By Bill Wethe
Finance Advisory Committee Chair
Purpose
The objective in preparing this memo is to provide further details of what DRM currently provides to the Association for the management fees (Fees) that are paid by the Association to DRM.
Please note this is a summary of many items in the executed Management Agreement (Agreement) that the Association has with DRM as well as other information provided by DRM. Please refer to the Agreement which is posted in the Residents Only section of the Association website.
Further Discussion
Let us review what management “goods” and services are provided by DRM to the Association to understand how those services relate to the management fees that are being paid by the Association.
DRM provides the following “goods” and services for the Fees paid to them:
- Application software and related infrastructure for:
- General ledger accounting
- Financial statement reporting
- Vouching of vendor invoices
- Electronic approval of vendor invoice (Strongroom)
- Accounts payable subledger
- Payment of vendor invoices
- Billing of assessments and other amounts due the Association
- Accounts receivable subledger
- HRIS
- Payroll (ADP)
- Benefits
- COBRA
- Affordable Care Act (ACA) compliance and reporting
- Timekeeping (ADP)
- Workplace monitoring (Safeline)
- Online employee training
- Employee performance
- Accounting and financial reporting including:
- Escrow disclosure fulfillment and changes of ownership
- Delinquency tracking
- Monitoring of bankruptcies foreclosures
- Lien processing and tracking
- Production of and distribution of the homeowner associations’ assessment billings
- Receipt of and tracking of all owner assessment payments
- Administration of bank accounts for the Operating Fund and Replacement Fund including approved account transfers and bank reconciliations
- Processing of vendor invoices and payment of Association vendors
- Preparation of the monthly general ledgers and related financial statements including general ledger account reconciliations
- Executive oversight and supervision in offsite office space:
- Mark Dodge of the General Manager
- Keith Lavery of the Controller
- Administration including:
- Support for operations of on-site Association management office
- Support for preparation and distribution of all Association written communication including annual mailers
- Customer Service interface with owners on billing and Association maintenance issues
- Attendance at and support for Board of Director (Board) meetings and relevant Advisory Committee meetings
- Oversight of and attendance at annual meetings and elections including support for preparation of election
- Updates to the Board as to new laws/regulations affecting the Association
- Rule enforcement support through use of mobile application
- Homeowner dispute mitigation and escalation
- Emergency services program; 24 hours a day, 7 days a week for communication with unit owners in the Association
- Human resources and personnel in offsite office space:
- Recruit, hire, pay, train, supervise, investigate and discharge the on-site employees of DRM
- DRM pays for all recruitment costs of on-site employees of DRM and the Association does not reimburse DRM (please note, the Association has used certain job posting websites to advertise open positions and has paid the costs of such directly to the vendors)
- Employee onboarding, including background and drug testing
- Employee Training and Development (please note, the Association did budget for additional education, training and development in 2018; the 2018 expense was $1,876 as compared to the annual budget of $8,000; the 2019 annual budget is $0)
- Benefits administration
- Workplace compliance and monitoring
- Support of monthly safety training program
- Processing and monitoring of workplace injury and harassment complaints
- Defend, indemnify and hold the Association harmless from and against claims as specified in the Agreement with DRM
- At DRM’s sole cost and expense, provide the insurance coverage as specified in the Agreement with DRM:
- Fidelity insurance with coverage for all DRM’s employees
- Commercial general liability, including automobile liability, insurance and the Association is additional insured under both policies
- Umbrella liability insurance
- Employment practices liability insurance
In addition, two additional benefits are provided to the Association without charge including:
- Associations, Inc. (Associa), the parent company of DRM, has arranged for a Private Depositor Bond issued by a Surety naming the Association as a beneficiary covering Association Operating Fund and Replacement Fund checking and money market accounts maintained at MUFG Union Bank, N.A. (Union Bank) which have account balances that are in excess of the FDIC insured limit of $250,000.
- Associa has arranged for implementation of positive pay on Association Operating Fund and Replacement Fund checking accounts maintained at Union Bank.
The Private Depositor Bond is significant to the Association in terms of operational and administrative efficiency. If the Private Depositor Bond was not in place, then the Association would have to maintain multiple Operating Fund checking accounts so that the average balance in each of the accounts was less than $250,000. The Association would need approximately eight to ten checking accounts which would take substantial more resources and time to manage and administer.
Positive pay is an automated fraud detection tool offered by the Cash Management Department of most banks, including Union Bank. In its simplest form, it is a service that matches the account number, check number and dollar amount of each check presented for payment against a list of checks previously authorized and issued by the Association.
Additional FAC Members: Larry Anderson, John Deshaw, Steve Proia, Carey Thompson, Bob Giovannettone and Bill Ferstenfeld.
Contact the author at finance@scshca.com.