2014 ECHO Seminars
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Chainsaws and Courtrooms — Why Accreditation Matters
Avoiding Reserve Planning Mistakes
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Who Is “A Member In Good Standing”?
Best Price, Highest Quality: Is That All There Is?
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December 2013
Serving Community Associations
echo-ca.org
New Davis-Stirling: Update on Legislation. p.8
ECHO 1602 The Alameda STE 101 San Jose, CA 95126 Change Service Requested
PRSRT STD U.S. Postage PAID Modern Litho 210
CONTENTS
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New Laws for 2014 As we get closer to January 1, 2014 and the official implementation date of the new Davis-Stirling Common Interest Development Act, we know that challenges lie ahead for common interest developments and the community associations that manage them.
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Chainsaws and Courtrooms As in most industries, certifications and professional affiliations communicate a great deal of information about a tree care company or professional. A variety of national and international organizations offer different types of accreditation, and though the focus of each is slightly different, the uniting theme is accountability.
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Avoiding Reserve Planning Mistakes Every day major association assets are deteriorating and drawing closer to their replacement date, whether the association is financially prepared or not. We have a few suggestions to help associations understand and avoid the top Reserve Funding mistakes.
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Who Is “A Member In Good Standing”? The term “good standing” is not defined in the Davis-Stirling Act or other statute. To find out who is, or is not, in good standing, you must, in most cases, refer to the association’s bylaws. The bylaws basically govern the association as a corporation and discuss how the corporation should work.
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Best Price, Highest Quality: Is That All There Is? Using the same bid with professionally prepared specifications will obtain the best price, but in addition to the best price, you want quality work, avoiding as many opportunities for problems as possible.
The ECHO Journal is published monthly by the Educational Community for Homeowners. The views of authors expressed in the articles herein do not necessarily reflect the views of ECHO. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Acceptance of advertising does not constitute any endorsement or recommendation, expressed or implied, of the advertiser or any goods or services offered. We reserve the right to reject any advertising copy. Copyright 2013 Educational Community for Homeowners. All rights reserved. Reproduction, except by written permission of ECHO is prohibited. The ECHO membership list is never released to any outside individual or organization. ECHO 1602 The Alameda, Suite 101 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours Monday-Friday 9:00am to 5:00pm Board of Directors and Officers President David Hughes Vice President Karl Lofthouse Treasurer Diane Rossi Secretary Jennifer Allivato
DEPARTMENTS
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News from ECHO
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2014 ECHO Educational Calendar
Directors Jerry L. Bowles Stephanie Hayes Robert Rosenberg Brian Seifert Steven Weil
John Garvic David Levy Kurtis Shenefiel Wanden Treanor
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San Francisco Luncheon — Thursday, January 16th
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Marin Educational Seminar — Saturday, February 8th.
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ECHO Bookstore
Director of Marketing & Membership Vacant
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Advertiser Index
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ECHO Event Calendar
Director of Communications Tyler Coffin
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ECHO Volunteers
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NEW @ echo-ca.org
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Legislation Overview
Executive Director Brian Kidney
Legislative Consultant Government Strategies, Inc. Design and Production Design Site ECHO Mission Statement Serving Community Associations
December 2013 | ECHO Journal
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news from ECHO
News From ECHO December 2013 December is one of my favorite months of the year. Everyone seems a little bit cheerier. And we take a little more time to care about our family, friends and neighbors. Even our communities become more friendly—which I wish would extend throughout the year. We at ECHO strive to bring you information and resources to help turn issues into resolutions and “common interest developments” into communities. I hope you enjoy the ECHO Journal, and I hope you will explore the array of articles, information and statutes available on our website: www.echo-ca.org. Let us know what we can do to make your membership experience better. We are pleased to bring you our schedule of events for 2014, which can be found on page 7. We are again hosting two Trade Show Annual Seminars: in Oakland on May 17 and San Jose on August 23. Each will offer more than a dozen speakers from several disciplines, with answers to your critical questions; there will also be over a hundred professional vendors ready to help you better understand their areas of expertise. In addition, we are conducting ten Regional Educational Seminars in geographies ranging from Santa Rosa to Monterey and inland from Fresno to Sacramento. These are fantastic opportunities to hear directly from experts in HOA issues and get all your questions answered. The better informed you are, the healthier your community will be. I also want to announce the re-election to the ECHO Board of Directors of John Garvic, Esq., David Levy, CPA, Karl Lofthouse, and Wanden Treanor, Esq. Each was elected to a three year term by acclamation. Finally, after many years, we are moving offices. Effective January 1, we will be located at: 1960 The Alameda, Suite 155, San Jose, CA 95126. Please update your address books. Our email and phone numbers will remain the same. I hope you all enjoy a happy and healthy holiday season, and share a little joy in your communities! Best,
Brian Kidney Executive Director
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2014 ECHO educational calendar
ECHO Seminars Now there’s one near you.
Santa Rosa
If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2014. Don’t miss an opportunity to get the education you need with guidance from some of California’s top HOA attorneys and professionals. Take a look and mark your calendar. We can’t wait to see you there!
Sacramento
Marin Walnut Creek Oakland San Francisco
San Jose
Jan. 16
Feb. 8
San Francisco Luncheon (See page 21)
Marin Educational Seminar (See page 29)
McCormick and Kuleto’s, San Francisco
Embassy Suites, San Rafael
DATE
EVENT
March 1 March 15 March 22 May 16-17 May 31 June 14 August 22-23 October 4 October 18
Santa Cruz Educational Seminar South Bay Educational Seminar Wine Country Educational Seminar ECHO Oakland Fresno Educational Seminar Sacramento Educational Seminar ECHO San Jose Monterey Educational Seminar Walnut Creek Educational Seminar
Campbell Santa Cruz
Fresno Monterey
Register today! Online: www.echo-ca.org; By Phone: 408.297.3246
December 2013 | ECHO Journal
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NEW LAWS
FOR 2014 Update on Legislation Affecting Common Interest Developments and Community Associations
Sandra M. Bonato, Esq.
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s we get closer to January 1, 2014 and the official implementation date of the new Davis-Stirling Common Interest Development Act, we know that challenges lie ahead for common interest developments and the community associations that manage them.
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t the same time, the Legislature recognized that pre-implementation fine tuning was appropriate and did so. This means that New Davis-Stirling has experienced “clean up” even before it has gone into effect. And in the category of major statutory changes is the new Commercial and Industrial Common Interest Development Act, which will remove all communities that are entirely commercial or industrial from Davis-Stirling altogether and make them subject to a new and wholly separate (and far more streamlined) regulatory body of law. Other ideas to facilitate association operations were debated and, in some cases, not promoted and in others, action was carried over into next year.
EFFECTIVE JANUARY 1, 2014 New Davis-Stirling At long last operative on January 1, 2014, New Davis-Stirling does not look anything like the current one. Pieces of the current law are significantly rearranged, and almost all sections have been broken up by their former subdivisions and spread out. Where you find a particular statute today isn’t where it will be as of January 1. All sections have new numbers (now in the 4000-6999 sections of the Civil Code) and as of January 1, 2014, current statute numbers are no longer applicable. Some sections are simplified, but for the most 10 echo-ca.org
part New Davis-Stirling does not contain new text. You will find that its language is largely recognizable, just that it is broken apart and relocated. It is expected that clarification of the law and substantive changes will happen later, but these are not major features of New Davis-Stirling. There are some substantive changes, the most dramatic changes have to do with how notifications to and from members are to be handled and the timing of disclosures. There are new terms to learn: “general notice” and “individual notice” (both having to do with how notices are sent to members) and “notice to the association” (involving how members may deliver certain official notices to associations). Disclosures are reorganized and re-sorted and, in the case of the two major disclosure pieces (known as the “Annual Budget Report” and the “Annual Policy Statement”) now are given in a time frame that is one day shorter than budgets and disclosures can today be sent out. Among the changes that impact all associations is a provision that requires the annual distribution of fine schedules and enforcement policies, if any, instead of just when or if a fine schedule changes. Dropped is the statutory requirement to notify members when certain types of insurance policies are cancelled and not replaced or other significant changes occur for such policies (doing so is still a best practice, however, and included in many governing documents). The ability to send disclosures and notices electronically is liberalized, though doing so still requires each member’s consent. Other small operational changes are also embedded. Larger anticipated changes - i.e., qualitatively substantive legal changes and improvements – await further work by the California Law Revision Commission in future years.
SB 745 / Senate Housing Committee Omnibus Bill (Miscellaneous Clean Up of New Davis-Stirling) After the governor signed New DavisStirling last year, the CLRC (which drafted it) spotted a few errors. Each year one or other of the Legislature’s Housing
Committee’s brings forth a bill — called an “omnibus bill” because of its eclectic content — that addresses clean-up type needs to keep applicable law fresh and correct. One problem that the CLRC spotted was that it had inadvertent omitted in new Civil Code section 4070 the ability of owners to “deliver to the association” certain official communications by mail. As corrected in SB 745, section 4070 with still allow delivery by electronic means or personal delivery (with association assent) and add in what the Commission clearly intended — ordinary types of mail, i.e., by first class, certified or express mail, or by an overnight delivery service center. New Davis-Stirling also helps associations determine how to deal with governing documents that conflict with each other or with the law. While clearly a conflict with the law will always defer to the law, not all governing documents contain provisions that help determine what to do when the documents themselves are internally inconsistent. At the same time, the CLRC was not entirely satisfied with the drafting approach in New Davis-Stirling and so suggested in SB 475 that the text be amended to more closely track the types of verbiage used in governing documents that do contain guidance. Rather than use the term “inconsistent” to describe the types of word problems that sometimes come up, New Davis-Stirling will be corrected as of January 1 to instead use the more direct and familiar term, “to the extent of any conflict.” The changed language affects new Civil Code section 4205. The same improvement is now made in the rule-change statute, new Civil Code section 4350. New Davis-Stirling, at Civil Code section 4070, inaptly referred to member decision-making “at a meeting,” when in actuality most member decisions are today made using mailed secret ballots that owners return. Instead, the CLRC proposed to change section 4070 to refer to “voting in a duly held election in which a quorum [of members] is represented.” With so much detailed attention being paid nowadays to election processes, this clarifying change should help minimize disputes over what was intended. And last, when New Davis-Stirling was signed last year, the governor also signed several bills that changed the current Act
with its current numbers. SB 475 cleans up these anomalies by fully and finally placing all of 2013’s changes to the current Act and moving them into New Davis-Stirling just in time for it to all go into effect on January 1, 2014.
SB 752 (Roth) (Commercial and Industrial Common Interest Development Act) As the CLRC looked at community association law generally, it was urged by some to treat wholly commercial and industrial common interest developments differently in an entirely new body of law. In response, the CLRC drafted and sponsored SB 752, which effectively removes purely commercial and industrial communities completely from the aegis of the Davis-Stirling Act. SB 752 creates a body of law entitled the “Commercial and Industrial Common Interest Development Act,” expected to be known familiarly as the “C&I.” The CLRC was persuaded that commercial
and industrial CIDs should be less-heavily regulated because of the supposed greater sophistication of owners of such property and the more limited need of the legislature to provide statutory protections for them. The CLRC believed that the correct mechanism to codify this approach is to separate these two types of CIDs entirely. These are not (currently) new principles, as the current Act contains express exceptions for some Davis-Stirling provisions for entirely commercial and industrial communities. For example, there is no statutory requirement to obtain member votes for special assessments of any amounts, to produce and distribute budgets, or to make escrow disclosures. However, by creating an entirely separate body of law for these types of communities that simply omits the expressly-excluded provisions in Davis-Stirling, the challenge lies in knowing what isn’t in it and, moreover, how the two bodies of law will eventually diverge in many other ways. The C&I started with a base of New Davis-Stirling and removed the current Act’s exceptions. It does not stop there,
however. Major sections of New DavisStirling were not incorporated, among them the CID Open Meeting Act, the Voting and Election statutes, Access to Records statutes, most disclosure obligations, most rule-change statutes, architectural control processes, provisions for rental restrictions, internal and alternative dispute resolution provisions, and certain immunity statutes, and radically simplifies assessment collection procedures. The commercial and industrial exception provision in New Davis-Stirling, Civil Code section 4202 (the carryover statute from the current Act), is repealed. Of concern is the difficulty created by a lack of a clear definition in the C&I (and, for that matter, in the current Act) of what a commercial or industrial common interest development is intended to be, so that board, members and managers of such communities will know clearly which body of law applies to their CID and which does not. The CLRC was reluctant to address this concern, because adding a definition has the potential to newly-include some communities who were not before and to newly-exclude
December 2013 | ECHO Journal 11
others that were, both of which constitutes a major substantive change in the law. It is widely believed that once the C&I is enacted, efforts to define the communities that are subject to it will be proposed. Of particular concern is the fate of live/work lofts. Many are zoned entirely commercial or industrial and have residential aspects to them that are legally considered to be merely incidental to the working space in the unit. Many owners, however, consider their residences to be the primary purpose of their ownership, deserving of higher legislated protections, and therein lies the potential collision. A further and not insignificant challenge will happen over time, as these two large bodies of law become increasingly different but still remain very similar. Knowing which body of law applies, and from there knowing what each contains or doesn’t contain to make it different from the other, will become very complicated. Current board members and managers can watch the law grow and change, while those in the future won’t have the benefit of knowing where all the differences are.
TWO-YEAR BILLS (FOR FURTHER CONSIDERATION IN 2014)
AB 968 (Gordon) (New Davis-Stirling “Lite”) AB 968 was introduced this year and made it through the Assembly, but once in the Senate was set aside for further review and consideration. AB 968, as currently written, would exempt small residential or mixed use CIDs, i.e., those with 15 or fewer units or lots, from the mechanisms of conducting member votes by mailed secret ballot. As currently drafted, the bill would allow the members, on a majority vote conducted by mailed secret ballot, to agree to conduct future elections at meetings as was done before the Voting and Election statute was enacted.
Unfortunately, other areas of the law have grown around the Voting and Election statute since 2006 and so simply drafting a bill to exempt some associations from some aspects of the Voting and Election statute has its trip hazards. While the concept might be considered beneficial, implementing it correctly takes skilled drafting and an awareness of all the other provisions of law or the governing documents that might be impacted. This bill will see more review in 2014.
AB 1360 (Torres) (Electronic Voting in Director Elections) AB 1360 deals with the idea of allowing members of community associations to cast votes electronically in electing directors. This bill, like the one above, left the Assembly but met with concerns in the Senate. The bill is awkwardly drafted and is based on puzzling concepts. So, while the intent is possibly laudable, much more consideration is needed before the idea ripens. As drafted, AB 1360 would establish a definition of an “electronic balloting service provider,” essentially an outside entity to provide such services but not well-defined, to conduct portions of director elections over the internet. As drafted, the concept is appended to existing law, but in ways that are fraught with legal concerns, ambiguities and questions. Like AB 968, AB 1360 will be considered further in 2014.
UNAPPROVED BILLS AB 126 (Hall) (Disclosure of Email Addresses in Time Share Communities) Presumably in response to a federal court opinion affecting the western United States in which a huge timeshare association with thousands of interval 12 echo-ca.org
owners was required to give out email addresses to a dissenting owner group, AB 126 initially would have required time share associations in California to maintain a complete list of names and addresses of all owners and to update that list every 12 months. Legislative efforts in this area are of considerable concern to non-time share communities of far smaller size, as the interests under which the court made its determination in the federal case are far different and more deserving of protection. The bill failed in committee.
AB 749 (Levine) (Smoking Prohibition) AB 749 was an effort at the state level to prohibit smoking in multi-family dwellings, defined as meaning property containing 2 or more units. More and more local cities, counties and special districts are taking up this issue, which
may have been one reason why this bill filed in committee. It has been granted reconsideration for next year.
SB 391 (DeSaulnier) (Recording Fee Increases to Fund Affordable Housing Programs) SB 391 was an effort to impose a $75 charge on top of a recording fee for most types of recordable documents. The charges collectively would be used to support affordable housing, administer housing programs, and related costs. The concept of the bill was to find a reliable funding source to support affordable housing programs in the state, now that state funding for such programs has been severely curtailed in the current economic budget. While a laudable goal, the idea that a single category of citizens —those who record documents — would be tasked with the funding of such pro-
grams was considerably controversial. Community associations record many types of documents, many in the area of assessment collection, and would have been highly impacted by this concept. With far higher fees, delinquent assessment collections would have been made considerably more unaffordable and difficult to resolve, with attendant financial impacts on associations and paying members across the state. This bill was not heard in the Appropriations Committee before the deadline to get bills to the Assembly floor and to the governor’s desk. This bill should be watched carefully next year. Sandra Bonato, Esq., is a principal with the law firm of Berding | Weil LLP, in Walnut Creek, California. She serves on the ECHO Legislative Committee and was its former Chair. She is also a frequent speaker at ECHO seminars.
December 2013 | ECHO Journal 13
CHAINSAWS Why Accreditation Matters in the Tree Care Industry By Katherine Naegele
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ree care companies come in a wide variety of sizes and skill levels, and choosing the right one for your project can be challenging. Should you go with the established, TCIA-affiliated tree care company? The Certified Arborist with a chipper and a small crew of Certified Tree Workers? The gal with the chainsaw and the pickup truck?
AND COURTROOMS
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ll of these are easy to locate and easy to hire, but price isn’t the only thing that differentiates them from one another.
So what does? As in most industries, certifications and professional affiliations communicate a great deal of information about a tree care company or professional. A variety of national and international organizations offer different types of accreditation, and though the focus of each is slightly different, the uniting theme is accountability. These organizations’ codes of ethics are publicly available online, and any member found to be out of compliance is subject to disciplinary action.
Landscaping and Gardening Coalition; the American Society of Consulting Arborists; the Society of American Foresters; and others.
TCIA – In order to qualify for
membership in TCIA, a tree care company must carry appropriate insurance; have the appropriate number of Arborists on staff for its size; and have a good safety and consumer satisfaction rating. Doing business with a TCIA-Accredited company helps ensure that the tree care process, including resolving any issues that arise, will go smoothly.
Two of the most popular and reputable certifying
Which certifications should I look for? Two of the most popular and reputable certifying organizations in the industry, are the International Society of Arboriculture (ISA) and the Tree Care Industry Association (TCIA). Neither offers lifetime membership, and in order to become recertified, the accreditee must satisfy certain requirements with on-going education.
organizations in the industry, are the International Society of Arboriculture (ISA) and the Tree Care Industry Association (TCIA).
ISA – Several credentials are offered to individuals through the ISA, most commonly the Certified Arborist and Certified Tree Worker certifications. Candidates must satisfy work experience and/or formal education prerequisites, and must pass a rigorous written and/or practical test. Continuing education through classes, seminars, and workshops is required for recertification.
Certification by the ISA is a prerequisite, or counts toward the requirements, for a variety of other, more specialized credentials offered by other organizations. These includ e the California Urban Foresters’ Council; the Bay Friendly
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TCIA also promotes a culture of safety in the industry through training and education of tree workers. Despite being a relatively high-risk industry, safety was not historically emphasized as a core value. TCIA and other organizations, along with changing cultural values, have helped improve safety for both workers and those who happen to be nearby when tree work is being performed.
Sounds great, but is it worth the extra expense? In short, YES! There are two major ways in which accredited tree care professionals are superior to the alternative:
Quality of work and long-term costs Far from being static features of the landscape, trees are dynamic, living organisms requiring specialized care. Appropriate management practices vary widely based on species, site conditions, and the property manager’s objectives. Uncertified tree workers may not be familiar with the best practices for a given situation, and may cause irreversible damage to trees. The purpose of certification programs like those offered by the ISA is to ensure as far as possible that every certified professional’s knowledge is accurate and up to date. One major advantage of obtaining high-quality tree care is that, over time, your trees will require less maintenance than they would if cared for improperly. If a tree carefully selected from good nursery stock is installed in an appropriate location, planted properly, pruned periodically to promote good structure, and monitored for health issues, it is unlikely to need expensive remedial work at any point in its life. If even one of these steps is not performed correctly, the tree’s health or structure may be compromised, leading to early death or failure (falling) of the limbs or trunk. Poorly-cared-for trees can be a nuisance and potentially even cause property damage or personal injury. When, on the other hand, trees are appropriately cared for, they can provide decades or even centuries of well-documented benefits. They can help reduce heating and cooling costs, increase property values and salability, and even improve economic vitality in the surrounding community. Trees are a good investment both financially and socially, and making that
investment starts with hiring qualified professionals to care for them.
Legal issues and liability Even when trees are properly cared for, failures do occasionally occur. When property damage or personal injury results, lawsuits may be filed. Arborists may be called as expert witnesses for either side and if improper tree care is found to have contributed to the failure, the tree care company or Property Manager may be found liable for the damage. (If the tree had no obvious defects and was managed appropriately, its failure may be deemed an “act of God,� meaning all parties are absolved of responsibility.) Furthermore, there is potential for property damage or personal injury any time tree work occurs. Many of the tools used are sharp and high-powered and can be deadly, as can falling limbs and trunks. Though tree workers are at the greatest risk, all people and property in the general vicinity may potentially be impacted by accidents. A TCIA-accredited tree care company is legally obligated to stand behind its work, and also carries the level of insurance necessary to deal with this type of issue. An unaccredited company without the proper insurance may further complicate legal proceedings.
Alright, I’m convinced. Now, where can I find an accredited tree care company? The ISA and TCIA websites contain listings of all the professionals and companies they certify. Before hiring anyone who claims to be certified, it is advisable to consult these listings to make sure they are members in good standing. Katherine Naegele is Certified Arborist #WE-9658A and works in the Tree Care Division of Serpico Landscaping, which is a long-time ECHO member.
December 2013 | ECHO Journal 17
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Avoiding Reserve Planning Mistakes By Derek Eckert
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utside of major reconstruction, Reserve expenses are the largest expenses an association will face. Too often, more immediate tasks are on the desk of an association
manager, and the important task of preparing the community for inevitable major expenses is neglected. Whether the manager, staff, or the board likes it or not, every day the association is slowly approaching its own future.
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very day major association assets are deteriorating and drawing closer to their replacement date, whether the association is financially prepared or not. Reviewing the operating and management behavior of our clients, we have a few suggestions to help associations understand and avoid the top Reserve Funding mistakes. Mistake #1: It’s just another accounting task. Often managers and directors associate Reserve planning with an accounting task. While both involve the finances of the association, any direct comparison is flawed. Accounting is a field that fundamentally looks backwards in time in to bring order and clarity to a business or association’s finances. Reserve planning, on the other hand, fundamentally looks forwards into the unknown. One is based on the concept of accuracy and confidence, the other on predictions about future events that may or may not occur as planned. To prepare a successful Reserve Plan, one needs to be comfortable about creating the future, leading and planning. This is not a task for someone who is comfortable only when documenting the past. Creating a successful Reserve Plan involves strategic thinking, perhaps some market research, and trend analysis. Assigning the preparation of the Reserve Study to the wrong volunteers or staff dooms the project from the start.
Special Assessment risk can be measured. Choices can be made, and plans implemented, that direct an association towards or away from special assessments. Special assessments are financially disruptive and politically destabilizing, and unfair to those owners hit by the special assessment (for deterioration that occurred years before they 20 echo-ca.org
expenditures or expenses higher than planned), your Reserve Study becomes inaccurate months after it is completed. It is a plan, after all, and as the association moves forward in time the plan needs to be updated. Continuing to use an outdated plan for financial guidance is foolish.
Percent Funded tells a board member, owner and manager the Reserve Fund strength, and therefore the risk of an upcoming special assessment. Percent Funded reveals how the cash Reserve balance matches against the fractional deterioration of community’s assets. Twenty years of experience over thousands of associations has revealed a direct match between Percent Funded and special assessments, and no correlation between Reserve Fund cash balance and special assessments. Sorry, but it’s true. 0-30% Funded means a high chance of a special assessment, while over 70% Funded means a very low chance. Knowing Reserve Fund cash (“We have $1.25 million dollars…”) without knowing the Percent Funded is a mistake.
To help an association plan effectively, there are three different “types” of Reserve Studies. An association can select the right “type” of Reserve Study to select the right level of service needed to gather or update their Reserve plan.
Mistake #3: Failure to Update But we just did a major review two years ago! We had a Reserve Study done three years ago; should we do one again? Both these statements reveal a misunderstanding about different types of Reserve Studies, and how they can be used to an association’s advantage. Due to physical issues (deterioration due to weather or owner usage and wear, damage, defects, or unexpected failures) or financial issues (Reserve contributions not made, interest different than planned, inflation higher than planned, some unplanned
Full Reserve Study: a comprehensive top-to-bottom inventory and evaluation of the entire physical facility. Update With-Site-Visit Reserve Study: a physical inspection performed to update projections about how many years each major common area asset will serve the needs of the association, and how many of those years are left. Update No-Site-Visit Reserve Study: a financial update where costs are updated, the starting balance is updated, and information on recent projects/ expenditures are updated without a physical site inspection. A Reserve Study comes in three types. Select the “type” needed by the association to update the association’s plan. Reserve contributions are large. A Reserve Study update doesn’t have to be a big deal. There are different Reserve Study types to fit an association’s different planning needs from year to year. If you use a credentialed Reserve Study professional, you’ll find Reserve Study updates significantly less expensive than a “Full” Reserve Study.
SPECIAL ASSESSMENT RISK DIAGRAM FUNDING STRENGTH
Mistake #2: Confusing Red Letter Information with Red Herring Information
became owners). The “red letter” information is the association’s Percent Funded. This is a parameter that measures the strength of the Reserve Fund. The “red herring” information is the association’s cash balance. Focusing on the cash balance without knowing the Percent Funded is a tremendous oversight.
RISK 16 national clients, of which 1,055 needed special assessments to avoid shortfall in funding. Data compiled 1/1/2000 to 5/1/2008. Association Reserves, Inc.
Join us at the San Francisco Luncheon Thursday, January 16th, 2014
/
11:30 AM to 1:30 PM
Register online at www.echo-ca.org or fill out the form below.
Yes, reserve ______spaces for the ECHO SF Luncheon Amount enclosed: $______(attach additional names) Name:
McCormick & Kuleto’s 900 North Point Street, Suite H301 San Francisco, CA 94109
Email Address: HOA or Firm: Address:
Price: (Lunch Included)
City: State:
ADDRESS
Zip:
Phone:
$59 Members $69 Nonmembers Prices go up on January 6!
Visa/Mastercard No. Exp. Date:
SPEAKER
Signature:
Steve Weil, Esq.
Return with payment to: ECHO, 1602 The Alameda, Ste 101, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517
December 2013 | ECHO Journal 21
Mistake #4: Doesn’t Interest Equal Inflation? Probably the classic mistake is that too often our clients fail to appreciate and acknowledge that interest and inflation are very real effects, very influential to the Reserve plan. Because inflation has its effect on the total value of an association’s asset (the roof system), while interest only has its effect on the fraction of roof replacement funds actually on-deposit, inflation is a much more powerful effect than interest. For instance, a 1% fluctuation in the assumed inflation rate requires a 13% change (on average) in the size of Reserve contributions. For associations maintaining a low Reserve Fund balance, this effect is even more pronounced. Interest does not equal inflation. Using a rough or bad estimate for interest and inflation is more accurate than choosing to neglect the influence of these powerful economic factors.
Mistake #5: Confusing Trivia with Significance Within a Reserve Study, the Reserve Component List contains life and cost estimates for the major assets the association is obligated to maintain. Typically, this list gets longer and more complicated as stray projects got added to the Reserve Study, making the Reserve Study gradually more unwieldy, unworkable, and unimportant. This can be avoided with a Reserve Study that specifically focuses on the objective of helping the association plan ahead for the repair and replacement of major components instead of becoming an inventory and history of every asset that has been purchased. Fundamentally, a Reserve Study is a budget preparation guide and forward planning tool. There are and always will be, exceptions to every well-laid plan. The wisdom is in knowing when the plan needs to be adjusted by excluding projects that are the exception and can be better served outside the Reserve Study. Time is saved, and money is saved, when projects can be accomplished with economies of scale and in a consistent, repeatable manner. The opposite is what we call “checker-boarding.” This is when exceptions are allowed to become the
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norm, and uniqueness becomes commonplace. The association becomes more difficult to manage because replacements begin to occur at different points in time, styles don’t match, and economies of scale are lost. Fundamentally, it begins to take more time to manage the assets, and it begins to take more money to replace the assets. Accidents will always happen. A chair will be broken, roof tiles will break, a water leak will stain a wall and a carpet. Memorializing an exception by adjusting the Reserve plan is a mistake. Make the repair, make the room usable and attractive, and move on. Yes, the newer carpet will not need to be replaced when it is time to replace the carpet in all the other rooms, but go ahead and replace the still “fair” condition carpet in the formerly water-damaged room. When an exception is made, that does not mean you should revise the Reserve Study or your plan to replace all assets as one project at the next opportune cycle. This is where you choose to control the Reserve assets, instead of letting them begin to control you. The Reserve Study is a budget plan. Let exceptions remain exceptions. Keep the integrity of the plan. The key is seeing the Reserve Study as a planning guide, not a record-book. And this brings me back to my first point, confusing Reserve planning with an accounting or asset-tracking task.
Summary: Reserve planning can be simple, if you know what you are trying to accomplish. Any athlete will tell you that avoiding errors or turnovers is a key to success. Avoiding Reserve planning mistakes helps to keep an Association on the path to success. Derek Eckert is president of Association Reserves–San Francisco, LLC. The San Francisco office handles Reserve Studies in the Northern California region. Association Reserves, Inc. is a national Reserve Study company, specializing in the preparation of Reserve Studies and Disclosures for its residential and association client base in 43 states and internationally. Association Reserves is a long-time member of ECHO. December 2013 | ECHO Journal 23
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Who Is “A Member In Good Standing”? Association directors and members frequently ask, “When is a member in good standing?” By: Ann Rankin, Esq.
B
ylaws Define “Good Standing”. The term “good standing” is not defined in the Davis-Stirling Act or other statute. To find out who is, or is not, in good
standing, you must, in most cases, refer to the association’s bylaws. The bylaws basically govern the association as a corporation and discuss how the corporation should work. In contrast, the CC&Rs are a recorded document whose main purpose is to govern the uses of the real estate assets.
December 2013 | ECHO Journal 25
Common Requirements for “Good Standing” The most common requirements governing eligibility for voting and for running for the board of directors are first a requirement that the member be current in payment of all association dues and assessments and second a requirement that the member’s privileges of membership have not been suspended as a result of breaking association rules or violating the governing documents. Some bylaws also require that board members reside in the development but that does not relate to “good standing.” The bylaws also often contain requirements that directors must satisfy in order to continue to serve on the board. Common requirements include:
The director must own a “unit” or a “lot,” and if such ownership ceases, so does membership on the board; The director must not have been convicted of a felony; if convicted, the member may be removed from the board by the other directors; The director must not have missed three regularly scheduled board meetings within the same calendar year; The director must not have been declared mentally “incompetent” by a court; if he has been, then he may be removed from the board by the other directors. Although the governing documents typically require that association members and board members own property within the development, they usually don’t limit membership to people having any particular percentage of ownership. So if a member lives with a “significant other” and deeds even one percent of the ownership of the unit or lot to the significant other, that significant other is still a member.
Suspension of Members’ Rights for Violation of CC&Rs or Rules 26 echo-ca.org
The Corporations Code allows an association to suspend a member’s right to use the common areas and to vote. However, such suspension may occur only after the member has been given notice of the alleged violation and an opportunity to be heard. The member may request that the board sit in executive session while holding the hearing. Of course, the board has no power to suspend a member’s right to use his own unit, residence or lot.
What To Do If Your Bylaws Fail to Address These Issues. We recommend that your bylaws specify what a member must do in order to be in “good standing,” and that they also specify reasons why other board members may remove a board member who fails to continue to qualify for board membership. If your current bylaws don’t include these provisions, we advise you to amend them to add the provisions. These provisions encourage owners to pay their assessments and dues on time, which helps association cash flow. It encourages compliance with rules and governing documents. And it allows a quick way of getting rid of board members in situations where continued membership on the board is obviously a bad idea, as in a case where a member has been convicted of a felony, or simply loses interest and fails to show up for board meetings. Corporations Code §7132(c)(3) specifically allows the articles of incorporation to specify restrictions and conditions on membership. Corporations Code §7151(d) allows the bylaws to specify the “qualifications, duties and compensation of directors.” Corporations Code §7151(d) says the bylaws can provide for the manner of suspension of membership rights consistent with the requirements of Corporations Code §7341. Corp. Code §7341 imposes due process requirements for suspension of a member’s rights. Ann Rankin is the principal at the Law Offices of Ann Rankin, in Oakland, California. The firm practices mainly in the areas of common interest development law and construction defect litigation. She is a member of the Legal Resource Panel. December 2013 | ECHO Journal 27
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Join us at the Marin Educational Seminar Saturday, February 8th, 2014
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Register online at www.echo-ca.org or fill out the form below.
Yes, reserve ______spaces for the ECHO Marin Seminar Amount enclosed: $______(attach additional names)
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Phone: Visa/Mastercard No. Exp. Date: Signature: Return with payment to: ECHO, 1602 The Alameda, Ste 101, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517
$49 Members $59 Nonmembers Prices go up on January 27! speaker David Feingold, Esq., Wanden Treanor, Esq. and Glenn Youngling, Esq. December 2013 | ECHO Journal 29
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BEST PRICE, HIGHEST QUALITY: IS THAT ALL THERE IS? By Burt Dean
To avoid liability, scrutiny is needed to protect property owners, property management, insurance companies, finance companies, government, and large corporations; all these entities are liable for errors from negligence from their contractors. To avoid liability, scrutiny is needed to protect property owners, property management, insurance companies, finance companies, government, and large corporations; all these entities are liable for errors from negligence from their contractors.
December 2013 | ECHO Journal 31
N
ot only do these entities try to protect themselves by verifying insurance, worker’s compensation, state licenses, business license, permits, etc., but they need to review and verify that their contractors’ policies and procedures meet minimum qualification. Getting the work bid using the same specifications is not a guarantee of avoiding the negligence lawsuit. Using the same bid with professionally prepared specifications will obtain the best price, but in addition to the best price, you want quality work, avoiding as many opportunities for problems as possible. Everyone is aware that State and Federal OSHA safety regulations exist, and must be practiced. Enforcement is usually after the fact, after an accident happens, and failures bring enormous fines with liabilities. Selecting the highest qualified bid may never be the best price, and determination of the highest qualified contractor takes investigation. It is not good enough to get either best price OR highest qualified, taking the investigation step may help reach the goal of the highest qualified contractor for the best price. It is all about getting the work done safely, with the fewer the incidents the better. Investigation of sensitive areas may include a contractor’s response for Policies and Procedures of the following:
Pre-Employment Background Check Polices; does the contractor have a policy for minimum qualifications, and does the contractor avoid convicted felons that might impose a threat to the environment where the employee is assigned to work. Does the contractor have procedures and programs to evaluate the level of employee skill and place them in the best jobs for that level, and offer training for improvement:
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Security and Theft Prevention Policy; this begins with video and audio security cameras in the contractor’s office and warehouse, and continues through careful analysis for suspicious identity information on their employment applications, document inconsistencies, breach of computer access, alerts from third sources, etc., where an employee may attempt to obtain non-public information or advantages. Communications with client and third parties, all need to be under carful filing systems maintained and locked when not being accessed. Perhaps this could even include a Clean Desk and Clean Computer Screen Policy, which every business follows, but do they have it in writing?
Personal Property Handling and Disposal Policy; materials delivered need to be carefully inventoried with controlled access. Records need to be retained for incoming and outgoing inventories with names and dates, and signed receipts for material disposition.
Complaint Resolution Policy; includes special polices for verbal and/or written complaints. There needs to be a form available which an employee or consumer can complete, with the job or account identification. The person originating the complaint needs to know it is being investigated and a report of findings will be delivered. All complaints need to be logged and periodically reviewed.
Disaster Preparedness; includes planning before, during and after the disaster. No one knows in advance if the disaster will be water, fire, earthquake, financial, etc., but safety of person’s is primary, and securing the property is next. Key elements would be a backup plan to include methods of communications, off-site storage of job computer data
files, on-going physical security, implementation of “work-around� during periods of communications/ information failures, and written lists of key contact persons for contractors, sub-contractors, government, insurance, and safety personnel. At the end of the day, has everyone done and investigated enough? Can everyone say there was nothing else I could have done to avoid this problem? When it comes time to select the contractor, be sure to ask for pertinent policies and procedures that will protect your job, and if anything does not look right, it probably is not right for your job. Burt Dean is the owner of Robello’s Towing Service. Previously he owned an association management company. Burt has been a member of ECHO and frequent contributor for many years.
December 2013 | ECHO Journal 33
Beyond Privatopia Non-Member Price:
$20.00 $25.00
The rise of residential private governance may be the most extensive and dramatic privatization of public life in U.S. history. In Beyond Privatopia, attorney and political science scholar Evan McKenzie explores emerging trends in private governments and competing schools of thought on how to operate them, from state oversight to laissez-faire libertarianism.
Condominium Bluebook 2013 Edition $17.00 Non-Member Price: $25.00
Condos, Townhomes and Homeowner Associations Member Price: $29.00 Non-Member Price: $45.00
Community Association Statute Book—2012 Edition Member Price: $15.00 Non-Member Price: $25.00
To make these a sustainable investment, new buyers, owners and board members need to understand “best practices basics” of how this form of housing works and have more realistic expectations of this form of “carefree, maintenance free” living.
Contains the current version of the Davis-Stirling Common Interest Development Act, the Civil Code sections that apply to common interest developments and selected provisions from other codes important to associations.
Robert’s Rules of Order $7.50 Non-Member Price: $12.50
The Board’s Dilemma Non-Member Price:
A step-by-step guide to the rules for meetings of your association, the current and official manual adopted by most organizations to govern their meetings. This guide will provide many meeting procedures not covered by the association bylaws or other governing documents.
In this essay, attorney Tyler Berding confronts the growing financial problems for community associations. Mr. Berding addresses board members who are struggling to balance their duty to protect both individual owners and the corporation, and gives answers to associations trying to avoid a funding crisis.
2013 Community Association Treasurer’s Handbook Member Price: $29.00 Non-Member Price: $35.00
Reserve Fund Essentials Member Price: $18.00 Non-Member Price: $25.00
The Condo Owner’s Answer Book Non-Member Price:
This book is an easy to read, must-have guide for anyone who wants a clear, thorough explanation of reserve studies and their indispensable role in effective HOA planning. The author gives tips to help board members mold their reserve study into a useful financial tool.
An excellent guide to understanding the rights and responsibilities of condo ownership and operation of homeowner associations. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.
This well-known compact guide for operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequently-asked questions about associations, along with succinct answers.
W NETION I ED
Home and Condo Defects Member Price: $12.95 Non-Member Price: $17.95 Construction defect litigation can be confusing, expensive and fraught with legal pitfalls. This eye-opening guide, written by accomplished construction-defect attorneys, is an essential tool for board members who need to understand the legal process.
Questions & Answers About Community Associations Member Price: $18.00 Non-Member Price: $25.00 For 12 years, Jan Hickenbottom answered homeowners’ questions in her Los Angeles Times column on community associations. Now collected in one volume, readers can find answers to almost any question about CIDs.
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$10.00 $15.00
$15.00 $20.00
The Handbook is an in-depth guide to all aspects of association finances, including accounting methods, financial statements, reserves, audits, taxes, investments and much more. Not for the accounting novice, this is a tool for the treasurer or professional looking for specific information about association finances.
Board Member Handbook Member Price: $15.00 Non-Member Price: $25.00 This publication is the essential guidebook for HOA Board members, dealing with governance, finances, insurance and maintenance issues. Revised and updated in June 2012.
Dispute Resolution in Homeowner Associations Member Price: $15.00 Non-Member Price: $25.00 This publication has been completely revised to reflect new requirements resulting from passage of SB 137.
Publications to answer your questions about common interest developments Order Online at store.echo-ca.org
Bookstore Order Form Board Member’s Guide for Contractor Interviews $15.00 Non-Member Price: $25.00
Executive Council of Homeowners 1602 The Alameda, Suite 101, San Jose, CA 95126 Phone: 408-297-3246 Fax: 408-297-3517
TITLE
QUANTITY AMOUNT
This report is a guide for directors and managers to use for interviews with prospective service contractors. Questions to find out capabilities and willingness of contractors to provide the services being sought are included for most of the contractor skills that associations use.
SUBTOTAL CALIFORNIA SALES TAX (Add 8.625%) TOTAL AMOUNT
Board Member’s Guide for Management Interviews Member Price: $15.00 Non-Member Price: $25.00 This guide for use by boards for conducting complete and effective interviews with prospective managers takes the guesswork out of the interview process. Over 80 questions covering every management duty and includes answer sheets matched to the questions.
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December August 2013 2013 || ECHO ECHO Journal Journal 3535
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advertiser index
about ECHO
American Management Services........36 www.amspcam.com
Mutual of Omaha Bank.......................36 www.mutualofomahabank.com
Angius & Terry.......................................3 www.angius-terry.com
Neighborhood Association Management.........................................33 www.neighborhoodam.com
A.S.A.P Collection Services.................23 www.asapcollect.com Association Reserves...........................36 www.reservestudy.com Benjamin Moore Paint & Company...27 www.benjaminmoore.com Berding|Weil .........................Back Cover www.berding-weil.com Collins Management............................27 www.collins-mgmt.com Community Association Financial...............................................22 www.HOAsManagement.com Condominium Financial Management.........................................32 www.Condofinancial.com Compass Management........................33 www.gocompass.com Cool Pool Service..................................22 Cornerstone Community Management.........................................26 www.cornerstonemgt.biz Ekim Painting.......................................26 www.ekimpainting.com Eugene Burger Management Co.........13 www.ebmc.com First Bank..............................................17 www.firstbankHOA.com
PGS; Professional Gutter Service, Inc. ..........................................33 www.guttercleaning.com PML Management................................12 www.pmlmanagement.com R.E. Broocker Co...................................17 www.rebroockerco.com Rebello’s Towing..................................28 www.rebellos.net Saarman Construction.........................23 www.saarman.com
WHAT IS ECHO? Serving Homeowners to Build Strong Community Associations The Educational Community for Homeowners (ECHO) is a nonprofit membership corporation dedicated to assisting California homeowner associations. ECHO provides help to homeowner associations on many fronts: finances, legal issues, insurance, maintenance and management. Members receive help through conferences, trade shows, seminars, online education, a monthly full-color magazine and discounted publications.
Who Should Join ECHO? If your association manages condominiums or a planned development, it can become a member of ECHO and receive all of the benefits designated for homeowner associations.
Benefits of Association Membership • Subscription to monthly magazine • Access to members-only online education • Updates to the Association Statute Book • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento
ECHO Membership Dues Association Membership 2 to 25 units....................................$120 26 to 50 units..................................$165 51 to 100 units................................$240 101 to 150 units..............................$315 151 to 200 units..............................$390 201 or more units...........................$495 Professional Membership.................$425 Association Management Membership.......................................$425 Individual Membership.....................$100
How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www. echo-ca.org. For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.
December August 2013 2013 || ECHO ECHO Journal Journal 3737
directory updates
All current listings may be found in our Professionals Directory available online at www.echo-ca.org.
New Members CertaPro Painters of San Francisco 60 29th Street #241 San Francisco, CA 94110 Contact: George Irving Tel: (415) 661.8400
New Pipes Inc. 2530 Seaboard Avenue San Jose, CA 95131 Contact: Jane Dobkins Tel: (408) 269.1969
Become an ECHO Professional Member and receive the benefits of membership. To learn more, visit our membership page at www.echo-ca.org 38 echo-ca.org
ECHO event calendar
RESOURCE PANEL CALENDAR Wednesday, December 4 Maintenance Resource Panel 12:00 Noon Il Fornaio Restaurant, 302 South Market Street, San Jose Wednesday, December 11 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell Friday, December 13 East Bay Resource Panel 12:00 Noon Massimo Restaurant, 1603 Locust St., Walnut Creek Tuesday, December 17 Wine Country Resource Panel 11:45 a.m. Sam’s For Play Restaurant, 1024 Sebastopol Rd, Santa Rosa Thursday, January 9 North Bay Resource Panel 11:45 a.m. Contempo Marin Clubhouse, 400 Yosemite Dr, San Rafael
Monday, January 13 Accountants Resource Panel 6:00 p.m. Scott’s Seafood, 2 Broadway Oakland
Wednesday, February 12 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell
Tuesday, january 14 Central Coast Resource Panel 12:00 Noon Michael’s On Main, 2591 S Main St., Soquel
Friday, February 14 East Bay Resource Panel 12:00 Noon Massimo Restaurant, 1603 Locust St., Walnut Creek
Wednesday, January 15 Wine Country Resource Panel 11:45 a.m. Serv-Pro, 373 Blodgett St., Cotati
Wednesday, February 19 Wine Country Resource Panel 11:45 a.m. Sam’s For Play Restaurant, 1024 Sebastopol Rd, Santa Rosa
Wednesday, January 15 Legal Resource Panel 6:30 p.m. Scott’s Seafood, 2 Broadway Oakland Wednesday, February 5 Maintenance Resource Panel 12:00 Noon ECHO Office, 1960 The Alameda, Suite 155, San Jose
REGULARLY SCHEDULED RESOURCE PANEL MEETINGS Panel
MEETING
location
Maintenance
First Wednesday, Even Months
ECHO Office, San Jose
North Bay
First Thursday, Odd Months
Contempo Marin Clubhouse, San Rafael
East Bay
Second Friday, Even Months
Massimo Restaurant, Walnut Creek
Accountants
Second Monday, Odd months
Scott’s Seafood Restaurant, Oakland
Central Coast
Second Tuesday, Odd months
Michael’s On Main, Soquel
South Bay
Second Wednesday, Even Months
Buca Di Beppo, Campbell
Wine Country
Third Wednesday, Monthly
Serv-Pro, Cotati
Legal
Quarterly
Varies
December 2013 | ECHO Journal 39
ECHO honor roll
ECHO HONORS VOLUNTEERS ECHO Resource Panels
Regional Seminar Speakers
Accountant Panel Marco Lara, CPA 650-632-4211
Wine Country Carra Clampitt Bill Gillis, Esq. David Hughes Ken Kosloff Tom O’Neill Steve Weil, Esq.
Central Coast Panel John Allanson 831-685-0101 East Bay Panel Beth Grimm, Esq. 925-746-7177 Cindy Wall, PCAM, CCAM 925-830-4580 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Brian Seifert 831-708-2916 North Bay Panel Diane Kay, CCAM 415-846-7579 Stephany Charles, CCAM 415-458-3537 South Bay Panel George Engurasoff 408-295-7767
South Bay Derek Eckert Stephanie Hayes, Esq. Robert P. Hall Jr., Esq. Fresno Geri Kennedy David Levy, CPA Michael J. Hughes, Esq. Walnut Creek Stephanie Hayes, Esq. Lisa Esposito, CCAM Rob Rosenberg, CCAM Beth Grimm, Esq. Monterey John Allanson Diane Rossi, PCAM, CCAM Sandra Bonato, Esq.
Wine Country Panel Pam Marsh 415-686-9342
Sacramento Ian Brown, CCAM Bill Erlanger, CPA Don Haney, CPA Deon Stein, Esq.
Legislative Committee
ECHO San Jose Speakers September 24, 2013
Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry Bowles Oliver Burford Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Geri Kennedy, CCAM Wanden Treanor, Esq.
Board Essentials Tyler Coffin Lisa Esposito, CCAM Pat Falconio Brian Kidney Mike Muilenberg Rob Rosenberg, CCAM Brian Seifert Wanden Treanor, Esq.
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Hot Topics Anton Bayer Ian Brown, CCAM Don Danmeier Glenn Kenes Nico March Steve Saarman Steve Weil, Esq.
Legal Tyler Berding, JD, PhD John Garvic, Esq. Michael Hughes, Esq. Julia Hunting, JD, SE Kerry Mazzoni Alex Noland, Esq. Paul Windust, Esq. Recent Contributing Authors July 2013 Anton Bayer, CFP Beth Grimm, Esq. Dave Phelps, ASLA, ISA Judy O’Shaughnessy Michael Petite August 2013 Julie Adamen Stan Malos, JD, PhD Sharon Glenn Pratt, Esq. John R. Schneider September 2013 Kevin Canty, Esq. Beth Grimm, Esq. Judy O’Shaughnessy Diane Rossi, PCAM, CCAM Steve Saarman October 2013 Beth Grimm, Esq. Debra A. Warren, PCAM, CCAM Richard Tippett Sharon Glenn Pratt, Esq. Geri Kennedy November 2013 Tyler Berding, JD, PhD John R. Schneider James H. Ernst, CPA, MS-Tax Tom Fier, Esq. Burt Dean
NEW
at echo-ca.org
We’re adding new information to our website every day. Log in to read the articles below. If you need help logging in, find it on our website or email ECHO at newaccount@echo-ca.org.
Articles The New Davis-Stirling: Standardized Rules The new law clarifies the rules surrounding notice and delivery. Educational Topic: Davis Stirling New The New Davis-Stirling: Annual Reports and Disclosures The annual budget mailing has become two separate documents with unique requirements. Educational Topic: Davis Stirling New The New Davis-Stirling: Liens Recorded in Error Members are no longer responsible for the costs associated with liens recorded in error. Educational Topic: Davis Stirling New Improving Security in Your Community Take specific steps to improve community safety, and know when to bring in professional help. Educational Topic: Safety
Four Essential Elements of an Effective Security Assessment A professional security assessment will look at four main areas and try to answer a specific list of questions. Educational Topic: Safety
Legislation 2013 Legislative Review Find out what happened with California bills addressing smoking, small association elections, common area, and more.
The Law Members who are logged in may now jump back and forth between the old and new versions of the Davis-Stirling Act. Log in and scroll down to the “Notes on the Text” within each section of law. Find in: echo-ca.org/law
December 2013 | ECHO Journal 41
2013 legislative Overview
Enacted Bills Bill Information
Summary
SB 298 Watch
Contracts with Private Parking Enforcement
SB 510 Watch
Resident Surveys in Mobilehome Conversions
SB 745 Watch
New Davis-Stirling Clean-Up
SB 752 Watch
Davis-Stirling for Commercial CIDs
This region-specific bill authorizes the Orange County Board of Supervisors to contract for supplemental law enforcement services for homeowners’ associations to enforce Vehicle Code on the association’s owned and maintained roads. While this bill does not directly impact associations in other regions, it may lay the groundwork for future legislation.
This bill provides that a local agency is required to consider the results of a survey in making its decision to approve or reject a map related to the conversion of a rental mobilehome park to resident ownership.
This annual housing omnibus bill contains non-controversial provisions that clean up mistakes within the new Davis-Stirling Act, effective in January 2014.
This bill establishes a new body of law, separate from the Davis-Stirling Act, that governs exclusively commercial and industrial CIDs. Mixed commercial and residential associations are not affected.
Two-Year Bills Bill Information
Summary
AB 968 Support
Elections in Small Associations
AB 1360 Support if Amended
Electronic Voting in CIDs
SB 391
Document Recording Fees
This bill seeks to carve out specific exemptions for small associations from existing law governing CID elections. In certain cases, the bill would allow small CIDs to forego the mailing of ballots, and permit both nominations and voting at the election meeting. The size of a “small” association changed several times, and currently stands at 15 units. While the bill moved through the Legislature with bipartisan support, concerns from the Senate Housing and Transportation committee pushed the bill into a two-year process. ECHO is working with the author to refine the bill and address some lingering concerns.
This bill authorizes an association to conduct elections or other membership balloting by electronic voting. It also requires an association to provide each member with an opportunity to indicate that he or she will be voting electronically and to provide a member who did not indicate so with a paper ballot. ECHO is seeking additional clarification, including a definition of an “electronic balloting service provider.”
In order to fund affordable housing, this bill would impose a fee for all documents that must be recorded in California, including governing documents. This bill poses several concerns for associations. While it is dead for 2013, it may return in another form next year.
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2013 legislative Overview (continued)
Unapproved Bills Bill Information
Summary
AB 126
Address Lists in Time-Shares This bill requires a time-share association to maintain a complete list of the names and postal addresses of all owners of time-share interests in the time-share plan and to update the list at least every 12 months. The bill did not meet legislative deadlines and is dead for this year.
AB 746
Smoking Ban in Multi-Family Dwellings This bill proposed to ban smoking in all multi-family dwellings in California. The sweeping nature of the legislation stirred up a predictable backlash, and the bill did not make it out of the Assembly Housing and Community Development committee. However, reconsideration was granted, and the bill may return in a new form next year.
AB 1205 Oppose Unless Amended
Mobilehome Residency Law Mediation Act
SB 125 Watch
Fire Prevention Fees
SB 750 Oppose Unless Amended
Mandatory Submetering
This bill would create a mediation program for alleged violations of the Mobilehome Residency Law, and would impose financial assessments to maintain the program. ECHO is seeking an amendment that would exempt mobilehome parks that are governed by the Davis-Stirling Act.
This bill exempts a property owner of a structure that is both within a state responsibility area and within the boundaries of a local fire district that provides fire protection services in the district from the payment of the fire prevention fee.
This bill deals with water sub-meters and meters. While the bill intended to address landlords and tenants, the language did not exempt common interest developments.
Learn More Don’t want to wait for the Journal to hear the latest news? We publish regular updates about HOA legislation on our website. Learn more about all the bills on our watch list, including those that don’t make the cut for the ECHO Journal. Find out more about ECHO’s activity, and what you can do to improve legislation for California HOAs. For all of this information and links to the text of each bill, visit ECHO’s HOA Advocacy pages at echo-ca.org/hoa-advocacy.
December 2013 | ECHO Journal 43