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he concepts of a community start relatively simple: band together to share and enjoy common benefits beyond what one could or would obtain individually. From there, it mushrooms not only into the care, feeding, and maintenance of the common property, but that aforementioned “togetherness,” which turns into a study of how different people can be. For larger communities, it may be obvious that managing the community will require more than volunteers can offer; for smaller communities, the temptation or outright need to save money may lead to seriously evaluating if the board can or should handle the association’s day-to-day affairs, or how they should be conducted. Management com-panies themselves can help shed light on some issues to consider.

Professional Association Management

Tby Kathy Danforth

What Are You Buying?

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Time “It is enormously time-consuming for board mem-bers, many of whom are still employed and working full-time, to be able to devote the required amount of time nec-essary to handle the many tasks/issues involved,” com-ments James Long with J & L Management of North FL, Inc. Regan Marock with KW Property Management Co. points out, “Board member positions are voluntary, so to expect the residents to put in a lot of time, which equates to money, is not appropriate.” The commitment and respon-sibility of being on the board is sizeable enough that further expanding the workload will deter more potential volun-teers from the position. Linda Johnson with LJ Serv-ices Group observes an occasional temptation for board members putting in large amounts of time: “It can make an owner doing it with no pay start thinking he needs to get paid, and then it becomes an issue.” If the volume of time required were not enough, there is also the unpredictable nature that comes with life. Michael Rhodes with Rhodes Management, LLC has seen that association management includes “every possible mechanical failure and subsequent damage that can pop up at a moment’s notice, 24 hours per day.” David Burman with Aegis Community Management Solutions, Inc. notes, “Whether a board member has the tech-nical expertise and tools to properly manage a community, doing so will nearly always divert his or her attention from their true role of governance. Community leaders who get

wrapped up in the day-to-day affairs of the association can easily lose sight of the broader vision and long-term strategy for the community.”Changing Laws Lack of knowledge, particularly in the arena of legal requirements, can present the greatest potential difficulty for an association. Anthony Flournoy with RealManage states that, first and foremost, “The role of the management company is to facilitate the business operations of the asso-ciation to keep them in compliance with local, state, and federal laws. Since legislation is constantly being modified and should be reviewed on an annual basis, a management company keeps track of those changes on behalf of the association and keeps them in compliance with those regulations.” Since laws are a dynamic environment, having past experience in an area is not enough to ensure current, ongoing expertise. Long notes, “Most homeowners are not knowledgeable about the various state laws, statutes, and regulations needed in the management of subdivision, co-ops, and apartments. Consequently, many state laws are broken; covenants, conditions, and restrictions are not adhered to; and records are not kept properly. Finances go down the drain.” Though self-management is largely for the purpose of saving money, the savings can be quickly engulfed by missing any steps required by law. “Self-management of an association can bring on legal risks and tremendous liability for a board of directors,” says Diane Lee with DLG Management Services. “Unless CAM-certified or unless constant continuing education is obtained, an association can easily put them-selves in a precarious situation based on the constantly changing laws here in the state of Florida.”Taking the Flack A management company not only reduces the time a board member would invest in managing an association—the more contentious tasks can be delegated. Marock observes, “Having a management company in place puts a buffer between the board and the residents, which helps avoid hostility as well as decreases the chance of fraud dramatically.” And, in some cases, a management company can help reign in errant board members to their designated responsibilities. “The possi-bility of individuals seeking to use the HOA as their opportunity to ‘be boss’ is more than an afterthought to some,” according to Long. Rhodes confirms that, unfortunately, “There are those individuals who aspire to director positions for the wrong reasons—those of per-sonal status, bone picking, ego boosting, personal aggrandizement, and/or feeding their personal emotional and sometimes financial needs.” A management company can instill a layer of checks, balances, and reason into such scenarios to benefit the community. Burman notes the benefit of having a party outside the governing board to represent the association’s official stance. “A reputable man-agement company avoids advocacy for any particular owner, group of owners, or board members and should represent an important layer of neutrality in the governance of the association. A reputable manage-ment company will also shun improper relationships with those doing business with the association in order to ensure that the business is done in the most competitive manner possible.”Continuity and Costs Continuity can be another benefit of using a management company. “Although community managers can change, a management company

20 Jun 2012 FLCAJ

trades/master-of-none’ scenario, primarily in the areas of HR/staff turnover, financial/book-keeping, maintenance, admin-istration, and governance/legal areas. A professional management company should possess a back office with the expertise to save the asso-ciation from these potential complications, unnecessary headaches, and, in many instances, higher costs over time. Management companies have the collective benefit of hundreds of years of experi-ence on many different types of communities, and can draw on the expertise of many for the benefit of the community.” The specialized resources available through one company can make a management com-pany the most effective route. “While for some communities,

represents an inherently consistent clearinghouse/custodian for the his-tory and records of the association. That aggregated history transcends the coming and going of board members, community managers, and community volunteers,” Burman observes. Marock adds, “Providing the association with multiple layers of support allows the association to feel comfortable that, should some-thing happen to the manager, an entity that knows the current status of the association’s affairs is there to step in.” While use of a management company is primarily buying service and expertise, several factors may mitigate the cost. “Most larger man-agement companies have negotiated preferred rates for their clients’ benefit,” James Donnelly with the Castle Group points out. Marock advises, “In addition to being a deterrent to fraud, whether self-managed or not, the accounting for the association has to be per-formed. Generally, the cost of hiring a company or individual equals what management companies charge for both the management and accounting services.” But the bottom line is: don’t presume; evaluate. Rhodes says, “Also, truly be careful of their maintenance services and what you are paying for them; very often, your billing for maintenance services more than compensates for the low management cost listed on the front of your contract. I have seen fifty dollar bills for changing a light bulb!” Expertise Donnelly acknowledges, “While there are extraordinary individual property managers, self-managed associations often face a ‘Jack-of-all-

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Assistance in board meeting procedures and conversation between the individual unit owners and the board, helping to develop an open discourse and create a more inclusive atmosphere within the com- munity fostering a general spirit of cooperation and inclusiveness.

Assistance with vetting vendors and contractors; a feat much more effectively accomplished through a company with influence and experience well beyond that of a single community.

Liaison with city, legal, and engineering professionals, creating a more point-on-point effective and less antagonistic line of communica- tion. This will aid operations financially, efficiently, and effectively.

Assistance in the long-term strategic planning and analysis necessary to lower daily operational costs over the long-term

self-management can be a productive and beneficial option, the engagement of a management company carries with it many intrinsic bene-fits,” Burman states. “Because a management company seeks to deliver a product that meets the needs of a variety of communities, it is more likely to have the capa-bility to implement the latest technological and educational resources for the management of the community. GPS- and Web-enabled rules enforce-ment systems, advanced website and accounting soft-ware, and manager and team member educational oppor-tunities are a few examples of the resources that manage-ment companies are able to offer,” Burman volunteers. “There are a number of dif-ferent disciplines that must be carried out properly in order to govern and manage a community, including account-ing, collections, real estate closings, and maintenance. Management companies can engage industry profession-als from beyond the commu-nity management industry to fill these roles.” General functions that Rhodes recommends commu-nities will want to have pro-vided include the following:

“Organization of files and records to facilitate day-to- day and future operations allowing for stable, effi- cient, and future strategic planning, both operation- ally and financially.

Financial record keeping that is easy for board members to understand and monitor on a monthly basis and can satisfy statute requirements.

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(five to ten years) through systematic integration of efficient machinery and cost-saving measures despite their current addi- tional costs.

A sounding board between and among the varying personalities necessary and conducive to general consensus decision making. There is a time to speak and a time to listen. In addition, particular community needs may include:

Impending physical plant and building upgrading and renova- tion projects that require specific experience and talents.

Complications of relationships with other associations whether master, recreational, or peer groups.

Particular financial crises arising from foreclosures, abandoned property, and non-paying unit owners.

Difficult issues with minority interests or even individual persons; some- times renters, part-time residents, financially con- strained owners, persons with disabilities, or aging and debilitated long-time owners with new and special needs.” David Hammond with CSI Management Services explains a number of areas where pro-fessional management can provide tested procedures: emergency, hurricane, and disaster plans; accounting procedures with checks and balances; staff training; pre-ventive maintenance and in-spections; inventory and asset tagging programs; vendor interface; document preserva-tion; and statute compliance.Options Choosing the type of man-agement will reflect the board’s vision for the community. Flournoy feels, “One of the greatest benefits of profes-sional management is the retention of residents. This retention is maintained when the finances of the association are carefully monitored, the reserves are properly funded, delinquencies are minimal, and covenants enforcement is consistent. As a result, prop-erty values are maintained and the quality of life for the residents is better. Rhodes describes four management options: a single manager devoted to your community, a husband and wife team serving several local communities, a boutique intermediate size organization

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providing on-site management, or a large-scale maintenance and management company. Hiring an individual manager limits a com-munity to that individual’s strengths and relationships; a husband/wife team goes a step further, but does not provide total back-up year-round. The intermediate companies can provide personal care with professional back-up, but Rhodes points out, “Their success intrinsically and often brings with it a diluting of their effectiveness as they grow.” With large companies, Rhodes advises, “You want to make sure that you are considered one of their most prized clients and receive the greatest attention they can afford you.” Rebecca Furlow, President of Leland Management, Inc. notes, “When choosing a management company, it’s important to remem-ber the role of the management company within the association. The manager generally offers input, implements the decisions made by the board of directors, encourages education to the board through training or suggested outside resources, oversees and dele-gates tasks to outsourced vendor services, and gives direction to staff members of the association. When combined with the daily accounting functions, assessment collection, and covenant enforce-ment, the role of a board member quickly becomes a full-time job and makes it easy to understand why most associations turn to a professional management company for assistance.” There are several different routes to managing an association. Each board should ensure that they are looking at the big picture to see that they are buying the management services they need to protect their community, to stay sane, and to step out of their position of director when desired! !———————————————————————————————Contributors:

David Hammond CSI Management Services www.csimsi.com

James Donnelly President/CEO, Castle Group www.castlegroup.com

Regan Marock, LCAM Executive Director of Business Development, KW Property Manage- ment & Consulting www.kwproperty management.com

David Burman, AMS, PCAM President, Aegis Community Manage- ment Solutions www.aegiscms.com

Anthony Flournoy Vice President, Florida, RealManage www.realmanage.com

Diane Lee DLG Management Services www.dlgmgmt.com

Rebecca Furlow President, Leland Management www.leland management.com

Michael “Mikel” Rhodes, LCAM, CMCA, AMS, Lic. Real Estate Broker CEO/President, Rhodes Management, LLC www.rhodes management.com

James Long Founder, J&L Manage- ment of North FL, Inc. www.jlmgmtnfl.com

Linda Johnson, CAM, MBA Senior Manager, LJ Services Group www.ljservicesgroup.com