Condo Media - January 2013 - 55

that not only met current expenses but also contributed to the future costs for capital replacements. Now as we all know, condominium trustees are unit owners who volunteer their time to guide the operation of their community. They are usually untrained in condominium management, including the legal, maintenance and financial considerations that are part of the job. They do have enthusiasm and energy and bring their own skill set, personal experience and bias to their board. They choose to be trustees for a variety of reasons and, for the most part, endeavor to make decisions that will best serve the property and the unit owners. In a selfmanaged community, these volunteers are even more tasked as they meet the challenges of property management and the particularities of governing a condominium and its unit owners and residents without the assistance of professional management.

Nature Versus Nurture
As the years went on in our twin condominiums, the initial trustees sold their homes and new unit owners were elected to serve on the board. At the North Shore condominium, the historic information, the reports and strategic plan for the community were provided to new trustees. As the baton was passed, each new trustee was educated on the importance of the procedures, property and systems information that was transferred and came to respect the work that had been done in the past and that which they were called to continue. Successive North Shore boards made sure that the capital plan and the building condition reports were updated every four years and that the reserves were healthy enough to meet future replacement needs. They were conservative in setting annual budgets to minimize the likelihood of shortfalls by providing sufficient income to meet expenses, even when this meant raising condominium fees. They withstood dissension and maintained good com-

munication with the unit owners so that each homeowner could appreciate how the board’s actions were preserving the value of their asset, their home. At the Metro west condominium, however, the transition from old trustee to new trustee was not as wellexecuted. The historic information, the reports and strategic plan for the community were not transferred to new trustees, or if provided, were not utilized by the board as valuable tools for the governance and operation of the property. The new trustees were not convinced that these old procedures and system maintenance programs should be continued. Even as the condominium aged, the trustees abandoned the long-term plan and focused on one year at a time. They put aside the annual review of the strategic plan as a waste of time and eventually abandoned it completely as no longer meaningful. They pursued new and unproven methods for the condominium that promised to reduce the cost of operation and keep the condominium fees low. They deferred maintenance and postponed replacements until systems and equipment failed. They did not fulfill their fiduciary responsibility to maintain an adequate reserve. The two twin condominiums recently rounded their 25th year, a time when many major components, including roofs and siding, sidewalks, roadways and parking areas had reached the end of their useful lives. At the North Shore condominium, the successive boards had planned for these replacements and were able to fund them from reserves. At the Metro west condominium this was not the case. These boards, with their focus on keeping condo fees low and spending only when equipment failed, found it necessary to call for a special assessment of unit owners.

owners and themselves happy by concentrating on lowering expenses and not increasing fees. However, shortchanging unit owners by considering simply the short term needs of the community and drafting and approving a bare bones annual operating budget year after year is a prescription for disaster. Without a long-term view, managing the cost of future replacements is impossible without calling on unit owners to come up with big money when equipment and systems fail. Worse yet, letting some common elements, like parking areas and sidewalks deteriorate because there is no money for repairs, creates safety hazards and seriously impacts the market value of each unit in the community. Unfortunately, far too many selfmanaged condominiums have found themselves in the position of the Metro west community in recent years. Unit owners who smiled when their condominium fees did not increase and who boasted about it to friends with higher fees are now struggling to cover the cost of a special assessment of many thousands of dollars. And with the impact of the deferred maintenance on the current market value of their unit, many homeowners are without the equity that would enable them to refinance or obtain home equity loans to meet this expense. As we have noted in previous articles, the prudent handling of the financial matters of the association is a major responsibility, if not the most important duty, of any governing board, but most especially of the trustees of the self-managed community. How well each board deals with their fiduciary responsibility can make it the best of times or the worst of times for the unit owners and the community. CM Patricia Brawley, CMCA, AMS, PCAM has managed community associations for more than 16 years and is currently a management consultant with Central Management Consulting Services.

The Sydney Carton Syndrome
Planning in the self-managed association can easily lose focus. It is clearly much easier for trustees to make unit

CONDO MEDIA • JANUARY 2013

Condo Media - January 2013

Table of Contents for the Digital Edition of Condo Media - January 2013