September 12, 2003

MANAGEMENT SELECTION

I Appoint a committee to evaluate current management and identify new management

II Retain an independent management consultant to advise and present recommendations to the committee and the Board of Directors in the selection of management.

III The committee, along with the consultant, should prior to the commencement of the process of management selection, do the following:

1. Throughly review the existing management.
   
2. Prepare an outline of the strengths and weaknesses of the current management in the following areas:
   
   (i.) General Management eg. onsite manager, effective management and back office
   
   (ii.) Employee training, recruitment and termination, labor relations, supervision, employee relations, and personnel administration
   
   (iii.) Finance eg. basic bookkeeping, budgets, collections, investments, project funding, accounts payable and receivable
   
   (iv.) Maintenance and repair eg. systems, follow-up and emergency service, environmental and legal compliance
   
   (v.) Capital projects eg. request for proposals and bids, oversight of work and construction, contract administration, oversight of engineers, architects and overall project management
   
   (vi.) Insurance and claims eg. administration of insurance claims, litigation and insurance review and placement and risk management
   
   (vii.) Tenant-Shareholder relations eg. day to day communications, resale policies and procedures, collections and dispute resolution
   
   (viii.) Administration eg. record keeping, shareholder files and communications, building plans and specifications, correspondence, contract administration, finance and payroll, rental and resale, board and stockholder relations, communications and follow-up, employment relations in management, interface with consultants, accountants and attorneys
   
   (ix.) Communications, advice and recommendations to the Board of Directors
   
   (x.) The major reasons for the selection of new management

IV The committee and the consultant should prepare a Request for Proposal [hereinafter “RFP”]. The RFP should be presented to the Board of Directors for review and approval.

The RFP should include:

1. A short history of the cooperative:
   
   (i.) The Offering Plan and Amendments
   
   (ii.) The corporate documents eg. by laws, proprietary lease, written policy and procedures, rules and regulations and resale policy
   
   (iii.) The Mission Statement and long range plan
   
   (iv.) Plans and proposals for the next one to three years re: maintenance, repair and major capital projects and refinancing
   
2. The Standards and Qualifications for a management company:
   
   (i.) A history of the company and its experience
   
   (ii.) The names of the principals, officers and senior management along with their resume, background and experience
   
   (iii.) Licenses held
   
   (iv.) The number of communities managed by the company. In addition, the location, number and number of units in each community similar to the cooperative.
   
   (v.) The insurance policies held eg. errors and omissions, fidelity bond and general liability
   
   (vii.) Professional organizations, certificates and degrees of principals and senior management
   
   (viii.) Name, title and experience of the manager or management team who would be directly responsible to manage the cooperative. In addition, a copy of the resume for each of the aforesaid persons.
   
   (ix.) The companies experience in preparation of bids and project management for major repairs and restoration and/or major capital projects. In addition, if the company has an engineering department and/or management staff with experience in major repairs and restoration and/or major capital projects, along with the resumes of that person or persons.
   
   (x.) A request for written representation by the company that:
   
   (a.) Neither the Company, any principal or agent of the Company, nor to the best of the Company’s knowledge, any property manager or other employee of the Company have been indicted or convicted of any misdemeanor or felony, or are currently subject to any criminal indictments or proceedings or any criminal investigation. The Company performs background checks on all employees prior to their employment.
   
   (b.) Neither the Company, any principal or agent of the Company, nor to the best of the Company’s knowledge, any property manager or other employee of the Company are subject to any pending civil proceedings, or have executed any settlement agreement, consent decree or similar document, from which a reasonable person might question the Company’s ability to fulfill its obligation under its management contract, in accordance with the highest standards of conduct and lawful behavior.
   
   (xi.) A proposed management contract proposed by the Cooperative.
   
   (xii.) The particular requirements of the Cooperative as to:
   
   (a.) On site manager and hours eg. days and hours per day.
   
   (b.) On site support staff eg. clerk, secretary or bookkeeper eg. days and hours per day.
   
   (c.) Oversight senior management on site eg. days and hours per day.
   
   (d.) Requirements as to meetings after hours and/or annual meetings
   
3. A request that the proposal by the management company include a detailed description as to:
   
   (i.) The Standards and Qualifications set forth in paragraph IV. B above.
   
   (ii.) The history of the company eg. years in business, number of employees and titles, company facilities, computer facilities.
   
   (iii.) Names, addresses and telephone numbers of no less than
   
   (a.) Five trade references
   
   (b.) Five community organizations managed by the company which are similar in size and location to the cooperative. In addition, the names of the president and treasurer of each community along with their business and home telephone number.
   
   (iv.) The proposal should include a facilities report and recommendations by the company with respect to the physical plant, equipment and systems of the cooperative.
   
   (v.) The proposal should address the management contract as proposed by the cooperative as to:
   
   (a.) proposed changes or additions to the contract
   
   (b.) annual management fee
   
   (c.) Additional fees and costs eg. court time, special board and annual meetings, capital projects, construction management and expenses, bonding and/or insurance fees
   
   (vi.) Monthly, semiannual and annual management reports, financial reports, accounts receivable and payables, budget analysis and all other proposed reports. Copies and sample reports should be provided with the proposal.
   
   (vii.) A copy of the declarations page of each current insurance policy should be provided.
   
   (viii.) Provide a copy of the proposed management contract.

V The Bidding Process

1. Each management company should be advised as to the time and date for the submission of all proposals.
2. If the proposals are incomplete or untimely, that they will be disregarded
3. Management firms must be invited to a conference at a specific date and time at the cooperative [“The Conference”].
4. The Conference should be attended by the consultant, the committee, the board of directors and officers of the cooperative.
5. Preparation for the Conference should include the following:
   
   (i.) Prepare copies of all documents eg. certificate of incorporation, offering plan, board minutes and amendments, by laws, proprietary lease, rules and regulations, resale policy, mission statement, long range plan and policies and procedures.
   
   (ii.) Insurance policies of the cooperative
   
   (iii.) Financial information eg. budget, financial statements, profit and loss statements.
   
   (iv.) Sample managements reports including accounts payable and receivable, arrears reports, et al, mission statement, policies and procedures, short term and long range plans for corporate projects and engineering and/or architects reports.
   
   (v.) As-built plans for the cooperative and any additional building plans for work performed or planned
   
   (vi.) Report by legal counsel re: litigation by or against the cooperative
   
   (vii.) The name and address of all current large vendors, contractors and suppliers
   
   (viii.) Prepare written evaluation reports to be filled out by the consultant, the committee, Board Members and officers to be completed at the end of the Conference.
   
   (ix.) Schedule a meeting of the committee and the consultant immediately after The Conference, evaluate and/or choose the management companies who are the finalists.
   
   (x.) The consultant should then perform her/his due diligence, research and report to the committees and the Board within no less then ten (10) days after the conference.
   

VI Management Selection

1. The finalists should be selected by the committee, along with the consultant.
2. The committee should adopt a criteria and rating system.
3. All the finalists should be personally interviewed. The interview must include the proposed on site personnel, supervisors, finance and back office personnel.
4. A visit should be made to the company’s offices and the on site offices at other communities.
5. The committee and the consultant should make its choice and recommend it to the Board, along with its written report. The board of directors will select the new management.

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