Solar Power

The U.S. Department of Energy has just released, in conjunction with the Solar Foundation, guidelines for solar panel architectural restrictions in homeowner associations.  The publication can be found here:    http://thesolarfoundation.org/sites/thesolarfoundation.org/files/HOA%20Guide_Final.pdf  

It notes that over half the homes in homeowner associations would be good candidates for solar panels, and if just 5% of all homes within homeowner associations were to “go solar”, emission reductions would be the same as removing over a million vehicles from the road.  Also noted in the publication, the state of Georgia does not currently have statutes on this topic, but pending legislation may change this in 2014.  Increasing panel efficiency and soaring energy consumption have sustained growing homeowner interest in this area. 

With that in mind, now is the time for your Board of Directors to establish explicit regulations addressing items such as placement of panels, removal of trees, impact on future tree installations or other architectural requests,  etc.   Establishing expectations now reduces frustration leading to negative and combative homeowners. 

Better yet, a Board-appointed committee that garners homeowner buy-in makes it less likely that someone will want to take advantage of future government regulations negatively impacting curb appeal.  For example, the community reaches agreement that panels should be restricted to the back roof of any home.   Homeowners start installing according to this regulation.  A few years from now, neighbors are less likely to install panels on the front of the roof, or in the front yard, if the government prohibits restrictions on panel placement.

As with any Association regulation, voluntary compliance grows from mutual respect nurtured over a period of time.  Have your homeowners proactively involved developing rules on “hot” topics such as solar panels!

The Air Up There

While “black mold” has been on the radar for years, a similar health concern is being elevated with the release of monitoring standards for Legionella.  This bacterium is the source of Legionnaire’s disease, a type of pneumonia with up to a 30% fatality rate.  According to the Centers for Disease Control, between 8,000 and 18,000 individuals are hospitalized each year and 120,000 have died over the last 30 years related to this lesser known bacterium. What's worse? Up to 70% of all building systems are contaminated!

Although this is a “standard” and not law, the courts do look to such promulgations when determining liability.  In a New Jersey case (Anthony Vellucci v Mack-Cali Real Estate) decided a few weeks ago, the reason the owner of a business office building was not held responsible for a Legionella death was because of a lack of recognized standards. This was the case then, but  upcoming ASHRAE (the American Society of Heating, Refrigerating and Air-Conditioning Engineers) action will change this for future suits. 

After several years of obtaining feedback on the topic, ASHRAE  is posting standards this year that apply to buildings having any one of following attributes (among others):

     Indoor or outdoor water fountain, whirlpool, spa
Housing of occupants primarily 65+ of age

     10+ stories (including basement levels)

     Cooling tower or evaporative condenser

     Hot water heater shared by more than one home

While a condominium is more likely to qualify, homeowner associations with water amenities do need to be aware of potential exposure.  Homeowner Association claims have occurred in Florida, Maryland, Nevada, and Vermont.  Our society’s litigious nature makes it likely we’ll see claims in Georgia.

Buildings falling under the ASHRAE standard are required to establish hazard analysis and critical control point (HACCP) plans, which must be reviewed annually.  Such plans have long been used in the food industry.  An HACCP team is composed of the building owner (Board of Directors), the owner's building management team or both, and must include at least one person who understands the principles of HACCP and at least one person who understands the building water systems.

Conducting the review is not particularly difficult, and the Internet is filled with sample HAACP plans.  This can easily be incorporated in to your community’s current annual maintenance review, and pointed out as a positive action by the Board during the annual meeting.  

Epic Fail

All too often, a prospective client approaches Access Management Group, asking us to assume complete control of a community. If you really think about it, this is an unacceptable abdication of homeowner responsibility.  A management company is only supposed to act as a agent of the Association, barred from the decision-making positions reserved exclusively for homeowners.  The Community's Board of Directors makes the decisions, but its the Community Association Manager that ensures that the Board's decisions are put into action. 

The root of such requests is typically due to apathy or tyranny - homeowners who just don't care and want someone else to "deal with" community issues OR homeowners that want the community that they live in to be run "their way."  Both are just the passive and aggressive sides of the same egocentric coin.  Board bullies grab news headlines, but homeowners who choose to “check out” of community involvement are just as damaging.  Carried to the extreme, a community ripped apart by strife or smothered in apathy finds itself in the same place:  under a Court-appointed master.

What can you expect if this occurs?  A court does not step in to the situation on its own.   It must be petitioned by a homeowner, the first of many expensive legal steps.  After a judge agrees that a community is simply limping along, he/she appoints a trustee to manage affairs. Often times, this is an expensive move that doesn't even end up benefiting the association in the least!

In one instance, a trustee assumed control of all association operations and bank accounts. The trustee ran the association as he saw fit and was able to bypass any and all voting processes. There was no homeowner input and no refusing to pay any increased assessments - no matter how much.  The salary cost for the trustee was nearly $64K for four month’s work.  Unlike a volunteer Board of Directors, a trustee is fully compensated for the work, which may run $150 to $300 an hour!

Money motivation finally drove the homeowners to take back governance of their community.  It was an expensive lesson:  The cost of constructive community homeowner engagement is far less than anti-social selfishness. The moral of this story - Be active in your community! If you won't...who will?

Worker's Compensation Coverage - A Follow Up

Back on April 2, 2013, we posted information about the importance of an Association maintaining Workers Comp coverage - even if it did not have employees or permit volunteer activity.  We have had several questions (which we love!) on this topic, so this post is a follow up!  

To clarify, there are two primary types of Workers Comp that a Board can purchase for the Association:

Volunteers and Committee Members

As the name implies, this type of insurance would cover all people acting on behalf of the Association who are not compensated by the Association.  If the Social Chair is injured while hanging Holiday Decorations or a Board member falls while changing a light bulb - they would be covered under this type of Works Comp policy. Liability limits are generally $1 million but can be underwritten for higher.  Premiums typically start in the $750 - $850 range.

Payroll Driven

These policies are underwritten for people who are working on behalf of the Association, are compensated and are not covered under their own policy.  To underwrite, the insurance company will need to have an estimated twelve (12) month payroll for the vendor.  They will also require a description of the duties of the contractor(s).  The premium would then be based on both the payroll and job duties.  The contractor(s) would be placed into a worker’s comp rating code that most closely matches the provided job description.  The riskier the duties, the higher the rating and resulting premium.  At the end of the policy period, the insurer will require accounting proof from the Association of the actual payroll dollars paid to the contractor(s).  If the actual is higher than the estimate, additional premiums will be due.  Conversely, if the contractor was paid less than the estimate, a premium credit would be given by the carrier.  Multiple contractors can be covered under the same policy if their duties are similar.

The Board should work closely with their agent to identify the type of coverage best suited to fit their objective.  Make sure the payroll driven coverage does not over or understate the job duties of the contractor and accurately projects expected compensation levels.   

Although “Payroll Driven” Workers Comp is a higher priority, Access Management strongly encourages all Associations to obtain both types of coverage due to the potential risk.  While a current Board of Directors may prohibit any type of volunteer activity, unauthorized volunteerism and future Board decisions do expose the Association to liability.  Consult with your legal counsel and insurance broker about this urgent issue.

What's in a Name?

“What exactly does a community association manager do?  What makes one successful?” 

The scope of a management contract lists various duties - ranging from basic accounting operations, up to the frequency of meetings and community inspections - but a manager is defined by more than just a collection of tasks.

Center-most, managers are navigators of a landscape populated with legal, engineering, accounting, psychological, insurance and maintenance challenges.  When an Association selects a management professional, it is adding another layer of protection against potential pitfalls and missteps.  A manager may not have all the answers, but guides the Board of Directors to effective resources for overcoming or avoiding each obstacle.  Some specific ways a manager accomplishes this include:

• Serve as a liaison between the Association/Board of Directors and legal counsel
• Provide information and guidance to the Board as it sets policies and makes decisions
• Educate and advise the Board of its role and responsibilities
• Organize and participate in meetings of the membership and of the Board
• Maintain insurance coverages (e.g., casualty, fidelity, liability, property, workers comp) in accordance with governing documents, statutes, and Board policy
• Represent the community association to the outside community (e.g., interface with local government, media, local public agencies)
• Analyze trends when preparing the budget
  
• Develop and update a multi‑year expense and reserve projection, seeking professional assistance as necessary
• Analyze the financial statements and reports, and report significant variances to the board
• Identify the exposure to potential loss
• Develop and implement safety programs and disaster plans
• Develop and implement preventive maintenance policies
• Ensure preparation of bid specifications and requests for proposals
• Review a contract for key elements (e.g., parties, scope of work, compensation)
• Ensure compliance with local ordinances prior to commencement of contracted work
• Seek interpretation of and invoke contract warranties as necessary
• Develop and implement effective assessment collection and accounts receivable processes

Five years is considered normal for a manager to become “seasoned” and able to operate efficiently in all of the above.  Those not “making the cut” normally drop out during year two or three.

If considering a career in community management,  just realize that the job interview never ends!  Each Board meeting is another examination where your words and actions can be scrutinized.  You are constantly working to instill confidence and to bridge potential credibility gaps.  Only the strongest in customer-service skills need apply!

Pass It On!

A frequent question raised by potential clients, potential employees and vendors is, “How does Access Management Group obtain new business?” 

Georgia Statutes, Section 43-40-25(b)(26) “Licensees shall not engage in any of the following unfair trade practices: …Obtaining a brokerage agreement…while knowing or having reason to believe that another broker has an exclusive brokerage agreement…unless the licensee has written permission from the broker having the first exclusive brokerage agreement; provided, however, that notwithstanding the provisions of this paragraph, a licensee shall be permitted to present a proposal or bid for community association management if requested to do so in writing from a community association board of directors;”

  

The State of Georgia requires that, with very few exceptions, all community association managers operate under a licensed broker.  The provision for broker solicitation is very clear:  Unless the existing management company of a community has given permission, another management company may only present a proposal upon request by a Board of Directors.  In simple terms, management companies in the state of Georgia can not actively solicit new communities.  They are only able to provide proposals to those communities that first approach the company requesting a quote.

Unfortunately, some management companies choose to push the boundaries on how much interaction is acceptable. When these companies choose to skirt the law - through aggressive advertising and pricing - it's at the expense of quality service.  The Atlanta region as compared to other areas of the nation, is known for cheap managerial contracts and low paid managers.  The predictable result is a migration of talent to those markets that are willing to pay for quality...all because certain companies are not playing by the rules.

What can a community expect of a management company resorting to such tactics to obtain business?  What other “short cuts” may be taken?  Rather than place a stain on the community association profession, Access Management chooses to let word-of-month referrals by existing satisfied customers attract a clientele that places a premium on a community’s reputation - rather than associating its name with questionable vendor partners. 

A reputable client paired with a reputable management company adds value to both.  How does Access Management Group obtain new business?  By consistently treating its employees, vendors, and clients with exceptional respect. 

Better Late Than Never

One of the Board's (many) responsibilities is ensuring a uniform community appearance.  The curbside appeal of a community directly impacts it's home values.  To accomplish this task, the Board may establish an architectural review committee, which homeowners petition when desiring to make a change to their properties. 

For communities where building guidelines have not been monitored over a period of years, a new Board must ask, “How do we go about implementing controls?”

The first step is to inventory the number and type of compliance violations that exist.  Learning how long these violations have existed limits how the Board acts.  If several homeowners installed storage sheds four or five years ago, the Board will have a difficult time requiring shed removal:  A Georgia two-year statute of limitations exists, starting at the point the violation began, not when it was noticed. 

A homeowner in one community wanted to install a second driveway.  The court upheld his ability to do so, when he provided evidence that most of the other homes in the community already had such driveways - a widespread violation may preempt enforcement altogether (for this particular violation).

This leads to the second step:  Putting the community on notice.  A letter acknowledging that enforcement has not occurred, a start-date for the Board’s commitment to begin monitoring, and a copy of the approval request form should be provided to each homeowner.  This is also a great time to call for volunteers to staff the review committee.

The glacial pace of the judicial system makes it impractical to pursue violations existing more than 18 months.  For more recent violations, the Board should issue a letter to the homeowner stipulating a request be provided immediately for review, or have the offending items removed.   For those homeowners who refuse, the next step is to file notice in the county courthouse records of the violation, so that any future homeowner will be aware that the violation requires correction upon purchase of the home. 

A homeowner in one community installed a hot tub on his patio without approval.  He refused to remove it, and sold his home prior to notice of the violation being filed in the property records.  Because of this, the condition was grandfathered in with the new homeowner. 

For this situation, along with those in which the statute of limitations expired, the final recourse is to tie it with conditional approval of future architectural requests.  In the above example, the new owner wanted to install double-pane windows, and agreed to have the hot tub removed at the same time.

By maintaining detailed records of approvals and denials for each home, the current Board sets the standard for all future Boards to follow.  To avoid creating loopholes, be sure to consult with management and legal counsel when starting up architectural compliance – each Association is unique in its stipulations.