6 minute read
The Economics of Virtual Meetings
The passage of AB 648 could mean major money and time savings for boards, along with other benefits.
By Rob Buffington
The passing of AB 648 in California represents a pivotal moment in how homeowners’ associations (HOAs) conduct board meetings. This legislation paves the way for the utilization of teleconferencing platforms such as Zoom, offering a more convenient and flexible approach to HOA governance.
While the shift toward virtual meetings has gained momentum in recent years, the declaration of a state of emergency during the COVID-19 pandemic raised concerns about the legality and practicality of exclusively virtual gatherings. As California transitions into a post-COVID era, HOAs across the state stand at a crossroads, with some eagerly embracing this change. In contrast, others remain steadfast in their commitment to traditional in-person meetings.
The passage of AB 648 signifies a significant milestone in the evolution of California’s HOAs. It acknowledges the evolving landscape of community management and governance and recognizes that technology can be pivotal in modernizing HOA operations. Nevertheless, the response to this change within the HOA community has been mixed. Forward thinking boards are excited about the opportunities that virtual meetings offer. They see this as a way to enhance community involvement, streamline processes, and ultimately improve the efficiency of board meetings. On the other hand, some HOAs, often constrained by existing management contracts, argue that the physical presence of the manager is indispensable during meetings.
As HOAs begin preparations for the annual financial review, evaluating the economic benefits of virtual meetings is crucial. Among the most tangible advantages of virtual meetings is the substantial savings in time and money. For many HOAs in California, particularly those in major metropolitan areas like Los Angeles and the Bay Area, the issue of traffic congestion makes commuting to in-person meetings a time-consuming and costly endeavor. Consider conservatively estimating that a manager spends one hour on average commuting for each in-person meeting. This encompasses the time spent driving to the meeting location, arriving early to allow for a buffer, addressing post-meeting matters, and the return journey.
Now, let’s consider data from CACM’s most recent Compensation Report. The median annual salary for a portfolio manager was $70,000 per year, with onsite general managers earning more. When you factor in benefits and payroll taxes, the hourly cost of a manager’s time is around $50 per hour. If an HOA holds bimonthly meetings and a manager is responsible for 10 properties in their portfolio, the drive time alone costs HOA managers approximately $3,000 annually. It is important to note that these estimates are intentionally conservative. Some managers may face even longer commutes due to traffic congestion.
However, the economic benefits of virtual meetings extend beyond time and cost savings. The following section covers several key advantages of virtual meetings vs. in-person meetings.
Seven Advantages of Meeting Virtually
1. FLEXIBILITY
Virtual meetings allow board members, managers, and homeowners to participate from the comfort of their own homes or offices. This flexibility can significantly boost attendance and participation, eliminating the need to commute. Managers can even schedule multiple meetings at different times in one evening if they have efficient boards, avoiding the need to sacrifice two evenings of personal life for consecutive meetings.
2. RECORD KEEPING
Virtual meetings can be quickly recorded and archived for future reference, simplifying the maintenance of accurate records of decisions, discussions, and actions taken during board meetings. It also enhances transparency, as homeowners who could not attend can access the meeting recordings. Additionally, it makes it easier for managers to share exhibits and bids without additional copying costs.
3. COST-EFFECTIVE
Besides saving time and reducing commute related costs, virtual meetings often result in lower overall expenses. There are no venue rental fees, and the need for physical meeting materials is minimized, leading to savings in printing and postage.
4. ECO-FRIENDLY
Embracing virtual meetings aligns with the growing emphasis on environmental sustainability. It reduces the need for paper based materials, minimizes energy consumption related to commuting, and lowers the carbon footprint of the HOA’s activities.
5. DECORUM
Most meetings tend to run longer than necessary due to disruptions caused by a few homeowners. Transitioning to virtual meetings allows boards and managers to have better control over those who speak outside the designated homeowner forum or are otherwise disruptive. Moreover, while rare, the threat of violence is not unheard of in the industry. Most experienced managers have had police presence at meetings at least once in their careers. Shifting to virtual meetings removes the physical threat and enhances safety for all participants.
6. INCREASED PARTICIPATION
Virtual meetings can attract a more diverse group of participants, including homeowners who may not have been able to attend in-person meetings due to work or family commitments. Achieving quorum is more likely in a virtual meeting, reducing the need for rescheduling and leading to a broader range of perspectives and ideas being shared within the community.
7. ENHANCED TECHNOLOGY
As virtual meetings become more commonplace, HOAs may invest in improved technology infrastructure, leading to more effective communication and collaboration within the community.
Why Not All HOAs Are Ready For Virtual Meetings
Despite these advantages, it is crucial to recognize that not all HOAs are ready to transition to virtual meetings. Some may have long-standing management contracts or governing documents that mandate inperson meetings. Others may have concerns about the digital divide, worrying that not all homeowners have access to the necessary technology or internet connectivity. This is especially common in age-restricted communities.
Additionally, virtual meetings may only be suitable for some types of discussions or decision-making processes. For example, the law already provides an exception for ballot tabulation meetings. However, management companies must decide how assertively they want to encourage this transition. Many companies may price their services so that in-person meetings become more costly, ultimately encouraging HOAs to opt for the cost-effective and efficient virtual approach.
AB 648 has opened the door to more flexible and cost-effective governance in California’s HOAs. Virtual meetings offer tangible benefits, from time and money savings to increased participation and environmental advantages. However, decide whether to fully embrace virtual meetings thoughtfully, considering each HOA’s unique needs and circumstances. As technology evolves and society becomes increasingly digital, virtual meetings will likely become integral to how HOAs conduct business, ultimately leading to more efficient, accessible, and sustainable community governance.
