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Subject: New Community - Thoughts on actions needed and priorities?
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GeorgeS21
(Florida)

Posts:2816


06/19/2020 11:23 AM  
Gonna be a long note, but please take a look. Nothing is hypothetical :-)

So, new community for us. Recall my previous postings have been either about a rental neighborhood (still have properties), and about our personal home community at the time (retained this property to rent, as well). I am still webmaster at the rental neighborhood (my exasperation level was exceeded after two years of motivating the Board (as secretary) to do the right things. I refused to be prez at the last neighborhood, and became VP to convince the new prez there would be corporate knowledge.

Platted and incorporated in 2007, 659 single family homes, private roads, conservancy area to protect from local growth, two gates (one staffed, both video, both access systems), multiple detention ponds, irrigation systems, wells, lightning, clubhouse, small gym next to the main component of the clubhouse, small office on the other side of the main component, bathrooms accessed from outside, double tennis/bball/pickleball courts, back area tables and grills, pool with separate kiddie pool, landscaping, etc - it is a nice place.

The usual sorts of things have happened over the years:
1. Builder hired real estate management company to assist in the initial development - once most lots were sold, the developer turned over to HOA and, since the market was in downturn, the real estate management company remained as the management company for the HOA
2. Management company had limited software based tools, limited access to information, etc - clearly not a community management company, but rather a commercial real estate manager - did not do a good job - always turmoil
3. Market much improved now, so management company quit last year, Board commenced a search and hired another management company - without software tools, without online access systems - the new company's strength is in the personal, friendly interface
4. HOA has always employed a generalist attorney, not an HOA attorney

So, with a bit of time on my hands, I ask questions of the prez at the new community, and, not surprisingly she asks for help (the usual apathy with a few bright spots).

I usually look for parallels - and lessons learned - from others, so would appreciate your thoughts as I ramble through this over this post, and what I am sure will be future posts.

1. Financials
- assessments paid quarterly ($800K/year)
- no online system that allows review of assessment payments, contractor billing and payment, bank balances, etc
- Reserve Study - isn't one, never has been, Board has been somewhat haphazardly adding to a fund, but there is limited discipline in the manner this is accomplished - i.e. no baseline.
- MC is not providing full financials, even after six months in the position - they manage assessment collections and pay bills (the prez signs every check), update bank account totals, etc.
- I have not been able to determine if the reserves are laddered in CDs, or what (no access, yet)

2. Board meetings are quarterly - they are always way outside the decision cycles needed
- attended first a few days ago
- Board not able to answer basic financial questions which started a feeding frenzy
- open forum at the end vice beginning; didn't work as well as at the beginning
- basic CCR/R&R/Bylaw references were inaccurate
- no one seem to have heard of FS720
- no one had heard of MRTA 1963 and FS712
- one Board member outspoken and tried controlling, but was more ignorant than most of the rest of the board - others clearly tired of him, but he just overwhelms them

3. Amenity hours
- I am concerned the amenities are open too long, too much, wrong times, etc and this is increasing oversight and cleaning cost
- they have pool contract, cleaning contract, security contract, landscaping contract - it seems like a more integrated approach might be the same or lower cost and provide more full time coverage
- biggest gripes are about bathroom cleanliness and general lodge upkeep and cleaning
- Pool hours 8 am to 10 pm
- Lodge hours 8 am to 10 pm
- Gym hours 24/7
- Bathrooms just outside gym door hours 24/7
- Tennis/Bball courts - 8 am - 10 pm

Would appreciate any thoughts the group might have - I have not started to lean in, yet. Wanted to do some factfinding :-)
CathyA3
(Ohio)

Posts:1077


06/19/2020 1:02 PM  
First I'd take a hard look at your governing docs and applicable state laws. Then make a couple lists (one for the board, one for the PM) that outline the general areas of responsibility and relative importance of each. Rate their performance in each area: good, acceptable, needs work, screaming emergency. This will tell you where you should be directing your efforts first.

Consider surveying the entire community and getting their opinions about stuff. You want to know if there are problems simmering away below the surface.

Consider providing education to the board members (they may not be willing to take it on board) and to the membership. The board is more important - they can't make good decisions if they don't understand what's required. Hopefully Florida has some good online resources for this. I've also come across educational blog postings from some Florida law firms. You may be able to find one that specializes in association law that would provide education for board members as part of the service contract (ours does this, and I can't overstate how valuable this is).

Personal opinion: I'd put the financials at the top of the list in importance in any community. Top priorities are a reserve study and an audit of your books (state law and/or your bylaws should address the requirements for both). You need to know where you stand before you can move forward. Full financials are a must, and there should be software out there that would automate a great deal of this. (In my community, the board does not physically sign checks at all. We employ the top management company in our area, they use state of the art software that handles everything including producing the checks, and the board reviews our financials each month. We also minimize risk by carrying enough fidelity insurance to cover us if someone absconds with our funds - our Declaration requires this.) Which reminds me, review your insurance, too.

I also think quarterly board meetings are not enough, especially if Florida requires that all decisions be made in open, properly noticed meetings. It also keeps the meetings shorter, and you get better decision making if they don't drag on. Your bylaws probably require meetings to be held at least once per quarter, but there is no reason they can't be more frequent.

May come up with more after I think for a while...
AugustinD


Posts:3495


06/19/2020 1:59 PM  
Posted By GeorgeS21 on 06/19/2020 11:23 AM

- biggest gripes are about bathroom cleanliness and general lodge upkeep and cleaning
- Pool hours 8 am to 10 pm
- Lodge hours 8 am to 10 pm
- Gym hours 24/7
- Bathrooms just outside gym door hours 24/7
- Tennis/Bball courts - 8 am - 10 pm
With all these amenities, I think the top priority is to arrange for a Reserve Study.
GeorgeS21
(Florida)

Posts:2816


06/19/2020 6:21 PM  
Thanks for comments!

In my initial discussions with prez, I identified first and second priority.

1. Get a firm grip on financials - starting with Reserve Fund, then walking it back into this year's budget.
2. Monthly Board meetings to be able to act on those myriad of things needing agreement to pursue.

Many of the things collecting angst are subsets of 1., above. The Reserve Study will provide a baseline - and a firm basis for arguing for what is needed.

Cathy - they have been doing surveys via fb ... a lot of the responses, as one would expect, reflect one clear position or the other. The Board has been very agreeable to be "ruled by survey" and it shows in their scattershot approach. I believe the community needs to continue to assess the interests of the community, but not sure their process is working. An audit has been conducted and no malfeasance, so probably OK there. Absolutely agree wrt Board meeting frequency. My last neighborhood was on quarterly and it was a mess - we used to refer to this in pilot talk as "being behind the airplane."

The education thing is what I am going to start inserting - they seem OK with input and I will try to not wear out my welcome. As an example most of you will have already seen, the Board members have certified per FS 720's requirement to have read and to follow the governing docs, but almost none have done so. Typical in this regard, so will get rolling on getting them smarter.
CathyA3
(Ohio)

Posts:1077


06/20/2020 5:05 AM  
Re: audits, our attorneys recommend a full audit once every five years, with annual reviews of the books in between if the full audit didn't reveal any issues. Going this route saves money but still has independent eyes on things - also helps stop any accusations of financial misconduct. (Our bylaws require an annual audit/review.)

Re: the surveys, I think of them as a tool to uncover potential issues that the board may have overlooked, rather than something that drives decision-making. It's a trade-off. The homeowners live in the community so their opinions should be taken into account. However, so many are clueless about the realities of running an HOA, which means that a lot of opinions will be uninformed. I'd give greater weight to opinions about the amenities - they use them and know what's going on day to day - as opposed to opinions about finances since so many people aren't skilled at personal money management, let alone corporate finance.

Re: education, our attorneys send out quarterly newsletters to the boards of their client associations. These newsletters cover topics of current interest as well as general refreshers and reminders. These are helpful - they are short enough (4 pages max) that they're more likely to be read, and serve as a regular reminder to board members about their obligations. In general, it's hard to educate board members who want to remain ignorant - ask me how I know this - but you can always encourage professionalism and over time change the culture of your board.

NpB
(Arizona)

Posts:306


06/23/2020 12:43 PM  
Posted By GeorgeS21 on 06/19/2020 11:23 AM
Gonna be a long note, but please take a look. Nothing is hypothetical :-)

So, new community for us. Recall my previous postings have been either about a rental neighborhood (still have properties), and about our personal home community at the time (retained this property to rent, as well). I am still webmaster at the rental neighborhood (my exasperation level was exceeded after two years of motivating the Board (as secretary) to do the right things. I refused to be prez at the last neighborhood, and became VP to convince the new prez there would be corporate knowledge.

Platted and incorporated in 2007, 659 single family homes, private roads, conservancy area to protect from local growth, two gates (one staffed, both video, both access systems), multiple detention ponds, irrigation systems, wells, lightning, clubhouse, small gym next to the main component of the clubhouse, small office on the other side of the main component, bathrooms accessed from outside, double tennis/bball/pickleball courts, back area tables and grills, pool with separate kiddie pool, landscaping, etc - it is a nice place.

The usual sorts of things have happened over the years:
1. Builder hired real estate management company to assist in the initial development - once most lots were sold, the developer turned over to HOA and, since the market was in downturn, the real estate management company remained as the management company for the HOA
2. Management company had limited software based tools, limited access to information, etc - clearly not a community management company, but rather a commercial real estate manager - did not do a good job - always turmoil
3. Market much improved now, so management company quit last year, Board commenced a search and hired another management company - without software tools, without online access systems - the new company's strength is in the personal, friendly interface
4. HOA has always employed a generalist attorney, not an HOA attorney

So, with a bit of time on my hands, I ask questions of the prez at the new community, and, not surprisingly she asks for help (the usual apathy with a few bright spots).

I usually look for parallels - and lessons learned - from others, so would appreciate your thoughts as I ramble through this over this post, and what I am sure will be future posts.

1. Financials
- assessments paid quarterly ($800K/year)
- no online system that allows review of assessment payments, contractor billing and payment, bank balances, etc
- Reserve Study - isn't one, never has been, Board has been somewhat haphazardly adding to a fund, but there is limited discipline in the manner this is accomplished - i.e. no baseline.
- MC is not providing full financials, even after six months in the position - they manage assessment collections and pay bills (the prez signs every check), update bank account totals, etc.
- I have not been able to determine if the reserves are laddered in CDs, or what (no access, yet)

2. Board meetings are quarterly - they are always way outside the decision cycles needed
- attended first a few days ago
- Board not able to answer basic financial questions which started a feeding frenzy
- open forum at the end vice beginning; didn't work as well as at the beginning
- basic CCR/R&R/Bylaw references were inaccurate
- no one seem to have heard of FS720
- no one had heard of MRTA 1963 and FS712
- one Board member outspoken and tried controlling, but was more ignorant than most of the rest of the board - others clearly tired of him, but he just overwhelms them

3. Amenity hours
- I am concerned the amenities are open too long, too much, wrong times, etc and this is increasing oversight and cleaning cost
- they have pool contract, cleaning contract, security contract, landscaping contract - it seems like a more integrated approach might be the same or lower cost and provide more full time coverage
- biggest gripes are about bathroom cleanliness and general lodge upkeep and cleaning
- Pool hours 8 am to 10 pm
- Lodge hours 8 am to 10 pm
- Gym hours 24/7
- Bathrooms just outside gym door hours 24/7
- Tennis/Bball courts - 8 am - 10 pm

Would appreciate any thoughts the group might have - I have not started to lean in, yet. Wanted to do some factfinding :-)






Hypothetical questions are often the best and most intelligent.
GeorgeS21
(Florida)

Posts:2816


06/23/2020 2:04 PM  
Ha.

In college, perhaps.
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