FCAP Community—August 2021

FCAP Community

Published August 2021

     Florida Community Association Professionals’ (FCAP) training is offered on two levels. Level one consists of courses meeting Florida’s continuing education requirements for CAMs, and level two is the Florida Advanced CAM Studies (FACS) course. For further information about the more than 38 online continuing education classes available or to pursue the Certified Florida Community Association Manager (CFCAM) designation, please visit www.fcapgroup.com/membership/education-training/.

Betsy Barbieux

Because You Asked
By Betsy Barbieux, CAM, CFCAM, CMCA

     Several of our current board members want an audit for their protection due to the questionable practices of our predecessors. I’d like to hear our attorney’s advice, given our situation, as well as guidance from you on whether, and if so, how often, we should have full audits. What is the difference between a review and an audit? We are a cooperative with more than $500,000.
– Mary

     The statutes (§719.104(4) are clear as to the financial reporting requirements for cooperatives. My belief (as a non-attorney) would be that any requirement in your documents is superseded by the statutes.
     The audit is required for all associations whose revenue is above $500,000 unless the shareholders vote every two years to provide a lower level of reporting, i.e., review, compilation, or cash report. I would think you are already doing an audit each year unless the shareholders are voting to reduce the reporting requirements.
     The fees that I have from a CPA firm indicate an audit is between $4,000 and $15,000. If you suspect foul play, you’ll want to contact a CPA, attorney, and state attorney’s office.
– Betsy

     Our shareholders recently voted to allow the board of directors to install and spend up to $23,000 for the addition of new fencing. The wording on the limited proxy was “not to exceed $23,000.” Now, several months later with skyrocketing prices, the price increased to $26,600. Can the board spend more than was voted on?
– Dave

     Unfortunately, since you were so specific as to the “not to exceed” figure, for the board to make the decision to spend more would exceed the authority the shareholders gave the board. It would be worth asking the contractor if he will honor the original estimate. 
– Betsy

     I have several questions for you and would like your thoughts on the following:

  1. Our board wants to cancel some of our insurance policies because the premiums are too high.
  2. Are there exceptions when board members can be sued?
  3. Can board members be sued and not the non-profit association?
  4. Would the association be responsible for paying any legal fees?
  5. Can board members be personally liable for any financial shortages? i.e., poor accounting or embezzlement?
  6. Can board members be held personally liable for a violation of state financial statutes? Example, not requiring three bids for contracts over $10,000.

– Thomas

     Wow, that is quite a list. You should check with your attorney or insurance agent, but here are my layman’s thoughts.

  1. Before you cancel any insurance, check your governing documents. They often require director/officer insurance and general liability as well as property insurance. The statutes also require a fidelity bond/crime insurance for all persons who control money/signs checks, which would include officers and the manager.
  2. Yes, board members can always be sued for decisions they make at board meetings. That is why the vote of every board member must be noted in the minutes; that is, how each board member voted—yes or no—on every motion. My understanding is that when sued, the D & O insurance carrier will want to see the minutes. Board members who acted within their fiduciary duty will have their legal defense fees paid.
  3. Both are sued; the association and the board members individually.
  4. Yes, the association will pay any legal fees not paid by the D & O insurance. This may mean a special assessment of owners. Board members who violated their fiduciary duty will not have their legal defense fees paid. That will come out of their pocket along with any fines or punitive damages.
  5. Poor accounting is stupid but not illegal. Embezzlement is a criminal offense and should be handled by the State Attorney’s Office. Board members are not personally responsible for poor management but should be voted out at the next election.
  6. Yes, they are personally liable for their actions (§§718.111, 719.104, 720.303, Florida Statutes). However, the statute does not require three bids nor does the statute require that board members take the lowest bid. There are statutory exceptions to the bids requirements. Be sure to ask your attorney and insurance agent!

– Betsy

     Does Florida allow voting for board election by proxy? We are a small HOA with only eight units.
– Teresa

     The condominium and cooperative statutes specifically prohibit voting for board members with a proxy. Owners must use a secret ballot when voting. 
     However, the homeowners association statute does not make mention of it, so you are driven by your documents. That voting procedure should be in your bylaws.
– Betsy

Marcy L. Kravit


The Past, the Present, and the Future of the Internet and TV

Marcy L. Kravit, CMCA, AMS, PCAM, CFCAM

     Do you remember the days of dial up and DSL?

     DSL: Copper wires can do serious damage if not professionally installed and maintained. They can generate electromagnetic currents that interfere with wires and severely damage a network. Fiber cables do not emit electromagnetic waves, nor will they be damaged by them. They are made from plastic and/or glass; therefore, they are unaffected by the harmful waves. Copper cables also conduct electricity, so they pose a potential fire risk if not professionally installed and maintained. This also means they are more susceptible to lightning and can be extremely dangerous if they go down during a storm. Florida is prone to storms!

     Symmetrical Speeds: Everyone uses the internet in one of two ways, downloading and/or uploading. When you watch something on Netflix, you are downloading. When you upload a video to YouTube, you are uploading. Downloading and uploading are typically represented at different speeds.

     One of the many things that makes fiber optic internet superior is that it provides symmetrical speeds where download and upload speeds match. DSL and other types of internet only offer asymmetrical speeds, where download speeds are faster than upload speeds.

     COVID-19: The pandemic highlighted that DSL broadband is outdated and a thing of the past!

  • How are your community association residents consuming TV, internet, and media today?
  • How will they do it tomorrow?
  • What is influencing your choices?
  • What is the impact of the internet in your association, and how do you forecast the entertainment/media landscape for your future needs?
  •      The Past: Back in 2009, according to Todd Spangler at Variety.com, 87.8 percent of American households had either a cable or a satellite TV subscription; however, by the end of 2019, that number dropped to just 65.3 percent of American households, as more American households opted to engage internet-based TV subscriptions, such as Netflix, Hulu, and YouTube TV.

         The Present: These days, we are driven and focused on data and media consumption. The fiber optic technology continues to strengthen, and the need for gigabit speeds becomes more and more evident.

    It is important to engage with a telecommunication service provider that specializes in community associations offering bulk discounted rates.

         The Future—FTTH: Fiber to the Home connectivity is no longer a luxury; it is a necessity and a requirement to provide for virtual remote distance learning, video streaming, entertainment, security, telemedicine, Zoom conferencing, remote work, and the use of multiple devices. FTTH provides residents significantly faster speeds. According to New Street Research, company data, over the next decade FTTH deployment could increase by 20 million to 60 million. This would take FTTH availability from 25 percent to 35 percent of households.

         The market research firm Strategy Analytics stated that while in 2020 we spent $90.7 billion on traditional pay TV (an eight percent drop from 2019) and $39.5 billion on streaming (a 34 percent jump from the year before), by 2024 legacy pay TV will only account for $74.47 billion—with streaming ahead at $76.3 billion. 

         Telecommunication services are changing; and negotiating a contract that protects the residents and property values takes time, understanding, and education! Determine what makes sense when upgrading the existing infrastructure to meet future needs.

         Fiber optics, or optical fibers, are long, thin strands of carefully drawn glass about the diameter of a human hair. These strands are arranged in bundles called optical cables. Fiber optic internet is the way of the future for delivering broadband.

         As the industry shifts to fiber optic cable for faster internet speeds, many associations will be negotiating new contracts. With fiber optic internet, the association has the flexibility and infrastructure to increase to 100 Gb speeds over a more reliable network. The installation of the physical fiber requires digging the fiber to the building and the over-build and launch process. Fiber has virtually unlimited bandwidth, and its durability will last for years to come! Fiber is future ready and fast!

         Smart Homes & Security: Smart home technology is growing! Connecting every aspect of your home so it runs smoothly from your smartphone and monitoring your home remotely is becoming ever so popular.

         Things to Consider:

    When seeking a new service provider, here are some things to consider:

    • Does the association currently have a bulk service agreement for internet, television, and/or phone services in place, and if so, will it expire or renew within 24 months? It takes time to evaluate your options for your residents and common areas.
    • Did you know that the FCC ruled to eliminate exclusivity clauses for the provision to MDUs [multiple dwelling units] , and your current agreement may be impacted?
    • How much space is available in the association’s telecom rooms?
    • Does the agreement provide for an access or easement agreement, and if so, what are the options?
    • Does the agreement offer an introductory/promotional rate for the first year and provide reasonable increases year two and after?
    • How many different paths to the building can the fiber cable take?
    • Is there sufficient power for the fiber-optic technology?
    • Will the service and fiber technicians and employees of the telecommunications company be direct hires, or are they subs/1099 employees?
    • How long will the agreement run?
    • What speeds does the service provider offer for upload and download? Are they symmetrical?
    • Does the service provider offer a community channel?
    • What options for programming will the service provider offer (retail) outside of what the association’s bulk contract will provide?
    • What are the equipment fees to lease or purchase the equipment?
    • Are there any startup costs or installation fees?
    • Who will pay the service provider?
    • Did you have your CPA review the governing documents to determine how the assessments may be apportioned across the community?
    • What are the fees for a technician to come out for a non-related company service call?
    • Does the service provider offer bundling TV, internet, and phone service packages to homeowners to save money?
    • Does the service provider offer incentives for switching providers?
    • Does the service provider offer temporary suspensions for snowbirds/seasonal residents?
    • Does the service provider offer an assigned account manager?
    • Is the service provider a trusted partner for hospitality facilities, sports stadiums, and government facilities?
    • Does the service provider offer an SLA (Service Level Agreement) defining the service requirements?
    • Does the service provider offer the latest and greatest Wi-Fi based mesh network solution?
    • Does the service provider define ownership of the hardware, home-run wiring, and wiring inside a unit?
    • Does the service provider offer security solutions?

         Technology MDUs: The landscape for technology is ever so changing for MDUs. Education regarding new technology, choosing a service provider that is customer focused, and considering how it will affect your association is essential. With these tips in mind, your service provider and contract will help meet your association’s needs.