Do-It-Yourself 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 Do-It-Yourself Reserve Study Arranmore HOA Portland, OR Report #: For Period Beginning: January 1, 2016 Expires: December 31, 2016 Date Prepared: January 29, 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

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 much Reserves are enough?...2 How much should we contribute?...3 What is our Recommended Funding Goal?...4 Projected Expenses...5 Expense Graph Figure Reserve Fund Status & Recommended Funding Plan...6 Funding Plan Graph Figure Cash Flow Graph Figure % Funded Graph Figure Table Descriptions...8 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...28 Terms and Definitions...29 Do-It-Yourself Worksheet... Appendix Association Reserves WA, LLC

4 3- Minute Executive Summary Association: Arranmore HOA #: Location: Portland, OR # of Units: 143 Report Period: January 1, 2016 through December 31, 2016 Findings/Recommendations as-of 1/1/2016: Projected Starting Reserve Balance:...$177,600 Current Fully Funded Reserve Balance:...$228,846 Average Reserve Deficit (Surplus) Per Unit:...$358 Recommended 2016 Annual Full Funding Contributions:...$28,600 Alternate minimum contribs* to keep Reserves above $0:...$18,610 Recommended 2016 Special Assessment for Reserves:... $0 Most Recent Budgeted Reserve Contribution Rate:...$28,600 Economic Assumptions: Net Annual After Tax Interest Earnings Accruing to Reserves % Annual Inflation Rate % This Reserve Study is based on the information provided to our firm, shown in the attached appendix, without oversight or review by Association Reserves personnel. This study was prepared by, or under the supervision of a credentialed Reserve Study Specialist (RS ) Your Reserve Fund is currently 78% Funded. This means the association s special assessment & deferred maintenance risk is currently low. 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 and your anticipated future expenses, our recommendation is to maintain annual Reserve Contributions of $28,600 for fiscal % Full contribution rate is designed to achieve the funding objective by the end of our 30-year report scope. Association Reserves WA, LLC. i

5 Table 1: Executive Summary Useful Rem. Current Life Useful Repl. Cost # Component (yrs) Life (yrs) Estimate 1 Pool House Carpet 15 1 $2,670 2 Pool House Furnace 45 7 $2,900 3 Pool House Roof - Now Concrete Tile 30 7 $12,800 4 Pool Dressing Rooms Remodel $26,100 5 Pool House Painting - Interior 10 5 $5,070 6 Pool House Painting - Exterior 10 6 $2,300 7 Pool House Entry Lock System $3,400 8 Pool Coping & Water Line Tile $12,450 9 Pool Re-plaster Vessel $15, Pool: Strip, Caulk, Rebalance H $5, Pool: Drains & Covers $3, Pool Cover 14 1 $3, Pool Concrete Deck 3,700 sq./ft $49, Pool Deck Expansion Joint Repair 5 4 $3, Underdeck Plumbing Allowance 30 4 $2, Pool Heater 12 0 $3, Pool Chemical Control System $5, Pool Filter $2, Pool Circulation/filter Pump 10 8 $2, Pool Wood Fence $8, Pool Fence - Stain 6 0 $2, Pool Entrance Walkway Pavers $3, Spa - New 30 4 $30, Spa - Circulation Pump 10 9 $1, Spa Filter (see note) $4, Spa Heater 12 2 $3, Spa Drain Cover $2, Spa Chemical Control System $5, Sauna Heater & Components 10 1 $1, Pool House 30 4 $50, Architectural Design Allowance N/A 1 $3, Well - Pump $11, Well, Control Pump 10 4 $6, Well-pipe Repair/Replacement Allowance 10 4 $2, Irrigation Smart Controller 12 7 $5, Sprinkler Repair/Replace Allowance 10 9 $5, Asphalt Pathway Paving Allowance 5 0 $5, Asphalt Pathway Repair Allowance 5 0 $5, Concrete Sidewalk Repair 30 8 $3, French Drain - Entry Tract 15 3 $8, French Drain - East Tract M $5, French Drain - West Tract M, Lower $4, French Drain - West Tract M, Upper $3, French Drain - Tract U $1, Re-landscape Oleson Rd. Berm, North $20, Re-landscape Bed at Pool House Entry $5, Re-landscape Berm N & W of Pool House 30 2 $10, Re-landscape St. John Pl. Circle 20 0 $2, Major Sod Removal 5 4 $2,500 Association Reserves WA, LLC. ii

6 Table 1: Executive Summary Useful Rem. Current Life Useful Repl. Cost # Component (yrs) Life (yrs) Estimate 50 Major Tree Pruning, South Oleson Berm 5 4 $5, Rock Retaining Wall at Entry $7, Total Funded Components Note 1: a Useful Life of N/A means a one-time expense, not expected to repeat. Note 2: Yellow highlighted line items are expected to require attention in the initial year, green highlighted items are expected to occur within the first five years. Association Reserves WA, LLC. iii

7 Assoc Introduction A Reserve Study is the art and science of anticipating, and preparing for, an association s major common area repair and replacement expenses. Partially art, because in this field we are making projections about the future. Partially science, because our work is a combination of research and welldefined computations, following consistent National Reserve Study Standard principles. The foundation of this and every Reserve Study is your Reserve Component List (what you are reserving for). This is because the Reserve Component List defines the scope and schedule of all your anticipated upcoming Reserve projects. Based on that List and your starting balance, we calculate the association s Reserve Fund Strength (reported in terms of Percent Funded ). Then we compute a Reserve Funding Plan to provide for the Reserve needs of the association. These form the three results of your Reserve Study. Reserve contributions are not for the future. Reserve contributions are designed to offset the ongoing, daily deterioration of your Reserve assets. Done well, a stable, budgeted Reserve Funding Plan will collect sufficient funds from the owners who enjoyed the use of those assets, so the association is financially prepared for the irregular expenditures scattered through future years when those projects eventually require replacement. Methodology For this Do-It-Yourself Reserve Study Kit, the client has provided the Reserve Component List, Reserve Balance, and values for interest and inflation. We then calculated Reserve Fund strength (Percent Funded) and developed a Funding Plan using the cash-flow methodology, designed to Fully Fund the association s Reserves. Association Reserves WA, LLC 1

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 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. Association Reserves WA, LLC 2

9 Assoc 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! 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. Association Reserves WA, LLC 3

10 Assoc 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

11 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 $225,726. Adding the next five years, your first ten years of projected Reserve expenses are $305,310. Please be aware of your near-term expenses, which are typically projected 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 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $ Years Figure 1 Association Reserves WA, LLC 5

12 Assoc Reserve Fund Status The starting point for our financial analysis is your Reserve Fund balance, projected to be $177,600 as-of the start of your Fiscal Year on January 1, As of January 1, 2016, your Fully Funded Balance is computed to be $228,846 (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 78% Funded. Across the country approx 2% 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 Annual budgeted contributions of $28, 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 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Years Figure 2 Association Reserves WA, LLC 6

13 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. $700, Yr Cash Flow Target Fully Funded Balance Recommended Funding Plan Alternate (Minimum) Current Budget $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ 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 7

14 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 8

15 Table 2: Reserve Component List Detail Rem. Current Useful Useful Repl. Cost # Component Quantity Life Life Estimate 1 Pool House Carpet Replace when Pool House is 15 1 $2,670 remodeled 2 Pool House Furnace 1 Gas Forced Air 45 7 $2,900 3 Pool House Roof - Now Concrete Tile 2000 sq./ft. replace w/ 30 7 $12,800 composition 4 Pool Dressing Rooms Remodel $12, $26,100 5 Pool House Painting - Interior 2014 Bid 10 5 $5,070 6 Pool House Painting - Exterior 2014 Bid 10 6 $2,300 7 Pool House Entry Lock System Card Entry, Including $3,400 Cards 8 Pool Coping & Water Line Tile 150 linear ft $12,450 9 Pool Re-plaster Vessel 2,200 Sq./Ft. /2/46, $15, Pool: Strip, Caulk, Rebalance H20 Cost when last replastered $5, Pool: Drains & Covers VGB Unblockable main $3,150 drains 12 Pool Cover 1200 sq./ft $3, Pool Concrete Deck 3,700 sq./ft. Allowance for demolition & 30 4 $49,050 new pour 14 Pool Deck Expansion Joint Repair 470 feet, remove, replace 5 4 $3, Underdeck Plumbing Allowance Repair/Replace when old 30 4 $2,700 deck removed 16 Pool Heater Raypack Digital 400 ASME 12 0 $3, Pool Chemical Control System Hayward Goldline Pro-Logic $5, Pool Filter Hayward 31" $2, Pool Circulation/filter Pump Installed Fall, $2, Pool Wood Fence 460 linear ft.(construction $8,000 cost) 21 Pool Fence - Stain Bid to be supplied. 6 0 $2, Pool Entrance Walkway Pavers 395 sq./ft. installed by $3,660 DeSantis 23 Spa - New Allowance for new 30 4 $30,000 installation 24 Spa - Circulation Pump Hayward VSP 3400 installed 10 9 $1, Spa Filter (see note) Hayward 26" $4, Spa Heater Raypack RP $3, Spa Drain Cover VGB Unblockable main drain $2, Spa Chemical Control System Hayward Goldline Pro-Logic $5, Sauna Heater & Components Polar LA-120 KW (OR Hot 10 1 $1,950 Tub) 30 Pool House Allowance for remodel 30 4 $50, Architectural Design Allowance Pool Deck, Landscape, Spa N/A 1 $3,590 Relocation 32 Well - Pump 30 HP Emerson Industrial $11,430 Utomation 33 Well, Control Pump Panel, Transducer & $6,900 Contractor Bypass 34 Well-pipe Repair/Replacement Allowance For unknown leaks, defects 10 4 $2, Irrigation Smart Controller WeatherTrak Pro 2 Smrt 12 7 $5,820 Controller 36 Sprinkler Repair/Replace Allowance $5,000 Every 5 years 10 9 $5, Asphalt Pathway Paving Allowance Repave damaged sections 5 0 $5, Asphalt Pathway Repair Allowance Allowance to repair damaged sections 39 Concrete Sidewalk Repair Allowance to repair damaged sections 5 0 $5, $3,130 Association Reserves WA, LLC 9

16 Table 2: Reserve Component List Detail Rem. Current Useful Useful Repl. Cost # Component Quantity Life Life Estimate 40 French Drain - Entry Tract South of Lots $8, French Drain - East Tract M East of Lot $5, French Drain - West Tract M, Lower Behind Lots $4, French Drain - West Tract M, Upper Behind Lots 57, $3, French Drain - Tract U North of Lots 126 & $1, Re-landscape Oleson Rd. Berm, North Install new plantings $20, Re-landscape Bed at Pool House Entry Install new plantings $5, Re-landscape Berm N & W of Pool House Remove dying pines, replant 30 2 $10, Re-landscape St. John Pl. Circle Install new plantings 20 0 $2, Major Sod Removal $2,500 per yr. for 5 yrs. 5 4 $2, Major Tree Pruning, South Oleson Berm Prune every 5 years 5 4 $5, Rock Retaining Wall at Entry Rebuild w/ existing rock $7, Total Funded Components Association Reserves WA, LLC 10

17 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance 1 Pool House Carpet $2,670 X 14 / 15 = $2,492 2 Pool House Furnace $2,900 X 38 / 45 = $2,449 3 Pool House Roof - Now Concrete Tile $12,800 X 23 / 30 = $9,813 4 Pool Dressing Rooms Remodel $26,100 X 5 / 25 = $5,220 5 Pool House Painting - Interior $5,070 X 5 / 10 = $2,535 6 Pool House Painting - Exterior $2,300 X 4 / 10 = $920 7 Pool House Entry Lock System $3,400 X 2 / 15 = $453 8 Pool Coping & Water Line Tile $12,450 X 7 / 25 = $3,486 9 Pool Re-plaster Vessel $15,680 X 7 / 25 = $4, Pool: Strip, Caulk, Rebalance H20 $5,660 X 7 / 25 = $1, Pool: Drains & Covers $3,150 X 7 / 25 = $ Pool Cover $3,170 X 13 / 14 = $2, Pool Concrete Deck 3,700 sq./ft. $49,050 X 26 / 30 = $42, Pool Deck Expansion Joint Repair $3,195 X 1 / 5 = $ Underdeck Plumbing Allowance $2,700 X 26 / 30 = $2, Pool Heater $3,675 X 12 / 12 = $3, Pool Chemical Control System $5,000 X 1 / 12 = $ Pool Filter $2,000 X 1 / 30 = $67 19 Pool Circulation/filter Pump $2,290 X 2 / 10 = $ Pool Wood Fence $8,000 X 9 / 20 = $3, Pool Fence - Stain $2,500 X 6 / 6 = $2, Pool Entrance Walkway Pavers $3,660 X 7 / 30 = $ Spa - New $30,000 X 26 / 30 = $26, Spa - Circulation Pump $1,850 X 1 / 10 = $ Spa Filter (see note) $4,240 X 1 / 30 = $ Spa Heater $3,800 X 10 / 12 = $3, Spa Drain Cover $2,370 X 7 / 25 = $ Spa Chemical Control System $5,000 X 1 / 12 = $ Sauna Heater & Components $1,950 X 9 / 10 = $1, Pool House $50,000 X 26 / 30 = $43, Architectural Design Allowance $3,590 X 0 / 0 = $1, Well - Pump $11,430 X 6 / 20 = $3, Well, Control Pump $6,900 X 6 / 10 = $4, Well-pipe Repair/Replacement Allowance $2,920 X 6 / 10 = $1, Irrigation Smart Controller $5,820 X 5 / 12 = $2, Sprinkler Repair/Replace Allowance $5,000 X 1 / 10 = $ Asphalt Pathway Paving Allowance $5,000 X 5 / 5 = $5, Asphalt Pathway Repair Allowance $5,000 X 5 / 5 = $5, Concrete Sidewalk Repair $3,130 X 22 / 30 = $2, French Drain - Entry Tract $8,400 X 12 / 15 = $6, French Drain - East Tract M $5,890 X 2 / 15 = $ French Drain - West Tract M, Lower $4,600 X 4 / 15 = $1, French Drain - West Tract M, Upper $3,920 X 4 / 15 = $1, French Drain - Tract U $1,540 X 5 / 15 = $ Re-landscape Oleson Rd. Berm, North $20,500 X 2 / 20 = $2, Re-landscape Bed at Pool House Entry $5,120 X 4 / 20 = $1, Re-landscape Berm N & W of Pool House $10,000 X 28 / 30 = $9,333 Association Reserves WA, LLC 11

18 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance 48 Re-landscape St. John Pl. Circle $2,500 X 20 / 20 = $2, Major Sod Removal $2,500 X 1 / 5 = $ Major Tree Pruning, South Oleson Berm $5,120 X 1 / 5 = $1, Rock Retaining Wall at Entry $7,760 X 38 / 50 = $5,898 $228,846 Association Reserves WA, LLC 12

19 Table 4: Component Significance Current Useful Repl. Cost Deterioration Deterioration # Component Life Estimate Cost/yr Significance 1 Pool House Carpet 15 $2,670 $ % 2 Pool House Furnace 45 $2,900 $64 0.3% 3 Pool House Roof - Now Concrete Tile 30 $12,800 $ % 4 Pool Dressing Rooms Remodel 25 $26,100 $1, % 5 Pool House Painting - Interior 10 $5,070 $ % 6 Pool House Painting - Exterior 10 $2,300 $ % 7 Pool House Entry Lock System 15 $3,400 $ % 8 Pool Coping & Water Line Tile 25 $12,450 $ % 9 Pool Re-plaster Vessel 25 $15,680 $ % 10 Pool: Strip, Caulk, Rebalance H20 25 $5,660 $ % 11 Pool: Drains & Covers 25 $3,150 $ % 12 Pool Cover 14 $3,170 $ % 13 Pool Concrete Deck 3,700 sq./ft. 30 $49,050 $1, % 14 Pool Deck Expansion Joint Repair 5 $3,195 $ % 15 Underdeck Plumbing Allowance 30 $2,700 $90 0.4% 16 Pool Heater 12 $3,675 $ % 17 Pool Chemical Control System 12 $5,000 $ % 18 Pool Filter 30 $2,000 $67 0.3% 19 Pool Circulation/filter Pump 10 $2,290 $ % 20 Pool Wood Fence 20 $8,000 $ % 21 Pool Fence - Stain 6 $2,500 $ % 22 Pool Entrance Walkway Pavers 30 $3,660 $ % 23 Spa - New 30 $30,000 $1, % 24 Spa - Circulation Pump 10 $1,850 $ % 25 Spa Filter (see note) 30 $4,240 $ % 26 Spa Heater 12 $3,800 $ % 27 Spa Drain Cover 25 $2,370 $95 0.4% 28 Spa Chemical Control System 12 $5,000 $ % 29 Sauna Heater & Components 10 $1,950 $ % 30 Pool House 30 $50,000 $1, % 31 Architectural Design Allowance N/A $3,590 $0 0.0% 32 Well - Pump 20 $11,430 $ % 33 Well, Control Pump 10 $6,900 $ % 34 Well-pipe Repair/Replacement Allowance 10 $2,920 $ % 35 Irrigation Smart Controller 12 $5,820 $ % 36 Sprinkler Repair/Replace Allowance 10 $5,000 $ % 37 Asphalt Pathway Paving Allowance 5 $5,000 $1, % 38 Asphalt Pathway Repair Allowance 5 $5,000 $1, % 39 Concrete Sidewalk Repair 30 $3,130 $ % 40 French Drain - Entry Tract 15 $8,400 $ % 41 French Drain - East Tract M 15 $5,890 $ % 42 French Drain - West Tract M, Lower 15 $4,600 $ % 43 French Drain - West Tract M, Upper 15 $3,920 $ % 44 French Drain - Tract U 15 $1,540 $ % 45 Re-landscape Oleson Rd. Berm, North 20 $20,500 $1, % 46 Re-landscape Bed at Pool House Entry 20 $5,120 $ % 47 Re-landscape Berm N & W of Pool House 30 $10,000 $ % Association Reserves WA, LLC 13

20 Table 4: Component Significance Current Useful Repl. Cost Deterioration Deterioration # Component Life Estimate Cost/yr Significance 48 Re-landscape St. John Pl. Circle 20 $2,500 $ % 49 Major Sod Removal 5 $2,500 $ % 50 Major Tree Pruning, South Oleson Berm 5 $5,120 $1, % 51 Rock Retaining Wall at Entry 50 $7,760 $ % 51 Total Funded Components $22, % Association Reserves WA, LLC 14

21 Table 5: 30-Year Reserve Plan Summary Fiscal Year Start: 01/01/16 Interest: 0.8% Inflation: 3.0% Reserve Fund Strength Calculations (All values as of Fiscal Year Start Date) Projected Reserve Balance Changes Starting Fully Special Loans or Reserve Funded Percent Assmt Reserve Special Interest Reserve Year Balance Balance Funded Risk Contribs. Assmts Income Expenses 2016 $177,600 $228, % Low $28,270 $0 $1,373 $18, $188,568 $241, % Low $29,118 $0 $1,485 $11, $207,449 $260, % Low $29,992 $0 $1,619 $14, $224,419 $277, % Low $30,891 $0 $1,771 $9, $247,902 $301, % Low $31,818 $0 $1,340 $171, $109,550 $159, % Med $32,773 $0 $882 $17, $125,734 $173, % Low $33,756 $0 $1,052 $5, $154,810 $200, % Low $34,769 $0 $1,196 $26, $164,308 $207, % Low $35,812 $0 $1,345 $6, $194,600 $235, % Low $36,886 $0 $1,517 $23, $209,953 $249, % Low $37,993 $0 $1,665 $15, $234,102 $271, % Low $39,132 $0 $1,761 $39, $235,586 $271, % Low $40,306 $0 $1,850 $19, $257,874 $291, % Low $41,515 $0 $2,046 $13, $287,792 $320, % Low $42,761 $0 $2,123 $54, $278,427 $309, % Low $44,044 $0 $2,154 $28, $296,207 $325, % Low $45,365 $0 $2,339 $16, $327,720 $355, % Low $46,726 $0 $2,642 $ $377,088 $404, % Low $48,128 $0 $2,551 $124, $303,490 $327, % Low $49,572 $0 $2,316 $41, $314,196 $335, % Low $51,059 $0 $2,294 $69, $297,833 $315, % Low $52,591 $0 $2,426 $3, $349,222 $363, % Low $54,168 $0 $2,832 $ $406,222 $419, % Low $55,793 $0 $3,166 $26, $438,222 $449, % Low $57,467 $0 $3,309 $54, $444,499 $453, % Low $59,191 $0 $3,437 $34, $472,349 $479, % Low $60,671 $0 $3,664 $31, $505,155 $511, % Low $62,188 $0 $4,036 $ $571,378 $578, % Low $63,742 $0 $4,440 $26, $613,067 $620, % Low $65,336 $0 $4,620 $63,804 Association Reserves WA, LLC 15

22 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Starting Reserve Balance $177,600 $188,568 $207,449 $224,419 $247,902 Annual Reserve Contribution $28,270 $29,118 $29,992 $30,891 $31,818 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $1,373 $1,485 $1,619 $1,771 $1,340 Total Income $207,243 $219,170 $239,060 $257,081 $281,060 # Component 1 Pool House Carpet $0 $2,750 $0 $0 $0 2 Pool House Furnace $0 $0 $0 $0 $0 3 Pool House Roof - Now Concrete Tile $0 $0 $0 $0 $0 4 Pool Dressing Rooms Remodel $0 $0 $0 $0 $0 5 Pool House Painting - Interior $0 $0 $0 $0 $0 6 Pool House Painting - Exterior $0 $0 $0 $0 $0 7 Pool House Entry Lock System $0 $0 $0 $0 $0 8 Pool Coping & Water Line Tile $0 $0 $0 $0 $0 9 Pool Re-plaster Vessel $0 $0 $0 $0 $0 10 Pool: Strip, Caulk, Rebalance H20 $0 $0 $0 $0 $0 11 Pool: Drains & Covers $0 $0 $0 $0 $0 12 Pool Cover $0 $3,265 $0 $0 $0 13 Pool Concrete Deck 3,700 sq./ft. $0 $0 $0 $0 $55, Pool Deck Expansion Joint Repair $0 $0 $0 $0 $3, Underdeck Plumbing Allowance $0 $0 $0 $0 $3, Pool Heater $3,675 $0 $0 $0 $0 17 Pool Chemical Control System $0 $0 $0 $0 $0 18 Pool Filter $0 $0 $0 $0 $0 19 Pool Circulation/filter Pump $0 $0 $0 $0 $0 20 Pool Wood Fence $0 $0 $0 $0 $0 21 Pool Fence - Stain $2,500 $0 $0 $0 $0 22 Pool Entrance Walkway Pavers $0 $0 $0 $0 $0 23 Spa - New $0 $0 $0 $0 $33, Spa - Circulation Pump $0 $0 $0 $0 $0 25 Spa Filter (see note) $0 $0 $0 $0 $0 26 Spa Heater $0 $0 $4,031 $0 $0 27 Spa Drain Cover $0 $0 $0 $0 $0 28 Spa Chemical Control System $0 $0 $0 $0 $0 29 Sauna Heater & Components $0 $2,009 $0 $0 $0 30 Pool House $0 $0 $0 $0 $56, Architectural Design Allowance $0 $3,698 $0 $0 $0 32 Well - Pump $0 $0 $0 $0 $0 33 Well, Control Pump $0 $0 $0 $0 $7, Well-pipe Repair/Replacement Allowance $0 $0 $0 $0 $3, Irrigation Smart Controller $0 $0 $0 $0 $0 36 Sprinkler Repair/Replace Allowance $0 $0 $0 $0 $0 37 Asphalt Pathway Paving Allowance $5,000 $0 $0 $0 $0 38 Asphalt Pathway Repair Allowance $5,000 $0 $0 $0 $0 39 Concrete Sidewalk Repair $0 $0 $0 $0 $0 40 French Drain - Entry Tract $0 $0 $0 $9,179 $0 41 French Drain - East Tract M $0 $0 $0 $0 $0 Association Reserves WA, LLC 16

23 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year French Drain - West Tract M, Lower $0 $0 $0 $0 $0 43 French Drain - West Tract M, Upper $0 $0 $0 $0 $0 44 French Drain - Tract U $0 $0 $0 $0 $0 45 Re-landscape Oleson Rd. Berm, North $0 $0 $0 $0 $0 46 Re-landscape Bed at Pool House Entry $0 $0 $0 $0 $0 47 Re-landscape Berm N & W of Pool House $0 $0 $10,609 $0 $0 48 Re-landscape St. John Pl. Circle $2,500 $0 $0 $0 $0 49 Major Sod Removal $0 $0 $0 $0 $2, Major Tree Pruning, South Oleson Berm $0 $0 $0 $0 $5, Rock Retaining Wall at Entry $0 $0 $0 $0 $0 Total Expenses $18,675 $11,721 $14,640 $9,179 $171,511 Ending Reserve Balance: $188,568 $207,449 $224,419 $247,902 $109,550 Association Reserves WA, LLC 17

24 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Starting Reserve Balance $109,550 $125,734 $154,810 $164,308 $194,600 Annual Reserve Contribution $32,773 $33,756 $34,769 $35,812 $36,886 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $882 $1,052 $1,196 $1,345 $1,517 Total Income $143,205 $160,542 $190,775 $201,465 $233,002 # Component 1 Pool House Carpet $0 $0 $0 $0 $0 2 Pool House Furnace $0 $0 $3,567 $0 $0 3 Pool House Roof - Now Concrete Tile $0 $0 $15,742 $0 $0 4 Pool Dressing Rooms Remodel $0 $0 $0 $0 $0 5 Pool House Painting - Interior $5,878 $0 $0 $0 $0 6 Pool House Painting - Exterior $0 $2,746 $0 $0 $0 7 Pool House Entry Lock System $0 $0 $0 $0 $0 8 Pool Coping & Water Line Tile $0 $0 $0 $0 $0 9 Pool Re-plaster Vessel $0 $0 $0 $0 $0 10 Pool: Strip, Caulk, Rebalance H20 $0 $0 $0 $0 $0 11 Pool: Drains & Covers $0 $0 $0 $0 $0 12 Pool Cover $0 $0 $0 $0 $0 13 Pool Concrete Deck 3,700 sq./ft. $0 $0 $0 $0 $0 14 Pool Deck Expansion Joint Repair $0 $0 $0 $0 $4, Underdeck Plumbing Allowance $0 $0 $0 $0 $0 16 Pool Heater $0 $0 $0 $0 $0 17 Pool Chemical Control System $0 $0 $0 $0 $0 18 Pool Filter $0 $0 $0 $0 $0 19 Pool Circulation/filter Pump $0 $0 $0 $2,901 $0 20 Pool Wood Fence $0 $0 $0 $0 $0 21 Pool Fence - Stain $0 $2,985 $0 $0 $0 22 Pool Entrance Walkway Pavers $0 $0 $0 $0 $0 23 Spa - New $0 $0 $0 $0 $0 24 Spa - Circulation Pump $0 $0 $0 $0 $2, Spa Filter (see note) $0 $0 $0 $0 $0 26 Spa Heater $0 $0 $0 $0 $0 27 Spa Drain Cover $0 $0 $0 $0 $0 28 Spa Chemical Control System $0 $0 $0 $0 $0 29 Sauna Heater & Components $0 $0 $0 $0 $0 30 Pool House $0 $0 $0 $0 $0 31 Architectural Design Allowance $0 $0 $0 $0 $0 32 Well - Pump $0 $0 $0 $0 $0 33 Well, Control Pump $0 $0 $0 $0 $0 34 Well-pipe Repair/Replacement Allowance $0 $0 $0 $0 $0 35 Irrigation Smart Controller $0 $0 $7,158 $0 $0 36 Sprinkler Repair/Replace Allowance $0 $0 $0 $0 $6, Asphalt Pathway Paving Allowance $5,796 $0 $0 $0 $0 38 Asphalt Pathway Repair Allowance $5,796 $0 $0 $0 $0 39 Concrete Sidewalk Repair $0 $0 $0 $3,965 $0 40 French Drain - Entry Tract $0 $0 $0 $0 $0 41 French Drain - East Tract M $0 $0 $0 $0 $0 Association Reserves WA, LLC 18

25 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year French Drain - West Tract M, Lower $0 $0 $0 $0 $0 43 French Drain - West Tract M, Upper $0 $0 $0 $0 $0 44 French Drain - Tract U $0 $0 $0 $0 $0 45 Re-landscape Oleson Rd. Berm, North $0 $0 $0 $0 $0 46 Re-landscape Bed at Pool House Entry $0 $0 $0 $0 $0 47 Re-landscape Berm N & W of Pool House $0 $0 $0 $0 $0 48 Re-landscape St. John Pl. Circle $0 $0 $0 $0 $0 49 Major Sod Removal $0 $0 $0 $0 $3, Major Tree Pruning, South Oleson Berm $0 $0 $0 $0 $6, Rock Retaining Wall at Entry $0 $0 $0 $0 $0 Total Expenses $17,470 $5,731 $26,467 $6,866 $23,049 Ending Reserve Balance: $125,734 $154,810 $164,308 $194,600 $209,953 Association Reserves WA, LLC 19

26 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Starting Reserve Balance $209,953 $234,102 $235,586 $257,874 $287,792 Annual Reserve Contribution $37,993 $39,132 $40,306 $41,515 $42,761 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $1,665 $1,761 $1,850 $2,046 $2,123 Total Income $249,610 $274,995 $277,742 $301,435 $332,676 # Component 1 Pool House Carpet $0 $0 $0 $0 $0 2 Pool House Furnace $0 $0 $0 $0 $0 3 Pool House Roof - Now Concrete Tile $0 $0 $0 $0 $0 4 Pool Dressing Rooms Remodel $0 $0 $0 $0 $0 5 Pool House Painting - Interior $0 $0 $0 $0 $0 6 Pool House Painting - Exterior $0 $0 $0 $0 $0 7 Pool House Entry Lock System $0 $0 $0 $4,993 $0 8 Pool Coping & Water Line Tile $0 $0 $0 $0 $0 9 Pool Re-plaster Vessel $0 $0 $0 $0 $0 10 Pool: Strip, Caulk, Rebalance H20 $0 $0 $0 $0 $0 11 Pool: Drains & Covers $0 $0 $0 $0 $0 12 Pool Cover $0 $0 $0 $0 $0 13 Pool Concrete Deck 3,700 sq./ft. $0 $0 $0 $0 $0 14 Pool Deck Expansion Joint Repair $0 $0 $0 $0 $4, Underdeck Plumbing Allowance $0 $0 $0 $0 $0 16 Pool Heater $0 $0 $5,240 $0 $0 17 Pool Chemical Control System $0 $6,921 $0 $0 $0 18 Pool Filter $0 $0 $0 $0 $0 19 Pool Circulation/filter Pump $0 $0 $0 $0 $0 20 Pool Wood Fence $0 $11,074 $0 $0 $0 21 Pool Fence - Stain $0 $0 $3,564 $0 $0 22 Pool Entrance Walkway Pavers $0 $0 $0 $0 $0 23 Spa - New $0 $0 $0 $0 $0 24 Spa - Circulation Pump $0 $0 $0 $0 $0 25 Spa Filter (see note) $0 $0 $0 $0 $0 26 Spa Heater $0 $0 $0 $0 $5, Spa Drain Cover $0 $0 $0 $0 $0 28 Spa Chemical Control System $0 $6,921 $0 $0 $0 29 Sauna Heater & Components $0 $2,699 $0 $0 $0 30 Pool House $0 $0 $0 $0 $0 31 Architectural Design Allowance $0 $0 $0 $0 $0 32 Well - Pump $0 $0 $0 $0 $17, Well, Control Pump $0 $0 $0 $0 $10, Well-pipe Repair/Replacement Allowance $0 $0 $0 $0 $4, Irrigation Smart Controller $0 $0 $0 $0 $0 36 Sprinkler Repair/Replace Allowance $0 $0 $0 $0 $0 37 Asphalt Pathway Paving Allowance $6,720 $0 $0 $0 $0 38 Asphalt Pathway Repair Allowance $6,720 $0 $0 $0 $0 39 Concrete Sidewalk Repair $0 $0 $0 $0 $0 40 French Drain - Entry Tract $0 $0 $0 $0 $0 41 French Drain - East Tract M $0 $0 $0 $8,650 $0 Association Reserves WA, LLC 20

27 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year French Drain - West Tract M, Lower $0 $6,367 $0 $0 $0 43 French Drain - West Tract M, Upper $0 $5,426 $0 $0 $0 44 French Drain - Tract U $2,070 $0 $0 $0 $0 45 Re-landscape Oleson Rd. Berm, North $0 $0 $0 $0 $0 46 Re-landscape Bed at Pool House Entry $0 $0 $0 $0 $0 47 Re-landscape Berm N & W of Pool House $0 $0 $0 $0 $0 48 Re-landscape St. John Pl. Circle $0 $0 $0 $0 $0 49 Major Sod Removal $0 $0 $0 $0 $3, Major Tree Pruning, South Oleson Berm $0 $0 $0 $0 $7, Rock Retaining Wall at Entry $0 $0 $11,064 $0 $0 Total Expenses $15,509 $39,409 $19,868 $13,643 $54,249 Ending Reserve Balance: $234,102 $235,586 $257,874 $287,792 $278,427 Association Reserves WA, LLC 21

28 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Starting Reserve Balance $278,427 $296,207 $327,720 $377,088 $303,490 Annual Reserve Contribution $44,044 $45,365 $46,726 $48,128 $49,572 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $2,154 $2,339 $2,642 $2,551 $2,316 Total Income $324,625 $343,911 $377,088 $427,767 $355,377 # Component 1 Pool House Carpet $0 $4,285 $0 $0 $0 2 Pool House Furnace $0 $0 $0 $0 $0 3 Pool House Roof - Now Concrete Tile $0 $0 $0 $0 $0 4 Pool Dressing Rooms Remodel $0 $0 $0 $0 $0 5 Pool House Painting - Interior $7,899 $0 $0 $0 $0 6 Pool House Painting - Exterior $0 $3,691 $0 $0 $0 7 Pool House Entry Lock System $0 $0 $0 $0 $0 8 Pool Coping & Water Line Tile $0 $0 $0 $21,195 $0 9 Pool Re-plaster Vessel $0 $0 $0 $26,694 $0 10 Pool: Strip, Caulk, Rebalance H20 $0 $0 $0 $9,636 $0 11 Pool: Drains & Covers $0 $0 $0 $5,363 $0 12 Pool Cover $4,939 $0 $0 $0 $0 13 Pool Concrete Deck 3,700 sq./ft. $0 $0 $0 $0 $0 14 Pool Deck Expansion Joint Repair $0 $0 $0 $0 $5, Underdeck Plumbing Allowance $0 $0 $0 $0 $0 16 Pool Heater $0 $0 $0 $0 $0 17 Pool Chemical Control System $0 $0 $0 $0 $0 18 Pool Filter $0 $0 $0 $0 $0 19 Pool Circulation/filter Pump $0 $0 $0 $3,899 $0 20 Pool Wood Fence $0 $0 $0 $0 $0 21 Pool Fence - Stain $0 $0 $0 $4,256 $0 22 Pool Entrance Walkway Pavers $0 $0 $0 $0 $0 23 Spa - New $0 $0 $0 $0 $0 24 Spa - Circulation Pump $0 $0 $0 $0 $3, Spa Filter (see note) $0 $0 $0 $0 $0 26 Spa Heater $0 $0 $0 $0 $0 27 Spa Drain Cover $0 $0 $0 $4,035 $0 28 Spa Chemical Control System $0 $0 $0 $0 $0 29 Sauna Heater & Components $0 $0 $0 $0 $0 30 Pool House $0 $0 $0 $0 $0 31 Architectural Design Allowance $0 $0 $0 $0 $0 32 Well - Pump $0 $0 $0 $0 $0 33 Well, Control Pump $0 $0 $0 $0 $0 34 Well-pipe Repair/Replacement Allowance $0 $0 $0 $0 $0 35 Irrigation Smart Controller $0 $0 $0 $0 $10, Sprinkler Repair/Replace Allowance $0 $0 $0 $0 $8, Asphalt Pathway Paving Allowance $7,790 $0 $0 $0 $0 38 Asphalt Pathway Repair Allowance $7,790 $0 $0 $0 $0 39 Concrete Sidewalk Repair $0 $0 $0 $0 $0 40 French Drain - Entry Tract $0 $0 $0 $14,300 $0 41 French Drain - East Tract M $0 $0 $0 $0 $0 Association Reserves WA, LLC 22

29 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year French Drain - West Tract M, Lower $0 $0 $0 $0 $0 43 French Drain - West Tract M, Upper $0 $0 $0 $0 $0 44 French Drain - Tract U $0 $0 $0 $0 $0 45 Re-landscape Oleson Rd. Berm, North $0 $0 $0 $34,900 $0 46 Re-landscape Bed at Pool House Entry $0 $8,216 $0 $0 $0 47 Re-landscape Berm N & W of Pool House $0 $0 $0 $0 $0 48 Re-landscape St. John Pl. Circle $0 $0 $0 $0 $0 49 Major Sod Removal $0 $0 $0 $0 $4, Major Tree Pruning, South Oleson Berm $0 $0 $0 $0 $8, Rock Retaining Wall at Entry $0 $0 $0 $0 $0 Total Expenses $28,417 $16,191 $0 $124,278 $41,181 Ending Reserve Balance: $296,207 $327,720 $377,088 $303,490 $314,196 Association Reserves WA, LLC 23

30 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Starting Reserve Balance $314,196 $297,833 $349,222 $406,222 $438,222 Annual Reserve Contribution $51,059 $52,591 $54,168 $55,793 $57,467 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $2,294 $2,426 $2,832 $3,166 $3,309 Total Income $367,549 $352,849 $406,222 $465,181 $498,998 # Component 1 Pool House Carpet $0 $0 $0 $0 $0 2 Pool House Furnace $0 $0 $0 $0 $0 3 Pool House Roof - Now Concrete Tile $0 $0 $0 $0 $0 4 Pool Dressing Rooms Remodel $47,140 $0 $0 $0 $0 5 Pool House Painting - Interior $0 $0 $0 $0 $0 6 Pool House Painting - Exterior $0 $0 $0 $0 $0 7 Pool House Entry Lock System $0 $0 $0 $0 $0 8 Pool Coping & Water Line Tile $0 $0 $0 $0 $0 9 Pool Re-plaster Vessel $0 $0 $0 $0 $0 10 Pool: Strip, Caulk, Rebalance H20 $0 $0 $0 $0 $0 11 Pool: Drains & Covers $0 $0 $0 $0 $0 12 Pool Cover $0 $0 $0 $0 $0 13 Pool Concrete Deck 3,700 sq./ft. $0 $0 $0 $0 $0 14 Pool Deck Expansion Joint Repair $0 $0 $0 $0 $6, Underdeck Plumbing Allowance $0 $0 $0 $0 $0 16 Pool Heater $0 $0 $0 $0 $7, Pool Chemical Control System $0 $0 $0 $9,868 $0 18 Pool Filter $0 $0 $0 $0 $0 19 Pool Circulation/filter Pump $0 $0 $0 $0 $0 20 Pool Wood Fence $0 $0 $0 $0 $0 21 Pool Fence - Stain $0 $0 $0 $0 $5, Pool Entrance Walkway Pavers $0 $0 $0 $7,223 $0 23 Spa - New $0 $0 $0 $0 $0 24 Spa - Circulation Pump $0 $0 $0 $0 $0 25 Spa Filter (see note) $0 $0 $0 $0 $0 26 Spa Heater $0 $0 $0 $0 $0 27 Spa Drain Cover $0 $0 $0 $0 $0 28 Spa Chemical Control System $0 $0 $0 $9,868 $0 29 Sauna Heater & Components $0 $3,628 $0 $0 $0 30 Pool House $0 $0 $0 $0 $0 31 Architectural Design Allowance $0 $0 $0 $0 $0 32 Well - Pump $0 $0 $0 $0 $0 33 Well, Control Pump $0 $0 $0 $0 $14, Well-pipe Repair/Replacement Allowance $0 $0 $0 $0 $5, Irrigation Smart Controller $0 $0 $0 $0 $0 36 Sprinkler Repair/Replace Allowance $0 $0 $0 $0 $0 37 Asphalt Pathway Paving Allowance $9,031 $0 $0 $0 $0 38 Asphalt Pathway Repair Allowance $9,031 $0 $0 $0 $0 39 Concrete Sidewalk Repair $0 $0 $0 $0 $0 40 French Drain - Entry Tract $0 $0 $0 $0 $0 41 French Drain - East Tract M $0 $0 $0 $0 $0 Association Reserves WA, LLC 24

31 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year French Drain - West Tract M, Lower $0 $0 $0 $0 $0 43 French Drain - West Tract M, Upper $0 $0 $0 $0 $0 44 French Drain - Tract U $0 $0 $0 $0 $0 45 Re-landscape Oleson Rd. Berm, North $0 $0 $0 $0 $0 46 Re-landscape Bed at Pool House Entry $0 $0 $0 $0 $0 47 Re-landscape Berm N & W of Pool House $0 $0 $0 $0 $0 48 Re-landscape St. John Pl. Circle $4,515 $0 $0 $0 $0 49 Major Sod Removal $0 $0 $0 $0 $5, Major Tree Pruning, South Oleson Berm $0 $0 $0 $0 $10, Rock Retaining Wall at Entry $0 $0 $0 $0 $0 Total Expenses $69,716 $3,628 $0 $26,959 $54,499 Ending Reserve Balance: $297,833 $349,222 $406,222 $438,222 $444,499 Association Reserves WA, LLC 25

32 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Starting Reserve Balance $444,499 $472,349 $505,155 $571,378 $613,067 Annual Reserve Contribution $59,191 $60,671 $62,188 $63,742 $65,336 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $3,437 $3,664 $4,036 $4,440 $4,620 Total Income $507,127 $536,684 $571,378 $639,561 $683,022 # Component 1 Pool House Carpet $0 $0 $0 $0 $0 2 Pool House Furnace $0 $0 $0 $0 $0 3 Pool House Roof - Now Concrete Tile $0 $0 $0 $0 $0 4 Pool Dressing Rooms Remodel $0 $0 $0 $0 $0 5 Pool House Painting - Interior $10,615 $0 $0 $0 $0 6 Pool House Painting - Exterior $0 $4,960 $0 $0 $0 7 Pool House Entry Lock System $0 $0 $0 $7,779 $0 8 Pool Coping & Water Line Tile $0 $0 $0 $0 $0 9 Pool Re-plaster Vessel $0 $0 $0 $0 $0 10 Pool: Strip, Caulk, Rebalance H20 $0 $0 $0 $0 $0 11 Pool: Drains & Covers $0 $0 $0 $0 $0 12 Pool Cover $0 $0 $0 $0 $7, Pool Concrete Deck 3,700 sq./ft. $0 $0 $0 $0 $0 14 Pool Deck Expansion Joint Repair $0 $0 $0 $0 $7, Underdeck Plumbing Allowance $0 $0 $0 $0 $0 16 Pool Heater $0 $0 $0 $0 $0 17 Pool Chemical Control System $0 $0 $0 $0 $0 18 Pool Filter $0 $0 $0 $0 $4, Pool Circulation/filter Pump $0 $0 $0 $5,239 $0 20 Pool Wood Fence $0 $0 $0 $0 $0 21 Pool Fence - Stain $0 $0 $0 $0 $0 22 Pool Entrance Walkway Pavers $0 $0 $0 $0 $0 23 Spa - New $0 $0 $0 $0 $0 24 Spa - Circulation Pump $0 $0 $0 $0 $4, Spa Filter (see note) $0 $0 $0 $0 $9, Spa Heater $0 $8,195 $0 $0 $0 27 Spa Drain Cover $0 $0 $0 $0 $0 28 Spa Chemical Control System $0 $0 $0 $0 $0 29 Sauna Heater & Components $0 $0 $0 $0 $0 30 Pool House $0 $0 $0 $0 $0 31 Architectural Design Allowance $0 $0 $0 $0 $0 32 Well - Pump $0 $0 $0 $0 $0 33 Well, Control Pump $0 $0 $0 $0 $0 34 Well-pipe Repair/Replacement Allowance $0 $0 $0 $0 $0 35 Irrigation Smart Controller $0 $0 $0 $0 $0 36 Sprinkler Repair/Replace Allowance $0 $0 $0 $0 $11, Asphalt Pathway Paving Allowance $10,469 $0 $0 $0 $0 38 Asphalt Pathway Repair Allowance $10,469 $0 $0 $0 $0 39 Concrete Sidewalk Repair $0 $0 $0 $0 $0 40 French Drain - Entry Tract $0 $0 $0 $0 $0 41 French Drain - East Tract M $0 $0 $0 $13,476 $0 Association Reserves WA, LLC 26

33 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year French Drain - West Tract M, Lower $0 $9,920 $0 $0 $0 43 French Drain - West Tract M, Upper $0 $8,454 $0 $0 $0 44 French Drain - Tract U $3,224 $0 $0 $0 $0 45 Re-landscape Oleson Rd. Berm, North $0 $0 $0 $0 $0 46 Re-landscape Bed at Pool House Entry $0 $0 $0 $0 $0 47 Re-landscape Berm N & W of Pool House $0 $0 $0 $0 $0 48 Re-landscape St. John Pl. Circle $0 $0 $0 $0 $0 49 Major Sod Removal $0 $0 $0 $0 $5, Major Tree Pruning, South Oleson Berm $0 $0 $0 $0 $12, Rock Retaining Wall at Entry $0 $0 $0 $0 $0 Total Expenses $34,778 $31,529 $0 $26,494 $63,804 Ending Reserve Balance: $472,349 $505,155 $571,378 $613,067 $619,218 Association Reserves WA, LLC 27

34 Assoc Accuracy, Limitations, and Disclosures Washington disclosure, per RCW: The reserve study should be reviewed carefully. It may 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 anticipated 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 estimate 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, drawing, 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 historical Reserve project reliable, and we have considered the representation 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 WA, LLC and its employee 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. Association Reserves WA, LLC 28

35 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 29

36 Assoc Do-It-Yourself Worksheets Note: Any questions relating to the information contained in this Appendix should be directed to the contact person indicated on the following page, not Association Reserves. Association Reserves WA, LLC 30

37

38