Village Glen HOA P.O. Box 1537, Arroyo Grande, CA. Reserve Study

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1 Village Glen HOA P.O. Box 1537, Arroyo Grande, CA Reserve Study As required by the state of California, it is the responsibility of the Board of Directors to create and maintain adequate reserves to provide for the timely and orderly repair and replacement of the common area assets so as to minimize the risk to homeowners of special assessments, deferred maintenance, or unfunded losses. In recognition of this responsibility, the Board will complete or commission a Reserve Study once every five years. This study will be completed by the current board with assistance from interested homeowners. Should homeowners desire an independent reserve study, they can effect this by calling a vote in which over 50 percent of homeowners agree to the expense. The reserve study determines: the Percent Funded of the existing reserve fund (a measure of reserve fund strength, where 100% refers to being fully-funded ), establishes the scope and schedule of anticipated reserve projects, and recommends a Reserve Funding contribution rate to ensure timely repairs & replacements.

2 Table of Contents Table of Contents 2 Reserve Fund Executive Summary 3 List of Reserve Components: 4 Reserve Policy 5 Methodology 6 Accuracy, Limitations, and Disclosures 7 Photographic Inventory 7 Assumptions & Reserve Estimates 8 Expenses. 10 July 19, 2017 Page 2 of 11

3 Reserve Fund Executive Summary Association: Village Glen Homeowners Association Location: Arroyo Grande, CA # of Units: 40 Report Period: Calendar Year 2017 Status of Fund: Projected Starting Reserve Balance $ 11, Fully Funded Reserve Balance $ 11, Percent Funded 100% Projected 5 year assessments: Year Regular Assessment Special Assessment YE Balance 2018 $9.23 $0.00 $ $9.50 $0.00 $ $9.78 $0.00 $ $10.08 $0.00 $ $10.38 $0.00 $ Economic Assumptions: Net Annual Interest Earnings: 0.0% Annual Inflation Rate: 3.00% The information in this Reserve Study is based on the site inspection conducted on October 12, Reserve Fund is 100% Funded; no special assessments are projected in the next 5 years. Should your reserve fund fall below 75%, a multi-year Funding Plan will be implemented to gradually bring the fund to the 100% level, or Fully Funded. Please note that a copy of the full Reserve Fund Report is located on the HOA Website. July 19, 2017 Page 3 of 11

4 List of Reserve Components: Useful life is estimate of how long the equipment will last. In all cases it is a conservative estimate (we believe it will last longer than indicated). Because we use a conservative number, the remaining life may remain the same with future assessments if we see no change in the equipments condition. In this assessment damage to the slope due to rain, irrigation valves and pipes are seen as near term (5 yr) concerns. Component Useful Life Assessed Remaining Life (yrs) (yrs) Cluster Mailboxes Drainage Basin Fence Drainage Basin Slopes 8 3 Irrigation Controller Box 20 5 Irrigation Controller Irrigation Controller Valves 10 5 Irrigation System Pipes & Hoses 10 5 VG Entryway Sign July 19, 2017 Page 4 of 11

5 Reserve Policy It shall be the policy of the VG HOA Homeowners Association to: 1. Maintain a Reserve Fund account for the exclusive purpose of funding anticipated reserve projects. Special Note: Unlike many larger associations, VGHOA does not need to plan for major maintenance or upgrade of recreational facilities and other real estate property. However, VG HOA does have responsibility to maintain our common areas and other assets such as fences, cluster mail boxes, and sprinkler systems. The target reserve fund amount takes into consideration both the planned repair/replacement of our assets and the potential risks from a major incident (i.e. earthquake or a 100 year flood scenario). 2. Maintain the Reserve Fund at or above 75% of the fully-funded balance. Should unforeseen circumstances result in the Reserve Fund falling below 75% of the fully-funded balance, the Board will take the steps necessary to bring the Reserve fund balance back to 100% of the fully-funded balance within three years. The Board believes that this level of Reserve fund strength reasonably protects the association members from the risk of special assessment, deferred maintenance, or unfunded losses. 3. Make annual contributions to the Reserve Fund to cover 3% inflation amount along with any expenditures incurred. 4. Authorize expenditures from Reserve Fund for: a. Reserve projects or purchases pre-approved in the annual budget; b. Projects or purchases anticipated in the current Reserve Study; c. Repairs or replacements determined to be of an emergency nature by a majority of the Board. 5. Maintain Reserve Funds in a separate fund. Reserve funds will not be allocated to individual reserve components. Note: The Board is authorized to use Reserve Funds to address first quarter cash flow constraints as long as the Reserve Funds are restored by the end of the second quarter. 6. Should the need arise, the board may levy as special assessment as authorized in Article 9.8 of the CC&Rs.. July 19, 2017 Page 5 of 11

6 Methodology The methodology for the Reserve Study is to: perform and document an annual site inspection per the CC&Rs, use information from the site inspection to assess impacts to the reserve fund, and update this plan a minimum of every three years and provide disclosures to homeowners annually. Site Inspection: A site inspection is held annually (preferably in the fall before seasonal rain begins) of the following areas and documented in a report provided to the homeowners via the website and discussed as an agenda item at the annual homeowners meeting. 1. Drainage Basin Inspect Basin for sediment level, erosion, weed control, and rodent damage. Check drainage pipes are for damage and debris Inspect fence and gate for security and stability Inspect slopes north and west of the basin for erosion and weed control. 2. Common Maintenance Areas Inspect entrances (Hidden Oak & South end of Village Glen) for, debris and landscape condition, entry sign condition (lighting, paint, etc), and landscape, erosion. Common area (hillsides along James Way,, Hidden Oak, and Village Glen are inspected for erosion, cleanliness, and plant health. Cluster Mail Boxes are inspected for paint condition and structural integrity. The concrete drains above Quail Ridge (2), behind homes on Hidden Oak, and behind lots 15, 16 & 17 on James Way inspected for excess soil to ensure proper flow of rainfall. Condition of wood structure on James Way (electrical meter stand) is inspected for condition of paint, general wear and structural integrity. July 19, 2017 Page 6 of 11

7 3. Cannon Way street surface is NOT part of the reserve study nor is it part of the annual site inspection except to ensure it does not affect or threaten the proper operation of the drainage basin, nor cause undue erosion around the basin. Accuracy, Limitations, and Disclosures Estimates are taken from public websites both for value and lifespan. These will be revisited each time the study is updated. The VG HOA board may authorize an independent reserve fund assessment should the need arise. Photographic Inventory Each year photographs of all Reserve Fund Items will be taken as part of the annual site inspection to document their condition. These photos will be stored on the VGHOA website until replaced by new photographs the following year. July 19, 2017 Page 7 of 11

8 Assumptions & Reserve Estimates Table 1 lists the assumptions and reserve estimates derived by the board. The Reserve Target is based on 75% of the High Reserve Column and 25% of the Low Reserve. Legend: Reserve Fund Assumptions Table (2017) Item of Interest Owner Life (yrs) Cluster Mail boxes Drainage Basin Slopes Drainage Basin Fence HOA = Village Glen Homeowners Association IHO = Individual Homeowners CWHO = Canyon Way Homeowners collectively Maintenance Assumptions HOA 15 - Cleaning and painting included in annual budget - Assume only one in low and two in high estimates - Replacement in reserve budget ($ each) - 2 hrs Labor per install HOA 5 - Clearing performed annually as required - Estimate is for erosion damage to basin or slope - Anticipate Some effort required every 5 years HOA 30 - Cost $25.00 per ft installed; - assume 25 feet for low est., 75 feet for high est. - Key Risks:[vehicle accident; earthquake; felled tree] Entry Sign HOA 20 - Key Risks: [vehicle accident; earthquake; vandals] - low and high estimates for major damage Irrigation Control Valves Irrigation System Piping Irrigation Controller Irrigation Controller Box HOA 10 - High Estimate of ~$100 per valve Hunter PGV Valves in System - (Low: replace 2) High: replace 6 - labor is one hr per HOA 10 - Drip tubing $ ft roll; Connectors $1 per 50 ft. - Key driver is labor to install $77@ 1 hour per 100 HOA 20 - High Estimate based on Hunter IC-600M $529 - labor estimate 2 $77 - low estimate based on 50% repair HOA 25 - Key Risks: [vehicle accident; earthquake] - Low estimate based on 50% repair w/ same labor - Labor estimated at 3 $200 per hour Low Reserve High Reserve Reserve Target $1400 $2800 $2450 $1500 $3000 $2625 $500 $1875 $1531 $500 $2250 $1813 $354 $1062 $885 $1000 $2500 $2125 $350 $750 $650 $305 $610 $534 Totals: $5909 $14847 $12613 July 19, 2017 Page 8 of 11

9 The items listed in Table 2 below are not the responsibility of the VG HOA and therefore are not included in the Reserve Study. The party responsibility for maintenance of these items is listed in the Owner column. Table 2 Components NOT included in Reserve Assessment Item of Interest Owner Items NOT Included in Assumptions Electrical Transformers PG&E - The electrical transformer boxes and the associated retaining walls are responsibility of PG&E - No reserve budget allocated Retaining Wall Lower end VGD IHO - This double level retaining wall is responsibility of the homeowner - No reserve budget allocated White Fence James Way IHO - Individual homeowners to repair as required - No reserve budget allocated Canyon Way Road CWHO - Canyon Way Homeowners are responsible for maintenance and repair of this driveway per County Recorded Document & No VG HOA reserve budget is allocated Concrete Troughs IHO - Above Quail Ridge behind lots 34, 35 & 36 - Behind lots 33 & 32, and behind lots 15, 16, - These troughs are IHOs to clear and repair July 19, 2017 Page 9 of 11

10 Expenses Table 3 shows the 20 Year Expenditure Plan and all anticipated debits from the reserves during those years. Expenses have been estimated by using data from various sources to determine the cost of replacement and/or repair. The following process was used to determine the Target Reserve Cost for each of the Reserve Components: Determine Typical Lifespan of each item (Data gathered from web sources) Determine Remaining life of each item (Subjective assessment) Document Assumptions for each component Establish a Low and High Reserve Estimate Value Reserve Target = sum of (25% of low estimate) + (75% of high estimate) These values are then input into Table 3 to form a 20 Year Reserve Expenditure and Funding schedule. Note that these are conservative estimates intended to minimize or eliminate any Special Assessments over the 20 year period. Using the conservative numbers will likely result in lower than anticipated Annual Regular Assessments. July 19, 2017 Page 10 of 11

11 Table 3: 20 Year Reserve Fund Plan YR1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10 YR11 YR12 YR13 YR14 YR15 YR16 YR17 YR18 YR19 YR Starting Reserve Balance $ 11,941 $ 10,049 $ 11,449 $ 12,099 $ 13,499 $ 14,349 $ 13,499 $ 14,899 $ 14,549 $ 15,984 $ 17,419 $ 16,604 $ 18,039 $ 18,724 $ 20,159 $ 18,944 $ 18,129 $ 18,189 $ 17,874 $ 18,409 Reserve Assessment $ 358 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 $ 1,400 Per Homeowner 35 $ 9 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 $ 35 Special Assessments $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Subtotal $12,299 $11,449 $12,849 $13,499 $14,899 $15,749 $14,899 $16,299 $15,984 $17,419 $18,854 $18,039 $19,474 $20,159 $21,594 $20,379 $19,564 $19,624 $19,309 $19,844 Reserve Component Useful Life (YRS) Remaining Life (as of 2017) Drainage Basin Slopes 5 0 $ 2,250 $ 2,250 $ 2,250 $ 2,250 Irrigation Controller Valves 10 3 $ 750 $ 750 Irrigation Controller 10 5 $ 550 $ 550 Sprinkler System Pipes & Hoses 10 8 $ 1,750 $ 1,750 Cluster Mailboxes $ 2,100 VG Entryway Sign $ 1,375 Drainage Basin Fence $ 900 Irrigation Controller Box $ 458 Subtotal $ 2,250 $ 0 $ 750 $ 0 $ 550 $ 2,250 $ 0 $ 1,750 $ 0 $ 0 $ 2,250 $ 0 $ 750 $ 0 $ 2,650 $ 2,250 $ 1,375 $ 1,750 $ 900 $ 458 Ending Reserve Balance $10,049 $11,449 $12,099 $13,499 $14,349 $13,499 $14,899 $14,549 $15,984 $17,419 $16,604 $18,039 $18,724 $20,159 $18,944 $18,129 $18,189 $17,874 $18,409 $19,387 Reserve Fund Target $ 12,299 $ 12,668 $ 13,048 $ 13,439 $ 13,843 $ 14,258 $ 14,686 $ 15,126 $ 15,580 $ 16,047 $ 16,529 $ 17,025 $ 17,535 $ 18,061 $ 18,603 $ 19,161 $ 19,736 $ 20,328 $ 20,938 $ 21,566 Percent Funded 82% 90% 93% 100% 104% 95% 101% 96% 103% 109% 100% 106% 107% 112% 102% 95% 92% 88% 88% 90% July 19, 2017 Page 11 of 11

Full Reserve Study. The Ridge at Rock Creek Marysville, WA 11/13/2012

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