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Preservation is a Priority at Landmark Property F E AT U R E S

Mastering Master Associations Board Member Conflict of Interest Saving Green Going Green Legislative Update Chicago Elevator Update Commonly Asked Questions for Community Associations

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Coming Next Issue‌ 1418 Lake Shore Drive Condominiums, is the first in Chicago to ban smoking from the entire building. Next issue will also include a special legislative update and state of the industry report.

table of contents COVER STORY


03 Preservation is a Priority at landmark Property By David Mack

13 Board Member conflict of interest by Katharine W. Griffin


15 saving Green Going Green By David Mack


06 Mastering Master Associations By David Mack

18 editors Message 19 directory Advertising industry Happenings Compiled by Michael C. Davids & Sherri Iandolo 26 legislative Update 26 chicago elevator Update 27 diversey Harbor & solar legislation BOARD BASIC

28 commonly Asked Questions for community Associations By David Mack EVENT HIGHLIGHTS

34 Mcd Golf invitational 36 condo lifestyles state of the industry






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cover story

By David Mack

Preservation is a Priority at Landmark Property All buildings need maintenance and restoration work. it’s one of the most important aspects of any community association’s operations. Building restoration programs at landmarked buildings and those along lake shore drive can take on even more importance.


he residential towers of the 860 Lake Shore Drive Trust are no exception. With preservation as a priority, the trustees at 860 Lake Shore Drive just spent $10,000,000 recreating the building using modern techniques to make the property look as good as when it was built in 1950. Located in Chicago’s Streeterville neighborhood on the Near North Side, the property is close by Northwestern University and the Lake Front and less than ½ mile east of the

shopping hub of North Michigan Avenue. Each of the two buildings is twenty-six stories in height and was constructed in the period of 1949 to 1951 by the late developer Herbert Greenwald. Mies van der Rohe Design The two structures were the first glass and steel high rises designed by renowned architect Ludwig Mies van der Rohe. “They are recognized as the template for all his sub-

sequent high rise buildings and are considered one of the earliest and most important examples of modern steel and glass high rise construction,” said Bob Levin, President of management company Wolin-Levin, Inc., which has managed the property for fifteen years. The buildings’ design significance was one of the primary factors that drew attorney Marc Boxerman, who is also one of the trustees of 860, and his wife to the location some six years ago from a rental they occupied about a half mile away. Their, “architectural and historical legacy initially attracted us to 860-880,” Boxerman said, adding, though, that, “other considerations were important too, including its location and the size and layout of our apartment.” Notable Features The notable features of the buildings, which combined, contain two hundred thirty eight apartments, include a black matte painted steel, glass and aluminum exterior,


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lobbies fronted on three sides by floor to ceiling windows connected by thin stainless steel mullions as well as a similar floor to ceiling fenestration layout in the units. “The buildings sit on a plinth of travertine marble that forms a plaza around the towers,” said Boxerman Plaza and Lawn The plaza forms the main outdoor space at the complex, but grass abounds. “We are one of the few downtown properties to have a substantial front lawn,” said Levin. For some time, however, water tended to puddle where the grass and marble paving adjoin each other but the problem was remedied in the recent capital improvement program (described more fully below). The work included,” re-grading the lawn and installing a drainage swale near the travertine edge to prevent water from ponding. The modifications have been successful.” Because it was the first of its kind designed by van der Rohe, the 860-880 buildings have achieved both national and local recognition. It was placed on the National Register of Historic Places in 1980. Eighteen


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years later Chicago gave added acknowledgement to the property’s unique nature. “Our buildings received landmark status from the City in 1998 and the designation covers the front lawn as well as the plaza, exterior of the building, the entrance and linking canopies and lobbies,” said Boxerman. More recently, the building and trust received the 2010 Chicago Landmark Award for Preservation Excellence from the City of Chicago, Office of the Mayor. Resident Demographics The demographics of the complex are, “all over the place,” according to Levin. But it is home to many professionals in building related fields. “It is a mecca for architects and interior designers (who) love to live in a ‘Mies’ building.” There has been good continuity among personnel assigned to handle 860 by WolinLevin and the staff at the property. “The property supervisor has been the same for fifteen years and the site manager the same for ten years,” said Levin, and they have come to know the buildings and long term residents quite well thus enabling them to do their jobs


efficiently. In total the office staff consists of three people and there are ten doormen working different shifts along with nine janitors/maintenance personnel. Unique Type of Ownership The 860 Lake Shore Trust, the official ownership entity, is neither a condominium nor a cooperative although it has attributes of the latter. Residents, “are technically tenants with a perpetual lease until they sell,” explained Levin. “The lease and trust agreement are similar to the structure of a cooperative.” Monthly payments under this agreement can be considered as rent. Parking spaces can, however, be leased in perpetuity by purchasing garage shares as with the apartments. Parking spaces are sold separately by the residents. They are located in an underground garage managed by an outside entity. “Spaces are deeded” said Levin, although not all residents own their parking spaces. Those who don’t own can rent one for a fee. There is no parking leased to non-occupants. Board Composition The Board of Trustees of the 860 Lake

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cover story

Because it was the first of its kind designed by van der Rohe, the 860-880 buildings have achieved both national and local recognition.


Shore Trust consists of five members who are managing trustees, different nomenclature than is used for conventional cooperatives or condominiums. And all have equal status without designation of officers. “There is no president or treasurer,” said Levin. “The five trustees share equal responsibilities and, in fact, trade off when presiding at meetings.” Terms are staggered and are either one or two years by a formula in the trust agreement. Trustees change periodically. None on the current board have served over five years. Interest amongst the residents in running for the board varies. Boxerman has enjoyed his tenure as a trustee. He has served because he cares about what happens to the buildings, which are both his home and an investment. “It has been a challenging but rewarding job, particularly the three year period in which we planned and implemented the capital improvement project which ended last year.” He is contemplating running again for the board but still has one and one-half years left on his current term. His intent to stay involved with administering the property is a solid plus for the association since there has

been a decline in interest amongst other residents to stand for election to the board. “In the past two years, fewer people have been interested and we only had as many candidates as open seats.” Board and Management The board and management have worked together effectively to keep the appearance of

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the buildings up to a high standard of excellence, and operations running smoothly. “The trustees and management have had an enduring positive relationship,” said Levin. “This has been reflected in the outcome of major accomplishments for the ownership.” The board handles most of the business of the organization itself rather than relying continued on page 32

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By David Mack

to Jordan Shifrin, Not true, aaccording principal in the law firm of Kovitz Shifrin Nesbit. “The term master association is really a misnomer,” said Shifrin. “Years ago the more common term was umbrella association, which does not infer any superiority or power. I have seen master boards dictating terms to residential (underlying) boards when they had no authority to do so.” (However because of its generally accepted usage we will use the word master in the context of this article.)

Mastering Master Associations the words “Master Association” would seem to imply that an association described as such holds a dominant position, in some way, over the underlying associations that comprise it.

Can Lead to Conflict This misinterpretation of the relationship can sometimes lead to conflict such as a dispute between the master and a sub-board over, for example, who is responsible for certain maintenance chores or whose architectural controls govern, Shifrin pointed out. “If the governing documents (of the 2 associations) are not crystal clear, then disputes arise over who does what. Sometimes it is a power struggle (and) sometimes it boils down to money as to who is paying for, say, the new bushes at the building (property) line.” (More on causes for disagreement later.) Why Master Associations Exist What are the reasons for there to be master associations in the first place? What brings two or more condo or town home associations together in an alliance overseen by a separate board of directors? “In nearly all instances, it is the common area recreational and flood control installations that provide the bond for these associations,” said Tracy Hill, President of Property Specialists Inc. (PSI), which currently manages 5 master associations with sub-associations ranging from five to seven and the total number of homes from 600 to 1200. The extent of PSI’s involvement varies from location to location, with the firm managing all associations in two cases, varying numbers in two others and only the master in one. Another connecting link between associations, Hill has found, is in, “commonly used web sites (that) are shared to provide a community wide communications vehicle.” Parking Lots and Landscaping Samuel Shoshoo pointed also to common amenities such as parking lots and landscaping as connecting links between separate associations in a master scheme. The company, of


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BoArd BAsics

which he is President, Distinctly Chicago manages four master associations as well as all four of the underlying associations that comprise each, all of which were generated by the same developer. He has been involved with them since the marketing phase and transitioned to post construction management. “The developer was our original client (and) made us part of the turnover,” said Shoshoo. Streets, Lighting or Roads To the above mix can also be added, “property that is essential to all of the residents such as the streets, lighting or roads,” said Lou Lutz, of Legum & Norman Mid-West, who has been involved with master associations going back to the conversion of Sandburg Village to condominiums some twenty years ago. More recently he has supervised Four Lakes Homeowners Association in Lisle, which has eight sub-associations, Also, “many times the master associations (provide) necessary services such as snow plowing and security,” Lutz noted. Economies of Scale Aside from the common amenities or

physical features that are the general basis for two or more associations to unite under a common overlying master association, another important reason is economies generated by scale. “Master associations use their massive buying power to save on items such as security, pool companies and landscaping,” said Mike Baum, President of Baum Property Services, which manages five master associations, including White Eagle Club HOA, which has been characterized as one of the premier master associations in the Midwest. Baum Property Services maintains a branch office in one of the master associations his company manages. “We do manage some sub-associations in most of the master associations we are involved at, Baum added. Architectural & Rules Enforcement Andrea Sorgani of Alma Property Management cited the shared interest in the need to assure reasonably similar exterior property treatment and community oriented behavior by residents of two or more adjacent or nearby associations as two factors that unite such associations under a common master.

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“Architectural enforcement and rule enforcement,” are important for appearance purposes and harmonious cooperative living and master associations can apply the same restrictions in the use of common features to each of their separate underlying associations to achieve these objectives. Alma manages three master associations varying in size from 408 to 1306 units. In one master arrangement it manages all of the sub-associations but in the other two that role is shared with other management companies. Multiple Boards In a master/sub-association combination there are, of course, multiple boards. Board members of the master association come from the underlying organizations and sometimes unit owners serve on both their home boards and that of the master, which Baum sees as a good arrangement. “Many board members serving on the master also serve on their subassociation boards so you do get some very dedicated individuals on the master board,” he said. Generally, though, it has been his experience that the underlying boards are more

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cohesive and effective in their operations than their master boards. “Board members who live in an (association) together are probably a bit closer to the association than those serving on the master board.” Shoshoo has found that master board members, who also serve on their underlying decision making bodies, tend to be more concerned with issues affecting their home turf rather than matters that impact the communal arrangement. They, “want to stay focused on their specific association’s needs,” said Shoshoo, “and have a tendency to not see the bigger picture on decisions that affect the entire property.” As a result, decision-making is more drawn out, and, “we have to guide it along,” Master Board Challenges Hill has observed that the members of master boards have to work harder than Directors from boards down the line. “In nearly all cases the master board members have a tougher job,” he said, pointing out that it is their task to integrate the needs of all of the underlying associations while maintaining

their fiduciary duty to the master. “They tend to take longer to come to conclusions but they are no less conscientious in reaching the correct decisions within the political reality.” Conscientious Board Members It has been Sorgani’s experience that board members of master associations are generally at least as conscientious toward their broader roles as the directors of the sub associations are about their narrower interests. “I find they are very much interested in the overall community,” she said, and in some cases actually are more business oriented than directors down the line who may not be as strict in the operating practices of their home associations, a not uncommon criticism of many directors who overlook the need to run their associations as businesses. Lutz perceives master board members as actually being more conscientious than their counterparts from the underlying associations because they have to be responsive to those counterparts as well as all the unit owners from all the associations on issues that affect the overall complex. In attempting to fulfill

their responsibilities, they have a much broader community to deal with. “There can be more critics and communication to residents is more difficult since there may not be as many expedient ways to communicate,” he said. “In many instances the only way to communicate to residents is through (their) member associations,”, which is a slower process than direct contact. Disagreement and Dissension While board members of master associations do work cooperatively on most issues, there are some matters that can bring about disagreement and dissension between them, especially when it comes to spending money that benefits some but not all of the sub-associations equally. Hill cited as an example the maintenance and care of such things as lake and nature areas. Master board members from associations close to these amenities, which provide a more attractive view for them than for the other associations not in clear line of sight that see these areas only for their rain dispersal value, typically will want to spend more on their appearance. Often a wetland

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BoArd BAsics

consultant or local official must be sought to broker a compromise between board members by helping devise the most environmentally and economically sound approach that all can live with, although not necessarily happily. “This type of disagreement is often best handled by bringing in outside (experts) to force the decision thus giving all board members political cover with their (individual) association membership, who are the ones who end up paying for what needs or is decided to be done,” explained Hill. Sorgani has run into the same money controversies at the master associations her firm is involved with. “The typical issue for dissension is spending money on areas which do not affect their (dissenters) communities directly,” she said. Lutz pointed to the same cost vs. benefit problem that can be cause for in-fighting on a master board because its members, “may believe their responsibility is to be an advocate for the member association that elected them,” and, therefore, to vote against spending money that does not provide a community wide benefit, a misguided approach to good

governance in master association. He is adamant that, “there should not be dissension between (master) board members because of the needs of any underlying association. (They) have a fiduciary responsibility to serve in the best interests of the members of the master association, not in the best interests of a member association.” Dual Assessments Baum has found that the burden of dual assessments is often a point of contention on master boards as their directors tend to reflect the views and attitudes of the members of their home associations. Having to pay two sets of dues aggravates some unit owners, especially if there is no benefit in anteing up for them or it is not clearly apparent, as the other managers have pointed out above, “The sub-association members sometimes feel they do not get their money’s worth from the master,” he said, noting, too, that some claim not having been told they had to also pay master dues when they bought their units. Their home association neighbors on the master board echo these sentiments and,

therefore, will be reluctant spenders and try to keep the second assessment at a minimum. Assessment Collection Issues It’s a matter of who is responsible for collecting dues/assessments that Shifrin pointed to as something that can impede the relationship between master and sub-associations. “Is the master association collecting everyone’s assessments and remitting their (each underlying entity’s) share or (do) the (individual associations) collect both and remit the (appropriate amount) to the umbrella or does each assess separately and the owners get two bills?” he said, noting that how this is handled is determined by what’s in the governing documents of the associations and everyone has to be satisfied with and accept the way collections are to be processed. But not all will be happy with the arrangement. And further complications can arise relative to who absorbs the loss of assessments in foreclosures or who can first collect if there are proceeds to distribute following a bankruptcy. Shifrin has also seen the potential for dissension between the master association and

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those underlying it over the banning of residents from using recreational facilities if they are delinquent in their assessments/dues. There has to be prior agreement worked out, for example, as to whether being current in the master assessments but delinquent in paying them to his home association is grounds for barring a homeowner from using a pool under the master’s control. “It is often surprising how these disputes escalate,” he said. Multiple Managers As previously noted, those firms that manage master associations do not always manage all of the underlying organizations. Multiple management companies often operate within the framework of one master. Does that mixed management in any way have a negative impact on how a master board operates since its directors come from different home management scenarios? Hill thinks not. “Generally speaking the master board members, though they are drawn from associations that have different managing agents, do not bring differing views of the goals the master association is to pursue that


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are based upon managing agent differences,” he said. “I have not seen any major variances in the efficiency of single vs. multiple management company situations.” Shoshoo would prefer not to be a participant in mixed management in master associations to avoid the potential for conflict between managers and between board members at the master level who might bring different ideas on running the board of the master that are generated by their disparate home agents. Although he is not burdened by such an arrangement in his present master association commitments, he said,” I have been in instances in the past where I have worked like this and it never is successful. We require that if we are being asked to manage the master association we also manage the underlying (associations).” Sorgani believes, too, that decision making by the master board can be adversely affected by shared management of the subentities., but, “only if the different management companies are not in sync with following the master association’s policies,” adding, though, “if the management compa-


nies involved are there to help (all) the associations and not just collect their monthly fee, harmony does and can exist.” In such situations where management is blended and the various firms may have occasionally clashing policies, it is up to the master association’s management company to bring about a reconciliation of any differences that may be impediments to full cooperation between all of the firms. Baum looks at this situation of mixed management from the perspective of a manager who wants to find the most efficient way to facilitate all of the associations working together and his focus is mainly on saving money by paring the cost of operation of all of them, which can be achieved more effectively by one company. “There is no question that there are economies of scale which lead to lower costs and improved communications between the master and sub-associations when (all) have the same management company,” he said. In his view, this economy of scale is sacrificed with the participation of multiple managers. While Lutz doesn’t believe that any sig-

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BoArd BAsics

nificant problems are caused by having more than one management company functioning in a master association development, he feels that having only one firm in charge is likely to be more efficient. Like Baum he sees there can be cost savings in arranging for some kinds of contracts or agreements through the offices of a single manager. “One management company can coordinate the purchasing power of all the underlying associations for certain services that all the associations purchase but may not be an appropriate master association expense, such as insurance, utilities or cable television,” Lutz said.

lems, the master board members will have a mutual bond in having gone through a grueling experience, (which) should make their on-going decision making much easier.” Shoshoo, too, believes that developer dislike can facilitate cooperation at the master board level in communities where more than one has put up sticks and bricks. : “We have noticed,” he said,” that whether there are one, two, three or four developers on a project, everyone blames the developers so that is usually a common ground at turnover and in

solving problems.” Incomplete Master Associations Sometimes a planned master/sub-association community is not completed, a phenomenon that occurred even more in the last few years due to the near collapse of the housing market as the result of the sub-prime mortgage scandal that devastated the U.S. economy. That led to the problem in some communities of having fewer unit owners paying assessments to cover the operation of the master association’s amenities. “What I

Multiple Developers It is not uncommon that more than one developer will have built the underlying associations that are eventually collected under the auspices of a master association to deal with common issues and amenities. Can that variation have any bearing on how well the master association board handles the communal matters? “Not unless the quality of construction or the management in a subassociation is poor,” said Baum, and those problems drift upward to impede decision making by the master board and broadens its scope of concerns it would have had under more normal operating conditions. Sorgani holds essentially the same opinion as Baum. “It depends on construction issues,” she said, with complications being more likely to arise for the master board if developers built different products and, “there are major differences in quality or unit amenities between phases.” Hill elaborated on the same circumstances Baum and Sorgani related as a result of multiple developers in the same master complex. As the latter two already pointed out, differences in price, style and quality of construction can be cause for complications at the master board. “Each of these can affect the initial organization of the master board as each underlying association is dealing with construction problems and quality questions with each separate developer,” he said, adding further that the situation for the master directors can be made even more problematical where there is a separate developer who builds the common amenities and issues arise to resolve. “In the end, although the beginning year or two will be difficult for the master board to address its own issues while the members are also dealing with their own association’s prob-

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photo: Balanced Environments

Shown here is Tall Grass HOA managed by Baum Property Services

have found is that the clubhouses (as well as other amenities such as pools) are built first so that they can serve as a sales office,” said Baum and, “the clubhouse is decked out to impress prospective purchasers, which is expensive.” He cited one association complex with which he is involved where the developer stopped after sixty-five townhouses but already had constructed a clubhouse with indoor pool, work out area, offices and more. “A community with those kinds of amenities typically needs 300 to 400 owners paying dues

to make this amenity affordable.” Hill has encountered the same dismal scenario on several properties in the past three years that has had a serious negative impact on the early homebuyers and the master and underlying boards. “In nearly all instances of partial construction the homeowners living in the communities have had to accept lower expectations of what their home purchases have provided them with in terms of amenities and the experience of living in a completed community,” he said. In some situations amenities were not completed, in others they were but their use has been curtailed (e.g. clubhouse closed) because the master association could not afford to operate them as the result of less than expected revenues from the

assessments being paid by a smaller population of homeowners than anticipated. Other Developer Issues When developers do not complete their plans in a master association complex, Shoshoo has found that confusion can arise among master board members about which organization would have to pay the legal costs in a lawsuit. Master board members from the different sub-associations may have different problems with their developers but the master board’s financial involvement in fronting or bearing legal expenses is normally only in connection with the incompletion or inadequacy of common features or amenities. A lawsuit over a roofing problem at only one sub-association is the concern of that one association alone, not the master. On the master board, directors will, “want those who feel they need to seek counsel to cover those expenses separately,” Shoshoo said. “This is where we become more of an educator to everyone on how master associations work, I do believe there is a lot of misunderstanding across the board on this.” Y


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s P e c i A l F e At U r e

By Katharine W. Griffin, Kovitz Shifrin Nesbit

Board Member Conflict of Interest ISSUE: A question that frequently comes up for an association Board of directors, can a director on the Board vote on matters before the Board (Association issues) when the director has been named as an individual defendant in a lawsuit involving the association or when the director is a named plaintiff in a lawsuit against the association? the brief answer is, no. it may be argued that a director may not vote on an issue in which he is either “not disinterested” or has a “personal interest.” ILLINOIS STATUTORY REQUIREMENTS: section 108.60 of the illinois General not For Profit corporation Act of 1986 discusses director conflict of interest. specifically subsection (a) provides: “if a transaction is fair to a corporation at the time it is authorized, approved, or ratified, the fact that a director of the corporation is directly or indirectly a party to the transaction is not grounds for invalidating the transaction.”

subsection (c) provides that: “the presence of the director, who is directly or indirectly a party to the transaction described in subsection (a), or a director who is otherwise not disinterested, may be counted in determining whether a quorum is present but may not be counted when the board of directors or a committee of the board takes action on the transaction.” Further, subsection (d) provides that: “For purposes of this section, a director is ‘indirectly’ a party to a transaction if the other party to the transaction is an entity in which the director has a material financial interest or of which the director is an officer, director or general partner.” Unfortunately, no relevant illinois case law was discovered which interpreted section 108.60. However, it may be argued that subsection (c) of section 108.60 provides two separate circumstances under which a director may not take action and/or vote. one situation is where the director is directly

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or indirectly a party to the transaction, i.e. a lawsuit involving the association where an issue must be voted on concerning the lawsuit. the second situation is where the director is otherwise not disinterested. A disinterested director arguably has no interest or an insignificant interest in the action at hand. if a director is “otherwise not disinterested” that director likely has some interest that may be significant to the action at hand and he may not be counted when the board takes action on that transaction in which he has an interest. ILLINOIS CASE LAW: in general, illinois courts have held that “duties imposed upon a director of the corporation as a fiduciary require him to manage the corporation with undivided and unqualified loyalty, and prohibit him from profiting personally at corporate expense or permitting his private interests to clash with those of his corporation.” See Weiss Medical Complex, Ltd. v. Kim, M.D., 87 ill.App.3d 111, 115, 408 n.e.2d 959, 963, 42 ill.dec.250, 254(1980).

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More specifically, where directors directly benefit and/or create a business opportunity as a result of their position in the corporation, a conflict of interest results which can harm the corporation. See Kerrigan v. Unity Savings Association et al., 58 ill.2d 20, 317 n.e.2d 39 (1974). in Kerrigan, plaintiff alleged that the defendants (certain directors on the Board) appropriated a business opportunity for their own benefit which properly belonged to the corporation and this among other actions produced a conflict of interest. Id. at 24. in concluding that a conflict of interest existed, the court surmised that “directors are not to be placed in a position where their own individual interests might interfere with the performance of their duties to their corporation.” Id. at 30.


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As for whether voting on an issue in which the director is already involved or has an interest is considered a conflict of interest, illinois courts have held that, “…a director who has a personal interest in a subject under consideration is disqualified to vote on the matter and may not be counted for the purposes of making a quorum.” See Weiss at 115. Further, while “personal interest” is a question of fact, the court in Weiss concluded that directors were clearly disqualified to vote on the removal of the restrictive covenants based on


evidence which demonstrated that the four directors had a personal interest in the matter under consideration as they were the intended beneficiaries of the resolution to delete the restrictive covenants. Id. at 115-16. CONCLUSION: While illinois case law is not prevalent on the issue at hand, based on a combination of illinois statute, case law and general fiduciary duties, a clear argument can be made that directors involved in litigation against the association may not vote in matters involving the litigation. From the director’s perspective, it would be a mistake to try and circumvent and disregard the potential conflict of interest and stand the risk of personal liability. erring on the side of caution, the director should always abstain. Y

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s P e c i A l F e At U r e

By David Mack

Saving Green Going Green Going green is becoming more popular as a strategy to save money.


t was the subject of a recent ACTHA seminar attended by representatives of a number of community associations. A panel consisting of Todd Walter of Reserve Advisors, Inc., John Porterfield of eZing Inc. and Joseph Pizzato of Landworks, Ltd. offered advice and suggestions on how to cut operating costs by adopting sustainable products and services. Environmental & Social Factors Walter identified one problem that is common to all associations- the need to eventually replace roofs. Generally, “it’s been primarily economic factors that determined which proposal (from contractors) to take,” he said, but he added now more than cost should be considered. Environmental and social factors should also be weighed when making this decision. A board might want to replace an existing roof with one that is highly reflective to reduce summer cooling costs or to select a landscaped topside for water control. “These are not new ideas,” Walter said. “What’s different is the focus on a holistic approach- how does the roof decision affect the rest of the property?” Long-Term Costs He also cited the replacement of windows, suggesting that the use of units that allow for increased passive heating or daylighting- greater use of the sun’s heat or light versus non-natural sources. “Think about how replacing one element affects other elements in a building in the green decision making process,” he reiterated, noting that what ultimately can drive a decision on what to do is a life cycle cost analysis. Under this procedure, not only the installation costs are evaluated but also the long-term costs associated with utility consumption and maintenance. It will cost more for better windows or roof embellishments but in the long run those initial installation costs can be recouped through offsetting savings in utility and upkeep expenses. That which, “has more favorable life cycle aspects is best for your association.”

Environmental and Economic Design (LEED) classification system developed by the United States Green Building Council (USGBC). Of interest to associations is the LEED category for Existing Buildings - Operation and Maintenance, the only designation that a building that is up and running can strive to achieve. There are a number of factors that are considered when an application for this certification is evaluated by the USGBC. The primary ones are: Materials in. A sustainable purchasing policy should be in effect that results in the acquisition of green products for repair and replacement. Materials out. A building should have a solid waste management policy that includes the collection of recyclables and a reduction in the amount of waste and toxins taken to landfills. Administration. This involves the logistics of running a high performance building and may require the green education of the property manager and/or building engineer. Green Cleaning. Requires the use of environmentally friendly cleaning products. Site Management. Includes drip instead of spray irrigation, the collection of rain

water, the use of native or adapted landscaping and the installation of pervious paving systems. “The (last item) is used now primarily in the South but technology is advancing so it will become more common here,” said Walter. An audience member pointed out that Morton Arboretum now uses permeable pavement. Occupant Health and Productivity. This standard is focused primarily on the improvement of indoor air quality through such measures as improved ventilation to outdoor air, the avoidance of products that contain volatile organic compounds or carbon monoxide and the establishment of a non-smoking policy at or near building entrances. Operational Effectiveness. Evaluates the use of best management practices for such functions as water and energy conservation – e.g., the use of low flow water systems, compact fluorescent bulbs and LED light fixtures- and building automation of mechanical and other systems. Walter summed up his presentation by once again emphasizing that, “one of the key factors in the green decision making process is to evaluate social and environmental aspects of the decision in addition to the cost.” Energy Tax Credit Porterfield of eZing, a company specializing in energy audits, briefly touched on the federal energy tax credit, which is available to

What Is Stopping You From Getting


USGBC & LEED Walter spoke about the Leadership in No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2010©.






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homeowners and which condo associations can also avail themselves of by making energy efficiency improvements to the common elements and then passing on the cost proportionately to individual unit owners who can take a credit of 30 % for their share of that cost. He repeated something that Walter had noted earlier - “One of the key aspects of a green building is the control of energy use.” The purpose of an energy audit is to determine where in a building and how much energy is being wasted with the goal of reducing total consumption by reducing that waste. This would primarily affect condo common areas. An audit involves measures such as utility bill analysis, infra-red scanning for leaks, combustion appliance safety testing and what’s called a blower door test. The results are summarized at the time of the audit in a verbal report to the client and subsequently a written presentation detailing findings and recommendations. “The energy audit report is very thorough,” said Porterfield but is accompanied by an executive summary that highlights the principal conclusions. Prioritizing Improvements The audit prioritizes energy improvements in terms of savings. “Lower cost improvements tend to have higher returns,” explained Porterfield. Associations, “can pick things (to do) that have a higher return on investment.” A couple of points that he emphasized in wrapping up his presentation were that energy efficient buildings have a higher value (which should affect unit value also) and that implementing energy saving improvements can help boards stabilize


condo liFestyles

energy costs in their budgets. The cost of an audit is something that should also be recoverable along with the expense of improvements through the long term savings in energy use that the improvements generate. Sustainable Landscapes Pizzato of Landmarks summarized at the outset of his remarks the impact that “green” landscaping can have on an association. “It can save time and money,” he said. Turf maintenance costs can be reduced, especially by eliminating the use of the popular Kentucky Blue Grass in lawns. “In my industry they call that the green monster,” said Pizzato, because of the expense of watering, fertilizing and cutting it as well as the hauling away of the clippings. “We have to tame the green monster by thinking in a sustainable way. It consumes most of the money in a landscaping budget.” The least expensive way for a developer to install landscaping is by seeding or sodding with expensive to maintain Kentucky Blue Grass. Associations are generally stuck with what they get from the developer but should consider replacement with hardier, low maintenance turf, especially if grassy areas deteriorate and become unsightly and require removal and replanting. However, Pizzato said, when an association is planning major improvements or changes in its landscaping, they key to making it really standout afterward is, “to use a limited amount of turf.”


Native Plantings He highlighted various techniques for creating sustainable landscaping to reduce the potential harm to the environment, provide healthier places to play and, of course, to reduce the cost of upkeep. Although reducing lawn coverage is recommended on replacement, where greensward is planted, a substitute for Kentucky Blue Grass such as Bella Blue Grass that is ecologically friendly should be used. It requires less watering, is hardier and, Pizzato said, “saves 50 to 80 percent on mowing.” Plants should be native to the area rather than exotic species brought in from other places as they will generally tolerate drought better because of deeper root systems and will be more resistant to insects. Rain Gardens Rain Gardens are landscaped areas that reduce rain runoff by allowing storm water to sink into the ground instead of flowing to storm water drains, which will cause more erosion in the process as well as water pollution and diminished ground water availability. Green Roofs Green roofs come in two basic varieties. They can be extensive and contain low profile plants that assist in the thermal conditioning of the roof by lowering cooling needs. Or they can be intensive and have a thicker landscaping growth with more durable plantings that absorb more of the sun’s radiation and heat than the extensive type and can withstand heavier foot traffic. A condo association might want to consider a green roof when it has to replace an existing cover and the roof deck can handle the load. That would certainly add to the cost so to justify it that monetary outlay would have to be offset by utility

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2010©.

s P e c i A l F e At U r e

cost savings over the life of the roof. A more practical use of a green roof might be on an auxiliary building added to the property for use as, say, a garage or recreational facility. Environmentally Friendly Materials In unplanted areas an association, when it plans upgrades to its grounds, can consider the use of other environmentally friendly materials such as bark mulch for pathways and the permeable paving products that Walter mentioned or solar powered photo-

voltaic cells as a source for exterior lighting. Permeable materials can supplement or even be a replacement for retention ponds. Tree windbreaks can serve as a buffer against winds by redirecting wind flow over buildings and also as sun shields in low-rise settings. They will reduce heating costs in winter and cooling costs in summer by planting them on the north and south sides of buildings. Shorelines around on-site water features are subject to erosion. They can be stabilized, “by strategic placement of materials that resist

erosion,” said Pizzato. Rain barrels collect rain from downspouts to be used for lawn and garden watering. “They save an incredible amount of money off the water bill,” he said. Pizzato reemphasized the dual positive impact a sustainable landscaping layout can have for an association. “All these things can be incorporated in a development to save money and benefit the environment.” Y


Interested in Green Building Issues… Buildings & Environments Chicagoland


630.932.5551 OR VISIT

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From the Editor


010 will come to a close soon and many of us are already making plans for next year. Autumn is in full swing and thanksgiving is just around the corner. thanksgiving is one of the most practical


holidays. it inherently asks us to take time to give thanks for people, places and ®

s Mike Davids

things in our lives. this holiday seems to have an edge on some of the other holidays that require gifts and decorations to be considered a success. so please take time to give thanks as often as you can for whatever good is happening in your community and consider doing something more to


make your community(s) even better. Although, there has been some recent improvement in the stock market, our economy continues to

Editor & Publisher Michael C. Davids

struggle on many fronts. in particular, the mortgage crisis has also become a foreclosure crisis and the

Vice President Sherri Iandolo

associations are now budgeting for “bad debts,’ something that is a first for most. Hopefully, 2011 will

Art Director Rick Dykhuis

housing market in general has gained little ground. one example that reflects this struggle is that many bring our local and national economy the improvements that we all would like to see. our cover story on 860-880 lake shore trust is a property profile story that demonstrates the importance of making preservation and restoration a priority at every property. restoration and maintenance

Special Events Coordinator Mary Knoll Contributing Writers Pamela Dittmer McKuen, Jim Fizzell, David Mack, and Cathy Walker Circulation Arlene Wold Administration Cindy Jacob and Carol Iandolo

work can be expensive but is essential to the long-term health of your association. Many are presently faced with difficult budget decisions as a result of our economic conditions. despite this challenge, do your best to make sound decisions in your building maintenance and capital improvement efforts. in our Board Basics column, you can gain a basic understanding of master or umbrella associations and the special circumstances and situations that can typically be found in this arena. one special feature in this issue is on board member conflicts of interest and includes a review of illinois statutory requirements as well as case law in this regard. Another special feature is offered and is about how going green or implementing environmentally friendly initiatives at your association can actu-

Condo Lifestyles Magazine is published quarterly by MCD Media, a wholly owned subsidiary MCD Marketing Associates, Inc. For editorial, advertising and subscription information contact: 935 Curtiss Street, Suite 5, Downers Grove, IL 60515. 630/663-0333. Circulation: Condo Lifestyles is available for a single issue price of $8.95 or at a $30.00 annual subscription. Distribution is direct mailing and delivery direct through authorized distributors to over 5,000 officers and directors of Common Interest Communities, 500 property managers, 400 realtors, 400 developers and 400 public officials. Total Circulation is 7,000. Condo Lifestyles attempts to provide its readership with a wide range of information on community associations, and when appropriate, differing opinions on community association issues.

ally help you save money. Another round of common Questions for community Associations is also featured in this issue. in addition to a brief legislative update, our regular industry Happenings and event Highlights also appear. State of the Industry Program December 9 one of the most pressing topics for community associations is how the mortgage crisis is impacting community associations and the collateral damage such as foreclosures and evictions that our economic situation has created. As such, this will be one of the main topics discussed at our condo lifestyles state of the industry program, which will be held on december 9th at the chicago cultural center. Another of our primary topics will be a legislative update including a report on the impact that manager licensing has had thus far. We’ll also discuss evacuation plans as they relate to chicago’s life safety & fire protection ordinance, Mechanic’s liens, budgeting tips, utilities, insurance, property maintenance and financial management. you can find more information and a registration form on page 36 of this issue or at our website

All material herein is copyrighted 2010©. No part of the publication may be reproduced whatsoever without written consent from the publisher. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is issued with the understanding that the publisher is not engaged in rendering legal or accounting services. If legal advice is required, services should be sought. Advertisers assume liability for all content of advertisements printed, and also assume personal liability for any claims arising therefrom against the publisher relating to advertising content. The publisher and editors reserve the right to reject advertising or editorial deemed inappropriate for the publication.


condo liFestyles thanks to the many new subscribers that have found our publication useful and informative. special thanks to the firms, associations and groups that have become Authorized distributors of condo lifestyles. As we get ready to welcome in another new year, we encourage you to take this opportunity to make your association and your community all it can be. if you have an idea that would benefit other community Associations, a success story to share, or some advice on how to avoid a problem or failure, please send me an e-mail ( Y Michael C. Davids Editor and publisher Editor's Note: if you are interested in green building issues, please visit and view a sample issue of our sister publication, chicagoland Buildings & environments


No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2010©.

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CONDO APPROVAL PROFESSIONALS LLC (847)293-2962 contact: Steve Stenger

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CONTECH MSI CO. 847-483-3803


Fire detection & signaling systems Fire Alarm systems chicago life safety evaluation solutions security systems/cctv card Access systems see our ad on page 13

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


ABC DECO INC. 773-701-1143




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SEAL-TIGHT PROTECTIVE SERVICES, INC. (847) 640-2210 see our ad on page 5.

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THE CARE OF TREES (847) 394-3903


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LEGISLATIvE UPDATE: GOvERNOR SIGNS BILLS IMPACTING COMMUNITY ASSOCIATIONS P. A. 96-1400 (SB 3180, Wilhelmi-Cross): creates the common interest community Association Act for noncondo properties.   

The Habitat Company

P. A. 96-1436 (hB 5429, Feigenholtz/Noland) creates the Homeowners’ solar rights Act.

renown for its unique architecture, skybridge is an award-winning luxury condominium community, which first opened its doors in 2002. it joins lake Point tower and 400 e. randolph among other premier condominium associations, as part of the Habitat company’s condominium management portfolio.

P. A. 96-1045 (hB 5509, Nekritz/Garrett) Provides that the notice of a judicial sale of a unit of a common interest community must contain a statement concerning liability for common expenses.  P. A. 96-0977 (hB 6082, Feigenholtz-Raoul) When 30% or fewer units, by number, possess over 50% of the votes in the association, any percentage vote of members specified in the Act or in the condo instruments shall require the specified percentage by number of units rather than by percentage of interest in the common elements allocated to units;  a unit shall not include a garage or storage unit and a vote in the association in the percentage or number count.   P. A. 96-993 (SB 3385, Wilhelmi/Nekritz) Under the Manager licensing Act, the dept. of Professional regulation may take into account whether the applicant has engaged in conduct or activities that would constitute disciplinary action under the Act. P. A. 96-994 (SB 3387, Wilhelmi/Bradley) Under the General not for Profit Act allows a vote of members without holding a meeting as long as the members have agreed to do so in writing by all members entitled to vote.    to view the full text of any of these bills, go to and type in the bill number in the first box to the left.  you will then see a short synopsis of the bill. to view the full text, click on “Full text” of the bill at the top of the page.


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the Habitat company is proud to announce that they assumed management responsibilities for skybridge, a 226-unit condominium at 737 West Washington Avenue, chicago, effective August 1.

“the Habitat company is thrilled to be at the service of the association board members and unit owners at skybridge. We look forward to cultivating and strengthening our partnership through our stewardship Program which is designed to foster open communication and achieve the board’s goals,” said diane White, senior vice president of condominium Management for the Habitat company.

“Following an exhaustive search for a property management company, we are delighted to begin a new partnership with the Habitat company and look forward to a long relationship,” said randy Fontana, board president for skybridge condominium. Habitat’s approach to property management provides a unique all-inclusive platform that incorporates technology, expert resources and capital project management. Habitat’s organizational focus, professionalism and their genuine interest in skybridge made them the company of choice that will help us meet the needs of our community.” Habitat’s condominium management portfolio includes 4,104 condominium units under management in chicago and detroit.

Chicago Elevator Update

the address of the property and the information will be provided by return email.

commissioner richard Monocchio of the chicago department of Buildings has extended the compliance dates for the Annual inspection certification (Aic) program for 2010.

By december 31, 2010 all inspections (including any necessary re-inspections) and the submittal of the inspection results must be completed. the building owner/ manager must submit via the website the results of the inspections and the program fee by that date. if an elevator permit is required for repair work, it must be secured, but the work does not need to be completed before the end of december. if repair work does not require a permit, then that work must be completed by december 31, 2010.

Please note that the deadline for the Aic program was changed to september 30, 2010 for the creation of a web account and assignment of an inspector and december 30, 2010 for the submittal of the inspection results instead of the date of June 30, 2010. the Aic program has been extended to enable all participants to complete the inspection and reporting requirements. By september 30, 2010 every owner/manager of a building with conveyance devices (elevators, escalators, lifts, etc.) in the central Business district is required to have minimally created a web account and assign an inspection company. the website address is: . Any owner/manager that needs the reference number and Pin to create the account can send an email to with


Properties that have not minimally created a web account and selected an inspector in the website by the end of september will be in violation and referred to Administrative Hearings. Please feel free to distribute this information. Updated information can be found on the city of chicago website Questions can be sent to

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2009©.

indUstry HAPPeninGs

Diversey Harbor & 2550 Lakeview nine years ago, back in 2001, the diversey Harbor lakeview Association began its defense of our community’s overstressed infrastructure, as it became actively involved in the process of redeveloping the former site of columbus Hospital, and led the effort for the process to go forward in a responsible manner.

these 4.1 automobile trips result from a multiplicity of activities: travel to and from work; round trips for shopping, for visits to (or from) friends, for medical care, and for many other purposes. there are also the trips made by taxis and special purpose vans, by tradesmen and by the members of building staffs.

According to diversey Harbor lakeview Association’s Gene Fisher, that process has now entered a new stage with the announcement that the 2550 lakeview project has secured its construction financing and will soon begin its major construction phases. this news marks an appropriate time to review the accomplishments of diversey Harbor’s steadfast nine-year effort, whose two most important benefits have been - -

thus, the success of diversey Harbor’s sustained nineyear effort means that the reduction of 221 new households will result in some 900 fewer automobiles clogging our already congested streets, every day.

1) A less congested community the original development proposed in 2001 planned to inflict a 450-unit project on our already stressed infrastructure. nine years later, 2550 lakeview will build only 229 units. the change means that 221 - - or 50% - - fewer households will be added to the density of our community’s population.

very few community associations can point to achievements of such magnitude. through nine long years of dedicated effort, the earlier plans for a greatly oversized project have been held at bay, until being downsized to a much more responsible level. the 2550 lakeview project’s next phases will see the construction of its three towers, the completion of its underground garage, and the preparation of the platforms for its adjacent townhouses. the work has been estimated to take 22 months, with move-ins targeted to begin in the late spring or summer of 2012.

2) A significant reduction in automobile traffic the real-world impact of 221 fewer households is derived from professionally conducted research, which determined that each household in our community generates a daily average of 4.1 automobile trips.

Acting on the community’s behalf., diversey Harbor had a lead role in negotiating the Agreement which governs the project’s construction activities. the group feels it is gratifying to report that the work performed to date has been in accordance with the Agreement. the project’s ongoing adherence to the Agreement’s standards of performance will continue to be monitored by diversey Harbor.

Keough & Moody, P.C.

Werk Management

Keough & Moody, P.c., is pleased to announce that it is relocating it’s naperville office to 1250 east diehl, suite 405, naperville.

shown below are Mindy Maggio and Jack Mancione. Ms. Maggio has recently been named president of Werk Management. Mancione is the owner of Werk Management based in Westmont, illinois.

Tairre Management tairre Management recently announced that the the 451 West Huron condominium Association is now managed by the company. the announcement was made by tairre dever-sutton of tairre Management.

Diversey Harbor & Solar Legislation community Associations in the diversey Harbor neighborhood were very concerned about the solar rights Act (HB 5429), which had been introduced in illinois’ General Assembly. the group contends that the legislation originally posed a potentially harmful impact to every condo owner in a mid-rise or taller building. Below is report from Gene Fisher of the diversey Harbor lakeview Association. ThE PROBLEM the Act’s original text would have deprived condo associations of the ability to prevent individual unit owners (at their sole discretion) from pock-marking their buildings’ exterior surfaces with installations of solar panels on their windows, exterior walls and balconies. in short, it would have over-ridden a condo association’s right to defend the architectural, aesthetic and financial integrity of what is arguably their building’s most precious common element: its exterior appearance. Because installations which degrade a condo building’s exterior appearance adversely impact the market value of every unit in that building, unregulated defacements of a condo’s exterior could financially punish every one of its unit owners. ThE RESPONSE recognizing the serious nature of this problem, diversey Harbor entered into an alliance with other concerned condo associations. the members of the alliance forthrightly expressed their views on this issue to the appropriate elected officials, and it is gratifying to report that our voices were heard. As a consequence, the Act which was recently adopted by the General Assembly was revised to include the improvement that was endorsed by the delegates to diversey Harbor’s spring Meeting. the Act’s application is now expressly limited to buildings whose height does not exceed 30 feet, an advancement that protects the exterior appearance of all mid-rise and taller condo buildings. this accomplishment serves as a safeguard to the hard earned equity position of every unit owner in such buildings. those unit owners no longer need be concerned that the market value of their condo will be harmed by unregulated defacements of their building’s exterior surfaces. our thanks to representative sara Feigenholtz, who sponsored the Act, as well as this upgrade to its text.

451 West Huron

Dickler, Kahn, Slowikowski & Zavell, Ltd. ~ concentrating in ~

Condo & HOA Representation Corporate • Real Estate • Litigation • Wills Personal Injury 85 W. Algonquin Rd., Ste #420, Arlington Heights, IL 60005

847-593-5595 No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2010©.


condo liFestyles


condo liFestyles

By David Mack

Commonly Asked Questions f Delinquent Candidates? Q/ Can persons behind in assessments (almost $2000 in one case) run for or be on the board? I think I have heard that they cannot but I am not sure where it is stated. How do we block someone who is in arrears from running? A/ It would seem appropriate that owners behind in their assessments be denied seats on the board but I sought an opinion from Howard Dakoff an attorney with Levenfeld Pearlstein in Chicago to confirm that belief. There was also the possibility that such persons could not be prevented from being on the board because in doing so would establish two classes of membership in the association which is prohibited by the law. Dakoff agreed with the latter position. “It is our opinion that any such restriction is void for the very reason you stated,” Dakoff said. “We occasionally see such a provision in the by-laws or rules and regulations, but we still opine that is not enforceable.” He noted that boards sometimes enact election procedures that require candidates to prepare a candidate form and one of the questions to be completed is whether the candidate is behind in assessments or has violated the covenants or rules of the association. “If the candidate does still decide to run, at least the rest of the unit owners know that he/she is not paying assessments and hopefully (decide not) to vote for such a candidate.”

Notice for Special Assessments

Baum Property Services, AAMC


Contact Michael D. Baum, CPM, PCAM



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Q/ Is there anything in the law governing how much notice should be given to association members that a special assessment has been passed and the due date of the payment? I live in a self managed condominium with 6 units and all six owners are on the board of directors. A/ There is nothing in condominium law regarding the timing of a notice of a separate (special) assessment, however, you should check your governing documents- especially the by-laws- to see if there is any such provision in them concerning such notice. It is likely, though, that the resolution adopting the assessment can contain the due date, which should be reasonable and give owners enough time to raise the funds if the request is steep. But notice wouldn’t seem to be an issue in the case of your association since all six owners are on the board of directors. When the separate assessment is to be discussed and then voted on at a board meeting, the prior notice for that meeting should contain an agenda which lists the assessment as one of the topics. That would likely assure that all six owners would attend to vote on the issue. If there is opposition to the assessment or its amount, it should come out at that meeting. A majority of the board would have to vote in favor of it. That would seem to be another problem for you. Generally boards are composed of an odd number of persons so there will not be tie votes unless there are abstentions. With six board members, a tie could result. You should determine if your by-laws provide for six board members or is that just a number that was selected because of the small size of the association.

Who Sees Assessment Status Q/ Does a unit owner have the right to review the assessment collections for the month under Section 19 of the Condo Act? I know of a condo board that reported several thousand dollars more than actually had been collected and got caught. How can the homeowners know that the board is reporting the correct collection data?


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BoArd BAsics

for Community Associations A/ With a written statement of proper purpose under Section 19 (e) an owner can review, per 19 (a)(9), books and records going back ten years, including itemized and detailed information on all receipts and disbursements. That means you should be able to review assessment collections- without names, however- since they are what primarily constitute the receipts of an association.

Who Can Be On Committee Q/ Some unit owners in my high rise want to redo the lobby and want to spend a large amount of cash. Can you give me some tips on how unit owners are to be selected for a lobby committee? The President appointed a Chairman but who has the right to be on this committee? A/ According to Section 108.40 the Illinois Not for Profit Corporation Act, which along with the Condominium Act governs the operation of your association, whether or not it is incorporated, the board appoints committee members. At least two directors from the board are supposed to be on any committee (except for any committee formed to deal with election issues, which can be composed entirely

of non board members) but they must always be in the majority. If a committee were to have six members, then technically at least four would have to be directors. No one has the “right’ to be on a committee. In actual practice, how committees are formed varies between associations. Aside from a majority being board members, others should be those who seem to have the greatest interest in the lobby renovation and have the time to devote to the assignment. Those with architectural/engineering, construction or design skills would be a benefit to the committee but those types of backgrounds shouldn’t be an absolute necessity. Nonprofessionals can also contribute insight and ideas.

Cumulative Voting Q/ Our declaration states that each voting member shall be entitled to vote on a cumulative voting basis. I’m a little foggy on the interpretation of this term and haven’t been able to get a definitive answer in the Condo Act. We have three new board members to elect and need this info for back up. Can you give me a for instance?

How do you increase your property values while saving money? Coder Taylor assoCiaTes. iNC. LICENSED ARCHITECTS & ENGINEERS CODER TAYLOR ASSOCIATES, INC.


847-382-4100 TELEPHONE

847-382-4104 FAX

Helps you prepare for future maintenance expenses by preparing a reserve study that lets you know when repairs will be needed. saves you money by designing proper specifications. through research and engineering, we assist you in hiring qualified contractors & ensuring that their performance is up to the associations’ expectations. Helps you take a proactive approach in protecting the value of your property from your pavement to your roof tops.

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condo liFestyles


condo liFestyles

A/ Here is the way cumulative voting works. A unit owner’s particular vote is equivalent to her percentage interest of ownership in the common elements. That is determined in the declaration and can be the same for all units or can vary based usually on the original value of a unit compared to the others. As a general rule, a unit owner’s percentage interest in the common elements is multiplied by the number of vacant seats for which directors are to be elected to determine the total votes the owner is eligible to cast in a cumulative voting scenario. Let’s take an easy example. Let’s say there are 100 units and each owner has one percent interest in the common elements. Each owner would have 1.0% x 3 seats or 3 votes. All could be cast for one candidate or the total broken down and distributed in some fashion between all running. In a less straightforward example, say an owner’s percentage interest of ownership is .45% (point four five percent). You would multiply .45 by 3 to get 1.35 total votes to be given to one person or distributed among the three. The three persons with the greatest number of votes, assuming you have more than three candidates, would be the winners. Cumulative voting, by the way, is often used by a minority of owners who lack voice on the board in an association as a means to elect at least one board member by accumulating votes for him/her.

Board Member as Manager Q/ One of our condo board members wants to manage our relatively small building. I’m wondering if this acceptable or could it possibly be a conflict of interest? A/ Such an arrangement is often considered a conflict of interest but it is not prohibited under condominium law. See Section 18(a)(16) of the Condo Act and there should be similar language in your association’s by laws. The board must give the unit owners notice of the proposed contract and 20% of the owners can file a petition to have a vote on the contract. A majority can vote it down. There are specific time frames in which actions must be taken. Contracts with board members always seem to create suspicion amongst others that something fishy is going on or there is favoritism at work. A lot of people in the condo business tend to recommend against such contracts for that reason but, if the law is followed, these contracts with board members (or there immediate families) are not illegal.

Foreclosures Causing Special Assessment Q/ I live in a condo association that sent out a letter informing residents that there could be a special assessment of $400 for each unit to help in the shortage of association fees because of the number of foreclosures in our complex. I am upset that despite the fact that I pay my mortgage and association fees on time I have to come up with this special assessment. I’m feeling frustrated with all that is happening money wise. This is something people do not need now. Is there anything that can be done? A/ Unfortunately what your association is experiencing is apparently not that uncommon in today’s mortgage crisis environment. The law now permits condo associations to collect up to six months of delinquent assessments from the buyer of a property at a foreclosure sale but this does not include the lender if the lender is not outbid for the property at that sale. However, a later buyer of the property from the


condo liFestyles


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BoArd BAsics

lender would have to come up with those six months of assessments. Many in the association field are dissatisfied with that six month limit and want it raised ideally to the actual amount owed. That is one of the changes in the law that the Condominium Advisory Council recommended to the Governor and Legislature, however, it was not enacted in 2009. Perhaps it will be next year. Associations that are hurting financially because of the loss of assessments due to foreclosure have to make up their losses somehow and the only feasible alternatives at the present are through special assessments or by including a larger amount in the line item known as collection loss in the annual budget.

Businesses in Association Q/ My association was formed by conversion of a rental building in 2005. Our by-laws state that businesses are not allowed. I have discovered that two units were purchased by a company from the developer for a business which earns nearly three million dollars a year and has 20 employees. I have asked the board about it and was initially told that only phone calls are made from the units. After I showed them a report with the preceding information, I was told it would be looked into. When I asked later, I was told they were “grandfathered in”. Is this possible or am I being lied to?

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2010©.

A/ If the association’s by-laws banned businesses with no exceptions from the very beginning when the original by-laws were enacted and no subsequent amendment regarding businesses and grandfathering was adopted, then there should be no grandfathering. Check your bylaws to see if there is a grandfathering provision for businesses that existed before businesses were banned. Also ask your board to show you some evidence of when the alleged grandfathering you were told about was adopted. Usually when businesses are permitted to operate in a residential association they involve little or no client or customer traffic on the premises or use of parking spaces assigned for residents only. In another area, grandfathering is a common practice with rentals when an association adopts a no rental policy by amending the bylaws. Often, rentals in existence before the ban is enacted are allowed to continue in perpetuity or for a specific period such as until the existing leases expire or the owners sell the units.


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condo liFestyles

from page 5

Preservation... on other residents to provide much assistance. “The only standing committee we have is the architectural committee composed of architects who live in the building,” said Boxerman. They, “advise the board on architectural and engineering issues.” Meetings are convened monthly, lasting less than two hours and typically are run smoothly just as the overall operation of the property. “Tenant-owners have an opportunity to speak and regularly exercise that right,” said Boxerman. Financial Management The current budget for 860-880 Lake Shore is $4.75 million. All expenses are covered by the assessments, including operation, the loan for the renovation program and property taxes. In addition, “the trust deposits about $500,000 annually into a reserve fund for future capital repairs and escrow for taxes (which will be going up in seven years when the assessment freeze-described below- ends),” said Levin.

Building Restoration & Maintenance Because of their six decades of existence and their direct exposure to the sometimes harsh weather coming off Lake Michigan, the two buildings have had to periodically undergo some substantial renovations to correct physical problems. “The original construction has held up well, given the buildings’ age but constant maintenance is required,” said Levin. Some systems have exceeded their life spans and have needed replacement. In 1981 Holabird & Root spearheaded a major effort on the first floor, which involved replacing all the glass and the original aluminum mullions with stainless steel. Laminated glass was substituted for sandblasted panes. Because of air and water penetration the windows on floors two through twenty-six were resealed with an upgraded sealant in 1992.

new underground sprinkler was installed as were new public ventilation fans along with their controls and the exterior steel was repainted. “The restoration of these systems was needed because of water damage that slowly occurred in the last 20 plus years,” explained Levin. In addition, the following building restoration work was completed: » Steel tubes holding up the storefront were replaced due to corrosion.

Recent Building Improvements The year 2007 brought the initiation of a $10 million rehabilitation of the common areas, both inside and out. The two roofs were replaced with a modified bitumen cover, a

» Selected stone in the lobbies was replaced, the travertine walls cleaned and the travertine on the floors re-honed.

» New stainless steel plate covers were installed along the lobby levels. » New low-iron and sandblasted glass was put in place to restore the look of the original glass from the decade of the 50s. » Travertine pavers in the plaza were replaced after considerable repairs were made to the deck below, including laying a new waterproof membrane and drainage system followed by new stone.

» The lobby ceiling and the mailroom were repainted.

The 860-880 Lake Shore Drive building and trust received the 2010 Chicago Landmark Award for Preservation Excellence - Ground Floor and Plaza Reconstruction from the City of Chicago, Office of the Mayor

gs n i d l i u B g n i or t s Re for over

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800-673-2567 Algozine Masonry Restoration • 2000 N. Lafayette Ct. • Griffith, IN 46319 32

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cover story

» The lobby heating system was upgraded and historically accurate lighting restored in the lobby and plaza. “We removed historically inaccurate alterations to the buildings whenever possible, including exterior doors on the south façade of the 880 building,” said Boxerman, noting that the halide lamps used in the plaza and lobby lighting are more energy efficient and more closely resemble the original lighting schemes than the fluorescents they replaced. “Although not related to the capital project we have just completed, we are installing more energy efficient lighting in our garage too.” Design , Supervision and Funding The most recent work was designed and overseen by the architectural firms of Krueck & Sexton and Harboe Architects and the actual work was done under the supervision of general contractor Bulley & Andrews. Schuler Shook was the lighting designer on the ground floor and plaza restoration project. Financing for the restoration and rehabilitation was through an $8.2 million loan, which is being repaid through an added increment to the monthly assessment (rent) paid by the

residents, although some of them prepaid their shares in a total of $800,000. Those who did pre-pay avoid the monthly add-on that the others bear. The expensive, but necessary comprehensive restoration program was made feasible because of a property tax assessment freeze granted by the State of Illinois for which the 860 Lake Shore Drive Trust was eligible because of its landmark status. “Had they not received this relief, which lasts for eight years plus an additional three years in which our assessments are gradually raised to market rates, they would have had to make piecemeal repairs,” said Levin. Preserving is Priority Preserving the buildings in tip-top shape and paying for future work have been and continue to be major concerns of the board. According to Boxerman, the primary issue with which the trustees will have to deal is, “maintaining our investment and insuring the buildings stay in good repair. We need to plan financially for when the tax relief comes to an end.” Added Levin, “we believe keeping the

buildings in a state of good repair is essential to keep the buildings competitive in today’s real estate market.” Resale Market As anyone who owns property knows, that market has not been fruitful for many sellers in recent times. But conditions have not been comparably dismal at the 860 Trust. “This is a tough market but our buildings have fared well,” said Boxerman. Resale prices at the property had taken a brief, but not significant, hit when the market crashed across the country following the sub-prime meltdown but now have come back to a relatively healthy level “Prices dropped (somewhat) when the bubble burst but largely held flat. Recent sales have been at a profit.” 60th Anniversary There is not a lot of social interaction by the residents but the buildings had a party on the terrazzo deck in September in recognition of the completion of the modernization program, celebration of the preservation award, and the 60th anniversary of the property. Y

In Memoriam... Phil Carter, Senior Property Supervisor with Community Specialists for the past 14 years, lost his life on August 20, 2010 after a seven day battle with pneumonia. Phil joined the firm while managing 680 N. Lake Shore Drive and quickly was moved into the position of Property Supervisor. Some of the condominium associations Phil supervised are The Aqua at Lakeshore East, Park Shore, The Pearson, Park Newberry, Park Alexandria and The Grand Ohio. While Community Specialists lost an outstanding professional with a solid knowledge of condominium management, he will most of all be missed for his warmth, caring and great sense of humor. Phil always went the extra mile

Property management services for Chicago’s finest high rise residential properties.

for the associations he worked with as well as for everyone in the Community Specialists family. We extend our deepest sympathy to Phil's family and friends.

Community Specialists 680 N. Lake Shore Drive, Suite 1326, Chicago IL 60611

312.337.8691 No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2010©.


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condo liFestyles

MCD Golf Invitational

Event Highlights

July 13, 2010 Eaglewood Resort, Itasca

Shown here is 1st place foursome from Chicagoland Management & Realty (LtoR) -Mitch Vucic, Rudy Karastanovic, Tony Briskovic and Stan Niketic

Pictured above are Ron Muldoon - Brouwer Bros. Steamatic, Bob Graf - Sudler, Jenna Bruce - Environ, Eva Fiala -Tairre Management, Terry Holum -Landscape Concepts Management, Chad Henson -Environ and John Bieg -Draper and Kramer, Inc.

Shown above are (LtoR) Josh Connell and Steve Ramos -Lake Shore Waste Services, David Berke and Tom Skweres -Wolin-Levin, Inc. and James Fatigatti ACM Elevator Co.

Shown above are Bob Wankewycz -Style Construction, Cathy Ryan -Property Specialists, Inc., Mark Schumann & Kurt Kojzarek - Property Specialists, Inc.

Shown here are (LtoR) Pablo Albuja -ConTech MSI Co., Victor Gonzales- The Buckingham, Rocco Bartucci ConTech MSI Co., and MCD Golf Outing Co-Chairperson, Tim Conway - Golub & Company.

Pictured here (L to R) are Evan Levin & Bob Levin Wolin-Levin, Inc., Tom Steele & Glenn Christ -Quality Restorations and Steve Stenger - Condo Approval Professionals.

Proud to be of service to Chicago’s most celebrated structures.

General Contractors Since 1891


condo liFestyles


No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2010Š.

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2010Š.


condo liFestyles


2 0 1 0 S TAT E O F T H E I N D U S T R Y S E M I N A R 11:00AM - 3:00PM | December 9, 2010 | Chicago Cultural Center | Call 708.822.8156 for more information Schedule/Agenda

Table Discussion Topics & Information Tables include:

» 11:00 am Registration

» Chicago Police - CAPS Program William Townsell

» 11:30 am Luncheon, Awards

» Evacuation Plans Chicago Fire Department

& Announcements • Introduce 2010 MCD Media Advisory Board Members • 2010 Outstanding Leadership Awards » 1:00 pm Legal Update & State of the Industry Update Tairre Dever-Sutton Tairre Management Services & Mark Pearlstein Levenfeld-Pearlstein » 2:00 pm What’s on Your Mind? Impact of Economic Crisis & Current Trends (Bad Debts, Bulk Purchasing Issues, Delinquent Assessments & Collection, Evictions, FHA Approval, Foreclosures, Mechanics Liens, Life Safety Evacuation Plans and other current trends) Brian Kelly Chicagoland Management Stephen Little Chicago Fire Department

Who Should Attend? » Community Association Board & Committee Members » Property Managers » Developers » Realtors & Realty Professionals » Colleagues & Contractors

» Fire Detection & Signaling Rocco Bartucci - Contech MSI Co.

» Government Officials & Employees Timing -Structure This event is intended to be structured to accommodate various levels of expertise as well as different types of interests in community associations. It is also intended to be flexible to meet time and schedule concerns. We are pleased to accommodate you in this regard. Feel free to contact our office to make customized arrangements.

» Energy Conservation Tips Chicagoland Building & Environments » Fire Protection & Life Safety Charles Featherling - Simplex-Grinnell » Fire & Water Restoration, Mold Remediation Brouwer Bros. Steamatic - Greg Brouwer » Evacuation Plans, Emergency Restoration Amy Edwards - QCI Restoration » Bulk TV, Internet Technology & Community Associations Tracy Haslett - Comcast Hand-Outs & Resources will be provided on the following topics: Renters, Pets & Parking, Board Training, Security, Waste Management, Green Building Technologies, Budgeting & Financial Management, Reserve & Transition Studies, and Managing Capital Improvements.

Additional topics may be added. 2010 State-of-the-Industry Committee Brian Kelly and Tony Briskovic - Chicagoland Management & Realty Bonne Escalante - Heil Heil Smart & Golee

Why Should You Attend? » To gain valuable, practical insight on how to deal with special issues of Community Associations » Identify resources needed to help your association(s) solve current challenges that your association(s) is facing » Meet and greet Condo Lifestyles Advisory Board members and other industry experts » To better understand government regulations regarding community associations » To contribute and share your ideas and input in an effort to improve standards in the field of community associations What Should you bring? Your questions. We will provide you with a bag full of paper, pens, and several other items you can use at the program, home or office.

Tairre Dever-Sutton -Tairre Management Micky Tierney -Community Specialists Tom Skweres and Natalie Drapac - Wolin Levin, Inc. Diane White - The Habitat Company.

Shelia Malchiodi QCI Restoration



Buildings Environments Gladys Montemayor 7306 North Wichester Condominium Association

The Chicago Cultural Center is located at 78 East Washington. An MCD registration table will be located outside the Washington & Garland rooms on the fifth floor. Use elevators in South lobby.


We welcome you to join us!

No. of CA units you are involved with as a:

No. of CA properties you are involved with as a:

Please complete the form and return to our office. If you will attend the seminar, return the registration information with your payment. Seminar (per person) Cost is $105.00 for professional colleague or vendor, $85 per additional person from same firm regular registration (includes handouts and other resources to be provided). Qualified Community Association Volunteers are $25.00 per person. MCD Media, 935 Curtiss, Suite 5, Downers Grove, IL 60515, 708.822.8156 or Fax 630.932.5553

DEVELOPER; __________

DEVELOPER; __________

MANAGER; ____________

MANAGER; ____________

REALTOR; ____________ COLLEAGUE/ CONTRACTOR; ________

REALTOR; ____________ COLLEAGUE/ CONTRACTOR; ________

DIRECTOR ____________

DIRECTOR ____________

UNIT OWNER __________

UNIT OWNER __________

NAME(S) List additional names on back or seperate sheet NUMBER OF PROFESSIONAL GUESTS @________________________ = $ __________________ NUMBER OF VOLUNTEER GUESTS @________________________ = $ __________________

T O T A L = $ __________________







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Community Advantage® isn’t just another financial institution. We go the extra mile to stay on top of community association and management trends. Most importantly we go the extra mile to understand our clients, and we’ve been doing so for over ten years. When you need help financing repairs, purchasing units or any number of other lending needs, we’ll work with you to figure out the best solutions, giving you the flexibility to complete projects on your schedule and your budget.


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October 2010


October 2010