Predictions for Community Associations in 2016
Going back through the news stories from 2015, I got to see some trends that I think will continue into 2016. So, here’s my look into the crystal ball (I should point out that I’m really bad picking sports winners, so we’ll see):
First off, the weather will screw up numerous places again this year. This is an easy one, as the weather has been getting wackier and wackier. But now, no matter where you live, you have to think about all kinds of potential disasters, determine how or if you should insure against them, whether to upgrade your infrastructure to deal with them better, and more. As a board, you need to start asking the “What if……?” questions and putting plans into place. Just ask the homeowner associations in South Carolina who were responsible for dams (and often didn’t know it).
Local municipalities are struggling for revenue and starting to look at associations as a possible source. For years, they ignored associations because they didn’t have to provide services and could still collect the full tax. But now they’re having an even harder time so they’re starting to look at ways to squeeze even more money out of them. This past year saw an increase in code violations issued against condo and homeowner associations. In Chicago, they adopted an ordinance that will require significant upgrades to safety systems for condos and began filing fines when they weren’t done on time. A number of places are looking at requiring fire sprinkler systems to be retrofitted in older buildings that were exempt in the past. That would bring in permit fees, inspections and possibly allow them to reduce fire department personnel. Be very careful that proper permits are pulled for work done on site and check to see if building upgrades are required when major repairs or replacements are scheduled.
More states will be looking to slow down construction defect litigation and if the state can’t get it done, then look for local municipalities to step in. Colorado is just the tip of the iceberg here. The builder/real estate/mortgage banking/development attorney lobby is a very powerful one, that has donated heavily to local and state politicians. The one thing you will never see or hear in their arguments are actual statistics about construction defect litigation, cases filed and results, because the numbers probably won’t support their arguments that construction defect litigation is brought on by a cadre of litigation attorneys and result in fewer condominiums being built. If anyone has access to actual data, this would be helpful.
This is an election year and if what’s happened to date is any indication, it’s going to be a real nasty one. Check your signage rules and regs and make sure they’re in step with your state law. Be ready to answer any media inquiries if you have to tell someone to remove or alter a sign. Have plenty of antacids/pepto-bismol handy. Make sure everyone in the association knows the rules, show sample pictures for those who have a problem reading anything longer than a tweet. Just understand that somebody will push beyond your rules this year. Be prepared!
One of the major trends last year that I expect to continue and probably grow this year is home and property owner associations trying to get local governments to take over, or pay for maintenance/replacement of major infrastructure items, like roads, retention ponds, dams, sewer and drainage systems, etc. Often, associations had forgotten they were responsible for these items and never set money aside to take care of them, or knew about it but ignored them, kicking the can down the road, just like their legislatures and Congress. Hint: you need political persuasion to have any hope of getting this to work and most associations pay little attention to this area. The likelihood of getting owner approval for a large assessment to make up for past ignorance is almost nil. If you’re facing this problem, it might be a good idea to have Plan A, B and C in place.
Technology always sees prices drop rather quickly so security cameras (and systems), traffic monitoring systems and drones will all be cheaper and more available to owners, management and associations. How to use them legally and ethically will challenge all of the parties, but use them they will. The FAA and local governments are already butting heads over drones and there were stories and cases last year about privacy invasion issues, issuing tickets on private roads, what constitutes “security” and more. Put a committee together to start thinking about how you’re going to deal with these issues.
Last year saw a growing number of condo associations that had their building(s) condemned. The recession set the problems in motion, but they really came home to roost last year. This will carry over to this year. Too many associations haven’t fully recovered from delinquencies and the resulting maintenance omissions. Often, utility bills and insurance weren’t paid. These associations need to know how to go into receivership or be identified quicker so they can be put there. The disaster that occurs if they go unfixed is a huge loss for all remaining owners.
One of the bad side effects of election years, and this one in particular, is that it brings out the worst in some people. Keep a very close eye on signage, social media postings for the association, and open discussions at meetings, regarding minorities, religions, guns, immigration and any other hot-button topic that gets people doing and saying stupid things. Make sure your association isn’t one of the offenders. Look for local seminars on controlling meetings, anger management, etc. and get the board members and managers to attend. (Note to CAI Chapters – this is a good year to hold these seminars).
As usual, most state legislation will impact existing associations and owners, ignoring developers because their lobby is too strong to put any real regulation on them. Besides, the individuals pushing for changes to associations are usually existing owners, mad at their boards. So expect more regulation and higher costs. (Did that sound cynical? Well, its an election year)
Finally, I think we’re going to start seeing the impact of those reserve studies that didn’t incorporate the unseen infrastructure of associations, i.e. water, sewer and drainage lines, utilities, underground structures. There are now a number of associations passing the 50-year mark in age and probably don’t even know where many of these items are located, much less what they are made of and their life expectancy. It’s going to be expensive finding out.
Have a great year.