CAPITAL RESERVE STUDY

Transcription

1 CAPITAL RESERVE STUDY FOR THE HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Project Number: W:\2012\ \CORR\ v1.doc Date: March 29, 2013

2 Table of Contents Section Page Executive Summary... 1 Reserve Study Disclosures... 2 Project Narrative... 3 Capital Reserve Methodology... 3 Capital Reserve Calculation... 4 Capital Reserve Recommendations... 6 Component Narrative... 7 i TOTAL SYSTEMS ENGINEERING SERVICE

3 Executive Summary The Hialeah Condominium development is a 24 unit residential complex consisting of one (1) multiple story building, located at 6210 Ocean Avenue in Wildwood Crest, New Jersey. The building is three (3) stories and is located over an open air private garage at grade level. The building contains condominium style living units. An exterior balcony is also provided to each of the units. Level of Service Full Service with Site Visit Fiscal Year of Study 2013 Recommended Total First Year Contribution $35,948* 5% Threshold Funding Contribution $20,721* 10% Threshold Funding Contribution $53,578* Present Reserve Fund $56,494 Required Reserve Fund $144,236 Percent Funded 39% Month Contributions Commence May 2013 * Please note that this is the contribution for the period of January 2013 through December TOTAL SYSTEMS ENGINEERING SERVICE

4 Reserve Study Disclosures General - Becht Engineering does not currently have any other active projects with this Association. We are not aware of any involvement with this Association that would lead to an actual or perceived conflict of interest. Physical Analysis - The inspections performed to determine the current physical condition of the common elements were visual in nature; no destructive testing or invasive inspections were performed. Quantities were taken from a combination of field counts/measurements and plan take-offs. Personnel Credentials - Preparation of this Reserve Study was performed by a CAI designated Reserve Specialist and licensed Building Inspector. Completeness - This Reserve Study assumes that proper preventative and corrective maintenance has been and will continue to be performed on the common elements. Failure to properly maintain the common elements may lead to premature failure. It should be noted that higher rates of inflation, lower earned interest rates or prematurely failing components can result in a negative closing cash balance. In addition, it is important to note that the capital fund contributions each year are assumed to rise at the assumed rate of inflation. Failure to raise the annual contributions with inflation will reduce the closing balance and may lead to a future shortfall. Reliance on Client Data This Reserve Study was prepared based on certain information provided by an official representative of the Association. This information includes the current asset balance of the Reserve Fund and the ages of the common elements and dates of most recent replacements. Scope This Reserve Study is a reflection of the information provided to us and assembled for the Association s use for budgeting purposes, not for the purpose of performing an audit, quality/forensic analysis or background checks of historical records. Reserve Balance The actual and projected Reserve Fund Balance is based upon information provided by the Association and was not audited. Component Quantities Where this Reserve Study is an update of a previously prepared Study, the Association is considered to have deemed previously developed component listings and quantities as accurate and reliable. Reserve Projects While the information provided in this Study is to be considered reliable, on-site inspections are not to be considered a project audit or quality inspection. 2 TOTAL SYSTEMS ENGINEERING SERVICE

5 Introduction The purpose of a Capital Reserve Study is to estimate the amount of money that must be funded to replace those common element components that will require replacement before the end of the effective life of the project. Mortgage lenders recognize the conditions of inadequate reserves. Reserves are important in preserving the qualities of a particular complex or building and therefore can affect property values. Consequently, capital reserves are directly related to the security and risk of a lender's investment and the marketability of the property. The Capital Reserve Study develops a recommended basic annual contribution based upon current replacement costs. Inflation may increase future costs, and the accumulation of interest on the reserve fund deposits increases available funds. Accurate projection of these factors is not possible. However, the effects of inflation and interest are shown via cash flow projections using assumed inflation and interest rates. Accurate reserve funding requires regular updates. The Community Associations Institute recommends yearly reviews and a formal study every three years. Project Narrative The Hialeah Condominium development is a 24 unit residential complex consisting of one (1) multiple story building, located at 6210 Ocean Avenue in Wildwood Crest, New Jersey. The building is three (3) stories and is located over an open air private garage at grade level. The building contains condominium style living units. An exterior balcony is also provided to each of the units. Horizontal vinyl siding and vinyl cedar shake panels are utilized on exterior exposures and a partial EIFS (exterior insulation finish system) band is utilized at the bottom of the first floor as a transition to the open air garage. The main low slope roof consists of a smooth, modified bituminous membrane with a reflective type coating. A mansard roof assembly is provided along most of the perimeter of the building. The mansard roof is covered with fiberglass reinforced asphalt shingles. The driveway and parking area are concrete paved. Poured concrete sidewalks are located along Ocean Avenue and Wisteria Avenue. An in ground pool is located at the west side of the property. The pool is surrounded by a concrete pool apron and lawn area. A PVC fence surrounds the pool area. Capital Reserve Methodology 3 TOTAL SYSTEMS ENGINEERING SERVICE

6 In preparing this study, we reviewed the master deed and offering statement to identify the common element components. These building and site components are owned by the Association. Only components with estimated remaining lives of 30 years or less have been included in the capital reserve fund. Components with estimated remaining lives that are greater than 30 years, such as building structures, piping and electrical wiring are usually replaced during a major renovation and financed at that time. Including these components in the reserve fund would result in an unrealistically high-recommended annual contribution to the capital reserve. The general accepted practice is to not include these items in reserve studies. Quantities of the components to be included in the reserve fund were then determined by field measurements, as well as a review of available building and site plans. Estimates of the costs to replace each component were derived from published industry standards, including the R.S. Means Company cost-estimating guides. In addition, the costs were reviewed for accuracy based on our experience of similar replacement projects. Finally, estimated remaining lives were determined for each of the included components based on the present age, available industry data related to typical useful lives and the condition of the component, as determined by our physical inspection. The capital reserve fund is not intended to cover annual maintenance. If maintenance items are included in the Capital Reserve Study, the tax status of the reserve fund can be jeopardized. However, expected lives are based on the assumption that proper annual maintenance is being performed. Therefore, this annual maintenance should be included in the Association's maintenance fee. Without proper maintenance, accelerated deterioration can be expected, with shortened lives. Please note, it is only possible to reserve for future expenditures and that a current need must be financed separately by borrowing or assessments. This Capital Reserve Study is developed as an aid in the proper financial planning of the Association. As such, the common element components included are evaluated for their physical condition and only for the purpose of estimating their remaining lives. Identification of possible deficient conditions is beyond the intent and scope of the Capital Reserve Study. Capital Reserve Calculation We have provided two Capital Reserve calculation methods. The first method provided in this reserve study is what is known as the Component Method. This is the most conservative approach to calculating the reserve requirement. The Component Method analyzes each component individually and assumes that the money collected for each item will only be used to replace that item. Our program uses assumed rates of interest and inflation in the 4 TOTAL SYSTEMS ENGINEERING SERVICE

7 calculation of the annual contribution and fully funded balance. The assumed inflation rate is 1.50% and the assumed interest rate is 2.00%. The second calculation method is known as the Threshold Funding Method. This method pools all the components and assumes that the money contributed to the fund is available for replacement of any item. The annual contribution is determined by lowering the contribution until the closing balance for any given year drops below a pre-determined threshold. This minimizes the annual contribution while maintaining a minimum closing balance. Determining the optimum minimum closing balance is a subjective task. Certainly, the lower the minimum acceptable balance is the greater the risk that the fund will experience a deficit. The Reserve Summary (A-1) outlines the categories included in the study. This sheet lists the estimated Replacement Costs for all components in each category at the time of the study. The Present Fund column is the amount presently on deposit for the replacement of the components in these categories. The Required Fund, which is the amount we have determined should be on deposit at this time, is calculated as the Present Age of the components multiplied by the Basic Annual Contribution. The Basic Annual Contribution is the amount that should be reserved each year, in current dollars, to replace the components included in these categories. The Component Schedule (A-2 through A-3) shows the amount necessary to replace individual components, which are grouped in the categories shown on the Reserve Summary. Present Age is the age of the component at the time of the study. The Estimated Remaining Life is the anticipated number of years before replacement of this component can be expected to be necessary. This is based on the normal life, the current age, and an engineering assessment that considers site specific conditions if a site visit is included in our scope of work. The Typical Life column represents the anticipated number of years that a component may be expected to provide adequate service. These figures are based on industry standards; a component may outlive, or require replacement prior to, its typical life. The Percentage of Total is the percent of total Required Fund. This shows the significance of specific components relative to the total fund. The Present Fund refers to the amount currently set aside for replacement. If present funds are not reserved for specific components but are an unallocated pool, the total present fund is allocated between the components according to a calculation that takes into account the Percentage of Total column. The Required Fund is the amount necessary for each component to be considered fully funded. The Surplus (Deficit) column is a calculation of the Present Fund minus the Required Fund. A positive number means a surplus of cash reserves have been set aside to date. A negative number indicates that there is a deficit in the Present Fund. Years to Make-Up is simply the Estimated Remaining Life or the amount of time left to fully fund a particular component before the money is anticipated to be required to replace the component. Finally, the Contribution Adjustment signifies, if a deficit exists, the increase in annual contributions above the recommended Basic Annual Contribution required to eliminate the deficit. If a surplus exists, this is the decrease in annual contributions that would offset the over-funded condition. 5 TOTAL SYSTEMS ENGINEERING SERVICE

8 The Annual Make-Up is based on the assumption the reserve for the item must be fully funded before the item must be replaced. The Disbursement Schedule (A-9 through A-10) lists the years in which each component will require replacement. In addition, this schedule shows the replacement cost in current dollars and the adjusted cost based on the assumed inflation factor. The Reserve Fund Scenario(s) (A-11 through A-13) are schedules that approximate actual cash flows. Since this is a plan of accumulating deposits to fund the cost of replacing these capital components in future years, it is necessary to consider the interest earned on the deposited money and the effect of inflation on the costs of the replacement work. A-11 shows a 30-year scenario of the component method calculation, using the assumed rates of interest and inflation. Deposits into the fund and expenditures out of the fund are shown on an annual basis. It is very important to note that these scenarios assume that the annual contributions to the capital reserve fund will be increased at the rate of inflation. A-12 through A-13 show a 30-year scenario using the same rates of interest and inflation with a minimized Annual Contribution resulting in a closing balance, which never goes below the established threshold. The Component Detail Pages (A-4 through A-8) show further details of the individual components, including the quantities. Capital Reserve Recommendations The Hialeah Condominium has a total of 35 components in the reserve fund with a current Replacement Cost of $931,446. The Association presently has a total of $56,494 in the reserve fund. Using the Component Method, we have determined that the Basic Annual Contribution to the reserve fund should be $30,716. The fully funded balance required is $144,236. This leaves a deficit of $87,742 in the reserve fund. The deficit will be offset on an annual basis, for each reserve component, based on the estimated remaining lives. The total of the next budget year contribution to the Contribution Adjustment is $5,232. This results in a Total Contribution to the reserve fund for the next budget year of $35,948. For the Threshold Funding calculations, as directed by the Association, we have used minimum closing balances of 5% and 10% of the Total Replacement Cost of all reserve components. This means that, using the given assumptions; the closing balance will never go below these minimum balances. The Threshold Funding Method results in first year Basic Annual Contributions of $20,721 and $53,578. Based on your evaluation of the preferred calculation method, we suggest that you plan your annual contributions over the next few years according to the appropriate cash flow schedule. Each year, for the next three years, you may choose to review these assumptions. At no later than three years, we suggest that you contact us for an update based on a proper engineering review of the facility and replacement costs. 6 TOTAL SYSTEMS ENGINEERING SERVICE

9 It should be noted that higher rates of inflation, lower earned interest rates or prematurely failing components can result in a negative closing cash balance. In addition, it is important to note that the capital fund contributions each year are assumed to rise at the assumed rate of inflation. Failure to raise the annual contributions with inflation will reduce the closing balance. We recommend that the Association review this Capital Reserve Study with their Certified Public Accountant to be utilized in the preparation of their annual budget. Component Narrative Architectural ALUMINUM GUTTERS Aluminum gutters are provided for the low slope roof drainage. Additional gutters are found on the cabanas. This component is 3 years old and we estimate a remaining useful life of 17 years. BALCONY/WALKWAY RAILINGS The balcony railings are PVC. We are estimating that these railings will need to be replaced in approximately 27 years. CABANA, ROOF SHINGLES The fiberglass reinforced asphalt roof shingles on the cabanas are original to the construction. This component is 3 years old and we estimate a remaining useful life of 27 years. FIBERGLASS BALCONIES/WALKWAYS The fiberglass coating on the balconies and walkways will need to be refinished in approximately 27 years. Our estimate is based on the removal of the fiberglass and sheathing and their replacement with comparable materials. FLAT ROOF- The main roof on the building consists of a single ply modified bitumen membrane with a reflective type coating. All of the penetrations through the roof were recently reflashed due to a poor original installation. We do not expect that this roof will reach its full expected life cycle. We are estimating this roof will need to be replaced in approximately 12 years. MANSARD ROOF SHINGLES Installation issues are also a factor in the reduced service life for the mansard roof shingles. We did observe areas on the roof where shingles had already blown off. This component is 3 years old and we estimate a remaining useful life of 12 years. ROOF RAILING The roof railing was recently reinstalled to make it more secure. The railing will need to be removed and reinstalled when the roof is next replaced. We are estimating a remaining useful life of 27 years for this item. 7 TOTAL SYSTEMS ENGINEERING SERVICE

10 VINYL SIDING We have included line items for the two types of vinyl siding installed on the building: horizontal lap siding and molded cedar panels. The vinyl siding should be expected to last approximately 40 years with maintenance. Over time when individual panels break or become detached, it becomes difficult to match siding products. It should be expected that the Association will need to replace the exterior siding in the future. This component is 3 years old and we estimate a remaining useful life of 37 years. Electrical BALCONY LIGHTS This line item is for the light fixtures provided at each balcony. This component is 3 years old and we estimate a remaining useful life of 17 years. ELEVATOR OVERHAUL A line item has been included for the overhaul of the hydraulic elevator. Typically, elevators don t get completely replaced but rather modernized and overhauled. This component is 3 years old and we estimate a remaining useful life of 22 years. EMERGENCY LIGHTING/EXIT There are exit and emergency light fixtures throughout the building including the stairwells. These fixtures have an expected life of 20 years. EXT.LIGHT FIXTURES,BLDG This line item is for exterior light fixtures on the building. These fixtures have an expected remaining life of 17 years. GARAGE LIGHTS, LARGE- The parking garage has light fixtures on the ceiling. This component is 3 years old and we estimate a remaining useful life of 17 years. POOL LIGHTS There are pole mounted lights located in the pool area. This component is 3 years old and we estimate a remaining useful life of 17 years. WALKWAY LIGHTS This line item is for the lights found in the common walkway areas. This component is 3 years old and we estimate a remaining useful life of 17 years. Mechanical FIRE SPRINKLER HEADS We have included a line item to replace the sprinkler heads located in the common areas of the building, including the garage and storage areas. In a salt water environment we expect these polyester coated heads will need to be replaced within the next 27 years. The heads should be replaced with a stainless steel type head. 8 TOTAL SYSTEMS ENGINEERING SERVICE

11 POOL HEATER and FILTER Line items have been provided for the filter systems and heaters for both the pool and spa. This component is 3 years old and we estimate a remaining useful life of 17 years. PTAC WALL UNIT, CABANA A PTAC air conditioning unit has been provided to one of the cabanas. This component is 3 years old and we estimate a remaining useful life of 17 years. Site CONCRETE DRIVEWAY There are two concrete driveways that lead to the parking garage. This component is 3 years old and we estimate a remaining useful life of 27 years. CONCRETE GARAGE We have included the concrete pavement found in the open air garage. As most of the concrete is not directly exposed to the elements, we have provided for a longer expected service life. This component is 3 years old and we estimate a remaining useful life of 37 years. CONCRETE SIDEWALKS There are concrete sidewalks around the building and leading into the pool area. This component is 3 years old and we estimate a remaining useful life of 27 years. POOL A line item has been included for the pool. In the future the pool may be recoated, relined or replaced. This component is 3 years old and we estimate a remaining useful life of 17 years. POOL APRON This line item is for the concrete found around the pool. This component is 3 years old and we estimate a remaining useful life of 27 years. POOL FENCE A PVC picket style fence has been installed around the pool area. This component is 3 years old and we estimate a remaining useful life of 27 years. SPA A line item has been included for the recoating of the existing spa in the pool area. STOCKADE FENCE, VINYL, 5 FT-This component is 3 years old and we estimate a remaining useful life of 27 years. Miscellaneous COMMUNITY SIGN A community identification sign is found at the front of the property. This component is 3 years old and we estimate a remaining useful life of 22 years. 9 TOTAL SYSTEMS ENGINEERING SERVICE

12 GAZEBO There are two gazebos located in the pool area. These gazebos are constructed primarily of pressure treated wood. This component is 3 years old and we estimate a remaining useful life of 17 years. POOL FURNISHINGS This line item is for the various pool furnishings found at the pool area. Timothy P. Sullivan, RS Senior Project Manager CAI Reserve Specialist #27 March 29, TOTAL SYSTEMS ENGINEERING SERVICE

13 Capital Reserve Calculations TOTAL SYSTEMS ENGINEERING SERVICE

14 Reserve Summary Project Name: Project Location: Project Number: HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Month Contributions Commence: May 2013 RESERVES CONTRIBUTION Category Replacement Present Required Surplus Basic Cost Fund Fund (Deficit) Annual Adjustment* Total Architectural $517,653 $40,857 $104,312 ($63,455) $17,482 $4,256 $21,738 Electrical $50,125 $2,415 $6,165 ($3,750) $2,041 $180 $2,221 Mechanical $40,300 $1,869 $4,773 ($2,903) $1,580 $139 $1,719 Site $309,168 $10,536 $26,899 ($16,363) $8,923 $581 $9,504 Miscellaneous $14,200 $818 $2,088 ($1,270) $690 $77 $767 TOTALS $931,446 $56,494 $144,236 ($87,742) $30,716 $5,232 $35,948 FIRST YEAR CONTRIBUTION ADJUSTMENT CAN DIFFER EACH YEAR Thursday, March 07, 2013 Page A-1

15 Component Schedule Project Name: Project Location: Project Number: HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Est. Basic Description Replacement Present Rem. Typical Annual Percent Present Required Surplus Contrib. Cost Age Life Life Contrib. Total Fund Fund (Deficit) Adjustment Architectural ALUMINUM GUTTERS $2, $ % $110 $281 ($171) $9 BALCONY RAILINGS $15, $ % $557 $1,422 ($865) $29 CABANA, ROOF SHINGLES $2, $ % $92 $234 ($142) $5 FIBERGLASS BALCONIES $69, $2, % $2,499 $6,381 ($3,882) $132 FIBERGLASS WALKWAYS $75, $2, % $2,728 $6,966 ($4,238) $144 FLAT ROOF $174, $8, % $26,063 $66,541 ($40,478) $3,212 LEADERS $1, $ % $48 $122 ($74) $3 MANSARD ROOF SHINGLES $20, $ % $4,475 $11,425 ($6,950) $551 ROOF RAILING $6, $ % $218 $557 ($339) $12 SIDING, CEDAR STYLE VINYL $75, $1, % $1,992 $5,086 ($3,094) $76 SIDING, HORIZONTAL $66, $1, % $1,771 $4,522 ($2,751) $67 WALKWAY RAILINGS $8, $ % $303 $773 ($471) $16 Electrical BALCONY LIGHTS $2, $ % $132 $338 ($205) $11 ELEVATOR OVERHAUL $30, $1, % $1,306 $3,334 ($2,028) $85 EMERGENCY LIGHTING/EXIT $9, $ % $496 $1,266 ($770) $42 EXT.LIGHT FIXTURES,BLDG $1, $ % $55 $141 ($86) $5 GARAGE LIGHTS, LARGE $1, $ % $106 $271 ($165) $9 POOL LIGHTS $1, $ % $72 $183 ($111) $6 WALKWAY LIGHTS $4, $ % $248 $633 ($385) $21 Mechanical FIRE SPRINKLER HEADS $18, $ % $657 $1,678 ($1,021) $35 POOL HEATER $7, $ % $386 $985 ($599) $33 POOL/SPA FILTER SYSTEM $5, $ % $303 $774 ($471) $26 PTAC WALL UNIT, CABANA $2, $ % $138 $352 ($214) $12 SPA HEATER $7, $ % $386 $985 ($599) $33 Thursday, March 07, 2013 Page A-2

16 Component Schedule Project Name: Project Location: Project Number: HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Est. Basic Description Replacement Present Rem. Typical Annual Percent Present Required Surplus Contrib. Cost Age Life Life Contrib. Total Fund Fund (Deficit) Adjustment Site CONCRETE DRIVEWAY $6, $ % $248 $633 ($385) $13 CONCRETE GARAGE $160, $3, % $4,263 $10,884 ($6,621) $162 CONCRETE SIDEWALKS $45, $1, % $1,637 $4,179 ($2,542) $86 POOL $44, $2, % $2,428 $6,198 ($3,771) $208 POOL APRON $24, $ % $871 $2,223 ($1,352) $46 POOL FENCE $10, $ % $362 $924 ($562) $19 SPA $4, $ % $254 $648 ($394) $22 STOCKADE FENCE, VINYL, 5 FT $13, $ % $474 $1,210 ($736) $25 Miscellaneous COMMUNITY SIGN $2, $ % $87 $222 ($135) $6 GAZEBO $9, $ % $507 $1,294 ($787) $43 POOL FURNISHINGS $3, $ % $224 $571 ($348) $28 TOTALS $931,446 $30, % $56,494 $144,236 ($87,742) $5,232 General Notes: None Thursday, March 07, 2013 Page A-3

17 Component Detail Project Name: HIALEAH CONDOMINIUM Project Location: WILDWOOD CREST, NEW JERSEY Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Architectural RESERVES CONTRIBUTION Replacement Present Required Surplus Basic Quantity Cost Fund Fund (Deficit) Annual Total ALUMINUM GUTTERS 250 LF $2,000 $110 $281 ($171) $93 $102 BALCONY RAILINGS 408 LF $15,504 $557 $1,422 ($865) $471 $501 CABANA, ROOF SHINGLES 850 SF $2,550 $92 $234 ($142) $78 $82 FIBERGLASS BALCONIES 2,784 SF $69,600 $2,499 $6,381 ($3,882) $2,117 $2,248 FIBERGLASS WALKWAYS 3,039 SF $75,975 $2,728 $6,966 ($4,238) $2,310 $2,454 FLAT ROOF 14,560 SF $174,720 $26,063 $66,541 ($40,478) $8,129 $11,340 LEADERS 110 LF $1,100 $48 $122 ($74) $40 $44 MANSARD ROOF SHINGLES 2,000 SF $20,000 $4,475 $11,425 ($6,950) $608 $1,160 ROOF RAILING 160 LF $6,080 $218 $557 ($339) $185 $196 SIDING, CEDAR STYLE VINYL 7,500 SF $75,000 $1,992 $5,086 ($3,094) $1,691 $1,766 SIDING, HORIZONTAL 10,670 SF $66,688 $1,771 $4,522 ($2,751) $1,503 $1,570 WALKWAY RAILINGS 222 LF $8,436 $303 $773 ($471) $257 $273 TOTALS $517,653 $40,857 $104,312 ($63,455) $17,482 $21,738 Thursday, March 07, 2013 Page A-4

18 Component Detail Project Name: HIALEAH CONDOMINIUM Project Location: WILDWOOD CREST, NEW JERSEY Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Electrical RESERVES CONTRIBUTION Replacement Present Required Surplus Basic Quantity Cost Fund Fund (Deficit) Annual Total BALCONY LIGHTS 24 EA $2,400 $132 $338 ($205) $112 $123 ELEVATOR OVERHAUL 1 LS $30,000 $1,306 $3,334 ($2,028) $1,104 $1,190 EMERGENCY LIGHTING/EXIT 30 EA $9,000 $496 $1,266 ($770) $419 $461 EXT.LIGHT FIXTURES,BLDG 8 EA $1,000 $55 $141 ($86) $47 $51 GARAGE LIGHTS, LARGE 7 EA $1,925 $106 $271 ($165) $90 $99 POOL LIGHTS 2 EA $1,300 $72 $183 ($111) $60 $67 WALKWAY LIGHTS 36 EA $4,500 $248 $633 ($385) $209 $231 TOTALS $50,125 $2,415 $6,165 ($3,750) $2,041 $2,221 Thursday, March 07, 2013 Page A-5

19 Component Detail Project Name: HIALEAH CONDOMINIUM Project Location: WILDWOOD CREST, NEW JERSEY Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Mechanical RESERVES CONTRIBUTION Replacement Present Required Surplus Basic Quantity Cost Fund Fund (Deficit) Annual Total FIRE SPRINKLER HEADS 183 EA $18,300 $657 $1,678 ($1,021) $557 $591 POOL HEATER 1 EA $7,000 $386 $985 ($599) $326 $359 POOL/SPA FILTER SYSTEM 1 LS $5,500 $303 $774 ($471) $256 $282 PTAC WALL UNIT, CABANA 1 EA $2,500 $138 $352 ($214) $116 $128 SPA HEATER 1 EA $7,000 $386 $985 ($599) $326 $359 TOTALS $40,300 $1,869 $4,773 ($2,903) $1,580 $1,719 Thursday, March 07, 2013 Page A-6

20 Component Detail Project Name: HIALEAH CONDOMINIUM Project Location: WILDWOOD CREST, NEW JERSEY Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Site RESERVES CONTRIBUTION Replacement Present Required Surplus Basic Quantity Cost Fund Fund (Deficit) Annual Total CONCRETE DRIVEWAY 690 SF $6,900 $248 $633 ($385) $210 $223 CONCRETE GARAGE 16,050 SF $160,500 $4,263 $10,884 ($6,621) $3,618 $3,780 CONCRETE SIDEWALKS 5,064 SF $45,576 $1,637 $4,179 ($2,542) $1,386 $1,472 POOL 612 SF $44,064 $2,428 $6,198 ($3,771) $2,050 $2,258 POOL APRON 2,020 SF $24,240 $871 $2,223 ($1,352) $737 $783 POOL FENCE 252 LF $10,080 $362 $924 ($562) $307 $326 SPA 64 SF $4,608 $254 $648 ($394) $214 $236 STOCKADE FENCE, VINYL, 5 FT 300 LF $13,200 $474 $1,210 ($736) $401 $426 TOTALS $309,168 $10,536 $26,899 ($16,363) $8,923 $9,504 Thursday, March 07, 2013 Page A-7

21 Component Detail Project Name: HIALEAH CONDOMINIUM Project Location: WILDWOOD CREST, NEW JERSEY Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Miscellaneous RESERVES CONTRIBUTION Replacement Present Required Surplus Basic Quantity Cost Fund Fund (Deficit) Annual Total COMMUNITY SIGN 1 EA $2,000 $87 $222 ($135) $74 $79 GAZEBO 2 EA $9,200 $507 $1,294 ($787) $428 $471 POOL FURNISHINGS 1 LS $3,000 $224 $571 ($348) $189 $216 TOTALS $14,200 $818 $2,088 ($1,270) $690 $767 Thursday, March 07, 2013 Page A-8

22 Disbursement Schedule Project Name: Project Location: Project Number: HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Future Replacement Year Description Base Cost Cost FLAT ROOF $174,720 $208,898 MANSARD ROOF SHINGLES $20,000 $23,912 POOL FURNISHINGS $3,000 $3,587 $197,720 $236,398 ALUMINUM GUTTERS $2,000 $2,576 BALCONY LIGHTS $2,400 $3,091 EMERGENCY LIGHTING/EXIT $9,000 $11,592 EXT.LIGHT FIXTURES,BLDG $1,000 $1,288 GARAGE LIGHTS, LARGE $1,925 $2,479 GAZEBO $9,200 $11,850 POOL $44,064 $56,755 POOL HEATER $7,000 $9,016 POOL LIGHTS $1,300 $1,674 POOL/SPA FILTER SYSTEM $5,500 $7,084 PTAC WALL UNIT, CABANA $2,500 $3,220 SPA $4,608 $5,935 SPA HEATER $7,000 $9,016 WALKWAY LIGHTS $4,500 $5,796 $101,997 $131,374 COMMUNITY SIGN $2,000 $2,775 ELEVATOR OVERHAUL $30,000 $41,627 LEADERS $1,100 $1,526 $33,100 $45,928 BALCONY RAILINGS $15,504 $23,175 CABANA, ROOF SHINGLES $2,550 $3,812 CONCRETE DRIVEWAY $6,900 $10,314 CONCRETE SIDEWALKS $45,576 $68,127 FIBERGLASS BALCONIES $69,600 $104,038 Thursday, March 07, 2013 Page A-9

23 Disbursement Schedule Project Name: Project Location: Project Number: HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Future Replacement Year Description Base Cost Cost 2050 FIBERGLASS WALKWAYS $75,975 $113,567 FIRE SPRINKLER HEADS $18,300 $27,355 POOL APRON $24,240 $36,234 POOL FENCE $10,080 $15,068 POOL FURNISHINGS $3,000 $4,484 ROOF RAILING $6,080 $9,088 STOCKADE FENCE, VINYL, 5 FT $13,200 $19,731 WALKWAY RAILINGS $8,436 $12,610 $299,441 $447,604 CONCRETE GARAGE $160,500 $278,432 SIDING, CEDAR STYLE VINYL $75,000 $130,108 SIDING, HORIZONTAL $66,688 $115,689 $302,188 $524,229 Thursday, March 07, 2013 Page A-10

24 Reserve Fund Scenario Project Name: HIALEAH CONDOMINIUM Calculation Method: Component Project Location: Project Number: WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Month Contributions Commence: May 2013 Opening Annual Contribution Earned Closing Year Balance Contribution Adjustment Disbursements Interest Balance 2013 $56,494 $20,477 $5,232 $0 $882 $83, $83,086 $31,177 $5,311 $0 $2,058 $121, $121,632 $31,644 $5,391 $0 $2,833 $161, $161,500 $32,119 $5,471 $0 $3,637 $202, $202,727 $32,601 $5,553 $0 $4,467 $245, $245,348 $33,090 $5,637 $0 $5,326 $289, $289,401 $33,586 $5,721 $0 $6,214 $334, $334,923 $34,090 $5,807 $0 $7,131 $381, $381,951 $34,601 $5,894 $0 $8,077 $430, $430,524 $35,120 $5,983 $0 $9,055 $480, $480,682 $35,647 $6,072 $0 $10,066 $532, $532,468 $36,182 $6,164 $0 $11,108 $585, $585,921 $36,725 $1,724 $236,398 $12,136 $400, $400,107 $37,275 $1,750 $0 $8,425 $447, $447,557 $37,835 $1,776 $0 $9,378 $496, $496,546 $38,402 $1,803 $0 $10,367 $547, $547,118 $38,978 $1,830 $0 $11,386 $599, $599,312 $39,563 $1,237 $131,374 $12,430 $521, $521,168 $40,156 $1,255 $0 $10,872 $573, $573,452 $40,759 $1,274 $0 $11,924 $627, $627,409 $41,370 $1,293 $0 $13,010 $683, $683,082 $41,991 $1,313 $0 $14,134 $740, $740,519 $42,620 $1,202 $45,928 $15,285 $753, $753,698 $43,260 $1,220 $0 $15,556 $813, $813,733 $43,909 $1,238 $0 $16,763 $875, $875,643 $44,567 $1,257 $0 $18,009 $939, $939,476 $45,236 $1,275 $0 $19,293 $1,005, $1,005,280 $45,914 $455 $447,604 $20,608 $624, $624,654 $46,603 $462 $0 $13,003 $684, $684,722 $47,302 $469 $0 $14,212 $746, $746,705 $48,012 $476 $0 $15,459 $810,652 Thursday, March 07, 2013 Page A-11

25 Reserve Fund Scenario Project Name: HIALEAH CONDOMINIUM Calculation Method: 5% of Repl. Cost Project Location: WILDWOOD CREST, NEW JERSEY Minimum Balance $46,572 Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Month Contributions Commence: May 2013 Opening Annual Contribution Earned Closing Year Balance Contribution Adjustment Disbursements Interest Balance 2013 $56,494 $13,814 $0 $0 $822 $71, $71,130 $21,032 $0 $0 $1,650 $93, $93,813 $21,347 $0 $0 $2,108 $117, $117,268 $21,668 $0 $0 $2,580 $141, $141,515 $21,993 $0 $0 $3,069 $166, $166,576 $22,322 $0 $0 $3,573 $192, $192,472 $22,657 $0 $0 $4,095 $219, $219,224 $22,997 $0 $0 $4,634 $246, $246,855 $23,342 $0 $0 $5,190 $275, $275,387 $23,692 $0 $0 $5,764 $304, $304,844 $24,048 $0 $0 $6,357 $335, $335,249 $24,408 $0 $0 $6,969 $366, $366,626 $24,774 $0 $236,398 $7,601 $162, $162,604 $25,146 $0 $0 $3,524 $191, $191,275 $25,523 $0 $0 $4,102 $220, $220,900 $25,906 $0 $0 $4,699 $251, $251,505 $26,295 $0 $0 $5,315 $283, $283,114 $26,689 $0 $131,374 $5,951 $184, $184,381 $27,089 $0 $0 $3,981 $215, $215,451 $27,496 $0 $0 $4,607 $247, $247,554 $27,908 $0 $0 $5,253 $280, $280,716 $28,327 $0 $0 $5,921 $314, $314,964 $28,752 $0 $45,928 $6,611 $304, $304,398 $29,183 $0 $0 $6,404 $339, $339,985 $29,621 $0 $0 $7,121 $376, $376,726 $30,065 $0 $0 $7,860 $414, $414,652 $30,516 $0 $0 $8,624 $453, $453,791 $30,974 $0 $447,604 $9,411 $46, $46,572 $31,438 $0 $0 $1,272 $79, $79,283 $31,910 $0 $0 $1,931 $113, $113,124 $32,389 $0 $0 $2,613 $148,126 Thursday, March 07, 2013 Page A-12

26 Reserve Fund Scenario Project Name: HIALEAH CONDOMINIUM Calculation Method: 10% of Repl. Cost Project Location: WILDWOOD CREST, NEW JERSEY Minimum Balance $93,145 Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% Month Contributions Commence: May 2013 Opening Annual Contribution Earned Closing Year Balance Contribution Adjustment Disbursements Interest Balance 2013 $56,494 $35,718 $0 $0 $932 $93, $93,144 $54,381 $0 $0 $2,452 $149, $149,977 $55,197 $0 $0 $3,598 $208, $208,772 $56,025 $0 $0 $4,782 $269, $269,579 $56,865 $0 $0 $6,008 $332, $332,452 $57,718 $0 $0 $7,274 $397, $397,444 $58,584 $0 $0 $8,584 $464, $464,612 $59,463 $0 $0 $9,936 $534, $534,011 $60,355 $0 $0 $11,334 $605, $605,700 $61,260 $0 $0 $12,778 $679, $679,737 $62,179 $0 $0 $14,268 $756, $756,185 $63,112 $0 $0 $15,807 $835, $835,104 $64,058 $0 $236,398 $17,396 $680, $680,160 $65,019 $0 $0 $14,308 $759, $759,487 $65,994 $0 $0 $15,905 $841, $841,386 $66,984 $0 $0 $17,553 $925, $925,924 $67,989 $0 $0 $19,255 $1,013, $1,013,168 $69,009 $0 $131,374 $21,011 $971, $971,813 $70,044 $0 $0 $20,195 $1,062, $1,062,053 $71,095 $0 $0 $22,011 $1,155, $1,155,159 $72,161 $0 $0 $23,885 $1,251, $1,251,205 $73,244 $0 $0 $25,818 $1,350, $1,350,266 $74,342 $0 $45,928 $27,811 $1,406, $1,406,490 $75,457 $0 $0 $28,947 $1,510, $1,510,895 $76,589 $0 $0 $31,048 $1,618, $1,618,532 $77,738 $0 $0 $33,213 $1,729, $1,729,482 $78,904 $0 $0 $35,444 $1,843, $1,843,831 $80,088 $0 $447,604 $37,744 $1,514, $1,514,058 $81,289 $0 $0 $31,162 $1,626, $1,626,509 $82,508 $0 $0 $33,424 $1,742, $1,742,442 $83,746 $0 $0 $35,756 $1,861,944 Thursday, March 07, 2013 Page A-13

27 Present Fund By Category Project Name: Project Location: Project Number: HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% 18.6% 3.3% 1.4% 4.3% 72.3% Architectural Electrical Mechanical Miscellaneous Site Thursday, March 07, 2013 Page A-14

28 Current Replacement Cost by Category Project Name: Project Location: Project Number: HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% 33.2% 55.6% 1.5% 4.3% 5.4% Architectural Electrical Mechanical Miscellaneous Site Thursday, March 07, 2013 Page A-15

29 Annual Contribution by Category Project Name: Project Location: Project Number: HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% 29.1% 2.2% 5.1% 6.6% 56.9% Architectural Electrical Mechanical Miscellaneous Site Thursday, March 07, 2013 Page A-16

30 Disbursements by Year HIALEAH CONDOMINIUM WILDWOOD CREST, NEW JERSEY Project Name: Project Location: Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Thursday, March 07, 2013 Page A-17

31 Reserve Fund Closing Balance Component vs. Cash Flow Project Name: HIALEAH CONDOMINIUM Project Location: WILDWOOD CREST, NEW JERSEY Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $ Component Method 5% Threshold Method 10% Threshold Method Thursday, March 07, 2013 Page A-18

32 Reserve Fund Contributions Component vs. Cash Flow Project Name: HIALEAH CONDOMINIUM Project Location: WILDWOOD CREST, NEW JERSEY Project Number: Interest Rate: 2.00% Date of Study: April 2013 Inflation Rate: 1.50% $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Component Method 5% Threshold Method 10% Threshold Method Thursday, March 07, 2013 Page A-19

33 Appendix TOTAL SYSTEMS ENGINEERING SERVICE

34 Definitions Base Cost - See definition "Current Replacement Cost Allowance". This calculation, based on current costs, is increased according to the assumed rates of inflation in the "Disbursement Schedule". Basic Annual Contribution - This is the amount that should have been contributed each year, while considering assumed rates of interest and inflation, to accumulate a reserve equal to the Current Replacement Cost Allowance at the anticipated replacement time (end-of-life). Contribution Adjustment - If the capital reserve fund for a component is not fully funded, this is the increase in annual contributions that would be required to fully fund the reserve before the estimated end-of-life. If the capital reserve fund for a component is over-funded, this is the decrease in annual contributions that would offset the over-funded condition. Contribution, Total - This is the recommended Basic Annual Contribution plus the "Annual Make-Up" (see definition) required to make up for past underfunding before replacement of the component is estimated to be required. The amount can decrease in future years because the required Annual Make-Up decreases each year in which a reserve fund for a capital component is fully funded. Current Replacement Cost - The cost to replace the component at the time of this Study. Estimated Remaining Life - The anticipated number of years before replacement of this component can be expected to be necessary. This is based on the normal life, the current age, and an engineering assessment that considers site-specific conditions. Deficit - This shows the amount that the Present Fund is undercapitalized. It is the present fund minus the Required Fund. A positive number (surplus) means excess cash reserves have been set aside to date. A negative number indicates a deficit in the Present Fund; this underfunding can be made up in one of two ways: 1) an increase in the annual fees to catch up or, 2) a special assessment between now and when the component requires replacement. This Study assumes the second method is used and recommends annual makeup on that basis. Interest - Interest accumulated on the capital reserve fund deposit based on the assumed interest rate listed at the top of the "Projected Cash Flow" pages. Inflation The increased cost of future replacement expenditures are based on an assumed rate of inflation. Opening Balance - On the "Projected Cash Flow" pages, this is the reported total reserve fund on deposit for the condominium Association. TOTAL SYSTEMS ENGINEERING SERVICE

35 Percentage Of Total - Percent of total recommended Basic Annual Contribution. This shows the significance of specific components relative to required contributions to the capital reserve fund. Present Age - Age of the component at the time of this Study. Present Fund - Present funds set aside for capital component replacement at this time. If present fund are not reserved for specific components but are an unallocated pool, the total present fund is allocated between the components according to the Percentage Of Total column. Required Fund - this amount should have been set aside for each component in the fund to be considered fully funded. Surplus - This shows the amount that the Present Fund is overcapitalized. It is the present fund minus the Required Fund. A positive number (surplus) means excess cash reserves have been set aside to date. Typical Life - The anticipated number of years that a component may be expected to provide adequate service. Please note that this is based on industry standards. A component may outlive, or require replacement prior to, its typical life. Abbreviations: EA - Each LF - Linear Foot LS - Lump Sum SF - Square Foot SY - Square Yard TOTAL SYSTEMS ENGINEERING SERVICE