May 2010 – Any marketing or sales expert will tell you that to get what you want, you have to “sell” your request to those making the “buying” decision. Funny as it sounds, a special assessment falls into that “buying” and “selling” paradigm.

If your board is convinced your condo or homeowners association needs a special assessment, it must take the process of getting buy-in seriously. Here’s how to “sell” a special assessment by being transparent, having community meetings that allow members to understand the issues and ask questions, and knowing how to overcome objections.

Watch Your Language

“Unfortunately I’ve had much experience in this arena,” says Debra A. Warren, principal of Cinnabar Consulting in San Rafael, Calif., which provides training and employee development services to community association management firms and training and strategic planning sessions for association board members. “I’ve had associations that have listened to the advice of the professionals and done special assessments right, and I’ve had those who’ve decided not to do their special assessment right and have had problems.”

First, don’t use the term “special assessment” until it’s needed. “There’s nothing more divisive than the words “special assessment,” says Duane McPherson, the San Rafael, Calif.-based division president at RealManage, an association management firm that oversees properties in Arizona, California, Colorado, Florida, Louisiana, Nevada, and Texas. “Be very careful about using that term until you know that’s an absolute necessity. Then when you do know you need a special assessment, have the proper backup that adequately explains the reason for the special assessment.”

Keep in mind that owners will need to process the idea of a special assessment. “Give the owners lots of time to catch up and understand what the needs are and why,” says Warren. “Give yourself a nice time frame, say six months. Most boards say, ‘Oh, my gosh, we can’t wait that long!’ But to be successful, if it’s not an emergency, you have to give yourself that time.”

That’s true, says Elizabeth White, a shareholder and head of the community associations practice at the law firm of LeClairRyan in Williamsburg, Va. “This is one area where the longer the rollout, the better,” she says. “Some boards think that’s a bunch of hoo-hah. They say, ‘Let’s just do our job. We don’t have time to meet with all the homeowners.'”

That’s a mistake because owners must process their feelings about a special assessment. “Owners have to go through that same five-step process that happens in grieving,” says Warren. “First they’ll be in shock, then they’ll be angry, and then they’re going to blame somebody before they’re willing to say, ‘OK, I’m ready to look at the options and make the reasonable decision.’ It’s important to give them that time. If you try to have the meeting for the vote too soon, owners will still have the anger and won’t vote for it.”

Show, Don’t Tell, the Need for a Special Assessment

During that rollout period, you’ll need to patiently explain to owners over and over your reasoning on the potential special assessment. “I prefer illustration over explanation,” says McPherson. “Show where the association is financially, the reasons you need this special assessment, and what it’s going to do for owners in the end. Typically the special assessment is a major component that’s gone out or not budgeted for that will severely take away from owners’ property values. In a lot of cases, the board fails to get enough information to adequately present its case. Most times residents are reasonable and will understand if this problem is going to affect their property values or lenders won’t lend on the property.”

Provide as much information as possible. “Give owners lots of complete and well-written information about why this is happening, who are the experts you’ve turned to, and how the board got to this decision,” says Warren. “You do it in writing, and you have open meetings. It’s really important to go through all those steps.”

Be prepared to have as many meetings as necessary to build your case. “Things need to be disclosed and discussed at least three times,” says McPherson. “You’ll need at least one open meeting, if not two, and plenty of information needs to be sent to owners so they can make up their mind.”

Include in that information well-thought out financing options. “Consider how you’re going to implement the assessment,” advises McPherson. “How big will it be, and what kind of payment plans are you going to offer?”

Rely on a Team of Advisors

Many associations that have been successful in passing difficult special assessments have leaned on experts to help make their case. “It’s usually a team that helps the board go through the process,” says Warren. “Depending on the reason for the special assessment, you probably want to include your management company, or if you didn’t have one, a management consultant to help you with the communication pieces. Then you’ll have your experts, such as construction experts, and your attorney to make sure you’re going through the legal requirements properly.”

One association White worked with assembled a strong team that was critical in the success of the special assessment. “I recently experienced a great example of a board handing a special assessment,” she explains. “The board masterminded the whole thing, and I was so impressed with the manager and the leader of the board.”

The property was on the Chesapeake Bay, and its siding wasn’t standing up to the gusts coming off the bay. “They kept doing patchwork, but there were continual cracks and water seepage,” says White. “Nobody wanted to go with recladding because that would have been a special assessment, even with a loan.” In the end, the board decided it needed entire recladding at a cost of $40,000 per unit, and the units’ values ranged from $200,000-$250,000. “A lot of the owners were widows on a fixed income,” says White.

“The board added weekly board meetings, and some board members groaned but went,” says White. “They overcommunicated to get the message out that they’d identified the problem and were in the process of identifying solutions. Initially, they had homeowners who didn’t know the facts and ranted and raved about how they didn’t want the assessment. In the end, they got 80 percent of the owners to approve.”

The team that explained the special assessment to owners included White, an architect, and an independent engineer who’d never done the building’s annual inspections—and had no vested interest in the outcome of her testing. “The engineer was incredible,” says White. “She’d explain the issue at meetings. If she didn’t feel comfortable answering a question asked there, she’d take the member’s name and phone number and call back later with an answer.”

White also credits the board for its patience and a thick skin. “They were very impressive in the way they handled it,” she recalls. “The board president truly had Teflon skin and let some really incredible things roll off. These little old ladies understood that they’d end up with better value and that their unit’s structure would be more stable. In the end, only about five owners refused the special assessment, and the community looks absolutely beautiful now.”

Even White learned from the board’s process. “It was a great learning experience for me,” she says. “I’ve been through lots of specials, and I was very skeptical and wasn’t sure they were going to pull it off. If you’re on the board and looking at that type of major special assessment, talk to other communities that have done it successfully, find out what process they followed, make sure you overcommunicate with owners, and do it in a credible way. Budget that extra money for the education of the members.

HOA Leader

Matt Humphrey is president of the Alameda, California-based, from which this article was adapted.

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