Letter to owners 12-20-2024

General Common Elements are defined in the Governing Documents of the regime to include the Master Deed, and the Third Amendment to the Master Deed filed in June of 2021. All Governing Documents can be found on this website. For your ease, the two mentioned here can be found below.  

 The renovation project includes work on the rear of the L and M buildings, addressing areas such as balconies, doors, windows, and siding.  

Prevoious: Please refer to the communication sent to Owners on September 5, 2024, for more details. The architectural firm has estimated the cost at approximately $2.3 million. However, the final cost will be determined once all bids are received. Bids are due to A101 by September 31st. 

Updated: Bid figures have come in around $2.8 million with a potential increase for phases that spread beyond the 2025/2026 Spring work schedule. 

 The Governing Documents outline each unit's percentage of ownership and corresponding financial responsibility for the project. See the Document Below

 The timing and scope of the renovation will depend on factors such as project costs and payment structures. Other considerations include when the project can begin and when it can be completed. We are mindful that many owners rely on rental income, and we are working to minimize any disruptions during peak rental season. 

The 2023 Annual Meeting minutes confirm, "The membership will have a vote before proceeding with the renovation project." At that meeting, the renovation initially proposed included several aesthetic enhancements to the buildings. . However, once the Board reviewed the projected costs for these aesthetic changes, it became clear that they would significantly exceed the current project's budget. In light of the financial burden such enhancements would place on the community, the Board decided to proceed with essential repairs to the rear of both buildings without altering their appearance, except where materials are unavailable or updated codes necessitate a change. This changed the requirement of the vote of the membership which is outlined in Article XXII that calls for a 60% vote for alterations or improvements over $5000. ). However, the attorney clarified that this rule applies to non-emergency or optional improvements rather than necessary repairs or replacements.

Since this project involves "like-for-like" repairs without aesthetic alterations, it qualifies as maintenance rather than an alteration, thus not requiring a membership vote. Under Article XXIV, the Association is obligated to maintain, repair, and replace General Common Elements at its expense. Given the essential nature of these repairs, the Board is authorized to undertake this work independently, fulfilling its maintenance responsibilities without requiring further membership approval. Bylaws, Section 6 (c)iii provides the Board the authority to levy additional assessments if the current budget is insufficient to cover essential repairs, including emergency situations. This means the Board can impose an assessment to ensure project funding without requiring a vote.

While the Board has the authority for the assessment for the needed repairs, owner input is valuable in determining the course moving forward, The produced a survey to provide Owners the opportunity to share their input on their preferred options for the payment schedule and work schedule. 

Article XXIV of the Master Deed designates the Association’s responsibility for maintenance, repair, and replacement of General Common Elements, which includes structural repairs needed in both buildings. All association members are financially responsible for these repairs according to their ownership percentage, rather than by the specific building. The first payment is due Jan 2025 

Answer From A101: The detailed scope of work defining the project is contained in the bid documents.  The only piece that is not included in these documents is the exact means and methods that the GC will undertake the project.  As a matter of practice, the GC’s means and methods are not included in our work.  We can always request a narrative from the GC, but we do not have that available. 

Answer from A101: The GC’s are making no guarantees on pricing for any phase of the projects not conducted in the next few months.  Pricing is too volatile right now for GC’s to hold any price for longer than a month or two. 

The assessment collected for the project will be deposited into the Reserve Account and will be used to fund project expenses. Initially, the existing reserve balance be borrowed against, interest-free, as an advance to cover project payables while owner assessments are collected. Additionally, professional service fees for planning, bidding, project oversight, and inspection are paid directly from the reserves and are not part of the assessment.

It is critical to maintain a healthy balance in the Reserve Account to safeguard the community’s financial stability. Depleting the reserves too low could place Harbor Island Beach House at risk if unexpected expenses, emergencies, or insurance claims arise.

Answer 5B. 

Bylaws, Section 6(c)(ii) and 6(c)(iii):

1. Section       6(c)(ii) permits the use of reserve funds to cover structural repairs, reinforcing       the Board’s authority to apply these funds as needed in emergencies.  

Answer From A101: The purpose of a waterproofing consultant is to provide a greater level of quality control for the project.  Waterproofing has become very complicated, and experts are now included on complicated projects such as this.  We do not typically include waterproofing consultant on smaller projects, but they are very common on large multifamily projects.  Our waterproofing consultant is WM Building Consultants (WMB) out of Moncks Corner, SC.  This is our first time working with them but many (about 75%) of our typical consultants will not work on condo multifamily.  After interviewing and soliciting proposals from three consultants, we selected WMB as best suited for this project.  Their website is linked here:  https://www.wmbeconsultants.com/

Answer From A101: Multifamily projects are notorious for waterproofing failures.  Great care must be taken on a project such as this to ensure that all waterproofing is installed correctly.   It is also important that all details of the liquid applied air barrier are followed correctly and properly coordinated with the siding and window and door installations. 

Our primary responsibility during construction contract administration is to make sure that the construction is being conducted in general conformance with the construction contract documents.  We will likely have an OAC (Owners / Architect / Contractor) meeting every two weeks to document progress, changes, and overall project issues.  At the conclusion of the OAC meeting, typically the work in progress is observed to verify that the work is being conducted properly and that the installation is progressing in a timely manner.  For a project of this type, we will spend quite a bit of time inspecting the flashing and systems to make sure that they are installed per manufacturer’s written installation instructions.

These are the types of issues that we must be on the jobsite in a timely manner to check on for you all, otherwise it might be covered up with siding and we’d never know it was there, possibly creating a future water intrusion point. 

To supplement A101’s biweekly site visits, Coastal Resort Association Management will be onsite daily to monitor ongoing work and handle ancillary issues. Coastal has contributed over 18 months of effort without compensation thus far, and they will continue to support the project by providing A101 with timely updates, coordinating with homeowners, and sharing weekly project updates with the community.

To address the phased approach concerning the L buildings and the extended payment plans. It has come to the Board's attention that the M building is in greater need of immediate attention due to concerns identified during the engineer's inspection. As such, HIBH must prioritize the completion of the rear of M Building.

The structure of the payment plans will significantly influence the project's timeline, as the funds collected will be directly allocated to the project. For detailed financial information, I encourage you to refer to Exhibit C of the project packet provided to the membership. This exhibit outlines the funding received in correlation with the project costs, specifically detailing Contractor A's overview, while Exhibit E focuses on Contractor B’s financials.

It is crucial to note that any payment options exceeding 18 months do not yield sufficient funds for the association to fully cover the necessary expenses of the L building project in a single phase. Additionally, you will find the cost exposure outlined at the bottom of the page, which has necessitated supplementation from the reserve fund until we can collect the required funds. That is why the Board stated they were leaning towards the 18-month payment plan, as it allows the L building to be completed in a single phase and reduces the impact on the building and those who rent their units.  

This is the reason the Board asked for Owner input on the timeline for payment of the assessment as the payment plans do directly affect the timeline of the project. 

The Board will place this question and answer on the FAQ portion of the website after collecting and answering all questions received in order to help other owners who may have the same question. 

 A contractual agreement has not yet been finalized. The Board of Directors is awaiting input from owners to determine the appropriate contract duration and project schedule. 

 Contractor Information Will be provided once a contract is signed.  

A101 was engaged to collaborate with 29E6 Engineering Group to produce construction documents with detailed specifications for the bidding process. Upon completion of these documents, A101 created a bid package and reached out to qualified general contractors, initiating a 30-day bid period. Three contractors expressed interest and were invited to a pre-bid walk-through held on August 30th. Subsequently, one contractor withdrew from the process, citing a large project on Hilton Head that limited their available workforce for our project.

During the bid period, another contractor requested an extension due to disruptions caused by Hurricane Milton, which was granted. A101 reviewed and qualified the two remaining bids and presented them to the Board for consideration. The Board requested clarifications on certain aspects of the bids. Following these discussions, A101 made the necessary adjustments, and the final bid documents were updated. The Board received the revised final bid submissions cost estimates on October 28th. These numbers were then disseminated on October 30th to the community through the packet for discussion at the annual meeting on the 2nd. 

A101: We solicited as many GC’s as possible who we felt possessed the capability and requisite experience to successfully accomplish a project of this scale.  As the market is currently very busy the pool of available GC’s is relatively small.  The project is too small for many of the larger GC’s that have multifamily experience.  It is also way too large and complex for many of the smaller contractors.  The GC must also have a Commercial GC license, so most smaller residential contractors are not able to provide bids.  The project is very remote by most standards, making it unlikely that a GC will have a project nearby which helps them with the labor pool and logistics.  Additionally, the majority of GC’s insurance companies will not allow their companies to participate in condo multifamily. 

Please be advised that the upcoming construction project may involve certain liabilities and will likely be disruptive for residents and or guests in the building. Construction activities can bring noise, dust, debris, and temporary access restrictions to certain areas. 

Owners who choose to allow guests or renters to occupy their units during the construction period should be aware that this may expose them to potential liability related to the construction environment. We encourage all owners to consider these risks carefully before allowing access to their units during this time.