Trestle's Community Association Management Blog

How to Create More Transparency in the Association Budget Process

Providing opportunities for owner participation during budget development often results in greater understanding and support from the community for the proposed budget. Community involvement should begin early in the budget process. Periodic communication and transparency are essential elements of budget development, especially if the Board anticipates a significant assessment increase. Three successful avenues are committees, surveys and general meetings. 

Committees

Committees are a great opportunity to create a larger work group that better represents the experience, ideas and preferences of the community. The budget committee, often lead by the Treasurer would have primary responsibility for developing the budget. The committee should also gather budget requests and input from the other committee chairs. 

Survey Owners

Prior to developing the annual budget, ask owners about their priorities for the community. Sending specifically targeted surveys is a great way to gather opinions. Some questions you may want to ask are. 

• What association services and amenities are most important to them?
• What projects would they like the board to focus on next year?
• Are they satisfied with the current maintenance programs?
• What changes would they like to see incorporated into the annual operating budget?
• Do they have any new cost-saving ideas or revenue generating ideas? 

Although input and suggestions from owners are important, the Board must carefully sift through these suggestions and implement only those that will be meaningful, productive and prove beneficial to the community as a whole rather than to a small number of residents. 

General meetings

Review the association’s current reserve study with the owners and share the funding goals so everyone understands the long-range financial and major maintenance plans for the community. 

Consider holding an informational meeting for the owners to seek input on the proposed budget prior to the formal ratification. The ratification meeting is not the place to ask for owner input since is too late to make changes to the proposed budget.  In addition, due to notice requirements, any changes made at the ratification meeting will typically necessitate another ratification meeting and its associated expenses. 

Trestle Community Management is a full-service manager of condominium and homeowner associations with headquarters in downtown Redmond, WA. Trestle can be reached at www.TrestleCM.com.

FHA Project Approval Expiration Deadlines Extended

The Federal Housing Administration (FHA) announced extension of condominium project approvals with an expiration date of December 7, 2010 and urges all condominium communities wishing to retain FHA approval to complete the recertification process. 

Provided below are the extension dates based on five-year time frames with the exception of those condominium projects with original approval dates from 1972 -1985.

Initial Project Approval Dates	Current Expiration Date	New Expiration Date
1972–1980	December 7, 2010	December 31, 2010
1981–1985	December 7, 2010	December 31, 2010
1986–1990	December 7, 2010	May 31, 2011
1991–1995	December 7, 2010	July 31, 2011
1996–2000	December 7, 2010	August 31, 2011
2001–2005	December 7, 2010	September 30, 2011
2006–2008 (Sept)	December 7, 2010	March 31, 2011

The extensions were granted to reduce the impact of processing and reviewing the number of project approvals expiring at the same time while recognizing current housing market conditions…interested parties are encouraged to begin the re-approval or recertification process as early as possible as it is not anticipated that any further extensions of project approvals will be issued.

In August, FHA announced a streamlined process for condominiums currently on the FHA-approved list to recertify to program requirements. The Community Association Institute (CAI) summarized the streamlined procedures, which are available in the following link [click here]. Under FHA’s condominium project approval guidelines, FHA-approval for all condominiums certified prior to October 1, 2008, was set to expire on December 7, 2010.

The Condominium look-up page and the FHA Connection databases were updated on December 7, 2010 and now reflect the extended expiration dates.  The links to the sites are:

Condominium look-up page: https://entp.hud.gov/idapp/html/condlook.cfm

FHA Connection: https://entp.hud.gov/clas/index.cfm

It is estimated that approximately 40% of all new loans will be insured by FHA, as such, FHA is becoming an increasingly important player in the condominium financing arena.  Consequently, all condominium associations should strongly consider obtaining full project approval. 

Information from Stephen Marcus Attorney, Contributed by Regenesis.net.

Avoid “Secret Meetings” of Your Community Association’s Board

From time to time, matters may come before a homeowner association’s board of directors that would be inappropriate to discuss in open session with members other than directors present. In a limited set of scenarios, matters may be discussed in closed executive session. If the Board abuses the closed session or fails to follow good closed session protocol, members may conclude that the board is holding “secret meetings.”

Pitfalls of Closed Sessions. By design, closed sessions exclude regular members of the association from the dialogue. In short, closed sessions may breed suspicion and the perception that the operations of the association are not transparent. These perceptions often lead to a poor sense of community and few community volunteers.

When is a Closed Session Allowed. The Washington Condominium Act does not require open meetings, so implicitly provides for closed sessions. The Washington Homeowner Association Act requires open meetings but provides that a limited scope of matters may be discussed in closed session. Care must be taken to follow the protocol outlined in the Act.

For both HOAs and Condominiums, the association’s governing documents may modify the range of matters that may be discussed in closed session. Here is a typical example of restrictions imposed by the bylaws of a condominium association.

 “The Board may, however, go into private, executive session to consider the employment or dismissal of the managing agent or other persons employed by the Association, or to hear complaints or charges brought against such person, unless the person requests a public hearing, or to discuss with legal counsel litigation in which the Association is or is likely to become a party if public discussion would adversely affect the interests of the Association in such litigation.”

Use sound judgment. Just because a closed session is allowed does not mean it is appropriate.

Protocol for Closed Sessions. The Washington HOA Act provides the following protocol for closed sessions, condensed to a bulleted list for brevity.

1. The Board must vote in an open meeting on a motion to enter into executive session. The motion voted on by the Board must state specifically the purpose of the closed session.
2. The board of directors must restrict the consideration of matters during the closed portions of meetings to those purposes specifically stated in the motion. Those purposes must be limited to personnel matters, legal matters, violations of the governing documents and matters related to possible liability of an owner to the association.
3. The motion to enter into closed session must be documented in the minutes of the open meeting.
4. No motion, or other action adopted, passed, or agreed to in closed session is effective unless the board of directors, following the closed session, reconvenes in open meeting and votes in the open meeting on such motion, or other action which is reasonably identified.

This protocol is not intended to require disclosure of information in violation of law or which is otherwise exempt from disclosure.

Summary. Closed sessions are a useful and necessary tool for boards of directors to apply in very limited scenarios. However, to avoid the perception of “secret meetings,” boards of directors should employ closed sessions only in scenarios where a closed session is clearly essential and and then follow good protocol. When in doubt whether a closed session is appropriate, the matter should be discussed in an open meeting.

Trestle Community Management is a full-service manager of condominium and homeowner associations with headquarters in downtown Redmond, WA. Trestle’s serves associations in Redmond, Kirkland, Bellevue and other nearby communities.

                                                                                                                   

Trestle Community Management participates in Redmond IMPACT Eco Fair

Trestle Community Management Redmond, WA participated in the City of Redmond's Derby Days Eco Fair on Saturday, July 10, 2010.  The IMPACT Eco-Fair was a brand new element of Redmond Derby Days designed to educate and encourage residents, employees and visitors to engage in green practices at home and work. Redmond businesses were invited to submit a story for the Eco-Fair’s “Green Business Showcase”.  Read our story below.

 

               

One of Trestle’s company goals is simplicity and sustainability of all management functions. As managers of multiple small businesses within the City, we eliminate redundant infrastructure many times over. Our green practices include:

 Reduced Energy Consumption

• Trestle’s home-based employees eliminate the need for separate business offices and reduce energy use.
• Our employees generate no daily commute trips.
• Trestle’s business infrastructure (phones, e-mail, software, etc.) can be extended anywhere there is a broadband internet connection
• Meeting materials are distributed via email or website postings to reduce paper and energy usage.
• Participants “gather” for green meetings via teleconference

 Paper Reduction

• Electronic document exchange reduces need to print and transport paper with a corresponding reduction of environmental and monetary costs.
  • Documents include RFPs, vendor proposals, work orders, invoices, assessment payments, meeting materials, real estate transaction documents.
• Documents at in-person meetings are projected on a screen eliminating the need for printed material for each participant.

 Recycling

• Non-confidential documents are recycled as waste paper.
• Confidential documents are shredded and recycled as yard waste.
• Everything that can be recycled is recycled.

Trestle Community Management is a full-service manager of condominium and homeowner associations with headquarters in downtown Redmond, WA. Depending on the desired service, Trestle serves associations across Washington State.

Build a Safer Community Association - Participate in NNO

WHAT is (NNO) National Night Out?   It’s America’s Night out against crime, a unique crime/drug prevention event sponsored by the National Association of Town Watch (NATW). The National Association of Town Watch (NATW) is a non-profit organization dedicated to the development and promotion of organized, law enforcement-affiliated crime and drug prevention programs. Since 1984, "National Night Out—America's Night Out Against Crime" has grown to involve over 34 million people from more than 10,000 community associations.

WHEN:   Tuesday, August 3, 2010 - 6:00PM-9:00PM

NATW's annual "National Night Out" (NNO) program is held on the first Tuesday each August.

WHO:

• Community Association homeowners and tenants
• Arrange for visits from local police and sheriff departments, firefighters, and city council

WHY?  NNO has proven to be an effective, inexpensive and enjoyable event to promote community association spirit and police-community partnerships in their desire for safer communities. Plus, the benefits your community association will derive from NNO will most certainly extend well beyond the one night.

• Meet and get to know the other members in your community association
• Heighten crime and drug prevention awareness in your community
• Generate community support for and participation in local anticrime programs
• Strengthen community spirit and police-community relationships
• Encourage community camaraderie as part of the fight for safer communities
• Send a message to criminals letting them know that communities are organized and fighting back

IDEAS for NNO Events   Along with the traditional display of outdoor lights and front porch vigils, community associations celebrate NNO with a variety of events and activities such as:

• Block parties / Potluck dinners
• BBQ’s / Cookouts
• Ice cream socials
• Exhibits
• Flashlight walks
• Contests

Board and Committee NNO Follow-up

• Evaluate and discuss exterior lighting standards and landscape standards that will enhance community security.
• Review and establish door, window and lock standards.
• Consider establishing a community block watch program

Trestle Community Management is a full-service manager of condominium and homeowner associations with headquarters in downtown Redmond, WA. Trestle’s serves associations in Redmond, Kirkland, Bellevue and other nearby communities.

                                                                                                                   

Embrace Open Meetings for a Healthy Community Association

Within community associations, issues often arise that require sensitivity and discretion. It may seem as if discussing such issues in an open forum with regular members present would be awkward or violate another member’s privacy. As a result, the Board may be tempted to discuss the matter in a closed executive session. If not used solely to discuss matters that are truly private or confidential, closed meetings lead to suspicion, discontent, gossip and a general sense of distrust in the community. Consider the following before meeting in a closed session.

Statutory and Governing Document Requirements. The Washington Condominium Act  does not require open meetings. In contrast, the Washington Homeowner Association Act does require open meetings. Provisions of the HOA Act may foretell changes to the Condo Act on the horizon.

The Washington HOA Act states that “…all meetings of the board of directors shall be open for observation by all owners of record and their authorized agents.” The HOA Act allows for discussion of a very limited set of matters in closed executive session—a privilege that must be used sparingly and with strict adherence to the provisions of the Act.

While the Condo Act does not mandate open meetings, the governing documents of many condominium associations contain open meeting requirements including the sort of matters that may be discussed in closed session. Be sure you know the provisions of your governing documents before proceeding with a closed session.

Legislative Action. Boards that have acted on the temptation to discuss too many matters behind closed doors and the lack of transparency that results have led owners to seek relief from their legislature. As a result, new legislation introduced in other states mandate not only open meetings but enhanced disclosure requirements. The Connecticut legislature recently passed law that requires associations to announce all board meetings at least one week in advance and to provide to all members of the association the same material provided to the Board of Directors for each item on the agenda. Similar legislation has been introduced in other states.

Regardless of the provisions of statute or your association’s governing documents, holding open, transparent meetings is the right thing to do. The health and harmony of your community depends on it.

Look for a future post on guidelines for closed sessions.        

Trestle Community Management is a full-service manager of condominium and homeowner associations with headquarters in downtown Redmond, WA. Trestle’s serves associations in Redmond, Kirkland, Bellevue and other nearby communities.

Start Community Association budgets early and enjoy the holidays

Believe it or not, it’s already mid July and time to start budget preparations.  Most associations are “multi-million dollar non-profit corporations.”  This means that the board of directors of an association is often running a small to midsize business.  Like other businesses, Homeowner Associations and Condominium Associations need to prepare their annual budget for the following year.

Gather Requirements. Get out those governing documents and review the budget requirements.  Is there a maximum assessment increase?  Who approves the budget?  Is a meeting required?  Many communities have requirements in their governing documents that specify the budget be adopted 30-60 days before the end of the fiscal year.  Draft a timeline to ensure the notice requirements are met.  Avoid late November and December budget confirmation meetings so volunteer leaders can enjoy the holidays. Starting early gives the committee and/or board members time to prepare a thoughtful and comprehensive budget for the community and can reduce the workload. 

Anticipate Changes. Utility costs typically increase every year.  Contract services are also subject to increases. Call your service providers to check if there will be an increase in the coming year.  Determine your goals for next year and review your projects so that funding is included in the budget.  Solicit input from committees and owners on their priorities for the community.  Communication during the budget process is essential.  This is especially important if you are considering a rate increase.

Review Current Year. July is also an ideal time to review the expenses for the first half of the current year to see how the community is tracking to the current budget.  Identify needed adjustments for the rest of the year.  Complete the income and expense estimates for the balance of the year so that any surplus or deficit can be included in next year’s budget.

Checklist for July 

• Form Budget Committee
• Review Reserve Study updates
• Determine annual reserve contribution
• Identify goals/projects for next year
• Solicit budget requests from committees
• Submit budget requirements to Manager
• Solicit bid estimates for projects, contract increases, utility increases, etc.

Follow our blog for additional budget tips in the future.

Trestle Community Management is a full-service manager of condominium and homeowner associations with headquarters in downtown Redmond, WA. Trestle’s serves associations in Redmond, Kirkland, Bellevue and other nearby communities.