Condo Media - November 2012 - 38

COVER STORY

are often the primary reasons (along with the time demands and oppressive paperwork Wood mentioned) that lead self-managed communities to seek professional management services.

own, who reports directly to the board, a solution that can work well, Brawley says, for communities large enough to afford the cost. • Boards that want to be hyperinvolved can, and often do, hire a full-service management company and then attempt to micro-manage it. This often satisfies board mem-

“They’re Delusional!”
That’s why Kravets thinks boards that decide they can manage a community as well as the management company

Communities may consider a hybrid solution, taking over some management costs but paying a management company to handle others.
working for them are “delusional.” “They don’t know what they’re getting into,” he says. Even if individual board members or non-board member volunteers have the skills required to handle the accounting or other specific management tasks, Kravets says, “they don’t really understand what their responsibilities will be or how their relationship with their neighbors will change.” In addition to managing community associations, Kravets has worked with Brawley in a separate venture, providing consulting services to community associations. And many of their clients, Kravets says, have been “self-managed communities that have no clue what they are doing.” The advice to many of them: “You need professional management.” Decisions to add management services or pare them are usually two sides of the same coin — fueled by concern about the financial challenges confronting the community and by the perception that the community is not being managed as well as it could be. But the options available to boards are not limited to heads (hire a full-service management company) or tails — operate without one: • Communities looking for more hands-on control may be able to hire a full-time manager of their bers but is rarely popular with management companies. • Communities may consider a hybrid solution, taking over some management tasks but paying a management company to handle others. Industry executives say they are seeing increasing interest in this approach, both from communities looking to reduce their management costs and from self-managed communities that want professional management services but can’t afford a full-service management fee.

The Hybrid Solution
A hybrid arrangement is an appropriate choice for some communities, Brawley says, but not for all — the difference depending less on the community’s size than on its character and, especially, the composition of its board. “It really requires a group of trustees who understand the benefits of the hybrid structure, and who have the time and energy to spend pulling together all the management pieces,” Brawley says. Equally important, she emphasizes, board members and owners have to understand the nature and limits of the services they are receiving in a hybrid arrangement and “they have to be comfortable governing and operating with less than a full-service management package.” They also have

to select the right company or companies to provide the management services the community needs. “You can’t just bring in a bookkeeper” to handle the accounting and financial reporting, Brawley says. “You need someone who understands the nuances of community associations and recognizes how they differ from other businesses.” For that reason, some community associations are turning to association management companies to provide a la carte services — financial services in particular. This obviously solves the industry knowledge problem, but these arrangements can break down for other reasons, Brawley has found. Management companies obviously have the experience and the administrative structure required to meet a community association’s needs, but “there also has to be a recognition [by the staff] that the a la carte client is as important as a full-service client,” Brawley says. And that isn’t always the case. “As a portfolio manager working for a property management firm, it’s a lot easier for me to encourage or cajole the accounting department to meet my community’s deadlines and to produce reports when the board wants them.” Board members who don’t have a personal relationship with the accounting staff and who aren’t in the management office regularly will have a harder time waving the flag for their community. “If you take the manager out of the picture,” Brawley says, “you remove the person who can be an advocate for the community — the person who can make sure their projects are closer to the top of the pile than the bottom.”

It Takes the Right Structure
“Unless [the management company] has a really great set up — a really tight operational structure — and very responsive people who are responsible for these clients, [hybrid arrangements] don’t work all that well,” Kravets says. Although he has offered a la carte financial services, Kravets says, “I don’t really believe in them.”

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CONDO MEDIA • NOVEMBER 2012
Condo Media - November 2012

Table of Contents for the Digital Edition of Condo Media - November 2012
