2020 ECHO HOA UNIVERSITY & EXPO
THE BIG PICTURE
INVESTING IN GOOD
All new virtual experience
Beginning or resuming construction projects
Echo membership is a wise investment
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SERVING HOA BOARD MEMBERS & HOMEOWNERS
SELF-MANAGED HOA GOVERNANCE Getting back on track PAGE 26
JULY / AUGUST 2020
The Laws of the Land PAGE 10
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MISSION STATEMENT Fostering a better quality of life in community associations through education, advocacy and networking.
Echo 5669 Snell Avenue, #249 San Jose, CA 95123 408.297.3246 | info@echo-ca.org www.echo-ca.org
BOARD OF DIRECTORS & OFFICERS PRESIDENT
DIRECTORS
David Hughes
Jerry L. Bowles
VICE PRESIDENT Adam Haney
Rolf Crocker Sarah Dunia John Gill, Esq.
TREASURER
Mark Guithues, Esq.
Karl Lofthouse
David Levy, CPA
SECRETARY Sandra Long
Diane Rossi Katrina Solomatina, Esq. Wanden Treanor, Esq.
EXECUTIVE DIRECTOR
David Zepponi MEMBER ENGAGEMENT MANAGER
Hannah McAuley hmcauley@echo-ca.org MEMBERSHIP & SALES ADMINISTRATOR
Jacqueline Price jprice@echo-ca.org The Echo Journal is published bi-monthly by the Executive Council of Homeowners (Echo). The views of authors expressed in the articles herein do not necessarily reflect the views of Echo. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Acceptance of advertising does not constitute any endorsement or recommendation, expressed or implied, of the advertiser or any goods or services offered. We reserve the right to reject any advertising copy.
Echo membership benefits you and your HOA. Join today! OUR MISSION STATEMENT Fostering a better quality of life in community associations through education, advocacy and networking.
Š 2020 Executive Council of Homeowners (Echo) All rights reserved. Reproduction except by written permission of Echo is prohibited. Echo member information is never released to any outside individual or organization.
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Join us virtually from anywhere | September 25-26, 2020 Registration Begins Mid-August! Learn to run your association better. Take advantage of these unique learning experiences, including live Q&A sessions with HOA experts. Visit our exhibitors in Echo’s virtual Expo Hall and win prizes – from wherever you are! Have your legal questions answered by industry experts for the price of admission! Log on to the all-day session when it’s convenient for you. HOA attorneys will be available Saturday to provide answers for attendees. Attend and learn on-demand, when it’s convenient for you. You will have access to all the programming and exhibitor booths for 28 days after the live 2-day conference. Learn what to expect from a community manager by visiting The Managers’ Lounge: A place for you to meet and have a casual chat with community managers and learn from their experience.
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July/August 2020 | ECHO journal
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Features 10
10
The Laws of the Land BY WILLIAM M. SCHERER, ESQ. & LOUIS J. SARMIENTO, JR., ESQ.
16
Don’t Lose Sight of the Big Picture: HOA Construction Projects During the Pandemic
BY REGAN BROWN & BILL MANN
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Investing in Good for the HOA Community
BY ROLF CROCKER, AMS, CAMEx, CCAM
26
The Self-Managed Association: Getting Governance Back on Track
BY JOHN CLIGNY, AMS, CAMEX, CCAM-HR
Happenings 4
2020 Echo HOA University & Expo
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Executive Director’s Message: Zoom into the Future!
BY DAVID ZEPPONI
8
Learn More About the Virtual Experience at Echo’s 2020 HOA University & Expo
29
The Legislative Session Continues
30
Welcome to Our New Professional Service Providers
32
Index of Advertisers
34
Echo Bookstore Offerings
23 26
ECHO journal | July/August 2020
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EXECUTIVE DIRECTOR’S MESSAGE
Raison d’Etre – The Reason for
What a beautiful phrase, raison d’etre (reason for being). I every board member should consider and collectively agree
Zoom into the Future! The phrase engenders humanity. The words roll from one’s
stark business senses and adds the element of humanity t
The coronavirus pandemic is horrible and At first this was a challenge to many but,evaluation; as a board: Strategic planning, execution and mi challenging, driving wedges in society that are time went by and the need to conduct business management. The business realities should be reflective of shattering norms – so too, for common interest became more acute, electronic board meetings common values of individuals in the community. developments. For all the bad, some good will found a new place in HOA management. For come. The acceleration of the use of technology HOA boards, the availability of remote meeting Communities are imperfect – because they are made of huma in HOAs to communicate with homeowners and platforms solved the problem of conducting relating. Humans using. living. Basically, humans b conduct business is one such good. business. For manyHuman homeowners, the technology being human, forget offeredcommunities new opportunity sometimes for involvement. It has that manag In the early days of the shelter-in-placeestablish orders, given them a greater understanding of the roleIn a sense, t norms for a successful community. HOA boards and managers struggled with how to of association leadership and a glimpse into the the community. Its purpose is to establish order and elev hold board meetings that met the requirements HOA board and association management. progress and pace by establishing norms and constraints of the law. The Davis – Stirling Act requires that a to benefit all. location must be made available to homeowners Of course, learning a new technology has for a legitimate meeting. Industry attorneys, some drawbacks such as access to computers It seems apparent that board leadership must understand managers and board members determined that it and understanding new meeting software owners order to orchestrate sense of community and g is best to hold the meetings virtually, keeping the inapplications. It is also a bit a more challenging to spirit of the law, while protecting and respecting “think virtually” sovalues. boards have to learnof how and protect community Thehad purpose a board, ther the health of residents and legal order of build state community to effectively communicate using the technology. based on common values for the good of authority to shelter-in-place. The answer was the Noticeably, however, the technology requires onset of remote meetings using technological boards and participants to be better organized It takes time to orchestrate a community. It takes time to kno platforms such as Zoom or GoToMeeting.time to listen and prepared to get their points across. to the voices and build a vision reflective of c Meeting duration noticeably dropped and, as
and you will be more effective as a board member and sati your reason for being on the board. Continued on page 32
ECHO is committed to helping homeowner boards and resid ing and advocacy – this is our “raison d’etre”.
Good luck and stay safe,
Sincerely,
David Zepponi Executive Director
ECHO EXECUTIVE DIRECTOR
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July/August 2020 | ECHO journal
Click here to register: www.echo-ca.org
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FREE Access to Online Video Conferencing for HOA Board Meetings During the coronavirus isolation, you are not alone. Echo is working hard to build resources to assist you and your HOA during this difficult time. Members can log onto the Echo website and register for FREE Zoom video conferencing for HOA board meetings. Not an Echo member? Join today and have quick access to this easy- to-use service. Look for solutions through the Echo We Care campaign. It was created because at Echo We Care about you! Members can log on to the Echo website to get instant access and schedule a meeting!
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July/August 2020 | ECHO journal
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July/August 2020 | ECHO journal
BY WILLIAM M. SCHERER, ESQ. & LOUIS J. SARMIENTO, JR., ESQ.
The Laws of the Land
E
very level and layer of government issues an abundance of new laws, regulations, guidelines, and executive orders (collectively, “laws”). The issuance of laws has only accelerated these past few months due to the COVID-19 pandemic. A few laws may even contradict one another, causing many to ask the question: “Which law must we follow?” If the state says one thing, the county another, and homeowners/ community/owners association’s (“association”) governing documents say something entirely different, what is one to do? What about the situation in which the Federal and state governments permit an activity, but a local government prohibits or otherwise regulates that activity? Generally speaking, the order of priority (from highest to lowest) is Federal law, state law, local (i.e., county and municipal) law, and association governing documents. Federal law sets the foundation, state law builds upon that foundation, and so forth. The law becomes more specialized and nuanced along the way. The interplay among the laws of the different bodies of government is as follows:
• If Federal law is: a) silent about a subject matter, b) delegates the authority to regulate that subject matter to the states, or c) does not preempt state law concerning the subject matter, then a state government may regulate that subject matter. Continued on page 12
GOVERNING DOCUMENTS
LOCAL LAW STATE LAW FEDERAL LAW
ECHO journal | July/August 2020
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The Laws of the Land Continued from page 11
• If California law a) does not regulate that subject matter, b) delegates authority, or c) does not preempt local ordinances, then the counties may do so.
• If the county in which an association is situated does not regulate the matter, then the city or town in which that association is situated may do so.
• Lastly, if none of the other levels of government regulate an action, then an association may do so.
Federal Law – Supreme Law of the Land Any article that addresses the FEDS layers of laws begins with the US Constitution Supremacy CALIFORNIA Clause. Article VI of the US Constitution states: “This COUNTY Constitution, and the CITY Laws of the United States which ASSOCIATION shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” (Emphasis added) As in all aspects of life in these United States, the U.S. Constitution, federal statutes, and federal regulations (collectively, “federal law”) control associations and their respective boards and members. A few of the more well-known federal laws that apply to associations include the Americans with Disabilities Act of 1990, Fair Housing Amendments Act of 1988, and Fair Debt Collection Practices Act. California laws apply to activities in this state, unless the state’s laws are preempted by federal law. Federal law preempts state laws through either express preemption (i.e. a valid Federal statute states that it preempts the state’s laws) or implied preemption – the state’s laws are inconsistent with federal law or federal law occupies the field such that there is no room for the state’s laws. 12
July/August 2020 | ECHO journal
State Law – General Laws Uniformly Applying to Californians After federal laws, California’s laws make up the next level of the metaphorical pyramid of laws applicable to association members. Echo Journal readers are, no doubt, aware of at least one major body of California law that applies to associations – the Davis-Stirling Common Interest Development Act (the “Act”). In addition to the Act, the Corporations Code, which includes titles that apply to corporations or unincorporated associations, and other state laws and regulations affect associations and their members. In recent months, Californians are also becoming more familiar with another aspect of state law that controls our daily life: our Governor’s executive orders. Taken all together, the state’s laws are key parts of what is referred to in this article as “state law.”
Local Law – Other Ordinances and Regulations Not in Conflict with General Laws California Constitution, Article XI, Section 7 states, “A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.” “General laws” are defined to be those laws that apply statewide and deal with matters of statewide concern. The general legal preemption principles between state law and a county’s and municipality’s laws (“local law”) are as follows: local laws that conflict with California’s laws are void. A conflict exists when the local law duplicates, contradicts, or enters an area fully occupied by state law, either expressly or by implication. (Sound familiar?) So, if there is an area of regulation at the local level that is not preempted by state law or federal law, then the local law may stand. Of course, someone just might challenge the local law when that law is enforced against them, but that is a topic for another edition of the Echo Journal.
Governing Documents – An Association’s Own Laws As previously mentioned, federal law, state law, and local law are higher in priority than an association’s governing documents. Simply put: if there is a conflict between the laws and governing documents, the laws prevail. Otherwise, the governing documents could regulate activities within
As in all aspects of life in these United States, the U.S. Constitution, federal statutes, and federal regulations control associations and their respective boards and members. a common interest development. Even among association governing documents, there is an order of priority, which in order of highest to lowest is: CC&Rs, Articles of Incorporation, Bylaws, Operating Rules, and Policies and Procedures.
Short Term Rentals To provide an example of the interplay of laws, consider a subject for which multiple levels of regulations concerning that subject operate among one another: the rental of all or part of a home for 30 days or less (“short-term rentals”). To the best of our knowledge, federal law is generally silent regarding short-term rentals. State law requires hosting platforms to post a notice on the hosting platform to non-owner occupants listing their residences for rent, warning that such shortterm rentals may violate the non-owner occupant’s lease or contract, and requiring an affirmative acknowledgement that the occupant has read the notice. Some local governments place restrictions, impose registration requirements, or require that taxes be paid on short-term rentals, while others prohibit short-term rentals completely. At the association level, governing documents could ban, place conditions on, or permit short-term rentals. For the sake of example, let us presume: 1) Federal law and state law do not prohibit shortterm rentals; 2) Local government permits short-term rentals, but requires hosting platforms to collect a tax on each transaction on behalf of the government; and 3) An association’s governing documents ban all renting of units for any term shorter than one year. Even though the federal, state, and local governments allow short-term rentals, an owner in that association would be prohibited from renting their unit for 30 days or less because of the governing documents. In this example, the different levels of law provide a layer of regulations that coexist.
Use of the Association Pool During a Pandemic
A topic currently on the minds of many association boards as Summer hits midstride and temperatures rise is the association pool. Members of associations that have a common area pool have likely already asked themselves whether their association could allow members to use the pool considering the various regulations relating to pool use and efforts to keep everyone healthy. State law effectively required associations to close their pools in March 2020. As a result, counties either explicitly or implicitly prohibited the use of association pools during this COVID pandemic. The state and some counties have recently started permitting pools to reopen. At the time of writing, federal law does not prohibit operating public pools. Instead, the Centers for Disease Control and Prevention (“CDC”) provide guidelines for public pools, including pools operated by association. Those guidelines provide lists of ways pool owners can promote behaviors that prevent the spread of the virus and directs pool operators to consult with local health departments. While state law previously banned the use of public pools, the California Department of Public Health and the State of California Department of Industrial Relations currently provide guidance for fitness facilities, including pools, which must be implemented by Continued on page 14
ECHO journal | July/August 2020
13
The Laws of the Land Continued from page 13
county health officer approval. With federal and state law allowing counties to determine whether swimming pools should be reopened, counties and associations are left to decide whether to permit an association pool to reopen. Some counties have already approved the reopening of association pools. If the county has not yet implemented pool reopening guidelines and has not approved reopening public pools, then an association in that county would not be permitted to reopen its swimming pool. Check with the county’s department of public health to see what the applicable protocols are to reopen and operate public or shared residential pools. Heads-up: some counties consider association swimming pools as “public pools” and others treat them as private or residential pools. Even assuming that the county allows for association pools to reopen while following applicable procedures, an association could decide not to reopen its pool immediately depending upon how its board assesses the risk.
Conclusion The intersection of federal law, state law, local law, and governing documents is rife with conflict among the governing bodies. There are also instances in which laws coexist, creating a figurative tapestry of laws in which state laws are woven into local law and embellished by obligations within an association’s governing documents. Consult with your association’s counsel to navigate the layers of laws. William M. Scherer, Esq., is a founding partner of Scherer Smith & Kenny LLP, a business, real estate, and litigation firm. He has advised homeowners associations, stock co-ops, and entrepreneurial companies for over 30 years.
Louis J. Sarmiento, Esq., is a real estate and business law attorney at Scherer Smith & Kenny LLP, where he advises homeowners associations and stock co-ops, as well as association members and other real property owners. For information, please visit www.sfcounsel.com.
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July/August 2020 | ECHO journal
You’re a volunteer. You deserve some help. Lead Confidently. California laws governing homeowner associations constantly change and it’s tough to stay informed and educated. Echo helps more than 7,000 board members approach every board meeting with confidence.
Become an Expert Board Member. We offer short training seminars throughout California, jam-packed with helpful guidance and timely advice. Most of our events are free for members, because education should be expert, not expensive.
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For more information visit www.echo-ca.org ECHO journal | July/August 2020 15
As the stay at home orders have begun
beginning, many associations would like to
What does the new normal loo
Don’t lose s
HOA Constru During the
BY REGAN BR
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July/August 2020 | ECHO journal
n to be lifted and life in the new normal is
o resume or start a new construction project.
ok like in the construction world? Continued on page 18
sight of the
uction Projects e Pandemic
ROWN & BILL MANN
As the counties lift restrictions on construction, new job site guidelines have been mandated and there are generally two different scenarios which will be covered. The importance of careful and current review of the county requirements cannot be stressed enough, especially as the guidelines change quickly. Many health departments adopted the same guidelines and construction was allowed to restart. The San Francisco Bay Area counties and Sonoma adopted a policy, referred to as “Appendix B” which issues different requirements depending on the size of the project. Projects where work is being conducted on 10 or fewer units are considered “small jobs” and have a required protocol like the rest of California county constraints for all of jobs. The Bay Area and Sonoma counties
also have a separate policy for large projects of 11 units or more. To clarify the classification of a project, here are a few examples: 1. The project consists of a 100-unit HOA, but the work is only in one unit. This would be classified as a small job. 2. The project is an exterior painting project on a 50-unit community made of 5-unit buildings. This would be a large project since the total number of units under the painting contract exceeds 10 units.
So, What are the Requirements? For “small projects” in SF Bay Area, Sonoma and “all projects” in the remaining counties the requirements are as follows. (Remember to check with the county for up-to-date guidelines). ECHO journal | July/August 2020
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Don’t Lose Sight of the Big Picture Continued from page 17
As the counties lift restrictions on construction, new job site guidelines have been mandated and there are generally two different scenarios which will be covered. The importance of careful and current review of the county requirements cannot be stressed enough, especially as the guidelines change quickly. Many health departments adopted the same guidelines and construction was allowed to restart. The San Francisco Bay Area counties and Sonoma adopted a policy, referred to as “Appendix B” which issues different requirements depending on the size of the project. Projects where work is being conducted on 10 or fewer units are considered “small jobs” and have a required protocol like the rest of California county constraints for all of jobs. The Bay area and Sonoma counties also have a separate policy for large projects of 11 units or more. To clarify the classification of a project, here are a couple examples: 1. The project consists of a 100-unit HOA, but the work is only in one unit. This would be classified as a small project.
2. The project is an exterior painting project on a 50-unit community made of 5-unit buildings. This would be a large project since the total number of units under the painting contract exceeds 10 units.
So, What are the Requirements? For “small projects” in the San Francisco Bay Area, Sonoma and “all projects” in the remaining counties the requirements are as follows: (Remember to check with the county for up-to-date guidelines). • Designated COVID-19 supervisor on-site fulltime • Protocol plan in place on site • Training of all employees • Signage in English and Spanish • Daily reporting including visitor logs • Daily screening of employees • Social distancing • Alternate entries from public • No gatherings for breaks or eating • No microwaves or shared coolers, drinks, etc. • PPE, non-medical grade – masks, gloves, eye protection • Stagger trades
While some protocols will certainly extend schedules and increase costs, items like full containment for interior work and no carpooling may require some work to be postponed until the pandemic is over. 18
July/August 2020 | ECHO journal
• Should not share tools or must disinfect between use • Handwashing facilities at multiple locations • Sanitize handwashing stations, restrooms or other enclosed workspace or high touch areas • Water now must be in single serve containers (bottled) • Interior work requires full sealed containment of work area with daily sanitizing • Daily visitor log • Posted notices in multiple locations • Carpooling only if it is your only transportation to work, or from same household
For “Large Jobs” in the San Francisco Bay Area and Sonoma Counties under Appendix B. These have the same protocols as small jobs including: • Daily COVID-19 safety meeting • Daily site inspection • Temperature checks of crew • Sanitize Job Site in the AM/PM • Check point signage • Decontamination area set up in yard • Job site specific protocols • Allow time for proper decontamination • Alternate entrance to Job site when possible • Daily briefings • COVID-19 Compliance safety officer with posted name and number • Remediation plan in case of contamination • MUST CONTRACT WITH A THIRD PARTY JOBSITE SAFETY ACCOUNTABILITY SUPERVISOR (JSAS): – Minimum 30-hour OSHA card – Written assessment every 7 days – Submit compliance to the county – Authority to stop work Job sites in the South Bay Area have been closed due to COVID-19 outbreaks among the crew members. It is important to understand that the authority to close a site is to protect both the construction worker and the residents of the community. While these protocols will certainly extend schedules and increase costs, items like full containment for interior work and no carpooling may require some work to be postponed until the pandemic is over. As construction workers have returned to work, parking for the crews at occupied residential sites has been difficult to impossible.
Before COVID-19, construction crews would arrive together at the jobsite in a 12-person worker van, carpooling to the jobsite. Due to distancing rules, workers now must drive single vehicles to the jobsite unless it is their only means of transportation, and a maximum use of 12 parking spots. With HOA residents at home sheltering in place, empty parking spaces are few and far between. The addition of the crew’s trucks creates a new parking issue for the HOA to overcome. Interior work has some of the same hurdles. Many residents are now working from home resulting in additional challenges. Contractors must work around home offices and often the work requires fully sealed containment. With home offices, interior work may be too much of a disruption or inconvenience to proceed. Noise levels of the work should also be considered. It is very difficult to be on a Zoom meeting while a crew is jack hammering outside a window. These types of repairs may need to be postponed until restrictions are lifted and residents go back to work, or at least an increase in communication to the residents to communicate more clearly the type and necessity of the work and to set expectations.
Construction Costs Increase Due to COVID-19 Since 2016, there has been a sharp increase in the cost of construction. It has impacted our state and nation with increases as high at 17% in a single year. San Francisco was the single most expensive place to perform construction in both 2018 and 2019 with many Bay Area communities not far behind. The ongoing housing shortage stimulated construction growth creating a fast track environment in California. Now in 2020, the pandemic has arrived with an entirely new set of concerns. Construction is still facing the same problems with the original trade issues, labor shortages and high material costs, but now also unique circumstances creating new costs directly affecting projects. Prior to the COVID-19 pandemic there were problems procuring materials due to complex trade agreements, high demand of materials for booming commercial construction, disaster relief & preparation, and new residential projects. Additional difficulties included severe labor shortages and escalating wages. At the time the shelter in place went into effect, unemployment was at an all-time low of 2.9%, the lowest since 1969. Continued on page 20 ECHO journal | July/August 2020
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Don’t Lose Sight of the Big Picture Continued from page 19
The pandemic has created havoc in all areas of business, but especially vulnerable to financial burden has been small resource companies, that regardless of government financial infusion many are simply not surviving requiring contractors to go elsewhere to fulfill their
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July/August 2020 | ECHO journal
contractual obligations. This along with the many strict requirements of the new COVID-19 safety policies, have now put budgetary constraints on existing projects, with many of those additional costs being passed through to the associations including those preparing to bid new work. This has led many boards to consider the prospect of “waiting until
this is over” vs. pursuing existing project plans. First, the evidence to wait from a cost analysis perspective, demonstrates it is not a great idea because the trend for the past 5 years has been a steady increase in costs both material and labor for many of the reasons listed above. Boards should expect the COVID-19 safety practices costs to continue. This will also create impacts on the overall construction schedule. For example, if the project included 10 workers for 12 months, adding 20 minutes a day for COVID-19 safety compliance the added labor hours alone would increase approximately 3 weeks to the schedule. This does not include the delay of materials and sub-contractors that may also impact the schedule. Depending on the size of and complexity of the project, cost increases can range anywhere from 3-10%. Additionally, due to the delays of COVID-19 in early spring, many contracts that were signed and allocated still need to be completed. This will push the construction for new projects well past the typical summer months leaving the projects delayed into next year. It also appears that the labor force may not be as strong as it was at the time of shut down. This will continue to fuel the shortages that are already in place. Employers are also taking this opportunity to change out poorly skilled employees. So, should a project be postponed until the pandemic is over? It really depends on whether the project is for “interior or exterior” repairs, whether homeowners are prepared and ready for the project, or if the project can be “safely” postponed. If the decision impinges on timing
of the work and whether costs will be better now or later, boards can expect general construction costs to continue to climb and that COVID-19 will continue to have a significant impact on project budgets into the foreseeable future.
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Detailed on-site inspections, inventories and component descriptions Meets or exceeds all requirements and disclosures of California Civil Code 1365 30 year funding model projections Includes color photos of components 21 years of reserve study experience
Call today for a free proposal 800-500-8505 or FAX 800-500-7305 Email info@ara-llc.com Visit us at www.ara-llc.com 4040 Civic Center Drive, Suite 200 San Rafael, CA 94903
ECHO journal | July/August 2020
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July/August 2020 | ECHO journal
REFLECTIONS BY ROLF CROCKER, AMS, CAMEx, CCAM
Investing in Good for the HOA Community
I
n 1964, there were 500 “homes associations� in the United States according to the Urban Land Institute Technical Bulletin No. 50. The bulletin was commissioned by the Federal Housing Administration to provide developers with a roadmap for a new housing solution in the United States. By 1970, there were more than 10,000 of these novel developments, now called Homeowners Associations (HOAs), across the country with a large percentage located in California. Nearly ten years later, on June 12, 1973, the Executive Council of Home Owners (Echo) was formed. The first HOA association in the state of California, it was organized to provide education, advocacy, and networking exclusively for homeowners in HOAs. Over the years, Echo worked diligently to guide California legislation and assure HOA homeowners had a voice in the capitol, especially when the landmark Davis Stirling Common Interest Development Act was enacted. The Act provided much needed sideboards around the governance, operations, and management of HOAs Continued on page 24 ECHO journal | July/August 2020
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Investing in Good... Continued from page 23
and was considered landmark legislation in the housing world. With the Act, management and boards were held accountable to communities, professionals, and others. A certain set of enforceable rules were established to provide clarity and authority for boards, homeowners, and professionals. Echo saw the importance of helping its HOA boards and homeowner members understand their legal and fiduciary responsibilities by providing forums, resource materials, two periodicals, and insight into best practices for a volunteer HOA leadership.
The “At Echo, We Care” campaign was launched out of a need to serve our communities without hesitation or expectation during the coronavirus pandemic. Without question, Echo has been there for HOA boards, engaged homeowners and communities. Because of its unique focus on the HOA community members, Echo has steadily expanded throughout
the state and across the country. The influence is unmistakable as we have seen our website traffic and online Live Events receive a stable following from homeowners in southern California and as far off as North Carolina. As the industry matures and a certain structure and decorum is established, Echo also has adapted by focusing on building community within the construct of law. An example: The “At Echo, We Care” campaign was launched out of a need to serve our communities without hesitation or expectation during the coronavirus pandemic. Echo’s members are struggling, and “We Care” by offering free Zoom
Get the Most Out of Your Echo Membership. Update Your Board Contact Info Today! We don’t want you to miss out on all that Echo has to offer! It’s important that we have updated board member contact information to continue to provide you the best membership experience. Please take a moment and email us your current HOA board member names and email addresses. Questions? Please email us at update@echo-ca.org.
408.297.3246 | update@echo-ca.org | www.echo-ca.org 24
July/August 2020 | ECHO journal
board meetings, distributing management information for boards to deal with the COVID crisis, focused issues of Insight and the Journal helping communities in isolation and uncertainty, offering ongoing, socially responsibility education and forums via the internet. Echo continues to be a place to call for comfort and objective advice, focused on community for communities. So, here is the ask: If you are a homeowner, board member or volunteer leader, become an Echo member. Be part of the community that includes 1 in every 4 Californians. Professional Service Providers invest in something good – an ally that works and cares about you, this industry, and acts in a positive and meaningful way. With Echo you have a partner that will not just provide opportunities to market your services but will help you in your ongoing work making your experience, and theirs, more effective and fruitful. Now more than ever, we believe Echo is an important asset for homeowners and service providers to embrace, as we work to provide the most up-to-date information to help communities now and in the future. Echo is here to serve, help, and be your partner in education and resources, so you can make a positive difference in your communities. Please support and become a member of Echo today!
Rolf Crocker, AMS, CAMEx, CCAM is Principal and CEO of OMNI Community Management, LLC. He also serves on the Echo Board of
You’re a volunteer. You deserve some help. If you are a homeowner, board member or volunteer leader, become an Echo member. Be part of the community that affects 1 in every 4 Californians. Professional Service Providers invest in something good – an industry association that works and cares about you, this industry, and acts in a positive and meaningful way. In Echo, you have a partner that will not just provide opportunities to market your services but will help you in your ongoing work making your experience, and theirs, more effective and fruitful. Now more than ever, we believe Echo is an important asset for homeowners and business partners to embrace, as we work to provide the most up-to-date information to help communities now and in the future. Echo is here to serve, help, and be your partner in education and resources, so you can make a positive difference in your community. Please support and become a member of Echo today!
For more information on Echo membership visit www.echo-ca.org/membership or email jprice@echo-ca.org
ECHO journal | July/August 2020
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THE SELF-MANAGED HOA
Getting Governance Back on Track The last few months have been challenging for self-managed community associations, as boards of directors and committees, deal with curtailed meeting schedules, navigating online meetings, restricting common area usage, and deferring projects and governance. As communities emerge from the isolation and fear of the pandemic, its time to re-engage community members and get community governance back on track.
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July/August 2020 | ECHO journal
BY JOHN CLIGNY, AMS, CAMEx, CCAM-HR
Official responses to the coronavirus pandemic have taught some valuable lessons about governance. These lessons will outlast the virus, and shape how boards can more effectively govern their communities. Effective communication is the key to effective community governance, especially during a crisis. Community association governance is debated and determined at the board of directors level, but its implementation and consequences are felt and experienced by all community members. During the height of the pandemic, society was treated to non-stop briefings by federal, state, and local officials about the status of the pandemic and the effectiveness of mitigation measures. For the most part, people considered this valuable information and set aside activities, including work, to “flatten the curve.” As self-managed community association boards of directors begin to restart community amenities, activities, and meetings; effective communication to members will play a large part in successfully transitioning back to normal and reestablishing governance continuity. Boards must communicate with members often and
use a variety of delivery methods. Mail, posting in designated common areas, email, and posting on community social media accounts can be effective ways to inform community members about reopening strategies, and meeting protocols. Work to keep communication compact, concise, and on topic. THE POWER OF A COMMUNITY-WIDE APPROACH TO ENCOURAGE GOVERNANCE SUCCESS. Webster
defines “community” as “a group of people living in the same place or having a particular characteristic in common.” Webster also defines “association” as “a group of people organized for a joint purpose.” For community association members, the “characteristic in common” is membership in the legal entity described as the homeowner association and their “joint purpose” is defined in the association’s governing documents. Boards of directors must embrace governance objectives and practices that are inclusive of all community members, celebrate community diversity, ensure community financial sustainability, and engage members to share responsibility for common areas and the well being of community members. This is not “pie in the sky” and may be difficult for self-managed associations, whose boards of directors may confuse operational tasks, the running of the association, with governance. Community association governance asks first, “what do we want our community to be?” The coronavirus pandemic has provided a pause, a chance to rethink, reboot, and re-examine what’s best for the microcosm of society that is represented in our communities. Association governing documents, and rules are silent on conducting critical association activities during a pandemic. It may be prudent for the board to consider revising annual meetings, board meetings, and committee meetings practices to include pandemic contingencies. Voting and election rules should include provisions for conducting elections during pandemics. Boards may find it helpful to solicit members’ preferences and comments about reopening strategies and deferred projects. Continued on page 28 ECHO journal | July/August 2020
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The Self-Managed HOA Continued from page 27
The importance of evidencebased and informed decision making. Although the “science” of the pandemic is being hotly debated, there can be no debate about how the science impacted federal, state, and local decision making and influenced pandemic policymaking. It was not uncommon for officials to site medical professionals, scientific studies, and experts to validate decision making. In community association governance appealing to the evidence is called “sound business judgment” and forms the basis of the board’s indemnification in decision making. To put it formally: community association directors are presumed to act in good faith, on an informed basis, and in
the honest belief that the action taken (decision made) was in the best interest of the association’s members. This is a powerful principle that lies at the core of effective community association governance. As communities reopen and boards get back to business as usual, the temptation will be to dive into projects, plans, and decisions that were deferred or postponed. It may be more prudent to re-examine and reconsider these activities in light of the unintended consequences of coronavirus and stay at home orders to community members, and social and economic uncertainty. Data and evidence that informed board decisions in late February and early March may not be relevant today, or if still relevant,
(408) 345-4000 http://wm-llp.com We counsel: • Condominium Associations • Planned Unit Developments
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We provide general counsel to Associations including the following services: • Construction Defect and Civil Litigation • Dispute Resolution
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July/August 2020 | ECHO journal
• Governing Document Interpretation • Governing Document Revisions • CC&R and Rules Enforcement
may require a more patient, phased-in approach to ensure community-wide engagement and success. Boards may want to consider postponing non-critical maintenance and repair projects to prioritize common area maintenance that was deferred or canceled during the pandemic. Meeting with critical vendors and service providers may provide needed insight into requirements for reopening common area amenities. Large or small, self-managed community associations have been afforded a great opportunity to get community governance back on track. Community members will appreciate effective communication, a communitywide approach, and evidencebased, informed board decision making. John Cligny AMS, PCAM, CCAM-HR is a veteran portfolio manager and community association management executive. As co-founder of Association Consulting Group, John is a trusted advisor primarily focused on educating and advising community association board members on effective governance to promote a positive public opinion of homeowner associations and community management. John is a frequent speaker and panelist on a wide range of community association topics and issues.
The Legislative Session Continues! For the most up-to-date information, visit the HOA Advocacy section at the Echo website: www.echo-ca.org/hoa-advocacy
2020 is the second and final year of this legislative session. The list below contains new bills introduced this year. This list, and the impact of each bill, will change as authors amend the language in these bills and others.
Current Legislation
AB 2227 AUTHOR: Irwin SUBJECT: FDIC & Fidelity Bond Coverage STATUS: In Assembly Housing POSITION: Watch SUMMARY: Would require that association funds
transfers greater than $10,000 receive prior written approval from the board of directors, that association funds shall be deposited in an institution insured by the FDIC, and that the association maintains certain types and levels of coverage for its directors, officers, and employees. AB 3182 AUTHOR: Ting SUBJECT: Short Term Rentals STATUS: Passed Assembly. In Senate Housing POSITION: Watch SUMMARY: This bill would make void and
unenforceable any governing document that purports to prohibit the rental or leasing of any of the separate interests in a common interest development. It provides that an owner of a separate interest in a common interest development is not subject to provisions that effectively prohibit or unreasonably restrict the rental or leasing of any of the separate interests. The bill would not apply to a provision in a governing document that prohibits short-term rentals of 30 days or less. SB 182 AUTHOR: Jackson SUBJECT: Fire Retardant Roofs STATUS: In Senate Housing POSITION: Watch SUMMARY: Within a very high fire severity zone,
SB 969 AUTHOR: Wieckowski SUBJECT: Association Elections STATUS: In Senate Housing POSITION: Watch SUMMARY: Includes among the permissible reasons
for disqualifying a person from nomination as a member of a Board of Directors of a common interest development, if the person has served the maximum number of terms or sequential terms allowed by the association. Requires additional persons to be appointed and overseen by the Inspectors of Election to also satisfy the criteria of who may be an independent third party. SB 981 AUTHOR: Archuleta SUBJECT: Email Delivery of Documents STATUS: In Senate Rules POSITION: Watch SUMMARY: Would require an association to deliver
documents by email unless a member has not provided a valid email address. Requires an association to make a good faith effort to acquire member email addresses. Additionally requires an association of at least 50 separate interests to maintain an association website, with certain exceptions. SB 1340 AUTHOR: Wilk SUBJECT: Inspection of Decks and Balconies STATUS: In Senate Housing POSITION: Watch SUMMARY: Existing law requires an inspection of
exterior elevated elements and waterproofing in an association. This bill would eliminate the prohibition against the contractor performing the inspection from bidding on the repair work.
requires an association to allow an owner to use at least one type of fire retardant roof covering material that meets certain requirements as defined in the section and in the International Building Code. ECHO journal | July/August 2020
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July/August 2020 | ECHO journal
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Executive Director’s Message Continued from page 6
participants learned to better use the technology, meetings have become more streamlined. As a result, one significant positive occurred: Member engagement has increased as sheltered-in-place homeowners and non-resident homeowners have tuned into meetings to learn how the HOA works and benefits them. More community members now can join and participate, or simply listen and learn. They can do this from the comfort of their home or in a far-off land with a computer or mobile device and internet connection. It is very attractive to non-resident homeowners, homeowners who travel and to those who are more introverted or circumspect about attending open meetings. People will tune in and be involved.
Listening to the board and how it works, from home, removes much of the mystique and uneasiness that might be due to a lack of knowledge about the process or the players. An efficiently run virtual meeting not only allows business to be conducted, it allows members of the community to know and understand why and how decisions are being made by removing the perception of insular decision making. The solution found in virtual meetings should help boards make better decisions because of greater community involvement, more efficient communication of decisions, and the ability to better hear the voices of member constituents. In addition, when the community feels the board is listening, homeowners will want to be more engaged. Virtual
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meetings present an interesting tool to address community apathy and help educate and motivate future leadership and community volunteers. The trick is how to make this tool a permanent part of the management equation. It is up to the boards of directors to seize the opportunity and leverage the tremendous tools of technology and tech communication to jump into the future. Boards can apply these solutions to enhance improved community involvement and establish a new, transparent way to do business. Adopting virtual meetings as a standard provides a glimmer of hope in a period of unsettled and paralyzing negativity brought on by the coronavirus.
July/August 2020 | ECHO journal
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Condominium Bluebook 2020 Edition
020 The Echo Bookstore is your source2for valuable information on the duties Condominium of HOA board members. Find these and other informative publications, Greenbook including FREE downloads, online at www.echo-ca.org.
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This companion to the Condominium Bluebook is an in-depth guide to all aspects of association finances, including accounting methods, financial state20 20 ments, 20 20reserves, audits, taxes, investments and much Condominium Condominium more. Not for the accounting Greenbook Greenbook novice, this is a tool for the treasurer or professional lookMember Price: $17 Member Price: $17 ing for specific information about association finances. Non-Member Price: $25
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 Condominium more than 200 frequentlyCondominium asked questions about Bluebook Bluebook along with 2associations, 002200Edition 2 Edition succinct answers.
Non-Member Price: $25
This companion toto the This companion the Condominium Bluebook Condominium Bluebookis is anan in-depth guide toto allall in-depth guide aspects ofof association finaspects association finances, including accounting ances, including accounting methods, financial methods, financialstatestatements, reserves, audits, ments, reserves, audits, taxes, investments and much taxes, investments and much more. Not forfor the accounting more. Not the accounting novice, this is is a tool forfor the novice, this a tool the treasurer oror professional looktreasurer professional lookinging forfor specific information specific information about association finances. about association finances.
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Board Member Non-Member Price: $25 Handbook This publication includes the current Member Price:version $20 FREE of the Davis-Stirling DOWNLOAD Common Interest FORNon-Member Price: $25 Development Act, the MEMBERS This publication is the
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This Thiswell-known well-knowncompact compact guide guidefor foroperation operationofofcomcommon moninterest interestdevelopments developments ininCalifornia Californianow nowincludes includesaa comprehensive comprehensiveindex indexofofthe the book and containing book andaachapter chapter containing Construction Defect Claims more morethan than200 200frequentlyfrequentlyMember Price: asked $19.95 about askedquestions questions about associations, along associations, with Non-Member Price: $25 alongwith succinct succinctanswers. answers. faults. It’s New buildings can conceal extensive a board’s worst nightmare—rainstorms damage buildings and bring owner complaints. Is legal action necessary? With this new book, you’ll learn about the resolution process for construction problems, and how to handle complex claims.
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Constructiondefect defectlitigation litigationcan canbe beconfusing, confusing, Construction A step-by-step guide to the rules for meetings expensiveand andfraught fraughtwith withlegal legalpitfalls. pitfalls.This This expensive of your association, the current and official eye-openingguide, guide,written writtenby byaccomplished accomplished eye-opening manual adopted by most organizations to govconstruction-defectattorneys, attorneys,isisan anessential essentialtool tool construction-defect ern their meetings. This guide will provide many forboard boardmembers memberswho whoneed needtotounderstand understand for meeting procedures not covered by the associathelegal legalprocess. process. the tion bylaws or other governing documents.
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ECHO journal | July/August 2020
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We’re Here to Support You, Your Management Team and Your HOA Clients Lead Confidently. Our goal is to help managers and boards work better together. We know that management companies wear two hats: professionals trying to grow their businesses and educators who guide and inform their HOA clients. Our Management Membership helps management companies market their services directly to HOA boards and provides resources and opportunities for managers to educate board members about best practices and how to work cohesively as a board in the best interest of the community.
An Educated Board Helps to Make HOA Management Easier. A simple fact: it’s easier to work with an educated and informed HOA board. Echo education helps board members better understand and differentiate their role from their manager’s role. All board members and homeowners from the communities you manage are encouraged to attend our events – whether they are in-person or online. Register a board member today and make your job easier!
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July/August 2020 | ECHO journal
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