October 2015 Board Member Newsletter

The Sharper Source - News for Board Members

Board Tips: Meetings Are For Decisions
In each newsletter issue we try and tackle topics that can help make Board meetings more productive. Perhaps we jumped the gun, though.  Tools for running effective meetings are great, but there's a prelude to those things that is imperative.  The perception of what a meeting is actually supposed to be!

Put simply - a regular meeting of the Board of Directors is a business meeting to make decisions and document approvals. That's it. Period.

So many Boards and Associations fall into the habit of treating a Board meeting as the opportunity to brainstorm topics, collectively review bids, debate homeowner concerns, etc.  It's natural. After all, you're going to be in a room together, so why not just do everything then, right?

Being on the Board is not just one-day-a-month job.  Discussion with one another can happen between meetings - and individual preparation should be done by every member of the Board.  Your Community Manager works hard to provide you with meeting materials, financials, bids, etc. PRIOR to the meeting. Come to the meeting prepared and having hashed out items beforehand.  Everyone's time is valuable and Board meetings shouldn't be a chore.  If you are dealing with complicated matters, consider putting together committees and having unofficial "working sessions."

Lastly, if you enjoy socializing and having treats at your Board meeting, that's great.  You must be a cohesive group. But save it for after the meeting. Get down to the business of making decisions and motions on behalf of your Association.   You will find that Board meetings are shorter, less frequent and most of all, more productive. There's an added bonus, as well.  Effective and efficient Boards don't seem to have an issue with member retention or find it difficult to get new members to join.

Governing Documents, Part III: Getting Member Approval
This final piece to our three-part story on Governing Documents will focus on the steps to take to get membership buy-in, which hopefully translates to approval, of your proposed amendment or completely re-stated document(s).

But first, let's recap where we've been.  In the first article we outlined the hierarchy and primary function of each Governing Document.  In order of legal priority - The Plat/Map; the Declarations; the Articles of Incorporation; the ByLaws; and finally, the Rules & Regulations.

In our last issue, we covered the requirements for amending the Declarations (typically 67% or 75% of owners and often times a percentage of first mortgage holders) and ByLaws (typically a majority of members). Most notably, however, we also discussed and strongly advised restating the entire document(s) - which takes the same process and requirements as making a single change with a single amendment. If your Documents are older or have been amended in the past, it is much better to re-state than to amend.

So now that you've decided to re-state your Declaration and/or ByLaws, how do you go about it?

Review Your Current Documents - The first step is READING your current ones.  Each Board member should individually read over the document(s) and flag areas for discussion, clarification and a possible change.   Simultaneously, the Community Manager and whatever attorney you plan to use for this project should do the same. There may be statutory or even illegal sections of your document that should be brought up to date.  Everyone should then come together as a group and go over their notes. 

***TIP: It is helpful to have a facilitator that will start a master check list of sections up for discussion. This will come in handy later! 

Draft Your New Document - As a Board, you will need to come to agreements on various topics. Perhaps in the ByLaws it requires 7 Board members and some want to change it to 5. Or perhaps the Declarations has front stoop is listed as a Common Element and the Association is responsible for maintaining, but some feel it should be a Limited Common Element and homeowner responsibility. Another common example is that some may want to see Leasing restrictions, while others don't want to touch the topic at all.  You are going to have to go through and debate these things, and come to an agreement. Sometimes that may mean calling a vote to settle it.

The changes and questions (via your handy master checklist) should be sent to the attorney and they will then draft your brand new document.  As a Board you will need to go through it and make sure it accurately captures all of your changes.  This may take some time!

Call a Meeting - Once you feel your draft is ready to present to the membership, a special INFORMATIONAL meeting should be called.  The draft document and notice of the meeting should be mailed to all owners. At this meeting the Board should give an overview of why the Association is embarking on getting a new document(s), go through and highlight the primary changes, and have the attorney present to help aid in a closing question and answer session.

This informational meeting is invaluable because 1.) it will become clear to you what hot button issues you need to further explain, better persuade the members of, or quite possibly change if it's clear it may be a "deal breaker" for votes.  The informational meeting is, essentially, a litmus test of your membership. 2.)  it is also the ultimate opportunity for you to get "buy in" to the new document for when it does come before them for a vote.  You've spent a lot of time (and money) to this point - it is SO important to get the members to understand and ultimately vote in favor.  Their opinions may vary, but without their understanding of a complicated 20+ document you certainly won't have their support.

Finalize Your New Document - After the informational meeting, the Board may or may not have to make further changes to the draft. Finalize the document and distribute to the members for their approval.  This process is going to vary by your current Declaration or ByLaw requirements.  Most often, it can be done via "consent" - whereby you would just need to include a form for them to fill out their name, address/unit #, consent or no consent and their signature.  Sometimes the Declaration may require first mortgage holder approval, in which case there would be another form for the owners to write in their mortgage holder information so that the attorney can begin collecting their consents.

Alternatively, you can collect the votes at a Special Meeting called for that purpose, or as an agenda item at your regular Annual Meeting.  But be careful of this approach. While a meeting may be another opportunity to answer questions and gain support before they vote, it can also become an opportunity for members to raise further questions or debate this or that - and before you know it, the document you've worked hard on to this point may be in question and difficult to pass.  Know your membership and have a sense of if you really feel you have the support of the membership before you take the approach of voting on it at a meeting - verse a mail in ballot/consent form approach.  

Which bring us to a TIP: *** Board members need to work to garner support. Say HI and remind your neighbors when you see them in the driveway to get their vote/consent in.  Make yourself available and ask folks if they have any questions when you see them at the mailbox. You've got to do some campaigning.  You will also get a good gauge if the document has the necessary support or not!

As you can see, re-stating your Governing Documents can be a lot of work. But again, if you have an old set of documents or have various amendments, it is a worthwhile initiative. In the long run, it can save you in legal fees and will help both homeowners and Board members have a little more clarity on the governing and legal framework of the Association.  Just remember the process takes time, and the more methodical you can be in obtaining membership buy-in, the sooner you will have your new set of Governing Documents!

Fiduciary Duty
As many Associations enter budget season, it's a good time to reflect on a phrase that is thrown around, but seldom understood and all too often not taken seriously enough  -  Fiduciary Duty.  Be it the approval of a budget, the granting of a homeowner request or the selection of a contractor, as an elected Board member and representative of your community association, it is your legal obligation.  So what does it mean?

According to Webster Dictionary, Fiduciary Duty is "the legal duty of a fiduciary to act in the best interest of the beneficiary."  Yeah, OK. That's well enough. In the context of your role as a Board member, however, we can dig a little deeper.

As a governing body, the Board of Directors has three primary functions:
1.)    A policy making body (creating Rules)
2.)    An approval body (approving a budget, managing architectural controls or contracting services)
3.)    An oversight body (reviewing financials or evaluating vendor services)

According to our industry resource, Community Association Institute, as an individual Board member you work to fulfill these functions and meet your all-important fiduciary obligations under two doctrines.

*    Duty of Care - making reasonable and informed decisions; regularly attending and participating in Board meetings; exercising independent judgement; relying on experts, but still exercising good business judgement; and acting in the best interest of the Association as a whole.
*    Duty of Loyalty - putting aside all personal interests; eliminating conflicts of interests; and exercising power in good faith to benefit the best interests of the community.

In summary, to ensure you are fulfilling your Fiduciary Duty - remember your primary functions as a collective Board and individual Board member, and ensure you are guided by the principles outlined in Duty of Care and Duty of Loyalty. To be even more succinct - work smart and don't be selfish!

(See more at https://www.caionline.org/LearningCenter/ResLib/Pages/3454.aspx )
Sharper News & Notes
Business Journal Ranking: At Sharper Management we are very proud of our rapid growth in the Community Association market. We feel that growth is a direct result from the excellent and unique "product" we offer in an often times cookie-cutter market. Our hard work was recently recognized when we were ranked #9 in the Minneapolis/St. Paul Business Journal's "The List: Residential Property Management Firms." The list and ranking is based entirely on the number of residential units managed. We thank you and your Association for helping us reach this milestone!

Online Feedback: as Board members, we truly value your feedback. If you appreciate the work we do for you and your Association, we want to encourage you to take a few moments and write some positive feedback and comments via an online "review." Among others, Google, Yelp and BBB are common sources of reviews that pop up on search engines. Please help us establish a review log that is reflective of the excellent service we feel we provide!

Sharper Staffers:
Betsy Erickson is every vendor's favorite person at Sharper Management. She cuts the checks! Betsy is our Accounts Payable gal. In addition to paying the bills, she also works with our Maintenance division to reconcile hours and material charges for maintenance jobs.

Sharper Maintenance: Did you know that Sharper has a maintenance team available to service both Association and homeowner repair / remodel needs? Our team of highly skilled and General Contractor licensed techs are ready to tackle any project including plumbing, electrical, drywall, HVAC, painting, exterior repairs, etc! We feel our maintenance division is a value-add in our management services to your Association!

Contact Matt Froehlich with questions or to schedule. (952) 224-4777 or matt@sharpermanagement.com 
Sharper Management and Toys for Tots
Sharper Management will be collecting toys for the 2015 Toys for Tots drive.

Members may drop toys off at the Sharper Management office in Eden Prairie from now until December 4.

Additionally, we will be picking up toys from our communities where there is an onsite Sharper Management office.

If you have any questions, please contact matt@sharpermanagement.com.