SUMMER 2010 Issue

2010 PlatInUM SPonSoRSAmerican Community Management

Becht Engineering BTChesapeake Landscape & Design

Community Association BancD. H. Bader Management Services

DRD Pool Management, Inc.MainScapes, Inc.Minkoff Company

Palmer Brothers Painting & General ContractingUnion Bank

Unlimited Restoration

2010 Gold SPonSoRAmerican Exteriors, Inc.

2010 EdUCatIonal SPonSoRMainScapes

Structural Restoration Services, Inc.Total Asphalt Maintenance, Inc.

In the BeaconPresident’s Message . . . . . . . . . . . . . . . 2

2010 “Essentials of Community association Volunteer leadership” Courses Scheduled . . . . . . . . . . . . . . . . 4

2010 Breakfast Seminars . . . . . . . . . . . 5

2010 Maryland legislative Update . . . . 6

Warranty Reform legislation Comes to Maryland . . . . . . . . . . . . . . . 7

the Manager’s Corner . . . . . . . . . . . . . . 8

Welcome new Members! . . . . . . . . . . 13

It’s time to start thinking about the 2011 budget . . . . . . . . . . . 14

How do americans Feel about Community association living? . . . . . . 16

2010 PMdP Classes . . . . . . . . . . . . . . 19

2010 Calendar of Events . . . Back Cover

Hear from a panel of experts, including the author of “Boomer Shock,” Ellen Hirsh de Haan, Esq.

2011 is the year Baby Boomers will begin retiring and the demographic face of America will change. These prospective changes have given rise to a general concern about the social, economic and physical “health” of our nation’s population.

Community associations should be equally concerned about how these

changes will affect the social and economic health of their associations.

This program is intended to get community association boards, managers and professionals to think about—perhaps even worry about—the inevitable, and then to actively prepare for it. This CAICRC program will provide attendees with the resources to help communities begin the process and establish a plan of action.

“Aging in America—Are You Ready for BOOMER SHOCK?”

continued on page 3

September 23rd Symposium & Expo—

Mark Your Calendar!!

Chapter Golf Outing Results & Photos!See more details on page 10 & 11

Seminars!Expo!Luncheon!Prizes!

President’s Message

Greetings again! Amazingly its already Summer and basically my favorite season as it means the beach, boating, golfing, tennis and other grand outdoor fun.

But this season also marks the halfway point in my year serving as the Chapter President. (Apparently, I blinked once!) The golf outing at Fairway Hills in Columbia was a success and luckily the weather held so our group could enjoy the full day. It was wonderful to see many of our members out of the office and wholly enjoying themselves. Many thanks to the Golf Committee and numerous other volunteers who made the day.

As to the Chapter’s future outlook, a committee has been set to assist with our plans for the next few years with dedicated members who will be on the Board in years to come to help see it all come to fruition. The Board will continue meeting through the summer so if you’ve got some comments or suggestions, please send them along.

Remember to check our website, www.caimdches.org, for the upcoming events, hotlinks to many service providers and almost endless helpful bits of information. I hope to see each of you at our fall Expo: “Aging in America—Are You Ready for the Boomer Shock?” with our keynote speaker Ellen Hirsch De Haan, Esquire from Florida to enlighten us all. This is certainly quite the topic on the minds of many in almost every business industry. There will be numerous opportunities for serious business networking as well as chances to meet new vendors and even win some prizes! Undoubtedly, you’ll find me selling 50/50 raffle tickets (remember: half to the lucky winner and half to the Maryland LAC) and checking in with all our exhibitors. It’s an event you surely don’t want to miss!

Something to ponder: The summer night is like a perfection of thought.

—Wallace Stevens (1879–1955)

Sincerely,

Ellen W. Throop Elmore & Throop, P.C.

5 Riggs Avenue Severna Park, Maryland 21146

410-544-6644 ethroop@elmore-throop.com

President, Chesapeake Chapter, Community Association Institute

CAI CHESAPEAKE REGION CHAPTERCamille Cimino, CED

Vera Brosky, Membership Manager5836 Rockburn Woods Way

Elkridge, MD 21075410/540–9831

410/540–9827 (fax)Email: contact@caimdches.org

www.caimdches.org

This publication attempts to provide CAI’s membership with information on community association issues. Authors are responsible for developing the logic of their expressed opinions and for the authenticity of all presented facts in articles. CAI does not necessarily endorse or approve statements of fact or opinion made in these pages and assumes no responsibility for those statements. This publication is issued with the understanding that the publisher is not engaged in rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Permission to reprint articles in Beacon may be granted only after receiving prior written approval from the CED of CRC/CAI.

EXECUTIVE BOARDPresident . . . . . . . . . . . . . Ellen Throop

Elmore & Throop, P.C..President-Elect . . . . . . . . Kara Permisohn

Minkoff Co.Vice President. . . . . . . . . Joseph Jordan

Becht Engineering BTSecretary . . . . . . . . . . . . . Pauline Watson

The Regency CondominiumTreasurer . . . . . . . . . . . . . David Bader

D. H. Bader Management Services, IncExecutive Director . . . . . Camille Cimino

DIRECTORSMel Herzberger, American Community Management

Allan McLeod, Village of Mill Run CondominiumScott Silverman, Nagle & Zaller, P.C.

Allen Watts, DRD Pool Management, Inc.

FINANCIAL ADVISORSStrauss & Associates

COMMITTEE CHAIRSMembership . . . . . . . . . . . . Joe Jordan

Becht Engineering BT

Programs . . . . . . . . . . . . . . Jonathan Rosenberg WP&M Real Estate Group

DelMarVa . . . . . . . . . . . . . . Tara Laing and Erika Grden Legum & Norman—Resorts Division

Maryland Legislative . . . . .Action Committee

Kathleen Elmore Elmore & Throop

Golf Committee . . . . . . . . . Scott Karam Palmer Brothers Painting & General Contracting

Holiday Social . . . . . . . . . . Josh Ploch DRD Pool Management, Inc. and Kara Permisohn, Minkoff Company, Inc.

Management Company . . . .Executives

Mel Herzberger American Community Management

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Cost for Attendees:Managers (CAI member) .................................................... $40

Managers (Non-CAI Member) ............................................ $45

Community Association Board Member ............................. $15

Non-Exhibiting CAI Service Provider ................................. $60

Non-Exhibiting Non-Member Service Provider .................. $80

Schedule8:00–9:30 am Continental Breakfast & Early Bird Preview—Expo Open

9:30–11:30 am General Session—Panel of PresentersEllen Hirsch de Haan, Esq. Becker & Poliakoff, P.A.

The anticipated demographic changes in our population have given rise to a general concern about the social, economic, and physical ‘health’ of our nation’s population. Although none of these changes may be new to community associations, when they affect or involve an aging population, they take on new dimensions that challenge association leaders to envision entirely new models, new approaches and new solutions. Ms. de Haan believes that these shouldn’t be insurmountable and that in recognizing the situation and working on those

new approaches now, we will help associations prepare for what’s ahead.

Michael LaChance Legislative Liaison, Maryland Department of Aging

“Aging in Place”—Transportation and housing to meet the needs of the growing, aging population. Mr. LaChance has worked in the field of aging services for over three decades. He will share the state’s “game plan” for addressing the anticipated shortage of senior-oriented housing and transportation in the years to come.

PFC Holly Burnham & Lila Bore Sr. Liaisons for Senior Issues Howard County Police Department, Community Outreach Division

“Arm Yourself with Knowledge”, which will cover how not to become a victim of many types of fraud, financial abuse, home & personal safety

Carl A. Soderstrom, M.D. Chief, Medical Advisory Board Maryland Motor Vehicle Administration

“Mobility for Life: The Maryland MVA and Medical Fitness to Drive for the Boomer Generation”. Dr. Soderstrom will provide advice regarding “medical fitness to drive” for aging Maryland residents. He will come equipped with information on existing and upcoming programs that address private transportation needs, neighborhood ride programs, and/or volunteer services.

11:30 am–2:00 pm Expo & Lunch in the Exhibit Area

1:30–3:00 pm Concurrent Breakout Sessions1. Morning Program Continued—

Ellen will talk about how to live with Boomer Shock in your communities, including balancing the needs, goals and approaches to life from each different generation. Learn how community associations evolved, and how to keep your sanity and find harmony while running a community association in the 21st Century. Ellen Hirsch DeHaan, Law Offices of Becker & Poliakoff, P .A .

continued on page 4

When:Thursday, September 23, 2010

time:8:00 am–3:00 pm

Where:Martin’s West Baltimore, MD

Great Value! All inclusive admission includes continental breakfast, Morning program, lunch,

Afternoon sessions and 3½ hours of Expo time!

continued from cover

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A Must-Attend for Managers & Board Members!

NEw

An added feature to this program will be a Business Providers Showcase enabling managers and volunteer leaders to meet with painting contractors, pool companies, HVAC maintenance contractors, attorneys, landscapers, reserve specialists, roofing companies, & more.

80% SoLdBooth SPACE AVAiLABLE

CALL to RESERVE!

410-540-9831

continued from page 3

2. “Estate Planning”—The program will cover all major aspects of estate planning, including Wills, Powers of Attorney, Advanced Directives and Trusts. It will also briefly outline long term care options for seniors and some of the death taxes that could impact an estate. Kim Aviles, Law Offices of Corbin, Schaffer & Aviles

3. “Self Defense”—Self defense for the “young-at-heart.” Currently recognized as the highest ranking Korindo Aikido instructor actively teaching in the U.S., Mr. Goss will provide some tools to live by regarding self-preservation and street smarts. There will be interactive demonstrations, which you may choose to participate in. John Goss, Chief Instructor, Aiki Martial Arts Institute

4. “MD-LAC Legislative Update” Kathleen Elmore, Chair, MD-LAC, Elmore & Throop, P.C.

Phyllis Marsh, MD-LAC Treasurer Tom Schild, Esq., Thomas Schild Law Group, LLC Susan Rapaport, Esq., Davis, Agnor, Rapaport & Skalny, LLC

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We have scheduled the following “Essentials” courses in 2010:Saturday, October 2 in Linthicum—8:30 am–4:30 pm

Saturday, November 6 in Ocean City—8:30 am–4:30 pm

Do you need to know about...

ɶ The role and obligations of your developer

ɶ How much control the Board has and which documents spell it out

ɶ Sources of income for an association

ɶ How to prepare an operating budget

ɶ Principles for enacting new rules

ɶ How to read financial reports

ɶ How to hire professional help

ɶ How to reduce risks

ɶ Who has fiduciary responsibility

If so, the Essentials Workshop is for YOU!

We’ll come to you! The Chesapeake Chapter would be more than willing to present an “Essentials” program for an individual community or management company if you are able to register a minimum of 15 people. Call Chapter office to reserve!

All attendees receive an extensive course manual that they can refer to as a source of information.

AttENtioN BoARd MEMBERS!2010 “Essentials of Community Association Volunteer

Leadership” (formerly “ABC’s”) Courses Scheduled

In this course you’ll learn the history, organization and financial structure of community associations and time-saving, problem solving techniques to help you better run your community.

SPECiAL SESSioN AddRESSiNG dELAwARE LAw

FiRSt-EVER!

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wednesday, october 20

Mock Trial—Demystify the Judicial ProcessFinally…the keys to demystifying some of the judicial processes for Board members and homeowners in a Mock-Trial presentation format!

In this true-to-life presentation, you will learn: 1. What a Board considers before filing a lawsuit; 2. What really happens during the collections process,

including the mechanics of settlement negotiations and trials;

3. What the Board must consider when deciding whether to settle or go to trial.

Too often there is some confusion which leads to many questions about what occurs during the life of a case. Much takes place prior to the “day of reckoning” a.k.a. the trial. Members are often confused about why a case is settled prior to trial or about the outcome of the trial itself. Unfortunately, in many cases, neither the Board nor management is at liberty to share the details of the collection process as they relate to the specific context of a particular case. It is not surprising that homeowners

respond with questions such as “How did that happen?” and “Why was that done?”

Come and join this Mock-Trial to help alleviate confusion and questions about this process.

Schedule:

9:00–9:45 am Breakfast/Networking9:45 am–12:00 noon Program

Location: The Rose Restaurant Baltimore (Linthicum), MD

For more information on these seminars, see the 2010 Educational Seminar brochure

2010 Breakfast Seminars

The 2010 Legislative Session in Annapolis was another very busy one filled with triumphs and tribulations. Among the triumphs was the defeat on the Senate floor of the inaccurately framed “Freedom of Speech” bill (SB212). CAI’s National Executive Director, Andrew Fortin, stated that; “As drafted, the bill would undermine the core principles that attract people to community associations—security and rules to protect property values.” The MD-LAC sent out alerts and enlisted the assistance of CAI membership. Through the memberships’ many calls, emails and letters to the legislators, and our direct lobbying efforts, we were able to get this bill killed on the Senate floor.

Among the tribulations was the defeat of our primary bill, i.e. The Residential Sustainability Act of 2010. The bill was passed out of the House with an amendment that was not approved by MD-LAC which would have required that Associations maintain an escrow account for each property. The bill died in the Senate Judicial Proceedings Committee. Please let us know if you support the idea of introducing this bill to give Condominiums and Homeowners’ Associations a 6 month lien priority, again in 2011. Send emails to kelmore@elmore-throop.com with the subject line—Lien Priority 2011.

The following bills impacting condominiums and/or homeowners’ associations as noted were all passed in 2010, signed by governor and will become effective October 1, 2010.

Clothesline Bill (SB224)—authorizing an owner or tenant to use a clothesline or other similar laundry drying device notwithstanding any terms in the declaration or bylaws or other documents. It authorizes the governing body of the association to adopt reasonable restrictions on the dimensions, placement, or appearance of the clotheslines for the purpose of protecting aesthetic values or to protect persons or property in the event of fire or other emergencies. Before adopting the restriction, reasonable notice of an open meeting shall be provided wherein the membership shall be afforded the opportunity to be heard. All single family property is includes except property that includes four or more dwelling units. Townhouses are considered single family properties.

Prince Gorge’s County Registration of Community Association Property Management Services (HB566)—requiring community association management services to register annually with the Prince George’s County Office of Community Relations and pay a specified fee.

Homeowners Association Annual Budget (HB695 and SB 416)—requiring a homeowners association that has

the responsibility under its declaration for maintaining and repairing its common areas, to prepare and submit an annual proposed budget to the lot owners 30 days before its adoption. The annual proposed budget may be sent to each lot owner by electronic transmission, by posting to the homeowners’ association’s home page, or by including the budget in the newsletter. The annual budget must provide information on or expenditures for at least the following items: 1) income, 2) administration, 3) maintenance, 4) utilities, 5) general expenses, 6) reserves, and 7) capital expenses. The budget shall be adopted at an open meeting at which all members have received notice. Notice of the meeting may be sent in the same manner as the budget is sent.

Fidelity Insurance or Fidelity Bond (HB702)—authorizing a governing body to satisfy the requirement of purchasing fidelity insurance by purchasing a fidelity bond.

Cancellation of Insurance Notification (HB1513)—altering the time in which a notification of cancellation of property and casualty insurance that must be maintained by the council of unit owners of a condominium.

Common Elements and Common Areas Implied Warranties (SB597 and HB620)—relating to the requirements for the description of the common elements of a residential condominium and altering the duration of a specified implied warranty in condominiums and homeowners associations.

Fidelity Insurance Exemption (SH800)—providing that the requirement to maintain fidelity insurance does not apply to associations with four or fewer members and for which 3 month’s worth of gross common charges is less than $2,500.

It was a very interesting year indeed. Thanks goes out to the membership for the grassroots support and for the donations to support the MD-LAC’s lobbying efforts. A special thank you from the MD-LAC to Chesapeake Region and Washington Metro Chapters for their generous support and donations and to the CRC for conducting the 50/50 raffles. All very much appreciated. The money is used to pay of excellent and hard working professional lobbyists, Lisa Harris-Jones and Sean Malone. We look forward to a stellar year in 2011 with very likely a “new crop” of legislators to educate. Be sure to us know what changes you might like to see.

Prepared by Kathleen M. Elmore, Esquire, Chair MD-LAC Elmore & Throop, P.C.

kelmore@elmore-throop.com 410-544-6644

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2010 Maryland Legislative Update

I recently had the privilege of drafting warranty reform legislation that was passed unanimously by the Maryland General Assembly and signed into law by Governor O’Malley, effective October 1, 2010. The legislation, known as Senate Bill (“SB”) 597, is intended to close “loopholes” that unfairly deny homeowners associations (“HOAs”) and condominium associations the protections afforded by statutory implied warranties for construction defects in new residential communities.

Succinctly put, SB 597 achieves the following:

•Extends the implied warranty periods when developers retain control of HOAs and condominium associations for long periods of time so that warranties cannot expire before homeowners take control of the association.

•Closes the loophole that allowed condominium developers to designate association-maintained, common building systems (e.g., roofs, exterior walls, foundations, etc.) as being part of specified units so that the common element warranty protections would not apply. In effect, redefining “common elements” as “units” to defeat the association’s common element warranties.Below is a brief description of the warranty “loopholes”

and how SB 597 will change the Maryland Real Property Article (“RP”) in order to close those loopholes.

Extension of Warranty Period When Developers Retain Control of the Association for Extended Periods of Time

The warranties applicable to homeowners associations under RP §11B-110 and condominium association under RP §11-131(d) require that the developer be given notice of common area defect claims within the warranty period. These particular warranties do not apply unless such notice has been given. When developers are in control of the association they do not typically investigate or make warranty claims against themselves. In some cases, developers retain control of the association until after the warranty period has expired or is about to expire. Senate Bill 597 modifies the warranty period so that it cannot expire until at least two years after control of the association is transferred to the homeowners. This will ensure that the initial homeowner-controlled association will have a fair opportunity to evaluate and investigate the common areas and give the statutorily required warranty notice to the developer should any construction defects exist in a newly constructed community.

Requiring that Shared Condominium Building Systems be Designated as Common Elements and Not Units

It has become an increasingly common practice for condominium developers to illogically define association-maintained, shared roofs, exterior walls and foundations of multi-family condominium buildings

as “units” with the sole purpose of creating a “legal fiction” under which they can argue that the “common element” RP §11-131(d) warranty does not apply. For example, a developer will define the boundary of the units on each floor to extend to the outermost exterior surface of the building adjacent to the unit living space (including the brick, siding and paint). Similarly, the boundaries of each unit on the top floor are defined by the developer to extend upward to the outermost surface of the exterior roof (including the shingles). Thus each unit owner owns a small section of the building exterior immediately adjacent to their unit living space, including brick, siding and roof shingles! In such condominiums, the entire building exterior is made up of patchwork of units, much like a checkerboard. Creating a nonsensical condominium like this allows developers to argue that the association’s warranty on the common elements does not apply to the building exterior should it start leaking.

Back Row: Nicholas D. CowieFront row from left to right: Lieutenant Governor Anthony G. Brown; Mike Miller, Jr., President of the Maryland Senate; Governor Martin Omally; and Michael E. Busch, Speaker of the Maryland House of Delegates.

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WARRANTY REFORM LEGISLATION COMES TO MARYLAND

continued on page 7

continued from page 7

By amending RP §11-103(a)(4), SB 597 prohibits this practice by requiring that “all roofs, foundations, external and supporting walls, mechanical, electrical and plumbing systems and other structural elements” be designated as “common elements” (and not “units”) to the extent that such improvements “are shared by or serve more than one unit or serve any portion of the common elements”. Thus, going forward, all shared portions of a multifamily Condominium building, such as the roof, will be common elements and clearly covered by the “common element” warranty in RP §11-131(d).

NOTE REGARDING AUTHOR:

Nicholas D. Cowie, is a member of the CRC CAI and a partner in the law firm Cowie & Mott, P.A. After drafting the original legislation, Mr. Cowie worked with Delegates Frush and Braveboy, Senator Rosapepe, and the Department of Legislative Services to incorporate amendments that ultimately became Senate Bill 597. Mr. Cowie organized groups of affected homeowners and worked with community association organizations, such as the CAI LAC, to provide written and oral testimony in support of SB 597 at committee hearings before the Maryland Senate and House of Delegates.

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The Manager’s CornerNBC-CAM Revises Standards of Professional Conduct

To endure the test of time, a community association manager must consistently exhibit strong character. Regardless of how intelligent, affable, persuasive, or savvy managers are, they will eventually fall prey to their own undoing if they are prone to rationalizing unethical behavior based upon current or future needs. But what constitutes ethical behavior?

NBC-CAM provides clarification through its CMCA Standards of Professional Conduct for Certified Managers of Community Associations. Because these standards evolve with the industry, NBC-CAM recently approved three new ones, bringing the total to ten. According to the additions to the standards, a Certified Manager of Community Associations shall:

• Act in a manner consistent with his/her fiduciary duty . A fiduciary duty is defined as a legal or ethical relationship of confidence or Atrust between two or more parties.

• Conduct themselves in a professional manner at all times when acting in the scope of their employment in accordance with the terms and conditions of their contractual agreement and in accordance with local, state and federal laws . While there are many examples of unprofessional behavior, the professional breach must be a material lack of professionalism as opposed to a misunderstanding, difference of opinion, personality conflict or simple human error.

• Recognize the original records, files and books held by the manager are the property of the Client Associations to be returned to the Client

at the end of the manager’s engagement and maintain the duty of confidentiality to all current and former clients . Regardless of the details surrounding the separation of the manager and the client, the CMCA must return these items within a reasonable time. Such items are those that were given to the manager at the beginning of his/her engagement or were developed by the manager and/or the client during the period of the manager’s engagement. This definition may be further expanded by the management agreement and/or applicable state statutes. Unless provided in such an agreement or otherwise, the manager has no obligation to provide the client with client-related computerized data unless the client owns the computer and software and such data can be separate from the data and software which are property of the manager. While the manager must return or forward all records, files, and books, he or she may retain photocopies of these key materials that might be necessary for the manager in dealing with post-engagement client-related matters. The manager shall maintain a duty of confidentially beyond the termination of representation. Visit our website: http://nbccam.org/program/

standards.cfm to review the entire set of standards and learn about their enforcement.

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Lots of Fun at the 2010 Golf Outing

A very special “Thank You” to

KerLey SiGnS, inc. (800–216–SiGn)&

Shannon Baum SiGnS, inc. (800–368–2295)

For donating all the signs and banners for the tournament

Please think of them when in need of display services!

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2010 GoLF outinG SponSorSThank you for making

the tournament a HUGE success!

American Pool Enterprises

AquaSafe Pool Management

Becht Engineering BT

Chesapeake Landscape & Design

Complete Landscaping Services

Continental Pools

D. H. Bader Management Services

DRD Pool Management, Inc.

Elmore & Throop, P.C.

Engineering & Technical Consultants, Inc.

Grounds Management

Instar Services Group

Ivy Hill/Sierra Land Services

Lasting Impressions Landscape Contractors

Law Office of Cynthia Hitt Kent

Law Office of Gregory Alexandrides

Legum & Norman

MainScapes

Miller-Dodson Associates

Minkoff Co.

Nagle & Zaller, P.C.

National Contractors

Nationwide Insurance

Palmer Brothers Painting & General Contracting

Potomac Basin Group

ProPainting

Residential Realty Group

Rosen Hoover, P.A.

SI Restoration

Simmons Management

Simple Promos

StopLeak

Superior Complete

T&D Duct Cleaning

Unlimited Restoration, Inc.

US Aquatics

Wackenhut

Wallace H. Campbell & Co.

Winkler Pool Management

Congratulations to the 2010 Golf Outing Winners!

1st Place—First Flight MainScapes

2nd Place—First Flight Kolb Electric

1st Place—Second Flight Lasting Impressions

2nd Place—Second Flight Tidewater Management/ Strauss & Associates

1st Place—Third Flight Wallace H. Campbell

2nd Place—Third Flight Community Association Underwriters

Putting Contest Mark Greenberg, Tidewater Property Management

Straightest Drive—Men Phil Maffei, Multicorp

Straightest Drive—Women Nancy Strigle, Residential Realty Group

Longest Drive—Men Ray McLaughlin, McLaughlin Electric

Longest Drive—Women Anne Mundth, DRD Pool Management

Closest-to-the-Pin—Men Dave Welsh, Bob Jackson Landscapes

Closest-to-the-Pin—Women Debbie Giese, Kolb Electric

11

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12

Welcome New Members!New Chapter Members, March 13, 2010–June 17, 2010

Sara Arthur, Esq.Arthur Law Group, LLC

Mr. Alex Azert Bay Crossing Homeowners Assn

Mr. Lee Bowes414 Water Street Residential CondoRecruiter: Sharon Shefter

Ms. Lynda BradyLegum & Norman— Resorts Div.

Mr. Connor BraniffOcean Point, Ltd.

Ms. Linda CanestraroEnglish Country Manor Condo, Phase I

Mr. Todd CogarCogar Print & Grahic Solutions

Ms. Nadine ConnorBartonwood Condominium

Mr. Jason DettelbachThe Village of Mill Run I Condo AssnRecruiter: Don Gentry

Mrs. Elizabeth EstrillSnowden Pond at Montpelier HOA

Mrs. Sandy FarrellMRA Property Management, Inc.Recruiter: Noreen Maddox

Mr. Todd FritchmanEnvirotech Environmental Consulting, Inc.

Mr. Christopher FroehlichCommunity Management Corporation

Ms. Miriam Fuchs414 Water Street Residential CondoRecruiter: Sharon Shefter

Mr. Jakub GusiewWP&M Real Estate Group

Mr. Mark HarringtonVerizon Enhanced Communities

Mr. Jeffrey HildEllicott Meadows Condo Assn

Mr. Darrell HopeThe Village of Mill Run I Condo AssnRecruiter: Don Gentry

Mrs. Angela HowellLegum & Norman

Mr. Keith KarasikSt. George’s Townhouse Assn

Ms. Lisa KupkeComplete Landscaping Service

Mr. Michael LuskWarfield & Sanford Elevator Company

Mr. Michael McFeeley414 Water Street Residential CondoRecruiter: Sharon Shefter

Mrs. Sandra MitchellSnowden Pond at Montpelier HOA

Mr. Bill MorrisLasting Impressions Landscape Contractors

Mr. Frederick Pollock

Mrs. Maria SimonEmory Hill Real Estate Services, Inc.

Ms. Regina StephensSilver Tree Management, LLC

Mr. Frank StoreyBay Crossing Homeowners Assn

Mr. Cephas ThorntonThe Village of Mill Run I Condo AssnRecruiter: Don Gentry

Ms. Christina TunisonThe Village of Mill Run I Condo AssnRecruiter: Don Gentry

Mr. Andrew ViolaThe Village of Mill Run I Condo AssnRecruiter: Don Gentry

Ms. Patricia Walsh

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Egad! The year is more than half over! We have not all likely enjoyed our summer vacations. I know I have not yet gotten my summer tan to where I want it to be. But soon, we will be planning for the holiday season.

So, with the year end coming up much faster than we want it to, it is now time to start considering the 2011 budget. Not only is it simply time to start thinking about that budget, you need to be thinking about the budget because it is going to be a hard budget to properly evolve. So start the planning, debating and negotiating now. The pressures of this budget are likely to be unusual.

As a generality, the financial woes of our nation really became noticeable in July 2007. It’s already been 3 years of broad-based economic stress. In my experience of dealing with the financial condition of all sorts of community associations across the country, I have noted a general progression of decisions that have been consistent since July 2007. When the 2008 budgets were being plotted, associations seemed to decide to hold their budget level to the prior year. That meant deferring projects that they would have liked to do but felt that holding off one more year would be prudent. As 2008 progressed, layoffs began, financial alarm bells went off and then the September “near collapse” of the American financial system occurred. The general response to these traumas was canceling any proposed maintenance projects and in very many cases operating budgets were cut back as well. Draconian cost control was the over-riding concern. Through 2009, many associations experienced operating deficits as delinquencies exploded with real operating costs outpacing what was budgeted. The 2010 budgets were constructed with again no interest in performing maintenance work on the properties and operating costs were further looked to be cut.

So, here we are looking at the 2011 budget and operating

expenses are continuing to increase. Many associations are still running real operating deficits because the

“balanced budget” approved for the year really was impractical for the true market driven operating costs are higher. I have watched reserve accounts continually being depleted over the

past two years to keep the associations afloat. The limits to these budgeting extreme measures

seem to have reached their conclusion. The operating budget cannot go

into a third year of deficit, yet costs continue to increase. The deferred maintenance that needed

to be addressed in 2007/2008 has reached its limit of practicality. By all appearances, community associations

are likely and largely about to go into a 3 to 5 year period of strongly increasing budgets

or strenuous special assessments. Prudence would suggest that a responsible Board step forward early to be prepared to propose the

budget increases that will be needed, recognizing what the real costs will be for the

coming year and planning for those cost increases. For instance, due to world economic pressures, it is likely that oil prices will rise dramatically in the very near term. What will that do to your utility costs? The investment portfolios of insurance companies are stressed. To

restore their needed reserve balances, insurance companies are likely to increase premiums.

Taxes will be increasing dramatically in order to halt budget deficits. That will squeeze

the profits of vendors so they will need to increase their prices to associations to

survive.

Deferred maintenance just cannot go on any longer for many of the common elements. It is

becoming an often circumstance that municipalities are fining and ordering associations to perform work within a time frame to satisfy life and safety issues. The roof was

leaking in 2008. Today, it is almost raining in the building. The building’s components need to be addressed and time has run out. The good news is that the cost

It’s time to start thinking about the 2011 budget

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of construction labor and materials in under control for the time being. The difficult news is that projects have a multi-thousand dollar impact on a per unit basis. Boards are going to have to plan for these projects to be done through combinations of using existing reserves, applying special assessments and seeking external financing.

The end result is the Boards need to do good research on the line items in their budgets so they can have a real strong handle on what might occur through 2011. Having individual line items becoming budget busters is just not going to be workable any longer. Boards need to get contractors in to provide cost estimates right away so planning can be made on how these now unavoidable items can be paid for. Getting the 2011 budget approved is going to be a major stress builder. Unit owners are still reeling from how the economy has affected them. The best thing that the Board can do to get the 2011 budget

approved is to communicate early and communicate well. Do good research. Present the case clearly with lots of detail. Bring in outside professionals to help explain why certain items in the budget need to be included. Let the insurance agent explain why the insurance premium might be what is proposed and then show that you have shopped around. In demonstrating the need to get capital maintenance project done, bring in a panel of experts to do a presentation to the unit owners: engineer, contractor, financing representative.

This is not an easy process but one that is truly necessary.

Written by Alan D. Seilhammer, Vice President New Alliance Bank

aseilhammer@newalliancebank.com 860-645-2514

Christine and John Sheehy proudly announce

the birth of their son

Andrew ThomasApril 13, 2010

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On behalf of CAI, Zogby International, an independent and respected public opinion research firm, conducted nationally representative surveys of community association residents in August 2005, November 2007 and December 2009. Except for a few additional questions added to the 2007 and 2009 surveys, the surveys were virtually identical. With few exceptions, the findings from all three surveys fall within the 3.8 percent margin of error.

• This clearly affirms the validity of the Zogby tracking research as an effective measure of the perceptions of Americans who live in community associations.

General SatisfactionZogby finding: 71% of community association residents are satisfied with their association experience. Only 12% express dissatisfaction.

• A 70-plus percent satisfaction rating—with only about one in 10 residents expressing some level of dissatisfaction—is a clear reflection of the dedication and skill of community association volunteer leaders and professional managers. Most institutions and political candidates would be immensely pleased with such an approval rating.

• We’d all like to see an even lower level of dissatisfaction. At the same time, it’s important to recognize that community association living is not ideal for everyone. Potential buyers need to understand not just the attributes of a community, but also the nature and obligations of living in an association before they buy. That isn’t always the case.

Note: CAI has a free, downloadable brochure, Community Matters—What You Should Know Before You Buy. Visit CAI’s bookstore at www.caisecure.net.

Note: Annual operating revenue for the estimated 304,000 associations in the United States is more than $40 billion. For more national statistics, visit www.caionline.org/info/research.

Governing BoardsZogby finding: 89% of association residents believe their governing boards strive to serve the best interests of the community; only 7% believe they don’t and 4% aren’t sure.

• Association board members are responsible for meeting the established expectations of their neighbors. They are expected to anticipate issues, solve problems, resolve disputes and preserve the nature and character of their communities.

• Community association boards enjoy a solid base of support among their residents. It’s says a lot when almost 90 percent of all residents believe their governing boards are working hard to serve their communities. This research affirms that the vast majority of people who govern community associations are committed volunteers working diligently to build strong and stable communities.

• Homeowners don’t volunteer to serve on a community board if they don’t care about their community—and they are unlikely to be reelected if their neighbors don’t like the job they are doing.

Note: CAI offers association board members and other community leaders an extensive array of resources and learning tools, including Board Member Basics, a free, online learning program that includes Rights and Responsibilities for Better Communities, Community Association Governance Guidelines and a Model Code of Ethics for Community Association Board Members. Visit www.caionline.org/events/boardmembers.

Community ManagersZogby finding: 76% of association residents say their community manager provides value and support to residents and the association as a whole; 18% say they don’t and 6% aren’t sure.

• Community managers are the professional backbone of the communities they serve, providing knowledge and expertise that are crucial to the day-to-day and long-term success of associations. Many associations could not function without their guidance and support. Their value cannot be overstated.

• Whether they are managing homeowners associations, condominium communities or cooperatives, experienced community managers understand how associations should function, how to meet resident expectations, how to plan and prepare for the future and how to address the wide range of challenges that most associations face.

Note: CAI provides three levels of professional education designed to give new managers a knowledge base and experienced managers a deeper understanding of all aspects of association management. Visit www.caionline.org/events/managers/pmdp.

Note: CAI and the National Board of Certification for Community Association Managers (NBC-CAM) have widely recognized and respected professional credentials

How Do Americans Feel About Community Association Living?

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that support the success of industry self-regulation. Visit www.caionline.org/career/designations.

Association RulesZogby finding: 70% of association residents say association rules protect and enhance property values; only 2% believe that rules harm property values and 28% see no difference or aren’t sure.

• This finding confirms overwhelming homeowner appreciation for common-sense rules that are applied fairly and consistently.

• Rules and restrictions can be a source of disagreement and discontent in virtually any environment, including associations. Some people simply don’t like to be told they can’t do something or must do something. However, much like employees in the workplace, homeowners have a contractual obligation to adhere to association rules.

Association AssessmentsZogby finding: 82% of association residents are positive about the value they get for their community association assessments.

• Community association assessments are an investment in the community, paying for services and amenities that enhance the neighborhood and protect property values. Homeowners in community associations have a right to see their assessments put to good use, and more than four in five do see a positive return on this investment. Would four of five Americans say the same about their taxes?

Government RegulationZogby finding: 87% of association residents oppose additional government regulation of their community associations.

• Intrusive regulation is unnecessary and unwanted by the vast majority of Americans who live in community associations. This should give pause to those who use isolated anecdotal evidence to advocate for legislation that may be unnecessary at best and costly and counterproductive at worst. Reasonable and necessary regulation will not hinder associations’ ability to serve the best interests of their homeowners.

Community Manager Licensing, Ethics and ProfessionalismThe December 2009 survey included five new questions pertaining to manager licensing and professional education, standards and ethics.

When asked, 37% of community association residents say they favor mandatory licensure for community association managers, while 56% disfavor such mandates and 7% were unsure.

• These data reflect CAIs’ public policy in support of self-regulation as the most effective and cost-efficient approach to elevate professionalism in the community management field.

• Although most community association residents are not fully aware of the challenges facing community

managers, they recognize the importance of professional education and the value of professional credentials. Not surprisingly, a majority of residents would be more inclined to hire community managers with professional credentials and believe that managers with credentials should earn a higher salary.

• When a state government or CAI members in a specific state consider pursuing mandatory manager licensing, CAI public policy supports development of regulatory systems that incorporate (1) adequate protections for homeowners, (2) mandatory education and testing on fundamental elements of community association management, (3) enforcement of defined standards of conduct and (4) appropriate insurance requirements.

49% of association residents say they would be more confident knowing their manager was required to adhere to established industry standards of professional and ethical conduct. Only 1% say it would make them less confident; 44% say it would make no difference.

44% of residents say they would be more confident knowing their community manager had taken and passed professional-level course work specifically developed for community managers. Only 2% say it would make them less confident; 51% say it would make no difference.

58% of residents say they would be more inclined to hire managers who had earned professional credentials in the field of association management. Only 6% say they would be less inclined; 34% say it would make no difference.

57% of residents say, everything else being equal, managers who have completed the course work necessary to earn professional credentials should be paid a higher salary than those without credentials. 34% say they should not necessarily make more; 9% are not sure.

Note: For additional information on manager licensing, see Community Association Manager Credentialing at www.caionline.org/govt/policies.

CAI staff contactsMedia, Zogby research, industry statistics Frank Rathbun, frathbun@caionline.org, (703) 797-6261Government and Public Affairs Andrew Fortin, afortin@caionline.org, (703) 797-6266Professional designations Anne-Marie Johnson, amjohnson@caionline.org, (703) 797-6332

NBC-CAM contactDawn Bauman, dbauman@nbccam.org, (703) 797-6287

Download the December 2009 Zogby International findings under Also of Interest at www.caionline.org/about/press.

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2010 PMDP CLASSES

Chesapeake Region Chapter Washington Metro Chapter

aug 19–20 M360Leadership Practices in Building

Community Baltimore, MD

Sep 23–24 M205 Risk Management

Sep 23–24 M204 Community Governance Baltimore, MD oct 14–16 M100 The Essentials of Community

Assn Mgmt

nov 18–20 M100The Essentials of Community Assn

Mgmt Annapolis, MD

dec 9–10 M206 Financial Management

Questions?Call CAI Direct at 888–CAI–4321 (M–F, 9:00 am–6:30 pm EST)

Website: www.caionline.org/educationprograms

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dECEMBER 2 Holiday Social

MARK YOUR CALENDAR!

Chapter Annual Planning RetreatSeptember 1st

3:00–6:00 pmWilde Lake Interfaith Center10431 Twin Rivers RdColumbia, MD 21044

Come & Share Your Ideas!!

ATTENTION BOARD MEMBERS & MANAGERS

SAVE THE DATE!!

September 23rd Symposium & Expo— Mark Your Calendar!!

Symposium and Business Provider Showcase

When: Thursday, September 23, 2010Time: 8:00 am–3:00 pmWhere: Martin’s West in Baltimore, MD

2010 Calendar of Events aUGUSt (no Board Meeting scheduled)

19–20 M360—Leadership Practices in Building Community—Baltimore, MD

SEPtEMBER 1 Chapter Planning Retreat

8 Board of Directors Meeting—Columbia, MD

14 GBBR Resale Disclosure Seminar

23 Expo & Business Provider Show Case”—Martin’s West, Baltimore, MD

23–24 M204—Community Governance—Baltimore, MD

oCtoBER 2 “Essentials” Course—Linthicum, MD

16 Homeowner Seminar—Working with Governing Documents—Wilde Lake Interfaith Center, Columbia, MD

20 *Breakfast Seminar—“Mock Trial—Demystify the Judicial Process”—Linthicum, MD

20 Board of Directors Meeting—Linthicum, MD

noVEMBER 6 “Essentials” Course*—The Capri, Ocean City, MD

9 GBBR Resale Disclosure Seminar

13 Homeowner Seminar—Insurance—Wilde Lake Interfaith Center, Columbia, MD

17 Board of Directors Meeting, Offices of Nagle & Zaller, Columbia, MD

18–20 M-100—The Essentials of Community Association Management—Annapolis, MD

the Chesapeake Region ChapterCommunity associations Institute5836 Rockburn Woods WayElkridge, Md 21075410–540–9831

PRSRT STD U.S. POSTAGE

PAID HARRISBURG, PA PERMIT NO. 533

(as of January 20, 2010)

Please note that this schedule is subject to change . The hotel in Linthicum is the Comfort Inn.

Booth Space Available

* Managers receive 3 continuing education credits for attending this.* “The Essentials of Community Association Volunteer Leadership” is the former ABC’s course