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Sharper Management

Rental Management Program

Tracking rental properties within an Association has long been a challenge to both Management and to the Board. “Managing” those Owners that choose to rent by ensuring they abide by any policies the Association might have regarding renting is even harder. It goes beyond the scope of the Management Agreement, and certainly adds further burden to the volunteer Board member experience. Recognizing this issue, Sharper has rolled out a program that adds the necessary resources to help manage this task, while allocating the cost to those creating it (the Owners that rent). This program is in the form of an Addendum to the Management Agreement. If adopted, it engages our rental management staff and gives the following benefits to the Association. Sharper Management will: The costs associated with engaging in this program is charge to the Owners that rent on an annual basis. As a Board, you have the authority to establish fees – and this minor Owner fee creates an opportunity to better manage the rentals in your community. Speak to your Manager or contact Client Care for more information. clientcare@sharpermanagement.com

Dues Increases – No Resident Wants It; But Every Association Needs It

Most Associations have a traditional calendar fiscal year (January-December), which means soon we will be entering budget season for 2025. It’s going to be a tricky one to navigate and, for many, a tough one to swallow. Back to basics, your operating budget is what sets the “dues” amount that people will pay each month/quarter/annual. Technically, it’s the “assessment” amount, but no one likes to use that word. Each Association is different in what they are responsible for funding; but operating budgets typically account for Looking back on 2024, there’s no doubt that there were a number of budget busters. Material costs continue to rise sharply, making your maintenance projects more expensive. Labor in all trades continues to be an issue, causing increased operating costs to match the increased wages to get workers. The lawn/snow/landscape industry has taken a particularly hard hit with labor and fuel prices. Utility costs are up 9% for electricity, 10% for natural gas, between 5-15% for water/sewer depending on the municipality, and garbage service is up, on average, 15-20% since 2023. And the biggest of them all – insurance.. The insurance market for the multi-family/associations continues to be volatile, to say the least. Renewals going in to 2024 we averaging a 50-70% increase.  And that’s if you had a clear claim history. Those with claims, policies were up 200-300% and a trend of carriers dropping/non-renewing clients began. This slope has continued throughout 2024 and the early 2025 picture doesn’t look much better. Carriers are holding their renewal premium until 30-days before renewal – and associations are informed of either non-renewal or double or triple rate increases with little to no time.  So how does one budget for insurance in 2025?  If you didn’t experience a significant increase this year, doubling your current premium might be wise. Be prepared to special assess if your renewal busts your budget.  There was an excellent news story on Kare11 discussing this particular issue. https://www.kare11.com/article/news/local/hail-storms-in-minnesota-lead-to-huge-insurance-price-increases/89-fc714fa1-56dc-42b9-aad8-472ec2ff84a3 So back to budgeting…..  No one likes to hear it, but the truth is every year dues should go up. Inflation is real. Things don’t get cheaper. Never truer than today. To stay fiscally health, dues should, at a minimum, go up to reflect national inflation. Looking into 2025; however, you may want to be even more aggressive when considering our current economic climate and state of the insurance market. Perhaps the increases listed above can be a guide as you look at each line item of your budget.

New Legislative Requirements for HOA Boards– “FinCEN”

Beginning January 1, 2025, the U.S. Department of the Treasury will begin enforcing the provisions of the Corporate Transparency Act (“CTA”). The Financial Crimes Enforcement Network (“FinCEN”) clarified that Community Associations ARE required to file Beneficial Ownership Interest (BOI) reports under the CTA. HOA’s have until January 1, 2025 to complete the requirement.  What does it mean to you/the association?  Paperwork to be filed with the government. To learn more about this new law, click or type the following link to a PDF, published by the Federal Government. https://drive.google.com/file/d/1-ENd7EL0YT80r9rU9wPJ9AY9wKEHKPPM/view?usp=sharing Sharper is taking this requirement seriously and has taken proactive steps to ensure that your association is in compliance. Note: there is a fine of $500 per day for non-compliance, up to two years of imprisonment, and an additional $10,000 fine. As your managing agent, Sharper can file on your behalf. We have the information necessary to file, including but not limited to: Agency, EIN, Governing Documents, Contact Information, Registered Address, and Compliance Tracking. What Sharper Will Do: What Each Board Member Board Needs To Do: The fee charged to the association for this service is $250. Sharper will also charge an annual maintenance fee of $200 for all updates to remain in compliance each year. This includes monitoring expired Identification Cards and accounting for all Board member changes. Please work with your manager or a member of our staff to ensure you, and the rest of your Board, are coming into compliance with this new law.

Press Release: Sharper Management to Open Office in East Metro

Eden Prairie, Minn – (September 25, 2024) – Sharper Management, LLC is excited to announce the opening of an additional office in Woodbury. The satellite office is expected to open towards the end of 2024.  “We are proud to be a Minnesota company, rooted in our local communities and neighborhoods,”  said Dan Cunningham, Owner of Sharper Management. “We are equally proud of our continued growth throughout the metro area. Having our headquarters in Eden Prairie, a satellite office in Maple Grove, and now an additional space in Woodbury will allow us to enhance our service to existing clients and position us for further growth.  We are excited” Founded in 2010, Sharper Management is a locally-owned, mid-sized property management company offering a full suite of premiere services to homeowner associations of all types, sizes and scopes. Sharper Management currently provides services to the Minneapolis-St. Paul seven-county area.

Board Training Opportunity – October 23rd  

The last of the 2024 quarterly Board Training sessions will be held on Wednesday, October 23rd, 6 p.m. at the Wells Fargo Plaza, 2nd Floor Training Room at 7900 Xerces Avenue in Bloomington, MN 55431. This free 90-minute session will focus on financials and insurance. Led by Sharper’s director of business development and education, Josh Reams, and Insurance Warehouse principal Eric Skarnes, topics will include: Insurance Basics: Financial Fundamentals: If you are interested in reserve your spot for this free training opportunity, email clientcare@sharpermanagement.com

Another Successful Sharper Scramble

Another successful golf tourney in the books! On Friday, July 26th Sharper hosted nearly 200 people for our 8th annual Sharper Scramble Golf Tournament at Boulder Pointe Golf Club. A day designed to celebrate Sharper Management, we brought together the trifecta of stakeholders – our trusted business partners, Sharper staff and valued Board members – for a day of fun, food, fellowship and golf. Thanks to our generous sponsors and people who donated throughout the day, we were also able to generate nearly $10,000 to go towards this year’s benefit – the ALS Foundation. We hope you can join us next year for this annual event. It is free to you as a Board member.  Watch for a date to be announced in the winter newsletter and make sure to secure your spot early. It fills fast!  To those that attended this year, thank you for joining us and hope to see you next year!

Board Training Opportunity – July 24th

The next session in the quarterly series of Board Training opportunities will be held on Wednesday, July 24th, 6 p.m. at the Wells Fargo Plaza, 2nd Floor Training Room at 7900 Xerces Avenue in Bloomington, MN 55431. The 90-minute session will be led by director of business development and education, Josh Reams, CMCA, AMS, PCAM – and will focus on Governing Documents If you are interested in reserving your spot, please email: clientcare@sharpermanagement.com

Rental Management Program

Tracking rental properties within an Association has long been a challenge to both Management and to the Board. “Managing” those Owners that choose to rent by ensuring they abide by any policies the Association might have regarding renting is even harder. It goes beyond the scope of the Management Agreement, and certainly adds further burden to the volunteer Board member experience.  Recognizing this issue, Sharper has rolled out a program that adds the necessary resources to help manage this task, while allocating the cost to those creating it (the Owners that rent). This program is in the form of an Addendum to the Management Agreement. If adopted, it engages our rental management staff and gives the following benefits to the Association.  Sharper Management will:  · Track all rental properties and their Lease terms  · Keep file of all Tenant contact information · Ensure all required paperwork is on file (ex: copy of Lease, Addendum, etc.) · Verify compliance with any City requirements (ex: rental license)  The costs associated with engaging in this program is charge to the Owners that rent on an annual basis. As a Board, you have the authority to establish fees – and this minor Owner fee creates an opportunity to better manage the rentals in your community. Speak to your Manager or contact Client Care for more information. clientcare@sharpermanagement.com

The Importance of Loss Assessment Coverage

Insurance in an Association can be confusing. One important distinction in your personal homeowner policy package (commonly called an “HO6” policy) is Loss Assessment Coverage. This coverage is typically different from your “Real Property Coverage.” Real Property Coverage should cover your personal contents, coverage of building construction items like flooring and walls that may NOT be insured by the Association’s Master Policy (which can vary greatly by Association) and, at a bare minimum, coverage of all of those covered components up to the Association’s Master Policy deductible.  Loss Assessment Coverage is separate and important to understand. At is core, it is actually quite simple. The Association typically assesses the owner(s) for their share of the Master Policy’s deductible in the event of a loss. The homeowner simply submits that letter, stating they’re being assessed to their HO6 carrier, and their HO6 carrier pays out that deductible assessment.  *If the owner doesn’t have this coverage, it is out of their pocket and the Association will move to collect on it just as they would any other regular assessment (“dues”) or special assessment.  This is becoming increasingly important because, for the past decade, Association Master Policies have had increasing deductibles – sometimes $25,000 or $50,000 on common losses; and almost all Association policies now have a separate percentage-based deductible for a loss related to wind and/or hail damage. This “wind/hail deductible” is often based on the building value and can range from 2-5%. In the case of a hail storm and loss, homeowners are susceptible to significant assessments to help the Association make up the deductible. Let’s go through three scenarios to help understand how Association deductibles work – and how (and why) Loss Assessments Coverage comes in to play.  Scenario 1 – Condo Building Water Leak  Unit 200 has a backed-up sink that caused water damage to unit 200 and 100 below. The Association has a $10,000 deductible on the Master Policy that has “all-in” coverage. Damage to both units totals $50,000. The Master Policy is going to cut a check to the Association for $40,000 (less the $10,000 deductible). The Association is going to assess both unit owners $5,000 to make up the $10,000 deductible. The Association is made whole on the claim and the loss/damages remedied.  Scenario 2 – Fire to a Townhome Unit  The end unit of a townhome complex sustains a fire and the unit is destroyed. The Association has a $25,000 deductible on the Master Policy that has “all-in” coverage, less “betterments and improvements.” Damage to unit is a complete loss. Value for the home is determined to be $200,000 to rebuild the unit back to the original specifications. The Master Policy is going to cut a check to the Association for $175,000 (less the $25,000 deductible). The Association is going to assess that homeowner (since it was the only unit affected) $25,000 to make up the deductible. The Association is made whole to rebuild the unit to the original specifications – the homeowner’s HO6 policy covers the personal contents and any “betterments and improvements” that may have been made by the owner, subject to whatever they had for real property coverage.  Scenario 3 – Hailstorm to a Townhome Development  Now it gets complicated. A 100-unit townhome development sustains a hailstorm and the roofs are totaled. The Association has a 4% wind/hail deductible on their policy and a total property value at $30,000,000. The loss for getting new roofs will cost $3,000,000. The Master Policy deductible for the hailstorm is $1,200,000 (4% of $30,000,000). That means the Association will receive a check for $1,800,000 (less the $1,200,000 deductible). The Association is going to assess every unit owner $12,000to make up the $1,200,000 deductible. The Association is made whole on the claim and new roofs are installed.  In each of these scenarios, the Association is assessing the deductible back to the owners benefiting. Scenario 3 is significant, because the Association has to collect $12,000 from EVERY unit owner. It is a vulnerable place for the Association to be in. And it is a vulnerable place for each homeowner to be in if they don’t have Loss Assessment coverage to cover that assessment.  Hopefully this is helpful in understanding how Association deductibles work – but more importantly, hopefully it illustrates just how imperative it is that EVERY owner has adequate Loss Assessment coverage as part of their H06 policy package.

Board Tips: Make Your Meetings Matter 

There’s no denying that we live in a culture of meetings. The ease and accessibility of virtual meetings have furthered exasperated the reactionary notion of “let’s get together to talk it through.” As we approach the spring/summer season and the cadence of Board meetings increase, step back and consider two things – Frequency and Productivity.  Meeting Frequency – how often are you meeting as an association Board? This will certainly vary. Your Governing Documents may dictate a number of meetings to be held within a calendar year. The size and complexity of your community may require more or less meeting regularity. And situational issues or projects may dictate the volume necessity for a “meeting of the minds.” Consider the notion, however, that the more often you meet, the less productive you may be. Fewer meetings force focus – and therefore motivation to have tangible outcomes and measurable initiatives.  Consider evaluating your meeting productivity. If you find that decisions are often times delayed or tabled, if your meetings are more social than business, and certainly if you have a limited number of items on your docket, consider having fewer meetings. See how it goes. The results might surprise you! Productivity = Action List – to ensure that the meeting was, in fact, constructive with measurable outcomes, it is helpful to have a summary identifying assigned tasks. Make a list! As Managers, we refer to this as an “Action Item List.” These can even be incorporated into the Meeting Minutes if it reflects a New Business decision or resolution of the Board. Towards the end of a meeting, it is natural for people to just want to get home. Verbally summarizing and capturing, in writing, all action items is imperative.  To make your meetings matter, reconsider frequency and have measurables/outcomes. You’ll find the two go hand-in-hand!