 Ladies and gentlemen, Aloha. My name is Jonathan Billings. I am a vice president at Touchstone Properties and owner president of Vertical Hawaii Reserve Studies. Today, we will speak about association reserve studies and building collapse and how you can utilize a reserve study to minimize the chance of a building collapse or any life safety event for that matter. First and foremost, we are all absolutely shocked at what happened with the condominium in Florida. Absolute tragedy. Obviously, this was a eye-opening experience for many of us. And as a reserve specialist, I thought, well, what could have been done or what could be done for that building or for any building here in Hawaii or anywhere for that matter with your reserve study that could have helped minimize that chance or the result that ended up happening? It's an absolute tragedy, but we can obviously take this as a learning experience as well when we look at our association funding and our association reserve studies when we perform those. As everyone is well aware in the state of Hawaii, reserve studies are required to be done on an annual basis. Generally speaking, it is a simple update, but in light of what just occurred, associations may want to consider doing a more in-depth reserve study or when I say more in-depth reserve study, I mean a level one reserve study, which is a more comprehensive reserve study that includes a site visit to help identify some items that may be considered life-threatening events. Let me be clear and completely upfront and provide this disclosure to our viewers today. I am not an engineer. I am not qualified essentially to give an engineering analysis or professional opinions out of fields that are not within my expertise. And that being said, I also want to disclose that a reserve study is not an engineering report. A reserve study is not an intrusive forensic inspection. It's not a code compliance inspection. It's not an engineering analysis, hazardous materials investigation, termite inspection, or any of that. It's not a quality or audit inspection of the project. A reserve study essentially is a financial planning tool that associations utilize in order to plan and fund projects accordingly that we know associations will have to undertake at some point in the future. That being said, considering reserve studies not an engineering analysis, how can a reserve study help plan in hopes to minimize the chance of a building collapse or minimize a chance of any life safety, life-threatening event, such as if you guys recall, the individuals that fell from a Lanai, excuse me, a corridor walkway at the Olimo-Wanash shopping center a number of years ago. So a reserve study essentially will look at your Lanai railing and your walk rails. A reserve study, when you are doing a site inspection will look at different areas of your complex such as possible trip hazards or possible electrical malfunctions that may result in an electrical arc flash. So a reserve study as a reserve specialist, I will not go and give an opinion that you have to be concerned that this is going to occur in the very near future because I'm not qualified to say that. However, it is important to understand that a reserve study can be utilized to help identify potential threats to an association. So how can you use your reserve study to accomplish that? The key takeaway from this episode that I want everyone to really think about is that a reserve study can be utilized to allocate funds to engage qualified third-party professionals to perform in-depth assessments of various components of your association such as structural, electrical, and mechanical engineers. Again, a reserve specialist generally speaking is not an engineer. So there are components in a building that may not be visible or may not have accessibility that is feasible for a reserve specialist. So a reserve study is not a destructive inspection. So there may be some components that a reserve study really can't dive into without getting that third-party professional involved. So that is really one of the major takeaways I want people to understand is that utilize your reserve study, set aside funds in your reserve study to engage third-party professionals to do more in-depth analysis of your various components. For example, like the Florida collapse that just occurred there was an analysis done by an engineer back in 2008 that basically highlighted some facts that the association should have taken no count and they did discuss, but those could have been implemented into a reserve study once that engineering report was made available. So that being said, looking at a reserve study, a reserve study is basically built on a site visit or several site visits by your reserve specialist or whoever is performing your reserve study and it's built on information provided to the reserve specialist. Here are some photos that I just want to show our viewers today of some items that I may encounter when I'm doing a reserve study site visit. Here's a picture obviously of this association that they obviously had some issues where they had to shore up that concrete beam and pillar by adding that reinforcement along the top corner there. So when I'm performing a reserve study and I see something like this, I will put into the reserve study funds allocated to engage a structural engineer or a third-party professional essentially to go and review something like this and maybe go and monitor something like this to get a really better understanding of what we are looking at. When it comes to some of these analysis of these engineering reports that you want to fund in a reserve study, it may not be a one-time expenditure as well. It is something that you may want to put in on a frequent basis or a set schedule to make sure that you're monitoring things that may have changed from one period of time to the other period of time because obviously there are things that could occur after your site visit or may occur a number of years later. So it would probably be beneficial to have some of these items as a reoccurring expense on a set schedule. And that will really depend on the details of your building and what that engineer may say. He may or she may say that you should perform an update or basically an assessment on a set schedule just to monitor what is going on with your building. The next picture is just another example here that I want to show you. It may be hard to see on your screen a little bit, but if you look closely at the center of that picture you can see that the CMU blocks are starting to separate a little bit. You can see daylight coming through and there's a horizontal a jag of crack that follows the mortar of that CMU block. So again, when I'm performing a site visit I'll highlight this fact in a reserve study and advise that board or that association that they need to engage a third party professional to really take a deeper dive into this and give their professional opinion on how to best address this matter. Another picture that I want to show you that's the next picture is some water intrusion. Again, this is just a simple visual observation that I'm doing as a reserve specialist. I'm not giving a professional opinion on how to fix this. Obviously I have some ideas, but again, the association has an obligation really to engage that third party to better understand. So obviously there's some water penetration issues here in this wall that should really be remedied as everyone is well aware. When water comes in contact with concrete that water will penetrate that concrete, work its way to that rebar. The rebar will rust and expand and essentially crack and cause concrete breaks or concrete spalls that need to be addressed. So again, when I perform a site visit and I see that there's some kind of water penetration entering the concrete like this in the basement garage, I'm gonna highlight that fact in a reserve study to ensure that that association is engaging a proper third party professional to give a further analysis of what needs to be done to remedy that situation. The next picture is a picture or an example that I kind of gave earlier is the walkway railings. This is a perfect example of something that I may encounter when I'm doing a site visit at an association. Obviously if you look at that they have concerns of what's going on there, that was actually already placed there, but if you look at the top corner there's some separation of that railing. And if you go to the next picture that will appear on your screen real briefly as you can see the bottom corner of that railing post pocket, there's a spall. So essentially that handrail is not structurally sound or secure due to that breakage in the concrete. Not only is that a safety concern for the handrail itself and putting weight on that, but if somebody were to walk underneath that and for having forbid that piece of concrete actually fell and caused bodily damage to an individual that was walking below that. So I guess the reason that are more in depth or a level one reserve study with site visit is beneficial is because a reserve specialist they will walk the property in its entirety all the way from the rooftop down to the basement garages, the different corridors, stairwells, things like that. And they are looking for items that obviously belong to the association which are considered their common elements, but also they're identifying areas that either are life safety issue or a component that has deteriorated quicker than originally anticipated. So you're basically getting a separate set of eyes on your association up and above your board of directors and your onsite management. It's always good to at least get a new set, a new set fresh set of eyes on a building because that individual may be able to see concerns or items that need to be addressed that have just basically come a normal eyesore for an owner or a board member or a resident manager. That being said, some of the things to consider and it depends on your property obviously, some of the things that I see at other properties is that depending on your location you may have a sea wall or a retaining wall. Obviously when you're doing a site visit or we're doing inspection of those oftentimes you'll see a bulge forming on the outer edge of those in regards to a sea wall, sinkhole might be forming on the inside of that sea wall. Again, what I'm going to an association doing this site visit, I'm allocating funds to engage third parties to give a further analysis of that retaining wall or that sea wall to see what is going on there. For that like that picture I showed you earlier there's obviously a waterproofing system that's compromised and the water's starting to seep through. So it's important to engage those third parties. That being said, well, we're going to take a short break here and we'll be right back with you to continue our discussion about the reserve studies and how you can utilize those to minimize life safety events. America Finding Its Way is a 30 minute talk show from Think Tech, Hawaii which is streamed live at 11 o'clock every Thursday morning. The show features Jay Fidel as host with regular contributors Tim Apachele, Cynthia Sinclair, Stephanie Dalton and Winston Welch. We discuss the issues, events, challenges and crises in Washington and around the country and the world, in the federal and state governments, in the cities and in the hinterland. We examine and evaluate the motivations and frustrations of the competing individuals and interests these days. We connect the dots, we tell the truth and we try to figure out what it all means and where things are going. In short, we cover America Finding Its Way in the post-Trump world, which is not easy and which is sometimes a discouraging experience. We try to be optimistic but we are often left pessimistic about the future of our country. Come watch us, listen to us, email your questions to us at questions at thinktechhawaii.com every Thursday morning and you'll see what we mean. Thanks. Ladies and gentlemen, welcome back to Kindle Insider about to you by Think Tech, Hawaii. Again, I'm Jonathan Billings Vice President of Touchstone Properties and Owner President of Vertical Hawaii Reserve Studies. We have been talking about how associations can utilize a reserve study to implement funding in order to minimize the chance of a building collapse or a life safety event that may cause bodily harm to your residents or to visitors of your association. We've talked about performing site visits, identifying areas that may be of concern where you should be utilizing a third-party professional such as a mechanical engineer or electrical engineer or structural engineer. Again, a reserve study is not an engineering analysis. It is a financial planning tool so you really need to engage those third-party professionals to give a more in-depth analysis of those different components that may be of concern. That being said, moving on, when it comes to performing your reserve study obviously a site visit is an important aspect of that reserve study process. However, it is also important that the association, the board of directors or on site management, managing agent, they provide as much information as possible to the individual performing the reserve study for your association. And what do I mean by as much information as possible? So if you have already conducted a third-party assessment where you've already had a structural engineer come out or an electrical engineer or a mechanical engineer, oftentimes those reports will highlight items that need to be addressed. If you're able to provide that information to your reserve specialist or the individual performing the reserve study for your association, that reserve specialist can incorporate that information into the reserve study. It'll help in order to prioritization of different projects in regards to what is a higher priority versus something that may be a lower priority and how do you find that? So if you have third-party condition assessments or third-party engineering reports, I would suggest that the association provide that information to the reserve specialist so they can incorporate that information into the reserve study. Another item that the association may want to provide to the reserve specialist or individual performing the reserve study is inspection reports, for example, may be performed by the Honolulu Fire Department. Those inspection reports will obviously identify deficiencies that need to be corrected and again, a reserve study can obviously highlight that as a priority and put that as a replacement component in the near future rather than pushing that out into the further on in the future. So an inspection report, an elevator inspection report that may have some components that are the responsibility of the association. So any kind of inspection report that is provided by a third-party professional or a governmental agency such as the Honolulu Fire Department or an elevator state inspection. Another report that obviously many high-rises have been mandated to perform or to complete over the last few years has been a life-safety evaluation in light of the loss at Marco Polo, city council enacted an ordinance that essentially mandates some association that don't already have sprinklers installed in their building to perform a life-safety evaluation and this life-safety evaluation will identify areas that need to be addressed. For example, your fire systems that are very costly, possible door closures or a standpipe installation. That report identifies or provides useful information that should be incorporated into a reserve study, especially considering that there is a deadline to meet these upgrades according to that ordinance that the city council hasn't acted. So that is another report that should be provided to your reserve specialist or individual who is performing your reserve study because that information can help prioritize. So once we've done our site visit, once we've reviewed the documents provided to the reserve specialist by the association, again, we can go and prioritize which projects have a higher urgency and which ones may be able to push out a little bit depending on your funding levels. Oftentimes items that are a risk to an association should be addressed immediately. A reserve study can help you understand whether or not a special assessment is required or a loan is required. Depending on the size of these repairs, a special assessment or oftentimes a loan may be required. For example, when you're doing your fire system modernizations, that kind of has been a very costly component for association. And now that they have a deadline to meet, they may have been planning to replace or modernize their fire systems 10 years from now. But with this new deadline that's in place, they have a shorter timeframe. So they may not have adequate funding right now in order to modernize that fire system. So a reserve study can help prioritize which components are more urgent and which components are less urgent and maybe more aesthetic that can be pushed off for a little bit in order to spread out cash flow. And then it will help identify whether or not a special assessment or a loan is required in the immediate future. Or depending on what the project is or depending on the results of those condition assessments that your third party professionals are performing, you might be able to adjust your reserve contribution accordingly implementing increases to meet your future obligations. That being said, again, a reserve study is a living document. It is updated on an annual basis by your association. The level one reserve study that we've discussed today is the most comprehensive reserve study according to a community associations institute. Level one reserve study basically includes a site visit where that reserve specialist is visiting your property again, they're walking the property from rooftop to basement. They're quantifying the different components of your association. They're documenting the different components of your association, what kind of condition via photograph, what condition those components are in and whether or not it may be a priority or not. From there, we input that information and hopefully your association will provide additional information that you've already conducted by third party professionals to incorporate into that reserve study. From there, you basically will create a funding plan and a prioritization plan with the board of directors. So make sure that when you're conducting your level reserve study that you meet with your reserve specialist and go over the different components, discuss them in depth, you know, discuss when those components should be completed. Keeping in mind, reserve study is not meant to be utilized to basically minimize increases. So unfortunately, what we have kind of seen and I've seen quite often is that association will receive these third party reports and it gets put into a filing cabinet and nothing is done with it. Because just due to the fact that the reports may recommend increasing maintenance fee or will require an increase in maintenance fees due to the findings of that condition assessment or that third party analysis. So I would highly suggest when you receive those reports, obviously just don't brush them off and put them in a filing cabinet, don't think of them again, implement that information into your reserve study in order to make sure you're funding accordingly to exercise or incorporate those repairs into reserve study in front accordingly. That being said, I appreciate your time today. Again, a reserve study is a wonderful tool that should be utilized and spend some time on your reserve study. Too often I see associations spend hours and hours and hours on an operating budget that may total maybe a million dollars or three million dollars for that fiscal year. The reserve study, however, has oftentimes one single project that may cost a million or three million or $10 million. So spend some time on your reserve study, have a clear understanding of your reserve study. It is a communication tool for you board members to utilize to your ownership when you are recommending a loan assessment or special assessment or large increase in maintenance fees. It is a communication tool that can clearly show the reason or the justification behind these increases in maintenance fees. That being said, thank you for your time today. I hope it was helpful to you. Aloha.