Go Local or Mega for Condo Management Services?

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Community associations traditionally contracted with locally owned and operated firms for management services. In recent years, however, large national and even international companies have entered the market. Rather than managing thousands of condominiums and townhomes, they manage millions.

Should your association hire a hometown professional or a mega-manager? There are benefits to both.
Local owners can be more closely involved with client associations, said Mark Durakovic, an owner and vice president at Kass Management Services in Chicago.

"It is important for boards and owners to know where the buck stops," he said. "If there is an issue with service down the road, I want them to have the connection with us." Jim Stoller, president and founder at The Building Group management company in Chicago, agrees.

"So much of what we do is dealing with local building ordinances, the Illinois Condominium Property Act and other laws," he said. "For paying assessments, we work with local banks and local lawyers. Doing a tax appeal means working with lawyers who understand the Cook County tax system. Just try to do a tax appeal on a national basis."

The national players say they do understand the local nuances.

Chuck Fallon is chief executive officer of publicly traded FirstService Residential, based in Dania Beach, Fla. The company serves associations in 21 states and Canada. It bought Wolin-Levin management company in Chicago about 2 1/2 years ago.

"We are not doing one size fits all across our organization," he said. "Our business in Chicago is actually very different from our business in New York or in Dallas."

But because of its size and buying power, FirstService offers associations preferred vendor relationships, insurance and investment products, and bulk energy savings. The company provides local managers sophisticated technology, education and licensing assistance, health care and retirement benefits.

"We bring human capital solutions and technology solutions while removing the routine functionality to make their lives easier, so they can keep the close local touch with their associations," Fallon said.

A decade ago, Dallas-based Associa bought Vanguard Community Management, now renamed Associa Chicagoland, in Schaumburg. Associa serves associations in 30 states, Canada, Mexico, Dubai and South Africa.

"We try to remain in every way possible a local company but to bring to the table for our clients and employees all the advantages of a large global company," said Joey Carona, president of the privately held Associa.

Large companies can afford to invest in services and programs that smaller ones can't, he said.

For example, Associa employs a government affairs team that tracks and advocates federal, state and local legislation. The company also centralizes all clients' accounting functions.

"We want to provide greater consistency, transparency and ultimately greater controls for the protection of client assets," he said. "We believe their money is safer with us than with any local management firm."

Stoller said because of his longtime relationships with local vendors, he can get the same or better pricing than the national companies.

"If someone owns the company, and their name is on the door, they are going to work very hard for that," he said.

Prices vary widely among both national and local management companies. Some offer packages for different service levels. Others customize every contract.

"Some communities need only a monthly financial packet sent electronically and for us to come once a year to take minutes at the annual meeting," Carona said. "Others need valet parkers and PGA golf pros. Pricing is different depending on how much you want us to engage in the community."

Durakovic's advice is to interview two to four management companies and ask the question: "What additional costs do you charge, either to the unit owners or the association as a whole, in excess of the management fee?"