by Michael Hamline, Editor / Published August 2020
There is a proverb that says “out of sight, out of mind.” If you serve on the board of directors, you can’t or shouldn’t allow this proverb to come true in your community. Because boards of directors in community associations have a fiduciary duty to their association, they shouldn’t allow physical elements in their communities to be forgotten. This issue is important because it reminds association leaders to set money aside for the maintenance and upkeep of the property, and it serves as a warning for what will happen if the elected officers don’t carry out their fiduciary responsibilities.
On page 8, Will Simons of Association Reserves has written the article “Don’t Let the Ball (or Balcony) Drop!” He presents a story about a fictional association that is inspired by a true story. This association neglected to maintain its assets and failed to update its reserve study, but when a balcony fell off the side of the building, it became evident that the board’s choices to not maintain the association were catching up to them. Simons remarks, “The moral of the story: Small, seemingly insignificant choices can lead to big problems.”
Turn to page 14 to read the article “Be Your Association’s Financial Leader” by Ron Peck of Centennial Bank. He says, “Associations are created for the sole purpose of maintaining and preserving the association property values.” To fulfill this mission, Peck talks about the importance of preparing a budget with fully funded reserves and sharing this information with the owners to bring them on board with the reserve plan. He also talks about establishing an investment policy and comments, “Your first priority is to maintain principal and minimize risk. Next is to maximize return with minimal risk.” He provides several safe investment options and describes them.
Other articles in this issue deal with obtaining proper insurance coverage for your association, developing a community security budget, and publishing a deadbeat list, which is inadvisable.
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