Info Bytes 05.11.23

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Meetings

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(Un)Boxed

Suppose your association has a rule about crushing boxes in your recycling area. Which of the following best matches your perspective on how to enforce the rule?

10 Habits of Great Homeowners

• A community-association (CIC) adaptation of Richard Haas' The Bill of Obligations:

  • Stay informed by reading: meeting minutes, statutes, and governing documents

  • Get involved by attending community events and Board meetings, joining a committee, and/or by volunteering to serve on the Board

  • Be reasonable

  • Remain civil, but don't acquiesce to violations of law or your governing documents

  • Reject violence

  • Value governance established by your community and work to improve it

  • Promote common sense for the common good of your community

  • Respect your neighbors and show appreciation for volunteer service

  • Support education for homeowners, volunteers and professionals

  • Elevate your CIC's needs above your own when and where appropriate

Ethics Fail

• Remember ethics of remuneration from our last issue? FirstService Residential has worked out a sweetheart deal to bring home 25% of the $109,000 exclusive rights payment from Spectrum for this community.

  • Read this week's Governance Matters: an FCC rule prohibits exclusivity in MTEs.

Facebook "Notice" = No Notice

• This association held an invalid annual meeting because of an invalid notice.

  • They sent notice 1) via Facebook that was 2) lacking all the required details. 😦

  • Know your statutes and governing documents to disseminate notice correctly!

These Homeowners Love Their Covenants

• Alys Beach homeowners love their covenants that wield vast control over community living. Covenants, as a concept, are not inherently good or bad. People make the difference. View the Reddit reaction.

  • White is the color of choice. Homes are also required to be masonry.

  • Property owners building homes in Alys Beach must start construction within 30 months of their purchase, and they have 36 months to complete it.

  • The community is strict about elements visible from the outside.

  • There are also guidelines for vacation rentals in Alys Beach. In order for homeowners to rent out their homes, for example, they are required to have specific glasses, linens, and serveware: cotton-sateen blend Garnier-Thiebaut linens, and dinnerware and flatware from Fortessa. These items are purchased through the community's vacation rental program.

  • A family spent about $5,170 to purchase the required linens, plus a $100 monthly replacement fee.

  • No family photos can be displayed while a property is being rented

  The Houses Must Be White, and the Designs Preapproved. Everybody Wants In — Libertina Brandt | WSJ | May 4, 2023

Kickbacks Kick Back

• The former manager of Plymouth Hill Condominiums who bilked condo residents out of hundreds of thousands of dollars in a kickback scheme has pleaded guilty.

  Lopez's fraud amounted to $585,000, according to Montgomery County Assistant District Attorney Steven Bunn, and other defendants allegedly stole $153,000 more.

  Former Plymouth Hill condo manager guilty in kickback scheme — Jenny Dehuff | The Reporter Online | May 4, 2012

Tight Pursestrings

• The following article highlights a juxtaposition between governments and their constituents, including this poignant quote recognized by many CICs:

  "We have very affluent residents, but as governments, we have very tight budgets…"

  7 acres, 3 lids: Eastside cities want the state to mow the lawn — Jenny Dehuff | The Seattle Times | May 9, 2012

Prompting Change: Your Next CAM Might Be … an AI?

• With reasoning, communicating and coordinating on the chopping block, you should expect that management companies will turn to AI to continue maximizing profits.

  Global labor markets are poised for a new era of turbulence as technologies like artificial intelligence accelerate the decline of clerical work, while simultaneously increasing demand for technology and cybersecurity specialists.

  Over the next five years, nearly a quarter of all jobs will change as a result of AI, digitization and other economic developments like the green energy transition and supply chain re-shoring, according to a report published by the World Economic Forum in Geneva on Monday.

  Tech, AI Driving Job Changes for Nearly a Quarter of All Workers | Bloomberg AI — Bryce Baschuk | Bloomberg | April 30, 2023

  BUT: ChatGPT Is Powered by Human Contractors Getting Paid $15 Per Hour — Lusas Ropek | Gizmodo | May 08, 2023

View past coverage: 1, 2, 3, 4, 5, 6, 7, 8 and 9.

Energy

• Nuclear power in the West is having a long-awaited revival, with new reactors opening in the U.S. and Europe and fresh momentum toward building more soon.

  A gaping hole in the plan: The West doesn't have enough nuclear fuel—and lacks the capacity to swiftly ramp up production. Even more vexing, the biggest source of critical ingredients is Russia and its state monopoly, Rosatom, which is implicated in supporting the war in Ukraine.

  The West Needs Russia to Power Its Nuclear Comeback — Jennifer Hiller, Daniel Michaels and Kim Mackrael | WSJ | May 10, 2023

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  Novel thermoacoustic heat pump system for residential applications — Emiliano Bellini | PV Magazine | May 08, 2023

The Cost of Net Zero

• Facing mounting pressure from environmental advocates and climate-minded voters, Gov. Kathy Hochul and Democratic lawmakers, who control the New York Senate and Assembly, approved the new $229 billion state budget containing the provision late Tuesday night.

  The law bans gas-powered stoves, furnaces and propane heating and effectively encourages the use of climate-friendly appliances such as heat pumps and induction stoves in most new residential buildings across the state. It requires all-electric heating and cooking in new buildings shorter than seven stories by 2026, and for taller buildings by 2029.

  The state's budget doesn't ban gas in all new buildings – there are exceptions for large commercial and industrial buildings like stores, hospitals, laundromats, and restaurants, for instance. But the impact on new residential buildings could be significant. Buildings account for 32% of New York State's planet-warming emissions, according to a 2022 report.

  New York becomes the first state to ban natural gas stoves and furnaces in most new buildings — Rachel Ramirez and Ella Nilsen | CNN | May 03, 2023

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  "By completely prohibiting the installation of natural gas piping within newly constructed buildings, the City of Berkeley has waded into a domain preempted by Congress," Judge Patrick Bumatay, a Trump appointee, wrote for the panel.

  Berkeley argued that the law only preempts local standards dictating the design and manufacture of appliances—not regulations that affect the distribution of energy sources such as natural gas. The Biden Administration essentially agreed in an amicus brief.

  But as Judge Bumatay points out, federal law defines "energy use" as "the quantity of energy directly consumed by a consumer product at point of use" by appliances, and Berkeley's ban on new gas hookups "necessarily impacts" the quantity of gas used.

  Federal appeals court scraps Berkeley, California's ban on gas hookups — The Hill

  U.S. Appeals Court Strikes Down Berkeley, Calif., Natural-Gas Ban — WSJ

  Gas Stoves Triumph Over Berkeley — WSJ Editorial Board

  9th Circuit Court of Appeals Decision 04/17/23

  42 USC Ch. 77: ENERGY CONSERVATION: 1975 Energy Policy and Conservation Act

Environment

• BATTLE: County-by-county battles are raging as wind and solar projects balloon in size, edge closer to cities and encounter mounting pushback in communities from Niagara Falls to the Great Plains and beyond. Projects have slowed…developers don't know if they can get local permits or how long it might take.

  'Over Our Dead Bodies': Backlash Builds Against $3 Trillion Clean-Energy Push — Jennifer Hiller | WSJ | May 08, 2023

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• SEEING RED: For pilots flying over rural America, a string of red lights flashing along the horizon is a warning that there might be a wind farm ahead.

  But for many residents on the ground, the lights are an eyesore that has ruined their view of the night sky and disrupted the bucolic stillness that defined their counties.

  "Imagine…red blinking stoplights…every night, all night long…and not in sync," Gayla Randel, who can see the lights on more than 130 turbines from her Marshall County, Kan., home, told lawmakers this year.

  Lawmakers Crack Down on Wind-Turbine Lights That Flash All Night — Shannon Najmabadi | WSJ | April 30, 2023

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• Air quality, as measured by fine particle pollution, improved across much of the country between 2015 and 2021, though it worsened across several Western states and Florida.

  Where air pollution is improving — and where it's worsening — Alex Fitzpatrick and Kavya Beheraj | Axios | April 27, 2023

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An audacious new effort to pull carbon dioxide out of the Pacific Ocean as a way to fight climate change is being backed by fossil fuel giants and Big Tech. But the nascent technology, called "direct ocean capture" (DOC), still has a long way to go to prove that it works — and that it won't cause any new problems.

Meet the fossil fuel-funded startup trying to take CO2 out of the ocean — Justine Calma | The Verge | May 04, 2023

Housing Affordability

• With US housing costs skyrocketing due to increased demand and limited stock, the dream of home ownership or an affordable rental is becoming unreachable for many…

  How finding a home in America became so absurdly expensive — Alvin Chang | The Guardian | 05/10/23

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  The Biden Administration's regulatory onslaught continues, with almost no media coverage about the costs or consequences. A case in point is a new Department of Energy rule due to hit on May 31 that will make manufactured homes less affordable.

  Some 22 million Americans live in manufactured homes, often called mobile homes, and their median household income is $35,000 a year. The average cost of a manufactured home ranges from $72,000 to $132,000, compared to $365,000 for a traditional house. Manufactured homes were about 9% of new single-family home starts in 2021, providing more than 100,000 affordable homes. Yet they are also the only single-residence housing entirely regulated by the federal government… How to Make Housing Less Affordable — The Editorial Board | WSJ | 05/08/23

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• According to a recent survey from Bankrate, 49% of U.S. adults have less savings compared to a year ago. Ten percent of those surveyed said they have no savings at all.

  The upshot: The most disastrous outcomes for U.S. households, like auto repossessions and home foreclosures, have begun to climb.

  "As a result of the expiration of government stimulus and current [economic] headwinds, we have seen delinquencies ticking up in this space over the last several months," said Margaret Rowe, a senior director at Fitch ratings group.

  Car repossessions and home foreclosures rising; some Americans are living on a financial cliff — Rob Wile, Rania Soetirto and Jasmine Cui | NBC News | 04/29/23

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• The BLOCK Project gives homeowners the opportunity to allow construction of a DADU in their backyard and rent it out to folks transitioning from homelessness.

  Block by Block: Backyard cottage program for homeless people boasts astonishing success rate — Tobias Coughlin-Bogue | Real Change | 04/26/23

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  This 28-year-old pays $62 a month to live in a dumpster he built for $5,000 — Harrison Marshall | CNBC | 04/29/23

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  The Metropolis Where Rents Rise 60%, 75%, Even 100% — Feliz Solomon | WSJ | 04/28/23

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  New research via Remote Work and Household Formation suggests one reason it's more expensive to rent: people got sick of living with each other. The Real Reason Rent Costs Are Sky High: People Left Their Roommates — James Rodriguez| Insider | 05/10/23

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  Fearing a flood of evictions after the end of key pandemic protections, Washington state lawmakers attempted to stem the tide with hundreds of millions of dollars in assistance and an array of new renter protections. So far, it appears those efforts have worked. But experts wonder: How long can the dam hold?

  Fewer WA renters face eviction now than before COVID. Will that last? — Heidi Groover | The Seattle Times | 05/07/23

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  Pedersen Fails to Stifle Housing Development in the Guise of "Tree Protection" — Erica C. Barnett | PubliCola | 05/08/23

Housing Market

Built Environment

• Avid CIC Info Bytes readers already know that covenants can have an adverse impact on property values. So what about demolishing a horde of 'zombie' houses? Getting rid of abject blight seems to help drive values up. Supply. Demand. New development. ⏶

  "There are dangerous, blighted buildings all over Ohio that are nothing more than eyesores that restrict new development," Gov. Mike DeWine said in a 2021 statement announcing the Ohio Building Demolition and Site Revitalization Program. In 2022, when DeWine laid out the 2,275 buildings across 42 counties slated for the wrecking ball, he added, "We're not just tearing down dilapidated buildings, we're helping to make communities across the state better places to start a business, raise a family, and build a bright future."

  An Ohio homeowner surrounded by 598 houses getting demolished said the teardowns have increased property values and improved his neighborhood — Alcynna Lloyd | Insider | 05/05/23

• Los Angeles, a city known for its conventional single-family homes, may offer some of today's most innovative solutions for multifamily housing.

  Why You Should Forget What You Think You Know About Housing in L.A. — Julie Lasky | NYT | May 05, 2023

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  LOL: …by the way, we have studios starting from a little over a million dollars, right? So it's not only for the rich."

  Macklowe's One Wall Street Is Largest NY Office Conversion — Adriane Quinlan | Curbed | May 05, 2023

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Does the CRE firesale mean more office to residential conversions are coming?

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Downtown San Francisco is experiencing its worst office vacancy crisis on record, with 31% of space available for lease or sublease. In the heart of the city, an astounding 18.4 million square feet of real estate is available — enough space to house 92,000 employees and the equivalent of 13 Salesforce Towers.

Condo Connection's financial coverage is indexed to our Dollar$ and $ense page dedicated to all things CIC finance.

Inflation and Monetary Policy

• Rates. Keep. Going. UP.

• The US Federal Reserve did what almost everyone said it would do, raising interest rates by a quarter percentage point and hinting it could be the final move in the most aggressive tightening campaign since the 1980s.

  With a slight tweak to its language, the central bank let the world know that the time to step back and watch may have arrived. Fed Chair Jerome Powell has made it his mission since the days of "Team Transitory" to thread the needle of a soft landing.

  With America's long-thrumming economy finally showing signs of lassitude, the question now is whether the inflation fight went too far, or not far enough, or ends up being just right. Throw in the wild cards of the banking crisis and the GOP's threat to let the US default, and it may make for an interesting summer for the economy. "The committee will closely monitor incoming information and assess the implications for monetary policy," the Federal Open Market Committee pledged. — Natasha Solo-Lyons and David E. Rovella | Bloomberg Evening Briefing | 05/03/23

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  US inflation continued to slow in April, giving the Federal Reserve room to pause interest-rate increases. The consumer price index rose by a below-forecast 4.9% from a year earlier, the first sub-5% reading in two years. Excluding food and energy, the so-called core consumer price index also cooled slightly. A narrower price measure often cited by Fed officials—tracking services that have boomed as the pandemic faded—registered the smallest monthly increase since mid-2022, as airfares and hotel costs declined. US stock futures jumped, Treasuries rallied and the dollar weakened after the report. — David Rovella | Bloomberg Evening Briefing | 05/10/23

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  Disinflationary path. The latest data showed CPI slowed more than expected, giving the Fed some breathing room to potentially pause:

  • A dilemma: Core and headline inflation are both more than double the Fed's target.

  • Consumer prices rose 0.4% in April with headline CPI up 4.9% on a year-on-year basis, its first reading below 5% in two years.

  — Bloomberg The Close | 05/10/23

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  GDP Report Shows Economic Growth Slowed in First Quarter — Austen Hufford | WSJ | 04/27/23

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  "Based on projected intermediate- to long-term borrowing needs, Treasury may need to modestly increase auction sizes later this year, potentially as soon as the August 2023 refunding announcement," the department said in a statement.

  Separately, the Treasury announced that, after months of consideration, it's kicking off a buyback program in the calendar year 2024. By buying back older securities and issuing more of the current benchmarks, one aim is to help bolster patchy liquidity in the Treasuries market. The program could also help the department to smooth out volatility in its issuance of Treasury bills as it manages its cash balance.

  "Treasury anticipates designing a buyback program that will be conducted in a regular and predictable manner, initially sized conservatively," the statement said. The program is "not intended to meaningfully change the overall maturity profile of marketable debt outstanding," it added.

  Treasury Flags Bigger Sales as Soon as August, Buybacks in 2024 — Liz McCormick | Bloomberg | 05/03/23

  Federal Reserve financial stability experts are on the lookout for weaknesses after a year of rising interest rates — and as they survey the potential risks confronting the system, they are increasingly watching office loans and other commercial real estate borrowing.

  View the Fed's latest Financial Stability Report

  Financial Stability Experts at the Fed Turn a Wary Eye on Commercial Real Estate — Jeanna Smialek | NYT | 05/08/23

Cashing In

• Unlike CDs issued at your local bank, brokered CDs and Treasuries can be sold before maturity at a profit (or loss) because the market for these securities is relatively liquid. Taking the opportunity to cash out of underperforming assets at the right time can prove to be a fantastic benefit to your community association (and to your personal finances).

• Has your association taken the time to analyze your cash flow needs, plan and execute an investment ladder for your short, medium and long-term investments to take advantage of the highest yield on US government debt in well over a decade?

  • If you don't already have your own, please use this free reserve study calculator. Remember: " full funding " is a unicorn. Cash flow is king.

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• I-Bonds are not a path to wealth (according to a recent article) and they're not a great way to invest for your CIC, either. That said, the fixed-rate portion of I-Bonds is now 0.9%, up from 0.4%. That fixed base rate impacts long-term I-Bond performance (over the course of years and decades) as the variable spread on top changes over time.

  Return on I Bonds Drops to 4.3%, but They May Now Be a Better Long-Term Investment — Imani Moise | WSJ | 04/28/23

  Here's the best time to redeem Series I bonds to maximize your interest — Kate Dore | CNBC | 05/10/23

Cashing Out

• Almost half of US adults are worried about the safety of their deposits in banks and other financial institutions—levels of concern as high or higher than during the 2008 global financial crisis.

  Worries are also significantly higher among those without a college degree and those who make less than $100,000 — even though Federal Deposit Insurance Corp. guarantees deposits up to $250,000.

  Nearly Half of Americans Worry Their Bank Deposits Aren't Safe — Gregory Korte | Bloomberg | 05/04/23

We're Not Exclusive, Right?

• On February 15, 2022, the Federal Communications Commission (FCC) released a Report and Order (Order) that prohibits cable operators and other service providers from entering or enforcing agreements for exclusive or "graduated" revenue-sharing with owners of residential or commercial apartment buildings, condominiums, shopping malls, and other multi-tenant environments (MTEs, also known as multi-dwelling units, or MDUs). The Commission also adopted rules that require service providers to disclose to potential customers the existence of any exclusive marketing agreement with the property, although such agreements remain otherwise enforceable.

  New FCC Rules Affect Broadband Competition in Multi-Tenant Properties — Robert B. Scott Jr | Davis, Wright, Tremaine | 02/23/22

Everything in Moderation

• First, a legal definition for determination of reasonableness: RCW 4.24.005: Tort actions—Attorneys' fees—Determination of reasonableness

• A bewildered homeowner posted HOA hit us with an absurdly large fine. I don't know what to do to the r/HOA subreddit a few days ago. The monetary penalty? $6,000 for garbage cans that weren't hidden well enough.

  • This HOA is located in North Carolina. § 47F-3-107.1 requires:

    1. Due process (including notice and an opportunity to be heard)

    2. If it is decided that a fine should be imposed, a fine not to exceed one hundred dollars ($100.00) may be imposed for the violation and without further hearing, for each day more than five days after the decision that the violation occurs .

• Colorado regulates CIC monetary penalties via § 38-33.3-209.5:

  • Learn about HB22-1137 (effective August 9, 2022)

  • (1.7) (III) (A) If an association reasonably determines that a unit owner committed a violation of the declaration, bylaws, covenants, or other governing documents of the association, other than a violation that threatens the public safety or health, the association shall, through certified mail, return receipt requested, provide the unit owner written notice, in English and in any language that the unit owner has indicated a preference for correspondence and notices pursuant to subsection (1.7)(a)(I) of this section, of the violation informing the unit owner that the unit owner has thirty days to cure the violation or the association, after conducting an inspection and determining that the unit owner has not cured the violation, may fine the unit owner; however, the total amount of fines imposed for the violation may not exceed $500 .

• Florida regulates CIC monetary penalties via 718.303(3) and 720.305(2):

  • The association may levy reasonable fines for the failure of the owner of the unit or its occupant, licensee, or invitee to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association.

  • A fine may not become a lien against a unit.

  • A fine may be levied by the board on the basis of each day of a continuing violation, with a single notice and opportunity for hearing before a committee as provided in paragraph (b). However, the fine may not exceed $100 per violation, or $1,000 in the aggregate .

• Beware of monetary penalties that run afoul of your state statutes and SCOTUS.

  • "The protection against excessive fines guards against abuses of government's punitive or criminal law-enforcement authority… For good reason, the protection against excessive fines has been a constant shield throughout Anglo-American history... Exorbitant tolls undermine other constitutional liberties. Excessive fines can be used, for example, to retaliate against or chill the speech of political enemies." — Ruth Bader Ginsburg, SCOTUS Majority Opinion

  • A Florida woman was fined $100,000 for a dirty pool and overgrown grass. When do fines become excessive?

  Excessive fines? Florida city hits homeowners with massive penalties — Kristine Phillips | USA TODAY| 07/19/19

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Following the Money on Fines and Fees — Aravind Boddupalli and Livia Mucciolo | Urban Institute | January 2022

Taking Follow-Up

• Following up on Too Much Taking from our last newsletter: do you know escheats? Every state has its own statute. In Washington, that's Chapter 11.08 RCW.

Legislative Updates

• Florida: The House & Senate unanimously passed HB919, the Homeowners' Association Bill of Rights. This legislation is perhaps THE strongest example of homeowner protections to date. Unfortunately, it does not include Florida condominiums.

  • Effective October 1, 2023. Full legislation info.

• Washington State has four newly effective CIC-specific statutes:

  • EFFECTIVE MAY 1, 2023

    1. HB1199 - Licensed Child Care in Common Interest Communities

  • EFFECTIVE JULY 23 + AUGUST, 2023

    1. HB1043 - Association Records in Common Interest Communities

    2. HB1349 and HB1636 related to foreclosure protections

    3. HB1101 Tenant Screening in Common Interest Communities

Visit our Legislation Page

Please contact us if you're aware of legislation to feature from YOUR state!

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