Page 4 - CooperatorNews Chicagoland Winter 2022

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 https://www.cai-illinois.org/events/illinois- 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