1165 BETHEL STREET

HONOLULU, HAWAII 96813

Continued from page 3

Julie focused on liabilities and how to mitigate them among

rogue Board members and owners. She asked that everyone

first remember each Board meeting is to be treated like any

business meeting. Know that liabilities exist and do not deny it.

Use insured vendors or sub-contractors. Bring in the experts to

assist the Board in mitigating against liabilities. The decision-

making process for Boards can be easily executed if they

remember to detach themselves from emotion, resist being

bullied into making a decision, use experts when input is

needed, and be consistent in decisions made. Julie

recommended Boards acknowledge staff and volunteers

publicly and privately, and use the Association newsletter and

website to do so.

It is a known fact that the cost of living in Hawaii is high. This

is also true for the cost of construction and services needed to

maintain and enhance the value of any community. Julie wants

Boards to know the cost of services. The Request for Proposal

(RFP) process is meant to provide a Board with real figures,

not necessarily figures the Board wishes they had. Julie

provided this anecdote: Don’t expect Mercedes-performance

from a ’63 Bug. Also, if the Board accepts the lowest bid,

there may very well be a cost in managing that bid during the

project or service. Seek out competitive bids and evaluate each

based on current references, proper insurance coverages, and a

valid license when necessary.

A Board of Directors is meant to be an inclusive space that

brings individuals with various backgrounds, upbringings, and

personalities to the same table. This also means disagreements

will take place, and board decisions may not always be

unanimous for or against a particular matter. Julie advised us to

speak with one voice. She reminds us that it is okay to disagree

at a meeting, but once the vote is cast, move forward as a team.

We do our best to remind Boards that a united front is

important when facing difficult decisions, especially in front of

the ownership, regardless of different views or perspectives. To

sum it up succinctly: discuss, vote, and move on.

Part of being a great communicator is consistency. Julie

provided examples of effective conduits of communication,

including newsletters, e-blasts, updated websites, well-noticed

open Board meetings, and relevance. Hawaii condo law

requires regular meeting notice to be posted with the Agenda

of meeting items up for discussion or vote. This enhanced form

of notification was meant to encourage owners to attend

meetings if a particular topic of interest is slated to be

discussed. Julie wrapped up this section with a furry anecdote

(adorable dog photo was included in this potion of her slide

show): Positive communication – resist being the “NO” police,

reinforce positive behavior, and remember that people want to

be a part of something positive, not feel as if they have been hit

with a rolled up newspaper.

Email your Property Manager if you would like an

electronic copy of Julie’s slide presentation.

www.hawaiianprop.com

H

Building Relationships That Last AWAIIAN PROPERTIES, LTD.

Phone (808) 539-9777 Fax (808) 521-2714 Call (808) 539-9502 to request a proposal

Honolulu Office: 1165 Bethel Street, Honolulu, Hawaii 96813

Kailua-Kona Office: 75-240 Nani Kailua Drive, Suite 9, Kailua-Kona, Hawaii 96740

WINTER 2019 ISSUE

NEW 2020-2021 PRESIDENT OF THE INSTITUTE OF REAL ESTATE

MANAGEMENT (IREM®), HAWAII CHAPTER

It is with great pleasure that we announce our VP of Business Development, Kristi Hirota-Schmidt, CPM®, CMCA®, AMS®, has officially been installed as the 2020-2021 President of the Institute of Real Estate Management (IREM®). With nearly 20,000 real estate

managers across all property types, IREM is an international educational institute that provides

industry-leading learning, a powerful network, and internationally recognized certifications.

IREM held its Annual Awards & Installations Gala on

November 2 at the Alohilani Resort. Congratulations to Brad

McClaflin, Resident Manager at The Pavilion at Waikiki,

for winning the Accredited Residential Manager of the Year

Award, and Gabriel Valentin, Resident Manager at the

Mauna Lani Terrace, and John Pampalone, General Manager

at The Villa on Eaton Square, for winning Building of the

Year, all within their unit size category. Hawaiian Properties

has managed The Pavilion at Waikiki since July 2014,

Mauna Lani Terrace since January 2018 and The Villa on

Eaton Square since June 1997. At the Gala, the following managers of Hawaiian Properties managed associations were

recognized for earning their Accredited Residential Manager (ARM®) certification:

Martin Trevino, Resident Manager , Chinatown Gateway Plaza

Elsa Fultz, Site Manager , Pear lr idge Gardens & Tower

Michael Ako, General Manager , Beach Villas at Ko Olina

Peter Togawa, Assistant Resor t General Manager ,

Beach Villas at Ko Olina

Jose Dominguez, General Manager , Keauhou Place

Dan Daoang, Jr., Resident Manager, Country Club

Village 6

AWARDS & INSTALLATIONS GALA

CONGRATULATIONS TO BRAD MCCLAFLIN, GABRIEL VALENTIN, AND JOHN PAMPALONE

ON THEIR HARD WORK AND OUTSTANDING ACCOMPLISHMENT.

Kevin Agena, Jeff Dickinson, Shaunagh Haiola, Dass Ramadass, Brad McClaflin, Kristi Hirota-Schmidt, Gabriel Valentin, Christy Hinds, Selkie Khoo, Michael Gordon, Kanani Kaopua, Daniel Kent

THE IMPORTANCE OF RESERVE STUDIES BY DONNA LAFRANCE CMCA®, AMS® ASST. VICE PRESIDENT/SR. PROPERTY MANAGER

Budget season is here and one of the most im-

pactful items on the budget is the reserve contri-

bution. What does contributing to the reserves really mean?

Besides being required by law, the main reason to contribute to

reserves is to avoid unexpected loans or special assessments

when a component breaks or it is time for replacement. Proper

financial planning of future expenses is essential to the finan-

cial well-being of an association.

THERE ARE 3 DIFFERENT TYPES OF RESERVE STUDIES:

Level 1 – This type of reserve study should be completed by a

properly licensed reserve analyst. This type of reserve study is

for those associations who have not had reserve studies in the

past or if they contract with a new reserve analyst

company. It comes complete with a site visit to in-

vestigate the condition of the components as well as

establishment of a life expectancy and future cost to

replace the component.

Level 2 – This type of reserve study is similar to a

level 1 except that the reserve analyst has access to a

previous reserve study which provides the life expectancy and

hopefully the in-service date of the components.

Level 3 – this type of reserve study is an annual update with no

site visit. This can be done by the property manager but it is

recommended to have the accounting update completed by the

reserve analyst.

THERE ARE ALSO DIFFERENT TYPES OF FUNDING MODELS

APPROVED BY STATUTE.

COMPONENT FUNDING METHOD means that the total contribu-

tion is based on 50% the sum of contributions for individu-

al components. For example if the total value of all of your

components is $1,000,000.00 then you must have at least

$500,000.00 in reserves each year. The amount which your

reserve contribution changes is dependent on what was spent in

the previous year. As an example, if you did an elevator mod-

ernization and it cost $200,000.00 then the next year’s contri-

bution would be $100,000.00

THRESHOLD FUNDING METHOD is a 20 year study in which

you are funded to be able to pay 100% of the reserve expendi-

tures for that year plus ensure that the reserve balance is set

at a predetermined amount. Establishing a reserve funding

goal of keeping the reserve balance above a specified dollar or

percent funded amount.

CASH FLOW METHOD is a 20 year study in which you are able

to pay 100% of the reserve expenditures each year for 20 years.

You can build in a minimum balance to ensure that your re-

serves do not drop below a particular amount simi-

lar to the threshold funding method but it is not

mandatory.

As you can see, there are plenty of things to think

about on the financial side of reserve studies but

there is plenty to think about on the facilities side

of a reserve study. Unfortunately, many associa-

tions only think about their reserve study during budget season

but using it is as a planning tool for implementation of replace-

ments is also recommended. If you approved a reserve study,

then it is smart to make sure that the components are actually

replaced as approved. Many associations believe that if an expenditure is a large

amount then it must be a reserve item. That is not always the

case. Ensure that only items listed in the reserve study are paid

for by reserve funds.

Finally, if you budget for a reserve contribution then you must

make the contribution. If you need to withhold a contribution

or borrow from reserves because of a large operating expense,

a plan needs to be made to reimburse the reserve account.

Hawaiian Properties had an opportunity to help send happiness and smiles to our island families and children during this holiday season with HUGS (Help, Understanding & Group Support). We donated and wrapped approximately 150 gifts for HUGS. HUGS is a nonprofit organization providing emotional and financial support to Hawaii families with children who have been diagnosed with a life-threatening illness.

2 3

WE’VE BEEN ADAMEN’D By Kanani Kaopua, PCAM® Vice President/Sr. Property Manager

H awaiian Properties, Ltd. held its Annual Board Member Seminar on August 9, 2019 at the Ala Moana Hotel. A marathon of

informational presentations took place by the

Department of Commerce and Consumer Af-

fairs, association attorneys John Morris of Ekimoto & Morris,

and Christian Porter of Porter McGuire Kiakona & Chow, LLP.

Featured guest speaker, Julie Adamen, President at Adamen Inc.

and creator of Community Association Management 101, provid-

ed audience members with The Essential Skills of an Effective

Board of Directors. Julie’s presentation included a satirical-

induced perspective on rogue Board members, rogue owners, and

how to overcome obstacles caused by both.

Julie stressed the importance of first understanding the responsi-

bility of the Board as a Trustee. To understand the role and re-

sponsibility, she covered a brief history lesson regarding the in-

ception of community associations, and how community associa-

tions across the nation increased over the last 50 years (10,000

community association in 1970, up to over 344,000 as of 2017;

Hawaii accounts for 2,000 associations statewide). An important

role of a Trustee is to properly spend the Association’s money,

aka, your maintenance fees. Julie reminded audience members

that your role as a Board member is not to never ever raise

maintenance fees, rather, be sure maintenance fees are spent

wisely.

She then dove into the Essential Skills for Board members,

including setting the stage for committee thinking so as not to

overburden the board with project-specific research and making

recommendations, having a goal in mind and staying organized,

using media as a way to publicize programs, identifying and in-

volving people with

needed skills, and being

able to relate with di-

verse groups.

Julie provided tips for

Board members to re-

cruit and retain commu-

nity members, including

seeking good volunteers

and placing them where

their experience will be

most productive and sat-

isfying for them. She

also recommended that

Boards should set policy,

resist micro-managing,

and don’t get caught up in the minutia. The ways in which Board

members can achieve this is by:

1) Reviewing board packets beforehand and not while you are

walking into a Board meeting.

2) Be prepared to make decisions.

3) Keep the meeting focused to what is on the Agenda

4) Don’t enable pontificators and philosophers (including Board

members) to hold others hostage during a discussion or vote. It is

hard enough to find volunteers to serve as Board members. Own-

ers will be more likely to volunteer if they see a Board that is

focused and organized, not to mention considerate of everyone’s

time.

Date: Tuesday, December 17, 2019 Time: 11:00 a.m. to 2:00 p.m. (Buffet Lunch Included) Location: Courtyard Marriott King Kamehameha’s Kona Beach Hotel, Kamakahonu Ballroom

75-5660 Palani Road Kailua Kona, Hawaii 96740

Topics:

Space is limited. To RSVP, please email suwadeen@hawaiianprop.com or call 808-539-9725

Testimonials - 2018 Seminar

“Very informative & timely topics, great vendors & giveaways, and

yummy lunch. Lots of attention to detail. Keep up the good work!!”

-Karin Pearson, Kona Pacific

“Very useful presentations, relevant,

pertinent, and informative.”

-Mike Park, Hale Kehau

Free 2019 Annual Board of Directors Seminar in Kona MAHALO TO OUR SPONSORS

Premier Sponsor

Parliamentary Procedures of Annual Meetings, Pitfalls of Improper Procedure, and Handling Disruptions

by Steve Glanstein, Management Information Consultants

Fiduciary Duty - Understanding Association Financials by Alan Dubroff, Hualalai Community Association Manager

Legislative Update and Fair Housing Issues Affecting Associations by Chris Porter, Porter McGuire Kiakona & Chow, LLP

Speakers:

Steve Glanstein Alan Dubroff Chris Porter

Continued on page 4