Read It Now - Community Associations Institute, Utah Chapter

UTAH
A NEWSLETTER FOR COMMUNITY ASSOCIATIONS, MANAGERS AND SERVICE PROVIDERS
COMMUNITY LIVING
UTAH CHAPTER
A S S O C I AT I O N S I N S T I T U T E
ISSUE 1
WINTER 2015
FINANCE 101
funding associations
through reserves
1
THE 2015
LEGISLATIVE SESSION
gearing up for the
year ahead
ASSOCIATION
COMMITTEES
the do’s and don’ts
ASSOCIATION
CONSIDERATIONS
hiring a staff or
independent contractors
the pre-spring issue
FROM THE PRESIDENT
full
participation
“New Year, new you,” is a phrase you’ll often hear repeated on commercials or see in
print ads during this time. So maybe you’ve made some resolutions for yourself, like
losing a few pounds, decreasing your carbon footprint, or taking a vacation. But have
you ever stopped to consider applying this not just to yourself, but to your HOA as well?
If you haven’t, today I issue you and your community the challenge of setting and
completing these goals during 2015.
Why Board Members Should
Become Members of UCCAI
First, adopt a collections policy for delinquent accounts by the end of January. Then,
before the end of February, get to a point where you are enforcing that policy uniformly
in your association. It will take a little discipline, but it is better for your board and for
the association.
Second, enhance the appearance of your community. I believe there is no more better
way to increase the value of your homes than cleaning up and making the community
look nice. By the end of March, do a detailed walk-through to identify landscaping issues,
structures that need repaired or painted, or areas that require cleaning. By the end of
April, create a plan to fix those issues over the coming weeks, months, and years. Then
complete one significant project in each of these areas during the summer months.
Third, and finally, by the end of September, get a reserve analysis done. Then at the end
of October, distribute the analysis to the owners within your association. Throughout
November, create a proposal for saving money and have it ready to go for your next
year’s budget and for discussion at your next annual meeting.
JOHN D. MORRIS, ESQUIRE
PRESIDENT
UTAH CHAPTER OF CAI
2
Now you may be thinking, “Those are some great ideas, but why should my association
bother with the trouble?” To that I say, consider this: according to independent research
conducted for the CAI by IBOPE Zogby International, the top reasons people enjoy
living in community associations include: neighborhood attractiveness (24%), community
safety (13%), and property values (12%). Getting owner accounts up-to-date on
assessments, improving the overall look of your community, and having a well-funded
reserve reaffirms to your owners why they chose to live in your association.
REFERENCES
IBOPE Zogby International. “Who
Should Judge Community Association Success? The Residents Who Live
in Community Associations!” Community Associations Institute: Falls
Church, VA. 2012.
1
Remember the words of the American philosopher Henry David Thoreau if you ever
get discouraged, “What you get by achieving your goals is not as important as what you
become by achieving your goals.” So don’t just make it a “New Year, new you” but also
make it a new year to become a new association too!
2015 CALENDAR OF EVENTS
APRIL
25
ESSENTIALS COURSE /
POST-LEGISLATIVE EVENT
29
TBD
JUNE
12
ANNUAL MEETING & GOLF SOCIAL
CAI ANNUAL CONFERENCE THROUGH MAY 2
AUGUST
SU EDUCATIONAL EVENT
TBD
SEPTEMBER
14
9
COMPANY LAWS
26
CAVL EVENT
GOLF TOURNAMENT AT
SOUTH MOUNTAIN
22
8
CAVL EVENT MEDIATION
LEADERSHIP LUNCHEON
FHA TRENDS
10
2016 PLANNING RETREAT
MAY
LEADERSHIP LUCHEON TITLE
OCTOBER
CAVL EVENT
ONE HOUR BOARD MEETINGS
22-24 M-100 IN SANDY
TBD SU GOLF TOURNAMENT
NOVEMBER
12
LEADERSHIP LUNCHEON
TIME MANAGEMENG
TBD
2
UTAH COMMUNITY LIVING
SU EDUCATIONAL EVENT
UCCAI LEADERSHIP
current UCCAI leadership
BOARD OF DIRECTORS
COMMITTEES
John Morris, ESQ.
LEGISLATIVE ACTION COMMITTEE
President, Business Partner
Robert Baird
President-Elect, Manager: Pepperwood HOA
Doug Shumway, ESQ.
Secretary, Business Partner
Tod Bean, CCMC
Treasurer, Manager: SunCrest
Ryan Bonham, CMCA, AMS
At Large, Advanced Community Solutions
Sarah Crawford, CMCA, AMS, PCAM
At Large, FCS
Noell Marble, CAVL
At Large
COMMITTEES
Communications/Publications
John Morris.Esq., CCAL - Liaison
Quinn Sperry – Chair
Eric Harker, Assoc. AIA
Megan Deming, CMCA
Sterling Jenkins
Ryan Newton, CMCA
Dale Gifford, CMCA, AMS, PCAM, RS
Jenai Reid, CMCA, AMS
Béat Koszinowski,CIRMS
Education
Ryan Bonham, CMCA. AMS – Liaison
Michael Johnson, CMCA, AMS, PCAM - Chair
Cindy Spillane, CMCA, AMS, PCAM
Sam Bell
Brent Bowthorpe
Diane Gaskill
Sara McConkie, CMCA, AMS
Ryan Connelly
Lynette Perkins
Corry Snow
Events
Tod Bean – Liaison
Tyler LaMarr - Chair
Tanner Blackburn
Joe Walters
Robert Rosing
Jeremy Bailey
Walter Jeffs
LaMond Woods, CIRMS – Chair
Sarah Crawford, CMCA, AMS, PCAM – Vice Chair
John Richards, Esq., CCAL – Secretary
Val K. Weight – Treasurer
Bruce Jenkins, Esq. – Legistlative Analysis Chair
David Houston, CMCA, AMS, PCAM - PR Chair
Ray Kimber - Fundraising Chair
Jerry Jensen, CMCA, AMS
Michael Miller, Esq.
John D. Morris, Esq., CCAL
Keith Schoen
Jason Sucher
Justin Rae
Jill Candland
Tod Bean, CMCA
Southern Utah
3
Sarah Crawford, CMCA, AMS, PCAM - Liaison
Greg Gardner, CMCA, AMS - Chair
Jerry Jensen, CMCA, AMS
Bruce Jenkins, Esq., CCAL
David Houston, CMCA, AMS, PCAM
Keith Schoen
Gina Yenser
Jeff Quayle
Marketing
Doug Shumway - Liaison
Connie Taylor, CMCA, AMS - Chair
Patsy Young
Alisa Shosted
Brandon Myers
Robert Baird, CMCA
Finance
Tod Bean - Liaison
Michael Johnson, CMCA, AMS, PCAM – Chair
Dale Gifford, CMCA, AMS, PCAM, RS
Jeremy Bailey
NATIONAL DESIGNATIONS
& ASSIGNMENTS
AAMC
CMCA
FCS Community Management
Robert Baird
Ryan Bonham
Josh Burkart
Thomas Cartwright
Sarah Crawford
Davis
Megan Deming
Alan Elliott
Greg Gardner
Dale Gifford
Amy Jo Harris
Brian Haskell
Amanda Hess
Jenny Hickman
Joe Holland
Hopkinson
David Houston
Pam Isham
Jerry Jensen
Michael Johnson
Catherine Johnson
Paul Johnson
Karl Karren
Sara McConkie
Kamarie Naase
Ryan Newton
Adam Peters
Janai Reid
Richard Rockhold
Jenee Schneiman
Melissa Scott
Jennifer Seals
Shaun Simmons
Cindy Spillane
Susan Stucki
Connie Taylor
Terry
Laura Valenzuela
AMS
Ryan Bonham
Thomas Cartwright
Sarah Crawford
Alan Elliott
Greg Gardner
Dale Gifford
Amy Jo Harris
Brian Haskell
Jenny Hickman
Hopkinson
David Houston
Jerry Jensen
Michael Johnson
Karl Karren
Sara McConkie
Kamarie Naase
Janai Reid
Richard Rockhold
Melissa Scott
Shaun Simmons
Cindy Spillane
Susan Stucki
Connie Taylor
Laura Valenzuela
CCAL
Lincoln Hobbs
John Richards
Bruce Jenkins
John Morris
CIRMS
Béat Koszinowski
LaMond Woods
Missy McGlone
PCAM
RS
Dale Gifford
Shelley Grover
Michael Johnson
Kamarie Naase
Cindy Spillane
Cat Ann Coltrell
Sarah Crawford
Dale Gifford
Bruce Jenkins
Skellan
National Faculty Members
Lincoln Hobbs
Michael Johnson
Sarah Crawford
UTAH COMMUNITY LIVING
3
CHAPTER NOTES
getting
involved
Getting the Most out of
Your UCCAI Membership
This new year, resolve to get the most out of your membership. There are many ways you can do
this.
Attend educational events – UCCAI offers monthly luncheons on a variety of topics to benefit all
types of members. Attending live events is a great opportunity to mingle and get to know others
in the Chapter. Look for event fliers in your email and register online at www.uccai.net.
Request to speak at events via RFP form – You can request a Speaker RFP form at info@uccai.com
and lend your expertise to the Chapter by speaking at an event. Forms are distributed each fall,
and first priority for speaking at events is given to those who have turned in the RFP form.
Sponsor an event – Sponsoring a luncheon or roundtable event is now more affordable than it
has been in years past (as is placing an ad in the quarterly newsletter). Sponsorship gets your
name on all advertisements prior to the event and on all table toppers and power points at the
event. You can bring your business cards and free giveaways and help greet people at the
registration table. You also get a minute to tell about your business at the beginning of your
sponsored event. Don’t miss out.
Call in to homeowner webinars – This year’s round tables will be moving to webinar format.
Homeowners and all CAVL members can attend via the internet from their home which allows
more people the opportunity to access the valuable information shared at these events. Round
tables are highly informative and tailored to specific homeowner needs. Industry experts give
their time and information and are available for questioning. Live webinars are also rebroadcast
on the UCCAI website: www.uccai.net and can be viewed on YouTube.
BY MINDY KNUDSEN
UCCAI EXECUTIVE DIRECTOR
Attend a PMDP course – If you’re a manager working toward renewing or acquiring credentials,
attend a live PMDP course offered this year or participate in an online course. The M-201 will be
offered March 19-20 in Sandy and the M-100 will be held October 22-24 in Sandy. A complete
listing of available courses, locations, dates and online courses is available at http://www.caionline.org/events/managers/pmdp/Pages/default.aspx.
2015 DIAMOND SPONSORS
VIAL FOTHERINGHAM LLP
L AWY ERS
2015 PLATINUM SPONSOR
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UTAH COMMUNITY LIVING
4
Play in the golf tournament – Both northern and southern Utah hold golf tournaments in early fall.
The northern tournament is Sept. 9 and the southern tournament is Oct. 9. Playing on a foursome
or sponsoring a hole is great way to mingle and get to know UCCAI members and their
associates.
ON THE HILL
gearing up
THE 2015 LEGISTLATIVE SESSION
5
BY LAMOND WOODS
SENIOR PARTNER, CIRMS
SENTRYWEST INSURANCE SERVICES
As I write, the start of the 2015 legislative session
is just over two weeks away. Like prior years, it
will be busy for members of the Legislative Action
Committee (LAC). We have the task of reviewing
each bill (In 2014 there were 786 bills and
resolutions introduced) and determining if the
proposed legislation will have an impact on
community associations. If the answer is yes, the
bill is designated as low, medium, high, or critical
priority. Our greatest effort will be given to those
bills given high or critical status.
Often a bill is introduced at the last minute. For
example, in 2014 legislation was introduced that
would limit a community association’s ability to
determine how rentals would be handled in their
community. It seems apparent that this legislation
used the camouflage approach in hopes of
avoiding public scrutiny. The approach did not
have the intended outcome. Thanks to
homeowners serving on the LAC we were able
to assemble a dozen individuals who attended
and testified at a committee hearing on the bill.
The legislation did not pass out of committee.
During the 45 day session in 2014 there were
over a half dozen occasions that members of the
LAC were on Capitol Hill meeting with legislators,
testifying before committees, or simply
monitoring how bills were unfolding. In addition,
our lobbyist is at the Capitol each day of the
session acting as boots on the ground.
I suspect that all past and present members of
the LAC have on at least one occasion wondered
why they volunteered to serve. Often, the
demands on their time can become overly
burdensome. No volunteer is compensated. Only
our lobbyist and the executive director receive
compensation. I suspect the underlying reason
we serve is that we believe we can make a
positive difference.
I can attest that we are succeeding. Thanks to the
work of many individuals past and present,
community associations are better represented
on Capitol Hill than ever before. It isn’t always
sunshine and roses, but what worthwhile ever is?
UTAH COMMUNITY LIVING
5
THE BOARDWALK
association committees
KILLING TWO BIRDS WITH ONE STONE
RYAN NEWTON
PROPERTY MANAGER
ADVANCED COMMUNITY SERVICES
Association
boards
and
management
committees often feel overwhelmed by the
endless responsibilities and tasks they face in
managing their communities well. Just as
often, boards struggle trying to get
homeowners to participate in meaningful ways
(you know, participation beyond just
complaining and criticizing). Association
boards can kill both these birds (overburden
and lack of participation) with a single stone by
successfully using committees.
COMMITTEE DO’S
Not only can committees lighten the work load
for board members, but the members of such
committees can become better invested in the
community and its management. By attending
board meetings to report their findings or
performance, these committees become
familiar with the projects the board is working
on and the processes used by the board. They
develop closer relationships with board
members. Over time, these committee
members become groomed to be future
board members and can also provide
important political support for the board with
disgruntled community members.
Consistent committee activity is critical to
creating committees that effectively delegate
6
UTAH COMMUNITY LIVING
community
management
and
foster
participation. The board should always give
the committee some sort of assignment
between board meetings and always have the
committee report about their progress on any
assignments or issues at each board meeting.
Even very minor tasks keep the committee
members involved and invested in the
community and help keep them unified with
the board; whenever possible though,
assignments for committees should be
meaningful. Committee members will know
when they aren’t really providing any valuable
service or are being ignored. Once committee
members believe this to be the case, they will
become frustrated or apathetic.
6
For these same reasons, it is a good idea to
grant committees authority to take action. If
they feel like they are being micromanaged,
they will again feel frustrated or abandon the
committee in spirit. Sometimes governing
documents carefully outline exactly what the
scope of a committee’s authority to act is.
Other times, the board will need to outline that
scope of work and the authority of the
committee. Whatever the case, these
committees should be acting at the ultimate
discretion of the board (unless otherwise
provided in the governing documents). The
board can still let the committee do its own
thing for the most part, but oversight should
be constant (this is easily accomplished by the
frequent reporting mentioned earlier) and if
the board feels strongly, it should require the
committee to act in a certain way or even
remove committee members. Obviously, that
is a drastic step and should not be done lightly.
Boards need to thoughtfully and carefully
consider the advice of a committee, even when
they may disagree. For starters, the committee
is likely more aware of all of the issues
surrounding the issue they have researched or
worked on and it may be that the board will
realize they were mistaken. Different
perspectives can help boards avoid mistakes
and take into account matters they would not
have otherwise considered.
COMMITTEE DON’TS
Since community involvement is one of the
reasons that a board chooses to use
committees, committee members should
generally not be board members. Instead,
boards should try to fill the committee with
homeowners that are not already involved. You
could have a single board member serve as a
committee chair if the board feels strongly
about it or if there is not enough participation,
but often this just leads to the board member
doing most of the work and so defeating the
attempt to delegate work load and to cultivate
participation. Be watchful to avoid this result.
Successful and useful committees are
delegated responsibilities that the board
would otherwise have to oversee by
themselves. Obviously, if the committee is
performing work that the board would
otherwise have to do, it relieves the board of
part of that burden. Boards should be careful
about creating committees that don’t perform
already existing board duties. Rather than
helping bear part of the board’s burden, such
committees actually increase the board’s work
load since the board now has to oversee and
coordinate with a committee that didn’t
previously exist and is performing tasks that
weren’t previously required.
FINAL THOUGHTS
Getting an effective committee set up and
running strong can be a fair amount of work
up-front, but like so many things, if you put that
time and effort in at the outset, the rewards in
the long run are more than worth it.
7
COMMON $ENSE
8
UCCAI HOA Spotlight
ROBERT “BOB” BAIRD, PEPPERWOOD HOA
Bob has been actively involved in his community
as a volunteer leader for more than seven years.
When he and his family first moved in, he
immediately began working on several
sub-committees
including
newsletter,
architectural review, and CC&R enforcement.
Owners were so impressed by his dedication
and leadership that they nominated and
subsequently voted him to serve on their Board
of Trustees.
CAROLYN LOTT
ADMINISTRATIVE ASSISTANT
MORRIS SPERRY
If ever there was a modern day Mayberry in the
state of Utah, it would be Pepperwood HOA in
Sandy with its abundant greenery, cottage-like
houses, and friendly atmosphere. And Mayberry
would not be complete without its own problem
solving, mediator Sheriff Andy Taylor, right? Enter
Pepperwood’s very own Robert “Bob” Baird.
8
UTAH COMMUNITY LIVING
It was during his initial years as a board member
that a good friend suggested Bob go to the Utah
Chapter of the Community Associations Institute
(“UCCAI”) to receive training for his new position.
He attended luncheons and round tables where
industry experts were able to offer advice and
answers to his concerns and questions.
Networking remains his favorite aspect of
participating in the chapter. He also credits the
training courses offered by the chapter, such as
M100 and M207, for his success as a board
member and home owner.
While Pepperwood sought a new manager, Bob
stepped down from the Board and served as
the interim manager and, in true Andy Taylor
fashion, offered the Board and owners guidance
and direction throughout the transition period.
During this time Bob did extensive research in
Sandy City Hall, reading through 23 different
phase plats and talking with the developer, to
figure out how many due paying lots were
within Pepperwood. Finding out the correct
number of lots (595) was his proudest
accomplishment as interim manager. Now that
Pepperwood has its new manager, he is back
serving on the Board. He is also currently the
President-Elect of the UCCAI.
Thank you “Sheriff” Bob Baird for your years of
service to Mayberry—I mean Pepperwood—and
the UCCAI as well! Here’s to many more to
come.
UCCAI MEMBERSHIP
9
first quarter membership status
DECEMBER 10, 2014 - FEBRUARY 23, 2015
NEW MEMBERS
RENEWED MEMBERS
RENEWED MEMBERS
Ms. Kristel Harrington
Mr. Jim Simmons
Ms. Lara Silvia Valenzuela, CMCA, AMS
Mr. James Nebeker
Mr. Craig Huntington, Sr.
Mr. Andy Widerberg
Ms. Kristi Spencer
Mr. Alan D. Seilhammer
Mr. Sterling Jenkins
Mr. Luke Hoffman
Mr. Jeff Buckner
Mr. Jeffrey Grover
Mr. Scott Setterlund
Ms. Suzan Scott
Mr. John D. Boekweg
Mrs. Teresa Kristina Wharton
Ms. Kate Delgado-Miller, CMCA
Mr. Darrell Thomas
Mr. Shaan Sanderson
Ms. Katherine Rene Maitlen
Mr. Chuck Balacy
Mr. Brian Webster
Mr. Allen Zachry
Mr. David G. Ricks
Ms. Brianna Davis, CMCA, AMS
Mr. Tod Bean
Mr. Sam Bell, Esq.
Ms. Michele Marie Townsley, CMCA
Mr. David C. Houston, CMCA, AMS, PCAM
Mr. Burt Willie, Esq.
Mr. Jeremy Allen Johnson
Ms. Laura Gvozdas
Mrs. Cindy Spillane, CMCA, AMS, PCAM
Ms. Marlene Lowry-Peck
Mr. Paul Limburg
Mr. Justin Kailing
Mr. L. Duane McPherson, CMCA, PCAM
Ms. Lisa McLeod
Mrs. Marla Mott-Smith
Ms. Jill Candland
RENEWED MEMBERS
Mrs. Mik'L Behunin
Mr. Justin Rae
Ms. Brenda Lake
Mr. Scott Anderson
Ms. Tracy Stephens
Mr. Stephen J. Lord
Ms. Wendy Anderson
Ms. Susan Valentini
Mr. Noell Marble
Ms. Megan Deming, CMCA
Ms. Alice Louise Harten
Mr. Stephen West
Mr. Greg Gardner, CMCA, AMS
Ms. Mindy Gutierrez, CMCA, AMS
Mr. Joshua Burkart, CMCA
Ms. Catherine M. Johnson
Mr. Ryan Newton, CMCA
Mr. Michael Johnson, CMCA, AMS, PCAM
Mr. Jeffrey M. Quayle
Mr. Paul Johnson
Mr. Jason Sucher, CMCA
Mr. Shaun Simmons, CMCA, AMS
Manager Membership
Manager Membership
Manager Membership
First Utah Bank
MGM Association Management
Peak Property Management Group, LLC
RAM Exteriors
Sunwest Management, Inc.
Treo Community Management
Worldmark by Wyndham
All Seasons Resort Lodging
Alliance Association Bank
Association Capital Bank, a Division of Texas Capital Bank
Associations Insurance Agency, Inc.
Big Sky Owners Association
Boise City Property Management
Boise City Property Management
CASE Forensics
CCMC
CCMC
REJOINED MEMBERS
CCMC
Ms. Margaret Alvarez
CCMC
Ms. Kamarie Naase, CMCA, AMS, PCAM
CertaPro Painters
Mr. Camron Hamilton
CiraConnect
St. Regis Deer Valley
Sunwest Management, Inc.
Vial Fotheringham, LLP
Manager Membership
Manager Membership
Volunteer Leader
Volunteer Leader
Advanced Community Services
Advanced Community Services
Advanced Community Services
Advantage Management & Real Estate Services, LLC
Community Association Consultants
F1 Property Management
FCS Community Management
FCS Community Management
FCS Community Management
FCS Community Management
FCS Community Management
FCS Community Management
Gladly
HOA Solutions
Huber, Erickson & Bowman-CPA
Millcreek Pueblo Homeowners Assocition
Mutual of Omaha Bank - Community Assoc Banking & CondoCerts
Property Management Systems, Inc.
SEB Legal
Smith Knowles, P.C
Sun Country Management, LLC
Sun Valley Elkhorn Association
SunWest Management
Sunwest Management, Inc.
Three Fountains Owners Association
Three Fountains Owners Association
Union Bank Homeowners Association Services
WorldMark by Wyndham
Wyndham Vacation Resorts, Inc.
Yellowstone Club
FCS Community Management
FCS Community Management
FCS Community Management
FCS Community Management
9
UTAH COMMUNITY LIVING
RISK MANAGEMENT
HOA considerations
For Hiring a Staff or Independent Contractors
BÉAT KOSZINOWSKI
COMMUNITY INSURANCE &
RISK MANAGEMENT
SPECIALIST & CERTIFIED
INSURANCE COUNSELOR
THE BUCKNER COMPANY
Members
of
condo
or
homeowners
associations (HOAs) usually don’t manage
communal property or handle building projects
themselves—this is one of the perks of joining an
HOA. Members’ association fees may pay for
snow removal, security, maintaining common
areas, landscaping and pool upkeep, not to
mention high-cost projects, such as replacing
the roof and other major building repairs.
As an HOA board member, it is your
responsibility to hire and manage those who
take care of property management, routine
services, and building projects. Some HOAs
decide to hire a staff, while others hire
third-party
contractors
or
a
property
management firm to fulfill these responsibilities. Whether you hire employees directly or
contract out this work, it’s important to
understand the issues that could lead to costly
losses for your HOA.
H I RING EMP LOYEES D I R ECTLY
Depending on the size of your HOA, you may
want to hire a part- or full-time staff to handle
services such as landscaping, security,
lifeguarding, and housekeeping in common
areas.
As with any organization, employing people
poses significant risks and the potential for an
employment practices lawsuit. It’s unlikely an
HOA has a human resources department to
take care of employee issues, and there is
always the risk of discrimination, harassment,
and retaliation claims.
If you hire a staff directly, thoroughly interview
and conduct background checks on all
potential employees. Make sure your General
Liability and Workers’ Compensation insurance
has adequate coverage for all the potential risks
that come with hiring employees. Purchasing an
Employment Practices Liability policy may be a
good idea to protect against a wrongful
termination, discrimination or harassment
claim.
H I RING A CONTRACTI NG F I R M
Some HOAs contract all services—from
large-scale construction projects to property
management and routine services—to a
third-party contracting firm. The benefit to this
10
UTAH COMMUNITY LIVING
option is that most contracting firms have their
own insurance to cover problems. Although you
may dodge employment liability, hiring
contractors is not risk free.
RISKS OF HIRING A CONTRACTING FIRM
Using a third-party contracting firm always
comes with the risk of poor workmanship or an
unfinished job. You’ve no doubt heard stories of
jobs gone wrong: a contractor repairs a roof,
only to have it leak in more places than before or
started a project but ran off with the money
before it was completed.
10
If the contracting firm doesn’t have insurance,
this complicates the situation further, especially
for major building construction or repair. This
can cost your HOA more money than budgeted
if you have to find another contracting firm to
complete an unfinished job or fix mistakes.
FINDING A RELIABLE CONTRACTING FIRM
Online
directories,
advertisements
and
telephone books are several ways to find
property management firms and other
contractors. However, referrals and networking
are a better option, giving you the opportunity
to gather feedback about contracting firms
people have used in the past. If you’ve hired a
property management company, they may also
be able to suggest building contracting firms
they’ve worked with.
Obtain at least three bids. Hiring the least
expensive contracting firm could actually cost
you more money than expected if the quality of
workmanship also matches the price. It’s a best
practice to obtain three or more written bids for
each project to find the highest quality
contractor for a price that fits your budget. The
bids should include materials, labor rates, and
the time frame to complete the job. Review the
bids with the board; in some cases, you may
want to ask for homeowners’ feedback as well.
Using the same criteria, board members should
review all of the bids and select the one that fits
the best interest of the association. While the full
HOA board reviews contractor bids—and can
involve members, too—the board president is
ultimately responsible for securing and signing
the contract.
M I TI GAT I N G R I S K S W H E N H I R I N G
Hiring the least expensive contracting firm saves
money, but it could cost your HOA more later on
if the contractor does careless work or doesn’t
finish the project. If you decide to hire a
contractor, keep in mind the following ways to
reduce risks:
• Hire only from a licensed contracting firm.
Always ask to see the contractor’s license and
check with your local State Contractor’s Board to
check its validity. Also, hire local contractors if
you can, as they are usually more knowledgeable about local codes and permits.
• Review the contracting firm’s service record.
Check the contractor’s references and a list of
his or her previous customers. Consult the Better
Business Bureau or online reviews for any
warning flags or negative reviews.
• Make sure the firm has insurance. Ask the
contractor to show you his or her certificate of
insurance to verify that they have adequate
coverage for the project. If your contractor
doesn’t have insurance, your HOA could be held
liable for property damage or bodily injuries
that occur on your property during the project.
At the very least, the contracting firm should
have Workers’ Compensation and General
Liability insurance to cover its workers.
Depending on the type of job, they may also
need a builder’s risk policy.
• Make sure the contract is comprehensive and
specific. Get everything about the project in
writing, specifically outlining what products or
services are needed. The contract should be
clear and agreed upon by both sides. Don’t feel
pressured to immediately sign a contract before
your board thoroughly reviews the terms.
• Avoid conflicts of interest. When a board
member receives kickbacks for retaining a
certain contracting firm, you could face a
fiduciary lawsuit from members. Always secure
contracts in the best interest of homeowners,
not your own interests or the personal interests
of other board members. If you are related in
any way to the contractor you may want to hire,
it’s best to disclose this relationship to the board
and members.
• Pay the contracting firm when the project is
completed. Pay for the project in increments or
when the project is completed to avoid having
the contractor run off with the association’s
money before the project is finished. Also, pay
by check instead of cash so you have a record of
what you paid and when.
• Maintain a record of all files related to the
project. Save a paper trail of important
documents, such as contracts, correspondence,
certificates of insurance, invoices, permits and
copies of checks so you can manage the
progress of the project. The file could also serve
as evidence in the event of a lawsuit.
For more information on the risks of hiring a staff
directly, or hiring a property management
company or building contractors, contact The
Buckner Company today at beat@buckner.com.
11
TOOL TIME
12
reserve funds
HOW CAN MY ASSOCIATION USE THEM?
DALE GIFFORD
RESERVE SPECIALIST, PCAM, AMS, CMCA
REGIONAL PROJECT MANAGER
COMPLEX SOLUTIONS, LTD.
You have your association’s reserve study in hand,
you have created a reserve fund line item in your
financials, you have opened a reserve fund bank
account and you have made your first deposit of
reserve funds into your reserve fund bank
account. You have expenses and you want to use
those reserve funds, so what are the guidelines
you need to follow when spending the money in
your reserve fund?
The Utah Code has two sources of information
to help guide associations in the matter of
reserves. The Community Association Act: Title
57, Chapter 8a, Part 2, Section 211 and the
Condominium Ownership Act: Title 57, Chapter
8, Section 7.5.
These two sections give us the same information,
but they use a little bit different wording. I
combined the two sections of language into the
12
UTAH COMMUNITY LIVING
one section and highlighted the combined
portions in blue.
Well what is daily maintenance and what is a
reserve expense?
(9)(a) A board/management committee may not
use money in a reserve fund:
(i) for daily maintenance expenses, unless a
majority of association members/members of the
association of unit owners vote to approve the
use of reserve fund money for that purpose; or
(ii) for any purpose other than the purpose for
which the reserve fund was established.
(b) A board/management committee shall
maintain a reserve fund separate from other
association funds/funds of the association of unit
owners.
(c) This Subsection (9) may not be construed to
limit a board/management committee from
prudently investing money in a reserve fund,
subject to any investment constraints imposed
by the governing documents/declaration.
Daily maintenance expenses, also called
operational expenses, are the day to day
expenses of running the association. This could
be snow removal, landscaping contracts, etc.
Reserve expenses are those typically larger
expenses with a longer useful life of “three years
or more and a remaining useful life of less than
30 years,” such as replacing a roof or painting the
exterior of the buildings.
What do these sections of code tell us? I see a
few things, so I am going to go over each one.
The first thing it tells us is if you want to use
reserve funds for “daily maintenance” then you
need to have a vote of the members. A majority
of the members must agree on the use of those
funds. I assume this means a simple majority, but
associations may have to refer to their governing
documents or the nonprofit corporation act if
they are incorporated. Either way the section
doesn’t clarify so I am not going to speculate;
instead I recommend associations seek advice
from their manager or attorney.
The second thing it says is, you cannot use the
reserve funds for “any purpose other than the
purpose for which the reserve fund was
established,” which is the long way of saying you
can only use the reserve fund for reserve
expenses.
Another thing it states is that you need to have a
reserve fund that is separate from the other
association funds. My interpretation of this
sentence is to have an actual reserve bank
account and not just a line item in your financials.
Finally it tells us that an association can invest its
reserve funds but it must be done prudently, and
boards must follow any constraints listed in the
association’s governing documents.
If you have any reserve questions you can always
talk to your manager, your attorney, and of course
you can also contact me, your reserve specialist.
NATIONAL HEADLINES
state advocacy
key issues from the community
associations institute
CAI PRESSROOM
FALLS CHURCH , VA
Community associations are subject to state
laws that control how associations are
established, governed and managed. This
state-based regu- latory system has proven
successful because it is predicated on the
principle of local control over land-use and
real estate decisions.
CAI supports effective state regulation that
ensures community association housing is
developed, maintained, governed, and
managed with sound public policy objectives
and standards that protect homeowners,
volunteer board members, management and
the community association as a whole. State
legislation should:
• Provide for full and fair protection of the
consumer, including existing residents in
conversion projects, through the disclosure
of all material facts relating to the
development, operation and ownership of
such housing.
governments
amend
their
community
association laws they consider the need for
updated and comprehen- sive legislation to
regulate the development of community
association housing consistent with the listed
goals. Moreover, in undertaking such review,
state governments are urged to consider and
give favorable treatment to one or more of the
uniform acts, such as the Uniform Common
Interest Owner- ship Act (UCIOA).
• Be comprehensive in its coverage of the
mate- rial aspects of the development,
governance, management, and operation
of this housing form.
• Provide adequate standards to promote the
viability and sustainability of the community
association.
• Provide for flexibility for communities to
develop rules for the common good. State
legislation should not be used as a solution
for individual constituent complaints.
CAI believes that these objectives are best
achieved by state governments and not by or
through legislative or regulatory procedures
at the federal level or at the local government
level. The likely diversity of legislative policies
adopted by local (city and county)
governments would unnec- essarily inhibit the
process across local jurisdic- tional lines, while
enactments at the federal level would be too
broad in scope to achieve these goals and fail
to reflect and respond to the unique character
and needs of local markets.
CAI recommends that when state
CAI, with our network of 33,000 members and
hundreds of volunteer leaders throughout the
country, work to clarify issues, preserve
policies and protect the interests of the 65
million people living and working in America’s
community associations by staying in close
communication with Congress, the administration, state and local officials and regulatory
bodies, as well as the general public.
13
For a current conversation on community
association government affairs issues, please
visit www.caionline.org/government.
Community associationrelated bills introduced
per session
0–25
51–100
26–50
100+
AVERAGE BASED ON 2013 & 2014
SESSIONS
Community associations
by state
SOURCE
Less than 2,000
4,000–7,500
12,500–20,000
2,000–4,000
7,500–12,500
20,000+
“Key Issues - State Advocacy Guide”,
Community Associations Institute: Falls Church, VA. 2014.
http://www.caionline.org/govt/Documents/CAI_StateAdvocacy.pdf
UTAH COMMUNITY LIVING
13
ASK THE EXPERT
120%
80%
40%
0%
-40%
finance 101
2044
2043
2042
2041
2040
2039
2038
2037
2036
2035
2033
2032
2031
2030
2029
2028
2027
14
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
-160%
2015
-120%
2034
-80%
FUNDING FOR RESERVE PROJECTS
By Chuck Balacy
Vice President
Regional Account Executive
Mutual of Omaha Bank
Now that homeowners associations in Utah are
completing (and updating) their reserve studies,
many are finding out how important it is to start
saving today for their association’s future. Unfortunately for some, a reserve study has been more of a
reality check. Many board members have been
setting aside funds for a handful of upcoming
projects, but have fallen short with so many components (roofs, asphalt, siding, etc.) they are responsible
for. I’m going to outline three options communities
have when it comes to funding their reserve projects.
Keep in the mind that every association is different, so
please consult with your banker, manager, or attorney
to decide which option is the best fit.
FUNDING THROUGH RESERVES
Ideally, having enough money in the bank is the best
option - although it’s not the most realistic. For
communities who have not been contributing to their
reserve account, the board may want to consider a
reserve assessment (one time or recurring). This will
help get the association on the right track to be able
to afford future projects, even if it means coming out
of pocket up front. Refer to your governing
14 UTAH COMMUNITY LIVING
documents and attorney if you are considering a
reserve assessment.
FUNDING THROUGH SPECIAL ASSESSMENT
It may not be the most popular option, but using a
special assessment to help fund a specific reserve
project is being utilized today. Again, you’ll need to
refer to your governing documents and attorney if
you plan on special assessing the membership. Keep
in mind that depending on the assessment amount
(especially substantial amounts), you are not guaranteed you’ll be able to collect from every homeowner
in a reasonable time frame.
FUNDING THROUGH A HOA LOAN
Using a bank loan to help fund reverse projects is an
option more and more communities are looking into
today, although it’s never a guarantee that your
community will be approved by the bank. Many
associations utilize a bank loan to help fund for some
of the larger reserve projects (such as a roof), instead
of depleting their entire reserve account. Banks allow
the community to pay their loan back over a long
period of time, allowing them to still save and fund for
other projects.
15
UTAH COMMUNITY LIVING
15
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eric@alliance-nw.com
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801.597.5977
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