After removal of the fireplace

I've just about completed the work to remove the fireplace. Here's a photo of the main living area. The fireplace was on the right. Removing it was a good choice, with a significant real estate tax reduction. I wanted an electric fireplace, but when I discovered this appliance would be listed as a "replacement" with the attendant tax increases, I decided to remove the original gas fired manufactured fireplace. Some day I might install a wall mount unit, but I can not see paying real estate taxes for an electric appliance!

Fireplace Saga

Back in the late 1970s when this area of DuPage County became a real estate "boom town" a lot of residential construction occurred.

Some of it was shabby and even local communities made mistakes. Did you know that Naperville didn't meet the Federal standards for evacuation streets? Probably not.

Here in Wheaton, the city made some terrible mistakes. These included the retention ponds including #1 through #4, which it seems were inadequate. It also approved and inspected the installation of at least 500 defective manufactured fireplaces. They were defective because of improper installation, but the code inspectors didn't catch even one flawed installation!

It took two serious fires to bring light to the fireplace issue, and the city condemned the few ostensibly defective fireplaces it could find. "Better late than never."

I've spent a few $thousand having the fireplace in my condo removed to meet city requirements. That included an architectural drawing mandated by the city. Go figure.

The final step is tearing up portions of a $5,000 floor to repair it so it looks like new. Here is a photo of step one; removal of sections which ended at the now removed fireplace. It is a "floating" floor comprised of interlocking bamboo sections and on top of an underlayment which meets HOA guidelines and was approved by management in writing for installation about 5 years go. This type of floor makes this relatively easy. Only $500 in materials to do this simple job. But we had to find a distributor in Georgia who carries this particular floor, as it is no longer manufactured. I'm one of about 330 people in this HOA who have had had to go through this process.

Fireplace Fiasco Saga

Currently, all of the fireplaces in this association have been condemned by the City of Wheaton. How this came to be is a tale of incompetence at several levels.

500 Fireplaces, and Counting
Back in the late 1970s the City of Wheaton got on board the expansion in this part of DuPage County. A tremendous expansion in south Wheaton took place and corn fields were replaced with homes, condominiums and apartments. Our association of 336 units was built as was another nearby.

In the process, something went wrong. The builder made mistakes and the city code enforcement division fell down on the job. In our HOA this showed up as no steel reinforcing installed in garage floors. But a more deadly and insidious problem was lurking within our units.

In 2010 a fire occurred in a nearby association. About a year later there was a second. It appeared the fires began with the fireplaces. This got the attention of the board at BLMH and in September 2011 an urgent safety bulletin was posted for residents. Not everyone on the board was happy about this turn of events and a few owners felt we had overstepped our bounds. After all, it was "my" fireplace stated one owner and I'll darn well do as I please.

Management and I agreed that safety was foremost and trumped any inconvenience. I recall several passionate and heated discussion I had on this subject. One was with the then president of the board. Owners would be unhappy. Of course, this would be an inconvenience. Of course, it might interfere with sales or property values. I argued the downside would be far, far worse. Compare the inconvenience of a destructive fire. Compare the "inconvenience" of possible injury or death. Compare the rise in insurance premiums not only to owners but also to the association. Any such insurance premium increase would be reflected in the owner fees. Yes, there was a larger picture here and not using one's fireplace seemed a very small price to pay and a temporary one. This would eventually be sorted out. None the less, one owner publicly lambasted the manager and questioned his judgement for bringing our fireplaces to the attention of the city.

What had gone wrong?
Apparently, 180 or so fireplaces were installed in a nearby HOA in such a manner as to render them unsafe and a hazard. At the time of construction this was not detected by the inspectors of the City of Wheaton. The problem, however, was far more extensive and included other buildings in the city. It now appears that 500 fireplaces were improperly installed. It is possible there are others.

A Safety Hazard and Other Issues
This is the latest of a series of mishaps at BLMH. Shortly after construction it was determined that there was no steel reinforcing in the garage floors. This too was an expensive problem, but was not a safety issue. How many garages are we talking about? This HOA has 84 4-car garages. The problem was an expensive one to correct. And some owners wonder "where does the money go?" Over the years some of it has been spent dealing with construction defects. In fact, more has and will be spent on these problems than on all of the road, driveway and roof replacements.

The fireplaces are a larger problem than the garage floors had been. In our HOA 330+ fireplaces were not properly installed, were not properly inspected, and then were sealed into the wall. A ticking time bomb, as it turns out.

So What is being done about this?
Fireplaces have been a discussion item at each and every association meeting at BLMH for two years. One issue was to provide a continuous reminder to residents "Do not use your fireplaces." Another was to track the progress and issues at the nearby HOA so as to be prepared for our day. A third was to come to terms with owners who expected something to be done by the board  "now." Some owners have been very impatient. It's been the position of the board that "It is your fireplace, you can replace it at any time." Of course, that will be expensive and no one wants to be a pioneer.

Throughout, management maintained a dialogue with the Building and Code Enforcement Department of Wheaton.

At times, the board calmed owners and advised patience. I actively promoted the position "Save for this, you will need funds to deal with it when the time comes." The fireplaces are owner property and were an option at the time of construction. Not all units have one. Owners have been reminded that the fireplace is their property. As such, owners need to do their own due diligence. Not all owners agree. There has been a continuous pressure on the part of some owners to push this as well as any and all other issues real or perceived, onto the board. So the board is expected to deal with the unhappiness of some owners with COD, the board is expected to figure out the fireplaces, etc. etc. etc. A former president once stated "They expect concierge service."

There is a double standard at BLMH. Some owners love to complain and then figuratively beat on the table and say such things as "I'm an owner, I expect such and such from the association." It's my opinion that the fireplaces present the opportunity for the 336 "owners" in this association to walk the talk.

2012 and to the Present
By 2012 management and the board asked for volunteer owners who would allow an inspection of their fireplaces. Few owners were willing, but the association was able to conduct an inspection of a few and that information was provided to the city Building and Code Enforcement Department. Of course, inspecting four fireplaces, or about 1% of the fireplaces on the property might not be conclusive. However, it seems likely that each fireplace at BLMH was installed improperly and not inspected properly by the City of Wheaton at the time of installation.

In the past year there have been informal, uncoordinated discussions with the Building and Code Enforcement Department. Owners who had these discussions and came to the HOA meetings reported a confusing list of requirements. Management also seemed to be getting inconsistent information. However, in December 2013 it was decided that we had sufficient information to move forward.

I suggested that a letter be written to the Building and Code Enforcement Department requesting specific guidance. The goal was to achieve some clarification. The board and management agreed and so I wrote that letter. Five scenarios had been identified:

1. An owner felt their fireplace did not have a problem. What to do?
2. An owner desires to remove their fireplace. What codes, permits and other requirements were to be satisfied?
3. An owner desires to replace their fireplace with a natural gas vented unit. What codes, permits and other requirements were to be satisfied?
4. An owner desires to replace their fireplace with a ventless gas fireplace. What codes, permits and other requirements were to be satisfied?
5. An owner desires to replace their fireplace with an electric unit. What codes, permits and other requirements were to be satisfied?

The City Responds
The letter was mailed to the Building and Code Enforcement Department in December with copies to the Mayor, City Council, City Management and the Engineering Department. I attended a coffee with the council meeting and presented my personal perspective in a candid conversation.

The letter of response is somewhat vague. The city doesn't want to provide a design guide to the owners. Of course, the reason 500 owners in Wheaton are being made to jump through these hoops and expend several million dollars is because of a failure on the part of the city. I suppose one might argue to the contrary; yes if they had been properly installed there would be no problem. It has been said the these factory built fireplaces are "at the end of their useful life."  However, no one has issued a city wide directive stating that any and all fireplaces installed prior to 1980 are unsafe and must not be used. This is a very consistent failure to properly inspect a large number of original installations on the part of the city.

Each owner at BLMH have been given a copy of the response of the city to my letter. Suffice it to say that the city's response has generated some confusion. There is an opinion this may be intentional on the part of the Building and Code Enforcement Department.

Confusion has been pronounced by the near simultaneous announcement by the very same Building and Code Enforcement Department that they want to shift from the 2003 code to 2012 code. So which code should owners spend their money attempting to design to, and will the 2012 code increase owner costs even more?

Will this be Expensive to Correct?
The city has stated the defects must be corrected. Complete removal or replacement seems to be the only options. However, the Building and Code Enforcement Department has indicated they are willing to discuss other options. That appears to be a false hope. I say that because of what has occurred during the correction of this defect elsewhere in Wheaton.

Further more, the city insists all current codes be adhered to. That may require adding insulation and electrical outlet(s) for example.

I will be monitoring this process for consistency and even-handedness on the part of the Building and Code Enforcement Department

This will financially stress some owners. Will anyone foreclose as a consequence? I don't know, but I am considering a "foreclosure meter" to be added to this blog.

I was planning on a newer, better furnace and HVAC system and got a quote. That will not happen at this time because I have decided to allocate those financial resources to the fireplace problem. The furnace and HVAC system I have is working fine and is about 12 years old. However, I prefer to take care of these things on a "preventative maintenance schedule." In that way I avoid or minimize breakdowns. The possible energy savings and benefits of a newer furnace and HVAC will have to wait. On the other hand, the Department of Energy new, improved standard for air conditioners goes into effect January 1, 2015. That might yield some additional energy improvement and so waiting might have some benefit. On the other hand, the edict passed down by the DOE for gas furnaces, which was overturned by the courts, simply raised costs to owners with little or no benefit. I posted about this on March 9. 2013.  In other words, waiting to replace my air condition in 2015 may provide nothing more but much higher installation costs.

What will I do about My fireplace?
I am of the opinion that removal of the offending components, including firebox, flue and chimney is necessary to satisfy the city. However, if this can be done without removal of the brick or stone faux mantle, it should be less costly. I would then like to install an electric fireplace on the surface or on new framing installed in the existing faux stone fireplace enclosure. The floor and ceilings will be properly sealed, the gas line will be capped and an additional electric outlet will be installed in the opening of the former gas line shutoff.

I have been told the city won't accept this. As far as I am concerned, if all codes are adhered to then the city has no choice but to accept this. By "all codes" I mean the codes the city is enforcing elsewhere.

The Limits of Involvement of the HOA Board and Management
Now, some owners feel this is someone else's problem. The builder dropped the ball and so did the City. They also feel that the association should take these people to task and solve this.

There are some realities here. First, the HOA has 336 owners, most of whom own a fireplace and are perfectly capable of dealing with the problems caused by their appliances, furnace, air conditioner and hot water heater. This is a part of home ownership. This HOA is not an apartment complex, it doesn't have a superintendent nor is it a retirement community. It has six board members who oversee the operation of the HOA and one manager. In fact, the board is understaffed and has been for years. Why should six volunteers take on the problems of the personal property of the 330 other owners?

The answer is simply this. They should not. However, the board is also in the unique position to provide coordination and maintain the peace. Nor is there any time or money budgeted to pursue this legally. Owners are welcome to spend their personal funds in any way they want, and they do so when they are so moved.

As I said, there is and continues to be a double standard at BLMH. When the association attempts to enforce the rules, some owners will say "It's my unit and my property. I'll do what I please." A case in point is the satellite antennas on the property. These are owned by the respective owners or their tenants. The association has rules about where and how personal property can be put in the common elements. The exterior of the buildings and the roofs and grounds are "common elements." There are guidelines about where to install and if on the roof, there are stipulations to assure the roofs and trusses are protected. Yet, more than one owner has threatened legal action when the board attempted to enforce the rules. Another owner attempted to install park equipment in the common elements, there have been address markers placed on lighting standards at the street, people routinely feed the birds and other animals and then complain when mice enter the building, etc. etc. When the board has attempted to enforce the rules about these, the argument of the owners becomes "It is my property; you have no right to tell me what to do with my property." So it should be with the fireplaces. It is the City of Wheaton that has condemned your fireplace. The association issued a directive, an "urgent safety notice" when it became known that similar fireplaces were suspect in nearby fires. This was to protect the residents from themselves and their neighbors and to protect the structure of the building.  Some owners again took the position "It's my fireplace. You cannot tell me what to do." Now that the City of Wheaton has condemned your fireplace, I suggest that if you have an issue about this, then discuss it with the City of Wheaton. It is your personal property. As some owners have stated time and time again "I will do what I want with my personal property; I'm an owner." So do it! However, the association should take steps to assure that the roofs are properly repaired or sealed when you have your chimney removed or replaced. It should also take steps to assure that insulation is in place so water lines and other pipes in trussed spaces or other common areas are protected from freezing when you have the modifications made to your fireplace.

The Impact on Resale Values
Home values have taken a hit in south Wheaton. For our association, the problems include not only the fireplace issue. Our fees are higher than basic HOAs because this is a PUD or Private Urban Development. We pay for maintenance items that other residents in Wheaton are provided as part of their taxes. In other words, our owners pay twice; once to the City of Wheaton and again to the association. Furthermore, the well publicized flood issues in south Wheaton remain unresolved. The city is supposed to "operate and maintain" a storm water control system which includes Lake 3 to the north and Lake 4 to the south. However, in the four decades this system has existed under city control it hasn't done very well. The most recent flooding has again raised the specter of serious problems. These problems too, like the fireplaces, have been there all along, but have been aggravated by recent events, including the construction at the college. Finally, the "Community" College of DuPage has gone on a tax and spending spree, borrowing about $340 million in the name of the taxpayers and is busy paving its campus, installing extensive storm sewers on the western half of the campus which further aggravates an already serious situation. The college for its part seems content to build white elephants such as the hotel and 4-star restaurant, and a monument to Robert Breuder, the current president.

This was once a nice neighborhood to live in. However, anyone with some common sense would have some valid concerns about the situation in south Wheaton, and the costs it will take for the Briarcliffe Lakes Manor Homes Association to deal with these. And who is expected to figure this out? Why, the board of BLMH, of course!  As several of the owners explained during the 2012 COD hearings "This is primarily a retirement community." Really?

City Council Considering Adopting Updated Building Codes

The City is considering a significant change to the building codes. Currently, the codes are based on the 2003 version of the ICC (International Code Council). The city is considering making the 2012 version the official code requirement. The press release and links to related matter is included at the end of this post.

The owners in our association are in the beginning stages of replacing or removing all fireplaces. A series of future posts will detail why this is necessary and how the owners and association are going about doing this.

The possible change in city codes would suggest that any owner wait to see where this particular moving target goes. After all, any new installation will have to meet the code that is in place in a few months. The Building Code & Enforcement Director has stipulated that plans and drawings be provided before approval and permitting. As I see it, spending money on engineering or architectural services could be a waste of owner money at this time.

PRESS RELEASE

Contact Information:
Director of Building & Code Enforcement Joe Kreidl

2/26/2014

City Council Considering Adopting Updated Building Codes

WHEATON, Ill. – The City Council is reviewing the adoption of the 2012 ICC Building Codes. The City currently enforces the 2003 ICC Building Codes.

Copies of the 2012 ICC Building Codes, significant changes to the codes since 2003, and a draft ordinance adopting the 2012 ICC Building Codes are available for inspection at the Building Department, Wheaton City Hall, 303 W. Wesley St., during normal business hours. For questions or feedback, please contact Joe Kreidl, Director of Building and Code Enforcement at jkreidl@wheaton.il.us or 630-260-2050.

The City Council discussed proposed changes to the Building Codes at the Feb. 24 Planning Session. You can view the meeting video and see the Report on Updating Building Codes on the City’s website.

The Council will further discuss these changes at the March 24 Planning Session. A first reading of the proposed ordinance will take place at the April 7 City Council Meeting, and the Council will vote on it at the April 21 City Council Meeting.

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Clicking will open a  New Window> Planning Session Video

Clicking will open a  New Window> Report on Updating Building Codes

Annual Meeting 2012 - Part I

The association annual meeting was held on September 27, 2012. As is required personal notices and invitations were mailed to all owners. We also posted notices in the lobbies a few days prior, as a reminder.

This meeting provides the owners with the opportunity to hear the "state of the association" in the boards' own words. This year the meeting spanned about 2-1/2 hours and included summaries provided by each board member, as well as extensive information on finances, projects, fireplaces, details pertaining to COD construction on our eastern property line, and the future. There were no free donuts and no koffee klatch (it's never "free" because fees would pay for these things.)

I'll provide some observations of the meeting in this and the next few posts.

Topics for the meeting included:

• Introduction of the board and our manager
• President's Comments
• Treasurer's Comments
• Welcoming Director's Comments
• Rules & Regulation Director's Comments
• Landscaping Director's Comments
• Architecture and Maintenance Director's Comments

Other special topics included:

• Fireplaces Moratorium and Status Update
• College of DuPage Construction Update

Low Turnout Disappointment
This year, the meeting was lightly attended. I do want to publicly thank every owner who attended. As a board member I appreciate your interest in your association and your willingness to set aside an evening to spend with your board and management.

The low turnout was not surprising, but a low turnout is always disappointing. The majority of owners did not attend.

Why was turnout so low? Perhaps the lack of freebies? I'm not sure what was on TV that night, and that's always a factor. I've noticed that attendance seems to be better when there are "significant personal issues" for owners. For example, in 2008, with the mushroom cloud of the financial meltdown hanging over our heads, a national presidential candidate running on the platform of "change" and a group here at the association promising the same, we had higher turnout and more interest.

This year, even with a problem with our COD neighbor, the continuing fireplace moratorium, and so on, there was not a lot of interest. Is this possibly a consequence of other, better forms of ongoing communications, specifically our expanded and more detailed newsletter? Or is it simply apathy? I don't know.

Two Upset Owners
Before the meeting even began, I had two individuals "in my face" to complain about a lack of seal coating on their driveway this year. It was not a discussion. It was a demand, as in "What are you going to do about this NOW?"

Note: This year we seal coated all driveways that has been replaced in 2010. The selection process for those driveways was made by an earlier, wiser board which included one individual who was sometimes described by other board members as the "sage" of the board! The purpose of this seal coating is to preserve and protect. It is not about beautification. At this point in time 2/3 of all driveways have been repaired including crack filling and seal coating (this began in 2011), or have been replaced and seal coated. The project will continue next year and additional driveways will be repaired or replaced in 2013. This has been communicated via the newsletter and described in depth during association meetings. Of course, most owners don't bother to attend these meetings.

Was this particular exchange of any significance? I think it was. My initial response to our dear, irate owners who were in my face at the meeting was "I suggest you talk to the board that made that decision." One of that former board was seated a few feet away and I made it a point of responding at a volume so that person and anyone else within earshot could hear the conversation. Then the method for selection this year was questioned. My response "Do you read the newsletters?" When this also failed to get me to make the concession that was demanded, one owner made the remark describing the association as a "Project." That was the last straw.

I'll have a post devoted to this particular exchange, owner demands and hostile, belligerent behavior.

Finances, Architecture and Maintenance (A&M), and Rules & Regulations (R&R)
I'm going to skip ahead of the meeting to the presentation I made to the attendees. I had prepared a detailed, 13-page report for the meeting. This included sufficient information were it necessary to provide details to owners. However, my formal presentation was a verbal summary. Anyone who reads the newsletters and association meetings did not get any surprises. However, I did elaborate on a few things. The report I delivered was very brief but did include these areas:

1. Financial support of A&M.
2. Progress in major projects - 2 year summary.
3. Progress in other maintenance areas - 2 year summary.
4. The near future - What should be expected. 
5. Cost increases for Owners and the Association - Water Rates.
6. Observations on Rules and Regulations violations.

Finances as the Foundation for Architecture and Maintenance
I very briefly discussed finances from the perspective of "What do we get for our money." Our budget has two components. 1) Operation and Maintenance, and 2) Reserves for capital projects.

I expressed to the owners who were present that I see some "daylight." In other words, I am cautiously optimistic. This optimism has nothing to do with the economy, or how I or anyone else "feels." It's all about the numbers and the current completion levels.  I also expressed to the owners who were present the dangers of "falling behind" in finances or maintenance. Once we fall behind it becomes difficult to catch up. After two or more years, it may become impossible. Why? Who has the financial resources to pay extra each month to make up for that funding shortfall? I'm one of the owners who is on the board who is absolutely opposed to "special assessments." These are to be a last resort, and are to be avoided. I'm going to elaborate on the presentation and provide some background information in this post.

What's the Meaning of a Word - "Difficult"
When describing finances, or a financial situation, or to describe an architectural or maintenance issue, we will sometimes use the word "difficult." That is a really rich word and it has a deep, significant meaning behind it. During meetings, owners seldom get a 5 minute dissertation on a problem by the board. So certain words are used such as "difficult" to embody the complexity, cost and issues. I'm going to elaborate here on the meaning of the statement "difficult" as it pertains to some aspects of finances in the association.

Finances are a long term proposition. It requires collecting a fee of about $50 a month from each owner and saving that amount for at least a decade to pay for roofs. Ten years ago, this association was collecting less than $200 each month from most owners, and had no reserves of consequence for roofs. The reserves were not sufficient to replace streets, roofs, driveways, water mains, exterior and interior painting, garage floors, patios and decks, shoreline maintenance, tree care and landscaping improvements. Those monthly fees also had to pay for electricity and street lighting, association water, stream maintenance, landscaping and mowing, snow removal, and for any and all other repairs, including temporary roof repairs, doors, etc. .

In 1999 with new management to provide guidance the board began ramping up fees to pay for ongoing Operations & Maintenance, and save for identified projects including roofs.  There is another way, and that is to simply make special assessments each time a roof is done, or a driveway, or a water main blows, etc. Of course, owners don't like that either. Some owners have promoted the idea that the association should take on a mortgage or loans when necessary. I've published the higher costs for owners if the association chooses that financial path. Banks do charge interest to provide us the use of that money, and fees from owners will be required to repay any loan principal and interest.

Borrowing and going into debt seems oh, such a comfortable way to deal with today's problems. Or at least it was for a decade. That "lost decade" was the one in which people racked up $tens of thousands in credit card debt and used their home equity like a piggy bank. Then in 2008 the music stopped. This is precisely why so many "homeowners" in the U.S. found themselves in a very "difficult" situation as serfs on property owned by the banks.  It seems it wasn't "free money."

Maintenance Update; "Save and Spend"
Our last major roofing project, which added a second layer of shingles on top of the first, occurred during 1991-2000. Roofs can be expected to last about 18 years. Our new roofs may last longer because they include ice and water shield, improved attic ventilation, etc. The present age of the second layer of shingles on our existing roofs is in the range of 12-21 years. Overall age of our existing roofs is 35-36 years.

Selection and replacement is not based on age. It's based on condition, and we had a roof fail at about 11 years, while we do have several over 20 years of age. The goal is to avoid damage to the building, owners contents, moisture and mold damage, and so on. Leak reports, exterior and interior (attic) inspections, etc. are all guides for determining possible remaining life, and dealing with problems. I've been tabulating problems for several years so I can track leaks and problems. While it is the goal to replace, this association continues to do roof repairs where necessary. This project will continue for another five years or so until all roofs are replaced.

Our driveways had not been seal coated for years. Some were being patched. We did have some garages with problem floors, we did have some driveways with problems, some concrete patios and last year a complete wooden deck was replaced, and so on. As downspouts are being moved off of driveways, drainage improvements are made to carry water away from the new downspout discharge. After doing the roof, serious driveway repairs or replacement usually occur. We've had a few gutters relocated prior to roofs, if the condition of driveway warranted replacement. Water standing on driveways is a serious problem.

Many of these maintenance items are predictable. We can determine with relative ease how long these things will last, and we can budget for their repair and replacement. That's actually the easy part. The difficult thing is collecting fees and amassing the reserves to maintain this association.

In a society which generally does not believe in saving, getting owners to contribute extra money for fees so we can save for these required (by statute) repairs is not easy. Board members are owners. So we bring our baggage and personal beliefs with us. I imagine it's been difficult for some board members to consider saving for the association if they themselves don't practice personal savings. For anyone living out of a checkbook and with little personal savings, seeing an association with a significant sum set aside as "reserves" can be considered wasteful. Some of these people will become board members in associations and when they do, they'll attempt to run the association in the same manner as their personal lives.

Once the association savings begins to grow, some owners will covet that money. After all "I could use that for a new furnace, or a new car" Yes, but where will the money come from for that replacement roof? "Oh, that's someone else's problem," or "I don't think I need a new roof this year." Sure, and when the roof leaks and damages the owner's contents, the association will be required to replace to primed drywall. So not only will your fees be used to replace a roof, additional money will be required to replace ceilings, walls and possibly even electrical "owned" by the owner of those units. In other words, the money required to do repairs and replace roofs is greater than that required to simply replace roofs.

We're a Nation of Gamblers
So while saving may be relatively straightforward, more difficult is getting a board into place that will do these things, rather than run a "popularity contest." Collecting money does not make one popular in an association. Saving money for the future does not make one popular with owners who want to flip or bail. I think the reader gets my drift.

When we read about HOAs which are financially struggling, or are dealing with special assessments, I can understand how that happened. It's a difficult and fine line to determine how much to collect from owners. Too little and special assessments are guaranteed. Too little and the association will fall behind, then have to catch up by raising fees higher than might be expected. This may financially stress the owners.  Most would agree that small and steady fee increases are easier to deal with.

Once an association falls behind there are really difficult choices to be made. None are easy or good. Raise fees in large steps to catch up, have special assessments, or delay maintenance and repairs are available choices. In extreme situations, all of these may be used simultaneously. In such a situation the board faces the difficult decision of balancing fee increases and assessments with delayed projects. While this occurs, the association may struggle to keep up with repairs. In extreme situations, it may not be able to pay monthly bills. Board members should not have to be the only ones who make these difficult choices. Nor should they be the target of unhappy owners. But sometimes they are. After things fall apart, in my experience there will be endless owners who will say "How could this happen?"

Financial planning is a long term requirement, and a long term commitment.  Yes, sometimes things can occur that create a step change in the finances of the association. Most situations occur gradually. Occasionally an association may fall behind in finances and then, at the most inopportune time, will encounter something financially unexpected. Murphy's Law is well understood and "The worst possible situations will occur at the most inopportune time." Even if sudden problems don't occur, an association may bleed to death, while the board and owners argue about how to deal with the situation, or the owners are unawares or unwilling to face the future. After all, some will say, "I don't plan on being here in five years." Back in the "good old days" of house flipping, it was easy to walk away and leave others to hold the bag. No longer.

It was pointed out during the annual meeting that all board members are owners, and pay fees. We are in exactly the same situation all owners find themselves to be. We all deal with the financial consequences of fee increases or breakdowns. But the board is a group of "fiduciaries" who are supposed to be stewards for this association. In 2012, as in 2008, that's much easier said than done. Unlike 2008, the problem today isn't the board. It's a few of the owners.

Savings for a Decade
This association has been collecting fees and saving money for a decade while ramping up the roofing and driveway projects. In 2007 we did not have nearly enough. But owners were a bit fed up with rising fees, and swelling coffers. A problem in an HOA is this. Back in the "good old days" prior to 2008, some owners didn't want to contribute their fees for reserves. I guess the idea was to sell before the bill arrived for that new roof, driveway, etc. For a short time we had a board that was willing to tell people what they wanted to hear, and that was "We have enough money."

The financial meltdown and real estate implosion put an end to that scheme, but it did take a while for the reality to sink in. People could no longer flip out. People couldn't sell their unit for what they believed it was worth. Some were trapped here, and some were angry. Most settled down once the reality sunk in, and things shifted slightly. 1) Some owners got serious about finances and maintenance, and 2) Some owners decided to lash out at the board prior to 2008, or anyone who talked about fee increases. After all, "They did this to us."

Ah yes, some politicians tell us that we live in the age of victims, where the rich did it to the rest of us! I'm a firm believer that there is no place for politics in an HOA. It would be oh, so much easier if we could get owners to stick to the numbers!

In 2007 management was publicly speaking about additional reserve requirements. So it seemed there wasn't enough money to do the really important projects including roofs. So what can an individual owner do? One can sell, but if that isn't possible, as occurred in 2008, there remain a number of options and one of the more effective ones is to get a board in place that can be manipulated and is compliant. In other words, one that will "take care of the squeaky wheels." No one really expected this terrible economy to last very long. Even President Obama said he'd get the job done in three years. So all that was necessary was to "kick the can down the road" for five years or so, real estate prices would be back and then owners could bail and leave the new purchasers holding the bag. Sounds elegantly simple, doesn't it?

Well, it wasn't simple, and I didn't buy it. Not the politics, the quick fix or the "squeaky wheels." I was one of those who expected it would require at least 5 years, and could take 7-10 years for the economy to recover. Real estate prices will eventually turn up. But how long will it take for them to return to the stellar prices of 2007? I won't be holding my breath. With this comprehension I shifted my plans accordingly. It was very apparent that parties, daffodils and mulch were not going to handle the problems facing this association.  As a former board member who had been "run off on a rail" in 2008 was fond of saying, "You can paint a pig, but it remains a pig." In other words, paint is not a substitute for a new roof, driveway and street repairs.

By 2010, I and a few very concerned and financially savvy owners prepared a "wake up call" of a financial letter, which we sent to all 336 owners via U.S. Mail at our personal expense. I may publish a few excerpts here as a reminder of the facts.

So here we are, five years after the onset of that terrible recession, and the association is making great progress, and there has not been a special assessment. For each owner this means that when they do make that decision to sell, there will be no lien on their property, and no assessment balance to pay off.

Are Things All That Good?
Well, let's see. The economy continues to struggle with really high unemployment, real estate continues in disfavor and prices are low, people everywhere are generally disgruntled and there is a national election about a month away. The international scene is a mess. I think that there might be "bad news" or "negative news" overload for a few of us!

So how are things in this association? Well, the fees saved as reserves have been ramped up are being used to fund the roofing and other projects. About 2/3 of our driveways have been repaired and seal coated, or replaced and seal coated. About 1/2 of the roofs have been replaced, and the accompanying front drainage improvements will be completed before winter. Lakecliffe has been repaired, two pump pits have been replaced, there is a plan to complete the repairs to the stream in the vicinity of waterfall #2 with a new patio with walks to replace stairs and an old bridge in that area.   The longest duration project is the roofs which could take another 5 years to complete. The board will conduct a budget workshop in October to review all of this and develop the budget for 2013.

Are People Happy? 
Who knows? As a board member, I'm not here to make your life work, or anyone else's, for that matter. When I purchased, I don't recall reading in the Bylaws about how we should all "be happy and completely satisfied." I've got my hands full dealing with my own problems. My spare time is completely absorbed being of service to this association.

"How are people doing?" That's possibly a more relevant question. We do have some statistics which can guide us as board members. Each month I prepare an updated spreadsheet of delinquencies since January 2008, with information provided by our treasurer. This is distributed to the board. Our treasurer provided owners at the annual meeting with a good summary.

We have delinquent owners and some disgruntled owners, we have experienced foreclosures, we have had modest sales.  I suspect some owners remain here simply because they cannot sell their units for the price they would like. Prices are substantially below the peak of 2006. It's a great time for recent buyers.

Asking owners "how are you?" can be construed to be a request for complaints. "I live on fixed income," etc. Because not one of us in this association is authorized to print  money, we each live on "fixed income." What varies is the source of that income. For many it is from work. For some it is from pensions, annuities and social security. With thanks to the politicians who were complicit in creating this mess via their easy money for homes schemes, and to the Federal Reserve which regulates the currency, savers are being punished. That includes this association which gets little interest on its money. Thank you, Congress, Mr. Greenspan and Mr. Bernanke!

Your Unit Is Not Your Castle - Part I

The association issued an urgent safety bulletin to unit owners. The bulletin was prompted by a disastrous fire at a nearby condominium association, which is believed to have started in the fireplace, firebox, or flue.

Our condominium is similar in design and construction to that which experienced the fire, and is about 35 years of age. Some of our units have a gas fired fireplace. Not all do; this was a $1,500 option back in 1978. Doesn't seem like much money by today's standards, but it's helpful to remember that a decent home (3 BR, 1 bath, 2-car garage, 0.33 acres) could be purchased in Wheaton for as little at $52,000 back then. I know, because I did! On the other hand, wages were lower too, and $25,000 a year was a very good wage. That's inflation!

The bulletin has resulted in some owner comments. I understand that some have stated they have no issue with this, and in fact, are very willing to comply. I also understand a few have questioned the necessity to have the fireplace inspected. One has refused and stated "I'm going to use my fireplace as-is."

That's an interesting perspective. The issue is very simple. Our management has advised us that they observed the damage and is very involved in the coordination of the cleanup, etc. It is with their guidance that BLMH has issued the statement to unit owners. According to management, there was no indication that the unit owner did anything improper in the fireplace. It's reasonable to assume this fireplace had been used many times in the past. However, this year, it failed, and when it did, it did major fire damage to the building.

The goal of the inspection, which includes a brief list of guidelines, is to assure that your fireplace, firebox, flue and chimney are intact, and safe to use.

To complicate this further, during the November association meeting, an elderly couple took the opportunity to make a statement about their concerns about safety at BLMH. This was prompted, they said, by the recent "fire" at the 1731 building. That "fire" was a near miss, with very minimal damage. What's minimal? Probably $2,000 or so, including a damaged window. That meeting was about 12 days prior to the serious fire at the nearby community.

So, what is the real issue here? In an association with families and singles, in 336 units, with ages from their 20s to their 90s, what is the appropriate action? And why the resistance by some unit owners to an "Urgent Fireplace Safety Warning?"

Living in a condominium association, we give up some personal freedoms. That's the way it is in a "Common Interest Development" or CID. I suspect a few of us don't know that, or have forgotten.

I'm going to quote an attorney who specializes in these matters. “People have this idea that they have a deed to this particular property and this is their castle,” however, he often has to remind people “your home is not your castle; your home is part of everyone’s castle.”

According to this article from which I quote the attorney, developments such as BLMH are attractive to buyers because "they are low maintenance, and city planners like them because they make better use of increasingly scarce areas for development. However, those homes come with a complex set of rules and regulations. It might be something as banal, yet frequently irksome, as how many pets you can have, or even what constitutes a pet."

“As a result,” he says, “many people have a hard time adjusting to life in a common interest development.”

“For the most part, the general public is not aware of what their rights and obligations are in these kinds of arrangements...Buying into a CID means you have elected to live together and be bound to each other, not just physically, not just by party walls or common lot lines, but to be bound together by a set of covenants, conditions and restrictions (CC & Rs) that are difficult to change.”

“The problem is the people who live in these units don’t understand what they have bought into,” says Richardson, “and the homeowner associations that run them do not always strike the right balance between a harmonious community and a viable business operation.”

It's my opinion that taking strong steps to protect the inhabitants of BLMH is an appropriate balance between being harmonious and a business. If your neighbor due to simple error, or accident, burns down the building you live in, that will certainly be an inharmonious event!

What we each do with the information that is provided to us, is our personal business. However, the failure of something in our unit can have serious consequences not only for ourselves, but also for our neighbors. Some examples include the dishwasher which springs a serious leak, a failure in our fireplace, or a fire in the clothes dryer, the utility fan, whatever. At times we will be inconvenienced by requests or rules of the association. Which is preferred, occasional inconvenience or disruption by serious events?

It's my opinion that how safe this association is, meaning how safe we are as owners and dwellers, is in part determined by our individual actions. I think it's useful to remember that we are, in fact, "bound together" and how we act as individuals does affect others in this community.

Comments, Corrections, Omissions, References

Note 1. Here's a link to the original article, from which I have quoted attorney Kelly Richardson. 

Kelly-Richardson-lawyer-interview.html

Note 2. The board or its members are not immune from making the same mistakes as owners. Recent boards, for example, have attempted to satisfy or placate each and every owner who comes before them with a problem or a complaint. In attempting to do so, at some point, a board will compromise some owners for the benefit of one or another. So how to make a good decision? Be familiar with the governing documents, and make decisions for the association as a whole, rather than for specific individuals, is probably a good start. 

Note 3. The bulletin was an association action, coordinated by the board and management. Management read and approved the notice, which was prepared by the board. This post is my personal opinion.