03.14.24

ISSUE # 87

CIC Info Bytes 03/14/24

CIC Info Bytes are frequent, succinct updates providing educational and engagement opportunities that help your community thrive!  Please forward and share this newsletter with your peers, neighbors and colleagues so they can connect and join.  Our goal is to curate content that provides a robust basis for contextual understanding to support practical takeaways for you and your association.  Please consider following us on Twitter and Reddit. 

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Technical Debt

• Most community associations suffer from technical debt of various sorts:

  • A CRM / portal solution that lacks basic features.

  • Lack of a long-term document management solution (storing PDF files on a portal is not document management).

  • Paper processes in a digital age.

  • Lack of electronic payment methods and so much more…

As companies race to build the latest and greatest software for their businesses, they are overloading their tech balance sheets with an oft-ignored kind of debt.

It’s known as “technical debt.” Underneath the shiny and the new, lurking in IT systems where it creates security vulnerabilities and barriers to innovation, is an accumulation of quick fixes and outdated systems never intended for their current use, all of which are badly in need of updating…

…Technical debt has parallels with our national debt, in that it compounds over time, ballooned during the pandemic, and has reached worrisome proportions. It’s also akin to our aging physical infrastructure, because it’s already leading to hazardous conditions in our everyday lives….

The Invisible $1.52 Trillion Problem: Clunky Old Software — Christopher Mims | WSJ | March 01, 2024

The Hammocks Part V

• Attorney David Gersten continues to seek justice for The Hammocks…

A year after ex-Hammocks board members were charged with running a massive fraud, the homeowners association’s receiver accused former HOA vendors of playing an “insider” role in the scheme. 

The lawsuit marks the latest chapter in the Hammocks fiasco. In November 2022, prosecutors charged former board presidents Marglli Gallego and Monica Ghilardi, as well as two other ex-board members, of misappropriating HOA funds by hiring bogus maintenance and other contractors that did no work. When the association paid the vendors, some of the former board members diverted funds to themselves, according to an arrest affidavit. 

Since then, David Gersten, the court-appointed receiver overseeing Hammocks affairs after the charges, has claimed in civil suits that others, aside from those criminally charged, either turned a blind eye or in some way participated in the fraud. In that, the Hammocks became the first major case in which association vendors are accused of wrongdoing. Although claims of mismanagement abound across South Florida communities governed by associations, most take aim at board members…

Hammocks Receiver Sues Ex-HOA Accounting, Security Vendors — Lidia Dinkova | The Real Deal | February 05, 2024

Rage Against The Regime

• Don’t let community associations escalate to physical violence!  Read Issue #78.

A verbal argument that “became physical” escalated when a resident of a downtown Miami high-rise pulled a rifle on another man, police said.

According to an arrest report, the whole thing stemmed from an “incident” earlier that day involving the building’s homeowners association manager…

Miami high-rise resident pulled rifle on man after ‘incident’ with HOA manager, cops say — Chris Gothner | WPLG Local 10 | March 05, 2024

Scenes from New York City

• Two questions and two answers.

Typically, condominium owners are responsible for funding repairs to building systems. But in this situation, where there appears to be a construction defect, it could be the responsibility of the sponsor, the entity that offered the new condominiums for sale…

When a New Condo Building Has Problems, Who Pays to Fix Them? — Jill Terreri Ramos | NYT | February 17, 2024

A working intercom isn’t just a convenience when visitors or food deliveries arrive — it’s a legal requirement. Under the state’s multiple dwelling law, buildings built or converted after 1968 with eight or more units must have a two-way voice intercom system linking the front door to each apartment. The city’s housing maintenance code also requires a functioning intercom…

That Broken Intercom in Your Apartment Is Illegal. Here’s What to Do. — Jill Terreri Ramos | NYT | January 20, 2024

Planning a long trip in your EV?  It’s gonna cost you.

Superchargers that look like gas stations open as Tesla prices Ford charging 30% higher — Daniel Zlatev | NotebookCheck | March 01, 2024

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Solar cells can benefit from “strategic impurities.”

In the interest of improving solar cell efficiency, a research team led by Prof. Wolf Gero Schmidt at the University of Paderborn has been using high-performance computing (HPC) resources at the High-Performance Computing Center Stuttgart (HLRS) to study how these cells convert light to electricity. Recently, the team has been using HLRS’s Hawk supercomputer to determine how designing certain strategic impurities in solar cells could improve performance.

Hawk Supercomputer Improves Solar Cell Efficiency — CleanTechnica | March 08, 2024

The Cost of Net Zero

• The fossil fuel to electric transition comes with staggering costs.  We’ve collected a number of reference articles online and in this document.

Toward the end of the article, the author cites a 2022 CBRE study identifying that “Average rents are 31% higher for buildings certified to conserve energy and meet other environmental standards than those without.”  That’s no recompense for condominiums and co-ops whose current owners are faced with excessive expense and no clear ROI.

A nearly 100-year-old office building in New York City is undergoing a massive retrofitting to slash its emissions. The $35 million project could serve as a blueprint—or warning—for property owners around the country.

The boiler in the basement of the 17-story building will be ripped out, along with the cast-iron radiators that wrap around each floor. In their place, heat pumps as big as oversize refrigerators will warm or cool water that is circulated in the building’s pipes to control temperatures through new radiators. 

The roughly decadelong project is an example of the daunting undertaking facing thousands of building owners across the U.S. By 2030, more than a dozen cities will have laws in place regulating building emissions, according to the carbon accounting company nZero. 

In New York alone, retrofitting some 15,000 properties to comply with a new law capping emissions would cost between $12 billion and $15 billion, according to an analysis by the city in 2023…

The NYC Building Makeover Being Watched Around the Country — Shane Shifflett | WSJ | March 01, 2024

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BloombergNEF estimates getting the world’s energy network ready for “net zero” will cost $30 trillion.  VIDEO

HB1589 boldly pushes into electrification.  Notably, the provision to prohibit new natural gas distribution was removed, but the sting of costs associated with electrification should not be brushed aside.  Thirty.  Trillion.  Dollars.

Senate passes electrification bill that would dramatically increase costs for ratepayers — Building Industry Association of Washington | March 04, 2024

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America's electricity bills have emerged as an unexpected driver of inflation despite energy costs in general moving downwards.

January's inflation data shows the electricity index rose 3.8 percent in the last year - above the 3.1 percent overall figure. 

But a new study by Texas Electricity Ratings reveals how some bills can vary by as much as $2,400 between states…

How much are electricity bills going up in YOUR state? Fascinating study… — Helena Kelly | Daily Mail | March 10, 2024

The latest appliance?  Expensive ovens and cooktops with built-in LFP batteries that plug into 120V AC.  Boiling water in 40 seconds sounds impressive, but the batteries in these products might only last an hour.  Don’t even consider whole-home backup.  Anyone who wants that should invest in something like a Powerwall.

According to DirectEnergy.com, most electric ovens draw between 2,000 and 5,000 watts an hour and cooktops range from 1,200 to 3,000 watts an hour depending on the size of the burner.  Notably, “There's a big difference in energy consumption between making beef jerky at 170 degrees and self-cleaning your oven at 800 degrees.”

Induction ovens with big batteries solve lots of problems — Seth Weintraub | Electrek | February 29, 2024

How Much Energy Does an Electric Oven and Stove Use? — Direct Energy

Environment

• Moderation is essential: too much of a good thing goes wrong.  

There is a solar-powered revolution going on in the fields of India. By 2026, more than 3 million farmers will be raising irrigation water from beneath their fields using solar-powered pumps. With effectively free water available in almost unlimited quantities to grow their crops, their lives could be transformed. Until the water runs out.

The desert state of Rajasthan is the Indian pioneer and has more solar pumps than any other. Over the past decade, the government has given subsidized solar pumps to almost 100,000 farmers. Those pumps now water more than a million acres and have enabled agricultural water use to increase by more than a quarter. But as a result, water tables are falling rapidly. There is little rain to replace the water being pumped to the surface. In places, the underground rocks are now dry down to 400 feet below ground.

Solar-Powered Farming Is Quickly Depleting the World's Groundwater Supply — Fred Pearce | WIRED | March 09, 2024

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A handful of startups are trying to reinvent one of the most ubiquitous, but also environmentally destructive, ingredients in our diets: palm oil.

Palm oil is in bread, instant noodles, Girl Scout cookies, lipstick, Nutella and ice cream, to name a few. People around the world use it to cook daily. But to make all of that oil, endless miles of rainforests worldwide — regions along the Equator vital to biodiversity and the fight against climate change — have been flattened and burned and turned into palm oil plantations. That’s had deadly consequences for species like orangutans in Indonesia.

The new companies are taking their tech out of the lab and into real products. The material is made by fermentation (think breweries producing oils rather than beer) and isn’t approved for food yet. But it’s starting to show up in things like cosmetics…

These Startups Want to Make Palm Oil. In a Lab. Without Palm Trees. — Dionne Searcey | The New York Times | March 09, 2024

• 36 states have “residual” insurance plans.  21 of those don’t explain precisely how they would address a deficit if losses exceed their capital.

…Homeowners in the most risky places are now more likely to be covered by state-created, “last resort” insurance programs that provide protection where the private market won’t.

Those plans have more than doubled their market share since 2018, and their liabilities crossed the $1 trillion threshold for the first time in 2022, according to Property Insurance Plans Service Office Inc., a research firm that tracks the programs. The most climate-vulnerable states are the most exposed: As of now, Florida’s plan could suffer $525 billion in losses; In California, it’s at least $290 billion, up sixfold from 2018.

But even as states have assumed more and more risk, they’ve largely dodged a fundamental question: How will they cover claims in the wake of a truly major catastrophe? There are limited options—levies on private insurers or state residents, or more state borrowing—and none of them are good…

…Homeowners don’t understand disaster risk the same way that actuaries do. Moving is a headache under the best of circumstances; for individuals or families, it can seem like a crazy response to a theoretical future disaster. And while humans expect risks in general, we tend to discount the likelihood that any particular bad event will happen to us…

US Home Insurance, Real Estate Markets Teeter on Financial Crisis — Leslie Kaufman, Saijel Kishan and Nadia Lopez | Bloomberg | March 05, 2024

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Middleton, Connecticut: Peppermill Village condominium association: 12 units damaged by fire and smoke.  One building of six units is a total loss.  No fatalities.  

The biggest question: how long will it take to repair and replace the structures AND will the displaced homeowners and residents’ insurance last long enough to keep them housed?

VIDEO: 10 families displaced after 2nd-alarm fire at condominium complex in Middletown — Courtney Ingalls and Kristina Russo | WTNH | February 29, 2024

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West Des Moines, Iowa: A year has passed since a fire destroyed several units and displaced dozens at Stoneridge condominium.  When will the displacement end?  Also see Issue# 83.

…Former residents of the complex expected it would be a couple of months until they could move back in. But a year later, they are still displaced. Now, they're demanding answers.

"We all still have to pay taxes, insurance and we can't live in our homes," said Ana Poole, a former resident of one of the condos in the building.

Poole has a pending lawsuit against the homeowner's association at Stoneridge Condominiums. It was filed in October. Poole requested that the court manage the HOA for a year "until fire repairs, roof repairs, financial and reserves corrected, dues collected and/or liens placed on unpaid properties."...

West Des Moines condo residents gather one year after fire displaces families — Ophelie Jacobson | KCCI | November 17, 2023

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Continuing efforts to shrink the state's Citizens Property Insurance Corp., the Florida House on Thursday gave final approval to a bill that could lead to at least some second homes moving from Citizens into the private insurance market…

…While the bill deals with a series of issues related to Citizens, much of the focus has been on a "depopulation" program that is designed to shift policies from Citizens into the private market. Currently, the program involves what are known as "admitted" insurance carriers, which face state regulation on issues such as rates.

The bill would open the depopulation program to "surplus lines" carriers, which are not subject to the same regulations as admitted carriers and often insure risky properties. Under the bill, surplus lines carriers would be able to assume policies from Citizens for residences that do not have homestead property-tax exemptions…

Florida lawmakers pass Citizens Insurance changes — CBS Miami | March 08, 2024

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Florida home insurance consumers got a mixed bag from the Florida Legislature this year.  Lawmakers approved a $200 million extension of the My Safe Florida Home program and created a separate program to help condo owners.

But a bill allowing surplus lines carriers to take out second-home policies from state-owned Citizens Property Insurance Corp. was approved, which critics say could subject snowbirds to failures by insurers whose policies are not guaranteed by the Florida Insurance Guaranty Association.

The Legislature also failed to approve bills that would allow the Office of Insurance Regulation to increase limits on insurable values eligible for Citizens coverage and prevent cancellation or nonrenewal of policies covering flood-damaged homes.

The Legislature finished its work for the year on Friday and, barring Gov. Ron DeSantis calling a special session, left insurance customers to continue to wait for reforms enacted in 2022 and 2023 to begin stabilizing rates…

Many Florida insurance bills approved by Legislature aim to save homeowners money — Ron Hurtibise | South Florida Sun Sentinel | March 11, 2023

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Depopulation from a state insurer of last resort can result in increased premiums.

Moved from Citizens to private insurance, some see rise in premiums — Ted Scouten | CBS Miami | March 11, 2023

• No relief in sight.

If you're waiting for a break in home prices, a new report from Seattle-based Redfin might convince you to get what you can.

According to their data, the U.S. housing market gained $2.4 trillion in value over the last year. The total value now is $47.5 trillion.

That's based on more than 90 million residential properties nationwide. Mortgage rates may drop this year, but buyers still face limited supply…/

US housing market value climbs $2.4 trillion, limits options for homebuyers — Lee Stoll| KOMO News | March 02, 2024

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Portable mortgages for the US?!

…The US housing market differs from most because the vast majority of mortgages are not assumable, meaning a buyer can take on a seller's mortgage when they purchase their home. Nor are they portable, which means borrowers can transfer their existing mortgage to another property

Offering portable mortgages would enable hesitant sellers to keep their rock-bottom mortgage rates when they move, potentially boosting overall inventory and transaction volumes.

"The main benefit of introducing a feature like portability is that it could 'unfreeze' housing markets to some extent by allowing homeowners to move without having to give up the low mortgage rates that they've locked in," Julia Fonseca, an assistant professor of finance at the University of Illinois Urbana-Champaign, told Business Insider…

How the Canadian mortgage model could help unfreeze the housing market — Theron Mohamed | Business Insider | March 09, 2024

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Smaller is more affordable.  See Issue#86.

After years of prioritizing large homes, the nation’s biggest and most powerful home builders are finally building more smaller ones, driving a shift toward more affordable housing.

The boom in smaller construction has cut median new-home sizes by 4 percent in the past year, to 2,179 square feet, census data shows, the lowest reading since 2010. That’s helped bring down overall costs and contributed to a 6 percent dip in new-home prices in the same period.

Townhouses, in particular, are increasingly popular, accounting for 1 in 5 new homes under construction at the end of 2023, a record high, according to an analysis of census data by the National Association of Home Builders. To cut costs, companies are building smaller and taller, with fewer windows, cabinets and doors…

Less money, less house: How market forces are reshaping the American home — Abha Bhattarai | The Washington Post | March 10, 2024

Built Environment

• Cookie-cutter townhomes have viewers in knots.

Viewers of Netflix's "Love is Blind" are making harsh comments about the housing development on the show.

One viewer called it the "most terrifying" part of the reality dating show.

The development is a typical Frankenstein of American suburban housing created by zoning constraints.

…There's nothing particularly remarkable about what's named the Blu South development in the town of Pineville — it's typical of many car-dependent American suburbs and exurbs, offering rows of attached single-family townhomes with wide streets and driveways and a bit of green space off a highway…

'Love is Blind' fans are bashing the cookie-cutter Charlotte suburbs featured on the show...

— Juliana Kaplan and Eliza Relman | Business Insider | March 08, 2024

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Citing lengthy delays and red tape, developers have been slow to tap a Biden administration program designed to finance office conversions near transit…

…Located about a block from Pittsburgh’s Union Station, Gulf Tower is the exactly the kind of project USDOT had in mind, at least on paper. But Stauber soon discovered that the White House program wouldn’t be workable for him. For one, he said getting approval for funds would take 18 to 24 months. “In a typical real estate financing deal, you’re closing that loan within 60 to 90 days,” he says…

Why a White House Plan to Fund Office-to-Housing Conversions Isn't Working Yet — Kriston Capps | Bloomberg | February 29, 2024

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Deferred maintenance draws public scrutiny in Japan:

…An increasing number of condominiums are facing problems nationwide due to aging or poor management, and Ashiya is no exception.  There are 419 condominiums with 10 or more units in the city and 105 of them are over 40 years old.  They are said to have such problems as exterior walls falling off and the corrosion of reinforcing steel.

Alarmed by the situation, the municipal government decided to enact an ordinance requiring the condominiums’ management associations to report repair plans and other information, and aims to bring the mandate into force in July.  Eight local governments across the country have already similar ordinances…

Hyogo: Aging of Condominiums Posing Problem for Ashiya Upscale Residential Area — Keiji Yamamoto and Yomiuri Shimun | The Japan News | March 02, 2024

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"Everything is empty…"

…Four years after the pandemic sparked a revolution in work-from-home practices, especially pronounced in the US, the shift is proving hard to reverse - and the consequences no longer possible to ignore.

About 20% of office space around the US was unleased at the end of last year - the highest vacancy rate in more than 40 years, according to Moody's Analytics…

What a $1 deal says about America's office market — Natalie Sherman | BBC | March 09, 2024

Q4 2023 Preliminary Trend Announcement — Thomas Lasalvia, Lu Chen and Nick Luettke | Moody’s Analytics | January 08, 2024

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Will 3-D printed homes lead to more affordable housing?

ICON unveils the future of 3D printed architecture at SXSW — Kat Barandy | designboom | March 12, 2024

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It would be the tallest building in the United States.  Will the Legends Tower take flight?  Guess what?  It’s sited in Oklahoma City.

Full funding secured for US tallest skyscraper says developer — Ben Dreith | Dezeen | March 11, 2024

• Debt just keeps piling up.  Also see Issue# 85.

The U.S. national debt is rising by $1 trillion about every 100 days — Michelle Fox | CNBC | March 01, 2024

Inflation and Monetary Policy

• State of monetary policy:

US Federal Reserve Chair Jerome Powell suggested the central bank is getting close to the confidence it needs to start lowering interest rates:

“We’re waiting to become more confident that inflation is moving sustainably at 2%,” Powell said Thursday in an appearance before the Senate Banking Committee. “When we do get that confidence—and we’re not far from it—it’ll be appropriate to begin to dial back the level of restriction.”

Ten Metrics for Judging Joe Biden’s Presidency — David Rovella | Bloomberg Evening Briefing | March 07, 2024

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Two months of increasing inflation in a row warrants rate caution.

Underlying US inflation topped forecasts for a second month in February as prices jumped for used cars, air travel and clothes, reinforcing the Federal Reserve’s cautious approach to cutting interest rates.

US Core Inflation Tops Forecasts Again, Reinforcing Fed Caution — Augusta Saraiva | Bloomberg | March 12, 2024

PLEASE watch the following video about the price of money:

…all of these forces combined could push the 10 year yield up to 6%.  Even if borrowing costs don’t rise quite that far, going from a world in which the cost of money is falling, to where it’s rising, will have major consequences for us all.

Why the Price of Money Is About to Start Going Up | Free 🔗

— Tom Orlik, Jamie Rush, and Stephanie Flanders | Bloomberg | January 11, 2024

The Price of Money Is Going Up, and It’s Not Only Because of the Fed

— Jamie Rush, Martin Ademmer, Maeva Cousin, and Tom Orlik | Bloomberg | November 05, 2023

• Florida: Both chambers unanimously passed HB1021 as a substitute for SB1178.  Read the legislative analysis of HB1021 that helps explain one central purpose: to ensure that homeowners can hold their association and individual board members accountable.  N.B.  This legislation is focused on condominiums, but does have some applicability for homeowners’ associations.  HB59 requires HOAs to provide members with certain governing documents.  HB293 provides hurricane protections.

Florida's unscrupulous HOAs contribute to our high cost of housing — Robert F. Sanchez | Miami Herald Op-Ed | March 02, 2024

• Washington: Multiple bills passed this session.  SB5796 unites all community associations under a single statute beginning January 1, 2028.  HB5973 prohibits unreasonable restrictions on installing heat pumps.  HB1054 prohibits tenant occupancy thresholds for unrelated adults that are more restrictive than local ordinances.  SB5934 prohibits unreasonable restrictions on pollinator habitats.

• Kansas: Over two dozen states have enacted protections ensuring that homeowners can install solar.  HB2268 would do the same for Kansas, but it has a fierce critic.

Alan Bauman would put solar panels on his Prairie Village home if he could. He’d like to benefit from the savings on his energy bill and have more security when his electric utility suffers power outages.   But his homeowners association restricts his and neighbors’ ability to install solar power…

…Jeff Terhune, an engineer from Wichita, said he and his wife installed solar panels when they had their roof repaired following a hail storm. They thought they had placed them in compliance with homeowners association requirements, only to be forced to move them almost a year and a half later to another side of the roof, where they won’t pick up as much sunlight.

Now, the family owes more than $4,000 in fines and has a lien on their home. The homeowners association is threatening to sue them…

Kansas homeowners urge lawmakers to ban ‘punitive’ rooftop solar restrictions — Allison Kite | Kansas Reflector | February 14, 2024

• Boise, Idaho: HB657 aims to reign in declarant / developer control.

…Rep. Jon Weber, R-Rexburg, brought HB 657 before the House Business Committee in the hopes of giving homeowners in developments with HOAs earlier control over the boards governing their neighborhoods instead of leaving associations under total control of the developer until the entire project is completed. The project would have created a five-member board with two seats for residents once 75% of a neighborhood is built and sold to homeowners. Ultimate control would go to homeowners once 95% of the neighborhood is completed.

Homebuilders work to stop bill to give earlier control of HOAs to homeowners — Margaret Carmel | BoiseDev | March 04, 2024

• Wyoming: HB126 would allow residential day care unless expressly prohibited by a covenant.  This legislative concept, both generally and specifically protecting the sovereignty of use of one’s home, is gaining steam across the United States.

Bill To Protect Small Wyoming Home Day Cares From HOAs Moves To Senate — Clair McFarland | Cowboy State Daily | February 29, 2024