Condo Media - September 2018 - 46

Sensitive S UB JE C T

FIDUCIARY DUTY
One of the primary business duties of
community associations is maintaining and preserving property values of
the association's common property.
To do this properly, associations must
develop funding plans for future repair
or replacement of major common-area
components.
A reserve study is a budget-planning
tool that identifies the current status of
the reserve fund and establishes a stable
and equitable funding plan to offset the
anticipated future, major common-area
expenditures. Being prepared for nonannual expenses allows your association to change the unexpected to the
expected. Reserve studies are one of
the best strategies for financial and
physical health at the association's disposal. In order to keep the replacement
costs current, the reserve study should
be updated (with a site visit) every three
to four years.
COMMUNICATION
AND RELATIONSHIPS
It is our belief that fundamental to
the accomplishment of any of these
objectives are two basic premises:
communication and relationships.
Communication is multi-faceted-
between the board and the owners,
between the board (and/or subcommittee) and the consultant, and between
the consultant and the owners. To
ignore these opportunities for effective
communication will result in diluting
the effectiveness and ultimate success
of the implementation of any reserve
study on the books for your association.
Relationship nurtures trust and
confidence. Through effective communication, greater trust and confidence
can be developed between the various
parties involved. As a result, it is more
likely (although certainly not guaranteed) that the recommendations of a
reserve fund study can be effectively
implemented.
AN OUTLINE FOR SUCCESS
It is imperative that the scope of a
reserve study be clearly defined before

CONDOMEDIA September 2018

even seeking proposals from consultants. The following are a variety of
options to be included in the scope of
any Request for Proposals:
n Define the project: Define exactly
what is expected of the consultant.
This should be the result of discussion by the board and/or building
subcommittee to determine what is
needed. It is particularly important to
decide whether the reserve study is to
be based on simply replacing existing
components or if upgrades and improvements should be considered.
n Interview the consultant: The
RFP should include a paragraph like
the one below. Getting to know the
consultant, the people involved on
your project, and their approach to
the project is imperative to a successful relationship.
* The board will select two to three
consultants it believes to be qualified for the work and then conduct
interviews. The objective of the
interview is to meet the people who
will be specifically working on our

project, discuss a variety of questions, and generally understand the
procedures the consultant intends
to use for the project. A final choice
will be made within one week following the interviews.
A reserve provider's objectives
are threefold: to provide a broader
perspective on reserve studies, to
assist property managers with a successful presentation of reserve fund
studies, and to create opportunities
for more meaningful reserve studies
and effective implementation of recommendations.
n Pre-project meeting: The board
(or building subcommittee) should
meet with the consultant before
actual work starts. The objective is
to refine and finalize the scope of the
project. This is also an opportunity to
determine what will be expected of
the association (or management company) and what will be expected of the
consultant throughout the project.
Suggested language for the RFP is
as follows:
* The first step after selection is a
meeting with the board (building
subcommittee) to review, refine,
and finalize the scope of this project.
At that time, the items to be covered,
the procedures involved, the on-site
protocol to be used by the consultant, and any special concerns of
the board (building subcommittee)
will be discussed.
n Conduct an owner survey: The
intent is to give all of the owners the
opportunity to express any particular concerns they might have about
the project. While this may seem
risky, it has been our experience that
it is actually quite effective. Such a
survey would be accompanied by a
letter from the association providing
all of the owners with the scope and
limitations of the reserve study to
be conducted and encouraging them
to respond to the survey. It has been

Condo Media - September 2018

Table of Contents for the Digital Edition of Condo Media - September 2018