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connect A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI
ISSUE TWO 2017
IN THIS ISSUE Effective Communication Options in the Digital Age Reducing Summer Pool Closures Is There A Security Obligation? Hey, You Can’t Pray Here! Requests for Religious Meetings in the Common Area Governor Lifts Drought Emergency in Most of California Effective Communication Options in the Digital Age: In a Nutshell!
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connect A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI
www.cai-grie.org
OFFICERS
Table of Contents
Jeremy Wilson, MBA, CCAM, CMCA, AMS, LSM, PCAM ........ President Associa-PCM Robert Serdoz......................................................................President-Elect Elite Pest Management, Inc. Linda Cooley........................................................................ Vice-President Rosetta Canyon Community Association Chet Oshiro................................................................................ Secretary EmpireWorks Phil Hakopian, CIRMS..................................................................Treasurer Cornerstone Commercial & Personal Insurance Services, Inc. Dana Mathey, CMCA, AMS, PCAM................................... Past-President FirstService Residential BOARD DIRECTORS
Features 4 Effective Communication Options in the Digital Age
25 Is Your Reserve Fund Adequate?
By R. Chris Branuelas
By Kevin Leonard, RS
8 Reducing Summer Pool Closures
By Chris Bostrum
Adam Armit........................................................Park West Tree Care, Inc. Jackie Fromdahl.....................................................Painting Unlimited, Inc. George Gallanes, CMCA...................................... Sunnymead Ranch PCA Bob Harvey, CMCA...............................................................Associa-PCM
10 Is There a Security Obligation?
Valerie Reyes.......................................................Villa Park Landscape, Inc. Christy Towner-Quesada, CMCA........................... FirstService Residential CHAPTER EXECUTIVE DIRECTOR DJ Conlon, CMCA MEMBER RELATIONS COORDINATOR Ginny Aronson-Hoke ADMINISTRATIVE ASSISTANT Elda Pfitzinger-Thomas
7 President’s Message
By Robert M. DeNichilo, Esq.
By Jeremy Wilson, MBA, CCAM, CMCA, AMS, LSM, PCAM
18 Hey, You Can’t Pray Here!
11 Editor’s Link
Brian Henry.........................................................................Park West, Inc. Pat King..............................................................Solera Oak Valley Greens
Departments
By Jonathan R. Davis, Esq.
21 Governor Lifts Drought By Brittany A. Ketchum, Esq.
By Brittany A. Ketchum, Esq.
14 Monte Carlo Night Photos 21 Legal Spotlight (New)
22 Effective Communication Options in the Digital Age: In a Nutshell! By Linda Cooley
EDITOR IN CHIEF Brittany Ketchum, Esq..........................................Beaumont Gitlin Tashjian PUBLICATIONS COMMITTEE Jeff Baker, AMS.............................................Packard Management Group Chris Branuelas.........................................Rainbow Canyon Villages HOA Linda Cooley...............................Rosetta Canyon Community Association Kevin Leonard............................................................ Association Reserves DESIGN & PRODUCTION Kristine Gaitan....................Rey Advertising & Design/The Creative Dept. All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Connect or the Community Associations Institute–Greater Inland Empire Chapter. Information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting or other professional services and should not be relied upon without the consultation of your accountant or attorney. Connect is an official quarterly publication of Greater Inland Empire Chapter of the Community Associations Institute (CAI–GRIE). The CAI–GRIE Chapter encourages submission of news and articles subject to space limitation and editing. Signed letters to the editor are welcome. All articles submitted for publication become the property of the CAI–GRIE Chapter. Reproduction of articles or columns published permitted with the following acknowledgment: “Reprinted with permission from Connect Magazine, a publication of the Community Associations Institute of Greater Inland Empire Chapter.”
Advertisers All Counties Fence & Supply.....................10 Alliance Association Bank..........................10 AMS Paving, Inc..............Inside Front Cover Beaumont Gitlin Tashjian...........................17 Berg Insurance Agency, Inc.........................9 Cardinal Property Management................11 CBCI Construction....................................20 Elias Bros. Contractors, Inc........................13
Epsten Grinnell & Howell APC..................19 Fiore Racobs & Powers APLC...................24 Keystone Pacific Property Management, Inc.....16 Mutual of Omaha Bank............................24 NPG - Nelson Paving.... Outside Back Cover Steven G. Segal Insurance Agency, Inc.........17 Union Bank HOA Services...............Page 20
Copyright © 1998–2017 CAI-Greater Inland Empire Chapter. Advertising, articles or correspondence should be sent to: CAI-GRIE Chapter 5029 La Mart, Suite A • Riverside, CA 92507-5978 (951) 784-8613 / fax (951) 848-9268 info@cai-grie.org
The Greater Inland Empire Chapter of CAI hosts educational, business and social events that provide the Chapter’s Business Partners various opportunities to promote their companies’ products and services to Community Association owners and managers serving the Community Association Industry. It is expected that all participants in Chapter events — whether they be educational, business or social — will conduct themselves in a professional manner representative of their business or service organization so as not to detract from the experience of others seeking to benefit from their membership in the Chapter. CONNECT WITH GRIE • ISSUE TWO 2017
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Effective Communication Options in the Digital Age
H
istorically, associations relied heavily on printed and mailed newsletters to keep their members informed about events and board activity. However, printed newsletters can be challenging in several ways. Depending on the frequency they are published, printing and postage can become expensive. A printed newsletter may consist of several pages requiring lengthy revisions and agreement on content, delaying their delivery. The most difficult aspect of printed newsletters is the likelihood that a fair percentage of members may simply not take the time to read them. There are many other options for communicating in the digital age, but it is important to recognize the potential advantages and pitfalls they may represent. Associations should discuss the use and limitations of any avenue of official communication with managers and even legal counsel before utilizing a new method. Digital communications all offer one notable advantage – anything you communicate reaches your audience immediately. Instantaneous communication carries its own curse, however. Incorrect or hasty communications, no matter its source, cause, or intent, also reaches your audience instantly. Unlike a newsletter which takes time and review to create, print and mail, an email or social media posting costs little or nothing, and is very easy to post. Naturally, the temptation by individual board members to use it without adequate review or consideration is high. Consider the following hypothetical: Your association is midway through a capital project and members have begun reacting negatively to inaccurate
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rumors about the project’s scope or costs. Your board wants to set the record straight and inform the members. With a mailing, your board would take the time to thoughtfully craft a response and there would likely be review by your manager, subject experts, involved contractors, or legal counsel. With digital media, however, board members may be quite tempted to respond with a quick text, email or social media post, perhaps using language influenced by the heat of the moment. So how do you take advantage of the power of digital media without falling prey to its problems? Slow
BY R. CHRIS BRANUELAS
down! Develop and then strictly follow agreed processes requiring review and approval before posting anything from the board. A digital message should follow the same guidelines and rules your board would use for a mailed notice. Where appropriate, you should consult experts to evaluate the implications of your intended message. The goal is to communicate what the board specifically intends, using clear, precise wording to avoid confusion and potential liability. Each digital media venue also operates somewhat differently. The following highlights a few of the
advantages and disadvantages these options present.
Facebook’s main advantage is that it is widely used and uses networks of “friends” to spread information quickly amongst interested parties. It is inexpensive or free and with care, can be a means of effectively keeping a large portion of your membership updated. If your association creates a Facebook “page” and your members opt to “follow” it, they instantly receive notice of any new material (photos, video, text, documents, or event announcements) you post there.
It is important to recognize that Facebook’s success is based on “networking.” In many cases, any material one of your members approves of (“likes”) or responds to will be instantly shared with their friends, and so on. Many Facebook users have hundreds or thousands of friends who will see and may likewise share or respond to your content. You can see how information intended for a core group can quickly spread outside that target audience. Facebook offers a few important options you should carefully consider before starting an account or page. Continued on page 6 CONNECT WITH GRIE • ISSUE TWO 2017
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posts often escalate into emotional digital arguments. This is where unintended civil or legal liability can develop, especially if the page administrator fails to take timely actions to police your page’s content.
Websites
Effective Communication Options in the Digital Age Continued from page 5
The first is whether to restrict access to the page with a process of approving requests to join. This allows the administrator to control the immediate audience, but only to a degree, as an approved follower could “share” (or copy and paste) anything from your private association page to their own Facebook account or any other social network. The second is whether to allow followers to comment on the page itself. Without this option, the page is a oneway communication from the board to the members (and their friends) who opt to follow it. If the administrator allows members to post their own comments, someone may eventually post something unacceptable or inappropriate, such as an angry comment about the board’s actions or a verbal attack or accusation against another member. Such
For a small fee, your association can create a unique website with one or many linked web pages containing all manner of information your membership may find useful. Typical content would include information about your association, phone number contacts, and notices of events or board meetings. There is very little that cannot be posted on a web page, including downloadable copies of your bylaws, CC&Rs, and rules documents. It is possible to restrict access to your website, or portions of it, to members only by providing them passwords, but approved members could always copy and paste anything from your website to any other form of communication.
Your association can create an email account from many platforms such as Google, Microsoft, or a long list of other providers. Email can be as simple as building a list of participating member’s email addresses and sending. Optionally, you can pay to have a company manage your emails and their distribution. Like other digital media, it is important that you consider your members’ privacy. A member who agrees to
Safely Navigate the Many Options Digital Platforms Offer It is essential that your association first do the following: Discuss communication goals. Identify who your audience is, and who it is not, and take steps to limit your communications to that audience where possible.
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technical side of the site, consider hiring a professional web or social media contractor to advise you. Develop and rigidly follow a set of internal rules for drafting and reviewing every message that will be posted to your audience.
Identify subjects or items that are not appropriate for mass communication and recognize the liability of publicly posting anything confidential, derogatory or offensive. One question you should always ask is, “Are you okay with that being on the 6 o’clock news?”
Police your digital sites to ensure that your (and any other participant’s) messages are valid, correct and acceptable. Take immediate action to remove bad or unacceptable information.
Consult experts before choosing which digital outlets to use. If you are not extremely familiar with the
Be prepared to manage timely responses to your postings or emails.
ISSUE TWO 2017 • CONNECT WITH GRIE
receive emails from you will want assurances that your association will not share their email address or personal information with other companies or other members without their express permission. It is also important to recognize that email is a two-way street. If you send a “blast” email to your members, expect responses! Someone should be specifically tasked with responding to those responses and following up on the questions and concerns they may contain in a timely way.
Creating a Twitter account allows your association to “tweet” – a limited text message or photo that is posted to the online Twitter world instantly. You can opt to restrict who receives your messages but you may not be able to restrict your members from re-posting (re-tweeting) information publicly. This is instantaneous communication at its most basic with minimal control over your audience and their possible responses. Imagine starting a conversation with the entire world watching.
Nextdoor.com
Nextdoor.com is a social media site created to allow people living in geographic neighborhoods to post public and private text and photo messages across their (and optionally, other nearby) neighborhood. It is a useful tool for individuals to share information about crimes, events, items for sale, and the like. Board members may use this site personally and be tempted to post information related to the association, especially when neighbors ask association-related questions or makes comments. Since an association cannot (currently) be a “member” and the site will include non-members such as renters and past residents, it is
wise to limit messages about the association to simple notices such as meeting or event dates. When members want more information, it is generally best to point them to other sources, such as your association manager, or your web page for official information.
Summary
The diverse means of communicating digitally can be confusing and intimidating and it grows and changes almost daily. There is immense power in being able to communicate so easily with large audiences. But the responsibility to communicate with care and forethought must also grow to meet that ability. The last thing your association wants is to put something incorrect, confidential, or inappropriate into any form of communication, especially one with the power of “going viral” and being tomorrow’s big social media or news story. Digital or social media options should not be entered into lightly, but with adequate thought and care, they can give your association the means to communicate with a larger portion of your membership more effectively and at a lower cost than mailings. R. Chris Branuelas, President Rainbow Canyon Villages Homeowners Association.
PRESIDENT’S MESSAGE Jeremy Wilson, MBA, CCAM, CMCA, AMS, LSM, PCAM with Associa-PCM and 2017 CAI-GRIE Chapter President.
Greetings colleagues and friends. I am again honored to be given this opportunity to serve as your president this year. I must give thanks to our dedicated board of directors, committee chairs, committees and chapter staff for a LEGENDARY first six months of the year. The education sessions, events and activities have been second to none and world class. At National Conference last month we were once again recognized in front of our peers for our exceptional performance and growth. Well done LEGENDS! I encourage you, our membership, to get involved, benefit and learn from what this LEGENDARY chapter has to offer. Join me as we surge, with the wind at our backs, into the second half of the year. A full calendar of events awaits; all we must do is answer the call.
“Men make history and not the other way around. In periods where there is no leadership, society stands still. Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better.” Harry S. Truman
CONNECT WITH GRIE • ISSUE TWO 2017
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Reducing Summer Pool Closures
A
s our pool areas emerge from their winter slumber and all of the pre-season preventative maintenances, renovations, equipment repairs and replacements have been performed; there are still a few things to prepare for in order to have a seamless summer for the community association membership, the association manager and the pool service provider. Now that summer is in full swing, it’s still not too late to make sure everything goes off without a hitch! Closure prevention is a high priority for all and here are a few tips: Emergency Contact Information − Make sure all of the property management team has the correct emergency contact information for the pool service provider. The individual manager as well as the emergency on-call management staff should have the emergency phone number for the pool service provider. Verify now and make sure the 8 |
ISSUE TWO 2017 • CONNECT WITH GRIE
contact is available 24/7/365. Post management emergency contact numbers in the pool area as well. Most residents should have cell phones and can quickly report issues which can expedite the emergency response time and reduce the length of potential closure or repair time. Emergency Repair Authorization Plan − Many common emergency repairs for pools fall under $1000. Typical community association pool pumps, motors, filter components, heater repairs and chemical disbursement parts that may fail without warning can be purchased from distributors and installed within 24 hours. Parts distributors are open 6 days a week during the summer months to accommodate emergency repairs, so delays in the approval process can unnecessarily prolong pool closures. Set up an emergency approval plan with the community association board of directors so repairs can be approved and expedited
BY CHRIS BOSTRUM
quickly and pool closure lengths reduced. For those larger pools or splash plays that have big or specialty equipment, the purchasing of back up pump motors (over 3 horsepower), filter components or specific heater parts like specialty igniters and safety switches, may be the desired approach. Some of these may be special order parts that can take 2-14 days to obtain, thus leaving the pool closed for an extended period of time. Having these special needs parts already on hand can eliminate the long-term closure that can ruin everyone’s pool fun and raise the complaint load to management and board members, which is frustrating for all. Chemical Automation Systems − It’s never too late to get a chemical automation system installed. Typical installation time should be less than 4 hours per body of water for most systems. Chemical automation systems take real time readings of the pool water and administer chemicals based on the water’s true need. These systems address the 2 major components for proper water balance: Disinfectant (typically chlorine) and a pH component (typically muriatic acid). At times of higher swimmer load, like mid-day, the system administers more chemical and when the swimmer load is lower, like at night or the early morning, less chemical is dispensed. An even level is maintained and thus less up and down spikes in chemicals. This is not only safer for the community association users, but also reduces the chances of closure by the county health department for lack of proper chemical balance. Title 22 introduced more stringent health department chemical testing requirements, standards and closure standards. Pools are now being closed for levels that fall within much tighter
parameters than in the past. Parameters that cannot be achieved or maintained with erosion (tablet) feeders or timer based liquid chlorine only pumps can be calibrated. Contamination Closure Prevention − Lets face it, human waste contamination is one of the most common closure causes that occur with the pools during the summer season. Accidents will happen, but a more proactive approach to prevention is the best deterrent. One community association had one to three contamination closure events per week over the course of the summer. They did have onsite staff and working with their service provider a two-fold solution was put in place: Swim diapers and restroom breaks. Swim diapers were offered for free at the clubhouse located adjacent
to the pool. Pool monitors informed families with children of that age that swim diapers were available at no charge in the clubhouse. This nominal cost to the association was far below what they were paying out in emergency service calls and greatly reduced the levels of complaints to staff, management and board members. The other component to the reduction of the contamination closures was the implementation of restroom breaks. The pool was cleared for 10 minutes every one-to-two hours, to allow for a restroom break. Often a game or competition was initiated to get the pool cleared quickly to reduce this closure time and small prizes were awarded. These breaks became a source of fun and accomplished what hadn’t been seen before; a huge reduction in contamination closures. What was once a closure of one to Continued on page 10
CONNECT WITH GRIE • ISSUE TWO 2017
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Reducing Summer Pool Closures Continued from page 9
Is your Community a Legend in the Making? Have you seen your association pull together in amazing ways to build an even greater sense of community? We want to hear about it, so others can learn from your example. Go make a difference in your community and let us know how you change the world! Send us a story about how your association is building a sense of community, and be entered in a monthly drawing to win a Starbuck’s giftcard.
Monthly Drawing Giftcard Prize: $5 for a text-only submission and $10 if it includes a picture. You are eligible to win each month until your story is chosen, and you are ALSO eligible to win a $200 prize at the TOPS Awards in December. Email your stories to info@cai-grie.org
AAB_Innov_CAI-GRIE_HalfPg_Cardoza_with Bleed_031417.pdf 1 3/14/2017 10:08:51 PM
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three times per week from Memorial Day to Labor Day, was reduced to three closures for the entire season. The community was abuzz with a tremendous pool area positive experience and all staff, management and residents became more of a community in the process. All of the tips mentioned have one thing in common: Planning. Effective planning between the community association board, association management and the pool service provider can make for a positive summer experience for the entire association membership and help to reduce or prevent summer pool closures. Chris Bostrom is the President of 1 Stop Pool Pros California Division and is a member of the Greater Inland Empire CAI Chapter.
EDITOR’S LINK
S
ummer is upon us, and with it hot days, warm nights and unique challenges. Inside this issue of Connect, you will find tips for reducing summer pool closures to “beat the heat.”
Although we are facing a hot summer, at the time of publication, California is (for the most part) no longer in a state of emergency due to drought. With that said, please do not forget the many best practices for water conservation our contributors have provided in past issues of Connect. Brittany A. Ketchum, Esq., an associate attorney with Beaumont Gitlin Tashjian, has devoted her career to representing common interest developments. She can be reached at bketchum@bgtlawyers.com.
Our current issue is brimming with vital information I hope you are able to utilize in your communities. On behalf of the Connect Magazine Committee, thank you for your readership. The committee’s goal for the year has been to draw from the unique skills, backgrounds and experience of our Chapter members. As an integral part of our industry, we encourage our readers to get involved in helping us educate and inspire our readership. If you are interested in sharing your knowledge, please contact me to discuss contributing an article. If you have questions pertinent to your community and the industry as a whole, we encourage you to
submit questions for our new “Legal Spotlight” column. It is always a pleasure working hand-in-hand with board members, managers and business partners alike to educate and support associations by increasing awareness of the important issues facing communities today.
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CONNECT WITH GRIE • ISSUE TWO 2017
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Is There A Security Obligation? BY ELLIOTT MEIER
By Robert M. DeNichilo, Esq.
Failing to be aware can lead to unnecessary liability.
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D
oes a community association have a duty to provide for the security of the residents in the association? Well, as is often the case when you ask an attorney, the answer is: it depends. Generally speaking there is no duty for an association to provide for security. An association’s powers and duties are limited and primarily set forth in its governing documents, most notably in its bylaws and the CC&Rs. Rarely, if ever, would you find any language specifically requiring an association to provide for security as part of the associations duties. However, there are circumstances which could actually place that obligation on the association. Sometimes that obligation arises as a result of the board’s own actions. Other times it arises as a result of the factors and circumstances outside or inside the association which may be out of the board’s control. It is important for boards to understand what actions they might take which can give rise to that obligation, and what the board should be aware of regarding what is happening in the community and surrounding area so that the association does not inadvertently take on an obligation it does not have, and when it must take on the obligation regardless of whether the board wants to or not. Failing to be aware of these factors can lead to unnecessary liability. So what factors should be considered when determining if the association has any obligation to provide security? Let’s start with the external factors which could require the board to act and what actions a board should take in such circumstances. The leading case on the issue is a California Supreme
Court case, Frances T. v. Village Green Owners Assn., (1986) 42 Cal. 3d 490. In Francis T, the California Supreme Court held an association potentially liable to a tenant who had been raped by an intruder. The plaintiff had alleged that even though the association knew that the project was located in a high crime area and that crimes had been committed on the premises, it failed to provide additional exterior lighting, an omission that proximately caused the crime. The association also increased the likelihood of harm by ordering her to remove additional exterior lighting that she had installed, with the result that there was no lighting outside her unit on the night the crime occurred. The court stated that directors have frequently been held liable for negligent nonfeasance where they know that a condition under their control posed an unreasonable risk of injury, but then failed to act to prevent it. So, what should a board take from this case? That it cannot bury its head in the sand when there are circumstances that could be
dangerous, and the board can take some steps to provide some level of increased safety in the common area. If something happens, failing to have taken some action could lead to liability for negligence if it is foreseeable that the crime could occur. In the case of Francis T, the board knew the association was in a high crime area. It could have at a minimum provided increased lighting in the common area. What should a board do when it becomes aware of facts such as those in the Francis T case, that it was in a high crime area, that there had been break-ins into several units in the community? The first step should be to determine what is the extent of the issue? What types of crimes are occurring? How prevalent is it? Has it happened within the community? With those facts, if there is reason to believe some action should be taken, a security survey should be conducted. Is the lighting within the community adequate? Are there bushes or trees that should be trimmed or removed to allow for better visibility and
eliminate places where someone could hide or engage in some illegal activity? An expert should be consulted (not one who might sell security services of any kind to the association) to provide the board with recommendations as to what steps can and should be taken to address the potential issues raised by the circumstances in the community. The board should also consult with legal counsel and seek advice on the risk(s) at issue and what steps the board should take to minimize its liability. So what actions might a board take that imposes the responsibility to take steps to increase security when there otherwise might not be such an obligation? Generally, the association does not have liability for criminal acts committed by third parties. However, the board may do something which could create such a duty. As is often said in today’s society, words have meaning. If a board describes actions it takes as being taken to increase safety, or post “security cameras” or “security Continued on page 16
CONNECT WITH GRIE • ISSUE TWO 2017
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CONNECT WITH GRIE • ISSUE TWO 2017
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Is There a Security Obligation? Continued from page 13
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guards” the residents might take that to mean that the association is taking on the responsibly for providing safety and security. Residents might lower their guard or not take measures they might otherwise take in the belief that the association is taking care of security. If the association has created a reasonable expectation that it is providing security, it could be found liable if it fails to act appropriately in undertaking that effort. Regardless of how the potential for liability arises, associations would be best served in avoiding such language and instead remind the residents that the association does not provide security, that residents should take steps to provide their own security if they are concerned for their safety. This can be done as part of the rules and regulations, and even as part of the annual disclosure package. Doing so will help avoid the perception that the association is providing security for the residents, and lower the risk that the association will be found liable for failing to take security measures in the community. Lastly, remember to work with experts in determining if any actions should be taken and if so what those actions should be. Not only consult with security experts and legal counsel to determine the risk but also the association’s insurance provider. Insurance is the best last line of defense. Make sure that proper insurance is in place for all vendors, expert consultants, the board and association. Robert M. DeNichilo is a partner in the law firm of Nordberg|DeNichilo, LLP, and specializes in community association law. Robert is the founder of HOABrief.com where he is a frequent writer on a variety of community association topics, and is a regular contributor to industry and national publications including CAI Connect, CAI’s OC View, USA Today, Common Ground and Habitat Magazine. You can reach Robert via email at Robert@NDHOALaw. com
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Hey, You Can’t Pray Here! Requests for Religious Meetings in Common Area BY JONATHAN R. DAVIS, ESQ.
R
eligion, like politics, is a topic people typically avoid in polite company. It provokes emotion, elicits strong opinions, and can be deeply personal. As such, religion is a topic that can spark a great deal of conflict. Community associations are not immune from this struggle. We regularly receive inquiries from managers and board members asking how to handle religious issues in their communities. One of the most common inquiries is what to do about member requests to use common area for religious meetings and prayer groups. While community associations routinely get requests from members to use common area for group meetings, associations are often particularly concerned about the ramifications of religious meeting requests because of the controversy such requests can engender. Will the membership be upset that religious meetings are being held in common area? Will chaos erupt if we grant the
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request despite vocal opposition on the topic at the last board meeting? Can we just ban religious meetings in general in order to avoid the issue altogether? Will we be sued for religious discrimination if we deny the member request? The simple answer to the last question is: “Yes, you can be sued.” In evaluating religious meeting requests, associations must keep in mind the requirements of California’s Unruh Civil Rights Act (“Unruh Act”) and Fair Employment and Housing Act (“FEHA”). The Unruh Act and FEHA both prohibit arbitrary discrimination by community associations based on religion (amongst a variety of other factors based on personal beliefs, background, and other personal characteristics). The Unruh Act expressly guarantees to all persons in the State of California, the “full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind
whatsoever” “no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation.” (Civil Code Section 51(b)). Similarly, the FEHA expressly states that “the practice of discrimination because of … religion… in housing accommodations is declared to be against public policy.” (Government Code Section 12920). Prohibited acts under FEHA include the provision of inferior housing terms, conditions, privileges, facilities, or services. If an association’s decisions and policies are applied uniformly to all members regardless of race, color, or religion, or other protected classification, such policies should be valid when tested against the Unruh Act and FEHA. If, however, an association refuses access to housing or facilities based upon a belief that an entire class may present a greater problem than other groups, such policy is likely in violation of both the Unruh Act and FEHA. For example, in situations where an association bases a policy or decision not to allow a religious group to use common area for meetings because of a concern that it might upset the rest of the membership, an association may be in violation of these laws. Such a policy prohibiting religious groups from using common areas for meetings when other groups are allowed to do so violates the Unruh Act and the FEHA because the policy restricts access to common area facilities based upon a classification, religion, which is explicitly protected under both the Unruh Act and FEHA. Even if a specific religion is not listed in the policy, the fact that religion is used to determine whether a group’s use is appropriate is sufficient to place an association in violation of these Civil Rights laws. Associations should carefully
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CONNECT WITH GRIE • ISSUE TWO 2017
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Hey, You Can’t Pray Here! Continued from page 19
consider the legal ramifications of policies and decisions regarding the use of common area for religious purposes. When drafting a policy about use of common areas by residents, associations should focus on content-neutral issues like noise, hours of operation, and clean-up while steering away from policies that single-out specific groups such as religious organizations. Associations with questions or concerns regarding decisions and policies related to religious meetings should seek the advice of legal counsel for assistance in drafting or enforcement.
Jonathan R. Davis is an associate with Richardson Harman Ober, PC and concentrates his practice in the areas of homeowner association law, real estate, construction and general civil litigation.
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ISSUE TWO 2017 • CONNECT WITH GRIE
Mahendra Sami Regional Account Executive 213-236-5029 mahendra.sami@unionbank.com
Legal Spotlight The Chapter is excited to announce a new column in Connect Magazine. It will feature a “Legal Spotlight” where attorneys from the industry answer Chapter Member questions in a Q & A style. We encourage members to submit questions that are impacting their communities or the communities they manage or service. Please submit your questions to: info@cai-grie.org. Experts will answer member questions about issues of particular interest to community association board members, managers and vendors. Our Chapter welcomes your emails, but regret that we can only answer a limited number each issue and cannot answer every question individually, but will do our best to pick the questions that will help the most members. This column does not constitute legal advice and is written for general information purposes only. Readers should consult with a lawyer for specific legal advice.
Governor Lifts Drought Emergency in Most of California
O
n April 7, 2017, Governor Jerry Brown declared an end to California’s historic drought, and lifted the drought emergency in all California counties except Fresno, Kings, Tulare and Tuolumne via Executive Order B-40-17. Consequently, unless a local government has declared a local emergency due to drought, an association is no longer prevented from imposing a fine against an owner for reducing or eliminating the watering of vegetation or lawns. (Civil Code Section 4735 (c)(1)-(2).) Associations are encouraged to confirm with the local water purveyor/agency to determine the scope of local emergency drought regulations before taking enforcement action. Note, Executive Order B-40-17 builds on actions taken in Executive Order B-37-16, which remains in effect, to continue making water conservation a way of life in California. The State Water Resources Control Board will continue to maintain urban water usage reporting requirements and interdictions on wasteful practices, such as watering during or after rainfall, hosing off sidewalks and irrigating ornamental turf on public street medians. Although the Governor’s emergency order has been lifted, with exceptions, associations cannot adopt or enforce governing documents that prohibit, or effectively prohibit, owners from using low water-using plants or artificial turf in landscaping design. (Civil Code §4735.) By Brittany A. Ketchum, Esq., Beaumont Gitlin Tashjian
CONNECT WITH GRIE • ISSUE TWO 2017
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BY LINDA COOLEY
Effective Communication Options in the Digital Age: In a Nutshell! H
istorically associations relied on U.S. mailed printed newsletters, typically sent with the bill or mailed separately, which took time to reach the recipient and resulted in costs: printing and postage can be expensive. Effective communication can offset social media rumors generated by digital media such as Next-door.com and Facebook. Misinformation can multiply and create hostility toward management and board members. Setting goals to create an atmosphere of unity can dispel social media rumors. Since Next-door.com can be viewed by other neighborhoods, past residents and renters, association information should not be posted by board members. Facebook can be effective in posting if it doesn’t allow followers to comment, using the option of one-way communication to members can offer much insight to the community as a whole. E-mailed newsletters open lines of communication between the association and members; brings awareness to the community of association needs and issues and social activities; association rules that protect and enhance property values; and help and support available information from association management. All of the above are key to bringing unity to the community and increasing member involvement and a sense of community. Whether an association is large or small, communication is a key factor in creating harmony. An e-mailed newsletter is more likely to be checked on a smartphone and is usually written in such a way that information is easy to skim. A paper newsletter requires sitting down to read it. Templates should be mobile friendly as studies show 52% of all electronic newsletter views in a community are done through mobile devices. Continued on page 24
CONNECT WITH GRIE • ISSUE TWO 2017
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Effective Communication Continued from page 23
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Newsletters must be informative and individualized to the community and need to consider the four elements of readership: the demographics of the association, membership, configuration of the community and the history of governance. Newsletters with a clean, classy appearance and board news condensed for easy reading with short board minutes work well in this busy age of juggling our time. Some associations keep the original newsletter in-house and e-mail a link, often when the link is opened, there is also a link for more information about events. Sign-up forms to receive the newsletter should be on the website. Residents should be reminded that their e-mail address will not be shared with anyone. Linda Cooley serves as Vice President of Rosetta Canyon Community Association and Vice President of CAIGRIE Executive Board of Directors and is a member of the Connect Magazine Committee.
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ISSUE TWO 2017 • CONNECT WITH GRIE
Member FDIC Equal Housing Lender
Is Your Reserve Fund Adequate? by Kevin Leonard, RS
I
t’s getting to be that time of year when most community associations begin the annual process of planning and adopting next year’s financial budget. For associations small and large, this is arguably the most difficult and most important task that boards and their managers will tackle in the course of doing business. There are estimates to be obtained, contracts to be negotiated, and tough decisions to be made regarding next year’s forecasts. The managers we work with routinely say that it’s the most stressful part of the year… and they’re the ones getting paid for the work they do. For volunteer board members, it’s the time of year that may make you question why you ran for that position in the first place!
Managing the Reserve Fund
One of the challenges many associations face is what to do about the reserve fund. Unlike the other line items in an association’s annual budget, the amount to budget for longterm repair and replacement of common area assets can be a little bit tricky. How do you know how much is enough? There are income statements and balance sheets with plenty of good-sounding numbers, but is this the whole story? Let’s try a simple exercise. A treasurer has just been reviewing current financial statements and his association has $500,000 in their reserve fund account. He’s planning to speak at their annual membership meeting to deliver the
good news to the rest of the homeowners. After all, they’ve got half a million in the bank, right? You know nothing but what he’s told you. If the treasurer lived in a fairly new condo building with one pool and a tennis court, you’d probably figure they’re in great shape. But what if he represents an aging 200-home community with crumbling roads, dilapidated amenities, and a 3,000 square foot clubhouse that needs a new roof and a paint job? How would that change your perception of things? By now, you’re appreciating that dollar balances don’t tell the whole story. To truly know where an association stands financially, they must have something to compare against. When it comes to reserve funding, this means comparing the actual reserve account balance to some type of benchmark.
National Reserve Study Standards & the Reserve Fund
National Reserve Study Standards define this benchmark as the “fully funded balance.” The fully funded balance is a financial representation of the “ageing” of the common area components. Ageing (also known as deterioration) is as normal and inevitable for buildings as it is for people! The physical deterioration of a building starts the moment new construction is completed. Let’s use a simple example to show how the fully Continued on page 26 CONNECT WITH GRIE • ISSUE TWO 2017
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Is Your Reserve Fund Adequate? Continued from page 25
funded balance figure is calculated. Imagine the roof of your association was replaced five years ago and you were told that the roof had a life expectancy of 20 years. If the current cost to replace the roof is $100,000, how much money should the association have already saved “to be on pace” with the roof’s deterioration? The answer should be intuitive – $25,000, right? The roof has “aged” (or used up) 25% of its useful life, so it makes sense that the association should have 25% of the $100,000 replacement cost on hand in the reserve fund. The fully funded balance is a theoretical amount corresponding exactly to the five years worth of actual “roof deterioration.”
Percent Funded: A Measure of Reserve Fund Strength
Taking this process a step further, we are able to calculate in real terms exactly how well the reserve fund has kept pace with common area deterioration. We express this relative strength in terms of reserves “percent funded,” another fairly simple National Reserve Study Standard calculation involving the fully funded balance:
Percent Funded = Actual Reserve Balance Fully Funded Balance
So, if the association has $25,000 actually sitting in the bank for the new roof after five years, the “percent funded” is 100% ($25,000 divided by $25,000). Remember, percent funded measures how well the reserve fund has kept pace with deterioration, and 100% funded means perfectly “on pace!” Now let’s say that instead of $25,000, the association only has $5,000 in their reserve account. The roof deterioration remains the same at $25,000 because the roof is still “five years old.” However, in relative terms, the reserves are only “20% funded” ($5,000 divided by $25,000). A “percent funded” of 20% means being 26 |
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substantially “off pace” compared to common area deterioration. In reality, an association’s common area consists of dozens of different reserve components, each with unique useful lives, remaining useful lives, and replacement costs. So a measurement of whether the reserve fund is “on pace” only has meaning when it is based on a “percent funded” calculation involving all repair and replacement projects.
Associations above 70% funded enjoy a low risk of ever needing additional funding to supplement their reserves. By contrast, associations less than 30% funded are likely to need a special assessment in the near future. Notice that there’s no mention here of dollar amounts. The only way to know whether your reserve fund is adequate is by comparing the actual amount in reserves against the fully funded balance to compute percent funded.
Why Percent Funded is Important: Accountability & Special Assessments
A Reserve Study Guides Your Reserve Fund
Now that you understand what it is and how it’s calculated, you might be wondering why percent funded is so important. There are two reasons: The first reason goes back to that treasurer who’s preparing to address the homeowners of his association. He knows the amount of the reserve fund is half a million dollars. But does he really know if the reserve fund is adequate? Can he assure the homeowners that the association is in a position to perform timely repairs and replacements? Is he prepared to have prospective buyers rely on his personal assessment of the situation to make an informed purchase decision? Percent funded is the only meaningful, independent, and reliable measure.
The second reason percent funded is so important is that it can be a reliable predictor of the likelihood of special assessments. This colorful infographic above demonstrates the relationship between percent funded and the risk of special assessment.
Hopefully you can see now that a reserve fund’s percent funded is a valuable calculation that needs to be made by every association every fiscal year. There are many other important steps along the way to a financially successful future, including keeping the component list up to date, a proper projection of the actual reserve balance, and a well-crafted funding plan. Many associations choose to use a professional reserve specialist to help with this process, which ensures that the calculations are accurate and the forecasting is done by a competent, independent professional with experience helping similar associations. Whether a board member chooses to take on this process internally or looks outside for assistance, knowing and understanding percent funded is the only way to gauge whether the association is keeping pace with ongoing deterioration and setting themselves up for success!
Kevin joined Association Reserves, Inc. in 2013 after graduating from California Lutheran University. His experience includes condominiums and homeowners’ associations ranging from 4 unit condos to 1,000+ unit PUDs. Kevin earned the Community Association Institute’s Reserve Specialist (RS) designation and has the distinction of being RS #294. He enjoys the demands of this job which require him to think critically through situations as well as to communicate clearly with clients, in order to bring clarity to Reserve planning and disclosure.
SeptEMBER 29, 2017 Dos Lagos Golf Course 4507 Cabot Dr., Corona
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Cart Path Clings − Company name on cling to be placed along course; on event invitation (if received by July 15) and Chapter website. Awards banquet not included $100.00 (Limit 18) Paparazzi Wall − Company logo on step & repeat banner at entrance to event and included in Powerpoint presentation. Awards banquet not included $200.00 (Limit 12) Company name on signage at Mimosa Bar; on event invitation (if received by July 15) and Chapter website. Cost of mimosas included. Includes banquet for one (1) person. (Exclusive) $600.00 Alcohol Putting Contest - Company name on signage at putting hole; on event invitation (if received by July 15) and Chapter website. Signage at special hole. Winners will take home a bottle (included). Includes banquet for one (1) person. $800.00 (Exclusive) Massage Sponsor - Company name on signage; on event invitation (if received by July 15) and Chapter website. Five (5) minute complimentary massage for attendees. Masseurs will be available after golf and before banquet for 1-1/2 hours. Includes banquet for one (1) person. $400.00 (Limit 3)
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