Reserve Planning, Envelope Reconstruction, and Lessons from Two California Communities
By Gary Porter, FMP, RS, RRC, CPA March 2025
In a revealing and informative interview with TimeSharing Today, Gary Porter and Jay Grant of Facilities Advisors International shared the intricate details behind two expansive, multi-year building envelope reconstruction projects in California. These weren’t typical reserve study cases—in fact, they demonstrate how the traditional boundaries of reserve planning are being redefined.
In the process, they’ve created a blueprint for how aging condominium communities—and, by extension, timeshare resorts and other multi-family properties—can meet the challenges of deteriorating infrastructure, changing materials, and evolving legislation with financial and strategic foresight.
From Reserve Study to Rebuild
Gary Porter has worked with reserve studies for decades. His firm, Facilities Advisors International provides detailed reports that associations use to plan for major capital repairs and replacements. “Most of the time,” Porter said, “we prepare a study, and the board uses it to develop a budget and move forward. But every once in a while, we come across projects that require a much deeper, more hands-on approach.”
That was the case with two Bay Area properties: one in Daly City with 50 buildings and 326 units and another in San Mateo with 31 buildings and 312 units. Both were approaching 50 years of age, and both revealed major structural concerns that went beyond the scope of a routine reserve report.
Enter Jay Grant. Porter brought Grant into the projects after recognizing his unique qualifications. “Jay had the time, the background, and the skill set to guide these associations through something far more involved than a reserve update,” said Porter.
Grant’s Unique Background
Jay Grant’s professional journey has taken him from military service to financial services to national infrastructure protection after 9/11. His work included helping draft port security legislation, forming the U.S. Port Security Council, and managing federal projects for deep water ports across the U.S. and abroad.
Later, Grant moved into a condominium in Washington State—an experience that would change his trajectory. “The building had significant deficiencies,” he explained. “We had leaks, elevator misclassifications, and ultimately had to undertake a full envelope reconstruction project. That hands-on involvement taught me everything about how these buildings age and how ill-prepared many associations are.”
Grant found Porter’s book on reserve studies—an in-depth 400-page guide—and reached out to discuss opportunities. Around 2020, he joined the Facilities Advisors team and soon took on the two large-scale California projects.
Legal Mandates Reshaping the Industry
What catalyzed these projects wasn’t just structural aging—it was California law.
Senate Bill 326 (SB 326), which took effect in 2020, requires regular inspections of load-bearing elements in common interest developments that are elevated more than six feet above ground. These include balconies, decks, exterior stairs, and walkways. The inspections must be performed by licensed structural engineers or architects and repeated every nine years. Findings must be documented and acted upon.
The Davis-Stirling Common Interest Development Act, which governs California HOAs, now includes stricter requirements for reserve funding and mandates detailed disclosures about physical deficiencies, underfunded reserves, and structural risks.
“These laws don’t just recommend best practices anymore,” said Grant. “They impose a legal obligation to assess, disclose, and fund repairs—particularly when lives and safety are at stake.”
Grant noted that these legal requirements can reveal previously hidden damage. In San Mateo, SB 326-mandated inspections showed widespread deterioration in the envelope and elevated elements, prompting the board to initiate a full reconstruction. In Daly City, architectural reports confirmed that the buildings had only seven to ten years of structural life left—justifying immediate intervention.
The Importance of the Envelope
The building envelope encompasses all the exterior elements—cladding, siding, roofing, windows, trim, balconies, decks, and structural projections. When any component of the envelope fails, moisture intrusion accelerates internal decay, undermining insulation, wood framing, metal reinforcements, and even electrical and plumbing systems.
“Everything is a lifecycle,” said Grant. “If water gets in, deterioration accelerates. You can’t always see it, but the damage is happening—and you’ll eventually pay for it, one way or another.”
He emphasized that the envelope must be included in reserve studies even for newer properties. “You don’t wait until failure. You plan now, even if your siding is only five or ten years old. Otherwise, you’re setting up the next board—or the next generation of owners—for disaster.”
Why Every Property Type Must Plan for This
Though these examples involved condominiums, Grant and Porter stressed that timeshare resorts, cooperatives, townhome developments, and other multi-family properties face the same vulnerabilities.
- Timeshare properties may rely on rotating boards and short-term governance, leading to insufficient long-term planning.
- Senior housing and retirement communities often defer maintenance to preserve affordability—at the expense of the physical property.
- Mixed-use buildings face complexity when retail and residential components are governed separately but share critical infrastructure.
“These properties must act like businesses,” Grant said. “The day you build a structure is the day you should start planning to replace it.”
Developing a Strategic, Phased Plan
In both Daly City and San Mateo, Grant transitioned from analyst to project quarterback. He coordinated with engineers, architects, contractors, and lenders to build comprehensive pro formas. He used satellite imaging and cost modeling when original architectural plans were unavailable. He created websites that guided owners through the legal context, costs, materials, and timelines.
In Daly City, the reserve study was expanded to accommodate a $62 million envelope reconstruction phased over three to four years. Twelve buildings are under construction this year, with 70 workers on-site daily. A long-term HOA loan replaces the need for lump-sum special assessments.
In San Mateo, a similar process unfolded. After presenting a fully documented reserve plan, including pro forma costs and invasive inspection findings, the board voted 7-0 in favor of a full envelope reconstruction. The project is now entering the bid and planning phase, expected to cost between $45 and $50 million.
New Materials, Long-Term Savings
These projects are also a chance to modernize. Daly City’s plan replaces old cladding with durable PVC siding that never needs painting—eliminating the need for a projected $30 million in repainting costs over the next 30 years. That alone offsets part of the loan payments.
Grant also emphasized hidden savings. “If you’re already spending $1.5 million a year on repairs, you’re just throwing money into a leaking ship. A new envelope reduces those costs—and the building becomes nearly new again.”
Envelope reconstruction also provides an opportunity to evaluate plumbing, wiring, and other concealed systems. Some buildings considered switching to mini-split HVAC systems, taking advantage of exposed walls to modernize without further disruption.
Working with Owners and Banks
One of Grant’s greatest challenges—and strengths—was communication. He developed custom communication programs for each community based on demographics and needs. One community, home to many retired residents on fixed incomes, needed a slower, more compassionate educational process. The other, filled with tech professionals, responded well to digital dashboards and data visualizations.
He also managed lender relations. “Most banks don’t know how to underwrite an HOA loan over $20 million,” Grant said. “I talked to over 30 banks for my own condo project and had to explain how to secure collateral from an association.”
HOA loans are structured similarly to construction loans. They begin as lines of credit during the reconstruction period and roll into long-term mortgages attached to units. This eliminates the need for disruptive assessments while preserving liquidity.
Industry Implications and a Call to Action
Porter and Grant agree that the implications extend far beyond these two California communities.
“Jay did what no one else could,” said Porter. “While engineers focused on balconies and contractors focused on siding, he connected the dots. He showed that treating these problems holistically saved millions—and probably saved these communities from catastrophic failures.”
With more buildings aging into their fifth decade and more states adopting laws like SB 326, the message is clear: Associations must act proactively or face exponential costs and risk.
“The earlier you plan, the less you’ll pay,” said Grant. “It’s not about reacting to a leak. It’s about building responsibly—for now and for the next 40 years.”
Gary Porter, FMP, RS, RRC, CPA is the CEO of Facilities Advisors International and has prepared reserve studies for associations since 1982. As a Facilities Management Professional (FMP) he has training in all phases of facilities management. As a valuation expert he has testified at trial more than 50 times. As a CPA he also focuses on the numbers. Gary is the author of seven books on financial aspects of community associations totaling nearly 5,000 pages and is also the author of more than 400 articles. He has been published or quoted in The Wall Street Journal, Money Magazine, Kiplinger’s Personal Finance, The Practical Accountant, Common Ground, The Ledger Quarterly, Timesharing Today, Hawaii Building Trades, and The Florida Community Association Journal. Gary is a past president of CAI (1998) and was a founding member of the CAI California Channel Islands Chapter in 1979. 47 years as a CAI member. He resides in Las Vegas, NV. Facilities Advisors provides reserve study and maintenance planning services to associations nationwide.