Journal_12_03

March 2012

A Journal for California Community Association Leaders

echo-ca.org

Top Traits of Great Boards

ALSO INSIDE THIS ISSUE:

• Use Email: It’s an Emergency • Can’t Increase Assessments Mid-Year • Painting for Protection and Appearance

Change Service Requested ECHO 1602 The Alameda STE 101 San Jose, CA 95126

Wine County Seminar March 24, 2012 Register Now

PRSRT STD U.S. Postage PAID Sundance Press 85719

PRESENTING 2012 ECHO Events March 24

April 21

June 22, 23

September 22

October 20

Wine Country Seminar

Half-Day Seminar

Sally Tomatoes, Rohnert Park —See page 33

8:00 a.m. to 1:00 p.m.

South Bay Seminar

Half-Day Seminar

Campbell Community Center, Campbell—See Page 29

8:00 a.m. to 1:00 p.m.

ECHO Annual Seminar

Full-Day Seminar

Santa Clara Convention Center, Santa Clara

8:00 a.m. to 4:30 p.m.

Central Coast Fall Seminar

Half-Day Seminar

Hilton Santa Cruz/Scotts Valley

8:00 a.m. to 1:00 p.m.

Peninsula Fall Seminar

Half-Day Seminar

Crowne Plaza Hotel, Foster City

8:00 a.m. to 1:00 p.m.

Questions for Painting Contractors—page 39

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Top Traits of Great Boards of Directors

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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 2012 Executive Council of Homeowners, Inc. All rights reserved.

Reproduction, except by written permission of ECHO, is prohibited.

Great boards of directors develop, maintain and value their credibility and their integrity. Read a description of the traits that differentiate a great board of directors from just an okay board.

The ECHO membership list is never released to any outside individual or organization.

Go Ahead and Use Email: It’s an Emergency

Executive Council of Homeowners, Inc.

In recent articles, authors have discussed many changes to the Open Meeting Act requiring new ways of conducting association business. This article discusses when and how email and other tools may be used to deal with emergencies without reliance on the emergency exception to the ban on email for decision-making.

1602 The Alameda, Suite 101 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org

Boards Can’t Increase the Rate of Assessments Mid-Fiscal Year

Board of Directors and Officers President David Hughes

The Civil Code cannot be interpreted to mean that a board has the ability to increase the rate of assessments in the middle of a fiscal year simply because they did not increase assessments by 20% when they distributed the budget. Read the article to learn when the board can increase assessments under the law.

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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.

Office Hours: Monday–Friday 9:00 a.m. to 5:00 p.m.

Vice President Karl Lofthouse Treasurer Diane Rossi Secretary Jennifer Allivato

Painting for Protection and Appearance Ask questions prior to beginning and setting up a schedule for a painting project. Once these questions are answered, there are important steps to take prior to entering into a bidding process with contractors. Following the basic procedures in this article will help make your painting project as stress free as possible.

Directors Paul Atkins John Garvic Robert Rosenberg Brian Seifert Steven Weil

Jerry L. Bowles David Levy Kurtis Shenefiel Wanden Treanor

Executive Director Oliver Burford Director of Member Services Jennifer Allivato

Departments 32 News from ECHO

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34 Directory Updates 36 ECHO Bookstore 38 Events Calendar

Design and Production George O’Hanlon

41 ECHO Marketplace

ECHO Mission Statement

41 Advertiser Index

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.

On the Cover March 2012 | ECHO Journal

Legislative Consultant Government Strategies, Inc.

40 ECHO Volunteers

Top Traits of Great Boards—page 6 4

Communications Coordinator Tyler Coffin

Welcome to Jennifer Allivato JENNIFER ALLIVATO joined ECHO on January 3 as our new Director of Member Services. She will take on the responsibilities previously assigned to Dorothy Kopczynski, ECHO’s long-time Director of Administrative Services, who retired at the end of 2011. In addition Jennifer will play a major role in our drive to increase ECHO’s membership.

Jennifer joined ECHO after nearly ten years of service to the YMCA of Silicon Valley. At the Northwest YMCA in Cupertino she developed a Member Services/Sales Department along with many other unique missionbased programs. At the YMCA Jennifer enjoyed tremendous success in membership growth and was the top Membership Director in her association.

After graduating from William Jessup University with a degree in Theology, Jennifer found her passion working in the non-profit field and has never looked back. She is excited about joining the ECHO family and participating in the organization’s bright future. In her role at ECHO she will be handling all membership and marketing functions.

Jennifer is very active in her community as a member of the Silicon Valley Young Professionals and the Junior League of the Mid-Peninsula. Outside of professional interests, she travels, paints, cheers on the Chicago Cubs and San Jose Sharks, but most importantly, enjoys spending time with her family and friends.

ECHO Journal | March 2012

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By Julie Adamen

Top Traits of Great Boards of Directors ver the past 20 years, I have worked with many, many boards of directors: As a manager, as a consultant and as a member of the board. And as we all—managers and board members alike—know, some boards are just better than others at administrating their community and effectively achieving their goals and objectives (their agenda)

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March 2012 | ECHO Journal

with grace, dignity, professionalism and humor. These boards are a pleasure with which to work or on which to serve.

So, what differentiates a great board from just an okay board? Great boards develop, maintain and value their credibility and their integrity. And they continually display,

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individually and as a group, the following traits: Great Boards Focus on Macro-Issues It’s the Big Picture that counts for boards.

Boards should be spending their time continually reviewing and refining the Big Picture (Vision Statement) for the community. To do that effectively, the board must have a Mission Statement and then set clear policy for all aspects of community administration—and stand back and observe if that policy is being carried out through management and on down to the vendors and the community at large. For example, the board may set a policy of “continual esthetically pleasing landscape conditions within budgeted figures.” This is a broad statement which gives management direction and authority to carry out that policy administratively and financially. The board who adopts this type of stance does not worry itself with the exact number of flats of flowers, or their color, nor how they are planted. Esthetically pleasing?

Within budget? That is what a macro-focused board thinks about.

Most board members come in to their “jobs” by accident or through coercion by an existing board member, and they really have no idea what they got themselves in to. The great board brings the new board members up to speed through corporate memory, helping them recognize what Vision Statement, Mission Statement and Policy has been set in place. This gives the new board member a foothold on established process so they may embrace the Big Picture rather than minutia.

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Great Boards Hold Productive Meetings Great boards always read relevant materials before the meeting. Great boards come to meetings having read the agenda and board packet beforehand, ready to make decisions based on solid information. These board members are not wasting their time or that of other board members or staff. They know being prepared develops the community’s trust in them as leaders and gives them the ability to make decisions on the community’s behalf in a timely manner. These prepared board members have their questions on the packet information answered by staff, vendors or each other before the meeting so that the business of the community can be conducted with expedience, efficiency and thus productively.

Great boards focus on matters at hand and don’t enable philosophers or pontific-

tors. Unfortunately, many people become board members because they need to feed their ego. The ego-driven, though often well intentioned, are usually the pontificators and philosophers who drag meetings out into space for hour after unproductive hour, completely unaware of the eye-rolling and underthe-table-kicking going on around them.

Great boards don’t enable this destructive behavior by suffering in a silent torpor while that ego-driven “Starship Steve” board member goes off to explore strange, new worlds holding everyone hostage. Great board members assist the Chair in keeping control of the pontificator/philosopher by calling for a “point of order” when he starts moving in to the Crab Nebula.

Great boards don’t wander off the agenda by bringing up new business that isn’t on that agenda. They stay focused on the matters at hand, carefully considering the information and moving forward as they are trusted to do by the membership. Focus, enforced through adopted parliamentary procedures, brings clarity of thought and purpose and the result is credibility in the eyes of the membership.

Great Boards Protect Against Liabilities …By keep rogue board members in check.

Great boards don’t allow a single board member to put the community in jeopardy by making racial, ethnic or sexual comments at a meeting. Too many times I have heard board members say something they would never think to say in a “regular” business situation, without anyone, including the Chair, calling them on this improper and risky behavior. Failing to reign in these types of situations can be a serious liability for the board and the community. …By using insured vendors and subcontractors. Great boards never, ever, use their unlicensed or uninsured brother-in-law who once did a drywall project in his house to remodel the clubhouse. Great boards know they have a duty and responsibility to the community not only to utilize someone who knows their stuff, but also to make sure they are protecting the community from liability by utilizing only licensed and insured contractors. …And they don’t deny the existence of liabilities. See no evil? Hear no evil? Great boards never wear blinders when it comes to the existence of liabilities. They don’t turn their backs or look the other way, hoping that the liability will go away. Great boards have set a policy on dealing with potential and evident liabilities, and they deal with

them quickly and surely. Great boards don’t wander off in to the weeds when examining their liabilities, either. They obtain information and direction from insurance, legal and management experts to guide them on this path. Great boards understand, and never shy away from, risk management.

Great Boards, Acting As Fiduciaries, Base Decisions on Logic and Reason Fiduciary—A person who occupies a position of special trust and confidence (for example, in handling or supervising the affairs or funds of another).

Great boards know and understand they are making decisions as fiduciaries for the community, not as buddies, friends or neighbors. To make decisions as fiduciaries, boards must base their decision on logic and reason, not on emotion or fear, giving the board and the community credibility and integrity for the long term as they occupy that place of special trust and confidence.

Great boards never allow themselves to be bullied into making a decision. A board of directors for a community association is a deliberative body that makes decisions based on solid input. That solid input should include, but not be limited to, their own experience, facts, data, standard of care and standard of the industry, precedents set before them, and expert opinion. Using these information gathering tools, great boards make informed decisions that are best for the community, even when those decisions may be unpopular with certain community members.

Great Boards Acknowledge Staff and Volunteers Publicly, privately, in the newsletter and on the website. Great boards continually acknowledge all contributors to the administration of the community: boards members, committee members, management staff, what have you. “Spin the halo,” as one of my old board members used to say. This crucial aspect of leadership is often overlooked by boards because they simply don’t realize that this positive form of communication to the membership about one of their own fosters a positive and successful image of the community administration. And people want to be a part of things that are positive and successful.

This means new volunteers for the board and its committees and an easier job for paid staff.

Great boards know they can’t do it alone.

They know they need more folks who will volunteer; so they create an atmosphere that ECHO Journal | March 2012

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fosters volunteerism. One of the ways to create that atmosphere is to publicly and regularly sing the praises of those volunteers and staff. Why? Because even great boards don’t want to be board members forever.

Great Boards Know They Get What They Pay For Great boards suffer no illusions. They know that if they receive three bids for a particular service (this assumes an appropriate Request for Proposal was sent out) and one of the three bids is substantially lower than the two, it is reasonable and logical to assume that there is something to question within that bid. Maybe the contractor read the RFP wrong. Or, maybe s/he simply low-balled the bid because they think they can get the job that way. But great boards are seldom fooled by this tactic. They know that if they want a Mercedes, they don’t get it for the price of a Focus. Reliable, quality and insured services cost money. …And know that if they do accept the low bid, there is a cost to managing that low bid.

Sometimes even great boards accept the lowest bid. How can they still be a great board, you ask? Because accepting the lowest of 10

March 2012 | ECHO Journal

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qualified bidders can be a legitimate strategy when the board acknowledges there will be a cost to managing that low bid—be it in their own time, staff time or having to have another contractor come in and finish the job or clean up the mess. This can actually work— the board can get the job done and save money overall. I don’t personally recommend it, but it has legitimacy as a business decision under certain conditions.

Great Boards Speak With One Voice They stick together. Picture yourself as a parent. Your child comes to you wanting something. You say no. Surreptitiously, the child goes to your spouse to ask the same question. The spouse says “Sure, why not?”

Mission accomplished: The child has divided and conquered the authority in the family and will either get what s/he wants or create tremendous disharmony between the parents who have failed to discuss beforehand and understand the value of a united front. The same is very, very true as it applies to boards of directors and the membership they serve.

Boards are like a family. Disparate personalities thrown together by an act of God (or a freak of nature), trying to accomplish

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something, maintain sanity and still speak to each other in a civil tone. This is normal. But what sets great boards apart is that they know there will be disagreements, they know they don’t each think alike; yet, once the votes are cast they move forward together—speaking with one voice to the membership. This is crucial for any board, but particularly those who have seriously disgruntled folks in their midst. Those with agendas that are not within the current board’s policies, goals and objectives will exploit any chink in the armor of the board. Great boards stick together and show a united front to their members, creating credibility and integrity.

Great Board Members Release Personal Agenda and Move on for the Betterment of the Community The agenda vacuum. Many board members get elected on a narrow, and many times emotional, platform—“Lower dues by 20%,” “Fire the management company!” ad nauseum. After the election, that board member often finds out the platform, or agenda, on which they ran, is based upon misinformation. A great board member realizes quickly things were not as s/he thought, releases his/her personal agenda and moves on to become a functioning and contributing member of the board. The board is now able to move forward as a group to the issues facing the community. This ability to release agendas when presented with new, credible, logical information that supports issues contrary to the former agenda is a key element of a potentially great board member. To present the new board member with this information, great boards do the following: Great boards bring new board members with contrary agendas into the process—fast and furious. Despite the fact that the new board member may be a total turn-off to the rest of the board and staff due to their contrary agenda, the only potential remedy is for the great board and staff to immerse this person in the process as soon as possible: An office or project with much responsibility. If that person is open-minded, nothing fills the agenda vacuum, focuses the new board member’s energy faster or gives him or her a look at what it’s really like to be a board member than to be given a position of importance and responsibility. It allows them to save face, become a part of something larger and to release their personal agenda and move forward.

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Great Boards are Proactive About Information Just like any corporate trustee, great boards know they cannot operate in an information vacuum. They don’t hunker down in the Cone of Silence until their term is over.

Great boards seek out information on all aspects of community administration and maintenance as it applies to their community. Sometimes, it’s information they don’t want to hear, such as learning that the most recent legislation calls for all boards to hold their meetings on Tuesdays when the moon is full and for all members to receive written (engraved) invitations to attend. But great board members listen anyway because they know as a board member it is part of their duty to always gather information. Sometimes they learn valuable information on ways to run their meetings, paint the decks or collect dues in a more efficient manner.

Whether by reading websites and industry publications or by attending workshops and forums and networking with other board members, great boards know they do their jobs best by being informed.

Whether by reading websites and industry publications or by attending workshops and forums and networking with other board members, great boards know they do their jobs best by being informed, and they strive to stay that way.

Great Boards Communicate Regularly and Positively with Their Residents Great boards don’t portray themselves or their community as the “No! Police.” We all know that much of the job as a board member entails having to tell members “No,” as the board is trusted with enforcing the CC&Rs for the continuity of the community.

“No parking in that spot,” “No leaving pool towels on the balcony,” “No dogs without a

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leash.” Great boards know there are ways to say no, but in a positive fashion. For example: “No walking dogs in the park from 8 a.m. to 12 noon,” can be couched as “Dog walkers are encouraged to take their pets to the park from 12 noon to 6 p.m. for sunshine and fresh air seven days a week.” Or, “No parking on Snowy Palms Drive during Easter Break,” can be turned in to “Owners are encouraged to park their vehicles on Warm Alaska Drive during the Easter Break so as to create less congestion for all residents entering the community.”

The importance of regular, upbeat, professional-looking newsletters, updated websites and other forms of communication is never lost on great boards.

The importance of regular (monthly or bimonthly), upbeat, professional-looking newsletters, updated websites and other forms of communication is never lost on great boards. These forms of communication create a sense of openness and allow for the outflow of positive communication about the community. They also create board credibility, and they do so by fostering a positive attitude while still giving the membership needed information and reminders. Because people want to be a part of something successful, upbeat and positive, a community with this image is one that fosters volunteerism.

Great Boards Have a Sense of Humor We can be a very negative industry. I believe that is born from an overall lack of appropriate communication on matters at hand, very poor advocacy and communication skills on the part of individuals, and virtually no consequences for obstructionists.

Add ego, frustration, plain bad manners and certain psychological disorders, and you have all the ingredients for a negative experience for well-intentioned volunteers. Where’s the humor in that?

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March 2012 | ECHO Journal

Great boards see the all the problems and challenges as something with which to be dealt with a healthy sense of reality and a big dose of humor. Why? Great boards know three things: 1. It’s not IBM, it’s an HOA. 2. The smaller the stakes, the pettier the politics.

3. It’s not personal.

Great boards have a sense of humor because they maintain perspective, giving much of what we do a very humorous aspect.

Great Boards Value Integrity and Credibility Above All Else Integrity and credibility is what we all look for and respect in friends, family, school, church, work, business and what we want to see in board members and in any board as a whole—boards that don’t get mired in minutia, that are consistent in their decisions, assist new members in adjusting to their roles and create a polite atmosphere in which to volunteer and to be serious but not take themselves or the situations at hand too seriously, demonstrate they are mature and responsible in their actions. These board members are Credible. They have Integrity.

And they are the best of the best. They are what make great boards.

Is Your Board Great?

It is my experience that most board members serve as part of their civic duty, and all they really want is to know how to meet that end with intelligence and grace and be appreciated for the difficult job they perform as volunteers. All boards are potentially great boards. By determining which of the top traits can be incorporated in to your board, you can achieve outstanding service for the community and a satisfying experience for each board member. Taking your board from good to great takes true vision, and the will to serve yourselves and the community at the highest level.

Julie Adamen is president of Adamen Inc., a consulting and placement firm specializing in the community management industry. She can be reached via email at julie@adamen-inc.com or through her website, www.adamen-inc.com.

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March 2012 | ECHO Journal

By Steven S. Weil, Esq.

Go Ahead and Use Email: It’s an Emergency Implementing CID Open Meeting Act Limitations in 2012 and Beyond n several recent articles, authors have discussed many changes to the Common Interest Development Open Meeting Act (Civil Code §1363.05) requiring new ways of conducting association business. Perhaps the biggest impact concerns the use of email: “the board of director shall not conduct a meeting via a series of electronic transmissions, including… electronic mail.” There is an exception:

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“Electronic transmissions may be used as a method of conducting an emergency meeting if all members of the board…consent in writing to

that action, and if the written consent(s)…are filed with the minutes of the meeting of the board.”

This article discusses when and how email may be used to deal with emergencies and other tools that can be used to address emergencies without reliance on the emergency exception to the ban on email for decision-making.

What is an “Emergency” under the Open Meeting Act? The definition under the Open Meeting Act (“Act”) of an “emergency” warranting special

ECHO Journal | March 2012

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decision making procedures has not changed. It exists when there are (1) circumstances that could not have been reasonably foreseen which (2) require immediate attention and (3) possible action by the board and which (4) of necessity make it impractical to give either two days notice to the membership (for executive session meetings) or four days notice (for regular or special board meetings).

These four requirements emphasize that an “emergency” is an event or circumstance that really wasn’t planned for and must be discussed and possibly acted on sooner than two or four days (the time periods required for posting notices of board meetings on common area).

Not all emergencies will involve money, health and safety or repairs, but many will.

Here are some examples of situations that in some cases could be deemed emergencies requiring fast board discussion and possible action: • Contractor found dry rot that poses threat to safe use of deck • Decision regarding the removal of newly found asbestos • Final strategic decisions before impending small claims court hearing • Lawsuit threat requiring immediate response • Previously unknown opportunity to attend City Council meeting to protect association • Addressing false publicly distributed emails relating to an important pending special assessment vote As you can see, the list of topics that constitute an emergency under the Civil Code is broad. It is not, however, all encompassing. A board relying on the emergency exception to the general ban on email decision-making should be confident enough to promptly disclose the decision made and stand behind the need to do it “secretly” (that is, without notice). The statute itself mandates this in the two ways discussed below.

Unanimity and Post-Decision Notice in Minutes One required safeguard against abuse of the emergency exception to the email ban is that, in addition to the four requirements listed above, the emergency action to be taken must be authorized by all directors.

There is some debate as to whether all directors must consent to the initial email stating the existence of the emergency and the need for action but generally the answer to this

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March 2012 | ECHO Journal

question is irrelevant: if all directors fail to respond to the email or refuse to agree to the proposed action, it cannot be authorized electronically whether or not the situation would otherwise be deemed an emergency.

The last requirement for emergency meetings by email is that copies of the email (or emails) reflecting the action taken and its unanimous support must “be filed with the minutes of the board.” In reality, this is not a new requirement and compliance is easy: a reference to the emergency action should be referenced in the minutes of the next board meeting and copies of the email(s) can be attached to those minutes. One purpose of this requirement is to assure that members are given notice of the action taken and perhaps this is intended to minimize abuse of the general rule against use of email for board decisions.

If an Emergency, Then What?

An emergency can be addressed in several ways, depending on practical and political considerations and the extent to which board authority has been delegated. As discussed above, these include conducting a “meeting by email,” which can work well if all directors

actively use email and consent on an issue is likely. Alternatively, if these conditions cannot be met, the president or two directors can call a meeting and, if a quorum is met, emergency action can be authorized by a majority attending (in person or by telephone) even if unanimous agreement cannot be reached. The method of timing of such notice is not specified in the Civil Code; the Corporations Code provides for 48-hour personal telephonic notice to directors for “special meetings” but does not deal with emergencies. No law requires providing members with prior notice of an emergency meeting.

In reality, many associations will probably choose to deal with emergencies without any board action, whether by emails, telephonic or “in person” meetings. Amendments to the Act specifically reference the board’s authority to delegate the right to make decisions concerning association operations (which would include spending authority) to one or more officers, directors or an executive committee (in all three cases involving less than a majority of directors or the manager). In the six scenarios noted above, the right to address emergencies without board action

could have been handled by less than the full board, without email or a noticed meeting, assuming a proper prior delegation had been made.

Be Smart The days of using email to conduct normal business by the full board are over. Like so many other changes to California homeowner association law that seem so dramatic and negative, recent amendments to the Act may actually promote better decision-making, as alluded to in our previous article. As it stands, the use of email for emergencies should adhere to the rules discussed above. If a true emergency exists, email decision-making can be an excellent tool used to protect or promote an association’s interest.

Steven S. Weil is one of the founding principals at Berding|Weil LLP in Alamo. He has practiced community association law since 1984 and has dealt with virtually every kind of challenge facing directors, managers and community association members. He is a member of the ECHO board of directors.

ECHO Journal | March 2012

19

By John R. Schneider

Lessons from the Field

Developing a Systematic Approach to Maintaining Common Areas aintenance is a concept that most people understand; yet its potential for economic savings is often overlooked. The reason is maintenance is often considered a good thing to do, but it is usually deferred until there is a problem.

Unfortunately, by the time most

M

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March 2012 | ECHO Journal

problems are visible they are much larger than they appear.

Although maintenance repairs are usually accounted for in reserve studies, most associations do not have a policy or guidelines in place to ensure maintenance is performed in a timely manner. If you have ever

served on an association board or managed property, you know the difficulties of juggling available funds to accommodate repairs.

Having worked in the construction industry for over 25 years, I’ve seen the value of creating and implementing a systematic approach to

maintenance, and the economic savings that can be realized. Depending upon the type of maintenance being performed, the overall savings can be substantial. However, for the savings to be realized, there must be a procedure in place, and it must be followed. All too often, maintenance

is performed to correct a specific component, without considering an overall strategy for maintaining the entire building.

Establishing a maintenance program requires knowledge and details of a building’s current condition.

This is best accomplished by an

annual or periodic inspection of a complex. Unless you know the current condition of the various building components, reserve studies and complaints of deficiencies will not tell an association what the current maintenance needs are, or what work is truly needed. A baseline evalECHO Journal | March 2012

21

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March 2012 | ECHO Journal

uation of a complex can provide this information as well as identify conditions that may fail in the near future.

This is particularly true of water intrusion through the envelope of a building.

Although reports of water intrusion are usually responded to quickly, many times the initial investigation and repair fail to properly identify and correct the deficiency, wasting valuable time and resources.

I recently worked with an association that was beginning to receive reports of deteriorated wood trim at the exterior of a few units.

The buildings in the complex were 10 years old and constructed with stucco and hardboard siding, with wood trim at the windows and doors, and a tile roof. Casually looking at the complex, a person would assume it was well maintained particularly since it was repainted 18 months earlier. While the association did perform some maintenance such as gutter cleaning, landscape improvements, and the painting of the complex, they had not considered the overall maintenance of the building exteriors.

Over a period of months, the board received complaints of damaged wood trim.

Concerned that damage was being discovered after the complex was painted, the association requested an evaluation of the trim at all the units in the complex. The board wanted to know how extensive the damage was, and what was causing it, within the parameters of a limited evaluation.

The results of the evaluation were revealing; there was substantially more deteriorated trim than expected, and much of the damage existed to some extent prior to the repainting of the complex. Based on observations, the damage appeared to be the result of flashing deficiencies in the original construction, and to deferred maintenance. The data and photos from the report provided a detailed list of the where the damage was located, which building components were affected, and what factors contributed to the wood deterioration, but it did not advise the association on how to proceed with the repairs. This board will now have to solicit opinions and costs to correct to distinguish what method of repair will be most effective for their situation.

When multiple building components are involved in a repair, it is often best to seek the advice of a construction specialist to determine available options. This person can assist in identifying and prioritizing what needs to be fixed, and offer suggestions on

minimizing future damage. Yet, most associations and managers are reluctant to seek the advice of outside professionals often citing the additional costs of the professional service, and the fact they already have vendors in place to implement repairs. These are common misconceptions.

The initial failure of obtaining professional input and advice could be seen at a complex I recently evaluated. For the past two years, water leakage had been reported at two adjacent units in one of the buildings.

The management company hired a contractor to make an initial evaluation of the leakage. It was determined that the leakage was coming in around newly replaced windows; so the contractor installed additional flashing and sealing around the window frame to make it weather tight. After a few rains, the leakage continued and began to infiltrate into the garages below the units.

Assuming the leakage was coming in from another location, another contractor was hired to provide an opinion and repair the leakage. The second contractor believed the leakage was coming in from the entry deck.

New flashing was installed between the deck and the exterior walls, and a liquid membrane was applied to the top of the entry deck to additionally seal the area. Once again after a few rains, leakage was observed by the unit owners.

Frustrated, the association board directed the property manager to solicit additional proposals from contractors to make further repairs. When three bids were submitted, each had a different scope and cost for the repair. Not knowing which bid to consider, the manager asked if I would review the proposals and determine which would best resolve the reoccurring leakage. The three bids ranged from $1,500.00 to $6,500.00, and none addressed the full extent of the leakage. When I pointed out the obvious discrepancies in the bids, the manager asked if I would take a look at the two units and see what might be involved.

After an initial reconnaissance of the units, it was obvious to me the attempted repairs to the windows, deck, and stucco were of little value. Continued leakage had caused substantial damage around the windows, under the entry deck and at the ceiling of the garage. When I met with the board and showed them initial photos of the water damage, they had no idea the previous repairs did not correct the leakage, nor were they aware of how extensive the damage had

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become. The repairing contractors assured the board they performed the work specified in their proposals, and that the leakage must be coming in from somewhere else.

I explained to the board that before any other attempts were made to correct the leakage, a systematic evaluation and spray testing would have to be performed to determine clearly the points of water entry. Once that was completed, a detailed scope of repair could be created and structured by the board, and then comparable bids from competent contractors could be obtained.

During the spray investigation, we checked the deck, the window installation, the stucco exterior and portions of the roof.

The results revealed the added flashing around the windows was not installed to shed water, the deck-to-wall flashing at the entry deck was not properly integrated with the weather resistive barrier behind the stucco, and the recently installed liquid membrane was delaminating from the deck substrate allowing water to infiltrate into surfaces below.

Since many of the surfaces evaluated during the spray testing connect and interface with each other, it would be impossible to effect repairs without removing and replacing the stucco at two walls, the entry deck, and a section of the roof. The spray evaluation revealed that leakage was partly the result of flashing deficiencies of the original construction at the roof, wall, and deck, and the improper installation and flashing around the replacement windows.

The board finally realized the repairs would involve more than a simple fix; it would require a detailed scope of work and cost several thousand dollars to complete. It was recommended that the board retain an architect to design additional flashing details (to correct deficiencies discovered in the original construction), and that the repairs be implemented by a contractor specializing in waterproofing and reconstruction.

Probably the most valuable lesson to be learned from this scenario is the need to investigate matters before repairs are made, and the need for association boards and managers to understand what is necessary to successfully execute repairs. Concerned with saving costs and not understanding what was involved in stopping the leakage, this particular association inadvertently wasted several thousands of dollars by agreeing to repairs that did not resolve the issue and allowed the damage to get worse.

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With proper planning and a thorough knowledge of construction, specific strategies can be created to balance repair needs with available funds and resources. Work can be divided into phases, performed as funding allows, and sequenced so that it integrates with work that needs to be done in the future. Successful maintenance involves knowing the current condition of a complex, developing an overall plan and timeline so repairs can be done in an efficient manner, and enlisting the services of an experienced construction professional when maintenance needs have not been clearly identified.

John R. Schneider is a licensed general building contractor and certified code specialist. Since 1985, he has been president of All About Homes, Inc., an East Bay consulting company that specializes in the investigation of construction related deficiencies, bid review, project management, and the facilitation of disputes between owners, associations, and vendors. He is a member of the ECHO Maintenance Panel, and questions can be directed to him at jrschneider@allabouthomes.com.

Find answers to almost any question about CIDs 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. Order today from ECHO! Call 408-297-3246, fax at 408-297-3517 or email: info@echo-ca.org ECHO Journal | March 2012

25

ONE ATTORNEY’S OPINION

By David C. Swedelson, Esq.

Boards Can’t Increase the Rate of Assessments Mid-Fiscal Year ere is the issue: A board adopts the annual budget and notifies the owners that assessments will increase from last year by 10%.

After the beginning of the association’s fiscal year, and months later, the board realizes that expenses are greater than anticipated and wants to again increase the assessments, this time by another 10% (for a total of a 20% annual increase).

Some attorneys, managers and board members believe that the board has this power; others (including this writer) disagree based on the language of the Civil Code, the intent of the legislature, and common sense. Owners are entitled to know at the beginning of the fiscal year what their association’s assessments will be. The board has a fiduciary obligation to determine what the assessments will be for that fiscal year and has a right to use the remedy provided in the Civil Code if expenses are greater than anticipated. Otherwise, the legislature would not have imposed a sanction for a board’s failure to timely distribute the new fiscal year’s budget, and a board could simply send out whatever they have and finalize the budget later.

H

The Civil Code makes it clear that the board’s power to increase assessments flows with the creation, adoption and distribution of the association’s budget. Section 1366(b) of the California Civil Code provides, in part, that notwithstanding more restrictive limitations placed on an association’s board of

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March 2012 | ECHO Journal

directors by the association’s governing documents (meaning no matter what an association’s CC&Rs say), the board “may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association’s preceding fiscal year….” If the association’s board adopts a budget increase in regular assessments at the beginning of its fiscal year that is less than 20% of the prior year’s assessments, some practitioners advise that this provision of the Civil Code allows the association’s board latitude to increase the rate of regular assessments midyear, without homeowner approval, as long as the total increase in regular assessments for the year does not exceed 20% over the prior year’s assessments (this mid-year increase would presumably be levied if budgeted regular assessments are not sufficient to cover the association’s current expenses). I, and others, do not agree.

Following the scenario referenced above, there are a number of reasons why a board is not permitted to increase regular assessments up to 20% whenever they feel the need. First, this action is contrary to the language of Section 1366(a), which provides, in part, that “annual increases in regular assessments for any fiscal year…shall not be imposed unless the board has complied with subdivision (a) of Section 1365 with respect to that fiscal year….” Section 1365 of the Civil Code deals with fiscal matters and

financial documents, including an association’s pro forma operating budget. This Section provides that the budget shall include the estimated revenue and expenses, including regular assessments, on an accrual basis, meaning that the board is required to estimate the expenses for the association at the time the budget is first distributed.

Section 1365(a)(4) provides that an association’s annual pro forma operating budget is to be distributed 30 to 90 days prior to the beginning of the association’s fiscal year. If the association does not timely distribute its budget, then it does not have the right to increase regular assessments, at least not without approval of the homeowners (as described below in reference to Section 1366(b)). This language makes it clear that it was the legislature’s intent that the budget be distributed once (and prior to the beginning of the association’s fiscal year), and that homeowners are entitled to know at the time the budget is distributed what the rate of assessments will be. To allow a board the ability to increase regular assessments mid-year does not allow the association’s homeowners to budget their personal finances properly and allows the board to approve and distribute a budget that is not a fixed and accurate accounting of the association’s projected costs for the fiscal year. The Civil Code does not specifically provide that an association has the right to increase assessments mid-

ECHO Journal | March 2012

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year (without owner approval) just because it did not increase regular assessments by 20% when the budget was distributed prior to the beginning of the association’s fiscal year.

Civil Code Section 1366(b) provides that this Section’s restrictions on regular assessment increases (and the imposition of special assessments) “does not limit assessment increases necessary for emergency situations.” Although this Section suggests that assessments levied for emergency situations are (regular) assessment increases, this language is generally interpreted to be with respect to the levying of emergency special assessments (see below). If the board had the ongoing power and authority to increase regular assessments on whim, the emergency situations provision would be superfluous.

Emergency situations are defined, under Section 1366(b)(1)-(3), as including an extraordinary expense (1) required by order of a court, (2) necessary to repair or maintain the common interest development or any part of it for which the association is responsible where a threat to personal safety on the property is discovered, or (3) necessary to repair or maintain the common interest development or any part of it for which the association is responsible that could not have been reasonably foreseen by the board in preparing and distributing the pro forma operating budget under Section 1365.

Section 1366(b)(3) provides that prior to the imposition or collection of an extraordinary assessment for unforeseeable repairs or maintenance (number 3 above), “the board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the members with the notice of assessment.” This language authorizes special assessments, but not an increase in regular assessments, that are levied on homeowners in the event the board determines that the budget does not provide sufficient revenue to pay for certain bills.

Civil Code Section 1366(b)(3) makes it clear that a board of directors for an association may not increase the amount of regular assessments, but may levy a special assessment, if an expense(s) was not and could not have been anticipated at the time the board distributed the association’s pro forma operating budget. At some associations, boards have been challenged on their decision to levy a special assessment where the owners

contend that the expense should have been anticipated. What would be the purpose of the provisions of this Section if carte blanche authority to increase regular assessments after budget distribution is presumed to be granted to the board? It is obvious that the legislature intended to establish the rate of regular assessments when the budget is distributed, as the Civil Code provides a mechanism for a board to levy a special assessment if there is an extraordinary expense that could not have been anticipated when the budget was first prepared.

The Civil Code does however provide an association an avenue for increasing regular assessments mid-year. In fact, Section 1366(b) allows the board to solicit the approval of the homeowners for a mid-year regular assessment increase (in lieu of a special assessment). For such increase approval, a majority of more than 50% of the homeowners (the quorum requirement under this Section) must cast a secret ballot, and a majority of those voting must vote in favor of the increase.

In conclusion, it seems fairly clear that the legislature’s intent was for the board of directors to timely distribute the budget with the projected regular assessment increase prior to the beginning of the association’s fiscal year, so that homeowners can rely on that information for their own budgeting purposes. The Civil Code allows a board to levy a special assessment for emergency situations when there is an extraordinary expense, which would indicate that the board of directors should be careful to budget for all anticipated expenses in the association’s pro forma operating budget. The language of the Civil Code cannot be reasonably interpreted to mean that a board has the ability to increase the rate of regular assessments in the middle of a fiscal year simply because they did not increase the assessments by 20% (as statutorily permitted) when they distributed the association’s budget. To come to another conclusion would sanction the actions of a board that does not take the time and effort to budget properly for their association’s fiscal year.

David Swedelson is a founder and senior partner at the law firm of Swedelson & Gottlieb in Los Angeles. The firm focuses its practice on the fullservice representation of community associations and is an active member of ECHO. David can be contacted at dcs@sghoalaw.com.

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Registration and Continental Breakfast Welcome and Introductions Fighting Cyber Crime—Alan Crandall How Good Are Your Governing Documents?—Stephanie Hayes, Esq. Break Legislative Update—Sandra Bonato, Esq. Dealing With a Difficult Board—Larry Russell, Esq. Questions & Answers—All speakers Vendor Prizes and Adjourn

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Painting for Protection and Appearance

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March 2012 | ECHO Journal

By David L. Hughes

Planning and Preparation for a Successful Painting Project here are several questions an association should ask prior to beginning a painting project and setting up a schedule for future painting.

Why are we painting?

Hopefully it is obvious that you are painting to protect the assets of the association from the elements and for esthetic reasons, which enhance the living experience for homeowners, as well as maintaining or increasing the value of the property.

When do we paint?

Painting should be performed before the exterior surfaces show signs of deterioration.

How often do we paint?

It is very important for the long-term condition of substrates that they be painted based on a regular schedule. For wood that means every 4 to 6 years, and for stucco that means 7 to 10 years depending on exposure and the condition of the property. Failure to maintain a regular schedule will cost much more in the long term because of siding failure or worse, dry rot of the structure behind siding materials.

T

Starting the Process Once these questions have been answered, there are three important steps that an association should take prior to entering into a bidding process with contractors. There are several ways to approach each of these issues,

but we recommend using resources outside your association in order to expedite the process and simplify the work for the association.

Decide on a color scheme for your association.

If you are planning to change the color palette of your association, be prepared to spend a great deal of time on this aspect of the process. Color is very personal, and individual homeowners generally have very strong feelings concerning the color choices that boards make. Choosing an outside consultant to help you arrive at your choices is a practical and probably prudent approach to the process. Many paint manufacturers offer this service for free with the use of their product. There are also many paid expert consultants with whom your association can contract to provide and help you with color choices. Remember to start this process early, at least 6 to 12 months prior to the anticipated start date of the project. Don’t plan to have a painter on the job before colors are selected. Your contractor did not bid the project that way; starting the job without colors will cost him money and may slow the job.

Have a specification and bid package prepared.

In order to have a method of evaluating the bids you will receive from painting contractors, you must provide bidders with accu-

rate job specific specifications from which they can bid the project. A competent professional who is familiar with your project and has inspected the property thoroughly before preparing the documents should produce these specifications. It may be prudent to hire a consultant to provide these services depending on the size and complexity of the project. Most paint manufacturers will provide specifications for free if you agree to use their products on your project. It is important that whoever provides your specifications discusses budget issues, the condition of the project and their recommendations for properly painting your association. Your budget should be dictated by what you need and not by how much money you have.

Specifications and bid packages should include the following: • Surface preparation of all included substrates • Detail caulking and spot-priming instructions • Product specification by manufacturer name and number for specific substrates • Number of coats required and application guidelines, which should include back rolling of at least one coat • Insurance requirements for the contractor Continued on page 34 ECHO Journal | March 2012

31

News from ECHO

Use Email: It’s an Emergency…

In several recent articles, authors have discussed changes to the Open Meeting Act (Civil Code §1363.05) requiring new ways of conducting association business. Perhaps the biggest impact concerns the use of email: “the board of director shall not conduct a meeting via a series of electronic transmissions, including…electronic mail.”

There is an exception: “Electronic transmissions may be used as a method of conducting an emergency meeting if all members of the board…consent in writing to that action, and if the written consent(s)…are filed with the minutes of the meeting of the board.”

The definition under the Open Meeting Act (“Act”) of an “emergency” warranting special decision making procedures has not changed. It exists when there are (1) circumstances that could not have been reasonably foreseen which (2) require immediate attention and (3) possible action by the board and which (4) of necessity make it impractical to give either two days notice to the membership (for executive session meetings) or four days notice (for regular or special board meetings).

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March 2012 | ECHO Journal

These four requirements emphasize that an “emergency” is an event or circumstance that really wasn’t planned for and must be discussed and possibly acted on sooner than two or four days (the time periods required for posting notices of board meetings on common area).

Not all emergencies will involve money, health and safety or repairs, but many will. Here are some examples of situations that in some cases could be deemed emergencies requiring fast board discussion and possible action: • Finding dry rot that poses threat to safe use of deck • Decision re removal of newly found asbestos • Final strategic decisions before impending small claims court hearing • Lawsuit threat requiring immediate response The list of topics that constitute an emergency under the Civil Code is broad, but not all encompassing. A board relying on the emergency exception to the general ban on email decision-making should be confident enough to promptly disclose the decision made and stand behind the need to do it “secretly” (that is, without notice)as the statute mandates.

The days of using email to conduct normal business by the full board are over. Like so many other changes to California homeowner association law that seem so dramatic and negative, recent amendments to the Act may actually promote better decision-making. As it stands, the use of email for emergencies should adhere to the rules discussed

above. If a true emergency exists, email decision-making can be an excellent tool used to protect or promote an association’s interest.

Boards Can’t Increase the Rate of Assessments Mid-Fiscal Year Here is the issue: A board adopts the annual budget and notifies the owners that assessments will increase from last year by 10%. After the beginning of the association’s fiscal year, and months later, the board realizes that expenses are greater than anticipated and wants to again increase the assessments, this time by another 10% (for a total of a 20% annual increase). Some attorneys, managers and board members believe that the board has this power; others (including this writer) disagree based on the language of the Civil Code, the intent of the legislature, and common sense. Owners are entitled to know at the beginning of the fiscal year what their association’s assessments will be. The board has a fiduciary obligation to determine what the assessments will be for that fiscal year and has a right to use the remedy provided in the Civil Code if expenses are greater than anticipated. Otherwise, the legislature would not have imposed a sanc-

tion for a board’s failure to timely distribute the new fiscal year’s budget, and a board could simply send out whatever they have and finalize the budget later.

It seems fairly clear that the legislature’s intent was for the board of directors to timely distribute the budget with the projected regular assessment increase prior to the beginning of the association’s fiscal year, so that homeowners can rely on that information for their own budgeting purposes. The Civil Code allows a board to levy a special assessment for emergency situations when there is an extraordinary expense, which would indicate that the board of directors should be careful to budget for all anticipated expenses in the association’s pro forma operating budget. The language of the Civil Code cannot be reasonably interpreted to mean that a board has the ability to increase the rate of regular assessments in the middle of a fiscal year simply because they did not increase the assessments by 20% (as statutorily permitted) when they distributed the association’s budget.

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Campbell Community Center 1 W. Campbell Ave., Campbell Friday and Saturday, June 22, 23 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

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A Saturday Matinee Seminar Agenda 8:00 a.m. Registration and Sponsor Tables 8:45 Welcome and Introductions 9:00 “Dangerous Liaisons”—Director’s and Officer’s Liability Insurance —Kirk Denebeim, Socius Insurance 9:40 “Stayin’ Alive”—Disaster Preparedness—Roger Docaster, Director of Disaster Services 10:20 Break and Vendor Booths 11:00 “The Money Pit”—Dangerous Maintenance Deferrals —Mark Dunia, Cagwin & Dorward; Bill Mann, AC Enterprises and David Hughes, Draeger 11:40 “Risky Business”—Legal Update—Bill Gillis and Barbara Zimmerman What’s happening in Sacramento.

CC&R Revisions—What’s in it for your community and how to effectively educate your members.

12:20 p.m. Ask the Experts 1:20 Raffle Drawings—Grand Prize: Wine Country Resource Panel’s Instant Cellar 1:30 Adjourn

Ticket Prices ECHO Members through March 11: $49 After March 11: $59 Save $5 Register Online by March 11 Non-Members Fixed Price: $69

Yes, reserve _____ spaces for the ECHO Wine Country Seminar.

Amount enclosed: $__________ (attach additional names) Name: HOA or Firm: Address: City:

State:

Zip:

Phone:

Call (408) 297-3246 or visit www.echo-ca.org for more information.

Sponsored by ECHO

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. Telephone: 408-297-3246; Fax: 408-297-3517

Painting for Protection Continued from page 31

• • • •

Contractor’s license requirements Realistic warranty requirements Reference requirements An agreement to follow the provided specification

Have a General Contractor inspect and repair substrates It is not possible to overemphasize how important surface repair is to the integrity of your painting project. You do not want to be surprised by the problems present with your substrates when the painting contractor begins power washing and these problems reveal themselves. Wood repair must be part of the budget for painting because some work will inevitably need to be done.

Painting over dry rot will not solve the problem, and your contractor and paint manufacturer will not stand behind any identified problem areas.

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Modesto, Since 1 990, o ur so le focus focu us has been been to to deliver deliver performance performance that enriches enriches 1990, our sole communities proud co mmunities and enhances enhancces the lives lives of the people people we we serve. serve. M & C iiss p roud to to be be Ž Ž Accredited an A ccredited Association Association Management Management Company Company (A (AAMC AAMC )),, w which hich iiss tthe he C Community ommunity Associations Associations Institute’s Institute’s highest GHVLJQDWLRQ DZDUGHG WR PDQDJHPHQW ÀUPV highest GHVLJQDWLRQ DZDUGHG WR PDQDJHPHQW ÀUPV

3OHDVDQWRQ ‡ )UHPRQW ‡ 6DQWD &ODUD 3OHDVDQWRQ ‡ )UHPRQW ‡ 6DQWD &ODUD Stockton Stockton 209.644.4900 209.644.490 00 ‡ ‡ 0RGHVWR ‡ &RSSHURSROLV 0RGHVWR ‡ &RSSHURSROLV For management pr proposal oposal information, informattion, please visit www www.mccommunities.com w.mccommunitiess.com or email inf info@mccommunities.com fo@mccommunities.com s.com 34

March 2012 | ECHO Journal

Bidding the Job Once you have your bid package in hand, you can begin the process of choosing a painting contractor. The telephone book will probably not be your best recourse in this regard. Painting contractors that work with associations have experience working with multi-family housing and individual homeowners. They will meet the higher standards for insurance and communication necessary for your association’s job.

A maximum of 4 or 5 contractors should be invited to bid the project; any more bidders will make it unlikely that all those bidding will spend the time to provide a competitive proposal because the chances of getting the job is minimized. Your management company, consultant or paint manufacturer can provide you with a list of qualified painting contractors and will assist in facilitating a mandatory job walk for all those interested in bidding the project.

A job walk will insure that all bidders understand the specifics of your job and what is required. The job walk also provides an opportunity for bidders to bring up any concerns they have about your project. If any changes result from the job walk, all participating contractors should be notified in writing in the form of an official addendum from the association. Bidding should not be a hurried process, and you should give the participating contractors time to put together an

accurate proposal. Two weeks is probably more than adequate.

Hiring Your Contractor You have received all your proposals from the painting contractors who attended your job walk and now must choose one for your project. Unfortunately all too often the choice is made to accept the lowest bid. Price is a prime concern, but it should not be the total determining factor. All proposals should be carefully read to insure that each contractor’s proposal accurately reflects the specifications in terms of preparation, number of coats and application. For example, it would seem that asking for two coats would be easily defined; however different contactors define coats differently, depending on their working methods. In general manufacturers define two coats as one application allowed to dry followed by a second application. Some contractors will define it as two coats crosshatched wet (spray technique) or sprayed and back rolled with the back roll being considered the second coat. Because these are competitive perspectives and may or may not be appropriate or specified for your project, it is important to compare such aspects of the several proposals.

A maximum of 4 or 5 contractors should be invited to bid the project; any more bidders will make it unlikely that all those bidding will spend the time to provide a competitive proposal.

In the end most professionals recommend that you interview the contractor you are contemplating hiring at a minimum and preferably the top two or three bidders. This is particularly worthwhile if the bids are close. The selected contractor will be on the association’s property for several months or more and will be interacting with homeowners on a regular basis. You need to feel comfortable and confident in your decision.

Interviewing Contractors The process for interviewing contractors should be the same for each for each interviewee to get a proper comparison. Putting together a group of questions to ask will speed your decision process. The following is a sample list of questions to aid you in your interviews.

• With whom do we communicate and how?

• Will a job foreman be on site at all times when work is being done?

• Do you have a clear process for us to communicate with you?

• Can you be contacted after hours and on weekends?

• What are your proposed working hours?

• Where will you store painting materials?

• Are you providing your employees an onsite restroom?

• How will you maintain a clean and safe job site?

• Do you hold weekly safety meetings per SB 198?

• What is your estimated completion date?

• How many employees will you have on the job?

• When would be your proposed start date?

• How will you notify homeowners for power washing, preparation and painting?

• What is your procedure for painting front doors?

• How long have you been in business?

• Will you add the association as an additional insured on your policies for the project?

• With which organizations are you associated? (CAI, CACM, ECHO, CAA) • Do you have a Maintenance Program?

(Your association should have one.)

• Do you provide a closeout binder on job completion?

You can and should add to this list. By asking these questions, you will have a much better picture of how the painting contractor will perform on your job and confidence in the choice you make.

Following these basic procedures should help make your painting project as stress free as possible.

David Hughes is a vice president at Draeger. He is president of the ECHO board of directors, a participant in several Resource Panels and a participant in many ECHO seminars.

To make your investment sustainable you need this book Condos, Townhomes and Homeowner Associations Member Price: $29.00 Non-Member Price: $45.00 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.

Order today from ECHO! Call 408-297-3246, fax at 408-2973517 or email: info@echo-ca.org

ECHO Journal | March 2012

35

Netwion Edi

Beyond Privatopia $20.00 Non-Member Price: $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 2012 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 2011 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 $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.

2012 Community Association Treasurer’s Handbook Member Price: $29.00 Non-Member Price: $35.00

This well-known compact guide for operation of common interest develop ments 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.

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Homeowners Associations— How-to Guide for Leadership Member Price: $15.00 Non-Member Price: $25.00 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.

FOR Board Members Reserve Fund Specialists Property Managers Unit-Owners, Accountants Lawyers, Builders

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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.

RESERVE FUND

ESSENTIALS THIRD EDITION FIFTH PRINTING JONATHAN H.

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Two experts discuss reserve fund planning and control in a refreshingly readable and exceptionally levelheaded style.

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INCLUDES RESERVE FUNDS FOR CONDOMINIUMS COMMUNITY ASSOCIATIONS HOAs CO-OPS MEMBER-OWNED PROPERTIES MUNICIPAL FACILITIES

Reserve Fund Essentials Member Price: $18.00 Non-Member Price: $25.00 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.

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 Answer Book $15.00 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.

2011 ECHO Annual Seminar Program Book $15.00 Non-Member Price: $25.00 This 300+ page reference book contains the presentation outlines, text and handouts from the sessions at the 2011 ECHO Annual Seminar held on June 18, 2011. It also contains vital information for association directors, such as assessment collection policies, internal dispute policies, and much more.

Dispute Resolution in Homeowner Associations Member Price: $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 www.echo-ca.org

Bookstore Order Form Board Member’s Guide for Contractor Interviews $20.00 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

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 8.25%) TOTAL AMOUNT

Yes! Place my order for the items above.

Board Member’s Guide for Management Interviews Member Price: $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

State

Zip

AMOUNT

ECHO Events Calendar

Save these dates Thursday, March 1 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael Monday, March 12 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant Oakland Tuesday, March 13 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz Wednesday, March 21 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. Rohnert Park, CA

Saturday, March 24 Wine Country Seminar 8:00 a.m. to 1:00 p.m.

Sally Tomatoes 1100 Valley House Dr., Rohnert Park Wednesday, April 4 Maintenance Resource Panel 12:00 Noon ECHO Office, 1602 The Alameda, Ste. 101, San Jose Tuesday, April 11 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell

Save these dates for the 2012 ECHO Annual Seminar June 22, 23

Wednesday, April 18 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park Saturday, April 21 South Bay Seminar 8:00 a.m. to 1:00 p.m.

Campbell Community Center 1 W. Campbell Ave., Campbell Friday and Saturday June 22, 23 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Friday, April 13 East Bay Resource Panel 12:00 Noon Massimo Restaurant 1603 Locust St., Walnut Creek

Regularly Scheduled ECHO Resource Panel Meetings Resource Panel Maintenance North Bay East Bay Accountants Central Coast South Bay Wine Country Legal 38

March 2012 | ECHO Journal

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

Location ECHO Office, San Jose Contempo Marin Clubhouse, San Rafael Massimo Restaurant, Walnut Creek Francesco’s Restaurant, Oakland Pasatiempo Inn, Santa Cruz Buca Di Beppo, Campbell Eugene Burger Management Co., Rohnert Park Varies

By Kevin Scroggins

Questions for Painting Contractors started painting when I was 10. I didn’t get good at it until I started working for other people.

The point is just because someone has been a contractor for a long time doesn’t mean he or she is good at it.

Contractors always give references. That’s good. Listen carefully when you call the references. Are they saying things such as “They did good” or “They are OK.” Don’t settle for that as an answer. Ask questions.

I

Call the References and Ask These Questions • Were there any complaints?

• Did they protect all unpainted areas?

• Was there any confusion about the contract? If so, what?

• Did they return calls promptly?

• Did they follow the specs?

• Were they responsive when you called them?

• Were they messy; did they pick up all their garbage daily?

• No overspray? If so, their response?

• Did they argue with you? Why? • Did they post sufficient notices?

• Did your project stay within budget?

• Was there someone on the project at all times who could answer questions and make decisions?

• Were change orders written?

• Why were there change orders?

• Was the project on time? If not, why?

• Did you feel safe with the workers around your home?

• What hours did the contractor work?

• Did the contractor stay on your project util it was done?

• Was the crew pleasant?

• Did the work pass inspection?

• Were you given a clear idea of what the contractor was doing for you?

• Were the results what you anticipated?

• How large was your project and what kind of work was done?

• Would you hire the contractor again?

Read a bidder’s contract to make sure it matches the specification. Specs are written to protect the homeowner association.

Proper application is important. Rather it is paint or wood repair. For an example…

When replacing wood all sides should be primed. Don’t let anyone talk you out of this step.

Questions You Should Ask the Contractors How long have you been contracting?

Look for a company with an established business history in your community. Surviving in any business in today’s competitive marketplace is a difficult task. Most successful conContinued on page 41 ECHO Journal | March 2012

39

ECHO Honor Roll

About

ECHO Honors Volunteers Beth Grimm 2011 Volunteer of the Year ECHO Resource Panels Accountant Panel Richard Schneider, CPA 707-576-7070 Central Coast Panel John Allanson 831-685-0101 East Bay Panel Beth Grimm, Esq., 925-746-7177 Mandi Newton, 415-225-9898 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 San Francisco Panel Jeff Saarman, 415-749-2700 South Bay Panel Toni Rodriguez, 408-848-8118 George Engurasoff, 408-295-7767 Wine Country Panel Maria Birch, CCAM, 707-584-5123

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

40

March 2012 | ECHO Journal

SF Luncheon Speakers John Allanson Jeffrey Barnett, Esq. Tyler Berding, Esq. Ronald Block, PhD. Sandra Bonato, Esq. Wendy Buller 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 Sandra Gottlieb, Esq. Beth Grimm, Esq. Brian Hebert, Esq. Roy Helsing Stephen Johnson, CFP Garth Leone Nico March Kerry Mazzoni Thomas Miller, Esq. Larry Pothast Larry Russell, Esq. Steve Saarman Jim Shepherd Nathaniel Sterling, Esq. Debra Warren, PCAM, CCAM Steven Weil, Esq. Mark Wleklinski, Esq. Glenn Youngling, Esq.

Seminar Speakers June 18, 2011 ECHO Annual Seminar Julie Adamen John Allanson Jeffrey Barnett, Esq. Tyler Berding, Esq. Jacquie Berry Sandra Bonato, Esq.

Jeffrey Cereghino, Esq. Timothy Cline Paul P. Cordova, PE Alan Crandall Bradley Epstein, Esq. Lisa Esposito, CCAM John Garvic, Esq. Beverlee Gordon Sandra Gottlieb, Esq. Patrick Holman Linnea Juarez, PCAM, CCAM David Kuivanen, AIA Kerry Mazzoni Evan McKenzie, Esq. Steven Saarman Brian Smith Deon Stein, Esq. Wanden Treanor, Esq. Steven Weil, Esq.

Recent ECHO Journal Contributing Authors December 2011 Pierce Gore, Esq. Michael Hardy, Esq. Stephanie J. Hayes, Esq. Kerry Mazzoni Roger Patching January 2012 Linda A. Bartel, PCAM Sandra M. Bonato, Esq. Michael Gartzke, CPA Beth A Grimm, Esq. Ken Kosloff Susan Spott February 2012 Jeffrey A. Barnett, Esq. Robert Booty Carl Brown, RCI, RRO Tom Fier, Esq. Steven S. 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 1,450 homeowner associations, you can become an associate member and join 350 other firms serving this important membership.

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 Non-members/Homeowners Businesses & Professionals

$50 $75 $125

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 408-2973246 or visit the ECHO web site (www.echo-ca.org) to obtain an application form and for more information.

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Questions for Painting Contractors Continued from page 31

tractors are proud of their history in the industry.

When will the project start and how long will it take? Ask questions about work schedules. What is your estimate for completion?

How early in the day will your crew begin work? When will they normally stop for the day? Will I be contacted about delays or changes in the schedule? By whom?

Have you ever operated under another name or been connected to another contractor? If so what is the relationship?

Does your company carry workers compensation and liability insurance? Ask for copies of the insurance certificates to verify coverage. Confirm the license number and expiration date with your local jurisdiction.

Check for additional licenses: https://www2.cslb.ca.gov/OnlineServices/ CheckLicenseII/CheckLicense.aspx May I have a list of references for projects you have completed (homeowner associations)? The contractor should be able to supply you with a minimum of five references, including names, telephone numbers and addresses. As a follow up to this question, ask how long ago the project was completed and if the contractor can arrange a visit to see the finished job. You should also ask for professional references from suppliers, financial institutions or subcontractors to verify sound business practices.

What percentage of your business is repeat or referral business? This will give you a good indication about the company’s customer satisfaction.

How many projects like mine have you completed in the past 12 months? This will help you determine the contractor’s familiarity with your type of project. You should confirm that a good portion of those completed projects were similar to the type of project you are proposing.

Will we need a permit for this project?

Most cities and towns require permits for building projects. Failure to obtain the necessary permits or to arrange obligatory inspections can be illegal. In some cases, if a project violates a zoning law or some other regulations, it may even have to be demolished if there is no way to comply with the law. A qualified remodeling contractor will be conscious of the permit process and ensure that all permits have been obtained before initiating any work.

May I have a list of your suppliers? You may want to add calling the contractor’s suppliers to your list of follow-up actions. This will help protect you from mechanics liens for nonpayment by the contractor. Suppliers also can be a source to establish credit history for the company.

Do you conduct background checks on your workers? If not, will you?

Ace Property Management . . . . . . . .15 American Management Services . . . .9 Angius & Terry . . . . . . . . . . . . . . . . .3 A.S.A.P. Collection Services . . . . . . .22 Association Reserves . . . . . . . . . . .18 Berding | Weil . . . . . . . . . . . . . . . . .44 Collins Management . . . . . . . . . . . .15 Common Interest Management . . . .24 Community Management Services . .12 Compass Management . . . . . . . . . .13 Cool Pool Service . . . . . . . . . . . . . .23 Cornerstone Community Mgmnt . . . .12 Ekim Painting . . . . . . . . . . . . . . . . . .8 First Bank Association Bank Srvcs . . .8 First Bank Association Bank Srvcs . .23 Flores Painting . . . . . . . . . . . . . . . .34 Helsing Group, The . . . . . . . . . . . . .18 M & C Association Services . . . . . . .34 Massingham and Associates . . . . . .25 Master Plumbing & Sewer . . . . . . . .43 Mutual of Omaha Bank . . . . . . . . . .14 PML Management Corp. . . . . . . . . .14 Pollard Unlimited . . . . . . . . . . . . . .24 R. E. Broocker Co. . . . . . . . . . . . . .15 Rebello’s Towing Service . . . . . . . . .19 REMI Company . . . . . . . . . . . . . . . .23 Saarman Construction . . . . . . . . . .22 Statcomm . . . . . . . . . . . . . . . . . . .24 Valley landscape Management . . . .28 Varsity Painting . . . . . . . . . . . . . . . .10

Kevin Scroggins is manager of marketing at CalPro Painting, an ECHO-member company. Kevin is a member of the Maintenance Resource Panel.

ECHO Journal | March 2012

41

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.

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