Management

MANAGEMENT OF HOMEOWNER ASSOCIATIONS

& CONDOMINIUM ASSOCIATIONS

Associations are big business in Florida. We have the second largest number of Community Associations in the United States.

The industry revolving around Community Associations is well established. There are Attorneys, Engineers, Accountants, Landscapers and numerous other professionals who have made a business around Community Associations.

There are currently 29 million Americans living in Community Associations with an estimated worth of close to $100 billion dollars. This number is expected to grow at a higher rate in Florida than anywhere else in the nation.

Last year Community Associations nationally spent over $12.5 billion dollars on maintenance and another $5 billion dollars in Reserves.

There are a number of ways to manage an Association. One of the best ways is self-management. In order for self-management to work, it takes at least one homeowner, hopefully more, to be extremely involved. Unless they get help and support, eventually they will burn out, just like the way property managers burn out.

Nationally 2/3 of the Associations do hire some type of management, whether in-house or contract. 38% of the Associations use Professional Management Companies with an average Association size of 143 units. 27% of the Associations have an on-site manager with an average of 272 units. It is estimated that presently there are over 225,000 Community Associations.

CONTRACT MANAGEMENT

There appears to be a lack of consumer awareness or, to put it better, the consumer often fails to discern the value for dollar invested in judging management companies. Contract management firms are usually retained when the Association’s size or budget cannot justify a full-time manager level employee and where the Board is not able to meet its needs through volunteers. They will also be retained where highly complex management systems are required.

ADVANTAGES:

The Board is relieved of handling the day-to-day problems of running a very complex business. This should allow them more time to concentrate on policy matters, which should result in:

		A longer tenure in office for Board members
		A more complete handling of policy matters
		A broader expertise is available to the Association.
		If the management company has prior experience in Community Association management, it will likely have tested procedures for handling most of the situations that might arise.
		The firm can act as a buffer in carrying out Board policies, especially with policies that may not be popular with particular co-owners, such as pet policies and restrictions regarding them.

DISADVANTAGES:

		Because contract management is most frequently an off-site operation, there may become communications problems.
		Without the day-to-day contact with what is going on in their Association, the Board can lose touch with the people they were elected to serve.
		In many markets, there will be few, high-quality firms to provide competition (or to provide property service).

ON-SITE MANAGEMENT

On-site management, sometimes referred to as “in-house” or “administrator” management, simply means that the Association hires an employee or employees to perform similar services to those of a contract management firm.

ADVANTAGES:

		It allows the Board greater control over the personnel and hopefully, as a result, the quality of services.
		It provides more personal attention to the needs of the community.
		It can provide better on-site supervision of the employees.
		After a period of time, the manager should be intimately aware of the Association needs and personalities and react to them better than an outside management company probably could.

DISADVANTAGES:

		The difficulty in finding an individual or group of people with the experience and skills necessary.
		The need to provide back-up personnel or support to cover during sickness, vacations, etc.
		Reliance on a small group of individuals or, especially, a single person can create problems if they leave for any reason. If the manager leaves, there may be severe problems in handling even the simplest of daily operations because of the Board’s lack of knowledge.
		The possibility of personal differences between employees and Board members is very real and, with the turnover of Board members, the chances of it happening increases yearly.

This type of management is usually too expensive for a small Association because of personnel costs. It is therefore found in Associations that can afford those costs or have a direct need for faster, more personalized service. Very large Associations often utilize it in conjunction with a back-up management firm that can provide certain of the services (bookkeeping, purchasing), and are available in emergency situations.

VOLUNTEER OR SELF-MANAGEMENT

Volunteer management is a form in which the co-owners perform all of a great majority of the services earlier outlined. In order for this to be successful, several key ingredients must interface properly. The most important of these is an actively committed nucleus of Association members. These members must have the time, expertise and willingness to address the continual needs of an Association.

ADVANTAGES:

		A reduction in management costs. Although fees related to professionals may increase, they shouldn’t offset the cost savings.
		There is usually a faster response to a co-owner’s problems, at least the more simply-solved ones. Time-consuming procedures and red tape are rarely present in this form of management (in fact, there is often little or no record-keeping which could be disastrous in the long run).
		When everything is working right, a feeling of community is an excellent by-product that often appears; the “We did it ourselves” type of pride.

DISADVANTAGES:

		The possible loss of continuity through normal causes, i.e., Board resignations, elections, key people moving out, etc.
		The loss of key people due to “burn-out”. the strain of having to deal on a regular, businesslike and sometimes adversary basis with neighbors and friends can interrupt a volunteer’s family life and emotional well-being.
		The loss of time for all involved.
		The “Dictator Syndrome”.

Volunteer management usually works best in small Associations where there are few serious problems and a deep well of volunteer talent to spread the work around evenly. Often, a small Association that has a high percentage of senior citizens finds that the cost savings, plus the number of volunteers, makes this form of management very attractive and workable.

By Steve Inglis, PCAM