RESERVE FUND STUDY REPORT

Transcription

1 RESERVE FUND STUDY REPORT Prepared for EAGLE RIDGE HOME OWNERS ASSOCIATION 538 HEFFERNAN DRIVE, EDMONTON, ALBERTA May Avenue, Edmonton, AB T5M 3X4

2 NOTICE TO READER All contents are protected by Copyright 1998 by Wade Engineering Ltd. and may not be reproduced without the express written permission of Wade Engineering Ltd. Cost/Life Data, Cost/Life Analysis, Present Course, and Reasonable & Sufficient, spreadsheets are Copyright and protected by law. Financial decisions based on assumptions or findings in this Report must consider the issuance date of this Report, the Scope of Work, Parameters and Variables as defined in this Report.

3 TABLE OF CONTENTS PROJECT SUMMARY... 1 FINANCIAL SUMMARY... 2 SUMMARY OF RECOMMENDATIONS... 3 INTRODUCTION... 4 SCOPE OF WORK... 4 PARAMETERS... 5 VARIABLES... 6 COMPONENT DESCRIPTION AND GENERAL CONDITIONS... 7 WALKWAYS AND STEPS... 7 RAILINGS AND GUARD POSTS... 8 LIGHTING... 9 FENCING LANDSCAPING RETAINING WALL AND UNISTONE SIGNAGE ANOMALIES AND SAFETY CONCERNS OF LIFE ITEMS FINANCIAL ANALYSIS QUALIFICATIONS STUDY PERSONNEL REFERENCE SOURCES FINANCIAL SPREADSHEETS Cost Life Data Cost Life Analysis Present Course Reasonable & Sufficient Ten Year Replacement Schedule... 27

4 PROJECT SUMMARY Project Name: Style of Buildings: Age of Property: Number of Buildings: Eagle Ridge Home Owners Association 538 Heffernan Drive, Edmonton, Alberta Single Family Houses 18 Years 265 Buildings Wade Engineering Ltd. was commissioned to conduct a Reserve Fund Study for Eagle Ridge Home Owners Association Condominium Corporation. This development is located on 538 Heffernan Drive, in the City of Edmonton, Alberta. This development is a home owners association, which only includes concrete walkways, fences, lights, and landscaping as part of the common property. Landscaping consists of grass, coniferous and deciduous trees and shrubs. The Reserve Fund Study consisted of a review of pertinent documentation, and consultation with the Board of Directors to develop an inventory of the common property components. The quantities and conditions of the common components were determined through site investigations conducted in May The component description, overall condition, conditions noted, pertinent history and specific maintenance or replacement recommendations have been summarized in chart form. Safety Concerns and Anomalies are summarized in a similar fashion. EAGLE RIDGE HOME OWNERS ASSOCIATION 1 WADE ENGINEERING LTD. Ó 2012

5 FINANCIAL SUMMARY Current Replacement Cost: $329, Annual Replacement Cost: $22, Recommended Safety Margin $23, Opening Fund Balance: $140, Current Annual Reserve Contribution: $15, Recommended Annual Contribution: $22, The expected life and replacement costs of components were estimated using technical resource literature, and information from contractors and industry professionals. Financial spreadsheets were developed, taking into account interest earned on Reserve Fund investments and inflation of replacement cost estimates. At Eagle Ridge Home Owners Association Condominium Corporation, the total cost of the common property components to be replaced or restored by the Reserve Fund, in today s dollars is $329, The Annual Replacement Cost (or the annual rate of deterioration of these components expressed in dollars) is $22, per year. A minimum fund balance or Safety Margin is recommended to offset unpredictable expenses, such as random sewer collapses. The Safety Margin for this development has been set at $23, which is based on the Annual Replacement Cost for this development. The Reasonable & Sufficient spreadsheet recommends an Annual Contribution of $22, increased annually by 2%. This option maintains a balance in the Reserve Fund sufficient to cover the scheduled expenses. EAGLE RIDGE HOME OWNERS ASSOCIATION 2 WADE ENGINEERING LTD. Ó 2012

6 SUMMARY OF RECOMMENDATIONS The most important maintenance consideration for Condominium Boards is ensuring that safety concerns are dealt with in a timely fashion. It is also important to keep water out of the interstitial components of the building and to protect components from the damaging effects of the sun and inclement weather. Recommendations are summarized below and listed in order of the report. The funds for the suggestions or recommendations that follow may not be accrued in this Study, unless specifically identified on the Cost/Life Data spreadsheet. It is incumbent on the Board to ensure that owner-installed objects have been properly and securely installed, and do not violate any of the current Building, Fire or Safety Codes. As well, it is the Board s responsibility to ensure that unit owners repair or replace these components in a timely fashion. Specific Recommendations: Safety Concerns & Anomalies (Report Pg. 15): Slightly damaged light fixtures were noted at Heffernan Road and at the monument. Light should be repaired or replaced as needed. Safety Concerns & Anomalies (Report Pg. 15): Water infiltrates a flood light at the monument. The fixture should be replaced and modifications should be made to prevent water infiltration into light fixtures. Safety Concerns & Anomalies (Report Pg. 15): A metal stick is exposed in the landscaping at the monument and should be removed immediately to prevent potential injury. Safety Concerns & Anomalies (Report Pg. 15): Wood rot was noted on some fence posts. Damaged posts should be replaced during regular maintenance repairs. Safety Concerns & Anomalies (Report Pg. 15): Walkway surfaces have slightly lifted potentially posing tripping hazards. Grinding of surfaces or mudjacking should be completed to even the surfaces and reduce tripping hazards. EAGLE RIDGE HOME OWNERS ASSOCIATION 3 WADE ENGINEERING LTD. Ó 2012

7 INTRODUCTION This Reserve Fund Study Report is a comprehensive document, designed to provide an overall assessment of the common property and the Reserve Fund requirements of the Corporation. In order for a Study of this magnitude to be feasible, it is prudent to establish realistic parameters for a scope of work that will result in a product that meets the needs of the Corporation, at a reasonable cost. If the provider were expected to inspect all components of common property, the costs to the purchaser would be prohibitive. SCOPE OF WORK The Study began with a review of the condominium plan, bylaws and other pertinent documents and consultation with the Board of Directors, to determine the common property components to be replaced or refurbished with monies from the Reserve Fund. These components were measured and/or counted during visits to the site (quantity survey). This data is used to calculate the current replacement cost (G.S.T. inclusive) for each component, with the same or similar product. A cursory inspection, noting the general condition of the various components, was conducted in conjunction with the quantity survey. The conditions noted, and the inspector s experience, combined with technical resource material referencing life cycles of building components, were used in forecasting the remaining functional lives of the various components. During the course of site inspections, safety concerns such as Building/Fire Code or condominium by-law violations, and/or other anomalies if noted, are reported. EAGLE RIDGE HOME OWNERS ASSOCIATION 4 WADE ENGINEERING LTD. Ó 2012

8 PARAMETERS No money is accrued in this Study for annual inspections and repairs, as they are considered to be part of ongoing operating costs. However, in the interest of achieving the maximum effective life of all components, specific maintenance recommendations may be included. Furthermore, no monies are included for the catch-up of deferred maintenance. The report reflects the condition by penalizing the life of the item. Replacement costs of components expected to last the life of the development, such as: structural building components, concrete foundation, etc., are not included, since their expected lives are considered to be synonymous with that of the development. Periodic and/or random repairs or upgrades to these types of components may be necessary in the future. Attempts to predict the uncertainty of the unknown for inclusion in this report would result in unreliable cost estimates. Components located below grade, such as sewer systems and/or components concealed from view such as electrical, are not reviewed or considered within this Study. A Safety Margin, determined by the study provider, is incorporated in all funding scenarios to help offset unpredictable expenses that may arise. Other components specifically excluded are those considered the responsibility of the unit owner. The inspections conducted in performance of this Study are cursory and are not to be considered a technical audit. Data generated by this report is not intended for third party use. Wade Engineering Ltd. accepts no responsibility for damages, if any, suffered by a third party, as a result of actions taken, or decisions made, on the basis of this Report. Should our work in preparing this report uncover conditions that are deemed beyond this Study s scope, recommendations for further investigation will be included. Please note that any additional investigations and the related repair costs are not included in the financial forecasts of this report. EAGLE RIDGE HOME OWNERS ASSOCIATION 5 WADE ENGINEERING LTD. Ó 2012

9 VARIABLES The estimate of life expectancies and replacement costs is not an exact science. However, every attempt is made to anticipate and compensate for the variables encountered in this Study. Market prices fluctuate as a result of supply and demand characteristics; lower prices at the beginning of the season when contractors are looking for work, higher at the end of the season when contractors are over booked. Some components will experience accelerated deterioration in the latter part of their functional life. These, and other such phenomena, can cause significant variations between the original life and cost estimates, and those actually realized. Life cycles and replacement costs have been estimated as accurately as possible. Deterioration of components occurs at different rates, therefore it is prudent to replace or repair portions of some components as they deteriorate, limiting the potential for damage to adjacent components, and/or limiting the Corporation s exposure to liability. In these cases, an allowance may be identified in the financial spreadsheets allocating either; a portion of the replacement costs on a short but perpetual cycle, or phased replacement of major components. Also note that deficiencies may be hidden; or they may be present but not located in areas where random inspections are conducted. It is assumed that the level of future preventive maintenance will be consistent with the standards currently employed. A more aggressive preventive maintenance program may allow various components to achieve a longer functional life, while deferral of maintenance may shorten its life. Although inflation and interest rates are difficult to predict, their impact on future pricing and potential earnings cannot be ignored. The spreadsheets for Funding Scenarios, as well as the Ten Year Replacement Plan, incorporate interest and inflation where applicable. While considerable effort has been made to present realistic projections, periodic updates of the Study are required to ensure it remains a practical approximation. EAGLE RIDGE HOME OWNERS ASSOCIATION 6 WADE ENGINEERING LTD. Ó 2012

10 COMPONENT DESCRIPTION AND GENERAL CONDITIONS During the course of conducting this Reserve Fund Study, a cursory site inspection was carried out on a representative sample of visible common property components. WALKWAYS AND STEPS Description: Poured concrete Overall Condition: Fair Current Replacement Cost: Expected Life: Actual Age: Effective Age: Remaining Life: Walkways $5, Steps $2, Comments: Poured concrete walkways are located around the monument tower. Two sets of poured concrete steps lead up to the monument base. Walkway to monument Concrete steps at tower Good Practice Guidelines: Do not use salt for de-icing, as it can cause spalling and premature deterioration of concrete components. An application of penetrating hydrophobic sealant will resist freeze / thaw damage (Spalling). EAGLE RIDGE HOME OWNERS ASSOCIATION 7 WADE ENGINEERING LTD. Ó 2012

11 RAILINGS AND GUARD POSTS Description: Metal railings and wood posts Overall Condition: Fair Current Replacement Cost: Expected Life: Actual Age: Effective Age: Remaining Life: Railings $2, Guard Posts $5, Guard Post Paint $1, Comments: A metal railing boarders the stamped concrete walkway in the monument park. Painted wood guard posts are located on the south entrance to the monument park and the end of each walkway throughout the neighborhood. Metal railing Specific Recommendations: Wood posts should be painted every 7 years. Wooden guard post EAGLE RIDGE HOME OWNERS ASSOCIATION 8 WADE ENGINEERING LTD. Ó 2012

12 LIGHTING Description: Site lighting fixtures Overall Condition: Fair Current Replacement Cost: Expected Life: Actual Age: Effective Age: Remaining Life: $2, Comments: Lighting surrounds the monument and illuminates the entrance signage. Flood light for monument Base light for monument Back light on monument Light at entrance sign Good Practice Guidelines: Schedule regular maintenance. Weekly walk around and inspection at night to ensure all lighting and light sensors are working properly. EAGLE RIDGE HOME OWNERS ASSOCIATION 9 WADE ENGINEERING LTD. Ó 2012

13 FENCING Description: Wood, steel Overall Condition: Fair Current Replacement Cost: Expected Life: Actual Age: Effective Age: Remaining Life: Replacement Zone 5 Wood Replacement Zone 6 Wood $63, $70, Zone 1 Paint $12,805 7 N/A 6 1 Zone 4 Paint $26,933 7 N/A 4 3 Zone 5 Paint $22,680 7 N/A 3 4 Zone 6 Paint $25,515 7 N/A 2 5 Zone 7 - Paint $7, N/A 1 9 Replacement Zone 7 Steel $42, Column Repair $13, Comments: Painted wood fencing is installed on the perimeter of the property and along interior roadways and walkways. Steel fencing is installed in one interior section. All fencing is divided into zones. The replacement of zone 5 and 6 (wood fencing) and zone 7 (steel fencing) are the responsibility of Eagle Ridge Home Owners Association. Painting on one side of the fencing is the responsibility of the Home Owners Association and is also divided into zones. The base of the wood fencing is potentially vulnerable to damage caused by grass trimmers and is in constant contact with the moist landscaping that can accelerate deterioration of the wood over time. Stone clad fence columns are installed in zone 1 and may require occasional repairs. Fencing in zone 1 Stone clad fence column EAGLE RIDGE HOME OWNERS ASSOCIATION 10 WADE ENGINEERING LTD. Ó 2012

14 FENCING CONTINUED Fence in zone 6 Fence in zone 4 Metal fence in zone 7 Specific Recommendations: Wood fences should be painted every 7 years. Steel fences should be painted every 10 years. Maintenance should be careful to not hit the fence with weed trimmer blades. Good Practice Guidelines: A galvanized steel guard installed at the base of posts will help eliminate wood rot due to damage from grass trimmer blades. Prior to installations of guards on existing fencing, cuts in the posts should be soaked with a wood preservative. EAGLE RIDGE HOME OWNERS ASSOCIATION 11 WADE ENGINEERING LTD. Ó 2012

15 LANDSCAPING Description: Varies Overall Condition: Fair Current Replacement Cost: Expected Life: Actual Age: Effective Age: Remaining Life: $2,100 5 N/A 2 3 Comments: The landscaping consists of grass, landscape rocks, gravel beds, and deciduous and coniferous trees and shrubs. Shrubs at monument park Mature trees Good Practice Guidelines: Proper aeration, fertilizing, weed control, cutting, and raking will maintain lawns, and they should not require wholesale replacement. Dead areas of grass should be replaced promptly. EAGLE RIDGE HOME OWNERS ASSOCIATION 12 WADE ENGINEERING LTD. Ó 2012

16 RETAINING WALL AND UNISTONE Description: Poured concrete Overall Condition: Fair Current Replacement Cost: Expected Life: Actual Age: Effective Age: Remaining Life: Unistone $ Retaining Wall Allan Block $1, Comments: Retaining walls and pavers should not require complete replacement; however, repair may be required from time to time. Monies fore repair only are scheduled approximately every 25 years. Retaining wall and pavers at monument Good Practice Guidelines: Schedule regular maintenance. EAGLE RIDGE HOME OWNERS ASSOCIATION 13 WADE ENGINEERING LTD. Ó 2012

17 SIGNAGE Description: Brick walls with metal signage Overall Condition: Fair Current Replacement Cost: Expected Life: Actual Age: Effective Age: Remaining Life: Signage $5, Brick Sealer Signage Brick Sealer Watch Tower $7, N/A 19 1 $7, N/A 19 1 Comments: Wholesale replacement should not be required; however, regular maintenance should be completed to maintain the appearance of the signs. Monies have been allocated for maintenance only. Monies for sealing of the brick are budgeted for Entrance sign and wall Entrance sign at Heffernan Close Rd. Good Practice Guidelines: Schedule regular maintenance to maintain the aesthetics of the property signs. EAGLE RIDGE HOME OWNERS ASSOCIATION 14 WADE ENGINEERING LTD. Ó 2012

18 ANOMALIES AND SAFETY CONCERNS OF LIFE ITEMS If deficiencies in a life item are detected they will be included in the Cost/Life Data sheet as a non-reoccurring expense (i.e. structural or other components not typically planned for replacement). It should be noted that some deficiencies may not become apparent during the Reserve Fund Study site inspections since only a representative sample of components are reviewed. Not included are components considered to be the responsibility of the unit owners. Although a report on the cursory inspection of life items and anomalies follows, this should not be considered a technical audit. General comments relating to the condition of the components are included to give a better overall understanding of conditions of the property. Often these conditions may require further investigation for an accurate estimation of repair scope and funds required. No cost centres have been included in this report for these items. SAFETY CONCERNS AND OTHER ANOMALIES Slightly damaged light fixtures were noted at Heffernan Road and at the monument. Light should be repaired or replaced as needed. Water infiltrates a flood light at the monument. The fixture should be replaced and modifications should be made to prevent water infiltration into light fixtures. A metal stick is exposed in the landscaping at the monument and should be removed immediately to prevent potential injury. Wood rot was noted on some fence posts. Damaged posts should be replaced during regular maintenance repairs. Walkway surfaces have slightly lifted potentially posing tripping hazards, grinding of surfaces or mudjacking should be completed to even the surfaces and reduce tripping hazards. Damaged light at Heffernan Road Damaged light at monument EAGLE RIDGE HOME OWNERS ASSOCIATION 15 WADE ENGINEERING LTD. Ó 2012

19 SAFETY CONCERNS AND OTHER ANOMALIES CONTINUED Evidence of water infiltration in floodlight Protruding metal Damaged fence post Potential tripping hazard on concrete walkway EAGLE RIDGE HOME OWNERS ASSOCIATION 16 WADE ENGINEERING LTD. Ó 2012

20 FINANCIAL ANALYSIS The financial spreadsheets that follow summarize and link the quantity survey, conditions noted, estimated life cycles, replacement costs and future expenditures. COST/LIFE DATA" SPREADSHEET Summarizes the following key information: Common Property Component - Defines the components to be replaced by the Reserve Fund. Current Replacement Cost - Estimates the current replacement cost of each component. Expected Life - Expresses the expected life of each component. Actual Age - Expresses the actual age of each component. Effective Age - The expected life of each component, adjusted to reflect the conditions noted. Remaining Life - Determines the expected life of each component, less the effective age of that component. Annual Replacement Cost - The Current Replacement Cost of each component, divided by its Expected Life - an initial indicator of annual reserve fund contribution requirements "COST/LIFE ANALYSIS" SPREADSHEET Analyses the information from the Cost/Life Data spreadsheet and determines the following: Percent of Total Contribution - Determines the percentage of each component s Current Replacement Cost in relation to the Total Replacement Cost of all components. Actual Present Fund - Determines the percentage (as calculated above) of the Actual Present Fund, allocated proportionately for each component. Expired Equity - Represents the value of each component, that has been used up, calculated by multiplying the Effective Age by the Annual Replacement Cost. Shortfall - Calculates the difference between the Expired Equity and the Actual Present Fund. Contingency - In order to compensate for the variables discussed previously, a contingent amount is included in the totals. Based on 10% of the total replacement cost spread over a 30-year period, and injected annually. Life Items & Anomalies - This category allows budgeting for repairs and /or upgrades to components expected to last the life of the project, such as remortaring of bricks. EAGLE RIDGE HOME OWNERS ASSOCIATION 17 WADE ENGINEERING LTD. Ó 2012

21 FUNDING PLAN SCENARIOS The ideal Reserve Fund scenario would see adequate contributions being made from the start of the project s life. Unfortunately, this is a rare occurrence. As the age of a project advances, the catch-up of under-funding becomes increasingly difficult. The first step in establishing appropriate contribution figures is consideration of the expenses for which the fund is responsible. It is not practical or reasonable to suggest condominiums maintain a level of funding sufficient to accommodate a major catastrophe. In those situations, it is anticipated the Condominium Board will levy a special assessment. However, it is prudent to maintain a reasonable minimum level of funding (safety margin), to help offset unpredictable expenses. The Study provider determines a safety margin, taking into account various factors including the age, size, and location of the project. The purpose of this Study is to determine a reasonable annual contribution figure that will generate a cash stream sufficient to cover predictable expenses (annual replacement costs), and to help offset unpredictable expenses (random sewer collapse). Various contribution figures are tested, to find the funding scenario that maintains a cash stream that flows as closely to the safety margin as possible (reasonable), without dipping below it (sufficient). Each funding scenario follows the projected flow of cash over a 25-year period, starting with the base year (now), and incorporates the effects of interest and inflation. The cash flow is tracked through: Opening Balance - begins with current fund balance Expenses - cost of components to be replaced or refurbished for each year, with inflation compounded annually Interest - calculated on the closing balances for each year, after expenses, and compounded annually Annual Contributions - are treated as being contributed at the end of each year, and do not factor in interest accrued for that year; inflation is compounded annually Additional Assessments - may be included in some funding plan scenarios, usually when major capital replacement or refurbishment of common property is required within the first few years. Closing Balance - each year s closing balance The effects of each funding scenario are illustrated in graph form, by plotting the Closing Balance for each year, along with the Safety Margin. Two Funding scenarios are presented: Present Course Reasonable and Sufficient EAGLE RIDGE HOME OWNERS ASSOCIATION 18 WADE ENGINEERING LTD. Ó 2012

22 PRESENT COURSE This spreadsheet predicts the flow of funds, based on the current fund balance, current contributions (inflated over time), and predicted expenses. This enables the Board to preview the long-term effects of current funding levels. Review of this funding Scenario can confirm the adequacy of fund balances and contribution levels, or reveal the need for change. REASONABLE AND SUFFICIENT This funding plan suggests the collection of an Annual Contribution approximately equal to the Annual Replacement Cost, in conjunction with the portion of Shortfall required to generate and maintain a cash flow that is: Reasonable - covers predictable expenses, yet maintains a cash stream that flows as closely to the safety margin as possible Sufficient - does not fall below the safety margin, required to help offset unpredictable expenses TEN - YEAR REPLACEMENT SCHEDULE To assist the Board, replacement scheduling of common property components is summarized in chart form. It starts with the Base Year (now), and schedules the predicted replacement of components for a 10-year period. The 10 - Year Replacement Schedule is included with all scheduling scenarios. CONCLUSION The estimate of life expectancies and replacement costs is, at best, a good guess. However, the Reserve Fund Study Report allows management decisions to be made with the best long - range plan available, which is far better than reacting to immediate needs or being surprised with a substantial unbudgeted expense. Review of the "cash flow" and 10-year replacement schedule, will help facilitate decisions regarding the scheduling of component replacement and collection of shortfalls required to meet the financial demands of the Corporation. To maximize the effectiveness of the Reserve Fund Study Report, updates are required on an ongoing basis. EAGLE RIDGE HOME OWNERS ASSOCIATION 19 WADE ENGINEERING LTD. Ó 2012

23 QUALIFICATIONS Wade Engineering Ltd. was established in 1986, as an independent consulting firm, specializing in preparation of specifications for and/or review of work in progress for the restoration and repair of building envelopes and exterior finishes. A combination of technical expertise and hands on experience has resulted in an extensive understanding of the repair and replacement procedures for common property components. Years of involvement in the condominium industry, including involvement with some education based organizations, has resulted in a sound understanding of the Reserve Fund requirements for condominiums, as well as the challenges facing Managers, Board Members and owners. Wade Engineering Ltd. carries Commercial General Liability insurance, Professional Liability insurance and Document Replacement Insurance. EAGLE RIDGE HOME OWNERS ASSOCIATION 20 WADE ENGINEERING LTD. Ó 2012

24 STUDY PERSONNEL The Reserve Fund Study is conducted through the combined skills of the following personnel: A. C. (Al) King, B.A.Sc., P.Eng., A.C.C.I., F.C.C.I. ð Bachelor of Applied Science degree from the University of Waterloo ð Professional Engineering degree from the University of Waterloo, and registered with the Association of Professional Engineers Geologists & Geophysicists of Alberta ð Alberta Roofing Contractors Association (ARCA) Accepted Roof Inspector ð Member of RCI, Inc. (Roof Consultants, Inc.) ð Associate of the Canadian Condominium Institute ð Fellow of the Canadian Condominium Institute. Ron Shannon, Building Envelope Consultant ð Building Envelope Inspector ð Window, siding, stucco; specification & maintenance program consultant for 12 years ð Five years experience in the manufacture of vinyl window systems, insulated glass units and pre-hung steel entry doors ð Certified Moisture Control Technician through SAIT ð Member of RCI, Inc. (Roof Consultants, Inc.) ð Roofing consulting in Winnipeg and Edmonton for 3 years Tony Foster, ARCA Accepted Roof Inspector ð Journeyman Roofer, with an Inter-provincial Red Seal, issued by Alberta Advanced Education and Career Development ð Alberta Roofing Contractors Association (ARCA) Accepted Roof Inspector ð Member of RCI, Inc. (Roof Consultants, Inc.) ð 21 years experience in the roofing industry Other individuals employed by Wade Engineering Ltd. may be called upon for technical and/or clerical assistance. Outside professionals may also be consulted. EAGLE RIDGE HOME OWNERS ASSOCIATION 21 WADE ENGINEERING LTD. Ó 2012

25 REFERENCE SOURCES Information used in completing this Study was collected from the following sources: ð Condominium Plan ð By-Laws ð Financial Statements ð Technical Reports on Common Property Components ð Site Investigations ð Property Manager and/or Board Members ð Technical Resource Material The life cycles of common property components were determined using a combination of the following: ð Recognizable conditions ð Experience factors ð Discussion with manufacturers, suppliers and service contractors Replacement costs of common property components were determined using a combination of the following: ð RSMeans Repair and Remodelling Cost Data 2012 ð RSMeans Square Foot Costs 2012 ð Experience with similar developments ð Discussion with manufacturers, suppliers and service contractors ð Review of financial documentation EAGLE RIDGE HOME OWNERS ASSOCIATION 22 WADE ENGINEERING LTD. Ó 2012

26 CURRENT COST/LIFE DATA 05/10/2012 ANNUAL REPLACEMENT EXPECTED ACTUAL EFFECTIVE REMAINING REPLACEMENT NO. COMPONENT COST LIFE AGE AGE LIFE COST 1 Walkways 5, Steps 2, Railings 2, Guard Posts 5, Guard Post - Paint 1, Lighting 2, Fencing - Replacement Zone 5 - Wood 63, ,100 8 Fencing - Replacement Zone 6 - Wood 70, ,363 9 Fencing - Zone 1 - Wood - Paint 12,805 7 N/A 6 1 1, Fencing - Zone 4 - Wood - Paint 26,933 7 N/A 4 3 3, Fencing - Zone 5 - Wood - Paint 22,680 7 N/A 3 4 3, Fencing - Zone 6 - Wood - Paint 25,515 7 N/A 2 5 3, Fencing - Zone 7 - Steel - Paint 7, N/A Fencing - Zone 7 - Steel 42, , Fencing - Column - Repair 13, Landscaping 2,100 5 N/A Unistone Retaining Wall - Allan Block 1, Signage 5, Brick Sealer - Signage 7, N/A Brick Sealer - Watch Tower 7, N/A Contingency 1, , TOTAL $ 329,666 $ 22,589 Eagle Ridge Home Owners Association 23 WADE ENGINEERING LTD. 2012

27 COST/LIFE ANALYSIS 05/10/2012 % OF ANNUAL ACTUAL REPLACEMENT PRESENT EXPIRED SHORT NO. COMPONENT COSTS FUND EQUITY FALL 1 Walkways 0.67% 942 2,736 1,794 2 Steps 0.33% 465 1, Railings 0.27% 372 1, Guard Posts 0.91% 1,271 3,690 2,419 5 Guard Post - Paint 0.86% 1, (819) 6 Lighting 0.33% 459 1, Fencing - Replacement Zone 5 - Wood 9.30% 13,015 37,800 24,785 8 Fencing - Replacement Zone 6 - Wood 10.46% 14,645 37,808 23,163 9 Fencing - Zone 1 - Wood - Paint 8.10% 11,342 10,980 (362) 10 Fencing - Zone 4 - Wood - Paint 17.03% 23,849 15,392 (8,457) 11 Fencing - Zone 5 - Wood - Paint 14.34% 20,081 9,720 (10,361) 12 Fencing - Zone 6 - Wood - Paint 16.14% 22,591 7,290 (15,301) 13 Fencing - Zone 7 - Steel - Paint 3.25% 4, (3,820) 14 Fencing - Zone 7 - Steel 4.65% 6,508 18,900 12, Fencing - Column - Repair 1.94% 2,715 6,570 3, Landscaping 1.86% 2, (1,763) 17 Unistone 0.15% Retaining Wall - Allan Block 0.29% 403 1, Signage 0.77% 1,085 3,150 2, Brick Sealer - Signage 1.74% 2,442 7,486 5, Brick Sealer - Watch Tower 1.74% 2,442 7,486 5, % % Contingency 4.85% 6,793 1,096 (5,697) TOTAL % $ 140,000 $ 177,631 $ 37,631 Eagle Ridge Home Owners Association 24 WADE ENGINEERING LTD. 2012

28 PRESENT COURSE 05/10/2012 Inflation 4% Interest 1.5% Annual Contribution Increase 3% Opening Annual Additional Closing Year Balance Expenses Interest Contribution Assessments Balance ,000-2,100 15, , ,100 30,221 1,903 15, , ,232 1,095 2,147 15, , ,197 31,905 1,939 16, , ,623 25,645 1,830 16, , ,690 30,773 1,649 17, , ,955 1,095 1,918 17, , ,689 9,828 2,068 18, , ,377 18,559 2,097 19, , ,918 9,879 2,266 19, , ,876 33,926 2,084 20, , ,193 29,295 1,978 20, , , , ,386 51, ,938 3, ,028 70, ,876 94,613 (356) 22,689-1, (1,404) 35,993 (561) 23,370-14, (14,589) 1,095 (235) 24,071 8, ,151 52,833 (670) 24,793-20, (20,560) 36,487 (856) 25,536-32, (32,366) 50,962 (1,250) 26,303-58, (58,275) 1,095 (891) 27,092-33, (33,170) 24,967 (872) 27,904-31, (31,104) 85,822 (1,754) 28,742-89, (89,939) 4,407 (1,415) 29,604-66, (66,157) 44,414 (1,659) 30,492-81, (81,738) 38,304 (1,801) 31,407-90,436 $ 821,566 $ 12,834 $ 578,296 $ - 200, , ,000 50, , , , FUND BALANCE SAFETY MARGIN $23,000 Eagle Ridge Home Owners Association 25 WADE ENGINEERING LTD. 2012

29 REASONABLE AND SUFFICIENT 05/10/2012 Inflation Variable Interest 1.5% Annual Contribution Increase 2% Opening Annual Additional Closing Year Balance Expenses Interest Contribution Assessments Balance ,000-2,100 15, , ,100 30,221 1,903 22, , ,042 1,095 2,249 22, , ,901 31,905 2,145 23, , ,301 25,645 2,140 23, , ,418 30,773 2,065 24, , ,805 1,095 2,441 24, , ,727 9,828 2,698 25, , ,667 18,559 2,837 25, , ,514 9,879 3,115 26, , ,831 33,926 3,044 26, , ,551 29,295 3,049 27, , , ,540 1,634 27, , ,212 3,812 2,016 28, , ,647 94,613 1,051 28,796 99, ,880 35, ,372 94, ,216 1,095 1,397 29, , ,477 52,833 1,075 30, , ,276 36,487 1,002 31,169 98, ,960 50, ,793 80, ,511 1,095 1,191 32, , ,036 24,967 1,321 33, , ,467 85, ,739 70, ,933 4, , , ,938 44, ,102 93, ,488 38, ,804 91,815 $ 821,566 $ 45,387 $ 727,994 $ - 250, , , ,000 50, FUND BALANCE SAFETY MARGIN $23,000 Eagle Ridge Home Owners Association 26 WADE ENGINEERING LTD. 2012

30 TEN YEAR REPLACEMENT SCHEDULE 05/10/ NO. COMPONENT Inflation Rate 0% 2% 2% 2% 2% 2% 2% 2% 2% 2% 1 Walkways $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 2 Steps $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 3 Railings $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 4 Guard Posts $ - $ - $ - $ - $ - $ - $ - $ 5,880 $ - $ - 5 Guard Post - Paint $ - $ - $ - $ - $ - $ 1,507 $ - $ - $ - $ - 6 Lighting $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 7 Fencing - Replacement Zone 5 - Wood $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 8 Fencing - Replacement Zone 6 - Wood $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 9 Fencing - Zone 1 - Wood - Paint $ - $ 13,061 $ - $ - $ - $ - $ - $ - $ 15,003 $ - 10 Fencing - Zone 4 - Wood - Paint $ - $ - $ - $ 28,581 $ - $ - $ - $ - $ - $ - 11 Fencing - Zone 5 - Wood - Paint $ - $ - $ - $ - $ 24,550 $ - $ - $ - $ - $ - 12 Fencing - Zone 6 - Wood - Paint $ - $ - $ - $ - $ - $ 28,171 $ - $ - $ - $ - 13 Fencing - Zone 7 - Steel - Paint $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 8, Fencing - Zone 7 - Steel $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 15 Fencing - Column - Repair $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 16 Landscaping $ - $ - $ - $ 2,229 $ - $ - $ - $ - $ 2,460 $ - 17 Unistone $ - $ - $ - $ - $ - $ - $ - $ 995 $ - $ - 18 Retaining Wall - Allan Block $ - $ - $ - $ - $ - $ - $ - $ 1,857 $ - $ - 19 Signage $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 20 Brick Sealer - Signage $ - $ 8,033 $ - $ - $ - $ - $ - $ - $ - $ - 21 Brick Sealer - Watch Tower $ - $ 8,033 $ - $ - $ - $ - $ - $ - $ - $ Contingency $ 1,095 $ 1,095 $ 1,095 $ 1,095 $ 1,095 $ 1,095 $ 1,095 $ 1,095 $ 1, Future Dollars $ - $ 30,221 $ 1,095 $ 31,905 $ 25,645 $ 30,773 $ 1,095 $ 9,828 $ 18,559 $ 9,879 Eagle Ridge Home Owners Association 27 WADE ENGINEERING LTD. 2012