Full Reserve Study. Nelson Farms HOA. Fort Collins, CO. Report #: For Period Beginning: May 1, 2016 Expires: April 30, 2017

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1 Full Reserve Study Nelson Farms HOA Fort Collins, CO Report #: For Period Beginning: May 1, 2016 Expires: April 30, 2017 Date Revised: January 13, 2016

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: 303/ Association Reserves Colorado, LLC 1/13/2016

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 Terms and Definitions Component Details... Appendix Association Reserves Colorado, LLC 1/13/2016

4 3- Minute Executive Summary Association: Nelson Farms HOA #: Location: Fort Collins, CO # of Units: 277 Report Period: May 1, 2016 through April 30, 2017 Findings/Recommendations as-of 5/1/2016: Projected Starting Reserve Balance:... $126,517 Current Fully Funded Reserve Balance:... $161,033 Average Reserve Deficit Per Unit:... $125 Recommended 2016/2017 Monthly Full Funding Contributions:... $3,183 Alternate Minimum Contributions to keep Reserves above $0:... $2,493 Recommended 2016/2017 Special Assessment for Reserves:... $0 Most Recent Budgeted Reserve Contribution Rate:... $3,183 Economic Assumptions: Net Annual After Tax Interest Earnings Accruing to Reserves % Annual Inflation Rate % This is a Full Reserve Study (original, created from scratch ), and is based on our site inspection on August 14, It was prepared by a credentialed Reserve Specialist (RS #260). Your Reserve Fund is currently 79% 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 in order to be within the 70% to 100% level as noted above. 100% Full 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 Colorado, LLC i 1/13/2016

5 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate Sites & Grounds 2105 Driveway Concrete - Repair 10 7 $5, Conc. Deck/Walk - Repair/Replace 5 3 $1, Asphalt - Seal and Repair 4 0 $2, Asphalt - Remove & Replace 25 4 $16, Storage Sheds - Refurbish 10 8 $4, Entry Sign - Refurbish/Replace 15 5 $2, Stone Monument - Refurbish/Replace 15 5 $6, Backflow Device - Replace $1,250 Amenities 2607 Drinking Fountains - Replace 20 7 $1, Tennis Court - Resurface 7 6 $13, Asphalt Tennis Court - Replace $105, Tennis Court Fencing - Replace $18, Tennis Court Windscreen - Replace 10 9 $4, Tennis Equipment - Replace $4,500 Pool Areas 2801 Awnings - Replace 10 0 $1, Pool Bldg. Doors - Replace 30 4 $3, Pool Bldg. Gutters - Replace $ Pool Bldg. Roof - Replace $7, Pool Bldg. Siding - Paint 7 3 $1, Pool Bldg. Siding - Replace $11, Pool Bldg. Trim - Repaint/Repair 7 3 $1, Pool Bldg. Office - Refurbish 15 0 $1, Pool Restrooms - Refurbish $4, Fencing: Pool Metal - Repair/Paint 5 0 $ Fencing: Pool Metal - Replace $4, Fencing: Pool Wood - Replace $18, Awning Fabric - Replace 2 1 $2, Pool/Patio Furniture - Replace 10 5 $3, Pool Deck/Coping - Replace $38, Pool - Resurface 10 6 $65, Pool Light Fixtures - Replace 15 5 $ Kiddie Pool - Resurface 10 6 $6, Water Heater - Replace 10 1 $1, Pool Heater - Replace 10 0 $15, Pool Filter - Replace 15 9 $18, Pool Pump - Repair/Replace 8 4 $3, Pool Pump Motor - Replace 4 2 $1, Pool Stairs - Replace 10 7 $2, Lifeguard Tower - Replace 10 5 $2, Pool Lane Dividers - Replace 12 5 $1, Kiddie Pool Cover - Replace 5 4 $1, Pool Cover - Replace 5 4 $8,000 Association Reserves Colorado, LLC ii 1/13/2016

6 Table 1: Executive Summary Useful Rem. Current Life Useful Cost # Component (yrs) Life (yrs) Estimate 42 Total Funded Components Association Reserves Colorado, LLC iii 1/13/2016

7 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 Colorado, LLC 1 1/13/2016

8 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 Colorado, LLC 2 1/13/2016

9 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 Colorado, LLC 3 1/13/2016

10 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 Colorado, LLC 4 1/13/2016

11 Assoc Site Inspection Notes During our site visit on August 14, 2015, we started with a brief meeting with Jillian Weaver and the board and then started the site inspection beginning with the pool areas. We visually inspected the pool building and were able to see the majority of the common areas. Please see photo appendix for component details; the basis of our assumptions. Association Reserves Colorado, LLC 5 1/13/2016

12 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 $72,123. Adding the next five years, your first ten years of projected Reserve expenses are $263,228. 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 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $ Years Figure 1 Association Reserves Colorado, LLC 6 1/13/2016

13 Assoc Reserve Fund Status The starting point for our financial analysis is your Reserve Fund balance, projected to be $126,517 as-of the start of your Fiscal Year on May 1, As of May 1, 2016, your Fully Funded Balance is computed to be $161,033 (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 79% Funded. Across the country, approx 2% 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 $3,183/month this Fiscal. 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 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Years Figure 2 Association Reserves Colorado, LLC 7 1/13/2016

14 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. $700, Yr Cash Flow Target Fully Funded Balance Recommended Funding Plan Alternate (Minimum) Current Budget $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ 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 Colorado, LLC 8 1/13/2016

15 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 Colorado, LLC 9 1/13/2016

16 Table 2: Reserve Component List Detail Rem. Useful Useful [ --- Current Cost Estimate --- ] # Component Quantity Life Life Best Case Worst Case Sites & Grounds 2105 Driveway Concrete - Repair ~ 1,800 GSF 10 7 $4,600 $6, Conc. Deck/Walk - Repair/Replace Numerous GSF 5 3 $1,000 $2, Asphalt - Seal and Repair ~ 6,500 GSF 4 0 $2,000 $2, Asphalt - Remove & Replace ~ 6,500 GSF 25 4 $13,000 $20, Storage Sheds - Refurbish (2) Sheds 10 8 $3,500 $4, Entry Sign - Refurbish/Replace (1) Wood 15 5 $1,500 $3, Stone Monument - Refurbish/Replace (1) Wood/Stone 15 5 $5,000 $8, Backflow Device - Replace (1) Backflow $1,000 $1,500 Amenities 2607 Drinking Fountains - Replace (1) Unit 20 7 $1,000 $1, Tennis Court - Resurface ~ 21,600 GSF 7 6 $12,000 $14, Asphalt Tennis Court - Replace ~ 21,600 GSF $90,000 $120, Tennis Court Fencing - Replace ~ 600 LF $17,000 $20, Tennis Court Windscreen - Replace ~ 430 GSF 10 9 $3,500 $5, Tennis Equipment - Replace (3) Nets, (6) Posts $4,000 $5,000 Pool Areas 2801 Awnings - Replace ~ 700 GSF 10 0 $1,500 $2, Pool Bldg. Doors - Replace (4) Metal Doors 30 4 $3,000 $3, Pool Bldg. Gutters - Replace ~ 75 LF $500 $ Pool Bldg. Roof - Replace ~ 2,100 GSF $6,000 $9, Pool Bldg. Siding - Paint ~ 600 GSF Hardie Shingles 7 3 $900 $1, Pool Bldg. Siding - Replace ~ 600 GSF Hardie Shingles $10,000 $12, Pool Bldg. Trim - Repaint/Repair ~ 780 GSF 7 3 $800 $1, Pool Bldg. Office - Refurbish ~ 140 GSF 15 0 $1,000 $2, Pool Restrooms - Refurbish (2) Restrooms $3,000 $5, Fencing: Pool Metal - Repair/Paint ~ 100 LF 5 0 $600 $ Fencing: Pool Metal - Replace ~ 100 GSF $4,000 $5, Fencing: Pool Wood - Replace ~ 600 LF $15,000 $21, Awning Fabric - Replace (2) Umbrellas 2 1 $1,500 $2, Pool/Patio Furniture - Replace ~ (59) Pieces 10 5 $3,000 $4, Pool Deck/Coping - Replace ~ 5,000 GSF $37,000 $40, Pool - Resurface (42x75) ~ 3,200 GSF 10 6 $63,000 $67, Pool Light Fixtures - Replace (6) Lights 15 5 $700 $ Kiddie Pool - Resurface ~ 200 GSF 10 6 $5,500 $6, Water Heater - Replace (1) Water Heater 10 1 $1,500 $2, Pool Heater - Replace (1) Teledyne Liars Heater 10 0 $14,000 $16, Pool Filter - Replace (1) Piece 15 9 $16,000 $20, Pool Pump - Repair/Replace (1) Pump 8 4 $3,000 $4, Pool Pump Motor - Replace (1) Motor 4 2 $1,600 $2, Pool Stairs - Replace (1) Mobile Stairs 10 7 $1,500 $2, Lifeguard Tower - Replace (1) Unit 10 5 $1,500 $2, Pool Lane Dividers - Replace (1) Set/Spool 12 5 $1,500 $2,000 Association Reserves Colorado, LLC 10 1/13/2016

17 Table 2: Reserve Component List Detail Rem. Useful Useful [ --- Current Cost Estimate --- ] # Component Quantity Life Life Best Case Worst Case 2840 Kiddie Pool Cover - Replace (1) Cover 5 4 $800 $1, Pool Cover - Replace (1) Cover 5 4 $7,000 $9, Total Funded Components Association Reserves Colorado, LLC 11 1/13/2016

18 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance Sites & Grounds 2105 Driveway Concrete - Repair $5,300 X 3 / 10 = $1, Conc. Deck/Walk - Repair/Replace $1,500 X 2 / 5 = $ Asphalt - Seal and Repair $2,150 X 4 / 4 = $2, Asphalt - Remove & Replace $16,500 X 21 / 25 = $13, Storage Sheds - Refurbish $4,000 X 2 / 10 = $ Entry Sign - Refurbish/Replace $2,250 X 10 / 15 = $1, Stone Monument - Refurbish/Replace $6,500 X 10 / 15 = $4, Backflow Device - Replace $1,250 X 1 / 15 = $83 Amenities 2607 Drinking Fountains - Replace $1,250 X 13 / 20 = $ Tennis Court - Resurface $13,000 X 1 / 7 = $1, Asphalt Tennis Court - Replace $105,000 X 6 / 20 = $31, Tennis Court Fencing - Replace $18,500 X 15 / 30 = $9, Tennis Court Windscreen - Replace $4,250 X 1 / 10 = $ Tennis Equipment - Replace $4,500 X 1 / 15 = $300 Pool Areas 2801 Awnings - Replace $1,750 X 10 / 10 = $1, Pool Bldg. Doors - Replace $3,250 X 26 / 30 = $2, Pool Bldg. Gutters - Replace $550 X 15 / 25 = $ Pool Bldg. Roof - Replace $7,750 X 15 / 25 = $4, Pool Bldg. Siding - Paint $1,100 X 4 / 7 = $ Pool Bldg. Siding - Replace $11,000 X 4 / 25 = $1, Pool Bldg. Trim - Repaint/Repair $1,150 X 4 / 7 = $ Pool Bldg. Office - Refurbish $1,750 X 15 / 15 = $1, Pool Restrooms - Refurbish $4,000 X 3 / 15 = $ Fencing: Pool Metal - Repair/Paint $700 X 5 / 5 = $ Fencing: Pool Metal - Replace $4,500 X 5 / 30 = $ Fencing: Pool Wood - Replace $18,000 X 15 / 30 = $9, Awning Fabric - Replace $2,000 X 1 / 2 = $1, Pool/Patio Furniture - Replace $3,500 X 5 / 10 = $1, Pool Deck/Coping - Replace $38,500 X 3 / 30 = $3, Pool - Resurface $65,000 X 4 / 10 = $26, Pool Light Fixtures - Replace $800 X 10 / 15 = $ Kiddie Pool - Resurface $6,000 X 4 / 10 = $2, Water Heater - Replace $1,750 X 9 / 10 = $1, Pool Heater - Replace $15,000 X 10 / 10 = $15, Pool Filter - Replace $18,000 X 6 / 15 = $7, Pool Pump - Repair/Replace $3,500 X 4 / 8 = $1, Pool Pump Motor - Replace $1,800 X 2 / 4 = $ Pool Stairs - Replace $2,000 X 3 / 10 = $ Lifeguard Tower - Replace $2,000 X 5 / 10 = $1, Pool Lane Dividers - Replace $1,750 X 7 / 12 = $1,021 Association Reserves Colorado, LLC 12 1/13/2016

19 Table 3: Fully Funded Balance Current Fully Cost Effective Useful Funded # Component Estimate X Age / Life = Balance 2840 Kiddie Pool Cover - Replace $1,000 X 1 / 5 = $ Pool Cover - Replace $8,000 X 1 / 5 = $1,600 $161,033 Association Reserves Colorado, LLC 13 1/13/2016

20 Table 4: Component Significance Current Useful Cost Deterioration Deterioration # Component Life Estimate Cost/yr Significance Sites & Grounds 2105 Driveway Concrete - Repair 10 $5,300 $ % 2107 Conc. Deck/Walk - Repair/Replace 5 $1,500 $ % 2123 Asphalt - Seal and Repair 4 $2,150 $ % 2125 Asphalt - Remove & Replace 25 $16,500 $ % 2141 Storage Sheds - Refurbish 10 $4,000 $ % 2167 Entry Sign - Refurbish/Replace 15 $2,250 $ % 2167 Stone Monument - Refurbish/Replace 15 $6,500 $ % 2170 Backflow Device - Replace 15 $1,250 $83 0.3% Amenities 2607 Drinking Fountains - Replace 20 $1,250 $63 0.2% 2609 Tennis Court - Resurface 7 $13,000 $1, % 2611 Asphalt Tennis Court - Replace 20 $105,000 $5, % 2613 Tennis Court Fencing - Replace 30 $18,500 $ % 2615 Tennis Court Windscreen - Replace 10 $4,250 $ % 2617 Tennis Equipment - Replace 15 $4,500 $ % Pool Areas 2801 Awnings - Replace 10 $1,750 $ % 2801 Pool Bldg. Doors - Replace 30 $3,250 $ % 2801 Pool Bldg. Gutters - Replace 25 $550 $22 0.1% 2801 Pool Bldg. Roof - Replace 25 $7,750 $ % 2801 Pool Bldg. Siding - Paint 7 $1,100 $ % 2801 Pool Bldg. Siding - Replace 25 $11,000 $ % 2801 Pool Bldg. Trim - Repaint/Repair 7 $1,150 $ % 2802 Pool Bldg. Office - Refurbish 15 $1,750 $ % 2802 Pool Restrooms - Refurbish 15 $4,000 $ % 2803 Fencing: Pool Metal - Repair/Paint 5 $700 $ % 2805 Fencing: Pool Metal - Replace 30 $4,500 $ % 2805 Fencing: Pool Wood - Replace 30 $18,000 $ % 2807 Awning Fabric - Replace 2 $2,000 $1, % 2807 Pool/Patio Furniture - Replace 10 $3,500 $ % 2809 Pool Deck/Coping - Replace 30 $38,500 $1, % 2815 Pool - Resurface 10 $65,000 $6, % 2815 Pool Light Fixtures - Replace 15 $800 $53 0.2% 2817 Kiddie Pool - Resurface 10 $6,000 $ % 2824 Water Heater - Replace 10 $1,750 $ % 2825 Pool Heater - Replace 10 $15,000 $1, % 2829 Pool Filter - Replace 15 $18,000 $1, % 2833 Pool Pump - Repair/Replace 8 $3,500 $ % 2833 Pool Pump Motor - Replace 4 $1,800 $ % 2835 Pool Stairs - Replace 10 $2,000 $ % 2836 Lifeguard Tower - Replace 10 $2,000 $ % 2839 Pool Lane Dividers - Replace 12 $1,750 $ % Association Reserves Colorado, LLC 14 1/13/2016

21 Table 4: Component Significance Current Useful Cost Deterioration Deterioration # Component Life Estimate Cost/yr Significance 2840 Kiddie Pool Cover - Replace 5 $1,000 $ % 2840 Pool Cover - Replace 5 $8,000 $1, % 42 Total Funded Components $30, % Association Reserves Colorado, LLC 15 1/13/2016

22 Table 5: 30-Year Reserve Plan Summary Fiscal Year Start: 05/01/16 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 2016 $126,517 $161, % Low $38,196 $0 $1,356 $21, $144,719 $174, % Low $39,151 $0 $1,631 $3, $181,638 $208, % Low $40,130 $0 $2,017 $1, $221,875 $245, % Low $41,133 $0 $2,404 $6, $259,129 $280, % Low $42,161 $0 $2,620 $38, $265,193 $283, % Low $43,215 $0 $2,768 $22, $288,570 $304, % Low $44,296 $0 $2,607 $102, $233,023 $245, % Low $45,403 $0 $2,504 $12, $267,954 $277, % Low $46,538 $0 $2,877 $9, $307,679 $315, % Low $47,702 $0 $3,113 $43, $315,109 $320, % Low $48,894 $0 $3,210 $40, $327,165 $330, % Low $50,116 $0 $3,512 $5, $375,602 $378, % Low $51,369 $0 $3,962 $13, $417,175 $419, % Low $52,654 $0 $4,334 $24, $449,932 $453, % Low $53,970 $0 $3,868 $183, $323,914 $324, % Low $55,319 $0 $3,168 $72, $310,034 $308, % Low $56,702 $0 $2,810 $117, $252,162 $246, % Low $58,120 $0 $2,715 $21, $291,013 $282, % Low $59,573 $0 $3,160 $12, $341,319 $330, % Low $61,062 $0 $3,601 $26, $379,241 $367, % Low $62,589 $0 $3,710 $82, $363,091 $349, % Low $64,153 $0 $3,832 $27, $403,637 $389, % Low $65,757 $0 $4,368 $3, $470,313 $457, % Low $67,401 $0 $5,029 $6, $535,835 $525, % Low $69,086 $0 $5,409 $63, $546,501 $538, % Low $70,813 $0 $5,712 $26, $596,435 $592, % Low $72,584 $0 $5,568 $157, $517,587 $515, % Low $74,398 $0 $4,836 $146, $450,105 $448, % Low $76,258 $0 $4,777 $25, $505,629 $506, % Low $78,165 $0 $5,008 $92,495 Association Reserves Colorado, LLC 16 1/13/2016

23 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Starting Reserve Balance $126,517 $144,719 $181,638 $221,875 $259,129 Annual Reserve Contribution $38,196 $39,151 $40,130 $41,133 $42,161 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $1,356 $1,631 $2,017 $2,404 $2,620 Total Income $166,069 $185,501 $223,784 $265,412 $303,910 # Component Sites & Grounds 2105 Driveway Concrete - Repair $0 $0 $0 $0 $ Conc. Deck/Walk - Repair/Replace $0 $0 $0 $1,639 $ Asphalt - Seal and Repair $2,150 $0 $0 $0 $2, Asphalt - Remove & Replace $0 $0 $0 $0 $18, Storage Sheds - Refurbish $0 $0 $0 $0 $ Entry Sign - Refurbish/Replace $0 $0 $0 $0 $ Stone Monument - Refurbish/Replace $0 $0 $0 $0 $ Backflow Device - Replace $0 $0 $0 $0 $0 Amenities 2607 Drinking Fountains - Replace $0 $0 $0 $0 $ Tennis Court - Resurface $0 $0 $0 $0 $ Asphalt Tennis Court - Replace $0 $0 $0 $0 $ Tennis Court Fencing - Replace $0 $0 $0 $0 $ Tennis Court Windscreen - Replace $0 $0 $0 $0 $ Tennis Equipment - Replace $0 $0 $0 $0 $0 Pool Areas 2801 Awnings - Replace $1,750 $0 $0 $0 $ Pool Bldg. Doors - Replace $0 $0 $0 $0 $3, Pool Bldg. Gutters - Replace $0 $0 $0 $0 $ Pool Bldg. Roof - Replace $0 $0 $0 $0 $ Pool Bldg. Siding - Paint $0 $0 $0 $1,202 $ Pool Bldg. Siding - Replace $0 $0 $0 $0 $ Pool Bldg. Trim - Repaint/Repair $0 $0 $0 $1,257 $ Pool Bldg. Office - Refurbish $1,750 $0 $0 $0 $ Pool Restrooms - Refurbish $0 $0 $0 $0 $ Fencing: Pool Metal - Repair/Paint $700 $0 $0 $0 $ Fencing: Pool Metal - Replace $0 $0 $0 $0 $ Fencing: Pool Wood - Replace $0 $0 $0 $0 $ Awning Fabric - Replace $0 $2,060 $0 $2,185 $ Pool/Patio Furniture - Replace $0 $0 $0 $0 $ Pool Deck/Coping - Replace $0 $0 $0 $0 $ Pool - Resurface $0 $0 $0 $0 $ Pool Light Fixtures - Replace $0 $0 $0 $0 $ Kiddie Pool - Resurface $0 $0 $0 $0 $ Water Heater - Replace $0 $1,803 $0 $0 $ Pool Heater - Replace $15,000 $0 $0 $0 $ Pool Filter - Replace $0 $0 $0 $0 $0 Association Reserves Colorado, LLC 17 1/13/2016

24 Table 6: 30-Year Income/Expense Detail (yrs 0 through 4) Fiscal Year Pool Pump - Repair/Replace $0 $0 $0 $0 $3, Pool Pump Motor - Replace $0 $0 $1,910 $0 $ Pool Stairs - Replace $0 $0 $0 $0 $ Lifeguard Tower - Replace $0 $0 $0 $0 $ Pool Lane Dividers - Replace $0 $0 $0 $0 $ Kiddie Pool Cover - Replace $0 $0 $0 $0 $1, Pool Cover - Replace $0 $0 $0 $0 $9,004 Total Expenses $21,350 $3,863 $1,910 $6,283 $38,718 Ending Reserve Balance: $144,719 $181,638 $221,875 $259,129 $265,193 Association Reserves Colorado, LLC 18 1/13/2016

25 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Starting Reserve Balance $265,193 $288,570 $233,023 $267,954 $307,679 Annual Reserve Contribution $43,215 $44,296 $45,403 $46,538 $47,702 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $2,768 $2,607 $2,504 $2,877 $3,113 Total Income $311,176 $335,472 $280,930 $317,369 $358,493 # Component Sites & Grounds 2105 Driveway Concrete - Repair $0 $0 $6,518 $0 $ Conc. Deck/Walk - Repair/Replace $0 $0 $0 $1,900 $ Asphalt - Seal and Repair $0 $0 $0 $2,724 $ Asphalt - Remove & Replace $0 $0 $0 $0 $ Storage Sheds - Refurbish $0 $0 $0 $5,067 $ Entry Sign - Refurbish/Replace $2,608 $0 $0 $0 $ Stone Monument - Refurbish/Replace $7,535 $0 $0 $0 $ Backflow Device - Replace $0 $0 $0 $0 $0 Amenities 2607 Drinking Fountains - Replace $0 $0 $1,537 $0 $ Tennis Court - Resurface $0 $15,523 $0 $0 $ Asphalt Tennis Court - Replace $0 $0 $0 $0 $ Tennis Court Fencing - Replace $0 $0 $0 $0 $ Tennis Court Windscreen - Replace $0 $0 $0 $0 $5, Tennis Equipment - Replace $0 $0 $0 $0 $0 Pool Areas 2801 Awnings - Replace $0 $0 $0 $0 $ Pool Bldg. Doors - Replace $0 $0 $0 $0 $ Pool Bldg. Gutters - Replace $0 $0 $0 $0 $ Pool Bldg. Roof - Replace $0 $0 $0 $0 $ Pool Bldg. Siding - Paint $0 $0 $0 $0 $ Pool Bldg. Siding - Replace $0 $0 $0 $0 $ Pool Bldg. Trim - Repaint/Repair $0 $0 $0 $0 $ Pool Bldg. Office - Refurbish $0 $0 $0 $0 $ Pool Restrooms - Refurbish $0 $0 $0 $0 $ Fencing: Pool Metal - Repair/Paint $811 $0 $0 $0 $ Fencing: Pool Metal - Replace $0 $0 $0 $0 $ Fencing: Pool Wood - Replace $0 $0 $0 $0 $ Awning Fabric - Replace $2,319 $0 $2,460 $0 $2, Pool/Patio Furniture - Replace $4,057 $0 $0 $0 $ Pool Deck/Coping - Replace $0 $0 $0 $0 $ Pool - Resurface $0 $77,613 $0 $0 $ Pool Light Fixtures - Replace $927 $0 $0 $0 $ Kiddie Pool - Resurface $0 $7,164 $0 $0 $ Water Heater - Replace $0 $0 $0 $0 $ Pool Heater - Replace $0 $0 $0 $0 $ Pool Filter - Replace $0 $0 $0 $0 $23,486 Association Reserves Colorado, LLC 19 1/13/2016

26 Table 6: 30-Year Income/Expense Detail (yrs 5 through 9) Fiscal Year Pool Pump - Repair/Replace $0 $0 $0 $0 $ Pool Pump Motor - Replace $0 $2,149 $0 $0 $ Pool Stairs - Replace $0 $0 $2,460 $0 $ Lifeguard Tower - Replace $2,319 $0 $0 $0 $ Pool Lane Dividers - Replace $2,029 $0 $0 $0 $ Kiddie Pool Cover - Replace $0 $0 $0 $0 $1, Pool Cover - Replace $0 $0 $0 $0 $10,438 Total Expenses $22,606 $102,450 $12,975 $9,691 $43,384 Ending Reserve Balance: $288,570 $233,023 $267,954 $307,679 $315,109 Association Reserves Colorado, LLC 20 1/13/2016

27 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Starting Reserve Balance $315,109 $327,165 $375,602 $417,175 $449,932 Annual Reserve Contribution $48,894 $50,116 $51,369 $52,654 $53,970 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $3,210 $3,512 $3,962 $4,334 $3,868 Total Income $367,213 $380,793 $430,934 $474,163 $507,769 # Component Sites & Grounds 2105 Driveway Concrete - Repair $0 $0 $0 $0 $ Conc. Deck/Walk - Repair/Replace $0 $0 $0 $2,203 $ Asphalt - Seal and Repair $0 $0 $3,065 $0 $ Asphalt - Remove & Replace $0 $0 $0 $0 $ Storage Sheds - Refurbish $0 $0 $0 $0 $ Entry Sign - Refurbish/Replace $0 $0 $0 $0 $ Stone Monument - Refurbish/Replace $0 $0 $0 $0 $ Backflow Device - Replace $0 $0 $0 $0 $1,891 Amenities 2607 Drinking Fountains - Replace $0 $0 $0 $0 $ Tennis Court - Resurface $0 $0 $0 $19,091 $ Asphalt Tennis Court - Replace $0 $0 $0 $0 $158, Tennis Court Fencing - Replace $0 $0 $0 $0 $ Tennis Court Windscreen - Replace $0 $0 $0 $0 $ Tennis Equipment - Replace $0 $0 $0 $0 $6,807 Pool Areas 2801 Awnings - Replace $2,352 $0 $0 $0 $ Pool Bldg. Doors - Replace $0 $0 $0 $0 $ Pool Bldg. Gutters - Replace $739 $0 $0 $0 $ Pool Bldg. Roof - Replace $10,415 $0 $0 $0 $ Pool Bldg. Siding - Paint $1,478 $0 $0 $0 $ Pool Bldg. Siding - Replace $0 $0 $0 $0 $ Pool Bldg. Trim - Repaint/Repair $1,546 $0 $0 $0 $ Pool Bldg. Office - Refurbish $0 $0 $0 $0 $ Pool Restrooms - Refurbish $0 $0 $5,703 $0 $ Fencing: Pool Metal - Repair/Paint $941 $0 $0 $0 $ Fencing: Pool Metal - Replace $0 $0 $0 $0 $ Fencing: Pool Wood - Replace $0 $0 $0 $0 $ Awning Fabric - Replace $0 $2,768 $0 $2,937 $ Pool/Patio Furniture - Replace $0 $0 $0 $0 $ Pool Deck/Coping - Replace $0 $0 $0 $0 $ Pool - Resurface $0 $0 $0 $0 $ Pool Light Fixtures - Replace $0 $0 $0 $0 $ Kiddie Pool - Resurface $0 $0 $0 $0 $ Water Heater - Replace $0 $2,422 $0 $0 $ Pool Heater - Replace $20,159 $0 $0 $0 $ Pool Filter - Replace $0 $0 $0 $0 $0 Association Reserves Colorado, LLC 21 1/13/2016

28 Table 6: 30-Year Income/Expense Detail (yrs 10 through 14) Fiscal Year Pool Pump - Repair/Replace $0 $0 $4,990 $0 $ Pool Pump Motor - Replace $2,419 $0 $0 $0 $2, Pool Stairs - Replace $0 $0 $0 $0 $ Lifeguard Tower - Replace $0 $0 $0 $0 $ Pool Lane Dividers - Replace $0 $0 $0 $0 $ Kiddie Pool Cover - Replace $0 $0 $0 $0 $1, Pool Cover - Replace $0 $0 $0 $0 $12,101 Total Expenses $40,049 $5,191 $13,759 $24,231 $183,855 Ending Reserve Balance: $327,165 $375,602 $417,175 $449,932 $323,914 Association Reserves Colorado, LLC 22 1/13/2016

29 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Starting Reserve Balance $323,914 $310,034 $252,162 $291,013 $341,319 Annual Reserve Contribution $55,319 $56,702 $58,120 $59,573 $61,062 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $3,168 $2,810 $2,715 $3,160 $3,601 Total Income $382,402 $369,546 $312,996 $353,747 $405,982 # Component Sites & Grounds 2105 Driveway Concrete - Repair $0 $0 $8,760 $0 $ Conc. Deck/Walk - Repair/Replace $0 $0 $0 $2,554 $ Asphalt - Seal and Repair $0 $3,450 $0 $0 $ Asphalt - Remove & Replace $0 $0 $0 $0 $ Storage Sheds - Refurbish $0 $0 $0 $6,810 $ Entry Sign - Refurbish/Replace $0 $0 $0 $0 $ Stone Monument - Refurbish/Replace $0 $0 $0 $0 $ Backflow Device - Replace $0 $0 $0 $0 $0 Amenities 2607 Drinking Fountains - Replace $0 $0 $0 $0 $ Tennis Court - Resurface $0 $0 $0 $0 $ Asphalt Tennis Court - Replace $0 $0 $0 $0 $ Tennis Court Fencing - Replace $28,822 $0 $0 $0 $ Tennis Court Windscreen - Replace $0 $0 $0 $0 $7, Tennis Equipment - Replace $0 $0 $0 $0 $0 Pool Areas 2801 Awnings - Replace $0 $0 $0 $0 $ Pool Bldg. Doors - Replace $0 $0 $0 $0 $ Pool Bldg. Gutters - Replace $0 $0 $0 $0 $ Pool Bldg. Roof - Replace $0 $0 $0 $0 $ Pool Bldg. Siding - Paint $0 $0 $1,818 $0 $ Pool Bldg. Siding - Replace $0 $0 $0 $0 $ Pool Bldg. Trim - Repaint/Repair $0 $0 $1,901 $0 $ Pool Bldg. Office - Refurbish $2,726 $0 $0 $0 $ Pool Restrooms - Refurbish $0 $0 $0 $0 $ Fencing: Pool Metal - Repair/Paint $1,091 $0 $0 $0 $ Fencing: Pool Metal - Replace $0 $0 $0 $0 $ Fencing: Pool Wood - Replace $28,043 $0 $0 $0 $ Awning Fabric - Replace $3,116 $0 $3,306 $0 $3, Pool/Patio Furniture - Replace $5,453 $0 $0 $0 $ Pool Deck/Coping - Replace $0 $0 $0 $0 $ Pool - Resurface $0 $104,306 $0 $0 $ Pool Light Fixtures - Replace $0 $0 $0 $0 $ Kiddie Pool - Resurface $0 $9,628 $0 $0 $ Water Heater - Replace $0 $0 $0 $0 $ Pool Heater - Replace $0 $0 $0 $0 $ Pool Filter - Replace $0 $0 $0 $0 $0 Association Reserves Colorado, LLC 23 1/13/2016

30 Table 6: 30-Year Income/Expense Detail (yrs 15 through 19) Fiscal Year Pool Pump - Repair/Replace $0 $0 $0 $0 $ Pool Pump Motor - Replace $0 $0 $0 $3,064 $ Pool Stairs - Replace $0 $0 $3,306 $0 $ Lifeguard Tower - Replace $3,116 $0 $0 $0 $ Pool Lane Dividers - Replace $0 $0 $2,892 $0 $ Kiddie Pool Cover - Replace $0 $0 $0 $0 $1, Pool Cover - Replace $0 $0 $0 $0 $14,028 Total Expenses $72,368 $117,384 $21,983 $12,428 $26,741 Ending Reserve Balance: $310,034 $252,162 $291,013 $341,319 $379,241 Association Reserves Colorado, LLC 24 1/13/2016

31 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Starting Reserve Balance $379,241 $363,091 $403,637 $470,313 $535,835 Annual Reserve Contribution $62,589 $64,153 $65,757 $67,401 $69,086 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $3,710 $3,832 $4,368 $5,029 $5,409 Total Income $445,540 $431,076 $473,762 $542,742 $610,330 # Component Sites & Grounds 2105 Driveway Concrete - Repair $0 $0 $0 $0 $ Conc. Deck/Walk - Repair/Replace $0 $0 $0 $2,960 $ Asphalt - Seal and Repair $3,883 $0 $0 $0 $4, Asphalt - Remove & Replace $0 $0 $0 $0 $ Storage Sheds - Refurbish $0 $0 $0 $0 $ Entry Sign - Refurbish/Replace $4,064 $0 $0 $0 $ Stone Monument - Refurbish/Replace $11,740 $0 $0 $0 $ Backflow Device - Replace $0 $0 $0 $0 $0 Amenities 2607 Drinking Fountains - Replace $0 $0 $0 $0 $ Tennis Court - Resurface $23,479 $0 $0 $0 $ Asphalt Tennis Court - Replace $0 $0 $0 $0 $ Tennis Court Fencing - Replace $0 $0 $0 $0 $ Tennis Court Windscreen - Replace $0 $0 $0 $0 $ Tennis Equipment - Replace $0 $0 $0 $0 $0 Pool Areas 2801 Awnings - Replace $3,161 $0 $0 $0 $ Pool Bldg. Doors - Replace $0 $0 $0 $0 $ Pool Bldg. Gutters - Replace $0 $0 $0 $0 $ Pool Bldg. Roof - Replace $0 $0 $0 $0 $ Pool Bldg. Siding - Paint $0 $0 $0 $0 $2, Pool Bldg. Siding - Replace $0 $20,463 $0 $0 $ Pool Bldg. Trim - Repaint/Repair $0 $0 $0 $0 $2, Pool Bldg. Office - Refurbish $0 $0 $0 $0 $ Pool Restrooms - Refurbish $0 $0 $0 $0 $ Fencing: Pool Metal - Repair/Paint $1,264 $0 $0 $0 $ Fencing: Pool Metal - Replace $0 $0 $0 $0 $ Fencing: Pool Wood - Replace $0 $0 $0 $0 $ Awning Fabric - Replace $0 $3,721 $0 $3,947 $ Pool/Patio Furniture - Replace $0 $0 $0 $0 $ Pool Deck/Coping - Replace $0 $0 $0 $0 $ Pool - Resurface $0 $0 $0 $0 $ Pool Light Fixtures - Replace $1,445 $0 $0 $0 $ Kiddie Pool - Resurface $0 $0 $0 $0 $ Water Heater - Replace $0 $3,256 $0 $0 $ Pool Heater - Replace $27,092 $0 $0 $0 $ Pool Filter - Replace $0 $0 $0 $0 $36,590 Association Reserves Colorado, LLC 25 1/13/2016

32 Table 6: 30-Year Income/Expense Detail (yrs 20 through 24) Fiscal Year Pool Pump - Repair/Replace $6,321 $0 $0 $0 $ Pool Pump Motor - Replace $0 $0 $3,449 $0 $ Pool Stairs - Replace $0 $0 $0 $0 $ Lifeguard Tower - Replace $0 $0 $0 $0 $ Pool Lane Dividers - Replace $0 $0 $0 $0 $ Kiddie Pool Cover - Replace $0 $0 $0 $0 $2, Pool Cover - Replace $0 $0 $0 $0 $16,262 Total Expenses $82,449 $27,439 $3,449 $6,908 $63,830 Ending Reserve Balance: $363,091 $403,637 $470,313 $535,835 $546,501 Association Reserves Colorado, LLC 26 1/13/2016

33 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Starting Reserve Balance $546,501 $596,435 $517,587 $450,105 $505,629 Annual Reserve Contribution $70,813 $72,584 $74,398 $76,258 $78,165 Recommended Special Assessments $0 $0 $0 $0 $0 Interest Earnings $5,712 $5,568 $4,836 $4,777 $5,008 Total Income $623,026 $674,587 $596,821 $531,140 $588,802 # Component Sites & Grounds 2105 Driveway Concrete - Repair $0 $0 $11,773 $0 $ Conc. Deck/Walk - Repair/Replace $0 $0 $0 $3,432 $ Asphalt - Seal and Repair $0 $0 $0 $4,919 $ Asphalt - Remove & Replace $0 $0 $0 $0 $38, Storage Sheds - Refurbish $0 $0 $0 $9,152 $ Entry Sign - Refurbish/Replace $0 $0 $0 $0 $ Stone Monument - Refurbish/Replace $0 $0 $0 $0 $ Backflow Device - Replace $0 $0 $0 $0 $2,946 Amenities 2607 Drinking Fountains - Replace $0 $0 $2,777 $0 $ Tennis Court - Resurface $0 $0 $28,877 $0 $ Asphalt Tennis Court - Replace $0 $0 $0 $0 $ Tennis Court Fencing - Replace $0 $0 $0 $0 $ Tennis Court Windscreen - Replace $0 $0 $0 $0 $10, Tennis Equipment - Replace $0 $0 $0 $0 $10,605 Pool Areas 2801 Awnings - Replace $0 $0 $0 $0 $ Pool Bldg. Doors - Replace $0 $0 $0 $0 $ Pool Bldg. Gutters - Replace $0 $0 $0 $0 $ Pool Bldg. Roof - Replace $0 $0 $0 $0 $ Pool Bldg. Siding - Paint $0 $0 $0 $0 $ Pool Bldg. Siding - Replace $0 $0 $0 $0 $ Pool Bldg. Trim - Repaint/Repair $0 $0 $0 $0 $ Pool Bldg. Office - Refurbish $0 $0 $0 $0 $ Pool Restrooms - Refurbish $0 $0 $8,885 $0 $ Fencing: Pool Metal - Repair/Paint $1,466 $0 $0 $0 $ Fencing: Pool Metal - Replace $9,422 $0 $0 $0 $ Fencing: Pool Wood - Replace $0 $0 $0 $0 $ Awning Fabric - Replace $4,188 $0 $4,443 $0 $4, Pool/Patio Furniture - Replace $7,328 $0 $0 $0 $ Pool Deck/Coping - Replace $0 $0 $85,520 $0 $ Pool - Resurface $0 $140,178 $0 $0 $ Pool Light Fixtures - Replace $0 $0 $0 $0 $ Kiddie Pool - Resurface $0 $12,940 $0 $0 $ Water Heater - Replace $0 $0 $0 $0 $ Pool Heater - Replace $0 $0 $0 $0 $ Pool Filter - Replace $0 $0 $0 $0 $0 Association Reserves Colorado, LLC 27 1/13/2016

34 Table 6: 30-Year Income/Expense Detail (yrs 25 through 29) Fiscal Year Pool Pump - Repair/Replace $0 $0 $0 $8,008 $ Pool Pump Motor - Replace $0 $3,882 $0 $0 $ Pool Stairs - Replace $0 $0 $4,443 $0 $ Lifeguard Tower - Replace $4,188 $0 $0 $0 $ Pool Lane Dividers - Replace $0 $0 $0 $0 $4, Kiddie Pool Cover - Replace $0 $0 $0 $0 $2, Pool Cover - Replace $0 $0 $0 $0 $18,853 Total Expenses $26,591 $157,000 $146,716 $25,510 $92,495 Ending Reserve Balance: $596,435 $517,587 $450,105 $505,629 $496,306 Association Reserves Colorado, LLC 28 1/13/2016

35 Assoc Accuracy, Limitations, and Disclosures 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 CO, LLC and its employees have no ownership, management, or other business relationships with the client other than this Reserve Study engagement. Bryan Farley R.S., company president, is a credentialed Reserve Specialist (#260). All work done by Association Reserves CO, 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. Component quantities indicated in this Report were developed by Association Reserves unless otherwise noted. 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 Colorado, LLC 29 1/13/2016

36 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 Colorado, LLC 30 1/13/2016

37 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 Colorado, LLC 31 1/13/2016

38 Association Reserves Client: 19185A Nelson Farms HOA Comp # : SITE & GROUNDS--- Location : Funded? : No Evaluation : Quantity: Component Details Best Case: Cost Source: Worst Case: Comp # : 2105 Driveway Concrete - Repair Quantity: ~ 1,800 GSF Location : Adjacent to roadway and parking areas Partial pad area replaced in 2013 Evaluation : Due to the expansive soils in the Colorado region, concrete is known to fail at a faster interval. Concrete maintenance should consists of pressure washing, crack repairs, and replacement of small sections as needed. Exposure to sunlight, weather, and frequent vehicle traffic can lead to larger, more frequent repairs, especially for older properties. Inspect all areas periodically to identify trip hazards or other safety issues. Repairs are frequently considered an Operating budget line item, but if a pattern of larger repairs develops, Reserve funding may be required. 10 years 7 years Best Case: $4,600 Worst Case: $6,000 Lower allowance for repair, more extensive Cost Source: Client Cost History January 13,2016 Page 1 of 31

39 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2107 Conc. Deck/Walk - Repair/Replace Quantity: Numerous GSF Location : Common area Evaluation : At the time of the inspection it was unclear who had responsibility for the concrete deck/sidewalk maintenance. Recommending funding as a prudent measure. No issues were noted with the concrete walks at the time of the inspection. Repair any trip and fall hazards immediately to ensure safety. As routine maintenance, inspect regularly, pressure wash for appearance and repair promptly as needed to prevent water penetrating into the base and causing further damage. In our experience, larger repair/replacement expenses emerge as the community ages. Although difficult to predict timing, cost and scope, we suggest a rotating funding allowance to supplement the operating/maintenance budget for periodic larger repairs. Adjust as conditions, actual expense patterns dictate within future reserve study updates. 5 years 3 years Best Case: $1,000 Worst Case: $2,000 Lower allowance Cost Source: ARI Cost Database January 13,2016 Page 2 of 31

40 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2113 Site Drainage System - Clean/Repair Quantity: Common Drainage Location : Common areas, hidden Funded? : No Unpredictable scope Evaluation : South of the pool area is a creek and a flood area, which is the responsibility of the City. Various drainage improvements at this site with no current problems observed or reported. Drainage facilities are typically inspected periodically by governing authority; typically storm system maintenance guidelines can be found on their website. Although annual work should be performed as part of general maintenance operating funding, we recommend including a funding allowance for periodic larger expenses that might occur. Track expenses and adjust in reserve study updates as needed. Best Case: Cost Source: Worst Case: January 13,2016 Page 3 of 31

41 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2123 Asphalt - Seal and Repair Quantity: ~ 6,500 GSF Location : Parking areas of association Evaluation : Asphalt seal noted to be in poor condition, with general cracking, alligator cracking, block cracking and lifting noted. 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 lower traffic asphalt areas such as these. 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 more brittle. As a result, the pavement will be more likely to crack because it is unable to bend and flex when subjected to traffic and 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 also provides uniform appearance, concealing the inevitable patching and repairs which accumulate over time. Seal coat ultimately extends useful life of asphalt, postponing the asphalt resurfacing, which can be one of the larger cost items in this study (see component #2125 for asphalt resurfacing costs). Repair asphalt before seal coating. Surface preparation and dry weather, during and following application, is key to lasting performance. The ideal conditions are a warm, sunny day with low humidity; rain can cause major problems when seal coating and should never be done when showers are threatening. Incorporate any striping and curb repair into this project. Fill cracks and clean oil stains promptly in between cycles as routine maintenance. 4 years 0 years Best Case: $2,000 Worst Case: $2,300 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 4 of 31

42 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2125 Asphalt - Remove & Replace Quantity: ~ 6,500 GSF Location : Parking areas of association Evaluation : Asphalt noted to be in poor condition with block cracking, alligator cracking, lifting and drainage issues seen. Appears to be original to the property. We recommend having surface sealed and repaired as directed in component #2123; regular cycles of seal coating are recommended for maximum design life. As routine maintenance, keep roadway clean, free of debris and well drained; fill/seal cracks to prevent water from penetrating into the sub-base and accelerating damage. As timing draws nearer, consult with asphalt vendor/consultant for recommendations and complete scope. 25 years 4 years Best Case: $13,000 Worst Case: $20,000 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 2139 Perimeter Fencing: Wood - Replace Location : Corner of Springwood - Lemay Funded? : No Evaluation : Reported to not be the responsibility of the HOA. Quantity: ~ 450 LF Best Case: Cost Source: Worst Case: January 13,2016 Page 5 of 31

43 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2140 Fencing: Wood Split Rail - Replace Quantity: ~ 30 LF Location : East side of property Funded? : No Evaluation : Small section of fencing is reported to be HOA responsibility. Due to the small size plan to replace as needed from the operating budget. Best Case: Cost Source: Worst Case: Comp # : 2141 Storage Sheds - Refurbish Quantity: (2) Sheds Location : Pool area and tennis court Replaced in 2014 Evaluation : This item was included at the request of the client. No issues were reported or noted at the time of the inspection. 10 years 8 years Best Case: $3,500 Worst Case: $4,500 Lower allowance Cost Source: Client Cost History January 13,2016 Page 6 of 31

44 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2167 Entry Sign - Refurbish/Replace Quantity: (1) Wood Location : Entry locations Evaluation : Good, legible condition with no significant damage/deterioration noted. Plan to replace at the interval below based on typical deterioration caused by constant exposure. Funding allowance here can vary significantly depending on style/type desired. As routine maintenance, inspect regularly, clean/touch up for appearance and repair from operating budget. 15 years 5 years Best Case: $1,500 Worst Case: $3,000 Lower allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History ; more elaborate, better quality Comp # : 2167 Stone Monument - Refurbish/Replace Quantity: (1) Wood/Stone Location : Entry locations Evaluation : Good, legible condition with no significant damage/deterioration noted. Plan to replace at the interval below based on typical deterioration caused by constant exposure. Funding allowance here can vary significantly depending on style/type desired. As routine maintenance, inspect regularly, clean/touch up for appearance and repair from operating budget. 15 years 5 years Best Case: $5,000 Worst Case: $8,000 Lower allowance to replace ; more elaborate, better quality Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 7 of 31

45 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2170 Backflow Device - Replace Quantity: (1) Backflow Location : Common areas Evaluation : The device was not tested at the time if the inspection. As routine maintenance, inspect regularly, test system and repair as needed from Operating budget. Consult with irrigation vendor to determine what types of repairs and replacements are included in the landscaping contract. 15 years 14 years Photo Not Available Best Case: $1,000 Worst Case: $1,500 Lower allowance to replace Cost Source: Client Cost History Comp # : 2171 Irrigation Controller - Replace Quantity: (1) Unit Location : Common areas Funded? : No Evaluation : The device was not tested at the time if the inspection Inspect regularly and repair/replace as needed as an Operating expense. Although eventual replacement will be needed due to parts obsolescence, technological upgrades, etc., cost is not expected to meet threshold for Reserve funding. As routine maintenance, inspect regularly, test system and repair as needed from Operating budget. Consult with irrigation vendor to determine what types of repairs and replacements are included in the landscaping contract. Best Case: Cost Source: Worst Case: January 13,2016 Page 8 of 31

46 Association Reserves Client: 19185A Nelson Farms HOA Comp # : AMENITIES----- Location : Funded? : No Evaluation : Quantity: Component Details Best Case: Cost Source: Worst Case: Comp # : 2604 Picnic Tables - Replace - 30% Quantity: 30% of (3) Tables Location : Common areas Funded? : No Reported to be an operating expense Evaluation : (1) wood table in poor condition; (1) composite table in good condition; (1) plastic table. Life expectancy of picnic tables, benches and other outdoor furnishings can vary greatly depending on level of exposure to the elements, preventive maintenance, quality of material and aesthetic standards of the association. In our experience, it is prudent to plan for replacement of all items together to preserve a coordinated appearance. Cost estimates can vary greatly depending on types of replacement furnishings selected. Unless otherwise noted, funding recommendation shown here assumes replacement with pieces comparable to the existing furnishings. Best Case: Cost Source: Worst Case: January 13,2016 Page 9 of 31

47 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2605 BBQs - Replace Quantity: (3) Units Location : Common areas Funded? : No Evaluation : (3) Charcoal units by the pool area. Some rust noted but generally no major problems seen. Barbecues were not tested during site inspection, and are assumed to be functional. Should be cleaned after each use and covered when not in use in order to prolong life expectancy. Life for these units is difficult to predict, plan to replace as needed from the operating budget. Best Case: Cost Source: Worst Case: Comp # : 2607 Drinking Fountains - Replace Quantity: (1) Unit Location : Adjacent to pool building Evaluation : Noted to be in fair condition. Drinking fountains were not tested during site inspection, but are assumed to be functional. Should be cleaned and inspected regularly as an Operating expense to ensure safe/sanitary conditions and proper function. Best practice is often to replace at the same time as other exterior furnishings, if present, such as pool furniture, picnic tables, etc. Funding recommendation shown here assumes replacement with comparable types. 20 years 7 years Best Case: $1,000 Worst Case: $1,500 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 10 of 31

48 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2609 Tennis Court - Resurface Quantity: ~ 21,600 GSF Location : Tennis court area Resurfaced in 2014 Evaluation : No problems noted. Inspect regularly and locally repair as needed within the annual Operating budget. Cracks and trip hazards should be addressed promptly to ensure safety. Re-coating is a recommended practice for restoring appearance of the court, bridging small surface cracks, and prolonging the life of the court surface itself. Plan to recoat (includes striping) at the approximate interval shown below. Maintenance projects such as pressure-washing should be considered as Operating expense. 7 years 6 years Best Case: Lower allowance $12,000 Worst Case: $14,000 Cost Source: Research with Local Vendor/Contractor Comp # : 2611 Asphalt Tennis Court - Replace Quantity: ~ 21,600 GSF Location : Tennis court areas Overlayed in 2006 Evaluation : Some cracking noted. The base is reportedly original. The courts were recently resurfaced, however the client should expect the need to fully replace the courts soon. Assuming proper maintenance and proper re-coating schedules, the court should have a relatively long life expectancy. Over time, exposure to UV light, wind, rain and foot traffic will deteriorate the surface to the point of failure. Prior to resurfacing, consult with vendors to identify any structural problems, such as poor grade, lack of drainage, high spots, etc. Best practice is to coordinate with other projects, such as fencing and/or lighting replacement. 20 years 14 years Best Case: $90,000 Worst Case: $120,000 Lower allowance Cost Source: Research with Local Vendor/Contractor January 13,2016 Page 11 of 31

49 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2613 Tennis Court Fencing - Replace Quantity: ~ 600 LF Location : Tennis court area Evaluation : Noted to be in good condition with no leaning, bending or cracking seen. Tennis court fencing should have a very long life expectancy assuming proper design and installation, lack of vandalism/abuse, etc. Best practice is to coordinate replacement with other major projects, such as court resurfacing, lighting replacement, etc. Vinyl-coated chain link fences normally have a longer life expectancy and are more attractive than those without. Gates and locks should be inspected and repaired as needed as an Operating expense in order to restrict access (if desired) to the tennis court. 30 years 15 years Best Case: Lower allowance $17,000 Worst Case: $20,000 Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 2615 Tennis Court Windscreen - Replace Quantity: ~ 430 GSF Location : Tennis court perimeter Replaced in 2015 Evaluation : Tennis court windscreens should be inspected periodically, especially where attached to the chain link to identify and repair any rips or tears. Loose/sagging/faded sections should be replaced to maintain good aesthetic appearance in the common areas. Costs to replace do not typically meet threshold for Reserve funding. Maintain, repair and replace as needed as an Operating expense. 10 years 9 years Best Case: $3,500 Worst Case: $5,000 Lower allowance Cost Source: Research with Local Vendor/Contractor January 13,2016 Page 12 of 31

50 Association Reserves Component Details Client: 19185A Nelson Farms HOA Comp # : 2617 Tennis Equipment - Replace Quantity: (3) Nets, (6) Posts Location : Tennis court Evaluation : Funding provided for the upkeep and replacement of the posts and nets. 15 years 14 years Best Case: $4,000 Worst Case: $5,000 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History Comp # : POOL/SPA----- Location : Funded? : No Evaluation : Quantity: Best Case: Cost Source: Worst Case: January 13,2016 Page 13 of 31

51 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2801 Awnings - Replace Quantity: ~ 700 GSF Location : Pool area Evaluation : Corrugated plastic awnings in pool area, tennis court area, kid pool area and pool fence area. Poor condition due to hail storm damage. Reported these are to be replaced soon. 10 years 0 years Best Case: Lower allowance $1,500 Worst Case: $2,000 Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 2801 Pool Bldg. Doors - Replace Quantity: (4) Metal Doors Location : Pool area Evaluation : The doors were noted to be older and in fair to poor condition. Metal doors. Expect the need to replace the doors in the near future. 30 years 4 years Best Case: $3,000 Worst Case: $3,500 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 14 of 31

52 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2801 Pool Bldg. Gutters - Replace Quantity: ~ 75 LF Location : Pool area Evaluation : Generally the metal gutters and downspouts appeared in good condition. As routine maintenance, inspect regularly, keep gutters and downspouts free of debris. We recommend that the adjacent gutter be replaced when the roof (or decks) is being resurfaced/replaced. National Roofing Contractor Association (NRCA) roofing standard includes installing eave flashings at the gutters. We suggest to plan for total replacement of gutter and downspouts at the same intervals as roof replacement for cost efficiency. Evaluate at time of roofing to determine if replacement or reuse is the better value. 25 years 10 years Best Case: $500 Worst Case: $600 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 15 of 31

53 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2801 Pool Bldg. Roof - Replace Quantity: ~ 2,100 GSF Location : Pool area Replaced in 2000 Evaluation : Roofing was composite shingles with a 6/12 pitch. Roofing is typically a long-lived component assuming it was properly installed and is properly maintained. 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 conduct any other repair needed to ensure waterproof integrity of roof. Keep roof surface, gutters and downspouts clear and free of debris. We recommend having roof inspected in greater detail (including conditions of sub-surface materials) by an independent roofing consultant prior to replacement. There is a wealth of information available through organizations such as the Roof Consultant Institute and the National Roofing Contractors Association (NRCA) If the roof has a warranty, be sure to review terms and conduct proper inspections/repairs as needed to keep warranty in force. 25 years 10 years Best Case: $6,000 Worst Case: $9,500 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 16 of 31

54 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2801 Pool Bldg. Siding - Paint Quantity: ~ 600 GSF Hardie Shingles Location : Pool area Replaced 2011 Evaluation : Association Reserves does not specifically endorse any products, manufacturers or vendors, but James Hardie Building Products, Inc. is the leading manufacturer of fiber cement siding, and their website ( is an informative resource for proper care and maintenance of fiber cement siding. Their "Best Practices" guidelines recommend the use of primers and topcoats that are designed and recommended for cement-based building materials such as fiber cement, masonry, brick or stucco. Two finish coats of high-quality exterior-grade acrylic paint are recommended. Their guidelines also recommend the use of elastomeric joint sealants complying with ASTM C920 Grade NS, Class 25 or higher, or latex joint sealants complying with ASTM C834. We recommend that the association consult with qualified exterior painting/waterproofing consultants and/or contractors to ensure that proper materials are used in painting and sealing the building siding. Plan for such projects at the interval shown here. 7 years 3 years Best Case: $900 Worst Case: $1,300 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 17 of 31

55 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2801 Pool Bldg. Siding - Replace Quantity: ~ 600 GSF Hardie Shingles Location : Pool area Replaced 2011 Evaluation : Surface was painted. Siding is believed to be Hardie fiber cement shingle. The largest manufacturer of fiber cement siding is James Hardie Building Products, Inc., and is a good source of information for best practices related to installation, care and maintenance of the product. At this time, there is no well-defined limit to the useful life of fiber cement siding. The association should review any available warranty documents to ensure proper steps are taken to maintain applicable warranties. As the product ages, the association should conduct more detailed inspections beyond the scope of the visual inspection conducted during this engagement. Currently Hardie offers the choice of a 30-year non-prorated or 50-year pro-rated warranty. The underlying waterproofing will degrade over time and may require replacement. No view of underlying waterproofing was part of our limited visual review. Plan for eventual replacement at roughly the time frame below. Inspect and repair as needed using operating and maintenance funds. 25 years 21 years Best Case: $10,000 Worst Case: $12,000 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 18 of 31

56 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2801 Pool Bldg. Trim - Repaint/Repair Quantity: ~ 780 GSF Location : Pool area Evaluation : Trim was horizontal board and batten. Surface was painted. Actual material of siding was not confirmed since we conducted only a limited visual inspection. The underlying waterproofing will degrade over time and may require replacement. No view of underlying waterproofing was part of our limited visual review. Inspect and repair as needed using operating and maintenance funds. 7 years 3 years Best Case: Lower allowance $800 Worst Case: $1,500 Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 2802 Pool Bldg. Office - Refurbish Quantity: ~ 140 GSF Location : Pool area Evaluation : (2 plastic desks, (2) chairs, (1) refrigerator, (2) sliding windows with ~ (32) GSF. Carpeting is in poor condition with an overall musty odor. 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. 15 years 0 years Best Case: $1,000 Worst Case: $2,500 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 19 of 31

57 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2802 Pool Restrooms - Refurbish Quantity: (2) Restrooms Location : Pool area Flooring done in 2012 Evaluation : Each restroom consisted of (1) sink with laminate counter top, (2) toilets, (2) showers with curtains, untreated concrete floors and painted cinder block walls. Good condition noted with no significant damage/deterioration noted. 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. 15 years 12 years Best Case: Lower allowance $3,000 Worst Case: $5,000 Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 2803 Fencing: Pool Metal - Repair/Paint Quantity: ~ 100 LF Location : Adjacent to pool Fence replaced 2010 Evaluation : Rust, chipping, peeling and corrosion noted. Metal fencing should be painted at the interval shown here in order to inhibit corrosion and prevent/limit costly repairs and replacement. Painting not only protects the metal surface from excessive wear, but promotes a good, attractive appearance in the common areas. 5 years 0 years Best Case: $600 Worst Case: $800 Lower allowance to repaint Cost Source: ARI Cost Database: Similar Project Cost History, Includes additional surface prep, etc. January 13,2016 Page 20 of 31

58 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2805 Fencing: Pool Metal - Replace Quantity: ~ 100 GSF Location : Adjacent to pool Fence replaced 2010 Evaluation : Good condition observed with no significant deterioration, instability and/or damage evident at railings sampled at this time. Sturdy item that can typically last for an extended period with ordinary care and maintenance. In our experience, however, eventual replacement is warranted due to constant wear, usage and exposure over time. Plan to replace at roughly the time frame below. Inspect regularly, clean for appearance and repair promptly as needed to ensure safety and maintain waterproofing. 30 years 25 years Best Case: $4,000 Worst Case: $5,000 Lower allowance to repaint Cost Source: ARI Cost Database: Similar Project Cost History, Includes additional surface prep, etc. January 13,2016 Page 21 of 31

59 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2805 Fencing: Pool Wood - Replace Quantity: ~ 600 LF Location : Adjacent to pool Fence replaced 2000 Evaluation : Good condition observed with no significant deterioration, instability and/or damage evident this time. Six foot height with five and one half inch slats. Stained and weathered with poles set in concrete. Sturdy item that can typically last for an extended period with ordinary care and maintenance. In our experience, however, eventual replacement is warranted due to constant wear, usage and exposure over time. Plan to replace at roughly the time frame below. Inspect regularly, clean for appearance and repair promptly as needed to ensure safety and maintain waterproofing. 30 years 15 years Best Case: $15,000 Worst Case: $21,000 Lower allowance to repaint Cost Source: ARI Cost Database: Similar Project Cost History, Includes additional surface prep, etc. January 13,2016 Page 22 of 31

60 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2807 Awning Fabric - Replace Quantity: (2) Umbrellas Location : Pool area Replaced 2010 Evaluation : Fabric umbrellas with metal poles. The life of the metal can be variable and difficult to predict. Life estimate below was provided by the board. Inspect regularly and repair or replace any damaged pieces promptly to ensure safety. Protected storage of furniture when not in use can help to extend useful life. Best practice is to replace all pieces together in order to maintain consistent style and quality in the pool/recreation area. Costs can vary greatly based on type of pieces selected for replacement. Funding recommendation shown here is based on replacement with comparable quality pieces. 2 years 1 years Best Case: $1,500 Worst Case: $2,500 Lower allowance to replace Cost Source: Estimate Provided by Client January 13,2016 Page 23 of 31

61 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2807 Pool/Patio Furniture - Replace Quantity: ~ (59) Pieces Location : Pool area Replaced 2010 Evaluation : (6) older plastic chaise loungers, (5) older metal chaise loungers, (36) new chaise loungers, (12) plastic chaise loungers. Inspect regularly and repair or replace any damaged pieces promptly to ensure safety. Protected storage of furniture when not in use can help to extend useful life. Best practice is to replace all pieces together in order to maintain consistent style and quality in the pool/recreation area. Costs can vary greatly based on type of pieces selected for replacement. Funding recommendation shown here is based on replacement with comparable quality pieces. 10 years 5 years Best Case: $3,000 Worst Case: $4,000 Lower allowance to replace Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 2809 Pool Deck/Coping - Replace Quantity: ~ 5,000 GSF Location : Pool deck Fully Replaced Evaluation : No major problems noted, good condition. Pool deck should not need to be completely replaced at any time in the foreseeable future, but occasional repairs may be required due to sun and weather exposure, pool chemicals, etc. As a routine maintenance expense, inspect the deck closely for trip hazards and other issues, especially close to the water. An allowance for miscellaneous repairs is recommended below based on our experience with other associations. This component should be re-evaluated during future Reserve Study updates as the association ages. 30 years 27 years Best Case: $37,000 Worst Case: $40,000 Lower allowance to repair Cost Source: Client Cost History January 13,2016 Page 24 of 31

62 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2815 Pool - Resurface Quantity: (42x75) ~ 3,200 GSF Location : Pool area Evaluation : Noted to be in good condition with no pitting or chipping seen. Pool vendor reported that the surface is in good to fair condition. Pool resurfacing will restore the aesthetic quality of the pool while protecting the actual concrete shell of the pool from deterioration. This work includes new coping stones, tile, and race line tile. While drained for resurfacing, any other repairs to lighting, handrails, stairs, ladders, etc. should be conducted as needed. This type of project is best suited for slow/offseason to minimize downtime during periods when pool is used heavily. Should be expected at the approximate interval shown below to preserve this important amenity of the association. 10 years 6 years Best Case: Lower allowance $63,000 Worst Case: $67,000 Cost Source: Research with Local Vendor/Contractor Comp # : 2815 Pool Light Fixtures - Replace Quantity: (6) Lights Location : Pool Evaluation : Funding provided to replace the fixtures only. Reported by the client that there may be issues with the wiring, however, we are not qualified to inspect the wiring. 15 years 5 years Best Case: $700 Worst Case: $900 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 25 of 31

63 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2817 Kiddie Pool - Resurface Quantity: ~ 200 GSF Location : Pool area Evaluation : Good condition noted. Should be resurfaced at the same time as the pool whenever possible to achieve better pricing and minimize downtime. Resurfacing will restore the aesthetic quality of the pool while protecting the actual concrete shell from deterioration. While drained for resurfacing, any other repairs to lighting, handrails, stairs, ladders, etc. should be conducted as needed. This type of project is best suited for slow/offseason to minimize downtime during periods when pool is used heavily. Should be expected at the approximate interval shown below to preserve this important amenity of the association. 10 years 6 years Best Case: Lower allowance $5,500 Worst Case: $6,500 Cost Source: Research with Local Vendor/Contractor Comp # : 2824 Water Heater - Replace Quantity: (1) Water Heater Location : Pool building Evaluation : Water heater life expectancies can vary greatly depending on level of use, location within a building, etc. Should be inspected and repaired as needed by servicing vendor or maintenance staff. Unless otherwise noted, expected to be functional. Plan to replace at the approximate interval shown below. No access to inspect the unit at the time of the inspection. 10 years 1 years Photo Not Available Best Case: $1,500 Worst Case: $2,000 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 26 of 31

64 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2825 Pool Heater - Replace Quantity: (1) Teledyne Liars Heater Location : Pool equipment room Evaluation : Reported that pool heater needs replacement. Teledyne Laars Mighty Therm model # AP1200In09C1ACXX; Serial # C98DO1208; Input 1,200,00 BTU/Hr; Output 972,000 BTU/Hr. Pool vendor should inspect heater regularly to ensure proper function, identify any required repairs, etc. Internal components were not analyzed during our site inspection, but typical signs of age and failure include rusting and corrosion around the burners, worn electrical components, etc. Many associations choose not to heat their pools year-round, which can prolong the life of the heater while reducing energy costs. When replacement models are being evaluated, we recommend considering high efficiency models which may have a higher initial cost but will ultimately be less expensive due to reduced energy usage. 10 years 0 years Best Case: Lower allowance $14,000 Worst Case: $16,000 Cost Source: Research with Local Vendor/Contractor Comp # : 2829 Pool Filter - Replace Quantity: (1) Piece Location : Pool equipment room Evaluation : Vendor reports that the client should expect to replace the filter with a larger, spun fiberglass, filter. Pool vendor should inspect regularly for optimal performance and address any repairs or preventive maintenance as needed. Life can vary depending on location, as well as level of use and preventive maintenance. 15 years 9 years Best Case: $16,000 Worst Case: $20,000 Lower allowance Cost Source: Research with Local Vendor/Contractor January 13,2016 Page 27 of 31

65 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2833 Pool Pump - Repair/Replace Quantity: (1) Pump Location : Pool equipment room Evaluation : Marathon Electric pump and motor - 7 1/2 HP. In most cases, pool pumps are repaired or rebuilt as needed as an Operating cost, as expenses involved do not typically meet threshold for Reserve funding. However, funding provided here to offset the operating budget. 8 years 4 years Best Case: Lower allowance $3,000 Worst Case: $4,000 Cost Source: Allowance Comp # : 2833 Pool Pump Motor - Replace Quantity: (1) Motor Location : Pool equipment room Evaluation : Per the pool vendor,splash, the current motor has ~2-4 RUL, supplemented with a backup motor in storage. Marathon Electric pump and motor - 7 1/2 HP. In most cases, pool pumps are repaired or rebuilt as needed as an Operating cost, as expenses involved do not typically meet threshold for Reserve funding. However, funding provided here to offset the operating budget. 4 years 2 years Best Case: $1,600 Worst Case: $2,000 Lower allowance Cost Source: Allowance January 13,2016 Page 28 of 31

66 Association Reserves Client: 19185A Nelson Farms HOA Comp # : 2835 Pool Stairs - Replace Location : Pool area Replaced in 2012 Evaluation : This item was included at the request of the client. Quantity: (1) Mobile Stairs Component Details 10 years 7 years Best Case: $1,500 Worst Case: $2,500 Lower allowance Cost Source: Client Cost History Comp # : 2836 Lifegaurd Tower - Replace Location : Pool area Evaluation : This item was included at the request of the client. Quantity: (1) Unit 10 years 5 years Photo Not Available Best Case: $1,500 Worst Case: $2,500 Lower allowance Cost Source: Estimate Provided by Client January 13,2016 Page 29 of 31

67 Association Reserves Client: 19185A Nelson Farms HOA Component Details Comp # : 2839 Pool Lane Dividers - Replace Quantity: (1) Set/Spool Location : Pool Evaluation : At the time of the inspection, it was unclear who was responsible for the replacement of the dividers. However, funding is included for budgeting purposes. 12 years 5 years Best Case: Lower allowance $1,500 Worst Case: $2,000 Cost Source: ARI Cost Database: Similar Project Cost History Comp # : 2840 Kiddie Pool Cover - Replace Quantity: (1) Cover Location : Put away at the time of the inspection Evaluation : Inspect regularly and properly store when not in use. Cover can provide cost savings for temperature differentials, reduce cleaning costs and provide safety. We suggest planning to replace at regular intervals to maintain proper functionality. 5 years 4 years Photo Not Available Best Case: $800 Worst Case: $1,200 Lower allowance Cost Source: ARI Cost Database: Similar Project Cost History January 13,2016 Page 30 of 31