Help from HOAs

WEST CHICAGO, Ill. – Contractors and wholesale growers visited the headquarters of Ball Horticultural in late summer for an update on new plant varieties and insight into the minds of commercial property managers and HOAs.

Selling pretty. Marcia Caruso, president of Caruso Management Group, Naperville, Ill., spoke to the bottom-line value of landscaping to an HOA, especially in a competitive market.

Caruso, whose company manages 25,000 homes in the Chicago area, stressed the importance of a good-looking landscape in selling a home.

“The value of landscaping is in the ability to sell that home,” Caruso says. “Landscaping is the single highest cost on any association. Second to it is insurance. So the money they put into that landscaping is an investment. We are in this marriage bed together.”

But despite that investment, she adds, landscaping costs are “the very first thing they cut” when budgets get tight. So, what can a contractor do?

Make sure the beauty of a landscape is instant, Caruso says, and “that it says ‘I’m worth the money you’re going to pay me.’ Pretty is what we’re selling. We’re getting the highest value for the prettiest buildings.”

HOAs by the numbers. In the 1960s, the Clean Water Act, the increasing price of land and mortgage insurance requirements contributed to the formation of HOAs, which allowed higher density for developers and let municipalities outsource many services without giving up tax revenue.

For decades, these associations have grown into “surrogate cities,” says Edith Makra, director of environmental initiatives for the Metropolitan Mayors Caucus in Chicago. Now, they wield tremendous power in certain markets. According to Marka’s data, 315,000 HOAs manage 24.8 million homes and 62 million residents nationwide. In the Chicago area, associations are responsible for 21 percent of the residential land – about 160,000 acres – and the majority of that is either common area or landscaped.

From the outset, HOA landscapes were designed for immediate aesthetics and a quick sale. Developers invested little in common, inexpensive plants, giving little thought to sustainable practices or plant choices, Marka says.

Forty to 50 years later, this presents an opportunity for landscapers who can renovate or retrofit a more sustainable landscape design.

Problems arise with restrictive covenants, which can be more limiting than city codes, and governing boards that aren’t required to have formal relationships with or even oversight from the cities in which they operate.

Marka says HOAs have an opportunity to become landscape stewards, what with the amount of water, turf and other greenspace they manage. She recommends landscapers begin their marketing approach by understanding that HOAs are, almost by design, inefficient and hard to reach, but that their boards and members are vested in their landscapes.

Commercial break. Rene Franco, vice president of property management, Pacifica Realty Group, Los Angeles, gave attendees an overview of his market and what the average property manager wants from a landscaper.

“We’re all dependent on the market, and that’s why it’s so important we all watch our operating costs,” Franco says.

He says that, like most businesses, property managers are doing more with less, and larger real estate companies are outsourcing work to more and more third-party managers. But, regardless of their size, a property manager wants a way to “stabilize the budget and maximize the shine,” Franco says.

A landscaper can help his client by understanding her budget cycle, and that it’s increasingly difficult to change numbers that have been set for the year.

He suggests proposing plans for maintaining different areas of a building to cut costs, and act as an outdoor adviser, as many managers are tied up with other projects and can’t get outside to look around much anymore.

Franco also wanted to dispel a common misconception when it comes to bids and RFPs. While contracts are going to bid more often – and properties managed by institutional investment funds are required to – managers are almost never required to choose the lowest bidder.

“It’s never, never, never the low bid,” he says. “There’s a competitive advantage given to contractors that are providing information and acting as a resource.”

– Chuck Bowen