CondoLifestyles - April 2012

APRIL 2012 | VOLUME 16 | NUMBER 1

CondoLifestyles

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THE SOURCE FOR INFORMATION ON COMMUNITY ASSOCIATIONS, CONDOS, TOWNHOMES, CO-OPS & HOAS

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Diagnostics Key to Treating Water Leaks F E AT U R E S

Policy Based Governance Smart Ideas for Energy Efficiency Risk Management and the Condominium Renovation Contract Alternative Investment Opportunities for Condominium Reserve Funds Single Buyer for Unsold Units Provides Hope

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table of contents COVER STORY

03 Diagnostics Key to Treating Water Leaks

By Pamela Dittmer McKuen BOARD BASICS

07 Policy Based Governance

By David Mack 13 Smart Ideas for Energy Efficiency

By Elena Lugo, Wolin-Levin, Inc. 16 Industry Happenings Compiled by Michael C. Davids & Sherri Iandolo 18 Editors Message 19 Directory Advertising 25 Industry Happenings S P E C I A L F E AT U R E

26 Risk Management and the Condominium Renovation Contract

by David Lewin, Lewin Law Group GUEST EDITORIAL

28 Alternative Investment Opportunities for Condominium Reserve Funds

By Robert B. Levin, CPM EVENT HIGHLIGHTS

32 MCD Pool Party Featuring Condolympics S P E C I A L F E AT U R E

31 Single Buyer for Unsold Units Provides Hope

By David Mack 34 IREM Chicago Premiere Awards

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COvER STORy

By Pamela Dittmer McKuen

Diagnostics Key to Treating Water Leaks If your building has water leaks, don’t rush out to buy new windows or to replace the roof. you’ll spend a lot of money, but you might not solve the problem. What appears to be the obvious solution is often wrong. That’s what makes building leaks such a challenge.

T

his and other lessons were shared by a panel of building professionals at the recent educational program, “Managing and Preventing Exterior Water Leaks.” The event, which was co- sponsored by MCD Media, was designed for community association managers, board members and homeowners. It also awarded 2 credit hours toward pre-licensing education requirements for those who seek manager licensing by the State of Illinois.

The panel consisted of Mark Waldman, SE, PE, LEED AP of Waldman Engineering Consultants ; Pete Cairo of CSR Roofing

Contractors; Walter Laska of Masonry Technologies; Ken Mariotti of Woodland Windows & Doors ; and Frank Coleman of Community Advantage of Barrington Bank and Trust, A Wintrust Company. The panelists shared large-screen photographs depicting a wide range of leakage, infiltration and damage as well as sample building materials that prevent water problems.

The program was moderated by Carol Marcou, CMCA, AMS, PCAM, senior community association manager with Vanguard Community Management in Schaumburg.

BASIC Building Elements Waldman opened the program by giving attendees basic technical information. He explained some building jargon, such as “building envelope” and “lintel,” and the three elements required for leakage: water, an opening or hole in the building, and pressure difference. Exterior water leakage issues can be difficult to track and resolve because of the interactions between building elements. The most common areas for leaks to occur are penetrations and transition zones.

Cracked, peeling drywall above a window doesn’t necessarily indicate a faulty window. It could mean a combination problem of roof and exterior wall. “Sometimes it takes months, even years, to get to the bottom of some of these problems,” he said.

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Wet Insulation - Water Leak

Extensive Sill Rot

“Roofs do take a serious beating,” he said.

“You have sun, snow and ice. People walk on them and animals go up there. Trees knock them. You really have to keep an eye on your roofs.”

A flat roof should last about 20 years.

That lifespan can be shortened in many ways,

Common Roof Defects Next, Cairo showed photos of various low-sloped (flat) and steep-sloped (pitched) roofing systems, and explained how each is constructed. Then he discussed the most common problems and defects associated with each.

including membrane punctures, blisters and open seams; open flashings around penetrations; missing strainers and clamping rings around drain holes; and plant material, which can clog drain systems and force water onto the roof. Pitched roofs can last 30 to 40 years.

They might not look attractive because they

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COnDO LIFESTyLES

Masonry Wall Considerations

▲ Shown above (LtoR) are Frank Coleman, Walk Laska, Ken Mariotti, Carol Marcou, Pete Cairo and Mark Waldman.

will be worn, but they will last. Common defects are: nail pops beneath or penetrating shingles; deteriorating rubber boots around soil pipes; bent or broken ridge shingles; raised flashings; clogged gutters; animals that lift vents and nest in the attic; improperly

installed satellite dishes.

“You should have a maintenance program,” Cairo said. “Every spring and fall, have your roof inspected, and you’ll solve a lot of these problems.”

Walt Laska, who specializes in masonry construction, detailed the two types of exterior wall construction: Cavity walls, which have a drainage layer between an inner and outer wall, and barrier walls, which repel rain.

Signs that water is trapped behind a masonry wall include efflorescence, rusted lintels, masonry staining, cracks in mortar joints, crazing on brick surface, spalling, and interior drywall damage.

Laska’s preferred method for investigating leaks are first, acute visual observation in addition to obvious warning signs and second, exploratory examination by making wall openings. He is not a huge fan of water tests to find wall leaks because most methodologies test permeability rather than leakage.

“Be careful,” he advised. “Masonry wall water tests are often not warranteed and are misused. They are also very expensive. A test costs about $1,200 to $2,500 and some of the experts will want to do 10, 12, 15 tests on your building. I believe a good visual inspection continued on page 35

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BOARD BASICS

By David Mack

Policy Based Governance Does the notion that “they who govern least, govern best” apply to boards of directors of common interest communities?

M

ichael D. Baum of Baum Property Management is a strong believer in that idea. “Common interest boards that wish to preside over a healthy and contented community are wise to heed this phrase,” he said. Those that do so tend to hold fewer meetings and stay in their board positions longer because they are not bringing down unnecessary stress upon themselves and other owners are satisfied with the job they are doing and find it unnecessary to rise up to vote them out of office.

Such boards, “have developed and implemented a clear set of policies,” which they want the management company to carry out,” said Baum.

This cuts down significantly on the need for the board members to govern; instead, they primarily monitor the performance of management to see

that it meets their policies and expectations.

Boards that utilize a system of established policies to govern are utilizing the principals of “policy based governance.”

Heavy Handed Boards Unhealthy Baum feels that when boards govern too forcefully- especially when they enact an excessive number of rules and regulations- “this is a signal of an association that is not healthy,” and may have a lot of dissatisfied and disgruntled residents. “Happy owners tend to be self-governing,” and will not have to be led like little children who need to be taught how to behave properly. And, “boards that tend to be heavy handed and dictatorial consist of miserable members who meet ad nauseum, don’t talk to their neighbors much and serve short term stays on their boards,” Baum added.

But Baum offered a caveat regarding a board that follows the operating style of easy does it.

“The art of governing least does not in any way mean a board should abandon its duties,” only that the directors follow the philosophy that they can usually best garner the support of the community by using a, “carrot instead of a stick.”

Baum’s views make sense but there are probably boards that contain directors who may not always agree on the best method of governance.

Some may want to exert a light touch in administering the affairs of their association while others want to follow a tougher approach. Some push their own agendas with whatever force they can, trying to pull others behind them in support. This can create conflict with the majority prevailing and following the operating style they prefer, for good or bad.

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over others or even be a little on the heavy handed side. “The best board member chooses to run for the board to give service back to the community without ego,” he said, in contrast to the person who wants to exercise absolute control for his own gratification. “There is no ‘I’ in board.” The good and reasonable director serves to represent the interest of all the owners in the community.

being taken seriously and that penalties are being levied upon the violators,” said Devlin. Action in this manner would not constitute an overbearing operating style but reflect a justified insistence that everyone on the property must contribute to its livability and be willing to accept the minimal restrictions on their lifestyles that enforcing those limited rules necessitates.

Emphasize Major Rule Concerns

Too Many Meetings

What do other management people feel about the idea that governing best by governing least? Is it a style that most would subscribe to?

“For the most part I would agree,” said Mike Devlin of Caruso Management Group, focusing primarily on the establishment and enforcement of rules part of a board’s responsibilities in governing its community. He believes, “that fewer rules which restrict a homeowner are the best way to go,” emphasizing that the major concerns where effective and strictly enforced rules are necessary are pets, noise and, “behavior toward other homeowners.” Few other areas require much attention from a board.

But regarding those limited issues, “the board and management company must be willing to make certain that the rules are being followed and

Barry Katz of Omnibus Services, Inc., also concurs with the light handed approach to board governance, which would be manifested, in his view, in a reduced frequency of meetings. “Most associations have too many meetings,” he said. In his experience, “many meet unnecessarily as a substitute for social gatherings or as a form of evening entertainment.” (He is not in favor of board gatherings late in the day because, “people are usually tired and definitely not thinking clearly or in a business like manner.”)

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Know Where the Line Is And as far as rules are concerned Katz agrees with Baum and Devlin, advocating keeping them, “general and as minimal as possible,” he said. Too many rules and those that are too specific and

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aimed at every little nuance of behavior, “are unnecessary and over reactive.” Smart boards know where the line is on behavior control that they should not cross.

Focus on Solving Problems While he may go along with the notion that less governance is generally a good method of operation for a board, one source that prefers to remain anonymous (we shall refer to him as Rugby) doesn’t believe that the number of meetings a board holds has anything to do with whether or not it runs its association with excessive vigor or attempts to place undue restrictions on the behavior of homeowners. “The main focus of the board should be to solve problems,” he averred. “Time allotment (to the number of meetings) will be a consideration based on the issues at hand.” That might require monthly sessions or official gatherings on a more or less frequent basis.

And as far as rules go, which he noted should only address those issues that have a material impact on the lives of homeowners or property values, when a board convenes meetings is not predictive of, “the number of rules it will or will not enact,” Rugby added.

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BOARD BASICS

Common Sources of Irritation in HOA’s Baum has seen residents of homeowner associations (HOAs) he manages provoked by trifling rules. About half of those HOAs do not permit storage sheds and, “some of the folks got pretty steamed that they cannot have (one) in the back yard of their single family homes,” he said. Control of flower planting is another area in which some HOA boards have been too controlling. “Many associations regulate the planting of flowers and bulbs and that does not sit well with folks (who) want to add some color around their homes.” Restricting bird feeders and the type of mail boxes have also been sources of irritation to homeowners. So much for the concept that a person’s home is his/her castle. These are the kinds of controls that mark associations in the eyes of some as undesirable places to live and which a village or city government would never impose on its citizens in areas not governed by community associations.

Management’s Role Do boards tend to go overboard in their zeal to control life on a property when they are on their own, unaided by a management professional?

Devlin believes so and feels that a management company can make a big difference in a number of

areas, one being the enforcement of rules. It can tone down the aggressive attitude of a board of directors that might have a tendency to be too forceful in going after violators of even especially simple rules. An added value of an agent in handling any rule violation processing is that the manager can deflect the anger of aggrieved homeowners toward itself and away from the board. On the other hand, “in a self managed community, the homeowners know that the board is behind the letters citing a violation,” said Devlin.

Baum cited the same problem of the potential for bad blood between homeowners and their boards when there is no management agent as intermediary. “In the absence of management, the board must do (all of) the governing,” he said, and, “this often leads to conflict when neighbors govern neighbors.”

While Katz feels that boards would probably find it difficult to operate with a light touch without the assistance of a management agent, he feels that some should have the self-governing capacity if they are of sufficient size. “Some very large associations that employ their own operating staff can achieve that minimal governance role if they let their (personnel) manage.”

Rugby feels that if certain management stan-

dards are met by an association, its board can generally do a competent job of conducting its business without being overbearing whether it hires a contract management company or undertakes the effort unaided by a professional. If the board handles its affairs,” in a businesslike and judicious fashion with clear boundaries and guidelines, any association can be run efficiently and effectively, self or professionally managed,” he said.

Size and Complexity As Rugby intimated, the size and complexity of an association should determine the frequency of meetings even when the board only operates pursuant to the minimalist approach to governance, according to Katz. Large, complex communities with an extensive physical plant or their own staffs will probably have to meet monthly, whereas smaller associations may be able to get by with quarterly meetings. But, he said, there has to be, “in such cases regular communication between the board and the managing agent or on-site manager.”

Necessary Business Baum also noted that the amount of necessary business to be conducted should dictate the number of meetings held to avoid a possible ten-

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dency to govern excessively when holding superfluous meetings where nothing essential is on the agenda. “More governing is created unnecessarily as a result of meeting more often,” he said when there is nothing important or required to be done.

Devlin doesn’t believe either that monthly meetings are necessary but they should be scheduled at times of the year when crucial actions must be planned and/or taken. He would limit them to 6 or 7 at which only important matters are discussed and transacted and petty decisions or actions that might antagonize many homeowners are avoided.

The first meeting could be in February to plan spring work- landscaping, concrete, painting, etc.

“The property manager (would) assist the board in setting priorities for the work,” said Devlin, as well as prepare requests for proposals. A meeting in March would allow the property manager to make a recommendation of contractors and a selection by the board. A subsequent meeting could be held in June or July at which fall projects can be discussed and planned followed by an August meeting that would have a two fold main purposeto select contractors for the fall projects and to go over the first draft of the next year’s budget prepared by the manager. An October session would continue the budget process and finally, “a year

end meeting in november would be held to adopt the next year’s budget.” At some point, too, a meeting for the annual election would be on the calendar. This is a pretty full complement of meetings but, again, planned only for the purpose of conducting essential business. Of course, other unanticipated matters might come up that would necessitate meeting outside of such a schedule.

Katz, like Baum, feels that one of the results of meeting too often is that board members start looking for things to do to fill the time and think up too many unnecessary rules that cause the association to become too involved in residents’ lives.

Devlin’s personal experience where he lives, however, indicates that isn’t always the case. His association does meet monthly, but when rules or changes are to be enacted it is through the participation and input of owners who attend those meetings. That limits rules to a necessary minimum that the owners can live with. Which is a good thing because, “if there are too many rules, owners will tend to ignore the most petty ones and the board will have a harder time enforcing any rules,” Devlin said. As indicated above, Rugby also generally does not agree on this point with Baum and Katz.

Heavy Handed Traits Boards that govern with a heavy hand have certain traits that identify them. Those Devlin has seen, “are demonstrated in every board meeting where the board is overly aggressive and acts as if it is the supreme ruler of the association,” he said.

“Owners are not allowed to speak, decisions are made before a meeting and only a vote is taken without any discussion.” The result is owner lack of interest because they have no input since decisions have already been made before the session comes to order. Baum added that under such circumstances, “folks also tend not to volunteer for committees (or even) attend the neighborhood picnic when they are overly governed and feel stepped on.”

Katz said that a major characteristic of boards that are too domineering in their manner is that they, “tend to be directed by individuals who are involved for inappropriate personal reasons or for self-aggrandizement.”

Rugby pointed out some of the features of people who sit on a board that exercises governance in a dictatorial manner. They would, “lack compassion, empathy, tolerance, understanding and the ability to listen and the desire to solve problems,” he explained.

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BOARD BASICS

Uniform Enforcement Important When it comes to enforcing rules, boards will generally differ in their methods depending on how forcefully they run their communities in other respects. Those that practice the minimalist governance approach will use a light touch, at least at first, trying diplomacy and tact to get homeowners to abide by the limited number of rules that are on the books before resorting to tougher measures when compliance or conduct modification doesn’t follow a gentle warning. It should be stated here before moving on to a more detailed description of this enforcement style that the most essential aspect of applying rules to anyone is that, “a board must first and foremost enforce (them) uniformly throughout the entire community,” said Devlin, who, consistent with the aforementioned practice of not going overboard in the initial stage of enforcement, favors first sending a warning or courtesy letter, citing the specific violation and a period of time in which to take corrective behavioral action. “The warning letter should (also) state that if a second violation (occurs) a fine may be assessed against the unit owner.” A further letter with an increasing fine would be sent to the guilty party and, finally, if compliance is still not achieved, in a third letter the threat of possible legal action against the owner is conveyed. Again Devlin emphasized the need to apply the rules equally to all unit owners even if they are friends of board members, or rule flouting directors themselves who might think they are above the law (see example below), so to speak. “If the board allows one owner to violate a rule and ‘get away with it’, they will be hard pressed to enforce that rule upon any other unit owners.” This seems like a balanced and well administered approach that a board could apply to the enforcement of a limited number of necessary rules without being criticized for being overbearing.

Intelligent Discretion and Flexibility Katz agrees with the laid back approach of enforcement of a limited set of general rules and regulations that, “should be written in such a way that allows for intelligent discretion and flexibility,” in their application. So that it will be less likely to have to actually enforce any rules, Katz urges the associations he manages to send out what he refers to as an annual “Procedures Letter” to all owners, explaining what is expected of them with respect to adhering to the rules and what the reasons are for those behavioral restrictions. “When people understand why a rule exists they tend to be more willing to follow the rule,” said Katz. And in doing so, they keep the board off their backs, which, of course, boards that prefer to stay out of their owners’ lives as much as possible would find very compatible with this objective of being minimally intrusive.

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Owners Should Buy Into Rules Baum is almost what you might consider an anti-rule man. He does not have a high opinion of them but for the best results in adherence to whichever rules are put in place in a community, he feels they should be,” written by the owners (through a rules committee consisting of owners) so they readily buy into them.” And, like Katz, he recommends they be flexible and be periodically reviewed and updated by the owners. In their enforcement he would take a somewhat different approach than Devlin, advising communities against letters and even fines, because they, “do not work well and usually just make things worse,” with the situation often escalating to a more serious confrontation than is justified by the infraction.

But Baum concedes that no matter how easily a minimally governing board prefers to deal with rule violators sometimes it, “must ‘go to the mat’ ” in enforcement. But, he added, through face to face meetings, “an attempt should (always) be made ahead of time to resolve the situation by using every avenue of courtesy, common sense and respect before going to war.”

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Falling Short on Governance

lowed by all unit owners.”

In contrast to the over zealous board that tends to be too controlling, there are associations in which boards fall short in the governance department by not even coming up to minimal standards in the performance of their duties as directors either by not meeting enough to properly take care of business or by ignoring or selectively enforcing rules. “When a board of directors doesn’t govern enough, the entire community will suffer,” said Devlin, offering as an example a situation in which the very essential rule of picking up dog droppings was enforced discriminately. Board members were leaving unsightly piles of feces from their canines, not bothering to bend over and remove them to the trash and getting away without being called to task for breaking the rule.

Devlin received many complaints from other owners who had been cited for that very same infraction saying they felt no obligation to scoop the poop of their pooches if the board members didn’t. When he queried the guilty directors about their oversight he was told that they had small dogs and it was the big mess makers they were after in the rule. “It took two years to remove all of those board members and replace them with other owners who believed the rules should be fol-

Financial Aspect of Governance

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Baum pointed to the financial aspect of governance as an important area in which association boards often fall short of fulfilling the minimum responsibilities of their positions as leaders of their communities. The greatest failure of a board, “in today’s economic environment is not raising (assessments) enough so the association can be properly maintained,” he said, which leads to vendors not being paid in a timely fashion and reserves not properly funded.”

Watch Out for Revolution Sometimes angry owners take matters in their own hands in actions against boards that lean on them too heavily, either with inequitable or inadequately justified actions or a plethora of niggling rules that are too restrictive. “We have had two or three ‘revolutions’ in the past year,” said Baum. ”I see more and more revolutions at annual meetings from folks who are fed up with the practices of their boards,” and they vote their antagonists out of office.

Devlin provided an example of an uprising in a community that was comprised of a master asso-

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ciation and several smaller entities over which the former exerted undue domination. The master association would increase assessments without justifying their need. The directors, “would not even reply to requests from the smaller associations to hold a meeting where all (their) board members could discuss their complaints,” said Devlin. “They were voted out at the next election.”

Do Unto Others….

Baum reaffirmed what he had already indicated-that good board members, those who are not overbearing or intrusive and do only what is necessary to keep an association functioning smoothly and solvent, will follow a variant of the golden rule- “do unto others as you would have done unto yourself,” in their relationships with unit owners. Anyone, “wishing to serve on the board must possess the desire to help the community instead of pushing their own individual agendas.”

The idea of “invisible” leadership- meaning not making one’s presence overly manifest in running an association-can be learned through experience, Baum feels. “Keeping all this in mind will result in a collegial, cooperative and content community where it’s a pleasure to serve on the board and not a drudgery,” he said. Y

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BOARD BASICS

By Elena Lugo, Wolin-Levin, Inc.

Smart Ideas for Energy Efficiency

T

here are many different financial opportunities for communities looking into energy efficient and renewable installations. To find these opportunities and understand how to apply or qualify can be more difficult than the installation itself. The State of Illinois and ComEd have implemented the “Smart Ideas for Your Business” program. The premise is clear-cut with programs ranging from simple light bulb replacements to major renovations. The application process is straightforward and the program is now offered year-round with no registration deadlines.

It is important for communities to embrace energy efficiency as a cost saving opportunity that can help offset the financial hardships caused by the relentless recession.

The benefits of these programs can be signifi-

cant. Although the availability of easily accessible funds may be difficult to conceptualize, according to Senior Energy Efficiency Programs Manager of ComEd, Erin Daughton, “approximately $30 million in Smart Ideas incentives is made available each year, as required by law. Illinois Public Act 95-0481, passed in 2007, requires ComEd and other investor-owned utilities to achieve annual energy savings goals through energy efficiency programs delivered to their customers.”

Determine Type of Project The most difficult aspect of these programs may be patience with average wait times for the refund check as this can take about one month. Therefore, the first step is to determine what type of project would produce the best results based on current condi-

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All material herein is copyrighted 2012©.

04.12

tions in your building and your budget. Consider the potential incentive, but understand that there’s no guarantee of the full reimbursement. After you have decided on the project and scope, we suggest you select a contractor that has experience with the Smart Ideas program. The contractor should complete and submit the application on your behalf since the process requires knowledge of the specific scope and itemized information.

The Smart Ideas program is well rounded and offers incentives for LED exit signs, CFL, LED and metal halide lamps and fixtures, and HVAC systems. In addition, there are incentives for variable frequency drives (VFDs), water and air-cooled chillers, unitary and split air conditioning systems, and air source heat pumps. If your community has a unique system or if you’re exploring more

COnDO LIFESTyLES

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innovative options, you can consider the Smart Ideas Custom program. These unique projects will increase the energy efficiency of a process or system but there is no established incentive. Although, typically, custom projects improve the efficiency of a specialized industrial process, any community is eligible to apply under the Custom program.

not advisable for communities seeking to maximize the reimbursement incentives offered now to reduce their overall costs. Bob Meyer, Director of Engineering Services for Wolin-Levin explains, “Take full advantage of the ComEd Rebate for T12 fixture replacements. Projects should be completed before June to qualify for the incentives.”

T12 Lighting Receives Higher Incentives

Low Hanging Fruit

Erin Daughton of ComEd, goes on to say that currently, the Smart Ideas program is offering bonuses and higher than usual incentives for T12 to T8/T5 retrofits. “This is to encourage business owners to replace their T12 lighting, which will become obsolete in July 2012, when new federal efficiency standards will eliminate production of most T12 lamps.” This is part of an ongoing quest to improve energy efficiency in the United States. The Department of Energy’s rulemaking of 2009 will eliminate most of the remaining commonly used types of T12 linear fluorescent lamps by July 14, 2012. Some communities may be tempted to stock up on T12s before they become obsolete instead of committing to a retrofit. However, that option is

In 2011, Wolin-Levin managed communities (as a whole), received almost $50,000 in rebates from the ComEd Smart Ideas program. Participation levels ranged from light bulb replacement projects to complete renovation of garage lighting systems. The majority of our communities have tackled the “lowhanging fruit”: light bulbs, fixtures, and variable frequency drives. Low-hanging fruit refers to projects which require little cash, minimum labor, and a quick return on investment. Typically, with these projects, cost savings are realized within the year.

New Communities Also Benefit Even newly built communities can benefit from an energy evaluation. Lighting tech-

nology and LED systems are continuously evolving and improving. For example, 1400 Museum Park Condominiums, built in 2009, recently renovated their lighting systems throughout the building which is already providing average savings of approximately 8% on their electric costs. At this rate, they can expect to save over $20,000 a year. The project included a complete replacement of the parking garage’s T12 bulbs and ballasts, LED conversion for emergency exit signs and hallway lighting. The total cost for parts and labor was $20,000 - they received a check reimbursement of over $6,500 – reducing their out of pocket cost to less than $14,000.

Caution Before Jumping on LED Bandwagon LED retrofits have become more common and popular, especially in exit sign lighting.

Wayne Callham of BlueStar Energy Services, cautions “to stay with major LED manufacturers.” He goes on to further explain that not all LED lighting systems are created equal.

There is no third party oversight on LED lighting to validate product quality and lifespan so only buy products that have an Energy Star

1400 Museum Park Association, Chicago, Illinois

www.lewinlg.com (312) 725-2084

Let us protect your association on your next renovation contract.

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COnDO LIFESTyLES

04.12

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BOARD BASICS

certification or other verifiable test results.

Callham believes LED lighting can greatly improve efficiency, but “pricing is still an issue.

There are big upfront costs. For example, the 12 watt LED bulb from Philips is $35-$40. It will last more than 40,000 hours, but you’ll only get a $10 rebate from ComEd. You won’t see payback for a couple years.” Callham brings up a good point that for residential communities, the big benefit with LEDs is less maintenance and upkeep. So all in all, evaluate your options; look at your needs and resources before hopping on the LED bandwagon.

Opportunity Assessment Don’t know where to start? Take advantage of the Smart Ideas Opportunity Assessment. This free assessment is conducted onsite by a ComEd energy engineer and takes approximately two hours to complete. The engineer produces a letter report detailing recommended energy efficiency measures that you can implement immediately. Each recommendation includes detailed information on estimated energy savings (kWh), energy cost savings, implementation cost, eligible Smart Ideas incentives and simple payback period.

1400 Museum Park Example

Daughton clarifies that, “Customers are under no obligation to implement the recommendations, but about 40% of them go on to make improvements, with the help of Smart Ideas incentives.

Any ComEd business customer can request a free Opportunity Assessment by contacting their ComEd account manager or by calling (888) 806-2273.”

Upfront Cost If you’re still worried about upfront costs, some contractors may be willing to work with you. One option, which prevents having to wait for the incentive check, is for you to sign a Payment Release Authorization on the Smart Ideas application, authorizing that the check be sent directly to the contractor doing the work. The contractor would then deduct the amount of the incentive from its final

Smart Elevators We Are Taking Care Of Chicago The Smart Way!!

invoice. BlueStar offers this option, as well as leasing options, like a lease to buy program and financing programs. Callham explains “every project we finance is cash positive, meaning your monthly savings will exceed your monthly costs for the project.”

More information about ComEd’s Smart Ideas for Your Business programs and incentive application forms can be found at www.ComEd.com/BizIncentives. Smart Ideas applications are accepted year-round; there is no deadline for submittal. Interested communities can also call ComEd’s program implementer, KEMA, at (888)806-2273. Y

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04.12

COnDO LIFESTyLES

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COnDO LIFESTyLES

Industry Happenings

Property Specialists, Inc.

Vanguard Community Management vanguard Community Management, an Associa company, is proud to announce the addition of seven new communities to its client portfolio.

“We welcome these new client relationships, and are privileged to be serving these unique new communities with our ever expanding services in the greater Chicago area,” said vanguard President and CEO Christine Evans. vanguard will provide a full range of management services, including financial, community management, communications, record keeping and administrative management services to the following communities: » Arboretum Park – The community offers many luxury features including winding streets and cul-de-sacs in the very desirable city of Lombard. It offers beautiful open areas with benches, providing a scenic overlook to the wetlands surrounding a pond, gazebos, and a tot lot for families.

» Courthouse Square – Located in an upscale community in Wheaton, this property provides homeowners with a unique residence. The Courthouse Square features living quarters inside a historic building and is the ideal place for anyone looking for the perfect mix between modern and classic living.

» Providence of Palatine – Located in the heart of the historic downtown Palatine, these luxury condos and modern lofts offer a variety of amenities to its homeowners, including lush lobbies, private balconies, and heated underground garages. Residents can also enjoy views from a private fourth-floor roof terrace as well as two party rooms for gatherings.

» Courthouse Square Condos – In what was previously the Wheaton Courthouse, this six-unit community provides upscale condos for its residents. The Courthouse Square Condos also boast a dazzling private clock tower terrace.

» Woodhills Bay Colony – With three phases built between 1975 and 1979, this condominium and townhome combination gives its residents a 117-unit community to call home or to use as their weekend getaway for summer and winter sports. Located on the edge of Fox Lake, the community provides boat slips, a swimming pool, clubhouse and tennis court to owners.

» Courthouse Square Midrise – This condo property is comprised of 50 units also located in Wheaton. The seven-story building offers a quaint and cozy place residents can call home. » Courthouse Square Office – Formerly the States Attorney building, the Courthouse Square Office features three units for Wheaton citizens. It also houses fitness and community rooms, full kitchen, pool, and balconies for homeowners

Kovitz Shifrin Nesbit Kovitz Shifrin nesbit, a Chicago-area law firm, is pleased to announce that Kelly C. Elmore and Wendy P. Durbin have joined the firm’s Chicago office in its Community Association Law practice group as Principal and Associate, respectively.

Kelly Elmore has more than seven years of experience in a wide range of association representation and litigation. She is also a regular speaker and author on a breadth of topics including litigation involving construction defects, developer turnover and fair housing issues. Ms. Elmore received her undergraduate degree from DePauw University and is a graduate of the DePaul University College of Law. Wendy Durbin brings over six years of experience in collections, evictions and foreclosures. Ms. Durbin received her undergraduate degree from the University of Akron and is a graduate of the John Marshall Law School.

At Kovitz Shifrin nesbit, Ms. Elmore and Ms. Durbin will continue to focus their practice on representing condominiums, townhomes and co-ops from KSn’s Chicago Loop office.

Property Specialists, Inc. held their annual vendor expo on Friday, March 9, 2012 at Meridian Banquets in Rolling Meadows, IL. Over 70 companies participated in the expo which was kicked off with a luncheon. According to PSI Chief Operating Officer, Cathy Ryan, “The program is intended to assist our management personnel in obtaining bids for various projects that are planned at PSI managed properties.”

Coder Taylor Associates, Inc. Consulting Engineers/Architects and Richard M. Fink Jr. are pleased to announce that Keith P. Weber has joined our firm as a Construction and Building Consultant.

We have been associated with Keith for nearly twenty years, working on a variety of projects with excellent results. Keith brings a great deal of experience in the industry and will represent Coder Taylor Associates, Inc. with the same veracity and integrity he has shown over the years.

Vanguard Proposal Palooza

According to Matthew Moodhe, Managing Principal of Kovitz Shifrin nesbit, “Kelly and Wendy have done an outstanding job representing Chicago associations and are an excellent addition to our expanding Community Association practice. Their team will be able to utilize KSn’s considerable experience and resources in continuing to provide a high level of service to their association clients.”

Associa vanguard Community Management held their annual Proposal Pallloza vendor expo on January 13, 2012 at The Stonegate Conference Center in Hoffman Estates. vanguard Community Management President Christine Evans welcomed attendees at a luncheon program that also featured Larry Potash, Director of national Training for Associa. According to event coordinator and senior property manager Carol Marcou, over 100 companies participated in the event.

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COnDO LIFESTyLES

04.12

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InDUSTRy HAPPEnInGS

Wentworth Management

Community Advantage

Erica R. Horndasch, CMCA®, AMS of Wentworth Property Management has been elected the president of the Community Associations Institute Illinois Chapter (CAI-IL), a national membership organization, to begin in 2013.

Frank Coleman and Anthony Dister of Community Advantage were both recently promoted to vice President.

Coleman joined the bank in 2007 as an Assistant vice President and has been very instrumental in the growth and development of Community Advantage while also being involved in many of the industry’s trade associations. A graduate of Arizona State University, Coleman is responsible for business development and portfolio management for condominium, homeowner, town home association and commercial management clients.

Erica is a Community Manager with Wentworth Property Management Corp a FirstService Residential Management Company and currently works on site at a large active adult community in Mundelein, IL. Erica has twenty years of property management experience. She has been active in Property and Community Management since the age of fifteen. Growing up in the industry, she has benefited from several real life situations that have awarded her the opportunity to share with the client and guide them in the right direction. She has a passion for management and looks at each day as a new challenge and an opportunity to enhance her customer service skills. In 2011, Erica was presented with the “Olympus Service Award” by CAI-IL. In 2006 she received the “Rising Star” award and was named the 2006 recipient of the Robert W. McLallen “Property Manager of the year” by CAI-IL. Erica was elected to the CAI-IL Board of Directors in 2008 and will serve as the Chapter President in 2013 for a one year term. She has been chair of the CAI-IL Conference and Exposition Committee for three years and has served on other committees including Membership and Awards. Erica’s term as President will begin in 2013.

Erica also serves as a Board President of a 645 home Homeowners Association having experience not only as a manager, but as a Board member. Erica holds the designations of Certified Manager of Community Associations (CMCA®) and Association Management Specialist (AMS®) and continues her education in Association management.

Dister joined the bank in 2002 as a teller and in 2004 transferred to Community Advantage as a credit analyst.

In 2007 Dister was promoted to Loan officer, and in 2009 promoted again to Assistant vice President. With over ten years of experience, and a Bachelors degree in Finance from University of Phoenix, Dister is responsible for portfolio management and business development with management companies and association clients.

United Service Companies Richard A. Simon was recently appointed to the Executive Committee of the Greater north Michigan Avenue Association (GnMAA). Mr. Simon has been nominated and appointed by his peers because of his experience as an industry leader in the community. He is the President/CEO of United Service Companies, which is a privately held corporation headquartered in Chicago’s South Loop. Mr. Simon is a leader in Chicago’s philanthropic community.

GnMAA is comprised of over 650 members and the Executive Committee is made up of 27 Board members.

The Executive Committee is responsible for overseeing the Associations budget and strategic planning. They work to inform and influence the developments that affect the business district of Michigan Avenue and the surrounding area.

Chicago Life Safety Ordinance Update The Chicago City Council recently passed an ordinance intended to strengthen compliance with the Life Safety Ordinance. The LSO applies to all buildings over 80 feet tall built prior to 1975.

The Ordinance which takes effect in June of this year, requires that the governing body of each building for which a life safety compliance is required, keep on file a disclosure statement on the status of compliance. A signed, dated copy of the disclosure must be presented to new tenants, tenants renewing leases and unit owners upon request. Fully sprinklered buildings are exempt.

After January 1, 2015 all buildings that are in full compliance will be exempt from the disclosure requirements as long as they remain in compliance. The fines have been established as $1,000 to $2,500 a day with each day being treated as a separate violation.

Condo Lifestyles does not give legal advice. We recommend that each association consult with an attorney knowledgeable on Community Association law regarding this law. Attention should also be given to the wording of your disclosure. As we understand, non-compliance will result in a daily fine after Jan. 1, 2015. The ordinance can be viewed at www.cityofchicago.org

Baum

PROPERTY MANAGEMENT

Professional Community Management C O N TA C T

Michael D. Baum, CPM, PCAM

630-897-0500 www.BaumProp.com

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04.12

COnDO LIFESTyLES

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COnDO LIFESTyLES

From the Editor

T

he warm temperatures in March broke a number of weather records and gave us a very early and welcomed spring. With the return of warmer weather, a host of exterior maintenance,

CondoLifestyles

repair, and restoration projects return to action at community associations all ®

▲ Mike Davids

over Chicagoland. If you are struggling with how to pay for necessary maintenance and repairs, you are not alone.

Our cover story highlights a recent seminar program we co-sponsored ““Managing and Prevent-

APRIL 2012 | VOLUME 16 | NUMBER 1

ing Exterior Water Leaks” and provides some important advice about dealing with water leaks and costs associated with leaks.

Editor & Publisher Michael C. Davids Vice President Sherri Iandolo Art Director Rick Dykhuis Special Events Coordinator Mary Knoll Contributing Writers Pamela Dittmer McKuen, Jim Fizzell, David Mack, and Cathy Walker Circulation Arlene Wold

Rules and related enforcement issues affect everyone who lives in a community association and we are all faced with some of the same governance challenges. Our second story on Policy Based Governance shares the perspective of some leading property managers on this subject. This is a recurring topic for us so feel free to let us know your thoughts in this regard.

Energy Costs are important to everyone and associations are becoming increasingly aware of ways they can manage this aspect of their community. One of our special features in this issue provides a reminder of the importance of energy efficiency and offers some practical examples of how you can save money.

Developments that had the misfortune of being under construction and/or completed during our current financial climate have special challenges. Another of our special features profiles how one development in this situation is solving their market challenges. A single buyer (Dart Container Corp)

Administration Cindy Jacob and Carol Iandolo Condo Lifestyles Magazine is published quarterly by MCD Media, a wholly owned subsidiary MCD Marketing Associates, Inc. For editorial, advertising and subscription information contact: 935 Curtiss Street, Suite 5, Downers Grove, IL 60515. 630/663-0333.

Circulation: Condo Lifestyles is available for a single issue price of $8.95 or at a $30.00 annual subscription.

Distribution is direct mailing and delivery direct through authorized distributors to over 5,000 officers and directors of Common Interest Communities, 500 property managers, 400 realtors, 400 developers and 400 public officials. Total Circulation is 7,000.

Condo Lifestyles attempts to provide its readership with a wide range of information on community associations, and when appropriate, differing opinions on community association issues.

emerged to purchase all of the remaining units in Walton on the Park and they are currently offering those units as rentals and are now known as Delaware Tower South.

In our board basics offerings, we revisit the topic of risk management on contracts with vendors for restoration and maintenance. you’ll also find an interesting guest editorial from Bob Levin about investment strategies for association reserve funds.

Inside this issue we again offer our regular Industry Happenings column and highlights from a variety of special events.

A special thank you to everyone who attended Condo Lifestyles’s/Condolympics on March 16th.

The donations we raised benefit Special Olympics Illinois.

Upcoming MCD special events include our annual golf outing, which will be held on July 13 and a luncheon in the Million Room at Arlington International Racecourse on September 13. If your association(s) has a special need or challenge, there will be a variety of experts specializing in community association issues including many members of our advisory board who will attend these events. MCD special events provide a terrific forum for association leaders to get questions answered, meet new

All material herein is copyrighted 2012©. No part of the publication may be reproduced whatsoever without written consent from the publisher.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is issued with the understanding that the publisher is not engaged in rendering legal or accounting services. If legal advice is required, services should be sought.

Advertisers assume liability for all content of advertisements printed, and also assume personal liability for any claims arising therefrom against the publisher relating to advertising content. The publisher and editors reserve the right to reject advertising or editorial deemed inappropriate for the publication.

18

COnDO LIFESTyLES

vendors, share a story idea, or socialize with other volunteers and professionals.

Thanks to the many new subscribers that have found our publication useful and informative. Special thanks to the firms, associations and groups that are Authorized Distributors of Condo Lifestyles.

Those of you who are not current subscribers can find subscription information at www.condolifestyles.net We encourage you to take this opportunity to make your association and your community all it can be. If you have an idea that would benefit other Community Associations, a success story to share, or some advice on how to avoid a problem or failure, please call our office at 630-932-5551. you can also send us an e-mail (mdavids@condolifestyles.net). Y Michael C. Davids Editor and publisher

04.12

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All material herein is copyrighted 2012©.

SERvICE DIRECTORy

ACCOUNTANTS

ARCHITECTS/ENGINEERS

ATTORNEYS

MICHAEL J. COCHRANE, CPA (847) 301-0377

KELLERMEYER GODFRYT & HART, P.C. (847) 318-0033

DICKLER, KAHN, SLOWIKOWSKI & ZAVELL, LTD. (847) 593-5595

Investigations and Repair Documents for: Exterior Walls, Windows, Roofs, and Parking Garages Condition Surveys and Reserve Studies www.kghpc.com

www.dicklerlaw.com.com

Specializing in Accounting Services for Homeowner Associations.

CONDO CPA A Division of Schneider, Cupuro & Associates, LTD.

MAXIMA CONSULTANTS CORPORATION 312-223-8414

1250 E. Diehl Rd., Suite 405, Naperville, IL 60540

Reserve Studies & Transition and Condition Assessment Reports Facade/ Roofing / Windows Garage Evaluations, Water Infiltration Investigations Fire Escape/Balcony/Porch Evaluations, Life Safety Evaluations www.maximaconsultants.com

LAW OFFICES OF KEAY & COSTELLO (630) 690-6446

CONTACT BRAD SCHNEIDER Brad@CondoCPA.com CERTIFIED PUBLIC ACCOUNTANTS

FROST, RUTTENBERG & ROTHBLATT, P.C. 847-282-6340

WALDMAN ENGINEERING CONSULTANTS (630) 922-3000

CERTIFIED PUBLIC ACCOUNTANTS

Contact: Steve Silberman, CPA

www.waldmaneng.com

SELDEN FOX, LTD. CERTIFIED PUBLIC ACCOUNTANTS

Contact: Michael C. Majewski, CPA

IFD INC. ASSOCIATED ENVIRONMENTAL LLC 847-364-6800

ARCHITECTS/ENGINEERS coder@codertaylor.com

(847) 382-4100

www.kmlegal.com

KOVITZ SHIFRIN NESBIT (847) 537-0500 www.ksnlaw.com Covenant Drafting & Enforcement Advising & Consulting with Boards Construction Defect Litigation Collecting Delinquent Assessments

ASBESTOS/LEAD ABATEMENT

(630) 954-1400

CODER TAYLOR ASSOCIATES

CHICAGO OFFICE: 312-899-9989 30 North LaSalle, Suite 2340, Chicago, IL 60602

NAPERVILLE OFFICE: 630-369-2700

630-832-2222 EXT 113

Accounting Solutions for Management Companies & Self-Managed Associations Audit & Accounting Services Income Tax Reduction & Planning

KEOUGH & MOODY, P.C. (630) 369-2700

ORUM & ROTH, LTD. (312) 922-6262

Asbestos Abatement • Lead Paint Mitigation www.ifd-associated.com

“We Specialize in Emergency Repairs” Architects • Research • Engineering Specifications • Reserve Studies

FULL CIRCLE ARCHITECTS, LLC (847) 564-0884 (847) 564-3880 FAX Daniel Baigelman, AIA dan@fullcirclearchitects.com Capital Improvements • Reserve Studies Engineering Reports

Intellectual Property Law Trademarks • Patents Condominium Law • General Litigation Contact Mark D. Roth

ATTORNEYS FULLETT ROSENLUND ANDERSON, P.C. (847) 259-5100

MCD

Golf Outing

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07.13.12

Eaglewood Re sort, Itasca, IL For more informatio www.condolifestylen visit s.net

www.fullcirclearchitects.com 85 REvERE DRIvE, SUITE B, nORTHBROOK, IL 60062

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04.12

COnDO LIFESTyLES

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COnDO LIFESTyLES

BUILDING RESTORATIONS

CARPET CLEANING

DOORS

BRAL RESTORATION, LLC. (847) 839-1100

R & S CARPET & UPHOLSTERY CLEANING, INC. 708-243-0635

HARRIS EXTERIORS & MORE, INC. (630) 372-7050

Masonry and Concrete Restoration www.bralrestoration.com

FORUM GROUP, INC. (773) 732-3051 Peter.Maneyski@ForumGroupInc.com

"We specialize in cleaning High Rise Buildings" Garbage Chute Cleaning Tile & Grout • Pressure Washing Move Out/Detail Cleaning Serving Chicagoland Area for Over 10 years

Serving Community Associations throughout Chicagoland Quality Service at the Right Price Roofing • Siding • Windows Doors • Soffit• Facia • Gutters Repairs • Carpentry • Maintenance www.harrisexteriors.com

CONCRETE RAISING/REPAIR

ELEVATORS/CONSULTANTS

CRC CONCRETE RAISING & REPAIR, INC. (847) 808-7400

SMART ELEVATORS CO. (630) 544-6829

Raising Settled Concrete throughout Chicagoland » Sidewalks » Driveways » Stoops/Steps » Pool Decks » Garage/Industrial Floors Experience the CRC Difference! www.WeCanRaiseIt.com

ENERGY GAS & ELECTRIC

L E A K R E PA I R S MASOnRy, COnCRETE, TUCKPOInTInG, CAULKInG See our ad on page 9 for more details or visit our website at: www.ForumGroupInc.com

GOLF CONSTRUCTION (219) 933-3420 www.golfconstruction.net

HOLTON BROTHERS, INC.

CONCRETE

(847) 253-3886 TEL / (847) 253-3255 FAX

FM&J ASPHALT PAVING, INC. 708-544-6700 / 630-279-0303

QUALITY RESTORATIONS (630) 595-0990

RIGGIO/BORON, LTD. (847) 531-5700 A Total Exterior Facade Restoration Company www.RiggioBoron.net

MCD

Concrete & Asphalt Paving Pavers & Color Stamping Drainage Systems & Sewer Repairs Sealcoating, Crack Filling & Striping www.fmjasphalt.com

09.13.12

Racetrack Arlington Park n visit For more informatioles.net ty es www.condolif 20

COnDO LIFESTyLES

Concrete Flatwork Specialists Asphalt Paving Curbs & Driveways | Sidewalks Footings & Foundations Colored Concrete Stamped Concrete Aggregate Finish Concrete www.hsshardsurfacesolutions.com

FHA/FANNIE MAE CONDOMINIUM PROJECT APPROVALS

CONDO APPROVAL PROFESSIONALS LLC (847)293-2962 contact: Steve Stenger www.condo-approval.com

FIRE SAFETY & PROTECTION

DOORS

CONTECH MSI CO. 847-483-3803

WOODLAND WINDOWS & DOORS 630-529-DOOR (3667) Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

04.12

SELECT ENERGY PARTNERS LLC (312) 593-6412 Contact: Ryan Anthony www.selectenergypartners.com

HARD SURFACE SOLUTIONS (847) 228-7230 / (630) 674-4520

Showcases the Races

COST CONTAINMENT INTL. LLC (877) 265-2799 Contact: Hans Herrmann www.c2intl.com

Masonry Repair Services, Tuckpointing, Caulking and Concrete Restoration John@holtonbrothers.com www.holtonbrothers.com

www.smartelevatorsco.com smartin@smartelevatorsco.com

Fire Detection & Signaling Systems Fire Alarm Systems Chicago Life Safety Evaluation Solutions Security Systems/CCTv Card Access Systems See our ad on page 9 www.contechco.com

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SERvICE DIRECTORy

FIRE SAFETY & PROTECTION

FORECLOSURE & EVICTION RELATED SERVICES

EMCOR TEAM MECHANICAL FIRE PROTECTIOn DIvISIOn (847) 229-7600

BROUWER BROS. STEAMATIC (800) CLEAN54

www.emcortmi.com

INSURANCE

Photo Inventory, Moving, Storage or Disposal www.bbsteamatic.com

NORTHERN ILLINOIS FIRE SPRINKLER ADVISORY BOARD (NIFSAB) 866-2NIFSAB (866-264-3722)

E.L. JOHNSON INVESTIGATIONS, INC. (312) 583-1167

708-403-4468 www.firesprinklerassoc.org

State Licensed Private Detectives All Types of Investigations Specialization in Foreclosure Process Service and Eviction notices on Foreclosed Property stacey@eljohnson.com

SIMPLEX GRINNELL (630) 948-1235 Fire Alarm / Sprinkler Systems Fire Pumps / Extinguishers Fire Panel Monitoring Installation / Testing / Maintenance 24/7 Service: (630) 948-1200 www.simplexgrinnell.com

nancy Ayers

HOLLINGER SERVICES, INC. (847) 437-2184 Property Casualty • Employee Benefits Workers Compensation www.HollingerInsurance.com

(312) 583-1169 FAX

JANITORIAL SERVICES BUTLER DOMESTIC SERVICES, INC. 630-871-6603

GARBAGE CHUTE CLEANING BROUWER BROS. STEAMATIC (800) CLEAN54

Janitorial and Light Maintenance Services "Pass the white glove test!" www.butlerdomesticservices.net

(708) 396-1477 www.bbsteamatic.com

FIRE/FLOOD RESTORATION

HVAC

BELFOR PROPERTY RESTORATION 847-205-0580

ALTHOFF INDUSTRIES 312.332.5700

Fire, Water & Storm Restoration Mold Remediation www.us.belfor.com

MESIROW FINANCIAL (312) 595-8135

KINGSBURY CLEAN (847) 768-1200

Mechanical - Plumbing - Electrical - Building Automation www.althoffind.com

“GREEn” Janitorial & Sanitizing Services for hospitality businesses, health care providers and commercial, industrial and multi-unit residential buildings.

Jed Levenstein / David Melone www.kingsburyclean.com

EMCOR SERVICES TEAM MECHANICAL (847) 229-7600

BROUWER BROS. STEAMATIC (800) CLEAN54

TOWER BUILDING SERVICES 312-404-3943

www.emcortmi.com

All types of environmental cleaning.

(708) 396-1477

www.towerservices.net

INSULATION (PIPE & HVAC) QCI RESTORATION 847-891-2929 866-832-6724

Cost efficient Janitorial & Maintenance services for homeowners associations.

Carpet cleaning, pressure washing, snow removal, etc.

ALL THERMAL INSULATION CO. (847) 698-7543

www.QCIrestoration.com

Serving Chicago Over 50 years We NEVER Charge for Estimates

THE RESTORATION GROUP, LLC (630) 580-5584

All Pipe & HvAC Insulation all_thermal@sbcglobal.net

www.trgrestore.com

For more information, visit our website at

www.condolifestyles.net No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2012©.

04.12

COnDO LIFESTyLES

21

COnDO LIFESTyLES

LAKE & POND MANAGEMENT ACRES GROUP (888) 231-1300 / (847) 526-4554 Ceritfied Aquatic Applicator Department of Agriculture www.acresgroup.com

LAUNDRY SERVICES & EQUIPMENT

PAINTERS

LAUNDRYLAND ROUTE, LLC. (847) 998-4050

AAA PAINTING CONTRACTORS, INC. (630) 231-8350

Contact Andrew neuman

LANDSCAPE CONTRACTORS

LAWN CARE

ACRES GROUP (888) 231-1300 / (847) 526-4554

SPRING-GREEN LAWN CARE (800) 830-5914

Professional Landscaping and Snow Removal www.acresgroup.com

ALAN HORTICULTURAL ENTERPRISES, INC. (630) 739-0205 www.alanhorticultural.com

BALANCED ENVIRONMENTS, INC. (847) 395-7120 www.BalancedEnvironmentsInc.com

www.aaapaintco.com

ABBOTT PAINTING, INC. 312-636-8400 773-725-9800

MAILBOXES

Quality Painting & Decorating since 1973 Our Mission: Guaranteed Committment to Quality now offering Parking Lot Painting www.Abbottpainting.com

MAILBOX WORKS (630) 355-9989 (773) 528-3111

ABC DECO INC. 773-701-1143

Large variety of Commercial and Residential Mailboxes Intercoms and Tele-Entry Address Signage & Engraved nameplates Installation Services Since 1989

www.MailboxWorks.com

ILT VIGNOCCHI (847) 487-5200

MOLD REMEDIATION

CERTAPRO PAINTERS 630-742-5119

www.iltvignocchi.com

GROUND PROS INC. (630) 993-1400 Full Service Four Season Landsacpe Management www.groundpros.com

KINSELLA LANDSCAPE, INC. (708) 371-0830

BROUWER BROS. STEAMATIC (800) CLEAN54 “All types of Environmental Cleaning” www.bbsteamatic.com

www.landscapeconcepts.com

SEBERT LANDSCAPING, INC. 630-497-1000

IFD, INC. ASSOCIATED ENVIRONMENTAL LLC

UNIVERSAL RESTORATION SERVICES 877-864-8266 P 888-596-4966 F Water, Fire and Disaster Restoration Joe Lamotte, General Manager Commercial Division www.4universal.com

COnDO LIFESTyLES

Painting, Construction & Maintenance www.insideoutcompany.com

(847) 364-6800 Environmental Remediation www.ifd-associated.com

www.sebert.com

22

Interior & Exterior Painting • Wallcoverings Stucco, Masonry & EFIS Repair • Drywall Repair www.certapro.com bkurschner@certapro.com

THE INSIDE OUT COMPANY 630-406-3000

Creating Lifestyles From The Outside In…™ www.kinsellalandscape.com

LANDSCAPE CONCEPTS MANAGEMENT, INC. (847) 223-3800

Painting & Wall Repairs Hardwood Floors/ Tile Installation Kitchen cabinetry sale & installation "Serving Community Association's for over 10 Years" Contact: Mike Chinte info@abcdecoonline.com

04.12

PAVING DUBOIS PAVING (847) 634-6089 (800) 884-4728 www.duboispaving.com

FM&J ASPHALT PAVING, INC. 708-544-6700 / 630-279-0303 Concrete & Asphalt Paving Pavers & Color Stamping Drainage Systems & Sewer Repairs Sealcoating, Crack Filling & Striping www.fmjasphalt.com No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2012©.

SERvICE DIRECTORy

PAVING

PROPERTY MANAGEMENT

PROPERTY MANAGEMENT

HARD SURFACE SOLUTIONS (630) 674-4520

COMMUNITY SPECIALISTS (312) 337-8691

PROPERTY SPECIALISTS INC. (847) 806-6121 (630) 633-5450

www.hsshardsurfacesolutions.com

www.communityspecialists.net

MAUL ASPHALT & SEALCOATING (630) 420-8765

THE HABITAT COMPANY (312) 527-5400

PEST CONTROL

www.smithereen.com

SUDLER PROPERTY MANAGEMENT (312) 751-0900

www.habitat.com

Sealcoating / Crack-sealing / Striping Asphalt Installation www.maulasphalt.com

SMITHEREEN PEST MANAGEMENT SERVICES (847) 647-0010 / (800) 336-3500

WOODRIDGE OFFICE

www.psimanagement.net

www.sudlerpropertymanagement.com

HEIL, HEIL, SMART & GOLEE (847) 866-7400

TAIRRE MANAGEMENT SERVICES (847) 299-5740

www.hhsg.net

tsutton@tairremgmt.com

WOLIN-LEVIN INC. (312) 335-1950

HILLCREST MANAGEMENT (630) 627-3303 / (312) 379-0692

Contact Jennifer Feldman, Tom Skweres

www.hillcrestmgmt.com

www.wolin-levin.com

PROPERTY MANAGEMENT AEGIS PROPERTIES CORPORATION (773) 667-8900

LEGUM & NORMAN MIDWEST (312) 944-2611

REAL ESTATE TAX ATTORNEY

www.lnchicago.com

ELLIOTT & ASSOCIATES (847) 298-8300

MCGILL MANAGEMENT, INC. (847) 259-1331

www.elliottlaw.com

www.aegisproperties.com

BAUM PROPERTY MANAGEMENT, LTD. (630) 897-0500

RESERVE STUDIES

www.mcgillmanagement.com

www.BaumProp.com

RESIDEnTIAL & COMMERCIAL

(630) 717-7188 CHICAGO PROPERTY SERVICES, INC. (312) 455-0107 X102

www.chicagoland-inc.com

1-800-221-9882 Conducted by Professional Engineers Enhanced Report / Most Customized Studies www.reserveadvisors.com Long-term Thinking.

Everyday Commitment.

PROPERTY MANAGEMENT SPECIALISTS, LTD. (847) 845-6067

www.chicagopropertyservices.com

CHICAGOLAND COMMUNITY MANAGEMENT (312) 729-1300

Reserve Studies & Transition Defect Studies

contact: Tracy Davis tracy@paragonmanagement-inc.com www.paragonmanagement-inc.com

www.carusomanagementgroup.com

“Premier Community Management”

RESERVE ADVISORS, INC.

PARAGON PROPERTY MANAGEMENT (847) 465-1483

CARUSO MANAGEMENT GROUP, INC.

“A Management Company with values” contact: James Krech service@pmgrs.com

For more information, visit our website at

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www.condolifestyles.net 04.12

COnDO LIFESTyLES

23

COnDO LIFESTyLES

SECURITY SCREENS

SWIMMING POOLS

MIDWEST SECURITY SCREENS (800) 615-6754

SPMS 630-692-1500

ROOFING ACTIVE ROOFING CO., INC. (773) 238-0338 (708) 430-8080

Quality Security for Windows and Doors www.midwestsecurityscreens.com

Established 1965 Maintenance & Repairs Roofing/Sheet Metal/Tuckpointing www.activeroofing.com

SECURITY SERVICES

B.T. LAKESIDE ROOFING (630) 628-0093

KRAMER TREE SPECIALISTS, INC. 630-293-5444

www.lakeroof.com See our ad on page 30.

www.csr-roofing.com See our ad on page 8.

HARRIS EXTERIORS & MORE, INC. (630) 372-7050 Serving Community Associations throughout Chicagoland Quality Service at the Right Price Roofing • Siding • Windows Doors • Soffit• Facia • Gutters Repairs • Carpentry • Maintenance www.harrisexteriors.com

Serving Community Associations throughout Chicagoland Quality Service at the Right Price Roofing • Siding • Windows Doors • Soffit• Facia • Gutters Repairs • Carpentry • Maintenance www.harrisexteriors.com

We’re Here When you need Us! www.protoproofing.com

Certified Arborists, Accredited, 5-Time “Company That Cares” Honor Roll Member www.thecareoftrees.com

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

S&D ROOFING SERVICE (630) 279-6600

SNOW REMOVAL

100,000 roofs installed TEAR OFFS • SHINGLES • FLAT ROOFS Our experience & technical know-how gets the job done right the first time!

Serving the area since 1963 www.sdroofing.com sales@sdroofing.com

Tree Pruning, Tree Removal, Cable Bracing, Plant Health Care, Tree Planting & Transplanting www.kramertree.com

THE CARE OF TREES (847) 394-3903

WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)

PRO★TOP ROOFING (847) 559-9119

TV-BULK CABLE & SATELLITE COMCAST (866) 594-1234 www.comcast.com

HARD SURFACE SOLUTIONS (630) 674-4520

RCN (312) 955-2322 rcnchicagoapts@rcn.net www.rcn.com

For more information, visit our website at

www.condolifestyles.net COnDO LIFESTyLES

A comprehensive aboricultural firm building relationships in every season for more information, please visit our website: www.autumntree.com

SIDING / RENOVATIONS

CSR ROOFING CONTRACTORS (708) 848-9119

24

AUTUMN TREE CARE EXPERTS, INC. (847) 729-1963

www.admiralsecuritychicago.com

See our ad on page 30. www.lakeroof.com

HARRIS EXTERIORS & MORE, INC. (630) 372-7050

TREE CARE

ADMIRAL SECURITY DOOR STAFF SOLUTIONS (847) 588-0888

B.T. LAKESIDE ROOFING (630) 628-0093

Heaters Pumps • Repairs • Chemicals Pool Maintenance • Complete Water Analysis Pool Guards, Inc. ross@spmspools.com

04.12

USA WIRELESS SATELLITE TVS/DIRECT TV 847-831-4561 www.usadishtv.com

No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2012©.

SERvICE DIRECTORy

WASTE SERVICES

WINDOWS/REPLACEMENTS

WINDOW RESTORATION

LAKESHORE WASTE SERVICES (773) 685-8811

HARRIS EXTERIORS & MORE, INC. (630) 372-7050

WINDOW WALL SERVICES, INC. THE CAULKING COMPANY (708) 361-9333

Serving Community Associations throughout Chicagoland Quality Service at the Right Price Roofing • Siding • Windows Doors • Soffit• Facia • Gutters Repairs • Carpentry • Maintenance www.harrisexteriors.com

WINDOWS/REPLACEMENTS CHICAGO WINDOW SYSTEMS, INC. (312) 915-0591 Window and Patio Door Replacement Aluminum and Wood Clad Steel UL Rated Windows Aluminum Store Fronts www.cwins10@yahoo.com

www.windowwallservices.com All Types of Window Restoration Weather Stripping / Hinges Handles and Adjustments Curtain Wall Repair Specialists

WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)

WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

For Display or Professional Services Directory Advertising Info, Call (630) 202-3006 CAI Conference & Trade Show

NATO Summit Preparedness Program Building Owners, Residents & Tenants & Guests Key Dates: May 20-21, 2012 ABOMA and the SEIU Local 1 Training Center are now offering a presentation on how you can prepare yourself and your building for the upcoming nATO Summit in Chicago.

The Illinois Chapter Community Associations Institute (CAI) held its annual conference and trade show featuring educational presentations, legal seminars, and exhibitors from all corners of the industry at Arlington Park International Racecourse on Friday, February 3rd and Saturday, February 4th, 2012. Over 1400 community association managers, homeowners, and industry members attended the two day event. For more information visit the CAIIllinois website at www.cai-illinois.org

Tairre Management Tairre Management recently announced two new management assignments effective January 1 of 2012. Tairre Management is now managing agent for Arcadia Place Townhomes, a 34 unit community association located in Chicago’s West Loop and Rivers Edge Condominium Association which is comprised of 96 manor style homes nestled on the Des Plaines river in Des Plaines. The announcements were made by president Tairre Dever-Sutton.

Topics covered will include: history of the event, traffic expectations, is my building ready?, conflict resolution, suspicious packages & bomb threats

Classes will be offered, free of charge to Local 1 members, at the SEIU training center on the following dates: Friday, May 4th at 9:00am Monday, May 7th at 6:00pm Thursday, May 10th at 6:00pm Arrangements can also be made to come out to your building and present the course on-site if you have 10 or more employees.**There is a $200 fee for on-site training.

For more information call (312) 226-1444.

Maxima Consultants Corporation is a licensed and insured professional firm providingb economical, practical, and sound solutions for your building projects. Our licensed professional staff has extensive technical experience in evaluating building systems, preparing repair/replacement drawings, estimating project costs, preparing bid packages, expediting building permits, and monitoring construction repair work for a wide range of building types • Reserve study • Façade inspection • Water infiltration • Transition study • Peer review • Porch, balcony, railing, fire escape, and garage Planter waterproofing and asphalt driveway

No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2012©.

MAXIMA

• Life safety evaluation • Property condition assessment • Architectural engineering • Bid packages, bid administration, permit expediting, and construction administration services • Window and roofing

For a free no-obligation 1-hour consultation session, contact Steve Hult, AIA | T312.223.8414 | www.maximaconsultants.com 04.12

COnDO LIFESTyLES

25

COnDO LIFESTyLES

by David Lewin, Lewin Law Group

Risk Management and the Condominium Renovation Contract One of the most challenging tasks for any condominium manager is contracting for renovations. There are many pitfalls along the way, including negotiating the contract so that it protects the building and then making sure that building takes appropriate action during the project to reduce liability.

I

magine the following scenario: your association enters into a contract for a facade repair. While scaffolding covers the building, a severe storm hits and the scaffolding falls, causing significant injuries to pedestrians who happened to be walking past.

You know that somebody is going to get sued, but who is going to end up paying for the loss?

If your contract included solid insurance and indemnification provisions, the answer is that the contractor and the contractor’s insurer are on the loss, and you’ve got nothing to worry about. However, if you’ve signed the one page contract handed to you by the contractor, the association’s insurance is going to pick up the tab, the insurance rates likely will go up, and depending on the injuries it may be facing a special assessment to pay a judgment.

So how do you make sure that the contractor picks up the tab? By focusing on the terms of the terms titled “Insurance” and “Indemnification.”

Insurance The first term to review is insurance. The insurance term needs to provide that the condominium association is covered under the contractor’s policy if something goes wrong.

That is done by requiring an “additional insured” endorsement.

An “additional insured” endorsement is a provision added to a contractor’s insurance policy that treats entities other than the contractor as if they were fully covered by the policy. If there is a proper additional insured endorsement, the contractor’s insurance company should be responsible for, at the very least, sharing the loss.

For projects exceeding $10,000.00 per year, the association starts off in a position of strength. The Illinois Condominium Property Act requires that if the contract is over $10,000.00, the contractor must list “the association, its board of directors, and its managing agent as additional insured parties.” As a result, there should not be any real negotiation. The association must insist on what is

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26

COnDO LIFESTyLES

04.12

required by law. The contractor cannot say no.

Scheduled & Blanket Endorsements For additional insured endorsements, the property manager should be aware of the difference between “Scheduled Endorsements” and “Blanket Endorsements.” A Scheduled Endorsement lists every specific entity that is added to the contractor’s policy. Blanket Endorsements add to the contractor’s policy any entity that meets certain criteria (usually the endorsement requires that a written contract require additional insured coverage).

When entering into the contract, to trigger a blanket endorsement the insurance provisions must require that the contractor provide the coverage. The contract must specify the insurance policies and limits to be required. The contract must state that the coverage provided by the contractor is primary and non-contributory. Unless all of those terms are present, the contractor’s insurance may not provide coverage.

Certificate of Insurance Equally important on the insurance is the follow-up. The contractor must provide a Certificate of Insurance as evidence of that coverage. Too often, we’ve seen contractors provide certificates that are incomplete or inaccurate. One common error is that the association is listed as a “Certificate Holder” rather than as “Additional Insured.” The second is that the certificate is flat out wrong. One way to protect the association is to require that the Additional Insured endorsement be attached to that certificate so that the property manager or counsel can review it to determine if it complies with the contract.

If a proper insurance provision is in place, the contractor’s insurer will share any loss with the association’s own insurer. However, there is a way to go one step further so that the contractor’s insurer picks up the entire loss. That’s through an indemnification provision.

No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2009©.

2012©.

S P E C I A L F E AT U R E

Indemnification Process

Means & Methods

To understand the importance of that indemnification provision, property managers should be aware of what is known in Illinois as “the targeted tender rule.” Under that rule, where a entity is covered by two policies that could cover a loss, the entity has the right to choose one of the policies to provide coverage and can choose for the other entity not to provide coverage. That means that if something goes wrong, the condominium association has the right to demand that the contractor’s policy provide coverage and that the association’s own insurer does not provide coverage.

That can have a very significant impact on the association’s insurance rates going forward.

Finally, once the work starts, take steps to make sure the association is not held liable for any negligence of the contractors. That means making sure that the association does not control the “means and methods” of the work.

Don’t tell the contractor what to do. Don’t tell the contractor how to do it. Don’t lend the contractor equipment. Other than pointing out the area where the work needs to be done and what time to start and stop, don’t give any instructions to the contractor. Too often, building managers and/or building superintendents (Chief Engineer,etc) are sought as resources for the contractor. Don’t let that happen. Minimize contact between the contractor and the superintendent (engineer).

Targeted Tender Rule How does an association make sure that it can use that targeted tender rule and completely shift the loss? By making sure that the indemnification provision is as broad as possible. It should require that the contractor indemnify the association for any loss arising from the contact. If that provision is proper and if there is a proper insurance provision requiring coverage, then the association should be able to invoke the targeted tender rule and shift the entire loss to the contractor and the contractor’s insurer.

www.carusomanagementgroup.com

Managing Risk Finally, if there is an accident, counsel should be called immediately. Counsel experienced in construction liability can come to the scene, obtain statements, and make sure that the association is protected.

Proper risk management will make renovation project go smoothly and reduce risk.

The goal is to get the renovation done right and if something goes wrong, protect the association. Y

MCD Golf Invitational July 13, 2012 @ Eaglewood Resort Itasca, Illinois Better Ball Scramble Bocce Games

Dickler, Kahn, Slowikowski & Zavell, Ltd.

Call

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Condo & HOA Representation Corporate • Real Estate • Litigation • Wills Personal Injury 85 W. Algonquin Rd., Ste #420, Arlington Heights, IL 60005 For more information, visit our website at

847-593-5595 No part of the publication may be reproduced whatsoever without written consent from the publisher.

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www.condolifestyles.net 04.12

COnDO LIFESTyLES

27

COnDO LIFESTyLES

By: Robert B. Levin, CPM

Alternative Investment Opportunities for Condominium Reserve Funds While the 2011 cost of living rate has gone up about 3.5%, the rate on money market funds and certificates of deposit have maintained rates between 0% and 1.5%/yr. One therefore could argue that while condominium associations appropriately fund their reserve for capital improvements, the value of the reserve is decreasing versus the inflation. of the interest rate on the certificate. Finally, CD’s must be held to maturity or penalties are incurred.

There is no secondary market. If interest rates were to go up, the value of the CD, if it could be sold, would be valued at a discount (capital loss).

This article advocates a condominium reserve allocation that includes mutual funds that include short term federal or treasury investments and short-term investment grade corporate debt. They can be bought and sold on a daily basis and many financial institutions that have their own MMF’s and CD’s can purchase these funds for the association. Before discussing the advocacy of these alternatives a few definitions need to be understood.

For purposes of expediency, the vanguard Funds were chosen both for low management fees and acknowledgement of their broad appeal. The funds being considered are the Short-Term Federal Admiral, Short-Term Treasury Admiral and the Short-Term Investment Grade Funds. Important terms to acknowledge include: • Average annual total return – Fund performance after taxes on distributions and sale of fund shares.

C

ondominium associations have traditionally deposited reserve funds in money market funds and certificates of deposits as their only means of investment for decades. It is believed that this method is the most conservative manner to maintain the reserve capital. I maintain that this approach is guaranteed to lose value if inflation is taken into consideration. Other alternatives are available that are conservative in nature that offer higher returns to the associations.

Money Markets & CD’s First a few words on money market funds and certificates of deposits. Unless money market funds are with banks they are not guaranteed at all. One should look at the fund prospectus quarterly and review the investments of the fund portfolio. Bank money market funds and CD’s are guaranteed up to $250,000 in total. Therefore should the association have reserves in money market funds and CD’s beyond $250k at one bank they are not insured. Should the FDIC take over a bank with a CD, they have the right to change the rate

• Distribution yield – The interest paid versus the price of the fund • SEC yield – The interest rate of all the investments in the portfolio if held to maturity • Duration – The average maturity of securities in the portfolio. For this group of funds the average duration of the portfolios is between 2.2 and 2.3 years.

Of primary concern to the association treasurer and Board of Directors is the variance in the fund price. Safety of capital is the primary concern.

For the three, five and ten year period the Federal and Treasury funds have been very stable. The same is true for the Investment Grade fund except for a one year period from mid ’08-’09. Regarding the Federal fund, the value is within .8% of the current value over a three year period, 6% over five years and 4.5% over ten years. The Treasury fund is within its current price by .1.5% over three years, 5.5% over five years and within 3% over ten years.

The Investment Grade fund is within 10% of its current value over three years, 1% over 5 years and 1.5% over ten years.

We discount the value of the SEC yield because very few of the securities in the fund will be held to maturity. However, if this yield is above or below the distribution yield it is a good indicator whether the future dividends will have a higher or lower interest rate to the price of the fund.

THE SOURCE FOR INFORMATION ON INDUSTRY NEWS AND TRENDS

Tom Engblom

Larry Myers

CMCA AMS PCAM

Assistant Regional Account Executive

Vice President/Regional Account Executive

Interested in Green Building Issues

779.435.2937 Toll Free 866.800.4656 ext. 7429 larry.myers@ mutualofomahabank.com

312.209.2623 Toll Free 866.800.4656 ext. 7498 tom.engblom@ mutualofomahabank.com

Chicagoland

&

Buildings Environments

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28

Member FDIC. Equal Housing Lender

COnDO LIFESTyLES

National Corporate Member of Community Associations Institute.

04.12

www.chicagolandbuidlingsandenvrionments.com

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All material herein is copyrighted 2012©.

GUEST EDITORIAL

Vanguard Funds returns for the three, five and ten year funds are as follows: Analysis of Vanguard Investment Funds For Three, Five and Ten Years

Three Years Five Years Ten Years

Fed MMF

Treas MMF

1.59

1.410

0.15

1.93

0.09

DISCUSSION

Prime Fed Mut Treas Mut d Inv Grade MMF Fund Fund Fund

1.85

0.21

2.86

2.11

6.93

1.99

4.10

3.76

4.01

1.69

4.74

4.15

4.28

It is obvious that funds put into money market funds performed poorly over any period of time. Due to compounding over time the difference escalates the longer funds remain in these accounts. Rolling over CD’s offers a better outcome than money market funds and the longer the CD term the better the outcome. In fact, rolling over three year CD’s offers the best outcome of all investment alternatives over a ten year timeframe. The alternative investments offer the greatest reward over a three and five year time-

We believe the distribution yield should be the focus of our analysis. This is the interest rate current owners of the fund would derive if the value of the fund remains the same. This yield changes from month to month as securities mature and new ones are purchased. In a declining interest rate environment the yield will slowly go down and in an increasing environment go up. With the average duration of the securities at approximately 2.3 years one could surmise the rate change would be about 43% of the change in interest rates going up or down during monthly period. As of 12/31/11 the distribution rate for the three funds are as follows: • Short Term Federal Fund - .73% (had capital gain distribution in 2010) • Short Term Treasury Fund - .63% (had capital gain distribution in 2010) • Short Term Inv. Grade Fund – 2.61% Alternative investments include money market funds and certificates of deposits. For expediency, the following are the rates offered by vanguard Funds.

• Prime Money Market Fund – .02% • Treasury Money Market Fund - .01% • Federal Money Market Fund - .01% • One year CD – .40% • Two year CD – .95% • Three year CD – 1.30%

ANALYSIS The objective is to prove that the rates of return from alternative investment funds outweigh the current theory of investing in money market funds and certificates of deposit. The following example shows how money market funds, one, two and three year CD rollovers (over $100k), and our three alternative investments performed over the past three, five and ten year periods given a $100,000 initial investment.

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04.12

COnDO LIFESTyLES

29

COnDO LIFESTyLES

frame and better than CD’s over a ten year timeframe if the CD’s are “rolled over” every one or two years. All of this makes sense because the average duration of the alternative investments is 2.3 years and the only investment with a greater duration is the three-year CD which offered the best result.

The Federal and Treasury funds have the strongest capital support because they are backed by the federal government or agency of the federal government. Bank money market funds offer FDIC insurance up to $250k per association. The prime money market account and investment grade accounts are supported by commercial paper and debt of the strongest corporations (BBB rated or better).

It should be noted that interest rates in the United States have gradually moved down in the past ten years. Therefore investments with the longest duration benefitted most during this timeframe. Should interest rates begin to move up the exact opposite situation will occur. In that event money market funds would begin to look attractive as they have the shortest duration and the longer term CD’s would become the poorest choice of investment. The alternative investments would fall in between as they would increase their

distributions as new securities offer greater interest rates as the ones they replace.

CONCLUSION For decades condominium associations have used the same methods of investing reserve funds.

Given the current economic environment the associations are in a position whereby the reserve funds are not keeping up with inflation thereby reducing the present value of the current funds if left in money market funds. Given a $100,000 balance an association would have lost over $25,000 over ten years versus alternative investments if funds were left in money market funds.

Laddering three year CD’s offers the best result from the survey. In this way the Board of Directors annually can choose whether to renew the three-year CD or use the funds for some other purpose.

Alternative investments in a Federal or Treasury Short Term fund offer the best of all worlds. These funds are the most secure in regard to capital security and have a very stable share value. They are totally liquid in that they can be bought and sold at any time. The current dividend rate for these funds is greater than money market

We Manage Your Property as if it was Our Own.™ You shouldn’t accept anything less than

excellence, attention to detail, experience and a commitment level unsurpassed by any other firm.

312 729 1300 www.Chicagoland-inc.com 111 E. Wacker Drive | Suite 1412 | Chicago, IL 60601-4501

| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |

| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |

| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |

| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT | 30

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funds (which offer no yield) and one and two year certificates of deposit.

The Investment Grade Short Term Fund has by far the highest dividend rate of all alternatives at the present time. Over the three, five and tenyear timeframe it offered the greatest return of all investment alternatives except the three year CD’s.

The share price of the fund was very stable for all periods of time except a one year period in ’08-’09 but has now returned to its stable environment.

If interest rates begin to increase it would be advantageous for the association to transfer more funds to money market funds versus the other alternatives. The point of transference would be when the MMF has a higher dividend yield than the CD’s or alternative investments.

Condominiums are businesses and they should take advantage of every income producing opportunity and cost saving as they can find. This article offers opportunities to increase income from interest that has not been looked at intensely for many years. Y

MCD MEDIA UPCOMING 2012 EVENTS

MCD Media MCD Showcases Golf Invitational the Races July 13, 2012

Sept. 13, 2012

Eaglewood Resort, Itasca, IL

Arlington International Racecourse

Chicagoland

Buildings Environments CondoLifestyles

®

&

www.condolifestyles.net |

630-202-3006

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S P E C I A L F E AT U R E

By David Mack

Single Buyer for Unsold Units Provides Hope

A

s with a number of other condominium properties, Walton on the Park, located at the corner of Delaware and State streets in the Gold Coast neighborhood of Chicago, was completed at an unfavorable time for the successful marketing and sale of its units. Recently a single buyer has emerged for the remaining units providing hope for the owners who have also purchased units in the building.

Financial Crisis Hit During Construction Well before the building was ready for occupancy in May, 2010, the financial crisis had near paralyzed the housing market here and elsewhere around the Country. Property values were dropping precipitously and no one knew when the tail spin would end.

The mostly concrete structure was developed by the Enterprise Companies in an area that a few years before had been a hot locale in which to buy. The conditions had all changed. Two towers had originally been planned, only one

started and finished.

Walton on the Park was constructed as a 201 unit, 32- story building with 29 residential floors. In the early marketing stage (when there were buyers), 12 of the units had been combined, reducing the total to 189, with square footage for various units ranging from 920 to 3400. Before sales came to a rather abrupt halt, 32 of the units had been sold, leaving 153 vacant and available.

Single Buyer for Unsold Units The developer found a single buyer for those remaining units last year. “In March, 2011, the Enterprise Companies sold all of their unsold units,

unsold parking spaces and the property to Dart Container,” said America Moyeno, the on-site manager of the complex for Wolin-Levin, Inc. the company that serves as managing agent. That sale enabled The Enterprise Company to pay off the balance of the construction loan for the development.

The official name of the new proprietor is Delaware

Make it a home before they even move in.

Give residents the entertainment they demand with XFINITY™ TV, Internet and Voice.

XFINITY is TV, Internet and Voice service made possible by Comcast’s network upgrade to an all-digital platform. XFINITY offers your residents the fastest Internet speeds, the phone service with the best call clarity and triple the HD channels.

Plus, they can enjoy thousands of movies and shows On Demand on TV – and even online – all delivered right to your resident’s door.

Keeping Up with the Kardashians Now Available on xfinityTV.com

1.800.XFINITY Restrictions apply. XFINITY service not available in all areas. Not all features available with all XFINITY packages. Based upon August 2010 call clarity analysis by Tektronix. Call for restrictions and complete details. Comcast © 2011. All rights reserved.

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All material herein is copyrighted 2012©.

04.12

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MCD Pool Party featuring Condolympics

Over 250 guests joined MCD Media at the 16th annual MCD Pool Party on March 16th,2012 at the Pyramid Club located at 236 West Lake Street in Addison, IL. Over $3000 was raised for Special Olympics at the event.

Major sponsors of this year’s event were: Kinsella Landscape, Inc., Hard Surface Solutions and Balanced Environments.

Ping Pong 1st – Russ Fleagle 2nd – Matt Kielbasinski 3rd – Ed Crowe

Dart Tourney 1st – Michael Kriebach, Jessica Ryan 2nd – Michael Shifrin, Grace McCafferty 3rd – Kevin Kojzarek, Melissa Brooks

Buck Hunting (video) 1st – Chris Ralph, Diana Krieter 2nd – Matt Denton, nicole Elledge 3rd – vlad Dulu, Aida Kovacevic

Pool Tourney 1st – David Pope, Donna Ciota 2nd – Matt Settler, Carrie Surratt 3rd – Mark Clements, Brittany Ryan

Bean Bags/Cornhole 1st – Russ Fleagle, Jonathan Howe 2nd – Jerry Shea, Jon Shea 3rd – Kevin Bowel, Phil Fitch

Beads Game 1st – Gidget Curtis 2nd – Joanne Mamo 3rd – Wayne Curtis

Best Dressed – St. Pat’s/Green Theme 1st – Gidget Curtis 2nd – Tracy Davis 3rd – Melissa Brooks

Special Olympics Donations 1st – Property Specialists, Inc. 2nd – Alan Horticultural Enterprises 3rd – Tairre Management

For more information on mcd media special events visit www.condolifestyles.net. View more event photos on MCD Media on Facebook.

Committee Members:

Keith Walker Sheila Malchiodi Tracy Davis

Cathy Ryan, Chairperson Kevin Block, Head Scorekeeper Tairre Dever-Sutton, Lead Judge

Tony Dister Tom Skweres Phil Mariotti

Debbie Hayes Renee Mercer Jim Riemma

August Girardi Tom Frye Lindsay Daehnke Eva Fiala

Mary Knoll Sherri Iandolo Arlene Wold

Your community is our business.

TRUSTED BY MORE ASSOCIATIONS THAN ANY OTHER, and proudly serving the greater Chicago area, Legum & Norman, Mid-West puts the power of our size and experience at work for you through proven community management and exclusive services designed to benefit you and your association – including individual residents. It’s what you should expect from association management. It’s what you can expect from Legum & Norman, Mid-West.

To learn more about Associa/Legum & Norman, Mid-West’s programs, services, and career opportunities, please visit www.LNChicago.com.

343 W. Erie, Suite 330 | Chicago, IL 60654 | Tel: 312-944-2611 Web: www.LNChicago.com | Email: askus@LNChicago.com

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© 2012 Associa. All rights reserved.

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S P E C I A L F E AT U R E Tower South LLC (DTS LLC). “It has since opted to rent out the units at a level which they have determined to be fair market pricing at approximately $3.99 per square foot.” It is expected that all rentals will be converted back to the originally conceived condominiums after a period of three to five years.

Owners Not Opposed to Arrangement The unit owners have not opposed the rental arrangement, according to Randy Grimes, Portfolio Manager for Wolin-Levin, Inc. managing agent for Walton, adding that the rentals are scattered throughout the building, mixed in with those occupied by individual owners. In addition to the residential accommodations, “there is (also) empty commercial space (available for lease) separate from the association but owned by Dart Container,” said Grimes.

Wolin-Levin as managing agent for day to day operations of the property,” said Moyeno. “This relationship has worked out where we are able to keep the condominium side separate from the rental side.”

Decision Making Due to the limited number of owned units, the association has not been turned over to the homeowners. DTS makes the decisions for the building in conjunction with the management agent. “The resident unit owners are kept up to date on building operations by management and

DTS at quarterly unit owner meetings,” explained Moyeno. But all decisions regarding leasing are those of Dart. Owners will have a say on significant matters that impact the overall property but, so far, because of the newness of the building, nothing has come up which has concerned them. “no major decisions have been made regarding the building and operations that would require owner input,” said Grimes.

What the occupied and unsold units are worth at the present time is an uncertain issue.

“We have not had any resales so I cannot attest to the current market value,” said Moyeno. Y

Building Amenities Although a second tower was rescinded, none of the amenities were spared; creating a luxurious community for owners and renters alike. Outdoors there is a swimming pool and deck, a barbeque area, a whirlpool and fireplace. There is also a fireplace in the inside common area. For exercise enthusiasts there is a well equipped fitness center and men’s and women’s saunas, whirlpools and showers.

A community room has a full catering kitchen and on the 7th floor Wi-Fi service is available. A doorman controls entry to the building 24-hours a day.

RESPONSIVE “Community Advantage and their team of industry experts were the most responsive and easiest to deal with out of all the financial providers we’ve worked with, enabling us to achieve our financial goal.” — Current Customer

Amenities in Units The unit amenities include floor to ceiling windows, granite counter tops, baths with imported Italian marble, viking appliances and Wood Mode cabinets. Parking is available for all units. “All parking spaces are deeded (to unit owners) and are offered to tenants with rental of a unit,” said Moyeno. Chicago’s Life Safety code requirements have been included in Walton’s construction.

For sustainable initiatives the building uses energy efficient bulbs in the common areas and there is a partial green roof that consists mostly of cactus and ground cover.

Budget and Financial The property operates with a 1.6 million dollar budget. “It is sufficient to maintain all services and pay operating costs,” said Moyeno. “There have been no financial shortfalls to date.” In addition to rental fees, revenue comes from monthly assessments of the owned units that range from $350 for one-bedroom to $2100 for three. no major issues with delinquent assessments have been reported.

Professional Management

YOUR TEAM OF TRUSTED INDUSTRY EXPERTS. Peter J. Santangelo

Frank Coleman,

Anthony Dister,

President

Assistant Vice President

Assistant Vice President

The Trusted Industry Experts at Community Advantage ® have been specifically serving the banking needs of community associations for more than a decade. Our expert knowledge and niche focus allows us to provide responsive, personal service. Along with that service, our financial solutions are specifically tailored to each situation, giving you the flexibility you need to keep your association’s finances healthy. Give us a call today and see what we can do for you.

110 W. Palatine Road | Palatine, IL | 60067 847-304-5940 | www.communityadvantage.com

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@ComAdvantage

Proud Members of ABOMA, ACTHA, BOMA, IREM, CAI

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

As noted previously, the property is managed by a well established agent. “DTS opted to keep

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04.12

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COnDO LIFESTyLES

2012 IREM Chicago Premier Awards

O

n March 9th 2012, IREM hosted the Professional Real Estate Management, 2012 PREMIER Awards at the Palmer House Hilton.

The participants celebrated the property management industry with an evening of casino, dinner and the announcement of the award winners that were judged by fellow property management professionals to have demonstrated excellence in 2012.

The Winners Are: CPM® of the year Kimmberly Carone, CPM® Draper and Kramer, Inc. ARM® of the year Kellie DeVilbiss, ARM® Jupiter Communities

34

Kellie DeVilbiss, ARM® - Jupiter Communities, Diane Gaerlan - Jupiter Communities, Asa Sherwood - Sudler Property Management, Kimmberly Carone, CPM® - Draper and Kramer, Inc., Chris Rocke - Valley Fire Protection Systems, Zach Gotkin -RMK Management, Patti Lopez- Pensacola Place / RMK Management, Ron Muldoon & Gidget Curtis - Brouwer Brothers Steamatic, Don McLauchlan - Elara Engineering, Greg Martin, CPM® - DK Living and DK CONDO, A Draper and Kramer Company.

Management Company of the year DK Living and DK CONDO, A Draper and Kramer Company Leasing Agent of the year Zach Gotkin RMK Management

COnDO LIFESTyLES

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Technology & Design - Renovation Award Sudler Property Management Community Service Award The Jupiter Cares Program at Jupiter Communities

Leadership Award Valley Fire Protection Systems vendor of the year Brouwer Brothers Steamatic

“Green” Design Award Elara Engineering Innovative Marketing Campaign Pensacola Place - RMK Management

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All material herein is copyrighted 2012©.

COvER STORy

from page 6

Diagnostics Key to Treating Water Leaks with openings should be able to determine the problems.”

Water testing can be effective for window leaks, he added.

A Study In Windows Mariotti covered the windows and doors segment of the program. He explained window parts and terminology as well as some of the most frequently seen problems.

Door and windows are a huge component of making a building watertight, he said.

One common scenario is sill rot below the window. Wood trim is more prone to decay these days because of the widespread use of chemically-grown wood. The product is more porous than naturally-grown wood. It must be frequently painted to keep the wood from soaking up water.

Many associations mistakenly cover their rotted sills with aluminum, thinking they have killed two birds with one stone: they’ve covered up the eyesore and eliminated the need to paint. Unfortunately, what they actually have done is trap moisture inside the wood, where it will cause further damage.

If window replacement is truly warranted, Mariotti advised doing a full-frame replacement rather than a partial replacement.

Full-frame replacement entails removing the entire window system, including the interior trim. It is more expensive, but it is more attractive and doesn’t look like an add-on. It also doesn’t cut down on the amount of light into the unit. Partial replacement merely inserts a new, smaller window into the

existing window system. The loss of light is dramatic.

Directing Water Flow Waldman again took the podium to talk about foundation leaks. He explained the differences between structural cracks and shrinkage cracks. Structural cracks are the more serious, although either one can permit water infiltration. “Water doesn’t care if it’s a shrinkage crack or a structural crack,” he said.

“It takes the path of least resistance.”

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04.12

Most basement foundation leaks are the result of improper control of roof runoff.

Waldman recommends extending downspouts between 6 feet to 10 feet away from the foundation, preferably into a graded swale. About 75 percent of basement water problems can be resolved in this manner, he said.

Other recommendations: Clean gutters, downspouts and roof drains once a year, check your groundwater sump pump at least twice a year, install a battery backup, make sure splash pads are properly positioned to

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COnDO LIFESTyLES

guide water away from the foundation.

Role of Architect or Engineer Waldman also explained the role played by an engineer or architect in the discovery and remediation of exterior water leakage.

Their job is to investigate moisture issues using established methodologies; prepare reports that document and illustrate the extent of the problem; prepare technical specifications and drawings for contractors to bid

and make repairs; provide technical oversight during construction and report to the property manager and/or owners; prepare change orders as required; make final inspections; and sign off on pay applications as needed.

“You can spend $100,000, $200,000, $300,000 on windows, and the building still leaks,” he said. “Hire consultants to find the source. Oftentimes, these are very technical issues.”

Is it possible… …TO IMPROVE property values and quality of life for homeowners? …TO OFFER specialized customer service to each of our 16,000 homeowners? …TO ACHIEVE cost savings without compromising homeowner’s quality of life? …TO DELIVER special value added services every day?

Financing For Associations Coleman’s presentation was on financing a major capital project. Associations have several options: reserves, special assessments, increased regular assessments, loans, or a combination of those. “If you have your own money, use it before you utilize a loan,” he said.

If you’re going for a loan, know that lenders will require a large amount of information and documentation to be assured you have the ability to pay it back. Start the process early, he advised.

Lenders will ask for your declaration and bylaws to make sure you have the authority to borrow money, pledge collateral and raise assessments. They want a legal description of the property, a list of unit owners and sales history. As for delinquencies (referring to delinquent assessments), they don’t want more than 10 percent of the units to be delinquent and the total delinquent amount to be more than 10 percent of the annual budget. And they might ask for an independent consultant’s review of the project.

A reserve study is a must. “We’re going to look at other capital improvement projects you’ve got coming up,” said Coleman. “If you come to us for a loan to replace a roof, but in three years you need a parking lot replacement, we might say we can do this loan for only three years, not five. Or we could combine the two projects and do them together.”

At the end of the seminar, panelists fielded questions from the audience.

MCD Media will be repeating the educational program, “Managing and Preventing Exterior Water Leaks,” later this year. If you’d like to be notified, email us at: mdavids@condolifestyles.net Y

Call or email Jennifer Feldman at 312.335.5650 or jmfeldman@wolin-levin.com to find out how WOLIN-LEVIN CAN MAKE IT POSSIBLE FOR YOU!

Serving the Chicagoland area for over 60 years.

RIVER NORTH - 312.335.1950 HYDE PARK - 773.371.1320 www.wolin-levin.com A FirstService Residential Management company.

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A H I G H - R I S E W I TH FIRE SPRINKLERS IS THE ONLY PLACE TO LIVE

If you are looking at a high-rise apartment or condo in Chicago, take a close look.

Make sure it is protected by a fire sprinkler system.

Why? Because fire sprinklers will save your life if there’s a fire.

Sprinklers are the single most effective way to protect you in a fire. They control deadly heat, smoke and flames, and they protect your property. Only the sprinkler closest to the fire activates, not the entire system.

Unfortunately, there are hundreds of high-rise buildings in Chicago that are NOT protected with fire sprinklers, many have not complied with the city fire safety codes.

Imagine being in a high-rise that catches fire, but doesn’t have fire sprinklers to automatically put it out……. Would firefighters be able to reach the upper floors?

Would you be able to survive?

When you are ready to make a move, take a close look and choose the high-rise that makes sense—one protected by a fire sprinkler system.

HighRiseLifeSafety.com ©2012, Northern Illinois Fire Sprinkler Advisory Board. All rights reserved. A not-for-profit organization.

Consistent, Award Winning Quality

BY K I N S E L L A L A N D S C A P E , I N C .

2011 ILCA Silver Award, Multi-Family Landscape Maintenance, Fay's Point Chicago

2012 ILCA Gold Award, Multi-Family Landscape Maintenance, University Commons Chicago

2010 ILCA Gold Award, Green Roof Construction, Echelon at K Station Chicago

2010 ILCA Judges Award & Gold Award, Residential Design & Construction, Lincoln Park Chicago

CREATING

2009 ILCA Silver Award, Multi Family Landscape Maintenance, Bridgeport Village, Chicago

LIFESTYLES ~ FROM THE ~

OUTSIDE IN

C O R P O R AT E O F F I C E

C H I C AG O O F F I C E :

13821 S. Harrison Avenue Blue Island, IL 60406 Phone: (708) 371-0830 Fax: (708) 371-9576

4335 S. Western Blvd.

Chicago, IL 60609 Phone: (773) 523-3538 Fax: (773) 523-1273

www.kinsellalandscape.com