Indian Peaks Townhomes 95 th Street Lafayette, CO 80026 Level 2, Premium Reserve Analysis Report Period 01/01/16 12/31/16 Client Reference Number - 4080 Property Type Townhome Development Number of Units 31 Fiscal Year End December 31 Final Version Date of Property Observation - February 25, 2016 Project Manager - G. Michael Kelsen, RS, PRA Main Contact Person - Mr. Kevin Lucas, Community Manager Report was prepared on - Wednesday, August 24, 2016 P.O. Box 1762 Castle Rock, CO 80104 Phone (303) 790-7572 Fax (303) 688-3083 www.aspenrs.com
Table of Contents SECTION 1: SECTION 2: SECTION 3: Introduction to Reserve Analysis... page 1 General Information and Answers to FAQ s... page 2-3 Summary of Reserve Analysis... page 4 Physical Analysis (Photographic)... page 1-11 Financial Analysis a) Funding Summary... page 1 b) Percent Funded Graph... page 2 c) Asset Inventory List... page 3 d) Significant Components Table... page 4 e) Significant Components Graph... page 5 f) Yearly Summary Table... page 6 g) Yearly Contributions Graph... page 7 h) Component Funding Information... page 8 i) Yearly Cash Flow Table... page 9 j) Projected Expenditures Year by Year Graph... page 10 k) Projected Expenditures Year by Year... page 11 SECTION 4: Glossary of Terms and Definitions... page 1-2
Introduction to the Reserve Analysis The elected officials of this association made a wise decision to invest in a Reserve Analysis to get a better understanding of the status of the Reserve funds. This Analysis will be a valuable tool to assist the Board of Directors in making the decision to which the dues are derived. Typically, the Reserve contribution makes up 15% - 40% of the association s total budget. Therefore, Reserves is considered to be a significant part of the overall monthly association payment. Every association conducts its business within a budget. There are typically two main parts to this budget, Operating and Reserves. The Operating budget includes all expenses that are fixed on an annual basis. These would include management fees, maintenance fees, utilities, etc. The Reserves is primarily made up of Capital Replacement items such as asphalt, roofing, fencing, mechanical equipment, etc., that do not normally occur on an annual basis. The Reserve Analysis is also broken down into two different parts, the Physical Analysis and the Financial Analysis. The Physical Analysis is information regarding the physical status and replacement cost of major common area components that the association is responsible to maintain. It is important to understand that while the Component Inventory will remain relatively stable from year to year, the Condition Assessment and Life/Valuation Estimates will most likely vary from year to year. You can find this information in the Asset Inventory Section (Section 2) of this Reserve Analysis. The Financial Analysis Section is the evaluation of the association s Reserve balance, income, and expenses. This is made up of a finding of the clients current Reserve Fund Status (measured as Percent Funded) and a recommendation for an appropriate Reserve Allocation rate (also known as the Funding Plan). You can find this information in Section 3 (pages 1 13) of this Reserve Analysis. The purpose of this Reserve Analysis is to provide an educated estimate as to what the Reserve Allocation needs to be. The detailed schedules will serve as an advanced warning that major projects will need to be addressed in the future. This will allow the Board of Directors to have ample timing to obtain competitive estimates and bids that will result in cost savings to the individual homeowners. This will also ensure the physical well being of the property and ultimately enhance each owner s investment, while limiting the possibility of unexpected major projects that may lead to Special Assessments. It is important for the client, homeowners, and potential future homeowners to understand that the information contained in this analysis is based on estimates and assumptions gathered from various sources. Estimated life expectancies and cycles are based upon conditions that were readily visible and accessible at time of the observation. No destructive or intrusive methods (such as entering the walls to inspect the condition of electrical wiring, plumbing lines, and telephone wires) were performed. In addition, environmental hazards (such as lead paint, asbestos, radon, etc.), construction defects, and acts of nature have not been investigated in the preparation of this report. If problem areas were revealed, a reasonable effort has been made to include these items within the report. While every effort has been made to ensure accurate results, this report reflects the judgment of Aspen Reserve Specialties and should not be construed as a guarantee or assurance of predicting future events. 1
General Information and Answers to Frequently Asked Questions Why is it important to perform a Reserve Study? As previously mentioned, the Reserve allocation makes up a significant portion of the total monthly dues. This report provides the essential information that is needed to guide the Board of Directors in establishing the budget in order to run the daily operations of your association. It is suggested that a third party professionally prepare a Reserve Study since there is no vested interest in the property. Also, a professional knows what to look for and how to properly develop an accurate and reliable component list. Now that we have it, what do we do with it? Hopefully, you will not look at this report and think it is too cumbersome to understand. Our intention is to make this Reserve Analysis very easy to read and understand. Please take the time to review it carefully and make sure the main ingredients (asset information) are complete and accurate. If there are any inaccuracies, please inform us immediately so we may revise the report. Once you feel the report is an accurate tool to work from, use it to help establish your budget for the upcoming fiscal year. The Reserve allocation makes up a significant portion of the total monthly dues and this report should help you determine the correct amount of money to go into the Reserve fund. Additionally, the Reserve Study should act as a guide to obtain proposals in advance of pending normal maintenance and replacement projects. This will give you an opportunity to shop around for the best price available. The Reserve Study should be readily available for Real Estate agents, brokerage firms, and lending institutions for potential future homeowners. As the importance of Reserves becomes more of a household term, people are requesting homeowners associations to reveal the strength of the Reserve fund prior to purchasing a condominium or townhome. How often do we update or review it? Unfortunately, there is a misconception that these reports are good for an extended period of time since the report has projections for the next 30 years. Just like any major line item in the budget, the Reserve Analysis should be reviewed each year before the budget is established. Invariably, some assumptions have to be made during the compilation of this analysis. Anticipated events may not materialize and unpredictable circumstances could occur. Aging rates and repair/replacement costs will vary from causes that are unforeseen. Earned interest rates may vary from year to year. These variations could alter the content of the Reserve Analysis. Therefore, this analysis should be reviewed annually, and a property observation should be conducted at least once every three years. Is it the law to have a Reserve Study conducted? The Government requires reserve analyses in approximately 20 states. The State of Colorado currently requires all associations to adopt a Reserve policy, but does not currently enforce a Reserve Study is completed. Despite enacting this current law, the chances are also very good the documents of the association require the association to have a Reserve fund established. This may not mean a Reserve Analysis is required, but how are you going to know there are enough funds in the account if you don t have the proper information? Hypothetically, some associations look at the Reserve fund and think $50,000 is a lot of money and they are in good shape. What they don t know is the roof will need to be replaced within 5 years, and the cost of the roof is going to exceed $75,000. So while $50,000 sounds like a lot of money, in reality it won t even cover the cost of a roof, let alone all the other amenities the association is responsible to maintain. 2
What makes an asset a Reserve item versus an Operating item? A Reserve asset is an item that is the responsibility of the association to maintain, has a limited Useful Life, predictable Remaining Useful Life expectancies, typically occurs on a cyclical basis that exceeds 1 year, and costs above a minimum threshold cost. An operating expense is typically a fixed expense that occurs on an annual basis. For instance, minor repairs to a roof for damage caused by high winds or other weather elements would be considered an operating expense. However, if the entire roof needs to be replaced because it has reached the end of its life expectancy, then the replacement would be considered a Reserve expense. The GREY area of maintenance items that are often seen in a Reserve Study One of the most popular questions revolves around major maintenance items, such as painting the buildings or seal coating the asphalt. You may hear from your accountant that since painting or seal coating is not replacing a capital item, then it cannot be considered a Reserve issue. However, it is the opinion of several major Reserve Study providers that these items are considered to be major expenses that occur on a cyclical basis. Therefore, it makes it very difficult to ignore a major expense that meets the criteria to be considered a Reserve component. Once explained in this context, many accountants tend to agree and will include any expenses, such as these examples, as a Reserve component. The Property Observation The Property Observation was conducted following a review of the documents that were established by the developer identifying all common area assets. In some cases, the Board of Directors at some point may have revised the documents. In either case, the most current set of documents was reviewed prior to inspecting the property. In addition, common area assets may have been reported to Aspen Reserve Specialties by the client, or by other parties. Estimated life expectancies and life cycles are based upon conditions that were readily accessible and visible at the time of the observation. We did not destroy any landscape work, building walls, or perform any methods of intrusive investigation during the observation. In these cases, information may have been obtained by contacting the contractor or vendor that has worked on the property. The Reserve Fund Analysis We projected the starting balance from taking the most recent balance statement, adding expected Reserve contributions for the rest of the year, and subtracting any pending projects for the rest of the year. We compared this number to the ideal Reserve Balance and arrived at the Percent funded level. Measures of strength are as follows: 0% - 30% Funded Is considered to be a weak financial position. Associations that fall into this category are subject to Special Assessments and deferred maintenance, which could lead to lower property values. If the association is in this position, actions should be taken to improve the financial strength of the Reserve Fund. 31% - 69% Funded The majority of associations are considered to be in this fair financial position. While this doesn t represent financial strength and stability, the likelihood of Special Assessments and deferred maintenance is diminished. Effort should be taken to continue strengthening the financial position of the Reserve fund. 70% - 99% Funded This indicates financial strength of a Reserve fund and every attempt to maintain this level should be a goal of the association. 100% Funded This is the ideal amount of Reserve funding. This means that the association has the exact amount of funds in the Reserve account that should be at any given time. 3
Summary of Indian Peaks Townhomes - Assoc. ID # - 04080-16 Projected Starting Balance as of May 1, 2016 - $229,019 Ideal Reserve Balance as of May 1, 2016 - $280,976 Percent Funded as of May 1, 2016-81% Recommended Reserve Allocation (per month) - $2,100 (rest of 2016) Recommended Reserve Allocation (per month) - $3,000 (starting 2017) Minimum Reserve Allocation (per month) - $2,825 (starting 2017) Recommended Special Assessment - $0 This report is an update to an existing Reserve Study that was prepared for the association 6 years ago for the 2010 fiscal period. An observation of the property s common area elements originally took place on February 25, 2016. In addition, we obtained information by contacting local vendors and contractors, as well as communicating with the property representative. To the best of our knowledge, the conclusions and suggestions of this report are considered reliable and accurate insofar as the information obtained from these sources. This property contains 31 townhomes within 7 different buildings, ranging in size of 3 to 6 units per building. This community is a sub-association of a master planned community that consists of more than 400 units. The responsibilities of the sub-association include building exterior surfaces, individual driveways, and unit fencing. Please refer to the Projected Reserve Expenditures table in the Financial Analysis section for a list of when components are scheduled to be addressed. In comparing the projected balance of $229,019 versus the ideal Reserve Balance of $280,976, we find the association Reserve fund to be in an above average financial position at this point in time (approximately 81% funded of ideal). Since the budget has already been adopted for the current fiscal year, we recommend maintaining the budgeted Reserve contribution ($2,100 per month) for the rest of 2016. However, as a result of the information contained in this report, we find the current Reserve allocation to be less than adequate in maintaining the strength of the Reserve fund to prepare for future projects. Therefore, we are recommending an increase of the Reserve contribution to $3,000 (representing an increase of approximately $29.00 per unit) per month starting January 2017. This should be followed by nominal annual increases of 3.50% thereafter to help offset the effects of inflation. By following the recommendation, the plan will maintain the Reserve account at the fully funded position throughout the thirty-year period. In the percent Funded graph, you will see we have also provided a minimum Reserve contribution of $2,825 per month. If the Reserve contribution falls below this rate, then the Reserve fund will fall into a situation where additional Special Assessments, deferred maintenance, and lower property values are possible at some point in the future. The minimum Reserve allocation follows the threshold theory of Reserve funding where the percent funded status is not allowed to dip below 30% funded at any point during the thirty-year period. This was provided for one purpose only, to show the association how small the difference is between the two scenarios and how it would not make financial sense to contribute less money (approximately 6% in this case) to the Reserve fund to only stay above a certain threshold. As you can see, the difference between the two scenarios is considered to be minimal, and based on the risk, we strongly suggest the recommended Reserve Allocation is followed. 4
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 105 Comp Shingle Roof - Replace Observations: - At the time of our site visit we noted that nothing had been done to the roofs since the last Reserve Study. Therefore, there were a few loose shingles still and other typical signs of deterioration. - While this roof has a rating of 30 years from the manufacturer, a life expectancy of 15-20 years should be anticipated due to the effects from the environment. - The elements in this area that affect the life expectancy of roofs include hail storms, extreme temperature variations, freeze/thaw conditions, and wind. - Remaining life is based on current condition and aging. Location: Roofs of unit buildings General Notes: Quantity: Approx. 554 squares Life Expectancy: 20 Remaining Life: 7 Best Cost: $207,750 $375/square; Estimate to remove and replace Building 412 to 418 (3 units) - 52 squares Building 360 to 380 (6 units) - 107 squares Building 370 to 382 (4 units) - 72 squares Building 354 to 366 (4 units) - 72 squares Building 329 to 349 (6 units) - 107 squares Building 316 to 328 (4 units) - 72 squares Building 300 to 312 (4 units) - 72 squares Worst Cost: $235,450 $425/square; Higher estimate for more labor costs Source of Information: Cost database Page 1 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 120 Raingutters/Downspouts - Replace Observations: - Majority of lines are aging as expected and are in fair condition with some signs of deterioration. - It is important to keep lines clean and free from debris. It is typical for debris, such as roof granules and dirt, to build up in the lines. - We recommend cleaning out the lines at least once a year as a maintenance expense to ensure full life expectancy. - It is typical to replace raingutters and downspouts at the same time as roof materials for best cost estimate. Location: (7) Existing buildings General Notes: Quantity: Approx. 4,510 LF Life Expectancy: 20 Remaining Life: 7 Best Cost: $35,950 $5.75/LF; Estimate to replace Building 412 to 418 (3 units) - 404 LF Building 360 to 380 (6 units) - 855 LF Building 370 to 382 (4 units) - 554 LF Building 354 to 366 (4 units) - 601 LF Building 329 to 349 (6 units) - 848 LF Building 316 to 328 (4 units) - 684 LF Building 300 to 312 (4 units) - 561 LF Worst Cost: $29,325 $6.50/LF: Higher estimate for larger lines Source of Information: Cost database Page 2 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 201 Building Ext Surfaces - Repaint Observations: - Surfaces are in fair/poor condition with some fading and peeling paint observed. - In order to maintain the appearance of the property, we suggest staining or painting wood surfaces every 4-6 years. Location: Quantity: Siding material and trim of buildings (31) Units General Notes: Life Expectancy: 6 Remaining Life: 0 Best Cost: $32,550 $1050/unit; Estimate to repaint siding only Worst Cost: $37,200 $1200/unit; Higher estimate for more prep work Source of Information: Cost database Page 3 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 304 Fiber Cement Siding - Major Repairs Observations: - As the property ages, this type of material has been known to start delaminating if not painted and caulked on a proper cycle. - We suggest establishing Reserve funds for major repairs every other painting cycle. - The remaining life is based on the observed conditions at the time of our site evaluation and the timing of the next paint job. Location: Siding of existing buildings General Notes: Quantity: Approx. 45,815 GSF Life Expectancy: 12 Remaining Life: 6 Best Cost: $17,000 $550/unit; Allowance for major repairs Worst Cost: $20,000 Higher allowance for more repairs Building 412 (3 units) - 4983 GSF Building 380 (6 units) - 8225 GSF Building 370 (4 units) - 6095 GSF Building 366 (4 units) - 6095 GSF Building 349 (6 units) - 8225 GSF Building 328 (4 units) - 6095 GSF Building 312 (4 units) - 6095 GSF **Unit 358 vent - soffit is loose Source of Information: Research with contractor Page 4 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 403 Concrete Driveways - Repair/Replace Observations: - Since it is unlikely that all concrete surfaces will fail at the same time, we suggest establishing a Reserve fund for periodic repairs and replacement to approximately 15% of the total area (1,270 GSF) every 5 years. - Repairs should be coordinated with other concrete surfaces for best cost estimate since most asphalt companies can also perform concrete work. Location: Unit driveways General Notes: Quantity: Approx. 8,460 GSF Life Expectancy: 5 Remaining Life: 0 Best Cost: $10,800 Estimate to replace 15% of area every 5 years Worst Cost: $12,100 Higher estimate for more repairs Unit 328-360 GSF, Unit 308-400 GSF, Unit 360-100 GSF, Unit 364-200 GSF, Unit 368-200 GSF, Unit 372-200 GSF, Unit 376-200 GSF, Unit 380-100 GSF, Unit 412-80 GSF, Unit 414-200 GSF, Unit 418-80 GSF, Unit 320-400 GSF, Unit 382-80 GSF, Unit 378-160 GSF, Unit 374-160 GSF, Unit 358-160 GSF, Unit 349-300 GSF Unit 324-400 GSF, Unit 316-400 GSF, Unit 312-400 GSF, Unit 370-80 GSF, Unit 366-80 GSF, Unit 362-160 GSF, Unit 354-80 GSF, Unit 345-600 GSF, Unit 341-600 GSF, Unit 329-240 GSF, Unit 329-440 GSF, Unit 304-400 GSF, Unit 337 - Approx. 600 GSF, Unit 333 - Approx. 600 GSF Source of Information: Cost Database Page 5 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 502 Garage Doors - Replace Observations: - According to Article 10.04, the owner shall be responsible to maintenance of garage doors (except painting). - Some associations decide to include garage doors as an association expense to obtain the best cost available and to maintain a consistent appearance for the association. - Unless otherwise noted, Reserve funding will not be included based on the rules stated in the declarations. - We suggest the association establish a design guideline so that when an owner goes to replace a door, it will match and be consistent with the others. Location: Quantity: At each garage (31) 7x16 aluminum roll up doors General Notes: Life Expectancy: N/A Remaining Life: Best Cost: $0 Worst Cost: $0 Source of Information: Page 6 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 607 Wood Decks - Replace Observations: - At the time of our site visit, it was noted that all decks appeared to be attached securely to the buildings with no sign of structural deterioration. However, paint was fading, peeling, etc. - Unable to access each unit due to exclusive use common areas. From ground observation, there were no signs of split or rotted boards. - The association will paint the decks during the painting cycle, but repairs should be performed by the individual owner since level of use will vary from unit to unit and not every unit has a deck to enjoy. Location: Some units General Notes: Quantity: (7) 5x15 existing decks Life Expectancy: N/A Remaining Life: Best Cost: $0 Building 380 - (1) 5x15 deck, 25 LF vinyl rail Building 370 - (1) 5x15 deck, 25 LF vinyl rail Building 366 - (1) 5x15 deck, 25 LF vinyl rail Building 349 - (2) 5x15 decks, 50 LF vinyl rail Building 328 - (1) 5x15 deck, 25 LF vinyl rail Building 312 - (1) 5x15 deck, 25 LF vinyl rail Worst Cost: $0 Source of Information: Page 7 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 803 Mailboxes - Replace Observations: - This line item is for the original mailboxes that were installed when construction of the community began. - While it is possible the USPS will maintain these boxes, we are starting to see the responsibility of all mailboxes get turned over to associations. - Therefore, funding should be included for conservative measures. - Based on our experience, these boxes will have a life expectancy of 15-20 years due to location and quality. - Remaining life is based on age and observed condition. Location: Quantity: Fern Lake Ct. and Jasper Peak Ct. (2) 16 box kiosks General Notes: Fern Lake Ct. - (1) 16 box CBU, 12/1999, serial #62859 Life Expectancy: 18 Remaining Life: 5 Best Cost: $3,500 $1750/kiosk; Estimate to replace Jasper Peak Ct. - (1) 16 box CBU, 12/1999, serial #62857 Worst Cost: $4,000 $2000/kiosk; Higher estimate Source of Information: Cost database Page 8 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 1007 Vinyl Trellis - Replace Observations: - At the time of our site visit, the structure on Jasper Peak no longer had extensive vine growth on the trellis. - Continue to monitor these structures for any signs of deterioration and adjust funding requirements in future Reserve Studies. - For now, we suggest treating any repairs to the structure itself as an operating expense. Location: Quantity: Mailbox kiosks (2) Trellis' General Notes: Life Expectancy: N/A Remaining Life: Best Cost: $0 Worst Cost: $0 Source of Information: Page 9 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 1008 Vinyl Fencing - Replace Observations: - At the time of our site visit, it was noted that quite a bit of the vegetation has been removed or died since our last inspection. - There were a few areas where the caps were missing, but we recommend replacing these on an as needed basis with operating funds. - While this fence material is supposed to have an "indefinite life expectancy" according to the manufacturer, a realistic replacement cycle will range from 20-22 years due to the dry climate and harsh sun. Location: Perimeter of unit yards General Notes: Quantity: Approx. 2,100 LF Life Expectancy: 22 Remaining Life: 9 Best Cost: $73,500 $35/LF; Estimate to replace Building 412 (3 units) - 226 LF Building 380 (6 units) - 448 LF Building 370 (4 units) - 315 LF Building 366 (4 units) - 391 LF Building 349 (6 units) - 300 LF Building 328 (4 units) - 185 LF Building 312 (4 units) - 235 LF Worst Cost: $84,000 $40/LF; Higher estimate Source of Information: Research with fence company Page 10 of 11 Wednesday, April 27, 2016
Component Inventory for Indian Peaks Townhomes Client Reference # 4080 Comp #: 1602 Exterior Fixtures - Replace Observations: - While replacement can occur on an as needed basis, it is our opinion and recommendation to replace all lights at the same time every 15-20 years to maintain a consistent appearance throughout the property. - By replacing multiple fixtures, the association will be able to obtain a quantity discount for replacement and installation of the fixtures. Location: At each unit General Notes: Quantity: (110) lights Life Expectancy: 20 Remaining Life: 7 Best Cost: $15,400 $140/light; Average cost to replace Worst Cost: $18,150 $165/light; Higher estimate for better fixture Each unit has: (1) pole lights at entrance to front yard area (1) Wall light above front porch (1) wall light by garage Add (2) lights for each unit with a deck Building 380-2 Building 370-2 Building 366-2 Building 349-4 Building 328-2 Building 312-2 Source of Information: Cost database Page 11 of 11 Wednesday, April 27, 2016
Funding Summary For Indian Peaks Townhomes Beginning Assumptions Financial Information Source Research With Client # of units 31 Fiscal Year End December 31, 2016 Monthly Dues from 2016 Approved budget $4,185.00 Monthly Reserve Allocation from 2016 Approved Budget $2,100.00 Projected Starting Reserve Balance (as of 1/1/2016) $229,019 Ideal Starting Reserve Balance (as of 1/1/2016) $280,976 Economic Factors Past 20 year Average Inflation Rate (based on CCI) 3.50% Current Average Interest Rate 1.00% Current Reserve Status Current Balance as a % of Ideal Balance 82% Recommendations for 2016 Fiscal Year Monthly Reserve Allocation (2016) $2,100 Per Unit $67.74 Monthly Reserve Allocation (starting 2017) $3,000 Per Unit $96.77 Minimum Monthly Reserve Allocation (starting 2017) $2,825 Per Unit $91.13 Nominal Annual Increases 3.50% # of Years 30 Special Assessment $0 Per Unit $0 Changes to Current 2016 Budget Increase/Decrease to Reserve Allocation $0 as Percentage 0% Per Unit $0.00 Changes from 2016 to 2017 Increase/Decrease to Reserve Allocation $900 as Percentage 43% Per Unit $29.03 1
Percent Funded Graph For Indian Peaks Townhomes Percent Funded Recommended Monthly Reserve Allocation from 2016 Approved Budget Minimum 120% 100% % Level of Funding 80% 60% 40% 20% 0% 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 Year 2
Component Inventory for Indian Peaks Townhomes Category Asset # Asset Name UL RUL Best Cost Worst Cost Roofing 105 Comp Shingle Roof - Replace 20 7 $207,750 $235,450 120 Raingutters/Downspouts - Replace 20 7 $35,950 $29,325 Painted Surfaces 201 Building Ext Surfaces - Repaint 6 0 $32,550 $37,200 Siding Materials 304 Fiber Cement Siding - Major Repairs 12 6 $17,000 $20,000 Drive Materials 403 Concrete Driveways - Repair/Replace 5 0 $10,800 $12,100 Property Access 502 Garage Doors - Replace N/A $0 $0 Walking Surfaces 607 Wood Decks - Replace N/A $0 $0 Prop. Identification 803 Mailboxes - Replace 18 5 $3,500 $4,000 Fencing/Walls 1007 Vinyl Trellis - Replace N/A $0 $0 1008 Vinyl Fencing - Replace 22 9 $73,500 $84,000 Light Fixtures 1602 Exterior Fixtures - Replace 20 7 $15,400 $18,150 3
Significant Components For Indian Peaks Townhomes Significance: Ave Curr (Curr Cost/UL) ID Asset Name UL RUL Cost As $ As % 105 Comp Shingle Roof - Replace 20 7 $221,600 $11,080 41.0634% 120 Raingutters/Downspouts - Replace 20 7 $32,638 $1,632 6.0479% 201 Building Ext Surfaces - Repaint 6 0 $34,875 $5,813 21.5416% 304 Fiber Cement Siding - Major Repairs 12 6 $18,500 $1,542 5.7135% 403 Concrete Driveways - Repair/Replace 5 0 $11,450 $2,290 8.4869% 803 Mailboxes - Replace 18 5 $3,750 $208 0.7721% 1008 Vinyl Fencing - Replace 22 9 $78,750 $3,580 13.2661% 1602 Exterior Fixtures - Replace 20 7 $16,775 $839 3.1085% 4
Significant Components Graph For Indian Peaks Townhomes 105 Comp Shingle Roof - Replace 201 Building Ext Surfaces - Repaint 1008 Vinyl Fencing - Replace 403 Concrete Driveways - Repair/Replace All Other 8% 16% 13% 22% 41% Significance: (Curr Cost/UL) Asset ID Asset Name UL RUL Average Curr. Cost As $ As % 105 Comp Shingle Roof - Replace 20 7 $221,600 $11,080 41% 201 Building Ext Surfaces - Repaint 6 0 $34,875 $5,813 22% 1008 Vinyl Fencing - Replace 22 9 $78,750 $3,580 13% 403 Concrete Driveways - Repair/Replace 5 0 $11,450 $2,290 8% All Other See Expanded Table For Breakdown $4,221 16% 5
Yearly Summary For Indian Peaks Townhomes Starting Fully Funded Reserve Percent Annual Reserve Rec. Special Interest Reserve Year 2016 Balance $280,976 Balance $229,019 Funded 82% Contribs $14,700 Ass'mnt $0 Income $2,195 Expenses $46,325 2017 $270,790 $199,589 74% $36,000 $0 $2,186 $0 2018 $309,173 $237,774 77% $37,260 $0 $2,576 $0 2019 $349,910 $277,610 79% $38,564 $0 $2,983 $0 2020 $393,120 $319,157 81% $39,914 $0 $3,407 $0 2021 $438,926 $362,478 83% $41,311 $0 $3,758 $18,053 2022 $468,772 $389,494 83% $42,757 $0 $3,798 $65,612 2023 $451,601 $370,437 82% $44,253 $0 $2,212 $344,804 2024 $146,066 $72,098 49% $45,802 $0 $954 $0 2025 $187,953 $118,855 63% $47,405 $0 $893 $107,328 2026 $121,509 $59,825 49% $49,064 $0 $766 $16,151 2027 $148,439 $93,504 63% $50,782 $0 $1,194 $0 2028 $194,407 $145,480 75% $52,559 $0 $1,461 $52,699 2029 $188,868 $146,801 78% $54,398 $0 $1,748 $0 2030 $239,155 $202,948 85% $56,302 $0 $2,322 $0 2031 $292,731 $261,572 89% $58,273 $0 $2,824 $19,183 2032 $329,910 $303,486 92% $60,313 $0 $3,352 $0 2033 $389,882 $367,150 94% $62,423 $0 $4,002 $0 2034 $453,647 $433,576 96% $64,608 $0 $4,182 $99,143 2035 $418,786 $403,223 96% $66,870 $0 $4,387 $0 2036 $487,133 $474,479 97% $69,210 $0 $5,000 $22,783 2037 $536,171 $525,906 98% $71,632 $0 $5,643 $0 2038 $612,451 $603,181 98% $74,140 $0 $6,432 $0 2039 $693,414 $683,753 99% $76,734 $0 $7,213 $8,273 2040 $770,731 $759,427 99% $79,420 $0 $7,628 $79,631 2041 $779,055 $766,844 98% $82,200 $0 $7,981 $27,059 2042 $844,314 $829,966 98% $85,077 $0 $8,765 $0 2043 $942,174 $923,808 98% $88,055 $0 $6,277 $686,086 2044 $335,750 $332,052 99% $91,136 $0 $3,794 $0 2045 $420,675 $426,982 101% $94,326 $0 $4,763 $0 6
Reserve Contributions For Indian Peaks Townhomes Reserve Contributions Recommended Current Minimum $9,000 $8,000 $7,000 Monthly Contribution $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 Year 7
Component Funding Information For Indian Peaks Townhomes Ave Current Current Fund ID Component Name Cost Future Cost Balance Balance Monthly 105 Comp Shingle Roof - Replace $221,600 $281,937 $144,040 $144,040 $862.33 120 Raingutters/Downspouts - Replace $32,638 $41,524 $21,214 $21,214 $127.01 201 Building Ext Surfaces - Repaint $34,875 $42,870 $34,875 $34,875 $452.37 304 Fiber Cement Siding - Major Repairs $18,500 $22,741 $9,250 $9,250 $119.98 403 Concrete Driveways - Repair/Replace $11,450 $13,599 $11,450 $11,450 $178.23 803 Mailboxes - Replace $3,750 $4,454 $2,708 $2,708 $16.21 1008 Vinyl Fencing - Replace $78,750 $107,328 $46,534 $0 $278.59 1602 Exterior Fixtures - Replace $16,775 $21,342 $10,904 $5,481 $65.28 Ideal 8
Yearly Cash Flow For Indian Peaks Townhomes Year 2016 2017 2018 2019 2020 Starting Balance $229,019 $199,589 $237,774 $277,610 $319,157 Reserve Income $14,700 $36,000 $37,260 $38,564 $39,914 Interest Earnings $2,195 $2,186 $2,576 $2,983 $3,407 Special Assessments $0 $0 $0 $0 $0 Funds Available $245,914 $237,774 $277,610 $319,157 $362,478 Reserve Expenditures $46,325 $0 $0 $0 $0 Ending Balance $199,589 $237,774 $277,610 $319,157 $362,478 Year 2021 2022 2023 2024 2025 Starting Balance $362,478 $389,494 $370,437 $72,098 $118,855 Reserve Income $41,311 $42,757 $44,253 $45,802 $47,405 Interest Earnings $3,758 $3,798 $2,212 $954 $893 Special Assessments $0 $0 $0 $0 $0 Funds Available $407,547 $436,049 $416,902 $118,855 $167,153 Reserve Expenditures $18,053 $65,612 $344,804 $0 $107,328 Ending Balance $389,494 $370,437 $72,098 $118,855 $59,825 Year 2026 2027 2028 2029 2030 Starting Balance $59,825 $93,504 $145,480 $146,801 $202,948 Reserve Income $49,064 $50,782 $52,559 $54,398 $56,302 Interest Earnings $766 $1,194 $1,461 $1,748 $2,322 Special Assessments $0 $0 $0 $0 $0 Funds Available $109,655 $145,480 $199,500 $202,948 $261,572 Reserve Expenditures $16,151 $0 $52,699 $0 $0 Ending Balance $93,504 $145,480 $146,801 $202,948 $261,572 Year 2031 2032 2033 2034 2035 Starting Balance $261,572 $303,486 $367,150 $433,576 $403,223 Reserve Income $58,273 $60,313 $62,423 $64,608 $66,870 Interest Earnings $2,824 $3,352 $4,002 $4,182 $4,387 Special Assessments $0 $0 $0 $0 $0 Funds Available $322,669 $367,150 $433,576 $502,366 $474,479 Reserve Expenditures $19,183 $0 $0 $99,143 $0 Ending Balance $303,486 $367,150 $433,576 $403,223 $474,479 Year 2036 2037 2038 2039 2040 Starting Balance $474,479 $525,906 $603,181 $683,753 $759,427 Reserve Income $69,210 $71,632 $74,140 $76,734 $79,420 Interest Earnings $5,000 $5,643 $6,432 $7,213 $7,628 Special Assessments $0 $0 $0 $0 $0 Funds Available $548,689 $603,181 $683,753 $767,700 $846,475 Reserve Expenditures $22,783 $0 $0 $8,273 $79,631 Ending Balance $525,906 $603,181 $683,753 $759,427 $766,844 Year 2041 2042 2043 2044 2045 Starting Balance $766,844 $829,966 $923,808 $332,052 $426,982 Reserve Income $82,200 $85,077 $88,055 $91,136 $94,326 Interest Earnings $7,981 $8,765 $6,277 $3,794 $4,763 Special Assessments $0 $0 $0 $0 $0 Funds Available $857,025 $923,808 $1,018,139 $426,982 $526,072 Reserve Expenditures $27,059 $0 $686,086 $0 $0 Ending Balance $829,966 $923,808 $332,052 $426,982 $526,072 9
Yearly Expenditures Graph For Indian Peaks Townhomes Reserve Expenditures $700,000 $600,000 $500,000 Annual Totals $400,000 $300,000 $200,000 $100,000 $- 2016 2018 2020 2022 2024 2026 2028 2030 2032 Year 2034 2036 2038 2040 2042 2044 2046 10
Projected Reserve Expenditures For Indian Peaks Townhomes Year Asset ID Asset Name Projected Cost 2016 201 Building Ext Surfaces - Repaint $34,875 Total Per Annum 403 Concrete Driveways - Repair/Replace $11,450 $46,325 2017 No Expenditures Projected $0 2018 No Expenditures Projected $0 2019 No Expenditures Projected $0 2020 No Expenditures Projected $0 2021 403 Concrete Driveways - Repair/Replace $13,599 803 Mailboxes - Replace $4,454 $18,053 2022 201 Building Ext Surfaces - Repaint $42,870 304 Fiber Cement Siding - Major Repairs $22,741 $65,612 2023 105 Comp Shingle Roof - Replace $281,937 120 Raingutters/Downspouts - Replace $41,524 1602 Exterior Fixtures - Replace $21,342 $344,804 2024 No Expenditures Projected $0 2025 1008 Vinyl Fencing - Replace $107,328 $107,328 2026 403 Concrete Driveways - Repair/Replace $16,151 $16,151 2027 No Expenditures Projected $0 2028 201 Building Ext Surfaces - Repaint $52,699 $52,699 2029 No Expenditures Projected $0 2030 No Expenditures Projected $0 2031 403 Concrete Driveways - Repair/Replace $19,183 $19,183 2032 No Expenditures Projected $0 2033 No Expenditures Projected $0 2034 201 Building Ext Surfaces - Repaint $64,780 304 Fiber Cement Siding - Major Repairs $34,364 $99,143 2035 No Expenditures Projected $0 2036 403 Concrete Driveways - Repair/Replace $22,783 $22,783 2037 No Expenditures Projected $0 2038 No Expenditures Projected $0 2039 803 Mailboxes - Replace $8,273 $8,273 2040 201 Building Ext Surfaces - Repaint $79,631 $79,631 2041 403 Concrete Driveways - Repair/Replace $27,059 $27,059 2042 No Expenditures Projected $0 2043 105 Comp Shingle Roof - Replace $560,995 120 Raingutters/Downspouts - Replace $82,624 1602 Exterior Fixtures - Replace $42,467 $686,086 2044 No Expenditures Projected $0 2045 No Expenditures Projected $0 2046 201 Building Ext Surfaces - Repaint $97,887 304 Fiber Cement Siding - Major Repairs $51,926 403 Concrete Driveways - Repair/Replace $32,138 $181,950 11
Glossary of Commonly used Words and Phrases (provided by the National Reserve Study Standards of the Community Associations Institute) Asset or Component Individual line items in the Reserve Study, developed or updated in the Physical Analysis. These elements form the building blocks for the Reserve Study. Components typically are: 1) Association Responsibility, 2) with limited Useful Life expectancies, 3) have predictable Remaining Life expectancies, 4) above a minimum threshold cost, and 5) required by local codes. Cash Flow Method A method of developing a Reserve Funding Plan where contributions to the Reserve fund are designed to offset the variable annual expenditures from the Reserve fund. Different Reserve Funding Plans are tested against the anticipated schedule of Reserve expenses until the desired Funding Goal is achieved. Component Inventory The task of selecting and quantifying Reserve Components. This task can be accomplished through on-site visual observations, review of association design and organizational documents, a review of established association precedents, and discussion with appropriate association representatives. Deficit An actual (or projected) Reserve Balance, which is less than the Fully Funded Balance. Effective Age The difference between Useful Life and Remaining Useful Life. Not always equivalent to chronological age, since some components age irregularly. Used primarily in computations. Financial Analysis The portion of the Reserve Study where current status of the Reserves (Measured as cash or Percent Funded) and a recommended Reserve contribution rate (Reserve Funding Plan) are derived, and the projected Reserve income and expense over time is presented. The Financial Analysis is one of the two parts of the Reserve Study. Component Full Funding When the actual (or projected) cumulative Reserve balance for all components is equal to the Fully Funded Balance. Fully Fund Balance (aka Ideal Balance) An indicator against which Actual (or projected) Reserve Balance can be compared. The Reserve balance that is in direct proportion to the fraction of life used up of the current Repair or Replacement cost. This number is calculated for each component, and then summed together for an association total. FFB = Replacement Cost X Effective Age / Useful Life Fund Status The status of the Reserve Fund as compared to an established benchmark, such as percent funding. Funding Goals Independent of methodology utilized, the following represent the basic categories of Funding Plan Goals. Baseline Funding: Establishing a Reserve funding goal of keeping the Reserve Balance above zero. Component Full Funding: Setting a Reserve funding goal of attaining and maintaining cumulative Reserves at or near 100% funded. Threshold Funding: Establishing a Reserve funding goal of keeping the Reserve balance above a specified dollar or Percent Funded amount. Depending on the threshold, this may be more or less conservative than the Component Fully Funding method. 1
Funding Plan An association's plan to provide income to a Reserve fund to offset anticipated expenditures from that fund. Funding Principles Sufficient Funds When Required Stable Contribution Rate over the Years Evenly Distributed Contributions over the Years Fiscally Responsible Life and Valuation Estimates The task of estimating Useful Life, Remaining Useful Life, and Repair or Replacement Costs for the Reserve components. Percent Funded The ratio, at a particular point of time (typically the beginning of the Fiscal Year), of the actual (or projected) Reserve Balance to the accrued Fund Balance, expressed as a percentage. Physical Analysis The portion of the Reserve Study where the Component Inventory, Condition Assessment, and Life and Valuation Estimate tasks are performed. This represents one of the two parts of the Reserve Study. Remaining Useful Life (RUL) Also referred to as Remaining Life (RL). The estimated time, in years, that a reserve component can be expected to continue to serve its intended function. Projects anticipated to occur in the initial year have 0 Remaining Useful Life. Replacement Cost The cost of replacing, repairing, or restoring a Reserve Component to its original functional condition. The Current Replacement Cost would be the cost to replace, repair, or restore the component during that particular year. Reserve Balance Actual or projected funds as of a particular point in time (typically the beginning of the fiscal year) that the association has identified for use to defray the future repair or replacement of those major components in which the association is obligated to maintain. Also known as Reserves, Reserve Accounts, Cash Reserves. This is based upon information provided and is not audited. Reserve Provider An individual that prepares Reserve Studies. Also known as Aspen Reserve Specialties. Reserve Study A budget-planning tool that identifies the current status of the Reserve fund and a stable and equitable Funding Plan to offset the anticipated future major common area expenditures. The Reserve Study consists of two parts: The Physical Analysis and the Financial Analysis. Special Assessment An assessment levied on the members of an association in addition to regular assessments. Special Assessments are often regulated by governing documents or local statutes. Surplus An actual (or projected) Reserve Balance that is greater that the Fully Funded Balance. Useful Life (UL) Also known as Life Expectancy, or Depreciable Life. The estimated time, in years, that a Reserve component can be expected to serve its intended function if properly constructed and maintained in its present application or installation. 2