Update With Site-Visit Reserve Study

Transcription

1 Washington Office Corporate Office 505 South 336 th St., Ste 620 Calabasas, CA Federal Way, WA Regional Offices TEL 253/ Phoenix, AZ FAX 253/ San Francisco, CA Denver, CO Honolulu, HI Las Vegas, NV Miami, FL Update With Site-Visit Reserve Study Markland Woods Mountlake Terrace, WA Report #: For Period Beginning: January 1, 2017 Expires: December 31, 2017 Date Prepared: August 31, 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: 253/ Relax, it s from Association Reserves WA, LLC 8/31/2016

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 Association Reserves WA, LLC 8/31/2016

4 3- Minute Executive Summary Association: Markland Woods #: Location: Mountlake Terrace, WA # of Units: 157 Report Period: January 1, 2017 through December 31, 2017 Findings/Recommendations as-of 1/1/2017: Projected Starting Reserve Balance:...$1,005,183 Current Fully Funded Reserve Balance:...$1,811,433 Average Reserve Deficit (Surplus) Per Unit:...$5, Monthly Full Funding Contributions:...$17,400 Baseline contributions (min to keep Reserves above $0:...$16,300 Recommended 2017 Special Assessment for Reserves:... $0 Most Recent Budgeted Reserve Contribution Rate:...$16,529 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 our site inspection on July 22, 2016 and meets or exceeds all requirements of the RCW. This study was prepared by a credentialed Reserve Specialist (RS ). Your Reserve Fund is currently 55% Funded. This means the association s special assessment & deferred maintenance risk is currently medium. The objective of your multi-year Funding Plan is to fund your Reserves to a level where you will enjoy a low risk of such Reserve cash flow problems. Based on this starting point, your anticipated future expenses, our recommendation is to increase your 2017 Monthly Reserve Contributions to $17,400. The 100% Full contribution rate is designed to achieve 100% funding objective by the end of our 30-year report scope. No assets appropriate for Reserve designation known to be excluded. See photo appendix for component details; the basis of our assumptions. Association Reserves WA, LLC i 8/31/2016

5 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate Site / Grounds 103 Concrete/Curb - Repair/Replace 4 2 $6, Asphalt - One-Time Repair N/A 0 $5, Asphalt (A) - Resurface $140, Asphalt (B) - Resurface 30 5 $140, Asphalt - Seal/Repair 4 2 $43, Garbage Enclosures - Replace 21 8 $26, Chain Link Fence - Replace $18, Metal Fence - Replace $24, Landscape - Partial Refurbish 3 0 $7, Irrigation System - Repair/Replace 5 0 $5, Pole Lights - Replace 35 8 $44, Catch Basin - Clean/Pump Out 5 0 $5, Trees - Remove/Trim 5 0 $10, Swales, (8) - Maintenance / Repair 10 6 $21, Mailboxes/Structure - Replace $13,300 Pool & Cabana 300 Pool Deck - Resurface 30 3 $26, Pool - Resurface 10 3 $13, Pool - Retile/Recope $8, Spa/Tile - Renovate 15 8 $7, Pool/Spa Heaters - Replace 10 0 $8, Pool Furniture - Replace 8 2 $6, Sport Court - Repair/Resurface 10 2 $5, Play Equipment - Replace 15 7 $23, Cabana Carpet - Replace 12 3 $9, Cabana Interior - Repaint 12 3 $8, Cabana Kitchen - Refurbish 20 9 $10, Cabana Bathrooms - Refurbish 20 9 $12, Cabana Furniture - Replace 12 3 $7, Cabana Rooms - Remodel 12 3 $7, Sauna Room - Refurbish 20 9 $6, Exercise Equipment-Partial Replace 5 3 $8,100 Building Exterior 500 Comp Shingle Roof - Replace $655, Gutters/Downspouts - Replace $87, Chimney Caps/Covers - Replace $83, Exterior Surfaces-Clean/Paint/Seal 7 0 $109, Siding: Vinyl - Replace 35 8 $870, Elevated Deck - Seal/Repair 5 4 $70, Wood Rail - Partial Replace 7 1 $8, Stairs - Repair/Replace 7 1 $8,100 Association Reserves WA, LLC ii 8/31/2016

6 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate 560 Exterior Lights - Replace 28 7 $19, Building/Unit Signage - Replace 21 7 $10, Carport Posts - Partial Replace (c) N/A 0 $13, Carport Posts - Partial Replace (d) N/A 1 $13, Carport Posts - Partial Replace (e) N/A 2 $13, Carport Posts - Partial Replace (f) N/A 3 $17,000 Systems 965 Fire Alarm Panels - Replace $46, Utility Vehicle - Replace 12 2 $18, Trash Compactor - Replace 15 6 $42, Trash Containers - Replace 9 0 $13, Total Funded Components Note 1: Yellow highlighted line items are expected to require attention in the initial year, Green highlighted items are expected to occur within the first five years. Note 2: a Useful Life of N/A means a one-time expense, not expected to repeat. Cross reference component numbers with photographic inventory appendix. Association Reserves WA, LLC iii 8/31/2016

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. Association Reserves WA, LLC. 1 8/31/2016

8 Assoc Which Physical Assets are Funded by Reserves? There is a national-standard four-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 WA, LLC. 2 8/31/2016

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! Association Reserves WA, LLC. 3 8/31/2016

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 Boardmembers to recommend to their association. Remember, it is the Board s job to provide for the ongoing care of the common areas. Boardmembers 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 WA, LLC. 4 8/31/2016

11 Assoc Site Inspection Notes During our site visit on July 22, 2016, we had a brief meeting with Tom Gish Jr, and Christine Ginett, and then began the limited visual review with the cabana and pool. We visually reviewed a sample of each visible component while compiling a photographic inventory, noting: current condition, make & model information where appropriate, apparent levels of care and maintenance, exposure to weather elements and other factors that may affect the components useful life. We were not able to view the pool equipment, the fire panels, or the vehicle. Association Reserves WA, LLC. 5 8/31/2016

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 $498,953. Adding the next five years, your first ten years of projected Reserve expenses are $2,413,651. 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 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $ Years Figure 1 Association Reserves WA, LLC. 6 8/31/2016

13 Assoc Reserve Fund Status The starting point for our financial analysis is your Reserve Fund balance, projected to be $1,005,183 as-of the start of your Fiscal Year on January 1, As of January 1, 2017, your Fully Funded Balance is computed to be $1,811,433 (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 55% Funded. Across the country approx 6% of associations in this range experience special assessments or deferred maintenance. Recommended Funding Plan Based on your current Percent Funded and your near-term and long-term Reserve needs, we are recommending budgeted contributions of $17,400/month this Fiscal Year. The overall 30-yr plan, in perspective, is shown below. This same information is shown numerically in both Table 5 and Table 6. Annual Reserve Funding Recommended Alternate (Minimum) Current Budget $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Years Figure 2 Association Reserves WA, LLC. 7 8/31/2016

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. $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, 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 WA, LLC. 8 8/31/2016

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. Association Reserves WA, LLC. 9 8/31/2016

16 Table 2: Reserve Component List Detail Rem. Useful Useful [ --- Current Cost Estimate --- ] # Component Quantity Life Life Best Case Worst Case Site / Grounds 103 Concrete/Curb - Repair/Replace Extensive square feet 4 2 $5,200 $7, Asphalt - One-Time Repair ~ 132,000 square ft N/A 0 $5,200 $6, Asphalt (A) - Resurface ~1/2 of 128,000 square ft $130,000 $150, Asphalt (B) - Resurface ~1/2 of 128,000 square ft 30 5 $130,000 $150, Asphalt - Seal/Repair ~ 128,000 square feet 4 2 $39,000 $48, Garbage Enclosures - Replace (8) assorted 21 8 $22,000 $30, Chain Link Fence - Replace ~ 1,000 linear feet $16,000 $21, Metal Fence - Replace ~ 340 linear feet $21,000 $28, Landscape - Partial Refurbish Extensive landscaping 3 0 $5,200 $10, Irrigation System - Repair/Replace Extensive systems 5 0 $4,100 $6, Pole Lights - Replace (69) metal, assorted 35 8 $39,000 $49, Catch Basin - Clean/Pump Out Extensive quantity 5 0 $4,100 $6, Trees - Remove/Trim Extensive quantity 5 0 $8,200 $12, Swales, (8) - Maintenance / Repair Extensive square feet 10 6 $19,000 $23, Mailboxes/Structure - Replace ~ (170) boxes $9,600 $17,000 Pool & Cabana 300 Pool Deck - Resurface ~ 2,200 square feet 30 3 $21,000 $31, Pool - Resurface ~ 1,000 SF surface 10 3 $11,000 $15, Pool - Retile/Recope ~ 140 linear feet $7,200 $10, Spa/Tile - Renovate (1) 8' diameter 15 8 $6,200 $8, Pool/Spa Heaters - Replace (2) Laars, assorted BTU 10 0 $7,000 $9, Pool Furniture - Replace Extensive quantity 8 2 $4,100 $8, Sport Court - Repair/Resurface ~ 2,100 square feet 10 2 $4,900 $5, Play Equipment - Replace (1) metal/vinyl 15 7 $21,000 $26, Cabana Carpet - Replace ~ 170 square yards 12 3 $8,500 $10, Cabana Interior - Repaint ~ 6,200 square feet 12 3 $7,700 $9, Cabana Kitchen - Refurbish (1) 9'x12' 20 9 $8,200 $12, Cabana Bathrooms - Refurbish (2) 200 square feet 20 9 $10,000 $14, Cabana Furniture - Replace Extensive quantity 12 3 $5,200 $10, Cabana Rooms - Remodel Extensive square feet 12 3 $5,200 $10, Sauna Room - Refurbish (1) 6'x10' 20 9 $5,700 $6, Exercise Equipment-Partial Replace (7) individual 5 3 $6,200 $10,000 Building Exterior 500 Comp Shingle Roof - Replace ~ 165,000 square feet $640,000 $670, Gutters/Downspouts - Replace ~ 14,500 linear feet $75,000 $100, Chimney Caps/Covers - Replace ~ (157) caps, (62) covers $67,000 $100, Exterior Surfaces-Clean/Paint/Seal ~ 143,000 GSF 7 0 $100,000 $118, Siding: Vinyl - Replace ~ 143,000 GSF 35 8 $740,000 $1,000, Elevated Deck - Seal/Repair ~ 14,000 square feet 5 4 $56,000 $84,000 Association Reserves WA, LLC. 10 8/31/2016

17 Table 2: Reserve Component List Detail Rem. Useful Useful [ --- Current Cost Estimate --- ] # Component Quantity Life Life Best Case Worst Case 550 Wood Rail - Partial Replace ~ 4,500 linear feet 7 1 $6,200 $10, Stairs - Repair/Replace (49) sets 7 1 $6,200 $10, Exterior Lights - Replace ~ (300) assorted 28 7 $15,000 $23, Building/Unit Signage - Replace (19) bldgs, (157) units 21 7 $7,100 $14, Carport Posts - Partial Replace (c) ~ (15), wood N/A 0 $12,000 $15, Carport Posts - Partial Replace (d) ~ (15), wood N/A 1 $12,000 $15, Carport Posts - Partial Replace (e) ~ (15), wood N/A 2 $12,000 $15, Carport Posts - Partial Replace (f) ~ (18), wood N/A 3 $15,000 $19,000 Systems 965 Fire Alarm Panels - Replace (20) Fire Lite $41,000 $52, Utility Vehicle - Replace (1) 2006 Ford P/U 12 2 $15,000 $21, Trash Compactor - Replace (1) Ramjet RJ $40,000 $44, Trash Containers - Replace (11) metal, 2 cubic yard 9 0 $12,000 $14, Total Funded Components Association Reserves WA, LLC. 11 8/31/2016

18 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance Site / Grounds 103 Concrete/Curb - Repair/Replace $6,200 X 2 / 4 = $3, Asphalt - One-Time Repair $5,700 X 0 / 0 = $5, Asphalt (A) - Resurface $140,000 X 2 / 30 = $9, Asphalt (B) - Resurface $140,000 X 25 / 30 = $116, Asphalt - Seal/Repair $43,500 X 2 / 4 = $21, Garbage Enclosures - Replace $26,000 X 13 / 21 = $16, Chain Link Fence - Replace $18,500 X 13 / 35 = $6, Metal Fence - Replace $24,500 X 27 / 40 = $16, Landscape - Partial Refurbish $7,600 X 3 / 3 = $7, Irrigation System - Repair/Replace $5,150 X 5 / 5 = $5, Pole Lights - Replace $44,000 X 27 / 35 = $33, Catch Basin - Clean/Pump Out $5,150 X 5 / 5 = $5, Trees - Remove/Trim $10,100 X 5 / 5 = $10, Swales, (8) - Maintenance / Repair $21,000 X 4 / 10 = $8, Mailboxes/Structure - Replace $13,300 X 6 / 28 = $2,850 Pool & Cabana 300 Pool Deck - Resurface $26,000 X 27 / 30 = $23, Pool - Resurface $13,000 X 7 / 10 = $9, Pool - Retile/Recope $8,600 X 7 / 20 = $3, Spa/Tile - Renovate $7,200 X 7 / 15 = $3, Pool/Spa Heaters - Replace $8,000 X 10 / 10 = $8, Pool Furniture - Replace $6,150 X 6 / 8 = $4, Sport Court - Repair/Resurface $5,200 X 8 / 10 = $4, Play Equipment - Replace $23,500 X 8 / 15 = $12, Cabana Carpet - Replace $9,250 X 9 / 12 = $6, Cabana Interior - Repaint $8,350 X 9 / 12 = $6, Cabana Kitchen - Refurbish $10,100 X 11 / 20 = $5, Cabana Bathrooms - Refurbish $12,000 X 11 / 20 = $6, Cabana Furniture - Replace $7,600 X 9 / 12 = $5, Cabana Rooms - Remodel $7,600 X 9 / 12 = $5, Sauna Room - Refurbish $6,200 X 11 / 20 = $3, Exercise Equipment-Partial Replace $8,100 X 2 / 5 = $3,240 Building Exterior 500 Comp Shingle Roof - Replace $655,000 X 15 / 25 = $393, Gutters/Downspouts - Replace $87,500 X 15 / 25 = $52, Chimney Caps/Covers - Replace $83,500 X 25 / 35 = $59, Exterior Surfaces-Clean/Paint/Seal $109,000 X 7 / 7 = $109, Siding: Vinyl - Replace $870,000 X 27 / 35 = $671, Elevated Deck - Seal/Repair $70,000 X 1 / 5 = $14,000 Association Reserves WA, LLC. 12 8/31/2016

19 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance 550 Wood Rail - Partial Replace $8,100 X 6 / 7 = $6, Stairs - Repair/Replace $8,100 X 6 / 7 = $6, Exterior Lights - Replace $19,000 X 21 / 28 = $14, Building/Unit Signage - Replace $10,550 X 14 / 21 = $7, Carport Posts - Partial Replace (c) $13,500 X 0 / 0 = $13, Carport Posts - Partial Replace (d) $13,500 X 0 / 0 = $6, Carport Posts - Partial Replace (e) $13,500 X 0 / 0 = $4, Carport Posts - Partial Replace (f) $17,000 X 0 / 0 = $4,250 Systems 965 Fire Alarm Panels - Replace $46,500 X 6 / 20 = $13, Utility Vehicle - Replace $18,000 X 10 / 12 = $15, Trash Compactor - Replace $42,000 X 9 / 15 = $25, Trash Containers - Replace $13,000 X 9 / 9 = $13,000 $1,811,433 Association Reserves WA, LLC. 13 8/31/2016

20 Table 4: Component Significance Current Useful Cost Deterioration Deterioration # Component Life Estimate Cost/yr Significance Site / Grounds 103 Concrete/Curb - Repair/Replace 4 $6,200 $1, % 119 Asphalt - One-Time Repair N/A $5,700 $0 0.0% 120 Asphalt (A) - Resurface 30 $140,000 $4, % 121 Asphalt (B) - Resurface 30 $140,000 $4, % 122 Asphalt - Seal/Repair 4 $43,500 $10, % 147 Garbage Enclosures - Replace 21 $26,000 $1, % 155 Chain Link Fence - Replace 35 $18,500 $ % 160 Metal Fence - Replace 40 $24,500 $ % 170 Landscape - Partial Refurbish 3 $7,600 $2, % 175 Irrigation System - Repair/Replace 5 $5,150 $1, % 180 Pole Lights - Replace 35 $44,000 $1, % 184 Catch Basin - Clean/Pump Out 5 $5,150 $1, % 186 Trees - Remove/Trim 5 $10,100 $2, % 190 Swales, (8) - Maintenance / Repair 10 $21,000 $2, % 205 Mailboxes/Structure - Replace 28 $13,300 $ % Pool & Cabana 300 Pool Deck - Resurface 30 $26,000 $ % 302 Pool - Resurface 10 $13,000 $1, % 304 Pool - Retile/Recope 20 $8,600 $ % 305 Spa/Tile - Renovate 15 $7,200 $ % 308 Pool/Spa Heaters - Replace 10 $8,000 $ % 314 Pool Furniture - Replace 8 $6,150 $ % 320 Sport Court - Repair/Resurface 10 $5,200 $ % 340 Play Equipment - Replace 15 $23,500 $1, % 430 Cabana Carpet - Replace 12 $9,250 $ % 434 Cabana Interior - Repaint 12 $8,350 $ % 436 Cabana Kitchen - Refurbish 20 $10,100 $ % 440 Cabana Bathrooms - Refurbish 20 $12,000 $ % 454 Cabana Furniture - Replace 12 $7,600 $ % 458 Cabana Rooms - Remodel 12 $7,600 $ % 460 Sauna Room - Refurbish 20 $6,200 $ % 464 Exercise Equipment-Partial Replace 5 $8,100 $1, % Building Exterior 500 Comp Shingle Roof - Replace 25 $655,000 $26, % 510 Gutters/Downspouts - Replace 25 $87,500 $3, % 514 Chimney Caps/Covers - Replace 35 $83,500 $2, % 525 Exterior Surfaces-Clean/Paint/Seal 7 $109,000 $15, % 530 Siding: Vinyl - Replace 35 $870,000 $24, % 540 Elevated Deck - Seal/Repair 5 $70,000 $14, % Association Reserves WA, LLC. 14 8/31/2016

21 Table 4: Component Significance Current Useful Cost Deterioration Deterioration # Component Life Estimate Cost/yr Significance 550 Wood Rail - Partial Replace 7 $8,100 $1, % 555 Stairs - Repair/Replace 7 $8,100 $1, % 560 Exterior Lights - Replace 28 $19,000 $ % 564 Building/Unit Signage - Replace 21 $10,550 $ % 608 Carport Posts - Partial Replace (c) N/A $13,500 $0 0.0% 608 Carport Posts - Partial Replace (d) N/A $13,500 $0 0.0% 608 Carport Posts - Partial Replace (e) N/A $13,500 $0 0.0% 608 Carport Posts - Partial Replace (f) N/A $17,000 $0 0.0% Systems 965 Fire Alarm Panels - Replace 20 $46,500 $2, % 985 Utility Vehicle - Replace 12 $18,000 $1, % 990 Trash Compactor - Replace 15 $42,000 $2, % 992 Trash Containers - Replace 9 $13,000 $1, % 49 Total Funded Components $145, % Association Reserves WA, LLC. 15 8/31/2016

22 Table 5: 30-Year Reserve Plan Summary Fiscal Year Start: 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 $1,005,183 $1,811, % Med $208,800 $0 $10,257 $177, $1,047,040 $1,843, % Med $215,064 $0 $11,445 $30, $1,242,958 $2,031, % Med $221,516 $0 $13,106 $98, $1,379,394 $2,159, % Med $228,161 $0 $14,430 $114, $1,507,795 $2,269, % Med $235,006 $0 $15,932 $78, $1,679,947 $2,424, % Med $242,056 $0 $17,159 $185, $1,753,215 $2,479, % Low $249,318 $0 $18,144 $143, $1,877,032 $2,584, % Low $256,798 $0 $19,145 $199, $1,953,674 $2,640, % Low $264,502 $0 $14,774 $1,230, $1,002,282 $1,641, % Med $272,437 $0 $10,658 $155, $1,130,239 $1,726, % Med $280,610 $0 $6,619 $1,223, $194,168 $718, % High $289,028 $0 $3,402 $ $486,599 $947, % Med $297,699 $0 $6,292 $18, $772,340 $1,170, % Med $303,653 $0 $8,884 $79, $1,005,282 $1,342, % Low $309,726 $0 $9,427 $443, $880,944 $1,152, % Low $315,920 $0 $9,834 $119, $1,086,735 $1,296, % Low $322,239 $0 $12,367 $33, $1,387,642 $1,540, % Low $328,684 $0 $15,591 $ $1,731,917 $1,834, % Low $335,257 $0 $18,360 $143, $1,941,593 $1,995, % Low $341,962 $0 $20,606 $122, $2,181,416 $2,190, % Low $348,802 $0 $23,409 $51, $2,502,333 $2,473, % Low $355,778 $0 $25,443 $295, $2,588,512 $2,522, % Low $362,893 $0 $26,610 $242, $2,735,820 $2,635, % Low $362,893 $0 $29,026 $55, $3,071,887 $2,951, % Low $362,893 $0 $31,891 $157, $3,308,926 $3,181, % Low $362,893 $0 $34,850 $42, $3,663,956 $3,546, % Low $362,893 $0 $37,603 $204, $3,859,899 $3,764, % Low $362,893 $0 $40,003 $118, $4,144,179 $4,087, % Low $362,893 $0 $40,379 $612, $3,935,088 $3,921, % Low $362,893 $0 $39,691 $331,097 Association Reserves WA, LLC. 16 8/31/2016

23 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Starting Reserve Balance $1,005,183 $1,047,040 $1,242,958 $1,379,394 $1,507,795 Annual Reserve Contribution $208,800 $215,064 $221,516 $228,161 $235,006 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $10,257 $11,445 $13,106 $14,430 $15,932 Total Income $1,224,240 $1,273,549 $1,477,580 $1,621,985 $1,758,733 # Component Site / Grounds 103 Concrete/Curb - Repair/Replace $0 $0 $6,578 $0 $0 119 Asphalt - One-Time Repair $5,700 $0 $0 $0 $0 120 Asphalt (A) - Resurface $0 $0 $0 $0 $0 121 Asphalt (B) - Resurface $0 $0 $0 $0 $0 122 Asphalt - Seal/Repair $0 $0 $46,149 $0 $0 147 Garbage Enclosures - Replace $0 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 160 Metal Fence - Replace $0 $0 $0 $0 $0 170 Landscape - Partial Refurbish $7,600 $0 $0 $8,305 $0 175 Irrigation System - Repair/Replace $5,150 $0 $0 $0 $0 180 Pole Lights - Replace $0 $0 $0 $0 $0 184 Catch Basin - Clean/Pump Out $5,150 $0 $0 $0 $0 186 Trees - Remove/Trim $10,100 $0 $0 $0 $0 190 Swales, (8) - Maintenance / Repair $0 $0 $0 $0 $0 205 Mailboxes/Structure - Replace $0 $0 $0 $0 $0 Pool & Cabana 300 Pool Deck - Resurface $0 $0 $0 $28,411 $0 302 Pool - Resurface $0 $0 $0 $14,205 $0 304 Pool - Retile/Recope $0 $0 $0 $0 $0 305 Spa/Tile - Renovate $0 $0 $0 $0 $0 308 Pool/Spa Heaters - Replace $8,000 $0 $0 $0 $0 314 Pool Furniture - Replace $0 $0 $6,525 $0 $0 320 Sport Court - Repair/Resurface $0 $0 $5,517 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 430 Cabana Carpet - Replace $0 $0 $0 $10,108 $0 434 Cabana Interior - Repaint $0 $0 $0 $9,124 $0 436 Cabana Kitchen - Refurbish $0 $0 $0 $0 $0 440 Cabana Bathrooms - Refurbish $0 $0 $0 $0 $0 454 Cabana Furniture - Replace $0 $0 $0 $8,305 $0 458 Cabana Rooms - Remodel $0 $0 $0 $8,305 $0 460 Sauna Room - Refurbish $0 $0 $0 $0 $0 464 Exercise Equipment-Partial Replace $0 $0 $0 $8,851 $0 Building Exterior 500 Comp Shingle Roof - Replace $0 $0 $0 $0 $0 Association Reserves WA, LLC. 17 8/31/2016

24 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Gutters/Downspouts - Replace $0 $0 $0 $0 $0 514 Chimney Caps/Covers - Replace $0 $0 $0 $0 $0 525 Exterior Surfaces-Clean/Paint/Seal $109,000 $0 $0 $0 $0 530 Siding: Vinyl - Replace $0 $0 $0 $0 $0 540 Elevated Deck - Seal/Repair $0 $0 $0 $0 $78, Wood Rail - Partial Replace $0 $8,343 $0 $0 $0 555 Stairs - Repair/Replace $0 $8,343 $0 $0 $0 560 Exterior Lights - Replace $0 $0 $0 $0 $0 564 Building/Unit Signage - Replace $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (c) $13,500 $0 $0 $0 $0 608 Carport Posts - Partial Replace (d) $0 $13,905 $0 $0 $0 608 Carport Posts - Partial Replace (e) $0 $0 $14,322 $0 $0 608 Carport Posts - Partial Replace (f) $0 $0 $0 $18,576 $0 Systems 965 Fire Alarm Panels - Replace $0 $0 $0 $0 $0 985 Utility Vehicle - Replace $0 $0 $19,096 $0 $0 990 Trash Compactor - Replace $0 $0 $0 $0 $0 992 Trash Containers - Replace $13,000 $0 $0 $0 $0 Total Expenses $177,200 $30,591 $98,186 $114,190 $78,786 Ending Reserve Balance: $1,047,040 $1,242,958 $1,379,394 $1,507,795 $1,679,947 Association Reserves WA, LLC. 18 8/31/2016

25 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Starting Reserve Balance $1,679,947 $1,753,215 $1,877,032 $1,953,674 $1,002,282 Annual Reserve Contribution $242,056 $249,318 $256,798 $264,502 $272,437 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $17,159 $18,144 $19,145 $14,774 $10,658 Total Income $1,939,162 $2,020,677 $2,152,975 $2,232,949 $1,285,377 # Component Site / Grounds 103 Concrete/Curb - Repair/Replace $0 $7,403 $0 $0 $0 119 Asphalt - One-Time Repair $0 $0 $0 $0 $0 120 Asphalt (A) - Resurface $0 $0 $0 $0 $0 121 Asphalt (B) - Resurface $162,298 $0 $0 $0 $0 122 Asphalt - Seal/Repair $0 $51,941 $0 $0 $0 147 Garbage Enclosures - Replace $0 $0 $0 $32,936 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 160 Metal Fence - Replace $0 $0 $0 $0 $0 170 Landscape - Partial Refurbish $0 $9,075 $0 $0 $9, Irrigation System - Repair/Replace $5,970 $0 $0 $0 $0 180 Pole Lights - Replace $0 $0 $0 $55,738 $0 184 Catch Basin - Clean/Pump Out $5,970 $0 $0 $0 $0 186 Trees - Remove/Trim $11,709 $0 $0 $0 $0 190 Swales, (8) - Maintenance / Repair $0 $25,075 $0 $0 $0 205 Mailboxes/Structure - Replace $0 $0 $0 $0 $0 Pool & Cabana 300 Pool Deck - Resurface $0 $0 $0 $0 $0 302 Pool - Resurface $0 $0 $0 $0 $0 304 Pool - Retile/Recope $0 $0 $0 $0 $0 305 Spa/Tile - Renovate $0 $0 $0 $9,121 $0 308 Pool/Spa Heaters - Replace $0 $0 $0 $0 $0 314 Pool Furniture - Replace $0 $0 $0 $0 $0 320 Sport Court - Repair/Resurface $0 $0 $0 $0 $0 340 Play Equipment - Replace $0 $0 $28,902 $0 $0 430 Cabana Carpet - Replace $0 $0 $0 $0 $0 434 Cabana Interior - Repaint $0 $0 $0 $0 $0 436 Cabana Kitchen - Refurbish $0 $0 $0 $0 $13, Cabana Bathrooms - Refurbish $0 $0 $0 $0 $15, Cabana Furniture - Replace $0 $0 $0 $0 $0 458 Cabana Rooms - Remodel $0 $0 $0 $0 $0 460 Sauna Room - Refurbish $0 $0 $0 $0 $8, Exercise Equipment-Partial Replace $0 $0 $0 $10,261 $0 Building Exterior 500 Comp Shingle Roof - Replace $0 $0 $0 $0 $0 Association Reserves WA, LLC. 19 8/31/2016

26 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Gutters/Downspouts - Replace $0 $0 $0 $0 $0 514 Chimney Caps/Covers - Replace $0 $0 $0 $0 $0 525 Exterior Surfaces-Clean/Paint/Seal $0 $0 $134,056 $0 $0 530 Siding: Vinyl - Replace $0 $0 $0 $1,102,090 $0 540 Elevated Deck - Seal/Repair $0 $0 $0 $0 $91, Wood Rail - Partial Replace $0 $0 $0 $10,261 $0 555 Stairs - Repair/Replace $0 $0 $0 $10,261 $0 560 Exterior Lights - Replace $0 $0 $23,368 $0 $0 564 Building/Unit Signage - Replace $0 $0 $12,975 $0 $0 608 Carport Posts - Partial Replace (c) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (d) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (e) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (f) $0 $0 $0 $0 $0 Systems 965 Fire Alarm Panels - Replace $0 $0 $0 $0 $0 985 Utility Vehicle - Replace $0 $0 $0 $0 $0 990 Trash Compactor - Replace $0 $50,150 $0 $0 $0 992 Trash Containers - Replace $0 $0 $0 $0 $16,962 Total Expenses $185,948 $143,644 $199,301 $1,230,667 $155,138 Ending Reserve Balance: $1,753,215 $1,877,032 $1,953,674 $1,002,282 $1,130,239 Association Reserves WA, LLC. 20 8/31/2016

27 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Starting Reserve Balance $1,130,239 $194,168 $486,599 $772,340 $1,005,282 Annual Reserve Contribution $280,610 $289,028 $297,699 $303,653 $309,726 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $6,619 $3,402 $6,292 $8,884 $9,427 Total Income $1,417,468 $486,599 $790,590 $1,084,877 $1,324,436 # Component Site / Grounds 103 Concrete/Curb - Repair/Replace $8,332 $0 $0 $0 $9, Asphalt - One-Time Repair $0 $0 $0 $0 $0 120 Asphalt (A) - Resurface $0 $0 $0 $0 $0 121 Asphalt (B) - Resurface $0 $0 $0 $0 $0 122 Asphalt - Seal/Repair $58,460 $0 $0 $0 $65, Garbage Enclosures - Replace $0 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 160 Metal Fence - Replace $0 $0 $0 $35,979 $0 170 Landscape - Partial Refurbish $0 $0 $10,836 $0 $0 175 Irrigation System - Repair/Replace $6,921 $0 $0 $0 $0 180 Pole Lights - Replace $0 $0 $0 $0 $0 184 Catch Basin - Clean/Pump Out $6,921 $0 $0 $0 $0 186 Trees - Remove/Trim $13,574 $0 $0 $0 $0 190 Swales, (8) - Maintenance / Repair $0 $0 $0 $0 $0 205 Mailboxes/Structure - Replace $0 $0 $0 $0 $0 Pool & Cabana 300 Pool Deck - Resurface $0 $0 $0 $0 $0 302 Pool - Resurface $0 $0 $0 $19,091 $0 304 Pool - Retile/Recope $0 $0 $0 $12,629 $0 305 Spa/Tile - Renovate $0 $0 $0 $0 $0 308 Pool/Spa Heaters - Replace $10,751 $0 $0 $0 $0 314 Pool Furniture - Replace $8,265 $0 $0 $0 $0 320 Sport Court - Repair/Resurface $0 $0 $7,414 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 430 Cabana Carpet - Replace $0 $0 $0 $0 $0 434 Cabana Interior - Repaint $0 $0 $0 $0 $0 436 Cabana Kitchen - Refurbish $0 $0 $0 $0 $0 440 Cabana Bathrooms - Refurbish $0 $0 $0 $0 $0 454 Cabana Furniture - Replace $0 $0 $0 $0 $0 458 Cabana Rooms - Remodel $0 $0 $0 $0 $0 460 Sauna Room - Refurbish $0 $0 $0 $0 $0 464 Exercise Equipment-Partial Replace $0 $0 $0 $11,895 $0 Building Exterior 500 Comp Shingle Roof - Replace $880,265 $0 $0 $0 $0 Association Reserves WA, LLC. 21 8/31/2016

28 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Gutters/Downspouts - Replace $117,593 $0 $0 $0 $0 514 Chimney Caps/Covers - Replace $112,217 $0 $0 $0 $0 525 Exterior Surfaces-Clean/Paint/Seal $0 $0 $0 $0 $164, Siding: Vinyl - Replace $0 $0 $0 $0 $0 540 Elevated Deck - Seal/Repair $0 $0 $0 $0 $105, Wood Rail - Partial Replace $0 $0 $0 $0 $0 555 Stairs - Repair/Replace $0 $0 $0 $0 $0 560 Exterior Lights - Replace $0 $0 $0 $0 $0 564 Building/Unit Signage - Replace $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (c) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (d) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (e) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (f) $0 $0 $0 $0 $0 Systems 965 Fire Alarm Panels - Replace $0 $0 $0 $0 $70, Utility Vehicle - Replace $0 $0 $0 $0 $27, Trash Compactor - Replace $0 $0 $0 $0 $0 992 Trash Containers - Replace $0 $0 $0 $0 $0 Total Expenses $1,223,300 $0 $18,250 $79,595 $443,491 Ending Reserve Balance: $194,168 $486,599 $772,340 $1,005,282 $880,944 Association Reserves WA, LLC. 22 8/31/2016

29 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Starting Reserve Balance $880,944 $1,086,735 $1,387,642 $1,731,917 $1,941,593 Annual Reserve Contribution $315,920 $322,239 $328,684 $335,257 $341,962 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $9,834 $12,367 $15,591 $18,360 $20,606 Total Income $1,206,699 $1,421,341 $1,731,917 $2,085,534 $2,304,162 # Component Site / Grounds 103 Concrete/Curb - Repair/Replace $0 $0 $0 $10,555 $0 119 Asphalt - One-Time Repair $0 $0 $0 $0 $0 120 Asphalt (A) - Resurface $0 $0 $0 $0 $0 121 Asphalt (B) - Resurface $0 $0 $0 $0 $0 122 Asphalt - Seal/Repair $0 $0 $0 $74,056 $0 147 Garbage Enclosures - Replace $0 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 160 Metal Fence - Replace $0 $0 $0 $0 $0 170 Landscape - Partial Refurbish $11,841 $0 $0 $12,938 $0 175 Irrigation System - Repair/Replace $8,024 $0 $0 $0 $0 180 Pole Lights - Replace $0 $0 $0 $0 $0 184 Catch Basin - Clean/Pump Out $8,024 $0 $0 $0 $0 186 Trees - Remove/Trim $15,735 $0 $0 $0 $0 190 Swales, (8) - Maintenance / Repair $0 $33,699 $0 $0 $0 205 Mailboxes/Structure - Replace $0 $0 $0 $0 $0 Pool & Cabana 300 Pool Deck - Resurface $0 $0 $0 $0 $0 302 Pool - Resurface $0 $0 $0 $0 $0 304 Pool - Retile/Recope $0 $0 $0 $0 $0 305 Spa/Tile - Renovate $0 $0 $0 $0 $0 308 Pool/Spa Heaters - Replace $0 $0 $0 $0 $0 314 Pool Furniture - Replace $0 $0 $0 $10,470 $0 320 Sport Court - Repair/Resurface $0 $0 $0 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 430 Cabana Carpet - Replace $14,411 $0 $0 $0 $0 434 Cabana Interior - Repaint $13,009 $0 $0 $0 $0 436 Cabana Kitchen - Refurbish $0 $0 $0 $0 $0 440 Cabana Bathrooms - Refurbish $0 $0 $0 $0 $0 454 Cabana Furniture - Replace $11,841 $0 $0 $0 $0 458 Cabana Rooms - Remodel $11,841 $0 $0 $0 $0 460 Sauna Room - Refurbish $0 $0 $0 $0 $0 464 Exercise Equipment-Partial Replace $0 $0 $0 $13,790 $0 Building Exterior 500 Comp Shingle Roof - Replace $0 $0 $0 $0 $0 Association Reserves WA, LLC. 23 8/31/2016

30 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Gutters/Downspouts - Replace $0 $0 $0 $0 $0 514 Chimney Caps/Covers - Replace $0 $0 $0 $0 $0 525 Exterior Surfaces-Clean/Paint/Seal $0 $0 $0 $0 $0 530 Siding: Vinyl - Replace $0 $0 $0 $0 $0 540 Elevated Deck - Seal/Repair $0 $0 $0 $0 $122, Wood Rail - Partial Replace $12,620 $0 $0 $0 $0 555 Stairs - Repair/Replace $12,620 $0 $0 $0 $0 560 Exterior Lights - Replace $0 $0 $0 $0 $0 564 Building/Unit Signage - Replace $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (c) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (d) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (e) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (f) $0 $0 $0 $0 $0 Systems 965 Fire Alarm Panels - Replace $0 $0 $0 $0 $0 985 Utility Vehicle - Replace $0 $0 $0 $0 $0 990 Trash Compactor - Replace $0 $0 $0 $0 $0 992 Trash Containers - Replace $0 $0 $0 $22,132 $0 Total Expenses $119,963 $33,699 $0 $143,941 $122,745 Ending Reserve Balance: $1,086,735 $1,387,642 $1,731,917 $1,941,593 $2,181,416 Association Reserves WA, LLC. 24 8/31/2016

31 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Starting Reserve Balance $2,181,416 $2,502,333 $2,588,512 $2,735,820 $3,071,887 Annual Reserve Contribution $348,802 $355,778 $362,893 $362,893 $362,893 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $23,409 $25,443 $26,610 $29,026 $31,891 Total Income $2,553,627 $2,883,554 $2,978,015 $3,127,739 $3,466,671 # Component Site / Grounds 103 Concrete/Curb - Repair/Replace $0 $0 $11,880 $0 $0 119 Asphalt - One-Time Repair $0 $0 $0 $0 $0 120 Asphalt (A) - Resurface $0 $0 $0 $0 $0 121 Asphalt (B) - Resurface $0 $0 $0 $0 $0 122 Asphalt - Seal/Repair $0 $0 $83,350 $0 $0 147 Garbage Enclosures - Replace $0 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $35,448 $0 $0 160 Metal Fence - Replace $0 $0 $0 $0 $0 170 Landscape - Partial Refurbish $0 $14,138 $0 $0 $15, Irrigation System - Repair/Replace $9,301 $0 $0 $0 $0 180 Pole Lights - Replace $0 $0 $0 $0 $0 184 Catch Basin - Clean/Pump Out $9,301 $0 $0 $0 $0 186 Trees - Remove/Trim $18,242 $0 $0 $0 $0 190 Swales, (8) - Maintenance / Repair $0 $0 $0 $0 $0 205 Mailboxes/Structure - Replace $0 $0 $25,484 $0 $0 Pool & Cabana 300 Pool Deck - Resurface $0 $0 $0 $0 $0 302 Pool - Resurface $0 $0 $0 $25,657 $0 304 Pool - Retile/Recope $0 $0 $0 $0 $0 305 Spa/Tile - Renovate $0 $0 $0 $14,210 $0 308 Pool/Spa Heaters - Replace $14,449 $0 $0 $0 $0 314 Pool Furniture - Replace $0 $0 $0 $0 $0 320 Sport Court - Repair/Resurface $0 $0 $9,964 $0 $0 340 Play Equipment - Replace $0 $0 $45,028 $0 $0 430 Cabana Carpet - Replace $0 $0 $0 $0 $0 434 Cabana Interior - Repaint $0 $0 $0 $0 $0 436 Cabana Kitchen - Refurbish $0 $0 $0 $0 $0 440 Cabana Bathrooms - Refurbish $0 $0 $0 $0 $0 454 Cabana Furniture - Replace $0 $0 $0 $0 $0 458 Cabana Rooms - Remodel $0 $0 $0 $0 $0 460 Sauna Room - Refurbish $0 $0 $0 $0 $0 464 Exercise Equipment-Partial Replace $0 $0 $0 $15,986 $0 Building Exterior 500 Comp Shingle Roof - Replace $0 $0 $0 $0 $0 Association Reserves WA, LLC. 25 8/31/2016

32 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Gutters/Downspouts - Replace $0 $0 $0 $0 $0 514 Chimney Caps/Covers - Replace $0 $0 $0 $0 $0 525 Exterior Surfaces-Clean/Paint/Seal $0 $202,772 $0 $0 $0 530 Siding: Vinyl - Replace $0 $0 $0 $0 $0 540 Elevated Deck - Seal/Repair $0 $0 $0 $0 $142, Wood Rail - Partial Replace $0 $0 $15,520 $0 $0 555 Stairs - Repair/Replace $0 $0 $15,520 $0 $0 560 Exterior Lights - Replace $0 $0 $0 $0 $0 564 Building/Unit Signage - Replace $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (c) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (d) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (e) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (f) $0 $0 $0 $0 $0 Systems 965 Fire Alarm Panels - Replace $0 $0 $0 $0 $0 985 Utility Vehicle - Replace $0 $0 $0 $0 $0 990 Trash Compactor - Replace $0 $78,132 $0 $0 $0 992 Trash Containers - Replace $0 $0 $0 $0 $0 Total Expenses $51,294 $295,043 $242,195 $55,852 $157,745 Ending Reserve Balance: $2,502,333 $2,588,512 $2,735,820 $3,071,887 $3,308,926 Association Reserves WA, LLC. 26 8/31/2016

33 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Starting Reserve Balance $3,308,926 $3,663,956 $3,859,899 $4,144,179 $3,935,088 Annual Reserve Contribution $362,893 $362,893 $362,893 $362,893 $362,893 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $34,850 $37,603 $40,003 $40,379 $39,691 Total Income $3,706,669 $4,064,452 $4,262,796 $4,547,452 $4,337,673 # Component Site / Grounds 103 Concrete/Curb - Repair/Replace $0 $13,371 $0 $0 $0 119 Asphalt - One-Time Repair $0 $0 $0 $0 $0 120 Asphalt (A) - Resurface $0 $0 $0 $320,310 $0 121 Asphalt (B) - Resurface $0 $0 $0 $0 $0 122 Asphalt - Seal/Repair $0 $93,812 $0 $0 $0 147 Garbage Enclosures - Replace $0 $0 $0 $0 $61, Chain Link Fence - Replace $0 $0 $0 $0 $0 160 Metal Fence - Replace $0 $0 $0 $0 $0 170 Landscape - Partial Refurbish $0 $0 $16,882 $0 $0 175 Irrigation System - Repair/Replace $10,783 $0 $0 $0 $0 180 Pole Lights - Replace $0 $0 $0 $0 $0 184 Catch Basin - Clean/Pump Out $10,783 $0 $0 $0 $0 186 Trees - Remove/Trim $21,147 $0 $0 $0 $0 190 Swales, (8) - Maintenance / Repair $0 $45,288 $0 $0 $0 205 Mailboxes/Structure - Replace $0 $0 $0 $0 $0 Pool & Cabana 300 Pool Deck - Resurface $0 $0 $0 $0 $0 302 Pool - Resurface $0 $0 $0 $0 $0 304 Pool - Retile/Recope $0 $0 $0 $0 $0 305 Spa/Tile - Renovate $0 $0 $0 $0 $0 308 Pool/Spa Heaters - Replace $0 $0 $0 $0 $0 314 Pool Furniture - Replace $0 $13,263 $0 $0 $0 320 Sport Court - Repair/Resurface $0 $0 $0 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 430 Cabana Carpet - Replace $0 $0 $20,547 $0 $0 434 Cabana Interior - Repaint $0 $0 $18,548 $0 $0 436 Cabana Kitchen - Refurbish $0 $0 $0 $0 $23, Cabana Bathrooms - Refurbish $0 $0 $0 $0 $28, Cabana Furniture - Replace $0 $0 $16,882 $0 $0 458 Cabana Rooms - Remodel $0 $0 $16,882 $0 $0 460 Sauna Room - Refurbish $0 $0 $0 $0 $14, Exercise Equipment-Partial Replace $0 $0 $0 $18,532 $0 Building Exterior 500 Comp Shingle Roof - Replace $0 $0 $0 $0 $0 Association Reserves WA, LLC. 27 8/31/2016

34 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Gutters/Downspouts - Replace $0 $0 $0 $0 $0 514 Chimney Caps/Covers - Replace $0 $0 $0 $0 $0 525 Exterior Surfaces-Clean/Paint/Seal $0 $0 $0 $249,384 $0 530 Siding: Vinyl - Replace $0 $0 $0 $0 $0 540 Elevated Deck - Seal/Repair $0 $0 $0 $0 $164, Wood Rail - Partial Replace $0 $0 $0 $0 $19, Stairs - Repair/Replace $0 $0 $0 $0 $19, Exterior Lights - Replace $0 $0 $0 $0 $0 564 Building/Unit Signage - Replace $0 $0 $0 $24,138 $0 608 Carport Posts - Partial Replace (c) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (d) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (e) $0 $0 $0 $0 $0 608 Carport Posts - Partial Replace (f) $0 $0 $0 $0 $0 Systems 965 Fire Alarm Panels - Replace $0 $0 $0 $0 $0 985 Utility Vehicle - Replace $0 $38,819 $0 $0 $0 990 Trash Compactor - Replace $0 $0 $0 $0 $0 992 Trash Containers - Replace $0 $0 $28,877 $0 $0 Total Expenses $42,713 $204,553 $118,617 $612,364 $331,097 Ending Reserve Balance: $3,663,956 $3,859,899 $4,144,179 $3,935,088 $4,006,575 Association Reserves WA, LLC. 28 8/31/2016

35 Assoc Accuracy, Limitations, and Disclosures Washington disclosures, per RCW: This reserve study should be reviewed carefully. It many not include all common and limited common element components that will require major maintenance, repair or replacement in future years, and may not include regular contributions to a reserve account for the cost of such maintenance, repair, or replacement. The failure to include a component in a reserve study, or to provide contributions to a reserve account for a component, may, under some circumstances, require you to pay on demand as a special assessment your share of common expenses for the cost of major maintenance, repair or replacement of a reserve component. 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. James D. Talaga R.S., company president, is a credentialed Reserve Specialist (#66). All work done by Association Reserves WA, 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 otherwise noted. 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. Association Reserves liability in any matter involving this Reserve Study is limited to our Fee for services rendered. Association Reserves WA, LLC. 29 8/31/2016

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. Association Reserves WA, LLC. 30 8/31/2016

37 Assoc The primary purpose of the photographic appendix is to provide the reader with the basis of our funding assumptions resulting from our physical analysis and subsequent research. The photographs herein represent a wide range of elements that were observed and measured against National Reserve Study Standards to determine if they meet the criteria for reserve funding: 1) Common are maintenance, repair & replacement reasonability 2) Components must have a limited life 3) Life limit must be predictable 4) Above a minimum threshold cost (board s discretion typically ½ to 1% of annual operating expenses). Some components are recommended for reserve funding, while others are not. The components that meet these criteria in our judgment are shown with corresponding maintenance, repair or replacement cycles to the left of the photo (UL = Useful Life or how often the project is expected to occur, RUL = Remaining Useful Life or how many years from our reporting period) and a representative market cost range termed Best Cost and Worst Cost below the photo. There are many factors that can result in a wide variety of potential cost; we are attempting to represent a market average for budget purposes. Where there is no UL, the component is expected to be a one-time expense. Where no pricing, the component deemed inappropriate for Reserve Funding. Association Reserves WA, LLC. 31 8/31/2016

38 Site / Grounds Comp #: 103 Concrete/Curb - Repair/Replace Quantity: Extensive square feet Funded?: Yes. History: 2015 asphalt one-time repair project included $20k of curb replace; $9,400 in curb replace in 2008 Location: Sidewalks, curb, patios, walkways, landings, etc Evaluation: Majority concrete appeared fair / stable, but some local limited cracking was noted. Based upon history and current condition, no anticipation for total replacement. However, best to plan for local larger repair needs as likely going forward that cannot be comfortably absorbed in the operating budget; ongoing allowance is factored below. Carefully track needs, actual expense patterns, and adjust in future reserve updates based upon historical expenses and current condition. If any trip and fall hazards repair immediately to ensure safety. As routine maintenance, pressure wash for appearance and seal cracks promptly to prevent water from penetrating into the sub-base and accelerating damage. 4 years 2 years Best Case: $5,200 Lower allowance Worst Case: $7,200 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 1 of 72

39 Comp #: 104 Brick/Concrete Drive - Repair Quantity: ~ 1,200 square feet Funded?: No. Sustain along with other similar component groupings History: Location: Entry drive area Evaluation: Small quantity at entry appeared in f air condition. Include local repair along with previous component #103, Concrete/Curb - Repair/Replace. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 2 of 72

40 Comp #: 112 Rockeries - Replace Quantity: Extensive square feet Funded?: No. Useful life not predictable or extended History: Location: Scattered common area locations Evaluation: Our visual observations of rockery walls were limited, but no widespread deterioration was observed. There were no signs of recent large scale movement and none reported. Analysis of a rockery wall beyond visual observation is not within the scope of a reserve study. No information regarding its construction was available to us, which could include how it was installed, including if drainage (critical) was provided, and if the drainage is still fully functioning. At this time, no large-scale repairs or replacements are predictable. Funding can be added to future reserve studies if conditions dictate. Inspect regularly including drainage, and repair as needed. If movement or other problems are suspected, consult with an engineer (geo-technical) for evaluation and repair recommendations. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 3 of 72

41 Comp #: 114 Landscape Timbers - Replace Quantity: Extensive quantity Funded?: No. History: Location: Common area landscaping and trail Evaluation: Landscape timber appeared in varying condition. Local replacements in the past from general operating funds. As routine maintenance, inspect regularly for stability, perform repairs promptly to ensure safe footing. No large scale replacement anticipated so no reserve funding suggested. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 4 of 72

42 Comp #: 119 Asphalt: Path - Overlay Quantity: ~4,000 square ft Funded?: Yes. History: Location: Asphalt path between lower units Evaluation: Asphalt is aging with local damage but majority is without advanced deterioration and widespread instability. Regular cycles of seal and repair (component #121) are recommended for maximum design life. Also, areas with an inverse slope for drainage require proactive maintenance (see image below). Keep surface clean, ensure that any drains are clean and free flowing, repair cracks and clean oil stains promptly. Board requested one time projected funded below. 0 years 0 years Best Case: $5,000 Lower allowance Worst Case: $12,000 Higher allowance Cost Source: Estimate Provided by Client August 31, 2016 Page 5 of 72

43 Comp #: 120 Asphalt (A) - Resurface Quantity: ~1/2 of 128,000 square ft Funded?: Yes. History: 2015 $133,000 (partial) Location: Asphalt private drive, and parking areas within property perimeter (location of 2015 repairs not specified) Evaluation: Generally fair but aged condition, with some problems (cracking, prior patches, ruts/settlement (w/ponding), and the beginning of some alligator cracking) observed during our limited visual review. A substantial (partial) repair and overlay was performed in 2015 the location was not specified Useful life below assumes regular seal coating and repairs (see component #121). The lack of seal coating and repairs can greatly decrease the asphalt s useful life. Resurfacing is typically one of the larger expense items in a reserve study. When need to resurface is apparent within a couple of years, consult with geotechnical engineer for recommendations, specifications / scope of work and project oversight. As routine maintenance, keep surfaces clean and free of debris, ensure that drains are free flowing, repair cracks, and clean oil stains promptly. Assuming proactive maintenance, plan to resurface at roughly the time frame below. Further resources: Pavement Surface Condition Field Rating Manual for Asphalt Pavement. DD5164EB34F5/0/AsphaltPavementBook.pdf Washington Asphalt Pavement Association 30 years 28 years Best Case: $130,000 Lower allowance Worst Case: $150,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 6 of 72

44 Comp #: 121 Asphalt (B) - Resurface Quantity: ~1/2 of 128,000 square ft Funded?: Yes. History: Location: Asphalt private drive, and parking areas within property perimeter Evaluation: See component #120 for typical notes 30 years 5 years Best Case: $130,000 Lower allowance Worst Case: $150,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History Comp #: 122 Asphalt - Seal/Repair Quantity: ~ 128,000 square feet Funded?: Yes. History: 2015 $133,000 included extensive repairs $35,000 Location: Asphalt private drive and parking areas within property perimeter Evaluation: Rain obscured visual observation to some extent, but general wear of asphalt surface observed. Note that asphalt maintenance coating and local repair occurred last in 2015 $133,000 and before that in 2009 at a total expense of $35,000. Regular cycles of seal coating, along with needed repairs is a best practice for the long term care of lower traffic asphalt areas to extend the useful life. The State of Washington Department of Transportation (WSDOT) recommends regular cycles of seal coating for the long-term care of asphalt paving with low traffic and low speed. The primary reason to seal coat asphalt pavement is to protect the pavement from the deteriorating effects of sun and water. When asphalt pavement is exposed, the asphalt oxidizes or hardens and this causes the pavement to become increasingly brittle. As a result, the pavement will become more likely to crack, as it is unable to bend and flex when subjected to traffic (weight) and temperature changes (thermal expansion and contraction). A seal coat combats this situation by providing a waterproof membrane, which not only slows down the oxidation process, but also helps the pavement shed water. Seal coating also provides uniform appearance and conceals the inevitable patching and repairs which accumulate over time, ultimately extending the useful life of asphalt before more costly resurfacing is needed (see component #120). Repairing asphalt before seal coating is imperative. Surface preparation and dry weather during and following application, is key to lasting performance. For further resources: Best Practices Handbook on Asphalt Pavement Maintenance August 31, 2016 Page 7 of 72

45 For a general overview of Asphalt Seal Coat Treatments review this publication: Other references: 4 years 2 years Best Case: $39,000 Lower allowance Worst Case: $48,000 Higher allowance. Cost Source: Client Cost History/Similar Project Cost History August 31, 2016 Page 8 of 72

46 Comp #: 147 Garbage Enclosures - Replace Quantity: (8) assorted Funded?: Yes. History: Garbage enclosures were reconstructed last in 2003 (utilizing vinyl siding taken from buildings) Location: Adjacent to asphalt private drive and parking areas Evaluation: Fair condition with no significant damage or advanced deterioration. Inspect regularly and repair as needed from operating budget. Best to plan for significant replacement at roughly the interval indicated below due to constant exposure to weather elements and typical damage which occurs in similar communities. Time project to coincide with paint cycles for cost efficiency. 21 years 8 years Best Case: $22,000 Lower allowance Worst Case: $30,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 9 of 72

47 Comp #: 155 Chain Link Fence - Replace Quantity: ~ 1,000 linear feet Funded?: Yes. History: 2004 Location: South perimeter of property Evaluation: Fair condition without noteworthy instability. Minor repair in recent years was indicated. Sturdy component that can last for extended period of time if not damaged or abused. Clean, and continue to repair as needed from operating funds. Plan for eventual intervals of replacement at the level indicated below. 35 years 22 years Best Case: $16,000 Lower allowance Worst Case: $21,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 10 of 72

48 Comp #: 160 Metal Fence - Replace Quantity: ~ 340 linear feet Funded?: Yes. History: Location: Perimeter of pool and playground area Evaluation: Fair condition without noteworthy corrosion or deterioration. As routine maintenance, inspect regularly to ensure stability and repair as needed, clean and paint periodically to maintain appearance and extend useful life. Prudent planning recommends funding for eventual large scale replacement to maintain a quality appearance to this highly visible area. 40 years 13 years Best Case: $21,000 Lower allowance Worst Case: $28,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 11 of 72

49 Comp #: 170 Landscape - Partial Refurbish Quantity: Extensive landscaping Funded?: Yes. History: Location: Common areas Evaluation: Extensive landscape is in generally fair condition. Currently, landscaping maintenance is funded out of the operating budget, but additional funding (shown below) was requested by the Board. As the association ages, many find the need or desire for larger scale refurbish projects not covered within the maintenance contract. These types of projects can include: bed renovations, major replanting, large scale bark or mulch replacements, turf renovations, drainage improvements, etc... Walk area each year with landscape contractor and perhaps landscape architect to assess the overall health, function and future needs of maintenance and refurbish to determine if supplemental reserve funding should be planned for. 3 years 0 years Best Case: $5,200 Lower allowance Worst Case: $10,000 Higher allowance Cost Source: Estimate Provided by Client, inflated August 31, 2016 Page 12 of 72

50 Comp #: 175 Irrigation System - Repair/Replace Quantity: Extensive systems Funded?: Yes. History: Location: Throughout common area landscaping Evaluation: Aging systems with local areas of invasive tree roots but no predictable total renovation for the foreseeable future. As routine maintenance, inspect and test system regularly, perform any minor repairs as necessary from operating budget. Follow proper winterization and spring start up procedures. Although the failure rate of the elements within this component are typically difficult to predict, prudent planning suggests to set aside some funding for larger scale partial refurbishing of irrigation systems on a cyclical basis. 5 years 0 years Best Case: $4,100 Lower allowance Worst Case: $6,200 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 13 of 72

51 Comp #: 180 Pole Lights - Replace Quantity: ~ (70) metal, assorted Funded?: Yes. History: Location: Scattered common area locations Evaluation: Assorted metal pole lights appeared in fair condition with no unusual deterioration apparent. As routine maintenance, inspect, repair/change bulbs as needed. Best to plan for large scale replacement of assemblies/wiring at roughly the time frame below for cost efficiency and consistent quality/appearance throughout association. 35 years 8 years Best Case: $39,000 Lower allowance Worst Case: $49,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 14 of 72

52 Comp #: 182 Drainage/Storm Systems - Replace Quantity: Extensive systems Funded?: No. Annual cost best handled as operating expense now that baseline established History: Significant one-time local improvements in recent years Location: Throughout community Evaluation: Analysis of the drainage system is beyond the scope of a reserve study as the vast majority of the drainage systems are located below ground. Observations were very limited to catch basin areas. No problems were reported to us. No predictable large-scale repairs/replacement at this time. Local repairs should be performed as part of general maintenance. If problems become known from professional evaluation, funding can be included in future reserve studies. As routine maintenance, inspect regularly and keep drains/grates free of debris to ensure water drains as intended. Maintenance schedules on stormwater systems depend on the condition of the system itself and the amount of sediment and debris moving around on site. Stormwater inspections usually consist of inspecting the catch basins and manholes, ensuring vaults and control structures are properly functioning. Evaluation of drainage can include the visual review of interior drain lines by use of miniature remote camera. Clean out drain lines and basins as often as needed in order to prevent decreased drainage capacity. Repair as needed. The responsibility of keeping the stormwater system in good working order falls on the association. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 15 of 72

53 Comp #: 184 Catch Basin - Clean/Pump Out Quantity: Extensive quantity Funded?: Yes. History: Last project occurred in 2012 Location: Throughout community; drive, parking and yard areas Evaluation: Research for prior update confirmed anticipation for significant catch basin clean out as factored below. Last project occurred in Track actual expense patterns as they continue to emerge and adjust in future reserve updates as conditions warrant. 5 years No Photo Available 0 years Best Case: $4,100 Lower allowance Worst Case: $6,200 Higher allowance Cost Source: Estimate Provided by Client August 31, 2016 Page 16 of 72

54 Comp #: 186 Trees - Remove/Trim Quantity: Extensive quantity Funded?: Yes. History: Significant projects in 2013 and 2003 Location: Throughout common areas Evaluation: This component may be utilized for larger tree removal/trimming projects which do not occur on a annual basis. Prior evaluation by expert revealed needs to remove a significant quantity (~50) of hazardous trees. Previous history also includes (~125) trees removed during a 2002/2003 project. Once baseline is established, tree removal/trimming expenses will reportedly be handled through the operating budget. Continue to consult with a qualified arborist for the care and management of the trees within the community, balancing aesthetics with protection of association assets. Monitor, track needs and expenses and incorporate into future reserve study updates as conditions merit. 5 years 0 years Best Case: $8,200 Lower allowance Worst Case: $12,000 Higher allowance Cost Source: Client Cost History/Estimate Provided by Client August 31, 2016 Page 17 of 72

55 Comp #: 190 Swales, (8) - Maintenance / Repair Quantity: Extensive square feet Funded?: Yes. History: Significant projects in recent years Location: Select common areas Evaluation: Two regulated streams and several regulated wetlands were previously delineated and evaluated by expert. Provided expense report indicated that ~$12,000 was expended to refurbish. Funding added below at Boards request. We recommend compliance with any and all governmental regulations regarding these areas. 10 years 6 years Best Case: $19,000 Lower allowance Worst Case: $23,000 Higher allowance Cost Source: Client Cost History/Estimate Provided by Client August 31, 2016 Page 18 of 72

56 Comp #: 198 Trail - Refurbish Quantity: Extensive square feet Funded?: No. Annual cost best handled as operating expense History: Location: Central common area Evaluation: Largely unimproved dirt trail with some railroad ties. No expectation of separate large scale expenses impacting reserves to maintain paths. Inspect regularly, clear vegetation and maintain safe footing from operating budget. Under historical pattern of care, no reserve funding recommended. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 19 of 72

57 Comp #: 200 Entry Monuments/Signs - Refurbish Quantity: (2) masonry/metal Funded?: No. Annual cost best handled as operating expense History: Metal characters were apparently replaced in 2011 from operating funds Location: Entrances/exits of community Evaluation: Fair structural condition for durable masonry entry monuments continues. No significant deterioration, damage or mortar loss. As routine maintenance, inspect regularly, clean/seal brickwork for appearance and repair as needed. No expectation of cyclical large scale expenses impacting reserves so no reserve funding suggested. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 20 of 72

58 Comp #: 205 Mailboxes/Structure - Replace Quantity: ~ (170) boxes Funded?: Yes. History: Replacement in 2011 at an expense of only $5,900 Location: Adjacent to asphalt private drive Evaluation: Metal mailboxes in fair condition, and are protected by the kiosk structure. Kiosk structure appeared in fair condition; clean, paint and roof along same cycles as other building structures, no need for separate funding. Inspect mailboxes regularly, clean by wiping down for appearance, change lock cylinders, lubricate hinges and repair as needed from operating budget. For long term planning purposes, best to plan for mailbox replacement at roughly the time frame below due to constant exposure, usage and wear over time. Note; lower expense below reflects previous client cost history adjusted for inflation and higher reflects current market rate. 28 years 22 years Best Case: $9,600 Lower allowance Worst Case: $17,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 21 of 72

59 Comp #: 207 Parcel Post Boxes - Replace Quantity: (5) clusters Funded?: No. Cost projected to be too small History: Location: Adjacent to asphalt private drive Evaluation: General aging and deterioration but no damage and still functional. Parcel post boxes are protected by the kiosk structure. Replace when needed from operating funds. Small expense (~$3,000-$4,000) doesn't merit reserve designation. 0 years Best Case: Worst Case: Cost Source: Comp #: 215 Required Signage - Replace Quantity: (19) assorted Funded?: No. Annual cost best handled as operating expense History: Location: Adjacent to asphalt private drive and parking areas Evaluation: Assorted metal signs, attached to structures and atop posts with varying condition. Sign shown below is faded. Inspect regularly, clean for appearance, repair and replace individually or in small groupings as needed from operating budget. Treat as maintenance item. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 22 of 72

60 Pool & Cabana Comp #: 300 Pool Deck - Resurface Quantity: ~ 2,200 square feet Funded?: Yes. History: Location: Perimeter of pool Evaluation: Local areas of surface cracking but otherwise stable condition. Inspect regularly, pressure wash for appearance, fill/seal any cracks which may develop to minimize further damage to pool deck and provide minor repair as needed from operating budget. There are a variety of ways to resurface pool decks, we recommend that as the community continues to age, that research be conducted to evaluate the associations preferred method. Eventual removal and replacement with similar surface factored below. 30 years 3 years Best Case: $21,000 Lower allowance Worst Case: $31,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 23 of 72

61 Comp #: 302 Pool - Resurface Quantity: ~ 1,000 SF surface Funded?: Yes. History: Refurbishing of pool and spa plus required upgrades were completed in 2010; expense of roughly $30,000 Location: Recreation area Evaluation: Fair condition without noteworthy staining or wear. As routine maintenance, we recommend proactive cleaning and maintenance as well as running the filters throughout the winter to minimize algae/debris buildup. Best plan for regular intervals of pool resurfacing to maintain a quality appearance. 10 years 3 years Best Case: $11,000 Lower allowance Worst Case: $15,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 24 of 72

62 Comp #: 304 Pool - Retile/Recope Quantity: ~ 140 linear feet Funded?: Yes. History: Refurbishing of pool and spa plus required upgrades were completed in 2010; expense of roughly $30,000 Location: Perimeter of pool Evaluation: Tile and brick cooping appeared in fair condition. Failed sealant joints were observed at numerous locations between the brick and the concrete deck. Replace all sealant joints as soon as possible to prevent further water infiltration and resultant damage. Best to plan for regular intervals of replacement, timed to coincide with every other pool resurface project for cost efficiency. Clean and repair as needed in between cycles as part of routine maintenance. 20 years 13 years Best Case: $7,200 Lower allowance Worst Case: $10,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 25 of 72

63 Comp #: 305 Spa/Tile - Renovate Quantity: (1) 8' diameter Funded?: Yes. History: Refurbishing of pool and spa plus required upgrades were completed in 2010; expense of roughly $30,000 Location: Adjacent to Recreation building Evaluation: Some fading noted. Generally in fair condition. Plan for similar large scale project at the time frame indicated below. Note; intervals of less costly plaster work only should be expected as an operational expense, roughly every 4-5 years, due to higher temperatures and higher concentration of chemicals. 15 years 8 years Best Case: $6,200 Lower allowance Worst Case: $8,200 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 26 of 72

64 Comp #: 307 Pool/Spa Filters - Replace Quantity: (1) Hayward, (1) Triton Funded?: No. Annual cost best handled as operating expense History: Location: Equipment room within recreation building Evaluation: No access was provided to t he pool equipment room. No reported problems at this time. Inspect regularly, repair/ replace as needed from general operating budget. Treat as maintenance items. 0 years Best Case: Worst Case: Cost Source: Comp #: 308 Pool/Spa Heaters - Replace Quantity: (2) Laars, assorted BTU Funded?: Yes. History: 2008 spa heater, 2003 pool heater. Location: Equipment room within recreation building Evaluation: Heaters are gas Raypac. No problems observed or reported to us. Provide regular service and maintain as recommended by the manufacturer. 10 years 0 years Best Case: $7,000 Lower allowance Worst Case: $9,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 27 of 72

65 Comp #: 310 Pool Pump/Valves - Replace Quantity: Moderate equipment Funded?: No. Annual cost best handled as operating expense History: Location: Equipment room within recreation building Evaluation: Typical failure rate of these types of components is difficult to predict and the individual repair/replacement costs are too small to merit reserve funding status. No reserve funding recommended, treat as maintenance item. 0 years Best Case: Worst Case: Cost Source: Comp #: 312 Pool Cover - Add/Replace Quantity: None at present Funded?: No. Cost projected to be too small History: Location: Pool recreation area Evaluation: No poll cover at present. We continue to recommend the purchase and installation of a winter/safety pool cover to enjoy reduced maintenance activity/ expenses, enhance safety and reduce risk assessment. No plans for such a project were indicated. 0 years No Photo Available Best Case: Worst Case: Cost Source: August 31, 2016 Page 28 of 72

66 Comp #: 314 Pool Furniture - Replace Quantity: Extensive quantity Funded?: Yes. Meets National Reserve Study Standards criteria for Reserve Funding History: Partial replacement in 2015 at expense of $2,200 Location: Pool recreation area Evaluation: Fair condition of assorted pieces of pool furniture observed during our site visit. Furniture has metal frame, coated and plastic fabric slats. We recommend regular intervals of replacements as noted below to maintain function and appearance. Inspect regularly and repair or replace any damaged pieces promptly to ensure safety. Store furniture inside during off-season if possible to extend useful life. 8 years 2 years Best Case: $4,100 Lower allowance Worst Case: $8,200 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 29 of 72

67 Comp #: 320 Sport Court - Repair/Resurface Quantity: ~ 2,100 square feet Funded?: Yes. History: Top coating and repair project in 2009 at an expense of $4,700 Location: Southeast perimeter of property Evaluation: Extensive surface cracking was observed, but otherwise still in fair condition. Painted surface appeared in fair condition. Inspect regularly, clean surface and fill/seal any deeper cracks which may develop to prevent further damage. Reserve funding recommended for maintenance projects at level indicated below. 10 years 2 years Best Case: $4,900 Lower allowance Worst Case: $5,500 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 30 of 72

68 Comp #: 330 Basketball Equipment - Replace Quantity: (1) assembly Funded?: No. Cost projected to be too small History: Location: Southeast perimeter of property Evaluation: Fair, playable condition with no advanced deterioration. Inspect regularly, clean for appearance, treat for rust, repair and replace as needed from operating budget. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 31 of 72

69 Comp #: 340 Play Equipment - Replace Quantity: (1) metal/vinyl Funded?: Yes. History: 2009 $15,000 Location: Adjacent to Recreation building Evaluation: Plastic and coated metal play equipment appeared in fair condition. Inspect regularly, tighten connections and repair play equipment as needed promptly from operating budget to ensure safety. Periodically clean by pressure washing to prevent build up of mold and mildew. Replenish material in fall zones and replace wood borders as needed. Going forward, best to plan for regular cycles of replacement at roughly the interval indicated below. 15 years 7 years Best Case: $21,000 Lower allowance Worst Case: $26,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 32 of 72

70 Comp #: 341 Swing Set - Replace Quantity: (1) metal/wood Funded?: No. Cost projected to be too small History: Location: Adjacent to Recreation building Evaluation: Aging wood swing set appeared fair, but appearance is marginal. Research for this update indicated no specific replacement plans at present. A wide range of play equipment and expense is possible. If replacing existing with an appropriate commercial quality swing set, expense would only be $2,000-$4,000 and should be treated as an operating budget item. No reserve funding recommended; adjust in future reserve updates. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 33 of 72

71 Comp #: 346 Wood Benches - Refurbish/Replace Quantity: (3) wood Funded?: No. Cost projected to be too small History: Location: Within playground Evaluation: Stable, with general aging, but without extensive damage. Appearance would benefit from wood refinishing. Inspect regularly, refinish for appearance and repair as needed to ensure safety. Small expense for either refurbishing or replacement is not suitable for reserve designation 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 34 of 72

72 Comp #: 430 Cabana Carpet - Replace Quantity: ~ 170 square yards Funded?: Yes. History: Location: Interior floor areas within Recreation Building Evaluation: Carpeting appeared in generally fair condition. Community will continue to benefit from gentle use and proactive maintenance. Expense and timing for replacement is somewhat subjective but needs for periodic aesthetic updating to maintain a quality appearance are not. Regular intervals of carpet replacement are factored below. 12 years 3 years Best Case: $8,500 Lower allowance Worst Case: $10,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 35 of 72

73 Comp #: 432 Cabana Tile Floor - Replace Quantity: ~ 860 square feet Funded?: No. Useful life not predictable or extended History: Location: Local interior floor areas within Recreation Building Evaluation: Fair condition with no damage or unusual wear noted during inspection. With ordinary care and maintenance, tile can last for extended period of time. Clean regularly and apply sealer periodically to prevent stains. No expectation of replacement within the scope of this reserve study, therefore no reserve funding recommended. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 36 of 72

74 Comp #: 434 Cabana Interior - Repaint Quantity: ~ 6,200 square feet Funded?: Yes. History: Location: Recreation building interior painted surfaces Evaluation: Interior paint appeared in fair condition. No unusual fading or staining observed. Regular cycles of professional painting are recommended to maintain appearance; best timed prior to carpet replacement for cost efficiency. Keep touch-up paint on site for in between cycle projects. 12 years 3 years Best Case: $7,700 Lower allowance Worst Case: $9,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 37 of 72

75 Comp #: 436 Cabana Kitchen - Refurbish Quantity: (1) 9'x12' Funded?: Yes. History: Location: Kitchen area within recreation building Evaluation: Fair condition of cabinets, countertops and appliances; community benefits from proactive maintenance and gentle use. Simple, durable materials typically have an extended useful life, however, many communities choose to refurbish the kitchen periodically for aesthetic updating; these may include appliances, kitchen cabinets (reface), sinks, counter tops, etc.. Reserve funding suggested at level indicated below. 20 years 9 years Best Case: $8,200 Lower allowance Worst Case: $12,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 38 of 72

76 Comp #: 440 Cabana Bathrooms - Refurbish Quantity: (2) 200 square feet Funded?: Yes. History: Location: Recreation building Evaluation: Fair and functional condition. Inspect regularly, perform any needed repairs promptly utilizing operating budget. Typically durable components, however, prudent planning suggests setting aside funds for regular intervals of refurbishing which may include items such as fixtures, vanities, shower enclosures, stalls, fans, etc. 20 years 9 years Best Case: $10,000 Lower allowance Worst Case: $14,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 39 of 72

77 Comp #: 454 Cabana Furniture - Replace Quantity: Extensive quantity Funded?: Yes. History: Location: Recreation rooms Evaluation: Fair condition with no significant damage or deterioration at this time. Timing and expense are subjective and may vary considerably. For the purposes of long term planning, some allowance for partial replacement is appropriate for periodic aesthetic updating. 12 years 3 years Best Case: $5,200 Lower allowance Worst Case: $10,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 40 of 72

78 Comp #: 458 Cabana Rooms - Remodel Quantity: Extensive square feet Funded?: Yes. Meets National Reserve Study Standards criteria for Reserve Funding History: Location: Recreation rooms Evaluation: Recreation rooms and furnishings appeared in fair condition. This component suggests setting aside funding for periodic remodeling and aesthetic updating. Many communities replace such items as wall coverings, lighting, window treatments, artwork, décor, ceiling fans, etc... at regular intervals to maintain this important community asset. No anticipation of complete remodel, we suggest a funding allowance for partial remodeling at the level indicated below. Timing and expense are by nature subjective; adjust in future reserve updates as conditions warrant. 12 years 3 years Best Case: $5,200 Lower allowance Worst Case: $10,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 41 of 72

79 Comp #: 460 Sauna Room - Refurbish Quantity: (1) 6'x10' Funded?: Yes. History: 2006 $6,000 Location: Recreation facility Evaluation: Fair condition; refurbishing of the sauna room occurred in 2006, expense of ~$6,000 included new heater. Inspect regularly and test for performance, repair promptly to ensure safety. Clean periodically as needed. Light sanding can freshen appearance. Plan for regular intervals of refurbishing at the interval indicated below. 20 years 9 years Best Case: $5,700 Lower allowance Worst Case: $6,700 Higher allowance Cost Source: Client Cost History/Similar Project Cost History Comp #: 462 Tanning Bed - Replace Quantity: (1) Solar Pacific Funded?: No. Annual cost best handled as operating expense History: Location: Tanning room within Recreation building Evaluation: Functional condition but general aging and data plate indicates 1990 manufacture. Maintain, repair and replace as operating budget item. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 42 of 72

80 Comp #: 464 Exercise Equipment-Partial Replace Quantity: (7) individual Funded?: Yes. History: 2015 $8,000 replacement expense Location: Gym room Evaluation: Equipment appeared to be in fair condition, and all are assumed to still be functioning and in operating order. No imminent needs or replacement plans were expressed. One of the treadmills was replaced last in 2009 and elliptical trainer in Inspect regularly, clean for appearance, maintain and repair promptly as needed from operating budget to ensure safety. Varying usage and life cycles; we continue to recommend setting aside funding for partial replacement at the interval indicated below. 5 years 3 years Best Case: $6,200 Lower allowance Worst Case: $10,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 43 of 72

81 Building exterior Comp #: 500 Roof: Comp Shingle - Replace Quantity: ~ 165,000 square feet Funded?: Yes. History: 2002 / 2003 Location: Rooftop of buildings, garages, carports, etc... Evaluation: Roofing is a laminated shingle with a closed cut valley. No reported problems. Generally fair condition with no significant damage, unevenness or missing shingles observed during our limited scope visual inspection. We recommend professional inspections at least twice annually and after wind storms, promptly replacing damaged/missing shingles or any other repair that may be needed to ensure that the water proof integrity of the buildings is maintained. Keep gutters and downspouts clear and free of debris to allow water to evacuate from rooftops as designed. Provide moss treatments and roof cleaning as ongoing maintenance. For purposes of long term planning, anticipate roof replacement at the typical useful life of years as factored below. Projects may be phased over several years and future reserve studies should be updated as conditions merit. 25 years 10 years Best Case: $640,000 Lower allowance Worst Case: $670,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 44 of 72

82 Comp #: 510 Gutters/Downspouts - Replace Quantity: ~ 14,500 linear feet Funded?: Yes. History: Location: Perimeter of building structures Evaluation: Metal gutters and downspouts appeared in fair condition with no widespread damage or instability illustrated. Inspect regularly, keep gutters and downspouts free of debris to ensure water evacuating from rooftops as designed and repair as needed from general operating funds. Best to plan for regular intervals of large scale replacement to ensure functionality. Time project at same interval as roof replacement for cost efficiency. 25 years 10 years Best Case: $75,000 Lower allowance Worst Case: $100,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 45 of 72

83 Comp #: 514 Chimney Caps/Covers - Replace Quantity: ~ (157) caps, (62) covers Funded?: Yes. History: Location: Rooftop chimney chases Evaluation: No up-close observation was performed. It was reported that metal work atop chimney chases is largely original (1990)construction and was not replaced as part of 2002 / 2003 Condominium Conversion. No reported problems. Inspect regularly, treat with rust inhibitor and repair as needed from operating funds. Assuming proactive maintenance, plan for eventual replacement at roughly the time frame below. Track needs and any actual expense patterns carefully; adjust in future reserve updates as appropriate. 35 years 10 years Best Case: $67,000 Lower allowance Worst Case: $100,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 46 of 72

84 Comp #: 516 Chimneys - Inspect/Clean Quantity: Extensive quantity Funded?: No. Annual cost best handled as operating expense History: Location: Rooftop chimney chases Evaluation: Going forward, ensure chimney inspections are provided as an ongoing maintenance expense or charged to individual unit owners as appropriate. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 47 of 72

85 Comp #: 525 Exterior Surfaces-Clean/Paint/Seal Quantity: ~ 143,000 GSF Funded?: Yes. History: Buildings were cleaned and painted last in 2011 at a reported expense of $111,000 Location: Exterior painted surfaces of buildings, garages, carports, trash enclosures, etc Evaluation: Exterior cladding consists primarily of vinyl siding which will not require refinishing. Painted surfaces are in generally fair condition without significant fading or deterioration. We recommend regular inspections with prompt touch-up and repair as needed to ensure that the water proof integrity of the buildings is maintained. Typical Northwest paint cycles are between five and eight years depending upon surface preparation, material quality, application methods, site and weather conditions. Removal and replacement of caulking with high quality product is important part of surface preparation. Repair any siding or trim necessary prior to painting. Going forward, plan to clean buildings, seal and refinish painted surfaces at the interval below. 7 years 0 years Best Case: $100,000 Lower allowance Worst Case: $118,000 Higher allowance Cost Source: Estimate Provided by Client August 31, 2016 Page 48 of 72

86 Comp #: 528 Exterior Surfaces - Clean / Wash Quantity: ~ 143,000 GSF Funded?: No. Annual cost best handled as operating expense History: Location: Exterior surfaces of buildings, garages, carports, trash enclosures, etc Evaluation: There are areas with substantial grime/moss growth. Research with Management confirmed plans for local cleaning to continue as an ongoing maintenance item. If pressure washed, use low pressure with proper spray angles to avoid penetration beneath siding. Under current pattern of care, no reserve funding suggested. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 49 of 72

87 Comp #: 530 Siding: Vinyl - Replace Quantity: ~ 143,000 GSF Funded?: Yes. History: Location: Exterior walls Evaluation: Vinyl siding was a horizontal clapboard style Generally, the siding appeared in fair condition, with no missing pieces, damage or unusual wear. We did observed extensive grime at numerous locations. No view of the critical underlying waterproofing was available as part of our limited visual review. Replacement may ultimately be needed due to the failure of the underlying waterproofing degrading over the decades, and/or the end of the useful life of the siding materials from general aging. Many factors influence the useful life, including exposure to (or protection from) wind driven rain, and the quality of the waterproofing and flashing beneath the siding. Evaluate the siding and the critical underlying waterproofing (typically building paper or house-wrap) more frequently as the remaining useful life approaches zero years. Adjust remaining useful life as dictated by the evaluation. Align with window replacement for cost efficiencies and building envelope integrity when practical. Inspect annually and repair locally as needed using general maintenance funds. Replacing the underlying waterproofing and flashing is projected to require replacement of the vinyl siding. Vinyl siding will typically fade over the years and when replacing pieces, it may be difficult to match the faded color. Note: Rehabilitative construction projects with associated costs are equal to or greater than 5% of the assessed value of the units must comply with the requirements of RCW These requirements include building enclosure design documents with waterproofing details by an architect or engineer, and independent oversight during construction to verify compliance with those details. Project costs can vary depending upon materials chosen and the condition of the underlying structural framing when exposed. We recommend the Board conduct research well in advance in order to define scope, timing and costs, including plan for some margin of contingency. 35 years 8 years Best Case: $740,000 Lower allowance Worst Case: $1,000,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 50 of 72

88 Comp #: 535 Windows/Glass Doors - Replace Quantity: ~ (820) assorted Funded?: No. Declarations suggest owner responsibility, not association History: Location: Exterior building elevations Evaluation: No current problems observed or reported with water infiltration. It is our understanding that dry rot repairs, adjacent to individual bay windows (bump outs), occurred during repairs provided by developer in 2002 / Similar repairs were subsequently needed at Association expense in 2009/2010. As before, it is our understanding that individual Unit owners are responsible to maintain, repair and replace Unit windows and glass doors (glass and frames). In any event, we recommend the Board provide for annual inspections (including Component #998, Association Annual Inspection) of windows and glass doors, penetrations, sealants and adjacent structure by a qualified contractor or engineer to assess repair needs and timing, notwithstanding responsibility of expense, to help prevent structural damage to buildings. Note; replace any Association windows or glass doors individually at Clubhouse when needed from the operating budget. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 51 of 72

89 Comp #: 538 Entry/Utility Doors-Replace Quantity: ~ (372) assorted Funded?: No. Declarations suggest owner responsibility, not association History: Location: Entry to each unit, utility locations such as storage doors, Fire closets, etc Evaluation: Entry and utility doors serving individual Units are reportedly the responsibility of Unit owners to repair or replace. Replace any common area doors individually when needed from the operating budget. In any event, clean and paint all doors along with other building surfaces, no need for separate funding. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 52 of 72

90 Comp #: 539 Garage Doors - Replace Quantity: ~ (66) wood Funded?: No. Declarations suggest owner responsibility, not association History: Location: At each garage Evaluation: Garage door are also reported to be the responsibility of Unit owners to repair or replace. As with other community doors clean and paint along with other building surfaces, no need for separate funding. We assume the Board will ensure a regular inspections and uniform replacement specifications to ensure a quality appearance. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 53 of 72

91 Comp #: 540 Elevated Deck - Seal/Repair Quantity: ~ 14,000 square feet Funded?: Yes. History: 2016 low bid $56, $45,000 Location: Elevated decks, landings and walkways adjacent to individual units Evaluation: Condition and exposure varies to some degree but only general surface deterioration and fading at the few decks and walkways we reviewed. Some build-up of grime and staining but no adhesion problems or damage apparent during our limited scope visual inspection. Maintenance top coating of all decks and walkways last in 2010 at a reported expense of only $45,000. No comprehensive evaluation of decks and walkways has occurred in recent years or was provided to this writer. This surface type should be recoated periodically for waterproof integrity, protection of surrounding structure, to maintain warranty and appearance. Although coating may appear intact, surface will lose mil thickness each year and even imperceptible holes can lead to water intrusion and damage. As routine maintenance, we recommend regular professional inspections with cleaning and repair as needed. Clean with mild solution such as TSP; bleach can be added if mold/mildew become a problem. Plan for regular intervals of professional maintenance sealing and minor repair at the interval indicated below. 5 years 4 years Best Case: $56,000 Lower allowance Worst Case: $84,000 Higher allowance Cost Source: Client Cost History August 31, 2016 Page 54 of 72

92 Comp #: 542 Elevated Deck - Repair/Replace Quantity: ~ 14,000 square feet Funded?: No. Useful life not predictable or extended History: Location: Elevated decks, landings and walkways adjacent to individual units Evaluation: No reported problems and no significant instability of decks apparent. Assumed to have been correctly installed with proper flashings and adequate slope and drainage provision. Decks and walkways are largely inset and most have protection from direct exposure. With regular re-coating (see #540) projects, there is no expectation for large scale repairs / replacement at this time. If not maintained properly, potential for significant repair/replacement expenses exist in future years. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 55 of 72

93 Comp #: 550 Rail: Wood - Partial Replace Quantity: ~ 4,500 linear feet Funded?: Yes. History: Location: Adjacent to stairs, decks and landings Evaluation: Fair condition without widespread deterioration apparent. We recommend regular professional inspections to ensure safety and stability with prompt repair as needed. No anticipation of total replacement assuming ordinary care and maintenance. We suggest setting aside funding for regular intervals of larger spot repairs and replacement at the level indicated below. Adjust in future reserve updates as patterns of expense and repair needs emerge. 7 years 1 years Best Case: $6,200 Lower allowance Worst Case: $10,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 56 of 72

94 Comp #: 555 Stairs - Repair/Replace Quantity: (49) sets Funded?: Yes. History: Location: Access to residential buildings upper floor locations Evaluation: Stairs have 4 x 12 stringers, and concrete treads. Fair condition with no significant damage or deterioration; minor repair indicated in As routine maintenance, we recommend regular professional inspections to ensure stability and weather proofing; perform any needed repairs promptly. Ensure that tread connections are tight and secure. Paint components regularly along with building exteriors. Varying exposures and utilizing concrete treads and metal brackets for construction. With ordinary care and maintenance there is no anticipation of total replacement within the scope of this reserve study. We recommend a repair allowance to supplement the operating budget for local spot repairs as buildings continue to age. 7 years 1 years Best Case: $6,200 Lower allowance Worst Case: $10,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 57 of 72

95 Comp #: 560 Exterior Lights - Replace Quantity: ~ (300) assorted Funded?: Yes. History: Location: Exterior common and limited common area locations Evaluation: Age, condition and exposure of assorted exterior fixtures varies to some degree but majority are older with general deterioration. Observed during daylight hours; assumed to be in functional operating condition. As routine maintenance, clean by wiping down with an appropriate cleaner, change bulbs and repair as needed. Best to plan for large scale replacement, timed to coincide with clean and paint cycle, for cost efficiency and consistent quality/appearance throughout association. 28 years 7 years Best Case: $15,000 Lower allowance Worst Case: $23,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 58 of 72

96 Comp #: 564 Building/Unit Signage - Replace Quantity: (19) bldgs, (157) units Funded?: Yes. History: Location: Building exterior surfaces Evaluation: Wood building signs and plastic unit designations are in fair condition with no unusual deterioration apparent, but typical fading and grime was observed. Clean and paint where appropriate along with other exterior building surfaces. Best to plan for regular intervals of large scale replacement to maintain a consistent, quality appearance. Replacement during clean and paint cycles is suggested for cost efficacy. 21 years 7 years Best Case: $7,100 Lower allowance Worst Case: $14,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 59 of 72

97 Comp #: 608 Carport Posts - Partial Replace (c) Quantity: ~ (15), wood Funded?: Yes. History: Location: Adjacent to asphalt private drive Evaluation: Third of six phases. Carefully track needs and actual replacement expenses and adjust future reserve updates as conditions warrant. Note; image is only representative and not indicative of any phasing. 0 years 0 years Best Case: $12,000 Lower allowance Worst Case: $15,000 Higher allowance Cost Source: Client Cost History/Estimate Provided by Client Comp #: 608 Carport Posts - Partial Replace (d) Quantity: ~ (15), wood Funded?: Yes. History: Location: Adjacent to asphalt private drive Evaluation: Fourth of six phases. Note; image is only representative and not indicative of any phasing. 0 years 1 years Best Case: $12,000 Lower allowance Worst Case: $15,000 Higher allowance Cost Source: Client Cost History/Estimate Provided by Client August 31, 2016 Page 60 of 72

98 Comp #: 608 Carport Posts - Partial Replace (e) Quantity: ~ (15), wood Funded?: Yes. History: Location: Adjacent to asphalt private drive Evaluation: Fifth of six phases. Note; image is only representative and not indicative of any phasing. 0 years 2 years Best Case: $12,000 Lower allowance Worst Case: $15,000 Higher allowance Cost Source: Client Cost History/Estimate Provided by Client Comp #: 608 Carport Posts - Partial Replace (f) Quantity: ~ (18), wood Funded?: Yes. History: Location: Evaluation: Last of six phases. Note; image is only representative and not indicative of any phasing. 0 years 3 years Best Case: $15,000 Lower allowance Worst Case: $19,000 Higher allowance Cost Source: Client Cost History/Estimate Provided by Client August 31, 2016 Page 61 of 72

99 Comp #: 610 Carports/Garages - Repair/Replace Quantity: (33) assorted sizes Funded?: No. Sustain along with other similar component groupings History: Location: Adjacent to asphalt private drive Evaluation: Other than one-time carport post replacements already factored, no anticipation of separate large scale reserve expenses going forward. Care, maintenance and replacement of paint, siding, roof, etc...along with similar residential building components is assumed. No separate reserve funding needed. 0 years Best Case: Worst Case: Cost Source: Comp #: 620 Guardhouse Structure - Refurbish Quantity: (1) 12'x13' Funded?: No. Sustain along with other similar component groupings History: Location: Entry area of property Evaluation: As before, unmanned and empty of furnishings/ equipment. No plans to add attendant or equipment at this time. No expectation of separate large scale expenses anyway, so no reserve funding recommended. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 62 of 72

100 Systems Comp #: 900 Plumbing - Repair Quantity: Extensive systems Funded?: No. Useful life not predictable or extended History: Location: Throughout common and limited common areas of community Evaluation: No widespread plumbing problems were reported at this time (such as; corrosion, sediment, pressure issues, leaks or occlusions). No history or pattern of significant repair expense was indicated. Assessing the plumbing systems is beyond the scope of a reserve study in any event. Prudent measure would include ongoing expert inspections of all building supply and drainage systems. Also, timely inspections and replacements of "high risk" components inside Units such as water heaters, hose connections, shower/tub drains, etc., regardless of responsibility for expense would be considered a best practice. Funding may be incorporated into future reserve study updates when remaining life of existing COA plumbing systems appears to be less than thirty years or if significant needs/patterns of expense emerge. 0 years No Photo Available Best Case: Worst Case: Cost Source: August 31, 2016 Page 63 of 72

101 Comp #: 902 Electrical - Repair Quantity: Extensive systems Funded?: No. Useful life not predictable or extended History: $7,000 in circuit breaker replacements and $8,000 project to protect meters and panels in previous years Location: Throughout common and limited common areas Evaluation: Assessing the electrical systems is also beyond the scope of our services. In previous years $7,000 in circuit breaker replacements and a $8,000 project to protect meters and panels at select buildings was indicated. No reported problems at this time. If installed per architectural specifications and local building codes, there is no predictable time frame for large scale repair/replacement expenses within the scope of our report. We recommend routine inspections (including infrared or thermographic testing) to assess conditions on an ongoing basis, along with regular maintenance of cleaning, tightening connections, and repairs where necessary. Funding may be incorporated into future reserve study updates if patterns of significant replacement continue, no reserve funding suggested at this time. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 64 of 72

102 Comp #: 910 A/C Units - Replace Quantity: (2) G.E. brand Funded?: No. Cost projected to be too small History: Location: Recreation building office and meeting room Evaluation: Assumed to be functioning and in operating order, no reported problems with either unit. Too small an expense to merit separate reserve funding status, treat as maintenance item. 0 years Best Case: Worst Case: Cost Source: Comp #: 912 Radiant Space Heaters - Replace Quantity: (9) assorted Funded?: No. Cost projected to be too small History: Location: Recreation building and Guardhouse interior Evaluation: Also not suitable for reserve designation. Inspect regularly, test for performance and safety. Repair and replace individually as needed from operating budget. Treat as maintenance item. 0 years No Photo Available Best Case: Worst Case: Cost Source: August 31, 2016 Page 65 of 72

103 Comp #: 913 Surveillance System - Refurbish Quantity: Moderate system Funded?: No. Cost projected to be too small History: Location: Clubhouse Evaluation: Small four camera system appeared to be in functional condition. No anticipation of significant enhancement or expansion at this time. No reserve funding recommended for minor replacement expense of existing equipment schedule. 0 years Best Case: Worst Case: Cost Source: Comp #: 929 Water Heater/Tank - Replace Quantity: (1) A.O. Smith Funded?: No. Costs projected to be too small for reserve funding History: Location: Pool equipment room within Recreation Building Evaluation: No access was provided to the pool equipment room. No reported problems to the 40,000 BTU, 40 gallon gas unit. Typical life expectancy of years; provide proactive replacements to help prevent water damage incidents and inconvenience. Too small an expense to merit separate reserve funding status; treat as maintenance item. 0 years No Photo Available Best Case: Worst Case: Cost Source: August 31, 2016 Page 66 of 72

104 Comp #: 965 Fire Alarm Panels - Replace Quantity: (20) Fire Lite Funded?: Yes. History: Large scale replacement occurred last in 2011 Location: Utility closets/boxes attached to individual buildings and interior of recreation building Evaluation: No access was provided into the fire alarm control room. Large scale replacement occurred last in 2011 when nearly all panels were replaced. Fair condition with no reported problems. Prior research with servicing contractor confirmed need to transition to RF (radio frequency) monitoring at "lower buildings" soon; modest one-time expense of $3,000- $4,000 should be provided from general operating funds. Parts obsolescence and prudent planning suggests setting aside funding for periodic panel replacement at the roughly the interval indicated below. Note; two panels had previously required replacement before 2011, however, for general planning purposes expenses for all twenty are included below. 20 years 14 years Best Case: $41,000 Lower allowance Worst Case: $52,000 higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 67 of 72

105 Comp #: 967 Pumps & Valves - Replace Quantity: Extensive systems Funded?: No. Useful life not predictable or extended History: 2010 $4,000 backflow replaced Location: Fire alarm closets Evaluation: No accesswas provided into the fire alarm control room. No reported problems at this time. Replacement of back flow pipes at an expense of ~$4,000 in Going forward, no predictable large scale expenses suitable for reserve designation. Treat as maintenance/operating issue. 0 years Best Case: Worst Case: Cost Source: Comp #: 980 Office Equipment - Replace Quantity: Minor equipment Funded?: No. Cost projected to be too small History: Location: Association office Evaluation: Similar minor equipment schedule as in previous years. No reserve funding suggested. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 68 of 72

106 Comp #: 985 Utility Vehicle - Replace Quantity: (1) 2006 Ford P/U Funded?: Yes. History: Last replacement purchased new in 2007; $15,000 expense Location: Throughout property Evaluation: No reported problems and routine maintenance is assumed. Last replacement purchased new in 2007; mileage of only 8,713 indicated on our site review. Low mileage accrues per year but typical utility application is considered severe duty. Reserve funding recommended for regular intervals of replacement at the level indicated below. 12 years No Photo Available 2 years Best Case: $15,000 Lower allowance Worst Case: $21,000 Higher allowance Cost Source: Client Cost History/Similar Project Cost History August 31, 2016 Page 69 of 72

107 Comp #: 990 Trash Compactor - Replace Quantity: (1) Ramjet RJ250 Funded?: Yes. History: 2008 $35,000. Location: Adjacent to asphalt private drive, Northeast quadrant of property Evaluation: Fair condition with no unexpected deterioration or wear. Regular professional inspections and maintenance are assumed. Cleaning, treatment for corrosion and spot painting will also benefit useful life cycles. Anticipate replacement at the year mark of life. 15 years 6 years Best Case: $40,000 Lower allowance Worst Case: $44,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 70 of 72

108 Comp #: 992 Trash Containers - Replace Quantity: (11) metal, 2 cubic yard Funded?: Yes. Meets National Reserve Study Standards criteria for Reserve Funding History: replacement last occurring between 2006 / 2008 Location: Adjacent to asphalt private drive and parking areas Evaluation: No apparent damage or perforation of several we inspected. The typical life expectancy of these types of containers is between seven and nine years. We suggest funding for replacement at roughly the time interval indicated below. Note; green recycle bins are not owned by COA so no reserve funding is factored. 9 years 0 years Best Case: $12,000 Lower allowance Worst Case: $14,000 Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History August 31, 2016 Page 71 of 72

109 Comp #: 998 Association Annual Inspection Quantity: Every year Funded?: No. Annual cost best handled as operating expense History: Location: Common and limited common areas Evaluation: Forensic building inspection is beyond the scope of a Reserve Study. Many Associations are required to have the Condominium inspected annually by a qualified engineer or architect in order to ascertain the physical condition of the improvements in the Condominium and to determine whether maintenance, repairs or replacements of any improvements are indicated. The inspection typically covers, at a minimum, the building envelope, including the roofs, siding, decks, caulking, flashings, windows and doors. Although your Associations governing documents do not appear to require such, we recommend the Board provide for regular comprehensive building envelope inspections, funded from the maintenance/operating budget, to ensure the weatherproofing and structural integrity of the buildings is maintained. 0 years Best Case: Worst Case: Cost Source: Comp #: 999 Reserve Study Update Quantity: Annual update Funded?: No. Annual cost best handled as operating expense History: Location: Common and limited common areas Evaluation: Per Washington law, chapter RCW reserve study updates with site inspections are required at least every three years to assess changes in condition (I.e., physical, economic, governmental, etc...) and the resulting effect on the community's long-term reserve plan. Most appropriately factored through operating budget, not as reserve component. 0 years Best Case: Worst Case: Cost Source: August 31, 2016 Page 72 of 72