Community Corner

CORNER COMMUNITY Condo News

Virus Slows Condo Project

There’s nothing the clever coronavirus can’t infect, it appears, including the Kakaako skyline. Complications of COVID-19 are listed as a major reason for the delay in construction of a planned 42-story condominium at the corner of Halekauwila and Keawe streets, to be called Ililani. So says project developer Ken Chang, who broke ground last October. Following a public lottery in which 564 applicants sought to buy 165 “moderate-priced” one- and two-bedroom condos, with 163 more two-bedroom units priced at “market,” Chang began signing up new owners in February. Enter the virus, and with an uncertain future, many would-be buyers grew wary of signing purchase contracts. Less than a third of the building had been sold by May, and the project’s bank declined to authorize further payment for construction. Chang, a local architect, told local media he has hopes of bringing the project to fruition with a combination of measures that include increasing the number of moderately-priced units, adding an extra floor of parking and seeking waivers for paying state general excise tax on construction and city water and wastewater connection fees, totaling about $6.5 million. That would not offset costs of about $7.5 million incurred by reducing market-priced units and construction delays, but would allow the project to move forward, with construction beginning in early 2021.

Vertical School Still on Hold

Another Kakaako project is also on hold—the long-anticipated vertical schoolhouse at 609 Pohukaina, site of the current Fisher Hawaii store. Tentatively known as Pohukaina School, it would be Hawaii’s first tower-based public school. Planned for a decade, the 10-story school was to be part of a project involving a condo tower of moderate-priced units and was originally supposed to begin construction in 2014, and then again last year. Talks are ongoing between Alaka‘i Development, the state Department of Education, the Hawaii Community Development Authority and the Hawaii Housing Finance and Development Corp., with funding dependent on the Legislature, which recently pulled $20 million because the project is not ready for construction.

Condo Sales Fall Statewide

For the second month in a row, sales of Oahu condominiums took a hit from the coronavirus in June, though not as bad as some industry observers had feared. Compared to June 2019, this year’s sales were down 34%, dropping from 473 to 312. The median price fell 2.5%, from $432,500 last year to $421,500. Sales on Neighbor Islands also were down. On Kauai, condo sales plummeted 59% from a year ago, from 41 to 17. The median price fell 11%, from $528,000 to $470,000. Big Island sales fell 48%, from 75 to 39. The median was down 5%, from $385,000 to $365,000. On Maui, condo sales were also down, 46%, from 123 to 67. The median was down 9%, from $554,000 to $503,000. The median is the price point at which half of condos sold for more and half for less. Sources include the Honolulu Board of Realtors, Kauai Board of Realtors, Realtors Association of Maui and Hawaii Island Realtors. ❖

TV Show

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There’s an elderly woman resident who hoards old newspapers and needs to be checked on.

There’s a board member who grumbles about “fake news” and doesn’t want to spend a dime on anything.

And there are hurricanes, blackouts, homeless people wandering through, elevators that get people stuck between floors, a protest march in the adjacent park, broken pipes that cause multi-floor floods, spalling falling in the barbecue area, an attempt by Ugandan hackers to get into the association’s reserve account, an unattended death on the 12th floor and somebody’s kid pooped in the pool.

All the while, Bella promotes “aloha culture” with staff and residents.

As the pilot episode is winding to a close, with the sound of an ambulance siren coming closer, Bella, a former Army combat nurse, helps a resident give birth in the lobby, and just as she is handing the cooing baby to mama and the staff is cheering, Bella calmly says:

“I smell smoke. Security, sound the alarm.”

Fade to black.

All yours, CBS. ❖

don@tradepublishing.com

CORNER COMMUNITY CAI: Pool Policies Vary Greatly Due to Virus

Asignificant portion of community association pools—41%—have not reopened because of the COVID-19 pandemic, while 30% of communities have opened pools following a delay, according to a new report released by the Community Associations Institute (CAI).

CAI, an authority in community association education, governance and management, conducted a survey of volunteer board members, community managers and other industry stakeholders from late June to early July to understand how and why community associations made decisions regarding their pools. “The question to open a community dimarshall/Wikimedia Commons association pool has been one of the most controversial and complicated topics facing condominiums and homeowners’ associations,” says Thomas M. Skiba, CAI’s chief executive officer.

“Unfortunately, it’s not a one-size-fits-all model, and the decisions to open or not open are tailored to each community and specific to their unique circumstances.”

According to the survey, several factors influenced the communities that did not open their pools, including fear of exposure to legal liability (58%), fear of spreading COVID-19 (50%) and attorney recommendation (48%).

Communities that opened their pools reported instituting new procedures, including prohibiting guests (60%), requiring residents to sign a liability waiver (40%) and requiring residents to bring their own chairs (37%).

Pool expenses related to COVID-19 are higher than budgeted in roughly 35% of communities. “Communities have to consider guidance from the Centers for Disease Control and Prevention, state and local requirements, the association’s ability to set and enforce rules, liability, resident sentiment, safety and expenses,” says Skiba. “CAI is encouraging state and federal legislators to provide limited liability protections to community associations that, after careful consideration and compliance with the appropriate government guidelines, have decided to open pools for their residents.”

Some additional findings could reflect the different approaches taken by government in each state to slowing the spread of COVID-19 and the differing philosophies on reopening. For example: • More than 80% of respondents in New Jersey, 56% in Maryland and 55% in Pennsylvania reported their pools are closed. These states had some of the more prolonged and restrictive stay-at-home orders. • By contrast, fewer than 10% of respondents in Florida, 24% in Texas, and 29% in North Carolina reported their pools closed. These states had some of the shorter and least restrictive stay-at-home orders. • In New Jersey in particular, fear of exposure to legal liability (84%), lack of insurance coverage (74%) and attorney recommendation (74%) kept pools closed. • For communities that opened pools, those in Texas (71%), Nevada (71%), Arizona (70%) and California (66%) lead the way in prohibiting guests. • In Texas, 65% of communities require residents to sign a liability waiver, and 44% require residents to bring their own chairs.

For more information about the impact of COVID-19 and community associations, go to caionline.org/Pages/Coronavirus.aspx. ❖ minium associations and their insurers, to include evaluation of duplicating building coverage, the process of improved building property claims, and reserving for and handling of any pending master policy deductible assessments.

Renters of condominiums should notify their renters insurance provider of the loss for processing of any personal property damage that they may have sustained, and handling of any displacement-related claims, such as increased meal expenses or lodging that may result from a covered loss.

It is important to note that provisions of insurance policies require that insureds take steps to mitigate damages following a loss and to promptly notify carriers of a loss that may be covered by insurance. Failure to mitigate damages or timely notify insurers of a loss may prejudice coverage and result in a denial of claims.

As you can see, there are many types of policies and coverages that apply to a condominium building loss, with some coverages overlapping depending on the extent of damages. Understanding how the different policies mesh and duties that must be met by all beneficiaries are key to having claims run smoothly and expedite a return of the damaged building property to pre-loss conditions.

Smooth, expedited and coordinated handling of condominium building damage claims provide the added benefits of reducing overall claim expenses for all policies that may be involved in a loss, and may reduce or eliminate risks of protracted and expensive disputes related to building damage liability claims.

This information is for educational and informational purposes only. Associations and owners should always check with insurance professionals regarding insurance and coverage. ❖

Carole R. Richelieu is senior condominium specialist in the Department of Commerce and Consumer Affairs’ Real Estate Branch. Contact her office at 586-2643 or go to www.hawaii.gov/hirec.