November Subject: Kuhio Shores at Poipu, 2018 Budget. Aloha Owners of Kuhio Shores,

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1 Hawaiiana Management Company, Ltd. Kukui Grove Executive Center 4370 Kukui Grove Street, Suite #208 Lihue, Hawaii Tel: (808) Fax: (808) Internet: November 2017 Subject: Kuhio Shores at Poipu, 2018 Budget Aloha Owners of Kuhio Shores, The 2018 Operating Budget and reserve plan was approved by your Board of Directors on October 30, After careful review of the Association's current and long-range requirements and to conform to Hawaii State Reserve Funding Laws, the Board has found it necessary to increase total maintenance fees by % for 2018 and cable fees to $42 per unit per month, which will include Spectrum TV and high-speed internet. A copy of the budget and reserve plan is enclosed for your review. The budget was prepared on a cash basis and the association is using the cash flow analysis method to compute the reserve funding requirements. Payment by E-check, Credit Card or Debit Card: You can now pay your maintenance fees by E-check and credit/debit card. Go to Hawaiiana Management website at click on Online Payments and follow the instructions. There is a nominal service fee for payment by E-check debit/credit card but it is less than the late fee and interest charges. As a friendly reminder, maintenance fee payments are due and payable on the first day of each month. If payment is not deposited by the end of the month, we are required to assess a late fee of $75 and interest of 1% on the outstanding account balance and 10% on the unpaid regular and special assessments. Further, the association has a priority of payment policy which requires that all payments will applied to owner accounts in the following order: 1. Payments will first be applied to legal charges, if any, charged to the account. 2. Remaining funds in the payment would then be applied to any late fees and interest. 3. Remaining funds in the payment would then be applied to any fines. 4. Remaining funds in the payment would then be applied to any special assessments. 5. Remaining funds in the payment would then be applied to any miscellaneous charges. 6. Remaining funds in the payment would then be applied to any maintenance fees on the account, applied to the oldest balances first. Acceptance and applications of such payment will not be construed as a waiver of any rights the association shall have against the delinquent owner. Should you have any questions, or require additional information, please feel free to contact me at (808) , or to lucyt@hmcmgt.com. Sincerely, FOR THE BOARD OF DIRECTORS AOAO Kuhio Shores at Poipu Lucy Taylor, CMCA, AMS, Management Executive.

2 Hawaiiana Management Company, Ltd 2018 Monthly Cash Operating Budget For Kuhio Shores at Poipu Approved by Board of Directors on October 30, 2017 Page 2 N DESCRIPTION JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC ANNUAL REVENUE TOTAL MAINTENANCE FEES 47,502 47,502 47,502 47,502 47,502 47,502 47,502 47,502 47,502 47,502 47,502 47, ,026 RESERVE ASSESSMENT 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11, ,000 LOAN ASSMT #1 4,479 4,479 4,479 4,479 4,479 4,479 4,479 4,479 4,479 4,479 4,479 4,479 53,748 LOAN ASSMT #2 1,191 1,191 1,191 1,191 1,191 1,191 1,191 1,191 1,191 1,191 1,191 1,191 14,292 CABLE/INTERNET 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 37,800 INVESTMENT INTEREST ,800 LAUNDRY 2,050 2,050 2,050 2,050 2,050 2,050 2,050 2,050 2,050 2,050 2,050 2,050 24,600 TOTAL REVENUE 69,522 69,522 69,522 69,522 69,522 69,522 69,522 69,522 69,522 69,522 69,522 69, ,266 UTILITIES JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL ELECTRICITY 3,678 3,678 3,678 3,678 3,678 3,678 3,678 3,678 3,678 3,678 3,678 3,678 44,136 WATER ,220 TELEPHONE ,200 TOTAL UTILITIES 4,963 4,963 4,963 4,963 4,963 4,963 4,963 4,963 4,963 4,963 4,963 4,963 59,556 CONTRACT SERVICES JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL SEWAGE/MAINT/REMOVAL 1,630 1,630 1,630 1,630 1,630 1,630 1,630 1,630 1,630 1,630 1,630 1,630 19,560 CONTRACT-ELEVATOR 1,164 1,164 1,164 1,164 1,164 1,164 1,164 1,164 1,164 1,164 1,164 1,164 13,968 PLANTS & TREES ,604 CONTRACT-PEST CONTROL ,480 CONTRACT-REFUSE 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 16,668 CONTRACT-CABLE 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 37,800 TOTAL CNTRCT SVCS 8,090 8,090 8,090 8,090 8,090 8,090 8,090 8,090 8,090 8,090 8,090 8,090 97,080 MAINTENANCE JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL BUILDING-MAINT/REPAIR ,016 LAUNDRY MACHINES-MAINT/RPR GROUNDS ,320 PLUMBING ,200 PAINT ,800 FIRE SYSTEMS ,200 BLDG MAINT-SUPPLIES 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 WINDOWS & DOORS RPR/MAINT ,000 TOTAL MAINTENANCE 4,668 4,668 4,668 4,668 4,668 4,668 4,668 4,668 4,668 4,668 4,668 4,668 56,016

3 Approved by Board of Directors on October 30, Monthly Operating Budget For Kuhio Shores at Poipu Page 3 DESCRIPTION JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC ANNUAL PROFESSIONAL SVCS TOTAL ADMIN SUPPLIES & SVCS ,000 MANAGEMENT SRVCS 1,406 1,406 1,406 1,406 1,406 1,406 1,406 1,406 1,406 1,406 1,406 1,406 16,875 AUDIT 3,120 3,120 LEGAL FEES GENERAL 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 16,800 TOTAL PROF. SERVICES 6,676 3,556 3,556 3,556 3,556 3,556 3,556 3,556 3,556 3,556 3,556 3,556 45,795 PAYROLL & BENEFITS JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL PAYROLL-MANAGER 5,345 5,452 5,452 5,452 8,178 5,452 5,452 5,452 5,452 5,452 8,178 5,452 70,769 PAYROLL-MAINTENANCE 3,272 3,272 3,272 3,272 4,908 3,272 3,272 3,272 3,272 3,272 4,908 3,272 42,536 PAYROLL-SECURITY 3,333 3,333 3,333 3,333 5,000 3,333 3,333 3,333 3,333 3,333 5,000 3,333 43,332 WORKERS COMP 8,005 8,005 TDI HEALTH CARE 3,003 3,003 3,003 3,003 3,003 3,003 3,003 3,003 3,003 3,003 3,003 3,003 36,039 PAYROLL TAXES 1,069 1,069 1,069 1,069 1,603 1,069 1,069 1,069 1,069 1,069 1,603 1,069 13,897 PAYROLL BONUS ,820 GROUP IRA ,520 TOTAL P/R & BENEFITS 24,879 16,824 16,824 16,981 23,388 16,824 16,981 16,824 16,824 16,981 23,388 16, ,544 OTHER EXPENSES JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL INSURANCE-COMML PACKAGE 2,862 2,862 2,862 2,862 2,862 2,862 2,862 2,862 2,862 2,862 2,862 2,862 34,344 INSURANCE-FLOOD 8,024 8,024 8,024 8,024 8,024 8,024 8,024 8,024 8,024 8,024 8,024 8,024 96,288 INSURANCE-D&O ,120 INSURANCE-FIDELITY INSURANCE-UMBRELLA ,300 INSURANCE-AUTO ,116 LOAN INTEREST 1,456 1,456 1,456 1,456 1,456 1,456 1,456 1,456 1,456 1,456 1,456 1,456 17,472 LEASE RENT ,200 STATE GENERAL EXCISE TAX ,800 TOTAL OTHER EXP. 13,268 13,268 13,268 13,268 13,268 13,268 13,268 13,268 13,268 13,268 13,268 13, ,216 TOTAL OP EXPENSE 62,544 51,370 51,370 51,526 57,933 51,370 51,526 51,370 51,370 51,526 57,933 51, ,207 LOAN PAYMENTS 5,088 5,088 5,088 5,088 5,088 5,088 5,088 5,088 5,088 5,088 5,088 5,088 61,056 TRANSFER TO RESERVES 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11, ,003

4 KUHIO SHORES AT POIPU YEAR 2018 RESERVE PROJECTS AS OF OCTOBER 30, 2017 COST NOW and NORM LIFE values are best estimates by Hawaiiana Management and vendors who were nice enough to inspect the property or give a best guess. Page 4 It may be advisable to employ an expert to evaluate those projects with high cost. RESERVE FUND STATUS - PERCENT FUNDED METHOD M. FEE RESERVE. MAINT. First Plan Year - Calendar 2018 Reference Year 2017 THE MODEL'S FINDINGS FOR % FUNDING 2017 Deficit CHANGE CONTRIB FEES Final Plan Year 2037 Recommended Reserve Funding 100% 596,031 97% 574,274 1,035, Maintenance Fees 527, Maint Fees 570,026 Target Reserve Funding Level 60% 243, % 230, , Other Income 251, Othr Inc 264,240 Minimum Reserve Funding Level 50% 155,018 15% 144, , Operating Expenses -599, Exp -641,207 EOY 2018 Funding %@ Approved Lev 45.83% 8% 108, , Reserve Contribution 179, Contribution 193,059 Condition Codes Source Codes Source Codes Projected Reserves At Start of ,995 Target Funding L 60% EXCELNT E Contractor Proposal 1 Cost at Similar Project 5 Projected Reserve % at Start of % Tgt Ann Contrib 69,040 GOOD G Contractor Estimate 2 Statistical Guideline 6 Minimum Inflation 2.5% Req Contrib-Tgt 312,260 FAIR F Engineer/Arch Estimate 3 Inflate First Year? Yes Projected Savings Interest 0.4% App. % Change 8.1% POOR P Cost When Last Done 4 CAPITAL INVENTORY NORM DONE LAST CO NEXT COST COST FUNDING EOY ITEM ADJUSTMENT LIFE LAST COST ND DUE DATE NOW SRC RQMNT RES DEFICIT ELEVATOR CABS ,750 24,630 24,630 SPALLING MAINTENANCE ,000 24,390 24,390 WINDOWS ,000 9,643 9,643 SEAWALL ,000 4,615 4,615 WINDOW HARDWARE ,000 4,878 4,878 FLATWORK ,000 4,878 4,878 LAUNDRY CLOTHES DRYERS (3) ,500 4,050 4,050 LAUNDRY - WASHING MACHINE (3) ,500 3,750 3,750 EXTERIOR PAINTING - BUILDING , , ,760 WINDOW SEALANT ,360 9,888 7,400 2,488 SOLAR PANELS ,300 8,427 8,427 HOT WATER HEATERS (2) ,150 4,214 4,214 PARKING LOT -SLURRY SEAL COAT ,703 8,281 8,281 LANDSCAPING/IRRIGATION IMPROVEMENTS ,300 6,438 6,438 PUMPS - SEWER ,550 64,203 64,203 MAIN LOBBY RENOVATIONS ,000 24,545 24,545 DRY STANDPIPE ,090 ELEVATOR MODERNIZATION , , ,872 SEWER SYSTEM - EQUIPMENT ,900 12,360 12,360 LAUNDRY - WASHING MACHINE (3) ,000 LOBBY/ELECTRICAL/SEWAGE ROOF ,600 10,987 10,987 LAUNDRY CLOTHES DRYERS (4) ,500 PARKING LOT -ASPHALT OVERLAY ,780 88,250 88,250 MAILBOXES ,605 2,451 2,451 LIGHTING ,000 TRUCK ,000 LIGHTING-GROUNDS ,000 GUTTERS AND DOWNSPOUTS ,500 RAILING POST REPAIRS - LANAIS , , ,000 ROOF ,900 57,386 57,386 ELEVATOR LOBBY & LAUNDRY RM TILE FLOOR ,000 5,250 5,250 BBQ/TRASH AREA ,900 11,124 11,124 LANDSCAPE UPGRADE ,750 9,270 9,270 RAILING POST REPAIRS - CORRIDORS ,800 14,832 14,832 FIRE SYSTEM ,900 4,944 4,944 EMERGENCY GENERATOR ,540 3,708 3, End Yr Totals 1,411, , , , BGT18 FINAL &R10/30/2017

5 1268 Kuhio Shores at Poipu Board Approved 2018 Cash Flow Plan Prepared By: Lucy Taylor and Hawaiiana Management Company, Ltd Maintenance Fee Plan to Accomplish All Known Improvements and Repairs For Next 30 Years Assumed Rate of Inflation: 2.5% Assumed Savings Interest Rate: 0.4% 30 Year Projection of Maintenance Fee Changes 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 0 Maint Fee Resv Exp Balance 100% Reserve 60% Reserve Contingency Reserve Fund $0. CY Starting -Reserve -Loan -Operating +Maint. +Other +Interest =Ending % Maint. Fee Net Reserve Percent Year Balance Expense Payments Expenses Fees Income Income Balance Change Contrib. Funded ,995 84,750 61, , , ,240 Included 333, % 47,253 39% , ,761 61, , , , , % (186,487) 21% ,721 69, , , , , % 124,169 35% , , , , ,440 1, , % 25,149 38% ,019 42, , , ,440 1, , % 154,192 50% , , , , ,440 1, , % (87,495) 47% ,864 80, , , ,440 1, , % 118,763 56% , , , , ,440 1, , % (28,808) 56% , , , , ,440 1, , % (162,620) 46% , , , , ,440 1, , % 71,476 52% ,161 57, , , ,440 1, , % 127,624 60% , , , , ,440 1, , % (265,745) 41% ,274 87, , , ,440 1, , % 94,013 48% ,432 54, , , ,440 1, , % 129,140 55% ,168 89, , , ,440 2, , % 95,796 59% , , , , ,440 1, , % (359,379) 36% , , , ,440 1, , % 190,280 54% ,652 48, , , ,440 1, , % 144,407 64% , , ,000, , ,440 2, , % (68,148) 63% ,822 80, ,025, , ,440 2, , % 117,788 70% ,752 58, ,050, , ,440 2, , % 143,867 76% ,294 67, ,076,960 1,019, ,440 3, , % 137,456 81% , , ,103,884 1,050, ,440 2, , % (273,508) 76% ,479 96, ,131,481 1,081, ,440 2, , % 116,656 81% ,822 22, ,159,768 1,114, ,440 3, , % 194,297 86% ,439 66, ,188,762 1,136, ,440 4,009 1,077, % 143,526 89% ,077,974 19, ,218,481 1,159, ,440 4,680 1,266, % 183,807 90% ,266,461 58, ,248,943 1,182, ,440 5,340 1,409, % 137,272 89% ,409,073 8, ,280,167 1,206, ,440 5,995 1,594, % 179,549 89% ,594, , ,312,171 1,230, ,440 5,446 1,133, % (466,313) 81% Page 5 10/30/ :01 AM

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