Quorum September 2016

SEPTEMBER 2016

Coachella Valley Community Associations Institute Magazine

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14 Whose Loss is it Anyway?

19 Does your HOA’s Insurance Agent have CAI’s CIRMS Designation?

29 Why Should I Worry About My Contractor’s Insurance Coverage?

36 Water Damage in your Condo…Who Pays for the Repairs?

38 Think a Computer Can Predict an Earthquake in your Association’s Future?

40 Condo Unit Owners’ Earthquake Insurance, Do I Need it? Should I Buy it?

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Quorum September, 2016

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BOARD OF DIRECTORS COACHELLA VALLEY CHAPTER 2016 GERARD GONZALES, PRESIDENT Albert Management, Inc. TAD BLACK, PAST PRESIDENT Associa OnCall PHYLLIS HARKINS, CMCA, CCAM, AMS PRESIDENT ELECT The Management Trust – Palm Desert JOLEN ZEROSKI, TREASURER Union Bank JOHN WALTERS-CLARK, SECRETARY Associa Desert Resort Management CARDINAL AMBROSE, CCAM, CMCA, AMS DIRECTOR Albert Management, Inc. RHONDA DREWS, CMCA, AMS, PCAM DIRECTOR Associa Desert Resort Management MATT LAWTON, CIRMS, DIRECTOR Prendiville Insurance Agency GEN WANGLER, ESQ., CCAL DIRECTOR Fiore Racobs & Powers A PLC

CAI Coachella Valley Office 41-905 Boardwalk, Suite A-2 Palm Desert, CA 92211 Tel: (760) 341-0559 Fax: (760) 341-8443 Website: www.cai-cv.org CAL LOCKETT Executive Director clockett@cai-cv.org

ARTICLE SUBMISSIONS OR ADVERTISING INFORMATION admin@cai-cv.org The materials contained in this publication are designed to provide our members with accurate, timely and authoritative information with regard to the subject covered. However, the CAI Coachella Valley Chapter is not engaging in the rendering of legal, accounting or other professional types of services. The Coachella Valley Chapter has not verified and/or endorsed the contents of these articles or advertising, nor do we have the facilities or the personnel to do so. Readers should not act on the information contained herein without seeking more specific professional advice from legal, accounting or other experts as required.

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Quorum September, 2016

CONTENTS FEATURES

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Palazzo at Shadow Hills

By Susan Browne Rosenberg, EPB

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Whose Loss is it Anyway?

By Alan Carnegie, Esq.

19

Does your HOA’s Insurance Agent have a CIRMS Designation?

By Matthew Lawton, CIRMS, CIC

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Why Should I Worry About My Contractor's Insurance Coverage?

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By Dan H. Stites

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Water Damage in your Condo…

Who Pays for the Repairs?

By Susan Browne Rosenberg, EBP

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Think a Computer Can Predict an Earthquake in your Association’s Future?

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By Timothy Cline, CIRMS

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Condo Unit Owners Earthquake Insurance, Do I Need it?

Should I buy it?

By Carol A. Fulton, CIRMS

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35 Years of Leadership Past CAI-CV Presidents

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CAI-CV Chapter New & Renewing Members

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Meet the Chair

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Oktoberfest Committee Tad Black Associa OnCall

By Erin H. Fujioka

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Q& A 26

STATE OF CALIFORNIA, ARNOLD SCHWARZENEGGER, GOVERNOR RESOURCES AGENCY, MIKE CHRISMAN, SECRETARY DEPARTMENT OF CONSERVATION, BRIDGETT LUTHER, DIRECTOR

CALIFORNIA GEOLOGICAL SURVEY JOHN G. PARRISH, PH.D., STATE GEOLOGIST

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2008

D. Branum1, S. Harmsen2, E. Kalkan1, M. Petersen2 and C. Wills1 1

California Geological Survey, 2United States Geological Survey

This map shows the expected relative intensity of ground shaking and damage in California from anticipated future earthquakes. The shaking potential is calculated as the level of ground motion that has a 2% chance of being exceeded in 50 years, which is the same as the level of ground-shaking with about a 2500 year average repeat time. Although the greatest hazard is in areas of highest intensity as shown on the map, no region is immune from potential earthquake damage. Expected earthquake damage in California in the next 10 years exceed $30 billion.

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121°

120°

Siskiyou

A large earthquake in or near a major urban center in California will disrupt the economy of the entire state and much of the nation. Effective disaster planning by State and local agencies, and by private businesses, can dramatically reduce losses and speed recovery.

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Current building codes substantially reduce the costs of damage from earthquakes, but the codes are intended only to prevent widespread loss of life by keeping the buildings from collapsing, not to protect the building from damage

41°

Lassen

Trinity

Shasta

If the Northridge or Loma Prieta earthquake had occurred closer to a major population center, fatalities would have been much higher. Earthquakes in Japan in 1995 (over 5,000 deaths), Turkey in 1999 (over 20,000 deaths), and China in 2008 (over 70,000 deaths) produced catastrophic death tolls.

Humboldt

After a large earthquake, residents and businesses may be isolated from basic police, fire, and emergency support for a period ranging from several hours to a few days. Citizens must be prepared to survive safely on their own, and to aid others, until outside help arrives.

Tehama

40°

Plumas

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Mendocino

High frequency shaking potential: Earthquake shaking at 0.2 second period affects short, stiff structures and is also used in estimating future earthquake damage. Local soil conditions have less effect on high frequency shaking, so this map shows less influence of the surface geologic materials map.

Glenn

Butte

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Maps of the shaking intensity after the next major earthquake will be available within minutes on the internet.

The maps will guide emergency crews to the most damaged regions and will help the public identify the areas most seriously affected.

Sierra Nevada

Lake

Colusa

Yuba

Low frequency shaking potential: Earthquake shaking at 1.0 second period affects tall, relatively flexible buildings and correlates well with overall earthquake damage. Local soil conditions have greater effect on low frequency shaking, so this map shows more influence of the Alpine surface geologic materials map.

Placer

39°

Level of Earthquake Hazard These regions are near major, active faults and will on average experience stronger earthquake shaking more frequently. This intense shaking can damage even strong, modern buildings.

39°

Sutter Sonoma

CHAPTER EVENTS

El Dorado

Napa Amador Sacramento

Solano

Contra Costa

San Francisco

“MOTRing” Through the Summer

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Calaveras

Marin

38° 123°

Alameda San Mateo

Tuolumne

San Joaquin

Santa Clara

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Questions and Answers from "Ask the Attorney"

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Santa Cruz

Mono

These regions are distant from known, active faults and will experience lower levels of shaking less frequently. In most earthquakes, only weaker, masonry buildings would be damaged. However, very infrequent earthquakes could still cause strong shaking here.

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County Boundaries

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Mariposa

Stanislaus

Highways Water

Merced Madera

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By Phyllis Harkins

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Earthquakes have produced over $55 billion in losses in California since 1971. The next large earthquake may produce even greater losses, especially if it affects a major urban area. California’s two largest urban centers lie in the State’s highest hazard zones.

Modoc

Yolo

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Important messages about earthquakes for Californians to remember:

Del Norte

The Annual Election of Directors Chapter Upcoming Events

MAP SHEET 48 (REVISED 2008) EARTHQUAKE SHAKING POTENTIAL FOR CALIFORNIA

Earthquake Shaking Potential for California

Increasing intensity

CHAPTER NEWS

37°

122° 117°

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Inyo

San Benito

Fresno

Tulare 116°

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Kings

Monterey

Three-quarters of Our Nation’s Earthquake Losses will be in California

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Kern 121°

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San Luis Obispo San Bernardino

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Santa Barbara

Ventura Los Angeles

By Dea Frank, Esq.

120°

34° 119°

After HAZUS99 Estimated Annualized Earthquake Losses (AEL) for the United States, Fema 366, Federal Emergency Management Agency, February, 2001

Riverside

Efforts to reduce the losses from earthquakes have already proven effective. California’s enhanced building codes; strengthened highway structures; higher standards for school and university, police and fire station construction; and well prepared emergency management and response agencies reduced deaths, injuries and damage in recent earthquakes. Strengthening of older buildings, gaining a better understanding of California’s earthquake threat, and continued education and preparedness will pay an even greater dividend to Californians in speeding response after future earthquakes.

CAI-CV.org

Orange 118°

33°

Earthquake shaking potential is calculated considering historic earthquakes, slip rates on major faults and deformation throughout the region and the potential for amplification of seismic waves by near-surface geologic materials. The complete analysis is called a Probabilistic Seismic Hazard Analysis. The resulting earthquake shaking potential is used in developing building code design values, estimating future earthquake losses and prioritizing earthquake retrofit.

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Historic earthquakes: The rate of historic earthquakes is used to estimate the rate of future earthquakes and to check the rate of future earthquakes calculated from other data.

Slip rates of major faults: The rate of earthquakes on faults is governed by the size of the fault and the rate that one side moves relative to the other. Larger faults can have larger earthquakes and faults with higher slip rates can have more frequent earthquakes.

7+ 6-7 5-6 Historical Fault Rupture Historical Occurrences of MMI greater than or equal to VII

A Faults,

faults where slip rate and seismic history are relatively well known

B Faults,

faults where slip rate is relatively well known

C Zones,

areas where seismic slip may be distributed, but slip rates are not known for all individual faults

33°

115°

116°

References

2007 Working Group on California Earthquake Probabilities, 2008, The Uniform California Earthquake Rupture Forecast, Version 2 (UCERF 2): U.S. Geological Survey Open-File Report 2007-1437 and California Geological Survey Special Report 203 [http://pubs.usgs.gov/of/2007/1091/].

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Surface geologic materials: Seismic waves may be amplified by near surface materials. Soft soils, those with low shear wave velocity, amplify shaking compared with hard rock. A geologic map of California showing units with different shear wave velocity can be used to estimate seismic amplification.

Faults Magnitude

Imperial

San Diego

Shear Wave Velocity of Upper 30 meters (m/sec)

760 609 489 377 287 216 160 Water

Petersen, Mark D., Frankel, Arthur D., Harmsen, Stephen C., Mueller, Charles S., Haller, Kathleen M., Wheeler, Russell L., Wesson, Robert L., Zeng, Yuehua, Boyd, Oliver S., Perkins, David M., Luco, Nicolas, Field, Edward H., Wills, Chris J., and Rukstales, Kenneth S., 2008, Documentation for the 2008 Update of the United States National Seismic Hazard Maps: U.S. Geological Survey Open-File Report 2008–1128, 61 p.

Wills,C.J. and Clahan, K.B., 2006, Developing a map of geologically defined site-conditions categories for California: Bulletin of the Seismological Society of America, V. 96 p. 1483 – 1501.

California Professional Licenses: D. Branum - Geologist No. 7821 E. Kalkan - Civil Engineer No. 73657 M. Petersen - Geologist No. 6754, Engineering Geologist No. 2129 C. Wills - Geologist No. 4379, Engineering Geologist No. 1423 Copyright © 2008 by the California Department of Conservation, California Geological Survey. All rights reserved. No part of this publication may be reproduced without written consent of the California Geological Survey.

“The California Department of Conservation makes no warranties as to the suitability of this product for any particular purpose.”

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GURALNICK & GILLILAND, LLP ATTORNEYS AT LAW Member of CAI and CACM

Legal Services for Community Associations

RODNEY BISSELL, CO-CHAIR Bissell Design Studios, Inc. PHYLLIS HARKINS, CMCA, AMS, CCAM BOARD LIAISON The Management Trust - Palm Desert

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KIMBERLY BURNETT U. S. Security Associates ALAN J. CARNEGIE, ESQ. Daniels, Fine, Israel, Schonbuch & Lebovits, LLP DEA FRANCK, ESQ. Epsten Grinnell & Howell, APC ERIN FUJIOKA G4S Secure Solutions, USA

• Construction Defect/Reconstruction • Mold Claims/Litigation • Real Estate Dispute/Litigation Phone: (760) 340-1515

QUORUM COMMITTEE MEMBERS KYMBERLI TAYLOR-BURKE, CHAIR NPG Nelson Paving, Inc.

TIFFANY WRIGHT The Management Trust – Palm Desert ANTOINETTE HAMILTON Suntrek Solar

FAX: (760) 568-3053

ERIN KLINK Pacific Western Bank FRAN MULLAHY Vintage Associates, Inc. SUSAN BROWNE ROSENBERG Desert Cities Indoor Air, LLC. STEVEN SHUEY, PCAM Personalized Property Management Co. DAN STITES CBCI Construction, Inc. JENNIFER ZEIVEL, CMCA, AMS Associa / Desert Resort Management

CREATIVE DIRECTOR & GRAPHIC DESIGNER RODNEY BISSELL Bissell Design Studios, Inc. rodney@bisselldesign.com (714) 293-3749

SUBSCRIBER SERVICES

The Coachella Valley Quorum Magazine is a publication expressly prepared for association leaders, managers and related business professionals of the Community Associations Institute. Members are encouraged to submit articles for publishing consideration. All articles accepted for publication in Quorum are subject to editing and rewriting by the Quorum Committee.

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Securitas Security Services USA, Inc. For more information on how we can exceed your expectations, contact Reginald St. Germaine, Palm Desert Branch Manager at (760) 779-0728.

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Quorum September, 2016

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CONTENTS DEPARTMENTS

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President’s Message Platinum Spotlight

Asphalt MD's

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Welcome Aboard

Alan J. Carnegie, Esq. Daniels, Fine, Israel, Schonbuch & Lebovits, LLP

By Erin Klink

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Matt Parker J.B. Bostick Company, Inc.

By Erin Klink

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Serving Our Military Every Day

By Grace Paluck

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Time Honored

Martha Fogg

By Phyllis Harkins

Water Wise Water Reduction Strategies

By Jim Schmid

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Maintenance

California needs More Certified Lake Managers

By Patrick Simmsgeiger

Newly Revised Gardening Book will Appeal to Coachella Valley Gardeners

By Heather Engel

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Trending Now 2016 Summer Olympics Pushes New Technologies

By Antoinette Hamilton

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Oct. Oct. 21, 21, 2016 2016 || Indian Indian Wells, Wells, CA CA CAI-CV

Oktoberfest

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Immediately Following Legal Forum Tickets Available at CAI-CV.ORG

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C CA AL L II F FO OR RN N II A A C CO OM MM MU UN N II T T II E ES S

A one-day event for California community managers, association board A one-dayand event for homeowners California community managers, associationInstitute—the board members other from Community Associations members and other homeowners from Community Associations Institute—the leader in HOA education, advocacy and professional development. leader in HOA education, advocacy and professional development.

Critical updates on important legal requirements that impact how you work.

Critical updates on important legal requirements that impact how you work.

Essential information on key legal developments that impact where you live.

Essential information on key legal developments that impact where you live.

For event details and registration, visit www.caionline.org/events/CALaw For event and registration, visit www.caionline.org/events/CALaw or call CAIdetails Member Services at (888) 224-4321 (M–F, 9 a.m.–6 p.m. ET). or call CAI Member Services at (888) 224-4321 (M–F, 9 a.m.–6 p.m. ET).

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Quorum September, 2016

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Vice President - Albert Management, Inc.

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Gerard J. Gonzales

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Summer is over, school is in session, football has started and cooler temperatures are headed our way. Although the last few months have been somewhat slow for our industry, the chapter has been extremely busy as we get ready for the upcoming season.

Like the associations that we support and represent, budget planning is right around the corner and I can’t stress the importance of working with our business partners to plan ahead. Also, we have chapter elections coming up and I am extremely excited about the candidates running to serve on the board. You can meet them on pages 22-26 of this issue of Quorum.

We’ve got some great events coming up, starting with our first Educational Program Luncheon and Mini Trade Show of the season, at Palm Valley Country Club on Friday, September 9th. The topic will be RESERVES and our guest speakers are James R. McCormick, Esq., CCAL, from Peters & Freedman, LLP, and Dan Stites, Chairman & CEO of CBCI Construction, Inc. Sign up now for our annual Casino Night, Friday, September 23rd at Sun City Palm Desert. The Theme is “Totally Awesome 80’s” and we are planning an entirely new horseracing encounter! You won’t want to miss this event.

Our chapter is hosting the California Statewide Legal Forum for all eight California CAI chapters on Friday, October 21, at the Renaissance Indian Wells Resort and Spa. It is a great honor for our area to be selected for this event. This spectacular day-long educational forum provides CAI managers and board members with an array of topics presented by some of the industry’s most gifted practitioners. Sign up at WWW.CAIONLINE.ORG under EVENTS. The cost for members is $135 if you sign up by September 30th.

Immediately following the Statewide Legal Forum, CAI-CV will be hosting our OKTOBERFEST Celebration at the Renaissance on the Rose Lawn. This will be the biggest CAI-CV event this year as all of the 600 plus participants at the Legal Forum are invited to join us. We’ve hired a live band, The Hofbrau Boys, to entertain us with traditional German music and dancing. Chef Eric at the Renaissance has promised some of the finest German food, and you can count on tasting some of California’s best beers that night. The Renaissance is offering CAI members a great room rate of $192 and a $50 resort credit for attendees who want to stay Friday and Saturday nights.

Sponsorships for Oktoberfest are still available. More information is available at the CAI-CV website, WWW.CAI-CV.ORG. We are still looking for energetic volunteers to help us with the last few events of 2016 and we welcome any volunteerism from our chapter members. If you are interested in serving on a committee, please contact the Chapter office at 760-341-0559.

Have a great September everyone and as always, my door is open if you have any questions or concerns regarding the chapter.

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Gerard J. Gonzales, Vice President - Albert Management, Inc. CAI-CV Chapter President

CIATIO ASSO NS TY IN NI L LA

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President’s Message

MEMORIES COM M U

FROM THE CHAPTER

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35 Years of Leadership CAI-CV wants to acknowledge the contributions of thousands of volunteers who have worked tirelessly to make CAI-CV the organization it is today. A special thanks to 35 years of CAICV Presidents.

CAI-CV Presidents

2016 Gerard Gonzales 2015 Tad Black 2014 Christina Baine DeJardin 2013 Nena Rutherford-Milward 2012 Rob Winkle 2011 Art Coulter 2010 Gloria Kirkwood 2009 Cyndi Koester 2008 Sharron Badham 2007 Nikki Even-Caster 2006 Mike Livingston 2005 Bob Wright 2004 Richard Warfield 2003 Richard Warfield 2002 Tom Albert 2001 Steven Shuey 2000 Mary Walker 1999 Doug Robinson 1998 Mike Walker 1997 Peggy Redmon 1996 Carol Fulton 1995 Gary Butler 1994 Kay Ladner 1993 Elly Dowd 1992 John Turnbull 1991 Jerald Cavoretto 1990 C J Klug 1989 Gary Wiedle 1998 Jeff Lilley 1987 Al Smith 1986 Melissa Layton 1985 Sabby Jonathan 1984 Wayne Guralnick 1983 Duke Baker 1982 Bob Tuvell 1981 Gary Wiedel

CHAPTER NEWS 2016 CORPORATE

SPONSORS PLATINUM___________ Accurate Leak Locators AMS Paving Asphalt MD's Conserve LandCare, Inc. Associa Desert Resort Management EmpireWorks Epsten Grinnell & Howell, APC Fiore Racobs & Powers, A PLC NPG Nelson Paving Pacific Western Bank Peters & Freedman, LLP Signarama Sunshine Landscape Western Pacific Roofing

GOLD________________ AMS Security CBCI Construction Diversified Asphalt Flood Response United Paving Vintage Associates

SILVER_______________ 1 Stop Pool Pros Alan Smith Pool Plastering Artistic Maintenance, Inc. Blue Sky Landscape Coachella Valley Water District Mutual of Omaha Painting Unlimited, Inc. Powerful Pest Management Prendiville Insurance Agency PrimeCo Purified Pool Water Seacoast Commerce Bank Three Phase Electric Union Bank Homeowners Association Services

BRONZE_____________ Adams Stirling, PLC All Counties Fence and Supply Aloha Bin Cleaning Animal Pest Management Association Reserves Bank of Southern California Dunn-Edwards Paints Farley Interlocking Pavingstones Frazier Pest Control G4S Secure Solutions Horizon Lighting Kasdan LippSmith Weber Turner, LLP LaBarre/Oksnee Insurance Agency Pro Landscaping, Inc. Rudy’s Termite and Pest Control, Inc. S.B.S. Lien Services SCT Reserve Consultants ServPro of Palm Springs/Indian Wells Sherwin-Williams Paint Silldorf & Levine U.S. Security Associates, Inc. Universal Protection Service Vista Paint Corporation

CAI-CV Chapter New & Renewing Members NEW BUSINESS PARTNERS

RENEWING MANAGER MEMBERSHIPS

DANIELS, FINE, ISRAEL, SCHONBUCH & LEBOVITS, LLP Alan Carnegie, Esq. (310) 556-7900 carnegie@dfis-law.com

ALBERT MANAGEMENT Patricia Forte (760) 346-9778 trish.forte@albertmgt.com

RENEWING BUSINESS PARTNERS AUTOMATION PRIDE Dana Pride (760) 423-6567 FLOOD RESPONSE, A DIVISION OF MACDONALD SERVICE GROUP, INC. Neil MacDonald (760) 343-3933 neil@floodresponse.com LAW OFFICE OF PEGGY REDMON, APC Peggy Redmon (760) 262-8840 peggy@peggyredmonlaw.com PWLC II, INC. Paul Rasmussen (760) 323-9341 paul-pwlc@hotmail.com SOUTHWEST PLUMBING, INC. Gregory Helmer (760) 343-2345 kathy@southwestplumbinginc.com WICR INC., WATERPROOFING AND DECKING Fred Wanke (888) 388-9427 Fred@wicr.net NEW MANAGER MEMBERSHIPS ASSOCIA ON CALL - DESERT RESORT MANAGEMENT Candra Rodriguez (760) 346-1161 candra.rodriguez@associa.us DESERT MANAGEMENT Amy Gunderson (760) 862-1202 agunderson@desertmanagement.com

ASSOCIA DESERT RESORT MANAGEMENT Vanessa Landrum (760)346-1161 vlandrum@drminternet.com Nancy Parkinson (760) 346-1161 Ext. 146 nparkinson@drminternet.com Carolyn Quintana (760) 775-5858 cquintana@drminternet.com Nena Rutherford-Milward (760) 777-8807 nrutherford@drminternet.com Renee Gumbel (708) 774-7195 rgumbel@drminternet.com INDIAN RIDGE HOMEOWNERS ASSOCIATION Mitzi Mills (760) 772-7234 mitzimills@cox.net PALM CANYON VILLA'S Ray Hungerford (760) 324-4835 pcvhoa@aol.com

RENEWING MULTI-CHAPTER BUSINESS PARTNERS 1 STOP POOL PROS, INC. Rachel Noesser (800) 880-6919 Ext. 210 Rachel@1StopPoolPros.com ADT SECURITY Janett McMillan (954) 683-9906 Ext. 1907 janettmcmillan@adt.com SADDLEBACK FENCE AND VINYL PRODUCTS Ed Newton (714) 966-1227 enewton@sadlebackvinyl.com SONNENBERG & COMPANY, CPAs Leonard Sonnenberg (858) 457-5252 lens@sonnenbergcpas.com NEW VOLUNTEER LEADERS PALM ROYALE COUNTRY CLUB Randy Arend Peggy Rondeau SPANISH WALK COMMUNITY ASSOCIATION Karen Chiesi Ashley LaPrade Roy Lu Zhanna Sapozhnikov Mark Vance

PERSONALIZED PROPERTY MANAGEMENT CO. Deborah Boss (760) 325-9500 dboss@ppminternet.com

RENEWING VOLUNTEER LEADERS

THE RESERVE COMMUNITY ASSOCIATION Julie Reese (760)674-2242 jreese@thereserveca.com

THE FAIRWAYS HOMEOWNERS ASSOCIATION Bob Dunlap Kirk Gardner

C A I -C V MI S S I O N S TAT E ME N T The mission of CAI-CV is to provide leadership for successful development and operation of community associations through information, research and education.

CAI-CV.org

OAK HILLS ESTATES OWNERS ASSOCIATION Deborah Davidson Diane Stuart

TRI-PALM UNIFIED OWNERS ASSOCIATION Marcee Williams Vista Montana Barbara Eastman Ron Jacobski Monica Lichtfuss Ron Orach Christa Saevke

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9

FEATURE

Palazzo at Shadow Hills

By Susan Browne Rosenberg, EBP

A

ccording to their website, “Palazzo at Shadow Hills in North Indio offers the ideal combination of desert elegance and affordability for family living within the privacy of a gated community.�

There are both single and two-story floor plans situated on extra wide home sites. Palazzo floor plans have three to five bedrooms with a minimum of two and one half baths. Palazzo offers flexible living space with options that include formal living and dining spaces, additional baths, secondary suite opportunities and outdoor California Rooms.

Located on 40 acres off Monroe Street near Avenue 41, the homes at Palazzo have the latest energy efficient features. Newer homes have Radiant Barrier Roof Sheathing to reflect the strong summer sun rays here in the desert. There is energy efficient insulation and low E2 vinyl windows to reduce heat and ultraviolet rays. 13 Seer air-conditioning and programmable thermostats reduce high electricity costs. They have water saving plumbing fixtures and water wise irrigation systems. The current builder of phase 2, starting in 2013, is Woodside Homes of Salt Lake City Utah.

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Quorum September, 2016

FEATURE

The first phase of 88 homes in the southwest quadrant of the property was started in 2005. These homes were built by the Rilington Group. Rilington Group is a family-owned and operated builder of premier new-home neighborhoods throughout the Southern California. Their projects include Palazzo in Indio, Prado in Coachella and Dolce in Palm Desert.

Rilington Group was honored with the coveted "Builder of the Year" award for 2006 by the BIA Desert Chapter. Rilington relocated their company from San Diego after 30 years and now call the Coachella Valley their home. Their headquarters are currently based in La Quinta.

With a total of 148 homes, the property is located near agricultural fields and has a lovely child friendly park and a grapefruit orchard at the main entry to the community. Homes range from 2,100 to 3,700 square feet and are priced between $325,000 and $500,000. Nearly 100% of the homeowners are full time residents. Low HOA fees of $85 per month and walkable sidewalks make this an ideal family neighborhood.

Board Member Roy Schaefer has lived there for three and a half years. There are currently three board members serving the community although their CC&Rs allow for up to five. Mr. Schaefer says “Palazzo has a great location and is a great mix of families and retirees. It is a diverse community in so many

ways with people of various nationalities and ages and nearly 50 children.” Even when temperatures soar over 100°F in the summer, families are out walking and biking.

The community’s management company is Desert Resort Management – An Associa® Company. Jennifer C. Zeivel, CCAM, CMCA, AMS is the Community Association Manager.

She said that the HOA is considering installing a new gate, possibly erecting a gazebo in the park and perhaps a dog park.

Jennifer told Quorum that “The community will be hosting its first community event on September 18th celebrating National Neighborhood Day and will feature a business expo for owners as well as family oriented entertainment and food.” Sounds like a wonderful place to live.

Susan Browne Rosenberg, CIH, CIEC, CHMM, and CAI EBP, is President and Co-owner of Desert Cities Indoor Air, LLC in Palm Desert, CA. Her company assists HOAs in assessing the extent of water damage and mold contamination. She can be reached at 760-902-2545 or sbriaq@gmail.com CAI-CV.org

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11

CAI-CV

2016 PLATINUM SPONSOR SPOTLIGHT

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There is however one name that stands out from all the others. There is a doctor in the asphalt industry.

You google Asphaltmds.com and discover Asphalt MD's, the desert's premier provider of reconstructive and cosmetic surgery for asphalt streets and parking areas. Using the list of criteria above, let's see how we score.

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performed thousands of operations, with an unparalleled 33- year history of performance excellence specializing in association street maintenance.

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Although all of the criteria above speaks volumes about our business, the best criteria of all are recommendations from others. We can tell you how great we are, but it's what others say that matters.

We have been active members of our local CAI for nearly 30 years and have been blessed with the great relationships we've enjoyed with all involved.

If you are looking for a local, experienced, compassionate and caring medical team to care for your streets, you can stop looking. You found what you're looking for.

Thank you to Asphalt MD's for their generous support of CAI-CV 12

Quorum September, 2016

Answering the call for the ultimate in security services.

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As a full service law firm, our services include: • Board Education & Fiduciary Compliance • Governing Document Interpretation • ADR & IDR • CC&R Restatement & Amendments • Assessment Recovery • Writs & Appeals • Litigation – Enforcement & Defense • Construction Defect / Reconstruction • Contract Negotiation San Diego Area: 760.436.3441 Coachella Valley: 760.773.4463 Orange County: 949.390.2977 www.hoalaw.com

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Please contact us for a free consultation on how we can help your association!

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13

FEATURE

s I s s o L e ? s y o a h W Any w It s ie, E g e rn

q.

a J. C n a l

By A

A

licia Palacin awoke to find water cascading into her lower level condominium unit, soaking her walls, carpeting and furniture. Having insured her condominium with Allstate Insurance Company, she was in good hands, right? Or was she?

It turns out the condominium owner's insurance policy Palacin purchased from Allstate covered real property items "which are your (Palacin’s) insurance responsibility as expressed or implied under the governing rules of the condominium." When Palacin tendered a claim to Allstate for water damage to her walls and floors, Allstate denied the claim, stating that the damaged items were not Palacin's "insurance responsibility" under the homeowner association rules.

Palacin sued Allstate for breach of contract, fraud, and bad faith. Allstate successfully challenged the complaint on the basis that there was no coverage. Palacin appealed. The appeal raised two important questions facing homeowner associations and their members on the occasion of a water loss: (1) which insurance company should pay for the damage— the association’s or the member’s; and (2) if the claim is not covered by the homeowners association's insurance policy, was the property damage her implied insurance responsibility triggering policy coverage as a so-called "improvement" within the meaning of the insurance policy?

Whenever a property damage claim arises in the context of a common interest development, and particularly in a condominium setting, a double–layered analysis is often triggered. Both the policy language and the language of the governing documents—typically the CC&Rs, By-laws and Rules and Regulations—must be reviewed. Often, too, there

14

Quorum September, 2016

are conflicts in the language of these authorities. Identifying and reconciling these potential or actual conflicts is the first order of business in assessing where to tender a claim and evaluating the insurer’s position in response to a claim.

How should the Court treat Ms. Palacin’s claim? A bit of background is insightful.

FACTUAL HISTORY Palacin owns a condominium development known as Casablanca, which is governed by a declaration of covenants, conditions and restrictions (Casablanca CC&R's) and managed by a homeowners association (Homeowners Association). The Casablanca CC&R's place responsibility on each condominium unit owner to maintain and repair the interior structures and surfaces of the condominium—a common characteristic of condominium ownership—and the Homeowners Association is responsible for maintaining the common areas and common structural components (roofs, exterior walls, exterior plumbing) of the buildings—equally common. The Casablanca CC&R's impose primary responsibility on the Homeowners Association to obtain liability and property insurance for the entire development, but permit a condominium unit owner to separately insure her unit under certain limited circumstances, which will be discussed in more detail below.

Palacin purchased from Allstate a first party "Condominium Owners" insurance policy that provided coverage for damage to real and personal property (the Allstate policy).

Palacin made a claim to Allstate under the policy's "Building Property Protection" provision, seeking insurance coverage for water damage to the interior of her condominium unit that

WITH RESPECT TO THE REAL PROPERTY PROTECTION, THE ALLSTATE POLICY STATES IN RELEVANT PART: COVERAGE A. BUILDING PROPERTY PROTECTION: PROPERTY WE COVER UNDER COVERAGE A: We will cover items of real property pertaining directly to your resident premises which are your insurance responsibility as expressed or implied under the governing rules of the condominium. This includes fixtures, construction materials and supplies, installations or additions comprising a part of the residence premises, only when situated within that portion of the premises used exclusively by you and made or acquired at your expense.

resulted from a water leak from a neighboring unit. Allstate denied the claim on the basis that the Homeowners Association was responsible for obtaining insurance for the claimed loss and therefore, the Allstate policy did not cover the loss under the policy terms.

The denial appears erroneous given the fact that Palacin is responsible for the interior of the condominium. But is it? Again, resorting to the express language of the policy and governing documents is essential.

GOVERNING POLICY AND CC&R PROVISIONS The Allstate policy covers "items of real property pertaining directly to your residence premises which are your insurance responsibility as expressed or implied under the governing rules of the condominium."

The “governing rules of the condominium" are of course the Casablanca CC&R's. Two sections of the CC&R's—sections 8.2 and 8.3—set forth rules regarding real property insurance.

Section 8.2 states that "The Association . . . shall obtain and maintain a master or blanket policy of fire insurance for the full insurable value of all of the improvements within the Development…." This section additionally states that the policy shall name as an insured the Homeowners Association and each condominium owner and identifies the amount and type of coverage that this insurance must include. With respect to the type of coverage, section 8.2 states the policy shall contain "an extended coverage endorsement, vandalism, malicious mischief coverage, [and] a special form endorsement. . . ."

Section 8.3 limits the type of property insurance that each individual condominium owner is entitled to purchase. The section begins: "Except as provided in this Section, no Owner can separately insure his Unit or any part of it against loss by fire or other casualty covered by any insurance carrier under Section 8.2." This paragraph then sets forth two exceptions to this rule. First, "[a]n Owner can . . . insure his personal property against loss." Second, "any improvements made by an Owner within his Unit may be separately insured by the Owner, but the insurance is to be limited to the type and nature of coverage commonly known as tenant's improvements."

The primary purpose of Sections 8.2 and 8.3 is to avoid double coverage by allocating insurance responsibility between the Homeowners Association and an owner of a condominium unit. If both the master and individual policy cover the same loss, the unit owner may be compelled to pay twice for the same insurance—once through Homeowners Association dues and then again through individual policy premiums.

CAI-CV.org

WELCOME ABOARD Alan J. Carnegie, Esq. Daniels, Fine, Israel Schonbuch & Lebovits, LLP

By Erin Klink Alan J. Carnegie is a partner with Daniels, Fine, Israel, Schonbuch & Lebovits, LLP and is sharing his legal talent with CAI-CV because of the strong connection he and the firm have with Common Interest Communities and the businesses serving them. Alan’s 30-year legal career has focused entirely on the representation of players in real property, construction and common interest matters, from builders and developers, to specialty subcontractors, architects, engineers, real estate professionals and homeowners associations and their members.

Alan is AV-rated by Martindale Hubbell.

Alan’s partners bring a wide range of legal expertise and experience to these fields, as well as mass tort litigation, aviation law, business, contracts, products liability and complex civil trial and appellate practices.

Senior Partner, Paul R. Fine has more than thirty-eight years of legal experience, with emphasis in the areas of construction, catastrophic personal injury, insurance bad faith, business, and complex litigation.

Attorney Timothy J. Hughes acted as the lead counsel in defense for the developer parties in numerous actions and claims resulting from the failure of the Trump Ocean Resort Baja Project. Their 234 plaintiffs prosecuted 15 different proceedings seeking return of nearly $26 million in deposits.

These are a few examples of the type of legal expertise the attorneys at Daniels, Fine delivers.

Daniels, Fine, Israel, Schonbuch & Lebovits, LLP is located at 1801 Centur y Park East, Ninth Floor, Los A ngeles, Ca lifornia 90067.

You can reach Alan Carnegie, Esq. at (310) 556-7900 or by email at Carnegie@dfis-law.com facebook.com/CAICV

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15

FEATURE Additionally, double coverage can lead to disputes over control of proceeds, where the "association could be faced with the obligation to repair where a portion of the insurance proceeds is controlled by a member."

"The principal take-away from Palacin’s dilemma is the need to read carefully, both the insurance policy and the governing documents..."

PALACIN’S RESPONSIBILITY TO INSURE UNDER THE CC&RS Allstate argued on appeal that Palacin’s coverage under its policy is triggered only for real property damage that Palacin is "responsible" for insuring and the Casablanca CC&R's does not impose any responsibility on Palacin to purchase real property insurance, and instead places exclusive responsibility on the Homeowners Association to obtain all property insurance for the development.

Further, Allstate argued that under section 8.2, the Homeowners Association is responsible for obtaining fire and extended coverage for "all improvements within the Development," and each owner must be named as an insured under these policies. The Court initially agreed that this broad language appears to initially place responsibility on the Homeowners Association to obtain comprehensive property insurance for the condominium development, including the external and internal structure of the condominium units.

However, the Court read section 8.2 in conjunction with section 8.3, which expressly permits the homeowner to obtain property insurance under specified circumstances. Palacin argued and the Court agreed that at least one reasonable interpretation of these provisions is that section 8.3 identifies the items that a condominium owner is implicitly responsible for insuring, if she elects to do so.

Bringing home the above-mentioned need to first review the language of the policy and governing documents to identify, and if possible, reconcile potential conflicts, the Court found this implied responsibility in the Casablanca CC&R's. That is, by making exceptions to the rules imposing insurance responsibility on the Homeowner's Association, section 8.3 can be reasonably construed to imply that these exceptions effectively establish the items for which the homeowner (rather than the Homeowners Association) will be responsible for insuring. This interpretation furthers the agreed purpose

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Quorum September, 2016

of the Casablanca CC&R's by avoiding double coverage and is consistent with the objective of the limiting provision in the Allstate policy's insurance clause, which is to mirror the allocations of insurance responsibility set forth in the CC&R's.

Equally, this interpretation gives effect to the real property coverage in Allstate's policy. If, as Allstate argued, the CC&R's are read to mean that a condominium owner has no responsibility to obtain any real property insurance for any property item or for any peril, the "Building Property" protections in the policy become meaningless. Taken to its illogical conclusion, Allstate's position means that it was not in fact selling Palacin any real property insurance because Palacin had no responsibility to obtain any of the coverage.

An insurance policy should not be interpreted to make policy terms meaningless.

IS THE DAMAGE TO PALACIN’S PROPERTY WITHIN THE DEFINITION OF “IMPROVEMENTS?” Only on appeal did Palacin clarify that the water damage for which she made the claim in the first instance required her to repaint walls and replace carpet pads. Paint and/or a carpet pad could conceivably constitute the type of improvement commonly known as an “improvement" within the meaning of section 8.3, especially if these real property items were added after she acquired the unit or were otherwise made at her instance and expense.

The appellate court concluded that under these circumstances, Palacin met her burden to show a reasonable probability she could amend her complaint to show damage to "improvements" under section 8.3, which the Allstate policy potentially covers, and allowed her claim to proceed.

IS THE DAMAGE TO PALACIN’S PROPERTY COVERED BY THE ASSOCIATION’S POLICY? What if the damaged property in Palacin’s unit is not an “improvement” as that term is used in the CC&R’s? In that event, does the Homeowners Association’s master policy cover the damage?

"Insurance and legal professionals ... are invaluable to an Association’s risk management program."

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Alan J. Carnegie, Esq. is a partner with Daniels, Fine, Israel, Schonbuch & Lebovits, LLP. Alan can be reached at at (310) 556-7900 or by email at Carnegie@dfis-law.com

JULY 201 6

IE

The principal take-away from Palacin’s dilemma is the need to read carefully, both the insurance policy and the governing documents when making a claim for policy benefits in the event of a water loss. This is true whether the damaged party is the unit owner or the board of directors for the Homeowners Association.

It is also imperative to review the Association’s governing documents periodically and especially when renewing insurance coverage or changing insurers, as policies differ among insurers and among policy years with many insurers restricting coverage in the face of rising insurance costs.

Insurance and legal professionals versed in the nuances that arise in this context are invaluable to an Association’s risk management program. In these instances it’s best to have several sets of good hands.

YOUR HOA CAN BE OUR NEXT COVER

CO M M

TAKE-AWAYS FROM PALACIN’S CONUNDRUM

CO

The first sentence of section 8.3 of the CC&R’s states "Except as provided in this Section, no Owner can separately insure his Unit or any part of it against loss by fire or other casualty covered by any insurance carrier under section 8.2. . . ." The logical corollary to this rule is that an owner is permitted to separately insure his or her unit or any part of it to the extent the property is not "covered by any insurance carrier under Section 8.2." At least one reasonable interpretation of this permissive authority is that this authorization to obtain insurance not covered by the Homeowners Association's insurance policy is equivalent to an implied responsibility to obtain this insurance if the condominium owner so desires.

This interpretation is objectively reasonable when viewed in context of the claim and the purpose of the policy. Because the central purpose of the insurance allocation rules set forth in sections 8.2 and 8.3 is to avoid double coverage, it is reasonable to read the Casablanca CC&R's as providing that an insured is entitled to purchase any real property coverage that the Homeowners Association had not obtained through its own policy. Unfortunately, the Palacin court did not have the Homeowners Association’s insurance policy before it, so this question is not answered in the opinion.

However, it is likely the master policy would not cover Palacin for damage to her own separate interest or to so-called “improvements” she installed after acquiring her unit. In such an event, Palacin is likely to benefit from Allstate’s policy coverage in light of Section 8.3 of the CC&R’s.

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17

CHARITY

MEET THE COMMITTEE CHAIR TAD BLACK, PAST CAI-CV PRESIDENT CHAIR, OKTOBERFEST COMMITTEE

Serving our Military Every Day

By Erin H. Fujioka Tad Black and his family moved to the Coachella Valley from the Sacramento area approximately 10 years ago when a good friend offered him a new business opportunity with a local Coachella Valley company. Today, Tad is the Director of Maintenance Services for Associa OnCall where he oversees all community maintenance and related contracts. Associa OnCall is a CAI-CV Business Partner and is part of Associa Desert Resort Management.

Tad and his wife, Tiffany, whom he met in college, and has been happily married to for 17 years, have two daughters who are 10 and 13 years old. Tad enjoys spending time with his family, traveling, golfing, skiing during the winter and spending time at the beach during the summer months. On Sundays you can find Tad at church singing in the choir.

Tad is a firm believer in giving back and being involved in the community to make a positive impact on those around him. He is currently serving on the Board of Directors for the Warburton Celebrity Golf Tournament - Music and Run event, benefitting St. Jude Children’s Research Hospital.

Tad has been a CAI-CV member for the past 9 years utilizing the Coachella Valley chapter to network and grow his relationships and friendships. Prior to joining the CID industry, Tad was a stock broker with Charles Schwab.

Earlier, he was a branch manager for a bank in Sacramento and worked for Lehman Brothers during the housing boom.

During the past 9 years, Tad has been a huge asset to CAI-CV. During his tenure with the chapter he has served on a majority of the committees as well as serving on the Board as the 2015 President. Tad currently serves on the Board’s Executive Committee as Past President and is Chair of the Oktoberfest Committee. We warmly remember Tad’s enthusiasm as MC of many CAI-CV events.

Thank you Tad for all you have done for our chapter!

18

Quorum January, 2015

By Grace Paluck

B

ob Hope United Service Organization (USO) provides services and programming to all of Southern California north of San Diego. An independent 501(c)3 nonprofit organization operating under a charter from USO, Inc., they provide moral and recreational services to member of the U.S. military. They operate airport centers at LAX, Ontario International Airport and Palm Springs International Airport. As part of their mission, they also provide USO programming and outreach at military installations across Southern California. Although congressionally chartered, they are not a government agency and rely entirely on contributions from patriotic Americans and philanthropic corporations and organizations. Each year, they provide direct services to over 100,000 military members, their families and eligible military retirees in Southern California. This includes being there for the families during troop deployments and “Welcome Home” events.

They provide complimentary sandwiches, snacks and beverages as well as an array of facilities and services that include recreation areas, secure luggage storage, a theater with a wide screen TV and a library of literally hundreds of current and classic films on DVD, a state-of-the-art Internet computer center, a fully stocked free lending library, a well-equipped “Family Room” where children can relax and play games – or simply a place to take a nap. There are separate shower facilities for men and women, and a “quiet room” where exhausted troops are able to rest undisturbed for a few hours. Complimentary phone

calls throughout the country on the “I-Freedom” telephone system allow troops an opportunity to phone home during their visit.

The Management Trust is gearing up for their annual Veterans’ Day dinner and gala to celebrate the Bob Hope USO Palm Springs. This will be their third event to recognize the outstanding volunteers along with current and former military members.

The volunteers work countless hours providing soft drinks, coffee, tea, water and snacks to visitors waiting for departing flights or transportation to the Marine Corps base at 29 Palms.

The Palm Springs Center also serves as the base of operations for USO outreach programs throughout the area.

If you’re interested in participating in this wonderful event, please contact spiritofhope@managementtrust.com or call (760) 776-5100.

If you’re interested in volunteering at the Bob Hope USO Palm Springs, please contact Teresa Cherry at Teresa@bobhopeuso.org or call her at (760) 866-1100. They are located at 102 N. El Cielo Way, Suite 102, in Palm Springs. Visit www.bobhopeuso.org for more information.

Grace Paluck is Vice President of Community Management for The Management Trust.

Grace has been a CCAM for fifteen years. Grace serves on the Business Partner Committee and has been a member of CAI for ten years.

Grace can be reached at (760) 776-5100 ext. 6324or via email at Grace.Paluck@managementtrust. com.

FEATURE

Does Your HOA’s Insurance Agent have a CIRMS Designation?

By Matthew Lawton, CIRMS, CIC

L

ike doctors, insurance agents have a broad range of specialties and aareas of expertise. Unfortunately, for most insurance agents, community association insurance is not one of their specialties. As we all know, community associations have countless unique needs and exposures, so boards and managers must be diligent in selecting an insurance agent with extra insurance knowledge for community associations.

One way to tell if your insurance agent is qualified to serve your association is to see if they have CAI’s “Community Insurance and Risk Management Specialist” designation – often referred to as a CIRMS. In order for an insurance agent to receive and maintain a CIRMS designation, they must go through hours of on-going education and CAI classes, which focus on community association’s unique coverage items such as; property damage from shared-wall water pipes; Directors & Officers protection; insurance for the thousands of dollars an HOA may have in the bank; Liability coverage for swimming pools, water features, sports courts, visitors getting injured on a property; and much more.

"Using an insurance agent with the CIRMS designation gives everyone involved the piece-of-mind in knowing that they have a qualified specialist on their side who they can go to for all their insurance related issues."

By choosing an insurance agent with the CIRMS designation, a manager and a board can be assured that their insurance agent is upto-date with the continuing changes in insurance coverages, lender requirements, State laws, and recent insurance issues in your area. Using an insurance agent with the CIRMS designation gives everyone involved the piece-of-mind in knowing that they have a qualified specialist on their side who they can go to for all their insurance related issues.

Remember: if you were going to have intricate surgery on your eye, you would most likely go to an Ophthalmologist as opposed to your regular family doctor. So when it comes to your community association’s insurance, you should look for an insurance agent with the Community Insurance and Risk Management Specialist (CIRMS) designation.

ON A REGULAR BASIS, AN INSURANCE AGENT WITH A COMMUNITY INSURANCE AND RISK MANAGEMENT SPECIALIST DESIGNATION WILL ALSO:

• Review the association’s documents, recommending the legal minimum insurance requirement, and recommending additional coverage that might be appropriate.

• Inspect the community and identify exposure that needs to be addressed.

• Verify the property values for replacement and reproduction costs.

• Review the association’s fidelity bond, and ensure that all appropriate parties are included.

• Obtain premium quotations and help the board select the best program.

• Educate the manager and board about coverage, exclusions, and limitations.

• Educate the residents about the association’s insurance policy, and what types of insurance the residents need.

• Offer the unit owners individual insurance quotes for their personal items and responsibilities.

• Provide certificates of insurance or evidence of coverage to lenders.

• Help the board decide how claims deductibles will be processed.

• Assist the association to establish procedures for service providers.

• Review the association’s claims annually and recommending how to reduce future claims.

Matthew Lawton works for Prendiville Insurance Agency in Palm Desert. Mr. Lawton has attained both the Community Insurance and Risk Management Specialist (CIRMS) designation, as well as the Certified Insurance Counselor (CIC) designation. He can be reached at (760) 774-2099 or by email at Matt@PrendivilleAgency.com.

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19

20

EVENTS

TIME HONORED

“MOTRing”

THROUGH THE SUMMER

By Phyllis Harkins

T

wenty years ago, Coachella Valley association managers looked forward to summer as a time to catch up on their paperwork, organize their files and not work the long days that occur during season. Well, in the last few years, that has changed. Managers often comment that they are busier now in summer than during the season. One of the reasons they are busier is now they are attending the one-hour CAI-CV MOTR (Manager On The Run) classes to learn more about topics such as time management, agendas and meetings, collections and other subjects of interest to association managers.

June’s MOTR class was taught by James McCormick, Jr., Esq., CCAL, and Christina Baine DeJardin, Esq., both from the Peters and Freedman law firm. James and Christina spoke on how managers can assist their boards in recovering past due assessments and collection costs. They focused on the two “Ps”, property vs people, and how to go forward with collection actions on either of them. In addition to providing the various collection options available to boards, James and Christina also discussed recent case rulings and how they currently impact associations’ collection actions, and how there may be more case rulings on the horizon that may change how associations collect past due assessments.

Thanks go to both James and Christina for their informative June program, and thanks also go to their law firm, Peters and Freedman, for sponsoring the MOTR breakfast.

August’s MOTR class focused on how managers can organize not only their annual calendar, but also their boards’ annual calendars. Steven Shuey from Personalized Property Management provided timely examples and walked the class attendees through the process of organizing calendars for various aspects of an association, from administrative to landscaping and to annual elections. Steven showed that by assisting the boards in their calendar preparation, boards will have a greater understanding of their responsibilities and requirements at board meetings. Thanks go to Steven for his informative program, and thanks also go to CBCI Construction for sponsoring the event, and to Flood Response for providing breakfast and coffee to the attendees.

All MOTR classes are approved by CAI National for 1 CEU; they cost only $10.00 per class. Community managers—this is a great way to earn your CEUs for your recertification. The classes are close to home, educational and fun!

Phyllis Harkins is the General Manager of Portola Country Club. She can be reached at (760) 346-5481 or by email at phyllis.harkins@managementtrust.com

Martha Fogg

By Phyllis Harkins

This year’s Time Honored columns have focused on those long time Chapter members who have supported our organization in a quiet yet solid way. Martha Fogg is one of those members. Martha is the General Manager of the Desert Falls Master Association, and she has worked at Desert Falls for over 22 years; she earned her degree in business administration with a specialty certificate in human resources. A member of the CAI-CV chapter since 2008, she is a Coachella Valley native and graduate of Palm Springs High School, and has lived here almost her entire life.

When not working, she enjoys time with her husband, Brian, and their three children, Kaitlyn, Megan, and Ryan. It was evident in her questionnaire responses that Martha clearly is proud of her children and their accomplishments in academics and athletics. One of the family traditions that she enjoys is their annual summer camping trip to June Lake. Martha mentioned in her questionnaire that her hobbies included driving her children to their sporting events and watching them play or perform, along with fishing and hiking with the family. She has also spent many hours volunteering her time to school councils and local school oversight committees.

Martha noted that one of her mentors is Steven Shuey, a very long time member of our Chapter. Before Martha accepted the general manager position at Desert Falls, she consulted with Steven, who gave her advice and insight about the HOA industry that helped during her decision making process.

Martha values Steven as a good friend and mentor. She also appreciates another long time Chapter member, Gloria Kirkwood, who has shared information and experiences with Martha. And lastly, Martha stated that she is grateful for the many great board members at Desert Falls; she commented that these board directors have supported her and allowed her to be part of making their community a better place.

Martha recently served on this year’s CAI-CV Golf Committee and she hopes to serve on other committees in the future when her schedule allows. She said that joining CAI was the best way for her to network and learn about the HOA industry through CAI classes. Martha earned her CCAM certification in 2006. When asked what would have been her career if not the HOA industry, she responded that when younger, she thought about teaching as a career; however, she found that business, especially human resources, was her career path. She commented that human resources was a natural transition into community management, because, as she noted: “A key to being a successful manager is learning how to interact with people, build relationships, and manage resources.”

Thank you, Martha, for your service to our industry. It’s an honor to share your story.

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21

ANNUAL ELECTION

The Annual Election of Directors

T

he Annual Election of Directors for the Coachella Valley Chapter of CAI has been scheduled for Wednesday, October 26, 2016, at 3:00 p.m., at the CAI-CV Chapter office, 41-905 Boardwalk, Suite A2, Palm Desert, CA 92211. The election will be run by the third-party professional elections company, The Inspectors of Election, and ballots will be available online beginning September 26, 2016. Voting will continue until October 24, 2016.

Each CAI-CV member will receive one vote and receive one login ID and password. Ballots will be sent to the person on record with CAI’s National office. If you are a business partner who is on the CAI-CV database but not on the CAI National database, please contact the CAI-CV office to find out where your company’s ballot will be sent.

The Nominating Committee selected the following format for the election that conforms to our current bylaws. Members will vote for two Manager Members, two Community Association Volunteer Leaders, and one Business Partner. Please call the CAI-CV office at (760) 341-0559 if you have questions about the election.

There are five open seats, four for three-year terms, from January 1, 2017 through December 31, 2019 and one term from January 1, 2017 through December 31, 2017. The member elected with the fewest votes will fill the one-year term.

THE NOMINATING COMMITTEE HAS APPROVED THE FOLLOWING CAI-CV MEMBERS AS CANDIDATES FOR THE ELECTION. 22

Quorum January, 2015

Gerard Gonzales Incumbent – Currently Serves on the Board’s Executive Committee as President.

If reelected, Gerard will serve on the Board’s Executive Committee as Past President.

RUNNING FOR SECOND TERM AS A MANAGER MEMBER Thank you for considering me for a second term on the CAI-CV Board of Directors. I currently serve as President and I am running for a second term to fulfill my obligation to serve on the 2017 Executive Committee as Past-President.

As Vice President of Albert Management I have been involved with the HOA industry for eight years. During this time, I have been an active volunteer and most recently in a leadership position on the board serving as President Elect and currently President. Over the past three years, CAI-CV has accomplished its goals and met its vision of becoming the authority on common interest developments in the Coachella Valley. We were also recognized by CAI National with three of the five awards given out at the 2016 national conference. CAI-CV is in excellent administrative and financial health and I am looking forward to continuing this good work as part of the leadership team.

I am a graduate of the University of Washington and have a diverse professional background and am a U.S. Army veteran. My experience has been geared around managing people, projects and business programs for success. My professional experience within the HOA industry and outside of it would continue to be a great asset to the chapter. My wife, Lori Albert, and I have enjoyed being desert residents for almost a decade. We reside in La Quinta with our two nine-year-old twin sons, Michael and Chance.

I believe that volunteering is an important part of one’s personal and professional growth, so in that respect, I hope to become a more rounded citizen and professional by continuing to work with CAI-CV’s volunteer leadership. I welcome the opportunity to represent the chapter for three more years to work toward even greater success.

ANNUAL ELECTION

Phyllis Harkins, CMCA, AMS, CCAM

Louise Stettler

Incumbent – Currently Serves on the Board’s Executive Committee as President Elect.

Palm Valley Country Club HOA

If reelected, Phyllis will serve on the Board’s Executive Committee as President.

RUNNING FOR SECOND TERM AS A MANAGER MEMBER As an only child growing up in Delaware, I never knew until my later years how special the 50’s and 60’s were. In the summer I left the house early in the morning to play with friends, and did not return home until the streetlights came on. My career with Marriott Corporation began at the young age of 14 (minimal labor laws then) and I worked with them during high school and my time at the University of Delaware. I moved to New Jersey in the mid-70’s as an operations manager and was responsible for 51 gift shop operations from the New York Thruway to the Florida Turnpike to the Illinois Tollway, ultimately working over 20 years with Marriott. I moved to Palm Springs in 1987, where I was co-owner of an hvac business for many years, and also did restaurant design and consulting work for the Los Angeles County Fairgrounds and restaurants and clubs throughout Southern California. In 2008 I became a community association manager for the Palm Desert Country Club Association; this summer, I was offered and accepted a position as general manager of Portola Country Club. Portola is an active 55+ community and I enjoy working with its board and residents.

As a child of parents who volunteered countless hours for various organizations, I guess you could say my apple didn’t fall far from their tree. In addition to my service to the CAI-CV Chapter board, I also serve on the Quorum magazine committee; needless to say, the Quorum has a special place in my heart. I also serve on CACM board of directors, volunteer my time to the City of Palm Desert as a Public Safety Commissioner and serve as a Eucharistic Minister at my church. When not volunteering, I enjoy DIY projects, scouring local thrift stores for something that I cannot live without! My friends call me “The Spray Paint Queen”, and if you saw my work area, you would agree.

I am honored to be your Chapter President-Elect, and I ask for your vote in this election. Thank you for all that YOU do for our Chapter

RUNNING FOR FIRST TERM AS A COMMUNITY ASSOCIATION VOLUNTEER LEADER (CAVL) It is an honor to be considered as a candidate for the Coachella Valley Board of Directors.

Before retiring last May, I had a 17-year journey with three CAI Chapters-Coachella Valley, San Diego & Greater Inland Empire. My first committee was Monte Carlo for the Coachella Valley Chapter. Since then, I have served on most committees and chaired several in all three chapters.

Here at the Coachella Valley Chapter, I chaired the Programs Committee for three years, and the first Texas Hold’em Tournament, Casino Night, the Membership Committee, the Awards Committee and most recently Corks for CLAC. I am on the National PR Committee for California Legislative Committee and the local CLAC Legislative Support Committee.

I have been honored with the Samuel L. Dolnick Lifetime Achievement Award from the San Diego Chapter, the Chapter Lifetime Achievement Award, Member of the Year, Volunteer of the Year, & Presidents Award in both CAI-CV & CAI-SD. I would be honored to continue serving the Chapter and the members as a CAVL continuing to grow our Chapter. I feel it is important to further enhance our footprint in the HOA communities by educating members on the importance of CAI’s representation in Sacramento, encouraging the education of manager and business partners.

Reaching out to new associations and managers is an ongoing priority for the Chapter.

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ANNUAL ELECTION

Michael Traidman Mira Vista HOA

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RUNNING FOR A FIRST TERM AS A COMMUNITY ASSOCIATION VOLUNTEER LEADER (CAVL).

Micha Ballesteros,

I joined the Mira Vista HOA board as a board member seven years ago and have been President and am now Treasurer. I am also Chairman of the Desert Cities HOA Council for board Presidents.

Last year I joined the CAI-CV PR Committee and received the CAI Community Volunteer Leader of the Year award.

My wife of 44 years and I have owned our home in the Valley for 15 years and have been full time residents for eight. We have two children and three grand children and consider ours a close family. We are docents for the PS Historical Society and active at our country club.

After receiving a BS in Chemistry and Physics at Bowling Green University I worked for a pharmaceutical company and shortly moved to my first choice employer, Goodyear Chemical who allowed me to combine my chemistry with marketing. After five years in sales, one of my customers, Sun Chemical Corporation, recruited me in their printing ink division in a management trainee program recently started by their President.

We moved often as I was trained and took on more significant management positions. This led to our living in Chicago, Denver, New Jersey, and Cleveland. After ten years a customer, Printco, a small Michigan printer recruited me as sales manager, and we moved to Grand Rapids. There I was promoted to Vice President of Sales and our management team along with excellent employees was able to raise our sales from $24.5 million to over $100 million. Unfortunately, our owner was diagnosed with a life threatening disease, which led us to sell the company to our main competitor, Treasure Chest Advertising.

I held several positions with Treasure Chest who morphed to Vertis Communications, which included VP Newspaper Sales and West Coast Regional VP. This last position enabled us to move to Rancho Mirage.

I worked 22 years totally for that company and left when it went bankrupt and sold. Still wanting to work, I started working for a wine distributor and then the US Government in Homeland Security in Palm Springs. I retired from there last year and am officially retired.

I am eager to take my experience to help grow our chapter and help our board excel. Thank you for your consideration.

WRT, ASD, FSRT

Quorum September, 2016

Operations Manager, Flood Response

RUNNING FOR A FIRST TERM AS A BUSINESS PARTNER MEMBER Over the course of the last 8 years, I have moved from Business Development to Operations Manager of the valley’s largest Disaster Response Company, Flood Response. Through 7 of those years, I have been highly involved in CAI. It has been a tremendous experience for both me and the company. The cooperation, insight and experiences afforded to me from the partnership with CAI have been invaluable. CAI has personally taught me how to be of better service to my clients, business partner and an overall asset to the community at large. I am exceptionally grateful for the experience.

Entering into my next chapter both personally and professionally, I feel I would be an asset to the CAI-CV BOD and respectfully submit my name for your consideration.

While there is no designation or credentialing for my industry to achieve with CAI, I did become the first locally to achieve the Educated Business Partner accreditation through CAI. I feel that I would be able to bring new and exciting ideas based on my experience with CAI thus far. My professional position parallels CAI in various ways. I’m often required to tactfully

and smoothly coordinate nuanced projects and transitions while being conscientious of the details, people and events involved.

My professional position has allowed me to hone key abilities of maintaining focus, finding new ideas and achieving stated goals. Ultimately, my 7 years of participating with CAI has allowed me to observe ideas that are worth elaborating on and providing the assistance and leadership on ideas that may need restructuring. I believe I can help keep CAI-CV fresh, fun and fruitful for the membership and new participants.

Thank you for your consideration.

Involvement with CAI-CV 1. Golf Committee member since 2009 2. Bowling Committee member since 2010 3. Bowling Committee Chair 2015 and 2013 4. Country Western Round Up Committee member 2011 5. Casino Night Committee Member 2011-2014 6. Business Partner Committee 2011-2014 7. Quorum “What to do when Water Intrudes�

November 2013 Professional Awards Received 1. 2012 Committee of the Year Casino 2. 2013 CAI-CV Rookie of the Year 3. 2015 Business Partner of the Year

ANNUAL ELECTION CONTINUED ON NEXT PAGE

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ANNUAL ELECTION

EVENTS On Friday, June 10, 2016, CAI-CV hosted an “Ask the Attorney” educational lunch program at Palm Valley Country Club.

This is the second article of questions and answers adapted for Quorum Magazine. More to come in October!

Questions and Answers from “Ask the Attorney” Tad Black Associa OnCall Incumbent – Currently Serves on the Board’s Executive Committee as Past President

RUNNING FOR SECOND TERM AS A BUSINESS PARTNER I appreciate your consideration for anotherterm on the Board of Directors for CAI-CV! I feel honored to have served this past term on the Board and on the Executive Committee as President and Past-President. I have also served in a number of other capacities including as a member and Board Liaison for the Programs Committee, Business Partner Committee, Golf committee, Casino Night, Awards Committee and I have written articles for Quorum. The last few years have been exciting times of growth and change for our chapter, as evidenced by the number of awards CAI-CV received at the National conference this year, and I would like to continue to contribute to that evolution and progression.

As the Director of Maintenance Services for Associa OnCall at Desert Resort Management, I am a Business Partner, not a Manager, and bring the perspectives of both segments to the Board.

I have been involved in CAI-CV since I moved to the Coachella Valley 10 years ago. I reside in Indio with my wife of almost 18 years, Tiffany, and my two daughters, Kaitlyn (13) and Lauren (11). I have marketing and management experience in a variety of industries including financial services, wholesale residential lending and landscape. Hobbies include playing golf poorly, snow skiing and music, and one of my passions is supporting St. Jude Children’s Research Hospital where I serve on the Board of Directors for the Warburton Celebrity Golf Tournament and Music events, benefitting the hospital.

Thank you.

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Quorum September, 2016

By Dea C. Franck, Esq.

THE FOLLOWING QUESTION WAS ASKED ABOUT MEMBERSHIP VOTING:

QUESTION What can an association do to encourage homeowners to vote re governing document revisions?

ANSW ER Failing to get members to vote, especially on governing document restatements, can result in a lot of wasted time and money in creating revisions that won’t become effective. However, if members care about their community they will vote. So how to you get members to care?

Encourage a sense of community by holding community functions, such as block parties, summer barbeques or other social events. Creating an association website can also provide a sense of community. The website should not only contain useful information such as downloadable architectural applications or information regarding government rebates, but also positive stories regarding the community and the people who live there.

Have food at the meeting at which the ballots will be opened and advertise that fact. Food draws people to events (such as meetings) and creates a convivial atmosphere. It also creates a sense of community and can make a meeting fun instead of tedious. Conversely, serving alcohol at meetings is not advisable because alcohol can bring down people’s inhibitions, which is not always good. Alcohol can also inhibit the productiveness of a meeting.

Educate the membership on the topic of the vote. Members are more likely to vote on something they understand than something that is confusing and overwhelming. Consequently, if you are asking members to vote to approve an expensive capital improvement project or a restatement of the governing documents, have meetings to explain why the Board is doing what it is doing and ask for member feedback. Make sure to stress to the membership that the Board and the membership are all in this process together and avoid creating an “us vs. them” mentality.

Incentives are a great way of getting members to vote. There is no consensus among attorneys as to whether the association can spend association funds to buy “incentive gifts.” However, if the association is going to buy incentive gifts, the most conservative route would be to give out a gift card in a small denomination.

Q

EVENTS Better still, ask local businesses or vendors used by your association to donate raffle prizes that will be raffled off at the annual meeting or the meeting where the votes will be counted. Raffle prizes can motivate members to attend the meeting. Another twist on the raffle prize would be to advertise to the membership that each member will be entered to win a prize if they return their ballot. Please know that Associations cannot give incentives for members who voted a certain way, e.g., only members who vote to approve the capital improvement project will be able to participate in the raffle. Can associations raffle off a month of free assessments? This can be controversial and might violate your association’s CC&Rs which may require that the association collect assessments from all owners equally or according to some formula.

can hear what you hear, even if it is late at night.

Be aware that if the Board decides to impose discipline on the party animal homeowner you are likely not going to hear about it for privacy reasons.

Associations cannot disclose the specifics regarding membership discipline.

On the other hand, the manager and board may have investigated and found that the member did not violate the governing documents.

This process should not be any different if the party animal is a board member. Board members should not be treated any differently than any other member of the community. If you feel that there is favoritism given by the board towards other members of the board, voice your concern to the board.

Give the board a chance to reflect on their actions. Again, remember that you may not be aware of the board’s exact actions or decisions as to how they respond to any situation.

offending board member must be given due process prior to being censured.

To meet due process requirements, the offending director must be given notice of the charges against him or her and a reasonable opportunity to address those charges. If after affording the offending director due process, the board feels that the offending acts occurred and are intolerable, the board can censure that director. Censure of a director can occur by way of a resolution signed by the board or a letter of censure approved by the board. The resolution or letter should then be kept with the meeting minutes during which the resolution was signed or the letter approved.

Boards should also consider implementing codes of conduct for board members and volunteer committee members to ensure that those persons maintain a high standard of ethical conduct. Codes of conduct can cover such issues as board member conflicts of interest, board members who go “rogue” in their decision making or actions, board member interference with vendors or management, or financial gain resulting from their position on the board. Such codes of conduct can provide guidance on acceptable behavior, and mechanisms as to how unacceptable behavior will be dealt with by way of discipline or other legal action.

Q& THE FOLLOWING QUESTIONS WERE ASKED ABOUT NUISANCE VIOLATIONS:

QUESTION

What can a homeowner do if their next door neighbor throws late night wild, loud parties? What if the problem party animal neighbor is a board member?

ANSW ER

Immediately notify the association’s patrol officers if the association has patrol officers or call the police. Often times, the police will refuse to intervene because they feel that these nuisance type issues are for the association to handle.

Keep a log regarding the time, place and location of the parties. If you can document what the noise is like inside your residence by way of an audio or video recording do that.

Finally, contact management and/or the board of directors with your complaint. The manager or members of the board should go out and investigate the issue. If a board member is willing, ask that you be able to contact them the next time a party is occurring so that they

THE FOLLOWING QUESTION WAS ASKED ABOUT BOARD MEMBER CONDUCT:

QUESTION

How can a board deal with vulgarity and sexist comments made by a board member?

ANSW ER

When a board or board members witness such behavior by a fellow board member, those directors need to immediately make it clear to the offending director that such behavior is unacceptable, will not be tolerated and that such behavior could rise to the level of breach of fiduciary duty. Additionally, the offending director needs to be made aware that such behavior leaves the association vulnerable to claims of discrimination or lawsuits for verbal harassment. Remember that directors and officers insurance will not cover any type of intentional act.

The board can always censure an offending director. However, the CAI-CV.org

Dea Franck is an associate attorney at Epsten Grinnell & Howell, APC’s Coachella Valley office. With offices in the Coachella Valley, San Diego and the Inland Empire, Epsten Grinnell & Howell provides common interest developments with corporate counsel, rapid assessment recovery services, construction defect and other civil litigation counsel, interpretation of fair housing issues and alternative dispute resolution assistance. You can reach Dea at (760) 836-1036 or dfranck@epsten.com.

Contact the CAI-CV office for a copy of CAI's Model Code of Ethics for Community Association Board Members.

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MAINTENANCE

California Needs More Certified Lake Managers By: Patrick Simmsgeiger

T

he maintenance of ponds, lakes, reservoirs and other large bodies of water requires comprehensive knowledge of diverse maintenance practices. No two waterscapes are the same. Each requires a unique maintenance strategy and diligent care. A Certified Lake Manager (CLM) is an expert who can identify the specific needs required by each waterscape, and help keep water features pristine.

To best maintain a waterscape, a Certified Lake Manager is an ideal resource. A CLM has the knowledge to make decisions and take measures that affect both the quality and longevity of a maintenance plan. To a Certified Lake Manager, there is no such thing as a routine maintenance plan. A CLM has a passion for each type of waterscape and a formal knowledge that prevents him from implementing routine maintenance plans; instead a specialized plan will be conceived for each unique body of water.

A CLM’s maintenance strategy will take into consideration the size of the water feature, the surrounding environment, the usage requirements and any other distinct details to effectively build a plan that will serve that particular waterscape, perfectly.

A CLM will take the appropriate measures and make wise recommendations to ensure the longevity of the maintenance plan – this will keep you from implementing any unnecessary or trivial maintenance strategies. In blatant business terms, your CLM can save you from spending money on things you do not really need!

Finding a Certified Lake Manager may be a difficult task. These individuals must be both experienced and knowledgeable in their field prior to obtaining their certification.

A CERTIFIED LAKE MANAGER IS EXPECTED TO: • Be directly involved in the comprehensive management of waterscapes • Make decisions that affect the quality and uses of waterscapes • Make recommendations regarding the implementation of maintenance • Personally supervise or conduct the maintenance program

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Quorum September, 2016

To be considered a Certified Lake Manager one must satisfy several requirements set forth by the North American Lake Management Society (NALMS). These requirements are intended to properly prepare that person to perform lake maintenance duties with maximum competence.

Even after obtaining the certification, a CLM is required to pursue additional knowledge. The NALMS places significant emphasis on continued education and training, a Certified Lake Manager is expected to ensure the highest standards of professional awareness and performance.

Lake maintenance requires a specialized skill set and extensive attention to detail. There are many people who may claim they are well versed in the maintenance of waterscapes; however, only a few individuals maintain the skill set and formal education necessary to superiorly manage the maintenance of large waterscapes.

CLM certification requires experience, specialized training and formal education – which make Certified Lake Managers a prestigious and rare find in the industry. In fact, there are few to be found; California only has one!

To build a greater efficiency and quality of waterscape maintenance in California, we need more Certified Lake Managers. For more information on obtaining a certification – or finding a CLM in your area, visit: www.nalms.org.

Patrick Simmsgeiger is President of Diversified Waterscapes, Inc. Since 1972 Diversified Waterscapes, Inc. has offered state-of-the-art products for aquatic management to professional applicators. To reach Patrick for expert guidance in maintaining your water feature, contact him direct at (949) 582-5414 or (760) 837-3700.

FEATURE

Why Should I Worry About My Contractor's Insurance Coverage?

By Dan H. Stites

WHY WORRY ABOUT WHAT INSURANCE A CONTRACTOR CARRIES? Because Contractors sign contracts in which they assume certain obligations and liabilities that are intended to protect their customers! Some of those liabilities can amount to millions of dollars such as an obligation to protect the customer’s property or to protect the customer from liability due to injury or damage to third parties that arise out of the contractor’s negligent actions, or liability for damages arising from defective construction. One purpose of the contractor’s insurance is to make sure that the customer has the financial protection specified in the contract.

Without adequate contractor insurance, the customer is left to call on the assets of the contractor in the event of a loss. Most contracting firms, however, are not ‘asset rich.’ They are not like a manufacturer who owns a factory or a material supplier who owns a building and has a large inventory. Other than a

few exceptions, construction contracting firms generally have office furniture and equipment, some pick-up trucks, tools, and limited inventory to support their ongoing jobs. Without insurance, a major loss could be catastrophic for the contractor and the customer will be left without protection.

SO WHAT TYPES OF INSURANCE SHOULD I REQUIRE MY CONTRACTORS TO CARRY? That will vary from contract to contract depending upon scope of work among other variables. For example, Professional Liability Insurance (commonly called Errors & Omissions insurance) is appropriate for design or engineering professionals when providing those services but would not likely be applicable to your landscape maintenance contractor. Remember, the insurance you require of your contractor adds to his cost which adds to the price of your contract, so it is important to make sure that your insurance requirements are appropriate for the work at hand.

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That said, there are a few musts!

COMMERCIAL GENERAL LIABILITY INSURANCE Commercial General Liabilit y Insurance (commonly referred to as CGL) is a business policy that protects the policy holder from the financial consequences of its negligent acts to third parties. Generally speaking these claims would be bodily injury or property damages arising from its operations or defective construction, including insurable liabilities assumed in the contracts signed during its normal scope of business. The CGL policy includes coverage for the actions of the contractor’s employees as well as any independent contractors or vendors that are conducting business on the contractor’s behalf.

One example of a CGL loss would be if a contractor is working on the second floor of a multi-family condominium unit and accidentally breaks a water pipe that causes significant damage to several other units. The homeowners’ cause of action would be to the contractor and to

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FEATURE the HOA. If a lawsuit were to ensue, the damages would not only be the physical damages to the building and contents but also the legal costs associated with the litigation; yours and those of the injured party if they prevail. The contract typically requires the contractor to indemnify the HOA for events like this and his CGL insurance would provide the financial protection, including the legal costs of defense, to the limits of the policy.

And speaking of limits, those for CGL policies are commonly not less than $1,000,000 per occurrence and $2,000,000 in the aggregate for most contract agreements that are encountered in the multi-family residential marketplace. Recognize that this is a broad generalization as the limits can vary widely depending on the specific project.

COMPREHENSIVE AUTOMOBILE LIABILITY INSURANCE Most of us have experience with Automobile Insurance and enjoy at least a rudimentary understanding of the policy coverages. As it relates to your contractor, the need for Automobile Insurance is exactly analogous to that for CGL insurance. You hired the contractor to work on your project; if one of his employees causes personal injury or death, or damage to property while

driving a vehicle owned by the contractor, the injured party’s cause of action is to the contractor and to the HOA. This is, again, a situation where the contractor indemnifies the HOA and his insurance steps in to provide financial protection.

Limits for Automobile Insurance policies are typically not less than $1,000,000 per occurrence but, again, can vary widely depending upon the specifics of the project at hand.

WORKERS’ COMPENSATION AND EMPLOYER’S LIABILITY INSURANCE Worker’s Compensation (WC) insurance (which encompasses both workers compensation and employer’s liability insurance) covers a contractor’s employee’s medical expenses and at least some portion of their lost wages if they are injured on the job. It is mandated by the State of California for all businesses that have employees, even if only one! If your contractor is a Roofer, the State goes a step further and requires all Roofing Contractors to carry WC Insurance whether they have employees or not.

The greatest protection afforded both the contractor and the customer is the ‘exclusive remedy’ provision of WC Insurance. If an employer has WC insurance and an employee is injured on the job, the employee’s only remedy is to look to the Workers’ Compensation

Insurance policy for relief. If the contractor does not have WC insurance and an employee is injured on the job, the employee is free to pursue any remedy available at law against any party, including the HOA. And, incidentally, the contractor is committing a crime if he does not have WC Insurance for his employees.

The Employer’s Liability portion of the Workers Compensation policy is usually required to be $1,000,000 each accident/ disease.

UMBRELLA LIABILITY INSURANCE Umbrella Liability Insurance adds another layer of insurance protection to the above policies carried by a contractor. For example, if a contractor has a $1,000,000 limit on a policy and a claim is settled for $2,000,000, the Umbrella policy will cover the $1,000,000 excess beyond the base policy coverage.

Although rare in the multi-family HOA market, it is a very cost effective way to increase the limit of insurance coverage carried by a contractor. On the other hand, it can be relatively expensive if the contractor does not already have this insurance and it has to be purchased for a single project.

Typical limits for Umbrella Policies range from $2,000,000 to $5,000,000 in excess of their underlying policies.

A FEW OTHER FACTORS TO CONSIDER

"The Employer’s Liability portion of the Workers Compensation policy is usually required to be $1,000,000 each accident/disease."

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Quorum September, 2016

First and foremost, do not use this brief article to decide your insurance strategy! Always involve an insurance professional and/or a competent attorney to guide you through the process.

That said, following are a few items you may want to keep in mind: • A Waiver of Subrogation endorsement in your favor will prevent the contractor’s insurance company from paying a claim for damages then coming back after you to recover those damages.

• Adding you as an Additional Insured on the contractor’s insurance policies provides you with the same protection that the contractor receives.

• The contractor’s insurance policies should remain in full force after the project is completed – typically two years.

• Insurance companies should be rated

by A.M. Best according to financial strength. Be sure to specify a minimum acceptable rating for insurance companies used by your contractors.

• The maintenance of insurance required by the contract should be a condition precedent to the contractor’s right to receive payment.

• The certificates of insurance provided by the contractor should contain a provision that coverages afforded under the policies will not be cancelled until at least (30) day’s prior written notice has been given to the certificate holder.

• The contract should include a provision that if the insurance lapses and the contractor does not obtain new substitute insurance, then the customer can do so and back charge the contractor.

Appropriate insurance is a critical part of every contract and is intended to protect both the contractor and the customer. The customers’ decisions regarding insurance requirements for every contract should be determined based on the customers’ objectives and in consultation with an insurance professional or competent attorney. Remember, insurance is not free!

Ultimately, the customer will pay for the insurance that they require of their contractors so make sure your requirements are project appropriate.

Dan Stites is a degreed and licensed Professional Engineer with over 35 years of experience in the construction industry. He also holds C-39 Roofing and Waterproofing and “B” General Building Contractor licenses and has completed graduate studies in business at Rice University and Thunderbird School of Global Management.

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WATER WISE

Water Reduction Strategies

I

By Jim Schmid

t has become painfully clear to many associations over the last couple of years that maintaining the same levels of water usage as they have in the past may no longer be a realistic proposition. The recently implemented rate increase by the CVWD is more likely a sign of things to come rather than a plateau.

As conservation, imported water costs, and state mandates for water quality all continue to increase, water rates will likely follow suit. The days of cheap water in the Coachella Valley are gone for good, and all stakeholders will need to reconsider the value they place on lush landscapes, as the cost of maintaining those rises.

If your association is like many others, water reduction will be part of the plan moving forward. The prospect of wholesale changes to longstanding practices can be intimidating.

Below are some suggestions that your association may want to consider before making any major decisions.

• Hire a water management professional. Having someone paying attention to your irrigation system and practices can yield significant reductions in water use. System efficiency, scheduling, repairs, and adjustments can make an immediate impact on the amount of water you use, as well as the associated cost.

• Consider alternative sources of water. If your association is near a golf course, the canal, or CVWD’s non-potable water line, it may be worth investigating the feasibility of connecting to an alternative source. Sources other than domestic water can often be supplied at significantly lower rates, as they do not need to be treated to drinking water standards. Some HOAs have been successful in reducing their water bills by finding alternatives to domestic water supplies.

• Review your bill to make sure that your site has been assigned the appropriate water budget for your property. The water budget is based on the size of your property, and the Et zone where you are located. Any mistake in this calculation could

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Quorum September, 2016

mean that your water budget is lower than it should be.

• Look at pools and water features for leakage. This can be a relatively simple investigation. During the summer months water will evaporate from pools at the rate of about an inch every 3 days. If the level of your pools or water feature falls faster than that you probably have a leak that needs to be addressed.

• Let some of your turf go brown. Some associations have decided to let selected areas of turf go dormant in low profile areas; others have let all their turf go. Just keep in mind that any trees planted in the turf are acclimated to regular watering along with the turf, and they will need special attention.

It is also important to remember that even Bermuda grass will die off eventually if water is withheld long enough.

Remember, with tiered rates, even a limited reduction in water use can yield significant savings, as these reductions will be applied to the highest tier you are using.

• Take advantage of conservation programs offered by your water supplier. Districts have a wide range of programs designed to help customers be more water efficient. From rebates for equipment upgrades or turf removal to onsite help with audits, districts have programs in place designed to help customers. Check with the conservation department of your local district to see what is available.

The above strategies may yield some results quickly, however, long term, consistent reductions in water use will likely require removal of some turf or water features. It may seem like a daunting task to consider, plan, and execute a

major landscape renovation. A plan that divides the turf removal into smaller, less expensive, more manageable projects may help.

• Consider using a landscape design professional to help redesign the landscape in your community. Many professionals can also help to facilitate the implementation, quality control, and follow up of the project.

• Turf Removal does not have to be an all-or-nothing proposition. Again, many HOAs are billed for water based on tiered rates. If you are billed on a tiered rate, reducing usage in higher tiers will yield larger savings than reducing usage in lower tiers. This means that the turf removed at the beginning of the project will likely result in a higher savings per square foot than turf removed later on. Removing some turf may have a significant impact on your bill, without the need to remove it all.

• There is a wide spectrum of landscape treatments that will use less water than turf. Turf removal does not have to mean scorched earth. There are many attractive options that will use less water than turf.

• Turf removal can be implemented with a phased approach, it doesn’t all have to go at once. This will help spread project costs out over time, and will allow residents time to adjust to the change in appearance.

• Target the highest water use areas first. Turf grass with southern and western exposures will have the highest water requirements. Small, irregularly shaped areas are difficult to water, and result in water waste.

• Artificial turf has come a long way. Even if you have considered it in the past and decided not to use it, it may be worth another look. Modern materials are better looking, more durable, and stay cooler than older options.

Even if your association were to pursue everything I’ve outlined here, you would save water, but you’d hardly make your neighborhood look like the associations and golf courses you see in Las Vegas or Phoenix. You would still look like a traditional Coachella Valley community – the kind of community that attracted your residents to locate here, retire here, or purchase a 2nd home here. The Coachella Valley Water Management Plan calls only for HOAs and golf courses to be aware of the need to manage their affairs with water conservation in mind and be maximally efficient when doing so; that and nothing more. It doesn’t ask us to fundamentally alter our way of life or the things that attracted us to this Valley in the first place.

Jim Schmid is director of operations at The Lakes Country Club. Jim currently serves as a director for the Hilo Desert Golf Course Superintendents Association and the California Golf Course Superintendents Association. Jim also serves as a member of the Coachella Valley Golf and Water Task Force. Contact him at jschmid@thelakescc.com or (760) 498-6647.

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33

WATER WISE

Matt Parker J.B. Bostick Company, Inc.

L IT

IN T EG R I T Y - S

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J.B. BOSTICK COMPANY

S TO

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QU A

By Erin Klink

RV

Newly Revised Gardening Book will Appeal to Coachella Valley Gardeners

WELCOME ABOARD

M E R S AT I S FAC

TI

By Heather Engel The highly popular desert-gardening book, Lush & Efficient, has been revised to include even more information and tips for creating a beautiful desert landscape that preserves and protects our most precious resource: water.

The book, now called “Lush & Efficient: Desert-Friendly Landscaping in the Coachella Valley,” is published and distributed by Coachella Valley Water District (CVWD) in partnership with Desert Water Agency (DWA).

The new revised edition will debut at this year’s Desert Garden Community Day from 8:30 a.m. to 1 p.m. on Saturday, Oct. 15 at UCR Palm Desert. The 11th Annual Desert Garden Community Day, a free program of the Desert Horticultural Society of the Coachella Valley and Host

The book provides alternatives to traditional high-water, high maintenance landscapes. The book features almost 500 color photos, providing a wealth of information on how to create a landscape that is colorful, attractive to hummingbirds and butterflies and also saves time, money and water.

Converting to desert-friendly landscaping, eliminating overseeding and removing turf all will help your water budget. This is especially true in light of new volumetric rate changes that went into effect on July 1, the first "Let the new Lush & Efficient guide rate increases your efforts to transform areas that for domest ic w ater si nce were traditionally turf into beautiful 2010. Increases desert-friendly landscaping." in fixed rates are expected to Sponsor UCR Palm Desert, will feature go into effect this fall. experts explaining how to create and Let the new Lush & Efficient guide maintain a desert garden and reduce your efforts to transform areas that were your water requirements. Classes, dem- traditionally turf into beautiful desertonstrations and informational booths friendly landscaping. And take advanfeature garden design, plant selection, tage of CVWD guidance and rebates to DIY grass removal, irrigation, mulch- make the make the transition easier. ing, pruning, and much more will be Visit www.cvwd.org/rebates to apply included. and learn more.

After Oct. 15, Lush & Efficient will be available for purchase at other events and online for $10 through CVWD’s website, www.cvwd.org

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Heather Engel is the director of Communication & Conservation for the Coachella Valley Water District. She can be reached at hengel@cvwd.org or at (760) 398-2661.

J.B. Bostick Company, Inc. has been setting the standard in asphalt paving, maintenance and repair since 1969.

They pride themselves on their reputation as one of the premier asphalt paving contractors in Southern California. They own and operate all their own state of the art equipment, which gives them complete quality control over the wide range of products and services they provide.

Integrity, quality and service are the traits in which J.B. Bostick Co. was founded upon, and are the standards which guide them today.

A quality purchase is never regretted. J.B. Bostick Co. believes that the customer deserves to receive what they pay for. There is no project too difficult to handle. The estimators and product’s staff have the experience, insight and imagination to come up with paving solutions to complete your project while staying within your budget constraints.

Servicing your paving project is top priority. When contacting J.B. Bostick Co. the professional office staff and project manager will guide you from start to finish. The goal at J.B. Bostick Co. is not only to be your service provider on your current project, but to be the asphalt service provider on all your future paving projects.

They joined CAI to improve and expand their relationships with communities and their managers.

J.B. Bostick Company, Inc. has been in business for 43 years, with 70 employees. Their Anaheim office is located at 2870 East La Cresta, Anaheim, CA 92806. Matt Parker can be reached at (714) 853-2581 or parker@jbbostick.com.

TRENDING NOW counters which are updated every time a swimmer touches a pad on the wall.

They were used in the 800-meter and 1500-meter freestyle swimming events.

BANKING WITH A WAVE

2016 Summer Olympics Pushes New Technologies

By Antoinette Hamilton At the 2016 Summer Olympics in Rio de Janeiro new technology was introduced for athletes, spectators, sporting competitions, security and banking.

SECURITY BALLOONS Developed by Brazilian manufacturer Altave, four balloons each with 13 high resolution cameras send images in real time to the Center for Integrated Regional Command and Control, coordinated by the Army. This is the first time such large-scale monitoring devices are being used in the Olympic Games. Tokyo the host city of the 2020 Olympics, as well as Qatar, host of the 2022 World Cup, have shown interest in the technology.

SPECTATOR EXPERIENCE Aimed at improving the experience for spectators in the arenas and gymnasiums, Omega added color images to the scoreboards. With the reintroduction of golf, scoreboards had a radar measuring system. New technology also improved the accuracy in archery, with sensors added to the traditional paper, allowing spectators to know when the arrow hit the target and displayed the score on the screen just one second later.

CLOUD-HOSTED PORTALS For the first time volunteer activities and credential management was hosted by the telecommunications firm, Embratel, on the cloud. By the time the

next competition takes place in 2020, according to Atos, it is anticipated that an entirely cloud-based model for all applications will be used.

PHOTOFINISH TECHNOLOGY For the Rio Games Omega introduced photofinish technology. The camera Scan 'O' Vision MYRIA, captured around 10,000 digital photos in a vertical line per second, producing better quality images of the athletics when they crossed the finish line.

BOXING TRACKING SYSTEM Startup Hykso developed for boxers a punch tracking system. Boxers during sparing and training can use this punch tracking system by placing sensors under their taped wrists which sends data to a mobile app that counts punches, measures intensity, velocity and the types of punches that are thrown.

SWIMMERS UNDERWATER LAP COUNTERS To eliminate swimmers being distracted by having to keep track of the number of laps they’ve completed, and officials who display numbers at the pool’s edge, Omega developed in 2014 at the FINA World Swimming Championships under water lap CAI-CV.org

Brazilian bank Bradesco and Visa teamed up at the 2016 Olympic Games, providing 4,000 point-of-sale terminals which allowed spectators to make purchases by waving an arm over a sensor using NFC (near-field communication) which is the same system that Apple Pay and Google Pay use.

Wearable water resistant rings provided by Visa to their sponsored Olympic athletes were used in the same manner for purchases.

GOOGLE AND YOUTUBE Mobile live streaming was available in more than 60 countries, with 15 YouTube curators broadcasting from their phones.

Google Maps added a 360-degree virtual tour of the city and added favela neighborhoods and businesses.

VR- VIRTUAL REALITY This is the first time that virtual reality or VR has been available for the Olympics.

On April 6, 1896, the first modern Olympic Games were held in Athens, Greece, with athletes from 14 countries participating. The International Olympic Committee met for the first time in Paris in June 1984 and chose Greece as the site of the inaugural modern Olympiad.

We can only wait and see what innovations appear in future Olympic games.

Antoinette Hamilton has ten years of experience in solar PV and solar pool heating in the Coachella Valley. She is a frequent guest speaker on energy efficiency solutions for HOAs, hotels, country clubs, apartment complexes and assisted living facilities. Antoinette can be reached at at (760) 808-1128 or by email at info@suntosolar.com.

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35

FEATURE

Water Damage in your Condo…Who Pays for the Repairs?

By Susan Browne Rosenberg, EBP

O

n the morning of July 27, 2016, I walked into my laundry room and found water on the floor. At first I thought the washing machine was broken and called the plumber. Once I began removing lots of wet stuff from this small room in the center of my condo, I saw more water under the HVAC closet.

I opened the door to check the AC system and saw standing water on the platform beneath the unit. The condensate drain line was overflowing. I immediately cancelled the plumber and called our airconditioning company. Luckily, we have a maintenance contract with emergency service, so we had someone at our house within the hour.

Although our HVAC system was serviced in March of this year, the drain line that had been “blown out” at the time had since become clogged from rust and sediment. The AC technician used pressurized carbon dioxide gas to again blow out the line. A second issue was the drain line was not draining properly at the outlet on the exterior of our unit. The HOA maintains these drains on the exterior on a biannual time table to make sure the drains are clear. Our drain was fully submerged in water. Another possible contributing factor was a week of high humidity in

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our valley, which causes more water to condense out of the air.

Once the drain issue was fixed, I got out my moisture meter to check the drywall. I found that there was wet drywall in the laundry room around the HVAC closet and also in an adjacent toilet closet. It was time to call another Educated Business Partner, Flood Response. Todd Trask arrived a few hours later and we had drying equipment (fans and a dehumidifier) installed within 24 hours. Additionally, his team had to cut out approximately 12 square feet of wet drywall in the laundry room to facilitate the drying of the wood studs.

In the middle of all this, we placed a call to our insurance agent of 30 years to discuss our coverage. Our policy with State Farm has a $500 deductible for emergency water damage. Our agent is one of our trusted advisors, so we asked him whether we should file a claim or not. His advice was to figure out what our “pain point” was for this event. Then consider the odds of having another larger catastrophic event, such as an earthquake in the near future.

We learned that two claims within a two year period can trigger large price increases and possible cancellation of our policy. We decided that getting back

a few thousand dollars from our insurance policy was not worth the possibility of a significant price increase.

Mary Walker, CCAM, AMS with MW Consulting, said that “determining who pays depends on so many things and is not an easy cut and dry issue.” Mary has worked with many HOAs over her career and stated that the governing documents (CC&Rs, etc.) control who pays what.

However, there is still discussion and interpretation by the insurance adjustor and lawyers for the HOA. Many HOAs have high deductibles for water damage claims that could range from $10,000 to $25,000. For a small incident such as mine, the homeowner would have to cover all the cost if the HOA had such a limit. In addition, Mary told me that many HOAs are changing their documents to say “water intrusion from any source is not the responsibility of the HOA unless gross negligence can be proven.” That sounds like a pretty high bar to me.

Carol Fulton, Community Insurance Risk Management Specialist (CIRMS) with LaBarre/Oksnee Insurance stressed the importance of fixing water leaks quickly to minimize damage. Carol has nearly 40 years in the insurance industry specializing in country clubs and community developments. She said that typically the homeowner is responsible for maintaining the inside of the unit from the “walls in.”

Many master policies will have an exclusion on wall and floor coverings, such as paint, wall paper, paneling and mirrors on the walls and carpet, tile, hardwood floors, coverings over the slab.

The Master Insurance Policy for the HOA would come into play when water intrusion is from roof damage or pipes inside of walls or under slabs. When there is water damage resulting from roofs, pipes in the walls and under the slab, it is generally the association’s responsibility and therefore the association would be responsibility for the deductible. Carol said that most Master Policies have a $10,000 deductible.

In the case of an upstairs unit flooding a lower unit, the upstairs homeowner may be responsible for paying the Master

FEATURE deductible for water damage to the lower unit(s).

According to t he Communit y Association Underwriters of America Inc., “Short of fire, nothing causes more damage to the inside of a property than leaking water. It is estimated that 65% of property damage to community associations is caused by water leaking from failing pipes, hoses, plumbing fixtures and appliances.” They recommend that HOA Boards send out notices to homeowners encouraging them to turn off the water to their washing machines when not in use. Boards should also consider adopting a Washing Machine Hose Replacement Resolution to limit water damage claims.

Sample resolutions are available on the CAU website. http://www.cauinsure. com/Include/Documents/P1%20-%20 Washing%20Machine%20Hoses.pdf Board members should review the Master policy coverage and exclusions each time the policy is up for renewal.

Water exclusions can save thousands of dollars on the insurance cost each year.

A water damage exclusion would state that the Master policy does not cover any water damage from various sources such as washing machines, wet bars, sinks, toilets, etc. Water exclusions must be approved by the Board of Directors and the Association’s attorney in writing. Any exclusion must comply with the CC&Rs and other binding Association documents.

Ultimately, it is the responsibility of homeowners to read all governing documents carefully. These documents include not only the CC&Rs, but the financial records and Reserve Study along with the Master insurance policy and the Homeowner insurance policy.

Homeowners should provide a copy of the CC&Rs and HOA insurance policy with limits and exclusions to their insurance agent to make sure they have coverage for any gaps between the two policies.

Martha Fogg, CCAM, with Desert Falls Master Association in Palm Desert told me that water damage insurance claims can be complex. And when more than one unit and multiple insurance companies are

involved in a large loss, the repair process can become a nightmare. Martha noted that not all insurance companies work well with each other. Sometimes a homeowner’s insurance provider will request a letter of denial from the Master HOA insurance provider before they will consider a claim. This process may take two to three weeks depending on insurance companies. When insurance adjusters get involved, be prepared to experience delays in repairs due to approvals and possible disputes over coverage. Sometimes disputes end up involving legal counsel if they cannot be resolved between insurance companies, owners and HOAs, which could delay the process even more.

Absentee Homeowners may also be responsible for notifying their insurance agents when they vacate a residence for more than 30 days. Some insurance policies have coverage exclusions when no one is in the home for long periods of time. Homeowners should think about turning off water into the interior of their homes whenever they leave for vacation or return to a second home. Home watch services are available and affordable in the valley. A weekly check on a vacant home, can help contain monetary losses from water damage that if left unchecked can render a home unlivable.

Homeowners should also consider insurance coverage for “Loss of Use” which will pay for living expenses while the unit is unlivable due to an insured loss. “Loss of Rents” coverage will replace lost rental income. Owners

should also have “Loss Assessment” coverage for the owner’s share of a special assessment loss that exceeds the Master policy limit in case of a catastrophic incident.

In conclusion, the answer to the question of “Who Pays?” is most often the homeowner. In my case, the only repair work covered by my HOA is reinstalling the drywall. Repainting and reinstalling the floor coverings are my responsibility.

A home is a high value item that needs not only proper insurance protection, but ongoing maintenance and should not be left unoccupied and empty for long stretches of time without precautions.

Mold will start to grow in 48 to 72 hours after an unchecked water leak. A leak left running for a week or more will cause tens of thousands of dollars in damage.

Do you know how to turn off the water to your appliances? Locate your water shut off valves and, if possible, use them next time you go on vacation. When shutting off water to a home, consider whether that could cause any damage to things like ice maker motors, spa and pool motors, and exterior landscaping.

Susan Browne Rosenberg, CIH, CIEC, CHMM, and CAI EBP, is President and Co-owner of Desert Cities Indoor Air, LLC in Palm Desert, CA. Her company assists HOAs and individual homeowners in assessing water damage and mold contamination. She can be reached at 760-902-2545 or sbriaq@ gmail.com

"MOLD WILL START TO GROW IN 48 TO 72 HOURS OF A WATER LEAK. A LEAK LEFT RUNNING FOR A WEEK OR MORE WILL CAUSE TENS OF THOUSANDS OF DOLLARS IN DAMAGE. DO YOU KNOW HOW TO TURN OFF THE WATER TO YOUR APPLIANCES?"

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37

FEATURE

Tulare 116°

Kings

36°

Think a Computer Can Predict an Earthquake in your Association’s Future?

Kern

s Obispo

115°

San Bernardino

Santa Barbara

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Ventura Los Angeles

120°

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Riverside

By Timothy Cline, CIRMS

Orange 118°

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ation throughout ell-meaning the region and the potential insurance profes- for in The earthquake-prone Seismic Hazard sionals Analysis. resulting earthquake References areas have used the phrases “probable modeling. There are seemingly endless herEarthquake catastrophe capabilities bit by bit.

2007 Working Group on California Probabilities, 2008, The Uniform California Earthquake itizing earthquake retrofit.

Rupture Forecast, Version 2 (UCERF 2): U.S. Geological Survey Open-File Report 2007-1437 and California 116°

maximum loss” (PML) and “earthquake variables, limitless uncertainties For the potentially devastatGeological Survey and Special Report 203 example, [http://pubs.usgs.gov/of/2007/1091/]. catastrophe modeling” at HOA board damage estimation problems.

And that is ing Puente Hills Thrust fault which runs Surface geologic materials: Seismic waves may be amplified by near Petersen, Mark D., Frankel, Arthur D., Harmsen, Stephen C., Mueller, Charles S., Haller, Kathleen M., Wheeler, Russell L., Wesson, Robert L., Zeng, Yuehua, Boyd, Oliver Perkins, David has M., Luco, Nicolas, surface materials.

Soft soils, those with low shear wavesuggesting velocity, amplify meetings with nearly resolute confidence, there is only one earthquake. under Downtown LosS., Angeles been Field, Edward H., Wills, Chris J., and Rukstales, Kenneth S., 2008, Documentation for the 2008 Update of the shaking compared with hard rock. A geologic map of California showing United States National Seismic there Hazard Maps: Geological Survey 61 p. butunits arewith these computer-generated predic- The events in Christchurch reminded forU.S.millions of Open-File years,Report but2008–1128, wasn’t different shear wave velocity can be used to estimate seismic Wills,C.J. and Clahan, K.B., 2006, Developing a map of geologically defined site-conditions categories tions of events and subsequent damage us that two events may strike the same discovered until 1999. This isn’t anfor amplification.

California: Bulletin of the Seismological Society of America, V. 96 p. 1483 – 1501. trustworthy? Are these predictive models community within a six month period. insignificant find. Scientists have deterShear Wave Velocity California Professional Licenses: meters don’t know what we a reliable tool for a board of director’sof Upper 30We don’t know. mined that the fault, which threatens Branum - Geologist No. 7821 760 earthquake purchasing decisions?

Were you ever curious D. to know the of the largest high-rises west of E. Kalkan - Civil Engineer No. some 73657 609 M. Petersen - Geologist No. 6754, Engineering Geologist No. 2129 We’re in the early stages. Recent reliability of computer predictions for the Mississippi, is capable of producing 489 C. Wills - Geologist No. 4379, Engineering Geologist No. 1423 377 earthquakes in Chile (2010), New the Northridge Earthquake (1994) or a Magnitude 7.5 event.

Copyright © 2008 by the California Department of Conservation, California Geological Survey. All rights 287 reserved. No part of this publication may be reproduced without written consent of the California Geological 216 Japanese event in Tohoku (2011)?

Zealand (2011) and Japan (2011) have the The problem with Probable Maximum Survey.

160 been a very humbling reminder to seis- There were none.

This wasn’t a result Loss predictions. regard “The California Department of Conservation makes no warranties as to theWith suitability of this product for any to Water particular purpose.” mologists that trying to predict the acts of technology, but instead a simple, a fire loss, the Insurance and Risk of Mother Nature is very tricky indeed. more revealing reality: both faults were Management Institute (IRMI) defines Predicting the resulting damage from unknown to seismologists prior to the “Probable Maximum Loss” as “referan earthquake requires an understand- devastating events. Until scientists ring to the maximum loss expected at ing of seismic sources and earthquake find a way to discover hidden faults, a given location in the event of a fire at behavior. Scientists are confronted we remain stuck in the infancy years that location, expressed in dollars or as with three overwhelming hurdles of predictive modeling. Like the layers a percentage of total values.” It’s fairly when it comes to earthquake predictive of an onion, Mother Nature is revealing simple to analyze the distance between

the

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(m/sec)

wn

al

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FEATURE buildings to determine the probability that a fire will successfully communicate from one building to another. For example, if buildings have 60 feet of separation, a fire at one building won’t likely impact the other. However, earthquakes are capable of producing damage over much larger distances. For example, there were homeowners associations

wagon seeking a way to judge whether or not to invest in a single location or portfolio given the estimated exposure of earthquake loss. Reliance, however, may be questionable. If the property owner hires two different engineering firms to provide a PML study at the same location, they’re likely to get two different results.

Unfortunately, the varying results may be unavoidable.

An earthquake fault line that produces an earthquake once every 500 years is said to have a “500-year return period.”

Scientists would then say the probability of an earthquake along that fault line this year is 1/500 – which sounds pretty low. Mother Nature, however, has her own timetable and a devastating earthquake could strike tomorrow. Users of the PML software might have their tolerances set at a 250-return period setting. By having such a narrow return period, the 1/500 event wouldn’t show up in the modeling of the earthquake – which would potentially make the PML study provide a more optimistic result.

Sometimes a “disclaimer” says far more about the PML study. A typical disclaimer on a PML study will read “The PML value is not intended to serve as a guarantee of how the property will perform in a seismic occurrence. Rather, it is a statistical review that is intended to suggest how the property will be affected by a probable seismic event. As with any model of complex physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophe events may differ from the results of simulation analyses.”

Ironically, buying partial earthquake coverage is nearly as expensive as purchasing full coverage. A typical earthquake placement for a community association in the Coachella Valley is written

"As with any model of complex physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophe events may differ from the results of simulation analyses." in Santa Monica that experienced total losses in the Northridge Earthquake, even though they were some 6.5 miles from the event epicenter. “Dispersion of risk” is an insurance term which is meant to describe the benefits of multiple buildings spread out over a large geographic area. Such considerations in an earthquake (unlike a fire) must be measured in miles not feet.

How to gage a “Probable Maximum Loss?” PML is a damage estimate, nearly always expressed as a percentage. PML studies were originally developed by insurance carriers to have a “best guess” estimate of the expected damage to real property improvements. Insurance carriers, like the consumers they insure, purchase a kind of insurance called “reinsurance.” Reinsurance helps them to better manage their exposure to earthquake loss. Reinsurance carriers run PML studies too. Institutional investors also jumped on the PML-band

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in layers. The first layer of protection ($5 Million, $10 Million or $15 Million for example) is called the “primary” layer.

Carriers that write “in excess of” the primary layer are called “excess” carriers. Because most earthquake losses are partial losses, the premium is “front loaded” in the primary layer.

Many carriers rely on something called the “Lloyds Scale” (or a similar table) that pro-rates premium based on fraction of the Association’s total insurable value. The Lloyds scale states that 65% of the risk for loss resides in the first 5% of Total Insured Value. That is to say, if a board of directors purchases only $5,000,000 of coverage (5%) on a project with a total insurable value of $100,000,000 they are likely paying 65% of the total premium just for the first 5% of coverage. Boards that rely on a PML study are inclined to buy up to the PML estimate, then stop - despite the fact that each subsequent layer becomes less expensive -- which means that the board of directors has already done the vast majority of the heavy lifting by purchasing the primary layer.

Probable Maximum Loss studies are wonderful guestimates of probable loss scenarios but they are, nonetheless, just estimates of potential damage. Mother Nature has consistently proven that her catastrophe events are predictably unpredictable.

Timothy Cline, CIRMS, is considered one of the leading authorities on insurance for common interest developments. He is President of the Timothy Cline Insurance Agency, Inc., based in Santa Monica, California. He and his staff specialize exclusively in coverage for common interest developments and commercial properties in California, Oregon, Washington and Arizona. Mr. Cline holds the Community Insurance and Risk Management Specialist (CIRMS) designation from Community Association Institute (CAI). He can be reached at 310-260-2900 or by email at tim@timothycline.com

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39

FEATURE

CONDO UNIT OW NERS

Earthquake Insurance Do I Need it? Should I Buy it?

By Carol A. Fulton, CIRMS

M

any owners are confused when it comes to purchasing their own personal earthquake insurance and many questions have arisen regarding this issue.

One of the most asked question is, “As a unit owner can I purchase personal earthquake insurance from the California Earthquake Authority (CEA) if my association does not have a master earthquake policy?”

The answer is YES. In order to obtain personal earthquake insurance from the CEA, you must first purchase a personal contents and liability policy from a carrier who participates in the California Earthquake Authority program. Then your agent may quote your personal earthquake insurance. You may purchase the following earthquake coverages: • Personal Property • Emergency Living Expenses (Loss of Use) • Building damage to the interior of your unit (there is no cover age for the exterior of your unit with the CEA) • Earthquake Loss Assessment, you may purchase $25,000, $50,000, $75,000 or $100,000.

• The Earthquake Loss Assessment coverage does not cover earthquake damages to common areas, only to the residential buildings.

Let’s say we have an earthquake that causes damages

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to the residential buildings in the amount of $15,000,000, each unit owner would be assessed equally to cover the deductible.

VERY IMPORTANT- keep in mind the association has covered the exterior and interior walls for fire, vandalism, water damages, etc.,under a master policy.

Please check with your personal agent in regards to your personal earthquake coverage. You may go on line and review the California Earthquake coverages at www.earthquakeauthority.com. You will be able to obtain a list of the participating carriers and helpful information regarding the CEA. Your agent may represent other carriers that can write earthquake coverage including earthquake loss assessment coverage with a carrier that is not participating in the CEA. Just remember that the loss assessment coverage that you have on your personal fire and liability policy is not earthquake loss assessment.

Carol Fulton has worked over 35 years in the insurance industry, specializing in homeowners associations. She has been a member of Community Association Institute since l980 and was President of the Coachella Valley Chapter in l996. She also established the scholarship fund for managers and still serves on the committee. She is one of the first 15 agents in the US to receive the CIRMS designation from CAI. Carol can be reached at 800-346-1077, ext. 264 or Carolf@hoainsurance.com

CONTENTS

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EY

ASPHALT

6

LL

BRABO & CARLSEN, LLP................................................... 6

1

ACCOUNTANTS & BOOKKEEPERS

COACHELLA I VA CA

AMS PAVING.................................................................... 20 ASPHALT MD’S................................................................ 41 J. B. BOSTICK COMPANY................................................... 3 NPG NELSON PAVING...................................................... 42

ATTORNEYS EPSTEN GRINNELL & HOWELL APC................................... 4

LAW OFFICE OF PEGGY REDMON.................................... 43 PETERS & FREEDMAN, LLP............................................. 13

6 AY

01

GURALNICK & GILLILAND, LLP.......................................... 6

ID

GREEN BRYANT & FRENCH, LLP...................................... 25

FR

FIORE RACOBS & POWERS.............................................. 31

, , O CTOBER 21

2

BANKING UNION BANK...................................................................... 3 MUTUAL OF OMAHA BANK.............................................. 31

CONSTRUCTION

ATTENTION CAI MEMBERS – THERE’S A PARTY YOU WON’T WANT TO MISS AT THE RENAISSANCE RIGHT AFTER THE LEGAL FORUM! TICKETS ARE AVAILABLE AT

C AI-C V.ORG OR C ALL 760-341-0 5 5 9

CBCI CONSTRUCTION...................................................... 33

ELECTRIC & WATER COACHELLA VALLEY WATER DISTRICT........................... 42

FURNITURE PATIO FURNITURE DOCTORS INC.................................... 42

LANDSCAPING CONSERVE LANDCARE.................................................... 17 PRO LANDSCAPEING INC................................................. 43 SUNSHINE LANDSCAPE................................................... 13 WATERRITE - VINTAGE ASSOCIATES, INC....................... 33

PEST CONTROL LLOYD PEST CONTROL...................................................... 2 POWERFUL PEST MANAGEMENT.................................... 33

POOL DECK RESURFACING CTI OF THE DESERT......................................................... 43

POOL WATER PURIFICATION PURIFIED POOL WATER................................................... 43

ROOFING WESTERN PACIFIC ROOFING........................................... 43

SECURITY ALLIED BARTON.............................................................. 25 AMS SECURITY................................................................ 13 SECURITAS........................................................................ 6

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Licenses #664779

Asphalt Concrete Seal Coating Striping ADA Compliance Grinding & Pulverizing

NPGASPHALT.COM So-Cal: 951.940.0200 Desert Division: 760.320.9600 Proud Members of: BIA,BOMA,CAI,IREM,CACM,CREW

Patio Furniture Doctors Inc. “REFINISHING SPECIALISTS”

Water Wise Tips For Coachella Valley residents

Plant a waterefficient landscape.

Desert-friendly plants use 50 to 75 percent less water than grass or tropical plants.

We can create a new look with your existing patio furniture for about 1/2 the cost of new!

We are your only locally owned and operated state of the art Please call me any time for your free on-site furniture assessment. I am always in your neighborhood.

Owner/Operator Bill Richardson

Irrigate efficiently.

Prevent water waste. Repair broken sprinklers CVWD offers a rebate for replacing nozzles with new water-efficient ones.

Find and fix indoor and outdoor leaks.

Download copy of Water Wise at Home: A Guide to Finding Leaks at www.cvwd.org Learn more about CVWD’s rebate & discount program at www.cvwd/org/rebates

BEST PRICES, QUALITY & SERVICE

We can meet or beat any professionally written quote.

patiofurnituredoctors@gmail.com

(760) 328-8999

42

Quorum September, 2016

Stay connected with us!

(760) 398-2651 www.cvwd.org

760-250-6232

Peggy@PeggyRedmonLaw.com •Landscape Management •Arbor Service •Landscape Design •Landscape & Hardscape Installation •Water Conservation Specialist •Growers of Exotic Palms & Desert Accents

We value and respect your landscaping investment and are dedicated to you and your satisfaction.

Phone: 760- 343-0162 • Fax: 760-343-4804 P.O. BOX 265 Thousand Palms CA 92276 Email: office@proland-inc.com

www.prolandscapingca.com

Contractors Lic. # 235717

WESTERN PACIFIC

STOP DRAINING POOLS!

Roofing Corporation

Since 1949

Acid Wash Your Pool and Concerve 90% of the Water

Now you can lower Total Dissolved Solids, including calcium hardness and more, without draining the pool.

Extend Plaster & Equipment Life

We clean the plaster without an aggressive acid wash.

We use the most technologically advanced industrial grade reverse osmosis system in the pool industry today.

Call today for a free poolside evaluation and quote!

Purified Pool Water is a division of Alan Smith Pools, Inc. CA Lic# 571196

“Complete Roofing Services” Repairs • Re-roofing Roof Inspection • Maintenance Programs Polyurethane Foam • Built-up • Tile • Patios 3462 La Campana Way, Palm Springs, CA 92262 Phone (760) 416-5877 Fax (760) 320-8912 FIND US ONLINE AT www.westpacroof.com

Use Less Chemicals The Water Feels Incredible!

PurifyYourPool.com

760.399.6428

79345 Country Club Dr. Unite B Bramuta Dunes 92203

CAI’s Best Practices Report: Ethics “Ethical behavior” doesn’t have to be an oxymoron—especially when you have an ethics policy.

Learn how to create your own, how others have done it and what sample codes cover.

Order Now at CAIONLINE.ORG Item 1800 only $12.95 CAI-CV.org

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41-905 Boardwalk, A-2 Palm Desert, CA 92211

CAI-CV UPCOMING EVENTS

GREEN IS FOR LOCAL EVENTS

SIGN UP FOR LOCAL EVENTS AT CAI-CV.ORG AND FOR CAI NATIONAL EVENTS AT CAIONLINE.ORG

SEPTEMBER CAI’s M100 Course (for managers) WHEN: Thursday – Saturday, September 8 – 10, 2016 WHERE: Santa Ana

Educational Lunch & Mini Trade Show (for all members)

WHEN:

Friday, September 9, 2016, 11:15 AM Registration WHERE: Palm Valley Country Club, Palm Desert

CAI’s Large Scale Workshop (for managers) WHEN: Wednesday – Saturday, September 21-24, 2016 WHERE: Charleston, SC

CAI’s M203 Course (for managers) WHEN: Thursday – Friday, September 22-33, 2016

WHERE: Santa Ana CAI-CV’s Casino Night – Totally Awesome 80’s (for all members) WHEN: Friday, September 23, 2016 WHERE: Sun City, Palm Desert

OCTOBER Manager On The Run (MOTR) (for managers) WHEN: Friday, October 7, 2016, 8:30 a.m.

WHERE: Sunshine Landscape, Thousand Palms

Educational Lunch Program & Mini Trade Show (for all members) WHEN: Friday, October 14, 2016, 11:15 a.m.

WHERE: Palm Valley Country Club CAI’s Common Interest Development Law Course (for all members) WHEN: Thursday, October 20, 2016 WHERE: Renaissance Indian Wells Resort & Spa, Indian Wells

California Legislative Action Committee (CLAC) Benefit Fundraiser (for all members) WHEN: Thursday, October 20, 2016, 6:30 p.m.

WHERE: STIR, Renaissance Indian Wells Resort & Spa, Indian Wells

CAI’s Statewide Legal Forum – California Communities (for all members) WHEN: Friday, October 21, 2016 WHERE: Renaissance Indian Wells Resort

CAI-CV’s Oktoberfest Celebration (for all members)

WHEN: Friday, October 21, 2016 – Immediately following the Legal Forum WHERE: Renaissance Indian Wells Resort & Spa, Indian Wells

& Spa, Indian Wells

E T DA

S HT ’ 80 IG E N E M O INO TH S E AS E W V M A NC A P Y S 0 L IO L 3 : T 9 TARA – O T EB M L P E PD 0 C

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