2006 Issue 8

ISSUES OF GOVERNANCE
By Walt Williamsen, PCAM

Recent travels around Connecticut and states such as Florida and California indicate that the condominium living concept is alive and well.  Many new common interest communities are being built.

A recent luncheon speaker who works with people who are considering going into business for themselves in later life said that many of the “boomers” that she talks with are looking to downsize from larger homes to condominiums and planned developments where much of the hassles of home ownership and maintenance are taken care of by someone else.

It has been heartening to learn that some of the newer common interest developments are getting off to a good start by using some of the advice provided by the CAI at various education sessions and from publications.

As new communities are being developed, some new unit owners admit that they are new to condominium ownership and not familiar with the concept of self-governance.   They have turned to the CAI for advice, guidance, and resources pertaining to hiring managers and proper reserve funding right from the beginning.

Picking up on the “boomer” comments and from other anecdotal experience, it is a fact that many people are just not going to be interested in participating in the administration and upkeep of the association and property.  They will be good citizens and obey the rules and pay their fees on time, but are they are looking for hassle-free living at a reasonable cost of ownership.

Who then is going to oversee and govern the affairs of the association?

There are instances where unit owners have served on boards for years and years and yet the associations wind up having to borrowing large sums of money to replace roofs, pavement, and decks due to a lack of accumulated capital reserves.  In many cases, this is symptomatic of well-meaning, but ineffective or inept governance.

Also, there is the “cycle-theory” of management.  Like many elements in nature, conditions and events behave according to cycles.  In the case of homeowner associations, effective leaders and managers come and go over the years, while the needs of the association and property go on and on.  In many cases these needs become more difficult over time.

How a condominium or other homeowner association operates affects two factors that are directly affected by governance and management.

1. Cost of ownership
2. Enjoyment of the property

Since governance and management depend in large part on a steady supply of committed leaders and managers who will likely come and go over time, here are some suggestions for maintaining a well run common interest community:

1. Recognize that it is a reality that only a handful of unit owners may want to actively participate in running the community.  This is not to look on the others as slackers, it is just that more and more people want to de-stress and enjoy their leisure time. 
2. Be aware that history has proven in many instances that associations that hired management firms eventually tried self-management and vice-versa.  This type of  discontinuity is a fact of life, but if done to extremes is not healthy for any enterprise.
3. Develop an operating manual specific to a particular property and association.  This will help to smooth over transitions and sudden changes in personnel.
4. Periodically, have a knowledgeable third party overview the operation, one who has no other interest in the property.  Many businesses have “operational audits” to review how things are being done, and in some cases make suggestions for improvement.  A summary report should be provided to all members of the association.  If problems are ignored or otherwise swept under the rug, then at least everyone had the chance to be aware.  The old saw that “you get what you accept” applies here.
5. Even if you do not actively participate in the operations, it is in a unit owner’s best interest to attend association meetings and activities and keep informed.  (No meetings, newsletters, updates? – This is not a good situation!).
6. Take advantage of the seminars and other educational materials that are offered by the CAI (both the Connecticut Chapter and National).

Everyone who owns a unit in a common interest community should always remember that there are tasks to be done and someone has to do them.  They can be done by volunteers or people hired from outside the community.  To the degree that the right tasks are done at the right time over a long period of time will directly affect cost of ownership and enjoyment of the property.

Walt Williamsen has vast experience as a property manager.  He has been active with CAI-CT for many years, serving as President from 2001-2003.   He is currently a member of the CAI-CT Board of Directors and serves as Secretary.  Walt is a frequent speaker at CAI-CT seminars and he coordinates our popular Ask the Experts: A Basic Course for Board Members program..  Walt is the owner of Condominium Consulting Services, LLC.