Protect your investment & Plan for the future
Are you a property owner or manager in Hawaii?
If so, it’s essential to perform a reserve study to ensure that your building’s long-term maintenance needs are adequately funded.
- The 2023 law increased the planning horizon from 20 to 30 years, with the intent to capture and adequately plan for more of the components that must be planned for.
- A minimum annual level III reserve study update is still required annually to complete the operating budget (in-house or third party for setting reserve amounts each year).
- At a minimum, a board that performs their own reserve study must have an independent review performed every three years.
Services
To maximize the benefit of the reserve study, it should be evaluated each year in tandem with the creation of the annual operating budget. Keeping the reserve plan updated and tied to current market conditions including construction cost, and inflation can have significant impact on the usefulness of the reserve study as your primary planning tool for long term financial health. The larger more complex properties may want to consider Level 1 studies on a more frequent basis.
Level 1 Reserve Study
Level one is the most comprehensive study and requires a site visit to assess firsthand the condition of the components. Required time onsite will vary based on size of property and number of different style of buildings, number of components and historical information for organizational purposes. The goal of all our plans is to allow for well planned cash flow, timely repair and maintenance and the avoidance of special assessments or other “catch up” sources of funding.
We will meet with your management and maintenance staff, quantify scope and assess the condition of components. A photo inventory will be created to also document conditions.
With a complete component list, we will contact your service providers to develop an updated replacement or repair cost estimate.
The computing and analysis of the Reserve Funding plan will be assessed. We will work to show you the most conservative approach as will as what is required by law so that you have the data to set a level that is the most appropriate for your needs.
Level 2 Reserve study update with site visit
At a minimum, the Level 2 reserve study update with a site visit should be performed every 3 years.
Our time onsite will vary, based primarily on how long it has been since the last site visit. We will take new pictures, and evaluate previous assumptions on the lifespan of each component based on the current conditions and velocity of change in that component.
We will meet with your management and maintenance staff, to get updates on what work has been completed since the last site assessment and re-assess the conditions of components. The current photo library will be compared to the previous photo library to assess component life estimates where feasible.
Current data and observations will be used to update costing all deliverables.
Level 3 Reserve study update, no site visit
A Level 3 reserve study is an office only “update” of a previous report that is performed annually between site visit studies to account for changes in economic conditions, inflation, construction material pricing, labor pricing or other shifts that might significantly impact the projections. Based on information provided by management and maintenance, the component list will be updated with information provided, and the reserve study will be updated to reflect new data and conditions. No on-site assessments or photo libraries are generated with this option.
What is a Reserve Study?
A reserve study is an essential capitol planning tool for property owners, managers, and board members to ensure that the maintenance, necessary repairs , and replacement of community assets are accounted for in the financial planning efforts of the community.
It is a critical part of the yearly budgeting effort and a third-party review ensures that the fiduciary responsibilities of the property manager and/or board are being met including compliance with Act 62.
Why HPS?
Located in Oahu, David Fontenot is both a licensed Professional Engineer, and spent 20 years in the residential construction industry running a design build general contracting company in Boston, Ma. HPS draws on years of experience evaluating, designing, building, and repairing buildings to help you to expertly evaluate your buildings current condition and plan for your future.
Years of designing, scoping and pricing residential construction project projects provides a critical foundation for evaluating future costs in comprehensive reserve study planning efforts.
As a consulting engineer, David Fontenot has performed net present worth analysis on capital improvement projects for municipalities, which is a valuable skill for understanding the financial implications of future maintenance needs. This knowledge allows the analyst to accurately forecast future costs and ensure that the reserve fund is adequately funded to meet those needs.
David Fontenot also has extensive experience working with condominiums and property managers, which can have unique maintenance needs compared to other types of buildings. As a vice president of a building envelope firm specializing in condos, he has firsthand knowledge of the specific issues that can arise with condo buildings, such as water intrusion and building envelope failure. This knowledge is invaluable when developing a reserve study for a condominium complex.
Hawaii Legislation
In Hawaii, there are specific laws governing reserve studies, which are commonly used to help condominium and community associations budget for future maintenance and repair costs. The current legislation for reserve studies in Hawaii is outlined in Hawaii Revised Statutes (HRS) Chapter 514B, which covers condominium property regimes.
Of particular interest are:
514B-144(a) Assessments shall be made based on a budget adopted and distributed or made available to unit owners at lease annually by the board.
514B-144(h) The board, either directly or through its managing agent or resident manager, shall notify the unit owners in writing of maintenance fee increases at least thirty days prior to such increase. Association governing documents may require sixty-day notice.
514B-148(a) The budget required under section 514-144(a) shall include at least the following:
1) The estimated revenues and operating expenses of the association
2) Information as to whether the budget has been prepared on a cash or accrual basis
Note that the operating budget can not be completed without a reserve study or reserve study update, to determine the reserve contribution that is included in the operating budget.
Contact Us
You can call, email or complete the form to contact us and we will get back to you shortly. Mahalo!