This newsletter is about special assessments ...the dreaded words ... in troubling times. Even in the best of economies, the imposition or suggestion of large special assessments often divides communities, being feared by Boards and the association members. Owners find it hard to believe that Boards and management do not have an ulterior motive when talk starts up about large special assessments. I cannot remember more difficult times for talking to boards and members about big but necessary special assessments. The meetings these days are becoming more and more challenging. When a board has to face the membership to talk about how to raise multi-thousand dollar per unit assessments for repair work, it is not fun. But truth be told, if the Board does not tell the membership about a looming big problem, it faces even bigger risks ... so the word is ... go forth and present without shame, guilt, or fear.

Boards often need some bolstering before facing a room filled with angry, frustrated, and emotional people who just cannot believe the rumor mill or the newsletters that have been circulated that suggest everyone may have to come up with $5,000, $10,000, $20,000 or more. It takes a brave soul or two, or more to pull off a good meeting. There are always at least a few in the audience who are ready to pounce. You can feel it, you can see it, and you can believe it will happen in every single meeting. It can take a board entirely by surprise since the board members can rarely fathom ahead of time that their neighbors could so easily turn on them, like a mad dog. In preparing a board for this, the best thing to do is keep reminding them that people will be upset and they will go through stages that are described below. If you can get the Board, or at least one or two of the Board members to prepare ahead of time a presentation for the members outlining exactly what has happened, and what has been discovered, it will help all of the Board members stay focused on the message, instead of worrying about the homeowner reactions. Sharing the painful reality with the homeowners is the goal. And if you can convince the board that being honest with the members will help ease some of the burden they have been carrying around for months, it will give them a goal and help them stay focused on moving forward, instead of getting stuck in the muck.

One of the sorriest things in any association that has serious building deficiency issues requiring a special assessment that can happen is the Board tries to move through the process on its own, without the help of knowledgeable professionals, and stumbles through the communications process, messes up the voting process, wonders why it is completely challenged by the collections process, and then suffers the aftermath of all things done wrong. I attend these special assessment meetings periodically, as do many professionals, including attorneys, bankers, CPAs, managers and the contractors. All of the people the Board uses to assist with getting through the process of passing a very large special assessment need to be experienced in dealing with these issues, and furthermore, need to be quite thick skinned, because the only way to get the necessary message through to owners is to be able to remain calm, patient, strong, and smart. The professionals can provide a safety net and can pick up the conversation whenever it starts to go the wrong direction and steer it back, but the bottom line is that the trust will build only if you can get the Board to face the owners first, and talk about what they have been through investigating the problem. The owners need to keep the perspective that the board members are homeowners too, and facing the same fate, that they are not the enemy.

This is my perspective, based on my own experience at the meetings: most owners do not want to hear an attorney telling them they have no choice but to figure out how to pay an assessment that is beyond their means. Boards often want to "hide behind" the attorney. But what the members want to hear is that the Board is confident there is a solution, and is pulling for them and doing everything it can to make it as affordable as possible for everyone. The members want to hear from the contractors and understand the problem. They want to hear from the bankers and hear what the loan options are. And last, but not least, the attorney is there to wear down the most angry attendees who are adamant that there must be someone that can be sued to get the money, that are adamant the board should be flogged for "letting things get this bad", etc. A good attorney can take a lot of the heat and still provide the glue that brings all the other parts together smoothly and effectively, can help bridge the gaps, and should help the Board to build trust. The role is to watch what is happening, to pay attention, and to help whenever possible, but not to monopolize the conversation if it can be helped. Doing that will only slow down and painfully draw out the process that has to happen.

This is such a critical a time to get it right. Money is tighter than ever. Hope is challenged. Members may break down at meetings, instead of beating back. To help professionals and Boards alike stay focused and understand ahead of time how the journey has to proceed, I want to pass on a short article written by a colleague. I have permission from Adrian Adams, an attorney in Southern California, to reprint the article below (appearing in quotations). I wish I had written it. Adrian's firm hosts the Davis-Stirling.com website and E-newsletter in which this article appeared. Maybe you have seen it already. Maybe you have lived it.

This article succinctly describes the process that I see take place at every single HOA meeting I attend where the Board is presenting to members the need for a very large special assessment. Honestly, if you can just have faith that you will get through it Š you will get through it, and come out on the other side. This is the process you can expect:

"SPECIAL ASSESSMENTS, DEATH AND DYING

QUESTION: The board recently informed everyone that we are facing a large special assessment to reroof and waterproof our buildings. I don't believe them. What can I do to stop the assessment?

ANSWER: In her 1969 book, "On Death and Dying", Swiss-born psychiatrist Elizabeth Kubler-Ross outlined the five stages of grief of someone who is dying. Over the years I've witnessed owners going through the same stages when they face large special assessments. Following are the stages:

Denial: "They don't know what they're talking about." "The contractor is just looking for work." "The repairs are not necessary." "The board must be getting a kickback." "Let's recall the board."

Anger: "Who can we sue for this disaster?" "Management was incompetent." "Let's recall the board and sue somebody."

Bargaining: "Can we defer the repairs?" "Can't we just patch the roof (until I sell my unit)?" "Are there cheaper alternatives?" "Will insurance pay for the repairs?" "The board is being unreasonable; let's circulate a recall petition."

Depression: "I can't bear the costs." "This will force me to sell my unit." "I can't put my family through this." "How do we recall the board?"

Acceptance: "I'm ready, I don't want to struggle anymore."

If you follow my blog, I will be covering the difficult issue of how to move the membership forward in a way that encourages all owners to participate as opposed to only those who can come up with the special assessment without help. This is a critical part of the solution. Otherwise, imagine the backlash on the fiscally stable owners who pay up front when the special assessments that have to be written off due to foreclosures or "walk aways" come back in tidal wave fashion on those who thought they were home free. If you want to know what I mean by this, watch for future blogs, and also for an upcoming publication that will be available on my website called "The Enigma of a Special Assessment".