Replacement Reserve Study Report

Transcription

1 Replacement Reserve Study Report for Landscaping and Lighting Assessment District (Zone 1: La Vigne) For the Napa County, California August 6, 2012 (Revised March 5, 2014)

2 Page i August 6, 2012 (revised March 5, 2014) City of American Canyon Mr. Greg Baer Development Services Engineer 4381 Broadway, Suite 201 American Canyon, CA Dear Greg: We hereby submit the revised Replacement Reserve Study Report for Zone 1 (La Vigne) in the American Canyon Landscape and Lighting Assessment District. The purpose of this study was to review the improvements constructed in Zone 1 (La Vigne) and prepare estimates of the funding that will be required in future years for the replacement/rehabilitation of those improvements as they reach the end of their useful lives. This study includes an explanation of a Replacement Reserve Study and what items are included in this analysis. It includes current and future replacement cost projections and recommends Reserve Fund funding levels for the next twenty (20) years. For FY 13/14, the Engineer s Report shows a contribution of $10,000 to the Capital Reserve Fund and estimated expenditures of $12,500 for the year. Based upon our analysis, it is projected that the annual contribution to the Reserve Fund will need to be increased in future years so that funds will be available when needed to replace/rehabilitate improvements as reach the end of their useful lives. It is recommended that the annual Reserve Fund contribution be increased to $25,000 beginning in FY 14/15 and gradually increased in future years until it reaches $50,000 in FY 25/26. Prior to FY 11/12 when no contribution to the Reserve Fund was made, the annual contribution had been in the range of $25-28,000 per year. Items identified in the Reserve Study were based on a review of the improvement plans, original construction estimates and cursory field visits. Costing methods were based solely on rules-of-thumb developed over years of experience in design and construction of similar facilities. This Reserve Study is not a condition report and therefore cannot be considered a detailed assessment of the improvements, nor can it be taken as a warranty of the systems probable life expectancy. We appreciate the opportunity to work with you. If you have any questions, please contact me at , ext Sincerely, Harris & Associates K. Dennis Klingelhofer Assessment Engineer

3 Page ii TABLE OF CONTENTS REPLACEMENT RESERVE REPORT Background and Information...1 Financial Summary...2 Replacement Reserve Analysis...2 Summary of Conditions...4 Life Expectancy and Cost Estimates...8 Survey Methodology...8 APPENDIX Part A Inventory of Improvements...10 Part B Cash Flow Method Data & Graph...12 Part C Replacement Schedule...13 Part E Maps...16

4 Page 1 BACKGROUND REPLACEMENT RESERVE REPORT AMERICAN CANYON (ZONE 1: LA VIGNE) The American Canyon Landscaping & Lighting Assessment District (LLAD) Zone 1 (La Vigne) was formed in January 2001 to provide a dedicated source of funds to cover the costs associated with the operation and maintenance of landscaping and lighting improvements within the La Vigne development. Operating Reserve and Capital Reserve funds were established for each zone at the time they were formed to provide funds for the future repair/replacement of improvements as they reach the end of their useful life as well as to provide the needed cash reserves to minimize future fluctuations in the level of the annual assessments. When this district was first formed, an annual Capital Reserve contribution of $25,000 was established (which was increased based upon CPI) and was made annually through FY to the Capital Reserve fund. However, due to an increase in operating costs and the community s desire not to increase assessments, no contribution was made for FY and the contributions for FY and FY were reduced to $10,000 per year. Based upon our review of the reserve funds during the preparation of the FY annual report, we observed that there is no method for formally evaluating or forecasting the needed level of reserve funds for the LLAD. We also noted that the Operating Reserve fund for Zone 1 was depleted and assessments rates may need to be increased within that zone next year unless the Capital Reserve fund is overfunded and funds can be transferred back to the Operating Reserve which an unrestricted fund. The City determined that a Replacement Study should be completed in conjunction with the FY annual report in order to develop a twenty (20) year cash flow forecast which will include the development of a capital replacement schedule for the capital improvements maintained by the LLAD. This report evaluates the La Vigne subdivision (Zone 1) since it was the most critical zone requiring additional funding within the next fiscal year. This subdivision has 466 single family homes as of the date of this study. INFORMATION An inventory of the improvements maintained by the district was established based on information from a review of district documents, site visit, GIS data, parcel maps, and quantities derived from a review of the improvement plans available. The condition of the improvements was ascertained from visual inspection. The life expectancy and the value of the components are provided based on typical construction knowledge and typical funding plans. Reserve fund estimates apply to improvements which comprise common components. No improvement performance audits were available for this study. Diagrams or photographs presented in this report are included for illustration purposes only.

5 Page 2 FINANCIAL SUMMARY The annual reserve fund deposit required to fund the replacement/refurbishment of the improvements was calculated by the Cash Flow Method and is presented graphically in the appendix. This method calculates the minimum constant annual contribution required to meet the projected expenditures without allowing the minimum reserves fund to fall below the specified minimum level. This funding level will provide an adequate amount to cover the replacement expenses that have been projected. It should be recognized that the Cash Flow Method calculations should be reviewed annually based on recent contributions/expenditures and should be updated every three to five years based on the physical condition of the improvements. The Replacement Reserves Fund Balance estimated for June 30, 2013 is $171,994. The planned annual contribution to the reserves for FY 13/14 is $10,000. The average annual expenditure for the replacement/rehabilitation of the improvements over the next 20 years is $48,229 in current dollars. Based on projected expenditures, the reserve fund will be depleted in FY 18/19 if the annual Reserve Fund contribution is not increased above the current $10,000 annual contribution as shown in the figure below. The minimum annual deposit to the Replacement Reserve Fund calculated based upon the study is $10,000, which is equivalent to $21.46 per single family home per year. This amount should be increased

6 Page 3 incrementally in coming years until the annual deposit reaches $50,000 per year, which is equivalent to $ per single family home per year. Those amounts should be placed in the Reserve Fund each year until the year 2031, which is the last year analyzed in this study. This study does not take into account the interest on the reserves on deposit. Construction costs were projected to increase 2% per year. REPLACEMENT RESERVE ANALYSIS Every effort was made to identify all inventory items which are maintained by the district. Certain components were deleted from this analysis if they were considered eligible to be funded from other sources than replacement reserves or had different replacement requirements. These included: Small Components: For ease of administration it may be preferable to handle replacement of low cost components from the annual operating budget rather than from disbursement from the reserves. A common guideline is anything that has a cost of less than $5,000. Long Lasting Components: The reserve schedule includes components with economic lives up to thirty (30) years. Some improvements have been assigned a maintenance frequency for less than the entire component per standard maintenance procedures. This was done to ensure funding for replacement while still including these longer lasting components in the study. Updating: It is recommended that the reserve analysis be reviewed annually to take into account replacements, which have actually occurred and known changes in replacement costs or cycle. Updating the analysis after major replacements may result in a reduction in the annual deposit. Future costs for updating this reserve analysis were not included in determining contributions to the reserve. Improvements Include: 1. The repair, replacement, and servicing of street light standards, luminaries, wiring and appurtenances necessary to provide street lighting within Zone The replacement of street trees and shrubs and the refurbishment of planting areas and irrigation systems together with earth berms, slopes, curbs: root deflectors, decorative paving, masonry walls and concrete or wood appurtenances, specifically: Along the entire north side of Parcel A: landscaping and the public walkway adjacent to the creek running through La Vigne subdivision. Parcel B: landscape right of way area along east side of Flosden Road including the median area directly adjacent to parcel B; landscape and park area north of Parcel A and south of the north Via Bellagio entry including the entry monument and the median area in Via Bellagio and special amenities.

7 Page 4 Parcel C: landscape right of way area along east side of Flosden Road including the median area directly adjacent to Parcel C; landscaping and detention basin including entry monument and special amenities and the median area within Via Bellagio. Parcel D: landscape right of way area along east side of Flosden Road, including the median area directly adjacent to Parcel D; landscaping and sound wall west of Parcel J including entry monument and special amenities. Parcel E: landscape right of way area along east side of Flosden Road including the median area directly adjacent to Parcel E and right of way area along south side of American Canyon Road to Via Firenze; median landscape areas within Via Firenze at the intersection of American Canyon Road, landscaping and sound wall north and west of La Vigne Unit 1 including entry monuments and special amenities. Parcel F: landscape right of way area along south side of American Canyon Road to the wetlands restoration area; DG trail along the east side of Via Bellagio: sound wall and landscape area north of Parcel F and special amenities. Parcel G: Paved trail from Parcel F that runs along the western edge of Parcel G. Parcel H: special amenities and landscape within park site, Via Bellagio Park. Parcel K: special amenities and landscape within park site, Pelleria Park. Via Bellagio including the entire length of the landscape right of way area from back of curb to face of sidewalk including ancillary medians that intersect Via Bellagio from adjoining parcels and neighborhoods. Entry monuments are not included as they are noted in other parcel descriptions.

8 Page 5 SUMMARY OF CONDITIONS The condition of the Zone 1 improvements are generally good and are providing adequate service, however, some of the improvements are reaching an age where major repairs/rehabilitation or replacement will be required within the next several years. Our overall approach for this financial analysis was to look at expected life expectancies and traditional replacement strategies in order to determine a replacement schedule. Useful lives were used as a general outline to stagger costs. The budget was then adjusted to small, low-cost annual increments for the eventual replacement of all components. The following discussion pertains to assumptions made for significant components in the City s inventory: Concrete Paths, Sidewalks, and Medians: The maintenance or replacement of the concrete components is mostly due to cracks, spalling or settlements which create an unsafe condition are typically repaired by replacing broken sections. Because it is unlikely that all concrete components will require replacement within the period of this study, we have assumed replacement of 10% of the inventory over our twenty (20) year time frame. This assumes a failure rate of 0.5% per year and staggered funding every three (3) years for the repair of concrete components. Concrete Path Sidewalk

9 Page 6 Detention Basins (Parcels B & C): Maintenance costs for detention basins include costs for sediment removal and replacing vegetation (turf) and repairs to inlet/outlet structures. This assumes a cost of 10% of the original cost every ten (10) years for minor repairs. Entry Monuments: Prefabricated stone community entry monuments have a long expectancy of thirtyfive (35) years, therefore we have only included funding for repairing damaged stones and cleaning/replacement of prefabricated stone sections due to weather exposure or water contact, as well as repainting of the wooden pergola supported by the stone faced pillars. This assumes a cost of 5% of the original cost every five (5) years for repainting and minor stone replacement. Entry Monuments

10 Page 7 Fencing: The three-foot high wooden Good Neighbor Fence at Pelleria Park, as well as all other fencing is assumed to have a life expectancy of ten (10) years. Replacement costs for fences can be due to weathering, erosion, or vandalism. Therefore, we assumed a replacement schedule of 30% every ten (10) years with costs spread out annually to cover replacing sections of the fence that are occasionally damaged. Typical Fencing Landscaped Areas: Landscaped areas require replacement of shrubs, trees, plantings, sod, topsoil, irrigation systems, etc. Replacement of these items requires that the City budgets annually for any and all problem areas. A useful life of twenty (20) years was assumed and costs were based on original construction estimates and average per square foot cost of landscaping/irrigation. Since replacement of entire landscaping sections is not typical and considering the City s ongoing maintenance and expectation of sustainable choices from hereon, we assumed a replacement schedule of 10% of the original cost every ten (10) years. Parks: All park appurtenances, such as benches and picnic tables are expected to last their useful lifetimes; therefore the approach used to determine annual replacement costs was to spread out the costs to fund these items when 100% replacement will be needed.

11 Page 8 Playground Equipment: The cost of replacing playground equipment for Via Bellagio Park and Pelleria Park is based on comparing the current equipment to the costs of similar sized structures in manufacturer catalogs with a life expectancy of twenty (20) years. An annual contribution is assumed. Playground Equipment Streetlights: The cost of replacing street light standards and luminaries will only occur in instances where streetlights are knocked down by vehicles or the City decides to upgrade or change to decorative streetlights. Therefore the cost of replacing streetlights was assumed to be the cost of replacing one (1) per year including wiring. While not included in this costs analysis, at some future date the District may want to look at the potential savings in energy costs from converting the existing street lights to LED or induction lighting. Walls: Although walls generally have a useful life longer than this study, we expect to replace a portion of walls over the next twenty (20) years. A replacement schedule of 20% of the original every twenty (20) years was determined to replace some wall portions. Graffiti removal was assumed to be funded as part of the annual maintenance budget. LIFE EXPECTANCY AND COST ESTIMATES Remaining Life: The Remaining Life in years represents the serviceable years left in the time based on the useful life of the improvement. As this study is reviewed annually, the City maintenance departments

12 Page 9 may wish to adjust the useful life of an improvement should it experience a longer or shorter life based on the environment, initial quality, maintenance, etc. Cyclical Funding: Some concrete improvements are typically replaced in stages rather than at one time period. Therefore these were placed on a cyclical replacement. Partial Funding: Some replacement items have been funded at less than their replacement value. This is done to keep reserve levels at a reasonable level since these improvements may never be replaced in their entirety and catastrophic failure is not anticipated. Safety Issues: Safety issues should be given the highest priority and completed immediately so as not to pose any welfare threat. Cost Rounding: Costs shown in this report are shown in whole dollars except when any cost was estimated at less than $0.50. SURVEY METHODOLOGY Valuation: This study depends on estimates of useful life, remaining life and replacement costs. These estimates were obtained from the City s bid documents, cost data, recent comparable costs, published estimating manuals and engineering judgment. We believe this analysis will provide a useful guide for planning. Actual experience in replacing the improvements may differ from these projections due to environmental factors, maintenance practices, inflation rates and regulatory actions.

13 Page 10 APPENDIX PART A: INVENTORY OF IMPROVEMENTS

14 Page 11 INVENTORY OF IMPROVEMENTS Zone 1 - La Vigne 466 Units Description Year Built Quantity/ Size Units Per Unit Price Estimated Cost at Construction Useful Life (years) Remaining Life Parcel A Path Northside of Lot A sf bond estimate $ 60, Parcel B - Park/Detention Basin (Dry) 1 acre acres ROW Landscape Area on Flosden 2001 sf bond estimate $ 245, Vineyard sf $ 3.50 $ 99,750 Landscape and Park Area (Detention Basin) & Irrigation sf $ 4.50 $ 196, Landscaping Median at North Via Bellagio Entrance sf $ 7.50 $ 6, Concrete Walkway Path sf $ 5.00 $ 34, Trash Receptacles ea $ $ Drinking Fountain ea $ 2, $ 2, Bicycle Rack ea $ $ Benches ea $ 1, $ 6, Entry Monument ea $ 30, $ 60, Parcel C - Detention Basin (Dry) 1.15 acres Landscaping Median at South Via Bellagio Entrance sf $ 7.50 $ 6, Concrete Median at South Via Bellagio Entrance lf $ 5.00 $ Landscape & Irrigation sf $ 2.50 $ 55, Entry Monument ea $ 30, $ 30, DG Path sf $ 3.40 $ 5, Concrete Pathway sf $ 4.00 $ 7, Wood and Wire Fence lf $ $ 1, Parcel D 1.42 acres Landscape & Irrigation sf $ 2.50 $ 154, Concrete Pathway sf $ 4.00 $ 33, Entry Monument ea $ 30, $ 30, Concrete Pathway sf $ 4.00 $ 22, Soundwall lf $ $ 119, Parcel E 1.83 acres Landscaping Median at Via Firenze Entrance (89 ft approx) sf $ 7.50 $ 6, Concrete Median at Via Firenze Entrance (89 ft approx) lf $ 5.00 $ Entry Monument ea $ 30, $ 30, Soundwall lf $ $ 90, Parcel F 0.65 acres Landscape & Irrigation acres $ 2.50 $ 70, Sound wall lf $ $ 29, Path (AC & DG) sf $ 3.40 $ 51, Parcel G Path (AC) sf $ 4.00 $ 78, Parcel H - Via Bellagio Park 1.07 acres Landscape & Irrigation 2001 sf from estimate $ 177, Playground Equipment ea $ 22, $ 22, Picnic Tables ea $ $ 2, Benches ea $ 1, $ 4, Paths and Hardscape Areas sf $ 4.00 $ 7, Wood Fence lf $ $ 4, Parcel K - Pelleria Park 1.06 acres Planting & Turf 2001 ea $ 165, $ 165, Landscaping (L-7) & Irrigation sf $ 2.50 $ 133, Concrete Walkway Path sf $ 5.00 $ 8, Playground Equipment/Structures ea $ 22, $ 44, Basketball Half-Court ea $ 18, $ 18, Picnic Tables ea $ $ 2, Benches ea $ 1, $ 3, Bicycle Rack ea $ $ ' High Good Neighbor Fence (Wood) lf $ $ 2, Fence lf $ $ 3, Trash Receptacles ea $ $ 1, Via Bellagio Parkway sf $ 4.50 $ 122, Irrigation System sf $ 2.50 $ 68, Irrigation Mainline (6") lf $ 2.50 $ 1, Landscaping Median at Brunello Drive (206 ft approx) sf $ 7.50 $ 15, Landscaping Median at Verona Drive (76 ft approx) sf $ 7.50 $ 5, Landscaping Median at Via Firenze (76 ft approx) sf $ 7.50 $ 5, Landscaping Median at Montecarlo Way (102 ft approx) sf $ 7.50 $ 7, Landscaping Median at Sarcedo Way sf $ 7.50 $ 8, Landscaping Median at Via La Morra sf $ 7.50 $ 8, Streetlights Streetlights ea $ 3, $ 3, Total Replacement Cost (at time of construction): $ 2,384,014

15 Page 12 APPENDIX PART B: CASH FLOW METHOD DATA (Starting Fund Balance, Recommended Annual Contribution, Annual Expenditure and Year End Fund Balance) Study Year Fiscal Year Starting Balance $ 171,997 $ 155,999 $ 147,419 $ 152,636 $ 136,779 $ 62,511 $ 41,623 $ 35,664 $ 19,299 $ 30,554 Recommended Annual Contribution $ 10,000 $ 15,000 $ 25,000 $ 25,000 $ 25,000 $ 30,000 $ 30,000 $ 35,000 $ 35,000 $ 40,000 Recommended Expenditures $ 25,998 $ 23,581 $ 19,783 $ 40,857 $ 99,268 $ 50,888 $ 35,959 $ 51,365 $ 23,746 $ 60,057 Proposed Year End Balance $ 155,999 $ 147,419 $ 152,636 $ 136,779 $ 62,511 $ 41,623 $ 35,664 $ 19,299 $ 30,554 $ 10,497 Proposed Annual Contribution per SFH $ - $ $ $ $ $ $ $ $ $ Study Year Fiscal Year Starting Balance $ 10,497 $ 9,774 $ 17,360 $ 8,652 $ 5,880 $ 24,879 $ 14,571 $ 26,778 $ 24,222 $ 30,518 Recommended Annual Contribution $ 45,000 $ 45,000 $ 45,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 55,000 $ 55,000 Recommended Expenditures $ 45,723 $ 37,414 $ 53,708 $ 52,772 $ 31,001 $ 60,308 $ 37,794 $ 52,556 $ 48,704 $ 129,136 Proposed Year End Balance $ 9,774 $ 17,360 $ 8,652 $ 5,880 $ 24,879 $ 14,571 $ 26,778 $ 24,222 $ 30,518 $ (43,617) Proposed Annual Contribution per SFH $ $ $ $ $ $ $ $ $ $

16 Page 13 APPENDIX PART C: REPLACEMENT SCHEDULE

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19 Page 16 APPENDIX PART D: MAP

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