Belle Monet. Full Reserve Study Report by HOMECERTS.COM

Transcription

1 Belle Monet Full Reserve Study Report by HOMECERTS.COM

2 Belle Monet Reserve Study Report as of June 5, South 2200 West Pleasant Grove, UT Units Completed in 2010

3 TABLE OF CONTENTS Belle Monet Homeowners Association 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 RESERVE STUDY Current Assessment Funding Model Summary 2-1 Current Assessment Funding Model Projection 2-2 Current Assessment Funding Model VS Fully Funded Chart 2-3 Threshold Funding Model Summary 2-4 Threshold Funding Model Projection 2-5 Threshold Funding Model VS Fully Funded Chart 2-6 Component Funding Model Summary 2-7 Component Funding Model Projection 2-8 Component Funding Model VS Fully Funded Chart 2-9 Component Funding Model Assessment & Category Summary 2-10 Distribution of Accumulated Reserves 2-12 Annual Expenditure Detail 2-14 Detail Report by Category 2-19 Category Detail Index 2-49 Annual Expenditure Chart 2-51 Funding Model Reserve Ending Balance Comparison Chart 2-52 Funding Model Comparison by Percent Funded 2-53

4 TABLE OF CONTENTS Belle Monet Homeowners Association Funding Model Assessment Comparison Chart 2-54 Spread Sheet 2-55

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 Home Certs. 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. Home Certs 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 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. PAGE 1-2

7 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 Painting Deck Resurfacing Fencing Replacement Asphalt Seal Coating Asphalt Repairs Asphalt Overlays Equipment Replacement Interior Furnishings Budgeting is Normally Excluded for: Park/Play Equipment Pool/Spa Re-plastering Pool Equipment Replacement Pool Furniture Replacement Tennis Court Resurfacing Lighting Replacement Insurance(s) Reserve Study 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. Financial Analysis PAGE 1-4

9 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 Home Certs Threshold and the Home Certs 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 Home Certs 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 three-tenths of the replacement cost to have accumulated, and if so, that component would be fully-funded. 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 Home Certs 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 Home Certs 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 Home Certs 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 Home Certs 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 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 PAGE 1-6

11 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 reports outlining how the monthly contributions would be affected by such an adjustment, or by any other changes that may be under consideration. PAGE 1-7

12 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 Home Certs Study Part II of your Home Certs 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 Home Certs 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 This calculation is completed internally based upon the report s fiscal year date and the date the asset PAGE 1-10

15 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 Home Certs 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 Home Certs 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 Home Certs 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 Home Certs 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 Home Certs 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 Home Certs 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 Home Certs 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 Home Certs Owners Summary meets or exceeds the disclosure requirements set forth on both state and federal levels. Your Home Certs 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 Pleasant Grove, Utah HC Current Assessment Funding Model Summary Report Date June 05, 2015 Account Number 1077 Budget Year Beginning June 04, 2015 Budget Year Ending June 03, 2016 Total Units 168 Phase Development 14 of 20 Report Parameters Inflation 3.00% Annual Assessment Increase 3.00% Interest Rate on Reserve Deposit 0.75% Contingency 3.00% 2015 Beginning Balance $66, Current Assessment Funding Model Summary of Calculations Required Month Contribution $2, $14.88 per unit monthly Average Net Month Interest Earned $51.87 Total Month Allocation to Reserves $2, $15.19 per unit monthly PAGE 2-1

18 HC Current Assessment Funding Model Projection Beginning Balance: $66,477 Projected Fully Current Annual Annual Annual Ending Funded Percent Year Cost Contribution Interest Expenditures Reserves Reserves Funded ,788,916 30, , ,465 26% ,842,583 30, ,462 95, ,519 23% ,897,861 31, , ,286 26% ,954,797 32,782 1, , ,461 28% ,013,440 33,765 1,328 3, , ,680 29% ,073,844 34,778 1,451 19, , ,157 28% ,136,059 35,822 1,700 3, , ,573 29% ,200,141 36,896 1,591 52, , ,690 26% ,266,145 38,003 1, , ,807 27% ,334,129 39,143 2, ,189 1,106,553 28% ,404,153 40,317 1, , ,430 1,107,925 22% ,476,278 41,527 1, ,928 1,229,146 23% ,550,566 42,773 1, , ,370 1,211,805 15% ,627,083 44, , ,785 1,230,889 10% ,705,896 45,378 1,084 2, ,978 1,362,802 12% ,787,072 46, , ,213 1,401,789 8% ,870,685 48,141 1,019 4, ,454 1,542,153 10% ,956,805 49,585 1, ,434 1,694,899 12% ,045,509 51, , ,119 1,746,009 9% ,136,875 52, , ,603 1,835,416 7% ,230,981 54,183 1,183 4, ,273 2,003,342 9% ,327,910 55,809 1,034 76, ,079 2,106,410 8% ,427,747 57,483 1,425 5, ,114 2,288,544 9% ,530,580 59,208 1, ,196 2,485,947 11% ,636,497 60,984 2,295 6, ,245 2,686,712 12% ,745,592 62, , ,966 2,621,622 5% ,857,960 64,698 1, ,867 2,840,956 7% ,973,699 66, ,750 43,855 2,850,729 2% ,092,910 68, ,370 38,172 3,009,044 1% ,215,697 70, ,444 3,253,263 3% PAGE 2-2

19 HC Current Assessment Funding Model VS Fully Funded Chart 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 Pleasant Grove, Utah HC Threshold Funding Model Summary Report Date June 05, 2015 Account Number 1077 Budget Year Beginning June 04, 2015 Budget Year Ending June 03, 2016 Total Units 168 Phase Development 14 of 20 Report Parameters Inflation 3.00% Annual Assessment Increase 3.00% Interest Rate on Reserve Deposit 0.75% Contingency 3.00% 2015 Beginning Balance $66, Threshold Funding Model Summary of Calculations Required Month Contribution $6, $38.61 per unit monthly Average Net Month Interest Earned $68.10 Total Month Allocation to Reserves $6, $39.01 per unit monthly PAGE 2-4

21 HC Threshold Funding Model Projection Beginning Balance: $66,477 Projected Fully Current Annual Annual Annual Ending Funded Percent Year Cost Contribution Interest Expenditures Reserves Reserves Funded ,788,916 77, , ,465 38% ,842,583 80,164 1,167 33, , ,519 46% ,897,861 82,569 1, , ,286 55% ,954,797 85,046 2, , ,461 62% ,013,440 87,598 3,076 3, , ,680 68% ,073,844 90,226 3,624 19, , ,157 71% ,136,059 92,932 4,313 3, , ,573 74% ,200,141 95,720 4,661 52, , ,690 75% ,266,145 98,592 5, , ,807 78% ,334, ,550 6, ,715 1,106,553 80% ,404, ,596 6, , ,775 1,107,925 79% ,476, ,734 7, ,546 1,229,146 81% ,550, ,966 6, , ,793 1,211,805 80% ,627, ,295 6, , ,621 1,230,889 80% ,705, ,724 7,842 2,269 1,103,918 1,362,802 81% ,787, ,256 8,055 99,197 1,134,031 1,401,789 81% ,870, ,893 9,006 4,918 1,263,012 1,542,153 82% ,956, ,640 10,029 1,401,681 1,694,899 83% ,045, ,499 10, ,364 1,437,097 1,746,009 82% ,136, ,474 10,807 74,932 1,509,446 1,835,416 82% ,230, ,568 11,897 4,696 1,657,216 2,003,342 83% ,327, ,785 12,489 76,038 1,738,453 2,106,410 83% ,427, ,129 13,646 5,873 1,895,355 2,288,544 83% ,530, ,603 14,890 2,063,848 2,485,947 83% ,636, ,211 16,129 6,231 2,231,957 2,686,712 83% ,745, ,957 15, ,810 2,136,505 2,621,622 81% ,857, ,846 16,762 2,321,113 2,840,956 82% ,973, ,881 16, ,750 2,296,808 2,850,729 81% ,092, ,068 17,451 74,370 2,417,956 3,009,044 80% ,215, ,410 18,944 2,620,310 3,253,263 81% PAGE 2-5

22 HC Threshold Funding Model VS Fully Funded Chart 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 2-6

23 Pleasant Grove, Utah HC Component Funding Model Summary Report Date June 05, 2015 Account Number 1077 Budget Year Beginning June 04, 2015 Budget Year Ending June 03, 2016 Total Units 168 Phase Development 14 of 20 Report Parameters Inflation 3.00% Interest Rate on Reserve Deposit 0.75% Contingency 3.00% 2015 Beginning Balance $66, Component Funding Model Summary of Calculations Required Month Contribution $10, $65.23 per unit monthly Average Net Month Interest Earned $86.31 Total Month Allocation to Reserves $11, $65.74 per unit monthly PAGE 2-7

24 HC Component Funding Model Projection Beginning Balance: $66,477 Projected Fully Current Annual Annual Annual Ending Funded Percent Year Cost Contribution Interest Expenditures Reserves Reserves Funded ,788, ,500 1, , ,465 53% ,842, ,548 1,773 33, , ,519 71% ,897, ,523 2, , ,286 86% ,954, ,048 3, , ,461 97% ,013, ,782 4,778 3, , , % ,073, ,970 5,643 19, , , % ,136, ,468 6,584 3, , , % ,200, ,290 7,156 52,556 1,014, , % ,266, ,891 8,116 1,140, , % ,334, ,076 9,053 1,264,733 1,106, % ,404, ,894 9, ,727 1,282,059 1,107, % ,476, ,765 10,140 1,412,964 1,229, % ,550, ,500 10, ,568 1,411,996 1,211, % ,627, ,636 10, ,400 1,454,615 1,230, % ,705, ,765 11,483 2,269 1,599,593 1,362, % ,787, ,196 11,871 99,197 1,654,462 1,401, % ,870, ,754 12,991 4,918 1,804,289 1,542, % ,956, ,729 14,152 1,959,170 1,694, % ,045, ,671 14, ,364 2,014,015 1,746, % ,136, ,468 15,234 74,932 2,111,785 1,835, % ,230, ,091 16,481 4,696 2,276,662 2,003, % ,327, ,698 17,200 76,038 2,374,521 2,106, % ,427, ,890 18,465 5,873 2,544,003 2,288, % ,530, ,946 19,781 2,719,730 2,485, % ,636, ,180 21,057 6,231 2,890,737 2,686, % ,745, ,615 20, ,810 2,818,975 2,621, % ,857, ,892 21,944 3,019,811 2,840, % ,973, ,957 21, ,750 3,019,917 2,850, % ,092, ,288 22,963 74,370 3,163,798 3,009, % ,215, ,123 24,605 3,383,526 3,253, % PAGE 2-8

25 HC Component Funding Model VS Fully Funded Chart 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 2-9

26 HC Component Funding Model Assessment & Category Summary Description Replacement Year Life Useful Adjustment Remaining Life Cost Current Assigned Reserves Fully Funded Streets/Asphalt Asphalt Overlay , ,215 Asphalt Seal Coat ,023 22,519 22,519 Streets/Asphalt - Total $116,739 $22,519 $33,734 Roofing Asphalt Shingles , ,082 Roofing - Total $322,575 $46,082 Painting Railing Repaint , ,302 Wrought Iron Fence Repaint , Painting - Total $99,010 $29,230 Fencing/Security Clubhouse Security , Fencing/Security - Total $1,500 $500 $500 Lighting Exterior Sconce Lights , ,500 Garage Lights , ,913 Monument Lighting , Post Lights , ,043 Small Exterior Lights , ,567 Lighting - Total $116,828 $28,418 Recreation/Pool Basketball Hoop Clubhouse Sport Court Resurface ,500 1,750 1,750 Gym Equipment , ,150 Playground Set , ,692 Pool Feeder , Pool Filter ,685 1,404 1,404 Pool Heater ,065 1,022 1,022 Pool Resurface ,228 3,114 3,114 Spa Feeder , Spa Filter ,685 1,404 1,404 Spa Heater ,065 1,532 1,532 Spa Resurface ,500 1,250 1,250 Recreation/Pool - Total $69,172 $13,221 $22,251 Interior Furnishings Clubhouse Furniture , ,250 Furnace , ,000 Interior Furnishings - Total $17,000 $4,250 PAGE 2-10

27 HC Component Funding Model Assessment & Category Summary Description Replacement Year Life Useful Adjustment Remaining Life Cost Current Assigned Reserves Fully Funded Equipment Clubhouse Drinking Fountain Equipment - Total $874 $168 Building Components Clubhouse Carpet , Clubhouse Tile , ,461 Decks Replace ,324 9,441 9,441 Interior Repaint ,246 4,269 4,269 Stone Veneer Inspection/Mortar Repair ,952 11,281 15,317 Stucco Replacement , ,350 Building Components - Total $686,502 $24,992 $97,436 Grounds Components Barbeque Concrete Curbs , ,428 Concrete: Sidewalk, Walkways, Slabs, Under , ,396 Covered Dining Area Refurbish ,000 1,000 1,000 Fountains Refurbish ,000 1,500 1,500 Gazebo , Picnic Tables , ,050 Wooden Pergola Repaint , Grounds Components - Total $354,716 $3,250 $42,644 Signs Monument Refurbish , ,000 Signs - Total $4,000 $1,000 Total Asset Summary $1,788,916 $64,482 $305,713 Contingency at 3.00% $1,994 $9,455 Summary Total $66,477 $315,168 Percent Fully Funded 21% Current Average Liability per Unit (Total Units: 168) -$1,480 PAGE 2-11

28 HC Distribution of Accumulated Reserves Description Remaining Replacement Assigned Life Year Reserves Fully Funded Reserves Asphalt Seal Coat ,519 22,519 Pool Feeder Pool Filter ,404 1,404 Spa Feeder Spa Filter ,404 1,404 Pool Heater ,022 1,022 Clubhouse Sport Court Resurface ,750 1,750 Fountains Refurbish ,500 1,500 Pool Resurface ,114 3,114 Spa Resurface ,250 1,250 Wooden Pergola Repaint Spa Heater ,532 1,532 Interior Repaint ,269 4,269 Clubhouse Security Covered Dining Area Refurbish ,000 1,000 Decks Replace ,441 9,441 Stone Veneer Inspection/Mortar Repair *11,282 15,317 Wrought Iron Fence Repaint Railing Repaint ,302 Garage Lights ,913 Small Exterior Lights ,567 Monument Lighting Basketball Hoop Clubhouse Carpet Clubhouse Furniture ,250 Exterior Sconce Lights ,500 Furnace ,000 Gym Equipment ,150 Monument Refurbish ,000 Picnic Tables ,050 Post Lights ,043 Barbeque Gazebo Clubhouse Drinking Fountain Playground Set ,692 Clubhouse Tile ,461 Asphalt Shingles ,082 Asphalt Overlay ,215 Concrete Curbs ,428 Concrete: Sidewalk, Walkways, Slabs, Unde ,396 PAGE 2-12

29 HC Distribution of Accumulated Reserves Description Remaining Replacement Assigned Life Year Reserves Fully Funded Reserves Stucco Replacement ,350 Total Asset Summary $64,483 $305,713 Contingency at 3.00% $1,994 $9,455 Summary Total $66,477 $315,168 Percent Fully Funded 21% Current Average Liability per Unit (Total Units: 168) -$1,480 '*' Indicates Partially Funded PAGE 2-13

30 HC Annual Expenditure Detail Description Expenditures No Replacement in 2015 Replacement Year 2016 Asphalt Seal Coat 27,834 Pool Feeder 1,078 Pool Filter 1,736 Spa Feeder 1,078 Spa Filter 1,736 Total for 2016 $33,462 No Replacement in 2017 No Replacement in 2018 Replacement Year 2019 Pool Heater 3,450 Total for 2019 $3,450 Replacement Year 2020 Clubhouse Sport Court Resurface 4,057 Fountains Refurbish 3,478 Pool Resurface 7,220 Spa Resurface 2,898 Wooden Pergola Repaint 1,739 Total for 2020 $19,392 Replacement Year 2021 Spa Heater 3,660 Total for 2021 $3,660 Replacement Year 2022 Asphalt Seal Coat 33,235 Interior Repaint 12,601 Pool Feeder 1,288 Pool Filter 2,072 Spa Feeder 1,288 Spa Filter 2,072 Total for 2022 $52,556 PAGE 2-14

31 HC Annual Expenditure Detail Description Expenditures No Replacement in 2023 No Replacement in 2024 Replacement Year 2025 Clubhouse Security 2,016 Covered Dining Area Refurbish 4,032 Decks Replace 38,065 Pool Heater 4,119 Stone Veneer Inspection/Mortar Repair 61,756 Wrought Iron Fence Repaint 3,739 Total for 2025 $113,727 No Replacement in 2026 Replacement Year 2027 Railing Repaint 137,198 Spa Heater 4,370 Total for 2027 $141,568 Replacement Year 2028 Asphalt Seal Coat 39,684 Garage Lights 10,115 Pool Feeder 1,538 Pool Filter 2,474 Small Exterior Lights 50,576 Spa Feeder 1,538 Spa Filter 2,474 Total for 2028 $108,400 Replacement Year 2029 Monument Lighting 2,269 Total for 2029 $2,269 Replacement Year 2030 Basketball Hoop 1,168 Clubhouse Carpet 3,728 Clubhouse Furniture 7,790 Clubhouse Sport Court Resurface 5,453 PAGE 2-15

32 HC Annual Expenditure Detail Description Expenditures Replacement Year 2030 continued... Exterior Sconce Lights 21,812 Fountains Refurbish 4,674 Furnace 18,696 Gym Equipment 7,167 Monument Refurbish 6,232 Picnic Tables 6,543 Pool Resurface 9,703 Spa Resurface 3,895 Wooden Pergola Repaint 2,337 Total for 2030 $99,197 Replacement Year 2031 Pool Heater 4,918 Total for 2031 $4,918 No Replacement in 2032 Replacement Year 2033 Post Lights 102,146 Spa Heater 5,218 Total for 2033 $107,364 Replacement Year 2034 Asphalt Seal Coat 47,385 Interior Repaint 17,966 Pool Feeder 1,836 Pool Filter 2,955 Spa Feeder 1,836 Spa Filter 2,955 Total for 2034 $74,932 Replacement Year 2035 Barbeque 1,084 Gazebo 3,612 Total for 2035 $4,696 Replacement Year 2036 Clubhouse Drinking Fountain 1,626 PAGE 2-16

33 HC Annual Expenditure Detail Description Expenditures Replacement Year 2036 continued... Playground Set 74,412 Total for 2036 $76,038 Replacement Year 2037 Pool Heater 5,873 Total for 2037 $5,873 No Replacement in 2038 Replacement Year 2039 Spa Heater 6,231 Total for 2039 $6,231 Replacement Year 2040 Asphalt Seal Coat 56,580 Clubhouse Security 3,141 Clubhouse Sport Court Resurface 7,328 Covered Dining Area Refurbish 6,281 Decks Replace 59,304 Fountains Refurbish 6,281 Pool Feeder 2,192 Pool Filter 3,528 Pool Resurface 13,040 Spa Feeder 2,192 Spa Filter 3,528 Spa Resurface 5,234 Stone Veneer Inspection/Mortar Repair 96,214 Wooden Pergola Repaint 3,141 Wrought Iron Fence Repaint 5,825 Total for 2040 $273,810 No Replacement in 2041 Replacement Year 2042 Railing Repaint 213,750 Total for 2042 $213,750 PAGE 2-17

34 HC Annual Expenditure Detail Description Expenditures Replacement Year 2043 Clubhouse Tile 67,358 Pool Heater 7,012 Total for 2043 $74,370 PAGE 2-18

35 HC Detail Report by Category Asphalt Overlay Asset ID 1008 Streets/Asphalt Useful Life 40 Replacement Year 2050 Remaining Life ,092 Sq. $0.83 Asset Cost $89, Future Cost $252, Assigned Reserves none Monthly Assessment $ Interest Contribution $0.44 Reserve Allocation $ Component in good condition. Useful life of the asphalt depends upon amount of use, how well it is maintained and exposure to weather conditions. Asphalt Seal Coat Asset ID 1007 Streets/Asphalt Useful Life 6 Replacement Year 2016 Remaining Life 1 108,092 Sq. $0.25 Asset Cost $27, Future Cost $27, Assigned Reserves $22, Monthly Assessment $86.94 Interest Contribution $14.48 Reserve Allocation $ PAGE 2-19

36 HC Detail Report by Category Asphalt Seal Coat continued... Component in good condition. Streets/Asphalt - Total Current Cost $116,739 Assigned Reserves $22,519 Fully Funded Reserves $33,734 PAGE 2-20

37 HC Detail Report by Category Asphalt Shingles Asset ID 1004 Roofing Useful Life 35 Replacement Year 2045 Remaining Life ,239 Sq. $1.82 Asset Cost $322, Future Cost $782, Assigned Reserves none Monthly Assessment $ Interest Contribution $1.61 Reserve Allocation $ Component in good condition. Useful life of component will depend on weather, maintenance and quality of installation and materials. Roofing - Total Current Cost $322,575 Assigned Reserves $0 Fully Funded Reserves $46,082 PAGE 2-21

38 HC Detail Report by Category Railing Repaint Asset ID 1003 Painting Useful Life 15 Adjustment 2 Replacement Year 2027 Remaining Life 12 9,720 Linear $9.90 Asset Cost $96, Future Cost $137, Assigned Reserves none Monthly Assessment $ Interest Contribution $0.75 Reserve Allocation $ Component in good condition. Useful life of paint depends on exposure to weather conditions and how well the component is maintained. Wrought Iron Fence Repaint Asset ID 1016 Painting Useful Life 15 Replacement Year 2025 Remaining Life Linear $9.90 Asset Cost $2, Future Cost $3, Assigned Reserves none Monthly Assessment $6.11 Interest Contribution $0.02 Reserve Allocation $6.13 PAGE 2-22

39 HC Detail Report by Category Wrought Iron Fence Repaint continued... Component in good condition. Fencing needs to be maintained to prevent any metal surfaces from deteriorating prematurely from water damage. Painting - Total Current Cost $99,010 Assigned Reserves $0 Fully Funded Reserves $29,230 PAGE 2-23

40 HC Detail Report by Category Clubhouse Security Asset ID 1042 Fencing/Security Useful Life 15 Replacement Year 2025 Remaining Life 10 1 $1, Asset Cost $1, Future Cost $2, Assigned Reserves $ Monthly Assessment $2.41 Interest Contribution $0.32 Reserve Allocation $2.74 Fencing/Security - Total Current Cost $1,500 Assigned Reserves $500 Fully Funded Reserves $500 PAGE 2-24

41 HC Detail Report by Category Exterior Sconce Lights Asset ID 1027 Lighting Useful Life 18 Adjustment 2 Replacement Year 2030 Remaining Life $ Asset Cost $14, Future Cost $21, Assigned Reserves none Monthly Assessment $23.30 Interest Contribution $0.09 Reserve Allocation $23.40 Component in good condition. Lighting needs to be replaced to ensure safe working condition and to maintain visual quality. Garage Lights Asset ID 1039 Lighting Useful Life 18 Replacement Year 2028 Remaining Life $82.00 Asset Cost $6, Future Cost $10, Assigned Reserves none Monthly Assessment $12.56 Interest Contribution $0.05 Reserve Allocation $12.62 PAGE 2-25

42 HC Detail Report by Category Garage Lights continued... Component in good condition. Lighting will need to be changed as needed. Monument Lighting Asset ID 1034 Lighting Useful Life 18 Adjustment 1 Replacement Year 2029 Remaining Life 14 5 $ Asset Cost $1, Future Cost $2, Assigned Reserves none Monthly Assessment $2.61 Interest Contribution $0.01 Reserve Allocation $2.62 Component in good condition. Lighting needs to be replaced as needed to ensure safe working condition and to maintain visual quality.the useful life of these lights has been adjusted one year to offset the cost so it doesn't coinside with other expenses in that same year. PAGE 2-26

43 HC Detail Report by Category Post Lights Asset ID 1028 Lighting Useful Life 18 Adjustment 5 Replacement Year 2033 Remaining Life $1, Asset Cost $60, Future Cost $102, Assigned Reserves none Monthly Assessment $89.90 Interest Contribution $0.37 Reserve Allocation $90.26 Component in good condition. Lighting needs to be replaced as needed to maintain visual quality and effectiveness. Small Exterior Lights Asset ID 1014 Lighting Useful Life 18 Replacement Year 2028 Remaining Life $82.00 Asset Cost $34, Future Cost $50, Assigned Reserves none Monthly Assessment $62.82 Interest Contribution $0.26 Reserve Allocation $63.08 PAGE 2-27

44 HC Detail Report by Category Small Exterior Lights continued... Component in good condition. Lighting needs to be replaced to ensure safe working condition and to maintain visual quality. Lighting - Total Current Cost $116,828 Assigned Reserves $0 Fully Funded Reserves $28,418 PAGE 2-28

45 HC Detail Report by Category Basketball Hoop Asset ID 1038 Recreation/Pool Useful Life 20 Replacement Year 2030 Remaining Life 15 1 $ Asset Cost $ Future Cost $1, Assigned Reserves none Monthly Assessment $1.25 Interest Contribution Reserve Allocation $1.25 Component in good condition. Clubhouse Sport Court Resurface Asset ID 1037 Recreation/Pool Useful Life 10 Replacement Year 2020 Remaining Life 5 1 $3, Asset Cost $3, Future Cost $4, Assigned Reserves $1, Monthly Assessment $7.46 Interest Contribution $1.13 Reserve Allocation $8.59 PAGE 2-29

46 HC Detail Report by Category Clubhouse Sport Court Resurface continued... Component in good condition. The useful life of this component will depend on the amount of use and the quality of installation and materials. Gym Equipment Asset ID 1030 Recreation/Pool Useful Life 20 Replacement Year 2030 Remaining Life 15 1 $4, Asset Cost $4, Future Cost $7, Assigned Reserves none Monthly Assessment $7.66 Interest Contribution $0.03 Reserve Allocation $7.69 Components in good condition. These will need to be repalced at the end of their useful life to ensure safe working condition and a good appearance. Price includes: $1400 $600 PAGE 2-30

47 Universal $ Sationary $550 Belle Monet Homeowners Association HC Detail Report by Category Gym Equipment continued... Total = 4600 Playground Set Asset ID 1010 Recreation/Pool Useful Life 25 Adjustment 1 Replacement Year 2036 Remaining Life 21 2 $20, Asset Cost $40, Future Cost $74, Assigned Reserves none Monthly Assessment $55.49 Interest Contribution $0.23 Reserve Allocation $55.72 Component in good condition. Pool Feeder Asset ID 1020 Recreation/Pool Useful Life 6 Replacement Year 2016 Remaining Life 1 1 $1, Asset Cost $1, Future Cost $1, Assigned Reserves $ Monthly Assessment $3.37 Interest Contribution $0.56 Reserve Allocation $3.93 PAGE 2-31

48 HC Detail Report by Category Pool Filter Asset ID 1021 Recreation/Pool Useful Life 6 Replacement Year 2016 Remaining Life 1 1 $1, Asset Cost $1, Future Cost $1, Assigned Reserves $1, Monthly Assessment $5.42 Interest Contribution $0.90 Reserve Allocation $6.32 Pool Heater Asset ID 1019 Recreation/Pool Placed in Service June 2013 Useful Life 6 Replacement Year 2019 Remaining Life 4 1 $3, Asset Cost $3, Future Cost $3, Assigned Reserves $1, Monthly Assessment $10.01 Interest Contribution $0.68 Reserve Allocation $10.69 Pool Resurface Asset ID 1018 Recreation/Pool Useful Life 10 Replacement Year 2020 Remaining Life 5 1,730 Sq. $3.60 Asset Cost $6, Future Cost $7, Assigned Reserves $3, Monthly Assessment $13.27 Interest Contribution $2.01 Reserve Allocation $15.28 Component in good condition. PAGE 2-32

49 HC Detail Report by Category Spa Feeder Asset ID 1024 Recreation/Pool Useful Life 6 Replacement Year 2016 Remaining Life 1 1 $1, Asset Cost $1, Future Cost $1, Assigned Reserves $ Monthly Assessment $3.37 Interest Contribution $0.56 Reserve Allocation $3.93 Spa Filter Asset ID 1025 Recreation/Pool Useful Life 6 Replacement Year 2016 Remaining Life 1 1 $1, Asset Cost $1, Future Cost $1, Assigned Reserves $1, Monthly Assessment $5.42 Interest Contribution $0.90 Reserve Allocation $6.32 Spa Heater Asset ID 1023 Recreation/Pool Placed in Service June 2015 Useful Life 6 Adjustment 6 Replacement Year 2021 Remaining Life 6 1 $3, Asset Cost $3, Future Cost $3, Assigned Reserves $1, Monthly Assessment $5.68 Interest Contribution $0.98 Reserve Allocation $6.67 Spa Resurface Asset ID 1022 Recreation/Pool Useful Life 10 Replacement Year 2020 Remaining Life 5 1 $2, Asset Cost $2, Future Cost $2, Assigned Reserves $1, Monthly Assessment $5.33 Interest Contribution $0.81 Reserve Allocation $6.13 PAGE 2-33

50 HC Detail Report by Category Spa Resurface continued... Recreation/Pool - Total Current Cost $69,172 Assigned Reserves $13,221 Fully Funded Reserves $22,251 PAGE 2-34

51 HC Detail Report by Category Clubhouse Furniture Asset ID 1040 Interior Furnishings Useful Life 20 Replacement Year 2030 Remaining Life 15 1 $5, Asset Cost $5, Future Cost $7, Assigned Reserves none Monthly Assessment $8.32 Interest Contribution $0.03 Reserve Allocation $8.36 Component in good condition. Furniture should be replaced to keep up with interior design trends. Furnace Asset ID 1041 Interior Furnishings Useful Life 20 Replacement Year 2030 Remaining Life 15 4 $3, Asset Cost $12, Future Cost $18, Assigned Reserves none Monthly Assessment $19.97 Interest Contribution $0.08 Reserve Allocation $20.05 Interior Furnishings - Total Current Cost $17,000 Assigned Reserves $0 Fully Funded Reserves $4,250 PAGE 2-35

52 HC Detail Report by Category Clubhouse Drinking Fountain Asset ID 1031 Equipment Useful Life 25 Adjustment 1 Replacement Year 2036 Remaining Life 21 1 $ Asset Cost $ Future Cost $1, Assigned Reserves none Monthly Assessment $1.21 Interest Contribution Reserve Allocation $1.22 Component in good condition. Price includes machine and installation. Equipment - Total Current Cost $874 Assigned Reserves $0 Fully Funded Reserves $168 PAGE 2-36

53 HC Detail Report by Category Clubhouse Carpet Asset ID 1032 Building Components Useful Life 20 Replacement Year 2030 Remaining Life 15 1,156 Sq. $2.07 Asset Cost $2, Future Cost $3, Assigned Reserves none Monthly Assessment $3.98 Interest Contribution $0.02 Reserve Allocation $4.00 Component in good condition. Clubhouse Tile Asset ID 1033 Building Components Useful Life 30 Adjustment 3 Replacement Year 2043 Remaining Life 28 3,054 Sq. $9.64 Asset Cost $29, Future Cost $67, Assigned Reserves none Monthly Assessment $36.67 Interest Contribution $0.15 Reserve Allocation $36.82 PAGE 2-37

54 HC Detail Report by Category Clubhouse Tile continued... Component in good condition. Decks Replace Asset ID 1036 Building Components Useful Life 15 Replacement Year 2025 Remaining Life 10 1,457 Linear $19.44 Asset Cost $28, Future Cost $38, Assigned Reserves $9, Monthly Assessment $45.55 Interest Contribution $6.11 Reserve Allocation $51.66 Component in good condition. PAGE 2-38

55 HC Detail Report by Category Interior Repaint Asset ID 1026 Building Components Useful Life 12 Replacement Year 2022 Remaining Life 7 12,807 Sq. $0.80 Asset Cost $10, Future Cost $12, Assigned Reserves $4, Monthly Assessment $19.12 Interest Contribution $2.76 Reserve Allocation $21.87 Component in good condition. The interior will only need to be repainted to update the area and to freshen all painted surfaces. Stone Veneer Inspection/Mortar Repair Asset ID 1001 Building Components Useful Life 15 Replacement Year 2025 Remaining Life 10 44,614 Sq. $1.03 Asset Cost $45, Future Cost $61, Assigned Reserves $11, Monthly Assessment $81.00 Interest Contribution $7.41 Reserve Allocation $88.41 PAGE 2-39

56 HC Detail Report by Category Stone Veneer Inspection/Mortar Repair continued... Component in good condition. Stucco Replacement Asset ID 1002 Building Components Useful Life 45 Replacement Year 2055 Remaining Life ,374 Sq. $3.60 Asset Cost $570, Future Cost $1,859, Assigned Reserves none Monthly Assessment $ Interest Contribution $2.75 Reserve Allocation $ Component in good condition. Includes garage stucco as well. Building Components - Total Current Cost $686,502 Assigned Reserves $24,992 Fully Funded Reserves $97,436 PAGE 2-40

57 HC Detail Report by Category Barbeque Asset ID 1011 Grounds Components Useful Life 25 Replacement Year 2035 Remaining Life 20 4 $ Asset Cost $ Future Cost $1, Assigned Reserves none Monthly Assessment $0.85 Interest Contribution Reserve Allocation $0.86 Component in good condition. Regular cleaning will ensure that the barbeques do not deteriorate sooner than necessary. Concrete Curbs Asset ID 1009 Grounds Components Useful Life 45 Replacement Year 2055 Remaining Life 40 6,036 Linear $17.04 Asset Cost $102, Future Cost $335, Assigned Reserves none Monthly Assessment $ Interest Contribution $0.50 Reserve Allocation $ PAGE 2-41

58 HC Detail Report by Category Concrete Curbs continued... Component in good condition. Useufl life depends on maintenance and ensuring there are no weeds causing the concrete to crack. Concrete: Sidewalk, Walkways, Slabs, Underground Parking Asset ID 1006 Grounds Components Useful Life 45 Replacement Year 2055 Remaining Life 40 58,226 Sq. $4.08 Asset Cost $237, Future Cost $774, Assigned Reserves none Monthly Assessment $ Interest Contribution $1.15 Reserve Allocation $ Component in good condition. There are a few areas that could use some maintenance because of cracks. PAGE 2-42

59 HC Detail Report by Category Covered Dining Area Refurbish Asset ID 1012 Grounds Components Useful Life 15 Replacement Year 2025 Remaining Life 10 2 $1, Asset Cost $3, Future Cost $4, Assigned Reserves $1, Monthly Assessment $4.82 Interest Contribution $0.65 Reserve Allocation $5.47 Component in good condition. This includes repainting of all painted surfaces and updating of all facia. Fountains Refurbish Asset ID 1015 Grounds Components Useful Life 10 Replacement Year 2020 Remaining Life 5 3 $1, Asset Cost $3, Future Cost $3, Assigned Reserves $1, Monthly Assessment $6.39 Interest Contribution $0.97 Reserve Allocation $7.36 PAGE 2-43

60 HC Detail Report by Category Fountains Refurbish continued... Component in decent condition. None of the fountains seem to be on or working however the fountain itself is in good condition. Gazebo Asset ID 1043 Grounds Components Useful Life 25 Replacement Year 2035 Remaining Life 20 1 $2, Asset Cost $2, Future Cost $3, Assigned Reserves none Monthly Assessment $2.84 Interest Contribution $0.01 Reserve Allocation $2.85 Component in good condition. PAGE 2-44

61 HC Detail Report by Category Picnic Tables Asset ID 1013 Grounds Components Useful Life 20 Replacement Year 2030 Remaining Life 15 6 $ Asset Cost $4, Future Cost $6, Assigned Reserves none Monthly Assessment $6.99 Interest Contribution $0.03 Reserve Allocation $7.02 Component in good condition. Wooden Pergola Repaint Asset ID 1017 Grounds Components Useful Life 10 Replacement Year 2020 Remaining Life 5 1 $1, Asset Cost $1, Future Cost $1, Assigned Reserves $ Monthly Assessment $3.20 Interest Contribution $0.48 Reserve Allocation $3.68 PAGE 2-45

62 HC Detail Report by Category Wooden Pergola Repaint continued... Component in good condition. Useful life of this component will depend on weather, maintenance and quality of workmanship and materials. Grounds Components - Total Current Cost $354,716 Assigned Reserves $3,250 Fully Funded Reserves $42,644 PAGE 2-46

63 HC Detail Report by Category Monument Refurbish Asset ID 1035 Signs Useful Life 20 Replacement Year 2030 Remaining Life 15 2 $2, Asset Cost $4, Future Cost $6, Assigned Reserves none Monthly Assessment $6.66 Interest Contribution $0.03 Reserve Allocation $6.68 Component in good condition. This includes all painted surfaces of the monument. All stone is listed under Stone Veneer Inspection/Mortar Repair. Signs - Total Current Cost $4,000 Assigned Reserves $0 Fully Funded Reserves $1,000 PAGE 2-47