Tuesday, February 5, 2008

Back to our Housing Future: Will the old Suburbs become the new Urban Core?

A New Role for Older Community Associations?

By Tyler P. Berding

Have we reached the end of the move to the northern California suburbs that started after World War II? The gradual shift of the population from inner city San Francisco, Oakland, and San Jose to the Peninsula, San Leandro, Walnut Creek, and Concord started about then, later followed by further shifts to Antioch, Brentwood, Morgan Hill, Fairfield and even Stockton and Modesto. Similar movements could be found in Sacramento as former residents of that city moved east into the foothills and south to the Central Valley. And of course, entire new cities were created in southern California as immigrants from Los Angeles and populations from other states migrated to Orange, Ventura, and San Bernardino Counties. As the middle classes moved out, the inner cities deteriorated, often followed by an increase in lower income population, the homeless and an increase in crime.

But no one really cared because gas was cheap and California had the best system of highways in the country. Also, the Interstate Highway system begun in the late fifties and early sixties created additional four lane freeways between jobs in the inner cities and the new single family housing in more distant suburbs. Prior to 1940, the bulk of California's population lived in Los Angeles, San Diego, San Francisco, San Jose, the East Bay, and Sacramento. A lot of that housing was high density. Even single family homes were generally built close together on small lots. Everything outside of these cities was largely agricultural and rural. But when the population shift began, it was unstoppable and the new suburbs became the destinations of choice for the World War II generation and eventually their baby boomer children. Land and houses were relatively cheap, crime was low, and the lifestyle there fit their expectations and California's good weather.
Gradually, however, these commuters began to pay the price for their homes in the suburbs. Long drives to jobs in the cities, traffic tie-ups that made the trip even longer, and the cost of automobile maintenance and gasoline began to represent a higher percentage of a family's disposable income. Some jobs followed the population into the suburbs. Office parks in cities like San Ramon, Cupertino, and Walnut Creek offered the chance for companies to move where their workers lived, but commute traffic around northern (and southern) California remained heavy and one to two hour commutes from places like Stockton and Tracy or Morgan Hill, to jobs in the Bay Area were not unusual by the end of the last decade. While rapid transit, like Cal Train and BART helped to some degree, the central problem was that affordable housing was gradually getting farther and farther away from jobs.

Then came the new millennium and high oil prices and we began to see the cost of the commute rising above the average worker's ability to pay for the daily drive. Finally, the “California Golden Rule”—that housing prices would always rise—was broken last year, housing prices dropped for the first time in many years, and the wisdom of investing in homes 50 and 60 miles from a job was finally being seriously questioned.

The reason to re-develop the (old) suburbs...

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Tuesday, January 1, 2008

The Contractual Community



Community Associations are not Little Governments--They Owe Their Entire Existence to a Contract among the Owners of the Property.



Articles in this and other publications devoted to the science of community association operations and management often discuss the concept of "community association" as if it were just another subdivision of local government. It is a common perception because so much discussion about this unique housing type is devoted to questions of governance. We have boards of directors that, in some respects, appear to be like city councils. There are property managers who carry out many of the same functions as city staff. The property so governed has many of the same physical accoutrements as a town or city-streets, utilities, parking and recreation facilities...



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Thursday, December 27, 2007

Condominium Conversions: Owner Equity at Risk?


Why We Should Stop Converting Old Apartments to Condos.

Condominium conversions, a really bad idea, are here again. You don’t need statistics to tell you that condominiums converted from old apartment houses have been all the rage for several years. Just look around. Numerous apartment buildings are being sold as condominiums. We saw it twenty years ago when home prices in California experienced the same kind of super heated run-up that we’ve seen in the first part of this decade. Anything with a door and a roof sold quickly, often with multiple offers. The market has cooled now, but builders with homes to sell made a lot of money...however, the price of admission was often misrepresented. How so? If the actual reserve and operations assessments are many times more than was actually stated by the converter, the association will have to face the possibility that they will never accumulate enough money to maintain the project...

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Stealth Reserves: Tapping Unused Assessment Authority


Thinking Outside the Box...

The latest survey done by Berding & Weil and The Levy Company confirms that  the average community association reserves are only 53% funded. The result of this is that vital repairs—roof replacement, painting, repair of siding and trim, and similar work—may be either deferred or done in a substandard manner all because of lack of necessary funding...Once a problem has a repair price tag that exceeds the available cash in reserves, the board may not be able to easily solve the problem...

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Construction Defects and the Statute of Limitations

Have Changes in the Law Imperiled your Associations Right to Recover for Construction Defects?

It’s 1998. The plumbing in your association’s 5-year old condo project has started to leak. You hire a plumber who discovers that the plumbing lines are made out of imported galvanized pipe and it is corroding from within leaving pinhole leaks throughout. Further investigation reveals that this pipe was withdrawn from the market years ago because of this tendency to corrode and leak. It’s 2008. Same facts as above, except that the condominiums were built in 2003. Although your attorney files suit within a year after you discover these problems, this time the suit is dismissed by the court as being untimely filed. What happened? How can two identical suits, filed 10 years apart by two community associations succeed for one and completely fail for the other?

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Sharing the Internet in a Community Association


No existing law prevents a community association from sharing an internet connection. Of course, agreements with Internet service providers would have to be reviewed to be sure that their contract language did not conflict with the intended use, but with all of the competition among providers, it would seem that some deal could be struck that would allow the connection to be shared by neighbors. The fact is that it is probably already happening informally. How many people who use a wireless connection for their laptop, for example, find multiple networks available when they log on to their computers? In multi-family projects, many of these signals come from neighbors, and if they are not encrypted, anyone can log on to the Internet on one or more of them...

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Construction Problems and Community Association Financial Stability

With many associations surprises have become the rule, and there are no bigger surprises than those that arise from various construction problems. There are, of course the problems found early in an association’s life--those that emanate from defects in original construction. But there are others, also related to the construction of the buildings that can affect financial stability much later...

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