Jennifer Helle: 0:00

You're now exposed to more inflation risk and other cost pressures, like the increased scope. So, if it's something that's structural or attached to your building, you might accumulate more water damage, which is something we experience because the seals break. So, as you defer maintenance, you're going to experience cost increase, and those costs increase are often not very predictable, and they start to like we talked about before mathematically, they start to compound.

Announcer: 0:32

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Association Insights and Marketplace, Association Reserves, Community Financials, Kevin Davis Insurance Services and the Inspectors of Election. You'll find links to their website and social media in the show notes.

Robert Nordlund: 0:48

Welcome back to HOA Insights: Common Sense for Common Areas. I'm Robert Nordlund, and I'm here today for episode number 182 with a special guest, someone I met on LinkedIn as we found ourselves sending similar messages to a community association audience. Now, professionally, she's a risk management expert. Personally, she's been a committee member and a director at her master and sub association. So she has personal and you could also say professional experience in the community association world. We

resonate on the theme: 1:18

when you can see what's coming, you can prepare for it. So I believe you'll enjoy listening in to my conversation with Jennifer Helle of Telemtryx in just a few minutes. We're here weekly, and last week's episode 181 was with management expert and consultant Julie Adamen. If you missed that episode or any other prior episode, take a moment after today's program to listen from our podcast website, hoa insights.org, or watch on our YouTube channel. But better yet, subscribe from any of the major podcast platforms or our YouTube channel so you don't miss any future episodes. Becoming a subscriber increases the podcast's ranking in search engines, helping others find this free resource so they can be better equipped to lead their association. Well, those of you watching on YouTube can see the HOA Insights mug that I have here, praising right side up volunteer board members, and I got that from our merch store, which you can browse through from our HOAInsights.org website or the link in our show notes, and while you're there, help yourself. Download a free Zoom background that you can use for your next board meeting. We enjoy hearing from you, responding to the issues you are facing at your association. So, if you have a hot topic, a crazy story, or a question you'd like us to address, you can contact us at 805-203-3130, or email us at podcast at hoa insights.org. We try to shape our episodes based on what you ask, but like I said earlier, today I thought you'd enjoy a conversation with Jennifer Helly to hear about board decisions from an analytical point of view. So, Jennifer, welcome to the program.

Jennifer Helle: 3:03

Thank you, Robert. Thank you for having me.

Robert Nordlund: 3:06

Well, tell me about your background. Where are you today?

Jennifer Helle: 3:10

Today, I'm on the east coast of Florida, sunny Florida usually, but not today. It's pouring. A little bit about my background. I've spent 15 years doing risk analysis and risk management for global financial institutions, banks, and asset management firms. More recently, I've been on the finance committee and the board as a board director and board president for my community, helping our association recover from some of the adverse economic effects of since COVID in the sunrise Surfside, yeah,

Robert Nordlund: 3:49

in the last few years. Okay, so Florida Association, what got you from a homeowner to a? What's your path to being on the board?

Jennifer Helle: 3:59

We were experiencing a lot of price assessment increases, mid-year increases, and I happened to be walking my dog one day, and a woman stopped me and asked me if I could explain what was going on with these increases. She was heartbroken. She she was telling me that she was going to have to move out of her home. She was an elderly lady, and she couldn't afford to live here anymore. And she was afraid that the prices would keep going up, and she wouldn't be able to sell. That led me to looking into some of the financial issues that we were facing. And eventually, as we kept getting hit with more and more assessment increases, I finally decided to join the finance committee to help figure out what was going on and see if we could stabilize our fees.

Robert Nordlund: 4:53

Yeah, because you're a numbers person professionally. You're a numbers person.

Jennifer Helle: 4:57

Yes, and I spent years going through. Financials and trying to understand, you know, what what caused what what drove P and Ls and profits and losses for asset managers. So I decided, you know, maybe my skills will be useful here. So I took a look at the finances. I got on the finance committee and decided to help from there. It became really obvious to me that the problems that or the drivers, I should say, that were causing these fee increases were not going to be resolved very easily. The solution was very obvious. The board, the the existing board, would have resolved them, but there were other drivers there that I felt needed a little bit more expertise to resolve.

Robert Nordlund: 5:54

Okay,

Jennifer Helle: 5:55

so that's what initiated my drive to get onto the board.

Robert Nordlund: 5:59

Got it. Okay, so it's not well. Was the the nice elderly lady who spoke to you was she a homeowner or was she a board member? Where was she or just just someone who was concerned about what was going on at your association?

Jennifer Helle: 6:14

She was a homeowner here. She had been here. I think she said like 30

Robert Nordlund: 6:18

years. Yeah,

Jennifer Helle: 6:19

and didn't expect to have to move, and her concern was more her own livelihood.

Robert Nordlund: 6:26

Got it. It was just getting too expensive, and she was getting squeezed out.

Unknown: 6:30

Yes,

Jennifer Helle: 6:30

exactly.

Robert Nordlund: 6:31

Okay. Well, I guess I'm a little bit comforted in that you didn't find massive fraud or things like that. It was just was it just a matter of the expenses were growing and growing and growing, and it was a human factor that the board had been maybe a little bit slow to react, and now the association was behind.

Jennifer Helle: 6:53

I didn't find any evidence of fraud. I will say that, or or wrongdoing. What happened was the accumulation of a lot of things, and I think it was just the perfect storm with the economic environment and regulatory environment that we were facing. And like I said, if if the solution had been really obvious, the board would have been able to handle the the existing board would have been able to handle it, and I trust that they would have. What ended up happening was the there was the insurance part, but the insurance part was not as big as everybody was thinking it was. So I looked into the reserves because I noticed that the reserves had spiked quite a bit over the past few years. And what

Robert Nordlund: 7:36

balance or the reserve? The reserve

Jennifer Helle: 7:38

budget, the assessment. Got it. Okay. So the reserve assessments for driving the overall assessments, and what it ended up being was a combination of risk factors that compounded on each other. So because of some regulatory issues that we were facing, maintenance had been deferred, and we were coming up on a wall, like a highly concentrated period of major expenses coming up. On top of that, we were dealing with extraordinary cost increases, just due to the post-COVID era supply shortages.

Robert Nordlund: 8:22

Right, that was when we learned the word supply chain and hyperinflation and things like that. And meanwhile, we're still trying to get ourselves out of COVID. There was a ship that was stuck in the Suez Canal, and everyone in the world knew about it. And just crazy things going on, things that we didn't need to know before. You you

Jennifer Helle: 8:40

never could have planned for that these things. There's this interrelationship between the time that you have to save and those cost increases, where the sooner you have to spend that money, that cost increase has a exponential impact on your fees because you have less time to collect for that increased price. And Stoke was yeah.

Robert Nordlund: 9:03

I'm so tickled because you looked at the numbers and they spoke to you. It's not like you were saying,"Well, what do we do?" I love that you were there, and you're a numbers person, and you were able to dig in and say, "Ah, now I know." And it's not just this, but it's this and this, and it's two problems that came together, and now we have a much bigger problem. And so I love that you were able to bring clarity to the situation. I also love that you were able to see kind of the truth of the matter. What what are these numbers saying? And sometimes I think about it like a sports game, like a football game, a timed event, or a basketball. I think basketball frustrates me the most that when you get down to the last minute, and crazy things start to happen in the last minute of a basketball game. There's so much fouling because that you have a last ditch effort to get the ball. And you're hoping that the guy doesn't sink the free throw, or girl doesn't sink the free throw. All these kinds of things, crazy things happen when you're out of time, and it affects everything you do. And the world is different if you have, and this is my world, if you have 20 years to plan for a roof replacement. That's easy peasy. Just a little bit of money over 20 years. At the end, you got enough money for a roof. But if you're waiting until the last year, I can barely sit in my chair thinking about it. That's that's an entirely different problem because you have no time.

Jennifer Helle: 10:38

Yeah, and so we were running out of time because we had we had deferred some maintenance, and now we were facing you know 20 25% increases on those costs, and the scope was widening too because as we were doing inspections, we realized that there was secondary damage that we had to replace. So we had it was just a perfect storm of events that happened, and all of those numbers just created this exponential rise in our reserve budget, and that was really the source of it. So immediately, you know, I was working with a team of other professionals who were thinking about running for the board, and we we started planning. Like, how can we how can we prevent this from happening? How can we explain it? So we did a lot of education presentations.

Robert Nordlund: 11:30

I love that communication. Communication is so big because it's not just what do we as a board decide, but you've got to bring the homeowners along with you.

Jennifer Helle: 11:38

And when they understand what's going on? You get more buy-in from them when they feel like you understand. You're letting them in on it. You get it becomes more of a cooperative activity.

Robert Nordlund: 11:55

I want to slow you down. There, I love the momentum, but I want to slow you down. I love communication, and I love treating the owners like grown-ups, bringing them along on the in the flow of the conversation, helping them understand it's community, it's ours. It's not the board saying we must do this. Sorry, it's hey folks, this is our association. And was that conscious, or did that just come kind of subconsciously as part of what you thought was the right thing to do was to communicate what you found out?

Jennifer Helle: 12:30

I thought it was responsible to communicate what we found out. It was also, you know, a call for for our community to come together and understand what's going on, so that everybody had more understanding of what and could participate in the solution. We had our elections, and we got on the board, and the treasurer and I, we were co-chairs of the finance committee, and we set up a bunch of. We had surprisingly, we had 42 volunteers for the finance committee.

Robert Nordlund: 13:11

Nice. And now, how many homes in the association?

Jennifer Helle: 13:15

We have almost 600 homes.

Robert Nordlund: 13:17

48. So that's that's a that's a big number, but it's also a significant fraction. That's a lot of interested people, which is just like the woman who stopped you as you were walking your dog. What's going on? How can I find out? And it was your curiosity that also brought you onto the the program when you said,"Well, maybe I can help," and I love that. That's again community spirit. What is our association? What can we do?

Jennifer Helle: 13:45

We were pleased to have a great turnout for the finance committees. We got a lot done. We were able to create some subcommittees, two of which really helped with the management, the risk management of our reserves going forward. So the first one that I created was a review group, a five-year review group, that where we went through the reserve finances for five years. We we looked at what what was voted on

Robert Nordlund: 14:21

the near five years, the

Jennifer Helle: 14:22

past five years, yeah, the

Robert Nordlund: 14:24

past five years. Okay, the

Jennifer Helle: 14:25

past five years. So we looked at the past five years to understand what happened, where where we could improve our operational processes, what was causing some of the erosion in our Fund,

Robert Nordlund: 14:42

okay,

Jennifer Helle: 14:43

and how could we create guardrails so that this doesn't happen again? So, out of that group, what the outcome was that we created policy and procedures that promoted transparency and financial responsibility. Created guardrails. We now use the definition of all of our components from the reserve study, and that's what gets spent. The money gets spent on those definitions of those components. We now have a contingency fund that acts as a buffer between operating and the reserve fund.

Robert Nordlund: 15:18

So when you're tight on money in the operating account, you're not pulling it from reserves. You have a little side bucket to soften the blow.

Jennifer Helle: 15:29

Correct.

Robert Nordlund: 15:30

Okay. And then if

Jennifer Helle: 15:32

there's any kind of overages in the reserves, we we can also tap that to protect our operating funds.

Robert Nordlund: 15:39

Got it. This sounds like there's another angle to this. We've had other people on the program who have talked about getting committees. Number one, to help them with a topic, but number two to communicate to the board members or to communicate to the homeowners. Because when you have 40 some people or 20 some people, boy, that's a lot more opportunity to meet more people as they're walking their dog, going to their car, getting the mail, up and down the elevator, all that kind of stuff. Playing tennis, playing pickleball to communicate the board's message, and again be able to build community around hard time. What what is happening? Well, oh, I don't know about it, but Sheila knows about it. Let's get Sheila or whatever it is. There's someone who knows because the rumor mill can be an awful thing.

Jennifer Helle: 16:30

And it did help because there were so many people involved and so many people watching and understanding, and so many more people understand why we have reserves and how it needs to be managed. So you know when we're planning these new budgets, sorry, projects with these huge budgets, they understand that that money's already saved, and they're not resisting these projects because of the price tag. And that's one of the the one of the outcomes of this, from a social perspective,

Robert Nordlund: 17:03

let me slow you down on that. I'm thinking the resistance to the price tag. When people hear that we've got to replace the roof on buildings two and three, it's going to cost $500,000. The first reaction for a lot of homeowners is pulling their hair out and say $500,000? How can it be that expensive, and it's wonderful to be able to say, but we have$500,000 in reserves because of the things we've done the last few years, and so we're set. That's not a problem. It's expensive, but it's not a problem. Is that what you're talking about?

Jennifer Helle: 17:35

And that's exactly what we're talking about.

Robert Nordlund: 17:37

That is wonderful. I think the average person in the country is. I realize I'm rubbing my hands here. Concerned about a bill, we don't want unsettling bills. And the great thing about reserves is you can see these projects coming years in advance. So if you can plan, use time to your advantage. Prepare in advance. Understand the risk management. Then, yeah, $500,000. It's a big number, but no worries. That's not our problem. The problem is deciding when we resurface the tennis court. Are we going to resurface it to have a couple pickleball lines? Those are. And we do that. We do that. Oh, good, good, good, good, good. Okay, but yeah,

Jennifer Helle: 18:26

and and to that point, that was in one of the other committees sub subcommittees that we created was a five-year planning group, which is the prospective five years, the next five years. They are, and this committee is still going on, and it's what it's a wonderful committee. The the the lady who took charge of that committee, she did a great job organizing it and creating a workflow for it. Where they take the plan from the reserve study, there's usually like a five year plan, and they start scoping it out. What kind of professionals do we need? What kind of inspections do we need to get the scope to understand the scope? Okay, how long is this project going to take? When do we send the RFPs out? They start planning for major projects five years in advance. Even though we've had the reserves maybe 30 years, five years we're getting the price more accurate. We're getting the vendors in line. We're understanding the scope more, so there's no surprises, and it's it that has been one of the most productive and satisfying committees that we've had.

Robert Nordlund: 19:33

That that is making me smile so much because to get that ready for people to say, "Oh, let's actually," as we look at the next five years, let's move this project up a year, so that we're getting all new pool furniture. How about we get all new pool furniture the same year we resurface the pool, so everything's bright and fresh. And if we can, let's hold the ironwork back a year, so we can paint the ironwork at the same time, so everything in. Pool area will look sharp, and just all of a sudden you're seeing light bulbs go on in people. Not only do things get done better, but they have ownership. Again, it's their community. It's not the board saying we'll do this. And I bet we have lots of listeners thinking, "I want to go to your association. I want 20 people on my committee. I want people on a last five-year after-action review committee. I want people on a plan the next five years committee. This is this is great stuff. This is a lot of fun. Well, I'm looking at the time. It is time to take a quick break, and we'll do that to hear from one of our generous sponsors. After which, we'll be back with Jennifer to talk about more common sense for common areas.

Paige Daniels: 20:43

Are you part of a homeowners association or condominium board? Making the right financial decisions for your community's future is crucial. At Association Reserves, we're proud to serve communities nationwide, specializing in reserve studies tailored to your community's unique needs. Our expert team helps you accurately assess your property's assets, forecast future expenses, and develop a solid funding plan. Whether you're a small HOA or a large condominium association, we've got you covered. Visit reservesite.com to learn more and get a proposal for your association.

Robert Nordlund: 21:15

And we're back. Well, Jennifer, over the break we were talking about more details about what had gone on at your association, and tell me, you got onto the board because of a series of significant assessment increases, mid-year increases. Was your board able to address that and solve that problem that was unsettling the community?

Jennifer Helle: 21:36

We were, and it took some creativity, a lot of analysis, but what we were able to do was prepare more. So, like I said, our five-year planning group is now forecasting out expenditures, and so for for the next five years, and we're getting more accurate pricing. We have more ability to prepare our reserve fund for the large expenses, and even if they might be a little bit of a surprise in costs.

Robert Nordlund: 22:08

Yeah,

Jennifer Helle: 22:09

we've also everything's getting more and more expensive. Yeah, it's the only thing you can plan for right now. So we've also restructured our cash management plan. So having that extra income from

Robert Nordlund: 22:21

talk to me about that. What's cash management? Cash management to me, and for a lot of board members, is hold on to it. Don't lose it.

Jennifer Helle: 22:30

Yeah. So we we are now actively managing our our cash. We have a system now that where we can determine how long we can invest our cash into CDs and how much we can invest. So when the banker calls and says, "Hey, you have a CD. Do what do you want to do with it?" It's not a scramble to figure out what to do. We know we can invest it. We know when we're going to need it for the next project. We know how long we can invest it for, and it's been been able. It's helped us increase our interest income, which also helps to offset the inflationary pressures. And

Robert Nordlund: 23:12

a couple things on that. So you're now we're in September as we're recording this. You're 4% ish. Where are you at on interest earnings?

Jennifer Helle: 23:24

We have been. I think this year everything went down a little bit, but yeah, we were we we we increased our interest income significantly, which helps to stabilize the revenues that we need from our homeowners.

Robert Nordlund: 23:37

Right. We have many listeners that are still getting 1% or a fraction of percent, and that's just no good. But another thing is the question you talked, you spoke about the timing. I just want to clarify: when you have a CD that a five-year CD that someone asks, do you want to roll it over again? Your inclination is say, well, sure, let's maximize interest. But you don't want to roll it into a five-year CD, if you have a roof project next year, is that what you're talking about? Yeah,

Jennifer Helle: 24:05

and that timing is is critical, and especially when you have deadlines to meet with these projects, because if you have your cash locked up in a CD and you have to break it, then there are penalties, and you can take a loss on your principal. So it is important to make sure you time that and have a have a good solid plan. Talk to your banker, talk to your financial advisor, but come up with a plan so that you can have that flexibility and balance flexibility and interest income.

Robert Nordlund: 24:37

Let's talk about the flip side of that. Okay, so you you buy a five-year CD, and you realize, oh darn, we have a roof project, asphalt project, elevator, whatever it is, and we need to liquidate that, and it's going to take a penalty. So now we're losing money from reserves. You don't like that option. What about the other option of limping the project? Long for for years until the CD is matured. Are there risks and costs of deferring a project?

Jennifer Helle: 25:08

Yes, of course there are. Deferring a project, especially over years, you're now exposed to more inflation risks and other cost pressures like the increased scope. So, if it's something that's structural or attached to your building, you might accumulate more water damage, which is something we experience because the seals break. So, as you defer maintenance, you're going to experience cost increase, and those costs increase are often not very predictable, and they start to like we talked about before mathematically. They start to compound.

Robert Nordlund: 25:46

Well, I'm thinking back to Champlain Tower South, and that always makes me very anxious. But I think they got their structural report in 2018 that recommended a $8 million set of projects, and by the time the board was actually dealing with that, I believe in 2020 it had gone up to 14 million, and I think that's exactly what you're talking about. When you have existing problems, instead of it just being a fix, now you're doing a fix plus, and you add that to inflation, and all of a sudden the 8 million dollar project gets to 14 million, or a $1 million roof project goes to 1.7 because you're having to replace the underlayment or the sheathing or something related, and it just gets more expensive. Yeah, and

Jennifer Helle: 26:34

like you said, if you go from 8 million to a 14 million, now you have a very short time to collect that extra 6 million, even if you were fully funded at 8 million. Yes,

Robert Nordlund: 26:42

because you're pinched. Yeah, you painted yourself into a corner,

Jennifer Helle: 26:47

and everything takes time.

Robert Nordlund: 26:48

What's this done for life at the association? You don't have people walking around wringing their hands. It's now middle of the year. Is the board going to do a mid-year increase? You've stabilized that.

Jennifer Helle: 27:00

We have stabilized that, and and people are more confident in what is going on. The management they're more confident in the board. They understand now that their fees are are hopefully going to remain stable for a while. Not that we won't have some increases with inflation or you know corrections, but but it's under control and it's being managed responsibly with analytics, and we're very transparent about

Robert Nordlund: 27:32

it. I like that. Do you have more people at board meetings?

Jennifer Helle: 27:36

We do. We have a lot of people showing up to board meetings now. Usually they're full.

Robert Nordlund: 27:40

Excellent. That's that's a wonderful thing because they're they're not to can I say not to complain, but they're there just to gather information.

Jennifer Helle: 27:48

Um, they're there to gather information. They feel like they have a voice now. They feel like um they can speak about things and ask questions and get answers.

Robert Nordlund: 27:57

And that's it. I think what drew us to this episode, right? What drew me to this episode was the opportunity to get answers, to have someone like you who has the tools to look into the numbers and find out what are they actually saying, and to develop. Because it's one thing to have a problem; it's another thing to have an accurate understanding of the problem so you can solve it. Because solving the wrong problem doesn't fix the underlying problem. Board member confidence, owner confidence, lots of good things, and because you came on the board and started a a number of good decisions being made, Jennifer, this is fantastic. Well, it was great to have you on the program today. Can yeah, what what kind of closing thoughts do you have at this time?

Jennifer Helle: 28:48

If you're on the board or you're thinking about getting on the board, and you are not a risk management professional, it doesn't mean that you cannot manage risk. There's a lot of people that are there to help and give you advice and ask a lot of questions and ask a lot of questions about what assumptions they use to give you those answers and what could go wrong, and just be curious, be very curious.

Robert Nordlund: 29:19

Okay, you've talked about throughout the episode the value of understanding your numbers. The we've spoken about the value of having effective committees, people that are there to help, providing insights and providing communication tools. Jennifer, earlier you spoke about. I've got so many notes. It's going to take a while to digest this and get this into the show notes. But you talked about policies and procedures, transparency, definition consistency. So when you're talking about a, it links to what is actually in the reserve site, things like that. You've developed a solution along with a team of others at your association. Aren't you now doing this professionally?

Jennifer Helle: 29:57

I am. So one of the issues. That I struggled with as a board member was trying to answer questions when it came to you know you had reserve studies your data from your reserve study over here your data from your bankers over here and then you had information coming in from your vendors about the real costs and the real scope and there was it was always a real struggle to connect all of that stuff. So I developed a software called Telemtryx that brings all of that data together and analyzes it. So board members now have all of that information in one view, and they can share that information with each other and their advisors.

Robert Nordlund: 30:44

Very cool. And how will they find Telemtryx?

Jennifer Helle: 30:46

They can search us up at Telemtryx.app. It's spelled T E L E M E T R Y X dot app.

Robert Nordlund: 30:55

Fantastic. Well, Jennifer, you've been a tremendous. It's been fun to speak to someone who has a heart for numbers, and to our audience, what a resource you have talked about that you were for your association. The benefit of having someone who understands numbers on the board, other professionals, the the way you've led your association. Well, wow! Just thank you. I've I've enjoyed this very much. And to our audience, yeah, good. We may need to have you back on the program for a follow-up, but to our audience, we certainly hope you learned some HOA insights from our discussion today that helps you bring common sense to your common areas. We look forward to having you join us for another great episode next week.

Announcer: 31:42

You've been listening to HOA Insights: Common Sense for Common Areas. You can listen to the show on our podcast website, HOAInsights.org, or subscribe on any of the most popular podcast platforms. You can also watch the show on our YouTube channel. Check the show notes for helpful links. If you like the show and want to support the work we do, you can do so in a number of ways. The most important thing you can do is engage in the conversation. Leave a question in the comments section on our YouTube video. You can also email your questions or voice memos to podcast at hoa insights.org, or leave us a voicemail at 805-203-3130. If you gain any insights from the show, please do us a huge favor by sharing the show with other board members you know. You can also support us by supporting the brands that sponsor this program. Please remember that the views and opinions expressed by the podcast do not constitute legal advice. You want to consult your own legal counsel before making any important decisions. Finally, this podcast was expertly mixed and mastered by Stoke Light Video and Marketing. With Stoke Light on your team, you'll reach more customers with marketing expertise that inspires action. See the show notes to connect with Stoke Light.