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APRIL 2014 | VOLUME 18 | NUMBER 1

CondoLifestyles

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THE SOURCE FOR INFORMATION ON COMMUNITY ASSOCIATIONS, CONDOS, TOWNHOMES, CO-OPS & HOAS

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Proxy Woes And Quorum Constraints...

Is Relief On The Way? F E AT U R E S

Do You Appreciate Your Property Manager? Illinois Supreme Court Rules on Spanish Court Case Capital Planning for Community Associations A Pipe Burst… Now What? Managing Capital Improvements at Heritage Manor


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03 Proxy Woes and Quorum Constraints…. Is Relief on the Way? By Pamela Dittmer McKuen L E G A L U P D AT E

08 Appellate Court Opines On Propriety of Communications Between Condominium Board Members By Patti O’ Connor and Howard Dakoff, Levenfeld Pearlstein LLC.

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09 Do You Appreciate Your Property Manager? By David Mack L E G A L U P D AT E

15 Illinois Supreme Court Rules on Spanish Court Case By Dale Miller, Kovitz Shifrin Nesbit 16 Spanish Court Ruling is Great News and Leaves Room for Concern By Bob Prince, Keough & Moody, P.C. 17 Industry Happenings Compiled by Michael C. Davids & Sherri Iandolo 20 Editors Message 21 Directory Advertising M O N E Y M AT T E R S

28 Capital Planning for Community Associations By Salvatore Sciacca, Chicago Property Services BOARD BASICS

31 A Pipe Burst... Now What? By Dawn Moody, Keough & Moody, P.C. PROPERTY PROFILE

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33 Managing Capital Improvements at Heritage Manor By Michael C. Davids EVENT HIGHLIGHTS

34 MCD Pool Party featuring Condolympics

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COVER STORY

By Pamela Dittmer McKuen

PROXY WOES AND QUORUM CONSTRAINTS...

Is Relief On The Way? In the world of community associations, annual meetings are fraught with frustration. Many associations can’t entice enough owners, not even with the incentive of food and beverages, to vote for board members. Others have so many candidates eager to take office that the campaigning becomes obnoxious, and the elections become contentious. Court challenges have ensued.

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any industry insiders say the quorum requirements and proxy provisions of the Illinois Condominium Property Act and the Common Interest Community Association Act are to blame. A quorum is the minimum percentage, usually 20 percent, of owners needed to hold an annual meeting. A proxy is a document that allows owners to designate someone to vote for them. Proxies count toward the quorum. “They fit hand in glove,” says Michael

Baum, president of Baum Property Management in Aurora. “Proxies exist to get quorum. If it weren’t for quorum, you wouldn’t need proxies.” He knows too well the frustrations of working within the restraints. “I can’t tell you how many times we have to do a meeting over because there is no quorum,” he says. “It costs associations money to do them again. What would happen in the Presidential election if proxies and quorum

were mandated? We might not have a President in office if the election were delayed.” Even worse is when a rabid proxy-collector takes over the board in one fell swoop. It happened again last fall in one of Baum’s client association. He tells the story: The board asked me to attend the annual meeting. They were a good board, a stable bunch. The five candidates running for three spots were standing up in front, ready to give their talks. A dozen people were in the audience. Ten minutes after the meeting started, a fellow walked in with proxies from more than half of the association for his slate of handpicked people. The candidates gave their speeches, but all the speeches in China wouldn’t have made a difference. The folks this guy brought with him weren’t that serious about being on the board. He just wanted to be in control.

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Those new boards typically replace the association’s entire roster of vendors, contractors and service providers within a short time, he adds.

Even More Challenges

Shaping the future!

There are more proxy and quorum woes to consider, such as security and fraud. For example, proxies sent to a management office frequently sit in a file or accumulate in a box until the election. “What if a manager did not like a board

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member and somehow omitted some proxies?” he suggests. “Could someone add a few proxies? Could the manager divulge the tally ‘so far’ to a candidate?” Another concern in the proxy concept is often confusing. Owners fill out the form incorrectly or don’t bother to return them. Recently Baum’s company had to return 36 of 81 proxies for corrections. “They think a proxy is a ballot,” he says. “They don’t understand that a proxy is to designate someone to vote for them. In addition, a

lot of folks send in their proxies and attend the meeting anyway. They think they already voted.” In the experience of Tairre Dever Sutton, president of Des Plained-based Tairre Management Services Inc., “No one turns in the proxies, so it is very hard to establish a quorum for voting purposes.” The present system also can be inefficient. Brian Suste, president of Duplex Homes of Morgan Crossing Homeowners Association in Oswego, says that enlisting owner participation is a huge challenge, and procuring proxies is a time-intensive burden. But without proxies, the board cannot fully function. “You may be able to get proxies for 20 percent of the homeowners to have a quorum for the required-by-law annual meeting, but not the super-majority requirement necessary to amend our bylaws,” he says. “The requirement of homeowner meeting attendance or proxies can be burdensome to the point of affecting a homeowner association’s ability to comply with state laws.”

Mixed Viewpoints

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MEMBER

Other industry veterans favor the use of proxies or express mixed views. Association attorney Ryan Shpritz of Kovitz Shifrin Nesbit in Buffalo Grove says, “The primary ‘pro’ is that owners who are unable to be physically present at a meeting can submit a proxy either by 1) assigning the right to vote to someone else, or 2) stating a preference for whom they would like the person who they are giving the proxy to vote on their behalf. Being able to participate in an election without physically attending a meeting allows for all owners to have an opportunity to participate in the election process.” Rosemarie Wert, a director at Community Specialists in Chicago, isn’t as positive. “Proxies are only of value for the few people who truly do not know anyone in the building and have no idea who to vote for and prefer to turn the whole matter over to their best friend or the next door neighbor,” she says. “The danger is that they will turn it over to the bully who knocks on their door.” “Proxies can be used for good, and they can be used for evil,” says association attorney David Sugar of Arnstein & Lehr LLP in Chicago. Sugar points out that proxies come in two formats, depending on an association’s

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COVER STORY

governing documents. Directed proxies require a proxy-holder to vote as the owner of the proxy specifies. Discretionary proxies allow the proxy-holder to vote however he or she wishes. “I don’t like the discretionary one,” says Sugar. “If unit owners don’t know enough to know who to vote for, they shouldn’t vote. You get political abuses with discretionary proxies.” A caveat to directed proxies is that they don’t allow owners to vote for candidates who are nominated on the floor of the meeting, he adds. So, what are the solutions, if solutions are needed? The veterans offered their suggestions: “An up or down vote by the board of directors and homeowners in attendance would be so much more efficient and could promote homeowner participation,” says Suste. “No quorum, no proxies, and a ballot system that allows owners to vote without attending the meeting,” says Sutton. “I prefer direct voting, wherein a ballot is mailed to each owner to be filled out and

returned via mail, into a lockbox, by email or fax,” says Wert. “We would save a lot of trees as well as funds for printing and postage.” As for Baum? “Electronic voting, via computer or smart phone, is a step in the right direction,” he says. “I also think email votes should count too. Email carries a date stamp. It’s far superior to pieces of paper signed in the middle of the night because some crackpot is going door to door.”

Legislative Change? Legislative changes may be forthcoming. Last year Rep. Elaine Nekritz, District 57, introduced HB-1167, which would amend the Condo Act by abolishing proxy voting for annual elections. The bill failed to gain traction, and she does not plan to re-introduce it this year, although she still sees proxies as a concern. “What I hear from my constituents is that proxies are a big source of problems,” she says. “The proxy process gets abused where people go out and solicit proxies, and the proxies are not necessarily freely given.” This year’s proposed legislation takes a

different approach. The Illinois Legislative Action Committee of the Community Associations Institute of Illinois is working with a handful of supportive lawmakers on legislation that will provide associations with the option of electronic voting. Two identical bills have been introduced: HB-5322, sponsored by Rep. Kelly Burke, District 36, and SB-3040, cosponsored by Sen. Kwame Raoul, District 13, and others. These bills will simultaneously amend the Illinois Condominium Property Act and the Common Interest Community Association Act. Among the provisions: Electronic votes are valid for purposes of quorum; votes, approvals and signatures (with certain exceptions) may be obtained using the most advanced technology available at the time; secret ballots are done away with; reasonable accommodations are to be made for those owners without the means or desire to communicate electronically. “It’s an alternative, not a mandate,” says association attorney Patrick Costello of Keay & Costello, P.C., in Wheaton and legal liaison to ILAC. “The thought is if we get associations to start using electronic voting not just for

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elections but for anything else the association is voting for, and if they like it, proxies will go away that way rather than by legislating them out of existence.” Costello says he understands the objections, but he doesn’t feel quorum requirements are onerous. Association boards are not permitted to conduct their business without a minimum number of members in attendance, so it follows that associations also should have a quorum to conduct theirs. The proposed legislation is designed to encourage greater owner participation by offering electronic voting, which in turn will help associations make their quorum. “It’s a lot easier for someone to be able to log onto a computer as opposed to coming out for an annual meeting on a freezing February night,” he says.

In The Meantime Until any legislative change occurs, if it does, associations must live within the confines of situation. And that’s just what many do. Wert, who would be happy to dispense with proxies, isn’t bothered by quorum

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requirements. “If a management company is involved, this should not be a problem,” she says. “If we see we are short a quorum the day before or on the day of the meeting, we sit in the lobby and catch residents coming or going. We get them to sign a proxy or ballot, even if they don’t vote, since this still will count for the quorum.” Of course, that strategy is more effective for high-rise and apartment-style buildings with centralized entrances. Shpritz believes the focus should be placed on improving attendance and participation rather than on changing the system. “Oftentimes, the current board can do a better job of reaching out to its owners, engaging new owners and educating others on the need for their participation,” he says. “Committees are great training grounds for people to learn about the governance of their community, even if it is the landscaping or social committee. Getting to know the owners better usually leads to better participation on the board.” Associations already have the alternative of using a mail-in/absentee ballot known as a

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“direct voting ballot.” Before they do so, they must formally adopt a rule authorizing such. Sugar explains: ICPA 18(b)(9)(B) imposes various conditions and restrictions on a direct voting rule: (1) the rule must be adopted at least 120 days before the annual meeting; (2) the rule can be over-ridden by a unit owner vote; (3) adoption of a direct voting rule precludes and prohibits the use of proxies; and (4) requires that various election process deadlines be established and strictly followed. Non-condo associations, which are governed by the CICAA, may vote by proxy or by direct voting without the need of any rule. See Section 1-25(h-5). “As is often the case, the CICCA ignores the provisions of the ICPA and imposes no controls, safeguards or procedural guidelines for how things are supposed to work,” he says. Direct voting counts toward the quorum in both condominiums and non-condominiums, although, like a directed proxy, does not provide the opportunity to consider candidates who are nominated from the floor at an annual meeting. continued on page 40

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R I G H T PA G E H E A D E R

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By Patti O’ Connor and Howard Dakoff, Levenfeld Pearlstein LLC.

Appellate Court Opines On Propriety of Communications Between Condominium Board Members

O

n the heels of the long-awaited reversal of the Spanish Courts II appellate decision, condominium associations have been hit again with a First District Appellate Court ruling which has the potential to drastically impact the operation of many boards. The Illinois Appellate Court’s March 21, 2014, order in Palm vs 2800 Lake Shore (“Palm II”) interprets the open meeting requirements of the Illinois Condominium Property Act (“ICPA”) and the authority of a condominium board to delegate in a manner which is inconsistent with how most boards currently operate. ICPA Section 2(w) provides that a “meeting of the board” occurs only when a quorum of the members of the board gather for the purpose of conducting board business. The original language of Section 2(w) defined “meeting of the board” as any gathering of a majority of a quorum of the members of the board held for the purpose of discussing board business. On January 1, 1994, Section 2(w) was amended to change the word “discussing” to “conducting.” Conducting board business has since been generally interpreted to mean voting, and some associations adopted procedures to discuss matters at working sessions or otherwise outside of open, properly

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noticed board meetings. A “meeting of the board” entitles all owners to notice and the opportunity to attend the meeting. The Appellate Court in Palm II rules that merely discussing association business, without making decisions, constitutes “conducting board business,” so that a closed or informal gathering of a quorum of the board is an unlawful “meeting of the board.” The Court in Palm II found that board workshops and similar gatherings that were not open to unit owners are unlawful. Pursuant to the Court’s analysis in Palm II, a quorum of the board cannot lawfully gather to talk about association business unless the association’s owners receive advance notice and are allowed to attend. Further, the Palm II decision restricts a board’s ability to delegate board responsibilities to representatives, committees or management. It is common practice for boards to delegate authority for specific matters (e.g., authority to sign contracts, waive rights of first refusal, pursue collection of delinquent assessments, all specifically cited in the Palm II case) to a property manager or the board’s officers, in lieu of a formal board vote on such decisions. The court ruled that this delegation of authority was improper because it again constituted acting

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outside of an open board meeting. According to the court, a board can lawfully delegate authority to a manager (or a “commission” of board members) if such delegation is expressly authorized by the association’s declaration; however, if the declaration authorizes a delegation of authority, such delegation must still require approval of a majority of the board. Finally, in Palm II, the court also addressed the common practice of polling or canvassing board members via email or other means in advance of open board meetings. Consistent with the court’s view that the open meeting requirements of ICPA 18(a)(9) are violated whenever a condominium board votes on, discusses or considers any association affairs outside of an open meeting, Palm II also found it unlawful for a board to make decisions by polling or canvassing board members via email or other means. The Palm II ruling is a “Rule 23” opinion, which is not binding on other Courts. However, the ruling speaks to the disposition of the Circuit Court of Cook County and the First District Appellate Court. Condominium boards should be cognizant of the ruling and govern their operations accordingly until the ruling is reversed or affirmed on appeal or mooted by legislative efforts. Y

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S P E C I A L F E AT U R E

By David Mack

Do You Appreciate Your Property Manager? Sometimes the money one earns for doing a job is insufficient compensation. Receiving the thanks and gratitude from those for whom a person provides services, even if contractually obligated to do so, can be an added reward that will buoy a person’s spirits and ensure a continued good performance. Going Above & Beyond is Underappreciated Compliments or plaudits are even more important in business relationships when a person goes, “above and beyond” his or her specified duties by doing something outside the framework of a contract and especially when not asked and with no expectation of being paid extra for doing so. Just an expression of gratitude would be sufficient for many who provide a service in such a situation. This does happen in business relationships but, not always. Those for whom a person provides services often don’t realize what the limits of a

contract’s obligations are or they do know these limits, but ignore them, and expect a person to exceed them when the need arises without having the expectation of even receiving thanks. And those who want a contract renewed will generally remain silent over the slight.

Not Unique to Property Managers This is true in many areas of service life. “I don’t think a lack of recognition or appreciation is unique to property managers,” said Gail Filkowski, Vice-President-Portfolio Management/First Community Management. “Unfortunately that’s prob-

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ably common in many professions.” But, she added, “when recognition is given it has a more positive impact on (property) managers and is felt more personally than,” in a lot of other business settings. When managers receive praise from a board member or homeowner, “I think it is more meaningful.” And the lack of praise when deserved is probably felt more deeply too. In the community association management field, boards of directors are those for whom managers work and who sign their checks as well as being in the best position to observe when compliments for jobs well done, whether a contractual responsibility or not, are appropriate and deserving. We contacted several present and former property managers to see what their experience had been in working with varied boards and to learn if they felt they seldom, occasionally or frequently received at least adequate, but also per-

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haps occasionally, special recognition for the jobs they did and the contributions they made to the economic and social well being of the associations they managed.

Managers’ Responsibilities Misunderstood Let’s first look at what the job of property manager entails and how tough it can be. Erica Horndasch, Director of Client Services for the law firm of Fullett Rosenlund Anderson, P.C., no longer manages property but remembers all too well from her 15 years in that role the difficulties the job entailed. “Most people don’t really understand what a community association manager goes through day in and day out,” she said. “This is no 95 job, it’s more like a 24/7/365 commitment and you’re lucky when your phone doesn’t ring.”

Difficult Position The property manager is often positioned between the board of directors and community residents and when things go wrong can get flak from both sides. Part of the problem lies now with the state licensing requirement for managers which has led to both boards and residents having high expectations of their managers. This is not a bad

thing, said Horndasch, “but everyone needs to do their part,” especially boards, so that managers do not solely have to bear the indignation of residents when something goes awry. “If a board doesn’t do (its) job, what is a manager supposed to do? They don’t have the authority to overrule a board on (its) decision making. Ultimately the manager is put in a difficult position,” and becomes the target of homeowner ire and sometimes abuse. “Can you imagine hearing complaints and receiving nothing but negative calls from people all day, every day?” Horndasch asked, when they get upset about something that is not even your fault. “Some people just aren’t happy and make comments like, well,’ I pay your salary’ or ‘I’m going to get on the board and get you fired’.”

Blame Game Joseph Baez, CEO of Advanced Property Specialists, Inc., knows all too well the extensive criticism, and sometimes abuse, managers receive from unit owners. “Managers are definitely blamed by the homeowners for everything,” he said. “Most residents do not understand the role of the manager, therefore when blame must be set, it falls on the manager.” Residents have to understand what the rela-

tionship is between board, manager and themselves. ”Managers don’t (create) policies (that unit owners dislike), they enforce them, which means they become the bad guys,” said Horndasch. This attitude is extremely unfair to property managers.

Understand Management Agreement Before going further on the matter of recognition, it is important to note that the contract between an association and management firm should clearly prescribe the duties and responsibilities of the latter for the fee it is to receive. Lawyers should attend to those details to assure the document is fair and equitable for both parties. “All managers should read and understand the contract,” said Horndasch, as should at least some board members to avoid misunderstanding the obligations of and limitations on the services to be provided by management. Failure to do so on the part of boards or in doing so just cursorily skimming the contract will lead a board to often expect more services of management than is required to provide for the stipulated compensation, according to Annette Byrd, Vice-President of Vanguard Community Management. That is when management must be assertive and, “educate the association’s volunteer leaders about the contract terms and obliga-

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S P E C I A L F E AT U R E

tions so that proper and reasonable expectations can be set on both sides of the table,” said Byrd. Baez has experienced the demanding expectations of boards all too often. “It is apparent that we are the first responders for every matter within the association even if it’s not part of our agreement,” he said.

Managers Should Manage Board Expectations There are some in the management field who believe that sometimes both sides may share the blame for such misunderstandings. While an association may intentionally or unknowingly demand more service than a contract requires, it is sometimes the other signatory that is at fault for allowing this to happen. Bob Levin, retired property management guru, believes that it can be management’s fault when it comes to willy nilly exceeding its responsibilities under a contract. “I blame the property management industry for doing more than the contract states,” he said. “They promise to handle any need of the association and seldom charge for extra services.”

More on Recognition Back to recognition. You will remember from

above that Horndasch feels property managers receive too much criticism and blame when things go badly at an association, even matters over which they have no control. As far as praise for something well done, “managers rarely get credit for their work or contributions,” she averred, despite, as was noted previously, having to, “work crazy hours (and) deal with demanding and difficult people.” And if managers are not located at only one site they often are dealing with as many as 8 to 12 communities. In addition to seldom getting the accolades they deserve for their efforts, they are not generally compensated that well for the amount of time and skill set that is required of the profession.

Lack of Awareness Levin believes that the failure of a board to extend its thanks or recognition to a property manager for an exceptional performance is often due to the directors’ lack of awareness of the effort made. “In general, it is lacking,” he said. Credit is much more likely to be given when all parties know what was accomplished. “If the manager stays in touch with the board on a successful project and if the internal PR is handled properly, it is often (given).” Byrd believes the relationship between prop-

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erty managers and representatives of associations should be based on respect for the former’s efforts and an awareness of what the limits of those efforts should be, “when it comes to reasonable expectations on the part of homeowners and board members,” she said. However, residents and board members often do not grasp what management’s function is, wanting more than management is obligated or able to give. “In general, I feel there is a lack of understanding about the role and responsibilities of the property manager,” a deficit which can perhaps be overcome by, “educating the membership on what the property manager’s job entails,” to, “help set expectations.” Michaelene Conrad, President and Owner of MC Property Management Corp., is of one mind with her management colleagues when it comes to the lack of esteem given them by members of the community associations they serve. “I do not feel property managers receive ample recognition,” she stated emphatically. “I feel that board members and homeowners do not recognize that we are professionals and have worked hard to earn our designations and perform our jobs according to (an) association’s governing documents and applicable state laws.”

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Managers Get Blame for Things Beyond their Control

Homeowners May Not Understand Managers

On the other hand, while recognition for work well done may only occasionally be given, culpability is often more readily assessed against managers when something goes wrong. “This is a chronic problem that will not go away in the future,” said Levin, pessimistically. “Managers often have to take responsibility for poor decisions made by the board.” But any negative impact upon a property manager can be mitigated, Levin conceded, if a bad situation is improved or reversed. How it all comes out in the end, whether, “there is success or failure (in such situations) in the outcome,” depends on, “how it is handled,” Levin added. And Levin added that where large capital projects are being undertaken at an association, boards expect management to do a perfect job in overseeing them even when there is no extra compensation in the contract for that work. When the work is not done entirely satisfactorily because of contractor negligence or oversight, the board may come down hard unfairly on management for the poor work. Such things, “ happen all the time,” said Levin.

In her experience, Filkowski believes problems are (not always but usually) more likely to arise between management and a homeowner rather than between management and the board. “When things go wrong they are of a personal nature, affecting someone’s home or finances,” she said. A homeowner can become very upset under such circumstances and point the finger of blame at management, especially if that is who the homeowner has dealt with as the representative of the board and even if management is not in any way responsible for what has happened. In these situations, “it’s a more emotional reaction that we deal with,” she said, which can cloud an owner’s powers of rational thinking. Byrd feels that criticism is often misdirected, especially in the relationship between an association and the various service contractors with whom it does business. Management often takes the heat when one of those service entities blunders. “Accountability should be placed on the vendor who is contractually obligated to deliver specific services, not on the manager who is simply a liaison to the community’s vendors,” she said.

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Horndasch was very succinct in agreeing with her former property management brethren when asked if management took the heat when misfortune occurs, even when having no part in the occurrence. “Absolutely,” she said. “All the time.” Conrad pointed out that it is the property manager who sees that an association is run correctly, implementing plans and policies of the board and coordinating major projects that have to be completed by outside contractors. Recommendations of the property manager on certain work projects may be ignored by the board which can lead to problems. “Many times (an) association does not take our professional advice and when things go wrong we tend to be in the middle between the vendor and the board so everyone points a finger at us,” she said, as the party responsible for a ‘goof up’. This often happens when a board member is able to swing a job to a friend who may not be qualified to do the work and turns in a shoddy or inadequate performance. Somehow management can get the blame for failure to see the work was done properly. “It usually does not go well,” said Conrad, for management in such circumstances.

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S P E C I A L F E AT U R E

Above & Beyond

Education on Limits & Roles

What about when property managers go above and beyond their obligations under the management agreement? Does this extra effort usually receive the gratitude from the board or homeowner that it deserves because it exceeds contractual responsibilities? “No,� said Horndasch, “it’s expected.� According to Levin, though, it, “can happen, if, again, the internal PR is handled properly� and the board knows what the manager has done. But generally, he agreed, there is no thanks expressed for extra effort or achievement. “It was promised in the interview (for the management contract) so no extra gratitude is given,� said Levin. But he could recall some instances of it, noting that some site managers occasionally get bonuses for outstanding performance. On rare occasions other employees have been rewarded too for notable achievement. Levin also remembered a head engineer on his staff who was sent to Ireland by the board for a week to play golf because he had done an exceptional job directing a window replacement project. “This was an outlier, but it did happen,� he said.

Byrd also believes that expressions of appreciation for creditable work depend on whether board members are aware of what has transpired. Managers sometimes fail to let a board know that their actions exceeded the contract’s limits as they are more, “focused on pleasing the board instead of seeking credit where it is due,� and because, “it can be awkward to toot your own horn looking for recognition.� Boards are likely to be more responsive to extra efforts by managers if they understand what their obligations are under the contract. “Continual reinforcement and education of boards on a manager’s contractual duties versus their accomplishments may be the best way to ensure a board knows when (management) is going above and beyond,� Byrd explained.

Emergencies & Disasters

More You Do, More is Wanted Conrad has found through her own experience that most work she has done outside of the framework of a contract has not been appreciated by boards and furthermore it raises their expectations of additional extra work not in the agreement. “The more you do the more they want,� she said, offering some examples of work she has been

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Filkowski said in her experience positive board feedback has generally come when a number of management personnel have worked together to overcome an emergency or disaster that strikes an association. “That team effort is truly appreciated by board members and homeowners alike,� she said. �We have dealt with several emergency man-

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asked to perform that was not part of her contractual duties- having meetings on weekends, going to stores and shopping for the association or being asked to go door to door to obtain proxies. Conrad did concede that gratitude can occasionally be forthcoming from board members or homeowners when managers exceed their official duties but those offerings are, “few and far between,� she said. Conrad has not been reluctant at times to go beyond being grateful for expressions of thanks from a board by asking, “for additional fees, if justified.� She has found that some boards will not be hesitant to ask for a discount when certain items in the contract have not been performed by management because they were determined to be unnecessary. However, “rarely do they offer to pay you for the extra things you did.�

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CONDO LIFESTYLES

agement situations and the support and thanks received during some really stressful and difficult times was overwhelming.�

Petty Issues Not only do managers receive only infrequent accolades from boards for an exceptional effort on some task, they also can get assailed over petty issues. While Filkowski did say above that in her experience most such criticism is levied against management by homeowners, she did recall a situation in which a board member took out after a generally well performing manager for his writing style, going over every memo searching for typos or errors in punctuation or grammar. He would correct memos and post them for everyone to notice. “I think that was very unfair to discount all of the manager’s accomplishments because he would use a colon instead of a semi-colon,� she said.

Understanding Roles & Responsibilities Management contracts can be lost when boards fail to understand the proper role and responsibilities of management. Baez recalled one such situation that involved getting bids on a work

project. The standard practice when seeking a contractor is to get three bids but a board member was unhappy when the manager only secured seven bids. This board member was also upset because the manager could not immediately answer e-mails and phone calls. These unreasonable demands led to termination of the contract. “When there are no problems, management is routine,� said Levin. However, if things go badly even regarding matters that are not covered by the

management contract or within management’s power to control, the company may lose the contract. Again, Levin said, “it happens all the time.� So with the extra challenges (frozen/burst pipes, frequent snow removal, etc.) that this past winter has brought your association in mind, consider when is the last time you and your board acknowledged the efforts of your property manager. Praise can be a fantastic source of motivation to continue excellent work. Y

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L E G A L U P D AT E

By Dale Miller, Kovitz Shifrin Nesbit

Illinois Supreme Court Rules on Spanish Court Case

D

eerfield attorney Diane Silverberg appeared before the Illinois Supreme Court last September to argue on behalf of her client, the Spanish Court Two Condominium Association in Highland Park, Illinois, that condominium unit owners should not be permitted to withhold payment of their assessments based on a dispute over the board of director’s performance of repair and maintenance obligations. The Supreme Court agreed, holding in the matter of Spanish Court Two Condominium Association v. Lisa Carlson, Case No. 115342, that a unit owner’s claim that her association failed to repair and maintain its common elements is not a valid defense to payment of assessments. Rather, the Court observed, “a unit owner’s liability for unpaid assessments is not contingent on the association’s performance.” Justice Theis wrote the majority decision. Silverberg, a principal in the litigation department of Kovitz Shifrin Nesbit, is pleased with the Supreme Court’s ruling, noting that the decision underscores the importance of timely paid assess-

ments to the successful operation of community associations. “An association member’s duty to pay assessments is owed not only to the association, but to each and every fellow unit owner,” Silverberg explains. “Without an association member’s timely payment of assessments, the association may be unable to meet its financial obligations or perform the duties it owes under the association’s governing documents and the Illinois Condominium Property Act, thereby imperiling the entire association.” Silverberg commented that the Supreme Court decision will allow State courts to continue to expedite proceedings brought by associations under Illinois’s Forcible Entry and Detainer Act to recover unpaid assessments. The Supreme Court recognized that unit owners still have numerous options available to them for addressing problems with their associations’ responses to repair and maintenance responsibilities, Silverberg notes. These options include taking steps to remove offending board members, becoming involved in the management of the association by seeking

election to the board, or seeking recourse through the courts in separate proceedings. The Supreme Court’s decision in Spanish Court largely reverses the Opinion and Order rendered by the Second District Court of Appeals (sitting in Elgin, Illinois) on November 9, 2012 and reinstates the judgment that had been entered in favor of the Spanish Court Two Condominium Association by Lake County Circuit Judge Michael J. Fusz. A videotape of the oral argument Silverberg presented to the Illinois Supreme Court is available at http://www.state.il.us/court/Media/On_Demand_2 013.asp (argument date of September 17, 2013). In addition to her September appearance before the Illinois Supreme Court, Silverberg recently co-authored a chapter entitled “Cooperative, Condominium, and Homeowners’ Association Litigation” included in the Illinois Institute for Continuing Legal Education’s volume on Real Estate Litigation. Y

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CONDO LIFESTYLES

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CONDO LIFESTYLES

Chicago Property Services inc.

By Bob Prince - Keough & Moody, P.C.

Chicago’s #1 Property Management Company

Spanish Court Ruling is Great News and Leaves Room for Concern

More Living. Less Worrying.

For nearly two years our industry has been monitoring an important case which could have a profound impact on the community association industry. Today the Supreme Court of Illinois released its opinion related to the case. Below is a summary of the opinion.

I

condominiums | townhomes | hoas | 100 units & under 3634 W. Wrightwood

Chicago 60647

www.chicagopropertyservices.com 312.455.0107

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CONDO LIFESTYLES

n a split decision, the Illinois Supreme Court has decided that unit owners cannot withhold assessments because of issues with the repairs and maintenance of the common elements. The Court recognized that the relationship between an association and a unit owner is different than the relationship between a landlord and a tenant. Further, an owner's obligation to pay assessments differs from a tenant's obligation to pay rent. The Court stated that allowing a unit owner to raise issues of whether the common elements have been maintained would interject a number of extraneous issues into the lawsuit and defeat the expeditious nature of forcible proceedings. However, the Court also made it clear that a unit owner will still be able to raise certain defenses against the association's claim for assessments, including attacking the record-

04.14

keeping and the adoption of the assessments themselves. In addition, they can take actions to remove offending board members, get themselves elected to the board and seek redress through the courts. The Illinois Supreme Court's opinion is great news for associations as it should help limit the expenses related to collections actions. Unfortunately, there is still room for concern. The Court relied heavily on Sections 9 and 18.4(o) of the Condominium Property Act in its analysis, which deal with the obligation to pay assessments and the Board's inability to forgive assessments. There are not any similar statutory provisions that apply to non-condominiums. It is unclear whether the absence of those provisions will affect a court's analysis when dealing with non-condominiums. Y

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INDUSTRY HAPPENINGS

industry happenings Kovitz Shifrin Nesbit

at restoring productive equilibrium within contentious association board situations. Kerry started her career at Kovitz Shifrin Nesbit in 1998.

Kovitz Shifrin Nesbit is pleased to announce that Principal Kerry Bartell has been elected President of CAI-Illinois.

Kovitz Shifrin Nesbit was founded in 1983 and has a team of nearly 100 legal professionals in five office locations, serving thousands of associations throughout Illinois and Wisconsin.

Kerry Bartell concentrates her practice in the representation of condominium, homeowner, and townhome associations. She has extensive experience with counseling association board members on other types of contracts, addressing and mediating issues with homeowners, and answering general questions about interpreting the declaration and Illinois law. Her approach is to provide association board members with practical advice, not just legal opinions, and she excels

The Illinois Chapter of Community Associations Institute (CAI) serves the educational, business, and networking needs of community associations in the Chicagoland Area. Members include condominium, cooperative, and homeowner associations as well as those who provide services and products to associations. The Illinois Chapter has over 1100 members including 250 businesses, and over 500 community associations Board members and unit owners representing over 100,000 homeowners . The Illinois Chapter is one of 60 Community Associations Institute chapters in the nation.

B.T. Lakeside Roofing. B.T. Lakeside Roofing & Exterior Solutions is pleased to announce that Brittany Wykle has been promoted to Service Department Coordinator. She previously was Service Assistant and Marketing Director and has been with Lakeside Roofing since 2003.

Property Specialists, Inc.

Associa & Vanguard Community Management Associa, North America’s largest community management services firm, recently named Donald Kekstadt as CEO and President of Vanguard Community Management. Kekstadt’s addition to the Vanguard team strengthens the company’s focus on Chicago area associations and homeowners. “Don is a seasoned professional with nearly 30 years of experience in the association management industry,” said Craig Koss, Associa Senior Vice President. “He is committed to and focused on developing a strong working relationship with each community and client.” Kekstadt’s move to this new role allows former President and CEO Christine Evans to resume her role as Associa Regional Vice President, supporting both senior vice president Craig Koss and Associa Gulf Coast in Florida. “Christine has been an integral member of the Vanguard team and we are pleased that she will remain with us while her respon-

sibilities grow and expand within Associa,” said Koss. Kekstadt is a real estate management professional with more than 30 years of experience leading, steering and directing all aspects of residential and multifamily community association operations. He currently serves as a board member of the State of Illinois Licensing Board as well as having served six years on the Illinois Chapter for the Community Associations Institute (CAI). Also still serving as President and CEO of Associa’s L&N Midwest in Chicago, Kekstadt’s role with Vangaurd will mirror his responsibilities at L&N. These duties include leading strategies for future business growth, staff leadership development, financial responsibilities, market share growth, client growth and retention, client satisfaction and industry involvement with CAI, ACTHA and the Illinois State License Board.

FirstService Residential

J. Hershey Architecture

FirstService Residential is proud to announce being selected to manage several new communities. Coronado Condominium located in Chicago's Lakeview neighborhood at 3900 Pine Grove with 107 units has several amenities to offer its homeowners; from an indoor pool, sauna, rooftop deck, and storage.

J. Hershey Architecture recently announced that Michael Carney has been hired as Senior Associate and Jen Klenheinz as the new Marketing Director

Pebblewood Condominium No. 1 is a 80 unit community featuring twin towers located in Naperville. The community offers its residents landscaped courtyards, walking paths, and a heated underground garage.

Property Specialists, Inc. (PSI) is proud to announce the addition of five newly licensed Community Association Managers: Anthony Cvek, Cindy Gibula, Haley Foster, Megan Knollman and Brittany Ryan. Each manager began their career as an Assistant Manager with PSI becoming fully acclimated with the industry before becoming licensed. “I am extremely proud of all five of our new managers,” said Cathy Ryan, PSI President and CEO. “These individuals took to the industry quickly and competently. They are wonderful additions to the PSI family and will be excellent assets to the communities we manage.” Each manager brings a varied and complimentary background to their new role. Mr. Cvek is a licensed Realtor and a current member of the Dekalb County Board representing the Sycamore area. Ms. Gibula has worked for over 20 years in the commercial insurance industry prior to choosing her new career path. Ms. Foster has been in customer service for her entire career, understanding and responding to client’s needs. Ms. Knollman has risen through the ranks of PSI staff serving as PSI’s receptionist, personal assistant to our Vice President of Construction and Assistant Manager. Ms. Ryan had served eight years within PSI’s Accounts Receivable Department specializing in collection matters and serving as the company’s liaison to legal counsel.

Pac Lofts Condominium is a beautifully-constructed development in Chicago that was completed in 2007. Originally built in 1908, it was the home to the Felt and Tarrant Manufacturing Company and then in the 1980s was converted into the Paulina Arts Center. As a new condo building it now houses 96 units along with deeded parking. Amenities include community room, dog washing area, wine cellar, exercise room, storage, and roof deck. “The Board of Directors of these communities were impressed with our industry-leading technologies and we’re excited to deliver these best in class services to these communities to improve communications,” said Asa Sherwood, FirstService Residential Illinois President. “Our responsive management team, and online web services will provide each of these residents the personal service they deserve.”

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Mutual of Omaha Bank

Community Specialists

Tom Engblom was recently named President-Elect of the CAI Illinois chapter. Mr. Engblom began in Real Estate in 1984 and was a licensed real estate broker/instructor in Illinois for (20) twenty years and university professor at several colleges/universities during the same period. Since 2004 Tom has taught as a National Instructor for Community Associations Institute including rewriting several of the course materials. Furthermore, Tom served on the National Business Council for Community Associations Institute. He formerly supervised 3,500 condominium units within Chicago and the suburbs for (20) twenty years with (2) two prestigious management firms.

Community Specialists recently announced that Nicholas Burbulis has been hired to manage Park Newberry Condominium Association, replacing Terry Spencer who has retired from her Property Manager’s position. Congratulations and best wishes to Ms. Spencer.

Tom began a second career in 2004 as an Association Banker for Mutual of Omaha Bank. Mutual of Omaha awarded Tom Engblom with the company’s prestigious Pillar Award – an honor given annually to the bank’s top 10 performers nationwide. Tom is a regional account executive for Mutual of Omaha Bank’s Community Association Banking group who demonstrated outstanding performance in 2011. He serves seven states in the northern Midwest region consisting of Minnesota (CAI Board of Directors), Wisconsin, Illinois (CAI Board of Directors), Indiana, Michigan (CAI Board of Directors), Kentucky and Ohio and consistently placed among the top performers in five categories throughout the entire bank organization. Tom has earned Certified Property Manager (CPM) from the Institute of Real Estate Management and Professional Community Association Manager from Community Associations Institute (PCAM). Tom is currently completing his Doctorate in Business Administration with the Dissertation dedicated to Association Management.

Lieberman Management Lieberman Management Services has promoted Charles Perry to Director of Business Development. Before joining the new business team, Charles was a Senior Portfolio Manager at LMS for five years and excelled at building strong client relationships, communicating effectively with customers, vendors, and staff, and adding true value to his portfolio.

Paula Guitierrez was named the new Property Manager for the 1720 S. Michigan Avenue Condominium Association effective March 24, 2014. Paula has worked in property management within the Chicagoland area since 2007. In other staff changes at CS, Andrew Andersen has moved from his position as Bookkeeper at River Plaza Condominiums to become the Assistant Manager there. Drew Godzik has moved from the corporate office at CS and has taken over the accounts position at River Plaza. John Uhlman is replacing Drew Godzik as the new IT assistant at the CS corporate office. John comes to us with 3 years of IT experience from his previous position. John Nordquist was the recipient of the Community Specialists Directors Cup Award for 2013. The award is given to John in recognition of his willingness to take on any project or difficult assignment. He is admired and loved by managers for his good nature and positive manner, as well as, for his wealth of knowledge and experience. Barb Kosich received the Kathy Patton Award at the 2013 CS Holiday party. Barb is appreciated for her friendly and responsive demeanor and her professional and courteous manner as she juggles the demands of her position. Barb is a dedicated employee who has been able to assume the manager’s responsibilities when absent; she has been with CS for nearly 15 years. Dave Szutenbach won the company’s Excellence in Leadership Award this year. Dave has managed 5100 Marine Drive since 2007 and has completed numerous complex building projects during that period. Community Specialists is proud to announce that Rosemarie Wert has been appointed to the Illinois Legislative Action Committee.

Charles has a Bachelor of Science degree in Anthropology and Sociology from Rockford College and was a property manager and leasing agent for several years before joining LMS. He is CMCA and AMS certified and is a committee member of the Illinois Legislative Action Committee.

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INDUSTRY HAPPENINGS

Tairre Management

ABOMA

Tairre Management was named managing agent for 5757 N. Sheridan Road Condominium Association. Built in 1961, the 21 story building is 171 units and located on Lake Michigan at Sheridan Rd and Ardmore in the lovely Edgewater neighborhood of Chicago .

OVER 25 YEARS OF INTEGRITY ACCOUNTABILITY & DEPENDABILITY

“Tairre started managing the 5757 N. Sheridan Road condos on April 1, 2014,” according to Tairre President Tairre DeverSutton. Lynn Ellsworth is the On-Site Property Manager.

ABOMA held their annual meeting in December 2013 at the University Club of Chicago and announced their 2014 Officers as below President - William O'Leary, DK Condo

The building is undergoing transformations now with new management, a hallway and lobby renovation is about to get under way and a cable system upgrade are among the building’s improvement projects. A get acquainted reception was held at the building on April 8th.

CondoCPA, Inc. CondoCPA is excited to introduce Daniel Degnan, CPA and Dhiren Khatri, CPA as the newest members of our team. Daniel graduated from Northern Illinois University in December 2011 with a Bachelor’s degree in Accounting. He continued his education at Oakton Community College for CPA eligibility and passed his CPA exam in January 2013. Daniel has been with us since April 2013 and has proven to be a great asset to our audit team. Dhiren also attended Northern Illinois University receiving his Bachelor’s degree in Accounting in June 2006, his Master’s degree in Accounting in December 2008 and passing his CPA exam in 2009. Dhiren worked for 18 months in public accounting for The Reznick Group. He also worked for 2 years at ADP. Dhiren started with CondoCPA in December 2013 working as part of both the tax and audit departments and is also a great addition to our firm. CondoCPA would also like to congratulate Jennie Braswell, CPA on becoming a Certified Fraud Examiner. CondoCPA now has a total of 5 Certified Fraud Examiners.

1st Vice President - Christine Friend The Parkshore 2nd Vice President - Tony Briskovic Chicagoland Community Management, Inc. Treasurer - John Bieg Draper & Kramer, Inc. Secretary - Robert C. Wiggs Congratulations to ABOMA President Bill O'Leary for receiving the Leadership Award from the Institute of Real Estate Management (IREM). This award is presented to one who guides and advises people along with encouraging them to be the best they can. As a leader, Bill is a person that supports and instills in others that they can do anything they put their minds to. The Leadership Award was established by IREM to recognize an individual that displays a leadership role to enhance the reputation of the real estate industry. The organization's next event is an ABOMA Labor Seminar which is being held on Thursday, June 26, 2014 from 8:30 am - 11:30 am at theEast Bank Club in Chicago. For more information contact ABOMA at aboma1@aol.com or visit www.aboma.com

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CONDO LIFESTYLES

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CONDO LIFESTYLES

From the Editor

T

CondoLifestyles

®

APRIL 2014 | VOLUME 18 | NUMBER 1 Editor & Publisher Michael C. Davids Vice President Sherri Iandolo Art Director Rick Dykhuis 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 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. 630-932-5551 or 630-202-3006. 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, 800 property managers, 400 realtors, 400 developers and 400 public officials. Total Circulation is 8,500. 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. All material herein is copyrighted 2014. 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.

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he Winter of 2013/14 just didn’t want to let go of us. February and March continued cold and snowy and April started much the same. Hopefully we are done with weather extremes for a while now and we can enjoy some seasonable temperatures. Not only does pleasant weather s Mike Davids put people generally in a better mood, but we need favorable conditions outside to perform exterior maintenance, repair, and restoration projects that community associations all over Chicagoland want to get done. Economic conditions in general continue to improve and many associations are now trying to get caught up with outside repair and restoration work. Our cover story on Proxies and Quorums and other important issues having to do with meetings, voting and general conduct of an associations business, continues the industry discussion of these subjects. We asked several managers and several attorneys to provide comments and share their perspective on these topics. If you would like to share your thoughts on this subject, please let us know. Our second story asks the question, “Do You Appreciate Your Property Manager”? This article discusses the importance of understanding at what point and when your property manager and/or management company is going above and beyond what they have agreed to and should be expected to do. There has been a lot of legislative activity recently as well as several court rulings that significantly impact community associations. The Spanish Court case ruling by the Illinois Supreme court and an Appellate court ruling dealing with board communication are both very important to be aware of. At least 8 other bills that would impact community associations are under consideration in the Illinois legislative process. Given the amount of legislative activity and recent court rulings – it’s a good idea to stay close with your associations attorney as well as other resources to stay informed about important legal issues. Our Property Profile column features Heritage Manor Condominiums in Palatine, IL. As a result of good financial planning and their determination to keep up with necessary maintenance and repairs, Heritage Manor has completed capital projects ranging from roofing, to concrete, to landscaping and more in recent years. In our Money Matters column, we revisit the topic of capital planning for community associations. It cannot be said enough that it’s important for all associations to plan and perform necessary capital improvement projects. It’s equally important to properly fund your capital reserve account and to understand the options available to pay for capital improvements. Our Board Basics column features some great insight on what to do and how to be better prepared when a pipe bursts at your association. With this past winter’s bitter cold, many of us had to deal with a frozen or burst pipe and water damage issues first hand. For those who have not had the pleasure, this should be particularly helpful. Inside this issue we again offer our regular Industry Happenings column and highlights from a variety of special events. A special thank you to everyone who attended our Condo Lifestyles’s/Condolympics event on March 14th. The over $3500 raised in donations at this event benefit Special Olympics Illinois. Upcoming MCD special events include our annual golf outing, which will be held on July 18 and a luncheon in the Million Room at Arlington International Racecourse on August 28. If your association(s) has a special need or challenge, there will be a variety of experts specializing in community association issues including many members of our advisory board who will attend these events. MCD special events provide a terrific forum for association leaders to get questions answered, meet new vendors, share a story idea, or socialize with other volunteers and professionals. Thanks to the many new subscribers that have found our publication useful and informative. Special thanks to the firms, associations and groups that are Authorized Distributors of Condo Lifestyles. Those of you who are not current subscribers can find subscription information at www.condolifestyles.net 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 call our office at 630-932-5551. You can also send us an email (mdavids@condolifestyles.net). Y

Michael C. Davids Editor and publisher

04.14

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2014©.


SERVICE DIRECTORY

ACCOUNTANTS

ARCHITECTS/ENGINEERS

ATTORNEYS

CANTEY ASSOCIATES, CPA’S (630) 681-9400

FULL CIRCLE ARCHITECTS, LLC (847) 564-0884

DICKLER, KAHN, SLOWIKOWSKI & ZAVELL, LTD. (847) 593-5595

ANNUAL ACCOUNTING SERVICES:

(847) 564-3880 FAX

Audits Reviews Compilations Income Taxes Board of Directors Training Monthly Services: Collection of Assessments Paying of Bills Monthly Financial Statements Consulting for Developer Turnover and Major projects

Daniel Baigelman, AIA dan@fullcirclearchitects.com Capital Improvements • Reserve Studies Engineering Reports www.fullcirclearchitects.com 85 REVERE DRIVE, SUITE B, NORTHBROOK, IL 60062

www.canteycpa.com

J. HERSHEY ARCHITECTURE (847) 549-5900 “Autographed with Excellence” www.jhersheyarchitecture.com

Specializing in Accounting Services for Homeowner Associations.

KELLERMEYER GODFRYT & HART, P.C. (847) 318-0033

CONDO CPA (630) 832-2222 EXT 113

Investigations and Repair Documents for: Exterior Walls, Windows, Roofs, and Parking Garages Condition Surveys and Reserve Studies www.kghpc.com

CONTACT BRAD SCHNEIDER Brad@CondoCPA.com CERTIFIED PUBLIC ACCOUNTANTS

Accounting Solutions for Management Companies & Self-Managed Associations Audit & Accounting Services Income Tax Reduction & Planning

MAXIMA CONSULTANTS CORPORATION (312) 223-8414

CUKIERSKI & KOWAL, LLC (847) 496-7180 A full-service accounting firm speacilizing in the unique needs of homeowners associations.

www.ckwcpa.com

FROST, RUTTENBERG & ROTHBLATT, P.C. (847) 282-6340

FULLETT ROSENLUND ANDERSON, P.C. (847) 259-5100 www.frapc.com

MICHAEL J. COCHRANE, CPA (847) 301-0377

CERTIFIED PUBLIC ACCOUNTANTS

www.dicklerlaw.com

Reserve Studies & Transition and Condition Assessment Reports Facade/ Roofing / Windows Garage Evaluations, Water Infiltration Investigations Fire Escape/Balcony/Porch Evaluations, Life Safety Evaluations www.maximaconsultants.com

SUPERIOR RESERVE ENGINEERING AND CONSULTANTS

CERTIFIED PUBLIC ACCOUNTANTS

(888) 688-4560

Contact: Steve Silberman, CPA

www.superiorreserve.com

CODER TAYLOR ASSOCIATES

WALDMAN ENGINEERING CONSULTANTS (630) 922-3000

coder@codertaylor.com

www.waldmaneng.com

ARCHITECTS/ENGINEERS

KEOUGH & MOODY, P.C. (630) 369-2700 Legal Representation for Community Associations www.kmlegal.com

LAW OFFICES OF KEAY & COSTELLO (630) 690-6446 pcostello@keaycostello.com www.keaycostello.com

KOVITZ SHIFRIN NESBIT (847) 537-0500 www.ksnlaw.com Covenant Drafting & Enforcement Advising & Consulting with Boards Construction Defect Litigation Collecting Delinquent Assessments

LEVENFELD PEARLSTEIN, LLC 312-476-7556 Howard Dakoff / hdakoff@lplegal.com www.lplegal.com

BANKING ALLIANCE ASSOCIATION BANK (815) 342-4228 / (888) 734-4567 Full service banking and lending solutions for management companies and associations. cfinck@AllianceAssociationBank.com www.AllianceAssociationBank.com

(847) 382-4100 “We Specialize in Emergency Repairs” Architects • Research • Engineering Specifications • Reserve Studies

For Display or Professional Services Directory Advertising Info, Call (630) 202-3006 No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2014©.

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CONDO LIFESTYLES

BANKING

BUILDING RESTORATIONS

CONCRETE

ITASCA BANK & TRUST (630) 773-0350

HOLTON BROTHERS, INC.

SUNDEK OF ILLINOIS (847) 392-3939

“Together We’ll Shape the Future” www.itascabank.com

COMMUNITY ADVANTAGE, A WINTRUST COMPANY (847) 304-5940 Loans, Reserve Investments & Lock Box Services www.communityadvantage.com

Masonry Repair Services, Tuckpointing, Caulking and Concrete Restoration

(847) 253-3886 TEL / (847) 253-3255 FAX John@holtonbrothers.com www.holtonbrothers.com

LS CONTRACTING GROUP, INC. T (773) 279-1122 F (773) 279-1133

CONCRETE RAISING

Contact: Tom Laird tlaird@lscontrtacting.com www.lscontracting.com

MUTUAL OF OMAHA BANK (866) 800-4656

VIKING CONCRETE RAISING & REPAIR (847) 808-7400

HOA Banking • Internet Cash Management HOA Loans • Online Payment Services www.mutualofomahabank.com

BUILDING RESTORATIONS ATJ'S HOME IMPROVEMENTS (630) 432-3238 www.atjshomeimprovement.com

QUALITY RESTORATIONS (630) 595-0990

Raising Settled Concrete throughout Chicagoland wwwWeCanRaiseIt.com

DOORS

SITE MAINTENANCE, INC. (847) 697-1077

WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)

www.sitemaintinc.com

BRAL RESTORATION, LLC. (847) 839-1100 Masonry and Concrete Restoration www.bralrestoration.com

DAKOTA EVANS RESTORATION, INC. (847) 439-5367 Tuckpointing ~ Masonry Repairs Waterproofing ~ Terra Cotta Repairs Caulking & Sealants ~ Structual Repairs Cleaning ~ Balcony Restoration Concrete Restoration www.dakotaevans.com

FORUM GROUP, INC. (773) 732-3051 www.ForumGroupInc.com

CONCRETE FM&J ASPHALT PAVING, INC. (708) 544-6700 / (630) 279-0303 Concrete & Asphalt Paving Pavers & Color Stamping Drainage Systems & Sewer Repairs Sealcoating, Crack Filling & Striping www.fmjasphalt.com

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

ELEVATORS/CONSULTANTS SMART ELEVATORS CO. (630) 544-6829

HARD SURFACE SOLUTIONS (630) 916-8005 / (847) 838-6610 Concrete Flatwork Specialists | Asphalt Paving Curbs & Driveways | Sidewalks Footings & Foundations Colored Concrete | Stamped Concrete Aggregate Finish Concrete Parking Structure Maintenance & Repair Contact Tom Frye

We resurface Concrete We remove & pour Concrete Waterproof Membranes Pool Decks • Balconies • Rooftops Shower & Locker Rooms “The Only 1 Stop Service since 1967” JaykZ33@yahoo.com www.Sundek.com

www.smartelevatorsco.com smartin@smartelevatorsco.com

SUBURBAN ELEVATOR CO. 847-743-6200 Simplifying Vertical Transportation Contact: Max Molinaro www.suburbanelevator.com

www.hsshardsurfacesolutions.com

ENERGY GAS & ELECTRIC

GOLF CONSTRUCTION (219) 933-3420

OCEANS ENERGY (312) 870-0580

www.golfconstruction.net

info@oceanscc.com www.oceanscc.com

View our Special Event Photos @ www.Facebook.com/mcdmedia 22

CONDO LIFESTYLES

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SERVICE DIRECTORY

ENERGY USE/BENCHMARKING

FIRE/FLOOD RESTORATION

HVAC

WESTSIDE MECHANICAL GROUP (630) 618-0608 / (630) 369-6690

BROUWER BROS. SERVICES (800) CLEAN54

ALTHOFF INDUSTRIES (312) 332-5700

All types of environmental cleaning. (708) 396-1477 | www.bbsteamatic.com

Mechanical - Plumbing - Electrical - Building Automation www.althoffind.com

GENESIS CONSTRUCTION, INC. (847) 895-4422

AMS MECHANICAL SYSTEMS, INC. (800) 794-5033

Serving the Tri-State Area Since 1970 Contact: Jackie Loftis * jloftis@wsmech.com www.wsmech.com

FHA/FANNIE MAE CONDOMINIUM PROJECT APPROVALS

www.genesisconstruction.com

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

QCI RESTORATION (847) 891-2929 (866) 832-6724

www.condo-approval.com

www.QCIrestoration.com

24 Hour Service HVAC • Industrial Refrigeration Service/Maintenance • Systems Integration Energy Management • Electrical Process Piping • Plumbing www.amsmechanicalsystems.com

THE RESTORATION GROUP, LLC (630) 870-0658

EMCOR SERVICES TEAM MECHANICAL (847) 229-7600

CONTECH MSI CO. (847) 483-3803

www.trgrestore.com

www.emcortmi.com

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

FITNESS SOLUTIONS

FIRE SAFETY & PROTECTION

DIRECT FITNESS SOLUTIONS (847) 680-9300 cgallagher@directfitnesssolutions.com www.directfitnesssolutions.com

NORTHERN ILLINOIS FIRE SPRINKLER ADVISORY BOARD (NIFSAB) (866) 2NIFSAB (866-264-3722) 708-403-4468 www.firesprinklerassoc.org

SIMPLEX GRINNELL (630) 948-1235 Fire Alarm / Sprinkler Systems Fire Pumps / Extinguishers Fire Panel Monitoring Installation / Testing / Maintenance 24/7 Service: (630) 948-1200 www.simplexgrinnell.com

EMCOR SERVICES TEAM MECHANICAL FIRE PROTECTION DIVISION (847) 229-7600 www.emcortmi.com

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2014©.

WESTSIDE MECHANICAL GROUP (630) 618-0608 / (630) 369-6690 Serving the Tri-State Area Since 1970 Contact: Jackie Loftis * jloftis@wsmech.com www.wsmech.com

H V A C CLEANING GARBAGE CHUTE CLEANING BROUWER BROS. SERVICES (800) CLEAN54 (708) 396-1477 www.bbsteamatic.com

BROUWER BROS. SERVICES (800) CLEAN54 (708) 396-1477 www.bbsteamatic.com

INSURANCE GREEN SUSTAINABILITY SOLUTIONS HOLLINGER SERVICES, INC. (847) 437-2184

OCEANS ENERGY (312) 870-0580

Property Casualty • Employee Benefits Workers Compensation www.HollingerInsurance.com

info@oceansenergy.com www.oceansenergy.com

GROUP BENEFITS

MESIROW FINANCIAL (312) 595-8135

OCEANS ADVISORS (312) 508-3032

Nancy Ayers

info@oceansadvisors.com www.oceansadvisors.com

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CONDO LIFESTYLES

INSURANCE

LANDSCAPE CONTRACTORS

NON PROFIT/EDUCATION

OCEANS ADVISORS (312) 508-3032

KINSELLA LANDSCAPE, LLC (708) 371-0830

ABOMA (312) 902-2266

info@oceansadvisors.com www.oceansadvisors.com

Creating Lifestyles From The Outside In…™ www.kinsellalandscape.com

ABOMA1@aol.com www.aboma.com

JANITORIAL SERVICES

LANDSCAPE CONCEPTS MANAGEMENT, INC. (847) 223-3800

ACTHA (312) 987-1906 Association of Condominium, Townhouse and Homeowners Associations

DJR CLEANING ENTERPRISES (630) 893-0757

www.landscapeconcepts.com

actha@actha.org | www.actha.org

“GREEN” Janitorial & Sanitizing Services for hospitality businesses, health care providers and commercial, industrial and multi-unit residential buildings. www.djrcleaning.com

SEBERT LANDSCAPING, INC. (630) 497-1000

COMMUNITY ASSOCIATION INSTITUTE OF ILLINOIS (847) 301-7505

www.sebert.com

info@cai-illinois.org | www.cai-illinois.org

LAUNDRY SERVICES & EQUIPMENT

PAINTERS

FAMILY PRIDE LLC (630) 827-6362

AAA PAINTING CONTRACTORS, INC. (630) 231-8350

LAKE & POND MANAGEMENT ACRES GROUP (888) 231-1300 / (847) 526-4554

Contact Paul Anzell paula@hughesenterprises.net www.familypridelaundries.com

Ceritfied Aquatic Applicator Department of Agriculture www.acresgroup.com

LAWN CARE

LANDSCAPE CONTRACTORS

ABBOTT PAINTING, INC. (312) 636-8400 (773) 725-9800

SPRING-GREEN LAWN CARE (800) 830-5914

ACRES GROUP (888) 231-1300 / (847) 526-4554

MAILBOXES

Quality Painting & Decorating since 1973 Our Mission: Guaranteed Committment to Quality Now offering Parking Lot Painting www.Abbottpainting.com

MAILBOX WORKS (630) 355-9989 (773) 528-3111

ATJ'S HOME IMPROVEMENTS (630) 432-3238

www.spring-green.com

Professional Landscaping and Snow Removal www.acresgroup.com

ALAN HORTICULTURAL ENTERPRISES, INC. (630) 739-0205 www.alanhorticultural.com

BALANCED ENVIRONMENTS, INC. (847) 395-7120 | (630) 916-8830

www.aaapaintco.com

Large Variety of Commercial and Residential Mailboxes Intercoms and Tele-Entry Address Signage & Engraved Nameplates Installation Services Since 1989

www.BalancedEnvironmentsInc.com

www.MailboxWorks.com

MOLD REMEDIATION

ILT VIGNOCCHI (847) 487-5200

QCI RESTORATION (847) 891-2929 (866) 832-6724

www.iltvignocchi.com

www.atjshomeimprovement.com

CERTAPRO PAINTERS OF THE NORTH SHORE (847) 287-2642 Interior & Exterior Painting Wallcoverings • Decorating • Remodeling Drywall Repair • Decks & Staining Tile Installation • Metal & Iron Painting www.certacommercial.com tivanov@certapro.com

www.qcirestoration.com

24

CONDO LIFESTYLES

04.14

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2014©.


SERVICE DIRECTORY

PAINTERS

PLUMBING

PROPERTY MANAGEMENT

DDI DECORATING & DESIGN INSTALLATIONS 773-790-6669

AMS MECHANICAL SYSTEMS, INC. (800) 794-5033

COMMUNITY SPECIALISTS (312) 337-8691

Professional Commercial Grade Custom Quality Painting–Decorating–Wallcovering Interior -Exterior / Fully Insured 25 YEARS EXPERIENCE Contact Mike: ddimidwest@gmail.com

24 Hour Service HVAC • Industrial Refrigeration Service/Maintenance • Systems Integration Energy Management • Electrical Process Piping • Plumbing www.amsmechanicalsystems.com

DK CONDO (312) 346-8600

www.communityspecialists.net

Contact Tom Taylor

www.dkcondo.com

PRECISION PAINTING AND DECORATING CORP. (630) 688-9423 www.ppdpainting.com

PROPERTY MANAGEMENT A PLUS PROPERTY MANAGERS, INC. (847) 315-0222

THE HABITAT COMPANY (312) 527-5400 www.habitat.com

Professionals helping volunteers.

PARKING GARAGE CLEANING

info@aplusmanagers.com / www.aplusmanagers.com

EXTREME POWER CLEANING INC. (630) 532-0345

ACM COMMUNITY MANAGEMENT (630) 620-1133

www.ExtremePowerCleaning.com info@extremepowercleaning.com

www.acmweb.com

Contact Tom Skweres

DUBOIS PAVING (847) 634-6089 (800) 884-4728 www.duboispaving.com

FM&J ASPHALT PAVING, INC. (708) 544-6700 / (630) 279-0303

www.almapropertymanagement.com

Elena.Lugo@fsresidential.com www.fsresidential.com

BAUM PROPERTY MANAGEMENT, LTD. (630) 897-0500

G&D PROPERTY MANAGEMENT (630) 812-6400 www.gd-pm.com

CARUSO MANAGEMENT GROUP, INC. RESIDENTIAL & COMMERCIAL

(630) 717-7188

HARD SURFACE SOLUTIONS (630) 916-8005 / (847) 838-6610 Contact Tom Frye

www.hsshardsurfacesolutions.com

PEST CONTROL

www.smithereen.com

Contact Asa Sherwood or Elena Lugo

www.BaumProp.com

Concrete & Asphalt Paving Pavers & Color Stamping Drainage Systems & Sewer Repairs Sealcoating, Crack Filling & Striping www.fmjasphalt.com

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

www.condomanagement.com

FIRSTSERVICE RESIDENTIAL (312) 335-1950

ALMA PROPERTY MANAGEMENT (847) 517-4400

PAVING

FIRST COMMUNITY MANAGEMENT (312) 829-8900

HILLCREST MANAGEMENT (630) 627-3303 / (312) 379-0692

www.carusomanagementgroup.com

www.hillcrestmgmt.com

CHICAGO PROPERTY SERVICES, INC. (312) 455-0107 X102

LEGUM & NORMAN MIDWEST (312) 944-2611

www.chicagopropertyservices.com

www.lnchicago.com

MORE LIVING. LESS WORRYING. CHICAGOLAND COMMUNITY MANAGEMENT (312) 729-1300

LIEBERMAN MANAGEMENT SERVICES (847) 459-0000 www.liebermanmanagement.com

www.chicagoland-inc.com

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2014©.

04.14

CONDO LIFESTYLES

25


CONDO LIFESTYLES

PROPERTY MANAGEMENT

REMODELING/REPAIRS

ROOFING

MCGILL MANAGEMENT, INC. (847) 259-1331

FM&J SERVICES, INC. (708) 544-2219

CSR ROOFING CONTRACTORS (708) 848-9119

www.mcgillmanagement.com

PROPERTY SPECIALISTS INC. (847) 806-6121 ROLLING MEADOWS OFFICE

(630) 633-5450

General Maintenance & Handyman Services General Carpentry, Flooring, Painting, Concrete & Tuckpointing Parking Lot Maintenance, Striping, Sealcoating Catch Basin & Sewer Repairs Custom Chimney Caps, Flashing, Gutters & Metal Roofs Waterproofing & Pressure Washing www.fmj-services.com

www.csr-roofing.com See our ad on page 8.

PROHTOP ROOFING (847) 559-9119 We’re Here When You Need Us! www.protoproofing.com

WOODRIDGE OFFICE

www.psimanagement.net

SUDLER PROPERTY MANAGEMENT (312) 751-0900 2014 IREM Management Company of the Year www.sudlerchicago.com

TAIRRE MANAGEMENT SERVICES (847) 299-5740

RESERVE STUDIES SITE MAINTENANCE, INC. (847) 697-1077

RESERVE ADVISORS, INC. Reserve Studies & Transition Defect Studies

1 (800) 221-9882 Conducted by Professional Engineers Enhanced Report / Most Customized Studies www.reserveadvisors.com Long-term Thinking. Everyday Commitment.

SUPERIOR RESERVE

tsutton@tairremgmt.com

ENGINEERING AND CONSULTANTS

WERK MANAGEMENT (630) 241-0001

www.superiorreserve.com

For All Your Property Needs www.werkmanagement.com

ROOFING

REAL ESTATE TAX ATTORNEY

ATJ'S HOME IMPROVEMENTS (630) 432-3238

(888) 688-4560

www.elliottlaw.com

ACTIVE ROOFING CO., INC. (773) 238-0338 (708) 430-8080 Established 1965 Maintenance & Repairs Roofing/Sheet Metal/Tuckpointing www.activeroofing.com

www.wvproptax.com

REMODELING/REPAIRS MI MAINTENANCE AND CONSTRUCTION (630) 241-0001

CONDO LIFESTYLES

100,000 roofs installed TEAR OFFS • SHINGLES • FLAT ROOFS Our experience & technical know-how gets the job done right the first time! Serving the area since 1963 www.sdroofing.com sales@sdroofing.com

SECURITY SERVICES ADMIRAL SECURITY DOOR STAFF SOLUTIONS (847) 588-0888 www.admiralsecuritychicago.com

GUARDIAN SECURITY SERVICES (708) 385-3300 Providing Chicagoland’s Finest Door Staff and Security Officers since 1975 www.guardiansecurityinc.com

PREMIER SECURITY (773) 867-8813 www.premiersecuritycorp.com

B.T. LAKESIDE ROOFING (630) 628-0093 www.lakeroof.com

SECURATEX (630) 317-8980 ”Keeping Tenants Happy” www.securatex.com

www.mancioneinc.com

26

S&D ROOFING SERVICE (630) 279-6600

www.atjshomeimprovement.com

ELLIOTT & ASSOCIATES (847) 298-8300

WORSEK & VIHON LLP (312) 368-0091

www.sitemaintinc.com

04.14

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2014©.


SERVICE DIRECTORY

TREE CARE

WINDOWS/REPLACEMENTS

KRAMER TREE SPECIALISTS, INC. (630) 293-5444

WOODLAND WINDOWS & DOORS (630) 529-DOOR (3667)

SIDING / RENOVATIONS ACCURATE EXTERIORS (630) 830-9191

ATJ'S HOME IMPROVEMENTS (630) 432-3238

Tree Pruning, Tree Removal, Cable Bracing, Plant Health Care, Tree Planting & Transplanting www.kramertree.com

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

TV-BULK CABLE & SATELLITE

WINDOW RESTORATION

RCN (312) 955-2322

WINDOW WALL SERVICES, INC. THE CAULKING COMPANY (708) 361-9333

www.atjshomeimprovement.com

B.T. LAKESIDE ROOFING (630) 628-0093

rcnchicagoapts@rcn.net www.rcn.com

www.windowwallservices.com

www.lakeroof.com

WOODLAND WINDOWS & DOORS (630) 529-DOOR (3667)

All Types of Window Restoration Weather Stripping / Hinges Handles and Adjustments Curtain Wall Repair Specialists

XFINITY 1 (800) XFINITY www.comcast.com

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

WASTE SERVICES

WOODLAND WINDOWS & DOORS (630) 529-DOOR (3667)

SNOW REMOVAL

LAKESHORE RECYCLING SYSTEMS (773) 685-8811

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

ATJ'S HOME IMPROVEMENTS (630) 432-3238

www.LakeshoreRecyclingSystems.com

www.atjshomeimprovement.com

View our Special Event Photos @ www.Facebook.com/mcdmedia HARD SURFACE SOLUTIONS (630) 916-8005 / (847) 838-6610 Contact Tom Frye

www.hsshardsurfacesolutions.com

MCD Pool Party Featuring Condolympics » March 14, 2014

THE WINTER WERKS (630) 241-0001 www.mancioneinc.com

SWIMMING POOLS SPMS (630) 692-1500 Heaters Pumps • Repairs • Chemicals Pool Maintenance • Complete Water Analysis Pool Guards, Inc. ross@spmspools.com

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2014©.

You can download registration & sponsor forms for our 2014 MCD Golf outing and Arlington Park Racecourse event at www.condolifestyles.net or www.Facebook/mcdmedia 04.14

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CONDO LIFESTYLES

By Salvatore Sciacca, Chicago Property Services

Capital Planning for Community Associations Now more than ever, associations must spend money wisely and plan ahead to ensure that their reserve account is properly funded. Proper reserve funding will allow boards of directors to properly maintain their associations and maximize the real estate values of the homeowners. Duties and Obligations of Board Members One of the fundamental obligations of board members is to maintain the common elements. In fact it is your fiduciary duty to maintain the common elements as stated in the Illinois Condo Property Act. The common elements consist of physical characteristics that involve regular maintenance as well as capital replacement. Which capital items should be replaced and when should they be replaced are the most impor-

tant questions to ask. It is not a question of whether the items should be replaced. All capital items have a finite life expectancy.

Reserve Studies are Recommended One of the questions that board members should ask is who determines what are the capital items, how long will they last and how much will it cost to replace the items. To answer those questions, an association should ideally hire a company that specializes in reserve studies. The reserve study is a document generated by experts that incorpo-

rates the life expectancy of all capital items over the span of 30 years into a detailed report. The report will indicate what items need to be replaced, when they need to be replaced, and how much it will cost to replace them. It will also detail how much the association will need to save to fund the capital item replacements on an annual basis. In principle, this sounds like a very sound idea. If your association has the funds for a reserve study which is typically at least $3,000 for a typical 30 unit community association to over $10,000 for a larger community, then it makes the most sense to do so. Practically speaking, many associations cannot afford to pay for a reserve study. In Illinois, there are over 40,000 communities and about 30,000 are under 25 units. Most of the associations under 25 units probably don’t have the funding to afford a reserve study. In addition, there are associations that have paid for reserve studies and have not followed the recommended plans. Certainly, this is not recommended but it is the reality for many associations based on their financial constraints.

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M O N E Y M AT T E R S

5 Year Capital Plans are Essential Regardless of whether an association has a current reserve study or not, it makes the most financial sense that ALL associations large or small, well funded or underfunded, have a 5 year capital plan. The capital plan needs to incorporate the reserve study data if available and create a roadmap of exactly what capital items will be addressed during which calendar year.

Capital Planning Saves Money Planning ahead and proactively addressing capital projects actually saves money. This is especially applicable to exterior façade, masonry and tuck pointing issues. Simple masonry issues can easily escalate into major expenditures. Costs associated with exterior masonry issues typically raise exponentially and not linearly. This means that the longer an association holds off with repairs, the more costly the repairs become. It is cheaper to make the capital improvements sooner than later. Given this fact, the best approach for the board of directors of community associations is to have a capital plan and to plan ahead. It is always best to plan long term and to keep the homeowners informed of expenditures, especially larger ones. As a result, it is quite important for the board of directors to create and maintain a 5 year capital plan.

Capital Planning Cycle The capital plan is a guide and a roadmap detailing exactly what capital items will be addressed over the next 5 years. The capital planning process should start in the spring and finish up with the plan that the board will present to the homeowners at the budget approval meeting which is typically held in October or November of each year. Ideally there is a capital committee that reviews the capital plan every year and submits the recommendation to the board each year in September. This allows the board to incorporate the capital planning process into the operational budget planning process that typically starts in September. Once the operating budget and capital plan is approved, the cycle starts all over again in the spring. It is an ongoing process that continues on through the life of the community association.

Proactive Planning or Deferred Planning It is the best case scenario when associations plan ahead and prefund the reserves for capital projects. But what happens when associations don’t plan ahead? The answer is simple. It costs MORE money. The project costs are higher and the board is often time forced to pass special assessments and raise more through bank loans. In addition, there is typically more frustration among the homeowners as the amount the homeowners are asked to pay is often times larger than the regular monthly assessment amount. It is much cheaper to raise regular assessments and save over time and have the funds necessary for capital projects versus raising funds for capital projects as necessary. The following sections discuss the most common capital funding scenarios.

Funding Options – Reserves Only In this best case scenario, the association has planned ahead and has built up the reserves sufficiently over the years and has enough to pay for the capital projects as necessary per the capital plan. This is the ideal situation because it means that the assessment levels are sufficient to build long term reserves. The association can move forward with the capital project at any time in this scenario and does not have to wait to collect additional funds. This scenario is the least stressful to the association and to the homeowners.

Funding Options – Reserves and Special Assessments In this scenario, the association can only partially fund the capital project from reserves and it is necessary to raise additional funds through a special

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assessment to fully fund the capital project. In this scenario, the association will need to wait until the special assessment funds are collected before proceeding with the project. This scenario would only apply in cases where there is low urgency in the project completion timeline.

Funding Options Special Assessments Only In this scenario, the association is severely underfunded and must raise funds completely through a special assessment. This is a viable option only if the project is not urgent in nature and can wait until the special assessment funds are collected. This scenario is the least common and would only apply in cases where there is low urgency in the project completion timeline.

Funding Options – Special Assessments and Bank Loans

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In this scenario, which is the least desirable scenario, the association is seriously underfunded and urgently needs funds to complete a capital project. This can be attributed to an unexpected event that has created the need to complete a capital project. Other scenarios include poor planning, deferment of capital projects, and/or underfunding of the reserves. There are banks that do lend to community associations which allow associations to access the capital necessary to complete the capital projects in this scenario. In this case, the association applies for a bank loan and at the same time will need to pass a special assessment to cover the cost of the project. The bank loan will allow the association to take on the project fairly quickly as a loan approval usually takes about 6 weeks to complete. Once the loan is approved, the association has the funding available to take on the project. The payback period of the loan is usually over 3 to 5 years. The special assessment is also usually drawn

out over the same period of time. This is the most expensive scenario due to the borrow costs of money and creates the most stress on an association and homeowners.

Communication is Key In the end, the best approach is to communicate information to the homeowners on a regular basis. By communicating the information to the homeowners, they will know the issues that are at hand and they will not be surprised to hear about upcoming capital improvement projects. In addition, if additional funds are needed, the homeowners will not be surprised by the need to pass a special assessment or obtain a bank loan. The way to do this is by holding regular quarterly board meetings that are officially noticed and distributing meeting minutes to all the homeowners so that information is shared to those who were not able to attend the board meetings.

Summary In summary, associations are encouraged to plan ahead especially regarding capital expenditures. These are the greatest expenditures that associations will undertake. As a result, it is advised that the association obtain a reserve study if financially affordable and to incorporate this information into a 5 year capital plan. Each year, the association should revise the 5 year plan and every 3-5 years the association should get an update to their reserve study. This proactive approach will result in the lowest amount of operating costs for the association. Conversely, associations that wait until the last minute to make capital repairs will often times need to pass special assessments, obtain bank loans, spend greater amounts of money to complete the projects and create the greatest stress and strain on the association and homeowners. Y

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Member FDIC Equal Housing Lender No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2014Š.


BOARD BASICS

by Dawn L. Moody - Keough and Moody, P.C.

A Pipe Burst... Now What? The winter of 2014 was the winter of pipe bursts. Managers, attorneys, insurance adjusters, and restoration companies have spent a large part of this year dealing with the aftermath of pipe bursts. This article helps summarize some of the legal issues, which come to light following a pipe burst, and provides some general guidance.

T

his article does not serve as a substitute for a legal opinion. Therefore, if your association is faced with a pipe burst and is unsure as to how to proceed, it should seek the advice of legal counsel.

Access Unit & Shut Off Water After a pipe bursts, it is imperative that the association and/or its representatives get access to the unit as soon as possible in order

to shut off the water so as to prevent further damage. It is generally easy to obtain access when the unit is occupied, as the owner is able to provide access. However, what about those situations where the unit is vacant or the owner is on an extended vacation? In a condominium association, the board is authorized by Section 18.4 (j) of the Illinois Condominium Property Act to access for the purpose of making emergency repairs to prevent further damage to the

common elements or other units. Hence, if the board is unable to locate an owner to arrange for access, it has the authority to enter into the unit on an emergency basis. If the association accesses the unit on an emergency basis, it is advisable for it to document the condition of the unit at the time of entry. This documentation will assist the association in addressing any claim that entry was unwarranted and/or claims that the association’s contractor ran off with the owner’s property, when there was no such property in the unit. It is further advisable to do all that you can to contact the owner to advise him/her that the association has accessed the unit.

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CONDO LIFESTYLES

Shown here (from L to R) is Dawn Moody - Keough & Moody, P.C., Cindy Fitts - CISA, Lindsey Daehnke -Keough & Moody, P.C., and Sheila Malchiodi - QCI Restoration. The group presented several seminars this Spring on dealing with burst pipes.

Entering a Townhouse or HOA Unit Differs From Condo While the Illinois Condominium Property Act provides a condominium association with the right to access a unit, there is no such statutory right for townhome or other common interest communities. Accordingly, one must look to the governing documents of that individual association in order to determine what, if any, right the association has to enter into the unit. In some associations, no such right may exist. Instead of waiting for a legal opinion as to whether the association may access the unit or in situations where no right exists, the association should contact the fire or police department for assistance. Once access to the unit has been obtained, the parties must take the necessary steps to stop the water. After stopping the water, the parties must take steps to address the water damage and stop any potential microbial (mold) growth. In many cases, these actions are taken by the association.

Who is Responsible to Pay for Damges? With a pipe burst, the most common question that we receive is who is responsible to pay the costs associated with remediating the damage. With a condominium association, one must first look to the association’s insurance policy and not the maintenance, repair and replacement provisions of the association’s governing documents. Under Section 12 of the Illinois Condominium Property Act, the association carries the primary insurance on the units (bare walls, floors and ceilings of the unit). Hence, when a pipe bursts, assuming the damage exceeds the association’s deductible, the association should file a claim with its insurance carrier; the owner, of course, should be directed to his/her insurance carrier for

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damage to personal property, etc., within the unit. This is true regardless of whether the damage is wholly contained within one unit and in many instances, regardless of whether the damage was caused by owner negligence. Please note that again, with townhome and other common interest community associations, insurance responsibilities are set forth in the association’s governing documents.

Insurance Claim & Contractors Claims under the association’s insurance policy should be filed by the board and/or its managing agent. Owners should not be filing claims with the association’s insurance carrier directly. Funds from the association’s insurance policy are to be used for the restoration of the unit. That is, the association should be hiring and supervising the contractor in order to ensure that the repairs are made consistent with the association’s policy and standards. Funds should not simply be handed over to the damaged owner. As with any insurance policy, the association’s policy will contain a deductible amount. Section 12 (c) of the Illinois Condominium Property Act provides a board with several options for payment of the deductible. First, the association may pay the deductible as a common expense. Alternatively, it can assess the deductible back to the damaged owners or after notice and an opportunity for a hearing, the board can assess the deductible back to the owner from whose unit the cause of loss originated.

Not Familiar with Insurance Policy? This year, it was apparent that while associations are familiar with the maintenance, repair and replacement provisions of the governing documents, those associations were not as familiar with the terms of its insurance policies. When there is substantial damage to a

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unit from an insurable loss, an association should not be looking at its maintenance responsibility matrix, but to its insurance policy. The same holds true for the insurance carrier, which may also look to the maintenance responsibility matrix to deny a claim.

Develop Plan for Pipe Bursts It is important that an association have a plan on how to handle pipe bursts (and other insurable losses) and undertake preventative maintenance to help prevent the same. Well in advance of the start of winter, associations should note the vacant units within the community. It should place the owners and mortgagees of those units on notice that the heat must be maintained within those units during the winter months. The association should further confirm that all necessary insurance is on file. This especially is true for those townhome communities, which place the obligation of maintaining insurance on the unit on the owner.

Insurable Loss Vs Maintenance Item Owners (and the Board/management) should be reminded as to the difference between an insurable loss and a maintenance item. In advance, procedures and policies should be adopted relative to the filing of an insurance claim and the handling of the deductible (i.e. will it always be assessed back to the damaged units). Further, owners should be aware in advance how the damage to their unit will be addressed. That is, they should understand that for items which the association is responsible to repair, the contractor, etc., will be engaged and directed by the association. Hopefully, by having the association develop a plan for handling insurable losses (and taking action to proactively prevent them), there will be no surprises or questions when such a loss occurs. Y

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PROPERTY PROFILE

By Michael C. Davids

Managing Capital Improvements at Heritage Manor

s Shown here are the recently installed entrance markers at Heritage Manor

H

eritage Manor Condominium Associations is a 433 unit community association located off Lake-Cook Road (just west of Illinois Route 53) in Palatine, Illinois. There are 96 two-story buildings that are home to approximately 1800 residents. The buildings are predominantly wood built with an aluminum/stucco siding and has been upgraded to maintenance free vinyl siding with aluminum trim. All of the units are either 2 or 3 bedrooms and 43 of the buildings have full basements. Developed in the early 1970’s, Heritage Manor began operating as a homeowner controlled community association after being turned over from the developer in the late 1970’s. Heritage Manor is set on just over 15 acres featuring beautiful landscaped grounds with multiple outdoor benches surrounding a pond. There is also a children’s playground and a large outdoor swimming pool as well as a children’s pool. Both pools and the playground are widely used by residents. Colorful flowers are installed each season throughout the property and near recently added entrance signs made of natural stone.

Governance Heritage Manor is governed by a nine member board of directors with terms that are staggered every two years. Retired business owner Chuck Lake is the current President. He has served on the board for 19 years and was elected President in 1996. In addition to being proactive at Heritage Manor, Lake is very active in the community helping out with Palatine Township elections. He is also an active member of his local health club. The board President feels that “a strong board currently supports our Heritage Manor continued on page 36

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MCD Pool Party Featuring Condolympics » March 14, 2014 Over 250 guests joined MCD Media at the 16th annual MCD Pool Party on March 14th,2014 at the Pyramid Club located at 236 West Lake Street in Addison, IL. Over $3,500 was raised for Special Olympics at the event. Major sponsors of this year’s event were FM& J Services, Hard Surface Solutions and Balanced Environments. Committee Members: Cathy Ryan, Chairperson Kevin Block, Head Scorekeeper Tairre Dever-Sutton, Lead Judge Tony Dister – Bracket Challenge

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Tracy Davis, Lindsey Daehnke, Aleka Ernst, Liz Foley, Sherri Iandolo, Toni Ivanov, Mydraine Janvier, Mary Knoll, Suzanne Kupp, Jackie Loftis, Erica Horndasch, Sheila Malchiodi, Suzy Martin, Patty Petersen, Greg Semmer, Tom Skweres, Jessica Towles and Tom & Brittany Wykle.

CONDO LIFESTYLES

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EVENT HIGHLIGHTS

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PING PONG Gold: Russ Fleagle Silver: Justin Maier Bronze: Fran O’Malley

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@ComAdvantage Community Advantage is a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank. ©2014 Community Advantage

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CONDO LIFESTYLES The pond at Heritage Manor offers colorful landscape plants and seating areas.

photo credit: Acres Group, Inc.

from page 33 community,” and that there is sufficient interest from other residents serving on the board. Association meetings are held six times per year and are run in a timely manner with typical meetings lasting no longer than two hours. Meetings also typically provide a time period that is designated to allow residents the opportunity to speak if desired.

Operations Vanguard Community Management/ Associa is the management agent for Heritage Manor Condominiums and has been for just over a year. The property manager for Vanguard at Heritage Manor is Sandy Lehnert who works from the on-site management office located at 1983 Williamsburg Drive in Palatine. The Association also employs one full time maintenance man and a part-time administrative assistant. The property manager and the board of directors work closely together to maintain the property by doing regular property walks at all times of the year. Together, the board and management identify, prioritize, and decide on what projects will be

needed to help maintain and enhance the Heritage Manor community. Management also communicates closely with the board to keep them informed of any emergencies and unexpected expenses. Approximately fifteen years ago the board of directors recognized that it needed a full time maintenance person and on site property manager to better serve the needs of the property and its residents. At this time, a

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small office for the employees was built and a second free standing building was constructed for the Association’s maintenance work truck, equipment and materials. In 2012, the Heritage Manor board again recognized that “we had outgrown the space and completed a beautiful addition to the onsite office,” which is now approximately 1200 square feet. “The office is now much a much more comfortable work space for the

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PROPERTY PROFILE

Pictured here are Kayla Sittig -Administrative Assistant, Sandy Lehnert -Property Manager, and Jim Jakubowski -Maintenance Man at Heritage Manor Condominium Association.

has all of their previously planned capital improvement projects completed.

Capital Projects

employees and the homeowners,” adds Lehnert. “Having an on-site office is a definite benefit to the operations of the property and communication within the community and helps make the frequency of board meetings less necessary,” stated the board president.

Budget & Finances In 1996, a new board of directors was elected with an awareness that the property

was in poor condition and no money in their capital reserve account. “This group and others since then faced that challenge and have worked very diligently to enhance the property and make it financially stable,” the board president offers. The current operating budget for Heritage Manor Condominiums is approximately $1,300,000 annually. To date Heritage Manor has $1,750,000 in their reserve account and

In addition to the office expansion, Heritage Manor has completed a variety of important capital projects over the years without a special assessment. In 1996, the Association borrowed $1,000,000 from a bank to replace all the siding on the “Quad” side of the property. This loan was paid off in full in less than ten years. The association also took out a $500,000 bank loan to replace and repair concrete driveways that were needed in 2006 and the loan was paid off in 2011. Heritage Manor replaced the roofs on all ninety-six buildings in phases (over a ten year period) at a cost of approximately one million dollars, paying for all the reroofing out of their reserve account. The siding on each building was also replaced at the same time as the roofs which is why it took 10 years to complete. “Considering the property is over 40 years old, the original construction has held up extremely well,” Lehnert said. “this is due to the fact that the boards of Heritage Manor

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One section of Heritage Manor's Maintenance shop is pictured below

have paid attention to the capital improvement needs of the buildings and continues to do proper maintenance.” The current board believes that a reserve study is a valuable guiding document and they are presently on track with following the recommendations of a reserve study performed at Heritage Manor by a professional architect/engineer.

Assessments Shown here is the inside of the exCurrent assessments range panded and remodeled management from approximately $205 per office at Heritage Manor month for smaller units to approximately $326 per month for economic recession that began in 2007/08 but larger units. Water, garbage service, insurance have not caused the Association to delay or put for common areas, landscaping, snow removal off any necessary maintenance or repairs. “While services, swimming pool operations, profesdelinquencies are a little higher than we would sional management and their maintenance like, the association is still in a strong financial and administrative assistant are among the position,” the board president added. items included in the Heritage Manor. Resale Values In 2014, there was a 2% assessment increase which is the first increase in several years. DelinHome values also decreased over the quent assessments increased slightly during the recent years of the economic recession. How-

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ever, “in 2013 we are seeing a 25% increase in home sales prices at Heritage Manor from the low point,” said Lehnert. In an effort to help support resale values and enhance the community “curb appeal” appearance, the Association recently installed two natural stone monument signs at the main entrance. The new markers and landscape enhancements were an investment of over $100,000 (paid for from their reserve account) and the property now blooms with attractive flowers and shrubs to welcome residents and guests to the property.

Communication Heritage Manor’s board and management strive to have open communication with residents and members. Having an on-site management office facilitates communication. The association also has a website and publishes a continued on page 40

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habitat.com


CONDO LIFESTYLES

from page 38

from page 6 / Cover Story

Heritage Manor

Proxy Woes And Quorum Constraints... Is Relief on the Way?

community newsletter in Spring and Fall to help keep everyone informed of their past, current and planned activities.

Sugar cautions that direct voting is not the appropriate solution for all associations. Proxies might be better for those that have trouble achieving quorum, but the elimination of proxies could deter overly-aggressive electioneering. The attorney doesn’t disagree with the concept of electronic voting, although he points out additional legal requirements that must be satisfied within its implementation. For instance, owners have a right to see ballots and proxies, and to be present when votes are counted. Until such finer points of the law are worked out, the proxy system suffices, he says. “It’s got some negatives, but the tried-and-true proxy system works,” he says. Y

Security & Lighting The association features security lighting throughout the property and resident feedback indicates that “people feel very safe here and enjoy living at Heritage Manor. Given the number of residents with children this is especially important to everyone involved. Currently, the board has undertaken a new security lighting project and is changing fro metal halides to LED lighting. This will help save the Association money on electric costs and conserve energy.

Brutal Winter Weather Like nearly every Association in the Chicagoland area, Heritage Manor had to contend with the impact of the brutal cold and record snowfall that this past Winter brought. They had one major water main burst under a street on the property due to the extreme cold as well as a fire hydrant valve stem that broke causing water to pour onto the street. “We have also had additional costs for snow removal this past winter. However, even with these additional costs that were not anticipated, the Association is still financially strong,” Lehnert said.

Closing Thoughts “My job relocated me to this area and I was sold on this property at that time due to its great location and the great amenities that the Village of Palatine”, said Lake. “And I was very attracted to the maintenance free style of living that condo associations offer.” When it was noticed that the property needed attention and was in poor financial condition, “I realized that ‘maintenance free’ does not mean ‘care free’ and decided it was time for me to invest time and energy serving on the Association Board of Directors.” Since then, Heritage Manor has been successful in restoring the financial well-being and enhancing the property (values) through proper maintenance and capital improvement projects. “I purchased my unit in the 1970’s and it has been a great place to live” and also proven to be a prudent investment. “My unit is worth much more now than what I originally paid,” Lake concludes. Y

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Condolifestyles April 2014  

CondoLifestyles April 2014

Condolifestyles April 2014  

CondoLifestyles April 2014

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