Report Dated November 17, Updates November 26, 2012 Reserve Study for Fiscal Year Prepared By WALLA SERVICES

Transcription

1 RESERVE STUDY ANALYSIS COMPONENT CALCULATION UPDATE Bakersfield, California A Planned Master Association Report Dated November 17, 2014 Updates November 26, 2012 Reserve Study for Fiscal Year 2015 Prepared By WALLA SERVICES PO Box 652 Clovis, California Fax

2 T a b l e o f C o n t e n t s Introduction Common Interest Development Introduction...1 What Is A Component Calculation Update Report...1 Updates and Disclosures...1 Reserve Account Calculations Reserve Fund Summary/Recommendations...2 Financial Analysis of Common Area Components...3 Component Inventory/Cost...4 Current Financial Position/Recommended Fund Allocations...6 Threshold Funding Cash Flow...8 Recommended Funding Cash Flow...9 Expenditures in Future Dollars...10 Notes Notes...16 Appendix Section Homeowner Assessment and Reserve Fund Disclosure Summary...17 Copyright 2014, Walla Services All Rights Reserved This Component Calculation Update Report was supplied to the association's board of directors and/or their acting agents. This report may be used by the parties named above for reserve fund financial planning of this association. No part may be reproduced in any form except for the client s right to reproduce and distribute copies of this report in whole or in part as required by state laws and/or this association's governing

3 I n t r o d u c t i o n Common Interest Development Introduction This Component Calculation Update Report was compiled for, a Planned Master Association. This common interest development is located east of Bakersfield, California in Kern County off State Route 178 at Miramonte Drive and Casa Club Drive (main entrance). The gated community consists of various residential tracts located adjacent to or within proximity of the Rio Bravo Golf Course. The entire master development covers approximately acres that includes acres designated for residential developments with the golf course covering areas. What Is a Component Calculation Update Report? This report makes financial adjustments to this association s last Reserve Study Analysis. This is done by making changes to each component s current replacement cost and estimating remaining life. The report does not make use of an on-site inspection of this development s major components. However, it does provide for a cost effective alternative by updating the most current Reserve Study when on-site component inspections may not be required. The reserve funding plan recommended in this report also uses current reserve fund amounts; any approved or projected special assessments, present and/or future reserve fund allotments, construction inflation factors, and any interest earnings. The report is intended as a supplement for the most current Reserve Study. It will satisfy the board of director s duties concerning annual review requirements under Civil Code 5550(a) that fall within the minimum three (3) year window for a new Reserve Study. Updates and Disclosures Components in this report use estimated current average replacement costs along with various assumptions as to interest earnings and inflation rates. In addition, certain conditions such as weather, deferred preventive maintenance, substandard materials used during construction, or the general workmanship of the development can decrease a component's useful life. Resources used for estimating replacement costs were from the Saylor Construction Cost Estimating System, any available contractor bids, or actual historical component replacement costs. The study uses various other assumptions, such as interest and inflation rates, to calculate future replacement costs of components and theoretical cash flows. The method used to determine this association's estimated funding level started by employing the straight line or segregated method. This method uses each component's estimated current replacement cost, present age, estimated remaining life, and estimated useful life to establish current component liabilities. These current liabilities were instrumental in establishing recommended assessments and ideal fund balances by further using a calculation method that takes into account various assumptions. These assumptions include interest earnings on fund balances and future component replacement costs along with their corresponding replacement years and inflation rates. The report then projects an estimated reserve fund cash flow for the next thirty (30) years while achieving a fully funded position. Any taxes that may be due on interest earnings are not deducted from fund balances. Our experience has shown that most associations pay their taxes from the operating budget accounts and not the reserve accounts. This firm claims no responsibility for inaccurate reserve fund figures or information supplied by the association's board of directors or their acting agents. File: Report Date: 11/17/2014 1

4 R e s e r v e S t u d y R e c o m m e n d a t i o n s 2014 Year-End Reserve Fund Position Total Reserve Fund Liability Remaining Expenditures This Year 2015 Recommended Reserve Funding Level 76, Total Annual Allotment 32, Total Quarterly Allotment 8, Remaining Reserve Fund Allocations 31, Quarterly Allotment (348 Annexed 12.71/lot) 4, Reserve Fund Ending Balance Ideal Reserve Fund Balance (100% Funded) Total Reserve Fund (Deficiency)/Overage Per Ownership Interest (Deficiency)/Overage Total Fund Liability Funded 57, Quarterly Allotment (131 Non-Annexed 9.52/lo 1, , Quarterly Allotment (A & E Union) 2, (18,982.00) Increase Compared to Current Funding Level 1.57% N/A Annual Funding Increase (thereafter) 4.70% 75.07% Projected Special Assessments 0.00 Reserve Study Parameters Development Inspection Date Fiscal Year-Ending (*) Number of Annexed Lots Number of Non-Annexed Lots Reserve Fund Balance as of July 31, 2014 (*) Average Annual Rate of Return (*) Components' Current Total Replacement Cost Components' Future Total Replacement Cost Annual Construction Inflation Index Annual Fund Allotment (*) Total Quarterly Fund Allotment Quarterly Allotment (348 annexed lots) Quarterly Allotment (131 non-annexed lots) Quarterly Allotment (A & E Union) Remaining Reserve Fund Allocations (*) Remaining Interest Earnings Approved Special Assessments (*) Remaining Major Component Expenditures (*) Source: Mario Valenzuela - Authorized Agent None December 31, , % 377, , % 31, , , , , , Year-End Fund Position (based on total replacement costs) Total Reserve Fund (Deficiency)/Overage Per Ownership Interest (Deficiency)/Overage Total Replacement Costs Funded Executive Summary (320,202.00) N/A 15.14% Total reserve funds or actual cash available on July 31, 2014, was $25, with a projected year-end fund balance of $57, This includes any remaining reserve fund allotments and interest earnings along with the deduction of any planned or recommended remaining expenditures this year. Comparing the reserve fund liability based on the wear-out period of all components to estimated year-end available cash suggests a percentage funded position of 75.07%. To be 100% funded, this association would need an ideal reserve fund balance of $76, The estimated current replacement costs of all components listed in this study total $377, with future replacement costs estimated at $666, Future replacement costs use an assumed annual construction inflation index of 3.00%. Recommendations are to increase the 2014, quarterly reserve funding level from $7, to $8, (refer to the recommendations above for annexed lots, non-annexed lots and A & E Union allotment amounts). This represents an increase over present funding levels of 1.57% with 4.70% increases per fiscal year thereafter until a 100% funded position is achieved. If projections forecast any special assessments that may be needed for additional funding, they are listed in the table above titled Recommended Reserve Funding Level. Reserve Funded Position If an association's reserve accounts indicate a liability funded position of 65% or higher, it normally indicates financial stability. However, associations with a reserve fund deficiency does not necessarily indicate a marginal or poor financial condition; unless the deficiency is out of proportion as compared to the development's age. Nevertheless, failure to adopt a long-term savings plan to adequately fund reserve accounts may have a negative impact on the development. Therefore, if funding levels appear not adequate, the board of directors should consider augmenting the reserve accounts by using increased regular budgeted allotments and/or special assessments when establishing annual budgets. Reserve Study Updates This study's funding recommendations could increase or decrease each budget year because of varying factors and assumptions. Recommendations are to review and update this study annually and have a new on-site study conducted every three years. 11/17/2014 2

5 Financial Analysis of Common Area Components Component Inventory / Costs The itemization in this section lists this association s major components, the year installed or fully restored, estimated useful and remaining lives, estimated replacement year, component condition, funding level, estimated quantities, estimated unit costs and estimated current and future costs. Cash Position / Recommended Funding This analysis again lists the association s major components and contains two sections. The first section Current Financial Position lists each component s current replacement cost, current liability based on years in service, the percentage of this liability funded, amount of funds allocated to each component from existing reserve funds and the deficit or overage of each component account. The second section Recommended Fund Allocations establishes the recommended monthly and annual reserve fund allotments for each major component along with the percentages of those reserve fund allotments. Various assumptions and parameters helped establish these recommended allocations. Threshold Funding Cash Flow The projections on this page indicate a reserve cash flow funding method that meets the association s minimum reserve requirements over a 30-year period. However, this funding plan does not attempt to achieve a 100% funded position of the reserve fund s liability. It only funds each year s reserve expenditure requirements without allowing the reserve fund s liability funded position to drop below 15%. The plan incorporates annual allotments, any special assessments, interest earnings, annual component expenditures, estimated ending and ideal ending balances along with the percentage of liability funded. The cash flow chart graphs the difference between the ideal and threshold funding ending balances. Threshold long-term funding is not recommended because of possible inadequately funded reserves that may require deferred maintenance and/or special assessments. Recommended Funding Cash Flow These projections indicate the estimated reserve fund cash flow using the study s recommended funding plan over a 30-year period. This funding plan will eventually achieve a 100% funded position of the reserve fund s liability and maintain this funded position for the remaining period this study covers. The analysis incorporates annual allotments, any special assessments, interest earnings, annual component expenditures, estimated ending and ideal ending balances along with the percentage of liability funded. The cash flow chart graphs the difference between the ideal and recommended funding ending balances. Expenditures in Future Dollars The matrix in this section lists estimated component expenditures per year for a 30-year period. The specified future replacement costs use an assumed construction, inflation index rate. File: Report Date: 11/17/2014 3

6 Component Inventory / Costs Number of Units/Lots: 479 Fiscal Year Ending: Component Description Install Year Est. Useful Life Est. Remain Life Est. Replace Year Condition Funding Level Est. Quantity Est. Unit Cost Current Replace Cost Future Replace Cost STREET Asphalt Replacement (Casa Club Drive) Good 100% 106,884 sf 2.28 sf 243, ,392 Asphalt Surface Treatment, seal coat (1-coat) none N/A 100% 106,884 sf 0.12 sf 12,400 12,772 Curbs/Gutters, concrete (2') Fair-Good 10% 7,124 lf lf 16,000 22,148 Fire Lane Painting N/A N/A 100% 836 lf 1.43 lf 1,200 1,236 Lane Striping, single skip line/markings N/A 100% 3,337 lf 0.48 lf 1,600 1,648 SIGNAGE Development Sign, carved wood (25" x 72") Poor 100% 1 ea 1, ea 1,850 1,906 Misc. Street Signs, metal N/A Good 100% 13 ea ea 1,300 1,647 No Trespassing Sign, carved wood Fair 100% 1 ea ea Speed Limit, metal N/A Good 100% 1 ea ea Speed Limit, carved wood Fair 100% 4 ea ea 1,200 1,236 STREET LIGHTS Concrete Pole w/lantern head (replacement) Fair-Good 30% 10 ea 4, ea 12,000 14,329 Concrete Pole w/lantern head (replacement) Good 30% 1 ea 4, ea 1,200 2,913 Metal Pole, single arm Good 30% 1 ea 3, ea 1,050 2,402 VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex Good 100% 1 ea ea 950 1,277 Antenna Pole (12') Good 100% 1 ea 1, ea 1,700 3,559 Cabinet, stainless steel, NEMA Type 3R, V.I.T Good 100% 1 ea 2, ea 2,400 5,025 Cooling Fans, IEI Good 100% 2 ea ea RFID Reader, Sirit ID4000-Flex Good 100% 1 ea 6, ea 6,000 8,555 Multi-Output Power Supply, Altronix AL600ULM Good 100% 1 ea 1, ea 1,300 1,599 Reader Interface/Controller, VertX V Good 100% 1 ea 1, ea 1,650 2,029 Transponders, Identity Flex TAG Good 100% 100 ea ea 2,500 3,075 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') Good 100% 2 ea ea 800 1,075 Operators, Magnetic Autocontrol MIB Good 100% 2 ea 4, ea 8,000 10,751 Loop Detectors Good 100% 2 ea ea 900 1,210 FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') Fair 100% 161 lf lf 10,050 12,000 Stucco Pillars (1' x 1' x 7') Fair 100% 7 ea ea 2,100 2,508 Painting, fence/pillars Good 100% 1,967 sf 0.97 sf 1,900 2,269 Sidewalks, concrete (268 lf) Poor-Fair 50% 1,072 sf 9.50 sf 5,100 5,253 GUARDHOUSE Building Repairs N/A 100% 1 ls 2, total 2,000 3,025 Canopy, canvas Fair 100% 1 ea 1, ea 1,500 1,545 Computer/Flat Panel Monitor, Dell Good 100% 1 ls total Evaporative Cooler, Champion Cooler WC Good 100% 1 ea 1, ea 1,000 1,469 Fixtures/Misc Fair 100% 1 ls 1, total 1,200 1,433 Floors, linoleum tile Poor 100% 189 sf 5.55 sf 1,050 1,082 Lights, single/double head flood Good 100% 4 ea ea Lights, ceiling/recess Poor-Fair 100% 6 ea ea /17/2014 4

7 Component Inventory / Costs Number of Units/Lots: 479 Fiscal Year Ending: Component Description Install Year Est. Useful Life Est. Remain Life Est. Replace Year Condition Funding Level Est. Quantity Est. Unit Cost Current Replace Cost Future Replace Cost Pass Printer, Zebra GK420T Good 100% 1 ea ea Painting, exterior Good 100% 660 sf 2.27 sf 1,500 1,791 Painting, interior Good 100% 675 sf 2.36 sf 1,600 1,910 Roof, clay tile Fair-Good 100% 225 sf sf 2,250 3,115 LANDSCAPING Irrigation System N/A 100% 1 ls 5, total 5,000 7,790 Landscape Renovations N/A 100% 1 ls 3, total 3,500 4,305 Tree Trim/Remove N/A 100% 1 ls 14, total 14,000 17,218 Totals: 377, ,920 11/17/2014 5

8 Current Financial Position / Recommended Fund Allocations Number of Units/Lots: 479 Fiscal Year Ending: Year-End Reserve Fund Position 2015 Recommended Allocations Component Description Current Replace Cost Component Liability Percent of Liability Funds Allocated (Deficit) or Overage Monthly Allotment Annual Allotment Percent of Allotment STREET Asphalt Replacement (Casa Club Drive) 243,700 9, % 7,317 (2,431) 1, , % Asphalt Surface Treatment, seal coat (1-coat) 12,400 8, % 6,205 (2,061) , % Curbs/Gutters, concrete (2') 16,000 12, % 9,075 (3,014) % Fire Lane Painting 1, % 601 (199) % Lane Striping, single skip line/markings 1,600 1, % 801 (266) % SIGNAGE Development Sign, carved wood (25" x 72") 1,850 1, % 1,349 (448) % Misc. Street Signs, metal 1, % 586 (194) % No Trespassing Sign, carved wood % 219 (73) % Speed Limit, metal % 45 (15) % Speed Limit, carved wood 1,200 1, % 875 (291) % STREET LIGHTS Concrete Pole w/lantern head (replacement) 12,000 10, % 7,657 (2,543) % Concrete Pole w/lantern head (replacement) 1, % 129 (43) % Metal Pole, single arm 1, % 158 (52) % VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex % % Antenna Pole (12') 1, % 213 (71) % Cabinet, stainless steel, NEMA Type 3R, V.I.T. 2, % 300 (100) % Cooling Fans, IEI % 268 (89) % RFID Reader, Sirit ID4000-Flex 6, % % Multi-Output Power Supply, Altronix AL600ULM 1, % 407 (135) % Reader Interface/Controller, VertX V2000 1, % 516 (171) % Transponders, Identity Flex TAG 4 2,500 1, % 782 (260) % VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') % 200 (66) % Operators, Magnetic Autocontrol MIB-30 8,000 2, % 2,002 (665) % Loop Detectors % 225 (75) % FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') 10,050 8, % 6,413 (2,130) % Stucco Pillars (1' x 1' x 7') 2,100 1, % 1,340 (445) % Painting, fence/pillars 1, % 204 (68) % Sidewalks, concrete (268 lf) 5,100 4, % 3,719 (1,235) % GUARDHOUSE Building Repairs 2, % 100 (33) % Canopy, canvas 1,500 1, % 1,051 (349) % Computer/Flat Panel Monitor, Dell % 319 (106) % Evaporative Cooler, Champion Cooler WC37 1, % 100 (33) % Fixtures/Misc. 1,200 1, % 766 (254) % Floors, linoleum tile 1,050 1, % 766 (254) % Lights, single/double head flood % 38 (12) % Lights, ceiling/recess % 656 (218) % 11/17/2014 6

9 Current Financial Position / Recommended Fund Allocations Number of Units/Lots: 479 Fiscal Year Ending: Year-End Reserve Fund Position 2015 Recommended Allocations Component Description Current Replace Cost Component Liability Percent of Liability Funds Allocated (Deficit) or Overage Monthly Allotment Annual Allotment Percent of Allotment Pass Printer, Zebra GK420T % 141 (47) % Painting, exterior 1, % 161 (53) % Painting, interior 1, % 172 (57) % Roof, clay tile 2,250 1, % 1,276 (424) % LANDSCAPING Irrigation System 5, % % Landscape Renovations 3, % % Tree Trim/Remove 14, % , % Totals: 377,350 76, % 57,148 (18,982) 2, , % 11/17/2014 7

10 Threshold Funding Cash Flow Number of Units/Lots: 479 Fiscal Year Ending: Year Annual Allotments Approved Special Assessments Interest Earnings Annual Expenditures Estimated Ending Balance Ideal Ending Balance Liability Funded , ,148 76, % , ,913 62,723 73, % , ,758 98, % , , , , % , ,323 17, , , % , , , , % , ,749 37, , , % , ,685 46, , , % , ,526 1, , , % , ,850 1, , , % , ,193 34, , , % , ,198 25, , , % , ,313 8, , , % , ,617 31, , , % , ,698 30, , , % , ,796 9, , , % , ,134 27, , , % , , , , % , , , , % , ,241 37, , , % , ,353 10, , , % , ,757 32, , , % , ,950 30, , , % , , , , % , , ,589 95, , % , ,005 62,499 86, , % , , , % , ,483 11, , , % , ,965 82, , , % , ,718 5, , , % , ,294 20, , , % 700,000 Ideal Ending Balance Threshold Ending Balance 600, , , , , , /17/2014 8

11 Recommended Funding Cash Flow Number of Units/Lots: 479 Fiscal Year Ending: Year Annual Allotments Projected Special Assessments Interest Earnings Annual Expenditures Estimated Ending Balance Ideal Ending Balance Liability Funded , ,148 76, % , ,913 62,235 73, % , ,281 98, % , , , , % , ,323 17, , , % , , , , % , ,750 37, , , % , ,692 46, , , % , ,538 1, , , % , ,862 1, , , % , ,209 34, , , % , ,224 25, , , % , ,350 8, , , % , ,664 31, , , % , ,760 30, , , % , ,875 9, , , % , ,229 27, , , % , , , , % , , , , % , ,415 37, , , % , ,568 10, , , % , ,015 32, , , % , ,258 30, , , % , , , , % , , , , , % , ,491 62, , , % , , , , % , ,914 11, , , % , ,374 82, , , % , ,112 5, , , % , ,665 20, , , % 700,000 Ideal Ending Balance Recommend Funding Ending Balance 600, , , , , , /17/2014 9

12 Expenditures in Future Dollars Number of Units/Lots: 479 Fiscal Year Ending: Component Description STREET Asphalt Replacement (Casa Club Drive) Asphalt Surface Treatment, seal coat (1-coat) 12,772 13,956 15,250 16,665 Curbs/Gutters, concrete (2') Fire Lane Painting 1,236 1,351 1,476 1,613 Lane Striping, single skip line/markings 1,648 1,801 1,968 2,150 SIGNAGE Development Sign, carved wood (25" x 72") 1,906 Misc. Street Signs, metal 1,647 No Trespassing Sign, carved wood 309 Speed Limit, metal 127 Speed Limit, carved wood 1,236 STREET LIGHTS Concrete Pole w/lantern head (replacement) 14,329 Concrete Pole w/lantern head (replacement) Metal Pole, single arm VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex 1,277 Antenna Pole (12') Cabinet, stainless steel, NEMA Type 3R, V.I.T. Cooling Fans, IEI RFID Reader, Sirit ID4000-Flex Multi-Output Power Supply, Altronix AL600ULM 1,599 Reader Interface/Controller, VertX V2000 2,029 Transponders, Identity Flex TAG 4 3,075 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') 1,075 Operators, Magnetic Autocontrol MIB-30 10,751 Loop Detectors 1,210 FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') 12,000 Stucco Pillars (1' x 1' x 7') 2,508 Painting, fence/pillars 2,269 Sidewalks, concrete (268 lf) 5,253 GUARDHOUSE Building Repairs Canopy, canvas 1,545 Computer/Flat Panel Monitor, Dell 985 Evaporative Cooler, Champion Cooler WC37 Fixtures/Misc. 1,433 Floors, linoleum tile 1,082 11/17/

13 Expenditures in Future Dollars Number of Units/Lots: 479 Fiscal Year Ending: Component Description Lights, single/double head flood 652 Lights, ceiling/recess 927 Pass Printer, Zebra GK420T 896 Painting, exterior 1,791 Painting, interior 1,910 Roof, clay tile LANDSCAPING Irrigation System Landscape Renovations 4,305 Tree Trim/Remove 17,218 Total Future Replacement Cost 27, , ,135 46,920 1,773 1,305 34,740 Estimated Available Reserve Funds(1) 57,148 90,148 96, , , , , , , , ,591 (1) Estimated available funds based on recommended funding plan 11/17/

14 Expenditures in Future Dollars Number of Units/Lots: 479 Component Description Fiscal Year Ending: STREET Asphalt Replacement (Casa Club Drive) Asphalt Surface Treatment, seal coat (1-coat) Curbs/Gutters, concrete (2') Fire Lane Painting Lane Striping, single skip line/markings SIGNAGE Development Sign, carved wood (25" x 72") Misc. Street Signs, metal No Trespassing Sign, carved wood Speed Limit, metal Speed Limit, carved wood STREET LIGHTS Concrete Pole w/lantern head (replacement) Concrete Pole w/lantern head (replacement) Metal Pole, single arm VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex Antenna Pole (12') Cabinet, stainless steel, NEMA Type 3R, V.I.T. 22,148 18,210 19,898 21,743 1,762 1,926 2,104 2,350 2,568 2,806 1,716 Cooling Fans, IEI RFID Reader, Sirit ID4000-Flex Multi-Output Power Supply, Altronix AL600ULM Reader Interface/Controller, VertX V2000 Transponders, Identity Flex TAG 4 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') Operators, Magnetic Autocontrol MIB-30 Loop Detectors FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') Stucco Pillars (1' x 1' x 7') 8, ,280 2,893 4,384 Painting, fence/pillars Sidewalks, concrete (268 lf) GUARDHOUSE Building Repairs Canopy, canvas Computer/Flat Panel Monitor, Dell Evaporative Cooler, Champion Cooler WC37 Fixtures/Misc. Floors, linoleum tile 2,790 3,432 3,025 2,407 1,324 1,469 11/17/

15 Expenditures in Future Dollars Number of Units/Lots: 479 Component Description Fiscal Year Ending: Lights, single/double head flood Lights, ceiling/recess Pass Printer, Zebra GK420T Painting, exterior Painting, interior Roof, clay tile LANDSCAPING Irrigation System Landscape Renovations Tree Trim/Remove 3, ,134 2,203 2,709 2,350 2,890 7,790 5,294 6,511 21,176 26,044 Total Future Replacement Cost Estimated Available Reserve Funds(1) 25,262 8,555 31,133 30,630 9,114 27,601 37,087 10,746 32, , , , , , , , , , , ,364 (1) Estimated available funds based on recommended funding plan 11/17/

16 Expenditures in Future Dollars Number of Units/Lots: 479 Component Description Fiscal Year Ending: STREET Asphalt Replacement (Casa Club Drive) Asphalt Surface Treatment, seal coat (1-coat) Curbs/Gutters, concrete (2') Fire Lane Painting Lane Striping, single skip line/markings SIGNAGE Development Sign, carved wood (25" x 72") Misc. Street Signs, metal No Trespassing Sign, carved wood Speed Limit, metal Speed Limit, carved wood STREET LIGHTS Concrete Pole w/lantern head (replacement) Concrete Pole w/lantern head (replacement) Metal Pole, single arm VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex Antenna Pole (12') Cabinet, stainless steel, NEMA Type 3R, V.I.T. Cooling Fans, IEI RFID Reader, Sirit ID4000-Flex 495,392 23,760 25,963 28,370 2,299 2,513 2,746 3,066 3,350 3,661 2, ,913 2,402 2,306 3,559 5, ,214 12,197 Multi-Output Power Supply, Altronix AL600ULM Reader Interface/Controller, VertX V2000 Transponders, Identity Flex TAG 4 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') Operators, Magnetic Autocontrol MIB-30 Loop Detectors FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') Stucco Pillars (1' x 1' x 7') Painting, fence/pillars Sidewalks, concrete (268 lf) GUARDHOUSE Building Repairs Canopy, canvas Computer/Flat Panel Monitor, Dell Evaporative Cooler, Champion Cooler WC37 Fixtures/Misc. Floors, linoleum tile 1,675 16,750 1,884 1,780 4,220 2,288 4,713 11/17/

17 Expenditures in Future Dollars Number of Units/Lots: 479 Component Description Fiscal Year Ending: Lights, single/double head flood Lights, ceiling/recess Pass Printer, Zebra GK420T Painting, exterior Painting, interior Roof, clay tile LANDSCAPING Irrigation System Landscape Renovations Tree Trim/Remove 1,178 1,437 1,820 3,332 3,554 12,136 8,008 32,031 Total Future Replacement Cost Estimated Available Reserve Funds(1) 30, ,589 62,499 11,106 82,709 5,891 20, , , , , , , , , ,425 (1) Estimated available funds based on recommended funding plan 11/17/

18 N o t e s File: Report Date: 11/17/

19 A s s e s s m e n t a n d R e s e r v e s D i s c l o s u r e S u m m a r y Summary Information for Homeowners Pursuant to California Civil Codes Sections 5300, 5565 and 5570, the board of directors must include a summary of the association s reserve fund requirements along with various assessment disclosures with the Pro Forma Operating Budget. The distribution of the Pro Forma Operating Budget must occur not less than thirty (30) days or more than ninety (90) days before the beginning of the association's next fiscal year. To help the board of directors comply with these state mandated reserve account and assessment disclosures, we have included a homeowner summary entitled Assessment and Reserve Funding Disclosure Summary on the following pages. Most of the required disclosure information is included in the summary. However, if the study indicates that the present funding level will not be sufficient enough at the end of each fiscal year to meet the association s obligations for major component repairs and replacement for the next thirty (30) years, the board of directors must decide whether to adopt the study s recommended funding plan and/or use borrowing or special assessments to help offset any inadequate funding levels. The board s final decision must be included on page 2 of the summary before distribution to the homeowners. File: Report Date: 11/17/

20 Assessment and Reserve Funding Disclosure Summary Fiscal Year Ending: December 31, 2014 Bakersfield, CA Summary Information Based On A Component Calculation Update Report Dated November 17, 2014 Pursuant to California Civil Code Sections 5300, 5565 and 5570 of the Davis-Stirling Common Interest Development Act, the Board is providing the following assessment and reserve fund summary information to the Association Members. If an Association Member would like additional information, the previously complete Reserve Study Analysis is on file with the Association records. Information contained in a Component Calculation Update Report provided by Walla Services to update this association's last Reserve Study provided some of the necessary information for this assessment and reserve fund summary. The report made changes to each component's current replacement cost and estimated remaining life used in the last Reserve Study and did not involve an on-site inspection of this development's major components. However, this update provides the necessary information required by state law as a cost effective alternative when on-site inspections are not required. Sources used for estimating current replacement costs was from the Saylor Construction Cost Estimating System, certain contractor bids and/or actual costs of any recently completed projects. The report's reserve funding requirements and recommendations were based on a modified straight-line calculation method. This calculation method starts by multiplying the number of years a component has been in service by the component's current replacement cost divided by the component's estimated useful life. This calculation is then adjusted each year by the following long-term assumptions; interest earnings of present and projected fund balances, estimated component replacement years and future component replacement costs based on an average construction industry inflation factor. The report also projected estimated reserve cash flows over the next thirty (30) years based on both the report's recommended funding plan and current funding levels. Current Regular and Approved Special Assessments (All regular and special assessments vary by ownership interest size or type.) Quarterly Regular Assessment Per Ownership Interest 348 Annexed Lots (96.15) Non-Annexed Lots (71.81) Portion of Regular Assessment Allocated to Reserve Fund Annexed Lots (12.51) - Non-Annexed Lots (9.37) Approved Special Assessments Per Ownership Interest (refer to page 2) $0.00 Current Reserve Fund Balance/Interest and Inflation Rates Total Reserve Fund Balance on July 31, 2014 $25,000 Average Long-Term Annual Rate of Return on Reserve Funds 1.05% Long-Term Annual Construction Index Inflation Rate 3.00% Estimated Year-End Reserve Fund Position on December 31, 2014 Total Major Component Replacement Cost $377,350 Total Cash Reserve Funds Set Aside $57,148 Based on Component Total Replacement Cost Total Reserve Fund (Deficiency) or Overage ($320,202) Reserve Fund (Deficiency) or Overage Based on 70.0% of Total Annexed Lots (502.39/lot - Non-Annexed Lots (376.42/lot) Percentage Funded Comparing Estimated Cash Set Aside to Total Replacement Cost 15.14% Based on Component Liability or "Wear-Out" Period ("Wear-Out" Period refers to the total years that components have been in service.) Total Reserve Fund Liability $76,130 Total Reserve Fund (Deficiency) or Overage ($18,982) Reserve Fund (Deficiency) or Overage Per Ownership Interest Annexed Lots (29.78/lot - Non-Annexed Lots (22.31/lot) Percentage Funded Comparing Reserve Cash Funds Set Aside to Component "Wear-Out" Period 75.07% Recommended Reserve Fund Allocations/Special Assessments Quarterly Reserve Fund Allocation Per Ownership Interest Percentage of Increase or (-Decrease) From Current Allocation Annual Allocation Percentage Increase (thereafter) Annexed Lots (12.71) - Non-Annexed Lots (9.52) 1.57% 4.70% Projected Special Assessments Per Ownership Interest (refer to page 2) $0.00 Report Date: 11/17/2014 Page 1 of 4 Walla Services Clovis, CA

21 Assessment and Reserve Funding Disclosure Summary Fiscal Year Ending: December 31, 2014 Bakersfield, CA Reserve Funds Used For Operating Expenses Due Date Amount Due Reserves $0.00 Purpose of Transfer Loans From Outside Sources Original Loan Amount Annual Interest Loan Amount Outstanding Payment Rate Payoff Date $0.00 $0.00 $ % Lending Institution Purpose of Loan Approved Special Assessments Assessment Due Date Amount Per Ownership Interest Per Year $0.00 Purpose of Assessment $0.00 Total of Assessments Major Components Listed in Study and Not Funded or Deferred for Repairs and/or Replacement Major Component None Useful Remaining Life (yrs) Reason Not Funded Currently Projected Reserve Account Balances 1) Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association's repair and replacement obligations of major components during the next thirty (30) years? YES NO 2) If the answer to #1 above is NO, what additional assessments or other contributions to the reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the board or members? Year of Assessment Estimated Amount Per Ownership Interest $0.00 Purpose For Additional Funds $0.00 Total of Assessments 5-Year Projected Reserve Fund Position Year Ending Required Reserve Funds Threshold Funding Study's Funding Plan Notes Approved Funding Plan Fund Balance Percentage Funded Fund Balance Percentage Funded Fund Balance Percentage Funded 2015 $73,435 $62, % $62, % 2016 $98,729 $96, % $96, % 2017 $126,021 $126, % $126, % 2018 $137,754 $137, % $137, % 2019 $166,714 $166, % $166, % Report Date: 11/17/2014 Page 2 of 4 Walla Services Clovis, CA

22 Assessment and Reserve Funding Disclosure Summary Fiscal Year Ending: December 31, 2014 Bakersfield, CA Component Inventory From Reserve Study Components Est. Useful Present Est. Est. Quantity Current Future Life (yrs) Life (yrs) Remaining Replacement Replacement Life (yrs) Cost Cost STREET Asphalt Replacement (Casa Club Drive) ,884 sf $243,700 $495,392 Asphalt Surface Treatment, seal coat (1-coat) 3 N/A 1 106,884 sf $12,400 $12,772 Curbs/Gutters, concrete (2') ,124 lf $16,000 $22,148 Fire Lane Painting 3 N/A lf $1,200 $1,236 Lane Striping, single skip line/markings ,337 lf $1,600 $1,648 SIGNAGE Development Sign, carved wood (25" x 72") ea $1,850 $1,906 Misc. Street Signs, metal 20 N/A 8 13 ea $1,300 $1,647 No Trespassing Sign, carved wood ea $300 $309 Speed Limit, metal 20 N/A 8 1 ea $100 $127 Speed Limit, carved wood ea $1,200 $1,236 STREET LIGHTS Concrete Pole w/lantern head (replacement) ea $12,000 $14,329 Concrete Pole w/lantern head (replacement) ea $1,200 $2,913 Metal Pole, single arm ea $1,050 $2,402 VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex ea $950 $1,277 Antenna Pole (12') ea $1,700 $3,559 Cabinet, stainless steel, NEMA Type 3R, V.I.T ea $2,400 $5,025 Cooling Fans, IEI ea $500 $530 RFID Reader, Sirit ID4000-Flex ea $6,000 $8,555 Multi-Output Power Supply, Altronix AL600ULM ea $1,300 $1,599 Reader Interface/Controller, VertX V ea $1,650 $2,029 Transponders, Identity Flex TAG ea $2,500 $3,075 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') ea $800 $1,075 Operators, Magnetic Autocontrol MIB ea $8,000 $10,751 Loop Detectors ea $900 $1,210 FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') lf $10,050 $12,000 Stucco Pillars (1' x 1' x 7') ea $2,100 $2,508 Painting, fence/pillars ,967 sf $1,900 $2,269 Sidewalks, concrete (268 lf) ,072 sf $5,100 $5,253 GUARDHOUSE Building Repairs ls $2,000 $3,025 Canopy, canvas ea $1,500 $1,545 Computer/Flat Panel Monitor, Dell ls $850 $985 Evaporative Cooler, Champion Cooler WC ea $1,000 $1,469 Fixtures/Misc ls $1,200 $1,433 Floors, linoleum tile sf $1,050 $1,082 Lights, single/double head flood ea $500 $652 Lights, ceiling/recess ea $900 $927 Pass Printer, Zebra GK420T ea $750 $896 Painting, exterior sf $1,500 $1,791 Report Date: 11/17/2014 Page 3 of 4 Walla Services Clovis, CA

23 Component Inventory From Reserve Study (cont.) Components Est. Useful Present Est. Est. Quantity Current Future Life (yrs) Life (yrs) Remaining Replacement Replacement Life (yrs) Cost Cost Painting, interior sf $1,600 $1,910 Roof, clay tile sf $2,250 $3,115 LANDSCAPING Irrigation System ls $5,000 $7,790 Landscape Renovations ls $3,500 $4,305 Tree Trim/Remove ls $14,000 $17,218 Totals: $377,350 $666,920 NOTE: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was 1.05% per year and the assumed long-term inflation rate to be applied to major component repair and replacement costs was 3.00% per year. Report Date: 11/17/2014 Page 4 of 4 Walla Services Clovis, CA