Page 4 - CooperatorNews Chicagoland Winter 2022
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4 COOPERATORNEWS CHICAGOLAND   —WINTER 2022  CHICAGO.COOPERATORNEWS.COM  Industry Pulse  Industry News  CAI Issues Condo Safety Policy Report  In the aftermath of the tragic partial col-  lapse of Champlain Towers South condomin-  ium in Surfside, Florida, in late June 2021, the   Community Associations Institute (CAI) re-  leased its Condominium Safety Public Policy   Report. This report shows the outcome of the   task forces CAI convened shortly after the   June 24 condominium collapse to recom-  mend changes to laws and best practices for   the  community  association  housing  model   that may help both communities and legisla-  tors better address building safety.   The international organization for edu-  cation, governance, and management of   condominiums, housing cooperatives, and   homeowners associations brought together   a wide range of stakeholders—condominium   and  co-op  board  members,  homeowners,   community managers, attorneys, bankers,   developers, insurance professionals, engi-  neers, and reserve study providers, to name   a few. Over a three-month period, this co-  hort of more than 600 people participated   in CAI’s process of identifying clear recom-  mendations through conversations, surveys,   research, and interviews.   In a press release, CAI said it also conduct-  ed outreach to organizations to help inform   the policy recommendations, including the   National League of Cities, National Society of   Professional Engineers, National Association   of Counties, Building Owners and Manag-  ers Association, International Code Council,   Building Inspectors Association, American   Property and Casualty Association, Ameri-  can Society of Civil Engineers, and National   Association of Housing Cooperatives. This   ongoing collaboration with key partners will   continue to make buildings safer.   “Following the Champlain Towers South   condominium collapse, board members and   community managers have been concerned   about building safety,” says Mitch Frumkin,   a CAI-designated Reserve Specialist and a   licensed professional engineer. “In the news   they are hearing terms like ‘structural evalu-  ations,’ ‘maintenance,’ and ‘reserve study’ and   are searching for answers and ways to protect   their communities. As we continue to create   education and best practices, CAI’s new Con-  do Safety Public Policy Report is a valuable   resource filled with policy recommendations   for condo residents, community association   stakeholders, and legislators.”   The Condominium Safety Public Policy   Report provides  extensive  policy  positions   and recommendations in the following areas:   • Reserve studies and funding: Among   the recommendations are mandates on re-  sponsible timing and transparency of reserve   studies, as well as fiscally prudent mandates   on reserves funding and assessments.  • Building maintenance and structural in-  tegrity: Recommendations include mandated   timing of periodic building inspections based   on the building’s age, with full disclosure to   appropriate parties, and association budget   recommendations.  • Federal solutions and priority recom-  mendations: This includes various grants,   loans, and tax reductions designed to mini-  mize the financial burden of local communi-  ties and individual owners regarding struc-  tural inspections and corrective measures.   “After the Champlain Towers South col-  lapse, we knew that CAI had a responsibil-  ity to lead the conversation to address con-  dominium safety,” says  CAI CEO Thomas   M. Skiba. “We are incredibly grateful for the   contributions of hundreds of our U.S. and in-  ternational members—representing critical   housing-related industries who came togeth-  er and offered their knowledge and expertise.   CAI has made a commitment to honor the   lives lost in this terrible tragedy by working   to respond in a way that strengthens condo-  minium safety. This is the first of many steps   to come.”  Events  State Hosts Virtual Advocacy Days  The Illinois chapter of the Community   Associations Institute (CAI-IL) invites its   members to the Illinois State Advocacy Days,   which will be held on Zoom. The House por-  tion will take place on February 10, 2022, at   10 a.m., and the Senate portion will be on   March 3, 2022, at 10 a.m.  During these virtual advocacy days, par-  ticipants can meet their state legislators and   express issues in their communities. The an-  nouncement encourages community associ-  ation advocates to attend, noting the number   of officials who have shown interest in par-  ticipating in the Advocacy Days to listen and   respond to members of CAI-IL.   “When it comes to community asso-  ciations in Illinois,” says the announcement,   “your voice is the only way our elected offi-  cials will hear what our communities need!”   For more information or to register, go to  state-advocacy-days-house-of-representa-  tives.  Finance  Fannie Mae Issues New Lending    Guidelines  Loop North News   reports that new Fannie   Mae lending guidelines applicable to condos   and co-ops will affect much of Chicago’s ag-  ing housing stock. The new guidelines went   into effect January 1, 2022.   Also in response to the tragic collapse of   the Champlain Towers South condominium   in Surfside, Florida this past June, reports the   outlet, the government-sponsored enterprise   (GRE) Federal National Mortgage Associa-  tion,  otherwise  known  as  Fannie  Mae,  has   tightened its lending standards for condo and   co-op projects that contain five or more at-  tached units, regardless of the type of project   review or review waiver.  Such  condo  and  co-op  buildings  with   significant deferred maintenance, or those   that have received a directive from a regula-  tory authority or inspection agency to make   repairs due to unsafe conditions, will not be   eligible for loan purchases by Fannie Mae.   (Fannie Mae purchases residential loans from   lenders to facilitate the flow of capital into the   housing market by issuing and guaranteeing   mortgage-related securities.)  These  projects  will  remain  ineligible  for   Fannie Mae-backed loans until the required   repairs have been made and documented.   Acceptable documentation may include a   satisfactory engineering or inspection report,   certificate of occupancy, or other substan-  tially similar documentation that shows the   repairs have been completed safely and with   structural integrity.  The new guidelines do not apply to routine   maintenance or repairs that a homeowners’ as-  sociation (HOA), condo association, or co-op   corporation undertakes to maintain or pre-  serve the integrity and condition of its proper-  ty, the outlet notes. Also, if damage or deferred   maintenance is isolated to one or a few units   and does not affect the overall safety, sound-  ness, structural integrity, or habitability of the   improvements, then the new project eligibility   requirements do not apply.  The guidelines, which will remain in ef-  fect until further notice, cover mortgages   purchased in 2022 and loans delivered into   mortgage-backed security (MBS) pools with   issue dates on or after January 1, 2022.  In a memorandum to the country’s lend-  ers and appraisers, Fannie Mae says, “Our   condo and co-op project standards policies   are designed to support the ongoing viabil-  ity of condo and co-op projects nationwide.   … \[A\]ging infrastructure and significant de-  ferred maintenance \[in high-rise buildings\] is   a growing concern across the nation. This con-  cern is expected to increase over the next de-  cade because the majority of residential condo   and co-op buildings were built more than 20   years ago. Lenders and other industry stake-  holders have asked for clear guidance on how   to manage emerging risk related to these aging   residential projects.”  According to   Loop North News,   analysts say   the  tougher  restrictions  could  have  a  major   impact on the sale and purchase of condos and   co-ops in Chicago. Many lakefront high-rises   date back to the 1950s and 1960s, and some   co-ops were built in the 1920s. Those that have   deferred maintenance issues may not qualify   for Fannie Mae-backed mortgages.  Real Estate  Seller’s Market Continues in Chicago  The Real Deal   reports that 2022 is shap-  ing up to be a continuation of the “frenetic”   housing market the Windy City experienced   in 2021.  During a cold weekend in January, two of   three homes that had open houses were in   contract by that Monday, according to Cold-  well Banker agent Anne DuBray in Glenview.   John Grafft of Compass tells   Crain’s   that a   one-hour open house at a new 11-unit condo   building in Lakeview had about 100 people   show up.   “It’s crazy out there,” DuBray told   Crain’s.  The third open house “is probably only a day   behind” the other two.  TRD   speculates that the frenzy is at least   partially due to an impending rise in interest   rates. Before the Fed raises rates again, pro-  spective buyers are hitting the pavement en   masse—even if sellers are not yet ready, notes   the outlet.   In the first week of 2022, says   TRD  , ap-  proximately 4,100 homes came on the mar-  ket in Chicago, down from the 5,350 available   in 2021’s first week.  While 44% of agents surveyed by Com-  pass expect inventory to improve, many say   2022 will still favor sellers over buyers, ac-  cording to   TRD.  “You have to pounce when a good new   listing comes on the market,” Brian Pistorius   of Berkshire Hathaway HomeServices told   Crain’s.   About 37 families came to his week-  end open houses in Logan Square, he said.   “In this weather, we’d usually be lucky to get   five or six.”  Development  4500 Block of Clark Street Getting 100+   New Units  Four developments—two ground-up   projects and two redevelopments—are begin-  ning construction this year on the 4500 block   of Clark Street in Uptown, reports   Block Club   Chicago.   The four buildings—two rentals and   two condos—will add more than 100 units to   blocks between Sunnyside and  Wilson Av-  enues, which   Block Club   characterizes as “a   sleepy stretch of single-story retail buildings.”  A mixed-use building with 14 condos,   ground-floor commercial space, 15 parking   spots, and a rooftop deck is coming to 4537   N. Clark St., reports   Block  Club  . Longford   Design + Construction demolished a retail   strip on the site last summer in preparation   for  its  four-story  building,  which  is  being   constructed under the property’s existing   zoning after three previous efforts to rezone   and build more dense projects on the site   failed.   Block Club   notes that a building per-  mit has been applied for but not yet issued,   PULSE  continued on page 15

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