Building, Home Owners Association (HOA), Maintenance, Reserve Studies, Roofing
posted by Ross Hardy

Solar Panels – Right for your HOA?

Solar Panels — Right For Your HOA?

Solar panels may be an option for your community. Legislative incentives are available in states around the country.

There is a growing consensus that climate change is real and its consequences will have significant impact on our quality of life and regional economic future. While the cause of climate change may be debated, its potential impact on future generations should not be. So the real question should be, what are we going to do about it?

If part of the solution to climate change is living more sustainably with a goal of zero-carbon power production, condominiums can take a key role in this effort. By the very nature of community living, condominiums reduce our carbon footprint through more efficient use of the land and reduction of construction materials with multi-family building designs. Many urban condos are developed by recycling old buildings that are re-purposed thus avoiding the wrecking ball and waste generation.

Condominiums can take a leadership position to promote more environmental friendly municipal projects ranging from efficient public transportation; avoidance of the consumption of fossil fuels in favor of sustainable electric generation for heat pumps or electric powered vehicles; and waste recycling.

Not only has the price for these PV solar panels been dropping rapidly over the past few years, the methods of maximizing their usefulness in a community environment is becoming more viable with the newest technology allowing both direct and scattered sunlight to create electricity and by use of power inverters so electric power can be directed into batteries or the utility grid to sell back excess electricity. These PV panels can be grouped into arrays called micro-grids that can collect electricity and distribute to not just one user but a community of users.

These micro-grids can be located in a wide range of locations. They do not have to be on top of roofs which are objectionable to many. Instead, they can be located in empty areas around the condo complex. As an example, one of these ‘solar farms’ can feed two buildings with four units in each. Buildings such as these are fueled today by shared propane tanks in the backyard, why not solar arrays?

These types of PV solar arrays can provide electricity to fuel common elements such as the club house; street lights; and hallways light fixtures. Unit owners could opted into becoming a member of a solar farm and own a portion of the panel array (called a share) or they could opt out. Those owners who become members of the array can then improve their current old heating system by converting to an electric, ductless mini-split system producing both heating and cooling which they never had before and adding value to their unit. With inexpensive electrical power available condominiums can consider adding fueling stations for battery driven automobiles further reducing fossil based fuel consumption and fostering cleaner air.

Those condo communities with an interest in using solar power in the future should be following locallegislative events. It is not too early to form an exploratory committee to review all of the special issues condos will face to implement solar power, as compared to an individual home owner. This research should reach out to other states who are ahead of Missouri’s solar curve. One good source is A Solar Guide for Condominiums Owners and Associations in Massachusetts easily found on Google.

Home Owners Association (HOA), Maintenance, Reserve Studies, Siding
posted by Ross Hardy

Vinyl Siding – or Not

Vinyl Siding Problems Perhaps you are on the Building Committee which has been charged by the Board to recommend a replacement siding material for your 35 year old condo. Perhaps you are a property manager whose in-basket is filled with unit owner complaints about vinyl clapboard siding problems in the new condo complex. Whatever the vinyl façade issue is, the future solutions may surprise you.

Vinyl siding materials are everywhere. It is probably the most common façade material in all its forms used on condominiums across the nation, and for good reason. It is quick to install; it is relatively inexpensive; and has an estimated useful life of over 40 years. Most of its negatives are well understood: it can crack or break in the winter time from hail or your grandkids hockey pucks; it can make noise when it’s windy or too hot; colors fade or become chalky over time; and frequent cleaning is required. However, these may not be the issues you may need to face with the current vinyl siding problems.

Solar Attack

This problem can fall in the unintended consequences category. With the issuance of the new building energy codes and the drive to reduce our heating costs and carbon footprint, we are melting our vinyl siding. This is happening due to the installation of the new low-E, highly insulated glass windows being installed in both new buildings and replacement windows.

The thermal layers and reflective properties of these high-tech windows cause sun rays to bounce off and reflect onto vinyl siding causing the siding to buckle; warp; or melt. These new window surfaces act like magnifying glasses concentrating the solar energy on a vinyl surface that cannot tolerate heat over 150 degrees Fahrenheit. This condition can occur when a window on the south elevation of the building is near a right angle corner wall covered in vinyl siding. It can even occur when a new commercial building is built across the street and its new glass wall façade faces the sun and reflects across the street to your vinyl sided property.

So what are you to do? This problem was rare in the past but now solar damage is occurring with increasing frequency due to the drive to install low-E windows. The Vinyl Siding Institute suggests placing awning or shades over the windows and even changing the landscaping to create shade trees to block the light. Some vinyl siding manufacturers are addressing this type of solar damage by adding a ‘thermal diffusion agent’ to the vinyl mix at the factory to help reflect and resist the heat build-up.

Manufacturers are also responding to the problem with vinyl siding by excluding solar refection or melt damage from their warranties. Their warranties always excluded damage from heat sources such as gas grills placed too close to the exterior wall, but now damage from reflective windows is recognized so it would be wise to read the fine print before selecting a siding brand.

Color Fading

This increasing problem is a sub-set of the solar melting problem. Whether it be due to window reflective energy; climate change; or changes in manufacturing, this color fading complaint is becoming more prevalent. In the past, color fade was protected with a lifetime warranty by the manufacturer. Color fade was measured by a maximum of a Delta E of 4 Hunter units in accordance with ASTM standard D2244.

In the past, this warranty issue would be handled by a siding replacement policy. Now, some manufacturers are offering a ‘restore’ process instead of replacement. The ‘restore’ process would allow the manufacturer to paint the siding with an acrylic paint often applied by specialist painting contractors. This restore process comes with a 10-year warranty, down from the prior ‘limited-lifetime’ color warranty. Here again, read the fine print before signing the contract.

Installation

Vinyl siding may be quick to install, but it is not easy, if it is done right. Vinyl siding has an integral vinyl tab at the top in which an oval hole is punched at set intervals along its length to allow a nail to be driven through this hole and into the sheathing. Sounds simple, but it is not. The manufacturer specification requires the installer to drive the nail head within 1/32th of the vapor barrier/ sheathing surface so as not to bind the thermal movement of the siding.

Keep in mind the fasteners are being driven by an adjustable nail gun requiring a level of skill to properly set the nails in each slot hole without touching the vinyl. This accuracy requirement, coupled with today’s reduced numbers of skilled construction personnel, makes this a quality control challenge. If fastener binding does occur, the siding will not properly move with thermal expansion and buckling will soon appear on the surface.

So the answer to today’s vinyl siding problem is: do your research. Read the manufacturer’s specifications and warranties; ensure your contractor is committed to good supervision of the installation of this important building envelope element; and finally, follow up with your own quality verification program, either through your building committee or project engineer. The siding is only as good as it is installed.

Cracks in foundations are by far the most common structural complaint raised in either reserve fund studies or transition studies. They can occur in the youngest or newest condo building. As condo documents usually assign the maintenance responsibility of their repair to the association, board members and property managers take them very seriously. Missouri condo buildings have many types of foundations including concrete block; brick; and mortared stone with the most common being poured concrete.

Most basements and garages have 4 to 6 inch concrete slabs and unless this is a slab-on-grade foundation, the slabs were poured independently of the foundation walls. They are said to be ‘floating’. Often the construction joint between the slab and wall can easily be seen. The common slab crack complaint is hairline cracks appearing in spider web-like patterns. These cracks can show up shortly after construction and are normally caused by shrinkage during the curing process. The key point here is this type of slab cracking is rarely a structural problem, for after all, the slab could be completely removed leaving a dirt floor while the foundation walls and columns with footings will easily maintain a stable building.

Therefore, slab cracking is often more of a cosmetic problem. Cracks are often repaired with a variety of grout, caulk, or epoxy products primarily to prevent groundwater penetration, insect entry, or radon gas infiltration. Cracks showing differential movement on opposing surfaces can be a tripping hazard but more importantly an indication of serious sub-surface conditions needing further investigation.

Regarding foundation walls, the most typical problem with concrete walls are vertical hairline cracks, often starting at the top of the wall and traveling down to the floor slab. A sub-set of these types of cracks are those that propagate often in a diagonal direction from stress concentration points such as the bottom corners of basement window openings. The key point to remember is these types of cracks, even when they penetrate the entire thickness of the wall, normally do not constitute a structural problem as the loads from above pass unobstructed on both sides of the crack to the footings below.

However, when the wall surfaces on both sides of the crack are moving out of plane or the structure above shows stress in the form of movement or cracking sheetrock walls and ceilings above, further structural evaluation is warranted. Foundation cracks should be sealed if periodic water infiltration occurs. Repairing cracks from the outside if often the best method, but due to the excavation costs involved, repairing the crack from the interior by injecting a crack filling material has become a routine solution.

When horizontal wall cracks; multiple closely spaced vertical cracks; or large diagonal cracks in basement corners are observed, these conditions may indicate more serious problems related to settlement or other structural problems. Similarly, a single vertical crack that is much wider at the top of the wall may indicated foundation settlement problems stemming from poor soil conditions; hydrostatic groundwater pressures; or frost heaving. These problems should be directed to a knowledgeable consultant.

Regarding concrete block foundation walls, most of the guidance above can be used with some exceptions. By their nature concrete block walls are often not well reinforced and are subject to inward movement from various soil pressures causing these types of walls can bulge inward. Ice lens forming about 3 feet below the ground surface can expand and push concrete block walls inward. This can even occur from a vehicle’s weight being too close to the foundation, such as oil delivery truck. When horizontal cracking is observed in block walls, steps should be taken quickly to prevent further movement. These types of walls are also very susceptible to water penetration even when foundation drains are present often requiring serious water proofing repairs.

The key to maintaining a sound brick or concrete block foundation is periodic vigilance to ensure loose or dislocated masonry elements are not ignored. If you observe a ‘stair step’ patten crack in the mortar joints of a masonry foundation wall, it typically means settlement has occurred under the ‘step’ section of the wall. . Any observed bulges or horizontal movement, as well as new cracks, should be quickly addressed.

Many Missouri condominiums have been converted from old multi-family apartment buildings with mortared or un-mortared stone foundations, some with brick foundation walls above the ground surface. These foundations have stood the test of time and are more than 100 years old and if well maintained can last another 100 years. They are more likely to allow the entrance of ground water due to their porous nature and the necessary steps should be taken to protect the structural elements and indoor air quality of the building if high moisture is a problem. Old foundations are like people. As they age, they need some extra care but they have already met the test of time.

Home Owners Association (HOA), Maintenance, Reserve Studies
posted by Ross Hardy

HOA Fees Going Up?

How to Sell the Results of a Reserve Study Without a Revolt

While the importance of associations building a strong reserve fund is no mystery to you, raising fees or assessments is often a sensitive subject with homeowners. Every association needs a long-term planning goal, and a reserve study creates an accurate timetable for all major improvements. Learn how to address those sensitivities and sell the results of a reserve study with a revolt.

FIDUCIARY DUTY

One of the primary business duties of community associations is maintaining and preserving property values of the associations’ common property. To do this properly, associations must develop funding plans for future repair or replacement of major common-area components.

A reserve study is a budget-planning tool that identifies the current status of the reserve fund and establishes a stable and equitable funding plan to offset the anticipated future major common-area expenditures. Being prepared for non-annual expenses allows your association to change the unexpected to the expected. Reserve studies are one of the best strategies for financial and physical health at the association’s disposal. In order to keep the replacement costs current, the reserve study should be updated (with a site visit) every three to four years.

COMMUNICATION AND RELATIONSHIPS

It is our belief that fundamental to the accomplishment of any of these objectives is two basic premises: communication and relationships. Communication is multi-faceted – between the board and the owners, between the board (and/or subcommittee) and the consultant, and between the consultant and the owners. To ignore these opportunities for effective communication will result in diluting the effectiveness and ultimate success of the implementation of any reserve study on the books for your association.

Relationship nurtures trust and confidence. Through effective communication, greater trust and confidence can be developed between the various parties involved. As a result, it is more likely (although certainly not guaranteed) that the recommendations of a reserve fund study can be effectively implemented.

AN OUTLINE FOR SUCCESS

It is imperative that the scope of a reserve study be clearly defined before even seeking proposals from consultants. The following are a variety of options to be included in the scope of any Request for Proposals:

Define the project – From the table above, define exactly what is expected of the consultant. This should be as a result of discussion by the board and/or building subcommittee to determine what is needed. It is particularly important to decide whether the reserve study is to be based on simply replacing existing components or if upgrades and improvements should be considered.
Interview the consultant – The RFP should include a paragraph such as follows below. Getting to know the consultant, the people involved on your project and their approach to the project is imperative to a successful relationship.
The board will select two to three consultants it believes to be qualified for the work and then conduct interviews. The objective of the interview is to meet the people who will be specifically working on our project, discuss a variety of questions, and generally understand the procedures the consultant intends to use for the project. A final choice will be made within one week following the interviews.
A reserve provider’s objectives are threefold: to provide a broader perspective on reserve studies; to assist property managers with a successful presentation of reserve fund studies; and to create opportunities for more meaningful reserve studies and effective implementation of recommendations.
Pre-project meeting – The board (or building subcommittee) should meet with the consultant before actual work starts. The objective is to refine and finalize the scope of the project. This is also an opportunity to determine what will be expected of the association (or management company) and what will be expected of the consultant throughout the project. Suggested language for the RFP is as follows:
The first step after selection is a meeting with the board (building subcommittee) to review, refine, and finalize the scope of this project. At that time, the items to be covered, the procedures involved, the on-site protocol to be used by the consultant, and any special concerns of the board (building subcommittee) will be discussed.
Conduct an owner survey – The intent is to give all of the owners the opportunity to express any particular concerns they might have about the project. While this may seem risky, it has been our experience that it is actually quite effective. Such a survey would be accompanied by a letter from the association providing all of the owners with the scope and limitations of the reserve study to be conducted and encouraging them to respond to the survey. It has been our experience that there is a very high percentage of response. Often the response to these surveys will reveal patterns that relate to association responsibilities as well as giving owners the opportunity to note areas of concern. The following is text for the RFP relative to this point:
The consultant is expected to participate in at least one meeting with the board (building subcommittee) prior to commencement of the project.
The consultant is expected to distribute a survey for use by all unit owners and compile the results of that survey as a part of the reserve fund study.
The content of the survey should be reviewed and modified for each specific project. Also, a letter should be distributed to the unit owners, along with the survey, explaining the purpose and logistics of the reserve study and the survey. That letter should be on the association stationery. The survey would be on the consultant’s stationery.
The final report would include a summary of the survey findings as well as any specific recommendations or observations related to the survey.
Follow-up meetings – It is important that the consultant be willing to discuss the findings of the study with the directors, building subcommittee, and unit owners. This is especially important if the study includes an evaluation of upgrades and improvements. Ideally, there will have been ongoing communication with the directors (building subcommittee) throughout the study process. A meeting with the unit owners will be a logical extension of that process. The following is language to be used in an RFP for that purpose:
The consultant is expected to attend at least one meeting to which all of the unit owners are invited. This will occur after submittal and acceptance of the final report. The consultant will be expected to provide an overview of their findings and to respond to questions from the unit owners.
Report format – Effective communication means effective distribution of information. In larger associations (more than thirty to fifty unit owners), distributing the complete report is impractical, cumbersome, and usually unnecessary. However, a condensed “owners’ report” is a valuable tool to distribute information. Typically, the owners’ report would include an executive summary and the financial projections that are part of the master report. To achieve this purpose, the following language is suggested for the RFP:
The consultant will provide (enough for the board or building subcommittee) copies of the complete final report. This will include photographs highlighting areas of concern and/or special interest. In addition, the consultant will provide a single reproducible copy of an owners’ report which will include a brief (two to three pages) overview of the findings of the study and the reserve fund projections.
Review draft report – For the association, directors, and building subcommittee to be comfortable with the work of the consultant, it is important that there be interaction throughout the process. Generally, we recommend that the consultants meet with the directors/building subcommittee regularly throughout the process of developing the study and submit a draft report for review and comment by the directors/building subcommittee. Recommended RFP language is as follows:
The consultant will provide a draft report for review by the board (building subcommittee). The board (building subcommittee) will provide comments within two weeks of receipt of the draft report. Following that, the consultant will provide its final report.

Now That You Have the Results, Where Do You Go From Here?

In the first half of this article, we discussed reserve studies and selling the results of the report to your association (without a revolt!). Now that you have the association on board with the report, how do you go about implementing the actual findings?

Click here to download the full article and a complete look at next steps…

Note: these resources are provided for consumer guidance only. To have a licensed, Professional Engineer inspect your deck, contact Criterium-Hardy Engineers.

Building, Decks and Balconies, Home Inspection, Home Owners Association (HOA), Maintenance
posted by Ross Hardy

How Safe Is Your Deck?

May is National Deck Safety Month® and your spring maintenance checklist should include a thorough inspection of your deck and railings. It’s important to ensure their safety before the outdoor entertainment season begins with family gatherings and neighborhood barbecues taking place on your deck.

Here are a few items to consider as you check your deck:

Check Connections: make sure all railing connections are secure. Anchorage points for wood railings often rot and may fail. Perform a stress test by cautiously pushing on the railing to make sure it doesn’t give at any point.
Stair Railings: stairs with two or more stair risers should have a railing.
Guardrails (railings): are required on “open-sided walking surfaces” higher than 30 inches from the ground, including decks. On single family homes, guardrails must be 36 inches high for decks (measured from the deck surface to the top of the rail) and 34 inches for stairs, measured vertically from the tread nosing.
Strength & Spacing: both guardrails and handrails must be able to withstand at least 200 pounds of force applied at any point and in any direction. The balusters should withstand 50 pounds of pressure exerted over a one-square-foot area. Spaces between balusters cannot exceed 4 inches to prevent children from getting their heads stuck in the openings or falling through them.
Benches: a bench installed around the perimeter does not serve also as a guardrail. The bench may be the required distance from the ground (36 inches), but without a guardrail behind it, which both the building code and common sense require, there is nothing to prevent someone from toppling backwards off the deck.
Touchup with Paint: repaint or stain the wood, if necessary (the experts suggest at least every five years). Consider using paint with slip-resistant additives for the deck and stairway riser surfaces.

With regular inspections of handrails and guardrails, you can identify and correct problems before they become an accident you could have prevented. Ensuring that your deck, handrails and guardrails are safe will help to ensure the safety of all who use them from toddlers to seniors.

Related Resources:

Your Home – a Criterium Engineers publication “Stairways and Decks Aren’t Safe Unless their Railings are Secure.” This document outlines building code requirements for guardrails and handrails, as well as design elements that may cause problems such as rail height and benches along the perimeter.
The State of California has a new extensive law that went into effect January 1, 2019, requiring the inspection of Exterior Elevated Elements (Decks and Balconies) and waterproofing elements for buildings with 3 or more multifamily dwelling units. Information on this bill and its history may be found on CA.gov.
The North American Deck and Railing Association (NADRA) provides tools for consumers to Check Your Deck® for the upcoming season.
- Check Your Deck® consumer checklist
- NADRA® deck evaluation checklist

Note: these resources are provided for consumer guidance only. To have a licensed, Professional Engineer inspect your deck, contact Criterium-Hardy Engineers.

Basement Seepage, Building, Home Owners Association (HOA), Maintenance, Water
posted by Ross Hardy

Water, Water, Everywhere

Typically when I am discussing water problems with the condo’s property manager or the board, the focus is on leaking roofs, foundations, windows, or other building envelope points of water infiltration. Instead, this article’s focus will be on water damage problems from inside sources and their prevention.

It is hard to talk about inside water damage without also considering a lengthy discussion of insurance matters, but I’ll try. The short answer is both the board and the unit owner should confirm the correct policies are in place. The association’s master insurance policy review should determine if the policy covers both as-built and upgrades (i.e. betterments and improvement clause) or just the walls, floors, and ceiling. The unit owners should consider sewer/ drain back-up coverage, if the policy does not. Keep in mind, insurance adjusters are looking for ways to avoid claim payouts. They will look for the source of the water and whether it was caused by accidental reasons or old age wear and tear; lack of maintenance; or your negligence.

So why is internal water damage such a big deal? It is because it is the number ONE insurance claim in the nation beating out other high profile claims including tornadoes, hurricanes, and wildfires. And it is growing. 1 in 50 homes experienced an internal water claim in the five year period of 2013 to 2017 per Verish Analytics ISO who provides insurance industry statistical data. This 5-year claim rate of 2.05% per dwelling is up from the prior 5-year statistical period rate of 1.44%. This equates to an average $10,000 per claim and $13 billion in total claims for 2017. It’s a big deal.

So why is this happening? The short answer is the trends in condo and HOA development and the aging of residential building inventory across the country. The burst in condo development in the 1980’s and 2000’s have resulted in many more water sourced appliances in risky locations. Many homes built in the last 20 to 30 years have laundries on the second floor instead of the more traditional basement location where a leaking hose could be dealt with a mop and bucket.

Some homes can have more than 40 water connections including washing machines; water sourced heat pumps; ice makers; wet bars; filtration systems; extra bathrooms; dishwashers; garbage disposals; indirect hydronic floor heat; and the list goes on. This partially explains why fire damage claims in the US have declined while water claims have increased, not only in numbers but in amount. High-end properties are the worst for this increase in water claims. For homes valued greater than $500,000 the claim sizes have doubled since 2015 while homes valued greater than $1 million have tripled in size according to the Wall Street Journal.

So what’s a property manager, board, or unit owner to do? Protect the home. Needless to say, each condo or HOA complex has its own factors of importance. These factors must be considered and a plan should be established to minimize the potential problems each type of complex should address. One place to start is the creation of a central maintenance log to record all reported internal water events to determine if there is a trend or pattern. An aging condo may have experienced a rash of washing machine hose leaks. This may prompt the property manage to notify unit owners to inspect their own hoses for wear or even hire a plumber to inspect all of the units’ water sourced appliances. Another HOA may have a population of ‘snow birds’ who should be cautioned to maintain their unit thermostats at a certain level to avoid pipe freeze up while they are vacationing in warmer climates. Sometimes a global reminder to all unit owners of the location of their central water shut off valve for future water emergencies is a good ounce of prevention.

Needless to say, no matter how much a property manager or board thinks about internal water damage, it often comes down to the individual unit owner being responsible to maintain the unit. Investing in water sensors at some risky or perennial problem locations may be money well spent. Educating the unit owners through the association’s newsletter or web site is also a step in the right direction. Reminders of the importance of maintaining caulk in the tubs and showers; hose connections for all appliances; and periodic observations around the home looking for developing rust; drywall damage; and pooling water can go a long way in preventing a trickle becoming a sea of trouble.

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Article written by Jack Carr, P.E., R.S., LEED-AP, Criterium Engineers

Published in Condo Media May 2019 edition

Download a PDF copy of this Condo Media Article

Home Owners Association (HOA), Transition Study
posted by Kyle Hardy

Transition Study, Reserve Study. What’s the Difference?

Most home owners association board members understand what a reserve study is and the beneficial role it plays in managing the financial future of the community association. Another study that comes up for recently constructed associations and is equally as important is the transition study.

A reserve study analyzes the capital items that the association is responsible for maintaining, which typically include Criterium-Hardy Engineers - HOA Home Owners Association Transition Study & Engineering Services roofs, siding, and concrete. The reserve study provides information regarding each item, including its life expectancy, and the cost to replace it in the future. Specifically, a reserve study is looking to see if and when the item will deteriorate due to ordinary wear and tear. A transition study, on the other hand, has a narrower purpose.

This type of study identifies and documents potential construction or design deficiencies. The key word with a transition study is “defect.” For example, a transition report would reveal such items as roof leaks, water infiltration, or concrete settlement caused by poor craftsmanship or design. A cost estimate to remedy the defect is normally provided as part of the analysis.

Each study is also different in purpose. The purpose of a reserve study is to assist the association in future budgeting for the cost to repair its capital items. Throughout the life of an association, maintenance and repair is an ongoing issue that the board continually needs to address. For example, even if a roof was just replaced, the association should immediately begin to budget for future roofing repairs and costs based on the life expectancy of the new roof. On the other hand, a transition study, ideally just occurs once at the time the property transitions over from the developer’s control to the homeowner board. At this juncture, some high quality developers will even order the transition study so that they can turn over the property with a “clean bill of health.”

More frequently, the association’s board orders a transition study when it takes over control of the association from the developer. When transition occurs, a transition study should immediately be ordered. The study then serves a twofold purpose. First, it can be forwarded to the developer along with a demand to address and repair any deficiencies or construction defects. Since an independent, unbiased evaluator performs the study, it generally has more leverage in pressuring the developer to voluntarily comply with correcting the defects. If the demand and further negotiations prove unsuccessful, the transition study can alternatively be used as evidence in litigation to force the developer to pay for needed repairs.

By requesting a transition study, the board also ensures that it has fulfilled its fiduciary duty. The study serves as an independent, expert analysis that the board can use to make sound business decisions in terms of properly addressing construction defects. Just like with reserve studies, a transition study takes the guess work out of identifying repairs, the cause for repairs, and the costs.

Although similar in some respects, the reserve study and transition study serve very different purposes. The reserve study can and should be ordered and then updated in the future to accommodate the ordinary wear and tear that the common elements will suffer, whereas the transition study looks back in time to discover defects caused by the developer or its contractors.

Learn more about Criterium-Hardy’s Reserve Study services.

Home Owners Association (HOA), Reserve Studies
posted by Kyle Hardy

Seven Things You Need To Know Before Conducting Your Next HOA Reserve Study

One of the primary business duties of Home Owners Associations is maintaining and preserving property values of the Association’s common property. To do this properly, Home Owners Associations must develop funding plans for future repair or replacement of major common area components. An HOA reserve study is a budget planning tool that identifies the current status of the reserve fund and establishes a stable and equitable funding plan to offset the anticipated future major common-area expenditures.

1. All HOA Reserve Study preparers are not equal.

There are a number of ways to evaluate the qualifications of the person or firm whom you are going to retain to perform your study. Key factors when making your decision should include the following: knowledge and experience of the provider, ability to understand the clients’ needs, local expertise and availability, quality control and accountability, and professional education. A key to evaluating this qualification is to have this portion of the work performed under the direction of a licensed Professional Engineer (PE), as the license confirms that the person has been trained and educated in performing this type of evaluation.

2. All Reserve Studies are not equal.

Until just a few years ago, most reserve studies included a list of all of the components, their replacement cost, and remaining useful life in order to determine what the next years funding should be. After many years of discussion and development by the Reserves Committee of the Community Associations Institute, it was agreed by the leading Providers from across the United States that all Reserve Studies should include not only this “Physical Analysis” but also a comprehensive “Financial Analysis”. This is now the standard. The physical analysis is important because it determines the existing condition and actual expected life of the common elements. The financial analysis focuses on the planning and budgeting of replacing these common elements, and includes a cash flow projection of the reserve fund over a 20-year period.

3. Full Funding of a HOA Reserve Study may mean that you are over funded.

There are a number of different “Funding Goals” which are recommended for use as the basis for your Association’s future reserve fund planning. “Baseline Funding” is when the cash flow projection reaches $0 at some time over the projection period. “Component Full Funding” is based on keeping every individual component within the Study 100% funded. In most instances, this will result in a significant amount of funds, which are never used during the cash flow projection period. “Threshold Funding” is when the amount in the fund during the cash flow projection period is based upon keeping a minimum balance within the fund. “Statutory Funding” is based upon the establishment of the amount to be funded as dictated by the local state requirements.

HOA Reserve Study Funding

4. The Replacement Costs included within a HOA Reserve Study should consider replacement alternatives, not just replacement with the exact same component or system.

In many instances the original component, which is being replaced, either is no longer available or has become outdated since it was first installed. By making recommendations for alternatives to the initial installation, the Association may be able to install a replacement component or system with a significantly longer life, such as a new type of roofing system, or a component or system which is much more energy efficient such as a new HVAC system. In both cases, this will result in either a reduction in the recommended contributions to the Reserve Fund or a reduction in your energy costs.

5. The Reserve Study can be used for much more than just estimating the Association’s contributions to the Reserve Fund.

The Reserve Study cash flow analysis can also determine how the Association’s Reserve Funds can be invested. They give the Association the ability to plan for the actual replacements, therefore making it easier to negotiate more effectively with contractors. An investment plan can be established to maximize the return on these funds based upon when they will be needed.

6. The HOA Reserve Study will not be the only funding the Association will need for the upkeep of the common elements.

The Reserve Study is only for the major repair or replacement of the common and limited common elements that are the Association’s responsibility. A reserve fund is intended to cover non-annual maintenance, repair and capital improvement costs. If the proper maintenance is not performed, it can result in a significant loss of useful life for the reserve components.

7. The actual cost of performing the replacement work, when it occurs, may vary from the costs included within the study.

In preparing the reserve study, the replacement costs that are used are based upon both industry estimating standards as well as the actual cost of similar projects that have been performed. Actual costs at the time work is done are influenced by many variables, and in order to keep the replacement costs as well as the anticipated useful lives current, the Reserve Study should be updated (including a site visit) on a regular basis.

Learn more about the Reserve Study.

Home Owners Association (HOA), Maintenance
posted by Kyle Hardy

Spring Into A Building Maintenance Schedule

With Winter drawing to a close, your residents are eager to replace their snow shovels with tennis rackets – it’s time to think about building maintenance! Now is the time to implement an ongoing building maintenance plan that will save your association time and money for many seasons to come.

View your association as a complete network with many important pieces working together, and ensure that each system is functioning properly. Here are 10 building maintenance tips your community can do now to keep your association in spring-ready shape: Spring Into A Building Maintenance Schedule for Your HOA

Drainage pathways. Clearing out your drains on a regular basis will ensure they are free of debris when spring rolls around. Spring months are notorious for high quantities of rain no matter where you live! Avoid the potential of blocked drainage systems by habitually cleaning them every other month.

Gutter and downspout repairs. Cleaning gutters is never an easy task but it’s a necessary one with spring rainfall! Try reaching into the gutter with a pair of large tongs to dig out leaves; placing a garden hose and turning on the water full-blast also works (but watch out below!). If the gutters are dry, and the roofs are walkable, leaf blowers make fast work of any debris in the gutters.

While you’re on the ladder, inspect all spikes, straps, and clips to ensure that they are securely fastened.

Close the foundation vent covers until summer. In the Midwest and Southern states, foundation vent covers are often left open during the summer months to allow for ventilation and airflow. However, in the winter and spring, the vent covers should be closed to prevent the warm inside air from leaking out. Closing your vent covers during the winter will save on energy and heating costs.

If you have a basement, check your sump pump regularly to ensure its operation throughout the rainy season. Water run off can create an overload of moisture that your sump pump may not be able to handle. Perform monthly inspections of the pump by opening the sump pit’s cover to clear any debris out of the bottom of the pit.

Replace snow stakes. It’s a common mistake to replace the snow stakes only once a year, usually at the beginning of winter. The stakes can be the first thing to be damaged after a heavy snowfall, particularly if the payloader knocks it over!

Do not remove snow from roof. Snow removal can be the cause of more damage than the actual snowfall itself. Most buildings are designed to handle snow, and it is very rare that even a large storm will dump enough snow to cause damage that will seriously harm your homes’ roofs. Let the snow melt naturally with Spring’s rain and warmer temperatures.

Landscaping plans. For associations in more temperate climates, the landscaping can often take a hit during the cooler months. Recover quickly by bringing in your local specialist and discussing the various shrubs and flowers that will need to be planted in spring.

Sendout paint bids for summer work. The major advantage to getting your bid requests out early is the extra time and accessibility your vendors are likely to have. Outside work requests often drop during cold weather, and getting a head start will ensure your association is at the top of their list during the summer rush!

Security enhancements. Now is the ideal time for associations to make the security enhancements they’ve been thinking about all winter. Security fencing and an alarm system are two timely projects for the post-winter months.

Replace smoke detector batteries. The batteries in all smoke and carbon monoxide detectors should be changed at least twice a year. The changing seasons are the perfect reminder to replace all batteries throughout the association.

Many maintenance projects have a double bonus – they will improve the appearance of your association while preventing costly repairs or replacements down the road. By undertaking some maintenance tasks now, you can lessen the costs that many associations rack up in the rush to recover from winter.

From the HOA Leader site, here’s a HOA Maintenance Checklist. Criterium-Hardy provides comprehensive HOA services, contact us to find out how we can help!

Home Owners Association (HOA), Reserve Studies
posted by Kyle Hardy

What Are Reserve Studies & How To Select A Provider?

“Assessment increases and stronger reserve funds will be needed to repair aging properties” was the number one prediction of experts surveyed by Common Ground, the magazine of the Community Associations Institute.

The most important element of credible reserve studies is valid component data.

Recent legislation in several states also emphasizes properly funded reserves and cites reserve studies as a necessary procedure in estimating funding requirements.

Capital Reserves are for projected repairs and replacements. Items such as regular periodic (non-annual) repairs (e.g., painting), irregular periodic repairs (e.g., deck surfacing), foreseeable failure, catastrophic failure, and outdated design/aesthetics may be included in a Capital Reserve budget.

Scope of Services

The standard, or full reserve study consists of five elements. The Component Inventory is the task of selecting and quantifying Reserve Components. Condition Assessment is the task of evaluating the current condition of the components. Life and Valuation Estimating establishes the Useful Life, Remaining Useful Life, and Repair or Replacement Cost estimates for the Reserve Components. Fund Status is determined by projecting the current and future funding of the Capital Reserve Account against current and future repair and maintenance requirements. The Funding Plan is intended to create options for achieving the desired funding levels to offset anticipated expenditures.

It is critical at the outset of any project to clearly define the scope of services. Annual maintenance items are typically excluded from a reserve study. The minimum scope of service may also be defined by statutory regulation.

Standards of Reserve Studies

In 1998, the Community Associations Institute adopted National Reserve Study Standards. The standards define three levels of service (a full reserve study as defined above, an update, and an update without an on-site visit), definitions of various terms, and the contents of the report. The standards also create the professional designation Reserve Specialist. The designation is awarded by CAI to individuals with the appropriate background, experience, and references, following a review of their work by the Reserve Specialist Designation Board.

State Legislation

Prompted by foreclosures and mismanaged properties, a number of states have already passed legislation governing the management of Common Interest Realty Associations (CIRAs). Among those that have passed legislation are Alaska, California, Florida, Hawaii, Illinois, Indiana, Massachusetts, Michigan, Minnesota, Oregon, Texas, and the District of Columbia. Some states address reserve studies broadly. Others are more specific.

For example, the California Davis-Stirling Common Interest Development Act states in part: At least once every three years the board of directors shall cause a study of the reserve account requirements of the common interest development to be conducted if the current replacement value of the major components which the association is obliged to repair, restore, replace or maintain is equal to or greater than one-half of the gross budget of the association for any fiscal year.

Florida statutes are even more specific. These accounts shall include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. The amount to be reserved shall be computed by means of a formula which is based upon estimated life and estimated replacement cost or deferred maintenance expense of each reserve item.

How to Select a Reserve Study Consultant

The most important element of a credible reserve study is valid component data. Inaccurate cost information, improper assessment of the condition of each component, and failure to examine ways of maintaining components to prolong their useful life can lead to underfunding or, almost as problematic, overfunding of the reserve account.

Reserve studies are a professional opinion. The value of that opinion is directly related to the knowledge and expertise of the person rendering it. Always ask the consultant for references and a statement of experience and qualifications. Even this may not tell the whole story, however. Here are some other factors to consider.

Is the consultant locally based? Materials and their performance will vary according to regional preference and climate.
Does the consultant thoroughly understand building systems? Databases work only for typical systems and components, not actual ones.
Does the consultant have the ability to diagnose problems, design repairs, and oversee construction? A reserve study also includes an evaluation of defective components and systems in need of immediate repair.
Will the consultant be available for questions and follow up? Often, there is a need to explain the findings to the board or individual members.
Does the financial model have credibility? The model and format should be prepared by someone with an accounting background and comply with the guidelines of the American Institute of Certified Public Accountants.

The Engineering Advisor is intended to enhance your knowledge of technical issues relating to buildings. For additional information on any subject, please feel free to call us. Our commitment is to provide you with timely, accurate information.

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