Update With Site-Visit Reserve Study

Transcription

1 Washington Office Corporate Office 505 South 336 th St., Ste 620 Calabasas, CA Federal Way, WA Regional Offices TEL 253/ Phoenix, AZ FAX 253/ San Francisco, CA Denver, CO Honolulu, HI Las Vegas, NV Miami, FL Update With Site-Visit Reserve Study Remington Kent, WA Report #: For Period Beginning: January 1, 2016 Expires: December 31, 2016 Date Prepared: April 13, 2015

2 Hello, and welcome to your Reserve Study! W e don t want you to be surprised. This Report is designed to help you anticipate, and prepare for, the major common area expenses your association will face. Inside you will find: 1) The Reserve Component List (the Scope and Schedule of your Reserve projects) telling you what your association is Reserving for, what condition they are in now, and what they ll cost to replace. 2) An Evaluation of your current Reserve Fund Size and Strength (Percent Funded). This tells you your financial starting point, revealing your risk of deferred maintenance and special assessments. 3) A Recommended Multi-Year Reserve Funding Plan, answering the question What do we do now? More Questions? Visit our website at or call us at: 253/ Relax, it s from Association Reserves WA, LLC

3 Table of Contents 3- Minute Executive Summary...i Reserve Study Summary...i Reserve Component List Table 1...ii Introduction, Objectives, and Methodology...1 Which Physical Assets are Funded by Reserves?...2 How do we establish Useful Life and Remaining Useful Life estimates?...2 How do we establish Current Repair/Replacement Cost Estimates?...2 How much Reserves are enough?...3 How much should we contribute?...4 What is our Recommended Funding Goal?...4 Projected Expenses...6 Expense Graph Figure Reserve Fund Status & Recommended Funding Plan...7 Funding Plan Graph Figure Cash Flow Graph Figure % Funded Graph Figure Table Descriptions...9 Reserve Component List Detail Table Contribution & Fund Breakdown Table Component Significance Table Year Reserve Plan Summary Table Year Reserve Plan Year by Year Detail Table Accuracy, Limitations, and Disclosures...20 Terms and Definitions...21 Component Details... Appendix Association Reserves WA, LLC

4 3- Minute Executive Summary Association: Remington #: Location: Kent, WA # of Units: 264 Report Period: January 1, 2016 through December 31, 2016 Findings/Recommendations as-of 1/1/2016: Projected Starting Reserve Balance:...$128,736 Current Fully Funded Reserve Balance:...$74,563 Average Reserve Deficit (Surplus) Per Unit:... $(205) 100% 2016 Monthly Full Funding Contributions:...$980 70% 2016 Monthly Threshold Funding Contributions:...$900 Baseline contributions (min to keep Reserves above ):...$735 Recommended 2016 Special Assessment for Reserves:... Most Recent Budgeted Reserve Contribution Rate:...$980 Economic Assumptions: Net Annual After Tax Interest Earnings Accruing to Reserves % Annual Inflation Rate % This is an Update With-Site-Visit Reserve Study, based on our site inspection on April 3, 2015 and meets or exceeds all requirements of the RCW. This study was prepared by, or under the supervision of a credentialed Reserve Specialist (RS ). Your Reserve Fund is currently 173% Funded. This means the association s special assessment & deferred maintenance risk is currently low. The objective of your multi-year Funding Plan is to fund your Reserves to a level where you will enjoy a low risk of such Reserve cash flow problems. Based on this starting point, your anticipated future expenses, our recommendation is to keep your Reserve contributions within the 70% to 100% level as noted above. 100% Full and 70% contribution rates are designed to achieve these funding objectives by the end of our 30-year report scope. While the association is currently 173% funded, maintaining current reserve contribution levels is required to maintain a fully funded balance over time. See photo appendix or component details; the basis of our assumptions. Association Reserves WA, LLC i

5 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate 145 Vinyl Rail Fencing - Replace $82, Entry Signs - Replace 20 7 $16, Brick Monuments - Clean/Repair/Seal 10 0 $6, Brick Monuments - Repair/Replace $33, Mailbox Stands (2012) - Replace $7, Mailbox Stands (2013/2014) - Rplce $12, Mailbox Stands (2015) - Replace $16, Steel Gates - Repair/Replace $4, Play/Park Eqpt. - Replace/Refurbish 15 8 $32, Benches, Picnic Eqpt - Rpr/Replace 15 8 $4, Sports Equipment - Repair/Replace 30 8 $10, Total Funded Components Note 1: a Useful Life of N/A means a one-time expense, not expected to repeat. Note 2: Yellow highlighted line items are expected to require attention in the initial year, green highlighted items are expected to occur within the first five years. Cross reference component numbers with photographic inventory appendix. A reserve-funding threshold of 1% of the annual operating budget is suggested for your association (expenses below this level expected to be factored within operating budget). Association Reserves WA, LLC ii

6 Assoc Introduction A Reserve Study is the art and science of anticipating, and preparing for, an association s major common area repair and replacement expenses. Partially art, because in this field we are making projections about the future. Partially science, because our work is a combination of research and welldefined computations, following consistent National Reserve Study Standard principles. The foundation of this and every Reserve Study is your Reserve Component List (what you are reserving for). This is because the Reserve Component List defines the scope and schedule of all your anticipated upcoming Reserve projects. Based on that List and your starting balance, we calculate the association s Reserve Fund Strength (reported in terms of Percent Funded ). Then we compute a Reserve Funding Plan to provide for the Reserve needs of the association. These form the three results of your Reserve Study. Reserve contributions are not for the future. Reserve contributions are designed to offset the ongoing, daily deterioration of your Reserve assets. Done well, a stable, budgeted Reserve Funding Plan will collect sufficient funds from the owners who enjoyed the use of those assets, so the association is financially prepared for the irregular expenditures scattered through future years when those projects eventually require replacement. Methodology For this Update With-Site-Visit Reserve Study, we started with a review of your prior Reserve Study, then looked into recent Reserve expenditures, evaluated how expenditures are handled (ongoing maintenance vs Reserves), and researched any well-established association precedents. We performed an on-site inspection to evaluate your common areas, updating and adjusting your Reserve Component List as appropriate. Association Reserves WA, LLC. 1

7 Assoc Which Physical Assets are Funded by Reserves? There is a national-standard four-part test to determine which expenses should appear in your Reserve Component List. First, it must be a common area maintenance responsibility. Second, the component must have a limited life. Third, the remaining life must be predictable (or it by definition is a surprise which cannot be accurately anticipated). Fourth, the component must be above a minimum threshold cost (often between.5% and 1% of an association s total budget). This limits Reserve Components to major, predictable expenses. Within this framework, it is inappropriate to include lifetime components, unpredictable expenses (such as damage due to fire, flood, or earthquake), and expenses more appropriately handled from the Operational Budget or as an insured loss. How do we establish Useful Life and Remaining Useful Life estimates? 1) Visual Inspection (observed wear and age) 2) Association Reserves database of experience 3) Client History (install dates & previous life cycle information) 4) Vendor Evaluation and Recommendation How do we establish Current Repair/Replacement Cost Estimates? In this order 1) Actual client cost history, or current proposals 2) Comparison to Association Reserves database of work done at similar associations 3) Vendor Recommendations 4) Reliable National Industry cost estimating guidebooks Association Reserves WA, LLC. 2

8 Assoc How much Reserves are enough? Reserve adequacy is not measured in cash terms. Reserve adequacy is found when the amount of current Reserve cash is compared to Reserve component deterioration (the needs of the association). Having enough means the association can execute its projects in a timely manner with existing Reserve funds. Not having enough typically creates deferred maintenance or special assessments. Adequacy is measured in a two-step process: 1) Calculate the value of deterioration at the association (called Fully Funded Balance, or FFB). 2) Compare that to the Reserve Fund Balance, and express as a percentage. Each year, the value of deterioration at the association changes. When there is more deterioration (as components approach the time they need to be replaced), there should be more cash to offset that deterioration and prepare for the expenditure. Conversely, the value of deterioration shrinks after projects are accomplished. The value of deterioration (the FFB) changes each year, and is a moving but predictable target. There is high risk of special assessments and deferred maintenance when the Percent Funded is weak, below 30%. Approximately 30% of all associations are in this high risk range. While the 100% point is Ideal (indicating Reserve cash is equal to the value of deterioration), a Reserve Fund in the 70% -130% range is considered strong (low risk of special assessment). Measuring your Reserves by Percent Funded tells how well prepared your association is for upcoming Reserve expenses. New buyers should be very aware of this important disclosure! Association Reserves WA, LLC. 3

9 Assoc How much should we contribute? According to National Reserve Study Standards, there are four Funding Principles to balance in developing your Reserve Funding Plan. Our first objective is to design a plan that provides you with sufficient cash to perform your Reserve projects on time. Second, a stable contribution is desirable because it keeps these naturally irregular expenses from unsettling the budget. Reserve contributions that are evenly distributed over current and future owners enable each owner to pay their fair share of the association s Reserve expenses over the years. And finally, we develop a plan that is fiscally responsible and safe for Boardmembers to recommend to their association. Remember, it is the Board s job to provide for the ongoing care of the common areas. Boardmembers invite liability exposure when Reserve contributions are inadequate to offset ongoing common area deterioration. What is our Recommended Funding Goal? Maintaining the Reserve Fund at a level equal to the value of deterioration is called Full Funding (100% Funded). As each asset ages and becomes used up, the Reserve Fund grows proportionally. This is simple, responsible, and our recommendation. Evidence shows that associations in the % range enjoy a low risk of special assessments or deferred maintenance. Allowing the Reserves to fall close to zero, but not below zero, is called Baseline Funding. Doing so allows the Reserve Fund to drop into the 0-30% range, where there is a high risk of special assessments & deferred maintenance. Since Baseline Funding still provides for the timely execution of all Reserve projects, and only the margin of safety is different, Baseline Funding contributions average only 10% - 15% less than Full Funding contributions. Threshold Funding is the title of all other Cash or Percent Funded objectives between Baseline Funding and Full Funding. Association Reserves WA, LLC. 4

10 Assoc Site Inspection Notes During our site visit on April 3, 2015, we started the site inspection beginning with the monument signs, moving next to the community park area and BPA trail easement. We visually inspected all visible common areas while compiling a photographic inventory, noting: current condition, make & model information where appropriate, apparent levels of care and maintenance, exposure to weather elements and other factors that may affect the components useful life. During our site inspection we noted that the white split rail fencing at the monument sign areas had been replaced with vinyl, and additional mailbox structures had been replaced since our last site visit. Association Reserves WA, LLC. 5

11 Assoc Projected Expenses While this Reserve Study looks forward 30 years, we have no expectation that all these expenses will all take place as anticipated. This Reserve Study needs to be updated annually because we expect the timing of these expenses to shift and the size of these expenses to change. We do feel more certain of the timing and cost of near-term expenses than expenses many years away. Your first five years of projected Reserve expenses total $6,525. Adding the next five years, your first ten years of projected Reserve expenses are $87,887. Please be aware of your near-term expenses, which we are able to project more accurately than the more distant projections. The figure below summarizes the projected future expenses at your association as defined by your Reserve Component List. A summary of these expenses are shown in Table 5, while details of the projects that make up these expenses are shown in Table 6. Annual Reserve Expenses $250,000 $200,000 $150,000 $100,000 $50, Years Figure 1 Association Reserves WA, LLC. 6

12 Assoc Reserve Fund Status The starting point for our financial analysis is your Reserve Fund balance, projected to be $128,736 as-of the start of your Fiscal Year on January 1, As of January 1, 2016, your Fully Funded Balance is computed to be $74,563 (see Table 3). This figure represents the deteriorated value of your common area components. Comparing your Reserve Balance to your Fully Funded Balance indicates your Reserves are 173% Funded. Across the country under 1% of associations in this range experience special assessments or deferred maintenance. Recommended Funding Plan Based on your current Percent Funded and your near-term and long-term Reserve needs, we are recommending budgeted contributions of $980/month this Fiscal Year The overall 30-yr plan, in perspective, is shown below. This same information is shown numerically in both Table 5 and Table 6. Annual Reserve Funding Recommended Alternate (Minimum) Current Budget $30,000 $25,000 $20,000 $15,000 $10,000 $5, Years Figure 2 Association Reserves WA, LLC. 7

13 Assoc The following chart shows your Reserve balance under our recommended Full Funding Plan, an alternate Baseline Funding Plan, and at your current budgeted contribution rate, compared to your always-changing Fully Funded Balance target. Target Fully Funded Balance 30-Yr Cash Flow Recommended Funding Pla n Alternate (Minimum) Current Budget $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50, Years Figure 3 This figure shows this same information, plotted on a Percent Funded scale. Recommended Funding Plan Percent Funded Alternate (Minimum) Funding Plan Current Budget 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% Years Figure 4 Association Reserves WA, LLC. 8

14 Assoc Table Descriptions The tabular information in this Report is broken down into six tables. Table 1 is a summary of your Reserve Components (your Reserve Component List), the information found in Table 2. Table 2 is your Reserve Component List, which forms the foundation of this Reserve Study. This table represents the information from which all other tables are derived. Table 3 shows the calculation of your Fully Funded Balance, the measure of your current Reserve component deterioration. For each component, the Fully Funded Balance is the fraction of life used up multiplied by its estimated Current Replacement Cost. Table 4 shows the significance of each component to Reserve needs of the association, helping you see which components have more (or less) influence than others on your total Reserve contribution rate. The deterioration cost/yr of each component is calculated by dividing the estimated Current Replacement Cost by Useful Life, then that component s percentage of the total is displayed. Table 5: This table provides a one-page 30-year summary of the cash flowing into and out of the Reserve Fund, with a display of the Fully Funded Balance, Percent Funded, and special assessment risk for each year. Table 6: This table shows the cash flow detail for the next 30 years. This table makes it possible to see which components are projected to require repair or replacement each year, and the size of those individual expenses. Association Reserves WA, LLC. 9

15 Table 2: Reserve Component List Detail Rem. # Useful Useful Life Life [ --- Current Cost Estimate --- ] Best Case Worst Case Component Quantity 145 Vinyl Rail Fencing - Replace ~4,000 LF, 4' high vinyl $72,000 $92, Entry Signs - Replace (6) sandblasted wood 20 7 $13,200 $19, Brick Monuments - Clean/Repair/Seal (6) brick monuments 10 0 $5,250 $7, Brick Monuments - Repair/Replace (6) brick monuments $27,000 $39, Mailbox Stands (2012) - Replace (9) wood stands $6,300 $8, Mailbox Stands (2013/2014) - Rplce (15) wood stands $10,500 $13, Mailbox Stands (2015) - Replace (21) wood stands $14,700 $18, Steel Gates - Repair/Replace (6) steel gates $3,300 $5, Play/Park Eqpt. - Replace/Refurbish (4) assorted pieces 15 8 $27,300 $38, Benches, Picnic Eqpt - Rpr/Replace (4) benches, (2) tables 15 8 $4,100 $5, Sports Equipment - Repair/Replace (1) backstop, (2) goals 30 8 $8,200 $13, Total Funded Components Association Reserves WA, LLC. 10

16 Table 3: Fully Funded Balance Current Fully Cost # Component Effective Estimate X Age Useful / Life Funded = Balance 145 Vinyl Rail Fencing - Replace $82,000 X 3 / 30 = $8, Entry Signs - Replace $16,200 X 13 / 20 = $10, Brick Monuments - Clean/Repair/Seal 202 Brick Monuments - Repair/Replace 205 Mailbox Stands (2012) - Replace 206 Mailbox Stands (2013/2014) - Rplce 207 Mailbox Stands (2015) - Replace 250 Steel Gates - Repair/Replace 340 Play/Park Eqpt. - Replace/Refurbish $6,525 X 10 / 10 = $6,525 $33,000 X 23 / 40 = $18,975 $7,200 X 4 / 20 = $1,440 $12,000 X 3 / 20 = $1,800 $16,800 X 1 / 20 = $840 $4,200 X 5 / 30 = $700 $32,750 X 7 / 15 = $15,283 Benches, Picnic Eqpt - Rpr/Replace $4,800 X 7 / 15 = $2,240 Sports Equipment - Repair/Replace $10,950 X 22 / 30 = $8,030 $74,563 Association Reserves WA, LLC. 11

17 Table 4: Component Significance Current # Useful Cost Deterioration Deterioration Life Estimate Cost/yr Significance Component 145 Vinyl Rail Fencing - Replace 30 $82,000 $2, % 200 Entry Signs - Replace 20 $16,200 $ % 201 Brick Monuments - Clean/Repair/Seal 10 $6,525 $ % 202 Brick Monuments - Repair/Replace 40 $33,000 $ % 205 Mailbox Stands (2012) - Replace 20 $7,200 $ % 206 Mailbox Stands (2013/2014) - Rplce 20 $12,000 $ % 207 Mailbox Stands (2015) - Replace 20 $16,800 $ % 250 Steel Gates - Repair/Replace 30 $4,200 $ % 340 Play/Park Eqpt. - Replace/Refurbish 15 $32,750 $2, % 346 Benches, Picnic Eqpt - Rpr/Replace 15 $4,800 $ % 350 Sports Equipment - Repair/Replace 30 $10,950 $ % $9, % 11 Total Funded Components Association Reserves WA, LLC. 12

18 Table 5: 30-Year Reserve Plan Summary Fiscal Year Start: /01/16 Interest: Reserve Fund Strength Calculations 1.0% Inflation: 3.0% Projected Reserve Balance Changes (All values as of Fiscal Year Start Date) Year Starting Reserve Balance Fully Funded Balance Percent Funded Special Assmt Risk Reserve Contribs. Loans or Special Assmts Interest Income Reserve Expenses $128,736 $135,291 $148,755 $162,648 $176,980 $191,763 $207,009 $222,731 $218,918 $173,681 $190,082 $198,191 $215,557 $233,469 $251,943 $270,992 $290,633 $299,268 $245,270 $265,910 $257,591 $267,402 $289,616 $312,527 $261,671 $285,280 $300,796 $325,826 $132,414 $156,831 $74,563 $80,204 $93,037 $106,569 $120,829 $135,849 $151,661 $168,299 $165,278 $119,779 $136,582 $145,253 $163,625 $182,968 $203,325 $224,738 $247,253 $259,016 $206,911 $230,354 $224,674 $237,561 $263,522 $290,826 $243,200 $271,076 $291,348 $321,922 $129,394 $156, % 168.7% 159.9% 152.6% 146.5% 141.2% 136.5% 132.3% 132.5% 145.0% 139.2% 136.4% 131.7% 127.6% 123.9% 120.6% 117.5% 115.5% 118.5% 115.4% 114.7% 112.6% 109.9% 107.5% 107.6% 105.2% 103.2% 101.2% 102.3% 100.3% $11,760 $12,045 $12,336 $12,635 $12,940 $13,254 $13,574 $13,903 $14,239 $14,584 $14,937 $15,298 $15,668 $16,048 $16,436 $16,834 $17,241 $17,658 $18,086 $18,523 $18,972 $19,431 $19,901 $20,382 $20,876 $21,381 $21,898 $22,428 $22,971 $23,527 $1,320 $1,420 $1,556 $1,697 $1,843 $1,993 $2,148 $2,207 $1,962 $1,818 $1,941 $2,068 $2,244 $2,426 $2,614 $2,807 $2,948 $2,722 $2,555 $2,616 $2,624 $2,784 $3,009 $2,870 $2,734 $2,929 $3,132 $2,290 $1,446 $1,694 $6,525 $19,924 $61,438 $8,769 $11,554 $74,378 $29,459 $11,785 $74,108 $8,794 $218,131 Association Reserves WA, LLC. 13

19 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Starting Reserve Balance Annual Reserve Contribution Recommended Special Assessments Interest Earnings Total Income # $128,736 $135,291 $148,755 $162,648 $176,980 $11,760 $12,045 $12,336 $12,635 $12,940 $1,320 $1,420 $1,556 $1,697 $1,843 $141,816 $148,755 $162,648 $176,980 $191,763 Component 145 Vinyl Rail Fencing - Replace 200 Entry Signs - Replace 201 Brick Monuments - Clean/Repair/Seal $6, Brick Monuments - Repair/Replace 205 Mailbox Stands (2012) - Replace 206 Mailbox Stands (2013/2014) - Rplce 207 Mailbox Stands (2015) - Replace 250 Steel Gates - Repair/Replace 340 Play/Park Eqpt. - Replace/Refurbish 346 Benches, Picnic Eqpt - Rpr/Replace 350 Sports Equipment - Repair/Replace $6,525 $135,291 $148,755 $162,648 $176,980 $191,763 Total Expenses Ending Reserve Balance: Association Reserves WA, LLC. 14

20 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Starting Reserve Balance Annual Reserve Contribution Recommended Special Assessments Interest Earnings Total Income # $191,763 $207,009 $222,731 $218,918 $173,681 $13,254 $13,574 $13,903 $14,239 $14,584 $1,993 $2,148 $2,207 $1,962 $1,818 $207,009 $222,731 $238,842 $235,119 $190,082 Component 145 Vinyl Rail Fencing - Replace 200 Entry Signs - Replace $19, Brick Monuments - Clean/Repair/Seal 202 Brick Monuments - Repair/Replace 205 Mailbox Stands (2012) - Replace 206 Mailbox Stands (2013/2014) - Rplce 207 Mailbox Stands (2015) - Replace 250 Steel Gates - Repair/Replace 340 Play/Park Eqpt. - Replace/Refurbish $41, Benches, Picnic Eqpt - Rpr/Replace $6, Sports Equipment - Repair/Replace $13,871 Total Expenses $19,924 $61,438 $207,009 $222,731 $218,918 $173,681 $190,082 Ending Reserve Balance: Association Reserves WA, LLC. 15

21 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Starting Reserve Balance Annual Reserve Contribution Recommended Special Assessments Interest Earnings Total Income # $190,082 $198,191 $215,557 $233,469 $251,943 $14,937 $15,298 $15,668 $16,048 $16,436 $1,941 $2,068 $2,244 $2,426 $2,614 $206,960 $215,557 $233,469 $251,943 $270,992 Component 145 Vinyl Rail Fencing - Replace 200 Entry Signs - Replace 201 Brick Monuments - Clean/Repair/Seal $8, Brick Monuments - Repair/Replace 205 Mailbox Stands (2012) - Replace 206 Mailbox Stands (2013/2014) - Rplce 207 Mailbox Stands (2015) - Replace 250 Steel Gates - Repair/Replace 340 Play/Park Eqpt. - Replace/Refurbish 346 Benches, Picnic Eqpt - Rpr/Replace 350 Sports Equipment - Repair/Replace $8,769 $198,191 $215,557 $233,469 $251,943 $270,992 Total Expenses Ending Reserve Balance: Association Reserves WA, LLC. 16

22 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Starting Reserve Balance Annual Reserve Contribution Recommended Special Assessments Interest Earnings Total Income # $270,992 $290,633 $299,268 $245,270 $265,910 $16,834 $17,241 $17,658 $18,086 $18,523 $2,807 $2,948 $2,722 $2,555 $2,616 $290,633 $310,822 $319,648 $265,910 $287,050 Component 145 Vinyl Rail Fencing - Replace 200 Entry Signs - Replace 201 Brick Monuments - Clean/Repair/Seal 202 Brick Monuments - Repair/Replace $54, Mailbox Stands (2012) - Replace $11, Mailbox Stands (2013/2014) - Rplce $19, Mailbox Stands (2015) - Replace $29, Steel Gates - Repair/Replace 340 Play/Park Eqpt. - Replace/Refurbish 346 Benches, Picnic Eqpt - Rpr/Replace 350 Sports Equipment - Repair/Replace Total Expenses $11,554 $74,378 $29,459 $290,633 $299,268 $245,270 $265,910 $257,591 Ending Reserve Balance: Association Reserves WA, LLC. 17

23 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Starting Reserve Balance Annual Reserve Contribution Recommended Special Assessments Interest Earnings Total Income # $257,591 $267,402 $289,616 $312,527 $261,671 $18,972 $19,431 $19,901 $20,382 $20,876 $2,624 $2,784 $3,009 $2,870 $2,734 $279,187 $289,616 $312,527 $335,779 $285,280 Component 145 Vinyl Rail Fencing - Replace 200 Entry Signs - Replace 201 Brick Monuments - Clean/Repair/Seal $11, Brick Monuments - Repair/Replace 205 Mailbox Stands (2012) - Replace 206 Mailbox Stands (2013/2014) - Rplce 207 Mailbox Stands (2015) - Replace 250 Steel Gates - Repair/Replace 340 Play/Park Eqpt. - Replace/Refurbish $64, Benches, Picnic Eqpt - Rpr/Replace $9, Sports Equipment - Repair/Replace $11,785 $74,108 $267,402 $289,616 $312,527 $261,671 $285,280 Total Expenses Ending Reserve Balance: Association Reserves WA, LLC. 18

24 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Starting Reserve Balance Annual Reserve Contribution Recommended Special Assessments Interest Earnings Total Income # $285,280 $300,796 $325,826 $132,414 $156,831 $21,381 $21,898 $22,428 $22,971 $23,527 $2,929 $3,132 $2,290 $1,446 $1,694 $309,590 $325,826 $350,545 $156,831 $182,052 Component 145 Vinyl Rail Fencing - Replace $182, Entry Signs - Replace $35, Brick Monuments - Clean/Repair/Seal 202 Brick Monuments - Repair/Replace 205 Mailbox Stands (2012) - Replace 206 Mailbox Stands (2013/2014) - Rplce 207 Mailbox Stands (2015) - Replace 250 Steel Gates - Repair/Replace $8, Play/Park Eqpt. - Replace/Refurbish 346 Benches, Picnic Eqpt - Rpr/Replace 350 Sports Equipment - Repair/Replace $8,794 $218,131 $300,796 $325,826 $132,414 $156,831 $182,052 Total Expenses Ending Reserve Balance: Association Reserves WA, LLC. 19

25 Assoc Accuracy, Limitations, and Disclosures Washington disclosures, per RCW: This reserve study should be reviewed carefully. It many not include all common and limited common element components that will require major maintenance, repair or replacement in future years, and may not include regular contributions to a reserve account for the cost of such maintenance, repair, or replacement. The failure to include a component in a reserve study, or to provide contributions to a reserve account for a component, may, under some circumstances, require you to pay on demand as a special assessment your share of common expenses for the cost of major maintenance, repair or replacement of a reserve component. Because we have no control over future events, we do not expect that all the events we anticipate will occur as planned. We expect that inflationary trends will continue, and we expect Reserve funds to continue to earn interest, so we believe that reasonable estimates for these figures are much more accurate than ignoring these economic realities. We can control measurements, which we attempt to establish within 5% accuracy through a combination of on-site measurements, drawings, and satellite imagery. The starting Reserve Balance and interest rate earned on deposited Reserve funds that you provided to us were considered reliable and were not confirmed independently. We have considered the association s representation of current and historical Reserve projects reliable, and we have considered the representations made by its vendors and suppliers to also be accurate and reliable. Component Useful Life, Remaining Useful Life, and Current Cost estimates assume a stable economic environment and lack of natural disasters. Because the physical condition of your components, the association s Reserve balance, the economic environment, and legislative environment change each year, this Reserve Study is by nature a one-year document. Because a long-term perspective improves the accuracy of near-term planning, this Report projects expenses for the next 30 years. It is our recommendation and that of the Financial Accounting Standards Board (FASB) that your Reserve Study be updated each year as part of the annual budget process. Association Reserves and its employees have no ownership, management, or other business relationships with the client other than this Reserve Study engagement. James D. Talaga R.S., company president, is a credentialed Reserve Specialist (#66). All work done by Association Reserves WA, LLC is performed under his Responsible Charge. There are no material issues to our knowledge that have not been disclosed to the client that would cause a distortion of the association s situation. Component quantities indicated in this Report were found in prior Reserve Studies unless otherwise noted. No destructive or intrusive testing was performed. This Report and this site inspection were accomplished only for Reserve budget purposes (to help identify and address the normal deterioration of properly built and installed components with predictable life expectancies). The Funding Plan in this Report was developed using the cash-flow methodology to achieve the specified Funding Objective. Association Reserves liability in any matter involving this Reserve Study is limited to our Fee for services rendered. Association Reserves WA, LLC. 20

26 Assoc Terms and Definitions BTU DIA GSF GSY HP LF British Thermal Unit (a standard unit of energy) Diameter Gross Square Feet (area). Equivalent to Square Feet Gross Square Yards (area). Equivalent to Square Yards Horsepower Linear Feet (length) Effective Age: The difference between Useful Life and Remaining Useful Life. Note that this is not necessarily equivalent to the chronological age of the component. Fully Funded Balance (FFB): The value of the deterioration of the Reserve Components. This is the fraction of life used up of each component multiplied by its estimated Current Replacement. While calculated for each component, it is summed together for an association total. FFB = (Current Cost X Effective Age) / Useful Life Inflation: Cost factors are adjusted for inflation at the rate defined in the Executive Summary and compounded annually. These increasing costs can be seen as you follow the recurring cycles of a component on Table 6. Interest: Interest earnings on Reserve Funds are calculated using the average balance for the year (taking into account income and expenses through the year) and compounded monthly using the rate defined in the Executive Summary. Annual interest earning assumption appears in the Executive Summary. Percent Funded: The ratio, at a particular point in time (the first day of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage. Remaining Useful Life (RUL): The estimated time, in years, that a common area component can be expected to continue to serve its intended function. Useful Life (UL): The estimated time, in years, that a common area component can be expected to serve its intended function. Association Reserves WA, LLC. 21

27 Assoc Component Details The primary purpose of the photographic appendix is to provide the reader with the basis of our funding assumptions resulting from our physical analysis and subsequent research. The photographs herein represent a wide range of elements that were observed and measured against National Reserve Study Standards to determine if they meet the criteria for reserve funding: 1) 2) 3) 4) Common are maintenance, repair & replacement reasonability Components must have a limited life Life limit must be predictable Above a minimum threshold cost (board s discretion typically ½ to 1% of annual operating expenses). Some components are recommended for reserve funding, while others are not. The components that meet these criteria in our judgment are shown with corresponding maintenance, repair or replacement cycles to the left of the photo (UL = Useful Life or how often the project is expected to occur, RUL = Remaining Useful Life or how many years from our reporting period) and a representative market cost range termed Best Cost and Worst Cost below the photo. There are many factors that can result in a wide variety of potential cost; we are attempting to represent a market average for budget purposes. Where there is no UL, the component is expected to be a one-time expense. Where no pricing, the component deemed inappropriate for Reserve Funding. Association Reserves WA, LLC. 22

28 Client: 18713A Remington HOA Comp # : 120 Roads - Resurface/Maintain Location : Roads throughout community Funded? : No Roads are municipality maintained History : None known Quantity: Extensive SF asphalt Evaluation : Roads throughout community are public and maintained by King County, therefore not an association responsibility. No reserve funding required. Component Association Details Reserves W Useful Life: Remaining Life: Best Case: Cost Source: Worst Case: Comp # : 125 Trail Easement - Refurbish/Maintain Location : Within the BPA easement area of community Funded? : No No major foreseeable projects History : None known Quantity: 20' wide, ~>1 mile long Evaluation : This 20 equestrian/pedestrian trail easement runs within the BPA (transmission line) easement area and according to the face of the plat is the responsibility of the Remington HOA to maintain. The actual trail is improved to ~ 5 wide at the most with gravel and mostly grown up with vegetation. Our source indicated that the BPA has been performing vegetation control along the trail. At this time no predictable basis for large scale reserve funding in this area. Useful Life: Remaining Life: Best Case: Cost Source: Worst Case: April 13,2015 Page 1 of 14

29 Client: 18713A Remington HOA Comp # : 145 Vinyl Rail Fencing - Replace Quantity: ~4,000 LF, 4' high vinyl Location : Scattered areas along entries to community and near power lines in areas Funded? : Yes History : Vinyl fence installed in ~ 2013 $57,565 Component Association Details Reserves W Evaluation : White vinyl fence appeared in generally stable condition with little aging apparent. No significant damage or unusual wear was observed. Dirt/grime was noted on fence, particularly in shaded areas. It was reported to us that the vinyl fence was installed in approximately 2013 at a cost of $57,565 (~ $14.15 per LF). This cost is typically less than we see for this type of fencing, therefore we have used a higher cost allowance for future replacement to ensure the association reserves funds adequately for future replacement. Plan to replace at roughly the time frame below. As routine maintenance, clean fencing as needed, inspect for damage and repair out of the operating maintenance budget. Useful Life: 30 years Remaining Life: 27 years Best Case: $72,000 Worst Case: $92,000 ~ $18/LF, lower allowance to remove & replace ~ $23/LF, higher allowance Comp # : 160 Pole Lights - Replace Location : Adjacent to public roads throughout community Funded? : No Street lights are utility maintained History : None known Cost Source: Inflated Client Cost History Quantity: Extensive quantity Evaluation : These street lights are owned/maintained by Puget Sound Energy (IntoLight) and therefore are not the responsibility of the association to maintain, repair or replace including all bulb replacements. As a result, no reserve funding included. Maintenance requests can be made on-line at : or by phone Useful Life: Remaining Life: Best Case: Cost Source: Worst Case: April 13,2015 Page 2 of 14

30 Client: 18713A Remington HOA Comp # : 170 Landscape - Refurbish Location : Throughout common areas Funded? : No Best handled as an operating expense Quantity: Shrubs, trees, turf History : Vegetation removal/replacement near golf course as an operating expense Component Association Details Reserves W Evaluation : Overall, although typically funded as ongoing maintenance item, this component may be utilized for setting aside funds for other larger landscape expenses that do not occur on an annual basis, such as: large scale plantings, improvement projects, bark/mulch replenishment, etc.; for discussion of street trees, see component #180. No special projects or costs from reserves reported for landscaping in the past. At this time, no problems observed by us and no requests by community for landscape projects exceeding typical operating budget funding. No predictable basis for reserve funding for landscaping; continue to monitor and if projects are desired/needed, include in future reserve study updates. Useful Life: Remaining Life: Best Case: Cost Source: Worst Case: April 13,2015 Page 3 of 14

31 Client: 18713A Remington HOA Comp # : 175 Irrigation System - Repair/Replace Quantity: Moderate system Location : Throughout main entry area, park at 20th St. SE and 112th Ave. SE Funded? : No Best handled as an operating expense History : ~ $5k of irrigation upgrades/repairs per year in 2013, 2014 & total $15k Component Association Details Reserves W Evaluation : Our visual observation of the irrigation system was limited as the majority of system components are below grade. No reports of repairs or problems. It was reported to us that the association performed approximately ~$5k in irrigation repairs/upgrades per year from 2013 to 2015 (total project cost ~$15k). At the time of this study, no information (plans and/or specifications) was provided to us regarding the extent of the irrigation system. No predictable large-scale costs at this time. The association did not request an allowance be included for future reserve projects. As routine maintenance, inspect, test, and repair system as needed from operating budget. Follow proper winterization and spring startup procedures. If properly installed and bedded without defect, the lines could last for many years. Controls for the system can vary greatly in number, cost, and life expectancy. Without additional information, these costs are not predictable. Other elements (i.e. sprinkler heads, valves) within this system are generally lower cost and have a failure rate that is difficult to predict. These elements are better suited to be handled through the maintenance and operating budget, not reserves. Useful Life: Remaining Life: Best Case: Cost Source: Worst Case: April 13,2015 Page 4 of 14

32 Client: 18713A Remington HOA Comp # : 180 Street/Median Trees - Trim/Replace Quantity: Moderate amount Location : Within street medians at entries/exists of community: 202nd, 207th & 200th Funded? : No No anticipation of large scale trimming/removal History : Trees at 202nd Ave planted 2011/2012 Component Association Details Reserves W Evaluation : There are (8) maple trees planted in the road median at the 202nd Ave. entry/exit to the community. These maple trees were planted following an ice/winter weather storm of which damaged the originally planted flowering plum trees. This project was funded through the operating budget. At the 207th entry/exit median are (21) flowering plum trees and (2) at the 202nd entry/exit which are all original. No predictable basis for large scale removal/trimming projects anticipated. If the community has not already done so, may want to consult with a qualified arborist for a long term plan for the care and management of these and other common area trees within the community, balancing aesthetics with protection of association assets. Useful Life: Remaining Life: Best Case: Cost Source: Worst Case: Comp # : 182 Drainage System - Maintain/Repair Location : At common areas Funded? : No Stormwater ponds are municipality maintained History : Quantity: Multiple Stormwater Ponds Evaluation : There are several drainage tracts throughout the community that according to signage at the site, the recorded plat maps and previous confirmation by the management/board contact, are the responsibility of King County to maintain, not Remington HOA. Additionally, previously reported to us by our board contact that street side gullies/piping under driveways in these areas is not association responsibility. No problems with drainage reported at common areas. No predictable basis for reserve funding for association drainage areas at this time. Useful Life: Remaining Life: Best Case: Cost Source: Worst Case: April 13,2015 Page 5 of 14

33 Client: 18713A Remington HOA Comp # : 200 Entry Signs - Replace Quantity: (6) sandblasted wood Location : Attached to brick monuments at 202nd Ave, 207th Ave, 200th Pl & south end of 201st Pl. Funded? : Yes History : None known Component Association Details Reserves W Evaluation : Sand blasted wood signs appear to be in stable condition with some local deterioration but no widespread damage/cracking observed. Inspect regularly, clean and repair locally as needed within the operating budget. Over time these wood signs will fade/show wear and should be budgeted for future replacement as shown here. Costs can vary depending on replacement type desired; funding here for similar replacement. It was reported to us that the Druid's Glen Golf Course signage on monuments at 207th Ave is the responsibility of the golf course to maintain and is thus not included in this component. Note: there are some miscellaneous association signs at parks and other areas that can be maintained out of the operating budget or along with park projects, not anticipated as separate reserve project. Useful Life: 20 years Remaining Life: 7 years Best Case: $13,200 Worst Case: $19,200 ~ $2,200 each (x6), lower allowance to replace ~ $3,200 each (x6), higher allowance Cost Source: ARI Cost Database: Similar Project Cost History April 13,2015 Page 6 of 14

34 Client: 18713A Remington HOA Comp # : 201 Brick Monuments - Clean/Repair/Seal Quantity: (6) brick monuments Location : (2) at 202nd Ave, (2) at 207th Ave, (1) at 200th Pl & (1) south end of 201st Pl. Funded? : Yes History : No major projects known Component Association Details Reserves W Evaluation : Overall brick areas were dirty/grimy with significant organic growth (mainly moss, however one area also had vegetation growing on the brick). Some areas had efflorescence (water staining) and we noted some cracking/damage. It was previously reported to us that monuments are original to construction. Some areas were difficult to view due to vegetation growth. Monuments should be inspected regularly and cleaned/repaired locally as needed within the operating budget. At this time we are recommending a wide scale cleaning, crack(s) repair and sealing the brick. The cost shown here is an estimate only and should be adjusted once masoner/vendor has been contacted and has provided a scope of work. Performing this type of work can extend the total life of the monuments and extend complete replacement as shown within component #202. Note: this component does not cycle during replacement year (component #202). Useful Life: 10 years Remaining Life: 0 years Best Case: $5,250 Worst Case: $7,800 ~ $875/each (x6), lower allowance to clean, repair and seal brick monument walls ~ $1,300/each (x6), higher allowance Cost Source: ARI Cost Database: Similar Project Cost History April 13,2015 Page 7 of 14

35 Association Reserves Washington, LLC 18713A Client: 18713A Remington HOA Component Details Quantity: (6) brick monuments Comp # : 202 Brick Monuments - Repair/Replace Location : (2) at 202nd Ave, (2) at 207th Ave, (1) at 200th Pl & (1) south end of 201st Pl. Funded? : Yes History : Evaluation : Some damage/cracking noted on walls, along with significant organic matter (see #201), with a clean, repair and seal project recommended at this time. Typically brick is a low maintenance material, however, over the course of years, mortar between bricks can become damaged or cracked and allow water to infiltrate into the walls. Although tuck pointing (grinding out small sections of existing mortar and installing new mortar) can be performed to restore, cost at this type of wall would outweigh cost/benefit of installing new monument walls. This component recommends planning for eventual complete removal and replacement of existing brick walls at the time frame shown here. In addition to larger clean/seal cycles within component #201, inspect walls annually and touch-up work should be performed as part of annual maintenance. Useful Life: 40 years Remaining Life: 17 years Best Case: $27,000 Worst Case: $39,000 ~ $4,500/each (x6), lower allowance to repair/replace monument walls ~ $6,500/each (x6), higher allowance Cost Source: ARI Cost Database: Similar Project Cost History April 13,2015 Page 8 of 14

36 Association Reserves Washington, LLC 18713A Client: 18713A Remington HOA Comp # : 205 Mailbox Stands (2012) - Replace Location : Throughout community, adacent to roads Funded? : Yes Component Details Quantity: (9) wood stands History : Replaced 2012 Evaluation : Individual mailboxes are lot owner responsibility, not association, thus this component is only for the wood stands. In 2012, about (9) mailbox stands were replaced. Clean, stable condition noted of stands that have been replaced. As routine maintenance, inspect regularly, repair locally and paint/touch-up as needed within the annual operating budget. Best to plan for eventual replacement of mailbox stands due to deterioration that will result over time from constant exposure. This component represents the stands replaced in 2012; components #206 & 207 are for stands replaced in subsequent years. Useful Life: 20 years Remaining Life: 16 years Best Case: $6,300 Worst Case: $8,100 $700/each (x9), lower allowance to replace mailbox stands $900/each (x9), higher allowance Cost Source: Client Cost History Comp # : 206 Mailbox Stands (2013/2014) - Rplce Location : Throughout community, adacent to roads Funded? : Yes Quantity: (15) wood stands History : Replaced 2013/2014 Evaluation : This component includes funding for replacement of the mailbox stands replaced in 2013/2014 (see #205). Clean, stable condition noted of stands that have been replaced. Follow maintenance recommendations within #205. Useful Life: 20 years Remaining Life: 17 years Best Case: $10,500 Worst Case: $13,500 $700/each (x15), lower allowance to replace mailbox stands $900/each (x15), higher allowance Cost Source: Client Cost History April 13,2015 Page 9 of 14

37 Association Reserves Washington, LLC 18713A Client: 18713A Remington HOA Comp # : 207 Mailbox Stands (2015) - Replace Location : Throughout community, adacent to roads Funded? : Yes Component Details Quantity: (21) wood stands History : Planned for replacement in 2015 Evaluation : This component provides funding for replacement of the mailbox stands scheduled to be replaced in 2015 (see # 205). We noted splitting of posts, rot and general overall deterioration of these older stands at the time of our site visit, which was prior to the planned replacement of these stands in Follow maintenance recommendations within #205. Useful Life: 20 years Remaining Life: 19 years Best Case: $14,700 Worst Case: $18,900 $700/each (x21), lower allowance to replace mailbox stands $900/each (x21), higher allowance Cost Source: Client Cost History April 13,2015 Page 10 of 14

38 Association Reserves Washington, LLC 18713A Client: 18713A Remington HOA Component Details Quantity: (6) steel gates Comp # : 250 Steel Gates - Repair/Replace Location : Adjacent to roads/entrances to trail easement at BPA easement areas of community Funded? : Yes History : Installed 2011 Evaluation : Clean, stable condition of steel gates observed during our site inspection. Previously reported to us these were installed in We recommend regular professional inspections, maintenance and repairs to help extend useful life cycle; clean for appearance and paint/touch-up as needed within general maintenance / operational funding (no reserve funding anticipated for these type of items). Although sturdy component, best to plan for replacement as shown here due to deterioration that will result in these highly exposed areas. It was reported to us that at installation the only cost the association bore was for the gates themselves with the wood uprights/fasteners installed/funded by BPA. Useful Life: 30 years Remaining Life: 25 years Best Case: $3,300 Worst Case: $5,100 ~ $550/each (x6), lower allowance to remove and replace ~ $850/each (x6), higher allowance Cost Source: Inflated Client Cost History April 13,2015 Page 11 of 14

39 Association Reserves Washington, LLC 18713A Client: 18713A Remington HOA Component Details Quantity: (4) assorted pieces Comp # : 340 Play/Park Eqpt. - Replace/Refurbish Location : Park area just south of intersection of 202nd Ave SE & SE 294th Way Funded? : Yes History : Installed 2008/2009 Evaluation : No instability or major deterioration observed of assorted pieces. Equipment appears to be study, constructed with powder coated steel and composite materials. A variety of equipment includes a large play set of recycled plastic/composite uprights/decking, a metal double flip bar set, a four swing metal swing set and a steel bike rack. This area was renovated with new equipment added in Regularly inspect for stability, damage and excessive wear and utilize maintenance funds for any repairs needed between replacement cycles including replacement of play chips/repairs to wood containment border. Replacement cycles vary depending on the amount of use/abuse, however expect extensive park area renovation at roughly the time frame listed below. This can include wood containment border, play chip replenishment, replacement of signs, etc. Useful Life: 15 years Remaining Life: 8 years Best Case: $27,300 Worst Case: $38,200 er allowance to replace equipment, refurbish area, etc. Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History April 13,2015 Page 12 of 14

40 Association Reserves Washington, LLC 18713A Client: 18713A Remington HOA Component Details Quantity: (4) benches, (2) tables Comp # : 346 Benches, Picnic Eqpt - Rpr/Replace Location : Park area just south of intersection of 202nd Ave SE & SE 294th Way Funded? : Yes History : None known Evaluation : Stable condition noted with minor areas of chipped paint. Pieces include (4) steel frame benches with wood seats/backs and (2) steel frame picnic table/bench units with wood table top and seating. Inspect regularly, clean for appearance and repair as needed from general operating funds. Wood components can be stained/painted periodically for aesthetics/protection. Best to plan for regular intervals of complete replacement at the time frame indicated below to maintain functionality and a consistent, quality appearance. This component coincides with play equipment (#340) for cost efficiency/consistency. Note: there are some signs throughout this park area that can be maintained through the operating budget as needed or along with this and other park renovations. Useful Life: 15 years Remaining Life: 8 years Best Case: $4,100 Worst Case: $5,500 ~ $550/bench (x4) plus $950/picnic (x2), lower allowance to replace ~ $750/bench (x4) plus $1,250/picnic (x2), higher allowance Cost Source: ARI Cost Database: Similar Project Cost History April 13,2015 Page 13 of 14

41 Association Reserves Washington, LLC 18713A Client: 18713A Remington HOA Component Details Quantity: (1) backstop, (2) goals Comp # : 350 Sports Equipment - Repair/Replace Location : Park area just south of intersection of 202nd Ave SE & SE 294th Way Funded? : Yes History : Renovated around 2008/2009 Evaluation : No significant deterioration/instability observed of two metal, soccer goal posts and a chain link baseball backstop at the fields. Noted one soccer goal net missing and the other partially detached from the post; repair/replace as needed out of the operating budget. Previously reported to us these areas were renovated around during the park equipment (#340) installation with more playable areas established. Inspect this field equipment regularly and repair/replace as needed within the annual operating budget. While these sturdy structures can last an extended period of time, we recommend funding for larger needs like replacement of posts, new cyclone fencing, etc. as shown here. This component coincides with every other park equipment renovation period (see components #340 & #346) for cost efficiency/consistency. Useful Life: 30 years Remaining Life: 8 years Best Case: $8,200 Worst Case: $13,700 er allowance for baseball backstop, soccer goals, turf renovations, etc. Higher allowance Cost Source: ARI Cost Database: Similar Project Cost History Quantity: Annual Update Comp # : 999 Reserve Study - Update Location : Common elements of association Funded? : No Best handled as an operating expense History : 2013 FULL, 2016 WSV Evaluation : Per Washington law (RCW), reserve studies are to be updated annually, with site inspections by an independent reserve study professional to occur no less than every three years to assess changes in condition (i.e., physical, economic, governmental, etc...) and the resulting effect on the community's long-term reserve plan. Most appropriately factored within operating budget, not as reserve component. Useful Life: Remaining Life: Best Case: Worst Case: Cost Source: April 13,2015 Page 14 of 14