ECHO Journal - July 2013

The Ticking Time Bomb

p.10

The Value of Consensus and Respect in an HOA Board p.16

Conducting a Site Walk-Through p.24

Preparing for Your Exterior Paint Project p.30

Register on Our New Website p.7

July 2013

Serving Community Associations

echo-ca.org

ECHO San Jose 42nd Annual Seminar & Trade Show p.8

ECHO 1602 The Alameda STE 101 San Jose, CA 95126 Change Service Requested

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CONTENTS

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The Ticking Time Bomb

The ticking time bomb is the two-fold punch of thirty years of declining interest rates (now near 0%) and rising inflation of construction related costs. The result is HOA reserve unfunded liabilities are growing with no evidence that either interest rate will begin to rise or inflation will decline.

The Value of Consensus and Respect in an HOA Board

In a perfect world, all of the board members in all of the associations in California would be civilized, hard-working, have unlimited business and interpersonal skills, be compassionate about doing service, make good decisions, have time, show up, and act like adults at all times! But it’s not a perfect world. Here are some strategies that might help.

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Conducting a Site Walk-Through

As a property manager or owner, regular site walk-throughs with your landscape service providers are essential. Site walk-throughs will help you communicate your desires, stay informed about site issues, and be proactive and strategic when determining priorities and action items.

Preparing for your Exterior Paint Project

There are many decisions to be made, including considerations regarding color selection, contract award, and types of coating systems. The following material can be a very helpful tool in preparation for your upcoming repaint project.

The ECHO Journal is published monthly by the Educational Community for Homeowners. The views of authors expressed in the articles herein do not necessarily reflect the views of ECHO. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service.

If legal advice or other expert assistance is required, the services of a competent professional should be sought.

Acceptance of advertising does not constitute any endorsement or recommendation, expressed or implied, of the advertiser or any goods or services offered. We reserve the right to reject any advertising copy.

Copyright 2013 Educational Community for Homeowners, Inc. All rights reserved. Reproduction, except by written permission of ECHO is prohibited.

The ECHO membership list is never released to any outside individual or organization.

ECHO 1602 The Alameda, Suite 101 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours Monday-Friday 9:00am to 5:00pm Board of Directors and Officers President David Hughes Vice President Karl Lofthouse Treasurer Diane Rossi Secretary Jennifer Allivato

DEPARTMENTS

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News from ECHO

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ECHO San Jose 42nd Annual Seminar and Tradeshow

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ECHO Event Calendar

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ECHO Volunteers

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Nominating Committee Seeks Candinates for ECHO Board of Directors

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Advertiser Index

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ECHO Bookstore

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Legislation at a Glimpse

Directors Jerry L. Bowles Stephanie Hayes Robert Rosenberg Brian Seifert Steven Weil

John Garvic David Levy Kurtis Shenefiel Wanden Treanor

Executive Director Brian Kidney Director of Marketing & Membership Jennifer Allivato Director of Communications Tyler Coffin Legislative Consultant Government Strategies, Inc. Design and Production Design Site ECHO Mission Statement Serving Community Associations

July 2013 | ECHO Journal

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news from ECHO

Visit www.echo-ca.org today!

Our new website is up and available for you: our members. The best things are worth the wait, and if you haven’t been to our website yet, please visit www.echo-ca.org today to see what we have to offer.

While anyone may view the website and find important guidance for HOAs, the most valuable material is available only to you. And to access that information, you must log in. Members who log in may: • Read and search nearly a decade of ECHO Journals • Access the ECHO MemberFuse community, create interest groups, share experiences, and meet other members.

• Access all educational material, including articles and videos, on the website.

• Read any “notes on the text” of current laws, and links to “New” Davis-Stirling sections.

• Register for events or purchase publications at a discount.

If you have not already received instructions on how to log in, please see the following page (page 7) for more information. We are eager to show you what’s available, so don’t hesitate to contact us for help.

We’ve done our best to create an exceptional online experience, but small problems are always a possibility during a major launch. Please let us know about your experience. We are positive that you will like what you find, but we are always striving to improve our services. Please send any questions to our office: info@echo-ca.org We are continuing to add great material to the website. Log in, look around, and let us know what YOU would like to see.

Best, Tyler Coffin

Director of Communications

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It’s finally here. Read. Watch. Learn.

Visit www.echo-ca.org today.

ECHO’s new website is up and running. For those of you who provided your email address to ECHO, you should have received instructions on how to login and take advantage of our new system.

If you have not provided your email address to ECHO, here’s how you gain access to our members-only information:

If you are the president of your association…

You are the “primary contact” for your association and have permission to manage your association’s members and account information.

If you choose, you can designate your manager to perform these tasks. You may also assign the primary contact role to another board member in your association. If you do not already have login information, please contact ECHO and provide your email address, name, and association name.

Email: newaccount@echo-ca.org Call: 408.297.3246 x21

If you are NOT the president of your association…

Your association president is automatically assigned the “Primary Contact” role. Contact your president and ask them to add your email address to your account along with a temporary password. If your association president is unavailable, contact ECHO and provide your email address, name, position within the association (board member, owner, etc.) and association name.

Email: newaccount@echo-ca.org Call: 408.297.3246 x21

July 2013 | ECHO Journal

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ECHO SAN JOSE 42nd Annual Seminar & Trade Show Saturday, August 24, 2013

We’re moving the Annual Seminar downtown! ECHO is thrilled to host its 42nd Annual Seminar and Trade Show, ECHO San Jose, at the San Jose Convention center. The Convention Center boasts even easier access to educational sessions, food, and public transportation. We are packing our program with essential information for board members including legal, financial, and maintenance guidance from some of the top experts in the HOA field.

ECHO San Jose is the perfect opportunity to grow your network of HOA contacts: meet new professionals on the trade show floor and enjoy lunch with fellow board members (included in the cost of your ticket).

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Visit the ECHO website for complete event details: www.echo-ca.org/events

Event Information

sessions

Location:

Board Essentials

San Jose Convention Center 150 W San Carlos St San Jose, CA 95113

• Putting Unity Back in Community • Your Real Job: Managing Maintenance, Repair and Replacement

Time:

• The Ticking Time Bomb

8:00 am to 4:30 pm

• Covering Your Assets

Parking:

Legal

Parking is discounted with validation. However, public transportation options are convenient and plentiful.

Please see the ECHO website for more information.

• New Davis-Stirling • Legislative Update

Lodging:

• CID Horror Stories, and How to Successfully Deal With Them

ECHO San Jose is immediately connected to the San Jose Hilton. A special rate of $99 per night (single or double) is available to conference attendees. Book by August 2 and mention ECHO Annual Seminar to get the discount! Book online, or call the Hilton at (877)901-6632.

Hot Topics • Practical Maintenance • Advice from an Atchitect and Contractor…Together • A Guide to Handling Investment Owners

Register Members: $99 $89 Nonmembers: $129 $119 Registration includes lunch and discounted parking.

Register online, or return the form on this page.

Prices increase $10 after July 31.

Yes, reserve ______spaces for the ECHO San Jose 42nd Annual Seminar & Trade Show.

Amount enclosed: $__________ (attach additional names) Name: Email Address: HOA or Firm: Address: City: State:

Zip:

Phone: Visa/Mastercard No. Exp. Date:

SPONSORS

Signature: Return with payment to: ECHO, 1602 The Alameda, Ste 101, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded.

Telephone: 408-297-3246; Fax: 408-297-3517

July 2013 | ECHO Journal

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THE TICKING TIME BOMB OF HOA RESERVE aCCOUNTS

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Board members of HOA’s may be finally sighing relief now that the housing crisis seems to be abating.

However, the recovery of the housing market may be both a curse and blessing for HOA’s.

Prepared By Anton Bayer, Cfp

July 2013 | ECHO Journal

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o doubt homeowners are relieved to see their property values increasing but with that is also a rise in construction related activities and expenses. The ticking time bomb is the two-fold punch of thirty years of declining interest rates (now near 0%) and rising inflation of construction related costs. The result is HOA reserve unfunded liabilities are growing with no evidence that either interest rate will begin to rise or inflation will decline.

Like many crises, it is the process of years of erosion that in small increments are seemingly inconsequential.

Until some point is reached that the issue requires significant attention and/ or is potentially unresolvable. The issue regarding HOA reserve accounts seems to be on this glide path. For decades many HOA boards have elected to deposit all their reserve funds in bank savings or Certificate of Deposits (CD’s).

It is not unusual for CCR’s to have the “FDIC” provision that requires all assets in the reserve account to be deposited into bank insured accounts. This seems reasonable for board members, who are both volunteers and fiduciaries, to be risk adverse. During the late 1970’s and through 1980’s interest rates issued by banks were at historic high levels with the Prime Lending rate peaking on December 19, 1980 at 21.5% that allowed many HOA reserve accounts to earn double digit risk-free rates.

However, since interest rates peaked they have steadily declined challenging reserve studies to determine a reasonable long term interest rate forecast. Every year as interest rates declined the unfunded liability would increase as interest earnings on the reserve accounts declined. It would seem inconceivable for a reserve study issued in the 1980’s to forecast interest rates declining for the next 30 years to 0%. But that is exactly what has happened.

As a result, HOA’s financial vulnerability may be at the highest risk in decades as their unfunded liability may continue to increase should inflation start to accelerate and interest yields remain low. Every year that inflation outpaces interest earnings (net after tax) the risk of not bridging the gap of unfunded liabilities increases that will challenge HOA’s years later on either increasing member’s dues or compromising future projects. As mentioned earlier, a crisis develops slowly over time until it is too late.

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HOA’s can learn from past experiences and mistakes of large pension plans that also faced the same challenge of underfunding. For decades pensions plans achieved their target returns and target actuarial year-end plan balance forecasts. However, in the early 1990’s, plans began seeing their unfunded liability widen as a greater number of participants were retiring than the addition of new participants. By the late 1990’s the deficit of outflows to retirees versus the inflow of employer contributions for new participant salaries was so great that many major companies feared their ability to meet their liabilities. To address the underfunding issue, many boards in the 1990’s decided to expand their investment policy to include more aggressive and risky investments in hopes of

HOA’s can learn from past experiences and mistakes of large pension plans that also faced the same challenge of underfunding.

increasing portfolio returns and narrow the unfunded gap. In portfolio manager terms, many changed the expanded investment policy to increase the portfolio’s correlation to the S&P 500. In other words, the closer a portfolio is correlating to S&P 500 the closer the portfolio’s returns match that of the S&P 500.

During the 1990’s this strategy proved productive as the US stock market performed well and banks were still offering mid-single digit interest rates on their fixed savings accounts. However, as you can guess the expanded investment policies exposed the portfolios to higher risk and a higher correlation to the stock market which meant that if the stock market declined the higher correlating portfolios

may also decline. The 2000 -2003 “tech bubble” crash caused significant damage to pension plan assets forcing several high profile pensions into Federal receivership (United Airlines 2005). Even though pensions’ assets benefited during the 2003 – 2007 recovery, interest rates steadily declined reducing the yields on the short term fixed accounts. When the US stock market crashed in 2008 it was for many pension plans a fatal blow that forced many more plans and their companies into bankruptcy (Hostess 2012).

Currently, of the 338 500 S&P companies with defined-benefit pension plans only 18 are fully funded. Seven companies reported that their plans were underfunded by more than $10 billion with the largest negative figure of $21.6 billion reported by General Electric 1.

For many years I was the financial advisor for a mid-size Teamsters supplemental retirement plan who’s Investment Policy only allowed deposits into bank savings accounts or Guaranteed Interest Contracts (GIC’s are issued by large insurance companies with guarantees on principal with fixed period interest rates). Every six months I was instructed to obtain bids for a new GIC reinvesting the proceeds from a maturing GIC (similar to a CD laddered portfolio). At the end of each fiscal year the reported unfunded liability had increased as the interest earnings on pension assets declined with interest rates. During the early 2000’s the yield decline was minimal from 7.5% to 7.25% but after 2000- 2003 market crash yields dropped as the Federal Reserved lowered their interest rates 16 times in 24 months and after 2008 underwriters of GIC contracts had significantly lowered renewing GIC yields to below 3% with many insurance companies ceasing to offer new contracts indefinitely.

To offset lowered annual earnings the board approved assessing more fees to the employers and participants but that did not cover the widening liability.

Finally, in 2012 the board approved transferring the plan assets and liabilities to a larger Teamster’s retirement plan that was structured as a 401(k) plan.

1 Source: U.S. Dept. of Labor, Bureau of Labor Statistics. Prepared by the Capital District Regional Planning Commission.

Establish an Investment Policy Statement (IPS) that will allow the opportunity for the reserve account to achieve the target benchmark return.

What can HOA board members learn from the pension experience?

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irst, take the proactive approach of defining the annual growth rate of the reserve account to meet your goals versus adjusting the goals per rate declarations by financial institutions.

Since 1980 the Consumer & Producer Price Index (CPPI) has an average annualized compounded rate of 2.96% per year 2. If the association pays a 20% tax rate then the benchmark target returns to match the CPPI net before tax should be around 3.70%. However, the CPPI may not be the appropriate inflation index as the purpose of the reserve account is to fund construction related expenses that do not necessarily inflate at the same pace as the CPPI. For the past several years, petroleum and metal costs have soared in price outpacing the CPPI by a wide margin that has impacted the costs of many construction products that include wiring, lumber, plastic piping, adhesives, paint, solvents, etc. Board members may consider whether the CPPI is a relevant target benchmark for the reserve account if construction related costs and services continue to outpace the CPPI. Second, establish an Investment Policy Statement (IPS) that will allow the opportunity for the reserve account to achieve the target benchmark return. I have reviewed many IPS documents for both 2 New York edition, July 21, 2012, page B3 article titled, “Private Pension Plans, Even at Big Companies, May be Underfunded�

July 2013 | ECHO Journal

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HOA’s and Pension plans that by design guarantee failure. For example, in “Goals and Objectives” section of many HOA Investment Policy Statements are the following investment parameters for the reserve account:

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1 2

Promote and assure the preservation of the reserve fund’s principal

3 4

Minimize the effects of interest rate volatility

Assure availability of funds in the reserve account to meet anticipated liabilities

Achieve long-term return on reserve fund assets that exceed inflation by 1% - 3% on net after tax basis

These Goals and Objectives assure the HOA board members of years of frustration and challenges. The first parameter is in itself confusing and rarely explained. Is “preservation of the reserve fund’s principal” the simplistic definition of not losing the actual principal or the more accurate definition of losing principal purchasing value and the inability to fulfill the purpose of the reserve account? What difference is there from the inability to purchase an item due to loss of principal or the inability to purchase an asset because the item has increased in price? Either way, the HOA cannot achieve the stated goals of the reserve account and alternatives will need to be considered such as raising member dues or postponing construction projects. In addition, this first parameter conflicts with the fourth parameter paralyzing board members to use fixed rate guarantee accounts (e.g. Certificate of Deposits) to outperform by 1% - 3% a variable increasing index. My research on yields for short and intermediate maturity interest accounts with principal guarantees have rarely if ever produced a yield that exceeds the CPPI inflation by 1% - 3% before tax. Today, the failure of these Goals and Objectives is very evident in which HOA board members should be earning 4.7% - 7.7% on their reserve account (based on the 32 year CPPI average and a 20% tax rate) while saving account yields hover around 0%.

The third parameter further challenges the board members to “minimize the effects of interest rate volatility” by possibly purchasing longer maturity deposit

accounts (e.g. three years or more) during declining interest rate periods (a possible conflict with the second parameter) and shorter maturity during rising interest rate periods. Not addressed is how volunteer board members meeting four times a year that are not typically trained on domestic and international currency markets that influence interest rates will define the complexity of interest rate trends and select appropriate maturity durations. For years many board members have missed locking in higher yields on longer term CD’s in anticipation of rising interest rates that have continued to decline. Now with rates near 0% board members are concerned about committing funds into longer term CD’s while the return in the reserve account suffers.

Financial institutions typically deposit their low risk funds in fixed income portfolios that by design earn well above their own issued bank savings rates. To state the obvious, banks reinvest HOA deposits into fixed income portfolios to earn a profit spread. Why doesn’t the HOA allocate some or the entire portfolio in a similar fixed income portfolio

instead of letting the banks earn the profit? Banks and insurance companies have built multi-trillion dollar organizations principally on the spread between yields they pay to depositors versus the return on their fixed income portfolios. I have heard HOA conference speakers say that depositing reserve funds in anything other than FIDC savings accounts is exposing the HOA to unwarranted risks and potential 50% account declines.

Jumping from a strategy of using guaranteed deposit instruments to investments that can decline 50% is both irresponsible and inappropriate.

If the Investment Policy is limiting the ability for the HOA to achieve the goals for the reserve account then the obvious solution is to amend the Investment Policy. The CCR’s of many HOA’s established after 2000 require the reserve funds to be deposited into FDIC insured or bank issued savings accounts. This year many HOA’s are going through the arduous and expensive process of re-stating their CCR documents to meet Davis-Stirling compliance. This is an opportunity for board members to cost efficiently expand the parameters of the Investment Policy that

will allow HOA board members to have more options to consider for their reserve account (including guaranteed deposit accounts) to potentially achieving its target return.

Don’t wait until it’s too late. Trustees of pension plans procrastinated as the unfunded liability widened and then took overly aggressive steps with their investments in hopes to narrow the gaps.

One key difference between pension plans and HOA’s is pension plans have the back-up of the Pension Guarantee Benefit Trust, a US government agency.

HOA’s do not have any such government agency to fall back on if they cannot meet their unfunded liability.

Anton Bayer will be speaking on this topic at the August 24, 2013 ECHO San Jose Conference. Mr. Bayer is the CEO of Up Capital Management, a Registered Investment Advisory firm, and has over 30 years’ experience as a Registered Investment Advisor and/or Registered Representative. Sign up for his newsletter or contact him at his website www. upcapitalmgmt.com.

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July 2013 | ECHO Journal

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THE VALUE OF CONSENSUS AND RESPECT IN AN HOA BOARD

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Do you think you can put a price tag on respect among board members? On the value of striving for consensus when unanimous agreement is out of the question? On choosing to participate in the decision making process over choosing to let personal egos or agendas rule? For understanding the goal at hand – which is to get the Association business done responsibly?

June 2013 | ECHO Journal

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-

Yes,

you can put a price tag on these things. And it correlates directly with the effort boards make to work together no matter how wide the chasm of differences. Every difficult decision a board has to make is exacerbated when directors engage in antics, games, arguments, power struggles, secrecy, exclusion, cliques, and “eg-o-lympics”.

Serving on the board is not about “winning” or losing. When someone “wins”, by contrast, someone else loses. It’s not a competition. It is specifically about managing assets of others as well as your own, in the most responsible way, and making decisions based on what is best for the community.

Serious discord among board members can increase the costs of an association exponentially. And the more entrenched or dysfunctional a board becomes, the higher the ultimate cost. Because when boards become deadlocked, paralyzed by infighting, unable to achieve quorum, discouraged by a bully, or resign en masse, it adversely affects the ability to accomplish important business, and discourages others from participating in association affairs and stepping up to relieve other members on the board. Serihousing practices. include dis-of ous dissention oftenThese requires the help crimination by the denial of a dwelling a professional to get things back on track.

Journal_13_05_ECHO Journal 4/18/13 6:41 PM Page 18

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gin. It further prohibits discrimination on these bases in OF the provision of servTHE VALUE RESPECT ices or facilities in connection with a CANNOT BE OVERSTATED, dwelling. Discrimination is defined to OR OVERRATED. include a refusal to make reasonable accommodations in rules, policies, a perfect world, all of the board practices members or services, when such accomin all of the associamodations mayinbe necessary to afford tions California would be such person equal opportunity to use civilized, hard-working, have unlimited business interpersonal skills, be and enjoyand a dwelling.

(42 U.S.C. Seccompassionate about doing service, tion 3604) The statute further promake good decisions, have time, show hibits discrimination by refusing to alup, and act like adults at all low a handicapped person,times! at that person’s expense, makePeople reasonable But it’s not a perfecttoworld. serve on the board forofvarious reasons.

It’s neca modifications existing premises volunteer position -- some provide essary to afford full enjoyment ofgood the service but others are merely filing a seat premises. and leave the decision making to the The New Regulations stronger personalities. And some need On October 7, 2011 new regulations to be right 100% of the time. Some need became guide DFEH proceto be theeffective center ofto attention, and some dures.

See California Administration have a chip on their shoulder.

Code, Sections 10035–10066. Certain changes made by regulations which facilitate the DFEH administrative process include the following:

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Serving on the board is not about “winning” or losing. When someone “wins”, by contrast, someone else loses.

Here are some strategies that might help in these situations.

Someone Take the Wheel and Learn Some Helpful Resources/ Techniques For Dealing With Difficult People and/or Consensus Building: If someone on the board can spend some time learning techniques to deal with the types of interpersonal issues that get in the way of thinking rationally and acting reasonably, he or she may be able to “crack the code” in an association that is experiencing dissention among directors. The web is full of articles on dealing with difficult people and difficult situations. I’ve written numerous publications myself. The library is full of books on subjects of resolving conflict in all kinds of situations, at home, at work, with teenagers, among boards. One quick Google search using the phrase “dealing with difficult people” turns up more than 10 pages of resources) pointing to articles and tips. A search on “building consensus” turned up even more resources. I found a great model on resolving disagreements and consensus building techniques related to articles posted on “Wikipedia”. Of course time is an issue but have you ever tallied up the time that is wasted when boards fight? The toll can be staggering. It can tear down defenses and cause people otherwise willing to give time to service to go running the other way.

1

Create a Safe Place And Forum To Conduct Business.

Try methods of promoting the right atmosphere to get business done with the least disruption such as:

2

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July 2013 | ECHO Journal

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• Use of parliamentary procedure as a way to keep order in the process – it’s required by California law anyway.

• Use of an Executive Committee of all board members except the one who needs to be excluded because of a propensity to disclose sensitive and confidential information to the wrong people – which concept is supported by the Chantilles case decision in California. Some practitioners believe that the absolute right of access by a director to Association records, although granted in the Corporations Code, is limited by the decision in the Chantilles case.

Use Outside Resources to Bring Good Information To the Table: Sometimes more information can resolve a disagreement, assist in making good choices, promote the best interests of the community, and recognize errors in thinking. That information could be in the form of articles on topic, meaningful statistics, surveys of owners, and/or opinions of experts. The internet is full of information, just be careful to consider the source.

3

Component Reserve Analysis and Construction Project Management

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Using a good facilitator or educated or experienced professional to step in or make suggestions may be just the pill the board needs.

Recognize That There Is No Place For Emotional Reactions or Acting Out In A Business Meeting. Let’s say there is a director who interrupts incessantly, yells or threatens trying to get their way. The very best

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Find the Answers to your All the right tools for your next project.

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thing other board members can do is 12926 and 12926.1. definitions IN KIND.These Anger breeds anger NOT REACT andbroadly escalates the fight. It’s not life easyactiviare construed.

Major because when a person feels they ties include physical, mental andare social being attacked, the adrenaline flows activities, as well as working. Chronic andepisodic the “fight or flight” reaction is to as or conditions are covered be expected. But try this instead: when disabilities. A few examples of physical Harry or Mary stands up and starts and mental recognized by yelling their disabilities position instead of deliverDFEH include heart disease, multiple ing it with “aplomb”, the best response sclerosis, palsy,is, when the HIV-AIDS, person runscerebral out of steam post-traumatic stressyour disorder and we clini“Thanks for sharing opinion… candepression. see you are very compassionate in cal your Andthe then on to another In view.” general, lawgorequires an acdirector or “call the question.”

You commodation when it imposes noknow, funall the obnoxious person is spouting damental alteration to the nature ofis information. If you look at it that way the program or undue financial or ad– just information, rather than the way ministrative burdens.

For don’t example, it is being delivered, – and buy if a mobility impaired resident has a van into the angst with which it was delivwith lift that cannot operered,aitwheelchair is easier to react objectively ate the garage due to physical conandin effectively. straints, it would be a reasonable request for that resident to be granted an Don’t Discount the Benefit of aaccommodation for parking in a near Trained Professional. There are by common area parking space despite professional facilitators and also restrictions or rules that would othersome attorneys and managers that are wise prohibit granting such a – permit. skilled in working with boards helpingA

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May 2013 | ECHO Journal

Every director has a responsibility to act in the best interests of the association, not their own individual interest. directors listen to each other, find areas of agreement, addressing inappropriate behaviors, finding solutions to impasse, locating and utilizing resources and information. Using a good facilitator or educated or experienced professional to step in or make suggestions may be just the pill the board needs.

Use Board Powers to choose good officers and unseat problem officers, issue mandates, encourage codes of conduct or If the Legislature intended to create commitment, and provide leadership. a new category of licensed contracDon’t choose the trouble maker to be the tor—one “oversees” construction, president.who If a director such as president but does not perform or propose abuses his or her position, it can be to a perform a work ofThe construction— very big problem. bylaws of the association like usually the board theof something thegive original version right to appoint, and unseat, officers, at the bill would have been adopted inwill. The board cannot remove a director stead of the very narrow amendment from the board but often can “neutralize” that we have.director So, unless the community the problem by taking away their manager his or her company is peroffice andor re-appointing another director to fill that or office.

Additionally, somea docuforming, offering to perform work ments allow boards to “vacate” a director’s of construction, they do not need a position for failure to4attend meetings or contractor’s license.

This same analysis failure to qualify in other ways. “Vacating” applies to construction managers hired a director’s board seat prevents them by community associations.

They do from participating in board business not a General Contracand need opensto uphave a vacancy on the board, but itlicense should unless not be done lightly, orto asor tor’s they propose a strategic move to change the majority. undertake to do the actual work or It should not be done (in my opinion) some part of it.5 without at least minimal due process allowing the director to explain themselves or to cure whatever leads to About the Authors: Tyler Berding, Ph.D., J.D. the threat.

6

is a founding principal of the Berding|Weil law continue indefinitely firm. JuliaDon’t Hunting, M.S., J.D. is a licensed Proto fight over impasse.

Find fessional and Structural Engineer and an aattorsolution to break an impasse. ney at Berding|Weil.

7

ECHO Journal | May 2013

Bring in additional information or a facilitator to help. If considering litigation, choose a process that is less contentious or expensive such as ADR – alternative dispute resolution. It comes in many forms (see below). Continuing to fight to the point where important business cannot be moved forward is a breach of fiduciary duty. Every director has a responsibility to act in the best interests of the association, not their own individual interest, clique, ego or power grab.

It may take tossing a coin, or rallying behind a new board candidate to break impasse. Just don’t muddle around in it too long.

ADR Processes Using Resources Outside the Association

If

a board needs outside help, there are processes far superior to initiating litigation or recall – which comes in different forms: Just a note about each appears below:

Negotiation (talking things through, presenting information, and coming to agreement): Basically, the board could use anyone to facilitate negotiations over something upon which the board cannot agree. Each side could bring in their own suggested expert or party with an objective view to help. Representatives to help with the “negotiations” might be contractors, vendors, attorneys, or trained facilitators that can help with negotiations.

Conciliation (agreeing to seek an objec tiveoutside opinion): This is different from  negotiation in the sense that the  directors agree to submit a dispute to   an outside person with the expertise  sufficient to offer an objective decision  or opinion on the questions that need    resolving.

If both sides or all parties   agree to submit the differences to a conciliator and agree to abide by that   person’s recommendation, it is one way to resolve a dispute that the directors   cannot resolve on their own. This is  like submitting a question about much interpreting the association governing  documents or a potential legal issue to  an attorney for an opinion. 

  Mediation (using a trained facilitator to help the parties find areas of agreement   in process): Mediation is voluntary except

July 2013 | ECHO Journal

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Once a person can actually hear another person, it gives them a new perspective and many times, that changes the dynamic. where a judge in a court case orders the parties to mediation. It involves a facilitator who is trained in mediation processes. The parties come together with the facilitator and discuss the issues and desired outcomes. It could have been invented for homeowner association disputes because it is one process where the parties are encouraged to talk about how they feel about the differences, not just what they want. Through the dialogue, the directors are more likely to “hear” each other even if they do not agree with each other, because the mediator will make sure the opportunity is generated.

And once a person can actually hear another person, it gives them a new perspective and many times, that changes the dynamic, in a good way. A mediator is not a judge and does not pressure the parties to settle, but provides an excellent opportunity to find a viable solution to the problem.

Arbitration (letting a hearing officer listen to the positions and subsequently

rule on what to do): Arbitration is a lot like court. Each side presents their issues, arguments and supporting items to their position to a hearing officer and that person makes a ruling. I do not think this is the best solution to internal board disputes. This is more like a court process than anything else, and is more expensive and involved than mediation. It may resolve one issue, but does nothing to promote ongoing board productivity.

California law (Civil Code Section 1369.510 etc.) requires homeowner associations and homeowners in them, who have a dispute with each other or their neighbor, to first attempt to engage the other side in ADR before filing a lawsuit. The statute says that the homeowner or association that wants to bring a complaint for injunctive relief or declaratory relief, coupled with damages of less than $5,000.00, has to serve the other party with a “Request for Resolution” prior to filing a lawsuit, asking them to participate in an ADR proceeding.

There are exceptions if there is a statute of limitations that may expire or a need for immediate relief, but the intent of the statute is to get associations and/ or homeowners to try ADR in CC&Rs disputes; before filing a lawsuit. (CC&Rs = Declaration of Covenants, Conditions and Restrictions that regulate a common interest development). This Request for Resolution should name the parties, state the dispute in simple terms, and request that the other side engage in ADR. The opposing party has 30 days to respond to this Request for Resolution. If the other party does not respond or rejects the offer within 30 days, the Request is deemed rejected and a lawsuit may be filed. There are no further hoops to jump through. If the Request is accepted by the

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If considering litigation, choose a process that is less contentious or expensive such as ADR – alternative dispute resolution. other party, the parties together have 90 days to resolve the dispute, or they can agree to extend the time.

If it is not resolved in 90 days, then the party wishing to file a lawsuit is entitled to do so, having satisfied the statute. If a party with a claim as described does not send a Request for Resolution to the other party, but files a lawsuit instead, the judge has various options. He or she may dismiss the lawsuit without prejudice to going through the steps again and then filing, or allow it to go forward taking into account the parties’ compliance with the statute (or noncompliance) when it comes time to consider an award of attorney fees.

Since the prevailing party in an enforcement action is entitled to recover attorney fees, the implication is that the judge could reduce the attorney fees award if either party refuses to participate in ADR. Hopefully the information in this article will provide some ideas for finding solutions when boards have fallen into dysfunction mode.

By Beth A. Grimm, Esq. ECHO East Bay Resource Panel Chairperson, a 20+ year member of ECHO and CAI, and author of FINDING THE KEY TO YOUR CASTLE, THE CONDO OWNERS HANDBOOK by Sourcebooks, THE DAVIS STIRLING ACT IN PLAIN ENGLISH, and other helpful community association publications.

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Journal_13_05_ECHO Journal 4/18/13 6:41 PM Page 26

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Conducting a Site Walk-Through Dave Phelps, ASLA, ISA

A

s a property manager or owner, regular site walkthroughs with your landscape service providers

are essential. Site walk-throughs will help you communicate your desires, stay informed about site issues, and be proactive and strategic when determining priorities and action items. Your service provider can be more attentive if given constructive feedback, and you can stretch your budget farther if your decisions are based on current, detailed information.

July 2013 | ECHO Journal

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Trees:

Site walk-throughs will help you communicate your desires, stay informed about site issues, and be proactive and strategic when determining priorities and action items.

T

his article outlines some items to help you be prepared so that you and your service provider can have more effective meetings.

The C-27 or Landscape Contractor’s specialty license is by far the broadest in scope of all the specialty contractor licenses. A licensed C-27 contractor’s expertise ranges from engineering and mechanical aspects of outdoor lighting and electrical, stone masonry, carpentry and wood craftsmanship, to plumbing expertise for efficient irrigation and drainage systems. In addition to these, the contractor must be knowledgeable in horticulture and ecology to address soil and plant health, as well as plant pests and diseases. All these fields of study are inter-related in the landscape system, and you should use your service provider’s expertise as a resource to help you get the most out of your landscape.

In landscapes, different areas of the landscape have different aesthetic values. The front entry’s level of detail and impact differs from the area around the trash compactor in the service area. Identifying and agreeing on the different landscape zones and their related aesthetic values helps the landscape service provider to prioritize tasks and allocate resources.

Another way to create zones is to organize the landscape by irrigation valve. Landscapes are designed and maintained to a large degree by the irrigation hydrozones. These are areas with similar plant

26 echo-ca.org

watering needs that are each irrigated by a separate valve or “station” on the irrigation controller. A competent landscaper will be monitoring these areas by doing regular irrigation systems checks. The irrigation zones are usually arranged or numbered in the controllers so that they can be tested in sequence in what is called a “walking order”. If this is the first detailed walk-through, doing it in the walking order of the irrigation check helps the service provider and the site manager stay on the same page and understand each other’s concerns.

Maintaining this same site tour path in future walk-throughs will help establish a comprehensive routine and assist in organizing notes and tasks for both parties.

It takes a skilled and experienced eye to catch minor landscape issues before they become problems. Sometimes the right questions can provoke greater depth and uncover problems and/or opportunities that otherwise would have gone un-discussed or unnoticed. Start the walk-through with a quick review of the main tasks from the last walk-through, any new issues that have come up; then start reviewing potential problems, desires and priorities, as well as opportunities for improvements while in each area. Issues that should be reviewed and discussed include:

Ask your landscaper about the general health of your trees. Your landscaper should be able to answer questions about: seasonal pruning, leaf drop, fruit issues, thinning, crown reduction, building clearance, hazardous branches, weak limb attachments, insects or diseases present or likely, pesticides used, life-span, staking, fertilizer program, mechanical damage, and general health and vigor.

Hardscape: Over time, your landscape could be causing damage to the hardscape. Your service provider can help you minimize damage caused by irrigation run-off damage, and root pressure, as well as minimize liability from trip hazards, slipping hazards, ADA compliance, plant edging, curb maintenance, and parking lot cleanup.

Site Amenities: Site amenities need maintenance too.

Your landscape provider should offer solutions for damage to wood fencing or structural siding, bench and table maintenance, paints and stains, lamp poles, signs, bollards, lighting, water features, and sculptural/accent elements.

Irrigation: Irrigation is one of the most important aspects of your landscape. Over water and you are wasting money, underwater and your landscape will suffer. Your landscape provider should offer weekly or monthly meter reads, water budgets, seasonal reference evapo-transpiration data, and irrigation system check results. They should be able to identify and repair mainline leaks, leaks at valve manifolds,

Debris:

Start the walk-through with a quick review of the main tasks from the last walk-through, any new issues that have come up; then start reviewing potential problems, desires and priorities, as well as opportunities for improvements while in each area.

A clear understanding of your service provider’s scope of work can be helpful.

Review debris clean-up responsibilities throughout the landscape and parking lot as well as trash schedules, and aesthetic thresholds.

Hazards: quick couplers, or hose bibbs, lateral leaks, pressure issues, broken nozzles, and leaking heads. They should also be knowledgeable about drip systems, flushing systems, emitter checks, valve box checks, head spacing, adjustments for plant growth, and backflow testing.

T

he current water bill should be compared to the site’s water budget. If you have mixed-meters, ask you service provider about sub meters to separate landscape water use from other water uses. Water efficiency improvements can sometimes show a quick return on investment (ROI) and can even provide funds for other landscape improvements. It is best to understand what the water agency or municipality expects for Water Efficient Landscape Ordinance (WELO) compliance. While this ordinance may not come into play until an improvement permit is required, strategically moving the landscape towards compliance will lessen the cost when it is mandated. Other things to discuss are possible rebates for irrigation improvements. Some of these improvements might include: • Lawn conversions for areas not directly used for recreation • Hydro-zoning plant areas: replace high water use plants in medium or low water use zones.

• Retrofitting old nozzles with high efficiency, matched precipitation nozzles • Installing: - “Smart” or weather-based controllers - Rain shut-off devices - Pressure regulators - Sub meters - Valve manifold shut-offs - In-line drip for planters less than 8’ wide, within 2’ of hardscape, or on slopes - Separate valves for tree bubblers - 3-4-inch mulch layer in planting beds

Planting Beds: Your service provider should have the horticultural knowledge to know what is best for your plants. You can ask them about your soil type, root-zone depth, organic-matter content, mulch type and depth, plant crown checks, their pruning style, recommended plant replacements, a fertilizer program, nutrient deficiencies or toxicities, diseases or pests present or likely, weeds, and herbicides and pesticides used.

Your landscape service provider can help minimize liabilities on your site.

Your service provider can identify paths through planting areas, tree hazards, hardscape hazards, and parking lot maintenance scheduling. All known hazards should be documented.

Sustainability: Sustainable enhancements are improvements that would save resources, minimize future inputs, or improve the landscape ecology. Some common enhancements that improve site sustainability are: • Reducing or eliminating shrubs that need shearing (and reduce noise pollution) • Increasing species diversity to promote beneficial insects and ecological stability • Maintaining an organic fertilizer program • Composting organic debris on-site • Improving rainwater infiltration by installing bio-swales • Planting natives and/or Mediterranean plants that are climate-appropriate • Planting edible plants

Turf Areas:

• Install permeable paving systems

Attractive turf areas can make your landscape pop. Discuss Turf type/blend, fertilizer programs, irrigation uniformity issues, weeds, herbicides used, core aerification, top-dressing, over-seeding, pests and diseases present or likely.

• Implementing an IMP program and checklist • Gray water and/or rain harvesting systems • Using chipped wood mulch on site • Using “mulching” mowers

July 2013 | ECHO Journal

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1 AB 2237 is codified as California Business and Professions Code Section 7026.1 (b)(2).

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12

I

May 2013 | ECHO Journal

t should go without saying that the walk-through should involve note taking, capturing images, and identifying action items. It is important to prioritize action items, and to understand what is included in the monthly maintenance contract and what will be billed as extra work.

MAINTENANCE SERVICES RENOVATION, DESIGN, INSTALLATION WATER MANAGEMENT

It is also helpful to review a short list of items on each walk-through. This includes any landscape improvement projects that are active, completed, or pending. Discuss costs and priorities for those still pending. Identify new opportunities for landscape improvements and ask your service provider for a quote.

TREE CARE

A wish list of potential improvement projects is helpful for periodic review and when budgeting for the future. Prioritizing which items are most important will help keep projects in perspective.

A good way to manage the process is for the service provider to supply the site manager or owner with a letter or email describing what was discussed on the walk-though. The letter should define next

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A wish list of potential improvement projects is helpful for periodic review and when budgeting for the future.

Prioritizing which items are most important will help keep projects in perspective.

actions and priorities for each party. This information can also be critical for effective transitions if either party moves on and new individuals have to get up to speed with the issues and needs of the site.

It may take some extra time and effort to do a thorough walk-through and produce the document as described, but the second time around it goes much quicker and after a few walk-throughs, both parties can be confident they are being as effective and efficient as possible and the landscape is getting the attention it deserves.

After the site manager or owner and landscape service provider have established a routine, inviting other users of the space to join them on the walk-through is the best way to enhance the process.

Usually there are a handful of key individuals who are either most vocal about issues, or are stakeholders in the maintenance of the site. Having them contribute their ideas and concerns on a walk-through can add insight for everyone involved.

This process will help promote quality communication and relationships between managers/owners, service providers and users. Also, opportunities for landscape improvements can be captured and implemented effectively and strategically. Ultimately, it will lead to the best possible landscape given the resources available.

Dave Phelps, ASLA, ISA, is Sustainability Manager with Cagwin & Dorward.

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Preparing for your Exterio r P a i n t Project Questions – Answer ed Easy There are many decisions to be made, including considerations regarding color selection, contract award, and types of coating systems.

The following material can be a very helpful tool in preparation for your upcoming repaint project.

30 echo-ca.org

Judy O’Shaughnessy and Michael Petite

July 2013 | ECHO Journal

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Color

C

olor is often the first consideration in the repainting process. Color selection is really based on achieving aesthetic value. Color should be pleasing to the eye, and work well with the surrounding exterior environment in which the property is located, i.e. landscaping, brick, stone work and roof color.

There are some basic guidelines that should be followed when colors for exterior use are being selected. The primary requirement is to select colors that are formulated with tinting pigments that are suitable for exterior exposure, in order to resist and protect against ultraviolet radiation from the sun. Light colors can actually reduce inside temperatures as

well as make a building stand out in its neighborhood. Conversely, a dark color will actually absorb heat and can make a large building seem better proportioned to a small lot. Temperature changes outside can affect the performance of coatings. As the temperature fluctuates hot to cold and conversely, cold to hot the substrate below the paint film will tend to expand and or contract. Thus, a high quality coating is recommended for optimum performance. Top quality paints are designed to produce the best looking and longest lasting result. And even though quality paints may cost a little more, they provide a smoother, more uniform appearance, and can last more than twice as long as ordinary paints;

Color should be pleasing to the eye, and work well with the surrounding exterior environment in which the property is located.

therefore, they are really more economical in the long run.

There are several options for a community association to achieve color selection for their property. The first would be to hire a consultant. A color consultant will choose colors for your community based upon his or her expertise. Second, have your paint manufacturer complete a complimentary color rendering, via digital photograph of your specific property. A starting point to get ideas on colors would be to view other properties that have colors you find appealing. Once you have narrowed your color options down to a couple, the painting contractor you have selected to do the project can provide you a ‘mock-up’ on a building.

A ‘mock-up’ is an area of the building where one or more paint color options can be applied and allowed to dry. This will enable viewing of the color schemes at different times of the day: morning, mid-day, evening. Colors may have a different appearance as the day light changes. This will enable the residents of the community to have a visual confirmation of the color selected prior to commencement of painting.

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resentative who not only provides a scope of work, but also details the preparation needed for the specific Product substrates. This document indicates Selection the specific primers for all wood, ferrous and non-ferrous metal, as well as aving aand/or specification concrete stuccoprepared surfaces.for It also your property will offer painting indicates the best topcoat gloss level guidelines and product recommendafor the surfaces, as well as specifying tions for your association now and in the future properwill paint to as meet or exceed the the serve a reference tool. longevity recommended byand theprepared reserve These specs can be obtained study. by your paint manufacturer, construction consultant or your painting contractor.

They should include consultation, a job walk, surface preparation guidelines, and substrate specific product recommendations. Many projects may use a vast range of products, including paints, stains, primers, sealers, varnishes, preservatives, elastomerics and many more. Architectural

H “

A specification will provide you, the customer, with a document that will instruct your bidders on materials and procedures for the High-quality products specific job.

Andofit is a use higher levels legal document pigment that helpso the material in the preserve the color’s specification will need to integrity over time. be used as directed.

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Paint quality considerations: premium or production. Premium lines are products engineered to offer excellent hide, color retention, and resistance to chalking and blistering. A production line is designed to offer good performance when budget constraints are an issue.

John Stauffer, technical director of the Paint Quality Institute, North America, explains that the difference between quality paint and lesser grades comes

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Please note, Product Information (PI) sheets and Material Safety Data coatings(MSDS) basicallyare serve only two Sheets available on purall poses: first, to provide protection to the paint products to explain the technical building materials, structure or objects to make up of the product as well as any which they are applied and second, to special instructions.

Just aesthetically like televibuildings more make the sions, paints are definitely notprovide all the pleasing.

Exterior paints must same! protection from moisture, ultraviolet radiation, pollutants and Keep inatmospheric mind 75–80% of the paint microbial growths that can degrade bid is attributed to labor; 20–25% wood is and even (paint, metal surfaces.

The decorative material caulking, etc.).

This value of paint is self-evident. One of the easiest and most cost effective ways to ECHO Journal | May 2013 enhance the beauty of a property is to add a fresh coat of paint.

Contact GCM to discuss your 24/7 Emergency Customer Service Fullneeds. administrative and facilities management management & reconstruction services Interactive website services fully integrated with accounting us a call today to see how (888)Give 277-5580 database we can serve your community. graysoncm.com

Avoid the confusion of construction defects Construction defect litigation can be confusing, expensive and fraught with legal pitfalls. This eye-opening guide, written by accomplished construction-defect attorneys, is an essential tool for board members who need to understand the legal process.

Order from ECHO! Call 408-297-3246 Fax 408-297-3517 store.echo-ca.org 27

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July 2013 | ECHO Journal

33

manage. advocate. nearby. obsessive.

Although elastomeric coatings offer a lot of excellent properties, they are higher in material cost, and the spread rate is reduced to approximately 30% of what a conventional exterior paint would be.

responsive.

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34 echo-ca.org

down to two primary factors: the number of prime pigments used and, with flat paints, the proportion of binder to pigment. High-quality products use higher levels of pigment that help preserve the color’s integrity over time. The premium paint’s higher level of binder improves the product’s resistance to elements such as dirt.

Another coating system, known as elastomerics, is also available to you.

Elastomeric coatings are for new and previously painted above-grade masonry surfaces. This blend of an acrylic terpolymer elastomer, adhesive agents and special pigments produces a film with high strength, durability, color retention, chalk resistance, elongation and elasticity. Since they are a mastic type of coating, some consideration should be given to the fact that it can be difficult to achieve a uniform finish; an experienced applicator is required when using mastic products.

Although elastomeric coatings offer a lot of excellent properties, they are higher in material cost, and the spread rate is reduced to approximately 30% of what a conventional exterior paint would be.

Additional labor costs need to be considered when selecting an elastomeric coating.

Type of Finish

W

hen selecting an exterior finish, sheen is another factor to be considered. While flat finish is generally the sheen selected for stucco and siding, selecting a low sheen in place of flats has become a current trend. Low sheened paints offer a more vibrant appearance as well as providing excellent dirt release from the substrate.

Closing

A

pplication of a quality coating at the recommended film thickness, using properly selected colors, will both protect and beautify your “most cherished investment.”

Judy O’Shaughnessy is a Bay Area Color Consultant and an ECHO member. Judy also is a member of the ECHO Maintenance Resource and South Bay Resource Panels.

Michael Petite is Kelly-Moore Paint Sales Representative and an ECHO member and is a member of the ECHO Maintenance Resource Panel.

12926 and 12926.1. These definitions are broadly construed. Major life activities include physical, mental and social activities, as well as working. Chronic or episodic conditions are covered as disabilities. A few examples of physical and mental disabilities recognized by DFEH include heart disease, multiple sclerosis, HIV-AIDS, cerebral palsy, post-traumatic stress disorder and clinical depression.

In general, the law requires an accommodation when it imposes no fundamental alteration to the nature of the program or undue financial or administrative burdens. For example, if a mobility impaired resident has a van with a wheelchair lift that cannot operate in the garage due to physical constraints, it would be a reasonable request for that resident to be granted an accommodation for parking in a nearby common area parking space despite restrictions or rules that would otherwise prohibit granting such a permit. A

Component Reserve Analysis and Construction Project Management  Detailed on-site inspections,

inventories and component descriptions  Meets or exceeds all requirements and disclosures of California Civil Code 1365  30 year funding model projections Professional Service –  Includes color photos of components Competitively Priced  21 years of reserve study experience

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Find the Answers to your Questions on Condo Ownership An excellent guide to understanding the rights and responsibilities of condo ownership and homeowner associations operation. The questionand-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.

Call todayRoger for aPollard, free proposal

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Order from ECHO! Call 408-297-3246 Fax 408-297-3517 Online: store.echo-ca.org

May 2013 | ECHO Journal

July 2013 | ECHO Journal

35

directory updates

All current listings may be found in our Professionals Directory available online at www.echo-ca.org.

Community Association Managers and Directors: Discover the difference our “On Demand” internet hosted accounting and management support service will make in your life: l

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Serving Community Associations

New Members Allied Trustee Services 990 Reserve Drive #208 Roseville, CA 95678 Contact: Andrea Bunch Tel: (916)960.0600 David Crowley Insurance Services P.O. Box 1981 Windsor, CA 95492 Contact: David Crowley Tel: (707)837.5175 Frank Fiala Roofing 1228 Quarry Lane Suite F Pleasanton, CA 94566 Contact: Cynthia Johnson Tel: (925)484.0124 Valley Siding, Inc. 576 N. Sunrise Ave. Suite 115 Roseville, CA 95661 Contact: Elania Rodriguez Tel: (916)791.3303 We Care Pest Control P.O. Box 14905 Santa Rosa, CA 95402 Contact: Bradford Stapleton Tel: (707)573.5899

Become an ECHO Professional Member and receive the benefits of membership.

To learn more, visit our membership page at www.echo-ca.org

36 echo-ca.org

ECHO event calendar

RESOURCE PANEL CALENDAR Monday, July 8 Accountants Resource Panel 6:00 p.m.

Scott’s Seafood, 2 Broadway, Oakland

Friday, August 9 East Bay Resource Panel Massimo Restaurant, 1603 Locust St., Walnut Creek 12:00 Noon

Wednesday, September 18 Wine Country Resource Panel 11:45 a.m.

Serv-Pro, 373 Blodgett St., Cotati

Tuesday, July 9 Central Coast Resource Panel 12:00 Noon Michael’s On Main, 2591 S Main St., Soquel

Wednesday, August 14 South Bay Resource Panel 12:00 Noon Buca Di Beppo, 1875 S. Bascom Ave., Campbell

Wednesday, October 2 Maintenance Resource Panel 12:00 Noon ECHO Office, 1602 The Alameda, Suite 101, San Jose

Thursday, July 11 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse, 400 Yosemite Dr., San Rafael

Wednesday, August 21 Wine Country Resource Panel 11:45 a.m.

Serv-Pro, 373 Blodgett St., Cotati

Wednesday, October 9 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell

Wednesday, July 17 Wine Country Resource Panel 11:45 a.m.

Serv-Pro, 373 Blodgett St., Cotati

Thursday, September 5 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse, 400 Yosemite Dr, San Rafael

Friday, October 11 East Bay Resource Panel Massimo Restaurant, 1603 Locust St., Walnut Creek 12:00 Noon

Wednesday, July 17 Legal Resource Panel 6:30 p.m.

Scott’s Seafood, 2 Broadway, Oakland

Monday, September 9 Accountants Resource Panel 6:00 p.m.

Scott’s Seafood, 2 Broadway Oakland

Wednesday, October 16 Wine Country Resource Panel 11:45 a.m.

Serv-Pro, 373 Blodgett St., Cotati

Wednesday, August 7 Maintenance Resource Panel 12:00 Noon ECHO Office, 1602 The Alameda, Suite 101, San Jose

Tuesday, September 10 Central Coast Resource Panel 12:00 Noon Michael’s On Main, 2591 S Main St., Soquel

Thursday, November 7 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse, 400 Yosemite Dr., San Rafael

REGULARLY SCHEDULED RESOURCE PANEL MEETINGS Panel

MEETING

location

Maintenance

First Wednesday, Even Months

ECHO Office, San Jose

North Bay

First Thursday, Odd Months

Contempo Marin Clubhouse, San Rafael

East Bay

Second Friday, Even Months

Massimo Restaurant, Walnut Creek

Accountants

Second Monday, Odd months

Scott’s Seafood Restaurant, Oakland

Central Coast

Second Tuesday, Odd months

Michael’s On Main, Soquel

South Bay

Second Wednesday, Even Months

Buca Di Beppo, Campbell

Wine Country

Third Wednesday, Monthly

Serv-Pro, Cotati

Legal

Quarterly

Varies

July 2013 | ECHO Journal

37

ECHO honor roll

ECHO HONORS VOLUNTEERS ECHO Resource Panels

Regional Seminar Speakers

Deon Stein, Esq. Wanden Treanor, Esq.

Accountant Panel Marco Lara, CPA 650-632-4211

Marin David Feingold, Esq. Wanden Treanor, Esq. Glenn Youngling, Esq.

Hot Topics Tyler Berding, Esq. Alan Crandal Stephanie Hayes, Esq. David Kuivanen John Schneider

Central Coast Panel John Allanson 831-685-0101 East Bay Panel Beth Grimm, Esq. 925-746-7177 Cindy Wall, 925-830-4580 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Brian Seifert 831-708-2916 North Bay Panel Diane Kay, CCAM 415-846-7579 Stephany Charles, CCAM 415-458-3537 South Bay Panel George Engurasoff 408-295-7767 Wine Country Panel Pam Marsh 415-686-9342 Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry Bowles Oliver Burford Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Geri Kennedy, CCAM Wanden Treanor, Esq.

San Francisco Steve Weil, Esq. Santa Cruz Lisa Esposito, CCAM Sharon Pratt, Esq. Rob Rosenberg, CCAM Paul Schultz Rosalia Tapia, Esq. Wine Country Carra Clampitt Bill Gillis, Esq. David Hughes Ken Kosloff Tom O’Neill Steve Weil, Esq. South Bay Derek Eckert Stephanie Hayes, Esq. Robert P. Hall Jr., Esq. Fresno Geri Kennedy David Levy, CPA Michael J. Hughes, Esq. Walnut Creek Stephanie Hayes, Esq. Lisa Esposito, CCAM Rob Rosenberg, CCAM Beth Grimm, Esq. ECHO Oakland Speakers April 6, 2013 Board Essentials Ian Brown Derek Eckert Geri Kennedy Ken Kosloff David Levy, CPA Steve Weil, Esq. Legal Jeffrey Barnett, Esq. Kevin Canty Sandra Gottlieb, Esq. Julie Mouser

38 echo-ca.org

Recent Contributing Authors February 2013 Oliver Diaz Lisa Esposito, CCAM Betty Jones, Esq. Robert Rosenberg, CCAM Steven S. Weil, Esq. Glenn H. Youngling, Esq. March 2013 Tom Fier, Esq. Paul Schultz, CIC, CLIA, CLT-E Deon R. Stein, Esq. Amy K. Tinetti, Esq. April 2013 Robert Aune Stephany Charles, CCAM Beth Grimm, Esq. Diane Kay, CCAM Hannah Skiles May 2013 Tyler Berding, PhD, Esq. Julia Hunting, Esq. Jeffrey Barnett, Esq. Ann Thomas Sherry Harvey, PCAM June 2013 Brian Kidney ECHO Maintenance Resource Panel Sandra Gottlieb, Esq. Alexander Noland, Esq. Tracy Neal, Esq. Stephanie Hayes, Esq. Richard Tippett Tyler Berding, JD, PhD David Levy, CPA

Sacramento Educational Seminar Saturday, September 7, 2013 8:30 AM to 12:30 PM

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Sacramento, CA 95822

Deon Stein, Esq. Adam Haney, CPA William Erlanger, CPA Ian Brown, CCAM

Price:

Join us at our first-ever Sacramento Seminar and get expert legal guidance, financial tips, and more. The Sacramento Educational Seminar is the perfect opportunity to meet fellow board members, strengthen your community, and reduce your association’s liability.

Watch our website and the ECHO Journal for more speaker and topic announcements.

$59 $49 Members $69 $59 Nonmembers Prices go up after August 23!

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2013 ECHO educational calendar

ECHO Seminars Now there’s one near you.

Santa Rosa

Only three Educational Seminars remain for 2013, including our signature Annual Seminar and Trade Show: ECHO San Jose. Don’t miss an opportunity to get the education you need with guidance from some of California’s top HOA attorneys and professionals.

Sacramento

Marin Walnut Creek Oakland San Francisco

San Jose

Aug. 24

Sep. 7

ECHO San Jose Annual Seminar and Tradeshow

Sacramento Educational Seminar

San Jose Convention Center, San Jose

Westin Hotel, Sacramento

Sep. 21 Monterey Educational Seminar

Campbell Santa Cruz

Fresno Monterey

Register today!

Online: www.echo-ca.org

By Phone: 408.297.3246

Hilton Garden Inn, Monterey

July 2013 | ECHO Journal

41

Nominating Committee Seeks Candidates for ECHO Board of Directors

T

he Nominating Committee for the ECHO Board of Directors is seeking expressions of interest from persons who are interested in serving on the ECHO Board of Directors. Four positions on the board will be up for election at the ECHO Annual Meeting that will be held in November. These positions are for three-year terms. Current directors whose terms expire in 2013 are John Garvic, David Levy, Karl Lofthouse and Wanden Treanor.

Board members are expected to attend four three-hour board meetings held each year, generally at the ECHO office in San Jose. Each board member also serves on one or more committees that hold regular meetings

42 echo-ca.org

throughout the year. In addition board members are expected to attend the Annual Meeting and a two-day board retreat each November. Board members receive no reimbursement for these activities. Nominees must also be members of ECHO, either through their homeowners association or business and have thorough familiarity with the organization and the CID industry.

Persons interested in being considered for nomination should obtain and complete a nomination and qualifications form, available by request from the ECHO office.

Every potential candidate, including incumbents, must submit a full form. All completed forms must be submitted to the ECHO office no later than July 24, 2013, to be considered by the nominating committee. Those requesting nomination may be requested to interview with the nominating committee. The committee will meet in late July to prepare recommendations for board consideration.

advertiser index

about ECHO

Ace Property Management......................... 28 www.acepm.net

Mutual of Omaha Bank.............................. 20 www.mutualofomahabank.com

WHAT IS ECHO?

American Management Services............... 21 www.amspcam.com

PML Management....................................... 19 www.pmlmanagement.com

Angius & Terry............................................... 3 www.angius-terry.com

Pollard Unlimited........................................ 20

Serving Homeowners to Build Strong Community Associations

Applied Reserve Analysis........................... 35 www.ara-llc.com A.S.A.P Collection Services........................ 23 www.asapcollect.com

R.E. Broocker Co.......................................... 29 www.rebroockerco.com RealManage................................................. 15 www.realmanage.com

Association Reserves.................................. 33

Rebello’s Towing.......................................... 40 www.rebellos.net

Benjamin Moore Paint & Company........... 22 www.benjaminmoore.com

Saarman Construction................................ 13 www.saarman.com

Berding|Weil ............................................... 48 www.berding-weil.com

Steve Tingley Painting, Inc......................... 47 www.tingleypainting.com

Cityscape Property Mgmt........................... 13 www.cityscapeHOA.com Collins Management................................... 36 www.collins-mgmt.com Community Association Management..... 33 www.HOAsManagement.com Community Management Services........... 32 www.communitymanagement.com Compass Management............................... 23 www.gocompass.com Cool Pool Service......................................... 14 Cornerstone Community Management..... 18 www.cornerstonemgt.biz Ekim Painting.............................................. 18 www.ekimpainting.com Eugene Burger Management Co................ 22 www.ebmc.com First Bank..................................................... 19 www.firstbankHOA.com Focus Business Bank.................................. 15 www.focusbusinessbank.com Grayson Community Management........... 33 www.graysoncommunitymgmt.com Haney Accountants, Inc............................. 36 www.haneyinc.com Helsing Group, The...................................... 23 www.helsing.com Levy, Erlanger & Company......................... 29 www.hoa-cpa.com M&C Association Management Services.... 2 www.mccommunities.com The Manor Association............................... 34 www.themanorassn.com Max M. Ranjbar........................................... 14 www.ranjbarcpa.com Medallion Landscape.................................. 28 www.mlmi.com

The Educational Community for Homeowners (ECHO) is a nonprofit membership corporation dedicated to assisting California homeowner associations. ECHO provides help to homeowner associations on many fronts: finances, legal issues, insurance, maintenance and management. Members receive help through conferences, trade shows, seminars, online education, a monthly full-color magazine and discounted publications.

Who Should Join ECHO? If your association manages condominiums or a planned development, it can become a member of ECHO and receive all of the benefits designated for homeowner associations.

Benefits of Association Membership • Subscription to monthly magazine • Access to members-only online education • Updates to the Association Statute Book • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues Association Membership 2 to 25 units....................................$120 26 to 50 units..................................$165 51 to 100 units................................$240 101 to 150 units..............................$315 151 to 200 units..............................$390 201 or more units...........................$495 Professional Membership.................$425 Association Management Membership.......................................$425 Individual Membership.....................$100

How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www. echo-ca.org.

For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.

July 2013 | ECHO Journal

43

Beyond Privatopia Non-Member Price:

$20.00 $25.00

The rise of residential private governance may be the most extensive and dramatic privatization of public life in U.S. history.

In Beyond Priva topia, attorney and political science scholar Evan McKenzie explores emerging trends in private governments and competing schools of thought on how to operate them, from state oversight to laissez-faire libertarianism.

Condominium Bluebook 2013 Edition $17.00 Non-Member Price: $25.00

Condos, Townhomes and Homeowner Associations Member Price: $29.00 Non-Member Price: $45.00

Community Association Statute Book—2012 Edition Member Price: $15.00 Non-Member Price: $25.00

To make these a sustainable investment, new buyers, owners and board members need to understand “best practices basics” of how this form of housing works and have more realistic expectations of this form of “carefree, maintenance free” living.

Contains the current version of the Davis-Stirling Common Interest Development Act, the Civil Code sections that apply to common interest developments and selected provisions from other codes important to associations.

Robert’s Rules of Order $7.50 Non-Member Price: $12.50

The Board’s Dilemma Non-Member Price:

A step-by-step guide to the rules for meetings of your association, the current and official manual adopted by most organizations to govern their meetings. This guide will provide many meeting procedures not covered by the association bylaws or other governing documents.

In this essay, attorney Tyler Berding confronts the growing financial problems for community associations. Mr. Berding addresses board members who are struggling to balance their duty to protect both individual owners and the corporation, and gives answers to associations trying to avoid a funding crisis.

2012 Community Association Treasurer’s Handbook Member Price: $29.00 Non-Member Price: $35.00

Reserve Fund Essentials Member Price: $18.00 Non-Member Price: $25.00

The Condo Owner’s Answer Book Non-Member Price:

This book is an easy to read, musthave guide for anyone who wants a clear, thorough explanation of reserve studies and their indispensable role in effective HOA planning. The author gives tips to help board members mold their reserve study into a useful financial tool.

An excellent guide to understanding the rights and responsibilities of condo ownership and operation of homeowner associations. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.

This well-known compact guide for operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequently-asked questions about associations, along with succinct answers.

W NETION I ED

Home and Condo Defects Member Price: $12.95 Non-Member Price: $17.95 Construction defect litigation can be confusing, expensive and fraught with legal pitfalls. This eye-opening guide, written by accomplished constructiondefect attorneys, is an essential tool for board members who need to understand the legal process.

Questions & Answers About Community Associations Member Price: $18.00 Non-Member Price: $25.00 For 12 years, Jan Hickenbottom answered homeowners’ questions in her Los Angeles Times column on community associations. Now collected in one volume, readers can find answers to almost any question about CIDs.

44 echo-ca.org

$10.00 $15.00

$15.00 $20.00

The Handbook is an in-depth guide to all aspects of association finances, including accounting methods, financial statements, reserves, audits, taxes, investments and much more. Not for the accounting novice, this is a tool for the treasurer or professional looking for specific information about association finances.

Board Member Handbook Member Price: $15.00 Non-Member Price: $25.00 This publication is the essential guidebook for HOA Board members, dealing with governance, finances, insurance and maintenance issues.

Revised and updated in June 2012.

Dispute Resolution in Homeowner Associations Member Price: $15.00 Non-Member Price: $25.00 This publication has been completely revised to reflect new requirements resulting from passage of SB 137.

Publications to answer your questions about common interest developments Order Online at store.echo-ca.org

Bookstore Order Form Board Member’s Guide for Contractor Interviews $15.00 Non-Member Price: $25.00

Executive Council of Homeowners 1602 The Alameda, Suite 101, San Jose, CA 95126 Phone: 408-297-3246 Fax: 408-297-3517

TITLE

QUANTITY AMOUNT

This report is a guide for directors and managers to use for interviews with prospective service contractors. Questions to find out capabilities and willingness of contractors to provide the services being sought are included for most of the contractor skills that associations use.

SUBTOTAL CALIFORNIA SALES TAX (Add 8.625%) TOTAL AMOUNT

Board Member’s Guide for Management Interviews Member Price: $15.00 Non-Member Price: $25.00 This guide for use by boards for conducting complete and effective interviews with prospective managers takes the guesswork out of the interview process.

Over 80 questions covering every management duty and includes answer sheets matched to the questions.

Yes! Place my order for the items above.

Check

Visa

MasterCard

Credit Card Number Exp. Date

Signature

Name (please print) Association (or company) Email Address City

State

Zip

Daytime Telephone

July 2013 | ECHO Journal

45

legislation at a glimpse

Hot Bills Bill No

Author

Subject

Status

Position

Summary

AB 968

Gordon

Elections in Small Associations

This bill has passed the Assembly, and is now in the Senate Transportation & Housing Committee.

Support

This bill seeks to establish alternative election procedures for associations of 15 units or less, if approved by a majority of the members. The new procedures would allow qualifying associations to conduct votes in simplified fashion, by nominating candidates and casting ballots at the election meeting.

AB 637

Torres

Maintenance Responsibilities

This bill is now a twoyear bill, and will be reintroduced under a new number in 2014.

Support

This ECHO-sponsored bill establishes that the owner of each separate interest is responsible for maintaining the exclusive use common area appurtenant to the separate interest unless otherwise provided for in the governing documents. ECHO is continuing to work to educate legislators on the importance of this clarification.

As the bill is now on a two-year track, ECHO’s text has been removed from AB 637. Our language will be reintroduced in a new bill in 2014.

Other Legislation Bill No

Author

Subject

Status

Position

Summary

SB 745

Committee on Transportation & Housing

Housing Omnibus Bill

This bill is under consideration in the Assembly Housing committee.

Watch

“Omnibus� legislation is intended to clean up errors in existing codes, and proceeds absent any objections. This bill contains language that cleans up the rewritten Davis-Stirling act, among other provisions. ECHO is watching these changes closely to ensure that no substantive changes are introduced.

AB 126

Hall

Time-Share Mailing Lists

This bill not yet been set for hearing, and is dead for 2013.

Watch

This bill requires a time-share association to maintain a complete list of the names and postal addresses of all owners of time-share interests in the time-share plan and to update the list at least every 12 months.

AB 746

Levine

Smoking Prohibition

This bill failed in committee and is dead for 2013. The bill was granted reconsideration and may appear again in 2014.

Watch

This bill prohibits the smoking of cigarettes or other tobacco products in all areas of multifamily dwellings. It provides an exception for designated smoking areas.

AB 1360

Torres

Electronic Voting

This bill passed the Assembly with bipartisan support and is now in the Senate Judiciary Committee.

Support

This bill authorizes an association to conduct elections or other membership balloting by electronic voting. It also requires an association to provide each member with an opportunity to indicate that he or she will be voting electronically and to provide a member who did not indicate so with a paper ballot.

46 echo-ca.org