General Summer and Fall Update
September 19, 2018
September 19, 2018
To: AAR Board of Directors
From: Jeremy Walker, Chief Executive Officer
Re: General Summer and Fall Update
Dear Board of Directors,
We hope everyone had a great summer and will be able to enjoy some cooler weather soon. We’d like to share several updates on Association business and activities from this summer and a few upcoming events:
Financial Accounting and Bookkeeping Support: Late this spring and early summer, the Association brought the accounting firm Carr Riggs & Ingram on board to perform in-house accounting and bookkeeping services as well as reconciliations and compliance work as recommended by our audit firm. They have done excellent work in a short amount of time and brought our compliance efforts up to date. Our audit firm Aldridge Borden will still perform annual audits.
Membership: Membership numbers have continued to increase and have surpassed 15,000. As of August 31, 2018, we have 15,771 members.
Audited Net Assets: As reported in the Spring Update, the preliminary 2017 Audit Report has been completed by the audit firm Aldridge Borden and presented to the Audit Task Force and Finance Committee. The audit takes into account the organization’s total financial picture and net assets. In 2017, we had an increase in net assets of approximately $438,375 bringing our total net assets to $6,615,312. In light of the significant expenses associated with the building maintenance and roof repairs, this is great news. The 2017 Audit will be presented to the Board of Directors at the annual directors meeting in October.
General Fund: At the end of 2017, the general fund had a surplus of $643,776. Through July 31, 2018, seven months into the year, revenues exceed expenses by approximately $251,000.
General Fund Reserves: General fund reserves currently stand at $1,297,651, including the audited general fund surplus from 2016 and interest earned through 2018 of $13,733. This represents 6.4 months of operating expenses. The Finance Committee will allocate the audited 2017 general fund surplus prior to the annual directors meeting in October.
Assets and Investments: Approximately $2,422,947 in Association assets are being managed by the Association’s investment advisor, UBS. Assets are allocated in a 100% CD portfolio with an estimated annual rate of return of 1.33% to 1.41%. All of the funds are FDIC insured, and there are no management fees for a CD-only portfolio. Those investments have generated $25,371 in investment interest through the first seven months of 2018.
Building & Assets:
Roof Leak: Hixson Consulting, who is managing this project on behalf of the Association, has continued its work with Summit Waterproofing, Jesco Inc., who is the original building contractor, Goodwyn Mills and Cawood, who is the original building architect, and others. Much progress has been made with the completion of the waterproofing of the exterior of the building and replacement of water barriers and an EIFS system on both metal penthouses. However, several trouble areas still exist and the team is continuing to identify and address the remaining water intrusion areas.
Roof Doors: The hardware on the two roof doors has been replaced and additional water seals and barriers have been added. Unfortunately, this has done little to stem the flow of water. Building code requires these doors open inward, and there is little that can be done to stop the flow of water in a hard driving rain from hitting these doors, flowing down to the threshold, under the doors into the stairwell, and into the building. Code will not permit storm doors which could inhibit access to the roof exits in the event of a fire or emergency. The next steps are to explore the addition of an awning that can extend out over the door and reduce direct water hitting the doors, and add sponge foam rings on the stairwell landings inside the doors to absorb excess water that seeps into the stairwells following each rain.
Screen Wall and Anchor Points: The original construction had a decorative metal screen wall that extended from the corner of the penthouse structure to block the view of the cooling tower. The screen wall had anchor points that connected to the roof penthouse structure. Each anchor point had screws and bolts that have been flagged as likely water intrusion areas. This area of the roof is the center of the ongoing water leaks. The metal screen wall serves no functional or structural purpose. The anchor point area will be removed and replaced with the EIFS and waterproofing system overlaying the rest of the roof penthouse.
The screen wall will not be replaced but if left unaddressed it would leave behind hollow steel beams with various screw holes and anchor points exposed to water entry. Therefore, these exposed steel beams will be framed and overlayed with the EIFS & waterproofing systems.
Flat Roof Area: Once the water intrusion areas around the penthouse have been completed, there are several bubbles and cuts in the flat roof area that will be repaired. Fortunately, these areas are under warranty.
Trial and Error: This process continues to be trial and error until all water intrusion areas have been located and fixed.
Interior Finishes: Once the roof repairs are complete, interior sheetrock, paint, and ceiling tiles will need to be repaired and/or replaced. The Association has begun receiving bids for the interior work so that this project can begin immediately once the last water intrusion points have been identified and repaired.
Costs: Final costs for all repairs and deferred maintenance, mitigation, and repair work is expected to range from $400,000 to $500,000. Current expenses are approximately $350,000.
Building Reserve Fund & Green Sheet: Following the completion of the repairs, a green sheet will be developed to calculate the remaining life expectancy of major systems in the building, maintenance, repairs, and eventual replacement costs. The Building Reserve Fund will need to be built back up over time to cover these eventual costs.
Building Mortgage Update:
Current Balance: $3,992,223.22
TERM: 9 years with a 20-year amortization
Interest: Fixed rate of 3.75%
Payment: $18,920 principal plus interest. August payment was $31,802.
Maturity: Balloon payment of $2,289,379 on March 11, 2026.
Public Policy Forum: The 2018 Public Policy Forum was held on Tuesday, August 21, 2018. The max capacity crowd included over 60 members from across the state. During the forum, REALTORS® discussed issues present in their markets. These ideas and issues will be used to help shape the Association’s Public Policy Statements and Public Policy Agenda for the next quadrennial (four-year) cycle, Legislative Sessions 2019-2022. Senator Del Marsh, President Pro Tem of the Senate, and Representative Nathaniel Ledbetter, House Majority Leader, provided a 2019 Legislative outlook.
Following lunch, many attendees stayed to participate in NAR REALTOR® Party Training, which was led by John Winston, NAR Campaign Services Manager. More information about the event can be found here.
2018 Elections and ARPAC Endorsements:
State Elections and ARPAC Endorsements: Primary elections for all state constitutional offices, statewide offices, and legislative offices were held on Tuesday, June 5. Primary run off elections were held on Tuesday, July 17.
Overall in the Primary Election Cycle, ARPAC Endorsed candidates won 92% of their races (131W/6L). Legislatively, ARPAC endorsed candidates won 95% of their races (118W/6L). This was a good outcome for these candidates.
With the fall general election right around the corner, more work is left to be done on Tuesday, November 6, 2018. Be on the look-out in Real Estate Alabama for ARPAC’s General Election list of endorsed candidates which will be released soon.
• Fundraising: ARPAC fundraising and investments are off to another great start this year. As of August 30, 2018, total state fundraising stands at $596,210 or 99% of our annual goal. Great job to all of our boards and ARPAC chairs who have worked so hard on these efforts!
Professionalism and Code of Ethics:
GRI Program: Over 30 Graduate, REALTOR® Institute courses are being offered this year with more still being added. Check out the scheduled dates here.
All Course Offerings: For a full list of other courses being offered, including REBAC courses, click here. (SRS, SRES, and MRP are scheduled in the fall)
- NAR Code of Ethics-Deadline December 31, 2018:
o REALTORS® are required to complete ethics training for the two-year cycle by December 31, 2018. Between January 1, 2017 and December 31, 2018, every REALTOR® is required to complete 2 1⁄2 hours of Code of Ethics training. REALTORS® who have completed this training as a requirement of membership in another association are not required to complete additional ethics training until the next two-year cycle.
o NAR offers two options for Code of Ethics courses online. Both meet the NAR Code of Ethics requirement, however, the paid version is eligible for three hours Alabama CE, while the free course is not approved for CE.
o To sign up for the free or paid Code of Ethics training or for more information, click here.
Professional Standards Procedural Training: AAR will offer Professional Standards Procedural Training on Monday, October 15, 2018 as part of the Annual Meeting in Montgomery. Nationally recognized instructor Bruce Aydt will lead the class. This event should be on the calendar for all members of all state and local professional standards and grievance committees across the state and is a chance to learn from one of the best. NAR Core Standards Training is provided. More information can be found here.
NAR Mediation Training: AAR will offer a two-day mediation certification course on Monday, October 15-Tuesday, October 16 as part of the Annual Meeting in Montgomery.
- Mediation is NAR's preferred method of dispute resolution. All local REALTOR® associations must, as a benefit of membership, offer the ability to mediate otherwise- arbitrable disputes. In some REALTOR® associations, mediation is required prior to an arbitration hearing. Traditionally, our industry disputes rely on negotiation for solutions. If negotiations fail, litigation is often initiated. Mediation involves the skillful intervention of a third-party, unbiased professional to help resolve disputes that arise between two or more parties. More information can be found here.
Miscellaneous Association Related & Core Standards:
Insurance Survey: Please be on the lookout for an important all member insurance survey being circulated by AAR. Our organization has heard a great deal from our members about the need for affordable, quality insurance options for our members. To meet this need, the Association is exploring different options to offer affordable, quality insurance for health care, general commercial liability, error and omissions, and cyber insurance for our members as optional member benefits. The survey will gauge potential interest in those benefits. To be successful we need the widest participation possible in this important survey.
Officer and Executive Committee Elections (October 1-2, 2018): The election for the 2019 Executive Committee opens Monday, October 1 at 12:00am and concludes Tuesday, October 2 at 11:59pm. All members who are in good standing may vote on statewide candidates, which include President, President-Elect, Treasurer and Secretary. Regional Vice Presidents may be voted on by members who are in good standing in that region (i.e., members whose primary local board is within that region). More information can be found here.
Judicial and Regulatory Monitor: In addition to the Legal Helpdesk, the Association has expanded the monitoring of regulatory activity in state government and legal decisions affecting our members and the real estate industry. Bad legal decisions and regulatory actions can negatively impact our members as much as bad legislation. Please be on the lookout for those reports in each week’s Real Estate Alabama. Past regulatory updates can be found here. The judicial monitoring reports can be found here.
Legal Helpdesk: Utilization of the Legal Helpdesk has increased each month since its launch. Most weeks, new articles and information are published in Real Estate Alabama. Plus, you can view previously published articles on our website here.
NAR Core Standards, Fourth Compliance Cycle: Every local board making up the Alabama REALTORS®, plus the state Association, were certified as having met NAR’s Third Cycle of Core Standards as of December 31, 2017.
The Core Standards Fourth Compliance Cycle has begun and boards are now able to use the NAR compliance database to track their events, activities, and progress. More information on the fourth compliance cycle can be found here.
The NAR Core Standards Compliance Tool can be found here. (NAR log in required to view the Core Standards compliance tool)
The Alabama deadline to submit Core Standards for certification is November 1.
Regional AE Meeting: (Savannah, GA-July 2018)
- In July, 11 Alabama Association Executives and AAR staff attended regional training in Savannah, GA. The Conference was hosted by the Georgia and North Carolina Associations. Attendees shared best practices on ways to better serve members.
NAR Leadership Summit: (Chicago, IL-August 2018)
• In August, 20 Alabama board Presidents-Elect and Association Executives attended NAR’s Leadership Summit and Training in Chicago. This is an annual event conducted by NAR where new best practices are shared and upcoming NAR events for 2019 are previewed.
NAR Local Board Leadership Training: (Montgomery, AL-October 15, 2018)
• On Monday, October 15, AAR will offer NAR’s local board leadership training as part of the Annual Meeting in Montgomery. The class, led by Bruce Aydt, will review the fundamentals for local board officers and directors and will qualify for NAR’s Core Standards required training. Registration and more information can be found here. Please note that training for state directors will occur as part of Capitol Conference in March 2019.
Special Events in 2018:
Broker/Owner Meeting: AAR hosted Steve Murray of REAL Trends on September 10, 2018 in Birmingham to speak to a gathering of broker/owners from across the state. Murray, president and owner of REAL Trends, facilitated the meeting discussing an array of topics aimed at helping brokers in all areas of their business and increase value in their firms. Murray has been an industry leading consultant for brokerages of all sizes across the country for over 30 years. Murray gave an update on the state of the industry and shared data and key metrics about current and future brokerage operations and financial performance. The meeting was at max capacity with over 50 broker/owners from all real estate markets across the state in attendance. More information about the event can be found here.
Leadership AAR 2018: Leadership AAR returned in 2018 with a newly re-designed curriculum aligning our Association’s mission with each session’s focus. The final class will be held on September 19-20 and focus on leadership. The second session of the Leadership class was held in June and focused on professionalism and ethics. This year’s leadership class is an amazing and talented group of REALTORS® from across the state. More information about the class can be found here. More information about Sessions 1 and 2 can be found here and here.
Alabama Disaster Relief Training: Alabama REALTORS® partnered with the Alabama Emergency Management Agency to offer Community Emergency Response Team Training (CERT) on June 13- 14. The event was sold out. The Association may offer this program again in the fall due to overwhelming interest. More information about the program can be found here. If you would like to participate in future offerings, please email Jennifer here. More information about the Disaster Relief Fund can be found here.
NAR’s Tech Edge Event at Capitol Hill: Alabama was fortunate to host one of NAR’s Tech Edge events in March. The sold-out event featured short sessions on new trends in technology and their practical application for real estate professionals. The event brought in REALTORS® from Florida, Georgia, Louisiana, Mississippi and Pennsylvania. More information and photos can be found here.
2018: What’s ahead?
AAR Annual Meeting (October 14-16): The 2018 Annual Meeting will focus on the Association’s governance, a celebration of Annual Awards and the installation of our officers, followed by a fun afterparty with a live band. On Monday and Tuesday, optional training opportunities will be available to assist with the professional standards and dispute resolution process for our boards and reinforce the fundamentals of local board leadership training.
With more demands on our members' time and resources and more opportunities for specialized training and events throughout the year locally, regionally and statewide, the 2018 Annual Meeting is focused on delivering the core purpose of the association’s mission by providing training and classes requested and needed by our boards, and returning members to their clients and businesses! We look forward to seeing you in Montgomery. More information can be found here.
AAR Officer and Executive Committee Elections: October 1-2
AAR Annual Meeting: October 14 (Montgomery, AL)
Alabama NAR Core Standards Deadline: November 1
NAR Annual Convention: November 2-5 (Boston, MA)
Alabama General Election: November 6
ARPAC Deadline: December 12
NAR Code of Ethics Deadline: December 31
Please reach out if you have any questions!