Clearbrook HOA. Level 1 Reserve Study. Report Period 1/1/ /31/2010. Client Reference Number /23/2010 Prepared By

Transcription

1 Clearbrook HOA Level 1 Reserve Study Report Period 1/1/ /31/2010 Client Reference Number Property Type Apartment Style Number of Units 21 Fiscal Year End 12/31 Date of Property Inspection 3/23/2010 Prepared By Robert Forney Analysis Method Cash Flow Funding Goal Full Funding Report prepared on Saturday, March 27, 2010 TEL: (888) Fax: (866)

2 Table of Contents Introduction Executive Summary page 1 Introduction page 2 General Information and Frequently Asked Questions page 3-4 Reserve Analysis Funding Summary page 5 Percent Funded Graph page 6 Component Inventory page 7 Significant Components page 8 Significant Components Graph page 9 Yearly Summary page 10 Yearly Reserve Contributions Graph page 11 Component Funding Information page 12 Yearly Cash Flow page 13 Yearly Reserve Expenditures Graph page 14 Projected Reserve Expenditures by Year page Component Evaluation Component Evaluation page 1-17 Glossary of Commonly used Words and Phrases

3 Executive Summary Clearbrook HOA - ID # Information to complete this Reserve Study was gathered by performing an on-site inspection of the common area elements. In addition, we also obtained information by contacting any vendors and/or contractors that have worked on the property recently, as well as communicating with the property representative (BOD Member and/or Community Manager). To the best of our knowledge, the conclusions and recommendations of this report are considered reliable and accurate insofar as the information obtained from these sources. Projected Starting Balance as of 1/1/2010 $8,200 Ideal Reserve Balance as of 1/1/2010 $107,658 Percent Funded as of 1/1/2010 8% Recommended Reserve Contribution (per month) $1,900 Recommended Special Assessment $0 Clearbrook HOA is a 21-unit condominium community. The property offers covered parking as well as landscaped areas as amenities. Currently Programmed Projects We have programmed the slurry sealing of the asphalt (Comp# 402) to occur this year (FY2010). We have programmed an estimated $5,488 in reserve expenditures toward the completion of these projects. (See page 15) Major Reserve Expenditures The first major reserve expenditure is programmed to occur in fiscal year Projects programmed to occur in fiscal year 2012 include replacing the mansard roofs (Comp# 105), replacing the storage building roof (Comp# 105), and repainting the buildings (Comp# 201 & 202). We have programmed approximately $43,730 in reserve funds towards the completion of these projects (see page 10). Significant Reserve Projects The association s significant reserve projects include replacing the flat roofs (Comp# 101), repainting the buildings (Comp# 201), overlaying the asphalt (Comp# 401), and repainting the wrought iron railings (Comp# 207). The fiscal significance of these components is approximately 24%, 14%, 12%, and 10% respectively (see page 8). A component s significance is calculated by dividing its replacement cost by its useful life. In this way, not only is a component s replacement cost considered but also the frequency of occurrence. These components most significantly contribute to the total monthly reserve contribution. As these components have a high level of fiscal significance the association should properly maintain them to ensure they reach their full useful lives. Reserve Funding In comparing the projected starting reserve balance of $8,200 versus the ideal reserve balance of $107,658 we find the association s reserve fund to be approximately 8% funded. This indicates a weak reserve fund position. In fact we have deferred several projects due to the lack of funds. In order to continue to strengthen the account fund, we suggest adopting a monthly reserve contribution of $1,900 ($90.48/unit) per month. However if any of the project costs come in higher than projected or if the deferred project have to be completed earlier then a special assessment may be necessary. Further if the reserve contribution falls below our recommended rate then the reserve fund may fall into a situation where special assessments, deferred maintenance, and lower property values are likely at some point in the future. 1

4 Introduction Reserve Study Purpose The purpose of this Reserve Study is to provide an educated estimate of the necessary reserve allocation. The detailed schedules will serve as an advanced warning that major projects will need to be addressed in the future. This will allow the Board of Directors to have ample time to obtain competitive estimates and bids that will result in cost savings to the individual homeowners. It will also ensure the physical well-being of the property and ultimately enhance each owner s investment, while limiting the possibility of unexpected major projects that may lead to special assessments. Preparer s Credentials After working for a notable national reserve study provider Mr. Forney started Complex Solutions Ltd. in Complex Solutions provides reserve study consulting services to clients primarily in California, Nevada and Utah. Mr. Forney holds a Bachelor of Science degree in Business Administration from Pepperdine University. Conducted over 1,000 reserve studies Created the proprietary software and databases used to prepare Complex Solutions reserve studies. This proprietary software gives Complex Solutions the freedom and ability to create reports tailored to the individual clients needs. Projects have ranged in size from small apartment-style condominium communities to Planned Unit Communities (PUD). Clients have ranged from developers interested in setting initial reserve accounts for communities under construction to high-rise communities, even an aero park (small airport). Active member of three local chapters of CAI (Nevada, Utah, and Channel Islands, CA). (3) Articles published in Community Interests. Budget Breakdown Every association conducts their business within a budget. There are typically two main parts to this budget, operating and reserves. The operating budget includes all expenses that are fixed on an annual basis. These would include management fees, maintenance fees, utilities, etc. The reserves is primarily made up of capital replacement items such as roofing, fencing, mechanical equipment, etc., that do not normally occur on an annual basis. Typically, the reserve contribution makes up 15% - 40% of the association s total budget. Therefore, reserves are considered to be a major part of the overall monthly association payment. Report Sections The Reserve Analysis Section contains the evaluation of the association s reserve balance, income, and expenses. It includes a finding of the client s current reserve fund status (measured as percent funded) and a recommendation for an appropriate reserve allocation rate (also known as the funding plan). The Component Evaluation Section contains information regarding the physical status and replacement cost of major common area components the association is responsible to maintain. It is important to understand that while the component inventory will remain relatively stable from year to year, the condition assessment and life estimates will most likely vary from year to year. 2

5 General Information and Frequently Asked Questions Why is it important to perform a Reserve Study? As previously mentioned, the reserve allocation makes up a significant portion of the total monthly dues. This report provides the essential information that is needed to guide the Board of Directors in establishing the budget in order to run the daily operations of your association. It is suggested that a third party professionally prepare the Reserve Study since there is no vested interest in the property. Also, a professional knows what to look for and how to properly develop an accurate and reliable component list. After we have a Reserve Study completed, what do we do with it? Hopefully, you will not look at this report and think it is too cumbersome to understand. Our intention is to make this Reserve Study easy to read and understand. Please take the time to review it carefully and make sure the main ingredients (component information) are complete and accurate. If there are any inaccuracies, please inform us immediately so we may revise the report. Once you feel the report is an accurate tool to work from, use it to help establish your budget for the upcoming fiscal year. The reserve allocation makes up a large portion of the total monthly dues and this report should help you determine the correct amount of money to go into the reserve fund. Additionally, the Reserve Study should act as a guide to obtain proposals in advance of pending projects. This will give you an opportunity to shop around for the best price available. The Reserve Study should be readily available for real estate agents, brokerage firms, and lending institutions for potential future homeowners. As the importance of reserves becomes more of a household term, people are requesting homeowners associations reveal the strength of the reserve fund prior to purchasing a condominium, town home, or any property that belongs to an association. How often do we update or review the Reserve Study? Unfortunately, there is a misconception that these reports are good for an extended period of time since the report has projections for the next 30 years. Just like any major line item in the budget, the Reserve Study should be reviewed each year before the budget is established. Invariably, some assumptions have to be made during the compilation of this analysis. Anticipated events may not materialize and unpredictable circumstances could occur. Deterioration rates and repair/replacement costs will vary from causes that are unforeseen. Earned interest rates may vary from year to year. These variations could alter the content of the Reserve Study. Therefore, this analysis should be reviewed annually, and a property inspection should be conducted at least once every three years. Is it the law to have a Reserve Study conducted? The Government requires reserve analyses in approximately 20 States. Even if it is not currently governed by your State, the chances are very good that the documents of the association require the association to have a reserve fund established. This doesn t mean a Reserve Study is required, but how are you going to know you have enough funds in the account if you don t have the proper information? Some associations look at the Reserve fund and think that $50,000 is a lot of money and they are in good shape. What they don t know is that the roof is going to need to be replaced within 5 years, and the cost of the roof is going to exceed $75,000. So while $50,000 sounds like a lot of money, in reality it won t even cover the cost of a roof, let alone all the other amenities the association is responsible to maintain. What is a Reserve Component versus an Operating Component? A Reserve component is an item that is the responsibility of the association to maintain, has a limited useful life, predictable remaining useful life, typically occurs on a cyclical basis that exceeds 1 year, and costs above a minimum threshold amount. An Operating expense is typically a fixed expense that occurs on an annual basis. For instance, minor repairs to a roof for damage caused by high winds or other weather elements would be considered an Operating expense. However, if the entire roof needs to be replaced because it has reached the end of its life expectancy, then the replacement would be considered a reserve expense. What are the GREY areas of maintenance items that are often seen in a Reserve Study? One of the most popular questions revolves around major maintenance items, such as painting the buildings or seal coating the asphalt. You may hear from your accountant that since painting or seal coating is not replacing a capital item, then it cannot be considered a Reserve issue. However, it is the opinion of several major Reserve Study providers that these items are considered to be major expenses that occur on a cyclical basis. Therefore, it makes it very difficult to 3

6 ignore a major expense that meets the criteria to be considered a reserve component. Once explained in this context, many accountants tend to agree and will include any expenses, such as these examples, as a reserve component. What happens during the Property Inspection? The Property Inspection was conducted following a review of the documents that were established by the developer identifying all common area assets. In some cases, the Board of Directors at some point may have revised the documents. In either case, the most current set of documents was reviewed prior to inspecting the property. In addition, common area assets may have been reported to Complex Solutions by the client, or by other parties. Estimated life expectancies and life cycles are based upon conditions that were readily accessible and visible at the time of the inspection. We did not destroy any landscape work, building walls, or perform any methods of intrusive investigation during the inspection. In these cases, information may have been obtained by contacting the contractor or vendor that has worked on the property. What is the Financial Analysis? We projected the starting balance by taking the most recent balance statement, adding expected reserve contributions for the rest of the fiscal year, and subtracting any pending projects that will be paid for before the end of the current fiscal year. We compared this number to the ideal reserve balance and arrived at the percent funded level. Measures of strength are as follows: 0% - 30% Funded is considered to be a weak financial position. Associations that fall into this category are subject to special assessments and deferred maintenance, which could lead to lower property values. If the association is in this position, actions should be taken to improve the financial strength of the reserve fund. 31% - 69% Funded is considered a fair financial position. The majority of associations fall into this category. While this doesn t represent financial strength and stability, the likelihood of special assessments and deferred maintenance is diminished. Effort should be taken to continue strengthening the financial position of the reserve fund. 70% - 99% Funded is considered a strong financial position. This indicates financial strength of a reserve fund and every attempt to maintain this level should be a goal of the association. 100% Funded is considered an ideal financial position. This means that the association has the exact amount of funds in the reserve account. 4

7 Funding Summary Beginning Assumptions # of units 21 Fiscal Year End 31-Dec Projected Starting Reserve Balance $8,200 Ideal Starting Reserve Balance $107,658 Economic Assumptions Current Inflation Rate 3.00% Reported After-Tax Interest Rate 2.00% Current Reserve Status Current Balance as a % of Ideal Balance 8% Recommendations Recommended Monthly Reserve Allocation $1,900 Per Unit $90.48 Future Annual Increases 3.00% For number of years: 7 Increases thereafter: 1.00% 5

8 Percent Funded - Graph 120% 100% 80% % Level of Funding 60% 40% 20% 0% Recommended

9 Category ID # Component Name Component Inventory Useful Life (yrs.) Remaining Useful Life (yrs.) Best Cost Worst Cost Roofing 101 Flat Roof - Replace $60,450 $67, Mansard Roof - Comp Shingle - Replace 18 2 $7,310 $8, Pitched Roof - Comp Shingle - Replace 18 2 $2,280 $2,520 Painted Surfaces 201 Buildings - Repaint 12 2 $23,920 $28, Wood Trim - Repaint 5 2 $4,000 $6, Wrought Iron Railings - Repaint 5 1 $6,600 $8,250 Drive Materials 401 Asphalt - Overlay 20 8 $29,813 $39, Asphalt - Slurry Seal 5 0 $4,975 $6,000 Property Access 507 Carports - Repair 15 5 $5,094 $6, Stairways/Railings - Repair 10 1 $7,000 $10,000 Decking 604 Balcony Decks - Resurface N/A $0 $0 Fencing 1001 Wood Fencing - Replace 15 6 $7,250 $8, Chain Link Fencing - Repair/Replace 25 1 $3,000 $5, PVC Vinyl Fencing - Replace $11,760 $13,440 Light Fixtures 1602 Exterior Wall Mount Lights - Replace 15 5 $6,500 $7, Pole Light Fixtures - Replace 15 5 $1,400 $2,100 Landscaping 1805 Landscape Timbers - Replace 30 3 $8,000 $10,000 7

10 Significant Components ID # Component Name Useful Life (yrs.) Remaining Useful Life (yrs.) Average Current Cost Significance: (Curr Cost/UL) As $ As % 101 Flat Roof - Replace $63,976 $3, % 105 Mansard Roof - Comp Shingle - Replac 18 2 $7,820 $ % 105 Pitched Roof - Comp Shingle - Replace 18 2 $2,400 $ % 201 Buildings - Repaint 12 2 $26,000 $2, % 202 Wood Trim - Repaint 5 2 $5,000 $1, % 207 Wrought Iron Railings - Repaint 5 1 $7,425 $1, % 401 Asphalt - Overlay 20 8 $34,781 $1, % 402 Asphalt - Slurry Seal 5 0 $5,488 $1, % 507 Carports - Repair 15 5 $5,603 $ % 590 Stairways/Railings - Repair 10 1 $8,500 $ % 1001 Wood Fencing - Replace 15 6 $7,830 $ % 1003 Chain Link Fencing - Repair/Replace 25 1 $4,000 $ % 1008 PVC Vinyl Fencing - Replace $12,600 $ % 1602 Exterior Wall Mount Lights - Replace 15 5 $7,000 $ % 1604 Pole Light Fixtures - Replace 15 5 $1,750 $ % 1805 Landscape Timbers - Replace 30 3 $9,000 $ % 8

11 Significant Components - Graph 101 Flat Roof - Replace 201 Buildings - Repaint 401 Asphalt - Overlay 207 Wrought Iron Railings - Repaint All Other 41% 24% 10% 11% 14% ID # Component Name Useful Life Remaining Useful Life Average Current Significance: (Curr Cost/UL) (yrs.) (yrs.) Cost As $ As % 101 Flat Roof - Replace $63,976 $3,554 24% 201 Buildings - Repaint 12 2 $26,000 $2,167 14% 401 Asphalt - Overlay 20 8 $34,781 $1,739 12% 207 Wrought Iron Railings - Repaint 5 1 $7,425 $1,485 10% All Other See Expanded Table For Breakdown $6,154 41% 9

12 Yearly Summary Year Fully Starting Percent Reserve Interest Reserve Funded Reserve Funded Contributions Income Expenses Balance Balance 2010 $107,658 $8,200 8% $17,100 $283 $5, $120,788 $20,095 17% $23,484 $435 $20, $119,292 $23,492 20% $24,189 $277 $43, $94,328 $4,227 4% $24,914 $238 $9, $104,022 $19,544 19% $25,662 $653 $ $124,647 $45,859 37% $26,431 $960 $23, $122,725 $50,250 41% $27,224 $1,105 $18, $126,215 $60,365 48% $28,041 $1,439 $6, $142,794 $83,696 59% $28,322 $1,531 $44, $121,397 $69,488 57% $28,605 $1,691 $ $145,331 $99,784 69% $28,891 $2,231 $7, $162,996 $123,531 76% $29,180 $2,565 $22, $166,708 $133,232 80% $29,472 $2,733 $25, $168,037 $140,344 84% $29,766 $3,133 $ $195,917 $173,243 88% $30,064 $3,403 $39, $184,811 $167,383 91% $30,365 $3,599 $8, $205,779 $192,797 94% $30,668 $4,081 $11, $224,637 $215,631 96% $30,975 $3,514 $114, $139,654 $136,113 97% $31,285 $3,063 $ $170,320 $170, % $31,597 $3,760 $ $202,700 $205, % $31,913 $3,928 $54, $180,948 $187, % $32,233 $3,661 $44, $169,791 $179, % $32,555 $3,846 $9, $194,816 $205, % $32,880 $4,488 $ $231,354 $243, % $33,209 $5,245 $ $269,909 $281, % $33,541 $5,909 $11, $298,735 $309, % $33,877 $5,778 $80, $258,104 $268, % $34,216 $5,655 $11, $288,954 $297, % $34,558 $5,548 $79, $251,240 $257, % $34,903 $5,558 $0 10

13 Reserve Contributions - Graph Monthly Reserve Contributions $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $ Year Recommended 11

14 Component Funding Information ID Component Name Quantity Average Ideal Current Fund Current Balance Balance Cost Monthly 101 Flat Roof - Replace Approx 10,075 Sq.ft. $63,976 $3,554 $0 $ Mansard Roof - Comp Shingle - Replace 18 2 Approx 680 Linear ft. $7,820 $6,951 $0 $ Pitched Roof - Comp Shingle - Replace 18 2 Approx 480 Sq.ft. $2,400 $2,133 $0 $16.78 UL RUL 201 Buildings - Repaint 12 2 Approx 20,800 Sq.ft. $26,000 $21,667 $0 $ Wood Trim - Repaint LF of fascia, (42) Doors $5,000 $3,000 $0 $ Wrought Iron Railings - Repaint 5 1 Approx 550 Linear ft. $7,425 $5,940 $2,713 $ Asphalt - Overlay 20 8 Approx 19,875 Sq.ft. $34,781 $20,869 $0 $ Asphalt - Slurry Seal 5 0 Approx 19,875 Sq.ft. $5,488 $5,488 $5,488 $ Carports - Repair 15 5 Approx 4,075 Sq.ft. $5,603 $3,735 $0 $ Stairways/Railings - Repair 10 1 See General Notes $8,500 $7,650 $0 $ Wood Fencing - Replace 15 6 Approx 290 Linear ft. $7,830 $4,698 $0 $ Chain Link Fencing - Repair/Replace ft. of approx 495 ft. $4,000 $3,840 $0 $ PVC Vinyl Fencing - Replace Approx 420 Linear ft. $12,600 $4,200 $0 $ Exterior Wall Mount Lights - Replace 15 5 See General Notes $7,000 $4,667 $0 $ Pole Light Fixtures - Replace 15 5 (7) Fixtures $1,750 $1, $0 $ Landscape Timbers - Replace 30 3 Approx 310 Linear ft. $9,000 $8,100 $0 $37.75 $107,658 $8,200 $1,900 Current Fund Balance as a percentage of Ideal Balance: 8% 12

15 Yearly Cash Flow Year Starting Balance $8,200 $20,095 $23,492 $4,227 $19,544 Reserve Income $17,100 $23,484 $24,189 $24,914 $25,662 Interest Earnings $283 $435 $277 $238 $653 Special Assessments $0 $0 $0 $0 $0 Funds Available $25,583 $44,015 $47,957 $29,379 $45,859 Reserve Expenditures $5,488 $20,523 $43,730 $9,835 $0 Ending Balance $20,095 $23,492 $4,227 $19,544 $45,859 Year Starting Balance $45,859 $50,250 $60,365 $83,696 $69,488 Reserve Income $26,431 $27,224 $28,041 $28,322 $28,605 Interest Earnings $960 $1,105 $1,439 $1,531 $1,691 Special Assessments $0 $0 $0 $0 $0 Funds Available $73,251 $78,580 $89,845 $113,548 $99,784 Reserve Expenditures $23,001 $18,215 $6,149 $44,060 $0 Ending Balance $50,250 $60,365 $83,696 $69,488 $99,784 Year Starting Balance $99,784 $123,531 $133,232 $140,344 $173,243 Reserve Income $28,891 $29,180 $29,472 $29,766 $30,064 Interest Earnings $2,231 $2,565 $2,733 $3,133 $3,403 Special Assessments $0 $0 $0 $0 $0 Funds Available $130,906 $155,276 $165,437 $173,243 $206,711 Reserve Expenditures $7,375 $22,044 $25,093 $0 $39,327 Ending Balance $123,531 $133,232 $140,344 $173,243 $167,383 Year Starting Balance $167,383 $192,797 $215,631 $136,113 $170,461 Reserve Income $30,365 $30,668 $30,975 $31,285 $31,597 Interest Earnings $3,599 $4,081 $3,514 $3,063 $3,760 Special Assessments $0 $0 $0 $0 $0 Funds Available $201,346 $227,546 $250,120 $170,461 $205,818 Reserve Expenditures $8,549 $11,915 $114,007 $0 $0 Ending Balance $192,797 $215,631 $136,113 $170,461 $205,818 Year Starting Balance $205,818 $187,367 $179,069 $205,890 $243,258 Reserve Income $31,913 $32,233 $32,555 $32,880 $33,209 Interest Earnings $3,928 $3,661 $3,846 $4,488 $5,245 Special Assessments $0 $0 $0 $0 $0 Funds Available $241,660 $223,260 $215,470 $243,258 $281,712 Reserve Expenditures $54,293 $44,191 $9,581 $0 $0 Ending Balance $187,367 $179,069 $205,890 $243, $281,712 Year Starting Balance $281,712 $309,673 $268,617 $297,381 $257,910 Reserve Income $33,541 $33,877 $34,216 $34,558 $34,903 Interest Earnings $5,909 $5,778 $5,655 $5,548 $5,558 Special Assessments $0 $0 $0 $0 $0 Funds Available $321,162 $349,327 $308,487 $337,487 $298,371 Reserve Expenditures $11,490 $80,710 $11, $79,577 $0 Ending Balance $309,673 $268,617 $297,381 $257,910 $298,371 13

16 Yearly Reserve Expenditures - Graph $120,000 $100,000 $80,000 Annual Totals $60,000 $40,000 $20,000 $ Year 14

17 Projected Reserve Expenditures by Year Year ID # Component Name Projected Total Per Cost Annum Asphalt - Slurry Seal $5,488 $5, Wrought Iron Railings - Repaint $7, Stairways/Railings - Repair $8, Chain Link Fencing - Repair/Replace $4,120 $20, Mansard Roof - Comp Shingle - Replace $8, Pitched Roof - Comp Shingle - Replace $2, Buildings - Repaint $27, Wood Trim - Repaint $5,305 $43, Landscape Timbers - Replace $9,835 $9, No Expenditures Projected $ Asphalt - Slurry Seal $6, Carports - Repair $6, Exterior Wall Mount Lights - Replace $8, Pole Light Fixtures - Replace $2,029 $23, Wrought Iron Railings - Repaint $8, Wood Fencing - Replace $9,349 $18, Wood Trim - Repaint $6,149 $6, Asphalt - Overlay $44,060 $44, No Expenditures Projected $ Asphalt - Slurry Seal $7,375 $7, Wrought Iron Railings - Repaint $10, Stairways/Railings - Repair $11,766 $22, Wood Trim - Repaint $7, PVC Vinyl Fencing - Replace $17,965 $25, No Expenditures Projected $ Buildings - Repaint $39,327 $39, Asphalt - Slurry Seal $8,549 $8, Wrought Iron Railings - Repaint $11,915 $11, Flat Roof - Replace $105, Wood Trim - Repaint $8,264 $114, No Expenditures Projected $ No Expenditures Projected $ Mansard Roof - Comp Shingle - Replace $14, Pitched Roof - Comp Shingle - Replace $4, Asphalt - Slurry Seal $9, Carports - Repair $10, Exterior Wall Mount Lights - Replace $12, Pole Light Fixtures - Replace $3,161 $54, Wrought Iron Railings - Repaint $13, Stairways/Railings - Repair $15, Wood Fencing - Replace $14,566 $44, Wood Trim - Repaint $9,581 $9, No Expenditures Projected $ No Expenditures Projected $ Asphalt - Slurry Seal $11,490 $11,490 15

18 Year Comp ID Component Name Projected Cost Total Per Annum Buildings - Repaint $56, Wrought Iron Railings - Repaint $16, Chain Link Fencing - Repair/Replace $8,626 $80, Wood Trim - Repaint $11,106 $11, Asphalt - Overlay $79,577 $79, No Expenditures Projected $ Asphalt - Slurry Seal $13, PVC Vinyl Fencing - Replace $30,584 $43,903 16

19 Component Evaluation Comp #: 101 Flat Roof - Replace Location: Quantity: Building roofs Approx 10,075 Sq.ft. General Notes: Quantity breakdown: Life Expectancy: 18 Remaining Life: 17 Best Cost: $60,450 $6.00/Sq.ft.; Estimate to replace roof 4,375 Sq.ft. - Bldg 576/580 5,700 Sq.ft. - Bldg ,075 Sq.ft. - Total Worst Cost: $67,503 $6.70/Sq.ft.; Higher estimate for more labor Source of Information: Actual Cost History Observations: No access to the building roofs at the time of inspection. Client reports that these roofs were replaced in For the purposes of this report we have assumed the roofs are in good condition and will reach a typical useful life of approximately 18 to 20 years. Page 1 of 17

20 Comp #: 105 Mansard Roof - Comp Shingle - Replace Location: Quantity: Building roofs Approx 680 Linear ft. General Notes: Quantity breakdown: Life Expectancy: 18 Remaining Life: 2 Best Cost: $7,310 $10.75/Sq.ft.; Estimate to replace mansard roof 355 Linear ft. - Bldg 576/ Linear ft. - Bldg Linear ft. - Total Worst Cost: $8,330 $12.25/Sq.ft.; Higher estimate Source of Information: CSL Cost Database Observations: Noted shingle deterioration as well as repairs. In general the mansard shingle roofs should be replaced this year. However due to lack of funds client reports that the association plans to replace these roofs in approximately two years. Page 2 of 17

21 Comp #: 105 Pitched Roof - Comp Shingle - Replace Location: Quantity: Storage building Approx 480 Sq.ft. General Notes: Life Expectancy: 18 Remaining Life: 2 Best Cost: $2,280 $4.75/Sq.ft.; Estimate to replace mansard roof Worst Cost: $2,520 $5.25/Sq.ft.; Higher estimate Source of Information: CSL Cost Database Observations: This roof is in poor condition. However due to the current lack of funds we have deferred this project two years to coincide with the replacement of the residential mansard roofs (see Comp# 105 Mansard Roof - Comp Shingle - Replace). Page 3 of 17

22 Comp #: 201 Buildings - Repaint Location: Quantity: Building exteriors Approx 20,800 Sq.ft. General Notes: Quantity breakdown: Life Expectancy: 12 Remaining Life: 2 Best Cost: $23,920 $1.15/Sq.ft.; Estimate to repaint stucco surfaces 10,300 Sq.ft. - Bldg 576/580 9,700 Sq.ft. - Bldg Sq.ft. - Storage bldg. 20,800 Sq.ft. - Total Worst Cost: $28,080 $1.35/Sq.ft.; Higher estimate for more prep costs Source of Information: CSL Cost Database Observations: Noted paint loss in local areas as well as discoloration throughout. However due to the current lack of funds we have deferred this project two years. Page 4 of 17

23 Comp #: 202 Wood Trim - Repaint Location: Quantity: Balcony facia, front doors 210 LF of fascia, (42) Doors General Notes: Life Expectancy: 5 Remaining Life: 2 Best Cost: $4,000 Estimate to repaint Worst Cost: $6,000 Higher estimate Source of Information: CSL Cost Database Observations: Doors are generally in good condition. However the fascia along the balconies is in poor condition and should be painted this year (FY 2010). Repaint these surfaces approximately every 4 to 5 years to maintain appearance and to protect the wood surfaces. Page 5 of 17

24 Comp #: 207 Wrought Iron Railings - Repaint Location: Quantity: Stairs/landing railings, balconies Approx 550 Linear ft. General Notes: Quantity breakdown: Life Expectancy: 5 Remaining Life: 1 Best Cost: $6,600 $12.00/Linear ft.; Estimate to repaint iron fence Worst Cost: $8,250 $15.00/Linear ft; Higher estimate for additional prep work Bldg 576/ Linear ft. - Stairs/landings 90 Linear ft. - Balconies Bldg Linear ft. - Stairs/landings 120 Linear ft. - Balconies 550 Linear ft. - Total Source of Information: CSL Cost Database Observations: Noted discoloration and paint loss as well as rusting. Due to the lack of funds we have defered this project one year to coincide with the repairing of the stairs/landings (see Comp# 590 Stairways/Railings - Repair). Page 6 of 17

25 Comp #: 401 Asphalt - Overlay Location: Quantity: Parking areas Approx 19,875 Sq.ft. General Notes: Life Expectancy: 20 Remaining Life: 8 Best Cost: $29,813 $1.50/Sq.ft.; Estimate for overlay Worst Cost: $39,750 $2.00/Sq.ft.; Higher estimate for local repairs Source of Information: CSL Cost Database Observations: Asphalt is in fair condition. Noted significant cracking in local areas but no alligatoring or structural problems noted. Expect to overlay these surfaces approximately every 20 years. Remaining life based on current condition. Page 7 of 17

26 Comp #: 402 Asphalt - Slurry Seal Location: Quantity: Parking areas Approx 19,875 Sq.ft. General Notes: Life Expectancy: 5 Remaining Life: 0 Best Cost: $4,975 $0.25/Sq.ft.; Estimate for seal coat only Worst Cost: $6,000 $0.30/Sq.ft.; Higher estimate for local repairs Source of Information: CSL Cost Database Observations: Noted minor raveling as well as local cracking. We recommend sealing these surfaces this year (FY 2010) to protect asphalt and to prevent premature overlay (see Comp# 401 Asphalt - Overlay). Page 8 of 17

27 Comp #: 507 Carports - Repair Location: Quantity: Parking area Approx 4,075 Sq.ft. General Notes: Quantity breakdown: Life Expectancy: 15 Remaining Life: 5 Best Cost: $5,094 $1.25/Sq.ft.; Allowance to make repairs to approx 15% (1) 25 X 75 ft. (1) 55 X 40 ft. Worst Cost: $6,113 $1.50/Sq.ft.; Higher allowance Source of Information: CSL Cost Database Observations: No expectation to completely replace carports. We recommend funding to make periodic repairs. Remaining life based on current condition. Page 9 of 17

28 Comp #: 590 Stairways/Railings - Repair Location: Quantity: Stairs/landing railings, balconies See General Notes General Notes: Quantity breakdown: Life Expectancy: 10 Remaining Life: 1 Best Cost: $7,000 Estimate to replace Worst Cost: $10,000 Higher estimate Bldg 576/ Linear ft. - Stairs/landings (74) Steps 90 Linear ft. - Balconies Bldg Linear ft. - Stairs/landings (50) Steps 120 Linear ft. - Balconies Source of Information: CSL Cost Database Observations: Noted significant rusting of the metal tread pans. Because the pans allow water to collect and cause rust some areas have had the metal pans removed and replaced with short right angle metal supports that the concrete step rests on. We recommend significantly repairing the damaged steps and removing the pans to ensure structural stability in the near future. Due to the current lack of funds we have deferred this project one year. However if the rust damage becomes a health and safety issue we recommend repairing the damaged areas immediately. Page 10 of 17

29 Comp #: 604 Balcony Decks - Resurface Location: Quantity: At each building Approx 1,190 Sq.ft. / (14) Balconies General Notes: Quantity breakdown: Life Expectancy: N/A Remaining Life: Best Cost: $0 Worst Cost: $0 Bldg 580/ Sq.ft. - (6) Balconies Bldg Sq.ft. - (8) Balconies 1,190 Sq.ft. - (14) Balconies Source of Information: Observations: Client reports that these decks are the responsibility of the individual owner. No reserve funding necessary. Page 11 of 17

30 Comp #: 1001 Wood Fencing - Replace Location: Quantity: Perimeter fencing Approx 290 Linear ft. General Notes: Life Expectancy: 15 Remaining Life: 6 Best Cost: $7,250 $25/Linear ft.; Estimate to replace fence Worst Cost: $8,410 $29/Linear ft.; Higher estimate for more installation costs Source of Information: CSL Cost Database Observations: Wood fence is in good to fair condition. No evidence of rot or deterioration, no broken areas or structural problems noted at the time of inspection. Expect to replace this fence approximately every 15 years. Remaining life based on current condition. Page 12 of 17

31 Comp #: 1003 Chain Link Fencing - Repair/Replace Location: Quantity: Common area 110 ft. of approx 495 ft. General Notes: Quantity breakdown: Life Expectancy: 25 Remaining Life: 1 Best Cost: $3,000 Estimate to replace 110 Linear ft. - Adjacent to school 275 Linear ft. - Adjacent to river 110 Linear ft. - Parking area 495 Linear ft. - Total Worst Cost: $5,000 Higher estimate Source of Information: CSL Cost Database Observations: Chain link fencing typically has an extended life. However we noted that the parking lot fencing footers have broken away from the edge of the asphalt and are leaning significantly. Therefore we recommend replacing this section of fencing. Due to lack of funds we have deferred this project one year. Although at the time of inspection it was our opinion that the fence is capable of preventing someone from falling off of the edge of the parking area if the fence becomes unstable and creates a health and safety issue we recommend replacing the fence immediately. Page 13 of 17

32 Comp #: 1008 PVC Vinyl Fencing - Replace Location: Quantity: Common area Approx 420 Linear ft. General Notes: Life Expectancy: 18 Remaining Life: 12 Best Cost: $11,760 $28/Linear ft.; Estimate for PVC vinyl fence replacement Worst Cost: $13,440 $32/Linear ft.; Higher estimate for more installation costs Source of Information: CSL Cost Database Observations: Fencing was observed to be in good condition at the time of inspection. Some minor warping noted in local areas. We recommend funding to replace this type of fencing on an 18-year schedule. Remaining life based on current condition. Page 14 of 17

33 Comp #: 1602 Exterior Wall Mount Lights - Replace Location: Building exteriors General Notes: Quantity: See General Notes Life Expectancy: 15 Remaining Life: 5 Best Cost: $6,500 Estimate to replace Worst Cost: $7,500 Higher estimate Source of Information: CSL Cost Database Quantity breakdown: Bldg 576/580 (7) Large fixtures (4) Unit entry lights (6) Ceiling lights Bldg 588 (8) Large fixtures (12) Unit entry lights (3) Ceiling lights (40) Total fixtures Observations: We recommend funding to replace these lights approximately every 15 years to maintain appearance and to ensure proper function. Remaining life based on current condition. Page 15 of 17

34 Comp #: 1604 Pole Light Fixtures - Replace Location: Quantity: Common area (7) Fixtures General Notes: Life Expectancy: 15 Remaining Life: 5 Best Cost: $1,400 $200/Fixture; Estimate to replace fixtures Worst Cost: $2,100 $300/Fixture; Higher estimate for pole/wiring repairs Source of Information: CSL Cost Database Observations: No structural problems noted with lights at the time of inspection. Although the poles should reach an extended life we recommend funding to replace the pole light fixtures and to refurbish the electrical, etc. approximately every 15 years. Page 16 of 17

35 Comp #: 1805 Landscape Timbers - Replace Location: Adjacent to Bldg 576/580, Bldg 588 Retaining wall Quantity: Approx 310 Linear ft. General Notes: Life Expectancy: 30 Remaining Life: 3 Best Cost: $8,000 Estimate to repair/replace Worst Cost: $10,000 Higher estimate Source of Information: CSL Cost Database Observations: Noted significant leaning in areas as well as deterioration. Due to the current lack of funds we have deferred this project 3 years. Page 17 of 17

36 Glossary of Commonly Used Words And Phrases (Provided by the National Reserve Study Standards of the Community Associations Institute) Cash Flow Method A method of developing a reserve funding plan where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different reserve funding plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved. Component Also referred to as an Asset. Individual line items in the Reserve Study developed or updated in the physical analysis. These elements form the building blocks for the Reserve Study. Components typically are: 1) Association responsibility, 2) with limited useful life expectancies, 3) have predictable remaining life expectancies, 4) above a minimum threshold cost, and 5) required by local codes. Component Full Funding When the actual (or projected) cumulative reserve balance for all components is equal to the fully funded balance. Component Inventory The task of selecting and quantifying reserve components. This task can be accomplished through on-site visual observations, review of association design and organizational documents, a review of established association precedents, and discussion with appropriate association representatives. Deficit An actual (or projected reserve balance), which is less than the fully funded balance. Effective Age The difference between useful life and remaining useful life (UL - RUL). Financial Analysis The portion of the Reserve Study where current status of the reserves (measured as cash or percent funded) and a recommended reserve contribution rate (reserve funding plan) are derived, and the projected reserve income and expenses over time is presented. The financial analysis is one of the two parts of the Reserve Study. Fully Funded Balance An indicator against which the actual (or projected) reserve balance can be compared. The reserve balance that is in direct proportion to the fraction of life used up of the current repair or replacement cost of a reserve component. This number is calculated for each component, and then summed together for an association total. FFB = Current Cost * Effective Age / Useful Life Fund Status The status of the reserve fund as compared to an established benchmark, such as percent funded. Funding Goals Independent of calculation methodology utilized, the following represent the basic categories of funding plan goals: Baseline Funding: Establishing a reserve-funding goal of keeping the reserve balance above zero. Component Full Funding: Setting a reserve funding goal of attaining and maintaining cumulative reserves at or near 100% funded. Threshold Funding: Establishing a reserve funding goal of keeping the reserve balance above a specified dollar or percent funded amount. Funding Plan An association s plan to provide income to a reserve fund to offset anticipated expenditures from that fund.

37 Funding Principles Sufficient funds when required Stable contributions through the year Evenly distributed contributions over the years Fiscally responsible GSF - Gross Square Feet Life and Valuation Estimates The task of estimating useful life, remaining useful life, and repair or replacement costs for the reserve components. LF - Linear Feet Percent Funded The ratio, at a particular point in time (typically the beginning of the fiscal year), of the actual (or projected) reserve balance to the ideal fund balance, expressed as a percentage. Physical Analysis The portion of the Reserve Study where the component evaluation, condition assessment, and life and valuation estimate tasks are performed. This represents one of the two parts of the Reserve Study. Remaining Useful Life (RUL) Also referred to as remaining life (RL). The estimated time, in years, that a reserve component can be expected to continue to serve its intended function. Projects anticipated to occur in the current fiscal year have a 0 remaining useful life. Replacement Cost The cost of replacing, repairing, or restoring a reserve component to its original functional condition. The current replacement cost would be the cost to replace, repair, or restore the component during that particular year. Reserve Balance Actual or projected funds as of a particular point in time (typically the beginning of the fiscal year) that the association has identified for use to defray the future repair or replacement of those major components that the association is obligated to maintain. Also known as reserves, reserve accounts, or cash reserves. In this report the reserve balance is based upon information provided and is not audited. Reserve Study A budget-planning tool, which identifies the current status of the reserve fund and a stable and equitable funding plan to offset the anticipated future major common area expenditures. The Reserve Study consists of two parts: The Physical Analysis and the Financial Analysis. Special Assessment An assessment levied on the members of an association in addition to regular assessments. Governing documents or local statutes often regulate special assessments. Surplus An actual (or projected) reserve balance that is greater than the fully funded balance. Useful Life (UL) Also known as life expectancy. The estimated time, in years, that a reserve component can be expected to serve its intended function if properly constructed and maintained in its present application of installation.