CAI-MN Minnesota Community Living - Mar/Apr 2010 by CAI-MN

Minnesota’s premier homeowners association magazine

March/April 2010

Volume 28 • Issue 2

In this Issue: Is Your Pool Green? Construction Defects – Really? New Reserves Legislation – Learn How Your Association May Be Affected

It’s Just Around the Corner: Preparing for Spring

And Much More!

Visit us online at www.cai-mn.com.

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Board of Directors

From the President

By Mark Gittleman | CAI-MN President

Facing up to Foreclosures What should we be doing as stakeholders in our industry

President Mark Gittleman Phone 952.277.2707 mgittleman@gittleman.com

There is a lot of talk within common interest communities about the impact of the ongoing foreclosure crisis.

President-Elect Holly Johnson, CMCA, AMS, PCAM Liaison to Vision Awards Committee Phone 763.225.6400 hjohnson@developcommunity.com

In Hennepin County, one important data set in the Twin Cities, there were 5,427 foreclosures in 2009. While this was down 35% from 2008 and 5% from 2007, the numbers remain discouraging and, in many ways, staggering.

as we consider the implications of these issues? First, there should be a clear collections procedure in place at every association that is fair, firm, and protects the interests of the association so that homeowners and boards know what to expect when members of the association are delinquent.

Second, management companies, attorneys, collection agencies, and boards of directors need to be nimble and provide collections solutions that maximize collections and minimize association expense. All concerned need to recognize that there are many different types of delinquent situations, each needing to be analyzed on its own terms instead of utilizing a cookie-cutter approach to collections.

First, as compared to the number of foreclosures in prior years, foreclosures in Hennepin County in 2009 were up 78% relative to 2006 and were more than triple the number of foreclosures in 2005. These numbers are Third, we need to communicate frankly with boards of somewhat understated, given the many foreclosures that have been postponed due to loan modification efforts but directors and with homeowners about the need to budget for uncollectable assessments and explain the reasons why that are likely to occur in the coming months. certain delinquencies will not be fully collectible. The reasoning behind chosen collection strategies should also The long duration of the foreclosure crisis, now headed arguably into its fifth year, is problematic for the housing be communicated so that board members feel a sense of understanding and can assist with collection related market and creates some unique implications for comdecision making. mon interest communities: 1.

Associations that have high percentages of foreclosures will find it difficult to obtain Fannie Mae, Freddie Mac, and FHA approval, which will narrow the market for resale of dwelling units. Associations that have big write-offs of delinquent accounts are often the very same associations that face tremendous financial pressure that make it difficult to budget for uncollectible dues and maintain a balanced operating budget. Foreclosure units are often poorly maintained, which can create maintenance liabilities and drive down the reputation of a community and the valuation of other dwelling units within an association. Units in foreclosure are often sold at prices below market value, which can put more pressure on valuations.

Finally, we should have compassion for the many homeowners who have lost jobs or otherwise faced hardship in this financial crisis. While there were many speculators and folks that made bad choices, there are many, many delinquent homeowners who are honest, hard working people facing tremendous adversity. CAI-MN has addressed collections issues in both its homeowner training and manager education track in the last year, and another session is around the corner as part of the CAI-MN legal education series. As we think about the tremendous stress in the economy and the resulting increases in foreclosures, planning for and understanding the impact of uncollectible debt will result in a healthier community. Now is the time to act, educate the community, plan and implement a collections policy and process, and finally, prepare for the results and outcomes.

Secretary Jonathan Edin Phone 651.222.2155 jedin@mnconstructiondefects.com Treasurer Michael P. Mullen, CPA Phone 952.928.3011 mike@cpamullen.com Directors Tom Engblom, AMS, CMCA, PCAM Liaison to Golf Tournament Committee Phone 866.800.4656 tengblom@cabanc.com Sarah J. Fjellanger, CIRMS Liaison to Legislative Action Committee Phone 763.746.8278 fjellangers@rjfagencies.com Mark Johnson Liaison to Communications Committee Phone 612.381.9951 mjohnson@associationsonline.com Joel A. Hilgendorf, JD Liaison to Membership Committee Phone 952.746.2167 jhilgendorf@hjlawfirm.com Traci Lehman, CMCA, AMS, PCAM Liaison to Manager Seminar Committee Phone 612.381.8600 tracil@citiesmanagement.com Gene Sullivan Liaison to Education Committee Phone 952.922.2500 gene@ncmgi.com Jim Rezek Phone 651.766.3169 jrezek@cadence.com

Committee Chairs Legislative Action Chair Michael Klemm, Esq. Phone 952.432.3136 KlemmM@SeversonSheldon.com

Annual Meeting Chair Lisa Astelford, CMCA Phone 952.277.2787 lastleford@gittleman.com

Golf Tournament Co-Chair Tosh Tricas, CMCA, AMS, PCAM Phone 888.219.2534 capt.tosh@gmail.com

Nominating Chair Joel A. Hilgendorf, JD Phone 952.746.2167 jhilgendorf@hjlawfirm.com

Communications Chair Steve Hoogenakker Phone 763.213.2410 steve@landscape.pro

Education Committee Chair Gene Sullivan Phone 952.922.2500 gene@ncmgi.com

Golf Tournament Co-Chair Membership Chair Tom Engblom, CMCA, AMS, PCAM Mike Laukka, CMCA, AMS, PCAM Phone 866.800.4656 Phone 952.831.8325 March | April 2010 3 tengblom@cabanc.com ml@laukka.com

CAI-MN Member News Joe Crawford Receives PCAM Designation

Joe Crawford, Community Manager at Community Development Inc., has earned his PCAM! The PCAM (Professional Community Association Manager) designation is the highest credential offered through the CAI Professional Management Development Program. Crawford has worked in the association management industry for 5 1/2 years and has been an active member and volunteer with CAI in the Minnesota Chapter. Congratulations, Joe!

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Calendar

Index

2010 April

MCIOA Update & Bankrupt Builders

features

departments

April 6, 2010, 8:30-10:30 a.m. $30 member early, $40 member regular, $50 nonmember

6 Protecting Your HOA from the

May

7 CAI Gives Back During Holiday

May 4, 2010, 8:30-10:30 a.m.

9 A Free System to Cut Your Work

Delinquencies, Collections & Foreclosures

Minnesota Thaw Season

By Jared Summers

Time in Half and Make Clients Happier! By Steve Hoogenakker

Homeowners Training Track: Insurance & Risk Management May 26, 2010, 6:00-7:45 p.m.

10 V-C-P…Oh Great, Another Acronym to Remember

Register online at www.cai-mn.com For more information regarding an event, call Taryn Ayres at 651.265.7856 or visit the CAI-MN Web site. Online registration is available at www. cai-mn.com.

By Tony Poetz

President’s Message

By Mark Gittleman

Member News

Thank You 2010 Annual Partners Platinum Gittleman Management Hellmuth & Johnson New Exteriors by SMA, Inc.

By Matthew Majkozak

11 The Case of the Missing Contract

By Steve Hoogenakker

12 Is Your Pool Green?

By Cheryl Svenningsen

13 Construction Defects – Really? By Joni Stulac

16 Shirt Management

By Tom Engblom

17 New Reserves Legislation – Learn How Your Association May Be Affected By Joel A. Hilgendorf

19 Attention Property Managers:

New Regulations for Lead-Based Paint By Mark Schoenfelder

Gold BEI Exterior Maintenance Community Association Banc Silver

Allstar Construction Management American Building Contractors Carlson & Associates Complete Building Solutions, LLC Gassen Management Hammargren & Meyer, P.A. Johnson and Lindberg Levin & Edin Omega Management

Bronze BNC National Bank Homeowner Association Website – HOA WEB Michael P. Mullen, CPA, PLLC RJF Agencies Schoenfelder Painting

[ ADS Index ] of Advertisers Allstar Construction Management................. 14

Complete Building Solutions . ......................... 14

Levin & Edin..................................................... 14

American Building Contractors, Inc............... 14

Construct-All Corporation................................ 13

Minnesota Exteriors Inc................................... 12

American Family Insurance............................... 4

Final Coat Painting.......................................... 10

New Exteriors by SMA, Inc............................... 2

Association Dues Assurance Corporation..... 17

Gassen Companies.......................................... 10

Omega Management, Inc............................... 18

BEI Exterior Maintenance............................... 18

Gittleman Management.................................. 20

Reserve Advisors.............................................. 18

Birch Lawn Maintenance................................... 4

Goetz Landscape Incorporated...................... 14

Reserve Data Analysis, Inc.............................. 19

Breiwick Companies.......................................... 9

Hammargren & Meyer, P.A. . ............................ 7

RJF Agencies..................................................... 6

Building Restoration Corporation.................. 15

Hellmuth & Johnson, PLLC......................... 8, 16

Russo Consulting Inc. ...........................................12

CA Banc/CondoCerts........................................ 4

Horticulture Services, LLC............................... 10

Schoenfelder Painting .................................... 14

Carlson & Associates, Ltd............................... 10

Johnson & Lindberg, P.A................................. 12

Thomsen & Nybeck........................................... 8

Published by Community Associations Institute — Minnesota Chapter, copyright 2010. All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Minnesota Community Living or CAI–Minnesota Chapter. The information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting, or other professional services by the CAI–Minnesota Chapter, or by Minnesota Community Living, or its authors. Articles, letters to the editor, and advertising may be sent to Chapter Staff Editor Jane Duntley at janeyd@cai-mn.com, or at CAI–Minnesota Chapter, 1000 Westgate Dr., Suite 252, St. Paul, MN 55114.

March | April 2010

Protecting Your HOA from the Minnesota Thaw By Tony Poetz, New Exteriors by SMA, Inc.

We’ve been here. We’ll be here.

Long-term dedication to your association.

t’s hard to believe, but the Minnesota thaw is just around the corner. At this time of year, HOA property managers lose sleep over the thought of icy sidewalks, water infiltration and ice dams creeping under shingles. The Minnesota snow melt can do a TON of damage, but there are some straightforward, low-maintenance solutions. 1) Gutters help a lot. The amount of snow on your roofs will translate to thousands of gallons of water in a hurry to hit the ground. All that water can be efficiently funneled away from your foundations. We have an entire article devoted to the benefits of gutters in our September/October 2009 issue. You can find it in the www.cai-mn.com archives. 2) Rake the lowest two feet of snow from your horizontal roof edges. This simple action allows a free flow of water to the gutters without creating those late March ice blocks on the edge. Extendable snow rakes are light and durable and a small crew can quickly move around the edge of each building. 3) Water infiltration at the foundation can be a simple matter of removing about two feet of snow away from the block. Buildings without basements are generally built on raised elevations and every building should have a grade that slopes away from the foundation. The sloped grade creates an easy path for water to move away from the home. Your snow crew can greatly advance this process by removing a couple feet of snow away by hand or snow-blower. A proactive solution that is becoming more common is the installation of hedges or hearty shrubs near the buildings edge to prevent snow buildup or wind blown snow. 4) Finally, ice dams. Though many believe they are simply part of living in a winter climate, they’re actually the result of failed attic preparation. When a home’s heat rises and hits the bottom of the shingles, the snow melts. The water heads down to the eave and over the edge. Once the water hits the edge, it’s no longer on a warm roof and it freezes - creating dangerous icicles and damaging ice dams. The water is still coming so the ice dam grows and grows upward underneath your shingles, peeling them along the way and finally resulting in a wet attic. How do you fix this? It’s simple physics.

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• Adequate insulation prevents heat loss. There are recommendations per type of insulation, but you generally want about 16” of blown insulation in your attics. • Your soffit (under the eave) ventilation allows cool air to blow into the attic reducing the shingle-heating warm temps. Siding contractors can take care of this for you. • Adequate roof ventilation up top allows an easy out-flow of attic heat. Roofing contractors know how much you need. Many times the addition of one vent to a roof solves an ice dam problem. The Minnesota thaw is almost here. Avoid the flood of water – and the flood of complaint calls – with just a few basic steps. 6

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CAI Gives Back During Holiday Season by

ver the past few years CAI has grown in membership, educational advancement, and business opportunities. In 2009, CAI took a greater role in giving back to those in need. Based on suggestions from Mark Gittleman, CAI President, and Mary Felix of Gassen Companies, Schoenfelder Painting spearheaded an effort to start an annual tradition for members to give their time to a worthwhile charity. Feed My Starving Children was chosen because it is a well run organization that not only distributes one of the necessities of life to those in need around the world but also because of the hands on experience it provides volunteers. To those unfamiliar with the process as a volunteer, it consists of 2 hour sessions that include measuring ingredients, packaging meals, which cost 17 cents each, and preparing the boxes to be shipped to one of many third world coun-

tries. The packaging session is accompanied by a short video that explains how and where the meals are shipped as well as how it impacts those receiving the life-saving meals. We are proud of the overwhelming numbers that volunteered for this first year. In total we had over 100 volunteers from CAI for our five scheduled sessions. These volunteers packaged over 75,000 meals that were sent to Haiti, El Salvador, Indonesia, Uganda, Nicaragua, Zimbabwe, North Korea, and the Philippines. Gassen Companies and RJF have since volunteered again to work at FMSC. Dennis Hanson of Laukka Management summarized it well when he said, “Working at FMSC is more fun than making beer.”

Jared Summers, Schoenfelder Painting

this experience with us as much as we enjoyed sharing it with you. A special thanks to participating companies: Laukka Management, Gittleman Management, Gassen Companies, New Concepts, Paradise, Community Development, Litehouse, All Ways Drain, Construct All, Rainbow Tree Care, BEI, Nesbitt Agencies, Serv Pro, CATS, BASF and many others. Next year at the trade show, we will again be seeking volunteers to serve. If you would like to be a team leader for next years event, contact Jared Summers at jared@schoenfelderpainting.com. To learn more about Feed My Starving Children, please visit www.fmsc.org.

Schoenfelder Painting would like to thank all of our friends at CAI that joined us in this charitable event and hope you enjoyed sharing

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March | April 2010

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A Free System to Cut Your Work Time in Half and Make Clients Happier! by

get about 10 new ideas every day. The first nine are usually pretty bad, and the 10th has some merit. This is definitely a #10.

As I was cleaning out emails from 2009, I noticed I had about 100 emails from one medium-size CIC from this summers’ service. Wow, I thought, I didn’t realize we had that much back and forth communication. This didn’t even count the 40-50 phone calls over the seven month period or my attendance at a few board meetings. In addition, when I looked through a few of the emails, it wasn’t uncommon to find that 3-5 people had been in the loop on each email! An example might be a request to repair a piece of downspout that had been run over by a mower. The process started with a homeowner, to the president, to the property manager, to me. I would write up our work order, it came back completed. I’d email back to the property manager again, and he’d contact the homeowner or the board. The inefficiency of this madness is amazing once you think about it, but what can we do? If it were possible to cut out 1/4 of the emails and time from beginning to end, it would be a fantastic creation, but I’ve found a way to cut out over half, and it’s free (for now). To do this, we’d have to have a single place where the information resides. A single place accessible

Steve Hoogenakker, Concierge Landscape Environments

by the property manager, the contractor and (optionally) the board. The association website software seemed the most natural place, but until Mark Johnson from Arcstone can build one, we found a method that works today and it’s free! 1. A spreadsheet is created for an association. The spreadsheet would have 6-7 COLUMNS listed across the top 1. ASSOCIATION NAME 2. WORK ORDER #,3. DATE, 4.SERVICE REQUEST DESCRIPTION, 5.WORK ORDER RECEIVED (by contractor) 6.WORK ORDER COMPLETED, and 7.COMPLETION NOTES. 2. The file is uploaded into Google Docs (free). You can then share it with whomever you wish. It’s easily done by inviting people to join using email addresses. Maybe the head of the grounds maintenance committee, president, property manager and contractor. If you want it available to the whole board, you can easily set permissions that allow the primary people to edit and update it but allow the board and/ or homeowners to view it. Allowing all homeowners to view it in effect publishes it to the web so everyone can see it. That doesn’t sound like a good idea to me. 3. You can set up notifications so that any time a change is made you can be notified once a day or immediately.

4. The property manager enters in the work order request, and notification automatically goes to contractor. 5. In the worst case, our office prints up the work order, marks the spreadsheet so everyone else knows that the work order was received with the date and sends it out to the field the next day. When completed, the office can enter it in as complete the following day, automatically updating everyone, or the same day if the crew calls it in. The best case scenario is if my operation manager or foreman has a mini-laptop in his truck; he can enter in the completion the minute it’s done! We can immediately markup the spreadsheet, along with any notes. Instead of making a chain of calls, property owners can view work orders on the web 24/7. 6. Everyone can view that the work order was sent, received, date done (or not) and any information. No phone calls were made, no emails were sent. A complete record of all work orders can be kept all year long, although that would be a pretty long spreadsheet. We saved all of the emails and phone calls. If I have mobile computing, I probably got the work order out into the field and the completion back 1-4 days sooner, and again it’s your favorite price, it’s FREE! This system would make a managers life a lot better in the winter where speed is 10 times more important.

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Google Docs is just releasing a method to upload all kinds of documents. Instead of a spreadsheet, if the property manager has an electronic work order, maybe it can be uploaded, shared and updated by me, the contractor the same way. As property managers start to customize this idea, it’d be wonderful to share it with CAI membership so we can create the best documentation available in the country.

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March | April 2010

V-C-P…Oh Great, Another Acronym to Remember by

n our industry full of acronyms (CAI, MCIOA, CCAM, CRM, CIC, HOA, CPA and too many more to mention), how is another one going to make your world a better place? Simple – this acronym is an equation and it works. Recently, we were brainstorming ways to help new vendor/service members get the most out of their membership. The step is, of course, to get involved. Getting involved builds relationships and paves the road to results. The most successful and profitable vendor/ service members (and businesses in general) are the ones that have built relationships and are therefore trusted by the general members. The challenge is that building a relationship takes time and effort. These two things seem to be in short supply now that many of us are multitasking, dealing with reduced budgets and less support staff. However, the VCP concept that I learned from BNI (Business Network International) Founder and CEO, Dr. Ivan Misner in his CD “Networking Secrets” is that getting involved leads to the first stage in this equation’s sequence:

Visibility By joining, participating and offering your

talents to CAI as a whole, you’re able to work with your potential clients first as a colleague. Whether you volunteer as an ambassador, Vision Awards committee member or Manager luncheon speaker, you will be working with general members. This allows you a chance to get to know them on a personal level. It also lets you reveal other talents a client will be looking for, such as your communication, organizational and out of paradigm thinking skills. Many companies spend thousands of dollars in advertising to convince prospective clients of the same thing. Once you have built trust as a colleague and are given the chance to show your professional skills, your visibility gives you the chance to gain:

Credibililty So, a general member/Property Manager has given your company the chance to bid, perform service or has even paid your final invoice. Great! You still have to build credibility. This part of the process usually takes the longest. Things like following up on loose ends of a project, addressing referrals from the client, and repeatedly demonstrating why you are the best choice in your specific profession will help build your credibility. Many companies drop the ball in this phase, focusing

Matthew Majkozak, New Exteriors by SMA, Inc.

only on the short term. It’s the long-term relationship building that leads to credibility, more referrals and:

Profitability Receiving and giving referrals. True profitability is when the relationship has been built so strong that both parties trust, respect and want to see each other succeed. Companies that see profits stay consistent year after year may have followed this method without even realizing it. One of the most important (and often overlooked) aspects is to ask for referrals. After you have built your credibility with a client or even another vendor/service member don’t be afraid to ask them for other people you can start the equation with. One of the fastest ways to receive a referral is to pass referrals. Visibility. Credibility. Profitability. The way to start making the equation work for you is by getting involved. CAI is constantly looking for volunteers. Remember that networking is more about farming than it is about hunting. VCP = long-term profitability.

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The Case of the Missing Contract By Steve Hoogenakker, Concierge Landscape Environments

t was a hot Monday afternoon in July and the humidity made it feel like an Indian sweat lodge. The air conditioner was refusing to work through another day, much like the temp that was hired here last week. My desk, looking like it belonged to Andy Rooney, was strewn with paperwork facing every direction.

common areas.” I don’t remember seeing that. I hope the birdbath was inside the sidewalk, but it’s not likely. I’m not looking forward to that visit and phone call. Ah, here’s edging. “Edging shall be completed once annually.” Well, no end date, so I guess they have until Halloween to finish. I’m sure they won’t wait that long, but when?

Emails had come in over the weekend about sprinkler heads shooting fountains 15 feet in the air, and I’d received 2 calls from the Vice President of the board asking when the pruning was going to be done. I even got an email asking about the sidewalk edging. Sidewalk edging? Who asks about sidewalk edging?

Then I found pruning. Pruning shall be completed twice annually, but after shrubs have flowered. What does that mean, I wondered? Surely some shrubs have finished flowering, it’s July for Pete’s sake. Have they done any of it? OK, one more question, irrigation, let’s see if that’s any better. Irrigation: “Lawn Sprinklers will be started up in the spring and blown out in the fall. If adjustments or repairs are necessary, it is the responsibility of client to notify contractor.”

I scrambled through the papers looking for the maintenance specs, then through my files. I called my assistant and asked her for the contract, but nobody had found it yet. The contractor finally called me back at 3:00 p.m. He didn’t think the pruning had been due yet. The edging might have been kind of done using a weed whip, he didn’t know. As for the sprinklers, how was he supposed to know? He said “I’ll get my irrigation subcontractor out there in the next week.” A week? Oh no. At 5:45 p.m., I left the office, never having found the specifications. I emailed the Vice President before I left and told her I was working on it, but I didn’t feel like I had made a lot of headway. Tuesday morning. Another email about wasting precious water due to the fountain sprinkler heads asking if I cared about the environment and if I was going to pay the water bill next month. I got a phone message from an angry resident about one of their bird baths being damaged by the mowers last week. With the edging and pruning questions still fresh on my mind, we did a full press search for the specifications. Voila, my assistant saved us! Well, saved might be a strong word. I started to read through it. Hmmm, I’d never seen specs like these before; they were only a couple of pages long so it should have been a piece of cake. Let’s see here, mowing; “Contractor not responsible for damage to personal items left in

So, I felt good that I found the contract and specs, but I still didn’t have a single answer to give to the association. This story happens hundreds if not thousands of times in Minnesota each year in one form or another. The problem arises because there is no standardized specifications for grounds maintenance. The specs could’ve come from a book, or more likely, they’re using a contractors specifications. I’ve run the largest landscape maintenance business here through the 1990’s and I can tell you that 20% of the language in contracts being passed around is language I wrote in 1999, and I am not an attorney! In the past the board probably took 3 bids with 3 sets of specifications and accepted one. If they were one of the lucky ones, they kept using the same specs even after the contract ran out. If not, when the bid was up again, they asked for 3 more bids and got 3 different sets of specs to try to compare and had a new board to re-learn everything all over again. So, what’s the solution? Whether you’re non-managed, a managed association, or a management company, you need to come up with your own set of specs and standardize as much of it as possible. To me, NOT having grounds maintenance specs for one of the

biggest budget items and complaint items is just like trying to run an association without having MCIOA as a backstop! There are only a couple of large management companies that have their own specs and they have a big competitive advantage over all the others. Their property managers already know what’s required at each site, why and when. They have deadlines for pruning and edging and they’re the same date, so on July 15, sidewalk edging had better be done at every site. 80% of the thinking and brain damage of the board and property managers has already been eliminated. Just mark it in your Outlook calendar in February: “first edging to be completed July 15.” You’ll see July 15 coming up so you can contact the vendor 2 weeks in advance with a reminder if you wish. The standardized specification makes less work for the manager, and in turn makes the manager and the board more efficient, and that translates into a happier association. So, how do you go about making standardized specs? Since 90% of the horticultural items apply to all sites, standardize as many dates and descriptions as possible. For those few items that have to be customized, put them on as an addendum WITH DATES. Grab 2-4 of your current landscape contracts and set up a meeting with 1-2 landscape contractors (with their current contracts), 1-2 of your property managers and optionally 1-2 respected board members. Send the documents out ahead of time and ask all to comment. Then, buy them lunch to come up with best parts of all contracts. Have them combine the specs into two sets. One for very small associations and one for larger associations. Run these by your accounting and legal departments and start using the “ABC Grounds Maintenance Specifications” as your own competitive advantage. Once done, 90% will always be done. You can tweak it over the years, but as the great philosopher Susan Powter says, “Stop the Insanity!” Steve Hoogenakker Concierge Landscape Environments Steve@Landscape.Pro 763-213-2410 March | April 2010

Is Your Pool Green? By Cheryl Svenningsen, CMCA, AMS- Gittleman Management

s more people become in tune with the environment, they are looking for alternatives in pool and spa maintenance that are healthier for people and the planet. Advances in technology and materials continue to evolve, giving associations more choices on maintaining their pool or spa with less chorine, reduction or elimination of other chemicals and less time spent on upkeep. This is a highlight of those with the most promise of making your pool green while creating a better, healthier swimming experience.

Sphagnum Moss Minnesota is the Land of 10,000 Lakes, so it should come as no surprise that a Plymouthbased company, Creative Water Solutions, has developed a patented treatment system to keep pools and spas clearer using sphagnum moss. Moss bogs in the northern part of the state have been credited for playing a part in the clean, crystal clear waters. In the past, sphagnum moss has been used to treat wounded soldiers prior to the development of antibiotics and Native Americans used it as diaper material. johnson_2.5x4.5_bleed.pdf

2/4/07

Using a moss-based filtration system has many benefits: • It significantly reduces the amount of harsh chemical usage such as chlorinesometimes as much as 90%. • It eliminates the need for cyanuric acid used to stabilize chlorine in outdoor pools. • It inhibits the growth of bacteria, fungus, mold & yeast. • It creates more natural water conditions and clearer water. • Lessens the impact of color changes and damage to swimwear and hair. • Eliminates the “chlorine” smell and irritation to the skin. • Moss is a renewable resource and it can be composted when you’re done with it. • Less chemicals end up in sewage system and water treatment plants. • Reduction of corrosion in pipes, pumps, heaters and other equipment. The City of St. Paul, MN piloted the first large-scale commercial test of the moss filtration system at a public aquatic complex in the sum-

8:33:09 PM

mer of 2009. In monitoring the results, the city found that they used two-thirds less chlorine, didn’t have to clean the pool as much and the water quality was wonderful. When treating the indoor pool, there was an improvement in air quality as well, eliminating the “pool” smell out of the whole building within a couple of days. The cost for these moss water treatment systems depends on the number of gallons being treated but run under $100 for a spa to several hundred dollars for a pool. For more information, visit Creative Water Solutions at: http://www.cwsnaturally.com

Salt Water Salt-water pools are quickly becoming more popular than traditional pools, especially in the southern United States. A salt-water pool is simply a pool that uses salt in a chlorine generator to produce chlorine rather than buying it. The amount of salt in this type of pool is 10 times less than that of the ocean and is around the salt level in the human body. Is Your Pool Green? continued on page 14

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Construction Defects – Really? by

Joni Stulac of Servpro of Brooklyn Park/Champlin; Scott May and Jeff Nonhof of Engle Martin and Associates

e all look forward to Spring being just around the corner, being able to get out and enjoy the sunshine and warm weather and longer days. As we can hardly wait to have some fun, we also remember that this is the time for the cleanup and repair of our property from the previous winter. With construction can come some unforeseen defects. What are some of these defects? How do they occur and what can we do to help prevent them? What are the damages that can result from construction defects? Some examples of possible construction defects would be fire suppression systems, leaky windows, roof collapse, and cracking of the foundation or walls due to the earth moving and settling. Basically, you could encounter problems with every component of a building as well as the equipment inside of the building. Construction defects can occur during the construction process of a new building, an addition to an existing building, or in maintaining the building. What are some of the reasons that this happens? •

Were the building and repairs designed correctly, taking in all of the elements of the entire building as well as the climate that it was constructed in?

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Was the building constructed and/or repairs completed correctly? Was there some reason why the general contractor or a subcontractor had to deviate from the original design? Were the correct building materials used as specified for that type of construction? Was the correct material or product specified by the architect? Did the building materials themselves have any inherent defects? Were the manufacturer requirements and recommendations met for maintaining the equipment or property to prevent breakdowns in the system? Were the repairs and/or construction made in conjunction with current building codes?

As you can see, there are many things that can contribute to the breakdown of the building. What can you do as a property management company or a developer of new construction? •

Make sure that when you hire the company(s) to design, construct, repair and install what is needed in your building that you check them out. Do they have all the credentials required to do the job correctly? Licenses, permits, and insurances certificates? Request from your General Contractor or sub-contractors a certificate of insurance. This certificate should come directly from the contactor’s insurance agent, as they are easily copied and dispersed. Also request copies of the inspection records, Siding Repair showing that all • Work Owrder Repairs major buildand Investigations ing items have • Structural Repairs been approved and signed off • Estimates on. Hiring a • Budget Proposals construction • Experienced Staff management • Quality Work company and • Competitive Prices or consultant

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for expertise in the area needed can also be considered. • Make sure that you maintain your property in the spring and fall according to the recommendations. Repairing roofs, caulking windows, repairing cracks, cleaning out gutters, clearing out those air ducts, inspecting insulation, furnaces and exchange systems, just to name a few. • Communicate, Communicate, Communicate! Make sure that the owners/tenants of each unit know the requirements and expectations of how and what needs to be done. 1. Do you have a requirement in your bilaws governing what is to be done when a tenant vacates the property for a long vacation or go south for the winter? A good idea would be to take exerts from the bi-laws and send them out to each tenant or owner in a newsletter each fall. 2. Are the required and/or systems in place to have someone from the management company to have access to the unit, so that during one of our long, nasty and very cold spells you can check to make sure there are no problems? One of the biggest issues that we face every winter is frozen pipes bursting from either the heat being turned off or turned down too low. Based on the physical characteristics of the building and the climate, the heat in the building typically cannot fall below 55 – 60 degrees. Have you ever seen the outside of a building in the winter where it looks like a frozen waterfall coming from the eaves? More than likely the heat was set to low to maintain the warmth needed to stop this from happening. If your building does encounter such a tragedy, call in the professionals to take care of the issue immediately, stop the cause of the problem, and develop a plan to prevent further damage to your building from occurring. Have a professional give you an assessment of damage and DO NOT throw anything away until this has been done. If the cause of loss was found to have occurred from a manufacture or construction defect, such as a frozen pipe or faulty sprinkler head an investigation may be conducted by an insurance adjuster or other professional to protect possible subrogation opportunities. March | April 2010

Is Your Pool Green? continued from page 12 The benefits of a salt-water pool include: • Provides a more consistent supply of chlorine naturally. • The water in a mild saline solution feels smooth, similar to showering in extremely soft water. • Since the generator produces it, you don’t have to buy, store or handle chlorine. • People report smoother skin and feel more refreshed. • Costs less time & money in maintenance. • Eliminates burning red eyes. • Lessens the need for other harsh chemicals. • Less chemicals end up in sewage system and water treatment plants.

Some disadvantages include the need to monitor the PH levels closely, having to add salt to the chlorine generator and having to clean off salt staining around the pool area. The initial upfront cost for installation can be at least $1,000 and up to several thousand dollars for a good quality chlorine generator, but you will save time and money on the upkeep.

The Bottom Line While you may have to do your homework to see which of these, or other options, would be best for your association, you can save time,

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The Vision Awards Program recognizes the “best of the best” individuals for their outstanding achievements in the community association management industry. Award winners and nominees illustrate high standards of management, certification, training and commitment to excellence.

Complete the nomination form online at www.cai-mn.com Rookie of the Year Award Recognition is given to a manager with fewer than two years experience in the management industry who has displayed exceptional abilities either generally or on a specific project. Provide details that reflect the manager’s significant accomplishments.

Excellence in Service Award Recognition is given to a manager or affiliate member who displays integrity, reliability, commitment to the industry, loyalty to consumer clients and the ability to interact well with board members, managers, service providers and other industry professionals. Contributions to the CAI-MN Chapter and promotion of ethical conduct and competence are included as part of the qualifications for this award.

Outstanding CAI-MN Chapter Volunteer This award is presented to the member who has contributed extraordinary service and time to the growth and development of the CAIMN Chapter. The nominee must have committed significant time, talent and/or resources to the achievement of programs to advance CAI-MN Chapter goals during the previous year. Examples include: Committee members/chairs, Board members, Instructors, etc.

Free Homeowner Education Program

Service Professional of the Year You may nominate any individual or business partner who has provided outstanding services to a Community Association. For example: property maintenance, finance, legal, insurance, restoration, property enhancement, etc.

Homeowner Association of the Year Recognizes the outstanding team effort of an association board and homeowners whose members clearly understand their roles and fiduciary responsibilities putting the association’s interest ahead of and above all personal agendas. A board comprised of effective volunteer leaders who are fair, responsible and reasonable in their decisions.

Lifetime Achievement Created to honor those members of CAI-MN who have provided a superior commitment to the advancement of the Chapter and the Community Management Industry through leadership, service and dedication to the mission of CAI. The Lifetime Achievement Award is not presented annually. It is awarded only in special instances to recognize individuals whose conduct and professionalism model the ideals of the industry. Inductees have contributed substantially to the growth and perpetuation of the Chapter through their individual efforts. Active participation on the Board of Directors or a committee need not have been their primary contribution. The winner will be selected by the CAIMN Board.

CAI offers a new series of webinars to make education more convenient for busy members like you. Additionally, two online resources are immediately accessible for CAI members: An Introduction to Community Association Living and The Fundamentals of Community Volunteer Leadership.

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March | April 2010

Shirt Management by

nnually I look forward to visiting Arizona in January, leaving frigid Chicago for an annual sales training. The uniqueness of the training was obscured until the redefined version of the author emerged! Upon arriving at the hotel and immediately unpacking, the room became a home for the next several days. Unfortunately, garments became wrinkled during flight and required attention. Immediately an “AHA” moment occurred while I was pondering the proper action: to re-iron the shirt or wear it in the current state of flux. Webster defines a shirt as “the usual sleeved garment worn by men on the upper part of the body, often under a coat or jacket, typically having a collar and a buttoned opening down the front, a similar garment for a women” and “a slang for a shirt as ’keeping one’s shirt on, as being patient or calm.” Shirt Management is interchangeable in every aspect of association management whether is pertains to Banking, Fiscal Management, Legal, Landscaping, Management, Maintenance, and Roofing. Every vendor purchases a shirt or

blouse from a retailer based on preference of that consumer. Garment stores offer a myriad of apparel selection to wear dependent on the event to attend. Comparatively, shirts are worn in the same manner; however, each vendor presents an esoteric shirt style of their own. First impressions are important based on the shirt worn by the vendor. The shirt from the cleaner’s, perfectly pressed, projects “on top of their game”, pride, and respect to you as a client. A wrinkled shirt potentially projects disorganization, lack of business value, or doing business on an interim basis. A long sleeved shirt rolled up to mid arms project endless hours or work by the vendor until the job is completed. It could also reflect no job is too large or small and the client is important. Should I even address the shirt not tucked in or half-button based on a generational mantra? Shirt Management is imperative in association management, selecting the proper apparel for your event. Everyone wears a shirt; however, the difference for an association is the correct size, length and style for your Banking, Fiscal Management, Legal, Landscaping, Management,

Tom Engblom, Community Association Banc

Maintenance, and Roofing needs. Predominately, do you clean your shirt with new detergent (ideas) or ultimately purchase a new shirt during pitfalls? Regardless, Shirt Management is imperative to association management, and involves selecting the correct apparel for the event. Eventually you will need to keep your shirt on to remain calm! Have you selected the right shirt for you business endeavor? Tom Engblom is a licensed instructor in Illinois for Real Estate for the past 22 years and National instructor for CAI. Tom began a career in property management in 1984 and earned ARM, CPM, CMCA, AMS, and PCAM managing a minimum of 3,500 units within the suburbs and Chicago for 20 years. Tom joined Community Association Banc, a division of Mutual of Omaha Bank, in March 2004 as a Regional Account Representative for the upper mid-west accelerating to Vice President achieving deposits in excess of 175 million covering Minnesota, Wisconsin, Illinois, Indiana, Michigan, Kentucky and Ohio. Tom can be reached at TEngblom@cabanc.com.

The Easiest Maintenance Decision You Can Make. Associations face numerous maintenance decisions. However, when it comes to maintaining your association’s legal affairs, look no further than Hellmuth & Johnson. Hundreds of associations and property managers look to us as the definitive source for legal expertise, education and counsel. As one of the first firms in Minnesota to focus on this specialized area of law, we know the many challenges of running and managing an effective home owners association. For attorneys who know associations, call us or visit our web site www.mncommunityassociation.com.

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Minnesota Communit y Living

New Reserves Legislation – Learn How Your Association May Be Affected by

As many readers know, there is a 2010 legislative initiative to amend the Minnesota Common Interest Ownership Act. As of the drafting of this article, a bill has not yet been submitted to the legislature; however, many important and significant changes to MCIOA are currently on track for inclusion in the anticipated 2010 legislation. A significant component of the proposal would amend several provisions of MCIOA to address issues regarding association replacement reserves. This article provides a summary of some of the most significant changes regarding replacement reserves that are likely to be included in the proposed legislation.1 The current version of Minn. Stat. §515B.3114 provides as follows: The annual budgets of the association shall provide from year to year, on a cumulative basis, for adequate reserve funds to cover the replacement of those parts of the common interest community which the association is obligated to replace. These reserve requirements shall not apply to a common interest community which is restricted to nonresidential use. The current language of Minn. Stat. §515B.3114 provides a broad requirement for associations to fund reserves, leaving out the specifics. Problems arose in many associations in recent years related to replacement reserves, on a scale not contemplated by the Act. These problems led to a call for greater legislative protections for associations in this area. A proliferation of troubled CIC projects, along with the general economic downturn, led to underfunded replacement reserves in many associations. It became increasingly common for associations to tap into replacement reserves for general operating expenses and other uses other than their intended purpose. These problems have led to a significant increase in litigation related to reserves, often by fledgling associations against their developers, for failure to establish adequate reserves, failing to establish adequate budgets, and violating declarant and board duties, among other claims. Although MCIOA, along with other State and Federal laws, provide certain protections to associations, litigation is a burden on a fledgling association. The proposed reserve amendments are designed to help prevent the circumstances

Joel A. Hilgendorf, Esq., Hellmuth & Johnson, PLLC

that lead to litigation in the first place. Further, lending requirements have tightened for Fannie Mae approved and FHA insured loans, including requirements that associations fund their replacement reserves. To obtain Fannie Mae lending approval for condominiums, lenders must review the association’s projected budget to determine that it is adequate, that it provides for the funding of replacement reserves for capital expenditures and deferred maintenance at least 10% of the budget, and that it provides adequate funding for insurance deductible amounts. To be eligible for FHA insured financing, lenders must review an association’s annual budget and determine that the budget is adequate, and includes allocations to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condominium project; provides for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget; and provides adequate funding for insurance coverage and deductibles. Under the proposed MCIOA amendment regarding reserves, the association shall include in its annual budget replacement reserves projected by the board to be adequate, together with past and future contributions to replacement reserves. The association’s annual report shall now contain a statement of the association’s total replacement reserves, the components of the CIC for which the reserves are set aside, and the amounts of the reserves, if any, that the board has allocated for the replacement of each of those components. Unless required by the declaration, the annual budget need not include reserves for limited common elements, nor need the budget include reserves for components with a useful life of more than 30 years.

If it wasn’t doing so before, the association must now keep the replacement reserves in an account or accounts separate from the association’s operating funds. Further, the association cannot use the replacement reserves to fund operating expenses or borrow from the replacement reserves to fund operating expenses; however, the association can pledge the reserves as security for a loan. The association must re-evaluate the adequacy of its replacement reserves at least every third year after the recording of the declaration. This method of re-evaluation is within the association’s discretion, and there is no statutory requirement of a formal reserve-study. Unless otherwise provided in the declaration, the association retains the power to fund certain replacement costs through special assessments. This situation can only happen after termination of declaration control, and requires approval by both the board and by a majority of votes in the association (other than the declarant or its affiliates). Like the current reserves provision, the proposed changes would not apply to nonresidential CICs unless otherwise required by their declarations. To allow time for CICs to adjust to the new requirements, the proposed changes regarding reserve requirements would not take effect until the fiscal years commencing on or after January 1, 2012. 1 This summary does not purport to cover all relevant chapters or sections. Further, the provisions summarized here are proposed legislation only. Due to the legislative process, said provisions may not become law, or may become law in a different form. The information in this article is general information and does not constitute legal advice regarding action to be taken in any particular case. The reader should consult with their attorney for assistance with making decisions in conformance with these and other legislative developments.

March | April 2010

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Attention Property Managers: New Regulations for Lead-Based Paint by

he EPA has issued new regulations for lead-based paint beginning April, 2010. The regulations apply to anyone who hires or is paid to renovate, repair or disturb lead-based paint in a home or child occupied facility. This specifically includes community managers, painters, electricians, drywallers, and plumbers. Homeowners working on their own homes are not included. The regulations require that renovations involving lead need to be performed by an EPA Certified Firm using Certified Renovators or employees trained and supervised by a Certified Renovator. Lead was used as a paint additive for hundreds of years. Lead is toxic to humans and in the 1960’s and 1970 it was mostly phased out and banned from use in residential homes. After 1978, it was almost never used in housing. Currently about 35% of homes contain lead with fewer homes having lead in areas that are likely to be disturbed. It is estimated that less than 5% of townhomes have lead and 10% of condos, but at least 40% of rental housing contains lead based paint. The condos that do have lead are often former apartment buildings that underwent a conversion. If lead is present in a home, it typically does not have to be removed unless it is being disturbed. If you have lead-based paint on your walls and woodwork, but it is sealed with more recent coats of paint from the 1980’s and 1990’s, you probably do not have to worry about it. However, if the paint is peeling, cracking, flaking, etc, it can be health hazard worth addressing. A common source of lead poisoning is caused by windows. Old wood windows frequently contain lead-based paint. When they slide up and down, the sides of the windows rub against each other creating dust. The dust can be invisible yet contain high concentrations of lead. This dust may get on the children’s hands and be ingested or inhaled. Lead is harmful to adults but particularly dangerous to children. Lead poisoning and the new regulations are very important to community managers and homeowner associations (HOA’s). The new EPA regulations explicitly include community managers and by implication self-managed HOA’s that hire a contractor. They have liability exposure if they do not follow these regulations.

Mark Schoenfelder, Schoenfelder Painting, Inc.

The new regulations also enumerate fines up to $32,000 per day for violations. The new regulations will increase the cost of renovations that disturb lead, but they will also increase the safety for occupants and renovators. Even if a home is pre-1978, renovations may be affordable. The first step in any renovation is to determine the age of the structure. If it is post-1978, lead is not a concern. If it is pre-1978, the next question is whether lead will be disturbed in the process. This likely will involve testing the surfaces that will be affected. All testing must be done by an EPA certified renovator. A certified renovator is able to ascertain if there is lead, whether it will be disturbed, and what precautions need to be taken. Many projects on pre-1978 homes will NOT require additional work beyond testing. If the project does contain lead, lead-safe practices need to be followed. The regulations specify that the work be done by a Certified Renovator or workers trained and supervised by a Certified Renovator. The regulations require specific notification requirements to residents, dust control, warning signs, specific clean up requirements and testing. Additionally, many practices are now prohibited like sanding, grinding, planing, needle gunning, blasting and other activities that create large amounts of dust. After completion the Certified Renovator must prepare and deliver test results to the owners and maintain records for 3 years. These regulations are available at www.epa.gov/lead. How do you know when to worry about lead? Screen your property carefully. Do not perform any construction, renovation, rehabbing, repairs, etc. on any property that is pre-1978 unless you have a certified professional involved. Fines for doing so can be as high as $32,000 per day and the health concerns are even more important. Mark Schoenfelder CAI Past President, Member of Vision Awards Committee and Membership Committee. BBB, MMHA, BATC, IREM and EPA Certified Renovator

March | April 2010

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