CONTENTS. Greens at Lochmere Cary, NC

Transcription

1

2 CONTENTS 1.0 INTRODUCTION EXECUTIVE SUMMARY PURPOSE & SCOPE PURPOSE SCOPE SOURCES OF INFORMATION DESCRIPTION OBSERVATIONS RESERVE FUND ANALYSIS CONCLUSION LIMITATIONS APPENDIX A: TOWNHOMES RESERVE FUND PROJECTIONS... APPENDIX B: COMMON AREA RESERVE FUND PROJECTIONS... APPENDIX C: PROJECT PHOTOGRAPHS... Greens at Lochmere Cary, NC

3 1.0 INTRODUCTION The Greens at Lochmere Homeowners Association authorized Criterium Giles Engineers to conduct a Reserve Study for the Greens at Lochmere community located in Cary, North Carolina. Studies of this nature are important to ensure a community has sufficient funds for long-term, periodic capital expenditure requirements. Anticipating large expenditures over an extended period of time through a structured analysis and scheduling process assists the Association in meeting financial requirements without increasing the service fees above permitted maximums, borrowing the funds, or levying special financial assessments to the home owners. Typically, a community association has two broad cash requirements: the general operating reserves and the capital repair and replacement reserves. In this report, we will focus on those items falling under the capital repair and replacement reserve criteria. We have projected a capital repair and replacement reserve for twenty (20) years. The first ten years are the most reliable. Such a study should be updated every five years. This report is structured to analyze components of the community for which the Association is responsible and to assess a useful expected life and useful remaining life to those components. The anticipated scheduled repair or replacement of the component and the anticipated expense for the activity are then analyzed in conjunction with the current capital reserves funding program for the community. Funding program recommendations are made with the objective of limiting substantial cash excesses while minimizing financial burdens that can result from significant cash inadequacies. This report is intended to be used as a tool to determine reserve fund allocation requirements for the community, to manage future Association obligations, and to inform the community of future financial needs in general. The report that follows has been prepared from the perspective of what an owner of this property would benefit from knowing. Some items, beyond those of immediate concern, may be discussed. Therefore, the report should be read in its entirety in order to fully understand all of the information that has been obtained. Greens at Lochmere Cary, NC Page 1

4 2.0 EXECUTIVE SUMMARY The Greens at Lochmere is a community in Cary, North Carolina that is comprised of 16 townhome units contained within 3 buildings and 22 single family homes. Based on Wake County tax records, the townhome buildings were originally constructed in The association has responsibility for the exterior of the townhome buildings including roofs, gutters, and siding on the townhome buildings. The association is also responsible for maintaining common area site improvements including common area drainage systems, concrete flatwork at townhome driveways/sidewalks, a section of walking trail, retaining walls, entrance signs and brick pavers at the entrance to the community. The buildings, common areas and grounds are generally in good condition. Based on our evaluation, the current level of funding does not maintain a positive balance through the term of this study. We have provided recommendations for annual reserve contribution schedules that provide sufficient funding to meet capital expenditure requirements in the next twenty years. A more detailed analysis of the reserve fund has been provided in Appendices A & B. Some significant expenditures are expected over the term of the study. Some of the more notable examples are listed below: Replace building roofs and gutters Paint and repair siding and trim There are, of course, other capital expenditures to be expected over the next twenty years. Those items that will require attention are discussed later in this report. Note that we have divided the reserve analysis to reflect two separate accounts for the townhomes and the common areas. Greens at Lochmere Cary, NC Page 2

5 3.0 PURPOSE & SCOPE 3.1 Purpose The purpose of this study is to perform a reserve fund analysis and to determine a capital needs plan. It is intended to be used as a tool for the Greens at Lochmere in determining the allocation requirements into the reserve fund in order to meet future anticipated capital expenditures for the community. This report forecasts obligations for the community twenty years into the future. It should be noted that events might occur that could have an effect on the underlying component or system useful life assumptions used in this study. Likewise, inevitable market fluctuations can have an impact on component or system replacement and repair costs. Therefore, a study such as this should be updated from time to time, usually on a three to five-year cycle, in order to reflect the most accurate needs and obligations of the community. 3.2 Scope This study has been performed according to the scope as generally defined by the Greens at Lochmere, Criterium-Giles Engineers Inc., Sentry Management, and the standards of the Community Associations Institute. The findings and recommendations are based on interviews with the community s management personnel; a review of available documents; and an investigation of the buildings and site. The Cash Flow Method of calculating reserves has been utilized, whereby contributions to the reserve fund are designed to offset the variable annual expenditures. Funding alternates are recommended which are designed to achieve a Baseline Funding goal by maintaining a positive balance for the term of the study. The guidelines used to determine which physical components within the community are to be included in the component inventory are based on the following general criteria: 1. The component must be a common element, or otherwise noted to be the responsibility of the Association to replace. 2. The component must have an estimated remaining useful life of twenty years or less. As the site ages, additional components may need to be added. 3. The funding for replacement should be from one source only, not funded from another area of the budget or through a maintenance contract. 4. The cost of replacement should be high enough to make it financially unsound to fund it from the operating budget. Our reserve study analysis included evaluating the following association property: Buildings: The HOA is responsible for maintenance and replacement of the exterior of the buildings including the roofing and gutters, siding and trim. Greens at Lochmere Cary, NC Page 3

6 Mechanical Systems: The Association is responsible for the buried common area plumbing supply and sewer system components serving the townhomes. Site and Grounds: The HOA is responsible for the entrance signs, a section of walking trail, small retaining wall with steps, common area drainage systems and a section of common area site fencing. The above list was obtained from the site inspection and discussions with the management firm prior to the inspection. This study estimates the funding levels required for maintaining the longterm viability of the facility. Our approach involves: 1. Examining association managed equipment, building and site facilities. 2. Predicting their remaining service life and, approximating how frequently they will require repair or replacement. 3. Estimating repair or replacement costs (in 2016 dollars) for each capital item. 4. Using data developed in Steps 1, 2 and 3 to project Capital Reserve balances for Years 1 through 20. The statements in this report are opinions about the present condition of the subject community. They are based on visual evidence available during a diligent investigation of all reasonably accessible areas falling under the responsibility of the Association. We did not remove any surface materials, perform any destructive testing, or move any furnishings. This study is not an exhaustive technical evaluation. Such an evaluation would entail a significantly larger scope than this effort. For additional limitations, see Section Sources of Information Onsite inspections of the property occurred on the following date: September 6, 2016 October 31, 2016 The following people were interviewed during our study: Letitia Rodrigues, Community Manager, Sentry Management Board members at meeting, 10/14/16 The following documents were made available to us and reviewed: Wake County real estate records Financial statements (income/balance sheet) Governing documents Recorded plat maps Greens at Lochmere Cary, NC Page 4

7 We based our cost estimates on some or all of the following: R.S. Means Our data files on similar projects Local contractor estimates For your reference, the following definitions may be helpful: Excellent: Component or system is in "as new" condition, requiring no rehabilitation and should perform in accordance with expected performance. Good: Component or system is sound and performing its function, although it may show signs of normal wear and tear. Some minor rehabilitation work may be required. Fair: Component or system falls into one or more of the following categories: a) Evidence of previous repairs not in compliance with commonly accepted practice, b) Workmanship not in compliance with commonly accepted standards, c) Component or system is obsolete, d) Component or system approaching end of expected performance. Repair or replacement is required to prevent further deterioration or to prolong expected life. Poor: Component or system has either failed or cannot be relied upon to continue performing its original function as a result of having exceeded its expected performance, excessive deferred maintenance, or state of disrepair. Present condition could contribute to or cause the deterioration of other adjoining elements or systems. Repair or replacement is required. Adequate: A component or system is of a capacity that is defined as enough for what is required, sufficient, suitable, and/or conforms to standard construction practices. All ratings are determined by comparison to other buildings of similar age and construction type. Further, some details of workmanship and materials will be examined more closely in higher quality buildings where such details typically become more relevant. All directions (left, right, rear, etc.), when used, are taken from the viewpoint of an observer standing in front of a building and facing it. Repair/Replacement Reserves - Non-annual maintenance items that will require significant expenditure over the life of the buildings. Included are items that will reach the end of their estimated useful life during the course of this forecast, or, in the opinion of the investigator, will require attention during that time. Greens at Lochmere Cary, NC Page 5

8 4.0 DESCRIPTION The Greens at Lochmere is a community in Cary, North Carolina that is comprised of 16 townhome units contained within 3 buildings and 22 single family homes. Based on Wake County tax records, the townhome buildings were originally constructed in The association has responsibility for the exterior of the townhome buildings including roofs, gutters, and siding on the townhome buildings. The association is also responsible for maintaining common area site improvements including common area drainage systems, concrete flatwork at townhome driveways/sidewalks, a section of walking trail, retaining walls, entrance signs and brick pavers at the entrance to the community. The townhome buildings throughout the community are of wood frame construction on crawl spaces. The exterior of the townhome buildings are predominately clad in wood siding with wood trim components. The roofs of the townhome buildings are predominately clad in architectural grade asphaltic fiberglass shingles with gutters and downspouts. Site drainage is provided via landscaped swales that drain towards catch basins in the paved and landscaped areas. These systems direct water flow offsite. 5.0 OBSERVATIONS The following key observations were made about the current condition of the more significant and costly common elements of the property. Site and Grounds Common Area Allocations: The asphalt paved streets throughout the community are public and maintained by the Town of Cary. However, the association (common area) is responsible for maintaining the brick pavers at the entrance to the community. The brick pavers generally appeared to be in good condition and include concrete apron borders. We noted limited deterioration and cracking developing in individual brick pavers. However, no significant areas of depressions or other significant concerns were observed. We have allocated funds for repairing approximately 10% of the brick paved area on an 8 year cycle beginning in This fund allocation is applied to the common area master reserve analysis. The main entrance includes masonry monument structures with brick veneer. The entrance sign inlay is comprised of a painted engraved wood sign that appeared to be in good condition. We have allocated funds to replace the entrance sign inlay on a 15 year cycle beginning in We have assumed minor repairs and painting of the sign inlay would be funded from an annual maintenance budget. The brick veneer and masonry structures appeared to be in good condition and have an expected useful life beyond the term of this study. However, it is likely that sections of the brick veneer will require periodic mortar re-pointing and repairs. We have allocated funds for repairing the monument structures on a 15 year cycle beginning in These fund allocations are applied to the common area master reserve analysis. Greens at Lochmere Cary, NC Page 6

9 The main entrance includes a limited landscape lighting system with approximately 3 light fixtures. We have allocated funds in the common area master reserve analysis for refurbishing the landscape lighting system at the entrance on a 15 year cycle beginning in A section of brick paved walking trail is located at the entrance to the community. The association plans to complete repairs to the walking trail in the near term. We have allocated funds to repair the walking trail on a 15 year cycle beginning in Townhome Allocations: Fencing is installed behind the townhome building lots adjacent to the golf course. The fencing is comprised of painted white wooden posts with a decorative chain between posts. Fence repairs were in process during the inspection and several fence posts were laying down and noted to be deteriorated. We have assumed minor repairs would be funded from an annual maintenance budget. We have allocated funds for replacing the fencing on a 20 year cycle beginning in Storm water on the site drains via surface flow or via landscaped swales toward catch basins and inlet pipes in the paved and landscaped areas. Inlets in the roadway gutters and the grassed areas collect stormwater that flows to an adjacent creek. The swales tend to accumulate sediment that settles out during storm events and will need to be periodically removed and re-graded. In addition, over time, small landscape drainage systems will likely need to be installed in flat areas of the community to address concerns. We recommend maintaining adequate soil stabilizing ground cover to reduce erosion concerns. We have allocated funds to repair the drainage systems on a 5 year cycle beginning in Repairs will likely include retrenching of swales to improve flow, adding rip rap or vegetation to stabilize exposed or steep areas, repairing erosion concerns, extending gutter downspouts to underground systems, installing french drains or other types of minor drainage systems. Mailboxes are installed in brick structures along the road at the townhomes. The mailbox inserts are moderately protected from the elements and appeared to be in good condition. We have allocated funds to replace the mailbox inserts on a 20 year cycle beginning in In addition to the brick structures enclosing the mail boxes, brick accent walls are located around the front and rear of the townhome buildings. The brick accent walls and brick structures at the mail boxes generally appeared to be in good condition. It is likely that repairs to sections of the brick structures will be periodically required. This would include repointing sections of mortar and other brick repairs. We have allocated funds for repairing sections of the brick accent wall structures and mailbox enclosures on a 10 year cycle beginning in Greens at Lochmere Cary, NC Page 7

10 Concrete flatwork in common areas includes the driveways and sections of walkways at the townhome buildings. Note that the association is not responsible for repairing rear concrete patios or sections of brick or concrete flatwork in the front courtyard areas at the townhome buildings. The concrete driveways and sidewalks generally appeared to be in good to fair condition. We noted sections of cracking and settlement/upheaval developing in concrete driveways. Specifically, we observed moderate cracking developing in the driveway at unit 109. We have allocated funds to repair sections of the concrete flatwork in the common area on a 5 year cycle beginning in Repairs would likely include saw-cutting and removing sections of concrete and installing new concrete. The association is responsible for maintaining the common area buried sanitary sewer system piping. Considering the age of the infrastructure, we recommend the association conduct routine video borescope inspections of the buried piping. This will greatly assist in determining the condition of the piping and developing pro-active repair plans. We have provided an allocation of funds to repair common buried piping on a 4 year cycle beginning in Repairs would likely include excavating and replacing sections of the piping or possibly root treatment and hydrojetting to remove debris as a less invasive alternative. Sections of the common area landscaped areas are served by a landscape irrigation system with control systems and a backflow preventer. We observed irrigation heads in several areas of the common area. We have assumed repairs to the landscape irrigation systems would be funded from an annual maintenance budget. A timber retaining wall with timber framed steps and a section of asphalt paved trail is located on association owned property at the north end of the community between the main entrance and the golf course. The section of trail appears to have been abandoned in place. We have assumed that the section of trail is no longer used and any limited repairs/maintenance and eventual removal would be funded from an annual maintenance budget. For reference, we estimate the cost to replace the retaining wall and steps to be approximately $10,800. We estimate the cost to resurface the asphalt paved trail to be approximately $4,000. However, we have not included these funds in our capital reserve analysis. Common Building Exteriors The predominant pitched roof surfaces over the buildings are covered in architectural grade asphaltic fiberglass shingles. Roof surfacing is applied over wood roof sheathing, and generally appears to be in good condition. The roofs include ridge and soffit vents with powered ventilators also observed. The buildings also include gutters and downspouts. The shingles generally appeared to be in good condition with no significant concerns observed in our limited inspection. We are unaware of any concerns with current roof leaks. We noted a section of gutter that was loose at the rear of unit 110. We anticipate minor improvements including replacing vent boots, flashing and drip edge repairs, and gutter repairs will begin to be required in the near term. We have assumed minor repairs Greens at Lochmere Cary, NC Page 8

11 would be funded from an annual maintenance budget. This type of roofing has an expected useful life of approximately years. We strongly recommend that any re-roofing project closely follow procedures outlined by the National Roofing Contractors Association s Roofing and Waterproofing Manual. A re-roofing sequence should include removal of the existing roofing material, replacement of any inadequate roof sheathing, replacement of any damaged flashing, and replacement of drip edge components. We have allocated funds to replace the roofs on all of the buildings in Note that we observed sections of the community with trees extending over the roofs and debris accumulation on the roofs of the buildings. We recommend trimming trees away from building roofs to help prolong the life of the roof surfacing. Gutters and downspouts are in generally good condition. We strongly recommend periodic cleaning and repairs/adjustments of gutters and downspouts to allow adequate flow of stormwater. We have included funds for repairing sections of gutters and downspouts during the roof replacement. Skylights are installed in several areas of the roofing. Skylights have an expected useful life similar to the roof surfacing and are typically replaced in conjunction with roof replacement. We have allocated funds to replace the skylights on a 20 year cycle beginning in Metal chimney caps are installed on top of the chimneys on the buildings. We observed evidence of surface rust developing on the chimney caps and have allocated funds for replacing the chimney caps on a 20 year cycle beginning in The buildings throughout the community are predominately clad in wood siding and trim. Limited areas of brick veneer are also installed on the buildings. Windows appeared to be of varying types with some original wood windows observed. The association is not responsible for replacing windows and doors. However the association is responsible for painting the windows and doors. The exterior surfaces of the buildings generally appeared to be in fair condition. We observed sections of rotted wood components in the community, specifically including a section of fascia at the front of unit 110, window trim on the left side of unit 101 and the fascia above the garage at unit 119. We also observed minor areas of warping siding. A section of damage was observed on the chimney at unit 115. We also noted areas of flaking paint around window trim in several areas of the community. We typically recommend painting and repairing exterior wood siding and trim components on a 7 year cycle. The painting cycles should include repairing deteriorated/damaged siding and trim components, repairing or replacing sections of deteriorated caulking as needed, a thorough cleaning of the exterior surfaces and the application of two coats of a high-quality exterior paint. We have allocated funds to repair and paint the exterior surfaces on a 7 year cycle beginning in We have deferred the Greens at Lochmere Cary, NC Page 9

12 painting and repair cycle a couple of years to allow time to accumulate adequate funds in the reserve account. We have assumed minor repairs to the damaged areas noted above would be completed in the interim and funded from an annual maintenance budget. We do not anticipate significant expenses will be required for repairing or repointing the brick veneer in the community. Brick veneer has an expected useful life of 50+ years. Many of the townhomes include rear decks. Reportedly, the association is not responsible for maintaining these components. Note that replacement of the doors and windows on the buildings are the responsibility of the individual unit owner. We have also assumed replacement of exterior light fixtures mounted on the buildings would be the responsibility of the individual unit owner. 6.0 RESERVE FUND ANALYSIS Using software developed by Criterium Engineers and KPMG Peat Marwick, we have analyzed capital reserves draw-down for the projected capital expenditures to determine the amount needed. The following is a projected reserve fund analysis for non-annual items as discussed in the report. This projection takes into consideration a reasonable return on invested moneys and inflation. Please review this thoroughly and let us know of any changes that may be desired. The intent of this reserve fund projection is to help the Association develop a reserve fund to provide for anticipated repair or replacements of various system components during the next twenty years. The capital items listed are those that are typically the responsibility of the Association and are derived from a list provided the Association with several items added as a result of the inspection. However, association bylaws vary, and therefore, which components are the responsibilities of the owner and which are the responsibilities of the Association can vary. The Association should confirm that the items listed should be financed by the reserve fund. This projection provides the following: An input sheet that defines all the criteria used for the financial alternatives, including the assumed inflation rate of 3% annually and rate of return on deposited reserve funds of 1.5% annually. A table that lists anticipated replacement and/or repair items complete with estimated remaining life expectancies, projected costs of replacement and/or repair, a frequency in years of when these items require replacement and/or repair, and a projection based on this frequency. A table and graph that represent end of year balances versus capital expenditures based on your current funding program and reserve balances, and alternatives to your current program. The provided graphs illustrate what effects the funding methods will have over the Greens at Lochmere Cary, NC Page 10

13 presented twenty-year period versus the anticipated capital expenditures. Note that based on our developed list of capital items and taking inflation into account; the current funding level is not adequate. The Association should bear in mind that unanticipated expenditures can always arise and maintenance of a significant reserve fund balance can be viewed as a way to avoid special assessments. We have included alternatives to your current reserve funding program and recommend that the board adopt an alternative that best reflects the objectives of the community. In summary they are as follows: TOWNHOMES Current Reserve Funding Rate: $6,000/year ($31.25/unit/month) Current Reserve Balance: $26,599 (projected 2017 starting balance) Alternative 1: Beginning in 2017, increase the reserve contribution each year for the next 9 years. The amount of the increase should be $3,600 per year ($18.75 per unit per month). This alternative is projected to maintain a positive balance through the term of this study. Alternative 2: Increase the annual contribution in 2017 to $20,400 per year ($ per unit per month). Then, increase the reserve contribution every year for the next 10 years by 5.5%. This alternative is projected to maintain a positive balance through the term of this study. COMMON AREA MASTER Current Reserve Funding Rate: $0.00 Current Reserve Balance: $16,404 Alternative 1: Beginning in 2017, set the annual reserve contribution rate to $180 per year. Then increase the reserve contribution rate by $180 per year every 3 years for the next 10 years. This alternative is projected to maintain a positive balance over the term. Alternative 2: In 2017, set the annual reserve contribution rate to $600 per year and maintain this contribution rate for the next 20 years. This alternative is projected to maintain a positive balance over the term. Please note that the reserve fund study does not include typical annual maintenance items. Our assumption is that you already have an annual operating budget that provides for these typical, repetitive items. This includes miscellaneous repairs, lawn and grounds maintenance, routine minor painting, etc. We have focused on those significant, non-annual items where careful financial planning is important. Greens at Lochmere Cary, NC Page 11

14 Finally, please note that the estimates we have developed are based on 2016 dollars. Our reserve fund study does adjust for an estimated annual inflation and a given return on investment assuming that the indicated fund balances are maintained. 7.0 CONCLUSION The alternatives provided above should provide sufficient funding to meet estimated capital expenditures during the next twenty years. Further detail of the reserve fund analysis is provided in Appendices A and B. 8.0 LIMITATIONS The observations described in this study are valid on the date of the investigation and have been made under the conditions noted in the report. We prepared this study for the exclusive use of the Greens at Lochmere. Criterium-Giles Engineers Inc. does not intend any other individual or party to rely upon this study without our express written consent. If another individual or party relies on this study, they shall indemnify and hold Criterium-Giles Engineers Inc. harmless for any damages, losses, or expenses they may incur as a result of its use. This study is limited to the visual observations made during our inspection. We did not remove surface materials, conduct any destructive or invasive testing, move furnishings or equipment, or undertake any digging or excavation. Accordingly, we cannot comment on the condition of systems that we could not see, such as buried structures and utilities, nor are we responsible for conditions that could not be seen or were not within the scope of our services at the time of the investigation. We did not undertake to completely assess the stability of the buildings or the underlying foundation soil since this effort would require excavation and destructive testing. Likewise, this is not a seismic assessment. We did not investigate the following areas: Buried utilities or infrastructure Concealed structural members or systems Unit interiors We do not render an opinion on uninvestigated portions of the community. We did not perform any computations or other engineering analysis as part of this evaluation, nor did we conduct a comprehensive code compliance investigation. This study is not to be considered a warranty of condition, and no warranty is implied. The appendices are an integral part of this report and must be included in any review. Members of the Criterium-Giles Engineers team working on this reserve study are not members of, or otherwise associated with the association. Criterium-Giles Engineers has disclosed any other involvement with the association that could result in conflicts of interest. Information provided by the official representative of the association regarding financial, physical, quantity, or historical issues, will be deemed reliable by Criterium-Giles Engineers. The reserve balance presented in the Reserve Study is based upon information provided and was not audited. Greens at Lochmere Cary, NC Page 12

15

16 Appendix A: TOWNHOME RESERVE FUND PROJECTIONS

17 Itemized Worksheet Capital Item Reserve Frequency Remaining To Be Replaced Quantity Unit cost Requirement (*) (yrs**) Life (yrs) Information Source Site Common area drainage improvements 1 LS $4, $4, Repair sections of concrete flatwork 1 LS $4, $4, Replace fencing at rear of townhomes 300 LF $15.00 $4, Replace mailboxes 19 EA $ $2, Repair brick accent wall structures and mailboxes 1 LS $4, $4, Allocation for common area buried utility repairs 1 LS $3, $3, Building Exterior Replace building roofs, repair gutters 450 SQ $ $132, Replace skylights 31 EA $ $23, Repair/paint exterior siding and trim 16 EA $2, $38, Replace chimney caps 10 EA $ $7, Building Interior Mechanical Amenities Other Totals $225, * Costs are typically 10%± ** Reserve study is based on a 20 year projection of non-annual maintenance Total Over Term $345, Criterium Engineers Page 1 of 14 11/2/2016

18 Annual Expense By Year Year: Year Number: Site Common area drainage improvements , , ,500 0 Repair sections of concrete flatwork 0 4, , , Replace fencing at rear of townhomes 0 4, Replace mailboxes , Repair brick accent wall structures and mailboxes , Allocation for common area buried utility repairs , , , Building Exterior Replace building roofs, repair gutters , Replace skylights , Repair/paint exterior siding and trim , , Replace chimney caps , Building Interior Mechanical Amenities Other Total Costs 0 9,250 38,400 7,000 8, , ,500 47,400 2,375 4, , ,500 0 Total Costs Adjusted For 3% Inflation 0 9,528 40,739 7,649 9, , ,434 61,846 3,192 6, , ,807 0 Criterium Engineers Page 2 of 14 11/2/2016

19 Annual Expense By Year Year: Year Number: Site Common area drainage improvements Repair sections of concrete flatwork Replace fencing at rear of townhomes Replace mailboxes Repair brick accent wall structures and mailboxes Allocation for common area buried utility repairs Building Exterior Replace building roofs, repair gutters Replace skylights Repair/paint exterior siding and trim Replace chimney caps Building Interior Mechanical Amenities Other Total Costs Total Costs Adjusted For 3% Inflation ,500 4, ,500 3, , , ,000 74, ,782 Criterium Engineers Page 3 of 14 11/2/2016

20 Reserve Study Worksheet General Information: 1 Organization: Greens at Lochmere - Townhomes 2 Address: Cary, NC 3 Number of Units 16 4 Age of Building (in years) 30 5a Study Period (in years) 20 5b Normal Fiscal Year starts: January 1, c Partial Fiscal Year starts: January 1, d Partial Year Length: 12 months 6 Site Inspection Date September 6, Reserve Funds at start $23,494 8 Rate of Return on invested Reserve Funds (%) 1.5% 9 Inflation Rate (%) 3.0% 10 Current Funding Levels Existing Funding Levels Total/Month Total Annual Per Unit/Month Per Unit/Year Reserve Fund Contribution... $500 $6,000 $31.25 $ Years Out Total Annual Per Unit Planned Special Assessment... 0 $0 $0 Balance Computed... ($329,142) 11 Alternative Reserve Fund Contribution Alternative 1 Level Funding with Steps Total/Month Total Annual Per Unit/Month Per Unit/Year Monthly Amount, (First Year)... $800 $9,600 $50.00 $ Monthly Amount, (Last Year)... $3,200 $38,400 $ $2, Balance Required Final Year... $23,675 Special Assessments: Years Out Total/Year Per Unit First Assessment... 0 $0 $0 Second Assessment... 0 $0 $0 Balance Computed... $221,617 Alternative 2 Escalating Funding at 5.5% per Year Total/Month Total Annual Per Unit/Month Per Unit/Year Monthly Amount, (First Year)... $1,700 $20,400 $ $1, Monthly Amount, (Last Year)... $2,752 $33,030 $ $2, Balance Required Final Year... $23,675 Base Escalation % % Special Assessments: Years Out Total/Year Per Unit First Assessment... 0 $0 $0 Second Assessment... 0 $0 $0 Balance Computed... $176,797 Alternative 3 Escalating Funding with Special Assessments (NOT USED) Total/Month Total Annual Per Unit/Month Per Unit/Year Monthly Amount, (First Year)... $500 $6,000 $31.25 $ Monthly Amount, (Last Year)... $500 $6,000 $31.25 $ Balance Required Final Year... $23,675 Base Escalation % % Special Assessments: Years Out Total/Year Per Unit First Assessment... 0 $0 $0 Second Assessment... 0 $0 $0 Balance Computed... Criterium Engineers ($329,142) Page 4 of 14 11/2/2016

21 Reserve Fund Worksheet Fiscal Years: Normal: Jan Partial: Jan 2017 (12 months) Existing Funding Levels Beginning Reserve Fund Balance: Revenue: Special Assessments: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $23,494 $29,936 $26,805 ($7,934) ($9,583) ($12,587) ($6,587) ($6,258) ($258) $1,327 ($54,519) ($51,711) ($52,286) ($273,695) ($267,695) ($268,501) $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $442 $396 $0 $0 $0 $0 $0 $0 $20 $0 $0 $0 $0 $0 $0 $0 $0 $9,528 $40,739 $7,649 $9,004 $0 $5,672 $0 $4,434 $61,846 $3,192 $6,575 $227,409 $0 $6,807 $0 $29,936 $26,805 ($7,934) ($9,583) ($12,587) ($6,587) ($6,258) ($258) $1,327 ($54,519) ($51,711) ($52,286) ($273,695) ($267,695) ($268,501) ($262,501) Alternative 1, Level Funding with Steps Average Cap. Expenditure $23,675 Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $23,494 $33,590 $37,822 $14,092 $27,245 $42,875 $71,532 $98,516 $135,316 $171,821 $150,601 $188,596 $223,727 $35,239 $74,744 $107,932 $9,600 $13,200 $16,800 $20,400 $24,000 $27,600 $31,200 $34,800 $38,400 $38,400 $38,400 $38,400 $38,400 $38,400 $38,400 $38,400 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $496 $559 $208 $403 $634 $1,057 $1,456 $2,000 $2,539 $2,226 $2,787 $3,306 $521 $1,105 $1,595 $2,195 $0 $9,528 $40,739 $7,649 $9,004 $0 $5,672 $0 $4,434 $61,846 $3,192 $6,575 $227,409 $0 $6,807 $0 $33,590 $37,822 $14,092 $27,245 $42,875 $71,532 $98,516 $135,316 $171,821 $150,601 $188,596 $223,727 $35,239 $74,744 $107,932 $148,527 Alternative 2, Escalating Funding at 5.5% per Year Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $23,494 $44,552 $57,395 $39,953 $57,102 $74,471 $102,649 $126,983 $159,008 $188,670 $162,251 $194,970 $224,746 $30,822 $64,810 $92,398 $20,400 $21,522 $22,706 $23,955 $25,272 $26,662 $28,128 $29,675 $31,308 $33,030 $33,030 $33,030 $33,030 $33,030 $33,030 $33,030 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $658 $848 $590 $844 $1,101 $1,517 $1,877 $2,350 $2,788 $2,398 $2,881 $3,321 $456 $958 $1,365 $1,881 $0 $9,528 $40,739 $7,649 $9,004 $0 $5,672 $0 $4,434 $61,846 $3,192 $6,575 $227,409 $0 $6,807 $0 $44,552 $57,395 $39,953 $57,102 $74,471 $102,649 $126,983 $159,008 $188,670 $162,251 $194,970 $224,746 $30,822 $64,810 $92,398 $127,309 Alternative 3, Escalating Funding with Special Assessments (NOT USED) Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $23,494 $29,936 $26,805 ($7,934) ($9,583) ($12,587) ($6,587) ($6,258) ($258) $1,327 ($54,519) ($51,711) ($52,286) ($273,695) ($267,695) ($268,501) $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $442 $396 $0 $0 $0 $0 $0 $0 $20 $0 $0 $0 $0 $0 $0 $0 $0 $9,528 $40,739 $7,649 $9,004 $0 $5,672 $0 $4,434 $61,846 $3,192 $6,575 $227,409 $0 $6,807 $0 $29,936 $26,805 ($7,934) ($9,583) ($12,587) ($6,587) ($6,258) ($258) $1,327 ($54,519) ($51,711) ($52,286) ($273,695) ($267,695) ($268,501) ($262,501) Criterium Engineers Page 5 of 14 11/2/2016

22 Reserve Fund Worksheet Fiscal Years: Normal: Jan 2017 Partial: Jan 2017 (12 months) Existing Funding Levels Beginning Reserve Fund Balance: Revenue: Special Assessments: Investment Earnings: Capital Expenditures: Ending Reserve Balance: ($262,501) ($331,361) ($325,361) ($319,361) $6,000 $6,000 $6,000 $6,000 $0 $0 $0 $0 $0 $0 $0 $0 $74,860 $0 $0 $15,782 ($331,361) ($325,361) ($319,361) ($329,142) Alternative 1, Level Funding w Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $148,527 $113,748 $154,431 $195,723 $38,400 $38,400 $38,400 $38,400 $0 $0 $0 $0 $0 $0 $0 $0 $1,681 $2,282 $2,892 $3,275 $74,860 $0 $0 $15,782 $113,748 $154,431 $195,723 $221,617 Alternative 2, Escalating Fundi Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $127,309 $86,761 $121,587 $156,936 $33,030 $33,030 $33,030 $33,030 $0 $0 $0 $0 $0 $0 $0 $0 $1,282 $1,797 $2,319 $2,613 $74,860 $0 $0 $15,782 $86,761 $121,587 $156,936 $176,797 Alternative 3, Escalating Fundi Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: ($262,501) ($331,361) ($325,361) ($319,361) $6,000 $6,000 $6,000 $6,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $74,860 $0 $0 $15,782 ($331,361) ($325,361) ($319,361) ($329,142) Criterium Engineers Page 6 of 14 11/2/2016

23 Itemized Graph Categories Totals Site $66,875 Building Exterior $278,200 Building Interior $0 Mechanical $0 Amenities $0 Other $0 Total $345,075 Amenities, $0 Other, $0 Mechanical, $0 Building Interior, $0 Site, $66,875 Itemized Graph Building Exterior, $278,200 Site Building Exterior Building Interior Mechanical Amenities Other Criterium Engineers Page 7 of 14 11/2/2016

24 Itemized Funding Monthly Annual Balance Reserve Reserve Full Reserve Beginning Requiring Funding Funding Funding Percent Categories Requirement Balance Funding Required Required Balance Funded Site $66,875 $2,344 $64,531 $843 $10,117 $10,613 Building Exterior $278,200 $21,150 $257,050 $2,493 $29,919 $95,779 Building Interior $0 $0 $0 $0 $0 $0 Mechanical $0 $0 $0 $0 $0 $0 Amenities $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 Totals $345,075 $23,494 $321,581 $3,336 $40,036 $106, % Criterium Engineers Page 8 of 14 11/2/2016

25 Existing Funding Levels Beginning Year Reserve Fund Fee Special Investment Capital Ending Year Number Balance Revenue Assessments Earnings Expenditures Balance $23,494 $6,000 $0 $442 $0 $29, $29,936 $6,000 $0 $396 $9,528 $26, $26,805 $6,000 $0 $0 $40,739 ($7,934) ($7,934) $6,000 $0 $0 $7,649 ($9,583) ($9,583) $6,000 $0 $0 $9,004 ($12,587) ($12,587) $6,000 $0 $0 $0 ($6,587) ($6,587) $6,000 $0 $0 $5,672 ($6,258) ($6,258) $6,000 $0 $0 $0 ($258) ($258) $6,000 $0 $20 $4,434 $1, $1,327 $6,000 $0 $0 $61,846 ($54,519) ($54,519) $6,000 $0 $0 $3,192 ($51,711) ($51,711) $6,000 $0 $0 $6,575 ($52,286) ($52,286) $6,000 $0 $0 $227,409 ($273,695) ($273,695) $6,000 $0 $0 $0 ($267,695) ($267,695) $6,000 $0 $0 $6,807 ($268,501) ($268,501) $6,000 $0 $0 $0 ($262,501) ($262,501) $6,000 $0 $0 $74,860 ($331,361) ($331,361) $6,000 $0 $0 $0 ($325,361) ($325,361) $6,000 $0 $0 $0 ($319,361) ($319,361) $6,000 $0 $0 $15,782 ($329,142) Criterium Engineers Page 9 of 14 11/2/2016

26 Existing Funding Levels Beginning Balance as of start of year beginning Jan 2017: $23,494 CONTRIBUTIONS SPECIAL ASSESSMENTS AMOUNT Totals $6, per year Per Year $0 Per Unit $0 $ per unit per year $ per month $31.25 per unit per month Projected Annual Funding and Expenditures: Year: Year Number: End of Year Reserve Fund Balance 29,936 26,805 (7,934) (9,583) (12,587) (6,587) (6,258) (258) 1,327 (54,519) (51,711) (52,286) (273,695) (267,695) (268,501) Capital Expenditures: - 9,528 40,739 7,649 9,004-5,672-4,434 61,846 3,192 6, ,409-6,807 Total Revenue (all sources) 6,442 6,396 6,000 6,000 6,000 6,000 6,000 6,000 6,020 6,000 6,000 6,000 6,000 6,000 6,000 Year: Year Number: End of Year Reserve Fund Balance (262,501) (331,361) (325,361) (319,361) (329,142) Capital Expenditures: - 74, ,782 Total Revenue (all sources) 6,000 6,000 6,000 6,000 6,000 Existing Funding Levels 50, (50,000) (100,000) Dollars (150,000) (200,000) (250,000) (300,000) (350,000) Funding Years Criterium Engineers Page 10 of 14 11/2/2016

27 Alternative 1: Level Funding with Steps Beginning Year Reserve Fund Fee Special Special Investment Capital Ending Year Number Balance Revenue Assessments 1 Assessments 2 Earnings Expenditures Balance $23,494 $9,600 $0 $0 $496 $0 $33, $33,590 $13,200 $0 $0 $559 $9,528 $37, $37,822 $16,800 $0 $0 $208 $40,739 $14, $14,092 $20,400 $0 $0 $403 $7,649 $27, $27,245 $24,000 $0 $0 $634 $9,004 $42, $42,875 $27,600 $0 $0 $1,057 $0 $71, $71,532 $31,200 $0 $0 $1,456 $5,672 $98, $98,516 $34,800 $0 $0 $2,000 $0 $135, $135,316 $38,400 $0 $0 $2,539 $4,434 $171, $171,821 $38,400 $0 $0 $2,226 $61,846 $150, $150,601 $38,400 $0 $0 $2,787 $3,192 $188, $188,596 $38,400 $0 $0 $3,306 $6,575 $223, $223,727 $38,400 $0 $0 $521 $227,409 $35, $35,239 $38,400 $0 $0 $1,105 $0 $74, $74,744 $38,400 $0 $0 $1,595 $6,807 $107, $107,932 $38,400 $0 $0 $2,195 $0 $148, $148,527 $38,400 $0 $0 $1,681 $74,860 $113, $113,748 $38,400 $0 $0 $2,282 $0 $154, $154,431 $38,400 $0 $0 $2,892 $0 $195, $195,723 $38,400 $0 $0 $3,275 $15,782 $221,617 Criterium Engineers Page 11 of 14 11/2/2016

28 Alternative 1: Level Funding with Steps Beginning Balance as of start of year beginning Jan 2017: $23,494 CONTRIBUTIONS SPECIAL ASSESSMENTS SETTINGS (analyzed by year) FIRST YR LAST YR Totals Starting amount ($): 800 $9, $38, per year First Per Year $0 Per Unit $0 Increment by ($): 300 $ $2, per unit per year Second Per Year $0 Per Unit $0 Every 1 year $ $3, per month Frequency: 8 time $50.00 $ per unit per month Projected Annual Funding and Expenditures: Year: Year Number: End of Year Reserve Fund Balance 33,590 37,822 14,092 27,245 42,875 71,532 98, , , , , ,727 35,239 74, ,932 Capital Expenditures: - 9,528 40,739 7,649 9,004-5,672-4,434 61,846 3,192 6, ,409-6,807 Total Revenue (all sources) 10,096 13,759 17,008 20,803 24,634 28,657 32,656 36,800 40,939 40,626 41,187 41,706 38,921 39,505 39,995 Year: Year Number: End of Year Reserve Fund Balance 148, , , , ,617 Capital Expenditures: - 74, ,782 Total Revenue (all sources) 40,595 40,081 40,682 41,292 41,675 Alternative 1: Level Funding with Steps 250, , ,000 Dollars 100,000 50, Funding Years Criterium Engineers Page 12 of 14 11/2/2016

29 Alternative 2: Escalating Funding at 5.5% per Year Beginning Year Reserve Fund Fee Special Special Investment Capital Ending Year Number Balance Revenue Assessments 1 Assessments 2 Earnings Expenditures Balance $23,494 $20,400 $0 $0 $658 $0 $44, $44,552 $21,522 $0 $0 $848 $9,528 $57, $57,395 $22,706 $0 $0 $590 $40,739 $39, $39,953 $23,955 $0 $0 $844 $7,649 $57, $57,102 $25,272 $0 $0 $1,101 $9,004 $74, $74,471 $26,662 $0 $0 $1,517 $0 $102, $102,649 $28,128 $0 $0 $1,877 $5,672 $126, $126,983 $29,675 $0 $0 $2,350 $0 $159, $159,008 $31,308 $0 $0 $2,788 $4,434 $188, $188,670 $33,030 $0 $0 $2,398 $61,846 $162, $162,251 $33,030 $0 $0 $2,881 $3,192 $194, $194,970 $33,030 $0 $0 $3,321 $6,575 $224, $224,746 $33,030 $0 $0 $456 $227,409 $30, $30,822 $33,030 $0 $0 $958 $0 $64, $64,810 $33,030 $0 $0 $1,365 $6,807 $92, $92,398 $33,030 $0 $0 $1,881 $0 $127, $127,309 $33,030 $0 $0 $1,282 $74,860 $86, $86,761 $33,030 $0 $0 $1,797 $0 $121, $121,587 $33,030 $0 $0 $2,319 $0 $156, $156,936 $33,030 $0 $0 $2,613 $15,782 $176,797 Criterium Engineers Page 13 of 14 11/2/2016

30 Alternative 2: Escalating Funding at 5.5% per Year Beginning Balance as of start of year beginning Jan 2017: $23,494 CONTRIBUTIONS SPECIAL ASSESSMENTS SETTINGS (analyzed by year) FIRST YR LAST YR Totals Starting amount ($): 1700 $20, $33, per year First Per Year $0 Per Unit $0 Increment by (%): 5.5 $1, $2, per unit per year Second Per Year $0 Per Unit $0 Step (%): $1, $2, per month Every 1 year $ $ per unit per month Frequency: 9 time Projected Annual Funding and Expenditures: Year: Year Number: End of Year Reserve Fund Balance 44,552 57,395 39,953 57,102 74, , , , , , , ,746 30,822 64,810 92,398 Capital Expenditures: - 9,528 40,739 7,649 9,004-5,672-4,434 61,846 3,192 6, ,409-6,807 Total Revenue (all sources) 21,058 22,370 23,296 24,798 26,373 28,179 30,005 32,025 34,096 35,427 35,911 36,351 33,485 33,987 34,395 Year: Year Number: End of Year Reserve Fund Balance 127,309 86, , , ,797 Capital Expenditures: - 74, ,782 Total Revenue (all sources) 34,911 34,312 34,826 35,349 35,642 Alternative 2: Escalating Funding at 5.5% per Year 250, , ,000 Dollars 100,000 50, Funding Years Criterium Engineers Page 14 of 14 11/2/2016

31 Appendix B: COMMON AREA RESERVE FUND PROJECTIONS

32 Itemized Worksheet Capital Item Reserve Frequency Remaining To Be Replaced Quantity Unit cost Requirement (*) (yrs**) Life (yrs) Information Source Site Replace entrance sign inlay 1 EA $1, $1, Allocation to repair entrance monuments 1 LS $2, $2, Refurbish landscape lighting system at entrance 1 LS $1, $1, Repair sections of brick pavers at entrance 45 SY $95.00 $4, Approx. 10% every 8 years Repair brick paved walking trail 1 LS $2, $2, Building Exterior Building Interior Mechanical Amenities Other Totals $11, * Costs are typically 10%± ** Reserve study is based on a 20 year projection of non-annual maintenance Total Over Term $18, Criterium Engineers Page 1 of 12 10/31/2016

33 Annual Expense By Year Year: Year Number: Site Replace entrance sign inlay , Allocation to repair entrance monuments , Refurbish landscape lighting system at entrance , Repair sections of brick pavers at entrance , , Repair brick paved walking trail 2, ,500 Building Exterior Building Interior Mechanical Amenities Other Total Costs 2, , ,500 3, , ,500 Total Costs Adjusted For 3% Inflation 2, , ,845 4, , ,895 Criterium Engineers Page 2 of 12 10/31/2016

34 Annual Expense By Year Year: Year Number: Site Replace entrance sign inlay Allocation to repair entrance monuments Refurbish landscape lighting system at entrance Repair sections of brick pavers at entrance Repair brick paved walking trail Building Exterior Building Interior Mechanical Amenities Other Total Costs Total Costs Adjusted For 3% Inflation Criterium Engineers Page 3 of 12 10/31/2016

35 Reserve Study Worksheet General Information: 1 Organization: Greens at Lochmere - Common Area 2 Address: Cary, NC 3 Number of Units 38 4 Age of Building (in years) 30 5a Study Period (in years) 20 5b Normal Fiscal Year starts: January 1, c Partial Fiscal Year starts: January 1, d Partial Year Length: 12 months 6 Site Inspection Date September 6, Reserve Funds at start $16,404 8 Rate of Return on invested Reserve Funds (%) 1.5% 9 Inflation Rate (%) 3.0% 10 Current Funding Levels Existing Funding Levels Total/Month Total Annual Per Unit/Month Per Unit/Year Reserve Fund Contribution... $0 $0 $0.00 $0.00 Years Out Total Annual Per Unit Planned Special Assessment... 0 $0 $0 Balance Computed... ($5,676) 11 Alternative Reserve Fund Contribution Alternative 1 Level Funding with Steps Total/Month Total Annual Per Unit/Month Per Unit/Year Monthly Amount, (First Year)... $15 $180 $0.39 $4.74 Monthly Amount, (Last Year)... $60 $720 $1.58 $18.95 Balance Required Final Year... $1,195 Special Assessments: Years Out Total/Year Per Unit First Assessment... 0 $0 $0 Second Assessment... 0 $0 $0 Balance Computed... $6,550 Alternative 2 One-time increase to $600 per year Total/Month Total Annual Per Unit/Month Per Unit/Year Monthly Amount, (First Year)... $50 $600 $1.32 $15.79 Monthly Amount, (Last Year)... $50 $600 $1.32 $15.79 Balance Required Final Year... $1,195 Base Escalation % % Special Assessments: Years Out Total/Year Per Unit First Assessment... 0 $0 $0 Second Assessment... 0 $0 $0 Balance Computed... $7,910 Alternative 3 Escalating Funding with Special Assessments (NOT USED) Total/Month Total Annual Per Unit/Month Per Unit/Year Monthly Amount, (First Year)... $0 $0 $0.00 $0.00 Monthly Amount, (Last Year)... $0 $0 $0.00 $0.00 Balance Required Final Year... $1,195 Base Escalation % % Special Assessments: Years Out Total/Year Per Unit First Assessment... 0 $0 $0 Second Assessment... 0 $0 $0 Balance Computed... Criterium Engineers ($5,676) Page 4 of 12 10/31/2016

36 Reserve Fund Worksheet Fiscal Years: Normal: Jan Partial: Jan 2017 (12 months) Existing Funding Levels Beginning Reserve Fund Balance: Revenue: Special Assessments: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $16,404 $14,113 $14,324 $14,539 $14,757 $14,979 $10,173 $10,326 $8,608 $4,237 $4,300 $4,365 $4,430 $4,497 ($1,781) ($1,781) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $209 $212 $215 $218 $221 $150 $153 $127 $63 $64 $65 $65 $66 $0 $0 $0 $2,500 $0 $0 $0 $0 $4,956 $0 $1,845 $4,434 $0 $0 $0 $0 $6,278 $0 $3,895 $14,113 $14,324 $14,539 $14,757 $14,979 $10,173 $10,326 $8,608 $4,237 $4,300 $4,365 $4,430 $4,497 ($1,781) ($1,781) ($5,676) Alternative 1, Level Funding with Steps Average Cap. Expenditure $1,195 Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $16,404 $14,295 $14,692 $15,095 $15,687 $16,288 $11,868 $12,594 $11,458 $7,678 $8,524 $9,383 $10,254 $11,139 $5,664 $6,480 $180 $180 $180 $360 $360 $360 $540 $540 $540 $720 $720 $720 $720 $720 $720 $720 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $211 $217 $223 $232 $241 $175 $186 $169 $113 $126 $139 $152 $165 $84 $96 $50 $2,500 $0 $0 $0 $0 $4,956 $0 $1,845 $4,434 $0 $0 $0 $0 $6,278 $0 $3,895 $14,295 $14,692 $15,095 $15,687 $16,288 $11,868 $12,594 $11,458 $7,678 $8,524 $9,383 $10,254 $11,139 $5,664 $6,480 $3,355 Alternative 2, One-time increase to $600 per year Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $16,404 $14,722 $15,551 $16,394 $17,249 $18,116 $13,967 $14,785 $13,744 $10,059 $10,818 $11,590 $12,373 $13,167 $7,601 $8,325 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $218 $230 $242 $255 $268 $206 $219 $203 $149 $160 $171 $183 $195 $112 $123 $75 $2,500 $0 $0 $0 $0 $4,956 $0 $1,845 $4,434 $0 $0 $0 $0 $6,278 $0 $3,895 $14,722 $15,551 $16,394 $17,249 $18,116 $13,967 $14,785 $13,744 $10,059 $10,818 $11,590 $12,373 $13,167 $7,601 $8,325 $5,105 Alternative 3, Escalating Funding with Special Assessments (NOT USED) Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $16,404 $14,113 $14,324 $14,539 $14,757 $14,979 $10,173 $10,326 $8,608 $4,237 $4,300 $4,365 $4,430 $4,497 ($1,781) ($1,781) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $209 $212 $215 $218 $221 $150 $153 $127 $63 $64 $65 $65 $66 $0 $0 $0 $2,500 $0 $0 $0 $0 $4,956 $0 $1,845 $4,434 $0 $0 $0 $0 $6,278 $0 $3,895 $14,113 $14,324 $14,539 $14,757 $14,979 $10,173 $10,326 $8,608 $4,237 $4,300 $4,365 $4,430 $4,497 ($1,781) ($1,781) ($5,676) Criterium Engineers Page 5 of 12 10/31/2016

37 Reserve Fund Worksheet Fiscal Years: Normal: Jan 2017 Partial: Jan 2017 (12 months) Existing Funding Levels Beginning Reserve Fund Balance: Revenue: Special Assessments: Investment Earnings: Capital Expenditures: Ending Reserve Balance: ($5,676) ($5,676) ($5,676) ($5,676) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($5,676) ($5,676) ($5,676) ($5,676) Alternative 1, Level Funding w Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $3,355 $4,136 $4,929 $5,734 $720 $720 $720 $720 $0 $0 $0 $0 $0 $0 $0 $0 $61 $73 $85 $97 $0 $0 $0 $0 $4,136 $4,929 $5,734 $6,550 Alternative 2, One-time increas Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: $5,105 $5,791 $6,486 $7,193 $600 $600 $600 $600 $0 $0 $0 $0 $0 $0 $0 $0 $86 $96 $106 $117 $0 $0 $0 $0 $5,791 $6,486 $7,193 $7,910 Alternative 3, Escalating Fundi Beginning Reserve Fund Balance: Revenue: Special Assessment #1: Special Assessment #2: Investment Earnings: Capital Expenditures: Ending Reserve Balance: ($5,676) ($5,676) ($5,676) ($5,676) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($5,676) ($5,676) ($5,676) ($5,676) Criterium Engineers Page 6 of 12 10/31/2016

38 Existing Funding Levels Beginning Year Reserve Fund Fee Special Investment Capital Ending Year Number Balance Revenue Assessments Earnings Expenditures Balance $16,404 $0 $0 $209 $2,500 $14, $14,113 $0 $0 $212 $0 $14, $14,324 $0 $0 $215 $0 $14, $14,539 $0 $0 $218 $0 $14, $14,757 $0 $0 $221 $0 $14, $14,979 $0 $0 $150 $4,956 $10, $10,173 $0 $0 $153 $0 $10, $10,326 $0 $0 $127 $1,845 $8, $8,608 $0 $0 $63 $4,434 $4, $4,237 $0 $0 $64 $0 $4, $4,300 $0 $0 $65 $0 $4, $4,365 $0 $0 $65 $0 $4, $4,430 $0 $0 $66 $0 $4, $4,497 $0 $0 $0 $6,278 ($1,781) ($1,781) $0 $0 $0 $0 ($1,781) ($1,781) $0 $0 $0 $3,895 ($5,676) ($5,676) $0 $0 $0 $0 ($5,676) ($5,676) $0 $0 $0 $0 ($5,676) ($5,676) $0 $0 $0 $0 ($5,676) ($5,676) $0 $0 $0 $0 ($5,676) Criterium Engineers Page 7 of 12 10/31/2016

39 Existing Funding Levels Beginning Balance as of start of year beginning Jan 2017: $16,404 CONTRIBUTIONS SPECIAL ASSESSMENTS AMOUNT Totals $0.00 per year Per Year $0 Per Unit $0 $0.00 per unit per year $0.00 per month $0.00 per unit per month Projected Annual Funding and Expenditures: Year: Year Number: End of Year Reserve Fund Balance 14,113 14,324 14,539 14,757 14,979 10,173 10,326 8,608 4,237 4,300 4,365 4,430 4,497 (1,781) (1,781) Capital Expenditures: 2, ,956-1,845 4, ,278 - Total Revenue (all sources) Year: Year Number: End of Year Reserve Fund Balance (5,676) (5,676) (5,676) (5,676) (5,676) Capital Expenditures: 3, Total Revenue (all sources) Existing Funding Levels 20,000 15,000 10,000 Dollars 5, (5,000) (10,000) Funding Years Criterium Engineers Page 8 of 12 10/31/2016

40 Alternative 1: Level Funding with Steps Beginning Year Reserve Fund Fee Special Special Investment Capital Ending Year Number Balance Revenue Assessments 1 Assessments 2 Earnings Expenditures Balance $16,404 $180 $0 $0 $211 $2,500 $14, $14,295 $180 $0 $0 $217 $0 $14, $14,692 $180 $0 $0 $223 $0 $15, $15,095 $360 $0 $0 $232 $0 $15, $15,687 $360 $0 $0 $241 $0 $16, $16,288 $360 $0 $0 $175 $4,956 $11, $11,868 $540 $0 $0 $186 $0 $12, $12,594 $540 $0 $0 $169 $1,845 $11, $11,458 $540 $0 $0 $113 $4,434 $7, $7,678 $720 $0 $0 $126 $0 $8, $8,524 $720 $0 $0 $139 $0 $9, $9,383 $720 $0 $0 $152 $0 $10, $10,254 $720 $0 $0 $165 $0 $11, $11,139 $720 $0 $0 $84 $6,278 $5, $5,664 $720 $0 $0 $96 $0 $6, $6,480 $720 $0 $0 $50 $3,895 $3, $3,355 $720 $0 $0 $61 $0 $4, $4,136 $720 $0 $0 $73 $0 $4, $4,929 $720 $0 $0 $85 $0 $5, $5,734 $720 $0 $0 $97 $0 $6,550 Criterium Engineers Page 9 of 12 10/31/2016

41 Alternative 1: Level Funding with Steps Beginning Balance as of start of year beginning Jan 2017: $16,404 CONTRIBUTIONS SPECIAL ASSESSMENTS SETTINGS (analyzed by year) FIRST YR LAST YR Totals Starting amount ($): 15 $ $ per year First Per Year $0 Per Unit $0 Increment by ($): 15 $4.74 $18.95 per unit per year Second Per Year $0 Per Unit $0 Every 3 year $15.00 $60.00 per month Frequency: 3 time $0.39 $1.58 per unit per month Projected Annual Funding and Expenditures: Year: Year Number: End of Year Reserve Fund Balance 14,295 14,692 15,095 15,687 16,288 11,868 12,594 11,458 7,678 8,524 9,383 10,254 11,139 5,664 6,480 Capital Expenditures: 2, ,956-1,845 4, ,278 - Total Revenue (all sources) Year: Year Number: End of Year Reserve Fund Balance 3,355 4,136 4,929 5,734 6,550 Capital Expenditures: 3, Total Revenue (all sources) Alternative 1: Level Funding with Steps 18,000 16,000 14,000 12,000 10,000 Dollars 8,000 6,000 4,000 2, Funding Years Criterium Engineers Page 10 of 12 10/31/2016

42 Alternative 2: One-time increase to $600 per year Beginning Year Reserve Fund Fee Special Special Investment Capital Ending Year Number Balance Revenue Assessments 1 Assessments 2 Earnings Expenditures Balance $16,404 $600 $0 $0 $218 $2,500 $14, $14,722 $600 $0 $0 $230 $0 $15, $15,551 $600 $0 $0 $242 $0 $16, $16,394 $600 $0 $0 $255 $0 $17, $17,249 $600 $0 $0 $268 $0 $18, $18,116 $600 $0 $0 $206 $4,956 $13, $13,967 $600 $0 $0 $219 $0 $14, $14,785 $600 $0 $0 $203 $1,845 $13, $13,744 $600 $0 $0 $149 $4,434 $10, $10,059 $600 $0 $0 $160 $0 $10, $10,818 $600 $0 $0 $171 $0 $11, $11,590 $600 $0 $0 $183 $0 $12, $12,373 $600 $0 $0 $195 $0 $13, $13,167 $600 $0 $0 $112 $6,278 $7, $7,601 $600 $0 $0 $123 $0 $8, $8,325 $600 $0 $0 $75 $3,895 $5, $5,105 $600 $0 $0 $86 $0 $5, $5,791 $600 $0 $0 $96 $0 $6, $6,486 $600 $0 $0 $106 $0 $7, $7,193 $600 $0 $0 $117 $0 $7,910 Criterium Engineers Page 11 of 12 10/31/2016

43 Alternative 2: One-time increase to $600 per year Beginning Balance as of start of year beginning Jan 2017: $16,404 CONTRIBUTIONS SPECIAL ASSESSMENTS SETTINGS (analyzed by year) FIRST YR LAST YR Totals Starting amount ($): 50 $ $ per year First Per Year $0 Per Unit $0 Increment by (%): 0 $15.79 $15.79 per unit per year Second Per Year $0 Per Unit $0 Step (%): $50.00 $50.00 per month Every 2 year $1.32 $1.32 per unit per month Frequency: 2 time Projected Annual Funding and Expenditures: Year: Year Number: End of Year Reserve Fund Balance 14,722 15,551 16,394 17,249 18,116 13,967 14,785 13,744 10,059 10,818 11,590 12,373 13,167 7,601 8,325 Capital Expenditures: 2, ,956-1,845 4, ,278 - Total Revenue (all sources) Year: Year Number: End of Year Reserve Fund Balance 5,105 5,791 6,486 7,193 7,910 Capital Expenditures: 3, Total Revenue (all sources) Alternative 2: One-time increase to $600 per year 20,000 18,000 16,000 14,000 12,000 Dollars 10,000 8,000 6,000 4,000 2, Funding Years Criterium Engineers Page 12 of 12 10/31/2016

44 Appendix C: PROJECT PHOTOGRAPHS

45 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Front entrance sign. Photo Number 1 Description: Brick pavers at entry. Photo Number 2

46 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Minor cracking noted in brick pavers. Photo Number 3 Description: Retaining wall and abandoned asphalt trail. Photo Number 4

47 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Landscape lighting control systems and irrigation control systems. Photo Number 5 Description: Exterior of townhome building, wood siding, and brick veneer. Brick accent walls. Photo Number 6

48 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Sections of warping noted in siding. Photo Number 7 Description: Flaking paint noted in areas of trim work. Photo Number 8

49 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Example of wood rot noted in sections of trim. Photo Number 9 Description: Typical rear view of townhome buildings. Photo Number 10

50 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Exterior of townhome buildings and roofs. Photo Number 11 Description: Townhome building roofs, trees in close proximity to roofs. Photo Number 12

51 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Surface rust noted on chimney caps. Photo Number 13 Description: Townhome building roofs and gutters. Photo Number 14

52 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Fencing along rear of townhome buildings at golf course. Photo Number 15 Description: Mailboxes for townhomes. Photo Number 16

53 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: General view of community. Photo Number 17 Description: Drainage inlet basin near townhome buildings. Photo Number 18

54 Location: Photo Taken by: Date: Greens At Lochmere Kevin R. Giles, RS 09/06/16 Cary, NC Description: Cracking observed in sections of concrete driveways. Photo Number 19 Description: Drainage inlet in concrete driveway. Photo Number 20