Page 1 - CAI Southeast Florida Chapter

LIVING
SPONSORSHIP PROGRAM
1250 E. Hallandale Beach Blvd. #609
Hallandale, Florida 33009
Telephone: 305-677-0022, x803
Email: [email protected]
4613 Little Road
Trinity, Florida 34655
Telephone: 800-263-7435
Email: [email protected]
3111 Stirling Road
Fort Lauderdale, Florida 33312
Telephone: 954-987-7550
Email: [email protected]
www.benjaminmoore.com
Telephone: (305) 304-6029
Telephone Broward: 954-792-6000, x880
Telephone P. Bch.: 561-276-4500, x880
Email: [email protected]
1451 W. Cypress Creek Rd. Ste. 212
Fort Lauderdale, Florida 33309
Telephone: 954-907-1010
Email: [email protected]
27318 Sora Blvd.
Wesley Chapel, Florida 33544
Telephone: 866-800-4656, ext. 7484
Email: [email protected]
Telephone: 954-876-2303
Telephone: {Cell} 941-313-0931
Email: [email protected]
7900 Miami Lakes Drive West
Miami Lakes, Florida 33016
Telephone: 786-953-1221
Email: [email protected]
Visit The Chapter Website
cai-seflorida.org
100 East Linton Blvd. Suite 102-B
Delray Beach, Florida 33483
Telephone: 561-330-3096
Email: [email protected]
9000 Sheridan Street, Suite 148
Pembroke Pines, Florida 33024
Telephone: 954-517-9355
Email: [email protected]
Reserves and Appraisal Services
20423 State Road 7 #6 PMB 216
Boca Raton, Florida 33498-6797
Telephone: 561-488-3012
2333 Ponce De Leon Blvd. Ste. 314
Coral Gables, Florida 33134
Telephone: 305-448-4800
Email: [email protected]
777 S Harbour Island Blvd
Tampa, FL 33602
Telephone: 813-229-1000
6615 Boynton Beach Blvd. #317
Boynton Beach, FL. 33437
Email: [email protected]
101 E. Kennedy Blvd. Ste. 1465
Tampa, Florida 33602
Telephone: 1-800-980-9881
Email: [email protected]
Web: reserveadvisors.com
3320 Holcomb Bridge Road NW
Norcross, GA 30092
678-405-1759
Email: [email protected]
WHO IS CAI?
9369 Sheridan Street, Suite 614
Cooper City, Florida 33024
Telephone: (954) 816-0661
Chapter Executive Director
Email the CED: [email protected]
Community Associations Institute, CAI, is the nation’s voice for
condominiums, cooperatives, and homeowner associations.
The institute is a national, nonprofit association created in 1973
to educate and represent America’s residential community
associations and related professionals and service providers. It
is a multidisciplinary alliance, dedicated to the development of
effective community associations.
Its members include:
condominium and homeowner associations, cooperatives, and
planned communities of all types; community association
managers and management firms; individual homeowners;
public officials; and lawyers, accountants, insurance providers,
engineers, builders/developers, and other providers of
professional services and products for Community Associations.
CAI estimates that more than 42 million Americans live in
dwellings governed by the 205,000 community associations in
the United States.
President
Vice-President
Attorney
Financial Institution
Treasurer
Secretary
Accountant
Insurance
READER COMMENTS & ARTICLES ARE WELCOME
Columns and ideas from all our members are always welcome.
Send submissions in Microsoft Word format to:
[email protected].
Homeowner
Attorney
Articles appearing in
reflect the author’s
opinion and not necessarily that of CAI. Acceptance of
advertising does not necessarily constitute an endorsement of
product or service.
Financial Institution
Manager
Insurance
Manager
Insurance
Manager
Accountant
Financial Institution
Directors
GOLF
FUN
Wednesday, May 21st
Wednesday, June 18th
Wednesday, July 16th
8:30 AM at Becker & Poliakoff
3111 Stirling Road
Ft. Lauderdale, FL. 33312
If you wish to attend, contact the CED: 954-816-0661
FOOD
PRIZES
NETWORKING
Friday, November 7th, 2008
Bonaventure Country Club, Weston
Tee Time: 12 Noon
Save the date
3
Insurance Reviews Video Documentation
J R FRAZER
Representing Policyholders Since 1985
INSURANCE CLAIM
PRESENTATION & LITIGATION
INSURANCE COVERAGE DISPUTES
INSURANCE BAD FAITH
Reserves & Appraisal Services
Property - Flood Reserves - Consultations
ASSURED ASSET PROTECTION
John R. Frazer
20423 State Road 7, F6
PMB 216
Boca Raton, FL. 33498
Phone: 561-488-3012
Fax: 561-488-1572
ED ACLE ROBERT REYNOLDS
CORAL GABLES, FL 305.448.4800
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4
The President’s Update
Hello everyone. It was really a pleasure to see
our members and many other community
leaders, managers and industry leaders at our
Day of Education and Trade Show in January.
The Chapter is really grateful to the Wynmoor
Community Council for its hospitality – the venue
turned out to be really conducive for the
exposition and the educational sessions,
Lisa Magill, Esq. although we may need a larger venue for next
year due to the tremendous turnout. Ms. Carroll,
the Florida Condominium Ombudsman, gave us
a great overview of some of the issues her office confronted over
the past year and provided practical advice and guidance to
attendees, as well as distributed educational materials. There
were over 400 participants this year – which is fantastic. Of
course, we appreciate all sponsor contributions and
all of our volunteers, especially those who came out
in the early morning hours to assist with registration.
We encourage comments and suggestions from
our members regarding the Trade Show and
welcome volunteers for next year’s event, as
planning begins shortly.
Gonzalez & Company, LLC
CERTIFIED PUBLIC ACCOUNTANT
Andrew Rand
Director of Association Services
9000 Sheridan Street
Suite 148
Pembroke Pines, FL 33024
Telephone (954) 517-9355
Fax: (954) 517-9356
E-Mail: [email protected]
The classes offered through CAI’s contract with the
State of Florida have concluded for the
spring/summer and will hopefully resume in the fall.
Classes are held at the Aventura Community Center
in Miami-Dade County and the Southwest Regional
Library in Broward County.
The Aventura
Community Center is conveniently located in
Northeast Miami-Dade, very close to all the
condominiums, cooperatives and community
associations in Aventura, Williams Island, the
California Club area, Sunny Isles, North Miami
Beach and Hallandale. We are looking for a more
well-situated location in Broward County and have
researched sites such as the new library in
Plantation and within the Nova Southeastern
campus in Davie. These classes are a great way for
homeowners and community leaders to learn about
the laws, regulations, policies and developments
that impact association operations, as well as share
ideas, practices and “war stories” with fellow
association members. Managers, please tell your
board members about these sessions, you will be
glad you did.
If any of you plan to attend CAI’s 57th National
Conference and Exposition, please make sure to
congratulate both Bruce Bandler and Marcy Kravit,
as they both will “walk the walk”, formally
acknowledging PCAM status.
We have an exciting year Fall and Winter season
planned.
Clear your schedule for the golf
tournament, take advantage of the last minute
opportunity to obtain credits before the reporting
period expires, plan to participate in the roundtable
sessions and check the website for updated
information from time to time.
www.cai-seflorida.org
5
As we read the financial pages of our local newspapers, we keep reading
about the credit crunch and what the Federal Reserve Bank is doing to
alleviate the problem. But for most association Boards and residents, the
bigger questions are how will this affect me personally, and how will it affect
the operation of my association.
As bankers we are starting to notice some trends that may have significant
effects on associations if they continue. One immediate effect of tightening
credit standards is that it is more difficult to buy homes. Up to very recently, to
qualify for a conforming mortgage, one that offered the best interest rates and
terms, a home buyer needed a credit score of approximately 620. The new
credit score required for this standard type of mortgage is 660, which
eliminates a significant number of buyers.
Buyers who do not meet the standards to qualify for a “conforming” loan will
have to pay a higher interest rate and accept less favorable terms. Some
buyers who may have qualified for a mortgage a year ago, cannot qualify for
any type of a mortgage now.
The buyers of higher-priced homes who need “jumbo” mortgages, over
$417,000, are having a hard time getting loans, rates are
high, and the buyers have to come up with large down
payments and often will have to agree to a five year
adjustable rate. While some community banks are making
these loans with favorable rates and terms, many of the
larger banks are not doing as much of this type of lending
as they did in the past.
The result of the tightening up of credit standards for
mortgages can have a significant effect on community
associations. If unit owners cannot sell their homes and
they need to move, they may rent out their units to cover
the monthly cost of ownership.
As the percentage of non-resident (investor) owners
goes up, the quality of community life tends to go down.
In general, renters do not treat the property with the same
respect as owners, they usually do not maintain their
properties as well as resident owners, and since they have
no permanent attachment, do not usually participate in
community events.
Another result of owners being unable to sell units, is
that maintenance delinquencies tend to increase,
foreclosures increase as unit owners have trouble
covering expenses on their residence as well as the
rented (or unoccupied unit) in your community association.
We are beginning to see rising delinquencies in
community associations, and in some cases, maintenance
has had to increase substantially so that those paying
maintenance can cover the costs of running the
association and collecting delinquent assessments.
This causes a bad downward spiral - as delinquencies
and foreclosures increase in an association, it is harder for
a potential buyer to get a mortgage, so unit owners who
can’t sell are forced to rent or sell at lower prices
substantially below current market values, or in some
cases abandon the property. The association then has to
6
decide whether to foreclose for delinquent association maintenance fees or wait
until the financial institution forecloses on the mortgage.
With operating deficits created by delinquencies, some associations are
coming to banks to finance large projects, operating cash needs, and insurance
premiums. Since association loans are collateralized by an assignment of
assessment rights, if the delinquencies are over 8%, they may not qualify for a
bank loan. They will then have to special assess, which will make their
delinquencies even worse as the unit owners who are delinquent on regular
maintenance are not likely to pay a special assessment in a timely manner.
The Board faced with these challenges, must take immediate action to head
off these problems. A restatement and strict enforcement of the collection policy
is an important first step. I recommend consulting with the association’s attorney
to re-state the collection policy and make sure that collections are handled in a
timely manner.
If you are interested in buying a home in a community association, it is
important to ask what the percentage of rentals is and to look at financial
statements to see if there are large numbers of delinquencies.
In these difficult times, it is important the Board of Directors build a good team
to work with. A qualified, experienced manager or management company,
Certified Public Accountant, Attorney, Insurance Agent, and Banker who are
experienced in working with associations can give advice to the Board on how to
head off as many of these problems as possible.
Robert Kaye & Associates P.A.
Attorney at Law
MICHAEL S. BENDE R
6261 Northwest 6th Way
Suite 103
Ft. Lauderdale, FL. 33309
954-928-0680
800-974-0680
954-772-0319 (fax)
[email protected] (email)
CHAPNICK COMMUNITY
ASSOCIATION LAW, P.A.
Michael E. Chapnick, Esquire
Managing Shareholder
100 East Linton Boulevard, Suite 102-B
Delray Beach, FL. 33483
561-330-3096
www.floridacondominiumlaw.com
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7
Renewing Your Condominium
Association’s Property Insurance
Policy?
--Keith Nicholson CPA, CIC
Make sure you build the right policy
What
do
condominium
boards
commonly overlook when purchasing
an insurance policy, and what can
happen without the proper insurance
endorsements.
Replacement Cost Coverage
Condominium
documents
generally require an Association to insure real and personal
property for its Replacement Cost value without any deduction
for depreciation. When purchasing the insurance for the
Association, it is necessary to purchase an amount equal to the
total cost to rebuild the entire community with new material. The
best way to determine the current replacement cost is to hire an
independent appraisal company. In the event of a covered loss,
if the Property Insurance Policy contains a Replacement Cost
valuation clause, the insurance company will evaluate and pay
the cost to repair or replace damaged property without deducting
for depreciation. The replacement cost valuation provision
fulfills a primary purpose of insurance, which is to return the
policyholder to the pre-loss condition that existed had a loss not
occurred.
The purpose of insuring property for its replacement cost
value is to provide sufficient funds to repair or replace damaged
property with new material of like kind and quality. If the
insurance policy did not provide coverage on a replacement cost
basis, there could be a severe shortfall of funds needed to pay
for rebuilding in the event of a covered loss.
Building Law and Ordinance Coverage – endorsement
Most Property Insurance Policies should include Law and
Ordinance Coverage, which would provide additional funds so
that a newly-repaired or replaced building will meet current
building codes. Current codes may require the installation of
costly features such as sprinklers, accessible bathrooms,
elevators, and extra-wide doorways; all of which can add
substantially to construction expenses. This coverage must be
added by a separate endorsement to the policy.
Some insurance companies , especially in the Florida
insurance marketplace, will not provide this coverage, but some
will do so upon request and payment of an additional premium.
Specific coverage components for consideration include:
A: Contingent Liability - This coverage provides funds to rebuild
the undamaged portion of the building if it has to be demolished
and rebuilt in accordance with current code. The South Florida
Building Code mandates the demolition of the undamaged
portion of any building that suffers a loss of over 50% of its total
8
structure.
B: Demolition - This section provides funds
to tear down and remove the undamaged
portion of the building if it must be rebuilt
according to local building codes.
C: Increased Cost of Construction – This
coverage provides funds for the additional
cost of construction as a result of current
building code requirements such as sprinklers, accessibility
requirements, and so forth.
Condominium board members should consult with an
insurance specialist to review their policy and highlight gaps in
coverage.
Keith Nicholson, CPA, CIC
Senior Sales Executive – Real Estate Services
Kornreich-NIA
Insurance and Financial Services
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9
The Search For Community,
Commitment and Contribution
-Marcy L. Kravit, CMCA, AMS, PCAM
Reprinted with permission from the Florida Community Association Journal
The late Peter Drucker (1909-2005), one of the most enduring management thinkers of our time, explains, “Every other American adult—90 million people
all told—works at least three hours a week as "unpaid staff," that is, as a volunteer with a nonprofit organization. By the year 2010, the number of such
“unpaid staff” people should have risen to 120 million and their average hours of work to five per week. The main reason for this upsurge of volunteer
participation in the United States is not the increase in need. The reason is the search for community, for commitment, and for contribution. “ Again and
again, when Mr. Drucker had spoken to volunteers, he had asked, "Why are you willing to give all this time when you are already working hard?" Again and
again, he had received the same answer, "Because here I know what I am doing. Here I contribute. Here I am part of a community."
Commitment
Volunteering offers the means to make a difference in one's community, but it requires an active commitment. Members of an association who volunteer
must understand the level of responsibility they take on when becoming affiliated with a community association board or becoming a committee member
volunteer.
It is important to recognize and fulfill:
(1) Acceptance of the responsibilities, commitment, dedication, loyalty, and time involved as an individual serving on a board of directors or committee.
(2) Responsibilities of the board/committee member to serve the community’s general welfare in accordance with the associations documents and state
statutes.
These responsibilities include ethical and fiduciary responsibilities. Volunteers must uphold the trust and confidence granted them in order to serve their
community members best interests. Strengths and commitments of board members and volunteers are changing. The level of professionalism is increasing
on all fronts. Volunteers are becoming more selective when choosing to serve on committees and on the board of directors. Individuals use their expertise
in their respective fields to provide needed direction for the community. Boards must adapt to the changing profile of volunteers and be willing to adjust to
their needs and expectations. Effective volunteers can build a strong, well-run community, but it requires communication, planning, goals, vision, financial
security, responsibility, and active participation.
Communication: Focus on Technology
Boards are relying more on fax, email, websites, cable channels and conference calls to correspond, disseminate and exchange information for improved
communications, and share agenda items. Great communication is always a positive and necessary step in building a strong community.
Strategic Planning
Since the board strives to serve the community, the board should use evaluation methods that help measure their success. The purpose of the evaluation
is to enhance professional development, along with efficient and effective delivery of services designed for the community. The evaluation is not an audit,
test, or system to promote criticism of the association. The purpose of assessment is to learn and improve rather than criticize. The performance strategic
plan is driven by results and outcomes that are linked to a defined timeframe. Evaluation also provides clear measures of the plans outcome and success.
Planning time is an investment in success! President Dwight Eisenhower said it best, “Plans are nothing; planning is everything.”
10
Why Plan?
·
·
·
·
·
Provides a common goal and plan
Sets a direction
Helps gain commitment
Enables managers and leaders to make informed
decisions
Determines how resources will be used
The Major Elements of a Strategic Plan
· Assessment of the Current Environment
· Vision and Mission
· Strategy
· Goals and Objectives
· Action Plans
· Implementation and Prioritizing
· Evaluation and Modification
Goals
To quote baseball’s Hall of Famer, Casey Stengel, “If you don’t know
where you’re going, you might end up somewhere else.”
The following concepts are critical in defining “who” your association
is and where you want it to go.
A Statement of Purpose
The purpose statement clearly states what your association seeks
to accomplish:
Why does your association exist? What is the ultimate anticipated
result and outcome of your work?
Purpose statements usually include two phrases:
• A statement that indicates a change, such as to increase, to
decrease,
to prevent or to eliminate the current situations.
• An identification of the problem or condition to be changed.
An example of a purpose statement is “to improve the quality of life.”
Vision
Martin Luther King, Jr. said, “I have a dream,” and what followed was
a vision that changed a nation. That famous speech is a remarkable
example of the power that can be generated by a person who
communicates a compelling vision of the future.
The Process for Creating a Vision
Like much of strategic planning, creating a vision begins with and
relies heavily on perception, enthusiasm, and dreaming.
As part of the process, you may wish to brainstorm with your staff or
your board what you would like to accomplish in the future. Talk
about and write down the values that you share in pursuing that
vision. Different ideas do not have to be a problem or crisis. People
can stimulate each other to more courageous and valuable dreams
and visions through discussions.
Financial Stability
Board members monitor the overall financial health of their
association by reviewing annual and monthly financial reports. As
part of their fiduciary responsibility, Board Members are actively
involved in making sure that the community realistically has the
money it needs to operate. This includes the board to ensure that
budgets are planned, proposed, and followed so that adequate
financial resources exist to operate and properly maintain and
provide the necessary services to the association.
Duty of Care
The duty of care describes the level of competence and capability, which is
expected of a board member. It is commonly expressed as the duty of “care that an
ordinary, prudent person would exercise in a like position and under similar
circumstances.” Board members must exercise due care and fiduciary care in all
dealings with the association and its interest. This includes careful review of
financial matters, preparation, reading and review of minutes, and attention to
issues that are of concern to the association. It includes listening and the raising of
questions whenever there is something that seems unclear, uncertain, or
questionable.
Participation
Individual Board members and volunteers should attend all board meetings and
actively participate in them and serve on committees. Finally, Board members and
committee members have the responsibility to know and fulfill their proper role as
board members and to act in the best interests of the association.
Community associations have changed and will continue to do so. Communities can
either react to change in such a way as to perpetuate separateness and invite
despair, or they can work toward establishing an interconnected wholeness. They
can provide opportunity for participation to all members. It is not an easy road. It
requires both skill and perseverance. Creating and achieving a healthy atmosphere
in your community is within reach. Volunteers need to work toward shared goals, if
they wish to foster innovation, dedication, and commitment for the benefit of all
members. Board members must encourage honest and constructive criticism. Most
members are committed and wish to volunteer for a good cause. With proper
encouragement and volunteer participation, the association will build community,
progress, and thrive. By applying many of these aspects mentioned, the community
will develop spirited individuals, utilizing their strengths in order to reach real
solutions for a successful association.
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Our program is simple... We assume the servicing of your
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11
WHEN NORMAL IS BEST: How an
Accounts Receivable Servicing Firm
Can Help Your Community
--Ken Arnold, CEO, Association Financial Services
There’s no doubt that these are tough financial times for
condominium and homeowners associations. But that’s just
providing more reason for more associations, property
managers and attorneys to partner with accounts receivable
servicing firms, such as Association Financial Services.
A recent article in the Wall Street Journal
talking about South Florida real estate
warned that “a high foreclosure rate [in a
condo
building]
means
special
assessments will likely be imposed…to
help pay for common maintenance costs.
That can unexpectedly raise your cost of
ownership.” And it could force out the remaining unit-holders
who can’t bear the increased cost. Non-payers and slow-payers
in an association threaten the well-being of the entire community.
Compounding this, mortgage payments are adjusting and many
people are simply walking away from their homes; it’s causing
chaos.
Property management firms can’t pay vendors. And good-paying
residents are faced with rising assessments, which essentially
just subsidize neighbors who aren’t paying. The end result is
that the value of properties will plummet and your community
could become a ghost town, rife with empty units or homes.
While the average community may “only” have 5-7% of its
unit-owners routinely paying monthly
assessments late, we’ve seen many
cases where 20-50% of association fees
are tardy. This forces property managers
to limit or delay payments to vendors. One
community that came to us was faced with
discontinuation of water service. Another
couldn’t get a bank loan to make repairs
from Hurricane Wilma. Today, they are
healthy associations . They are providing
the services expected, paying vendors in
a timely fashion, and—due to their improved cash flow—are
being viewed as reliable by banks.
And it’s not just foreclosures, non-payers or late-payers that
threaten condo and homeowners associations. The proper
management of accounts receivable also puts proper financial
controls on boards and property management firms.
An accounts receivable servicing firm can help save
communities by assuming those duties and normalizing cash
flow, mitigating non-payment of vendors, mitigating fraud, and
allowing property managers to focus on what they do best:
maintaining and managing the community. In some cases, we’ve
found that a normalized cash flow has resulted in more efficient
budgeting, which has in turn allowed associations to reduce
assessments.
12
Ideally, a community would choose an A/R servicing firm that
would fund 100% of the accounts receivable to the association,
regardless of whether all the condo or homeowners have paid,
normalizing the community association’s cash flow. This is a
useful service in both good and bad times because managing
cash flow has always been a problem for associations.
Normalizing cash flows enables a community’s board to:
cases allowing associations to lower assessments or
improve services
property – and not waste time on delinquencies and
collections
constant, and thus easy to track
In short, it brings normalcy and regularity to any community’s
cash flow. The service is similar in concept to those that provide
payroll servicing, such as PayChex or ADP, plus the additional
A/R funding aspect. In fact, the best ones offer multiple payment
options (online, automatic ACH withdrawals, etc.) to make it
easy for owners to pay and head off
owner’s accruing late fees, as well as
offer increased communication on the
status of their account.
Unfortunately, even in the best of
times, associations aren’t always that
effective in dealing with delinquent
assessments.
Despite
legal
requirements, sometimes, there is little
fairness and equity. The board
member’s best friend may be delinquent, so he gets a break.
And property managers are reluctant to put pressure for fear of
angering residents – and losing their contract – because it’s
those same residents who vote on their contract.
An A/R servicing firm removes the onus of making sure each
owner pays away from the condo or homeowners association
and property manager. They send monthly statements and
delinquency letters; do all the printing, stuffing and payment
processing. They assess late fees in strict accordance with the
by-laws of the community, with no favoritism shown. And they
have the burden of working with the collection attorney or
proceeding with foreclosure, if it was deemed necessary,
sparing the board from such time-consuming actions.
There is a solution for the growing cash crisis facing condo and
homeowners association, and an accounts receivable servicing
firm can show you how “normal” is often the best way to go.
Ken Arnold is CEO and founder of Association Financial Services
(AFS), which has helped numerous associations with their cash flow
and financial problems. AFS is the leader in community association
accounts receivable services. For more on how AFS can help you and
your
community,
please
visit
them
online
at
www.associationfinancialservices.com or call them at 305-677-0022.
The Florida legislature established the Florida Insurance
Guarantee Association in 1970 through the enactment of Florida
Statute section 631.50 et seq. The FIGA, as it is known,
essentially services and pays pending insurance claims made by
Florida policy holders of member insurance companies that have
become insolvent and ordered liquidated. In order to receive relief
from FIGA, the policy holder must have a “covered claim” which
means an unpaid claim that arises out of and is within the
coverage (and not in excess of) the applicable limits of an
insurance policy from an insurer that has been declared insolvent.
The maximum amount that FIGA will cover in the cases of
condominium and homeowners associations claims will be
$100,000.00 multiplied by the number of units in the association.
All claims are subject to a $100.00 deductible, above and beyond
any deductible identified in the policy holder’s policy. If your
association’s insurer is insolvent and in liquidation or bankrupt,
you should contact FIGA immediately to determine whether
coverage is available in your circumstance. You may contact
FIGA at 1-800-988-1450, P.O. Box 10366, Jacksonville, FL
32247-0366 or visit its website at www.FIGAfacts.com, where you
can review frequently asked questions about FIGA, a list of active
insolvencies being handled by FIGA and other very helpful
information.
Effective June 1,
2006, the Second
Judicial Circuit Court in
Leon County, Florida, entered orders placing Atlantic Preferred
Insurance Company, Florida Preferred Property Insurance
Company, and Southern Family Insurance
Company in receivership for purposes of
liquidation. These companies are
members of the Poe Financial Group and
are referred to together as the “Poe
Insurers.” The Florida Department of
Financial Services is the court-appointed
Receiver of the Poe Insurers. FIGA has addressed outstanding
claims of the Poe Insurers. The claims filing deadline for these
companies was July 1, 2007 and if your claim has not been
resolved, the deadline for filing legal action is July 1, 2008.
To find our general information regarding insurance entities in
receivership go to http://www.fldfs.com/Receiver
13
SELECTING THE RIGHT RESERVE
STUDY PROFESSIONAL FOR YOU
--Sally Conley, Reserve Advisors
APRA
Association of
Professional Reserve
Analysts is a nonprofit
corporation established in
1995 by principals of
America’s leading reserve
study companies. The
purpose of APRA is to
provide a forum to establish a
common base of knowledge,
standards of care and
professionalism within the
reserve study industry.
The RS designation is
awarded to experienced,
qualified reserve specialists
who, through years of
specialized experience, can
help ensure that community
associations prepare their
reserve budget as accurately
as possible. RS designees
must meet comprehensive
requirements including:
x Preparing at least 30
reserve studies within the
past three calendar years
x Holding a bachelors
degree in construction
management, architecture, or
engineering (or equivalent
experience and education)
x Complying with strict
rules of conduct outlined by
the Professional Reserve
Specialist Code of Ethics.
Community associations have undergone explosive growth in the past few
decades. It is estimated that over 50 million Americans now live in a
planned community compared to almost none only 30 years ago. This
growth is accelerating and, as is often the case, progress is accompanied
by confusion.
It is important that every community association board know what a reserve
study is and the pivotal role it plays in the future of the association. A
reserve study is the physical and financial analysis of all common elements
that the board is responsible for maintaining and details a repair and
replacement schedule over the next thirty years. A reserve study is critical
for many reasons, of which the most influential may be that it is a key
financial tool that helps the board to fulfill its fiduciary responsibility to
maintain the common property of the association.
In the early years, prospective buyers had no idea what they were getting
into with community living. Many board members were volunteers from
within the community and, as such, they enlisted to conduct virtually all
aspects of managing the association. An attorney on the board would
handle legal aspects; a CPA would act as treasurer and manage the books.
All board members would field calls from homeowners with questions, etc.
Subsequently, board members became more educated in their roles as
fiduciaries of the association. Overextended boards began looking for
professional help in all facets such as legal counsel, accounting services,
professional reserve study providers, and property management firms—
each specializing in needs unique to community living.
The unprecedented growth of reserve study services is a prime example of
boards reaching out for professional assistance. Most board members lack
not only the knowledge and expertise required to determine future capital
expenditures and replacement schedules, but also the time to compile this
data. Additionally, many do not want to assume the responsibility of
determining funding requirements. The board is responsible for maintaining
what is a homeowner’s single largest investment, and professional advice
is often the best way to go.
As the number of community associations continues to rise, so does the
demand for professional reserve study providers. Trying to find and select
the right provider can be a difficult task. It is important to know what
constitutes a professional Reserve study and who should conduct them.
The industry has seen the emergence of two organizations that are
committed to the development of high standards of competency for reserve
study providers: The Association of Professional Reserve Analysts
(APRA) and Community Associations Institute (CAI). The designations
that a reserve study provider can achieve in the respective organizations
are: PRA (Professional Reserve Analyst) in APRA; and RS (Reserve
Specialist) in CAI. The organizations share a primary goal of establishing
high standards to ensure that both the engineering and the financial
components of a reserve study are included.
Continued On Page 16
14
Representing Over 4,000 Community Associations Throughout Florida
Community Association Law • Covenant Enforcement • Legislative Advocacy • Civil Litigation
Collections • Foreclosure • Corporate Law & Transactions • Construction Litigation • Real Estate Law
Miami Dade
Broward
Contact: Rosa M. de la Camara
[email protected]
Alhambra Towers
121 Alhambra Plaza, 10th Floor
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Contact: Lisa A. Magill
[email protected]
Emerald Lake Corporate Park
3111 Stirling Road
Fort Lauderdale, FL 33312
www.becker-poliakoff.com
[email protected]
The hiring of a lawyer is an important decision.
Castle Management
- A Property Services Company Administration, Accounting, Insurance, Maintenance / Janitorial,
Landscaping, Pest Control, Security,
Painting, and Developer Services
On The Web:
www.castlemanagement.net
[email protected]
12270 SW 3rd St.
Suite 200,
Plantation, FL 33325
(T) 954.792.6000 Ext 880
(F) 954.792.9230
15200 Jog Road
Suites 205 A & B
Delray Beach, FL 33446
(T) 561.276.4500 Ext 880
(F) 561.792.6264
15
Do the reports comply with the AICPA Audit Guide
and relevant state statutes?
An increasing number of states are passing legislation
regarding association reserve funds and funding
requirements.
Continued from page 14
What is the firm’s background and experience?
Are they engineers or architects? What are their credentials?
Which organizations does the firm belong to that
demonstrate a high level of expertise in reserve studies?
Association of Professional Reserve Analysts (APRA)?
Community Associations Institute (CAI)? Other trade
associations such as Association of Construction Inspectors
(ACI), etc.?
Does the firm comply with APRA and CAI basic
requirements for a reserve study? Are both the
engineering and the financial components of the
reserve study included?
The study should include a component inventory, condition
assessment, life and valuation estimates, and a fund status
and funding plan.
What percent of the firm’s work is for community
associations?
Does the firm specialize in studies for community
associations, or are studies for community associations a
sideline business? If not, they may not be able to take cost
saving success stories from other communities and apply
them to your association.
What is the size of staff involved in our assignment?
What is the background of the individual inspecting the
association? Will others in the firm be involved in the
analysis and review? Does the firm have a strong quality
control system in place?
Does the firm use full-time employees only or
subcontract individuals such as part-time building
inspectors?
This question can speak volumes about the expertise of the
firm and its staff, or lack thereof.
Which method do you use for funding reserves—Cash
Flow or Component?
APRA and CAI endorse both methods. However, the cash
flow method determines minimum yet stable levels of
funding over the term of the analysis without the fear of
special assessments.
What is your basis for replacement costs of the
common elements?
The most accurate sources are database cost info and
internal database information of the reserve study provider’s
that are tailored to your locale.
16
Can you provide reserve study references that are
either of similar property style or in close proximity to
my own?
Contact references because they will often share what
they liked and disliked about a firm.
In addition to the above, there are many other benefits to
having a professional firm conduct your reserve study.
Due to their expertise and familiarity, the provider may be
able to make recommendations that can prolong or
extend the life of common elements and save the
homeowners significant dollars over the long term. Years
from now questions about the study can be answered
because the firm will be available, while an individual may
have moved away. A professional reserve study is also an
excellent tool for marketing the association to prospective
buyers and their lenders. Property is an investment and
the study will show that the association is managed with
expert advice, which adds to the value of the property.
The dangers of not funding or under funding reserves
should not be discounted
and determining appropriate
reserve contributions is not
an easy task. Boards do not
want to be faced with
unpopular and/or difficult
choices such as special
assessments or obtaining
bank loans in order to
the
common
The life span and condition of the maintain
elements
for
which
they are
roof is one of many facets
responsible.
A
professional
considered in a reserve study.
reserve study provider can
determine adequate, not excessive, reserve contributions.
A professional reserve study is an accurate, long-range
strategic plan that is essential for an association’s
success. It is important that the study be conducted by a
knowledgeable, reputable firm that meets or exceeds the
guidelines set forth by APRA and CAI in order to ensure
the most precise physical and financial assessment of
your property. Like many things in life, one feels more
secure when you know something was done right—a
professional study is the best way to provide peace of
mind for the community association board and
homeowners.
Sally Conley is the Director of Graphics/Media for Reserve
Advisors, Inc. She develops targeted marketing activities,
apprising the industry of leading Reserve Study services. Visit
www.reserveadvisors.com or call (800)980-9881 for
information on Reserve Studies.
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17
18
19
Lyons Tech Corporate Park is a commercial property comprised of 15 buildings and
11 separate properties. Some of the offices and warehouses are commercial
condominiums, but all are governed by the Lyons Tech Corporate Park Master
Association, Inc. Shari Lynn Hurtado, CAM, manages the master association, coping
with the competing interests of owners of businesses ranging from aluminum
fabrication and distribution to computer software development. The master common
areas include a nature preserve and a lake with a fountain that adds to the aesthetic
value of the community and facilitates water aeration. Security patrols provide the
owners with an additional comfort level not present in other commercial properties.
Lyons Tech was bestowed with the prestigious Building Owners and Managers
(BOMA) “TOBY” award, recognizing the quality of its management, efficiency, tenant
retention, emergency planning and community impact. The owners and employees
of the businesses within the community very generously contributed to the holiday
toy drive benefiting Miami Children’s Hospital organized by management which
plans to continue philanthropic efforts in the future.
9369 Sheridan Street
Suite 614
Cooper City, FL. 33024
PRSRT STD
US POSTAGE PAID
WEST PALM BEACH FL
PERMIT NO 767
Visit Our Website: www.cai-seflorida.org
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