By Kathy Danforth / Published Oct 2015
The Venetian Condominium, winner of the Financial Innovation category for smaller communities, also captured the Condominium of the Year award in the 2015 Communities of Excellence contest. The Ft. Lauderdale high rise, built in 1971, had neglected its maintenance and finances for a period of time. In 2006, the board decided to change management and tackle upkeep of the building and the budget. Their change in approach has enabled the building to upgrade, pass their 40-year-recertification with no deficiencies, eliminate loans, and stabilize finances for the future as well.
With more than 20 years of experience working in condominiums, Wilfredo Lopez was hired as an independent manager nine years ago because his skills met the building’s needs. “I had been a chief engineer before I became a manager, and I like to restore buildings, so that means I pay attention to the mechanical issues and financing,” he shares. “When I came, the building had loans and there was not enough money allocated to pay for insurance out of the budget. Now we can write checks to any contractor for planned expenses, we can pay insurance in full and avoid financing charges, and there have been no maintenance fee increases or assessments in the last eight years.” Taking care of the building’s needs while improving finances required the association to prioritize, economize, and be realistic.
“We have saved significant amounts by being proactive with contractors and watching every project very closely,” says Lopez. “Not all the projects have to be done right away, so we’ve prioritized and taken a conservative, proactive approach. I know everybody likes cosmetic work done first, but most residents understand why we care more about the structural and mechanical components. Because we’ve projected our costs for 10 years in our planning model, that eliminates the need for special assessments and financing.
“The electrical panels were brought up to the new code about seven years ago,” Lopez recalls. “Our maintenance committee chairman had an electrical background, and we knew it had to be done before recertification. It cost us less to do it then than it would now.”
Lighting has been changed to more energy-efficient models—first fluorescent and now LED. “There is no magic wand for saving energy; you have to tackle it little by little,” Lopez observes. Other energy-saving measures include installing motion sensors on lights, switching to energy-efficient natural gas pool heaters, and replacing propane with natural gas for the grills. Association energy costs were also cut by switching to a natural gas “pipeline supplier” and installing an electrical meter at the docks so dock users would pay that expense rather than the entire association.
“The air conditioning risers were corroded and had plugs in the line, which was normal for the age of the building,” according to Lopez. “This reduced the flow to the units and consumed more energy. Four
or five companies—good companies—had tackled the problem with different approaches, but the reality was that it needed to be replaced. Looking for a cheap solution without continuity was putting on a band-aid instead of fixing it. The cooling towers were replaced this year, and the domestic motor pumps were replaced with variable frequency drive motors resulting in $1,500–$2,000 per month in energy savings. Also, we are saving on water because the system no longer has water splashing out. Overall, electricity costs have been lowered by 37–50 percent since 2006,” reports Lopez.
The community has established a preventive maintenance program for their roof that should extend its life 30–40 years. “Every year, we recoat a 10–15 percent section of the roof,” Lopez explains. “In ten years, we’ll go back and start over. This way we don’t have to bring in cranes to redo the whole roof. It’s a good plan that has worked for other associations.”
The community completed a concrete restoration project, waterproofed the decks, and resurfaced the pool. Plumbing upgrades are performed when owners remodel their units. “We do this when construction is already going on to avoid being too intrusive,” Lopez relates. A tankless water heater was installed in the community’s kitchen, but it was determined that installation in units was too intrusive and the building’s wiring was not sufficient for that load.
With the real estate market recession, the association implemented processes to minimize delinquencies and their associated costs. Direct debit of monthly association fees is highly encouraged and is now used by two-thirds of the owners. Staff began issuing the 60-day certified notices to delinquent owners, speeding the collection process and reducing legal expenses. Renters pay rent directly to the association should the owner default on fees, and the association foreclosed on two units, renting one out to recover funds. To prevent collection problems the association adopted a rigorous application review process, which has in some cases included collection of maintenance fees in advance or securing a personal guarantee from an officer for some corporate owners. Consistent application of procedures and early communication of issues have been key to successful collections.
When Lopez became manager, one of the first goals was bringing security in-house. “We’ve improved service, and it cost $65,000 less the first year,” Lopez recalls. “Before, the contract security service would send a variety of employees to the property. Now the residents know the security guards, and we have more continuity. We pay our guards more than the contract security company paid, and they are all licensed and trained for our building.”
“There have also been upgrades to the security system. Two or three years ago we had limited control over who was coming in,” says Lopez. “We had an open front entry with arms, so when the guard was attending someone on one side of the small guardhouse, anyone could walk in behind him. We installed electronic gates and cameras so now we have access control. For security issues, though, training and support from the board and management are the most important factors.”
“The residents of the Venetian are predominantly middle-aged working professionals,” says Lopez. “Sixty percent of the units are occupied full time, and about 30 percent of the owners are out of state. The location is perfect—one block to the ocean, with restaurants and entertainment in the area. However, because of all the local activity, the community requires more security on the weekends.”
An active social committee keeps the residents entertained close to home, also. “We supply a budget for
holiday celebrations, such as St. Patrick’s Day, Cinco de Mayo, and Fourth of July,” relates Lopez. “One of the biggest events is the annual boat show and party. We take advantage of the view from our location to see all the fancy boats around, including magnificent $10,000,000-plus yachts. For that event, the snowbirds are here and we’ll have 70-80 percent of the residents attending. In the low season, only 20 percent of the residents may come to events.”
“The communication at the Venetian makes it unique,” states Lopez. “I know how high-rises can be, but this is a peaceful community. The directors communicate with the owners, the administration, and the manager, and they follow the bylaws and regulations. For any violations, we try to treat everyone equally, with a phone call, then an e-mail, and then a formal letter. The quarterly community magazine was revived nine years ago and that spotlights problems, projects, and positive events such as donations. We’re working on having CCTV installed in the elevators by the end
of the year, and one of our two local channels will broadcast community messages and videos.”
“We’ve reached a point where we’re sound financially, mechanically, and structurally,” states Lopez, “but now we have to maintain and continue with the plan. You can’t just fix it once; if a maintenance system works, you have to continue to monitor it. Being proactive is key for condominiums. Sometimes owners don’t want to face the reality of costs that are necessary, and that can create a lot of trouble in a building.”
“I’m happy to work for an association like this, where the maintenance committee chairman is very active and the board listens to recommendations,” Lopez comments. “We are going by principles and priorities, and that’s working!”
By Kathy Danforth
Editor’s Note: 2015 marked the fifth year for Managers of Excellence, which honors professional community association managers. Anna Brautigam was one of five managers honored in 2015 as a manager of excellence.
Anna Brautigam’s decision to enter community associationmanagement was one of the rare benefits of the recent economic slump. Brautigam shares, “I came to Miami for my MBA, but the financial crisis happened right when I graduated so there weren’t many jobs. My parents have a condominium in South Florida and my dad suggested property management, so I checked into it and approached KW Property Management and Consulting. I started as an assistant manager and moved on to several different properties before spending three years at Yacht Harbour. Next month, I will be starting at the Grove at Grand Bay, a new property in Coconut Grove.”
Yacht Harbour had been self-managed since its construction, but serious physical issues and imminent 40-year recertification led the board to hire professional management. Brautigam explains, “We made dramatic changes, which were rather sudden for residents who had been there since the beginning and were used to how things had always been. The biggest challenge initially was winning over those residents so they could see what needed to be done and why.
“We updated the reserve study and developed strategies to boost reserve accounts. A special assessment was required for the project, but the board is very educated and wants reserves funded properly so that this will not happen again in the future,” Brautigam shares.
“After planning, the construction project took two years. The pool deck was resurfaced and waterproofed, concrete balconies were reinforced and repaired, new landscaping was installed, and elevator components were replaced,” according to Brautigam. “We had weekly construction meetings with the architect, project manager, all contractors, two of the board members, and myself. We would discuss problems, come up with solutions, and get approval from the board, because you need a plan to keep going forward immediately.”
Brautigam comments, “One of the main things I learned through these projects was to be flexible with my own schedule and to be empathetic with the residents. You have a list of things that have tobe accomplished, but when you are dealing with people’s homes and lives, there will be interruptions in your day. You will have people who are concerned or worried, and it’s important to take the time to go to their unit and see what they’re talking about. Yes, it’s an interruption, and you may not get everything done, but at the end of the day, you’ll have residents who know you care about them. Later, when there are difficult times, they will remember that you do care about them.”
A monthly newsletter was started and social activities were also revived to bring the residents closer together. “We hosted parties on the pool deck, enjoyed a potluck with the annual meeting, and hostedHalloween events for children,” Brautigam recalls. “This has helped bring more of a sense of community.” They have developed a social committee and a grievance committee, which has been effective in improving compliance.
The staff has had regular training, including life safety training to get everyone certified in CPR and first aid. “We’ve also held staff lunches and parties to help everyone feel that they’re part of the team,” says Brautigam.
Brautigam’s advice for managing association finances is to stay informed of the financial condition of the community every day. “I run a cash management report and delinquency report every week to see where the money is and to identify problems quickly. You have to understand the actual situation to avoid making a big mistake,” she adds.
“Get out of your office every day and walk your property,” Brautigam recommends as an essential step in caring for the physical property. “Use all five senses and look at it with the eyes of someone who is paying to live there. The worst thing to me is when a resident has to report that something on the property is wrong—something is broken or dirty or smells or is strange. We should notice it before they do!
“Dealing with residents requires being a bit of a psychologist,” according to Brautigam. “Empathy is most important, which is hard for us as selfish human beings. As property managers, we have to get into the mind of the resident to figure out what they’ve been through and what’s motivating them, so we can try to accommodate their requests.”
Yacht Harbour successfully passed their 40-year recertification, and initial reluctance to entertain new ways has been overcome by the success of the transformation. “The same board has been re-elected unanimously every year since then, and at the end of the day, the residents have a gorgeous building,” says Brautigam. Management fundamentals have made revitalization of Yacht Harbour a reality!