Connect Magazine: Issue 1—2015

CAI-GRIE’s mission is: To make a positive contribution to the Common Interest Development Community through education and networking.

connect A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI

ISSUE ONE 2015

HOA Budgeting & Finance

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connect Table of Contents

A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI

www.cai-grie.org

OFFICERS Nancy I. Sidoruk, Esq................................................................. President Epsten Grinnell & Howell APC Dana Mathey, CMCA, AMS, PCAM.................................President-Elect Euclid Management Company Linda Cooley...................................................................... Vice-President Rosetta Canyon Community Association Lana Hamadej, LSM, PCAM..................................................... Secretary Avalon Management Group, AAMC Jeremy Wilson, MBA, CCAM, CMCA, AMS, PCAM ................ Treasurer Associa-PCM/Sun Lakes Country Club Kimberly Lilley, CMCA, CIRMS...........................................Past President Berg Insurance Agency, Inc. BOARD DIRECTORS Greg Borzilleri......................................... PCW Contracting Services, Inc. George Gallanes, CMCA....................................Sunnymead Ranch PCA Cyndi Koester, CMCA, AMS, PCAM................................. Sunwest Bank Nick Mokhlessin...............................ValleyCrest Landscape Maintenance Brian D. Moreno, Esq................................................. SwedelsonGottlieb Chet Oshiro.........................................................................EmpireWorks Shelly Risbrudt............................................Pilot Painting & Construction Kristie Rose, CMCA, AMS, PCAM........................ FirstService Residential

Features

Departments

4 Tips for Associations to Keep Expenses Down

6 President’s Message

By Toni Y. Burns, CCAM

By Jay W. Hansen, Esq., CCAL

8 Fiscal Duties: A Checklist 13 Businesses May Not Be Leaving, People Are!

By Dr. Esmael Adibi

15

Chapter Executive Director DJ Conlon, CMCA

Surviving & Learning from the Recession

By Linda Cooley

ADMINISTRATIVE ASSISTANT Ginny Aronson-Hoke

19

HARP: Could Be Sweet Music to the Wallet

EDITOR IN CHIEF Cang Le, Esq. ............................................................Adams Kessler, PLC

By Robert Riddick, CMCA

PUBLICATIONS COMMITTEE Linda Cooley.............................Rosetta Canyon Community Association Gary Kessler, Esq........................................................Adams Kessler, PLC Robert Riddick, CMCA.......................................Sunnymead Ranch PCA Betty Roth, CCAM, CMCA, AMS, PCAM.............. Avalon Management

Group, AAMC Nancy I. Sidoruk, Esq. .............................Epsten Grinnell & Howell, APC

By Nancy I. Sidoruk, Esq.

9 Past President's Perspective

Featuring Sherry Neal, PCAM

12

Editor's Link

By Cang Le, Esq.

26 IE Indoor Olympic Photos

21 Love Your Lake and Waterways

By Patrick Simmsgeiger

24 The Benefits & Obligations of HOA Membership

By Jim McMurray

DESIGN & PRODUCTION Kristine Gaitan..................Rey Advertising & Design/The Creative Dept.

All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Connect or the Community Associations Institute–Greater Inland Empire Chapter. Information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting or other professional services and should not be relied upon without the consultation of your accountant or attorney.

Connect is an official quarterly publication of Greater Inland Empire Chapter of the Community Associations Institute (CAI–GRIE). The CAI–GRIE Chapter encourages submission of news and articles subject to space limitation and editing. Signed letters to the editor are welcome. All articles submitted for publication become the property of the CAI–GRIE Chapter. Reproduction of articles or columns published permitted with the following acknowledgment: “Reprinted with permission from Connect Magazine, a publication of the Community Associations Institute of Greater Inland Empire Chapter.”

The Greater Inland Empire Chapter of CAI hosts educational, business

Copyright © 1998–2015 CAI-Greater Inland Empire Chapter.

Community Association owners and managers serving the Community

and social events that provide the Chapter’s Business Partners various opportunities to promote their companies’ products and services to

Advertising, articles or correspondence should be sent to: CAI-GRIE Chapter 5029 La Mart, Suite A • Riverside, CA 92507-5978

Association Industry. It is expected that all participants in Chapter events —

(951) 784-8613 / fax (951) 848-9268 info@cai-grie.org

whether they be educational, business or social — will conduct themselves in a professional manner representative of their business or service organization so as not to detract from the experience of others seeking to benefit from their membership in the Chapter.

CONNECT WITH GRIE • ISSUE ONE 2015

| 3

Tips for Associations to Keep Expenses Down In Good Times and Bad

W

ith the recession still looming over associations, more board members and community managers are searching for creative methods for keeping expenses down. Obvious as some of them seem, putting a new twist on an old method can have great results. Here are just a few:

We Spend How Much on That?!

It can be as simple as a visual aid to help homeowners and board members understand where a majority of their money is being spent and possible ways to reduce expenses (see sample chart at right). If members knew that almost 50% of the dues they pay each month went to utilities, it would prompt them to

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ISSUE ONE 2015 • CONNECT WITH GRIE

7% 16% 32% 45%

look at the association’s usage or contact their tenants about watching usage. It also would make members more likely to call and report landscaping leaks.

Contract services can also run high. Holding vendor meetings on a regular basis to ensure everyone is on the same page might not save a lot of money, but it can help the board and manager understand where contract services might be going over budget. Don’t forget to look at expenses for print, postage and mail. For example, in a small association of 100 units, 10¢ per page, 25¢ per envelope and 49¢ postage equals $64 for RESERVES a standard mailer. Thus, one UTILITIES mailer a month can cost $768 a year. Alternatively, there is email.

CONTRACT SERVICES Create an opt-in form for the ADMIN members to fill out and return so monthly billing, notices and important association related information can be emailed instead of mailed.

BY TONI Y. BURNS, CCAM

City Resources

Contact the city or utility providers to see if they offer credits for accidental over-usage. For example, the City of Corona will consider issuing credits for over-usage due to leaks. Providing an estimated leak start date, the repair date, and the name of the vendor that repaired the leak can reduce a $1,200 water bill down to the $350 normal billing amount.

Check with the City to see what free services or rebates they provide for water, trash, and landscaping items such as shade trees and mulch. Some water agencies will provide free shower timers, die tabs for leaks, faucet aerators and even sprinklers. Consistently putting this type of information out to members can save them and the association money.

Consistent Newsletters Now vs. Later

Extra trips result in extra charges. Take the time to put together a maintenance calendar to publish in each management report so board and committee members clearly know the amounts which are being charged for extra service requests. Also, having one point of contact on the board for extra service charges can help eliminate the question: “Who authorized this?” when reviewing financials. The amount that each vendor charges for emergency services should be included in the maintenance calendar, since it is usually billed at a high rate. Be sure that the board and committees are in agreement on what constitutes an emergency. Below is an example of a maintenance calendar.

Sending out consistent newsletters (via email; wink, wink) can be one of the most helpful resources for associations. Frustrations can result from a lack of understanding by board members and homeowners. Putting important information in newsletters can be a transparent way of educating members on how the association operates.

Publishing monthly utility usage figures for the property (not individual homeowners) will create engagement with homeowners. For example: • “Water usage is up by 8% from last year, don’t forget to report leaks and please forward a copy of this notice to your tenants.”

• “We received 100 free kitchen faucet aerators, contact management to receive one.”

Continued on page 6

CONNECT WITH GRIE • ISSUE ONE 2015

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Tips for Associations Continued from page 5

PRESIDENT’S MESSAGE statewide and

This year, we celebrate the 25th anniversary of

regional economic

CAI-GRIE. In honoring our

outlook by Dr. Esmael

chapter’s longevity and

Adibi of Chapman

success, how can we also

University (also a

ensure that 25 years from

contributing author in this financial-focused

now, we will continue to be as vital an organization, as important a resource, and as meaningful a

Nancy I. Sidoruk, Esq., is an attorney with Epsten Grinnell & Howell, APC, and the 2015 CAI-GRIE Chapter President.

issue of Connect), which brought to our attendees the kind of quality

source of personal and professional connections as we are

programming services expected

today? To be vital, to be important,

of a leading organization in the

and to be meaningful to community

community association arena. We

associations and those who serve

also look forward to participating

them, we must continue to advance

in April’s Legislative Day at the

the community association experience.

Capitol, presented by CAI’s California

In preparing to serve as your 2015

Legislative Action Committee (CLAC).

CAI-GRIE president, I reflected on our

I am confident that an impressive

purposes, strengths and opportunities

number of our chapter members

for development. As we move through

will again attend on behalf of

the year, I call upon you to keep in

Greater Inland Empire community

mind the following nine items that

associations, making their voices

represent the core of what CAI-GRIE is

heard by California’s elected officials

all about:

while continuing to learn about and

• Education & Credentials

contribute to the legislative process.

• Information & Resources

• Professionalism

of our year-long celebration, and

• Personal Interactions &

we’re already off to an exciting

• Quality Service

to participate in our celebration by

• Community Harmony & Success

joining me and your fellow CAI-GRIE

• Relevant Knowledge

members in advancing the community

• Legislative Involvement

association experience. Attend an

• Leadership

educational program, networking

Those of you who have attended

event or other chapter gathering. Visit

Networking

We’re only at the beginning

and productive start. I invite you

our luncheon programs this year

our new website (www.cai-grie.org)

already know that I’ll regularly touch

and social media pages. Participate

upon these core topics. For example,

in and contribute to the vitality of

our January luncheon program on

our organization by enjoying all it

effective time management provided

has to offer and by bringing to it the

practical tips and important knowledge

experience, skills, leadership, interests,

relevant to our members’ day-to-

heritage, personality and enthusiasm

day activities. Our highly acclaimed

that define us as CAI-Greater Inland

February program featured an

Empire.

informative and engaging national,

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ISSUE ONE 2015 • CONNECT WITH GRIE

• “The association was charged $50 for trash overage; please contact management if you have large items to dispose of and they will schedule a pickup for you.”

• Adding visual aids to budget and maintenance newsletter articles is a great way to increase reader interest in these otherwise dry subjects.

Collections

While boards have a fiduciary responsibility to ensure dues are collected, after an account is in collections the fees can increase fast, making owners feel like they are stuck in the rabbit hole of debt. Let’s be honest, some money is better than no money; accepting a ‘reasonable’ payment plan offer or settlement, and working with the owner to waive late fees or interest can help the association receive funds quicker.

Most assessment collection policies have verbiage about homeowners being able to contact the board for ‘reasonable’ payment plans before their account is turned over to collections, which can be a huge saver for homeowners on the pricey collection fees and costs.

Due to the division of responsibilities in the association’s governing documents, applicable state laws, as well as the terms of the management agreement, property managers are limited in what they can do and solve for the association.

Ultimately, it is up to the membership, through their board of directors, to make the tough decisions and maintain the association.

Toni Y. Burns, CCAM is a Portfolio Supervisor with JLA Real Estate Group and is a member of CACM.

Please note the following corrections to your 2015 Membership Directory: GATES/ACCESS CONTROLS Automated Access Systems Mr. Carl Whited PO Box 77157 Corona, CA 92877-0105 714-572-3573 Fax: 714-572-3805 E-mail: carl@aasgates.com www.aasgates.com GENERAL CONTRACTORS CBCI Construction Ms. Kristen Johnson 10015 Muirlands Blvd Ste E Irvine, CA 92618 949-548-5569 E-mail: kjohnson@cbciconstruction.com www.cbciconstruction.com LANDSCAPE MAINTENANCE/DESIGN RGS Landscape, Inc. Mr. Gary Plumley 1156 N Grove St Anaheim, CA 92806-2109 714-630-5300 Fax: 714-630-1330 E-mail: gplumley@rgsls.com www.rgsservices.com PLUMBING AAP All American Plumbing Mr. Anthony R. Pouliot 10247 Bellegrave Ave Ste #111 Mira Loma, CA 91752 855-893-3601 Fax: 951-427-1708 E-mail: anthony@aap-allamericanplumbing.com Professional Community Management has changed to Associa/PCM

CONNECT WITH GRIE • ISSUE ONE 2015

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Fiscal Duties: A Checklist This checklist summarizes the most significant statutory duties imposed on community association boards and managers. Most items include a citation to the statutes from which these duties are derived. Naturally, this checklist does not encompass all statutory obligations imposed on community associations or managers, and it certainly cannot address all contractual obligations or governing document duties that can and do vary widely. This checklist is also significantly condensed, so the reader must consult the actual statutes for important additional details.

Also note that while duties from the Corporations Code affect just incorporated associations, they might still be used as guidance by a court in determining whether an unincorporated association has acted reasonably. (NOTE: The entire Nonprofit Mutual Benefit Corporations Law applies to associations incorporated before January 1, 1980, except it does not apply to the mandatory contents of the articles of incorporation, unless the corporation amends them later and elects to be governed under the new law. [Corp. Code §§9912 & 9913])

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ISSUE ONE 2015 • CONNECT WITH GRIE

BY JAY W. HANSEN, ESQ., CCAL

Tax Returns

Associations must file a federal and state tax return or exemption statement by the 15th day of the third month after the fiscal year ends. Since requirements can vary, it is best to consult the association’s C.P.A. or tax advisor regarding applicable filing or reporting requirements.

Annual W-2 and 1099 Forms

Associations that have their own employees (regardless of compensation paid) or that have nonincorporated independent contractors (paid $600 or more during the year) must file appropriate forms with the state and federal government at various intervals during the year.

Consult the association’s CPA, tax advisor, manager or payroll contractor to be sure all forms are being processed. Caveat: calling employees independent contractors does not make them independent contractors any more than calling a cow a horse makes it a horse.

Use Tax Payments and Returns

California law requires any individual or business to pay “use tax” on merchandise bought from an outof-state vendor for use in California, if that vendor does not charge sales tax. This is frequently the case with mail order and internet purchases.

The State Board of Equalization is now sending notices to businesses, including CIDs, to register to pay use tax on such purchases. See www.boe. ca.gov, Publications 123-TG and 126 and Form BOE-404-A. [Rev. & Tax Code §6225].

Annual Review or Audit

Within 120 days after the fiscal year ends, a C.P.A. must prepare at least a “review” (or an audit, if the governing documents call for it), and the association must distribute it to the members, if the association’s gross income exceeds $75,000. [Civ. Code §5305] However, any incorporated association that had at least $10,000 in gross revenue must make available a balance sheet, income statement and statement of changes in financial position which is (1) accompanied by report from a C.P.A. or (2) an officer’s certificate that its balance sheet was prepared without audit.

[Corp. Code §8321] The annual report must also contain a statement indicating where the names and addresses of the current members are located [§8321(b)]. It must also contain a statement of any corporate “indemnifications or material financial transactions” between the corporation and any officer, director or holder of 10% or more of the voting power. The statute contains many details. [Corp.

Code §8322]

Director Financial Interest in Contracts

The 2014 Davis-Stirling Act added a section identifying specific actions on which directors have a conflict and may not vote. [Civ. C ode §5350] Under the Corporations Code, directors must disclose any contract or other transaction between the corporation and (1) the director or (2) any entity in which the director has a material financial interest. Detailed rules apply for proper ratification of any such transactions. [Civ. Code §5350 & Corp. Code §7233]

Distributions to Members

Corporations may not make any “distributions” to members except upon dissolution. [Corp. Code §7411] “Distributions” are defined in Corp. Code §5049. If the board is contemplating the return of any funds from the association’s operating or reserve funds, check with your attorney first.

Reconciling Bank Accounts

At least quarterly, review a current reconciliation of the association’s operating and reserve accounts. [Civ. Code §5500(a)&(b)]

Quarterly Review of Budget

At least quarterly, review the current year’s actual reserve revenues and expenses compared to the current year’s budget. [Civ. Code §5500(c)]

Quarterly Review of Income Statement

At least quarterly, review an income and expense statement for the association’s operating and reserve accounts. [Civ. Code §5500(e)]

Review of All Bank Statements

Review the latest account statements from each financial institution where the association has its operating and reserve accounts. In most cases that is monthly. [Civ. Code §5500(d)]

Continued on page 10

CONNECT WITH GRIE • ISSUE ONE 2015

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Fiscal Duties: A Checklist Continued from page 9

Bank Signature Cards

Be sure that the signature cards on all reserve accounts require at least two signatures. All signatures must be either board members, or one may be an officer who is not on the board. [Civ. Code §5510(a)]

Proper Reserve Expenditures

Do not spend reserve funds except for reserve items, or for litigation involving the repair, restoration, replacement or maintenance of major components which the association is obligated to maintain. The board may borrow money from a reserve fund for operating expenditures following the procedures in the law.

However, any borrowed funds must be restored within 1 year from the date of the first transfer, with limited exceptions. [Civ. Code §§5515 & 5520]

Common Area Taxes

We have found that some associations are paying real estate taxes on their common areas. Most, if not all, associations should be exempt. Check with legal counsel or your CPA [Rev. & Tax. Code §2188.5]

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ISSUE ONE 2015 • CONNECT WITH GRIE

Common Area Tax Bill Addresses

If the association owns common area lots, be sure the county assessor has your correct mailing address, even if you do not normally get tax bills. If a tax bill appears for any reason, or if you become subject to a mechanic’s lien, the only address may be the address in the public records. You want to be sure you know about any tax liens or other liens against the property. Many of these mailing addresses are still old and outdated addresses for the developer.

Water Meter Errors

Some associations regularly pay water bills on meters that serve other properties, or they encounter claims to pay water bills that someone else has been paying. It is critical for boards and managers to know that the water bills match up to a meter serving the association and that meters serving the association have a water bill coming to the association.

John (Jay) W. Hansen is a senior attorney at Epsten, Grinnell & Howell, APC, and a member of CAI’s College of Community Association Lawyers. Since 2005, he has taught CAI’s “Essentials” class for association board members and managers for the CAI-San Diego Chapter and periodically for other chapters, including CAI-GRIE. Jay annually prepares a series of checklists that are part of the firm’s Community Association Law Resource Book to assist boards and community association managers in fulfilling their statutory duties.

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CONNECT WITH GRIE • ISSUE ONE 2015

| 11

EDITOR’S LINK The “great recession” – the term coined for the economic and housing crisis that began around 2008 – greatly impacted the homeowner association industry and posed many unique challenges for those in the industry.

Cang Le, Esq. Most associations saw increased assessment delinquencies and many boards had to make difficult decisions regarding whether to defer maintenance and postpone renovations. Vendors and contractors servicing associations saw significant reductions in their businesses, and some did not survive.

And many communities became eyesores, with unkempt, foreclosed and abandoned homes littering neighborhoods throughout the state.

On a personal note, my parents had purchased a brand new home in a luxury senior community at the peak of the housing bubble. Similar to others who purchased during that time, their home lost more than half its value and they ended up losing hundreds of thousands of dollars in equity. At the same time, I almost

purchased a newly constructed high-rise condominium in downtown San Diego. Fortunately, I was a 27-year old with severe commitment issues – so I backed out of the transaction. Everyone was affected by the great recession, whether they had to walk away from their own residence or knew someone else who lost their home to a short sale or foreclosure.

With this issue, the Connect Magazine Committee wanted to tell stories from the community association world – from managers to business partners – about surviving the great recession and where we are now.

While (thankfully) greener pastures now appear on the horizon, there are cautionary tales to be told and important lessons to be learned. Although the pains from the great recession may have passed, hopefully they will not be forgotten.

Cang N. Le is a Senior Associate at Adams Kessler PLC and heads the firm’s Riverside office - 11801 Pierce Street, Riverside, CA 90505 and he can be reached at 1-800-4642817 or cle@adamskessler.com.

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ISSUE ONE 2015 • CONNECT WITH GRIE

Businesses May Not Be Leaving, People Are!

By Dr. Esmael Adibi

A

recent study by California Foundation for Commerce and Education points to a poor business climate in California. This study along with recent announcements by Toyota and Nestle that they are leaving California are once again fueling the debate as to whether California is losing its competitive advantage to retain or to attract businesses to the state.

The lack of adequate data is making it difficult for researchers to arrive at a conclusive answer. In spite of the Great Recession, the number of private business establishments in California increased from 1,261,000 in 2007 to 1,343,000 in 2011, but it declined to about 1,303,000 in 2013. Looking at the total number of business establishments, however, is misleading. Every year, many firms, particularly smaller ones are formed and many others fail. Although the Bureau of Labor Statistics attempts to estimate the number of death and birth of businesses, its estimation is not reliable. This data limitation is the primary reason why there is no clear answer if California, on balance, is losing businesses to other states.

There are, however, solid data that show some Californians are leaving the state for other destinations.

As shown in the nearby table, over the 2005-2012 period,

California experienced a net outflow of 1,168,000 people moving to other states. Texas, Arizona, Oregon and Nevada were the most popular destinations.

Two observations are noteworthy.

First, there is not a single year over the 2005-2012 period that shows positive net inflows into California.

Second, the net outflow is affected by the business cycle and trended down during the recession and the early stage of recovery. At the surface, this looks promising but the decline in the number of outflows over the last three years was influenced by the direction of home prices.

Many homeowners with underwater mortgages avoided selling their homes during the recession. With the rebound in home prices, these homeowners are recapturing lost equity and some may sell their homes and relocate. This could accelerate population outflows in the coming years.

Continued on page 14

CONNECT WITH GRIE • ISSUE ONE 2015

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Businesses May Not Be Leaving...

Continued from page 13

In spite of net population outflows, California’s total population increased over the 2005-2012 period.

The natural population increase (fertility minus mortality) along with international immigration more than offset the net population outflows.

This begs the question: Who is leaving and who is moving into the state and what is the resulting change in the quality and quantity of the labor force?

The shift in the mix of population, therefore, has significant effects on overall income & spending growth and tax revenues for the state and local governments.

The nearby table shows the number of tax returns classified by adjusted gross income over the 20052009 and 2005-2011 periods. The year 2005 is chosen to make this table somewhat consistent with the population outflow data. And there are no data available yet for 2012 and beyond.

As shown by the changes over the 2005-2009 period, the Great Recession had a significant negative effect on the number of taxpayers earning adjusted gross income of $400,000 and over.

By 2011, the largest increase in the number of tax returns is concentrated in the $1,000 to $99,000 income bracket. What is alarming is the decline or the little change in the number of returns for taxpayers having adjusted gross income of $1 million and over.

Of course, it is impossible to tie the population outflow figures with the number of returns filed by taxpayers. However, both sets of data are alarming.

First, continuous population outflows are a symptom of difficult economic environment in the state.

This could include high cost of living, lack of affordable housing, high taxes, traffic congestion, and so on.

Second, high-income taxpayers are a major source of personal income tax revenue for the state. Of course, based on the available data, we don’t know if some of these high-income earners are leaving the state. But there is no doubt that a significant decrease or a slow growth in the number of highincome earners will negatively affect state and local tax revenue.

Hence, if this trend continues, it spells trouble for the state which in all likelihood will face significant budgetary challenges in the next business cycle.

Esmael Adibi is the Director for Anderson Center for Economic Research, Chapman University

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ISSUE ONE 2015 • CONNECT WITH GRIE

Surviving & Learning from the Recession

By Linda Cooley

D

uring the last economic downturn and mortgage foreclosure crisis, the Rosetta Canyon Community Association’s delinquency rate rose to twenty percent. Consequently, the Board of Directors felt that strategic planning with specific goals was the key to reaching their survival objectives and goals:

• Keep assessments as low as possible (dues had steadily been lowered from $110 to $84).

• Maintain social events for families and their children at a reduced cost to the association, but free of charge to families. The City was contacted, and it agreed to provide movies in the park, a holiday Santa, and disposable trash containers.

• Avoid deferred maintenance by keeping reserves set aside for long-term capital repair fully funded. During that period, the wrought iron fences and mailboxes were painted while reserves remained fully funded.

• Keep a balanced budget to protect all homeowners’ investments so the value of homes would be minimally impacted.

• Revisit contracts and vendor services.

Vendor bids for services such as landscaping, painting, and electrical work were sought to find qualified providers at a lower cost. The board also created a wish list for additional items on each Request for Proposal.

The most difficult part was finding a balance between assessment collections and empathy for struggling homeowners. The board worked closely with our community manager to implement payment plans, while late charges would remain in place until all assessments were fully caught up.

Homeowners were aware that hard costs to the association would stay in place.

Also, restriction violations could not be overlooked and fines were assessed, but with the understanding that they could be revisited when the violation was corrected.

The recession was difficult, but the lessons learned adjusting to it were valuable to the board and the association.

Linda Cooley, Vice-president Rosetta Canyon Community Association, Vice President CAI-GRIE, Executive Board.

CONNECT WITH GRIE • ISSUE ONE 2015

| 15

M , PCA l a e N herry S g rin Featu

Why did you become President of GRIE? Did someone ask you? What were the circumstances that led you to becoming President?

I was asked to become President by my fellow board members. It was really part of a three year plan and partnership between then President, Michelle Hill (2008) and PresidentElect, John Bauer (2009). At that time I was serving as Vice President.

In 2008, President Michelle Hill and the board faced serious issues with a dwindling membership, a budget in the red, low attendance at programs and events, and no Executive Director. While under her leadership we successfully brought the Chapter to a level that we could grow from, we literally had to go back to the basics.

We also brought DJ Conlon on as the Executive Director in 2008. In 2009, during John Bauer’s leadership, and during my year as President-Elect, 16 |

ISSUE ONE 2015 • CONNECT WITH GRIE

the Chapter showed continued growth and was on its way to being fiscally sound. We were out of the red. In 2010 I was appointed President and was lucky that I had a stronger base to launch from thanks to all the hard work of the board and the ever-faithful volunteers and the leadership of my two predecessors.

When you became President of the Chapter, what were your main goal(s) for the Chapter? (Was there an obvious specific need?) Did you have a theme?

And how did you think it would further the Chapter as a whole?

The theme for my term was “Up, Up & Away, Connect, Build & Play.”

My main goals during my term were to continue to build membership, continue with the efforts to become financially sound and most importantly, I wanted to ensure quality programs for our members. I felt that

by providing quality programs, the members would regain confidence, and the programs would be a valuable resource for our members.

This required a lot of monitoring, scrutinizing and embellishing, when reviewing programs, speakers and venues. An on-going challenge for sure.

Another goal was to appeal to the manager members, not only for their attendance at programs and events, but for their involvement. I resurrected the Manager Committee and was very surprised at the response I received when I called on various managers to participate and join the committee. I wanted our manager members to have a voice, and I wanted them to be able to take something away from each program that would benefit them in their day-to-day work. By building the manager involvement, we

provided our business partners with more opportunities for business. This effort ultimately provided confidence and quality so that we could have something to offer our homeowner members, which was the largest part of our membership at that time.

Although a lot of emphasis was placed on growth and quality, we wanted our members to have fun. I felt it was important to put just as much energy into the social events in order for our members to have the opportunity to build relationships.

What did you feel were your biggest successes with the Chapter?

There were many successes that surfaced during my term and some were due to the three year plan/ partnership.

• The board amended and updated the Chapter’s Policies and Procedures to be compatible with the needs of members.

• The Education Committee updated and rewrote the

“Essentials Course” to be compatible with current laws and trends.

• The board met and exceeded our financial obligation to CLAC for the first time in 6 years • The Chapter was recognized and received an award at the “Legislative Day at the Capitol” for the “Turn Around Chapter.”

• The Chapter was recognized and received an award at the National Conference in Las Vegas for “Chapter Management and Development.”

I added a social event to the schedule that required CLAC to receive all proceeds. This is now known as the Winery Event that Nancy Sidoruk and the LSC committee successfully organized and is now an on-going event each year. In fact, the LSC committee was recognized and received an award at National Conference in San Diego in 2013 for their success with this event.

What I am most proud of is that

we all worked together and created amazing energy and enthusiasm. This Chapter has always had a reputation for being the most friendly, fun and welcoming Chapter, and I believe we brought that back.

What did you feel were your biggest challenges with the Chapter?

My biggest challenge was finding enough time to devote to all the new programs and growth. We were literally starting from scratch with some committees. The training of a new Executive Director, being available to the members at any time, while at the same time holding down a full-time plus job. I owe a lot of thanks to Walters Management for their support and generosity in order for me to devote the time needed to fulfill my commitment to the Chapter. What most people don’t realize is that the commitment to being Chapter President is not a one year commitment; it is a three Continued on page 18

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Past President’s Perspective Continued from page 17

year commitment. You do all of your planning as President-Elect the year before, and next year you fulfill your commitment as President, and the following year you spend supporting the incoming President and try to ensure continuity from the previous years’ work and efforts.

What do you see as the challenges facing the Chapter today?

I believe the Chapter will always be challenged to provide quality programs, but it is imperative.

What advice/words of wisdom would you impart to the Chapter today?

Like all living things we need to feed the Chapter’s successes to ensure it continues. I also think we need to move outside of the confines of the Chapter and into the surrounding communities to see who and what is out there that would benefit or be a benefit to the Chapter.

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ISSUE ONE 2015 • CONNECT WITH GRIE

HARP: Could Be Sweet Music to the Wallet

by Robert Riddick, CMCA

M

any of us in the homeowner association industry, whether we’re residents, property managers, real estate professionals, or business partners, have probably heard the term HARP, the popular acronym for the government’s Home Affordable Refinance Program. But quite often, nearly just as many of us don’t really know what it does, who qualifies for it, and how it actually works. So let’s see if we can shed some light on exactly what HARP really is.

For starters, the program was first rolled out as part of President Obama’s ambitious Making Home Affordable Program back in 2009. At the time, there was a demand from responsible homeowners, who faithfully made their monthly mortgage payments but also owned homes whose value was far less than the balance owed on their mortgages, to be afforded an opportunity to take advantage of dramaticallyfalling interest rates. In other words, their properties were, in the vernacular of the industry, “underwater” (owed more than the appraised value of their homes) in actual value.

The HARP program was primarily designed to offer muchneeded relief to those homeowners who, even though their homes were underwater, paid on their mortgages on-time but were not able to refinance their homes.

During its initial introduction, the program met with moderate success, but still fell far short of its goal to offer relief to the hundreds of thousands who needed it. Blame it on poor promotion or lack of knowledge on the part of homeowners, but the government, recognizing that the program was not meeting its expected goals, revamped and released it as a much-improved HARP 2.0. After doing so, the numbers speak for themselves, with nearly 20% or better of all home refinancing today being HARP-driven. Let’s look a little deeper into deciding if HARP is right for you.

First, we need to know what exactly does the HARP program do? It’s a program that allows qualified homeowners who are “underwater” with their mortgages to refinance. It’s primarily for those who can’t get financing anywhere else.

For them, the traditional avenues for refinancing simply are not available, even with exceptional credit, and even with a substantial ability to pay back on a refinanced mortgage.

Second, we need to understand who actually qualifies for the HARP program. When the government initially set the program up, it knew that it would only be able to service a certain number of loans, so it made a determination then that the only loans eligible would be those owned by Fannie Mae (Federal National Mortgage Association) or Freddie Mac (Federal Home Loan Mortgage Corporation). The first

eligibility qualification is that your loan MUST be owned by one of these two entities. If not, you don’t qualify for HARP. You must be current on your payments for at least the past 12 months. Your loan must have originated before May 31, 2009, and your loan-to-value must be greater than 80%. Lastly, your home must be your primary residence.

You can go online to quickly and easily find out if your loan is owned by Freddie Mac or Fannie Mae., www.fanniemae.com/loanlookup or www.ww3.freddiemac.com/corporate. If you meet these basic requirements, then there’s a good chance that you will be able to take advantage of the HARP program. It also doesn’t matter where your home is located.

Third, this is how the HARP process works. Once you meet the qualifications of the program, you need to do the following: 1) Gather all of your financial and mortgage documents, including mortgage statements for at least the past twelve months, as well as income verification (paystubs, tax returns, etc.); 2) Contact your current mortgage company and ask if they are an approved HARP lender.

If they are, then they already have all of your mortgage documentation and that part is done. If, on the other hand, they aren’t a HARP lender, then there is a list of approved HARP lenders located at the Fannie Mae and Freddie Mac sites which you can contact.

Next, go through the application process, making sure Continued on page 20 CONNECT WITH GRIE • ISSUE ONE 2015

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HARP...

Continued from page 19

to be as complete and thorough as possible, and wait to hear that you’ve been approved for the program. It’s also good to know that if your lender says “No” on your application, make sure you ask for specific reasons why.

If you think you’re eligible, then ask to speak with the HARP specialist, and if you’re still not satisfied, don’t be afraid to go to another lender.

Besides, a second opinion can be very informative.

If you are approved, you’ll go through the process of “closing,” much like you did with your original mortgage. Keep in mind that since you’re going through the HARP program, you may not be offered the rock-bottom low interest rates we’re seeing advertised. Instead, expect your rate to be in the 4% range. Even though it may not be the lowest rate

in town, you’ll still be able to save hundreds, and perhaps even thousands, of dollars which you otherwise would have spent on your old loan.

In my own community (Sunnymead Ranch PCA), there are a number of homeowners I contacted who took advantage of HARP to refinance their homes, and almost without exception, everyone who applied was approved for the program. The one exception was a homeowner who could not prove that his household income would be consistent over the reasonable life of a new mortgage because he was a professional gambler. Even though he clearly proved his past earnings (and losses) could easily sustain a refinanced mortgage, it wasn’t enough for the lenders he talked with to “bless the deal.” I guess, ironically, you could say “sometimes you win, sometimes you lose.”

In summary, for those looking at relief from continued high interestrates on their “underwater” homes, HARP is a very attractive, and perhaps the only, option for lowering those rates for the life of your mortgage. The good news is that the government just recently renewed the program to run through at least the end of 2015. The bad news is that it is an opportunity many homeowners in our communities will not take advantage of because they mistakenly think they won’t qualify or they just don’t know about it. Hopefully, this article will shed enough light on the program to convince some readers to at least investigate the HARP program to see if it’s the solution they have been seeking. It’s one government program that’s well-worth the effort to look into.

Links to check out: www.makinghomeaffordable.gov

Robert is the current President of the Sunnymead Ranch PCA, and past GRIE-Chapter President.

He is also serving his fifth year on the CAI National CAVC committee, and is a past CAI National Board of Trustees member. He served six years as a CAI-GRIE board member and will continue to serve as the CAI-GRIE CLAC Liaison.

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ISSUE ONE 2015 • CONNECT WITH GRIE

Love Your Lake and Waterways Love Your Lake and Waterways

by Patrick Simmsgeiger

By Patrick Simmsgeiger

Lakes and ponds are a luxury in many communities.

During the recession, some associations may have neglected the maintenance of these amenities.

L

akes and ponds that exist within nature are maintained naturally within their own ecosystem.

However, most lakes that compliment condominium, apartment, and golf course communities are artificial, and as a result require human maintenance.

Although many options exist for lake and pond maintenance, typically these alternatives are divided into two categories: Natural (or “green”) and Chemical. The Natural approach does not use synthetic solutions and relies entirely on products from nature to maintain lakes and ponds; while the Chemical approach uses Specialty Water Treatment Products to aid in maintenance.

So which method is better? The truth is – neither! Even though both have their benefits, the specific characteristics of each water location should be carefully investigated to provide the best possible maintenance solution. Because the majority of lake and pond systems are not natural, a balanced approach is often the most favorable. A balanced approach means that either the Natural or Chemical technique, or any combination of the two, can be utilized to obtain the desired results.

Sometimes when a water system is too large it is neither cost-effective nor timely to use an entirely Natural approach. Furthermore, overcompensating natural elements to restore an ecosystem in an artificial lake could actually lead to negative results. In other words, sometimes too much “green” can turn out to be a bad thing. Consider the following example: Water lilies can be introduced to a pond in order to increase visual appeal while providing natural oxygen.

However, if the water lilies are left to grow naturally, they are likely to expand and cause an overgrowth. The leaves will shed and sink, creating a biomass at the bottom of the pond. A large biomass will remove oxygen from the water and can become detrimental to the pond. In these and similar situations, leaving the ecosystem to take its course through nature using a strictly natural approach could actually be detrimental to the water.

Overgrowth of aquatic plants depletes oxygen from ponds and lakes. And when unwanted aquatic plants, algae, or weeds overgrow, repair work is definitely needed.

Continued on page 22 CONNECT WITH GRIE • ISSUE ONE 2015

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Love Your Lakes...

Continued from page 21

Overgrowth in large water features is a circumstance where a balanced approach is often the best method (as well as the most economical, timeeffective, and practical) for yielding successful results.

Combining methods could be as simple as initiating a natural approach to manual harvesting (having a team of laborers come in and manually remove overgrowth), and then introducing Specialty Water Treatment Products to eliminate the remaining unwanted material and restore the water system’s health.

When researching contractors to service lakes and ponds, make sure they are aware of all potential approaches and are licensed to provide all possible options and solutions.

Often a contractor will suggest the Natural approach because alternative options cannot be provided without a license (which the bidding contractor does not have).

“Green” doesn’t mean clean.

Ask each contractor if they have a Qualified Applicator License (QAL).

A QAL means that the contractor’s state and county allow him or her to use chemically produced Specialty Water Treatment Products. Specialty Water Treatment Products are biodegradable and environmentally safe.

Given the initial cost of constructing lake and water features, becoming informed about the best methods for maintaining lakes and ponds can help reduce future repair and maintenance expenses in both good and bad times.

Patrick Simmsgeiger is President of DWI in Laguna Niguel and is California’s only certified lake manager.

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ISSUE ONE 2015 • CONNECT WITH GRIE

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CONNECT WITH GRIE • ISSUE ONE 2015

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The Benefits & Obligations of HOA Membership

BY JIM McMURRAY

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ISSUE ONE 2015 • CONNECT WITH GRIE

It has been estimated that over 9 million homeowners live in a community association in California alone, and approximately 65 million do across the United States.

T

he benefits of living in a development that is governed by a community association are many and varied. The most important benefit is the proven track record that associations have in the maintenance (and often the enhancement) of property values.

It is widely accepted that the protection of property values of individual homeowners is a main goal of a homeowners association.

Communities with associations more effectively preserve property values because the associations offer several important benefits to residents that they, under normal circumstances, would be unable to obtain on their own. Community associations accomplish this goal in several different ways.

First, the association offers a greater level of confidence that the community will remain physically attractive. This is accomplished through collection of assessments and the enforcement of rules and regulations through the process of imposing member discipline, including fines, for lack of compliance. These enforcement procedures can involve areas such as architectural regulations, landscaping, fences, signage, parking and other important matters of property use and aesthetics. As an example, homeowners in typical community associations need not worry that a 32-foot RV will be parked in their neighbor's driveway for extended periods of time, or that a neighboring home will be painted lime green with purple trim, or that a falling limb from a dead or dying tree will present a hazard to residents.

Second, community associations quite often provide amenities and

recreational opportunities for their residents. These might include a swimming pool, clubhouse, fitness center, library, craft and/or activity room, tennis courts, walking trails and other amenities that many residents may not be able to afford or maintain on their own. Also, by their nature, community associations bring people together. Through clubs, classes and other association-sponsored events and activities, the residents are afforded the opportunity to build friendships which promotes and creates a sense of belonging.

Third, the association assumes the responsibility of maintaining the common areas and managing the aforementioned recreational facilities.

In addition, many associations are gated communities, providing limited access to the community by residents and invited guests.

Membership in a community association also entails certain obligations. These include the obligation of each homeowner to pay their association assessments on a consistent and reliable basis. These funds are literally the lifeblood of the association and are used to cover the expenses of the community. These expenses would include those incurred for landscaping the common areas, maintaining community amenities, insuring commonly owned structures and areas, mailing newsletters and other important correspondence, employing a community manager, retaining legal counsel, and other expenditures that are authorized by the community's governing documents. Members of a community association must also agree to bear the responsibility of abiding by the rules and regulations of that association, and ensuring that their tenants (if

any) and guests do, too. Homebuyers would do well to remember that when purchasing a home in a community association, they buy into the community’s rules and regulations as well.

In many cases, the everyday operation of a community association is handled by resident volunteers serving on committees and on the board of directors. Residents who are willing to offer their time, ideas and experience, combined with the guidance of a professional community association manager, are the keys to the successful operation of an association.

Over the years community associations have not only become increasingly numerous but have also become increasingly well received by their membership. A national survey conducted in early 2014 by Public Opinion Strategies shows that 90% of residents rate their overall community association experience as positive (64%) or neutral (26%). In addition, 90% of residents say association board members “absolutely” or “for the most part” serve the best interests of their communities. For more information, see www.caionline.org/about/press/ Documents/2014%20National%20 Homeowner%20Survey.pdf In closing, a community association is not unlike a grandmother's quilt.

Individually each piece is different, but when sewn (working) together, they help to keep everyone warm.

Jim is currently serving as Vice-President of The Club in Sun City Community Association. He has also served as President of the association. He is a member of the CAI-GRIE Chapter and its Legislative Support Committee.

CONNECT WITH GRIE • ISSUE ONE 2015

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ISSUE ONE 2015 • CONNECT WITH GRIE

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