Pemberley at Robinsons Grove

Transcription

1 Pemberley at Robinsons Grove Level I Reserve Study Report Period 1/01/06 12/31/06 Client Reference Number Property Type Apartment Style Number of Units Fiscal Year End December 31 Date of Property Inspection..... Dec. 7th, 2005 Inspector..... Robert Forney Report prepared on Friday, January 20, 2006

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 1-25 Glossary of Commonly used Words and Phrases

3 Executive Summary Pemberley at Robinsons Grove - ID # Information to complete this Reserve Study was gathered on December 7th, 2005 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 Property 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 January 1, 2006 $72,230 Ideal Reserve Balance as of January 1, 2006 $142,626 Percent Funded as of January 1, % Recommended Reserve Contribution (per month) $4,800 Minimum Reserve Contribution (per month) $4,400 Recommended Special Assessment $0 Minimum Recommended Special Assessment $0 Pemberley at Robinsons Grove is a 160-unit community consisting of apartment-style condominium homes. The property offers a rec. building that includes a fitness room and small theater as well as a pool area as amenities. Construction on the community was completed in Currently Programmed Projects There are no projects programmed to occur this year. (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 2013 include repainting the buildings (Comp# 201), sealing the asphalt streets (Comp# 402), and making replacements to the rec. building furniture (Comp# 1405). We have programmed approximately $172,551 in reserve funds or approximately 35% of fiscal year 2013 s recommended starting balance towards the completion of these projects (see page 10). Significant Reserve Projects The association s significant reserve projects include replacing the roofs (Comp# 105), repainting the buildings (Comp# 201), overlaying the asphalt (Comp# 401), and replacing the vinyl fencing (Comp# 1008). The fiscal significance of these components is approximately 30%, 24%, 10%, and 8% 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 $72,230 versus the ideal reserve balance of $142,626 we find the association s reserve fund to be approximately 151% funded. This indicates a fair reserve fund position. In order to continue to strengthen the account fund, we suggest adopting a monthly reserve contribution of $4,800 ($30.00/unit) per month. We have also included a minimum reserve contribution of $4,400 ($27.50/unit) per month. If the contribution falls below this 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. 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. Information and Data Gathered It is important for the client, homeowners, and potential future homeowners to understand that the information contained in this analysis is based on estimates and assumptions gathered from various sources. Estimated life expectancies and cycles are based upon conditions that were readily visible and accessible at the time of the inspection. No destructive or intrusive methods (such as entering the walls to inspect the condition of electrical wiring, plumbing lines, and telephone wires) were performed. In addition, environmental hazards (such as lead paint, asbestos, radon, etc.), construction defects, and acts of nature have also been excluded from this report. If problem areas were revealed, a reasonable effort has been made to include these items within the report. While every effort has been made to ensure accurate results, this report reflects the judgment of Complex Solutions, Ltd. and should not be construed as a guarantee or assurance of predicting future events. 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 3

6 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 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 160 Fiscal Year End 31-Dec Budgeted Monthly Reserve Allocation $1,120 Projected Starting Reserve Balance $72,230 Ideal Starting Reserve Balance $142,626 Economic Assumptions Current Inflation Rate 3.00% Reported After-Tax Interest Rate 1.50% Current Reserve Status Current Balance as a % of Ideal Balance 51% Recommendations Recommended Monthly Reserve Allocation $4,800 Per Unit $30.00 Future Annual Increases 3.00% For number of years: 16 Increases thereafter: 2.25% Minimum Recommended Monthly Reserve Allocation $4,400 Per Unit $27.50 Future Annual Increases 3.00% For number of years: 16 Increases thereafter: 2.25% Changes From Prior Year Recommended Increase to Reserve Allocation $3,680 as Percentage 329% Minimum Recommended Increase to Reserve Allocation $3,280 as Percentage 293% 5

8 Percent Funded - Graph 120% 100% % Level of Funding 80% 60% 40% 20% 0% Year Recommended Current Minimum 6

9 Category ID # Component Name Component Inventory Useful Life (yrs.) Remaining Useful Life (yrs.) Best Cost Worst Cost Roofing 105 Pitched Roof - Comp Shingle - Repl $237,400 $292,200 Painted Surfaces 201 Buildings - Repaint 10 7 $104,500 $132, Interior Surfaces - Repaint 9 8 $4,350 $5,650 Drive Materials 401 Asphalt - Overlay $93,200 $109, Asphalt - Seal Coat/Crack Fill 5 2 $13,200 $16,500 Fencing 1008 PVC Vinyl Fencing - Replace $64,440 $78,760 Pool/Spa 1101 Pool - Resurface 10 8 $6,000 $8, Spa - Resurface 5 3 $1,500 $1, Pool Heater - Replace $2,000 $2, Spa Heater - Replace $1,800 $2, Pool Filter - Replace $1,000 $1, Spa Filter - Replace $900 $1, Pool Furniture - Replace 6 3 $4,000 $6,000 Recreation Equip Play Structure - Replace $12,000 $15, Picnic Tables - Replace 12 9 $1,200 $1,600 Interiors 1405 Furniture - Partial Replace 10 7 $6,000 $8, Fitness Cardio Equipment - Replace 8 5 $8,000 $10, Fitness Equipment - Replace $3,500 $5, Restrooms - Remodel $8,000 $12, Theater - Remodel/ Equipment Upgr 8 6 $7,000 $9, Kitchenette - Remodel $3,500 $5,500 Flooring 1501 Carpeting - Replace 9 6 $1,700 $2, Safety Flooring - Rubber - Replace 8 5 $900 $1,300 Light Fixtures 1602 Exterior Wall Mount Lights - Replac $28,000 $36, Pole Light Fixtures - Replace $3,000 $4,200 7

10 Significant Components ID # Component Name Useful Life (yrs.) Remaining Useful Life (yrs.) Average Current Cost Significance: (Curr Cost/UL) As $ As % 105 Pitched Roof - Comp Shingle - Replace $264,800 $14, % 201 Buildings - Repaint 10 7 $118,450 $11, % 216 Interior Surfaces - Repaint 9 8 $5,000 $ % 401 Asphalt - Overlay $101,450 $5, % 402 Asphalt - Seal Coat/Crack Fill 5 2 $14,850 $2, % 1008 PVC Vinyl Fencing - Replace $71,600 $3, % 1101 Pool - Resurface 10 8 $7,000 $ % 1102 Spa - Resurface 5 3 $1,650 $ % 1104 Pool Heater - Replace $2,250 $ % 1105 Spa Heater - Replace $2,000 $ % 1107 Pool Filter - Replace $1,150 $ % 1108 Spa Filter - Replace $1,000 $ % 1121 Pool Furniture - Replace 6 3 $5,000 $ % 1301 Play Structure - Replace $13,500 $ % 1306 Picnic Tables - Replace 12 9 $1,400 $ % 1405 Furniture - Partial Replace 10 7 $7,000 $ % 1406 Fitness Cardio Equipment - Replace 8 5 $9,000 $1, % 1406 Fitness Equipment - Replace $4,500 $ % 1413 Restrooms - Remodel $10,000 $ % 1415 Theater - Remodel/ Equipment Upgrade 8 6 $8,000 $1, % 1417 Kitchenette - Remodel $4,500 $ % 1501 Carpeting - Replace 9 6 $2,000 $ % 1590 Safety Flooring - Rubber - Replace 8 5 $1,100 $ % 1602 Exterior Wall Mount Lights - Replace $32,200 $1, % 1604 Pole Light Fixtures - Replace $3,600 $ % 8

11 Significant Components - Graph 105 Pitched Roof - Comp Shingle - Replace 201 Buildings - Repaint 401 Asphalt - Overlay 1008 PVC Vinyl Fencing - Replace All Other 27% 31% 8% 10% 24% Useful Life (yrs.) Remaining Useful Life (yrs.) Average Current Cost Significance: ID # Component Name (Curr Cost/UL) As $ As % 105 Pitched Roof - Comp Shingle - Replace $264,800 $14,711 30% 201 Buildings - Repaint 10 7 $118,450 $11,845 24% 401 Asphalt - Overlay $101,450 $5,073 10% 1008 PVC Vinyl Fencing - Replace $71,600 $3,978 8% All Other See Expanded Table For Breakdown $13,160 27% 9

12 Yearly Summary Year Fully Funded Balance Starting Reserve Balance Percent Funded Reserve Contributions Interest Income Reserve Expenses 2006 $142,626 $72,230 51% $57,600 $1,526 $ $197,135 $131,356 67% $59,328 $2,432 $ $254,785 $193,116 76% $61,108 $3,259 $15, $299,491 $241,729 81% $62,941 $4,071 $7, $355,878 $301,474 85% $64,829 $5,043 $ $423,089 $371,347 88% $66,774 $6,024 $11, $481,952 $432,437 90% $68,777 $6,961 $11, $544,088 $496,234 91% $70,841 $6,727 $172, $444,459 $401,250 90% $72,966 $6,481 $17, $503,613 $463,406 92% $75,155 $7,504 $8, $575,659 $537,714 93% $77,410 $8,641 $8, $651,574 $615,163 94% $79,732 $9,893 $ $740,651 $704,788 95% $82,124 $10,949 $41, $791,385 $756,015 96% $84,588 $11,837 $29, $858,865 $823,289 96% $87,125 $13,001 $12, $948,145 $911,315 96% $89,739 $10,023 $585, $452,118 $425,904 94% $92,431 $7,131 $ $546,285 $525,466 96% $94,511 $5,402 $430, $202,638 $195,225 96% $96,637 $3,567 $14, $279,062 $280, % $98,812 $4,986 $ $375,512 $384, % $101,035 $6,570 $ $477,498 $492, % $103,308 $7,981 $30, $553,650 $572, % $105,633 $9,024 $56, $608,777 $631, % $108,009 $10,326 $3, $722,820 $746, % $110,440 $12,076 $4, $842,423 $864, % $112,924 $13,915 $ $972,866 $991, % $115,465 $15,768 $10, $1,099,271 $1,112, % $118,063 $15,008 $354, $878,213 $890, % $120,720 $14,208 $19, $999,097 $1,005, % $123,436 $15,793 $42,889 10

13 Reserve Contributions - Graph $12,000 $10,000 Monthly Contribution $8,000 $6,000 $4,000 $2,000 $ Year Recommended Current Minimum 11

14 Component Funding Information ID Component Name Average Current Cost Future Cost Ideal Balance Current Fund Balance Monthly 105 Pitched Roof - Comp Shingle - Replace $264,800 $412,550 $44,133 $8,280 $1, Buildings - Repaint $118,450 $145,679 $35,535 $35,535 $1, Interior Surfaces - Repaint $5,000 $6,334 $556 $556 $ Asphalt - Overlay $101,450 $167,681 $15,218 $0 $ Asphalt - Seal Coat/Crack Fill $14,850 $15,754 $8,910 $8,910 $ PVC Vinyl Fencing - Replace $71,600 $111,550 $11,933 $0 $ Pool - Resurface $7,000 $8,867 $1,400 $1,400 $ Spa - Resurface $1,650 $1,803 $660 $660 $ Pool Heater - Replace $2,250 $3,024 $375 $375 $ Spa Heater - Replace $2,000 $2,688 $333 $333 $ Pool Filter - Replace $1,150 $1,546 $192 $192 $ Spa Filter - Replace $1,000 $1,344 $167 $167 $ Pool Furniture - Replace $5,000 $5,464 $2,500 $2,500 $ Play Structure - Replace $13,500 $22,313 $2,025 $0 $ Picnic Tables - Replace $1,400 $1,827 $350 $350 $ Furniture - Partial Replace $7,000 $8,609 $2,100 $2,100 $ Fitness Cardio Equipment - Replace $9,000 $10,433 $3,375 $3,375 $ Fitness Equipment - Replace $4,500 $6,608 $844 $844 $ Restrooms - Remodel $10,000 $14,258 $2,000 $2,000 $ Theater - Remodel/ Equipment Upgrade $8,000 $9,552 $2,000 $2,000 $ Kitchenette - Remodel $4,500 $6,416 $900 $900 $ Carpeting - Replace $2,000 $2,388 $667 $667 $ Safety Flooring - Rubber - Replace $1,100 $1,275 $413 $413 $ Exterior Wall Mount Lights - Replace $32,200 $50,167 $5,367 $0 $ Pole Light Fixtures - Replace $3,600 $5,287 $675 $675 $22.15 $142,626 $72,230 $4,800 Current Fund Balance as a percentage of Ideal Balance: 51% 12

15 Yearly Cash Flow Year Starting Balance $72,230 $131,356 $193,116 $241,729 $301,474 Reserve Income $57,600 $59,328 $61,108 $62,941 $64,829 Interest Earnings $1,526 $2,432 $3,259 $4,071 $5,043 Special Assessments $0 $0 $0 $0 $0 Funds Available $131,356 $193,116 $257,483 $308,741 $371,347 Reserve Expenditures $0 $0 $15,754 $7,267 $0 Ending Balance $131,356 $193,116 $241,729 $301,474 $371,347 Year Starting Balance $371,347 $432,437 $496,234 $401,250 $463,406 Reserve Income $66,774 $68,777 $70,841 $72,966 $75,155 Interest Earnings $6,024 $6,961 $6,727 $6,481 $7,504 Special Assessments $0 $0 $0 $0 $0 Funds Available $444,145 $508,175 $573,802 $480,697 $546,064 Reserve Expenditures $11,709 $11,941 $172,551 $17,291 $8,351 Ending Balance $432,437 $496,234 $401,250 $463,406 $537,714 Year Starting Balance $537,714 $615,163 $704,788 $756,015 $823,289 Reserve Income $77,410 $79,732 $82,124 $84,588 $87,125 Interest Earnings $8,641 $9,893 $10,949 $11,837 $13,001 Special Assessments $0 $0 $0 $0 $0 Funds Available $623,764 $704,788 $797,861 $852,440 $923,416 Reserve Expenditures $8,601 $0 $41,846 $29,150 $12,101 Ending Balance $615,163 $704,788 $756,015 $823,289 $911,315 Year Starting Balance $911,315 $425,904 $525,466 $195,225 $280,703 Reserve Income $89,739 $92,431 $94,511 $96,637 $98,812 Interest Earnings $10,023 $7,131 $5,402 $3,567 $4,986 Special Assessments $0 $0 $0 $0 $0 Funds Available $1,011,077 $525,466 $625,378 $295,429 $384,500 Reserve Expenditures $585,173 $0 $430,154 $14,726 $0 Ending Balance $425,904 $525,466 $195,225 $280,703 $384,500 Year Starting Balance $384,500 $492,106 $572,700 $631,311 $746,390 Reserve Income $101,035 $103,308 $105,633 $108,009 $110,440 Interest Earnings $6,570 $7,981 $9,024 $10,326 $12,076 Special Assessments $0 $0 $0 $0 $0 Funds Available $492,106 $603,395 $687,357 $749,646 $868,906 Reserve Expenditures $0 $30,695 $56,046 $3,256 $4,066 Ending Balance $492,106 $572,700 $631,311 $746,390 $864,840 Year Starting Balance $864,840 $991,680 $1,112,130 $890,240 $1,005,377 Reserve Income $112,924 $115,465 $118,063 $120,720 $123,436 Interest Earnings $13,915 $15,768 $15,008 $14,208 $15,793 Special Assessments $0 $0 $0 $0 $0 Funds Available $991,680 $1,122,913 $1,245,202 $1,025,167 $1,144,605 Reserve Expenditures $0 $10,783 $354,962 $19,791 $42,889 Ending Balance $991,680 $1,112,130 $890,240 $1,005,377 $1,101,716 13

16 Yearly Reserve Expenditures - Graph $600,000 $500,000 $400,000 Annual Totals $300,000 $200,000 $100,000 $ Year

17 Projected Reserve Expenditures by Year Year ID # Component Name Projected Cost Total Per Annum 2006 No Expenditures Projected $ No Expenditures Projected $ Asphalt - Seal Coat/Crack Fill $15,754 $15, Spa - Resurface $1, Pool Furniture - Replace $5,464 $7, No Expenditures Projected $ Fitness Cardio Equipment - Replace $10, Safety Flooring - Rubber - Replace $1,275 $11, Theater - Remodel/ Equipment Upgrade $9, Carpeting - Replace $2,388 $11, Buildings - Repaint $145, Asphalt - Seal Coat/Crack Fill $18, Furniture - Partial Replace $8,609 $172, Interior Surfaces - Repaint $6, Pool - Resurface $8, Spa - Resurface $2,090 $17, Pool Furniture - Replace $6, Picnic Tables - Replace $1,827 $8, Pool Heater - Replace $3, Spa Heater - Replace $2, Pool Filter - Replace $1, Spa Filter - Replace $1,344 $8, No Expenditures Projected $ Asphalt - Seal Coat/Crack Fill $21, Restrooms - Remodel $14, Kitchenette - Remodel $6,416 $41, Spa - Resurface $2, Fitness Cardio Equipment - Replace $13, Fitness Equipment - Replace $6, Safety Flooring - Rubber - Replace $1, Pole Light Fixtures - Replace $5,287 $29, Theater - Remodel/ Equipment Upgrade $12,101 $12, Pitched Roof - Comp Shingle - Replace $412, PVC Vinyl Fencing - Replace $111, Pool Furniture - Replace $7, Carpeting - Replace $3, Exterior Wall Mount Lights - Replace $50,167 $585, No Expenditures Projected $ Buildings - Repaint $195, Interior Surfaces - Repaint $8, Asphalt - Overlay $167, Asphalt - Seal Coat/Crack Fill $24, Play Structure - Replace $22, Furniture - Partial Replace $11,570 $430, Pool - Resurface $11,917 15

18 Year Comp ID Component Name Projected Cost Total Per Annum 1102 Spa - Resurface $2,809 $14, No Expenditures Projected $ No Expenditures Projected $ Pool Furniture - Replace $9, Picnic Tables - Replace $2, Fitness Cardio Equipment - Replace $16, Safety Flooring - Rubber - Replace $2,046 $30, Asphalt - Seal Coat/Crack Fill $28, Pool Heater - Replace $4, Spa Heater - Replace $3, Pool Filter - Replace $2, Spa Filter - Replace $1, Theater - Remodel/ Equipment Upgrade $15,329 $56, Spa - Resurface $3,256 $3, Carpeting - Replace $4,066 $4, No Expenditures Projected $ Interior Surfaces - Repaint $10,783 $10, Buildings - Repaint $263, Asphalt - Seal Coat/Crack Fill $32, Pool Furniture - Replace $11, Furniture - Partial Replace $15, Restrooms - Remodel $22, Kitchenette - Remodel $9,996 $354, Pool - Resurface $16, Spa - Resurface $3,775 $19, Fitness Cardio Equipment - Replace $21, Fitness Equipment - Replace $10, Safety Flooring - Rubber - Replace $2, Pole Light Fixtures - Replace $8,484 $42, Theater - Remodel/ Equipment Upgrade $19,418 $19,418 16

19 Component Evaluation Comp #: 105 Pitched Roof - Comp Shingle - Replace Building roofs Approx 182,620 Sq.ft. Life Expectancy: 18 Remaining Life: 15 Best Cost: $237,400 $1.30/Sq.ft.; Estimate to replace roof Worst Cost: $292,200 $1.60/Sq.ft.; Higher estimate for more installation costs Asphalt shingle roofs have a typical life expectancy of approximately 18 years. Remaining life based on average age. Page 1 of 25

20 Comp #: 201 Buildings - Repaint Exterior building surfaces Approx 139,390 Sq.ft. Life Expectancy: 10 Remaining Life: 7 Best Cost: $104,500 $0.75/Sq.ft.; Estimate to repaint stucco surfaces Worst Cost: $132,400 $0.95/Sq.ft.; Higher estimate for more prep costs Typically stucco surfaces should be painted approximately every 10 years to avoid staining and discoloration. Remaining life based on average age. Page 2 of 25

21 Comp #: 216 Interior Surfaces - Repaint Recreation building Approx. 8,685 Sq.ft Component breakdown: Life Expectancy: 9 Remaining Life: 8 Best Cost: $4,350 $.50/Sq.ft.; Estimate to repaint Worst Cost: $5,650 $.65/Sq.ft.; Higher estimate Main room - 1,950 Sq.ft Hallway - 1,460 Fitness room - 1,425 Sq.ft Children's play room Sq.ft Office - 1,300 Sq.ft Theatre - 1,275 Sq. ft Bathrooms Sq.ft Total - 8,685 Sq.ft. Interior painted surfaces are generally in good condition. Some local marking noted but no significant appearance concerns observed. Expect to repaint these surfaces approximately every 10 years to maintain appearance. Page 3 of 25

22 Comp #: 401 Asphalt - Overlay Community streets Approx. 109,680 Sq.ft. Life Expectancy: 20 Remaining Life: 17 Best Cost: $93,200 $0.85/Sq.ft.; Estimate for overlay Worst Cost: $109,700 $1.00/Sq.ft.; Higher estimate for local repairs Asphalt surfaces typically require an overlay approximately every 20 years. Seal these streets (see Comp# 402 Asphalt - Seal Coat / Crack Fill) regularly to protect surface and ensure full life. Page 4 of 25

23 Comp #: 402 Asphalt - Seal Coat/Crack Fill Community streets Approx.109,680 Sq.ft. Life Expectancy: 5 Remaining Life: 2 Best Cost: $13,200 $0.12/Sq.ft.; Estimate for seal coat only Worst Cost: $16,500 $0.15/Sq.ft.; Higher estimate for local repairs Asphalt surfaces should be sealed regularly to prevent premature overlay (see Comp# 401 Asphalt - Overlay). Remaining life based on current age. Page 5 of 25

24 Comp #: 1008 PVC Vinyl Fencing - Replace Perimeter fence, pool fence, balconies Approx 3,580 Linear ft. Quantity breakdown: Life Expectancy: 18 Remaining Life: 15 Best Cost: $64,440 $18/Linear ft.; Estimate for PVC vinyl fence replacement 150 Linear ft. - Pool fence 1,280 Linear ft. - Perimeter fence 2,150 Linear ft. - Balcony railing Worst Cost: $78,760 $22/Linear ft.; Higher estimate for better quality material Fencing was observed to be in good condition at the time of inspection. Some minor warping noted in local areas. We recommend funding for replacement of this type of fence every 18 years. Page 6 of 25

25 Comp #: 1101 Pool - Resurface Pool area (1) 25 X 15 ft. pool Life Expectancy: 10 Remaining Life: 8 Best Cost: $6,000 Estimate to replaster pool Worst Cost: $8,000 Higher estimate for local repairs Unable to inspect pool at the time of inspection. Assume pool is aging normally. Service professionally to ensure full life. Page 7 of 25

26 Comp #: 1102 Spa - Resurface Pool area (1) 8 X 8 ft. spa Life Expectancy: 5 Remaining Life: 3 Best Cost: $1,500 Estimate to replaster spa Worst Cost: $1,800 Higher estimate for local repairs Unable in inspection spa at the time of inspection. Assume spa surface is aging normally. Expect to resurface spa approximately every 5 years. Page 8 of 25

27 Comp #: 1104 Pool Heater - Replace Pool equipment area (1) Pool heater Life Expectancy: 12 Remaining Life: 10 Best Cost: $2,000 Estimate to replace heater Worst Cost: $2,500 Higher estimate for more installation costs Unable to inspect pool equipment. Assume heater is aging normally. Expect a useful life of approximately 12 years from this component. Page 9 of 25

28 Comp #: 1105 Spa Heater - Replace Pool equipment area (1) Heater Life Expectancy: 12 Remaining Life: 10 Best Cost: $1,800 Estimate to replace Worst Cost: $2,200 Higher estimate for more installation costs Unable to inspect pool equipment. Assume heater is aging normally. Expect a useful life of approximately 12 years from this component. Page 10 of 25

29 Comp #: 1107 Pool Filter - Replace Pool equipment area (1) Pool filter Life Expectancy: 12 Remaining Life: 10 Best Cost: $1,000 Estimate to replace filter Worst Cost: $1,300 Higher estimate for more installation costs Unable to inspect pool equipment. Assume filter is aging normally. Expect a useful life of approximately 12 years from this component. Page 11 of 25

30 Comp #: 1108 Spa Filter - Replace Pool equipment area (1) Spa filter Life Expectancy: 12 Remaining Life: 10 Best Cost: $900 Estimate to replace filter Worst Cost: $1,100 Higher estimate for more installation costs Unable to inspect pool equipment. Assume filter is aging normally. Expect a useful life of approximately 12 years from this component. Page 12 of 25

31 Comp #: 1121 Pool Furniture - Replace Pool area See general notes Quantity breakdown: Life Expectancy: 6 Remaining Life: 3 Best Cost: $4,000 Allowance to make replacements Worst Cost: $6,000 Higher estimate for more replacements/better quality (25) Metal chairs (8) Metal chaise lounges (2) Metal benches (3) Metal tables (2) Metal drink tables (3) Umbrellas Furniture is in good condition. Expect to make replacements to the pool furniture approximately every 6 years. Page 13 of 25

32 Comp #: 1301 Play Structure - Replace Park area (1) Play structure Life Expectancy: 20 Remaining Life: 17 Best Cost: $12,000 Estimate to replace Worst Cost: $15,000 Higher estimate No problems noted at the time of inspection. We recommend funding to replace this component on a 20 year schedule to maintain appearance. Page 14 of 25

33 Comp #: 1306 Picnic Tables - Replace Picnic cabanas (2) Picnic tables Life Expectancy: 12 Remaining Life: 9 Best Cost: $1,200 $600/Table; Estimate to replace Worst Cost: $1,600 $800/Table; Higher estimate No fading or chalkiness noted on plasticol coating. Expect to replace these tables approximately every 12 to 15 years. Page 15 of 25

34 Comp #: 1405 Furniture - Partial Replace Recreation building See general notes Quantity breakdown: Life Expectancy: 10 Remaining Life: 7 Best Cost: $6,000 Allowance to make replacements Worst Cost: $8,000 Higher allowance 25 linear ft. mirrored wall (4) Lamps (4) Chairs (4) Couches (3) End tables (3) Five-light track lighting (1) Coffee table (1) Round glass table/4 chairs (1) Fireplace (1) Rug (1) Ceiling fan (1) T.V. (1) DVD player No signs of wear or damage. We recommend funding for an allowance to make replacements to the furniture every 10 years. Page 16 of 25

35 Comp #: 1406 Fitness Cardio Equipment - Replace Recreation building See general notes Quantity breakdown: Life Expectancy: 8 Remaining Life: 5 Best Cost: $8,000 Estimate to replace cardio fitness equipment (2) Life Fitness "Flex Deck" treadmills 9000HR (1) Life Fitness life Cycle (1) Life Fitness 90R - recline bike Worst Cost: $10,000 Higher estimate Due to heavy use expect to replace this equipment approximately every 8 years. Make repairs as necessary as service regularly as an operating expense. Page 17 of 25

36 Comp #: 1406 Fitness Equipment - Replace Recreation building See general notes Component breakdown: Life Expectancy: 16 Remaining Life: 13 Best Cost: $3,500 Estimate to replace Worst Cost: $5,500 Higher estimate (1) bench press (1) lat pull down (1) leg extension/curl (1) leg press (1) weight rack (22) weights lbs. No rips or tears in bench upholstery, no missing weights noted. Expect to replace this type of fitness equipment approximately every 16 years. Page 18 of 25

37 Comp #: 1413 Restrooms - Remodel Restrooms (2) Restrooms Life Expectancy: 15 Remaining Life: 12 Best Cost: $8,000 $4,000/Restroom; Estimate to remodel restroom Worst Cost: $12,000 $6,000/Restroom; Higher estimate for more extensive remodel Restroom interiors are in good condition. Painted surfaces are bright and mark-free, countertop and fixtures are in good condition. Expect to conduct a general remodeling of the restroom interiors approximately every 15 years to maintain appearance and keep up with current decorative tastes. Page 19 of 25

38 Comp #: 1415 Theater - Remodel/ Equipment Upgrade Rec. building (1) Theater Life Expectancy: 8 Remaining Life: 6 Best Cost: $7,000 Allowance to remodel and upgrade equipment Worst Cost: $9,000 Higher allowance Chairs and equipment is in good condition. We recommend funding for an allowance to replace equipment and make remodeling upgrades approximately every 8 years. Page 20 of 25

39 Comp #: 1417 Kitchenette - Remodel Rec. building See General Notes Component breakdown: Life Expectancy: 15 Remaining Life: 12 Best Cost: $3,500 Estimate to remodel Worst Cost: $5,500 Higher estimate for more extensive remodel Cabinets - 24 linear ft. Countertop - 17 linear ft. (1) G.E. oven (1) G.E. refrigerator (1) G.E. dishwasher (1) G.E. microwave Kitchenette is in good condition. Although this area my reach an extended life we recommend funding to remodel and make replacements to the appliances approximately every 15 years. Page 21 of 25

40 Comp #: 1501 Carpeting - Replace Recreation building Approx. 82 Sq.yrds. Component breakdown: Life Expectancy: 9 Remaining Life: 6 Best Cost: $1,700 $21/Sq.yrd.; Estimate to replace Children's play room - 12 Sq.yrds. Office - 12 Sq.yrds. Theatre - 58 Sq.yrds. Total - 82 Sq.yrds. Worst Cost: $2,300 $28/Sq.yrd.; Higher estimate for better quality No significant staining or wear patterns observed. Expect to replace this component approximately every 8 to 10 years assuming normal use and wear. Remaining life based on current age and condition. Page 22 of 25

41 Comp #: 1590 Safety Flooring - Rubber - Replace Fitness rooms Approx 440 Sq.ft. Life Expectancy: 8 Remaining Life: 5 Best Cost: $900 $2/Sq.ft.; Estimate to replace flooring Worst Cost: $1,300 $3/Sq.ft.; Higher estimate No gouges or significant signs of wear. Expect to replace this rubber safety flooring approximately every 8 years to maintain appearance and ensure proper function as a safety feature. Page 23 of 25

42 Comp #: 1602 Exterior Wall Mount Lights - Replace At each building Approx 280 Lights Life Expectancy: 18 Remaining Life: 15 Best Cost: $28,000 $100/Lamp; Estimate to replace exterior wall lamps Worst Cost: $36,400 $130/Lamp; Higher estimate for better quality replacements Lights are generally in good condition. Expect to make local repairs and replacements as necessary as an operating expense and to completely replace lights approximately every 18 years. Page 24 of 25

43 Comp #: 1604 Pole Light Fixtures - Replace Common area (12) Pole lights Life Expectancy: 16 Remaining Life: 13 Best Cost: $3,000 $250/Fixture; Estimate to replace light fixtures Worst Cost: $4,200 $350/Fixture; Higher estimate for more installation costs No structural problems noted with lights at the time of inspection. Due to the extended life associated with light poles reserve funding is not appropriate. Reserve only to replace fixtures on a 16 year schedule to maintain appearance and function. Page 25 of 25

44 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.

45 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.