Disaster Planning & Recovery for Community Associations [5-21-15]

Disaster Planning & Recovery for Community Associations
by Susan P. Bakalar, Esq.

As we in South Florida are all painfully aware, Hurricane Wilma, the last major storm to impact South Florida left a path of destruction, raised issues pertaining to association operations and enlightened many of our clients as to the deficiencies in their respective hurricane/disaster planning. Unfortunately, many associations found themselves without a Disaster Recovery Plan in place. Prior to Hurricane Wilma, such a plan may have seemed superfluous to some associations. In hindsight it is perhaps analogous to individual homeowners who have not made adequate preparations such as purchasing fuel for their vehicles and stockpiling water and essentials.

Implementation of a Disaster Recovery Plan also addresses necessary, sequential steps which must be taken, and which may not be implemented when we become overwhelmed by the circumstances. Some topics that should be addressed in such a plan include but are not limited to the following points and are easily accomplished and implemented by Board action:

-Pre-Disaster Strategic Planning (planning, preparation, post event evaluation, etc..),
-Displacement of property owners / property managers and those who provide service to the Association,
-Backup of Association records (including all electronic media, tax records, payment records etc..)
-Risk Management (maintenance of adequate insurance policies),
-Governance during and after a disaster event,
-Photographic / Video documentation of Association owned property / elements,
-Reserve Studies/Fiscal soundness,
-Financial Operations/access to Association funds,
-Transition/Implementation of recovery plans.

Implementation of a disaster plan is based upon the type of disaster being contemplated. Hurricanes are forecasted days before landfall allowing time to initiate pre-disaster strategies. Fires, floods and the occasional tornado appear without warning or notice. A properly prepared disaster plan accounts for the type of losses expected as well as the need to relocate people (such as property owners and on site management). In the past, hurricanes have passed through South Florida with little or no impact other than loss of electricity.

In the past, we have borne the brunt of several storms and it has been forecasted by the National Hurricane Centers, NOAA and respected meteorologists that the frequency and intensity of future hurricane seasons will be as active as those that we have encountered over the past years. However, something as common as loss of power can dramatically affect a community. Property owners are often displaced (in search of hotel accommodations or to stay with relatives etc…) and those that stay are now, more often than not seeking alternative power sources such as gas powered generators, which pose their own unique set of issues.

Disaster planning should also encompass dealing with loss of life (not only property owners but also members of the Board of Directors who before, during and after a crisis are the decision makers), destruction of property (both individual and common element), and economic issues (inability to meet financial obligations, pay assessments). Additionally, the cumulative effect of the disaster has rapidly escalating downstream repercussions. For instance, based on how communities and cities are planned, aside from loss of power and destruction of property taking place within an Association, we should also assume that restaurants, grocery stores, gas stations, hospitals, banks, post offices, retail stores and numerous other businesses that in some way support each of our Associations will be in the same position as the Association itself, that being without power and possibly suffering from property destruction, loss of life and the inability to operate.

Aside from the businesses and entities supporting the Association from the outside, there are numerous entities that provide direct support such as: property management, pool maintenance, elevator maintenance, lawn maintenance, roofers, painters, security personnel, air conditioning contractors, paving contractors, attorneys and accountants to name a few.

It is suggested that Community Associations begin their disaster preparedness by collecting the following:

-A list of all property owners of record and/or current occupants if leased or rented.
-Telephone numbers (home, work, cell) for each owner of record.
-Email address(es) and fax number(s) for each owner of record (both home and work)
-Name, address and phone numbers of the place where owners anticipate that they may relocate to during an evacuation or prior to a storm or event (such as a relative or friend in another city).
-Complete copy of all insurance policies. Should include the type and extent of coverage, carrier name, address, phone numbers, and policy number(s).
-Complete copy of any and all electronic records (can be copied to a CD or other storage media, including “cloud based”). Individual Associations and managers may wish to consider the benefits of off site electronic date storage and retrieval systems in addition to or instead of hard copy backups.
-Copy of Association financial records, accounting audits, collection records, legal records, violation records as well as original deeds, mortgages, loans etc…
-Inventory of Association owned property (both physical items such as computers, phones, cell phones, walkie-talkies, furniture, fax machines, copy machine, etc…) and common elements).Copies of all contracts (such as pool, lawn, elevator, laundry, paint, paving, roof).
-Copies of all warranties (for all association owned items such as pool, paving, light poles, playground equipment, security system, gate entry system, etc).
-Copy of the Association meeting minutes for the last 7 years.
-List of the names, phone numbers, email address and physical address for each and every person that does work for the Association. The list should include all property managers, accountants, attorneys, contractors, insurance agents, bankers, accountants.
-Photographs or video recorded images of all Association owned property such as computers, phones, cell phones, walkie-talkies, furniture, fax machines, copy machine, maintenance equipment. Specific attention should be paid to building exteriors, landscaping, and all common elements. Digital images can be easily stored on a CD or floppy disc as well as emailed to individuals for safe keeping and ease of access should the need arise. Digital video images can likewise be copied and stored with a little extra effort.
-A complete copy of the AS BUILT plans and specifications as well as all architectural drawings. (As Built plans are the drawings of what is actually built as opposed to the original architectural blueprints which may be modified “on the fly” as construction progresses and may differ from the original approved plans. Knowing the location of shut off valves and structural components may be key in averting additional damage)
-Activation of a contingency line of credit. (Many local banks friendly to Community Associations will make arrangements for a line of credit. The line may never get used and will therefore not cost the Association anything to keep but in the event of an emergency situation, often times an infusion of money is needed and having a line of credit prepared in advance may be very beneficial. It is important to note that we do not advocate using cash. Vendors / contractors / suppliers will usually accept payment on a net 30 day basis but payment terms must be agreed upon prior to the need to use the vendor, contractor or supplier’s services.

The above list is by no means meant to be finite and should be reviewed and updated on an annual basis to account for the ever changing needs of an Association. Individual property owners of an Association should also consider implementing a disaster preparedness program for themselves and their families. Many of the above items are relevant to the constituents of the Association as well. Such items may include a list of neighbors names and contact information, copies of bank records, medical records, medication needs (prescriptions),financial records, inventory of personal property, copies of insurance policies, photographic documentation of property and possessions, warranties etc…).

It should be understood by the members of a community that the Association is taking an active role in assuring its continued operation and survival and that each member must take the same steps for themselves. It should also be pointed out that the Association does not take any part in safeguarding individual property and that adequate insurance must be maintained by each and every property owner as many fail to maintain adequate levels of coverage for their personal effects and building upgrades within their homes.

There are several types of insurance policies that may be purchased by the Association in addition to the basic coverage required by Statute such as:

-Loss Assessment Coverage: Intended to protect against special assessments levied to cover losses from a covered peril in the event that the primary insurance coverage is inadequate.
-Water Seepage Coverage: Intended to cover the cost of damage sustained from wind driven water or rain which enters a structure from a source other than typical openings such as windows and doors (such as around a door or window frame.
-Additions, Alternations and Betterment Coverage: Intended to cover upgrades as well as real property added by the owner.
-Code Compliance Coverage: Is intended to cover the cost of repair / reconstruction in the event that the repairs are made at a higher cost due to the fact that building codes evolve over time and the cost to replace or repair may be significantly higher that the inflation adjusted cost to repair or replace the item as originally constructed.
-Rising Water Coverage: Intended to cover fresh water flooding/damage that occurs due to rising fresh water (such as leakage from a toilet, dishwasher, washing machine etc…).

Again, the above list is by no means meant to be a complete list of the insurances available. The Board of Directors and management should take an active role in seeking out their insurance carrier(s) and ask probing questions to best ascertain what coverage an individual carrier has to offer and the cost to benefit of each type of coverage available. Many Associations may find that their coverage is lacking and wish to enhance their insurance which may come at a significant cost to the Association. Insurance increases may be covered in the next fiscal year budget or, as allowed by statute and the Association’s governing documents, by a special assessment. While nobody wants to have special assessments, the realty is that in Association’s with little or no reserves or budgetary overages, a special assessment properly considered, levied and implemented may save an enormous amount of money and stress in the future.

Everything considered, we live, work and play in one of the most beautiful places in the country. Everyone needs to do their part to ensure for the future survival, enjoyment and use of our properties and to do our best to prepare for and mitigate potential damage from storms, fires, floods and other disasters. It is really not a question of “will we eventually have to deal with another hurricane or peril” but “how will we best deal with a future peril which is sure to come our way”. By facilitating adequate preparation both in terms of an Association as well as its members, we can all do our part to minimize the impact that future disasters will have on our lives and peace of mind.

Depending upon the needs of your particular association we can also recommend other suggestions that can easily be accomplished to effectuate positive change. We have the expertise and multiple resources available to us to assist the Association in its disaster preparedness needs. As always, please contact our office at 954-475-4244 with any questions and/or comments.