HOA Insights: Common Sense for Common Areas

076 | Keep your HOA Out of the News! Courage and Communication Matters

• Hosts: Robert Nordlund, Kevin Davis, Julie Adamen • Season 1 • Episode 76

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Learn how Ed O’Connell and his HOA narrowly avoided a catastrophe and took action for the safety of their community.
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In this episode, we sit down with Ed O’Connell to uncover how his HOA board averted a structural crisis in their 60-year-old condominium in Falls Church, Virginia. Ed walks us through how proactive management, quick decision-making, and clear communication with homeowners prevented a catastrophe like the one seen in Florida. From identifying structural issues to evacuating residents and securing funding for repairs, Ed and his team expertly navigated the situation, ensuring their HOA stayed out of the news. Tune in to hear about the importance of strong leadership, teamwork, and the strategies that allowed them to handle financial and insurance aspects effectively.

Contact Ed O'Connell: eoconnell@whitefordlaw.com

Chapters
00:00 A crises was averted thanks to the HOA 
00:50 Introduction to Ed O'Connell
04:03 How Ed’s HOA spotted a potential structural disaster
06:29 Immediate actions and evacuation of the building 
11:39 How Ed’s HOA dealt with rehousing people in his HOA 
13:14 AD Break - Community Financials 
13:56 How Ed’s HOA handled communication & coordination with owners 
21:52 How Ed’s HOA handled the financial and insurance aspects
26:52 Final outcome and future considerations

The views & opinions expressed in this program are those of the Hosts & Guests, intended to provide general education about the community association industry. The content is not intended to provide specific advice or recommendations for any individual or organization. Please seek advice from licensed professionals.

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Ed O'Connell:

They didn't think opposed to the media threat, because we didn't see any cracking, they didn't see any other levels of instability. But in light of what had happened in Florida, they weren't going to take any chances either. That's why the city came in and said, This is dangerous and unsafe. We're condemning this part of the building.

Jennifer Johnson:

HOA insights, common sense for common areas exist to help all 2 million volunteer board members nationwide have the right information at the right time to make the right decisions for their future. This podcast is sponsored by four companies that care about board members, association, insights and marketplace. Association reserves, community financials and Kevin Davis Insurance Services, you'll find links to their websites and social media in the show notes.

Robert Nordlund:

Welcome back to Hoa insights, common sense for common areas. I'm Robert Nordlund, and I'm here today for episode 76 with a special guest to talk about how a board at a 60 year old condominium association in Virginia detected and avoided tragedy at their association. I heard this story at the CAI conference in May in Las Vegas, and wanted to share this story with our board member podcast audience so you can learn some lessons from what the Board did for that property. Well. I hope you enjoyed last week's episode number 75 with regular co host Kevin Davis, with more wise counsel and insights about how to manage insurance issues successfully at your association. If you missed that episode or any other prior episode, you can find them on our podcast website, Hoa insights.org, on your favorite podcast platform or on our YouTube channel, but better yet, subscribe to the podcast in order to get every episode delivered right to your phone or mobile device. Well, those of you watching on YouTube can see the custom mug I have here that I got from our merch store, which you can browse through from our HOA insights.org website, or you can find that merch store in the show notes, you'll find that we have some specialty items, like this mug and some free board member zoom backgrounds. And as a treat, I'll give this mug away. I'll put it back in its box to the 10th person to email podcast@reservestudy.com mentioning episode 76 mug giveaway or something close to that. Well, we enjoy hearing from you, and most episodes we're doing in response to a topic that you've recommended. So stay in contact. Leave us a voicemail at 805-203-3130, leave a comment on one of the YouTube videos or send us an email at podcast@reservestudy.com but to today's episode. Ed O'Connell is a partner at Whiteford law in Falls Church, Virginia, and is co chair of the firm's business department and the community associations section. He's also a fellow in CAI, prestigious college of community association lawyers and Ed caught my attention earlier this year when he was on a panel discussing an older high rise association where significant deterioration was caught and repaired before it caused a tragedy. It is part of the team responsible for keeping deterioration at the Madison, a 100 unit, 60 year old, six story condo association in Falls Church Virginia, from becoming national news Ed's legal counsel for the association, and he had a first hand view to what happened when significant structural cracking in the pillars in the front of the building and in the walls of the basement became evident in late 2022 and remember that date, what was happening in the community association world in 2022 in response to what happened in 2021 in Florida anyway, so Ed, welcome to the program.

Ed O'Connell:

Robert, thank you for having me. As you mentioned, Whiteford serves as the outside counsel for the condominium association, and I've been working with the Madison since about 1999 so I've had a long tenure with that. What happened was, fortunately, we had a very observant property manager who was taking a walk to the property, and in front of the building is a breezeway over which 10 units are located. It's supported by 12 steel column steel beams, if you will. They're encased in concrete. As he was doing his property walk through, he noticed some spalling or some cracking at the base of the cement columns where they met the ground level, which, which caused attention. And everyone, as you mentioned, was hyper, becoming more hyper observant, if you will, about these sort of things. So we bought in an engineering team to take a look at it. Let

Robert Nordlund:

me. Let me stop you there. Okay, go ahead. Just to remind. Nine everyone, June, 24 2021, so the prior year, champing tower South falls and so people are getting a little sensitive about cracking and things of the building. So when does a minor crack become a significant crack? Or is that exactly what the manager was trying to determine.

Ed O'Connell:

That's exactly what the manager was trying to determine, Okay, we're talking spalling, probably about the size of my thumb. Not much there, but it was enough to intrigue him to look into it further. He noticed it over the summer. He called an engine, an engineering firm. They came in and started to look at the latter in September, they're saying, they're getting the plans together, they're looking at things. And say, we need to do some destructive testing of you. We need to take a look what's behind the concrete. So they range for this to happen in October, october 22 when they start, they bought it. They bought in a subcontractor to do the work for them, and all of a sudden they start, they remove the concrete on two of the 12 pillars, and they see holes in the steel beams. About one was the size of about a baseball. Another was slightly smaller, but enough to catch your attention. There shouldn't be holes in steel beams. No. That caused an immediate reaction by the engineering team and the management team. They got the city of Falls Church out there to take a look at it, and the city of Falls Church decided that we're going to order an immediate evacuation of the units located above the breezeway area. Those are 10 residential units up there to the point where they were posing. Goes to condemnation. Signs dangerous and unsafe. This caught people off guard, as you can well imagine.

Robert Nordlund:

Okay, yeah, let's slow it down. We've been talking about the manager. Manager was curious. We like curious. We like someone who cares, and who says, Okay, I don't know. I see some cracks. They look like no big deal. But had the courage to hire someone to spend some association money. Now is that, when the board members started to get involved, to approve the expense and to keep them in the loop. How did Yes, okay, so

Ed O'Connell:

he advised him at the manager advise the September meeting, what he was doing. We're bringing his engineering team in to take a look at it, and let's see what's going on there. And what was nice is we, the management team, had a very good working relationship with the board. The board trusted the manager. He had a fair amount of experience. He had handled other construction related or repair related issues in the building. Real quick

Robert Nordlund:

question, you said that you'd been there for a long time. How long had the manager been there to develop that trusting relationship with the

Ed O'Connell:

board? The the current management team has been there since 2007

Robert Nordlund:

2008 got it.

Ed O'Connell:

The manager in question had been there for four years on the property, and then he moved to do the portfolio position. But he had oversight over the property, so he stayed with the property. Got it. So he got a working relationship with the board. They get the consent for the expense. They go for they'd hire the engineers they might think. Except the August meeting. Forgive me, because work with them in September. Initially, they're going through the process, and we then, once we find out what's going happening, we, of course, are calling the 22nd we called an emergency meeting of the Board of Directors. This is where we got in from a standpoint of working with management and the board, what the next steps would be, in light of, first, the condemnation of the 10 units, and was there an immediate safety issue? And of course, no one could answer that question. What the engineers did opine was this had happened over time. It's the way the building was constructed back in the 1960s concrete encasement was at the ground level. It's now above that to prohibit this from exactly happening, okay, but it was fine at the time, and so they didn't think he posted immediate threat, because we didn't see any clacking. They didn't see any other levels of instability. But in light of what had happened in Florida, they weren't going to take any chances either. That's where the city came in and said, This is dangerous and I'm safe. We're condemning this part of the building. How

Robert Nordlund:

long did it take that process? Because seemed like like you were saying it was gradual deterioration. So they saw crack in August. It had probably been developing for months, if not years, and so that's a nice, gradual thing. But then all of a sudden the engineer says, Hey, you got to see this. And takes pictures, and they get the city involved. How quickly was that hours? Or was that days?

Ed O'Connell:

That was ours? I Yeah. What? Say we removed the concrete. They observed the situation on two of the 12 pillars. They decided immediate action was required.

Robert Nordlund:

Did they even? They didn't even take the time to go to 10 more. They realized we got enough of a problem here.

Ed O'Connell:

We enough of the problem here. We don't know what's happening, so we need to develop a plan. But right now, step one is to make sure there's not an immediate safety issue along those lines. And the first step was to condemn and make sure no one entered those 10 units located in those two tiers above the breezeway.

Robert Nordlund:

Okay, so this is kind of pandemic time. So were there people living at home, working at home, totally unaware of what was happening below them.

Ed O'Connell:

They weren't. They were completely caught off guard. And matter of fact, I think it was three or four of the units, they weren't even home at the time. So when they came back, they found their units working down, but they couldn't get to medication, they couldn't get to computers, they couldn't get to anything, because the city said absolutely not, which meant we had to put in place a Firewatch, meaning for the next for over a period of about six months, we had two people on the property, 20 24/7 making sure that no one entered those units, because we had people trying to get into the units to get stuff. You know, we don't believe this is a problem. We went back to the city, and the city said, No, once the units are condemned until an engineer tells us it's clear for us safe for you to go back in. You're not going back in those units. That was one of the issues we learned to deal with over the next six months. Is working with the owners of those 10 units very closely. Yeah.

Robert Nordlund:

Now I'm just sitting here. I got one set of clothes on. If someone told me I couldn't go back to my closet, my bedroom, my refrigerator, I would be incredibly unsettled. And that's just a normal human dynamic. So how did that go? It didn't

Ed O'Connell:

go well at first. First, people were in shock. Then they realized they had to find another place to stay. Fortunately, some had friends or relatives they could start with, but eventually they had to get temporary housing. And one of these we had to work with was their insurance companies, because the condominiums insurance doesn't cover displacement or loss of use, so they had to find make alternative arrangements for housing for approximately six months until the it was all clear, go back into the units.

Robert Nordlund:

Well, now we know. And that's a, I guess, a spoiler alert, it was six months, which is, I think is incredible for what they were able to do, but at that point in time, all they knew was, you can't go back in and they didn't know if it was going to be years correct.

Ed O'Connell:

We didn't know. And that was a question we would get once a week. When can we go back? When can we go back? The first interesting, oh, show if it's only the two pillars, it shouldn't be that issue. But after going through six weeks of that, we finally can reach the conclusion. Stop giving estimates right now until we know you can go back. The answer is, we don't know, but we're not going to give a guesstimate. Andres, yeah, well, this is

Robert Nordlund:

absolutely fascinating. I've got a follow up question, but let's take a quick break to hear from one of our generous sponsors, and after that, we'll be right back with more HOA insights on the Madison.

Russell Munz:

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Robert Nordlund:

and we're back Ed. Let's follow up on that. You were talking about the communication, how they kept people posted. Can you follow up on that and tell people exactly what happened? Certainly.

Ed O'Connell:

Well, one thing they had at the same time as they were transitioning between two site managers, the board realized how important communication was going to be. They had a portfolio manager working with the board, but she also had other properties as well. So what the board came to a conclusion working with management was they were going to hire a dedicated person from the management company. His sole role was to be the Project Coordinator. He was going to handle all communications with the owners, with the board, with the instruction team, the engineering team. It was going to be in place. And one of these we started with almost immediately was having at least a weekly communication, if not further communication, with an email blast out to the community, as well as being posted on their internal communication system so that everyone knew what was going on with real time information that helped alleviate a lot of concerns and made things easier to deal with. The coordinator and I would meet once a week over those communications just to make sure. Uh, they were factually correct. They weren't saying anything they weren't supposed to be saying. And we also allowed them owners to send him questions. Okay? And we follow up in the communications along those lines. We post the question with a response to it, so that everyone saw what was being asked, so they weren't repeating questions easier.

Robert Nordlund:

So it was partially news and partially Q A Correct. I like that

Ed O'Connell:

the court date would also attend every board meeting which we which treated as open meetings, and Virginia has some strict requirements, but we, we dedicated a part of every board meeting to the ongoing matter, where people could discuss the project, ask questions, share their comments and concerns, and the board increased the number of meetings it held as things developed through the project. So when there was real time information, they didn't wait for their monthly board meeting. They were scheduling special board meeting from time to time to share that information, allow them to ask questions. At times, we had the engineers come to those meetings. The idea was to communicate as much as we could about the situation so people understood what things were, and we focused more closely on the the tenant owners, the owners the 10 units that had been condepped to make sure that they had a flow of information. We worked with their insurance providers. We provided communications. We shared information on a real time basis with them. We didn't go through the books and records. Is that information came available? We just made it available to them.

Robert Nordlund:

Yeah, fantastic. Okay, we've talked about personnel. So there was a Firewatch person in addition or two people, I guess, in addition to construction types, engineers, construction types, architects, I want to say the project types. They added a administration position to help with communication. So I'm, you know, I'm going to follow up with some budget questions, but let's talk about the human factors. We're talking about board members who had been serving normal board member duties and once a month meetings, and all of a sudden, the workload for them has risen incredibly How did they forge forward? How did they do they

Ed O'Connell:

did very well. They came together as a team. They realized they did not have all the answers, and they let others know that, but they would tell them, they would also follow up and get the answers they needed. We kept some controls on the meeting, because people, at times, would get very upset, and we just asked them to remind we would remind them, both the management team and I would if they're unpaid volunteers living in this building, they're trying to help get this project going forward. They're doing everything possible that they can. They're making some very important decisions. Some of those were, for example, one was hiring the Project Coordinator. Another was treating this as an emergency situation. So we we did not go through the normal bidding process. We worked with engineers that we knew, and they worked with companies that they knew to find good, competitive prices from those sole providers. So we sole sourced it, but the pricing structure turned was was very competitive. It was so complicated by covid To a certain extent the pandemic, because building materials were in short supply in some cases. So it took a while to get some of the repair parts for the for the steel beams,

Robert Nordlund:

right. That's that's when we learned the term supply chain correct.

Ed O'Connell:

And we went through that process. We we spent a lot of time explaining things too with community temporary shoring. So essentially, what they did was, for each of the 12 pillars, they put in steel temporary shoring so they could cut the bottom of the damaged steel beam out and do whatever work they needed to be done, right? So educated our owners intensly would show them everything there. We let them go in the area, because it was a condemned area. But we took videos, we provided photographs, we explained step by step what was going on. Those weren't the board meetings into the weekly communications, but the idea was any owner who wanted to know something, even a resident who was not an owner, since they were living in the building, we shared that information with them. We did not hide anything from them with respect to what was going on from a construction standpoint, from an engineering standpoint, from dealing with the city, and the city was a good part in the process too. They would expedite permits through the process to get them done, to make sure they were comfortable with this. Our engineers had full contact with them when they needed it, because no one wanted to see the building come down. Yeah,

Robert Nordlund:

that that happened in Florida, and no wants it. Nobody wants it in their backyard. I just want to bring out what you mentioned, and that issue of transparency. When there's an absence of information, it seems like people tend to make up their own narrative, their own story about what might be going on. And when you are covering the issue with regular communication, and you're providing, I was wondering if you had a live webcam that people could tune into to watch the process, but to have pictures and videos and say, Tomorrow, at 10am we're going to cut column number one and install a replacement. You know, I gain confidence knowing that. Okay. Okay, tomorrow they're going to do number one. The day after, they're going to do number two. It sounds like the board was doing everything in their power to be clear make sure no one's worried. On that note, were the 90 100 unit Association 10 above the area in question? Were the other 90 people ever nervous that the building was going to fall in the middle of the night when they were sleeping, hopefully peacefully?

Ed O'Connell:

No, they weren't concerned, because we did a walk throughs to the building you'd mentioned at the beginning that we saw we had a crack somewhere in the foundation. We had to take a look at that, and the engineers concluded that was cosmetic in nature. So we wanted we let owners know that we checked out the entire building. We did a walk that we just when the main focus was the breezeway area, that section of the building. We still check the rest of the building along those lines. And what had been helpful for us is we had good maintenance records for the building, so they had been paying attention to certain things. They knew how the tears were structured, because it hadn't been an aging building. And the board of this board, in the prior boards, over the past 10 or 15 years, had made a focus on maintaining the integrity of the building and the look of the building. Because of its location, they realized newer buildings were going in place, so they wanted to make sure that this building remained a good, viable option for people seeking a unit in Falls Church, Virginia,

Robert Nordlund:

Right? Which is market value, which is what we pay the mortgage to do. So, okay, so it's a great building, and a great location had been there for a long time, serving people. Well, I can imagine it was, I almost want to say, a pillar in the community, a known building, a good building, sounds like they had stable legal representation, stable management, all good things. The board responded quickly. More Good Things. Let's turn the subject to budget. How did the board, how'd they choose to afford this? How they make these projects happen the news, the staffing, yeah, tell me about the budget.

Ed O'Connell:

They were very fortunate in the sense that the reserves were well funded. Because being a six year old building, they knew they had some proxies upcoming, an elevator project, for example, a roofing project, some other big projects they were going to have to take care of. And this, of course, was an unplanned, unexpected project, right? They did do at that point in time is they deferred one of the projects because they could. It was scheduled for 2023, and they just took funds from the reserves to pay for it. And I'm going to give you a round number. It's not exactly what it was, a million dollars specs. So they spent a million dollars between engineering, repairs, Firewatch, the whole nine yards. So, so the whole project cost a million dollars. They got through it. They had the funds available there. But then they ran into a bit of a hiccup in the summer of 2023 in that they've just spent a million dollars that they have all these projects coming up, right? They've somewhat depleted their reserves. They've depleted the reserves. They spend a million dollars they hadn't planned to have spent, yep. So looking at their finances, they decided they had two options. One was to do a special assessment. It would be a large special assessment on 100 owners take a million dollars. Just do the math,

Unknown:

it's 10 grand, yeah,

Ed O'Connell:

or they could get a bank loan. They suck bids from banks. They finally got it down to three banks, and they interviewed them, and what they did was they made, they reached what they thought was the best bank to work with. So they had to go back to the hour so because to borrow funds that required membership approval, okay? And what they did was they presented two budgets to them. We can do this one of two ways. We can do a special assessment, which is going to cost you x, or we can do a bank loan, which are still going to be increases, but it'll give us more time to deal with it. They presented the full budgets to the owners. They call this special meeting and said, I need, we need a decision from you and the member and the owners decided we'll do the bank loan. Was

Robert Nordlund:

that the close vote, or was that the landslide? Or do you recall it

Ed O'Connell:

was a relatively close vote? A number of the investor owners, in particular, I can do either or if so they think long term, the loan is going to cost them slightly more because you're paying interest over right, a seven month period. But they also recognized this is what the members decided. So they went forward along those lines, and they put that into place. And what that did is basically got a loan for the project they just completed on the building repairs of the million dollars, and then that gave them the funds to move forward with the other projects. Right, scheduled for 2425 and another for 26 right,

Robert Nordlund:

basically supplement or re replenish the reserves that they had spent. But the

Ed O'Connell:

key they learned from the building project was the amount of information you need to share with the owners. Let them. Make the informed decision. So it wasn't they gave them full detailed budgets. They showed them the finances. They showed them how they arrived, those numbers, and they let the members, the owners, make an informed decision. And that was very important. They were included in the process. So that's how they financed the project. Go

Robert Nordlund:

ahead, I was gonna say a couple things there. Another C word I'm sensitive to that is choice. You treated you, they you and the board treated the owners as grown ups, and said, we can choose A or B. It's not clear. And that whole issue, again, of transparency that we are looking into this, involving them, and communication. So many good things that this board did.

Ed O'Connell:

We're very, very fortunate. One of the more difficult issues they had to deal with was insurance, because number of auditors were asking, Why isn't our insurance company covering this? Well, the way the policies were written in many of these policies are written this way. If it's it, if the building had collapsed, then it would have been an insurance claim. But if it's what I'm going to call a near collapse, it hasn't collapsed, it's a maintenance or repair issue, and that's not typically covered by insurance. So that was part of our communication with the or with the elders, letting out explain the difference between a casualty versus a maintenance repair issue, okay? And ultimately that was determined to be a maintenance repair issue that just incurred over a very long period of time.

Robert Nordlund:

Yeah, it was gradual deterioration of those columns over 50 some years.

Ed O'Connell:

The upside to this was the building looks great now. Maybe the best the steel Pierce in a manner that was, um, that meets curb building codes. So this, this should be good for another 50 years, and

Robert Nordlund:

that'll be another another story for another day. Hey, tell me about home values.

Ed O'Connell:

Unit owned values have continued to increase the market low competitive with other condominium units in the area, so it hasn't been impacted in any way, shape or form, by this incident. Again,

Robert Nordlund:

that's absolutely fantastic, because they they took a punch right to the face, and they responded. They communicated effectively. And a key word you said early was they treated it as an emergency timeliness. It's important, let's not massage this question. Let's not mull over this question. Let's get this done now. And you were talking about same day, you were talking about good communication between the project management staff and the city and all these kinds of things. And I just think there's so many instances of things done well. So I just want to praise this board for the things that they did well. I want to thank you, Ed for taking the time to join us on today's program. I want to thank you for being part of the team at the Madison that prevented that property from becoming national news. Do you have any closing thoughts to add at this time?

Ed O'Connell:

The only I would say is you've talked about it already, is communication. That was the key, working with the owners, listening to the owners, making sure that they stayed involved and were as involved as they could be. And that was that made, that made a big difference. Looking back on the project,

Robert Nordlund:

lucky to have that the Madison was lucky to have you on the team, lucky to have that board, consistent management entity, there a lot of good things came together, and we're just happy. I'm just happy to have heard this story and be able to share this story again to our audience. If you have some questions you want to follow up with Ed, you can reach them at E O'Connell, that's e, O, C, O, N, N, E, L, L, at Whiteford law.com and we hope you learned some HOA insights from our discussion today that helps you bring common sense to your common areas. And we look forward to having you join us for another great episode next week.

Jennifer Johnson:

You've been listening to Hoa insights, common sense for common areas. You can listen to the show on our podcast website, hoe insights.org, or subscribe on any of the most popular podcast platforms. You can also watch the show on our YouTube channel. Check the show notes for helpful links. If you like the show and want to support the work we do. You can do so in a number of ways. The most important thing that you can do is engage in the conversation. Leave a question in the comments section on our YouTube videos. You can also email your questions or voice memos to podcast@reservestudy.com or leave us a voicemail at 805-203-3130, if you gain any insights from the show, please do us a HUGE favor by sharing the show with other board members that you know. You can also support us by supporting the brands that support this program. Please remember that the views and opinions expressed by the podcast do not constitute legal advice. It want to console your own. Legal counsel before making any important decisions. Finally, this podcast was expertly mixed and mastered by stoke light, video and marketing with stoke light on your team, you'll reach more customers with marketing expertise that inspires action. See the show notes to connect with stoke light

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Robert Nordlund, PE, RS

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Julie Adamen

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Kevin Davis, CIRMS

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