PM+Reserves Veteran Owned Business SPECIALIZING IN RESERVE STUDIES SINCE 1990 A PROFESSIONAL CORPORATION

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1 PM+Reserves Veteran Owned Business SPECIALIZING IN RESERVE STUDIES SINCE 1990 A PROFESSIONAL CORPORATION APRA Association of Professional Reserve Analysts November 8, 2012 Woodwinds Condominium c/o Ms. Diana W. Fritts, CMCA, AMS Community Manager Horizon Community Services P.O. Box 2070 Purcellville, VA Dear Ms. Fritts: Enclosed please find the Level I Repair and Replacement Reserve Study for Woodwinds Condominium. We have been advised board members have reviewed the draft copy of the report and have no comments or suggested changes, accordingly please consider this version the Final report. Again, I thank the Board of Directors and Horizon Community Services for selecting PM+ to do this study and hope you will continue to call upon PM+ for your future reserve studies. Sincerely, Mario B. "Ben" Ginnetti, PRA, RS, P.E. President Enclosure: Study - PDF File 4388 Poplar Tree Court Chantilly, VA (703) FAX (703) pmplusreserves@cox.net

2 PM+Reserves Veteran Owned Business SPECIALIZING IN RESERVE STUDIES SINCE 1990 A PROFESSIONAL CORPORATION RESERVE STUDY Level I, Full Study WOODWINDS CONDOMINIUM Reston, Virginia APRA Association of Professional Reserve Analysts Prepared for: Board of Directors Date: November 8, 2012 Engineer Mario B. Ben Ginnetti, PRA, RS, P.E. Copyright by Mario B. Ginnetti This document contains copyright and proprietary data. It may only be reproduced for the exclusive use of Woodwinds Condominium. All other rights reserved by the author Poplar Tree Court Chantilly, VA (703) FAX (703) pmplusreserves@cox.net

3 Table of Contents Contents Page Executive Summary... 1 Study Information... 3 Maintenance/Repair/Replacement Tips... 5 Level of Service and Engineer s Qualification... 7 Common and Limited Common Elements... 9 Reading and Understanding the Tables and Charts Photographs & Comments Appendix A Table of Repair/Replacement Reserves and Years 1 10 Expense Projection...A1 Years Expense Projection...A3 Funding Plans - 30 Year Projection...A5 Property Comparison...A6 Excel Spreadsheet Items... No Page # i by MBG

4 Executive Summary This study was prepared by comparing Your Funding plan to the two Community Association Institute (CAI) recommended methods for preparing reserve studies; Cash Flow Method and Component Method. The Cash Flow Method is also known as the Pooling Method. The following relevant data was used in preparing this study: 1st Study Year FY13 $448,010 AOH at Start of Fiscal Year FY Begins 01-Jan-13 $225,600 Your Contribution in FY12 Inspection Date(s) 15-Jul % Inflation # Units % Interest AOH (cash amount on hand at start of fiscal year) and current year contribution were supplied by management and are considered best information available as of the proposal acceptance date. They are not audited amounts. Interest and inflation factors¹ best project the future needs of the property. Inflation is based on the last ten year average for the Consumer Price Index (CPI); interest on savings is based on the ten year average of the Constant Maturity Yield for the 10-Year U.S. Treasury note. The following table summarizes our findings of the funding needed to meet the property's reserve requirement and compares your current funding to the two recognized methods for funding the reserves (detail information can be found in "Funding Plans - 30 Year Projection" chart, columns (13) through (18): FY13 Contribution Summary Yours² Cash Flow Component Method Method Contribution $231,060 $233,030 $591,410 Avg/Owner $1,605 $1,618 $4, Yr Average Contribution $333,850 $336,730 $387,420 Avg/Owner $2,318 $2,338 $2, Yr Minimum/Maximum Balance $74,120 $85,300 $1,158,450 $3,270,490 $3,410,110 $7,533,780 Analysis: Your contribution will need only a slight increase to meet the reserve needs of the property. The cash flow method requires less contribution throughout the life of the study than the component method plan and is the preferred method for funding the reserves. It provides the most consistency in the annual contribution, from one year to the next year. Future contribution increases can be mostly attributable to inflation. The component method requires the greatest contribution and yearly contributions can be expected to fluctuate considerably from year to year, making it less practical as a funding plan. If this method is chosen, the reserve tables should be updated more frequently, preferably annually. 1. Although the factors used may not prove to be precise they should be reasonable predictors of cost increases and contributions needed to support the reserve requirement over the life of the study. 2. If the study is being done for other than the current fiscal year, inflation is applied to your current contribution by MBG

5 R/R Study - Woodwinds Condominium November 8, 2012 In the funding plan we recommend, column (16) portrays the year end balances, both minimum and maximum, we expect will be available, based on the assumptions in this study. These amounts are calculated to assure: 1) funds are available for needed work, 2) there is always a minimum amount of savings available to provide for unforeseen contingencies, and 3) when studies are updated there is not a substantial increase needed to meet the reserve requirement. To prevent against substantial increases PM+ studies take into consideration the first thirty years of the study and an additional twenty years, making the "look at" period a total of fifty years. The 50-year projection is to assure our recommended contribution is based on a sound analysis of the reserve needs of the property. Recommendation: Because the cash flow method requires the least contribution and yearly contribution increases are mostly inflation adjustments, we recommend the association fund their reserves using this method by MBG

6 Study Information Introduction The purpose of this study is to design a Table of Repair/Replacement Reserves for the common and limited common elements of the property based on the current condition of the components. If the property is to preserve the owner's investment and its quality of life features, a reserve of funds is necessary to do future work. In addition to the above, Properties located in the state of Virginia are required by Virginia Statutes, 2003 Condominium and Property Owner s Association Act, to conduct reserve studies at least every five years, review the results of the study at least annually and make adjustments as necessary unless the condominium instruments/declaration imposes more stringent requirements. Your attention is called to Sections :1 and of the Statutes for the complete text. This study is the second (Last PM+ study December 5, 2007) engagement for the property by PM+. PM+ has neither collaborated with nor provided consulting advice to others on issues pertaining to the property. In developing the table we consider items that have a predictable life cycle as well as those that will most likely need annual maintenance and repairs to keep them in serviceable condition. They are as follows: Predictable life cycle (Non # sign items). These components have a predictable life cycle (an average useful life). At the end of its useful life total replacement will be needed. Annual Allowances (Items preceded by the # sign). We reserve an average annual amount for these items. These items are typically life of the property or long lasting components that do not have a predictable life cycle. We assume the association will keep these components in satisfactory condition with timely spot repairs. The following considerations should be taken into account to properly manage the reserves: 1) properly funded reserves avoids special assessments, 2) each owner should pay their fair share for the time they use the component, 3) when reserve funds are available the Association is more inclined not to defer work deferral results in additional deterioration and catch-up costs to restore the item to a good condition, 4) government mortgage guarantees agencies, i.e. FHA, require a current reserve study to be available before backing a loan, and 5) some state laws require them. In addition to these considerations, a new factor has recently become apparent. Years ago owners were poorly informed on the importance of the reserves and paid very little attention to whether or not a property had an adequate plan for funding the reserves. With the inclusion of reserve tables in resale packages and other publicity, many potential buyers are now verifying the reserve status before they buy. Although we use generally accepted techniques and the best information available, it is possible actual costs and useful life can vary from our estimates. We recognize that possibility and attempt with our methodology to arrive at the overall funding recommendation that will avoid, or minimize the need for a special assessment to do reserve work by MBG

7 R/R Study - Woodwinds Condominium November 8, 2012 Unless otherwise noted, this study does not take into consideration any work the association may need to correct hazardous or defective conditions, such as issues with asbestos, radon, lead, mold, FRT, etc., nor will it fund major projects to repair/replace facades, building tension cables, utilities and other essential systems. Projects of this nature require the services of engineers or other consultants to determine scope, timing and projects costs. If requested, once costs and project timing are known, we will provide a revised study at no additional cost. This purpose of this study is to determine the funding needed to support the property s reserve requirement and recommended a funding plan to meet that requirement. No other use is intended. For any reserve projects in progress on the date(s) of our visit our observation of the work should not be considered a project audit or quality control inspection. We leave that to others to determine. In order for the Table to be an effective budget management tool it will need periodic updates. Because reserves on hand, current costs, quality of maintenance, acts of God, vandalism, and useful life can vary from year to year, a periodic review will assure it remains an effective management tool by MBG

8 Maintenance/Repair/Replacement Tips and Reserve Considerations There are three levels of care needed to maximize the useful life of equipment and property components: 1) Maintenance, 2) Repair and 3) Replacement. Maintenance is taking care of an item by doing such tasks as sealing pavement cracks to prevent water from undermining the base, painting to prevent metal corrosion or wood rot, lubricating moving parts on mechanical equipment, fan belt adjustments, etc. It involves the least expenditure of funds and is the best way to maximize useful life. Repair is replacing a portion of an item, such as, a section of pavement, a part of a roof, an air conditioning compressor, etc. It's usually more expensive than maintenance. The most costly is replacement. It involves the entire replacement of the item. The application of good maintenance and repair techniques can be explained by the following example: An asphalt parking lot of 1000 square yards develops a 10 foot long crack in the surface. The crack can be sealed for about a dollar a linear foot. By doing so, water will not seep through the asphalt causing damage to the base course. That simple maintenance action extended the useful life of the pavement at minimum cost. Assume the crack was not sealed and it grew to a 12' by 12' base damaged area. Cost of repairs would be approximately 60 times as much as fixing the crack. If the damaged area was not repaired and eventually the entire lot had to be replaced it would cost considerably more. Therefore, the prudent thing to do is good maintenance. It's the least costly of the three levels of work. Prior to totally replacing an item, e.g., a roof, a fence, an air conditioner, etc., all measures should be taken to extend the useful life of the item with repairs. If the roof is leaking don't automatically think the entire roof needs to be replaced. Most leaks occur around penetrations and flashed areas and they can be repaired for less than replacing the entire roof. Fence posts almost always rot out at ground level before the rest of the fence. Posts can be replaced without purchasing a complete new fence. The same applies to most mechanical/electrical equipment. Tube leaks frequently occur in boilers; compressor failures occur in air conditioners and circuit breakers wear out in electric panels. These kinds of failures are repairable without replacing the entire item. The reserve table should be used as an aid in establishing budgets - not as a work plan. When used as a budget management tool its effectiveness will be recognized when funds are readily available to do work - when it must be done. Do not use the remaining useful life data as a work plan. It should be treated as a window of probable expectancy, based on statistical information, historical trends, conditions at time of survey and experience of when repair or replacement is most likely to be needed. Actual work should not be done until needed. For example, if paving is estimated to need replacement in five years but it's not a problem at that time, put it off until it is a problem. Conversely, if repairs are necessary sooner, do them sooner. When contracting for services, seek competitive bids and purchase only what s necessary to restore the item to its like original condition. Include state-of-the-art improvements but avoid over buying or substantially enhancing an item beyond its original condition. Such improvements are not included in the cost estimates. Catastrophic failures to such items as footers, foundations, floors, exterior walls and total replacement of utility systems, etc., are not included in the table. They are not included because they are not predictable and it is rare that these items have to be replaced in total. We do recommend a reasonable annual amount be set aside for some repairs and reflect that in the reserve table by MBG

9 R/R Study - Woodwinds Condominium November 8, 2012 Funding for reserves should be fair to all owners; past, present and future. The worst case scenario for a property is to have no money set aside to pay for repairs/replacements forcing the current owners to pay the total cost. Additionally, having insufficient reserves also presents some injustices as illustrated by the following example: Mr. and Mrs. X owned a unit at the property for the first ten years of its existence when reserve funding was suppressed and insufficient to take care of future problems. Mr. and Mrs. X sell their unit and leave. Five years after they leave the pavement and sidewalks need to be repaired. Mr. & Mrs. Y now own the unit and receive notice they are to be specially assessed to pay for the repair costs. For demonstration purposes let's say the pavement and sidewalk repairs costs $150,000 and the association has $50,000 in the reserve account. Let's also assume there are 100 units at this property. Over the last fifteen years, past and present owners set aside $50,000 to take care of the $150,000 expenditure. Expressed in $/year that equates to $3,333/yr or $33.33 per owner per year. Mr. & Mrs. X had the benefit of good paving and sidewalks for 10 years at a total cost to them of $ Unfortunately for Mr. & Mrs. Y, they only used the items for five years, but it will cost them $ for their share of the repairs. Calculations for the above are as follows: 5 years they lived there X $33.33/yr = $ The difference between amount in reserves and repair costs divided by number of unit owners: ($150,000-50,000)/100 = $ Total cost to Mr. & Mrs. Y = $ Or, said another way: Mr. and Mrs. X used the items for 66% of their useful life but only paid 22% of the repair cost. Mr. and Mrs. Y used the items for 34% of their useful life but had to pay 78% of the cost. For funding to be fair all owners should contribute their share of the costs for the period of time they use the item. Where we describe preventive maintenance recommendations in this study they are intended to be general in nature and the most common tasks needed to extend item useful life. They are not all inclusive; we do not imply that is all that is necessary for good maintenance. Manufactures brochures, service specialty companies and other qualified sources should be consulted to establish the full array of actions needed for proper preventive maintenance by MBG

10 Level of Service and Engineer s Qualification This is a Level I, Full Study (with on-site visit) as defined by CAI s National Reserve Study Standards and the Association of Professional Reserve Analysts (APRA). The association requested this study be a Level I, Full Study in the proposal acceptance. This study was compiled in accordance with generally accepted standards and represents our professional opinion on the items, timing and dollar amounts that should be budgeted for repair and replacement. The contents of this study comply with the proposal acceptance. In compiling this study we used information obtained from field measurements, observations and management (information provided by management is considered to be reliable). We also took into consideration construction features, current conditions and component age. Testing was not performed, nor was demolition done or panels removed to determine conditions that are not obvious. Based on our observations and the information gained during the visit this study contains, to the best of our ability, all material issues required to determine the funding needed to meet the property s reserve requirement. This reserve study was done in its entirety by Mario B. Ben Ginnetti, a registered professional engineer (P.E.) licensed to practice engineering in the states of Virginia, Maryland and the District of Columbia. Mr. Ginnetti is also a CAI Certified Reserve Specialist (RS) and a Professional Reserve Analyst (PRA). Age, Units and Style Constructed in the mid 1970 s; 144 units 102 gardens, 28-townhomes, 148-patio homes. Configuration - Garden, town and patio home configuration. Major amenities Pavilion; other amenities provided by Reston Association. Cash flow and Component Method Studies This study was calculated using both the Cash flow and Component methods. A synopsis of each method is as follows: Cash flow method - This method develops the funding plan by having the annual contributions offset the variable annual expenses. All expenses are averaged over the life of the study to calculate the annual contribution needed to support the reserve requirement. Component method - This method develops the funding plan by dividing the remaining useful life into the balance needed to fund the item for only the next cycle of work. The individual item contributions are then added to calculate the total annual contribution needed to support the reserve requirement for that year. Because of averaging the cash flow method provides a more consistent annual contribution from one update to another and the annual contribution can be calculated so that a special assessment is not anticipated over the life of the study. With the component method, annual contributions can vary significantly from year to year depending on where the components are in their life cycle. If the component method is chosen the reserve tables should be updated more frequently, preferably annually. Funding Goals by MBG

11 R/R Study - Woodwinds Condominium November 8, 2012 The following represent the basic categories of Funding Plan goals as defined by the Community Association Institute (CAI) for reserve studies: Baseline Funding - Establishing a Reserve funding goal of keeping the Reserve cash balance above zero. Component Full Funding - Setting a Reserve funding goal of attaining and maintaining cumulative Reserves at or near 100% funded. Statutory Funding - Establishing a Reserve funding goal of setting aside the specific minimum amount of reserves required by local statutes or financing agencies. Threshold Funding - Establishing a Reserve funding goal of keeping the Reserve balance above a specified dollar or Percent Funded amount. Depending on the threshold, this may be more or less conservative than "Fully Funding." This study complies with this goal by MBG

12 Common and Limited Common Elements (Major Components) Building Envelope Peaked Roof Gutters & Downspouts Windows, Balcony & Patio Doors (Owners Responsibility) Main Entrance Doors Utility Room Doors Brick & Siding Façade Exterior/Interior Painting (Funded from the Operating Account) Pavements/Sidewalks Asphalt Pavements Concrete Curbs & Gutters Concrete Sidewalks/Patios Decoration Carpeted Stairways Mechanical/Electrical Hot Water Heaters Common Mechanical/Plumbing/Electrical Systems Retaining Walls/Fencing Wood, Stone & Masonry Block Retaining Walls Wood Fencing Other Property Features Balconies/Patios Pavilion Pole Mounted & Building Mounted Site Lights Mail Boxes Entrance Features Signs Storm Drainage Hand Railing Picnic Tables/Benches Trash Receptacles Minor Landscaping by MBG

13 Reading and Understanding the Tables and Charts General Comment The Repair and Replacement Table shows the common or limited common element, average and remaining useful life and estimated cost for work. This information, for the most part, is self-explanatory; however, when we believe more information is needed, we provide comments or use photographs. Table of Repair & Replacement Reserves Column (1) The various property components and major items of equipment we believe the community should include in the reserves. Where a 15%, 30%, etc., is shown means that total replacement of that item is not anticipated. These items generally have an indefinite life span and only need partial repairs. Items preceded by the pound (#) sign are budgeted for a year at a time. Typically, these items need annual repairs. These items should be adjusted at each update based on historical trends and the amount of work anticipated the following year. If we have omitted or added any items that are not common or limited common area responsibility, please inform us so we can provide a revised table. It also applies if the association accomplishes the work from their annual operating expense and a reserve set-aside is not needed. (2) Approximate quantity and unit of measure. The following abbreviations are used; however, they may not all appear in this study: AC Acres AOH - Amount-On-Hand AnAvg - Annual Average BLD - Building EA - Each CY - Cubic Yards LF - Linear Feet LS - Lump Sum HP Horsepower RC - Replacement Cost SF - Square Feet SY - Square Yards TN - Tons UN - Units > - Greater Than < - Less Than (3) The components average useful life (Avg). Leading publications on useful life data, our own experiences and historical trends are used to determine the average useful life. (4) Our best estimate of the remaining useful life (RUL). Some items in the table may not fail precisely as shown. We use the remaining useful life in conjunction with the estimated cost to calculate the annual contribution needed to fund the component. (5) Current cost estimates are in current dollars. Estimates are based on similar work in the greater Washington area, association experience, industry publications, such as R.S. Means and Home- Tech, contractors and other reliable sources. It assumes the association will competitively seek bids and obtain a fair price in today's market. Some work, such as, balconies, roofing, garages, façade, boiler and chiller replacements, etc. may need the services of an engineer or architect to determine scope and oversee repairs. Those estimates take precedence over those shown in the table. Conditions that are not obvious from observations, such as excessive deterioration in materials and systems could result in higher costs than shown. (6) Distribution of the funds the association had (is projected to have) at the start of their fiscal year or the amount we were requested to use. The program distributes a prorated amount to each item. (7) The amount needed to fund the balance of the requirement. (8) The contribution needed to fund the 1 st year applying the cash flow method. This value is the product of the reserve components and the Funding Plans - 30 Year Projection chart. The annual contribution is calculated so that the reserve balance never falls below the X axis and there is always a minimum balance for unforeseen contingencies by MBG

14 R/R Study - Woodwinds Condominium November 8, 2012 (9) The contribution needed to fund the 1 st year applying the component method. Fiscal Years 1-10 Expense Projection - The actual cash out-lays the association should be prepared to fund in the first ten years of the study. Fiscal Years Expense Projection - The actual cash out-lays the association should be prepared to fund in the next twenty years of the study. Note - these projections are needed to verify the association is funding the reserves to avoid a "Special Assessment" over the life of the study. Average Contribution Per Owner - The average contribution needed per owner to fund the 1st year reserve contribution. This amount is not indicative of each owner s individual contribution. Funding Plans - 30 Year Projection Column (10) Fiscal Year. (11) Projected annual expenses. (12) Cumulative expenses over 30-years. (13) 30-year projected contribution if your current funding plan continues, inflation applied. (14) Projected year-end balances based on your current contributions, interest applied. (15) 30-year projected contribution if the cash flow method is implemented to fund the reserves, inflation applied. (16) Projected year-end balances based on the cash flow method, interest applied. (17) 30-year projected contribution if the component method is implemented to fund the reserves, inflation applied. (18) Projected year-end balances based on the component method, interest applied. Graphs Graphs depict the projected contributions and year end balances for each plan. The contribution objective should be to have a consistent contribution, year after year, that can be maintained with inflation adjustments. Avoid fluctuating contributions as they can impose financial hardships on owners. The plot objective for the reserve balance is to have the year end balances always above the X axis. If it falls below, it indicates a special assessment or loan will be needed to support the reserves. Summary 30-Year Annual Average - Average contribution needed to fund each funding plan. 30-Year Average/Owner - Average contribution per owner for each funding plan. 30 & 50-Year Minimum Balances - Projected minimum balance for each funding plan. An amount to be held in reserve to fund unforeseen contingencies. Property Comparison (Not shown in some studies) The Property Comparison chart compares the property s current funding to the last 100 properties we have studied. The comparison shows the maximums, minimums and property averages compared to your property. Three comparisons are made: % Funded - Ratio of the current to the ideal Reserve Balance for each component in the Reserve Table. The ratio is a product of the used-up life, useful life and component cost. Reserve Depletion Factor - Number of years amount-on-hand will fund (It's the same as the go broke date if no more money is added to the reserves). Cost Per Owner Average contribution per owner needed to meet the reserve requirement. Dollar amounts will vary from property to property based on construction features, common/limited common elements, past contributions to the reserves and other factors that may not result in a true comparison by MBG

15 PHOTOGRAPHS & COMMENTS Property identification sign. Woodwinds condominium has two building styles. There are seventeen garden buildings containing 102 homes....and fourteen town home buildings with 32 homes. Lower level end homes in each building are called patio homes. Garden entrance doors are holding up well. Stairway landing carpet should be replaced within the next three years. Nine of 17 stairways have been recently painted. We reserve for the remaining stairways to be painted in FY13. 12

16 Eleven water heaters have been replaced since our last visit. The association is repairing rear balconies. To date fiftytwo have either been done or are under contact to be done. We also reserve for repairs to front balconies on garden buildings and.... townhomes. Carport roofing shingles are approaching the end of their normal useful life. Carports have been painted since our last visit. 13

17 Pavilion is holding up well. It should either be pressure washed and have a wood sealer applied or painted to protect the wood from deteriorating. Wood deck of the pavilion. Pavement repairs have been made since our last visit. See comments in the "Additional Comments" section for proper care of asphalt pavements. We reserve for spot repairs to be made to curbs, gutters and.... sidewalks. 14

18 We also reserve for stone sections of sidewalks that are placed throughout the property. Retaining walls are a combination of modular block and.... wood. Booth are holding up well. Mail boxes in each garden stairway. Mail box for town and patio homes. We also reserve for signs to be properly maintained. Well maintained signs enhance property appearance. 15

19 COMMENTS CONTINUED The following additional comments are offered to clarify our assumptions or call to your attention items of concern. BUILDING ENVELOPE PAINT/WOOD TRIM REPLACEMENT PAVEMENTS MECHANICAL/PLUMBING/ELECTRICAL PLUMBING RPRS/PIPE RE-LINING OTHER PROPERTY FEATURES BALCONY RECONSTRUCTION LANDSCAPE ENHANCEMENTS ANNUAL ALLOWANCES FACADE/CAULK/WATERPROOFING COMMON AREA DOORS/WINDOWS CURBS/GUTTERS/SIDEWALKS/STEPS/PATIOS MECHANICAL/PLUMBING/ELECTRICAL MASONRY RETAINING WALLS HAND RAILING/WOOD FENCING New entry. Painting was previously done with operating funds. We reserve an average amount of funds to replace deteriorated wood trim on buildings prior to painting. Actual cost can be higher or lower depending on the rate of deterioration. Periodic painting can reduce the amount of wood trim deterioration. There are two considerations that apply to asphalt pavements: 1) Implement a preventive maintenance program - preventive maintenance consist of sealing open cracks (equal to or greater than 1/8 ), repair wearing surface/base/sub-base areas that have failed (distinguished by alligator or chicken wire cracking), applying a seal coat to the entire surface and repaint all traffic markings. An additional benefit of the seal coat and traffic markings is the pavement will look uniform and that enhances property appearance. Funding for this work is identified as Preventive Maintenance in the reserve table. Although we allow for this work to be done every four years, if cracks open or asphalt failures occur sooner they should be repaired at that time. The contingency built into the funding plan should be more than adequate to fund these repairs in the off years. If additional funds are needed in the scheduled years, likewise, the contingency should be used. 2) Be prepared to repave all asphalt around the time period shown in the table. Although we allow for 100% of the asphalt to be repaved our experience supports a smaller percentage of the base/sub-base will need repairs. We show that percentage in the Base Course/Concrete Repairs entry. When repaving, there are two possible courses of action; 1) mill only near the gutter pans to preserve proper drainage and then place a 1-1/2" of compacted asphalt throughout, and 2) total milling of all the asphalt and repave to the thickness removed. Also reserves for major concrete repairs to curbs, gutters and sidewalks. Note - We use current cost for the price of asphalt pavement work. Asphalt cost is dictated by the price of oil. Actual cost could be higher or lower depending on the cost of oil at the time work is done and how many base failures need repair to support the overlay. After years of use domestic water pipes leak - we reserve for common area pipe repairs. We reserve a reasonable amount for this work. Actual cost can vary depending on whether the pipe is replaced or re-lined, number of tiers, number of fixtures, pipe routing, valving, insulation, demolition, restoration and other related costs. Also includes condensate piping. Our entry includes both balcony restoration work and balcony preservation work. Once the balcony railings are replaced they are considered to be a life of the property component; however, balcony concrete will need repair and re-coating well into the future. A new entry to provide reserve funds for needed landscape improvements. Cost estimates are anticipate cost for each phase of work. The project is expected to span three fiscal years. The below listed components are non-cyclical items that typically experience some kind of failure each year or every few years. We reserve a reasonable amount of money each year to keep them in good repair. Funding from other sources may be needed if major repairs are needed. Minor repairs to bricks, sealing windows, doors, walls, expansion joints and other openings to keep buildings weather tight. Provides for replacing association owned doors and windows that are not reserved for elsewhere, as needed. Curbs, gutters, sidewalks and steps will deteriorate, heave, settle, be damaged by vehicles or sustain other types of damage. Defective areas should be corrected as needed. A annual expenditure to keep in good repair common area mechanical, plumbing and electric systems that are not reserved for elsewhere. Heat exchangers, coils, unit heaters, motors, pumps, gauges, valves, controls, fire, security, mechanical system, plumbing pipes, electric faults and other kinds of system deterioration will need repair as problems occur. We consider concrete and masonry walls to be life of the property and should never need to be completely replaced unless a catastrophic failure occurs. We allow an annual amount to keep them in good repair. If corrosion is controlled with paint periodically metal will last the life of the property. Keep post pockets sealed to prevent standing water. Standing water will corrode metal and damage masonry and concrete. 16

20 COMMENTS CONTINUED SITE ITEMS Repairs to entrance features, signs, sign posts, flood lights, drainage, minor landscaping, hand railing, picnic tables/benches, exercise trails and other miscellaneous items that are not reserved for elsewhere by MBG 17

21 Appendix A 18

22 TABLE OF REPAIR & REPLACEMENT RESERVES by MBG ITEM APPROX'MT USEFUL LIFE ESTIMATED DISTR'BTN BALANCE FY13 FISCAL YEARS 1-10 EXPENSE PROJECTION QUANTITY AVGREM COST IN OF AOH NEEDED CONTRIBUTION (YRS) CURRENT $ AS OF TO FUND CASH FLOW COMPONENT Jan-13 RESERVE METHODS (1) (2) (3) (4) (5) (6) (7) (8) (9) BUILDING ENVELOPE GARDEN UNITS ROOFING-SHINGLES 67,592 SF $216,290 $35,450 $180,840 $5,090 $12,920 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 GUTTERS/DOWNSPOUTS 2,882 LF ,580 5,670 28, , MAIN ENTRANCE DOORS/GLASS 17 EA ,120 9,360 47,760 3,760 9, , TOWNHOME UNITS ROOFING-SHINGLES 34,020 SF ,860 17,840 91,020 2,110 5, GUTTERS/DOWNSPOUTS 1,400 LF ,800 2,750 14, PAINT/WOOD TRIM REPLACEMENT GARDEN & TOWNHOME EXTERIORS LS ,750 5,530 28,220 5,560 14, , , ,850 CARPORTS LS ,000 3,770 19,230 1,260 3, , TOTAL BUILDING ENVELOPE 490,400 80, ,030 18,920 48,040 PAVEMENTS PREVENTIVE MAINTENANCE 9,511 SY ,920 3,430 17,490 6,890 17,490 20, , ,330 0 PAVEMENT OVERLAY 9,511 SY ,860 16,370 83,490 8,220 20, , BASE COURSE/CONCRETE 20% 1,902 SY ,870 9,980 50,890 5,010 12, , TOTAL PAVEMENTS 181,650 29, ,870 20,120 51,080 DECORATING STAIRWAY CARPET 1,252 SY ,100 9,030 46,070 6,050 15, , ,330 STAIRWAY PAINTING 8 EA 7 1 9,600 1,570 8,030 3,160 8,030 9, , STAIRWAY PAINTING 9 EA ,800 1,770 9, , , TOTAL DECORATING 75,500 12,370 63,130 9,720 24,680 MECHANICAL/PLUMBING/ELECTRICAL WATER HEATER(S) 1 EA ,000 1,640 8,360 3,290 8,360 10, WATER HEATER(S) 11 EA ,000 18,030 91,970 2,790 7, PLUMBING RPRS/PIPE RE-LINING 144 EA ,800 51, ,880 11,600 29, , TOTAL MECHANICAL/PLUMBING/ELECTRICAL 436,800 71, ,210 17,680 44,860 RETAINING WALLS/FENCING RETAINING WALL(WOOD) 200 LF ,000 4,920 25, , ,200 RETAINING WALL(REMOVED) 0 LF TOTAL RETAINING WALLS/FENCING 30,000 4,920 25, ,510 OTHER PROPERTY FEATURES REAR BALCONIES GARDENS BALCONY RECONSTRUCTION 10 EA ,000 23, ,230 23,880 60, , BALCONY RECONSTRUCTION 10 EA ,000 23, ,230 15,920 40, , BALCONY RECONSTRUCTION 10 EA ,000 23, ,230 11,940 30, , BALCONY RECONSTRUCTION 9 EA ,500 21, ,110 8,600 21, , BALCONY PRESERVATION 29 EA ,000 19,010 96,990 2,550 6, TOWNHOMES Woodwinds Condominium-FY13 A1 11/8/2012

23 TABLE OF REPAIR & REPLACEMENT RESERVES by MBG ITEM APPROX'MT USEFUL LIFE ESTIMATED DISTR'BTN BALANCE FY13 FISCAL YEARS 1-10 EXPENSE PROJECTION QUANTITY AVGREM COST IN OF AOH NEEDED CONTRIBUTION (YRS) CURRENT $ AS OF TO FUND CASH FLOW COMPONENT Jan-13 RESERVE METHODS (1) (2) (3) (4) (5) (6) (7) (8) (9) BALCONY RECONSTRUCTION 5 EA ,500 15,980 81,520 10,710 27, , BALCONY PRESERVATION 23 EA ,000 18,850 96,150 2,530 6, FRONT BALCONIES GARDENS 8 EA ,000 13,110 66,890 4,390 11, , GARDENS 9 EA ,000 14,750 75,250 4,240 10, , TOWNHOMES 28 EA ,000 11,470 58,530 5,770 14, , CARPORT ROOFING-SHINGLES 21,336 SF ,280 11,190 57,090 11,250 28, , PAVILION ROOFING-SHINGLES 640 SF , , REDECK-(COMPOSITE MATERIAL) 667 SF ,000 3,280 16, , PAVILION-POWER WASH/SEAL/PAINT LS 3 1 6, ,020 1,980 5,020 6, , , ,440 MAIL BOXES-WALL 102 EA ,260 2,170 11, , , MAIL BOXES-STREET 42 EA ,400 1,380 7, , , REPLACE ASSOCIATION STREET LIGHTS 7 EA ,000 3,440 17,560 3,460 8, , TOTAL OTHER PROPERTY FEATURES 1,272, ,650 1,064, , ,880 LANDSCAPE ENHANCEMENTS PHASE 1 LS ,000 13,930 71,070 28,000 71,070 85, PHASE 2 LS ,000 13,110 66,890 13,180 33, , PHASE 3 LS ,000 8,200 41,800 5,490 13, , TOTAL LANDSCAPE ENHANCEMENTS 215,000 35, ,760 46, ,450 ANNUAL ALLOWANCES # FACADE/CAULK/WATERPROOFING LS 1 1 8,000 1,310 6,690 2,640 6,690 8,000 8,190 8,390 8,590 8,800 9,020 9,230 9,460 9,690 9,920 # COMMON AREA DOORS/WINDOWS LS 1 1 3, ,260 1,280 3,260 3,900 3,990 4,090 4,190 4,290 4,400 4,500 4,610 4,720 4,840 # CURBS/GUTTERS/SIDEWALKS/STEPS/PATIOS LS 1 1 4, ,340 1,320 3,340 4,000 4,100 4,200 4,300 4,400 4,510 4,620 4,730 4,840 4,960 # MECHANICAL/PLUMBING/ELECTRICAL LS 1 1 8,000 1,310 6,690 2,640 6,690 8,000 8,190 8,390 8,590 8,800 9,020 9,230 9,460 9,690 9,920 # MASONRY RETAINING WALLS LS 1 1 2, , ,670 2,000 2,050 2,100 2,150 2,200 2,250 2,310 2,360 2,420 2,480 # HAND RAILING/WOOD FENCING LS 1 1 1, ,100 1,130 1,150 1,180 1,210 1,240 1,270 1,300 1,330 1,360 # SITE ITEMS LS 1 1 4, ,340 1,320 3,340 4,000 4,100 4,200 4,300 4,400 4,510 4,620 4,730 4,840 4, TOTAL ANNUAL ALLOWANCES 31,000 5,090 25,910 10,220 25,910 TOTAL RESERVES $2,733,340 $448,010 $2,285,330 $233,030 $591,410 $162,520 $388,210 $397,150 $443,430 $263,570 $189,070 $184,070 $48,000 $446,450 $193,260 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== AVERAGE CONTRIBUTION PER OWNER = $1,618 $4,107 Notes: All dollars rounded to nearest $10. Totals may not add due to rounding. # - An annual allocation. Repairs are usually needed at least once a year. One year remaining useful life indicates the useful life of the component is used up, except for # sign items that are treated as annual events. Woodwinds Condominium-FY13 A2 11/8/2012

24 ITEM by MBG USEFUL LIFE ESTIMATED FISCAL YEARS EXPENSE PROJECTION AVGREM COST IN (YRS) CURRENT $ (1) (3) (4) (5) BUILDING ENVELOPE GARDEN UNITS ROOFING-SHINGLES $216,290 $0 $0 $0 $295,150 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 GUTTERS/DOWNSPOUTS , , MAIN ENTRANCE DOORS/GLASS , ,270 TOWNHOME UNITS ROOFING-SHINGLES , , GUTTERS/DOWNSPOUTS , , PAINT/WOOD TRIM REPLACEMENT GARDEN & TOWNHOME EXTERIORS , , , , , ,520 CARPORTS , , , , TOTAL BUILDING ENVELOPE 490,400 PAVEMENTS PREVENTIVE MAINTENANCE , , , , , ,860 0 PAVEMENT OVERLAY , , ,780 BASE COURSE/CONCRETE 20% , , , TOTAL PAVEMENTS 181,650 DECORATING STAIRWAY CARPET , , , STAIRWAY PAINTING 7 1 9, , , ,750 0 STAIRWAY PAINTING , , , , TOTAL DECORATING 75,500 MECHANICAL/PLUMBING/ELECTRICAL WATER HEATER(S) , , WATER HEATER(S) , , , PLUMBING RPRS/PIPE RE-LINING , TOTAL MECHANICAL/PLUMBING/ELECTRICAL 436,800 RETAINING WALLS/FENCING RETAINING WALL(WOOD) , ,020 RETAINING WALL(REMOVED) TOTAL RETAINING WALLS/FENCING 30,000 OTHER PROPERTY FEATURES REAR BALCONIES GARDENS BALCONY RECONSTRUCTION , , BALCONY RECONSTRUCTION , , BALCONY RECONSTRUCTION , , BALCONY RECONSTRUCTION , , BALCONY PRESERVATION , , ,070 TOWNHOMES BALCONY RECONSTRUCTION , , BALCONY PRESERVATION , , ,070 FRONT BALCONIES GARDENS , , GARDENS , , TOWNHOMES , ,730 0 CARPORT ROOFING-SHINGLES , , Woodwinds Condominium-FY13 A3 11/8/2012

25 ITEM by MBG USEFUL LIFE ESTIMATED FISCAL YEARS EXPENSE PROJECTION AVGREM COST IN (YRS) CURRENT $ (1) (3) (4) (5) PAVILION ROOFING-SHINGLES ,050 2, REDECK-(COMPOSITE MATERIAL) , , PAVILION-POWER WASH/SEAL/PAINT 3 1 6, , , , , , , MAIL BOXES-WALL , MAIL BOXES-STREET , REPLACE ASSOCIATION STREET LIGHTS , TOTAL OTHER PROPERTY FEATURES 1,272,990 LANDSCAPE ENHANCEMENTS PHASE , , PHASE , , PHASE , , TOTAL LANDSCAPE ENHANCEMENTS 215,000 ANNUAL ALLOWANCES # FACADE/CAULK/WATERPROOFING 1 1 8,000 10,160 10,410 10,660 10,920 11,180 11,450 11,730 12,010 12,300 12,600 12,910 13,220 13,540 13,870 14,200 14,540 14,900 15,260 15,630 16,000 # COMMON AREA DOORS/WINDOWS 1 1 3,900 4,950 5,070 5,200 5,320 5,450 5,580 5,720 5,860 6,000 6,140 6,290 6,440 6,600 6,760 6,920 7,090 7,260 7,440 7,620 7,800 # CURBS/GUTTERS/SIDEWALKS/STEPS/PATIO 1 1 4,000 5,080 5,200 5,330 5,460 5,590 5,730 5,860 6,010 6,150 6,300 6,450 6,610 6,770 6,930 7,100 7,270 7,450 7,630 7,810 8,000 # MECHANICAL/PLUMBING/ELECTRICAL 1 1 8,000 10,160 10,410 10,660 10,920 11,180 11,450 11,730 12,010 12,300 12,600 12,910 13,220 13,540 13,870 14,200 14,540 14,900 15,260 15,630 16,000 # MASONRY RETAINING WALLS 1 1 2,000 2,540 2,600 2,660 2,730 2,800 2,860 2,930 3,000 3,080 3,150 3,230 3,300 3,380 3,470 3,550 3,640 3,720 3,810 3,910 4,000 # HAND RAILING/WOOD FENCING 1 1 1,100 1,400 1,430 1,470 1,500 1,540 1,570 1,610 1,650 1,690 1,730 1,770 1,820 1,860 1,910 1,950 2,000 2,050 2,100 2,150 2,200 # SITE ITEMS 1 1 4,000 5,080 5,200 5,330 5,460 5,590 5,730 5,860 6,010 6,150 6,300 6,450 6,610 6,770 6,930 7,100 7,270 7,450 7,630 7,810 8, TOTAL ANNUAL ALLOWANCES 31,000 TOTAL RESERVES $2,733,340 $41,970 $40,320 $223,730 $476,830 $379,600 $95,900 $789,340 $461,360 $279,890 $254,370 $367,360 $564,450 $137,070 $149,240 $102,810 $117,710 $57,730 $300,960 $256,900 $1,133,520 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== Woodwinds Condominium-FY13 A4 11/8/2012

26 FUNDING PLANS - 30 YEAR PROJECTION Funding Plans FY Expenses Yours Cash Flow Method Component Method Annual * Cumulative Contr'btn Balance Contr'btn Balance Contr'btn Balance (10) (11) (12) (13) (14) (15) (16) (17) (18) AOH $448,010 $448,010 $448, , , , , , , , , , , , , , , ,720 1,158, , , , , , , ,960 1,342, ,430 1,391, ,250 80, ,370 88, ,170 1,426, ,570 1,654, ,260 74, ,430 85, ,220 1,581, ,070 1,843, , , , , ,820 1,768, ,070 2,028, , , , , ,150 1,953, ,000 2,076, , , , , ,140 2,260, ,450 2,522, , , , , ,050 2,266, ,260 2,715, , , , , ,340 2,429, ,970 2,757, , , , , ,120 2,720, ,320 2,798, , , ,160 1,019, ,960 3,055, ,730 3,021, ,840 1,108, ,500 1,146, ,670 3,284, ,830 3,498, , , ,010 1,032, ,830 3,326, ,600 3,878, , , ,710 1,019, ,780 3,462, ,900 3,974, ,730 1,246, ,590 1,297, ,780 3,865, ,340 4,763, , , , , ,520 3,714, ,360 5,224, , , , , ,620 3,835, ,890 5,504, , , , , ,590 4,088, ,370 5,759, ,930 1,013, ,070 1,086, ,880 4,375, ,360 6,126, ,740 1,059, ,950 1,137, ,540 4,590, ,450 6,690, , , ,050 1,003, ,890 4,632, ,070 6,827, ,000 1,208, ,370 1,300, ,160 4,965, ,240 6,977, ,460 1,507, ,910 1,606, ,680 5,305, ,810 7,079, ,150 1,874, ,680 1,980, ,060 5,704, ,710 7,197, ,080 2,250, ,690 2,364, ,390 6,130, ,730 7,255, ,250 2,712, ,940 2,834, ,450 6,659, ,960 7,556, ,660 2,959, ,440 3,089, ,000 7,044, ,900 7,813, ,320 3,270, ,200 3,410, ,530 7,533, ,133,520 8,946, ,240 2,728, ,220 2,877, ,270 7,304,110 SUMMARY 30-Year Annual Average = $333,850 $336,730 $387, Year Average/Owner = $2,318 $2,338 $2, Year Minimum Balance = $74,120 $85,300 $1,158, Year Maximum Balance = $3,270,490 $3,410,110 $7,533,780 Notes: * An annual average cost. Some expenditures may be needed in earlier years, some in later years, depending on when the actual work is done. Data is a projection based on this point in time. The projection will change as useful life, current costs and amount-on-hand vary. Data should be considered a more accurate projection for years 1-5 than the out-years. Minimum balance does not include the first year. # Units = by MBG $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Contribution Yours Cash Flow Method Component Method Reserve Balance Yours Cash Flow Method Component Method Woodwinds Condominium-FY13 A5 11/8/2012

27 PROPERTY COMPARISON Sample Size = 100 Condo's/Coop's by MBG Maximum 128 Maximum 9.2 Minimum 0 Upper 25% > 64% Lower 25% < 25% Minimum 0 Upper 25% > 3.7Yrs Lower 25% < 1.0Yrs Property Avg 45 Property Avg 2.8 Woodwinds 28 Woodwinds % Funded Reserve Depletion Factor Maximum 8,989 Minimum 236 Upper 25% > $1,525 Lower 25% < $794 Property Avg 1,392 Woodwinds 1,618 $0 $2,000 $4,000 $6,000 $8,000 $10,000 Legend: This comparison only compares the first study year to other properties. % Funded -- Used-up life divided by Useful Life times Current Cost. Reserve Depletion Factor -- Number of years the amount-on-hand will fund if no more is contributed to the reserves. Cost Per Owner - The average cost per owner to meet the reserve requirement compared to other properties. Cost Per Owner Woodwinds Condominium-FY13 A6 11/8/2012