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Buildings Environments $ AUTUMN 2015

The Basics of Chicago’s Energy Benchmarking Ordinance S P E C I A L F E AT U R E

Many Apartments Going Smoke Free Serosun Farms & Swainson’s House Feature Eco-Luxe Living Expanded Tax Incentives for Commercial & Industrial Cook County Properties Emerald Award Winners

The Weather and Your Landscape Income Taxes for Commercial Condominium Associations Don’t Misunderstand Your Warranties Chicago Green Office Challenge Winners

table of contents COVER STORY

02 The Basics of Chicago’s Energy Benchmarking Ordinance By Robert Meyer S P E C I A L F E AT U R E

05 Many Apartments Going Smoke Free By Matt Butterfield PROPERTY PROFILE

07 Serosun Farms & Swainson’s House Feature Eco-Luxe Living By Marianne Geiger & Leslie Friebert M O N E Y M AT T E R S

10 Expanded Tax Incentives for Commercial & Industrial Cook County Properties By Joanne Elliott 11 Industry Happenings A S S O C I AT I O N ’ S A V E N U E

12 Emerald Award Winners 14 Editor’s Message 15 Directory Advertisements THE LANDSCAPE BUYER

19 The Weather and Your Landscape By James Fizzell M O N E Y M AT T E R S

21 Income Taxes for Commercial Condominium Associations By Steve Silberman MAINTENANCE MEMOS

23 Don’t Misunderstand Your Warranties By Justin Maier & Nik Clark S P E C I A L F E AT U R E

26 Chicago Green Office Challenge Winners





reuse | reduce | recycle

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autumn 2015

ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

By RoBeRt MeyeR - FiRstseRvice Residential

The Basics of Chicago’s Energy Benchmarking Ordinance in the fall of 2013, the City of Chicago adopted the Building energy use Benchmarking ordinance. the primary goal of this ordinance is to increase awareness of energy performance and unlock energy cost savings for municipal, Commercial, and residential buildings. this process requires facilities larger than 50,000 square feet to track whole building energy use (electricity, natural gas, and any other fuels) and report to the City of Chicago annually. to ensure accuracy, covered buildings must also have their energy data verified by someone with a recognized credential every three years.


enchmarking building energy use empowers condominium board members and other decision makers to take control of one of the largest building operating expenses and to deliver on capital improvement goals. Better data enables smarter operating and investment decisions by helping condo board members, owners, and managers to identify, prioritize, and evaluate energy efficiency and cost saving opportunities. Chicago’s benchmarking ordinance – like other similar policies in other cities across the country – uses the US EPA’s ENERGY STAR Portfolio Manager software

( to facilitate energy use tracking, verification, and reporting. For most residential buildings, Portfolio Manager uses basic building information and monthly energy use data to generate standard energy performance metrics, including a 1-100 ENERGY STAR Score that allows energy performance comparisons (controlling for differences in weather, building operations, amenities, etc.). Portfolio Manager also calculates energy use intensity metrics that can help identify energy savings potential. Chicago’s ordinance does not require

covered buildings to use 3rd-party support, but some buildings find it extremely helpful to work with managing agents like FirstService Residential to assist with the energy benchmarking process and to identify specific, cost-effective efficiency opportunities. Since energy/utilities are one of a building’s largest expenses, energy efficiency can provide a real competitive edge for residential communities. Depending on the type of building, typically these can be the first or second largest expense for a community.

Which Buildings Are Covered By Chicago’s Benchmarking Ordinance? 2015 marks the second year of a three-year phase-in of the Chicago Energy Benchmarking Ordinance implementation. In 2014, nearly 350 municipal and commercial buildings larger than 250,000 square feet reported under the ordinance. First-year findings are available at In 2015, ordinance coverage included residential buildings larger than 250,000 square feet, as well as municipal and commercial buildings larger than 50,000 square feet. In 2016, all municipal, commercial, and residential buildings larger than 50,000 square feet must benchmark energy use and report to the City, with data verification required for buildings that are reporting for the first time (and each third year thereafter). This year, the City recognized all building benchmarking submissions by August 1st as compliance; going forward, June 1st will be the annual reporting deadline in 2016 and beyond.

How Does Data Verification Work? Chicago’s ordinance requires covered buildings to have their energy data verified every three years by someone who holds a City-recognized license or training credential. This verification may be done by an in-house or third-party professional

2 ChiCagoland BuildingS & environmentS

autumn 2015

coveR stoRy

(including condominium staff, board members, residents, or outside support). As of 2015, the City of Chicago has recognized the following professional credentials for individuals who can verify data: • Building Operator Certificate (BOC) Midwest Energy Efficiency Alliance • Building Energy Technology Certificate (BET) – City Colleges of Chicago • Building Energy Assessment Professional Certification (BEAP) - ASHRAE • Certified Energy Manager Certification (CEM) – Association of Energy Engineers • Professional Engineer (PE) State of Illinois • Licensed Architect - State of Illinois Both the PE and Architect will need to be licensed by the Illinois Department of Financial & Professional Regulation. FirstService Residential has completed benchmarking our client’s properties that are larger than250,000 square feet. All benchmarking and property data is uploaded to the Energy Star Portfolio Man-

ager. At FirstService, we were able to complete this process through our Energy Management division, FSEnergy, and an in-house verifier, Mark Paris, LEED AP, Project Administrator. Mark has his BOC (Building Operator Certification), which allows him to certify the data we benchmark for our buildings.

How Can a Building Improve its Energy Performance? There are numerous ways to improve a building’s energy performance. The easiest way is to be aggressive with “low hanging fruit” energy retrofits. Lighting is typically one of the easiest areas to im-

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autumn 2015

ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

prove on, as well as cost effective for your Return on Investment (ROI). Installing LED lights will usually have a positive ROI within 18 months of completing the project. With incentive programs by Com-Ed to assist with retrofitting it’s almost “too easy” to not be more energy efficient. Third party Non-Profit groups such as Elevate Energy and others are working with buildings to complete an energy audit, retro-commissioning and the installation of upgrades that help all electric buildings

become more energy efficient and help with those clients with available rebates. When it comes to natural gas, Peoples Gas, NICOR and North Shore Gas also have programs to assist with energy savings. By tuning up your boilers, water heaters and other gas fired equipment and preforming a combustion analysis (process that measures how efficiently the gas is being burned) the gas companies will pay a portion of that service as a reimbursement to your building. Installing new

enhancing landscapes for life… • Landscape Maintenance • Landscape Design/Build • Landscape Construction • Seasonal Flower Rotations • Snow and Ice Control

steam traps will garner additional funding from the gas companies. Also consider the initial savings you will see from the boiler tune up itself. If you’re in the market for or have been considering upgrading your central boiler/heating and or cooling equipment the funding supplied by ComEd and NICOR or Peoples Gas can help offset the replacement cost by thousands of dollars. For instance, one building managed by FSR decided to upgrade their 20 year old rooftop air cooled chiller to a new multi stage/multiple compressor air cooled chiller with a soft start feature. This was an energy saving upgrade due to the efficiency rating of the new chiller. In addition, the new system included a basic building automation system and variable frequency drives (VFD’s) to the electric motors that pump the chilled water throughout the building. The energy savings is substantial and the system accomplishes the same cooling needs for a fraction of the cost. The building took advantage of the rebates available for the Chiller upgrade and VFD’s which totaled around $10,000. This is an extra bonus to the $400 a month savings on the energy consumption of the old chiller.

Good Results To-Come: The City of Chicago Benchmarking Ordnance is well on its way to helping all Municipal, Commercial and Residential buildings to increase energy awareness and to unlock potential energy cost savings. By June of 2016, all of these buildings from 50,000 sq. feet and larger will have their data for the City of Chicago Benchmarking Ordnance stored in the EPA Energy Star Portfolio Manager. $

For More Information: » Chicago Energy Benchmarking Website: See for additional background, guidance materials, and resources


4 ChiCagoland BuildingS & environmentS

» Chicago Energy Benchmarking Help Center: or (855) 858-6878 (M-F 9am-5pm) » US EPA ENERGY STAR Portfolio Manager:

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s p e c i a l F e at u R e

Many Apartments Going Smokefree almost half of Chicagoland’s property managers mandate no smoking policies inside their residences, and a new survey indicates many more are on the way.


new survey of Chicago area apartment (rental) property managers released in august of this year reveals that almost half of the apartments (rental) in the Chicagoland area prohibit smoking inside all of their residences. of those that still permit smoking on the property, an overwhelming 85 percent report they are interested in developing a smoke-free policy, according to the survey conducted by the american lung association in greater Chicago and the Chicagoland apartment association. the survey is part of the lung association’s efforts to advance smoke-free housing under the illinois tobacco-Free Communities initiative,

autumn 2015

funded by the Chicago department of Public health (CdPh). "Smokefree environments decrease exposure to first and second hand smoke." said CdPh Commissioner dr. Julie morita. "they promote better overall health by reducing lung and heart disease including cancer.  i commend the property managers on this smokefree initiative and their dedication to making Chicago homes safer and healthier."  Specifically, the poll says 44 percent of property managers prohibit smoking in all of their units, while another 14 percent designate some of their units as smokefree. the study also reveals

ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

Shown here is The Catalyst Apartments managed by Marquette Property and located at 123 N. Des Plaines St in Chicago.

that 74 percent of buildings restrict smoking in all or some of their exterior common areas. “these are the trends we are always thrilled to see, but the survey also shows that we have a lot of work to do,” said Kristen Young, executive

director of the lung association of greater Chicago. “Secondhand smoke can easily migrate from unit to unit through doorways or common ventilation systems. this is dangerous because secondhand smoke contains more than 4,000 chemi-

6 ChiCagoland BuildingS & environmentS

cals, 69 of which are known to cause cancer. So given that courts have held that residents do not have a constitutional right to smoke in rented properties, we believe the negative health effects caused by secondhand smoke justifies prohibiting this harmful behavior in apartment residencies.” “Property managers within our membership recognize that an overwhelming number of residents favor smokefree policies,” said michael mini, the executive director of the Chicagoland apartment association. “in addition to the obvious health benefits, prohibiting smoking decreases the risk of fire and lowers maintenance costs. managers respond to resident demands, and while a smokefree policy isn’t right for everyone, we see the trend moving towards becoming the new normal for Chicago’s rental apartments.” $

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pRopeRty pRoFile

By MaRianne geigeR & leslie FRieBeRt

Serosun Farms & Swainson’s House feature Eco-Luxe Living in late June of this year, Serosun Farms debuted the Swainson’s house, a highperformance luxury home, boasting innovative green technologies, sustainable and healthy design and luxurious amenities.


he model home is designed to set the standard for custom homebuilding at Serosun Farms, a cutting-edge, sustainable development in the far northwest suburbs of Chicago, and will represent a key component in its all-encompassing, nature-inspired lifestyle experience. the Swainson’s house, named after a rare indigenous hawk that often perches on the site, is the proverbial “feather in the cap” of the development’s vision for agricultural urbanism. the first of its kind in the u.S., Serosun Farms is an agricultural preservation community located 50 miles northwest of Chicago in hampshire, ill. it is a working organic farm that upholds and embraces the land's prairie heritage and early days of agriculture. Situated on 410 acres with 114


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ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

home sites, the sustainable community will bring its residents a healthy living experience through adaptive agricultural practices, a state-of-the-art equestrian facility and high-performance, luxury homes. eventually, Serosun Farms seeks to become a viable farm-to-table operation, drawing on its unique agricultural production to bring nutrientrich produce to the wider community. “not only are there substantial health and environmental benefits derived by living in a green-built home, but Serosun Farms is also offering a lifestyle with rare access to natural fea-

tures such as a prairie, restored savannah woodlands, wetlands, wildlife, a working farm and community gardens,” said Serosun Farms developer John deWald. “Seventy-five percent of our 410 acres is preserved so residents can enjoy and benefit from nature.” the presence of the Swainson’s hawk on the property represents the focus on heritage wildlife and guides the way toward continued habitat improvements that Serosun Farms hopes to achieve in its restoration efforts.

The Swainson’s House the Swainson’s house is a cutting-edge, 3,900 square foot model home that was brought to life by the Serosun Farms team led by deWald and in collaboration with Funke architects, Kettlekamp landscape architects, Cr embassy Construction, evolutionary home Builders and troste design.

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the home will meet the world’s premier benchmarks for green building, including u.S. green Building Council leed v4 certification and national association of home Builders green Build certification and energy Star v3 certification. the home is also shooting for a home energy rating System (herS) score of 25-30. the Swainson’s house brings together luxurious amenities within an updated american Foursquare design. the home’s outdoor features include natural prairie landscaping, a grand wraparound porch and a semi-detached garage. the interiors of the home take on a more contemporary farmhouse aesthetic and include a spectacular great room with a gourmet kitchen featuring energy and water efficient appliances, a bedroom wing on the first floor, a finished basement and a spacious, second-level loft. each home at Serosun Farms will be built on a one-acre lot with a focus on traditional rural american architecture. the homes can be designed in a variety of styles and will range from 2,000 square foot cottages and farmhouses to 6,000 square foot estate homes. all Serosun Farms homes must meet sustainable and healthy home design criteria.

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pRopeRty pRoFile

Sustainable Design Highlights the home’s design, construction and development techniques and materials minimize its impact on the environment while conserving natural resources and reducing energy costs for homeowners. Some of the sustainable design attributes in the model high-performance luxury home include: • advanced framing techniques • a high efficiency thermal envelope • energy efficient windows and passive solar elements • Composite siding, trim and decking • a geothermal heating, air conditioning, and hot water system • an automated energy recovery ventilation (erv) system • energy and water efficient appliances • Water efficient plumbing fixtures • high efficiency lighting • advanced home automation system • Sustainable and healthy interior finishes including bamboo flooring and Crystal Cabinets • rain harvesting and green roof systems

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• a drought tolerant mixed traditional and native-based landscape comprised of over 50 percent natural prairie

Partnerships “We have developed a strong set of partners, from our design team, builders, sub-contractors and finance team to our product and technology vendors to help deliver cost effective and top quality, high performance homes for our buyers,” notes deWald. “We have also leveraged our food, farm, conservation and sustainable living non-

profit partners to help us advance our vision of a sustainable community which we hope will set the standard in ‘agricultural urbanism’. Serosun Farms’ rare blend of sustainable living and agricultural preservation with modern luxury and architectural significance offers something for everyone that we hope will endure for generations.” $

ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

B y : J o a n n e e l l i o t t - e l l i o t t & a s s o c i at e s

MCD Golf & Bocce Outing

Expanded Tax Incentives for Commercial and Industrial Cook County Properties Cook County offers several tax incentives to owners of commercial and industrial property. the incentives are valuable, reducing property taxes by 55% over a 12-year period.


hey apply when a new building is built, an existing building is substantially renovated and enlarged, or when “abandoned property” (a building vacant long enough) is re-occupied. The incentives apply to industrial property anywhere in Cook County and to commercial property in economically disadvantaged areas. Cook County has expanded these incentives over recent years. Under prior law, the incentive for re-occupancy of abandoned property only applied to bona-fide purchasers for value; however, recent changes allow existing owners to qualify if their buildings were vacant for at least one-year and approval is obtained from both the municipality and County. Another recent change (called the SER program) allows long-term owners of industrial buildings to qualify if they can demonstrate their business suffers an economic hardship due to factors related to the building they own or lease (such as deferred maintenance, blight, vacancy, etc.). In 2014, the County adopted a new incentive that applies to commercial projects that would not otherwise be economically feasible without assistance. This is known as Class 7c or the CURE program. The CURE program offers a 60% reduction in assessment for three years, a 40% reduction in year 4 and a 20% reduction in year 5 and can be renewed for an additional 5-year term. The basic eligibility requirements are as follows: The property’s assessed value, equalized assessed value or real estate taxes for three of the last six years must have

declined or remained stagnant due to the depressed condition of the property. There must be a reasonable expectation that the project is viable, will likely go forward if CURE is granted and that CURE will result in the economic enhancement of the property. The project must satisfy “but for” and “condition subsequent” tests. Essentially, this requires that the commercial development project will not go forward without the CURE incentive and the commercial development will remain feasible after the incentive expires. The taxpayer must convince applicable governmental authorities that the commercial development will ultimately result in an increase in real property tax revenue and employment opportunities. To apply for the CURE incentive, a completed application, supporting documentation and a resolution/ordinance from the municipality where the real estate is located must be submitted to the Cook County Assessor and the Bureau of Economic Development prior to the commencement of construction, rehabilitation or reoccupation of the property. If the CURE designation is granted, the recipient must file an annual affidavit attesting to the property’s use and employment. $ editor’s note: the requirements for these tax incentives are complicated and technical and we have only briefly outlined the requirements. if you think your property may qualify for a tax incentive, you should consult a qualified tax attorney.

10 C h i C a g o l a n d B u i l d i n g S & e n v i r o n m e n t S

Y Pictured above is 1st place foursome from Chicagoland Community Management - Stan Niketic, Tony Briskovic, Rudy Karastanovic and Mitch Vucic. The 19th annual MCD Golf & Bocce Invitational was held on July 17, 2015 at Eaglewood Resort in Itasca. Over 200 participants played golf or bocce and enjoyed industry networking at a special reception. Special thanks to Tim Conway of Golub & Co. and Mydraine Janvier of ALMA Property Management who served as co-chairs. Major sponsors of the event were Suburban Elevator, Westside Mechanical, FirstService Residential and Xfinity Communities

FirstService Residential

FirstService Residential held their annual Vendor Expo on Friday, July 24th. Over 200 guests were in attendance along with 60 industry partners that exhibited their products and services to FirstService managers and operational teams. Held at the Abbington Banquet Hall in Glen Ellyn, FirstService Residential proudly donated over $11,000 of the event proceeds to the Neighborhood Housing Service of Chicago (NHS). Visit to see how NHS supports and revitalizes neighborhoods in need. A legal update seminar and discussion was held for property managers and board member attendees. FirstService Residential President Asa Sherwood commented, “thanks to our managers and partner exhibitors we had another successful year for our Vendor Expo.”

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industRy happenings

IREM Chicago Golf Outing

đ&#x;“– industry happenings Landscape Concepts Management

Y Shown here is John Santoro of Lieberman Management (Men’s Low Score- Member) and Katelin Dorsey of dk condo (Women’s Low Score-Member). Scores of IREM Chicago members, Industry Partners participated in the IREM Chicago 29th Annual Golf Outing & Silent Auction that was held at the beautiful Kemper Lakes Golf Club. 147 golfers and many non-golfers also took part in the post-golf reception, Vendor Expo and Silent Auction. Along with golf and the festivities within the Kemper Lakes Club House, attendees were generous in bidding during the Silent Auction. $12,500 was raised for Breakthough, a Chicago non-profit organization that helps people in need develop skills and improve their lives. According to Teri Lind of IREM Chicago, “Our Industry Partners also greatly contributed to the success of this year’s event through their sponsorship of the continental breakfast, cookout lunch, dinner buffet, open bar, trophy holes and tee boxes, and participation in the Vendor Expo.� Special thanks to Linda Carrasco, CPMŽ, Chairperson of the 2015 Golf Outing & Silent Auction Committee and Co-Chair Katelin Dorsey. 2015 Chapter President June McCrory, CPMŽ, served as the Silent Auction Committee chair. IREM Chicago’s next event in being held on November 12th at Cliff Dwellers in Chicago.

Landscape Concepts Management held an open house at their corporate offices located in Grayslake, IL on August 6th. Nearly 150 client, colleague and supplier guests attended the event which featured a pig roast, craft beers, and live music. Landscape Concepts Management was founded in 1981 by Mike Kerton and is now one of the largest and most diversified commercial landscaping companies in the Midwest, with hundreds of employees and annual revenues in the tens of millions. In addition to their corporate office facility in Grayslake, LCM has Chicagoland branch offices in Aurora and Chicago and also has a

Y Shown here is Teri Lind, Elena Jimenez, June McCrory and Nick Helmer. Milwaukee area branch office located in Mequon, WI. The company also has its own tree nursery and grows its own perennials out of Bristol, WI.

Chicago Association of Realtors The spotlight was on the Chicago real estate industry as the Chicago Association of REALTORSŽ hosted their 132nd Inaugural Gala to honor members of the profession on Thursday, September 24 at the Hilton Chicago, 720 S. Michigan Ave. The 132nd Inaugural Gala is the annual installation and awards ceremony for incoming C.A.R. leadership and other Chicago-area real estate luminaries, including the induction of the newest members of the C.A.R. Hall of Fame and the celebration of the 2015 REALTORŽ of the Year. More than 700 attendees attended the event. This year’s honorees include: • 2015-2016 C.A.R. President Dan Wagner, Inland Real Estate Group • 2015-2016 C.A.R. President-Elect Matthew Silver, Urban Real Estate

• 2015-2016 C.A.R. Treasurer Rebecca Thomson, @properties • 2015 C.A.R. REALTORŽ of the Year Matthew Farrell, Urban Real Estate

• 2015 C.A.R. Hall of Fame inductees Y Dan Wagner Larry Klairmont and Alfred Klairmont, Imperial Realty Company Additional recognition included: • REALTORŽ Achievement: Bob Krawitz, RE/MAX Signature

• REALTORŽ Community Service: Thaddeus Wong, @properties

• Affiliate of the Year: Scott Burgess, Citywide Title Corporation

• Managing Broker of the Year (1-50 licensees): Eduardo Garcia, Realty of Chicago

• Managing Broker of the Year (51+ licensees): Darlene Little, Berkshire Hathaway HomeServices

đ&#x;“– industry happenings autumn 2015

ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

Emerald Awards the uSgBC illinois emerald awards program is a showcase of the best and brightest contributors to a more sustainable built environment by recognizing outstanding individuals, organizations, projects, and technologies implemented across illinois.

Z Sarah E. Goode STEM Academy

The 10th annual Emerald Award winners that were announced in April of this year include: Colin Rohlfing, vice President and Sustainable design leader in hoK’s Chicago office, was honored with the Intent to Matter: Individual Leadership award for his outstanding career to promote unique industry collaborations that move sustainable practices forward and transform our built environment. Niles Township High School District 219 was recognized with the Intent to Matter: Outstanding Organization award for their comprehensive plan to leverage green infrastructure to supercharge the achievement of every student and ensure the next generation of eco-conscious citizens. the district works to reduce its environmental footprint, and inspires its students, staff, and community to become active participants in doing so. Method received a Green Building Innovation award for the industry’s first leed Platinum manufacturing facility in the historic Pullman community. the facility exudes the company’s core mission and its commitment to the environment and sustainability. University of Chicago’s Child Development Center in Stony Island was recognized with a Green Building Innovation award. the Center beautifully immerses the children with the natural world providing exciting opportunities for discovery and sensory development while emphasizing the natural landscape over the built one. Sarah E. Goode STEM Academy was

acknowledged with a Green Building Innovation award for the design team’s remarkable efforts to bring the first leed Platinum rating to Chicago Public Schools. the project’s innovative water use and management, passive solar systems and health-focused student environment set a high sustainability bar for K-12 schools. Space to Grow: Greening Chicago’s Schoolyards received the Chapter Mission award recognizing the impact collaborations can have in building better, brighter and healthier spaces to live, learn and work. this diverse coalition of organizations is transforming Chicago schoolyards into spaces that provide students and their community with opportunities for active play, outdoor learning, environmental literacy and engagement with art,

12 C h i C a g o l a n d B u i l d i n g S & e n v i r o n m e n t S

while addressing neighborhood flooding issues. earlier this year, illinois was recently recognized as the state with the most leed-certified (leadership in energy and environmental design) square footage per capita for the second year in a row. the distinction places illinois at the forefront in the movement for sustainable building design, construction and operation. "this year, the outstanding achievements in sustainable leadership being recognized underscore why illinois is leading the nation in green building innovation," said Brian imus, uSgBC-illinois executive director. "We applaud their efforts to help make our buildings and communities more sustainable, prosperous and healthy." $

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11:00AM - 3:00PM December 10, 2015 Chicago Cultural Center

78 E. Washington St., Chicago IL

5th Floor Washington & Garland Rooms For more information Call 630-202-3006 Visit our website at ...Or e-mail us at


Luncheon & Keynote Speaker

• State of the Industry Panel Discussion, Q & A

Followed by Seminar Sessions

• Legal and Case Law Updates (Manager Licensing Update New Rules Proposed, Short Term Rentals & More) by Gabriella Comstock -Keough & Moody, P.C.

CondoLifestyles Buildings Environments Chicagoland


• How to Find and Retain Quality Property Managers & Board Members • Living with Palm II & Other Recent Court Cases • Property Tax Appeals • Chicago Ordinance Update (Life Safety, Energy Benchmarking & more) • Technology, Communication & Meeting Strategies (e-mail, social media, web sites, conference calls, drones, etc.) • Managing Renters & Advice for Boards

2015 Committee: Tony BriskovicChicagoland Community Management Michael Donnell FirstService Residential Tairre Dever-Sutton -Tairre Management Mydraine Janvier ALMA Property Management Mickey Tierney & Natalie Drapac Community Specialists Diane White - The Habitat Company Tom Skweres ACM Community Management


editoR’s Message



Buildings Environments Volume 11, No. 1, Autumn 2015


he summer of 2015 started very cool and wet until July came and then mother nature turned up the heat. We had many

days with temperatures of 90 degrees or higher. the warmer temperatures we experienced here in the Chicagoland area were stressful on energy budgets as well as outdoor landscapes. extreme weather, of course, reinforces the need for energy conservation practices and the

Volume 22, No. 1, Autumn 2015

benefit of investing in new equipment and technology. autumn is a fantastic season for enjoying the outdoors although many of us spend long hours inside at this time of year setting budgets for next year. thanksgiving will soon be here and after that we’ll be bracing for another Chicago Winter. make plans now to prepare your building (s) and

Editor & Publisher Michael C. Davids

grounds for winter weather conditions. our cover story for this issue of CBe provides a review of the basics of Chicago’s energy

Vice President Sherri Iandolo

Benchmarking ordinance. the 3rd phase of this ordinance’s coverage includes a deadline for all

Art Director Rick Dykhuis

port by June 1st, 2016.

Contributing Writers James A. Fizzell, Cathy Walker, David Mack, Pamela Dittmer-McKuen Circulation & Administration Carol Iandolo, Mary Knoll, Arlene Wold

Chicagoland Buildings & Environments (and The Landscape Buyer) is published in Spring and Fall by MCD Media as an independent magazine to inform owners, managers and others involved with commercial, multi-family, institutional and government properties about sustainability as well as property maintenance and restoration. CIRCULATION: Chicagoland Buildings & Environments (and The Landscape Buyer) maintains a circulation of 8,500. Subscriptions are available for $19.95 per year. Group subscriptions are available at $13.95 each, per year (orders of 5 or more). Single issues are available for $10.95. All material herein is copyrighted. No part of this 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, the services of a competent professional should be sought. Contact us at:

935 Curtiss, Suite 5, Downers Grove, IL 60515

residential buildings in Chicago over 50,000 square feet to file their first energy benchmarking reour second story is a feature on the growing trend of smoke-free apartment (rental) buildings. this article features the results of a recent survey conducted by the Chicagoland apartment association which showed that over half of the (rental) apartments in the Chicagoland area prohibit smoking. the uSgBC’s emerald award winners are recognized in a special feature and an article featuring the winners of round 4 of Chicago’s green office Challenge can also be found in this issue. a Property Profile article in this edition offers a glimpse of Serosun Farms, a sustainable development which is planned as an agricultural preservation community. Property taxes for commercial and industrial buildings is the subject of one of the articles in our money matters column while accounting issues for commercial condominiums is discussed in a second article under our money matters category. another feature article in this issue covers some of the most misunderstood aspects of warranties that building owners and managers should be aware of. Jim Fizzell’s regular feature (in the landscape Buyer) on the weather and your landscape provides some helpful tips on preparing your outdoor landscape for the coming winter season along with a winter weather forecast. our regular industry happenings column in this edition offers several noteworthy and informative green building stories for your benefit. We will continue to explore many other green building trends and initiatives in coming issues of CBe. if you have a green story to share please let us know. if your property has a special need or challenge, mCd media produces special events that feature a variety of resources and experts to assist you. many members of our CBe advisory board will attend these events. there are also key resources from our sister publication Condo lifestyles available at our special events. Please consider attending our upcoming State of the industry seminar and luncheon being held on december 10, 2015. You can view photos from various events we produce and others we participate in at the mcd media Facebook page. thanks to the many new subscribers that have found our publications useful and informative. Special thanks to the firms, associations and groups that are authorized distributors of Chicagoland

Phone us at:

Buildings and environments, the landscape Buyer and Condo lifestyles. those of you who are inter-


ested in becoming subscribers can obtain subscription information on our website

E-Mail us at: $ Visit us at:

Michael c. davids

editor and publisher

14 C h i C a g o l a n d B u i l d i n g S & e n v i r o n m e n t S

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Levenfeld Pearlstein, LLC 312-476-7556 Howard Dakoff /

BALCONY REPAIRS THE RESTORATION GROUP 24 Hours- 630-231-5700 Structural Repair Services / Balcony Repair and Replacement Stair Tower Repair and Replacement Fire and Water Response and Restoration

J. Hershey Architecture 847-549-5900

Evaluations/Bid Repair Specificatons/Reserve Studies


Superior Reserve Engineering Consultants 888-688-4560

Waldman Engineering 630-922-3000 Energy Benchmarking Studies & Compliance Services, Reserve Studies, Specifications

ASPHALT Hard Surface Solutions 815-344-8400 / 630-916-8005


Bral Restoration, LLC 847-839-1100 Masonry and Concrete Restoration

Dakota Evans Restoration, Inc. 847-439-5367 Tuckpointing ~ Masonry Repairs Waterproofing ~ Terra Cotta Repairs Caulking & Sealants ~ Structual Repairs Cleaning ~ Balcony Restoration Concrete Restoration

Holton Brothers, Inc. Masonry Repair Services, Tuckpointing, Caulking and Concrete Restoration

847-253-3886 TEL / 847-253-3255 FAX

Riggio/Boron Ltd. A Total Exterior Facade Restoration Company


Community Advantage A W I N T R U S T C O M PA N Y

847-304-5940 Loans, Reserve Investments & Lock Box Services

CARPET CLEANING Done Just Right Inc. 630-893-0757 |

Mutual of Omaha Bank Community Association Banking 312-209-2623 HOA Banking - Internet Cash Management HOA Loans - Online Payment Systems Dedicated Customer Service www.mutualof

CONCRETE Hard Surface Solutions 630-916-8005 / 847-838-6610 Concrete Flatwork Specialists / Asphalt Paving Curbs & Driveways / Sidewalks / Footings &Foundations Colored & Stamped Concrete / Aggregate Finish Concrete Parking Structure Maintenenace & Repair Contact Tom Frye


ChiCagoland BuildingS & environmentS




CRC Concrete Raising & Repair (847) 336-3400

CenterPoint Energy Solutions (630) 795-2594

We Save Concrete, You Save Money!


Natural Gas & Electric Energy Reliable Service. People You Trust. Contact: Vickie Farina

Woodland Windows & Doors 630-529-Door (3667) Window and Related Masonry Interior & Exterior Doors | Siding & Gutters

DUCT CLEANING Airways Systems, Inc. 630-595-4242 Cleaning: Air/Laundry/Toilet Exhaust Ducts, Coils, Trash Chutes, Parking Garages. ALso Air Filters, Belts

Oceans Energy 312-870-0580 |

All types of Environmental Cleaning.

Waldman Engineering 630-922-3000 Energy Benchmarking Studies & Compliance Services, Reserve Studies, Specifications

Westside Mechanical Group 630-618-0608 / 630-369-6990 Serving the Tri-State Area Since 1970 Contact: Jackie Loftis *


Brouwer Bros. Steamatic 708-396-1444


All types of Environmental Cleaning. Air & Exhaust Duct Cleaning • Mold Remediation Garbage Chute Cleaning • Carpet & Drapery Cleaning Photo Inventory, Moving, Storage or Removal

(630) 544-6829 FAX

Suburban Elevator Co. 847-743-6200 Simplifying Vertical Transportation Contact: Max Molinaro

Fire Detection & Signaling Systems Fire Alarm Systems Chicago Life Safety Evaluation Solutions Security Systems/CCTV Card Access Systems

Northern Illinois Fire Sprinkler Advisory Board (NIFSAB) 866-2NIFSAB (866-264-3722) 708-403-4468


Done Just Right Inc. 630-893-0757

Smart Elevators Co. (630) 544-6800

ConTech MSI Co. 847-483-3803

Brouwer Bros. Steamatic 708-396-1444


QCI Restoration 847-891-2929 | 866-832-6724

The Restoration Group, LLC 630-870-0658

16 C h i C a g o l a n d B u i l d i n g S & e n v i r o n m e n t S

EMCOR Services Team Mechanical (847) 229-7600

HOLIDAY DECORATIONS Balanced Environments 847-395-7120 630-916-8005

HVAC Althoff Industries 312.332.5700 Mechanical - Plumbing - Electrical - Building Automation

EMCOR Services Team Mechanical (847) 229-7600

Westside Mechanical Group 630-618-0608 / 630-369-6990 Serving the Tri-State Area Since 1970 Contact: Jackie Loftis *

The YMI Group, Inc. 847-258-4650 Mechanical - Plumbing - Building Automation - Service

autumn 2015




Brouwer Bros. Steamatic 708-396-1444

Semmer Landscape 708-926-2304

CertaPro Painters of the North Shore (847) 287-2642



Hollinger Services, Inc. 847-437-2184

Spring Green Professional Lawn & Tree Care 800-830-5914

Interior & Exterior Painting Wallcoverings • Decorating • Remodeling Drywall Repair • Decks & Staining Tile Installation • Metal & Iron Painting

Mesirow Financial 312-595-8135 Nancy Ayers



NonStop Locksmith 312-929-2230 Locksmith Services, Intercom & Access Control Systems, CCTV, Overhead Garage Doors

Done Just Right Inc. 630-893-0757 |

LANDSCAPE CONTRACTORS Alan Horticultural Services, Inc. 630-739-0205

ILT Vignocchi 847-487-5200

PEST MANAGEMENT SERVICES Brouwer Bros. Steamatic 708-396-1444 All types of Environmental Cleaning

QCI Restoration 847-891-2929 / 866-832-6724

NUISANCE WILDLIFE Smithereen Pest Management Services 847-647-0010 OFFICE RENTAL/LEASING

Sebert Landscaping, Inc. 630-497-1000

DuBois Paving 847-634-6089 / 800-884-4728


Landscape Concepts Management 847-223-3800


Balanced Environments 847-395-7120 / 630-916-8830

Precision Painting and Decorating Corp. (630) 688-9423

The Alter Group 630-620-3600

All-Over Pest Solutions (773) 697-1100 Bed Bug Specialists. Results Guaranteed!

Smithereen Pest Management Services 800-336-3500

PLUMBING Lifeline Plumbing 847-468-0069 Plumbing - Heating & Air Conditioning Water Heaters - Sewer Cleaning & Repair Hot Water Drain Jetting



ACM Community Management 630-620-1133

AAA Painting Contractors, Inc. 630-231-8350 autumn 2015

ChiCagoland BuildingS & environmentS





Alter Asset Management 630-620-3600

B.T. Lakeside Roofing 630-628-0093

Hard Surface Solutions 630-916-8005 / 847-838-6610

Associa Chicagoland 312-944-2611 / 847-490-3833

CSR Roofing Contractors 708-848-9119


Industrial/Commercial/Multi Tenant/High Rise All types of Roofing Leak Trouble Shooting/Roof Repairs Roof Check 365 Maintenance Programs Conventional and Single Ply Roofing

Solar Service, Inc. 847-677-0950

Baum Property Management, LTD. 630-897-0500

Caruso Management Group, Inc. Residential & Commercial


FirstService Residential 312-335-1950 Contact Asa Sherwood

Lieberman Management Services 847-459-0000 / 312-202-9300

Tairre Management (847) 299-5740

REAL ESTATE TAX ATTORNEYS Elliott & Associates 847-298-8300

S&D Roofing Service (630) 279-6600 250,000 roofs installed since 1963 TEAR OFFS • SHINGLES • FLAT ROOFS Multi-Family ROOFING Specialist Our experience & technical know-how gets the job done right the first time! |

Contact Tom Frye

TREE CARE & PRESERVATION Landscape Concepts Management 847-223-3800 Tree Pruning / Tree Installation / Replacement Tree Preservation / Tree and Stump Removal Insect and Disease Control / Tree Protection Mulching / Gator Bags & Watering Services



Admiral Security Door Staff Solutions (847) 588-0888

XFINITY Communities 1 800 XFINITY For more information E-mail:

SHEET METAL [CUSTOM] J.J. Superior Sheet Metal, Inc. (708) 544-3757


Architectural Sheet Metal Specialists Coping, Counter Flashing & Specialty Copper Work Gutters & Custom Roofing Accessories

Lakeshore Recycling Services 773-685-8811

Property Tax Attorneys



Worsek & Vihon LLP 312-368-0091

Woodland Windows & Doors 630-529-Door (3667)

Woodland Windows & Doors 630-529-Door (3667)

ROOFING Adams Roofing Professionals, Inc. 847-364-7663 Roofing -Siding -Gutters - Insulation

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18 C h i C a g o l a n d B u i l d i n g S & e n v i r o n m e n t S

autumn 2015

the landscape BuyeR


By JaMes a. Fizzell


Will Mild Summer Portend Mild Winter 2015-16?

planted Freemanii maple cultivars and lindens was reported.  there were reports of sudden dying of old, native trees such as hickories, and some oaks as well.  many of these were in irrigated lawns and had developed unusually shallow root systems. Some exposed plantings of the hardy landscape roses were killed outright. turfgrass damage was due to snow mold, salting, and to scuffing by snow plowing. 

Spring 2015 was Slow to Arrive


e have been writing this column for nearly two decades, relying on the expertise of our good friend and weatherman par excellence, greg Soulje*, for his astonishing prognostications. in the column last winter, Weather guru, Soulje predicted a wet spring with below normal temperatures, delayed planting, and slow crop development.  he also predicted the cool summer with roller-coaster temperatures and no extended heat waves.  Starting out very wet, the season would be moderating to quite dry by the end of July, he said.  he could not have been more accurate.   looking back on some of Soulje’s other amazing predictions, a year ago in this column he had suggested that the 2014-15 winter also would be a roller coaster weather-wise, with icy, rainy, snowy weather all season but no extended cold waves or warm spells.  that certainly was true.  last winter was cold, with something like 20 days with lows below zero, and nearly four feet of snow. much of the cold occurred when the ground was relatively free of snow.   the average temperatures were a little below the norm for the season, but averages don’t really

autumn 2015

show the season’s big temperature swings that Soulje had predicted, and which recurred all winter. these forecasts followed a winter (2013-14) for which he accurately predicted unusually heavy snowfall and very cold temperatures.

Effects of Weather Obvious the effect of the extremely variable weather on plantings was obvious all season. damage from two harsh winters started to show up as failure to leaf out, dieback, and even total dying of plants.  trees and shrubs as well as herbaceous plants were affected.  evident were catalpa trees and redbuds.  Some catalpas leafed out slowly and never did fully leaf out.  dead wood in redbuds was being supplanted by new shoots growing from the roots. normally these plants are expected to stand whatever the midwest winters throw at them.  there was some speculation that these affected plants were southern-grown, or were southern selections, geotypes, that had survived up to now because of the previous mild winters.  Severe frost cracking on some newly

Spring, 2015, was slow to arrive. Cool temperatures due to a constant east wind off lake michigan, and dark, cloudy weather slowed things down.  day after day of wet weather delayed spring clean-up and planting.  increasingly stormy weather continued as expected into late spring and early summer.  according to the weather reports, the temperatures averaged a little above normal, not because of warm days, but due to the cloudiness that kept the night-time temperatures from dropping to the expected lows.  as things started growth last spring, the cool weather delayed development of some kinds of plants.  those that normally start early were well developed before some of the slower ones even began growth. there was plenty of moisture, too much in some places, but eventually things grew well.   By the start of summer, plants were as green and lush as we had seen in years.

Cool, Wet Pattern Continued into Summer the cool, wet pattern continued well into summer. Soulje had expected the weather to change abruptly about the 4th of July trending drier and warmer.  the change did begin in late July.  after months of above average rainfall, our rain gauges recorded less than three inches in august, although some local areas experienced tremendous amounts of rain from isolated thunder storms. august is normally our wettest month with around five inches of rain expected.

ChiCagoland BuildingS & environmentS


the landscape BuyeR

Low Pest Levels from Weather the weather was instrumental in keeping insect pests at a low level. in wet seasons, insects are attacked readily by fungus diseases that keep them under control.  the customary invasion by Japanese beetles and masked chaffer adults never materialized.  the larvae had succumbed to the deep frost in the ground last winter.  Japanese beetle grubs dig down only 10 inches or so to escape freezing.  masked-chafer white grubs dig somewhat deeper.  the ground froze a lot deeper than that wherever there was minimal snow cover. the low population of adult Japanese beetles and masked chafers resulted in a lack of grub damage in turf later this past summer.  also, the grass was green and growing even where it was not irrigated.  this gave the egg-laying beetles plenty of sites to choose from and reduced the possibility that only well-watered turf would get grubs. 

Plant Diseases Were Delayed While wet weather can acerbate disease problems, many diseases need free moisture to germinate and grow. When it rains almost continuously, the spores are washed off the leaves before they can grow and infect the foliage.  Foliar diseases did develop later in the summer when frequent rainfall abated.

August Was Dry as July turned to august and the rains were less frequent, plantings, and especially lawns, quickly dried out. Some trees began to wilt and to drop their oldest leaves.   Were it not for the comfortable temperatures, some significant damage may have developed.  With highest temperatures mostly in the 80's, only six 90-degree highs were recorded during the meteorological summer. there were more at some other recording sites. after so much early rain, the rapid drying of the soil was unexpected by many casual observers.  however, experienced landscape contractors are aware that in wet weather soils develop excellent drainage.  that drainage doesn’t stop when the rains stop.  as the water drains deeper into the soil, it pulls in air behind it, drying the ground very rapidly.

El Nino Appears to be Developing all indications are that a strong el nino is developing, which could affect the weather for the remainder of this year, and possibly well into next season. For an update on expected weather for the rest of the summer, fall, and early winter, we are fortunate once again to have the expertise of our weather guru, greg Soulje  . according to Soulje, no two el nino seasons are the same.  there are too many other con-

founding factors. this year the Pacific decadal oscillation has pushed a large pool of warm water off the northwest coast of north america deflecting the jet stream.  Soulje expects the end of summer to signal a change from the pleasant warmth of early autumn, to a fall season featuring early cold and temperatures below, to well below normal.  an early freeze can be expected, he says.  the fall will be increasingly wet with possible snow in late September, and the first big snow about the third week of october.  Snowfall will be above average in early winter with a total of maybe 40 to 50 inches of the white stuff for the season.  anticipating an early start to winter, it would be prudent to get as much fall work as possible done while the weather is still good.     We will “use up winter” early in the season, he says.  the coldest weather of the season will occur in late fall, but anticipated early snow cover will quite possibly prevent any frost in the ground. 

Looking into 2016 after the first of the year, things will moderate and the rest of the winter will be much milder. there will be dramatic temperature swings but no prolonged cold snaps, he says.  daytime temperatures generally will be in the 30's and 40's with wet snow.  most of the season will be cloudy which is common during mild winters.  With little frost in the ground, melting snow should soak in recharging the soil.  Snow mold develops where freezing-cold water stands, and always is severe during spells of freezing and thawing.  Where turf has suffered in the past from snow mold, treat with fungicides before the season begins and again when winter weather allows.

Protecting Plants Protect plantings exposed to salt spray, winter sun, and winter winds. Wrap upright evergreens with burlap.  install burlap screens tacked to wooden stakes on the south and west sides of lower-growing evergreens especially broad-leaf evergreens exposed to the winter elements.   Wet snow will pull down evergreens and other weak trees and shrubs.  Bundle these in burlap and tie them so they can shrug off the snow. heavy snow means heavy salting.   it is a lot easier to protect plantings and turfgrass from salt than trying to repair the damage next spring.  While they do not look the best, silt screens set up along walks and drives to prevent salt spray are worth the time and trouble.  delineate walks and drives with markers so snow plow operators will know where the pavement ends and the turfgrass begins.

20 C h i C a g o l a n d B u i l d i n g S & e n v i r o n m e n t S

Animal Damage May Occur deep snow covers up forage, and animals will attack ornamental plants to survive. Protect thinbarked trees with rabbit guards.  Shrub borders can be surrounded with chicken wire fences.   deer feeding is very difficult to prevent.  deer can eliminate a yew planting almost over-night.  Cages of hardware cloth over re-bar will prevent this loss. the cages are expensive, but can be used year after year.  high-value plantings such as those in office complexes, on some estates, or in botanic gardens are worth protecting. mice will build extensive tunnel systems under the snow where they are fully protected from predators and the elements.  these pathways often show up in turf areas when the snow melts in spring.  Before it snows, have maintenance personnel pull back mulch and groundcover plantings around the bases of trees so they are not attractive hiding places for mice.  this will prevent them from taking up residence around the plants they intend to live off all winter.  later, walk down the snow around these plants so any mouse tunnels are flattened.  if mouse pressure is heavy, consider gladiator in bait boxes so other animals can’t get into it.

Holiday Decorations installing holiday decorations is much easier and much faster if the weather is still mild. decorations don’t need to be turned on until after thanksgiving.

Plan Your Snow Removal Before the snow season begins, meet with your snow contractor to decide where the snow from parking lots and drives will be piled.   it is important that you and the plow operators are aware beforehand where to put the snow.  if not planned in advance, at 3:00 a.m. in the cold and snow, the plow operator will shove it wherever there is room.

Mild Winter? does the mild summer portend a mild winter? i guess the answer is Yes and no.  early winter is expected to be hard, but the latter part may be quite mild.  time will tell! With preparations completed, we are really at the mercy of whatever nature does throw at us. Your Professional landscape Contractor is well aware of the needs of your plantings, and can be relied upon to do everything possible to make sure they survive the winter.  many will make mid-winter inspections to be certain all is in order.  all we can do is assume that the time and effort we have put in will keep the plantings in the best shape possible. $

*Greg Soulje Professional Meteorologist, Hinsdale, IL

autumn 2015

M o n e y M at t e R s

B y s t e v e n s i l B e R M a n , c pa - F R o s t, R u t t e n B e R g & R o t h B l at t, p. c .

Income Taxes For Commercial Condominium Associations… Are They The Same As Commercial Rental Properties? if you are a recent owner or property manager managing a Commercial Condominium association (“CCa”), you must understand that both accounting and income taxes for a CCa are significantly different than a Commercial rental Property. CCa’s are required to follow the illinois Condominium Property act and the by-laws and declaration of the association.

3. the assessment must be accounted for as a capital contribution and held for that purpose. the books and records of the association and the budget should segregate operating and reserve (capital) activities. Consequently, the association benefits from using fund accounting. 4. reserve (capital) assessments should be deposited into a separate account and reserve expenses should be paid out of this separate account. an association can pay for capital expenditures out of the operating fund account as long as the reserve account reimburses the operating fund account in a relatively short period of time.

Segregate Membership And Non-Membership Activities


hey must also follow certain internal revenue Code (“irC”) sections that apply to Condominium associations. income taxes for a CCa are not merely calculated by subtracting expenses from income and applying an income tax rate to the net amount. CCa income taxes are much more complicated.

Fund Account Should Be Used the first important concept that you should understand is that CCa’s should be using fund accounting in order to possibly reduce their income tax liability. the following types of funds can be used: 1. Operating – this fund is for budgeted estimated common area costs of maintenance and operations. 2. Repair and Replacement (Reserve) – this fund is used to accumulate funds for future major repairs and replacement of existing common area components. the illinois Condominium Property act states that an association must maintain reasonable reserves. one method to determine reasonable reserves is to

autumn 2015

have a reserve study prepared. it is recommended that the reserve study be prepared by an outside engineering firm. 3. Capital Improvement – this fund is designated for the acquisition or construction of new common area components not in existence currently. 4. Contingency/Deferred Maintenance – this is a separate operating fund that can be used for large periodic maintenance items such as painting and caulking. irC Section 118 allows capital (reserve) assessments to be excluded from gross income and therefore treated as non-taxable on Federal Form 1120, if the association meets the following guidelines: 1. the purpose of the assessment must be capital in nature. the reserve study supports the purpose of the capital assessment. however, painting, even if included in the reserve study, is considered an operating assessment, not a capital assessment. 2. association members must have advance notice. distributing copies of the budget to the members is considered advance notice.

another important concept that one should understand is that CCa’s are subject to irC Section 277. under this section, associations must limit its deductions taken against membership income. For that reason, associations must segregate membership and non-membership activities for income tax purposes. associations can be taxed on both net membership income and net non-membership income. membership income is generally defined as gross income received from its members. nonmembership income is generally considered to be income from investments and income received from non-members. through various court cases, the internal revenue Service (“irS”) has provided guidance as to which expenses are eligible to be allocated against non-membership income and how to calculate the deductible portion of these expenses. an association’s tax liability depends upon whether they have net membership and net nonmembership income or loss. if the association has a net non-membership income, the association is taxed at regular corporate income tax rates. if the association has a net non-membership loss, the loss can be carried forward for twenty years or backwards for two years. Currently there is debate in the industry on whether an association can offset net membership income with a net non-membership loss. if an association has a net membership loss, that loss can be carried forward to future years. if the association has net membership income, the association will incur an income tax liability on this net income at the regular corporate income tax rates or it has another choice. $

ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

Election To Defer Paying Income Taxes For One Year On Net Membership Income the choice relates to the final concept that one needs to understand which is revenue ruling 70-604. under this ruling, the association may be able to defer paying income taxes or not pay income taxes at all on this net membership income. revenue ruling 70-604 allows associations to defer net membership income for one year, but if the association has net membership income in the next year, then the association would have to pay income tax on this deferred income in the next year. it is then extremely important for the association to do proper planning when they are preparing their budget for the upcoming year. the association must show the net membership income carry forward in next year’s budget. an association can also make an election under revenue ruling 70-604 to refund net membership income to its members, but this option is rarely exercised. however, please review your bylaws and declaration before making either 70-604 election. if your bylaws or declaration state that net membership income must be refunded to the members, then you can only make the election to

refund net membership income. a question that comes up often is: “Can an association transfer excess net membership income to reserves and then not have to pay income tax on this excess?” the answer is clearly no! an association cannot transfer excess net membership income to reserves to avoid paying taxes since the association cannot re-characterize what the assessment was originally intended for. in order for revenue ruling 70-604 to be valid, the election has to be approved annually by the members (usually at the annual meeting) and it should preferably be made before the end of the year. the dollar amount does not have to be specified. there has been debate on whether revenue ruling 70-604 applies to CCa’s. many in the industry believe the key to whether this revenue ruling applies is not whether the association is commercial or residential, but the scope of the activities of the association. if the scope of the activities of a CCa is similar to a residential Condo-

22 C h i C a g o l a n d B u i l d i n g S & e n v i r o n m e n t S

minium association (“rCa”), then revenue ruling 70-604 should apply. if the scope of the activities far exceed the scope of activities of a rCa, then it will not apply. accounting for a CCa and the elections and filing of income taxes is extremely complicated. Specialized knowledge is required in order for the CCa to benefit from the accounting and income tax rules. therefore, it is recommended that a CCa consult with professionals that specialize in the accounting and income tax rules for CCa’s. $

autumn 2015

Maintenance MeMos

B y J u s t i n M a i e R & n i k c l a R k - s u p e R i o R R e s e R v e e n g i n e e R i n g & c o n s u lt i n g

Don’t Misunderstand Your Warranties Board members for community associations are volunteers who often don’t have expertise in all the decision making that is required of them (nor should it be expected that they would). there are also others that are responsible for purchasing at various types of organizations who can sometimes lack a thorough understanding of warranties.


urchasing decisions, and long term capital planning decisions are sometimes improperly influenced by misunderstanding the realities of product warranties.

Consider Engineering History over Marketing Claims Product warranties aren’t always based on the content of the product. An error common to association planning, is to equate a warranty with a “useful life” of an

element. Consider warranties on asphalt shingles. In 2011, shingle manufacturers extended their product warranty without a change in the product itself ( While a shingle manufacturer may discover that their product is lasting longer than previously expected, a change in warranty coverage that didn’t correspond to a change in the product itself, demonstrates many products go on the market without the manufacturer having real-world observa-

tional data pertaining to their longevity. With new products especially, marketing claims (and sometimes warranty claims) do not have an engineering history to validate a marketing sales pitch. There are different types of product warranties. Many product warranties are a sales tool. Their purpose is to reduce purchase anxiety and/or overcome a barrier to a sale by providing assurances or guarantees of performance to the consumer. Some products may have a 90-day, or one year warranty, in spite of the fact that an actual observed useful life of that product may be significantly longer. Other warranties may suggest a useful life that is rarely attainable, or provide little value if the product can actually last that long.

Natural Gas and Electric Energy Services and Solutions CenterPoint Energy Services (CES) provides a wide range of competitive natural gas and electric services with energy solutions that meet our customers’ unique needs. • Competitive pricing • Personal, local service • Operational and market expertise Contact Vickie Farina at 630-795-2594 Visit us at

Reliable service. People you trust.

autumn 2015

ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

Pro-rated Warrnaties

Keep Record of Warranties

Roofing warranties are an often misunderstood document. It’s important to understand the different types of warranties in order to give them proper consideration in your long term capital planning. Many warranties are “prorated”. Pro-rated warranties have decreasing coverage as the product ages. If the product fails half way through it’s promised life, the warranty may only cover half its replacement value. Warranties might not cover the labor to remove the old product and install the new. A general rule of thumb for roofing is the cost to replace a roof is one-third labor to remove, one-third labor to install and one-third materials. Although roofing primarily includes shingles, it also includes underlayment, flashing and ventilation. If the shingles were to fail half way through their life, the pro-rated warranty would only cover half of less than one-third of the total roof replacement cost (less than 17% of the total roof replacement cost).

There are other considerations when it comes to warranties. Community association boards change and so do management companies. Almost all organizations are subject to some level of employee turnover. Warranty information can easily get misplaced in the shuffle. The current board, manager and/or management company might not even know a warranty exists for a product that they are replacing. While often overlooked in record keeping protocols, warranties should be recorded and stored for future reference. Some warranties are virtually impossible to qualify for. Warranties can have exclusions as to what they might cover. Some warranties are void as a result of adverse weather conditions. In this part of the country, adverse weather conditions occur frequently! Paint warranties can exclude soiling of the painted surface - but that’s why we paint! It’s not to say it is the fault of the paint for becoming soiled, but the warranty gives a false impression

of how often one can expect to paint. A paint warranty that excludes labor has little value since the major cost of a painting project is the labor.

Not the Same as Useful Life A warranty is not equivalent to a useful life. A warranty is a manufacturer’s tool to persuade one to buy a product. A useful life is an unbiased opinion on how long the product will last in its installed environment. Shingle manufacturers don’t provide warranties on roofs. They provide warranties on shingles. The useful life of a roof is determined through the summation of all the components that make up the roof. If leaks are occurring at improperly installed flashings at roof to wall intersections, or if plumbing vent flashings are failing, a property might find it necessary to replace their roofs regardless of the condition of the shingles.

Look at Replacement Value Condominium boards and others involved in purchasing activities should not


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Contact Jackie Loftis 630-618-0608


24 C h i C a g o l a n d B u i l d i n g S & e n v i r o n m e n t S

autumn 2015

Maintenance MeMos

make decisions solely on warranties. Your objective should be to replace the current product with an equivalent product or a slightly improved product that has become an industry standard (such as replacing three-tab shingles with architectural shingles). An equitable approach for some community association boards includes gauging the average tenure of the homeowners at their property. If the average homeowner lives at the property for 15 years, it may not be equitable to install shingles with a 50-year warranty. Current homeowners may not see a financial benefit by paying additional warranty costs up front for products that last long beyond their time in an association. On the other hand, if warranties do exist that provide a benefit for future homeowners, as earlier stated, maintaining proper documentation of warranties may provide a “sales tool” that will be useful for existing homeowners in marketing their unit to prospective buyers! $

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800-673-2567 Algozine Masonry Restoration • 2000 N. Lafayette Ct. • Griffith, IN 46319 autumn 2015

ChiCagoland BuildingS & environmentS


Buildings & enviRonMents

Chicago Green Office Challenge Announces Winners on June 10, 2015, delta institute Ceo Jean Pogge joined City of Chicago Chief Sustainability officer Karen Weigert, Yalmaz Siddiqui, Senior director of Sustainability for office depot, and george malek, director of energy efficiency Services at Comed, to announce the final results and winners of the 2014-2015 Chicago green office Challenge, an impact-driven sustainability competition among commercial offices to promote resource efficiency, save money, and reduce greenhouse gas emissions. the event was held at technexus in Chicago with food and beverages donated by native Foods and goose island.


ore than 500 individuals from 170 Chicago offices ‘played’ this year’s Challenge by taking concrete steps to strengthen and promote sustainable practices at work and at home. in total, participants completed over 2,850 activities to improve office sustainability, ranging from retrofitting lighting and water fixtures to redesigning office recycling programs. over 250 participants took the Challenge into their homes, using energy-saving devices like smart strips and programmable thermostats to reduce their environmental impacts. “With energy use in buildings accounting for 71 percent of Chicago’s carbon emissions, the green office Challenge is a great opportunity for Chicago’s businesses to reduce their environmental impact while saving money and driving positive business results,” said Weigert. “Congratulations to all participants, and thank you for your concrete efforts to make Chicago the most livable, competitive and sustainable city in the 21st century.”

“With over 170 offices taking part in the fourth round of the Chicago green office Challenge, it is clear that the program now has an established place within the City’s vibrant sustainability culture,” said Siddiqui. “We’re particularly encouraged by Chicago Challenge participant efforts to write and implement greener purchasing policies – a relatively under-appreciated but disproportionally meaningful area of sustainability practice.” Participants in the 2014-2015 Challenge collectively achieved the following impacts: • Reduced energy usage by 690,383 kWh (or kilowatt hours) annually, which is equivalent to taking 43 homes off the grid for one year. » eight offices completed lighting retrofits, which are expected to save a collective 574,530 kilowatt hours and over $48,662 in energy costs annually. » 263 individuals replaced incandescent light bulbs with CFl or led bulbs at home, which is the greenhouse gas emissions equivalent to taking 10 cars off the road for one year.



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• Saved over 705,000 gallons of water annually, which is equivalent to over 5.6 million 16oz. water bottles. » thirteen offices and 59 households installed high-efficiency sink aerators, resulting in approximately $2,550 in savings on their water bills. • Reduced the equivalent of 71 tons of waste annually through expanded recycling and waste reduction efforts. » 96% of participants already offered office recycling, and many offices improved those programs with new outreach and education efforts or by expanding recycling streams to include batteries, e-waste, toner, plastic bags, or compost. » over 175 households instituted paperless billing, and 44 households began composting food scraps. among the many sustainability activities encouraged by the Challenge, energy efficiency improvements accounted for the highest share of points logged by participants, both in the office and at home. “Small changes in energy habits can have a noticeable impact on strengthening a building’s operations and maximizing energy efficiency,” said malek. “Comed is pleased to see the momentum carried by this year’s participants, which will help them lower their energy use and meet sustainability goals.” Challenge participants earned points by completing activities to improve sustainability not only in the workplace but also at home. this Challenge marked the first year that participants’ athome sustainability efforts grew to account for nearly 60% of the completed activities and 14% of


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s p e c i a l F e at u R e

[ Shown below are some of the participants of the 2014-2015 Chicago Green Office Challenge.

The 2015 Chicago Green Office Challenge awards were presented in the following categories: • Sustainability grand Champion: 71 South Wacker drive holdings llC Company also won awards for water, waste, and purchasing impacts.

• outstanding Sustainability leader: Perkins eastman Company also won awards for employee engagement and energy and at-home impacts.

the total points tallied. “this year, we saw more participants take these sustainability lessons into their homes than ever before, which means that we’re positively influencing individual behavior in both residential as well as commercial spaces,” said delta Ceo Jean Pogge. “delta institute is proud to help inspire that sustainability ripple effect across Chicago.” architecture firm Perkins eastman was recognized for its achievements in several Challenge cat-

egories, including energy and at-home activities. “as architects and designers, we encourage our clients to adopt environmentally-responsible and sustainable practices, wherever possible,” said architect Steven Burgos. “the green office Challenge presented our team with a fun and motivational platform to put those sustainable living principles into practice, and we were able to create a better, more efficient, and less wasteful work environment in the process.

• energy Conservation leader: american College of healthcare executives • green transit leader: Perkins eastman & 71 South Wacker holdings llC • Social media master:  Coalition: energy • outstanding tenant engagement:   riverview realty Partners • greener Purchasing Policy leader:   thornton tomasetti • all-Star green team: KPmg llP originally launched in 2008, this citywide competition has served as a model for over a dozen similar sustainability competitions across the country.  to learn about how you can participate in the next Chicago green office Challenge, look for updates on,, and twitter @Chigreenoffice. $

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Recognition of Chicago Green Office Challenge Participants GOLD LEVEL ACHIEVEMENT


• 71 South Wacker drive holdings llC

• grumman/Butkus associates

• Perkins eastman

• american College of healthcare executives

• riverview realty Partners • KPmg • thornton tomasetti • midwest energy efficiency alliance • dtZ • Purohit navigation • mayer Brown llP • Constellation Brands/Crown imports • loyola university institute of environmental Sustainability Program

• Franklin energy Services – o’hare office • educational assistance ltd. • gravitytank • Franklin energy Services, llC – goose island • epstein • Positivenergy Practice, llC • engineering/Ch2m hill • arCadiS – uS, inc.

BRONZE LEVEL ACHIEVEMENT • Coalition: energy • trane – ingersoll rand • Ch2m hill • triS3Ct • american medical association • delta institute • Shorenstein realty Services, l.P. • Simple truth • antunovich associates • urban innovations, ltd. • illinois Sustainable technology Center

• office depot, inc.

• 550 West Washington – Jll

• elevate energy

• institute of real estate management

• PepsiCo

• motorola Solutions

• deSman associates

• technexus

• Peace Corps midwest regional recruiting office

• Bmo harris Bank • James mchugh Construction Co.

• elmspring

• groupon • the langham hotel

Y 71 South Wacker, Chicago, Illinois

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Chicagoland Buildings & Environments 09.15  
Chicagoland Buildings & Environments 09.15