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Legislative advisory council hears earfuls of condo woes
7-Oct-08 – Bad developers, bad condo boards, fines, floods, fraud, mold, inadequate assessments, problems collecting assessments, misuse of assessment funds, two-year construction delays, property foreclosures, and shoddy construction. The seven members of the Condominium Advisory Council heard nearly two hours of testimony about these issues during their fifth and final public hearing October 6. About 30 people attended the hearing on the campus of Illinois Institute of Technology, and roughly half of them spoke before the council.
Besides Osterman, council members include one other state representative, two state senators, two veterans of condo boards, and one attorney who specializes in condominium, townhome and homeowner associations. Also listening in were two additional state representatives and 3rd Ward Alderman Pat Dowell. Jordan I. Shifrin, an attorney with Kovitz Shifrin Nesbit, who is chairman of the council, says they are not necessarily looking to overhaul the Illinois Condominium Property Act, first adopted in 1963 and revised in 1978 and 1983. “We’re trying to figure out what’s broken and what needs to be fixed.” Sen. Mattie Hunter (Democrat, 3rd District), who says her district has the most condominiums in the state, says she gets “so many complaints” about condo issues. While there is no shortage of complaints, there are not many places to which a condo owner can complain. “There are state statutes but nothing to enforce it,” says Shifrin. “There is only one alternative, and that’s to go hire a private attorney. There should be a place perhaps to have minor disputes resolved without having to go to court – like a state ombudsman, similar to what they created in Florida. We’ve heard about abusive problems from developers. We’ve heard about board abuses. We’ve heard about homeowner abuses of boards. And we’re going to compile all this.” Most of the problems described at the hearing were related to developer turnover of a property to a condominium association – particularly in the South Loop. Said Bill Van Emberg of Prairie District Neighborhood Alliance, “There’s not a single building in the entire South Loop that I’m aware of that has not had some significant developer issue.” Shifrin blames the economy. In the early part of the decade, he explains, much investment capital went into real estate. “So anybody who had a brother-in-law who had an idea could do a development, and what happened was a lot of people who were unqualified – financially and intellectually – were converting everything under the sun into condos.” This resulted in a lot of construction that was affordable but shoddy. The 896-unit gorilla in the room With developer turnover of the residential towers occurring more than 30 years ago, it’s less of an issue at Marina City. But residents did attend to complain about the board of directors of Marina Towers Condominium Association. Owner Mark Ulaszek, a former MTCA board member and treasurer who has lived at Marina City for 15 years and operates the residential blog Marina Watch Dog Sound Off, expressed frustration of owners at Marina City about what he called the MTCA board’s lack of transparency. “I know when I was on the board, our board meetings would last two to three hours, minimum. Their board meetings last 20 minutes. They don’t take any votes. When I ask how come [a resolution] wasn’t voted in open session, the answer I get is, ‘Oh, that was done by unanimous consent.’” Ulaszek described for the council difficulty he and others have had obtaining MTCA financial records. “I’m on the finance committee. I can’t get a current copy of balance sheets. I get a letter from our attorney that says you haven’t given a proper purpose.” Some condo boards abuse power, mismanage money Speaking with Marina City Online after the hearing, Shifrin says the worst problems with condo boards are when they do not provide proper financial accountability. “They’re not collecting assessments. They’re not paying what they’re supposed to pay. They use the money that they’re controlling to fund developer capital improvements. They don’t set aside enough to set up and fund reserves. Even when people put in two or three months of assessments, they use that for [operating] shortfalls. And then they walk away.” This, he says, results in increased assessments. While he has clients that are dedicated to their property and increasing its value, Shifrin says he also sees many condo boards that abuse their position. “If the motivation…to serve on the board of directors [is] because it’s a personal power trip for you, you have a crappy job and this makes you feel important,” you may not be cut out to be on a condo board. “Do you like abusing people or are you doing it because you really give a damn about your investment?” “Do I have boards that are despicable? Absolutely. And should all those people be tossed out on their ear? Yeah. Because everything they’re doing is either self-serving or vindictive.” Shifrin has advice for residents of Marina City – organize and hire a good attorney.
Council will now summon lawyers The advisory council will next seek input from real estate attorneys, then compile what they’ve learned and prepare a report for the legislature. “We don’t have any power, we’re just a recommending body,” says Shifrin. “So what we’re going to do is compile all the things we heard from everybody and shift out some of the things that are a little off-base, or crackpot, or too self-serving – [just] deal with more global issues.” Anyone who missed the public hearings can still submit comments. Rep. Osterman may be reached by email at hjo17@aol.com. Sen. Mattie Hunter may be reached at senatorhunter03@sbcglobal.net. And Jordan Shifrin at jshifrin@ksnlaw.com.
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