CAI-MN Minnesota Community Living - Sep/Oct 2010 by CAI-MN

Minnesota’s premier homeowners association magazine

September/October 2010

In this Issue: How Do You Know if it’s Time for a New Asphalt Roof Making Repairs During a Potential Construction Defect Claim

Volume 28 • Issue 5

Your 2011 Budget Create a Strong Financial Engine

Condominium Upgrade: Floors And Much More!

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

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Minnesota Communit y Living

Board of Directors

From the President

By Holly Johnson | CAI-MN President

Fall is here! This is, by far, my favorite time of year. The air is crisp and clean and there is something more intangible: the allure of a clean slate and a fresh start. I am sure that I am not the only one who remembers the back to school frenzy: the school clothes shopping, the new school supplies and clean, un-written in notebooks. The possibilities were endless and the anticipation was almost too much to handle. A new beginning! I hate to acknowledge how old I am getting, but I clearly remember being excited when I received the 64 count crayon box with the built in sharpener. Now, kids are not excited about their back to school gear unless it includes a phone with unlimited texting and internet. The “stuff” may be different, but the feeling is the same. Excitement! I still get excited with the possibilities of fall each year. There is too much drama and pressure when it comes to making resolutions on December 31. Fall, however, is a perfect time of year to begin something new, to recommit ourselves to something that we may have neglected, or worse, something that may have become complacent in our lives. Is there something about this industry, your career, or your community that rings true with this statement? If so, what a perfect opportunity to seize the moment and recommit! Our educational opportunities at CAI-MN are fantastic. If you are drawn to the education and classroom aspect of fall, check out our Manager Education events or our HOTT events. I am sure you will find something coming up that interests you. Do you want to make this the year that you really focus on your career? Where are you at with your certifications and your PDMP courses? What about your Community? Is it time that you look at it with fresh eyes? Many of us are working on budgets this time of year. What do we really need to budget for? Don’t get stuck doing the same thing each year—look at the possibilities. Look at your Community like you did when you first saw it. Fall is also great time to recommit to the relationships you have with your Board. Sometimes we allow these to become stale. Remember what it was like to see your

friends again when you went back to school in the fall? Treat your Board members the same way. Be excited to see them and listen to what they did over the summer. A little reconnection can go a long way in developing a strong working relationship. Take the time this fall to get excited again. It is a perfect time to re-evaluate and re-energize ourselves. Let’s make this fall full of fresh starts. No. 2 pencils ready! I wanted to also take just a moment to talk about some of the exciting events that have taken place at CAI-MN. Our Annual Meeting and Vision Awards has come and gone and a number of exceptional individuals were nominated for these prestigious awards. Congratulations to the 2010 winners Hamlet Vazquez for the Excellence in Service award; Mark Schoenfelder for the Outstanding CAI-MN Chapter Volunteer award; John Tracy for the Rookie of the Year award; Sara Lassila for the Service Professional of the Year award and The Jonathan Association for the Homeowners Association of the Year award. I know that every award ceremony uses the line that it is an honor to just be nominated, but I truly believe that it IS an honor to be nominated for a Vision Award. Only the best of the best get nominated, and for those that walked away with the award, a well deserved congratulations! You have done an amazing job! A special thank you goes out to Schoenfelder Painting and New Exteriors by SMA for sponsoring the “after party” at CRAVE in St. Louis Park. Attendees were able to continue the celebration after the awards with beverages, appetizers, and good company. The golf event was a hit again this year! Every year this event grows and is becoming the pinnacle of the summer events for CAI-MN. The weather made everyone second guess what to wear, but although it was hot and humid with a some rain in the morning, it was a success none the less! Please check out the pictures on the CAI-MN website.

President Holly Johnson, CMCA, AMS, PCAM Phone 763.225.6400 hjohnson@developcommunity.com President-Elect 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 Phone 866.800.4656 tengblom@cabanc.com Mark Johnson Phone 612.381.9951 mjohnson@associationsonline.com Michael Klemm, Esq. Phone 952.953.8832 klemmm@seversonsheldon.com Traci Lehman, CMCA, AMS, PCAM Phone 612.381.8600 tracil@citiesmanagement.com Nancy Polomis, Esq. Phone 952. 941.4005 npolomis@hjlawfirm.com Jim Rezek Phone 763-424-9984 jimrezek@comcast.net Halo Stafford, CMCA, AMS, PCAM Phone 952. 277.2785 hstafford@gittleman.com Gene Sullivan Phone 952.922.2500 gene@ncmgi.com

Finally, the annual Volunteer Appreciation Event was held at the Edina Country Club in July. It is an event to thank and acknowledge the awesome volunteers that make up the committees for CAI-MN. It is my hope that this event will continue to grow as I know that many of those individuals that make our committees and events a success were not able to attend this year. For those who were in attendance, thank you. For those of you that were not able to attend, thank YOU as well! Your hard work is what makes CAI-MN a success.

Committee Chairs Legislative Action Chair Michael Klemm, Esq. Phone 952.953.8832 KlemmM@SeversonSheldon.com

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

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

Nominating Chair Jonathan Edin Phone 651.222.2155 jedin@mnconstructiondefects.com

Communications Chair Steve Hoogenakker Phone 763.213.2410 steve@landscape.pro

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

Home Owner Training Chair Sara Lassila, CPA Phone 952.935.6868 September slassila@jmm-cpa.com

Membership Chair Rachel Wexler Phone 763.225.6400 | October 2010 3 rwexler@developcommunity.com

2010 Tax Credit End: 12/31/10 by

Tony Poetz, Spectrum Home Services

We’ve been here. We’ll be here.

Long-term dedication to your association.

ecember 31, 2010 is the last day to cash in on home improvement rebates brought about by the American Recovery and Reinvestment Act of 2009. The act dedicated $4.3 billion toward products that make homes more energy efficient and environmentally friendly. Basically, if you install a product that makes your furnace or air conditioner run less, there’s a good chance that you can take up to 30 percent of what you paid for the product off of your 2010 taxes. Most of the rebates top out at $1,500 PER EXISTING HOME. It’s not per person or product or new construction...it’s per existing household which means each unit in an HOA is eligible. Energystar.gov has a ton of details about what, who, where and how much. The first category contains items that qualify for the 30 percent (up to $1,500) rebate until December 31, 2010. Some of these products qualify for the rebate, but the labor to install them does not. Those items are noted. Make sure your contractor itemizes their bill into parts and labor (which an upfront contractor will do without being asked) so you can properly claim the parts on your taxes.

• • • • • • •

Central AC Air Source Heat Pumps Furnaces Water Heaters Windows and Doors (material only) Roofs (material only) Insulation (material only)

The second category features products that provide significant energy returns and drastically reduce environmental impact. Because these products perform better, the rebate and timeline available is considerably more. The cost of materials and labor qualifies for the 30 percent rebate and with these products there is no upper limit. There’s no $1,500 cap. The deadline for these items to qualify is extended until December 31, 2016.

• • • •

Geothermal Heat Pumps Solar Panels Solar Water Heaters Small Wind Energy Systems

Association Risk Management & Insurance Commitment • Adapting to your needs • Protecting your future

Advocacy • Unique solutions to control risk • Priority claims support

Experience • 20+ years helping associations • Multiple markets aligned to your current and future needs

Finally, the Fed has extended the homebuyer tax credit (10 percent of price up to $8,000) until April 30, 2011. You can save $8,000 if your closing occurs before that date. Buy earlier and take advantage of the $1,500 for a total of $9,500 in savings. $9,500 back for buying a home with upgraded appliances…start calling now.

d? ] [ Have You Hear 73 percent of community association volunteer leaders responded to a recent CAI-MN survey that they find the Community Living Magazine to be a valuable resource. 4

Minnesota Communit y Living

Community Association Insurance Services (763) 746-8000 www.rjfagencies.com

Calendar

Index

2010 October

Managers Seminar – Time Management & Multi-Tasking October 13, 2010, 11:30 am–1:30 pm Sheraton Bloomington Hotel $30 for members (early); $40 for members (regular); $50 for nonmembers

M-100, The Essentials of Community Association Management

October 14-16, 2010 Holiday Inn Select Airport Hotel $445 for members, $545 for nonmembers

Bare-Bones Basics for Boards – Rules and Regulations/Collection Policies

October 27, 2010, 6:00–7:45 pm Sheraton Bloomington Hotel Free – homeowner; $30 – manager/ business partners; $15 – manager/business partner bringing one homeowner; free – manager/business partner bringing two or more homeowners

November

Managers Seminar – Insurance

November 2, 2010, 8:30–11:00 am Sheraton Bloomington Hotel $30 for members (early); $40 for members (regular); $50 for nonmembers

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 website. Online registration is available at www.cai-mn.com.

features

departments

4 2010 Tax Credit End: 12/31/10

By Tony Poetz

6 How Do You Know if it’s Time for a

New Asphalt Roof

By Clay Curran

8 HVAC System Cleaning

By Cory Wombacher

9 Spoila-what? Making Repairs

During a Potential Construction Defect Claim

By Jonathan Edin

11 Condominium Upgrade: Floors

By Tony Poetz

14 Is Your Association Like a Box of Chocolates?

By Thomas C. Engblom

15 Create a Strong Financial Engine for

2011

By Amy Dullum

18 Minnesota Community Association Voting Legislation Joins the Electronic Age

By Kurtis Peterson

President’s Message By Holly Johnson

Thank You 2010 Annual Partners Platinum Gassen Management Gates General Contractors, Inc. Gittleman Management Hellmuth & Johnson New Exteriors by SMA, Inc. Gold BEI Exterior Maintenance Community Association Banc Silver Allstar Construction Management American Building Contractors Carlson & Associates Complete Building Solutions, LLC 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

“I enjoy articles that feature various associations and the things they are doing well, or problems they are facing. It helps us in our long range planning.” – CAI-MN member

[ ADS Index ] of Advertisers Ace Chem Dry.................................................... 8 Allstar Construction Management................... 6 American Building Contractors, Inc............... 10 American Family Insurance............................. 10 Association Property Management Co. ....... 16 BEI Exterior Maintenance................................. 2 CA Banc/CondoCerts...................................... 19 Carlson & Associates, Ltd................................. 9 Complete Building Solutions ........................ 10

Construct-All Corporation.............................. 14 Final Coat Painting.......................................... 10 Gates General Contractors, Inc. . .................. 12 Gassen Companies.......................................... 17 Gittleman Management.................................... 7 Hammargren & Meyer, P.A. . ............................ 8 Hellmuth & Johnson, PLLC....................... 10, 16 Johnson & Lindberg, P.A................................. 11 Levin & Edin....................................................... 6

Minnesota Exteriors Inc................................... 13 New Exteriors by SMA, Inc............................. 20 Omega Management, Inc............................... 14 Reserve Advisors.............................................. 19 Reserve Data Analysis, Inc................................ 8 Rick’s Roofing & Siding Inc.............................. 16 RJF Agencies..................................................... 4 Thomsen & Nybeck......................................... 13

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.

September | October 2010

How Do You Know if it’s Time for a New Asphalt Roof by

nless you have residents calling you up every time it rains, you probably don’t spend a lot of time thinking about replacing your old, sloped, asphalt shingle roofs. On the surface this makes perfect sense. You don’t change a light bulb just because it’s been in the lamp for a long time; you wait until it burns out. Unfortunately, the two situations are not analogous. A burned-out bulb may be inconvenient, but it is not causing thousands of dollars worth of damage to your building until you can swap it out. Also, when you do decide to replace your roof you can’t just run down to Walgreens and buy one with the change you find in your couch cushions. When your roof gets close to the end of its useful life you need to be ready with a budget and a plan. So, how do you tell how long you do have? The unpleasant answer is that there are no guarantees. A number of factors beyond your control may play a critical part in the longevity of your sloped asphalt roofing system. They include, but are not limited to, the quality of the labor and materials used on the original installation, the functionality of the roof ’s ventilation system, the exposure to environmental conditions (wind, sun, pollution) and non-essential foot traffic (hanging lights, adjusting antennae, etc.). Depending on the severity, any of these conditions could significantly shorten your asphalt shingle’s life expectancy. So, what are some things we do know that can help us make this determination?

Clay Curran, American Building Contractors, Inc.

Let’s start with the age of the roof. This is where a lot of people get confused. Don’t be fooled by the number that was on the packages of shingles you bought (e.g. 30 year). Maybe roofs last that long somewhere, but not here in Minnesota. Hot summers and cold winters take their toll on shingles. Assuming the issues mentioned in the paragraph above are not playing a significant factor, a realistic estimate would be closer to 1012 years of solid, problem-free life and maybe another 5-8 years where the roof is really on borrowed time and periodic repairs may be necessary. How do shingle companies get away with this misrepresentation? Because of space restraints you’ll have to read my other articles where I expand on this, but the fact of the matter is, if your sloped, asphalt shingle roof is in this age range, you better start getting your plan together quickly.

mining the condition of the roof yourself, have a competent roofing contractor take a look and give you an honest evaluation. If you play your cards right you can probably find someone to do this at no cost.

The second thing to consider is the observable condition of the roof. Obviously, be careful not to damage the roof while making these determinations. Things that should be cause for alarm are lifted and missing shingles, curling ends and shingle blistering (which looks exactly like it sounds). Even more disturbing is granular loss on the shingles. I’m not talking about finding a few granules in the gutter, which is completely normal. I’m talking about bare patches on the shingles themselves. Those ceramic granules not only make the shingle look pretty, they protect the asphalt in the shingle from the sun’s harmful UV rays. If the asphalt in your shingle is exposed to the sun it’s only a matter of time before it shrinks and decays, leaving you with a hole in your roof. When your roof starts exhibiting any of these problems, again, you better start figuring out how you can get the roof replaced in the relatively near future. If you’re not comfortable deter-

Second, if you wait until someone notices water inside, you may have waited too long. Water could be coming in for a long time before the tell-tale stains on the ceiling show up. It may be ruining insulation, forming mold, damaging walls and rotting out decking. What if the leak is occurring in a vacant unit? Waiting for a leak is just not a smart or reliable plan for determining a roof ’s condition.

As I eluded to earlier, most people feel the litmus test for a roof is, “Is it leaking?” While leaking is a great indicator that there is a problem, it is not the best gauge for determining the general condition of the roof. First, it’s possible (and probably more likely) that a leak is due to something other than degraded shingles. Most leaks turn out to be some kind of flashing issue. If this turns out to be the case a simple repair should correct the problem. I suppose I should note that the older shingles get, the more brittle they become and the more difficult and less successful these repair attempts become.

I’m not trying to say everyone should buy a new roof tomorrow (though that would be good for our business). I’m just saying that like any investment your business makes in a depreciable item, you need to be ready at the end of its useful life to get it replaced. If you wait too long the money you end up spending to make repairs, replace sheetrock and paint could have gone towards the new roof you need.

EDIN

750 Landmark Towers 345 St. Peter Street St. Paul, Minnesota 55102 PHONE (651) 222-2155 FAX (651) 222-2156 jedin@mnconstructiondefects.com

Substantial experience in the successful resolution of construction defect claims. Contingent fee option in most cases. To schedule a free initial consultation with us, or a free initial inspection by a qualified consultant, contact managing attorney Jonathan A. Edin at 651-222-2155

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September | October 2010

HVAC System Cleaning By Cory Wombacher, Servpro of Coon Rapids/Central Anoka

aving your Furnace and Ductwork cleaned regularly is a great way to not only improve the indoor air quality of your home but to ensure that your HVAC system is running as efficiently and effectively as possible. Excessive dust and debris in the ductwork and on system components can put unnecessary stress on your furnace and can eventually lead to higher energy bills and sometimes even system failure. According to the National Air Duct Cleaners Association (NADCA), frequency of cleaning depends on several factors, not the least of which is the preference of the home owner. Some things to take into consideration include: • Are there smokers in the home? • Are there pets that shed high amounts of hair and dander? • Are there residents in the home with allergies or asthma? • Have you done any recent renovations or remodeling? • Has there ever been any water contamination to the home or HVAC system?

SMART & DECISIVE The Best Value in Construction Law for Community Associations

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Minnesota Communit y Living

If you answered yes to one or more of these questions, you will want to consider cleaning your HVAC system as often as every other year. If you answered no to all of the questions then every 3-5 years is a good rule of thumb. When choosing a cleaning contractor there are many things to consider. If possible, it is best to get estimates from two or three different companies. Be sure to ask questions about their cleaning process, such as the type of equipment they use and how long the process will take. Inquire as to how long they have been in business and the experience level of the technicians that will be performing the cleaning. Be weary of “blow-and-go” air duct cleaning companies that charge a low fee to do a poor job and then try to persuade the customer into unneeded services. The easiest way to avoid these companies and find a reputable contractor is to go to www.nadca. com and search for a NADCA certified company in your area. NADCA certified companies must meet stringent requirements and follow a Code of Ethics in order to acquire and maintain their certification status.

Spoila-what? Making Repairs During a Potential Construction Defect Claim

By Jonathan Edin, Levin & Edin

ssociation Board members and property managers work hard to keep our associations running smoothly and have a lot of responsibility on their shoulders.

Unfortunately, a recent Court of Appeals decision in Minnesota just made their job even harder. The Minnesota Court of Appeals recently upheld a District Court decision which had dismissed a construction defect case because the contractors were not given an opportunity to observe the defective condition before it was corrected. Even though the contractors had been given notice of the problem, the Court ruled that the notice was insufficient because the contractors were not able to observe the defective condition when that condition was exposed during the repair process. In this case, the homeowner had taken the following actions before correcting the defective work: 1. Notified the contractors of a potential construction defect issue. 2. Invited the contractors to inspect the condition in question. 3. Met with the contractors and pointed out evidence of the damage. 4. Invited the contractors to investigate if not satisfied by what they had seen. 5. Documented the defective work by taking photos during the repair process. The contractors even looked at a hole in the wall created by the owner to observe the mold and moisture intrusion before the corrective work was undertaken. However, much of the damage was not observable because of the stucco exterior. As is often true, the condition causing the problem remained concealed until exposed during the course of repair. When the contractors did not make any offer to repair, the homeowner authorized the repair

work. After a substantial amount of repair work had been completed, the homeowner notified the contractors that he was in the process of repairing the defective conditions. At this point, the evidence had been destroyed, and the contractors no longer had the ability to view the evidence. The majority opinion by the Court of Appeals determined that the homeowner was guilty of conduct constituting spoliation of evidence. Black’s Law Dictionary defines spoliation as “the intentional destruction, mutilation, alteration, or concealment of evidence.” 1 The Court of Appeal upheld the District Court decision to dismiss the homeowner’s suit as a sanction for spoliation of evidence. The majority found that evidence of the defect was destroyed before the contractor had an adequate opportunity to inspect it. Evidence in a construction defect claim is the building itself and the materials that make up the construction.2 So where did the homeowner go wrong? The Court emphasized that the homeowner failed to: 1. Make it sufficiently clear that the contractor was being held responsible for the problem before correcting it. 2. Give the contractor specific notice of when the repair work would be done. 3. Give the contractor the opportunity to document the condition for himself because photos of the condition were not an adequate substitute for inspection. One dissenting judge argued that the notice given by the homeowner was sufficient and that in any event dismissal of the suit was not warranted as a sanction. However, his opinion was not persuasive and the matter has gone to the Minnesota Supreme Court. While we await the decision of the Supreme Court, associations can take action to preserve their rights. Most importantly, written notice of the problem should be given to all known potentially responsible parties as soon

as possible. The following simple steps should be taken to avoid dismissal of your case: 1. Describe the problem fully. 2. Give the contractor written notice that a claim is going to be made against him. 3. Give the contractor specific notice that the homeowner or association intends to make repairs on or after a specific date without further notice to the contractor. 4. Invite the contractor to investigate the condition prior to the specified date and to document the condition before that date. What does this mean for association managers? Association managers need to caution a board not to initiate repairs of defective work without giving notice to all potentially responsible parties. Since the lesson of this case is that exactly what is required to satisfy this notice obligation isn’t always clear, managers should recommend that boards consult with counsel to obtain guidance on how to satisfy notice requirements for the specific condition in question. If repairs are required right away, tread carefully. Even if you don’t think a claim will ultimately be made, repairing a condition can have serious consequences. Circumstances can change, problems can become more severe and rights must be protected. Any attempt to repair without giving an adverse party both reasonable notice and an opportunity to inspect the conditions could result in a dismissal of your case on the grounds you have “spoliated” the evidence. Black’s Law Dictionary, 8th ed., Thomson West 2004 Miller v. Lankow, 2009 Minn.App. LEXIS 220. This case is currently on appeal to the Minnesota Supreme Court. 1 2

September | October 2010

Your Single Source for Construction Defect Questions and Answers. Our Construction Defect Practice Group provides litigation services and counsel to community associations with construction defect issues, including water intrusion, stucco defects, leaking windows, ground heaving issues, and other construction-related problems. Since there are strict time limitations that apply to all construction defect claims, it is important to understand your rights and take action quickly. Contact Robert Keena today for your free initial consultation at jkeena@hjlawfirm.com or 952-746-2113.

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Minnesota Communit y Living

Condominium Upgrade: Floors By Tony Poetz, Spectrum Home Services

amily members react differently to new or refinished wood floors. Dad: “Hmmm… durable, some periodic maintenance, good for resale.” Mom: “It looks GREAT but might be cold on our feet. Kids can easily wipe their spills.” Kids: “I bet we could slide all the way across the room in our socks.” Like most upgrades, the best flooring is the kind that addresses the needs of the user. Whether you’re selling or staying, your floor choice is very important. It’s the one part of your home that is almost always physically connected to you, so it has to look, feel and perform how you want it to. We’re going to show some info, guidelines and pricing on a variety of flooring options but, in the end, the most important aspect remains the same – the user. HOA Rules & Regulations For the most part, there aren’t any restrictions on what kind of flooring you can have in your condo. “However, more and more condominiums are requiring board approval prior to any installation”, says Gene Sullivan, President of New Concepts Management. “This is because of increased noise levels that hard wood floors can pose to the unit owner below. With this being said, it is always good for every homeowner to verify that they have board approval prior to beginning any work in their home. Lastly, it is good to remember that any improvements in a home should be communicated immediately to your insurance agent.” If there are any noise restrictions to floor types, the process can usually be modified to suit, i.e. sound-proof padding under the floor boards. Checking in with other homeowners before you install isn’t just neighborly; it could result in big savings when multiple homeowners combine buying power. “It’s good for every association to remember that they do carry clout whenever they or their members purchase a product or service together,” continues Sullivan. “It’s one of the benefits of living in an HOA!”

Finally, if the rules, logistics or price are too restrictive to install new flooring, consider refinishing those worn wood floors or hiring an extensive carpet clean. Each process can usually bring new life to old floors.

• Cork – Considered “green” because the air spaces result in less tree use. It’s generally cheaper at around $5.00/sf.

STONE FLOORS such as granite, marble, travertine and slate are popular installations in Floor Types kitchens and baths as homeowners tend to get WOOD FLOORS are available in a variety of these areas wet. Material generally runs about types, colors and textures. They can be clear$4.00/sq. ft. Labor hovers around $3.00/sf. coated, stained or painted. Most consumers Start to finish averages prefer a clear-coat of 1-2 days depending polyurethane as it reon the material being veals the wood’s natuIt is always good for every removed and the ral grain…which is amount of custom why they chose wood homeowner to verify that they have cutting. in the first place. Oak, board approval prior to beginning cherry, maple, walnut, Many times, installers etc. can vary in price any work in their home. can put new stone depending on supplier – Gene Sullivan, President, right over old vinyl or and geography. (Tenlinoleum, saving time nessee has more oak New Concepts Management and money. The protrees than Minnesota cess is straightforward – oak is cheaper in – backerboard screws Tennessee.) into the existing surface, thinset (adhesive) is applied, stone is accurately placed, grout is In Minnesota, hardwood floors, including johnson_2.5x4.5_bleed.pdf 2/4/07 8:33:09 labor and material, install for around $8.00/ Condominium Upgrade continued on page 13 sf. Your 20 x 15 living room will run about $2,400 depending on wood type and any extra materials and contractor. From start to finish, the process takes at least 2-3 days and increases with the square footage. Refinishing brings dramatic results at a fraction of the cost – around $2.50/sq ft.

“ ”

While each wood type may have its own maintenance requirements (see manufacturers recommendations), there are some rules that apply to all wood. 1. Don’t soak it. Too much water from the mop can get in the wood and harm it. 2. Frequently vacuum. Scratches are wrought by tiny grains of sand and dirt. 3. Don’t wax a wood floor. It already has a finish specially made for coating wood. Adding wax will dull it and create a sticky film. Trends in wood floor include: • Handscraped – More rustic looking with hand texturing. Beautiful, but a bit pricier. • Bamboo – Technically, it’s grass. It comes in some wild patterns and is usually light which brightens a room. Very easy to clean and almost no maintenance.

Construction defect problems?

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September | October 2010

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Condominium Upgrade from page 11 spread into the spaces between the stone tiles. It seems easy enough, but it is an acquired talent, and your stubbed toe will recognize bad quality every time it gets caught on that one stone corner that sticks up a ¼ inch.

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2010 trends lean toward bigger tiles: 18” and 24” tiles give the impression of a wide-open space. A few homes on luxury tours feature stone floors with a neutral base color and the occasional, vibrantly colored accent tile. With stone, it’s possible to change each unit, which becomes important when selling if the prospective buyer likes the ivory base but not the Sante Fe Orange in the corner. CARPETING is ever-popular because of its feel, warmth, color options and soundproofing abilities. There are many more reasons, but that’s the advantage of carpet – its versatility. Sending the word “carpet” through a search engine’s image feature shows

everything from wool to red to flying. It’s available in plastic for your boat or wool for your executive offices (don’t get this wet…it shrinks to the point of ripping). Depending on the type (of course), price can be $1.50/sf to more than $4.00/sf for material. Flat, no-frills carpet installation runs between $1 and $3.00/sf. Stairs, irregularities, furniture moving, etc. increase the price. Carpet trends in 2010 favor themes such as a giant Twins logo in the middle of the man cave or the Disney princesses underfoot in the nursery. Still, the most popular elements remain stain resistance and off-browns that hide dirt as carpet cleanliness is imperative. Finding the right carpet cleaning company saves money, health and maintenance. Note: Don’t EVER ask the carpet cleaner if you can see the water after the cleaning. Remember the User Whether you’re selling, staying, maintaining or upgrading, floor type affects a home’s performance as well as its occupants. Again, it’s the part of the home almost always connected to the user. Remember the user – your family (or your buyer’s family) will thank you.

The Talent You Need is Here. The Time You Need it is Now. Our talented Community Association Team includes: Partners (pictured left to right) David J. McGee, Gretchen S. Schellhas, Matthew A. Drewes, Christopher P. Renz, William E. Sjoholm; and Associates Ryan J. Wood, Debra M. Newel, Natalie R. Walz, Ivory L. Ruud, Nathan J. Knoernschild

Thomsen & Nybeck’s commitment to serving the needs of community associations and those that work with them is stronger than ever. Whether you need assistance with collections or have bigger issues like construction defects, our talented team of lawyers will deliver results.

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September | October 2010

Is Your Association Like A Box of Chocolates? By Thomas C. Engblom, Community Association Banc & Condo Certs

get.’” Or as Momma could say, “Associations, association boards, association unit owners, association management and association vendors are like a box of chocolates. You never know what you’re gonna get.”

uring the second week of July, I was assigned the task of teaching M-201 Facilities Management in Charleston, South Carolina, a class I have taught numerous times in the past and is very enjoyable for the students.

Regardless of your position as a perspective unit owners, existing unit owner, board member, association manager, or association vendor, every facet of the industry is interrelated. It truly is a two-way street for all parties involved to achieve effective communication and work successfully together.

After proctoring the test on Friday, I had several hours to enjoy Charleston before the return flight to Chicago. It was truly an amazing city to tour while I worked up an appetite for lunch. As I pondered where to dine I stumbled upon Bubba Gump Shrimp Company. The wait time for seating was extended due to the popularity of the restaurant so I maneuvered to the bar for a seating of one. As I ate, Forrest Gump played without sound on the television screens around me. I could almost hear the movie’s warm Southern dialect though as customers chatted around me. The dining experience was wonderful; as was the return flight to Chicago.

How can I know what box of chocolates I am getting? I suggest affiliating with Community Associations Institute members, researching properly, obtaining reference, due diligence and networking with the experts in the industry. It could be like a box of chocolates that is not a mystery because you sampled it first! Unless you want someone to tell you, “Stupid is as stupid does,” do your sampling and buy the box of chocolates that is unique to your situation. As Forrest Gump himself would put it, “That’s about all I have to say about that.”

The next day while channel-surfing at home, I came across Forrest Gump. I began to watch intently when I realized the movie’s most famous quotation was approaching. “Momma always said, ‘Life was like a box of chocolates. You never know what you’re gonna

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Create a Strong Financial Engine for 2011 By Amy Dullum, HG&K, Ltd

s the season rolls around to address next year’s budget, it reminds me that budgeting — much like tax planning — no longer comes just once a year. It is now a fast-moving process that requires leadership and monitoring throughout the year to support your organization’s fiscal health. To create a smart new budgeting process for your association in 2011, here are three phases to consider now and in the coming months. Set up each phase properly and it will support strong fiscal stewardship, improved communication among board members and unit owners and better documentation to prepare the next budget. In short, this process could save you time and money. The Development Phase It may seem impossible to put together a realistic budget when the current governing documents bind you to a small increase. If this sounds familiar to you, it is time for a review of the policies and procedures that support budgeting. Some options to consider include:

• • • • •

special assessments elimination of services more competitive vendor selection stronger policies for collections provisions for contingencies (weather, increased utility or fuel costs)

You may think that your goal is to cut expenses, but in reality it is to build flexibility into the budget for opportunities and surprises. Who pays when you have uncollectible accounts? Who pays when there are unforeseen damages to a property? Who pays when you don’t shop around for service providers? The development phase of budgeting creates accountability for the association to protect its interests and also provide a high value for owners.

Build time into this phase to review the association’s governing documents, board minutes and statutory requirements. Align them with your goals for the budget in terms of operating or replacement fund levels, the frequency of soliciting vendor bids or the approval process for increased expenditures. Take a close look at the prior years’ budget to actual variances. Consider if expenses will be ongoing or if it’s a one-time expense. For example, if the association planted flowers this year, but the owners are proposing a beautification committee for next year, this expense may not continue into 2011. Determine if line items can be adjusted to reflect reality and expectations rather than last year’s allocation. Review all current and future contracts to determine if estimates are accurate or should be adjusted. Work with current vendors to negotiate more favorable terms for the coming year. There are simple modeling techniques that can be used in the development of the budget to calculate more accurate projections. Talk to your accountant or financial advisor about proper estimating. The Approval Phase For some associations, the approval process may be as simple as creating a budget that mirrors the previous year and presenting it to board members for a stamp of approval. It shouldn’t be that simple. Board members are accountable for reviewing and approving the budget, representing the interests of the unit owners and justifying association services — or lack thereof. They may be called upon throughout the year to either defend or explain the decisions that led to the budget. For example, if owners have been accustomed to snow removal when levels reach one inch but are now getting removal at the two-inch mark, they will likely want to know why. Explain these changes to owners before they happen, either through the association newsletter or a quarterly letter.

Establishing a culture in which board members contribute to effective decision-making on the budget will help the board communicate decisions on property improvements, reduction in services or other issues. The budget should be viewed as a work in progress. All board members should be involved and comfortable with how and why decisions are made. Keep in mind that budget analysis should continue through the year as the board is presented with amendments/revisions or unforeseen expenses and debt. Discuss the board’s fiscal responsibility and review board duties with regard to approval, documentation and liability. Address how the board will handle unexpected expenses throughout the year. Review board minutes from the prior year to avoid future misclassification of expenses or insufficient documentation. The Monitoring Phase Here is the work in progress phase. Ensuring clear documentation of any amendments, unbudgeted expenditures, uncollected dues and other variances will support a more accurate budget going forward. You don’t want to wait until the end of the year to discover misclassifications or giant overages in any areas of the budget. Talk to your accountant or financial advisor about the proper variance analysis to perform at least monthly or quarterly. This will ensure that any changes in expenses or revenue are included in next year’s budget. These three phases of budgeting will help board members anticipate change rather than fear it. It’s time to start your engines!

[ Join us! ] Fundamentals of Community Volunteer Leadership

Saturday, October 9, 2010 8:00 am – 4:00 pm Dorsey Ewald Conference Center Register online at www.cai-mn.com!

September | October 2010

The Easiest Maintenance Decision You Can Make. Associations face numerous maintenance decisions. However, when it comes to maintaining your associationâ&#x20AC;&#x2122;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

September | October 2010

Minnesota Community Association Voting Legislation Joins the Electronic Age

By Kurtis Peterson, The Inspectors of Election, LLC

our Association Elections at the Click of a Mouse

The amendments to the law pertaining to online voting now state:

Picture the following:

317A.015 Legal Recognition of Electronic Records and Signatures

Two identical associations approached their annual election. The first is Happy Trails HOA and the second is Weeping Willow HOA. Both are about 200 units in size and need to elect a new board of directors. As they plan their elections, Happy Trails does their due diligence and learns that the Minnesota Common Interest Owners Act (MCIOA) has been amended in 2010 to accommodate electronic means of communication – including internet voting. Happy Trails concluded that internet voting is safe, effective, user-friendly as well as cost-effective and decided to go that route. Their election was done in a timely fashion, candidates provided their biographical information online and their statements were automatically available for all members to view. Quorum was easily achieved, online ballots were automatically tabulated and the results of the election were provided at the annual meeting in an uncontested manner. On the other hand, Weeping Willows HOA went with the traditional paper and snail mail election. The paperwork was tedious, redundant and costly. They had a tough time getting candidates and achieving quorum. The printing and mailing costs went up from the previous year again. Wording errors were prevalent in the mailed material and unable to be corrected without sending out additional mailings adding costs to the association. Inevitably both association elections were completed, but Happy Trials using online voting experienced far less stress and expenditures during the entire process. Minnesota is not the first state to pass legislation but it is good to finally be part of 21st Century technology and the “Green” age. Legislature recognized the electronic communication trend and made appropriate adjustments to accommodate for how people give and receive information in today’s technological environment. 18

Minnesota Communit y Living

Subdivision 1.Definitions. (a) For purposes of this section, the words, terms, and phrases defined in this subdivision have the meanings given them. (b) “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. (c) “Electronic record” means a record created, generated, sent, communicated, received, or stored by electronic means. (d) “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. (e) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. Subdivision 2. Electronic records and signatures. For purposes of this chapter: (1) a record or signature may not be denied legal effect or enforceability solely because it is in electronic form; (2) a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation; (3) if a provision requires a record to be in writing, an electronic record satisfies the requirement; and (4) if a provision requires a signature, an electronic signature satisfies the requirement. 515B.1-115 Notice. Section 515B.3-110 authorizes notices under MCIOA to be given by electronic means (i) if given in compliance with the statute under which the CIC association was created and (ii) if electronic notice is not limited or prohibited by the articles of incorporation, bylaws or declaration governing the CIC. 515B.3-110 Voting; Proxies. The Amendment adds provisions authorizing voting by electronic means, provided that such voting is in compliance with the applicable statute under which the association was incorporated.

Online voting has proven to be a growing trend that will only increase in popularity in the future. Aspects that make it most appealing to the HOA’s include: Ease of Use – Homeowners can access the information for the election from any computer as long as they have login credentials. They can view meeting notice and information, candidate signup and candidate information, voting rules, and ultimately make their decision and vote online. Quorum can be monitored and email reminders for participation can be sent to improve voting participation. Results can be tabulated electronically, which eliminates the need for hand counting paper ballots. Guessing what intentions are on the handwritten ballot also becomes a thing of the past. Green – No more paper and ink waste – save trees! Everything is handled electronically. Information sharing, notices, agendas, candidate submission and review, voting, and reporting is all handled in an absolutely secure online environment. Cost Effectivee – Reduce or eliminate paper and envelopes, printing, stuffing and postage, about half the cost of the election processing. Time Savings – Updates, completion of candidate statements and balloting are done in real time. No need to wait for the mail to receive information, vote or obtain the balloting results. One of the main obstacles that Internet voting faces is fear of the technology by some. This fear is not necessarily unsubstantiated.

Online Voting continued on page 19

Online Voting from page 18 With SPAM and stories of identity theft, it is easy to understand why homeowners would be reluctant in agreeing to release their emails. Additionally, many associations do not have emails for all of their members, making total electronic communication impossible.

Knowing your goals. And the most effective way to meet them.

Internet security can also be problematic. The possibility of hacking into a voting system and manipulating the results of the election is a concern. Internet voting systems must be contained in a highly secured environment with access only by a unique username and password to gain access to Association information and to vote. When considering using an online system, ensure that it is well protected from outside intrusion and that all submitted information passes through encryption.

At Reserve Advisors, we understand that no two reserve studies are ever the same. Which is why we always start at the same place – with you. We begin with a blank slate and then build a reserve study based on your special requirements. Let us be your partner for the future.

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Finally, there may be a concern that no “paper trail” exists to verify that the results are correct and valid. Although paper is not involved, a good internet voting system should have confirmation emails sent to voters once a ballot is completed and an electronic trail of all activity that happens within the system which can be printed at any time. Every day the world grows a little smaller with all the technological inventions that are being introduced. As we make every attempt to keep up, it moves exponentially faster. Whether by cell phone, smart phone, iPad, iPod, laptop, or desktop, using electronic means of communication in today’s world is unavoidable. Change is inevitable – change is good.

For your no-cost proposal, please call Nik Clark at (800) 221-9882 or visit reserveadvisors.com

Tom Engblom CPM PCAM Who else can say – our account executives know community management backwards and forwards. Who else can say – our relationship managers speak your language and understand your business. Who else can say – our technology group has revolutionized the business of association management.

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Vice President/ Regional Account Executive 312.209.2623 Toll Free 866.800.4656 ext. 7498 tom.engblom@cabanc.com cabanc.com

Adam O’Halloran Assistant Regional Account Executive

773.220.8293 Toll Free 866.800.4656 ext. 7505 adam.ohalloran@cabanc.com cabanc.com

Community Association Banc

Community Association Banc is a division of Mutual of Omaha Bank. Member FDIC. Equal Housing Lender National Corporate Member of Community Associations Institute. September | October 2010

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