RESERVE STUDY UPDATE SUMMARY for Fieldstone OWNERS ASSOCIATION Date Prepared: 12/4/2018 for fiscal year 2019 Prepared By: John D. Beatty & Company 8425 Brentwood Blvd., Suite A7 Brentwood, CA 94513 (925) 831-1803 Fax (925) 831-2493
Reserve Study Update Summary This report documents the results of a reserve study performed by John D. Beatty & Company for the following: Fieldstone Owners Association Murphys, California It provides an analysis of the repair and replacement requirements for the association's major components and recommends a funding plan to meet those obligations. This study was performed in compliance with California Civil Code sections 4178, 5300, 5550, 5560 & 5565. The intent of this legislation is to insure that the association maintains a plan to meet all future obligations for major component maintenance. The essential elements of this legislation are: 1. Identification of the major components which the association is obligated to maintain 2. Current estimate of the useful life of each component 3. Current estimate of the remaining life of each component 4. Current estimate of the replacement cost of each component 5. Current estimate of the total annual contribution necessary to maintain the major components 6. Current estimate of the amount of cash reserves necessary to maintain the major components 7. Disclosure of the current amount of accumulated cash reserves actually funded 8. Disclosure of the percentage of reserves actually funded 9. Disclosure of any determined or anticipated special assessments 10. A general statement of methodology SCOPE This study is aligned with the association's fiscal year and establishes January 1, 2019 through December 31, 2028 as the period of time for which reserve expenditures and reserve fund balances are projected. METHODOLOGY A cash flow methodology was used to determine the annual reserve contribution. The underlying premise of this reserve funding approach is to establish a contribution level that will allow the association to maintain a positive balance in the reserve fund while meeting all anticipated maintenance obligations. The cash flow method allows the association to achieve this goal without the unnecessary overfunding of reserves. Also, as the interest earned on the reserve fund will not totally offset inflation, projections were made using the current inflation factor and an average interest rate on fully insured certificates of deposit. In preparing this study, a comprehensive list of major components was developed and information was compiled on the type, number, age and cost of each of these components. In gathering this data, certain assumptions were made about costs, conditions, and future events and circumstances that may occur. Some assumptions inevitably will not materialize and unanticipated events and circumstances may occur subsequent to the date of this report. Therefore, the actual replacement costs and remaining lives may vary from this report and the variations could be material. All life expectancies were based on reasonable industry experience for equipment and material and, unless specifically noted, all components were in a reasonable and ordinary condition. No inspection was conducted of the major components. Information utilized to update the reserve study was obtained from management and the association s records. 12/4/2018 Page 1 Fieldstone Jan 2019 RSUb
For a component to be included in this study, the following criteria must be met: 1. The maintenance of the component is the responsibility of the association; 2. The maintenance of the component is not included in the annual operating budget; 3. The estimated useful life of the component is greater than one year; and 4. The estimated remaining life of the component is less than 30 years. This study is intended to reflect the estimated replacement cost of the components and is not intended to project the actual cost of the work when performed. This limitation is necessary, as it is virtually impossible to predict with any degree of certainty the myriad factors that will impact costs at a future date. Because of this qualification, it is necessary for the results of this study to be reviewed annually to reflect any meaningful changes in use or significant increases in labor and/or materials costs. The funding for this study has a threshold margin of 10%. This means that the projected ending balance for each fiscal year is at least 10% of the projected expenditures for the same year. This margin provides a contingency for any unforeseen or out of the ordinary repair or replacement expense. Additionally, it can be used in subsequent years as a source of funds for reallocation of the life cycles should the aging of any components be abnormally accelerated. FINDINGS The findings of this study indicate that it will be necessary to adjust the annual reserve contribution as indicated on pages 5-7 of this report in order to meet projected expenditures and keep pace with inflation. These findings are based on the following: DISCLOSURES 1. Projected reserve fund balance as of January 1, 2019 $ 534,387 2. Reserve contribution for fiscal year 2018 $ 65,400 3. Reserve contribution for fiscal year 2019 $ 72,986 4. Assumed annual inflation rate 3.0% 5. All "after tax" interest earned on reserve fund investments will be retained in the reserve fund. This plan provides adequate funds to meet projected expenditures without relying on special assessments or increases in regular assessments that require a vote of the membership. Based on the assumption that the association will fund reserves in accordance with this plan, which includes those increases indicated above, the percent funded was calculated in the following manner: Accumulated Cash Reserves (Numerator) Projected reserve fund balance as of January 1, 2019 $ 534,387 Accrued Liability (Denominator) Estimate of the amount of cash necessary to repair, replace, restore or maintain the association's major components as of January 1, 2019 $ 866,666 Percent Funded 62% This Reserve Study was reviewed and approved by the Association's Board of Directors. 12/4/2018 Page 2 Fieldstone Jan 2019 RSUb
Projected Expenditures Assumed Annual Inflation Rate... 3.0% Current Estimated Fiscal Year (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Repair Repr/Repl Usfl Rmng Jan 1.. 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 RESERVE COMPONENTS % Cost Life Life Dec 31.. 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 BUILDING EXTERIOR: 1 - Awning Replace 1,093 15 4 1,194 2 - Door Replace 2,131 20 7 2,544 3 - Stucco Paint NOTE: Per BOD they choose not to paint the stucco as they have colored stucco. 4 - Stucco Repr/Repl NOTE: Individual owners are responsible for the maint of this component. 5 - Tile Shower Repair 10% 64 10 1 64 6 - Wood & Trim Paint/Touch Up 25,750 5 1 25,750 29,851 7 - Wood & Trim Paint 50,918 5 3 54,019 62,622 8 - Wood & Trim Repr/Repl 2% 16,011 10 8 19,691 9 - Wood Railing Paint NOTE: Paint cost included in Wood & Trim Paint line. 10 - Wood Railing Repr/Repl 5% 2,059 10 8 2,533 BUILDING INTERIOR: 11 - Remodel Restrooms & Shower 7,957 25 12 12 - Restroom Paint 630 10 8 775 FENCING/WALL: 13 - Masonry Wall Repr/Repl 10% 8,661 10 3 9,188 14 - Masonry Retaining Wall Repr/Re 10% 6,145 10 3 6,520 15 - Wood Fence Stain - Res 25,884 6 2 26,660 31,834 16 - Wood Fence Repr/Repl - Res 5% 6,614 12 2 6,812 17 - Wood Fence Replace - Res 132,280 24 14 18 - Wood Fence Stain - Pool 2,858 6 2 2,943 3,515 19 - Wood Fence Repr/Repl - Pool 5% 730 12 2 752 20 - Wood Fence Replace - Pool 14,604 24 14 21 - Wrought Iron Fence Paint - Pool 3,240 5 3 3,437 3,985 22 - Wrought Iron Fence Repr/Repl - P 5% 555 10 8 682 23 - Wrought Iron Fence Replace 11,092 25 13 FURNISHINGS: 24 - WI Chaise Lounge Replace 506 10 1 506 25 - WI Table Replace 1,182 10 1 1,182 26 - Plastic Chair Replace 507 5 1 507 587 27 - Chaise Lounge Replace 1,351 5 1 1,351 1,566 28 - WI Chair Replace 2,026 10 1 2,026 LANDSCAPING: 29 - Irrigation Timer Replace - Front 11% 4,355 5 2 4,486 5,200 30 - Irrigation Valve Replace 9% 1,784 2 0 1,784 1,892 2,007 2,130 2,259 31 - Plant Stock Replenish 2,652 1 1 2,652 2,732 2,814 2,898 2,985 3,075 3,167 3,262 3,360 3,461 32 - Tree Trimming/Add/Removal NOTE: Funding is handled via the association's operating budget. LIGHTING: 33 - Bollard Light Replace 3,715 20 7 4,436 34 - Fluorescent Fixture Replace 208 25 12 35 - Lantern Fixture Replace 656 20 7 783 36 - Spot Light Fixture Replace 219 25 12 12/4/2018 Page 3 Fieldstone Jan 2019 RSUb
Projected Expenditures Assumed Annual Inflation Rate... 3.0% Current Estimated Fiscal Year (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Repair Repr/Repl Usfl Rmng Jan 1.. 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 RESERVE COMPONENTS % Cost Life Life Dec 31.. 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 PAVED SURFACES: 37 - Asphalt Overlay 97,395 25 16 38 - Asphalt Major Repair 10% 20,814 10 1 20,814 39 - Asphalt Sealcoat & Repair 11,865 5 1 11,865 13,755 40 - Asphalt Striping 983 5 1 983 1,140 41 - Concrete Sidewalk,Curb&Gutter 2% 8,749 5 1 8,749 10,143 42 - Concrete Driveway Repr/Repl 2% 19,672 5 1 19,672 22,806 43 - Concrete Pool Deck Repr/Repl 3% 3,525 5 1 3,525 4,087 44 - Concrete Pool Deck Replace 117,504 30 17 RECREATIONAL FACITILITES: 45 - Chlorinator Replace 4,456 5 1 4,456 5,165 46 - Filter Replace 1,437 8 1 1,437 1,820 47 - Heater Replace 1,858 10 7 2,218 48 - Pump Motor 2hp Replace 2,087 7 2 2,149 2,643 49 - Pump Motor 1hp Replace 869 7 2 896 1,101 50 - Resurface Pool 16,635 10 9 21,072 51 - Tile & Coping Replace 6,159 10 9 7,803 ROOFING SYSTEM: 52 - Composition Roof Replace 880,341 30 17 53 - Metal Roof Replace - Pool 4,500 50 37 54 - Metal Roof Replace - BBQ 9,750 50 37 55 - Gutter & Downspout Replace 200,369 25 12 56 - Gutter Guard Replace 6,139 25 20 57 - Gutter Guard Replace 22,098 10 6 25,618 58 - Gutter Guard Replace 31,456 10 7 37,560 59 - Gutter Guard Replace 31,456 10 8 38,687 60 - Roof Inspection & Repair 13,640 5 1 13,640 15,812 OTHER: 61 - BBQ Replace 1,910 10 8 2,349 62 - Drinking Fountain Replace 1,351 18 5 1,520 63 - Refrigerator Replace 675 8 1 675 855 64 - Message Board Replace 328 25 12 65 - Mailbox Cluster Replace NOTE: United States postal service maintains this component. 66 - Storm Drain Maintenance 67 - Wood Trellis/Arbor Stain 835 5 3 886 1,027 68 - Wood Trellis/Arbor Repr/Repl 10% 2,402 10 8 2,954 69 - Wood Trellis/Arbor Replace 24,021 25 13 70 - Monument Signage 1,311 10 1 1,311 71 - Governing Doc Revisions 7,752 10 1 7,752 72 - Reserve Study Update 400 1 1 400 412 424 437 450 464 478 492 507 522 73 - Reserve Study Update Inspection 1,030 3 1 1,030 1,126 1,230 1,344 UNSCHEDULED... 5% 3,649 1 1 3,649 4,073 4,545 5,072 5,661 6,317 7,050 7,868 8,781 9,799 TOTAL EXPENDITURES 1,897,855 135,781 51,915 83,725 10,727 12,623 140,386 66,796 182,275 50,202 15,126 12/4/2018 Page 4 Fieldstone Jan 2019 RSUb
Funding Plan 1,057,817 Projected Cash Balance 472,849 503,606 512,050 604,162 706,389 694,097 770,132 747,111 874,546 Fiscal Year (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Jan 1.. 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Dec 31.. _ 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 BEGINNING BALANCE 534,387 472,849 503,606 512,050 604,162 706,389 694,097 770,132 747,111 874,546 EXPENDITURES (inflated $) 3.0% 135,781 51,915 83,725 10,727 12,623 140,386 66,796 182,275 50,202 15,126 RESERVE CONTRIBUTION 72,986 81,453 90,901 101,446 113,214 126,346 141,003 157,359 175,613 195,984 Per Unit Per Month (46 units) 132.22 147.56 164.68 183.78 205.10 228.89 255.44 285.07 318.14 355.04 Percentage Increase to Reserves 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 SPECIAL ASSESSMENTS 0 0 0 0 0 0 0 0 0 0 INTEREST 0.3% 1,257 1,219 1,268 1,394 1,636 1,748 1,828 1,894 2,025 2,412 _ ENDING BALANCE 472,849 503,606 512,050 604,162 706,389 694,097 770,132 747,111 874,546 1,057,817 12/4/2018 Page 5 Fieldstone Jan 2019 RSUb
Funding Plan 1,470,081 1,495,348 1,094,934 1,029,803 1,133,344 1,151,819 Projected Cash Balance 226,066 184,204 282,691 369,706 Fiscal Year (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Jan 1.. 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Dec 31.. _ 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 BEGINNING BALANCE 1,057,817 1,094,934 1,029,803 1,133,344 1,151,819 1,470,081 1,495,348 226,066 184,204 282,691 EXPENDITURES (inflated $) 3.0% 184,287 311,873 171,562 288,380 24,278 357,056 1,693,972 194,489 58,470 74,552 RESERVE CONTRIBUTION 218,718 244,089 272,403 304,002 339,266 378,621 422,541 152,115 156,374 160,753 Per Unit Per Month (46 units) 396.23 442.19 493.48 550.73 614.61 685.91 765.47 275.57 283.29 291.22 Percentage Increase to Reserves 11.6 11.6 11.6 11.6 11.6 11.6 11.6 (64.0) 2.8 2.8 SPECIAL ASSESSMENTS 0 0 0 0 0 0 0 0 0 0 INTEREST 0.3% 2,688 2,653 2,701 2,853 3,273 3,702 2,149 512 583 814 _ ENDING BALANCE 1,094,934 1,029,803 1,133,344 1,151,819 1,470,081 1,495,348 226,066 184,204 282,691 369,706 12/4/2018 Page 6 Fieldstone Jan 2019 RSUb
Funding Plan Projected Cash Balance 622,807 783,672 647,996 729,312 668,083 802,507 991,874 441,165 456,932 294,556 Fiscal Year (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) Jan 1.. 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Dec 31.. _ 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 BEGINNING BALANCE 369,706 294,556 441,165 456,932 622,807 783,672 647,996 729,312 668,083 802,507 EXPENDITURES (inflated $) 3.0% 241,233 24,190 159,992 15,000 25,445 327,184 115,438 263,468 73,520 24,753 RESERVE CONTRIBUTION 165,254 169,881 174,637 179,527 184,554 189,721 195,034 200,495 206,108 211,879 Per Unit Per Month (46 units) 299.37 307.75 316.37 325.23 334.34 343.70 353.32 363.21 373.38 383.84 Percentage Increase to Reserves 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 SPECIAL ASSESSMENTS 0 0 0 0 0 0 0 0 0 0 INTEREST 0.3% 829 919 1,121 1,348 1,756 1,787 1,719 1,745 1,836 2,240 _ ENDING BALANCE 294,556 441,165 456,932 622,807 783,672 647,996 729,312 668,083 802,507 991,874 12/4/2018 Page 7 Fieldstone Jan 2019 RSUb
Assessment and Reserve Funding Disclosure Summary This Summary contains information about the Association s assessments and the status of the reserve fund. The Association may periodically update or supplement the information in this Summary. Please contact the Association to determine if a more recently prepared Summary or supplement is available. As of the date this Summary was prepared: (1) The current total assessment per unit is $ per month. NOTE: If assessments vary by the size or type of unit, the assessment applicable to this unit may be found on the attached Variable Assessment Report. (2) Additional assessments that have already been scheduled to be imposed or charged, regardless of the purpose, if they have been approved by the Board and/or Members: Date Assessment Amount per unit per month (if assessments are is due: variable, see note immediately below): Purpose of the assessment: NOTE:if assessments vary by the size or type of unit, the assessment applicable to this unit may be found on the attached Variable Assessment Report. (3) Based upon the most recent reserve study and other information available to the Board of Directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association s obligation for repair and/or replacement of major components during the next 30 years? (4) Yes X If the Special Assessment in Note (2) is collected No If the answer to #3 is no, what additional assessments or other contributions to reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years? Approximate date assessent will be due: Amount per unit per month: $ (5) Total: The following major components, which are included in the reserve study, are NOT included in the existing reserve funding: Useful remining Major Component: life in years: Reason this major component was not included: 12/4/2018 Page 8 Fieldstone Jan 2019 RSUb
Assessment and Reserve Funding Disclosure Summary (6) Based on the method of calculation in paragraph (4) or subdivision (b) of Section 5570, the estimated amount required in the reserve fund at the end of the current fiscal year is $866,666, based in whole or in part on the the last reserve study or update, prepared by John D. Beatty & Company. The projected reserve fund cash balance at the end of the current fiscal year is $534,387, resulting in reserves being 62% funded at this date. If an alternate, but generally accepted, method of calculation is also used, the required reserve amount is $534,387 (beginning balance per management) (see attached explanation). (7) Based on the method of calculation in paragraph (4) of subdivision (b) of Section 5570 of the Civil Code, the estimated amount required in the reserve fund at the end of each of the next five budget years is (listed in the table below), and the projected reserve fund cash balance in each of those years, taking into account only assessments already approved and other known reserves, is (listed in the table below), leaving the reserve at (listed in the table below) percent funding. If the reserve funding plan approved by the association is implemented, the projected reserve fund cash balance in each of those years will be (listed in the table below), leaving the reserves at (listed in the table below) percent funding. Estimated amount required in Projected reserve fund Percent Year the reserve fund cash balance Funded 2 $ 847,097 $ 472,849 56% 3 $ 914,880 $ 503,606 55% 4 $ 954,445 $ 512,050 54% 5 $ 1,070,706 $ 604,162 56% 6 $ 1,188,880 $ 706,389 59% Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. This Summary was authorized by the Association based on the information available in the Association's most recent reserve study or annual update dated as of December 4, 2018. This summary supercedes all earlier issued versions. NOTE: The remainder of Civil Code Section 5570 is not part of the required Assessment and Reserve Funding Disclosure Summary Form, but is included here because the information is needed to properly complete the form. For the purposes of preparing a summary pursuant to this section: John D. Beatty President (1) (2) Estimated remaining useful life means the time reasonably calculated to remain before a major component will require replacement. Major component has the meaning used in Section 5550. Components with an estimated remaining useful life of more than 30 years may be included in a study as a capital asset or disregarded from the reserve calculation, so long as the decision is revealed in the reserve study report and reported in the Assessment and Reserve Funding Disclosure Summary. 12/4/2018 Page 9 Fieldstone Jan 2019 RSUb
Assessment and Reserve Funding Disclosure Summary (3) The form set out in subdivision (a) of Civil Code Section 5700 shall accompany each annual budget report or summary thereof that is delivered pursuant to Section 5300. The form may be supplemented or modified to clarify the information delivered, so long as the minimum information set out in subdivision (a) is provided. (4) For the purpose of the report and summary, the amount of reserves needed to be accumulated for a component at a given time shall be computed as the current cost of replacement or repair multiplied by the number of years the component has been in service divided by the useful life of the component. This shall not be construed to require the board to fund reserves in accordance with this calculation. 12/4/2018 Page 10 Fieldstone Jan 2019 RSUb