07.20.23

EV Charging

• Our electric vehicle (EV) charging page has been around for the past two years, but many folks have yet to discover it.  Go ahead and plug in.  Readers in condominiums will be especially pleased to find over 10 examples of EV charging installations.

Insurance

• Our insurance page has been enhanced with a collection of articles – conveniently located at the top of the page – covering market changes over time.

For the Love of Money

• What’s one reason there’s a trust gap between community associations and their vendors?  The management industry is fraught with fraud.  Below are a few cases that our coverage has not previously highlighted.

The owner of a property management company for a large HOA community in Winter Springs has been arrested on embezzlement charges.

Investigators said Tammi Morrison [of Morrison Management LLC] stole nearly $600,000 of the HOA’s money in the short time she was in charge.

Owner of property management company accused of stealing nearly $600,000…

— Jeff Levkulich and Sarah Wilson | WFTV | July 05, 2023

Miami condo board member stole $20,000 while maintenance work went undone…

— David J. Neal | Miami Herald (Reprint by Yahoo! News) | March 23, 2023

Our HOA company stole all our money — u/JoshATXSolutions | r/F*ckHOA | 2020

Multiple U.S. HOA management agents, board members arrested for fraud and theft

— Deborah Goonan | Independent American Communities | January 19, 2022

Common Funds for Private Party

• Has your association ever used common funds for an exclusive event?  Doing so likely violates restrictions in the declaration that define acceptable common expenses.  Had this happened in South Carolina, the homeowner could have reported the incident.

‘It’s unacceptable’: Homeowner says HOA used funds on private party for retiring manager — Jason Stoogenke | WSOCTV | July 14, 2023

In A Few Words

• The article below provides a concise history and summary of common interest communities.  Want more detail?  Read What Are CICs?!

When your neighbors become your overlords — Emily Stewart | Vox | April 20, 2023

‘Undue Strains’ in CAI’s Backyard

• Falls Church, Virginia is home to CAI, CAMICB and FCAR (both managed by CAI).  It’s also home to failing community association infrastructure. 

Representatives of an engineering firm hired by the residents’ board at the Madison Condominium at 600 Roosevelt Blvd. in Falls Church found a steel beam that was completely corroded and they immediately call City Hall and City engineers condemned the building and the Falls Church Police Department and Office of Emergency Management supervised an evacuation of residents who are now in area hotels, a News-Press source close to the incident has reported.

The Madison, located at 600 Roosevelt Boulevard in Falls Church, has had concerned residents voice their worries for months about cracks and strain on the building.

According to News-Press sources, the F.C. Police confirmed that 12 units in the building needed to be vacated immediately…

Local Condominium Vacates Twelve Units Due to ‘Undue Strains’ — Josh Trupo | Falls Church News-Press | July 19, 2023

Dysfunction

• Please enjoy the commentary on Reddit that accompanies the following article.

What is the root cause of HOA dysfunction? — Deborah Goonan | Independent American Communities | February 16, 2019

Utilities Uff-Da!

• The Charlestowne condo association in Portsmouth has fallen delinquent on its utility bills. A city spokesperson tells 10 On Your Side the association currently owes $726,589 in water and sewage payments.

City staff say the delinquencies have been piling up for at least four years and were made worse by the COVID-19 pandemic.

Portsmouth condo association owes more than $726K in utility payments — Michelle Wolf | WAVY | May 5, 2023

Hassle Free?!

• What’s the difference between real estate marketing and reality?  Quite a lot.  Condominium living isn’t “hassle free” and often feels less than “luxurious.”

Oceanfront high-rise condominium epitomizes hassle-free, luxurious seashore living

Arrested Governance

• While the incident below made headlines, the reporting offers somewhat scant information about the materiality of assessment increases.  We hope your owners' meetings don’t escalate to police involvement.

Police called on property owners after HOA increases monthly fees to $350 — Anna McAllister | CBS Miami | July 13, 2023

View past coverage:  1,  2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14.

Energy

• Getting renewable energy to the grid is easier said than done.  View prior coverage.

Texas solar and wind are going to double by 2035, but if the state’s grid isn’t upgraded, then all that power is going to go to waste, according to the US Energy Information Administration (EIA).

The EIA’s analysis released this month, A Case Study of Transmission Limits on Renewables Growth in Texas, found that if Texas doesn’t expand ERCOT’s electrical transmission network, congestion and curtailments are going to rise. (ERCOT, or the Electric Reliability Council of Texas, operates the state’s electrical grid.)

Texas solar and wind are setting records, and the state's grid can't handle it — Michelle Lewis | Electrek | July 13, 2023

Environment

• Getting hotter: July has seen the 10 hottest days ever recorded… 

The average global temperature breached 17C (63F) for the first time July 3 and remained above that level into this week, according to data from the US National Centers for Environmental Prediction.

The extreme heat underscores the dangers of ever-increasing carbon emissions generated by burning fossil fuels. The threat from climate change is compounded this year by the El Niño weather phenomenon, which is set to push global temperatures even higher…

July Heatwave: The 10 Hottest Days Ever Put People and Livelihoods at Risk — Eamon Akil Farhat | Bloomberg | July 13, 2023

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Read more about cementing our future in Issue #64…

A cement-free concrete, a first-of-its-kind innovation in the construction industry, was used in a commercial building project in Seattle in July 2023.

Construction company C-Crete Technologies claims that the concrete is an environmentally friendly alternative to conventional Portland cement and emits close to zero CO₂ during its manufacture and can also absorb CO₂ from the atmosphere over time…

Groundbreaking Cement-free Concrete Debuts in Seattle — Tasos Kokkinidis | Greek Reporter | July 15, 2023

Housing Affordability & Homelessness

• A federal appeals panel refused to rehear a ruling prohibiting an Oregon city from punishing homeless people who sleep in public places. The fight could keep going…

Appeals court won’t reconsider ruling allowing homeless camping — Maxine Bernstein | The Seattle Times | 07/06/23

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Issue #68 taught us the genesis of California’s homeless population.  Here’s Seattle’s:

Where are King County’s homeless residents from? — Anna Patrick | The Seattle Times | 07/06/23

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This crisis of deferred maintenance puts things in perspective.

Nearly three-quarters — $60 billion — of the [NYCHA] repairs are needed immediately, the document shows. In 2017, the amount of work needed immediately was $31.8 billion.

NYCHA woes grow as repair bill soars to a whopping $78 billion, new audit finds — Nolan Hicks | AP News | 07/12/23

NYCHA 2023 FACT SHEET

355 developments | 2,411 Buildings | 106,985,066 sqft

177,569 apartments | 360,970 residents

Infrastructure + Insurance

• Failing multifamily infrastructure and rising costs of property insurance materially contribute to a lack of housing affordability.   READ MORE on our Insurance page

The sister of u/Simple-Feed9375 purchased a condo in 2022 and decided to remodel the place.  She hasn’t moved in yet and her unit has been assessed $6,000, then $8,000 and now $125,000 to pay for structural repairs.  r/HOA: Special Assessment fees

California senate committee addresses condominium insurance crisis — David Gotfredson | CBS8 | 03/07/23

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Each condo owner has to pay for two policies. The individual policy, which covers the unit and the HOA’s master policy, which covers common areas.  The master policy is the problem. The premium has spiked almost 1,000%.

In total, 56 condo unit owners used to pay approximately $56,000 a year. Now, it’s more than half a million dollars.  Why is this happening?  8 On Your Side obtained the insurance proposal prepared for the condo. It shows the condo’s insurance broker went to carriers across the state.  They declined, declined, declined.  Citizens, Heritage and others noted an open construction defect lawsuit. In court, neighbors have claimed some buildings have a defect.

Multiple brokers tell 8 On Your Side that spells trouble to insurers. In a normal market, you’d have trouble getting a good deal. Now, it’s nearly impossible.  Only one company would take the risk:  Lloyd’s of London.  The policy only covers up to $2.5 million of damage per hurricane. It’s supposed to cover 56 units. That’s another reason residents are not happy…

Florida Condo Association’s property insurance spiked nearly 1,000% — Mahsa Saeidi | WFLA | 07/18/23

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Farmers Insurance will stop offering its policies in Florida, including home, auto and umbrella policies, in a change that will force thousands of people to change their insurance provider.

The company said in a statement that its decision to get out of Florida was a business decision necessary to manage its risk exposure in the hurricane-prone state. Farmers serves 100,000 customers in Florida but said there will be no impact to customers who use Farmers’ owned subsidiaries like Foremost Signature and Bristol West…

Farmers Insurance pulls out of Florida, affecting 100,000 policyholders — Jordan Valinsky | CNN Business | 07/12/23

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In a news release, AAA blamed inflation, excessive litigation and last year’s “catastrophic” hurricane season for what it calls an “unprecedented rise in reinsurance rates, which affects the company’s profitability…

“We are encouraged by the statutory changes that have recently taken effect and believe they will provide positive results. Those improvements will take some time to fully materialize and until they do, AAA, like all other providers in the state, are forced to make tough decisions to manage risk and catastrophe exposure. This includes issuing some non-renewals. The number of non-renewals accounts for a small percentage of our business,” company officials said in a statement…

Crisis continues: AAA Insurance set to drop ‘small percentage’ of Florida homeowners — Anthony Talcott and Aaron Farrar | News 4 JAX | 07/14/23

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 As residents of condominiums across Florida struggle to adapt to a sweeping new law that increases building inspections and maintenance costs, Florida legislators have agreed to a series of changes aimed at ending confusion — but not the financial pain.

This bill is an effort to “provide more clarity, flexibility and transparency,” said Sen. Jennifer Bradley, R-Fleming Island, the sponsor of SB 154, which passed unanimously on Wednesday. The measure is a response to last year’s law that created the first statewide inspection program for aging condos in response to the partial collapse of Champlain Towers South in Surfside in June 2021 that killed 98 people.

Last year’s legislation “went on in a rather blunt fashion,” Bradley said Wednesday, leaving many issues unresolved. She and others spent the summer conducting town hall meetings around the state to hear concerns from condo residents.

“We had people that were confused. They were angry, and they wanted answers,” she told the Senate. “We now have a bill that we can be proud of with a lot of input from a lot of people.”

Florida lawmakers aim to ease condo confusion, but money questions remain — Mary Ellen Klas | Tampa Bay Times | 04/12/23

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Signs of life for Florida’s insurance market…

"State Farm plans to continue our substantial presence in the Florida insurance marketplace," the company said in a written statement to FOX Business. "Our current plans include a commitment to responsible growth so that we can maintain the financial strength to deliver on our promises to our customers."

State Farm's recommitment to The Sunshine State follows Farmers Insurance's move earlier in the week informing the Florida Office of Insurance Regulation (FOIR) that it would no longer offer Farmers-branded auto, home or umbrella policies in the state – impacting some 100,000 customers.

"I think [insurers are] going to wait through this hurricane season, and then I think they’re going to be willing to deploy more capital to Florida," governor Ron Desantis said. "So, knock on wood, we won’t have a big storm this summer. Then I think you’re going to start to see companies see an advantage."

State Farm doubles down on Florida after Farmers Insurance pulls back — Breck Dumas | FOX Business | 07/14/23

Built Environment

• Concerned about maintenance, repair and replacement?  Misery loves company.

Nearly three-quarters — $60 billion — of the [NYCHA] repairs are needed immediately, the document shows. In 2017, the amount of work needed immediately was $31.8 billion.

NYCHA woes grow as repair bill soars to a whopping $78 billion, new audit finds — Nolan Hicks | AP News | 07/12/23

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Empty storefronts dot the streets. Large “going out of business” signs hang in windows….

Diversify or die: San Francisco’s downtown is a wake-up call for other cities — Anne D’Innocenzio and Janie Har | AP News | 07/16/23

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

Inflation and Monetary Policy

• US inflation sharply cooled last month, offering fresh hope that the Federal Reserve can soon wrap up the most aggressive interest-rate hikes in decades.

The consumer price index rose 3% last month from a year ago, the smallest advance in more than two years, according to data out Wednesday from the Bureau of Labor Statistics. Excluding food and energy, the core CPI — which economists view as the better indicator of underlying inflation — advanced 4.8%, also the lowest since 2021.  Both measures climbed 0.2% from May, less than economists expected.

US Inflation Hits Two-Year Low, Giving Hope for End to Fed Hikes — Augusta Saraiva | Bloomberg | 07/12/23

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Fed Governor Christopher Waller said he expects the US central bank will need to raise interest rates [by 25bps] twice more this year to bring inflation down to its target…

However, he also said that more good data on prices could obviate the need for the second hike, pointing out that the US Bureau of Labor Statistics will publish two more consumer price index reports between the Fed’s upcoming July 25-26 policy meeting and the next gathering in September. Good news from these reports could lead to the cessation of further hikes.  — Tiffany Tsoi | Bloomberg Five Things to Start Your Day | 07/14/23

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Three Federal Reserve officials said yesterday that policymakers will need to raise interest rates further this year to bring inflation back to the central bank’s 2% goal. “We’ve made a lot of progress in monetary policy, the work that we need to do, over the last year,” Federal Reserve Vice Chair for Supervision, Michael Barr, told a Bipartisan Policy Center meeting on Monday. “I would say we’re close, but we still have a bit of work to do.” Futures on the S&P 500 and Nasdaq 100 struggled to build on Monday’s modest gains after these remarks.  — Tiffany Tsoi | Bloomberg Five Things to Start Your Day | 07/11/23

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Most economists expect the Federal Reserve to lift interest rates one more time next week as it ends a 16-month hiking cycle that has been the most aggressive fight against US inflation in 40 years.

The Federal Open Market Committee will raise rates a quarter point at its July 25-26 meeting to a range of 5.25% to 5.5%, the highest since 2001, according to economists surveyed by Bloomberg. With price pressures diminishing last month, almost all economists expect no change to rates at the September meeting and just one-fifth of the group predicts another hike by the November meeting.

Fed Seen Hiking Final Time to a 22-Year Peak in Economist Survey — Steve Matthews and Kyungjin Yoo | Bloomberg | 07/20/23

Cashing In

• What’s your yield?!  Our association is currently earning about 5% to have funds sit in a brokered money market account.  NOT BAD.

  • N.B.  Yield curve inversion is still pronounced with 5 and 10 year treasuries well over 100bps lower than their shorter duration brethren.

A Look at Covenants Without Assessments

• UCIOA (and generally the statutes adopted by states related to it) exempts communities with 12 or fewer units from most statutory requirements.  With that in mind, we created Covenants Without Assessments as a brief look at some fairly typical language.

Please Read your Governing Documents

• Follow the 10 Habits of Great Homeowners.  It pays to read your governing documents!  Beat HOA with their own rules — u/raakshaas | r/F*ckHOA | 07/14/23

The Board Must Respond

• Florida 718.112 requires a response to certified mail from homeowners.  Notably:

The failure to provide a substantive response to the inquiry as provided herein precludes the board from recovering attorney fees and costs in any subsequent litigation, administrative proceeding, or arbitration arising out of the inquiry.

Condominium board obligated to respond to inquiry sent by certified mail — Ryan Poliakoff | Florida Today | 07/17/23

Enforcing your Governing Documents and Statutes…

• …is easier said than done.  That’s why organizations like HOA United are working toward legislative solutions that allow for accessible, reasonable enforcement.  Enforcement is about changing behavior.  Why do homeowners have to go to court to change behavior that directly contradicts the law?  See Get Help!

In the article below (paywall cannot be removed), homeowners write in concerned about a blatant violation of Florida law that requires open meetings and expressly prohibits Board decisions via email.  Here are a few key points:

• Boards can generally ratify an otherwise prohibited email vote at the next meeting which effectively “fixes” the problem retroactively.

• Violations that cause neither financial nor physical harm are deemed “technical statutory violations” by certain attorneys and in this case Ryan Poliakoff scoffs at using the term “illegal” when describing actions that plainly violate the statute. 

• Taking violations with no physical or financial harm to court might prove a point and the plaintiff could recover attorneys fees and costs, but little more.

• What the attorney gets wrong in this article is a concept the community association industry seems to praise: “technical violations” amount to “no real-world harm.”

• Here’s what the article seems to get right: Because there is no enforcement authority … it’s up to individual owners to sue the association to police matters themselves — and because the cost is so significant, very few are willing to do so.

[Paywall] Residents angered that HOA board skipped meeting, made decision via email — Ryan Poliakoff | Palm Beach Post | 07/16/23

Case Study in Pitfalls of Poor Governance

• The Boca View Condominium Association is a fantastic example of governance askew.  WHY has the Board of this condominium been allowed to remain in place?  Because “self governance” often fails to translate into common sense and fair elections.

As this case dramatically illustrates, little good can come from highly contentious and prolonged litigation between community associations and their unit owners for all the parties involved. In the association setting, some disputes are bound to arise from time to time, but finding and adhering to equitable resolutions should be the goal for both sides.

Obstinately refusing to accept court decisions and continuing to pursue losing cases can lead to significant legal and financial liabilities for associations and unit owners, who are often surprised to learn they can be on the hook for the association’s legal fees as well as their own if they do not prevail. Owners in communities with highly litigious boards of directors would be well advised to consider moving in a different direction with new candidates for board seats who are more inclined to resolving disputes.

Boca condo offers case study in pitfalls of prolonged litigation for associations and owners — Michael Hyman | Miami Herald | 03/31/23

Justice Coming into View

• Circuit Judge Carolyn Bell ruled on July 5th, 2023 that Boca View must pay $232,170 in legal fees, plus interest, to the plaintiff whose attorney representative was denied the opportunity to view records.  More than 400 documents have been filed in this case over the last four years while the association has continued to deny access to records.

Despite a judge and a state arbitrator ruling that Boca View violated state law by denying access to the records, the condo association refuses to give up the legal battle that began more than four years ago:

• The association has appealed the state court ruling.

• It filed a separate lawsuit in federal court to overturn the state court ruling.

• It has also filed a motion for a rehearing in October, exposing itself to having to pay even more legal fees.

Palm Beach County judge awards condo owner in fight with Boca View — Mike Diamond | The Palm Beach Post | 07/19/23

Ambiguous Covenants

• Many jurisdictions hold that ambiguous covenants are resolved in the most favorable light to the non-drafting party (homeowners) against land use restrictions.  Minnesota has gone in a different direction in Windcliff Association, Inc. v. Aaron Breyfogle, Et al.

The court held that a jury should decide what the meaning of an ambiguous restrictive land covenant is absent extrinsic evidence conclusively demonstrating intent. If the question goes to a jury, the court requires the jury to strictly construe the ambiguity in a restrictive covenant against land use only if it is unable to resolve the ambiguity from extrinsic evidence through a preponderance of the evidence.

Justice G. Barry Anderson and Chief Justice Lorie S. Gildea dissented. “[T]he fact that restrictive covenants may bind subsequent successors highlights the need for a rule of strict construction to appropriately uphold the right to use property freely,” stated Anderson. The dissent maintained that the court’s approach “provides minimal protection to property owners and does not adequately protect the right to free and unrestricted property use.” It also raised Roff’s worry about extended litigation. “Property rights inure not only to the wealthy and powerful, but also to the highly leveraged first-time owner of a townhouse in a modest neighborhood; the former is well-positioned to endlessly litigate ambiguous terminology under the formula proposed by the court, the latter not so much,” declared Anderson.

Justices remand homeowners association covenant case — Laura Brown | Minnesota Lawyer | 04/24/23

Competence Not Required

• What are the themes in our Issue #70 Governance Matters section?  

  • Statutory protections are only as good as the enforcement that accompanies them. 

  • Board members (volunteer directors) are not required to be competent.

    1. [ˈkämpəd(ə)ns] — the ability to do something successfully or efficiently

    2. Community association volunteer leaders are charged with either a duty of care of a fiduciary duty, but competence isn’t required.  Volunteers also expect competence from their vendors.  Lack of competence creates headaches.

Condo boards not legally required to hire management companies — Howard Dakoff | Chicago Tribune | 03/26/23