After 40-odd years in the management business, you’re of the opinion that most people who live in co-ops and condos have no idea what their boards do. Is that really true?
It’s 100 percent true. I find it amazing that most shareholders and unit-own-ers really don’t know what their boards do, how they do it, what their roles and responsibilities are, the roles of the managing agent and the building staff — really, what a board does on a day-to-day, week-to-week, month-to-month, year-to-year basis.
Why don’t owners understand these things better?
I think that boards don’t take enough time to communicate and explain. I go to a lot of annual meetings every year, and the two buzzwords that I hear all the time are “communication” and “transparency.” And they’re right. Boards don’t really sell themselves, or at least explain how hard their job is. It’s a volunteer position with no thanks and a lot of aggravation.
What can boards do to overcome this?
I think they need to explain what’s going on in the building. There’s the simple tool of a monthly, bimonthly, or quarterly newsletter. We can send email blasts out to the residents. In addition to the annual meeting, we have what’s called an informational town hall meeting. We like to do it around the budget season, so sometime around mid-November to early December. We let everybody know about the projects we’re working on, how we’re financing them, how they affect the board, the residents, the staff, and the building.
So a town hall meeting works well for explaining building budgets?
Well, that’s two-part. We talk about the projects, and that leads into the budget. Budgeting has become such a science that it’s easy to explain if you educate people. We print out 11-by-17 sheets with the budget, and we go through it line by line, income and expenses. And we get to have an open dialogue with people about how much money is coming in and how much money is going out.We know that something like 70, 75 percent of the budget is fixed: mort-gage, insurance, payroll, real estate taxes. There’s not much you can do about those things. Only about 25 percent of the budget is discretionary. So explaining the budget line by line gives people an understanding and an ownership of where their maintenance is going.
What else does this kind of meeting accomplish?
Not only do residents understand what the board is doing, but they understand what the managing agent is doing and where their money is going. They understand some of the rules and regulations that are always changing. So it’s a great informational meeting, and it tends to be a little lower key than the annual meeting because there’s no election. It’s really more of an intimate, one-on-one between the board, the residents, and the managing agent.
And it’s an education.
We really believe that besides transparency and communication, education is paramount, and the more that the shareholders and the unit-owners understand, the better off everybody is. They see that nobody’s hiding anything. Boards want to share the information. They want people to be involved. They don’t want to do all the stuff themselves, so they want to share and educate because it really makes a big difference.