CAI-MN Minnesota Community Living - Nov/Dec 2013

The Efficiency Issue November/December 2013

Volume 31 • Issue 6

Save time, money, and energy this winter on the things that matter to your association.

In this Issue: Efficient Meetings... 3 An HOA’s Look at Lighting Energy Efficiency..................9 The Efficient Attic: Why Insulating Saves You Time and Money....................21 So Much to Do, So Little Time..............29

And Much More!

Visit us online at www.cai-mn.com.

2

Minnesota Communit y Living

From the President

Board of Directors President Michael Klemm, Esq. Phone 952.953.8832 klemmm@dmshb.com

By Michael Klemm | CAI-MN President

Efficient Meetings “Efficient” is defined by the Merriam-Webster dictionary as “capable of producing desired results without wasting materials, time, or energy.” Efficient meetings help volunteer leaders balance service to their communities with work, family and personal obligations.

Efficient meetings also help organizations recruit and retain volunteer leaders. After attending hundreds of meetings, it is my observation that effective leaders work out of the same basic toolbox to facilitate efficient meetings.

Agenda. A thorough agenda includes the name of the organization, the date, time and place of the meeting, and a description of the items to be discussed. Each item on the agenda should be briefly described in sufficient detail to avoid confusion.

Vice President Gene Sullivan Phone 952.922.2500 gene@ncmgi.com

Meeting Notice. Notice of the meeting should be given at a time and by a method permitted by the applicable statutes and governing documents, which may vary depending on the type of meeting and the items that are on the agenda.

Treasurer Halo Stafford, CMCA, AMS, PCAM Phone 952.944.2237 edenplacemgr@pinnaclefamily.com Secretary Nancy Polomis, Esq. Phone 952.941.4005 npolomis@hjlawfirm.com

Meeting Location. Meeting participants should be able to easily see and hear each other and have sufficient table space to work with documents during the meeting. The meeting location should be large enough to comfortably accommodate the meeting participants and others who may attend the meeting, and should be private if confidential issues will be discussed.

Directors Tom Engblom, AMS, ARM, CMCA, CPM, PCAM Phone 866.800.4656 tengblom@cabanc.com Steve Hoogenakker Phone 763.213.2410 steve@landscape.pro

Open or Closed Meetings. It is important to determine in advance whether a meeting should be open to all association members or closed for a purpose authorized by the applicable statutes Consent Agenda. Routine items that do not and governing documents. A mistake either way require discussion may be listed at the beginning may result in a significant waste of resources, of the agenda under an item named “consent time and energy dealing with the consequences. agenda.” For example, minutes of the previous meeting and routine financial statements may Robert’s Rules. The basic rules of procedure be placed on the consent agenda. If discussion from Robert’s Rules of Order are very helpful to is warranted, then items can be moved from run efficient meetings. Motions, discussion and the consent agenda to the regular agenda at voting help meeting participants make decisions the beginning of the meeting. Items remaining on complex issues. When a formal hearing is on the consent agenda are approved by vote required, clear procedures help the chairperson without discussion, conserving time. run the hearing in a fair and orderly manner.

Agenda Packet. An agenda packet includes the meeting agenda and documents that provide information about the agenda items. The agenda packet should be distributed to the meeting participants for review several days prior to the meeting.

Joseph Fadell Phone 952.392.9208 fadell.joseph@gmail.com Russ Lis, CMCA, AMS Phone 612.805.6111 rlis@reconstructionsolutionsgroup.com Jim Rezek Phone 763-424-9984 jimrezek@comcast.net Michelle Stephans, RS Phone 763.754.5500 michelle@reserveadvisors.com Crystal Pingel, CMCA, AMS, PCAM Phone 612.381.8626 crystalp@citiesmanagement.com

Minutes. The secretary or designee should take minutes at the meeting. The minutes should be distributed to the meeting participants for review, corrected (if necessary) and approved at the next meeting, and kept for future reference.

Joel Starks Phone 952.698.2053 joel@sharpermanagement.com

Committee Chairs Communications Chair Janice Pyka Phone 612.801.1229 jpyka@minutebids.com

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

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

Legislative Action Chair Greg Pettersen Phone 612.616.4817 gregp@RDAmidwest.com

Membership Chair

Lisa Astleford, CMCA, AMS Phone 952.277.2787 lisa.astleford@fsresidential.com

Social Committee

Tracey Bernier Phone 952.277.2780 Tracey.Bernier@fsresidential.com

Tradeshow Committee Chair Jon Edin Phone 651.222.2155 jedin@mncondodefects.com

Charitable Outreach Committee Chair

Cliff Kurth Phone 763.248.1047 cliff@assetrestoration.net

Vision Awards Chair

Jane Bristow, CMCA, AMS Phone 952.277.2722 jane.bristow@fsresidential.com

November | December 2013

3

As American as Baseball and... CAI?

By Matt Drewes, Thomsen & Nybeck, P.A., Attorneys

S

ummer may feel like it’s already a long way away, but we now have new reason to look forward to the changing of the seasons when the calendar turns to 2014.

In July, next year’s Major League Baseball All-Star Game is coming to Minnesota. For fans of the local nine (read: Twins) and baseball in general, this is going to be an exciting year, and we’ll hope our own boys of summer play well enough for more than the obligatory lone representative to be recognized with an invitation to play in the mid-summer classic.

Those of us involved in CAI like to think of our efforts as those of a team, as well.

With Ewald Consulting acting as a “general manager” of sorts helping to fill out the rosters on our various committees, many people pitch in and share in making what we hope will be a successful effort to engage, energize, and educate the various members of the larger body of people living in and working with community associations.

We think a number of additional parallels may be drawn between the phases of a baseball season and offseason and the annual calendar of CAI and its members, as well. So, with that in the back of our minds, and a tip of the cap to former chair (and current Board liaison) Joel Starks of Sharper Management for the idea, we on the CAI-MN communications committee are pleased to announce that we’ll have a baseball-oriented series of issues of Minnesota Community Living Magazine for you in 2014.

For example, MLB organizations begin the calendar by continuing offseason efforts to construct their roster, sign contracts with free agents and arbitration-eligible players, and plan for the season ahead. The work continues as spring training begins, as players prepare themselves and organizations evaluate those 4

Minnesota Communit y Living

players. By the time summer truly arrives the baseball season will have begun. Teams look to solidify their positions and build on earlyseason successes, keeping their ballclubs and their facilities looking and performing their best. July, of course, marks the return of MLB’s All-Star Game to Minnesota, and shortly thereafter the playoff push begins. Teams vie to finish strong and, when the offseason arrives, organizations will look back to the decisions they made months earlier that resulted in whatever position they may now find themselves. A new process of budget analysis, player evaluation, roster change begins.

The communities that CAI-MN seeks to serve, meanwhile, also may begin their year assembling teams of service providers to provide seasonal work such as landscapers, or contractors to provide building repair and maintenance or paving. Evaluating contracts and personnel, training and preparation, and performing an HOA’s own rite of spring (walkthroughs) are themes that correlate equally well to the baseball calendar. In the summer, the work throughout your homes and neighborhoods will be underway, and

associations will want to continue to focus on what is working within their organizations and what may need to change. CAI-MN will of course look to recognize and honor its own “stars” within the HOA field with the beginning of nominations for and selection of Vision Award winners. And as the warm weather and eventually the calendar year winds down, communities should also perform some self-reflection to consider what worked and what didn’t, including budgets, personnel, or contractors.

We hope you’ll enjoy the revised layouts and features we’re including in this year’s version of the magazine. More importantly, we hope that by reviewing these themes and article concepts, you’ll step up to the plate, or pitch us your idea, and join our lineup of article authors for 2014 or find another way to get involved and become a part of the team. Take a look at the editorial calendar below for information about how we have tried to take these baseball themes and apply them to useful article topics you can contribute, or perhaps that you can use throughout the year in your own communities.

2014 MCL Magazine Themes & Editorial Schedule

Are you interested in contributing an article to an edition of the MCL? We take the time to consider each article that is submitted for publication in CAI-MN’s magazine. So if you enjoy writing, enjoy researching industry topics, or want to share your findings on a discovery you’ve made, then feel free to contact us and submit your article. Articles can be sent to montea@cai-mn.com. This year’s magazine themes and article deadlines are listed below.

January/February

Theme: “Pre-Season” Topics: Contracts, arbitration, member benefits

March/April

July/August

Theme: “All-Star Game” Topics: Promoting all-stars in HOA, honoring employees, growing business Article Deadline: May 1, 2014

Theme: “Spring Training” Topics: Training managers and board members, spring walkthroughs, bids Article Deadline: Jan. 17, 2014

September/October

May/June

November/December

Theme: “Play Ball” Topics: Operations, putting training into practice, lawn care, community Article Deadline: March 1, 2014

Theme: “Post-Season” Topics: Budgets, finishing the year strong Article Deadline: July 1, 2014 Theme: “Off-Season” Topics: Evaluating the year, analyzing strategy, looking ahead to next year Article Deadline: September 1, 2014

Calendar

Index

2014 SAVE the DATE! CAI-MN 2014 Trade Show Thursday, February 20, 2014 1:30 - 7:00 p.m.

Saint Paul RiverCentre 175 West Kellogg Boulevard Saint Paul, MN 55102

For more upcoming events please visit our event calendar at cai-mn.com

Register 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. Online registration is available at www.cai-mn.com.

features

series

4 As American as Baseball and...CAI?

3 President’s Message

By Matt Drewes

6 Ask the Attorney

9 An HOA’s Look at Lighting Engergy Efficiency

By Lynn Boergerhoff

13 Announcing Our CAI-MN 2014

2013 Annual Partners

14 MNOSHA Statute Update

By Matt Doughty

17 Professional Credentials

By Janice Pyka

21 The Efficient Attic: Why Insulating

22 Understanding Financial Statements

By Jeff Westendorf

25 To Rent or Not to Rent?

By Patrick Carson

29 So Much to Do, So Little Time

By Lon Bencini

Find articles from this issue and archived articles online at cai-mn.com in the Minnesota Community Living Resource Library.

Published by Community Associations Institute — Minnesota Chapter, copyright 2013. 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 Chapter Staff Editor Joanne Penn at joannep@cai-mn.com, or at CAI–Minnesota Chapter, 1000 Westgate Dr., Suite 252, St. Paul, MN 55114.

[ ADS ] All Ways Drains............................................. 28 ADAC-MN, LLC............................................ 12 American Family Insurance – Jeff Mayhew.. 15 APMC – Association Property Management Company........................... 28 Benson, Kerrane, Storz & Nelson, P.C. ........ 28 Carlson & Associates, Ltd ........................... 15 Columbus Exteriors, Inc................................. 2 Community Advantage................................ 12 Community Development, Inc..................... 18 Complete Building Solutions ...................... 20 Construct-All Corp. ..................................... 15 Country Financial ......................................... 31

By Carin Rosengren

Charitable Partner

By Mike Baker

As mentioned on page 4, the 2014 magazine themes will all be focused around a baseball theme. We encourage you to consider using some “baseball creativity” in your advertisements.

Keep your eyes and ears open for information on an upcoming advertisement contest during 2014.

By Nigel H. Mendez

19 Carin’s Corner

Saves You Time and Money

Announcement for Current & Potential Advertisors

By Michael Klemm

Platinum

Gassen Management Sela Roofing & Remodeling Xtreme Exteriors

Community Development Gold

Benson, Kerrane, Storz & Nelson, P.C. Community Advantage Complete Building Solutions, LLC Hellmuth & Johnson Silver

All Ways Drains American Family Insurance – Jeff Mayhew Carlson & Associates Mutual of Omaha Bank – Community Association Banking & CondoCerts

FirstService Residential Hammargren & Meyer PA Levin & Edin Natural Green

New Concepts Omega Management Schwickerts Roofing Sharper Management Thomsen & Nybeck Bronze

American Building Contractors Construct-All Corporation Dougherty, Molenda, Solfest, Hills

& Bauer P.A. Michael P. Mullen, CPA, PLLC SERVPRO of Brooklyn Park/Champlin Tru Seal America, LLC

Clean Response

Index of Advertisers

Felheber Larson Fenton & Vogt .................. 16 Final Coat Painting....................................... 15 FirstService Residential.................................. 7 Gassen Companies......................................... 8 Gates General Contractors ......................... 11 Genesis Property Management, Inc. ............. 7 GW Cross, LLC............................................. 12 Hammargren & Meyer, P.A. ........................ 26 Hellmuth & Johnson, PLLC.......................... 16 Levin & Edin................................................. 12 Mutual of Omaha Bank – Community Association Banking & CondoCerts........... 7 Natural Green............................................... 28

New Concepts Management......................... 7 Omega Management, Inc............................ 23 Reserve Advisors.......................................... 15 Reserve Consultants, Inc. ............................ 30 Reserve Data Analysis, Inc. .......................... 28 Russo Consulting, Inc. ................................... 7 Sarah Lassila CPA........................................... 7 Schwickerts Roofing..................................... 15 Sela Roofing ................................................ 24 Sharper Management ................................. 15 Strobel & Hanson ........................................ 15 Thomsen & Nybeck...................................... 12 Xtreme Exteriors..........................................

November | December 2013 5 32

Ask the Attorney by

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 We have an owner in our association who is very delinquent with his assessments, but claims that he does not owe the association anything because he filed for bankruptcy. Is that correct?

Bankruptcy law is complicated and has many nuances that could alter a general answer such as this. That being said, normally, when an individual files for bankruptcy protection and is granted a discharge by the bankruptcy court, any debt that existed at the time of filing is extinguished. This means that the personal obligation of the debtor to pay the creditor is excused. However, there are two issues that associations need to keep in mind when they encounter an owner who has filed bankruptcy.

Personal Obligation An individual who is granted a discharge, either through a Chapter 13 or Chapter 7 bankruptcy case, no longer can be sued personally for any debt that was incurred prior to the date of filing for bankruptcy protection. However, all assessments that came due after the date of filing remain a personal liability of the owner. In pursuing the collection of post-filing debt, the association should only claim debt that was incurred after the date of filing for bankruptcy protection. Depending on whether the person filed a Chapter 7 or a Chapter 13 bankruptcy, the bankruptcy process may take many months or even years to complete. Until the matter is concluded with the bankruptcy court, the

6

Minnesota Communit y Living

association must not take any collection action — even for the debt that came due after filing. Once the bankruptcy case is concluded, collections efforts can be initiated.

Property Lien Associations have a lien upon each unit in the association for assessments that are levied against that unit. While a discharge of debt in bankruptcy removes the personal liability of the owner, it does not always extinquish the association’s lien. Therefore, once the bankruptcy proceeding is completed the association may be able to foreclose its lien on the property.

In summary, a bankruptcy filing by an owner will typically result in the association not being able to sue the owner for the assessments owed, but it does not always affect the association’s eventual right to foreclose its lien or to collect future assessments. There are exceptions to this rule, but boards should not automatically assume that because a member filed bankruptcy the association has lost all options to collect its assessments. It is recommended that you contact your association attorney when the issue of bankruptcy arises as there are penalties that can be imposed by the bankruptcy court for taking improper actions.

Our board of directors has been running the association for almost thirty years.

We are ready to retire from the board but nobody else seems to want to take over.

Should we hire a professional management company to take over for the board?

Your question highlights a misconception that I occasionally hear about hiring a management company. Associations that are selfmanaged are responsible for collecting assessments, creating budgets, hiring contractors, pursuing delinquencies, organizing meetings, keeping minutes at meetings, etc. In short, if your association is self-managed the owners (mostly the board) does everything. Hiring a manager helps a great deal with the day-to-

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

day operations of the association. However, it does not replace the board.

Managed associations still have annual meetings, budgets, board meetings, etc. The difference is that they have an experienced professional to assist them along the way. Many managers will prepare budgets, oversee the collection of assessments, work with contractors to obtain bids, take minutes at meetings and perform many other tasks. The manager will report to the board and make suggestions on how to handle different situations that arise, and may make recommendations to the board. Ultimately, all decisions made in the association still fall back to the board.

The manager is an assistant to the board, and has no power except what is given by the board. The board remains in charge and responsible for the actions of the manager.

Managers are very helpful, but don’t believe that you can disband the board once you hire one for your association.

Our board wants to install security cameras at the entrance door to the condominium. Is this OK? Yes. In Minnesota you are allowed to install security cameras on your property. A camera over the entrance door to a condominium would be on association property. I would recommend that you let the members know that you will be installing the cameras and how they will be used. In addition, there should be a clear policy in place regarding the viewing of the footage and if they will be actively monitored, or if they will just record the past X number of hours and continually overwrite the recording (I recommend the latter option).

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.

CAI-MN is looking for article contributions.

Contact Monte Abeler at (651) 265-7852 or montea@cai-mn.com for further details about joining our list of article contributors.

Making a difference. Every day.

Specializing in Residential Association Management We develop management packages based on your needs.

Genesis Property Management LLC 8416 Xerxes Ave. North visit us online at Brooklyn Park, MN 55444 Phone: 763.424.0300 www.genesismn.com Fax: 763.493.0061

For communities looking for best-in-class management services and enterprising solutions delivered by the right people, FirstService Residential combines industry leading expertise with a local touch and a personal connection.

FirstService Residential Minnesota 1801 American Boulevard E., Ste. 21 Bloomington, MN 55425 952.277.2700 fsresidential.com FirstService Residential Minnesota is an AAMC

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

MEMBER

• Consulting Services • Specifications, Bidding, Contracts, Inspections of All Exterior Replacement Items including Asphalt, Concrete, Siding, Roofing, Windows, Doors • Litigation Support • Insurance Claims and Appraisal Support • Problem Solving and Investigations CALL THE PROFESSIONALS ASSOCIATION SERVICES

November | December 2013

7

ASSOCIATION MANAGEMENT ———————————————————————————-——————————————–-————

Gassen Companies is a Minnesota owned and operated property management company specializing in Community Association Management and Maintenance for Condominiums, Townhomes and Common Interest Communities.

We have been meeting the unique needs of the real estate and property management industry since 1969.

Our 98% customer retention demonstrates we are serious about service!

———————————————————————————————————————————————————————————— –———————————————————————————————————————————————————————————————— – ————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————

6438 CITY WEST PARKWAY EDEN PRAIRIE, MN 55344

P: 952-922-5575 F: 952-922-2004 WWW.GASSEN.COM 8

Minnesota Communit y Living

An HOA’s Look at Lighting Energy Efficiency

By Lynn Boergerhoff, Woodstock Townhome Association

W

oodstock Homeowners Association has worked with the Center for Energy and Environment (CEE) to develop a plan to replace aging exterior garage lights with energyefficient LED lights. We expect to save money through utility rebates that reduce the installation costs by about one third and through expected energy savings of more than 80%. Here’s how our process played out over 6 months, from our first contact with CEE to our first Board meeting discussion.

Woodstock HOA is a townhome-style condominium association in Bloomington, Minnesota. Woodstock has 67 buildings with either three or four family units in each building for a total of 227 units built in nine “Sections” from the mid-1970s to the mid-1990s. Each Section maintains garage lights mounted over its building’s garages.

Please refer to the Woodstock Common Area Lighting map below.

The Center for Energy and Environment (CEE) has, since 1989, provided a range of practical and cost-effective programs to help Minnesota homeowners, businesses, nonprofits and governments reduce energy waste and save money. CEE services include audit and diagnostics to evaluate current conditions, preparation of energy and cost saving projections and administering energy savings initiatives. CEE and Xcel Energy partner to administer certain rebate programs.

Our goals were to maintain the right amount of lighting for safety and security, reduce lighting utility and maintenance costs, and maintain attractive lighting acceptable to homeowners. In addition to CEE, we found a number of helpful resources listed at the end of this article. Like many things is life, more light is not necessarily better light.

In general, well-designed exterior lighting promotes safety, saves energy and money, is not intrusive to neighbors, reflects an association’s character and reduces risk to residents and wildlife. Safety is a special

Woodstock HOA Common Area Lighting 1 3

Garage Light

Pole Light

2 Section

1

2

5

4

8

9

6

7

8

8

8 9

concern in driving and parking areas and in certain walking areas.

The process began with an email to CEE requesting a lighting energy audit. We were soon contacted by Charlie Ketchum, a lighting specialist, who worked with us throughout this project. Ketchum visited our Association to meet with representatives of our Board. He explained that he would conduct a detailed audit of our common area lighting then recommend options to replace our lights with LED lighting that would reduce energy use and cost and would be eligible for one or more energy rebate programs.

First, he established our energy use history by reviewing the previous year’s utility bills.

This review included energy consumption and costs of operating our common area lighting for both the garage-mounted lights and pole lights throughout our association.

Ketchum next opened and inspected about 80% of our 52 garage-mounted lights and several of the pole lights to identify the type of bulbs installed. Two of the 52 garagemounted lights had been replaced with LED light fixtures and were excluded from the lighting analysis. Our common area lighting is controlled by photo light sensors that turn lights on at dusk and off at daylight.

(Pictured on page 10 — an original garagemounted light fixture.)

Although bulbs of varying wattage were discovered in the existing fixtures that Ketchum inspected — ranging from 100W to 250W - the overwhelming majority were 150W Metal Halide. The fixtures themselves were identical, but bulb replacement over the years led to this inconsistency in the type of bulb being used. Because we wanted to determine an adequate replacement fixture for every unit, we focused on identifying an LED replacement equivalent to the

Energy Efficiency continued on page 10 November | December 2013

9

Energy Efficiency continued from page 9 placed above both the three-car and fourcar garages to see the lighting characteristics under normal use conditions.

An original garage-mounted light fixture 150W HID bulb. (HID or High Intensity Discharge, includes metal halide, mercury vapor, low/high pressure sodium.) This 150W bulb was used to estimate the average energy use and operating costs, to select a replacement LED fixture, and to calculate the expected energy and cost savings and the estimated payback time. Finally, the meter associated with each garage light was identified so energy use could be monitored.

With this baseline information, we were ready to talk about specific rebate programs and start developing a lighting replacement plan. We learned from Mr. Ketchum that our common area lighting fell into two categories, each eligible for a different energy rebate program. Our pole lights were eligible for rebates through Xcel Energy and its Custom Efficiency Program. Our garage lights were eligible for rebating both through Xcel and through the Center for Energy and Environment, but CEE offered a greater incentive.

The LED fixture was very different in appearance and functional lighting from our original light fixtures. The original fixtures are octagonal in shape, approximately 12” in diameter and 20” tall mounted on short brackets extending out from the building. The LED fixture measured 6” x 9” and extended just 5” from the building.

While the original fixtures shed light in all directions, the LED fixtures focused light radiating only downward from the lower ledge of the fixture. The original fixtures displayed different shades of white depending on the bulb type and age while the LED fixtures appeared to be a bright white.

The lighting analysis revealed that each of our current garage light fixture bulbs uses an estimated 758 watts of energy each year costing approximately $74.94 for a total annual cost of $3,747 for all 50 lights. In comparison, each 18-watt LED fixture uses 92 watts of energy each year costing $9.10 for a total annual cost of $455 for all 50 lights. The new LED lights are expected to save $3,292 in energy costs each year compared to the current fixtures, an 88% energy and cost saving.

Ketchum estimated the cost of installing a RAB Slim18 wall pack light fixture to be about $218 per light after a $96 rebate

Lighting efficiency resources we reviewed include: The Center for Energy and the Environment at www.mncee.org, 612-335-5874.

Xcel Energy at www.xcelenergy.com, 612-244-2427.

MN Pollution Control Agency, RETAP Program at www.pca.state.mn.us, 651-757-2276.

Appliances, Lighting, Electronics: An Energy Guide from the MN Department of Commerce, Division on Energy Resources at www.energy.mn.gov.

Exterior Lighting for Energy Savings, Security, and Safety from the US Department of Energy at www.ntis.gov/ ordering.htm.

The Slim18W LED light Minnesota Communit y Living

CEE and Ketchum have provided excellent technical assistance to our Association. You may want to look at your exterior lighting situation for ways to improve efficiency, especially if your association is older.

You may also benefit from new lighting technologies and CEE expertise.

RAB Lighting at www.rabweb.com, 888722-1000 (technical help line). Guidelines for Good Exterior Lighting Plans from The Dark Sky Society at www.darkskysociety.org.

Ketchum prepared a sample lighting analysis using an appropriate LED replacement light fixture, a RAB Slim18 wall pack light, designed for applications such as our garagemounted lights. In addition, he provided samples of the Slim18W LED light (pictured at right) and Slim 26W LED fixtures that we

10

for each light, a 31% saving from the original $315 installed price. The estimated total cost to install 50 lights is $10,914.

He estimates that we will recover this installation cost through reduced energy costs in 3.3 years. In addition, the LED lights include a 5-year warranty to avoid maintenance and replacement costs during the warranty period. The LED lights are expected to have a useful life of 100,000 hours.

November | December 2013

11

ADAC-MN, LLC,

A Minnesota Limited Liability Company

build your reserves with the trusted industry experts Community Advantage is one of the Midwest’s leading providers of financial services to condominium, townhome and homeowner associations. Our lending solutions are tailored to fit each association’s individual needs. We offer a complete suite of financial solutions, including lending options, reserve investments and treasury management services.

Call (952) 835-2780 to speak directly with our local Minnesota contact, Ron Ornatowski or call (866) 328-0008 to speak with any of our Trusted Industry Experts.

GWCross, LLC P.O. Box 270276 Vadnais Heights, MN 55127 gcross71@gmail.com

866-328-0008 | www.communityadvantage.com

@ComAdvantage 110 W. Palatine Rd. , Ste. 2 Palatine, IL 60067 5001 American Blvd. W., Ste. 1000 Bloomington, MN 55437

Community Advantage is the Proud recipient of the 2013 “Leadership Award” from the Institute of Real Estate Management (IREM) recognizing their leadership role in enhancing the reputation of the real estate industry.

Community Advantage is a division of Barrington Bank & Trust Company, N.A.

12

Minnesota Communit y Living

Consulting Services      

over 20 yrs. experience managing CIC’s

Site map creation Resident handbooks Reserve studies conducted & reviewed Management Practices Review Guide Parlimentary procedures Architectural Control procedures

  

Planning calendars Grounds specifications Board orientations

Announcing Our CAI-MN 2014 Charitable Partner by

Our local Minnesota chapter’s charitable outreach committee has been hard at work interviewing potential charitable outreach partners for CAI-MN. Our mission was to find a state-wide partner where our CAI-MN Membership could mak­­e a huge difference! The merits of more than a dozen organizations were discussed and three were selected as finalists. In the end, the decision was unanimous.

The charitable outreach committee is excited to announce Minnesota Adult & Teen Challenge as CAI-MN’s first charitable partner! Although there are many reasons

we are eager to engage the CAI community in supporting Minnesota Adult & Teen Challenge, one reason stood above the rest – addiction has touched or will touch everyone at some point in his or her life.

Did you know?

Today, Minnesota Adult & Teen Challenge serves close to 450 residents on nine campuses around the state. It is the most effective recovery program of its kind, offering both short-term and long-term options, with a success rate of 79% for individuals who complete the 13 month program.

A tenth campus will be opening soon in Rochester, and Willmar has requested an eleventh campus in western Minnesota. In

CAI-MN Charitable Outreach Committee

the months ahead you will learn of ways you can get involved as a community association, management company and vendor. In 2013, fundraising events included banquets/galas, fishing competitions, a golf scramble, and the annual walk for hope. In addition to these major events, there are ongoing mentoring and volunteer opportunities in which you can personally get involved.

As a committee, we look forward to enlisting the participation of our CAIMN community. We are eager to support Minnesota Adult & Teen Challenge, so get ready to hear stories of hope. Get ready to give and get involved. To learn more about CAI-MN’s Charitable Partner, go to http:// www.mntc.org/ or call CAI-MN Outreach Committee Cliff Kurth at 763-248-1047.

CAI-MN — More than a Magazine Join the Discussion on LinkedIn! What is LinkedIn? LinkedIn is a directory of professionals and companies. Individuals and companies use LinkedIn for networking, job searching, hiring, company research, and connecting with affiliates, including alumni, industry, and a variety of other business related groups.

Never used LinkedIn before? Don’t worry, it’s quick and easy.

Get started online at www.linkedin.com.

Be sure to find CAI-MN and join our group to keep up to date on all the latest CAI-MN news.

Find CAI-MN on LinkedIn: www.linkedin.com/groups?gid=1769135

“ What are some ways you practice efficiency in your community? ”

November | December 2013

13

MNOSHA Statute Update Suspended Work Anchorage Requirements

T

he Minnesota Occupational Safety and Health Administration (MNOSHA), under the jurisdiction of the Minnesota Department of Labor and Industry, has strengthened safety standards related to fall protection for suspended work such as exterior wall repair, exterior wall maintenance, and window cleaning.

The new standards, issued on March 1, 2012, provide a higher level of safety for personnel performing building maintenance, repair, and window cleaning services from suspended platforms or rope descent systems. Buildings are now required to have certified and identified anchorage locations for attachment of suspended equipment and secondary lifelines, as outlined within Minnesota Administrative Rules section 5205.0730, titled “WINDOW CLEANING; BUILDING MAINTENANCE”. This standard and additional information regarding the standard can be referenced on the Minnesota Department of Labor and Industry website at https://www.revisor.leg. state.mn.us/rules/?id=5205.0730 and http:// www.dli.mn.gov/OSHA/Pdf/76_0712sl_ windowwashingfaqs.pdf.

The required certified and identified anchorages can take many forms but often consist of structural attachment points, attached to roof framing and/or structural elements on the roof that can withstand the prescribed MNOSHA loads. Building elements can be verified as compliant for certification per evaluation, analysis, or testing. The anchorage locations are

by

Matt Doughty, Encompass Inc.

required to be certified by a qualified individual, as defined in the 5205.0730 statute.

As a result of the recent implementation of the statute, many buildings are not compliant due to either an absence of certified anchorages or in-place anchorages that are in need of certification to allow for suspended work.

Commonly posed questions from associations include: “Does our building need to be compliant?”, “Is our building compliant?”, and “How do we make our building compliant?” One way to proceed in response to these questions is as follows: Assess the overall building and roof configuration. Many existing three or four-story structures are readily and costeffectively accessible from the ground using a high lift or ladders and thus do not need suspended workers or related roof anchorages. Taller buildings that are not easily accessible via ground equipment often require anchorages.

If anchorages are needed, the next step is to assess what the building currently has. An association should review its maintenance files for records regarding existing anchors and/or review the roof for the existence of roof anchorages. Note that if existing anchors are present without compliant certification letters and inspection reports, additional certification and/or inspection activities are required prior to use.

In the absence of certified anchorages, an engineer or other qualified personnel can be engaged to review the roof configuration, analyze existing roof features for potential usage as certifiable anchorage points, as well as provide a design for new anchor installations.

If new anchors are being installed or existing anchors are in place but uncertified, load testing of anchors is usually required by the entity providing the certification.

Upon completion of the anchorage certification process (anchor design, review, and/or testing), the association should receive a certification letter and usage log book by the entity responsible for the certification. Certifications are typically valid for a 10 year duration, yet visual inspections by a competent individual are also required yearly and prior to each use, in addition to the certification.

The steps outlined above are one way to navigate through the certification process, yet may vary as each building is unique.

If it is determined that certified anchorages are needed on a specific building to facilitate suspended wall maintenance/repairs or window washing activities, the association can begin moving toward compliance with MNOSHA standards via engagement of a qualified individual, such as a licensed engineer.

14

Minnesota Communit y Living

CONSTRUCT-ALL Quality construction for over 30 years

CORPORATION

General Contractors Decks • Siding • Doors/Windows • Water Damage Fire Damage • Budget Proposals • Work Orders Structural Repairs • Investigations

763-427-5900

www.construct-allcorp.com

November | December 2013

15

The Easiest Maintenance Decision You Can Make Associations face numerous maintenance decisions.

However, when it comes to maintaining your association’s legal affairs, look no further than Hellmuth & Johnson.

Hundreds of associations and property managers look to us as the definitive source for legal expertise, education and counsel. As one of the first firms in Minnesota to focus on this specialized area of law, we know the many challenges of running and managing an effective home owners association.

For attorneys who know associations, call us or visit our web site www.mncommunityassociation.com.

8050 West 78th Street, Edina, MN 55439 952-941-4005 • www.hjlawfirm.com

member of:

The Community Associations Institute & The Minnesota Multi Housing Association

Providing LegaL advice to

Homeowners associations since 1975 • General corporate matters, enforcement of covenants, restrictions and management issues • Document interpretation and amendments

Fred Krietzman 612.373.8418

Mark Radke Timothy Hassett Jake Hendricks 612.373.8409 651.312.6006 612.373.8575

• Replacement reserve analysis • Collection of assessments and foreclosure of assessment liens • Dispute resolution and litigation, including construction defect litigation • Applicability and options under the Minnesota Common Interest Ownership Act (MCIOA) • Project development and documents • Turnover of developer control

Steve Yoch 612.373.8559

Molly Gherty 612.373.8453

Marnie Fearon 612.373.8405

220 South 6th Street, Suite 2200 Minneapolis, MN 55402-4504 444 Cedar Street, Suite 2100 St. Paul, MN 55101-2136

www.felhaber.com

16

Minnesota Communit y Living

Professional Credentials What You Need to Know

by

AMS—Association Management Specialist

S

imilar in some ways to a government, an association is a community and a business, making it a unique type of organization. For some small associations where cost is a significant factor, selfmanagement through a strong volunteer structure can work well. Many associations, however, choose to contract with a professional management company, while others hire on-site managers who become association employees. Some combine elements of different types of management.

If you are a volunteer or board member seeking to hire a manager, insurance and risk management consultant, reserve provider or attorney for your association, hiring a credentialed professional is your best bet to protect yourself and your association.

If you are a manager, insurance and risk management consultant, reserve provider or attorney wishing to enhance your career, this information can help you.

CAI awards qualified professionals with credentials to improve the quality and effectiveness of community management.

CAI awards the following credentials:

CMCA—Certified Manager of Community Associations Your first step in gaining the fundamental knowledge you need to manage any type of community association.

The CMCA certification, administered by the CAI affiliated organization, National Board of Certification for Community Association Managers (NBC-CAM), is recommended for all community association managers. It can elevate your credibility and your community association’s confidence in you.

The second level in the CAI career development track for community association managers. The AMS designation demonstrates a higher level of commitment to your career and the community association industry. An AMS designation is recommended for managers who want to enhance their career opportunities by increasing their knowledge and expertise.

Recommended for experienced managers who want to demonstrate advanced skills and knowledge and who wish to be recognized as one of the best and most experienced managers in the nation.

Five years of direct community association management experience.

•

Successful completion of all six M-200 Level Programs

•

Successfully passed the CMCA Examination administered by NBC-CAM.

How do you pursue the PCAM designation?

•

Complete the prerequisites.

•

Earn a minimum total of 125 points on the PCAM application, including: •

A maximum of 20 points is allowed for Professional Designations or Licenses.

•

A maximum of 30 points is allowed for Formal Education.

Complete the PCAM application.

•

All applicants have one year from the date of application approval to complete the Case Study. Failure to complete a Case Study will require you to re-apply with payment. Submit the PCAM application after you have met the above qualification criteria before applying to sit for the Case Study.

•

Submit the nonrefundable application fee with the PCAM application.

•

Member: $195 (Individual Manager Membership)

•

Nonmember: $295

How do you maintain the PCAM designation?

•

What are the prerequisites for the PCAM designation?

•

•

•

PCAM—Professional Community Association Manager The pinnacle of community association management. The PCAM designation is the highest professional recognition available nationwide to managers who specialize in community association management. Earn your PCAM and join the elite—the select— the best.

Janice Pyka, MinuteBids

Pay annual maintenance fees.

•

Member: $150 (Individual Manager Membership)

•

Nonmember: $250

•

Re-designate every three years in August and meet continuing education requirements.

•

Comply with the CAI Professional Manager Code of Ethics

If you are looking for additional information or forms, please visit, http://www.caionline. org/career/designations/Pages/managers. aspx#ams

A minimum of 55 points in Section II. November | December 2013

17

BEYOND MANAGEMENT At CoMMuNity DeVelopMeNt, first-class community management services are just the beginning. We offer lifestyle products and services, unparalleled in the industry, designed to improve your life.

• Expert 24 hours a day, 7 days a week, 365 days a year maintenance services • Discounts and savings on the products and services you use every day • Family-friendly programs promoting health, safety, and “green” living

7100 Madison Avenue West | Golden Valley, MN 55427 (763) 225-6400 | www.developcommunity.com

Delivering unsurpassed management and lifestyle services to communities worldwide.

18

Minnesota Communit y Living

Carin’s Corner: Top Performers Find a Balance Between “Right” and “Now”

By Carin Rosengren, Keller Property Management

F

olks in the community association industry know how it feels to be under pressure.

I don’t just mean the usual time constraints that come with a property manager’s full portfolio or added expectations by neighbors when a member decides to join the board.

In the community association biz, both volunteers and paid individuals quickly learn that time is money, and not only that, but homeowners are demanding more for less.

“If you don’t have time to do it right, when will you have time to do it over?” —

John Wooden

i.e. “getting it right,” which surfaced when her thorough reading of an insurance renewal uncovered an error and saved the association hundreds of dollars.

Excellence in Service Award winner Kim Schultz (pictured at right bottom), of FirstService Residential, oversees highprofile high rises and urban condos, where she earns praise from board members for In effect, efficiency becomes king. But it her hard work. Kudos like “consistently remains our job to see that efficiency does obtaining quorum at annual meetings” not become a dictator. Sometimes, when mean that Kim is working efficiently, as the homeowners to whom we answer are well. Without a quorum, an annual meeting demanding something “right now,” we have needs to be redone, costing the manager to tell them to choose: “Do you want it and the association twice the time, money right, or do you want it now?” That’s why and effort. the quote from John Wooden grabbed my attention when I saw it, although I didn’t Surely Franz Eisenbauer, the Above & know who Wooden was (he led a 10-time Beyond Award winner from Creekside of national champion basketball team), and Plymouth, should know a thing or two I’ve kept it tacked up in my office ever since. about efficiency: he’s been serving on that board for 16 years and has held most of This is the last of my series of columns the officer positions at different times. taking another look at the winners of the Eisenbauer has helped guide the association 2013 Vision Awards from the Minnesota through two large storm insurance claims Chapter of the Community Associations and two special assessments, in addition to Institute (CAI-MN). This year’s event was the laundry list of community living issues. the highest-attended in its history — a Volunteer or not, an inefficient person beautifully executed evening in May where would have found himself kicked to the the people who performed under pressure curb by the homeowners in a most efficient were applauded. Throughout the night way. and throughout the nominations, it was apparent that the winners had been able to Let’s face it — nobody gets it right every find just the right balance of responding to time. Sometimes, we make a mistake pressure and acting with efficiency. that forces us to do a task again, or to try it in another way until we get it right.

Rookie of the Year Meggan Anderson Sometimes we simply have to do it over, (pictured at right top), of Community despite the inefficiency of it all. But how we Development, Inc., earned her Vision respond when that happens offers a chance Award in part by demonstrating the hard to practice professionalism and reintroduce work it takes to be a successful property efficiency. During one such opportunity manager. She also has attention to detail, years ago, I offered the following to a Board

of Directors, “I dropped the ball here and I am sorry. But, I can promise you this: you will not see me make the same mistake twice.” Now is that efficient, or what?

Vision Award Winner Meggan Anderson Community Development, Inc.

Vision Award Winner Kim Schultz FirstService Residential

November | December 2013

19

bS C 20

Minnesota Communit y Living

The Efficient Attic Why Insulating Saves You Time and Money

I

nsulating an attic is not an aesthetically pleasing or enjoyable project for homeowners, and often is an expense that is not covered by an association. However, there are several reasons why undertaking this type of project is not only advantageous for individual homeowners; it can also help associations save money and protect one of their most precious investments.

Snow Removal We find that associations incur large snow removal costs during bad winter storms, and this is increasingly the case when attics are not properly insulated and ventilated. When premature snow melt occurs on roofs due to heat loss in an attic, associations are left with a decision to leave the snow where ice dams may occur or remove snow from roof eaves to prevent ice dams. This cost is hard to predict and often hard on the reserve funds when winter months leave us with excessive storms.

Having a properly insulated and ventilated attic space can eliminate the need for snow removal on roofs and save the association money in the long run.

Another symptom of large temperature differences between outdoors and the attic and improper ventilation is condensation in the attic. One of the most common occurring issues in attics during the winter is frost on the underside of the roof deck. This frost eventually melts and can compromise the insulation below it and in some cases finds a way into the living space, causing damage. This type of leaking is often mistaken for a roof leak. Ice and water barriers protect the attic from leaks, but also trap moisture in the attic; this creates a need to ensure proper insulation, bypass sealing and ventilation to ensure moisture does not become an issue in attic space. Eliminating this moisture can protect an association from spending money on roof maintenance that may be unnecessary.

Energy Efficiency

by

Mike Baker, Complete Building Solutions

before and after insulation and ventilation projects and in some cases have seen up to a 20% savings in heating and cooling during peak months. In condominiums this can save associations money on common area heating and cooling bills. It also makes investing in attic insulation and ventilation one of the only construction projects that can actually pay itself back to the homeowners over time in energy savings.

Attic insulation can be an important project for any association, whether you are preparing for a re-roof project or want to reduce snow removal costs. The first step is to consult a professional to inspect your attics and find out the proper scope to remediate any issues. Remember, proper insulation and ventilation can save your association money in the next winter and protect the investment in your roof system.

Properly insulating the attic is one of the best ways to save energy in a home or building. We have tracked energy costs

Roof Life When attics are poorly insulated and ventilated, we see roof life expectancy reduced and sometimes cut in half. A new roof assembly should be expected to last 25 years, but excessive heat loss and poor ventilation can quickly eat away at those years. The temperature of an attic needs to remain at or near the outdoor temperature. Unfortunately most attics we encounter remain rather warm during the winter months and get excessively hot in the summer. These temperature swings, sometimes as much as a 70 degree difference, will cause building materials to expand and contract at different rates and wear down the roof deck and shingles prematurely.

Creating a proper attic system will protect the roof life and help associations protect one of their most expensive investments in their buildings.

Moisture Damage November | December 2013

21

Understanding Financial Statements Ignorance Is Not an Option

L

et’s admit most people get glassy-eyed when they see financial statements.

One month after purchasing my condo, I attended my Association’s annual meeting. Sitting with a handful of fellow owners, we voted to approve the annual financial statements. There was only one problem – the balance sheet didn’t balance. Assets did not equal liabilities plus equity. As a trained accountant I could not convince the membership it was not possible the financial statements were accurate. The manager (not a CMCA or professional manager) could not answer why they didn’t balance. After all, he used QuickBooks and they must be accurate!

Fiduciary Duty to Understand Associations are a business and Boards must act as a prudent business person. As Board members and Managers we have a fiduciary duty to ensure that the financial statements are not only complete, but accurate. Boards cannot make reasonable resource allocation decisions with inaccurate financial information. And let’s face it, most Board decisions are resource allocation issues – how much to spend on irrigation, lawn care, snow removal; how much to pay the manager, which lawyer can we afford, what is the cost of a adopting a new rule or policy, cost of capital repairs or deferring maintenance. Without accurate financial statements, Boards are simply making uninformed decisions, exposing their Association and maybe even themselves to criticism or mismanagement claims from fellow owners.

Know Your Manager’s Background Your manager should be able to explain in detail your financial statements. Many managers come from real estate sales, construction management, human services training and other fields and may not possess formal training in accounting, financial statement preparation or analysis.

22

Minnesota Communit y Living

Ideally, a manager has been trained as an accountant and has experience producing financial statements.

If your management company has an accounting department, you will want to make sure that your manager fully understands the various accounting processes and how they impact the financial reports. Every association is different and thus will probably have slightly different financial statement accounts and even format. Your manager should be able to tell you the difference between cash vs. accrual basis accounting, financial vs. fund reporting, factors and accounts impacting taxation, and be able to explain receivables, payables and any supplemental reports.

For example, when an association uses cash basis accounting, income is reported when it is received. Therefore, if someone pays dues early, the income is reported in the month the money is received. This would be prepaid dues (a liability for the Association). However, this liability would show only on accrual basis financial statements. Therefore, the Board should request a supplemental Owners’ Account Aging Report showing all the dues that are prepaid and likewise who is delinquent in order to ascertain future cash flows and collection issues.

by

Jeff Westendorf, West Property Management

•

General Ledger – showing all accounting activity for the month

•

Bank Reconciliations – for each bank account

•

Copies of All Bank Statements – should tie to bank reconciliations

•

Supplemental reports – such as expense detail reports or capital project reports

In addition, a Board officer should review all invoices and countersign or approve all checks for the Association. Reserve Funds should be controlled by dual signatures of two Board members to safeguard funds. If there is a question about any expense, the Board should be able to review any invoice to ensure it was properly accounted for in the financial statements. In addition, Board members should verify that: •

The income statement includes all income and expenses from the general ledger.

•

Net income or loss is recorded in the Equity section of the balance sheet.

•

Assets equal Liabilities plus Equity.

•

Balance sheet asset accounts agree to the bank reconciliations.

•

Bank reconciliations tie to both the balance sheet and also to the bank statements.

•

Reconciling items on the bank reconciliations are reasonable:

Basic Review of Monthly Financial Package Your monthly financial package, at a minimum, should include: •

Income Statement – for the month and year to date

•

Checks are not more than 30 days outstanding;

•

Balance Sheet – for the month end

•

•

Cash Flow Statement – only if you use accrual accounting

Checks are made to vendors with whom the association does business;

•

•

Owners’ Account Aging Report – showing prepaid dues & past due accounts

Check amounts and dates are reasonable based on services performed;

•

Math is accurate!

•

•

Checks that have cleared the bank are accounted for in the expense detail and included in the income statement;

Are reserve funds adequately funded? (note – you should use your reserve study to compare your current reserve fund levels to projected future needs.)

•

Should we make adjustments in dues or modify expenses in order to meet short-term and long-term needs of the community?

•

As you approve vendors and contracts, analyze the projected contract costs to your budget to know if you can afford that level of service or can add additional services.

•

Are there future projects or expenses that Management foresees affecting the community and what impact will they have on the Association?

•

Deposits on the bank statement are reconciled to income.

The review of the financial package is not something that can be done at the Board meeting as the manager is presenting the financials. The prudent Board member will have taken some time to review the entire financial package prior to the meeting and then make sure that what the manager or Treasurer is saying during the meeting makes sense. A critical internal control is a vigilant Board that asks questions and does not accept an answer until it is proven to be accurate using independent documents like bank statements or invoices.

A Deeper Understanding To deepen your understanding of your community’s financial condition, Board members should use the financials to engage in the following examples of discussions: •

How are we doing relative to our annual or month to date budget?

•

What changes or modifications should we be making to our budget or financial plan?

•

What impact will those changes have on the Association, community members or our plans for the property?

Trust, But Verify Board members have a fiduciary duty to understand and use financial information appropriately. All Board members, not just the Treasurer, should be able to answer financial statement questions for any homeowner and use this information in making decisions. If you can’t, then it is time that you ask your Manager or an outside resource to provide supplemental education so you can perform your minimum responsibilities.

Managing to make a

difference 30 years of association management experience Reserve Plans are included in our management program Proactive management, including weekly property visits Smart, expert, professional advice

To quote President Ronald Reagan, “trust, but verify” the financial statements presented by your manager; review, ask questions and deepen your understanding; only then are you ready to make prudent business decisions!

About the Author Jeff Westendorf holds a Master of Arts in Teaching from Drake University and a Bachelor of Business Administration in Accounting from The University of Iowa. Jeff is currently the only Certified Manager of Community Associations in the State of Iowa and is the founder and owner of West Property Management in West Des Moines, Iowa. Professional experience includes public accounting, banking, secondary & higher education and non-profit management.

Omega Management, Inc.

763.449.9100

www.omega-mgt.com

November | December 2013

23

24

Minnesota Communit y Living

To Rent or Not to Rent?

Debunking Misconceptions About Leasing by

A

s a director of a leasing division at a real estate brokerage, I work with many associations and their respective property management companies. Over the last seven years, I have heard the concerns expressed from condo homeowners, board members, and property managers. Much of the concern is certainly understandable, as associations and property managers prefer owner occupied units in their buildings, but I think there are some misconceptions about private ownership rentals, and some great benefits when compared to the alternatives.

One of the first misconceptions through the years of economic downturn and recovery is that rentals can substantially affect the property values in a particular complex.

Although rented properties may have some effect on property values, the percentage would need to be close to 40% for that effect to be noticeable. It would only become noticeable when it affects the ability for a buyer to obtain FHA financing. Most associations, during the worst of times for sales, never saw rentals reach 30%, even in buildings with no rental caps in place.

Alternatively, and in my opinion myopically, many associations implemented rentals caps far below any level that would affect any financing, or substantially lower property values. The associations that did impose rental caps (as low as 15% of total units in some cases), rental term limits, or other policies that made leasing difficult for individual owners actually increased the number of foreclosures and short sales that are far more detrimental to property values than leasing. With homeowners forced to move due to employment relocation, additions to families, etc., some homeowners that would have certainly been in good financial standing were forced into short selling or being foreclosed on because they could not lease their property. In these cases the other homeowners in the complex

Patrick Carson, Downtown Resource Group

experienced far greater devaluation than those associations with a higher number of renters. It also meant associations most likely were not receiving association dues.

No association wants to be in the collections business.

Along with fewer foreclosures and short sales, there are other benefits that associations see when individual units are rented. Those homeowners who have rented their place have steady monthly income to pay their association fees, and generally have a lower rate of delinquency on HOA dues than owner occupied units.

With the recovery we have seen and record high rents, investors and homeowners have an even better ability to be current with their association fees and additional expenses. Associations can actually implement policies that further mitigate the risk of delinquent dues from rented properties by requiring rent payments be paid directly to the association if the owner falls behind. Furthermore, associations also have much more control over a renter’s occupancy and the ability to evict a problem renter, as opposed to removing a problem homeowner.

Another misconception is that renters as occupants are of less quality than homeowners. In many of the associations I work with, the rental requirements, including the background checks used, tend to make it harder to lease a condo than purchase. With no background check required to purchase, if someone has the means to purchase the property they can essentially do so no matter of their criminal background or other possible negative history. In contrast, an association has the ability to review a renter’s full history, including criminal, credit, rental, homeownership, employment, and more. Guidelines can be put in place in which the association can work in concert with their homeowners to make sure the

quality of rentership in the complex is acceptable.

In fact, a large majority of the renters I work with could purchase but are choosing not to. Many are empty nesters who just sold their home and want to try out condo/association living before buying again. Others want to test out a specific building before buying in it. Many others are relocating from other cities and either own a home already or aren’t sure how long they will be living in the area. There are many circumstances in which client choose to rent, but what a large majority have in common are great rental criteria (good jobs, solid income, no criminal history, solid rental history, etc.). At the end of the day, the risks of renting can be mitigated substantially by the association and the homeowner.

These are just a few points that associations and homeowners can consider when addressing the issue of leasing in their buildings. In leasing, so long as an association employs smart and practical policies, and educatea its homeowners on best practices, leasing can be far more of a benefit than a detriment to the overall health and enjoyment of a building and its association. For more information on additional policies and best practices, contact an agent experienced in leasing in your building and in your market, as well as knowledgeable of the rental policies in your building.

November | December 2013

25

cai-mn

The

NEW TRADEShow

O

n Thursday, February 20, the Saint Paul RiverCentre will be the location of CAI-MN’s annual tradeshow event. This year’s tradeshow is taking on a new schedule designed to provide focused education, enhanced networking opportunities, and extended tradeshow time. The education sessions will be split into two tracks, one for homeowner board members/volunteers and the other for managers. More information about the event can be found online! Exhibitor/ sponsor registration is already open and attendee registration will be opening soon.

We hope to see you in February!

Thank You 2014 Sponsors!

List as of Nov. 21, 2013 3M Window Films Advanced Sandjacking, Inc. Advanced Waterproofing & Foundation Repairs, Inc. Alliance Association Financial Services Allied Blacktop Company AMBE Ltd. Asset Restoration Birch Lawn Maintenance Breiwick Companies CertaPro Painters Community Advantage Complete Building Solutions Construct-All Corporation Extreme Exteriors N.A., Inc. Gaughan Companies Levin & Edin LLP Metro Paving Inc. Mutual of Omaha Bank Paul Davis Restoration Reserve Advisors Restoration Technologies, Inc. Sharper Management Stone Valley Painting 26

Minnesota Communit y Living

2014 Tradeshow Features: •

100+ Exhibiting & Sponsoring Companies

•

200+ Industry Professionals in attendance

•

Networking Reception

•

Tradeshow Hall open for 2.5 hours

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

That’s what our clients tell us.

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.

Register Online at www.cai-mn.com

(952) 844-9033 www.hammarlaw.com

SAVE the DATE!

Thursday, February 20, 2014 Saint Paul RiverCentre

Where: Saint Paul RiverCentre 175 West Kellogg Boulevard Saint Paul, MN 55102 (651) 265-4800

When: Thursday, February 20, 2014 1:30 – 7:00pm

Agenda: 1:30pm

Registration Opens

2:00pm

Education Sessions:

CAVL Track

Manager Track

3:30pm

Networking Reception

4:30pm

Tradeshow: Tapas

7:00pm

Closing Remarks

& Door Prizes

Stations, Bar, and Exhibits

November | December 2013

27

Property Managers call us when...

They are trying to meet budget numbers, have Service concerns with their current vendor, and if they are looking for a vendor who knows Associations.

Phone 763-425-8400

28

Minnesota Communit y Living

So Much to Do, So Little Time How Technology Can Help You Become More Efficient by

Lon Bencini, MinuteBids

Maintaining important documents and conducting inspections on rental properties, apartment buildings, and homes is crucial for property management companies of any size, big or small, and it can be difficult to manage this process. Property managers can now use their mobile devices to help them manage their properties, saving them time when doing their regular inspections, checking on projects and capturing data while on the go.

A

re you feeling the pressure? You’re not alone. In an increasingly competitive real estate market we’re all doing a lot more, managing more properties and working longer hours. There are solutions. Technologies are now available help us become more efficient when dealing with our day-to-day tasks. These technologies can allow more time to spend with our customers while improving our bottom line at the same time and maybe, even spend a bit more quality time with our families.

We need to take advantage of the new stuff out there; here are a couple of technologies that we’ve used and that you should consider to help better manage your time.

Mobile Applications Mobile technology is changing the property management business. From sales to maintenance and everything in between, there are mobile applications for your smart phone and tablets to manage all of it.

The growth of mobile usage is phenomenal. In 2011, mobile traffic was 12 times the total internet traffic generated in 2000 and it’s estimated that there will be 10 billion connected mobile devices by 2017. Most consumers are using their mobile devices to find apartments, condominiums and townhomes. In 2012, ninety percent of consumers began their search on the web, according to a study by National Association of Realtors, and more than 80% are accessing this information on their smart phones and tablets, according to the California Association of Realtors. These are huge trends.

Today, many property management companies are allowing their managers to do more on their smart phones. Many are using them to make notes and snap pictures of their properties, make payments, map directions to meetings, communicate with their team and other important applications. It’s amazing, but today all of this is possible on smart mobile devices.

There are many property inspection applications available for your smart phone and tablet, though they can be expensive. Here at MinuteBids, we’ve just launched a free mobile application that property managers and management companies can use on the iPhones or iPads they already have, to inspect properties using touch check boxes, auto text comments, and photos to create an organized professional report. This report can then be accessed anywhere online when they need to view, print, or email the report directly to the property owner on the spot. Property reports take very little time when done from the property being inspected.

Local Information The amount of information on the internet is beyond our abilities to access it. The amount of data stored in the cloud is now measured in zettabytes, sounds big. The amount of data we can access is something less than that but still an inconceivable amount of information. While the internet has made a lot of what we do more efficient, finding the right answer is not always made easier. For example, I just did a Google search for roofers in Minneapolis and got 1,160,000 results. I know it’s not very helpful but easier than what we’ve done in the past.

So Much to Do continued on page 30 November | December 2013

29

Minnesota

Community Looking to contribute?

CAI-MN is looking for article contributions.

Contact Monte Abeler at (651) 265-7852 or montea@cai-mn.com for further details about joining our list of article contributors.

So Much to Do continued from page 29 Over the years, looking for local service providers has evolved from paper based yellow pages to Internet directories and Google searches. Angie’s List, HomeAdvisor and other online directories provide lists and ratings of various service providers. It takes time and sometimes additional cost to go through these long lists and it requires some faith that the ratings are meaningful. Once you’ve built your list then you have to hope that the service providers you’ve selected are interested in bidding on your project or that you’re not barraged by phone calls and emails. And, the service providers usually have to pay somebody something to learn about your project.

managed and the service providers work primarily with property managers. It’s not for homeowners, it’s all B2B. Using our database, we’ve created an online marketplace, an eBay, if you will, for buyers and sellers of property services.

What we all end up doing is working with the same list of trusted service providers. It would be nice if we had the time to check out new ones, to review the whole pricing thing and to have all this activity stored somewhere easily accessible and really easy to use. It would be nice if we all had a lot more time to do this.

The opportunity to become more efficient through technology isn’t so much that it’s available and plentiful, it’s how to use the tools intelligently to get you the answers you need and to do the reports required for your job.

MinuteBids has taken this to the next step by creating a database of properties and services, all voluntarily registered on MinuteBids because the properties are

Reserve Consultants, Inc. Association Property Services Specializing in RESERVE PLANS that are • Easy to Understand • Practical (Around 12 to 13 Pages) • Color Photos Included • Fee will be the Least Expensive Quoted John Russo has more than 20 Years Experience in Reserve Planning; Is the only Ph.D. Reserve Analyst in the Midwest.

952-944-7137 (Office) 952-935-9647 (Fax)

30

Minnesota Communit y Living

Property managers simply request bids on projects they have on their properties and service providers are matched to the project, based on the specific project and location. This saves time by ensuring property managers get the bids they need and only from those service providers interested in the work are bidding on the project, including your trusted and preferred ones.

We’ve learned over the past few years that there really aren’t enough hours in the day to do what needs to get done. We need to work smarter and we need to use the tools available to help us.

Breaking through to your neighbor’s condo is a bad way to see the holes in your insurance coverage.

Without the right condo insurance, you could end up paying out of pocket for your repairs. Worse, you could owe for the repairs to your neighbor’s condo, as well.

Talk to COUNTRY Financial for the right condo insurance.

We can help you determine what type of coverage — and how much — you need to protect you and your home.

Give us a call today!

855-276-2306

countryfinancial.com Policies issued by COUNTRY Mutual Insurance Company® or COUNTRY Casualty Insurance Company®, Bloomington, IL.

November | December 2013

31

Your Home Has To Breathe.

It’s Why Sufficient Attic Ventilation Is So Important.

When it comes to roofing, it’s not just about the shingles. When attics are lacking in adequate ventilation, it can reduce the longevity of your shingles, create an environment for ice dams to form during winter months and potentially render your shingle warranty void. At Xtreme Exteriors, we address roofing as a “system” that when properly installed, ensures your home looks and functions at its best for seasons to come.

When the Snow Flies. Count on Xtreme Exteriors to expertly remove roof top snow and ice.

Removing roof top snow also helps extend the life of your shingles. If you’ve experienced ice dams in the past, we can help you identify problem areas in your attic’s ventilation, plus offer affordable solutions to minimize ice dams from forming.

Want To Learn More? We like to share what we know, so we’ve created a series of educational presentations on various home exteriors issues we offer to association boards, just like yours. No sales pitches, just information based on experience and best practices, so you can make informed decisions when it comes to your own home’s exteriors. To find out more, give us a call at 763.441.1334 or visit www.xtremeexteriors.com/presentations.html.

Jeff and Jeannie Sigler, Owners of Xtreme Exteriors.

Your Dependable Single-Source Solution for Your Entire Home Envelope.

MN License: BC362463

•

WI License: 962215

Call Us Today at 763.441.1334.

Visit Us at www.xtremeexteriors.com