Association Bridge was formed in large part due to my experience teaching CAI’s old “Essentials” program for community association volunteer leaders. Ken Ingram of Whiteford, Taylor & Preston and I were tapped to teach the full day program for a few years at Reston Association. RA member associations are typically very small communities known as “clusters.” By the early 2000s, some of these small associations were facing some serious challenges. The class gave them access to resources that board members in larger associations would probably take for granted.

I will never forget hearing a board president proudly explain his excellent system for keeping the books for his cluster.

“I use different color ink in the checkbook.”

“Oh, you mean to help identify different types of expense and income or something?”

“Well yeah, kinda…”

“OK, can you share the system with the class?”

“Sure. You see, everything in green ink is cluster activity, and everything in blue is mine…”

“Yours?”

“Yeah. That’s how I can easily separate the cluster activity from mine in the account.”

“Wait, are you saying you collect your neighbor’s fees, deposit them in your personal bank account… and pay cluster expenses from the same account?”

“Well…yeah.”

Yikes!

Time & Attention

Teaching the class was an instructive experience. Board members were searching for creative ways to get two things all community associations need if they are to be managed effectively – time and attention. I frequently heard the refrain, “Our management company doesn’t do ANYTHING!” Without fail, some follow up questions revealed the boards weren’t paying for very much of anything. Some gave up and went fully self-managed. They were doing a lot of work themselves to make up the difference between what they wanted from management and what they felt they could afford.

It reminded me that small associations have to make tough choices, all borne from the inequity of scale. Certain costs simply do not scale. Managing a 20-unit building will likely require the same number of site visits as would a 150-unit building. The time required to create board packages, produce monthly financial reports and attend meetings will not scale to the unit count. Neither will the costs of independent audits or reserve studies. This can apply to capital projects as well. A 3-story high rise and a 10-story high rise could have the same building footprint, meaning that the cost to replace their respective roofs may be about the same. Bottom line: Inevitably, unit owners in small condominiums are very likely to pay more per unit in total fees than their counterparts in larger condominium associations.

As a result, boards of smaller associations frequently opt for less service, requiring investment in the time and knowledge base of volunteers to make up the difference. That burden can be very difficult for volunteers.

There may be solutions that require some creative thinking. While I applaud the resourcefulness and sense of duty shown by the board member who co-mingled personal and association finances, I pray he never gets in a beef with a fellow unit owner. That association clearly did not have any crime coverage. I doubt they had proper directors & officers liability coverage, either. Not all creative ideas are great ideas.

What Can We Do?

The goal is to identify the needs and wants of the board and membership, and then design a plan that is in harmony with them. It is a mistake to assume that small associations can’t afford “good” service. Such thinking is a variation on the sin of fee targeting. Many a community has found that a cheap price results in a high cost later on. Whether it comes in the form of making up for deferred maintenance, the bottom dropping out of resale values, disengaged unit owners, or dissatisfied residents, sooner or later everyone bears the cost of short-term thinking.

Analyzing the Operation

A Responsibility Grid is an excellent tool to help see where you are and where you have gaps. First, list the tasks involved in operating the association along the left margin to create rows. Then, along the top of the page, create columns by listing the volunteers and paid personnel or contracted parties who have roles in the operation. A sample grid you can use can be found HERE.

Once the tasks and responsible parties have been listed, fill in the grid boxes, describing each party’s current role in each task. Soon, you will have a snapshot of the operation, seeing the interrelation of the parties involved. This frequently leads to Aha! moments. We’ve noticed that many Boards have a tendency to assume most issues are performance problems. The Grid helps to reveal weaknesses in the system, allowing everyone to differentiate system problems from performance problems. The Grid may point out that someone else in the organization is better suited to take on a certain responsibility. Or you may find that some tasks aren’t being performed at all under the current system. Once clarified, performance issues can be more effectively addressed.

The trick is to use the Grid to address system problems by making adjustments. The context of seeing the operation in totality helps the board to identify areas where more support is needed. You can redline the grid until it makes sense. It takes the guesswork out of the picture, communicates responsibilities with clarity, and increases the likelihood of finding successful solutions. The final grid can then be a tool to adjust contracted specifications and position descriptions as needed.

What Are The Options?

Many contracts are designed to be “competitive” without regard to the actual workload required for the job. Standard “full service” management may not provide the required attention needed to support volunteers in your specific case. Some approaches to bridge the gaps include:

• Customizing the management agreement to provide more attention in specific areas. Quantify time and attention where possible. If a minimum weekly site visit and monthly or quarterly property inspection with written report will address many of the issues a community is experiencing, include those as specifications in the management contract. Set the expectation and create a system that takes some of the burden off the shoulders of volunteer leaders. It may be that some specifications can be decreased to help compensate for additional cost, such as decreasing the number of board meetings attended.
• Decrease the management contract to “financial-only” or “financial-plus” service levels to free up assets and redirect them to on-site management. This is where it gets creative. I cut my management teeth as a part-time on-site manager for five different associations over the span of ten years. Two of them had fewer than 50 units. All of them had something in common. They were all too small to justify full-time, on-site management, but too busy to be well-served by off-site management.
• Adjust the scope of the management contract to dedicate a specific allowance of time. If the management company is willing to consider an out-of-the-box option, they could provide more attention by defining a number of hours per week for dedicated attention, including on-site time. Some management companies in the northwest use this model.
• It takes a village. Depending on the configuration and condition of the property, a combination of services might make sense. Perhaps the volunteer base is strong, and you can engage management on an a la carte basis to provide only the services needed when you need them. Perhaps you just need a management company or consultant to set up the annual calendar and preventive maintenance programs and come back to audit the system periodically. Perhaps a maintenance position can be beefed up with a system to provide valuable eyes, ears, arms and legs for Management and the Board. Perhaps strategically scheduling a contracted annual architectural and engineering inspection to coincide with the annual budget process combined with “financial-only” professional management gives the association the best bang for the buck. The possibilities are endless.

In the End

The quality of volunteer leadership will always be vital to the success of any condominium association. The smaller the association, the more important this is. Smaller associations have special challenges. Even volunteer leaders who have the time and talent to assume certain management roles are wise to seek resources to set up systems and find best practices. National organizations like the Community Associations Institute  and the National Association of Housing Cooperatives can be very valuable resources. Associations in the Washington Metro area can tap into additional resources such as the DC Cooperative Housing Coalition, the Montgomery County Office of Common Ownership Communities, and the Office of the Virginia Common Interest Commission Ombudsman 
Small associations may have special challenges. But they don’t have to give up, and they don’t have to settle. There are resources and options for volunteer leaders to provide quality service to their members. It may take some creativity and a realistic view of the expenses related to inequity of scale, but it can be done.