Driftwood Point Association

Transcription

1 Washington Office Corporate Office 505 South 336 th St., Ste 620 Calabasas, CA Federal Way, WA Regional Offices TEL 253/ Phoenix, AZ FAX 253/ San Francisco, CA Denver, CO Full Reserve Study Honolulu, HI Las Vegas, NV Miami, FL Driftwood Point Association Lake Tapps, WA Report #: For Period Beginning: May 1, 2014 Expires: April 30, 2015 Date Prepared: April 4, 2014

2 Hello, and welcome to your Reserve Study! W e don t want you to be surprised. This Report is designed to help you anticipate, and prepare for, the major common area expenses your association will face. Inside you will find: 1) The Reserve Component List (the Scope and Schedule of your Reserve projects) telling you what your association is Reserving for, what condition they are in now, and what they ll cost to replace. 2) An Evaluation of your current Reserve Fund Size and Strength (Percent Funded). This tells you your financial starting point, revealing your risk of deferred maintenance and special assessments. 3) A Recommended Multi-Year Reserve Funding Plan, answering the question What do we do now? More Questions? Visit our website at or call us at: 253/ Relax, it s from Association Reserves WA, LLC. 4/4/2014

3 Table of Contents 3- Minute Executive Summary...i Reserve Study Summary...i Reserve Component List Table 1...ii Introduction, Objectives, and Methodology...1 Which Physical Assets are Funded by Reserves?...2 How do we establish Useful Life and Remaining Useful Life estimates?...2 How do we establish Current Repair/Replacement Cost Estimates?...2 How much Reserves are enough?...3 How much should we contribute?...4 What is our Recommended Funding Goal?...4 Projected Expenses...6 Expense Graph Figure Reserve Fund Status & Recommended Funding Plan...7 Funding Plan Graph Figure Cash Flow Graph Figure % Funded Graph Figure Table Descriptions...9 Reserve Component List Detail Table Contribution & Fund Breakdown Table Component Significance Table Year Reserve Plan Summary Table Year Reserve Plan Year by Year Detail Table Accuracy, Limitations, and Disclosures...20 Terms and Definitions...22 Component Details... Appendix Association Reserves WA, LLC. 4/4/2014

4 3- Minute Executive Summary Association: Driftwood Point Association #: Location: Lake Tapps, WA # of Units: 416 Report Period: May 1, 2014 through April 30, 2015 Findings/Recommendations as-of 5/1/2014: Projected Starting Reserve Balance:... $108,307 Current Fully Funded Reserve Balance:... $106,408 Average Reserve Deficit (Surplus) Per Unit:... $(5) 100% 2014/2015 Annual Full Funding Contributions:... $12,500 70% 2014/2015 Monthly Threshold Funding Contributions:... $10,900 Baseline contributions (min to keep Reserves above $0):... $8,800 Recommended 2014/2015 Special Assessment:... $0 Most Recent Reserve Contribution Rate:... $10,800 Economic Assumptions: Net Annual After Tax Interest Earnings Accruing to Reserves % Annual Inflation Rate % This is a Full Reserve Study, based on our site inspection on March 10, 2014 and meets or exceeds all requirements of the RCW. This study was prepared by, or under the supervision of a credentialed Reserve Specialist (RS ). Your Reserve Fund is currently 102% Funded. This means the association s special assessment & deferred maintenance risk is currently low. The objective of your multi-year Funding Plan is to fund your Reserves to a level where you will enjoy a low risk of such Reserve cash flow problems. Based on this starting point and your anticipated future expenses, our recommendation is to maintain your Reserve contributions to within the 70% to 100% level as noted above. 100% Full and 70% contribution rates are designed to achieve these funding objectives by the end of our 30-year report scope. No assets appropriate for Reserve designation were excluded. See photo appendix for component details; the basis of our assumptions. Association Reserves WA, LLC i 4/4/2014

5 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate 100 Concrete - Repair/Replace 5 0 $3, Asphalt Path - Resurface $5, Gate - Replace $1, Gate Operator - Replace $3, Chain Link Fence - Replace $20, Entry Sign/Monument - Replace $2, Tennis Court - Seal/Repair/Stripe 5 2 $6, Tennis Court - Resurface $35, Tennis Court Fence - Replace $16, Basketball Court - Replace $7, Basketball Equipment - Replace $1, Backstop - Replace $2, Play Equipment - Replace $25, Benches/Tables - Replace 15 5 $6, Bridge - Repair/Replace $10, Docks - Repair/Replace $60, Wood Pilings - Replace N/A 15 $24, Dive Platform - Repair/Replace 15 5 $4, Dock Slide - Replace $2, Gazebos - Repair/Replace 10 5 $2, Asphalt Shingle Roofs - Replace 30 5 $4, Park Bathrooms - Refurbish $6, Total Funded Components Note 1: a Useful Life of N/A means a one-time expense, not expected to repeat. Note 2: Yellow highlighted line items are expected to require attention in the initial year, green highlighted items are expected to occur within the first five years. Cross reference component numbers with photographic inventory appendix. A reserve-funding threshold of $1,000 is suggested for your association (expenses below this level expected to be factored within operating budget). Association Reserves WA, LLC ii 4/4/2014

6 Assoc Introduction A Reserve Study is the art and science of anticipating, and preparing for, an association s major common area repair and replacement expenses. Partially art, because in this field we are making projections about the future. Partially science, because our work is a combination of research and welldefined computations, following consistent National Reserve Study Standard principles. The foundation of this and every Reserve Study is your Reserve Component List (what you are reserving for). This is because the Reserve Component List defines the scope and schedule of all your anticipated upcoming Reserve projects. Based on that List and your starting balance, we calculate the association s Reserve Fund Strength (reported in terms of Percent Funded ). Then we compute a Reserve Funding Plan to provide for the Reserve needs of the association. These form the three results of your Reserve Study. Reserve contributions are not for the future. Reserve contributions are designed to offset the ongoing, daily deterioration of your Reserve assets. Done well, a stable, budgeted Reserve Funding Plan will collect sufficient funds from the owners who enjoyed the use of those assets, so the association is financially prepared for the irregular expenditures scattered through future years when those projects eventually require replacement. Methodology For this Full Reserve Study, we started with a review of your Governing Documents, recent Reserve expenditures, an evaluation of how expenditures are handled (ongoing maintenance vs Reserves), and research into any well-established association precedents. We performed an on-site inspection to quantify and evaluate your common areas, creating your Reserve Component List from scratch. Association Reserves WA, LLC 1 4/4/2014

7 Assoc Which Physical Assets are Funded by Reserves? There is a national-standard four-part test to determine which expenses should appear in your Reserve Component List. First, it must be a common area maintenance responsibility. Second, the component must have a limited life. Third, the remaining life must be predictable (or it by definition is a surprise which cannot be accurately anticipated). Fourth, the component must be above a minimum threshold cost (often between.5% and 1% of an association s total budget). This limits Reserve Components to major, predictable expenses. Within this framework, it is inappropriate to include lifetime components, unpredictable expenses (such as damage due to fire, flood, or earthquake), and expenses more appropriately handled from the Operational Budget or as an insured loss. How do we establish Useful Life and Remaining Useful Life estimates? 1) Visual Inspection (observed wear and age) 2) Association Reserves database of experience 3) Client History (install dates & previous life cycle information) 4) Vendor Evaluation and Recommendation How do we establish Current Repair/Replacement Cost Estimates? In this order 1) Actual client cost history, or current proposals 2) Comparison to Association Reserves database of work done at similar associations 3) Vendor Recommendations 4) Reliable National Industry cost estimating guidebooks Association Reserves WA, LLC 2 4/4/2014

8 Assoc How much Reserves are enough? Reserve adequacy is not measured in cash terms. Reserve adequacy is found when the amount of current Reserve cash is compared to Reserve component deterioration (the needs of the association). Having enough means the association can execute its projects in a timely manner with existing Reserve funds. Not having enough typically creates deferred maintenance or special assessments. Adequacy is measured in a two-step process: 1) Calculate the value of deterioration at the association (called Fully Funded Balance, or FFB). 2) Compare that to the Reserve Fund Balance, and express as a percentage. Each year, the value of deterioration at the association changes. When there is more deterioration (as components approach the time they need to be replaced), there should be more cash to offset that deterioration and prepare for the expenditure. Conversely, the value of deterioration shrinks after projects are accomplished. The value of deterioration (the FFB) changes each year, and is a moving but predictable target. There is a high risk of special assessments and deferred maintenance when the Percent Funded is weak, below 30%. Approximately 30% of all associations are in this high risk range. While the 100% point is Ideal (indicating Reserve cash is equal to the value of deterioration), a Reserve Fund in the 70% -130% range is considered strong (low risk of special assessment). Measuring your Reserves by Percent Funded tells how well prepared your association is for upcoming Reserve expenses. New buyers should be very aware of this important disclosure! Association Reserves WA, LLC 3 4/4/2014

9 Assoc How much should we contribute? According to National Reserve Study Standards, there are four Funding Principles to balance in developing your Reserve Funding Plan. Our first objective is to design a plan that provides you with sufficient cash to perform your Reserve projects on time. Second, a stable contribution is desirable because it keeps these naturally irregular expenses from unsettling the budget. Reserve contributions that are evenly distributed over current and future owners enable each owner to pay their fair share of the association s Reserve expenses over the years. And finally, we develop a plan that is fiscally responsible and safe for Boardmembers to recommend to their association. Remember, it is the Board s job to provide for the ongoing care of the common areas. Boardmembers invite liability exposure when Reserve contributions are inadequate to offset ongoing common area deterioration. What is our Recommended Funding Goal? Maintaining the Reserve Fund at a level equal to the value of deterioration is called Full Funding (100% Funded). As each asset ages and becomes used up, the Reserve Fund grows proportionally. This is simple, responsible, and our recommendation. Evidence shows that associations in the % range enjoy a low risk of special assessments or deferred maintenance. Allowing the Reserves to fall close to zero, but not below zero, is called Baseline Funding. Doing so allows the Reserve Fund to drop into the 0-30% range, where there is a high risk of special assessments & deferred maintenance. Since Baseline Funding still provides for the timely execution of all Reserve projects, and only the margin of safety is different, Baseline Funding contributions average only 10% - 15% less than Full Funding contributions. Threshold Funding is the title of all other Cash or Percent Funded objectives between Baseline Funding and Full Funding. Association Reserves WA, LLC 4 4/4/2014

10 Assoc Site Inspection Notes During our site visit on March 10, 2014, we started with a brief meeting with Board President Jerry Blessing, and then started the site inspection beginning with the buildings. We visually inspected all visible common areas while compiling a photographic inventory, noting: current condition, make & model information where appropriate, apparent levels of care and maintenance, exposure to weather elements and other factors that may affect the components useful life. Early planning for future maintenance projects, efficient execution and tracking within reserve study updates is key to avoiding future special assessments and cash flow problems. Association Reserves WA, LLC 5 4/4/2014

11 Assoc Projected Expenses While this Reserve Study looks forward 30 years, we have no expectation that all these expenses will all take place as anticipated. This Reserve Study needs to be updated annually because we expect the timing of these expenses to shift and the size of these expenses to change. We do feel more certain of the timing and cost of near-term expenses than expenses many years away. Your first five years of projected Reserve expenses total $9,365. Adding the next five years, your first ten years of projected Reserve expenses are $39,930. Please be aware of your near-term expenses, which we are able to project more accurately than the more distant projections. The figure below summarizes the projected future expenses at your association as defined by your Reserve Component List. A summary of these expenses are shown in Table 5, while details of the projects that make up these expenses are shown in Table 6. Annual Reserve Expenses $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $ Years Figure 1 Association Reserves WA, LLC 6 4/4/2014

12 Assoc Reserve Fund Status The starting point for our financial analysis is your Reserve Fund balance, projected to be $108,307 as-of the start of your Fiscal Year on May 1, As of May 1, 2014, your Fully Funded Balance is computed to be $106,408 (see Table 3). This figure represents the deteriorated value of your common area components. Comparing your Reserve Balance to your Fully Funded Balance indicates your Reserves are 102% Funded. Across the country, under 1% of associations in this range experience special assessments or deferred maintenance. Recommended Funding Plan Based on your current Percent Funded and your near-term and long-term Reserve needs, we are recommending budgeted contributions of $12,500/month this Fiscal Year. The overall 30-yr plan, in perspective, is shown below. This same information is shown numerically in both Table 5 and Table 6. Annual Reserve Funding Recommended Alternate (Minimum) Current Budget $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Years Figure 2 Association Reserves WA, LLC 7 4/4/2014

13 Assoc The following chart shows your Reserve balance under our recommended Full Funding Plan, an alternate Baseline Funding Plan, and at your current budgeted contribution rate, compared to your always-changing Fully Funded Balance target. $350, Yr Cash Flow Target Fully Funded Balance Recommended Funding Plan Alternate (Minimum) Current Budget $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Years Figure 3 This figure shows this same information, plotted on a Percent Funded scale. 120% Percent Funded Recommended Funding Plan Alternate (Minimum) Funding Plan Current Budget 100% 80% 60% 40% 20% 0% Years Figure 4 Association Reserves WA, LLC 8 4/4/2014

14 Assoc Table Descriptions The tabular information in this Report is broken down into six tables. Table 1 is a summary of your Reserve Components (your Reserve Component List), the information found in Table 2. Table 2 is your Reserve Component List, which forms the foundation of this Reserve Study. This table represents the information from which all other tables are derived. Table 3 shows the calculation of your Fully Funded Balance, the measure of your current Reserve component deterioration. For each component, the Fully Funded Balance is the fraction of life used up multiplied by its estimated Current Replacement Cost. Table 4 shows the significance of each component to Reserve needs of the association, helping you see which components have more (or less) influence than others on your total Reserve contribution rate. The deterioration cost/yr of each component is calculated by dividing Current Replacement Cost by Useful Life, then that component s percentage of the total is displayed. Table 5: This table provides a one-page 30-year summary of the cash flowing into and out of the Reserve Fund, with a display of the Fully Funded Balance, Percent Funded, and special assessment risk for each year. Table 6: This table shows the cash flow detail for the next 30 years. This table makes it possible to see which components are projected to require repair or replacement each year, and the size of those individual expenses. Association Reserves WA, LLC 9 4/4/2014

15 Table 2: Reserve Component List Detail Rem. Useful Useful [ --- Current Cost Estimate --- ] # Component Quantity Life Life Best Case Worst Case 100 Concrete - Repair/Replace ~ 4,800 Sq Ft 5 0 $2,000 $4, Asphalt Path - Resurface ~ 2,000 Sq Ft $4,000 $6, Gate - Replace (1) sliding chain link $1,000 $1, Gate Operator - Replace (1) Chamberlain Elite $2,500 $3, Chain Link Fence - Replace ~ 960 Lin Ft $17,000 $23, Entry Sign/Monument - Replace (1) masonry/stone $2,000 $3, Tennis Court - Seal/Repair/Stripe ~ 7,200 Sq Ft 5 2 $5,000 $7, Tennis Court - Resurface ~ 7,200 Sq Ft $30,000 $40, Tennis Court Fence - Replace ~ 360 Lin Ft $14,000 $18, Basketball Court - Replace ~ 800 Sq Ft $6,000 $8, Basketball Equipment - Replace (1) assembly $1,200 $1, Backstop - Replace ~ 60 Lin Ft, chain link $2,000 $3, Play Equipment - Replace (1) wood set/asstd pieces $20,000 $30, Benches/Tables - Replace (3) benches, (15) tables 15 5 $5,000 $7, Bridge - Repair/Replace ~ 300 Sq Ft $9,000 $12, Docks - Repair/Replace ~ 1,660 Sq Ft $50,000 $70, Wood Pilings - Replace (8) wood pilings N/A 15 $20,000 $28, Dive Platform - Repair/Replace (1) wood platform 15 5 $4,000 $5, Dock Slide - Replace (1) slide $1,500 $2, Gazebos - Repair/Replace (4) wood structures 10 5 $2,000 $3, Asphalt Shingle Roofs - Replace ~ 1,600 Sq Ft 30 5 $3,000 $5, Park Bathrooms - Refurbish (2) bathrooms $5,000 $8, Total Funded Components Association Reserves WA, LLC 10 4/4/2014

16 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance 100 Concrete - Repair/Replace $3,000 X 5 / 5 = $3, Asphalt Path - Resurface $5,000 X 15 / 30 = $2, Gate - Replace $1,250 X 5 / 15 = $ Gate Operator - Replace $3,000 X 5 / 15 = $1, Chain Link Fence - Replace $20,000 X 5 / 40 = $2, Entry Sign/Monument - Replace $2,500 X 5 / 20 = $ Tennis Court - Seal/Repair/Stripe $6,000 X 3 / 5 = $3, Tennis Court - Resurface $35,000 X 18 / 40 = $15, Tennis Court Fence - Replace $16,000 X 18 / 40 = $7, Basketball Court - Replace $7,000 X 1 / 30 = $ Basketball Equipment - Replace $1,500 X 10 / 20 = $ Backstop - Replace $2,500 X 20 / 40 = $1, Play Equipment - Replace $25,000 X 15 / 25 = $15, Benches/Tables - Replace $6,000 X 10 / 15 = $4, Bridge - Repair/Replace $10,500 X 15 / 30 = $5, Docks - Repair/Replace $60,000 X 15 / 30 = $30, Wood Pilings - Replace $24,000 X 0 / 0 = $1, Dive Platform - Repair/Replace $4,500 X 10 / 15 = $3, Dock Slide - Replace $2,000 X 10 / 20 = $1, Gazebos - Repair/Replace $2,500 X 5 / 10 = $1, Asphalt Shingle Roofs - Replace $4,000 X 25 / 30 = $3, Park Bathrooms - Refurbish $6,500 X 10 / 20 = $3,250 $106,408 Association Reserves WA, LLC 11 4/4/2014

17 Table 4: Component Significance Current Useful Cost Deterioration Deterioration # Component Life Estimate Cost/yr Significance 100 Concrete - Repair/Replace 5 $3,000 $ % 120 Asphalt Path - Resurface 30 $5,000 $ % 135 Gate - Replace 15 $1,250 $83 0.9% 136 Gate Operator - Replace 15 $3,000 $ % 155 Chain Link Fence - Replace 40 $20,000 $ % 200 Entry Sign/Monument - Replace 20 $2,500 $ % 320 Tennis Court - Seal/Repair/Stripe 5 $6,000 $1, % 322 Tennis Court - Resurface 40 $35,000 $ % 324 Tennis Court Fence - Replace 40 $16,000 $ % 325 Basketball Court - Replace 30 $7,000 $ % 330 Basketball Equipment - Replace 20 $1,500 $75 0.8% 335 Backstop - Replace 40 $2,500 $63 0.7% 340 Play Equipment - Replace 25 $25,000 $1, % 346 Benches/Tables - Replace 15 $6,000 $ % 390 Bridge - Repair/Replace 30 $10,500 $ % 400 Docks - Repair/Replace 30 $60,000 $2, % 406 Wood Pilings - Replace N/A $24,000 $0 0.0% 410 Dive Platform - Repair/Replace 15 $4,500 $ % 415 Dock Slide - Replace 20 $2,000 $ % 420 Gazebos - Repair/Replace 10 $2,500 $ % 428 Asphalt Shingle Roofs - Replace 30 $4,000 $ % 440 Park Bathrooms - Refurbish 20 $6,500 $ % 22 Total Funded Components $9, % Association Reserves WA, LLC 12 4/4/2014

18 Table 5: 30-Year Reserve Plan Summary Fiscal Year Start: 05/01/14 Interest: 1.0% Inflation: 3.0% Reserve Fund Strength Calculations (All values as of Fiscal Year Start Date) Projected Reserve Balance Changes Starting Fully Special Loans or Reserve Funded Percent Assmt Reserve Special Interest Reserve Year Balance Balance Funded Risk Contribs. Assmts Income Expenses 2014 $108,307 $106, % Low $12,500 $0 $1,136 $3, $118,943 $116, % Low $12,875 $0 $1,260 $ $133,078 $129, % Low $13,261 $0 $1,372 $6, $141,345 $137, % Low $13,659 $0 $1,489 $ $156,493 $152, % Low $14,069 $0 $1,643 $ $172,204 $168, % Low $14,491 $0 $1,686 $23, $165,196 $160, % Low $14,926 $0 $1,735 $ $181,856 $177, % Low $15,373 $0 $1,867 $7, $191,718 $187, % Low $15,835 $0 $2,006 $ $209,558 $205, % Low $16,310 $0 $2,187 $ $228,054 $225, % Low $16,799 $0 $2,090 $56, $190,163 $187, % Low $17,303 $0 $1,997 $ $209,463 $208, % Low $17,822 $0 $2,151 $8, $220,882 $222, % Low $18,357 $0 $2,311 $ $241,549 $249, % Low $18,907 $0 $2,522 $ $262,978 $290, % Low $19,475 $0 $1,898 $167, $116,870 $141, % Low $20,059 $0 $1,275 $ $138,204 $161, % Low $20,661 $0 $1,442 $9, $150,389 $171, % Low $21,280 $0 $1,618 $ $173,288 $193, % Low $21,919 $0 $1,851 $ $197,057 $216, % Low $22,576 $0 $1,948 $28, $192,684 $210, % Low $23,254 $0 $2,052 $ $217,990 $234, % Low $23,951 $0 $1,762 $109, $134,485 $147, % Low $24,670 $0 $1,475 $ $160,630 $171, % Low $25,410 $0 $1,741 $ $187,781 $196, % Low $26,172 $0 $1,915 $20, $195,454 $201, % Low $26,957 $0 $2,099 $ $224,511 $228, % Low $27,766 $0 $2,328 $13, $241,277 $242, % Low $28,599 $0 $2,568 $ $272,444 $271, % Low $29,457 $0 $2,802 $16,496 Association Reserves WA, LLC 13 4/4/2014

19 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Starting Reserve Balance $108,307 $118,943 $133,078 $141,345 $156,493 Annual Reserve Contribution $12,500 $12,875 $13,261 $13,659 $14,069 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $1,136 $1,260 $1,372 $1,489 $1,643 Total Income $121,943 $133,078 $147,710 $156,493 $172,204 # Component 100 Concrete - Repair/Replace $3,000 $0 $0 $0 $0 120 Asphalt Path - Resurface $0 $0 $0 $0 $0 135 Gate - Replace $0 $0 $0 $0 $0 136 Gate Operator - Replace $0 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 200 Entry Sign/Monument - Replace $0 $0 $0 $0 $0 320 Tennis Court - Seal/Repair/Stripe $0 $0 $6,365 $0 $0 322 Tennis Court - Resurface $0 $0 $0 $0 $0 324 Tennis Court Fence - Replace $0 $0 $0 $0 $0 325 Basketball Court - Replace $0 $0 $0 $0 $0 330 Basketball Equipment - Replace $0 $0 $0 $0 $0 335 Backstop - Replace $0 $0 $0 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 346 Benches/Tables - Replace $0 $0 $0 $0 $0 390 Bridge - Repair/Replace $0 $0 $0 $0 $0 400 Docks - Repair/Replace $0 $0 $0 $0 $0 406 Wood Pilings - Replace $0 $0 $0 $0 $0 410 Dive Platform - Repair/Replace $0 $0 $0 $0 $0 415 Dock Slide - Replace $0 $0 $0 $0 $0 420 Gazebos - Repair/Replace $0 $0 $0 $0 $0 428 Asphalt Shingle Roofs - Replace $0 $0 $0 $0 $0 440 Park Bathrooms - Refurbish $0 $0 $0 $0 $0 Total Expenses $3,000 $0 $6,365 $0 $0 Ending Reserve Balance: $118,943 $133,078 $141,345 $156,493 $172,204 Association Reserves WA, LLC 14 4/4/2014

20 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Starting Reserve Balance $172,204 $165,196 $181,856 $191,718 $209,558 Annual Reserve Contribution $14,491 $14,926 $15,373 $15,835 $16,310 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $1,686 $1,735 $1,867 $2,006 $2,187 Total Income $188,382 $181,856 $199,097 $209,558 $228,054 # Component 100 Concrete - Repair/Replace $3,478 $0 $0 $0 $0 120 Asphalt Path - Resurface $0 $0 $0 $0 $0 135 Gate - Replace $0 $0 $0 $0 $0 136 Gate Operator - Replace $0 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 200 Entry Sign/Monument - Replace $0 $0 $0 $0 $0 320 Tennis Court - Seal/Repair/Stripe $0 $0 $7,379 $0 $0 322 Tennis Court - Resurface $0 $0 $0 $0 $0 324 Tennis Court Fence - Replace $0 $0 $0 $0 $0 325 Basketball Court - Replace $0 $0 $0 $0 $0 330 Basketball Equipment - Replace $0 $0 $0 $0 $0 335 Backstop - Replace $0 $0 $0 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 346 Benches/Tables - Replace $6,956 $0 $0 $0 $0 390 Bridge - Repair/Replace $0 $0 $0 $0 $0 400 Docks - Repair/Replace $0 $0 $0 $0 $0 406 Wood Pilings - Replace $0 $0 $0 $0 $0 410 Dive Platform - Repair/Replace $5,217 $0 $0 $0 $0 415 Dock Slide - Replace $0 $0 $0 $0 $0 420 Gazebos - Repair/Replace $2,898 $0 $0 $0 $0 428 Asphalt Shingle Roofs - Replace $4,637 $0 $0 $0 $0 440 Park Bathrooms - Refurbish $0 $0 $0 $0 $0 Total Expenses $23,185 $0 $7,379 $0 $0 Ending Reserve Balance: $165,196 $181,856 $191,718 $209,558 $228,054 Association Reserves WA, LLC 15 4/4/2014

21 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Starting Reserve Balance $228,054 $190,163 $209,463 $220,882 $241,549 Annual Reserve Contribution $16,799 $17,303 $17,822 $18,357 $18,907 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $2,090 $1,997 $2,151 $2,311 $2,522 Total Income $246,944 $209,463 $229,436 $241,549 $262,978 # Component 100 Concrete - Repair/Replace $4,032 $0 $0 $0 $0 120 Asphalt Path - Resurface $0 $0 $0 $0 $0 135 Gate - Replace $1,680 $0 $0 $0 $0 136 Gate Operator - Replace $4,032 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 200 Entry Sign/Monument - Replace $0 $0 $0 $0 $0 320 Tennis Court - Seal/Repair/Stripe $0 $0 $8,555 $0 $0 322 Tennis Court - Resurface $0 $0 $0 $0 $0 324 Tennis Court Fence - Replace $0 $0 $0 $0 $0 325 Basketball Court - Replace $0 $0 $0 $0 $0 330 Basketball Equipment - Replace $2,016 $0 $0 $0 $0 335 Backstop - Replace $0 $0 $0 $0 $0 340 Play Equipment - Replace $33,598 $0 $0 $0 $0 346 Benches/Tables - Replace $0 $0 $0 $0 $0 390 Bridge - Repair/Replace $0 $0 $0 $0 $0 400 Docks - Repair/Replace $0 $0 $0 $0 $0 406 Wood Pilings - Replace $0 $0 $0 $0 $0 410 Dive Platform - Repair/Replace $0 $0 $0 $0 $0 415 Dock Slide - Replace $2,688 $0 $0 $0 $0 420 Gazebos - Repair/Replace $0 $0 $0 $0 $0 428 Asphalt Shingle Roofs - Replace $0 $0 $0 $0 $0 440 Park Bathrooms - Refurbish $8,735 $0 $0 $0 $0 Total Expenses $56,780 $0 $8,555 $0 $0 Ending Reserve Balance: $190,163 $209,463 $220,882 $241,549 $262,978 Association Reserves WA, LLC 16 4/4/2014

22 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Starting Reserve Balance $262,978 $116,870 $138,204 $150,389 $173,288 Annual Reserve Contribution $19,475 $20,059 $20,661 $21,280 $21,919 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $1,898 $1,275 $1,442 $1,618 $1,851 Total Income $284,351 $138,204 $160,307 $173,288 $197,057 # Component 100 Concrete - Repair/Replace $4,674 $0 $0 $0 $0 120 Asphalt Path - Resurface $7,790 $0 $0 $0 $0 135 Gate - Replace $0 $0 $0 $0 $0 136 Gate Operator - Replace $0 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 200 Entry Sign/Monument - Replace $3,895 $0 $0 $0 $0 320 Tennis Court - Seal/Repair/Stripe $0 $0 $9,917 $0 $0 322 Tennis Court - Resurface $0 $0 $0 $0 $0 324 Tennis Court Fence - Replace $0 $0 $0 $0 $0 325 Basketball Court - Replace $0 $0 $0 $0 $0 330 Basketball Equipment - Replace $0 $0 $0 $0 $0 335 Backstop - Replace $0 $0 $0 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 346 Benches/Tables - Replace $0 $0 $0 $0 $0 390 Bridge - Repair/Replace $16,359 $0 $0 $0 $0 400 Docks - Repair/Replace $93,478 $0 $0 $0 $0 406 Wood Pilings - Replace $37,391 $0 $0 $0 $0 410 Dive Platform - Repair/Replace $0 $0 $0 $0 $0 415 Dock Slide - Replace $0 $0 $0 $0 $0 420 Gazebos - Repair/Replace $3,895 $0 $0 $0 $0 428 Asphalt Shingle Roofs - Replace $0 $0 $0 $0 $0 440 Park Bathrooms - Refurbish $0 $0 $0 $0 $0 Total Expenses $167,481 $0 $9,917 $0 $0 Ending Reserve Balance: $116,870 $138,204 $150,389 $173,288 $197,057 Association Reserves WA, LLC 17 4/4/2014

23 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Starting Reserve Balance $197,057 $192,684 $217,990 $134,485 $160,630 Annual Reserve Contribution $22,576 $23,254 $23,951 $24,670 $25,410 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $1,948 $2,052 $1,762 $1,475 $1,741 Total Income $221,582 $217,990 $243,703 $160,630 $187,781 # Component 100 Concrete - Repair/Replace $5,418 $0 $0 $0 $0 120 Asphalt Path - Resurface $0 $0 $0 $0 $0 135 Gate - Replace $0 $0 $0 $0 $0 136 Gate Operator - Replace $0 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 200 Entry Sign/Monument - Replace $0 $0 $0 $0 $0 320 Tennis Court - Seal/Repair/Stripe $0 $0 $11,497 $0 $0 322 Tennis Court - Resurface $0 $0 $67,064 $0 $0 324 Tennis Court Fence - Replace $0 $0 $30,658 $0 $0 325 Basketball Court - Replace $0 $0 $0 $0 $0 330 Basketball Equipment - Replace $0 $0 $0 $0 $0 335 Backstop - Replace $4,515 $0 $0 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 346 Benches/Tables - Replace $10,837 $0 $0 $0 $0 390 Bridge - Repair/Replace $0 $0 $0 $0 $0 400 Docks - Repair/Replace $0 $0 $0 $0 $0 406 Wood Pilings - Replace $0 $0 $0 $0 $0 410 Dive Platform - Repair/Replace $8,128 $0 $0 $0 $0 415 Dock Slide - Replace $0 $0 $0 $0 $0 420 Gazebos - Repair/Replace $0 $0 $0 $0 $0 428 Asphalt Shingle Roofs - Replace $0 $0 $0 $0 $0 440 Park Bathrooms - Refurbish $0 $0 $0 $0 $0 Total Expenses $28,898 $0 $109,218 $0 $0 Ending Reserve Balance: $192,684 $217,990 $134,485 $160,630 $187,781 Association Reserves WA, LLC 18 4/4/2014

24 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Starting Reserve Balance $187,781 $195,454 $224,511 $241,277 $272,444 Annual Reserve Contribution $26,172 $26,957 $27,766 $28,599 $29,457 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $1,915 $2,099 $2,328 $2,568 $2,802 Total Income $215,869 $224,511 $254,605 $272,444 $304,703 # Component 100 Concrete - Repair/Replace $6,281 $0 $0 $0 $0 120 Asphalt Path - Resurface $0 $0 $0 $0 $0 135 Gate - Replace $2,617 $0 $0 $0 $0 136 Gate Operator - Replace $6,281 $0 $0 $0 $0 155 Chain Link Fence - Replace $0 $0 $0 $0 $0 200 Entry Sign/Monument - Replace $0 $0 $0 $0 $0 320 Tennis Court - Seal/Repair/Stripe $0 $0 $13,328 $0 $0 322 Tennis Court - Resurface $0 $0 $0 $0 $0 324 Tennis Court Fence - Replace $0 $0 $0 $0 $0 325 Basketball Court - Replace $0 $0 $0 $0 $16, Basketball Equipment - Replace $0 $0 $0 $0 $0 335 Backstop - Replace $0 $0 $0 $0 $0 340 Play Equipment - Replace $0 $0 $0 $0 $0 346 Benches/Tables - Replace $0 $0 $0 $0 $0 390 Bridge - Repair/Replace $0 $0 $0 $0 $0 400 Docks - Repair/Replace $0 $0 $0 $0 $0 406 Wood Pilings - Replace $0 $0 $0 $0 $0 410 Dive Platform - Repair/Replace $0 $0 $0 $0 $0 415 Dock Slide - Replace $0 $0 $0 $0 $0 420 Gazebos - Repair/Replace $5,234 $0 $0 $0 $0 428 Asphalt Shingle Roofs - Replace $0 $0 $0 $0 $0 440 Park Bathrooms - Refurbish $0 $0 $0 $0 $0 Total Expenses $20,414 $0 $13,328 $0 $16,496 Ending Reserve Balance: $195,454 $224,511 $241,277 $272,444 $288,207 Association Reserves WA, LLC 19 4/4/2014

25 Assoc Accuracy, Limitations, and Disclosures Washington disclosure, per RCW: The reserve study should be reviewed carefully. It may not include all common and limited common element components that will require major maintenance, repair or replacement in future years, and may not include regular contributions to a reserve account for the cost of such maintenance, repair, or replacement. The failure to include a component in a reserve study, or to provide contributions to a reserve account for a component, may, under some circumstances, require you to pay on demand as a special assessment your share of common expenses for the cost of major maintenance, repair or replacement of a reserve component. Because we have no control over future events, we do not expect that all the events we anticipate will occur as planned. We expect that inflationary trends will continue, and we expect Reserve funds to continue to earn interest, so we believe that reasonable estimates for these figures are much more accurate than ignoring these economic realities. We can control measurements, which we attempt to establish within 5% accuracy through a combination of on-site measurements, drawings, and satellite imagery. The starting Reserve Balance and interest rate earned on deposited Reserve funds that you provided to us were considered reliable and were not confirmed independently. We have considered the association s representation of current and historical Reserve projects reliable, and we have considered the representations made by its vendors and suppliers to also be accurate and reliable. Component Useful Life, Remaining Useful Life, and Current Cost estimates assume a stable economic environment and lack of natural disasters. Because the physical condition of your components, the association s Reserve balance, the economic environment, and legislative environment change each year, this Reserve Study is by nature a one-year document. Because a long-term perspective improves the accuracy of near-term planning, this Report projects expenses for the next 30 years. It is our recommendation and that of the Financial Accounting Standards Board (FASB) that your Reserve Study be updated each year as part of the annual budget process. Association Reserves WA, LLC and its employees have no ownership, management, or other business relationships with the client other than this Reserve Study engagement. James D. Talaga R.S., company president, is a credentialed Reserve Specialist (#66). All work done by Association Reserves WA, LLC is performed under his Responsible Charge. There are no material issues to our knowledge that have not been disclosed to the client that would cause a distortion of the association s situation. Association Reserves WA, LLC 20 4/4/2014

26 Assoc Component quantities indicated in this Report were developed by Association Reserves unless otherwise noted in our Site Inspection Notes comments. No destructive or intrusive testing was performed. This Report and this site inspection were accomplished only for Reserve budget purposes (to help identify and address the normal deterioration of properly built and installed components with predictable life expectancies). The Funding Plan in this Report was developed using the cash-flow methodology to achieve the specified Funding Objective. Association Reserves liability in any matter involving this Reserve Study is limited to our Fee for services rendered. Association Reserves WA, LLC 21 4/4/2014

27 Assoc Terms and Definitions BTU DIA GSF GSY HP LF British Thermal Unit (a standard unit of energy) Diameter Gross Square Feet (area). Equivalent to Square Feet Gross Square Yards (area). Equivalent to Square Yards Horsepower Linear Feet (length) Effective Age: The difference between Useful Life and Remaining Useful Life. Note that this is not necessarily equivalent to the chronological age of the component. Fully Funded Balance (FFB): The value of the deterioration of the Reserve Components. This is the fraction of life used up of each component multiplied by its estimated Current Replacement. While calculated for each component, it is summed together for an association total. FFB = (Current Cost X Effective Age) / Useful Life Inflation: Interest: Cost factors are adjusted for inflation at the rate defined in the Executive Summary and compounded annually. These increasing costs can be seen as you follow the recurring cycles of a component on Table 6. Interest earnings on Reserve Funds are calculated using the average balance for the year (taking into account income and expenses through the year) and compounded monthly using the rate defined in the Executive Summary. Annual interest earning assumption appears in the Executive Summary. Percent Funded: The ratio, at a particular point in time (the first day of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage. Remaining Useful Life (RUL): The estimated time, in years, that a common area component can be expected to continue to serve its intended function. Useful Life (UL): The estimated time, in years, that a common area component can be expected to serve its intended function. Association Reserves WA, LLC 22 4/4/2014

28 Assoc Component Details The primary purpose of the photographic appendix is to provide the reader with the basis of our funding assumptions resulting from our physical analysis and subsequent research. The photographs herein represent a wide range of elements that were observed and measured against National Reserve Study Standards to determine if they meet the criteria for reserve funding. 1) Common area maintenance repair & replacement responsibility 2) Components must have a limited life 3) Life limit must be predictable 4) Above a minimum threshold cost (board s discretion typically 1/2 to 1% of annual operating expenses). Some components are recommended for reserve funding, while others are not. The components that meet these criteria in our judgment are shown with corresponding maintenance, repair or replacement cycles to the left of the photo (UL = Useful Life or how often the project is expected to occur, RUL = Remaining Useful Life or how many years from our reporting period) and a representative market cost range termed Best Cost and Worst Cost below the photo. There are many factors that can result in a wide variety of potential costs, we are attempting to represent a market average for budget purposes. Where there is no UL, the component is expected to be a one-time expense. Where no pricing, the component deemed inappropriate for Reserve Funding. Association Reserves WA, LLC 23 4/4/2014

29 Client: 26650A Driftwood Point Association Comp # : 100 Concrete - Repair/Replace Quantity: ~ 4,800 Sq Ft Location : Boat launch, walkways, picnic/gazebo pads, curb stops, etc Funded? : Yes History : No history reported Component Association Details Reserves W Evaluation : The majority of concrete appeared in fair condition, but we noted random areas of cracking and settling as well as a few potential trip hazards (see photo below). Repair any trip and fall hazards (1/2" or larger displacement) immediately to ensure safety. In our experience, larger repair/replacement expenses can emerge as the community ages. Although difficult to predict timing, cost and scope, we suggest a funding allowance to supplement the operating/maintenance budget for periodic larger repairs. Adjust as conditions, actual expense history indicates within future reserve study updates. As routine maintenance, inspect regularly, pressure wash for appearance and repair promptly as needed. 5 years 0 years Best Case: $2,000 Worst Case: $4,000 Lower allowance for partial repair Higher allowance; more repair needs Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 1 of 25

30 Client: 26650A Driftwood Point Association Comp # : 105 Sea Wall - Maintain Location : Partial lakefront perimeter at Driftwood Point Park Funded? : No Useful life not predictable History : No history reported Quantity: ~ 1,900 Lin Ft Component Association Details Reserves W Evaluation : The majority of concrete seawall appeared in stable condition. One section of concern where walkway has settled and cap is uplifted from vertical. At this time, based on the age and condition, we recommend the seawall be inspected by a qualified engineer (geotech, marine) to assess movement, develop mitigation scope. If seawall inspection requires repair, funding may be added to future reserve study update. Until more information is available, there is no predictable basis for reserve funding. Best Case: Cost Source: Worst Case: April 04,2014 Page 2 of 25

31 Client: 26650A Driftwood Point Association Comp # : 120 Asphalt Path - Resurface Location : Pathway at park entrance Funded? : Yes History : No history reported Quantity: ~ 2,000 Sq Ft Evaluation : Overall fair, stable condition noted with some edge damage, but no significant raveling (loss of binder) or deterioration observed. Drainage plane appears positive. Component Association Details Reserves W Even with ordinary care and maintenance, plan for eventual large scale resurface (overlay) at roughly the time frame below. As timing draws nearer, consult with asphalt vendor/consultant for recommendations and complete scope. As routine maintenance, keep asphalt clean, free of debris and well drained; fill/seal cracks (hot rubberized crack fill) to prevent water from penetrating into the sub-base and accelerating damage. 30 years 15 years Best Case: $4,000 Worst Case: $6,000 Lower allowance to resurface (overlay) Higher allowance to resurface (overlay) Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 3 of 25

32 Client: 26650A Driftwood Point Association Comp # : 123 Asphalt Path - Seal/Repair Location : Pathway at park entrance Funded? : No Cost projected to be too small for reserve funding History : No history reported Quantity: ~ 2,000 Sq Ft Component Association Details Reserves W Evaluation : No significant damage or deterioration observed Recent rain prevented visual confirmation of any fading or dry surface areas. Regular cycles of seal coating (along with any needed repair) has proven to be the best program in our opinion for the long term care of asphalt areas such as these. Based on the small amount of asphalt pathway, this would be a lower cost item and best suited to be handled as an operating expense, no reserve funding suggested. The primary reason to seal coat asphalt pavement is to protect the pavement from the deteriorating effects of sun and water. When asphalt pavement is exposed, the asphalt oxidizes, or hardens which causes the pavement to become brittle and more likely to crack when subjected to temperature changes. A seal coat combats this situation by providing a waterproof membrane, which not only slows down the oxidation process but also helps the pavement to shed water, preventing it from entering the base material. Seal coat ultimately extends useful life of asphalt, postponing the asphalt resurfacing, which can be one of the larger cost items in the reserve study (see component #122 for asphalt resurfacing costs). Repair asphalt before seal coating as needed. Surface preparation and dry weather, during and following application, is key to lasting performance. Best Case: Cost Source: Worst Case: April 04,2014 Page 4 of 25

33 Client: 26650A Driftwood Point Association Comp # : 135 Gate - Replace Location : Boat launch area entrance/exit Funded? : Yes History : Reportedly replaced ~ 5 years ago Quantity: (1) sliding chain link Evaluation : Fair condition noted of physical components of chain link sliding gate observed during our site inspection. Component Association Details Reserves W Although chain link gates are typically durable, we recommend setting aside funding for regular intervals of replacement due to constant wear/usage, exposure and typical collision damage as seen in similar communities. As routine maintenance, have regular inspections, maintenance and repair as needed to help extend useful life cycles. 15 years 10 years Best Case: $1,000 Worst Case: $1,500 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 5 of 25

34 Client: 26650A Driftwood Point Association Comp # : 136 Gate Operator - Replace Location : Adjacent to entry/exit gate leading to boat launch area Funded? : Yes History : Reportedly replaced ~ 5 years ago Evaluation : Functional condition assumed, no problems reported. Quantity: (1) Chamberlain Elite Component Association Details Reserves W Even with ongoing maintenance, plan for replacement at typical life expectancy indicated below. Track actual expenses closely for future reserve study updates. As routine maintenance, we recommend regular professional inspections including service and repair as needed from the operating budget. 15 years 10 years Best Case: $2,500 Worst Case: $3,500 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 6 of 25

35 Client: 26650A Driftwood Point Association Comp # : 155 Chain Link Fence - Replace Location : Partial perimeter of Driftwood Point Park Funded? : Yes History : Reportedly replaced ~ 5 years ago Quantity: ~ 960 Lin Ft Evaluation : Fair condition noted with no significant or widespread instability or damage/deterioration observed. Component Association Details Reserves W Even with ordinary care and maintenance, plan to replace this fence as shown below due to deterioration that will result from constant exposure. Inspect regularly; clean and repair, stretch locally as needed as part of general maintenance, operating funding. 40 years 35 years Best Case: $17,000 Worst Case: $23,000 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 160 Pole Lights - Replace Location : Adjacent to Driftwood Point Park entry and tennis court Funded? : No Maintained by IntoLight through PSE History : No history reported Quantity: (2) pole lights Evaluation : Wood poles with metal light fixtures at park area are assumed to be in functional condition. We noted IntoLight tags on these units which indicate these pole lights are part of the IntoLight program and although the Association pays a monthly fee, the maintenance, repair and replacement of these lights is the utility company responsibility, not the Association, therefore, reserve funding is not required at this time. Best Case: Cost Source: Worst Case: April 04,2014 Page 7 of 25

36 Client: 26650A Driftwood Point Association Comp # : 165 Guardrails - Replace Location : Funded? : No Useful life not predictable History : Quantity: (2) metal guardrails Evaluation : Generally fair, stable condition, with areas of grime, but no significant rust or corrosion evident. Long lasting materials, no predictable timeframe for replacement at this time, therefore, no reserve funding suggested. Inspect regularly, clean and repair as needed from operating budget. Component Association Details Reserves W Best Case: Cost Source: Worst Case: Comp # : 170 Landscape - Refurbish Location : Common area open spaces throughout community Funded? : No Annual costs, best handled in operational budget History : Typical ongoing maintenance reported Quantity: Common area landscaping Evaluation : Overall fair condition of common area landscaping noted with no specific problems observed or reported to us. Although typically funded as ongoing maintenance item, this component may be utilized for setting aside funds for larger expenses that do not occur on an annual basis, such as large scale plantings, resodding lawn areas, bark/mulch replenishment, etc... Often times these types of projects can be handled within the annual operating budget as a separate line item from the landscape maintenance contract. At this time no specific projects anticipated. Monitor and include funding in reserve study updates if needed / desired. Best Case: Cost Source: Worst Case: April 04,2014 Page 8 of 25

37 Client: 26650A Driftwood Point Association Comp # : 190 Trees - Trim/Remove Location : Throughout common areas Funded? : No Annual costs, best handled in operational budget History : No history reported Quantity: Numerous trees Evaluation : No specific problems observed or reported at this time. Trees are generally mature throughout community. Component Association Details Reserves W This component may be utilized for larger tree trimming/removal projects which do not occur on an annual basis. If the community has not already done so, consult with a qualified arborist to assess the appropriateness of current plantings and for a long term plan for the care and management of the trees within the community, balancing aesthetics with protection of association assets. Tree trimming/removal expenses can be incorporated into future reserve study updates at the discretion of the Board. Best Case: Cost Source: Worst Case: April 04,2014 Page 9 of 25

38 Client: 26650A Driftwood Point Association Comp # : 200 Entry Sign/Monument - Replace Location : Main entrance to community Funded? : Yes History : Reportedly installed approximately 5 years ago Quantity: (1) masonry/stone Evaluation : Fair, legible condition of entry sign/monument noted with some grimy areas, but no significant damage or deterioration observed. Component Association Details Reserves W Sturdy masonry/stone materials should last for extended period if not damaged or abused. A general refurbish allowance below at 20 year interval may include: masonry repair / seal, improvements, etc As routine maintenance, inspect regularly, clean for appearance and repair as needed. 20 years 15 years Best Case: $2,000 Worst Case: $3,000 Lower refurbish allowance Higher refurbish allowance Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 201 Signage - Replace Location : Scattered common area locations Funded? : No Cost projected to be too small for reserve funding History : No history reported Evaluation : The majority of signage appears to be in fair condition. Quantity: ~ (8) assorted signs Smaller cost item that can be replaced on an as needed basis, funded through the operating budget. No reserve funding required. Inspect regularly, clean for appearance and replace as needed. Best Case: Cost Source: Worst Case: April 04,2014 Page 10 of 25

39 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 205 Bike Racks - Replace Location : Adjacent to park entry Funded? : No Cost projected to be too small for reserve funding Component Details Quantity: (3) metal racks History : No history reported Evaluation : Fair, stable condition with no significant damage or instability. These metal bike racks should last for an extended period with ordinary care and maintenance. Smaller cost item that can be replaced on an as needed basis, funded through the operating budget. No reserve funding required. Inspect regularly to ensure stability and clean/repair as needed from operating funds. Best Case: Worst Case: Cost Source: Comp # : 320 Tennis Court - Seal/Repair/Stripe Location : Driftwood Point Park Funded? : Yes Quantity: ~ 7,200 Sq Ft History : Inferior reseal project reportedly completed 3 years ago Evaluation : We were informed that the tennis court was resealed 3 years ago, reportedly the project was of poor quality and the Association currently plans to reseal again in roughly 2 years. Plan for regular cycles of repair, seal and restripe at intervals shown here. Inspect regularly and locally repair as needed within the annual operating budget. 5 years 2 years Best Case: $5,000 Worst Case: $7,000 Lower allowance to clean and seal Higher allowance; includes some repair work Cost Source: Research with Local Vendor: Mid-Pac Tennis April 04,2014 Page 11 of 25

40 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 322 Tennis Court - Resurface Location : Driftwood Point Park Funded? : Yes Component Details Quantity: ~ 7,200 Sq Ft History : No resurface history reported Evaluation : No significant damage or deterioration observed, tennis court surface was wet due to recent rain and difficult to evaluate at time of site visit, but generally intact. In addition to periodic seal/repair projects (see separate component), we typically recommend the overlay/resurface project around the year mark of life. Repair base as needed at that time and ensure positive drainage. As routine maintenance inspect regularly and clean as needed, fill cracks from the operating budget. See previous component for cyclical seal coating and striping. 40 years 22 years Best Case: $30,000 Worst Case: $40,000 Lower allowance to resurface Higher allowance to resurface Cost Source: Research with Local Vendor: Mid-Pac Tennis April 04,2014 Page 12 of 25

41 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 324 Tennis Court Fence - Replace Location : Perimeter of tennis court Funded? : Yes Component Details Quantity: ~ 360 Lin Ft History : No history reported Evaluation : Fair condition with no significant or widespread damage/deterioration noted. With ordinary care and maintenance, if not damaged or abused, anticipate 30+ years of service life before replacement is needed. Inspect regularly; clean and repair locally if needed as part of general maintenance, operating budget. 40 years 22 years Best Case: $14,000 Worst Case: $18,000 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 325 Basketball Court - Replace Location : Adjacent to tennis court Funded? : Yes Quantity: ~ 800 Sq Ft History : Reportedly replaced in 2013 Evaluation : Concrete basketball court is in good condition, no damage or settling apparent. Although concrete is a long lasting material, our experience suggests replacement will eventually be needed due to constant exposure over time. Plan on replacement of basketball courts at roughly the time frame indicated below. Inspect regularly and repair any trip and fall hazards immediately to limit liability and potential for injuries. 30 years 29 years Best Case: $6,000 Worst Case: $8,000 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 13 of 25

42 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 330 Basketball Equipment - Replace Location : Sports court adjacent to tennis court Funded? : Yes Component Details Quantity: (1) assembly History : Reportedly replaced approximately 10 year ago Evaluation : Playable condition observed, no significant damage or deterioration noted. Although sturdy materials/equipment if not damaged or abused, plan for eventual replacement of pole/backboard assembly at roughly the time frame indicated below. Inspect regularly and repair/replace net/hoop as needed within annual operating budget. 20 years 10 years Best Case: $1,200 Worst Case: $1,800 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 335 Backstop - Replace Location : Park at NE 179th Ave E and Driftwood Dr E Funded? : Yes Quantity: ~ 60 Lin Ft, chain link History : No history reported Evaluation : Fair condition with no significant or widespread damage/deterioration noted. With ordinary care and maintenance, if not damaged or abused, anticipate 30+ years of service life before replacement is needed. Inspect regularly; clean and repair locally if needed as part of general maintenance, operating budget. 40 years 20 years Best Case: $2,000 Worst Case: $3,000 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 14 of 25

43 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 340 Play Equipment - Replace Location : Park area Funded? : Yes Component Details Quantity: (1) wood set/asstd pieces History : Pieces added and replaced over the years Evaluation : Generally stable condition with no significant damage or unusual wear observed. Replacement cycles vary depending on the amount of use/abuse, however expect extensive park area renovation at roughly the time frame listed below. Inspect for stability, damage and excessive wear and utilize maintenance funds for any repairs needed between replacement cycles. 25 years 10 years Best Case: $20,000 Worst Case: $30,000 Lower replacement allowance Higher allowance; upgraded equipment, accessories included, etc Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 15 of 25

44 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Component Details Quantity: (3) benches, (15) tables Comp # : 346 Benches/Tables - Replace Location : Scattered throughout park area Funded? : Yes History : No history reported Evaluation : Although weathered and in need of paint, tables and benches appeared to be in fair condition. The benches and some tables are metal framed with wood tops/seats. Best to plan for regular intervals of complete replacement at the time frame indicated below, to maintain functionality and a quality appearance. At time of replacement, consider composite or coated metal for lower maintenance and longer life. Inspect regularly, clean for appearance and repair as needed from general operating funds. 15 years 5 years Best Case: $5,000 Worst Case: $7,000 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 348 Barbeques - Replace Location : Scattered common area locations Funded? : No Cost projected to be too small for reserve funding Quantity: (7) metal barbecues History : No history reported Evaluation : Fair, functional condition assumed. Sturdy metal barbecue stands should have a long useful life if not damaged or abused. Too small of an expense to merit reserve funding status. Replace individually as needed using operating / maintenance funds. Best Case: Worst Case: Cost Source: April 04,2014 Page 16 of 25

45 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 390 Bridge - Repair/Replace Location : Connection to island at Driftwood Point Park Funded? : Yes Component Details Quantity: ~ 300 Sq Ft History : No history reported Evaluation : Fair condition noted with no obvious damage or deterioration observed. Bridge is composed of concrete piling and structural steel framing with wood decking/railing. Regular inspections by engineer are prudent; factor those inspections and general repairs within operating budget. No engineering report was available for our review. Even with regular repairs/maintenance, we recommend a funding allowance for periodic larger repair/replacement of wood decking and railing. Track expenses and engineer's recommendations for basis of adjustment in reserve study updates in future years. 30 years 15 years Best Case: $9,000 Worst Case: $12,000 Lower allowance for repair/replacement of wood deck/railing Higher allowance for repairs/replacements wood deck/railing Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 17 of 25

46 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 400 Docks - Repair/Replace Location : Common dock areas Funded? : Yes Component Details Quantity: ~ 1,660 Sq Ft History : Scattered throughout Driftwood Point Park Evaluation : Docks were observed to be stable and in fair condition with some organic growth and random deterioration, but no significant wood rot or damage noted. Docks are mainly composed of wood decking, with wood structures above concrete pilings. A small amount of composite decking was observed at boat launch docks. Eventual replacement should be anticipated; defined by ongoing evaluation by qualified Marine contractor. We recommend regular clean & seal, local repair projects to be handled as-needed within operating funds. 30 years 15 years Best Case: $50,000 Worst Case: $70,000 Lower allowance to repair/replace Higher allowance to repair/replace Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 18 of 25

47 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Component Details Quantity: Numerous pilings Comp # : 405 Concrete Pilings - Maintain Location : Below docks and bridge Funded? : No History : Evaluation : Concrete dock and bridge pilings appeared in stable condition, no problems reported. Long lasting material, no predictable basis for large scale repair or complete replacement expenses that would impact reserves at this time. No reserve funding suggested. Periodic inspections by professional engineer is prudent, checking for any movement, deterioration, etc Best Case: Worst Case: Cost Source: April 04,2014 Page 19 of 25

48 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 406 Wood Pilings - Replace Location : Below docks at boat launch Funded? : Yes Component Details Quantity: (8) wood pilings History : No history reported Evaluation : Wood pilings at boat launch docks appeared to be in stable condition, age unknown. Although wood pilings have a long useful life, eventual replacement will be necessary due to typical deterioration. Allowance below factors in a one-time replacement of the wood pilings (assumed to be replaced with concrete pilings), timed to coincide with future dock repair for cost effectiveness. Periodic inspections by professional engineer is prudent, checking for any movement, deterioration, etc 15 years Best Case: $20,000 Worst Case: $28,000 Lower allowance to replace wood pilings Higher allowance to replace wood pilings Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 20 of 25

49 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 410 Dive Platform - Repair/Replace Location : End of dock Funded? : Yes Component Details Quantity: (1) wood platform History : No history reported Evaluation : We noticed areas of chipped, peeling paint as well as areas of organic growth and general deterioration. Plan for regular cycles of replacement at roughly the time frame indicated below. Inspect regularly for stability, stain/paint and perform any necessary repairs in between larger replacements using operating funds. 15 years 5 years Best Case: $4,000 Worst Case: $5,000 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 415 Dock Slide - Replace Location : End of dock Funded? : Yes Quantity: (1) slide History : No history reported Evaluation : Generally fair condition with no significant damage or instability noted at this time. Based on constant exposure to the elements and typical usage/wear, best to plan for regular cycles of total replacement at roughly the interval indicated below. Inspect regularly, tighten connections and repair as needed promptly from operating budget. 20 years 10 years Best Case: $1,500 Worst Case: $2,500 Lower allowance to replace Higher allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 21 of 25

50 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 420 Gazebos - Repair/Replace Location : Scattored throughout park area Funded? : Yes Component Details Quantity: (4) wood structures History : No history reported Evaluation : Generally fair, stable condition noted at time of inspection. No evidence of significant damage or deterioration. Although these gazebos are sturdy structures that can typically last for an extended period with ordinary care and maintenance, eventual repair/replacement is warranted due to constant exposure over time. A funding allowance for partial repair/replacement of the gazebo structures is factored in at roughly the time frame indicated below. See component #428 for roof replacement. Inspect regularly for structural stability. Perform any necessary repairs in between larger replacements using general operating funds. 10 years 5 years Best Case: $2,000 Worst Case: $3,000 Lower allowance for partial repair/replacement Higher allowance to partial repair/replacement Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 22 of 25

51 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Component Details Quantity: (2) concrete block bldg's Comp # : 425 Buildings - Maintain Location : Near main entrance to park Funded? : No Useful life not predictable History : No history reported Evaluation : Common area storage building and restroom building are constructed from concrete block. No damage or deterioration was observed. This type of CMU (Concrete Masonry Unit) can last for an extended period and with ordinary care and maintenance, there is no predictable basis for large scale repair or complete replacement expenses that would impact reserves at this time. Monitor closely and if areas of deterioration emerge, consult with appropriate professional for repair scope. If need becomes apparent, funding can be incorporated into future reserve study updates. Roof replacement is factored in to component #428. As part of general maintenance/operating funding, inspect regularly, clean/seal and repair as needed. Best Case: Worst Case: Cost Source: April 04,2014 Page 23 of 25

52 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Comp # : 428 Asphalt Shingle Roofs - Replace Location : Rooftops of gazebos, storage building and bathrooms Funded? : Yes Component Details Quantity: ~ 1,600 Sq Ft History : No history reported Evaluation : Roofing is three tab shingles. No significant debris or moss was observed on the roof surfaces. Plan for replacement at roughly the time frame indicated below. Costs below include replacing with a similar shingle to what is currently in place. As routine maintenance, many manufacturers recommend inspections at least twice annually (once in the fall, before the rainy season, and again in the spring) and after large storm events. Promptly replace any damaged/missing sections or any other repair needed to ensure waterproof integrity of roof. Keep roof surface clear and free of moss or debris. Moss growth can decrease the life of the roofing shingles and should be removed sooner than later. Liquid applied fungicide (moss killer) is recommended instead of power washing the living moss off the shingles. Do not use high pressure wash. 30 years 5 years Best Case: $3,000 Worst Case: $5,000 Lower allowance to remove and replace roofs Higher allowance to remove and replace roofs Cost Source: ARI Cost Database: Similar Project Cost History April 04,2014 Page 24 of 25

53 Association Reserves Washington, LLC 26650A Client: 26650A Driftwood Point Association Component Details Quantity: (2) bathrooms Comp # : 440 Park Bathrooms - Refurbish Location : Restroom areas Funded? : Yes History : No history reported Evaluation : Functional, clean condition noted of common area bathrooms, no problems reported. Prudent planning suggests setting aside funds for periodic large scale refurbishing which may include items such as: plumbing fixtures, vanity area, lighting, flooring, ventilation, accessories, décor, etc... As routine maintenance, inspect regularly, perform any needed local repairs promptly utilizing general operating funds. 20 years 10 years Best Case: $5,000 Worst Case: $8,000 Lower allowance to refurbish Higher allowance; more extensive, better finishes Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 999 Reserve Study - Update Location : Common areas of association Funded? : No Cost projected to be too small for reserve funding Quantity: Annual update History : No prior reserve studies completed by Association Reserves Evaluation : Per Washington law (RCW), reserve studies are to be updated annually, with site inspections by an independent reserve study professional to occur no less than every three years to assess changes in condition (i.e., physical, economic, governmental, etc...) and the resulting effect on the community's long-term reserve plan. Most appropriately factored within operating budget, not as reserve component. Best Case: Worst Case: Cost Source: April 04,2014 Page 25 of 25