Sample Reserve Study Your City, Your State Account Sample Reserve Study -- Version 7.0 (2003) February 01, 2003

Transcription

1 Your City, Your State Account Sample Reserve Study -- Version 7.0 (2003) February 01, 2003 Reserve Analyst P.O. Box 797 Vernon, AZ Phone: Fax: Prepared By Quality Check By

2 Reserve Analyst Report Sample Homeowner s Association Your City, Your State Account Sample - Version 7.0 (2003) February 1, 2003 This is an alternate cover page for this report. Any style of page, including the cover, can be included in your report. Reserve Analyst Software for the Reserve Professional P.O. Box 1312 Show Low, AZ Phone: Fax:

3 TABLE OF CONTENTS Part I Information About Your Reserve Study Important Information 1-1 Introduction 1-2 Funding Options 1-2 Types of Reserve Studies 1-3 Developing a Component List 1-3 Operational Expenses 1-4 Reserve Expenses 1-4 Funding Methods 1-5 Funding Strategies 1-6 Distribution of Reserves 1-7 User s Guide to Your Reserve Study 1-9 Definitions 1-9 Your Reserve Study is a Multi-Purpose Tool 1-13 Part II Your Reserve Study Current Assessment Funding Model Summary 2-1 Current Assessment Funding Model Projection 2-2 Current Funding Model & Fully Funded Comparison Chart 2-3 Program Features & Benefits - Page Threshold Funding Model Summary 2-5 Threshold Funding Model Projection 2-6 Threshold Funding Model & Fully Funded Comparison Chart 2-7 Component Funding Model Summary 2-8 Component Funding Model Projection 2-9 Component Funding Model & Fully Funded Comparison Chart 2-10 Component Funding Model Assessment & Category Summary 2-11 Program Features & Benefits - Page Distribution of Accumulated Reserves 2-15 Annual Expenditure Detail 2-17 Detail Report by Category 2-23 Program Features & Benefits - Page Category Detail Index 2-56

4 TABLE OF CONTENTS Annual Asset Expenditure Charts 2-57 Funding Model Comparison By Percent Funded Chart 2-58 Funding Model Reserve Ending Balance Comparison Chart 2-59

5 Important Information This document has been provided pursuant to an agreement containing restrictions on its use. No part of this document may be copied or distributed, in any form or by any means, nor disclosed to third parties without the expressed written permission of Reserve Analyst. The client shall have the right to reproduce and distribute copies of this report, or the information contained within, as may be required for compliance with all applicable regulations. This reserve analysis study and the parameters under which it has been completed are based upon information provided to us in part by representatives of the association, its contractors, assorted vendors, specialist and independent contractors, the Community Association Institute, and various construction pricing and scheduling manuals including, but not limited to: Marshall & Swift Valuation Service, RS Means Facilities Maintenance & Repair Cost Data, RS Means Repair & Remodeling Cost Data, National Construction Estimator, National Repair & Remodel Estimator, Dodge Cost Manual and McGraw-Hill Professional. Additionally, costs are obtained from numerous vendor catalogues, actual quotations or historical costs, and our own experience in the field of property management and reserve study preparation. It has been assumed, unless otherwise noted in this report, that all assets have been designed and constructed properly and that each estimated useful life will approximate that of the norm per industry standards and/or manufacturer s specifications. In some cases, estimates may have been used on assets, which have an indeterminable but potential liability to the association. The decision for the inclusion of these as well as all assets considered is left to the client. We recommend that your reserve analysis study be updated on an annual basis due to fluctuating interest rates, inflationary changes, and the unpredictable nature of the lives of many of the assets under consideration. All of the information collected during our inspection of the association and computations made subsequently in preparing this reserve analysis study are retained in our computer files. Therefore, annual updates may be completed quickly and inexpensively each year. Reserve Analyst would like to thank you for using our services. We invite you to call us at any time, should you have questions, comments or need assistance. In addition, any of the parameters and estimates used in this study may be changed at your request, after which we will provide a revised study. This reserve analysis study is provided as an aid for planning purposes and not as an accounting tool. Since it deals with events yet to take place, there is no assurance that the results enumerated within it will, in fact, occur as described. PAGE 1-1

6 Part I Introduction Preparing the annual budget and overseeing the association s finances are perhaps the most important responsibilities of board members. The annual operating and reserve budgets reflect the planning and goals of the association and set the level and quality of service for all of the association s activities. Funding Options When a major repair or replacement is required in a community, an association has essentially four options available to address the expenditure: The first, and only logical means that the Board of Directors has to ensure its ability to maintain the assets for which it is obligated, is by assessing an adequate level of reserves as part of the regular membership assessment, thereby distributing the cost of the replacements uniformly over the entire membership. The community is not only comprised of present members, but also future members. Any decision by the Board of Directors to adopt a calculation method or funding plan which would disproportionately burden future members in order to make up for past reserve deficits, would be a breach of its fiduciary responsibility to those future members. Unlike individuals determining their own course of action, the board is responsible to the community as a whole. Whereas, if the association was setting aside reserves for this purpose, using the vehicle of the regularly assessed membership dues, it would have had the full term of the life of the roof, for example, to accumulate the necessary moneys. Additionally, those contributions would have been evenly distributed over the entire membership and would have earned interest as part of that contribution. The second option is for the association to acquire a loan from a lending institution in order to effect the required repairs. In many cases, banks will lend to an association using future homeowner assessments as collateral for the loan. With this method, the current board is pledging the future assets of an association. They are also incurring the additional expense of interest fees along with the original principal amount. In the case of a $150,000 roofing replacement, the association may be required to pay back the loan over a three to five year period, with interest. The third option, too often used, is simply to defer the required repair or replacement. This option, which is not recommended, can create an environment of declining property values due to expanding lists of deferred maintenance items and the association s financial inability to keep pace with the normal aging process of the common area components. This, in turn, can have a seriously negative impact on sellers in the association by making it difficult, or even impossible, for potential buyers to obtain financing from lenders. Increasingly, lending institutions are requesting copies of the association s most recent reserve study before granting loans, either for the association itself, a prospective purchaser, or for an individual within such an association. The fourth option is to pass a special assessment to the membership in an amount required to cover the expenditure. When a special assessment is passed, the association has the authority and responsibility to collect the assessments, even by means of foreclosure, if necessary. However, an association considering a special assessment cannot guarantee that an assessment, when needed, will be passed. Consequently, the association cannot guarantee its ability to perform the required repairs or replacements to those major components for which it is obligated when the need arises. Additionally, while relatively new communities require very little in the PAGE 1-2

7 way of major reserve expenditures, associations reaching 12 to 15 years of age and older, find many components reaching the end of their effective useful lives. These required expenditures, all accruing at the same time, could be devastating to an association s overall budget. Types of Reserve Studies Most reserve studies fit into one of three categories: Full Reserve Study; Update with site inspection; and Update without site inspection. In a Full Reserve Study, the reserve provider conducts a component inventory, a condition assessment (based upon on-site visual observations), and life and valuation estimates to determine both a fund status and funding plan. In an Update with site inspection, the reserve provider conducts a component inventory (verification only, not quantification unless new components have been added to the inventory), a condition assessment (based upon on-site visual observations), and life and valuation estimates to determine both the fund status and funding plan. In an Update without site inspection, the reserve provider conducts life and valuation estimates to determine the fund status and funding plan. The Reserve Study: A Physical and a Financial Analysis There are two components of a reserve study: a physical analysis and a financial analysis. Physical Analysis During the physical analysis, a reserve study provider evaluates information regarding the physical status and repair/replacement cost of the association s major common area components. To do so, the provider conducts a component inventory, a condition assessment, and life and valuation estimates. Developing a Component List The budget process begins with full inventory of all the major components for which the association is responsible. The determination of whether an expense should be labeled as operational, reserve, or excluded altogether is sometimes subjective. Since this labeling may have a major impact on the financial plans of the association, subjective determinations should be minimized. We suggest the following considerations when labeling an expense. PAGE 1-3

8 Operational Expenses Occur at least annually, no matter how large the expense, and can be budgeted for effectively each year. They are characterized as being reasonably predictable, both in terms of frequency and cost. Operational expenses include all minor expenses, which would not otherwise adversely affect an operational budget from one year to the next. Examples of operational expenses include: Utilities: Bank Service Charges Accounting Electricity Dues & Publications Reserve Study Gas Licenses, Permits & Fees Repair Expenses: Water Insurance(s) Tile Roof Repairs Telephone Services: Equipment Repairs Cable TV Landscaping Minor Concrete Repairs Administrative: Pool Maintenance Operating Contingency Supplies Street Sweeping Reserve Expenses These are major expenses that occur other than annually, and which must be budgeted for in advance in order to ensure the availability of the necessary funds in time for their use. Reserve expenses are reasonably predictable both in terms of frequency and cost. However, they may include significant assets that have an indeterminable but potential liability that may be demonstrated as a likely occurrence. They are expenses that, when incurred, would have a significant effect on the smooth operation of the budgetary process from one year to the next, if they were not reserved for in advance. Examples of reserve expenses include: Roof Replacements Park/Play Equipment Painting Pool/Spa Re-plastering Deck Resurfacing Pool Equipment Replacement Fencing Replacement Pool Furniture Replacement Asphalt Seal Coating Tennis Court Resurfacing Asphalt Repairs Lighting Replacement Asphalt Overlays Insurance(s) Equipment Replacement Reserve Study Interior Furnishings Budgeting is Normally Excluded for: Repairs or replacements of assets which are deemed to have an estimated useful life equal to or exceeding the estimated useful life of the facility or community itself, or exceeding the legal life of the community as defined in an association s governing documents. Examples include the complete replacement of elevators, tile roofs, wiring and plumbing. Also excluded are insignificant expenses that may be covered either by an operating or reserve contingency, or otherwise in a general maintenance fund. Expenses that are necessitated by acts of nature, accidents or other occurrences that are more properly insured for, rather than reserved for, are also excluded. PAGE 1-4

9 Financial Analysis The financial analysis assesses the association s reserve balance or fund status (measured in cash or as percent fully funded) to determine a recommendation for the appropriate reserve contribution rate in the future, known as the funding plan. Preparing the Reserve Study Once the reserve assets have been identified and quantified, their respective replacement costs, useful lives and remaining lives must be assigned so that a funding schedule can be constructed. Replacement costs and useful lives can be found in published manuals such as construction estimators, appraisal handbooks, and valuation guides. Remaining lives are calculated from the useful lives and ages of assets and adjusted according to conditions such as design, manufactured quality, usage, exposure to the elements and maintenance history. By following the recommendations of an effective reserve study, the association should avoid any major shortfalls. However, to remain accurate, the report should be updated on an annual basis to reflect such changes as shifts in economic parameters, additions of phases or assets, or expenditures of reserve funds. The association can assist in simplifying the reserve analysis update process by keeping accurate records of these changes throughout the year. Funding Methods From the simplest to the most complex, reserve analysis providers use many different computational processes to calculate reserve requirements. However, there are two basic processes identified as industry standards: the cash flow method and the component method. The cash flow method develops a reserve-funding plan where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different reserve funding plans are tested against the actual anticipated schedule of reserve expenses until the desired funding goal is achieved. This method sets up a window in which all future anticipated replacement costs are computed, based upon the individual lives of the components under consideration. The Reserve Analyst Threshold and the Reserve Analyst Current Assessment funding models are based upon the cash flow method. The component method develops a reserve-funding plan where the total contribution is based upon the sum of contributions for individual components. The component method is the more conservative of the two funding options, and assures that the association will achieve and maintain an ideal level of reserve over time. This method also allows for computations on individual components in the analysis. The Reserve Analyst Component Funding model is based upon the component methodology. PAGE 1-5

10 Funding Strategies Once an association has established its funding goals, the association can select an appropriate funding plan. There are four basic strategies from which most associations select. It is recommended that associations consult professionals to determine the best strategy or combination of plans that best suit the association s need. Additionally, associations should consult with their financial advisor to determine the tax implications of selecting a particular plan. Further, consultation with the American Institute of Certified Public Accountants (AICPA) for their reporting requirements is advisable. The four funding plans and descriptions of each are detailed below. Associations will have to update their reserve studies more or less frequently depending on the funding strategy they select. Full Funding---Given that the basis of funding for reserves is to distribute the costs of the replacements over the lives of the components in question, it follows that the ideal level of reserves would be proportionately related to those lives and costs. If an association has a component with an expected estimated useful life of ten years, it would set aside approximately one-tenth of the replacement cost each year. At the end of three years, one would expect threetenths of the replacement cost to have accumulated, and if so, that component would be fullyfunded. This model is important in that it is a measure of the adequacy of an association s reserves at any one point of time, and is independent of any particular method which may have been used for past funding or may be under consideration for future funding. This formula represents a snapshot in time and is based upon current replacement cost, independent of future inflationary or investment factors: Fully Funded Reserves = Age divided by Useful Life the results multiplied by Current Replacement Cost When an association s total accumulated reserves for all components meet this criterion, its reserves are considered fully-funded. The Reserve Analyst Threshold Funding Model (Minimum Funding). The goal of this funding method is to keep the reserve cash balance above zero. This means that while each individual component may not be fully funded, the reserve balance overall does not drop below zero during the projected period. An association using this funding method must understand that even a minor reduction in a component s remaining useful life can result in a deficit in the reserve cash balance. The Reserve Analyst Threshold Funding Model. This method is based upon the cash flow funding concept. The minimum reserve cash balance in threshold funding, however, is set at a predetermined dollar amount (other than $0). The Reserve Analyst Current Assessment Funding Model. This method is also based upon the cash flow funding concept. The initial reserve assessment is set at the association s current fiscal year funding level and a 30-year projection is calculated to illustrate the adequacy of the current funding over time. The Reserve Analyst Component Funding Model. This is a straight-line funding model. It distributes the cash reserves to individual reserve components and then calculates what the reserve assessment and interest contribution (minus taxes) should be, again by each reserve component. The current annual assessment is then determined by summing all the individual component assessments, hence the name Component Funding Model. This is the most conservative funding model. It leads to or maintains the fully funded reserve position. The following details this calculation process. Component Funding Model Distribution of Accumulated Reserves PAGE 1-6

11 The Distribution of Accumulated Reserves Report is a Component Funding Model calculation. This distribution does not apply to the cash flow funding models. When calculating reserves based upon the component methodology, a beginning reserve balance must be allocated for each of the individual components considered in the analysis, before the individual calculations can be completed. When this distribution is not available, or of sufficient detail, the following method is suggested for allocating reserves: The first step the program performs in this process is subtracting, from the total accumulated reserves, any amounts for assets that have predetermined (fixed) reserve balances. The user can fix the accumulated reserve balance within the program on the individual asset s detail page. If, by error, these amounts total more than the amount of funds available, then the remaining assets are adjusted accordingly. A provision for a contingency reserve is then deducted by the determined percentage used, and if there are sufficient remaining funds available. The second step is to identify the ideal level of reserves for each asset. As indicated in the prior section, this is accomplished by evaluating the component s age proportionate to its estimated useful life and current replacement cost. Again, the equation used is as follows: Fully Funded Reserves = (Age/Useful Life) x Current Replacement Cost The Reserve Analyst software program performs the above calculations to the actual month the component was placed-in-service. The program projects that the accumulation of necessary reserves for repairs or replacements will be available on the first day of the fiscal year in which they are scheduled to occur. The next step the program performs is to arrange all of the assets used in the study in ascending order by remaining life, and alphabetically within each grouping of remaining life items. These assets are then assigned their respective ideal level of reserves until the amount of funds available is depleted, or until all assets are appropriately funded. If any assets are assigned a zero remaining life (scheduled for replacement in the current fiscal year), then the amount assigned equals the current replacement cost and funding begins for the next cycle of replacement. If there are insufficient funds available to accomplish this, then the software automatically adjusts the zero remaining life items to one year, and that asset assumes its new grouping position alphabetically in the final printed report. If, at the completion of this task, there are additional moneys that have not been distributed, the remaining reserves are then assigned, in ascending order, to a level equal to, but not exceeding, the current replacement cost for each component. If there are sufficient moneys available to fund all assets at their current replacement cost levels, then any excess funds are designated as such and are not factored into any of the report computations. If, at the end of this assignment process there are designated excess funds, they can be used to offset the monthly contribution requirements recommended, or used in any other manner the client may desire. Assigning the reserves in this manner defers the make-up period for any under-funding over the longest remaining life of all assets under consideration, thereby minimizing the impact of any deficiency. For example, if the report indicates an under funding of $50,000, this under-funding will be assigned to components with the longest remaining lives in order to give more time to replenish the account. If the $50,000 under-funding were to be assigned to short remaining life items, the impact would be felt immediately. If the reserves are under-funded, the monthly contribution requirements, as outlined in this report, can be expected to be higher than normal. In future years, as individual assets are replaced, the funding requirements will return to their normal levels. In the case of a large deficiency, a special assessment may be considered. The program can easily generate revised PAGE 1-7

12 reports outlining how the monthly contributions would be affected by such an adjustment, or by any other changes that may be under consideration. Funding Reserves Three assessment and contribution figures are provided in the report, the Monthly Reserve Assessment Required, the Average Net Monthly Interest Earned contribution and the Total Monthly Allocation to Reserves. The association should allocate the Monthly Reserve Assessment Required amount to reserves each month when the interest earned on the reserves is left in the reserve accounts as part of the contribution. Any interest earned on reserve deposits, must be left in reserves and only amounts set aside for taxes should be removed. The second alternative is to allocate the Total Monthly Allocation to reserves (this is the member assessment plus the anticipated interest earned for the fiscal year). This method assumes that all interest earned will be assigned directly as operating income. This allocation takes into consideration the anticipated interest earned on accumulated reserves regardless of whether or not it is actually earned. When taxes are paid, the amount due will be taken directly from the association s operating accounts as the reserve accounts are allocated only those moneys net of taxes. Users Guide to your Reserve Analysis Study Part II of your Reserve Analyst Report contains the reserve analysis study for your association. There are seven types of reports in the study as described below. Report Summaries The Report Summary for all funding models lists all of the parameters that were used in calculating the report as well as the summary of your reserve analysis study. Index Reports The Distribution of Accumulated Reserves report lists all assets in remaining life order. It also identifies the ideal level of reserves that should have accumulated for the association as well as the actual reserves available. This information is valid only for the Component Funding Model calculation. PAGE 1-8

13 The Component Listing/Summary lists all assets by category (i.e. roofing, painting, lighting, etc.) together with their remaining life, current cost, monthly reserve contribution, and net monthly allocation. Detail Reports The Detail Report itemizes each asset and lists all measurements, current and future costs, and calculations for that asset. Provisions for percentage replacements, salvage values, and one-time replacements can also be utilized. These reports can be sorted by category or group. The numerical listings for each asset are enhanced by extensive narrative detailing factors such as design, manufactured quality, usage, exposure to elements and maintenance history. The Reserve Analyst Detail Index is an alphabetical listing of all assets, together with the page number of the asset s detail report, the projected replacement year, and the asset number. Projections Thirty-year projections add to the usefulness of your reserve analysis study. Definitions Report I.D. Includes the Report Date (example: November 15, 1992), Account Number (example: 9773), and Version (example: 1.0). Please use this information (displayed on the summary page) when referencing your report. Budget Year Beginning/Ending The budgetary year for which the report is prepared. For associations with fiscal years ending December 31 st, the monthly contribution figures indicated are for the 12-month period beginning 1/1/20xx and ending 12/31/20xx. Number of Units and/or Phases If applicable, the number of units and/or phases included in this version of the report. Inflation This figure is used to approximate the future cost to repair or replace each component in the report. The current cost for each component is compounded on an annual basis by the number of remaining years to replacement, and the total is used in calculating the monthly reserve contribution that will be necessary to accumulate the required funds in time for replacement. Annual Assessment Increase This represents the percentage rate at which the association will increase its assessment to reserves at the end of each year. For example, in order to accumulate $10,000 in 10 years, you could set aside $1,000 per year. As an alternative, you could set aside $795 the first year and increase that amount by 5% each year until the year of replacement. In either case you arrive at the same amount. The idea is that you start setting aside a lower amount and increase that number each year in accordance with the planned percentage. Ideally this figure should be equal to the rate of inflation. It can, however, be used to aide those associations that have not set aside appropriate reserves in the past, by making the initial year s allocation less formidable. PAGE 1-9

14 Investment Yield Before Taxes The average interest rate anticipated by the association based upon its current investment practices. Taxes on Interest Yield The estimated percentage of interest income that will be set aside to pay income taxes on the interest earned. Projected Reserve Balance The anticipated reserve balance on the first day of the fiscal year for which this report has been prepared. This is based upon information provided and not audited. Percent Fully Funded The ratio, at the beginning of the fiscal year, of the actual (or projected) reserve balance to the calculated fully funded balance, expressed as a percentage. Phase Increment Detail and/or Age Comments regarding aging of the components on the basis of construction date or date of acceptance by the association. Monthly Assessment The assessment to reserves required by the association each month. Interest Contribution (After Taxes) The interest that should be earned on the reserves, net of taxes, based upon their beginning reserve balance and monthly contributions for one year. This figure is averaged for budgeting purposes. Total Monthly Allocation The sum of the monthly assessment and interest contribution figures. Group and Category The report may be prepared and sorted either by group (location, building, phase, etc.) or by category (roofing, painting, etc.). The standard report printing format is by category. Percentage of Replacement or Repairs In some cases, an asset may not be replaced in its entirety or the cost may be shared with a second party. Examples are budgeting for a percentage of replacement of streets over a period of time, or sharing the expense to replace a common wall with a neighboring party. Placed-In-Service Date The month and year that the asset was placed-in-service. This may be the construction date, the first escrow closure date in a given phase, or the date of the last servicing or replacement. Estimated Useful Life The estimated useful life of an asset based upon industry standards, manufacturer specifications, visual inspection, location, usage, association standards and prior history. All of these factors are taken into consideration when tailoring the estimated useful life to the particular asset. For example, the carpeting in a hallway or elevator (a heavy traffic area) will not have the same life as the identical carpeting in a seldom-used meeting room or office. Adjustment to Useful Life Once the useful life is determined, it may be adjusted, up or down, by this separate figure for the current cycle of replacement. This will allow for a current period adjustment without affecting the estimated replacement cycles for future replacements. Estimated Remaining Life PAGE 1-10

15 This calculation is completed internally based upon the report s fiscal year date and the date the asset was placed-in-service. Replacement Year The year that the asset is scheduled to be replaced. The appropriate funds will be available by the first day of the fiscal year for which replacement is anticipated. Annual Fixed Reserves An optional figure which, if used, will override the normal process of allocating reserves to each asset. Fixed Assessment An optional figure which, if used, will override all calculations and set the assessment at this amount. This assessment can be set for monthly, quarterly or annually as necessary. Salvage Value The salvage value of the asset at the time of replacement, if applicable. One-Time Replacement Notation if the asset is to be replaced on a one-time basis. Current Replacement Cost The estimated replacement cost effective at the beginning of the fiscal year for which the report is being prepared Future Replacement Cost The estimated cost to repair or replace the asset at the end of its estimated useful life based upon the current replacement cost and inflation. Component Inventory The task of selecting and qualifying reserve components. This task can be accomplished through on-site visual, review of association design and organizational documents, a review of established association precedents, and discussion with appropriate association representative(s). PAGE 1-11

16 A Multi-Purpose Tool Your Reserve Analyst Report is an important part of your association s budgetary process. Following its recommendations should ensure the association s smooth budgetary transitions from one fiscal year to the next, and either decrease or eliminate the need for special assessments. In addition, your Reserve Analyst reserve study serves a variety of useful purposes: Following the recommendations of a reserve study performed by a professional consultant can protect the Board of Directors in a community from personal liability concerning reserve components and reserve funding. A reserve analysis study is required by your accountant during the preparation of the association s annual audit. The Reserve Analyst reserve study is often requested by lending institutions during the process of loan applications, both for the community and, in many cases, the individual owners. Your Reserve Analyst Report is also a detailed inventory of the association s major assets and serves as a management tool for scheduling, coordinating and planning future repairs and replacements. Your Reserve Analyst Report is a tool that can assist the Board in fulfilling its legal and fiduciary obligations for maintaining the community in a state of good repair. If a community is operating on a special assessment basis, it cannot guarantee that an assessment, when needed, will be passed. Therefore, it cannot guarantee its ability to perform the required repairs or replacements to those major components for which the association is obligated. Since the Reserve Analyst reserve analysis study includes measurements and cost estimates of the client s assets, the detail reports may be used to evaluate the accuracy and price of contractor bids when assets are due to be repaired or replaced. The Reserve Analyst reserve study is an annual disclosure to the membership concerning the financial condition of the association, and may be used as a consumers guide by prospective purchasers. The Reserve Analyst Owners Summary meets the disclosure requirements of the California Civil Code and also the recently adopted ECHO standards. Your Reserve Analyst Report provides a record of the time, cost, and quantities of past reserve replacements. At times the association s management company and board of directors are transitory which may result in the loss of these important records. PAGE 1-12

17 Your City, Your State RA Current Assessment Funding Model Summary Report Date February 01, 2003 Account Number Sample Reserve Study Version 7.0 (2003) Budget Year Beginning January 01, 2003 Budget Year Ending December 31, 2003 Total Units 55 Phase Development 1 of 1 Report Parameters Inflation 3.00% Annual Assessment Increase 3.00% Interest Rate on Reserve Deposit 3.00% Tax Rate on Interest 30.00% Contingency 3.00% 2003 Beginning Balance $105, Current Assessment Funding Model Summary For budgeting purposes, unless otherwise indicated, we have used January 1990 to begin aging the original components in this reserve study. This a 55 unit condominium is located at the intersection of 1st Street and Main Street, Your Town, Your State, USA. The last Reserve Analyst field inspection was completed on Janury 3, Summary of Calculations Monthly Reserve Assessment Required $1, $28.03 per unit per monthly Average Net Monthly Interest Earned $ Total Monthly Allocation to Reserves $1, $28.32 per unit monthly PAGE 2-1

18 RA Current Assessment Funding Model Projection Beginning Balance: $105,000 Year Projected Fully Percent Current Annual Annual Annual Ending Funded Fully Cost Assessment Interest Expenditures Reserves Reserves Funded ,942 18,500 2,323 3, , ,223 92% ,291 19,055 2,538 10, , ,130 91% ,859 19,627 2,819 8, , ,503 91% ,655 20,215 2,933 17, , ,737 90% ,685 20,822 3,232 9, , ,404 89% ,955 21,447 2,967 36, , ,009 87% ,474 22,090 3, , ,125 87% ,248 22,753 2,990 49, , ,331 85% ,286 23,435 2,204 63, , ,176 80% ,594 24,138 1,915 39, , ,630 77% ,182 24,862 2, , ,526 79% ,057 25,608 2,714 16, , ,739 79% ,229 26,377 2,352 45, , ,137 76% ,706 27,168 2,342 29, , ,103 74% ,497 27,983 2,450 24, , ,129 74% ,612 28,822 2,800 14, , ,397 75% ,061 29,687 3, , ,442 77% ,852 30,578 3,917 12, , ,923 77% ,998 31,495 3,152 70, , ,541 72% ,508 32,440 3,077 38, , ,475 71% ,393 33,413 3,528 14, , ,960 72% ,665 34,415 4,076 11, , ,644 73% ,335 35,448 4, , ,673 75% ,415 36,511 4,296 69, , ,589 71% ,917 37,607 4,648 24, , ,429 71% ,855 38,735 5,359 9, , ,618 73% ,240 39,897 5,019 60, , ,752 70% ,088 41,094 3, , , ,525 63% ,410 42,327 2,527 95, , ,208 55% ,223 43,596 1,395 98,811 90, ,258 43% PAGE 2-2

19 RA Current Funding Model & Fully Funded Comparison Chart Current Funding Model VS Fully Funded Reserves 450, , , , , , , ,000 50,000 0 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 Fiscal Year Current Funding Model Fully Funded Reserves The Current Assessment Funding Model is based on the current annual assessment, parameters, and reserve fund balance. Because it is calculated using the current annual assessment, it will give the accurate projection of how well the association is funded for the next 30 years of planned reserve expenditures. PAGE 2-3

20 RA Program Features & Benefits - Page 1 Program Features & Benefits Windows Software Open ended architecture - Any desired feature can be added Very user friendly Uses Rich Text - Edits like Microsoft Word Network ready Easily Zip and project files to others or use as backup Craftsman component cost database included Produces Professional reports Import other data files Project Notes for specific information about each project Meets current California owner's disclosure requirements PAGE 2-4

21 Your City, Your State RA Threshold Funding Model Summary Report Date February 01, 2003 Account Number Sample Reserve Study Version 7.0 (2003) Budget Year Beginning January 01, 2003 Budget Year Ending December 31, 2003 Total Units 55 Phase Development 1 of 1 Report Parameters Inflation 3.00% Annual Assessment Increase 3.00% Interest Rate on Reserve Deposit 3.00% Tax Rate on Interest 30.00% Contingency 3.00% 2003 Beginning Balance $105, Threshold Funding Model Summary For budgeting purposes, unless otherwise indicated, we have used January 1990 to begin aging the original components in this reserve study. This a 55 unit condominium is located at the intersection of 1st Street and Main Street, Your Town, Your State, USA. The last Reserve Analyst field inspection was completed on Janury 3, Summary of Calculations Monthly Reserve Assessment Required $1, $27.41 per unit per monthly Average Net Monthly Interest Earned $ Total Monthly Allocation to Reserves $1, $27.70 per unit monthly PAGE 2-5

22 RA Threshold Funding Model Projection Beginning Balance: $105,000 Year Projected Fully Percent Current Annual Annual Annual Ending Funded Fully Cost Assessment Interest Expenditures Reserves Reserves Funded ,942 18,093 2,319 3, , ,223 92% ,291 18,636 2,525 10, , ,130 91% ,859 19,195 2,797 8, , ,503 90% ,655 19,771 2,901 17, , ,737 89% ,685 20,364 3,190 9, , ,404 88% ,955 20,975 2,914 36, , ,009 86% ,474 21,604 3, , ,125 86% ,248 22,252 2,914 49, , ,331 83% ,286 22,920 2,116 63, , ,176 77% ,594 23,608 1,814 39, , ,630 73% ,182 24,316 2, , ,526 76% ,057 25,045 2,585 16, , ,739 75% ,229 25,797 2,208 45, , ,137 72% ,706 26,570 2,183 29, , ,103 70% ,497 27,368 2,275 24, , ,129 69% ,612 28,189 2,608 14, , ,397 70% ,061 29,034 3, , ,442 72% ,852 29,905 3,689 12, , ,923 73% ,998 30,802 2,905 70, , ,541 67% ,508 31,727 2,809 38, , ,475 65% ,393 32,678 3,239 14, , ,960 66% ,665 33,659 3,766 11, , ,644 68% ,335 34,668 4, , ,673 70% ,415 35,708 3,938 69, , ,589 66% ,917 36,780 4,266 24, , ,429 66% ,855 37,883 4,951 9, , ,618 67% ,240 39,020 4,584 60, , ,752 65% ,088 40,190 3, , , ,525 56% ,410 41,396 2,034 95, , ,208 46% ,223 42, ,811 65, ,258 30% PAGE 2-6

23 RA Threshold Funding Model & Fully Funded Comparison Chart Threshold Funding Model VS Fully Funded Reserves 450, , , , , , , ,000 50,000 0 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 Fiscal Year Threshold Funding Model Fully Funded Reserves The Threshold Funding Model calculates the minimum reserve assessments, with the restriction that the reserve balance is not allowed to go below $0 or other predetermined threshold, during the period of time examined. All funds for planned reserve expenditures will be available on the first day of each fiscal year. The Threshold Funding Model allows the client to choose the level of conservative funding they desire by choosing the threshold dollar amount. PAGE 2-7

24 Your City, Your State RA Component Funding Model Summary Report Date February 01, 2003 Account Number Sample Reserve Study Version 7.0 (2003) Budget Year Beginning January 01, 2003 Budget Year Ending December 31, 2003 Total Units 55 Phase Development 1 of 1 Report Parameters Inflation 3.00% Annual Assessment Increase 3.00% Interest Rate on Reserve Deposit 3.00% Tax Rate on Interest 30.00% Contingency 3.00% 2003 Beginning Balance $105, Component Funding Model Summary For budgeting purposes, unless otherwise indicated, we have used January 1990 to begin aging the original components in this reserve study. This a 55 unit condominium is located at the intersection of 1st Street and Main Street, Your Town, Your State, USA. The last Reserve Analyst field inspection was completed on Janury 3, Summary of Calculations Monthly Reserve Assessment Required $1, $32.14 per unit per monthly Average Net Monthly Interest Earned $ Total Monthly Allocation to Reserves $1, $32.44 per unit monthly PAGE 2-8

25 RA Component Funding Model Projection Beginning Balance: $105,000 Year Projected Fully Percent Current Annual Annual Annual Ending Funded Fully Cost Assessment Interest Expenditures Reserves Reserves Funded ,942 21,219 2,349 3, , ,223 95% ,291 21,945 2,624 10, , ,130 95% ,859 22,369 2,967 8, , ,503 96% ,655 22,929 3,142 17, , ,737 97% ,685 23,413 3,502 9, , ,404 97% ,955 24,310 3,299 36, , ,009 97% ,474 24,665 3, , ,125 97% ,248 25,809 3,456 49, , ,331 98% ,286 26,920 2,749 63, , ,176 99% ,594 27,769 2,547 39, , , % ,182 27,668 3, , , % ,057 28,245 3,500 16, , , % ,229 29,448 3,215 45, , , % ,706 30,718 3,293 29, , , % ,497 31,392 3,496 24, , , % ,612 32,022 3,938 14, , , % ,061 32,608 4, , , % ,852 33,419 5,232 12, , , % ,998 34,863 4,560 70, , , % ,508 35,705 4,584 38, , , % ,393 36,377 5,135 14, , , % ,665 37,163 5,778 11, , , % ,335 37,902 6, , , % ,415 39,692 6,186 69, , , % ,917 41,030 6,648 24, , , % ,855 42,362 7,476 9, , , % ,240 44,004 7,262 60, , , % ,088 46,196 5, , , , % ,410 47,688 5,075 95, , , % ,223 49,339 4,115 98, , , % PAGE 2-9

26 RA Component Funding Model & Fully Funded Comparison Chart Component Funding Model VS Fully Funded Reserves 450, , , , , , , ,000 50,000 0 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 Fiscal Year Component Funding Model Fully Funded Reserves The Component Funding Model s long-term objective is to provide a plan to a fully funded reserve position over the longest period of time practical. This is the most conservative funding model. PAGE 2-10

27 RA Component Funding Model Assessment & Category Summary Report Date February 01, 2003 Beginning Fiscal Year January 01, 2003 Account Number Sample Reserve Study Version Number 7.0 (2003) Description Replacement Year Life Useful Adjustment Remaining Life Asphalt Pavement Asphalt Overlay ,236 26,153 26,153 Streets - Asphalt Repairs ,360 2,016 2,016 Streets - Asphalt Seal Coat , Asphalt Pavement - Total $48,496 $29,149 $29,149 Roofing Roofs - Built Up w/gravel, Replace , ,625 Roofing - Total $18,375 $2,625 Gutters & Downspouts Gutters & Downspouts - Replace , Gutters & Downspouts - Total $1,212 $716 $716 Skylights Skylights - Roof, Replace , Skylights - Total $1,340 $792 $792 Painting, Interior Paint - Lobby, Atrium, & Halls ,567 6,604 6,604 Painting, Interior - Total $10,567 $6,604 $6,604 Painting, Exterior Paint - Metal , Paint - Stucco ,975 7,595 7,595 Paint - Wood Siding , Painting, Exterior - Total $41,699 $9,085 $9,085 Fencing Fence - Steel, Pool, Replace ,686 11,328 11,328 Fencing - Total $15,686 $11,328 $11,328 Pool Pool - Filter, Replace , Pool - Replaster/Tile Replacement ,207 1,552 1,552 Pool Furniture - Replacement , Pool Heater - Replacement ,164 2,164 2,164 Pool - Total $11,309 $4,294 $4,294 Play Equipment Play Equipment - Replace , ,250 Play Equipment - Total $12,000 $2,250 Cost Current Assigned Reserve Fully Funded PAGE 2-11

28 RA Component Funding Model Assessment & Category Summary Description Replacement Year Life Useful Adjustment Remaining Life Railings, Metal Railing - Ext, Wrght Iron, Replace ,484 2,516 2,516 Railings, Metal - Total $3,484 $2,516 $2,516 Lighting, Interior Lighting - Ceiling Recess Rounds, Replace , Lighting - EXIT/Emergency, Replace ,434 3,211 3,211 Lighting - Fluorescent Fixtures, Replace , ,430 Lighting - Wall Sconces, Replace ,084 3,595 3,595 Lighting, Interior - Total $19,312 $6,806 $8,577 Lighting, Exterior Lighting - Buildings, Replace ,810 1,070 1,070 Lighting, Exterior - Total $1,810 $1,070 $1,070 Floor Cover Floor Cover - Carpet, Halls, Replace ,111 5,408 5,408 Floor Cover - Total $8,111 $5,408 $5,408 Hot Water System Boiler - Hot Water System, Replace , Hot Water Storage Tank - Replace , Hot Water System - Total $18,470 $703 Elevator Elevator - Cab Refurbishing ,200 5,757 5,757 Elevator - Major Repairs ,000 7,944 7,944 Elevator - Total $17,200 $13,702 $13,702 Gate Operator Security - Gate Operators, Sliding, Replace ,895 1,760 1,760 Gate Operator - Total $1,895 $1,760 $1,760 Security Security - Access Phone, Replace ,512 2,333 2,333 Security - Total $2,512 $2,333 $2,333 Doors, Exterior Doors - Exterior, Metal, Replace ,161 3,280 4,244 Doors, Exterior - Total $8,161 $3,280 $4,244 Landscape Equipment Irrigation Controller - Replace ,728 1,728 1,728 Landscape Equipment - Total $1,728 $1,728 $1,728 Mailboxes Mailboxes - Wall Clusters, Replace ,575 1,280 1,280 Mailboxes - Total $1,575 $1,280 $1,280 Cost Current Assigned Reserve Fully Funded PAGE 2-12

29 RA Component Funding Model Assessment & Category Summary Description Contingency Traffic Signs Contingency - Total Replacement Year Life Adjustment Remaining Life Useful unfunded Cost Current Assigned Reserve Fully Funded Total Asset Summary $244,942 $101,850 $110,163 Contingency at 3.00% $3,150 $3,407 Summary Total $105,000 $113,570 Fully Funded Level 92% Current Average Liability per Unit (Total Units:55) -$155 PAGE 2-13

30 RA Program Features & Benefits - Page 2...More Features & Benefits Add and print color digital photos of assets to the report Solid industry accepted funding models Special Assessments Reserve preparer has control of funding models Sort, group and find assets Add record comments to describe assets Use names for asset categories and groups Stock Comments included to describe assets Keep detailed inventory of the association s assets PAGE 2-14

31 RA Distribution of Accumulated Reserves Description Remaining Replacement Assigned Fully Funded Life Year Reserves Reserves Irrigation Controller - Replace ,728 1,728 Pool Heater - Replacement ,164 2,164 Elevator - Cab Refurbishing ,757 5,757 Security - Access Phone, Replace ,333 2,333 Security - Gate Operators, Sliding, Replace ,760 1,760 Floor Cover - Carpet, Halls, Replace ,408 5,408 Mailboxes - Wall Clusters, Replace ,280 1,280 Paint - Lobby, Atrium, & Halls ,604 6,604 Paint - Metal Paint - Wood Siding Streets - Asphalt Repairs ,016 2,016 Streets - Asphalt Seal Coat Elevator - Major Repairs ,944 7,944 Fence - Steel, Pool, Replace ,328 11,328 Pool Furniture - Replacement Railing - Ext, Wrght Iron, Replace ,516 2,516 Asphalt Overlay ,153 26,153 Paint - Stucco ,595 7,595 Gutters & Downspouts - Replace Lighting - Buildings, Replace ,070 1,070 Lighting - EXIT/Emergency, Replace ,211 3,211 Lighting - Wall Sconces, Replace ,595 3,595 Pool - Replaster/Tile Replacement ,552 1,552 Skylights - Roof, Replace Pool - Filter, Replace Doors - Exterior, Metal, Replace ,280 4,244 Roofs - Built Up w/gravel, Replace ,625 Play Equipment - Replace ,250 Hot Water Storage Tank - Replace Lighting - Ceiling Recess Rounds, Replace Lighting - Fluorescent Fixtures, Replace ,430 Boiler - Hot Water System, Replace Traffic Signs unfunded PAGE 2-15

32 RA Distribution of Accumulated Reserves Description Remaining Replacement Assigned Fully Funded Life Year Reserves Reserves Total Asset Summary $101,850 $110,163 Contingency at 3.00% $3,150 $3,407 Summary Total $105,000 $113,570 Fully Funded Level 92% Current Average Liability per Unit (Total Units:55) -$155 PAGE 2-16

33 RA Annual Expenditure Detail Description Expenditures Replacement Year 2003 Irrigation Controller - Replace 1,728 Pool Heater - Replacement 2,164 Total $3,892 Replacement Year 2004 Elevator - Cab Refurbishing 6,386 Security - Access Phone, Replace 2,587 Security - Gate Operators, Sliding, Replace 1,952 Total $10,925 Replacement Year 2005 Floor Cover - Carpet, Halls, Replace 8,605 Total $8,605 Replacement Year 2006 Mailboxes - Wall Clusters, Replace 1,721 Paint - Lobby, Atrium, & Halls 11,547 Paint - Metal 2,605 Paint - Wood Siding 1,464 Total $17,338 Replacement Year 2007 Streets - Asphalt Repairs 3,782 Streets - Asphalt Seal Coat 5,515 Total $9,297 Replacement Year 2008 Elevator - Major Repairs 12,752 Fence - Steel, Pool, Replace 18,184 PAGE 2-17

34 RA Annual Expenditure Detail Description Expenditures Replacement Year 2008 continued... Pool Furniture - Replacement 1,908 Railing - Ext, Wrght Iron, Replace 4,038 Total $36,883 No Replacement in 2009 Replacement Year 2010 Asphalt Overlay 49,485 Total $49,485 Replacement Year 2011 Floor Cover - Carpet, Halls, Replace 10,275 Paint - Metal 3,020 Paint - Stucco 48,106 Paint - Wood Siding 1,697 Total $63,099 Replacement Year 2012 Gutters & Downspouts - Replace 1,582 Lighting - Buildings, Replace 2,362 Lighting - EXIT/Emergency, Replace 7,090 Lighting - Wall Sconces, Replace 7,938 Pool - Replaster/Tile Replacement 8,099 Skylights - Roof, Replace 1,748 Streets - Asphalt Repairs 4,384 Streets - Asphalt Seal Coat 6,393 Total $39,596 No Replacement in 2013 Replacement Year 2014 Paint - Lobby, Atrium, & Halls 14,627 Pool - Filter, Replace 1,788 Total $16,416 Replacement Year 2015 Doors - Exterior, Metal, Replace 11,636 PAGE 2-18

35 RA Annual Expenditure Detail Description Expenditures Replacement Year 2015 continued... Irrigation Controller - Replace 2,464 Pool Furniture - Replacement 2,347 Pool Heater - Replacement 3,085 Roofs - Built Up w/gravel, Replace 26,198 Total $45,730 Replacement Year 2016 Paint - Metal 3,501 Paint - Wood Siding 1,968 Play Equipment - Replace 17,622 Security - Access Phone, Replace 3,689 Security - Gate Operators, Sliding, Replace 2,783 Total $29,563 Replacement Year 2017 Floor Cover - Carpet, Halls, Replace 12,269 Streets - Asphalt Repairs 5,082 Streets - Asphalt Seal Coat 7,412 Total $24,763 Replacement Year 2018 Elevator - Cab Refurbishing 9,659 Hot Water Storage Tank - Replace 4,674 Total $14,333 No Replacement in 2019 Replacement Year 2020 Lighting - Ceiling Recess Rounds, Replace 2,479 Lighting - Fluorescent Fixtures, Replace 10,403 Total $12,882 Replacement Year 2021 Paint - Metal 4,059 PAGE 2-19

36 RA Annual Expenditure Detail Description Expenditures Replacement Year 2021 continued... Paint - Stucco 64,650 Paint - Wood Siding 2,281 Total $70,990 Replacement Year 2022 Mailboxes - Wall Clusters, Replace 2,762 Paint - Lobby, Atrium, & Halls 18,530 Pool Furniture - Replacement 2,886 Streets - Asphalt Repairs 5,892 Streets - Asphalt Seal Coat 8,592 Total $38,662 Replacement Year 2023 Floor Cover - Carpet, Halls, Replace 14,650 Total $14,650 Replacement Year 2024 Pool - Replaster/Tile Replacement 11,547 Total $11,547 No Replacement in 2025 Replacement Year 2026 Elevator - Major Repairs 21,709 Fence - Steel, Pool, Replace 30,957 Paint - Metal 4,706 Paint - Wood Siding 2,645 Pool - Filter, Replace 2,550 Railing - Ext, Wrght Iron, Replace 6,875 Total $69,442 Replacement Year 2027 Irrigation Controller - Replace 3,513 PAGE 2-20

37 RA Annual Expenditure Detail Description Expenditures Replacement Year 2027 continued... Pool Heater - Replacement 4,399 Streets - Asphalt Repairs 6,830 Streets - Asphalt Seal Coat 9,961 Total $24,703 Replacement Year 2028 Security - Access Phone, Replace 5,260 Security - Gate Operators, Sliding, Replace 3,968 Total $9,227 Replacement Year 2029 Floor Cover - Carpet, Halls, Replace 17,493 Pool Furniture - Replacement 3,550 Roofs - Built Up w/gravel, Replace 39,627 Total $60,670 Replacement Year 2030 Asphalt Overlay 89,376 Paint - Lobby, Atrium, & Halls 23,473 Total $112,849 Replacement Year 2031 Paint - Metal 5,455 Paint - Stucco 86,884 Paint - Wood Siding 3,066 Total $95,405 Replacement Year 2032 Boiler - Hot Water System, Replace 36,456 Elevator - Cab Refurbishing 14,611 Play Equipment - Replace 28,279 PAGE 2-21

38 RA Annual Expenditure Detail Description Expenditures Replacement Year 2032 continued... Streets - Asphalt Repairs 7,918 Streets - Asphalt Seal Coat 11,547 Total $98,811 PAGE 2-22

39 RA Detail Report by Category Asphalt Overlay Asset ID 1069 Asphalt Pavement Placed in Service January 1990 Useful Life 20 Replacement Year 2010 Remaining Life 7 Asset Cost $40, Percent Replacement 100% Future Cost $49, Assigned Reserves $26, Monthly Assessment $ Interest Contribution $48.26 Reserve Allocation $ ,000 - sq. ft. of asphalt $1.01 = $35, manhole cover = 3, valve cover = 1, Total = $40, The cost of asphalt overlay is based on a minimum thickness of 1.5" and includes the cost of applying a paving fabric. Streets - Asphalt Repairs Asset ID 1058 Asphalt Pavement Placed in Service January 1997 Useful Life 5 Adjustment 5 Replacement Year 2007 Remaining Life 4 35,000 sq. $6.40 Asset Cost $3, Percent Replacement 1.5% Future Cost $3, Assigned Reserves $2, Monthly Assessment $31.76 Interest Contribution $3.86 Reserve Allocation $35.63 PAGE 2-23

40 RA Detail Report by Category Streets - Asphalt Repairs Continued... The useful life on the asphalt repairs has been adjusted to align with the future cycle of the asphalt sealing. It is estimated that a percentage of the asphalt areas will require repair or replacement. The actual condition of the asphalt should be monitored through time and the estimates adjusted accordingly. The actual date this item was placed in service was not available. For budgeting purposes, we have estimated this date based upon its present condition. Streets - Asphalt Seal Coat Asset ID 1059 Asphalt Pavement Placed in Service January 2002 Useful Life 5 Replacement Year 2007 Remaining Life 4 35,000 sq. $0.14 Asset Cost $4, Percent Replacement 100% Future Cost $5, Assigned Reserves $ Monthly Assessment $88.93 Interest Contribution $2.59 Reserve Allocation $91.52 PAGE 2-24

41 RA Detail Report by Category Streets - Asphalt Seal Coat Continued... Asphalt surfaces should be sealed within 3 years of their initial installation. Thereafter, a 4 to 5 year cycle should be observed and adjusted according to the client's particular needs. The cost includes any restriping that may be necessary. The actual date this item was placed in service was not available. For budgeting purposes, we have estimated this date based upon its present condition. The replacement cost for this asset has been adjusted downward due to the large quantity to be replaced or maintained. Asphalt Pavement - Total Current Cost $48,496 Assigned Reserves $29,149 Fully Funded Reserves $29,149 PAGE 2-25

42 RA Detail Report by Category Roofs - Built Up w/gravel, Replace Asset ID 1001 Roofing Placed in Service June 2001 Useful Life 14 Replacement Year 2015 Remaining Life 12 5,090 sq. $3.61 Asset Cost $18, Percent Replacement 100% Future Cost $26, Assigned Reserves none Monthly Assessment $ Interest Contribution $1.54 Reserve Allocation $ The client advises that these roofs were replaced during June 2001 for $18,476. Main building - 3,890 Building A - 1,200 Total = 5,090 sq. ft. It is recommended that the association secure cost proposals for the roofing replacement from qualified roofing contractors or consultants as soon as practical. Roofing costs have risen significantly due to new environmental and safety regulations, as well as higher costs of materials. In addition, existing or changes to roofing specifications, choice of the quality of the product, possible structural repairs, or other unknown factors can add to the cost. We can amend this analysis using the current cost proposals in an updated or revised reserve study when the information becomes available. In order to ensure a high quality installation, the client may wish to obtain the services of an independent roofing consultant to work with the client and the roofing contractor providing installation. Consultants are available for the preparation of installation specifications and, if desired, to work with the contractor during the installation process. We have been advised that fees vary upon the size of the job and the extent of detail required by the client. However, fees for a consultant should not exceed six to eight percent of the actual roof replacement cost. The PAGE 2-26

43 RA Detail Report by Category Roofs - Built Up w/gravel, Replace Continued... costs we have used do not include this additional expense. Should the client request, we will be happy to incorporate this into our calculations. The cost used on this component includes the removal and disposal of the existing material. The roofing specifications are unknown; therefore, the cost used on this built-up roof is based upon replacing it with a 3-ply roof membrane. The useful life estimate is based upon the assumption that the roof will be inspected annually and maintained as needed. Roofing - Total Current Cost $18,375 Assigned Reserves $0 Fully Funded Reserves $2,625 PAGE 2-27

44 RA Detail Report by Category Gutters & Downspouts - Replace Asset ID 1004 Gutters & Downspouts Placed in Service January 1990 Useful Life 22 Replacement Year 2012 Remaining Life lin. $7.13 Asset Cost $1, Percent Replacement 100% Future Cost $1, Assigned Reserves $ Monthly Assessment $6.03 Interest Contribution $1.32 Reserve Allocation $7.35 There are gutters and downspouts on Building A only. gutters downspouts - 60 Total = 170 sq. ft. Gutters & Downspouts - Total Current Cost $1,212 Assigned Reserves $716 Fully Funded Reserves $716 PAGE 2-28

45 RA Detail Report by Category Skylights - Roof, Replace Asset ID 1013 Skylights Placed in Service January 1990 Useful Life 22 Replacement Year 2012 Remaining Life 9 2 $ Asset Cost $1, Percent Replacement 100% Future Cost $1, Assigned Reserves $ Monthly Assessment $6.66 Interest Contribution $1.46 Reserve Allocation $8.13 These skylights are 4' by 3'. Skylights - Total Current Cost $1,340 Assigned Reserves $792 Fully Funded Reserves $792 PAGE 2-29

46 RA Detail Report by Category Paint - Lobby, Atrium, & Halls Asset ID 1011 Painting, Interior Placed in Service January 1998 Useful Life 8 Replacement Year 2006 Remaining Life 3 18,870 sq. $0.56 Asset Cost $10, Percent Replacement 100% Future Cost $11, Assigned Reserves $6, Monthly Assessment $ Interest Contribution $12.84 Reserve Allocation $ This is the interiors for the main building. Building A has no interiors. entry doors lobby - 1,130 hallway/atrium, 1st floor - 4,380 hallway, 2nd floor - 1,610 hallway, 3rd floor - 1,610 hallway, 4th floor garage, wall only - 3,840 stairwells - 5,190 Total = 18,870 sq. ft. The actual date this item was placed in service was not available. For budgeting purposes, we have estimated this date based upon its present condition. Painting, Interior - Total Current Cost $10,567 Assigned Reserves $6,604 Fully Funded Reserves $6,604 PAGE 2-30

47 RA Detail Report by Category Paint - Metal Asset ID 1067 Painting, Exterior Placed in Service January 2001 Useful Life 5 Replacement Year 2006 Remaining Life 3 2,148 sq. $1.11 Asset Cost $2, Percent Replacement 100% Future Cost $2, Assigned Reserves $ Monthly Assessment $42.82 Interest Contribution $2.09 Reserve Allocation $44.92 This asset budgets for painting the metal fencing, gates and deck railing. Paint - Stucco Asset ID 1007 Painting, Exterior Placed in Service January 2001 Useful Life 10 Replacement Year 2011 Remaining Life 8 Asset Cost $37, Percent Replacement 100% Future Cost $48, Assigned Reserves $7, Monthly Assessment $ Interest Contribution $17.04 Reserve Allocation $ The client advises that the entire association was painted, interior and exteriors for a total of PAGE 2-31

48 RA Detail Report by Category $54,139 during May Paint - Stucco Continued... This is a five story building. 24,500 - sq. ft. of stucco, Main $1.55 = $37, Total = $37, The actual date this item was placed in service was not available. For budgeting purposes, we have estimated this date based upon its present condition. Paint - Wood Siding Asset ID 1066 Painting, Exterior Placed in Service January 2001 Useful Life 5 Replacement Year 2006 Remaining Life 3 Asset Cost $1, Percent Replacement 100% Future Cost $1, Assigned Reserves $ Monthly Assessment $24.06 Interest Contribution $1.17 Reserve Allocation $25.24 This is a two story building. 2,000 - sq. ft., siding, bldg $0.67 = $1, Total = $1, PAGE 2-32

49 RA Detail Report by Category Painting, Exterior - Total Current Cost $41,699 Assigned Reserves $9,085 Fully Funded Reserves $9,085 PAGE 2-33

50 RA Detail Report by Category Fence - Steel, Pool, Replace Asset ID 1016 Fencing Placed in Service January 1990 Useful Life 18 Replacement Year 2008 Remaining Life 5 Asset Cost $15, Percent Replacement 100% Future Cost $18, Assigned Reserves $11, Monthly Assessment $88.63 Interest Contribution $20.87 Reserve Allocation $ This is painted steel tubular fencing with a spear top lin. ft. of 6'H fencing, $46.58 = $5, gate, 2'W x = lin. ft., driveway, = 6, vehicle gate, 18'x6'H, 2, = 2, Total = $15, Fencing - Total Current Cost $15,686 Assigned Reserves $11,328 Fully Funded Reserves $11,328 PAGE 2-34

51 RA Detail Report by Category Pool - Filter, Replace Asset ID 1063 Pool Placed in Service January 2002 Useful Life 12 Replacement Year 2014 Remaining Life 11 Asset Cost $1, Percent Replacement 100% Future Cost $1, Assigned Reserves $ Monthly Assessment $11.14 Interest Contribution $0.29 Reserve Allocation $11.43 The pool contractor advises that this Purex 60 sq. ft. pool filter was placed in serviced during The actual month this item was placed in service was not available. For budgeting purposes we have used the month corresponding to the beginning of the client's fiscal year. Pool - Replaster/Tile Replacement Asset ID 1060 Pool Placed in Service January 2000 Useful Life 12 Replacement Year 2012 Remaining Life 9 Asset Cost $6, Percent Replacement 100% Future Cost $8, Assigned Reserves $1, Monthly Assessment $52.41 Interest Contribution $3.24 Reserve Allocation $55.66 PAGE 2-35

52 RA Detail Report by Category Pool - Replaster/Tile Replacement Continued... The pool appears to be in good condition sq. ft. of pool $5.12 = $4, lin. ft. of trim = 1, lin. ft. of lane = Total = $6, The actual date this item was placed in service was not available. For budgeting purposes, we have estimated this date based upon its present condition. Pool Furniture - Replacement Asset ID 1061 Pool Placed in Service January 2001 Useful Life 7 Replacement Year 2008 Remaining Life 5 Asset Cost $1, Percent Replacement 100% Future Cost $1, Assigned Reserves $ Monthly Assessment $21.92 Interest Contribution $1.04 Reserve Allocation $22.96 PAGE 2-36

53 RA Detail Report by Category Pool Furniture - Replacement Continued... This Tropi-Kai style furniture appears to be in good conditon. 4 - $ = $ bruch = fabric = Total = $1, Pool Heater - Replacement Asset ID 1062 Pool Placed in Service January 1990 Useful Life 12 Replacement Year 2003 Remaining Life 0 Asset Cost $2, Percent Replacement 100% Future Cost $2, Assigned Reserves $2, Monthly Assessment $18.85 Interest Contribution $0.18 Reserve Allocation $19.04 The pool contractor advises that this 400K Teledyne Laars pool heater is original and is in poor condition. Pool - Total Current Cost $11,309 Assigned Reserves $4,294 Fully Funded Reserves $4,294 PAGE 2-37

54 RA Detail Report by Category Play Equipment - Replace Asset ID 1064 Play Equipment Placed in Service January 2000 Useful Life 16 Replacement Year 2016 Remaining Life 13 Asset Cost $12, Percent Replacement 100% Future Cost $17, Assigned Reserves none Monthly Assessment $98.34 Interest Contribution $0.95 Reserve Allocation $99.29 The actual date this item was placed in service was not available. For budgeting purposes, we have estimated this date based upon its present condition. Play Equipment - Total Current Cost $12,000 Assigned Reserves $0 Fully Funded Reserves $2,250 PAGE 2-38

55 RA Detail Report by Category Railing - Ext, Wrght Iron, Replace Asset ID 1053 Railings, Metal Placed in Service January 1990 Useful Life 18 Replacement Year 2008 Remaining Life 5 Asset Cost $3, Percent Replacement 100% Future Cost $4, Assigned Reserves $2, Monthly Assessment $19.68 Interest Contribution $4.63 Reserve Allocation $ lin. ft. of 3.5'H railing, $29.03 = $3, Total = $3, Railings, Metal - Total Current Cost $3,484 Assigned Reserves $2,516 Fully Funded Reserves $2,516 PAGE 2-39

56 RA Detail Report by Category Lighting - Ceiling Recess Rounds, Replace Asset ID 1026 Lighting, Interior Placed in Service August 1998 Useful Life 22 Replacement Year 2020 Remaining Life $ Asset Cost $1, Percent Replacement 100% Future Cost $2, Assigned Reserves none Monthly Assessment $10.12 Interest Contribution $0.09 Reserve Allocation $10.22 The client advises that all light fixtures were replaced or modified during August1998, to reduce electricity usage and, therefore reduce costs. The hallway wall sconces, emergency double spots, and EXIT signs were not part of this program. Lighting - EXIT/Emergency, Replace Asset ID 1022 Lighting, Interior Placed in Service January 1990 Useful Life 22 Replacement Year 2012 Remaining Life 9 Asset Cost $5, Percent Replacement 100% Future Cost $7, Assigned Reserves $3, Monthly Assessment $27.04 Interest Contribution $5.93 Reserve Allocation $32.97 PAGE 2-40

57 RA Detail Report by Category Lighting - EXIT/Emergency, Replace Continued EXIT emergency $ = $5, Total = $5, Lighting - Fluorescent Fixtures, Replace Asset ID 1020 Lighting, Interior Placed in Service August 1998 Useful Life 22 Replacement Year 2020 Remaining Life 17 Asset Cost $6, Percent Replacement 100% Future Cost $10, Assigned Reserves none Monthly Assessment $42.47 Interest Contribution $0.41 Reserve Allocation $42.88 The client advises that all light fixtures were replaced or modified during August 1998, to reduce PAGE 2-41

58 RA Detail Report by Category Lighting - Fluorescent Fixtures, Replace Continued... electricity usage and, therefore reduce costs fluor, 8' dbl, w/o lens, $ = $3, fluor, 4' dbl, w/o lens, = fluor, 4' dbl, w/lens, = 2, Total = $6, Lighting - Wall Sconces, Replace Asset ID 1024 Lighting, Interior Placed in Service January 1990 Useful Life 22 Replacement Year 2012 Remaining Life 9 39 $ Asset Cost $6, Percent Replacement 100% Future Cost $7, Assigned Reserves $3, Monthly Assessment $30.27 Interest Contribution $6.64 Reserve Allocation $36.92 These wall sconces are located in the hallways. Lighting, Interior - Total Current Cost $19,312 Assigned Reserves $6,806 Fully Funded Reserves $8,577 PAGE 2-42

59 RA Detail Report by Category Lighting - Buildings, Replace Asset ID 1068 Lighting, Exterior Placed in Service January 1990 Useful Life 22 Replacement Year 2012 Remaining Life 9 Asset Cost $1, Percent Replacement 100% Future Cost $2, Assigned Reserves $1, Monthly Assessment $9.00 Interest Contribution $1.97 Reserve Allocation $ vapor flood fixtures, Main $ = $1, wall mount lanterns, Building = Total = $1, All cost estimates have been calculated based upon the original inventory as identified in this section. It is likely that future replacements will vary and therefore the cost used may be considered as a general indication of budgetary needs rather than specific for these components. Lighting, Exterior - Total Current Cost $1,810 Assigned Reserves $1,070 Fully Funded Reserves $1,070 PAGE 2-43

60 RA Detail Report by Category Floor Cover - Carpet, Halls, Replace Asset ID 1027 Floor Cover Placed in Service January 1999 Useful Life 6 Replacement Year 2005 Remaining Life sq. $47.38 Asset Cost $8, Percent Replacement 107% Future Cost $8, Assigned Reserves $5, Monthly Assessment $ Interest Contribution $10.72 Reserve Allocation $ The client advises that this new carpeting was installed during December 1998 for $6,998. 1st floor nd floor rd floor th floor - 15 Total = 160 sq. yrds. The measurement indicated represents the actual area to be replaced. The percentage of replacement has been increased above 100% to allow for a waste factor which should be considered when replacing this component. The current cost used on this asset is based upon actual expenditures incurred at last replacement, and has been adjusted for inflation where applicable. Date For budgeting purposes, we have used the next fiscal year's beginning date as the placed-inservice date for this component. Floor Cover - Total Current Cost $8,111 Assigned Reserves $5,408 Fully Funded Reserves $5,408 PAGE 2-44

61 RA Detail Report by Category Boiler - Hot Water System, Replace Asset ID 1039 Hot Water System Placed in Service March 2002 Useful Life 30 Replacement Year 2032 Remaining Life 29 Asset Cost $15, Percent Replacement 100% Future Cost $36, Assigned Reserves none Monthly Assessment $76.16 Interest Contribution $0.73 Reserve Allocation $76.90 This is a 15,500 KBTU input, Teledyne Laars boiler. The client advises that it was replaced during March 2002 for $15,000. The cost estimates on this asset were originally provided by the client, and have been adjusted to allow for inflationary changes. Hot Water Storage Tank - Replace Asset ID 1040 Hot Water System Placed in Service March 2002 Useful Life 16 Replacement Year 2018 Remaining Life 15 Asset Cost $3, Percent Replacement 100% Future Cost $4, Assigned Reserves none Monthly Assessment $22.11 Interest Contribution $0.21 Reserve Allocation $22.32 PAGE 2-45

62 RA Detail Report by Category Hot Water Storage Tank - Replace Continued... This is an insulated, 150 gallon, hot water storage tank. The client advises that this water storage tank was placed in service during March 2002 with the boiler for $2,913. The current cost used on this asset is based upon actual expenditures incurred at last replacement, and has been adjusted for inflation where applicable. Hot Water System - Total Current Cost $18,470 Assigned Reserves $0 Fully Funded Reserves $703 PAGE 2-46

63 RA Detail Report by Category Elevator - Cab Refurbishing Asset ID 1036 Elevator Placed in Service January 1990 Useful Life 14 Replacement Year 2004 Remaining Life 1 Asset Cost $6, Percent Replacement 100% Future Cost $6, Assigned Reserves $5, Monthly Assessment $41.82 Interest Contribution $10.57 Reserve Allocation $52.40 This is a 5' x 6.5' elevator cab. The cab has carpeted walls with a mid-grade of carpet and tile flooring with a non-skid rubber mat. Lighting in the cab is a large round fluorescent fixture. Elevator - Major Repairs Asset ID 1037 Elevator Placed in Service January 1990 Useful Life 18 Replacement Year 2008 Remaining Life 5 Asset Cost $11, Percent Replacement 100% Future Cost $12, Assigned Reserves $7, Monthly Assessment $62.16 Interest Contribution $14.63 Reserve Allocation $76.79 This category is for the additional major repair costs associated with hydraulic style elevators such as valve and cylinder replacements. Cab refurbishing alone is generally sufficient for traction style elevators as all additional maintenance is usually covered within the elevator service agreements. Elevator - Total Current Cost $17,200 Assigned Reserves $13,702 Fully Funded Reserves $13,702 PAGE 2-47

64 RA Detail Report by Category Security - Gate Operators, Sliding, Replace Asset ID 1030 Gate Operator Placed in Service January 1990 Useful Life 12 Adjustment 2 Replacement Year 2004 Remaining Life 1 Asset Cost $1, Percent Replacement 100% Future Cost $1, Assigned Reserves $1, Monthly Assessment $12.78 Interest Contribution $3.23 Reserve Allocation $16.01 The gate operator opens the driveway vehicle gate. It appears to be in working order. The useful life of this asset has been extended due to its present condition. Gate Operator - Total Current Cost $1,895 Assigned Reserves $1,760 Fully Funded Reserves $1,760 PAGE 2-48

65 RA Detail Report by Category Security - Access Phone, Replace Asset ID 1028 Security Placed in Service January 1990 Useful Life 12 Adjustment 2 Replacement Year 2004 Remaining Life 1 Asset Cost $2, Percent Replacement 100% Future Cost $2, Assigned Reserves $2, Monthly Assessment $16.94 Interest Contribution $4.28 Reserve Allocation $21.23 This is a Nutone, "hands free", access phone. It is in working condition. The useful life of this asset has been extended due to its present condition. Security - Total Current Cost $2,512 Assigned Reserves $2,333 Fully Funded Reserves $2,333 PAGE 2-49

66 RA Detail Report by Category Doors - Exterior, Metal, Replace Asset ID 1014 Doors, Exterior Placed in Service January 1990 Useful Life 25 Replacement Year 2015 Remaining Life 12 Asset Cost $8, Percent Replacement 100% Future Cost $11, Assigned Reserves $3, Monthly Assessment $45.32 Interest Contribution $6.23 Reserve Allocation $ doors, 3'W x 7'H, solid core, $ = $4, doors, 3'W x 7'H, solid core, parking = 2, doors, 4'W x 8'H, Main Bldg, util, = 1, Total = $8, Doors, Exterior - Total Current Cost $8,161 Assigned Reserves $3,280 Fully Funded Reserves $4,244 PAGE 2-50

67 RA Detail Report by Category Irrigation Controller - Replace Asset ID 1046 Landscape Equipment Placed in Service January 1990 Useful Life 12 Replacement Year 2003 Remaining Life 0 Asset Cost $1, Percent Replacement 100% Future Cost $1, Assigned Reserves $1, Monthly Assessment $15.05 Interest Contribution $0.14 Reserve Allocation $15.20 The landscape contractor advises that these Irritrol irrigation controllers are in poor condition. 2-8 station $ = $1, Total = $1, The information used on this asset has been provided with the assistance of the client's maintenance contractor. Landscape Equipment - Total Current Cost $1,728 Assigned Reserves $1,728 Fully Funded Reserves $1,728 PAGE 2-51

68 RA Detail Report by Category Mailboxes - Wall Clusters, Replace Asset ID 1047 Mailboxes Placed in Service January 1990 Useful Life 16 Replacement Year 2006 Remaining Life 3 35 $45.00 Asset Cost $1, Percent Replacement 100% Future Cost $1, Assigned Reserves $1, Monthly Assessment $9.64 Interest Contribution $2.35 Reserve Allocation $12.00 These mailboxes are located in the lobby. Mailboxes - Total Current Cost $1,575 Assigned Reserves $1,280 Fully Funded Reserves $1,280 PAGE 2-52