 Thank you for joining us for another episode of condo and cider. That's the show that deals with deals with living and working in condominiums. And we hope that this this YouTube provide you with some information that helps you in those areas. You know, we're going to be talking about the legislature and my guest today is Raylene Tenno, who is the programs director for HCCA. Hi Raylene. Hi Jane. Nice to see you. Nice to see you. Hey, you know, the legislature opened up yesterday was quite a ceremony. I mean, after three years, I mean, there were lots of people down to legislature. Lots of foods, lots of food. It was like it was like old times. I mean, you know, you know, the old days, you know, when you didn't have to eat breakfast and lunch, you just went to the capital and spent the whole half day there. I can imagine everybody's excited to get out of their house. Yeah, I mean, it was it was quite a it was quite exciting, you know, and hopefully, and now this year, they're going to I don't know if they're going to do hybrid but I think they're doing in person hearings. They're going to continue with online. I mean, I heard that some people were doing hybrid hearings, you know, in person plus the zoom. So but anyway, there's lots of activity going on. And in the last couple of days, you know, I've been working with some of the legislators, you know, about different bills. I don't know what's out there, but I kind of sort of know. But you know what, let's talk about, you know, the elephant in the room benchmarking. So benchmarking started for certain buildings January 2023. And it was signed into law last July by Mayor Blanchiarty. So it impacts the first segment impacts the buildings that have 100,000 square foot but it's floor space. It's not just square foot of the land. It's the, it's the floor space within the building. They're not concerned about the exterior common elements, it's only the inside. So when I talked with Ben Sullivan, who is the person at the city for the resilience benchmarking. He had, I want to explain to I go, well, how do you measure the interior. So I said, okay, so if a building is like the units are all studios are 300 square feet, and we're four floors, there's 64 units. I said, can I take the 64, can I take the 64 units times the 300 square feet and do it that way. And he's like, well, but you got the corridors and I said well what if we just measure the exterior of the building times how many floors, because we determined square footage, and then times times it by the amount of floors you have. And he said that would work. Okay, and what is benchmarking this is what this is. This is like a software program that the management of your condo is supposed to download. And then it measures the electricity that the building uses and the water usage right. Yes, the water they're having a few challenges but right now it's going to start with the electric. So, and the and the water usage is only going to be building so you're not going to need individual. So some of that information get from the water bill that you get every month right, but the electric is going to be for the entire building, and the whole purpose of it is to to to see over time, how much the building is using to conserve, or do better on their usage. You know, my argument back to them was, well, we have to pay the bill so we kind of make sure we conserve as much as we can, you know, even landscaping some condos have switched off to not so much grass maybe, or doing what they can to plant grass that is more drought tolerant. You know, so it's going to be a hard measure over time because I think a lot of condos already make the effort to conserve. So that's going to be interesting but there is a software. There's a link that we can post. And there's information, it's kind of cumbersome to set it up in the very beginning, but I'm going to be working with them they put some tutorials together. So I'm going to be working with trying to set up a mock and using their tutorial, and then I'll give them feedback of like this doesn't make sense hard. But it's going to be a second read someone that's never read it before. So I'm going to be taking it and helping them to kind of proofread it to see if maybe if it needs a little bit more, more help or adjustments in it. So we also have our ACCA in person, first one in three years benchmarking seminar, that's on February 16, and we're going to have the city and county the benchmarking people there to do the presentation as well so that will be. And I've been to one before, and it's kind of hard to follow. It's going to be hard to follow if we did it via webinar. That's why I really kind of push to do it in person. It's going to be a lot easier to see it in person than it is via webinar because to there's the screens and going back and forth. It would be too hard. And you know, I know that the first report is due in June of this year June of 2023, which is less than six months away and six months is really not a long time. And the notices have already gone out, because I saw a one right we saw one of the notices right so so the city is sending notices to the buildings already. And so those people who are listening to this show. The notices will go to your property manager. And then you have until June of this year to figure out how to do the benchmarking so that you can submit your report. And I'm told that it's probably not real difficult. The issue is setting it up right doing the software. And once you get that all set up, then it's not difficult, but I and our property manager is Hawaiian and I'm told Hawaiian is not going to do it. And our site manager says that they're not going to do it. So I told the two of them, I told the two of them at our board meeting between the two of you somebody tell me at our next board meeting, who's going to be making the report for our building. If the site manager, I mean if the managing agent is not going to do it and the site manager is not going to do it. Who is going to do it. And so I need to have an answer. And so I guess I mean that that's that's the dilemma is, once you get your notice, who do you contact to say okay, I got to do benchmarking so who's going to set it up for me. I think once we get through this training, we're going to see how how actually complex it was. Because when I first read what was going on, it said that it was for every single unit. We would have to get the report but I but I'm kind of like reading something else I go it's for the building as a as a whole. And not so much for individual units so that's where there's a little bit confusion that I still need to get some clarification on, but it's supposed to be total property not individual. So I think once we get through the training and there there is ability so I'm going to be playing with it, the software, I can do a mock one I can do a makeup one. So I can actually go through the steps to, and the city also hired in Ben's office, a kind of like an intern. Her name is Marissa. So she might be the person that if someone gets stuck that will be the person that we would contact. So the city is setting up, I mean, taking steps to make sure that there are people around. In other words, if you can't do it or you have a question, then there's going to be somebody who's available, you know, either on the internet, through a website, or a telephone that is going to be able to help you. Yeah, plus they they're making up their tutorial, their how to book. So that as well. So we'll have paper copy. And if we really get stuck, then at least we have a point of contact. But she's, that's going to be her main focus, because I'm going to be working with her when we get ready for the seminar for the presentation. Okay, well let's hope everybody, you know, comes to the seminar on what is it February 760. The 16th at a Wahoo Country Club and a Wahoo Country Club. So those of you who are listening, tell your friends and neighbors that we have a seminar on bench, benchmarking, and they should come out and join us. Let's go on to the next one. There's an ombudsman bill I have not seen it, but a reporter contacted me so I know it's out there, or it's getting developed. And really, you and I know the ombudsman bills have been raised before they've always been shot down, mainly because we have in place with condominiums, the value of the mediation, that is, there's money in the condo ad fund that pays for mediation. And, and I guess what I'm being told is that, you know, people either don't know or don't want to go through mediation that it's too long, they'd rather have an ombudsman. And the way the bill is set up. The DCCA real estate, you know, commission over at the state of Hawaii. They're the regulatory agency that oversees condominiums. And so they would be charged if the bill passes. An ombudsman would be set up in the DCCA. And because the condo, the condos have that condo ad fund that is earmarked for dispute resolution, the money will come from that fund. So the state can't say, oh, we don't have the money to hire this person. The money is there. Right. So, so they're they're going to hire this ombudsman. And the way I hear that means that if you have, you are an owner and you have a complaint against the board. I guess, maybe the board, maybe your, your, your site manager or your property manager, I don't know how broad it is that you can make a complaint, probably online. You know, with the DCCA, like Rico, right? Right. To the ombudsman. And the ombudsman would then be charged to do an investigation and actually come up with a decision, whether you're right, or you're wrong, or, you know, who's ever and I, and, you know, my, my, my, my following that is, well, it's one thing to come up with a decision, but what do you do with it? You can take it to court or, you know, what can you do with it? Well, and then, and then as I'm hearing you talking, and I go, I'm like, listening, I'm like, well, it's almost kind of like DCCA is going to be the mediator because they're listening. They're, you know, they're going to hear the complaint. So the owner makes the complaint or probably talk to the condo association, you know, and hear their side. And then what are they going to be the mediator? I mean, you know, how are they going to make their decisions? Yeah. But anyway, it's pattern after Virginia bill. And in Virginia, that's what happens. The ombudsman there gets the complaint from the homeowner does the investigation and comes up with a letter ruling. And, you know, once you come up with a letter ruling, I guess that if you're the owner and, and the ombudsman sides with you, I guess that's a good thing. But if the ombudsman comes back and says you're wrong, I mean, what happens then. And, you know, if, and, you know, in the past, because we had, you know, subsidized mediation, you know, through the conduit fund. I've kind of, I've always opposed these ombudsman bills. I think this year I'm going to support it. And I'm going to ask, you know, why counsel people to support it, mainly because and maybe it's just me. But, you know, these board meetings are getting hostile. And some of them are getting toxic. And, you know, and to me, you know, the volunteer board members don't get, they don't get paid anything. And they don't have to be put in a situation where they're, you know, yelled at and called names and say, Oh, you're corrupt or you're stealing from us. And this kind of stuff, they don't have to put up with that kind of conduct. And so, you know, maybe if this ombudsman bill allows the owners, you know, to file their complaint to the ombudsman and let the ombudsman get involved in an investigation and make a statement. And it will stop some of this toxic action that I'm hearing about is happening at board meetings. I'm all for it. And it's the other side of the fence, too, or if it's not really the homeowner, but it's the board acting inappropriately, not following the statutes, not doing their fiduciary duty. And it's, and it's being evidenced, you know, and the homeowners can provide that to support their complaint, you know, then that would be work on the on the owner side. So two sides, right. You know, to me, I think when I go to testify, I'm going to say, you know, I think if instead of making it just an owner, complaining against all these entities, the managing agent, the site manager or resident manager and the board, that any of them can complain about the other. Right. And the ombudsman would be the one to make the decision. And there has to be enforcement. There has to be some consequence. If the ombudsman finds that there's been some bad conduct, you know, I don't know what the, what do you call it the enforcement or the consequences would be. But to me, a bill that says that you have an ombudsman who's going to listen and come to a decision, you know, is a nonstarter because once you have the decision, what do you do with it? You know, right. And so I think this year, that's going to be something I'm going to support if I see it. And you know, I am going to ask that it be mutual, that it not be just the homeowner, but everybody, you know, can make complaints against each other and have the ombudsman do the investigation, make a ruling and maybe have some authority to, you know, issue consequences, either that or say that the ombudsman's decision can be used as a basis for a complaint, for a civil complaint, right? And then that person can take that opinion and go to circuit court and say, hey, you know, I went to the ombudsman, got this decision, said that the board is bad. And so I want, you know, the court to do this and that, you know. Or the ombudsman can require them to go through training. Yeah. You know, if they want to serve on the board. Well, even a homeowner, even a homeowner is bad. Hey, you need to take, you need to take some training to set that to learn how condominiums work. You know, you need to understand that before you start complaining, you need to understand the process before you start barking up a tree, and you're not understanding like about like some people always complain about the reserves. So you need to understand how the reserves work, what they're for before you start complaining about it. You know, that could be a thing where the both sides of the fence could go be ordered to go through training. So, so that they understand. What about let's go get on to another because, you know, otherwise we're not going to have time to get over. We've got two training bills. Okay, I mean, basically, not training, but anyway, there's a bill. I've seen it and I said to you a draft. There's a bill that's going to require property managers that service. Association homeowners associations for condos co-ops and HOA's to be licensed and regulated by the state of Hawaii. And there's another bill that talks about board members having to be trained. All board members within one year of being elected or appointed to the board must have training to be done by the DCCA real estate commission, if they don't have the right to serve on a board. So let's talk about those two. I think both of them have a lot of merit. But, but they whoever is, you know, the board members should also go to at least another besides their board or director training they should at least go to, like, you know how we do our legislative updates, you know, once a year, they should at least attend those because they're going to get the updates on the on the current laws. They should be, they should be attending those as well. But the licensing of property managers. That's kind of what's happening in a bunch of other states across the country. I think there's like eight other states that require licensing Florida California. I know Florida, specifically, if a property manager manager handles $100,000 or more, they require them to be licensed. And it's theirs is pretty heavy because it's 20 hours. Plus you have to pass an exam. You know, but their complaint levels is not to the level like that. I mean, because we're, we hear it all the time from everybody. And it prevents someone from a property manager just hiring somebody from, you know, essentially off the streets a now you're a property manager. You know, just like I had a conversation about a resident manager, you hire somebody with no experience. Now they're a manager. How can you manage if you if you don't know your dog. How can you be right and especially with the Florida collapse. Yeah, that you know, now people are finding out that you know you have volunteer boards, who basically, you know, make decisions about the operations of these $100 condo co-op and HOA projects. Right. They're volunteer boards are not trained engineers. They're, they're, you know, they're not financial wizards. And yet they have to make these complicated financial and, you know, technical decisions, you know, and some of them. And you know, the thing that we see a lot is with this volunteer board. They do not want to spend money for consultants or for professionals. Right. They want to go cheap. They don't want to raise maintenance fees. And you know, that's another reason for the board training is because you have these board members who have a mindset that their whole function on being on the board is to keep maintenance fees lows, which is very which is not why they're there. They're there to make sure that the building that the project that you know they're supposed to be overseeing is, you know, is well maintained for current owners and for future owners. And that means that you have to have a healthy reserve, and that you have to do periodic inspections. You got to pay professionals to come onto the property to look at your building. Otherwise you end up with a full and you know in Florida. The board in Florida did not have the authority, you know, to, to implement those changes, whereas in Hawaii, the boards do have it. And we have a very strong reserve law that requires mandates that you set aside sufficient funds. And, you know, the statue talks about 50% funded. And although that's what the statutory requirements are, I'm hearing from reserve specialist that very few buildings are 50% funded. Many, many aren't even at the 25% funding level, which is really scary. Well, I think the change in the law where you have to use an outside third party to do the reserves. I think this year, the next two years, maintenance fees are going to go even higher because they're going to get that surprise that they weren't properly funded. Right. And that's another legislative bill. They're clarifying the budget and reserve section. You know, they're trying to clarify certain provisions to, you know, to say, you know, who exactly can last year, they tried to define who was a reserve specialist who can prepare these reports. And they came out with a very general term. And the drafts that I've seen this year of the bill, they're trying to clarify that as to who can do the report, what kinds of information do you or is required to have in this report. And, you know, this is all good information. I mean, good, good, good stuff to put in the bill so that the boards have got, you know, will have guidance as to what they have to do when they're working on their reserves. Yeah, because in my opinion that whoever does the reserves should be should be somebody that's not connected with the property management company, or with a board member, you know, because that to me is a conflict of interest. And it has to be someone totally independent outside of that circle to get the real because you know what, eventually it's going to back up. You know, if you get someone that tries to say, okay, let's try to keep it down. You know, let's play around with the reserve numbers. It's eventually going to back up. You're going to have something big and major and you're going to have a special assessment. And that's the biggest. And that's what we're all trying to avoid is a special assessment. You know, and I told someone I'd rather have a maintenance fee increase of $20 versus a special set minute of even 2000 or 20,000, you know, I know I'd rather have a $20 a month increase versus those four digit and five digit numbers, you know, right. So that's what, you know, some of the changes in the legislature, I mean, that's that's what's driving these three changes, licensing of property managers, training a board member so they know better what to do to protect their buildings, and and not feel, you know, not feel that their job is to keep maintenance fees low. To me, that sends, you know, this, that's the wrong message. And you know, one other thing that may happen, and I haven't seen the bill. But you know what the insurance increases that have haven't been happening. And you know, they have a hurricane relief fund when the insurance company stops selling insurance, you know, hurricane coverage. And so what there is some movement to try to get a state run fund to help associations because about what about a third of the people in the state of Hawaii live in condominiums, right, and the high rise buildings are getting surcharged because they don't have fire sprinklers. And that you're talking about most of the older buildings that were built before 1986. And we're not talking small increases like 5,000, not even 10,000. We're talking this year, my building went up $65,000. And that's in excess of the 18% increase that was budgeted. You know, and that's happening all over the state. And so, and you know, what it, what it means is that someday, you know, some of us are going to have to go out to surplus lines. And that means that, you know, we're going to be paying a lot more money for insurance. And, and we don't know, you know, and at first we told, we were told this is only temporary. Right. The reinsurance companies that, you know, we're funding the local insurance companies, they suffered these huge losses due to natural disasters on the mainland. Like wildfires and the condo collapse in Florida. And now this year you got the floods in California. Right. So it's not going to go away. Natural disasters happen. And insurance has to pay for the losses. And so everybody across the country is being surcharged to help subsidize the losses. It's not going to go to speak. It's not because people in Hawaii are doing something bad. It's because the insurance industry. Right. It is suffering losses that have to be recouped. And that's why they're increasing the insurance premium to those high rise buildings in Hawaii. And so they're talking about maybe setting up a special fund in Hawaii like the hurricane relief fund. I don't know how far that's going to, I know that representative of what's her name, Bella, she's against it. She's got a lot of condos in her Makiki district. You know, I'm wondering if there's something else happening at the city level, because the city approved these plants, you know, these condo building plans way back when, but not all of them were built immediately. Like, remember the one that's supposed to be projected at Cam Shopping Center, the Swatmead area or the Swatmead used to be? You know, they abandoned those plans. They changed their mind not going to do it. But what if they go back and say like maybe five years ago, well, you know, maybe the timing is right. We want to build it again, you know, or is the city and county going to have to redo it and tell them they have to adjust it to current building codes and not the code that when it was originally approved. I think that's what happened in the past when some of these developments were approved today, but they weren't stated to be built to like five years from now. You know, and codes change, you know, over time. So I think that's where some probably where the city should take a look at that and kind of give some condos a break on somehow because it was through their efforts or through their But I think that if this bill is introduced, at least it'll start the discussion that something that we didn't break the condo people did not bring this on themselves. Right. This happened, you know, outside of Hawaii. And we, the high people who live in high rise condos are being asked to subsidize these losses to the insurance industry. And that's not only us. That's high rise people, owners who live on the mainland are being asked to subsidize it as well. And so, you know, you know, we've got to figure out something because of, you know, what we have what we have, and at least in my building, you have owners coming to the board and saying this is your fault. Yeah. The fact that you know, the insurance goes up. I mean it's our fault because we didn't plan on it. I don't think anybody planned on it. Right. Right. And so, so you're going to have a lot of, you know, board members of board owners, you know, going to their boards and say, how come this happened? Why didn't you stop it? Why didn't you tell us? You know, it's always like, did we anticipate climate change? You know, that's something that is impacting a lot of these insurances. I mean, the disasters is the climate change. You know, anyway, you know, we've kind of run out of time. And so we're going to have to, well, I'm sure we're going to be talking about this during the session because, you know, the debates will happen. And we can talk about the issues because we would like our listeners to become involved in the process and maybe call their legislators and tell them, yay or nay on certain bills. And so it's, you know, I hope this show will just, you know, kind of alert people to the fact that these things are happening right now and their legislators are going to be sitting down. They're probably sitting down right now looking at draft bills and some of them dealing with the exact same issues that you and I have been talking about today. So it's going to be time for them to pick up the phone and to call their legislators and say, hey, I heard about, you know, that, you know, bill about licensing property managers and, you know, I want you to vote for it. You know, this kind of stuff. They're going to, we're going to have to, you know, get people, you know, alerted so that they can participate in the process and let their legislators know what they want. Yeah, and everybody kind of check during this for the month of January, February, check emails every day because we'll send out email blasts. We want testimony submitted in so that everybody has their own, has their input into these bills moving forward. Yeah. Well, thanks Reileen for being on the show and talking about these issues. And I'm sure we're going to be doing it, you know, through the session because we got, you know, at least 60 days of this. It just started yesterday. And the people who are viewing this, thank you for joining us. And please join us again next week for another episode of Condo Insider, the show about living and working in condos. So thank you very much. And we'll see you next week. Aloha and Mahalo. And also follow us on Facebook, Instagram and LinkedIn and donate to us at think.kawaii.com. Mahalo.