Is it time to ask vendors to cut rates?

The short answer is Yes, kind of, When Dan Greenstein brought the subject up yesterday about freezing contractor prices for 1-3 years or doing an outright cut, there were nervous coughs from the vendors in the audience. Can I afford a bidding war this year? No, Will my service come in as low bid most of the time, No. Do I make a ton of money, No, so there's no room to cut, right? My cost for fuel, tires, fertilizer, salt all doubled last year, but there was no room to double the prices. Here are 2 areas where cuts could be made. I'll focus on lawn and snow because it's the biggest part of your budget, but it could apply to anything. Here are 3 quick areas that you could look at: 1. Cutting services in your contract. We talked to a large office park last year that needed cuts. We already had a contract in place, but we went through the specs and cut out an edging, pruning and one application of fert and weed control. 2. Standard bid specs. I'm the #1 advocate for standardized bid specs. (If you don't have them, I'll send you one) Here are a few specs that can be cut that will have minimal effects on quality and minimal impacts on contractor profits. 1. Apply much around all trees (whether it's needed or not) Too much mulch is BAD for trees 2. Rough Cut 7 times per year. There's a site I'm looking at now, where I can save them $4000 if I cut it 4 times per year. There is a segment of the market that will likelyy either put off landscape care or reduce their maintenance programs. We are working closely with all our clients to prioritize the work that cannot be put off, and giving them a program tailored to their budget. It's important to maintain open, honest communications with each other. Someday we'll talk about hybrid snow contracts.

Preparing your townhome association for spring part I

YOUR LANDSCAPE – WHAT YOU DON’T KNOW COULD KILL MILLIONS PART I

That’s right. As a homeowner, you’re responsible for millions of living organisms. You’re the “Jack Bauer” of the show “24” protecting millions of innocent lives!Grass plants, ornamentals, trees, annual flowers and shrubs. Your decisions also affect insect and biotic populations. Most importantly, you’re in control of how your landscape affects you and your family personally. The best way to make the most of your living investment is knowledge and of course, action!

At the end of this article, I’ve included a link to www.Townhome.Pro, where I’ve added links for your lawn, landscape, trees and garden. This website is dedicated exclusively for MHA members at this time.

Let’s get started!
“Da Lawn”
We’ll start with the lawn. It’s very important to have a thick, healthy lawn. Why? My daughter plays soccer and I shudder everytime she gets knocked down. (I never cheer when she knocks someone else down.) When kids play on your lawn, or when elderly residents walk in it, a thick lawn protects their skin and joints. A thick lawn also prevents weeds from coming up, reducing the need for pesticides. So, what can we do in the spring to get there?
First, write down your thoughts about last years’ turf. What improvements would you like to have seen? Then “spring” into action. If you have a lawn contractor, discuss fertilization options with him/her. Are they applying 2-3 pounds of Nitrogen per year? Nitrogen has a direct relationship to the color of the lawn. If the lawn isn’t thick and green, ask them to do a soil test, or you can do one using the easy instuctions on the website. (Cost $15.00 plus postage) Do they use slow release or fast release fertilizer? Quick release fertilizers give the lawn a quick greenup and are cheaper, but they lose their color after 2-4 weeks. If you’re getting 3 applications per year, with normal release fert, you get 4 weeks of food and rapid growth followed by 4 weeks of partial starvation. Using slow release feeds gradually, and keeps the lawn growing at a more regular pace. Ask your contractor if he likes double cutting and bagging grass clippings, if he says yes, I owe you a $5.00 gift certificate to Caribou Coffee. When he says no, tell him that using slow release will cut down on rapid flush growth, and cut down the need for a lot of extra labor. Everybody wins!
There is bound to be some winter salt or plow damage too. These areas need to be seeded or sodded right away. I recommend bringing black dirt in if needed and if using seed, use blends, such as kentucky bluegrass and perennial rye for sunny areas, and fine fescue, perennial rye and bluegrass for shady areas. If seeding, expect weeds. Crabgrass control can’t be applied to these areas unless you use Siduron (Tupersan), but broadleaf controls can be used after the seeded area is mowed twice. Seed or Sod, water a couple of times per day for short periods of time.
This article may be reprinted as long as the author information below is included.
Steve Hoogenakker, Steve@Landscape.Pro
CAI Minnesota, MHA, CICMidwest, Steve Hoogenakker, Showcase Landscape, Taylor Made Landscape,

Minnesota Common Interest Ownership Act - Financing

FINANCING
Cooperative housing is housing owned by a cooperative corporation, usually a nonprofit corporation. In Minnesota, a cooperative corporation is formed under Minnesota Statutes, Chapter 308A. A housing cooperative is also a common interest community under the Minnesota Common Interest Ownership Act, Minnesota Statutes, Chapter 515B. In order to create the common interest community, a declaration must be filed when the construction is complete. A cooperative corporation typically is formed by a developer/sponsor, which will build the cooperative housing and sell the completed facility to the cooperative corporation. The developer/sponsor usually controls the board of directors until a certain percentage of the cooperative memberships have been sold (the statute caps that percentage at 75 percent).

The primary distinction between a housing cooperative and other forms of homeownership is that, in a housing cooperative, the owners do not own real estate. The real estate is owned by the cooperative corporation. Each member of the corporation owns a share in the corporation. Each membership share represents a unit of housing in the cooperative. Each membership entitles the member to an exclusive right to live in a specific unit (established through an occupancy agreement or proprietary lease) for as long as the member wishes. It sets forth the rights and obligations of the member and the cooperative to each other. Legally, it is viewed as a lease by the member with the housing cooperative.

Ownership of a share and the ability to occupy a unit may not be separated. Each unit carries with it the right to one vote in the business of the corporation. A cooperative operates for the benefit of its members on a not-for-profit basis in order to provide the goods and services members need at the lowest practical cost. Each month the members pay an amount that covers their share of the operating expenses of the cooperative corporation.
The interest on the financed portion of the price of a share is deductible by the member for federal income tax purposes and, in Minnesota, for state income tax purposes. Real estate taxes are also deductible. Other benefits include lower turnover rates, controlled maintenance costs, and resident participation and control.

A purchaser of a membership share in a housing cooperative is paying for a share of the cooperative housing corporation. The purchase price will vary depending on amenities, the location, the size of the unit, whether the cooperative limits resale prices, and whether the cooperative has an underlying mortgage for the entire property.

There are two common methods of financing in Minnesota. One is through an FHA-insured mortgage that is made to the cooperative corporation and secured by the real estate owned by the cooperative corporation. The other is through a construction loan from a conventional lender followed by individual loans to the purchasers of the shares in the cooperative corporation. The proceeds of these individual loans are used to pay off the construction loan.

Loans made to individual members to purchase shares in the cooperative corporation are commonly called share loans. A share loan is like a mortgage. It provides the member with borrowed funds to buy the share from the cooperative corporation. The member makes monthly payments on the share loan to the lender and monthly carrying charge (maintenance) payments to the cooperative corporation.

A loan made to a member of a cooperative is evidenced by a note payable to the lender. security for repayment of the share loan is a pledge of the share in the cooperative corporation. This share and its attendant rights are pledged by a security agreement. Instead of recording a mortgage, a UCC Financing Statement is filed with the secretary of State. The lender will also take possession of the stock or membership certificate evidencing the ownership of a share in the cooperative corporation. The occupancy agreement or proprietary lease (the contract between the cooperative corporation and the member that sets the conditions for the right to occupy a particular unit) is conditionally assigned to the lender as additional security for repayment of the share loan.

The lender will also sign a recognition agreement with the cooperative corporation. The recognition agreement is an understanding between a cooperative and the lender that provides share loans to the cooperative's members or shareholders. The recognition agreement outlines the responsibilities between the cooperative corporation and the lender and the courses of action that must be taken by each party if a shareholder/member defaults on the loan. It should also provide for notice to the lender of any default by the member under the occupancy agreement. In particular, it should require the corporation to notify the lender if the member misses a monthly maintenance payment.

If the member defaults in repayment of the share loan, the lender may enforce its rights under the collateral assignment of the occupancy agreement and under the uniform commercial code with respect to the share in the cooperative corporation. Both these actions must occur in order for the lender to sell the share and assign the occupancy agreement to a new member. This process is significantly quicker than foreclosure of a mortgage. Any purchaser of the share must meet the criteria in the cooperative documents (particularly the declaration, the occupancy agreement, and the bylaws) for membership in the cooperative corporation and occupancy of a unit. Written by:

SHERRILL R. OMAN
Bank & Finance Group
612.492.7131
soman@fredlaw.com

Steve Hoogenakker
Steve@Landscape.Pro
www.Landscape.Pro
www.Townhome.Pro

CAN YOUR ASSOCIATION AFFORD NEEDED CAPITAL IMPROVEMENTS?

Community Association Law - Association Improvements
CAN YOUR ASSOCIATION AFFORD NEEDED CAPITAL IMPROVEMENTS?
Townhome Association, Minnesota Townhouse Association
The decks are falling apart, the siding needs paint, and the roof is due to be replaced. Does your community association have enough in its reserve fund to pay for these necessary projects? Unfortunately, many associations do not have adequate reserve funds for capital improvements. There are generally three primary solutions to this problem: increase annual assessments, impose a special assessment, and/or finance the project(s) with a bank loan. This article provides legal guidelines for addressing the problem of inadequate reserve funds.
Community associations suffering from inadequate reserve funds are put in that situation for a number of reasons, including the following:
Increased assessment delinquencies causing a budget shortfall;
Increased maintenance costs due to pricing increases or demand for improved maintenance;
Construction defects;
Inadequate initial assessments by developer;
Inadequate assessment increases by prior boards of directors;
Reserve requirements imposed by the Declaration or Bylaws;
Reserve study implementation requirements;
IRS reserve allocation requirements;
FHA Recertification; and
Minnesota Common Interest Ownership Act ("MCIOA") reserve requirements under Minnesota Statutes section 515B.3-114).
While other reasons exist, the above lists some of the most common reasons for inadequate reserve funds - all of which require action by the association's board of directors.
The board of directors has a duty to maintain the financial viability of the community association. The first step in meeting this duty is to understand the current financial situation by evaluating current and future financial needs to meet the obligations imposed on the community association by the declaration. Community associations often analyze their current financial situation by conducting a reserve study, which provides an analysis of the current capital items, determining each capital item's age and expected useful life, and then estimating the timing and amount of future capital improvement expenditures. The reserve study further analyzes current and future financial resources to determine whether any inadequacies exist now or in the future when capital improvement expenditures come due. Reserve studies are available from a variety of sources including management companies, independent consultants, accounting firms, certified public accountants, and through software packages.
If the board of directors determines that a reserve fund shortfall exists (or will exist in the future), it must take action to meet its fiduciary duty by using reasonable and good faith efforts to implement a financially sound plan for the growth and use of the association's financial resources. In short, the board of directors must take affirmative action to correct the inadequate reserve fund situation.
The first method for increasing reserve funds is to increase annual assessments and the amount of those assessments being deposited into the community association's reserve fund. While governing documents generally allow the board of directors to make increases to the annual assessments without homeowner approval, most place a limit on such increases without homeowner approval. Assuming that the association can increase annual assessments by a sufficient amount with or without homeowner approval, and the association has sufficient time to increase its reserve funds before capital improvements become necessary, an annual assessment increase is an effective solution to the inadequate reserve fund problem.
The legal method for implementing an assessment increase is primarily determined by the governing documents, including the declaration, bylaws and articles of incorporation. Although many associations have similar provisions concerning assessment increases, specific provisions must be carefully reviewed prior to increasing the annual assessment.
The same principles are generally applicable whether or not the community is a planned unit development (townhouse) or condominium. However, there are some important differences between planned unit development (townhouse) and condominium documents. For example, there is generally no homeowner vote required to increase annual assessments or impose a special assessment in a condominium association, but there may be limits on the amount of the increase. In any case, the association and its counsel should carefully review the governing documents prior to proceeding with the annual assessment increase.
If capital improvement items are required now or in the near future, the association must look at alternative solutions, usually a special assessment or bank loan financing. A special assessment is a one-time assessment to the affected units, which is used to pay for the necessary capital improvement project. While a special assessment may be an effective solution, many governing documents require homeowner approval of any special assessments, and the homeowners may not support the proposed special assessment. In these situations, a board of directors cannot force homeowners to approve the special assessment, even if there is a recognized need. Nevertheless, the board of directors must undertake efforts to correct the inadequate reserve fund issue by affirmative action to meet its duty to the association.
If an annual assessment increase or a special assessment is not possible or feasible under the circumstances, an association facing inadequate reserve funds for capital improvements may attempt to finance the capital improvements with a bank loan. Again, the governing documents must be analyzed to determine whether the board of directors has the power to obtain financing - either with or without homeowner approval. In situations where the other alternatives are not available, bank loan financing provides the community association with a means to accomplish the required capital improvement projects, and the bank loan is paid out of future annual assessment revenue. Since additional revenue will be required to meet the loan payment requirements, the association must have sufficient revenues in its budget to repay the loan, or the association must be able to increase its annual assessments to meet these new obligations.
Whenever an annual assessment increase or special assessment becomes necessary, there are many commonly applicable legal principles involved in the process. The declaration creates a lien for annual assessments (usually payable in equal monthly installments) and special assessments (usually for capital improvements in the year imposed). The declaration fixes an initial annual assessment and sets forth method of increasing the assessment. The declaration typically allows discretionary increases by the board of directors without consent by the owners. The most common discretionary increase is limited to five percent (5%). The board of directors is required fix any annual assessment increase at least thirty (30) days prior to calendar year end by resolution, and written notice to the homeowners is commonly required.
Annual assessment increases in excess of the discretionary amount or special assessments usually require consent by vote of the homeowners. Whenever homeowner consent is required to increase annual assessments or to impose a special assessment, the first step in the process is to call a meeting of the homeowners. Notice of the homeowner meeting are typically controlled by the bylaws, requiring written notice a specific number of days prior to meeting date, and including a statement of proposed meeting action. At the homeowner meeting, a quorum (the required percentage of all homeowners) must be present in person or by proxy to conduct business at that meeting. Once a quorum is established, the homeowners may vote on the annual assessment increase or the special assessment, but approval of the requested action must comply with the approval requirements of the association�s governing documents, regardless of meeting the quorum requirements.
The above information should prove helpful in analyzing your community association's assessment rights in dealing with inadequate reserve funds. However, it is important to note that each association's documents are unique, and the board of directors must look to the governing documents to determine the applicable legal requirements for dealing with the inadequate reserve fund issue. If the board of directors is uncertain as to the association's assessment rights and procedure, it should seek competent legal counsel prior to implementing an annual assessment increase, special assessment or bank financing.
Deepest gratitude to: Liz Hersey at 952-746-2158
© 2006 Hellmuth & Johnson, PLLC - 10400 Viking Drive, Suite 500 - Eden Prairie, MN 55344 - Ph: 952-941-4005 - info@hjlawfirm.com
Found on site www.townhome.pro Contact Steve Hoogenakker at Steve@Landscape.Pro Taylor Made Landscape Management

Top traits of Great Property Managers - CAI seminar

I attended CAI's "The Top Traits of Great Property Managers". It was held for townhouse association managers and property managers. CAI did a good job of organizing and presenting the program even though Julie Adamen, the presenter was unable to get here because of snow.
It was held at the Ewald Center on April 11th given by Marj Peterson of Creative Transitions. Here are my thoughts about the session and the high points. You can join CAI by going to http://www.cai-mn.org/

The seminar covered many principles of property management and strategies for dealing with townhouse association boards. Here is the short version of the top traits. I'll cover in more detail below.
1. Effective Communicators
2. Present themselves well
3. Are organized
4. Follow through
5. Don't procrastinate
6. NEVER give an answer they're unsure of.
7. Value vendor relationships
8. Admit mistakes and fix them
9. Maintain a professional distance
10. Stay current with the townhome and property management industries
11. Deal with Change
12. Have a sense of Humor
13. Value Integrity and Credibility above all else.

The most important traits were Integrity and Credibility. I can vouch for Integrity being important. When designing a mission-values statement for a company recently, I came up with 7-8 goals or principles to live by. Listening to Jerry Porras' Success Built to Last, he made the point that if you don't have integrity, then who can believe the rest of the mission statement? Who can believe you? Pretty simple and powerful point. So Integrity seems to be the #1 trait for any professional manager or business. Next, she talked about the 3 steps that people use to judge these two traits:
1. Judge people by first impression
2. When we open our mouth, they start to judge us
3. The Test of Time.

Next, Marj talked about Communication. She said the three C's of great communication are "communicate, communicate, communicate". Frequency of communication are certainly important, but we all know that.

More interesting was her thoughts about talking with multiple people on the board. Paying attention to the styles of one person on the board, who might be a visual, driver (director) is a small challenge, but communicating with an entire board that consists of kinesthetics, auditories, influencers, conscientious, etc... might be like communicating with Sybil.

Even though she listed "present themself well" separately, it fits in with communication and judging by first impression too.

Great Managers Follow through. Follow through by returning phone calls and emails, visiting the owner and finishing projects.

Great Managers admint (whoops, sorry)mistakes and take responsibility, then FIX the mistakes.
Don't give answers your unsure of. Marj points out that as a manager, you are a "generalist" You are not an expert on everything, even if a board expects you to be.

Maintain a professional detachment. Something I find very difficult to do, but I know the wisdom of it. She had a manager that sent emails to every one of the residents in association and they were'nt nice emails.

Mangers stay current with changes in the industry. Joining CAI and Multi Housing are two great organizations and resources for managers. The fellowship with other peope in the industry is always worth the price of membership. You just have to commit to getting involved.
http://www.cicmidest.com/, http://www.cai-mn.org/. Click on these links to get more information.

Organization is obviously important. One of the managers uses a program called Filmaker Pro to organize everything. She said it tracks all tasks, sends them to email and files everything.
Another manager color codes file folders and a couple of people talked about color coding their calendars.

Work on only one thing at a time. Marj brought up the term "Paper Chicken Pox" The question is: If you had to put a dot of your pen on a piece of paper every time you touched it, would it look like it had "Chicken Pox"? Touch papers only once, or preferably, keep everything electronic.
These are my opinions only and not the opinions of the speakers or CAI.
You can subscribe to this feed, comment on this posting, contact me about other questions you have, or send me articles that other professional managers might find useful.

Steve Hoogenakker

mailto:Steve@Landscape.Pro
http://www.townhome.pro/
http://www.landscape.pro/

Townhome Association and Condo Answers FAQ

A great explanation of basic townhouse and condominium association facts and answers to common questions by Maury Beaulier - Minnesota (612) 240-8005

Condo & Townhome Association FAQ's

1. What is a Community Association?
Community Association is a generic term used to describe residential developments in which each owner is bound to a real estate organization by a set of governing documents that require adherence to a set of rules and payment of assessments. The money collected in assessments is used for the operation of the association. Membership is automatic when a unit is purchased. There are typically three types of Community Associations, including:
a. Condominiums
Typically, high rise style buildings where the exterior of the building and the grounds are owned and maintained by the Association. In this style of property, an owner typically owns the property within the four walls of their individual living unit. An owner has an undivided ownership interest in the common elements (typically including the roof, exterior building surfaces and grounds).
b. Planned Unit Development (Townhouses)
Townhouses developments generally consist of platted properties where each owner typically owns the living unit and land under and/or directly adjacent to the living unit. There are usually party walls between units which are the joint responsibility of the owners adjacent to such surfaces. There may or may not be common areas and the Association is typically responsible for maintenance of exterior building surfaces. Generally, the Association owns all common areas.
c. Cooperatives
These are the least common (in Minnesota) of the various types of Community Associations. In a cooperative, a corporation holds title to the real estate, including the units and common areas. Typically, the share interests and/or leases gives the owners exclusive rights to a unit within the building.
2. What laws are Community Associations subject to in the state of Minnesota?
Generally, all associations formed after June 1, 1994 are governed by Chapter 515B of Minnesota Statutes, known as the Minnesota Common Interest Ownership Act. Community Associations are also generally governed by Chapter 317A of Minnesota Statutes, known as the Non Profit Corporation Act. There are a number of other statutes which may govern or apply to Community Associations. For specific guidelines with respect to your Association, you should consult with competent legal counsel.
3. What documents typically govern Community Associations?
Generally, there are four major documents that govern associations. Each document has a different purpose that is typically, as follows:
a. Declaration (of Covenants…, for Condominium…)
The Declaration governs the real estate forming the Association. Generally, the Declaration contains assessment provisions, real estate definitions, maintenance obligations and other information. This is the primary document establishing the Association and subjecting the land to Association governance.
b. Articles of Incorporation
The Articles of Incorporation are filed with the Minnesota Secretary of State to form the Association. The articles define and establish the non profit corporation. Often, the articles contain powers and duties relating to the Association.
c. Bylaws
The Bylaws are the operational guidelines controlling the Association. The Bylaws typically contain guidelines concerning meeting notices, quorums and voting and other operational issues. The Bylaws also define the Board and the roles of officers and directors of the Association.
d. Rules and Regulations
Rules and regulations are generally specific guidelines and policies relating to the day to day operation of the Association. Common topics covered by the Rules and Regulations include pet rules, collection policies, storage and property use restrictions, parking and other property issues.
4. How do Community Associations Operate?
Associations typically operate through a volunteer Board of Directors who oversee the operation of the Association. Community Associations may be self managed or may hire a management company to perform this role. The Board typically meets on a monthly basis to decide all issues involving the Association. On an annual basis, the Association holds an owners meeting to elect new board members and to update all owners as to the status of Association operations.
5. What Resources are Available to Community Associations?
There are a number or resources available to Associations. This web site contains links to helpful information about community association related topicsor for a consultation with aleading Townhome & Condominium Association lawyer call 952-746-2153.

Thanks to Maury Beaulier http://www.minnesotalawyers.com/ who provided this article.
He can be reached at (612) 240-8005!

Steve Hoogenakker - http://www.landscape.pro http://www.townhome.pro Steve@Landscape.Pro