Reserve Study Transmittal Letter

Transcription

1 Reserve Study Transmittal Letter Date: February 1, 215 To: Sonja Bachus, Management Alternative, The From: Browning Reserve Group (BRG) Re: ; Update w/o Site Visit Review Attached, please find the reserve study for. To assist in your understanding of the study, and to highlight key information you may need quickly, we have listed below some of the important information contained in the study. At BRG our goal is to bring clarity from complexity, so should you have any questions, please do not hesitate to contact us anytime. 1. Where do I find the recommended reserve contribution for next year's budget? This is found in Section III, 3 Year Reserve Funding Plan, Cash Flow Method. $168,34 is the annual amount. Directly under the annual amount is the amount per ownership interest, per month, or other period, as applicable. $ For any other funding related issues, if any, see Section III, 3 Year Reserve Funding Plan, Cash Flow Method. 2. Where do I find the status of the reserve fund, based on the Percent Funded calculation? This is found for the 3-year term of the study in Section IV, 3 Year Reserve Funding Plan, Including Fully Funded Balance and % Funded. For the year for which the study was prepared, 215/216, the Association is 46.1% funded. Based on the 3 year cash flow projection, the Association's reserves appear adequately funded as the reserve fund ending balances remain positive throughout the replacement of all major components during the next 3 years. California statute imposes no reserve funding level requirements nor does it address funding level adequacy, and although one or more of the reserve fund percentages expressed in this report may be less than one hundred percent, those percentages do not necessarily indicate that the Association's reserves are inadequately funded. This study's balances do not include the USDA required loan reserve which is held in a separate account. The new water system project components have not been visually observed by the reserve provider. A reserve site visit and updated reserve study may be required once the project is complete. 6uwov4.5.7 P. O. Box 6125 / Sacramento, CA 9586 Office (916) Fax (916) Bob@BrowningRG.com /

2 February 1, Reserve Study Page Two 3. Where do I find the assumptions for interest and inflation factors? While this information is in various places in the study, it can always be found in Section III, 3 Year Reserve Funding Plan, Cash Flow Method. For this study the assumption is 2.5% for the interest rate and 2.5% for the inflation factor. Please be advised these rates estimate the values that will stand the test of time over the 3-year term of the study, not simply only next year. 6uwov4.5.7

3 February 1, Reserve Study Page Three 4. What pages from the reserve study get mailed to the members (homeowners)? Please see the last section of the reserve study, "Member Distribution Materials." These are the last six pages (or more) of the study which can be removed, and copied, for distribution to the membership with the budget packet. This packet includes all state mandated disclosures related to the reserves and the reserve study. This section of the study is a stand-alone packet with it's own cover and table of contents. 5. What are the next steps? This study meets the CA Civil Code Requirements for a review of the study each year and the preparation of the California Assessment and Reserve Funding Disclosure, which under law, must be presented to the association members each year. The next site visit study will be due three years from the date of the last site visit study. BRG proposes doing an Update Without Site Visit Study during the intervening two years at a nominal cost which includes the preparation of a reserve study and above required disclosures. Please read the two helpful sections entitled Glossary and Notes to the Auditor. The glossary explains common reserve study terms as well as BRG specific terminology. The Notes to the Auditor while intended to assist the auditor, has useful information for the casual reader on how year zero, (214/215) the current fiscal year is dealt with in the study. Thank you for the opportunity to work with the on this study. 6uwov4.5.7

4 RESERVE STUDY Update w/o Site Visit Review Sky High Ranch of Calaveras Water System Published - February 1, 215 Browning Reserve Group P. O. Box 6125 / Sacramento, CA 9586 Office (916) Fax (916) Bob@BrowningRG.com / Browning Reserve Group /1/215 6uwov :m Version 2/1/215 3:42:1 PM

5 Sky High Ranch of Calaveras Water System Table of Contents Section Report Page Section I: of Association Reserves 1 Section II: 3 Year Expense Forecast Detailed 5 Section III: 3 Year Reserve Funding Plan Cash Flow Method {c} 9 Section III-a: 3 Year Reserve Funding Plan Cash Flow Method - Ending Balances Chart 1 Section III-b: 3 Year Reserve Funding Plan Special Assessments / Other Contributions 11 Details Section IV: 3 Year Reserve Funding Plan Fully Funded Balance and % Funded 13 Section IV-a: 3 Year Reserve Funding Plan Cash Flow Method - Percent Funded Chart 14 Section V: Reserve Fund Balance Forecast Component Method 15 Section VI: Component Listing Included Components 17 Section VI-b: Component Listing Excluded Components 24 Section VII: Tabular Component Listing Included Components 27 Section VII-a: Expenditures by Year - Next 3 Years 3 Section X: Auditor Notes 32 Section X-a: Supplementary Information for Auditor Component Method Section XI: Glossary Reserve Study Terms Addendum: Member Distribution Materials See Page ii for Details /1/215 6uwov :m Version 2/1/215 3:42:1 PM Browning Reserve Group 215 TOC - i

6 Sky High Ranch of Calaveras Water System Member Distribution Materials The following Reserve Study sections, located at the end of the report, should be provided to each member. Section Report California: Member Assessment and Reserve Funding Disclosure Section III: 3 Year Reserve Funding Plan Section III-b: 3 Year Reserve Funding Plan [Civil Code 557] Cash Flow Method {c} Special Assessments / Other Contributions Details /1/215 6uwov :m Version 2/1/215 3:42:1 PM Browning Reserve Group 215 TOC - ii

7 Section I Update w/o Site Visit Review Sky High Ranch of Calaveras Water System Published - February 1, 215 Reserve Study A Reserve Study was conducted of (the "Association"). An Update Without Site-Visit Review is an update with no on-site visual observation upon where the following tasks are performed: life and valuation estimates; fund status; and a funding plan. is a Planned Development with a total of 245 Lots. of Reserves For the first year of the Reserve Study, the reserve contribution is based upon the existing budget unless otherwise noted in Section III, Reserve Funding Plan. In addition BRG relied on the Association to provide an accurate Beginning Reserve Balance. The status of the Association's reserves, as reflected in the following Reserve Study, is as follows: 1. The Expenditure Forecast of the following Reserve Study identifies the major components which the Association is obligated to repair, replace, restore or maintain, as determined in accordance with the criteria specified above, and specifies for each such component: a. Its current estimated replacement cost; b. Its estimated useful life; and c. Its estimated remaining useful life. 2. It is estimated that the total cash reserves necessary to repair, replace, restore or maintain such major components (in the aggregate) during and at the end of their first remaining useful life is $231,22. [For purposes of this calculation, necessary is defined as the Fully Funded Balance (FFB) (Component Current Cost X Effective Age / Useful Life, including a provision for interest and inflation in future years.)] 3. The current amount of accumulated cash reserves actually set aside to repair, replace, restore, or maintain such major components as of the fiscal year ending June 3, 216 is estimated to be $16,612, constituting 46.1% of the total expenditures anticipated for all such major components through their first end of useful life replacement /1/215 6uwov :m Version 2/1/215 3:42:1 PM Browning Reserve Group 215 P. O. Box 6125 / Sacramento, CA 9586 Office (916) Fax (916) Bob@BrowningRG.com /

8 Reserve Study - Update w/o Site Visit Review 2 4. Based upon the schedule of annual reserve contributions necessary to defray the cost of repairing, replacing, restoring or maintaining such major components in the years such expenditures are estimated to be required, it is estimated that annual reserve contributions in the initial amount of $168,34 [$ per Lot per year (average)] for the fiscal year ending June 3, 216 (the first full fiscal year following first distribution of this report) will be necessary in order to meet all such reserve expenditures when they are projected to come due. Funding Assessment Based on the 3 year cash flow projection, the Association's reserves appear adequately funded as the reserve fund ending balances remain positive throughout the replacement of all major components during the next 3 years. California statute imposes no reserve funding level requirements nor does it address funding level adequacy, and although one or more of the reserve fund percentages expressed in this report may be less than one hundred percent, those percentages do not necessarily indicate that the Association's reserves are inadequately funded. This study's balances do not include the USDA required loan reserve which is held in a separate account. The new water system project components have not been visually observed by the reserve provider. A reserve site visit and updated reserve study may be required once the project is complete. Percent Funded Status Based on paragraphs 1-3 above, the Association is 46.1% funded. The following scale can be used as a measure to determine the Association s financial picture whereas the lower the percentage, the higher the likelihood of the Association requiring a special assessment, or other large increases to the reserve contribution in the future. Percent Funded Poor % Fair % Strong % Methodology The above recommended reserve contribution for the next fiscal year (and future fiscal years as outlined in Section III, Reserve Fund Balance Forecast) was developed using the cash flow method. This is a method of developing a reserve funding plan where the contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different reserve funding plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved. Funding Goals The funding goal employed for is Threshold Funding: Establishing a Reserve funding goal of keeping the Reserve balance above a specified dollar or Percent Funded amount. Depending on the threshold, this may be more or less conservative than Fully Funding.

9 Reserve Study - Update w/o Site Visit Review 3 Limitations The intention of the Reserve Study is to forecast the Association's ability to repair or replace major components as they wear out in future years. The Reserve Study is not an engineering report, and no destructive testing was performed. The costs outlined in the study are for budgetary and planning purposes only, and actual bid costs would depend upon the defined scope of work at the time repairs are made. Also, any latent defects are excluded from this report. Statutory Disclosures Compliance The Reserve Study was conducted pursuant to Sections 53 and 555 of the California Civil Code. Open Meeting California Civil Code Section 556 says (in part): The (Reserve Funding) plan shall be adopted by the board of directors at an open meeting before the membership of the association as described in Article 2 (commencing with Section 49) of Chapter 6. If the board of directors determines that an assessment increase is necessary to fund the reserve funding plan, any increase shall be approved in a separate action of the board that is consistent with the procedure described in Section 565. General: Supplemental Disclosures BRG has no other involvement(s) with the Association which could result in actual or perceived conflicts of interest. Personnel Credentials: BRG is a licensed general building contractor in California, #768851, and the owner, Robert W. Browning, holds the Reserve Specialist designation, #46 from the Community Associations Institute. Completeness: BRG has found no material issues which, if not disclosed, would cause a distortion of the Association's situation. Reliance on Client Data: Information provided by the official representative of the Association regarding financial, physical, quantity, or historical issues will be deemed reliable by BRG. Scope: This Reserve Study is a reflection of information provided to BRG and assembled for the Association's use, not for the purpose of performing an audit, quality/forensic analysis, health and safety inspection, or background checks of historical records.

10 Reserve Study - Update w/o Site Visit Review 4 Reserve Balance: The actual beginning reserve fund balance in this Reserve Study is based upon information provided and was not audited. Reserve Projects: Information provided about reserve projects will be considered reliable. Any on-site inspection should not be considered a project audit, quality inspection, or health and safety review. Component Quantities: The Association warrants the previously developed component quantities are accurate and reliable. Browning Reserve Group

11 See Section VI-b for Excluded Components Section II 3 Year Expense Forecast - Detailed Current Replacement Life Useful / Reserve Component Cost Remaining 214/15 215/16 216/17 217/18 218/19 219/2 22/21 221/22 222/23 223/24 224/25 225/26 226/27 227/28 228/ Existing Components 4 - Structural Repairs 93 - Building Maintenance 2 Skyline Drive Pump Houses Total 4 - Structural Repairs 16, Water System 15 - Pressure Relief Valves 4 Distribution Line PRV's 16 - Pressure Relief Valves 3 PRV Maintenance 21 - Well Meadow Well 25 - Pump- Replace 15 HP- Replace Pump- Re-build 15 HP- Rebuild 26 - Pump- Replace 3/4 HP- Replace Flow Meter Meadow Well Electrical Panel Meadow Well 3 - Water Storage Tank 22,3 Gal. Middle Tank 31 - Water Storage Tank 65,9 Gal. Upper Tank 9 - Miscellaneous Accumulator 91 - Miscellaneous Hi-Lo Switches, Panels, Sheds, Etc 92 - Miscellaneous Transmitters 93 - Miscellaneous Testing & Cleaning Sediment Total 28 - Water System 38, Undesignated 1 - Miscellaneous Reserve Items Total 32 - Undesignated 3,9 16, ,338 22,194 29, ,338 22,194 1, ,76 1,218 1, , , ,673 4,543 8, ,452 1, ,468 1, ,25 6, ,352 53, ,267 96, ,612 2, ,537 3,247 1, ,266 1,432 1,62 6, ,329 8,12 3, ,126 4,2 46,7 12,11 11,25 58,893 27,879 3, ,998 4,412 4,871 5,376 3,998 4,412 4,871 5,376 Total [Existing Components] Expenditures 2.5% 5,5 17,338 4,412 12,11 11,25 4,871 58, , /215 Replacement Project 28 - Water System Version 2/1/215 3:42:1 PM Browning Reserve Group /15 to 228/29 5

12 Current Replacement Life Useful / See Section VI-b for Excluded Components 3 Year Expense Forecast - Detailed Reserve Component Cost Remaining 214/15 215/16 216/17 217/18 218/19 219/2 22/21 221/22 222/23 223/24 224/25 225/26 226/27 227/28 228/ Distribution Line Repl. 2,963 Lin. Ft. Line Replace (135%)[nr:1] 27 - Service Lines 2,655 Lin. Ft. Dedicated Pump/Tank Line (135%)[nr:1] Service Lines Pump 2 Bypass Line (135%)[nr:1] Miscellaneous 5 Pressure Reducing Stations (135%)[nr:1] Valves 46 6" Gate Valves (135%)[nr:1] Miscellaneous 7 Blow-Off Assemblies (135%)[nr:1] Miscellaneous 1 ARVs (135%)[nr:1] Miscellaneous 248 Reconnect Services (135%)[nr:1] Pump- Replace Well Pump Well & Pump New Well & Pump (135%)[nr:1] Flow Meter Booster Pump 1 (135%)[nr:1] Water Storage Tank 125, Gal. Bolted Steel (135%)[nr:1] Total 28 - Water System 3,818,944 2,264,4 5 2,264,4 286, ,74 2,25 5 2,25 236, ,25 124, ,2 14, ,175 2,25 5 2,25 52,2 5 52,2 1, , 5 162, 1, , , ,75 3,88,944 Total [214/215 Replacement Project] Expenditures 2.5% Total Expenditures 2.5% 3,88,944 3,88,944 5,5 17,338 4,412 12,11 11,25 4,871 58, ,45 Total Current Replacement Cost 4,219,74 Version 2/1/215 3:42:1 PM Browning Reserve Group /15 to 228/29 6

13 See Section VI-b for Excluded Components 3 Year Expense Forecast - Detailed Reserve Component 229/3 23/31 231/32 232/33 233/34 234/35 235/36 236/37 237/38 238/39 239/4 24/41 241/42 242/43 243/ Existing Components 4 - Structural Repairs 93 - Building Maintenance 2 Skyline Drive Pump Houses Total 4 - Structural Repairs 28,41 28, Water System 15 - Pressure Relief Valves 4 Distribution Line PRV's 16 - Pressure Relief Valves 3 PRV Maintenance 21 - Well Meadow Well 25 - Pump- Replace 15 HP- Replace Pump- Re-build 15 HP- Rebuild 26 - Pump- Replace 3/4 HP- Replace Flow Meter Meadow Well Electrical Panel Meadow Well 3 - Water Storage Tank 22,3 Gal. Middle Tank 31 - Water Storage Tank 65,9 Gal. Upper Tank 9 - Miscellaneous Accumulator 91 - Miscellaneous Hi-Lo Switches, Panels, Sheds, Etc 92 - Miscellaneous Transmitters 93 - Miscellaneous Testing & Cleaning Sediment Total 28 - Water System 32 - Undesignated 1 - Miscellaneous Reserve Items Total 32 - Undesignated Total [Existing Components] Expenditures 2.5% 1,559 1,764 1, ,325 51,899 12,99 15,487 1,879 2,46 2,823 3,613 9,411 12,47 4,157 1,833 2,74 2,347 1,371 5,123 15,491 14,113 75,388 19,83 18,66 283,325 5,934 6,55 7,23 7,981 5,934 6,55 7,23 7,981 15,491 2,47 81,938 28,41 7,23 19,83 18,66 291, /215 Replacement Project 28 - Water System 21 - Distribution Line Repl. 2,963 Lin. Ft. Line Replace (135%)[nr:1] 27 - Service Lines 2,655 Lin. Ft. Dedicated Pump/Tank Line (135%)[nr:1] Service Lines Pump 2 Bypass Line (135%)[nr:1] Version 2/1/215 3:42:1 PM Browning Reserve Group /3 to 243/44 7

14 See Section VI-b for Excluded Components 3 Year Expense Forecast - Detailed Reserve Component 229/3 23/31 231/32 232/33 233/34 234/35 235/36 236/37 237/38 238/39 239/4 24/41 241/42 242/43 243/ Miscellaneous 5 Pressure Reducing Stations (135%)[nr:1] Valves 46 6" Gate Valves (135%)[nr:1] Miscellaneous 7 Blow-Off Assemblies (135%)[nr:1] Miscellaneous 1 ARVs (135%)[nr:1] Miscellaneous 248 Reconnect Services (135%)[nr:1] Pump- Replace Well Pump Well & Pump New Well & Pump (135%)[nr:1] Flow Meter Booster Pump 1 (135%)[nr:1] Water Storage Tank 125, Gal. Bolted Steel (135%)[nr:1] Total 28 - Water System 14,483 14,483 Total [214/215 Replacement Project] Expenditures 2.5% Total Expenditures 2.5% 14,483 14,483 15,491 2,47 81,938 28,41 7,23 19,83 18,66 291,36 Version 2/1/215 3:42:1 PM Browning Reserve Group /3 to 243/44 8

15 Section III 3 Year Reserve Funding Plan Cash Flow Method Beginning Balance Inflated 2.5% Reserve Contribution 245 Percentage Increase 214/15 215/16 216/17 217/18 218/19 219/2 22/21 221/22 222/23 223/24 137,694 16, ,88 132, , , , ,657 25,472 3,88,944 5,5 17,338 4,412 12,11 11,25 4,871 71,18 168,34 169, , ,44 175, , ,658 18, , % 1.% 1.% 1.% 1.% 1.% 1.% 1.% 1.% Special Assessments / Other 1 3,873, , , , , , , , , ,397 Interest After 2.5% Ending Balance 1) 1,7 3,16 2,885 3,22 3,569 4,15 4,637 5,99 5,767 8, ,694 16, ,88 132, , , , ,657 25, ,933 See Section III-b for important USDA loan repayment, water system project contribution and existing water system funding details. Additionally required USDA loan reserve funds are not included within this study's balances and are held within a separate account. Beginning Balance Inflated 2.5% Reserve Contribution 245 Percentage Increase Special Assessments / Other Interest After 2.5% Ending Balance 224/25 225/26 226/27 227/28 228/29 229/3 23/31 231/32 232/33 233/34 283, ,11 33, ,28 145, ,247 23, , ,37 28,158 58, ,45 14,483 15,491 2,47 184,71 184,71 184,71 184,71 184,71 184,71 184,71 184,71 184,71 184, %.%.%.%.%.%.%.%.%.% -152, , , , , , , , , ,397 7,494 7,737 7,986 6,35 4,34 4,746 5,282 5,762 6,447 7,4 323,11 33, ,28 145, ,247 23, , ,37 28, ,232 Beginning Balance Inflated 2.5% Reserve Contribution 245 Percentage Increase Special Assessments / Other Interest After 2.5% Ending Balance 234/35 235/36 236/37 237/38 238/39 239/4 24/41 241/42 242/43 243/44 319, , , , ,616 41, , ,89 494, ,3 81,938 28,41 7,23 19,83 18,66 291,36 184,71 184,71 184,71 184,71 184,71 184,71 184,71 184,71 184,71 184, %.%.%.%.%.%.%.%.%.% -152, , , , , , , , , ,397 8,377 8,354 8,33 8,975 9,636 1,579 11,297 11,897 12,761 1,23 359, , , ,616 41, , ,89 494, ,3 289,628 Version 2/1/215 3:42:1 PM Browning Reserve Group 215 9

16 Fund Balance Section III-a 3 Year Reserve Funding Plan Cash Flow Method - Ending Balances $6, $5, $4, $3, $2, $1, $ 214/15 215/16 216/17 217/18 218/19 219/2 22/21 221/22 222/23 223/24 224/25 225/26 226/27 227/28 228/29 229/3 23/31 231/32 232/33 233/34 234/35 235/36 236/37 237/38 238/39 239/4 24/41 241/42 242/43 243/44 Years Version 2/1/215 3:42:1 PM Browning Reserve Group 215 1

17 Section III-b 3 Year Reserve Funding Plan Special Assessments / Other Contributions Detail Funding Source 214/15 215/16 216/17 217/18 218/19 219/2 22/21 221/22 222/23 223/24 224/25 225/26 226/27 227/28 228/29 Existing Water System Accumulated Reserve Funds INFLOW USDA Loan INFLOW OUTFLOW Lump Sum Inflow: fp1 Lump Sum Inflow: fp1 3 Outflows: fp2 64,814 3,48,944 Funds transferred from the general reserve account for existing water system reserve obligations. -152, , , , , , , , , , , , , ,397 $3,48,944 loan with P&I repayment at $152,397/year for 4 years based on 3.25% interest per Water System Project report dated 1/1/215. Loan payback period 215/216 through 254/255. Water System Project Contribution INFLOW Lump Sum Inflow: fp1 4, Funds transferred from the general reserve account for the water project contribution. Net Total Other Contributions 3,873, , , , , , , , , , , , , , , Version 2/1/215 3:42:1 PM Browning Reserve Group /15 to 228/29

18 Funding PlanSpecial Assessments / Other Contributions Detail Funding Source 229/3 23/31 231/32 232/33 233/34 234/35 235/36 236/37 237/38 238/39 239/4 24/41 241/42 242/43 243/44 Existing Water System Accumulated Reserve Funds INFLOW USDA Loan INFLOW OUTFLOW Lump Sum Inflow: fp1 Lump Sum Inflow: fp1 3 Outflows: fp2-152,397 Funds transferred from the general reserve account for existing water system reserve obligations. -152, , , , , , , , , , , , , ,397 $3,48,944 loan with P&I repayment at $152,397/year for 4 years based on 3.25% interest per Water System Project report dated 1/1/215. Loan payback period 215/216 through 254/255. Water System Project Contribution INFLOW Lump Sum Inflow: fp1 Funds transferred from the general reserve account for the water project contribution. Net Total Other Contributions -152, , , , , , , , , , , , , , , Version 2/1/215 3:42:1 PM Browning Reserve Group /3 to 243/44

19 Section IV 3 Year Reserve Funding Plan Including Fully Funded Balance and % Funded Year Beginning Balance Fully Funded Balance Percent Funded Inflated 2.5% Reserve Contribution Special Assessments & Other Contributions 214/15 4,17,43 3.4% 3,88,944 71,18 3,873,758 1,7 137, /16 137, , % 5,5 168,34-152,397 3,16 16, /17 16,612 23, % 169, ,397 2, ,88 217/18 127,88 227,93 58.% 17, , ,397 3,22 132, /19 132, , % 173,44-152,397 3, , /2 156,817 26, % 4, , ,397 4,15 179,295 22/21 179, , % 12,11 176, ,397 4, , /22 196, , % 11,25 178, ,397 5,99 216, /23 216, , % 18, ,397 5,767 25, /24 25, ,65 82.% 4, , ,397 8, , /25 283, , % 184,71-152,397 7, ,11 225/26 323,11 44, % 58, ,71-152,397 7,737 33, /27 33, , % 184,71-152,397 7, ,28 227/28 343,28 411, % 235,45 184,71-152,397 6,35 145, /29 145,539 25, % 184,71-152,397 4,34 181, /3 181, , % 14, ,71-152,397 4,746 23,184 23/31 23, , % 15, ,71-152,397 5, , /32 224, , % 2,47 184,71-152,397 5, ,37 232/33 242,37 283, % 184,71-152,397 6,447 28, /34 28, ,48 1.3% 184,71-152,397 7,4 319, /35 319, , % 184,71-152,397 8, , /36 359, ,42 8.7% 81, ,71-152,397 8, , /37 317, , % 184,71-152,397 8,33 357, /38 357, ,86 95.% 28,41 184,71-152,397 8, , /39 369,616 41, % 184,71-152,397 9,636 41, /4 41, , % 7,23 184,71-152,397 1, ,948 24/41 445,948 48, % 19,83 184,71-152,397 11, ,89 241/42 469,89 56, % 18,66 184,71-152,397 11, , /43 494, , % 184,71-152,397 12, ,3 243/44 539,3 585, % 291,36 184,71-152,397 1,23 289,628 Interest Ending Balance Version 2/1/215 3:42:1 PM Browning Reserve Group

20 Percent Funded Section IV-a 3 Year Reserve Funding Plan Cash Flow Method - Percent Funded /15 215/16 216/17 217/18 218/19 219/2 22/21 221/22 222/23 223/24 224/25 225/26 226/27 227/28 228/29 229/3 23/31 231/32 232/33 233/34 234/35 235/36 236/37 237/38 238/39 239/4 24/41 241/42 242/43 243/44 Years /1/215 6uwov :m Version 2/1/215 3:42:1 PM Browning Reserve Group

21 Section V Reserve Fund Balance Forecast Component Method Reserve Component Current Repl. Cost Useful Life Remaining Life Estimated Future Replacement Costs Per Year 214/215 Fully Funded Balance 215/216 Fully Funded Balance % Per Year Straight Line 215/216 Line Item Contribution based on Cash Flow Method 3 - Existing Components 4 - Structural Repairs 93 - Building Maintenance 2 Skyline Drive Pump Houses 28 - Water System 15 - Pressure Relief Valves 4 Distribution Line PRV's 16 - Pressure Relief Valves 3 PRV Maintenance 21 - Well Meadow Well 25 - Pump- Replace 15 HP- Replace Pump- Re-build 15 HP- Rebuild 26 - Pump- Replace 3/4 HP- Replace Flow Meter Meadow Well Electrical Panel Meadow Well 3 - Water Storage Tank 22,3 Gal. Middle Tank 31 - Water Storage Tank 65,9 Gal. Upper Tank 9 - Miscellaneous Accumulator 91 - Miscellaneous Hi-Lo Switches, Panels, Sheds, Etc 92 - Miscellaneous Transmitters 93 - Miscellaneous Testing & Cleaning Sediment 16, ,338 1,734 11,27 13,22 7.6% 12,798 29, ,592 8,38.% 1, , ,76.94% 1, , ,325 7,83 38,74 42, % 52,283 3, ,673 3,167 27,81 31, % 23,379 8, , ,26 4, % 6,977 1, , % 1,84 1, , % 1,628 6, , ,856 2, % 5,427 53, ,267 1,857 36,366 38, % 13,75 96, ,612 3,34 65,424 69, % 24,656 2, , ,228 2, % 1,873 1, , , % 1,869 6, , ,558 6, % 4,672 3, , ,745 3, % 2,38 Sub-total [28 - Water System] 38,76 557,688 19, , , % 141,448 Version 2/1/215 3:42:1 PM Browning Reserve Group

22 Reserve Fund Balance Forecast Component Method Reserve Component Current Repl. Cost Useful Life Remaining Life Estimated Future Replacement Costs Per Year 214/215 Fully Funded Balance 215/216 Fully Funded Balance % Per Year Straight Line 215/216 Line Item Contribution based on Cash Flow Method 3 - Existing Components 32 - Undesignated 1 - Miscellaneous Reserve Items 3, , ,925 3, % 7,377 Sub-total Existing Components 4,76 579,24 21,896 27,861 23, % 161, /215 Replacement Project 28 - Water System 21 - Distribution Line Repl. 2,963 Lin. Ft. Line Replace (135%)[nr:1] 27 - Service Lines 2,655 Lin. Ft. Dedicated Pump/Tank Line (135%)[nr:1] Service Lines Pump 2 Bypass Line (135%)[nr:1] Miscellaneous 5 Pressure Reducing Stations (135%)[nr:1] Valves 46 6" Gate Valves (135%)[nr:1] Miscellaneous 7 Blow-Off Assemblies (135%)[nr:1] Miscellaneous 1 ARVs (135%)[nr:1] Miscellaneous 248 Reconnect Services (135%)[nr:1] Pump- Replace Well Pump Well & Pump New Well & Pump (135%)[nr:1] Flow Meter Booster Pump 1 (135%)[nr:1] Water Storage Tank 125, Gal. Bolted Steel (135%)[nr:1] 2,264,4 5 2,264,4.% 286, ,74.% 2,25 5 2,25.% 236, ,25.% 124, ,2.% 14, ,175.% 2,25 5 2,25.% 52,2 5 52,2.% 1, , % 6, , 5 162,.% 1, ,125.% 168, ,75.% Sub-total [28 - Water System] 3,818,944 14, ,89, % 6,682 Sub-total 214/215 Replacement Project 3,818,944 14, ,89, % 6,682 Totals 4,219,74 593,57 22,81 4,17,43 231,22 1.% 168,34 [A] [EndBal] [A] [B] [EndBal] [B] Percent Funded 3.43% 46.15% Version 2/1/215 3:42:1 PM Browning Reserve Group

23 Section VI Component Listing Included Components Existing Components Structural Repairs 93 - Building Maintenance Useful Life 1 2 Skyline Drive Pump Houses Quantity 2 Unit of Measure Building Cost /Bldg $8,5 This is to repair and maintain the middle and upper pump houses. 1.% Total Cost/Study $16,1 Replacement Year 217/218 Future Cost $17, Water System 15 - Pressure Relief Valves Useful Life 5 4 Distribution Line PRV's Quantity 4 Unit of Measure Items Cost /Itm $7,3 This is to install new pressure relief valves along distribution lines % Total Cost/Study $29,2 Replacement Year 251/252 Future Cost $72, Pressure Relief Valves Useful Life 5 3 PRV Maintenance Quantity 3 Unit of Measure Items Cost /Itm $35 1.% Total Cost/Study $1,5 Replacement Year 215/216 Future Cost $1,76 This is for regular ongoing pressure relief valve inspections and maintenance Well Useful Life 4 Meadow Well Quantity 1 Unit of Measure Items This is to replace the 78' well. Cost /Itm $138,45 22/23- This work completed including electrical components % Total Cost/Study $138,45 Replacement Year 243/244 Future Cost $283, Pump- Replace Useful Life 1 15 HP- Replace Quantity 1 Unit of Measure Lump Sum Cost /LS $3,9 1.% Total Cost/Study $3,9 Replacement Year 215/216 Future Cost $31,672 This is to replace the 15 HP pump motor. Pump rebuild is provided for within another component. 1 Version 2/1/215 3:42:1 PM Browning Reserve Group

24 Component Listing Included Components Existing Components Water System Pump- Re-build Useful Life 1 15 HP- Rebuild Quantity 1 Unit of Measure Lump Sum Cost /LS $8,15 1.% Total Cost/Study $8,15 Replacement Year 22/221 Future Cost $9,452 This is to rebuild the pump. Pump replacement is provided for within another component. 29/21- Cost estimate increased per client to add electrical work at pump Pump- Replace Useful Life 1 3/4 HP- Replace Quantity 1 Unit of Measure Lump Sum This is to replace the 3/4 HP pump motor (pony). Cost /LS $1,235 1.% Total Cost/Study $1,235 Replacement Year 221/222 Future Cost $1, /213- Per client, this has been replaced so the remaining life is reset to full Flow Meter Useful Life 1 Meadow Well Quantity 1 Unit of Measure Items This is to replace the well flow meter. Cost /Itm $1,855 1.% Total Cost/Study $1,855 Replacement Year 221/222 Future Cost $2,25 212/213- Per client, this has been replaced so the remaining life is reset to full Electrical Panel Useful Life 1 Meadow Well Quantity 1 Unit of Measure Lump Sum Cost /LS $6,185 This is to maintain, repair and replace the well electrical panel. 1.% Total Cost/Study $6,185 Replacement Year 221/222 Future Cost $7, Per client, this has been replaced so the remaining life is reset to full Water Storage Tank Useful Life 4 22,3 Gal. Middle Tank Quantity 22,3 Unit of Measure Gallon Cost /Gal $ % Total Cost/Study $53,875 Replacement Year 227/228 Future Cost $74,267 This is to maintain and replace the 22,3 gallon water tank, perform complete water testing, drain and re-coat the tank Tank placed in service. Version 2/1/215 3:42:1 PM Browning Reserve Group

25 Component Listing Included Components Existing Components Water System 31 - Water Storage Tank Useful Life 4 65,9 Gal. Upper Tank Quantity 65,9 Unit of Measure Gallon Cost /Gal $ % Total Cost/Study $96,925 Replacement Year 227/228 Future Cost $133,612 This is to maintain and replace the 65,9 gallon water tank, perform complete water testing, drain and re-coat the tank Tank placed in service. 9 - Miscellaneous Useful Life 1 Accumulator Quantity 1 Unit of Measure Lump Sum Cost /LS $2,475 1.% Total Cost/Study $2,475 Replacement Year 215/216 Future Cost $2,537 This is to replace the accumulator with the pumps motor. May not be needed with new system. 212/213- Per client, this can be extended from 213/214 to 214/ Miscellaneous Useful Life 5 Hi-Lo Switches, Panels, Sheds, Etc Quantity 1 Unit of Measure Lump Sum Cost /LS $1,235 This is to maintain the high-low switches, electrical panels, sheds, etc. 1.% Total Cost/Study $1,235 Replacement Year 215/216 Future Cost $1, Miscellaneous Useful Life 1 Transmitters Quantity 1 Unit of Measure Lump Sum This is to maintain the radio transmitters. Cost /LS $6,175 1.% Total Cost/Study $6,175 Replacement Year 215/216 Future Cost $6, Miscellaneous Useful Life 1 Testing & Cleaning Sediment Quantity 1 Unit of Measure Lump Sum Cost /LS $3,5 1.% Total Cost/Study $3,5 Replacement Year 215/216 Future Cost $3,126 This is to inspect, clean and test the water tanks and measure accumulation levels. 1 Version 2/1/215 3:42:1 PM Browning Reserve Group

26 Component Listing Included Components Existing Components Undesignated 1 - Miscellaneous Useful Life 4 Reserve Items Quantity 1 Unit of Measure Lump Sum Cost /LS $3,9 This is for major unanticipated reserve component repairs. 1.% Total Cost/Study $3,9 Replacement Year 215/216 Future Cost $3, /215 Replacement Project Water System 21 - Distribution Line Repl. Useful Life 5 2,963 Lin. Ft. Line Replace (135%) Quantity 2,963 Unit of Measure Linear Feet Cost /l.f. $8. Qty * $/l.f. $1,677,4 135.% Treatment [nr:1] Total Cost/Study $2,264,4 Replacement Year 214/215 Future Cost $2,264,4 This is to replace existing line with 6" line including construction contingency, engineering & administration and construction management overheads. 214/215- $1,677,4 cost, 2,963 lf quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/ Service Lines 2,655 Lin. Ft. Dedicated Pump/Tank Line (135%) Useful Life 5 Quantity 2,655 Unit of Measure Linear Feet Cost /l.f. $8. Qty * $/l.f. $212,4 135.% Treatment [nr:1] Total Cost/Study $286,74 Replacement Year 214/215 Future Cost $286,74 This is for dedicated pump/tank 6" line including construction contingency, engineering & administration and construction management overheads. 214/215- $212,4 cost, 2,655 lf quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/ Service Lines Useful Life 5 Pump 2 Bypass Line (135%) Quantity 1 Unit of Measure Lump Sum Cost /LS $15, Qty * $/LS $15, 135.% Treatment [nr:1] Total Cost/Study $2,25 Replacement Year 214/215 Future Cost $2,25 This is for 6" pump 2 bypass line including construction contingency, engineering & administration and construction management overheads. 214/215- $15, cost and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/215. Version 2/1/215 3:42:1 PM Browning Reserve Group 215 2

27 Component Listing Included Components /215 Replacement Project Water System Miscellaneous Useful Life 5 5 Pressure Reducing Stations (135%) Quantity 5 Unit of Measure Items Cost /Itm $35, Qty * $/Itm $175, 135.% Treatment [nr:1] Total Cost/Study $236,25 Replacement Year 214/215 Future Cost $236,25 This is for the pressure reducing stations including construction contingency, engineering & administration and construction management overheads. 214/215- $175, cost, 5 item quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/ Valves Useful Life " Gate Valves (135%) Quantity 46 Unit of Measure Items Cost /Itm $2, Qty * $/Itm $92, 135.% Treatment [nr:1] Total Cost/Study $124,2 Replacement Year 214/215 Future Cost $124,2 This is for the 6" gate valves including construction contingency, engineering & administration and construction management overheads. 214/215- $92, cost, 46 item quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/ Miscellaneous Useful Life 5 7 Blow-Off Assemblies (135%) Quantity 7 Unit of Measure Items Cost /Itm $1,5 Qty * $/Itm $1,5 135.% Treatment [nr:1] Total Cost/Study $14,175 Replacement Year 214/215 Future Cost $14,175 This is for the blow-off assemblies including construction contingency, engineering & administration and construction management overheads. 214/215- $1,5 cost, 7 item quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/ Miscellaneous Useful Life 5 1 ARVs (135%) Quantity 1 Unit of Measure Items Cost /Itm $1,5 Qty * $/Itm $15, 135.% Treatment [nr:1] Total Cost/Study $2,25 Replacement Year 214/215 Future Cost $2,25 This is for the ARVs including construction contingency, engineering & administration and construction management overheads. 214/215- $15, cost, 1 item quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/215. Version 2/1/215 3:42:1 PM Browning Reserve Group

28 Component Listing Included Components /215 Replacement Project Water System Miscellaneous Useful Life Reconnect Services (135%) Quantity 248 Unit of Measure Items Cost /Itm $1,5 Qty * $/Itm $372, 135.% Treatment [nr:1] Total Cost/Study $52,2 Replacement Year 214/215 Future Cost $52,2 This is for reconnect services including construction contingency, engineering & administration and construction management overheads. 214/215- $372, cost, 248 item quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/ Pump- Replace Useful Life 15 Well Pump Quantity 1 Unit of Measure Items This is to repair and replace the well pump. Cost /Itm $1, 15 1.% Total Cost/Study $1, Replacement Year 229/23 Future Cost $14, /215- $1, cost and 15 year life estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/ Well & Pump Useful Life 5 New Well & Pump (135%) Quantity 1 Unit of Measure Lump Sum Cost /LS $12, Qty * $/LS $12, 135.% Treatment [nr:1] Total Cost/Study $162, Replacement Year 214/215 Future Cost $162, This is for a new well and pump including construction contingency, engineering & administration and construction management overheads. 214/215- $12, cost, single item quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/ Flow Meter Useful Life 5 Booster Pump 1 (135%) Quantity 1 Unit of Measure Items Cost /Itm $7,5 Qty * $/Itm $7,5 135.% Treatment [nr:1] Total Cost/Study $1,125 Replacement Year 214/215 Future Cost $1,125 This is for the booster pump #1 flow meter including construction contingency, engineering & administration and construction management overheads. 214/215- $7,5 cost, single item quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/215. Version 2/1/215 3:42:1 PM Browning Reserve Group

29 Component Listing Included Components /215 Replacement Project Water System Water Storage Tank Useful Life 5 125, Gal. Bolted Steel (135%) Quantity 125, Unit of Measure Gallon Cost /Gal $1. Qty * $/Gal $125, 135.% Treatment [nr:1] Total Cost/Study $168,75 Replacement Year 214/215 Future Cost $168,75 This is for the bolted steel storage tank including construction contingency, engineering & administration and construction management overheads. 214/215- $125, cost, 125, gallon capacity, single item quantity and 35% overhead estimates per Weber, Ghio & Associations, Inc Water System Replacement Project report dated 1/15/215. Version 2/1/215 3:42:1 PM Browning Reserve Group

30 Section VI-b Component Listing Excluded Components /215 Replacement Project Water System 4 - Distribution Line Repl. Useful Life 8 Phase 1- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $512,5 Replacement Year N/A 1.% Total Cost/Study $512,5 1 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase one cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report. 213/214- $1,5 expended to revise water system proposal in Sept 213. Client advised that Phase 1 project will begin in June 214 with an estimated expense of $5,. Client to provide payment schedule as project progresses. BRG moved project to the 214/215 fiscal year due to June start date. 212/213- The board has resolved to do this project phase in 213/214 to see what the impact is on the community and the reserve fund Distribution Line Repl. Useful Life 8 Phase 2- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 1.% Total Cost/Study $525,3 6 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase two cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report Distribution Line Repl. Useful Life 8 Phase 3- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 13 1.% Total Cost/Study $525,3 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase three cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report. Version 2/1/215 3:42:1 PM Browning Reserve Group

31 /215 Replacement Project Water System Distribution Line Repl. Useful Life 8 Component Listing Excluded Components Phase 4- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 2 1.% Total Cost/Study $525,3 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase four cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report Distribution Line Repl. Useful Life 8 Phase 5- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 27 1.% Total Cost/Study $525,3 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase five cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report Distribution Line Repl. Useful Life 8 Phase 6- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 34 1.% Total Cost/Study $525,3 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase six cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report Distribution Line Repl. Useful Life 8 Phase 7- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 41 1.% Total Cost/Study $525,3 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase seven cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report. Version 2/1/215 3:42:1 PM Browning Reserve Group

32 /215 Replacement Project Water System Distribution Line Repl. Useful Life 8 Component Listing Excluded Components Phase 8- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 48 1.% Total Cost/Study $525,3 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase eight cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report Distribution Line Repl. Useful Life 8 Phase 9- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 55 1.% Total Cost/Study $525,3 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase nine cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report Distribution Line Repl. Useful Life 8 Phase 1- Multiyear Project Quantity 1 Unit of Measure Lump Sum Cost /LS $525,3 Replacement Year N/A 62 1.% Total Cost/Study $525,3 Future Cost N/A This is to replace the distribution piping with 4" line. This is the estimated project phase ten cost. The actual project costs may vary as the work is put out to bid. Water service connection fees estimated at $25, are not included at this time. Administrative costs are in a separate line item. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report Water Storage Tank Useful Life 3 2 New 6k Gal Storage Near Tank 2 Quantity 2 Unit of Measure Items Cost /Itm $71,963 Replacement Year N/A 13 1.% Total Cost/Study $143,925 Future Cost N/A This is to install approximately 6, gallons of new storage near tank 2 and perform complete water testing. This is recommended in the engineering report based on build-out of lots. The consultant may be recommending that a pair of 27,+/- gallon tanks be installed instead. This work is to coincide with phase 3 of the water project. 214/215- Excluded this component based on 1/15/215 Water System Replacement Preliminary Engineering Report. Version 2/1/215 3:42:1 PM Browning Reserve Group

33 Section VII Component Tabular Listing Included Components Component Current Replacement Cost Useful Life Remaining Life Quantity Cost/ U of M Treatment Location Existing Components Structural Repairs 93 - Building Maintenance $16, $8,5/Bldg Skyline Drive Pump Houses 28 - Water System 15 - Pressure Relief Valves $29, $7,3/Itm Distribution Line PRV's 16 - Pressure Relief Valves $1, $35/Itm PRV Maintenance 21 - Well $138, $138,45/Itm Meadow Well 25 - Pump- Replace $3, $3,9/LS 15 HP- Replace Pump- Re-build $8, $8,15/LS 15 HP- Rebuild 26 - Pump- Replace $1, $1,235/LS 3/4 HP- Replace Flow Meter $1, $1,855/Itm Meadow Well Electrical Panel $6, $6,185/LS Meadow Well 3 - Water Storage Tank $53, ,3 $2.42/Gal Middle Tank 31 - Water Storage Tank $96, ,9 $1.47/Gal Upper Tank 9 - Miscellaneous $2, $2,475/LS Accumulator 91 - Miscellaneous $1, $1,235/LS Hi-Lo Switches, Panels, Sheds, Etc 92 - Miscellaneous $6, $6,175/LS Transmitters 93 - Miscellaneous $3, $3,5/LS Testing & Cleaning Sediment 32 - Undesignated 1 - Miscellaneous $3, $3,9/LS Reserve Items /215 Replacement Project Water System 21 - Distribution Line Repl. $2,264,4 5 2,963 $8./l.f. (135%) [nr:1] Line Replace 27 - Service Lines $286,74 5 2,655 $8./l.f. (135%) [nr:1] Dedicated Pump/Tank Line Service Lines $2, $15,/LS (135%) [nr:1] Pump 2 Bypass Line Miscellaneous $236, $35,/Itm (135%) [nr:1] Pressure Reducing Stations Valves $124, $2,/Itm (135%) [nr:1] 6" Gate Valves Miscellaneous $14, $1,5/Itm (135%) [nr:1] Blow-Off Assemblies Miscellaneous $2, $1,5/Itm (135%) [nr:1] ARVs Version 2/1/215 3:42:1 PM Browning Reserve Group

34 Component Tabular Listing Component Current Replacement Cost Useful Life Remaining Life Quantity Cost/ U of M Treatment Location Included Components /215 Replacement Project Water System Miscellaneous $52, $1,5/Itm (135%) [nr:1] Reconnect Services Pump- Replace $1, $1,/Itm Well Pump Well & Pump $162, 5 1 $12,/LS (135%) [nr:1] New Well & Pump Flow Meter $1, $7,5/Itm (135%) [nr:1] Booster Pump Water Storage Tank $168, , $1./Gal (135%) [nr:1] Bolted Steel Version 2/1/215 3:42:1 PM Browning Reserve Group

35 Component Tabular Listing Component Current Replacement Cost Useful Life Remaining Life Quantity Cost/ U of M Treatment Location Excluded Components /215 Replacement Project Water System 4 - Distribution Line Repl. $512, $512,5/LS Phase 1- Multiyear Project 44 - Distribution Line Repl. $525, $525,3/LS Phase 2- Multiyear Project 48 - Distribution Line Repl. $525, $525,3/LS Phase 3- Multiyear Project Distribution Line Repl. $525, $525,3/LS Phase 4- Multiyear Project Distribution Line Repl. $525, $525,3/LS Phase 5- Multiyear Project 42 - Distribution Line Repl. $525, $525,3/LS Phase 6- Multiyear Project Distribution Line Repl. $525, $525,3/LS Phase 7- Multiyear Project Distribution Line Repl. $525, $525,3/LS Phase 8- Multiyear Project Distribution Line Repl. $525, $525,3/LS Phase 9- Multiyear Project Distribution Line Repl. $525, $525,3/LS Phase 1- Multiyear Project 48 - Water Storage Tank $143, $71,963/Itm New 6k Gal Storage Near Tank 2 Version 2/1/215 3:42:1 PM Browning Reserve Group

36 Section VII-a Expenditures by Year - Next 3 Years Reserve Component Life Useful Current Replacement Cost Forecast Inflated 2.5% 214/ /215 Replacement Project Water System 21 - Distribution Line Repl. 2,963 Lin. Ft. Line Replace (135%)[nr:1] 5 2,264, Service Lines 2,655 Lin. Ft. Dedicated Pump/Tank Line (135%)[nr:1] 5 286, Service Lines Pump 2 Bypass Line (135%)[nr:1] 5 2, Miscellaneous 5 Pressure Reducing Stations (135%)[nr:1] 5 236, Valves 46 6" Gate Valves (135%)[nr:1] 5 124, Miscellaneous 7 Blow-Off Assemblies (135%)[nr:1] 5 14, Miscellaneous 1 ARVs (135%)[nr:1] 5 2, Miscellaneous 248 Reconnect Services (135%)[nr:1] 5 52, Well & Pump New Well & Pump (135%)[nr:1] 5 162, Flow Meter Booster Pump 1 (135%)[nr:1] 5 1, Water Storage Tank 125, Gal. Bolted Steel (135%)[nr:1] 5 168,75 Total 214/15: 3,88, / Non Replacement Project Components 28 - Water System 16 - Pressure Relief Valves 3 PRV Maintenance 25 - Pump- Replace 15 HP- Replace 9 - Miscellaneous Accumulator 91 - Miscellaneous Hi-Lo Switches, Panels, Sheds, Etc 92 - Miscellaneous Transmitters 93 - Miscellaneous Testing & Cleaning Sediment 32 - Undesignated 1 - Miscellaneous Reserve Items Total 28 - Water System: 44, ,5 1,76 1 3,9 31, ,475 2, ,235 1, ,175 6, ,5 3,126 46,6 4 3,9 3, /1/215 6uwov :mm.* Version 2/1/215 3:42:1 PM Browning Reserve Group 215 3

37 Reserve Component 215/16 Life Useful Expenditures by Year- Next 3 Years Current Replacement Cost Forecast Inflated 2.5% Total 215/16: 48,785 5, /1/215 6uwov :mm.* Version 2/1/215 3:42:1 PM Browning Reserve Group

38 Section X Notes to the Auditor This report is intended to assist the auditor while preparing the audit, review or compilation of s (the "Association") financial documents. Browning Reserve Group ("BRG") prepared a reserve study for the Association during the 214/215 fiscal year. This was done to help determine the Association's reserve contribution for the next fiscal year (215/216) and future fiscal years. In addition, BRG prepared the proper statutory disclosures for distribution to the Association members. This reserve study is an Update w/o Site Visit Review. An Update Without Site-Visit Review is an update with no on-site visual observation upon where the following tasks are performed: life and valuation estimates; fund status; and a funding plan. Please note, as this study update did not require a site visit, and relied completely on the information provided, it is possible BRG has never visited Sky High Ranch of Calaveras Water System. For BRG reserve studies, the year in which the study is being conducted, is the first year of the study. For example, this study is being prepared during 214/215 and is the Association s first year in the study. This enables BRG to use a starting point which ties to the last audited financial statement, June 3, 214. You will notice in Section III, Reserve Fund Balance Forecast, a Beginning Reserve Balance of $ is being used which ties to the last completed audit or review of the Association s financial statements. BRG then re-builds the first year of the study, in this case 214/215, and estimates an ending reserve fund balance. Again, see Section III and the 214/215 ending reserve balance estimate of $137,694. Re-building the first year of the study as mentioned above simply means using the 214/215 adopted budget for the 214/215 reserve contribution. Finally, the 214/215 reserve expenses both actual and projected are estimated. We find by using the above method a more accurate reserve study is possible because the beginning reserve fund balance ties directly to the Association s audited financial statement or, in the absence of an audit or review, the year end balance sheet. There is no need to rely on others for determining mid year reserve balances or estimating current year ending reserve balances. This approach forces all involved, to look at the current year s reserve fund activities so a more accurate ending reserve fund balance can be estimated. Version 2/1/215 3:42:1 PM Browning Reserve Group

39 Notes to the Auditor With respect to the reserve component Percent Funded values on the next page(s), here are the calculations: FFB = Year Cost X Year Effective Age / Useful Life % Funded = Year Estimated Ending Reserve Balance / Year FFB Please see Section V - Reserve Fund Balance Forecast. Browning Reserve Group Version 2/1/215 3:42:1 PM Browning Reserve Group

40 Schedule of Supplementary Information for Auditor Component Method Reserve Component Current Repl. Cost Useful Life Remaining Life 214/215 Fully Funded Balance 215/216 Fully Funded Balance 215/216 Line Item Contribution based on Cash Flow Method 3 - Existing Components 4 - Structural Repairs 93 - Building Maintenance 2 Skyline Drive Pump Houses 28 - Water System 15 - Pressure Relief Valves 4 Distribution Line PRV's 16 - Pressure Relief Valves 3 PRV Maintenance 21 - Well Meadow Well 25 - Pump- Replace 15 HP- Replace Pump- Re-build 15 HP- Rebuild 26 - Pump- Replace 3/4 HP- Replace Flow Meter Meadow Well Electrical Panel Meadow Well 3 - Water Storage Tank 22,3 Gal. Middle Tank 31 - Water Storage Tank 65,9 Gal. Upper Tank 9 - Miscellaneous Accumulator 91 - Miscellaneous Hi-Lo Switches, Panels, Sheds, Etc 92 - Miscellaneous Transmitters 93 - Miscellaneous Testing & Cleaning Sediment 32 - Undesignated 1 - Miscellaneous Reserve Items 16, ,27 13,22 12,798 29, ,592 8,38 1, ,76 1, , ,74 42,573 52,283 3, ,81 31,673 23,379 8, ,26 4,177 6,977 1, ,84 1, ,628 6, ,856 2,536 5,427 53, ,366 38,655 13,75 96, ,424 69,544 24,656 2, ,228 2,537 1,873 1, ,266 1,869 6, ,558 6,329 4,672 3, ,745 3,126 2,38 3, ,925 3,998 7,377 Sub-total Existing Components 4,76 27,861 23, , /215 Replacement Project 28 - Water System 21 - Distribution Line Repl. 2,963 Lin. Ft. Line Replace (135%)[nr:1] 27 - Service Lines 2,655 Lin. Ft. Dedicated Pump/Tank Line (135%)[nr:1] Service Lines Pump 2 Bypass Line (135%)[nr:1] Miscellaneous 5 Pressure Reducing Stations (135%)[nr:1] Valves 46 6" Gate Valves (135%)[nr:1] Miscellaneous 7 Blow-Off Assemblies (135%)[nr:1] Miscellaneous 1 ARVs (135%)[nr:1] 2,264,4 5 2,264,4 286, ,74 2,25 5 2,25 236, ,25 124, ,2 14, ,175 2,25 5 2, /1/215 June 3 Version 2/1/215 3:42:1 PM Browning Reserve Group

41 Schedule of Supplementary Information for AuditorComponent Method Reserve Component Current Repl. Cost Useful Life Remaining Life 214/215 Fully Funded Balance 215/216 Fully Funded Balance 215/216 Line Item Contribution based on Cash Flow Method 6-214/215 Replacement Project 28 - Water System Miscellaneous 248 Reconnect Services (135%)[nr:1] Pump- Replace Well Pump Well & Pump New Well & Pump (135%)[nr:1] Flow Meter Booster Pump 1 (135%)[nr:1] Water Storage Tank 125, Gal. Bolted Steel (135%)[nr:1] 52,2 5 52,2 1, , , 5 162, 1, , , ,75 Sub-total 214/215 Replacement Project 3,818,944 3,89, ,682 Totals 4,219,74 4,17,43 231,22 168,34 [A] [B] Percent Funded [EndBal] [A] 3.43% [EndBal] [B] 46.15% /1/215 June 3 Version 2/1/215 3:42:1 PM Browning Reserve Group

42 Section XI Glossary of Reserve Study Terms Terms & Definitions CAI CASH FLOW METHOD: A method of developing a Reserve Funding Plan where contributions to the Reserve fund are designed to offset the variable annual expenditures from the Reserve fund. Different Reserve Funding Plans are tested against the anticipated schedule of Reserve expenses until the desired Funding Goal is achieved. COMPONENT INVENTORY: The task of selecting and quantifying Reserve Components. This task can be accomplished through on-site visual observations, review of association design and organizational documents, a review of established association precedents, and discussion with appropriate representative(s) of the association or cooperative. COMPONENT METHOD: A method of developing a Reserve Funding Plan where the total contribution is based on the sum of contributions for individual components. See Cash Flow Method. COMPONENT: The individual line items in the Reserve Study, developed or updated in the Physical Analysis. These elements form the building blocks for the Reserve Study. Components typically are: 1) Association responsibility, 2) with limited Useful Life expectancies, 3) predictable Remaining Useful Life expectancies, 4) above a minimum threshold cost, and 5) as required by local codes. CONDITION ASSESSMENT: The task of evaluating the current condition of the component based on observed or reported characteristics. CURRENT REPLACEMENT COST: See Replacement Cost." DEFICIT: An actual (or projected) Reserve Balance less than the Fully Funded Balance. The opposite would be a Surplus. EFFECTIVE AGE: The difference between Useful Life and Remaining Useful Life. Not always equivalent to chronological age, since some components age irregularly. Used primarily in computations. FINANCIAL ANALYSIS: The portion of a Reserve Study where current status of the Reserves (measured as cash or Percent Funded) and a recommended Reserve contribution rate (Reserve Funding Plan) are derived, and the projected Reserve income and expense over time is presented. The Financial Analysis is one of the two parts of a Reserve Study. Version 2/1/215 3:42:1 PM Browning Reserve Group

43 Glossaryof Reserve Study Terms FULLY FUNDED BALANCE (FFB): Total Accrued Depreciation. An indicator against which Actual (or projected) Reserve balance can be compared. The Reserve balance that is in direct proportion to the fraction of life used up of the current Repair or Replacement cost. This number is calculated for each component, then summed together for an association total. Two formulae can be utilized, depending on the provider s sensitivity to interest and inflation effects. Note: Both yield identical results when interest and inflation are equivalent. FFB = Current Cost X Effective Age / Useful Life or FFB = (Current Cost X Effective Age / Useful Life) + [(Current Cost X Effective Age / Useful Life) / (1 + Interest Rate) ^ ] - [(Current Cost X Effective Age / Useful Life) / (1 + Inflation Rate) ^ ] FULLY FUNDED: 1% Funded. When the actual (or projected) Reserve balance is equal to the Fully Funded Balance. FUND STATUS: The status of the reserve fund as compared to an established benchmark such as percent funding. FUNDING GOALS: Independent of methodology utilized, the following represent the basic categories of Funding Plan goals: Baseline Funding: Full Funding: Statutory Funding: Establishing a Reserve funding goal of keeping the Reserve cash balance above zero. Setting a Reserve funding goal of attaining and maintaining Reserves at or near 1% funded. Establishing a Reserve funding goal of setting aside the specific minimum amount of Reserves required by local statues. Threshold Funding: Establishing a Reserve funding goal of keeping the Reserve balance above a specified dollar or Percent Funded amount. Depending on the threshold, this may be more or less conservative than Fully Funding." FUNDING PLAN: An association s plan to provide income to a Reserve fund to offset anticipated expenditures from that fund. FUNDING PRINCIPLES: Sufficient Funds When Required Stable Contribution Rate over the Years Evenly Distributed Contributions over the Years Fiscally Responsible LIFE AND VALUATION ESTIMATES: The task of estimating Useful Life, Remaining Useful Life, and Repair or Replacement Costs for the Reserve components. PERCENT FUNDED: The ratio, at a particular point of time (typically the beginning of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage. PHYSICAL ANALYSIS: The portion of the Reserve Study where the Component Inventory, Condition Assessment, and Life and Valuation Estimate tasks are performed. This represents one of the two parts of the Reserve Study. Version 2/1/215 3:42:1 PM Browning Reserve Group

44 Glossaryof Reserve Study Terms REMAINING USEFUL LIFE (RUL): Also referred to as (RL). The estimated time, in years, that a reserve component can be expected to continue to serve its intended function. Projects anticipated to occur in the initial year have zero Remaining Useful Life. REPLACEMENT COST: The cost of replacing, repairing, or restoring a Reserve Component to its original functional condition. The Current Replacement Cost would be the cost to replace, repair, or restore the component during that particular year. RESERVE BALANCE: Actual or projected funds as of a particular point in time that the association has identified for use to defray the future repair or replacement of those major components which the association is obligated to maintain. Also known as Reserves, Reserve Accounts and Cash Reserves. Based upon information provided and not audited. RESERVE PROVIDER: An individual that prepares Reserve Studies. RESERVE STUDY: A budget planning tool which identifies the current status of the Reserve fund and a stable and equitable Funding Plan to offset the anticipated future major common area expenditures. The Reserve Study consists of two parts: the Physical Analysis and the Financial Analysis. RESPONSIBLE CHARGE: A reserve specialist in responsible charge of a reserve study shall render regular and effective supervision to those individuals performing services which directly and materially affect the quality and competence rendered by the reserve specialist. A reserve specialist shall maintain such records as are reasonably necessary to establish that the reserve specialist exercised regular and effective supervision of a reserve study of which he was in responsible charge. A reserve specialist engaged in any of the following acts or practices shall be deemed not to have rendered the regular and effective supervision required herein: 1. The regular and continuous absence from principal office premises from which professional services are rendered; except for performance of field work or presence in a field office maintained exclusively for a specific project; 2. The failure to personally inspect or review the work of subordinates where necessary and appropriate; 3. The rendering of a limited, cursory or perfunctory review of plans or projects in lieu of an appropriate detailed review; 4. The failure to personally be available on a reasonable basis or with adequate advance notice for consultation and inspection where circumstances require personal availability. SPECIAL ASSESSMENT: An assessment levied on the members of an association in addition to regular assessments. Special Assessments are often regulated by governing documents or local statutes. SURPLUS: An actual (or projected) Reserve Balance greater than the Fully Funded Balance. See Deficit. USEFUL LIFE (UL): Total Useful Life or Depreciable Life. The estimated time, in years, that a reserve component can be expected to serve its intended function if properly constructed in its present application or installation. The above terms and definitions are from the Community Associations Institute (CAI) national standards. Version 2/1/215 3:42:1 PM Browning Reserve Group

45 Glossaryof Reserve Study Terms Terms & Definitions BRG Browning Reserve Group reserve studies use several terms that are unique to our reports. Our specialized systems have been developed to offer flexibility in many areas of our reporting. Please see below for definitions of abbreviations and symbols used in many of our reserve studies. NR-1 (LIMITED RECURRENCE, 1 TIME): This signifies a major reserve component recurs for only a fixed number of cycles. Most often used to display a cost in a specific year only, NR-1 signifies the component only occurs one time. An NR-2 means the component will display for two cycles and so on. This makes it easy to enter one-time costs that pop up from time to time, or to display a cost that may be unique at one replacement date only. SE-2 (SPREAD EVENLY OVER 2 YEARS): This signifies the major component, when replaced is spread evenly over 2 or more years. For example if a component will be replaced in year 8 of the study, and there is a SE-2, then the component will be replaced over 2 years, year 8 and year 9. Although the component is split over 2 or more years, each subsequent year will increase by the study s inflation factor. An SE-3 signifies the component is split over three years and so on. NSE-2 (SPREAD NON-EVENLY OVER 2 YEARS): Similar to above, but the spread is not equal in each year. The spread is entered at a different amount for each year in the spread. The total of the spread will always equal 1% of the total replacement cost, excluding inflation. % (PERCENT TO INCLUDE): This signifies that the component is being replaced at less than 1 percent of its replacement cost or quantity. Perhaps a component is replaced partially at each replacement year. Another example would be to do a small portion of the work at each replacement year. Oftentimes wood fencing is replaced over several cycles, and the study will display a percentage of the fence at each replacement cycle. DELAYED START (REMAINING LIFE GREATER THAN USEFUL): In many instances a component's replacement cycle may not begin immediately, so the replacement cycle start is delayed. Delay is accomplished by setting the remaining life greater than the useful life. ZERO REMAINING LIFE: Zero remaining life signifies that the component is replaced in the year which the study is prepared. All replacements are reflected in their replacement year, and the year in which the study is prepared is no different than any other year. Version 2/1/215 3:42:1 PM Browning Reserve Group

46 RESERVE STUDY Member Distribution Materials Sky High Ranch of Calaveras Water System Update w/o Site Visit Review Published - February 1, 215 Section Report Page California: Member 1 Assessment and Reserve Funding Disclosure [Civil Code 557] Section III: 3 Year Reserve Funding Plan Cash Flow Method {c} 5 Section III-b: 3 Year Reserve Funding Plan Special Assessments / Other Contributions 6 Details 3 Professionally managed by Management Alternative, The (29) Browning Reserve Group /1/215 6uwov :m Version 2/1/215 3:42:1 PM Browning Reserve Group 215