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Community 411 | Fall 2017

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Hurricane Recovery in Texas and Florida

Within days of each other, back-to-back Category 4 hurricanes slammed into Texas and Florida—two states have the highest number of community associations in the country.

Hurricane Harvey inundated greater Houston-area communities—home to more than 4 million residents in nearly 20,000 associations—with high winds and as much as 50 inches of rain shortly before the Labor Day weekend.

Within days after the storm in Texas, Hurricane Irma's 120-mile-an-hour winds and torrential rain tore a path of destruction from the Florida Keys to Jacksonville. Home to almost 10 million residents in 48,000 communities, Florida has more community associations than any other U.S. state.

Hurricane Irma forced 7 million Floridians to evacuate their communities, and more than 12 million homes lost power during the storm. Officials opened six hundred shelters across the state.  

Recovery Will Take Months
As Florida residents returned to their homes to assess the damage in mid-September, Houston homeowners were already ripping out waterlogged drywall and piling debris on their front lawns for removal.

About 4 feet of water flooded out Chaparral Management Company, AAMC, offices. "No one can keep this Texas girl down for long," says Chaparral President Pamela D. Bailey, CMCA, AMS, PCAM. "We're going to use this opportunity to … make our offices better for the future." Bailey, who also is president of CAI's Greater Houston Chapter, encouraged community associations in the area to suspend compliance demands temporarily.

A tornado damaged about 100 homes in Sienna Plantation Associations in Missouri City, Texas, and First Colony Community Association in nearby Sugar Land. Originally, both communities planned to host CAI's 2017 Large-Scale Managers Workshop in mid-September. Limited access to shelter, some roads, and other resources compelled Sandra K. Denton, CMCA, LSM, PCAM, general manager of Sienna Plantation, and Cary Kelley, CMCA, AMS, LSM, PCAM, First Colony's executive director, to cancel this year's event.

Storm Relief in Houston
CAI's Houston Chapter Executive Director Stephanie Ferrante says the chapter is recruiting volunteers for its newly launched CAI Community Outreach Committee to assist Houston-area residents in need. Interested CAI members are asked to contact Chris Archambault at carchambault@daughtryjordan.com or Ferrante at stephanie@caihouston.org to donate resources or to volunteer.

"CAI is first and foremost about 'community,' " Ferrante says, "and with so many of our friends and neighbors needing help, it's time to give back and make a difference. Please let us know your specific need or the resources you are willing to provide, and we will coordinate efforts."

To learn other ways to help residents and communities devastated by Hurricane Harvey, visit www.caionline.org/CAISupportsTexas. Other sites with information about recovery efforts include:

Helpful CAI Resources
CAI recently updated its Disaster Resources page to provide information for those affected by the storms as well as for those who would like to donate their time and other resources to Houston and Florida communities.

In addition to pages dedicated specifically to Florida and Texas, this area of the website includes links to general information about filing insurance claims, contacting the Federal Emergency Management Administration (FEMA) for assistance, and finding the appropriate business partners to help remediate damaged property after any natural disaster.

The site also includes updated information about Professional Management Development Program courses and other events scheduled to be held in Houston and throughout Florida.

>>Visit www.caionline.org/DisasterResources for more information and links to helpful federal, state, and municipal sites.

>>For general information about mortgage relief and how to avoid contractor scams, visit www.freddiemac.com/blog/tag/?Hurricane%20Help.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution prohibited.

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Extinguishing the Flames

Despite recent headlines, most high-rise fires are rarely deadly—thanks to sprinkler systems and well-trained managers.

By Julie Warren

Tragically, fires in high-rise communities have made headlines all too often recently. The 27-story Grenfell Tower in West London, which claimed at least 80 or more lives and caused countless injuries, was arguably the most horrific high-rise catastrophe since 9/11.

Fire-related disasters also have occurred this year in a 21-story building in Tehran, Iran, and Honolulu's 568-unit Marco Polo Condominium. More than 30 people perished—including several firefighters—last January in Tehran; the Marco Polo fire claimed three lives in July.

Heartbreaking? Absolutely. Unlikely and preventable? Definitely, according to Robert Solomon, head of the Building and Life Safety Codes division at National Fire Protection Association (NFPA). "We probably have zero fatalities in a high-rise building in the U.S. that's protected with an automatic sprinkler system," Solomon said in a June Washington Post article. "It's zero or approaching zero."

Safety Statistics
From 2009 to 2013, U.S. firefighters responded to an average of 14,500 high-rise fires annually, according to NFPA's 2016 research document High-Rise Building Fires.

NFPA, which defines a high-rise building as "7 stories above grade," says the risk of deaths per 1,000 fires is lower in high-rise buildings overall than in other types of residential buildings. NFPA's research also states that high-rise buildings are more likely to have automatic fire protection equipment (fire alarms and wet-pipe sprinkler systems) and fire-resistive construction than smaller buildings.

Fires in high-rise communities also rarely damage rooms other than those in which the fires originate. Only 4 percent of high-rise fires spread to another room, and a mere 2 percent spread to another floor. Nearly two-thirds of high-rise fires are in apartments or multi-family communities (as opposed to office buildings), and more than three-quarters of high-rise fires originate in a kitchen.

Life-Saving Sprinkler Systems
As recently as early August, a blaze at the 87-story Torch Tower—one of the world's tallest residential buildings and located in Dubai, United Arab Emirates—destroyed 38 of the building's 676 apartments, but remarkably there were no casualties. The reasons, according to several sources, were an emergency evacuation plan that residents practiced regularly and a sprinkler system.

Many U.S. states and municipalities don't require sprinkler systems in some older high-rise buildings, and The Chicago Tribune recently cited a "mixed bag" of regulations in several cities. New York, Dallas, and Chicago, for instance, don't require sprinkler systems to be installed in older buildings unless the retrofit is part of another major renovations. When called upon to retrofit their communities with this critical safety equipment, many boards balk because of the cost.

Florida's Gov. Rick Scott just signed a law that will require older communities across the state to install sprinkler systems, no matter what. (See Homefront in the September/October 2017 Common GroundTM magazine.) A costly mandate, particularly for communities that lack reserves, retrofitting buildings with sprinkler systems could save lives.

Another Essential Safety Feature
In "Taking the Heat," the May/June 2015 Community Manager cover article, Marshall Johnson, PCAM, president of CWD Group, AAMC, in Seattle, agrees that deaths in high-rise fires are rare, particularly because of the built-in safety features in condominium buildings constructed in the past couple of decades.

He also says high-rise managers can have a substantial influence on residents' safety during a fire-related emergency.

Managers should be familiar with the building's safety equipment and evacuation routes and have a comprehensive emergency plan in place. Such a plan should include up-to-date contact information for all residents, including tenants, and a designated area in which building occupants can gather once the floor or building has been evacuated.

Prudent managers also know which units are occupied and by whom, says Johnson, who teaches CAI's High-Rise Maintenance and Management (M-320) course. For instance, are there disabled residents in the community or families with one or more young children, and what provisions have been made for evacuating them?

It's also a manager's responsibility to see that hallways and doorways are accessible and storage areas are free of debris and combustible substances so firefighters can do their jobs efficiently as soon as they arrive.

Managers should test fire alarms and safety equipment frequently, and—particularly critical—educate boards about their responsibility to ensure there's sufficient funding and a process in place for maintaining the building's safety systems and equipment.

Julie Warren is editor of Community Manager.

>>Access NFPA's High-Rise Building Fires and U.S. High-Rise Building Fires Fact Sheet at goo.gl/vTPWvq.
 

High-Rise Maintenance and Management

High-Rise Maintenance and Management (M-320) is a comprehensive, two-day Professional Management Development Program (PMDP) course that provides a detailed analysis of multi-story buildings' distinct management needs, including the physical elements of the high-rise infrastructure, major systems, and maintenance operations. This course meets requirements for Professional Community Association Manager (PCAM) re-designation and is approved for 16 hours of continuing education for Certified Manager of Community Associations (CMCA) recertification. The course also is approved for continuing education credit by many states. Currently scheduled for Nov. 2–3 in Austin, Texas, the M-320 is held only twice per year, and space is limited, so sign up soon.   

>>For more information or to register for this important course, visit www.caionline.org/M320.

CAI Resources

CAI has several webinars and books available on emergency planning and recovery including:

  • WEBINARS: "Best Practices for Worst Cases: Emergency Planning and Recovery" and "Covering Your Ass(ets): Natural Disaster Planning and Recovery" are both available at www.caionline.org/webinars. The member price for a 120-day subscription is $69; the nonmember price is $99.

  • BOOKS: Natural Disasters: How Community Associations Protect Themselves (member price $15; nonmember price $25) and Before and After Disaster Strikes: Developing an Emergency Procedures Manual (member price $39.95; nonmember price is $66.95) are available at www.caionline.org/shop.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution prohibited.

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TWO UPCOMING ESSENTIAL WEBINARS FOR YOUR COMMUNITY

Cast Your Vote: Online Voting in Community Associations

Wed., Nov. 8 | 2–3 p.m. ET

What does it mean for you and your association residents that more and more community associations are making the switch to online voting? And what's the best way to implement an online voting process in your community? This one-hour webinar covers the benefits and features of online voting and provides the best steps to implement a successful online election, tips for the most effective online voting, and how to address homeowners concerns about online voting.


Don't Be Shocked:  Electric Cars Are Coming!

Wed., Dec. 6 | 2–3 p.m. ET

Electric vehicles (EVs) are economical, environmentally friendly options for drivers and are quickly becoming the future of transportation. The sales growth of EVs indicates they will soon be a part of everyday life for many Americans living in community associations. Managing the increasing demand for EVs will require associations to consider electricity capacity, charging stations, association policies, and innovative management strategies. Learn what your community association will need to do to keep pace with this expanding and evolving technology. 

>>Register for these and more than 250 on-demand webinars on a wide range of topics at www.caionline.org/webinars. Member price for each is $69; nonmember price is $99.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution prohibited.

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Turnaround Time

With the recent decline in foreclosures, financial stability is returning to many associations.

By Christine Cimino

Mortgage foreclosures are decreasing—which is great news for community associations.

"The percentage of loans in the foreclosure process at the end of the first quarter was 1.39 percent, down 14 basis points from the fourth quarter and 35 basis points lower than one year ago," according to a statement released by the Mortgage Bankers Association (MBA) in May. 

And ATTOM Data Solutions, which manages the nation's largest fused-property database, says 2017 first-quarter foreclosure activity figures are below pre-recession levels nationwide.

The rate of delinquencies—which include loans that are not yet in the foreclosure process but are at least one payment past due—also is declining. According to MBA, the rate is down nine basis points from the fourth quarter 2016 to first quarter 2017, and the rate is six basis points lower than one year ago.

Overall Financial Health
Fewer foreclosures and delinquencies in an association not only mean increased assessment revenue for operating costs and reserve funds, but also a stronger financial picture overall, which is essential for an association to obtain a bank loan for major capital improvements.

"Overall (financial) health … makes associations better candidates for loans," says Alicia Granados, CMCA, AMS, PCAM, vice president at Pacific Premier Bank in Denver. "And we are seeing trends toward associations qualifying easier because of lower delinquency rates."

Granados, who specializes in homeowners association financing, recalls the recession as a much bleaker time when loans were denied to community associations seeking funds for basic repairs. "Seven years ago, we weren't able to loan to associations that needed it most."

In the years following the onset of the Great Recession nearly a decade ago, mortgage foreclosures skyrocketed in the U.S., peaking at 3.8 million filings in 2010. The surge in mortgage failures devastated individual homeowners and impacted thousands of community associations across the country.

How Foreclosures Hurt Associations
Individual homeowners' assessments are the main source of revenue for most community associations. Without this income, an association can struggle to cover its operating budget—salaries, utilities, lawn maintenance, and snow removal, etc.

Without regular assessments, an association also can't contribute regularly to the community's reserve funds, which are essential for funding infrastructure maintenance and replacing items like roofs, roads, siding, street lights, and HVAC equipment on schedule.

When some homes in a community are foreclosed, the burden to make up the difference in income falls to those homeowners who are paying their assessments, and increasing assessments can become an additional burden to those who are already strapped to pay their bills. Without regular common-area maintenance or updated amenities, some associations face lower home values and fewer sales.

Patience Prevails
"It's really just beginning to turn around," says Granados. "(Associations) now are more willing to take out a loan for improvements they have put off. They're looking at larger loans, and they're more likely to take on that risk because they're more confident in their future assessments."

Another sign of the economic improvement, according to Granados: Associations that have postponed raising assessments to appropriate levels now are able to do so.  

Granados recognizes that another reason communities are willing to take on risk now is because people have better faith in the economy, a sentiment supported by banking industry studies.

Marina Walsh, MBA's vice president of industry analysis, attributes the delinquency decrease to employment growth and an increase in the average hourly wage. "These fundamentals have helped to support the performance of all loan types, whether FHA, VA, or conventional loans," says Walsh.

The Great Recession, which technically ended in 2009, was—according to many experts—the worst global financial recession since the 1930s. Recovery from it was slow and is still underway for many homeowners and community associations.

"It takes time to make significant changes," says Granados, who was a manager and management company executive for 10 years before becoming a banker. "Even when delinquencies have declined, (associations) still must go through the process of getting buy-in from homeowners to begin spending again. But that should be less difficult now that the overall picture of financial health has improved."

Christine Cimino is a Washington, D.C.-based freelance writer.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution prohibited.

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