Orsid Realty: Capital Planning

THE BIG PICTURE

The most crucial lesson concerning the role of a board member is understanding that the new member is responsible for the well-being of the cooperative or condominium and also responsible to the residents. This person will have to deal with diverse populations with different expectations, different needs, and different visions. And as a fiduciary, he or she will have to balance those differences and define a game plan for the future of that building.

BE SMART

A specific example of this concept has to do with renovation of lobbies and hallways, projects that are not mandated by law but are undertaken purely at the discretion of the board. How does a building go ahead on projects like this?
You hire a design professional. You basically create plans and specifications. It’s like a shopping list. You’re going to start with the basics and work your way up to all kinds of issues, with a price tag. You can take a hallway project in a 16-story building and do a makeover for $200,000 or you can go soup to nuts and create a magnificent new look for more than $1.5 million. Often those projects need to be funded by assessments, which is going to affect the property’s population.

What are some of those specific decisions? Are you replacing the old floor or refinishing a floor or are you carpeting? What’s your wall treatment? Are you painting? How are you dealing with the wiring by cable and internet providers? There are going to be many questions, and how you answer those questions and how far you go affects the price tag. Boards must remember their fiduciary role and need to be cognizant of what they’re doing and why.

The goal is to improve quality of life. Not everybody is going to think their quality of life is improved by the $1.5 million lobby. Many people will, but it’s an important thing to think about. The other question is: are we going to increase value? There are people who are going to be driven by that, and there are going to be people who could not care less. So how does a board go ahead and marry these two issues and make the right decisions?

I’m an advocate of communicating in detail what you’re doing with your residents. I’m a believer in getting feedback. The board should render the final decision, but it is extremely beneficial to go ahead and solicit input. Find out, through meetings and non-binding votes, what people want, then come up with a compromise. You don’t want this to split the community. It serves a building well to have a board that is able to make some concessions and to compromise. As the organizational consultant Simon Sinek once observed: “Leadership is not about being in charge. Leadership is about taking care of those in your charge.”