Finding a new management company for your co-op community can be a daunting task—every building has its own personality, needs, and expectations, and the management field is crowded with prospective providers. In the search for the right company at the right price, a smart board uses all the tools at its disposal—and one of the most useful is the Request For Proposal (RFP). An RFP is a document that can help facilitate the selection of a property management company, allowing comparable competitive responses from bidders. Going through the process of compiling the RFP can also help clarify and focus the needs of the building and its shareholders more clearly and completely.

Who You Are

It's generally advisable that an RFP begin by providing prospective bidders with some very basic, important facts about the building—its vital statistics, in other words. For example, the document should state the address, the size and age of the building, and whether it's an historic landmark, or otherwise architecturally significant. The proposal should also indicate the level of continuous scheduled maintenance in the building, existing protocols for handling maintenance emergencies, and comment on the building’s structural condition, taking into consideration its age.

The RFP should also make mention of whether the building serves a function for or makes a contribution of some kind to the neighborhood at large—such as making its community rooms available for meetings or other gatherings, for example—and should also include information on its legal structure, summarize its financial conditions and disclose any long-term debts and liabilities.

The document should discuss the role and overall characteristics of the building's board of directors, summarizing how the board governs the property. If the property is currently being managed by another property management company, the RFP should state the name of the company, the length of time that the relationship has been in effect, and when the current contract expires.

The proposal should also include the number of staff members and their various titles, and should indicate whether or not the building's engineer resides on-site. It should also outline the services provided by the other members of the building's staff, as well as their availability.

Since it should be expected that the property management company be involved in the sale of apartments, a comment on the number of apartments for sale each year would be appropriate, as well as the annual turnover percentage.

What You Want From Them

Along with your building's fundamental information, it is essential to list your board's requirements in terms of day-to-day property management in detail. As the relationship matures, ongoing issues are more easily resolved if expectations, terms and conditions are laid out in writing from the beginning. The following is a suggested punch-list of items a board might consider including in the Terms & Conditions section of the RFP. An RFP should also state the amount of time per week the building expects from the manager, whether on or off-site. (Be prepared to negotiate this matter.)

In the course of those duties, a manager often is the liaison between architects and engineers hired to do projects at the property. He or she should be able to:

• Recommend to the board architectural and/or engineering firms to perform consultation, design or review of construction, maintenance, or remodeling work (for the building or shareholders).

• Prepare or oversee preparation of any needed contracts or purchase orders for such work, solicit vendors to bid on such works, and recommend final selection of vendors to the board.

• Work closely with the A&E firm’s contact person in order to monitor the execution of major contract work and ensure proper performance of duties (quality of work, cost management, timeliness) by contractors and subcontractors.

• Review (or oversee proper review) and approve all invoices or secure necessary credits for major contract work.

The property manager may also be called upon to recommend to the board other expert services that may be provided from time to time, i.e., tax counsel, legal counsel, risk assessment/insurance counsel, etc. In this role, the property manager must prepare or assist the board with drawing up any needed performance or service agreements, and afterwards monitor and report on the services that were performed.

The manager must also be the point person in dealing with contractors or vendors servicing the property. He or she will gather or use an existing list of approved maintenance vendors; identify and obtain proposals from vendors for needed services to the building; and recommend to the board the most appropriate vendor considering cost, experience and reputation.

Another basic component of the manager’s duties that should be mentioned in the RFP is the day-to-day operation of working with the building’s engineer: The manager typically oversees the engineer’s activities and sends notices to the shareholders regarding short-term changes in building services.

The manager also has oversight of other employees, and manages under the direction of the board, the building door-staff, maintenance and custodial personnel, including hiring, termination, scheduling, and approval of hours worked. He or she must also negotiate with unions on behalf of the building.

The manager is often charged with recommending insurance carriers to the board of directors. The RFP should spell out that the manager will assist the board in negotiating the most effective insurance plans at the lowest cost; and deal with the investigation and reporting of any insurance claims involving the building.

Another crucial duty of the manager is record-keeping and institutional memory. At the direction of the board, he or she must maintain all permanent files and records of the building corporation. The manager’s role is also to communicate board business to shareholders, and assist the board in developing and distributing documents concerning announcements, meetings, house regulations, and the like.

Sometimes a property manager must even coordinate building sales. In this case, he or she will have to work in concert with brokers representing buyer(s) and seller(s) and gather together all required information necessary for evaluating the qualifications of any prospective purchaser(s) of an apartment in the building. The manager will then represent the property during closing proceedings and other real estate transactions.

Another important duty is financial responsibility. Prior to the beginning of each calendar year, the manager must in conjunction with other experts, prepare a recommended annual budget under the direction of the treasurer. In this role, he or see will handle payroll, the bank lock box account for the building, the collection of all regular and special assessments, other authorized fees from shareholders and any other monies due the building. Subsequently, a complete cash receipts journal and daily receipts record with proper account numbers must be maintained, along with a chart of accounts, and a general accounting ledger that details all financial transactions. The manager must ensure all monthly financial statements are prepared promptly at the conclusion of each month. Under the auspices of the building treasurer, the manager is also responsible for maintaining vendor records and vendor disbursement reports. As such, he or see will ensure that a timely audit of accounts is completed for the building as well.

One thing an RFP must not be remiss at is detailing specific costs for services and spelling out the duration of the management contract. It should indicate the cost of property management services—in detail, and propose the exact length of the contract and renewal considerations.

There are also miscellaneous managerial duties the board must track as well, such as attending the monthly meetings of the board, reporting on the status of the building at meetings and making sure accurate minutes are kept by the recording secretary.

The RFP should also set the ground rules of how the selection is to proceed and on-site visits. It should indicate the date and time that a tour of the property and a Q&A session will be conducted. If possible, you may request that the candidate property management companies introduce the individual who will be responsible for the on-site building management. If you feel that attendance at the meeting is vitally important, encourage it and also request written advanced confirmation.

At the end of the RFP, indicate the due date, the number of copies of the proposal needed, the person and address to whom the proposal should be submitted and the approximate selection date of the winner. Also remark on the duration of the contract and notice of termination.

Selection of the most appropriate property management company entails a stringent review process dealing with people, support activities and expected results. The framework provided by a clear, thorough RFP can help streamline the process and make sure no important items fall through the cracks.

James B. Peterson is president of the board of directors of a Chicago Lake Shore Drive cooperative.