Is your co-op run by one dominant board member? Or are you serving on the board, clueless about what you should be doing – but also vaguely aware that you shouldn’t be leaving all your decisions to the managing agent? Or is your board having trouble getting its hands around the idea of a “cooperative,” still referring to maintenance as “rent,” and half-expecting the landlord to take care of things? Oh, wait a minute! That “landlord” is you!
If you – or your board – are having difficulties understanding your roles and the scope and limits of your authority, be warned: lack of the necessary skills and confusion over board roles, responsibilities, and powers often lead to bad governance, which, in turn can lead to poor decisions and, possibly, future financial problems. Celia Dunayer, the property manager of two co-ops in Washington, D.C., says that the board members don’t “recognize the gravity of their fiduciary duties.”
The National Association of Housing Cooperatives (NAHC) has come to the rescue with “Roles, Risks, and Rewards –The Three Rs for Co-op Boards,” a workshop designed to teach board members the basics. Funded by a grant from the National Cooperative Bank, attending the workshop is like having a personal trainer: the instructor studies your problems and then comes to your building to train your board in proper procedures. Taught in about eight hours (with breaks), the session is divided into three modules: why boards govern; how boards govern; and what boards do (board responsibilities). At least 60 percent of a board’s members must go to the workshop for it to be effective. And at the end, participants get a workbook that contains the material covered in the workshop, including a Power Point presentation. The workbook is a reference tool for board members to refresh their memories on what they learned.
Boards should take the workshop for the following reasons:
It educates boards on the basics. It covers all the information that a board needs to know in order to effectively run its co-op, including board members’ powers, duties, and responsibilities, and how to read and understand financial statements.
It’s convenient. The sessions are held at the co-op, so there’s no need for attendees to travel. Kendra Perry, secretary of the board of the Seabury co-op in New Haven, Connecticut, which is scheduled to take the workshop later this year, says that convenience was “a huge selling point.” The board members are at home and just have to come downstairs to attend.
It’s customized for your co-op. The workshop is different from other available training because it’s personalized for each co-op. It uses the building’s own legal and financial documents, including its bylaws, proprietary lease, house rules, financial statements, audits, and budget. Before a manager leads a workshop, he spends time reviewing the co-op’s documents and speaking to its property manager so that he knows what the challenges are and can then tailor the workshop sessions accordingly.
Many co-ops rely on outdated documents, particularly bylaws and house rules. So, the workshop is a good forum to discuss issues, such as pets or noise. The instructor then helps the board create rules to address them. They also discuss the value of forming committees and the board’s relationship with the property manager. And they learn which decisions the board can make on its own and which need a vote of all the shareholders.
There are currently only eight trainers available to teach the workshop, and the co-op chooses one. Choosing the right person is important. You want an instructor with experience in your type of co-op; for example, a specialist in market-rate cooperatives would not be the best choice for a federally financed property.
It teaches the board members as a group. The workshop is unique because it teaches the board members as a group. This feature distinguishes the workshop from other courses. And it’s important because it ensures that all board members have the same basic knowledge, the absence of which can be an issue for some co-ops.
It teaches the board members to work together. The trainer doesn’t simply stand there and lecture for a number of hours, says Kimalee Williams, a trainer and vice president of Westford Real Estate Management, a Connecticut property management company. Instead, the teacher will speak about a particular topic, and then open the floor for discussion. Such interaction is important because it teaches the members to work through their issues together, which is what they should be doing in their actual meetings. The workshop also teaches conflict resolution – whether it’s a conflict between board members, between the board and a shareholder, or between the board and the property manager.
The workshop provides a forum for board members to ask questions they’ve always wanted to ask, says Douglas M. Kleine, executive director of NAHC, but it isn’t cheap, costing $1,500 for up to 10 participants ($50 for each additional participant). And, if the chosen trainer is from out of town, the co-op has to pay the trainer’s travel and hotel expenses.
Williams suspects that board members who sign up for the workshop will do so “to get a better understanding of how to serve the co-op and fill their roles.”
That’s the case with Perry’s board. She says that it doesn’t have any real issues, but adds: “We think we have an idea of how a co-op is supposed to run, [but we] aren’t sure.” She hopes that the workshop will help the board members operate better as a board, and give the members an extensive knowledge of co-ops that they can pass along to the other shareholders.
Julia Eichorst, president of a Maryland co-op, participated in a session and says the training and trainers were excellent. “They went over our own documents and discussed them,” and led the board members in quite a few discussions. She adds that the workshop was “so worthwhile and eye-opening. Everyone who took the class was impressed. Even seasoned board members walked away with new knowledge.”