Journal_09_05 by Echo

May 2009

A Journal for California Community Association Leaders

echo-ca.org

Race to Win ECHO Annual Seminar

ALSO INSIDE THIS ISSUE:

• Assigning Responsibility for Maintenance • What Happens If an Association Fails? • Myths of Chairmanship

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Contents

What Happens If An Association Fails? page 14

2009 Annual Seminar Begins June 12 With the Annual Seminar only a month away, seminar tickets are beginning to fly, but plenty of space remains. Send in your reservation now for California’s largest CID conference.

Assigning Responsibility for Maintenance One of the most confusing areas an association must deal with is how to allocate responsibility for the maintenance and repair of their buildings. This is especially true of exclusive use common areas where buildings have aged significantly. Read attorney Glenn Youngling’s take on this subject.

What Happens If An Association Fails? Many articles have appeared in the Journal about the future of CIDs. Underfunded reserves have given way to underfunded budgets as the economic crisis deepens and associations are finding their ability to pay for even daily operations difficult. What was once predicted as a future problem is now a reality.

20 18

Myths of Chairmanship Ever chaired a meeting? Whether you are a past or a newly-elected president, you must appreciate the challenge for the person who holds the gavel: How do you apply democratic principles in a fair and efficient way? The author has compiled a list of popular “myths” regarding proper parliamentary procedure.

Departments 28 Directory Updates 32 News from ECHO 33 Legislation at a Glimpse 34 ECHO Bookstore

36 Calendar of Events 38 ECHO Volunteers

Copyright 2009 Executive Council of Homeowners, Inc. 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.

Executive Council of Homeowners, Inc. 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 9:00 a.m. to 5:00 p.m.

Board of Directors and Officers President David Hughes Vice President Karl Lofthouse Treasurer David Levy Secretary Dorothy Kopczynski Directors Paul Atkins John Garvic Diane Rossi Richard Tippett Steven Weil

Jerry L. Bowles Robert Rosenberg Kurtis Shenefiel Wanden Treanor

Executive Director Oliver Burford Communications Coordinator Tyler Coffin Legislative Consultant Government Strategies, Inc.

41 ECHO Marketplace 41 Advertiser Index

ECHO Mission Statement

On the Cover ECHO Annual Seminar—page 6 May 2009 | ECHO Journal

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.

Design and Production George O’Hanlon

38 About ECHO

The ECHO Journal is published monthly by the Executive Council of 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 person should be sought.

The mission of ECHO is to advance the concept, interests and needs of homeowner associations through education and related services to board members, homeowner members, government officials and the professionals in the industry.

Top Ten Reasons to Attend the ECHO Annual Seminar June 13, 2009 1. Valuable advice from experts in law, accounting, association management, insurance and maintenance.

6. Checklists and other important reference information in the 300-page Seminar Program Book.

2. Information, assistance, product samples and prizes from more than 125 booths in the Trade Show.

7. Practical ideas for handling community association leadership issues effectively.

3. Best practices and proved procedures for associations unveiled in 16 educational sessions. 4. The latest update from the State Legislature and Law Revision Commission. 5. A unique opportunity to take the CACMaccredited Advanced Budgeting course.

8. Time-saving tips that will help make your leadership experience more worthwhile. 9. Exchanges on common concerns by networking with 1,000 community association leaders. 10. Information about ECHO programs, publications and services designed to support association leaders. ECHO Journal | May 2009

2009 Annual Seminar Begins June 12 he 37th ECHO Annual Seminar is just around the corner—only a month away. Many exciting presentations and outstanding speakers are lined up for this year’s seminar. Community association board members and professional members have been ordering seminar tickets for the past month, but plenty of space remains. Send in your reservation now for California’s largest CID conference.

The 2009 Seminar and Trade Show will be an all-new, high-paced event, with most activities packed into a Saturday schedule. This year the event will use the main front lobby of the Santa Clara Convention Center for registration and the adjacent exhibition space. Morning and afternoon educational sessions, the full program book with handouts from all speakers, continental breakfast and an afternoon ice cream social are all included in the Seminar ticket price. Annual Seminar Plan and Special Events On-site registration begins at 12:00 noon on Friday, June 12, for those who are attending the CACM course on Advanced Budgeting. Set-up of exhibits for Saturday’s Trade Show is also scheduled for Friday afternoon, from 3:00 p.m. to 6:00 p.m. Many of the exhibitors plan to celebrate the “Race to Win” theme of the seminar in their booths. Registration is still available for the threehour CACM course on Advanced Budgeting. This course is designed to take managers to the next level in financial management and help them feel confident about the budget process, reserve funding plans, the effect of litigation on financial operations, the differences between budgeting for a conversion versus new construction, and much more. After successfully completing this course, managers will understand how to utilize the budget and reserve study to evaluate the community association’s financial status. The 6

May 2009 | ECHO Journal

class will be presented on Friday afternoon, June 12, beginning at 2:30 p.m. The Friday Night Reception to honor exhibitors is open to all members and guests for a $40 fee. Light refreshments will be featured and cash bars will be available. A lively music group will provide entertainment for the reception. The ECHO Volunteer of the Year for 2009 will be announced and there will be a few other special presentations. The party will recognize our loyal exhibitors and sponsors for their major contributions to the Annual Seminar. Registration on Saturday will open at 7:30 a.m. and the Trade Show and refreshments will open at 8:00 a.m.; educational sessions will start at 9:00 a.m. and continue to 4:30 p.m. To give attendees maximum flexibility to allocate their time, the optional Saturday buffet luncheon adjacent to the Trade Show is again available for $40 to those who make advance reservations. Educational Program HOA University, ECHO’s training course for new directors, will be repeated this year. The basic responsibilities and duties of homeowner association board members will be explained by a full range of experts. This series of sessions is a “must” for all new or potential board members and also will provide an excellent review for any board members. Those who attend this entire track will receive a special certificate, recognizing their participation and completion of the program. The 2009 Seminar also includes full-day tracks addressing legal and legislative, association financial and management, and building maintenance concerns. As usual there will be a presentation and status report on the legislative bills affecting common interest developments that are now moving through

the California Legislature. Katharine Rosenberry, Esq., an international expert on community housing legal matters and one of the original drafters of the Davis-Stirling Act, will be a first-time presenter this year. Sessions about association structures will focus on “green” concerns. The full program of educational presentations with speakers can be found on page 43 of this issue. Scholarship Program A limited number of scholarships to cover the cost of Annual Seminar tickets will be available again this year, thanks to the generosity of a number of member businesses and professionals. These scholarships will generally be offered to board members or owners who are first-time attendees at the Annual Seminar and who are residents of smaller, poorly funded associations or associations with other sorts of serious operational problems. Preference will be given to representatives of ECHO member associations, but membership is not mandatory. Recipients are not required to be members of their association board. Anyone who wishes to be considered for a scholarship may apply, preferably in writing, to Oliver Burford, ECHO’s Executive Director, at the ECHO Office. Summary Don’t delay making reservations for current and future board members, committee members, and association members at your association. The 2009 Seminar is the place to get all the up-to-date information about operating your association efficiently and legally; every ECHO member association should participate. Complete the form on page 43 and send your orders to ECHO. You may also purchase tickets via a secure link on the ECHO website: www.echo-ca.org.

Race to Win

ECHO Journal | May 2009

May 2009 | ECHO Journal

ONE OF THE MOST CONFUSING areas a homeowner association must deal with is where the lines should be drawn allocating association and individual responsibility for the maintenance and repair of certain aspects of their buildings. This is especially true of condominium exclusive use common areas and in planned unit developments where buildings have aged significantly and need more than just exterior paint and reroofing.

By Glenn H. Youngling, Esq.

Assigning Responsibility for Maintenance and Repair At the outset, it is important to understand that where the lines are drawn depends a lot on whether the development is a condominium or a planned development (which may broadly include townhouses, cluster homes and even single family detached homes). Although it may be an over-generalization, with a condominium, the association is responsible for all that is not specifically assigned to the individual owner. With a PD, the opposite is generally true, i.e. the owner is responsible for all that is not specifically assigned to the association. The first part of this

article will address condominiums and draws on precedent set in the Davis-Stirling Act. The second part of the article will address PDs and offer suggestions as to how the Davis-Stirling Act might be applied by extrapolation to this second type of home. The Davis-Stirling Act is a set of statutes located in the California Civil Code commencing with Section 1350. Condominiums In the simplest sense, the condominium association is responsible for all common areas, indi-

ECHO Journal | May 2009

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May 2009 | ECHO Journal

vidual owners are responsible for all unit areas, and there is an overlap in responsibility for exclusive use common area. To understand how these areas interface with each other, it is helpful to start with a traditional concept. When a person purchases a condominium, that person is really buying a cube of air (often expressly including cabinets, plumbing fixtures, a hot water heater, a furnace, etc.) and the thin finish surfaces that surround that cube of airspace. Everything else is common area. The owner is responsible for the unit area and the association is responsible for everything else. Problems arise when the “black and white” of the traditional notions of unit versus common area responsibility is unclear because the governing documents (and more specifically, the Covenants, Conditions and Restrictions or CC&Rs) are not clear. The DavisStirling Act attempts to mitigate some of these problems with the concept of exclusive use common area, which is essentially a “gray area” between unit and common area. The key to understanding the statutes dealing with exclusive use common area is that the act applies unless the governing documents provide otherwise. In other words, these sections only come into play if the CC&Rs are silent on the point or are ambiguous. Civil Code Section 1364 (a) states: “Unless otherwise provided in the declaration (CC&Rs) of a common interest development, the association is responsible for repairing, replacing or maintaining the common area, other than exclusive use common areas, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common areas appurtenant to that separate interest.” (emphasis added) Examples of exclusive use common area are also set forth in the Davis-Stirling Act in Civil Code Section 1351(i)(1) which states: “...any shutters, awnings, window boxes, door steps, stoops, porches, balconies, patios, exterior doors, door frames, and hardware incident thereto, screens and windows or other fixtures designed to serve a single separate interest, but located outside the boundaries of the separate interest, are exclusive use common areas allocated exclusively to that separate interest.” It is important to note that, even as to exclusive use common areas, the owner maintains and the association still has responsibility to repair and replace. Just what is entailed in “maintenance” as opposed to

“repair” or “replacement” may raise issues that are not addressed. Even the Davis-Stirling Act does not address all of the facets of construction your association may want to address. If your governing documents are ambiguous, unclear or fail to address other “borderline” areas, you should consider making your own policy. Consider such areas as: • Elastomeric coatings, planks and other deck surfaces and components • Chimney flues (where creosote builds up) • Sprayed-on acoustical ceilings (that may contain asbestos in buildings constructed up to the mid-1970s) • Skylights • Fences and balcony railings In trying to define and draw the lines reasonably, every association (whether condominium or PD) should consider the following: • Are there economies of scale present if the association takes broad responsibility for this component? • Is access by association representatives or contractors a problem? • Is the component one that is traditionally thought of as an association responsibility? • Is it an area subject to widely different levels of use (and abuse) by owners? If there is a casualty loss, is this a component that is covered by owner insurance, association insurance, neither or both? • How has your particular association handled it in the past? • Is the component readily visible from public areas? If your governing documents are unclear, the best way to deal with the omission is to amend that portion of your CC&Rs. You might want to take the opportunity to update and make specific the entire issue of exclusive use common area. Remember, in doing so, you are not bound by the Davis-Stirling guidelines. If a different approach is more reasonable, you may deviate from the statutory approach but be sure to be clear and unambiguous. Planned Developments In most PDs, the individual homeowner owns the ground under his or her home and owns the building itself. The association traditionally is responsible to paint the exterior walls, maintain and replace the roof and perhaps maintain some areas of the landscaping adjacent to the home. Few governing documents go beyond reference to painting or reroofing. This opens many questions for the ECHO Journal | May 2009

older association. Does painting include caulking? Does it include preparation of the surface for painting? Does it include patching or replacing any part of the surface that receives the paint? Does it include waterproofing windows, doors and other openings? What if the governing documents provide that the association shall maintain the entire “exterior”? Does this apply to components such as those included in the condominium references of Civil Code Section 1351(i)(1) (i.e., shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patios, exterior doors, door frames, and hardware incident thereto, screens and windows or other fixtures designed to serve a single separate interest)? These are all good questions and few PDs have governing documents that help in drawing lines and defining areas of responsibility to this degree.

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Few PDs have governing documents that help in drawing lines and defining areas of responsibility.

Some PD associations assume responsibility for maintaining, repairing and replacing the construction components necessary to the weatherproof “envelope” of the building. If this is the case, it logically includes paint, flashing, trim, caulking, stucco, rain gutters and downspouts, substrate such as plywood or shingles, and any other facet necessary to keeping the structure protected from water. Other associations will assume as little responsibility as possible and this may be limited to painting and roof work. There, individual owners must play a greater role in preserving their homes. Assuring that these owners live up to their responsibilities is a task that requires foresight, education and policing by the association.

Although the Davis-Stirling Act does not provide direct guidance in this area to PDs, you may find it helpful to extrapolate as you decide how to “reasonably” interpret and implement the provisions of the governing documents that address responsibility for the “exterior.” Consider applying the criteria mentioned above in deciding who can most efficiently and fairly carry out some aspect of maintenance, repair, or replacement of a particular component of the building. If you live in a PD, you should be aware that Civil Code Section 1364 expressly addresses the role that your association may play in addressing the presence of wooddestroying pests. If you are aware of insect or vermin infesting any homes in your association, you should read the specific provisions of Civil Code Section 1364. Generally, these sections provide that a majority of the owners in a planned development can vest their association with the power to deal with such pests on a building-by-building or project wide basis. This includes the power to levy special assessments against the owners of homes affected. As with the condominium association, ambiguities or lack of specificity in governing documents are good reasons to amend the governing documents. Common sense, foresight, the quality of construction and the personality of your membership are important factors in drawing lines and defining responsibility. In Summary If you find areas of your governing documents are less than models of clarity in assigning responsibility for certain building components, you are not alone. The key to good association management is not as dependent on where you draw the lines or assign responsibilities as it is in anticipating how best to assure that your buildings are preserved for the long run. This always involves anticipating gray areas, making clear by amendment or policy what responsibility is assigned to whom, and following up to be sure that owners and the association are working together to preserve the quality of life and value of your property.

Glenn H. Youngling is an attorney with offices in San Rafael whose practice includes a sizeable number of common interest developments. He is a member of the ECHO Legal Resource Panel and a frequent speaker at ECHO seminars. ECHO Journal | May 2009

e have written many times about the difficult future of the housing industry and that of common interest developments in particular.1 Underfunded reserves have given way to underfunded operating budgets as the economic crisis deepens and community associations are finding layoffs and foreclosures beginning to affect their ability to pay for even daily operations as assessment payments dry up. What we once predicted

May 2009 | ECHO Journal

as a future problem has been escalated to the present by the economic downturn. This problem is not confined to California. Other states are experiencing the effects of the economy on community associations. In Florida, the problem is epidemic. In a recent article, Jim 1 Berding, â&#x20AC;&#x153;The Uncertain Future of Community Associations,â&#x20AC;? 1999; 2005.

By Tyler P. Berding, Esq.

What Happens If an Association Fails? Does the Experience in Florida Presage the Future for California? Loney, writing for Reuters.com, tells the story like this: “Florida’s condominium and homeowners’ associations are facing what experts call a trickledown disaster from the property crisis. Dozens and perhaps hundreds of condo buildings have budget shortfalls as thousands of owners, under water on their mortgages or in foreclosure, stop paying monthly fees.

“I call it a death spiral,” Miami Beach city commissioner Jerry Libbin said. “It’s a catastrophe in the making.”2 Community associations rely on the monthly cash flow from assessments to pay virtually all of their expenses. In most cases, they have no other 2 Loney, Jim, “U.S. property bust threatens condo ‘death spiral;’” Reuters.com, April 3, 2009.

ECHO Journal | May 2009

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source of income. When that income is seriously curtailed, the ability of the board of directors to protect and maintain the project is in jeopardy. Borrowing from reserves works for a while, assuming there are reserves in the first place. But that lasts only as long as does the available cash, and then what? We’ve written about this situation recently, and it leaves boards in the position of making some very tough decisions.3 Landscape or pool maintenance? Painting or insurance premiums? Management or the water bill? When we get down to life-safety issues, like paying for electricity, security guards or the sewer bill, its time to re-evaluate the very survival of the association. Loney shows us that the problems in Florida are similar: “Rust pokes through the peeling paint on the railings, pest control has been curtailed and the palm trees are no longer being fertilized at the 1940s-era Miami Modern condominium building in Miami Beach.”

Foreclosures by lenders could actually be a blessing in disguise—if they were to actually occur. But it’s not just the owners who have lost their homes or who have lost their jobs and can no longer pay their assessments who are impacted. The remaining owners are hit hard too: “When a unit owner stops paying monthly fees, which can range from $150 in a small building to over $1,000 in a luxury tower, a condo board must collect money from other owners to make up the shortfall. Rising fees or special assessments, or levies, can drive other vulnerable owners into insolvency.”4 How did things get so bad? The same way it happened in California—a super-heated housing boom that allowed anyone with a 3 Berding, “Your Association is Broke—Who do you pay when the cash runs out?” CondoIssues.com, December 3, 2008. 4 Loney, Ibid.

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pulse to become a homeowner. When the bubble burst, all of those people who could never have kept their loans current even while employed abandon those properties when the debt catches up or their income is cut off. The Florida problem sounds very much like many California projects: “The apartments were converted to condos at the height of a boom that saw prices— inflated by speculation and fraud—double within four years, then tumble in the last three. A one-bedroom, 560-square-foot (52square-meter) unit that topped out near $200,000 might now get $70,000, leaving owners drowning in debt. Still… it could be worse. The board president pointed to a nearby tower where she said more than 200 of the 244 units have liens or lawsuits pending. She said an upscale building not far away—where units that once sold for over $1 million and are now priced below $500,000— has 16 troubled apartments of 44 in the building. The crisis could mean serious pain for Miami Beach, a resort town with 88,000 residents and 42,000 condos. If debtors walk 5 Ibid.

away from their units, buildings could become derelict. “I haven’t seen it yet, but I think we’re going to see it…”5 Foreclosures by lenders could actually be a blessing in disguise—if they were to actually occur. Banks and other lenders would foreclose and then pick up the assessments. The only problem is that in many cases, banks have refused to do that and the properties are languishing. Whether it’s the payments themselves that the banks don’t want to make, or whether the act of foreclosing would force them to re-value these assets to the detriment of their balance sheets—the cause of this inaction varies from lender to lender—its effect can be devastating as well as unjust to the remaining owners in the project. The Florida examples are similar to what we have seen in California: Condo advocates say banks are partly responsible for hobbling condo boards by being slow to foreclose on owners who have fallen behind… Lenders don’t become responsible for an apartment’s costs until they foreclose and under current law, a bank is liable to pay only six months worth of fees in arrears, or one percent of the mortgage

value, when it takes back a property… Condo advocates say banks are deliberately stalling… “There’s no doubt in my mind it’s done so they don’t have to pay the fees,” says Rosa de la Camara, a lawyer with Becker & Poliakoff, a Florida firm that does condo legal work.6 Many states are looking to their legislatures to fashion a way out. Bills aimed at forcing lenders to pay past assessments are being introduced (although nothing in California at the moment.) “Proposed legislation would make banks pay up to 12 months of fees. Advocates also want the Florida legislature to allow associations to collect rent directly from tenants when owners are taking in rent but not paying condo fees, and said other states are considering similar legislation.” But even that might not be enough to save Florida projects in the most financial distress. There, the Miami Beach city commissioner is looking at a state takeover as a real possibility, stating “...the state might end up taking over bankrupt condo associations. Imagine

6 Ibid. 7 Ibid. ECHO Journal | May 2009

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what it will be like if you have to call the governor’s office to get a plumber...”7 A State Takeover of Community Associations? Actually, that has certain symmetry to it. As a condition of approval, many community associations were required by cities and counties to maintain the very same infrastructure—streets, utilities, open space—that in other neighborhoods are maintained by the local public entity using property and sales tax dollars—income denied to community associations. So, if the state or local government were to take over a community association and its various maintenance responsibilities, perhaps public instead of private revenues might finally finance some of that responsibility. Nothing like that would come without a price, however, and if the project were to remain in private hands, the price would probably be a repayment lien placed by the government as a condition to taking over, but at least help would arrive. Government takeover has already happened in California. We wrote about just such an action in Sacramento several years ago, when a community association that could not pay its bills and had deteriorated badly, it was condemned by the City of Sacramento and redeveloped into subsidized housing.8 The future of other common interest developments may also lie in the hands of local or state government as well before we know it. The current financial crisis has rapidly accelerated trends that otherwise might have taken decades to occur. The Florida examples and our own experience in California give us reason to be concerned that the “Uncertain Future” may be here sooner than we think. The Berding|Weil website (www.berding-weil.net) and the ECHO Journal have many useful articles written to help community associations weather these tough economic times. Readers are encouraged to take advantage of these resources.

Tyler Berding is a founding partner of Berding & Weil, LLC, a community association law firm located in Alamo, CA. He has taught real estate and community association law at California State University East Bay and is the immediate past president of ECHO. Questions or comments can be directed to Dr. Berding at www.berdingweil.com or www.condoissues.com. 8 Berding, “The Uncertain Future,” Ibid.

May 2009 | ECHO Journal

By Kim Goldsworthy

Myths of Chairmanship

HAVE YOU EVER HAD TO CHAIR A meeting? Scary, isn’t it? Whether you are a past president or a newly elected president, you must appreciate the daunting challenge for the person who holds the gavel. How do you apply democratic principles in a fair and efficient way— without messing up too badly?

It’s a tough job, and the job is tougher if you do not have a firm grasp of “parliamentary procedure,” often called “Robert’s Rules of Order” after the popular manual on the subject. Over the years, I have compiled a list of the most popular misunderstandings, or “myths,” that some people hold regarding proper parliamentary procedure, particularly, myths that conflict with the current edition of Robert’s Rules, namely, Robert’s Rules of Order Newly Revised (10th edition, 2000, published by Perseus Publishing). For this article,

I have edited my master list of parliamentary myths down to four myths that explicitly involve the presiding officer or chairman. Below is a list of statements that are all “false.” That is, each statement is my paraphrase of a “myth” that some people hold regarding what they think Robert’s Rules of Order has to say on the subject. Beware: A superior rule (e.g., state law, articles of incorporation or bylaws) always supersedes the rule in a parliamentary authority such as Robert’s Rules of Order. So, if your organiza-

ECHO Journal | May 2009

tion has a written customized rule that says otherwise, or if your state’s corporate code has a rule that applies, then that rule must be obeyed. The rules in one’s parliamentary authority only apply if your superior rules are silent or not in conflict. Here is my list of myths and my commentary. 1. Chairs cannot vote. False, but with a grain of truth. A chair who is a true member of the body that is meeting never loses the ordinary rights of membership merely by acting as the presiding officer. However, while acting as the presiding officer, the duties of chairmanship demand that the chair establish an air of impartiality, even if the chair does not feel impartial regarding the pending motion. Impartiality demands that the chair not debate while acting as the presiding officer. But note that a chair, when voting, may always vote by ballot, since a secret ballot preserves the impartiality of the chair. When voting by voice or by hand or by rising, the chair votes last or not at all, and then only if his single vote will make a difference in the outcome, like changing a tie into a one vote majority (i.e., to change a motion’s loss into an adoption) or to change a one vote majority into a tie (i.e., to change a motion’s adoption into a loss). This rule of the chair’s voting is relaxed for small boards (less than a dozen members or so) and committees, where the chair is often the most vocal debater and who will likely vote along with the rest of the members. 2. Chairs may vote a second time to break a tie. False. The principle is: one man, one vote. A tie is a loss for most ordinary motions; so, technically, there is nothing to break. An exception to this “tie = loss” equation would be an election, where a tie results in no winner. But still there is never a second vote for the chair. 3. A chair, after asking for the ayes and the nays, should ask for the abstentions. False. Abstentions are never called for. Abstentions are treated like so much scrap paper and are never counted toward the ayes or the nays. The exception would be a custom rule or law that demands that all decisions made have a certain number of voters participating or a certain percentage of votes. Absent any such rule, abstentions count neither toward the affirmative nor the negative. Here is an extreme example: In a meeting of 100 members entitled to vote, if 99 members 22

May 2009 | ECHO Journal

abstain, then a vote may be recorded, properly, as 1-0 (adoption) or 0-1 (rejection) and is just as binding as a vote of 100-0 or 0-100. 4. The chair controls the agenda. False. Certainly, the creation of the agenda must be done by someone, and typically this duty falls to the president or to the secretary. Ultimately, the agenda is the property and responsibility of the sitting body itself, to tailor its own agenda to suit its needs. Ordinarily, items of business may be added, deleted, and moved around by a majority vote, or by general consent, prior to adoption of the agenda. After adoption of the agenda, its amendment takes a two-thirds vote. Even easier, if your agenda includes the standard order of business as recommended by Robert’s Rules of Order, then there will be a class of business called “new business.” If this class of business is in your agenda, then there is no need to modify the agenda at the top of the meeting. The chair may simply prompt the members for their business when the meeting reaches “new business.”

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Those are the common myths that I have logged over the years regarding presiding officers and chairmanship. To repeat my warning: If you have a law or a rule that applies, then that law/rule always overrules a rule in one’s parliamentary manual.

Kim Goldsworthy is a professional registered parliamentarian and a certified parliamentarian. ECHO Journal | May 2009

May 2009 | ECHO Journal

By Richard Tippett

Don’t Waste Your Existing Assets board of directors occasionally asks us to provide construction management services for complete replacement of some asset, usually roofing or paving, that isn’t completely worn out yet.

Telling the board that none of the roofing or paving needs to be replaced is not always greeted favorably. We are generally told “we have

to replace all of it to be fair to everybody,” or “if we don’t replace them for everyone, the owners that don’t have theirs replaced won’t vote for the assessment.” On the surface of it, this is logical. Everybody is treated equally, everybody shares the cost equally, and everybody feels the pain equally. The approach seems very politically cor-

rect—very warm and comfortable, very egalitarian. Let’s pull back a bit and really think about this for a minute. Consider a couple of similar examples. 1. You have three children with autos. You buy new tires for one of them whose tires are worn out. Do you, just to be fair, buy new ECHO Journal | May 2009

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tires for the cars of the other two children even if they donâ&#x20AC;&#x2122;t need them? 2. One of these same three children injures her leg while playing soccer. Do you, just to be fair, insist the other two children stop playing soccer while the first one recovers? 3. Your husband has an accident with his car and his auto insurance doubles. Do you insist that your insurance rates be raised also, just to be fair? I didnâ&#x20AC;&#x2122;t think so. In the commercial/industrial world, building components are regularly maintained yet are not replaced until they are worn out. This is considered to be simple common senseâ&#x20AC;&#x201D;if the roof doesnâ&#x20AC;&#x2122;t leak, or can be repaired, it stays in service. This procedure keeps costs down. To remove and replace the roof before that time would be a waste of money that can be kept in reserve for other things.

Replacing components that are not ready for replacement, just to be â&#x20AC;&#x153;fair,â&#x20AC;? is equivalent to destroying the value of that component. It is the same for the maintenance of condominiums. Not every roof on every building wears out at the same time. Replacing all of the roofs at one time is not really fair to anyone. It is, in fact, unfair to everyone because it makes the cost of reroofing much higher than it really should be. Nor do all building components wear out at the same rate. Some roofs, balconies, siding, paving and trim boards will last two or three times longer than others. The difference in working life can be due to better workmanship, better material quality, a different weather exposure, and a different phase of construction, even a change in design. Replacing components that are not ready for replacement, just to be â&#x20AC;&#x153;fairâ&#x20AC;?, is equivaContinued on page 28

May 2009 | ECHO Journal

New election rules: $500 In today’s economic crisis, there may be some items that associations can cut to reduce costs. ECHO membership is not one. Let’s face it, educated board members are better fiduciaries, which helps them to avoid costly law suits and possibly personal liability. ECHO is the premier resource in California for board member education. ECHO offers new articles each month with practical and easy to understand advice about current California requirements, and what may be on the horizon. ECHO staff is available by phone or E-mail to answer members’ questions about association problems or to recommend competent professional services when necessary. And with discounted member rates at more than a dozen educational events throughout the year, ECHO is simply the best educational resource for California homeowners. Avoid Litigation Each year, as a member benefit, ECHO sends every board member a copy of the updated Community Association Statute book. Every issue of the ECHO Journal and every seminar examine one or more aspects of compliance with association law, because one of the major causes of expensive litigation is ignorance of the law.

Mailing ballots: $200 Make Better Financial Choices Many associations struggle to understand reserve funding requirements and strategies, the benefits and disadvantages of using special assessments, proper collections practices, and even how to determine what components the association is required to maintain. At a time when wise financial planning is essential, ECHO members have access to a wealth of articles about reserve funding, budgeting, insurance, collections, and much more. Fight Costly Regulation Every year, Sacramento legislators introduce more legislation that confuses the job of California board members and increases the costs of compliance. ECHO is committed to fighting unnecessary regulation in California and promoting the interests and welfare of common interest developments. Hire Competent Professionals ECHO offers a variety of articles and publications to help members evaluate their service providers, including questions to ask prospective management firms and contractors. All ECHO Journal articles are available to members at no cost, and publications are sold to members at a discount.

Avoiding a lawsuit: Priceless. Spend a Little, Get a Lot The cost of ECHO membership is minimal. In a worsening economy, associations are looking to cut big expenses from their budgets. Yet, ECHO membership is as little as 25¢ per unit each month. For that small cost, here’s what every board member receives as part of being a member of ECHO: • A subscription to the ECHO Journal • An annual copy of the current Community Association Statute book • Unlimited access to ECHO’s library of past articles • Telephone consultations with ECHO staff about their problems • Reduced fees for ECHO events • Discounted prices on publications • And much more… In These Tough Economic Times, ECHO Membership is a Necessity As the only California organization devoted exclusively to board member and homeowner education, ECHO is a one-of-a-kind resource that your association can’t afford to lose.

Donâ&#x20AC;&#x2122;t Waste Your Assets Continued from page 24

lent to destroying the value of that component. For example, if a deck that is worth $20,000 and has a working life of 25 years is torn down and replaced after only 15 years, 2/5 of the value of that deck, or $8,000 was thrown away. Another example: Replacing a stucco wall after only 23 years that has a working life of fifty years, just because it has a few cracks, is equivalent to throwing away more than half of the value of the wall. That is a lot of money wasted. Directors should also take into account the inconvenience and unpleasantness of turning their complexes into a construction site. Construction is intrusive, noisy, disturbing and can create a lot of dust and debris. Here is the best way to insure that any proposed major maintenance or reconstruction project truly is fair and equitable to all of the owners: 1. Do only the maintenance and construction work that is necessary. This may 28

May 2009 | ECHO Journal

require a partial site survey by a construction specialist. 2. Assure all of the owners whose units will not be worked on this time that, by following this optimal strategy, you are lowering the cost of ownership for everyone. 3. Remind those owners whose units will be worked on in future years that they will be treated equally, and that their work will ultimately have a longer useful life than the units being done now. 4. Continue to build reserves based on both the present cost of replacement and on the (future) staggered schedule for the work. This will actually reduce the monthly assessment. By following this strategy, a board can lower the overall cost of ownership for all, as well as minimizing the disruption that accompanies reconstruction.

Richard Tippett is a member of ECHOâ&#x20AC;&#x2122;s Board of Directors, past chairman of the Maintenance and Central Coast Resource panels and is the principal at ERTECH, Inc. a company specializing in condominium reconstruction.

Directory

UPDATES

Continued from page 29

Color West Painting, Inc. 40335 Winchester Rd., E138 Temecula, CA 92591 Tel: 951-757-4358 Fax: 951-602-7777 Contact: Steve West www.colorwestpainting.com Email: steve@colorwestpainting.com

Fidelity Roof Company, Inc. 1075 40th Street Oakland, CA 94608 Tel: 510-547-6330 Fax: 510-658-0868 Contact: Steve Parry www.fidelityroof.com Email: steve@fidelityroof.com

Sigura Construction 614 National Avenue Mountain View, CA 94043 Tel: 650-969-1302 Fax: 408-716-2857 Contact: Ilan Sigura www.siguraconstruction.com Email: ilan@siguraconstruction.com

A full service general contracting company that provides all facets of the construction industry. A diamond certified company that emphasizes on high quality work at low costs. We pride ourselves in making customer service our #1 priority.

Changes to Member Listings Dawson, Passafuime, Bowden & Martinez Name change only; everything else remains the same Environmental Remedies, Inc. 3490 Union St., Ste. D Fremont, CA 94538-4365 Tel. & fax remain the same

May 2009 | ECHO Journal

Water Submeter Rebate Program The Santa Clara Valley Water District is offering a rebate of up to $100 per installed submeter to mobile home parks and condominium complexes for changing from a master water meter to individual water submeters. The rebate amount may be applied to the cost of the submeters and their installation. Why Install Water Submeters? Just as residents are responsible for their own electric bill, water submetering makes residents responsible for their own water use. Submetering can help associations to keep assessments low because water costs can be charged directly to unit occupants. Consequently residents are encourage to fix or report leaks, helping with long-term maintenance. How Much Water Can You Save? In a pilot study, the District found that complexes reduce their water use by an average of 25 percent after submeters are installed. If your site has an acre or more of irrigated landscape, you can schedule a landscape water-use survey with the Water District; these surveys are provided free of charge. Participation Is Easy An applicant must contact the Santa Clara Valley Water District at (408) 265-2607, ext. 2707, before the start of the project to receive an application package, and the completed Submeter Retrofit Application must be submitted before the submeters are installed. The installed submeter equipment must meet the following criteria: • Be compliant with the Uniform Plumbing Code • Be certified for use, before installation, by the Department of Weights & Measures • Be permitted by the California Department of Housing & Community Development The equipment must be lawfully installed by a contractor licensed to work in California and be insured.

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ECHO Journal | May 2009

News from ECHO

Assigning Responsibility for Maintenance And Repair One of the most confusing areas a homeowner association must deal with is where the lines should be drawn allocating association and individual responsibility for the maintenance and repair of certain aspects of their buildings. This is especially true of condominium exclusive use common areas and in planned unit developments where buildings have aged significantly and need more than just exterior paint and reroofing. At the outset, it is important to understand that where the lines are drawn depends a lot on whether the development is a condominium or a planned development (which may broadly include townhouses, cluster homes and even single family detached homes). Although it may be an overgeneralization, with a condominium, the association is responsible for all that is not specifically assigned to the individual owner. In the simplest sense, the condominium association is responsible for all common areas, individual owners are responsible for all unit areas, and there is an overlap in responsibility for exclusive use common area. With a planned development, the opposite is generally true, i.e. the owner is responsible 32

May 2009 | ECHO Journal

for all that is not specifically assigned to the association. If you find areas of your governing documents are less than models of clarity in assigning responsibility for certain building components, you are not alone. Ambiguities or lack of specificity in governing documents are good reasons to amend the governing documents. Common sense, foresight, the quality of construction and the personality of your membership are important factors in drawing lines and defining responsibility. The key to good association management is not as dependent on where you draw the lines or assign responsibilities as it is in anticipating how best to assure that your buildings are preserved for the long run. This always involves anticipating gray areas, making clear by amendment or policy what responsibility is assigned to whom, and following up to be sure that owners and the association are working together to preserve the quality of life and value of your property.

Financial Reports: The Need, the Problem and the Solution Whether for a business or a nonprofit homeowners association, regular accounting reports provide managers and boards of directors with the information

needed to make prudent decisions and control daily activities. Furthermore, they supply legally mandated information to homeowners and government agencies. Recognizing the importance of financial reports, the State of California has legislated their review by boards of directors, in essence forcing boards to go through the motions of fulfilling their fiduciary responsibilities. Specifically, Civil Code §1365.5 requires that the board of directors at least quarterly: (1) Review current reconciled bank statements of the association’s operating and reserve accounts and (2) Review income and expense statements for the association’s operating and reserve accounts. This requirement stems from the widespread aversion that board members have to financial reports, which they regard as confusing, cryptic and intended only for trained specialists called accountants. This attitude, coupled with the time constraints most volunteer directors experience, causes them to feel exempt from both understanding financial documents and the responsibility that accompanies them. This is a grave error. While the board may delegate various activities and functions to others, their ultimate legal duty, including the fiduciary responsibility to preserve and protect the assets of the association, is inalienable. Understanding those reports is the key that gives a director access to powerful management tools. By overcoming the dread of financial reports and using them to their fullest advantage, directors can comply with legal requirements, meet their fiducia-

ry responsibilities and manage their association effectively.

Annual Seminar is June 13 The ECHO Annual Seminar is just a month away. This Seminar and Trade Show will be an exciting high-paced event. Many exciting presentations and outstanding speakers are lined up for this year’s seminar. There will be morning and afternoon educational sessions, a full program book containing handouts from all speakers, a continental breakfast and an afternoon ice cream social. The 2009 Seminar also includes four full-day tracks addressing basic training for directors, legal and legislative matters, association finances and management, and facility concerns. As usual there will be a presentation and status report on the legislative bills affecting common interest developments that that are now moving through the California Legislature. Katharine Rosenberry, Esq., an international expert on community housing legal matters and one of the original drafters of the Davis-Stirling Act, will be a speaker this year. Sessions about association facilities will focus on “green” concerns. The full program of educational presentations with speakers can be found on pasge 43 and on the ECHO website, www.echo-ca.org. Send in your reservation now for California’s largest CID conference.

2009 Legislation at a Glimpse As of April 22, 2009 Bill No.

Author

Subject

Status

Position Watch

Summary

AB 49

Feuer

Water Reduction

In Assembly Water, Parks & Wildlife; hearing 4/14

AB 121

Hernandez

Judgment Lien Extension

In Assembly Watch Appropriation; hearing 4/1

Under certain conditions, this bill would allow creditors to extend judgment liens on specified personal property by filing a continuation statement in the office of the Secretary of State. The statement must be filed no earlier than six months before the lien is scheduled to expire.

AB 313

Fletcher

Tax-based Assessments

In Assembly Housing & Community Development; hearing 4/15

Oppose

After December 30, 2009, would prohibit associations from levying assessments based upon the taxable value of the separate interests within the association. Associations that levied assessments based upon taxable value on or before December 30, 2009 would be exempted.

AB 566

Nava

Mobilehome Conversion Approval

In Assembly Housing; hearing 4/15

Support

Would require a subdivider to obtain the approval of the majority of the residents in a mobilehome park before converting the park to resident ownership.

AB 869

Mendoza

Mobilehome Park Managers

In Assembly Housing; hearing 4/15

Support

Defines “Park Manager” and “Certified Mobilehome Park Manager.”

AB 927

Calderon

Construction Defect Claims

In Assembly Judiciary

Watch

Deletes expiration date of provisions regulating the filing of a complaint for damages, by an association, against a developer for construction defects.

AB 1061

Lieu

Low WaterUsing Plants

In Assembly Water, Parks & Wildlife

Watch

Would render void and unenforceable any provision in the governing documents of an association that has the effect of prohibiting low water-using plants or prohibits or restricts compliance with local conservation ordinances.

AB 1108

Fuentes

Master Meter Regulations

Assembly first reading

Oppose Unless Amended

Establishes new guidelines for master meter customers, including requirements that master meter customers maintain all submeter facilities and limits fines for late payments.

AB 1328

Salas

Contract Restrictions

Assembly first reading

Watch

Nullifies contract length restrictions for associations in cases where the board reasonably anticipates that the contract will result in verifiable savings to the association, including establishing a water or energy efficiency program.

SB 23

Padilla

Mobilehome Safety Plan

In Senate Watch Transportation & Housing; hearing 4/14

Would require all mobilehome or manufactured home parks to develop and implement an emergency and fire safety plan, as well as appropriate emergency services training for park or community managers and onsite staff. The bill would require the operator to distribute and post the plan in a conspicuous area accessible to all residents.

SB 259

Benoit

Board Elections

In Senate Judiciary

In the event that the results of an election are invalidated for violation of the elections law, this bill provides that decisions of the improperly elected board shall not be invalidated unless those decisions violate the law or governing documents.

Watch

This bill would require the state to achieve a 20% reduction in urban per capita water use in California by December 31, 2020. ECHO is monitoring this spot bill for its potential impact on homeowner association water consumption.

ECHO Journal | May 2009

2008 ECHO Business & Professional Directory $20.00 Non-Member Price: $25.00

Condominium Bluebook 2009 Edition $18.00 Non-Member Price: $25.00

Homeowners Association and You $13.00 Non-Member Price: $20.00

Community Association Statute Book—2009 Ed. $15.00 Non-Member Price: $25.00

This directory lists all business and professional members of ECHO as of December 2007. Current addresses, telephone and fax numbers, email addresses, and a short description are included. This directory is an invaluable tool for locating service providers that work with homeowner associations.

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.

A practical problem solving guide to all aspects of community association living. Written by two long-time association residents, it provides an insightful overview of community living from the viewpoint of experienced owners in readable language. Recently revised and expanded.

Contains the 2009 version of the Davis-Stirling Common Interest Development Act, the Civil Code sections that apply to common interest developments and selected provisions from the Civil, Corporations, Government and Vehicle Codes important to associations.

Robert’s Rules of Order $7.50 Non-Member Price: $12.50

The Board’s Dilemma $10.00 Non-Member Price: $15.00

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.

California Building Guidelines for Residential Construction $52.50 Non-Member Price: $60.00

Homeowners Associations— How-to Guide for Leadership $35.00 Non-Member Price: $45.00 This well-known guide and reference is written for officers and directors of homeowner associations who want to learn how to manage and operate the affairs of their associations effectively.

Reserve Fund Essentials Questions & Answers About Community Associations $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.

$18.00 Non-Member Price: $25.00 This book is an easy to read, musthave 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.

The Condo Owner’s $15.00 Answer Book Non-Member Price: $20.00 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 easy-to-read manual is an excellent tool to understand a new home. It contains chapters covering more than 300 conditions that have been sources of disputes between homeowners and builders, offers homeowner maintenance tips, and defines the standards to which a residence should be built.

CID Leadership Two-Disc DVD set $30.00 Non-Member Price: $40.00 Board—An orientation for new board members and a refresher for current members. Meetings—How to conduct effective meetings that stay focused and achieve results. Reserves—How adequately-funded reserves prevent problems in associations. Insurance—Considers insurance to protect multi-million dollar community assets.

Dispute Resolution in Homeowner Associations $20.00 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 Now Order Online at echo-ca.org

Board Memberâ&#x20AC;&#x2122;s Guide for Contractor Interviews $20.00 Non-Member Price: $25.00 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.

Bookstore Order Form Executive Council of Homeowners 1602 The Alameda, Suite 101, San Jose, CA 95126 Phone: 408-297-3246 Fax: 408-297-3517 TITLE

QUANTITY

SUBTOTAL CALIFORNIA SALES TAX (Add 9.25%) TOTAL AMOUNT

Yes! Place my order for the items above. Board Memberâ&#x20AC;&#x2122;s Guide for Management Interviews $20.00 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.

q Check q Visa q Mastercard Credit Card Number Exp. Date

Signature

Name (please print) Association (or company) Address City Daytime Telephone

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AMOUNT

Calendar of Events

Save these dates... Thursday, May 7 North Bay Resource Panel 11:30 a.m. Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael Friday, May 8 East Bay Resource Panel 9:30 a.m. Angius & Terry 1900 N. California Blvd. Suite 950, Walnut Creek

Wednesday, June 1 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Suite 101 San Jose Wednesday, June 10 South Bay Resource Panel 12:00 Noon Allana Buick & Bers 990 Commercial St., Palo Alto

Monday, May 11 Accountants Resource Panel 6:00 p.m. Francesco’s Restaurant Oakland Tuesday, May 12 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz

Friday, June 12 East Bay Resource Panel 9:30 a.m. Christison Company 1090 Independence Dr., # 100 Livermore Friday and Saturday June 12 & 13 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Wednesday, May 20 Wine Country Resource Panel 11:45 a.m. Wednesday, June 17 Eugene Burger Mgmt Co. Wine Country Resource Panel 6600 Hunter Dr., Rohnert Park 11:45 a.m. Eugene Burger Mgmt. Co. Thursday, May 21 6600 Hunter Dr., Rohnert Park San Francisco Luncheon 11:45 a.m. St. Francis Yacht Club San Francisco

Thursday, July 2 North Bay Resource Panel 11:30 a.m. Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael Friday, July 10 East Bay Resource Panel 9:30 a.m. Angius & Terry 1900 N. California Blvd., Suite 950, Walnut Creek Monday, July 13 Accountants Resource Panel 6:00 p.m. Francesco’s Restaurant, Oakland Tuesday, July 14 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz

Thursday, July 16 San Francisco Luncheon 11:45 a.m. to 2:00 p.m. St. Francis Yacht Club San Francisco Wednesday, August 5 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Suite 101 San Jose Wednesday, August 12 South Bay Resource Panel 12:00 Noon Location TBD

Friday, August 14 East Bay Resource Panel 9:30 a.m. Christison Company Wednesday, July 15 Wine Country Resource Panel 30090 Independence Dr., #100 Livermore 11:45 a.m. Eugene Burger Mgmt. Co. Wednesday, August 19 6600 Hunter Dr., Rohnert Park Wine Country Resource Panel 11:45 a.m. Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park

Regularly Scheduled Resource Panel Meetings Resource Panel Maintenance North Bay East Bay East Bay Accountants Central Coast South Bay Wine Country Legal 36

May 2009 | ECHO Journal

Meeting

Location

First Wednesday, Even Months First Thursday, Odd Months Second Friday, Odd Months Second Friday, Even Months Second Monday, Odd Months Second Tuesday, Odd Months Second Wednesday, Even Months Third Wednesday, Monthly Quarterly

ECHO Office, San Jose Contempo Marin Clubhouse, San Rafael Angius & Terry, Walnut Creek Christison Company, Livermore Francesco’s Restaurant, Oakland Pasatiempo Inn, Santa Cruz Eugene Burger Management Co., Rohnert Park Varies

408-295-7767 or 877-295-FLOW

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Honor Roll

About

ECHO Honors Volunteers Mike Muilenburg 2008 Volunteer of the Year ECHO Resource Panels Accountant Panel Richard Schnieder, CPA 707-576-7070 Central Coast Panel John Allanson 831-685-0101 East Bay Panel Scott Burke, 408-536-0420 Mandi Begley, 925-937-0434 Legal Panel Mark Wleklinski, Esq. 925-691-1191 Maintenance Panel Brian Seifert, 408-536-0420 North Bay Panel Diane Kay, CCAM, 415-846-7579 Stephany Charles, CCAM 415-458-3537 San Francisco Panel Jeff Saarman, 415-749-2700 South Bay Panel Geri Kennedy, CCAM 650-348-2691 ext. 1006 Kimberly Payne, 408-200-8470 Wine Country Panel Maria Birch, 707-584-5123

Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry L. Bowles Joelyn Carr-Fingerle, CPA John Garvic, Esq., Chair Geri Kennedy, CCAM Wanden Treanor, Esq.

May 2009 | ECHO Journal

SF Luncheon Speakers John Allanson Tyler P. Berding, Esq. Ronald Block, PhD. Doug Christison, PCAM, CCAM Karen Conlon, CCAM Rolf Crocker, CCAM Ross Feinberg, Esq. David Feingold, Esq. Tom Fier, Esq. Kevin Frederick, Esq. John Garvic, Esq. Beverly Gordon, CCAM Beth Grimm, Esq. Brian Hebert, Esq. Roy Helsing Stephen Johnson, CFP Julia Lave Johnston Garth Leone Nico March Kerry Mazzoni Larry Russell, Esq. Steve Saarman Nathaniel Sterling, Esq. Debra Warren, PCAM, CCAM Steven Weil, Esq. Mark Wleklinski, Esq. Glenn Youngling, Esq.

Marin Seminar Speakers David Feingold, Esq. Linnea Juarez, PCAM, CCAM Wanden Treanor, Esq. Glenn Youngling, Esq.

Association Finances Seminar Speakers Joelyn Carr-Fingerle, CPA Bill Erlanger, CPA James Ernst, CPA John Garvic, CPA Donald Haney, CPA

North Bay Winter Seminar Speakers Sandra Bonato, Esq. Robert Hall, Esq. Diane Kaye, CCAM David Kuivanen, AIA Steve Lieurance, CCAM Steven Saarman Robert Smylie Barbara Zimmerman, Esq.

Recent ECHO Journal Contributing Authors January 2009 Tyler P. Berding, Esq. Joelyn K. Carr-Fingerle, CPA Jeanette Catellier, PCAM Jan A. Kopczynski, Esq. Alfred D. McKelvy February 2009 Jeffrey A. Barnett, Esq. David H. Levy, CPA Brian E. Martin, Esq. March 2009 Tyler Berding, Esq. Thomas Douma Sandra Gottlieb, Esq. Beth A. Grimm, Esq. Graham Oliver David Swedelson, Esq. Steven Weil, Esq. April 2009 Julie Adamen Colletta Ellsworth-Wicker, PCAM Tom Fier, Esq. Steven Weil, Esq.

ECHO

What is ECHO? ECHO (Executive Council of Homeowners) is a California non-profit corporation dedicated to assisting community associations. ECHO is an owners’ organization. Founded in San Jose in 1972 with a nucleus of five owner associations, ECHO membership is now 1,525 association members representing over 150,000 homes and 325 business and professional members.

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. If your company wants to reach decision makers at over 1,525 homeowner associations, you can become an associate member and join 325 other firms serving this important membership.

What are the Benefits of ECHO Membership? • Subscription to monthly magazine for every board member • Yearly copy of the Association Statute Book for every board member • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues HOA Size 2 to 25 units 26 to 50 units 51 to 100 units 101 to 150 units 151 to 200 units 201 or more units Business/Professional

Rate $120 $165 $240 $315 $390 $495 $425

ECHO Journal Subscription Rates Members $50 Non-members/Homeowners $75 $125 Businesses & Professionals

How Do You Join ECHO? Over 1,800 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for membership, call ECHO at 408-297-3246 or visit the ECHO web site (echo-ca.org) to obtain an application form and for more information.

Seeking CANDIDATES for ECHO Board of Directors The Nominating Committee for the ECHO Board of Directors is seeking names of persons who are interested in being considered as candidates for positions on the ECHO Board of Directors. Four positions on the board will be up for election at the ECHO Annual Meeting that will be held in October. These positions are for three-year terms. Current directors whose terms expire in 2009 are Paul Atkins, Jerry L. Bowles, David L. Hughes and Steven S. Weil. Board members are expected to attend all six three-hour board meetings held each year, generally at the ECHO Office in San Jose. Each board member also serves on one or more committees that hold regular meetings throughout the year. These two activities involve a commitment of four to six hours per month plus travel time. In addition members are expected to attend the Annual Seminar, Annual Meeting and a two-day board retreat each November. Board members receive no reimbursement for these activities. Nominees will also be expected to have been recent active participants in ECHO activities and to have thorough familiarity with the organization and the CID industry. Persons interested in being considered for nomination should obtain and complete a nomination and qualifications form, available by request from the ECHO office. Every potential candidate, including incumbents, must submit a full form. All completed forms must be submitted to the ECHO office no later than July 15, 2009, to be considered by the nominating committee. Those requesting nomination may be requested to interview with the nominating committee. The committee will meet in August to prepare recommendations for board consideration.

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ECHO Journal | May 2009 4/13/09

3:11:50 PM

ECHO Marketplace

Advertiser Index

The place to find business and professionals for your association Affirmative Management . . . . . . . . . .41 Alpha Restoration & Waterproofing . .10 American Asphalt . . . . . . . . . . . . . . .22 American Management Services . . . .12 Angius & Terry . . . . . . . . . . . . . . . . . . .3 Applied Reserve Analysis . . . . . . . . . .31 AquaTek Plumbing . . . . . . . . . . . . . .37 A.S.A.P. Collection Services . . . . . . . .11

WILLIAM FISHER ARCHITECTURE (831)246-0117 FAX:(831)457-0246 INC. MODERN-ARCHITECTURE.COM

ARCHITECTURE. CONSULTATION.

603 FRONT ST. SANTA CRUZ 95060

SBI, LLC 180 Second Street Suite A Los Altos, California 94022 Voice: (650) 949-3774 Fax (650) 941-3689 Email: tom@sbiusa.net General Contractors • Civil Engineers

Reserve Studies • Energy Surveys Insurance Replacement Cost Analysis Construction Defects Mold Sampling Foundation and Drainage Inspections

Affirmative Management Services Feeling ignored by your property manager? Need to get more things done? Recent management changes = Poor service? Want a more effective manager? Time for new management? x HOA management is our only business

Association Reserves . . . . . . . . . . . . .23 Bayridge Group . . . . . . . . . . . . . . . . .18 Berding & Weil . . . . . . . . . . . . . . . . . .44 CACM . . . . . . . . . . . . . . . . . . . . . . . .16 Coastal Termite Control . . . . . . . . . . .18 Collins Management . . . . . . . . . . . . .31 Community Association Banc . . . . . . .26 Community Management Services . . .22 Community Reconstruction Solutions .37 Compass Management . . . . . . . . . . .31 Cool Pool Service . . . . . . . . . . . . . . . .18 Cornerstone Community Mgmnt . . . .10 County Bank . . . . . . . . . . . . . . . . . . . .2 Draeger . . . . . . . . . . . . . . . . . . . . . . .13 Ekim Painting . . . . . . . . . . . . . . . . . . .39 First Bank Association Bank Services . .30 Flores Painting . . . . . . . . . . . . . . . . . .29 Helsing Group . . . . . . . . . . . . . . . . . .18 Hill & Company. . . . . . . . . . . . . . . . . .26 M&C Association Services . . . . . . . . .29 M. L. Nielsen Construction . . . . . . . . .30 Massingham and Associates . . . . . . .17 Pelican Management Group . . . . . . .23 PML Management Corp. . . . . . . . . . .13 Pollard Unlimited . . . . . . . . . . . . . . . .28 Pro-Craft Builders . . . . . . . . . . . . . . . .39 Professional Association Services . . . .39 R. E. Broocker Co. . . . . . . . . . . . . . . .16 REMI Company . . . . . . . . . . . . . . . . .23 Saarman Construction . . . . . . . . . . . .11 Socher Insurance . . . . . . . . . . . . . . . .19 Statcomm . . . . . . . . . . . . . . . . . . . . .37 Steve Tingley Painting . . . . . . . . . . . .28 Steve’s Painting Services . . . . . . . . . . .12

x We’re experienced, knowledgeable & responsive x Make this the year you start solving your HOA’s problems x Contact us today for a proposal or to schedule an interview

We’re Here to Improve Your Quality of Life! Serving Santa Clara County Phone: (408) 244-0909

Email: info@thehoamanager.com

On the web: www.thehoamanager.com

ECHO Journal | May 2009

Race to Win ECHO Annual Seminar June 13, 2009 Saturday, June 13, 2009 8:00 a.m.–4:30 p.m. Santa Clara Convention Center Santa Clara, California 125 Booths in Trade Show, Hundreds of Prizes, New CACM Course, Buffet Luncheon, Ice Cream Social and more! Join the Friday Night Gala! Annual Seminar Reception Friday, June 12, 5:00–7:30 p.m. Food, Music, Socializing, Prizes Cost: $40—See Registration Form

Special Hotel Rates Don’t miss out on the special room rate of $89 single or double at the Hyatt Regency adjacent to the Santa Clara Convention Center. Call the Hyatt Regency at 800-233-1234 and mention the Executive Council of Homeowners or go online at: santaclara.hyatt.com/groupbooki ng/clara2009echo. The special

rate is available until May 20.

CACM Course (Open To Managers Only) Friday, June 12, Room 209 2:00 p.m.–5:00 p.m. Advanced Budgeting This course is designed to take managers to the next level in financial management and help them feel confident about the budget process, reserve funding plans, the effect of litigation on financial operations, the differences between budgeting for a conversion versus new construction, and much more. After successfully completing this course, managers will understand how to

utilize the budget and reserve study to evaluate the community association’s financial status. (3 hours CACM CEU) Registration: $110 Call the ECHO Office to register.

Educational Program Session Tracks

Saturday Morning 9:00 to 10:10

Saturday Morning 10:50 to 12:00

Saturday Afternoon 1:30 to 2:40

Saturday Afternoon 3:20 to 4:30

HOA UNIVERSITY Rooms 209 and 210

Administration

Legal

Financial

Insurance

LEGAL Rooms 203 and 204

Legislative Update

Board Hearings: A Valuable Tool

Insolvency: Delinquencies, Foreclosures & Bankruptcies

Ask the Attorneys

MANAGEMENT & FINANCIAL Ballroom H

Top Traits of Great Managers and Boards

Learning from a Survey of Association Finances

So You Think You Have a Problem

Investing Reserve Funds in Troubled Times

Solar Energy: It’s Hot!

Green Construction

Disaster Preparedness

MAJOR MAINTENANCE Ballroom G

Reserves Topic

R E GIS T R AT ION FOR M Yes! Please reserve my space at the 2009 ECHO Annual Seminar. Name ___________________________________________________________________ Association/Organization ___________________________________________________ Address _________________________________________________________________ City __________________________________________ State _____ Zip____________ Daytime Phone ___________________________________________________________ Names of Additional Attendees: 1. _________________________________________ 2. ________________________________________ Please reserve tickets for: No. Amount Seminar Only (members) $75 ___________ $___________ Seminar Only (non-members) $90 ___________ $___________ Seminar Buffet Lunch $40 ___________ $___________ Friday Reception $40 ___________ $___________ TOTAL $___________ Visa/MasterCard No._______________________________________________________ Expiration Date ___________________________________________________________ Cardholder’s Signature_____________________________________________________

Reserve Now Tickets are non-refundable Order will not be processed without full payment Return with payment to: ECHO 1602 The Alameda, Ste. 101 San Jose, CA 95126 Tel: 408-297-3246 Fax: 408-297-3517

Condominium Conversions Did You Get What You Paid For?

Condo conversions are not new condominiums. They are older rental apartments that were converted to condos. So, what’s wrong with that? Nothing, if the financial plan that came with your condo is up to the task of maintaining a building with 20-30 years of deferred maintenance. How do you know? You probably don’t unless someone

has taken a close look at the homeowner association’s budget and compared it to the actual condition of the buildings. The fact is, very few condominium conversions were sold with repair budgets that are adequate to meet the needs of the project. What does this mean to you? If the budget is inadequate, it will mean either increased homeowner assessments or a gradually deterio-

rating condominium project. Or both. In either case, you didn’t get what you paid for. If you’d like to know the truth now about what you bought, call us. If you want to wait and see what happens, ok, but either way, we’ll be here when you need us. Berding | Weil, LLP 3240 Stone Valley Road West Alamo, California 94507 925-838-2090 www.berding-weil.com