SUNLAND DIVISION 17 OWNERS ASSOCIATION
Board of Directors Special Meeting
Wednesday, September 27, 2017
Location: Sunland’s “The Gathering Place,” Ground Floor Meeting Room
There were 27 homeowners in attendance.
Call to Order
The special meeting of the Sunland Division 17 Owners Association board of directors was called to order by Board Chair at 9:02 AM and confirmed a quorum with five members of the board present: Gary Fortmann (president), David Walp (secretary), Jim Jones (treasurer) John Lewis (vice president) and Mike Johnson (member-at-large).
Purpose of Meeting
Selection of a company to enter into a contract to restore the units at 191 and 201 Cascadia Loop
Agenda
-
- Call to order
- Establish quorum of owners
- Purpose
- Motion
- Present case for motion
- Owner questions
- Vote
- Adjourn
Ground Rules for the Meeting
-
- Roberts Rules of Order
- Board presents motion
- Board reviews case for the motion
- Questions from the floor
- Vote on the motion
Motion
Gary Fortmann Moved that the company of Belfor, Inc. be selected as the contractor to complete the restoration of the units at 191 and 201 Cascadia Loop. Further, that a contract be executed by the board of directors.
Case for the Motion
John Lewis paraphrased and read verbatim from the following notes that lay out the due diligence that was completed by the Board of Directors leading up to the motion.
DUE-DILIGENCE BY BOD for SELECTION of FIRE RESTORATION CONTRACTOR OBJECTIVE:
Restoration of units 191/201 Cascadia Loop to the conditions that existed at each unit the day before the fire. Restoration needs to proceed as expeditiously as possible so that the owners can obtain occupancy at the earliest possible date consistent with the terms of the insurance settlement, the HOA CC&Rs, avoidance from adverse weather conditions, minimal time impact and disturbance to the neighborhood. The objective assumes that the site has been cleared of debris, stabilized, and protected from further damage until restoration is started.
SELECTION CRITERIA:
- Importance of the guaranteed replacement cost versus standard / depreciated value policy
- Have sufficient management resources to plan and implement a project of this size and complexity
- Be able to start work by September 15, 2017 in order to have the structure enclosed before the start of adverse
- winter weather
- Have sufficient financial resources and willingness to carry upwards of $200,000 of costs until the final insurance settlement payment is received by the HOA
- Any contract price for the restoration scope of work, excluding unforeseen and open items such as design services and permitting fees cannot exceed the approved insurance settlement to the HOA
RESTORATION ALTERNATIVES:
Restoration contractor alternatives to implement the objective and meet the selection criteria include:
- Design-build contractor who specializes in residential construction
- General contractor who specializes in residential construction
- Contractor specializing in fire restoration
These three alternatives were investigated with the following results when compared for best fit to achieve the stated objective and meet the required criteria.
Design-build contractor:
The process for a design-build contract requires the following steps:
- The BOD would prepare a list of qualifying conditions for a design-build contractor and then interview potential contractors.
- Select a contractor based on interview, The HOA would collect all available information as to the specifications of the structure prior to the fire and that is known to be very limited.
- The contractor then develops a complete set of design plan, documents, reports for a permit application, and a lump sum price for the work.
- The BOD would then decide if it will accept the proposal; if so then enter into a contract with the builder.
This process could take approximately two months (sometime in early November) to reach the point of issuing a notice to proceed to the contractor. As a result exterior work would occur during adverse winter weather or be delayed until spring. Potential additional risks would be if the price exceeds the insurance settlement the HOA would be liable for the increased cost and possibly the cost of design if the proposal is rejected. An additional risk is that the HOA would have to finance contract payments beyond the initial insurance payout until final completion and receipt of final settlement from the insurance company. This could be as much as $200,000 that the HOA would have to payout during construction.
The BOD requested references from the local Builders Association for a list of design-build residential contractors. From a list of four it appeared that two were of sufficient size and with resources to do the work. Both were contacted and both declined due to all of their resources being committed to other work for the foreseeable future. Estes Builders (the original developer and contractor) was also contacted and they also declined for the same reason. At a later date Estes indicated a renewed interest and was invited to submit a proposal. After a review Estes again declined due to current commitments of their resources.
General Contractor:
The process for a general contract requires the following steps:
- The BOD would need to select and then retain a qualified design / architectural firm to develop a complete set of design documents, reports for a permit application, and a budget estimate for the reconstruction. Assist the BOD with obtaining bids from qualified contractors, reviewing bids and recommending contractor for award.
- Based on the architect’s recommendations the BOD would enter into a reconstruction contract; assuming a bid less than or equal to the insurance settlement. It is also probable that the HOA would have to implement a separate demolition contract. This process could take approximately two months (sometime late in November) to reach the point of issuing a notice to proceed to the contractor. As a result exterior work would occur during adverse winter weather or be delayed until spring. Potential additional risks would be if the price exceeds the insurance settlement the HOA would be liable for the increased cost or reject the bid leaving the restoration in limbo. An additional risk is that the HOA would have to finance contract payments beyond the initial insurance payout until final completion and receipt of final settlement from the insurance company. This could be as much as $200,000 that the HOA would have to payout during construction. Based on the known construction environment and the results of trying to retain a design-build contractor this approach was considered not to be practical to pursue.
Contractor specializing in fire restoration:
The process for this type of contract requires the following steps:
- The BOD would prepare a list of contractors that meet the selection criteria and then interview potential contractors.
- Select the contractor based on interview and available information that best fits the criteria; including a commitment by the contractor to complete the full scope of work for a price not to exceed the insurance settlement.
- Enter into a contract and issue a notice to proceed by mid-September.
- Implement demolition
- The contractor would assemble all available information as to the design and specifications of the structure prior to the fire; develops a complete set of design plans, specifications and engineering reports for a permit application.
- to the extent possible the contractor starts the process of sourcing long lead construction
- The demolition, design and commitment for long lead materials will proceed simultaneously
There are several major distinctions between the conventional design-build contractor and a restoration contractor:
- experience with this type of work has the resources to mobilize immediately
- there is a contract,
- can start preliminary work while complying construction and permit documents,
- accept the insurance settlement scope of work and estimate as a lump sum contract
- finance the balance of the payout until final insurance settlement.
Two such contractors were available that met the criteria and were invited to an interview. One contractor (Restoration Management Company) declined the invitation for a variety of reasons. Belfor participated in an interview and confirmed that they could start immediately, meet all of the criteria for restoration for the lump sum amount in the insurance settlement. Based on these findings the BOD unanimously agreed to accept the Belfor offer and develop a contract for approval.
Owner Questions and Answers by the BOD
Before we start that, I would like to address Mrs. Colburn. Your email from yesterday, because of some legal issues, we need to consult with an attorney before addressing this email. So, we will now take questions from the floor, specific to the motion. Two minutes per owner.
Question from owner Colburn 1: Can you please describe BELFOR’s plan building plan? Are they going to build from the ground up? Or are they going to build like they told us when we did the walk through, that they are going build over charred and already compromised building materials? Because the CC&Rs allow us to have a unit that was is the condition it was before the fire. Before the fire, neither Don nor my unit had any burn or damage items in it.
Response Board Member John Lewis: Any evidence of fire contact, burning, charring, scorching, whatever, will be totally removed prior to reconstruction. There can be nothing left that has any evidence any fire contact whatsoever.
Question from owner Colburn (cont): Is that going to be a total knock down to the foundation and then a rebuild because everything in those units have been subjected to water, soot, and fire damage.
Response Board Member John Lewis: Water damage, as my understanding, be that the building or remaining structure was dried out. As they say, all I can tell you, is that any evidence of fire damage will be removed.
Question from owner Colburn (cont): That is not what Mr. Jones told us, John, when you were there. He was going to shellac over the two by fours that were there. He was going to put extra screws in the subfloor to keep it from squeaking. Our garage still has insulation that was wet and damaged because they haven’t removed it. They were not going to knock down the brick columns in the front because they survived the fire. So, I would like to understand how they are going to be able to build around all those items and do it properly. Because we’ve been told that there is soot, there’s mold, there’s other things that need to come down and that specifically was not what he told us they were going to do. They were going to build and leave what’s up there now and build around it.
Response Board Member John Lewis: All I can say is we heard two different things. The garage interior is going to be stripped. They left it in the present condition to provide some weather protection. The entire roof structure down to the wall studs will be totally removed. Part of the inspection process will be to ensure that there is no remaining evidence of fire damage, whether it is water damage or mold, or anything else. If there is anything disclosed that is part of the purpose of doing these inspections. If there are any disclosures of that nature, they will have to continue removing it until it’s entirely out of there.
Questions from owner Colburn (cont): And will the owners be allowed access?
Time keeper Mike Johnson: The time is up for questions from this homeowner.
Response Board Member John Lewis: Yes, there will be opportunities to inspect it.
Questions from owner Brooner: I just don’t understand the difference between restoring it to its healthy status the day before the event. Why that’s not depreciated. To me, I mean the house is already so many years old, to me they sound like the same thing. What am I missing? (Something is mumbled about money) It’s not like to a brand-new home, I understand that, but it’s to a standard before the fire. I mean you can’t calculate that kind of stuff.
Response Board Member John Lewis: Yeah, I am not sure how to describe it, but maybe someone who is more, is versed with it.
Questions from owner Brooner: I can follow up later on it.
Response Board Member John Lewis: The intent is that the homeowner will have back everything they had the day before the fire and to the standards that were there at that day. But I am not the insurance (mumbling in the background) professional. That’s kind of a layman’s answer here.
Question from owner Brooner: I can do some separate research with insurance companies if I need to know.
Comment owner Cindy Rhodes: John doesn’t mean if they put in new cabinets or new carpeting, whatever was in between the time it was initially built and day of the fire, it will be brought to and continue those higher rated components.
Response Board Member John Lewis: Well certainly. If the homeowner
Comment owner Cindy Rhodes: Not the original amount
Response Board Member John Lewis: That’s probably a more concise answer. So yes, if the homeowner had upgraded the flooring, for example, the original construction to what it was that day. It would be restored to what it was that day.
Response Board Member Jim Jones: Or better because it’s going to be new.
Response Board Member John Lewis: Well it would be, yeah, it would be, yeah, it would obviously it would be new.
Question from owner Osborne: So, I will continue the question that she started. So what process is going to be put in place for the homeowners that were affected, to be part of the construction process?
Time keeper Mike Johnson: Ok. We are out of time for the initial homeowner, bouncing around, so
Question from owner Osborne: I’m a different homeowner.
Time keeper Mike Johnson: I realize that. I am trying to determine what the board, how the board wants to handle it with a continuation of the same questions. And now we are into the third person that wants to comment on it. You want me to start a new time?
Response Board Member John Lewis: Yeah
Time keeper Mike Johnson: Ok
Response Board Member John Lewis: Go ahead
Question from owner Osborne: Ok, so my question is, ultimately the HOA is BELFOR’s client, not the homeowners because they have a policy and they are dealing with the insurance company. So how is that process going to work with the homeowners as far as, you know, the board doesn’t understand what was in the unit beforehand, the homeowners obviously do. So how is that process gonna flow between communication with the board, with BELFOR, and the homeowners?
Response Board Member John Lewis: The typical way it would transpire, and that’s probably relating a lot to the interior finishes and appliances and you know, light fixtures, and things of that nature versus say the wall studs and so on. The way that would normally work, the way it will work is that the contractor would prepare what’s generally referred to as a submittal. And let’s take the flooring as an example. Ok. They would make, prepare a submittal and say, “Here’s the samples of what we think is the, what the proper replacement for what was there.” If the specifications or material samples, or whatever is appropriate. The contractor would then bring that to the HOA. And for us to do a preliminary review, to the best of the information we have and looks appropriate and then, go to the homeowner with that same submittal and say “Here’s what the contractor is proposing. Does that fit with the information you have?” And that you understood to be there the day before the fire. And it would have to. So, if there is some, you know, differences of opinion, then we’ve obviously got to work that out to the satisfaction of the homeowner, that, in fact, they are getting the same thing that they had the day before. If it’s a case of say a fixture. Um, and the previous model may not be, no longer available, you know manufacturers change and upgrade fixtures and etc. They would have to propose a one that’s the closest fit to the original that is at least equivalent to or a higher grade. They can’t go down in grade. They have to be equivalent or go up in grade. And again, those things would be presented to the homeowner to review and approve that, yes in fact that is what needs to be there. That’s the way it would work. The whole series of submittals as they work through all of these individual details, you know, including paint colors, things and so on.
Question from owner Berger: I’m still concerned about Vicky’s question about the not tearing the whole thing down. Who is going to be in charge of evaluating whether something needs to be removed or not as far as fire damage, water damage, and anything that happens in either unit, is going to affect the value of both units together, so at a later date, if things are found not to have been done properly, who’s responsible for the depreciated value of the property, even if it has been totally restored because it hasn’t been done properly?
Response Board Member John Lewis: Well, I guess that the inspection is going to be the critical part to ensure that whatever is remaining has not suffered any damage. That’s the very first thing. During the course of construction, the county building department is going to, there’s several inspection points in the course of construction, when framing is done, the county has to inspect that, when the sheeting is done, plumbing, electrical, the heat. All of these systems and components are inspection points with the county and building inspectors. And then when we get to the finishes and so on that we just talked about, then the homeowners will have a direct involvement to say that in fact that the fixtures and finishes and so on are approved by the homeowners. So, there’s several control points and inspections along the way. They just can’t go in and build something and nobody sees any part of it until they say, “Here it is.” It’s a controlled process all the way through.
Question from owner Colburn: Is the board going to make sure that BELFOR gives a warranty for all of their work? So, that in six months after its completed there’s mold issues, they’re going to hold them responsible? Second part of the contract specifically. Will we get to see the contract before it’s signed, so our legal team can review it?
Response Board Member John Lewis: I can’t comment on that, the legal part of it, I can’t comment on that. But the warranty part of it, the contract calls for a five-year warranty. Normal building warranties are typically in the range of 1 year, they’ve offered a five-year warranty.
Question from owner Mike Johnson: I have a question. I’ll start the timer over again. John, I am concerned when you said the homeowner will have the final approval on various items inside the house. Is that in fact the case? And is there a time frame for getting that approval? Because these contractors need answers to, to questions so it does not delay construction.
Response Board Member John Lewis: I guess the whole premise is we are trying to expedite to get the project completed so the owners can get back into their residence so, I think the submittals, they will be making submittals in advance of needing answers. Lots of time for review and response. That’s part of their management process is to ensure that these submittals come in, in a timely manner so that they are not coming in the day before they need to do something, Say approve it, no. If that’s the case, they are not going to get it. There’s no reason to have forced dates on things like that. And I think almost any contractor realizes that they need to make submittals well in advance of gaining approval.
Question from owner Colburn: Request for a second question if possible. Is the board going to do it themselves, or are we going to acquire a project manager of some kind? Cause it’s a pretty big deal.
Response Board Member John Lewis: At this point, the board is going to do it themselves. At this point, Vicki.
Gary Fortmann, President: Ok that concludes questions from the floor. I am going to reread the motion and then the board is going to vote on it.
MOTION is: Move that the company of BELFOR Incorporated be selected as the contractor to complete the restoration of the units at 191 and 201 Cascadia Loop. Further, that the contract be executed by the Board of Directors with BELFOR.
Board vote on the motion
Motion was seconded by Jim Jones and approved by the board. The motion carries. BELFOR is selected
ADJOURNED AT 3:43 AM, by President Gary Fortmann.
Submitted by David Walp, Secretary of the Board of Directors
Note: Questions and responses are extracted from the transcript of the recording of the meeting.