Updated Surplus Numbers

Updated Surplus Numbers
Updated Surplus Numbers: Actual surplus 2018 per audit was $85,163.
Boards 2011-2018 implemented policies and procedures with specific goals:
stabilize owner fees, achieve maintenance objectives and achieve annual budget surpluses.
Any surplus was retained by the association.
The board elected in fall 2018 decided to increase owner fees, even in view of a large potential surplus

Average fees prior to 2019

Average fees prior to 2019
Average fees per owner prior to 2019:
RED indicates the consequences had boards continued the fee policies prior to 2010,
BLUE indicates actual fees. These moderated when better policies and financial controls were put in place by boards

Better budgeting could have resulted in lower fees

Better budgeting could have resulted in lower fees
Better budgeting could have resulted in lower fees:
RED line = actual fees enacted by boards,
BLUE line = alternate, fees, ultimately lower with same association income lower had
boards used better financial controls and focused on long term fee stability
Showing posts with label Rules and Regulations. Show all posts
Showing posts with label Rules and Regulations. Show all posts

Tuesday, August 21, 2018

My final year on the board, Part II

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I've been extraordinarily busy for the last few months. At this association we began projects early this year and accellerated two of them. They could have been delayed, and that's the "kick the can down the road" approach that previous boards preferred.

I'd like to point out that I run a viable business, am the president of a condo board and yes, I do have a life to lead. So I like to kayak, etc. in my "free time". Life is short is my motto. So it is so very important to treat each day as the wonderful gift it is.

I'd also like to point out that I live "somewhere else" for 75% of the year. Yet with all of the above I've found a way to get the job done. Which is why I have little patience for those who join a board with the expectation of reading the packet, attending the monthly meeting, vote and do little else. Our owners benefit from having a "working board."

Our longest serving board member once commented to me that "We shouldn't cater to the lowest common denominator". But that is precisely what our condominium association does. If anyone has sufficient credit to purchase, they are approved. If anyone can get to a HOA meeting, they are a suitable board candidate.

My time on this HOA board is ending. Glad I could donate thousands of hours to the association. I had an agenda; I wanted to demonstrate what was possible if a very few, capable board members showed up.

I've accomplished my goal. What's next? Ask my crystal ball; I'll be bringing it to the annual association meeting on September 27. I will have some additional information for owners:




Sunday, April 14, 2013

Catch Me If You Can!

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An Unpopular and Difficult Chore
I've been in this association for over 10 years I've observed that maintaining and enforcing the rules in a large association is one of those unpopular chores. Enforcement of the rules has been an obvious issue to anyone attending association meetings. Several years go it was usually reported at the meetings that there were no rules violations. At the time, another unit owner remarked "In an association with 336 units that's difficult to believe!" Some Rules & Regulation Directors (R&R) or boards apparently preferred only to act if there were a violation reported by an owner. I guess that rules enforcement was considered police work.  It apparently didn't fit in with an agenda for a "kinder and gentler" community, and anarchy was preferred!

As it is with all things here at BLMH, there are differing points of view on rules enforcement. Some expect the rules to be vigorously enforced, and others do not. Some see it as unnecessary and an infringement upon their personal rights. Some owners are for it, if it is the board that does the dirty work. For example, if they purportedly see a violation they may call a board member and complain "You should do something about it" or, after the fact, they may come to an association meeting and complain "Why didn't you do something about it?" What they won't do is report it using the required procedure which is a "Written Initial Complaint by a Resident, Association Board or Association Management." You'll note that "Resident" is first on that list.

Should owners expect another owner or the board to do the "dirty work" that they are unwilling to do? Should owners expect the board to insert themselves between some of their differences? We're not mediators or policemen. We will do what we can to keep the peace but we're not here to arbitrate disputes. However, if an owner won't even fill out the basic paper work and expects a board member to do this, I suggest it becomes unreasonable.

We've experienced R&R enforcement which was lax simply because the director didn't do it. It's difficult to say why this occurs. I concluded that the reasons might be the fact its unpopular with some at BLMH. One doesn't enforce the rules with their "friends" does one? Why not?

Time is another problem. Monitoring our extensive property can be time consuming. Simply walking from address to address on the property can take 45 minutes. Add another walk along the patios and it can take hours. Then let's walk along Briarcliffe Blvd to 1825-1827 and around the lake.  I've spent the better part of a half-day doing the walk I describe, and so I know.

In an association management will take its cues from the board. There is a lot to do in an association this large and I can appreciate a position that doing a task that alienates one to the board is not a good use of time. The board will also take it's cue from the president and the R&R director. If the director simply doesn't do the job, then what? Should another board member take on double duty and perform that duty? Why? Board members are equals. Work on the board is supposed to be more or less equally distributed. Board members have specific duties and responsibilities.

Taking up the challenge is a good way for a board member to become a target of the 5%.

A Growth Opportunity
Serving on the board is a growth opportunity. Taking away one's duties and responsibilities is not a good approach with a recalcitrant board member. However, it remains that the board does have serious work to do and some how it must get done. If not, then stagnation and serious problems can occur. There is no "auto pilot" in our association.

In society the "do bees" might be penalized and given more and more to do. The "don't bees" may succeed by simply dragging their feet and allowing the "do bees" to get the job done. If this were a row boat and one side were manning the oars and the other coasting, we'd be going in circles. So too with boards and organizations.


This can lead to animosity on boards, and I'm sure directors walk off from time to time. Last year, an owner addressed me at a meeting and told me "You are not the board." I said "You are absolutely correct, and there is an empty seat here for any owner who wants to take on the empty position." They didn't take me up on that offer.

Rules enforcement, like all other tasks in the association fall to board and the R&R director is the leader in that task.


Practicing Good Citizenship
Keeping the rules is inconvenient and at one time or another, we'll each step over that line. It may be excessive trash in the garage, or a failure to pick up doggy do, or not moving our car during a snowstorm so the plows can complete the street, or leaving it unattended on the property for two weeks while we're on vacation. However, keeping the rules is not to be a burden; I'd suggest it is an opportunity to make an expression about what type of association we want and what part we fulfill in it.

Keeping the rules is another aspect of maintaining our unit and our personal property. When we understand and follow the rules, we're practicing good citizenship. We're maintaining our relationship in this community association and we're putting it into action.

If we do break a rule, we should expect a letter of correction. If we fail to comply we can expect a fine. That fine has been looked upon from time to time as "board repression." It isn't. Owners are given an opportunity to comply and if they fail to do so, then a fine is used as a means to encourage compliance. Our association does not "make money" levying fines. I'm sure management and the board have much better things to do than this. But it is a part of the duties and it is necessary to take steps to assure compliance. Or would owners prefer anarchy?

In some situations compliance may not be easy. Most boards are not comfortable with discussions about circumstance as a criteria for rules enforcement. In other words "For some individuals and under certain circumstances rules violations are acceptable." That's creating distinctions and different classes of owners. A definite no-no under the Illinois Condominium Act.  All owners are equals and all owners have the same responsibilities in the association. Of course, we don't all behave identically. We have different perspectives and different views on what is important and what is not. The rules assist us in establishing community priorities we can live with.

Living and working in a community is not a social club. We do need guidance from time to time about what is appropriate behavior and what is not. It's not a popularity contest.

Rules and Fees
Looking into this more deeply, one can't discuss the rules without looking at fees. Paying fees in a timely manner is one of the rules. In fact, paying the fines is one of the rules! So, some observations about fees will be included in this post.

I walk the property frequently in the warmer months. This is to do various condition inspections and look for maintenance problems. Of course, this also picks up various rules violations, which are reported. I usually include a photo which is date stamped and with location etc. on the face. This is accompanied by a brief description and I frequently copy the specific rule text and provide the necessary references. Of course, the camera is mine, etc.  With management, I've done thorough garage interior and patio surveys and inspections.

With the arrival of spring, I'll again be doing specific surveys and inspections.

When doing past surveys, we have determined that a large majority of owners do not have apparent and visible rules violations. The most frequent violations include patios or decks with things on railings or other than outdoor furniture. Another is lawn chairs, feeders and barbecues in the common areas. We have found some rules violations in garages. These are usually inoperative vehicles or storage of boxes and bags. Large oil stains sometimes occur. This might not be considered a violation, but it is true that the owners of these vehicles can expect a fee for extra effort spend to clean up those stains by our cleaning crews.

One re-occurring problem is residents who set things on second floor patio railings. This is dangerous. One resident stained the new railings with run-off of plant watering; those plants were on set on the railing. Of course, this also flowed onto the patio below. That might be the source of the problem. Residents may be setting the plants there so the run off doesn't fall through the deck and onto the belongings of their neighbor below. However, nothing is to be set on the railings.

There are occasional complaints about satellite antennas and that includes wandering cables.

In some buildings there is a complaint about mice. We caution owners about storing anything edible in non-metallic containers in the patio and garage storage closets. Some owners do feed the animals in violation of the rules and others do use grass seed as allowed by past boards. Unfortunately, these seeds not only attract birds but also mice and squirrels, who can be very prolific. I suspect some of the issues in specific areas of the association are caused by such feeding. Reoccurring mouse complaints is an indicator of some sort of food source.

Before continuing, I want to emphasize that rules violations aren't an epidemic at BLMH. However, I also think many residents are not aware of the rules. That includes renters who see this as an apartment and have no interest or involvement in this association; so too for some of our remote owners. However, ignorance is not a valid excuse. If it was, the best defense for any problem would be "I don't open my mail or answer the telephone." I guess we could call that the "ignorance is bliss defense." That's why this association has found that it is necessary to inform owners that "Failure to receive a monthly invoice is no excuse for not paying your monthly fee."

The Board and Residents - Apparent Aloofness or Ambivalence
Our association has one Rules & Regulations Director and what seems to be an aloof or ambivalent population. So he is outnumbered! Yes, the owners do generally agree that "We want and expect the rules to be enforced." However, that is not always true if it interferes with a personal perspective, results in inconvenience, or interferes with personal activities.

Rules enforcement is a hot button for a few owners and may be an embarrassment for some violators. It shouldn't be. Rules have nothing to do with being a "good" neighbor or a "bad" neighbor. Nor have they anything to do with convenience. In other words, we all make mistakes and while we may have the opinion some rules are "good" and should be enforced, it is also true that what I may consider a "bad" rule does not allow me the choice to violate it. I think some of our owners have been given very poor coaching by self styled "experts" in the association. The rules are the rules!

If a rules violation is reported using the proper procedures (when, where and by whom) a letter is issued and the resident is given a reasonable amount of time to correct the situation. Most of us have done a violation at one time or another. So how to react on receipt of that letter? Fix the problem, ignore it, or stonewall the board? Of course, there is a procedure for formally contesting a violation letter. However, saying "The rule is stupid or unfair" is not a defense. The question is "Did I violate a specific rule?" If the answer is "Yes" then it's best to consider correcting the problem. The resident can then take all the time in the world to attempt to change the "stupid" rule. And some have. Others say "I won't and you can't make me!" That approach will result in multiple letters and a fine or fines. It may be a way for some owners to get attention and divert the board from more important matters.

When owners take a position that the rules are "stupid" or "I don't like it" I am of the opinion that they are making a personal statement about the association. The board does review the relevance of the rules, and not just on occasion. We're aware that the rules are a part of the social fabric that binds us all. Believe me, I don't like or agree with all of the rules. That however, is not the issue, nor is it an opportunity to avoid keeping a rule or enforcing it. Board members are required to uphold the rules, just as they are required to collect fees and do their best to maintain the property. Owners too are required to keep the rules and pay their fees and do what they can to be "good neighbors." All residents are expected to keep the rules and be good neighbors.

As is true for all things in an association, this is not a popularity contest.

However, if a resident insists upon the "stupid rule" tack, then I am inclined to say "You are entitled to your opinion. However, if you really don't like it here, then consider living somewhere else." It's a fact that most of these rules have been in place for decades. These documents are provided to all owners before purchase and are to be provided by owners to their tenants as part of any lease agreement. Discovering that we don't allow 2 or more dogs and cats in a unit after purchasing is not an acceptable excuse. You can't just have a garage sale, park your RV or 6-wheeler, have a lawn party for your church, or whatever. That grassy expanse is not "your" lawn, or mine. It is shared by all and is for no one's exclusive use.

That is the center of this issue. We are not really "owners" of the association. We are shareholders, and we share everything. Selfish or antisocial people have great difficulty adjusting to living in an HOA. If you think you are the center of the universe, then I guarantee that you will make life miserable for your neighbors and be a disruption to the board.

The vast majority of our association rules were made decades ago and have a sole purpose and that is to promote harmony in the association. The most recent changes were made to accommodate advances in technology and to recognize the change in the value of the dollar because of inflation over the past 35 years.

I am of the opinion that a few may actively practice rules violations. Some residents see rules enforcement as repression or an infringement on personal rights. Some are antisocial and see any form of exterior control as a challenge to their personal domain.  Others say what they are doing as not harmful and so it's okay!

I've been here for over a decade. I've watched owners attend association meetings and denigrate the board about rules and rules enforcement. Some play both sides, arguing that the rules are unfair and also arguing that they aren't properly enforced. A few years ago we entered a time of a "kinder, gentler" board accompanied by minimal rules enforcement. Is it a coincidence that delinquencies doubled during the next 18 months or was that solely the result of a weak economy? The fact is, what we each do as individuals does make a difference.

Is there a Purpose to These Rules?
Our rules have several purposes. These include keeping things civil and harmonious, assuring that everyone pays their fees, and assuring that the association is operated with only one class of owners. I suspect these are the principal motivators for rules in most well run associations.

Most of the rules are common sense and many are obviously designed to assure a harmonious society.

Yet, some owners and other residents attempt to skirt the rules. Informing management "after the fact" doesn't make it right. It does, of course, make it difficult for the board to enforce the rules, and that may be the purpose of residents who skirt the rules.

When these things occur, other owners will sometimes join in the sport. Common complaints to the board and to management include "How could you allow this to happen?", "Why aren't you doing your job?" And "Someone should do something about this!"

Sometimes violations occur unbeknownst to the board. The fact we didn't know this was going on is no excuse!

Apparently, even our legion of walkers is unawares or oblivious. They walk and talk but ignore rules violations. It seems that maintenance issues such as peeling paint is occasionally reported, but for example dilapidated, rusting air conditioners are ignored. I suppose the thinking is these will have no negative impact on property values! (The rules state that these are to be painted a neutral color). Pots or other objects teetering on balconies, barbecues and chairs or benches on the lawns, these too are generally ignored. Yes, there is collusion among the owners. It might be "quid pro quo" where some owners assume that if they ignore rules violations that this "courtesy" will be extended to them. I suggest the ultimate motivation to look the other way is simply "It isn't my duty or responsibility." If so, then some of our owners think they are living in an apartment complex.

Because of a lack of resident involvement, enforcing the rules has devolved into a game which is the title of this post.

How Extensive are These Rules?
We have rules about the use of the common elements. Our grounds can't be used beyond walking with friends and family, or your pet. If you walk your pet it is to be on a short leash and you are supposed to pick up that doggy-doo. That's a requirement of Wheaton Municipal code. We have several trash receptacles on the property for deposit of these little bags. Some use them. At times, we see a proliferation of small bags accumulating adjacent to some of the buildings. How are we to determine who owns these?

All owners are required to complete an annual census form and to have Condominium Owners Insurance. They are required to provide proof of that insurance. The reasons for such insurance would be obvious. However, if an owner doesn't comply and doesn't produce these documents, exactly how is the association to enforce this and make them get insurance? I have yet to get an enforceable answer from anyone to this question. Yes, there are fines, but some owners apparently prefer to pay those fines than produce the necessary documents. Go figure!

Satellite antennas are allowed, in accordance with FCC rulings but we do stipulate where they can be installed. That stipulation is an attempt to achieve a trouble free installation for both the association and the owners of these antennas. The buildings were designed long before individual satellite antennas were popular. The association uses owner paid fees to maintain the exterior of the buildings; exterior repairs caused by antennas and the interaction with the elements come out of general maintenance because we don't have a specific fund for antenna related repairs and damage, holes, etc. Why should we? The association does not own these antennas and the majority of owners don't have one. Similarly, we don't have a fund to maintain the cable TV system and repair is by the owner and their vendor. That antenna is the property of the respective owner or resident and all maintenance of it is their sole responsibility. Owners are required to get a variance form and fill one out before the installation. They are then given an approval letter via the management office. But it seems some don't follow the procedures and simply install that antenna whenever and wherever they wish. When a wind storm occurs and that antenna is ripped off of the building with a part of the fascia it was fastened to, management will get a call to "Fix the building NOW so my TV works!" Some will argue that the fee to remount or re-aim the antenna should be paid by the association. In other words, from the fees of the other owners.

Patios and decks are "limited common elements" and are maintained by the association. We replace and repair decking materials, repair concrete patios and recently completed the replacement of all railings. Owners are permitted lawn (outdoor) furniture on their patios and decks, but that spare couch can't be moved from the living room to the patio. Indoor-outdoor carpeting (green or brown) on the patio or deck is permitted. The lawns are not part of an owner's living room. So while first floor owners may walk onto the lawns from their patios, that's onto property owned and maintained by the fees of all owners, including those living on the second floor.

We also have stipulations about dumpsters on the property, storage in the garages and on patios and decks. There are rules about what can be parked on our privately maintained streets. Automobiles must be in working condition and cannot be stored on the streets. There are restrictions to the use of the driveways and streets. Motorcycles need a protective plate under support skids to protect the asphalt; these are readily available. Approved dumpsters must be for a very short duration and on timber or plywood to protect the asphalt driveways. And so on.

Do the Rules Interfere with a Good Time?
Some want to party on the property. They see all of these grounds and say "That's ideal for a party." True, and we could have games and sports of all sorts, too. But ideal doesn't mean that's a proper use.

Yes, we all like to use these grounds, and some would like more extensive use. Some also want private gardens off of their patio. Others would like more outdoor activities and some would like extensive barbecues and evening lawn parties for family, friends and acquaintances. But we are limited under the rules.

There have been really lengthy discussions about this over the past 5 years. In fact, it seems owners would rather discuss this than discuss foreclosures and delinquencies. Yet most owners would also like to see lower fees, if that were possible. I find that interesting. I suppose one could say it is a matter of priorities.

When owners have approached the board to discuss this rule and to promote a rule change, or contested the rule about such activities, they have also declared they won't get the additional insurance to indemnify the association for damage or if someone is injured on the common elements. The argument has been "That isn't necessary. No one will get hurt, and there will be no damage" When told during such discussions that alcohol cannot be a part of the proposed festivities unless specifically allowed by the insurance rider of the owners, and that under age drinking is illegal they will say "No one will be drinking." Perhaps, but if things do go wrong, who will pay the consequences? If someone is injured or there is property damage, then what of the insurance and future premium increases levied on the association? The cost of those fees and any judgments will be distributed to the other owners.

Owners have different opinions about what might be acceptable activities during lawn parties. One person's nuisance might be another's entertainment. Some think it should be a quiet and dignified affair. Others see an opportunity for lawn bowling and games for children and adults. Some would certainly enjoy soccer, volleyball and horseshoes or other lawn games. There has been no consensus brought forward that I am aware.

Wheaton has a lovely park with pavilion immediately across the street. We encourage residents to use it for their large parties, sports activities and so on. If that park lawn is damaged, if there is trash left behind or if there is an injury, the consequences won't be paid by the fees of the rest of our owners. Yet that has been argued as "inconvenient."

The fact is, the owner body pays a lot of money each year for insurance, to maintain the 15 acres of turf, the lake shorelines and the hundreds of trees and shrubs on our property. So too for the park benches, streams,  waterfalls and central decks. None of us has an exclusive right to these facilities and this association does not  have an army of janitors to clean up behind anyone, or extra money in the budget to restore lawns or take care of any damage. Most of our owners would say they would prefer no fee increase this year, or the next.

Inconvenient Fees
One of our rules involves the timely payment of fees. Our fees have been described as a major inconvenience. Some owners will state that they are "too high." I'm sure we all have some other use for that money each month. But we also expect our roofs to be replaced in a timely manner, the exterior of the buildings to be properly maintained, and that includes the driveways, patios and decks. Ditto for the shorelines of the lakes and oh, those 800 or so trees, the streets, water mains and sewers. Let's not forget about the hallway and garage lighting, the street lighting and so on. Snow plowing is not an option and neither is association insurance. Accounting is done and reserves are a necessity.

I have been told that there was a time this 40 acre association, a PUD, had fees of about $35 a month. Think about that! Some of our old timers will probably say that things were wonderful back them. I'm sure they were. Extraordinarily low fees, few reserves and no apparent plan for adequate reserve accumulation. Yes, those were the good old days. Ask them and they will also tell you that the hat was passed on more than one occasion to collect enough to pay the association bills.

How many owners today could deal with a special assessment?

I suspect that 20 years ago owners were probably delighted. Things looked wonderful. True, there were financial issues, but those were mere "details." Some of the shrewder ones probably expected to move on before the rest of the owners woke up to the reality and the special assessments arrived. I have been told that many owners argued to maintain fees at a low level.

But something changed. New management about 15 years ago pointed out that fees were not adequate for an association of this breadth and depth. The fees increased. But this association had some catching up to do. Owners continued to argue that "fees are too high."

Today, after two paid reserve studies, we seem to be on a sustainable track. But each of our owners certainly would prefer to keep that money and spend it on their personal wants and needs. That is understandable.

The board has put three studies to very good use; one was internally prepared. These studies have been an important source of the recent decision to make a fee decrease for reserves. Yes, you read that correctly. This association was able to reduce the fees collected for reserves in 2013! The board instead put funds into a contingency for infrastructure breakdowns such as water mains, fire hydrants and so on. How many associations can say that?

Do Those Opposed to Rules have a Point?
Interestingly the same people who make arguments against many of these rules sometimes come to association meetings over the years to complain.  The theme for these owners is "I don't like this and the board should change it to satisfy me."

To be honest, I do understand where people are coming from with respect to inconvenient rules and fees. What's a reasonable annual increase? What's an expected annual increase? This association not only had one, but several negative annual fee increases, back in the "good old days." You've read this correctly. This association, with minimal reserves, actually reduced fees back in the "good old days." So some owners have come to expect a fee decrease if we have money in the bank. I say that because the buzz about 5 years ago was "We have enough money; a fee increase is not required."

That was only true if one ignored the state of the roofs and driveways, and the costs necessary to complete the programs in progress.

Back in the 1980s and 1990s some owners made their financial decisions based upon the monthly fees. Before purchasing here I discussed this association with owners. Some owners told me that the fees were too high! I gave the financial documents to my accountant and asked his candid and unbiased opinion. His first remark was a concern about the reserves. He didn't know this association was a PUD, which actually puts more financial pressure on it.

Unfortunately, a lot of owners apparently didn't do their "due diligence" or didn't run the numbers. I also suspect they didn't have an appreciation for "the miracle of compounding." It worked in their favor for a while, and they saw a $50,000 condo rise to the stellar heights of $190,000 after 15 years of annual property value increases. Unfortunately, the same is true for budget shortfalls. That's why this country has a multi-trillion dollar debt and is running huge annual deficits. You don't have to look that far. We all know the financial condition of the State of Illinois, don't we? We didn't get to that place in one year or five. Borrowing and spending more than is collected is a good way to build a large financial hole. Illinois made the same mistake some individuals and associations have made; they didn't save for the future, preferring to spend today and defer planning to tomorrow.

What is true for our government is also true for individuals.  If an association underfunds reserves for a few years, it creates a financial hole and it is very difficult to catch up. An association and the owners should expect to replace roofs every 18-20 years, repair or replace driveways, and so on. It should also expect that costs will rise over time. If the owners don't accept this and refuse to plan accordingly, then those bills will be paid by future owners. That's what apparently occurred in the 1980s.

Fees weren't comfortable then and they aren't comfortable now. Owners will always prefer to spend any money sent to the association as fees for their personal satisfaction or needs. It's just like taxes. However, in our association we can see how the money is spent. Yes, there are cycles in which funds are accumulated. At those times when the association is building reserves for these very expensive capital projects it's not obvious that there will be new roofs in 5, 10, or 15 years. I suppose that is when some owners are prompted to say "What do we get for our money?"

What Other Rules Do We Have?
Household pets are allowed, and these are defined in the R&R documents. If we didn't do that, I suppose a chimpanzee or panther would be expected to be normal on the grounds. Owners can have one cat or dog. Not two or three, and while four 5-pound dogs may weigh the same as one 20 pound dog, our rules aren't based on weight.

There are stipulations about the hours permitted for certain types of noisy activities and "construction" in the units. While "hardwood" floors are permitted, there are specification about the quality of noise abatement and professional installation is required, with proof of that.

Owners can't cut holes in the exterior walls, modify the structural elements and supports of the buildings, extend into the common areas including wall spaces, garages or attics. (What! I can't have a sky light or an attic penthouse?). They are not to use extension cords cut and wire-nutted to install their ceiling mounted "can" lighting and such lighting must be suitable for direct contact with insulation. They are to adhere to City of Wheaton codes and ordinances.

Installing kitchen ventilators which discharge in the walls or attic is not permitted; they must vent into the kitchen space. Apparently this may be difficult to comprehend because we have had owner(s) vent their kitchen exhausts into the attic and even the space between units. Wood saturated with grease is not a good thing. This creates a fire hazard!

Owners are required to fill out architectural and maintenance variation forms and get letters with specific permission from management for many modifications. That includes exterior window replacement and patio doors. They are to keep these in a permanent file so they can be produced if there is an issue or a complaint in the future. Of course, turning these over to a new owner at the sale would be helpful. We're all good neighbors, I have been told.

This association allows rentals. Tenants are surrogates for the remote owners; this is not a rental community. There is no superintendent. All residents are expected to pitch in with the application of snow melt on the driveway and entrance walk. They should help with brushing snow from the entrance. Yet how many remote owners have such a conversation with their tenants and provide a shovel and broom for that use? Owners are required to fully inform their tenants of all rules and regulations and are required to provide them with a copy of these rules. Owners are also to get a one year lease and provide a copy to management. How many actually do these things, and how many don't? And some owners wonder why there is tension from time to time between renters and onsite owners?

Feeding of the wildlife is not permitted. Yes, we have residents who persist in doing this. Walking the property will sometimes reveal bird feeders, or seed thrown around patios. This attracts many of the birds who live in and around the property, and will provide a nice show. It also attracts mice and adds to the diet of the many squirrels on the property.  We have some buildings from which we receive complaints of mice. In some cases, we've discovered that someone in the building is feeding the animals. We can't always determine who the culprit is.

We have a lot of shady areas. That makes growing grass difficult. Some owners have complained and so the association allows them to plant additional grass seed in the common areas adjoining their patios. We also allow lawn sprinkling to grow that seed. This is a compromise. One must wonder how many mice are feeding on that grass seed? However, owners may not extend into the common areas. They don't own that lawn! Staking out an area to allow grass to grow is understandable. But if it becomes a area that fences in a lawn adjacent to a patio and limits general access, some may wonder what is going on. Access to that area should be available to all owners. We can walk anywhere we wish on the property. It is also true that walking immediately adjacent to patios and window may not be courteous. Of course, the management and our landscaping director may prefer we adhere to the walks so the ground is not compressed and the grass not flattened.

We've discovered other "bootleg" plantings from time to time. Some owners have argued these are desirable. Some really aren't.  Last year, our arborist spotted a shrub which he identified as a pest harborer. Where did  that shrub come from? He suggested we remove it because that specific plant harbors a species of mites that attacks our pines. We did remove it. After all, we have hundreds of trees and spend thousands of dollars each year maintaining and spraying them.

There was a move afoot a few years ago to create "gardens" on the property. In particular, to allow special plantings by owners off of patios. In other words, to allow first floor owners to extend their exclusive area beyond the patios and into the lawns. As was pointed out, that might seem fine to a few, but who pays for trimming those special bushes and shrubs? Our landscapers are not gardeners. If you walk the grounds you will see the occasional plant that deviates from the planting scheme. How did that get there, if not by an owner or tenant? Beauty is in the eyes of the beholder. Shrubs, turf, groundcover and trees are generally agreed to be acceptable. However, some of our flowering trees drop fruit and that has been objectionable to some owners, and some of these trees have been removed.

One of the rules is the timely payment of monthly dues (maintenance fees). If these fees are late, the association sends a letter and for this and other violations there is an additional "fee" schedule. Rules violations get a letter first; continued non-compliance will result in a fee. This too has been considered "repression" by a very few in the association. In fact, this is to assure compliance. One of the things owners may not be aware of is the expense born by this association chasing owners who are delinquent. It takes letters and in some cases, an attorney.  All of this takes the time of management. There is a finite amount of that and as we say, "time is money." So why should owners who are timely, pay their bills with alacrity and keep the rules, have a portion of their fees diverted to dealing with those who don't? That question is the flip side of the "fairness" argument that some used to stonewall board activities to maintain a healthy associations. I think there are some really distorted viewpoints about "neighborliness" and "fairness."

Garages are shared. Each owner has a stall and a place to store their trash and recycling receptacles. All vehicles must the operable and we don't allow engine, automobile or motorcycle repair in the garages and on the driveways. Ditto for boats, etc. Bicycles are permitted, but must be stored in such a way as not to obstruct walkways, etc. General storage in the garages is not permitted. Each owner has a closed and locked closet in the garage for their exclusive use. Additional lockers, shelving and cardboard containers are rules violations. The association maintains the interiors of the garages with the exception of the overhead doors which are owner property. We've replaced ceilings, floors and repaired walls. Owners may paint the walls a neutral color, but they must obtain a letter from management. For all such activities we require an insured company so in the event of a mishap the other owners don't pay for someone else's mistakes or accidents.

Yet, some owners attempt to turn the garages into an extension of their storage lockers. Well, if these weren't shared facilities and if all interior maintenance costs were paid by that owner, it might be acceptable. But it isn't.

Conclusion
The game will continue because of the mistaken beliefs of some owners about what they are entitled to do and how they expect "their" fees to be used in the association. This will continue because of an unawareness of the current Rules & Regulations, the apathy of other owners, and some antisocial tendencies in society.

There is also a history to contend with. When a board decides to get lax about the rules, this is quickly telegraphed to the other owners. Once precedent is set, it may be difficult to get owners and other residents back on track. A board may find itself with the difficult task of rehabilitating the association.

It's an interesting observation to make, but if asked, many owner will say they are in favor of vigorous rules enforcement. But it seems that's not true when they receive that rules violation letter.

As I said, most of this is common sense. Some is designed to protect us from each other. Some is to assist in the maintenance of the property and avoid spending fees unnecessarily.

Its been argued that for some violations it is difficult to see the harm in some of the infractions. I'm skeptical of that defense. Most have a simple basis. Keep owners in their units and from infringing on their neighbors. Keep activities safe and prevent damage to the property. Set boundaries so we each know where our "unit" stops and the jointly owned property begins. Have enforcement for fee collection so owners honor their financial obligations to the association.

Some of this isn't going to be popular. Some of it will put owners in a position where they have to make financial choices. Let's see, would I rather have a nice vacation, a new iPhone or automobile, or pay that onerous fee each month?

The board is required to enforce the rules. We are required to do so equally and fairly. In other words, it's not possible to look the other way for some owners and enforce the rules for others because the Illinois Condominium Act prohibits the creation of separate groups or classes of owners. A board that deliberately refuses to enforce the Rules & Regulations may be creating such classes. Of course, some rules may be difficult to enforce. Lack of cooperation by owners and outright collusion may make it impossible to enforce all rules.

Electing board members who refuse to enforce the rules is one covert example of collusion among owners. How many owners would vote for a board if it was made known that "We won't enforce specific rules?" How many such boards would be willing to put that a position into writing? Very few I expect, because we all do really know what is required.

Another way of bending the rules is to pretend "There is enough money" because of a perceived balance in the check book. Ignoring future obligations including reserve requirements when making such statements is deceitful. This may also occur if a group of owners decided to elect a board to keep fees low and in so doing, avoid costly maintenance or the collection of fees to accumulate necessary reserves. This could be a popular approach for owners who hope to sell their units before such an association collapses into disrepair. Of course, the other owners will be left 'holding the bag.'

However, owners have a right to expect that the property will be maintained, that the association will do proper studies and collect the necessary reserves, that the fees will be levied to do so, and that the board will do its fiduciary duty.

Of course, the owners may decided that they don't like the rules. There is a way to deal with this with integrity. Make a list of specific changes, provide them in writing to all owners, and get agreement from the ownership as required in the bylaws.  Another method is to get a board in place who will either not enforce the rules or will selectively enforce the rules.

Why Does it Take So Long?
Sometimes owners wonder why it is that things don't get done, or it takes so, so long. The answer to that question can be complicated, and includes the fact that a board convenes once a month in open meetings. Month 1 = hold a discussion and decide how to proceed. Month 2 = review the bids or whatever transpired in month 2 as a consequence of the decisions of the previous month. Month 3 = the contractor, or whomever was awarded the work has an opportunity to put the work on the schedule. Month 4 = the work is done if all materials arrive and workers are available. A similar scenario occurs for many tasks in an association.

Of course, the Monday morning quarterbacks only see that "their" wants, needs and desires are the most important. The board should deal with that water main break, or that felled tree, or that blizzard "in their spare time" and after you take care of ME!

Owners get the boards they elect, and the boards they deserve.
That's the bottom line, and it is why each and every association is what it is. Some have more and larger problems, and some fewer. It's completely the result of the owners.



Sunday, February 12, 2012

CAI Annual Conference

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I attended the Community Associations Institute annual conference held in Arlington Heights with two other board members; we also attended the conference last year. This post will include my observations and insights. Let me also state that this is not intended to be a line by line report; the educational sessions we attended spanned about 4 hours, and there were additional one on one conversations with experts and professionals. So it is not possible to reproduce the content here.

I suggest interested parties attend next year's sessions. Doing so could be a useful investment by an owner or potential owner. Particularly if there are concerns about condominiums and how associations deal with the issues. This also affords an opportunity to talk to the experts during educational sessions, or simply meet some of the professional vendors out there who are servicing associations, including a few of our vendors.

Another resource available is ACTHA. There is info available at their website. Clicking will open a New Window> ACTHA Website

The CAI conference had two parts. One includes several hundred exhibits staffed by vendors who can provide everything from mold remediation to reserve studies. This is useful, but was not the big draw for me. However, in the "giving credit where it is due" department, if it weren't for these vendors, who each pay a fee and are sponsors of, and speakers during, the educational sessions, there probably wouldn't be any. So I say "thank you" to each of the vendors.

The second part was the“Education Session Tracks” which are educational sessions oriented toward homeowners, boards and managers. This is where training and education is available. We attended three "Education Session Tracks" last year, and so I was interested in attending again.

This year, we attended these educational sessions:
  1. Homeowner Forum: Ask Questions to a Panel of Experts. “The panel of experts is prepared to answer all of your most pressing questions. With years of combined experience in all facets of community management and living, you are assured to leave with answers.”
  2. Property Values and Paying Assessments: "The presentation shall have a four part discussion which addresses legal, building insurance and landscaping issues. Learn: How to effectively budget for your association and oversee contracts and expenditures; ways to avoid special assessments by proactively detecting potential repairs; insurance protection for delinquent association assessments; and how landscaping adds financial value to your real estate investment."
  3. Legal Update: "The Legal Update provides updates on association case law, recent local legislation, and more."
There were other sessions available, but it's impossible to attend them all. I was interested in the legal aspects. I mean, when it seems everyone is gunning for a piece of the pie, it becomes essential to become more aware of the issues, the possible motivations, consequences, and the methods to deal with them. 

The topics in the sessions sometimes overlapped. For example, legal issues were discussed in all of the sessions I attended. I suspect based on questions from the audience, that legal and financial issues are at the top of most associations' lists of concerns.

Listening to the experts, the questions posed by the audiences, and the exchange of ideas, problems and issues, gave me a lot to think and reflect about.

Overall, the legal discussions were somewhat discouraging. It seems that prevention is the operative word, but damage control is what everyone is practicing. On the other hand, if an association has no delinquencies, no foreclosures and is involved in no lawsuits, then finances and legal questions are not a concern. At BLMH, we are not so fortunate. 

Homeowner's Forum
I found this to be very interesting. I attended because I wanted to see the "issues" homeowners and boards at other associations are dealing with.

I know the problems here at BLMH, and I am aware of the position of a very few owners. But I attended the "Homeowners Forum" to get a dose of reality from the rest of the HOA world. During the conference sessions it became apparent that some of the problems other associations are facing are extremely daunting. I was struck by how engaged in the process some of these board members are. I also realized how easy we, as owners, actually have it. 

Discussions and observations made during the Forum included finances, dealing with owners, dealing with boards, etc. There was, for example, a discussion about a board that apparently wants financial compensation. That's not allowed under the Illinois Condominium Act. There were also questions about the new licensing requirement for managers. 

Another serious issue was getting all owners to pay their assessments so that necessary maintenance can be done. The "panel of experts" stated "Don't people normally pay their bills?" It seems that as stated in the audience, some of us don't. One member of the audience made an interesting statement about their association, in which some owners are so opposed to the payment of fees that the association could not pay its bills!

As expressed by a member of one association during the Homeowner's Forum, even an inability to pay for necessary services wasn't enough to get owners to meet their obligations. Listening to that board member, I was struck by how boards are to be fiduciaries, but owners have no such requirement. Boards are supposed to make it all work, but owners can play games, hire lawyers and avoid their financial responsibilities.

During the session, the question was raised about using professional collection agencies. I can imagine the uproar that might cause if it were implemented at BLMH! The bottom line for collections is 1) Associations cannot operate without income, 2) Use standardized procedures, 3) Be consistent in their application, 4) Treat all owners fairly. The last is difficult if some owners are of the belief that they are "special," or have the belief that their circumstances warrants special treatments. However, boards must try, while honoring their role as fiduciaries and as representatives for ALL of the owners.

There were also questions about boards which operate out of view of the unit owners, and associations which have problems with financial records, as in "no financial records." The discussions during this and other sessions included delinquencies, uncooperative owners, uncooperative boards, demands and requirements of elderly, handicapped residents, etc. The expert panel provided insights into how boards and associations can deal with these problems in a reasonable way.

Property Values and Paying Assessments
This session had several components, as can be seen in the synopsis above. It consisted of four presentations by experts and then a "question and answer" session. I gather that there is pressure on boards to improve their collection procedures, and there is also pressure to cut back on spending; only collected funds can be spent. This is something that has been discussed here at BLMH. You know, an "austerity program."

There was a presentation and discussion about a new insurance product, which is designed to deal with delinquencies. It's fairly complex, but if I understood it correctly it works as follows. After an owner lapses by a specific period of time, the collection is turned over to the insurer, and their professionals including lawyers, deal with the delinquent owner(s). At that time, the insurance will pay the association an amount to replace the uncollected fees. Actual fees collected by the insurance company are retained by the insurance company, including legal fees. There is an annual premium, based upon the total fees of the association.  These premiums are of course, an added expense to the association. The benefit seems to be a guarantee that delinquent fees will never escalate beyond a certain amount per unit. The presenter admitted this product might not be desirable for every association. Some association have standardized methods, and have legal procedures in place. The question each association needs to ask is "Would the benefits derived be sufficient to offset the cost of the insurance?" I concluded there may be an additional benefit with an automatic program using professionals. It relieves the board which has difficulty making these decisions. 

In various expert moderated discussions during the CAI education sessions including those last year, it was reiterated that boards are required to maintain the association; there is some latitude in accomplishing this, and to keep the board on track it is essential to rely on expert advice. Methods of avoiding current financial pain was included in various sessions of the past two years, and that included association borrowing. A banker was present last year and he went over the issues quite thoroughly. Borrowing raises the costs to owners; the borrowing fees and interest are added to the loan, and that loan with the bundled interest and fees is repaid by owner assessments. It was pointed out last year that not every association qualifies for loans and there are stringent requirements.

An architectural presentation was made this year in which is was stated "Water is THE problem." Hear Hear! The presentation included numerous slides and photos in which this was amplified and explained via real case histories and examples. This was a most interesting presentation.

A presentation was made about the value of landscaping to enhance property. The discussion centered on a long term approach, with annual improvements spanning years and perhaps a decade. It was stated that the "shotgun" approach is to be avoided. It was noted that all of those plantings must be maintained, with ongoing and annual costs. Yes, landscaping may increase costs but it also contributes to property values. The issue of budgeting for this was also discussed. I gathered that it's best to come up with an overall property plan, and then implement it in phases. That seems reasonable. 

I concluded a couple of years ago that it's simply too bad that BLMH isn't town homes with private lawns. Then owners could spend their personal time and money to their hearts content, and if their gardens, lawns and trees weren't impeccably maintained, it would be THEIR problem. 

The attendees to these CAI sessions seemed to understand all of this. 

Landscaping is, to my knowledge, one of the reasons people purchase at BLMH. This general point was made during the session and applies to all HOAs. Our challenge at BLMH is a mature grounds with many ornamental trees at or near the end of their useful life span. I have never gotten a coherent answer to the question "At what point is it better to replace than to maintain?" That's not the fault of the experts. It's a question which has a complex answer. Replacement includes cost of removal and the cost of new plantings. Those new trees will be much smaller, with a smaller profile and less shade.  

Legal Update
This session dealt specifically with case law, updates to the Illinois Condominium Act and the similar act which applies to other types of HOAs. There was a discussion about the new licensing requirement for managers. Realtors will be treated somewhat differently. I concluded that they have better representation in Springfield. 

There were legal questions posed from the audience during all three of the educational sessions I attended. So I gather that legal issues have moved up on the list for many HOAs. Discussions ranged from delinquencies and the collection of fees, FHA, the special needs and demands of the elderly and handicapped, etc.  

For example, one of the experts observed that it seems there is a trend to move into an HOA as a means to avoid the cost of elderly care. However, HOAs for the most part, are not physically designed nor do they provide the amenities of such elder care facilities. Owners or relatives of the elderly may see only a financial incentive. HOA's are substantially less costly to live in, and some services are provided; however, those services are not for the benefit of individuals. They are for the maintenance and operation of the association. All owners in HOAs have specific duties and responsibilities, and even other residents must keep the rules. Not all may be amenable to this. The position of the experts seemed to be that is is essential that all approach this from the perspective of "reasonableness" and fairness to all owners.

Personal Observations
In an interview independent of the CAI conference, Thomas M. Skiba, chief executive officer of the Community Associations Institute stated that "Nationwide, non-payment of HOA fees is among the top problems facing condo, single-family, and other planned development associations today."

Many associations are dealing with this and are asking the same questions. I've had the opportunity to reflect on the conference, and put our association under the spot light.

When delinquencies occur, they have to be made up by other owners. Many owners in associations look at the annual budget and fail to realize that the "bottom line" is split into two areas "Operations and Maintenance" (or O&M) and "Reserves." Each and every month at BLMH the association expects to receive a specific amount from owners. A portion goes to O&M which pays for snow plowing and the lights, etc. Another portion goes to Reserves, which pays for roofs, driveways and streets, etc. When owners are delinquent, the association doesn't receive that money. So then what? If an association has savings, as we do, we can dip into the savings account and pay all the bills. However, at the end of the year, if we haven't collected as much as we budgeted, then what happens? We find that we have actually taken a loan from Reserves, and at the end of the year the association writes a check to transfer funds from the O&M budget to the reserves. In other words, we then get to pay that back. Ultimately, if we don't collect 100% of fees, we find that we cannot properly fund our budgets. It's wonderful to have a reserve study, but that study assumes a specific cash "flow". If we don't receive 100% then we have to raise fees to cover the shortfall.

Ultimately, the fees of the other owners may be a bit higher because of delinquencies. In addition, if delinquencies rise to 15% past due 30 days or more, Fannie Mae, for example, will not guarantee loans in those condominiums. Some associations now place liens on units that are 60 days past due. Payment plans are an option, but many experts recommend "6 to 12 month payment plans." In other words, the association and our neighbors aren't a bank and delinquencies should be handled quickly.

For any association that has allowed things to "get out of control" there are few acceptable options. Remember, everyone in an association is an equal. So allowing 36 or 48 month payment plans sounds good to an owner in trouble. But every owner should then be afforded the same opportunity. If this or any association made the statement "there will be no late or legal fees" for owners who are delinquent, what would then happen? Why would anyone pay their fees on time? Why not use it for personal purposes and then, when the spirit moves us, send a check to the association? What happens when a significant number of owners fall many months behind? That's when the lights go out, the streets aren't plowed in winter, and the lawn becomes a weed bed. It's also when property values really plummet. People think things are difficult now? They think that property values are low? Wait until an association stops all maintenance. That's when sales and values really plummet!

If an association allows long term payment plans, why would ANY owner send money to that association? Wouldn't an owner be better off paying down high interest credit card debt? Every "financial debt counselor" I've ever listened to has advocated paying off the "high interest debt" first. So is it any wonder that some HOAs find themselves as the last debtor in line? But I suppose some of us are in better financial condition than others. In that case, the argument is "let the wealthy" pay more!

Returning to reality and leaving the politicians behind, here at BLMH, we have 336 units and about that many owners. That's good, if a few of us find ourselves in a situation in which we do not pay our monthly fees; the association may not like it, but it doesn't mean we have to pass the hat each month to the rest of the owners so we can keep the street lights "on." At BLMH the "pain" is more broadly distributed, and may not be as obvious. However, there has been a commentary about "fairness" in our association since 2008. I don't quite know what that means or who such conversation is intended to benefit. I look at it this way. We are all "equals." We benefit equally from our ownership. We each will get a new roof when the time comes, even if an owner in our building is delinquent, or if a building includes an owner in foreclosure. We each will reap the rewards of our investment when we decide to sell our unit. So shouldn't we equally pay our share to maintain the property each and every month? Why shouldn't each and every one of us? I have yet to get a rational, legal answer to that question, and until I do, that's the position I will take as a fiduciary.

To those who choose not to pay their fees, I have to ask this question; Is it "fair" to the rest of the owners who do pay each month? In these difficult economic times, I am of the opinion that each owner at BLMH has a budget, and has felt the sting of high gasoline prices, or reduced wage increases or reduced SS "COLA" annual increases. Is it "fair" that those who make the difficult choices are expected to pay their fees in a timely manner while others do not?  After listening to the audience at the CAI event, I guess it could be said that in some associations, a few owners would prefer to pay an attorney to "champion" their personal agenda, and in the process, stiff the neighbors! Boards in those HOAs find themselves to be the "bad guys" and become bill collectors!  Yes, it's difficult to be straight with people at times. My advice? Tell the "bleeding hearts" to empty their wallets into the hat that you are passing. If they don't or won't then I conclude they have indeed voted with their wallets, and that vote is "we aren't willing to walk the talk." I wonder how many owners would be willing to pay a $25 monthly fee to assist other owners who are in trouble? I have NEVER heard anyone, and that includes the "bleeding hearts" advocate this. It was always and remains an issue of spending the money of others.

Moving on to legal suits, it seems these may be a negotiating ploy, but they can only be dealt with in the courts and in that case the motives may be complex. They may also be simply profit and greed. Any well run association has deep pockets, and we publish our finances on the web. It is my opinion that an association may become a target, and BLMH is no exception. According to an article at Yahoo Finance about HOA's, "When in Doubt, We Sue." According to that article, law suits at HOAs happen all the time, and experts in California estimate that 75% of the homeowners associations are embroiled in a legal tangle of some kind. It goes on to state that Chicago attorney Mark Pearlstein, who represents associations, figures that "60% of all condo boards and homeowners associations in Illinois are involved in some kind of legal suit."

Attending the CAI educational sessions gave a few insights. Is it possible for associations to avoid litigation, greedy people and owners who don't want to pay their bills? What do you think? I am of the opinion that this is human nature we are dealing with, so the best we can do is limit the damage. Suing an association might be a more successful money making approach than buying a "Powerball" lottery ticket, and it can make up for deficiencies in retirement planning. Certainly the odds of collecting something are much, much better than purchasing that lottery ticket.

Anyone who has attended association meetings at BLMH for a period of years is aware that some owners feel that their life is oh, so very difficult at BLMH. Issues raised include benches, better grounds and even how  "the fees are lower" at other associations. Frankly I'm beyond bored when that statement is made by anyone about BLMH. According the the U.S. Census Bureau, the annual HOA fees average $2,400 for condominiums. The "average" condominium does not have 40 acres, hundreds of trees, 15 acres of turf, a mile or so of "paved walking paths," three streams including decks and gazebos and a captive lake! However, I do realize some owners would like a fitness center, spa, pool, concierge desk, and a library and, for good measure, a "party center." Yes, all for about $300 per month! Wouldn't that be wonderful! Yes it would. So would Real Estate taxes in Wheaton of $0 per year.

It's always implied that the grass is greener on the other side of the hill, both literally and figuratively. Of course I have to ask, and I do, "Do those associations have any hills?" We do! I am of the opinion that the associations that have fewer problems may be those that don't have delinquencies, foreclosures, etc. It makes me wonder if it has nothing to do with fees or fee levels. Perhaps it has a lot to do with the nature of the owners and other residents. No one seems to ask "How much time and talent is spent dealing with the financial problems of an HOA?" A few years ago, I didn't hear much about delinquencies, foreclosures and rule violations. I assume the boards of HOAs were free to spend their time running the association rather than as debt collectors or policemen. That is no longer true.

As owners, we do have to budget to maintain our units; that includes the furnace and hot water heater. The association deals with the big stuff; roofs, garages, driveways, streets, landscaping and even the water and sewage piping and snow removal! All in all, I had the insight that as an owner, I've really got it pretty good. If there is a problem, pick up the phone or get on the internet and leave an email. I also had the thought that it seems some of these owners, and that might include those of us who can't apparently deal with our personal finances, nevertheless have a belief system that we could run the association, and do it better than the management, other professionals, the board and so on. Now that's interesting!

Could it be easier for all of us? If we all paid our bills, there would be no delinquencies. One member of the audience made an interesting statement about their association, in which some owners are so opposed to the payment of fees that the association could not pay its bills! As I recall, I had a concern that we were headed down that track a few years ago. In 2008 there was a focus on parties, and we had a sufficiently large piggy bank that our fees were supposedly excessive.

It seems for a few there is the belief is that associations should only collect when the piggy bank is empty. But I also recall, BLMH is an association where a 3% fee increase is supposedly difficult for some owners to manage, budget and deal with.

During an educational session, the question was raised about using professional collection agencies. Can you imagine the uproar that might cause if it were implemented at BLMH! There would be a few marching in the street about "board repression." But the rest of the owners can and are to pay their bills completely and in a timely manner! That group, "the rest of us" can keep the funds flowing into the reserves, cover the operating and maintenance budgets, and so on. Is this fair? Others at BLMH have stated it isn't. But as long as some owners make financial mistakes or get into financial "hot water" and as long as there are lawyers available to represent them against their association, this will continue. I have no answer for this dilemma. I do not understand how an owner can afford to pay legal fees instead of paying their association fees. Our treasurer has stated repeatedly during association meetings for anyone attending, and also in the association newsletter, that these legal fees can be as much as one-half of the total amount owed to the association. Does that make financial sense? I don't think so. But then, paying late fees to credit card companies, interest and other additional fees, doesn't make sense either. But in the US there are a lot of people who do this each and every month, according to financial experts.

One can always get an attorney for the purpose of delaying or to attempt to avoid the payment of fees. Of course, paying attorney's fees is an expensive proposition.  Or is it for bragging rights? I have no idea.

I concluded that in these unusual times, the board is sometimes the "bad guy." Of course, being on a board isn't supposed to be a popularity contest. However, some owners don't understand that. I am writing from personal experience and observations at BLMH during the most recent 5 years.

If we suspended the collection of fees, an association would have no choice but to suspend services and curtailing projects. Would that work? I wonder how owners at BLMH would feel if they each got an extra bill from the City of Wheaton for water and sewer, or from ComEd to cover the street lights? How long would it be before the lights went out? Or we stopped mowing the lawn or clearing the streets of snow? Based on the situation described by another association, it is apparent that some HOA owners would allow that to happen.

The issue with reducing fees is, as we have also discussed at length here at BLMH, a question of maintaining the property and paying the bills. I once posed the question: Who is to be told "Sorry, you're number 35 on the list for new roofs, but, with the installation of roof #34, we've spent all of the money and we no longer have sufficient funds to do YOUR roof?" I do think we've had owners and board members who were inclined to "kick the can down the road" and pass the hat to future owners. However, we're required to maintain the property today, maintain reserves, and so on.

Regarding maintenance and water issue, here at BLMH we are in the midst of a multi-year roofing project, we've replaced garage floors and corrected foundation cracks which admitted water into the cavity under the garage, we have added gutters and downspouts and relocated some, which moved water in new and interesting ways, and we've had to make numerous drainage improvements to handle this re-directed water. We've had owners complain about the standing water on a new driveway, which could only be dealt with by installing new drainage systems. We've had a complaint about mosquitoes, and of course, there are the occasional water main breaks! Our neighbor, the College of DuPage has only partially completed a new drainage and water retention system. We now view a very large muddy hill, a muddy hole and well, even more mud, dirt and sand piles on the other side of the the property line. Yes, we are dealing with water issues!

Using BLMH as a landscaping example, if a decision were made to spend $5,000 on entrance plantings, I suppose the question would be "how to apply such plantings throughout the property, so the general appearance is uniform?" The second question would be "How much would this cost, in total?" The board at BLMH has had that discussion. It has been pointed out to owners that 1) We have landscaping; we don't have gardens. 2) Adding flowers, gardening, etc. to the common areas places an additional burden on association finances, and that ultimately means on owner fees. 3) Owners cannot use the common areas for their exclusive benefit. Plantings must be coordinated with the landscaper and be maintainable by the association. 

Returning to the presentation and using $5,000 per BLMH entrance as an example, with 84 entrances, we could spend $420,000 doing enhanced or improved landscaping! My, where would that money come from? Some owners want gardens, some have stated they want benches, and others want fee reductions; some want all of these and more! Some want to extend their domain into the common areas, the maintenance of which all owners contribute their fees.

But "it is what it is" and we are a condominium association. When I've listened to owner arguments for private gardens, I've often wondered how a first floor owner would feel if a second floor owner decided they too had a right to do what they want on the grounds? Where would they put their private garden? Probably outside a first floor owners patio. How would that turn out? I suspect it would get ugly. How about a vegetable garden? A few corn and cabbages in a garden staked out beyond my neighbor's patios? Can you see how unworkable this would be? All owners have equal use of the grounds. So where and at what convenience should second floor owners, which are half of the owners at BLMH, supposed to plant their personal gardens on the grounds? That's a consequence if the board allows such gardens, or sand boxes or benches or whatever. I think this has been one of the problems the board has had to deal with. This spring, it may again resurrect it's head, either overtly or with covert plantings. We'll see?

Of course, one of the impediments to long term programs is board turnover. Get a "revolution" and a new board, and it's a new ball game. It can be a "reset" and we can start over, plans can be shelved, and we can pursue new initiatives. Once the novelty wears off, we can go on to do other things. I'm speaking from experience at BLMH. Who knows, perhaps in the fall of 2012 we can start over again. It's reminiscent of that movie "Groundhog Day" and the association will get to go over the same ground over, and over, and over "ad nauseam."

The fact is, we all know how to minimize costs in the short term. Don't spend money! Don't do maintenance! Of course, at some point, perhaps two or three years, this will and does catch up. Reality has a way of intervening. I have the proof, right here at BLMH. I am also of the opinion that not everyone will like that; in particular long term or new owners who will be stuck with the bills, or, as I am fond of saying "stuck with cleaning up the mess."

Owners do have the right to elect whomever they wish. But once elected the board is a fiduciary body. How does one get around that? However, it seems that it has been tried at various HOAs via a politically motivated board. Would the entire association go downhill? Not necessarily. A politically inspired board could continue to take care of the "friends of the board." It is not all that difficult to achieve if an association is complacent. All that is required is the appropriate diversions and the right incentives. A campaign to "throw out the repressive board" and a few free donuts, etc. could work, couldn't it? Chicago is nearby as an example, and so we all know "Something for nothing" is the universal grease. Any costs transferred to the association is something an individual owner doesn't have to pay for. I am of the opinion that there is a real incentive for some owners. The most powerful forces in human beings, it has been said, is "fear and greed." A board comprised of fiduciaries is a unit owners last line of defense. Certainly all of our owners at BLMH know that!

Conclusion
I found the educational sessions, the observations of the experts and the questions posed by the audiences to be extremely interesting. I also concluded that the issues we face at BLMH are not at all unusual. That's one of the benefits of attending the CAI educational sessions.




Friday, December 10, 2010

Your Unit Is Not Your Castle - Part I

0 comments
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.

Friday, November 5, 2010

A Compendium of Rules

0 comments
Here's a list of posts I've made which include or refer to rules and regulations at BLMH. This is in response to an anonymous commentl, which asked "Norm, what happened to the original blog about Rule violations? -- October 29, 2010 5:11 PM.

I haven't removed or deleted any of the posts on rule and regulations. Here is a list of links:

When is a bench more than a bench?

Is this sign difficult to understand?

Benefits of owning a PUD

Dialog on a Rule Violation

It's not in my job description

Benches and other ideashtml

Am I in violation?

Wednesday, October 27, 2010

When is a Bench, More than a Bench?

4 comments
A bench appeared in the common area adjacent to 1700. Here's a photo taken on October 10:

I'm not sure precisely how this bench got to where it is, but I suspect an owner put it there. I'm going to make that assumption for this purpose of this post. We have had an owner make "requests" of the board for a bench for a year or so. This was observed during the homeowner's forum of several association meetings. That owner also approached other residents and stated his and her case; I was approached.

On first glance, one might be inclined to say "well, if they want a bench, why not allow one?"

To answer that question requires an inquiry into the "ownership" of BLMH, and some of the definitions, and responsibilities of that ownership, and the role of the board in these matters.

The bench is in the "common area" of the association. The "common area" is one of three areas, which denotes ownership and responsibility. These are:
  • Unit
  • Common Element
  • Limited Common Element
The "Unit" is owned and under the control of each owner. It's my property and it's everything contained within the walls of my dwelling space. Each owner is fully responsible for everything in his or her unit. However, "my responsibility" extends beyond the wall of my unit. The windows, interior of the walls including finish painting, electrical, plumbing, garage door, etc. If something in my "unit" fails, it is my personal responsibility to repair it. Further, if there is damage to the building or to our neighbor's unit, caused by any failure of something which is a part of my "unit" or by the utilities solely serving my unit, such as water, waste plumbing, electrical, etc., such repair is entirely my responsibility. That means, it is my responsibility to make such a failure right, and I will be obligated to pay any sum to do so. I will be required to pay for any and all repairs to my neighbor's unit and the building or "common elements," if failure of my "property" is the cause. It's not a choice; it's an obligation.

The "Common Elements" are anything which does not serve or service my unit exclusively. It's generally the grounds and everything outside of the interior of my unit. However, structural elements of the building, even if within my unit, are part of the common elements. (Note 1). Common elements are owned and maintained by the association. They are not "my" property. They are association property and the use of these commons elements is available to and shared by all unit owners. Maintenance, which is to say the cost of maintaining anything and everything in the common elements is paid by your fees, and is shared by the unit owners. The bench in the photo is in the common elements.

The "Limited Common Element" is the "grey area" which isn't in my "unit" and also isn't part of the "common elements." It's anything that isn't within the walls of my unit, but which may be there for the purpose of serving my unit. This includes my patio, the air conditioning compressor outside my unit (which I own, but is situated in the common elements) and all the plumbing and the electrical service that serves my unit. For example, once the water main leaves the "T" in the water closet in the garage, and through "my" water meter, that plumbing is my responsibility, because it serves my unit exclusively. It's of no matter or consequence if that plumbing is outside the walls of my unit. It is "my" plumbing because is serves my unit, and mine exclusively.

So, what is the significance of the bench?
The bench is in that area called the "common elements". It doesn't serve a specific unit, nor is it in any way connected to a unit. That means the bench in the photo is now a "common element." It is now a part of the property of the association. 

If a unit owner placed it there, have they, in fact, donated it to the association? It could be argued that in doing so, the unit owner has given up all rights to it. But have they? A bench in the common elements is now the responsibility of the association, as the association is responsible for all of the common elements. That means that your fees will be used to clean it, maintain it in good order, and, if someone should trip over it or fall off of it, our association would be expected to cover any medical claims.

I have heard owners complain to the board at association meetings that wood chips were left on sidewalks. They requested that maintenance "get out there with a broom" and sweep. What would make me think that the same owners will be out there maintaining this bench? The sidewalks adjacent to our units are as much our property as anything else in the common elements. 

If this bench is now association property, that means it can be used by anyone in the association at any time. Who has first claim to sit here? Another resident, or friends of the person who placed the bench here? Perhaps another owner will decide this is not the best location for a bench. Perhaps landscaping or maintenance will also decide that. Or management. Does the association have the right to move it to a better, or more advantageous location? Perhaps another owner would conclude it would provide more benefit if it was outside their unit. Why shouldn't or wouldn't they petition the association to move it, or simply get a few friends to move it? After all, if one person can decide to put a bench in a location, why can't or shouldn't another decide to move it? Why shouldn't we all have benches, or planters, or lawn furniture and decorations? After all, we are all equals here, and if the association doesn't manage these things, then it's entirely up to individual owners to make the decisions. 

You can see the problem, can't you? If the directors of the association decide to look the other way and allow the owners to make the decisions, that will ultimately lead to conflict. It will result in anarchy. 

Sometimes a bench isn't simply a bench. It's a symbol. It's a declaration. It's taking a stand.  I wonder if those who placed that bench along the walk, truly realized what they were doing?

If there are to be games at BLMH, wouldn't you, as an owner, like to know what the ground rules are, so you too can "play the game" and win?

Comments, Corrections, Omissions, References, Miscellaneous News
Oops. I had posted the wrong address; it was a typo and has been corrected.

Note 1. If an owner should modify the walls or other aspects of the structural elements, then responsibility for subsequent failures may pass to the owner. So, if I want to modify a wall, it might be a good idea to hire a competent carpenter and not simply "Joe the Handyman" to do the work. A few years ago, a unit owner decided to add a "built-in" bookcase to his or her unit. It was a nice idea. However, whoever they hired to do the job cut the structural supports. This was discovered by one of our observant maintenance crew before irreparable damage occurred to the building. The cost of repairs was the responsibility of the owner who authorized the original work. If a previous owner had done this, then the responsibility passed to the current owner.

Note 2. Our "rules and regulations" state that an owner may report a rules violation, and specifies the proper methods of doing so. I suspect the previous board has used this as the opportunity to avoid rules enforcement. It seems that if an owner doesn't report a violation, then the rules and regulations director, and the others on the previous board, made a decision to "look the other way." This is conjecture on my part, based upon the content of a rules violation letter I received, and observations. This policy change wasn't discussed in public during association meetings, nor were the discussions of policy changes and enforcement by the rules and regulation "focus group" revealed to the unit owners.

Note 3. There have been some interesting consequences because of the new rules enforcement policies. I've noticed a few satellite dishes mounted in such a manner as to be in violation. The reason for strict guidelines is to minimize potential damage to the buildings and the roofs, and that means, to keep our maintenance costs as low as possible.

Note 4. I sent a copy of the photo to the R&R director yesterday, with copy to the president of the association. I accompanied it with a few questions about the origin and legitimacy of the bench. My thanks to the owner who took the photo on October 10.

Questions include:
  1. Has the owner been determined, and has this been discussed with the owner? If not, I would suggest a discussion be made with the residents of the building to determine ownership.
  2. If no one claims ownership, should it be removed by the association? If an owner claims it, then I’d like to know the specific position of the rules and regulations director, in this matter.
  3. I pointed out a potential issue. All property in the common areas is the property of the association. We are responsible for it as soon as it is placed there. Should a unit owner have the right to determine the responsibilty of his or her neighbors, and their liability for his or her actions? 
  4. If it is the decision of the board that the placement of personal property in the common areas is to be permitted, I requested advice on this. I suggested that the board determine what features and types of items are to be permitted, and if benches are to be permitted, where are they to be installed, etc. Who is to maintain them? What is the criteria for removal by the association? For example, if the bench falls into decay or disuse and becomes a danger or hazard to residents, who is to determine when and if it poses such a danger? Who is to negotiate with the owner if such ‘danger’ exists. Who is to pay for such removal? In other words, what are the ground rules?
  5. If benches on the property are desireable, and the R&R director has decided to “look the other way”, then I suggest that the R&R director approach the board and initiate a discussion to determine the appropriateness of such benches, and determine how to specify the type of benches, where they are to be installed, who is to approve such installation, and then initiate a change to the rules.
  6. Finally, whose insurance will be cited if someone trips over this, or falls from it and is injured? The association’s or the owner’s? Perhaps what is needed is a “waiver of subrogation” from the owner, naming BLMH. Of course, such waiver must be renewed annually. Who is to assure that this is done? Who is to monitor this? If an owner refuses, then what?
Note 5. The approach I am advocating would permit all owners to have the same benefits. It could also shift rules enforcement in the direction of being a creation, rather than a reaction. If this makes sense to you, I suggest you contact the board. Writing is best, if for no other reason than it is easy to ignore or lose verbal requests. Email with copies to all board members are an easy method of accomplishing this. Our email addresses are contained in each "Manor Briefs" newsletter, which is also posted on the official BLMH.org website. 

Note 6. It's also my observation that the rules and enforcement of the rules at BLMH has shifted into gamesmanship. Owners and even board members, sometimes cajole other owners and play politics to get others to agree with their positions. One of the statements used in conversation to solicit such agreement is "Isn't this wonderful!" That's one of the reasons I have stated publicly that "silence in all matters is consent." That's exactly the conclusion of people who interpret such silence as being complete agreement. Of course, most owners would prefer to avoid confrontation and that means, avoid an argument or disagreement. Some months ago I didn't "roll over" during such a press by an owner about their position on a matter here at BLMH and at the end of that conversation I was told "You are a hard, hard man!" That's the way the game is to be played by some of our politically astute owners. Cajole, manipulate and if that fails, then dominate? Or simply attempt to make others "bad and wrong?"