By Alyssa E. Chirlin, Smith Jadin Johnson, PLLC 

Community associations, like all other entities in the United States, have had to learn to navigate a new landscape of COVID-19 restrictions in the past year. Associations have had to adapt to the ever-changing situation on the fly, filling in the gaps left by government guidelines and legal requirements in order to fulfill their obligation to, among others, safely maintain common areas. While it seems that the pandemic will unfortunately continue through at least the winter and spring, associations should be prepared for the eventual easing of restrictions, which in some areas is already beginning. 

Above all, associations must always follow applicable federal and state law. When the two differ, associations must adhere to that which is most restrictive. As of this writing, Governor Polis’ Executive Order mandating mask-wearing is still in effect. Although its limitation to “public indoor spaces” seemingly excludes association common areas that are only open to residents and guests, the term has been defined to include “all enclosed indoor areas, whether publicly or privately owned or managed, except an individual’s residence.” This means that, in Colorado, wearing masks is mandatory in association common areas, including laundry rooms and stairwells, and associations therefore must require that staff, residents, and guests wear masks in any indoor areas other than individual units. 

Beyond the statewide mask mandate, Colorado has also instituted the COVID-19 dial, which assigns one of six colors to each county based on that county’s assessed risk level. The color assigned to a county is based on a number of metrics, including local case numbers and hospitalization rates, and provides counties with a framework for restrictions to implement based on its risk level. Associations must be aware of the current color level of the county in which it is located and should use it as a first step when considering whether to open or close amenities. For example, depending on a county’s risk level, indoor gyms may be entirely prohibited from opening, while all six levels prohibit them from operating at maximum capacity. 

Associations should adhere to CDC guidelines as well, which include social distancing and sanitization recommendations. We recommend that, at a minimum, associations advise residents to practice social distancing, conduct meetings virtually, provide hand sanitizer throughout open common areas, and implement an increased cleaning schedule. 

Furthermore, associations can always implement rules and regulations that are stricter than those imposed by federal and state laws. CCIOA affords associations, subject to their governing documents, the ability to “regulate the use, maintenance, repair, replacement, and modification of common elements.” This entitles associations to implement regulations regarding common areas that enforce the law, such as a mask mandate, but also stricter measures should the association so decide. For example, while CDC guidelines that require six feet of social distancing may limit elevator capacity to two unrelated parties, an association may institute a rule that limits elevator capacity to only one family at a time.

When deciding whether to open certain amenities in accordance with COVID-19 dial restrictions, Boards should examine each amenity individually. An outdoor playground and an indoor pool present different considerations. Specifically, Boards should consider any increased costs that will be incurred in adhering to local restrictions and CDC guidelines, such as increased staffing costs to enforce capacity limitations or institute increased sanitation. The association’s general liability insurance policy should also be consulted. It may contain exclusions regarding bacteria and/or communicable diseases, which may open the association to liability for possible COVID-19-related claims. If the decision to open an amenity is made, and even before such a decision is made, Boards should develop a plan for its safe reopening and should communicate this plan to the community. 

In fact, one of the most important things an association can do regarding any safety precautions it implements is to communicate them to the community. We recommend frequent, substantial communication to residents, via email and signage in common areas. Communications should identify community requirements and, crucially, the underlying rationale, whether prompted by law or by concern for residents’ health and safety. Transparency is invaluable in encouraging community compliance and thus in minimizing the spread of COVID-19 as much as possible, which should be the goal of any association. 

Alyssa E. Chirlin is an attorney at Smith Jadin Johnson, PLLC, a law firm focused on the representation of HOAs, including throughout the insurance claim adjustment process. If you have any questions about HOA legal requirements or insurance coverage, please call her at 720-550-7280.

By Lindsay Smith, Winzenburg, Leff, Purvis & Payne, LLP 

Community-to-community disputes often come down to one issue – money.  

Shared Use Agreements

Developers often create shared use agreements for things like access roads, open space, clubhouses and pools, and other recreational amenities.  While these agreements attempt to create structures that allow members of both communities a full and equitable opportunity to make use of the shared improvements, more often than not, they kick the can down the road and force future homeowner leaders to try to work out philosophical differences with neighbors who may be less than neighborly.

A shared use agreement will describe the shared property, and if you’re lucky, the proper method of allocating costs and use rights.  When these agreements are poorly conceived, drafted without significant input from the developer, or not reflective of what was actually constructed, the inherent ambiguities can lead to litigation.  Sometimes, agreement terms are included in the Declaration meaning that two Boards have to obtain homeowner approval to revise the terms of the agreement.

When you face a dispute about a shared use agreement – whether the dispute is based on funding, use rights, or something else – call the Association’s attorney early, before positions become entrenched.  The attorney can review the agreement and help to determine whether any options exist for termination, the proper method to amend provisions, and provide guidance and suggestions that may not be apparent to the board members who are living with the agreement.  If the dispute is emotional, the attorney can help bring objectivity and clarity to the discussions.

Shared Non-Agreements

More problematic are the informal non-agreements.  For instance, where a community has used access over private property for years, and the new owner decides to stop the practice, the community may be faced with no option short of litigation.  The Association may or may not have defense coverage in such litigation; this determination is specific to the individual policy, the nature of the claims asserted between the parties, and the presence of any exclusions to coverage related to pre-existing disputes.

It is axiomatic that communities that are able to work things out without litigation will spend less money on attorney fees.  As with the analysis of shared agreements, the attorney’s early involvement can help mitigate future expenses by providing guidance before emotions cloud the dispute.  Also, important for litigation, the attorney’s early involvement can help a community avoid errors that could subsequently impair litigation posture.  

Other Disputes

Other common disputes relate to things that the developer determined weren’t important enough to justify a written agreement.  It is common for perimeter and boundary wall and fence repair, replacement, and maintenance, to not be the subject of a stand-alone agreement.  This repair and maintenance may be dictated by documents that are not included in the Association’s regular governing documents, such as a development agreement between the developer and the municipality.  These disputes might not even arise for thirty or more years after development.

If the work performed in one community causes damage to a neighboring community (e.g., where new development changes drainage and grading patterns), call the lawyers first.  A good quality builder will act promptly to correct problems caused by the work, but a builder who is short on funds may take shortcuts that are unacceptable.  

Takeaways

Note that while legal advice is recommended and necessary to resolve these disputes with minimal (literal or figurative) bloodshed, I don’t speak to who pays for the legal advice.  Many times, legal advice in community-to-community disputes must be borne as a business expense.  Sometimes, the agreements between the parties will provide for a prevailing party attorney fee provision.  We have also experienced courts that are willing to award attorney fees under CCIOA to a prevailing party in a dispute with someone outside the community association.  However, unlike assessment collection and covenant enforcement, you should not assume you will be awarded attorney fees in a community-to-community dispute.  

The risk of paying your own attorney fees is substantial, but the risk of paying litigation attorney fees – and perhaps the litigation attorney fees of your opposing community – is more so.  Investment in good legal advice at the beginning of a dispute can help mitigate these risks, and create a stronger foundation for what comes next.

Lindsay Smith is a partner at Winzenburg, Leff, Purvis & Payne, LLP in Littleton, a full-service community association law firm.  Lindsay focuses her practice on general community association law, including covenant enforcement, document amendment and interpretation, governance advice, and litigation.

By Wes P. Wollenweber, Pearson Wollenweber Freedman, LLC 

The recent ADR survey that the Legislation Action Committee circulated to CAI-RMC membership led to questions about alternative dispute resolution. The survey was designed to obtain member feedback concerning potential legislation related to ADR for community disputes because of the belief that ADR for these disputes will be legislated one way or the other. In fact, the forthcoming bill is expected to address ADR yet again. As a mediator and arbitrator in this industry, it seems like great timing to discuss the nuts and bolts of ADR and its future role concerning community association disputes. While most of us in the industry understand what ADR entails, there are aspects of it in the HOA context that can be confusing. In order to make decisions and provide input concerning future legislative bills targeting ADR, understanding the different types of ADR and how they apply to community disputes is beneficial.

What are the Types of ADR that Best Serve Community Association Disputes?

1.Mediation:  This form of ADR involves the parties to a dispute mutually selecting a third party to act as an intermediary or a neutral and facilitate a possible resolution between those parties. The most common questions concerning mediation are: (1) Is mediation binding - meaning, can mediators determine the outcome of a case? (2) Who has to pay for them? (3) How much do they cost? 

Mediators do not decide the outcome of a legal dispute. Rather, they negotiate with the parties and facilitate settlement discussions, with the hope of helping the parties find a resolution. If the parties to a dispute reach an agreement, then the written agreement that results is often a binding agreement that each party to the agreement can enforce if the other side breaches it.

Typically, mediators charge by the hour or a flat-charge for the day, and prices vary depending on the complexity of the dispute and the experience of the mediator. The parties to the dispute equally split the total cost of the mediator unless they agree otherwise of a covenant or community rule requires something different. Many mediators are attorneys but there is no requirement in Colorado for mediators to be attorneys and there is no credentialing requirement. While there is no credentialing process, many mediators take extensive ADR training. 

If mediators are not able to help the parties resolve the case, then the parties are free to move forward with litigation or arbitration.

2.Arbitration:  As many know, arbitration is a private, out-of-court process where the parties to a dispute mutually select a third party (an arbitrator) to oversee their case, and ultimately make a decision concerning the dispute. Most arbitrators' decisions concerning HOA disputes are binding, meaning the parties have to live with the outcome of the decision. Most often, the parties split the cost of the arbitrator and any associated administrative costs.

3.Med/Arb:  This is a hybrid, where typically the parties choose a mediator to try to settle the case, and if it does not settle, the mediator converts to being the arbitrator, who then makes a binding decision on the case. This form of ADR is controversial, many believing a third party cannot transition from being a mediator to an arbitrator and maintaining impartiality when weighing the evidence presented at an arbitration hearing. Yet, it is a growing form of ADR used in HOA disputes in certain states.

When is ADR Required in HOA Legal Disputes and How Might Legislation Change this?

As of right now, parties to any legal dispute, including community disputes, are required to mediate when there is an existing court case and the court mandates mediation. Arbitration is only required when there is a covenant in a Declaration that mandates arbitration. While most communities have the statutorily required Conflict Resolution policy, most such policies are not written to mandate mediation. Current legislation efforts are aimed at mediation. However, one longstanding homeowner advocacy group is pushing for Med/Arb to be legislated for HOA disputes.

As the recent survey touched on, there are two primary ways that legislation could play out. Members of our industry need to be prepared to weigh in. One, legislation could amend the Colorado Common Interest Ownership Act, making mediation mandatory in some situations, and possibly even Med/Arb in others, regardless of a court order for ADR. Under this type of legislative scheme, Conflict Resolution policies may have to include mandatory ADR language. Two, legislation could create a process within the Division of Real Estate (which is under DORA), where the State oversees a list of mediators or implements some type of specific credentialing for HOA disputes. A third possibility is a CCIOA change and DORA intervention combined. 

As to which route seems best, it is worth discussion. Many involved in HOA disputes want their day in court. Nevertheless, the legislative landscape is shaping on this issue and weighing in on the best way to negotiate this legislation is crucial.

Wes Wollenweber is a founding partner at Pearson Wollenweber Freedman, LLC in Lakewood, Colorado, where his law practice focuses on litigation and mediation of complex community association disputes.

By CAI-RMC Editorial Committee, CAI Rocky Mountain Chapter

2020 was such an action-packed year that you may have missed some of the bills that passed during the 2020 Colorado legislative session. As a quick overview, here are the bills that may have an impact on the future of Colorado community associations. 

• SB 20-126Concerning the operation of a licensed family childcare business in a common interest community. 

This bill grants homeowners in a community governed by the Colorado Common Ownership Interest Act the ability to operate a licensed family childcare home, as defined under state law. The association will need to make reasonable accommodations for any exterior fencing requirements applicable to licensed family childcare homes. The association may require the family childcare homeowner or operator to carry liability insurance covering the operation of the family childcare home. This law is not applicable to communities that qualify as housing for older people under the federal “HOUSING FOR OLDER PERSONS ACT OF 1995" law.

• HB 29-1074Concerning the authorization for special districts to provide for the collection and transportation of solid waste. 

This bill grants the board of a sanitation district, water and sanitation district, or metropolitan district to provide solid waste and residential waste collection and transportation on behalf of the district. The board may impose fees for this service and the board may require that the residents of the district pay charges for residential waste services. If the board contracts with a third-party service provider, then the board will need to publish a notice that they are requesting a proposal no less than thirty days prior to awarding the contract. The board shall not award a contract that exceeds three years in duration. The board cannot collect waste without the consent of the municipality, city, and county.

• HB 20-1093Concerning county authority to license and regulate short-term rentals. 

This law grants the board of your local county commissioners the authority to license and regulate short-term rental owners or an owner’s agent who advertise or rent the owner’s lodging unit as a short-term rental; and to set the fees, terms, and manner for short-term license issuance and revocation. 

• HB 20-1201Concerning mobile home park homeowners’ opportunity to purchase the park under certain circumstances. 

If a mobile home park owner intends to change the use of the land comprising the mobile home park, the mobile home park owner will need to give written notice to each homeowner at least twelve months before the change in use will occur. 

No earlier than thirty days after giving the notice required by this subsection, a mobile home park owner may post information in a public space on allowing the homeowners the opportunity to purchase the mobile home park. 

After the notice is provided, the homeowners will be granted a 90-day period to negotiate an agreement to purchase the park. However, if at least fifty percent of the homeowners who reside in the park provide signed writings to the mobile home park owner expressing no interest in purchasing the park, then the opportunity to purchase will terminate even if the ninety-day period has not yet elapsed.

By Loura K. Sanchez, Burg Simpson Eldredge Hersh & Jardine, P.C. 

A mere five years ago, CAI undertook an extensive project to speak with over 50 different stakeholders about the future of the community association industry, which resulted in a report entitled Community Next: 2020 & Beyond. Here we are, about to close out 2020, so it is time to look into the next five years. There are currently 70 million residents in community associations nationwide, and 69% of all new construction is within a community association. Our industry's evolution will continue to change and will be driven by many factors beyond our direct control.

As leaders in the community association industry, we must think and plan how to best respond to the evolving trends, including how we govern, lead, support, and manage our associations.

Below are ten trends that should not be ignored:

1) Millennials - The Millennial generation is now the largest generation in the world (72.12 million as of 2019). In five years, millennials will be 29 to 44 years old. They will be residents and owners in our communities. Millennials believe in civic duty and are often motivated to engage on a grassroots level. They are used to working in teams and seek positions of influence without formal structure.

2) Ethnic Diversity - By 2060, it is predicted that 39% of the United States population will be Hispanic or Asian, and there will be no clear majority. Our political climate continues to raise awareness of bias and needed improvements to be inclusive.

3) Working From Home - Experts say that the work from home flexibility that the COVID pandemic necessitated will continue to be a part of our culture in the foreseeable future.

4) Obsolete Community Infrastructures - Communities formed in 1970-80 are now 40+ years old. Most have not been maintained or updated to be fully usable and functional, thereby necessitating high assessments, large special assessments, or economic failure of communities.

5) Connection Demand - While virtual meetings may be here to stay, the pandemic has heightened the importance of human connection and community belonging.

6) Baby Boomers - This generation represents the second-highest segment of our population, and as they continue to age, they prefer to do so in place.

7) Community Association Management Profession - There is a growing recognition that community association management is a profession. With this comes formalized education with multiple colleges, including Arapahoe Community College, offering course work to train community association managers. In addition, the demand for specialization and broader skill bases will grow.

8) Conflict Resolution - The push towards less litigation and more alternative dispute resolution, either voluntarily or mandated by courts or governing documents, continues but with seemingly little effectiveness in community associations.  

9) Urban Migration - Migration from urban/metropolitan cities to smaller towns was predicted over 20 years ago but has been slow to materialize. Now it is in warp speed. With remote workforces commonplace post-COVID, 5G wireless communications rolling out, and a national infrastructure bill likely that will make connectivity even easier, there is no need to live in an urban area with high housing costs and low quality of life. The National Association of Homebuilders reported its housing index (used to track single-family home sales expectation over the next six months) at 78. This is the highest in 35 years.

10) Cancellation Culture - Ghosting. Bailing. Cancelling.  The trend of committing then not showing up means you can't count on a "yes" at all, so we must figure out how we can curate community volunteers and those we rely on to get stuff done.

While there is no guarantee that any of these trends will continue, using them to strategize how a given trend may impact your community or business is prudent. Without the benefit of a crystal ball, it may be worth considering these potential and many other outcomes from the above trends:

• Technological demands of millennials and future generations must be met.
• Transparency and non-hierarchical leadership is expected;
• Inclusion of all people requires more than just words.
• Language and cultural differences must be embraced to create community.
• More accessory dwelling units will be used as "offices.”
• More in-home businesses.
• New home floor plans will change to meet the needs of home offices and aging in place.
• Naturally occurring retirement communities create a demand for assistance with daily life activities as well as instrumental daily activities of living.
• Future developments may be hybrid models with investors owning common areas and the association leases the common areas for use of the owners.
• In-house or private ombudsmen resolve covenant enforcement issues.
• Community is more important than amenities.
• Community association managers with specific skills such as engineering, finance, and technology backgrounds, as well as multi-lingual, conflict resolution and community building skills are in high demand.
• Single-family communities being built in small towns. 
• Less multi-family communities in metro areas.
• Paid board members to guarantee decisions are made.
• Increased salaries for community association managers because of education and specialization.

As with all trends, you can ignore it, lead it, buck it, or be impacted by it. Your choice - but, as leaders of community associations, it is our responsibility to do so with knowledge and thoughtfulness.

Loura K. Sanchez, Director of Marketing Construction Defect Group, Burg Simpson Eldredge Hersh & Jardine, P.C. Burg Simpson helps community associations remain healthy by addressing problems with construction of both new and major renovations.

By Amy Ostwinkle, Pacific Premier Bank

The Board of Directors has worked with the community manager, planned a major renovation project or improvement, evaluated their finances, reviewed the current reserve study, and has ultimately decided that obtaining a loan appears to be a suitable option. . . but what’s next?    

Board members, homeowners, and community managers are becoming increasingly aware of the many benefits of association loans.   Financing provides immediate funds to complete capital improvement projects or manage unanticipated major expenses, all while continuing to build and maintain healthy reserves and improve property values.   Associations understand that they can take advantage of better pricing and minimize impact to the community by completing projects at one time instead of phasing over many years.   The questions now become, where do we start, what is the process, and how do we know if the association will qualify?

Where to Start?

• Can we borrow? – Check the governing documents and consult your association attorney to assure the association has the legal authority to borrow. 
• How will we repay the loan? – Decide whether there is a need to increase regular assessments, initiate a special assessment or serial assessment, assign funds from the current budget, or a combination of these sources. Understand any limitations or votes that may be required.  
• Where should we look for a loan?  - When deciding on the course of an HOA Loan, it is important to consider choosing the right lender. Rates, terms, and fees are always important factors, conversely so is the knowledge that the lender has in the HOA lending space. Working with an institution that specializes in HOA lending and asking that lender the tough questions such as “How long has this institution been offering HOA loans” and “What is your length of time to close an HOA Loan” is a must.  An appropriate lender will streamline the lending process for you to create a very palatable working relationship with the management company, community, and lending institution.

What Will be Required?

• Qualification - HOA lenders have varying requirements for loan approval. Most will vet these requirements before submitting a loan proposal or term sheet. Conventional lending requirements include:

• Delinquency rate - Indicates percentage of the homeowners that are delinquent on assessments.
• Size – Smaller associations (20 and under) carry a bigger risk for lenders.
• Control – The developer should no longer control the Board of Directors.
• Investor Ratio – Lenders typically like to see less than 40% of the homes in the community owned by investors, and no single person or entity owning more than a small percentage of the units.

What is Next and What Should We Expect?

Depending on the size, complexity of the loan, and requirements within the community’s governing documents, the process will typically take anywhere from a couple of weeks to a couple of months. There are a few things that the association can do to make this process seamless.  

• Get organized - Be sure your “papers” are in order - Documents should be complete and up to date. The scope of work should be written out and bids from contractors available. 
• Provide the initial details – Beginning the loan process will include the lending institution requesting current financial statements, a delinquency aging report, a description of the project, requested loan amount, as well as the association’s plan to fund repayment of the loan.  
• Review the term sheet - A term sheet is just that, a document indicating what the lending institution is offering for rates, terms, lending fees (if applicable), and additional requirements of the loan.  After the review of the term sheet by the board of directors, they will then indicate to the lending institution which term they have chosen. 

Are We Approved?

How Exciting… let the underwriting process begin!

• Underwriting the loan - Once the underwriting process begins, the community manager or board representative will work with the lender to gather the underwriting documentation. This may include updated financial statements, the current budget, signed proposals for the project, governing documents, meeting minutes approving the loan, an owner listing, etc. 
• Questions - During the underwriting period, additional questions from the underwriter are probable. This is a normal occurrence and should be expected. These questions will be presented to and answered by either the community manager or the board representative.
• Loan Documents for Review – Once approved, the physical loan documents are then created and presented for review.

The Finish Line

The management company and Board of Directors will be notified of the approval and collection of final closing documentation will take place. 

• Closing documents – Final budget, proof of insurance coverage, signer identification, and any required Board resolution will be collected.  
• Closing and funding - Loan documents are notarized and signed by the appropriate board members.  Signed documentation is processed. The loan is then funded and the funds are allocated to the association bank account for use. 

A well-organized community, working with a dedicated association lender, can successfully navigate the association loan process with ease and enjoy all the benefits of their project in just a short period of time. 

Amy Ostwinkle is an experienced HOA Banker and Lending Expert who began her career in the Community Association Industry in 1993. In her 27 years of experience Amy has worked directly with industry specific software companies to train and broaden the scope of finance technology knowledge to Community Management Companies in the Greater Southwest.  Prior to joining Pacific Premier Bank, Ms. Ostwinkle was a founding member of a large Community Association Bank where she performed her duties as Senior Vice President for 12 years.

By Meaghan Brown, EmpireWorks Reconstruction

How many times have you been forced to push a project back to the following year?  This can happen as a result of weather, contractor capacity, delays in receiving the bids, the board members feeling like they don’t have enough information to make a decision; the list goes on.  This article examines what causes these delays, how to avoid them, and ultimately, the importance of starting the bidding process early.

The first defense against delaying the bidding process is to provide a detailed request for proposal (or RFP).  Although submitting an RFP is a near daily activity for a Community Manager, as a contractor, we see RFPs come across our desks in various forms and various degrees of detail.  It is not uncommon to receive a few words scratched onto a sticky note, with the expectation of accurately submitting a bid based on that limited information alone.  

A properly written RFP is important for various reasons.  Not only does it help vendors understand the board’s expectations and how they would like the job to be outlined or broken out, but it also helps the Manager in obtaining apples-to-apples bids from the various contractors.  This reduces back and forth questions from the contractor to the Manager, resulting in a quicker turnaround time for the estimate. It also allows the board to make a clear decision and to better understand what they are investing in.  You may want to ask a trusted business partner (such as a contractor or engineer) for assistance.  

The first step to efficiently developing an RFP is understanding your Board of Directors (or BOD).  It is not uncommon for Board Members to change their mind during the bidding process, thus causing further delays. At a minimum, the BOD should take a physical look at the work and agree on the desired outcome.  A community’s needs must be fully addressed in the scope and specifications. The BOD should be involved in the scope development, so they know exactly what they are investing in and to ensure proper expectations are set.  Ideally, the BOD should walk the project with the Manager and bidding contractors to determine details prior to the formal RFP being issued.

Subsequently, to ensure everyone is on the same page, the Community Manager should schedule a pre-bid site-walk with all bidding contractors.  Ideally, this happens all at once, with all bidding contractors present at the same time.  By doing this, you will ensure that the same details are explained to each of the bidding contractors.  Not only that, but other ideas, product recommendations, or a more efficient way to attain the desired outcome may be recommended by a contractor, which can then be relayed to everyone on the walk.  For these reasons, walking the project with all bidding contractors will ensure you obtain apples-to-apples bids and make it easier for the Board to make a clear and well informed decision.

Recognizing how this process works for the bidding contractors will assist in setting proper expectations for your board and the contractors alike.  Once the RFP is received by the Account Executive or Business Development Representative, the estimating team reviews the RFP and scope of work to clarify details.  The estimator will then inspect the property and determine the means/methods for project execution. Once the estimating team quantifies and calculates the scope of work, the team then reviews the bid for accuracy, feasibility, schedule, exclusions, and unforeseen conditions. 

Next, the Account Executive formats this information into a bid-packet presentation and delivers the proposal to the Manager. It is important to note that on average, the bidding process takes contractors 40+ hours on a $100k project. This is not including the Community Manager’s time or any revisions.  During our busy season, it may take up to four weeks to turn around a bid.  From there, it usually takes about 30 days to start the project from the time the executed contract is received. Not to mention, if the project requires engineered drawings, the Community Manager should allocate another three to four weeks on the front end for the drawings to be prepared.  Below is a general timeline showing how this all pans out.

	TASK	TIMELINE
1	Community Manager and Board of Directors (BOD) identifies the issue and agrees upon a desired outcome.	Dependent on BOD
2	If applicable, Community Manager and BOD involves an engineering firm to attain engineered drawings. The firm reviews the project and submits a proposal to the BOD for signature.	2 weeks
3	If applicable, the BOD signs the proposal and hires the engineering firm to develop the scope of work and drawings.	2-4 weeks
4	The Community Manager, BOD, and/or engineering firm submits the RFPs to bidding contactors. The bidding contactors reviews the scope, clarifies details, puts together the estimate and submits their bid to the BOD.	3-4 weeks
5	The Community Manager, BOD, and/or engineering firm reviews and compares the bids.  They clarify any questionable details, select a contractor, and submit the signed contract.	Dependent on BOD
6	The contactor receives the signed contract and begins planning logistics.  If applicable, they will submit applications for any necessary permits (timeline on this can be several weeks or even months.)  They will then order materials, and depending on the project, this can also take several weeks.	4 weeks
	TOTAL: 2-4 months from RFP to Project Commencement

If the project at hand is on the larger side, it is especially vital to start the bidding process early on.  For example, if you want to start the project in the Spring of 2021, you’d want to start the bidding process in Q4 of 2020.  Additionally, one typically gets better pricing if the contract is signed in the off-season.  This will also guarantee that the project is one of the first on the schedule once weather permits. 

Lastly, upon receipt of these bids and once a general investment cost is determined, knowing where you are obtaining funding is crucial.  If the cost is higher than expected or outside of the amount budgeted in their reserves, getting these bids sooner rather than later will help you to plan accordingly, whether that be getting a loan, doing a special assessment, or raising the monthly HOA dues.

Taking all of this into consideration, it is easy to see how a project can quickly be pushed back to the following year.  By setting the right expectations for your board, identifying potential pitfalls, and starting the process early on, you can help to better serve your communities and board members alike.

Meaghan Brown is an Account Executive at EmpireWorks Reconstruction, working with HOAs, multifamily, and commercial properties for their exterior, community-wide reconstruction projects.  As an Account Executive, Meaghan acts as the liaison between their production team, the community/property manager, board of directors, and residents throughout the course of each project.  Some of their core services include roofing, carpentry, EIFS/stucco, concrete, painting, decks/walkways, steel fabrication, and construction defect services. 

By Kacie Dreller, CMCA®, AMS®, PCAM®, Hammersmith Management, Inc

There are many choice words spoken when discussing a Special Assessment in a community. And no, those words do not often include “fabulous,” “fantastic,” or “fun.” Let’s face it, the need for a Special Assessment suggests, whether right or wrong, that someone failed to responsibly manage community finances at one point or another. After all, Special Assessments are imposed when reserve funds are not adequate to cover the cost of long-term repairs and replacements. For example, the replacement of siding or when an unexpected expense occurs.  

The first question asked by the Membership in the discussion of passing a Special Assessment is, “How did this happen?”  The response to this question can vary. Perhaps the Association was managed by a Board of Directors that for many years took pride in announcing at every Annual Meeting that once again, there would be no increase in assessments next year. Owners cheer, the Board of Directors is showered with accolades, and everyone goes home happy knowing that they will not pay an additional $3.00 per month next year. How wonderful! 

Unfortunately, the reality is that the Association’s costs increase at a minimum of 3% annually. Water, electricity, management and maintenance contracts, and insurance expenses increase anywhere from 3% to 50% annually. To afford those increases, budget allocations are decreased in other areas, like reserve contributions. Year after year the contributions decrease and then, when the siding of a building is rotten and needs to be replaced, reserve funds are not adequate to fund the project. Another possibility is that the association was “robbing Peter to pay Paul” by using reserves year after year to pay operating expense overages. Or perhaps the Association was paying for repairs and maintenance that was not association responsibility, but instead the responsibility of an owner. 

Whatever the reason, the Board of Directors is now in a place where they need to “sell” a Special Assessment at a time when, oh right, there is a pandemic, and many homeowners are already struggling financially. <Insert choice word that is not “fantastic,” “fabulous” or “fun”> 

To ease the pain of the Special Assessment Meeting, and increase chances of the Board of Directors and Management walking out of the meeting in one piece, please accept the following constructive recommendations on how to approach this lovely task: 

1. Anticipate Homeowner Questions:  How did this happen?  Did the Board of Directors request additional proposals for the work that needs to be done?  Does insurance cover any of the work?  Can we sue someone? And, of course, the most common question, “Why do I have to pay it if I’m not benefitting from the work? My siding is fine!”  

Research the answers to these questions and provide details to the Membership. Become an expert on the matter and enlist the support of other industry experts to assist with answering the questions where necessary. Present a historical accounting of the reserve funds. Provide owners with information as to where reserves have been used in prior years. Reference paragraphs in the Governing Documents that define maintenance of common and limited elements. Quote the Declaration section that details the power of the Board to consider a Special Assessment and the requirements for approval of said Special Assessment. The more information you can provide to the owners, the more they will see that the Board of Directors and Management are educated on the matter and have exhausted all other options to solve the problem. 

1. Present the Membership the Alternatives: Owners need to understand what happens if the Special Assessment is not approved. Provide the details. Perhaps the roof needs to be replaced. Without the Special Assessment, it cannot be replaced, which means it’s uninsurable. If the roof is uninsured, lenders will not finance loans, so no one can sell their home. Perhaps not passing the Special Assessment means that monthly assessments will increase substantially, which also hinders the sale of homes in the Community. Lastly, not repairing the rotten siding could lead to pests entering units, helping themselves to food in your pantry and a warm spot on your couch. 

1. Be Sensitive to Homeowner Struggles: Special Assessments are hard to swallow in good times, let alone when we are experiencing higher unemployment rates and economic downturn. The Board of Directors should evaluate options for payment of the Special Assessment. How can the Board of Directors meet the needs of the Association, while being sensitive to the struggles that so many are facing? Is it an option for the Association to obtain a loan to partially finance the work and decrease the Special Assessment? Can the Board of Directors utilize reserve funds to frontload payment for services, thus allowing owners more time to pay the Special Assessment? What sort of payment plans can the Board offer homeowners? What do state statutes require in terms of payment plans? Is there a service provider that will finance the work to allow more time for the Special Assessment to be paid?

Angry homeowners are often the result of our failure to educate them on the matter at hand. Homeowners do not spend their free time reveling in the awe-inspiring document called the Declaration of Covenants, Conditions, and Restrictions. In their minds, Board Members and Management were put on this earth to do nothing more than harass them about their trashcans and deny their request to paint their home chartreuse. In my many years of management, I have learned this one very important lesson; There is nothing that will deescalate an angry homeowner more effectively than providing them with education and information. Anticipate the questions, educate on alternatives, and remember that we all have our struggles.   

Kacie Dreller, CMCA®, AMS®, PCAM® is a Regional Director at Hammersmith. Kacie is recognized in the industry for her expertise in community management, professionalism, ability to lead, and her desire to serve. Kacie strives to be a positive role model of Hammersmith’s Core Values: Professionalism, Excellence, Integrity, Life Balance, Education, and Partnership.

By Nicole Hernandez, PCAM, CB Insurance

I started my career in the HOA industry as a receptionist nearly 20 years ago.  Since that time, I have served in many facets, including hiring and training responsibilities.  Building my career and living through seemingly endless interviews has taught me a lot.  Learning how to properly brand and market yourself in this unique industry is time well spent.

We live in a world where we are fortunate to have the opportunity to choose the image we wish to portray.  Every day, we have control over how we want to show up in the world and how we choose to present ourselves to others.  When thinking about establishing a personal brand, it’s important to consider what matters to your ideal client as well as learn from what has contributed to others’ success in the past.

A Positive Attitude

I know it is cliché but the best thing we can do for this industry is keep a positive attitude in our interactions.  A positive attitude is everything.  Waking up every day with the determination to approach every situation and opportunity with an optimistic attitude goes far.  Of course, things are going to go wrong, and there are going to be troubles, but keeping a positive attitude and remembering that these minor frustrations are only temporary will help you keep your sanity as well as show others around you that they can rely on you to remain cool in difficult situations.

I know it can sometimes be hard but keeping the perspective that it is not personal and there is always something to learn helps re-ground me.  Remember, every difficult situation is an opportunity for growth.  We learn from the challenges in life.  Keeping track of the bigger picture, and where I want to go, always helps me stay focused and positive.

Dress the Part, Act the Part

Professionalism looks a little different to all of us.  To me, being a professional is being educated and harnessing the skills and knowledge needed to handle difficult situations while maintaining poise and integrity.  Professionalism to me is looking the part and acting the part.  When I say “look the part,” I don’t necessarily mean that you are in a tailored suit every day (and if you are one of those people, I salute you!), but rather that you take the time to launder your clothing and select pieces in your wardrobe that  demonstrate the image you wish to portray.  

Acting the part requires a little more effort…

The number one way to establish credibility and provide value is to know what you are talking about.  I know, it seems like the simplest thing ever, but think about what goes into the Community Manager’s role; you need to know a lot about a wide array of subjects.  Of course, an understanding of Governing Documents, CCIOA, financials, insurance, and basic construction and contracting is key, but there is so much more that goes into the role!

For example, any knowledge or training that can improve your ability to manage conflict, including improving soft skills and communication techniques, will go far in a high-energy field like HOA management.  The better you can communicate with people and the quicker you can win them over will improve the customer’s experience and your reputation as a result.  There is so much knowledge that you will benefit from!  Topics like meeting management, parliamentary procedure, computer skills, decision making techniques and leadership skills will take you far.  The services you provide will always be improved by the more you know.

Circle of Influence

Equally important to what you know is who you know.  Building your circle of influence and connecting with industry leaders that you can turn to for advice, information, and guidance can do a lot to propel your career and reputation to the next level.  Think about who is influential in your local community, who is a wealth of knowledge, and who is always available to help answer questions and look good with your Boards.  Those are your angels - treat them well.  That additional pool of expertise and connections will only improve the resources you are able to offer your communities.

Use educational sessions and networking opportunities to your advantage.  Dress the part and ask the experts around you about situations you are encountering - I bet once you get them talking, there will be many take-aways that you can use for your communities… remember to take notes!  

If you are not receiving a service or solution that might help you, ask your Circle of Influence. If you’ve never hired someone from a specific trade before, ask your circle what questions you should make sure the Board asks in the interviews. Depending on your relationship with your client, you can set them up to ask the correct questions or you can do it for them. Either solution results in a better exchange of information and helps you gain the confidence of your client.

Acting with Integrity

I would be remiss if I did not take this opportunity to stress the importance of behaving with integrity.  You can follow every suggestion on this list, but if you make unethical decisions, you still won’t get anywhere.  

Did you know that CAI has a Professional Manager Code of Ethics?!

The established Code of Ethics includes handling business in a professional manner, without unfair business practices such as duplicating proprietary information and bad-mouthing competitors and their business practices.  

I have always kept true to the adage of “you don’t make yourself look good by making other people look bad” – it really is that easy.

Behave with integrity and professionalism at all times, take the time to educate yourself and connect with the right people and your career will explode faster than you can say “Community Association Management”… and by all means, have a little fun along the way!

Be The Talent Check List: 

Positive Attitude

Do I demonstrate an attitude that I would want to be around? 

What is one thing I can do today to make myself happier while doing my job? 

Dress the Part; Act the Part

Do I make the effort to look like someone I would respect and take advice from? 

What skill could I brush up on that would make my job go more smoothly? 

Circle of Influence

Who are three people in the HOA world that I can turn to for advice? 

Is there anyone in the industry I’d like to know better? 

Acting with Integrity

Have I reviewed CAI’s Professional Manager Code of Ethics? 

Are there people in my circle who put my credibility at risk? 

Nicole Hernandez is a specialty insurance professional in the Denver-Metro area focused on helping community associations build highly effective risk management programs.  With 19 years of HOA management experience, Nicole uses her results-oriented personality to provide knowledge and expertise to help solve problems for her circle of influence. 

By Ari Shore, CAP Management

Forecasting, anticipating, and addressing increased delinquencies for a Homeowners Association can feel like an impossible task for association board members and community managers alike. With so many variables at play, it is a challenge to know how and when an HOA should best respond to a larger, societal shift. There is no time better than the present to highlight the unpredictability of dues delinquencies. 

Following the initial COVID-19 response and “stay-at-home” restrictions, the HOA industry was quick to anticipate a potential spike in delinquencies of monthly membership assessments – a scenario that could threaten the financial viability of the entire community. Many associations reacted with a similar urgency by quickly revising collections policies under the assumption that the majority of homeowners would be unable to pay monthly membership dues. 

In reality, HOA delinquencies did not drastically increase as the industry originally expected, rather delinquency rates stayed within a normal range. This can be attributed partially to economic stimulus, and more importantly the ability to “work from home,” which has proven to be the most successful way of preserving personal income.

The true impact of the economic shutdown was of course impossible to predict in the Spring of 2020. Many associations and management companies reacted out of fear and anticipation, but with good intentions of limiting any further economic hardship for owners. Unfortunately, these associations that prematurely revised collections policies and offered additional forgiveness opportunities have been hurt the most, facing an uphill battle of revoking moratoriums or continuing operations with insufficient funds. On the other hand, associations that maintained their legal policies while expressing empathy and a willingness to work with homeowners have proven to be better positioned to rebound from economic uncertainty. 

Global pandemic or not, there are a wide variety of socio-economic factors that can affect an Association’s delinquency rate. Local, City, State, Regional, Federal, and International factors could all be at play for the leading cause of a delinquency uptick. It is critical to take a comprehensive view of the monthly activities to determine if an association is particularly vulnerable to a delinquency increase. Variables like tax reforms, currency valuations, weather, unemployment rates, and a variety of other factors should all be considered in this evaluation. It is important to understand that many associations are comprised of members who are societal peers, who often share many socio-economic characteristics. Because of this similarity, an association’s owners are likely to be susceptible to the same external threats. When evaluating delinquency vulnerability, rather than attempting to make sense of every economic factor, a community manager should be hyper focused on the specific variables that would likely affect the communities they’re serving.

A community manager can effectively navigate the uncertainty of a delinquency situation by focusing on two key competencies - communication and consistency. There is no harm or shame in having empathy and a willingness to work with all members of an Association as it relates to delinquencies. If the manager is warm, welcoming, and willing to work with the members within the parameters of the collections policy, more members will reach out for resolution before the problem escalates uncontrollably.

The alternative to the compassionate approach is to be rigid, unavailable, and unwilling to work with the members facing financial hardship. The major problem with this approach is many individuals will avoid confrontation especially when it comes to financial matters. Avoidance and denial will likely emerge and could become major inhibitors to resolution, let alone the cost of pursuing remedy. Although late fees and delinquencies have their place in an association’s governance, these penalty mechanisms are rarely a motivator when agreeing to a financial resolution. 

Let’s look at an example in practice: An association has quarterly dues of $25.00. Late fees are $10.00 for every 30 days late (plus interest) and lien fees are $100.00. Additionally, after 90 days the account will be forwarded to the attorney for collections with an automatic legal fee of $200.00. A $25.00 bill is now over $355.00 (plus interest) for a member who was having trouble paying $25.00. This individual will likely become elusive and the association may be responsible for covering additional costs of collections. Alternatively, if the member knows the association will follow the collections policy but is willing to come to a reasonable repayment solution, both parties will see a brighter outcome. A simple resolution could be presented to the owner, requesting a repayment schedule of $8.33 per month over 3 months, with the understanding that waived late fees and interest will only be accommodated within reason. This approach to a delinquency resolution undoubtedly requires more patience and compassion from the managers and board members, but it should be viewed as an investment into the community’s social capital, which will preserve and sustain the long-term viability of the association.

A community manager will face many challenges with an association, but the personal financial situation of a member (especially in troubling times) is by far the most challenging. The more approachable, open and empathic a manager presents themselves, the better poised they will be to lead all parties to a beneficial outcome. 

Ari Shore is CAP Managements Chief Operating Officer. CAP Management is a regional organization dedicated to enhancing the sustainability and resilience of all the associations and customers they serve.