Reserve Analysis Sample HOA 1234 Colorado Blvd. Your City, CO 80010

Transcription

1 Reserve Analysis Sample HOA 1234 Colorado Blvd. Your City, CO Level 1 Reserve Analysis Report Period 01/01/13 12/31/13 Client Reference Number Property Type Townhouse Style Number of Units 65 Fiscal Year End December 31 Final Version Date of Property Observation - January 01, 2013 Project Manager - G. Michael Kelsen Main Contact Person - Ms. Jackie Miles, Property Manager Report was prepared on - Monday, January 08, 2013 P.O. Box 1762 Castle Rock, CO Phone (303) Fax (303)

2 Table of Contents SECTION 1: SECTION 2: SECTION 3: Introduction to Reserve Analysis page 1 General Information and Answers to FAQ s pages 2-3 Summary of Reserve Analysis page 4 Physical Analysis (Photographic) pages 1-40 Financial Analysis a) Funding Summary page 1 b) Percent Funded Graph page 2 c) Asset Inventory List page 3 d) Significant Components Table page 4 e) Significant Components Graph page 5 f) Yearly Summary Table page 6 g) Yearly Contributions Graph page 7 h) Component Funding Information page 8 i) Yearly Cash Flow Table page 9 j) Projected Expenditures Year by Year Graph page 10 k) Projected Expenditures Year by Year pages SECTION 4: Glossary of Terms and Definitions pages 1-2

3 Introduction to the Reserve Analysis The elected officials of this association made a wise decision to invest in a Reserve Analysis to get a better understanding of the status of the Reserve funds. This Analysis will be a valuable tool to assist the Board of Directors in making the decision to which the dues are derived. Typically, the Reserve contribution makes up 15% - 40% of the association s total budget. Therefore, Reserves is considered to be a significant part of the overall monthly association payment. Every association conducts its business within a budget. There are typically two main parts to this budget, Operating and Reserves. The Operating budget includes all expenses that are fixed on an annual basis. These would include management fees, maintenance fees, utilities, etc. The Reserves is primarily made up of Capital Replacement items such as asphalt, roofing, fencing, mechanical equipment, etc., that do not normally occur on an annual basis. The Reserve Analysis is also broken down into two different parts, the Physical Analysis and the Financial Analysis. The Physical Analysis is information regarding the physical status and replacement cost of major common area components that the association is responsible to maintain. It is important to understand that while the Component Inventory will remain relatively stable from year to year, the Condition Assessment and Life/Valuation Estimates will most likely vary from year to year. You can find this information in the Asset Inventory Section (Section 2) of this Reserve Analysis. The Financial Analysis Section is the evaluation of the association s Reserve balance, income, and expenses. This is made up of a finding of the clients current Reserve Fund Status (measured as Percent Funded) and a recommendation for an appropriate Reserve Allocation rate (also known as the Funding Plan). You can find this information in Section 3 (pages 1 13) of this Reserve Analysis. The purpose of this Reserve Analysis is to provide an educated estimate as to what the Reserve Allocation needs to be. The detailed schedules will serve as an advanced warning that major projects will need to be addressed in the future. This will allow the Board of Directors to have ample timing to obtain competitive estimates and bids that will result in cost savings to the individual homeowners. This will also ensure the physical well being of the property and ultimately enhance each owner s investment, while limiting the possibility of unexpected major projects that may lead to Special Assessments. It is important for the client, homeowners, and potential future homeowners to understand that the information contained in this analysis is based on estimates and assumptions gathered from various sources. Estimated life expectancies and cycles are based upon conditions that were readily visible and accessible at time of the observation. No destructive or intrusive methods (such as entering the walls to inspect the condition of electrical wiring, plumbing lines, and telephone wires) were performed. In addition, environmental hazards (such as lead paint, asbestos, radon, etc.), construction defects, and acts of nature have not been investigated in the preparation of this report. If problem areas were observed, a reasonable effort has been made to include these items within the report. While every effort has been made to ensure accurate results, this report reflects the judgment of Aspen Reserve Specialties and should not be construed as a guarantee or assurance of predicting future events. 1 January 8, 2013

4 General Information and Answers to Frequently Asked Questions Why is it important to perform a Reserve Study? As previously mentioned, the Reserve allocation makes up a significant portion of the total monthly dues. This report provides the essential information that is needed to guide the Board of Directors in establishing the budget in order to run the daily operations of your association. It is suggested that a third party professionally prepare a Reserve Study since there is no vested interest in the property. Also, a professional knows what to look for and how to properly develop an accurate and reliable component list. Now that we have it, what do we do with it? Hopefully, you will not look at this report and think it is too cumbersome to understand. Our intention is to make this Reserve Analysis very easy to read and understand. Please take the time to review it carefully and make sure the main ingredients (asset information) are complete and accurate. If there are any inaccuracies, please inform us immediately so we may revise the report. Once you feel the report is an accurate tool to work from, use it to help establish your budget for the upcoming fiscal year. The Reserve allocation makes up a significant portion of the total monthly dues and this report should help you determine the correct amount of money to go into the Reserve fund. Additionally, the Reserve Study should act as a guide to obtain proposals in advance of pending normal maintenance and replacement projects. This will give you an opportunity to shop around for the best price available. The Reserve Study should be readily available for Real Estate agents, brokerage firms, and lending institutions for potential future homeowners. As the importance of Reserves becomes more of a household term, people are requesting homeowners associations to reveal the strength of the Reserve fund prior to purchasing a condominium or townhome. How often do we update or review it? Unfortunately, there is a misconception that these reports are good for an extended period of time since the report has projections for the next 30 years. Just like any major line item in the budget, the Reserve Analysis should be reviewed each year before the budget is established. Invariably, some assumptions have to be made during the compilation of this analysis. Anticipated events may not materialize and unpredictable circumstances could occur. Aging rates and repair/replacement costs will vary from causes that are unforeseen. Earned interest rates may vary from year to year. These variations could alter the content of the Reserve Analysis. Therefore, this analysis should be reviewed annually, and a property observation should be conducted at least once every three years. Is it the law to have a Reserve Study conducted? The Government requires reserve analyses in approximately 20 states. The State of Colorado currently requires all associations to adopt a Reserve policy, but does not currently enforce a Reserve Study is completed. Despite enacting this current law, the chances are also very good the documents of the association require the association to have a Reserve fund established. This may not mean a Reserve Analysis is required, but how are you going to know there are enough funds in the account if you don t have the proper information? Hypothetically, some associations look at the Reserve fund and think $50,000 is a lot of money and they are in good shape. What they don t know is the roof will need to be replaced within 5 years, and the cost of the roof is going to exceed $75,000. So while $50,000 sounds like a lot of money, in reality it won t even cover the cost of a roof, let alone all the other amenities the association is responsible to maintain. 2 January 8, 2013

5 What makes an asset a Reserve item versus an Operating item? A Reserve asset is an item that is the responsibility of the association to maintain, has a limited Useful Life, predictable Remaining Useful Life expectancies, typically occurs on a cyclical basis that exceeds 1 year, and costs above a minimum threshold cost. An operating expense is typically a fixed expense that occurs on an annual basis. For instance, minor repairs to a roof for damage caused by high winds or other weather elements would be considered an operating expense. However, if the entire roof needs to be replaced because it has reached the end of its life expectancy, then the replacement would be considered a Reserve expense. The GREY area of maintenance items that are often seen in a Reserve Study One of the most popular questions revolves around major maintenance items, such as painting the buildings or seal coating the asphalt. You may hear from your accountant that since painting or seal coating is not replacing a capital item, then it cannot be considered a Reserve issue. However, it is the opinion of several major Reserve Study providers that these items are considered to be major expenses that occur on a cyclical basis. Therefore, it makes it very difficult to ignore a major expense that meets the criteria to be considered a Reserve component. Once explained in this context, many accountants tend to agree and will include any expenses, such as these examples, as a Reserve component. The Property Observation The Property Observation was conducted following a review of the documents that were established by the developer identifying all common area assets. In some cases, the Board of Directors at some point may have revised the documents. In either case, the most current set of documents was reviewed prior to inspecting the property. In addition, common area assets may have been reported to Aspen Reserve Specialties by the client, or by other parties. Estimated life expectancies and life cycles are based upon conditions that were readily accessible and visible at the time of the observation. We did not destroy any landscape work, building walls, or perform any methods of intrusive investigation during the observation. In these cases, information may have been obtained by contacting the contractor or vendor that has worked on the property. The Reserve Fund Analysis We projected the starting balance from taking the most recent balance statement, adding expected Reserve contributions for the rest of the year, and subtracting any pending projects for the rest of the year. We compared this number to the ideal Reserve Balance and arrived at the Percent funded level. Measures of strength are as follows: 0% - 30% Funded Is considered to be a weak financial position. Associations that fall into this category are subject to Special Assessments and deferred maintenance, which could lead to lower property values. If the association is in this position, actions should be taken to improve the financial strength of the Reserve Fund. 31% - 69% Funded The majority of associations are considered to be in this fair financial position. While this doesn t represent financial strength and stability, the likelihood of Special Assessments and deferred maintenance is diminished. Effort should be taken to continue strengthening the financial position of the Reserve fund. 70% - 99% Funded This indicates financial strength of a Reserve fund and every attempt to maintain this level should be a goal of the association. 100% Funded This is the ideal amount of Reserve funding. This means that the association has the exact amount of funds in the Reserve account that should be at any given time. 3 January 8, 2013

6 Summary of Reserve Analysis Sample HOA - Association ID # Projected Starting Balance as of January 1, $69,863 Ideal Reserve Balance as of January 1, $153,483 Percent Funded as of January 1, % Recommended Reserve Allocation (per month) - $5,600 Minimum Reserve Allocation (per month) - $5,125 Information to complete this Reserve Analysis was gathered on January 1, 2013 by means of performing an on-site observation of the common area elements. In addition, we obtained information by contacting any vendors or contractors that have worked on the property recently, as well as communicating with the property representative (BOD Member and/or Property Manager). To the best of our knowledge, the conclusions and suggestions of this report are considered reliable and accurate insofar as the information obtained from these sources. There are 65 units contained among a privately gated community that offers a pool and recreation area as amenities. The common areas are in very good condition since construction of the property was recently completed in October It appears as though average to above average quality construction materials were used during development. As with all new construction, it is suggested that painting occurs within 2 3 years of completion. The reason behind this stems from the initial coating of paint being absorbed into the raw materials. Once a new coat of paint is applied, the painting cycle should resume to a more typical cycle of once every 4 5 years. In these elements, it is suggested to seal coat the asphalt every 2 3 years in order to maintain and protect the streets. As you can see on the Reserve Asset list (page 3 of the Financial Analysis), these are the two main components, along with concrete sidewalk repairs, the association will have to address in the next couple years. In comparing the projected balance of $69,863 versus the ideal Reserve Balance of $153,483, we find the association Reserve fund to be in an average financial position at this time (approximately 48% funded). This indicates a good to fair level of funding considering the association is only 2 years old. In order to continue strengthening the account fund, we suggest increasing the Monthly Reserve Allocation to $5,600 per month, followed by nominal annual increases of 3.50% thereafter to help offset the effects of inflation. This funding plan will allow the Reserve fund to achieve a fully funded position within the thirty-year period while avoiding the possibility of Special Assessments and deferred maintenance. In the percent Funded graph, you will see that we have also suggested a minimum Reserve contribution of $5,125 per month. If the Reserve contribution falls below this rate, then the Reserve fund will fall into a situation where Special Assessments, deferred maintenance, and lower property values are possible at some point in the future. The minimum Reserve allocation follows the threshold theory of Reserve funding where the percent funded status is not allowed to dip below 40% funded at any point during the thirty-year period. This was provided for one purpose only, to show the association how small the difference is between the two scenarios and how it would not make financial sense to contribute less money (approximately $7.30 per unit per month in this case) to the Reserve fund to only stay above a certain threshold. As you can see, the difference between the two scenarios is considered to be minimal, and based on the risk involved, we strongly suggest the recommended Reserve Allocation is followed. 4 January 8, 2013

7 Comp #: 105 Comp Shingle Roof - Replace All shingles are intact and in good condition with no problems noted at time of observation. Typically this type of roofing material has a useful life of approximately 18 years in this environment. Inspect roofs regularly and make local repairs on an as needed basis using operating funds to ensure full life from this component. Remaining life is based on current age and condition. Rooftops of buildings and garages Quantity: Approx. 861 squares Life Expectancy: 18 Remaining Life: 16 Best Cost: $107,625 $125/square; Estimate for a new layer Quantity Breakdown: Building #1-140 squares Building #2-145 squares Building #3-205 squares Building #4-205 squares Building #5-145 squares clubhouse - 21 squares Worst Cost: $120,550 $140/square; Higher estimate for better quality Source of Information: Cost Database Page 1 of 40

8 Comp #: 120 Raingutters/Downspouts - Replace There was evidence of a few damaged downspout extensions. The gutter lines and downspouts were in good condition, with no unusual deterioration noted. The extensions can be replaced as needed with general operating funds. The material that is being installed appears to be a "primed galvanized" metal. This means that the galvanized metal has a coat of primer paint and is ready for final painting at time of installation. The life expectancy is years depending on maintenance. Keep gutters and downspouts free from debris which can cause corrosion of metal materials or blockage which can cause the downspouts to freeze and expand during winter months. Expect to replace at same time as roof replacement. Perimeter of roofs Quantity: Approx 7150 LF Life Expectancy: 18 Remaining Life: 16 Best Cost: $28,600 $4.00/LF; Estimate to remove and replace Quantity Breakdown: Building # LF Building # LF Building # LF Building # LF Building # LF Worst Cost: $32,200 $4.50/LF; Higher estimate for more labor Source of Information: Research with local contractor Page 2 of 40

9 Comp #: 207 Iron Fencing - Repaint Some evidence of minor rusting and discoloration at the base of the fence. These surfaces should be repainted every 3-4 years to protect the metal materials from rust and corrosion. Funding includes pole lights. Pool perimeter, handrails, throughout Quantity: Approx 625 LF, 18 lights Life Expectancy: 3 Remaining Life: 1 Best Cost: $2,200 Estimate to repaint Quantity Breakdown: Pool Perimeter Fence LF Miscellaneous handrails LF (18) Pole Lights - Throughout common area Worst Cost: $2,800 Higher estimate for additional prep costs Source of Information: Cost Database Page 3 of 40

10 Comp #: 215 Building Exterior Surfaces - Repaint Some fading on southern exposed walls. Colors are lighter than trim, so not as much fading as occurred. However, initial paint by developer tends to absorb into the materials. Therefore, wood products will need to be painted within 2-3 years of construction date. Thereafter, expect to repaint every 5 years. Building exterior surfaces Quantity: (65) Units Life Expectancy: 5 Remaining Life: 1 Best Cost: $55,250 $850/unit; Estimate to repaint trim and siding Quantity Breakdown: Building # GSF Building # GSF Building # GSF Building # GSF Building # GSF Worst Cost: $65,000 $1000/unit; Higher estimate for more labor Source of Information: Cost database Page 4 of 40

11 Comp #: 216 Interior Surfaces - Repaint In good condition with no significant problems noted. Repainting cycle depends on level of use and abuse from children. In most associations, clubhouses need to be repainted every 5-7 years. Quantity: Interior surfaces of recreation room Approx 3600 GSF Life Expectancy: 7 Remaining Life: 5 Best Cost: $1,800 $.50/GSF; Estimate to repaint Worst Cost: $2,350 $.65/GSF; Higher estimate Source of Information: Cost Database Page 5 of 40

12 Comp #: 301 Hardboard Siding - Replace (I) No wear or deterioration noted. This line item has been split into (3) different phases to ease budgeting purposes. Typically, siding materials need to be replaced every years, depending on quality of materials and level of maintenance through the years. Building siding materials Quantity: 1/3rd of GSF Life Expectancy: 25 Remaining Life: 22 Best Cost: $117,125 $5.00/GSF; Estimate to replace approx GSF Quantity Breakdown: Building # GSF Building # GSF Building # GSF Building # GSF Building # GSF Clubhouse GSF Worst Cost: $134,700 $5.75/GSF; Higher estimate for better materials Source of Information: Cost Database Page 6 of 40

13 Comp #: 302 Hardboard Siding - Replace (II) This will be the second phase of a 3-year project to replace the siding material. As long as the association has signed a three-year contract with the contractor, the cost should not vary from year to year. Quantity: Exterior building materials 1/3rd of GSF Life Expectancy: 25 Remaining Life: 23 Best Cost: $117,125 Estimate to replace approx GSF Worst Cost: $134,750 Higher estimate for better quality materials Source of Information: Cost Database Page 7 of 40

14 Comp #: 303 Hardboard Siding - Replace (III) This will be the third and final phase of the siding replacement project. Future life expectancies depends on level of maintenance and quality of materials installed. Quantity: Exterior building materials 1/3rd of GSF Life Expectancy: 25 Remaining Life: 24 Best Cost: $91,000 Estimate to replace approx GSF Worst Cost: $130,000 Higher estimate for better quality materials Source of Information: Cost Database Page 8 of 40

15 Comp #: 401 Asphalt - Overlay Asphalt surfaces are new and in good condition without any major cracks or voids noted. Depending on level of traffic and maintenance, it is expected that asphalt surfaces will require a new overlay every years in this environment. Streets and parking areas throughout Quantity: Approx GSF Life Expectancy: 21 Remaining Life: 19 Best Cost: $41,250 $1.10/GSF; Estimate for an overlay Quantity Breakdown: Colorado Ave GSF Rocky Mtn. Way GSF Pikes Peak Lane GSF Mountain View GSF Worst Cost: $46,875 $1.25/GSF; Higher estimate to include repairs Source of Information: Cost Database Page 9 of 40

16 Comp #: 402 Asphalt - Seal Coat/crack fill Some loss of seal and overall dryness noted throughout. Areas that are adjacent to landscaped sections have more evidence of wear as the continual water runoff deteriorates the asphalt at a quicker pace. Asphalt should be crack filled annually as a maintenance issue, but sealed and crack filled every 2 years as a Reserve issue. Streets and parking areas throughout Quantity: Approx GSF Life Expectancy: 3 Remaining Life: 1 Best Cost: $3,000 $.08GSF; Estimate for seal coat only Quantity Breakdown: Colorado Ave GSF Rocky Mtn. Way GSF Pikes Peak Lane GSF Mountain View GSF Worst Cost: $3,750 $.10/GSF; Higher estimate includes repairs Source of Information: Cost Database Page 10 of 40

17 Comp #: 502 Garage Doors - Replace Majority of doors are in good condition. A few show evidence of dings and dents, but this is normal for metal doors. While the doors will still function for a long time, the doors will need to be replaced every years due to appearance. Quantity: Garage buildings (65) 16 x 7 doors Life Expectancy: 22 Remaining Life: 20 Best Cost: $45,500 $700/door; Estimate to replace Worst Cost: $58,500 $900/door; Higher estimate for better quality Source of Information: Cost Database Page 11 of 40

18 Comp #: 503 Utility Doors - Replace Doors are hollow core doors and should not have a long life expectancy. The association should expect to replace these doors within 5 years. Thereafter, as long as a good quality door is purchased, a life expectancy of years should be expected. Quantity: Next to garages (22) Doors Life Expectancy: 12 Remaining Life: 10 Best Cost: $3,300 $150/door; Estimate to replace Worst Cost: $4,400 $200/door; Higher estimate Source of Information: Cost Database Page 12 of 40

19 Comp #: 601 Concrete Sidewalks/Decks - Repair No significant cracking or spalling noted yet. Due to overall area, there is no expectancy to completely replace all concrete at the same time. Reserve an allowance for periodic major repairs. Minor cracks and problems can be repaired on an as needed basis with Operating funds. Sidewalks, pool deck Quantity: Approx GSF Life Expectancy: 3 Remaining Life: 1 Best Cost: $15,000 Estimate to replace 15% of area at $5.00/GSF Quantity Breakdown: Sidewalks GSF Pool Deck GSF Worst Cost: $20,850 Higher estimate for more repairs Source of Information: Cost Database Page 13 of 40 Thursday, June 28, 2007

20 Comp #: 607 Wood Deck - Replace It was difficult to inspect each deck due to accessibility issues. Since the property is relatively new, we assume all are in good condition. Conditions, sizes, and types of decks vary throughout the community. According to the declarations, it appears the association will be responsible for painting/staining the decks (funding included with exterior building surfaces - repaint). However, when it comes to replacement, the declarations are not clear. Per the request of the client, we have included Reserve funding for replacement to occur every years. When replacement is necessary, we recommend upgrading to a composite material that has a longer life expectancy and does not require as frequent maintenance. Rear decks of units Quantity: (32) 6x10, (33) 8x12 decks 1920 Life Expectancy: 24 Remaining Life: 22 Best Cost: $86,700 $17/GSF; Estimate to replace with similar Worst Cost: $102,000 $20/GSF; Higher estimate to upgrade materials Source of Information: Cost Database Page 14 of 40

21 Comp #: 705 HVAC System - Replace These are the only units that are the responsibility of the association. Private units outside the resident is the sole responsibility of the individual owner. Depending on amount of use, expect to replace these units every years. Quantity: Outside of recreation room (2) 3 ton systems Life Expectancy: 25 Remaining Life: 23 Best Cost: $7,000 $3500/system; Estimate to replace units Worst Cost: $8,000 $4000/system; Higher estimate for larger unit Source of Information: Cost Database Page 15 of 40

22 Comp #: 803 Mailboxes - Replace Mailboxes are new and in good shape without any rust or deterioration noted. These boxes are well protected from the elements which will extend the life expectancy. Expect to replace every years with proper care, Quantity: Entrance to property (4) 16 Box CBU's, (1) 8 box CBU Life Expectancy: 18 Remaining Life: 16 Best Cost: $6,500 $1300/CBU; Estimate to replace Worst Cost: $7,750 $1550/CBU; Higher estimate Source of Information: Cost Database Page 16 of 40

23 Comp #: 906 Vehicle Gate Operators - Replace Relatively new units in good operating condition with no unusual reports of problems. Depending on amount of use and maintenance, these types of units typically last 7-10 years. Entrance and exit of property Quantity: (2) Swing gate units Life Expectancy: 12 Remaining Life: 10 Best Cost: $4,600 $2300/unit; Estimate to replace Exit gate - Serial # Entry gate - Serial # Worst Cost: $5,600 $2800/unit; Higher estimate Source of Information: Cost Database Page 17 of 40

24 Comp #: 1002 Iron Fence - Replace Minor rusting noted at base of posts. This is from constant exposure to moisture from soil and sprinklers. Be sure to keep fencing well painted to inhibit rusting and corrosion. Perform minor repairs at the same time as painting (See component #207). Quantity: Pool perimeter, various handrails thr Approx 625 LF For Quantity Breakdown, see Reserve Asset #207 Life Expectancy: 18 Remaining Life: 16 Best Cost: $15,625 $25/LF: Estimate to replace Worst Cost: $18,750 $30/LF; Higher estimate Source of Information: Cost Database Page 18 of 40

25 Comp #: 1003 Chain Link Fence - Replace New fencing in good shape with no damage noted. Depending on the amount of use the courts receive, expect to replace chain link only (poles should last a lifetime) every years. Quantity: Tennis court perimeter Approx 480 LF Life Expectancy: 35 Remaining Life: 33 Best Cost: $9,600 $20/LF; Estimate to replace link only Worst Cost: $12,000 $25/LF; Higher estimate for repairs to poles Source of Information: Cost Database Page 19 of 40

26 Comp #: 1101 Pool - Resurface Plaster is in good condition with no roughness noted. A few cracks were noted on stairs leading into and out of the shallow end. During inoperable months, fill cracks and continue to monitor for worsening conditions. Plaster typically needs to be redone every years in these elements. Maintain proper chemical balances during summer months to prevent premature deterioration of plaster. Center of property Quantity: (1) 45 x 25 plaster pool Life Expectancy: 10 Remaining Life: 8 Best Cost: $9,550 Estimate to resurface and retile Tile LF - $20/LF - $25/LF Plaster - Approximately 1685 GSF of surface $4 - $6 per GSF If needed: Caulking - Approx. $1,300 total (4) Skimmers - $ $1800 per skimmer Worst Cost: $13,600 Higher estimate Source of Information: Cost Database Page 20 of 40

27 Comp #: 1102 Spa - Resurface Spa surface is in good condition, but due to constant use year round, high heat and chemical balances, the life expectancy of spa plaster is shorter than pools. Expect to resurface spas twice as often as pools. Center of property Quantity: (1) 12 x 12 plaster Life Expectancy: 5 Remaining Life: 3 Best Cost: $1,500 Estimate for new plaster and tile Tile - 48 LF Plaster - Approximately 195 GSF of surface area Worst Cost: $2,000 Higher estimate Source of Information: Cost Database Page 21 of 40

28 Comp #: 1104 Pool & Spa Heaters - Replace These heaters are high efficiency units that should have a life expectancy of years. The pool heater is a 400,000 BTU Laars, Serial # The spa heater is a 325,000 BTU Laars, serial # Quantity: Pool/spa equipment room, enclosed (2) Heaters Life Expectancy: 15 Remaining Life: 13 Best Cost: $6,500 Estimate to replace Worst Cost: $7,000 higher estimate for a more efficient unit Source of Information: Research with contractor Page 22 of 40

29 Comp #: 1107 Pool & Spa Filters - Replace These filters are a fiberglass tank and have a diatomaceous earth medium that will have a life expectancy of years. No problems noted at the time of property observation. Quantity: Pool and spa equipment room (2) Purex filters Life Expectancy: 18 Remaining Life: 16 Best Cost: $1,700 Estimate to replace Worst Cost: $2,100 Higher estimate Source of Information: Research with contractor Page 23 of 40

30 Comp #: 1110 Pool/Spa Pumps - Replace The contractor mentioned that the life expectancy of these units is too hard to predict. He suggested replacing these units as needed with general operating funds. Quantity: Pool & spa equipment room (3) Assorted sizes Life Expectancy: Best Cost: $0 N/A Remaining Life: Worst Cost: $0 Source of Information: Page 24 of 40

31 Comp #: 1112 Pool Cover - Replace Covers were intact and in good condition with no holes or tears noted. There are two different manufactures, but both appear to be similar age and condition. While most cover manufacturers carry a 10 year warranty against defects, there are strict storage requirements to adhere to the warranty. In this environment, the cover fabric typically has a life expectancy of 7-8 years. The replacement cost is a little higher than normal for the pool cover due to the need for a custom design. These covers were manufactured by Merlin and Meyco. Quantity: Attached to pool during observation (1) 50 X 30 cover Life Expectancy: 8 Remaining Life: 6 Best Cost: $2,000 Estimate to replace Worst Cost: $2,500 Higher estimate Source of Information: Research with contractor Page 25 of 40

32 Comp #: 1120 Pool Furniture - Replace All pieces are in good condition with no problems noted with straps or frames. As long as these are well cared for and not abused, then the life expectancy should range from 5-7 years. (7) Chaise lounges, (3) tables, (12) chairs, (3) umbrellas. Pool and spa area Quantity: (25) Assorted pieces Life Expectancy: 7 Remaining Life: 5 Best Cost: $2,500 Average estimate to replace all pieces Item Breakdown: (10) Chaise lounges at $125 - $190 per piece (8) chairs at $80 - $125 per piece (2) Tables at $150 - $200 per piece (5) Drink tables at $60 - $85 per piece Worst Cost: $3,750 Higher estimate for more pieces Source of Information: Cost Database Page 26 of 40

33 Comp #: 1201 Tennis Court - Resurface Courts are constructed from concrete and is reported to be post tension, so the likelihood of major cracking is diminished. Expect to resurface court only and do not Reserve for replacement of material. Depending on level of use, expect to resurface every 4-5 years. Reported that these courts are used frequently for association tournaments. Adjacent to pool area Quantity: (2) Courts, 60 x 120 Life Expectancy: 4 Remaining Life: 2 Best Cost: $6,000 $3000/court; Estimate to resurface Worst Cost: $8,000 Higher estimate includes minor crack repairs Source of Information: Research with developer Page 27 of 40

34 Comp #: 1202 Tennis Court Windscreen - Replace Windscreen is rolled up during non use events and only used during tournaments. This will extend the life expectancy and replacement should occur every other court resurfacing. Quantity: Tennis court perimeter fence Approx 4800 GSF Life Expectancy: 8 Remaining Life: 6 Best Cost: $3,125 $.65/GSF; Estimate to replace Worst Cost: $3,850 $.80/GSF; Higher estimate Source of Information: Research with local vendor Page 28 of 40

35 Comp #: 1301 Play Equipment - Replace New structure that is stable and intact. While this type of equipment has an extended life expectancy, the association should plan on updating the equipment every years as new and improved play structures are developed. Quantity: Recreation area (1) Medium sized structure Life Expectancy: 16 Remaining Life: 14 Best Cost: $25,000 Estimate to replace Worst Cost: $30,000 Higher estimate Source of Information: Catalog from manufacturer Page 29 of 40

36 Comp #: 1303 Tot Lot Groundcover - Refill Material is wood chip and had good coverage at time of observation. There was some minor signs of the weed barrier showing through the groundcover in low areas. Ground cover material can be added as needed as a maintenance issue. It is too difficult to predict how often gravel will need to be added since it depends on amount of use. Therefore, Reserve funding is not required for this component. Quantity: Play area Approx 20 cu yds Life Expectancy: Best Cost: $0 N/A Remaining Life: Worst Cost: $0 Source of Information: Page 30 of 40

37 Comp #: 1402 Appliances - Replace These are in good condition as they appear to be seldom used. Expect to replace every years. Pieces include a refrigerator, dishwasher, and an ice maker. Quantity: Interior of clubhouse (3) Assorted pieces Life Expectancy: 18 Remaining Life: 16 Best Cost: $1,800 Average estimate to replace Worst Cost: $2,400 Higher estimate for better quality Source of Information: Cost database Page 31 of 40

38 Comp #: 1405 Furnishings - Replace All pieces are well cared for and used properly. Expect to replace every years, depending on level of use and care. Quantity: Interior clubhouse (18) Assorted pieces Life Expectancy: 14 Remaining Life: 12 Best Cost: $7,850 Estimate to replace Worst Cost: $9,750 Higher estimate Source of Information: Cost Database Page 32 of 40

39 Comp #: 1501 Carpeting - Replace No significant wear patterns or stains noted at time of observation. Keep carpet well vacuumed and clean to extend life expectancy. Quantity: Clubhouse interior Approx 60 GSY Life Expectancy: 7 Remaining Life: 5 Best Cost: $1,500 $25/GSY; Estimate to replace Worst Cost: $1,800 $30/GSY; Higher estimate for better grade Source of Information: Cost Database Page 33 of 40

40 Comp #: 1503 Ceramic Tile - Replace No cracked tiles or grout problems noted at time of observation. Ceramic tile has a long life expectancy. However, since this is located at the main entrance, wear patterns, cracks, and missing grout will start to develop over time. Expect to replace every 3rd carpet replacement cycle. Quantity: Entrance to clubhouse Approx 175 GSF Life Expectancy: 21 Remaining Life: 19 Best Cost: $5,250 $30/GSF; Estimate to replace Worst Cost: $7,000 Higher estimate Source of Information: Cost Database Page 34 of 40

41 Comp #: 1602 Exterior Wall Mount Lights - Replace Fixtures are securely attached to walls. Assumed to be functional as observation occurred during the daytime and lights were not turned on. No reported problems. Expect to replace every years to maintain modern appearance and functionality. Quantity: Front porches, garage doors, ends of Approx 140 lights Life Expectancy: 20 Remaining Life: 18 Best Cost: $17,500 $125/light; Estimate to replace Worst Cost: $24,500 $175/light; Higher estimate Source of Information: Cost Database Page 35 of 40

42 Comp #: 1604 Pole Lights - Replace Structurally stable and intact with minor rusting noted at base of fixture. In order to increase life expectancy, be sure fixtures are well painted to inhibit rusting. Typical replacement cycle ranges from years. Quantity: Throughout general common area Approx 18 fixtures Life Expectancy: 20 Remaining Life: 18 Best Cost: $6,300 $350/pole light; Estimate to replace with similar Worst Cost: $8,100 $450/light; Higher estimate Source of Information: Cost Database Page 36 of 40

43 Comp #: 1609 Street Lights - Replace All are structurally stable and intact. These are constructed of heavier duty metal than pole lights, therefore should carry a longer life expectancy. Expect to replace every years. Quantity: Adjacent to driveways Approx 10 lights Life Expectancy: 24 Remaining Life: 22 Best Cost: $6,500 $650/light; Estimate to replace Worst Cost: $8,500 $850/light; Higher estimate for better fixture Source of Information: Cost Database Page 37 of 40

44 Comp #: 1701 Irrigation System - Replace Research with landscaper revealed no unusual problems with system. Reported that minor repairs can be performed as needed and there is no expectancy to completely replace the system at one time. Therefore, no Reserve funding is required. Quantity: Throughout landscaped areas Extensive system Life Expectancy: Best Cost: $0 N/A Remaining Life: Worst Cost: $0 Source of Information: Page 38 of 40

45 Comp #: 1703 Irrigation Timeclocks - Replace Sizes of clocks vary from 12 station to 24 station. All clocks are functioning well with no reported problems. Since system only operates during summer months, expect to replace clocks every years. Clocks are well protected from elements with stainless steel enclosures. Quantity: Common area (4) Assorted clocks Life Expectancy: 12 Remaining Life: 9 Best Cost: $6,000 Average estimate to replace all at same time Worst Cost: $7,500 Higher estimate for larger clocks Source of Information: Research with association contra Page 39 of 40

46 Comp #: 1811 Concrete Drain Swales - Repair No significant cracking or lifting noted at time of observation. Since area is not subject to traffic, predicting a life expectancy for repairs is very difficult. Treat repairs as needed with general Operating funds. Quantity: Through middle of landscaped area Approx 3650 GSF Life Expectancy: Best Cost: $0 N/A Remaining Life: Worst Cost: $0 Source of Information: Page 40 of 40

47 Funding Summary For Reserve Analysis Sample HOA Beginning Assumptions Financial Information Source Research With Client # of units 128 Fiscal Year End December 31, 2013 Budgeted Monthly Dues $12, Budgeted Monthly Reserve Allocation $3, Projected Starting Reserve Balance $69,983 Ideal Starting Reserve Balance $153,483 Economic Factors Current Inflation Rate 4.50% Reported After-Tax Interest Rate 3.00% Current Reserve Status Current Balance as a % of Ideal Balance 46% Recommendations Monthly Reserve Allocation $6,350 Per Unit $49.61 Minimum Monthly Reserve Allocation $5,700 Per Unit $44.53 Nominal Annual Increases 4.25% # of Years 30 Special Assessment $0 Per Unit $0 Changes From Prior Year Increase/Decrease to Reserve Allocation $2,600 as Percentage 69% Per Unit $

48 Percent Funded Graph For Reserve Analysis Sample HOA Percent Funded Recommended Current Minimum 120% 100% % Level of Funding 80% 60% 40% 20% 0% Year 2

49 Category Asset # Asset Name UL RUL Best Cost Worst Cost Roofing 105 Comp Shingle Roof - Replace $107,625 $120, Raingutters/Downspouts - Replace $28,600 $32,200 Painted Surfaces 207 Iron Fencing - Repaint 3 1 $2,200 $2, Building Exterior Surfaces - Repaint 5 1 $55,250 $65, Interior Surfaces - Repaint 7 5 $1,800 $2,350 Siding Materials 301 Masonite Siding - Replace (II) $117,125 $134, Masonite Siding - Replace (III) $91,000 $130, Hardboard Siding - Replace (I) $117,125 $134,700 Drive Materials 401 Asphalt - Overlay $41,250 $46, Asphalt - Seal Coat/crack fill 3 1 $3,000 $3,750 Property Access 502 Garage Doors - Replace $45,500 $58, Utility Doors - Replace $3,300 $4,400 Decking 601 Concrete Sidewalks/Decks - Repair 3 1 $15,000 $20, Wood Deck - Replace $86,700 $102,000 Mechanical Equip. 705 HVAC System - Replace $7,000 $8,000 Prop. Identification 803 Mailboxes - Replace $6,500 $7,750 Security 906 Vehicle Gate Operators - Replace $4,600 $5,600 Fencing 1002 Iron Fence - Replace $15,625 $18, Chain Link Fence - Replace $9,600 $12,000 Pool/Spa 1101 Pool - Resurface 10 8 $9,550 $13, Spa - Resurface 5 3 $1,500 $2, Pool & Spa Heaters - Replace $6,500 $7, Pool & Spa Filters - Replace $1,700 $2, Pool/Spa Pumps - Replace N/A $0 $ Pool Cover - Replace 8 6 $2,000 $2, Pool Furniture - Replace 7 5 $2,500 $3,750 Courts 1201 Tennis Court - Resurface 4 2 $6,000 $8, Tennis Court Windscreen - Replace 8 6 $3,125 $3,850 Recreation Equip Play Equipment - Replace $25,000 $30, Tot Lot Groundcover - Refill N/A $0 $0 Interiors 1402 Appliances - Replace $1,800 $2, Furnishings - Replace $7,850 $9,750 Flooring 1501 Carpeting - Replace 7 5 $1,500 $1, Ceramic Tile - Replace $5,250 $7,000 Light Fixtures 1602 Exterior Wall Mount Lights - Replace $17,500 $24, Pole Lights - Replace $6,300 $8, Street Lights - Replace $6,500 $8,500 Irrig. System 1701 Irrigation System - Replace N/A $0 $ Irrigation Timeclocks - Replace 12 9 $6,000 $7,500 Landscaping 1811 Concrete Drain Swales - Repair N/A $0 $0 3

50 Significant Components For Reserve Analysis Sample HOA Significance: Ave Curr (Curr Cost/UL) ID Asset Name UL RUL Cost As $ As % 105 Comp Shingle Roof - Replace $114,088 $6, % 120 Raingutters/Downspouts - Replace $30,400 $1, % 207 Iron Fencing - Repaint 3 1 $2,500 $ % 215 Building Exterior Surfaces - Repaint 5 1 $60,125 $12, % 216 Interior Surfaces - Repaint 7 5 $2,075 $ % 301 Hardboard Siding - Replace (I) $125,913 $5, % 301 Masonite Siding - Replace (II) $125,938 $5, % 301 Masonite Siding - Replace (III) $110,500 $4, % 401 Asphalt - Overlay $44,063 $2, % 402 Asphalt - Seal Coat/crack fill 3 1 $3,375 $1, % 502 Garage Doors - Replace $52,000 $2, % 503 Utility Doors - Replace $3,850 $ % 601 Concrete Sidewalks/Decks - Repair 3 1 $17,925 $5, % 607 Wood Deck - Replace $94,350 $3, % 705 HVAC System - Replace $7,500 $ % 803 Mailboxes - Replace $7,125 $ % 906 Vehicle Gate Operators - Replace $5,100 $ % 1002 Iron Fence - Replace $17,188 $ % 1003 Chain Link Fence - Replace $10,800 $ % 1101 Pool - Resurface 10 8 $11,575 $1, % 1102 Spa - Resurface 5 3 $1,750 $ % 1104 Pool & Spa Heaters - Replace $6,750 $ % 1107 Pool & Spa Filters - Replace $1,900 $ % 1112 Pool Cover - Replace 8 6 $2,250 $ % 1120 Pool Furniture - Replace 7 5 $3,125 $ % 1201 Tennis Court - Resurface 4 2 $7,000 $1, % 1202 Tennis Court Windscreen - Replace 8 6 $3,488 $ % 1301 Play Equipment - Replace $27,500 $1, % 1402 Appliances - Replace $2,100 $ % 1405 Furnishings - Replace $8,800 $ % 1501 Carpeting - Replace 7 5 $1,650 $ % 1503 Ceramic Tile - Replace $6,125 $ % 1602 Exterior Wall Mount Lights - Replace $21,000 $1, % 1604 Pole Lights - Replace $7,200 $ % 1609 Street Lights - Replace $7,500 $ % 1703 Irrigation Timeclocks - Replace 12 9 $6,750 $ % 4

51 Significant Components Graph For Reserve Analysis Sample HOA 215 Building Exterior Surfaces - Repaint 105 Comp Shingle Roof - Replace 601 Concrete Sidewalks/Decks - Repair 301 Masonite Siding - Replace (II) All Other 19% 10% 54% 8% 9% Significance: (Curr Cost/UL) Asset ID Asset Name UL RUL Average Curr. Cost As $ As % 215 Building Exterior Surfaces - Repaint 5 1 $60,125 $12,025 19% 105 Comp Shingle Roof - Replace $114,088 $6,338 10% 601 Concrete Sidewalks/Decks - Repair 3 1 $17,925 $5,975 9% 301 Masonite Siding - Replace (II) $125,938 $5,038 8% All Other See Expanded Table For Breakdown $34,751 54% 5

52 Yearly Summary For Reserve Analysis Sample HOA Starting Annual Fully Funded Reserve Percent Reserve Interest Reserve Year 2013 Balance $153,483 Balance $69,983 Funded 46% Contribs $76,200 Income $3,287 Expenses $ $227,403 $149,470 66% $79,439 $4,421 $87, $216,016 $145,628 67% $82,815 $5,573 $7, $290,928 $226,371 78% $86,334 $8,168 $1, $378,406 $318,876 84% $90,003 $10,636 $28, $445,689 $391,134 88% $93,829 $13,194 $8, $540,335 $489,620 91% $97,816 $14,937 $94, $552,762 $507,487 92% $101,974 $16,494 $32, $634,985 $593,566 93% $106,307 $19,382 $18, $739,057 $700,306 95% $110,825 $22,833 $10, $861,419 $823,934 96% $115,536 $25,879 $61, $939,743 $903,618 96% $120,446 $27,832 $97, $988,819 $954,322 97% $125,565 $30,533 $26, $1,119,227 $1,083,879 97% $130,901 $34,087 $57, $1,228,534 $1,191,626 97% $136,465 $37,187 $74, $1,330,051 $1,290,759 97% $142,264 $41,423 $ $1,519,592 $1,474,446 97% $148,311 $39,206 $519, $1,180,941 $1,142,770 97% $154,614 $37,110 $ $1,375,707 $1,334,494 97% $161,185 $41,411 $107, $1,473,621 $1,429,924 97% $168,035 $43,211 $186, $1,499,634 $1,454,608 97% $175,177 $45,000 $125, $1,597,680 $1,549,376 97% $182,622 $47,340 $168, $1,662,339 $1,610,796 97% $190,383 $40,945 $719, $1,161,603 $1,122,479 97% $198,474 $31,501 $372, $1,009,505 $980,396 97% $206,910 $28,133 $317, $915,561 $897,639 98% $215,703 $29,495 $71, $1,083,416 $1,071,308 99% $224,871 $32,051 $259, $1,070,967 $1,068, % $234,428 $36,057 $ $1,339,097 $1,338, % $244,391 $42,147 $150, $1,471,941 $1,474, % $254,777 $48,732 $0 6

53 Reserve Contributions For Reserve Analysis Sample HOA Reserve Contributions Recommended Current Minimum $25,000 $20,000 Monthly Contribution $15,000 $10,000 $5,000 $ Year 7

54 Component Funding Information For Reserve Analysis Sample HOA Ave Current Current Fund ID Component Name Cost Future Cost Balance Balance Monthly 105 Comp Shingle Roof - Replace $114,088 $230,727 $12,676 $0 $ Raingutters/Downspouts - Replace $30,400 $61,480 $3,378 $0 $ Iron Fencing - Repaint $2,500 $2,613 $1,667 $1,667 $ Building Exterior Surfaces - Repaint $60,125 $62,831 $48,100 $48,100 $1, Interior Surfaces - Repaint $2,075 $2,586 $593 $593 $ Hardboard Siding - Replace (I) $125,913 $331,610 $15,110 $0 $ Masonite Siding - Replace (II) $125,938 $346,601 $10,075 $0 $ Masonite Siding - Replace (III) $110,500 $317,800 $4,420 $0 $ Asphalt - Overlay $44,063 $101,690 $4,196 $0 $ Asphalt - Seal Coat/crack fill $3,375 $3,527 $2,250 $2,250 $ Garage Doors - Replace $52,000 $125,409 $4,727 $0 $ Utility Doors - Replace $3,850 $5,979 $642 $0 $ Concrete Sidewalks/Decks - Repair $17,925 $18,732 $11,950 $11,950 $ Wood Deck - Replace $94,350 $248,485 $7,863 $0 $ HVAC System - Replace $7,500 $20,641 $600 $0 $ Mailboxes - Replace $7,125 $14,409 $792 $0 $ Vehicle Gate Operators - Replace $5,100 $7,920 $850 $0 $ Iron Fence - Replace $17,188 $34,759 $1,910 $0 $ Chain Link Fence - Replace $10,800 $46,160 $617 $0 $ Pool - Resurface $11,575 $16,461 $2,315 $0 $ Spa - Resurface $1,750 $1,997 $700 $700 $ Pool & Spa Heaters - Replace $6,750 $11,962 $900 $0 $ Pool & Spa Filters - Replace $1,900 $3,843 $211 $0 $ Pool Cover - Replace $2,250 $2,930 $563 $0 $ Pool Furniture - Replace $3,125 $3,894 $893 $893 $ Tennis Court - Resurface $7,000 $7,644 $3,500 $3,500 $ Tennis Court Windscreen - Replace $3,488 $4,542 $872 $0 $ Play Equipment - Replace $27,500 $50,928 $3,438 $0 $ Appliances - Replace $2,100 $4,247 $233 $0 $ Furnishings - Replace $8,800 $14,924 $1,257 $0 $ Carpeting - Replace $1,650 $2,056 $471 $331 $ Ceramic Tile - Replace $6,125 $14,136 $583 $0 $ Exterior Wall Mount Lights - Replace $21,000 $46,378 $2,100 $0 $ Pole Lights - Replace $7,200 $15,901 $720 $0 $ Street Lights - Replace $7,500 $19,752 $625 $0 $ Irrigation Timeclocks - Replace $6,750 $10,031 $1,688 $0 $55.70 Ideal 8

55 Yearly Cash Flow For Reserve Analysis Sample HOA Year Starting Balance $69,983 $149,470 $145,628 $226,371 $318,876 Reserve Income $76,200 $79,439 $82,815 $86,334 $90,003 Interest Earnings $3,287 $4,421 $5,573 $8,168 $10,636 Special Assessments $0 $0 $0 $0 $0 Funds Available $149,470 $233,330 $234,015 $320,873 $419,516 Reserve Expenditures $0 $87,702 $7,644 $1,997 $28,382 Ending Balance $149,470 $145,628 $226,371 $318,876 $391,134 Year Starting Balance $391,134 $489,620 $507,487 $593,566 $700,306 Reserve Income $93,829 $97,816 $101,974 $106,307 $110,825 Interest Earnings $13,194 $14,937 $16,494 $19,382 $22,833 Special Assessments $0 $0 $0 $0 $0 Funds Available $498,156 $602,373 $625,954 $719,256 $833,965 Reserve Expenditures $8,536 $94,886 $32,389 $18,949 $10,031 Ending Balance $489,620 $507,487 $593,566 $700,306 $823,934 Year Starting Balance $823,934 $903,618 $954,322 $1,083,879 $1,191,626 Reserve Income $115,536 $120,446 $125,565 $130,901 $136,465 Interest Earnings $25,879 $27,832 $30,533 $34,087 $37,187 Special Assessments $0 $0 $0 $0 $0 Funds Available $965,349 $1,051,896 $1,110,419 $1,248,867 $1,365,277 Reserve Expenditures $61,731 $97,574 $26,541 $57,242 $74,518 Ending Balance $903,618 $954,322 $1,083,879 $1,191,626 $1,290,759 Year Starting Balance $1,290,759 $1,474,446 $1,142,770 $1,334,494 $1,429,924 Reserve Income $142,264 $148,311 $154,614 $161,185 $168,035 Interest Earnings $41,423 $39,206 $37,110 $41,411 $43,211 Special Assessments $0 $0 $0 $0 $0 Funds Available $1,474,446 $1,661,963 $1,334,494 $1,537,090 $1,641,170 Reserve Expenditures $0 $519,193 $0 $107,166 $186,562 Ending Balance $1,474,446 $1,142,770 $1,334,494 $1,429,924 $1,454,608 Year Starting Balance $1,454,608 $1,549,376 $1,610,796 $1,122,479 $980,396 Reserve Income $175,177 $182,622 $190,383 $198,474 $206,910 Interest Earnings $45,000 $47,340 $40,945 $31,501 $28,133 Special Assessments $0 $0 $0 $0 $0 Funds Available $1,674,785 $1,779,337 $1,842,124 $1,352,454 $1,215,439 Reserve Expenditures $125,409 $168,541 $719,645 $372,058 $317,800 Ending Balance $1,549,376 $1,610,796 $1,122,479 $980,396 $897,639 Year Starting Balance $897,639 $1,071,308 $1,068,260 $1,338,745 $1,474,805 Reserve Income $215,703 $224,871 $234,428 $244,391 $254,777 Interest Earnings $29,495 $32,051 $36,057 $42,147 $48,732 Special Assessments $0 $0 $0 $0 $0 Funds Available $1,142,838 $1,328,230 $1,338,745 $1,625,283 $1,778,315 Reserve Expenditures $71,529 $259,970 $0 $150,478 $0 Ending Balance $1,071,308 $1,068,260 $1,338,745 $1,474,805 $1,778,315 9

56 Yearly Expenditures Graph For Reserve Analysis Sample HOA Reserve Expenditures $800,000 $700,000 $600,000 Annu ual Totals $500,000 $400,000 $300,000 $200, $100,000 $ Year 10