VPV Exterior Renovation Project
Summary of Original Design Schemes as proposed by Fremer Architects
Overview summary of the six original schemes as designed by Fremer: (Scheme 7 was not an original Fremer concept, but rather a requested presentation of a specific design.) None of these designs are being pursued, based on the issues identified below.
Colors on all design schemes are not the proposed exterior finish color for the materials. The colors used on these drawings are for presentation purposes only, visually indicating the variations in materials and depicting the individual design elements.
Designs 1 – 6 include alterations to the roof lines which would require the project to be reviewed through the City’s public hearing process.
Designs 1 – 6 include the use of exposed coated metal chimney flues. While this design element may be attractive to some individuals, VPV does not have a history of suffering from chronic maintenance issues in the current chimney areas. Therefore, this significant proposed design change was determined to not be cost effective.
Design 3 contains the use of metal “box” elements over the windows which were deemed to cause a reduction in view from the interior of units.
Designs 3 and 4 include modifying the current exterior finish on balconies to a proposed clear tempered glass. This alteration would require the project to be submitted through the City’s public hearing process.
Designs 3, 4 and 5 include metal standing seam panel systems. This dramatic design element may be attractive to some individuals, but was determined to be too much of a drastic overall design change and likely too great of a challenge to obtain HOA approval. This specific design element was also indicated to be too cost prohibitive.
Summary for Scheme 7:
Following review of proposed designs 1 – 6, the Board declined further pursuit of any delivered specific designs. This determination was primarily due to concerns over indicated costs well beyond expectations, and the perceived inability to obtain HOA approval for dramatic design element alterations such as the wide use of metal panels, etc.
In early September of 2006, former HOA Board President, Mike Martinet met with Hal Fremer to provide specific direction for an additional design which incorporated the use of stucco in areas where the current VPV siding experiences chronic maintenance issues. Design Scheme 7 depicts this specific direction and is not a design conceived or originated by Fremer Architects, but rather the result of their drawing services.
In early 2007, the ERC and current Board determined that it was not prudent to dictate a specific design to an Architect, but rather to request a design concept which addressed the specific areas of concern with use of alternate materials. Fremer Architects declined the invitation to continue the design process with VPV once it was decided that the overall design would consist of a refurbishment, rather than a complete re-design. The base concept for Scheme 7 is currently being pursued in general principal with alternate designers, encouraging their professional and creative expertise for architectural design rather than dictating the detailed design specifications.
Talking Points for Sept 6, 2007
HOA Meeting in Regard to the Renovation Project Actions to Date
“Welcome” (presented by Carma Hardin)
Thank you for attending – it is important that the community gets informed and involved
I’m sorry to have to read from my notes, but I need to ensure that everything is covered tonight, and in the same manner that it will be mailed out. With my passion for this project, I could go on and on and this will help me to manage that.
We have a lot of information to share tonight, so we’ll do our best to stick to the timeline, and unfortunately, there will not be available time for questions. For any items that are not covered tonight, you may submit your specific questions in writing to Joanne Pena, prior to September 12, and they will be included in the package of information that will be mailed to all homeowners, including all of the information presented tonight.
It was one year ago, this August, when I attended a Board meeting and volunteered to help with the renovation. The ERC was formed a couple of months later and we were all confident that the process would be further along by now, but we are moving forward and I’m proud of the work that has been completed this last year, and our plan forward.
Before we go forward, I would like to take this opportunity to quickly introduce the members of the Board of Directors and the Exterior Renovation Committee (ERC). (Board: Mike Talbot, Joe Grasso, Karen Vincent, Mark Bayma -- ERC: Dean Reuter, Jenna White, Maribeth Borowski, Dan Constant, Jean Lloyd)
Tonight’s Objectives: Several of you have asked to see the work products and what has been completed and paid for so far in the process. This effort tonight, is to provide the historical information and put the past behind us, taking the good results and the plan, forward. We intend to make good progress in the next few months ahead.
The first objective is to share the work products from the past, so that the past can be put behind us and we can move forward more productively
The second is to communicate the value of work products to date and how they support us moving forward
Why the models were created and how they can help
Why the designs are not being considered but what we learned from their creation
Why the budgets are invalid and the importance of quality project management
The benefits of the destructive testing to support our construction plan
Status of Fremer – Hal Fremer’s firm chose to not proceed with the project, once we identified that we did not have the flexibility to undergo a complete re-design the complex
Status of Brussels – currently working through editing their initial estimates. They had used the incorrect quantities and incorrect application of the required work process which caused concern over the overall quality of the numbers.
No substantial costs have been incurred since the value of the project to date was reconciled and provided to homeowners at the first of this year. Costs have been mitigated over the entire last year that the ERC was in action. The HOA will be advised of upcoming project costs.
Timing is important for this project, as costs are continuing to escalate. We will be significantly increasing the pace of the project.
For the benefit of those residents who may be new to the community over the last couple of years, or for those who missed some of the material early on, I want to address a couple of the basic questions which seem to keep resurfacing:
Talking Points
Page 2
“Welcome” Continued
Question 1) Why can’t we sue the original Architect or Contractors for the construction deficiencies and get them to pay for the repair portion of the renovation?
Response 1) The statue of limitations on these issues is 10 years. For new construction, the period is three years.
Question 2) Why can’t we just repair the sections that are damaged and paint the remaining portions of the complex?
Response 2) It isn’t that simple. This is more than a repair project, and significantly more than a paint job or even a new siding job. We have original construction deficiencies and deterioration of our materials after being in place for 30 yrs. This is a big and complex project.
“Where we are now” (presented by Dean Reuter)
Once it was determined that we needed a design not yet presented, we sought out new partners in this effort. A very basic and generalized Request for Proposal (RFP) was created to solicit the interest of new parties
The RFP has now been issued twice. The first session was a learning opportunity as we discovered that insurance requirements had gotten much stricter. This insurance basically protects the Architects against the potential lawsuits of multiple homeowners, rather than the impact of dealing with a single client.
The first candidates were familiarized with the project but only to learn that they could not obtain the adequate insurance.
This moved us into a mode of seeking a firm who could manage both the design and the construction, commonly known as a Design / Build firm. This is a significant change to how this work has been historically performed, but a necessity in today’s lawsuit prevalent society.
Design / Build firms were located, which are known to have experience with Homeowners Associations and these types of projects.
Four firms were recently issued the RFP to solicit a commitment of interest. They were provided with copies of the destructive testing report, the roofing study, a complete set of drawings for one section of our complex, and the quantities of basic material components required for the project.
Site-walks were performed with each of the firms, with Phil Greer providing a presentation of our maintenance problems.
We are not seeking a complete re-design, but need the construction deficiencies resolved, our expired material components replaced, and a refreshed or more enhanced exterior appearance. These actions will protect our property values.
The general design concept seeks a plan which incorporates additional stucco and wood or wood-like appearance materials, which provides:
Affordability
Accessibility for maintenance repairs
Reduced ongoing maintenance costs
Reduced fire hazard
Current design style appearance, considerably “freshening / enhancing” our general curb appeal
The scope of the project includes: Replacement of siding, windows, doors, garage doors, roofs, and other required sub-structure elements
This is the time to address all of the integrated components.
Re-setting the clock on the expired life-expectancy for these components
Providing increased energy-efficiencies
Providing reduced noise intrusions
Increasing our property values
Later in tonight’s presentation, we will have some information on anticipated costs
Talking Points
Page 3
Building Evaluation and Destructive Testing (presented by Phil Greer)
Age of the complex
30 plus years – all wood construction
General condition
Siding deterioration in UV locations
Pest damage
Water intrusion damage
Destructive testing and repair discoveries
Selection of testing locations
Photo documentation of recent repairs
Building Envelope…roof, siding & stucco, drainage plane
Building components that work in concert to keep the interior dry
Function of the drainage plane
Quantities and condition of the major building components
Decks, doors, windows, railings, siding, etc.
Deficiencies
Original building products, design and execution
Remedies
Modern materials, additional protection and proper execution
Necessity of integration of the components and repairs
Areas of the building that are connected and function together
Life expectancy of various components
Projected life based on a survey of manufacturers, trade associations and product researchers
(NOTE: The photographs used in this portion of the evening’s agenda, depicting the actual deficient sites revealed in the destructive testing, as well as other repairs performed by Phil, are available on the VPV website at www:palosverdes.org. For additional reference, a document outlining the life expectancy of various material components is provided later in this package.)
Talking Points
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Benefits of VPV Exterior Renovation Project (presented by Dan Constant)
My name is Dan Constant. I am a former HOA Board Member and my wife and I have been VPV owners since 1995. We lived here for 5 years and now live in Rancho Palos Verdes and have retained our town home as an investment. I am a commercial real estate appraiser working for Wells Fargo Bank, so I have a knowledge of real estate trends in the South Bay and, in particular, Palos Verdes and the Riviera. For the last year, I’ve worked on the Exterior Renovation Committee in an advisory capacity to our HOA Board of Directors.
As we saw in Phil Greer’s presentation, the wood siding at Village Palos Verdes (VPV) has deteriorated and is beyond just "minor repairs." Our wood siding has exceeded its normal life expectancy of 30-35 years. In addition to being unsightly, this has affected waterproofing, something that could become costly if not properly addressed. Replacement of the entire exterior siding is, unfortunately, something that cannot be paid for out of our reserves (in fact, condo association reserves are never sufficient to cover complete re-siding, so we are not alone there). Other homeowners associations have successfully completed the exterior renovation process, and we have been working hard on a renovation plan that is in the best interest of our homeowners.
We know the cost of this type of project will be significant, but the bottom line is that it is something we need to do. Fortunately, it’s a project that will also have significant benefits. The project will include all new windows, which along with the new exteriors will give the complex a contemporary look, much better insulating ability compared to the existing windows, and superior waterproofing ability.
Updating VPV will make our town homes more marketable and add value, plus the added benefit of better energy efficiency and noise reduction. In the long run, ongoing maintenance costs are also likely to decrease. Once we move forward on the project, local real estate agents (and prospective buyers) will no longer have to ask “what is going to happen at VPV?”
There are several options available to us to finance the project, as Mike Talbot and your finance committee will discuss. Keep in mind that any interest payments in connection with a renovation loan (or refinance) are tax deductible. And the end result is a like-new town home while keeping your current real estate tax basis.
We live in a great area that also happens to be a very expensive area to purchase a home or a townhouse. Newer town homes in the Riviera are $1MM plus (most don’t even have attached garages, views, and common amenities like we do) and it’s nearly impossible to find even a small fixer-upper home in the area for under $1MM. What this means is that there is room for values to increase at VPV (so we certainly would not be “over-improving” for the area). The renovation project will enhance the appeal of VPV in the marketplace, not to mention improving our quality of life (try to visualize coming home to a renovated VPV).
I encourage everyone to support the renovation project. It’s something we can accomplish and it is an investment in our quality of life here at VPV as well as protecting and enhancing the value of our homes.
Talking Points
Page 5
Renovation Finance Committee (presented by Mike Talbot)
Mission and Charter
Identify financing options, evaluate each program, summarizing the pros and cons of each option and then present the results in an organized manner to the Board and the HOA.
Each program has its own requirements for qualification, as well as its own benefits, which need to be matched with each individual owner’s profile – taking into consideration many qualifying factors including equity position, income, age and tax implication. The mechanics of how these different programs work, the fees involved and the tax implications of each will be evaluated and documented.
Tonight……
The Exterior Renovation Finance Committee and the various financing programs under initial review:
1. Conventional – Equity Financing – New First, Second TD – Lines of credit.
(Owner qualifies with – credit, income – appraised value)
Committee Member – Cassie Zar (217 Calle Mayor) and Myself (Mike Talbot, Board liaison for the Finance Committee, 161 Calle Mayor)
2. Reverse Mortgage
(available to homeowners 62 years or older, must live in the home and have a low mortgage balance)
Committee Member – Lola Chevlin (171 Calle Mayor)
3. HOA Financed
(The Home Owners Association obtains and qualifies for the loan and those who elect to participate in the program pay their prorated share through an increase in HOA dues).
Committee Member – Scott Robinson (411 Camino de las Colinas)
4. Cash – God Bless ya – you don’t need our help.
The volatile financing market that we are currently experiencing should subside by next year and the lending institutions will be offering an array of programs that will most likely be much better than what is on the market currently.
We will be sending out more detailed information as the project progresses and the options are further defined. If you have any specific questions regarding this process, please send them to Joanna Pena so that we may respond appropriately.Talking Points
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“Reserves” or Replacement Fund – Talking points (presented by Mark Bayma)
Why do we perform Reserve Studies?
Helps the Board develop a realistic budget each year.
Annual studies help the HOA maintain adequate funds and can reduce or eliminate the risk of special assessments.
By saving vs borrowing, the HOA earns income over time that can used to offset other expenses and help keep monthly dues low.
Provides long range planning rather than short term reactionary funding.
Helps to add some predictability to the management of HOA financials for both the Board and homeowners.
Studies are a major part of the HOA Board’s fiduciary responsibility to maintain the community and protect property values.
Long range planning allows us to take advantage of miracle of compound interest. Small and steady amounts can grow very large over time! This is very similar to long range planning for retirement. The earlier you start the less you ultimately have to set aside.
Example:
$10 per month per unit would grow to over $993,000 in 25 years at 4.5% Waiting just five years to start saving reduces the available balance by almost 30%.
To save the same amount of money over the shorter period of time, monthly contributions would need to increase over 40% to $14.25 per month.
Benefits of adequate reserves and funding plan:
Provide for long range planning rather than short term reactionary funding such as special assessments.
Minimizes the cost issue when making decisions.
Take advantage of benefit of time.
Enhances resale value. Prospective buyers anticipate less risk in the future with adequate reserves.
Potential for impact on whether prospective buyers can get financing. More important in the current tight credit market environment.
Legal Requirements:
Annual update to review replacement cost and useful life and make adjustments if events over the past year warrant changes.
Reserve study is open to all association members and is included with the other required financial documents that all homeowners receive each year.
California Civil Code requirements 1365 - http://www.leginfo.ca.gov/
Talking Points
Page 7
“Reserves” Continued
Reserve Study Components
1) Major Component Inventory:
Major items that were part of the initial construction or added later: Roofs, Siding, Pools, Concrete work, Windows and Doors
These are items the HOA is required to maintain or replace with a service life of less than 30 years.
Items with useful life of more than 30 years may be included as a capital asset or excluded from the reserve calculations. However, these must be disclosed to the study and reported on a reserve study disclosure form.
We use experts to help us estimate the cost and useful life of the major components. (Reserve Studies Inc Les Wienberg)
2) Estimate of the remaining service or useful life of each major component.
3) Estimate of the current amount of reserves necessary to repair, replace, restore or maintain the major components.
4) Current accumulated reserves set aside to repair, replace, restore or maintain the major components.
5) Reserve Funding Plan – Board plan to adequately fund the reserves over time to repair, replace, restore or maintain the major components as they come due. Options include:
Increase or decreases to annual reserve contributions
Special Assessments
Borrowing
Sales of assets
Deferral of replacement or repairs
6) Different funding profiles are run for comparison to compare annual funding requirements and subsequent funding levels:
No change to current funding – worse case scenario
100% funded at all time – annual contribution to keep us 100% funded to schedule
Funding when due – Special with assessments as necessary as components come due.
7) Statement as to whether the Board expects to levy a special assessment to include:
Schedule must include the date, amount and duration, if any, of any special assessments.
The current work on the HOA Reserves will be a topic of further discussion, currently planned for the Annual Meeting in October. If you have any specific questions regarding this topic, please forward them in writing to Joanne Pena.
Reserves
Talking Points
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Moving Forward - How much will it cost? (presented by Carma Hardin)
Target price
Everybody’s #1 question…………, “how much”
We honestly don’t know yet
The design needs to be finalized and then the plan formed
We don’t want to advertise one price and then need to keep revising it.
The HOA will be communicated with throughout this next important phase of the project as we develop the design and costs.
Once a realistic cost estimate is obtained, we will be able to start discussing financing and getting the community more directly involved in the process
Rumors are hurtful to the process, we will do our best to openly and accurately inform in a timely manner
Previously “rumored” figures have been as low as $20K per unit and recently I’ve heard the uninformed figure of a total anticipated cost of $25M, or about $139K per unit
The actual price is still unknown and we are doing our best to ensure that we keep costs aligned with the value received. These are our homes too and we will also be personally impacted by the overall costs.
What we do know about the cost:
It will be more than $20K per unit – this is a sizeable and complex project
The recent RFP targeted an all inclusive figure of $75K per unit, not to be exceeded. This is only a target, based on the information we currently have.
Some preliminary cost estimates placed this project at nearly $100k per unit. This figure is continually impacted by the rising costs of materials and the costs associated with disposal.
We will continue to manage costs by pursuing a design which will be well received by the City’s Planning Department, avoiding the public hearing process. We are not considering the use of some materials which were proposed in the initial designers performed by Fremer, such as the contemporary metal panels.
We are pursuing a design which materials best address our needs, price, maintenance costs and appearance.
We feel that $75k is a realistic target, considering the overall scope of the project and that some basic kitchen remodels can range from $50 - $60k.
If it appears as though we will not be able to maintain this target, we will directly communicate that to the HOA.
Some of the costs will be off-set by the Reserves which have been accumulated over the years identified for the specific material components. But, as you just learned from Mark Bayma’s presentation, those Reserves are not nearly sufficient.
This is significantly more than just a “re-siding” job, and for as good as the destructive testing report is, we only have estimated amounts of repairs, which are at risk as we actually open up the buildings.
Advantages to moving forward now
Opportunity for contractor availability
Material costs continue to escalate
Mitigate continually increasing maintenance costs
Increase the value of our property, now
Talking Points
Page 9
Closing (presented by Carma Hardin)
This is a project of considerable size and compounding complexities
It won’t be fun living through the construction and it won’t be quick or easy. It will be uncomfortable due to not only the mere logistics, noise and congestion, but also the additional financial burden. That is not taken lightly by the ERC or the Board. We are representing you to the best of our ability.
This is our opportunity to pull together as a community and get this required work completed in a responsible and timely manner. We can no longer afford for the complex to deteriorate and must move to protect our investments.
It is also our opportunity to re-set the Reserves timeline for the majority of the components back to “new” and realize those effects by mitigating the escalation in the HOA dues. This also helps our property to become more attractive to perspective buyers who want to ensure Reserves are well established.
We are all in this together and your cooperation and support is vital to our success.
We will be sending out an information package to all homeowners containing the material delivered tonight. It will also contain any questions that have been submitted in writing and the responses from the Board and ERC. We want to ensure that we are communicating fully, so please submit any questions, in writing, directly to Joanne Pena before September 12, so that we can include them in this package.
We will continue to openly share information as it develops. We are all anxious to get to the stage in the project where we have a design, and associated costs and colors to present to the community. Please rally your neighbors to get involved and to attend these important meetings.
Thank you for coming tonight and showing your interest. We look forward to seeing you all next month at the Annual HOA Meeting.
Good night and get home safely.