Tag Archives: strategic planning

Meeting Tips #3 – O Say Can You Hear?

Community association boards do the bulk of their business at board meetings (or at least, they SHOULD). It can be tough for community members to observe the proceedings and resist the urge to chime in from the audience, especially on hot topics. This happens often with residents who do not understand that community associations are based on the representative democracy model. Yes, the board is ultimately responsible for picking the community center wallpaper…it’s not a community vote…

Wise boards do everything they can to avoid operating in a vacuum. They know they are responsible for making decisions that benefit the membership as a whole. They also learn that group leadership is a messy business. The odds are less than great that everyone will be happy with every decision. Convincing a vocal minority that they have been heard can be tough.

Meetings are an opportunity to build community through listening. Sometimes the format of board meetings can create unintentional landmines in this regard. Here are a few ways to flip the script and make opportunity.

Owner Comment Period

Many state statutes require a period of time be set aside for owners to ask questions and make comments. Even if it might not be required in your location, it’s a terrific provision. There are a few nuances to how a board administrates the comment period that will take full advantage of listening opportunities.

  • Timing: Some communities choose to have a comment period on the agenda before action items to allow for input. Others find that most of the comments and questions are on topics unrelated to the action items and find it more beneficial to put comment periods later in the agenda. I had one client that found it most effective to have two short open forums: the first for input before the board discussed action items, and the second one after, to allow members to bring up items unrelated to action items.
The key is to thoughtfully consider how members can best contribute to the discussion and be heard. Remember – you never know where the next great idea might come from! Be ready to hear it.
  • Following up: A typical refrain from some community association members is that things are discussed at meetings but nothing ever happens. Sometimes the culprit is how the owner comment period is conducted. Some matters are simple management issues that can be addressed on the spot. However, boards are wise not to make decisions on new issues brought up in open forum when they are unprepared. Some boards use the stock phrase, “We will take that under advisement,” but they don’t actually have a system to close the loop. Here are a few tips to help boards listen, which will also give their community members the confidence they actually are:
  1. Take notes while the member is talking to capture the main points.
  2. Ask questions for clarification as needed,
  3. Restate. A great phrase I’ve used is, “So I think I heard…”
  4. Embrace passion. If an owner is upset, they care. There’s energy there. Perhaps there’s an ad hoc committee lurking, just waiting to be formed, that will help the board turn a problem into a solution.
  5. If a matter is worth discussion, add it to new business in the meeting agenda.
  6. Make it clear if a matter is delegated to management, a committee, or a board member.  Who has the ball?
  7. If a matter would require an unbudgeted expense, you can indicate that it might be included in next year’s budget discussion and direct that it be added to the budget file. Just make sure it’s included in the first draft, (a.k.a. “the kitchen sink version” – for more on that concept, CLICK HERE) of the budget, no matter how wacky the idea might seem.
  8. Make sure the manager or another party is responsible for producing a meeting task list. The list should include not only the follow-up items from motions, but also all the little details noted above that would get lost otherwise.
Hint: If owners are using valuable meeting time to bring up day-to-day management issues, it may be a sign your processes are not clear. Asking a member if they have reported the matter to management is an appropriate response. If they have, but believe the response was inadequate, you can let them know you appreciate the report and will help to connect the dots between the owner and management. If they have not, it’s a golden opportunity. Listen to the report, then let them know management will take care of it. Then remind them that in the future, they need not wait for board meetings to make requests. That message reinforces the association’s service procedures and helps all participants understand the best way to be heard in such matters.

Recognition

Don’t forget to thank volunteers and managers for their efforts. Thank members for their comments. Recognize good questions. If a member discussed a problem, show empathy for the member even if they were a part of the problem. Practicing recognition promotes active listening and demonstrates the emotional intelligence that helps members know they have been heard.

Hot Topics

Some disagree with me, but I’ve always recommended that those chairing meetings open the floor for specific comments on particularly contentious issues to allow members to express themselves. This uncommon action of adding impromptu comment periods proves the board is serious about member input. You can still set a time limit to keep things going. You can also request that if someone else had already made a point a member wishes to make, that they make a simple statement of agreement and do not make repetitive points.

Is This the Right Meeting?

Board meetings are designed to conduct business. If the member comment period is taking over the meeting, the community is telling you something. You have bigger issues to address. When board meetings become free-for-alls, it has become a de facto “town hall” meeting. It also may be telling you the community is deep in the weeds and needs to take a step back and do some serious planning. Board meetings are great for doing the basic business of the community. But they are lousy for town hall meetings and for strategic planning.

Town hall meetings are great for either collecting or disseminating information. No business is done, just communication. It amazes me that most community associations never have a yearly planning session soon after annual meetings to discuss the goals for the upcoming board year. If the community needs to hire an outside facilitator to help plan and conduct town hall or strategic planning meetings, it can be well worth the investment.

Carpe Momentum

Meetings are opportunities to lead, to connect, and to build community. Listening is at the heart of all three. Why not seize the moment?

14 Things Your Reserve Analysts Might Not Tell You – And It’s Not Their Fault (Part 3)

Two weeks ago,,  we shared five focus points to help you analyze property components. Last week, we offered another five, which were practical considerations to discuss with your reserve analysts in order to estimate project expenses as accurately as possible. To recap, we’ve covered:

1. Engineering Study for Stuff You Can’t See
2. Elements Impacted by Code Compliance
3. Piping Systems
4. New Construction Technology
5. Underground Piping and Wiring
6. Project Design & Management Expense
7. Logistics for Limited Access Projects
8. Collateral Damage
9. Items Outside Study Period
10. Strategic Improvements

We close out the series with the last four nuggets. These cover areas where the Board has a level of discretion and help you deal with some thorny cash flow issues.

11. Interior Renovation Upgrades: Interior renovations can take many forms. If you don’t tell your analysts what you have in mind, they are left to guess. For instance, I helped one client to plan for wallcovering, painting and lighting that would last through two cycles of carpet. In another case, the whole lighting plan was to be revised. That specific data had to be plugged into the reserve study.

12. Alternative Funding Options: If the community is behind the ball financially, debt service, special assessments, or a combination of the two might be options to consider. Clarifying the Board’s authority to do either and strategically planning to communicate options to members are absolutely crucial. This will no doubt be the subject of a future blog. Your reserve analysts should be able to help you to run “what if” scenarios, but you are going to have to tell them what those options might be.

13. Big Trees, Drainage & Other Landscaping: I’ve heard arguments that greenspace does not belong in reserve studies. However, mature trees and landscaping can be really expensive to remove, not to mention replace. Over time, surface drainage can become ineffective and might even lead to flooding. A review by an arborist, landscape designer or architect can be a real eye-opener. You can consult with your reserve analyst and auditor to confirm the appropriateness of including such items in the replacement reserve. If it gives either of them heartburn, you have an option. See #14 below.

14. Major Periodic Maintenance: I regularly see five-year electrical panel and switchgear maintenance in reserve studies. I even see the cost for future reserve studies in some reserve schedules. Even though these expenses may not pass the test as a reservable component, it makes sense to flow the funding evenly from year to year. Including such expenses in the operating budget could have significant impacts on fees. The fact that it’s on a schedule and in the financial plan helps Boards to maintain the discipline to actually tackle these vital projects. Depending on the property there might be other major periodic maintenance that is just as vital and has a similar financial impact. Hydro-jetting of plumbing stacks and laterals, dryer duct/vent cleaning, HVAC duct cleaning, and chimney inspections and cleaning can add up. There may be a couple of approaches to consider. If the property can be divided up with a portion of the work done each year, it would flatten out the expense. But if that’s not feasible, you might ask the reserve analyst to include such projects in the study. If the analyst (or the auditor as noted in #13) or the Board is uncomfortable with that approach, there is an option. You can create an operating reserve, set up a schedule of expenses, and calculate a monthly contribution to that reserve in the same manner as the replacement reserve. This will make sure the money is in the bank, keep you from deferring critical preventive maintenance, and even out the financial impact on association members.

Who & When?

We’ve identified a number of capital projects that may require additional professional support to properly plan and estimate replacement costs. Investing funds up front to work with a qualified, structural engineer, mechanical engineer, construction manager, construction estimator, project manager, elevator expert, fire protection system engineer, architect, or contractor can significantly mitigate the possibility of unhappy surprises and create a realistic funding plan. We’ve identified a few areas where legal and audit advice is advisable. Making this a point of discussion with your reserve analyst will help. Some firms that provide reserve studies are multi-disciplinary and may have some of these resources in-house.

The optimal time and depth of study will depend on the projects themselves. Hopefully this series has helped you to take a hard look at the components in your reserve schedule, do a risk analysis and take the holistic approach described in last week’s blog. Once you’ve identified elements that may benefit from further analysis, check the timing. Early on, perhaps you can get some inexpensive thumbnail estimates (hint – plan for the worst, guess high). If you are getting to within about five years of a large project, it might be time to make a more significant investment and hire specialists to take a deeper look. The more complicated the project, the more important this is.

Bottom Line

A truly comprehensive reserve plan can make all the difference in the financial health of a community association and the quality of life of its members. The reserve study is a tool. Your reserve analysts are your partners. See the bigger picture. The better the data, the better the study. The better the study, the better the plan. The better the plan, the better the execution of the plan. The better the execution of the plan, the better the community.

14 Things Your Reserve Analysts Might Not Tell You – And It’s Not Their Fault (Part 2)

Last week’s blog offered five focus points to improve the accuracy of your reserve plan. Nuggets 1 through 5 help you analyze property components. This week, we share nuggets 6 through 10. These are practical considerations to discuss with your reserve analysts in order to estimate project expenses as accurately as possible.

These all come from my experience working with clients through the years. In some cases, I noticed a disconnect between plan and execution. In their planning process they dutifully used the expense listed in their reserve study. However, once the project got going, additional necessary expenses that were not anticipated in the study were funded from replacement reserves. This made it appear that the projects were over budget, resulting in weeping and gnashing of teeth, not to mention death glares in the direction of their reserve analysts. The truth was that these projects were not over budget, rather they were under planned. In other cases, under planning occurred when clients failed to take a bigger picture or strategic approach to planning projects. The lesson is clear: The more accurately you can see the future, the better the odds you can get there.

Clients who implemented this week’s nuggets planned more realistically and utilized reserve funds to the maximum benefit.

6.  Project Design & Management Expenses: Wise associations elect to engage professional engineers, architects, and/or project management firms to develop specifications, facilitate the bidding process, and provide quality control for major capital projects. Depending on the nature and size of project, the investment can be in the neighborhood of allowing 10% to 15% of the total project costs.

Lately I’ve been encouraged to work with boards that understand the impact of major projects on their management team. Projects that impact residents in an intense way take human resources to make sure they run smoothly. Hiring additional staff or a professional project manager can make all the difference between a great project and one that sucks the life out of every resident, board member, and team member. Too many associations ignore the fact that without that support, something will give – the quality of the project, the quality of day-to-day operations, or both.

Reserve studies may not anticipate any of these expenses. You may need to direct that they be included.

7.  Logistics for Limited Access Projects: If something is hard to access, it’s going to be more expensive to replace or maintain. Sometimes A LOT more expensive. Getting a handle on those costs can be crucial to estimating the total price tag of a project. A cooling tower on top of a 27-story high rise is going to cost exponentially more than one on the ground floor. If a building elevation presents challenges in accessing a roof, the costs of roof or gutter replacement and periodic major maintenance on components like soffits and trim go way up. Contractors and construction estimators can be lifesavers in helping to avoid some gnarly surprises.

8.  Collateral Damage: This can be a tricky one. Technically, the association may have limited or no responsibility for replacing unit components. But what if they are altered to access common element replacements like pipe risers? My favorite example to illustrate the point: Let’s say the only way to replace a piping system is to go through 1950’s era ceramic tile. You’ll never match the old tile. Will the Board repair the plaster only? Tile one mismatching wall? Or replace all the tile in the unit? Multiply the expense by all the units in that tier. The answer might make a significant impact on project costs. Here, your first call may be to association counsel to be clear on your responsibilities and options. Then you’ll have to make a business judgment. Just don’t wait until you start the project to decide. Get clarity in the planning process and plug the info into the reserve study. That is not your reserve analyst’s responsibility, it’s the Board’s.

9.  Items Outside Study Period: Many studies include only those components that have useful lives within the period of the study (usually 30 years). The rationale is that if you conduct studies every three to five years, the component will eventually make its way into the study. But some major components such as electrical switchgear, transformers, or piping systems may have useful lives of 50 years or more and they may be major expenses. Waiting to fund those expenses over only 30 years could create a big bump in required funding levels when they magically appear in the study. Plug them in now.

10.  Strategic Improvements: Instead of replacing components in kind, it might make sense to rethink and plan. For instance, a property may have high-maintenance components such as wooden exterior soffits, fascia, and rake boards. These require repainting every few years and eventually sectional or full replacement. It might make sense to replace them with low-maintenance materials. More expensive up front, but much less expensive in the long run. Original gutters might have been undersized and should be replaced with larger ones. If gutters and downspouts are being replaced, it might be the golden opportunity to replace wood trim with low-maintenance material. The Association could pay only once for mobilization for two projects and save money in the long run. Better yet – think strategically and tie these projects in with the next roof replacement to get to best bang for the buck. Take a step back and see property components in a broader context. Adjust the plan accordingly and make sure the data gets plugged into the reserve study.

Perspective

No one wants to increase fees. It can be tempting to ignore the potential for additional expense, even if it means losing out on savings in the long run. Making the best use of members’ assets is a key element of the board’s fiduciary duty. Think strategically, plan wisely.

“Leaders keep their eyes on the horizon, not just on the bottom line” –Warren Bennis

Next…

Next week we close out this series with the last 4 nuggets. These will help you to recognize areas where the board has a great deal of discretion in the planning process. Many community associations are facing the tough realities of under funding and have to include options such as loans and special assessments in their funding plan. We will help you to partner with your reserve analysts and other professionals to develop scenarios and choose the best plan for your community.

Why Don’t Community Associations Plan?

RobinHood1
Howard Hill with Errol Flynn

The late motivational speaker Zig Ziglar taught the subject of goal setting by opining on the story of Howard Hill, who won 196 archery tournaments in a row in the first part of the 20th century. He was the guy Hollywood hired to do stunts like splitting one arrow with another in Robin Hood films. Amazing stuff. Mr. Ziglar claimed he was such a talented instructor, he could teach anyone to hit a target with more proficiency than Howard Hill – provided Mr. Hill was blindfolded and spun around a few times.

“Ridiculous! How can someone hit a target they can’t see?” To which Mr. Ziglar responded “That’s very true. Even worse, how can you hit a target you don’t even have?”

It seems so incredibly obvious. Have a target, hit a target. Have a goal, reach a goal.  Duh.  Yet how many community associations have clear, measurable goals, much less a plan to achieve them? Shockingly few.

THERE’S YOUR SIGN…

Comedian Bill Engvall made this tag line famous. If you are not familiar, Google it. He will make you laugh. But some signs can make you cry. Does any of this sound familiar?:

– “Surprise” major expenses resulting in special assessments, steep fee increases, loans, or any combination thereof

– Members disenchanted with their community association

– Endless debate on how the association should spend its money

– Crisis management becoming standard operating procedure

– Regrettable history repeating itself over and over again

– All these may be signs that long term planning is lacking.

HOW DID WE GET HERE?

If it so clear that community associations need goals and a planning process, why doesn’t it happen?Through the years, I’ve heard plenty of reasons, none of them good.

– “Our meetings are already 3 hours long. Our agenda is full.”

– “Why should we plan for things that won’t happen until after we are long gone from here?”

– “I’ve been through strategic planning sessions at work. Everybody has great ideas, but nothing ever comes of it. It’s a waste of time.”

– “We are all volunteers here. We just don’t have time.”

– “We have a budget and a reserve study. That’s our plan.”

– “We can deal with it later.”

Failing to plan is absolutely a plan to fail. Ted Ross, a board member for the Washington Metro Chapter of the Community Associations Institute and owner of TRC Engineering frequently preaches, “The longer you defer a capital project, the more costly the project becomes and fewer options are available.” The same principle is true for any facet of the operation where necessary change is deferred. Waiting for projects or situations to become emergencies is never a good idea. Planning for the future is an investment in time, energy, and money.

This is Part 1 of a 6 part series. Part 2 will outline the 5 basic steps of long range planning. Stay tuned!