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JudithE1 (Arizona)
Posts: 21
Posted:
Our new HOA Board recently met to vote on two items. A timer for $5.00 and ceiling fan for $40.00. Was this vote necessary?
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By JudithE1 on 03/08/2013 5:13 PM
Our new HOA Board recently met to vote on two items. A timer for $5.00 and ceiling fan for $40.00. Was this vote necessary?

Boards are typically made up of people who lack any training or experience in managing a business and whose one and only qualification is that they bought a home within the boundaries of the association.

The board should have put together a budget for for office expenses and delegated the purchases to someone (anyone). The good news is that by focusing their discussions on a $5 timer and a $40 fan they were not screwing up something important. But I do hope they had a vigorous debate and allowed homeowners to add their comments at a meaningful time before the vote was taken to approve these items. Will next month's agenda include discussion and a vote to buy more paper clips?
MelissaP1 (Alabama)
Posts: 13,836
Posted:
I do not see a problem here. It may not had much to discuss this time around. Matter of fact i have had a similar meeting. We had a high water bill because the pool person would forget to turn off the water after filling it up in the morning visits. If I or someone else did not catch it our water bill sky rocketed. So I came up with buying a timer. That had to be approved prior to purchasing. I could not just buy it and tell everyone here is the receipt without discussion. It is Not my money to spend. The budget is EVERYONES money.

So it may be a small thing to you but it is not just a normal office supply expense. We had no problem with the clubhouse committee submitting receipts for normal cleaning supplies and toilet paper. However, for things that did fall into routine it was discussed. It is a good thing.

Former HOA President
TimB4 (Tennessee)
Posts: 21,059
Posted:
Yes, the meeting was necessary.

Another option would have been an action without a meeting.
This would have required a 100% prior approval from all board members (perhaps via e-mail) and then mention it in the next scheduled meeting and attach the e-mails as proof of approval to those minutes. Sometimes, an action without meeting is more work than simply holding the meeting.
BruceF1 (Connecticut)
Posts: 2,535
Posted:
Quote:
Posted By JudithE1 on 03/08/2013 5:13 PM
Our new HOA Board recently met to vote on two items. A timer for $5.00 and ceiling fan for $40.00. Was this vote necessary?

It really depends on the size of your annual budget and how your budget is set up. For some associations, small purchases like these would be considered to be "lost in the noise."

For example, suppose these items were purchased for the clubhouse, and suppose a certain amount, say $1,000, is set aside in the budget for discretionary spending by the clubhouse committee. Then, the clubhouse committee could decide to purchase these items out of their $1,000 and no vote by the board should be necessary. In a similar fashion, suppose the secretary is allocated a budget for office expenses. The secretary should not have to seek board approval for every office item as long as the total of the purchases remains withing the amount allocated.

Our property manager used to seek board approval for every minor repair expense. At a recent meeting the board voted to authorize the property manager to authorize minor repairs that were under $1,000 without first seeking board approval. Naturally, if the board discovers that this discretionary authority is being abused, the board can always rescind the approval for all future expenses.

My question is, who is going to install the ceiling fan? I hope it's a licensed, insured contractor, and that will cost more than the fan did. It's one thing for an unlicensed homeowner to install a ceiling fan in his own home, but quite a different thing for an unlicensed "handyman" to install a ceiling fan on community property.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Bruce, Tim, and Melissa:

Your responses show exactly why none of you serve on a real board of directors.

The board should have appointed officers to handle the day-to-day operations of the association. That's what officers do. The board should have also budgeted money for small office items and delegated the purchase of these things to the officers. This is not at all dependent upon the size of the association or the size of the budget. The board should delegate petty and/or routine matters to the officers. There is no circumstance under which a $5.00 purchase should ever be on any board's agenda.

One of the hallmarks of inexperienced managers is an inability to delegate. Someone who has the need to micromanage a $5.00 purchase has no business making decisions that will effect the values of several million dollars worth of homes.

VictorG1 (Michigan)
Posts: 4
Posted:
Our Board has delegated authority to the management group and to the board treasurer for approval of expenses under $500. All that is required is reporting back on those expenses. Boards should back away from micromanagement.
CarolR11 (Colorado)
Posts: 2,563
Posted:
Welcome to the Forum, Judith. If you need to hire (yes, licensed) electricians to install the fan and even the timer, the costs will be higher.
And sometimes, the Board needs to make decisions about things like the style/color of the fan especially if it's going in a nice common area amenity.

About a year ago, a homeowner wrote requesting that the board purchase a large clock to mount in the pool area so that lap swimmers--like her--wouldn't have to bring their watches to the pool to know how long they've been swimming. Ditto other pool users wouldn't need to bring watches. Great idea! But the board was concerned that it wouldn't be attractive-one director even thought it would look junky. (We're a urban high rise HOA).

The Board kicked it down to the Building Committee (BC) that often recommends improvements to the Board and takes aesthetics into account. A BC member who also swims laps brought several online pics to the BC of samples of clocks that she thought would be attractive in appearance and that also would withstand being installed in almost full sun.

The BC selected one to recommend to the Board and the Board, which normally meets once a month, approved it. So this took three months! The cost of the clock was $89 plus battery changes every so often. Our engineers did the electrical.

My point is, I guess, that there are pretty good reasons for some modest purchases to be decided by the Board especially if they are additions to our common areas. If the original requester had brought three sample pics for the board to review, we probably could have made a choice that evening.

TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By LarryB13 on 03/09/2013 9:08 AM
1
The board should have appointed officers to handle the day-to-day operations of the association. That's what officers do.

And that is what we have done.

Quote:
Posted By LarryB13 on 03/09/2013 9:08 AM
1
The board should have also budgeted money for small office items and delegated the purchase of these things to the officers.

We've done this as well.
For us, small office items would be defined as postage, printing, envelopes, paper and printer ink

Quote:
Posted By LarryB13 on 03/09/2013 9:08 AM
1
The board should delegate petty and/or routine matters to the officers. There is no circumstance under which a $5.00 purchase should ever be on any board's agenda.

In the OP post, the issue was purchasing repair parts.
We do not know if this was discovered during routine maintenance or is an unscheduled repair.

My Association doesn't have amenities or common elements that require a yearly operating fund to cover minor repairs or maintenance. If we did have the need for such a fund then common repairs and maintenance supplies would be paid for from that fund with proper receipts (similar to common administrative costs). However, unexpected/unplanned repairs would likely require expenditure approval from the Board (be it $5 or $500).

Bruce gave the best answer:

It really depends on the size of your annual budget and how your budget is set up. For some associations, small purchases like these would be considered to be "lost in the noise."

Since Judith's Board called a meeting for such an expenditure, they thought the need for prior approval was there.

Quote:
Posted By LarryB13 on 03/09/2013 9:08 AM
1
One of the hallmarks of inexperienced managers is an inability to delegate.

Just remember, you can delegate authority but you may not delegate responsibility.

LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By CarolR11 on 03/09/2013 10:45 AM

About a year ago, a homeowner wrote requesting that the board purchase a large clock to mount in the pool area.

The Board kicked it down to the Building Committee (BC) that often recommends improvements to the Board and takes aesthetics into account. A BC member who also swims laps brought several online pics to the BC of samples of clocks that she thought would be attractive in appearance and that also would withstand being installed in almost full sun.

The BC selected one to recommend to the Board and the Board, which normally meets once a month, approved it. So this took three months!

One more reason why small matters should be delegated. Three months of full board meetings to decide on a freaking $89 clock. Anyone else would have picked up a clock at Staples and had it hung on the wall in about 15 minutes.

But there is, as usual, a silver lining. By spending three months on focused on making a trivial decision it means the board had less time to screw up anything important. Keep up the good work.

BTW, have you scheduled a debate over the merits of plastic versus metal paper clips? That ought to be worth at least six meetings.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Just for the record, my association allows any director or officer to spend up to $2,500 without pre-approval and our VP of Roads has a $5,000 Visa card at his disposal plus a $10,000 account at the local Caterpiller dealer. My biggest expense when I was on the board was $14.00 to record a notice with the county. Our annual budget is just under $200,000.

CarolR11 (Colorado)
Posts: 2,563
Posted:
Well, Larry, our Rules & Regs state that no individual may place items in the common areas without board approval. I like the rule as it prevents odd sofas from showing up in our lounges or lobbies, funky exercise equipment being "donated" to our gym, or some generous soul's old rose bushes from being planted in our tropical planters and pots. In addition, no one except our engineers is insured to climb ladders or do electrical work. The clock installation required both.

Needless to say, Larry, the board conducted a lot more business than merely the purchase of the clock at the relevant board meetings. It's pure hyperbole for you to suggest that we spent three "whole board meetings" on the topic.

As I obviously failed to explain clearly, items to be installed in our common areas--that are highly visible to us and our guests--often can and do take board action, no matter what the cost, in our 200+ unit twin high rises for both aesthetic & practical reasons. We have a contract with a vendor who delivers restroom and janitorial supplies, and our PM certainly has a budget for all office supplies. The $89 example is rare as most of the purchase requests brought to the board are for much more than that.

Our annual budget is over $2 mill., so most of our day-to-day operations are handled by our GM and her asst. mgr. If their tasks fell on us 7 directors, I promise you that no one would serve on our board.

Bruce points out that different HOAs have different needs based on size and complexity and as others have pointed out, assignments to the PM or to various officers are part of evolving processes in all sound HOAs.
BruceF1 (Connecticut)
Posts: 2,535
Posted:
Quote:
Posted By LarryB13 on 03/09/2013 9:08 AM
Bruce, Tim, and Melissa:

One of the hallmarks of inexperienced managers is an inability to delegate. Someone who has the need to micromanage a $5.00 purchase has no business making decisions that will effect the values of several million dollars worth of homes.


I don't know why you mentioned my name, my post indicates that delegate is exactly what we did. As I said, the board will step in only if the financial data, as reviewed by our treasurer, appears to indicate that the authority to authorize expenditures for minor repairs is being abused by the PM. We have also delegated authority to our treasurer to waive late fees at his discretion.
BruceF1 (Connecticut)
Posts: 2,535
Posted:
Larry,

I might add, I am insulted by your remark. I have managed a rather large research budget for a major communications company and I have owned several businesses. I wholeheartedly agree with the concept of delegating, and it was I who was instrumental in convincing the board that they had more important things to do than to micromanage every expense.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By BruceF1 on 03/09/2013 3:57 PM
Larry,

I might add, I am insulted by your remark. I have managed a rather large research budget for a major communications company and I have owned several businesses. I wholeheartedly agree with the concept of delegating, and it was I who was instrumental in convincing the board that they had more important things to do than to micromanage every expense.

Bruce,

I am sorry that you were insulted. That was not my intent.

In response to the OP's concern about the board voting on petty purchases, you wrote "It really depends on the size of your annual budget and how your budget is set up. For some associations, small purchases like these would be considered to be "lost in the noise."

I took that to mean that you felt that it was proper for the board to vote on the purchase of a $5 time and a $40 under some circumstances. Having had plenty of experience with my own businesses and lots of consulting time in Fortune 500 companies, I can imagine no circumstances where even the smallest of boards should be voting on a $5 purchase. These are ordinary everyday expenses and there is no reason for a board to ever be dealing with this. The board's job is strategic: set the policies, establish the budget, and plan for the future. The officers' jobs are to implement the plans and handle the day-to-day activities.
BruceF1 (Connecticut)
Posts: 2,535
Posted:
Larry,

After further thought, perhaps some of what you say might be true. I last served on our board in 2008. At the annual election, I "retired" and decided not to seek re-election. This past year I was approached by many homeowners to again seek election to the board. As one homeowner put it to me, "our board needs adult supervision." I decided at the last minute to submit my name for re-election and won handily. Hopefully, in the next two years I can teach the board how to manage.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By CarolR11 on 03/09/2013 3:34 PM
Well, Larry, our Rules & Regs state that no individual may place items in the common areas without board approval.

Our annual budget is over $2 mill., so most of our day-to-day operations are handled by our GM and her asst. mgr. If their tasks fell on us 7 directors, I promise you that no one would serve on our board.

This keeps getting funnier all the time. You have a $2M budget and seven directors plus a building committee plus a GM plus her assistant and you spent a total of three months just buying an $89 clock. Your board spent one quarter of a year pondering the purchase of an item that represents 0.00445% of your annual budget. If you bought 100 of these clocks it would still be less than one half of one percent of your budget.

I have discovered a defect in my copy of the Bible. It is missing the passage that says, "And God decreed that, 'Only a majority of the Board of Directors shallst determine that which is attractive and that which offends Mine eyes. The Board of Directors shall be turned into a seven pillars of salt shouldst they defy me by delegating to others the authority to determine that which is ugly and that which is appealing.'"

JonD1
Posts: 2,350
Posted:
Following this topic is proof positive many who serve have no real business ever doing so.

Meeting to approve spending $5 is IMO a joke.

And spending 3 months seeking the approval of close to 15 people to determine which clock should be purchased so swimmers can keep track of time well I would have kept that tale to myself.

Our budget is just under $400,000 per year not that this matters. As President I take on most maintenance issues on the property and ok any expenditure if needed when necessary. I make purchases authorize work and then bring the Board up to speed at the next meeting.

I like to get things done and have eliminated anything that prevents me from doing so. Evidently, some folks see the purcahse of an $89 clock after 3 months as an accomplishment. I could do that in less than an hour!
CarolR11 (Colorado)
Posts: 2,563
Posted:
Look, Jon & Larry, the reason I placed an exclamation point after it took 3 months was NOT because I was proud of it, but because it does indeed seem silly. Around here, anyway, owners do rely on our board to protect, maintain and enhance our common areas. Our pool/jacuzzi area is very lovely--not any old clock would have pleased our rather fussy membership. As I wrote already, the board did, in fact, conduct a great deal of additional business at those 3 meetings.

I'd say we spent a total of 20 minutes in the three board mtngs. on the clock and over six hours on other matters. I'd be perfectly happy if the board gave the Building Committee an annual budget, but my motion do do so a while back was defeated. But if you'll read more closely, I also stated that the Board rarely deals with such small purchases--this certainly was the smallest during my 6 years on the Board.

I do agree with my board colleagues that management shouldn't make these aesthetic purchases. Why not they don't live here and are not stakeholders.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By CarolR11 on 03/09/2013 6:02 PM

I do agree with my board colleagues that management shouldn't make these aesthetic purchases. Why not they don't live here and are not stakeholders.

So, if you are elected to the board you are automatically an aesthetique.

Can't help but recall a TV story from a number of years ago where random Americans were shown pictures of famous paintings and asked to identify them. The "Mona Lisa" and the "Last Supper" did OK, Munch's "The Scream" and Hopper's "The Nighthawks" did not do so well, but 100% of those surveyed correctly identified "Dogs Playing Poker."

CarolR11 (Colorado)
Posts: 2,563
Posted:
What I AM saying, Larry, and already said, is that Owners here do count on the Board to maintain and enhance our common areas including the appearance of the latter. The board, in turn, often, but not always accepts the recs of the Building Committee. A fairly recent project was recovering about 20 swivel chairs that are used at the meeting table in our Conference Room/Business Center and at the meeting table in the Lounge where we hold board meetings. The BC looked at fabric books, and brought us their three top choices of samples & prices. We picked their 2nd choice. This was about $2,700, including labor, and is more typical of the kinds of purchases we make. We're reaching our 12th anniversary as a community, so we'll need to replace or refurbish more and more of these types of items.

In a year or two, we'll need to recover or replace the furniture in our other lounge. We, no doubt, will hire a designer to present us with some options and seek owner input on that project. Ditto when we refurbish both of our large two-story so-called "Grand Lobbies."

By the way, I fail to see whether or not people can identify famous works of art as signifying that they have "good taste" in art.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By CarolR11 on 03/09/2013 6:54 PM
By the way, I fail to see whether or not people can identify famous works of art as signifying that they have "good taste" in art.

In a country where "Dogs Playing Poker" is the most recognized work of art, I expect far more kitsch than good decorating taste from a board of directors of a condo or any other run-of-the-mill group.

MelissaP1 (Alabama)
Posts: 13,836
Posted:
I happen to own 2 copies of that painting! Two different versions and sizes....I also have a copy of "The Scream"...It's kind of a joke as they make me laugh...Art is supposed to provoke a reaction...

Former HOA President
CarolR11 (Colorado)
Posts: 2,563
Posted:
Larry, you draw a very odd conclusion; "Recognizing" dog-poker art and wanting to purchase it are two very different things.

Take another kind of art-music. I recognize many styles of music, but there are a couple of styles that I will never purchase.

MelissaP1 (Alabama)
Posts: 13,836
Posted:
Excuse me but "Dogs playing poker" is an excellent form of art and not for the deep of thought...It's dogs playing poker at a table...How many times do you see that in everyday life? It has to be captured on canvas. Why imagine it to be somewhat how many HOA's even conduct their meetings...

Former HOA President
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By CarolR11 on 03/10/2013 2:45 PM
Larry, you draw a very odd conclusion; "Recognizing" dog-poker art and wanting to purchase it are two very different things.

My conclusion is that a 7-member board of directors with a $2,000,000 annual budget that takes three months plus referrals to building committees to purchase and install an $89 clock has demonstrated such extremely poor judgment that whatever they finally settled on will be less like Shinola and more like that other stuff.
KellyM3 (North Carolina)
Posts: 2,239
Posted:
Judith,

Voting on any business matter is appropriate. Voting on EVERY small detail of business, like you've noted is not necessary, however. Your HOA can set a policy, and a dollar cap, on regular maintenance supplies purchases and repair bills, that trusted board representatives can use to keep your community operation running smoothly.

My HOA board gives our professional property manager a $500 cap. That's enough to hire a plumber to repair an emergency leak w/out waiting on us to get home from work, vacation, etc and call a meeting.

If, however, there isn't trust among your board or between the board and the community, then be transparent on all details until trust is established.

Good question.

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