When life is business as usual, Homeowner’s Associations (HOAs)—and we’ll include condo associations under that umbrella—exist to uphold the standard of living within the community and manages shared spaces. However, when the unexpected strikes, an HOA is also responsible for residents’ welfare, including their health and safety in the event of a disaster or emergency. One source states that the community association has two responsibilities in the face of disaster: to carry out an effective response and to return the community to normalcy post-disaster. In this article, we will cover some best practices for HOA disaster and emergency preparedness, including how HOAs have responded to COVID-19 and how they may change moving forward.
THE BASICS OF AN HOA DISASTER AND EMERGENCY PREPAREDNESS PLAN
Some natural disasters that commonly affect HOAs and the communities they serve are earthquakes, fires, floods, or the effects of major storms. Manmade disasters can include chemical spills, explosions, acts of terrorism, or some type of building failure. Unless stated in the HOA’s governing documents, there is no mandate for them to have a disaster response plan, much less a public health-specific emergency response plan. The following elements will help provide basic information on how an HOA can best respond when the unexpected strikes.
LEGAL CONSIDERATIONS
HOAs are technically non-governmental and so they do not legally have expanded powers tangential to a government’s during a declared emergency. They may, however, have increased responsibility and more authority in some areas as dictated by the HOA’s governing documents. Among these documents, there should also be included any applicable information from state laws regarding emergency situations. Above all, any expanded authority by an HOA should be in accordance with the board’s fiduciary duty or, in other words, their obligation to act in the best interest of the community as a whole rather than in the interest of the board itself.
Having an association insurance policy can add additional protection when disasters occur, especially for condominium association managers. For condos, any damage in a building can potentially shut down the whole thing. It is important an HOA’s master insurance policy coves property damage to common areas and liability coverage to association and members for accidents that occur in common areas. Individuals should have homeowner’s insurance for their own units but insurance at the association level helps take care of losses related to the common areas and exteriors of buildings.
RESERVE FUNDS
It is best to avoid raising regular assessment costs for homeowners if possible, especially on short notice as an emergency or disaster would require. In order to prevent this, many HOAs will use regular assessment money to pay into a reserve fund. This fund provides resources for scheduled and unscheduled repairs that may arise, including those necessitated by an emergency/disaster situation. One management source recommends hiring a professional to conduct a reserve study every few years. They can assess the conditions of association assets and amenities and help managers to anticipate upcoming costs with maintenance and repairs. HOAs should aim to have at least 70% of anticipated costs covered in the reserve fund. One article recommends putting 25% to 40% of regular assessment fees toward the reserve fund. Depending on your area of the country, there may need to be a majority vote from HOA members to use these funds, even in the case of emergency situations.
While you can’t predict the future, you can plan for specific emergencies that may be more likely to occur in your area. Is the community you manage in dry, fire-prone hills? Or on a flood plain? Consider what disasters you are most at-risk for in your community and plan accordingly. In addition to saving funds for anticipated repairs, you can also save a portion for the identified, appropriate response of your most probable disasters.
In the event the reserve fund is not enough to cover emergency expenses outright, HOAs can take out short-term loans. This is a good option for HOAs with insurance who need to respond quickly but are waiting for the insurance claim to be adjusted. If an HOA’s insurance will not be able to cover all of the expenses for losses and the reserve fund is low, these loans can also be a successful option if the HOA is able to adjust regular assessments for members until the short-term loan is paid off.
SHORT-TERM PLAN FOR HOA DISASTER AND EMERGENCY PREPAREDNESS
When disaster strikes, what needs to happen right away? Managers should be prepared to formerly close recreation areas and other public spaces in response to safety concerns. For example, this has been an immediate action taken by HOA managers in response to COVID-19 so as to reduce contact among residents. In addition to managing common areas, HOA leaders are also responsible for removing any hazards and containing hazardous situations that would affect the safety of residents. One example of this would be debris or powerlines that have fallen on the property due to earthquakes or storms. The HOA should know who they need to call or whose services they can contract out to get these hazards taken care of and have a site plan prepared that highlights any shut-off valves, lift stations, generators, and other important touchpoints throughout the property. Ultimately, a good disaster response plan will not be filled with specific procedures, but rather principles such as identifying threats, working with response organizations, and communicating with residents.
Perhaps the most important part of an HOA’s short-term plan is their communication strategy. While HOAs do not have the power to order people out of their homes in the event of a disaster warning or evacuation order, they should have an effective communication plan in place so that any regional disaster information can be communicated to residents quickly. Managers should have this figured out beforehand and act quickly when they have any knowledge that residents may be in danger. This need for a communication plan extends to any voting activities that need to take place. Does your state allow remote voting? Will votes need to be mailed-in? How will board meetings be held if you can’t physically get together? These are all questions your disaster plan should answer. To ensure good communication on all levels, an HOA should keep updated contact records for all board members, residents, the property manager, insurance agency, and vendors connected to the property.
LONG-TERM PLAN FOR HOA DISASTER AND EMERGENCY PREPAREDNESS
In the face of disaster or emergencies, what needs to happen to get back to normalcy? One source explains that disaster response and disaster recovery are not mutually exclusive categories. Often, they are occurring simultaneously.
In some cases, it may be necessary to provide temporary shelter for residents while repairs are taking place on a larger scale. If evacuation is necessary, HOA leaders should have a list of available shelters including those that are pet-friendly. This will help expedite the process of evacuation which in turn will speed up recovery efforts on the property. While an evacuation plan may take place in the short-term or immediate response, it’s success will be very important to residents returning to the property as soon as possible.
As far as long-term financial recovery from disasters goes, some HOA’s will require a special assessment from members to be paid one time which will help cover the costs of disaster recovery expenses. Depending on location, this special assessment may need to be approved by members while in some areas the board can initiate it without member approval. While a homeowner’s ability to pay assessments may be affected by a disaster, the HOA will not be able to respond adequately or carry on activities without those payments. Therefore, if need be, they should try to work out temporary payment plans or deferred payments with residents. This is poignant especially in the case of COVID-19 where a major consequence of the global health emergency is millions of people losing their jobs.
A final element of long-term recovery efforts will be to plan for an evaluation of the response and recovery once things have returned to normalcy. While your plan should be evaluated and run through different scenarios before the event actually occurs, you will also want to evaluate how well the response actually went and what core elements should be adjusted for next time. While every emergency situation will be different, your essential operations will most likely remain constant and you’ll want to fix any recognized gaps.
HOW DISASTER PLANNING MAY DIFFER FOR DIFFERENT COMMUNITY DEMOGRAPHICS
As HOA disaster and emergency preparedness plans are crafted, they will want to take into consideration the unique needs of their community which includes age, economic status, and if there are families with children. If there are community members who would not be able to transport themselves to safety, this should be noted. Also, if there are those with disabilities or chronic conditions such as obesity, asthma, or other major concerns, this should be noted as well and accounted for, especially in evacuation plans.
For COVID-19, communities with at-risk, older residents have had to be especially vigilant in considering emergency changes to their operations. In retirement communities, there are usually many more organized social gatherings for the entire community. They may also offer communal dining and be more likely to have outside visitors in the form of family members. To account for these unique circumstances, property staff are limiting non-essential visitors, sanitizing any public spaces, shutting down non-essential events, and spacing out the sitting in communal eating to CDC standards.
HOW COVID-19 HAS AFFECTED HOAS AND WHAT LIES AHEAD
A survey conducted by the Community Associations Institute (CAI) reported on association board members’ experiences with COVID-19 and their projections for the future. One-third of respondents said that they have tried to reduce expenses out of concern for decreased revenue in the future. Half of respondents report they expect that infractions with assessments will increase in 2020. While over 90% of HOA members are up-to-date on assessment payments (the same as pre-pandemic levels), 20% of respondents reported seeing more requests from members for payment plan options. A large majority of managers report responding to the pandemic by closing common areas, encouraging social distancing, holding remote board meetings, updating residents on local, state, and federal announcements, and increasing the frequency of disinfecting commonly touched surfaces. While budget uncertainties lie ahead, 91% of association managers surveyed reported no alterations of their employment so far.
Emergency and disaster planning is a continual process that requires compassion, flexibility, financial foresight, and a commitment to communication. As HOAs remain committed to serving their communities and members, they can engage in robust disaster and emergency planning that will give residents the best chance at safety through uncertainty and an efficient recovery on the other side.
