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For a property manager, it was the homework assignment from hell. Take this 11-page questionnaire home with you over the weekend and spend several hours filling it out, explaining in great detail how you would go about managing a 96-unit Art Deco co-op in Brooklyn’s Park Slope.
The form, a “Request for Proposal and Statement of Qualifications for Property Management Services,” or RFP, is the sort of document co-op and condo boards traditionally send out when seeking to hire contractors or engineers. Now some boards have begun using simple RFPs – usually a couple of pages – when seeking a new management company. But the document produced by a four-member committee at the Park Slope co-op is very elaborate – and it could serve as a template for other boards looking to change management companies.
“We’ve gotten RFPs in the past, but not like this one,” says Andrea Bunis, president of Andrea Bunis Management, the company that was recently hired by the Park Slope co-op from a field of 13 candidates. “This one was very detailed, with a lot of questions, and I spent a lot of time answering them. They asked some questions about my personal finances that I thought were a little over the top. I told them that was proprietary information, and I didn’t answer it.”
But Bunis answered everything else to the board’s satisfaction, and on May 1, her company began managing the co-op, which was deeply dissatisfied with its previous management company.
The Process Begins
The process of replacing the old company began last spring, when Albert DeLeon, an attorney who has been the board’s president since early 2009, approached several shareholders about helping with the hunt for a new management company. “I like to get non-board members involved in the building,” DeLeon says. “I came up with four names – Stephen Bupp, who has experience managing condos; Paula Wagner, a retired teacher; Leith Harmon, a financial adviser; and Ben Forsyth, a retired college administrator.”
The committee gathered references, visited other buildings, pored over Habitat’s annual listing of managing agents. “It was Leith Harmon who came up with the idea of using an RFP – because she’s smart,” says DeLeon. “There’s no rule book on this.”
Working with DeLeon, the committee began to hammer out a document that specified what it expected from a management company. “I’m a lawyer, so I crafted a lot of it,” says DeLeon. “We didn’t re-invent anything. You can find a lot of this stuff on the web, but you try to tailor it to your building. We knew what we wanted. We wanted someone who has handled similar-sized buildings, maybe pre-World War II, someone who can manage staff. We wanted professionalism, responsiveness, experience, and recommendations. We checked their reputations.”
Committee member Stephen Bupp, who manages condos and homeowners’ associations in Maryland, says RFPs are widely used in management company searches outside New York City. “I think [the approach] works,” he says. “I gave my fellow committee members a sample RFP from Maryland. We cut parts, added others. We wanted a management company that would manage the building and the staff, instead of letting the board do it. That had been the case before in our building.”
The finished 11-page RFP went out to 13 companies, along with a cover letter. Six declined to fill out the questionnaire, saying they didn’t want to spend the time. The committee members whittled the list to five and visited the companies’ offices. After checking references – including at least one property that had terminated each company’s services – the committee came up with three finalists. Each of those three companies came to the co-op for individual 50-minute interviews with the full board.
Bupp says that in addition to each candidate’s RFP, the types of buildings they manage, the services they offer, and their references, the board was looking for an intangible he calls “relaxed professionalism.”
“Andrea Bunis’s presentation was good,” says DeLeon. “They know what they’re doing. They told us some things we didn’t know – for example, that the new energy benchmarking law is about to take effect. That’s the sort of thing we expect our managing agent to know.”
Another asset is that Bunis’s company has a website with a Client Resource Center, which sends notices, fields complaints, and posts building by building bylaws, house rules, and codes of conduct. “We did a meet-and-greet with all shareholders during our first week on the job,” Bunis says. “We also sat down with the staff and explained that there will be change.”
“The biggest change I hope to see,” notes Bupp, “is that staff and management develop a ‘can-do’ attitude. It’ll be a challenge for shareholders to deal with change – nobody likes change – but it can be very positive.”
“We’re moving into the age where people are now doing things electronically, especially if they’re traveling,” says DeLeon, who is pleased with the role the RFP played in the co-op’s search for a management company. “I’d never heard of this being done before. You hear all these stories about bad management companies. How do you make them honest? If you do an RFP, you really have them on the hook, and it lets them know you’re about business.”
Bupp agrees. “I don’t know how boards are going to judge property managers if they don’t write down standards,” he says.
But Alex Kuffel, president of Pride Property Management, cautions that RFPs can’t simply be imported here from other cities. “If they’re going to be used,” he says, “they need to be tailored to the mandates and requirements – the idiosyncracies – of New York City.”
In the case of the Park Slope co-op’s lengthy RFP, Kuffel noted a glaring unawareness of these idiosyncracies. On the page titled “Management Bid Form,” the questionnaire asks the management company to specify if its fee will be a flat fee or a percentage of the maintenance billed, the maintenance collected, the gross potential maintenance, or some “other” number.
“What went through my head when I read that,” says Kuffel, “is that they took a nationwide RFP for a rental property and sent it out to management companies. All companies that manage co-ops and condos in New York City charge a flat fee. In rental properties it’s a percentage of the rent roll. If a co-op refinances its mortgage and the maintenance goes up, it wouldn’t be fair for the management company to collect more fees. So this question about fees is not applicable here.”
Howard Mandel, a managing agent with TKR Property Services, believes that while RFPs might prove useful, they’re no substitute for experience.
“I’ve had four RFPs in the past two years, so I would say it is not uncommon,” he says. “I think it’s happening more since you have more board members who work in finance getting involved. If you have a seasoned board that has been in control for a few years, you do not need an RFP to decide on a new management company. But if you do use one, I think an interview should come first, and then the RFP. That way you don’t scare the management company away.”
Andrea Bunis, for one, is glad she completed the homework assignment from hell. “I knew where I stood and what they wanted before I signed on the dotted line,” she says. “And that’s not a bad thing.”