RESERVE STUDY FUNDING ANALYSIS

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Sharlene Lyons
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RESERVE STUDY FUNDING ANALYSIS There are two generally accepted means of estimating reserves; the Component Funding Analysis and (he Cash Flow Analysis methodologies.

1 RESERVE STUDY FUNDING ANALYSIS There are two generally accepted means of estimating reserves; the Component Funding Analysis and (he Cash Flow Analysis methodologies. The Component Funding Analysis (or Straight Line Method) calculates the annual contribution amount for each individual line item component by dividing the component's unfunded balance by its remaining useful life. A component's unfunded balance is its replacement cost less the reserve balance in the component at the beginning of the analysis period. The annual contribution rate for each individual line item component is then summed to calculate the total annual contribution rate for this analysis. j The Cash Flow Analysis (or Pooling Method) is a method of calculating reserve contributions where contributions to the reserve funds are designed to offset the variable annual expenditures from the reserve fund. This analysis calculates the future replacement cost for reserve components when they are due for replacement, and recognizes increases in construction costs, as well as interest income attributable to reserve accounts. Funds from the beginning balances are pooled together and a yearly contribution rate is calculated to arrive at a positive cash flow and reserve account balance to adequately fund the future projected expenditures throughout the period of the analysis. If the association maintains a pooled account for reserves, the amount of the contribution to the pooled reserve account as disclosed on the proposed budget shall be not less than that required to ensure that the balance on hand at the beginning of the period for which the budget will go into effect plus the projected annual cash inflows over the remaining estimated useful lives of all of the assets that make up the reserve pool are equal to or greater than the projected annual cash outflows over the remaining estimated useful lives of all of the assets that make up the reserve pool, based on the current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal; the association may include annual percentage increases in costs for the reserve components, but these increases are not mandated. Fully funded reserve contributions utilizing this methodology may not include future special assessments, and the annual funding levels cannot include percentage increases. In our Cash Flow Analysis calculations, we do not include percentage increases in construction costs/inflation. While future costs are expected to be higher than today's costs, which is supported by our analysis of past indexes/trends, increases in costs should be recognized as the association estimates current repair/replacement costs during their annual calculations of full reserve funding. A current cost estimate during the existing fiscal year would theoretically be higher than a current cost for the pending fiscal year, and so on. That way the estimates of current cost moving forward will eventually represent current costs as of the date of forecast expenditure. Funding the reserves annually on that basis should ensure that adequate monies are available as of the date of expense, assuming that the current cost estimate is appropriate and that the reserve was fully funded since its last repair/replacement project was completed.

2 RESERVE STUDY FUNDING ANALYSIS - Continued; As of July,, homeowner's associations are mandated by Florida Statute to include a disclaimer in their annual budgets if reserves are excluded from the budget. If homeowner's associations have previously funded reserves, they must include full funding reserve estimates under similar criteria as condominium associations in the state of Florida. A copy of these requirements is included in the addendum to this report. The association currently utilizes the Cash Flow Analysis; at their request, the Component Funding Analysis methodology has been omitted from our study.

3 EXECUTIVE SUMMARY PROPERTY DATA Property Name: Property Location: GAB File Number: Property Type: Total Units: Holley by the Sea Navarre, Florida Community Association 4 Units Report Run Date: Budget Year Begins: Budget Year Ends: /4/ // /3/ PROJECTED COMPONENT CATEGORIES AND PARAMETERS Component Categories in Reserve Analysis:. Bath House. Beach House 3. Clubhouse/Poolhouse 4. Courts & Ballfields 5. Furnishings & Equipment. Grounds. Hurricane Fund 8. Maintenance Building 9. Pavilions. Paving. Pier & Playground. Pools & Equipment Total current cost of all reserve components in reserve analysis: Estimated beginning reserve fund balance for reserve analysis: Total number of components scheduled for replacement in the budget year: Total cost of components scheduled for replacement in the budget year: ANALYSIS RESULTS - CASH FLOW ANALYSIS Current annual reserve funding contributions amount ( Budget): Recommended annual reserve funding contributions amount: Increase between current and recommended annual contribution amounts: Increase between current and recommended annual contribution amounts:,3, 43, 549,4 34, 4,5,5 5.% CONCLUSIONS Our calculations indicate that the association is experiencing a near term reserve underfunding scenario; at total of+/- 54, in reserve expenditures is forecast for fiscal year, while the association expects to carry a total of+/- 43, in reserves into fiscal year. Our calculations suggest that by the Cash Flow Analysis methodology, the association could fully fund the reserves included in this study in fiscal year at 4,5. As of fiscal year, when the major near future reserve expenditures will have been funded/completed, the funding level could be decreased by a factor of 5%, to 53,488. This level of annual reserve funding could remain stable over the remainder of the year study period, provide adequate funds to offset planned reserve expenditures, and maintain a minimum annual reserve fund balance of approximately, (in fiscal year 3). The, threshold was included based on the observation that most properties would rather not

4 EXECUTIVE SUMMARY - Continued: approach a reserve fund balance at any one given time. The Cash Flow Analysis utilizes a pooling effect with reserve funds by pooling all funds together and distributing these funds to individual components as their replacement comes due. Funds that are pooled together in the cash flow analysis include the beginning balance, contributions to the reserve funds and interest earned on reserve funds. These pooled funds are matched against reserve expenditures throughout the period of the analysis by using our reserve analysis software program to ensure that the available funds are always greater than expenditures.

5 Holley By The Sea ACCOUNTANT'S REPORT Cash Flow Analysis - Holley by the Sea // -/3/ Component Asphalt Overlay, Maint. Road Asphalt Overlay, Parking & Drives Asphalt Sealcoat/Rejuvenation, BH Asphalt Sealcoat/Rejuvenation, CH Audio/Video Equipment, Beach House Audio/Video Equipment, Clubhouse Dock Repair/Restore, Boat Launch Exercise Equipment (Annual) Fencing, BBall/Shuffleboard Fencing, Boat Launch Fencing, East/West Boundaries Fencing, Highway 98 Fencing, Maintenance Yard Fencing, Mechanical Yards Fencing, Pool Area Fencing, Tennis Courts Fire Alarm Systems, Clubhouse Flooring, Carpet - CH Offices Flooring, Mats - Exercise Rooms Flooring, Tile - Bath House Flooring, Tile - CH Entry/Halls/Din Flooring, Tile - CH Kitchen Flooring, Tile - CH RRs/Lockers Flooring, Vinyl - CH Billiards Room Flooring, Vinyl - CH Day Care Flooring, Wood - CH Multipurp. Rm. Fountain Pumps Repair/Replace () Furnishings, Clubhouse Dining Remaining Life (yr/mo) 3/3 3/ / 4/ 9/ / /5 /5 / / / /5 / / / / / / / 4/5 /5 / / / 4/ 9/ 8/5 / Future Cost,489 9,83,,55,5,5,48 9,338 8,98, 4,84 3,9,9,999,5 49,99 9,55 5,3,448 3, 33,49 5, 3,9,3,9,43,83 3, Assigned Reserves 8,9 9,4 9,4 3,5 Contribution Requirement,,43, ,43 3,88 3, ,3, ,5 3, 43, ,5 Assigned Interest Earned Funding Requirement,,48, ,438 3,88 3 3, ,, ,59 33,8 438, , Section Page Copyright 99 by Reserve Pro

6 Wf/jyp//: saw.- ' ^/#r/-f>>/'fjwrm?<^'«^m'/^ Holley By The Sea ACCOUNTANT'S REPORT Cash Flow Analysis - Holley by the Sea // -/3/ Component Remaining Life (yr/mo) Future Cost Assigned Reserves Contribution Requirement Assigned Interest Earned Funding Requirement Furnishings, Clubhouse Offices Furnishings, Clubhouse Patio Furnishings, Clubhouse Patio 4 Furnishings, Pool Decks Hurricane Fund Reserve HVAC Air Handler, Beach House HVAC Air Handler, Beach House HVAC Air Handler, Clubhouse East HVAC Air Handler, Clubhouse Gym HVAC Air Handler, Clubhouse West HVAC Air Handler, Maintenance Bldg. HVAC Condenser, Beach House HVAC Condenser, Beach House HVAC Condenser, Beach House HVAC Condenser, Clubhouse East HVAC Condenser, Clubhouse Gym HVAC Condenser, Clubhouse West HVAC Condenser, Maintenance HVAC Unit, Clubhouse Patio Irrigation Pumps/Equip. Allowance Irrigation System, West Jogging Trail Fitness Stations Jogging Trail Restoration Jogging Trail Restoration Kitchen Equipment, Beach House Kitchen Equipment, Clubhouse Landscaping Allowance Landscaping, Beach House / / 3/ / /5 / / / / / / / / / / /5 / / 4/ / 3/ / /5 /5 4/ / / /,5,,,599 5,,5,9,4,, 3,99,5,3,34,43 8,8 8,8 3,8,435,,, 8, 5, 8,85,4 5,, 9,4 4,3 4,3 4,3 9,4 4,3 4,3 4,3 9,4 4,9 9,4 34, 9 88,483,5,9 8,3,9,5,3,34,9 3,35 3,35,5,5,54 3, ,9 3, , 9 89,49,5,9 8,3,9,5,3,34,9 3,35 3,35, 4,84,54 3, ,4 3, Section Page Copyright 99 by Reserve Pro

7 ACCOUNTANT'S REPUKi Cash Flow Analysis - Holley by the Sea // -/3/ Component Lift Station Pumps/Equip., Camping Lift Station Pumps/Equip., CH Lighting, Parking, Pool, BBall Lighting, Tennis Courts Paint Bath House Interiors Paint Beach House Exteriors Paint Beach House Interiors Paint Clubhouse Exteriors Paint Clubhouse Interiors Paint Maintenance Bldg. Exteriors Pavilions Maintenance Fund Pier/Pier House Maintenance Pier/Pier House Maintenance 3 Pier/Pier House Restore/Replace Playground Equipment Allowance Plumbing/Electrical, Bath House Plumbing/Electrical, Beach House Plumbing/Electrical, Clubhouse Plumbing/Electrical, Maintenance Pool Deck Repair/Replacement Pool Dome Air/Heater Unit Pool Dome Air/Heater Unit Generator Pool Dome Structure/Replacement Pool Equipment, Miscellaneous Pool Heater, Gas Pool Heaters, Geothermal (3) Pool Interiors, Family Pool Pool Interiors, Indoor Pool Remaining Life (yr/mo) 4/ / /4 / /5 / 4/ / / 5/ / / / / / 3/ 9/ / / / /8 / / / 3/ /5 /3 3/ Future Cost,5,5 38,,8,9,448,85 3, 5,4, 5, 5, 5, 5, 5,, 5,,5 5,4 8,,99 5,,,45 8,834 3,49 4,8 Assigned Contribution Assigned Funding Reserves Requirement Interest Earned Requirement 4,3 9,4 4,9 8,,35 935,5 4,455 3,8 358,93 8,43 3,98,8 55 5,9 933,5 83,94 4,88 3,4 9,5 3,8 3, ,359 94,3 4,455 3,8 3,983 8,4 3,948, ,33 938,54 84, 4,88 3,8 98,8 3,8 3,94 Section Page 3 Copyright 99 by Reserve Pro

8 Holley By ne sea ACCOUNTANT'S REPORT Cash Flow Analysis - Holley by the Sea // -/3/ Component Remaining Life (yr/mo) Future Cost Assigned Contribution Assigned Funding Reserves Requirement Interest Earned Requirement Retaining Wall Restoration Roofing, Bath House Roofing, Beach House Roofing, Boat Launch Pavilion Roofing, Clubhouse (Flat ) Roofing, Clubhouse (Flat ) Roofing, Clubhouse (Metal) Roofing, Maintenance Bldg. Roofing, Pier Pavilions Roofing, RV Park Pavilions Roofing, Tennis Pavilions RV Park Maintenance Screen Enclosure, Beach House Security Cameras & Monitors Security Gate Motor & Keypad Signage, Coral, Edgewood, Sunrise Signage, Main Entries Softball Field Renovation Steam Generator, Clubhouse Tennis Court Fencing/Erosion Vehicle Replacement, Golf Carts () Vehicle Replacement, Tractor/Loader Vehicle Replacement, Truck (Arch.) Vehicle Replacement, Truck (Maint.) Vinyl Siding, Bath House Water Heaters, Clubhouse () Totals: / /5 / / 5/ 9/ 5/ / / / / 3/ 9/ / 8/5 5/5 /3 / 3/9 / /9 / 4/5 /9 9/5 4/,4,5 5,, 4,49 5,88 39,58 5,38 4,555,4 3,9 5, 3,9 5,, 5,,5, 5, 5, 5,,, 8,,45 8,39,3,,49 8,9 458,8 3,39 54, , , ,5 35,488 3,5 3,8, 35, ,34 54,35 4 5, ,33 8 4,4 3,5 3,5 38,8, 353,93 Section Page 4 Copyright 99 by Reserve Pro

ALAMEDA ISLES PROPOSED BUDGET FACT SHEET

ALAMEDA ISLES PROPOSED BUDGET FACT SHEET These sheets outline the proposed 2016/2017 budget in two parts. The first part is the operating budget which shows our income and anticipated expenses with a comparative