By Michael Schleich, Distinguished Programs
This article offers tips for community associations to manage rising insurance costs and mitigate losses after major disasters. The increasing cost of insurance premiums is due to catastrophic losses and the need for more reinsurance. To keep costs down, community associations should focus on risk management, regular maintenance, and work with experienced insurance brokers.
What happened to getting multiple insurance quotes and saving money each year on my insurance premiums? Where have the coverage enhancements and low deductibles gone?
The Surfside condo collapse in June of 2021 serves as a tragic reminder of the importance of having a robust risk management program that includes planning and setting aside reserves for the future. All properties age, and it’s never too early to develop a plan for roof replacement, structural engineering surveys, and implementing the subsequent recommendations. Consistent and regular inspections of buildings, facilities, and systems should be a part of every association’s risk management plan. With the help of property managers and their insurance advisors, I’d encourage board members to make risk management an important priority, not just once a year when the insurance renews but a consistent practice throughout the year.
The Increasing Cost of Insurance
Did you know that in 2022 there were 18 natural disasters in the U.S. – each causing over one billion dollars in damages? Bottom line, avoiding at least some changes to your insurance program in the coming year will be challenging. The question becomes – what to do about it?
Insurance is based on the principle that says the premiums of many pays for the losses of a few. So, when a hurricane or building collapse happens in Florida, it has a ripple effect on all insurance buyers, no matter where the association is located.
There has been a lot of discussion about reinsurance (insurance for insurance companies) as the leading driver in premium increases. Chances are your insurance provider purchases reinsurance to help stabilize the effect of catastrophic claims. Most insurance companies do. The size and scope of the devastating losses has forced reinsurers to charge insurance companies more premium, which is passed along to you.
The increased cost comes in the form of higher premiums, but it can also include increased deductibles, decreased capacity, and even reduced or eliminated coverage, i.e., wind or wildfire exclusions. Even if your association hasn't filed any claims, the losses resulting from other parties' claims will still impact everyone, including you.
Why a High Deductible Might Be the Right Choice for Your Association
I recommend that buyers opt for a deductible that is as high as possible but, at the same time, one that the association feels comfortable covering out-of-pocket in the event of a loss. This can help keep premiums lower, but it's important to ensure your association has reserves available. Governing documents may need to be reviewed or revised to allow for a higher deductible.
How Your Claims History Affects Your Association's Insurance Premiums
A common belief by underwriters is that a frequency of claims ultimately increases the likelihood of a severe claim – “frequency leads to severity.” Having several minor claims on your loss history might make underwriters think there is a chance the next claim will be a large one. For example, several smaller claims on older properties can indicate that maintenance is lacking. Underwriters may charge more for the risks with these characteristics than for a loss-free risk or decline to quote.
Your individual claims history is critical. A high deductible will help keep your loss history clean, and some savings might be available. Although sometimes a high deductible might be a minimum requirement to do business with certain insurance companies.
Conclusion: Ensuring Your Community Association Is Properly Protected for the Future
So, how do you get the best advice and receive the best options for your association’s insurance purchase? Find a broker committed to the industry. The best community association brokers tend to focus solely on community association insurance. Many individuals showcase their commitment by becoming CIRMS – Community Insurance and Risk Management Specialists. They are up to date on current trends and represent top-rated carriers in the market. These specialists can offer guidance and suggestions on keeping costs under control while ensuring that the board members' fiduciary duty to protect the association is not compromised.
Michael Schleich, MBA is the National Business Development Leader for Community Associations at Distinguished Programs. Distinguished Programs has been providing insurance solutions through its broker partners to community association clients for over 25 years. With over 30 years of experience advising brokers and working with clients, Mike has developed a comprehensive approach to risk management programs for community association insurance clients.
By Zachary A. Goldberg, Winzenburg, Leff, Purvis & Payne, LLP
How concerned should Colorado common interest communities be about civil liability arising from third-party criminal acts committed on the Common Elements?
Until recently, a common answer may have been something like: Not terribly concerned at all, especially in communities where individual owners share fractional, undivided interests in the Common Elements. Trailside Townhome Ass'n v. Acierno, 880 P.2d 1197 (Colo. 1994) is a seminal case on this issue, involving a townhome owner severely injured after diving into a community swimming pool. Colorado’s Premises Liability Statute focuses on whether the injured person was a “trespasser,” who enters the property without the owner’s consent; a “licensee,” who enters the property for his own interests with the owner’s consent, like a social guest; or an “invitee,” who enters the property to transact business with the owner’s consent or at the owner’s invitation, like a vendor. In Trailside, the Supreme Court of Colorado held that the owner was not considered a “licensee” for purposes of premises liability analysis, but that the Declaration was the source of the applicable Association standard of care. Unlike an owner who has a right to use common areas without Association consent by virtue of her ownership, trespassers, licensees, and invitees have no right to enter the property without landowner consent. The Court concluded that if an Association’s governing documents contain a standard of care as to owners, those provisions control. If not, courts will look to general principles of negligence.
Thus, the crux of premises liability concerns—at least relative to individual owners—has historically been linked to an association’s standard of care per the governing documents, if any, coupled with a standard negligence gap filler. Thus, even for planned communities, or others in which Common Elements are association-owned, common law negligence principles, as opposed to the Premises Liability Statute, are the source of a community association’s duty of care, at least to individual owners. But a recent, as-yet-unresolved, skirmish among Colorado courts and legislatures stemming from the 2019 mass shooting at the Rocky Mountain Planned Parenthood (RMPP) in Colorado Springs could signal a broader Association duty to owners and tenants, and proportionately broader liability risk, relative to third-party criminal acts.
Why, one might ask, would that tragedy perpetrated by a mass shooter with religio-political motives have any bearing on common interest communities’ duties of care and potential liability?
Like RMPP, a common interest community is considered a “landowner” for premises liability purposes and may now be a more prominent and frequent target for lawsuits stemming from shootings and other violent attacks. In Rocky Mountain Planned Parenthood, Inc. v. Wagner, 467 P.3d 287 (Colo. 2020)., the Supreme Court of Colorado granted certiorari to weigh in on whether individuals who cause mass casualties without regard to their own survival or capture are necessarily the predominant cause of harm to their victims, such that a landowner cannot be liable under the Premises Liability Statute. The Colorado Court of Appeals held, and the Supreme Court of Colorado affirmed, that a landowner can be held liable as a substantial factor in causing harm without considering whether a third-party criminal act was the cause of that harm.
In 2022, the Colorado State Senate introduced Colorado Senate Bill 22-115 which, if codified into law, would directly contravene the Wagner holdings on this issue, and a related one as to the foreseeability of third-party criminal conduct based upon whether the goods or services offered by a landowner are “controversial.”The Bill expressly states that the Wagner cases “are contrary to the stated purpose of the landowner liability statute to the extent that it does not create a legal climate that will promote private property rights and commercial enterprise and foster the availability and affordability of insurance.” In addition to an express declaration that the Wagner cases were improperly decided, the bill would redefine “landowner” under the Premises Liability Statute as “an authorized agent or a person in possession of real property and a person legally responsible for the condition of real property or for the activities conducted or circumstances existing on real property.”
Nevertheless, and although Trailside is still “good law,” unless or until the legislature scales back the substantial landowner liability augmentation effect of the Wagner cases, community association Boards, managers, and insurers may be more exposed to lawsuits by victims, and potential related civil liability and costs, following violent criminal acts within the communities they serve. While community associations may provide services less controversial than Planned Parenthood services, entities offering “controversial” services and “noncontroversial” services alike are now susceptible to heightened potential liability in connection with third-party criminal acts committed on property they operate and control and, importantly, this issue will have important liability insurance coverage and cost implications.
Zachary A. Goldberg is an attorney with the law firm of Winzenburg, Leff, Purvis & Payne, LLP, headquartered in Littleton, Colorado. His practice includes counseling and advocating on behalf of Colorado common interest communities.
By Aaron J. Goodlock, Orten Cavanagh Holmes & Hunt, LLC
Employment law issues can seem daunting to community associations, which are typically governed by volunteer boards of directors. This is due, in large part, to the myriad of complex state and federal employment laws, administrative regulations, labor standards, tax codes, and case law governing employers and employees. And although most associations don’t directly employ staff, having employees can be advantageous depending on the community’s particular needs. For example, many condominium and resort communities employ onsite managers, operations and housekeeping staff, and maintenance personnel.
The following is a brief overview of key employment law concepts and considerations in the context of community associations.
Classification of employees and independent contractors. A fundamental concept with respect to employment is understanding the distinction between association employees versus independent contractors.
Colorado employment laws define “employee” as any person, including a migratory laborer, performing labor or services for the benefit of an employer. Relevant factors in determining whether a person is an employee generally include (1) the degree of control the employer may or does exercise over the person, and (2) the degree to which the person performs work that is the primary work of the employer. Individuals who are primarily free from control and direction in the performance of the service, and who are customarily engaged in an independent trade, occupation, profession, or business related to the service are not considered employees.
If an individual meets the criteria for an “employee,” the Association has an obligation to comply with applicable employment laws.
Misclassification of workers as independent contractors instead of employees creates risk, including civil and statutory penalties (i.e., fines) for violation of state and federal employment laws, in addition to liability for unpaid employment taxes. In Colorado, if an employer willfully misclassifies an employee, the employer may be fined between $5,000 and $25,000 per employee.
To avoid these risks, if the worker meets the criteria of an employee, the association should classify the individual as an employee and pay applicable employment taxes and premiums, etc. If the worker is not considered an employee (i.e., if they are engaged as an independent contractor), the association should ensure that specific language to this effect is included in the written contract between the Association and the worker.
Employee payroll and employment taxes. Employers are obligated to withhold employment and payroll taxes (e.g., income tax, social security tax, Medicare tax, unemployment tax). Failure to properly remit employment taxes could subject the association to additional tax liability, fines and other penalties from state and federal tax authorities.
For federal employment and tax purposes, it’s important to note that Colorado law and the IRS have different criteria for defining employees and independent contractors. Associations should review IRS Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, to determine if workers should be treated as employees or independent contractors for federal tax purposes.
Workers Compensation. Most associations carry workers compensation insurance to protect against liability even if the association doesn’t have employees. Under the Colorado Workers’ Compensation Act, associations are required to carry workers compensation insurance covering association employees. Workers compensation insurance provides coverage for employee job-related injuries and substantially protects the association for additional tort liability.
Wage and Labor Laws, Employment Practices. Associations with employees must comply with applicable minimum wage laws, overtime pay requirements, mandatory meal and rest period regulations, employer record-keeping and posting requirements, and Colorado’s employment discrimination laws.
With limited exceptions, the Colorado Wage Act (“CWA”) requires employers to pay employees overtime at one and a half times the regular rate of pay for any work in excess of: 40 hours per week; 12 hours per day; or 12 consecutive hours, regardless of the start and end time of the workday.
The CWA also requires employers to provide minimum meal breaks and rest periods based upon the length of the employee’s work shift.
The Colorado Anti-Discrimination Act (“CADA”) encompasses a broad range of employment-related practices that most employers are strictly obligated to comply with. CADA prohibits discrimination in the workplace based on protected class, which includes disability, race, creed, sex, sexual orientation, gender identity, gender expression, religion, age, national origin, ancestry, and pregnancy. In that vein, CADA also prohibits: (1) refusing to hire employees; (2) discharging employees; (3) refusing to promote employees; (4) demoting employees; (5) harassing employees; (6) discriminating in compensation; and (7) discriminating in the terms, conditions and privileges of employment, based on or because of an employee’s protected class or in retaliation for engaging in protected activity. CADA also requires employers to provide reasonable accommodations to employees with disabilities.
Other Employment Issues - Vicarious liability. Associations can be vicariously liable for an employee’s negligent acts. If an employee causes damage or injuries to another person and the damage or injury occurred while the employee was acting within their scope of employment, the association may be vicariously liable for any damages or injuries sustained. In addition to maintaining appropriate liability insurance, associations can mitigate the risk of liability by exercising reasonable care to prevent negligent or careless behavior. Adopting and implementing policies and employee handbooks, providing training, and ensuring reasonable employee oversight will help to mitigate this risk.
Understanding the distinction between employees and independent contractors is important, especially when analyzing how employment issues can impact an association’s relationship with workers and services providers. Additionally, because the landscape of employment law is continuously changing, consulting an attorney or other employment specialist can be helpful to proactively mitigate and manage employment-related risks.
Aaron J. Goodlock is an attorney at Orten Cavanagh Holmes & Hunt, LLC. He provides general counsel and transactional services to community associations throughout Colorado and serves on the Colorado Legislative Action Committee for CAI.
By Ryan Hurley, AssuredPartners
What happens when products such as insurance, where the perception of quality is often based on how little it costs, suddenly becomes universally perceived as cost prohibitive? As consumers, we all recognize the importance of maintaining adequate insurance coverage, even if its sole purpose is to comply with mortgage lending requirements and applicable state laws. However, as premiums continue climbing towards record highs, these rising costs are beginning to impact community associations, especially condominium and townhome communities who, for the most part, are required to maintain adequate property insurance coverage on their residential structures.
As budgets continue to be blown out by unexpected rate increases, (in some cases as much as 500% or more over the expiring premium), many board members must make difficult decisions, which may even include the temptation to underinsure the Association's building property to intentionally save money. Before heading down the road of bad choices, we need to understand that there are many ways to adequately protect residential buildings other than relying solely on the traditional condo/townhome insurance approach.
The traditional condo/townhome insurance model, where the associations maintain high-limit property policies with low standard policy deductibles, is proving less effective and more expensive than ever. This model, when coupled with the Personal Lines HO-6 Insurance Carriers firmly (and rightfully) adhering to their 'excess' insurance role when losses occur within their insured's unit, results in more losses showing up on condo/townhome communities' loss history reports, which further drives up renewal premium and can even compromise an association's future insurability.
To manage costs without compromising coverage, we must begin thinking outside the box to design a more practical approach to transferring risk. Fortunately, covenant-controlled communities are a perfect candidate for implementing unorthodox coverage strategies thanks to the contractual influence the CC&Rs and supporting policies/procedures have over the association's master property policy and owners' personal HO-6 policies.
For many years, condo/townhome board members and individual unit owners have worked together to amend their association's governing documents to reduce the burden placed on the association by assigning more insurable interests to the respective owners, usually through amending the insurance section of their CC&Rs from “all-in” or “original construction” responsibilities to a version of the “bare walls” coverage model while staying within the guidelines set forth by CCIOA. This time-tested, proven strategy has helped reduce associations' master insurance costs while enabling individual homeowners to have more significant control over the reconstruction processes when losses occur within their homes. Yet this is just the beginning of what is possible when we intentionally establish policies and procedures to spread risk between the association and individual owners.
For example, we can establish non-traditional coverage models using peril-specific wildfire deductibles and/or a sub-limit to reduce the obligation on the primary insurance carriers for communities in high-risk wildfire zones. Including parametric insurance products and establishing contractual language to trigger the individual owners' HO-6 policies to fill in the gaps, we can further stack deductibles and limits to reduce the primary layers' costs without compromising the coverage quality. These non-traditional risk management strategies will soon become even more valuable as Colorado legislatures continue working on House Bill 1288, a quasi-governmental backed "last resort" insurance product, to offer primary coverage options to homeowners and associations in areas deemed uninsurable by the private insurance markets due to high risk of wildfire.
However, to effectively design and implement these non-traditional coverage models, we must address how board members often direct their community managers to shop for alternate insurance options. As stated for years by many of my insurance counterparts throughout CAI, the old-fashion approach of blasting out RFPs to as many agents as possible does not work and will likely lead to much higher premiums. It may even compromise a community's ability to insure its property to total replacement cost values as agents block each other out of the limited carrier availability in this volatile insurance market. Furthermore, these new coverage strategies don't come in a “one size fits all” box, but require input from a knowledgeable HOA Insurance Agent working with an experienced HOA Attorney. Board members who take the time to interview multiple insurance agents before selecting a single agent to design their renewal coverage platform will have far better pricing and coverage options for their upcoming coverage term.
Throughout our industry, we all agree that change is inevitable, and how we respond to it will dictate our success in the future. This is an opportunity for us to collectively work together to develop more efficient ways to insure Colorado's condo/townhome communities. By intentionally developing risk management strategies to address costs while implementing policies/procedures to expedite reconstruction processes when losses occur, we can reestablish more predictability during the budget season while better managing losses as they occur within our communities.
Ryan M Hurley, Executive Vice President
I started my insurance career in the late 1990s as a personal insurance agent before transitioning to commercial insurance. I have specialized exclusively in Colorado's Community Association Insurance Industry for nearly twenty years. As the head of AssuredPartners' Community Association Insurance Department, the value my team offers our client communities is the unique understanding of the relationship that exists between the personal lines and commercial insurance forms that make up a complete community association coverage platform.
By Scott Murray, Premier Roofing Company
Gutters are the unsung heroes of a building’s water-shedding capability. Though often overlooked and forgotten; a properly sized, installed, and functioning gutter system can make a major difference in a home’s ability to funnel precipitation down and away from the building, preventing large repair bills. How do you know when it’s time to upgrade your gutter system? What signs might indicate gutter issues? Read on to learn more.
Put simply, the biggest sign that you might need a gutter upgrade or reinstallation is water ending up somewhere it shouldn’t. A few examples include:
If any of these issues are prevalent at your building, it’s likely time to have a roofing and gutter professional evaluate the performance of your system. Like most areas of home maintenance, being proactive with maintaining your gutters can save you much larger headaches down the road.
What are your upgrade options and how can they make a difference? To start with, gutter size (diameter) makes a huge difference in water shedding capability. Larger roof surfaces and steeper slopes shed more water, faster. A professional evaluation can help you determine what gutter size is optimal, usually in the four to six inch range. Gutter material is also a big factor in installation, maintenance, and appearance. The vast majority of gutters are aluminum due to the ease of installation, a clean rust-free look, and lightweight material. Vinyl gutters are also becoming more common as an even lighter, paint-free option. For a luxury touch, homeowners can upgrade to copper gutters which provide a more decorative look and are often longer lasting. Finally - don’t forget about downspouts. There are a variety of sizes and shapes, lengths and extensions, but the general principle is to efficiently direct water away from the building foundation.
Remember, addressing gutter issues and upgrading your system can provide a major savings in the long run, as well as add value to your home. Ask your qualified contractor to review these options with you.
Scott Murray, Business Development Representative, Premier Roofing Company
Premier Roofing specializes in multi-family roofing services for community managers, apartment managers, homeowner’s associations and property management services. Premier was founded in 2005 in Denver, Colorado by two college classmates and has grown to 15 permanent locations across the country.
By Spencer Weston, Supervisory Forester with the Franktown Field Office of the Colorado State Forest Service (CSFS)
More than 3 million Coloradans live in the wildland-urban interface (WUI), where homes and other structures intermingle with wildland vegetation. There’s also a risk of being affected by wildfire for folks who live in the WUI. Wildfire mitigation actions are critical to reduce the risk of damage from wildfire, and community-wide wildfire mitigation activities are more effective and efficient than individuals working on their properties alone. Homeowner associations are often well positioned to organize and lead community wildfire mitigation efforts.
What are wildfire mitigation activities?
Wildfire mitigation refers to actions that reduce the risk of damage from wildfires, and these steps can look different depending on the needs of your community. If an HOA is just getting started with wildfire mitigation, members may consider creating a Community Wildfire Protection Plan. These plans usually bring together diverse local interests to work toward common goals for public safety, sustainability and natural resources. They often include information about local firefighting capability, tips for homeowners and plans for land management.
Neighborhoods and homeowner associations are all unique, and the wildfire mitigation activities chosen for your HOA should reflect the needs of the residents and surrounding area. Geography, vegetation type, age of homes and distance between structures all affect how each HOA approaches wildfire mitigation. Here’s a list of some wildfire mitigation activities that various HOAs have undertaken:
Wildfire mitigation in action: Roxborough Park Foundation
The 2002 Hayman Fire triggered pre-evacuation warnings for the residents of the Roxborough Park Foundation (RPF). The largest wildfire in state history at the time ignited action among the people of RPF, and they quickly formed the Fire Mitigation Committee, a group of resident volunteers who lead fire mitigation efforts for the RPF. Since the group’s founding, they’ve made great progress protecting their properties from the risk of damage from wildfires. Funding from the Forest Restoration and Wildfire Risk Mitigation grant program and assistance from the local Colorado State Forest Service Field Office resulted in a lot of work completed in the area:
Wildfire mitigation resulted in some additional unexpected benefits.
“Many of the participating residents had been working on their properties for several years and were excited to finally reach a mitigated state. Now they can focus on the easier job of maintaining the mitigation. Every participating resident was very pleased with the enhanced safety and look of their property,” reported the Fire Mitigation Committee.
Resources for wildfire mitigation
Residents can take steps year-round to protect their properties from wildfire, and efforts at the town, neighborhood or homeowner association-level improve the outcomes of those individual efforts. When communities work together, we help protect each other and improve the effectiveness of all wildfire mitigation actions. The Colorado State Forest Service has resources for all levels of wildfire mitigation, from funding opportunities to the Home Ignition Zone guide. Contact your local field office for more information.
About the author: Spencer Weston is the Supervisory Forester with the Franktown Field Office of the Colorado State Forest Service (CSFS). The Franktown Field Office of the CSFS is one of 17 field offices throughout Colorado, serving Arapahoe, Douglas, Elbert and Lincoln counties. Our mission is to achieve stewardship of Colorado’s diverse forest environments for the benefit of present and future generations.
By Damien Bielli, Vial Fotheringham LLP
The Board of Directors in a homeowners’ association (HOA) are responsible for the functionality and governance of the community. One of the powers and duties delegated to the Board of Directors is the power to negotiate and enter into contracts, which is highly significant to the operation of an HOA. In fact, one of the exceptions to the open meetings requirement under CCIOA is for negotiation of contracts. This means that Boards can meet in executive sessions to negotiate contract terms and then re-convene in an open board meeting to vote on approving a contract.
What is a contract?
In its simplest form, a contract is an agreement between two or more parties where there has been a “meeting of the minds.” To have a contract, there must be an offer, acceptance of the offer, and consideration. Consideration means that there must be value given by each party to the contract. While some oral contracts can be enforced, an association should only enter into contracts that are in writing. Oral contract can make enforcement more difficult in the event of a breach but may also leave critical details regarding performance of the contract in the eye of the beholder.
There are a multitude of contracts relevant to association. The most common are maintenance contracts, landscape contracts, cable bulk service agreements, building envelope/construction evaluations, construction contracts, employment contracts, attorney representation agreements, management company contracts, and association lending contracts. With the different variations of contracts, it is important each is negotiated in ways that suit the HOA community and are reviewed and discussed thoroughly by the Board.
When is legal support needed?
If a contract is for ongoing services, or for more than a few thousand dollars, it is highly recommended and encouraged that the HOA brings in an attorney to assess and review the material. There is specific terminology in every contract that can be used if a disagreement arises, which is why it is critical for an attorney to be brought in to help the Board understand the nuances that may be difficult to understand and interpret. Timing of the performance of the contract, conditions precedent to performance and association obligations within the contract should be scrutinized.
Before entering into a contract, the Board must fully understand the scope of what it addresses and demands, this includes the goods or services that are going to be offered, what the expectations are for performance under the contract, how to terminate a contract, what it will cost the association to terminate the contract, whether arbitration is required, or any other limitation on enforcing the contract, and if attorney fees are to be awarded to the prevailing party in a lawsuit. Without having a grasp on these aspects, the Board is at a vulnerable disadvantage which could cause negative legal ramifications if an issue was to present itself.
What type of contracts are commonly used?
There are numerous different types of contracts, all with their caveats. Understanding the differences and knowing what to expect before engaging with a contract is beneficial because it streamlines the revision, negotiation, and entering into phases. In general, contractors use standard form contracts, these can have provisions that may not be favorable, or even applicable, to the association. These form contracts are commonly very lengthy and can be very specific about payment, insurance, performance, and limitation of liability. Under no circumstances should the board use a bid as the construction contract. When the Board selects a bid, they should request a copy of the contract to evaluate terms.
There are also clauses within the contracts that Boards should be cognizant of. Evergreen clauses are a common pitfall, and it is critical associations understand these terms. An Evergreen Clause is an automatic renewal clause. It’s a contractual provision that operates at the end of a contract’s terms to automatically extend the term for a specified period unless one party provides notice of its intent not to renew. These time periods for notice can vary widely and be as long as 90 days, depending on the length of the original contract. Colorado passed a new law in 2022 which requires upfront and specific disclosure of these types of clauses; however, Boards should still be wary.
Finally, as fiduciaries, the Board of Directors has an obligation to enter into a contract with the best interest of the association at the forefront. Certain negative terms within a contract may outweigh the lower bid price for services and be more advantageous to the association’s needs. The association should always solicit bids from multiple sources for any contractual need and compare price and terms.
When entering into contracts, the Board needs to fully understand the contracts it enters into on behalf of the association. Questions and concerns about contracts should be discussed with legal counsel.
As a partner in Vial Fotheringham LLP, Damien M. Bielli has a unique background in HOA Law, trial advocacy, insurance defense, professional liability, coverage disputes, labor law, employment law, construction, commercial litigation, and contracts. He may be reached at Damien.Bielli@vf-law.com.
By Jason Helzer
Leadership consultant and retired Navy Seal Officer Jocko Willink, Author of the New York Times’ best-selling book “Extreme Ownership” advocates for a principle he states as “Discipline Equals Freedom.” This concept emphasizes that by developing self-discipline and adhering to a set of structured behaviors, individuals can achieve greater freedom and success in their lives. This principle also holds very true for Associations when they implement a preventative maintenance program to address the needs of the property, systems, and buildings in their communities.
Preventative maintenance is a proactive approach to keeping equipment, facilities, and buildings in good working order. By implementing such a plan, Boards can help ensure that their property is maintained in good condition, reducing the chances for expensive, extensive and inconvenient repairs.
It’s not hard to see the many scenarios where Associations - be that Condominium, Townhouse, High Rise or Single Family – greatly benefit from a disciplined approach of evaluating all of the various items that they have the responsibility for as outlined in their governing documents. Starting with a review of the Association’s reserve study is a great way to begin to make a list of all the areas that the Board should be considering.
Once that list is complete, the Board should then work with their trusted vendors to identify what a comprehensive maintenance plan would entail and start prioritizing and performing that work. This could be as simple as taking a look at the fence around the community and deciding if it needs a new coat of stain, to having the drain piping in the building scoped and jetted to prevent backups and the costly damage a backup can cause.
Below is a list of just a few of the various items that a Board should consider when looking at implementing a preventive maintenance plan.
Single Family
Townhome
Condo
High Rise
Concrete/Asphalt
Roof
Fencing
Siding
Decks
Irrigation
Windows
Playground
Mechanicals
Elevators/Mech
Fire Safety
Garage
Also, by creating and following a preventive maintenance plan, the Association is better equipped to budget more accurately for the year. Even when the time does come that something is at the end of its useful life and it needs to be replaced rather than maintained, having the discipline to follow the plan will give the Board much greater visibility of that issue sooner, and make it easier to prepare for the expense when the time comes. This may mean that there are smaller, incremental increases in annual assessments along the way, but those are vastly preferable to large unexpected special assessments that many homeowners have a hard time accommodating, especially in these uncertain financial times.
Additionally, by taking this proactive approach, Boards are able to much more effectively perform their primary fiduciary responsibility, which is to maintain and enhance the value of the properties in the Association. It goes without saying that it is easy to tell a well-maintained property just by looking at it. The care and attention are obvious.
By Andy Denker, Denver Commercial Property Services
Asphalt and or Concrete parking lots and driveways are the first interaction point a visitor or resident has with your facility. Keeping your asphalt and concrete in excellent condition starts with effective maintenance. A well-maintained property helps to attract and retain clients or homeowners.
With both asphalt and concrete cleaning, crack filling and sealing are necessary to maximize the life of the pavement.
Cleaning:
Cleaning asphalt and concrete surfaces is the most basic part of maintenance. Cleaning helps to keep the surfaces free from debris which can become hazardous and delivers a clean and appealing appearance. Due to the vehicle and foot traffic that asphalt parking lots incur daily, it is essential to conduct a periodic extensive cleaning. Cleaning enables the removal of vegetation, oil, paint, and other substances that accumulate on the surface. For concrete areas such as swales, pans, curbs, and gutters, it is best to check for obstruction or blockages and remove trash, debris, and sediment in a timely manner.
Crack filling:
Whether you have an asphalt or concrete surface, cracking is inevitable. Cracks occur over time due to the change in moisture levels in the material, which can occur with fluctuations in temperature. It is important to fill cracks as soon as they appear. If left untreated, cracks can become larger, and pavement failure, such as potholes, can occur. Approximately 75% of unsealed cracks develop into potholes within 3 years, while only 1% of sealed cracks become potholes in that same amount of time. Crack filling slows the deterioration and extends the life of the pavement surface up to 5 years. It is a low-cost protection method for cracks that are greater than 1/8 inch.
Sealing:
Sealcoating can help stop water from penetrating the asphalt, causing degradation which can lead to the formation of potholes. Additionally, sealing asphalt can improve the appearance of your surface as well as improve road safety by boosting color contrast between the pavement and road markings.
Because concrete is porous, sealing can protect the surface from weather, UV rays, and damage. Concrete parking garages are subject to weather, de-icing chemicals, thermal expansion and contraction, and more. Parking garages have an estimated life expectancy of 30-40 years, but that can be extended with good preventative maintenance, which includes applying a waterproofing traffic coating to prevent moisture from seeping into the concrete. Typically, many associations will opt for the cost-effective approach for caulking and isolated repairs. This method is only for treating visible cracks and will only extend the life for a limited time.
To extend the life of asphalt and concrete surfaces, it is recommended to seal every 2-5 years, depending on the existing conditions.
Just as it is with your health, the longer you wait to address issues the more dangerous and costly it can become. Cracks, debris, and uneven surfaces can be trip and fall hazards, leaving HOAs potentially liable for claims. Preventative maintenance for asphalt and concrete is necessary.
About the Author
Andy Denker has over 25 years of experience in the construction industry, having worked for national-ranked construction contracting companies. He leads the Asphalt and Concrete Division as Denver Commercial Property Services, a single-source provider of commercial property services across Colorado.
By Emily Schosid
Denver's goal is to eliminate carbon emissions from buildings by 2040. Buildings and homes account for 64% of Denver’s greenhouse gas emissions. Electrifying buildings and making them more energy efficient both lowers those emissions and improves the environment.
A crucial way the City reaches the zero emissions goal is through the Energize Denver ordinance. City ordinances can be hard to navigate, but knowing what parts of Energize Denver will apply to you and your building is the critical first step for your building and Denver to reach their goals. The requirements change depending on your building’s size, so knowing this will help you know what you need to do to comply. Building size is calculated by the gross square footage of the building, including common areas and individual condominium or apartment units.
Buildings 25,000 sq. ft. and larger
About 3,000 buildings in Denver are 25,000 square feet or larger. One third of those are either condominiums or apartment buildings. These buildings are required to report their annual energy data through a benchmarking report and meet a series of energy efficiency targets between now and 2030. When Denver reviews the benchmarking data each building submits, they look at the building as a whole: the sum of every individual apartment or condominium unit and any common spaces. The building owner, building manager, or HOA have a couple of options for collecting this information, but ultimately, they will have to add together the energy use from each individual unit.
The energy efficiency performance requirements work the same way. The building is required to meet a certain energy use intensity (the amount of energy used per square foot of area) by 2030. There are two interim goals the building must meet on its way to its 2030 goal: one in 2024 and one in 2027. Everyone who lives in a multifamily building must work together to help the building reach its performance target. This work can be organized by a building owner, manager, or HOA.
The City wants to see all buildings reach their performance targets. While there are penalties for buildings that do not make the required progress towards their goals, there are several alternate compliance options available, as well as target adjustments available for taking steps like electrifying a building or utilizing renewable energy sources. The City’s help desk is available to help you figure out the best compliance options for your building. Contact at energizedenver@denvergov.org.
Buildings 5,000 – 24,999 sq. ft.
There are about 6,000 commercial and multifamily buildings in Denver between 5,000 and 24,999 square feet. About a third of buildings in this category are either apartments or condominiums. These buildings are not required to submit annual benchmarking data or meet a specific energy use intensity. Instead, these buildings will be required to either upgrade at least 90% of their lighting load (measured in kilowatt-hours) to LEDs or source at least 20% of their building energy demand from renewable sources. The deadline to complete these upgrades occur between 2025 and 2027.
The City is still finalizing the rules, alternate compliance options, and technical guidance for these buildings. The City recognizes that condominiums will face unique challenges in trying to meet these requirements, and will provide updates on how you can work with the City to achieve your Energize Denver requirements. In the meantime, you can the City at energizesmallbuildings@denvergov.org.
Energize Denver Electrification Program
The final part of Energize Denver is the Electrification Program. This part of the ordinance uses the Denver Commercial Building Code to require buildings to replace gas-fired space and water heating and cooling equipment with electric alternatives at the end of the equipment’s life. These requirements apply to all commercial and multifamily buildings in Denver, regardless of their size.
Replacing heating and cooling equipment is expensive, and building managers may delay until it becomes an emergency. There are exceptions to the electrification requirements if you find yourself in an emergency, but the best course of action is for building owners, managers, and HOAs to plan ahead, rather than wait for their equipment to fail. Later this year, Denver will have financial incentives to make it easier to switch to energy efficient electrified equipment. Ultimately, Denver will be a very different city when its buildings meet their Energize Denver requirements. Making your building greener will make your tenants and residents more comfortable, help improve Denver’s air quality, and increase Denverites’ quality of life.
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