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ISSUE # 105
CIC Info Bytes 12/12/24
🔊 Listen to the Podcast of Issue# 105
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.
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EVENTS
Visit our homepage to view events and add them to your own calendar.
This is the latest survey proving that industry sponsorship bias is real. Love data? View our Surveys and Statistics pages!
METHODOLOGY: In September 2024, we surveyed 1,005 American homeowners for their feedback on HOAs and their experiences belonging to an HOA. Respondents were 50% female, 49% male, and 1% non-binary with an age range of 18 to 79 and an average age of 45.
Pros and Cons of HOAs: What Homeowners Really Think — Frontdoor | October 30, 2024
QUOTE
💡 “A good idea is meaningless without the courage to act.”
— Madam Secretary, Season 3
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💡 “Democracy is NOT self-sustaining — it requires active vigilance.”
— Heesoo Jang as quoted in Bloomberg | December 07, 2024
➡️ TRANSLATION: YOU must be the change you want to see, whether hyper-locally in your condo, co-op, or HOA, or in your city, county, state or nation.
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🏘️ “American real estate development corporations, with government as a silent partner, have chosen to build a new kind of community that serves as a monument to privatism.”
— Evan McKenzie | Privatopia | 1994
You’ve got questions and our Surplus Funds page has answers. While the article below incorporates references for North Carolina, the surplus funds law in North Carolina and many other states is materially similar. What your association needs to know:
State laws and IRS tax code are mutually exclusive, but those laws have generally been written to handle surplus funds in a way that does not create a taxable event: reconciliation of surpluses. 🚫 Hoarding surpluses is specifically prohibited by law.
There’s an “unless otherwise provided by the declaration” clause. If your association’s declaration of covenants, conditions and restrictions (CC&Rs) has its own surplus funds language, you need to use that.
Attorneys and CPAs usually offer uniquely different and sometimes impractical opinions about how to handle reconciling surpluses, but the options are finite.
Illinois condominium law offers the most precise direction for handling surplus funds.
HANDLING EXCESS ASSESSMENTS
Where a community association has received assessments from its members during the year in excess of its budgeted expenses, the Internal Revenue Service ("IRS") determined, in Revenue Ruling 70-604, that the excess amounts are not taxable income to the association itself where the members vote at the end of the year either to: (1) apply excess assessments to their future assessments; or (2) rebate the excess amounts back to the members. The IRS made this key ruling with respect to excess assessments received by a condominium management corporation. In its ruling, the IRS noted that the stockholder-owners of the condominium association held a meeting each year at which they decided what to do with any excess assessments not actually used for association expenses. Your community association's membership will need to do the same to take advantage of this tax exemption—take a vote (either in person or by written ballot) before the association files its Form 1120.
After issuing this ruling, the IRS clarified, in several informational letters, that the ruling did not mean that condominium and homeowners associations could retain excess assessments from year to year in a working capital reserve without recognizing the amounts as taxable income. Accordingly, your community association may not apply excess assessments to its reserve account. It must either: (1) return the excess assessments to the membership or (2) apply the excess assessments to the next fiscal year, thereby reducing the subsequent year's annual assessment.
Mo Money, Mo Problems? No Biggie for a Homeowner's Association, Right? HOA Tax Burdens…
— Matthew A. Jones | The National Law Review | October 04, 2023
New Mexico 47-7C-14
Unless otherwise provided in the declaration, any surplus funds of the association remaining after payment of or provision for common expenses and any prepayment of reserves shall be paid to the unit owners in proportion to their common expense liabilities or credited to them to reduce their future common expense assessments.
North Carolina § 47F-3-114
Unless otherwise provided in the declaration, any surplus funds of the association remaining after payment of or provision for common expenses, the funding of a reasonable operating expense surplus, and any prepayment of reserves shall be paid to the lot owners in proportion to their common expense liabilities or credited to them to reduce their future common expense assessments.
Washington: RCW 64.34.356
Unless otherwise provided in the declaration, any surplus funds of the association remaining after payment of or provision for common expenses and any prepayment of reserves shall, in the discretion of the board of directors, either be paid to the unit owners in proportion to their common expense liabilities or credited to them to reduce their future common expense assessments.
Illinois Condominiums: 765 ILCS 605/9(c)(5)
(5) At the end of an association's fiscal year and after the association has approved any end-of-year fiscal audit, if applicable, if the fiscal year ended with a surplus of funds over actual expenses, including budgeted reserve fund contributions, then, to the extent that there are not any contrary provisions in the association's declaration and bylaws, the board of managers has the authority, in its discretion, to dispose of the surplus in one or more of the following ways:
(i) contribute the surplus to the association's reserve fund;
(ii) return the surplus to the unit owners as a credit against the remaining monthly assessments for the current fiscal year;
(iii) return the surplus to the unit owners in the form of a direct payment to the unit owners; or
(iv) maintain the funds in the operating account, in which case the funds shall be applied as a credit when calculating the following year's annual budget.
If the fiscal year ends in a deficit, then, to the extent that there are not any contrary provisions in the association's declaration and bylaws, the board of managers has the authority, in its discretion, to address the deficit by incorporating it into the following year's annual budget.
If 20% of the unit owners of the association deliver a petition objecting to the action under this paragraph (5) within 30 days after notice to the unit owners of the action, the board of managers shall call a meeting of the unit owners within 30 days of the date of delivery of the petition. At the meeting, the unit owners may vote to select a different option than the option selected by the board of managers. Unless a majority of the total votes of the unit owners are cast at the meeting to reject the board's selection and select a different option, the board's decision is ratified.
Trials and Tribulations of a Volunteer Director - Part XXIII
View parts I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI & XXII.
PART XXIII: Getting Academic
Most people are not going to read academic literature about condos and HOAs, but there is plenty of it to go around that addresses the cause and effect relationships that gave birth to community associations and all of their systemic challenges. Academic writing dating back to at least the 1990s and to a lesser extent the 1980s, contains a smorgasbord of information about everything from disputes to deferred maintenance and the reluctance of owners to reserve funds for the future.
Evan McKenzie, a professor of political science at University of Illinois at Chicago, is probably the most prolific author and researcher when it comes to community associations (he prefers the term CIDs or residential private governments). He's best known for his 1994 book Privatopia and a 2011 follow-up Beyond Privatopia. McKenzie has also contributed to a number of books and academic journals and continues to write about the trials and travails of the residential private government model. In fact, McKenzie wrote about concerns with deferred maintenance long before the June 2021 collapse of Champlain Towers in Surfside, Florida.
McKenzie wrote one chapter of 2016's Private Communities and Urban Governance: Theoretical and Comparative Perspectives titled Rethinking Residential Private Government in the US: Recent Trends in Practices and Policy. It's an insightful exploration of how the community association landscape had changed up to that point, including the effect of the 2007 housing market collapse and 2008 banking crisis. Listen to NotebookLM's podcast summary.
“...increased concerns about association finances highlight the extent to which the rapid spread of common interest housing has outpaced the public policy process, which is now trying to catch up.
[The Community Associations Institute] CAI ... functions as an interest group that has substantial influence on legislation and court decisions....”
Local governments' desire to offload fiscal responsibility plus community association industry (developers and businesses in the ecosystem led primarily by CAI) have been the tail wagging the dog for decades. Homeowners often complain, but fail to coalesce to create meaningful change. Lack of engagement (often referred to as apathy) and lack of unity is an Achilles heel at both the hyper-local association level as well as when it comes to reforming state laws to enact more precise minimum, reasonable standards and remedies within reach. A few states including, but not necessarily limited to Arizona, California, Colorado, Florida, Nevada and Washington have begun to enact reforms that make a real difference for homeowners.
“Despite the mounting evidence that CID private governments are overly reliant on owner resources and lacking in institutional support, policy makers have favored self-protective steps to insulate public institutions from the risk of loss, rather than bolstering the private governments that pose that risk.
Such policies are an improvement over the reckless promotion and unregulated privatization that marked the rise of residential private government. At least we appear to have discarded the cavalier assumption that no institutional support or regulation are necessary. But what is missing, still, is a proactive and forward looking approach.”
Individuals aligned with business interests often claim there's some sort of bias against the business industry despite the fact -- documented thoroughly by McKenzie and other academics -- that the industry has been executing its profit-centric agenda for decades at the expense of millions of homeowners. McKenzie concludes with this:
“There is nothing improper about professionals advancing their interests in the press and through the policy process, but there is an enormous public interest in having a full understanding of what is going on in this privatized realm, and that will never come from private professionals who are making their living solving problems that could be prevented by more enlightened public policies.”
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The following conclusion from NotebookLM speaks to the importance of understanding the bigger picture. That’s what we hope this newsletter helps you do in every single issue.
…We need a paradigm shift in how we think about and approach HOAs. It’s not just about property rights. It’s about recognizing how interconnected these communities are and the impact they have on the wider world. We need to embrace a more collaborative approach. Homeowners, policymakers, industry professionals, even academics, everyone has a role to play. We all need to work together to find solutions. It’s about recognizing that we’re all stakeholders in this system. The health of our CIDs is a reflection of our communities and our society as a whole. It’s about creating communities that are not just places to live, but places to thrive.
It’s a reminder that CIDs are about more than bricks and mortar. They’re about people, their homes and their shared futures and those futures are intertwined with the health and vitality of the entire housing market. The way we address these challenges today will shape the landscape of CIDs for generations to come. It’s a lot to think about!
The next time you see that HOA sign or drive through a gated community, take a moment to appreciate the complex world behind those walls: the challenges, the possibilities and the potential for positive change. CIDs are here to stay and it’s up to all of us to shape their future.
Home buyers interested in condominium, co-op, townhome and/or single-family home properties in HOAs should carefully evaluate myriad factors before committing six or seven figures to what is often their single largest asset.
Here's what the rise of homeowners associations means for buyers — Ana Teresa Solá | CNBC | December 02, 2024
South Jordan, Utah: A $30,000 per unit special assessment in lump-sum -OR- $57,600 per amortized over 20 years.
Some homeowners in South Jordan’s Daybreak community are about to pay hundreds of dollars more a month in HOA fees.
This comes after years of fighting and legal drama over their damaged homes.
Starting January 1, homeowners of the nearly 400 units in the Daybreak Townhomes 1 Owners Association will have to pay $240 more a month. In a recent letter to homeowners, the HOA board acknowledged the painful size of the increase.
“We recognize that additional financial obligations are unwelcome, especially during these economic times, and we did not make this decision lightly,” the letter said. “The Board has worked vigorously to balance the needs of the individual owners with the Association’s mandate to maintain and repair certain improvements.”...
🎥 VIDEO: Daybreak homeowners brace for big HOA fee increase to fix damaged houses — Daniel Woodruff | KSL TV | November 06, 2024
View coverage in Issue# 81.
In this edition of We Mean Business: “How They Did It,” Ananya Bhargava interviews Ames Alexander and David Raynor about their recent award-winning investigative series “Hopes Foreclosed.” This investigation uncovered how often HOAs in North Carolina are foreclosing on homeowners. It revealed not only a troubling trend of HOA foreclosures in the region but how many of those foreclosures were due to debts of less than $2,000…
— Ananya Bhargava | The Reynolds Center | November 2024
This unit owner paid his $60,000 special assessment, but the association’s project is delayed waiting on payment from five additional owners.
Our HOA announced a special assessment to redo the siding and windows for the entire building (about 35 condos). They asked each condo owner to pay $60,000 by June 2024, promising that repairs would start in September. I paid my share on time.
In September, they said some owners hadn’t paid yet, so they couldn’t start the work. They then promised to begin in November. Now it’s December, and they’re saying the repairs will be delayed another 3–6 months because five owners still haven’t paid.
My question is: Is there any legal way for me to ask for my money back? I would prefer to keep the funds in a savings account and earn some interest until the repairs actually start.
Special assessment repair delays — u/shchuchkin | Reddit r/HOA | December 02, 2024
Lake Tapps, Washington: Owning property is expensive. The owners always pay.
Pierce County homeowners’ association proposed a one-time fee of more than $8,000 for its residents in addition to dues that could force some to move out if approved.
Members of the Tapps Island Association in Lake Tapps can vote to approve the proposal; however, in an ordinance with state law and HOA guidelines, the measure will be automatically passed unless a majority of members reject it. The fee was proposed at a Tapps Island Board meeting this fall.
“My husband went to the meeting and he came home and said, ‘We need to pack up and leave,’” Renate Lyman, who has lived on the island for 46 years, said…
…The board has proposed a one-time special assessment fee per lot of $8,035 if homeowners pay before March 1. There are payment plans for residents who cannot afford the fee all at once, but costs increase. For residents seeking more time to pay the fee, the fee goes up to $9,898…
…The money is intended to build up the island’s Reserve Fund, which is “a pool of funds set aside for the repair and replacement of major community assets⎼such as roofs, roads, pools and evening plumbing systems,” according to the information packet provided to residents…
🎥 VIDEO: ‘Time to get out’: Pierce County HOA proposing more than $8K fee for residents… — Madeline Ottilie | KIRO 7 | November 27, 2024
Palm Beach, Florida: Governor's Pointe in one of thousands of condominium associations across Florida facing a special assessment. These particular unit owners are staring down a roughly $30,000 per unit obligation.
The clock is ticking for condominiums across Florida as the deadline to perform building assessments on older properties is approaching…
…"A lot of people are on fixed incomes, they only have Social Security, and they cannot afford this additional assessment," Jean Geiger, a resident of the Governor's Pointe Condominiums in North Palm Beach, said…
…According to a structural reserve study done in July, engineers estimated a $1,070,000 cost to make repairs to the building's foundation, plumbing, electrical, roof replacement and more…
Palm Beach County Commission calls for immediate special session on condo assessment deadline — Joel Lopez | WPTV | December 04, 2024
Miami, Florida: $153,000 per unit special assessment leads to unrest.
A Coconut Grove condo owner is expressing frustration after his homeowners association approved a $7.1 million special assessment, leaving him responsible for more than $153,000.
John DuBois, who has owned a villa at The Cloisters on the Bay for over 20 years, said he was blindsided by the high cost, which he must pay within two weeks.
Although DuBois now rents out the property, he said the steep bill has left him scrambling. "I don't have that kind of cash sitting around," DuBois said…
…"I feel like the victim of an unfortunate set of circumstances that happened a couple of years ago and now all the condo owners in Florida are paying the price for it," he said. While DuBois hopes to contest the assessment, he is also considering requesting an extension to buy more time to gather the necessary funds.
🎥 VIDEO: Coconut Grove condo owner upset over $7.1 million assessment — Teri Hornstein | CBS | December 05, 2024
Florida: Will 2025 bring a legislative adjustment to increase the glide path for condominiums to reach full funding?
Senators from both parties and experts from various fields gathered to tackle the Florida condo crisis — but warned struggling owners that there is no silver bullet for rising costs and that deadlines are not likely to be extended.
In fact, Senate Democratic leader Jason Pizzo underlined that owners, including those of the collapsed Surfside building, should not be surprised by the state of affairs. They could even shoulder some of the blame by not tackling issues until it was too late, he told WLRN.
“We went 30 years without doing anything, and all of a sudden we're shocked and surprised that we're gonna have an expensive sort of wake-up call of tough-love measure?” he said at the event in Broward....
...Pizzo said that the goal of the regulations is to give owners a clear snapshot of the structural and financial health of their buildings. He also intimated that some of the burden for the increasing costs is on the owners of these condo units.
“I have sympathy, but it doesn't rise to the level of empathy,” he told WLRN. “Surely you had a home inspection because you probably got financing, and it told you about the appliances, and the condition, and the useful life remaining, and all of these things… you did this for the interior of your unit, but you didn't do it for the building that your unit is sitting in?”...
Bipartisan summit tackles Florida condo crisis, warns payment deadlines will remain — Carlton Gillespie | WUSF / WLRN Public Media | December 04, 2024
Florida: Condominium owners facing five- and six-digit special assessments might be able to sell to a developer for a reasonable price.
You wouldn’t know it from the broken security gate and weather-worn buildings, but at one time, the Grande Oasis condominium in Carrollwood was “a garden of Eden,” said resident Etty Segal. “Not anymore.” Like Adam and Eve, she and about 70 other owners may soon be forced out by a Florida law that gives one company power to seize the entire property.
The condo always had a mix of live-in owners and renters. But over time, corporate investors bought up more and more units to lease as apartments. One real estate firm, West Shore, now owns more than 90% of the property’s 1,000 units. The company has complete control of the condo board and a clear path to terminate the community’s existence as a condominium to become the sole owner…
…An onslaught of takeovers like the one at Grande Oasis could be on the horizon as new condo safety guidelines go into effect next year. Regulations passed by the Florida Legislature following 2021′s deadly Surfside building collapse have created a mountain of new expenses for condo associations and left some cash-strapped owners desperate to sell.
Investors are eager to buy and redevelop these struggling properties, many of which are on prime pieces of land in hot neighborhoods or coastal communities. This could provide a lifeline for thousands of owners who cannot afford to bring their aging buildings up to the new standard, said state Rep. Vicki Lopez, R-Miami.
But owners who want to stay are left with little recourse if they are outnumbered…
A corporation took over their condo. This Florida law made it possible — Rebecca Liebson | Tampa Bay Times | December 02, 2024
Opinion: New Florida condo rules: Developer buyouts offer lifelines to owners — Joseph Hernandez | The Palm Beach Post | November 30, 2024
Tiburon, California: This HOA’s pool, recreation and laundry exist on a parcel now owned by a third-party intent on getting paid.
A group of Tiburon residents is battling to reclaim a property that Marin County mistakenly sold at a tax auction.
The buyer, a limited liability company called AssetRenew, scooped up the parcel for $6,600. Now the company wants the Tiburon View Homeowners Association to pay $1 million to get it back, or pay rent to use it.
The parcel is a common area that includes a pool, a recreation area and laundry facilities for seven association members living on lots surrounding the Circle Drive property. The county sold it at a public auction in March because the association owed $625 in unpaid taxes and $981 in penalties for the years 2013-2018.
“We recognize that this was erroneous and it needs to be rescinded,” said Sandra Kacharos, the county’s assistant director of finance. “We have asked the purchaser to voluntarily rescind, which is the first step in the legal procedure. However, they have indicated that’s not their intent.”...
Marin County property mistakenly sold at tax auction for $6,600 — Richard Halstead | East Bay Times | December 09, 2024
California: Was this wildfire restoration legitimate, or insurance fraud?
After the 2019 and 2020 wildfires, Vallen Cooper and her son Chad handled insurance claims worth millions of dollars for smoke and ash cleanup at the Villa Rosa condominium complex in Santa Rosa and other properties they managed.
Chad Cooper’s company, Accurate Janitorial & Maintenance, which he ran with his fiancee, handled the work.
The problem was, according to homeowners associations for those properties, they didn’t know the claims were being filed on their behalf and were unaware that any work was done.
The dispute sparked lawsuits and a countersuit involving the HOAs, insurance carriers and the Coopers, the last of which was settled in September.
But now, the Sonoma County District Attorney’s Office has charged Vallen Cooper with three felony counts of insurance fraud and Chad with two. Both were hit with “aggravated white collar crime” enhancements, which can be charged when the alleged fraud involves more than $500,000…
Alleged Santa Rosa fraud scheme, now with criminal charges… — Marisa Endicott | the Press Democrat | November 30, 2024
Sweeping injunctions stemming from a single federal judge in district court are not new.
💡 TIP: Avoid the rollercoaster. Every respectable advisor continues to recommend filing your FinCEN beneficial owner reporting (BOIR) by the January 1, 2025 deadline because this ride isn’t over. The next shoe might be a stay of the CTA injunction.
Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas issued the injunction at the request of a family-run firearms and tactical gear retailer, called Texas Top Cop Shop Inc., among other co-plaintiff businesses and the Libertarian Party of Mississippi. Their lawsuit alleged that the CTA falls outside of Congress’s powers to regulate interstate and foreign commerce because it regulates incorporated entities regardless of whether they engage in commercial activity.
“For good reason, Plaintiffs fear this flanking, quasi-Orwellian statute and its implications on our dual system of government,” Mazzant wrote.
The CTA required that an estimated 32.6 million existing business entities disclose their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network before 2025. The government argued that the law’s function—to crack down on anonymous shell companies and deter money laundering, terrorism financing, and other illicit economic activity—falls within Congress’s regulatory duties.
But the CTA still fails to pass muster, even if anonymous corporate operations can be regulated by Congress, because the Constitution’s Commerce Clause can’t be leveraged to compel the disclosure of information for law enforcement purposes, the court’s opinion said.
“The fact that a company is a company does not knight Congress with some supreme power to regulate them in all aspects—especially though the CTA, which does not facially regulate commerce,” Mazzant said….
Corporate Transparency Act Blocked Nationwide by Texas Court — John Woolley | Bloomberg Tax | December 03, 2024
4:24-cv-00478-ALM - Texas Top Cop Shop et al v Department of the Treasury
Coverage: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48 & 49
Energy
Washington State: Remember Initiative 2066 that voters passed just over a month ago? Here come the lawsuits.
,,,Initiative 2066 seeks to explicitly protect access to natural gas in Washington and also weakens building codes that make it more difficult and costly to add natural gas heating in new construction.
The initiative threw a wrench in the state’s long-term plans to ease reliance on climate-warming fossil fuels, and made Washington one of dozens of states that have passed similar laws prohibiting local bans on natural gas.
Around 52% of voters approved the initiative in November. It was supported by the Building Industry Association of Washington, the Washington Hospitality Association and political action committee Let’s Go Washington.
The plaintiffs challenging the initiative include advocacy groups Climate Solutions, Washington Conservation Action and Front and Centered, and the Washington Solar Energy Industries Association and a builder, who is a former member of the State Building Code Council. They are represented by Pacifica Law Group. The plaintiffs gathered at Métier Brewing Company on Wednesday to publicize the lawsuit.,,,
King County, Seattle sue over natural gas initiative passed by voters | Initiative 2066 Complaint — Amanda Zhou | The Seattle Times | December 11, 2024
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A (very distant) future that relies on 100% renewable energy requires BIG batteries.
Solar panels and wind turbines give the world bountiful energy — but come with a conundrum. When it’s sunny and windy out, in many places these renewables produce more electricity than is actually needed at the time. Then when the sun isn’t shining and wind isn’t blowing, those renewables provide little to no electricity when it’s sorely needed.
So for the grid of tomorrow to go 100 percent renewable, it needs to store a lot more energy. You’ve probably heard about giant lithium-ion batteries stockpiling that energy for later use. But when providing backup power, even a big battery bank will usually drain in four hours. The need for an alternative has the United States government, researchers, and start-ups scrambling to develop more “long-duration energy storage” that can provide a minimum of 10 hours of backup power — often by using reservoirs, caverns, and other parts of the landscape as batteries…
…One technique is known as pumped storage hydropower: When the grid is humming with renewable power, a facility pumps water uphill into a reservoir. Then, when solar or wind power drops off, the facility lets the water loose to flow back down into another reservoir, turning turbines that produce electricity. It’s exploiting energy from the wind and the sun, along with the power of gravity…
Giant Underground 'Batteries' Are Shaping the Future of Renewable Energy Storage — Matt Simon | Grist | December 02, 2024
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Lithium-ion is popular, but it is far from the only battery technology required to advance to the next phase of powering humanity foward.
Sodium-ion batteries for electric vehicles and energy storage are moving toward the mainstream. Wider use of these batteries could lead to lower costs, less fire risk, and less need for lithium, cobalt, and nickel.
On November 18, CATL, the world’s largest battery manufacturer, announced its second-generation sodium-ion battery, mass production of which would begin in 2027. The China-based company said the new battery has an energy density of 200 watt-hours per kilogram, which is an increase from 160 watt-hours per kilogram for the previous generation that launched in 2021. Higher energy density in an EV battery translates into more driving range...
...A typical sodium-ion battery has an energy density of about 150 watt-hours per kilogram at the cell level, he said. Lithium-ion batteries can range from about 180 to nearly 300 watt-hours per kilogram. I asked Srinivasan what he makes of CATL’s claim of a sodium-ion battery with 200 watt-hours per kilogram. “We tend to be skeptical of news releases from companies,” he said. He specified that his comment applies to all battery companies…
Lower-cost sodium-ion batteries are finally having their moment — Dan Gearino | Ars Technica | December 06, 2024
The Cost of Net Zero
Heat pumps are a popular, but not inexpensive, technology to replace fossil-fueled equipment originally installed in condominiums and cooperatives.
In their drive to cut their buildings' carbon emissions enough to satisfy New York City's Local Law 97, many co-op and condo boards are installing electric heat pumps, efficient machines that can heat and cool a building without burning fossil fuels. As the electric grid gets greener in coming years, the thinking goes, carbon emissions will keep going down.
That was the thinking at Waverly Mews, a 120-unit co-op in Greenwich Village that had inefficient and expensive electric baseboard heaters. Each unit paid paid its own electric bill, and some shareholders were paying over $1,000 a month to meet their winter heating needs. Not surprisingly, the co-op had a D grade for energy efficiency...
...Based on efficiency data from the manufacturer, shareholders can expect to slash their winter heating bills by 80% and see savings of up to 30% on summer cooling costs.
The VRF system has the added ability to recover and reuse heat that would otherwise be lost. “Not only can the system simultaneously heat and cool the building, but it can extract heat from one area and give it to another,” says Sina Jasteh, the founder of Efficiti, the engineering firm designing and managing the project. The project involves the installation of more than a dozen heat pumps on the roof, each serving multiple apartments...
...The project comes with a price tag above $2 million, and the board hopes successful applications for Con Edison and New York State Energy Research and Development Authority incentives will cover a significant portion of the cost. To pay the balance, the co-op is using a combination of reserve funds and its credit line from its mortgage lender. Efficiti is also helping the board explore other financing options.
“Having a variety of financing alternatives helps us calibrate how much financial burden our economically diverse community shoulders up front versus over time,” Soroudi says, adding that the work is expected to be completed before the end of the year.
NYC's Local Law 97 prompts co-op and condo boards to install electric heat pumps — Emily Myers | Habitat Magazine | November 29, 2024
Environment
Recycling is a fragile system when it depends on a system of private businesses.
Here’s something to ponder while pouring a bottle of wine, beer or sparkling cider this holiday season: The glass containers that Seattle residents toss out are currently being stockpiled or crushed — rather than being recycled as normal — because a crucial business has shut down.
For years, glass bottles and jars dropped into Seattle recycling bins were picked up, sorted, cleaned, pulverized and then taken to an Ardagh Glass Packaging plant in Georgetown, where they were made into new wine bottles.
But Ardagh closed its 250-worker plant this month amid competition from cheaper imported bottles and challenges in the Washington wine industry, depriving the city’s recycling network of its main glass buyer…
Seattle’s glass recycling network shatters as wine bottle maker closes — Daniel Beekman | The Seattle Times | December 02, 2024
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Agreements to cap plastic production don’t sit well with the biggest producers…
Countries negotiating a global treaty to curb plastic pollution failed to reach agreement on Monday with over 100 nations wanting to cap production while a handful of oil-producers were prepared only to target plastic waste.
The fifth U.N. Intergovernmental Negotiating Committee meeting to yield a legally binding global treaty in Busan, South Korea, was meant to be the final one.
However, countries remained far apart on the basic scope of a treaty, and could agree only to postpone key decisions to a future meeting…
…China, the United States, India, South Korea and Saudi Arabia were the top five primary polymer producing nations in 2023, according to data provider Eunomia…
UN plastic talks collapse as countries fail to agree targets — Joyce Lee and Valerie Volcovici | Reuters | December 01, 2024
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Three key stand in the way of a global treaty to end plastic pollution.
United Nations-backed talks for a global treaty to end plastic pollution wrapped up without an agreement in the early hours of Sunday, December 1. A new round of talks is expected in mid-2025.
Negotiations foundered over a cap on plastic production, restrictions on the use of certain chemicals in plastics and financial support to help developing countries switch to less polluting business models. These are staunchly opposed by the “like-minded group” of countries, including Saudi Arabia, Iran, Russia and other major oil producers with powerful advocates for the petrochemical and chemical sectors, for whom plastic offers a rapidly growing market.
While no deal was agreed in Busan, South Korea, where the talks took place, there was a feeling of renewed determination to create an ambitious and robust plastics treaty. In a memorable moment during the debate, a delegate from Rwanda spoke about the need for reductions in plastic production to confront mounting pollution, and was met with a standing ovation.
Global plastic pollution talks stalled – but a treaty is possible if countries can agree on 3 things
— Steve Fletcher and Samuel Winton | The Conversation | December 02, 2024
Housing Affordability & Homelessness
Seattle: A special city with some single-stair residential condominiums and apartments. Also consider Is it Rude to STAIR? from Issue# 63.
Built in 1978 with a view of Seattle’s historic Pike Place Market, the Pike and Virginia Building (figure 1) initiated a housing style unique to US cities. Locally dubbed the Seattle Special, this type of housing is a multifamily dwelling built up to six stories in height, constructed with a small footprint on an urban lot, also known as an infill lot, and served by a single staircase.
The Pike and Virginia Building, the very first Seattle Special, is a narrow six-story condominium tower made possible by 1977 building-code amendments drafted at the recommendation of an advisory committee formed by Seattle’s Mayor Wes Uhlman to reverse the city’s population decline. The committee, known as the Building Code Advisory Board, was tasked with examining how the building code could be modified to “encourage in-city living, redevelopment, and new construction” and recommended amendments to legalize taller single-stair housing within the city. The adoption of these unique amendments allowed the Pike and Virginia project to build more than a dozen units using a compact-footprint and slender-massing design that met strict urban-design guidelines. Though the amendments have evolved over the decades, they have maintained the original spirit that first encouraged the development of dense housing on small urban lots, and today the Seattle Special is a prolific building type used for new housing across the city.
In response to today’s housing crisis in the United States, building-code reform has drawn attention from US politicians and housing advocates looking to make housing more attainable.[3] With a three-story height limit, the most commonly used model code in the United States, the International Building Code (IBC), mandates one of the most restrictive height limits in the world for single-stairway multifamily buildings.[4] In contrast, the Seattle Special diverged from model code requirements after experts in Seattle evaluated the impact that egress requirements were having on housing options in the city and created measures for taller single-stair housing of any construction type, including wood, steel, and concrete…
The Seattle Special: A US City’s Unique Approach to Small Infill Lots — Sean Jursnick | Mercatus Center | December 02, 2024
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Are REITS and private equity doing Americans a favor with build-to-rent projects?
Wall Street firms buying or developing single-family homes are betting billions of dollars on people like Adrianne Harlow.
The 45-year-old women’s basketball coach was moving from Alabama to Florida, where she looked to buy a home for herself and her infant daughter. She became discouraged by the limited selection, steep prices and high mortgage rates.
Then Harlow looked at similar homes for rent. In July, she moved into a four-bedroom house with a backyard, porch, patio and garage, part of a single-family rental neighborhood known as Oak Grove, about 40 miles north of Orlando. Her landlord is Main Street Renewal, a subsidiary of the large real-estate investor Amherst.
“I haven’t regretted any of it,” Harlow said. “I’ve been able to make it my home.”
As more millennials enter their prime home-buying years and start families, many are finding themselves priced out of the most coveted suburban neighborhoods with top-flight schools…
Wall Street Is Betting Billions on Rental Homes as Ownership Slips Out of Reach (free 🔗) — Rebecca Picciotto | WSJ | December 10, 2024
Florida: Nearly 50% of insurance claims to multiple insurers have been closed without payment.
In the first meetings of officials from Citizens Property Insurance Corp. since back-to-back hurricanes raked Florida this year, the state’s largest insurer acknowledged data showing half of last year’s claims were closed without payment and how the resolution of this year’s storm claims could produce a similar result.
The percentage of claims that have been or will be closed without payment is likely to be closely watched, as this is the first season of major, multi-storm hurricane activity since the state Legislature passed reforms that make it harder to sue one’s insurer when the policyholder finds a settlement unsatisfactory. While the move advanced with the argument that tort reform was key to shoring up the state's insurance market battered by frivolous lawsuits, others see policyholders left at the mercy of their insurance company's decisions.
Reporting on the company’s 2023 claims shows that Citizens is closing a greater percentage of cases without making a payment than the state’s other private insurers. The state had one hurricane landfall last year — Hurricane Idalia hit the sparsely populated Big Bend region at Category 3 strength in August 2023.
A report from Weiss Ratings, a Palm Beach Gardens ratings agency, found that the state-backed insurer of last resort closed homeowner claims without a payment 50.4% of the time in 2023. That compares with 36.7% for Universal Property & Casualty Insurance Company. The percentage that other insurance companies − Castle Key Insurance, Castle Key Indemnity and State Farm Florida − closed claims without payment ranged between 46% to 47.1%...
Citizens insurance: Why half of 2023 homeowner property damage claims closed without payment — Anne Geggis | The Palm Beach Post | November 26, 2024
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Florida’s property insurance market is in recovery-ish.
…Despite three catastrophic hurricanes hitting the state this year, Florida’s property-insurance market “continues to recover,” Citizens President and CEO Tim Cerio told the state-backed insurer’s board of directors Wednesday.
“The reforms passed by the legislature, it’s not an understatement to say they really brought the insurance market back from the brink of collapse. They are continuing to work, which is great news for all Floridians,” Cerio said.
Lawmakers in 2022 and 2023 passed a series of measures aimed at stabilizing the state’s insurance market as insurance companies fled the state and policyholders saw premiums skyrocket. Among the changes was a measure that made it more difficult for homeowners to sue insurers over claim disputes, an effort lawmakers said was necessary to curb litigation by bad actors…
Cerio also said efforts to “depopulate” Citizens by shifting polices to private insurers are exceeding expectations. The depopulation program is a key strategy as state leaders try to shrink Citizens, which in recent years became Florida’s largest property insurer because of financial problems in the private market.
“We think we are going to end the year at only 369,000 new policies, which is 30 percent below what we forecast. So, because the market is getting healthier, we are seeing less new business come in,” Cerio said. “We’re certainly moving in the right direction.” The number of Floridians insured by Citizens fell below 1 million last month and is expected to drop to 907,000 by the end of the year, according to the state-backed insurer’s website…
Citizens CEO says insurance market rebounds 'from brink of collapse' — Dara Kam | WLRN | December 05, 2024
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Will Florida’s insurance market recovery translate into benefits for policy holders?
Policyholders need more information about just how risky Florida is. Approximately one-third of the world’s insured hurricane risk is in Florida, according to one slide summit attendees were shown. The challenge lies in convincing the public that the legal changes that diminished their ability to sue insurers are ultimately going to also benefit them.
It's an information war, subject to political demagoguery, one panel agreed. It included Tim Cerio, president and CEO of Citizens; Chris Spencer, executive director of the Florida State Board of Administration; and Michael Yaworsky, who heads up the Florida Office of Insurance Regulation.
The insurance industry needs to convince policyholders they care and legislators that the industry's transparency and accountability are preferable to the lawsuit-driven firestorm the state was facing, Yaworsky said.
Insurance leaders, observers praise improvements in Florida's market. Will it help policyholders? — DarAnne Geggis | The Palm Beach Post | December 05, 2024
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Also Insurance failures in Issue#90 about cherry-picking in Issue# 82.
The morning after Hurricane Milton made landfall in Florida in October, Terrence McLean sat thousands of miles away, sensing opportunity…he predicted that new customers, abandoned by other insurers, might soon be flocking to a special product he had introduced to Florida only two years ago: Surechoice Underwriters Reciprocal Exchange, or SURE, which had already grown to nearly 20,000 policies by the end of September.
That’s because SURE is a type of lightly-regulated insurance known as “non-admitted,” largely absent in residential property until recently. Most insurance is highly supervised by the government, with states monitoring the quality of insurers, reviewing contracts and limiting price hikes. Conventional companies are backed by what is called a guaranty fund, meaning even if the company goes bankrupt, customers will still get their claims paid. Non-admitted companies have none of those protections. They’re more commonly found in the commercial real estate industry, and were designed for properties that face unique and relatively rare risks, like a fireworks factory or nuclear waste project.
But climate change is supercharging storms, floods and fires and making them more common. Conventional insurers are determining that houses in places struck often by extreme weather are too risky to insure, canceling hundreds of thousands of policies. In the last two years, seven of the 12 biggest home insurers have limited their coverage in California. For those whose policies have been dropped by major insurers, non-admitted insurance is one of their only remaining options for coverage. It means regular homes in some parts of the country are now viewed by the insurance industry as the equivalent of a fireworks factory…
…It’s not just Florida. The wildfires and hurricanes walloping California, South Carolina and Louisiana are pushing consumers into non-admitted policies. Companies behind this coverage take in less than 2% of all US homeowners insurance premiums, but their share of the market for residential insurance has nearly doubled over the past decade. Between 2022 and 2023, non-admitted home insurance premiums grew 27.5%, compared to 13.8% in the admitted market, according to data from S&P Global Market Intelligence…
…Depending on who you ask, this phenomenon is either evidence that the market is working as it should — with non-admitted insurers providing a necessary relief valve — or it’s a flashing warning sign that people should not be living in these areas. Charles Nyce, professor of risk management and insurance at Florida State University’s College of Business, says it can be both. After all, it’s not easy to incentivize people to move out of dangerous areas. “It’d be very difficult for the state of Florida to say we can’t live in Miami Beach anymore — and that’s the problem,” says Nyce. On the other hand, non-admitted policies tend to be much more expensive and, “Anything you do to distort prices will change people’s incentives.”...
…The rise of these startups in a staid industry speaks to a change in the attitude of some state regulators. Once they saw their role as protecting consumers. Now they are desperate for insurers to offer policies to homeowners in their states, even if it means the new entrants into the market have a weaker financial profile than traditional companies…
Florida, California Home Insurance Market Infused by Riskier Carriers (free 🔗) — Sophie Alexander and Leslie Kaufman | Bloomberg | December 03, 2024
Market Data | Quick Facts — Florida Surplus Lines Service Office
The Federal Insurance Office tracks information insurance across the United States.
For 2023, total P&C sector direct premiums written reached a record level at $964 billion, marking the second consecutive year of a 10 percent annual increase…
…Direct premiums written for personal lines increased by 14% compared to 2022, while direct premiums written for commercial lines increased by 7%...
…Homeowners’ average multi-peril insurance premiums (approximately 16% of sector total) increased by 14% in 2023 because of a variety of factors…
…The combined ratio for the P&C sector decreased to 101.8% in 2023 from 102.7%percent in 2022, reflecting a slight decrease in underwriting losses. Further, the continuing deterioration in underwriting results for both personal auto and homeowners lines was slightly offset by improvements in commercial lines. Higher natural catastrophe losses also hindered results. Despite rate increases in personal lines, regulatory constraints, inflationary pressure, higher cost of reinsurance, and the higher frequency and severity of weather-related events contributed to elevated losses…Severe convective storms contributed significantly to total insured natural catastrophe losses in 2023, amounting to about $53 billion, which represented the costliest year for severe convective storms in the United States…
2024 Annual Report on the Insurance Industry — Federal Insurance Office | September 2024
Housing Market
Chicago, Illinois: Declining condominium sales and closing prices are juxtaposed against escalating closing prices for single-family homes. The trend of urban multifamily residential condominiums and cooperatives losing appeal and value has roiled major cities – in addition to the CRE crisis – since COVID-19 became a pandemic in March 2020.
For nearly a decade, billionaire hedge-fund magnate Ken Griffin and Illinois Gov. JB Pritzker have been locked in a highly public feud. So it came as no surprise when Griffin, after selling a portion of his Chicago penthouse for a dramatic 44% loss last month, was quick to take a shot at Pritzker, blaming “failed political leadership in Illinois” for rising crime and declining luxury real-estate values in the Windy City. The saga took a bizarre turn, however, when the mystery buyer of Griffin’s 9 West Walton Street penthouse turned out to be none other than Pritzker himself. The two men haven’t revealed how the deal came together, but the sale highlights a broader issue in the Chicago real-estate market: High-end sellers are losing money, and looking for someone to blame.
Chicago’s luxury real-estate market has seen a precipitous drop in recent years. In the third quarter, there were 28 Chicago home sales of $4 million or more, plummeting 28% from 39 in the same period of 2021, according to data from BrokerMetrics. The median price of those sales was $4.625 million, down from $5 million in 2021’s third quarter.
Luxury condos in Chicago’s downtown and Gold Coast neighborhoods have been particularly hard-hit, local real-estate agents said. The median price of Chicago condos above $1 million dropped 9.1% in the third quarter from the third quarter of 2021, according to a recent report by brokerage @properties.
By comparison, Chicago single-family homes, as well as prices in suburbs such as Evanston and Naperville, haven’t seen those types of declines. The median price of Chicago single-family homes above $1 million in Chicago rose 14% in the third quarter from the same period of 2021. But older homes that need work are lingering on the market, agents said…
It’s Not Just Ken Griffin. Rich Chicago Residents Are Losing Their Shirts on Real Estate — Katherine Clarke | WSJ | December 06, 2024
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Cash is king and more homes are being purchased in all-cash deals even as property values for single-family homes continue to remain out of reach for a many potential buyers.
It takes more money than ever to buy a home in America right now. And nearly a third of home buyers navigating the high mortgage rates, rising home prices and low inventory are somehow buying their homes entirely in cash.
The share of home buyers paying all cash reached 33 percent through August this year, according to data from Redfin — one of the highest rates since the years following the Great Recession.
“The demographics of buyers doing this is incredibly broad,” said Compass Realtor Megan Dwyer in Florida’s Southeast coast. “Young families, retirees, local moves, multistate moves.”...
All-cash buyers are still snapping up homes. See where they’re buying. (free 🔗)
— Kevin Achaul and Rachel Lerman | The Washington Post | December 02, 2024
Owning real property isn’t a walk in the park.
EasyKnock, a real estate company offering controversial sale-leaseback deals to financially strapped homeowners, announced abruptly on Thursday that it is going out of business...
...An NPR investigation in June, citing court records obtained from lawsuits against the company, found that the deals can cost homeowners tens of thousands of dollars in equity, and that customers rarely buy back their homes as the deals allow. Some people were even evicted from homes they once owned. EasyKnock has said its deals have helped hundreds of people improve their finances.
The company faces over two dozen lawsuits around the country and several investigations by state attorneys general. In May, the Michigan attorney general sent EasyKnock a cease and desist letter calling on the company to end certain "unfair and deceptive trade practices." EasyKnock denies any liability in these lawsuits and investigations and says it is cooperating with attorneys general.
In October, the Federal Trade Commission issued a consumer alert about the "risky business" of sale-leasebacks. "The ads make these agreements — called sale-leasebacks — sound like a simple and risk-free way to get cash upfront and stay in your home," reads the alert. "But the truth is these agreements are far from risk-free."...
A company that turned homeowners into renters abruptly shuts down — Caitlin Thompson | NPR | December 06, 2024
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Life after owning real property isn’t always a walk in the park, either.
Bob Curtis, 87, and his wife Sandy sold their home in Nassau County three years ago and forked over $840,000 to move into The Harborside, a Long Island retirement home that was supposed to provide care for the rest of their lives.
Then the facility went bankrupt and an effort to sell it to new owners was blocked by New York regulators in October. So now, like nearly 200 others who live there, they could see much of their life savings -- and their new home - disappear…
Americans Risk Losing Life Savings When Retirement Homes Go Bust (free 🔗) — Martin Z Brauun | Bloomberg | December 03, 2024
Built Environment
Jupiter Island, Florida: A XL condominium project is pending approval to the disdain of its would-be neighbors.
Developers in Jupiter Island, Florida have proposed an eight-story luxury condominium building powered by solar energy, featuring a rooftop pool.
The proposed project faces opposition from neighboring condominiums concerned about the new building's size and proximity to their properties.
Developers argue that the larger size is necessary to make the project economically viable and are seeking a zoning change to reduce setback requirements.
The proposed building would replace an older condominium, with unit owners receiving significant payouts if the sale is approved.
Palm Beach County commissioners are expected to vote on the zoning change on July 17th, following a staff report analyzing the project's impact.
Solar-powered luxury high rise with rooftop pool: New Jupiter Island condo plans unveiled — Mike Diamond | The Palm Beach Post | December 09, 2024
Condo Connection's financial coverage is indexed to our Dollar$ and $ense page dedicated to all things CIC finance.
Inflation is sticky, but the FOMC is still expected to make another 0.25% cut next week.
Both the headline CPI and the core, which strips out food and energy prices, rose 0.3% from October, matching economists’ forecasts. The year-on-year increases also slotted in as projected, with CPI up 2.7% and the core CPI 3.3% higher.
The report suggested that disinflation has essentially stalled in recent months. Headline CPI notched the first back-to-back annual acceleration since March, while core has been stuck at 3.3% — well above a figure consistent with the Fed’s 2% target for a separate price gauge, the PCE – for three months now.
Shelter costs as usual made up the main portion of the rise in CPI, at almost 40%, although they did slow from the previous month. The closely watched owners’ equivalent rent component rose 0.23% on the month, which marked the smallest rise since the start of 2021.
Here Are the Key Takeaways From the US CPI Report for November (free 🔗) — Chris Anstey | Bloomberg | December 11, 2024
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The US Federal Reserve’s preferred measure of underlying inflation accelerated in October from a year ago. The so-called core personal consumption expenditures price index, which strips out volatile food and energy items, increased 2.8% from October last year and 0.3% from a month earlier (a good part of that acceleration however was due to the impact of higher stock prices on the calculation). While inflation is taking time to recede back to the Fed’s 2% target, the policy path ahead will be complicated by Donald Trump’s economic agenda, which many economists warn will reverse America’s multiyear climb out of the pandemic recession while reigniting inflation. Indeed, Trump’s plans—despite his promises to lower US fuel costs—are seen as causing a spike in US gasoline prices by as much as 50 cents a gallon come summer. And if you’re looking to buy that special someone a power drill for Christmas, better do it now: Stanley Black & Decker said it’s already considering raising prices in anticipation of the president-elect’s promised tariffs.
— David E. Rovella | Bloomberg Evening Briefing | November 27, 2024
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The Nasdaq 100 climbed 1.9% to a new record as the Magnificent Seven once again find themselves in pole position. Wall Street’s optimism surrounding the industry and its AI dreams has seemingly proven enduring. So much so that US inflation’s decision to take a breather on the way down wasn’t enough to dampen investor spirits Wednesday. The consumer price index rose 0.3% in November for the fourth-straight month, while core CPI, which excludes volatile food and energy costs, rose by the same amount. To Skyler Weinand, chief investment officer at Regan Capital, the CPI report “gives the Federal Reserve the green light for a 25 basis point rate cut at the December meeting, as it helps to confirm that we are still making progress on inflation even though it remains sticky.”
— David E. Rovella | Bloomberg Evening Briefing | December 11, 2024
Cashing In
Data from Fidelity shows more retirement account millionaires, but note that the average retirement account balance is under $150,000.
The number of millionaire 401(k) accounts at Fidelity Investments rose 9.5% to a record 544,000 in the third quarter, according to an analysis released Thursday.
Accounts with less lofty balances also rose to their highest average levels since Fidelity began tracking them in 1999, the company said. Average 401(k) and 403(b) balances stood at $132,300 and $119,300, respectively, as of Sept. 30. Both types of retirement savings accounts saw a 4% rise from the prior quarter and were up 23% from a year ago.
Savers benefited from strong stock-market performance. The S&P 500 Index gained 5.5% in the third quarter, its fourth straight quarter of gains. The index is up more than 27% so far this year.
With most Americans badly underprepared for what could be 30 years or more in retirement, the gains are good news. The bad? More than 40% of full-time workers don’t have access to workplace retirement savings plans, and nearly 50% of workers don’t get matching contributions from employers, according to the Economic Innovation Group…
There Are More 401(k) Millionaires Than Ever Before Fidelity Says — Suzanne Woolley | Bloomberg | December 05, 2024
The next 25 years are set to unleash an intergenerational inheritance boom.
…About $105 trillion is projected to be passed down from older generations over the next quarter century, according to research firm Cerulli Associates, an amount roughly equal to global gross domestic product in 2023.
Rising stock markets and home prices, as well as inflation, have fattened the estates that members of the baby boom generation, born between 1946 and 1964, are expected to leave their heirs. The latest inheritance projection by Cerulli is 45% higher than the 25-year forecast the firm made only three years ago. US gifts and inheritances are expected to total $2.5 trillion next year alone.
“About 80% of the wealth held today is going to be in motion,” Chayce Horton, the lead author of the Cerulli report, said in an interview. “The ratio of wealth expected to be changing hands in the next 25 years is significant, and much greater than what we even saw a decade ago.”
Yet even as the assets of millions of aging Americans are passed on, the share of the US population that will benefit from inherited money has remained static, a sign of how accumulating family wealth has become more concentrated among the most affluent households…
A $105 Trillion Inheritance Windfall Is On the Way for US Heirs — Daniel Neligh, Maria Clara Cobo, and Andre Tartar | Bloomberg | December 05, 2024
Cashing Out
Condos, co-ops and HOAs function somewhat like a trustee for the cumulative assets of the members of the association. As such, the prudent associations based in the US will partner with financial custodians domiciled in and regulated by FINRA or the OCC. To the contrary, associations that custodian funds with a fintech company, might have an undesirable experience. Synapse filed for bankruptcy protection in April 2024 after it literally lost track of millions of dollars.
“Synapse functioned as a middleware provider between banks and fintechs. Synapse was a pioneer in what came to be known as “banking-as-a-service” (BaaS). In this role, Synapse opened accounts on behalf of approximately 100 fintech companies (and millions of end users) at four different partner banks. … Synapse managed ledgering for these accounts, tracking all transaction activity and account balances. It is our understanding that the partner banks could access a portal that provided snapshots of how much each end user was owed, but not which partner bank held those funds. None of the partner banks maintained a copy of Synapse’s account ledger. As a result, the partner banks and fintechs were all reliant on Synapse to determine how much each customer was owed at all times.” — Troutman Pepper Financial Services | October 03, 2024
When you deposit money at a bank, you expect the bank to give it back to you. There are two things you might worry about, two sets of risks that might prevent the bank from giving you back your money.
One, which we talk about a lot around here, and which is pretty central to the history and theory of banking and bank regulation, is that the bank might lose the money… These kinds of risk are very well understood … and if things do go wrong, there is an extensive system of government backstops — the Federal Reserve as a lender of last resort, the Federal Deposit Insurance Corporation’s guarantee of bank deposits, etc. — to make sure that depositors will get their money anyway.
The other risk, which we talk about less, and which is sort of less intellectually interesting, is that the bank might lose track of the money… And the bank might be totally solvent and have invested your $100 in very safe things, but it won’t give it back to you because it doesn’t have a record of you. This risk is also heavily regulated, though you hear about it less. That regulation is just less controversial… And this risk is harder to fix after the fact. If a bank loses all your money, the FDIC can give you your money back, because the FDIC is the government and can print money. If the bank loses its list of who has the money, what can the FDIC do?... The definitive list of who the bank owes money is kept by the bank. Unless it isn’t. If the bank doesn’t keep a definitive list, then nobody does…
Synapse Still Can’t Find Its Money — Matt Levine | Bloomberg Money Stuff | November 25, 2024
'I have no money': Thousands of Americans see their savings vanish in Synapse fintech crisis — Hugh Son | CNBC | November 22, 2024
The Federal Deposit Insurance Corporation has started to more closely track financial technology companies that partner with banks across the U.S., Bloomberg News reported on Wednesday.
An internal database will help FDIC examiners track third parties that work with banks, and anticipate potential vulnerabilities before they become a problem, the report added, citing people familiar with the regulator's supervisory operations. The FDIC does not directly regulate fintech companies.
FDIC seeks to closely track fintech firms… — Reuters | December 05, 2024
Are you fascinated by case law? Maybe you should be?
Texas: Banning religious signs while permitting others violates the Fair Housing Act.
The ACLJ took action against a homeowners association (HOA) in Texas after it informed our client that religious yard signs are not permitted even though the HOA permits various nonreligious yard signs.
Our client initially had a sign in her front yard and a banner in the backyard. The sign stated, “Pray for America,” and the banner stated, “Jesus is Our Only Hope.” Shortly after our client put up the sign and banner, she received a violation notice from the HOA that demanded our client “Remove ALL ‘Jesus’ signs – they are not allowed.”...
…We fired off a demand letter informing the HOA of our client’s rights under the Fair Housing Act (FHA). Despite what many homeowners associations think, they cannot prohibit religious signs while allowing nonreligious signs.
As we explained in our letter, the FHA makes it illegal “[t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of . . . religion.” Courts have also emphasized individuals are protected from discrimination before and after they acquire the property, including governance by HOAs. The FHA therefore prohibits HOAs from applying rules to an owner’s use of their property in a manner that discriminates against their religion….
HOA Reverses Course after banning “‘Jesus’ Signs,” Saying “They Are Not Allowed,” … — Garrett Taylor | ACLJ | December 09, 2024
HOA Attempts Penal Code Enforcement
Texas: Don’t do this in your association! Texas Property Code (TPC) regulates how associations in the state can go about enforcement. View out our State Statute Concepts Matrix to learn more.
Rules must always be reasonable…and more. Nevada’s NRS 116.31065 is the most succinct and prescriptive legislative requirement for rule-making.
…I think it’s unlikely that this is an issue addressed in your declaration of covenants. Instead, the association is presumably relying on its right to pass rules governing the use of the common areas.
If that right exists (which is likely), the question then becomes whether the association has passed a rule that is “reasonable.” Is the association addressing a legitimate association concern, and is the rule directly related to that concern?...
Condo board bans personal trainer, insists all residents go through one company. Is that allowed? — Ryan Poliakoff | The Palm Beach Post | December 08, 2024
Failing to keep elevators in working order could create a Fair Housing Act violation.
As you may recall from prior columns, the Fair Housing Act both prohibits discrimination against disabled persons as well as requires housing providers (like condominiums) to make reasonable accommodations of its rules and practices when necessary to afford a disabled person the full use and enjoyment of the premises.
On the one hand, there’s no question that condominiums are allowed to make decisions regarding how to spend their money; and they could legitimately argue that the decision to wait for repairs during business hours is a legitimate business decision. On the other hand, that business decision has a direct discriminatory impact on disabled persons in a very meaningful way. The intent might not be to discriminate, but the business decision certainly has an adverse impact on the disabled.
Additionally, an argument could be made that the association must reasonably accommodate disabled persons by making repairs to the elevators at all times, despite the cost…
Can condo president refuse to call for elevator repair on weekends, stranding disabled folks? — Ryan Poliakoff | The Palm Beach Post | December 01, 2024
WASHINGTON STATE: Good things are coming in 2025. HOA United has spent dozens of hours between legislative sessions working on stronger protections for condos, co-ops and HOAs. Going toe-to-toe with CAI is a LOT of work, but we've done it. The upcoming legislative session has several things in store:
1️⃣ associations must provide at least one method of accepting payment of assessments from unit owners at no charge or as a common expense
2️⃣ open meeting requirements effective on 1/1/26 for all existing associations
3️⃣ the opportunity to comment BEFORE the board makes decisions
4️⃣ associations can conduct meetings via telephone / teleconference / web meetings regardless of restrictions in their governing documents; all such meetings must offer the ability to join by telephone
5️⃣ slightly improved election integrity
6️⃣ the right to invest reserve funds vs. keeping all money in the bank (literally)
7️⃣ controlling statute provisions for RCW 64.32 and 64.38 (already in 64.34 and 64.90)
8️⃣ expanded “small community” provisions to 50 units + $1,000/unit annual assessment cap with significantly more applicable provisions of the statute
9️⃣ minor updates to EV Charging and Heat Pump requirements
🔟 the right to ask questions and receive substantive answers
...AND MORE.
+++ Have a question that you'd like to ask directly to your peers? Ask YOUR listserv! +++
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