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Vantage Point, Mill Creek
Building Envelope Investigation (invasive)

Vantage Point

A six building, 96-unit condominium complex experiencing significant moisture intrusion problems. We performed a comprehensive building envelope investigation on all buildings. This included an infrared evaluation of the exteriors, followed up by targeted invasive investigation into a dozen areas of the building envelopes. We provided the Association with a complete report with photo-documentation of our findings with recommendations for remediation.

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Answers to Building Inspection Questions

Frequently Asked Questions (and their answers)

We get questions daily and you should never hesitate to contact us with one. However, many of you have similar questions and we have tried to identify our most frequent.

Questions about Reserve Studies


What is a Reserve Study?

Reserve Studies are comprehensive reports that are used as budget planning tools that will assess the current financial health of the Reserve fund as well as create a plan for future funding to offset anticipated major future common area expenditures.

“There are two components of a reserve study—a physical analysis and a financial analysis. During the physical analysis, a reserve provider evaluates information regarding the physical status and repair/replacement cost of the association’s major common area components. To do so, the provider conducts a component inventory, a condition assessment, and life and valuation estimates. A financial analysis assesses only the association’s reserve balance or fund status (measured in cash or as percent funded) to determine a recommendation for an appropriate reserve contribution rate (funding plan)." - quoted from Community Association Institute's 'Best Practices, Reserve Studies/Management'

Reserve Studies have become so important to the ongoing health of Associations that Washington State has passed legislation to encourage updating them annually. Lending institutions such as the Federal Housing Authority (FHA) are also adopting stringent requirements in the hopes of ensuring a minimum standard of Reserve Fund health. In other words, they are increasingly necessary to maintaining an Association regardless of whether the Association wants one or not.

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What are the different types of reserve studies?

Reserve studies fit into one of three categories: Full; Update with site visit; and Update with no site visit. They are frequently called Level 1, Level 2, and Level 3 respectively (as defined by Washington Senate Bill 6215).

Level 1: A full reserve study – the reserve provider conducts a component inventory, a condition assessment (based upon on-site visual observations), and life and valuation estimates to determine both a fund status and a funding plan. They typically extend 30-years. A full reserve study must be in place before a Level 2 or Level 3 can take place.

Level 2: An update with site visit (on-site review) -- the reserve provider conducts a component inventory (verification only, not quantification), a condition assessment (based on on-site visual observations), and life and valuation estimates to determine both a fund status and a funding plan. A Level 2 update is performed every third year, with the first one scheduled 3 years after the Level 1 was completed.

Level 3: An update with no site visit (off-site review) -- the reserve provider conducts life and valuation estimates to determine a fund status and a funding plan. A Level 3 update is performed annually, except in years when a Level 1 or Level 2 has been conducted.

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When should my association obtain a reserve study?

Most association experts would agree that an initial full 30-year reserve study should be conducted sooner rather than later if one is not already in place. They are typically updated annually after that to account for things such as inflation and any adjustments in funding levels, budgets, repairs or replacements.

If you follow Washington Senate Bill (SB) 6215 (which we recommend that you do), your reserve study schedule would look like this:

Year 1 -- Level 1 full 30-year study
Years 2, 3 -- Level 3 annual updates
Year 4 -- Level 2 update with site visit
Years 5, 6 -- Level 3 annual updates
Year 7 -- Level 2 update with site visit

The cycle of Level 2 and Level 3 updates continues indefinitely. A Level 1 full study is not necessary according to SB 6215 after year 1; however, it is common for a Board to decide to obtain an updated full study after a few years time for one reason or another.

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Why is a Reserve Study important? How does it benefit me?

Benefits of reserve studies, in short, include improved property maintenance (and therefore value) as well as complying with the law. In more detail:

Complying with state law
Washington Senate Bill 6215 took effect in June 2008. It does not require a reserve study, but rather, strongly encourages it the following way: Each Public Offering Statement or Resale Certificate should include a copy of the association’s reserve study for the current fiscal year that meets all of the requirements of the new law, or the following disclaimer:

“This association does not have a current reserve study. The lack of a current reserve study poses certain risks to you, the purchaser. Insufficient reserves may, under some circumstances, require you to pay on demand as a special assessment your share of common expenses for the cost of major maintenance, repair, or replacement of a common element.”

View the full law at:
http://apps.leg.wa.gov/documents/billdocs/2007-08/Pdf/Bills/Senate%20Bills/6215.pdf.

Fulfilling lender requirements (such as FHA)
Many lenders are requiring up-to-date reserve studies that indicate adequate financial health before they lend. Having a reserve study in place that shows a healthy funding plan before a homeowner finds a buyer could save significant time in the closing process.

Help maintain the property's value and appearance
A reserve study helps maintain the property's value and the property owner's investment. By identifying and budgeting for future repairs or replacement (anticipated capital expenditures), the property's common elements continue to look attractive and well-kept, adding to the community's overall quality of life. Many features, when properly maintained, can also benefit from an extended lifespan resulting in overall cost savings to the owners. Well maintained properties almost always have higher resale values than those that have been neglected.

Establishing sound financial planning and budget direction
A comprehensive reserve study lays out a schedule of anticipated major repairs or replacements to common property elements and applies cost estimates to them. It typically spans a 30-year period, and will serve as a financial planning tool for the association to use when determining homeowners dues and contributions to the reserve fund.

Reducing the need for special assessments
An association that has properly implemented their reserve study will strategically collect fees over time from homeowners (via monthly dues) rather than need large sums of cash unexpectedly (special assessments). Therefore, the need for special assessments should be minimalized because expenses have already been planned for and the funds exist when needed.

Fulfilling the board of directors' fiduciary responsibility
Board members of community associations have a fiduciary responsibility to their members. Directors are legally bound to use sound business judgment in guiding the association and cannot ignore major capital expenditures or eliminate them from the budget.

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How many years has Jeff Samdal been performing Reserve Analysis?

Mr. Samdal has been preparing Reserve Studies since 2005; and as an engineer has been putting together capital budgets since 2000.

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May the board specify the components included in a reserve study?

We certainly take board input into which components are in the study. Often there are items that are typically in the study that the board wants omitted. In these instances, I simply state the reasons that certain items are omitted from the report, such as “paid for by the operating budget” or “warrantee of product beyond the duration of study” since we want future boards to understand our methodology.

Our basic philosophy is that we are preparing a tool or guide for you, our client, to best plan financially. We understand that some items pretty much are what they are (building envelope, mechanical systems, fire suppression, etc.) and other items are discretionary such as interior remodeling, amenities, etc.

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What documents are reviewed to prepare for the study verses what are the number of hours on site reviewing components?

We try to obtain as much documentation that provides information regarding pricing, quantities, and life expectancies of the various components of a property. The most helpful thing from a property (although not always available) would be complete drawing sets. We also would like a list of the primary service vendors at the property (HVAC, Fire Protection & Suppression, Plumbing, Elevators, Curtain Wall Inspection/Maintenance, etc.). Quality information from the drawings and the primary service vendors is extremely valuable, in fact we have often performed complete Reserve Studies from drawings alone for buildings that have yet to be constructed.

On site, time can range from a couple of hours to most of a day depending on age, condition, size, number of shared components, and information available. If we get good information from drawings and service vendors, our time on site is not extensive. If there are no drawings and/or the service vendors are not cooperative, then we will need to perform measurements on everything to get quantities, model numbers, etc. so that we may obtain pricing and typical lifespan information.

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Is there photographic inventory included in the report?

Absolutely. Photos are integrated into the report.

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Are your representatives willing to meet with or communicate with the Board free of cost?

Yes. This is actually part of our proposal. Though not all boards take us up on this offer, we feel that is beneficial to sit down with a board to review the report and at a minimum perform a Q&A session to get their feedback. Schedule permitting, we make every effort to either attend one board meeting in person or be available by conference call.

Although we present a finished product the first time we send a copy of our report to a client, we always anticipate one round of comments and changes and include those complimentary. We ask that boards work together to consolidate and agree upon feedback during this round of edits. Every effort is made to have a finished product that all are happy with.

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What are your deliverables for a reserve study?

Following the review period where the client has had the opportunity to make comments and amend as they see fit, we will email an electronic copy of the final report. The client has the option of two bound hard copies upon request as well (these used to be standard but we found that most were not being used).

In the two subsequent years to this report, we will provide Level 3 Annual Update Reserve Studies at no additional charge to keep the property in compliance with WA State SB 6215. The Level 3 Annual Updates will be sent electronically.

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What is your time to delivery from signed contract?

Timeframe can vary depending on the property and circumstances. Please request a proposal for a more exact timeframe. However, a typical proposal (for an average sized property) states that we can begin the project within two weeks of obtaining a signed contract and that we will provide a completed first draft of the report within four weeks of beginning the project. Therefore, the longest duration between signed contract and completed draft would typically be six weeks. In most cases this is an outlier and reports are generally completed earlier.

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What do you charge for Reserve Study updates?

With site visit (Level 2)? -- This fee is determined on a property by property basis and is basically a function of our time. Typically, Level 2 Reserve Study Updates cost less than original Level 1 Reserve Studies. There is still the same type of evaluation of the current components that needs to take place; however, all of the measurements are the same and the component list has already been assembled. Just like our Level 1 service agreements, our Level 2 agreements include Level 3 Annual Updates complimentary.

No site visit (Level 3)? -- $0. All Level 3 Reserve Study updates are provided at no additional charge following our initial Level 1 Reserve Studies and our Level 2 Reserve Study Updates. Occasional exceptions to this are necessary.

 


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ADDRESS: PO Box 2489, Woodinville, WA 98072   PHONE: (206) 412-4305   FAX: (425) 825-9090
EMAIL: info@samdalassoc.com

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