Successful Sharper Scramble
Another successful Sharper Scramble Golf Tournament is in the books! On Friday, July 14th, Sharper hosted over 150 people for a day of fun, food, fellowship, and golf at Boulder Pointe Golf Club in Elko. We had 104 golfers, equally made up of our loyal and trusted business partners, Sharper staff members, and valued Board members from our client base. It was a wonderful day designed for these three groups to come together to celebrate Sharper Management. Thanks to our generous sponsors and people who donated throughout the day, we raised an impressive $10,000 to go towards this year’s benefit – the Multiple Myeloma Research Foundation. We look forward to delivering the big check to them next month. We hope you can join us when we host our 8th annual golf tournament next year. It is free to you as a Board member. Watch for a date to be announced in the winter newsletter, and secure your spot early. To those that attended this year, thank you for joining us, and we hope to see you next year!
Legislative Changes Affecting HOAs
The 2023 legislative session in Minnesota was active, with several significant bills that will impact community associations in the state. Below is an abbreviating listing of those topics. As the laws are further defined and incorporated into daily living in HOAs, we will continue diving deeper into these topics in future newsletters and publications. Marijuana/Cannabis A controversial topic, to be sure, that has been swirling around Minnesota for the past few years became a new law – Minn. Stat. #342. As a part of the comprehensive language passed, specific points related to associations and multi-resident/unit dwellings. We have to look at it in two ways. One issue is smoking, and the second is growing. Associations will have to navigate both problems. What it Says – generally, smoking or vaping in multi-resident/unit housing is unlawful and a nuisance under the statute. Growing is allowed with some limitations (maximum of eight plants). When it comes to growing, it does get a little more complicated. The new law allows people to grow up to eight cannabis plants, with no more than four being mature; flowering plants may be grown at a single residence. Must be the primary residence of a person 21 or older. If outside, it must be (1) enclosed; (2) locked; and (3) not visible to the public. The current law does not reference multi-family/unit developments (HOAs). Whom it Affects – all HOAs What it Means – Vaporizing or smoking cannabis flowers, cannabis products, artificially derived cannabinoids, or hemp-derived consumer products is prohibited in multi-family housing buildings, including balconies and patios. By existing state statute, boards also can govern common areas, including prohibiting smoking or vaping of cannabis products if they so choose. When it comes to growing, the association still controls common areas and can prohibit growing in limited common and common areas. However, they cannot regulate or disallow growing inside of the unit/home. The association’s Declarations would have to be amended to specifically disallow it. That said, the association does have the ability to manage and respond to nuisance issues. Both state statutes and Declarations typically say something to the effect of: Quiet Enjoyment; Interference Prohibited. All Owners and Occupants and their guests shall have a right to peaceful enjoyment in their respective Units. They shall use the Property in such a manner as will not cause a nuisance nor unduly restrict, interfere with, or impede the use of the Property by other Owners and Occupants and their guests. Should the growing of cannabis create issues, such as smell, and other owners complain, the association does have the right to ask an owner to cease the activity that made said nuisance. This issue could become challenging for an association to navigate, and it should seek legal counsel. When it Goes into Effect – July 1, 2023 Summary: our friends at the Smith, Jadin, and Johnson law firm recently spoke to Sharper Manager at length on this issue. An overview of their recommendations is as follows: Send an update to Owners regarding the marijuana bill explaining that as multifamily housing, smoking and vaping are prohibited. Take any complaints seriously and send violations consistent with Rule enforcement procedures. Keep a good paper trail. For complaints lodged, Board will need to know (1) when the alleged violation occurred and (2) who was the violator. If an Owner complains that they “smell” smoke, they can’t send a violation to every Owner. However, a general “reminder” email blast may help paper the file in case of a nuisance lawsuit. If a lawsuit for nuisance arises – 1. If procedures are followed (sent violation), tell Owner you have enforced and that they must drop the case or else the HOA will defend itself and assess fees • 2. If procedures are not followed, settle Solar Panels Like satellite dishes 20 years ago, associations must navigate homeowners wishing to install solar panels on rooflines. This has been a discussion amongst legislative bodies for the past few years. This year it finally got traction, and Minn. Stat. # 500.216 was passed. The bottom line, the new law limits some associations from prohibiting solar panels on rooflines. What it Says – “Notwithstanding any … homeowners association document, … a private entity must not prohibit or refuse to permit the owner of a single-family dwelling to install, maintain, or use a roof-mounted solar energy system.” Whom it Affects – Single family HOAs and any HOAs where the Owner is responsible for maintaining and insuring the dwelling (roofs, siding). Note that this bill does NOT apply to HOAs with shared roofs (such as a standard townhome). What it Means – Single-family HOAs may want to create a policy that could set parameters, requirements, and approval processes around solar panels. Examples include: Require only licensed contractors; prohibit materials extending beyond rooflines; require Owners to indemnify the HOA for any damages; require Owners remove the system if necessary to repair or replace something the HOA maintains. When it Goes into Effect – August 1, 2023 Violations & Rule Enforcement To create more uniformity in how rule violations are notified, fines assessed, and appeals processed, the Minnesota Common Interest Ownership Act (MCIOA) was amended to develop further standards. What it Says – any fine associated with a rule violation has to meet seven specific criteria, or it could be challenged in court. Homeowners are also entitled to a more consistent process for an appeal and hearing of said fine. Whom It Affects – all associations currently under MCIOA, which is any association built after June 1, 1994, and any condominium association regardless of when it was established. What it Means – Any fine and specific assessments must be accompanied by a dated, written notice to the Owner, including seven pieces of information. (1) states the amount and reason for the fine or assessment (2) for fines levied under section 515B.3-102(a)(11) [VIOLATION OF GOVERNING DOCUMENTS], specifies (i) the violation for which a fine is being levied and the date of the levy; and (ii) the specific section of the declaration, bylaws, rules, or regulations allegedly violated; (3) for assessments levied under section 515B.3-115(g) or
Insurance Market Troubles
The insurance market for HOAs has been volatile, at best, for the last decade. 2023 has been horrendous on a number of fronts. For most associations, premium increases have been somewhere between 20-40%. For some, the primary business/structural policy premium has doubled. And for a rapidly growing number of associations, surprising news of non-renewals has left them scrambling to find coverage elsewhere in an already consolidated market. Unfortunately, the future doesn’t give any optimistic signs of improvement. Although Minnesota is not alone in this troubling trend, we have been hit harder than most states. For five consecutive years, Minnesota has ranked in the top-5 in the nation for losses paid out. Florida has hurricanes. California has wildfires. Minnesota is the bullseye for hail. Minnesota has now been labeled as a “catastrophic state” by most insurance carriers, shrinking the market’s interested providers and inflating the rates for those offering coverage. One local industry expert calculated that for every $1 of premium collected, the insurance market has paid out $1.44 in losses for the multi-family sector. In response, carriers have not only increased premiums, but also wind-hail deductibles have increased to the point they no longer even pay out for hail damage; they’ve increased the number of “exclusions” on policies, and thus reduced the scope of coverage and further complicating claims; they have decreased the “cash value” and valuations on claims. While premium increases have been challenging, the real trouble in 2023 has been the shrinking market of providers and non-renewals. One industry expert with Insurance Warehouse estimated that there are only two or three carriers that will even write new policies for a townhome-style association right now. The big names, such as American Family, State Farm, Farmers, etc., have steadily been non-renewing associations with claims history and choosing to refrain from writing any new policies for multi-family developments. Many associations have had to go to the “secondary market” of carriers, which only fulfills the association’s requirement to have insurance, but offers little coverage and inflated premiums. The insurance market for associations is really in a state of crisis. In summary, carrier selections are becoming fewer, non-renewals more common, and drastically increasing premiums are the norm. Associations need to be aware of these challenges and be prepared financially.
Press Release – Brownstones on France Joins Sharper Portfolio
Contributing to a solid first quarter of growth, Sharper Management is pleased to welcome the Brownstones on France Association into the property management fold, effective March 1st. This beautiful, luxurious, and truly unique townhome development was constructed in 2006 by a local high-end home builder, Noonan Construction. Proud of the original design and high demand, Noonan managed it themselves until now, the owner is looking to retire. Sharper was selected to carry on the need for the custom management services required to care for a development that includes individual nothing but the most elaborate of materials, unique architectural styling, enclosed garages within their common garage space, private elevators in the units, sprawling and vibrant landscaping, walking paths, a gazebo and so much more. “We are truly honored to be selected to work with the Brownstone Board in caring for this exquisite property,” said Josh Reams, director of business development & education. “We are fortunate to have a strong presence in the 50th & France area of Edina. Brownstones will certainly be a marquee property in our portfolio, and we will work tirelessly to ensure its well-known legacy and admired reputation remains deservedly intact.”
Construction Chat: Navigating a Bad Ice Dam Year
The up-and-down temperatures, rare January rain storms, and the record-breaking snow totals we’ve experienced so far this brutal winter have been the perfect recipe for ice dam formation on various types of roofs. Ice dams are particularly tricky for Associations because the line between Homeowner vs. Association responsibility can become rather blurred. First, it is important to understand how ice dams form. In short, they form when the snow melts on your roof and then re-freezes over the eave—typically over the soffit area. The ice “dam” then prohibits further melting snow to drain properly off the roof, which can (but not always) cause leaking water into the home. There are many factors as to why ice dams form. The inevitable freeze/thaw cycle; excess snow pack; clogged gutters, or frozen downspouts; – but the primary culprit is excessive heat loss from the unit and/or a lack of ventilation. This is why, many times and depending on your Governing Documents, ice dams and the leakage they can cause is not necessarily the Association’s responsibility. They are NOT caused by roofing deficiencies. They are caused by insulation and ventilation deficiencies INSIDE of the home. It is important to understand how your Association’s Governing Documents define “unit boundaries.” Does the boundary of the unit include “unfinished surfaces” or “no upper or lower boundaries?” If so, this could imply that the attic space (or the space between the roof deck and the ceiling) and insulation inside of it would be a homeowner’s responsibility; therefore, the heat loss causing the ice dam is the homeowner’s deal. Once there is an understanding of who is responsible for what, it is very helpful for the associations to review their ice dam situation and have a policy in place for how they are to be addressed. It is also important to have an awareness of the history of ice dams and potential leakage. Sometimes the worst-looking ice dam you’ve ever seen will not cause any leakage (suggesting roofs have extra layers of “ice and water shield” membrane under the shingles). And sometimes, where you might not be able to see an ice dam at all, a unit has a faucet coming into their unit at the exterior wall line. Knowing if your Association has a history of LEAKING ice dams is important to know as you make a decision on how (or IF) the Association addresses them.
Electric Vehicle Charging Capabilities
Ready or not, the future is here. One of the most complex situations every HOA will face, if they’ve not already, is how to handle the quickly emerging demand for electric vehicle (EV) charging capabilities. Per the US Department of Energy, between 2015-2020, the number of EV charging stations installed throughout the country doubled. Between 2021 and 2022, the number of charging stations has doubled again. As electric vehicles become more accessible and affordable, demand has and will continue to increase. The issue associations are currently facing is how they can accommodate residents who make the switch to electric vehicles. Accommodating electric vehicles presents different challenges at each unique Association: Will the underground parking garage of a condo building offer charging stations in each garage stall? Will the association install a common area station somewhere for residents to share? Does the detached garage in the townhome association have an adequate electricity supply to the structure to handle 240-volt charging stations should a homeowner want to install one? Is the transformer to the townhome metered separately, and does it have the bandwidth to allow owners to install a station in their private garage? How will costs be handled? Sharper is excited to announce a recent partnership with the experts at HOAMEV to assist HOAs with answering these questions. HOAMEV is equipped to offer installation, setup, and electrical service upgrades and, perhaps most importantly, are experts in interpreting and working with association governing documents. The first step is to evaluate and audit your association’s existing electrical infrastructure and electricity usage. This electrical audit provides the information that HOAMEV needs to develop a plan to accommodate for the inevitability of being ready for electric vehicle charging capabilities at your association. The cost for the electrical audit is roughly $1,000 per association. The audit takes place over the course of a 30-day period, is unintrusive, and will not affect or interrupt electrical service. Your homeowners likely won’t even know the audit is taking place. If you are interested in exploring this opportunity, speak to your Community Manager and they can connect you with a HOAMEV representative. It is important that associations act soon. While the electrical audits can be conducted now, supplies for installing electric vehicle charging capabilities are currently limited, and installers are already booked into the fall of 2023. If you haven’t started the process yet, you are already behind.
2023 Sharper Events: Save-the-Dates
Join us for the following events throughout 2023. All events are FREE to Board members serving Associations managed by Sharper. Board Training Schedule: April 19 – Roles & Responsibilities of the Board & Governing Documents July 12 – Associations Defined & Property Management Practices October 25 – Insurance & Financials March 22 – New Client Orientation May 18 – Board Member Appreciation BBQ July 14 – Annual Sharper Scramble Golf Tournament August 16 – New Client Orientation
Board Training Opportunity – April 19, 2023
Sharper Management will present the second in a series of Board Training opportunities on Wednesday, April 19, 2023, at 6 p.m. at the Wells Fargo Plaza, 2nd Floor Training Room at 7900 Xerces Avenue in Bloomington, MN 55431. The 90-minute session will be led by the director of business development and education, Josh Reams, CMCA, AMS, PCAM. This session will focus on defining the roles and responsibilities of the Board and an overview of governing documents. Topics include: Board of Directors Roles & Responsibilities of the Board Officer Positions & Duties Legal Obligations & Protections Committees Governing Documents Governing Document Types Federal & State Statutes – Overview of MCIOA Rules & Regulations Enforcement of Rules If you are interested in reserving your spot, please email clientcare@sharpermanagement.com
Sharper Launches Educational Video Library
We are extremely excited to launch our Video Resource Library – which contains nearly 100 professionally filmed educational videos with topics ranging from insurance to governing documents, to financials, to association meetings, and more. Although there are nearly 6 hours of total footage, each video is a short 2-8 minutes long with a very specific and focused topic. Feel free to browse around for topics that might intrigue you. “We are excited to launch this resource for our Board members, homeowners, and even as a refresher and training center for our own managers,” said Sharper Management owner and CEO Dan Cunningham. “We look forward to adding more in the future!” You can enter the video library at https://sharpermanagement.com/resource-library-2/ You can also see the videos through our weekly Tuesday Training Topic post by following us on LinkedIn at https://www.linkedin.com/company/880327.
Board Tips: Meeting Room Setup
As some associations resume in-person meetings, one thing to consider going in to your 2023 meeting schedule is the oftentimes overlooked detail of simply how the room is set up. Remember, a board meeting is a BOARD meeting. It is not a membership/homeowner meeting. Homeowners can be there for observation or to address the board during an allocated open forum part of the meeting. Outside of that, interaction should be between board members. How are most board meeting rooms set up? Usually, some form of auditorium style seating, right? The board sits in a row at a head table facing chairs lined in rows. It invites participation from the audience, gives the impression the board is reporting to the audience, but hinders eye contact–and thus interaction–between board members. Another setup we commonly see is a round table room. The physical setup of that puts no barrier between the board and membership and makes it feel all-inclusive. It’s a nice sentiment, but not a good way to run a business meeting of the board. The best setup you can create is some form of a U- or V-shaped table for the board, and audience-style seating for homeowners. This way, no one’s back is to the audience, but interaction and eye contact is crossed between board members. Most city hall and other government meeting rooms are set up this way for a reason. If you have difficulty controlling interaction between board members and homeowners, try this type of board meeting setup. Little things can make a big difference!