Most likely, your homeowners association is following the rules. Your declaration is up to snuff and you’ve done a reserve study. But do you have a business plan?
You should, according to R. Timothy Rooney, president of Erincorp, a marketing and management firm in Schaumburg. He helped write the business plan for the association he serves, Lexington Green II Condominium Association, also in Schaumburg.
“From any number of viewpoints, a homeowners association is a business,” he says. “Net incomes are often half a million dollars or more. Even the smallest associations are looking at replacement costs for buildings, grounds and equipment of a million dollars. Reserve studies probably show millions if not tens of millions of capital expenditures which will occur within the next 10 to 15 years. That’s a business and a business requires a business plan.”
A business plan puts in writing an association’s goals and maps a way to achieve them. It goes beyond the budget, governing documents and vendor contracts by providing boards and management with a step-by-step guide to running the association.
A reserve study isn’t enough, he says. “It doesn’t tell us how we should be running our association.”
Last year Lexington Green incorporated into its business plan a multi-step regimen for re-siding its 64 buildings, which comprise more than 400 units. The process included how the project would be carried out, investigation of payment options and how the financial solution–a special assessment–would be presented to the residents.
“The result was very little, if any, animosity toward the board,” says Rooney. “We had more than fair acceptance toward our plan.”
How do you create a business plan for your community? You can hire a consultant with experience in community associations or you might have a homeowner who will volunteer his or her expertise. Many books have been published in recent years on how to write one. Rooney offers the following pointers:
– Start with a mission statement that reflects the overall vision for your community. The mission statement for Lexington Green II Condominium Association is: “to be the pre-eminent coachhouse community in the Chicago metropolitan area as measured by appreciation on homeowner’s equity, competitive rates of assessment, growth of association assets, aesthetics and service to its constituents.”
If you don’t write a business plan, create a mission statement, says Rooney. But don’t think it’s easy to get a board consensus. It took a year to write Lexington Green’s.
A couple years ago, one condominium board was discussing which improvement projects to put into their next budget.
“We want to be a luxury community,” said a board member who advocated raising assessments to upgrade many of the common elements.
“No, we don’t,” said another. “We’re middle class here.”
A mission statement would have helped them with their decision-making.
– Define your objectives in three categories–financial, operations and marketing, all of which support your mission statement. You’ll have to define the goals that best fit your association’s needs, but financial planning could include projections for investment returns and how to pay for improvement projects. Marketing objectives might be increasing awareness of your community among local real estate brokers or improving the quality of your newsletter.
Include specific tactics and time frames under each category, says Rooney. He also advises using verbs such as “increase” and “decrease,” which call for action, rather than “develop” or “create,” which tend to delay action.
– Include your contractors and property manager as you create your plan. Generally, they are the ones carrying out your objectives and you want them on your side.
“At the very least, you want them to be aware of what your objectives are,” says Rooney.
– Review your business plan regularly. Don’t wait until the end of the year to determine your hits and misses. Refer to it at every meeting to track your progress. Then update it every year. Your goals will change as you meet some and make new ones.
And what happens when a new board comes in next year and presents its own agenda? Well, that happens to many associations, says Rooney. A business plan can thwart some of that.
“If you don’t write something down, it’s a guarantee the next board will change what you guys thought was best,” he says. “If you do have published documents, it’s an obvious attempt to assure continuity in purpose and action from board to board.”
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The Council of Oak Lawn Condominium Associations is sponsoring a seminar, “Condominium Boards: Powers and Responsibilities,” on Saturday, May 10, from 10 a.m. to 1 p.m. at the Oak View Center, 110th Street and South Kilpatrick Avenue in Oak Lawn. The cost is $5. The public is invited. For registration or information call 708-857-7439.
Do you have an issue you’d like to see discussed in a future column? You can write to Pamela Dittmer McKuen at Community Living, Chicago Tribune, Your Place section, 435 N. Michigan Ave., 4th Floor, Chicago, Ill. 60611. Please include your phone number. Or e-mail Pmckuen@aol.com. Answers to queries will be provided only through the column.
