ECHO Journal - September 2018

The Fight Against Short Term Rentals p.8

Understanding Insurance Recommendations

From a President’s Perspective

p.14

p.18

Serving Community Associations

What is a Capital Improvement? p.26

Why Did They Build These Buildings So Crummy? p.30

September /October 2018 echo-ca.org

What the Actions of Five Coastal Cities Could Mean for California Short Term Rentals p. 8

ECHO 1960 The Alameda STE 195 San Jose, CA 95126 Change Service Requested

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news from ECHO

News From ECHO September 2018 Summer is over, and the cooling air means one thing to HOA boards and their managers: budget season. Forget back-to-school and pumpkin spice, budgets take careful planning and set the financial course for your community. Start early, take your time, and don’t be afraid to make tough financial decisions. And, of course, don’t forget to include ECHO Membership!

We’re also hard at work charting our course for 2019, and I’d like to draw your attention to a few important items: ECHO’s final seminar of the year will be held on October 27th in Monterey.

While the location may be a trek for some, please consider attending if you can. This seminar will provide your first attorney-guided look at new legislation for 2019. With several key bills on the governor’s desk (see SB 1265 on page 43) you’ll want to learn all you can. ECHO will be sure to publish more information in the November Journal.

Our Annual Meeting of Members will be held on November 2nd at 9:00 am at the Hayes Mansion, 200 Edenvale Ave, San Jose, CA 95136. We invite you to join us.

And finally, please reach out to me directly if you would like to see ECHO address any subject of interest to your HOA. We would like to hear from more directors about their experiences, so please consider sharing them at a local panel (page 37) or sending me an email: tcoffin@echo-ca.org.

Thank you for your membership and continued support!

Sincerely,

Tyler Coffin Executive Director

September/October 2018 | ECHO Journal

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CONTENTS

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26 4 echo-ca.org

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The Fight Against Short Term Rentals California's housing crisis has made short term rental regulations an even more urgent concern for leaders across the state, and some cities have already developed their own laws. These regulations and internal homeowner association rules and CC&Rs provisions sometimes collide. Read this update on recent case law and local ordinances.

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Understanding Insurance Recommendations When your insurance carrier delivers a “recommendation” (i.e. “fix this or else”) it’s easy to panic. Fixing problems takes time and money, and the wheels of association decision-making move slowly. Learn what to do when you get a recommendation or, better yet, how to avoid one in the first place!

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From a President’s Perspective Being an association president takes a special kind of dedication.

Owners and board members alike often look to the president to resolve differences and steer the ship. In this article, veteran president and ECHO member Pete Pearson shares some of his observations about board service and great HOA governance.

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What Is a Capital Improvement?

Many governing documents cap spending on capital improvement projects without member approval, often at 5% of the annual budget. But what exactly is a “capital improvement?” – the term is rarely defined in the documents. So how do you know if a particular expense requires member approval? While there is no clear definition of a capital improvement in the HOA context, a few guidelines can help you decide what to do.

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Why Did They Build These Buildings So Crummy?

A column from ECHO’s Maintenance Panel: why are so many associations running into major problems with their buildings?

It’s easy to point the finger at deferred maintenance and past boards of directors, but there are other reasons why so many of California’s buildings are breaking down. Learn how changes in the law and building industry helped pave the way for today’s maintenance problems.

DEPARTMENTS

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News from ECHO 2018 ECHO Educational Calendar Monterey Seminar — Saturday, October 27th, 2018 Help ECHO Help You ECHO Professional Directory ECHO Volunteers ECHO Event Calendar ECHO Bookstore New Professional Members Advertiser Index Legislation at a Glimpse

The ECHO Journal is published bi-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 2018 Educational Community for Homeowners. 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 1960 The Alameda, Suite 195 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 Adam Haney Treasurer Diane Rossi Directors Sandra Bonato David Levy Jerry L. Bowles Karl Lofthouse Rolf Crocker Sandra Long Sarah Dunia Wanden Treanor John Gill

Executive Director Tyler Coffin Marketing Communications Specialist Priscilla Ann Ornido Design and Production Design Site ECHO Mission Statement Fostering a better quality of life in community associations through education, advocacy, and networking.

September/October 2018 | ECHO Journal

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2018 ECHO educational calendar

2018 ECHO Educational Seminars If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2018. Don’t miss an opportunity to get the education you need with guidance from some of California’s top HOA attorneys and professionals. Take a look and mark your calendar. We can’t wait to see you there!

Oct. 27 Monterey Educational Seminar (see page 7) Embassy Suites Seaside, CA

Register today!

Online: www.echo-ca.org;

By Phone: 408.297.3246 6 echo-ca.org

San Rafael

San Francisco

FREE Attendance for ECHO HOA Members!

TOPICS

HOAs and the Social Media Trap What Boards Should Know About HOA Budgets Preparing for New Laws in 2019

Monterey Educational Seminar Saturday, October 27, 2018 8:00 AM to 12:30 PM

SAVE THE DATE!

Event Link: bit.ly/echoMonterey18 Promo code: 9CJY6D As an ECHO member, you may register for free when you apply the promotional code.

How to apply the promo code to you order 1. Type the above link into your browser and select “Register” located in the top right.

2. Click the “Enter Promotional Code,” link in the top-right of the Register window.

3. Find “Enter Code,” type in the code and click “Apply Code.”

4. Confirm your entry was successful. You should see the “Price” and “Fee” update to reflect the discounted amount.

Visit echo-ca.org/events for the latest information and online registration.

ADDRESS

Embassy Suites 1441 Canyon Del Rey Blvd., Seaside, CA 93955 PRICE

FREE for Pre-registered ECHO HOA Members $50 – Nonmembers and Walk-ins September/October July/August2018 2018 | | ECHO ECHOJournal Journal

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The Fight

Against Short Term Rentals

What the Actions of Five Coastal Cities Could Mean for California HOAs

By Katrina Solomatina, Esq.

September/October 2018 | ECHO Journal

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Introduction

C

alifornia‘s housing crisis has made short term rental regulations an even more urgent concern for leaders across the state, and some cities have already set their own regulations. These regulations and internal homeowner association rules and CC&Rs provisions sometimes collide. Here is an update based on recent case law and local ordinances.

On the one side of the issue are residents who say short-term guests treat homes like mini-hotels, bringing problems such as loud parties, trash strewn on yards and sidewalks, and a shortage of parking. On the other side are those who earn money through vacation rentals of homes and condos. This is because short-term rental sites like Airbnb, VRBO and Homeaway have created a lucrative way for homeowners to earn income by renting out their spare bedrooms or living room space to occupants for a short stay.

As a result, several California cities have tried to impose a ban on short term rentals. What motivates them? Preservation of a neighborhood's residential character; minimization of inadequate maintenance (from non-resident owners); generation of tax revenue; assuring fair competition with properly licensed hotels and similar facilities; promoting the safety of renters and facilities; controlling traffic and adequacy of parking; noise; dealing with trash; and more.

Five Coastal Cities Attempt to Regulate Short Term Rentals 10 echo-ca.org

The coastal city of Del Mar in San Diego County, for example, approved an ordinance which restricts short term vacation rentals in residential neighborhoods to a minimum period of seven days, for a maximum of 28 rental days per year. The ordinance cannot take effect, however, until approved by the California Coastal Commission (CCC) and incorporated into Del Mar's local coastal program. Last month, the California Coastal Commission rejected Del Mar's proposed short term rental requirements saying they were too restrictive; the CCC staff recommended that the ordinance be changed to allow minimum rental periods of three days, for a maximum of 180 days per calendar year. The City wants to continue to fight for the ordinance as submitted, as has been announced at a July 16, 2018 City Council meeting. This position is supported by the City Mayor and the City Attorney as well as all but one of the council members.

The coastal city of San Diego passed an ordinance by a 6-3 vote at the City Council's meeting on July 16, 2018, restricting short term rentals and eliminating the Mayor's proposal to exclude the Mission Beach neighborhood, a popular beachside and bayside community. The vote

outlaws vacation rentals in secondary homes, limiting short-term stays to one's primary residence only, for up to six months of the year. The new rules will go into effect in July, 2019. In Mission Beach the vast majority of those rentals are second homes. Council members, in voting for tighter restrictions, argued that their first obligation was to residents, who have been complaining for years that rotating cycles of vacationers are disrupting their quiet neighborhoods, depleting the supply of long-term housing and turning homes into mini hotels.

In pushing down on short-term rentals, the council also approved a registration program that would require the payment of an annual licensing fee of $949, which would help generate revenue to hire personnel to enforce the new laws. The fee was calculated based on allowing primary residence rentals, plus one additional short-term rental. Those who fail to register their properties could face daily fines starting at $2,500 per violation. The hosting platforms would be subject to even stiffer penalties for failing to help ensure their hosts are properly licensed.

Meanwhile, the new regulations still must pass muster with the California Coastal Commission, which has long

favored short-term rentals as an affordable option for overnight lodging along the coast. While other coastal cities, including San Francisco, have embraced regulations that limit vacation rentals to primary residences only, the commission has not taken a uniform approach with every city.

The City and County of San Francisco enacted a short-term rental ordinance in 2015.

This ordinance requires hosts to register with the City, pay a $250 application fee and self-report every year. I represented a client who rented a lavish mansion in the Presidio neighborhood. At the same time he purchased another mansion several blocks away and wanted to sublet a part of the mansion to transient renters.

That plan, however, never came to life because hosts must be on the premises while the unit is being rented, but what's even worse is hosts may rent only their primary residence and not a secondary home. And, hosts may be off the premises but only for a maximum of 90 days per year. Airbnb recently spent $8 million successfully opposing San Francisco's Proposition F, which would have limited all private rentals to 75 nights per year and required payment of hotel taxes.

is to preserve affordable housing in the City. This ordinance would still have to pass muster and get approved by the California Coastal Commission because the plan will affect the price and affordability of rentals in the area, and by extension, the ability of the public to visit and enjoy the beautiful California coast.

Do any of these Proposed or Enacted Ordinances Affect Common Interest Developments?

Leasing Restrictions Many CIDs nowadays have lease restrictions within their governing documents such as a restriction which prohibits the rental or leasing of a property for a period

of less than 30 days. Such a restriction was adopted in 2016 by the coastal community of Mandalay Shores Community Association located in Oxnard; the Board also adopted a schedule of significant fines that could be imposed for violations. Two owners sued Mandalay Shores seeking an injunction to stay the enforcement of the short-term rental rule, contending that it violated the California Coastal Act. The injunction was ultimately granted on appeal. The court of appeal stated the Act was enacted to, among other things, “maximize public access to and along the coast and maximize public recreational opportunities to the coastal zone consistent with sound resources conservation principles and constitutionally protected right of private property owners.” While Mandalay Bay Shores did not erect a physical barrier to the beach, the Court believed it erected a monetary barrier, which had the same effect. The court went on to

The coastal city of Santa Monica, for example, also adopted a short-term rental ordinance in 2015. It requires hosts to obtain a city license, pay an initial fee of $79.00, and pay a transient occupancy tax. The City refers to such rentals as “homesharing” where the transient occupants stay for 30 days or less, and where the host lives on-site throughout the visitor's stay. The City outlaws vacation rentals of 30 days or less where the host is not present at any time. In 2016, the City of Santa Monica prosecuted an owner who was renting out five STRs in the city, in violation of this prohibition. The owner was charged with misdemeanor charges of operating a business without city permits as well as ignoring multiple citations that had been issued against him. The owner entered a plea bargain and agreed to stop operating the rentals. Additionally, he also is required to pay the City $3,500 in fines and investigative costs, as well as hundreds of dollars in criminal fines and restitution, and was placed on 24 months of probation.

The city of Santa Cruz in April of 2018 enacted a city-wide ban on short term rentals limiting the amount of short-term rentals to only 450 city-wide. Their goal September/October 2018 | ECHO Journal

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Business or Commercial Activity Restrictions

say that “the decision to ban or regulate short term rentals must be made by the City and Coastal Commission, not a homeowner's association.” Thus, in the court's opinion, an HOA may not adopt rules affecting the “intensity of use or access to single family residences in a coastal zone.”

Under the California Coastal Act, if a violation is determined, the CCC can impose administrative civil penalties of up to $11,250 per day (with greater sums imposed if judicial relief is sought).

Other Possible Pitfalls In order to determine whether the HOA can prohibit Airbnb rentals, it is essential to review the CC&Rs and Rules and Regulations enacted in a particular community in the coastal zone. Many CC&Rs contain

leasing restrictions which prevent homeowners from renting their property for less than 30 days. An argument has been made that Airbnb or other short term rentals might not qualify as a “lease” even though the host is being paid money (rent?) in exchange for allowing the guest to occupy their home. This is because, the argument goes, a lease or rental involves conveyance of a real property interest and the exclusive right to possession whereas term arrangements are mere licenses to use someone's home (or a portion of it) for a short time, without the exclusive right to possession. However, some CC&Rs define the terms “rental” and “lease” broadly enough to include granting the right to “use” a unit in exchange for the payment of money. In such cases, CC&Rs may, in fact, prohibit short-term vacation rentals and in so may violate the Coastal Act.

Another approach to limiting or prohibiting short term rentals is to attempt to characterize them as “business or commercial activity” which in theory could be prohibited by an appropriate covenant or rule. However, home businesses are generally permissible in residential zones, as long as there is no unreasonable interference (like traffic or noise) within the community. The law in this area is evolving with some cases suggesting that use of a residence for short term rentals is a business while others saying that use of a residence for things like eating, sleeping and bathing is not a business operation even when utilized for compensation to the owner. In addition, there is one out of state case which held that an owner's receipt of money does not change the use from residential to commercial, at least where the owner does not provide “on-site services.”

Unfortunately, the court did not specify the nature or extent of on-site services that would convert the use from residential to commercial, but it did say that sleeping and eating are residential uses.

Approaches There are “pros and cons” to regulating short term rentals in any community, including those in the Coastal Zone.

An association considering regulation should first a get a sense of the interest in the community to expand or limit short term rentals; then, a legal analysis of the applicable local ordinances (a call to the local Planning Department or an online review of local regulations can help) would help frame the debate before the community actually goes to vote on CC&Rs amendments or rule changes.

If you have questions about how this fast changing area of the law might impact your community, contact your association attorney.

Katrina Solomatina is an attorney with the law firm of Berding | Weil, and her practice focuses on compliance with the Davis-Stirling Act. She is a frequent writer and speaker in the common interest development industry, and will appear at ECHO’s Monterey Seminar in October. She may be reached at ksolomatina@berdingweil.com.

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Understanding

Insurance Recommendations

By Charlotte Allen

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September/October 2018 | ECHO Journal

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omeowners Associations and Insurance Brokers alike have to deal with recommendations that can, at times, be surprising and difficult to address. With maintenance and repair issues requiring process, thought, and often times, lengthy decision time and debate, complying with insurance carrier’s requests can be challenging. It’s important that insureds understand where these recommendations come from as well as their importance, and equally as important, that brokers do their best to avoid them when possible.

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When a carrier starts insuring a property, an inspection is typically conducted within the first 90 days of the policy start date. Carriers also tend to re-inspect every three or so years. From inspections, recommendations can be made in an effort to prevent loss. Take these recommendations seriously. Paying for maintenance and upkeep up front can avoid losses, hefty payouts, insurance claim denials and premium increases to the insured.

Keep in mind, not all recommendations are mandatory. Be sure to consult your insurance professional to determine whether or not the recommendations made have to be done as well as whether or not they have a strict timeline component. Often, your agent can “buy” the association time to address recommendations, especially when the fix will require a bidding process and lengthy implementation.

Some recommendations may seem less necessary than others. You have every right to ask and understand the value in the recommendation and just how addressing it will positively impact your community. Something to keep in mind is that each carrier has their own underwriting guidelines and certainly individual loss experiences. Often times, underwriting

guidelines have something to do with losses experienced by that carrier in the past. This also means that for nearly every carrier that has an issue with a specific component, another carrier may not. If a recommendation is made that the association can’t afford, doesn’t agree with or find value in, or if an association cannot address a recommendation in the timeframe given, it may be appropriate to explore other insurance options. Working with a broker that specializes in common interest communities gives you many insurance options should you find yourself in this predicament.

Avoiding recommendations altogether is certainly the most desirable option and this requires the help and expertise of your broker. Your broker should be very aware of the standard guidelines for each carrier they utilize. To avoid some surprise recommendations, brokers should inspect properties to a degree before placing coverage. Although they can’t easily tear out walls, or examine certain components in depth, they can (and should) visit the property, take certain measurements such as railing width and pool fence height, make note of common area amenities, and do their best to paint a realistic picture of the entire property for insurance

carriers. This often avoids common recommendations like railing width adjustments, pool depth marker placement, fire extinguisher requirements, etc.

This doesn’t always prevent the unexpected recommendations, those situations that may change from day to day or matters that exist beneath the surface (i.e. trash or graffiti issues, electrical panel inspection or replacement and tree maintenance or dangers).

Inspections that uncover unknown hazards like wood rot, electrical panel dangers, tree disease and lifted pavement are certainly helpful and avoid loss and liability, but often end up being costly and require time. Although coming up with a plan and way to pay for these unexpected needs isn’t always simple, it’s better in so many ways to be proactive than reactive. Insurance Brokers dislike surprise recommendations about as much as our clients. And we don’t want to be a part of any unpleasant surprise

to you. A broker’s mission is to serve clients though, not the carrier. This means, brokers can negotiate recommendations on your behalf, use leverage with carriers to buy more time, or loosen up seemingly unfair recommendations and work with you to implement fixes to avoid losses in a timeframe that is fair for all involved parties.

Seek clarification and guidance from your trusted broker when you or your association receives a recommendation and try to understand these notices often come from a place of partnership in an effort to avoid losses and even heftier outof-pocket expenses to you, the insured.

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.

Charlotte Allen is the director of marketing at Socher Insurance Agency. She uses her deep knowledge of association insurance to educate board members and their manager on “all things insurance.” She is frequent speaker and writer for ECHO and other industry organizations. Send her your questions at callen@hoainsurance.net.

September/October 2018 | ECHO Journal

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From a Presiden

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nt’s Perspective

by Pete Pearson

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n association president often has a unique view of the property he or she manages, the many challenges of finance and construction issues and even the personalities of both the board of directors and the membership. Three terms as president, and many more years as a director, gives me insight to comment on building your team and what makes a good board of directors.

board members vs. absentee homeowners? It is generally much more difficult to work with an absentee member who is on the board for name only. The board will carry a greater workload and not have that person’s input or assistance.

Sometimes, the absentee board member will sabotage the board by telling others that he or she did not agree with a controversial decision or that he or she was not involved.

Build Your Board

I prefer to hand select prospective board members in advance of a vacancy. Have a few members in the wings as possible candidates and discuss their merits with board members. Find out their interests and professional background. Balance your board and consider representation from the various size homes in your complex if that is an issue. Condominiums in our development vary in size from 954-2500 sq. ft. We have inclusionary units with no garages, no fireplaces and no decks and then some units with two car garages & space for two additional cars. This can cause friction between the little guys and those of perceived wealth, whether true or not. You

First, let’s build your board. Homeowners may assume that anyone with a pen and pencil can be a board member. Sometimes, your own board or management company will want to fill a vacancy with the first willing, warm body. This usually will be a fatal error. Is the new candidate really willing? What are his or her interests? What is his work, travel, and vacation schedule away from home? Will she be an absentee board member and what is your board ratio of live on the premises

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I recall vividly one time when the vice president and I went to interview a prospective board member. We had zeroed in on a retired business manager.

As we spoke with him, we realized he reacted slowly and really had no interest in being on the board. His interest was golf and it turned out his wife was really the better candidate. Don’t overlook mixing your board to get a combination of perspectives, both male and female.

need the perspective of everyone before you make a major decision. Would you clean fireplace flumes at HOA expense, or should that cost be borne by the homeowners that have fireplaces.

A board member with a maintenance or real estate background may be perfect to oversee repair and landscape projects in your development. A business major, CEO or CFO, may be just the person to lead assessment reviews and monthly financial discussions. And the social person may be the one to lead a committee or organize a yearly yard sale, pool party or other activity. The president mostly needs to be good at leading others to work for him or her! It’s not his or her job to dominate the board.

Construction Projects Our board has found it advantageous to assign a director to oversee construction projects that do not need a hired construction consultant. This may be a minor road resurface to landscape and paint. Again, using an experienced board member, perhaps retired, who has the time to spot-check daily the work being done can nip errors or omissions in the bud and achieve the quality job your association paid for. Believe it or not, you do not always get what you pay for!

In some instances a contracted company may use a “B” or “C” team to do smaller projects. Day laborers may be used instead of skilled painters, in violation of the contract. In our case that is just what happened. Several directors noted numerous violations including laborers using small scraps of sandpaper and painting in the rain, a failure to remove nails as specified in the contract and poor preparation and caulking. After consulting with our attorney, we stopped the project and had several meetings with the paint manufacturer and the painting company. The errors were documented in photographs, and we settled successfully outside the courtroom. We were able to resolve the probem because we had a few dedicated directors recording the daily mishaps of the contractor.

But often, you have board members who are working full-time. They do not have the interest, expertise or time to be problem solving a contracted job for the association on a daily basis. That’s when you need to call in the big guns.

Often for a reasonable price you can hire a construction expert to oversee your project. The advantages are many. The construction manager will have the right qualifications for the job assignment.

He or she will then monitor the project daily and hold the contractor accountable for any violations of the written order. Contractors are less likely to sway from the specs or argue with a known professional manager in the field. And your construction manager reports directly to the board.

Emails Emails are a modern day popular form of communication that can bite you in the rear. I started out trying to be email friendly and responsive to our community. But soon I realized one popular member would use emails to build support for

an architectural change outside of filing the proper forms. Others would use any response from the president as carte blanche approval to do whatever they wanted and circumvent the system of checks and balances. Now, I’m more careful how I respond to a member and I always copy my response to the property manager. It’s also a good idea to keep your property manager in the loop when directors respond to discussions by email. Emails often are now subpoenaed in both criminal and civil court cases.

Rotation of Officers The president is the most visible member of the board and often the first asked for comment on a proposal by a homeowner.

Rotating officers every two to four years is probably good overall for the organization. I firmly believe that we all have a “shelf life” with the membership. A grace period exists for the president, but after so many years you are bound to have made some decisions that have rubbed a few people the wrong way. In our assocSeptember/October 2018 | ECHO Journal

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iation these areas tend to be architectural changes, fines, parking issues and pool closures.

Your Home is Your Castle One time I jumped the architectural process by stepping into a homeowner’s home to make suggestions for getting wood floors approved through committee. I thought I was being helpful and instructed the homeowner on how to separate the areas of the home for consideration. Well, it backfired. The committee denied the wood floors and the owner has not talked to me since. Sometimes what we see as helping is seen as meddling.

CC&R Enforcement Encourage your board to be understanding of homeowner decorations of their personal spaces. Almost everyone wants to personalize his or her space, whether it is with flowerpots, temperature gauges or other decoration. The CC&Rs should be adhered to for their intended purpose.

We enforce the white window dressing requirement but relax on outdoor barbecues for those units that do not have a garage or deck. In other words, pick your battles and tread lightly!

Our board decided to allow parking in driveways as long as the vehicle did not protrude into the fire lane. But we drew the line for multiple vehicles even if you could crowd three or four onto a driveway intended for two.

Problem Home Owners and Roberts Rules of Order I would like to say that I’m up to date on Roberts Rules, but that is not always the

I try to start every meeting on time and sometimes this means interrupting a social conversation to get things rolling. case. A good knowledge of the above can help you effectively control problem people that appear before the board.

We have a homeowner who is frequently out of compliance with the CC&Rs, off his medications and who has threatened board members from time to time. After a number of encounters on the property and in the board room I realized that whenever we called him on a CC&R violation he would turn the tables by attacking one or more board members verbally with construction violations of their own. These meetings would quickly escalate to a yelling match between the eccentric homeowner and the board member verbally assaulted.

At our next meeting I pointed out his antics in advance to board members and suggested that we each keep calm and deflect his attack in a form of verbal judo. As anticipated, he deflected our efforts to discuss the violations at hand and immediately launched into a tirade against one director. I calmly advised him that we were here to discuss his

violations and that we would table his accusations for another meeting date in accordance with Roberts Rules. When his friend spoke up I advised her she was not a home owner and not part of the discussion. Although the issue was not resolved, our homeowner stormed out screaming and we all regained our composure.

Roberts’ Rules had saved the day!

And for Directors...

I try to start every meeting on time and sometimes this means interrupting a social conversation to get things rolling.

On other occasions a board member may be questioning the association manager on an individual personal expense that would be best taken up in private outside the meeting. Starting a meeting promptly is a courtesy to the board members present. After an introduction of guests

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for thought. This can easily be done by email by sending your comment to the association manager for distribution.

Keep everyone in the loop and you will avoid claims of favoritism, even if you disagree with the suggestion or comment. Once the decision is made at a board meeting, it is final. All directors should support 100 percent the policy set—even if the decision was made by a split vote. What is said in the boardroom stays in the boardroom. Homeowners have a unique ability to recognize dissention in a board and to manipulate individual board members that they may see as sensitive to their viewpoint.

Don’t let it happen.

I encourage all board members to read and study financial reports in advance. I often send an email reminder ahead of meeting. First, this alerts the board to the upcoming meeting they may have forgot and secondly, it shortens long periods of silence as members review the financial and management reports. I prefer to jump right into questions and answers.

Conclusion

I then remind the board that we have a lot on the agenda with a quick citing of the major topics. This alerts the board that I will keep the meeting moving and not allow rambling conversation. I do make sure that all Board members have their say on any given topic. I feel you can usually tell if there are lingering questions, and I will call on that board member if he or she has not spoken up.

Pay particular attention to senior members of the board that speak softly but carry a big stick. They may have historical data recollection about the association that your more junior members do not have. You can also call on the senior member for a viewpoint to help balance off-the-wall suggestions that can be costly. A good president should have a good idea in advance how each of the board members is likely to vote on any given issue.

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Special guests, such as contractors, construction managers, insurance rep and security manager, should be taken out of order as quickly as possible. I may dispense with a few brief items to get the agenda rolling and then take the “working person” as soon as possible. This person is on the clock, so to speak, and is offering us an inside view that we may not see on the written reports.

Don’t Blindside the President Don’t blindside the president or other directors at a meeting. Bring up ideas, suggestions, etc., before the meeting

The task of the president for an association is to keep the board members involved. It’s building a team that will anticipate and be sensitive to homeowner demands and interests. Keep board members involved by recognizing the expertise that each may bring to the table and by frequently asking for their input. Rotate officers for cross training and never play favorites. Work out in advance an approach to problem people appearing before the board. Roberts Rules of Order may help in controlling difficult persons.

Pete Pearson is a multi-term board president and director for his association in Santa Cruz. He also served as a director in a large law enforcement fraternal association for fifteen years. He holds a bachelors degree in management.

Is Your Board Receiving ECHO Benefits?

Members receive the ECHO Journal, free training, and digital downloads from the ECHO website.

Boards change frequently, so keep your HOA’s information up to date! Send us: 1. Board Names 2. Mailing Addresses 3. Email Addresses Send everything to account@echo-ca.org or ask your property manager to do so on your behalf. Thanks for being an ECHO member!

Questions? We can help: Email: account@echo-ca.org. Phone: 408-297-3246

September/October 2018 | ECHO Journal

25

26 echo-ca.org

What is a Capital Improvement?

By Robert DeNichilo, Esq.

September/October 2018 | ECHO Journal

27

M

any HOAs have language in their governing documents that act as a spending cap on capital improvement projects without member approval (often at 5% of the annual budget). However, the term “capital improvement” is often not defined.

This often leads to confusion as to whether an expense requires member approval. “Capital improvement” is an accounting term. Unfortunately, there is no industry adopted definition of what constitutes a “capital improvement” in the HOA context.

A “capital improvement” is often defined as the addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property’s overall value or increase its useful life. This definition of “capital improvement” provides little guidance to a Board as to whether an expense is a “capital improvement” which might require member approval. For example, new roofs on a building both enhance the property’s overall value and increase its useful life. Therefore, they could be considered a “capital improvement”.

Treating new roofs as a “capital improvement” may require member approval prior to incurring the expense. Such a requirement would conflict with the Board’s authority to maintain the common area facilities. Therefore, a better definition for common interest developments is needed for purposes of CC&R restrictions.

Some in the industry suggest Associations consider adopting the following definition for capital improvement: 28 echo-ca.org

A capital improvement is any (i) substantial discretionary addition to the common areas, (ii) voluntary significant upgrade to common area materials, or (iii) discretionary material alterations to the appearance of the development.

While adopting such a definition would go a long way towards resolving the confusion caused by the use of an accounting term in the HOA context, even this definition is subject to confusion in its application. A Board would still have to determine if an expense is for a “substantial” discretionary addition or if it is for an “insubstantial” discretionary addition, or if the expense is for a “significant” upgrade to common area or if it is an “insignificant” upgrade.

Even with these potential pitfalls, to best deal with the uncertainty created by a capital improvement restriction Boards should consider defining “capital improvement” whenever they amend or restate their CC&Rs. If amendment is not a viable option, at minimum, Associations should adopt the definition and follow the procedure for a rule change to give notice to the members that it is considering the adoption of a given definition of “capital improvement”.

Neither option will guarantee that an expense will not be challenged. However, a Board’s decision will stand a greater chance of surviving scrutiny, whether it is by a member or a court, when the membership is given advance notice and a chance to vote or at least provide their input to the Board prior to the adoption of any such definition.

Several courts in and out of California have ruled on various challenges to HOA expenses and determined whether expenses qualified as capital improvements. The results have been mixed, and are often factually specific. Therefore, it is impossible to provide a bright line test for Boards to follow when attempting to determine if an expense is a “capital expenditure” and subject to a cap on spending. Exceptions to the capital expenditure limitation have been found in cases of expenses required by governmental mandate and expenses which are necessary to protect Association assets.

In such cases, the expenditures may be seen as within the Board’s authority to maintain and repair the common area property. However, any such expense must be examined in light of the individual factual circumstances. Any Board

faced with a spending cap should consult with their legal experts to determine whether a vote of the members is required before undertaking an expense which could be viewed as a capital improvement.

Some considerations for a Board attempting to determine if an item is a Capital Expense subject to a spending cap are:

1 Do the Governing Documents place a spending cap on Capital Improvements? – If not, no vote is necessary.

2 Do the Governing Docu-

ments define “Capital Improvement?” – If so, determine if the expense falls within definition.

3 Is the expense less than

the spending cap? – If so, no vote is necessary.

4 If the expense is above

spending cap, is it for a new facility? – If so, it may be a capital improvement and member vote may be required.

5 Is the expense for repair

or replacement of an existing item with like quality, or is it an upgrade?

a) If the expense is for a like quality repair or replacement, it most likely falls within the Board’s authority to maintain, repair and replace, and a member vote may not be necessary. b) If the expense is for an upgrade or improvement to an existing item, determine if there are any possible exceptions to requirement for a member vote.

i. Is the expense necessary due to governmental requirement (ex: replacing wood shingles with fire retardant material)?

– If so, members cannot veto, and a vote may not be necessary. ii. Is the expense necessary to protect Association assets (ex.: underpinning of building foundation to prevent settlement)? – If so the expense is most likely within the Board’s authority to maintain, repair and replace, and a vote may not be necessary. iii. Is the expense for a new technology or building material that did not exist at the time of construction that will last longer and not need to be maintained or replaced as frequently?

– If so, it may fall within the Board’s discretion and business judgment, and a vote may not be necessary. c) If the expense is for an upgrade to an existing facility, and no exceptions apply, it will most likely be considered a capital improvement and approval of the members may be required.

Robert DeNichilo, Esq. is a partner in the law firm Nordberg | DeNichilo, LLP., specializing in the representation of community associations throughout California. For more information, please visit his web site at NDHOALaw.com.

September/October 2018 | ECHO Journal

29

30 echo-ca.org

Why Did They Build These

Buildings So

Crummy?

By Scott Swinton

I

t‘s hard to hear - “Hey, this mess...it‘ s your fault!” But if you’re on the Board of Directors, you probably hear that insinuated if not actually verbalized often. So, as a contractor, I’m here to say, it‘s not yours…it’s my fault!

Ok, so not necessarily mine specifically, but you may find it cathartic to hear that the reason your condo is suffering goes back far beyond your first Board of Director’s meeting. Here’s why…

HOA construction boomed in the 1970's and 1980's. Before 1965, there were an estimated 500 CID communities nationwide.

By 1970 that number had climbed to 10,000. Today the estimate is well over 250,000 with more than 50,000 of them in California alone.

Don't miss it - that's a massive increase in 40 years.

Let’s find out why by reviewing history in hyper speed and condensing 100's of pages of legislation into less than 200 words:

Cause In 1978, Prop 13 sucked money out of municipal coffers by rolling back and lowering property taxes.

Effect Municipalities started looking for ways to get more income and take on less responsibility.

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Cause Developers were getting pressured by the market to make housing options more affordable as land and construction costs climbed.

were faced with a dilemma: who would pay to maintain the drain inlets, ponds, and collection structures?

Effect CID's (HOA's) were established to manage these water collection elements.

Effect High-density communities with "common" elements such as roofs, driveways, and interior walls became more desirable.

Cause Cities short on cash needed more tax revenue while available land was being used up.

Cause The Clean Water Act of 1977 required that new housing developments not create a significant change in water flow to nearby properties. As developers began designing means of catching and controlling the runoff water, they

Effect High-density ownership (not rental) was strongly encouraged, and developers building these communities had an open door at the Planning Department.

Ok, so that was the civic and social environment which caused the boom.

Now - what happened to make the buildings they built - SO CRUMMY? Think about who was swinging hammers in the 1980's...40-year-olds... who had been experimenting with altering their mental state in the 1960's. Just kidding - sort of.

It actually wasn't that experimenting that had the most impact (in my opinion), it was another set of experiments.

In the 1970's and 1980's the federal government cracked down on 3 things specifically: lead paint, asbestos, and "un"clean air/water. The 1970's Clean Air Act, and the banning of asbestos and lead paint in 1978 bore the essence of the Law of Unintended Consequences.

A cascade of industries, processes, products, and methods that had been developing since the dawn of the industrial revolution slammed into a hastily erected wall of legislation and regulation.

But hold your fire - I'm not saying I wish lead and asbestos were still contaminating our homes - that's not my point.

Here's the point - And it's ALL IMPORTANT! In the 1970's and 1980's when multifamily construction was exploding - engineers, architects, and contractors were experimenting with new products and processes because many of the old

ones were now illegal. Lead paint was quite effective paint - but kids were dying. Replacement products had to be developed, but development takes time and comes with all the risks natural to experimentation.

In the 1970's under-slab copper plumbing lines were often run unprotected through concrete slabs. The failure of these lines is alone a parable of construction defect.

In the 70's and 80's aluminum framed windows came into their own - with condensation and leak issues all their own.

But probably most impactful, in the 1950's a new product hit the mainstream - Caulk in a Tube. By the 1960's latex and acrylic latex caulks were flowing out of the DAP labs. And then in the 1980's - silicone caulk. The effect of the introduction of caulk on the construction industry cannot be underestimated. It doesn't take too vivid an imagination to figure out what happens to the craftsmanship behind waterproofing systems, wood joints, window installations, and concrete joints when you have a simple and cost-effective construction-grade band-aid.

Granted, for some problems, various caulks have proven an invaluable solution. But in its early years, distributed widely to an industry seeking ways to cut cost and streamline processes, it was like handing out cocaine and saying, "use sparingly." And it wasn't just that the quality of the early caulk products was poor (and it was), it was that architects and engineers began making assumptions about what could be

waterproofed and sealed with the stuff.

It was integrated into already dubious building systems and the effects today are disappointing at best.

It’s not your fault.

I hope this helps.

But, your role in resolving the problems of the past actually is your responsibility, and failure to apply knowledge will be your fault. Understanding the political and economic environment that created many of the problems of today, is a key to moving forward wisely. Plan ahead. Build up reserves. Hire contractors, engineers, and consultants who understand the history, use time-tested methods and materials, and can help you prepare for the future.

Scott Swinton is the co-founder and president of Unlimited Property Services Inc., a firm that specializes in all aspects of homeowner association construction services. Scott is a regular writer for the industry, and a member of ECHO’s Maintenance Resource Panel. He can be reached at scott@upsionline.com.

September/October 2018 | ECHO Journal

33

FREE Attendance for ECHO HOA Members!

Join us at the San Rafael Educational Seminar Saturday, January 26th, 2019

/

8:30 AM to 12:30 PM

Register online at www.echo-ca.org or fill out the form below.

TOPICS

New Laws for 2019 More Topics to Be Announced…

Event Link: bit.ly/echoMarin19 Promo code: X3XTFV As an ECHO member, you may register for free when you apply the promotional code.

How to apply the promo code to you order 1. Type the above link into your browser and select “Register” located in the top right.

2. Click the “Enter Promotional Code,” link in the top-right of the Register window.

3. Find “Enter Code,” type in the code and click “Apply Code.”

4. Confirm your entry was successful. You should see the “Price” and “Fee” update to reflect the discounted amount.

34 echo-ca.org 34 echo-ca.org

ADDRESS

Embassy Suites San Rafael 101 McInnis Parkway San Rafael, CA 94903 PRICE

FREE for Pre-registered ECHO HOA Members $50 Nonmembers and Walk-ins.

ECHO Professional Directory

Need Expert Help? Check Out ECHO’s Directory All of our Professional ECHO Members specialize in services for HOAs. Choose from more than 250 companies in over 50 categories including: 73 MANAGEMENT COMPANIES 30 ATTORNEYS 21 ACCOUNTING FIRMS VISIT THE PROFESSIONAL DIRECTORY ON THE ECHO WEBSITE!

www.echo-ca.org

Accountants/CPAs Animal Control Services Arbitrators & Mediators Architects/Architectural review Asphalt Repair & Paving Assessment Collection Services

Attorneys Banking Services Community Association Consulting Concrete Products & Services Concrete Repair Construction Manage- ment Consultants Consulting Electrical Services Fencing Gates & Doors Financial Services Fire Alarms Fire Sprinklers General Contractors Gutters Insurance Services Janitorial & Cleaning Services

Landscape Design Services Landscape Maintenance Leak Detection Maintenance & Repairs Management Company Services Masonry Other Paint Manufacturer & Consultant Painting Contractors Pest Control Services Plumbing & Boiler Repairs Pool Maintenance & Services Pool Repair & Resurfacing Services

Power Washing & Steam Cleaning Reserve Study Firms Restoration & Remediation Services Retaining Walls Roofing Contractors Roofing Products Security Services & Systems Sprinkler Repair Towing & Parking Services Tree Services Utility Auditors Water Conservation Water Management & Services Waterproofing Window

September/October 2018 | ECHO Journal

35

ECHO honor roll

ECHO HONORS VOLUNTEERS Resource Panel Chairs

Seminar Speakers

Recent Contributing Authors

Accountant Panel Adam Haney, CPA 888-786-6000 x317 ahaney@cidcllc.us

Annual Seminar Lisa Black, Esq. Jeffrey Cereghino, Esq. Rolf Crocker, CCAM Lisa Esposito David Feingold, Esq. John Garvic, Esq. John Gill, Esq. Sandra Gottlieb, Esq. Adam Haney, CPA Matt Haulk, Esq. Susan Hoffman, PCAM Michael Kennedy, Esq. Cindy Koester, PCAM David Levy, CPA Julie Mouser, Esq. Rob Rosenberg Amy Tinetti, Esq. Wanden Treanor, Esq. Wendy Weber Steve Weil, Esq.

July/August 2017 David Kuivanen, AIA Pat Crosscombe Sandra M. Bonato, Esq. Steven S. Weil, Esq. Steven T. O’Brien

Central Coast Panel John Allanson 831-685-0101 East Bay Panel Ann Marquis-Fisher amarquisfisher@yahoo.com Legal Panel Mark Wleklinski, Esq. 925-280-1191 markwlek@aol.com Maintenance Panel Cassidy Rajkovich cassidy@brookcm.com North Bay Panel Stephanie Charles scharles@charlesps.com Diane Kay kay_star@comcast.net Denise Wolford (415) 458-3537 denise@charlesps.com South Bay Panel Tyler Coffin 408-297-3246 x4 Wine Country Panel Pam Marsh 415-686-9342 Pamela.Marsh@benjaminmoore.com Sarah Dunia sarah.dunia@cagwin.com 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 Roy Helsing Geri Kennedy, CCAM Wanden Treanor, Esq.

36 echo-ca.org

East Bay Charlotte Allen Susana Cendejas, Esq. Andrea O’Toole, Esq. Monterey Sandra Bonato, Esq. Melissa Ward, Esq. Wendy Weber San Rafael David Feingold, Esq. Wanden Treanor, Esq. Glenn Youngling, Esq. Santa Cruz Sharon Pratt, Esq. Diane Rossi, PCAM, CCAM Brian Seifert Jennifer Stearns, CCAM Rosalia Tapia, Esq. Wine Country Carra Clampitt, CCAM Susan Hoffman, PCAM Amy Tinetti, Esq.

September/October 2017 David C. Swedelson, Esq. Bob Gourley Berding & Weil LLP Cagwin & Dorward Julie Adamen November/December 2017 Debra Warren Joelyn Carr-Fingerle Wendy Weber Sandra L. Gottlieb, Esq., CCAL January/February 2018 Robert DeNichilo, Esq. John P. Gill, Esq. Oliver Diaz Rolf Crocker March/April 2018 Jennifer M. Jacobsen, Esq. Paul W. Windust, Esq. Andrea L. O’Toole, Esq. Derek Eckert John P. Gill, Esq. May/June 2018 Susan L. Hoffman Thomas Connelly Kevin Boland Rolf Crocker, AMS, CCAM July/August 2018 Carra Clampitt, CCAM Pat Wendleton, Esq. and Sharon Glenn Pratt, Esq. Andrea L. O’Toole, Esq. and Burt Dean Jeffrey A. Barnett, Esq. John P. Gill, Esq.

ECHO event calendar

RESOURCE PANEL CALENDAR ECHO Resource Panels meet during lunch on weekdays to enable managers, professionals and board members to hear about important topics presented by experts in the industry, and share experiences and issues. The meetings are open to all ECHO members, and those interested in learning about ECHO, offered in a casual atmosphere where the cost of attendance is the price of your lunch. The sessions last about an hour and a half. Check-in with the ECHO Panel Secretary for details and to register.

Please join us: DATE

LOCATION

INQUIRIES

TOPIC

Sept. 20, 11:45 a.m.

Wine Country Resource Panel Rohnert Park Community Center Meeting Room #2 5401 Snyder Ln., Rohnert Park

Pam Marsh 415-686-9342

TBD

Oct. 3, 12:00 p.m.

Maintenance Resource Panel ECHO Office 1960 The Alameda, Suite 195 San Jose, CA

Cassidy Rajkovich cassidy@brookcm.com

Getting Paid: Tools and Tips

Oct. 12, 11:45 a.m.

East Bay Resource Panel Massimo Restaurant 1604 Locust St., Walnut Creek

Ann Marquis-Fisher amarquisfisher@yahoo.com

Social Media

Nov. 1, 11:45 a.m.

North Bay Resource Panel Edgewater Condominiums, Novato

Denise Wolford, CCAM 415-458-3537

Round Table Discussion & Topic Selection

Nov. 12, 11:45 a.m.

Accountant Resource Panel Scott’s Seafood Grill & Bar 2 Broadway, Oakland

Adam Haney, CPA ahaney@cidcllc.us

TBD

Sign up online: echo-ca.org/events

REGULARLY SCHEDULED RESOURCE PANEL MEETINGS PANEL

MEETING

LOCATION

Maintenance

First Wednesday, Even Months

ECHO Office, San Jose

North Bay

First Thursday, Odd Months

TBD

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

The Back Nine Grill, Santa Cruz

South Bay

Second Wednesday, Even Months

TBD

Wine Country

Third Thursday, Odd months

Rohnert Park Community Center

Legal

Quarterly

Varies

September/October 2018 | ECHO Journal

37

BOOKSTORE The ECHO Bookstore is your source for great information on the duties of HOA Board Members.

Order online or fill out the form on the facing page.

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

2019

2019 Condominium Greenbook Member Price: Non-Member Price:

This companion to the Condominium Bluebook 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: Non-Member Price:

Non-Member Price: $17.95 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.

38 echo-ca.org

$15.00 $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.

Construction Defect Claims Member Price: Non-Member Price:

$19.95 $25.00

New buildings can conceal extensive faults.

It’s a board’s worst nightmare—rainstorms damage buildings and bring owner complaints. Is legal action necessary? With this new book, you’ll learn about the resolution process for construction problems, and how to handle complex claims.

Home and Condo Defects Member Price: $12.95

$17.00 $25.00

2018

Condominium Bluebook 2018 Edition Member Price: $17.00 Non-Member Price: $25.00 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 frequentlyasked questions about associations, along with succinct answers.

2018 Digital Downloads Free for ECHO Members

ciation o s s A unity Book Comm Statute dition 2014 E

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

Bookstore Order Form

EDUCATIONAL COMMUNITY FOR HOMEOWNERS 1960 THE ALAMEDA, STE 195, SAN JOSE, CA 95126 PHONE: 408-297-3246, FAX: 408-297-3517

TITLE

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and Reservation Form HOA Investment Policy

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September/October 2018 | ECHO Journal

39

new professional members

Welcome to our

NEW PROFESSIONAL MEMBERS

Alliance Association Bank With more than 100 years of industry experience, we are experts at meeting the unique and complex banking needs of HOAs and CICs. With Alliance Association Bank, you benefit from an HOA banking team with in-depth industry knowledge, as well as advanced technology solutions and a commitment to superior customer service. All backed by the national strength of Western Alliance Bancorporation. We are proud to be a relationship-centered bank that puts client needs first with expert bankers, strong capacity, access to decision-makers, sophisticated products, customized solutions, and a real commitment to adding value.

Contact: Blair Fox • Tel: (925) 437-2317 Email: bfox@allianceassociationbank.com Web: www.westernalliancebancorporation.com/allianceassociation-bank-home

AppFolio AppFolio Property Manager is a powerful cloud-based property management software that allows apartment, residential, commercial, student housing, and community association property managers to more effectively market, manage and grow their business. AppFolio is headquartered in Santa Barbara, California, and creates easy-to-use, cloud-based software that helps small and mid-sized businesses improve their workflow so they save time and make more money. Our company was founded by a team of technology leaders with proven backgrounds in creating revolutionary software for businesses.

Contact: Stephanie Vernon • Tel: (866) 452-3358 Email: info@appfolio.com Web: www.appfolio.com

Cascade Building, Inc.

Clark Hill PLC Clark Hill is a multidisciplinary, international law firm that draws on our attorneys’ comprehensive industry and policy knowledge and a global network of industry advisors and subject-matter experts to provide innovative legal solutions and client-service excellence worldwide. Our work is guided by our deeply-held shared values, including practicality, entrepreneurship, mutual respect, diversity, ethical behavior and a commitment to client and community service. Our significant presence in Washington, DC, and our deep government relations and public affairs experience at every level help ensure that our clients’ voices are heard in the development of federal and state regulatory policy and legislation.

Contact: Elizabeth A England, Esq. • Tel: (800) 949-3120 Email: email@clarkhill.com Web: www.clarkhill.com 40 echo-ca.org

Cascade Building Company began as a small business 45 years ago in 1970 and has since incorporated as Cascade Building Inc. We are proud of our long list of satisfied customers and our reputation for quality work and integrity in the construction industry. Cascade Building Inc. serves apartment and commercial building owner needs for USPS Post Office zip codes in the San Francisco Bay Area Counties of Alameda, Contra Costa, Marin, Santa Clara, Santa Cruz, San Mateo, San Francisco and Solano.

Contact: James McBurney • Tel: (408) 733-9479 Email: jmcburney@cascadebuildinginc.com Web: www.cascadebuildinginc.com

Find all of ECHO’s Professional Members Online.

Visit our Professionals Directory at www.echo-ca.org

advertiser index

about ECHO

WHAT IS ECHO? Ace Property Management..................24 www.acepm.net

Common Interest .................................11 www.commoninterest.com

Affirmative Management Services ....29 www.affirmativemanagement services.com

Cornerstone Community Management.........................................12 www.cornerstonemgt.biz

Applied Reserve Analysis....................33 www.appliedreserveanalysis.com

IQV Construction & Roofing................24 www.iqvinc.com

Barcode Automation, inc. ...................13 www.Barcode-Automation.com

Levy, Erlanger & Company..................22 www.hoa-cpa.com

Benjamin Moore Paint & Company...........................................20 www.benjaminmoore.com

Rebello’s Towing....... Inside Front Cover www.rebellos.net

Berding Weil..........................Back Cover www.berding-weil.com Cascade Building, Inc. .........................21 www.cascadebuildinginc.com

Statcomm, Inc. .....................................29 www.statcomm.com White and MacDonald.........................33 http://wm-llp.com

Serving Homeowners to Build Strong Community Associations 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 bi-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 bi-monthly magazine • Members-only online education • Updates to the Association Statute Book • Frequent educational seminars • Special prices for CID publications

ECHO Membership Dues Association Membership HOA 2 to 25 units...........................$130 HOA 26 to 50 units.........................$180 HOA 51 to 100 units.......................$275 HOA 101 to 150 units.....................$375 HOA 151 to 200 units.....................$450 HOA 201 or more units..................$575 Professional Membership.................$500 Association Management Membership.......................................$500 Individual Membership.......................$75 Journal Subscription............................$15

How Do You Join ECHO?

Office 1960 The Alameda, Suite 195 San Jose, CA 95126-2308

Over 1,400 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.

August2014 2013 || ECHO ECHOJournal Journal February ECHO Journal

41 41

legislation at a glimpse

Catch Up On The Legislative Session!

The list below features important legislation for California associations, and the legislative year is coming to a close: the final day for the Governor to sign or veto bills for the 2017-2018 Legislative Session is September 30th.

For the most up-to-date information, visit the HOA Advocacy section at the ECHO website: www.echo-ca.org/hoa-advocacy

Current Legislation Bill Information

Summary

AB 1760

Emergency Vehicle Parking

Watch Status: Died

Makes a prohibition or restriction in the governing documents of a common interest development relating to parking, including, but not limited to, onstreet parking, void and unenforceable with respect to an emergency vehicle owned or under the control of a member.

AB 1917

Extension of Declaration

Watch

Allows for extensions to the terms of the declaration, as specified. Prohibits extension of the terms of the declaration from exceeding the initial term of the declaration or 25 years, whichever is less.

Author: Frazier

Author: Steinorth Status: In Assembly Judiciary

AB 1943

Manufactured Housing Title Ownership

Watch

Specifies that a registered owner of a manufactured home in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, stock cooperative, or condominium project, may submit written evidence of that owner’s resident ownership in order to comply with this requirement.

Author: Waldron Status: To Governor

AB 2141

Annual Statement Deadlines

Watch

Changes the time requirements for the distribution of the annual policy statement to members of a common interest development to be within 31 to 91 days before the end of the fiscal year.

Author: Cunningham Status: Introduced

AB 2912

Fidelity Coverage and Electronic Transfers

Watch

Requires an Association to maintain fidelity bond coverage, as specified. Prohibits transfers greater than a specified amount or a certain percentage of an Association's total combined reserve and operating account deposits, whichever is lower, without prior written approval from the Board. Requires the Board to review financial documents and statements on a monthly basis.

Author: Irwin Status: To Governor

AB 3041

Prohibition of Transfer Fees

Watch

Prohibits the creation of a transfer fee, other than excepted transfer fee covenants, as defined, with respect to real property as a fee payment requirement imposed in any covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of real property. Excepts certain transfer fee covenants from a notice requirement.

Author: Cunningham Status: To Governor

AB 3156

Electric Vehicle Charging Stations

Watch

Clarifies that equipment that meets the definition of "electric vehicle service equipment" is electric vehicle service equipment whether or not it is necessary to tether the equipment to a vehicle to permit the transfer of electric energy.

Author: Mullin Status: In Assembly Transportation

42 echo-ca.org

legislation at a glimpse

Current Legislation (continued) Bill Information

Summary

SB 721

Deck & Balcony Inspection Requirement

Watch

This bill would have required regular inspection and repairs inspection of building assemblies and associated waterproofing elements, including decks and balconies, for buildings with more than a certain number of multifamily dwelling units by a licensed architect, civil or structural engineer, or building inspector or official at certain intervals. Amendments have removed common interest developments from the scope of this bill.

Author: Hill Status: Amended.

To Assembly Housing.

SB 1016

Electric Vehicle-Dedicated Meters

Watch

Requires, with respect to an electric vehicle charging station placed in a common area, the homeowner to agree to pay costs associated with installation. Requires the owner of a charging station, wherever located within a subdivision, to maintain a liability coverage policy, and provide the association with a certificate of insurance, as specified.

Author: Allen Status: Assembly Third Reading

SB 1128

Consent to Email, Election by Acclamation

Watch Status: Assembly Third Reading

Authorizes the recipient of a document sent by a common interest development association to consent to or revoke consent to electronic delivery by email. Requires at least 28 days general notice by an association before making a rule change. Requires the director nominees of an association to be considered elected by acclamation in certain circumstances. Makes other changes to elections provisions.

SB 1173

Time Share Exemption from Notifications

Watch

Exempts from notice requirements under the Davis-Stirling Common Interest Development Act, interests regulated in the Vacation Ownership and Time-Share Act of 2004.

Author: Roth

Author: Vidak Status: Signed by Governor

SB 1265

Election Qualifications and Procedures

Oppose Unless Amended

Regulates how association governing documents may specify the qualifications for candidates for a common interest development board and any other elected position, and the qualifications for voting. Requires the association to disqualify candidates for specified reasons. Deletes exception that allows associations to use a paid third party as inspector of elections. Adds other requirements to election rules.

Author: Wieckowski Status: Passed Assembly.

To Senate for Concurrence.

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September/October 2018 | ECHO Journal

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