Realty Times October 22, 2003

HOA Retreat To Move Forward
by Richard Thompson

When a new homeowner association emerges from developer transition or a new board steps in the shoes of an outgoing one, many questions ensue like: What now? What next? When? and Why not? The reason these questions are so general is that new Boards are often clueless as to content. Many adopt a Rope-a-Dope management strategy waiting for the problems to present themselves rather than being proactive.

But to be truly in charge, the Board must be informed and have a plan, a.k.a. "getting organized." A good way to focus on this is to schedule a Board Retreat. The Retreat is designed to share ideas, discuss strategy and get informed on the HOA management process. It's extremely important that the Board get its bearings before charging off like Don Quixote to right all wrongs. (Look what happened to him!) Understanding the process means grasping the basics of board authority and what makes the HOA tick. A Retreat is like Spring Training for HOA Boards -- it prepares the Board for serious play action by learning to work as a team.

Retreats can be accomplished in a morning and/or afternoon session depending on the size and complexity of the HOA. Understanding what the job description entails should come first. This is also a good time to dispel myths (what Boards are not supposed to do). The Board should adopt the role of executive directors of a multi-million dollar corporation. Here is a good series of topics for discussion:

Board Roles. The Board wears many hats including:

  • Contractor Supervision. The Board was elected to supervise hired contractors that perform a variety of tasks like management, accounting, landscaping, pool maintenance, building maintenance and window washing.

  • Quality Control. It is the Board's job to hire professionals that are properly licensed, bonded and insured for the work they perform. (Sorry, the treasurer's 13-year-old nephew Billy doesn't qualify).

  • Financial Oversight. Managing the HOA's money is a top priority. This means the Board should be receiving monthly financial reports that compare actual to budget income and expenses. It should also be responsible for preparing an annual budget which provides adequately for services and maintenance.

  • Long Range Planning. Since renovation projects are expensive and complex, they should be planned for years in advance. Using a professionally generated Reserve Study, the Board can project funding needs and scheduling out 30 years in advance.

  • Rules Enforcement. Rules in HOAs should be few and necessary. Not all rule breaking is the Board's to enforce. The police should be used whenever possible since they are trained to deal with loud parties, domestic disturbances, violence and theft. That leaves issues like parking and pets for the Board to oversee.

  • Architectural Design. Protecting the look of the community is an important charge. In common wall communities, the HOA generally maintains the grounds and building exteriors but certain owners are inclined to "improve" the look with storm doors, awnings, fences, patios, sheds and decks. The Board can generally make decisions on these requests or, better, establish standards for members to follow. In single-family HOAs where members maintain their own homes, it's more a matter of paint and roofing colors and architectural design of homes or additions. This often warrants hiring the services of a consulting architect who can properly evaluate the proposed additions.

    Officer Roles. Officers are appointed by the directors to serve as President/Chairman, Treasurer, Secretary and, possibly, Vice President.

  • President/Chairman runs the meetings and is the "go to" person between meetings to make decisions that are in keeping with the budget, governing documents and Board policy; signs checks.

  • Treasurer oversees the bookkeeper (usually the management company) and accountant. It's the Treasurer's job to deliver financial reports, approve bills for payment, sign checks and reconcile the bank statement.

  • Secretary records minutes of the meetings and oversees preparation and distribution of minutes, newsletters and communications.

  • Vice President is one heartbeat away from the presidency and typically is slotted for that role next term. Should be informed and prepared to step in for the President at any time.

    Meeting Process. Meetings are where HOA business is transacted. Board meetings should be at least quarterly and scheduled a year in advance so the directors and members know when and where they will happen. Meetings should be held in visitor friendly locations, the more professional the setting the better. Avoid holding meetings in member homes since they tend to be too small and prone to disruptions. (An excellent video called "Meetings" is available in the Regenesis.net Video section. Buy it and view it at the Retreat).

    Board Operations Manual. This indispensable tool should be assembled before the retreat for each director. It contains the essential information that a director should have on hand to keep abreast of HOA business like governing documents, site maps, vendor lists, member directory, rules, approved budget and recent financial statements. All should be logically grouped by labeled page dividers for ease of access (For a comprehensive list of what to include, see the Regenesis.net Planning Tools section).

    Review the information section-by-section to become familiar with it, particularly the governing documents. Highlight sections that are particularly important. This is an extremely important exercise since the governing documents may contradict common practice or logic. The Board is bound to follow them unless amended by the members.

    Prioritizing Issues. Now that the basic organizational tasks are covered, it's time to prioritize and discuss the issues, including:

  • Budget. Is it adequate?

  • Collections. Under control?

  • Maintenance. Any deferred?

  • Major Renovation. Review Reserve Study.

  • Rules Enforcement. Problems?

  • Architectural Design Requests/Violations.

    The Board Retreat is invaluable for getting the Board off to a running start. While a brand new director will profit enormously, old hands can use a refresher course and add their perspective to the process. Take the time to get organized and informed before tackling business. Use a Retreat to move forward.


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