Cost Savings of Extending Useful Life of Major Property Components

Volume 25 Issue 2
April 2011
H AWA I I C H A P T E R
President’s
Message
It was great
to see so many of
you at the recent
Building Expo held
at the Blaisdell.
Thanks especially
to those of you
who took the
time to attend the
CAI-sponsored
seminar “Ask the
Experts.” As always, it was an informative affair.
I also had the pleasure of meeting many of you who stopped by the
CAI booth. I encourage all of you to
share the materials you picked up
with your boards.
This month’s newsletter is
packed with helpful information. The
theme of this issue is Spring Cleaning! CAI’s website has a wealth of information that is free to members for
the taking, yet many people do not
take advantage of these resource.
CAIonline.org is loaded with free
sample forms and templates relating
to association life on such topics as
maintenance, enforcement, bidding,
inspection reports and even carpet
analysis. Many of these forms will
help you organize and clean for the
new season.
Next up is Mike Price who goes
into great detail on cost savings of
extending useful life of project components. He stresses the importance
of preventive maintenance and how
this can help you reduce insurance
claims and minimize surprise assessments or loans to repair and replace.
Boards get into trouble when they do
not maintain their buildings. When it
comes to preserving and protecting
your project, an ounce of prevention is worth a pound of cure. As
you read Mike’s article, ask yourself
where is your association on a scale
of 1 to 10?
continued on page 4
Cost Savings of Extending
Useful Life of Major
Property Components
By Mike Price CMCA, AMS, RS
Deterioration of association components like roofs, exterior paint,
mechanical equipment and asphalt is inevitable due to wear and effects of this
tropical climate. The Board of Directors is responsible for maintaining these
components for the good of all owners. One of the most important tasks of the
Board regarding protecting the property is to maintain a protective water seal
over the physical building(s). A leak proof roof and gutter system; exterior
paint seal; and seal coated exterior landings, hallways and stairs obviously
prevent water intrusion and the resulting damage. Usually there is an average
effort by Boards to protect the condition of the property. Some Boards defer
action with a philosophy of “Wait until it breaks (leaks)” or “Put a band-aid on
it and hope for the best.” Boards also look for ways to cut costs by eliminating programs such as routine preventative maintenance. Other Boards have
and maintain an aggressive preventative maintenance program that routinely
inspects the building seal and repairs worn areas, cracks and weak coatings as
discovered. Timely paint touch-up and small repairs contain the water damage
and minimize consequential damage at a small cost. Waiting until the exterior paint or seal is mostly cracked, peeled and faded to the point water easily
penetrates will add significant surface preparation and repair costs to the next
paint or seal project.
Reserve studies recommend a budget plan to collect enough money
to properly fund replacement of deteriorated components without the need
for loans or large Special Assessments. Reserve funding contribution rates are
lower when an effective preventative maintenance program is in place. The following definitions are used to demonstrate how this works.
Useful Life (UL) is the normally expected functional life stated in years of a
component in reserve study terminology. This UL is determined from averaged
length of life of a component historically in similar conditions.
Remaining Useful Life (RUL) is the number of years left before replacement is required. This RUL is determined by actual observations, warranties,
recommendations of manufacturers and experienced service vendors’ and
contractors’ recommendations and records.
Deteriorated Value is the used up replacement value in dollars of the
current cost to replace a component stated simply. That portion of money on
hand to replace is calculated as follows:
Current Cost $ to replace X (Number of years in service / UL) = current
deteriorated value $
An adequate Reserve Fund to replace components at the end of functioning life (UL) is required by Hawaii Law. Reserve studies recommend a
budget plan to collect enough money to properly fund replacement of deteriorated components without the need for loans or large Special Assessments.
The recommendations of the reserve plan are based on the “normal useful life”
(UL) and the remaining useful life (RUL) of an asset like the roof. For example
continued on page 2
2
April 2011
H A W A I I
Cost Savings
continued from page 1
P.O. Box 976, Honolulu, Hawaii 96808
(808) 488-1133
email: caihawaii@hawaiiantel.net
www.caihawaii.org
Officers and
Board of Directors
President
João Santos
Insurance Associates
Vice President
Cruz Vina
Homeowner
Secretary
Kawika Keala
Mott-Smith Laniloa
Treasurer
Milton Motooka
Motooka Yamamoto & Revere
Directors
Suzanne Alawa
Lois Ekimoto
Hawaiiana Management Co.
Boyd Ready
Akahi Service
in exposed high temperature locations in Hawaii, asphalt composition shingle
roofing has “normally” lasted 18 -20 years before replacement was required.
This is the normal UL mentioned above, based on the average experience with
average quality shingles.
Useful Life can be extended in many cases. The Board with a preventative maintenance program will experience component useful life longer than the
average “normal useful life.”
Besides cost savings from extending component life, there will be reduced
insurance claims, and consequential damage like concrete spalling, wood rot
and mold that are large unpredictable expenses that usually “require surprise”
unplanned loans or special assessments to repair.
The reserve study process requires evaluating all component conditions periodically. Preventative maintenance that extends the life of the
components that maintain the building seal should be considered in the new
analysis review. With extension of life beyond what is found “normally” the
reserve contribution required will be reduced especially when assets like
painting are the major replacement costs in the reserve study.
Extending the Useful life and Remaining Useful Life of an asset lowers the
annual deteriorated cost of replacement. Collecting the annual cost to replace
an asset over a longer time period reduces the annual recommended contribution amount needed to eventually replace the asset. For a simple demonstration example excluding inflation and interest influences with no change in future
projected UL gives the following results:
Roof with a UL = 18 years and current cost of $144,000 to replace and
RUL= 6 years projected in prior reserve report.
Agnes Ringle
Homeowner
Reserve Fund portion collected to replace in the future is available and
represents the Deteriorated Value of the roof = $144,000 X (12 years in
service/ UL =18) = $96,000.
Keven Whalen
Touchstone Properties
Total future additional contribution needed to replace the roof = $144,000 X
(RUL = 6/ UL = 18) = $48,000 collected before time of replacement.
Newsletter Committee
Editor
Lillian McCarthy
Hawaiiana Management
John Schick
Hawaiiana Management
Joani Taylor
Homeowner
Legal Reviewer
Christian Porter, Esq.
The Hawaii Community Associations newsletter is published for associations leaders
and other related professionals of CAI.
Authors are encouraged to submit articles for
publishing consideration.
This publication is designed to provide accurate and authoritative information regarding
the subject matter covered. It is issued with
the understanding that the publisher is not engaged in rendering legal, accounting or other
professional services.
CAI Hawaii Community Associations newsletter provides an opportunity for information
and/or comment. Articles do not necessarily
reflect the viewpoint of the Chapter. The reader should not act on information contained
herein without seeking more specific professional advice.
Preventative Maintenance has extended the time before replacement (RUL).
Inspection has determined a new RUL = 8 Years ($48,000/8= $6,000 annual contribution) less than the prior RUL projection of 6 years ($48,000/6=
$8,000), the annual contribution allocation is reduced $2,000.
Associations need to document the preventative maintenance program and
share the information with the professional reserve specialist providing the next
reserve study update. Documentation can be photographs of repairs, written
preventative maintenance plan and schedule, and invoices from contractors
and vendors for repairs and materials. Professional reserve study site inspections will verify the longer life and better overall condition of the asset. The time
before replacement of a component should then extend in years from a prior
average “normal Remaining Useful Life” RUL projection in the prior reserve
study as a result. These reserve fund savings translate into Annual Budget
recommended maintenance fee contribution rate reductions. Remember to allow for any increase in preventative maintenance costs in the Operating Budget
portion of the Annual Budget.
Indirect benefits of preventative maintenance are prevention of insurance losses, reduced legal costs and unplanned consequential damages
cost that also reduce the overall annual budget. To lower required owner
Maintenance Fees, Boards should utilize a Preventative Maintenance Program and incorporate results in the reserve study update process.
Of course the reverse situation applies to the property that neglects
maintenance or discontinues a preventative maintenance program. Assets
continued on page 4
Community Association Management
KEEP YOUR COMMUNITY ASSOCIATION
SAILING SMOOTHLY
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concerns and needs because every day is different and
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4
April 2011
H A W A I I
Cost Savings
President’s Message
continued from page 2
continued from page 1
will require replacement sooner than projected, insurance
premiums increase due to increased claims. Consequential repair costs for personal property water damage,
wood rot, concrete spalling and mold will surprise owners. Exposure to statutory code violation fines and legal
costs due to owner litigation against the Association will
increase as well.
This being the legislative season, your CAI Legislative
Action Committee (LAC) has been busy. Phil Nerney, Esq’s
has done an excellent job in bringing us up to date with
what our legislators are up to with this month’s LAC corner!
Summary: The Board of Directors has a fiduciary
duty to maintain the property. Boards generally try to
avoid raising maintenance fees as much as possible.
Rather than under funding maintenance, Boards need to
consider preventative maintenance programs as a positive means to control costs, while maintaining a safe,
good appearance property. The owners will appreciate
the long term cost savings results. Low risk exposure to
property damage, interruption of services, legal claims,
and insurance claims is another benefit.
About the Author: Mike Price – CAI Reserve Specialist
#164 is President of Association Reserves Hawaii LLC,
a local office affiliated with Association Reserves Inc,
providing independent third party comprehensive reserve
studies for all Islands. Mr. Price has a degree from Eastern Washington University and over 30 years experience
in construction and project management. He holds the
CMCA and AMS designations as a past condominium Site
Manager and General Manager. Mr. Price can be contacted at mprice@reservestudy.com or 808 936-4789.
Attention board members! It is not too late for the
ABC’s – Esssentials of Community Association Leadership
Seminar on Saturday, April 30. Call 488-1133 or email
caihawaii@hawaiiantel.net for details. This intensive seminar is only put on once a year to make you a better, more
knowledgeable board member. See you at the Japanese
Cultural Center.
João Santos
CAI Hawaii accepts articles for publication on topics
that are directly relevant to CAI Hawaii’s main purpose - improving the management and operation of
homeowner associations in Hawaii. CAI Hawaii edits
articles for clarity, not content, so the views expressed
in published articles are those of their authors and not
necessarily the views of CAI Hawaii.
April 2011
5
H A W A I I
6
April 2011
H A W A I I
Bed Bugs
Detection, Eradication and Avoidance
By Michael Botha
As you know bed bugs have
recently being making sensational
news headlines from Hawaii to New
York. In fact in a 2010 Global Study
conducted by the National Pest
Management Association it appears
that bed bugs are taking the world by
storm. The study reported that up to
80% of apartments, 60% of hotels,
30% of college dormitories and 15%
of office buildings have bed bugs. If
this seems surprising, consider that
bed bugs have actually been around
forever; interestingly they are closely
related to bat bugs that live in caves
where they feed on bats. It is believed that bed bugs started out in
caves, then migrated out of caves
with cavemen, where they have been
living and feeding on human blood
ever since.
Although bed bugs may occasionally feed on animals they prefer
human hosts to all others. One of
the reasons is that their proboscis
(thin needle like feeding tube) is ideal
for penetrating thin hairless skin but
has difficulty penetrating thicker skin
and fur. Bed bugs need a blood meal
in order to progress through each
nymphal life stage, to breed and for
sustenance; human blood provides
all of the nutrition a bed bug will ever
need.
In Hawaii bed bugs have very
quickly gone from relative obscurity
to a statewide pandemic. We very
seldom had bed bug calls prior to
2007, in fact from 1997 to 2007 we
had less than a dozen calls. However,
since 1997 calls have been escalating rapidly, we now get up to a dozen
bed bug calls in a single day. There
are many reasons why bed bugs are
making such an impressive comeback.
These include:
1) The bed bugs ability to develop
resistance to certain chemicals. In
2010 researchers documented resistance to 88% of the insecticides
labeled to control bed bugs.
2) Increased travel exposes more
people to bedbugs and introduces
and spreads new bed bug populations
across the globe.
3) Well-established urban reservoirs such as homeless shelters
provide an ongoing source of new
infestations to public areas.
4) Ineffective detection and control
strategies for existing infestations allow bed bugs to become well established while remaining undetected and
they often survive attempts to eradicate them with conventional means.
Bed bugs can certainly be considered a very challenging pest for pest
control operators. The pointed tarsi
(feet) do not pick up residual materials
like other pests such as cockroaches
that have flat tarsal pads. Eggs cannot be controlled by conventional
applications, insect growth regulators
only inconstantly affect one of the five
nymphal instars, and so it is almost
impossible to break the development
or breeding cycle. Bed bugs are incredibly difficult to find, particularly the
early life stages that have not fed yet,
not only are they the size of a pinhead
they also are translucent. Adult bed
bugs may be as large as an apple
seed, but they typically hide in areas
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April 2011
7
H A W A I I
that are impossible to inspect, such as
inside box springs.
It is important to consider that bed
bugs do not fly, hop or crawl long distances to access a structure, they are
almost always unintentionally brought
in by somebody on their person or
their belongings. In Hawaii bed bugs
have been documented in moving
vans, taxis, movie theatres, hospitals,
ambulances, guest suitcases, police stations and used furniture and
clothes, to name just a few. K9 Scent
Detection has been used for several
years in Hawaii. It utilizes NESDECA
Certified Scent Detection K9 Teams
to efficiently and accurately identify
bed bug infestations. The K9’s have
been scientifically proven to > 97%
accurate and can identify a single bed
bug or live egg within 90 seconds of
entering a room.
cation and management is the only
way to manage the potential liability.
Almost everyone and every property is
just as likely to come into contact with
bed bugs. By understanding what the
early signs of infestations are, educating tenants and property manager staff
and taking proactive steps to conduct
periodic inspections and immediately
scheduling eradication, one may keep
bed bug liabilities under control.
There are many bed bug management products available, including
mattress and box spring encasements,
Being proactive in bed bug edu-
About the author: Michael Botha, is
President of Sandwich Isle Pest Solutions, which offers full service pest
control, including K9 Scent Detection
Hawaii with two certified K9 Teams.
He can be reached at 456 7716. See
advertisement in this issue.
Call to Schedule Your Bed Bug
Educational Session
Call For More Information
Once bed bugs have been identified in a structure there are various
options for eradication. For a single
application solution both tent fumigation (with 3 x the Drywood Termite rate
of gas) and EnviroPureHeat (130°F for
3 hours) are good options, but keep in
mind that one needs to identify how
the bed bugs gained access to the
structure in the first place, as there will
be no residue left by the treatment.
Conventional treatments will depend
upon multiple applications and inspections to eradicate bed bugs. Between
3 and 5 treatments are usually necessary to eradicate all existing bed bugs
and the newly hatched offspring over a
3 – 4 week period.
Bed bug eradication is the most
difficult and expensive pest management service available, it is best to
be proactive and vigilant and prevent
infestations from becoming established. It is always best to react
quickly to bed bug infestations, as
time progresses the problem always
gets proportionately worse and more
expensive to manage. Add to the pest
management expense the potential for
liability from victims of bed bug bites,
or the expense of treating neighboring
units that become infested as a result
of an infestation in an adjacent unit,
and expenses can spiral out of control.
Bed bug bite victims may have serious
physical and emotional reactions to
bites, and often vent their frustrations
on social media outlets, which may
create tremendous negative publicity.
passive and active bed bug traps, portable heat chambers, dissolvable laundry bags and luggage treatments and
encasements. I recommend checking
with your pest management professional if you are interested in finding
out more about these products.
Early detection is key to
managing bed bug infestations.
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8
April 2011
H A W A I I
Sample Responsibility Chart for
Residents in a Planned Community
WHOM TO CONTACT
Y
Y
ITEM
OWNERASSOCIATION OTHER
1. Owners’ equipment/appliances
X
Equipment
Manufacturer
Y
2. Interior unit constrtuction
X
Developer*
3. Interior alterations to unit
X
Developer*
a
4. Exterior alterations to unit—approval
5. Trash collection
Architectural Committee
X
6. Exterior pest control
X
7. Interior pest control
X
8.Plumbing
X
Developer*
9. Air conditioners
X
Developer*
10.Window glass replacement
X
11.Exterior painting
X
12.Roof repairs
X
13.Insurance—fire or damage to structure
X
14.Insurance—owners’ contents
X
O
15.Common area landscape problems
X
16.Pool/spa maintenance
X
17.Recreation facility maintenance
X
*If a warranty matter
H
f
o
April 2011
H A W A I I
YOU explored the options.
Ko Olina Kai
Golf Estates and Villas
OAHU
9
YOU did the math.
YOU selected Hawaiiana,
and we
Thank You!
Hawaiiana welcomes the
following new properties to
our portfolio*:
Oahu
Hawaii Island
Allure Waikiki
Century Square Lease
Coolidge Villa
Hale Ka Lae
Ko Olina Kai Golf
Estates and Villas
Liliha Square
Makakilo Gardens I
Pacifica Honolulu
Pulewa at Mehana
Punahou Wilder
Condominium
Royal Aloha Condo
The Cabana at Waikiki
The Vanguard Lofts
Waikiki Sunset
Waterfront at Puuloa
49 Black Sand Beach
Hainoa Villas
Hualalai Colony HOA
Kohala by the Sea
Kolea Condo Villas
Kolea Owners Association
Kona Palms
Lulana Gardens
Ohai Estates
Royal Kahili
The Golf Villas at Hualalai
The Villas at Ke Alaula
Kauai
Maui
Apopo Hale
Halaulani Condo
Hale Honu
Kahu’aina Grove
Pali Ke Kua
Regency Hule’ia
Villas at Poipu Kai
Cottages at Kulamalu
Ho`onanea at Lahaina
Koa Resort
Maui Lani Terraces
Opukea at Lahaina
Pohailani Maui
The Ironwoods at Kapalua
Hawaiiana Management
Company, Ltd. extends its
deep appreciation to its
Boards of Directors and
Developer Clients for giving
Hawaiiana’s 200 employees
the privilege of serving and
protecting property values for
Hawaii’s Homeowners.
*Hawaiiana manages nearly 600 properties state-wide. The properties listed above
contracted service with Hawaiiana between January, 2010 and the present.
10
April 2011
H A W A I I
The Two Biggest Mistakes Community
Association Make Involving Directors
& Officers Liability Insurance
By Joel W. Meskin, Esq., CIRMS
The Directors & Officers Insurance policy (“D&O”) is
a small part of an association’s insurance coverage and
premium puzzle, but it is a critical piece. It is important
because it protects the community members who agree
to accept a very often no-win and often thankless volunteer job to manage the association. Contrary to the other
pieces of the insurance puzzle, D&O coverage can differ
significantly from insurer to insurer. There are currently
two significant mistakes associations make in regards to
D&O policies.
The first mistake is price over coverage. Boards have
a fiduciary obligation to manage the association. This
obligation includes the procurement of insurance that is in
the best financial interest of the association. Accordingly,
the first item of business is to obtain the best coverage
for the association, because the best coverage will respond to the most claims thereby costing the association
less at the end of the day. The existence of coverage at
the time of a claim is the most important part of the insurance purchase equation.
The average D&O policy is probably about $1,000 for
a $1 million limit with a $1,000 deductible. Notwithstanding this incredibly low price, one of the biggest problems
we find is that the main focus in the purchase transaction
is price as opposed to coverage. It is always easy to sell
price. What boards must understand is that the point of
sale price is only a small part of the equation. An association may save $50, $100 or even $500 on a policy, but
if there is an uncovered claim, those purported savings
will be dwarfed. The defense of a single uncovered D&O
claim can cost the association thousands or tens of thousands of dollars. Moreover, if an association has to fund
a lawsuit itself, it may not be able to defend it vigorously
and may have to settle notwithstanding the fact that they
did nothing wrong. Where will reimbursement come for
those uncovered costs and settlement; it will come from
the association. Three cheers for the special assessment.
During the past year, I have reviewed thousands of
claims. Very often, I review claims as part of an application when an association comes to us because a claim
was not covered by its existing policy. Do you know
what is covered by your policy? Many policies do not
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April 2011
11
H A W A I I
cover: defense of breach of contract, defense of failure to
maintain or obtain insurance, discrimination claims, nonmonetary claims, emotional distress damages, defamation, wrongful eviction, invasion of right of privacy, challenges to elections, or challenges to architectural review
committee decisions. Some policies may not cover past
directors, community managers, developers on the board,
volunteers, or actions between individual board members.
Remember, three cheers for the special assessment.
How does the association know what the best coverage is? There is no short cut –do your homework. The
best place to start is with a professional that specializes in
associations. If the professional does not have adequate
experience, find one who does. Many associations rely
on their managers and many are extremely experienced.
However, do not assume they are experienced. Ask your
manager how many D&O policies they have reviewed,
how many D&O claims they have been involved with, or
ask them to explain to you what is or is not covered in
various D&O policies. If you are satisfied, great, still call
the agent.
This policy is different than most associations or their
attorneys are familiar. As a result, many claims that would
ordinarily be covered are denied because they are not reported in a timely fashion. Accordingly, it is imperative to
understand in each policy how “wrongful act” and “claim”
are defined and what the reporting obligation is. Insurers
and courts have no mercy for and have upheld stringently
the reporting requirements of these policies.
Fortunately, these two mistakes are very preventable
as long as the associations and their managers do the
necessary homework. It is always better to be educated
than surprised.
Copyright © 2010
The second biggest mistake that associations make
with D&O policies is the untimely reporting of a claim.
D&O policies are normally claims made and reported policies. In brief, the policy provides defense and indemnity
for a “wrongful act” (the board’s alleged mistake) for a
“claim” (demand that the board do or not do something
about the mistake) made during the policy period and
reported to the insurer during the policy period.
The Phone Call From #*11
Sorry, but the claim is not covered.
Agent: “Remember when we discussed that coverage
and you did not want to pay the additional cost because that would never happen in your association?
Well it happened.”
Board Member: “I must not have heard you or understood what you meant. A train must have been going
by. I thought we had full coverage?”
Agent: “At least you can issue a special assessment.”
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12
April 2011
H A W A I I
Risk Management
Minimizing a Director’s Personal Liability
By Sue Savio
Maybe you volunteered, or maybe you were elected
because you did not show up at the annual meeting, but
for whatever reason you are now on a Condo Board and
you have a “job” that may cause you to be sued.
How do you minimize your personal liability? The following nine points should keep you safe.
1. You Are Not Important. Serve one principal—
the association. Make decisions for one mission:
to preserve, protect and enhance the condominium common elements for decades to come. Rise
above self interest.
2. Think Before You Make a Decision. Make decisions based on information, research, and professional consultants when required. In arriving at a
decision, act independently and not at the direction and dominance of another Board member.
Act prudently in making decisions. Do what the
reasonable person would suggest and do under
like circumstances.
3. Know Your Stuff. Be knowledgeable of the affairs of the Association. This includes having a
working knowledge of the Association’s:
• Minutes
• Budgets
• House rules
•
Condominium statute, Chapter 514A, HRS
•
Other related administrative rules
4. Listen To Your Owners
•
Be responsive to the residents you serve.
•
This may include surveying the residents on
appropriate issues—not all issues.
5. Ask Experts for Advice
Consult experts when you are unfamiliar with the issues
• Attorneys specializing in condominium governance and administration
• Accountants and reserve specialists
• Contractors, electricians, plumbers, etc.
• Insurance agents
• Property Managers
Consult more than one expert to ensure that you have
gathered information on which to base your decision, but
remember that intentionally shopping around for a preselected biased opinion may not be deemed reasonable.
6. Stay Smart
• Governing documents
• Declaration
• Bylaws
•
Attend continuing education courses and
other seminars relating to managing the affairs of the association.
Equity Properties, Inc.
99-860 Iwaena Street, Suite 204 • Aiea, Hawaii 96701-5608
The Property Management Specialists Serving Hawaii Since 1985
•
•
•
•
Condominium/Cooperative/H.O.A. Management
Rental & Commercial/Property Management
Real Estate Sales
Personalized & Professional Service
Phone (808) 485-0855
Fax: (808) 485-0987 • Email: admin.epi@hawaiiantel.net
Or visit us on the web for more information at www.equitypropertiesinc.com
LICENSED & BONDED
April 2011
13
H A W A I I
• Keep abreast and be aware of:
-
Court decisions
-Legislation
-
New federal laws, state laws, and county ordinances
7. You Get What You Pay For
•
•
Hire managing agents and resident managers
after a thorough investigation including
-
Applicable license history
-
Reputation in the community
-
Reasonable prices for professional services
rendered
Seek more than one bid for any job
8. Know Your Documents
•
•
Amend declarations and bylaws, if necessary,
to include provisions for the association to be
responsible for costs and reasonable attorney’s
fees incurred in defending yourself for the good
faith decisions made while serving on the board.
The association may provide for this by indemnification and insurance for directors and officers.
9. Know the Rules
•
Give clear directions to the association’s officers,
employees, and agents as to the scope and limitations of their duties and responsibilities.
•
Implement procedures to prevent activities beyond
the scope and authority of the duties delegated.
In conclusion
•
You are not important just because you are a board
member.
•
Think before you make a decision.
•
Know your documents.
•
Ask experts for advice.
•
Stay smart—attend classes, seminars, and other educational activities.
•
You are only a board member when attending a meeting—the rest of the time you are Joe Homeowner.
•
Your only job is to preserve, protect and enhance the
condominium common elements.
About the author: Sue Savio (sue@ia-hawaii.com) is president of Insurance Associates and a general agent since 1975.
The firm specializes in condominium association Insurance
and commercial insurance.
Who else can say – our account executives know
community management backwards and forwards.
Who else can say – our relationship managers speak
your language and understand your business.
Who else can say – our technology group
has revolutionized the business of association
management.
ExpEriEncE
HOA Banking
HOA Loans
Internet Cash Management
Online Payment Systems
Dedicated Customer Service
Kris Gjylameti
AVP/Regional Account Executive
808.673.8794
808.854.9402 (Neighbor Islands)
Toll Free 866.800.4656, ext. 7503
kris.gjylameti@cabanc.com
cabanc.com
Z3329 Community Association Banc is a division of Mutual of Omaha Bank.
National Corporate Member of Community Associations Institute.
Member FDIC. Equal Housing Lender
Equal Housing Lender
14
April 2011
H A W A I I
Spring Cleaning
By Wyman Chang
Keeping a clean organized storage facility can be
a difficult task if it’s not maintained and monitored on a
regular basis. As Resident and Site Managers we can also
forget that specific (storage) rooms are not designed to
store certain material. Take for instance a booster pump
room. This area contains heavy equipment such as large
water pumps and pipes which transfers water throughout
your property. Storing items in this area would not be a
good idea. Why?
Reason 1. Water damage. If a water line breaks in the
pump room you can bet that that room will get a pretty
good amount of moisture, to say the least. Paper material,
tools and many other things can be damaged by water.
Reason 2. Technicians. Pump rooms and any other
type of mechanical or electrical room should always be
kept free and clear of any debris or unrelated equipment
so that they don’t get in the way of your technicians’
scheduled maintenance duties or emergency type repairs.
I do not store anything in these areas. It also helps me
monitor the mechanical equipment effortlessly.
A Resident/Site Manager must always remember to
be aware of the items they are storing. All gaseous and
flammable liquids must be stored in a specifically designed fireproof cabinet. Fire cabinets can be purchased
at any safety equipment distributor, online or on the
island.
If you manage and maintain a swimming pool you
must store certain chemicals, such as chlorine and muriatic acid separately. Unless you want to light up the sky
I recommend storing them in two separate storage areas
and preferably in a ventilated room.
Cleaning and maintaining storage areas utilized specifically for association related items must always be kept
clean and free of non-essential items. Most large properties are always supplied with storage areas, which hold
tools, pool supplies,etc.
Another way to keep a tidy storage space is doing
an annual inventory of your supplies and tools. Knowing
where they are and when you need to replace or rotate
supplies or if you just don’t have a use for items such as
old paint, cleaning detergents that have expired or broken
power tools that are beyond repair makes cleaning easier
during your annual cleaning and inventory.
And remember, these are not your personal storage
areas either so if you don’t have room to store your personal items in your own storage place, there’s dozens and
dozens of commercial storage facilities available near you.
About the author: Wyman Chang is the Resident Manager at Royal Court and may be contacted at 538-1733 or
via e-mail at wyman69@hawaiiantel.net.
April 2011
15
H A W A I I
OaHu
Hawaii
Kauai
Maui / Lanai
Certified Management is proud to deliver association management services by
a local team with the strengths and resources of a national leader. 5-Star Service
is our commitment to our valued clients. With a proven record of excellence and
strong community roots CMI provides professionalism and a vast array of money-saving
programs to more than 400 associations on five islands.
Call Kristi Hirota-Schmidt, Vice President of Business Development, at 808.837.5289
or kristi@certifiedhawaii.com for a confidential quote.
An Associa® Company
www.certifiedhawaii.com
info@certifiedhawaii.com
Hawaii Office
Oahu Office
75-169 Hualalai Road
3179 Koapaka Street
Honolulu, Hawai‘i 96819 Kailua-Kona, Hawai‘i 96740
Phone: 808.329.6063
Phone: 808.836.0911
Fax: 808.326.2486
Fax: 808.839.9430
Kauai Office
4-1579 Kūhiō Hwy, Suite 102A
Kapa‘a, Hawai‘i 96746
Phone: 808.821.2122
Fax: 808.821.2131
Maui Office
375 Huku Li‘i Place, Suite 207
Kihei, Hawai‘i 96753
Phone: 808.243.9565
Fax: 808.244.7848
16
April 2011
H A W A I I
HELPFUL HINTS
REDUCE ELEVATOR NUISANCE
TROUBLE CALLS
Frequently elevators may be inoperative due to reasons
that are not equipment problems. Callbacks of this nature
are beyond the control of the elevator maintenance company, and may incur an unnecessary cost to the building.
In order to minimize unnecessary cost to the building, we
recommend that building personnel check out the following
items before placing a trouble call:
1. When an elevator is reported out of service, please
verify which car is actually out of service.
discourage people from using the emergency stop
switch.
4. Check door safety edges for foreign objects, stoppers, cardboard, etc.
5. Use safety edge to reopen doors if you don’t have
infrared door sensors.
6. If you have infrared door sensors, use a dry cloth
and wipe down the face of the door detector.
2. Check to be sure all key operated switches are in
normal positions – on/off, Inspection, Independent, Fire
Service, Emergency Stop, Light, Fan, etc., for automatic service.
7. If you have photo electric eyes, use a dry cloth and
wipe the face of the photo electric eye.
3. Check emergency stop switch. If the switch is activated the elevator will not run. There are projects with an
alarm bell hooked up to the emergency stop switch to
9. Use “door open” button to hold doors open for longer than intended “dwell open” time.
Na Lan Milton Motooka Todd Moulton Carlos Perez‐Mesa Cherrylina Piedad Terrance Revere Carol Rosenberg Hwa Kyung Song Anna Valiente* Clay Valverde Myles Yamamoto *Licensed in CA 8. Press buttons only once when calling the elevator.
10. Check doors and sills for debris, sand and foreign
objects that could prevent the elevator doors from
closing properly. Obstructions are usually found in
the sill track.
11. If cars are returning to one particular floor without
reason, check all hall and car buttons to see if they
are stuck.
12. Check building mainline fuse boxes, handles and
fuses periodically for faulty or old equipment.
13. If normal power for lights fail, check 110 circuit
breakers (usually located in the elevator machine
room or electrical box; also be sure they are clearly
marked).
A leader in Community Association Legal Services, providing comprehensive, economical services statewide ♦ timely, experienced advice to protect your association and your association’s assets ♦ effective problem solving and covenant enforcement ♦ efficient, productive collection of delinquent assessments with monthly progress reports ♦ effective, zealous advocates when you need to litigate 1000 Bishop St. Suite 801 Honolulu, HI 96813 Phone 532‐7240 www.myrhawaii.com clientservice@myrhawaii.com 14. If there is a power outage, check for trapped passengers. Refrain from releasing trapped passengers
from the elevator. For safety reasons only licensed
elevator personnel should release passengers. This
also avoids costly damage to doors and elevator
equipment. Calm the passengers in the elevator and assure them help is on the way. If power
is restored prior to the elevator mechanic’s arrival,
cancel the call. Elevators should start to run after
normal power is restored, unless an overload was
tripped or fuses blown.
15. Check machine rooms after heavy rains to safeguard elevator equipment from water intrusion. Your
elevator service company should be called immediately if water intrusion conditions exist that are
affecting the operation of the elevator equipment.
This is a billable item that can normally be recovered
through insurance claims.
16. Reduce overtime costs by holding calls until the
next regular working hours, unless an emergency
exists, such as a person trapped in the elevator.
April 2011
17
H A W A I I
17. Experience has shown that false calls and confusion are
greatly reduced if all reports of an elevator malfunction
are channeled through one responsible person. An accurate log should be kept of all calls.
How to Wake Up
A Building
18. Use the elevator log book for listing lights or bells that
need replacement. Your service technician will sign off
when completed.
By Wyman Chang, Resident Manager Royal Court
19. If your building has fireman’s service, walk through the
monthly testing with your service technician and familiarize yourself with the operation of the elevator fireman’s
service system. It may save a life.
20. If you are stuck inside the elevator, please remain calm.
Do not try to open door or force the elevator to open.
Use the emergency communication device (phone or intercom) and calmly tell the person on the other end your
building ID number and which elevator you are stuck in.
The operator will inform a mechanic from your Elevator
Company and give you an ETA (estimated time of arrival), or inform the building security. Please remember
to remain calm, the elevator is not air tight so you will be
able to breathe with no problems.
Late one night, 12:30am to be exact my pregnant
wife and I were enjoying a nice sound sleep when
someone decided to drop his or her garbage down
the trash chute. Now this wouldn’t have been so bad
had the trash chute not been located on the opposite
side of my bedroom wall, as well as 14 other neighbors above and below me. But this insensitive person
was dropping four empty 24oz bottles of Red Stripe,
Jamaican Lager beer down the chute banging its way
down 17 floors. Forget the fact that on every floor in
every trash room there is a large recycle container
that says specificly that it’s there for “glass bottles”
but there is also a large sign on every trash room door
on every floor that states “No trash disposal between
10pm and 7am”.
Never have I been so rudely awakened by someone so inconsiderate in the 8 plus years as a Resident
Manager, that it inspired me to write this poem.
So, to the insensitive, inconsiderate and downright
rude person who decided to dump their trash with no
regard for their neighbors, this poem is dedicated to
you:
On an early Sunday morning, 12:30am to be
exact. We were rudely awakened by the sound
of a bottles crash.
This included a neighbor with a newborn baby.
Who cried and cried because you were too lazy.
Advising boards on
managing and operating
their associations
• Recommending actions to reduce the risk of claims
• Answering day-to-day questions on legal issues
• Interpreting and amending documents
• Enforcing covenants
• Collecting delinquencies
• Lease-to-fee conversions
• Lease rent renegotiation
Richard S. Ekimoto • John A. Morris
Gwenaelle Bratton
Russell H. Ando
Dan C. Oyasato
Of Counsel Arlette S. Harada
American Savings Bank Tower
1001 Bishop Street, Suite 780
Honolulu, Hawaii 96813-3410
Telephone: 808.523.0702 • Fax: 808.538.1927
law@hawaiicondolaw.com • www.hawaiicondolaw.com
With recycle containers, in plain view. The
bottles were still sent crashing down because
of you.
Big blue signs, in plain sight. Saying “don’t
drop your trash after 10 o’clock at night.”
Maybe it was after drinking the four Red Stripe
beers. That hampered you in thinking, that it
was all clear.
To rudely awaken your neighbors next door.
While you walked back to your unit and passed
out on the floor.
So if it’s because you were drunk, or you just
didn’t care.
Please try to remember, you’re not the only one
there.
18
April 2011
H A W A I I
Speak Out
What technologies can be
implemented that would substantially
aid in lowering our energy reliance?
CAI announced further enhancements to its
website that will make it easier for members to access their individual accounts.
Keven Whalen
Solar and Photo Voltaic is being
looked at by many Associations. The
problem is utilizing the Federal and
State tax credits; there are a lot of
programs out there such as banks
purchasing the equipment for you,
they take the credits and you lease
from them.
Photo Voltaic and Solar needs legislative support for giving authority to
Association Boards to utilize these
technologies, either in competition
with or in conjunction with the electric company.
Although I am a member of the Hawaii CAI Chapter I live in Nebraska.
The most recent trends being used
there are the collection of rainwater
into barrels and using that for landscaping, and supplementing use
items such as toilets. We also are
learning techniques for landscaping
which are beneficial to the environment that draw insects, birds and the
like that are beneficial around your home.
Christian P. Porter
Carl Tom
S.V. (Bud) Quitiquit
David W.H. Chee
Jeffrey D. Watts
Donna Yamamoto
R. Laree McGuire
Jerilynn Ono Hall
Danielle Degele-Mathews
There are three sections in the “My Order History” page: Events, Membership, and Products
Purchased.
In the membership section, you can view your
membership expiration date and print your own
membership card.
Karen Watson
ATTORNEYS AT LAW
“My Order History” makes it easy for members to look at transactions on their account. You
can now view past transactions, print reports, and
renew membership from the Profile/My Information
page.
In the Events section, you can print your
student transcript, view your grades, and print a
course certificate.
Dante Carpenter
PORTER TOM
QUITIQUIT CHEE
& WATTS, LLP
CAI Member Transaction
History – “My Order
History”
❑
❑
❑
❑
❑
❑
❑
❑
In the products purchased section you can
access past and current product orders, view the
invoice number, product name, price and payment
balance, track a shipment including the date and
UPS tracking number, and view or print a receipt.
In addition to my order history, members can
also access a schedule of professional management development programs and on line registration forms, a database of credentialed professionals, including CMCA, AMS, LS, PCAM, AAMC, RS,
CIRMS and CCAL. There is also a national service
directory of all eligible business partners and management company members.
Check it out now – sign on to www.caionline.
org.
Real Property Transactions and Development
Condominium and Community Association Law
Voluntary and Involuntary Lease To Fee Conversions
Construction Litigation
Employment Law
Civil and Commercial Litigation
Business Law
Civil Appellate Practice
HONOLULU 841 Bishop Street, Suite 2125 • Honolulu, HI 96813
Phone: (808) 526-3011 • Fax: (808) 523-1171
Email: cporter@btpqlaw.com
KAILUA-KONA 75-1000 Henry Street, Suite 208 • Kailua-Kona, HI 96740
Phone: (808) 326-7300 • Fax: (808) 326-7725
Email: budq@btpqlaw.com
April 2011
19
H A W A I I
Legislative Action Committee
By Philip S. Nemey, Esq,
industry and the non-profit communities we all serve.
This article is written in mid-March, shortly after the
first crossover for bills moving from one legislative chamber to the other. It is difficult to predict how matters will
stand when you read this, but foreclosure law may be
substantially different when the session ends and associations may lose existing tax exemptions.
Foreclosure law will almost certainly change for mortgage lenders because of populist sentiment against them.
The open question is whether the legislature will distinguish
between lenders and associations. Your Legislative Action
Committee (“LAC”) continues to press for recognition of
the significant differences between the for-profit mortgage
The pressing need to fill state coffers might overwhelm
reasoned arguments noting that the collection of maintenance fees should not be regarded as a taxable event. The
bottom line is that niceties of that sort may be overlooked
unless an excise tax increase is imposed instead. Please
ask your legislators to maintain current tax exemptions.
Ongoing challenges also exist because legislative efforts
to micromanage associations appear with distressing regularity. LAC seeks to uphold the principle of self-governance.
LAC’s lobbyist has helped greatly and many community
members have also testified on bills, to good effect.
Association Maintenance – Free Sample Forms
and Templates for CAI Members
CAI is dedicated to providing resources, tools and education for board members, community managers, association management companies, and other product and
service providers. A variety of free sample forms and
contracts on community operations and management is
available on line for CAI members – www.caionline.org.
These forms and contracts cover key topics such as Rule
Development and Enforcement, Bidding and Contracting,
and Maintenance. They provide helpful ideas and are a
valuable starting point from which Associations can draft
their own forms and contracts.
For your spring cleaning pleasure you might want to
check the following forms for ideas. Please note that
these are sample checklists and should be reviewed and
modified to fit your Association’s needs.
Sample Carpet Analysis
Sample Check list for each floor/area/unit
Sample Inspection Report
Responsibility Chart for residents of planned
communities
Following are some other sample forms available for download:
Bidding and Contracting:
Decision Chart - Choosing between Association Staff
and Contracting Out
Landscaping Maintenance Contract
Bid Comparison Spreadsheet – Lawn Bid
Bid Sheet and Pool Maintenance
Landscape Contract Bid Form
Landscape Maintenance Specification
Request for Proposal – Asphalt Work/Painting/Pool
Maintenance
Maintenance:
Maintenance Contact Sheet
Maintenance System Checklist
Grounds Maintenance Record
Inspection Report (Punch list)
Maintenance Calendar
Work Order / Response form
Governing Document Language - Physical Assets and
Maintenance
METER READING SERVICES
Armstrong Consulting Inc
Monthly Reading
New Installation
Commissioning
Electrical Audits
Contact Us For a Free Quote Today
808.394.6910
Locally Owned & Operated Since 1993
Specializing in Prompt & Responsive Service
H A W A I I
Presorted Standard
U. S. Postage
PAID
Honolulu, HI
Permit No. 59
P.O. Box 976
Honolulu, Hawaii 96808
2011 SEMINARS
April 30, 2011
ABC’S-A One Day Workshop for Board Members
& Homeowners
A basic course which offers an overview of community associations,
including industry facts and legal information, and the roles and
responsibilities of board members officers and professional staff
June 2, 2011
CONDO WARS- How to bring peace to the promised land
July 14, 2011
LEGISLATIVE UPDATE
An overview of new laws affecting community associations
August 25, 2011
DEALING WITH THE DARK SIDE, DRUGGIES AND DOGS
Dealing with the criminal element in the association. How to respond
to the professional dissidents, Hawaii Civil Rights Commission
October 13, 2011
COVENANTS ENFORCEMENT
November 3, 2011
CAI-HAWAII ANNUAL MEETING-Awards and celebration
The seminars listed above (excluding the annual meeting) are partly funded
by funds from the Condominium Educational Fund, Real Estate Commission,
Professional and Vocational Licensing Division, Department of Commerce and
Consumer Affairs, State of Hawaii for condominium, apartment owners whose
associations are registered with the Real Estate Commission.
For more information, please visit the Hawaii Chapter website at
www.caihawaii.org
Note: topics and dates subject to change
2011 PMDP
Courses
CAI National offers a Professional Management Development Program (PMDP). The PMDP
consists of three levels of courses designed to
give new managers a knowledge base and experienced managers a deeper understanding of all aspects of association management. Courses focus
on such topics as insurance, finance, leadership,
governance, and communications. For additional
information on the national courses, visit www.
caionline.org.
The classes being offered in Hawaii this year are:
April 7-8, 2011
M-201
Facilities Management
July 7-8
M-205
Risk Management
November 3-4
M-360
Leadership Practices in
Building Community
For more information, please
Call CAI Direct: (888) CAI-4321;
Call CAI’s Fax Back Service:
(703) 836-6904; or visit
www.caisecure.net/pmdp/mv