Saturday, August 18, 2012

Saving for a "rainy day": funding community association reserves

Recently I was interviewed for a story in Kiplinger business magazine about what new condominium buyers should be considering prior to making their purchase. The list I provided was long but at the top was whether or not the proposed community had fully funded reserves.

Why is this so important not only to potential new purchasers but to existing owners? Fully funded reserves usually allow communities to meet expected and unexpected financial challenges without the need to specially assess the members. Those communities who had funds in reserve during the tumultous hurricane seasons a few years back fared much better than their reserve-less counterparts.

Still reserves can be a dirty word in associations for some folks. There are those who fear having any sort of money "lying around" for the board to use even though Florida statutes require a membership vote to use reserve funds for non-reserve purposes. There are other people who trust the board but don't trust that they will live to see the benefit of the repairs and maintenance for which the reserve funds are being held.

Both views are, in my opinion, shortsighted and not in the best interests of the membership. A community with full reserves can be a lot more attractive to potential purchasers than a community with older components and no financial cushion. A community with full reserves can also provide much-needed peace of mind to existing residents.

Even folks who understand all the benefits of reserve funding still find themselves confused over the details such as:

What community components merit reserve funding?

What percentage of the membership is needed to waive reserves?

What is the process to waive reserves?

What does it mean to "pool" reserve funds?

What is a Reserve Study and is it really needed?

If you are interested in the answers to these questions, the law firm of Katzman Garfinkel & Berger (my Firm) and Association Reserves are co-sponsoring a Webinar this Wednesday, August 22nd at 2:00 pm (EDT) and 4:30 pm (EDT). Join us from the comfort of your home or office and learn more than you ever wanted to know about reserve funding. Registrants will have the opportunity to participate and ask questions. To register for either time, click this link: http://www.reservestudy.com/webinars




Monday, August 13, 2012

Association as Employer: what laws do you need to know about?

We don't often think about community associations in the context of labor law but the majority of associations do have at least one employee and some large master associations have dozens. The largest association employer I ever met actually bought a building to house its more than seventy-five association employees.


Even if you have only one employee or as many as a small company, your board needs to understand that you have duties and responsibilities to those employees under both federal, state and local laws. For purposes of this blog, we'll stick with just the Federal and Florida laws that will impact associations who have at least one employee. There are many more laws that need to be considered when the number of people an association employs goes beyong the one-person mark.

For associations that have one or more employees, the law firm of Christine Hanley & Associates (www.cdhanley.com) has advised that the following laws apply:

Fair Labor Standards Act of 1938. This law establishes minimum wage, overtime, record-keeping and youth employment standards. This law also prohibits wage discrimination baed on sex as well as prohibits retaliation against employees who exercise their rights under this Act.

Occupational Safety and Health Act of 1970. This law establishes minimum workplace safety standards for private sector employers and prohibits retaliation against whistleblowers.

Fair Credit Reporting Act of 1970. This law promotes the accuracy, fairness and privacy of informatoin in the files of consumer reporting agencies. This law prohibits employers from using a third party to obtain a consumer report on an applicant or employee unless the individual gives authorization by signing a separate disclosure and consent form. This law also requires an employer to provide the applicant with a copy of the consumer report and written summary of rights before denying employment or taking any adverse action based in whole or in part on the consumer report.

Employee Retirement Income Security Act of 1974. This law establishes minimum standards for most voluntarily-established health and welfare benefit and pension plans in the private sector. This law requires employers to provide plan participants with information about plan features and funding. This law also imposes fiduciary responsibilities on those who manage and control plan assets and requires plans to establish a grievance and appeals process.

Immigration Reform and Control Act of 1986. This law prohibits the employment of individuals not authorized to work in the U.S by requiring employers to verify the identity and employment eligibility of all employees.

Employee Polygraph Protection Act of 1988. This law prevents employers from requiring or requesting employees to submit to lie detector tests either for pre-employment screening or during the course of employment, with certain exceptions. This law also prohibits retaliation against an employee or applicant who refuses to take a lie detector test.

Uniformed Services Employment and Reemployment Rights Act of 1994. This law protects civilan jobs and benefits for veterans and reservists. This law requires employers to re-employ returning service members in the job that they would have attained had they not been absent for military service with the same seniority, status and pay, as well as other rights and benefits determined by seniority. This law also requires employers to make reasonable efforts to accommodate a disability which has been incurred or aggravated during military service. Lastly, this law requires employers to make reasonable efforts (such as training or retraining) to enable returning service members to refresh or upgrade their skills to help them qualify for re-employment.

Florida's Minimum Wage Act. This law establishes state minimum wage standards for employees.

Florida's Unemployment Compensation Law. This law provides monetary benefits to individuals who are unemployed through no fault of their own. This law suggests that employers should establish standards of conduct for employees and implement a 90-day probationary period for new hires.

Florida Health Insurance Coverage Continuation Act. This law provides employees and covered family members not covered by COBRA with a temporary extension of group health care coverage under certain circumstances.

The foregoing laws impact associations who have even just one employee. Naturally, the more employees an association has, the more government regulation to which it will be subjected. Associations with two or more employees will be subject to the National Labor Relations Act of 1935, the Immigration and Nationality Act of 1954 and the Florida's Workers' Compensation Law. If an association has fifteen or more employees, it will be subject to Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act of 1990 as well as the Florida Civil Rights Act of 1992.

This blog is not meant to discourage associations from hiring employees. It is meant to advise associations and their managers that hiring employees is a serious business, subject to much government regulation. It is absolutely essential that associations establish employee protocol that complies with all pertinent statutes and ordinances. In other words, call your attorney before placing that ad for your next employee!

Sunday, August 5, 2012

Do you know how Life Safety Upgrades are adopted in Florida and around the country?

Have you ever been confused by the Life Safety jargon that applies to your multifamily community or your individual unit/home? Engineered life safety systems, fire flow requirements and uniform elevator keys may not be lingo with which you are entirely comfortable or even familiar. Are you even more distressed by the hefty bills that typically accompany any conversations with local building and fire officials using this terminology? You may even have wondered at some point, who has the final say in what your building's components need to look like and why. If you haven't been able to figure out the specifics, it's not a surprise. It is not in the local authority's best interests to involve individual Floridians let alone their representative associations in the political and rulemaking processes that affect their wallets and ultimately their lives; doing so would take more time and money and delay the process.

In many countries, fire safety codes and standards are drafted, debated and ultimately adopted by their federal governments. Not so in the U.S. where our Constitution leaves this up to our individual states. Now if our states were writing their own building safety standards (even knowing that standards would vary from state to state) we could still enjoy some level of comfort. However, that is not the case either and our states instead use "model" codes that are written by private organizations. The states may adopt these "model" codes entirely or with amendments. Ultimately, legislative bodies within local states and jurisdictions will have the final say, and the result might be inconsistent approaches across our country. As such, your financial burdens and life safety protections might vary widely if you live in New York or New Jersey, Tennessee or Texas and so on.

One of the private organizations that writes fire safety standards is the National Fire Protection Association (NFPA). In the state of Florida, we are required by statute to adopt the recommendations this group makes every three years almost without question. We can add even greater restrictions to what they recommend but rejecting the NFPA's proposed rules is basically out of the question. Just who is this group then? Well the mission statement on their website reads as follows:

The mission of the international nonprofit NFPA, established in 1896, is to reduce the worldwide burden of fire and other hazards on the quality of life by providing and advocating consensus codes and standards, research, training and education.

Not surprisingly, their Board of Directors and their Officer Roster are heavily comprised of folks whose companies produce the products (sprinklers, elevator components, alarms, etc.) that are all needed to comply with their triennial recommendations. There is no doubt that this same group is also comprised of folks who have made it their life's work to protect public safety. However, in the absence of a legislative review of a private organization's recommendations and in the absence of any meaningful citizen input, we have no current checks and balances in a process that impacts lives and our economic welfare.

Section 633.0215(2) of the Florida Statutes reads as follows:

Florida Statutes, Section 633.0215(2): The State Fire Marshal shall adopt the National Fire Protection Association’s Standard 1, Fire Prevention Code but shall not adopt a building, mechanical, or plumbing code. The State Fire Marshal shall adopt the Life Safety Code, Pamphlet 101, current editions, by reference. The State Fire Marshal may modify the selected codes and standards as needed to accommodate the specific needs of the state. Standards or criteria in the selected codes shall be similarly incorporated by reference. The State Fire Marshal shall incorporate within sections of the Florida Fire Prevention Code provisions that address uniform firesafety standards as established in s. 633.022. The State Fire Marshal shall incorporate within sections of the Florida Fire Prevention Code provisions addressing regional and local concerns and variations.

A better approach might be to require the State Fire Marshal to present a report to the Florida Legislature every three (3) years outlining the proposed changes (before the changes are adopted), and how such changes will impact the specific needs of the State. From there, the Legislature can choose whether to adopt a particular change. I can already hear the bureaucratic criticism that this cannot be done but how would such a report truly be a burden on the Fire Marshal? Surely, this Office can accomplish this feat every three (3) years to ensure that the changes we adopt triennially are not unduly burdensome and actually accomplish reasonable goals. It would also be interesting to note how many times the State Fire Marshal has adopted the NFPA's Fire Prevention Code by blind reference with no additional modifications as needed or requested by the local citizenry. After all that is the easy thing to do but is it the wise thing to do for Floridians and others whose states handle such an important matter in a similar fashion?