Condominium Living and Laws: IMS

Monday, November 1, 2010

IMS – ABOUT US

David W. Foret, Sr. Community Association Manager (CAM)

• Possesses a strong background in construction and maintenance on all types of structures and high rise buildings, along with a strong working knowledge in preventative maintenance for all equipment.
• Extensive experience in contract negotiation and project management for any size project.
• Extensive experience with reviewing and supervising landscaping, swimming pool, as well as other community amenities.
• CAM License since 2006, managed over 1500 units for a portfolio company for two years prior to partnering with other principals to form IMS.

Christine Crosby:

• Successful Certified Project Manager with experience at managing budgets in excess of 21 Million dollars.
• Held leadership positions at Barnett Bank, American Express, AT&T, Merrill Lynch and Blue Cross Blue Shield of Florida where she has was in Operations and IT organizations.
• Ability to manage strategically as well as tactically. Extensive experience in managing day to day situations, problem solving skills, risk management, project management, and vendor management.

Kay Stratton:

• B.S. in accounting, Masters degree with focus on accounting and finance.

• Experience with Big 6 accounting firm of Coopers & Lybrand (now Big 4 – Pricewaterhouse Coopers); financial analyst with Blue Cross for six years.
• IT project manager for 8 years with Blue Cross (certified PMP).
• Served on association boards for 10 years; partnered with other two principals because of strong belief that there was a better, more efficient and effective way to manage community associations while providing exceptional customer service.

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Master Association Blocks Owners from Pool and Recreational Facilities

The Quail Run story demonstrates the power one, two or a few delinquent owners have over the paying owners. According to the Sun-Sentinel, close to 100 condo owners have been shut out of the pool, clubhouse and other Quail Run recreational facilities, even though a very small minority are behind in payment of maintenance fees.

The Condominium Act was amended, effective July 1, 2010, to allow associations to suspend use rights in the event an owner is more than ninety (90) days delinquent. Section 718.303, Florida Statutes says in part:

If a unit owner is delinquent for more than 90 days in paying a monetary obligation due to the association, the association may suspend the right of a unit owner or a unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid.

There is a similar provision in the statutes that govern homeowners' associations operations. Section 720.305, Florida Statutes likewise states (in part):

If a member is delinquent for more than 90 days in paying a monetary obligation due the association, an association may suspend, until such monetary obligation is paid, the rights of a member or a member’s tenants, guests, or invitees, or both, to use common areas and facilities and may levy reasonable fines of up to $100 per violation, against any member or any tenant, guest, or invitee.

Thus, it is evident that the association (whether a condominium association or a homeowners' association) has certain remedies available to it against a delinquent owner. The question here is whether this punishment may be imposed against all owners in a particular sub-association when some are delinquent and others paid in full.

Many communities are developed with several neighborhoods inside a large subdivision. There is a master association that bears responsibility for certain portions of the property, generally including the roads, perimeter fencing or walls, security gates and recreational facilities. In newer communities, typically the governing documents will give the master association's board the choice to 1. collect assessments directly from the individual owners, or 2. to require the sub-association to pay the aggregate amount. Obviously the latter is far easier for the master association administratively - keeping track of 5, 8, 10 or 15 payments is a lot easier than keeping track of hundreds or thousands of payments from individuals. The master doesn't necessarily need to keep track of property transfers or participate in many of the lender foreclosure actions when the sub-association bears responsibility for payment of the assessments attributable to its units/homes (although in many cases it may be wise).

Not all governing documents give the master association the options stated above. Some of the declarations merely require the sub-association to act as a conduit, not as a guarantor of payment. Some declarations actually require the master association to collect assessments from the individual owners.

One of the sub-association boards in the Quail Run community decided it could not absorb the costs of owners in default and only paid the master association for the unit owners that submitted their payments. The master association, relying on the language of Section 718.303, Florida Statutes, then suspended use rights for everyone in that neighborhood, rather than limiting the suspension to the owners in default. A hearing was recently held to determine whether the master association was right or wrong by taking that action. We'll be sure to report on further developments in this particular case as they become known. In the meantime, be sure counsel has reviewed your governing documents to see what options are available to secure your community's continued viability.

Cutting Costs without Cutting Value

As the economy continues to flop about like a fish out of water, community associations are forced to find more ways to cut costs. Reports of the recession coming to an end have been heard, but we may not see the light in that tunnel for some time.

Rather than focusing on what can’t be changed, community association boards of directors can roll up their respective sleeves and take a fresh look at how their association operates. The goal is to reduce expenses to run the business but retain the value and equity of that business.

As foreclosures are still looming and lenders take far too long to initiate them, finding ways to operate more efficiently should become the new focus. Some associations have taken drastic measures to cut costs such as closing down amenities and reducing services. In some cases the boards are left with no other alternatives when their expenses far exceed their income because of high delinquencies and foreclosures.

Some of the cost saving steps that associations are taking, barring the extreme measures noted above, include reducing the expenses while continuing to make the community a desirable place in which to live. Some steps are minor and yield minor impacts, while others require a modest cash outlay and can yield significant outcomes. Boards should carefully review all ways that they can positively impact their association while reducing operating expenses. This would fall into that fiduciary duty category that requires all board members always to act in the best interests of the association and to protect the common elements and property values of each home/unit.

Step 1: Electricity

The first step that I recommend for any community with common area electricity usage would be to call your local service provider (the electric company) to come to your property to conduct an audit of your power usage and equipment. Most will provide this service at no cost, along with a written report on their findings and recommendations. We all know about changing light bulbs to CFL (compact fluorescent lights) that use much less power than the standard incandescent bulb. However, there are other alternatives that can save even more, and many fixtures can be retrofitted to accommodate the newer technology such as LED (light emitting diodes). The LEDs are more expensive per bulb than a CFL, but will last much longer and even less power.

Using solar-powered lights also has become very popular. These fixtures are fairly inexpensive, depending on the application. Whatever you decide, ensure that you are still providing adequate lighting for safety purposes.

More comprehensive solar applications have also become a hot topic, with many associations installing solar or photovoltaic panels in the common areas or on the rooftops of buildings to harness the sun’s energy and offset electrical expenses, including pool heaters and building HVAC systems. Be sure to investigate any rebates or tax benefits that the association may be eligible for related to energy savings improvements. They can often be significant both on the state and federal levels.

Step 2: Water

Reducing the frequency and length of time irrigation runs can make a noticeable difference in water bills. Try running one less cycle per 24 hour period and run it overnight if you have high winds or significant evaporation issues. Adjusting heads to only spray the plants (not the asphalt and walkways) helps to reduce waste and expense.

Monitor your irrigation system for leaks. This is an ongoing and never-ending source of significant water loss and high water bills. If you suspect a system is suffers from major leaks, you may be money-ahead by hiring a leak detection company to find and repair these leaks. There are a variety of techniques used that are both fast and precise such as injecting helium into the lines and tracking the leaks by a sonar device. It’s a bit costly up front but usually results in significant savings.

Also, if your building is master-metered, set up a plan to inspect all toilets to ensure that they are not running when not in use. This may seem insignificant, but if you consider a condominium with 200 units with 2 toilets each, that is potentially a lot of water loss and unnecessary expense. The blue tabs used for testing are inexpensive as are toilet repair kits. Most importantly, you’ll see savings immediately.

Step 3: Buy In Bulk

Buying in bulk isn’t just for groceries anymore! If your association uses products that neighboring communities also use, consider sharing in the cost of delivery. Similarly, you might be able to coordinate with your these neighbors to obtain discounts for bulk purchases. These tactics can result in reduced overhead for things such as pool chemicals, green waste hauling, recycling, janitorial supplies, lawn and pool maintenance, etc.

Step 4: Renegotiate Contracts

Reviewing and renegotiating contracts can often prove to be mutually beneficial for both the association and the service provider. Consider asking for a discounted price from your provider to whom you have been loyal; it doesn’t hurt to ask! Remember that service providers need us as much as we need them and they might offer significant savings if they’re able to secure continuing business.

In order to realize maximum savings, be ready to consider a two or three year renewal agreement. This maybe the perfect union for both parties, the contractor has the comfort of a long term commitment, and you get the benefit of a reduction in costs. This is particularly successful with landscapers, tree trimmers, pool cleaning services, and janitorial services.

Step 5: Amenities

We all know that operating the swimming pool or Jacuzzi® can be one of the more costly amenities within a community. Closing them down is not generally well received by your owners; however, there are ways to reduce expenses, short in this area as well.

First, consider replacing existing pumps with a variable rate pool pump. These pumps have proven to save up to 50% on related power costs. They are highly efficient, and can be programmed to run at different speeds and times. Most variable rate pumps cost under $2,000 and the savings on electricity is immediate — it can often pay for itself in a few months time. If your pool is heated, turning down the temperature a few degrees can make a difference.

Installing ceiling fans in community facilities can help to keep areas cool and eliminate the need to run air conditioners. Similarly, they can work in conjunction with air conditioning units and still result in valuable savings. Try setting air conditioner thermostats up a few degrees and running a ceiling fan for greater savings.

Landscape modifications can also help reduce expenses. Cut back on the frequency of tree trimming (always considering any safety and liability issues these reductions could pose, especially with coconut palms). Adjusting mower blades higher and reducing the frequency lawns are mowed can save money as well. In areas that you are considering new plantings, be sure to research before you plant; look for plants that require little water, low maintenance, and are disease and weather tolerant. These considerations will make the ongoing maintenance easier, reducing lawn maintenance contract costs.

Consider holding community clean-up or beautification events. Take advantage of owners interested in helping by organizing a community clean up day, planting event, front entry refurbishment, etc. You can ask for volunteers and donations of plant material to make improvements to your association at little or no expense. This also garners a great sense of community and accomplishment. Be sure to check with your insurance agent to ensure you have the proper liability coverage for these types of activities.

If a property has available space, consider starting a plant nursery of sorts. Take cuttings from some of the existing plant; as they mature, they can be used throughout the property, saving the cost of purchasing new plants.

These are just a few of the great cost savings ideas that are out there. Until the economy recovers, you probably can come up with more creative ways to save and, at the same time, encourage your owners to become more involved. You may be surprised at the wealth of knowledge, resources, and great ideas your owners contribute.

Kathy Cooley, CMCA®, AMS®, PCAM®
Vice President of Hawaii Operations
Certified Management, Inc.
Kona, HI

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Mark R. Benson

mark@markRbenson.com

www.markRbenson.com

Community Association Manager

Past Chairman of the Florida Community Association Living Study Council

Past Member of the Regulatory Council of Community Association Managers

Past Vice-Chairman of the Advisory Council on Condominiums

County Court Mediator

Faculty Member Edison State College CAMP Program

Monday, November 1, 2010

IMS – ABOUT US

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