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posted: 8/19/2017 6:00 AM

When do budgeted increases require owner vote

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Q. I have a question about Section 1-45(c) of the Common Interest Community Association Act. It states: "If an adopted budget or any separate assessment adopted by the board would result in the sum of all regular and separate assessments payable in the current fiscal year exceeding 115 percent of the sum of all regular and separate assessments payable during the preceding fiscal year, the common interest community association, upon written petition by members with 20 percent of the votes of the association delivered to the board within 14 days of the board action, shall call a meeting of the members within 30 days of the date of delivery of the petition to consider the budget or separate assessment." Can you provide an example of how this works?

A. Sure, but keep in mind this is coming from an attorney and not an accountant, so check my math!

Let's suppose that in 2016 the ABC Association regular assessments were $650,000, and there was a special assessment of $50,000, for total regular and special assessments of $700,000 levied in 2016. In 2017, the ABC Association regular assessments are $798,000, and the board is adopting a $60,000 special assessment.

The year 2017 regular assessment adopted by the board of $798,000 is 114 percent of the total 2016 regular and special assessments of $700,000 for ABC Association, so the regular assessment increase for 2017 was not subject to the potential owner petition and vote. However, the 2017 special assessment of $60,000 would be subject to the potential owner petition and vote. That is because the total 2017 regular assessment of $798,000 and the proposed 2017 special assessment of $60,000 together would be $858,000 and that sum exceeds the total regular and special assessment of $700,000 for 2016 by more than 115 percent; it's about 122 percent of the 2016 regular and special assessments.

The total regular and special assessments the board could adopt for 2017 without triggering the unit owner vote/petition would be $805,000. This sum is exactly 115 percent of the total regular and special assessments for 2016. So, the law permits an increase, year over year, in regular and special assessment of 15 percent without triggering the unit owner petition/vote. Note that entire amount of the multiyear assessment is deemed considered and authorized in the first fiscal year in which the assessment is approved for purposes of making these calculations.

There is similar language in the Illinois Condominium Property Act.

Q. Crime around our association is on the increase. The board is considering installing fake, "dummy" video surveillance cameras, and posting signs that state that the area is under video surveillance. In reality, it won't be. Does this create an issue for the association?

A. There is going to be some degree of exposure to the association if "fake" surveillance cameras are installed when there is no camera in operation, as the cameras and the sign leave the impression that a crime would be captured.

If a crime occurs in an area where a person felt secure due to the supposed existence of the surveillance camera, the association is at risk for creating the false sense of security. The association here should consider installing actual surveillance cameras, and maintain them in working order. The video should also be captured and maintained for some period of time on recording equipment.

Q. One of the board members of our association insists that the meeting minutes summarize every issue that is discussed at the meeting. The result is contentious and prolonged debates about how these discussions should be described, and it wastes a lot of time. Do the minutes have to describe matters that are discussed at a board meeting, but for which no matter is put to a vote?

A. It is not necessary to include a summary of issues discussed in the minutes. Many authors suggest it is actually inappropriate to include such summaries. The rationale is that the minutes are a record of decisions made by the board, and not of what is merely being discussed or of what is stated at a meeting.

• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.

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