As community associations “officially” enter the new millennium, they face a number of issues, as this form of housing becomes the dominant pattern for new developments in the Chicago area.
To help them, the primary national trade group in the industry, the Community Associations Institute, anticipates trends and apprises members of financial issues, legal developments and operational problems.
The Illinois Chapter of CAI has formed an Emerging Issues Task Force to identify future challenges for community associations.
Members can address their challenges by legislation, improved documents and decisive action by individual association boards of directors.
Highlighting these challenges for the new year are the following:
Technology. With more people communicating via the Internet, the concept of the open board meeting will change. Computers enable board members to communicate with each other without being physically present in the same room.
Similarly, technology developments enable owners to review association documents, follow actions of the board, and even vote by computer.
Web sites and e-mail may provide the answer to communication problems between directors and owners. Cable television companies must provide efficient high speed internet service with minimal equipment and service disruptions.
Documentation. Except for changes to comply with current law, the format of current declarations and bylaws have not changed substantially since the late 1970s.
The challenge of the community association industry, particularly developers and their counsel, is to simplify the text of governing documents and disclosure information.
Municipal Services. Given the fact that members of the community association pay taxes to local governments, the national debate is whether community associations should receive the same scope of services given to citizens who live in typical single-family communities.
Court decisions and proposed legislation have dealt with the issues of providing municipal services to associations for refuse collection, snow removal, street maintenance and electrical services.
In the Chicago area, unit owners are seeking greater assistance from government officials to monitor and enforce developer compliance with building code requirements.
Aging Population. A significant portion of the homeowner association community in the next few years will be at or near retirement age.
Creating senior housing properly under federal guidelines, allowing the presence of caregivers in a condominium or townhome unit, permitting the adjustment of units and common elements to facilitate access by the physically impaired, and ensuring the availability of handicapped access parking are among the issues communities must face with this population change.
Reserves and Long Term Maintenance. Perhaps the biggest problem facing community associations is the completion of major repair and replacement projects at a cost that community members can afford.
Whether a structure is a converted apartment building, an old warehouse converted to lofts, or new construction, long-term common element repair and replacement is the major focus of association operations.
The challenge for the industry is to provide more guidance to associations in funding reserves and creating a means to complete major projects without financial hardship to association members.
Developer Turnover. With one out of every six Americans living in a community association, and one out of every two new developments in the Chicago area being a community association, the turnover process from a developer to the owners can be a major struggle. The industry must clarify both the reserve obligation of developers and their turnover of board control to unit owners in multi-phase condominium or townhouse projects.
Issues include insurance obligations, auditing the developer’s operations and providing a clear scope for unit and common element warranty claims. If these issues were more clearly resolved, it would minimize the litigation which often arises from the developer turnover process.
Insurance. Owners and insurers need better guidance on coverage obligations for common areas, as well as household furnishings and improvements.
A special condominium subcommittee of the Chicago Bar Association has drafted proposed legislation to clarify responsibility for deductibles and for unit decorating, and to require owners to obtain liability coverage to cover water damage claims by fellow residents.
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These are a few of the many issues facing the community association industry. Representatives from all phases of the industry must work in a cooperative basis to stimulate the growth and economic success for this form of housing.
The CAI Illinois Chapter will feature programs on many of these topics, and exhibitors will display the latest products and techniques for property maintenances and services at the 2001 Conference and Trade Show. The event will be held on Saturday, from 9 a.m. to 4:30 p.m. Jan. 27, at the Rosemont (Donald E. Stephens) Convention Center.
For registration and further information, contact the CAI Illinois Chapter at 630-980-0251 or visit the Chapter Web site at www.CAI-Illinois.com.
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Mark Pearlstein is a Chicago lawyer who specializes in condominium law. Write to him c/o Condominiums, Real Estate Section, 4th Floor, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill., 60611. Sorry, he can’t make personal replies.
