Hot Topics for November, 2013
Board Packets: A complete report that Board Members should receive each month
The frequency of how often HOA Boards are required to meet is spelled out in the Association's bylaws. However, whether the Board meets once per month, once per quarter, or once per year, a well prepared Board Packet can be the difference between success and struggle when it comes to accomplishing the association's business in a professional and timely manner. After all, a well-run, highly productive meeting is a great reward for the Board and the manager.
As a matter of law, many states now require that Board meeting agendas and notices of meeting be published and distributed in advance of Board meetings, not only to Board members, but to all members so that the Board cannot be accused of conducting business without knowledge of other association members. Obviously, a well thought out meeting agenda and notice of meeting are the first items that should be included in the Board Packet.
To save time and allow for adequate Board Member preparation, any documents or contracts that the Board will be asked to vote on should also be included in the Board Packet. This can include letters from unit owners, reports from Board committees, bids for projects, contracts for renewal, and even community association loan proposals. By insisting that Board members review these important documents before the Board meeting, and ask any questions in advance of the meeting, the meeting can proceed quickly and productively if the Board is well informed. If just 30 minutes per meeting were saved by following this simple procedure, a Board that meets monthly could save six hours per year in meeting time! Very well prepared Board packets are the cornerstone of the efficient (aka short!) meetings.
Important documents should also include financial statements from the previous month, and, where applicable, year to date. This may include a Treasurer's Report, a Profit and Loss (P&L) statement, and current bank statements. Much of the work performed by the Board is managing the association's assets, chief of which is safeguarding the association's money. The Board members should be provided the supporting documentation behind any summary financial reports created. The Board has a fiduciary responsibility for managing the association's funds. Seeing the supporting source material (i.e. invoices) will help the Board ask the right questions to be sure Association policies are being followed and funds are being spent as approved. Discussions on cash flow, common fees, assessments, loans and other financial considerations requires Board members to be fully informed of the association's finances. If necessary, the Board should meet in executive session, so that updates on pending litigation can be included. This keeps Board members informed of the association's legal standing and potential liability in court cases. Rules for when a Board can meet in executive session vary by state, so be sure to consult with counsel.
Minutes from the previous Board meeting should always be included. One of the first orders of business is to approve these minutes so it is imperative that Board members have a chance to review these minutes before voting to approve them at the Board meeting.
The agenda is set by the President in advance for the business the Board members will vote on. At the discretion of the President or Property Manager, other items could be included. These include summaries of new laws that could affect the governance of the association. On occasion, reprints of articles highlighting "best practices" for community associations may be included. Basically, anything that is going to help the Board do a better job of governing that requires reading in advance of the meeting can be included in the Board Packet.
Providing Board Members with a complete packet of information is an important step to helping the Board keep informed and make the best decisions possible for the community it governs.