Country Club Townhomes

Transcription

1 Full Reserve Study Country Club Townhomes Dewey, Arizona Report #: For Period Beginning: January 1, 2016 Expires: December 31, 2016 Date Prepared: March 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 Association Reserves AZ, LLC

3 Table of Contents 3- Minute Executive Summary...i Reserve Study Summary...i Reserve Component List Table 1... iii 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...26 Terms and Definitions...27 Component Details... Appendix Association Reserves AZ, LLC

4 3- Minute Executive Summary Association: Country Club Townhomes #: Location: Dewey, Arizona # of Units: 76 Report Period: January 1, 2016 through December 31, 2016 Findings/Recommendations as-of 1/1/2016: Projected Starting Reserve Balance:...$30,269 Current Fully Funded Reserve Balance:...$709,482 Average Reserve Deficit (Surplus) Per Unit:...$8,937 Approved 2016 Monthly Reserve Contributions:...$1,457 Recommended 2017 Monthly Reserve Contributions:..$5,000 Alternate Minimum Contributions* To Keep Reserves Above $0:...$3,025 Recommended 2016 Special Assessment:...$0 Recommended 2017 Special Assessment:...$304,000 ($4,000/Unit) Recommended 2018 Special Assessment:.$190,000 ($2,500/Unit) Most Recent Budgeted Reserve Contribution Rate:...$1,457 Economic Assumptions: Net Annual After Tax Interest Earnings Accruing to Reserves % Annual Inflation Rate % This is a Full Reserve Study (original, created from scratch ) based on our site inspection on February 4, The Reserve expense threshold for this analysis is $1,000. This means no expenses under $1,000 are funded in the Reserve Study. Because your Reserve Fund is 4% Funded, this means the association s special assessment & deferred maintenance risk is currently high. The objective of your multi-year Funding Plan is to Fully Fund your Reserves, where associations enjoy a low risk of Reserve cash flow problems. The HOA has already approved Reserve contributions for 2016 at $1,457/month. This contribution rate is not sufficient to keep up with future expenses, since the Reserve Study components are currently deteriorating at a rate of approximately $4,300/month. Beginning in 2017, we recommend increasing Reserve contributions to Association Reserves AZ, LLC i

5 $5,000/month. Annual increases are scheduled thereafter to help offset inflation and strengthen Reserves (see tables herein for details). We also recommend special assessments of $304,000 ($4,000/Unit) during 2017 and $190,000 ($2,500/Unit) during These special assessments are recommended to help fund the tile roof and painting projects scheduled in the next couple years. *officially called Baseline Funding Association Reserves AZ, LLC ii

6 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate COMMON AREA 103 Concrete - Repair 5 1 $2, Asphalt - Resurface $140, Asphalt - Chip Seal 8 2 $28, Asphalt - Seal/Repair 4 6 $7, Mailboxes - Replace (A) 20 5 $8, Mailboxes - Replace (B) 20 5 $1, Storage Shed - Rebuild $2, Monument Sign - Replace 15 5 $1, Landscaping - Renovate 5 3 $2, Unit Ext. - Paint/Repair (Full) 10 2 $130, Unit Ext. - Paint/Repair (Partial) 10 7 $25, Wood Pergolas - Replace 30 7 $20, Garage Doors - Replace (A) 30 0 $11, Garage Doors - Replace (B) 30 2 $9, Garage Doors - Replace (C) 30 9 $3, Garage Doors - Replace (D) $21, Garage Doors - Replace (E) $7, Tile Roofs - Refurbish (1987) 30 1 $290, Tile Roofs - Refurbish (1995) 30 9 $38, Tile Roofs - Refurbish (2004) $200, Tile Roofs - Refurbish (2013) $7, Tile Roofs - Refurbish (2016) 30 0 $6, Gutters/Downspouts - Repair 5 1 $1,500 WASTE PLANT 2150 Wood Fence - Replace 25 4 $3, Chain Link Fence - Replace $6, Breaker Panel - Replace $1, Waste Bags - Replace (1 of 2) 1 0 $3, Transfer Pump - Replace 10 3 $1, Lift Pumps - Replace 7 4 $3, Lift Controls - Replace 30 7 $2, Blower - Replace (A) $2, Blower - Replace (B) 15 2 $2, Blowers - Repair 7 1 $1, Blower Controls - Replace 30 7 $2, Inlet Screen - Replace $1, Equipment Shelters - Repair 6 1 $1, Total Funded Components Note 1: 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. Association Reserves AZ, LLC iii

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 Full Reserve Study, we started with a review of your Governing Documents, recent Reserve expenditures, an evaluation of how expenditures are handled (ongoing maintenance vs Reserves), and research into any well-established association precedents. We performed an on-site inspection to quantify and evaluate your common areas, creating your Reserve Component List from scratch. Association Reserves AZ, LLC 1

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) Association Reserves 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 Association Reserves database of work done at similar associations 3) Vendor Recommendations 4) Reliable National Industry cost estimating guidebooks Association Reserves AZ, LLC 2

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 a 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! Association Reserves AZ, LLC 3

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. Association Reserves AZ, LLC 4

11 Assoc Site Inspection Notes During our site visit on February 4, 2016, we started by meeting with Community Manager Ms. Dawn Stoner with HOAMCO. We toured the community, including the unit exteriors and waste treatment plant. During our tour we discussed any issues or concerns. We then started the site inspection beginning with the waste treatment plant. Next, we inspected the asphalt and landscaping. Finally, we inspected the unit exteriors and any remaining common areas. Association Reserves AZ, LLC 5

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 $530,320. Adding the next five years, your first ten years of projected Reserve expenses are $693,819. Please be aware of your nearterm 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 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Years Figure 1 Association Reserves AZ, LLC 6

13 Assoc Reserve Fund Status The starting point for our financial analysis is your Reserve Fund balance, projected to be $30,269 as-of the start of your Fiscal Year on January 1, This is based on your actual balance on December 31, As of January 1, 2016, your Fully Funded Balance is computed to be $709,482 (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 4% Funded. Across the country, approximately 58% of associations in this range experience special assessments or deferred maintenance. Recommended Funding Plan The HOA has already approved Reserve contributions for 2016 at $1,457/month. Beginning in 2017, we recommend increasing Reserve contributions to $5,000/month. Special assessments are also recommended during 2017 and 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 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $ Years Figure 2 Association Reserves AZ, LLC 7

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. $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200, Yr Cash Flow Target Fully Funded Balance Recommended Funding Plan Alternate (Minimum) Current Budget $ Years Figure 3 This figure shows this same information, plotted on a Percent Funded scale. 120% Percent Funded Recommended Funding Plan Alternate (Minimum) Funding Plan Current Budget 100% 80% 60% 40% 20% 0% Years Figure 4 Association Reserves AZ, LLC 8

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 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. Association Reserves AZ, LLC 9

16 Table 2: Reserve Component List Detail Rem. Useful Useful [ --- Current Cost Estimate --- ] # Component Quantity Life Life Best Case Worst Case COMMON AREA 103 Concrete - Repair Numerous Sq Ft 5 1 $1,700 $2, Asphalt - Resurface Approx 62,300 Sq Ft $120,000 $160, Asphalt - Chip Seal Approx 62,300 Sq Ft 8 2 $25,000 $31, Asphalt - Seal/Repair Approx 62,300 Sq Ft 4 6 $6,500 $8, Mailboxes - Replace (A) Approx (5) Clusters 20 5 $7,000 $9, Mailboxes - Replace (B) (1) Cluster 20 5 $1,000 $1, Storage Shed - Rebuild (1) Shed $1,700 $2, Monument Sign - Replace (1) Sign 15 5 $900 $1, Landscaping - Renovate Granite, Erosion, Etc. 5 3 $1,700 $2, Unit Ext. - Paint/Repair (Full) (76) Units 10 2 $110,000 $150, Unit Ext. - Paint/Repair (Partial) (76) Units 10 7 $22,000 $28, Wood Pergolas - Replace Approx (19) Pergolas 30 7 $17,000 $23, Garage Doors - Replace (A) (17) Doors 30 0 $10,700 $13, Garage Doors - Replace (B) (14) Doors 30 2 $8,800 $10, Garage Doors - Replace (C) (5) Doors 30 9 $3,100 $3, Garage Doors - Replace (D) (30) Doors $18,500 $23, Garage Doors - Replace (E) (10) Doors $6,000 $8, Tile Roofs - Refurbish (1987) (39) Units: ~72,500 Sq Ft 30 1 $260,000 $320, Tile Roofs - Refurbish (1995) (5) Units: ~9,500 Sq Ft 30 9 $33,000 $43, Tile Roofs - Refurbish (2004) (30) Units: ~50,000 Sq Ft $170,000 $230, Tile Roofs - Refurbish (2013) (1) Unit: ~1,900 Sq Ft $6,600 $8, Tile Roofs - Refurbish (2016) (1) Unit: ~1,600 Sq Ft 30 0 $5,900 $7, Gutters/Downspouts - Repair Numerous LF 5 1 $1,300 $1,700 WASTE PLANT 2150 Wood Fence - Replace Approx 180 LF 25 4 $3,200 $4, Chain Link Fence - Replace Approx 240 LF $5,300 $6, Breaker Panel - Replace (1) Panel $1,500 $2, Waste Bags - Replace (1 of 2) (2) Liners/Bags 1 0 $2,700 $3, Transfer Pump - Replace (1) Whisper-Flo 10 3 $900 $1, Lift Pumps - Replace (2) Pumps, 3-HP 7 4 $2,600 $3, Lift Controls - Replace (1) Panel 30 7 $1,700 $2, Blower - Replace (A) (1) Gardner Denver $2,000 $2, Blower - Replace (B) (1) Fuller Company 15 2 $2,000 $2, Blowers - Repair (2) Blowers 7 1 $1,300 $1, Blower Controls - Replace (1) Panel 30 7 $1,700 $2, Inlet Screen - Replace (1) Screen $1,700 $2, Equipment Shelters - Repair Roofs, Siding, Paint 6 1 $900 $1, Total Funded Components Association Reserves AZ, LLC 10

17 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance COMMON AREA 103 Concrete - Repair $2,000 X 4 / 5 = $1, Asphalt - Resurface $140,000 X 30 / 40 = $105, Asphalt - Chip Seal $28,000 X 6 / 8 = $21, Asphalt - Seal/Repair $7,500 X 0 / 4 = $0 403 Mailboxes - Replace (A) $8,000 X 15 / 20 = $6, Mailboxes - Replace (B) $1,200 X 15 / 20 = $ Storage Shed - Rebuild $2,000 X 12 / 25 = $ Monument Sign - Replace $1,000 X 10 / 15 = $ Landscaping - Renovate $2,000 X 2 / 5 = $ Unit Ext. - Paint/Repair (Full) $130,000 X 8 / 10 = $104, Unit Ext. - Paint/Repair (Partial) $25,000 X 3 / 10 = $7, Wood Pergolas - Replace $20,000 X 23 / 30 = $15, Garage Doors - Replace (A) $11,900 X 30 / 30 = $11, Garage Doors - Replace (B) $9,800 X 28 / 30 = $9, Garage Doors - Replace (C) $3,500 X 21 / 30 = $2, Garage Doors - Replace (D) $21,000 X 12 / 30 = $8, Garage Doors - Replace (E) $7,000 X 4 / 30 = $ Tile Roofs - Refurbish (1987) $290,000 X 29 / 30 = $280, Tile Roofs - Refurbish (1995) $38,000 X 21 / 30 = $26, Tile Roofs - Refurbish (2004) $200,000 X 12 / 30 = $80, Tile Roofs - Refurbish (2013) $7,600 X 3 / 30 = $ Tile Roofs - Refurbish (2016) $6,500 X 30 / 30 = $6, Gutters/Downspouts - Repair $1,500 X 4 / 5 = $1,200 WASTE PLANT 2150 Wood Fence - Replace $3,600 X 21 / 25 = $3, Chain Link Fence - Replace $6,000 X 1 / 30 = $ Breaker Panel - Replace $1,750 X 23 / 35 = $1, Waste Bags - Replace (1 of 2) $3,000 X 1 / 1 = $3, Transfer Pump - Replace $1,000 X 7 / 10 = $ Lift Pumps - Replace $3,000 X 3 / 7 = $1, Lift Controls - Replace $2,000 X 23 / 30 = $1, Blower - Replace (A) $2,250 X 5 / 15 = $ Blower - Replace (B) $2,250 X 13 / 15 = $1, Blowers - Repair $1,500 X 6 / 7 = $1, Blower Controls - Replace $2,000 X 23 / 30 = $1, Inlet Screen - Replace $1,900 X 2 / 15 = $ Equipment Shelters - Repair $1,000 X 5 / 6 = $833 $709,482 Association Reserves AZ, LLC 11

18 Table 4: Component Significance Current Useful Cost Deterioration Deterioration # Component Life Estimate Cost/Yr. Significance COMMON AREA 103 Concrete - Repair 5 $2,000 $ % 201 Asphalt - Resurface 40 $140,000 $3, % 204 Asphalt - Chip Seal 8 $28,000 $3, % 207 Asphalt - Seal/Repair 4 $7,500 $1, % 403 Mailboxes - Replace (A) 20 $8,000 $ % 403 Mailboxes - Replace (B) 20 $1,200 $60 0.1% 450 Storage Shed - Rebuild 25 $2,000 $80 0.2% 701 Monument Sign - Replace 15 $1,000 $67 0.1% 805 Landscaping - Renovate 5 $2,000 $ % 1115 Unit Ext. - Paint/Repair (Full) 10 $130,000 $13, % 1116 Unit Ext. - Paint/Repair (Partial) 10 $25,000 $2, % 1160 Wood Pergolas - Replace 30 $20,000 $ % 1170 Garage Doors - Replace (A) 30 $11,900 $ % 1174 Garage Doors - Replace (B) 30 $9,800 $ % 1178 Garage Doors - Replace (C) 30 $3,500 $ % 1182 Garage Doors - Replace (D) 30 $21,000 $ % 1186 Garage Doors - Replace (E) 30 $7,000 $ % 1304 Tile Roofs - Refurbish (1987) 30 $290,000 $9, % 1306 Tile Roofs - Refurbish (1995) 30 $38,000 $1, % 1308 Tile Roofs - Refurbish (2004) 30 $200,000 $6, % 1310 Tile Roofs - Refurbish (2013) 30 $7,600 $ % 1310 Tile Roofs - Refurbish (2016) 30 $6,500 $ % 1320 Gutters/Downspouts - Repair 5 $1,500 $ % WASTE PLANT 2150 Wood Fence - Replace 25 $3,600 $ % 2160 Chain Link Fence - Replace 30 $6,000 $ % 2200 Breaker Panel - Replace 35 $1,750 $50 0.1% 2240 Waste Bags - Replace (1 of 2) 1 $3,000 $3, % 2365 Transfer Pump - Replace 10 $1,000 $ % 2580 Lift Pumps - Replace 7 $3,000 $ % 2585 Lift Controls - Replace 30 $2,000 $67 0.1% 2650 Blower - Replace (A) 15 $2,250 $ % 2650 Blower - Replace (B) 15 $2,250 $ % 2660 Blowers - Repair 7 $1,500 $ % 2670 Blower Controls - Replace 30 $2,000 $67 0.1% 2695 Inlet Screen - Replace 15 $1,900 $ % 2750 Equipment Shelters - Repair 6 $1,000 $ % 36 Total Funded Components $51, % Association Reserves AZ, LLC 12

19 Table 5: 30-Year Reserve Plan Summary Report Start Date: 01/01/16 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 2016 $30,269 $709, % High $17,484 $0 $284 $21, $26,637 $759, % High $60,000 $304,000 $549 $307, $83,216 $517, % High $64,200 $190,000 $1,191 $183, $155,018 $396, % Med $68,694 $0 $1,869 $6, $219,025 $455, % Med $73,503 $0 $2,515 $10, $284,238 $514, % Med $78,648 $0 $3,174 $15, $350,757 $571, % Med $81,007 $0 $3,847 $16, $418,894 $627, % Med $83,437 $0 $4,300 $65, $441,448 $640, % Med $85,941 $0 $4,825 $8, $523,980 $713, % Low $88,519 $0 $5,417 $58, $559,853 $739, % Low $91,174 $0 $5,102 $195, $460,925 $631, % Low $93,910 $0 $4,984 $23, $536,287 $699, % Low $96,727 $0 $4,908 $192, $445,801 $598, % Low $99,629 $0 $4,899 $16, $534,321 $677, % Low $102,617 $0 $5,860 $4, $638,261 $773, % Low $105,696 $0 $6,849 $18, $732,110 $857, % Low $108,867 $0 $7,849 $10, $838,396 $954, % Low $112,133 $0 $8,735 $49, $909,265 $1,015, % Low $115,497 $0 $7,517 $437, $594,753 $685, % Low $118,962 $0 $6,537 $7, $713,238 $791, % Low $122,531 $0 $7,744 $7, $836,289 $903, % Low $126,207 $0 $8,975 $12, $959,378 $1,017, % Low $129,993 $0 $8,924 $272, $826,208 $865, % Low $133,893 $0 $8,913 $11, $957,172 $979, % Low $137,909 $0 $10,278 $6, $1,099,261 $1,106, % Low $142,047 $0 $11,563 $38, $1,214,240 $1,207, % Low $146,308 $0 $12,484 $89, $1,283,533 $1,265, % Low $150,697 $0 $13,254 $79, $1,368,407 $1,339, % Low $155,218 $0 $14,447 $15, $1,522,285 $1,484, % Low $159,875 $0 $15,929 $33,228 Association Reserves AZ, LLC 13

20 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Starting Reserve Balance $30,269 $26,637 $83,216 $155,018 $219,025 Annual Reserve Contribution $17,484 $60,000 $64,200 $68,694 $73,503 Recommended Special Assessments $0 $304,000 $190,000 $0 $0 Interest Earnings $284 $549 $1,191 $1,869 $2,515 Total Income $48,037 $391,186 $338,607 $225,582 $295,043 # Component COMMON AREA 103 Concrete - Repair $0 $2,060 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 204 Asphalt - Chip Seal $0 $0 $29,705 $0 $0 207 Asphalt - Seal/Repair $0 $0 $0 $0 $0 403 Mailboxes - Replace (A) $0 $0 $0 $0 $0 403 Mailboxes - Replace (B) $0 $0 $0 $0 $0 450 Storage Shed - Rebuild $0 $0 $0 $0 $0 701 Monument Sign - Replace $0 $0 $0 $0 $0 805 Landscaping - Renovate $0 $0 $0 $2,185 $ Unit Ext. - Paint/Repair (Full) $0 $0 $137,917 $0 $ Unit Ext. - Paint/Repair (Partial) $0 $0 $0 $0 $ Wood Pergolas - Replace $0 $0 $0 $0 $ Garage Doors - Replace (A) $11,900 $0 $0 $0 $ Garage Doors - Replace (B) $0 $0 $10,397 $0 $ Garage Doors - Replace (C) $0 $0 $0 $0 $ Garage Doors - Replace (D) $0 $0 $0 $0 $ Garage Doors - Replace (E) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1987) $0 $298,700 $0 $0 $ Tile Roofs - Refurbish (1995) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2004) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2013) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2016) $6,500 $0 $0 $0 $ Gutters/Downspouts - Repair $0 $1,545 $0 $0 $0 WASTE PLANT 2150 Wood Fence - Replace $0 $0 $0 $0 $4, Chain Link Fence - Replace $0 $0 $0 $0 $ Breaker Panel - Replace $0 $0 $0 $0 $ Waste Bags - Replace (1 of 2) $3,000 $3,090 $3,183 $3,278 $3, Transfer Pump - Replace $0 $0 $0 $1,093 $ Lift Pumps - Replace $0 $0 $0 $0 $3, Lift Controls - Replace $0 $0 $0 $0 $ Blower - Replace (A) $0 $0 $0 $0 $ Blower - Replace (B) $0 $0 $2,387 $0 $ Blowers - Repair $0 $1,545 $0 $0 $ Blower Controls - Replace $0 $0 $0 $0 $ Inlet Screen - Replace $0 $0 $0 $0 $ Equipment Shelters - Repair $0 $1,030 $0 $0 $0 Total Expenses $21,400 $307,970 $183,589 $6,556 $10,805 Association Reserves AZ, LLC 14

21 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Ending Reserve Balance: $26,637 $83,216 $155,018 $219,025 $284,238 Association Reserves AZ, LLC 15

22 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Starting Reserve Balance $284,238 $350,757 $418,894 $441,448 $523,980 Annual Reserve Contribution $78,648 $81,007 $83,437 $85,941 $88,519 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $3,174 $3,847 $4,300 $4,825 $5,417 Total Income $366,060 $435,611 $506,632 $532,214 $617,916 # Component COMMON AREA 103 Concrete - Repair $0 $2,388 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 204 Asphalt - Chip Seal $0 $0 $0 $0 $0 207 Asphalt - Seal/Repair $0 $8,955 $0 $0 $0 403 Mailboxes - Replace (A) $9,274 $0 $0 $0 $0 403 Mailboxes - Replace (B) $1,391 $0 $0 $0 $0 450 Storage Shed - Rebuild $0 $0 $0 $0 $0 701 Monument Sign - Replace $1,159 $0 $0 $0 $0 805 Landscaping - Renovate $0 $0 $0 $2,534 $ Unit Ext. - Paint/Repair (Full) $0 $0 $0 $0 $ Unit Ext. - Paint/Repair (Partial) $0 $0 $30,747 $0 $ Wood Pergolas - Replace $0 $0 $24,597 $0 $ Garage Doors - Replace (A) $0 $0 $0 $0 $ Garage Doors - Replace (B) $0 $0 $0 $0 $ Garage Doors - Replace (C) $0 $0 $0 $0 $4, Garage Doors - Replace (D) $0 $0 $0 $0 $ Garage Doors - Replace (E) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1987) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1995) $0 $0 $0 $0 $49, Tile Roofs - Refurbish (2004) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2013) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2016) $0 $0 $0 $0 $ Gutters/Downspouts - Repair $0 $1,791 $0 $0 $0 WASTE PLANT 2150 Wood Fence - Replace $0 $0 $0 $0 $ Chain Link Fence - Replace $0 $0 $0 $0 $ Breaker Panel - Replace $0 $0 $0 $0 $ Waste Bags - Replace (1 of 2) $3,478 $3,582 $3,690 $3,800 $3, Transfer Pump - Replace $0 $0 $0 $0 $ Lift Pumps - Replace $0 $0 $0 $0 $ Lift Controls - Replace $0 $0 $2,460 $0 $ Blower - Replace (A) $0 $0 $0 $0 $ Blower - Replace (B) $0 $0 $0 $0 $ Blowers - Repair $0 $0 $0 $1,900 $ Blower Controls - Replace $0 $0 $2,460 $0 $ Inlet Screen - Replace $0 $0 $0 $0 $ Equipment Shelters - Repair $0 $0 $1,230 $0 $0 Total Expenses $15,302 $16,717 $65,183 $8,234 $58,062 Association Reserves AZ, LLC 16

23 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Ending Reserve Balance: $350,757 $418,894 $441,448 $523,980 $559,853 Association Reserves AZ, LLC 17

24 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Starting Reserve Balance $559,853 $460,925 $536,287 $445,801 $534,321 Annual Reserve Contribution $91,174 $93,910 $96,727 $99,629 $102,617 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $5,102 $4,984 $4,908 $4,899 $5,860 Total Income $656,129 $559,819 $637,922 $550,328 $642,799 # Component COMMON AREA 103 Concrete - Repair $0 $2,768 $0 $0 $0 201 Asphalt - Resurface $188,148 $0 $0 $0 $0 204 Asphalt - Chip Seal $0 $0 $0 $0 $0 207 Asphalt - Seal/Repair $0 $10,382 $0 $0 $0 403 Mailboxes - Replace (A) $0 $0 $0 $0 $0 403 Mailboxes - Replace (B) $0 $0 $0 $0 $0 450 Storage Shed - Rebuild $0 $0 $0 $2,937 $0 701 Monument Sign - Replace $0 $0 $0 $0 $0 805 Landscaping - Renovate $0 $0 $0 $2,937 $ Unit Ext. - Paint/Repair (Full) $0 $0 $185,349 $0 $ Unit Ext. - Paint/Repair (Partial) $0 $0 $0 $0 $ Wood Pergolas - Replace $0 $0 $0 $0 $ Garage Doors - Replace (A) $0 $0 $0 $0 $ Garage Doors - Replace (B) $0 $0 $0 $0 $ Garage Doors - Replace (C) $0 $0 $0 $0 $ Garage Doors - Replace (D) $0 $0 $0 $0 $ Garage Doors - Replace (E) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1987) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1995) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2004) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2013) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2016) $0 $0 $0 $0 $ Gutters/Downspouts - Repair $0 $2,076 $0 $0 $0 WASTE PLANT 2150 Wood Fence - Replace $0 $0 $0 $0 $ Chain Link Fence - Replace $0 $0 $0 $0 $ Breaker Panel - Replace $0 $0 $2,495 $0 $ Waste Bags - Replace (1 of 2) $4,032 $4,153 $4,277 $4,406 $4, Transfer Pump - Replace $0 $0 $0 $1,469 $ Lift Pumps - Replace $0 $4,153 $0 $0 $ Lift Controls - Replace $0 $0 $0 $0 $ Blower - Replace (A) $3,024 $0 $0 $0 $ Blower - Replace (B) $0 $0 $0 $0 $ Blowers - Repair $0 $0 $0 $0 $ Blower Controls - Replace $0 $0 $0 $0 $ Inlet Screen - Replace $0 $0 $0 $2,790 $ Equipment Shelters - Repair $0 $0 $0 $1,469 $0 Total Expenses $195,204 $23,532 $192,121 $16,007 $4,538 Association Reserves AZ, LLC 18

25 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Ending Reserve Balance: $460,925 $536,287 $445,801 $534,321 $638,261 Association Reserves AZ, LLC 19

26 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Starting Reserve Balance $638,261 $732,110 $838,396 $909,265 $594,753 Annual Reserve Contribution $105,696 $108,867 $112,133 $115,497 $118,962 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $6,849 $7,849 $8,735 $7,517 $6,537 Total Income $750,806 $848,827 $959,263 $1,032,279 $720,252 # Component COMMON AREA 103 Concrete - Repair $0 $3,209 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 204 Asphalt - Chip Seal $0 $0 $0 $47,668 $0 207 Asphalt - Seal/Repair $11,685 $0 $0 $0 $0 403 Mailboxes - Replace (A) $0 $0 $0 $0 $0 403 Mailboxes - Replace (B) $0 $0 $0 $0 $0 450 Storage Shed - Rebuild $0 $0 $0 $0 $0 701 Monument Sign - Replace $0 $0 $0 $0 $0 805 Landscaping - Renovate $0 $0 $0 $3,405 $ Unit Ext. - Paint/Repair (Full) $0 $0 $0 $0 $ Unit Ext. - Paint/Repair (Partial) $0 $0 $41,321 $0 $ Wood Pergolas - Replace $0 $0 $0 $0 $ Garage Doors - Replace (A) $0 $0 $0 $0 $ Garage Doors - Replace (B) $0 $0 $0 $0 $ Garage Doors - Replace (C) $0 $0 $0 $0 $ Garage Doors - Replace (D) $0 $0 $0 $35,751 $ Garage Doors - Replace (E) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1987) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1995) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2004) $0 $0 $0 $340,487 $ Tile Roofs - Refurbish (2013) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2016) $0 $0 $0 $0 $ Gutters/Downspouts - Repair $0 $2,407 $0 $0 $0 WASTE PLANT 2150 Wood Fence - Replace $0 $0 $0 $0 $ Chain Link Fence - Replace $0 $0 $0 $0 $ Breaker Panel - Replace $0 $0 $0 $0 $ Waste Bags - Replace (1 of 2) $4,674 $4,814 $4,959 $5,107 $5, Transfer Pump - Replace $0 $0 $0 $0 $ Lift Pumps - Replace $0 $0 $0 $5,107 $ Lift Controls - Replace $0 $0 $0 $0 $ Blower - Replace (A) $0 $0 $0 $0 $ Blower - Replace (B) $0 $0 $3,719 $0 $ Blowers - Repair $2,337 $0 $0 $0 $ Blower Controls - Replace $0 $0 $0 $0 $ Inlet Screen - Replace $0 $0 $0 $0 $ Equipment Shelters - Repair $0 $0 $0 $0 $1,754 Total Expenses $18,696 $10,431 $49,999 $437,525 $7,014 Association Reserves AZ, LLC 20

27 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Ending Reserve Balance: $732,110 $838,396 $909,265 $594,753 $713,238 Association Reserves AZ, LLC 21

28 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Starting Reserve Balance $713,238 $836,289 $959,378 $826,208 $957,172 Annual Reserve Contribution $122,531 $126,207 $129,993 $133,893 $137,909 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $7,744 $8,975 $8,924 $8,913 $10,278 Total Income $843,513 $971,470 $1,098,295 $969,014 $1,105,359 # Component COMMON AREA 103 Concrete - Repair $0 $3,721 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 204 Asphalt - Chip Seal $0 $0 $0 $0 $0 207 Asphalt - Seal/Repair $0 $0 $14,371 $0 $0 403 Mailboxes - Replace (A) $0 $0 $0 $0 $0 403 Mailboxes - Replace (B) $0 $0 $0 $0 $0 450 Storage Shed - Rebuild $0 $0 $0 $0 $0 701 Monument Sign - Replace $1,806 $0 $0 $0 $0 805 Landscaping - Renovate $0 $0 $0 $3,947 $ Unit Ext. - Paint/Repair (Full) $0 $0 $249,093 $0 $ Unit Ext. - Paint/Repair (Partial) $0 $0 $0 $0 $ Wood Pergolas - Replace $0 $0 $0 $0 $ Garage Doors - Replace (A) $0 $0 $0 $0 $ Garage Doors - Replace (B) $0 $0 $0 $0 $ Garage Doors - Replace (C) $0 $0 $0 $0 $ Garage Doors - Replace (D) $0 $0 $0 $0 $ Garage Doors - Replace (E) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1987) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1995) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2004) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2013) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2016) $0 $0 $0 $0 $ Gutters/Downspouts - Repair $0 $2,790 $0 $0 $0 WASTE PLANT 2150 Wood Fence - Replace $0 $0 $0 $0 $ Chain Link Fence - Replace $0 $0 $0 $0 $ Breaker Panel - Replace $0 $0 $0 $0 $ Waste Bags - Replace (1 of 2) $5,418 $5,581 $5,748 $5,921 $6, Transfer Pump - Replace $0 $0 $0 $1,974 $ Lift Pumps - Replace $0 $0 $0 $0 $ Lift Controls - Replace $0 $0 $0 $0 $ Blower - Replace (A) $0 $0 $0 $0 $ Blower - Replace (B) $0 $0 $0 $0 $ Blowers - Repair $0 $0 $2,874 $0 $ Blower Controls - Replace $0 $0 $0 $0 $ Inlet Screen - Replace $0 $0 $0 $0 $ Equipment Shelters - Repair $0 $0 $0 $0 $0 Total Expenses $7,224 $12,092 $272,087 $11,842 $6,098 Association Reserves AZ, LLC 22

29 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Ending Reserve Balance: $836,289 $959,378 $826,208 $957,172 $1,099,261 Association Reserves AZ, LLC 23

30 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Starting Reserve Balance $1,099,261 $1,214,240 $1,283,533 $1,368,407 $1,522,285 Annual Reserve Contribution $142,047 $146,308 $150,697 $155,218 $159,875 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $11,563 $12,484 $13,254 $14,447 $15,929 Total Income $1,252,870 $1,373,032 $1,447,484 $1,538,072 $1,698,089 # Component COMMON AREA 103 Concrete - Repair $0 $4,313 $0 $0 $0 201 Asphalt - Resurface $0 $0 $0 $0 $0 204 Asphalt - Chip Seal $0 $60,385 $0 $0 $0 207 Asphalt - Seal/Repair $0 $0 $0 $0 $0 403 Mailboxes - Replace (A) $16,750 $0 $0 $0 $0 403 Mailboxes - Replace (B) $2,513 $0 $0 $0 $0 450 Storage Shed - Rebuild $0 $0 $0 $0 $0 701 Monument Sign - Replace $0 $0 $0 $0 $0 805 Landscaping - Renovate $0 $0 $0 $4,576 $ Unit Ext. - Paint/Repair (Full) $0 $0 $0 $0 $ Unit Ext. - Paint/Repair (Partial) $0 $0 $55,532 $0 $ Wood Pergolas - Replace $0 $0 $0 $0 $ Garage Doors - Replace (A) $0 $0 $0 $0 $ Garage Doors - Replace (B) $0 $0 $0 $0 $ Garage Doors - Replace (C) $0 $0 $0 $0 $ Garage Doors - Replace (D) $0 $0 $0 $0 $ Garage Doors - Replace (E) $0 $15,096 $0 $0 $ Tile Roofs - Refurbish (1987) $0 $0 $0 $0 $ Tile Roofs - Refurbish (1995) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2004) $0 $0 $0 $0 $ Tile Roofs - Refurbish (2013) $0 $0 $16,882 $0 $ Tile Roofs - Refurbish (2016) $0 $0 $0 $0 $ Gutters/Downspouts - Repair $0 $3,235 $0 $0 $0 WASTE PLANT 2150 Wood Fence - Replace $0 $0 $0 $0 $8, Chain Link Fence - Replace $0 $0 $0 $0 $14, Breaker Panel - Replace $0 $0 $0 $0 $ Waste Bags - Replace (1 of 2) $6,281 $6,470 $6,664 $6,864 $7, Transfer Pump - Replace $0 $0 $0 $0 $ Lift Pumps - Replace $6,281 $0 $0 $0 $ Lift Controls - Replace $0 $0 $0 $0 $ Blower - Replace (A) $4,711 $0 $0 $0 $ Blower - Replace (B) $0 $0 $0 $0 $ Blowers - Repair $0 $0 $0 $0 $3, Blower Controls - Replace $0 $0 $0 $0 $ Inlet Screen - Replace $0 $0 $0 $4,347 $ Equipment Shelters - Repair $2,094 $0 $0 $0 $0 Total Expenses $38,630 $89,499 $79,078 $15,787 $33,228 Association Reserves AZ, LLC 24

31 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Ending Reserve Balance: $1,214,240 $1,283,533 $1,368,407 $1,522,285 $1,664,861 Association Reserves AZ, LLC 25

32 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. Association Reserves 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 Association Reserves 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 developed by Association Reserves unless noted otherwise in our Site Inspection Notes comments. No destructive or intrusive testing was performed. This Report and the 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. Association Reserves liability in any matter involving this Reserve Study is limited to our Fee for services rendered. Association Reserves AZ, LLC 26

33 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. Association Reserves AZ, LLC 27

34 Inventory Appendix Country Club Townhomes Common Area Association Reserves

35 Client: 9621A Country Club Townhomes: Common Area Comp # : 103 Concrete - Repair Location : Curbs, gutters and walkways throughout community History : Quantity: Numerous Sq Ft Component Association Details Reserves - Evaluation : There is no expectancy to completely replace the concrete. This component provides an allowance for periodic repairs and/or partial replacements. Cracks and pitting evident. 5 years 1 years Best Case: $1,700 Worst Case: $2,300 Allowance for repairs and/or partial replacement Comp # : 201 Asphalt - Resurface Location : Streets & parking areas throughout community History : Installed during Cost Source: ARI Cost Allowance Higher allowance Quantity: Approx 62,300 Sq Ft Evaluation : Asphalt is older with raveling and cracks evident. Some alligatoring also noted. Still intact and in fair shape overall at this time. Useful life is based on periodically chip sealing and maintaining the asphalt. 40 years 10 years Best Case: $120,000 Worst Case: $160,000 Estimate to resurface Cost Source: ARI Cost Database March 04,2016 Page 1 of 14

36 Client: 9621A Country Club Townhomes: Common Area Comp # : 204 Asphalt - Chip Seal Location : Streets & parking areas throughout community History : Quantity: Approx 62,300 Sq Ft Component Association Details Reserves - Evaluation : Chip seal appears thin and worn off in some spots. Overall fair conditions observed. Expect to chip seal the asphalt again eventually, in order to delay resurfacing of the asphalt. 8 years 2 years Best Case: Estimate to chip seal $25,000 Worst Case: $31,000 Comp # : 207 Asphalt - Seal/Repair Location : Streets & parking areas throughout community History : Cost Source: ARI Cost Database Quantity: Approx 62,300 Sq Ft Evaluation : Recommend waiting to seal the asphalt until after the next chip seal application occurs. Seal coat asphalt surfaces periodically to prevent premature cracking and deterioration. 4 years 6 years Best Case: $6,500 Worst Case: $8,500 Estimate to seal/repair Cost Source: ARI Cost Database March 04,2016 Page 2 of 14

37 Client: 9621A Country Club Townhomes: Common Area Comp # : 403 Mailboxes - Replace (A) Location : Unit front yards History : Original from the 1980's. Quantity: Approx (5) Clusters Component Association Details Reserves - Evaluation : Each unit has a lighted individual mailbox, which is reportedly HOA responsibility. When replacement is eventually needed, the HOA plans to replace the individual mailboxes with cluster units. We estimate (5) cluster units will be needed. 20 years 5 years Best Case: $7,000 Worst Case: $9,000 Estimate to replace, including new concrete pad Cost Source: ARI Cost Database Comp # : 403 Mailboxes - Replace (B) Quantity: (1) Cluster Location : E Wingfoot Ct (northern end of community, near lot 1) History : Installed during Evaluation : This is an 8-box cluster. Appears older but still intact and functional. Future replacement should be anticipated. 20 years 5 years Best Case: $1,000 Worst Case: $1,400 Estimate to replace Cost Source: ARI Cost Database March 04,2016 Page 3 of 14

38 Client: 9621A Country Club Townhomes: Common Area Comp # : 450 Storage Shed - Rebuild Location : Adjacent to parking lot (southern end of community) History : Quantity: (1) Shed Component Association Details Reserves - Evaluation : This component provides funding to eventually rebuild the storage shed. This would include replacing the tile roof, skylights, and repair/replace of the wood siding. Appears to be in fair shape overall. 25 years 13 years Best Case: $1,700 Worst Case: $2,300 Estimate to replace Cost Source: ARI Cost Database Comp # : 701 Monument Sign - Replace Quantity: (1) Sign Location : Community entrance History : Evaluation : Wood sign appears intact and in fair shape. Future replacement should be anticipated to maintain the appearance. 15 years 5 years Best Case: $900 Worst Case: $1,100 Estimate to replace Cost Source: ARI Cost Database March 04,2016 Page 4 of 14

39 Client: 9621A Country Club Townhomes: Common Area Comp # : 800 Irrigation System - Replace Location : Common areas throughout community Funded? : No Repair as-needed using Operating funds. History : Quantity: Lines, Valves, Timers Component Association Details Reserves - Evaluation : It is beyond the scope of this Reserve Study to quantify and assess the condition of the irrigation system, which is primarily buried underground. Recommend planning repairs annually as an Operating expense. Best Case: Cost Source: Worst Case: Comp # : 805 Landscaping - Renovate Location : Common areas throughout community History : Quantity: Granite, Erosion, Etc. Evaluation : Per the HOA's request, an allowance is provided for landscape renovations. This may include replenishing the landscape granite, adding rip-rap, retaining wall repairs, etc. 5 years 3 years Best Case: $1,700 Worst Case: $2,300 Allowance to renovate Higher allowance Cost Source: ARI Cost Allowance March 04,2016 Page 5 of 14

40 Client: 9621A Country Club Townhomes: Common Area Comp # : 1115 Unit Ext. - Paint/Repair (Full) Quantity: (76) Units Location : Unit exterior wood, metal, & stucco surfaces (includes unit/garage doors, pergolas, rails) History : Component Association Details Reserves - Evaluation : This component provides funding for complete repainting of the unit exteriors. Repaint periodically to maintain the appearance and to keep the surfaces properly sealed. This has not been completed in many years, so surfaces are older with peeling paint and fading evident. 10 years 2 years Best Case: $110,000 Worst Case: $150,000 Estimate to paint/repair (Full) Cost Source: ARI Cost Database Comp # : 1116 Unit Ext. - Paint/Repair (Partial) Quantity: (76) Units Location : Unit exterior wood, metal, & stucco surfaces (includes unit/garage doors, pergolas, rails) History : Evaluation : This component provides funding for partial repainting of the unit exteriors, in-between complete repainting projects. Some of the wood and metal surfaces will require more frequent painting, so this component covers those areas. 10 years 7 years Best Case: $22,000 Worst Case: $28,000 Estimate to paint/repair (Partial) Cost Source: ARI Cost Database March 04,2016 Page 6 of 14

41 Client: 9621A Country Club Townhomes: Common Area Component Association Details Reserves - Comp # : 1130 Stairways/Balconies - Repair Quantity: Stairways + Balconies Location : Unit exteriors Funded? : No Stairways and balconies are reportedly the responsibility of each homeowner for repairs and replacement, not the HOA. History : Evaluation : Funding for repainting the stairway and balcony rails is included with the building exterior repainting components. Best Case: Cost Source: Worst Case: Comp # : 1140 Wall Lights - Replace Quantity: Approx (250) Fixtures Location : Mounted to exteriors of the unit buildings (front & rear of units) Funded? : No Exterior wall lights are reportedly the responsibility of each homeowner, not the HOA. History : Evaluation : No Reserve funding required. Best Case: Cost Source: Worst Case: March 04,2016 Page 7 of 14

42 Client: 9621A Country Club Townhomes: Common Area Comp # : 1150 Awnings - Replace Quantity: Numerous Sq Ft Location : Mounted to exteriors of the unit buildings Funded? : No Awnings are reportedly the responsibility of each homeowner, not the HOA. History : Evaluation : No Reserve funding required. Component Association Details Reserves - Best Case: Cost Source: Worst Case: Comp # : 1160 Wood Pergolas - Replace Location : Adjacent to unit front doors History : Quantity: Approx (19) Pergolas Evaluation : Varying conditions observed. Some pergolas have likely been replaced at some point, while others may still be original. No historical information has been provided on these pergolas. For budgeting purposes, we are planning for complete replacement eventually to maintain uniformity. 30 years 7 years Best Case: $17,000 Worst Case: $23,000 Estimate to replace Cost Source: ARI Cost Database March 04,2016 Page 8 of 14

43 Client: 9621A Country Club Townhomes: Common Area Comp # : 1170 Garage Doors - Replace (A) Location : Exteriors of (17) units History : Original from the 1980's. Quantity: (17) Doors Component Association Details Reserves - Evaluation : The HOA reports these garage doors need to be replaced in the near future. Doors appear worn and weathered. 30 years 0 years Best Case: Estimate to replace $10,700 Worst Case: $13,100 Comp # : 1174 Garage Doors - Replace (B) Location : Exteriors of (14) units History : Original from the 1980's. Cost Source: Estimate Provided by Client Quantity: (14) Doors Evaluation : These garage doors are not on the list for immediate replacement, however they are old and will still need to be replaced within the next couple years. 30 years 2 years Best Case: $8,800 Worst Case: $10,800 Estimate to replace Cost Source: Estimate Provided by Client March 04,2016 Page 9 of 14

44 Client: 9621A Country Club Townhomes: Common Area Comp # : 1178 Garage Doors - Replace (C) Location : Exteriors of (5) units History : Installed during Quantity: (5) Doors Evaluation : Still appear functional and in fair shape. Funding is provided for future replacement. Component Association Details Reserves - 30 years 9 years Best Case: $3,100 Worst Case: $3,900 Estimate to replace Cost Source: Estimate Provided by Client Comp # : 1182 Garage Doors - Replace (D) Quantity: (30) Doors Location : Exteriors of (30) units History : Installed during Evaluation : Appear to be in good shape overall. Funding is provided for future replacement. 30 years 18 years Best Case: $18,500 Worst Case: $23,500 Estimate to replace Cost Source: Estimate Provided by Client March 04,2016 Page 10 of 14

45 Client: 9621A Country Club Townhomes: Common Area Comp # : 1186 Garage Doors - Replace (E) Location : Exteriors of (10) units History : Quantity: (10) Doors Component Association Details Reserves - Evaluation : No information has been provided on how many garage doors have been replaced in the past. For budgeting purposes, we assume approximately (10) garage doors have been replaced. 30 years 26 years Best Case: Estimate to replace $6,000 Worst Case: $8,000 Comp # : 1304 Tile Roofs - Refurbish (1987) Location : Rooftop of (39) units History : Primarily installed during Cost Source: Estimate Provided by Client Quantity: (39) Units: ~72,500 Sq Ft 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. Roofs are old with leak issues reported. 30 years 1 years Best Case: $260,000 Worst Case: $320,000 Estimate to remove tiles, replace underlayment, reinstall tiles Cost Source: 2016 HOA Bid March 04,2016 Page 11 of 14

46 Association Reserves - AZ, LLC 9621A Client: 9621A Country Club Townhomes: Common Area Comp # : 1306 Tile Roofs - Refurbish (1995) Location : Rooftop of (5) units Component Details Quantity: (5) Units: ~9,500 Sq Ft History : Primarily installed during 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 9 years Best Case: $33,000 Worst Case: $43,000 Estimate to remove tiles, replace underlayment, reinstall tiles Cost Source: 2016 HOA Bid Comp # : 1308 Tile Roofs - Refurbish (2004) Location : Rooftop of (30) units Quantity: (30) Units: ~50,000 Sq Ft History : Installed during 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 18 years Best Case: $170,000 Worst Case: $230,000 Estimate to remove tiles, replace underlayment, reinstall tiles Cost Source: 2016 HOA Bid March 04,2016 Page 12 of 14

47 Association Reserves - AZ, LLC 9621A Client: 9621A Country Club Townhomes: Common Area Comp # : 1310 Tile Roofs - Refurbish (2013) Location : Rooftop of 978 N Fairway Drive (Lot 46) Component Details Quantity: (1) Unit: ~1,900 Sq Ft History : Refurbished during 2013 for ~$6,200. 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. No problems reported. 30 years 27 years Best Case: $6,600 Worst Case: $8,600 Estimate to remove tiles, replace underlayment, reinstall tiles Cost Source: 2016 HOA Bid Comp # : 1310 Tile Roofs - Refurbish (2016) Location : Rooftop of 1046 Bunker Place (Lot 60) Quantity: (1) Unit: ~1,600 Sq Ft History : The HOA received a bid of $6,450 to refurbish this roof during 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 0 years Best Case: $5,900 Worst Case: $7,100 Estimate to remove tiles, replace underlayment, reinstall tiles Cost Source: 2016 HOA Bid March 04,2016 Page 13 of 14

48 Association Reserves - AZ, LLC 9621A Client: 9621A Country Club Townhomes: Common Area Component Details Quantity: Numerous LF Comp # : 1320 Gutters/Downspouts - Repair Location : Unit exteriors History : Installed during Evaluation : There is no expectancy for complete replacement. An allowance is provided for periodic repairs and partial replacements. Missing and damaged downspouts noted. 5 years 1 years Best Case: $1,300 Worst Case: $1,700 Allowance for repairs Higher allowance Cost Source: ARI Cost Allowance Quantity: Numerous Skylights Comp # : 1330 Skylights - Replace Location : Unit rooftops Funded? : No Skylights are reportedly the responsibility of each homeowner, not the HOA. History : Evaluation : No Reserve funding required. Best Case: Worst Case: Cost Source: March 04,2016 Page 14 of 14

49 Inventory Appendix Country Club Townhomes Waste Plant Association Reserves

50 Client: 9621B Country Club Townhomes: Waste Plant Comp # : 2150 Wood Fence - Replace Location : Northern perimeter of waste treatment plant History : Likely original from the 1980's. Quantity: Approx 180 LF Component Association Details Reserves - Evaluation : Fence appears older and weathered. Funding is provided for complete replacement eventually. Stain or paint periodically as an Operating expense. 25 years 4 years Best Case: Estimate to replace $3,200 Worst Case: $4,000 Comp # : 2160 Chain Link Fence - Replace Location : Southern perimeter of waste treatment plant History : Installed during Cost Source: ARI Cost Database Quantity: Approx 240 LF Evaluation : Appears new and in good shape. Long life component under normal circumstances. It would still be prudent to plan for complete replacement eventually. Privacy screen should be replaced when needed as an Operating expense. 30 years 29 years Best Case: $5,300 Worst Case: $6,700 Estimate to replace Cost Source: ARI Cost Database March 04,2016 Page 1 of 8

51 Client: 9621B Country Club Townhomes: Waste Plant Comp # : 2200 Breaker Panel - Replace Location : Waste treatment plant History : Assumed to be original from the 1980's. Quantity: (1) Panel Component Association Details Reserves - Evaluation : Long life component under normal circumstances. It would still be prudent to plan for future replacement. No problems reported at this time. 35 years 12 years Best Case: Estimate to replace $1,500 Worst Case: $2,000 Comp # : 2240 Waste Bags - Replace (1 of 2) Location : Waste treatment plant History : One bag was replaced during 2013 for ~$2,900. Cost Source: ARI Cost Database Quantity: (2) Liners/Bags Evaluation : These waste bags reportedly need to be replaced every couple years. They are offset in age by one year, so funding has been provided to replace one of the bags annually. 1 years 0 years Best Case: $2,700 Worst Case: $3,300 Estimate to replace (1) of (2) liners/bags Cost Source: Client Cost History March 04,2016 Page 2 of 8

52 Client: 9621B Country Club Townhomes: Waste Plant Comp # : 2360 Flow Meter - Replace Quantity: (1) Sensus Location : Waste treatment plant Funded? : No Replacement cost is expected to be too small for Reserve designation. History : Component Association Details Reserves - Evaluation : Meter appears functional with no problems reported. Future replacement should be anticipated as an Operating expense. No Reserve funding required. Best Case: Cost Source: Worst Case: Comp # : 2365 Transfer Pump - Replace Location : Waste treatment plant History : Quantity: (1) Whisper-Flo Evaluation : Although there are two pumps in our picture, only one of the pumps is actually used. Appears older but functional. Some signs of leaking noted. Future replacement should be anticipated. 10 years 3 years Best Case: $900 Worst Case: $1,100 Estimate to replace Cost Source: ARI Cost Database March 04,2016 Page 3 of 8

53 Client: 9621B Country Club Townhomes: Waste Plant Comp # : 2580 Lift Pumps - Replace Location : Waste treatment plant History : One pump was reportedly replaced during 2013 for ~$1,000. Quantity: (2) Pumps, 3-HP Evaluation : Cost appears very low, and likely only included the cost of materials and no labor. Age of the other pump is unknown. Funding is provided for future replacement. Component Association Details Reserves - 7 years 4 years Best Case: Estimate to replace $2,600 Worst Case: $3,400 Comp # : 2585 Lift Controls - Replace Location : Waste treatment plant History : Likely original from the 1980's. Cost Source: Client Cost History/ARI Cost Database Quantity: (1) Panel Evaluation : Control panel is expected to have a long life span under normal circumstances. Over time, parts will become obsolete and repairs to this panel will be difficult. It would be prudent to plan for replacement eventually. 30 years 7 years Best Case: $1,700 Worst Case: $2,300 Estimate to replace Cost Source: ARI Cost Database March 04,2016 Page 4 of 8

54 Client: 9621B Country Club Townhomes: Waste Plant Comp # : 2620 Chlorine Equipment - Replace Quantity: Pump + Tanks Location : Waste treatment plant Funded? : No Replacement cost is too small for Reserve designation. History : Component Association Details Reserves - Evaluation : Treat replacement of the pump and chlorine storage tanks as an Operating expense when needed. No Reserve funding required. Best Case: Cost Source: Worst Case: Comp # : 2650 Blower - Replace (A) Location : Waste treatment plant History : Quantity: (1) Gardner Denver Evaluation : This blower appears newer than the other blower. Actual age is unknown. Future replacement should be anticipated. No problems reported at this time. 15 years 10 years Best Case: $2,000 Worst Case: $2,500 Estimate to replace Cost Source: Research with Plant Operator March 04,2016 Page 5 of 8

55 Client: 9621B Country Club Townhomes: Waste Plant Comp # : 2650 Blower - Replace (B) Location : Waste treatment plant History : Quantity: (1) Fuller Company Evaluation : This blower appears older and worn. Actual age is unknown. Funding is provided for future replacement. Component Association Details Reserves - 15 years 2 years Best Case: Estimate to replace $2,000 Worst Case: $2,500 Comp # : 2660 Blowers - Repair Location : Waste treatment plant History : Cost Source: Research with Plant Operator Quantity: (2) Blowers Evaluation : Each blower has a 5-HP Baldor motor that will require periodic replacement. Other repairs will likely be needed as well. This component provides an allowance for periodic repairs and motor replacement. 7 years 1 years Best Case: $1,300 Worst Case: $1,700 Allowance for repairs Higher allowance Cost Source: Research with Plant Operator March 04,2016 Page 6 of 8

56 Client: 9621B Country Club Townhomes: Waste Plant Comp # : 2670 Blower Controls - Replace Location : Waste treatment plant History : Quantity: (1) Panel Component Association Details Reserves - Evaluation : Control panel is expected to have a long life span under normal circumstances. Over time, parts will become obsolete and repairs to this panel will be difficult. It would be prudent to plan for replacement eventually. 30 years 7 years Best Case: $1,700 Worst Case: $2,300 Estimate to replace Cost Source: ARI Cost Database Comp # : 2690 Storage Tanks - Replace Quantity: Concrete Tanks Location : Waste treatment plant Funded? : No Underground tanks are concrete with no coating applied. History : Evaluation : There is no expectancy to replace or coat the concrete storage tanks. No Reserve funding required. Best Case: Cost Source: Worst Case: March 04,2016 Page 7 of 8

57 Client: 9621B Country Club Townhomes: Waste Plant Comp # : 2695 Inlet Screen - Replace Location : Underground at the concrete storage tanks History : Replaced around for ~$1,800. Quantity: (1) Screen Component Association Details Reserves - Evaluation : No access to closely inspect. Assumed to be intact and in good shape. Funding is provided for future replacement. 15 years 13 years Photo Not Available Best Case: Estimate to replace $1,700 Worst Case: $2,100 Comp # : 2750 Equipment Shelters - Repair Location : Waste treatment plant History : Cost Source: Client Cost History Quantity: Roofs, Siding, Paint Evaluation : Equipment shelters have metal roofs and wood siding. Wood surfaces appear older and weathered, with peeling paint evident. This component provides an allowance to periodically repaint the wood surfaces, repair the siding, and repair the metal roofs. 6 years 1 years Best Case: $900 Worst Case: $1,100 Allowance to repair Higher allowance Cost Source: ARI Cost Allowance March 04,2016 Page 8 of 8