PM+Reserves Veteran Owned Business SPECIALIZING IN RESERVE STUDIES SINCE 1990 A PROFESSIONAL CORPORATION

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1 PM+Reserves Veteran Owned Business SPECIALIZING IN RESERVE STUDIES SINCE 1990 A PROFESSIONAL CORPORATION APRA Association of Professional Reserve Analysts September 25, 2015 Cross Creek Village HOA C/o Ms. Jorie Martin, PCAM Coventry Group Community Management 21 S. Kent Street Winchester, VA Dear Ms. Martin: Enclosed please find the Level I Full Reserve Study for Cross Creek Village HOA. Consider this version a Final Draft. It will become the Final Report after review by the Board of Directors (or their representatives) and all concerns have been addressed. If desired I will attend a meeting to discuss this study at a mutually agreeable time. In the meantime, please let me know if there are any questions. I thank the Board of Directors and Coventry Group Community Management for selecting PM+ to do this study and hope you will continue to call upon PM+ for your future reserve studies. Sincerely, Patrick B. O Bryan Project Manager Mario B. "Ben" Ginnetti, PRA, RS, P.E. President Enclosure: Study - PDF File 4388 Poplar Tree Court Chantilly, VA (703) FAX (703) pmplusreserves@cox.net

2 PM+Reserves Veteran Owned Business SPECIALIZING IN RESERVE STUDIES SINCE 1990 A PROFESSIONAL CORPORATION APRA Association of Professional Reserve Analysts CROSS CREEK VILLAGE HOA Winchester, VA Level I Full Reserve Study, September 25, 2015 Prepared for: Board of Directors Engineer Mario B. "Ben" Ginnetti, PRA, RS, P.E. Copyright by Mario B. Ginnetti This document contains copyright and proprietary data. It may only be reproduced for the exclusive use of Cross Creek Village HOA. All other rights reserved by the author Poplar Tree Court Chantilly, VA (703) FAX (703) pmplusreserves@cox.net

3 TABLE OF CONTENTS PAGE EXECUTIVE SUMMARY...1 STUDY INFORMATION...3 MAINTENANCE/REPAIR/REPLACEMENT TIPS & RESERVE CONSIDERATIONS...5 READING AND UNDERSTANDING TABLES & CHARTS...7 PHOTOGRAPHS...9 APPENDIX A...12 Table of Repair/Replacement Reserves and Years 1 10 Expense Projection...A1 Years Expense Projection...A3 Funding Plans - 30 Year Projection...A5 Property Comparison...A6 Comments...A7 Cross Creek Village HOA i by MBG

4 EXECUTIVE SUMMARY KEY TO UNDERSTANDING STUDY RESULTS The purpose of a reserve study is to establish a financial plan for keeping the property s common and limited common elements in good repair. The plan is developed by identifying the component, assessing its condition and estimating both the time when work will be needed and cost of work. In a PM+ study these entries can be found beginning on page A1, columns (1), (4) and (5). Those entries combined with reserve savings, current reserve contribution, interest and inflation rates and how much of a contingency should be preserved to fund unforeseen events are the factors that determine the reserve contribution. RELEVANT DATA 1st Study Year FY16 $112,000 AOH Start of Fiscal Year FY Begins 01-Jan-16 $7,443 Your Contribution in FY16 Inspection Date(s) 9/21/ % Inflation # Units % Interest AOH (cash/investments start of fiscal year) and Current Year Contribution were provided to PM+ and were best estimates available when provided, they are not audited amounts. INTEREST AND INFLATION factors¹ best project the future needs of the property. Inflation is based on the last ten year average for the Consumer Price Index (CPI); interest on savings is based on the ten year average of the Constant Maturity Yield for the 10-Year U.S. Treasury note. NOTE If changes to amounts/factors are desired PM+ will provide a revised study, if requested. THE FOLLOWING TABLE SUMMARIZES our findings see detail information in "Funding Plans - 30 Year Projection" chart, columns (13) - (21)): CONTRIBUTION SUMMARY Association² Cash Flow Component Plan Plan Plan Reserve Contribution FY16 $7,440 $25,770 $20,840 Avg Owner Contribution FY Avg Owner Contribution/Month Year Income 336,260 1,259,380 1,259,390 Income From Interest 20, , ,240 Income From Assessments 315,280 1,092,300 1,119, Year Min Balance (837,980) 34,240 53, Year Max Balance 79, , , Year Min Balance (1,812,620) 35,450 52, Year Max Balance (831,350) 485, ,050 ANALYSIS: As indicated in the above table, the association s projected FY16 contribution will need to be increased to meet the reserve needs of the property. The recommended owner contribution assumes interest earned on savings will be applied to the reserves and not used to offset operating account expenses or used for other purposes. If interest is not applied to the reserves then the annual contribution will need to be increased by the interest amount. Cash flow method is the preferred method for funding reserves. It provides consistency in the annual contribution from one year to the next year. Future contribution increases are mostly attributable to inflation. 1. Although factors used may not prove to be precise they should be reasonable predictors of cost increases and contributions needed to support the reserve requirement over the life of the study. 2. If the study is being done for other than the current fiscal year, inflation is applied to prior year contribution. Cross Creek Village HOA by MBG

5 Reserve Study September 25, 2015 Component method contributions can be expected to fluctuate considerably from year to year, making it less practical as a funding plan. Funding plan dollar amounts shown in columns (15), (18) and (21) of the Funding Plans 30 Year Projection chart are the approximate year end balances, both minimum and maximum, that can be expected if the plans are funded as shown. Properly funded plans will meet the following objectives: 1) funds are always available for needed work, 2) there is always a minimum amount of savings available to provide for unforeseen contingencies, and 3) when studies are updated, there is not a substantial increase needed to meet the reserve requirement. To avoid substantial increases PM+ studies take into consideration the first thirty years of the study and an additional twenty years, making the "look at" period a total of fifty years. The 50-year projection is to assure the recommended contribution is based on a sound long range analysis of the property's reserve needs. RECOMMENDATION: Fund the reserves using the Cash Flow method. WHERE THE CONTRIBUTIONS TO THE RESERVES GO: ANNUAL ALLOWANCES 11% BUILDING 23% OTHER PROPERTY FEATURES 12% PAVEMENTS 54% Cross Creek Village HOA by MBG

6 STUDY INFORMATION THIS STUDY is the initial engagement for the property by PM+. PM+ has neither collaborated with nor provided consulting advice to others on issues pertaining to the property. THIS IS A LEVEL I FULL STUDY with on-site visit. The association requested a Level I Full Study. STUDY WAS DONE in its entirety by Mario B. Ben Ginnetti, a registered professional engineer (P.E.) licensed to practice engineering in the states of Virginia, Maryland and the District of Columbia. Mr. Ginnetti is also a CAI Certified Reserve Specialist (RS) and a Professional Reserve Analyst (PRA). RESERVE STUDY criteria is defined by the Community Association Institute (CAI) and the Association of Professional Reserve Analysts (APRA). In complying with the criteria this study compares the Associations current funding plan to the two recommended methods for preparing reserve studies, Cash Flow (AKA Pooling) and Component. This is a reserve study only - no other use is intended. STUDY WAS COMPILED in accordance with generally accepted standards and represents our professional opinion on the items, timing and dollar amounts that should be budgeted for repair and replacement. In compiling this study information was obtained from field measurements, visual observations and management (information provided by management is considered to be reliable). Also taken into consideration are construction features, current conditions and component age. Testing was not performed, nor was demolition done or panels removed to determine conditions that are not obvious. Based on our observations and the information gained during the visit this study contains, to the best of our ability, all material issues required to determine the funding needed to meet the property s reserve requirement. FOR PROPERTIES LOCATED IN THE STATE OF VIRGINIA, Virginia Statutes, 2003 Condominium and Property Owner s Association Act require the association to conduct reserve studies at least every five years, review the results of the study at least annually and make adjustments as necessary unless the condominium instruments/declaration imposes more stringent requirements. Your attention is called to Sections :1or of the Statutes for the complete text. AGE, UNITS AND STYLE Constructed in units; single family homes. Major amenities clubhouse. CASH FLOW AND COMPONENT METHOD STUDIES This study was calculated using both the Cash Flow and Component methods. A synopsis of each method is as follows: CASH FLOW METHOD - This method develops the funding plan by having the annual contributions offset the variable annual expenses. All expenses are averaged over the life of the study to calculate the annual contribution needed to support the reserve requirement. Yearly contribution increases are due to inflation. COMPONENT METHOD - This method develops the funding plan by dividing the remaining useful life into the balance needed to fund the item for only the next cycle of work. Yearly contributions can vary significantly from year to year depending on where the components are in their life cycle. Contribution needed to pay expenses will equal to the cash flow method over the life of the study. FUNDING GOAL This study complies with the Threshold Funding Plan established by the Community Association Institute (CAI) for reserve studies. Funding goal objective is to keep the reserve balance above a specified dollar or Percent Funded amount. IN DEVELOPING the reserves we consider items that have a predictable life cycle as well as those that will most Cross Creek Village HOA by MBG

7 Reserve Study September 25, 2015 likely need annual maintenance and repairs to keep them in serviceable condition. They are as follows: PREDICTABLE LIFE CYCLE (Non # sign items). These components have a predictable life cycle (an average useful life). At the end of its useful life total replacement will be needed. ANNUAL ALLOWANCES (Items preceded by the # sign). We reserve an average annual amount for these items. These items are typically life of the property or long lasting components that do not have a predictable life cycle. We assume the association will keep these components in satisfactory condition with timely spot repairs. FOLLOWING CONSIDERATIONS should be taken into account to properly manage the reserves: 1) properly funded reserves avoids special assessments, 2) each owner should pay their fair share for the time they use the component, 3) when reserve funds are available the Association is more inclined not to defer work; deferral results in additional deterioration and catch-up costs to restore the item to a good condition, 4) government mortgage guarantees agencies, i.e. FHA, require a current reserve study to be available before backing a loan, and 5) some state laws require them. In addition to these considerations, a new factor has recently become apparent. Years ago owners were poorly informed on the importance of the reserves and paid very little attention to whether or not a property had an adequate plan for funding the reserves. With the inclusion of reserve tables in resale packages and other publicity, many potential buyers are now verifying the reserve status before they buy. ALTHOUGH we use generally accepted techniques and best information available, it is possible actual costs and useful lives can vary significantly from our estimates. We recognize that possibility and attempt with our methodology to arrive at the overall funding recommendation that will avoid, or minimize the amount of funding if a special assessment is needed to do reserve work. FOR THE RESERVES to be an effective budget management tool it will need periodic updates. Because reserves on hand, current costs, quality of maintenance, acts of God, vandalism, and useful life can vary from year to year, a periodic review will assure it remains an effective management tool. We recommend studies be updated every 3 years. UNLESS OTHERWISE NOTED this study does not take into consideration any work the association may need to correct hazardous or defective conditions, such as issues with asbestos, radon, lead, mold, FRT, etc., nor will it fund major projects to repair/replace facades, building tension cables, utilities and other essential systems. Projects of this nature require the services of engineers or other consultants to determine scope, timing and projects costs. If requested, once costs and project timing are known, we will provide a revised study at no additional cost. FOR ANY RESERVE PROJECTS in progress on the date(s) of our visit our observation of the work should not be considered a project audit or quality control inspection. We leave that to others to determine. WHERE WE DESCRIBE PREVENTIVE MAINTENANCE recommendations in this study they are intended to be general in nature and the most common tasks needed to extend item useful life. They are not all inclusive; we do not imply that is all that is necessary for good maintenance. Manufactures brochures, service specialty companies, and other qualified sources should be consulted to establish the full array of actions needed for proper preventive maintenance. FUNDING FROM RESERVE VERSUS OPERATING ACCOUNT - There could be components in this study the association is funding from the operating account. When there are we recommend they be funded from the reserves. When components are worked on it usually extends their useful life - a proper reserve expense. Reserve funds are intended to keep property components in good repair and to replace those that need replacing; operating funds are intended for maintenance and reoccurring operating expenses. Cross Creek Village HOA by MBG

8 MAINTENANCE/REPAIR/REPLACEMENT TIPS & RESERVE CONSIDERATIONS THERE ARE THREE LEVELS of care needed to maximize the useful life of equipment and property components: 1) Maintenance, 2) Repair and 3) Replacement. MAINTENANCE is taking care of an item by doing such tasks as sealing pavement cracks to prevent water from undermining the base, painting to prevent metal corrosion or wood rot, lubricating moving parts on mechanical equipment, fan belt adjustments, etc. It involves the least expenditure of funds and is the best way to maximize useful life. Repair is replacing a portion of an item, such as, a section of pavement, a part of a roof, an air conditioning compressor, etc. It's usually more expensive than maintenance. The most costly is replacement. It involves the entire replacement of the item. APPLICATION of good maintenance and repair techniques can be explained by the following example: An asphalt parking lot of 1000 square yards develops a 10 foot long crack in the surface. The crack can be sealed for about a dollar a linear foot. By doing so, water will not seep through the asphalt causing damage to the base course. That simple maintenance action extended the useful life of the pavement at minimum cost. Assume the crack was not sealed and it grew to a 12' by 12' base damaged area. Cost of repairs would be approximately 60 times as much as fixing the crack. If the damaged area was not repaired and eventually the entire lot had to be replaced it would cost considerably more. Therefore, the prudent thing to do is good maintenance. It's the least costly of the three levels of work. PRIOR TO TOTALLY REPLACING an item, e.g., a roof, a fence, an air conditioner, etc., all measures should be taken to extend the useful life of the item with repairs. If the roof is leaking do not automatically think the entire roof needs to be replaced. Most leaks occur around penetrations and flashed areas and they can be repaired for less than replacing the entire roof. Fence posts almost always rot out at ground level before the rest of the fence. Posts can be replaced without purchasing a complete new fence. The same applies to most mechanical/electrical equipment. Tube leaks frequently occur in boilers; compressor failures occur in air conditioners and circuit breakers wear out in electric panels. These kinds of failures are repairable without replacing the entire item. The reserve table should be used as an aid in establishing budgets - not as a work plan. When used as a budget management tool its effectiveness will be recognized when funds are readily available to do work - when it must be done. Do not use the remaining useful life data as a work plan. It should be treated as a window of probable expectancy, based on statistical information, historical trends, conditions at time of survey and experience of when repair or replacement is most likely to be needed. Actual work should not be done until needed. For example, if paving is estimated to need replacement in five years but it's not a problem at that time, put it off until it is a problem. Conversely, if repairs are necessary sooner, do them sooner. WHEN CONTRACTING for services, seek competitive bids and purchase only what s necessary to restore the item to its like original condition. Include state-of-the-art improvements but avoid over buying or substantially enhancing an item beyond its original condition. Such improvements are not included in the cost estimates. CATASTROPHIC FAILURES to such items as footers, foundations, floors, exterior walls and total replacement of utility systems, etc., are not included in the table. They are not included because they are not predictable and it is rare that these items have to be replaced in total. We do recommend a reasonable annual amount be set aside for some repairs and reflect that in the reserve table. FUNDING FOR RESERVES SHOULD BE FAIR TO ALL OWNERS; past, present and future. The worst case scenario for a property is to have no money set aside to pay for repairs/replacements forcing the current owners to pay the total cost. Additionally, having insufficient reserves also presents some injustices as illustrated by the following example: Mr. and Mrs. X owned a unit at the property for the first ten years of its existence when reserve funding was suppressed and insufficient to take care of future problems. Mr. and Mrs. X sell their unit and leave. Five years after they leave the pavement and sidewalks need to be repaired. Mr. & Mrs. Y now own the unit and receive notice they are to be specially assessed to pay for the repair costs. Cross Creek Village HOA by MBG

9 Reserve Study September 25, 2015 For demonstration purposes let's say the pavement and sidewalk repairs costs $150,000 and the association has $50,000 in the reserve account. Let's also assume there are 100 units at this property. Over the last fifteen years, past and present owners set aside $50,000 to take care of the $150,000 expenditure. Expressed in $/year that equates to $3,333/yr. or $33.33 per owner per year. Mr. & Mrs. X had the benefit of good paving and sidewalks for 10 years at a total cost to them of $ Unfortunately for Mr. & Mrs. Y, they only used the items for five years, but it will cost them $ for their share of the repairs. Calculations for the above are as follows: 5 years they lived there X $33.33/yr. = $ The difference between amount in reserves and repair costs divided by number of unit owners: ($150,000-50,000)/100 = $ Total cost to Mr. & Mrs. Y = $ Or, said another way: Mr. and Mrs. X used the items for 66% of their useful life but only paid 22% of the repair cost. Mr. and Mrs. Y used the items for 34% of their useful life but had to pay 78% of the cost. For funding to be fair all owners should contribute their share of the costs for the period of time they use the item. Cross Creek Village HOA by MBG

10 READING AND UNDERSTANDING TABLES & CHARTS RELEVANT DATA Study fiscal year, inspection date(s), units, association s financial data, and interest/inflation rates. CONTRIBUTION SUMMARY Financial summary of study results. TABLE OF REPAIR & REPLACEMENT RESERVES The Repair and Replacement Table shows the common or limited common element, average and remaining useful life, and estimated cost for work. This information, for the most part, is self-explanatory; however, when we believe more information is needed, we provide comments or use photographs. Column (1) The various property components and major items of equipment we believe the community should include in the reserves. Where a 15%, 30%, etc., is shown means that total replacement of that item is not anticipated. These items generally have an indefinite life span and only need partial repairs. Items preceded by the pound (#) sign are budgeted for a year at a time. Typically, these items need annual repairs. These items should be adjusted at each update based on historical trends and the amount of work anticipated the following year. If we have omitted or added any items that are not common or limited common area responsibility, please inform us so we can provide a revised table. It also applies if the association accomplishes the work from their annual operating expense and a reserve set-aside is not needed. (2) Approximate quantity and unit of measure. The following abbreviations are used; however, they may not all appear in this study: AC Acres AOH - Amount-On-Hand AnAvg - Annual Average BLD - Building EA - Each CY - Cubic Yards LF - Linear Feet LS - Lump Sum HP Horsepower RC - Replacement Cost SF - Square Feet SY - Square Yards TN - Tons UN - Units > - Greater Than < - Less Than (3) The components average useful life (Avg). Leading publications on useful life data, our own experiences and historical trends are used to determine average useful life. (4) Our best estimate of the remaining useful life (RUL). Some items in the table may not fail precisely as shown. We use the remaining useful life in conjunction with the estimated cost to calculate the annual contribution needed to fund the component. Actual remaining useful life can be significantly different. (5) Estimated costs are in current dollars; actual cost can be significantly different. Estimates are based on similar work in the greater Washington area, association experience, industry publications, such as R.S. Means and HomeTech, contractors and other reliable sources. It assumes the association will competitively seek bids and obtain a fair price in today's market. Some work, such as balconies, roofing, garages, façade, boiler and chiller replacements, etc. may need the services of an engineer or architect to determine scope and oversee repairs. Those estimates take precedence over those shown in the table. Conditions that are not obvious from observations, such as excessive deterioration in materials and systems could also affect costs. (6) Distribution of the funds the association had (is projected to have) at the start of their fiscal year or the amount we were requested to use. The program distributes a prorated amount to each component. (7) The amount needed to fund the balance of the requirement. Cross Creek Village HOA by MBG

11 Reserve Study September 25, 2015 (8) The contribution needed to fund the 1 st year applying the cash flow method. This value is the product of the reserve components and the Funding Plans - 30 Year Projection chart. The annual contribution is calculated so that the reserve balance never falls below the X axis and there is always a minimum balance for unforeseen contingencies. (9) The contribution needed to fund the 1 st year applying the component method. Fiscal Years 1-10 Expense Projection Projected cash out-lays over the first ten years of the study. Fiscal Years Expense Projection Projected cash out-lays over the next twenty years of the study. Average Contribution Per Owner - The average contribution needed per owner to fund the 1st year reserve contribution. This amount is not indicative of each owner s individual contribution. FUNDING PLANS - 30 YEAR PROJECTION Column (10) - Fiscal Year. (11) - Projected annual expenses. (12) - Cumulative expenses over 30-years. (13), (16) and (19) - Interest earned per funding plan based on previous year end balance. (14), (17) and (20) - Contribution per funding plan, inflation applied. (15), (18) and (21) - Projected year-end balance per funding plan. GRAPHS Graphs depict the projected contributions and year end balances for each plan. The contribution objective should be to have a consistent contribution, year after year, that can be maintained with inflation adjustments. Avoid fluctuating contributions as they can impose financial hardships on owners. The objective for the reserve balance is to have the year end balances always above the x-axis. If it falls below, this indicates a special assessment or loan will be needed to support the reserves. SUMMARY 30-Year Income - projected from interest and owners. 30-Year Average Annual Contribution - average association contribution over 30-years. 30-Year Average Contribution/Owner - average contribution to be paid by each owner. 30 & 50-Year Minimum/Maximum Balances - includes contingency for unforeseen events. PROPERTY COMPARISON (NOT SHOWN IN SOME STUDIES) The Property Comparison chart compares the property s current funding to the last 100 properties we have studied. The comparison shows the maximums, minimums and property averages compared to your property. Three comparisons are made: % Funded - Ratio of the current to the ideal Reserve Balance for each component in the Reserve Table. The ratio is a product of the used-up life, useful life and component cost. Reserve Depletion Factor - Number of years amount-on-hand will fund (It's the same as the go broke date if no more money is added to the reserves). Cost Per Owner Average contribution per owner needed to meet the reserve requirement. Dollar amounts will vary from property to property based on construction features, common/limited common elements, past contributions to the reserves and other factors that may not result in a true comparison. Cross Creek Village HOA by MBG

12 PHOTOGRAPHS - to assist the reader in identifying components and understanding reserve table assumptions. Not all components may be shown; see following section for additional comments. Front view Rear view of homes Typical front view of homes in this 91-unit HOA located in Winchester, VA. Each owner is responsible for the exterior of their home. Driveways are roads are association responsibility. Community center. Windows or Pavement 1 Doors or Pavement 2 Windows and doors of community center are reserve components. Sidewalks Curbs, gutters The sitting area of the community center is nicely appointed. A laminate floor was recently installed throughout the community center. Kitchens eventually need upgrades.. Cross Creek Village HOA-FY16 9 9/25/2015

13 Tot Lot Tot lot fill..and so do bathrooms Reserve provides for tables and chairs to be replaced. Fencing Retaining wall A single hot water heater serves the building. Community center is served by split-system HVAC units totaling 5 tons. Retention pond Erosion/drains/rip-rap The association is responsible for the roads and driveways in the community except for Heritage Drive. See our recommendations in the Comments section for proper care of asphalt pavements. Walking trails can have their useful life extended by doing spot repairs as needed. Cross Creek Village HOA-FY /25/2015

14 Street lights Entrance features Heritage Drive curbs and gutters are not the association's responsibility. Only those within the community belong to the association. Board on board fence at the southeast side of the property is in fair condition. Straightening posts and replacing missing slats as needed could extend the useful life of this fence. Railings/Masonry walls Park benches, picnic tables, trash cans, doggie stations Mail boxes are the property of the US Postal Service. Street lights are not an association responsibility. They are serviced by the power company. Trees Site Items A reasonable amount to replace dead or diseased trees and shrubbery. Does not include normal landscaping upkeep which is funded from the operating account nor large scale improvements. Also included in the reserves are signs, sign posts, dog stations, park benches, and other miscellaneous components. Well maintained components enhance property appearance. Cross Creek Village HOA-FY /25/2015

15 APPENDIX A Cross Creek Village HOA-FY /25/2015

16 TABLE OF REPAIR & REPLACEMENT RESERVES by MBG ITEM APPROX'MT USEFUL LIFE ESTIMATED DISTR'BTN BALANCE FY16 FISCAL YEARS 1-10 EXPENSE PROJECTION QUANTITY AVG REM COST IN OF AOH NEEDED CONTRIBUTION (YRS) CURRENT $ AS OF TO FUND CASH FLOW COMPONENT Jan-16 RESERVE METHODS (1) (2) (3) (4) (5) (6) (7) (8) (9) BUILDING ROOFING ROOFING-METAL 3,433 SF $48,070 $12,630 $35,440 $700 $560 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 GUTTERS/DOWNSPOUTS 309 LF , , FAÇADE PAINT/WOOD TRIM REPLACEMENT LS ,500 1,970 5,530 1,410 1, , WINDOWS/DOORS WINDOWS 31 EA ,050 4,480 12, DOORS 3 EA ,600 3,310 9, DECORATING CORRIDORS/LOBBY COMPOSITE WOOD FLOORING 1,421 SF ,710 1,500 4, LINOLEUM FLOORING 424 SF , , FURNISHINGS LS ,000 1,310 3, ,990 0 INTERIOR PAINT LS 8 7 5,000 1,310 3, , KITCHEN RENOVATION 1 EA ,000 3,420 9, BATHROOMS RENOVATION 2 EA ,000 2,630 7, MECHANICAL/PLUMBING/ELECTRICAL HVAC A/C & HEATING 5 TN ,500 3,290 9,210 2,350 1, , PLUMBING WATER HEATER-50 GAL 1 EA , ELECTRICAL LIGHT FIXTURES 11 EA , , EXIT SIGNS/EMERGENCY LIGHTS 6 EA , CEILING FANS 5 EA , , FIRE PROTECTION/SECURITY FIRE ALARM SYSTEM LS , , TOTAL BUILDING(S) 149,750 39, ,390 6,700 5,410 PAVEMENTS ROADS PREVENTIVE MAINTENANCE 8,812 SY ,220 3,470 9,750 2,490 2, , , PAVEMENT OVERLAY 8,812 SY ,370 32,420 90,950 4,640 3, ,120 BASE/SUB-BASE/CONCRETE 5% 441 SY ,420 4,050 11, ,890 DRIVEWAYS (ASPHALT) DRIVEWAY SEAL COAT 91 EA 4 2 8,190 2,150 6,040 1,540 1, , , ,030 DRIVEWAY OVERLAYS 4,074 SY ,040 14,990 42,050 1,260 1, TOTAL PAVEMENTS 217,240 57, ,160 10,510 8,510 OTHER PROPERTY FEATURES TREES/LANDSCAPING CYPRESS TREE REMOVAL LS NA 1 7,000 1,840 5,160 2,630 2,130 7, Cross Creek Village HOA-FY16 A1 9/25/2015

17 TABLE OF REPAIR & REPLACEMENT RESERVES by MBG ITEM APPROX'MT USEFUL LIFE ESTIMATED DISTR'BTN BALANCE FY16 FISCAL YEARS 1-10 EXPENSE PROJECTION QUANTITY AVG REM COST IN OF AOH NEEDED CONTRIBUTION (YRS) CURRENT $ AS OF TO FUND CASH FLOW COMPONENT Jan-16 RESERVE METHODS (1) (2) (3) (4) (5) (6) (7) (8) (9) CYPRESS TREE REMOVAL LS NA 2 7,000 1,840 5,160 1,320 1, , CYPRESS TREE REMOVAL LS NA 3 7,000 1,840 5, , DISEASED/DEAD ITEM REPLACEMENT LS 3 2 2, , , , , FENCING 6' FENCE (CRANBERRY COURT) 498 LF ,940 4,190 11,750 1, , WALKING TRAIL ASPHALT TRAIL 332 SY ,580 4,360 12,220 1, , TOTAL OTHER PROPERTY FEATURES 56,020 14,730 41,290 7,340 5,940 ANNUAL ALLOWANCES # CONCRETE SIDEWALKS/CURBS/GUTTERS LS 1 1 1, , ,500 1,530 1,570 1,600 1,640 1,680 1,720 1,760 1,800 1,840 # MECHANICAL/PLUMBING/ELECTRICAL LS # SITE ITEMS LS 1 1 1, ,000 1,020 1,050 1,070 1,090 1,120 1,140 1,170 1,200 1, TOTAL ANNUAL ALLOWANCES 3, ,370 1, TOTAL RESERVES $426,210 $112,000 $314,210 $25,770 $20,840 $10,200 $55,350 $10,670 $3,420 $6,240 $63,950 $9,380 $6,680 $9,830 $183,960 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== Reserve Contribution FY16 $25,770 $20,840 Avg Owner Contribution FY16 $283 $229 Notes: Avg Owner Contribution/Month $23.60 $19.08 All dollars rounded to nearest $10. Totals may not add due to rounding. # - An annual allocation. Repairs are usually needed at least once a year. One year remaining useful life indicates the useful life of the component is used up, except for # sign items that are treated as annual events. Cross Creek Village HOA-FY16 A2 9/25/2015

18 ITEM by MBG USEFUL LIFE ESTIMATED FISCAL YEARS EXPENSE PROJECTION AVG REM COST IN (YRS) CURRENT $ (1) (3) (4) (5) BUILDING ROOFING ROOFING-METAL $48,070 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $84,460 $0 $0 $0 $0 GUTTERS/DOWNSPOUTS , , FAÇADE PAINT/WOOD TRIM REPLACEMENT , , , WINDOWS/DOORS WINDOWS , , DOORS ,600 15, DECORATING CORRIDORS/LOBBY COMPOSITE WOOD FLOORING , , LINOLEUM FLOORING , , FURNISHINGS , , ,400 0 INTERIOR PAINT 8 7 5, , , KITCHEN RENOVATION ,000 16, BATHROOMS RENOVATION , , MECHANICAL/PLUMBING/ELECTRICAL HVAC A/C & HEATING , , PLUMBING WATER HEATER-50 GAL , , , ELECTRICAL LIGHT FIXTURES , , EXIT SIGNS/EMERGENCY LIGHTS , , CEILING FANS , , FIRE PROTECTION/SECURITY FIRE ALARM SYSTEM , , TOTAL BUILDING(S) 149,750 PAVEMENTS ROADS PREVENTIVE MAINTENANCE , , , , , PAVEMENT OVERLAY , , BASE/SUB-BASE/CONCRETE 5% , , DRIVEWAYS (ASPHALT) DRIVEWAY SEAL COAT 4 2 8, , , , ,400 0 DRIVEWAY OVERLAYS , , TOTAL PAVEMENTS 217,240 OTHER PROPERTY FEATURES TREES/LANDSCAPING CYPRESS TREE REMOVAL NA 1 7, CYPRESS TREE REMOVAL NA 2 7, CYPRESS TREE REMOVAL NA 3 7, DISEASED/DEAD ITEM REPLACEMENT 3 2 2,500 3, , , , , , ,700 0 FENCING 6' FENCE (CRANBERRY COURT) , , Cross Creek Village HOA-FY16 A3 9/25/2015

19 ITEM by MBG USEFUL LIFE ESTIMATED FISCAL YEARS EXPENSE PROJECTION AVG REM COST IN (YRS) CURRENT $ (1) (3) (4) (5) WALKING TRAIL ASPHALT TRAIL , , TOTAL OTHER PROPERTY FEATURES 56,020 ANNUAL ALLOWANCES # CONCRETE SIDEWALKS/CURBS/GUTTERS 1 1 1,500 1,880 1,920 1,970 2,010 2,060 2,100 2,150 2,200 2,250 2,300 2,350 2,410 2,460 2,520 2,580 2,640 2,700 2,760 2,820 2,880 # MECHANICAL/PLUMBING/ELECTRICAL ,000 1,030 1,050 1,070 1,100 1,120 1,150 1,180 1,200 1,230 1,260 1,290 1,320 1,350 # SITE ITEMS 1 1 1,000 1,250 1,280 1,310 1,340 1,370 1,400 1,430 1,470 1,500 1,530 1,570 1,610 1,640 1,680 1,720 1,760 1,800 1,840 1,880 1, TOTAL ANNUAL ALLOWANCES 3,200 TOTAL RESERVES $426,210 $39,220 $15,250 $4,200 $36,340 $11,250 $21,460 $107,910 $24,090 $35,870 $8,740 $17,880 $38,400 $17,570 $5,380 $21,630 $204,810 $5,760 $260,990 $35,520 $6,150 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== Cross Creek Village HOA-FY16 A4 9/25/2015

20 FUNDING PLANS - 30 YEAR PROJECTION Funding Plans FY Expenses Associations Cash Flow Method Component Method Annual * Cumulative Interest Contr'btn Balance Interest Contr'btn Balance Interest Contr'btn Balance (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) AOH $112,000 $112,000 $112, ,200 10,200 3,730 7, ,970 3,730 25, ,300 3,730 20, , ,350 65,550 3,760 7,610 68,990 4,370 26, ,680 4,210 27, , ,670 76,220 2,300 7,780 68,400 3,550 26, ,520 3,410 18, , ,420 79,640 2,280 7,960 75,220 4,210 27, ,880 3,790 18, , ,240 85,880 2,500 8,140 79,620 5,160 28, ,000 4,430 23, , , ,830 2,650 8,330 26,650 6,060 28, ,950 5,150 32, , , , ,520 26,680 5,090 29, ,160 4,270 24, , , , ,710 29,600 5,930 30, ,580 4,910 28, , , , ,910 29,670 6,910 30, ,520 5,800 37, , , , ,110 (144,190) 7,840 31,560 90,960 6,900 58,810 88, , , ,320 (174,090) 3,030 32,280 87,050 2,960 29,930 82, , , ,530 (179,810) 2,900 33, ,720 2,750 23,790 93, , , ,750 (174,260) 3,590 33, ,880 3,120 24, , , , ,970 (200,630) 4,690 34, ,770 3,890 31, , , , ,200 (201,680) 4,790 35, ,640 3,870 30, , , , ,430 (212,710) 5,750 36, ,070 4,640 37, , , , ,670 (309,950) 6,430 36, ,550 5,340 50, , , , ,910 (323,130) 4,280 37, ,540 3,610 33, , , , ,160 (347,840) 4,880 38, ,210 4,020 32, , , , ,410 (345,170) 5,140 39, ,150 4,030 26, , , , ,670 (351,380) 6,330 40, ,040 4,780 30, , , , ,940 (377,840) 7,290 41, ,290 5,360 41, , , , ,210 (383,200) 7,640 42, ,660 5,640 36, , , , ,490 (376,090) 8,710 43, ,250 6,470 40, , , , ,770 (384,950) 10,260 44, ,130 7,860 52, , , , ,060 (576,700) 11,360 45, ,940 9,140 81, , , , ,360 (569,100) 6,420 46, ,890 5,350 55, , ,990 1,236, ,660 (816,430) 7,990 47,350 34,240 7,180 91,790 53, ,520 1,271, ,970 (837,980) 1,140 48,430 48,290 1,790 35,230 55, ,150 1,278, ,290 (829,840) 1,610 49,530 93,280 1,840 42,360 93,290 SUMMARY 30-Year Income = $20,980 $315,280 $167,080 $1,092,300 $140,240 $1,119, Yr Avg Annual Contr'btn = 10,510 36,410 37, Yr Avg Contr'btn/Owner = Year Minimum Balance = ($837,980) $34,240 $53, Year Maximum Balance = 79, , , Year Minimum Balance = (1,812,620) 35,450 52, Year Maximum Balance = (831,350) 485, ,050 # Units = $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Associations $600,000 Contribution Cash Flow Method Reserve Balance $400,000 $200,000 $0 -$200,000 -$400,000 -$600,000 -$800,000 -$1,000, Associations Cash Flow Method Notes: * An annual average cost. Some expenditures may be needed in earlier years, some in later years, depending on when the actual work is done. Data is a projection based on this point in time. The projection will change as useful life, current costs and amount-on-hand vary. Data should be considered a more accurate projection for years 1-5 than the out-years. Minimum balance does not include the first year. Cross Creek Village HOA-FY16 A5 9/25/2015

21 PROPERTY COMPARISON Sample Size = 100 HOA's/POA's by MBG Maximum 325 Maximum 17.6 Minimum 8 Minimum 0.5 Property Avg 132 Property Avg 5.5 Median 110 Median 5.1 Cross Creek 57 Cross Creek 5.4 % Funded Reserve Depletion Factor Maximum Minimum Property Avg Median 2,257,200 5, , ,250 Maximum Minimum Property Avg Median Cross Creek 112,000 Cross Creek 283 AOH Cost Per Owner Legend: This comparison only compares the first study year to other properties. % Funded -- Used-up life divided by Useful Life times Current Cost. Reserve Depletion Factor -- Number of years the amount-on-hand will fund if no more is contributed to the reserves. Cost Per Owner - The average cost per owner to meet the reserve requirement compared to other properties. Cross Creek Village HOA-FY16 A6 9/25/2015

22 COMMENTS Additional information on the following components an/or recommendations for consideration. PAVEMENTS There are two considerations that apply to asphalt pavements: 1) Implement a preventive maintenance program - preventive maintenance consist of sealing open cracks (equal to or greater than 1/8 ), repair wearing surface/base/sub-base areas that have failed (distinguished by alligator or chicken wire cracking), applying a seal coat to the entire surface and repaint all traffic markings. An additional benefit of sealcoating and traffic markings is the pavement will look uniform and that enhances property appearance. Funding for this work is identified as Preventive Maintenance and "Immediate Repairs for Life Extension." Although we allow for preventive maintenance to be done every four years, if cracks open or asphalt failures occur sooner they should be repaired as needed. Contingency built into the funding plan should be more than adequate to fund additional needed work, 2) Be prepared to repave all asphalt around the time period shown in the table. When repaving there are two possible courses of action, a) mill only near gutter pans to preserve proper drainage and place back 1-1/2" (or more) of compacted asphalt throughout, and b) total milling of all asphalt and repave to thickness removed. Notes: a) Asphalt is an oil based product - price varies with the cost of a barrel of oil, and b) When pavements are shared with adjacent properties quantity shown is one-half the shared amount. BASE/SUB-BASE/CONCRETE 5% Although we allow for 100% of the asphalt to be repaved, our experience supports a smaller percentage of the base/sub-base will need repairs. Entry also provides for major concrete repairs to curbs, gutters and sidewalks. OTHER PROPERTY FEATURES CYPRESS TREE REMOVAL A 3-year program to remove diseased trees. Assumption is only diseased trees will be removed. As known costs become better known estimated costs should be revised accordingly. ANNUAL ALLOWANCES This category provides for non-cyclical items that typically experience some kind of failure each year or every few years. Reserve provides a reasonable amount each year to keep components in good repair. Funding from other sources may be needed if major repairs are needed. CONCRETE SIDEWALKS/CURBS/GUTTERS A reasonable amount to keep these components in good repair. MECHANICAL/PLUMBING/ELECTRICAL A annual expenditure to keep in good repair common area systems, such as, fire sprinklers, security, unit heaters, motors, pumps and other mechanical, plumbing and electric systems that are not reserved for elsewhere. SITE ITEMS Repairs/replacements to signs, sign posts, flood lights, storm drainage, irrigation systems, hand railing, low height wood retaining walls, masonry columns and walls and other miscellaneous items. EXCLUSIONS PRESSURE WASHING/PAINTING/STAINING Not included in the reserves. Maintenance work, properly funded from the operating account. CATASTROPHES Are not predictable events - no reserve allowance. If one occurs funding from other sources may be needed if the contingency built into the reserves is insufficient to cover expenses. BUILDING TENSION CABLES We make no allowance for tension cable that may be installed as this work is not predictable. If tension cables need repair, funding from other sources may be needed if the contingency built into this study is insufficient to pay for repairs by MBG Cross Creek Village HOA-FY16 A7 9/25/2015