Board Shorts - So Long
Board Shorts #7
By: Peter Walpole
Longer than you think
In previous Board Shorts columns, I’ve highlighted some of the major issues or concerns that I believe you (as a Board member) may encounter. Time to shift focus.
When you first considered running for your board, you were probably told that it ‘only involves one meeting a month — about two hours’. You could be the director who simply attends a single meeting a month. You will not be popular with the rest of the Board.
Look at it this way: the Board is managing a (probably) multi-million dollar facility; you are responsible for annual budgets that reach up to and beyond $1,000,000 per year; you are responsible for the safety and security of dozens (possibly hundreds) of owners and residents. You, as a director are charged with securing the owners’ investments in such a way as to increase their return on investment — owners expect to get a fair value for their property, when they sell. Your responsibilities, as a director, are very similar to those on the Board of a major corporation. And you can’t complete those responsibilities in a simple two-hour meeting.
The long and the short of it
At the very least, you need to spend time and effort on the briefing papers produced by your Manager, ahead of the next Board meeting: read and understand the Financials; read the Manager’s Report and all attached letters, quotations, documents. The actual Board meeting is not the time to start to read the Month’s financial and bank statements. You need to have considered questions, concerns, previous decisions, and understand ‘why we do things this way’. That takes time.
If a major decision is pending, you might be advised to get alternate opinions from other Board members. That way you can more easily determine what decisions might best resolve the problem.
A major construction or renovation project presents challenges to the Board. There are processes and procedures that must/should be followed. You may need engineering reports. You will certainly need multiple quotes and estimates. You may want/need to consult owners. You will almost certainly have budget limitations to consider, along with time constraints. That all takes time — on your part. You can’t be seen to be disinterested.
A topic that can initially baffle new Directors is the Reserve Fund and Reserve Fund Study. Put simply, every three years (per current legislation) the Board needs to conduct a Reserve Fund Study. You employ a qualified engineer to examine your property, your decision making, your finances and recent repair/renovation work. The engineer’s task is to project what works will be required over the next few years, the estimated costs, and your ability to pay for said repairs.
The engineer then produces a schedule predicting what needs to be repaired/replaced/renovated and when, and the expected costs. The next step tells the Board what sums need to be raised each year/month, to cover those projected costs. The Board can discuss their plans and projections and the draft RFS may be refined. But the engineer’s statements of what you need to place in Reserve, must be followed — to the letter.
Your Reserve Fund Study will probably extend out towards 40 years. That may be beyond your expected lifetime (it’s way past mine!). The Reserve Fund must hold sufficient funds for expected repairs. Of course, totally unexpected repairs may need a Special Assessment, and nobody wants that. Implementing a SA will certainly take much more than two hours a month. Try not to go there. Spend your valuable time refining your budgets.
So Long, it’s been good …
My time as a director is up. My term limit expired a year ago, but I was appointed for an extra year (no time off for good behavior). So, I must relinquish my responsibilities. It makes sense, since I’ll no longer be able to speak as a Director, to relinquish my seat on the Board of CCI Huronia. No more Board Shorts columns. No more involvement in the great work of CCI Huronia. My time is shortly up.
But that means there’s more work for you. CCI Huronia welcomes (needs) the voices of actual condo board members. Consider this my invitation to you.