Report Dated November 17, Updates November 26, 2012 Reserve Study for Fiscal Year Prepared By WALLA SERVICES

RESERVE STUDY ANALYSIS COMPONENT CALCULATION UPDATE Bakersfield, California A Planned Master Association Report Dated November 17, 2014 Updates November 26, 2012 Reserve Study for Fiscal Year 2015 Prepared By WALLA SERVICES PO Box 652 Clovis, California 93613-0652 559-291-9140 800-400-9140 Fax 559-291-6666

T a b l e o f C o n t e n t s Introduction Common Interest Development Introduction...1 What Is A Component Calculation Update Report...1 Updates and Disclosures...1 Reserve Account Calculations Reserve Fund Summary/Recommendations...2 Financial Analysis of Common Area Components...3 Component Inventory/Cost...4 Current Financial Position/Recommended Fund Allocations...6 Threshold Funding Cash Flow...8 Recommended Funding Cash Flow...9 Expenditures in Future Dollars...10 Notes Notes...16 Appendix Section Homeowner Assessment and Reserve Fund Disclosure Summary...17 Copyright 2014, Walla Services All Rights Reserved This Component Calculation Update Report was supplied to the association's board of directors and/or their acting agents. This report may be used by the parties named above for reserve fund financial planning of this association. No part may be reproduced in any form except for the client s right to reproduce and distribute copies of this report in whole or in part as required by state laws and/or this association's governing

I n t r o d u c t i o n Common Interest Development Introduction This Component Calculation Update Report was compiled for, a Planned Master Association. This common interest development is located east of Bakersfield, California in Kern County off State Route 178 at Miramonte Drive and Casa Club Drive (main entrance). The gated community consists of various residential tracts located adjacent to or within proximity of the Rio Bravo Golf Course. The entire master development covers approximately 478.58 acres that includes 280.08 acres designated for residential developments with the golf course covering 198.5 areas. What Is a Component Calculation Update Report? This report makes financial adjustments to this association s last Reserve Study Analysis. This is done by making changes to each component s current replacement cost and estimating remaining life. The report does not make use of an on-site inspection of this development s major components. However, it does provide for a cost effective alternative by updating the most current Reserve Study when on-site component inspections may not be required. The reserve funding plan recommended in this report also uses current reserve fund amounts; any approved or projected special assessments, present and/or future reserve fund allotments, construction inflation factors, and any interest earnings. The report is intended as a supplement for the most current Reserve Study. It will satisfy the board of director s duties concerning annual review requirements under Civil Code 5550(a) that fall within the minimum three (3) year window for a new Reserve Study. Updates and Disclosures Components in this report use estimated current average replacement costs along with various assumptions as to interest earnings and inflation rates. In addition, certain conditions such as weather, deferred preventive maintenance, substandard materials used during construction, or the general workmanship of the development can decrease a component's useful life. Resources used for estimating replacement costs were from the Saylor Construction Cost Estimating System, any available contractor bids, or actual historical component replacement costs. The study uses various other assumptions, such as interest and inflation rates, to calculate future replacement costs of components and theoretical cash flows. The method used to determine this association's estimated funding level started by employing the straight line or segregated method. This method uses each component's estimated current replacement cost, present age, estimated remaining life, and estimated useful life to establish current component liabilities. These current liabilities were instrumental in establishing recommended assessments and ideal fund balances by further using a calculation method that takes into account various assumptions. These assumptions include interest earnings on fund balances and future component replacement costs along with their corresponding replacement years and inflation rates. The report then projects an estimated reserve fund cash flow for the next thirty (30) years while achieving a fully funded position. Any taxes that may be due on interest earnings are not deducted from fund balances. Our experience has shown that most associations pay their taxes from the operating budget accounts and not the reserve accounts. This firm claims no responsibility for inaccurate reserve fund figures or information supplied by the association's board of directors or their acting agents. File: Report Date: 11/17/2014 1

R e s e r v e S t u d y R e c o m m e n d a t i o n s 2014 Year-End Reserve Fund Position Total Reserve Fund Liability Remaining Expenditures This Year 2015 Recommended Reserve Funding Level 76,130.00 Total Annual Allotment 32,400.00 0.00 Total Quarterly Allotment 8,100.00 Remaining Reserve Fund Allocations 31,899.00 Quarterly Allotment (348 Annexed Lots @ 12.71/lot) 4,422.60 Reserve Fund Ending Balance Ideal Reserve Fund Balance (100% Funded) Total Reserve Fund (Deficiency)/Overage Per Ownership Interest (Deficiency)/Overage Total Fund Liability Funded 57,148.00 Quarterly Allotment (131 Non-Annexed Lots @ 9.52/lo 1,247.40 76,130.00 Quarterly Allotment (A & E Union) 2,430.00 (18,982.00) Increase Compared to Current Funding Level 1.57% N/A Annual Funding Increase (thereafter) 4.70% 75.07% Projected Special Assessments 0.00 Reserve Study Parameters Development Inspection Date Fiscal Year-Ending (*) Number of Annexed Lots Number of Non-Annexed Lots Reserve Fund Balance as of July 31, 2014 (*) Average Annual Rate of Return (*) Components' Current Total Replacement Cost Components' Future Total Replacement Cost Annual Construction Inflation Index Annual Fund Allotment (*) Total Quarterly Fund Allotment Quarterly Allotment (348 annexed lots) Quarterly Allotment (131 non-annexed lots) Quarterly Allotment (A & E Union) Remaining Reserve Fund Allocations (*) Remaining Interest Earnings Approved Special Assessments (*) Remaining Major Component Expenditures (*) Source: Mario Valenzuela - Authorized Agent None December 31, 2014 348 131 25,000.00 1.05% 377,350.00 666,920.00 3.00% 31,899.00 7,974.75 4,354.21 1,228.11 2,392.43 31,899.00 248.93 0.00 0.00 Year-End Fund Position (based on total replacement costs) Total Reserve Fund (Deficiency)/Overage Per Ownership Interest (Deficiency)/Overage Total Replacement Costs Funded Executive Summary (320,202.00) N/A 15.14% Total reserve funds or actual cash available on July 31, 2014, was $25,000.00 with a projected year-end fund balance of $57,148.00. This includes any remaining reserve fund allotments and interest earnings along with the deduction of any planned or recommended remaining expenditures this year. Comparing the reserve fund liability based on the wear-out period of all components to estimated year-end available cash suggests a percentage funded position of 75.07%. To be 100% funded, this association would need an ideal reserve fund balance of $76,130.00. The estimated current replacement costs of all components listed in this study total $377,350.00 with future replacement costs estimated at $666,920.00. Future replacement costs use an assumed annual construction inflation index of 3.00%. Recommendations are to increase the 2014, quarterly reserve funding level from $7,974.75 to $8,100.00 (refer to the recommendations above for annexed lots, non-annexed lots and A & E Union allotment amounts). This represents an increase over present funding levels of 1.57% with 4.70% increases per fiscal year thereafter until a 100% funded position is achieved. If projections forecast any special assessments that may be needed for additional funding, they are listed in the table above titled Recommended Reserve Funding Level. Reserve Funded Position If an association's reserve accounts indicate a liability funded position of 65% or higher, it normally indicates financial stability. However, associations with a reserve fund deficiency does not necessarily indicate a marginal or poor financial condition; unless the deficiency is out of proportion as compared to the development's age. Nevertheless, failure to adopt a long-term savings plan to adequately fund reserve accounts may have a negative impact on the development. Therefore, if funding levels appear not adequate, the board of directors should consider augmenting the reserve accounts by using increased regular budgeted allotments and/or special assessments when establishing annual budgets. Reserve Study Updates This study's funding recommendations could increase or decrease each budget year because of varying factors and assumptions. Recommendations are to review and update this study annually and have a new on-site study conducted every three years. 11/17/2014 2

Financial Analysis of Common Area Components Component Inventory / Costs The itemization in this section lists this association s major components, the year installed or fully restored, estimated useful and remaining lives, estimated replacement year, component condition, funding level, estimated quantities, estimated unit costs and estimated current and future costs. Cash Position / Recommended Funding This analysis again lists the association s major components and contains two sections. The first section Current Financial Position lists each component s current replacement cost, current liability based on years in service, the percentage of this liability funded, amount of funds allocated to each component from existing reserve funds and the deficit or overage of each component account. The second section Recommended Fund Allocations establishes the recommended monthly and annual reserve fund allotments for each major component along with the percentages of those reserve fund allotments. Various assumptions and parameters helped establish these recommended allocations. Threshold Funding Cash Flow The projections on this page indicate a reserve cash flow funding method that meets the association s minimum reserve requirements over a 30-year period. However, this funding plan does not attempt to achieve a 100% funded position of the reserve fund s liability. It only funds each year s reserve expenditure requirements without allowing the reserve fund s liability funded position to drop below 15%. The plan incorporates annual allotments, any special assessments, interest earnings, annual component expenditures, estimated ending and ideal ending balances along with the percentage of liability funded. The cash flow chart graphs the difference between the ideal and threshold funding ending balances. Threshold long-term funding is not recommended because of possible inadequately funded reserves that may require deferred maintenance and/or special assessments. Recommended Funding Cash Flow These projections indicate the estimated reserve fund cash flow using the study s recommended funding plan over a 30-year period. This funding plan will eventually achieve a 100% funded position of the reserve fund s liability and maintain this funded position for the remaining period this study covers. The analysis incorporates annual allotments, any special assessments, interest earnings, annual component expenditures, estimated ending and ideal ending balances along with the percentage of liability funded. The cash flow chart graphs the difference between the ideal and recommended funding ending balances. Expenditures in Future Dollars The matrix in this section lists estimated component expenditures per year for a 30-year period. The specified future replacement costs use an assumed construction, inflation index rate. File: Report Date: 11/17/2014 3

Component Inventory / Costs Number of Units/Lots: 479 Fiscal Year Ending: 12-31-2014 Component Description Install Year Est. Useful Life Est. Remain Life Est. Replace Year Condition Funding Level Est. Quantity Est. Unit Cost Current Replace Cost Future Replace Cost STREET Asphalt Replacement (Casa Club Drive) 2013 25 24 2038 Good 100% 106,884 sf 2.28 sf 243,700 495,392 Asphalt Surface Treatment, seal coat (1-coat) none 3 1 2015 N/A 100% 106,884 sf 0.12 sf 12,400 12,772 Curbs/Gutters, concrete (2') 1980 45 11 2025 Fair-Good 10% 7,124 lf 22.45 lf 16,000 22,148 Fire Lane Painting N/A 3 1 2015 N/A 100% 836 lf 1.43 lf 1,200 1,236 Lane Striping, single skip line/markings 2013 3 1 2015 N/A 100% 3,337 lf 0.48 lf 1,600 1,648 SIGNAGE Development Sign, carved wood (25" x 72") 1980 35 1 2015 Poor 100% 1 ea 1,850.00 ea 1,850 1,906 Misc. Street Signs, metal N/A 20 8 2022 Good 100% 13 ea 100.00 ea 1,300 1,647 No Trespassing Sign, carved wood 1980 35 1 2015 Fair 100% 1 ea 300.00 ea 300 309 Speed Limit, metal N/A 20 8 2022 Good 100% 1 ea 100.00 ea 100 127 Speed Limit, carved wood 1980 35 1 2015 Fair 100% 4 ea 300.00 ea 1,200 1,236 STREET LIGHTS Concrete Pole w/lantern head (replacement) 1980 40 6 2020 Fair-Good 30% 10 ea 4,000.00 ea 12,000 14,329 Concrete Pole w/lantern head (replacement) 2009 35 30 2044 Good 30% 1 ea 4,000.00 ea 1,200 2,913 Metal Pole, single arm 2007 35 28 2042 Good 30% 1 ea 3,500.00 ea 1,050 2,402 VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex 2014 10 10 2024 Good 100% 1 ea 950.00 ea 950 1,277 Antenna Pole (12') 2009 30 25 2039 Good 100% 1 ea 1,700.00 ea 1,700 3,559 Cabinet, stainless steel, NEMA Type 3R, V.I.T. 2009 30 25 2039 Good 100% 1 ea 2,400.00 ea 2,400 5,025 Cooling Fans, IEI 2009 7 2 2016 Good 100% 2 ea 250.00 ea 500 530 RFID Reader, Sirit ID4000-Flex 2014 12 12 2026 Good 100% 1 ea 6,000.00 ea 6,000 8,555 Multi-Output Power Supply, Altronix AL600ULM 2009 12 7 2021 Good 100% 1 ea 1,300.00 ea 1,300 1,599 Reader Interface/Controller, VertX V2000 2009 12 7 2021 Good 100% 1 ea 1,650.00 ea 1,650 2,029 Transponders, Identity Flex TAG 4 2009 12 7 2021 Good 100% 100 ea 25.00 ea 2,500 3,075 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') 2009 15 10 2024 Good 100% 2 ea 400.00 ea 800 1,075 Operators, Magnetic Autocontrol MIB-30 2009 15 10 2024 Good 100% 2 ea 4,000.00 ea 8,000 10,751 Loop Detectors 2009 15 10 2024 Good 100% 2 ea 450.00 ea 900 1,210 FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') 1980 40 6 2020 Fair 100% 161 lf 62.40 lf 10,050 12,000 Stucco Pillars (1' x 1' x 7') 1980 40 6 2020 Fair 100% 7 ea 300.00 ea 2,100 2,508 Painting, fence/pillars 2013 7 6 2020 Good 100% 1,967 sf 0.97 sf 1,900 2,269 Sidewalks, concrete (268 lf) 1980 35 1 2015 Poor-Fair 50% 1,072 sf 9.50 sf 5,100 5,253 GUARDHOUSE Building Repairs 2013 15 14 2028 N/A 100% 1 ls 2,000.00 total 2,000 3,025 Canopy, canvas 2000 15 1 2015 Fair 100% 1 ea 1,500.00 ea 1,500 1,545 Computer/Flat Panel Monitor, Dell 2009 10 5 2019 Good 100% 1 ls 850.00 total 850 985 Evaporative Cooler, Champion Cooler WC37 2012 15 13 2027 Good 100% 1 ea 1,000.00 ea 1,000 1,469 Fixtures/Misc. 1980 40 6 2020 Fair 100% 1 ls 1,200.00 total 1,200 1,433 Floors, linoleum tile 1980 35 1 2015 Poor 100% 189 sf 5.55 sf 1,050 1,082 Lights, single/double head flood 2013 10 9 2023 Good 100% 4 ea 125.00 ea 500 652 Lights, ceiling/recess 1980 35 1 2015 Poor-Fair 100% 6 ea 150.00 ea 900 927 11/17/2014 4

Current Financial Position / Recommended Fund Allocations Number of Units/Lots: 479 Fiscal Year Ending: 12-31-2014 2014 Year-End Reserve Fund Position 2015 Recommended Allocations Component Description Current Replace Cost Component Liability Percent of Liability Funds Allocated (Deficit) or Overage Monthly Allotment Annual Allotment Percent of Allotment STREET Asphalt Replacement (Casa Club Drive) 243,700 9,748 12.80% 7,317 (2,431) 1,182.07 14,184.83 43.78% Asphalt Surface Treatment, seal coat (1-coat) 12,400 8,267 10.86% 6,205 (2,061) 501.22 6,014.63 18.56% Curbs/Gutters, concrete (2') 16,000 12,089 15.88% 9,075 (3,014) 43.12 517.39 1.60% Fire Lane Painting 1,200 800 1.05% 601 (199) 48.51 582.06 1.80% Lane Striping, single skip line/markings 1,600 1,067 1.40% 801 (266) 64.67 776.08 2.40% SIGNAGE Development Sign, carved wood (25" x 72") 1,850 1,797 2.36% 1,349 (448) 6.41 76.92 0.24% Misc. Street Signs, metal 1,300 780 1.02% 586 (194) 7.88 94.58 0.29% No Trespassing Sign, carved wood 300 291 0.38% 219 (73) 1.04 12.47 0.04% Speed Limit, metal 100 60 0.08% 45 (15) 0.61 7.28 0.02% Speed Limit, carved wood 1,200 1,166 1.53% 875 (291) 4.16 49.89 0.15% STREET LIGHTS Concrete Pole w/lantern head (replacement) 12,000 10,200 13.40% 7,657 (2,543) 36.38 436.55 1.35% Concrete Pole w/lantern head (replacement) 1,200 171 0.23% 129 (43) 4.16 49.89 0.15% Metal Pole, single arm 1,050 210 0.28% 158 (52) 3.64 43.65 0.13% VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex 950 0 0.00% 0 0 11.52 138.24 0.43% Antenna Pole (12') 1,700 283 0.37% 213 (71) 6.87 82.46 0.25% Cabinet, stainless steel, NEMA Type 3R, V.I.T. 2,400 400 0.53% 300 (100) 9.70 116.41 0.36% Cooling Fans, IEI 500 357 0.47% 268 (89) 8.66 103.94 0.32% RFID Reader, Sirit ID4000-Flex 6,000 0 0.00% 0 0 60.63 727.58 2.25% Multi-Output Power Supply, Altronix AL600ULM 1,300 542 0.71% 407 (135) 13.14 157.64 0.49% Reader Interface/Controller, VertX V2000 1,650 688 0.90% 516 (171) 16.67 200.08 0.62% Transponders, Identity Flex TAG 4 2,500 1,042 1.37% 782 (260) 25.26 303.16 0.94% VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') 800 267 0.35% 200 (66) 6.47 77.61 0.24% Operators, Magnetic Autocontrol MIB-30 8,000 2,667 3.50% 2,002 (665) 64.67 776.08 2.40% Loop Detectors 900 300 0.39% 225 (75) 7.28 87.31 0.27% FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') 10,050 8,543 11.22% 6,413 (2,130) 30.47 365.61 1.13% Stucco Pillars (1' x 1' x 7') 2,100 1,785 2.34% 1,340 (445) 6.37 76.40 0.24% Painting, fence/pillars 1,900 271 0.36% 204 (68) 32.91 394.97 1.22% Sidewalks, concrete (268 lf) 5,100 4,954 6.51% 3,719 (1,235) 17.67 212.04 0.65% GUARDHOUSE Building Repairs 2,000 133 0.18% 100 (33) 16.17 194.02 0.60% Canopy, canvas 1,500 1,400 1.84% 1,051 (349) 12.13 145.52 0.45% Computer/Flat Panel Monitor, Dell 850 425 0.56% 319 (106) 10.31 123.69 0.38% Evaporative Cooler, Champion Cooler WC37 1,000 133 0.18% 100 (33) 8.08 97.01 0.30% Fixtures/Misc. 1,200 1,020 1.34% 766 (254) 3.64 43.65 0.13% Floors, linoleum tile 1,050 1,020 1.34% 766 (254) 3.64 43.65 0.13% Lights, single/double head flood 500 50 0.07% 38 (12) 6.06 72.76 0.22% Lights, ceiling/recess 900 874 1.15% 656 (218) 3.12 37.42 0.12% 11/17/2014 6

Threshold Funding Cash Flow Number of Units/Lots: 479 Fiscal Year Ending: 12-31-2014 Year Annual Allotments Approved Special Assessments Interest Earnings Annual Expenditures Estimated Ending Balance Ideal Ending Balance Liability Funded 2014 31,899 0 249 0 57,148 76,130 75.1% 2015 32,888 0 600 27,913 62,723 73,435 85.4% 2016 33,907 0 659 530 96,758 98,729 98.0% 2017 28,247 0 1,016 0 126,021 126,021 100.0% 2018 27,518 0 1,323 17,108 137,754 137,754 100.0% 2019 28,371 0 1,446 985 166,586 166,714 99.9% 2020 29,250 0 1,749 37,135 160,450 161,166 99.6% 2021 30,157 0 1,685 46,920 145,372 146,466 99.3% 2022 31,092 0 1,526 1,773 176,216 177,292 99.4% 2023 32,055 0 1,850 1,305 208,817 210,357 99.3% 2024 33,049 0 2,193 34,740 209,319 211,851 98.8% 2025 34,074 0 2,198 25,262 220,328 223,765 98.5% 2026 35,130 0 2,313 8,555 249,217 253,669 98.2% 2027 36,219 0 2,617 31,133 256,920 262,844 97.7% 2028 37,342 0 2,698 30,630 266,329 273,779 97.3% 2029 38,499 0 2,796 9,114 298,511 307,567 97.1% 2030 39,693 0 3,134 27,601 313,738 324,923 96.6% 2031 40,923 0 3,294 0 357,955 371,473 96.4% 2032 42,192 0 3,759 0 403,906 420,523 96.0% 2033 43,500 0 4,241 37,087 414,560 435,095 95.3% 2034 44,848 0 4,353 10,746 453,015 477,615 94.8% 2035 46,239 0 4,757 32,555 471,455 500,809 94.1% 2036 47,672 0 4,950 30,562 493,516 527,935 93.5% 2037 49,150 0 5,182 987 546,861 586,730 93.2% 2038 50,674 0 5,742 507,589 95,688 142,005 67.4% 2039 52,245 0 1,005 62,499 86,438 130,385 66.3% 2040 53,864 0 908 0 141,210 182,314 77.5% 2041 55,534 0 1,483 11,106 187,120 226,136 82.7% 2042 57,255 0 1,965 82,709 163,632 201,154 81.3% 2043 59,030 0 1,718 5,891 218,489 253,768 86.1% 2044 60,860 0 2,294 20,389 261,255 295,036 88.6% 700,000 Ideal Ending Balance Threshold Ending Balance 600,000 500,000 400,000 300,000 200,000 100,000 0 2044 2043 2042 2041 2040 2039 2038 2037 2036 2035 2034 2033 2032 2031 2030 2029 2028 2027 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 11/17/2014 8

Recommended Funding Cash Flow Number of Units/Lots: 479 Fiscal Year Ending: 12-31-2014 Year Annual Allotments Projected Special Assessments Interest Earnings Annual Expenditures Estimated Ending Balance Ideal Ending Balance Liability Funded 2014 31,899 0 249 0 57,148 76,130 75.1% 2015 32,400 0 600 27,913 62,235 73,435 84.7% 2016 33,923 0 653 530 96,281 98,729 97.5% 2017 28,729 0 1,011 0 126,021 126,021 100.0% 2018 27,518 0 1,323 17,108 137,754 137,754 100.0% 2019 28,499 0 1,446 985 166,714 166,714 100.0% 2020 29,837 0 1,750 37,135 161,166 161,166 100.0% 2021 30,527 0 1,692 46,920 146,466 146,466 100.0% 2022 31,062 0 1,538 1,773 177,292 177,292 100.0% 2023 32,508 0 1,862 1,305 210,357 210,357 100.0% 2024 34,025 0 2,209 34,740 211,851 211,851 100.0% 2025 34,952 0 2,224 25,262 223,765 223,765 100.0% 2026 36,109 0 2,350 8,555 253,669 253,669 100.0% 2027 37,644 0 2,664 31,133 262,844 262,844 100.0% 2028 38,805 0 2,760 30,630 273,779 273,779 100.0% 2029 40,027 0 2,875 9,114 307,567 307,567 100.0% 2030 41,727 0 3,229 27,601 324,923 324,923 100.0% 2031 43,138 0 3,412 0 371,473 371,473 100.0% 2032 45,150 0 3,900 0 420,523 420,523 100.0% 2033 47,243 0 4,415 37,087 435,095 435,095 100.0% 2034 48,698 0 4,568 10,746 477,615 477,615 100.0% 2035 50,734 0 5,015 32,555 500,809 500,809 100.0% 2036 52,429 0 5,258 30,562 527,935 527,935 100.0% 2037 54,238 0 5,543 987 586,730 586,730 100.0% 2038 56,703 0 6,161 507,589 142,005 142,005 100.0% 2039 49,388 0 1,491 62,499 130,385 130,385 100.0% 2040 50,560 0 1,369 0 182,314 182,314 100.0% 2041 52,936 0 1,914 11,106 226,058 226,136 100.0% 2042 55,424 0 2,374 82,709 201,147 201,154 100.0% 2043 56,400 0 2,112 5,891 253,768 253,768 100.0% 2044 58,992 0 2,665 20,389 295,036 295,036 100.0% 700,000 Ideal Ending Balance Recommend Funding Ending Balance 600,000 500,000 400,000 300,000 200,000 100,000 0 2044 2043 2042 2041 2040 2039 2038 2037 2036 2035 2034 2033 2032 2031 2030 2029 2028 2027 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 11/17/2014 9

Expenditures in Future Dollars Number of Units/Lots: 479 Fiscal Year Ending: 12-31-2014 Component Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 STREET Asphalt Replacement (Casa Club Drive) Asphalt Surface Treatment, seal coat (1-coat) 12,772 13,956 15,250 16,665 Curbs/Gutters, concrete (2') Fire Lane Painting 1,236 1,351 1,476 1,613 Lane Striping, single skip line/markings 1,648 1,801 1,968 2,150 SIGNAGE Development Sign, carved wood (25" x 72") 1,906 Misc. Street Signs, metal 1,647 No Trespassing Sign, carved wood 309 Speed Limit, metal 127 Speed Limit, carved wood 1,236 STREET LIGHTS Concrete Pole w/lantern head (replacement) 14,329 Concrete Pole w/lantern head (replacement) Metal Pole, single arm VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex 1,277 Antenna Pole (12') Cabinet, stainless steel, NEMA Type 3R, V.I.T. Cooling Fans, IEI 530 652 RFID Reader, Sirit ID4000-Flex Multi-Output Power Supply, Altronix AL600ULM 1,599 Reader Interface/Controller, VertX V2000 2,029 Transponders, Identity Flex TAG 4 3,075 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') 1,075 Operators, Magnetic Autocontrol MIB-30 10,751 Loop Detectors 1,210 FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') 12,000 Stucco Pillars (1' x 1' x 7') 2,508 Painting, fence/pillars 2,269 Sidewalks, concrete (268 lf) 5,253 GUARDHOUSE Building Repairs Canopy, canvas 1,545 Computer/Flat Panel Monitor, Dell 985 Evaporative Cooler, Champion Cooler WC37 Fixtures/Misc. 1,433 Floors, linoleum tile 1,082 11/17/2014 10

Expenditures in Future Dollars Number of Units/Lots: 479 Fiscal Year Ending: 12-31-2014 Component Description 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Lights, single/double head flood 652 Lights, ceiling/recess 927 Pass Printer, Zebra GK420T 896 Painting, exterior 1,791 Painting, interior 1,910 Roof, clay tile LANDSCAPING Irrigation System Landscape Renovations 4,305 Tree Trim/Remove 17,218 Total Future Replacement Cost 27,913 530 17,108 985 37,135 46,920 1,773 1,305 34,740 Estimated Available Reserve Funds(1) 57,148 90,148 96,811 126,021 154,862 167,699 198,301 193,386 179,065 211,662 246,591 (1) Estimated available funds based on recommended funding plan 11/17/2014 11

Expenditures in Future Dollars Number of Units/Lots: 479 Component Description Fiscal Year Ending: 12-31-2014 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 STREET Asphalt Replacement (Casa Club Drive) Asphalt Surface Treatment, seal coat (1-coat) Curbs/Gutters, concrete (2') Fire Lane Painting Lane Striping, single skip line/markings SIGNAGE Development Sign, carved wood (25" x 72") Misc. Street Signs, metal No Trespassing Sign, carved wood Speed Limit, metal Speed Limit, carved wood STREET LIGHTS Concrete Pole w/lantern head (replacement) Concrete Pole w/lantern head (replacement) Metal Pole, single arm VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex Antenna Pole (12') Cabinet, stainless steel, NEMA Type 3R, V.I.T. 22,148 18,210 19,898 21,743 1,762 1,926 2,104 2,350 2,568 2,806 1,716 Cooling Fans, IEI RFID Reader, Sirit ID4000-Flex Multi-Output Power Supply, Altronix AL600ULM Reader Interface/Controller, VertX V2000 Transponders, Identity Flex TAG 4 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') Operators, Magnetic Autocontrol MIB-30 Loop Detectors FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') Stucco Pillars (1' x 1' x 7') 8,555 802 2,280 2,893 4,384 Painting, fence/pillars Sidewalks, concrete (268 lf) GUARDHOUSE Building Repairs Canopy, canvas Computer/Flat Panel Monitor, Dell Evaporative Cooler, Champion Cooler WC37 Fixtures/Misc. Floors, linoleum tile 2,790 3,432 3,025 2,407 1,324 1,469 11/17/2014 12

Expenditures in Future Dollars Number of Units/Lots: 479 Component Description Fiscal Year Ending: 12-31-2014 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Lights, single/double head flood Lights, ceiling/recess Pass Printer, Zebra GK420T Painting, exterior Painting, interior Roof, clay tile LANDSCAPING Irrigation System Landscape Renovations Tree Trim/Remove 3,115 877 1,134 2,203 2,709 2,350 2,890 7,790 5,294 6,511 21,176 26,044 Total Future Replacement Cost Estimated Available Reserve Funds(1) 25,262 8,555 31,133 30,630 9,114 27,601 37,087 10,746 32,555 249,027 262,224 293,977 304,409 316,681 352,524 371,473 420,523 472,182 488,361 533,364 (1) Estimated available funds based on recommended funding plan 11/17/2014 13

Expenditures in Future Dollars Number of Units/Lots: 479 Component Description 2036 2037 2038 2039 2040 2041 2042 2043 2044 Fiscal Year Ending: 12-31-2014 STREET Asphalt Replacement (Casa Club Drive) Asphalt Surface Treatment, seal coat (1-coat) Curbs/Gutters, concrete (2') Fire Lane Painting Lane Striping, single skip line/markings SIGNAGE Development Sign, carved wood (25" x 72") Misc. Street Signs, metal No Trespassing Sign, carved wood Speed Limit, metal Speed Limit, carved wood STREET LIGHTS Concrete Pole w/lantern head (replacement) Concrete Pole w/lantern head (replacement) Metal Pole, single arm VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex Antenna Pole (12') Cabinet, stainless steel, NEMA Type 3R, V.I.T. Cooling Fans, IEI RFID Reader, Sirit ID4000-Flex 495,392 23,760 25,963 28,370 2,299 2,513 2,746 3,066 3,350 3,661 2,974 229 2,913 2,402 2,306 3,559 5,025 987 1,214 12,197 Multi-Output Power Supply, Altronix AL600ULM Reader Interface/Controller, VertX V2000 Transponders, Identity Flex TAG 4 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') Operators, Magnetic Autocontrol MIB-30 Loop Detectors FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') Stucco Pillars (1' x 1' x 7') Painting, fence/pillars Sidewalks, concrete (268 lf) GUARDHOUSE Building Repairs Canopy, canvas Computer/Flat Panel Monitor, Dell Evaporative Cooler, Champion Cooler WC37 Fixtures/Misc. Floors, linoleum tile 1,675 16,750 1,884 1,780 4,220 2,288 4,713 11/17/2014 14

Expenditures in Future Dollars Number of Units/Lots: 479 Component Description 2036 2037 2038 2039 2040 2041 2042 2043 2044 Fiscal Year Ending: 12-31-2014 Lights, single/double head flood Lights, ceiling/recess Pass Printer, Zebra GK420T Painting, exterior Painting, interior Roof, clay tile LANDSCAPING Irrigation System Landscape Renovations Tree Trim/Remove 1,178 1,437 1,820 3,332 3,554 12,136 8,008 32,031 Total Future Replacement Cost Estimated Available Reserve Funds(1) 30,562 987 507,589 62,499 11,106 82,709 5,891 20,389 558,497 587,717 649,594 192,884 182,314 237,165 283,856 259,659 315,425 (1) Estimated available funds based on recommended funding plan 11/17/2014 15

N o t e s File: Report Date: 11/17/2014 16

A s s e s s m e n t a n d R e s e r v e s D i s c l o s u r e S u m m a r y Summary Information for Homeowners Pursuant to California Civil Codes Sections 5300, 5565 and 5570, the board of directors must include a summary of the association s reserve fund requirements along with various assessment disclosures with the Pro Forma Operating Budget. The distribution of the Pro Forma Operating Budget must occur not less than thirty (30) days or more than ninety (90) days before the beginning of the association's next fiscal year. To help the board of directors comply with these state mandated reserve account and assessment disclosures, we have included a homeowner summary entitled Assessment and Reserve Funding Disclosure Summary on the following pages. Most of the required disclosure information is included in the summary. However, if the study indicates that the present funding level will not be sufficient enough at the end of each fiscal year to meet the association s obligations for major component repairs and replacement for the next thirty (30) years, the board of directors must decide whether to adopt the study s recommended funding plan and/or use borrowing or special assessments to help offset any inadequate funding levels. The board s final decision must be included on page 2 of the summary before distribution to the homeowners. File: Report Date: 11/17/2014 17

Assessment and Reserve Funding Disclosure Summary Fiscal Year Ending: December 31, 2014 Bakersfield, CA Summary Information Based On A Component Calculation Update Report Dated November 17, 2014 Pursuant to California Civil Code Sections 5300, 5565 and 5570 of the Davis-Stirling Common Interest Development Act, the Board is providing the following assessment and reserve fund summary information to the Association Members. If an Association Member would like additional information, the previously complete Reserve Study Analysis is on file with the Association records. Information contained in a Component Calculation Update Report provided by Walla Services to update this association's last Reserve Study provided some of the necessary information for this assessment and reserve fund summary. The report made changes to each component's current replacement cost and estimated remaining life used in the last Reserve Study and did not involve an on-site inspection of this development's major components. However, this update provides the necessary information required by state law as a cost effective alternative when on-site inspections are not required. Sources used for estimating current replacement costs was from the Saylor Construction Cost Estimating System, certain contractor bids and/or actual costs of any recently completed projects. The report's reserve funding requirements and recommendations were based on a modified straight-line calculation method. This calculation method starts by multiplying the number of years a component has been in service by the component's current replacement cost divided by the component's estimated useful life. This calculation is then adjusted each year by the following long-term assumptions; interest earnings of present and projected fund balances, estimated component replacement years and future component replacement costs based on an average construction industry inflation factor. The report also projected estimated reserve cash flows over the next thirty (30) years based on both the report's recommended funding plan and current funding levels. Current Regular and Approved Special Assessments (All regular and special assessments vary by ownership interest size or type.) Quarterly Regular Assessment Per Ownership Interest 348 Annexed Lots (96.15) - 131 Non-Annexed Lots (71.81) Portion of Regular Assessment Allocated to Reserve Fund Annexed Lots (12.51) - Non-Annexed Lots (9.37) Approved Special Assessments Per Ownership Interest (refer to page 2) $0.00 Current Reserve Fund Balance/Interest and Inflation Rates Total Reserve Fund Balance on July 31, 2014 $25,000 Average Long-Term Annual Rate of Return on Reserve Funds 1.05% Long-Term Annual Construction Index Inflation Rate 3.00% Estimated Year-End Reserve Fund Position on December 31, 2014 Total Major Component Replacement Cost $377,350 Total Cash Reserve Funds Set Aside $57,148 Based on Component Total Replacement Cost Total Reserve Fund (Deficiency) or Overage ($320,202) Reserve Fund (Deficiency) or Overage Based on 70.0% of Total Annexed Lots (502.39/lot - Non-Annexed Lots (376.42/lot) Percentage Funded Comparing Estimated Cash Set Aside to Total Replacement Cost 15.14% Based on Component Liability or "Wear-Out" Period ("Wear-Out" Period refers to the total years that components have been in service.) Total Reserve Fund Liability $76,130 Total Reserve Fund (Deficiency) or Overage ($18,982) Reserve Fund (Deficiency) or Overage Per Ownership Interest Annexed Lots (29.78/lot - Non-Annexed Lots (22.31/lot) Percentage Funded Comparing Reserve Cash Funds Set Aside to Component "Wear-Out" Period 75.07% Recommended Reserve Fund Allocations/Special Assessments Quarterly Reserve Fund Allocation Per Ownership Interest Percentage of Increase or (-Decrease) From Current Allocation Annual Allocation Percentage Increase (thereafter) Annexed Lots (12.71) - Non-Annexed Lots (9.52) 1.57% 4.70% Projected Special Assessments Per Ownership Interest (refer to page 2) $0.00 Report Date: 11/17/2014 Page 1 of 4 Walla Services Clovis, CA

Assessment and Reserve Funding Disclosure Summary Fiscal Year Ending: December 31, 2014 Bakersfield, CA Reserve Funds Used For Operating Expenses Due Date Amount Due Reserves $0.00 Purpose of Transfer Loans From Outside Sources Original Loan Amount Annual Interest Loan Amount Outstanding Payment Rate Payoff Date $0.00 $0.00 $0.00 0.00% Lending Institution Purpose of Loan Approved Special Assessments Assessment Due Date Amount Per Ownership Interest Per Year $0.00 Purpose of Assessment $0.00 Total of Assessments Major Components Listed in Study and Not Funded or Deferred for Repairs and/or Replacement Major Component None Useful Remaining Life (yrs) Reason Not Funded Currently Projected Reserve Account Balances 1) 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 repair and replacement obligations of major components during the next thirty (30) years? YES NO 2) If the answer to #1 above is NO, what additional assessments or other contributions to the reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the board or members? Year of Assessment Estimated Amount Per Ownership Interest $0.00 Purpose For Additional Funds $0.00 Total of Assessments 5-Year Projected Reserve Fund Position Year Ending Required Reserve Funds Threshold Funding Study's Funding Plan Notes Approved Funding Plan Fund Balance Percentage Funded Fund Balance Percentage Funded Fund Balance Percentage Funded 2015 $73,435 $62,723 85.4% $62,235 84.7% 2016 $98,729 $96,758 98.0% $96,281 97.5% 2017 $126,021 $126,021 100.0% $126,021 100.0% 2018 $137,754 $137,754 100.0% $137,754 100.0% 2019 $166,714 $166,586 99.9% $166,714 100.0% Report Date: 11/17/2014 Page 2 of 4 Walla Services Clovis, CA

Assessment and Reserve Funding Disclosure Summary Fiscal Year Ending: December 31, 2014 Bakersfield, CA Component Inventory From Reserve Study Components Est. Useful Present Est. Est. Quantity Current Future Life (yrs) Life (yrs) Remaining Replacement Replacement Life (yrs) Cost Cost STREET Asphalt Replacement (Casa Club Drive) 25 1 24 106,884 sf $243,700 $495,392 Asphalt Surface Treatment, seal coat (1-coat) 3 N/A 1 106,884 sf $12,400 $12,772 Curbs/Gutters, concrete (2') 45 34 11 7,124 lf $16,000 $22,148 Fire Lane Painting 3 N/A 1 836 lf $1,200 $1,236 Lane Striping, single skip line/markings 3 1 1 3,337 lf $1,600 $1,648 SIGNAGE Development Sign, carved wood (25" x 72") 35 34 1 1 ea $1,850 $1,906 Misc. Street Signs, metal 20 N/A 8 13 ea $1,300 $1,647 No Trespassing Sign, carved wood 35 34 1 1 ea $300 $309 Speed Limit, metal 20 N/A 8 1 ea $100 $127 Speed Limit, carved wood 35 34 1 4 ea $1,200 $1,236 STREET LIGHTS Concrete Pole w/lantern head (replacement) 40 34 6 10 ea $12,000 $14,329 Concrete Pole w/lantern head (replacement) 35 5 30 1 ea $1,200 $2,913 Metal Pole, single arm 35 7 28 1 ea $1,050 $2,402 VEHICLE TRANSPONDER SYSTEM Antenna, Sirit Identity Flex 10 0 10 1 ea $950 $1,277 Antenna Pole (12') 30 5 25 1 ea $1,700 $3,559 Cabinet, stainless steel, NEMA Type 3R, V.I.T. 30 5 25 1 ea $2,400 $5,025 Cooling Fans, IEI 7 5 2 2 ea $500 $530 RFID Reader, Sirit ID4000-Flex 12 0 12 1 ea $6,000 $8,555 Multi-Output Power Supply, Altronix AL600ULM 12 5 7 1 ea $1,300 $1,599 Reader Interface/Controller, VertX V2000 12 5 7 1 ea $1,650 $2,029 Transponders, Identity Flex TAG 4 12 5 7 100 ea $2,500 $3,075 VEHICLE BARRIER GATES Arms, Magnetic Autocontrol MSB-5N-030 (10') 15 5 10 2 ea $800 $1,075 Operators, Magnetic Autocontrol MIB-30 15 5 10 2 ea $8,000 $10,751 Loop Detectors 15 5 10 2 ea $900 $1,210 FENCES/WALLS/SIDEWALKS Fences, metal tube (5.5') 40 34 6 161 lf $10,050 $12,000 Stucco Pillars (1' x 1' x 7') 40 34 6 7 ea $2,100 $2,508 Painting, fence/pillars 7 1 6 1,967 sf $1,900 $2,269 Sidewalks, concrete (268 lf) 35 34 1 1,072 sf $5,100 $5,253 GUARDHOUSE Building Repairs 15 1 14 1 ls $2,000 $3,025 Canopy, canvas 15 14 1 1 ea $1,500 $1,545 Computer/Flat Panel Monitor, Dell 10 5 5 1 ls $850 $985 Evaporative Cooler, Champion Cooler WC37 15 2 13 1 ea $1,000 $1,469 Fixtures/Misc. 40 34 6 1 ls $1,200 $1,433 Floors, linoleum tile 35 34 1 189 sf $1,050 $1,082 Lights, single/double head flood 10 1 9 4 ea $500 $652 Lights, ceiling/recess 35 34 1 6 ea $900 $927 Pass Printer, Zebra GK420T 8 2 6 1 ea $750 $896 Painting, exterior 7 1 6 660 sf $1,500 $1,791 Report Date: 11/17/2014 Page 3 of 4 Walla Services Clovis, CA

Component Inventory From Reserve Study (cont.) Components Est. Useful Present Est. Est. Quantity Current Future Life (yrs) Life (yrs) Remaining Replacement Replacement Life (yrs) Cost Cost Painting, interior 7 1 6 675 sf $1,600 $1,910 Roof, clay tile 45 34 11 225 sf $2,250 $3,115 LANDSCAPING Irrigation System 15 0 15 1 ls $5,000 $7,790 Landscape Renovations 7 0 7 1 ls $3,500 $4,305 Tree Trim/Remove 7 0 7 1 ls $14,000 $17,218 Totals: $377,350 $666,920 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. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was 1.05% per year and the assumed long-term inflation rate to be applied to major component repair and replacement costs was 3.00% per year. Report Date: 11/17/2014 Page 4 of 4 Walla Services Clovis, CA