Strategic vs. Operational Decisions
A well-functioning condominium board must focus on strategic governance, while the condominium manager executes day-to-day operations.
Strategic Board Responsibilities:
Setting long-term financial and operational goals.
Developing risk management strategies for legal compliance and financial stability.
Approving budgets, reserve fund plans, and major contracts.
Creating and amending bylaws in accordance with the Condominium Property Act (CPA).
Operational Responsibilities of the Manager:
Managing vendors, service providers, and maintenance.
Implementing board-approved policies.
Handling owner complaints and enforcement of bylaws.
Maintaining financial records and preparing reports.
Common Issue: Some boards become overly involved in daily operations, leading to inefficiency, confusion, and potential non-compliance with the CPA. The manager’s role includes redirecting boards to focus on governance-level decision-making.
Goal-Setting Strategies for Condominium Boards
Boards should follow structured goal-setting methods to establish clear, measurable, and legally sound objectives.
SMART Goals Framework:
Specific: Define a clear objective (e.g., “Conduct a full reserve fund study update by Q3”).
Measurable: Ensure progress can be tracked (e.g., “Increase reserve contributions by 10% over two years”).
Achievable: Set realistic goals within the corporation’s financial capacity.
Relevant: Goals should align with CPA compliance and long-term financial health.
Time-bound: Establish deadlines to ensure accountability.
Example: Governance Goal
Weak Goal: Improve financial management.
SMART Goal: Implement a monthly financial reporting system by the end of the fiscal year to enhance budget transparency.
Risk Management in Board Decision-Making
Boards must avoid decisions that could create financial instability, legal issues, or governance conflicts.
Common Decision-Making Risks:
Ignoring CPA Requirements: Boards must ensure all decisions comply with the CPA and bylaws. For example, failing to conduct a reserve fund study within the CPA’s required timeframe may lead to financial penalties or legal disputes.
Mismanaging Reserve Funds: Improper financial planning or underfunding reserves can create serious financial risks, leading to unexpected special assessments for owners.
Lack of Transparency: Boards that fail to properly document decisions or provide clear financial reporting may lose the trust of unit owners.
Ensuring Accountability in Board Decision-Making
Condominium managers must help boards stay focused on strategic priorities while maintaining transparency and accountability.
Best Practices for Board Accountability:
Document all decisions in board meeting minutes.
Ensure financial transparency through CPA-compliant reporting.
Implement policies to prevent conflicts of interest in decision-making.
Encourage consensus-based governance to strengthen board unity.
Example: Governance Issue & Solution
Issue: A board consistently makes off-the-record financial decisions outside of official meetings.
Solution: The manager advises the board to formalize all financial discussions in meeting minutes and follow CPA-compliant approval procedures.
Strategic Planning Assessment
Scenario:
A condominium board votes to reduce contributions to the reserve fund to avoid increasing condo fees. However, this decision conflicts with the CPA requirement to ensure the reserve fund is adequately funded for future repairs.
Task:
Identify the strategic and legal risks associated with this decision.
Evaluate whether this decision aligns with CPA compliance and best practices.
Propose an alternative solution that balances financial sustainability with legal compliance.
