Journal_12_01

January 2012

How Communities Can Save Energy ALSO INSIDE THIS ISSUE:

• CID Open Meeting Act Amendments • Corporate Status Suspended?

• Transfer Fees and Disclosures

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

Marin Seminar February 4, 2012 Register Now

PRSRT STD U.S. Postage PAID Sundance Press 85719

Learn to at the ECHO

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Central Coast Seminar

Saturday, February 25 Hilton Santa Cruz/Scotts Valley, 6001 La Madrona Dr., Santa Cruz

Look for announcements of the seminar agenda in the next issue of the ECHO Journal and seminar flyers.

Ticket Prices ECHO Members through Feb 11: $49 After Feb 11: $59 Save $5 Register by Feb 11 Non-Members Fixed Price: $69

Yes, reserve _____ spaces for the ECHO Central Coast Seminar.

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

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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

CID Open Meeting Act Amendments —page 16

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East Bay HOA’s Giant Step to Save Energy Continually rising utility bills for an association in Walnut Creek caused it to consider all cost saving measures. While “Green Energy” is blossoming, there are still many unknowns. Where to start? What is needed? What contractor to use? How much will it cost? Should one lease or purchase? This article will provide a few answers.

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CID Open Meeting Act Amendments On January 1, 2012, Senate Bill 563 became effective with significant changes in the way association directors communicate with each other and make decisions, strengthening the Legislature’s goals of open, transparent governance and decision-making in associations. This article explains these changes.

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The ECHO Journal is published monthly by the Executive Council of 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 person 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 2012 Executive Council of 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.

Executive Council of Homeowners, Inc. 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 9:00 a.m. to 5:00 p.m.

Board of Directors and Officers

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Association’s Corporate Status Suspended?

Every corporation formed in California is required to file a statement of officers on a biennial basis, file tax returns and pay taxes. Failure to meet filing obligations can lead to corporate suspension by the State of California. Learn the potential impacts on your association of a suspension.

Treasurer Diane Rossi

Transfer Fees and Disclosures

Secretary Dorothy Kopczynski

Assembly Bill 771 deals with the documents that must be provided upon sale or transfer of a property.

Under this new law, an association has to provide on a form specified in the new law, a check-off of the documents and an estimate of fees to be charged for providing these disclosures.

Directors Paul Atkins John Garvic Robert Rosenberg Brian Seifert Steven Weil

Departments 31 Index of 2011 Articles 32 News from ECHO 33 Legislation at a Glimpse

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34 Directory Updates 36 ECHO Bookstore 38 Events Calendar

Jerry L. Bowles David Levy Kurtis Shenefiel Wanden Treanor

Executive Director Oliver Burford Communications Coordinator Tyler Coffin Legislative Consultant Government Strategies, Inc. Design and Production George O’Hanlon

41 ECHO Marketplace

ECHO Mission Statement

41 Advertiser Index

The mission of ECHO is to advance the concept, interests and needs of homeowner associations through education and related services to board members, homeowner members, government officials and the professionals in the industry.

On the Cover January 2012 | ECHO Journal

Vice President Karl Lofthouse

40 ECHO Volunteers

Communities Save Energy—page 6 4

President David Hughes

PRESENTING 2012 ECHO Events February 4

February 25

March 24

April 21

June 22, 23

September 22

October 20

Marin Seminar

Half-Day Seminar

Embassy Suites, San Rafael See page 39

8:00 a.m. to 1:00 p.m.

Central Coast Winter Seminar

Half-Day Seminar

Hilton Santa Cruz/Scotts Valley

8:00 a.m. to 1:00 p.m.

Wine Country Seminar

Half-Day Seminar

Sally Tomatoes, Rohnert Park See page 35

8:00 a.m. to 1:00 p.m.

South Bay Seminar

Half-Day Seminar

Campbell Community Center, Campbell

8:00 a.m. to 1:00 p.m.

ECHO Annual Seminar

Full-Day Seminar

Santa Clara Convention Center, Santa Clara

8:00 a.m. to 4:30 p.m.

Central Coast Fall Seminar

Half-Day Seminar

Hilton Santa Cruz/Scotts Valley

8:00 a.m. to 1:00 p.m.

Peninsula Fall Seminar

Half-Day Seminar

Crowne Plaza Hotel, Foster City

8:00 a.m. to 1:00 p.m.

ECHO Journal | January 2012

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By Susan Spott and Ken Kosloff

East Bay Community takes a Giant Step to Save Energy ometimes it requires a leap of faith in coming up with ways to save money for homeowner associations (HOAs). That’s what Dave Rosenblatt, an association manager with Common Interest Management Services, learned as he embarked on a new energy conservation project for the Greenwood Condominium Community in Walnut Creek. Continually rising utility bills for the 301-unit, three-story condominium complex, situated on seven acres of beautifully landscaped grounds, caused the HOA to consider all cost saving measures.

Rosenblatt had just the spirit needed (especially since the final outcome was far from guaranteed) to lead the HOA toward a project involving significant energy conservation measures. In addition, the board of directors for the HOA was made up of innovative thinkers so that Dave’s ideas were well received.

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January 2012 | ECHO Journal

While the “Green Energy” market is blossoming, there are still many unknowns for the consumer. Where do we start? What are the necessary tools? What contractor should we use? How much will it cost? Should one lease or purchase? It is the intent of this article to provide a few answers.

Dave started on this journey by contacting Energysmart Solutions, a general building contractor based in Walnut Creek, California, that specializes in energy saving solutions. After a few meetings, it was decided that the HOA would conduct a General Energy Audit. This audit is a process where specific components of the building envelope are measured. The components included in the audit consist of: framing insulation at the exterior walls, attic and under-floor, water piping insulation, fenestration rating (which tells how well the windows resist heat transfer), the insulation and sealants around openings to the building envelope

ECHO Journal | January 2012

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(doors, windows, vents etc.), heating and cooling capacity, and all importantly, the lighting demands. The report not only assessed the current components condition but also suggested improvements with an estimate of the consequential energy savings.

One might correctly think that such an audit could lead to a mountain of work to be done and still leave the clients scratching their heads wondering, “What’s next?” In this case, Energysmart proved to be an important asset by providing suggestions along with carefully prepared estimates. They partnered with Rayco Energy, also a general building contractor out of San Jose, who was available to manage the project and complete all the installations. The audit report revealed that a substantial savings would result by taking on the house (or common area) lighting and electrical demands and installing microprocessors, which work with aquastats, to regulate fuel consumption at the building boilers. Consider just the common area electrical demands of a community such as Greenwood. They have exterior lighting for pathways, security and parking, and inside the buildings are the hallway lighting and the heating and cooling electrical requirements.

Tackling these “pacmen” of energy consumption was a challenging but huge step in the right direction.

The audit report provided the information about what tools would be needed: the installation of a photovoltaic system to power the electrical demands of the house lighting and HVAC; replacing all fluorescent bulbs with LED bulbs; and installing a microprocessor control mechanism on the building boilers. With a path defined and a developing team to carry it through, it would seem that the hardest step was complete. But the biggest hurdle was still ahead.

Financing When Dave approached several non-industry financial institutions, he met a surprising and unforeseen hindrance; “Most of these folks didn’t know what an HOA was,” he explained, so Dave had the difficult and timeconsuming task of educating them. Those lending institutions he had previously worked with tended to consider the proposed improvements as a capital project, one that should be funded by special assessment.

Although these banks understood the financial structure of an HOA, they also wanted to finance each endeavor separately; that is, finance the photovoltaic first, then finance the light bulb replacement and finally 8

January 2012 | ECHO Journal

finance the microprocessors for the building boilers. While this meant more money for the lender, it certainly didn’t meet the cost saving objectives for the HOA. “Actually,” Dave explained, “obtaining the financing was the longest process of all!” Amidst the quandary of how to finance this project (now estimated to cost approximately $900,000), Energysmart Solutions owner Gahl Levy offered what was needed; someone with a comprehensive understanding of HOAs and their financial structure as well as extensive contacts in the lending world. With his expertise, a single lender was found—one that would finance the project as a whole.

Also involved with the process of gaining the approval of the homeowners and navigating the financial and legal challenges was Berding|Weil, the legal counsel for Greenwood Condominiums. In a complicated process such as this, it’s important to have an attorney that has extensive experience with CC&R analysis and can assist in the process of evaluating a range of funding mechanisms such as bank loans and special assessments to help Greenwood determine the best fit, as well as drafting contracts and equipment leases for a large construction project such as this.

Berding|Weil attorney Melissa Ward worked closely with Dave during the process of obtaining member approval for the project, securing financing and putting together solid contract terms for the association.

Melissa stated that, “My job was two-fold: (1) to protect the association’s interest by aligning the legal requirements for each part of the deal with the governing documents, and (2) to help make the overall project and its many moving parts work.” For example, one of the early options considered was an equipment lease through a US Department of Energy grant program. That program was not designed for HOAs, however, and Melissa determined that while it looked good at first, many of the requirements didn’t fit well with Greenwood’s needs and would result in substantial long-term risks to the association. As a result, Greenwood returned to the much better fit of a loan option.

Melissa provided the board with a detailed long-term risk analysis regarding the project and also drafted the member information packet, voting materials and construction contract.

The final loan obtained was a 15-year, fully amortized agreement with payments averaging $8,200 per month. This was $700 less

than the average monthly PG&E bill for the association.

What is Photovoltaic? Why Replace Light Bulbs and How Do Microprocessors Work?

A photovoltaic (PV) system is comprised of solar modules linked to create arrays that convert the collected sun’s energy to a direct electrical current (D.C.). In order to convert this power to one that can be utilized by our buildings and electrical circuitry, inverters are installed to invert this D.C. power to A.C. (alternating current). In a system that is connected to the grid, such as Greenwood, this A.C. power is delivered to the “house meter” causing (depending on the load at the given time) the meter to move much slower, stand still and yes, even roll backwards. That backwards motion is power going back to the utility provider, in this case PG&E; and yes, that power does have a value. While California is not quite up to par with much of Europe and the state of New Jersey, which allows these credits to be traded as fair marketing commodities, it still is a credit to the system owner even if it’s out of PG&E’s store. It is important to note here that Greenwood HOA wisely opted to purchase their system, not lease it. Many companies offer leasing programs that eliminate the challenge of obtaining financing, but at the same time they also eliminate the benefits of owning, such as utility and tax credits. This is an important consideration.

Another benefit of owning the equipment is the ability of the owner to negotiate the rate schedule with the utility provider with the understanding that the rate the utility provider sells each kilowatt hour is the rate that the utility provider must pay to buy back the kilowatt hour. The rate schedule that the system owner has negotiated with PG&E is locked in for a given period of time (in the case of Greenwood HOA, the rate schedule is locked in for the 15-year life of the loan).

Rate schedules cannot be arbitrarily changed as proposed modifications are subject to review by the Public Utility Commission. The rate schedule will typically have a premium price for peak hour usage and minimal price for off peak hour usage. If the utility provider buys the electricity at the rate of $0.23 per kilowatt hour during the peak hours, that value stays with the kilowatt hours purchased.

So when the property buys back power during the off peak times, they have the benefit of significantly more kilowatt hours available because they are purchasing back their hours at a reduced rate.

ECHO Journal | January 2012

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Practically speaking, during the summer months and during the peak demand hours of the day, the photovoltaic system will likely produce more energy than it can use. PG&E purchases the excess at the peak hour rate (say $0.23). Then during the off peak times, when the property must rely on PG&E’s provision of power, the cost is at a lower off-peak rate (say $0.06). For example, in a given 24 hour period, let’s say the system produced an excess of 87 kilowatt hours during the peak period. At the rate that power is sold to PG&E (who uses it elsewhere), it’s worth $20.

During the off peak time those 87 peak kilowatt hours are now worth 333 non-peak kilowatt hours. This creates the potential of one day’s peak sale to PG&E offsetting several days of off peak usage.

Above is a graph that demonstrates how the photovoltaic system will affect the overall energy costs for Greenwood HOA. This graph represents the anticipated savings once all the PV systems are up and running.1 Why should they replace the light bulbs as part of this project? Have you noticed how difficult it is these days to get incandescent bulbs? Soon, they won’t be available to consumers. Fluorescent lights, which demand considerably less energy to operate, are rapidly replacing incandescent. While the lifetime of the fluorescent bulb is an improvement to the incandescent (8,000 hours vs. 1,200 hours), the quality of lighting is quite variable. Fluorescent lighting also contains mercury which represents a hazardous waste for disposal. Remember, when thinking ‘green’ for building components, one needs to consider the longevity along 10

January 2012 | ECHO Journal

A mounting plate to support the solar panel frame on a sloped single roof.

with the end use (or disposal) aspects of the component.

As a viable alternative, LED (Light Emitting Diode) lighting is now available.

These lamps have a lifetime of approximately 50,000 hours and also take much less energy to activate and sustain (6–8 watts per unit of lumen). Comparing the incandescent and the fluorescent, the watts per unit of lumen are 60 and 14 watts respectively. It is also of interest to note that the carbon footprint of a building can be significantly decreased (around 85%) with the use of LED lighting.

For example, one kilowatt-hour of electricity will generate 1.34 pounds (610 g) of CO2 emission. Assuming the average light bulb is on for 10 hours a day, one 40-watt incandescent bulb will generate 196 pounds (89 kg) of CO2 emission per year. The 6-watt LED equivalent, however, will only generate 30 pounds (14 kg) of CO2 over the same time period.2 One drawback with LED bulbs is the fact they are initially more expensive to purchase than fluorescent; however, their longer lifespan and reduced energy costs more than pay for that initial investment. Another drawback to the LED bulbs is that they are primarily a source of direct lighting so ambient

1 Graph provided by Rayco Energy based on estimated savings.

2 “U.S. Department of Energy EIA: Electricity Emission Factors.” www.eia.doe.gov/oiaf/1605/emission factors.html

Sealant is applied to the lag bolts inside the receptors welded to solar panel anchors to provide waterproof seals.

lighting or flood lighting can be difficult to achieve. Greenwood HOA experienced this problem when they had difficulty in achieving enough flood light for use of the security camera in one of their parking areas. After an exhaustive search, the right LED bulb was found and the camera works just fine.

Do commercial boilers already come with their own aquastat? If so, why spend money for new processors to do the job the aquastat is supposed to do? The microprocessor conContinued on page 12

How to make your investment safer Condos, townhomes, homeowner associations and other “shared expenses” housing is the wave of the future in the United States and around the world. But to make it a sustainable investment, new buyers, owners and volunteer 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.

The new book, Condos, Townhomes, Home Owner Associations—How to Make Your Investment Safer, provides essential training and checklists for • Association Board Members • Owners in Associations • Prospective Buyers of Association Property The book answers vital questions that can help to keep your association from financial ruin: • What overview training should board members have before beginning their service?

• What critical financial and mechanical information should

board members track each month?

• What information should a buyer look for before buying in an association?

The author provides lessons that help you to: • Protect property values • Gain peace of mind • Lessen the need for large, unexpected special assessments Patrick Hohman, author of the book and a 22-year association president, compiled these userfriendly, colorful lessons with the help of industry experts throughout the United States.

The paperback, Condos, Townhomes, Home Owner Associations—How to Make Your Investment Safer, is now available from ECHO for only $29 for members and $45 for nonmembers. Order today by calling (408) 297-3246 or order online at www.echo-ca.org.

A Giant Step to Save Energy Continued from page 10

Greenwood HOA in Walnut Creek, California embarked on a project involving significant energy conservation measures.

Solar panels are attached to composition shingle roof using a flat steel sheet that is slid in between shingles, eliminating the concern of leaks caused by mechanical attachments.

trol mechanism acts as a gas regulator that will adjust the boiler burners for the peak hours of operation. One of the significant challenges an HOA faces is the maintenance and upkeep of aging equipment. While new and state of the art building boilers may offer high-end aquastats, the boilers at Greenwood HOA did not. The microprocessor installed for this project acts in unison with the existing aquastat, which has the job of maintaining the temperature in the boilers within a specific range. The existing aquastats work 24/7, are not programmable and typically do not detect peak hours of demand. By installing these new processors, the amount 12

January 2012 | ECHO Journal

of times the boiler “fires up” is less, and fuel savings are realized. The manufacturer of the particular processor Greenwood installed guarantees a 10 percent fuel savings, although it is likely that the fuel savings will be more in the area of 15 to 20 percent. The HOA is anticipating an approximate $8,000 annual savings from installing these microprocessors.

The Nuts and Bolts of Installation As long-time industry consultants, we have a tendency to approach new ideas with a bit of skepticism. One question we had was, “How will the solar panels be attached without compromising the waterproof integrity of the roof and still resist wind uplift?” We were impressed with the result. The attachment on sloped roofs is simply made to the framing members (roof rafters) with necessary frequency. The anchor itself is composed of an 11 by 14-inch flat stainless or galvanized steel sheet that is slid in between the laps of the shingles. The size of the sheet provides adequate lap for the up and down slope shingle.

The anchor is situated inside a one inch raised receptor that is welded to the sheet metal. The anchor (a 3-inch lag bolt) goes inside this receptor for seating at the bottom with a rubber gasket and steel washer. A compatible sealant is used when installing the lag bolts.

But “What about the built-up (flat) roofs?” we asked. Well, the answer for the horizontal surfaced roofs is to create no roof penetrations in the first place by instead using concrete blocks to act as ballast whose weight will hold the panels to the roof. This provides a system that can be easily removed for roof replacement or repair and certainly eliminates the concern of leaks caused by mechanical attachments.

The California Electrical Code does have several code requirements for photovoltaic systems. Sections 690 and 705 have requirements that are consistent with just about all electrical installs. Clear labeling is required; ground fault protection is also required. The breakers that are found on the utility connected inverters will need to handle backfeed, that is power going bi-directionally, and the short circuit rating of the main disconnect panel must account for the PV system as well as the utility supplied power.

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Projected Cost of Improvements and Savings Generated A photovoltaic system will cost about $6 to $7 per watt. At Greenwood HOA, a 108 ECHO Journal | January 2012

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January 2012 | ECHO Journal

Kilowatt photovoltaic system was installed, which translates to approximately 15 KW per building.

There were 1,035 new LED bulbs installed throughout the complex, with the final cost of such determined by the type of fixture.

For a significant portion, the installation of the new LED bulbs was done using the existing fixtures. Typically, the use of existing fixtures (in this case ones that held both incandescent and compact fluorescent) is achievable. In some cases the fixtures require a change-out to accommodate the new lighting, which understandably presents an added expense.

When all is said and done, what is the anticipated cost of the improvements to Greenwood HOA and what are the anticipated savings? It is expected that the annual savings to the HOA will be approximately $68,000 in utility billing and approximately $17,000 in maintenance costs. The projected 25-year savings (based on current system efficiency that may diminish somewhat as the panels age) will be about $2.2 million.

Because the equipment has only recently been installed, there is little data for evaluating the billing; however, one utility bill has already been received. For a building that previously averaged $850 per month, this recently received bill (with the PV system operational) was $3.76.

Currently, for qualified properties, there are rebates and tax deductions available to property owners who install energy-saving measures. A good resource for learning about these incentives is the Go California web site: www.gosolarcalifornia.ca.gov.

As an additional incentive, it was determined that under the Nonbusiness Energy Property Credit (NBEP), each unit owner will be eligible to obtain a tax credit of up to $1,500 from the federal government. The amount of the credit (not a cash rebate) is proportional to the cost of the improvements. So for Greenwood HOA, each unit owner will qualify for a credit up to $750.

This credit is extended to each unit owner (rather than to the HOA) because the unit owners are the actual owners of the system.

Form 5695 from the Department of the Treasury, Internal Revenue Service provides details regarding these tax credits.

Regarding the efficiency of the installation in general, the spring, summer and fall months will be the most productive for the PV system. This is why the placement of the roof mounted panels is so critical.

Greenwood HOA has beautiful redwood trees throughout the complex. Part of the General Audit was to evaluate the shade factor of these trees and how much actual real estate would be available given their location.

A primary focus was to install the solar arrays in such a way as to avoid any “trimming� of trees but still provide the most power possible. One of the ways that the contractor achieved this was to install some of the arrays on the sloped roofs in a reverse tilt fashion.

This presented an additional wind uplift concern that was addressed with minor modifications to the fastening system.

There is a savings on maintenance costs as well. Replacing bulbs will be done much less frequently. In addition, part of the contract Rayco Energy has with Greenwood HOA includes maintenance of the panels for the first 10 years. Maintenance typically involves keeping them clean and performing visual inspections of the wiring, terminations and equipment fastening. As far as product and installation warranties, the contractor offers a one-year labor and product warranty on the LED lighting, after which the manufacturer’s products warranty, takes effect. Additionally, for the entire solar system, the contractor offers an initial 10-year labor and product warranty, which is then followed by the manufacturer’s warranty.

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The manufacturers will cover the solar modules with a five-year material and workmanship warranty as well as a 25-year transferable power output warranty, (90 percent at 10 years and 80 percent at 25 years). The inverters come with a warranty of five years with an optional 10-, 15- or 20-year extended service agreement. Finally, the microprocessors have a 15-year limited warranty against breakdowns or defects.

In effect, perhaps the biggest saving of all is that Greenwood HOA is doing its part to minimize their footprint on the world‌ something that we all need to consider.

ACE Property Management, Inc. Professional Service Delivered Personally

Susan Spott is a Construction Consultant with Richard Avelar & Associates. She is a certified Green Point Rater for new construction and has over 20 years of experience as a construction inspector, construction manager and construction contract administrator. Ken Kosloff is a Principal Senior Construction Consultant with Richard Avelar & Associates. He has worked extensively with community associations performing reserve studies and both construction and project management. Richard Avelar & Associates are members of ECHO.

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Management Service ˜ Financial Service ˜ Customer Service ACE Property Management, Inc. ‡ 1625 The Alameda, Suite 917, San Jose, CA 95126 Phone: 408-217-2882 ‡ Fax: 408-886-9474 ‡ Email: Info@acepm.net ECHO Journal | January 2012

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January 2012 | ECHO Journal

By Sandra M. Bonato, Esq.

SB 563 and You How Amendments to the CID Open Meeting Act Affect Board Activities ast fall Governor Jerry Brown signed SB 563 into law. The bill, authored by the Senate Transportation and Housing Committee, amends the Common Interest Development Open Meeting Act (Civil Code §1363.05) in ways that strengthen the Legislature’s public policy goals of open, transparent governance and decision-making in community associations. On

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January 1, 2012, SB 563 became effective and makes significant changes in the way association directors communicate with each other and make decisions.

Summary of SB 563 Effective January 1, 2012, SB 563 clarifies that executive sessions of the board are “meetings,”

ECHO Journal | January 2012

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but they are simply not open meetings. This question has split attorneys up until now, because of the unusual way in which the Open Meeting Act defined a “meeting.” The new law removes the ambiguous language from the definition.

The new law overrides conflicting bylaw provisions that specify that certain boards must first notice, agendize and conduct an open meeting and then “adjourn” into executive session. Rather, boards will not be required to go through these elaborate steps if the only reason the board is meeting is for an executive session purpose. In exchange, the new law requires the board to post a notice and brief agenda for executive sessions, at least two days beforehand. No notice or agenda need be posted if the executive session is for an emergency meeting (i.e., where something unexpected has come up that could need board action, and notice isn’t practicable).

The new law provides that discussing, deliberating or deciding association business among a majority of directors may only be done in meetings. There are two types of meetings—in person or by conference call.

This new limitation, therefore, does not include discussions or decision-making by a majority of directors by email. The sole exception will be for emergency meetings, as defined above. Emergency decisions can be made by email if the following apply: 1. the decision is with the unanimous consent of the board, 2. the decision is in writing (which an email is), 3. a record of the board’s unanimous consent is maintained with the board’s meeting minutes.

The new law will helpfully specify the process for how association boards can lawfully meet using conference telephone equipment. Since decisions made in an emergency conference call meeting need not be unanimous, it is important to understand the conference call protocols, as it seems likely most emergency meeting decisions will be made in that way.

Executive Sessions As noted above, executive sessions will now clearly be meetings. The new definition of meetings will allow only two types (absent an emergency)—in-person meetings and conference call meetings. Thus, unless an executive session subject is an emergency, executive sessions will require either calling a physical meeting or a conference call among

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January 2012 | ECHO Journal

all directors. If the subject of the executive session is an emergency and the other requirements above are met, then the board can also confer on an executive session subject by email.

Notice of executive sessions (unless for an emergency as defined) and a brief agenda must be posted in a prominent place in the common area at least two days in advance of it. Such notices will state that the board will be meeting in executive session at a specific date and time, and the agenda for the executive session will be stated in very general terms: “To confer with counsel”; “To discuss pending litigation”; “To discuss member discipline”; “To consider foreclosing an association lien”; “To discuss contract formation”; “To discuss personnel matters.”

Note that such notices/agendas will now be available to requesting members under the Access to Records statute, so copies of such notices/agendas should be retained in the association’s files. A good practice would

be to mark on the copies the dates and times of posting.

As noted above, even if an association’s bylaws state that the board must first notice and conduct an open meeting before adjourning into executive session, the new law will supersede that restriction. Instead, boards will now be permitted to start and end an executive session without an open meeting (and its typical four days’ notice) if the board is solely meeting for an executive session purpose. If the board is meeting in executive session in person or by conference call, then the date, time, participants and general subject will need to be stated in the minutes of the board’s next open meeting. If the board is meeting by email in emergency circumstances in executive session, then the unanimous email consents should be gathered and maintained in the executive session minutes book as well as the fact, subject, etc. of the executive session by email being generally noted in the next open meeting minutes.

Emergency Meetings Perhaps the largest impact of the new amendments is the focus they will bring on the emergency nature of board decision mak-

ing. For that reason, any time the board is planning to meet without notice (either four days or two days), its first question must be whether the circumstances permit an emergency meeting. Again, the subject must be unexpected, likely need board action, and notice is not practicable. All three of these tests must be met.

At the same time, it is widely understood that the tests are not difficult to achieve, leaving boards considerable flexibility in decision making when need be. However, if a subject of discussion is an open meeting subject and four days’ notice can be given, it must. If a subject of discussion is for an executive session purpose and two days’ notice can be give, it must. These would not be emergency meetings and, for the open meeting subject at least, members are entitled to attend and to address the board in open forum.

Conference Calls The now-specified protocol for open meetings by conference call is that at least one director must be at a designated location and, if members choose to attend, have speaker phone (or video) capability so that all directors can hear one another at the ECHO Journal | January 2012

19

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same time, attending members can hear as well, and all directors can hear members who wish to address the board in open forum.

Conference calls for executive session subjects are uncomplicated. All directors would be on a phone (or video) system that allows each to hear all others at the same time.

Emergency Meetings by Email As noted above, the only time a majority of directors will be able to communicate substantive discussion and decisions by email is for emergency meeting purposes. Either the president or two officers of the association can call such a meeting. If the subject of the discussion and decision-making were properly an emergency, then the decision made by the board by email would be a resolution of the board documented in the board’s meeting minutes (either open meeting or executive session minutes book, depending on the subject). The email decision must be unanimous and the resolution must reflect that fact.

If the board is unable to agree, then the subject would be taken up in an in-person emergency meeting or, more likely, in an emergency meeting by conference call.

Unanimity is not required for such methods of meeting.

No More Everyday Email?

Because of the policy underpinning of openness and transparency in community associations, and because email is neither open nor transparent, all substantive communications among a majority of the board members is to be reserved to open meetings.

If we take a page out of court opinions regarding the Ralph M. Brown Act (the sunshine law for local elected officials), then any communications among a majority of directors that suggests a “collective concurrence” is either sought or won by directors outside of a meeting would be a violation of the Open Meeting Act. The Legislature has said that those discussions and the debates that go with them belong in open session.

That is not to say that a manager could not transmit information to directors between meetings (such “informational exchanges” appear to be allowed), but any ensuing discussion among a majority of directors in advance of the next open meeting (or sharing by the manager with directors one or more other directors’ positions) would be problematic. That is also not to say that directors could not email their schedules for a meeting or submit agenda items (with-

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January 2012 | ECHO Journal

out opinions included). Discussions about items of association business, however, would be for noticed open meetings or executive sessions, not in between them (absent emergency circumstances).

Permitted by email, then, might be: “I can meet next Tuesday at 5:00 p.m. or Wednesday at 6:00 p.m.” Or “The available colors for the new roofs are sable brown or midnight grey.” Not permitted by email, then, might be: “I can’t meet next Tuesday so we have to make it when I can because I intend to vote against the landscape contract.” Or “The only color I like is blue.”

The limitation on email may seem inefficient in today’s world, but if one thinks about it, the opposite might well be true. Limiting email exchanges will require greater organization and also free up directors who are otherwise heavily trapped by emails relaying every nuance of activity in their communities.

Managers’ reports will be comprehensive, not piecemeal. The time for discussion, deliberation and decision can be easily recognized among directors as the night of the board meeting, not in seriatim email exchanges throughout the month or quarter.

The new legislation also encourages proper delegation of responsibility to officers and managers, so that between-meeting reporting might be more the norm, not the exception.

And in those communities where board scrutiny is highest, board decision making on agendized items will demonstrate the commitment of the board to run business meetings professionally.

The clarity that the new amendments bring to long-debated subjects in the Open Meeting Act is, if not welcomed, then at least a relief. Question marks always come with risks of going one way or another. SB 563 will result in some changes by having answered many of the questions.

Sandra Bonato is a principal with the law firm of Berding|Weil in Alamo, California. She is the Bay Area member of the four-person California State Bar sub-committee tapped to give comments to the CLRC on its efforts to restate Davis-Stirling and is a member and former chairperson of the ECHO Legislative committee. She is a frequent speaker at ECHO seminars.

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ECHO Journal | January 2012

21

By Michael Gartzke, CPA

Is Your Association’s Corporate Status Suspended?

What is Corporate Suspension? very corporation formed in California, whether a mutual benefit corporation such as a homeowner association, a professional corporation or a major corporation, is registered with the California Secretary of State’s office. Upon incorporation, the corporation is assigned a corporate number and is required to file a Statement of Information (SI-100) on a biennial basis with the Secretary of State and to file tax returns with the Franchise Tax Board and pay taxes as required on an annual basis. In addition, all homeowner associations are now required to file a Statement of Common Interest Development (SICID) with the Secretary of State every two years as well. Failure to meet any of these corporate filing obligations can eventually lead to corporate suspension or revocation of corporate powers by the Califor-

E

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January 2012 | ECHO Journal

nia Secretary of State or the California Franchise Tax Board.

Some commentators have opined that 10 percent or more of California’s homeowner associations are suspended. Some of these associations may only exist on paper (i.e. articles were filed to establish the association but the project has never been built). With nearly 50,000 homeowner associations in California, that means that 4,000 to 5,000 associations may be suspended.

Why is this Matter Important?

Under California Revenue and Taxation Code (R&TC) Section 23304.1(a), “Every contract made in this state by a taxpayer during the time that the taxpayer’s corporate powers, rights and privileges are suspended or forfeited pursuant to Section 23301, 23301.5 or 23775 shall, subject to Section 23304.5, be

voidable at the instance of any party to the contract other than the taxpayer.” Section 23304.5 requires that a lawsuit be brought by the other party in order for the contract to be voided. This could be problematic for a suspended association in the following situations: A dispute arises in a maintenance contract (roofing, painting, landscaping, etc.) and cannot seem to be worked out other than through the courts. If the association’s corporate powers are suspended, the other party could void the contract and/or the association has no ability to enforce the provisions of the contract since the association is suspended.

• The association is involved in construction defect issues that lead to litigation. Should the corporation be suspended, it cannot pursue

the legal remedies permitted until the corporation is “revived.”

• The association is attempting to collect delinquent assessments from a homeowner. Liens could not be enforced or small claims could not be pursued if the association has its corporate powers suspended. The inability to secure the association’s assessments during a suspension period could result in lost assessments by the association.

• Without corporate powers, the association may not be able to enforce any provisions of its governing documents.

• Board members may not have the immunities provided by the DavisStirling Act if the corporation is not in “good standing.”

How Does Suspension Occur?

Listed below are several scenarios that have occurred in my practice that I believe are not unique but occur regularly: Suspension soon after incorporation. The association was incorporated by the developer’s attorney in 1983 but was suspended in 1985 for failure to file tax returns or pay the California minimum tax. This 5-unit association was built and had a bank account with the manager’s tax ID number. Mailing addresses had changed from the attorney to one or more of the owners to the manager over the years. Notices sent by the FTB may not have been received or returned to the FTB due to the change in address. The suspension

was discovered when management changed in 1999.

Suspension due to failure to file Statement of Information forms. As noted in the first scenario, association mailing addresses can change frequently. If the association uses an officer’s mailing address or its management company’s address as its mailing address, there is a strong possibility that the mailing from the Secretary of State will not be forwarded to the correct address when officers or managing agents change.

Follow-up notices, penalty notices and suspension notices will likewise ECHO Journal | January 2012

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not be forwarded. This was a problem when the Statement of Information was an annual filing. Now that the statement is filed every two years and the Secretary of State no longer mails information forms, nonfiling has probably increased, resulting in more suspensions. Filing forms and requirements can be found at the Secretary of State’s web site: www.sos.ca.gov. Missing one filing but making the subsequent filings does not “revive” the corporation. The penalty for failure to file the nonprofit Statement of Information is $100 and is assessed through the Franchise Tax Board.

Recommendat ion: The Statement of Officers can be amended at any time during the twoyear filing period at no cost. This form could be revised at the same time that signature cards are changed to reflect new officers, corporate mailing address change or change in agent for service of process. A fill-in form is available on the Secretary of State’s web site: www.sos.ca.gov.

Suspension for failure to file Franchise Tax Board Form 199. An association was suspended in 1987 because it had not filed a Form 199 for 1986. 1986 was the last year that filing of Form 199 was required of all nonprofit corporations regardless of revenues received. The $25,000 annual revenue minimum filing requirement for Form 199 was effective in 1987. In order to revive, the association had to file a 1986 Form 199—in 2001!

My 1986 forms book was in storage so a colleague came to the rescue. The association did not have a 1986 income statement so we used a 1987 one. (The FTB suggested that the form be filled in with “zeroes.”) The 199 has a $10 filing fee. If the form is filed late, the fee increases to $65 plus interest.

Suspension for failure to file forms 100 and 199 and pay resulting penalties. While this can happen due to the address, officer or management changes noted above, it can also happen due to the negligence of the financial managing agent.

There are companies in California that provide financial management to associations. Some are owned by tax and accounting professionals who hold themselves out as providing all the necessary financial statement and tax preparation services needed by an association. This scenario can be attractive to a small association board as it allows them to feel confident that these matters are being taken care of by a professional and that the board has nothing to worry about.

What happens when the tax returns are not filed? Demand notices and penalty notices are sent by the FTB. If no response is received, a series of letters threatening forfeiture of the corporation commence leading to the eventual suspension of the corporation.

I have seen a number of instances in recent years of a former financial manager providing 3–10 years worth of Federal and California income tax returns for filing by the association at the time of the changeover in financial management. I have received numerous calls over the years outlining this scenario. The managers know that tax returns are due annually and the 2005 returns are now five years late. These associations are going to incur late filing penalties as well as late payment and interest charges on any taxes due for both Federal and California. These associations have been suspended. Once these associations are revived, then they will have to go to small claims court to recover the penalties and interest incurred as a result of the negligence of the former financial manager. This is not an isolated incident. Many notices have to be ignored and thrown away for a corporation to be suspended.

How Do You Find Out if an Association is Suspended?

Some information from the Statement of Information filing is maintained on the Secretary of State’s website: www.sos.ca.gov.

From there enter into “California Business Search.”

Enter the corporation’s name or a portion of the name (if you are not sure of the exact name) to obtain name matches and corporate information. For example, I entered “Summerland Association” and six matches were returned, one of which was a suspended homeowner association, the Summerland Villas Homeowners Association. A “click” on the corporate name generated another report showing the last reported corporation mailing address and the agent for service of process. It does not show when the corporation was suspended, just that it is suspended.

How Do You Return the Association to Active Status?

If your association is suspended, you need to contact the California Secretary of State and the Franchise Tax Board to determine what triggered the corporate suspension.

Secret ary of St at e Email: officers@sos.ca.gov Phone: (916) 657-5448

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1500 11th Street Sacramento, CA 95814 If the corporation was suspended by the Secretary of State simply because the last Statement of Information or Statement of Common Interest Development was not filed, you may revive the corporation by sending a letter to the Secretary of State along with the delinquent Statements and the payment of any fees or penalties imposed. The Secretary of State will send a “Notice of Revivor” to the association and notify the Franchise Tax Board.

Franchise Tax Board Phone: (800) 852-5711 P.O. Box 942840 Sacramento, CA 94240-0000 My experience has been that speaking to one of the FTB corporate telephone representatives has been fruitful in obtaining the information as to why a corporation was suspended.

The telephone representatives have information concerning why the FTB has suspended the corporation or whether the Secretary of State has suspended it. All required tax forms, tax payments, penalties and interest

must be made with the FTB Form 3557 “Application for Certificate of Revivor.”

If the association is small, with little or no taxable income, the process is fairly straightforward and should not be too costly. I did have an FTB representative contact me once regarding the filing of a Form 100 for an association that had less than $100 in nonmembership income in the year in question (e.g. interest income). The association is not required to file Form 100 when nonmembership income is less than $100 (See Form 100 instructions and Publication 1028—Guidelines for Homeowners Associations.) He wanted to know my authority. I cited the above FTB publications and never heard back from him.

Some associations, like the one cited in my first example, are suspended for failure to pay the minimum tax. This is because California tax-exempt status was not requested during incorporation. Form 3500 must be filed and approved by the Franchise Tax Board to obtain this status. It is not an automatic election like the Federal IRS Section 528 election. A brief questionnaire regarding association activities must be completed and four years’ financial information and signed

copies of the association’s governing documents much be provided with the application. Upon qualification, the FTB will refund up to four years’ minimum tax for associations that qualify. Most residential associations should have no trouble qualifying for exempt status.

Do We Have to Disclose the Suspension?

While the CIRA Guide (Accounting Standards for HOAs) does not provide any specific guidance, it is my opinion that an audited or reviewed financial statement should disclose suspended status in the notes to the financial statements. An association without corporate powers could have its financial situation severely impacted if it cannot collect its assessments or sue for damages incurred. This is a very significant disclosure.

Michael Gartzke, an ECHO member, is a Certified Public Accountant with a large homeowner association practice in the Santa Barbara area. He is also the coordinator of the South Coast Homeowners Association with a membership of about 140 associations.

ECHO Journal | January 2012

25

By Beth A Grimm, Esq.

Transfer Fees and Disclosures What’s New from 2011? ssembly Bill 771 (Butler) was sponsored by the California Association of Realtors. For obvious reasons, CAR believes that full disclosure should be made about costs in a real estate transaction. HOAs are not exactly consistent in the charges made for providing disclosures in a sales transaction. The bill identifies fees that may be charged to purchasers by sellers for providing documents upon sale or transfer of a property in a common interest development, changing the language to incorporate processes for providing electronic documents.

A

The Davis-Stirling Act requires a seller of a separate interest in a common interest development to provide specified documents to a prospective purchaser. The documents have to be provided within 10 days of the mailing or delivery of the request (usually coming in as an

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January 2012 | ECHO Journal

escrow demand made to the association as the seller may ask the association to provide the documents).

Under this new law, an association then has to provide, on a fairly specific form (sample form on page 28) specified in the new law, a written or electronic estimate of the fees to be charged for providing the requested documents.

New—Electronic Format Okay The documents required may be maintained in electronic form and may be posted on the association’s Internet Web site. Requesting parties (representing the prospective purchaser) have the option of receiving the documents by electronic transmission if the association maintains the documents in electronic form.

Fees Allowable The association may charge a reasonable fee based upon the asso-

ciation’s actual cost for the procurement, preparation, reproduction and delivery of the documents requested pursuant to the provisions of this section.

Once the charges have been estimated on the form, the association may not charge additional fees for the electronic delivery of the documents requested. Fees for documents required to be provided are distinguished from other fees such as key or gate fees, fines, or assessments that are due as part of the sales transaction.

Delivery of the documents required may be conditioned on the payment of the fee allowed.

Practically, the HOA can require the payment up front but it is likely that these fees will be added to the distribution to be made upon close of escrow. Because of the failure in recent years of some escrow officers

ECHO Journal | January 2012

27

SAMPLE DISCLOSURE FORM

CHARGES FOR DOCUMENTS PROVIDED AS REQUIRED BY CIVIL CODE § 1368* Property Address __________________________________________________________________________________________________________________ Owner of Property _________________________________________________________________________________________________________________ Owner’s Mailing Address ___________________________________________________________________________________________________________ (If known or different from property address.)

Provider of the Section 1368 Items: _________________________________________________________________________________________________________________________________ Print Name _________________________________________________________________________________________________________________________________ Position or Title Association or Agent _________________________________________________________________________________________________________________________________ Date Form Completed Check or Complete Applicable Column or Columns Below: Document

Civil Code Section

Articles of Incorporation or statement that not incorporated

Section 1368(a)(1)

CC&Rs

Section 1368(a)(1)

Bylaws

Section 1368(a)(1)

Operating Rules

Section 1368(a)(1)

Age restrictions, if any

Section 1368(a)(2)

Pro forma operating budget or summary, including reserve study

Sections 1365 and 1368(a)(3)

Assessment and reserve funding disclosure summary

Sections 1365 and 1368(a)(4)

Financial statement review

Sections 1365 and 1368(a)(3)

Assessment enforcement policy

Sections 1365 and 1368(a)(4)

Insurance summary

Sections 1365 and 1368(a)(3)

Regular assessment

Section 1368(a)(4)

Special assessment

Section 1368(a)(4)

Emergency assessment

Section 1368(a)(4)

Other unpaid obligations of seller

Sections 1367.1 and 1368(a)(4)

Approved changes to assessments

Sections 1365 and 1368(a)(4), (8)

Settlement notice regarding common area defects

Sections 1368(a)(6), (7) and 1375.1

Preliminary list of defects

Sections 1368(a)(6), 1375, and 1375.1

Notice(s) of violation

Sections 1363 and 1368(a)(5)

Required statement of fees

Section 1368

Minutes of regular meetings of the board of directors conducted over the previous 12 months, if requested

Section 1368(a)(9)

Included

Not Available (N/A) or Not Applicable (N/App)

Total fees for these documents: * The information provided by this form may not include all fees that may be imposed before the close of escrow. Additional fees that are not related to the requirements of Section 1368 may be charged separately.

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January 2012 | ECHO Journal

to pay fees when the monies are distributed, it is possible that some HOAs or managers who provide the documents will require payment prior to delivery.

The HOA may contract with any person or entity to facilitate compliance with the requirements of this subdivision on behalf of the association. HOAs are likely to contract with managers or online services like CondoCerts and other providers to make the documents available for a fee, which must be paid to the service or company in order to retrieve the documents.

What Are The Required Disclosures?

The disclosures (found in Civil Code Section 1368) have for a long time included the governing documents of the association; the financials and most recent disclosures that are made to owners, any occupancy or age restrictions inconsistent with those allowed by law; outstanding assessments, association fees, fines, outstanding violations of the documents (for which the selling owner has received prior notice), liens, any changes in the association’s documents that have been approved but are not yet in effect, etc.; and information related to any defects identified as a result of defect litigation.

What is new under this new statute is that up to 12 months of minutes, except executive session minutes, are subject to disclosure if the prospective purchaser asks for them.

Also, under a new law described in an earlier article, any rental restrictions appearing in the governing documents must be disclosed.

Last but not least, if any party required to do so on behalf of the selling owner, including the association, does not provide the disclosures within 10 days of the written request, the party is subject to a $500 fine and, if litigation ensues, the prevailing party is entitled to recover attorney fees.

There are some special rules that relate to Community Service Organizations that are not covered in this article. Check with your attorney if you have questions about CSO disclosures and allowable charges.

Beth Grimm is an attorney with offices in Pleasant Hill. She is a member of ECHO and various other industry organizations in California and nationally. She can be contacted through her website www.californiacondoguru.com. She was named by ECHO as the 2011 Volunteer of the Year. She is the co-chair of the East Bay Resource Panel.

ECHO Journal | January 2012

29

By Linda A. Bartel, PCAM

HOA Governance Making the Management Decision ommunity association management oftentimes can save money and headaches. The number one reason many homeowner associations choose to self manage is to save money. Although an association may save money in management fees, the long-term benefits provided by a professional management company outweigh the shortterm savings.

All too often, self-managed companies run into a consistent pattern of problems: • Financial/bookkeeping/reserves • Maintenance/Administrative • Governance/Legal

C

Financial/Bookkeeping/Reserves Financial recording and reporting is a large responsibility for any association, and not as simple as collecting dues and paying bills.

Association funds should be segregated.

Persons charged with the custody of funds may not commingle them with funds that do not belong to the association. For example, many states require that monies set aside as reserve funds must be kept in a separate account. It is easy for the board to find itself in a situation where it is not following local, state and federal law and, as a result, may expose the association to litigation or prosecution.

Managing, and sometimes building, the reserve fund is another area where self-managed boards might struggle. The reserve fund is designated for future major repair or replacement of common elements. It is easy to fall into the trap of thinking that putting money away each month for reserves raises the maintenance fee to an unreasonable level. In fact, some boards feel that future owners should pay for a component when it needs to be replaced, rather than creating a reserve fund to ensure that funds are available when it’s time to replace a common element component. In reality, the easiest way to make sure that no bank loan or special assessment will be necessary when an association’s physical asset requires replacement is regularly to set aside a specific amount of money every month from maintenance fee 30

January 2012 | ECHO Journal

revenue. Consider allocating funds to reserves a form of user fees in which owners pay for the component as it depreciates.

An alternative is to consider having a professional reserve study performed by an independent expert, and then explaining to the owners the importance of funding reserves on an ongoing basis according to the reserve study recommendations. By demonstrating sound fiscal management to the owners, a board can reduce claims of financial mismanagement because the directors sought out the advice of independent reserve study experts. Another positive is that homeowners will have a high comfort level with the board, confident that the investment in their property is being managed properly.

Maintenance/Administrative Many self-managed properties fail to consider a maintenance plan for operating maintenance or future replacement programs.

This deficiency often leads to deferred maintenance, and deferred maintenance often leads to more expensive maintenance over time.

Some common examples include: • extending recommended maintenance cycles, such as painting buildings every 12 years versus the recommended seven years, • failing to use a top coat on decks, which would waterproof and protect the wood, and • failing to seal asphalt on a regular cycle.

Another consideration is the quality and experience of contractors. I have seen flat roofs fail after five years because the work was done so poorly. If the board had sought outside help to put together the specifications and monitor the work, the overall cost to the owners would be far less than dealing with leaky roofs, interior repairs and eventually replacing the roofs again far sooner than expected. Self-managed associations typically do not have an extensive vendor list for competent, honest and competitive contractors.

Not all problems relate to maintenance and money. Self-managed communities require a few key individuals to step forward

to deal with the day-to-day administrative business. Who do the owners call to report a problem, who handles emergencies during the day and in the middle of the night, who fills out lender forms and responds to escrow payoff figures? Does the board outsource the bookkeeping or keep it in house? Board members typically are the same people who usually end up enforcing the house rules and get ugly stares and cold shoulders from the violators. What happens if these community leaders move or stop volunteering? Who steps up to do it?

Governance/Legal This section covers potential legal pitfalls and the following sentence should keep the reader’s attention: an association board or individual board member may be held legally liable for failure to follow local, state and federal law or to act in good faith based on reasonableness and good judgment. Self-managed community association board members often do not have the resources, background, training or experience to recognize potential legal hazards, but they are still required to comply with all mandates.

An example of self-managed association pitfalls includes: • Imposing improper limitations on satellite TV dishes (in violation of the Federal Telecommunications Act); • Denying certain rental applications (in violation of the Fair Housing Act); • Failing to respond properly to homeowner disputes (in violation of ordinary and reasonable care).

Another serious consideration for selfmanaged association boards is the need to keep current on all new laws, statutes and ordinances. Joining ECHO (web site: www.echo-ca.org) is a way to ensure that board members receive timely updates on new laws and regulations, and the best way to ensure compliance.

In order to avoid unnecessary risks, an association board may wish to explore hiring an experienced association management company to help guide them through the sometimes precarious, yet always eventful, experience of community association governance and management.

Linda Bartel is a senior vice president at the Principal Management Group of Houston in Houston, Texas. This article has been published previously in AssociationTimes, a monthly publication of Associa, North America’s largest community association management firm.

Index of 2011 Articles Association Board Affairs The Majority Rules: What if the Minority Won’t Stop Fighting?—Aronson, Esq., Janet O., January The Painful Death of Volunteerism—Adamen, Julie, March Serving on the Board: It’s About Team Building and Leadership—Harvey, Sherry, May Optimizing Committees in Association Governance—Foley-Healy, Esq., Molly A., July Sideswiping Owners Will Have a Backlash!— Grimm, Esq., Beth A., July If You Fail to Plan, You Plan to Fail— Campbell, Walter, A ugust Fight Night or Fight Nice—Adamen, Julie, Sept ember From a President’s Perspective—Pearson, Pete, November Rude and Unruly Board Members? Robert’s Rules of Order to the Rescue!—Patching, Roger, December Financial (Assessments, Budgets, Reserves and Taxes) Understanding Your Community’s Financial Health in a Tough Economy—Evans, Christine, February Simplified Cash Management for Association Directors—Lofthouse, Karl T., March Reserve Funding During Economic Downturn— Oliver, Susan, May Six Ways to Minimize Your Reserve Contributions—Nordlund, P.E., R.S., Robert M., A ugust Disaster! No Reserves. No Insurance.—Berding, Esq., Tyler P. and Weil, Esq., Steven S., O ct ober Borrowing from Reserves: How Healthy Is It?— Grimm, Esq., Beth A., November Know Your Community’s Financial Position— Lape, Hilary, December General Kids in Condos—Lincoln, Marilyn, January Transparency in Towing—Vehicle Owners Rights and Responsibilities—Dean, Burt, February

More Certainty Expected from FHA—Sanchez, Esq., Loura K., March How Simple Jobs Can Get Out of Control Lessons from the Field—Schneider, John R., A pril Color Theory and Perception—Thomas, Ann, June Bakersfield Tree Service Scammer Sentenced to Jail—ECHO, July Neighborhood Awareness and Security Assessments—Mesple, Larry, July Residential Real Estate Agency and Your HOA—Stein, Joseph, A ugust Condominium Conversions: Owner Equity at Risk?—Berding, Esq., Tyler P., Sept ember Social Media: Make It Work for You—VelaMora, Sandra, December Insurance Insuring for the Future—Allen, Charlotte, July Building Ordinance Coverage—Cline, Timothy, Sept ember Earthquake Insurance: To Buy or Not To Buy— Grimm, Esq., Beth A., Sept ember Construction Costs versus Market Value—Cline, Timothy, November Legal Executive Sessions: Documentation and Minutes—Stein, Esq., Deon R. & Mattson, Esq., Jesse R., January CC&R Enforcement: The Five Most Important Don’ts You Need to Know—Weil, Esq., Steven S., January Planning for the Future: The Restated DavisStirling Act—Bonato, Esq., Sandra M., March Is Lamden Unraveling?—Grimm, Esq., Beth A., A pril When is a Homeowner Association Like Wisconsin?—Weil, Esq., Steven S., A pril Landslides: Nuisance or Construction Defect?— Berding, Esq., Tyler P., May Who’s the Client?—Devereaux, Esq., James O., May Aberrant Behavior in Associations—Barnett, Esq., Jeffrey A., June Continued on page 41 ECHO Journal | January 2012

31

News from ECHO Rather, boards will not be required to go through these elaborate steps if the only reason the board is meeting is for an executive session purpose. In exchange, the new law requires the board to post a notice and brief agenda for executive sessions, at least two days beforehand. No notice or agenda need be posted if the executive session is for an emergency meeting (i.e., where something unexpected has come up that could need board action, and notice isn’t practicable).

How Amendments to the CID Open Meeting Act Affect Board Activities Last fall Governor Jerry Brown signed SB 563 into law. This bill amends the CID Open Meeting Act in ways that strengthen the Legislature’s public policy goals of open, transparent governance and decision-making in community associations. On January 1, 2012, SB 563 became effective and makes significant changes in the way association directors communicate with each other and make decisions.

SB 563 clarifies that executive sessions of the board are “meetings,” but they are simply not open meetings. This question has split attorneys up until now, because of the unusual way in which the Open Meeting Act defined a “meeting.” The new law removes the ambiguous language from the definition.

The new law overrides conflicting bylaw provisions that specify that certain boards must first notice, agendize and conduct an open meeting and then “adjourn” into executive session.

32

January 2012 | ECHO Journal

The new law further provides that discussing, deliberating or deciding association business among a majority of directors may only be done in meetings.

There are two types of meetings—in person or by conference call. This new limitation, therefore, does not include discussions or decision-making by a majority of directors by email.

The sole exception will be for emergency meetings; emergency decisions can be made by email if the decision is with the unanimous consent of the board, it is in writing (which an email is), and a record of the board’s unanimous consent is maintained with the board’s meeting minutes.

The new law specifies the process for how association boards can lawfully meet using conference telephone equipment. Since decisions made in an emergency conference call meeting need not be unanimous, it is important to understand the conference call protocols, as it seems likely most emergency meeting decisions will be made in that way.

Important Upcoming Events Marin Winter Seminar Saturday, February 4 8:00 a.m. to 1:00 p.m Embassy Suites, 101 McInnis Parkway, San Rafael

Transfer Fees and Disclosures AB 771 also became effective on January 1. HOAs are not always consistent in the charges made for providing disclosures in a sales transaction. This bill identifies the documents that must be provided upon sale or transfer of a property in a common interest development and requires a firm estimate of the fees that may be charged to purchasers by sellers for providing documents. The bill alters the language to incorporate processes for providing electronic documents.

Under this new law, an association then has to provide, on a fairly specific form specified in the new law, a written or electronic estimate of the fees to be charged for providing the requested documents. Once the charges have been estimated on the form, no additional fees may be charged by the association for the electronic delivery of the documents requested. Fees for documents required to be provided are distinguished from other fees such as key or gate fees, fines, or assessments that are due as part of the sales transaction. Delivery of the documents required may be conditioned on the payment of the fee allowed.

Three Marin County attorneys will discuss (1) Changes to the law resulting from the 2011 Legislative session and 2011 court decisions; (2) Hot Topics—the burning issues facing your association: rental restrictions, smoking, emails, meetings; and (3) Fiduciary Duty in Hard Times, a participatory session in which the speakers will present a hypothetical “Board Packet” to the audience. In this quick-paced session, attendees will work with a fictional board and learn new tools to handle issues facing their communities.

Wine Country Winter Seminar Saturday, March 24 8:00 a.m. to 1:00 p.m.

Sally Tomatoes, 1100 Valley House Dr., Rohnert Park Topics that will be covered include an update of actions by the Legislature and the courts in 2011 that affect HOAs; a broad review of Directors’ and Officers’ (D&O) Liability Insurance; discussion of delays in facility maintenance that may be dangerous to the association; and a revisit of disaster preparedness concerns.

Watch for the full agenda in flyers and the February issue of the ECHO Journal.

Legislation at a Glimpse 2011 Final Status Bill No.

Author

Subject

Status

Position

Summary

AB 19

Fong

Submetering

Failed passage in Assembly Housing.

Support if Amended

For new construction of multi-unit structures, requires the installation of water sub-meters.

AB 20

Halderman

Construction Defect Disclosure

Failed passage in Assembly Judiciary.

Oppose

Requires that an attorney make certain written disclosures to a client in a potential construction defects action. Failure to disclose would constitute cause for professional discipline.

AB 579

Monning

Mobilehome Attorneys Fees

Hearing 5/10 canceled at author’s request.

Support

Would permit the award of attorney's fees to local governments in an action brought by the owner of a mobilehome park to challenge the validity of a local ordinance.

AB 771

Butler

Sale Disclosure Signed by Documents Governor.

Neutral

Provides that the time frame and fee limitation for providing specified documents to an owner of a separate interest apply to an agent of the association.

AB 805

Torres

Davis-Stirling Revision Part 1

Passed Assembly 5/2.

Two-year Bill.

Support

This is the first of two bills from the California Law Revision Commission that restate and clarify the Davis-Stirling Act.

AB 806

Torres

Davis-Stirling Revision Part 2

Passed Assembly 5/2.

Two-year Bill.

Support

This is the second of two bills from the California Law Revision Commission that restate and clarify the Davis-Stirling Act.

AB 818

Blumenfield

Right To Recycle

Signed by Governor.

Watch

Would establish “Renter’s Right To Recycle Act.”

SB 150

Correa

Rental and Lease Rights

Signed by Governor.

Support if amended

Would require associations to permit rentals by unit owners.

SB 209

Corbett

Electric Vehicle Charging Stations

Signed by Governor.

Oppose

Makes void and unenforceable any prohibition by an association that restricts the installation or use of an electric vehicle charging station. Requires homeowner to pay for all charges and damages associated with installation and maintenance.

SB 561

Corbett

Third Party Collections

In Assembly Judiciary.

Two-year Bill.

Oppose

Would require any 3rd party acting to collect payments or assessments on behalf of an association to comply with the same requirements imposed on the association. Makes statement of legislative intent.

SB 563

Transportation & Housing Committee

Electronic Meetings

Signed by Governor.

Support

Prohibits electronic meetings except for emergencies. Prohibits boards from taking action outside of a meeting. Requires boards to provide agendas of executive sessions. Requires boards to give notice two days before an executive session.

SB 759

Lieu

Artificial Turf

Vetoed.

Oppose

Voids provisions in governing documents that prohibit artificial turf.

Allows associations to establish design and quality standards.

ECHO Journal | January 2012

33

Directory UPDATES Updates for listings in the ECHO Directory of Businesses and Professionals, now available online at www.echo-ca.org.

New Members The Prescott Companies 111 Deerwood Road San Ramon, CA 94583 Contact: Susan Green Tel: 415-404-5647 www.prescottmgt.com Email: sgreen@prescottmgt.com

6 6(59,1* &20081,7,(6 7+528*+287 1257+(51 &$/,)251,$ 672&.721 +4 ‡ )5(0217 (59,1* &20081,7,(6 7+528*+287 1257+(51 &$/,)251,$ 672&.721 +4 ‡ )5(0217 PLE PLEASANTON ‡ &233(5232/,6 ‡ 02'(672 ‡ 6$17$ &/$5$ ASANTON ‡ &233(5232/,6 ‡ 02'(672 ‡ 6$17$ &/$5$

M & C Association Management Services provides community association management and developer services to Fremont, Pleasanton, Santa Clara, Stockton, Modesto, Copperopolis and the surrounding foothills.

Since 1990, our sole focus has been to deliver performance that enriches communities and enhances the lives of the people we serve. M & C is proud to be an Accredited Association Management CompanyŽ (AAMCŽ), which is the Community Associations Institute’s highest GHVLJQDWLRQ DZDUGHG WR PDQDJHPHQW ÀUPV

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

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

3 3OHDVDQWRQ ‡ )UHPRQW ‡ 6DQWD &ODUD OHDVDQWRQ ‡ )UHPRQW ‡ 6DQWD &ODUD S Stockton tockton 209.644.4900 209.644.4900 ‡ ‡ 0RGHVWR ‡ &RSSHURSROLV 0RGHVWR ‡ &RSSHURSROLV For management proposal information, please visit www w.mccommunities.com or email inffo@mccommunities.com 34

January 2012 | ECHO Journal

Learn to

Face

CID Challenges

at the ECHO

Wine Country Seminar

Saturday, Saturday, March 24 Sally Tomatoes 1100 Valley House Dr., Rohnert Park Seminar Agenda 8:00 a.m. Registration and Continental Breakfast 8:45 Welcome and Introductions 9:00 Preliminary Agenda Topics: Legal Update Directors’ and Officers’ (D&O) Liability Insurance Dangerous Maintenance Deferrals Disaster Preparedness Final agenda and speakers to be announced in the February ECHO Journal and ECHO seminar flyers 1:00 p.m. Adjourn

Ticket Prices ECHO Members through March 11: $49 After March 11: $59 Save $5 Register by March 11 Non-Members Fixed Price: $69

Yes, reserve _____ spaces for the ECHO Wine Country Seminar.

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

State:

Zip:

Phone:

Call (408) 297-3246 or visit www.echo-ca.org for more information.

Sponsored by ECHO

Visa/Mastercard No.

Exp. Date:

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

Netwion Edi

Beyond Privatopia $20.00 Non-Member Price: $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 Privatopia, 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 2012 Edition $17.00 Non-Member Price: $25.00

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

This well-known compact guide for operation of common interest develop ments 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.

To make it 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.

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

The Board’s Dilemma $10.00 Non-Member Price: $15.00

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.

Community Association Statute Book—2011 Edition $15.00 Non-Member Price: $25.00 Contains the 2010 version of the Davis-Stirling Common Interest Development Act, the Civil Code sections that apply to common interest developments and selected provisions from the Civil, Corporations, Govern ment and Vehicle Codes important to associations.

cial e p S rice P

Homeowners Associations— How-to Guide for Leadership Member Price: $15.00 Non-Member Price: $25.00 This well-known guide and reference is written for officers and directors of homeowner associations who want to learn how to manage and operate the affairs of their associations effectively.

FOR Board Members Reserve Fund Specialists Property Managers Unit-Owners, Accountants Lawyers, Builders

NEW

2 CHAP TERS ON OP ERATI BUDGETS NG

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

RESERVE FUND

ESSENTIALS THIRD EDITION FIFTH PRINTING JONATHAN H.

JUFFS Reserve Fund Specialist

Two experts discuss reserve fund planning and control in a refreshingly readable and exceptionally levelheaded style.

GRAHAM D.

OLIVER Board President (ret.), Reserve Fund Aficionado

INCLUDES RESERVE FUNDS FOR CONDOMINIUMS COMMUNITY ASSOCIATIONS HOAs CO-OPS MEMBER-OWNED PROPERTIES MUNICIPAL FACILITIES

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

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.

The Condo Owner’s Answer Book $15.00 Non-Member Price: $20.00 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.

2011 ECHO Annual Seminar Program Book $25.00 Non-Member Price: $35.00 This 300+ page reference book contains the presentation outlines, text and handouts from the sessions at the 2011 ECHO Annual Seminar held on June 18, 2011. It also contains vital information for association directors, such as assessment collection policies, internal dispute policies, and much more.

Dispute Resolution in Homeowner Associations Member Price: $20.00 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 Now Order Online at www.echo-ca.org

Bookstore Order Form Board Member’s Guide for Contractor Interviews $20.00 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

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 8.25%) TOTAL AMOUNT

Yes! Place my order for the items above.

Board Member’s Guide for Management Interviews Member Price: $20.00 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.

q Check q Visa q MasterCard Credit Card Number Exp. Date

Signature

Name (please print) Association (or company) Address City Daytime Telephone

State

Zip

AMOUNT

ECHO Events Calendar

Save these dates Thursday, January 5 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael Monday, January 9 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant Oakland Tuesday, January 10 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz Wednesday, January 18 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park Wednesday, February 1 Maintenance Resource Panel 12:00 Noon ECHO Office, 1602 The Alameda, Ste. 101 San Jose

February 4 Marin Seminar 8:00 a.m. to 1:00 p.m.

Embassy Suites 101 McInnis Parkway, San Rafael Wednesday, February 8 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell Friday, February 10 East Bay Resource Panel 12:00 Noon Massimo Restaurant 1604 Locust St., Walnut Creek Wednesday, February 15 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park Saturday, February 25 Central Coast Winter Seminar 8:00 a.m. to 1:00 p.m.

Hilton Santa Cruz/Scotts Valley 6001 La Madrona Dr., Santa Cruz

Save these dates for the 2012 ECHO Annual Seminar June 22, 23

Thursday, March 1 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael

Saturday, April 21 South Bay Seminar 8:00 a.m. to 1:00 p.m.

Campbell Community Center 1 W. Campbell Ave., Campbell

Monday, March 12 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant Oakland

Friday and Saturday June 22, 23 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Tuesday, March 13 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz Wednesday, March 21 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. Rohnert Park, CA Saturday, March 24 Wine Country Seminar 8:00 a.m. to 1:00 p.m.

Sally Tomatoes 1100 Valley House Dr., Rohnert Park

Regularly Scheduled ECHO Resource Panel Meetings Resource Panel Maintenance North Bay East Bay Accountants Central Coast South Bay Wine Country Legal 38

January 2012 | ECHO Journal

Meeting First Wednesday, Even Months First Thursday, Odd Months Second Friday, Even Months Second Monday, Odd Months Second Tuesday, Odd Months Second Wednesday, Even Months Third Wednesday, Monthly Quarterly

Location ECHO Office, San Jose Contempo Marin Clubhouse, San Rafael Massimo Restaurant, Walnut Creek Francesco’s Restaurant, Oakland Pasatiempo Inn, Santa Cruz Buca Di Beppo, Campbell Eugene Burger Management Co., Rohnert Park Varies

Learn to

Face

CID Challenges

at the ECHO

Marin Seminar

Saturday, February 4, 2012 Embassy Suites, 101 McInnis Parkway, San Rafael Seminar Agenda 8:00 a.m. Registration and Continental Breakfast 8:45 Welcome and Introductions—Oliver Burford 9:00 Legislative and Case Law Update—David F. Feingold, Esq. Learn what Sacramento has been up to in 2011 and what you need to know for 2012.You will also find out about those association conflicts and disputes that ended up in the courts and pick up valuable tips in the process!

9:45 Hot Topics: Rental Restrictions, Smoking, Emails, Meetings and More—Glenn Youngling, Esq. What are the burning issues facing your association? How are you going to deal with the changes in the law, and other issues that are hot in 2012? We guarantee that we will hit your hot topic, and that you will find you are not alone.

10:30 Break 10:50 Fiduciary Duty in Hard Times, A Participatory Session—Wanden Treanor, Esq. The poor economy persists, values in common interest developments continue to decline and the problems for association directors arising directly from the stormy financial climate have increased. We will present a hypothetical “Board Packet” to the audience and in this quick paced interactive session, you will work with a fictional board and learn new tools to handle the issues facing your community.

12:15 Q&A Session—All Speakers The speakers will answer your questions, and even some you did not realize you had.

12:35 Drawings for Door Prizes and Close 1:00 Adjourn

Ticket Prices ECHO Members through January 22: $49 After January 22: $59 Save $5 Register online by January 22 Non-Members Fixed Price: $69

Yes, reserve _____ spaces for the ECHO Marin Seminar.

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

State:

Zip:

Phone:

Call (408) 297-3246 or visit www.echo-ca.org for more information.

Sponsored by ECHO

Visa/Mastercard No.

Exp. Date:

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

ECHO Honor Roll

About

ECHO Honors Volunteers Beth Grimm 2011 Volunteer of the Year ECHO Resource Panels Accountant Panel Richard Schneider, CPA 707-576-7070 Central Coast Panel John Allanson 831-685-0101 East Bay Panel Beth Grimm, Esq., 925-746-7177 Mandi Newton, 415-225-9898 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 San Francisco Panel Jeff Saarman, 415-749-2700 South Bay Panel Toni Rodriguez, 408-848-8118 George Engurasoff, 408-295-7767 Wine Country Panel Maria Birch, CCAM, 707-584-5123

Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry Bowles Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Geri Kennedy, CCAM Wanden Treanor, Esq.

40

January 2012 | ECHO Journal

SF Luncheon Speakers John Allanson Jeffrey Barnett, Esq. Tyler Berding, Esq. Ronald Block, PhD. Sandra Bonato, Esq. Wendy Buller Doug Christison, PCAM, CCAM Karen Conlon, CCAM Rolf Crocker, CCAM Ross Feinberg, Esq. David Feingold, Esq. Tom Fier, Esq. Kevin Frederick, Esq. John Garvic, Esq. Beverly Gordon, CCAM Sandra Gottlieb, Esq. Beth Grimm, Esq. Brian Hebert, Esq. Roy Helsing Stephen Johnson, CFP Garth Leone Nico March Kerry Mazzoni Thomas Miller, Esq. Larry Pothast Larry Russell, Esq. Steve Saarman Jim Shepherd Nathaniel Sterling, Esq. Debra Warren, PCAM, CCAM Steven Weil, Esq. Mark Wleklinski, Esq. Glenn Youngling, Esq.

Seminar Speakers June 18, 2011 ECHO Annual Seminar Julie Adamen John Allanson Jeffrey Barnett, Esq. Tyler Berding, Esq. Jacquie Berry Sandra Bonato, Esq.

Jeffrey Cereghino, Esq. Timothy Cline Paul P. Cordova, PE Alan Crandall Bradley Epstein, Esq. Lisa Esposito, CCAM John Garvic, Esq. Beverlee Gordon Sandra Gottlieb, Esq. Patrick Holman Linnea Juarez, PCAM, CCAM David Kuivanen, AIA Kerry Mazzoni Evan McKenzie, Esq. Steven Saarman Brian Smith Deon Stein, Esq. Wanden Treanor, Esq. Steven Weil, Esq.

Recent ECHO Journal Contributing Authors October 2011 Tyler P. Berding, Esq. Steven Weil, Esq. November 2011 Timothy Cline, CIRMS Beth A. Grimm, Esq. Pete Pearson Paul Windust, Esq. Glenn H. Youngling, Esq. December 2011 Pierce Gore, Esq. Michael Hardy, Esq. Stephanie J. Hayes, Esq. Kerry Mazzoni Roger Patching

ECHO What is ECHO? ECHO (Executive Council of Homeowners) is a California non-profit corporation dedicated to assisting community associations. ECHO is an owners’ organization. Founded in San Jose in 1972 with a nucleus of five owner associations, ECHO membership is now 1,525 association members representing over 150,000 homes and 325 business and professional members.

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.

If your company wants to reach decision makers at over 1,450 homeowner associations, you can become an associate member and join 350 other firms serving this important membership.

Benefits of ECHO Membership • Subscription to monthly magazine for every board member • Yearly copy of the Association Statute Book for every board member • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues HOA Size 2 to 25 units 26 to 50 units 51 to 100 units 101 to 150 units 151 to 200 units 201 or more units Business/Professional

Rate $120 $165 $240 $315 $390 $495 $425

ECHO Journal Subscription Rates Members Non-members/Homeowners Businesses & Professionals

$50 $75 $125

How Do You Join ECHO? Over 1,800 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for membership, call ECHO at 408-2973246 or visit the ECHO web site (www.echo-ca.org) to obtain an application form and for more information.

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2011 Article Index Continued from page 31

Dangers of Hiring Unlicensed Contractors— Smith, Esq., Thomas, June Carbon Monoxide Detectors Now Required in All Homes—Strom, Esq., Lise K., July Did You Record That Judgment?—Windust, Esq., Paul W., A ugust Killer Weed in the Common Area?—Windust, Esq., Paul, November Assigning Responsibility for Maintenance and Repair: The Association or the Owner?— Youngling, Esq., Glenn H., November Legislature Targets Board Actions By Email— Hayes, Esq., Stephanie J., December Delegating Board Authority—Hardy, Esq., Michael, December Notice Requirements for California HOA Meetings—Gore, Esq., Pierce, December Legislative 2010 Statute and Case Law Update - Part 1: Legislative Developments—Barnett, Esq., Jeffrey A., January 2010 Statute and Case Law Update - Part II— Barnett, Esq., Jeffrey A., February

2011 Year End Legislative Update—Mazzoni, Kerry, December Maintenance Planning and Paying for Major Reconstruction—Powell, Teresa and Seifert, Brian, February Eco-Friendly Landscaping—Ebertowski, Gene, March Spring Into Maintenance—Saarman, Steve, A pril Are You Getting Your Maintenance Dollar’s Worth?—Tippett, Richard, May It’s the Season for Paving—Dean, Burt, June A Primer on Painting—Muilenburg, Mike, June How Is Your Maintenance Plan Affecting Your Property?—Brown, Regan and Greening, Mark, A ugust Don’t Waste Your Existing Assets—Tippett, Richard, A ugust Causes and Cures of “Hot Spots” in Turf— O’Shaughnessy, Judy, Sept ember The Big Surprise: Major Reconstruction Projects in Community Associations—Berding, Esq., Tyler P., O ct ober Comparing Painting Proposals—Scroggins, Kevin, December

Ace Property Management . . . . . . . .15 Affirmative Management . . . . . . . . .18 American Management Services . . . .9 Angius & Terry . . . . . . . . . . . . . . . . .3 A.S.A.P. Collection Services . . . . . . .20 Association Communications (ACI) . .29 Association Reserves . . . . . . . . . . .18 Berding | Weil . . . . . . . . . . . . . . . . .44 Collins Management . . . . . . . . . . . .15 Common Interest Management . . . .31 Community Management Services . .12 Compass Management . . . . . . . . . .13 Cool Pool Service . . . . . . . . . . . . . .21 Cornerstone Community Mgmnt . . . .12 Ekim Painting . . . . . . . . . . . . . . . . . .8 First Bank Association Bank Srvcs . . .8 First Bank Association Bank Srvcs . .21 Flores Painting . . . . . . . . . . . . . . . .34 Helsing Group, The . . . . . . . . . . . . .18 M & C Association Services . . . . . . .34 Massingham and Associates . . . . . .25 Master Plumbing & Sewer . . . . . . . .43 Mutual of Omaha Bank . . . . . . . . . .14 PML Management Corp. . . . . . . . . .14 Pollard Unlimited . . . . . . . . . . . . . .24 R. E. Broocker Co. . . . . . . . . . . . . .15 Rebello’s Towing Service . . . . . . . . .19 REMI Company . . . . . . . . . . . . . . . .21 Saarman Construction . . . . . . . . . .20 Statcomm . . . . . . . . . . . . . . . . . . .24

ECHO Journal | January 2012

41

New election rules: $500 In today’s economic crisis, there may be some items that associations can cut to reduce costs. ECHO membership is not one. Let’s face it, educated board members are better fiduciaries, which helps them to avoid costly law suits and possibly personal liability.

ECHO is the premier resource in California for board member education. ECHO offers new articles each month with practical and easy to understand advice about current California requirements, and what may be on the horizon. ECHO staff is available by phone or E-mail to answer members’ questions about association problems or to recommend competent professional services when necessary.

And with discounted member rates at more than a dozen educational events throughout the year, ECHO is simply the best educational resource for California homeowners.

Avoid Litigation Each year, as a member benefit, ECHO sends every board member a copy of the updated Community Association Statute book. Every issue of the ECHO Journal and every seminar examine one or more aspects of compliance with association law, because one of the major causes of expensive litigation is ignorance of the law.

Mailing ballots: $200 Make Better Financial Choices Many associations struggle to understand reserve funding requirements and strategies, the benefits and disadvantages of using special assessments, proper collections practices, and even how to determine what components the association is required to maintain.

At a time when wise financial planning is essential, ECHO members have access to a wealth of articles about reserve funding, budgeting, insurance, collections, and much more.

Fight Costly Regulation Every year, Sacramento legislators introduce more legislation that confuses the job of California board members and increases the costs of compliance. ECHO is committed to fighting unnecessary regulation in California and promoting the interests and welfare of common interest developments.

Hire Competent Professionals ECHO offers a variety of articles and publications to help members evaluate their service providers, including questions to ask prospective management firms and contractors. All ECHO Journal articles are available to members at no cost, and publications are sold to members at a discount.

Avoiding a lawsuit: Priceless.

Spend a Little, Get a Lot The cost of ECHO membership is minimal. In a worsening economy, associations are looking to cut big expenses from their budgets. Yet, ECHO membership is as little as 25¢ per unit each month. For that small cost, here’s what every board member receives as part of being a member of ECHO: • A subscription to the ECHO Journal • An annual copy of the current Community Association Statute book • Unlimited access to ECHO’s library of past articles • Telephone consultations with ECHO staff about their problems • Reduced fees for ECHO events • Discounted prices on publications • And much more…

In These Tough Economic Times, ECHO Membership is a Necessity As the only California organization devoted exclusively to board member and homeowner education, ECHO is a one-of-a-kind resource that your association can’t afford to lose.

We service throughout Santa Clara and San Mateo counties with a record for honest, experienced service, quality work, and professional qualifications.

If you have boilers, booster pumps, sump pumps, hot water pr problems, oblems, deteriorating sewers, small line camera inspections, water softener break break downs, or late night emergencies, give us a call. W We e pr provide ovide the support managers and boar boards ds need to maintain and upgrade their complex plumbing systems.

877-691-0400 MasterPlumbing.net STRAIGHT TALK TALK AL

HONEST WORK

JOB DONE