SENIOR HOUSING BOARD CORPORATION BOARD OF DIRECTORS HANDBOOK

SENIOR HOUSING BOARD CORPORATION BOARD OF DIRECTORS HANDBOOK Senior Citizen Housing Board Martin Stone, President Jim Latta, Vice President Karen Gorin, Secretary Paula Rotolo, CFO Jim de Cordova, Board Member Laura Freeman, Board Member Terry Sue Aikens, Board Member City Council Mayor, Suzanne Fuentes Mayor Pro Tem, Carl Jacobson Council Member, Dave Atkinson Council Member, Marie Fellhauer Council Member, Michael Dugan

TABLE OF CONTENTS SECTION 1 Senior Housing Board Corporation Board of Directors General Information SECTION 2 Background Information SECTION 3 Operating Agreement between SHBC and City of El Segundo SECTION 4 Plan of Operations SECTION 5 Loan Repayment Agreement between SHBC and City of El Segundo SECTION 6 Management Company SECTION 7 Park Vista Resident Handbook SECTION 8 Park Vista Rental Information SECTION 9 Park Vista Safety Information SECTION 10 Services Agreements for Park Vista SECTION 11 Policy Revisions SECTION 12 Park Vista Finances

Senior Housing Board Corporation Board of Directors Handbook Table of Contents Section 1 - Senior Housing Board Corporation Board of Directors General Information A Board of Directors Roster B Municipal Guide Handebood for Elected and Appointed Officials C Roles and Responsibilities D Life of a Motion Section 2 - Background Information A Memorandum from City Attorney - October 27, 2004 Section 3 - Operating Agreement between SHBC and City of El Segundo A Original Agreement #1888 - May 6, 1986 B Amendment #1 to Operating Agreement - April 7, 1992 C Amendment #2 - July 19, 2005 Section 4 - Plan of Operations A Plan of Operations - revised June 2014 B Plan of Operations - revised July 2010 Section 5 - Loan Repayment Agreement between SHBC and City of El Segundo A Resolution #3425 - October 7, 1986 B Repayment Agreement #1937 - January 5, 1988 C Amendment #1 to Agreement #1937 - April 18, 1997 D Amendment #2 to Agreement #1937 - December 7, 2004 E Amendment #3 to Agreement #1937 - February 2009 F Exhibit A - Repayment Schedule Section 6 - Management Company A Original Request for Proposals for Management Services (RFP) #04-05 - July 15, 2004 B Cadman Group Proposal for RFP #04-05 C Property Management Agreement #3364 between Senior Housing Board Corporation and Cadman Group - October 1, 2014 - and Staff Report to City Council August 17, 2014 D Amendment #1 to Property Management Agreement #3364 - July 25, 2007 - and Staff Report to Council August 21, 2007 E Amendment #2 to Property Management Agreement #3364 - October 26, 2011 Section 7 - Park Vista Resident Handbook A Utility Company Phone Numbers B Park Vista Rental Agreement C State of Authorization and Responsibility D Emergency Medical Form E Bed Bug Infestation Addendum F Park Vista Rental Agreement Addendum #1 - House Rules and House Rules Affidavit G Park Vista Rental Agreement Addendum #2 - Pet Agreement, Exhibit A - Pet Rules, Pet Registration Form H Park Vista Rental Agreement Addendum #3 - Move-In & Move-Out Procedures I Park Vista Rental Agreement Addendum #4 - Unit Inspection Report

Section 8 - Park Vista Rental Information A Eligibility Requirements and Application for Residency at Park Vista B Rental Rates C Apartment Floor Plans Section 9 - Park Vista Safety Information A Evacuation Plan B Facility Diagrams with Fire Extinguisher Locations Section 10 - Services Agreements for Park Vista A Amtech Elevator Services B Prudential Overall Supply (Employee Uniforms) C Time Warner Cable D Web Service Company (Laundry Facilities) Section 11 - Policy Revisions A Annual Calendar of Recurring Discussion Items B Waiting List Policy - revised April 19, 2012 C Move-In & Move-Out Procedures on Weekends - revised?? Section 12 - Park Vista Finances A 2014 Budget B Reserve Study

Section 1 Senior Housing Board Corporation Board of Directors General Information

Senior Housing Board Corporation - Board Members Board Member Term Start Date Term Exp. Date Position Marty Stone appointed 7/17/12 6/30/2016 appt President June 2012 Jim decordova appointed 7/17/12 6/30/2016 Laura Freeman appointed 5/3/11 6/30/2015 Karen Gorin appointed 5/3/11 6/30/2015 appt Secretary June 2012 Paula Rotolo appointed 6/15/10 6/30/2014 appt CFO at least 2006 (and possibly before) Jim Latta appointed 7/16/13 6/30/2017 appt Vice President September 2013 Terry Sue Aikens appointed 7/16/13 6/30/2017 Recording Secretary Cindy Mortesen Staff Contact Information Meredith Petit City of El Segundo Neil Cadman Cadman Group Elizabeth Calciano City Attorney

Section 2 Background Information

Section 3 Operating Agreement between SHBC and City of El Segundo

Section 4 Plan of Operations

Section 5 Loan Repayment Agreement between SHBC and City of El Segundo

Section 6 Management Company

EL SEGUNDO CITY COUNCIL MEETING DATE : August 17, 2004 AGENDA ITEM STATEMENT AGENDA HEADING : Committee s, Commissions and Boards AGENDA DESCRIPTION : Consideration and possible action to award management contract for El Segundo Senior Housing complex, Park Vista, 615 E. Holly Avenue, El Segundo, to Cadman Group Real Estate Management and Consulting. RECOMMENDED COUNCIL ACTION : 1. Approve Senior Housing Board recommendation to award Park Vista Senior Housing management contract to Cadman Group Real Estate Management and Consulting. 2. Alternatively, discuss and take other action regarding this item. BACKGROUND & DISCUSSION : The Park Vista Senior Housing complex is currently managed by Community Housing Management Services (CHMS). Their previous contract expired May 31, 2004, with an extension granted for June 1 through August 31, 2004 to cover services during the RFP process. On July 15, 2004 proposals were received from two management companies : CHMS and the Cadman Group-Real Estate Management and Consulting. Interviews were conducted on July 22, 2004 with a panel consisting of Stacia Mancini, Recreation and Parks Director ; Peter Freeman, President, Senior Housing Corporation and Don Mcllroy, Vice President, Senior Housing Corporation. As CHMS has held the management contract for Park Vista during the past six years, the committee deemed it necessary to visit the senior housing site currently managed Cadman Group as part of the interview process. Therefore, on August 2, 2004 the interview panel visited a Long Beach senior complex currently managed by the Cadman Group. On August 4m the Senior Citizen Housing Corporation conducted a special board meeting to review, discuss and evaluate both proposals and site visit. At said meeting, the Corporation decided to recommend contracting with the Cadman Group beginning September 1, 2004. The Cadman Group is a local El Segundo management company with experience operating a non-hud senior housing complex in Long Beach. In business since 1995, their philosophy is focused upon direct involvement with all aspects of daily operations for optimum tenant satisfaction and effective financial management. Cadman Group currently manages approximately 750 apartment units and 20 light industrial/warehouse spaces. Half of their management portfolio is located in El Segundo. ATTACHED SUPPORTING DOCUMENTS : none FISCAL IMPACT : Operating Budget : Amount Requested : Account Number : Appropriation Required : none none not applicable Yes X No ORIGINATED : DATE : Stacia Mancini, ecreation and Parks Director REVIEWED BY : DATE : Mary Stren, C it ana- ge r /~~f' UJ4 4

Section 7 Park Vista Resident Handbook

Section 8 Park Vista Rental Information

Section 9 Park Vista Safety Information

Section 10 Services Agreements for Park Vista

Section 11 Policy Revisions

Senior Housing Board Calendar of Recurring Items January Changes to Plan of Operations, if necessary, to City Council Financial Audit - Previous Calendar Year February March April May June Board Member Terms expire 6/30 July New Board Members Begin Board Position Elections August September October October 31, 2014 Reserve Study Rent Rate Analysis Budget Preperation Current contract term expires for Cadman Management Group November December As needed Current Calendar Year's Senior Housing Board Accomplishments, to City Council Next Calendar Year's budget approval, to City Council Modifications to House Rules, per Board Direction Modifications to Plan of Operations, per Board Direction Emergency Repairs Maintenance Contracts & Service Agreements

Section 12 Park Vista Finances

Budget Detail Report Property: Park Vista - 615 E. Holly Avenue El Segundo, CA 90245 Period Beginning: Jan 2014 Date Prepared: 01/14/2014 Prepared By: Cadman Group Budget Description: Draft 2014 Budget Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014 Aug 2014 Sep 2014 Oct 2014 Nov 2014 Dec 2014 Total Percent Income RENT Rent Income 47,422.00 47,422.00 48,370.44 48,370.44 48,370.44 48,370.44 48,370.44 48,370.44 48,370.44 48,370.44 48,370.44 48,370.44 578,548.40 96.26 Parking Income 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 18,000.00 2.99 RENT 48,922.00 48,922.00 49,870.44 49,870.44 49,870.44 49,870.44 49,870.44 49,870.44 49,870.44 49,870.44 49,870.44 49,870.44 596,548.40 99.25 Laundry Income 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 4,500.00 0.75 Total Budgeted Income 49,297.00 49,297.00 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 601,048.40 100.00 Expense Fire Service 91.74 91.66 91.66 91.66 91.66 91.66 91.66 91.66 91.66 91.66 91.66 91.66 1,100.00 0.28 Maintenance 6,666.74 6,666.66 6,666.66 6,666.66 6,666.66 6,666.66 6,666.66 6,666.66 6,666.66 6,666.66 6,666.66 6,666.66 80,000.00 20.67 Elevator service 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 375.00 4,500.00 1.16 Gardening 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 12,000.00 3.10 Management Fees 12,333.33 12,333.33 12,333.33 12,333.33 12,333.33 12,333.33 12,333.33 12,333.33 12,333.33 12,333.33 12,333.33 12,333.33 147,999.96 38.24 Pest Control 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 1,200.00 0.31 Insurance - Property 0.00 0.00 17,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 17,000.00 4.39 Licenses and Permits 0.00 0.00 550.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 570.00 0.15 Electricity 1,583.37 1,583.33 1,583.33 1,583.33 1,583.33 1,583.33 1,583.33 1,583.33 1,583.33 1,583.33 1,583.33 1,583.33 19,000.00 4.91 Gas 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 12,000.00 3.10 Water 2,416.74 2,416.66 2,416.66 2,416.66 2,416.66 2,416.66 2,416.66 2,416.66 2,416.66 2,416.66 2,416.66 2,416.66 29,000.00 7.49 Telephone 583.37 583.33 583.33 583.33 583.33 583.33 583.33 583.33 583.33 583.33 583.33 583.33 7,000.00 1.81 Cable/Television 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 36,000.00 9.30 Stenographer 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 2,400.00 0.62 Office Supplies 395.87 395.83 395.83 395.83 395.83 395.83 395.83 395.83 395.83 395.83 395.83 395.83 4,750.00 1.23 Uniforms 208.37 208.33 208.33 208.33 208.33 208.33 208.33 208.33 208.33 208.33 208.33 208.33 2,500.00 0.65 Advertising & Promotion 116.74 116.66 116.66 116.66 116.66 116.66 116.66 116.66 116.66 116.66 116.66 116.66 1,400.00 0.36 Created on 01/14/2014 Page 1 of 2

Budget Detail Report Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014 Aug 2014 Sep 2014 Oct 2014 Nov 2014 Dec 2014 Total Percent Entertainment 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 1,500.00 0.39 Bank Service Fees 0.00 0.00 0.00 0.00 70.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 70.00 0.02 Professional Fees 583.37 583.33 583.33 583.33 583.33 583.33 583.33 583.33 583.33 583.33 583.33 583.33 7,000.00 1.81 Total Budgeted Expense 30,779.64 30,779.12 48,329.12 30,799.12 30,849.12 30,779.12 30,779.12 30,779.12 30,779.12 30,779.12 30,779.12 30,779.12 386,989.96 100.00 Total Budgeted Income 49,297.00 49,297.00 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 50,245.44 601,048.40 100.00 Total Budgeted Expense 30,779.64 30,779.12 48,329.12 30,799.12 30,849.12 30,779.12 30,779.12 30,779.12 30,779.12 30,779.12 30,779.12 30,779.12 386,989.96 100.00 Net Operating Income 18,517.36 18,517.88 1,916.32 19,446.32 19,396.32 19,466.32 19,466.32 19,466.32 19,466.32 19,466.32 19,466.32 19,466.32 214,058.44 100.00 Other Income Interest on Bank Accounts 41.74 41.66 41.66 41.66 41.66 41.66 41.66 41.66 41.66 41.66 41.66 41.66 500.00 100.00 Total Budgeted Other Income 41.74 41.66 41.66 41.66 41.66 41.66 41.66 41.66 41.66 41.66 41.66 41.66 500.00 100.00 Other Expense Loan Principle Reduction 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 156,000.00 100.00 Total Budgeted Other Expense 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 156,000.00 100.00 Created on 01/14/2014 Page 2 of 2

Update No-Site-Visit Reserve Study Park Vista Apartments El Segundo, CA Report #: 549-4 For Period Beginning: January 1, 2014 Expires: December 31, 2014 Date Prepared: August 19, 2013

Hello, and welcome to your Reserve Study! T his Report is a valuable budget planning tool, for with it you control the future of your association. It contains all the fundamental information needed to understand your current and future Reserve obligations, the most significant expenditures your association will face. W ith respect to Reserves, this Report will tell you where you are and where to go from here. In this Report, you will find 1) A List of What you re Reserving For 2) An Evaluation of your Reserve Fund Size and Strength 3) A Recommended Multi-Year Reserve Funding Plan More Questions? Visit our website at www.reservestudy.com or call us at: 800/733-1365 Association Reserves, Inc. 8/19/2013

Table of Contents 3-Minute Executive Summary...i Reserve Study Summary...i Reserve Component List Table 1...ii Introduction, Objectives, and Methodology...1 Which Physical Assets are Covered by Reserves?...2 How are Useful Life and Remaining Useful Life established?...2 How are Cost Estimates Established?...2 How much Reserves are enough?...3 How much should we contribute?...4 What is our Funding Goal?...4 Projected Expenses...5 Expense Graph Figure 1...5 Reserve Fund Status & Recommended Funding Plan...6 Funding Plan Graph Figure 2...6 Cash Flow Graph Figure 3...7 % Funded Graph Figure 4...7 Table Descriptions...8 Reserve Component List Detail Table 2...9 Contribution & Fund Breakdown Table 3...10 30 Year Reserve Plan Summary Table 4...11 30 Year Reserve Plan Year by Year Detail Table 5...12 Accuracy, Limitations, and Disclosures...18 Terms and Definitions...19 Association Reserves, Inc. 8/19/2013

3-Minute Executive Summary Association: Park Vista Apartments Assoc. #: 549-4 Location: El Segundo, CA # of Units: 97 Report Period: January 1, 2014 through December 31, 2014 Results as-of 1/1/2014: Projected Starting Reserve Balance:...$403,284 Fully Funded Reserve Balance:...$474,932 Average Reserve Deficit Per Unit:...$739 Percent Funded:... 84.9% Recommended 2014 Monthly Reserve Contribution:...$8,245 Recommended 2014 Special Assessment for Reserves:... $0 Most Recent Reserve Contribution Rate:...$7,000 Economic Assumptions: Net Annual After Tax Interest Earnings Accruing to Reserves... 1.00% Annual Inflation Rate... 3.00% This is an Update No-Site-Visit Reserve Study, based on a prior Report prepared by Association Reserves, Inc. for your 2013 Fiscal Year. No site inspection was performed as part of this Reserve Study. This Reserve Study was prepared by, or under the supervision of, a credentialed Reserve Specialist (RS). Because your Reserve Fund is at 84.9% Funded, this represents a fair position. In perspective, associations below 30% typically are at a higher risk of special assessments and deferred maintenance whereas associations above 70% usually enjoy less risk of such crisis. Your multi-year Funding Plan is designed to gradually bring you to the 100% level, or Fully Funded. Based on this starting point, your anticipated future expenses, and your historical Reserve contribution rate, our recommendation is to increase your Reserve contributions. No assets appropriate for Reserve designation were excluded. Association Reserves, Inc. i 8/19/2013

Table 1: Executive Summary 549-4 Useful Rem. Current Future Life Useful Average Average # Component (yrs) Life (yrs) Cost Cost 104 5th Floor Patio Deck - Seal/Repair 5 2 $2,500 $2,652 104 Balcony/Patio Decks - Seal/Repair 5 0 $33,000 $38,256 105 5th Floor Patio Deck - Resurface 25 22 $7,000 $13,413 105 Balcony/Patio Decks - Resurface 25 13 $132,000 $193,846 201 Asphalt - Remove & Replace 24 7 $18,750 $23,060 202 Asphalt - Seal/Repair 4 0 $1,500 $1,688 301 TV - Replace 8 7 $1,500 $1,845 303 HVAC System - Replace 20 19 $5,000 $8,768 305 Security System - Modernize 12 6 $4,500 $5,373 401 Awnings - Replace 10 2 $23,000 $24,401 401 Entry Awning - Replace 10 9 $9,000 $11,743 403 Mailboxes - Replace 25 15 $7,000 $10,906 404 Patio Furniture - Replace 8 7 $5,000 $6,149 407 BBQ - Replace 10 4 $800 $900 601 Carpet - Replace 10 4 $101,500 $114,239 701 Key Card System - Replace 8 4 $3,500 $3,939 704 Intercom - Replace 12 0 $3,500 $4,990 705 Gate Operator (A) - Replace 12 5 $3,500 $4,057 705 Gate Operator (B) - Replace 12 0 $3,500 $4,990 705 Gate Operator (C) - Replace 12 0 $3,500 $4,990 801 Boilers - Replace 20 12 $19,000 $27,089 804 Boiler Tanks - Replace 10 0 $3,500 $4,704 903 Rec. Room Furniture - Replace 15 14 $8,000 $12,101 904 Rec. Room Kitchen - Remodel 20 0 $7,000 $12,643 905 Kitchen Appliances - Replace 10 0 $3,500 $4,704 1110 Interior Surfaces - Repaint 10 4 $28,500 $32,077 1115 Stucco - Repaint 12 0 $146,000 $208,161 1301 Roof - Replace 15 14 $346,000 $523,356 1801 Elevator - Modernize 25 19 $200,000 $350,701 1802 Elevator Cab - Remodel 15 14 $16,000 $24,201 1808 Landscaping - Refurbish 5 4 $15,000 $16,883 31 Total Funded Components Note 1: a Useful Life of N/A means a one-time expense, not expected to repeat. Note 2: highlighted line items are expected to require attention in the initial year Association Reserves, Inc. ii 8/19/2013

Assoc. 549-4 Introduction A Reserve Study is the art and science of anticipating, and preparing for, an association s major common area repair and replacement expenses. Partially art, because in this field we are making projections about the future. Partially science, because our work is a process of research and analysis along well defined methodologies. In this Report you will find the Reserve Component List (what you are reserving Reserve Study for). It contains our estimates for Useful Life, Remaining Useful Life, and the Component List current repair or replacement cost for each Reserve Fund Strength major component the association is Recommended Contribs obligated to maintain. Based on that List and your starting balance we computed the association s Reserve Fund Strength (measured as Percent Funded ), and created a recommended multi-year Reserve Funding Plan to offset future Reserve expenses. As the physical assets age and deteriorate, it is important to accumulate financial assets to keep the two in balance. A stable Reserve Funding Plan that offsets the irregular Reserve expenses will ensure that each owner pays their own fair share of ongoing common area deterioration. Methodology First we establish what the projected expenses are, then we determine the Reserve Study Types association s financial status and create a Funding Plan. For this Update No-Site- Full Visit Reserve Study, we started with a Update With-Site-Visit review of your prior Reserve Study, recent Update No-Site-Visit Reserve expenditures, an evaluation of how expenditures are handled (ongoing maintenance vs Reserves), and research into any well-established association precedents. We adjusted life and cost factors based on time since the last Reserve Study and interviews with association representatives. Association Reserves, Inc. 1 8/19/2013

Assoc. 549-4 Which Physical Assets are Covered by Reserves? There is a national-standard four-part test to determine which expenses should be funded Reserve Components through Reserves. First, it must be a common area maintenance responsibility. Second, the Common Area component must have a limited life. Third, the Limited Useful Life limited life must be predictable (or it by definition is a surprise which cannot be Predictable Life Limit accurately anticipated). Fourth, the Cost must be Significant component must be above a minimum threshold cost. This limits Reserve Components to major, predictable expenses. Within this framework, it is inappropriate to include lifetime components, unpredictable expenses (such as damage due to fire, flood, or earthquake), and expenses more appropriately handled from the Operational Budget or as an insured loss. How are Useful Life and Remaining Useful Life established? 1) Reported Condition (wear and age since last report) 2) Association Reserves database of experience 3) Client Component History 4) Vendor Evaluation and Recommendation How are Cost Estimates Established? Financial projections are based on the average of our Best Case and Worst Case estimates, which are established in this order 1) Client Cost History 2) Comparison to Association Reserves database or work done at similar associations 3) Vendor Recommendations 4) Reliable National Industry cost estimating guidebooks Association Reserves, Inc. 2 8/19/2013

Assoc. 549-4 How much Reserves are enough? Your Reserve cash Balance can measure reserves, but the true measure is whether the funds are adequate. Adequacy is measured in a two-step process: 1) Calculate the association s Fully Funded Balance (FFB) 2) Compare to the Reserve Fund Balance, and express as a percentage. The FFB grows as assets age and the Reserve needs of the association increase, but shrinks when projects are accomplished and the Reserve needs of the association decrease. The Fully Funded Balance changes each year, and is a moving but predictable target. Percent Funded - 130% Ideal - 100% - 70% - 30% - 0% Strong Fair Weak Special assessments and deferred maintenance are common when the Percent Funded is below 30%. While the 100% point is Ideal, a Reserve Fund in the 70% - 130% range is considered strong because in this range cash flow problems are rare. Measuring your Reserves by Percent Funded tells how well prepared your association is for upcoming Reserve expenses. New buyers should be very aware of this important disclosure! Association Reserves, Inc. 3 8/19/2013

Assoc. 549-4 How much should we contribute? There are four Funding Principles that we balance in developing your Reserve Funding Plan. Our first objective is to design a plan that provides you with sufficient cash to perform your Reserve projects on time. A stable contribution rate is desirable because it is a hallmark of a proactive plan. Reserve contributions that are evenly distributed over the owners, over the years, enable each owner to pay their fair share of the association s Reserve expenses (this means we recommend special assessments only when all other options have been exhausted). And finally, we develop a plan that is fiscally responsible and safe for Boardmembers to recommend to their association. Funding Principles Sufficient Cash Stable Contribution Rate Evenly Distributed Fiscally Responsible What is our Funding Goal? Maintaining the Reserve Fund at a level equal to the physical deterioration that has occurred is called Full Funding the Reserves (100% Funded). As each asset ages and becomes used up, the Reserve Fund grows proportionally. This is simple, responsible, and our recommendation. As stated previously, associations in the 100% range rarely experience special assessments or deferred maintenance. Allowing the Reserves to fall close to zero, but not below zero, is called Baseline Funding. In these associations, deterioration occurs without matching Reserve contributions. With a low Percent Funded, special assessments and deferred maintenance are common. Threshold Funding is the title of all other objectives randomly selected between Baseline Funding and Full Funding. Funding Goals Full Funding Threshold Funding Baseline Funding Association Reserves, Inc. 4 8/19/2013

Assoc. 549-4 Projected Expenses The figure below shows the array of the projected future expenses at your association. This figure clearly shows the near term and future expenses that your association will face. Note the expenses in 2014, made up primarily of stucco expenses. Annual Reserve Expenses $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2014 2019 2024 2029 2034 2039 2044 Figure 1 Years A summary of this information is shown in Table 4, while details of the projects that make up this information are shown in Table 5. Since this is a projection about future events that may or may not take place as anticipated, we feel more certain about near-term projects than those many years away. While this Reserve Study is a one-year document, it is based on 30 years worth of looking forward into the future. Association Reserves, Inc. 5 8/19/2013

Assoc. 549-4 Reserve Fund Status The starting point for our financial analysis is your Reserve Fund balance, projected to be $403,284 as-of the start of your Fiscal Year on January 1, 2014. This is based on your actual balance on 6/30/2013 of $707,284.25 and anticipated Reserve contributions of $42,000 and expenses of $346,000 projected through the end of your Fiscal Year. As of January 1, 2014, your Fully Funded Balance is computed to be $474,932 (see Table 3). This figure represents the deteriorated value of your common area components. Comparing your Reserve Balance to your Fully Funded Balance indicates your Reserves are 85% Funded. As indicated earlier in the Executive Summary, this represents a fair status. Recommended Funding Plan Based on your current Percent Funded and your projected cash flow requirements, we are recommending Reserve contributions of $8,245/month this Fiscal Year. This represents the first year of a 30-year Funding Plan. This same information is shown numerically in both Table 4 and Table 5. Funding Plan Recom m ended Current $20,000 $18,000 $16,000 Monthly Contributions $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 2014 2019 2024 2029 2034 2039 2044 Years Figure 2 Association Reserves, Inc. 6 8/19/2013

Assoc. 549-4 The following chart shows your Reserve Balance under our recommended Funding Plan and your current Funding Plan, and your always-changing Fully Funded Balance target. $2,500,000 30-Yr Cash Flow T arget Fully Funded Balance Recom mended Funding Plan Current Funding Plan $2,000,000 $1,500,000 $1,000,000 $500,000 $0 2014 2019 2024 2029 2034 2039 2044 Figure 3 Years In this figure it is easy to see how your Reserve Fund gradually draws closer to the Fully Funded (100%) level. 120% Percent F unded Recom mended Funding Plan Current Funding Plan 100% 80% 60% 40% 20% 0% 2014 2019 2024 2029 2034 2039 2044 Years Figure 4 Association Reserves, Inc. 7 8/19/2013

Assoc. 549-4 Table Descriptions The tabular information in this Report is broken down into five tables. Table 1 summarizes your funded Reserve Components, and is part of the Executive Report summary that appeared earlier in this Report. Table 2 provides the main component description, life, and cost factors for all components determined to be appropriate for Reserve designation. This table represents the core information from which all other tables are derived. Table 3 is presented primarily as an accounting summary page. The results of the individual line item Fully Funded Balance computations are shown. These individual quantities are summed to arrive at the Fully Funded Balance for the association as of the start date of the Report. The figures in the Current Fund Balance column and the Monthly Reserve Contribution column show our distribution throughout the line items. If the association is underfunded, Reserve Funds are distributed first to components with a short Remaining Useful Life. If the association s Reserve Balance is above 100% Funded, funds are distributed evenly for all components. Contribution rates for each component are a proportionate distribution of the total contribution on the basis of the component s significance to the association (current cost divided by useful life). This presentation is not meant to cause clients to redistribute association funds, it simply presents one way to evenly distribute the total among all the different line items. Table 4: This table provides a one-page 30-year summary of the cash flowing into and out of the association, compared to the Fully Funded Balance for each year. Table 5: This table shows the cash flow detail for the next 30 years. This table makes it possible to see what components are projected to require repair or replacement each year, and the size of those individual expenses. Association Reserves, Inc. 8 8/19/2013

Table 2: Reserve Component List Detail 549-4 Rem. Current Useful Useful Best Worst # Component Quantity Life Life Cost Cost 104 5th Floor Patio Deck - Seal/Repair Approx. 1,000 GSF 5 2 $2,000 $3,000 104 Balcony/Patio Decks - Seal/Repair Approx. 13,200 GSF 5 0 $26,000 $40,000 105 5th Floor Patio Deck - Resurface Approx. 1,000 GSF 25 22 $6,000 $8,000 105 Balcony/Patio Decks - Resurface Approx. 13,200 GSF 25 13 $106,000 $158,000 201 Asphalt - Remove & Replace Approx. 6,000 GSF 24 7 $16,500 $21,000 202 Asphalt - Seal/Repair Approx. 6,000 GSF 4 0 $1,000 $2,000 301 TV - Replace (1) 50" Flat Screen 8 7 $1,000 $2,000 303 HVAC System - Replace Furnace&Packaged Unit 20 19 $4,000 $6,000 305 Security System - Modernize (6) Cameras 12 6 $4,000 $5,000 401 Awnings - Replace Approx. 1,900 GSF 10 2 $18,000 $28,000 401 Entry Awning - Replace (1) Awning 10 9 $8,000 $10,000 403 Mailboxes - Replace (102) Metal Boxes 25 15 $6,000 $8,000 404 Patio Furniture - Replace (55) Pieces 8 7 $4,000 $6,000 407 BBQ - Replace (2) Char-Broil 10 4 $600 $1,000 601 Carpet - Replace Approx. 2,900 GSY 10 4 $87,000 $116,000 701 Key Card System - Replace (7) Access Points 8 4 $3,000 $4,000 704 Intercom - Replace (1) System 12 0 $3,000 $4,000 705 Gate Operator (A) - Replace (1) DKS 1/2 HP Slider 12 5 $3,000 $4,000 705 Gate Operator (B) - Replace (1) Elite 1/2 HP Slider 12 0 $3,000 $4,000 705 Gate Operator (C) - Replace (1) Elite 1/2 HP Slider 12 0 $3,000 $4,000 801 Boilers - Replace (2) Raypak 400,000 BTU 20 12 $17,000 $21,000 804 Boiler Tanks - Replace (2) Raypak 115 Gallon 10 0 $3,000 $4,000 903 Rec. Room Furniture - Replace Numerous Pieces 15 14 $7,000 $9,000 904 Rec. Room Kitchen - Remodel Cabinets,Counter,Fixtures 20 0 $6,000 $8,000 905 Kitchen Appliances - Replace (5) Pieces 10 0 $3,000 $4,000 1110 Interior Surfaces - Repaint Approx. 45,000 GSF 10 4 $23,000 $34,000 1115 Stucco - Repaint (97) Units 12 0 $127,000 $165,000 1301 Roof - Replace Approx. 17,100 GSF 15 14 $341,000 $351,000 1801 Elevator - Modernize (2) 6-Stop 25 19 $190,000 $210,000 1802 Elevator Cab - Remodel (2) Standard Cabs 15 14 $14,000 $18,000 1808 Landscaping - Refurbish Plants,Trees,Lights 5 4 $10,000 $20,000 31 Total Funded Components Association Reserves, Inc. 9 8/19/2013

Table 3: Contribution and Fund Breakdown 549-4 Rem. Fully Current Useful Useful Current Funded Fund Reserve # Component Life Life (Avg) Cost Balance Balance Contributions 104 5th Floor Patio Deck - Seal/Repair 5 2 $2,500 $1,500 $1,500.00 $49.52 104 Balcony/Patio Decks - Seal/Repair 5 0 $33,000 $33,000 $33,000.00 $653.65 105 5th Floor Patio Deck - Resurface 25 22 $7,000 $840 $0.00 $27.73 105 Balcony/Patio Decks - Resurface 25 13 $132,000 $63,360 $63,360.00 $522.92 201 Asphalt - Remove & Replace 24 7 $18,750 $13,281 $13,281.25 $77.37 202 Asphalt - Seal/Repair 4 0 $1,500 $1,500 $1,500.00 $37.14 301 TV - Replace 8 7 $1,500 $188 $187.50 $18.57 303 HVAC System - Replace 20 19 $5,000 $250 $0.00 $24.76 305 Security System - Modernize 12 6 $4,500 $2,250 $2,250.00 $37.14 401 Awnings - Replace 10 2 $23,000 $18,400 $18,400.00 $227.79 401 Entry Awning - Replace 10 9 $9,000 $900 $900.00 $89.13 403 Mailboxes - Replace 25 15 $7,000 $2,800 $0.00 $27.73 404 Patio Furniture - Replace 8 7 $5,000 $625 $625.00 $61.90 407 BBQ - Replace 10 4 $800 $480 $480.00 $7.92 601 Carpet - Replace 10 4 $101,500 $60,900 $60,900.00 $1,005.23 701 Key Card System - Replace 8 4 $3,500 $1,750 $1,750.00 $43.33 704 Intercom - Replace 12 0 $3,500 $3,500 $3,500.00 $28.89 705 Gate Operator (A) - Replace 12 5 $3,500 $2,042 $2,041.67 $28.89 705 Gate Operator (B) - Replace 12 0 $3,500 $3,500 $3,500.00 $28.89 705 Gate Operator (C) - Replace 12 0 $3,500 $3,500 $3,500.00 $28.89 801 Boilers - Replace 20 12 $19,000 $7,600 $7,600.00 $94.09 804 Boiler Tanks - Replace 10 0 $3,500 $3,500 $3,500.00 $34.66 903 Rec. Room Furniture - Replace 15 14 $8,000 $533 $533.33 $52.82 904 Rec. Room Kitchen - Remodel 20 0 $7,000 $7,000 $7,000.00 $34.66 905 Kitchen Appliances - Replace 10 0 $3,500 $3,500 $3,500.00 $34.66 1110 Interior Surfaces - Repaint 10 4 $28,500 $17,100 $17,100.00 $282.26 1115 Stucco - Repaint 12 0 $146,000 $146,000 $146,000.00 $1,204.96 1301 Roof - Replace 15 14 $346,000 $23,067 $4,375.25 $2,284.47 1801 Elevator - Modernize 25 19 $200,000 $48,000 $0.00 $792.30 1802 Elevator Cab - Remodel 15 14 $16,000 $1,067 $0.00 $105.64 1808 Landscaping - Refurbish 5 4 $15,000 $3,000 $3,000.00 $297.11 31 Total Funded Components $474,932 $403,284 $8,245 Association Reserves, Inc. 10 8/19/2013

Table 4: 30-Year Reserve Plan Summary 549-4 Fiscal Year Beginning: 01/01/14 Interest: 1.0% Inflation: 3.0% Starting Fully Annual Loans or Projected Reserve Funded Percent Reserve Special Interest Reserve Year Balance Balance Funded Rating Contribs. Assmts Income Expenses 2014 $403,284 $474,932 84.9% Strong $98,940 $0 $3,519 $205,000 2015 $300,743 $363,779 82.7% Strong $101,908 $0 $3,533 $0 2016 $406,184 $463,013 87.7% Strong $104,965 $0 $4,472 $27,053 2017 $488,568 $540,010 90.5% Strong $108,114 $0 $5,451 $0 2018 $602,134 $649,911 92.6% Strong $111,358 $0 $5,756 $169,727 2019 $549,521 $591,100 93.0% Strong $114,699 $0 $5,884 $42,314 2020 $627,790 $664,657 94.5% Strong $118,140 $0 $6,873 $5,373 2021 $747,429 $781,451 95.6% Strong $121,684 $0 $7,948 $34,129 2022 $842,933 $875,201 96.3% Strong $125,334 $0 $9,088 $1,900 2023 $975,455 $1,008,124 96.8% Strong $129,094 $0 $10,291 $31,315 2024 $1,083,525 $1,117,997 96.9% Strong $132,967 $0 $11,283 $53,757 2025 $1,174,018 $1,211,407 96.9% Strong $136,956 $0 $12,482 $0 2026 $1,323,457 $1,366,445 96.9% Strong $141,065 $0 $12,529 $293,707 2027 $1,183,343 $1,227,178 96.4% Strong $145,297 $0 $11,644 $193,846 2028 $1,146,437 $1,190,256 96.3% Strong $149,656 $0 $8,350 $780,194 2029 $524,249 $552,067 95.0% Strong $154,145 $0 $5,677 $72,445 2030 $611,626 $627,604 97.5% Strong $158,770 $0 $6,930 $2,407 2031 $774,918 $781,555 99.2% Strong $163,533 $0 $8,556 $9,917 2032 $937,090 $936,516 100.1% Strong $168,439 $0 $10,222 $7,661 2033 $1,108,090 $1,102,703 100.5% Strong $173,492 $0 $9,986 $401,553 2034 $890,015 $872,545 102.0% Strong $178,697 $0 $9,367 $93,918 2035 $984,161 $956,858 102.9% Strong $183,164 $0 $10,807 $0 2036 $1,178,132 $1,145,082 102.9% Strong $187,743 $0 $12,466 $62,273 2037 $1,316,067 $1,279,596 102.9% Strong $192,437 $0 $14,123 $12,828 2038 $1,509,799 $1,474,004 102.4% Strong $197,248 $0 $13,056 $617,563 2039 $1,102,540 $1,056,444 104.4% Strong $202,179 $0 $11,745 $69,095 2040 $1,247,369 $1,196,508 104.3% Strong $207,233 $0 $13,572 $0 2041 $1,468,174 $1,417,329 103.6% Strong $212,414 $0 $15,788 $5,553 2042 $1,690,823 $1,644,601 102.8% Strong $217,725 $0 $18,022 $11,440 2043 $1,915,130 $1,878,344 102.0% Strong $223,168 $0 $15,655 $936,735 Association Reserves, Inc. 11 8/19/2013

Table 5: 30-Year Income/Expense Detail (yrs 0 through 4) 549-4 Fiscal Year 2014 2015 2016 2017 2018 Starting Reserve Balance $403,284 $300,743 $406,184 $488,568 $602,134 Annual Reserve Contribution $98,940 $101,908 $104,965 $108,114 $111,358 Planned Special Assessments $0 $0 $0 $0 $0 Interest Earnings $3,519 $3,533 $4,472 $5,451 $5,756 Total Income $505,743 $406,184 $515,621 $602,134 $719,248 # Component 104 5th Floor Patio Deck - Seal/Repair $0 $0 $2,652 $0 $0 104 Balcony/Patio Decks - Seal/Repair $33,000 $0 $0 $0 $0 105 5th Floor Patio Deck - Resurface $0 $0 $0 $0 $0 105 Balcony/Patio Decks - Resurface $0 $0 $0 $0 $0 201 Asphalt - Remove & Replace $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $1,500 $0 $0 $0 $1,688 301 TV - Replace $0 $0 $0 $0 $0 303 HVAC System - Replace $0 $0 $0 $0 $0 305 Security System - Modernize $0 $0 $0 $0 $0 401 Awnings - Replace $0 $0 $24,401 $0 $0 401 Entry Awning - Replace $0 $0 $0 $0 $0 403 Mailboxes - Replace $0 $0 $0 $0 $0 404 Patio Furniture - Replace $0 $0 $0 $0 $0 407 BBQ - Replace $0 $0 $0 $0 $900 601 Carpet - Replace $0 $0 $0 $0 $114,239 701 Key Card System - Replace $0 $0 $0 $0 $3,939 704 Intercom - Replace $3,500 $0 $0 $0 $0 705 Gate Operator (A) - Replace $0 $0 $0 $0 $0 705 Gate Operator (B) - Replace $3,500 $0 $0 $0 $0 705 Gate Operator (C) - Replace $3,500 $0 $0 $0 $0 801 Boilers - Replace $0 $0 $0 $0 $0 804 Boiler Tanks - Replace $3,500 $0 $0 $0 $0 903 Rec. Room Furniture - Replace $0 $0 $0 $0 $0 904 Rec. Room Kitchen - Remodel $7,000 $0 $0 $0 $0 905 Kitchen Appliances - Replace $3,500 $0 $0 $0 $0 1110 Interior Surfaces - Repaint $0 $0 $0 $0 $32,077 1115 Stucco - Repaint $146,000 $0 $0 $0 $0 1301 Roof - Replace $0 $0 $0 $0 $0 1801 Elevator - Modernize $0 $0 $0 $0 $0 1802 Elevator Cab - Remodel $0 $0 $0 $0 $0 1808 Landscaping - Refurbish $0 $0 $0 $0 $16,883 Total Expenses $205,000 $0 $27,053 $0 $169,727 Ending Reserve Balance: $300,743 $406,184 $488,568 $602,134 $549,521 Association Reserves, Inc. 12 8/19/2013

Table 5: 30-Year Income/Expense Detail (yrs 5 through 9) 549-4 Fiscal Year 2019 2020 2021 2022 2023 Starting Reserve Balance $549,521 $627,790 $747,429 $842,933 $975,455 Annual Reserve Contribution $114,699 $118,140 $121,684 $125,334 $129,094 Planned Special Assessments $0 $0 $0 $0 $0 Interest Earnings $5,884 $6,873 $7,948 $9,088 $10,291 Total Income $670,104 $752,803 $877,062 $977,355 $1,114,840 # Component 104 5th Floor Patio Deck - Seal/Repair $0 $0 $3,075 $0 $0 104 Balcony/Patio Decks - Seal/Repair $38,256 $0 $0 $0 $0 105 5th Floor Patio Deck - Resurface $0 $0 $0 $0 $0 105 Balcony/Patio Decks - Resurface $0 $0 $0 $0 $0 201 Asphalt - Remove & Replace $0 $0 $23,060 $0 $0 202 Asphalt - Seal/Repair $0 $0 $0 $1,900 $0 301 TV - Replace $0 $0 $1,845 $0 $0 303 HVAC System - Replace $0 $0 $0 $0 $0 305 Security System - Modernize $0 $5,373 $0 $0 $0 401 Awnings - Replace $0 $0 $0 $0 $0 401 Entry Awning - Replace $0 $0 $0 $0 $11,743 403 Mailboxes - Replace $0 $0 $0 $0 $0 404 Patio Furniture - Replace $0 $0 $6,149 $0 $0 407 BBQ - Replace $0 $0 $0 $0 $0 601 Carpet - Replace $0 $0 $0 $0 $0 701 Key Card System - Replace $0 $0 $0 $0 $0 704 Intercom - Replace $0 $0 $0 $0 $0 705 Gate Operator (A) - Replace $4,057 $0 $0 $0 $0 705 Gate Operator (B) - Replace $0 $0 $0 $0 $0 705 Gate Operator (C) - Replace $0 $0 $0 $0 $0 801 Boilers - Replace $0 $0 $0 $0 $0 804 Boiler Tanks - Replace $0 $0 $0 $0 $0 903 Rec. Room Furniture - Replace $0 $0 $0 $0 $0 904 Rec. Room Kitchen - Remodel $0 $0 $0 $0 $0 905 Kitchen Appliances - Replace $0 $0 $0 $0 $0 1110 Interior Surfaces - Repaint $0 $0 $0 $0 $0 1115 Stucco - Repaint $0 $0 $0 $0 $0 1301 Roof - Replace $0 $0 $0 $0 $0 1801 Elevator - Modernize $0 $0 $0 $0 $0 1802 Elevator Cab - Remodel $0 $0 $0 $0 $0 1808 Landscaping - Refurbish $0 $0 $0 $0 $19,572 Total Expenses $42,314 $5,373 $34,129 $1,900 $31,315 Ending Reserve Balance: $627,790 $747,429 $842,933 $975,455 $1,083,525 Association Reserves, Inc. 13 8/19/2013

Table 5: 30-Year Income/Expense Detail (yrs 10 through 14) 549-4 Fiscal Year 2024 2025 2026 2027 2028 Starting Reserve Balance $1,083,525 $1,174,018 $1,323,457 $1,183,343 $1,146,437 Annual Reserve Contribution $132,967 $136,956 $141,065 $145,297 $149,656 Planned Special Assessments $0 $0 $0 $0 $0 Interest Earnings $11,283 $12,482 $12,529 $11,644 $8,350 Total Income $1,227,775 $1,323,457 $1,477,050 $1,340,284 $1,304,443 # Component 104 5th Floor Patio Deck - Seal/Repair $0 $0 $3,564 $0 $0 104 Balcony/Patio Decks - Seal/Repair $44,349 $0 $0 $0 $0 105 5th Floor Patio Deck - Resurface $0 $0 $0 $0 $0 105 Balcony/Patio Decks - Resurface $0 $0 $0 $193,846 $0 201 Asphalt - Remove & Replace $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $0 $0 $2,139 $0 $0 301 TV - Replace $0 $0 $0 $0 $0 303 HVAC System - Replace $0 $0 $0 $0 $0 305 Security System - Modernize $0 $0 $0 $0 $0 401 Awnings - Replace $0 $0 $32,793 $0 $0 401 Entry Awning - Replace $0 $0 $0 $0 $0 403 Mailboxes - Replace $0 $0 $0 $0 $0 404 Patio Furniture - Replace $0 $0 $0 $0 $0 407 BBQ - Replace $0 $0 $0 $0 $1,210 601 Carpet - Replace $0 $0 $0 $0 $153,528 701 Key Card System - Replace $0 $0 $4,990 $0 $0 704 Intercom - Replace $0 $0 $4,990 $0 $0 705 Gate Operator (A) - Replace $0 $0 $0 $0 $0 705 Gate Operator (B) - Replace $0 $0 $4,990 $0 $0 705 Gate Operator (C) - Replace $0 $0 $4,990 $0 $0 801 Boilers - Replace $0 $0 $27,089 $0 $0 804 Boiler Tanks - Replace $4,704 $0 $0 $0 $0 903 Rec. Room Furniture - Replace $0 $0 $0 $0 $12,101 904 Rec. Room Kitchen - Remodel $0 $0 $0 $0 $0 905 Kitchen Appliances - Replace $4,704 $0 $0 $0 $0 1110 Interior Surfaces - Repaint $0 $0 $0 $0 $43,109 1115 Stucco - Repaint $0 $0 $208,161 $0 $0 1301 Roof - Replace $0 $0 $0 $0 $523,356 1801 Elevator - Modernize $0 $0 $0 $0 $0 1802 Elevator Cab - Remodel $0 $0 $0 $0 $24,201 1808 Landscaping - Refurbish $0 $0 $0 $0 $22,689 Total Expenses $53,757 $0 $293,707 $193,846 $780,194 Ending Reserve Balance: $1,174,018 $1,323,457 $1,183,343 $1,146,437 $524,249 Association Reserves, Inc. 14 8/19/2013

Table 5: 30-Year Income/Expense Detail (yrs 15 through 19) 549-4 Fiscal Year 2029 2030 2031 2032 2033 Starting Reserve Balance $524,249 $611,626 $774,918 $937,090 $1,108,090 Annual Reserve Contribution $154,145 $158,770 $163,533 $168,439 $173,492 Planned Special Assessments $0 $0 $0 $0 $0 Interest Earnings $5,677 $6,930 $8,556 $10,222 $9,986 Total Income $684,071 $777,325 $947,008 $1,115,751 $1,291,568 # Component 104 5th Floor Patio Deck - Seal/Repair $0 $0 $4,132 $0 $0 104 Balcony/Patio Decks - Seal/Repair $51,413 $0 $0 $0 $0 105 5th Floor Patio Deck - Resurface $0 $0 $0 $0 $0 105 Balcony/Patio Decks - Resurface $0 $0 $0 $0 $0 201 Asphalt - Remove & Replace $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $0 $2,407 $0 $0 $0 301 TV - Replace $2,337 $0 $0 $0 $0 303 HVAC System - Replace $0 $0 $0 $0 $8,768 305 Security System - Modernize $0 $0 $0 $7,661 $0 401 Awnings - Replace $0 $0 $0 $0 $0 401 Entry Awning - Replace $0 $0 $0 $0 $15,782 403 Mailboxes - Replace $10,906 $0 $0 $0 $0 404 Patio Furniture - Replace $7,790 $0 $0 $0 $0 407 BBQ - Replace $0 $0 $0 $0 $0 601 Carpet - Replace $0 $0 $0 $0 $0 701 Key Card System - Replace $0 $0 $0 $0 $0 704 Intercom - Replace $0 $0 $0 $0 $0 705 Gate Operator (A) - Replace $0 $0 $5,785 $0 $0 705 Gate Operator (B) - Replace $0 $0 $0 $0 $0 705 Gate Operator (C) - Replace $0 $0 $0 $0 $0 801 Boilers - Replace $0 $0 $0 $0 $0 804 Boiler Tanks - Replace $0 $0 $0 $0 $0 903 Rec. Room Furniture - Replace $0 $0 $0 $0 $0 904 Rec. Room Kitchen - Remodel $0 $0 $0 $0 $0 905 Kitchen Appliances - Replace $0 $0 $0 $0 $0 1110 Interior Surfaces - Repaint $0 $0 $0 $0 $0 1115 Stucco - Repaint $0 $0 $0 $0 $0 1301 Roof - Replace $0 $0 $0 $0 $0 1801 Elevator - Modernize $0 $0 $0 $0 $350,701 1802 Elevator Cab - Remodel $0 $0 $0 $0 $0 1808 Landscaping - Refurbish $0 $0 $0 $0 $26,303 Total Expenses $72,445 $2,407 $9,917 $7,661 $401,553 Ending Reserve Balance: $611,626 $774,918 $937,090 $1,108,090 $890,015 Association Reserves, Inc. 15 8/19/2013

Table 5: 30-Year Income/Expense Detail (yrs 20 through 24) 549-4 Fiscal Year 2034 2035 2036 2037 2038 Starting Reserve Balance $890,015 $984,161 $1,178,132 $1,316,067 $1,509,799 Annual Reserve Contribution $178,697 $183,164 $187,743 $192,437 $197,248 Planned Special Assessments $0 $0 $0 $0 $0 Interest Earnings $9,367 $10,807 $12,466 $14,123 $13,056 Total Income $1,078,079 $1,178,132 $1,378,341 $1,522,627 $1,720,103 # Component 104 5th Floor Patio Deck - Seal/Repair $0 $0 $4,790 $0 $0 104 Balcony/Patio Decks - Seal/Repair $59,602 $0 $0 $0 $0 105 5th Floor Patio Deck - Resurface $0 $0 $13,413 $0 $0 105 Balcony/Patio Decks - Resurface $0 $0 $0 $0 $0 201 Asphalt - Remove & Replace $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $2,709 $0 $0 $0 $3,049 301 TV - Replace $0 $0 $0 $2,960 $0 303 HVAC System - Replace $0 $0 $0 $0 $0 305 Security System - Modernize $0 $0 $0 $0 $0 401 Awnings - Replace $0 $0 $44,070 $0 $0 401 Entry Awning - Replace $0 $0 $0 $0 $0 403 Mailboxes - Replace $0 $0 $0 $0 $0 404 Patio Furniture - Replace $0 $0 $0 $9,868 $0 407 BBQ - Replace $0 $0 $0 $0 $1,626 601 Carpet - Replace $0 $0 $0 $0 $206,329 701 Key Card System - Replace $6,321 $0 $0 $0 $0 704 Intercom - Replace $0 $0 $0 $0 $7,115 705 Gate Operator (A) - Replace $0 $0 $0 $0 $0 705 Gate Operator (B) - Replace $0 $0 $0 $0 $7,115 705 Gate Operator (C) - Replace $0 $0 $0 $0 $7,115 801 Boilers - Replace $0 $0 $0 $0 $0 804 Boiler Tanks - Replace $6,321 $0 $0 $0 $0 903 Rec. Room Furniture - Replace $0 $0 $0 $0 $0 904 Rec. Room Kitchen - Remodel $12,643 $0 $0 $0 $0 905 Kitchen Appliances - Replace $6,321 $0 $0 $0 $0 1110 Interior Surfaces - Repaint $0 $0 $0 $0 $57,935 1115 Stucco - Repaint $0 $0 $0 $0 $296,788 1301 Roof - Replace $0 $0 $0 $0 $0 1801 Elevator - Modernize $0 $0 $0 $0 $0 1802 Elevator Cab - Remodel $0 $0 $0 $0 $0 1808 Landscaping - Refurbish $0 $0 $0 $0 $30,492 Total Expenses $93,918 $0 $62,273 $12,828 $617,563 Ending Reserve Balance: $984,161 $1,178,132 $1,316,067 $1,509,799 $1,102,540 Association Reserves, Inc. 16 8/19/2013

Table 5: 30-Year Income/Expense Detail (yrs 25 through 29) 549-4 Fiscal Year 2039 2040 2041 2042 2043 Starting Reserve Balance $1,102,540 $1,247,369 $1,468,174 $1,690,823 $1,915,130 Annual Reserve Contribution $202,179 $207,233 $212,414 $217,725 $223,168 Planned Special Assessments $0 $0 $0 $0 $0 Interest Earnings $11,745 $13,572 $15,788 $18,022 $15,655 Total Income $1,316,463 $1,468,174 $1,696,376 $1,926,570 $2,153,953 # Component 104 5th Floor Patio Deck - Seal/Repair $0 $0 $5,553 $0 $0 104 Balcony/Patio Decks - Seal/Repair $69,095 $0 $0 $0 $0 105 5th Floor Patio Deck - Resurface $0 $0 $0 $0 $0 105 Balcony/Patio Decks - Resurface $0 $0 $0 $0 $0 201 Asphalt - Remove & Replace $0 $0 $0 $0 $0 202 Asphalt - Seal/Repair $0 $0 $0 $3,432 $0 301 TV - Replace $0 $0 $0 $0 $0 303 HVAC System - Replace $0 $0 $0 $0 $0 305 Security System - Modernize $0 $0 $0 $0 $0 401 Awnings - Replace $0 $0 $0 $0 $0 401 Entry Awning - Replace $0 $0 $0 $0 $21,209 403 Mailboxes - Replace $0 $0 $0 $0 $0 404 Patio Furniture - Replace $0 $0 $0 $0 $0 407 BBQ - Replace $0 $0 $0 $0 $0 601 Carpet - Replace $0 $0 $0 $0 $0 701 Key Card System - Replace $0 $0 $0 $8,008 $0 704 Intercom - Replace $0 $0 $0 $0 $0 705 Gate Operator (A) - Replace $0 $0 $0 $0 $8,248 705 Gate Operator (B) - Replace $0 $0 $0 $0 $0 705 Gate Operator (C) - Replace $0 $0 $0 $0 $0 801 Boilers - Replace $0 $0 $0 $0 $0 804 Boiler Tanks - Replace $0 $0 $0 $0 $0 903 Rec. Room Furniture - Replace $0 $0 $0 $0 $18,853 904 Rec. Room Kitchen - Remodel $0 $0 $0 $0 $0 905 Kitchen Appliances - Replace $0 $0 $0 $0 $0 1110 Interior Surfaces - Repaint $0 $0 $0 $0 $0 1115 Stucco - Repaint $0 $0 $0 $0 $0 1301 Roof - Replace $0 $0 $0 $0 $815,372 1801 Elevator - Modernize $0 $0 $0 $0 $0 1802 Elevator Cab - Remodel $0 $0 $0 $0 $37,705 1808 Landscaping - Refurbish $0 $0 $0 $0 $35,348 Total Expenses $69,095 $0 $5,553 $11,440 $936,735 Ending Reserve Balance: $1,247,369 $1,468,174 $1,690,823 $1,915,130 $1,217,218 Association Reserves, Inc. 17 8/19/2013

Assoc. 549-4 Accuracy, Limitations, and Disclosures Because we have no control over future events, we cannot claim that all the events we anticipate will occur as planned. We expect that inflationary trends will continue, and we expect that financial institutions will provide interest earnings on funds on-deposit. We believe that reasonable estimates for these figures are much more accurate than ignoring these economic realities. The things we can control are measurements, which we attempt to establish within 5% accuracy. Your starting Reserve Balance and current Reserve interest earnings are also numbers that can be identified with a high degree of certainty. These figures have been provided to us, and were not confirmed by our independent research. Our projections assume a stable economic environment and lack of natural disasters. Because both the physical status and financial status of the association change each year, this Reserve Study is by nature a one-year document. This information can and should be adjusted annually as part of the Reserve Study Update process so that more accurate estimates can be reflected in the Reserve plan. Reality often differs from even the best assumptions due to changing economic factors, physical factors, or ownership expectations. Because many years of financial preparation help the preparation for large expenses, this Report shows expenses for the next 30 years. We fully expect a number of adjustments will be necessary through the interim years to both the cost and timing of distant expense projections. It is our recommendation and that of the American Institute of Certified Public Accountants (AICPA) that your Reserve Study be updated annually. Association Reserves, Inc., and its employees have no ownership, management, or other business relationships with the client other than this Reserve Study engagement. Robert M. Nordlund, P.E., R.S., company president, is a California licensed Professional Engineer (Mechanical, #22322), and credentialed Reserve Specialist (#5). All work done by Association Reserves is performed under his Responsible Charge. There are no material issues to our knowledge that have not been disclosed to the client that would cause a distortion of the association s situation. We have relied upon the client to provide the current (or projected) Reserve Balance, the estimated net-after-tax current rate of interest earnings, and to indicate if those earnings accrue to the Reserve Fund. In addition, we have considered the association s representation of current and historical Reserve projects reliable, and we have considered the representations made by its vendors and suppliers to also be accurate and reliable. Component quantities indicated in this Report were derived from the prior Reserve Study, unless otherwise noted in our Site Inspection Notes comments. No destructive or intrusive testing was performed, nor should the site inspection be assumed to be anything other than for budget purposes. Association Reserves, Inc. 18 8/19/2013