Update With Site-Visit Reserve Study

Transcription

1 Update With Site-Visit Reserve Study Park Place HOA Surprise, Arizona Report #: For Period Beginning: January 1, 2017 Expires: December 31, 2017 Date Prepared: October 4, 2016

2 Hello, and welcome to your Reserve Study! W e don t want you to be surprised. This Report is designed to help you anticipate, and prepare for, the major common area expenses your association will face. Inside you will find: 1) The Reserve Component List (the Scope and Schedule of your Reserve projects) telling you what your association is Reserving for, what condition they are in now, and what they ll cost to replace. 2) An Evaluation of your current Reserve Fund Size and Strength (Percent Funded). This tells you your financial starting point, revealing your risk of deferred maintenance and special assessments. 3) A Recommended Multi-Year Reserve Funding Plan, answering the question What do we do now? More Questions? Visit our website at or call us at: or Relax, it s from - AZ, LLC 10/4/2016

3 Table of Contents 3- Minute Executive Summary...i Reserve Study Summary...i Reserve Component List Table 1...ii Introduction, Objectives, and Methodology...1 Which Physical Assets are Funded by Reserves?...2 How do we establish Useful Life and Remaining Useful Life estimates?...2 How do we establish Current Repair/Replacement Cost Estimates?...2 How much Reserves are enough?...3 How much should we contribute?...4 What is our Recommended Funding Goal?...4 Projected Expenses...6 Expense Graph Figure Reserve Fund Status & Recommended Funding Plan...7 Funding Plan Graph Figure Cash Flow Graph Figure % Funded Graph Figure Table Descriptions...9 Reserve Component List Detail Table Contribution & Fund Breakdown Table Component Significance Table Year Reserve Plan Summary Table Year Reserve Plan Year by Year Detail Table Accuracy, Limitations, and Disclosures...29 Terms and Definitions Appendix - AZ, LLC 10/4/2016

4 3- Minute Executive Summary Association: Park Place HOA #: Location: Surprise, Arizona # of Units: 258 Report Period: January 1, 2017 through December 31, 2017 Findings/Recommendations as-of 1/1/2017: Projected Starting Reserve Balance:...$680,331 Current Fully Funded Reserve Balance:...$1,413,729 Average Reserve Deficit (Surplus) Per Unit:...$2,843 Recommended 2017 Monthly Full Funding Contributions:...$12,500 Alternate Minimum Contributions* to keep Reserves above $0:...$10,800 Recommended 2017 Special Assessment for Reserves:...$0 Most Recent Budgeted Reserve Contribution Rate:...$11,686 Economic Assumptions: Net Annual After Tax Interest Earnings Accruing to Reserves % Annual Inflation Rate % This is an Update With-Site-Visit Reserve Study, based on a prior Report prepared by for your 2014 Fiscal Year. We performed the site inspection on June 27, The Reserve expense threshold for this analysis is $2,000, which means no expenses under $2,000 are funded in the Reserve Study. Your Reserve Fund is 48% Funded. This means Reserve strength is fair, and the association s special assessment & deferred maintenance risk is currently medium. The objective of your multiyear Funding Plan is to Fully Fund Reserves. Projected balance reflects approx $100,000 from settlement funds being transferred to Reserves. Based on this starting point and anticipated future expenses, we recommend increasing Reserve contributions to $12,500/month, followed by 10% annual increases to help strengthen contributions over time and offset inflation (see tables herein for details). *officially called Baseline Funding - AZ, LLC i 10/4/2016

5 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate COMMON AREA 100 Monuments - Refurbish 18 7 $5, Directory Sign - Replace 18 7 $2, Entry System - Replace 15 4 $5, Gate Operators - Replace 15 4 $15, Vehicle Gates - Replace $17, Asphalt - Resurface $278, Asphalt - Seal/Repair 4 3 $23, Concrete Pavers - Repair 20 9 $22, Concrete - Repair 5 2 $2, Carport Roofs - Repair 10 2 $3, Carport Lights - Replace 20 9 $9, Carport Trim - Repaint 8 7 $9, Trash Compactor - Replace 20 9 $24, Pole Lights - Replace $49, Pole Lights - Repaint 5 4 $2, Bollard Lights - Replace 20 9 $96, Mailboxes - Replace 20 9 $15, Park Furniture - Replace 20 9 $15, Fitness Stations - Replace 20 9 $7, Bocce Ball Turf - Replace 6 0 $6, Wood Pergolas - Replace $31, Wood Pergolas - Repaint 5 4 $3, Perimeter Walls - Repaint 8 0 $13, Metal Fence - Replace $3, Irrig Controllers - Replace 12 2 $4, Landscape Granite - Replenish 8 7 $9, Drywells - Inspect/Clean 3 2 $3,500 POOL AREA 800 Metal Fence - Replace $8, Pool Deck - Resurface $10, Pool Deck - Seal/Repair 4 3 $3, Pool - Resurface $13, Spa - Resurface $4, Furniture - Partial Replace 3 1 $3, BBQ Grill - Replace 15 4 $2, BBQ Counter - Replace $3, Pool/Spa Pumps - Replace 12 1 $3, Pool Heater - Replace 8 4 $3, Spa Heater - Replace 8 4 $2,650 CLUBHOUSE 900 Carpet (1st Flr) - Replace 8 4 $11, Carpet (2nd Flr) - Replace 8 7 $10, Interior Surfaces - Repaint 15 4 $12, Window Treatments - Replace 20 9 $5, Interior Lights - Replace $27,500 - AZ, LLC ii 10/4/2016

6 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate 912 Artwork/Décor - Replace 20 9 $7, Furniture - Partial Replace 5 4 $20, Billiards Table - Replace $4, Kitchen - Remodel $30, Restrooms - Remodel $25, Surveillance System - Replace 8 1 $5, Laminate Floor - Replace 20 9 $2, Cardio Treadmills - Replace 10 1 $10, Cardio Machines - Replace 12 3 $17, Strength Equipment - Replace 20 9 $7, Video Projector - Replace 10 3 $2, Wallpaper - Replace 20 9 $5, Elevator - Modernize $57, Elevator Cab - Remodel 15 6 $9,750 BUILDINGS 1000 Exterior Lights - Replace 15 0 $15, Metal Surfaces - Repaint 5 4 $12, Wood Trim - Repaint 5 4 $12, Stucco Surfaces - Repaint 10 9 $218, Sunscreens - Replace $2, Flat Roofs - Replace 18 7 $275, Tile Roofs - Refurbish $290, HVAC Units - Replace (Ph1) 15 1 $76, HVAC Units - Replace (Ph2) 15 3 $76, HVAC Units - Replace (Ph3) 15 5 $76, HVAC Units - Replace (2015) $23, HVAC Units - Replace (2016) $7, Epoxy Floor - Recoat 10 6 $12, Carpet Floor - Replace 10 0 $108, Tile Floor - Replace $24, Hallways - Repaint 10 0 $71, Stairways - Repaint 10 6 $12, Interior Lights - Replace $136, Elevator Cabs - Remodel 15 6 $30, Elevators - Modernize $187, Fire Alarm System - Modernize 20 9 $165, Fire Alarm System - Repair $23, Total Funded Components Note 1: a Useful Life of N/A means a one-time expense, not expected to repeat. Note 2: Yellow highlighted line items are expected to require attention in the initial year. - AZ, LLC iii 10/4/2016

7 Assoc Introduction A Reserve Study is the art and science of anticipating, and preparing for, an association s major common area repair and replacement expenses. Partially art, because in this field we are making projections about the future. Partially science, because our work is a combination of research and welldefined computations, following consistent National Reserve Study Standard principles. The foundation of this and every Reserve Study is your Reserve Component List (what you are reserving for). This is because the Reserve Component List defines the scope and schedule of all your anticipated upcoming Reserve projects. Based on that List and your starting balance, we calculate the association s Reserve Fund Strength (reported in terms of Percent Funded ). Then we compute a Reserve Funding Plan to provide for the Reserve needs of the association. These form the three results of your Reserve Study. Reserve contributions are not for the future. Reserve contributions are designed to offset the ongoing, daily deterioration of your Reserve assets. Done well, a stable, budgeted Reserve Funding Plan will collect sufficient funds from the owners who enjoyed the use of those assets, so the association is financially prepared for the irregular expenditures scattered through future years when those projects eventually require replacement. Methodology For this Update With-Site-Visit Reserve Study, we started with a review of your prior Reserve Study, then looked into recent Reserve expenditures, evaluated how expenditures are handled (ongoing maintenance vs Reserves), and researched any well-established association precedents. We performed an on-site inspection to evaluate your common areas, updating and adjusting your Reserve Component List as appropriate. - AZ, LLC 1 10/4/2016

8 Assoc Which Physical Assets are Funded by Reserves? National Reserve Study Standards outlines a 4-part test to determine which expenses should appear in your Reserve Component List. First, it must be a common area maintenance responsibility. Second, the component must have a limited life. Third, the remaining life must be predictable (or it by definition is a surprise which cannot be accurately anticipated). Fourth, the component must be above a minimum threshold cost (often between.5% and 1% of an association s total budget). This limits Reserve Components to major, predictable expenses. Within this framework, it is inappropriate to include lifetime components, unpredictable expenses (such as damage due to fire, flood, or earthquake), and expenses more appropriately handled from the Operational Budget or as an insured loss. How do we establish Useful Life and Remaining Useful Life estimates? 1) Visual Inspection (observed wear and age) 2) database of experience 3) Client History (install dates & previous life cycle information) 4) Vendor Evaluation and Recommendation How do we establish Current Repair/Replacement Cost Estimates? In this order 1) Actual client cost history, or current proposals 2) Comparison to database of work done at similar associations 3) Vendor Recommendations 4) Reliable National Industry cost estimating guidebooks - AZ, LLC 2 10/4/2016

9 Assoc How much Reserves are enough? Reserve adequacy is not measured in cash terms. Reserve adequacy is found when the amount of current Reserve cash is compared to Reserve component deterioration (the needs of the association). Having enough means the association can execute its projects in a timely manner with existing Reserve funds. Not having enough typically creates deferred maintenance or special assessments. Adequacy is measured in a two-step process: 1) Calculate the value of deterioration at the association (called Fully Funded Balance, or FFB). 2) Compare that to the Reserve Fund Balance, and express as a percentage. Each year, the value of deterioration at the association changes. When there is more deterioration (as components approach the time they need to be replaced), there should be more cash to offset that deterioration and prepare for the expenditure. Conversely, the value of deterioration shrinks after projects are accomplished. The value of deterioration (the FFB) changes each year, and is a moving but predictable target. There is high risk of special assessments and deferred maintenance when the Percent Funded is weak, below 30%. Approximately 30% of all associations are in this high risk range. While the 100% point is Ideal (indicating Reserve cash is equal to the value of deterioration), a Reserve Fund in the 70% -130% range is considered strong (low risk of special assessment). Measuring your Reserves by Percent Funded tells how well prepared your association is for upcoming Reserve expenses. New buyers should be very aware of this important disclosure! - AZ, LLC 3 10/4/2016

10 Assoc How much should we contribute? According to National Reserve Study Standards, there are four Funding Principles to balance in developing your Reserve Funding Plan. Our first objective is to design a plan that provides you with sufficient cash to perform your Reserve projects on time. Second, a stable contribution is desirable because it keeps these naturally irregular expenses from unsettling the budget. Reserve contributions that are evenly distributed over current and future owners enable each owner to pay their fair share of the association s Reserve expenses over the years. And finally, we develop a plan that is fiscally responsible and safe for Board Members to recommend to their association. Remember, it is the Board s job to provide for the ongoing care of the common areas. Board Members invite liability exposure when Reserve contributions are inadequate to offset ongoing common area deterioration. What is our Recommended Funding Goal? Maintaining the Reserve Fund at a level equal to the value of deterioration is called Full Funding (100% Funded). As each asset ages and becomes used up, the Reserve Fund grows proportionally. This is simple, responsible, and our recommendation. Evidence shows that associations in the % range enjoy a low risk of special assessments or deferred maintenance. Allowing the Reserves to fall close to zero, but not below zero, is called Baseline Funding. Doing so allows the Reserve Fund to drop into the 0-30% range, where there is a high risk of special assessments & deferred maintenance. Since Baseline Funding still provides for the timely execution of all Reserve projects, and only the margin of safety is different, Baseline Funding contributions average only 10% - 15% less than Full Funding contributions. Threshold Funding is the title of all other Cash or Percent Funded objectives between Baseline Funding and Full Funding. - AZ, LLC 4 10/4/2016

11 Assoc Site Inspection Notes During the site visit on June 27, 2016, we started by meeting with community manager Ms. Amber Winter from Peterson Management and Board Treasurer Mr. Howard Rosch. We spent time reviewing reserve related projects in progress, planned in the near future, and recently completed (some of them were paid with defect settlement funds). Additionally, the projected starting balance used in this analysis reflects an additional $100,000 of settlement funds being transferred to reserves. After the meeting, I visually re-inspected common areas throughout the community, which included the parking lot areas, pool area, clubhouse, plus interiors and exteriors of the condo buildings and exteriors of the townhome buildings. - AZ, LLC 5 10/4/2016

12 Assoc Projected Expenses While this Reserve Study looks forward 30 years, we have no expectation that all these expenses will all take place as anticipated. This Reserve Study needs to be updated annually because we expect the timing of these expenses to shift and the size of these expenses to change. We do feel more certain of the timing and cost of near-term expenses than expenses many years away. Your first five years of projected Reserve expenses total $584,921. Adding the next five years, your first ten years of projected Reserve expenses are $2,059,041. Please be aware of your near-term expenses, which we are able to project more accurately than the more distant projections. The figure below summarizes the projected future expenses at your association as defined by your Reserve Component List. A summary of these expenses are shown in Table 5, while details of the projects that make up these expenses are shown in Table 6. Annual Reserve Expenses $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $ Years Figure 1 - AZ, LLC 6 10/4/2016

13 Assoc Reserve Fund Status The starting point for our financial analysis is your Reserve Fund balance, projected to be $680,331 as-of the start of your Fiscal Year on January 1, This is based on your actual balance on April 30, 2016 of $506,402 and anticipated Reserve contributions and expenses projected through the end of your Fiscal Year. As of January 1, 2017, your Fully Funded Balance is computed to be $1,413,729 (see Table 3). This figure represents the deteriorated value of your common area components. Comparing your Reserve Balance to your Fully Funded Balance indicates your Reserves are 48% Funded. Across the country approx 13% of associations in this range experience special assessments or deferred maintenance. Recommended Funding Plan Based on your current Percent Funded and both your near-term and longterm Reserve needs, we recommend budgeted contributions of $12,500/month this Fiscal Year. The overall 30-yr plan, in perspective, is shown below. This same information is shown numerically in Tables 5 & 6. Annual Reserve Funding Recommended Alternate (Minimum) Current Budget $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ Years Figure 2 - AZ, LLC 7 10/4/2016

14 Assoc The following chart shows your Reserve balance under our recommended Full Funding Plan, an alternate Baseline Funding Plan, and at your current budgeted contribution rate, compared to your always-changing Fully Funded Balance target. Target Fully Funded Balance 30-Yr Cash Flow Recommended Funding Plan Alternate (Minimum) Current Budget $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ Years Figure 3 This figure shows this same information, plotted on a Percent Funded scale. Recommended Funding Plan Percent Funded Alternate (Minimum) Funding Plan Current Budget 120% 100% 80% 60% 40% 20% 0% Years Figure 4 - AZ, LLC 8 10/4/2016

15 Assoc Table Descriptions The tabular information in this Report is broken down into six tables. Table 1 is a summary of your Reserve Components (your Reserve Component List), the information found in Table 2. Table 2 is your Reserve Component List, which forms the foundation of this Reserve Study. This table represents the information from which all other tables are derived. Table 3 shows the calculation of your Fully Funded Balance, the measure of your current Reserve component deterioration. For each component, the Fully Funded Balance is the fraction of life used up multiplied by its estimated Current Replacement Cost. Table 4 shows the significance of each component to Reserve needs of the association, helping you see which components have more (or less) influence than others on your total Reserve contribution rate. The deterioration cost/yr. of each component is calculated by dividing the estimated Current Replacement Cost by Useful Life, then that component s percentage of the total is displayed. Table 5: This table provides a one-page 30-year summary of the cash flowing into and out of the Reserve Fund, with a display of the Fully Funded Balance, Percent Funded, and special assessment risk for each year. Table 6: This table shows the cash flow detail for the next 30 years. This table makes it possible to see which components are projected to require repair or replacement each year, and the size of those individual expenses. - AZ, LLC 9 10/4/2016

16 Table 2: Reserve Component List Detail Rem. Useful Useful [ --- Current Cost Estimate --- ] # Component Quantity Life Life Best Case Worst Case COMMON AREA 100 Monuments - Refurbish (2) Monuments 18 7 $5,100 $6, Directory Sign - Replace (1) Sign 18 7 $1,800 $2, Entry System - Replace (1) DoorKing System 15 4 $4,800 $6, Gate Operators - Replace (4) Operators 15 4 $14,500 $17, Vehicle Gates - Replace (4) Vehicle, (3) Ped $15,500 $19, Asphalt - Resurface Approx 182,530 Sq Ft $237,000 $320, Asphalt - Seal/Repair Approx 182,530 Sq Ft 4 3 $21,000 $26, Concrete Pavers - Repair Approx 27,700 Sq Ft 20 9 $19,000 $25, Concrete - Repair Numerous Sq Ft 5 2 $2,200 $2, Carport Roofs - Repair Approx 31,750 Sq Ft 10 2 $2,800 $3, Carport Lights - Replace Approx (61) Lights 20 9 $8,400 $10, Carport Trim - Repaint Approx (200) Spaces 8 7 $8,300 $10, Trash Compactor - Replace (1) RamJet 20 9 $21,000 $27, Pole Lights - Replace Approx (22) Lights $44,000 $55, Pole Lights - Repaint Approx (22) Lights 5 4 $2,100 $2, Bollard Lights - Replace Approx (93) Lights 20 9 $82,000 $110, Mailboxes - Replace (16) Clusters 20 9 $14,000 $16, Park Furniture - Replace (26) Pieces 20 9 $13,000 $17, Fitness Stations - Replace (5) Stations 20 9 $6,500 $8, Bocce Ball Turf - Replace Approx 720 Sq Ft 6 0 $5,500 $6, Wood Pergolas - Replace Approx 1,840 Sq Ft $28,000 $35, Wood Pergolas - Repaint Approx 3,680 Sq Ft 5 4 $2,700 $3, Perimeter Walls - Repaint Approx 37,000 Sq Ft 8 0 $11,000 $15, Metal Fence - Replace Approx 120 LF $3,000 $3, Irrig Controllers - Replace (2) Rain Master, 36-sta $4,300 $5, Landscape Granite - Replenish Numerous Sq Ft 8 7 $8,000 $10, Drywells - Inspect/Clean (31) Locations 3 2 $3,000 $4,000 POOL AREA 800 Metal Fence - Replace Approx 245 LF $7,500 $9, Pool Deck - Resurface Approx 2,200 Sq Ft $9,400 $11, Pool Deck - Seal/Repair Approx 2,200 Sq Ft 4 3 $3,000 $4, Pool - Resurface (1) Pool, 120 LF $11,000 $15, Spa - Resurface (1) Spa, 30 LF $3,500 $4, Furniture - Partial Replace (46) Pieces 3 1 $3,000 $4, BBQ Grill - Replace (1) Gas Grill 15 4 $2,300 $2, BBQ Counter - Replace Approx 36 Sq Ft $3,000 $3, Pool/Spa Pumps - Replace (3) Challenger 12 1 $2,700 $3, Pool Heater - Replace (1) Hayward 400,000 BTU 8 4 $3,000 $4, Spa Heater - Replace (1) MasterTemp $2,300 $3,000 CLUBHOUSE 900 Carpet (1st Flr) - Replace Approx 270 Sq Yds 8 4 $10,000 $13, Carpet (2nd Flr) - Replace Approx 275 Sq Yds 8 7 $9,000 $11, Interior Surfaces - Repaint Approx 17,140 Sq Ft 15 4 $10,000 $14,000 - AZ, LLC 10 10/4/2016

17 Table 2: Reserve Component List Detail Rem. Useful Useful [ --- Current Cost Estimate --- ] # Component Quantity Life Life Best Case Worst Case 907 Window Treatments - Replace Approx (22) Pieces 20 9 $4,600 $5, Interior Lights - Replace Approx (158) Lights $25,000 $30, Artwork/Décor - Replace Numerous Pieces 20 9 $6,400 $8, Furniture - Partial Replace Approx (115) Pieces 5 4 $16,000 $24, Billiards Table - Replace (1) Table $3,700 $4, Kitchen - Remodel (1) Kitchen $27,000 $33, Restrooms - Remodel (4) Restrooms $21,000 $30, Surveillance System - Replace (1) DVR, (9) Cameras 8 1 $4,600 $6, Laminate Floor - Replace Approx 200 Sq Ft 20 9 $1,700 $2, Cardio Treadmills - Replace (2) True Treadmills 10 1 $9,600 $11, Cardio Machines - Replace (4) Machines 12 3 $15,000 $19, Strength Equipment - Replace (4) Pieces + Dumbbells 20 9 $6,700 $8, Video Projector - Replace (1) Panasonic 10 3 $2,400 $3, Wallpaper - Replace Approx 1,120 Sq Ft 20 9 $4,800 $6, Elevator - Modernize (1) Otis, 2-Stop $50,000 $65, Elevator Cab - Remodel (1) Standard Cab 15 6 $8,500 $11,000 BUILDINGS 1000 Exterior Lights - Replace Approx (100) Lights 15 0 $13,000 $17, Metal Surfaces - Repaint Approx 3,610 LF 5 4 $10,000 $14, Wood Trim - Repaint Approx 11,900 LF 5 4 $10,000 $14, Stucco Surfaces - Repaint Approx 233,600 Sq Ft 10 9 $196,000 $240, Sunscreens - Replace (72) Suncreens $2,500 $3, Flat Roofs - Replace Approx 91,400 Sq Ft 18 7 $250,000 $300, Tile Roofs - Refurbish Approx 78,000 Sq Ft $250,000 $330, HVAC Units - Replace (Ph1) 1/3 of (52) HVAC Units 15 1 $70,000 $83, HVAC Units - Replace (Ph2) 1/3 of (52) HVAC Units 15 3 $70,000 $83, HVAC Units - Replace (Ph3) 1/3 of (52) HVAC Units 15 5 $70,000 $83, HVAC Units - Replace (2015) (6) Goodman, 1.5-Ton $20,000 $26, HVAC Units - Replace (2016) (2) Goodman, 1.5-Ton $6,800 $8, Epoxy Floor - Recoat Numerous Sq Ft 10 6 $11,000 $14, Carpet Floor - Replace Approx 3,335 Sq Yds 10 0 $96,000 $120, Tile Floor - Replace Approx 2,000 Sq Ft $21,000 $28, Hallways - Repaint Approx 100,000 Sq Ft 10 0 $62,000 $81, Stairways - Repaint Approx 21,700 Sq Ft 10 6 $11,000 $13, Interior Lights - Replace Approx (975) Lights $120,000 $152, Elevator Cabs - Remodel (3) Standard Cabs 15 6 $25,000 $35, Elevators - Modernize (3) Otis, 3-Stop $165,000 $210, Fire Alarm System - Modernize (1) System 20 9 $150,000 $180, Fire Alarm System - Repair (1) System $20,000 $26, Total Funded Components - AZ, LLC 11 10/4/2016

18 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance COMMON AREA 100 Monuments - Refurbish $5,750 X 11 / 18 = $3, Directory Sign - Replace $2,000 X 11 / 18 = $1, Entry System - Replace $5,600 X 11 / 15 = $4, Gate Operators - Replace $15,750 X 11 / 15 = $11, Vehicle Gates - Replace $17,250 X 11 / 30 = $6, Asphalt - Resurface $278,500 X 11 / 28 = $109, Asphalt - Seal/Repair $23,600 X 1 / 4 = $5, Concrete Pavers - Repair $22,000 X 11 / 20 = $12, Concrete - Repair $2,500 X 3 / 5 = $1, Carport Roofs - Repair $3,150 X 8 / 10 = $2, Carport Lights - Replace $9,200 X 11 / 20 = $5, Carport Trim - Repaint $9,150 X 1 / 8 = $1, Trash Compactor - Replace $24,000 X 11 / 20 = $13, Pole Lights - Replace $49,500 X 11 / 30 = $18, Pole Lights - Repaint $2,450 X 1 / 5 = $ Bollard Lights - Replace $96,000 X 11 / 20 = $52, Mailboxes - Replace $15,300 X 11 / 20 = $8, Park Furniture - Replace $15,000 X 11 / 20 = $8, Fitness Stations - Replace $7,500 X 11 / 20 = $4, Bocce Ball Turf - Replace $6,000 X 6 / 6 = $6, Wood Pergolas - Replace $31,500 X 11 / 25 = $13, Wood Pergolas - Repaint $3,000 X 1 / 5 = $ Perimeter Walls - Repaint $13,000 X 8 / 8 = $13, Metal Fence - Replace $3,300 X 11 / 35 = $1, Irrig Controllers - Replace $4,800 X 10 / 12 = $4, Landscape Granite - Replenish $9,000 X 1 / 8 = $1, Drywells - Inspect/Clean $3,500 X 1 / 3 = $1,167 POOL AREA 800 Metal Fence - Replace $8,550 X 11 / 24 = $3, Pool Deck - Resurface $10,400 X 1 / 12 = $ Pool Deck - Seal/Repair $3,500 X 1 / 4 = $ Pool - Resurface $13,000 X 1 / 15 = $ Spa - Resurface $4,000 X 1 / 15 = $ Furniture - Partial Replace $3,500 X 2 / 3 = $2, BBQ Grill - Replace $2,550 X 11 / 15 = $1, BBQ Counter - Replace $3,400 X 1 / 15 = $ Pool/Spa Pumps - Replace $3,000 X 11 / 12 = $2, Pool Heater - Replace $3,500 X 4 / 8 = $1, Spa Heater - Replace $2,650 X 4 / 8 = $1,325 CLUBHOUSE 900 Carpet (1st Flr) - Replace $11,500 X 4 / 8 = $5, Carpet (2nd Flr) - Replace $10,000 X 1 / 8 = $1, Interior Surfaces - Repaint $12,000 X 11 / 15 = $8,800 - AZ, LLC 12 10/4/2016

19 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance 907 Window Treatments - Replace $5,000 X 11 / 20 = $2, Interior Lights - Replace $27,500 X 11 / 25 = $12, Artwork/Décor - Replace $7,450 X 11 / 20 = $4, Furniture - Partial Replace $20,000 X 1 / 5 = $4, Billiards Table - Replace $4,250 X 11 / 30 = $1, Kitchen - Remodel $30,000 X 11 / 30 = $11, Restrooms - Remodel $25,500 X 11 / 30 = $9, Surveillance System - Replace $5,400 X 7 / 8 = $4, Laminate Floor - Replace $2,000 X 11 / 20 = $1, Cardio Treadmills - Replace $10,650 X 9 / 10 = $9, Cardio Machines - Replace $17,000 X 9 / 12 = $12, Strength Equipment - Replace $7,450 X 11 / 20 = $4, Video Projector - Replace $2,700 X 7 / 10 = $1, Wallpaper - Replace $5,400 X 11 / 20 = $2, Elevator - Modernize $57,500 X 11 / 25 = $25, Elevator Cab - Remodel $9,750 X 9 / 15 = $5,850 BUILDINGS 1000 Exterior Lights - Replace $15,000 X 15 / 15 = $15, Metal Surfaces - Repaint $12,000 X 1 / 5 = $2, Wood Trim - Repaint $12,000 X 1 / 5 = $2, Stucco Surfaces - Repaint $218,000 X 1 / 10 = $21, Sunscreens - Replace $2,800 X 1 / 12 = $ Flat Roofs - Replace $275,000 X 11 / 18 = $168, Tile Roofs - Refurbish $290,000 X 11 / 30 = $106, HVAC Units - Replace (Ph1) $76,500 X 14 / 15 = $71, HVAC Units - Replace (Ph2) $76,500 X 12 / 15 = $61, HVAC Units - Replace (Ph3) $76,500 X 10 / 15 = $51, HVAC Units - Replace (2015) $23,000 X 2 / 15 = $3, HVAC Units - Replace (2016) $7,600 X 1 / 15 = $ Epoxy Floor - Recoat $12,500 X 4 / 10 = $5, Carpet Floor - Replace $108,000 X 10 / 10 = $108, Tile Floor - Replace $24,500 X 10 / 20 = $12, Hallways - Repaint $71,500 X 10 / 10 = $71, Stairways - Repaint $12,000 X 4 / 10 = $4, Interior Lights - Replace $136,000 X 11 / 25 = $59, Elevator Cabs - Remodel $30,000 X 9 / 15 = $18, Elevators - Modernize $187,500 X 11 / 25 = $82, Fire Alarm System - Modernize $165,000 X 11 / 20 = $90, Fire Alarm System - Repair $23,000 X 1 / 20 = $1,150 $1,413,729 - AZ, LLC 13 10/4/2016

20 Table 4: Component Significance Current Useful Cost Deterioration Deterioration # Component Life Estimate Cost/Yr. Significance COMMON AREA 100 Monuments - Refurbish 18 $5,750 $ % 104 Directory Sign - Replace 18 $2,000 $ % 110 Entry System - Replace 15 $5,600 $ % 120 Gate Operators - Replace 15 $15,750 $1, % 130 Vehicle Gates - Replace 30 $17,250 $ % 201 Asphalt - Resurface 28 $278,500 $9, % 202 Asphalt - Seal/Repair 4 $23,600 $5, % 204 Concrete Pavers - Repair 20 $22,000 $1, % 210 Concrete - Repair 5 $2,500 $ % 260 Carport Roofs - Repair 10 $3,150 $ % 262 Carport Lights - Replace 20 $9,200 $ % 264 Carport Trim - Repaint 8 $9,150 $1, % 270 Trash Compactor - Replace 20 $24,000 $1, % 300 Pole Lights - Replace 30 $49,500 $1, % 302 Pole Lights - Repaint 5 $2,450 $ % 322 Bollard Lights - Replace 20 $96,000 $4, % 400 Mailboxes - Replace 20 $15,300 $ % 405 Park Furniture - Replace 20 $15,000 $ % 415 Fitness Stations - Replace 20 $7,500 $ % 420 Bocce Ball Turf - Replace 6 $6,000 $1, % 425 Wood Pergolas - Replace 25 $31,500 $1, % 426 Wood Pergolas - Repaint 5 $3,000 $ % 500 Perimeter Walls - Repaint 8 $13,000 $1, % 503 Metal Fence - Replace 35 $3,300 $94 0.1% 610 Irrig Controllers - Replace 12 $4,800 $ % 640 Landscape Granite - Replenish 8 $9,000 $1, % 660 Drywells - Inspect/Clean 3 $3,500 $1, % POOL AREA 800 Metal Fence - Replace 24 $8,550 $ % 810 Pool Deck - Resurface 12 $10,400 $ % 811 Pool Deck - Seal/Repair 4 $3,500 $ % 814 Pool - Resurface 15 $13,000 $ % 816 Spa - Resurface 15 $4,000 $ % 820 Furniture - Partial Replace 3 $3,500 $1, % 826 BBQ Grill - Replace 15 $2,550 $ % 827 BBQ Counter - Replace 15 $3,400 $ % 842 Pool/Spa Pumps - Replace 12 $3,000 $ % 846 Pool Heater - Replace 8 $3,500 $ % 856 Spa Heater - Replace 8 $2,650 $ % CLUBHOUSE 900 Carpet (1st Flr) - Replace 8 $11,500 $1, % 901 Carpet (2nd Flr) - Replace 8 $10,000 $1, % 904 Interior Surfaces - Repaint 15 $12,000 $ % - AZ, LLC 14 10/4/2016

21 Table 4: Component Significance Current Useful Cost Deterioration Deterioration # Component Life Estimate Cost/Yr. Significance 907 Window Treatments - Replace 20 $5,000 $ % 910 Interior Lights - Replace 25 $27,500 $1, % 912 Artwork/Décor - Replace 20 $7,450 $ % 914 Furniture - Partial Replace 5 $20,000 $4, % 918 Billiards Table - Replace 30 $4,250 $ % 920 Kitchen - Remodel 30 $30,000 $1, % 926 Restrooms - Remodel 30 $25,500 $ % 934 Surveillance System - Replace 8 $5,400 $ % 950 Laminate Floor - Replace 20 $2,000 $ % 952 Cardio Treadmills - Replace 10 $10,650 $1, % 954 Cardio Machines - Replace 12 $17,000 $1, % 956 Strength Equipment - Replace 20 $7,450 $ % 960 Video Projector - Replace 10 $2,700 $ % 966 Wallpaper - Replace 20 $5,400 $ % 980 Elevator - Modernize 25 $57,500 $2, % 982 Elevator Cab - Remodel 15 $9,750 $ % BUILDINGS 1000 Exterior Lights - Replace 15 $15,000 $1, % 1020 Metal Surfaces - Repaint 5 $12,000 $2, % 1022 Wood Trim - Repaint 5 $12,000 $2, % 1024 Stucco Surfaces - Repaint 10 $218,000 $21, % 1030 Sunscreens - Replace 12 $2,800 $ % 1040 Flat Roofs - Replace 18 $275,000 $15, % 1050 Tile Roofs - Refurbish 30 $290,000 $9, % 1060 HVAC Units - Replace (Ph1) 15 $76,500 $5, % 1060 HVAC Units - Replace (Ph2) 15 $76,500 $5, % 1060 HVAC Units - Replace (Ph3) 15 $76,500 $5, % 1070 HVAC Units - Replace (2015) 15 $23,000 $1, % 1072 HVAC Units - Replace (2016) 15 $7,600 $ % 1100 Epoxy Floor - Recoat 10 $12,500 $1, % 1102 Carpet Floor - Replace 10 $108,000 $10, % 1104 Tile Floor - Replace 20 $24,500 $1, % 1120 Hallways - Repaint 10 $71,500 $7, % 1124 Stairways - Repaint 10 $12,000 $1, % 1130 Interior Lights - Replace 25 $136,000 $5, % 1140 Elevator Cabs - Remodel 15 $30,000 $2, % 1142 Elevators - Modernize 25 $187,500 $7, % 1150 Fire Alarm System - Modernize 20 $165,000 $8, % 1150 Fire Alarm System - Repair 20 $23,000 $1, % 79 Total Funded Components $179, % - AZ, LLC 15 10/4/2016

22 Table 5: 30-Year Reserve Plan Summary Report Start Date: 01/01/17 Interest: 1.0% Inflation: 3.0% Reserve Fund Strength Calculations (All values as of Fiscal Year Start Date) Projected Reserve Balance Changes Starting Fully Special Loans or Reserve Funded Percent Assmt Reserve Special Interest Reserve Year Balance Balance Funded Risk Contribs. Assmts Income Expenses 2017 $680,331 $1,413, % Med $150,000 $0 $6,516 $213, $623,346 $1,420, % Med $165,000 $0 $6,578 $102, $692,903 $1,548, % Med $181,500 $0 $7,798 $14, $867,402 $1,775, % Med $199,650 $0 $9,040 $134, $941,359 $1,892, % Med $219,615 $0 $9,958 $119, $1,051,065 $2,033, % Med $241,577 $0 $11,307 $92, $1,211,206 $2,212, % Med $265,734 $0 $13,081 $83, $1,406,139 $2,413, % Med $275,699 $0 $13,386 $423, $1,272,147 $2,277, % Med $286,038 $0 $14,112 $20, $1,551,395 $2,557, % Med $296,764 $0 $12,789 $853, $1,007,431 $1,996, % Med $307,893 $0 $10,266 $278, $1,046,728 $2,017, % Med $319,439 $0 $11,741 $75, $1,302,537 $2,256, % Med $331,418 $0 $14,540 $41, $1,606,720 $2,543, % Med $343,846 $0 $17,568 $59, $1,908,291 $2,829, % Med $356,740 $0 $16,968 $795, $1,486,755 $2,375, % Med $370,118 $0 $16,112 $135, $1,737,053 $2,594, % Med $383,998 $0 $18,432 $188, $1,950,929 $2,774, % Low $398,397 $0 $19,193 $479, $1,889,359 $2,668, % Low $413,337 $0 $20,351 $140, $2,182,597 $2,918, % Low $428,837 $0 $17,268 $1,356, $1,272,453 $1,933, % Med $444,919 $0 $12,504 $500, $1,229,312 $1,809, % Med $461,603 $0 $14,197 $93, $1,611,354 $2,110, % Low $478,913 $0 $18,505 $17, $2,091,240 $2,509, % Low $496,873 $0 $22,764 $147, $2,463,549 $2,797, % Low $515,505 $0 $26,605 $145, $2,859,807 $3,106, % Low $534,837 $0 $28,317 $616, $2,806,029 $2,951, % Low $554,893 $0 $30,621 $70, $3,320,807 $3,365, % Low $575,702 $0 $35,733 $103, $3,828,730 $3,769, % Low $597,291 $0 $40,956 $101, $4,365,964 $4,201, % Low $619,689 $0 $38,921 $1,603,054 - AZ, LLC 16 10/4/2016

23 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Starting Reserve Balance $680,331 $623,346 $692,903 $867,402 $941,359 Annual Reserve Contribution $150,000 $165,000 $181,500 $199,650 $219,615 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $6,516 $6,578 $7,798 $9,040 $9,958 Total Income $836,846 $794,925 $882,201 $1,076,092 $1,170,932 # Component COMMON AREA 100 Monuments - Refurbish $0 $0 $0 $0 $0 104 Directory Sign - Replace $0 $0 $0 $0 $0 110 Entry System - Replace $0 $0 $0 $0 $6, Gate Operators - Replace $0 $0 $0 $0 $17, Vehicle Gates - Replace $0 $0 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $0 $0 $0 $25,788 $0 204 Concrete Pavers - Repair $0 $0 $0 $0 $0 210 Concrete - Repair $0 $0 $2,652 $0 $0 260 Carport Roofs - Repair $0 $0 $3,342 $0 $0 262 Carport Lights - Replace $0 $0 $0 $0 $0 264 Carport Trim - Repaint $0 $0 $0 $0 $0 270 Trash Compactor - Replace $0 $0 $0 $0 $0 300 Pole Lights - Replace $0 $0 $0 $0 $0 302 Pole Lights - Repaint $0 $0 $0 $0 $2, Bollard Lights - Replace $0 $0 $0 $0 $0 400 Mailboxes - Replace $0 $0 $0 $0 $0 405 Park Furniture - Replace $0 $0 $0 $0 $0 415 Fitness Stations - Replace $0 $0 $0 $0 $0 420 Bocce Ball Turf - Replace $6,000 $0 $0 $0 $0 425 Wood Pergolas - Replace $0 $0 $0 $0 $0 426 Wood Pergolas - Repaint $0 $0 $0 $0 $3, Perimeter Walls - Repaint $13,000 $0 $0 $0 $0 503 Metal Fence - Replace $0 $0 $0 $0 $0 610 Irrig Controllers - Replace $0 $0 $5,092 $0 $0 640 Landscape Granite - Replenish $0 $0 $0 $0 $0 660 Drywells - Inspect/Clean $0 $0 $3,713 $0 $0 POOL AREA 800 Metal Fence - Replace $0 $0 $0 $0 $0 810 Pool Deck - Resurface $0 $0 $0 $0 $0 811 Pool Deck - Seal/Repair $0 $0 $0 $3,825 $0 814 Pool - Resurface $0 $0 $0 $0 $0 816 Spa - Resurface $0 $0 $0 $0 $0 820 Furniture - Partial Replace $0 $3,605 $0 $0 $3, BBQ Grill - Replace $0 $0 $0 $0 $2, BBQ Counter - Replace $0 $0 $0 $0 $0 842 Pool/Spa Pumps - Replace $0 $3,090 $0 $0 $0 846 Pool Heater - Replace $0 $0 $0 $0 $3, Spa Heater - Replace $0 $0 $0 $0 $2,983 - AZ, LLC 17 10/4/2016

24 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year CLUBHOUSE 900 Carpet (1st Flr) - Replace $0 $0 $0 $0 $12, Carpet (2nd Flr) - Replace $0 $0 $0 $0 $0 904 Interior Surfaces - Repaint $0 $0 $0 $0 $13, Window Treatments - Replace $0 $0 $0 $0 $0 910 Interior Lights - Replace $0 $0 $0 $0 $0 912 Artwork/Décor - Replace $0 $0 $0 $0 $0 914 Furniture - Partial Replace $0 $0 $0 $0 $22, Billiards Table - Replace $0 $0 $0 $0 $0 920 Kitchen - Remodel $0 $0 $0 $0 $0 926 Restrooms - Remodel $0 $0 $0 $0 $0 934 Surveillance System - Replace $0 $5,562 $0 $0 $0 950 Laminate Floor - Replace $0 $0 $0 $0 $0 952 Cardio Treadmills - Replace $0 $10,970 $0 $0 $0 954 Cardio Machines - Replace $0 $0 $0 $18,576 $0 956 Strength Equipment - Replace $0 $0 $0 $0 $0 960 Video Projector - Replace $0 $0 $0 $2,950 $0 966 Wallpaper - Replace $0 $0 $0 $0 $0 980 Elevator - Modernize $0 $0 $0 $0 $0 982 Elevator Cab - Remodel $0 $0 $0 $0 $0 BUILDINGS 1000 Exterior Lights - Replace $15,000 $0 $0 $0 $ Metal Surfaces - Repaint $0 $0 $0 $0 $13, Wood Trim - Repaint $0 $0 $0 $0 $13, Stucco Surfaces - Repaint $0 $0 $0 $0 $ Sunscreens - Replace $0 $0 $0 $0 $ Flat Roofs - Replace $0 $0 $0 $0 $ Tile Roofs - Refurbish $0 $0 $0 $0 $ HVAC Units - Replace (Ph1) $0 $78,795 $0 $0 $ HVAC Units - Replace (Ph2) $0 $0 $0 $83,594 $ HVAC Units - Replace (Ph3) $0 $0 $0 $0 $ HVAC Units - Replace (2015) $0 $0 $0 $0 $ HVAC Units - Replace (2016) $0 $0 $0 $0 $ Epoxy Floor - Recoat $0 $0 $0 $0 $ Carpet Floor - Replace $108,000 $0 $0 $0 $ Tile Floor - Replace $0 $0 $0 $0 $ Hallways - Repaint $71,500 $0 $0 $0 $ Stairways - Repaint $0 $0 $0 $0 $ Interior Lights - Replace $0 $0 $0 $0 $ Elevator Cabs - Remodel $0 $0 $0 $0 $ Elevators - Modernize $0 $0 $0 $0 $ Fire Alarm System - Modernize $0 $0 $0 $0 $ Fire Alarm System - Repair $0 $0 $0 $0 $0 Total Expenses $213,500 $102,022 $14,800 $134,733 $119,867 Ending Reserve Balance: $623,346 $692,903 $867,402 $941,359 $1,051,065 - AZ, LLC 18 10/4/2016

25 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Starting Reserve Balance $1,051,065 $1,211,206 $1,406,139 $1,272,147 $1,551,395 Annual Reserve Contribution $241,577 $265,734 $275,699 $286,038 $296,764 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $11,307 $13,081 $13,386 $14,112 $12,789 Total Income $1,303,948 $1,490,021 $1,695,224 $1,572,297 $1,860,948 # Component COMMON AREA 100 Monuments - Refurbish $0 $0 $7,072 $0 $0 104 Directory Sign - Replace $0 $0 $2,460 $0 $0 110 Entry System - Replace $0 $0 $0 $0 $0 120 Gate Operators - Replace $0 $0 $0 $0 $0 130 Vehicle Gates - Replace $0 $0 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $0 $0 $29,025 $0 $0 204 Concrete Pavers - Repair $0 $0 $0 $0 $28, Concrete - Repair $0 $0 $3,075 $0 $0 260 Carport Roofs - Repair $0 $0 $0 $0 $0 262 Carport Lights - Replace $0 $0 $0 $0 $12, Carport Trim - Repaint $0 $0 $11,253 $0 $0 270 Trash Compactor - Replace $0 $0 $0 $0 $31, Pole Lights - Replace $0 $0 $0 $0 $0 302 Pole Lights - Repaint $0 $0 $0 $0 $3, Bollard Lights - Replace $0 $0 $0 $0 $125, Mailboxes - Replace $0 $0 $0 $0 $19, Park Furniture - Replace $0 $0 $0 $0 $19, Fitness Stations - Replace $0 $0 $0 $0 $9, Bocce Ball Turf - Replace $0 $7,164 $0 $0 $0 425 Wood Pergolas - Replace $0 $0 $0 $0 $0 426 Wood Pergolas - Repaint $0 $0 $0 $0 $3, Perimeter Walls - Repaint $0 $0 $0 $16,468 $0 503 Metal Fence - Replace $0 $0 $0 $0 $0 610 Irrig Controllers - Replace $0 $0 $0 $0 $0 640 Landscape Granite - Replenish $0 $0 $11,069 $0 $0 660 Drywells - Inspect/Clean $4,057 $0 $0 $4,434 $0 POOL AREA 800 Metal Fence - Replace $0 $0 $0 $0 $0 810 Pool Deck - Resurface $0 $0 $0 $0 $0 811 Pool Deck - Seal/Repair $0 $0 $4,305 $0 $0 814 Pool - Resurface $0 $0 $0 $0 $0 816 Spa - Resurface $0 $0 $0 $0 $0 820 Furniture - Partial Replace $0 $0 $4,305 $0 $0 826 BBQ Grill - Replace $0 $0 $0 $0 $0 827 BBQ Counter - Replace $0 $0 $0 $0 $0 842 Pool/Spa Pumps - Replace $0 $0 $0 $0 $0 846 Pool Heater - Replace $0 $0 $0 $0 $0 856 Spa Heater - Replace $0 $0 $0 $0 $0 - AZ, LLC 19 10/4/2016

26 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year CLUBHOUSE 900 Carpet (1st Flr) - Replace $0 $0 $0 $0 $0 901 Carpet (2nd Flr) - Replace $0 $0 $12,299 $0 $0 904 Interior Surfaces - Repaint $0 $0 $0 $0 $0 907 Window Treatments - Replace $0 $0 $0 $0 $6, Interior Lights - Replace $0 $0 $0 $0 $0 912 Artwork/Décor - Replace $0 $0 $0 $0 $9, Furniture - Partial Replace $0 $0 $0 $0 $26, Billiards Table - Replace $0 $0 $0 $0 $0 920 Kitchen - Remodel $0 $0 $0 $0 $0 926 Restrooms - Remodel $0 $0 $0 $0 $0 934 Surveillance System - Replace $0 $0 $0 $0 $7, Laminate Floor - Replace $0 $0 $0 $0 $2, Cardio Treadmills - Replace $0 $0 $0 $0 $0 954 Cardio Machines - Replace $0 $0 $0 $0 $0 956 Strength Equipment - Replace $0 $0 $0 $0 $9, Video Projector - Replace $0 $0 $0 $0 $0 966 Wallpaper - Replace $0 $0 $0 $0 $7, Elevator - Modernize $0 $0 $0 $0 $0 982 Elevator Cab - Remodel $0 $11,642 $0 $0 $0 BUILDINGS 1000 Exterior Lights - Replace $0 $0 $0 $0 $ Metal Surfaces - Repaint $0 $0 $0 $0 $15, Wood Trim - Repaint $0 $0 $0 $0 $15, Stucco Surfaces - Repaint $0 $0 $0 $0 $284, Sunscreens - Replace $0 $0 $0 $0 $ Flat Roofs - Replace $0 $0 $338,215 $0 $ Tile Roofs - Refurbish $0 $0 $0 $0 $ HVAC Units - Replace (Ph1) $0 $0 $0 $0 $ HVAC Units - Replace (Ph2) $0 $0 $0 $0 $ HVAC Units - Replace (Ph3) $88,684 $0 $0 $0 $ HVAC Units - Replace (2015) $0 $0 $0 $0 $ HVAC Units - Replace (2016) $0 $0 $0 $0 $ Epoxy Floor - Recoat $0 $14,926 $0 $0 $ Carpet Floor - Replace $0 $0 $0 $0 $ Tile Floor - Replace $0 $0 $0 $0 $ Hallways - Repaint $0 $0 $0 $0 $ Stairways - Repaint $0 $14,329 $0 $0 $ Interior Lights - Replace $0 $0 $0 $0 $ Elevator Cabs - Remodel $0 $35,822 $0 $0 $ Elevators - Modernize $0 $0 $0 $0 $ Fire Alarm System - Modernize $0 $0 $0 $0 $215, Fire Alarm System - Repair $0 $0 $0 $0 $0 Total Expenses $92,742 $83,882 $423,077 $20,902 $853,517 Ending Reserve Balance: $1,211,206 $1,406,139 $1,272,147 $1,551,395 $1,007,431 - AZ, LLC 20 10/4/2016

27 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Starting Reserve Balance $1,007,431 $1,046,728 $1,302,537 $1,606,720 $1,908,291 Annual Reserve Contribution $307,893 $319,439 $331,418 $343,846 $356,740 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $10,266 $11,741 $14,540 $17,568 $16,968 Total Income $1,325,590 $1,377,908 $1,648,495 $1,968,133 $2,281,999 # Component COMMON AREA 100 Monuments - Refurbish $0 $0 $0 $0 $0 104 Directory Sign - Replace $0 $0 $0 $0 $0 110 Entry System - Replace $0 $0 $0 $0 $0 120 Gate Operators - Replace $0 $0 $0 $0 $0 130 Vehicle Gates - Replace $0 $0 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $0 $32,668 $0 $0 $0 204 Concrete Pavers - Repair $0 $0 $0 $0 $0 210 Concrete - Repair $0 $0 $3,564 $0 $0 260 Carport Roofs - Repair $0 $0 $4,491 $0 $0 262 Carport Lights - Replace $0 $0 $0 $0 $0 264 Carport Trim - Repaint $0 $0 $0 $0 $0 270 Trash Compactor - Replace $0 $0 $0 $0 $0 300 Pole Lights - Replace $0 $0 $0 $0 $0 302 Pole Lights - Repaint $0 $0 $0 $0 $3, Bollard Lights - Replace $0 $0 $0 $0 $0 400 Mailboxes - Replace $0 $0 $0 $0 $0 405 Park Furniture - Replace $0 $0 $0 $0 $0 415 Fitness Stations - Replace $0 $0 $0 $0 $0 420 Bocce Ball Turf - Replace $0 $0 $8,555 $0 $0 425 Wood Pergolas - Replace $0 $0 $0 $0 $47, Wood Pergolas - Repaint $0 $0 $0 $0 $4, Perimeter Walls - Repaint $0 $0 $0 $0 $0 503 Metal Fence - Replace $0 $0 $0 $0 $0 610 Irrig Controllers - Replace $0 $0 $0 $0 $7, Landscape Granite - Replenish $0 $0 $0 $0 $0 660 Drywells - Inspect/Clean $0 $4,845 $0 $0 $5,294 POOL AREA 800 Metal Fence - Replace $0 $0 $0 $12,556 $0 810 Pool Deck - Resurface $0 $14,396 $0 $0 $0 811 Pool Deck - Seal/Repair $0 $4,845 $0 $0 $0 814 Pool - Resurface $0 $0 $0 $0 $19, Spa - Resurface $0 $0 $0 $0 $6, Furniture - Partial Replace $4,704 $0 $0 $5,140 $0 826 BBQ Grill - Replace $0 $0 $0 $0 $0 827 BBQ Counter - Replace $0 $0 $0 $0 $5, Pool/Spa Pumps - Replace $0 $0 $0 $4,406 $0 846 Pool Heater - Replace $0 $0 $4,990 $0 $0 856 Spa Heater - Replace $0 $0 $3,778 $0 $0 - AZ, LLC 21 10/4/2016

28 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year CLUBHOUSE 900 Carpet (1st Flr) - Replace $0 $0 $16,396 $0 $0 901 Carpet (2nd Flr) - Replace $0 $0 $0 $0 $0 904 Interior Surfaces - Repaint $0 $0 $0 $0 $0 907 Window Treatments - Replace $0 $0 $0 $0 $0 910 Interior Lights - Replace $0 $0 $0 $0 $41, Artwork/Décor - Replace $0 $0 $0 $0 $0 914 Furniture - Partial Replace $0 $0 $0 $0 $30, Billiards Table - Replace $0 $0 $0 $0 $0 920 Kitchen - Remodel $0 $0 $0 $0 $0 926 Restrooms - Remodel $0 $0 $0 $0 $0 934 Surveillance System - Replace $0 $0 $0 $0 $0 950 Laminate Floor - Replace $0 $0 $0 $0 $0 952 Cardio Treadmills - Replace $0 $14,742 $0 $0 $0 954 Cardio Machines - Replace $0 $0 $0 $0 $0 956 Strength Equipment - Replace $0 $0 $0 $0 $0 960 Video Projector - Replace $0 $0 $0 $3,965 $0 966 Wallpaper - Replace $0 $0 $0 $0 $0 980 Elevator - Modernize $0 $0 $0 $0 $86, Elevator Cab - Remodel $0 $0 $0 $0 $0 BUILDINGS 1000 Exterior Lights - Replace $0 $0 $0 $0 $ Metal Surfaces - Repaint $0 $0 $0 $0 $18, Wood Trim - Repaint $0 $0 $0 $0 $18, Stucco Surfaces - Repaint $0 $0 $0 $0 $ Sunscreens - Replace $0 $3,876 $0 $0 $ Flat Roofs - Replace $0 $0 $0 $0 $ Tile Roofs - Refurbish $0 $0 $0 $0 $ HVAC Units - Replace (Ph1) $0 $0 $0 $0 $ HVAC Units - Replace (Ph2) $0 $0 $0 $0 $ HVAC Units - Replace (Ph3) $0 $0 $0 $0 $ HVAC Units - Replace (2015) $0 $0 $0 $33,776 $ HVAC Units - Replace (2016) $0 $0 $0 $0 $11, Epoxy Floor - Recoat $0 $0 $0 $0 $ Carpet Floor - Replace $145,143 $0 $0 $0 $ Tile Floor - Replace $32,926 $0 $0 $0 $ Hallways - Repaint $96,090 $0 $0 $0 $ Stairways - Repaint $0 $0 $0 $0 $ Interior Lights - Replace $0 $0 $0 $0 $205, Elevator Cabs - Remodel $0 $0 $0 $0 $ Elevators - Modernize $0 $0 $0 $0 $283, Fire Alarm System - Modernize $0 $0 $0 $0 $ Fire Alarm System - Repair $0 $0 $0 $0 $0 Total Expenses $278,863 $75,372 $41,775 $59,843 $795,244 Ending Reserve Balance: $1,046,728 $1,302,537 $1,606,720 $1,908,291 $1,486,755 - AZ, LLC 22 10/4/2016

29 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Starting Reserve Balance $1,486,755 $1,737,053 $1,950,929 $1,889,359 $2,182,597 Annual Reserve Contribution $370,118 $383,998 $398,397 $413,337 $428,837 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $16,112 $18,432 $19,193 $20,351 $17,268 Total Income $1,872,985 $2,139,482 $2,368,520 $2,323,048 $2,628,703 # Component COMMON AREA 100 Monuments - Refurbish $0 $0 $0 $0 $0 104 Directory Sign - Replace $0 $0 $0 $0 $0 110 Entry System - Replace $0 $0 $0 $0 $9, Gate Operators - Replace $0 $0 $0 $0 $27, Vehicle Gates - Replace $0 $0 $0 $0 $30, Asphalt - Resurface $0 $0 $460,318 $0 $0 202 Asphalt - Seal/Repair $36,768 $0 $0 $0 $41, Concrete Pavers - Repair $0 $0 $0 $0 $0 210 Concrete - Repair $0 $0 $4,132 $0 $0 260 Carport Roofs - Repair $0 $0 $0 $0 $0 262 Carport Lights - Replace $0 $0 $0 $0 $0 264 Carport Trim - Repaint $14,255 $0 $0 $0 $0 270 Trash Compactor - Replace $0 $0 $0 $0 $0 300 Pole Lights - Replace $0 $0 $0 $0 $86, Pole Lights - Repaint $0 $0 $0 $0 $4, Bollard Lights - Replace $0 $0 $0 $0 $0 400 Mailboxes - Replace $0 $0 $0 $0 $0 405 Park Furniture - Replace $0 $0 $0 $0 $0 415 Fitness Stations - Replace $0 $0 $0 $0 $0 420 Bocce Ball Turf - Replace $0 $0 $0 $10,215 $0 425 Wood Pergolas - Replace $0 $0 $0 $0 $0 426 Wood Pergolas - Repaint $0 $0 $0 $0 $5, Perimeter Walls - Repaint $0 $20,861 $0 $0 $0 503 Metal Fence - Replace $0 $0 $0 $0 $0 610 Irrig Controllers - Replace $0 $0 $0 $0 $0 640 Landscape Granite - Replenish $14,022 $0 $0 $0 $0 660 Drywells - Inspect/Clean $0 $0 $5,785 $0 $0 POOL AREA 800 Metal Fence - Replace $0 $0 $0 $0 $0 810 Pool Deck - Resurface $0 $0 $0 $0 $0 811 Pool Deck - Seal/Repair $5,453 $0 $0 $0 $6, Pool - Resurface $0 $0 $0 $0 $0 816 Spa - Resurface $0 $0 $0 $0 $0 820 Furniture - Partial Replace $0 $5,616 $0 $0 $6, BBQ Grill - Replace $0 $0 $0 $0 $4, BBQ Counter - Replace $0 $0 $0 $0 $0 842 Pool/Spa Pumps - Replace $0 $0 $0 $0 $0 846 Pool Heater - Replace $0 $0 $0 $0 $0 856 Spa Heater - Replace $0 $0 $0 $0 $0 - AZ, LLC 23 10/4/2016

30 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year CLUBHOUSE 900 Carpet (1st Flr) - Replace $0 $0 $0 $0 $0 901 Carpet (2nd Flr) - Replace $15,580 $0 $0 $0 $0 904 Interior Surfaces - Repaint $0 $0 $0 $0 $21, Window Treatments - Replace $0 $0 $0 $0 $0 910 Interior Lights - Replace $0 $0 $0 $0 $0 912 Artwork/Décor - Replace $0 $0 $0 $0 $0 914 Furniture - Partial Replace $0 $0 $0 $0 $35, Billiards Table - Replace $0 $0 $0 $0 $7, Kitchen - Remodel $0 $0 $0 $0 $52, Restrooms - Remodel $0 $0 $0 $0 $44, Surveillance System - Replace $0 $0 $8,925 $0 $0 950 Laminate Floor - Replace $0 $0 $0 $0 $0 952 Cardio Treadmills - Replace $0 $0 $0 $0 $0 954 Cardio Machines - Replace $26,485 $0 $0 $0 $0 956 Strength Equipment - Replace $0 $0 $0 $0 $0 960 Video Projector - Replace $0 $0 $0 $0 $0 966 Wallpaper - Replace $0 $0 $0 $0 $0 980 Elevator - Modernize $0 $0 $0 $0 $0 982 Elevator Cab - Remodel $0 $0 $0 $0 $0 BUILDINGS 1000 Exterior Lights - Replace $23,370 $0 $0 $0 $ Metal Surfaces - Repaint $0 $0 $0 $0 $21, Wood Trim - Repaint $0 $0 $0 $0 $21, Stucco Surfaces - Repaint $0 $0 $0 $0 $382, Sunscreens - Replace $0 $0 $0 $0 $ Flat Roofs - Replace $0 $0 $0 $0 $ Tile Roofs - Refurbish $0 $0 $0 $0 $508, HVAC Units - Replace (Ph1) $0 $122,760 $0 $0 $ HVAC Units - Replace (Ph2) $0 $0 $0 $130,236 $ HVAC Units - Replace (Ph3) $0 $0 $0 $0 $ HVAC Units - Replace (2015) $0 $0 $0 $0 $ HVAC Units - Replace (2016) $0 $0 $0 $0 $ Epoxy Floor - Recoat $0 $20,059 $0 $0 $ Carpet Floor - Replace $0 $0 $0 $0 $ Tile Floor - Replace $0 $0 $0 $0 $ Hallways - Repaint $0 $0 $0 $0 $ Stairways - Repaint $0 $19,256 $0 $0 $ Interior Lights - Replace $0 $0 $0 $0 $ Elevator Cabs - Remodel $0 $0 $0 $0 $ Elevators - Modernize $0 $0 $0 $0 $ Fire Alarm System - Modernize $0 $0 $0 $0 $ Fire Alarm System - Repair $0 $0 $0 $0 $40,331 Total Expenses $135,933 $188,553 $479,161 $140,451 $1,356,249 Ending Reserve Balance: $1,737,053 $1,950,929 $1,889,359 $2,182,597 $1,272,453 - AZ, LLC 24 10/4/2016

31 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Starting Reserve Balance $1,272,453 $1,229,312 $1,611,354 $2,091,240 $2,463,549 Annual Reserve Contribution $444,919 $461,603 $478,913 $496,873 $515,505 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $12,504 $14,197 $18,505 $22,764 $26,605 Total Income $1,729,876 $1,705,113 $2,108,772 $2,610,877 $3,005,660 # Component COMMON AREA 100 Monuments - Refurbish $0 $0 $0 $0 $0 104 Directory Sign - Replace $0 $0 $0 $0 $0 110 Entry System - Replace $0 $0 $0 $0 $0 120 Gate Operators - Replace $0 $0 $0 $0 $0 130 Vehicle Gates - Replace $0 $0 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $0 $0 $0 $46,577 $0 204 Concrete Pavers - Repair $0 $0 $0 $0 $0 210 Concrete - Repair $0 $0 $4,790 $0 $0 260 Carport Roofs - Repair $0 $0 $6,036 $0 $0 262 Carport Lights - Replace $0 $0 $0 $0 $0 264 Carport Trim - Repaint $0 $0 $0 $18,058 $0 270 Trash Compactor - Replace $0 $0 $0 $0 $0 300 Pole Lights - Replace $0 $0 $0 $0 $0 302 Pole Lights - Repaint $0 $0 $0 $0 $4, Bollard Lights - Replace $0 $0 $0 $0 $0 400 Mailboxes - Replace $0 $0 $0 $0 $0 405 Park Furniture - Replace $0 $0 $0 $0 $0 415 Fitness Stations - Replace $0 $0 $0 $0 $0 420 Bocce Ball Turf - Replace $0 $0 $0 $0 $12, Wood Pergolas - Replace $0 $0 $0 $0 $0 426 Wood Pergolas - Repaint $0 $0 $0 $0 $6, Perimeter Walls - Repaint $0 $0 $0 $0 $26, Metal Fence - Replace $0 $0 $0 $0 $6, Irrig Controllers - Replace $0 $0 $0 $0 $0 640 Landscape Granite - Replenish $0 $0 $0 $17,762 $0 660 Drywells - Inspect/Clean $6,321 $0 $0 $6,908 $0 POOL AREA 800 Metal Fence - Replace $0 $0 $0 $0 $0 810 Pool Deck - Resurface $0 $0 $0 $20,525 $0 811 Pool Deck - Seal/Repair $0 $0 $0 $6,908 $0 814 Pool - Resurface $0 $0 $0 $0 $0 816 Spa - Resurface $0 $0 $0 $0 $0 820 Furniture - Partial Replace $0 $0 $6,706 $0 $0 826 BBQ Grill - Replace $0 $0 $0 $0 $0 827 BBQ Counter - Replace $0 $0 $0 $0 $0 842 Pool/Spa Pumps - Replace $0 $0 $0 $0 $0 846 Pool Heater - Replace $6,321 $0 $0 $0 $0 856 Spa Heater - Replace $4,786 $0 $0 $0 $0 - AZ, LLC 25 10/4/2016

32 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year CLUBHOUSE 900 Carpet (1st Flr) - Replace $20,770 $0 $0 $0 $0 901 Carpet (2nd Flr) - Replace $0 $0 $0 $19,736 $0 904 Interior Surfaces - Repaint $0 $0 $0 $0 $0 907 Window Treatments - Replace $0 $0 $0 $0 $0 910 Interior Lights - Replace $0 $0 $0 $0 $0 912 Artwork/Décor - Replace $0 $0 $0 $0 $0 914 Furniture - Partial Replace $0 $0 $0 $0 $40, Billiards Table - Replace $0 $0 $0 $0 $0 920 Kitchen - Remodel $0 $0 $0 $0 $0 926 Restrooms - Remodel $0 $0 $0 $0 $0 934 Surveillance System - Replace $0 $0 $0 $0 $0 950 Laminate Floor - Replace $0 $0 $0 $0 $0 952 Cardio Treadmills - Replace $0 $19,812 $0 $0 $0 954 Cardio Machines - Replace $0 $0 $0 $0 $0 956 Strength Equipment - Replace $0 $0 $0 $0 $0 960 Video Projector - Replace $0 $0 $0 $5,329 $0 966 Wallpaper - Replace $0 $0 $0 $0 $0 980 Elevator - Modernize $0 $0 $0 $0 $0 982 Elevator Cab - Remodel $0 $18,138 $0 $0 $0 BUILDINGS 1000 Exterior Lights - Replace $0 $0 $0 $0 $ Metal Surfaces - Repaint $0 $0 $0 $0 $24, Wood Trim - Repaint $0 $0 $0 $0 $24, Stucco Surfaces - Repaint $0 $0 $0 $0 $ Sunscreens - Replace $0 $0 $0 $5,526 $ Flat Roofs - Replace $0 $0 $0 $0 $ Tile Roofs - Refurbish $0 $0 $0 $0 $ HVAC Units - Replace (Ph1) $0 $0 $0 $0 $ HVAC Units - Replace (Ph2) $0 $0 $0 $0 $ HVAC Units - Replace (Ph3) $138,168 $0 $0 $0 $ HVAC Units - Replace (2015) $0 $0 $0 $0 $ HVAC Units - Replace (2016) $0 $0 $0 $0 $ Epoxy Floor - Recoat $0 $0 $0 $0 $ Carpet Floor - Replace $195,060 $0 $0 $0 $ Tile Floor - Replace $0 $0 $0 $0 $ Hallways - Repaint $129,137 $0 $0 $0 $ Stairways - Repaint $0 $0 $0 $0 $ Interior Lights - Replace $0 $0 $0 $0 $ Elevator Cabs - Remodel $0 $55,809 $0 $0 $ Elevators - Modernize $0 $0 $0 $0 $ Fire Alarm System - Modernize $0 $0 $0 $0 $ Fire Alarm System - Repair $0 $0 $0 $0 $0 Total Expenses $500,564 $93,759 $17,532 $147,328 $145,853 Ending Reserve Balance: $1,229,312 $1,611,354 $2,091,240 $2,463,549 $2,859,807 - AZ, LLC 26 10/4/2016

33 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Starting Reserve Balance $2,859,807 $2,806,029 $3,320,807 $3,828,730 $4,365,964 Annual Reserve Contribution $534,837 $554,893 $575,702 $597,291 $619,689 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $28,317 $30,621 $35,733 $40,956 $38,921 Total Income $3,422,961 $3,391,544 $3,932,242 $4,466,976 $5,024,574 # Component COMMON AREA 100 Monuments - Refurbish $12,039 $0 $0 $0 $0 104 Directory Sign - Replace $4,188 $0 $0 $0 $0 110 Entry System - Replace $0 $0 $0 $0 $0 120 Gate Operators - Replace $0 $0 $0 $0 $0 130 Vehicle Gates - Replace $0 $0 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $0 $0 $52,422 $0 $0 204 Concrete Pavers - Repair $0 $0 $0 $0 $51, Concrete - Repair $0 $0 $5,553 $0 $0 260 Carport Roofs - Repair $0 $0 $0 $0 $0 262 Carport Lights - Replace $0 $0 $0 $0 $21, Carport Trim - Repaint $0 $0 $0 $0 $0 270 Trash Compactor - Replace $0 $0 $0 $0 $56, Pole Lights - Replace $0 $0 $0 $0 $0 302 Pole Lights - Repaint $0 $0 $0 $0 $5, Bollard Lights - Replace $0 $0 $0 $0 $226, Mailboxes - Replace $0 $0 $0 $0 $36, Park Furniture - Replace $0 $0 $0 $0 $35, Fitness Stations - Replace $0 $0 $0 $0 $17, Bocce Ball Turf - Replace $0 $0 $0 $0 $0 425 Wood Pergolas - Replace $0 $0 $0 $0 $0 426 Wood Pergolas - Repaint $0 $0 $0 $0 $7, Perimeter Walls - Repaint $0 $0 $0 $0 $0 503 Metal Fence - Replace $0 $0 $0 $0 $0 610 Irrig Controllers - Replace $0 $10,352 $0 $0 $0 640 Landscape Granite - Replenish $0 $0 $0 $0 $0 660 Drywells - Inspect/Clean $0 $7,548 $0 $0 $8,248 POOL AREA 800 Metal Fence - Replace $0 $0 $0 $0 $0 810 Pool Deck - Resurface $0 $0 $0 $0 $0 811 Pool Deck - Seal/Repair $0 $0 $7,775 $0 $0 814 Pool - Resurface $0 $0 $0 $0 $30, Spa - Resurface $0 $0 $0 $0 $9, Furniture - Partial Replace $7,328 $0 $0 $8,008 $0 826 BBQ Grill - Replace $0 $0 $0 $0 $0 827 BBQ Counter - Replace $0 $0 $0 $0 $8, Pool/Spa Pumps - Replace $6,281 $0 $0 $0 $0 846 Pool Heater - Replace $0 $0 $0 $8,008 $0 856 Spa Heater - Replace $0 $0 $0 $6,063 $0 - AZ, LLC 27 10/4/2016

34 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year CLUBHOUSE 900 Carpet (1st Flr) - Replace $0 $0 $0 $26,311 $0 901 Carpet (2nd Flr) - Replace $0 $0 $0 $0 $0 904 Interior Surfaces - Repaint $0 $0 $0 $0 $0 907 Window Treatments - Replace $0 $0 $0 $0 $11, Interior Lights - Replace $0 $0 $0 $0 $0 912 Artwork/Décor - Replace $0 $0 $0 $0 $17, Furniture - Partial Replace $0 $0 $0 $0 $47, Billiards Table - Replace $0 $0 $0 $0 $0 920 Kitchen - Remodel $0 $0 $0 $0 $0 926 Restrooms - Remodel $0 $0 $0 $0 $0 934 Surveillance System - Replace $11,306 $0 $0 $0 $0 950 Laminate Floor - Replace $0 $0 $0 $0 $4, Cardio Treadmills - Replace $0 $0 $0 $0 $0 954 Cardio Machines - Replace $0 $0 $37,762 $0 $0 956 Strength Equipment - Replace $0 $0 $0 $0 $17, Video Projector - Replace $0 $0 $0 $0 $0 966 Wallpaper - Replace $0 $0 $0 $0 $12, Elevator - Modernize $0 $0 $0 $0 $0 982 Elevator Cab - Remodel $0 $0 $0 $0 $0 BUILDINGS 1000 Exterior Lights - Replace $0 $0 $0 $0 $ Metal Surfaces - Repaint $0 $0 $0 $0 $28, Wood Trim - Repaint $0 $0 $0 $0 $28, Stucco Surfaces - Repaint $0 $0 $0 $0 $513, Sunscreens - Replace $0 $0 $0 $0 $ Flat Roofs - Replace $575,789 $0 $0 $0 $ Tile Roofs - Refurbish $0 $0 $0 $0 $ HVAC Units - Replace (Ph1) $0 $0 $0 $0 $ HVAC Units - Replace (Ph2) $0 $0 $0 $0 $ HVAC Units - Replace (Ph3) $0 $0 $0 $0 $ HVAC Units - Replace (2015) $0 $0 $0 $52,622 $ HVAC Units - Replace (2016) $0 $0 $0 $0 $17, Epoxy Floor - Recoat $0 $26,957 $0 $0 $ Carpet Floor - Replace $0 $0 $0 $0 $ Tile Floor - Replace $0 $0 $0 $0 $ Hallways - Repaint $0 $0 $0 $0 $ Stairways - Repaint $0 $25,879 $0 $0 $ Interior Lights - Replace $0 $0 $0 $0 $ Elevator Cabs - Remodel $0 $0 $0 $0 $ Elevators - Modernize $0 $0 $0 $0 $ Fire Alarm System - Modernize $0 $0 $0 $0 $388, Fire Alarm System - Repair $0 $0 $0 $0 $0 Total Expenses $616,932 $70,736 $103,512 $101,012 $1,603,054 Ending Reserve Balance: $2,806,029 $3,320,807 $3,828,730 $4,365,964 $3,421,521 - AZ, LLC 28 10/4/2016

35 Assoc Accuracy, Limitations, and Disclosures Because we have no control over future events, we do not expect that all the events we anticipate will occur as planned. We expect that inflationary trends will continue, and we expect Reserve funds to continue to earn interest, so we believe that reasonable estimates for these figures are much more accurate than ignoring these economic realities. We can control measurements, which we attempt to establish within 5% accuracy through a combination of on-site measurements, drawings, and satellite imagery. The starting Reserve Balance and interest rate earned on deposited Reserve funds that you provided to us were considered reliable and were not confirmed independently. We have considered the association s representation of current and historical Reserve projects reliable, and we have considered the representations made by its vendors and suppliers to also be accurate and reliable. Component Useful Life, Remaining Useful Life, and Current Cost estimates assume a stable economic environment and lack of natural disasters. Because the physical condition of your components, the association s Reserve balance, the economic environment, and legislative environment change each year, this Reserve Study is by nature a one-year document. Because a long-term perspective improves the accuracy of near-term planning, this Report projects expenses for the next 30 years. It is our recommendation and that of the Financial Accounting Standards Board (FASB) that your Reserve Study be updated each year as part of the annual budget process. and its employees have no ownership, management, or other business relationships with the client other than this Reserve Study engagement. DJ Vlaming, R.S., company president, is a credentialed Reserve Specialist (#61). All work done by AZ, LLC is performed under his Responsible Charge. There are no material issues to our knowledge that have not been disclosed to the client that would cause a distortion of the association s situation. Component quantities indicated in this Report were found in prior Reserve Studies unless noted otherwise. No destructive or intrusive testing was performed. This Report and this site inspection were accomplished only for Reserve budget purposes (to help identify and address the normal deterioration of properly built and installed components with predictable life expectancies). The Funding Plan in this Report was developed using the cash-flow methodology to achieve the specified Funding Objective. liability in any matter involving this Reserve Study is limited to our Fee for services rendered. - AZ, LLC 29 10/4/2016

36 Assoc Terms and Definitions BTU DIA GSF GSY HP LF British Thermal Unit (a standard unit of energy) Diameter Gross Square Feet (area). Equivalent to Square Feet Gross Square Yards (area). Equivalent to Square Yards Horsepower Linear Feet (length) Effective Age: The difference between Useful Life and Remaining Useful Life. Note that this is not necessarily equivalent to the chronological age of the component. Fully Funded Balance (FFB): The value of the deterioration of the Reserve Components. This is the fraction of life used up of each component multiplied by its estimated Current Replacement. While calculated for each component, it is summed together for an association total. Inflation: Interest: FFB = (Current Cost X Effective Age) / Useful Life Cost factors are adjusted for inflation at the rate defined in the Executive Summary and compounded annually. These increasing costs can be seen as you follow the recurring cycles of a component on Table 6. Interest earnings on Reserve Funds are calculated using the average balance for the year (taking into account income and expenses through the year) and compounded monthly using the rate defined in the Executive Summary. Annual interest earning assumption appears in the Executive Summary. Percent Funded: The ratio, at a particular point in time (the first day of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage. Remaining Useful Life (RUL): The estimated time, in years, that a common area component can be expected to continue to serve its intended function. Useful Life (UL): The estimated time, in years, that a common area component can be expected to serve its intended function. - AZ, LLC 30 10/4/2016

37 Assoc AZ, LLC 31 10/4/2016

38 COMMON AREA Comp #: 100 Monuments - Refurbish Quantity: (2) Monuments Location: Main entrance on Mountain View Blvd. Evaluation: This component funds to eventually replace the lettering and logo. Still attractive and in good shape. 18 years 7 years Best Case: $5,100 Allowance to refurbish Worst Case: $6,400 Higher allowance Cost Source: ARI Cost Allowance Comp #: 104 Directory Sign - Replace Quantity: (1) Sign Location: Main entrance on Mountain View Blvd. Evaluation: Funding is provided to eventually replace the lettering and sign for the directory. Still intact and in decent shape. 18 years 7 years Best Case: $1,800 Allowance to replace Worst Case: $2,200 Higher allowance Cost Source: ARI Cost Allowance October 04, 2016 Page 1 of 51

39 Comp #: 110 Entry System - Replace Quantity: (1) DoorKing System Location: Main entrance on Mountain View Blvd. Evaluation: Still appears functional and in fair shape. No problems observed or reported. *Model years 4 years Best Case: $4,800 Worst Case: $6,400 Estimate to replace Comp #: 120 Gate Operators - Replace Quantity: (4) Operators Location: Main entry/exit gates plus exit only gates on Mountain View & Reems Evaluation: There are (2) Elite swing-arm operators and (2) DoorKing slider operators. Appear functional with no issues reported. Surfaces look aged and faded but not damaged. 15 years 4 years Best Case: $14,500 Worst Case: $17,000 Estimate to replace October 04, 2016 Page 2 of 51

40 Comp #: 130 Vehicle Gates - Replace Quantity: (4) Vehicle, (3) Ped. Location: Main entry/exit gates plus exit only gates on Mountain View & Reems Evaluation: Vehicle gates have a long life expectancy under normal circumstances. Still intact and appear to be in good shape. Long-term replacement should be anticipated eventually. Periodic painting is included with the metal surfaces under the Unit Buildings section of this report. 30 years 19 years Best Case: $15,500 Worst Case: $19,000 Estimate to replace Comp #: 201 Asphalt - Resurface Quantity: Approx 182,530 Sq Ft Location: Driveways and parking areas throughout community Evaluation: Generally smooth and in fair to good shape overall. No significant cracking or deterioration noted. Life span is based on periodically seal coating and maintaining the surface. 28 years 17 years Best Case: $237,000 Estimate to resurface Worst Case: $320,000 October 04, 2016 Page 3 of 51

41 Comp #: 202 Asphalt - Seal/Repair Quantity: Approx 182,530 Sq Ft History: Sealed & repaired 2/2016 for $23,019 (included red curbs). Another $4,685 was spent 5/2016 to replace a section. Approx $30,200 was spent in 2013 to slurry seal half of the asphalt and seal coat the other half. Location: Driveways and parking areas throughout community Evaluation: Seal is dark with no exposed cracks in most areas. Looks good overall. Still some problems reported with asphalt coming up at garage entrances. This component funds to periodically crack seal and surface seal the asphalt to prevent premature cracking and deterioration. 4 years 3 years Best Case: $21,000 Estimate to seal coat Worst Case: $26,200, includes minor patching & repairs Cost Source: Client Cost History October 04, 2016 Page 4 of 51

42 Comp #: 204 Concrete Pavers - Repair Quantity: Approx 27,700 Sq Ft Location: Community entrances/exits and various sections of the driveway Evaluation: There is no expectancy for complete replacement of the concrete pavers. This component provides an allowance to repair and replace a portion of the total. Some chipping and cracks noted. 20 years 9 years Best Case: $19,000 Worst Case: $25,000 Allowance to repair Higher allowance Cost Source: ARI Cost Allowance Comp #: 208 Fire Lane Curbs - Repaint Quantity: Approx 1,950 LF Funded?: No. Cost is below the Reserve expense threshold, so no Reserve funding has been allocated. Painting the curbs will be combined with asphalt sealing or treated as a maintenance expense. History: Painted in 2016 for $1,560. Previously painted in 2013 for $3,200. Location: Fire lane curbs bordering driveways throughout the community Evaluation: Best Case: Worst Case: Cost Source: October 04, 2016 Page 5 of 51

43 Comp #: 210 Concrete - Repair Quantity: Numerous Sq Ft Location: Walkways, curbs, and gutters Evaluation: There is no expectancy to completely replace the concrete. This component provides an allowance for periodic repairs and/or partial replacements. Concrete is in good condition with no major lifting or trip hazards. 5 years 2 years Best Case: $2,200 Allowance for repairs and/or partial replacement Cost Source: ARI Cost Allowance Worst Case: $2,800 Higher allowance Comp #: 260 Carport Roofs - Repair Quantity: Approx 31,750 Sq Ft Location: Parking areas throughout community Evaluation: There is no expectancy to replace all of the carport roofs. They do get damaged, so periodic repairs should be anticipated. Some of the roof corners are dented from vehicles. Treat minor repairs as a maintenance expense. 10 years 2 years Best Case: $2,800 Allowance to repair or partially replace Cost Source: ARI Cost Allowance Worst Case: $3,500 Higher allowance October 04, 2016 Page 6 of 51

44 Comp #: 262 Carport Lights - Replace Quantity: Approx (61) Lights Location: Parking areas throughout community Evaluation: Carports have 4' fluorescent light fixtures with 2-bulbs each. They look older and are expected to be original. Replace bulbs and ballasts as a maintenance expense when needed. This component funds to eventually replace and upgrade the lighting. 20 years 9 years Best Case: $8,400 Worst Case: $10,000 Estimate to replace Comp #: 264 Carport Trim - Repaint Quantity: Approx (200) Spaces History: Painted in 2016 with the buildings. Previously original from Location: Parking areas throughout community Evaluation: This component funds to paint the carport beams and posts. Paint looks new and is in good condition. Repaint periodically to maintain the appearance and inhibit rust. 8 years 7 years Best Case: $8,300 Estimate to repaint Worst Case: $10,000 October 04, 2016 Page 7 of 51

45 Comp #: 270 Trash Compactor - Replace Quantity: (1) RamJet Location: Trash enclosure behind Building #11 Evaluation: Assumed to be in good working condition. No problems were observed or reported. Future replacement should be anticipated. *Model: RJ-250WD, Serial: , Mfg. Date: 03/ years 9 years Best Case: $21,000 Worst Case: $27,000 Estimate to replace Comp #: 274 Trash Gates - Replace Quantity: (2) Gates Funded?: No. Cost is below the Reserve expense threshold, so no Reserve funding has been allocated. Location: Trash enclosure behind Building #11 Evaluation: These trash gates have metal frames with wood slats. Still in decent shape. Trash gates tend to receive frequent use and abuse and will need replacement eventually. Best Case: Worst Case: Cost Source: October 04, 2016 Page 8 of 51

46 Comp #: 300 Pole Lights - Replace Quantity: Approx (22) Lights Location: Parking areas throughout community Evaluation: Appear functional and in good shape. Long life expectancy under normal circumstances. It would still be prudent to plan for replacement eventually. 30 years 19 years Best Case: $44,000 Worst Case: $55,000 Estimate to replace Comp #: 302 Pole Lights - Repaint Quantity: Approx (22) Lights History: Location: Parking areas throughout community Evaluation: Pole lights were not painted with the rest of the community during Surfaces are faded and discolored. HOA is going to paint them before the end of 2016, so this component reflects the paint as new. Recommend painting periodically to restore the appearance and inhibit rust. 5 years 4 years Best Case: $2,100 Estimate to repaint Worst Case: $2,800 October 04, 2016 Page 9 of 51

47 Comp #: 322 Bollard Lights - Replace Quantity: Approx (93) Lights Location: Bordering walkways throughout community Evaluation: Still appear functional and in good shape overall. Some of them are dented and damaged. Future replacement should be anticipated. 20 years 9 years Best Case: $82,000 Worst Case: $110,000 Estimate to replace Comp #: 330 Landscape Lights - Replace Quantity: Numerous Lights Funded?: No. HOA is planning to remove the landscape lights, so no Reserve funding has been allocated. Location: Common areas throughout community Evaluation: A large portion of the landscape lights are broken and not functional. The pole and bollard lights reportedly put out adequate lighting alone, so HOA is planning to just remove the landscape lights. Best Case: Worst Case: Cost Source: October 04, 2016 Page 10 of 51

48 Comp #: 400 Mailboxes - Replace Quantity: (16) Clusters Location: In-front of pool area & clubhouse (across the street) Evaluation: There are (11) 5 X 5 clusters and (5) 2 X 2 clusters. Some fading noted. Still in decent shape overall. 20 years 9 years Best Case: $14,000 Worst Case: $16,600 Estimate to replace Comp #: 405 Park Furniture - Replace Quantity: (26) Pieces Location: Throughout the common areas Evaluation: Quantity includes (7) picnic tables, (6) benches, (6) trash receptacles, and (7) charcoal grills. Some of the bench slats have been replaced, but other slats/pieces look older and faded. 20 years 9 years Best Case: $13,000 Worst Case: $17,000 Estimate to replace October 04, 2016 Page 11 of 51

49 Comp #: 415 Fitness Stations - Replace Quantity: (5) Stations Location: Mounted in common areas along the rear perimeter Evaluation: This is a LifeTrail fitness set by PlayWorld Systems. Still looks good and not abused. Paint/surfaces are fading though. 20 years 9 years Best Case: $6,500 Worst Case: $8,500 Estimate to replace Comp #: 420 Bocce Ball Turf - Replace Quantity: Approx 720 Sq Ft Location: Adjacent to building #10 Evaluation: Turf looks old and worn. Recommend planning to replace in the near future. 6 years 0 years Best Case: $5,500 Worst Case: $6,500 Estimate to replace October 04, 2016 Page 12 of 51

50 Comp #: 425 Wood Pergolas - Replace Quantity: Approx 1,840 Sq Ft Location: (3) structures throughout common area and (1) structure in the pool area Evaluation: Wood pergola structures are in good condition. Some cracks and splits visible. Life span will vary depending on how well the wood is maintained. Replacement, or rebuilding, should be anticipated eventually. 25 years 14 years Best Case: $28,000 Worst Case: $35,000 Estimate to replace Comp #: 426 Wood Pergolas - Repaint Quantity: Approx 3,680 Sq Ft History: Painted in with the buildings. Location: (3) structures throughout common area and (1) structure in the pool area Evaluation: Paint is in good condition. Stain/repaint periodically to protect and preserve the wood. 5 years 4 years Best Case: $2,700 Estimate to repaint/stain Worst Case: $3,300 October 04, 2016 Page 13 of 51

51 Comp #: 500 Perimeter Walls - Repaint Quantity: Approx 37,000 Sq Ft History: Location: Perimeter of community & trash enclosures Evaluation: Walls were not painted with the buildings. Paint is faded and discolored. Some of the paint has completely worn off at bottom of the walls. Repaint periodically to maintain the appearance and keep surfaces well sealed. 8 years 0 years Best Case: $11,000 Estimate to repaint Worst Case: $15,000 Comp #: 503 Metal Fence - Replace Quantity: Approx 120 LF Location: Front perimeter bordering Mountain View Blvd. Evaluation: Fence is mounted on a block wall and away from irrigation exposure. Long life expectancy under normal circumstances. Future replacement should still be anticipated. Periodic painting is included with the metal surfaces under the Unit Buildings section of this report. 35 years 24 years Best Case: $3,000 Worst Case: $3,600 Estimate to replace October 04, 2016 Page 14 of 51

52 Comp #: 600 Irrigation System - Replace Quantity: Lines, Valves, Heads Funded?: No. There is no expectancy to completely replace the irrigation system at this time. Repairs and partial replacements should be included in the annual landscape maintenance budget. Funding for replacement of the system can be added to this study at the client's request and with the landscaper's assistance to estimate timing, scope of work, and cost. History: Location: Common areas throughout community Evaluation: In addition to the underground system, there are at least (16) backflow valves throughout the community that should be repaired or replaced as a maintenance expense when needed. Best Case: Worst Case: Cost Source: October 04, 2016 Page 15 of 51

53 Comp #: 610 Irrig Controllers - Replace Quantity: (2) Rain Master, 36- sta. Location: Mounted on Mountain View Blvd., adjacent to the main entry Evaluation: Controllers are mounted inside steel enclosures. They appear functional and in fair shape. Future replacement should be expected. *Model RME36EGI-T, Serial #EG & EG years 2 years Best Case: $4,300 Worst Case: $5,300 Estimate to replace Comp #: 612 Irrig Controller - Replace (C) Quantity: (1) Irritrol, 18-sta. Funded?: No. Cost is below the Reserve expense threshold, so no Reserve funding has been allocated. History: Replaced around Previously installed during Location: Mounted on Mountain View Blvd., adjacent to the main entry Evaluation: This is a smaller, relatively inexpensive controller that replace one of the Rain Master controllers. It is newer and in good condition. *Model TC-18EX-R, Serial #106703, date code J1437 Best Case: Worst Case: Cost Source: October 04, 2016 Page 16 of 51

54 Comp #: 640 Landscape Granite - Replenish Quantity: Numerous Sq Ft Backflow valves typically last a long time. They can often be repaired and rebuilt rather than replaced. Recommend repairing or replacing as needed with Operating funds. History: Replenished with 94-tons in 2016 for $7,426. Location: Common areas throughout community Evaluation: Granite coverage was in the process of being replenished at the time of inspection. Old areas were pretty depleted and bare. Surfaces are expected to be full and in good shape upon completion of this project. Expect to touch-up spots annually as part of the Operating budget. This component provides an allowance to periodically replenish larger portions of the community. 8 years 7 years Best Case: $8,000 Allowance to replenish Worst Case: $10,000 Higher allowance Cost Source: ARI Cost Allowance October 04, 2016 Page 17 of 51

55 Comp #: 660 Drywells - Inspect/Clean Quantity: (31) Locations History: Cleaned (7) locations in 2016 for $3,180. Location: Common areas throughout community Evaluation: Location quantity accounts for drywells, catch basins, and tanks. Periodic inspection and clean-out is important to ensure proper function and longevity. There is no expectancy to clean all locations at the same time. This component funds an allowance to inspect and clean only a portion of them as was done in years 2 years Best Case: $3,000 Allowance to clean & inspect Worst Case: $4,000 Higher allowance Cost Source: Client Cost History October 04, 2016 Page 18 of 51

56 POOL AREA Comp #: 800 Metal Fence - Replace Quantity: Approx 245 LF Location: Pool area Evaluation: Fence is in fair condition overall. Some rust noted at base of the fence, plus some bent spots along top of the fence. Periodic painting is included with the metal surfaces under the Unit Buildings section of this report. 24 years 13 years Best Case: $7,500 Worst Case: $9,600 Estimate to replace October 04, 2016 Page 19 of 51

57 Comp #: 810 Pool Deck - Resurface Quantity: Approx 2,200 Sq Ft History: Resurfaced in 2016 for $11,270. Location: Pool area Evaluation: Pool deck coating is new and in good condition. The 2016 project did not include removal of the old deck coating, so expect future resurfacing work to be more expensive in comparison. 12 years 11 years Best Case: $9,400 Estimate to resurface (combine with seal/repair for total cost) Worst Case: $11,400 (combine with seal/repair for total cost) Comp #: 811 Pool Deck - Seal/Repair Quantity: Approx 2,200 Sq Ft History: Location: Pool area Evaluation: Deck surface is clean and in good condition. This component funds to periodically patch cracks and seal/paint the deck to cover stains and restore the appearance. 4 years 3 years Best Case: $3,000 Estimate to seal Worst Case: $4,000 October 04, 2016 Page 20 of 51

58 Comp #: 814 Pool - Resurface Quantity: (1) Pool, 120 LF History: Resurfaced in 2016 for $16,583 (cost included the spa). Location: Pool area Evaluation: Pool was resurfaced with a pebble sheen finish. This type of finish is expected to last longer than the original plaster. Surface is new and in good condition. 15 years 14 years Best Case: $11,000 Estimate to resurface & retile Worst Case: $15,000 for better quality or increased labor Comp #: 816 Spa - Resurface Quantity: (1) Spa, 30 LF History: Resurfaced in 2016 with the pool. Location: Pool area Evaluation: Spa surface is new and in good condition. It was resurfaced with a pebble sheen finish. 15 years 14 years Best Case: $3,500 Estimate to resurface & retile Worst Case: $4,500 for better quality or increased labor October 04, 2016 Page 21 of 51

59 Comp #: 820 Furniture - Partial Replace Quantity: (46) Pieces History: Most pieces replaced from Location: Pool area Evaluation: Pieces include (18) lounges, (16) chairs, (1) bench, (4) dining tables, (3) tea table, and (4) umbrellas. Furniture has been partially replaced as needed over the years. HOA has no intentions of replacing all of this furniture at the same time. This component funds an allowance for partial replacement. 3 years 1 years Best Case: $3,000 Allowance to replace Worst Case: $4,000 Higher allowance Cost Source: Estimate Provided by Client Comp #: 826 BBQ Grill - Replace Quantity: (1) Gas Grill Price to replace the BBQ is below reserve threshold. No funding will be allocated. Location: Adjacent to pool Evaluation: Grill appears to be in decent shape. There is a large dent in the hood. Looks fine otherwise. Replacement cost can vary significantly depending on the brand, quality, and features. 15 years 4 years Best Case: $2,300 Estimate to replace Worst Case: $2,800 Cost Source: Internet Research October 04, 2016 Page 22 of 51

60 Comp #: 827 BBQ Counter - Replace Quantity: Approx 36 Sq Ft Cost is expected to be relatively inexpensive and should be treated as an Operating expense. History: Replacement planned in 2016 for $3,318. Location: Pool area Evaluation: Some of the tile is chipped and missing. HOA is planning to replace with a granite counter in years 14 years Best Case: $3,000 Estimate to replace Worst Case: $3,800 Cost Source: Estimate Provided by Client Comp #: 840 Pool Filter - Replace Quantity: (1) Pentair, TR-140 Funded?: No. Location: Pool/spa equipment enclosure Evaluation: Filter looks to be in fair condition. Still functional with no reported problems. Model TR-140, Serial # V 15 years 4 years Best Case: $1,800 Worst Case: $2,300 Estimate to replace October 04, 2016 Page 23 of 51

61 Comp #: 842 Pool/Spa Pumps - Replace Quantity: (3) Challenger Location: Pool/spa equipment enclosure Evaluation: Pumps are still functional despite their age. Periodic repair and motor replacement should be addressed as a maintenance issue. This component funds for replacement of the pump and motor assembly. 12 years 1 years Best Case: $2,700 Worst Case: $3,300 Estimate to replace Comp #: 846 Pool Heater - Replace Quantity: (1) Hayward 400,000 BTU History: Replaced in Previously original from Location: Pool/spa equipment enclosure Evaluation: Heater appears to be functional and in fair condition. *Model H400FDN, Serial # years 4 years Best Case: $3,000 Worst Case: $4,000 Estimate to replace October 04, 2016 Page 24 of 51

62 Comp #: 850 Spa Filter - Replace Quantity: (1) Pentair, TR-60 Funded?: No. Cost is below the Reserve expense threshold, so no Reserve funding has been allocated. History: Replaced in Previously original from Location: Pool/spa equipment enclosure Evaluation: Filter is newer and in good condition. *Model TR-60, 3.14 sq ft, Serial # Q, mfg date 7/24/2015 Best Case: Worst Case: Cost Source: Comp #: 856 Spa Heater - Replace Quantity: (1) MasterTemp 250 History: Replaced in Previously original from Location: Pool/spa equipment enclosure Evaluation: Functional and in fair condition. *Mfg. Date: 11/ years 4 years Best Case: $2,300 Worst Case: $3,000 Estimate to replace October 04, 2016 Page 25 of 51

63 CLUBHOUSE Comp #: 900 Carpet (1st Flr) - Replace Quantity: Approx 270 Sq Yds History: Replaced in 2013 for $10,700. Previously original from Location: 1st floor of the clubhouse Evaluation: Some of the seams are visible. There is also some staining. Carpet is still in good shape overall. 8 years 4 years Best Case: $10,000 Worst Case: $13,000 Estimate to replace Cost Source: Client Cost History Comp #: 901 Carpet (2nd Flr) - Replace Quantity: Approx 275 Sq Yds History: Replacement is planned in 2016 for $9,684. Location: 2nd floor of the clubhouse, including the stairway Evaluation: Carpet at the time of inspection was still original. It looked old and worn. Replacement is planned in the near future, so this component reflects carpet as new for years 7 years Best Case: $9,000 Estimate to replace Worst Case: $11,000 Cost Source: Proposal from Express Flooring October 04, 2016 Page 26 of 51

64 Comp #: 904 Interior Surfaces - Repaint Quantity: Approx 17,140 Sq Ft History: Painted in Location: Clubhouse interior Evaluation: Clubhouse interior paint is still in good shape overall. Some marks and scuffs noted. Relatively low use in this area, so repainting is not expected yet. 15 years 4 years Best Case: $10,000 Estimate to repaint Worst Case: $14,000 Comp #: 907 Window Treatments - Replace Quantity: Approx (22) Pieces Location: Clubhouse interior Evaluation: Window treatments include (2) sets of drapes, (4) valances, and (16) blinds. Window treatments still appear attractive with no holes or damage. Complete replacement should be expected eventually. 20 years 9 years Best Case: $4,600 Worst Case: $5,400 Estimate to replace October 04, 2016 Page 27 of 51

65 Comp #: 910 Interior Lights - Replace Quantity: Approx (158) Lights Location: Clubhouse interior, plus patios Evaluation: Quantity includes (8) assorted wall sconces, (2) chandeliers, (1) billiards table light, (101) recessed can lights, (4) ceiling fans, (9) assorted fluorescent fixtures, (12) exit lights, and (21) emergency lights. Functional and in good condition. Replacement should be expected eventually to update and modernize the lighting. 25 years 14 years Best Case: $25,000 Worst Case: $30,000 Estimate to replace Comp #: 912 Artwork/Décor - Replace Quantity: Numerous Pieces History: Purchased in Location: Clubhouse interior Evaluation: This component provides an allowance for future replacement of artwork and décor in the clubhouse. 20 years 9 years Best Case: $6,400 Allowance to replace Worst Case: $8,500 Higher allowance Cost Source: ARI Cost Allowance October 04, 2016 Page 28 of 51

66 Comp #: 914 Furniture - Partial Replace Quantity: Approx (115) Pieces History: Purchased around Proposed original costs were over $107,000. Location: Clubhouse interior & patio area Evaluation: Pieces include various sofas, chairs, tables, benches, desks, lamps, and televisions. Clubhouse reportedly does not receive a lot of use, so there is no expectancy to replace all of the furniture at one time. This component funds an allowance for periodic, partial replacement as needed. 5 years 4 years Best Case: $16,000 Allowance for partial replacement Worst Case: $24,000 Higher allowance Cost Source: ARI Cost Allowance Comp #: 918 Billiards Table - Replace Quantity: (1) Table History: Purchased during Location: 1st floor in the Multi-Purpose Room Evaluation: Table still appears to be in good condition. Some nicks and marks noted on the wood. Felt is worn and has a tear in one spot. Replace the top felt and bumpers periodically as an Operating expense. 30 years 19 years Best Case: $3,700 Worst Case: $4,800 Estimate to replace October 04, 2016 Page 29 of 51

67 Comp #: 920 Kitchen - Remodel Quantity: (1) Kitchen Location: 1st floor in the Multi-Purpose Room, includes lobby tile floor Evaluation: This component funds to eventually replace the kitchen cabinets, counters, tile floor, and appliances. Funding also includes replacing the lobby tile floor. This is a high quality kitchen that receives little use. Cabinetry and appliances still look good. 30 years 19 years Best Case: $27,000 Estimate to remodel Worst Case: $33,000 Comp #: 921 Kitchen Appliances - Replace Quantity: (5) G.E. Appliances Funded?: No. Replacement is included under the kitchen remodel component. Repair or replace individual appliances as an Operating expense if needed. Location: 1st floor in the Multi-Purpose Room, includes lobby tile floor Evaluation: Quantity includes (1) refrigerator, (1) oven, (1) microwave, (1) dishwasher, and (1) exhaust hood. These are high quality appliances with stainless steel finishes. Best Case: Worst Case: Cost Source: October 04, 2016 Page 30 of 51

68 Comp #: 926 Restrooms - Remodel Quantity: (4) Restrooms Location: Clubhouse interior: upstairs & downstairs Evaluation: Funding is provided to eventually remodel the restrooms. This includes replacing the flooring, fixtures, wallpaper, etc. No damage or wear observed. Restrooms look to be in good to fair condition. 30 years 19 years Best Case: $21,000 Estimate to remodel Worst Case: $30,000 Comp #: 930 Computers - Replace Quantity: (3) Computers Funded?: No. HOA will replace computers as an Operating expense when needed. History: Location: 1st floor: (1) in HOA office & (2) in Business Center Evaluation: Best Case: Worst Case: Cost Source: October 04, 2016 Page 31 of 51

69 Comp #: 934 Surveillance System - Replace Quantity: (1) DVR, (9) Cameras History: Actual age of this system is unknown. Location: DVR in the HOA office & cameras mounted throughout Evaluation: System is getting old but reportedly still working fine. Repair or replace individual pieces as an Operating expense. Replacement of this system should be anticipated in the near future. 8 years 1 years Best Case: $4,600 Worst Case: $6,200 Estimate to replace Comp #: 950 Laminate Floor - Replace Quantity: Approx 200 Sq Ft Location: 2nd floor in the Fitness Room Evaluation: Laminate wood floor is installed around the perimeter of the fitness room. Still appears to be in good shape. No problems observed. 20 years 9 years Best Case: $1,700 Worst Case: $2,300 Estimate to replace October 04, 2016 Page 32 of 51

70 Comp #: 952 Cardio Treadmills - Replace Quantity: (2) True Treadmills History: Purchased in Location: 2nd floor in the Fitness Room Evaluation: Treadmills reportedly receive limited use overall. They are still functional and in fair condition, so replacement is not planned yet. Replacement cost can vary widely depending in the brand and quality of machine purchased. 10 years 1 years Best Case: $9,600 Worst Case: $11,700 Estimate to replace Comp #: 954 Cardio Machines - Replace Quantity: (4) Machines History: Purchased in Location: 2nd floor in the Fitness Room Evaluation: Machines include (2) LifeFitness 91Xi ellipticals and (2) LifeFitness 90r exercise bikes. Some equipment has been replaced, but all in good to fair condition. Expected to be replaced in years 3 years Best Case: $15,000 Worst Case: $19,000 Estimate to replace October 04, 2016 Page 33 of 51

71 Comp #: 956 Strength Equipment - Replace Quantity: (4) Pieces + Dumbbells History: Purchased in Location: 2nd floor in the Fitness Room Evaluation: Equipment includes (1) LifeFitness multi-station strength machine, (2) benches, and (1) dumbbell rack with (10) sets of dumbbells. Equipment still looks good and functional. Life span reflects low use, but replacement should still be anticipated eventually. 20 years 9 years Best Case: $6,700 Worst Case: $8,200 Estimate to replace Comp #: 958 Drinking Fountain - Replace Quantity: (1) Elkay Funded?: No. Cost is below the Reserve expense threshold, so no Reserve funding has been allocated. Location: 2nd floor in the Fitness Room Evaluation: This is a single drinking fountain with dual dispensers. *Serial # Best Case: Worst Case: Cost Source: October 04, 2016 Page 34 of 51

72 Comp #: 960 Video Projector - Replace Quantity: (1) Panasonic History: Purchased in Location: 2nd floor in the Theatre Room Evaluation: Projector is expected to be in good working condition. It does not receive much use. Replace the DA Lite projector screen and sound system equipment as needed with Operating funds. *Model: PT-AE900R 10 years 3 years Best Case: $2,400 Estimate to replace Worst Case: $3,000 Cost Source: Internet Research Comp #: 966 Wallpaper - Replace Quantity: Approx 1,120 Sq Ft Location: 2nd floor in the Theatre & Massage Rooms Evaluation: Wallpaper still appears to be in good condition. Some chipped spots noted. Replacement should be expected eventually. 20 years 9 years Best Case: $4,800 Worst Case: $6,000 Estimate to replace October 04, 2016 Page 35 of 51

73 Comp #: 970 Storage Room - Remodel Quantity: Floor + Cabinets Funded?: No. We expect this area will be repaired as-needed with Operating funds, so no Reserve funding has been allocated to remodel this room. Location: 2nd floor inside the Craft Room Evaluation: There was no access to inspect this room. Per previous inspection, this room has vinyl flooring with laminate counters and cabinets. No Photo Available Best Case: Worst Case: Cost Source: Comp #: 980 Elevator - Modernize Quantity: (1) Otis, 2-Stop Location: Clubhouse interior Evaluation: Elevator is functional with no problems observed or reported. Modernization involves replacing the controller, push button fixtures, and door equipment. 25 years 14 years Best Case: $50,000 Estimate to modernize Worst Case: $65,000 October 04, 2016 Page 36 of 51

74 Comp #: 982 Elevator Cab - Remodel Quantity: (1) Standard Cab Location: Clubhouse interior - elevator cab Evaluation: This component funds for future cab interior remodeling. Life span will vary depending on the amount of use and the association's desire for change. Cab has no interior issues or damages. 15 years 6 years Best Case: $8,500 Estimate to remodel Worst Case: $11,000 Comp #: 990 Key Fob System - Relpace Quantity: (1) System Funded?: No. History: Installed during 2016 for $25,583 plus tax. Location: Clubhouse & pool area Evaluation: Key fob system was a new addition to the community. Repairs and individual reader replacements should be treated as an Operating expense. This component funds to eventually replace or modernize the system. 10 years 9 years Best Case: $25,000 Worst Case: $31,000 Estimate to replace Cost Source: Client Cost History October 04, 2016 Page 37 of 51

75 BUILDINGS Comp #: 1000 Exterior Lights - Replace Quantity: Approx (100) Lights Location: Exterior of Townhomes, Buildings 10, 11, 12 & Clubhouse Evaluation: These are decorative, exterior wall mounted light fixtures. These lights look poor overall. Surfaces are very faded and weathered. Recommend planning to replace in the near future to restore the appearance. Replacement cost can vary significantly depending on the brand and quality of fixture purchased. Quantity excludes balcony/patio lights as each owner is responsible for them. 15 years 0 years Best Case: $13,000 Worst Case: $17,000 Estimate to replace Comp #: 1010 Garage Doors - Replace Quantity: (18) Double, (63) Single Funded?: No. Each owner is responsible for repairs and replacement of their garage door. Location: Townhome garages Evaluation: Exterior surfaces of the garage doors will be painted with the building exteriors. Best Case: Worst Case: Cost Source: October 04, 2016 Page 38 of 51

76 Comp #: 1014 Decks - Resurface Quantity: (193) Decks Funded?: No. Decks have a concrete surface and do not require coatings or maintenance work. Owners that apply tile or other surfaces to their decks assume responsibility for any maintenance required thereafter. Location: Balcony decks at Townhomes & Buildings 10, 11, 12 Evaluation: Best Case: Worst Case: Cost Source: Comp #: 1020 Metal Surfaces - Repaint Quantity: Approx 3,610 LF History: Painted in for approx $11,000. Location: Balcony & patio rails/gates at Townhomes & Buildings 10, 11, 12 plus pool fence, perimeter fence bordering Mountain View Blvd. & vehicle gates Evaluation: Metal rails, gates, and fences were recently painted and are in good condition. Vehicle gates were not included in the recent painting project, but they should be included next time. Repaint periodically to maintain the appearance and to inhibit rust. 5 years 4 years Best Case: $10,000 Estimate to repaint Worst Case: $14,000 Cost Source: Client Cost History October 04, 2016 Page 39 of 51

77 Comp #: 1022 Wood Trim - Repaint Quantity: Approx 11,900 LF History: Painted in with the stucco. Location: Exterior wood trim of the Townhomes & Buildings 10, 11, 12 Evaluation: Surfaces were recently painted and are in good condition. Repaint periodically to maintain the appear and to keep the wood well sealed. 5 years 4 years Best Case: $10,000 Estimate to repaint Worst Case: $14,000 Comp #: 1024 Stucco Surfaces - Repaint Quantity: Approx 233,600 Sq Ft History: Repaired & painted in for $776,000 (painting alone was $223,307). Location: Exterior stucco surfaces of the Townhomes & Buildings 10, 11, 12 Evaluation: Stucco required extensive repair work due to the amount of cracking that developed. This was funded as part of a construction defect settlement. Repairs to that extent are not anticipated again. Stucco looks new, attractive, and in good condition. 10 years 9 years Best Case: $196,000 Estimate to repaint Worst Case: $240,000 Cost Source: Client Cost History October 04, 2016 Page 40 of 51

78 Comp #: 1030 Sunscreens - Replace Quantity: (72) Suncreens History: Added in 2016 for $2,703. Location: Windows of the Townhomes buildings Evaluation: Sunscreens were a new addition to the townhome buildings. Clean and repair as an Operating expense when needed. This component funds for eventual replacement. Quantity includes (36) 3'x4', (18) 3'x3', and (18) 2'x3'. 12 years 11 years Best Case: $2,500 Worst Case: $3,100 Estimate to replace Cost Source: Client Cost History Comp #: 1038 Rain Gutters - Replace Quantity: Numerous LF Funded?: No. We do not anticipate the need to plan complete replacement of these gutters and downspouts. Recommend repairing and replacing sections individually as needed with Operating funds. History: Added in 2016 for $15,894. Location: Building exteriors Evaluation: Rain gutters were a new addition to the buildings in They were installed at various spots around the buildings. Best Case: Worst Case: Cost Source: October 04, 2016 Page 41 of 51

79 Comp #: 1040 Flat Roofs - Replace Quantity: Approx 91,400 Sq Ft Location: Rooftop of Buildings 10, 11 & 12 Evaluation: Some roof repairs have been made. Granules wearing off at some sections of roofing. No problems were reported at this time. 18 years 7 years Best Case: $250,000 Worst Case: $300,000 Estimate to replace Comp #: 1050 Tile Roofs - Refurbish Quantity: Approx 78,000 Sq Ft Location: Rooftop of Townhomes & Buildings 10, 11, 12 Evaluation: There is no expectancy to replace all of the tiles under normal circumstances. Replacement of the felt paper underlayment should be anticipated eventually. Life span will vary depending on the quality of underlayment installed. 30 years 19 years Best Case: $250,000 Estimate to refurbish with new underlayment Worst Case: $330,000 October 04, 2016 Page 42 of 51

80 Comp #: 1060 HVAC Units - Replace (Ph1) Quantity: 1/3 of (52) HVAC Units Location: Rooftop of Buildings 10, 11, 12 & Clubhouse Evaluation: Quantity includes (39) 1.5-ton, (10) 3-ton, and (3) 5-ton. Units are a combination of split systems and packaged units. They service hallways, stairways, elevators, and the clubhouse. They are looking older and weathered. A number of them have been replaced already. We do not expect all of these units will be replaced at the same time, so replacement of these original HVAC units is being phased over time. 15 years 1 years Best Case: $70,000 Estimate to replace 1/3 Worst Case: $83,000 to replace 1/3 Cost Source: RS Means Commercial Renovation Guide Comp #: 1060 HVAC Units - Replace (Ph2) Quantity: 1/3 of (52) HVAC Units Location: Rooftop of Buildings 10, 11, 12 & Clubhouse Evaluation: Quantity includes (39) 1.5-ton, (10) 3-ton, and (3) 5-ton. This component reflects the second phase of replacement. 15 years 3 years Best Case: $70,000 Estimate to replace 1/3 Worst Case: $83,000 to replace 1/3 Cost Source: RS Means Commercial Renovation Guide October 04, 2016 Page 43 of 51

81 Comp #: 1060 HVAC Units - Replace (Ph3) Quantity: 1/3 of (52) HVAC Units Location: Rooftop of Buildings 10, 11, 12 & Clubhouse Evaluation: Quantity includes (39) 1.5-ton, (10) 3-ton, and (3) 5-ton. This component reflects the third phase of replacement. 15 years 5 years Best Case: $70,000 Estimate to replace 1/3 Worst Case: $83,000 to replace 1/3 Cost Source: RS Means Commercial Renovation Guide Comp #: 1070 HVAC Units - Replace (2015) Quantity: (6) Goodman, 1.5-Ton History: Replaced in 2015 for $19,582. Previously original from Location: Rooftops: (1) on Bldg 10, (2) on Bldg 11 & (3) on Bldg 12 Evaluation: These units were recently replaced and still look near new. These units service hallways and stairways. *Model GSX130181EC 15 years 13 years Best Case: $20,000 Worst Case: $26,000 Estimate to replace Cost Source: Client Cost History October 04, 2016 Page 44 of 51

82 Comp #: 1072 HVAC Units - Replace (2016) Quantity: (2) Goodman, 1.5-Ton History: Replaced in 2016 for $6,839. Previously original from Location: Rooftop of Building 11 (near A/C for unit 324) Evaluation: These units were recently replaced and are near new. These units service hallways and stairways. *Model GSX140191KB, Serial # & years 14 years Best Case: $6,800 Worst Case: $8,400 Estimate to replace Cost Source: Client Cost History Comp #: 1080 Evaporative Cooler - Replace Quantity: (1) Adobe Air Funded?: No. Cost is below the Reserve expense threshold, so no Reserve funding has been allocated. Location: Rooftop of building #11 (above clubhouse) Evaluation: Model E533OG, Serial #B , 1/3-HP Best Case: Worst Case: Cost Source: October 04, 2016 Page 45 of 51

83 Comp #: 1082 Exhaust Fan - Replace Quantity: (1) Captive Aire Funded?: No. Cost is below the Reserve expense threshold, so no Reserve funding has been allocated. Location: Rooftop of Building 11 (above clubhouse) Evaluation: This is a large exhaust fan for the clubhouse kitchen. Appears to be functional and in fair condition. *Model NCA10FA, 1/3-HP, mfg date: 08/2006 Best Case: Worst Case: Cost Source: Comp #: 1100 Epoxy Floor - Recoat Quantity: Numerous Sq Ft History: HOA applied this coating during 2013 for approx $11,400. Location: Stairway landings at Buildings 10, 11 & 12, Trash Rooms, Clubhouse patio Evaluation: Still in good to fair condition. A couple spots of peeling noted. This component funds to reapply the epoxy coating at some point in the future. 10 years 6 years Best Case: $11,000 Estimate to recoat Worst Case: $14,000 Cost Source: Client Cost History October 04, 2016 Page 46 of 51

84 Comp #: 1102 Carpet Floor - Replace Quantity: Approx 3,335 Sq Yds Location: Hallways at Buildings 10, 11 & 12 Evaluation: Carpet conditions vary. Some sections exhibit more wear and staining than others. Carpet pattern hides the wear and staining well though. HOA had a bid to replace in 2013 for approx $100,000 but did not pursue it. 10 years 0 years Best Case: $96,000 Estimate to replace Worst Case: $120,000 Cost Source: Estimate Provided by Client Comp #: 1104 Tile Floor - Replace Quantity: Approx 2,000 Sq Ft Location: Elevator lobbies at Buildings 10, 11 & 12 Evaluation: The elevator lobby at each level has a tile floor. No lifting or cracked tile. Good conditions observed. Long life component, however future replacement should still be expected. Coordinate with future carpet replacement to restore the building interiors at the same time. 20 years 10 years Best Case: $21,000 Worst Case: $28,000 Estimate to replace October 04, 2016 Page 47 of 51

85 Comp #: 1120 Hallways - Repaint Quantity: Approx 100,000 Sq Ft History: Painted in Location: Hallways at Buildings 10, 11 & 12 Evaluation: Some marks and wear on the walls. Surfaces still look fine overall. Repainting is expected in the near future to coincide with replacing the carpet floor. Repaint periodically to maintain the appearance. 10 years 0 years Best Case: $62,000 Estimate to repaint Worst Case: $81,000 Comp #: 1124 Stairways - Repaint Quantity: Approx 21,700 Sq Ft History: (5) of the (8) stairways were repainted in 2013 for $6,700. Location: Stairways at Buildings 10, 11 & 12 Evaluation: Overall paint is in good to fair condition. Some marks and scuffs on the walls. Repaint periodically to maintain and restore the appearance. 10 years 6 years Best Case: $11,000 Estimate to repaint Worst Case: $13,000 Cost Source: Client Cost History October 04, 2016 Page 48 of 51

86 Comp #: 1130 Interior Lights - Replace Quantity: Approx (975) Lights Location: Hallways & Stairways at Buildings 10, 11 & 12 Evaluation: Quantity includes approximately (189) wall lights, (336) recessed can lights, (146) exit lights, (201) emergency lights, and (103) 4' fluorescent lights. Functional and in good condition. Replacement should be expected eventually to update and modernize the lighting. 25 years 14 years Best Case: $120,000 Worst Case: $152,000 Estimate to replace Comp #: 1140 Elevator Cabs - Remodel Quantity: (3) Standard Cabs Location: Elevator lobbies at Buildings 10, 11 & 12 Evaluation: This component funds to periodically remodel the elevator cab interiors. Life span will vary depending on the amount of use and the association's desire for change. 15 years 6 years Best Case: $25,000 Estimate to remodel Worst Case: $35,000 October 04, 2016 Page 49 of 51

87 Comp #: 1142 Elevators - Modernize Quantity: (3) Otis, 3-Stop Location: Elevator lobbies at Buildings 10, 11 & 12 Evaluation: Modernization involves replacement of the controller, push button fixtures, and door equipment. Appears to be in good condition and functional, with no problems observed. 25 years 14 years Best Case: $165,000 Estimate to modernize Worst Case: $210,000 Comp #: 1150 Fire Alarm System - Modernize Quantity: (1) System History: System is original from It was repaired in 2015 for $21,960. Location: Main panels in Building 11: 1st floor hallway closet labeled "Fire Alarm Control Panel Room" Evaluation: Modernization involves replacement of the fire alarm control panels, NAC power supplies, annunciating devices, and smoke detectors. All of these items work together for monitoring all buildings in the community, and they must all be able to communicate with each other. Replacement should be expected eventually to modernize the system with new components. Replacement of the wiring is not expected under normal circumstances. 20 years 9 years Best Case: $150,000 Estimate to modernize Worst Case: $180,000 Cost Source: Research with Western States Fire Protection October 04, 2016 Page 50 of 51

88 Comp #: 1150 Fire Alarm System - Repair Quantity: (1) System History: System was repaired 12/2015 for $21,960. Location: Main panels in Building 11: 1st floor hallway closet labeled "Fire Alarm Control Panel Room" Evaluation: Alarms were not working, so system required some troubleshooting and parts replacement. This is an extensive alarm system, so we believe it is prudent to plan for repairs. This component is scheduled to occur once between system replacement intervals. 20 years No Photo Available 19 years Best Case: $20,000 Worst Case: $26,000 Allowance to repair Cost Source: Client Cost History Comp #: 1160 Water Heater - Replace Quantity: (1) Rheem, 50-Gal. Funded?: No. Cost is below the Reserve expense threshold, so no Reserve funding has been allocated. Location: Building 11: 1st floor hallway closet, next to the fire alarm control panel room Evaluation: This water heater services the clubhouse. Model 82V52-2, Serial #RH0806R18221 Best Case: Worst Case: Cost Source: October 04, 2016 Page 51 of 51