Page 6 - New Jersey Cooperator February 2019

C ommunity association and co-op boards typically consist of elected volunteers whose job is to serve the best interests of the community in day- to-day decisions both big and small. In an ideal world, every board would live and die by its fiduciary duty, making well-informed choices that not only keep its community or building solvent, but also maintain a pleasant environment in which to live. But would even that ideal scenario be enough? If a board is doing all the right things but fails to communicate the hows and whys of its decisions to its constituents, will those decisions be received approvingly? Truth is, in addition to making good decisions, it also falls to the board to com- municate those decisions – as well as how they were reached – to its community in a clear and digestible way. The reasoning for this goes beyond just getting reelected; to a diligent and capable board, optics may seem performative, but they’re actually a crucial part of being open and transparent with the residents that board represents. A certain amount of marketing and sales- manship is often needed to get buy-in from the folks most directly impacted by a given board decision. A board that does the right thing without showing its work can still face backlash from residents who interpret the board’s discretion as secrecy, or who don’t see immediate positive results from the board’s endeavor. The Messaging Matters “Optics are huge,” says Chip Hoever, Founder and Managing Partner of Som- erset Management in North Brunswick. “Homeowners have a right to know where their money is going and, when a board keeps its owners informed, it keeps them calm. Owners who don’t know what’s go- ing on tend to get irate. When boards fail to communicate, owners start ‘talking over the back fence,’ and that’s when false infor- mation starts to circulate and grow.” Thomas O. Moriarty, a principal at the law firm of Moriarty Troyer & Malloy in Braintree, Massachusetts agrees. “While perception of performance alone is obvi- ously not enough to deliver results, results alone are not enough to ensure content- ment among unit owners. The fact of the matter is that unless a board has systems in place to ensure that unit owners believe they have a voice in the process of gover- nance, those owners may never be happy with the results. In addition, if the actions and deliberations of the board are not transparent, unit owners may not even be aware of the issues the board is confronting – nevermind whether the board has done a competent job pursuing resolutions. “Knowledgeable unit owners under- stand and expect that when they buy a unit, they become members of a self-governing association,” Moriarty continues. “While they might not volunteer to serve on the board, they nevertheless have an important economic and personal interest in how the board conducts its business. A unit owner who cannot obtain enough information to reasonably assess the merits of his or her board’s decision making is not going to de- velop confidence and trust in that board. This can lead to frustration and skepti- cism.” Moriarty goes on to say that when boards fail to communicate their process to owners, owners nearly always perceived that as negative. “While there are always exceptions based upon the need for con- fidentiality – attorney-client privilege, for example – or because statutes may pre- vent the disclosure of certain information,” he says, “in every other circumstance it is almost always better to communicate as much information as possible, even if the information is not what the owners want to hear. Reasonable unit owners will under- stand that not all news is good news, and they will be more content with board op- erations and governance if they have more accurate and reliable information, good or bad.” A current board can make association business easier for its eventual replacement by being explicit with its decision-making methodology. “It’s essential to pay attention to the details, or there can be problems in the future,” warns Mark N. Axinn, a part- ner with the New York City-based law firm of Brill & Meisel. “For example, when files are reviewed by a future board, it should be clear what the people at the time were considering, and why a particular decision was made. Records should be kept in such a manner that someone who is not famil- iar with an issue can easily ascertain what happened and why certain decisions were made.” According to Jacqueline Abraham, Re- gional Director for Lieberman Manage- ment Services, which has offices in Chicago and Elk Grove Village, Illinois, a resident will occasionally run for the board with the intended goal of improving its optics. “Once elected, these board members real- ize that there is a need for greater transpar- ency, and make efforts to steer the other members to communicate more with the community,” Abraham says. “This could mean forming a committee to create and send a monthly or quarterly newsletter; sending meeting minutes to owners elec- tronically immediately following a board meeting; installing a bulletin board in the common area on which they’ll post com- munity updates and notices; or utilizing a community website to store documents and share information.” Backlash For a board, neglecting optics and ig- noring the public relations aspect of its job can have abject consequences. “Boards often forget the messaging as- pect inherent in getting information to owners before a new policy takes effect,” notes Axinn. “This is especially true if there is a new restriction or a new charge being considered. For example, if a board decides to implement a fee for subletting, it is im- portant to convey to the owners that \[the purpose\] of the fee is to raise funds to help BOARD RELATIONSHIPS Board Optics The Perception of Performance BY MIKE ODENTHAL ISTOCKPHOTO.COM 6 THE NEW JERSEY COOPERATOR —FEBRUARY 2019 NJCOOPERATOR.COM