CAI-MN Minnesota Community Living - Jul/Aug 2015

In this Issue: Irrigation Irritation. . . 8 Spring Clean-Up Day . . . . . . . . . . . . . . . . . . . 10

July/August 2015

Volume 33 • Issue 4

Online Magazine Available! www.cai-mn.com/ magazine

Living Green

Organic Waste Diversion — Turning Waste into Resource . . . . . . . . . . . . . . . . . . . 18 Staying Green: 1-2-3 . . . . . . . . . . . . . . . . . . 20 Association Resuscitation . . . . . . 28 Ask the Attorney. . . 32 And More!

DEBUNKING GREEN MYTHS: What Your HOA Really Needs to Know

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Tyranny of the Urgent!

by Gene Sullivan | New Concepts Management Group, Inc.

T

here are times when every homeowner association board is faced with a timesensitive decision that calls for action now. How you handle that situation is very important. To not act could cause harm to an individual, or further damage to the property. We all recognize the need to act in this instance, however…

There are many other times when the situation really is not an “emergency” but merely an issue that someone has invested a lot of personal time and emotion into.

In these cases, not to act quickly is interpreted as a personal rebuff.

And still, at other times, we have been conditioned as a society to be very impatient people. Technology is always improving, allowing us to get information more quickly than before. In our dining habits for example, we are used to going through a drive thru, and if the food is not ready by the time we get to the window, we are incredulous.

We live in the tyranny of the urgent.

And somehow through all of this, we don’t question the quality of our life; we only seem bent on getting “one more thing” done before the end of the day. However, through all of this, have we ever taken a moment to stop and ask ourselves “Is this right?”

It can be so easy to equate acting quickly as the right thing to do rather than focus on the outcome of our efforts.

When our government was first getting established, our founding fathers were careful to always institute a check and balance, in order to protect the interest of the minority, with the wishes of the majority. Founding Father James Madison, in the Federalist Papers, said the purpose of government is to be deliberate not efficient!

What did he mean?

When a governing body gathers, be it Congress, a state legislature, or a homeowners board of directors, they have the authority and ability, but also the responsibility for their actions, because they affect the lives of many others in a very real way.

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Obviously, not everyone can get what they want in a democracy. Because of this fact, it is important for everyone elected to a position of authority to take time to deliberate.

It is so important that Minnesota State Statute reminds those serving on an HOA Board that their decisions made outside of regularly scheduled board meetings must have all Board Members weighing in on a matter before moving forward. This is not optional.

Board of Directors President Gene Sullivan Phone 952.922.2500 gene@ncmgi.com Vice-President Joel Starks, CMCA Phone 952.500.1068 sparkymn1@gmail.com Treasurer

Many Board Members, however, reason to themselves, “We have five people on the board, if I call and get two other board members to agree with me, I don’t need to contact the other two. We have a majority, and we can move forward!”

Remember, when something happens repeatedly, it becomes a habit. Habits once established create a destiny. When an HOA Board creates this “tyranny of the urgent” they will find that…

• They experience burnout. Many Board Members come to the conclusion, “I didn’t sign on for this thing to become my entire life!”

• Boards don’t see the value that disagreement and discussion have in order to bring clarity of everyone’s position and wishes on a particular matter.

• Without this understanding, there can be no way of building a consensus that everyone can truly learn to live with.

• Because of this “urgency” we put greater emphasis on the “quickness” of the decision, as opposed to what is in everyone’s best interest.

• And it is this, that allows us experience the “law of unintended consequences”.

When this happens, an association finds itself always fixing, always changing, and always needing to meet “one additional time.”

However, if we choose to be more deliberate, we might be able to finally make a break from the tyranny of the urgent.

Halo Stafford, CMCA, AMS, PCAM Phone 952.944.2237 edenplacemgr@pinnaclefamily.com Secretary Nancy Polomis, Esq. Phone 952.941.4005 npolomis@hjlawfirm.com Directors JoAnn Borden, CMCA, AMS, PCA Phone 763.746.1196 jborden@developcommunity.com Matthew Drewes Phone 952.835.7000 mdrewes@tn-law.com Joseph Fadell Phone 952.392.9208 fadell.joseph@gmail.com Russ Lis, CMCA, AMS Phone 612.805.6111 rlis@reconstructionsolutionsgroup.com Crystal Pingel, CMCA, AMS, PCAM Phone 952.277.2703 Crystal.Pingel@fsresidential.com Jim Rezek Phone 763-424-9984 jimrezek@comcast.net Michelle Stephans, RS Phone 763.754.5500 michelle@reserveadvisors.com

Letters from Readers

Mastering Disaster: Be Proactive Before the Insurance Claim The March/April issue of Minnesota Community Living focused on “When Disaster Strikes.” It contained several articles that offered excellent advice. One of the articles centered on how to handle insurance claims.

Again, some excellent advice and information was offered, especially the points an insurance company may argue about that were listed.

However, being an agent who has specialized in HOA insurance for 29 years, I know many people outside of the insurance or legal industry, or with little experience in insurance claims, may have found the information intimidating. Rightfully so.

That article struck a chord in me.

This article will provide a different take on the insurance claim process. The advice it will offer is that the insurance claim process should start long before the claim/loss. It starts with the selection of the insurance carrier and agent you choose to work with.

One of the main duties of the Board of Directors for an association is to preserve and enhance the value of the property. The choie of an insurance carrier and agent would certainly come into play for that responsibility. That choice should be marked by quality and value, and not be based solely on price. However, for the last several years, I’m told daily by property management professionals and folks who serve on Boards that many Boards’ sole motivation when checking the insurance market is price.

“Get three bids” is often the charge.

It seems many insurance consumers nowadays view insurance as commodity. It’s not. If it was, insurance would be purchased solely online. My experience over the years is that insurance is like anything else in this world… you get what you pay for.

A wise mentor of mine in the industry advised me years ago that insurance companies, adjusters, and agents fix and repair damaged property (homes, cars, buildings, boats, etc.), and to that extent they’re collectively like “property doctors” in a fashion. When a person is sick or injured, they want the best doctor. They seldom shop around for one based only on price. Why do they shop differently when it comes to the “health” of their property?

When selecting an insurance company, there’s a need for due diligence. It’s one thing to choose your own insurance company, but it’s an even bigger responsibility to choose your neighbor’s insurer. When they have a fire or pipe break in their home, the Board’s going to hear about it if things aren’t smooth. For the last several years, the norm is the “spreadsheet” as the main tool for making insurance decisions. However, they usually only reflect coverage and price — one needs to go further.

This can include getting references from other associations, contractors, public adjusters, attorneys, and other insurance pros without an interest in the association. What’s the insurer’s reputation for paying claims in the local market? What’s their complaint ratio with the Department of Commerce?

Boards should also interview agents. Granted, it takes some extra time on their part, but that supports the duty of care and the business judgment rule, which calls for informed decisions that may require some research.

What are the agents’ levels of experience and knowledge? How many claims have they had go to suit or appraisal? Do they get involved in the claim process? Are they informed on how their own company does things, or are they just acting as salespeople?

What extra value do they bring? Agents aren’t a commodity, either. This is the Board’s responsibility, and shouldn’t be delegated to anyone else.

Insurance premiums are based on long-term actuarial data for a given area. No company

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has a protective dome over the property it insures. Regardless of investment income, any insurance companies pricing below what’s actuarially sound won’t sustain profitability (no business continues selling a product or service at a loss) and something will suffer — which may well be the amount paid on claims.

If an insurance company is chosen based more on quality, and not just price, one can usually avoid the cost, hassle, delays, and frustrations that were cited in the aforementioned article.

Companies known for excellent claims service/ performance want to pay their claims fair and fast. It’s smart business on their part not to run up the ever-increasing cost of their claim expenses.

There’s an old maxim that “immediate gratification may bring short-term happiness, but planning and foresight bring true happiness.” Saving money in the short term provides immediate gratification. But, having a $1 million+ claim for hail damage to siding and roofs handled to the association’s full satisfaction with no hassle equals true happiness. I’ve seen it for years in all lines of insurance: A person laments that they had a claim handled in a most unsatisfactory manner. When asked why they chose the particular company they were with at the time, they say they were the lowest priced.

When it comes to price for association insurance, there’s a point often overlooked: When cost is broken down on a per homeowner basis per month, the difference between quotes is often less than the price of having a pizza delivered. No one misses that pizza when their claim winds up in appraisal.

There’s no disputing that investing more time in selecting an insurer, where price isn’t the overriding factor, pays dividends at claim time. Then, instead of hoping to rely on your insurance policy, you can be far more confident your claim will be handled to your satisfaction.

Paul Gentilini, State Farm

Calendar

Series

Index

Upcoming Events

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Irrigation Irritation

3 President’s Message

By Bob MacDonald, CMCA, AMS, PCAM | Cedar Management

CAI-MN 2015 Golf Tournament Monday, August 10, 2015 Midland Hills Country Club

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Spring Clean-Up Day

By Beth Larson and George Horner, Residents of

CAI-MN 2015 Vision Awards

Village Homes at St. Anthony Falls Association

Thursday, September 17, 2015 International Market Square

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Vision Awards Information

By CAI-MN

CAI-MN Social Event: Wine Tasting

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Organic Waste Diversion – Turning Waste into Resource

By Stuart MacDonald, Managing Director,

Thursday, October 1, 2015

CAI National Course: M-206

Organix Solutions

October 1 – 2, 2015

CAI-MN Manager Seminar (1/2 day) Tuesday, October 13, 2015

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Staying Green: 1-2-3

By Kate Madonna Hindes, Writer, CAI-MN

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CAI-MN Manager Seminar (1/2 day)

Tuesday, November 10, 2015

CAI-MN Twins Social Event Recap

CAI-MN Social Event: Ugly Sweater and White Elephant Holiday Party

By Monte Abeler, Executive Director, CAI-MN

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Association Resuscitation

By Carin Rosengren, CMCA | Keller Property Management

Thursday, December 3, 2015

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CAI-MN Manager Seminar (1/2 day) Tuesday, January 12, 2016

What’s the Latest Statistics

By CAI

By Gene Sullivan | New Concepts Management Group, Inc.

4 Letters from Readers 6 Carin’s Corner

By Carin Rosengren, CMCA | Keller Property Management

32 Ask the Attorney

By Nigel H. Mendez, Esq. | Carlson & Associates, Ltd.

2015 Annual Partners Platinum

Asset Exteriors Columbus Exteriors Community Development, Inc. Parsons Construction Sela Roofing & Remodeling Xtreme Exteriors

Gold

Benson, Kerrane, Storz & Nelson Community Advantage, a Wintrust Company FirstService Residential Gassen Management Hellmuth & Johnson

Silver

Register for events online at www.cai-mn.com For more information regarding an event, call the office at 651.203.7250 or visit the CAI-MN website.

Have Comments?

Email your feedback on articles to suey@cai-mn. com for a chance to be featured in Minnesota Community Living!

All Ways Drains American Family Insurance - Jeff Mayhew Carlson & Associates Gaughan Companies Hammargren & Meyer PA Mutual of Omaha/CA Banc New Concepts Management Omega Management Company Sharper Management

Bronze

American Building Contractors Clean Response Gates General Contractors, Inc. Levin Law Group, LLP Michael P. Mullen, PLLC TruSeal America LLC

Published by Community Associations Institute — Minnesota Chapter, copyright 2015. All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Minnesota Community Living or CAI–Minnesota Chapter. The information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting, or other professional services by the CAI–Minnesota Chapter, or by Minnesota Community Living, or its authors. Articles, letters to the editor, and advertising may be sent to Monte Abeler at montea@cai-mn.com, or at CAI–MN Chapter, 1000 Westgate Dr., Suite 252, St. Paul, MN 55114.

Index of Advertisers All Ways Drains . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Final Coat Painting . . . . . . . . . . . . . . . . . . . . . . . . . 19

Reserve Advisors. . . . . . . . . . . . . . . . . . . . . . . . . . . 17

American Family Insurance – Jeff Mayhew . . . . 17

FirstService Residential. . . . . . . . . . . . . . . . . . . . . 25

Reserve Consultants, Inc. . . . . . . . . . . . . . . . . . . . 19

APMC – Association Property Management

Gassen Companies . . . . . . . . . . . . . . . . . . . . . . . . . 23

Reserve Data Analysis, Inc. . . . . . . . . . . . . . . . . . . 33

Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Gates General Contractors, Inc. . . . . . . . . . . . . . . . 7

Restoration Technologies, Inc. . . . . . . . . . . . . . . . 16

Asset Exteriors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Gaughan Companies . . . . . . . . . . . . . . . . . . . . . . . 13

Russo Consulting, Inc. . . . . . . . . . . . . . . . . . . . . . . 30

BEI Exterior Maintenance . . . . . . . . . . . . . . . . . . . . 11

GJ Awning & Canvas . . . . . . . . . . . . . . . . . . . . . . . 13

Sara Lassila, CPA Inc. . . . . . . . . . . . . . . . . . . . . . . . . 9

Benson, Kerrane, Storz & Nelson, P.C. . . . . . . . . 17

Hammargren & Meyer, P.A. . . . . . . . . . . . . . . . . . . 15

Sela Roofing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Carlson & Associates, Ltd . . . . . . . . . . . . . . . . . . . . 9

Hellmuth & Johnson, PLLC.. . . . . . . . . . . . . . . . . . 26

Sharper Management . . . . . . . . . . . . . . . . . . . . . . . 9

Columbus Exteriors, Inc.. . . . . . . . . . . . . . . . . . . . . .2

New Concepts Management. . . . . . . . . . . . . . . . . 15

Strobel & Hanson, P.A. . . . . . . . . . . . . . . . . . . . . . . 16

Community Advantage . . . . . . . . . . . . . . . . . . . . . 33

Omega Management, Inc. . . . . . . . . . . . . . . . . . . . 19

TruSeal America LLC. . . . . . . . . . . . . . . . . . . . . . . . 36

Community Development, Inc.. . . . . . . . . . . . . . . 21

Parsons Construction. . . . . . . . . . . . . . . . . . . . . . . 29

Xtreme Exteriors. . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Construct-All Corporation . . . . . . . . . . . . . . . . . . . 9

Plehal Blacktopping . . . . . . . . . . . . . . . . . . . . . . . . 33

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Carin’s Corner

By Carin Rosengren, CMCA | Keller Property Management

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he July/August issue has a focus around the concepts and practices of “being green.”

Please check them out and enjoy. And hey — if you did enjoy one of the articles, or if you didn’t enjoy one of the articles, or if you just want to add your two cents, your feedback is welcome! Take a minute to tell us your opinion, or your experience, or why the article was good or less-than-spectacular. Responses may be published in the “Letters From Readers” section we’re hoping to develop into a regular feature. … As long as I’ve got your eye, please consider the question:

What Do You Want to Read About?

Please take a look at the editorial calendar and consider ideas you have related to these topics. Are you seeing or doing these things?

Would you like to write about anything? (Support and editing available to all as needed!) Are there any topics, ideas or activities that you think should be addressed in the magazine? What do you want to read about? Next, and I know this is asking a lot, but please think ahead to 2016 — what topics will be relevant for you and other readers? (You know the audience — it is the homeowners, board members, property managers, and vendors who work together for the greater good of all.)

Here are some of the story ideas and magazine themes we’re throwing around for future editions. Do you know somebody who has talked about, tried, or is practicing any of the topics below?

Could you write a short article or share your experiences? Please let me know: crosengren@kellerpm.com.

Thanks for taking the time to peruse our list. Even if you don’t have experience or knowledge in these areas, maybe you know someone who does. Reach out to that person and suggest they contact Minnesota Community Living.

MN Community Living Editorial Calendar Sept/Oct — “Energy Efficiency” • Electric cars/accommodation by communities, including charging stations, need for high-voltage, tracking energy use, cost of special outlet installation, who gets them, talk to an electrician, “specialist” or auto dealer?

• Energy audit, find a contractor to talk on increasing energy efficiency, include technical view, how to analyze the results; energy audit could dovetail into ice dam issues, not a bad time to discuss avoidance of these; • Water use audit, it’s a major and growing expense for many

Nov/Dec — “Technology” and “What’s Ahead in 2016” • What’s Ahead: For Minnesota’s CAI committees, what national trend(s) are on the horizon, … more ideas/ viewpoints needed • The Technology Issue, what are the Top 10 Apps/ Programs for Community Managers? Are there apps for HOA Presidents? Tell us your favorite app that’s useful at work!

• Providing Wi-Fi to a building, what are the costs and who pays, can anyone opt-out? Is it secure? Protecting your wi-fi from neighbors’ use?

• Technology infrastructure updates: changing coaxial to fiber, what does this mean? What work would be done? Who pays? Pros/cons?

Committee Chairs Communications Chair – Carin Rosengren Phone 952.432.3722 CRosengren@kellerpm.com

Golf Tournament Chair – Kris Birch Phone 651.481.9180 krisbirch@birchlawn.net

Social Chair – Jenna Wright Phone 303.547.7848 jwright@bensonpc.com

Charitable Outreach Chair – Cliff Kurth Phone 763.248.1047 cliff@aemn.co

Legislative Action Chair – John Dorgan Phone 612.721.4116 jrd@jdorganlaw.com

Trade Show Chair – Michele Ramler Phone 763.231.9809 mramler@cedarmanagement.com

Education Chair – Nigel Mendez Phone 651.287.8640 nmendez@carlsonassoc.com

Membership Chair – Paul Lawson Phone 952.277.2792 paul.lawson@fsresidential.com

Vision Awards Chair – Shaun Zavadsky, CMCA Phone 952.277.2786 shaun.zavadsky@fsresidential.com

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Irrigation Irritation

By Bob MacDonald, CMCA, AMS, PCAM | Cedar Management

E

very day, some people seem to do annoying and inappropriate things that make life harder for the rest of us. From the drivers who unabashedly take up two parking spaces with glee, to the endless army of litterers who consider the entire earth to be their own personal trash can, rude and nasty people always find a way to make our days just a little bit worse. But fear not, those who still believe in common decency and the American way, because Jimmy Kimmel plans to stop these obnoxious, inconsiderate foes in their tracks with “The Finger of Shame.” And the first finger of shame that caught my attention was a man wasting a lot of water while “irrigating” his lawn with a hose.

IRRIGATION IRRITATION — Shame on you! 1

As Community Association Managers, we should work with our local municipalities and the associations we manage to find creative ways to reduce the toll excessive irrigation is taking on the environment.

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Morgan Stanley recently released a report which stated that the “perfect storm” of declining water supply and rising demand are likely to make water the critical limiting resource of our time. The report, entitled “Peak Water: The Preeminent 21st Century Commodity Story,” paints a convincing picture of a world that is on the brink of a severe water crisis. It also offers hope by presenting new technological solutions and opportunities emerging in response. Facing rising costs and dwindling supply, businesses and utilities will be forced to invest in water infrastructure and technology, making the industry ripe for growth.” 2 Many interrelated forces are converging to exacerbate the water scarcity problem. The one I would like mention for the purpose of this article is Rapid Urbanization: Currently more than half of the global population lives in cities. In 1990, the world had 10 cities with populations of over 10 million; by 2020, the UN predicts that number will increase to 27.

Urbanization, which is usually associated with an increasing standard of living, can increase a person’s demand for water to five times that of the basic water requirement. And of course, those who live in urban areas love lush lawns and a plethora of blooming plants.

1) https://search.yahoo.com/yhs/search?p=jimmy+ kimmel+finger+of+shame&ei=UTF8&hspart= mozilla&hsimp=yhs-003 2) https://www.morganstanleyclientserv.com/contentmanagement/HTMLFiles/pdf/ gic_peakwater.pdf

One of the ways to combat the effects of Rapid Urbanization on the water supply is through More Efficient Irrigation; a goal the City of Woodbury, Minnesota, takes seriously. To accomplish this, the City of Woodbury has established a Water Resources Policy Statement and Strategies. Included in the policy is the goal to “strive towards total flat annual water use through 2030.” To achieve this goal, city staff have identified and begun the implementation of an HOA irrigation pilot program. This program is a study and the number of participants is limited. The objective of the home owner association (HOA) irrigation retrofit pilot program is to better understand the benefits, as they relate to water use, of applying state of the art irrigation technologies to existing irrigation systems.3 As part of the limited HOA Irrigation Retrofit Pilot Program the City intends to: • Support on a limited basis the implementation of technology upgrades to HOA irrigation systems with the intent of water conservation.

• Following implementation of upgrades, monitor water use for irrigation and compare to historical use data to determine the benefit of the technology upgrades relate to water use.

• Evaluate data from the pilot program to support potential recommendations to the City Council.

Fortunately, one of the properties I manage is participating in the pilot program being implemented by the City of Woodbury. As a layman, let me first describe the updated system at the property I manage as an “irrigation system with a brain.” As I understand it, the modified system uses the power of the Internet to affordably deliver centrally controlled smart irrigation. This allows each property (HOA) in the program to be remotely managed by landscape professionals. Irrigation activity and savings reports will readily be available for ongoing cost management.

According to Jason Schott from Horticultural Services, “the newly installed computerized Smart Controllers are devices that automatically update the watering schedule to allow for changes in water needs throughout the year. A smart controller will automatically reduce the watering times as the weather gets cooler and less water is needed. Then, as the weather begins to warm up, the controller will add more watering time. And what’s amazing is that it does this zone by zone or even head by head, depending on the type of irrigation system installed.”

Clearly, the news media reminds us daily that water shortages around the world are a reality that cannot be ignored. Right now in Beverly Hills, owners are replacing their lawns with rocks because the drought is so severe. We who live in Minnesota should and must do what we can to minimize the use of irrigation water. Even as I write this article, the state of Minnesota is facing drought concerns even though it is raining today. As Community Association Managers, we should work with our local municipalities and the associations we manage to find creative ways to reduce the toll excessive irrigation is taking on the environment.

3) http://www.woodburybulletin.com/content/city-plunging-water-usage-data

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Spring Clean-Up Day

By Beth Larson and George Horner, Residents at the Village Homes at St. Anthony Falls Association

V People who participate in the Clean-up Day are often more inclined to pick up litter on an ongoing basis around the property.

illage Townhomes is a relatively small complex comprised of 48 units, located in the Nicollet Island East Bank Neighborhood Association, bounded by two major traffic arteries—University Avenue and First Avenue NE. Residents of the complex—about a third of whom are original owners— include everyone from recent retirees to young families to urban professionals—many of whom work at the University of Minnesota or in downtown Minneapolis.

As with many urban properties, Village Townhomes enjoys the benefits of a very walkable and retail-rich East Hennepin neighborhood, and the challenges that come with being a “destination” neighborhood. One of those challenges, which— is acutely evident when the snow melts, is litter that gathers ­particularly on the perimeter of the property.

While the complex contracts with a firm to maintain and clean landscaping on the property, one of the original owners had the idea to engage owners in doing an annual Spring Clean-Up Day—to get a jumpstart on improving the overall curb appeal of the property.

The premise of the clean-up day is really two-fold: To clean up litter that had built up over the winter—and to provide some time for neighbors to connect and get to know one another better.

For the past 10 years, at the end of April (depending on the last snow melt!) residents are invited to participate in the clean-up day.

Coffee and donuts are provided, along with garbage bags and paint to cover up any graffiti. Rain or shine, cold or warm, 10-25 people come to work, chat and start their Saturday with fellow residents for the Clean-up Day. The clean-up goes quickly—usually in less than two hours. But, the lasting impact of the event is even greater.

People who participate in the Clean-up Day are often more inclined to pick up litter on an ongoing basis around the property. And, there is a real sense of pride in keeping the complex clean and litterfree.

All-in-all, Clean-up Day is a simple but effective event that is really a grassroots effort on the part of owners themselves. The Board participates in the event as owners, not as Board members.

The event is neither sponsored by nor managed by the property management firm or the Board. The event helps create a sense of neighborhood pride and community that go a long way in making the complex not only awesome for current owners, but also attractive for prospective buyers.

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Save the Date!

Please join us for the 2015 Annual Vision Awards on September 17, 2015!

Register now!

www.cai-mn.com/VisionAwards

Recognize those outstand ing in the community association business!

Nominate someone — or an association — for a Vision Award today.

www.cai-mn.com/nominate

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“The Vision Awards is a great time where we can all come together and celebrate our accomplishments, individually and as a group.”

— JoAnn Borden | CAI-MN Board “The Vision Awards is a great event. It’s a chance to meet with friends and colleagues in the community association industry in a great setting, and also to recognize those who have made significant contributions to community associations throughout the year. If community associations play a role in your life in any way, you really should nominate those who you see “raising the bar” and come out to support their efforts.”

Community Association Management Accessible. Reliable. Accountable.

Hands-on Management.

Whether your community is large or small, we provide comprehensive management services by evaluating your community’s wants, needs and goals.

We understand the importance of efficient cost-effective practices that result in the cohesive operations of the community.

Our hands-on management is responsive to the requests of the Board of Directors and Homeowners while preserving the property and lifestyle of the community.

For over four decades, Gaughan Companies has been trusted for our integrity and perspective. Our Management Teams treat your Association as if we owned it. Each member of our team will always be accessible, reliable and accountable to you, the homeowner.

Making the Difference: Gaughan Companies is small enough to tailor their services to meet the needs of the Associations they manage, and large enough to make sure all areas of Associations’ needs are handled promptly and professionally. ~ Susan Sabrowsky Ashbourne Townhomes

You Imagine It! We Cover It!

— Matt Drewes | Thomsen Nybeck, CAI-MN Board “[Nominating someone for an award] is one of the highest compliments you can give an employee, partner or customer. Nominating someone or a group really gives a sense of giving back. The CAI-MN Vision Awards event has become more of a black tie affair. Use this as your way of saying thank you with a wonderful evening of fun and fellowship.”

— Joel Starks | CAI-MN Board

Covering Minnesota & Beyond 13

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Homeowner Associations, Rookies, Above and Beyond 2. Community Managers (portfolio, resident or office managers) 3. Management Companies Some people deserve (and have earned) extra special recognition. CAI-MN recognizes these individual superstars with the Rookie of the Year Award and the Above and Beyond Award.

Nominees may be CAI members or non-members serving in one or more of the following areas: 1. Community Association Volunteer Leaders (homeowners, Board members, other community leaders)

4. Business Partners The Rookie of the Year Award recognizes an individual with less than two years’ experience in the management industry who has displayed exceptional abilities, either generally or on a specific project.

The Above and Beyond Award recognizes an individual for substantial achievement who has performed tasks, services or humanitarian efforts above and beyond a typical job

description. Nominations for this award might be made for individuals who have improved quality of life for a community, exhibited ‘”grace under pressure”, helped others in a particularly kind and understanding manner, etc.

And where would we all be without community associations?! Managers, business partners and service providers all work for the betterment of community associations.

These associations deserve recognition, too! Awards for associations are divided into two categories: associations of fewer than 100 homes, and associations of more than 100 homes.

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Minnesota Communit y Living

The Outstanding Community-Building by an Association Award recognizes an association that does an outstanding job at community resourcefulness, has a strong sense of commitment to enhancing the neighborhood, and recognizes and uses the strengths of the individuals within the association.

The Association of the Year Award recognizes the outstanding team effort of an association’s board of directors and homeowners whose members clearly understand their roles and fiduciary responsibilities, putting the association’s interests ahead of and above all personal agendas. An association nominated for this award should have a board composed of effective volunteer leaders who are fair, responsible and reasonable in their decisions.

Nominate someone or an association for a Vision Award today.

www.cai-mn.com/ nominate

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Minnesota Communit y Living

SMART & DECISIVE The Best Value in Construction Law for Community Associations

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At Hammargren & Meyer, we’re smart, decisive lawyers focused exclusively in the areas of law that we know best.

For prompt responses and straightforward answers, call Hammargren & Meyer.

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Help Keep Our Community Green

General Counsel for Associations:

More and more association leaders these days are striving to use environmentally friendly products and services. Here are some tips that you can use in your home and at your association to continue this positive trend in the community:

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Use organic products, such as organic lawn fertilizers, which are less harmful to the environment.

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Choose latex paints over oil paints, which are harmful to the environment.

Use energy-saving light bulbs.

And, at home and at work, save and reuse scrap paper.

The little things, when done consistently by enough people, can really add up.

— Community Associations Institute

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CAI-MN is looking for article contributions.

Submit your article online at www.cai-mn.com under the Resources Tab or email to suey@cai-mn.com

Manage your subscription and more at CAI-MN.com Subscribe and unsubscribe online at www.cai-mn.com by editing your user profile.

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Organic Waste Diversion – Turning Waste into Resource

By Stuart MacDonald, Managing Director | Organix Solutions

M

ost of us have been accustomed to recycling our trash, or municipal solid waste (MSW), since the 1980s. Almost as a reflex action now, we look for the recycling container when we have an empty water bottle in our hand and have difficulty letting it go if we can’t find one. We have, over the course of a generation, changed our behavior and lifestyle choices with an understanding that to reduce, reuse and recycle is good for our planet.

Our recycling habits are making an impact.

In 1980 our recycling rate was 10% of MSW generated. By 2012 our recycling rate increased to over 35%. Over the same period of time, our disposal rate to landfill dropped from 89% of waste generated down to 54% in 2012.

The resource value of waste continues to be a critical driver toward more advanced recycling as commodity prices have increased because of demand on our finite natural resources.

This is important to note because according to the EPA, Americans generated about 251 million tons of trash in 2012. As our population continues to grow, we must continue to reduce the amount of MSW we send to landfill which reduces emissions of methane, a powerful greenhouse gas.

When we analyze the contents of our trash that goes to landfill after recycling and composting, organics waste is by far the largest component of the waste stream— with food waste comprising 21% and paper about 15%. Organics waste to landfill is also the largest contributor to greenhouse gas emissions.

More and more cities in the U.S. are beginning to focus on the organics “fraction” of the waste stream and are developing policies and laws with targets for diversion from landfill as part of their solid waste management strategies. This includes extended producer responsibility, landfill bans for organics waste materials and aggressive recycling and composting goals. In 2014, the Minnesota legislature established a goal of 75% waste recycling and composting by 2030

and made a substantial increase of grants to all Minnesota counties to promote recycling efforts. Hennepin County alone has up to $50,000 available to commercial business and multi-unit properties for 2015. In Minnesota, Source Separated Organics (SSO) are exempt from county solid waste fees as well as the state solid waste tax of 17%.

Simply put, one of the greatest values in recycling is, literally, as a sink. Recycling in general absorbs the various costs that would be spent treating this potential waste by landfilling or incinerating it. Many cities in the U.S. recognized this value during the early recycling years and early recyclers took advantage of the recycling momentum to adapt and modernize. Now, the recycling industry in the U.S. is a $200 billion industry employing more than a million people and accounting for about 2% of the country’s GDP. The resource value of waste continues to be a critical driver toward more advanced recycling as commodity prices have increased because of demand on our finite natural resources.

We are expecting 3 billion more people to enter the middle class by 2030, driving more demand for goods and services. This requires us to rethink how we obtain and reuse our materials in a sustainable way.

Moving away from a take-make-dispose model that has defined our last century toward more circular, regenerative solutions that close the material loop and reduce waste from landfill are being developed at scale in Minnesota now. Innovative companies in Minnesota are focusing on the large organic fraction of the waste stream to help close the loop by returning organics waste to our community value chain as highest best use commodities.

Two examples include Source Separated Organics (SSO) and Anaerobic Digestion.

Innovative SSO programs are being

successfully implemented in Minnesota by independent waste haulers that collect food waste from residential and commercial customers and divert this valuable commodity to compost facilities. Converting food waste into compost produces a higher value, more nutrient-rich compost product for resale.

Next-generation Anaerobic Digestion (AD) facilities are being built here in Minnesota to process food waste from the supply chain and other organic materials into fuels like ethanol and methane, which divert organic waste toward their highest value uses.

These Minnesota AD facilities are being built to serve two value creating functions: diverting food waste from landfill avoids the landfilling costs as well as creating revenue sources. Biogas from organics waste will be converted into cleaner burning CNG fueling trash hauling trucks in Minnesota. This is a net carbon negative fuel source.

Calls for waste reduction are often mistakenly confused with pleas to slow economic growth. However, innovations and sustainable solutions are succeeding here, thanks to Minnesota companies that have developed strategies to decouple waste growth from economic growth and are finding value in our garbage!

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Staying Green: 1-2-3

By Kate Madonna Hindes, Writer | CAI-MN

1. Bringing Sustainability to the Table: Truths about GREEN Energy Nestled in the landscape of beautiful trees and brand-new siding, Tom Rother, owner and President of Network Management in Apple Valley, Minn, is proud of the small, thoughtful steps his associations are taking to better the environment and the lives of homeowners. Recently, one of Rother’s properties went maintenance-free with its siding, helping to increase property values and saving the 3 to 4 year painting rotation. Rother said, “We’re taking a proactive approach within our association and budgets. We’re cognizant of the cost involved, but also look to the future and trends for new ideas. Proactive instead of reactive planning can help our properties go far.”

F

rom turning off the lights when leaving a room, to purchasing more energy-efficient appliances, sustainability is on the forefront of homeowner minds and budgets. From common practices of sustainability, to lesser-known ideas, one thing is certain: the future of our planet can only be determined by our choices today. Here are four ways to initiate a model of sustainability in your HOAs.

Conduct an Energy Audit Contact a utility company or energy management firm to conduct an energy audit. An energy audit determines whether a home or building wastes energy and finds where energy is being lost. An audit can also offer energy-saving solutions and save money. One solution that pays for itself quickly is fluorescent or LED lighting.

Fluorescents and LEDs are more expensive than incandescent bulbs, but use less power and last much longer. Many associations have been able to recover their lighting investment in six months due to savings in utility costs.

Conserve Water Initiate a water conservation program, providing residents with free water inspections and promoting water-saving devices, such

as low-flow shower heads and low-flush toilets. The savings can be considerable. Conserve water used in landscaping by implementing irrigation controls that monitor rainwater and adjust watering accordingly. Select plants that are drought resistant and suited to your climate. Target your watering to specific plants by using drip irrigation. Reduce overall water use by replacing turf in some common spaces with native plants.

Recycle Trash Investigate recycling options with your trash contractor or local municipality. Recycling helps the environment for obvious reasons— resources are re-used instead of thrown out and landfills don’t fill up as fast. Americans now recycle about a third of their waste, an amount that has almost doubled in the past 15 years, according to Earth 911. The most common materials recycled are paper, plastic, aluminum cans, steel packages and appliances.

Reduce Chemical Use Reduce environmental pollution by cutting back on chemical herbicides, pesticides and fertilizers. Use natural remedies instead.

Consider composting. Plant native grasses and wildflowers that help filter polluted storm water run-off before it reaches lakes and streams. continued on page 22

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2. Green Landscaping: Beautiful Lawns, Beautiful Planet

Staying Green — continued from page 20

“Traditional landscaping and current landscape maintenance practices, while frequently meeting human needs and aesthetics, often have harmful impacts. The clearing of native woodlands and other natural habitats for urban/suburban growth and subsequent planting of grounds with vast lawns and manicured arrangements of exotic ornamental plants place a heavy toll on environmental and human health. This type of a landscape requires extensive use of mechanical equipment, unnecessary consumption of our limited natural resources (water and fossil fuels), frequent application of fertilizers and pesticides, and the generation of significant quantities of solid waste. As a result, our surface and ground waters are being polluted; destructive flooding is more commonplace; our neighborhood’s tranquility and air quality are compromised by noisy, polluting landscape equipment; and our landfills are being consumed by yard waste. Furthermore, the biodiversity of our ecosystems is suffering from the introduction of invasive exotic landscape plants.” – EPA.gov

H

omeowners are keen to energy savings and green landscaping can offer up to 30% savings on home heating bills, according the U.S. Department of Energy. How does it work? With plants blocking sunlight and absorbing heat, they absorb solar radiation to cushion the house from outside heat. In winter, when plants and trees shed their leaves, they allow more sunlight to reach the building, offering greater internal heat. In fact, dense trees can block up to 95% of sunlight and 75% of external heat.

In response to coastal shortages and rising prices, many HOAs are in the process of taking major steps to curtail water use. Water conservation discussions are bringing new opportunities for HOAs to include landscaping in their green services portfolio.

How can the average association implement water-conservation efforts? According to FacilitiesNet, associations should consider:

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• Shutting down irrigation systems during months of high rainfall • Incorporating drip irrigation and pressure reducers on systems to lower water volume • Adding composted materials to soil to retain moisture • Reducing lawn space enables greater conservation as lawns require more watering than plant beds.

The cost savings can truly add up, as Pacific Green Landscape will attest. In 2014, it finished a large-scale initiative with Westview Neighborhood HOA in Mira Mesa, California. At the start of the project, water bills were in the ballpark of $16,000 a month. With new initiatives in place, water bills were dramatically cut to $3,000.

How did they achieve such large savings? Pacific Green Landscape explained that it took research, time and partnerships.

“As we worked on upgrading the irrigation system, the HOA’s board began working with the City of San Diego to explore the possibility

of using reclaimed water for its irrigation. In 2007, the city began installing reclaimed meters and Pacific Green Landscape began the paperwork and installation of the infrastructure for the use of reclaimed water throughout Westview. The city installed its last meter in 2011 and Pacific Green Landscaping finished Westview’s reclaimed system at the beginning of 2012. Now, all of the landscape is irrigated using reclaimed water. With the installation of smart controllers and the use of recycled water, the Westview HOA has reduced its water consumption by about 40 percent and cut water costs in half, according to Kalas. In fact, the 12 month actuals for the cost of water show that the board spent $53,611 in 2011 and only $21,107 for the 2014 fiscal year. These savings have not only allowed the HOA to replace some of the older landscape with more attractive and water-friendly plants, but have enabled Westview HOA to continue operating without raising monthly homeowner dues in a very long time.” (http://www.pacificgreenlandscape.com) Cassie Larson, Executive Director at the Minnesota Nursery and Landscape Association, has been noticing a rising trend in green landscaping. “One of the items we’re seeing in our industry is a rise in permeable pavement options. Saving rainwater and helping keep water out of the storm sewers seems to be popular on the East Coast, but is moving inwards. Rather than covering things in asphalt, people are installing permeable pavers. This allows water to go down and be captured and reused—instead of running off into storm sewers.” continued on page 24

• • • • •

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Minnesota Communit y Living

Did You Know…

Gasoline-powered landscape equipment (mowers, trimmers, blowers, chainsaws) account for over 5% of our urban air pollution.

Residential application of pesticides is typically at a rate 20 times that of farmers per acre; it results in many unintended results.

Yard wastes (mostly grass clippings) comprise 20% of municipal solid waste collected and most still end up in landfills.

A lawn has less than 10% of the water absorption capacity of natural woodland — a reason for suburban flooding.

3. Solar Energy: Sustainability from the Sun

Staying Green — continued from page 23

“Today, solar is the fastest-growing source of renewable energy in America, with more than 20,000 megawatts (MW) of installed solar capacity nationwide—enough to power more than 4 million homes—and those numbers are projected to double by the end of 2016. What’s driving this growth? Solar has never been more affordable, with installed residential and commercial system prices dropping 12 percent in the last year—and down nearly 50 percent since 2010—while utilityscale prices have plummeted by more than 65 percent. Today in southern California, one out of every four new homes is equipped with a clean, affordable solar energy system.” - Rhone Resch, SEIA president and CEO

W

ith fossil fuels contributing to global warming, both individuals and HOAs are considering the idea of solar panels as a strong contender in renewable energy options. The World Nuclear Association has cited solar and wind energy as options for renewable energy due in part for their cost, efficiency, and their lack of carbon dioxide emissions.

Could solar energy finally be peaking to broader adoption?

According to the Solar Energy Industries Association (SEIA.org), growth of solar is expected to continue through 2016—doubling the country’s existing solar capacity.

Dustin Smith, a proponent of solar energy and consultant at NewDawn, LLC. believes that solar energy is one of the best options for homeowners and associations looking to build renewable options in scale. “Solar energy offers the ability to generate energy in different ways to maintain an individual’s current lifestyle. I imagine associations will want to be aware of Smart Grid Technologies for their ease of use and cosmetic options.” Smith believes that the rise of solar energy has helped it evolve into an option for associations concerned about the look of panels and placement. Many of the newer solar modules lack frames, allowing them to better fit in with their surroundings. Smith describes the evolution of the solar panel, “Flush-mounted roof arrays, combined with frameless solar modules, allow for a cosmetic camouflage look that appears like a very large 24

Minnesota Communit y Living

solar window. Technologies utilizing and made from graphene and molybdenum disulfide for new solar cells which will be thin, light weight and efficient up to a 1,000 times more than today’s silicon panels, will further help cosmetic appearances on roof while dramatically increasing solar power production.”

Solar energy is trending within HOAs as individual homeowners opt to choose energy savings that make sense to their pocketbooks and to the future of our planet. Whether HOA concerns revolve around community aesthetics, size, cost or shading, many HOAs are opting to open the discussion on both the cost-benefits of solar panel installations and the potential pitfalls. Whether your HOA is for or against solar energy, the key is to have your decision ready and be willing to have a discussion when homeowners start asking questions.

According to Philip Haddix, author of The Solar Foundation’s report, A Beautiful Day in the Neighborhood: Encouraging Solar Development through Community Association Policies and Processes, “Difficulties arise from people not knowing about HOA restrictions, deciding to ignore them, or not knowing on what basis the HOA will judge the system.” Haddix believes that Associations can allow solar without ceding their authority by being willing to have the conversation with homeowners and the board.

It’s also important to note that Minnesota is one of 15 states that currently have laws that protect easements and their establishment on a legal contractual basis without having an express solar rights law. The language is as follows: Sec. 15. Minnesota Statutes 2006, section 500.30, subdivision 2: Like any conveyance. Any property owner may grant a solar or wind easement in the same manner and with the same effect as a conveyance of an interest in real property. The easements shall be created in writing and shall be filed, duly recorded, and indexed in the office of the recorder of the county in which the easement is granted. No duly recorded easement shall be unenforceable on account of lack of privity of estate or privity of contract; such easements shall run with the land or lands benefited and burdened and shall constitute a perpetual easement, except that an easement may terminate upon the conditions stated therein or pursuant to the provisions of section 500.20. A wind easement, easement to install wind turbines on real property, option, or lease of wind rights shall also terminate after seven years from the date the easement is created or lease is entered into, if a wind energy project on the property to which the easement or lease applies does not begin commercial operation within the seven-year period. EFFECTIVE DATE. This section is effective the day following final enactment, and applies to wind easements created and wind rights leases entered into on and after the effective date of this section.

Did You Know‌ There is currently enough solar energy being generated in the United States to power 4 million American homes (on average).

195,000 solar installations occurred in 2014, with nearly 645,000 U.S. homes and businesses going solar.

In 2014, a new solar project was installed every 2.5 minutes.

The price of solar is falling. Since the implementation of the ITC in 2006, the cost to install solar has dropped by more than 73%.

While residential costs have dropped by 45% since 2010, utility-scale costs have dropped more significantly, with recent contracts at prices below $0.05/kWh.

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Minnesota Communit y Living

CAI-MN Twins Social Event Recap

By Monte Abeler | CAI-MN Executive Director

T

he weather was perfect, the food was great, and the people were awesome! The only thing missing was a Twins win.

But that didn’t stop 115 people from having a great evening at Gluek’s and Target Field at the CAI-MN Twins Social. Thank you to all who attended! Check the CAI-MN website for information on upcoming social events.

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Minnesota Communit y Living

Association Resuscitation

Housing Improvement Area was neighborhood’s last chance

By Carin Rosengren, CMCA | Keller Property Management

Before

for years. It was the cause of increased dues, reduced maintenance and deferred improvements for the past several years.

The association’s decades-old wood siding had failed. Homeowners were facing water intrusion, not to mention the visual eyesore.

No building was worse than the next, so a staged approach seem futile. The association needed all the funds at once.

“It was pretty frustrating that we knew what needed to be done but were unable to raise the funds to do them,” said Anita Tayson, board president.

M

ocha, ivy, steel blue and granite: Until last fall, the board members and homeowners at a Twin Cities association could only imagine what life these colors would breathe into their neighborhood. Thankfully the aging association’s dream took shape in 2014, when the Niakwa Village 2nd Addition turned its sepia-toned association into Technicolor townhomes. This, thanks to the long hours and diligence of the board and management, who worked with the city and county to establish a Housing Improvement Area (HIA) in Lakeville. It was arduous at times but in the end, nobody gave up on the four-year process that got them here.

Something had to give In fresh snow up to their boot-ankles last winter, talking about gutters, cable wires, J-blocks and punch lists, a conversation between the contractor, construction consultant and property manager signaled that the end of this project was near.

Mundane as they were, the tail-end details also thrilled the major players, because they represented the success of an $800,000 project that had seemed impossible.

That winter day, the association was nearing completion of a siding, soffit and fascia project that had haunted the board

At the suggestion of a board member and after a moment’s research by the property manager, soon they corresponded regularly with City of Lakeville’s Director of Development, David Olson. With prior experience with the program, Olson guided Niakwa Village 2nd through the city’s first application for an HIA. An HIA application requires a majority vote of the association, so a straw poll and petition became the starting point for this project. “We held a number of meetings and also talked with virtually every owner, several times,” Tayson said.

Many of the homeowners understood that something had to be done; that the association didn’t have funds to pay for it; and that the money will come from the owners regardless of the approach. The only other apparent options were a bank loan (denied), special assessment (a hardship) or alternative funding, such as the HIA. The majority of owners at Niakwa Village 2nd Addition ultimately gave their support.

“The majority were in agreement that if we could participate in an HIA, that would be a great way to get done, at a reasonable interest rate, and to have the payments spread over a length of time that would make the payments doable,” Tayson said.

Process, procedure, application Housing Improvement Area: “A defined area within the city where housing improvements are made or constructed and the costs of the improvements are paid in whole or in part from fees imposed within the area.”

The association can make improvements to common areas, structures, streets, sidewalks – basically whatever it would deem capital improvements. While Niakwa Village 2nd Addition started its HIA by working with the City of Lakeville, now the Dakota County Community Development Agency has authority to establish an HIA without city participation.

However, not every penny-poor association will qualify. According to MN Statute 428A.12, the association needs to already have suffered rejection for bank loans and other means of funding. Combined with requirements, the association must demonstrate that without the HIA, the necessary improvements are not possible.

In lieu of special assessments or a steep increase in homeowner dues – which can put strain on association collections and lead to an increase in delinquencies – the Board of Directors took on the task of garnering county funds through an HIA. This method allows the county to assess the homeowners through property taxes, where the responsibility for collection does not fall on the association.

For an HIA to work, the homeowners need to start the process. At least 50 percent of signatures are required on a petition to the governing body that will administer the loan. Then there will be meetings with owners, with the county, with the property manager; and after that meetings with construction consultants, potential bidders, more meetings with the county, and continued on page 30

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Association Resuscitation — continued from page 28

eventually a public hearing before county commissioners where the Lakeville HIA got a stamp of approval.

The homeowners are now faced with property tax assessments for the next 15 years. For some, the payment structure proves easier to swallow than a special assessment from the association, which could have been upwards of $15,000 per owner payable in one year, if not for the special district established by the CDA. The end result? A beautified neighborhood and a renewed sense of ownership pride in this neighborhood built more than 30 years ago. Now the association can use its funds for landscaping, decks and other projects that have been on eternal “hold” until the siding could be completed.

St. Louis Park Pioneers Depending upon the scope of the project and size of the association, every HIA is different. The City of St. Louis Park was the first Minnesota city to break ground into HIAs and has done seven projects to date, with associations from 20 to 280 units. With project costs ranging from $183,000 to $5.2 million, the assessments to homeowners were between $5,000 and $21,000, payable over 10 to 20 years.

One of those HIAs was at Wolfe Lake Condominiums. Built in 1971 as rental apartments, it was converted to condos in 1980 and has 131 units, plus a 128-stall underground parking, outdoor pool, indoor amenities and office. It also is a dated facility with boilers, old windows and siding, aluminum patio doors and more. By the time its first 30-year reserve analysis was completed in 1994, the association’s savings were dire; and despite more than doubling assessments in the next dozen years, the financial forecast showed nothing but shortfalls ahead.

What were the options? 1) Increase the annual assessment, but they were already high, and the increase would render units impossible to sell and could increase abandonments; 2) Special assessment, which are difficult to impose while property 30

Minnesota Communit y Living

values are declining and collections already a challenge; 3) Bank loan, which may need member approval. Loans are usually repaid in 5-7 years, and delinquency rates must be acceptable to the lender; 4) Do nothing, which some owners will love—but doing nothing ignores the board’s mission (To Protect and Enhance), and long-term, this tactic is sure to be disastrous.

Next the association was able to look at its 30-year reserve plan, and to think about the possibilities for improvements as the board considered how much money to request.

The total should include a reasonable contingency for the inevitable surprises.

And, the total should be realistic. It’s better to have a surplus than to be left short of funds to finish the job.

After

HIA Key Facts Rates are competitive with a first mortgage Long-term, fixed rate (up to 20 years) lowers monthly cost Prepayments may be an option Interest may be taxdeductible Not a balance-sheet liability for the association Higher cost alternative to bank loan and raising assessments Longer process to implement Association must meet future reserve funding requirements

Contact John Russo, Ph.D. Reserve Specialist 952-944-7137

MEMBER

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Ask the Attorney

by Nigel H. Mendez, Esq. | Carlson & Associates, Ltd.

This column is comprised of questions that have been posed to me by homeowners, property managers and related professionals regarding legal issues that they have encountered with respect to their associations. Discussion of these questions, as well as prior questions, can be found on the CAI-MN LinkedIn page: www.linkedin. com/groups?gid=1769135

Q:

I am on the Board of my condominium association and was contacted by a member requesting a mailing list for all members. Do I need to give them that? Should I check with the other members to see if they want their contact information released?

A:

This is a question that I get fairly often. Minn. Stat. §515B.3-118 requires that associations governed by the Minnesota Common Interest Ownership Act (MCIOA) keep records of membership, owner meetings, board meetings, committee meetings, contracts and other agreements and material correspondence and memoranda relating to their operations. In addition, financial records must also be retained.

Minn. Stat. §515B.3-118 provides that all records “shall be made reasonably available for examination by any unit owner or the unit owner’s authorized agent....” Therefore, associations should provide the membership list when a request is made. Owners are not able to “opt-out” of being included in the list of members.

If the request is for an electronic copy, and the association maintains an electronic copy, it must be provided in that format. However, if the association does not maintain electronic copies, it does not have to type in the data just to satisfy the request. If copies are requested, the association may charge for the copies. If the request is fewer than 100 pages, the charge may not exceed 25 cents per page. For larger requests, an association may charge the actual costs incurred in fulfilling the request. These costs may include the time of an agent or employee to respond to the request.

For associations that are not governed by MCIOA, the Minnesota Nonprofit Corporation Act provides guidance. While Minn.

Stat. §317A.461 does not directly deal with member lists, it does require the association to allow reasonable access to a collection of documents related to the association. Subdivision 5 allows the association to charge a reasonable fee to cover the expenses of providing the requested documents. Finally, it is important to review the association’s declaration and bylaws, which might have additional disclosure requirements.

Q: A:

Our association requires that units be owneroccupied. We have a unit that is owned by an LLC. Who can live in the unit?

If your association has rental restrictions or has an owner-occupancy requirement, the question of what to do when an entity such as a limited liability company (LLC) owns the unit will arise. If the association is governed by the Minnesota Common Interest Ownership Act (MCIOA) you can look to the statutes for guidance. If not, the association’s declaration may provide details on such occupancy rights.

MCIOA, specifically in §515B.1-103(37), defines a Unit Owner as “a declarant or other person who owns a unit . . . but does not include a secured party.” A Person is defined in §515B.1-103(25) as “an individual, corporation, limited liability company, partnership, trustee under a trust, personal representative, guardian, conservator, government, governmental subdivision or agency, or other legal or commercial entity capable of holding title to real estate.”

Therefore, for an MCIOA association that requires a unit to be owner-occupied, the proper occupants are the individual owners, a member of an LLC, a trustee of a trust, or a shareholder of a corporation. An association would be permitted to require proof of an individual’s status with an entity to ensure that the individual is a member or shareholder.

Q: A:

We tried to have an annual meeting but did not make quorum—what happens to our board? Do they remain directors?

In order to conduct business of the association, including electing directors, a meeting of the members must reach a quorum. The bylaws will often contain either the number of units that must be represented or the percentages of votes in the association that must be present, in person or via proxy to constitute a quorum. Many associations have an option to reconvene a meeting at a later date if quorum was not met, and the quorum requirement at a reconvened meeting may be lower.

In associations governed by MCIOA, and that don’t have a quorum specified in their bylaws, quorum is present when the meeting is attended, in person or via proxy, by members who are entitled to cast at least twenty percent of the votes in the association.1 For non-MCIOA associations, quorum is obtained if ten percent of the members attend, in person or via proxy.2 1) Minn. Stat. §515B.3-109(a) 2) Minn. Stat. §317A.451, subd. 1

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Directors serve for the term specified in the bylaws. If no term is specified, a director serves a one-year term.3 If, at the end of the term an election is not held, the current directors will remain in office until a successor is elected, or until death, resignation or removal.4 If a director no longer wishes to serve on the board, they may resign. Unless stated differently in the bylaws, the remaining directors may fill the vacancy.

If failure to obtain quorum is more than an occasional occurrence, you should speak with your attorney about amending the bylaws to reduce the quorum requirement. I recommend ten percent of the votes in the association as a good requirement for quorum. It is important to remember this is the lowest number of votes needed to hold a meeting—not that 10% of the votes get to decide all issues in the association. If an important issue is being voted on, the number of votes present will be higher. However, when things are going well, and attendance at a meeting is low, the ten percent quorum will usually allow business to be conducted.

To have a question answered in a future article, please email it to me at nmendez@ carlsonassoc.com with the subject line of “Ask the Attorney.” While I can’t promise that all questions will be answered, I will do my best to include questions that have a broad appeal. Questions will also be answered by other attorneys practicing in this area of law. The answers are intended to give the reader a good understanding of the issue raised by the question but are not a substitute for acquiring an opinion from your legal counsel.

3) Minn. Stat. §317A.207, Subd. 1(a) 4) Minn. Stat. §317A.207, Subd. 1(b)

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Minnesota Communit y Living

What’s the Latest Statistics

from Community Associations Institute

In 2014, there were almost 27 million housing units in community associations, or planned communities.

Not surprisingly, Florida and its prolific retirement scene had the most associations (47,100), followed closely by the more-populous but equally aestheticminded California (43,300 associations).

The statistics come from Community Associations Institute (CAI), which cites these facts and more in its recent release of “National and State Statistical Review for 2014,” giving loads of communityassociation information by-the-numbers, such as: The number of community associations has grown from 10,000 communities in 1970 to nearly 334,000 communities in 2014, providing townhome-, condoand cooperative-living to more than 66 million residents.

Additional Data

0.7 % $4.95 trillion of the U.S. population lives in a community association

is the value of homes in community associations

$70 billion

in assessments were collected to fund essential association obligations, including utilities, insurance, common area maintenance, professional management, landscaping, capital improvements and amenities

$22 billion

assessment dollars went to reserve funds, contributing to the future repair and replacement of roofs, streets, pools, elevators and other common expense

30-40 %

of associations are self-managed After the two runaway leaders, numbers three and four are Texas and Illinois, with nearly 20,000 associations apiece. North Carolina, New York, Massachusetts, Georgia and Washington State have between 10,000 and 13,600 associations each.

Where does our state place? Minnesota’s 1.2 million association members own homes in 7,500 associations, landing it 15th in the ranks of states with the most planned communities.

Twelve states ranked 16 through 27 have between 3,200 and 6,700 community associations; with between 2,000 and 3,000 associations are Alabama, Idaho, Iowa, Kentucky and New Hampshire.

States with fewer than 1,000 associations are Alaska, Arkansas, Mississippi, North Dakota, South Dakota, West Virginia and Wyoming.

Number of community association management companies:

7,000-8,000

2,300,000

people serve as association board and committee members, contributing

78,000,000

hours of their time to service Estimated value of time provided by board and committee members:

$1.6 billion

(based on Bureau of Labor Statistics estimate of $22.50 per hour of volunteer time) — Additional statistical information published by the Foundation for Community Association Research is available at www.cairf.org/factbook 34

Minnesota Communit y Living

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