Kayscreek Estates HOA

Kayscreek Estates HOA Level I Reserve Study Report Period 1/01/09 12/31/09 Client Reference Number.... 11004 Property Type........ Single Family Homes Number of Units............. 276 Fiscal Year End......... December 31 Date of Property Inspection..... April 21st, 2008 Inspector....... Robert Forney Report prepared on Monday, June 23, 2008

Table of Contents Introduction Executive Summary page 1 Introduction page 2 General Information and Frequently Asked Questions page 3-4 Reserve Analysis Funding Summary page 5 Percent Funded Graph page 6 Component Inventory page 7 Significant Components page 8 Significant Components Graph page 9 Yearly Summary page 10 Yearly Reserve Contributions Graph page 11 Component Funding Information page 12 Yearly Cash Flow page 13 Yearly Reserve Expenditures Graph page 14 Projected Reserve Expenditures by Year page 15 Component Evaluation Component Evaluation page 1-12 Glossary of Commonly used Words and Phrases

Executive Summary Kayscreek Estates HOA - ID # 11004 Information to complete this Reserve Study was gathered on April 21st, 2008 by performing an on-site inspection of the common area elements. In addition, we also obtained information by contacting any vendors and/or contractors that have worked on the property recently, as well as communicating with the property representative (BOD Member and/or Community Manager). To the best of our knowledge, the conclusions and recommendations of this report are considered reliable and accurate insofar as the information obtained from these sources. Projected Starting Balance as of January 1, 2009 $78,165 Ideal Reserve Balance as of January 1, 2009 $59,231 Percent Funded as of January 1, 2009 132% Recommended Reserve Contribution (per month) $975 Minimum Reserve Contribution (per month) $835 Recommended Special Assessment $0 Minimum Recommended Special Assessment $0 Kayscreek Estates HOA is a 276-unit community consisting of single-family homes. The property offers several park areas with two tot-lots as amenities as well as a walking path as amenities. Construction on the community was completed in 2002. Currently Programmed Projects There are no projects programmed to occur this year. (See page 15) Major Reserve Expenditures The first major reserve expenditure is programmed to occur in fiscal year 2010. Projects programmed to occur in fiscal year 2010 include sealing the asphalt paths (Comp# 1311) and repairing the asphalt paths (Comp# 1312). We have programmed approximately $12,637 in reserve funds or approximately 21% of fiscal year 2010 s recommended starting balance towards the completion of these projects. (see page 10). Significant Reserve Projects The association s significant reserve projects include replacing the chain link fencing (Comp# 1003), replacing the play structures (Comp# 1301), sealing the asphalt paths (Comp# 1311), and refilling the tot lot groundcover (Comp# 1303). The fiscal significance of these components is approximately 22%, 20%, 13%, and 10% respectively (see page 8). A component s significance is calculated by dividing its replacement cost by its useful life. In this way, not only is a component s replacement cost considered but also the frequency of occurrence. These components most significantly contribute to the total monthly reserve contribution. As these components have a high level of fiscal significance the association should properly maintain them to ensure they reach their full useful lives. Reserve Funding In comparing the projected starting reserve balance of $78,165 versus the ideal reserve balance of $52,231 we find the association s reserve fund to be approximately 132% funded. This indicates a strong reserve fund position. In order to maintain a strong account fund, we suggest adopting a monthly reserve contribution of $975 ($3.53/unit) per month. We have also included a minimum reserve contribution of $835 ($3.03/unit) per month. If the contribution falls below this rate, then the reserve fund may fall into a situation where special assessments, deferred maintenance, and lower property values are likely at some point in the future. 1

Introduction Reserve Study Purpose The purpose of this Reserve Study is to provide an educated estimate of the necessary reserve allocation. The detailed schedules will serve as an advanced warning that major projects will need to be addressed in the future. This will allow the Board of Directors to have ample time to obtain competitive estimates and bids that will result in cost savings to the individual homeowners. It will also ensure the physical well-being of the property and ultimately enhance each owner s investment, while limiting the possibility of unexpected major projects that may lead to special assessments. Preparer s Credentials After working for a notable national reserve study provider Mr. Forney started Complex Solutions Ltd. in 2001. Complex Solutions provides reserve study consulting services to clients primarily in California, Nevada and Utah. Mr. Forney holds a Bachelor of Science degree in Business Administration from Pepperdine University. Conducted over 650 reserve studies Created the proprietary software and databases used to prepare Complex Solutions reserve studies. This proprietary software gives Complex Solutions the freedom and ability to create reports tailored to the individual clients needs. Projects have ranged in size from small apartment-style condominium communities to 1000+ Planned Unit Communities (PUD). Clients have ranged from developers interested in setting initial reserve accounts for communities under construction to high-rise communities, even an aero park (small airport). Active member of three local chapters of CAI (Nevada, Utah, and Channel Islands, CA). (3) Articles published in Community Interests. Budget Breakdown Every association conducts their business within a budget. There are typically two main parts to this budget, operating and reserves. The operating budget includes all expenses that are fixed on an annual basis. These would include management fees, maintenance fees, utilities, etc. The reserves is primarily made up of capital replacement items such as roofing, fencing, mechanical equipment, etc., that do not normally occur on an annual basis. Typically, the reserve contribution makes up 15% - 40% of the association s total budget. Therefore, reserves are considered to be a major part of the overall monthly association payment. Report Sections The Reserve Analysis Section contains the evaluation of the association s reserve balance, income, and expenses. It includes a finding of the client s current reserve fund status (measured as percent funded) and a recommendation for an appropriate reserve allocation rate (also known as the funding plan). The Component Evaluation Section contains information regarding the physical status and replacement cost of major common area components the association is responsible to maintain. It is important to understand that while the component inventory will remain relatively stable from year to year, the condition assessment and life estimates will most likely vary from year to year. 2

General Information and Frequently Asked Questions Why is it important to perform a Reserve Study? As previously mentioned, the reserve allocation makes up a significant portion of the total monthly dues. This report provides the essential information that is needed to guide the Board of Directors in establishing the budget in order to run the daily operations of your association. It is suggested that a third party professionally prepare the Reserve Study since there is no vested interest in the property. Also, a professional knows what to look for and how to properly develop an accurate and reliable component list. After we have a Reserve Study completed, what do we do with it? Hopefully, you will not look at this report and think it is too cumbersome to understand. Our intention is to make this Reserve Study easy to read and understand. Please take the time to review it carefully and make sure the main ingredients (component information) are complete and accurate. If there are any inaccuracies, please inform us immediately so we may revise the report. Once you feel the report is an accurate tool to work from, use it to help establish your budget for the upcoming fiscal year. The reserve allocation makes up a large portion of the total monthly dues and this report should help you determine the correct amount of money to go into the reserve fund. Additionally, the Reserve Study should act as a guide to obtain proposals in advance of pending projects. This will give you an opportunity to shop around for the best price available. The Reserve Study should be readily available for real estate agents, brokerage firms, and lending institutions for potential future homeowners. As the importance of reserves becomes more of a household term, people are requesting homeowners associations reveal the strength of the reserve fund prior to purchasing a condominium, town home, or any property that belongs to an association. How often do we update or review the Reserve Study? Unfortunately, there is a misconception that these reports are good for an extended period of time since the report has projections for the next 30 years. Just like any major line item in the budget, the Reserve Study should be reviewed each year before the budget is established. Invariably, some assumptions have to be made during the compilation of this analysis. Anticipated events may not materialize and unpredictable circumstances could occur. Deterioration rates and repair/replacement costs will vary from causes that are unforeseen. Earned interest rates may vary from year to year. These variations could alter the content of the Reserve Study. Therefore, this analysis should be reviewed annually, and a property inspection should be conducted at least once every three years. Is it the law to have a Reserve Study conducted? The Government requires reserve analyses in approximately 20 States. Even if it is not currently governed by your State, the chances are very good that the documents of the association require the association to have a reserve fund established. This doesn t mean a Reserve Study is required, but how are you going to know you have enough funds in the account if you don t have the proper information? Some associations look at the Reserve fund and think that $50,000 is a lot of money and they are in good shape. What they don t know is that the roof is going to need to be replaced within 5 years, and the cost of the roof is going to exceed $75,000. So while $50,000 sounds like a lot of money, in reality it won t even cover the cost of a roof, let alone all the other amenities the association is responsible to maintain. What is a Reserve Component versus an Operating Component? A Reserve component is an item that is the responsibility of the association to maintain, has a limited useful life, predictable remaining useful life, typically occurs on a cyclical basis that exceeds 1 year, and costs above a minimum threshold amount. An Operating expense is typically a fixed expense that occurs on an annual basis. For instance, minor repairs to a roof for damage caused by high winds or other weather elements would be considered an Operating expense. However, if the entire roof needs to be replaced because it has reached the end of its life expectancy, then the replacement would be considered a reserve expense. What are the GREY areas of maintenance items that are often seen in a Reserve Study? One of the most popular questions revolves around major maintenance items, such as painting the buildings or seal coating the asphalt. You may hear from your accountant that since painting or seal coating is not replacing a capital 3

item, then it cannot be considered a Reserve issue. However, it is the opinion of several major Reserve Study providers that these items are considered to be major expenses that occur on a cyclical basis. Therefore, it makes it very difficult to ignore a major expense that meets the criteria to be considered a reserve component. Once explained in this context, many accountants tend to agree and will include any expenses, such as these examples, as a reserve component. What happens during the Property Inspection? The Property Inspection was conducted following a review of the documents that were established by the developer identifying all common area assets. In some cases, the Board of Directors at some point may have revised the documents. In either case, the most current set of documents was reviewed prior to inspecting the property. In addition, common area assets may have been reported to Complex Solutions by the client, or by other parties. Estimated life expectancies and life cycles are based upon conditions that were readily accessible and visible at the time of the inspection. We did not destroy any landscape work, building walls, or perform any methods of intrusive investigation during the inspection. In these cases, information may have been obtained by contacting the contractor or vendor that has worked on the property. What is the Financial Analysis? We projected the starting balance by taking the most recent balance statement, adding expected reserve contributions for the rest of the fiscal year, and subtracting any pending projects that will be paid for before the end of the current fiscal year. We compared this number to the ideal reserve balance and arrived at the percent funded level. Measures of strength are as follows: 0% - 30% Funded is considered to be a weak financial position. Associations that fall into this category are subject to special assessments and deferred maintenance, which could lead to lower property values. If the association is in this position, actions should be taken to improve the financial strength of the reserve fund. 31% - 69% Funded is considered a fair financial position. The majority of associations fall into this category. While this doesn t represent financial strength and stability, the likelihood of special assessments and deferred maintenance is diminished. Effort should be taken to continue strengthening the financial position of the reserve fund. 70% - 99% Funded is considered a strong financial position. This indicates financial strength of a reserve fund and every attempt to maintain this level should be a goal of the association. 100% Funded is considered an ideal financial position. This means that the association has the exact amount of funds in the reserve account. 4

Funding Summary Beginning Assumptions # of units 276 Fiscal Year End 31-Dec Budgeted Monthly Reserve Allocation $807 Projected Starting Reserve Balance $78,165 Ideal Starting Reserve Balance $59,231 Economic Assumptions Current Inflation Rate 3.50% Reported After-Tax Interest Rate 1.50% Current Reserve Status Current Balance as a % of Ideal Balance 132% Recommendations Recommended Monthly Reserve Allocation $975 Per Unit $3.53 Future Annual Increases 2.75% For number of years: 12 Increases thereafter: 3.50% Minimum Recommended Monthly Reserve Allocation $835 Per Unit $3.03 Future Annual Increases 2.75% For number of years: 12 Increases thereafter: 3.50% Changes From Prior Year Recommended Increase to Reserve Allocation $169 as Percentage 21% Minimum Recommended Increase to Reserve Allocation $29 as Percentage 4% 5

Percent Funded - Graph 140% 120% 100% % Lev vel of Funding 80% 60% 40% 20% 0% 2009 2011 2013 2015 2017 2019 2021 2023 2025 Year 2027 2029 2031 2033 2035 2037 2039 Recommended Current Minimum 6

Category ID # Component Name Component Inventory Useful Life (yrs.) Remaining Useful Life (yrs.) Best Cost Worst Cost Painted Surfaces 207 Metal Fencing - Repaint 4 2 $2,500 $3,050 Prop. Identification 801 Monument Signs - Replace 15 8 $8,000 $10,000 Fencing 1002 Metal Fencing - Repair/Replace 20 13 $13,800 $16,500 1003 Chain Link Fencing - Replace 25 18 $48,400 $60,500 1008 PVC Vinyl Fencing - Replace N/A $0 $0 Recreation Equip. 1301 Play Structures - Replace 16 9 $30,000 $35,000 1302 Swing Set - Replace N/A $0 $0 1303 Tot Lot Groundcover - Refill 5 2 $4,000 $6,000 1307 Park Furniture - Replace 8 2 $4,000 $5,000 1311 Asphalt Paths - Seal 5 1 $5,325 $7,100 1312 Asphalt Paths - Repair/Replace 10 1 $5,330 $6,665 1390 Footbridge - Refurbish 15 7 $3,000 $5,000 7

Significant Components ID # Component Name Useful Life (yrs.) Remaining Useful Life (yrs.) Average Current Cost Significance: (Curr Cost/UL) As $ As % 207 Metal Fencing - Repaint 4 2 $2,775 $694 6.9851% 801 Monument Signs - Replace 15 8 $9,000 $600 6.0411% 1002 Metal Fencing - Repair/Replace 20 13 $15,150 $758 7.6269% 1003 Chain Link Fencing - Replace 25 18 $54,450 $2,178 21.9293% 1301 Play Structures - Replace 16 9 $32,500 $2,031 20.4517% 1303 Tot Lot Groundcover - Refill 5 2 $5,000 $1,000 10.0686% 1307 Park Furniture - Replace 8 2 $4,500 $563 5.6636% 1311 Asphalt Paths - Seal 5 1 $6,213 $1,243 12.5102% 1312 Asphalt Paths - Repair/Replace 10 1 $5,998 $600 6.0386% 1390 Footbridge - Refurbish 15 7 $4,000 $267 2.6849% 8

Significant Components - Graph 1003 Chain Link Fencing - Replace 1301 Play Structures - Replace 1311 Asphalt Paths - Seal 1303 Tot Lot Groundcover - Refill All Other 35% 22% 20% 10% 13% Useful Life (yrs.) Remaining Useful Life (yrs.) Average Current Cost Significance: ID # Component Name (Curr Cost/UL) As $ As % 1003 Chain Link Fencing - Replace 25 18 $54,450 $2,178 22% 1301 Play Structures - Replace 16 9 $32,500 $2,031 20% 1311 Asphalt Paths - Seal 5 1 $6,213 $1,243 13% 1303 Tot Lot Groundcover - Refill 5 2 $5,000 $1,000 10% All Other See Expanded Table For Breakdown $3,480 35% 9

Yearly Summary Year Fully Funded Balance Starting Reserve Balance Percent Funded Reserve Contributions Interest Income Reserve Expenses 2009 $59,231 $78,165 132% $11,700 $1,269 $0 2010 $71,583 $91,134 127% $12,022 $1,372 $12,637 2011 $71,649 $91,890 128% $12,352 $1,382 $13,149 2012 $71,558 $92,475 129% $12,692 $1,493 $0 2013 $85,460 $106,660 125% $13,041 $1,709 $0 2014 $100,247 $121,410 121% $13,400 $1,935 $0 2015 $115,965 $136,745 118% $13,768 $2,086 $11,048 2016 $121,225 $141,551 117% $14,147 $2,158 $11,451 2017 $126,695 $146,406 116% $14,536 $2,232 $11,851 2018 $132,399 $151,322 114% $14,936 $2,064 $44,294 2019 $105,199 $124,027 118% $15,346 $1,912 $10,262 2020 $112,760 $131,023 116% $15,768 $1,963 $17,826 2021 $113,264 $130,928 116% $16,202 $2,043 $7,555 2022 $124,942 $141,618 113% $16,769 $2,087 $23,694 2023 $120,868 $136,779 113% $17,356 $2,163 $4,492 2024 $137,089 $151,806 111% $17,963 $2,428 $0 2025 $159,109 $172,198 108% $18,592 $2,660 $10,772 2026 $171,353 $182,678 107% $19,243 $2,837 $8,973 2027 $186,511 $195,784 105% $19,916 $2,242 $114,654 2028 $93,467 $103,288 111% $20,613 $1,716 $0 2029 $116,500 $125,618 108% $21,335 $2,058 $0 2030 $141,032 $149,011 106% $22,082 $2,227 $25,146 2031 $141,112 $148,174 105% $22,854 $2,221 $25,099 2032 $141,985 $148,151151 104% $23,654 $2,266 266 $19,855 2033 $149,083 $154,217 103% $24,482 $2,514 $0 2034 $177,772 $181,213 102% $25,339 $2,348 $76,805 2035 $128,794 $132,095 103% $26,226 $1,944 $32,990 2036 $124,300 $127,275 102% $27,144 $2,032 $12,658 2037 $141,573 $143,793 102% $28,094 $2,384 $0 2038 $173,462 $174,271 100% $29,077 $2,852 $0 10

Reserve Contributions - Graph Monthly Reserve Contributions $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Year Recommended Current Minimum 11

Component Funding Information ID Component Name Average Current Future Ideal Current Fund Cost Balance Cost Balance Monthly 207 Metal Fencing - Repaint $2,775 $2,973 $1,388 $1,831 $68.10 801 Monument Signs - Replace $9,000 $11,851 $4,200 $5,543 $58.90 1002 Metal Fencing - Repair/Replace $15,150 $23,694 $5,303 $6,998 $74.36 1003 Chain Link Fencing - Replace $54,450 $101,140 $15,246 $20,120 $213.81 1301 Play Structures - Replace $32,500 $44,294 $14,219 $18,764 $199.40 1303 Tot Lot Groundcover - Refill $5,000 $5,356 $3,000 $3,959 $98.17 1307 Park Furniture - Replace $4,500 $4,821 $3,375 $4,454 $55.22 1311 Asphalt Paths - Seal $6,213 $6,430 $4,970 $6,559 $121.97 1312 Asphalt Paths - Repair/Replace $5,998 $6,207 $5,398 $7,123 $58.88 1390 Footbridge - Refurbish $4,000 $5,089 $2,133 $2,815 $26.18 $59,231 $78,165 $975 Current Fund Balance as a percentage of Ideal Balance: 132% 12

Yearly Cash Flow Year 2009 2010 2011 2012 2013 Starting ti Balance $78,165 $91,134 134 $91,890 $92,475 $106,660660 Reserve Income $11,700 $12,022 $12,352 $12,692 $13,041 Interest Earnings $1,269 $1,372 $1,382 $1,493 $1,709 Special Assessments $0 $0 $0 $0 $0 Funds Available $91,134 $104,528 $105,624 $106,660 $121,410 Reserve Expenditures $0 $12,637 $13,149 $0 $0 Ending Balance $91,134 $91,890 $92,475 $106,660 $121,410 Year 2014 2015 2016 2017 2018 Starting Balance $121,410 $136,745 $141,551 $146,406 $151,322 Reserve Income $13,400 $13,768 $14,147 $14,536 $14,936 Interest Earnings $1,935 $2,086 $2,158 $2,232 $2,064 Special Assessments $0 $0 $0 $0 $0 Funds Available $136,745 $152,599 $157,856 $163,173 $168,321 Reserve Expenditures $0 $11,048 $11,451 $11,851 $44,294 Ending Balance $136,745 $141,551 $146,406 406 $151,322 $124,027 Year 2019 2020 2021 2022 2023 Starting Balance $124,027 $131,023 $130,928 $141,618 $136,779 Reserve Income $15,346 $15,768 $16,202 $16,769 $17,356 Interest Earnings $1,912 $1,963 $2,043 $2,087 $2,163 Special Assessments $0 $0 $0 $0 $0 Funds Available $141,285 $148,754 $149,173 $160,473 $156,298 Reserve Expenditures $10,262 $17,826 $7,555 $23,694 $4,492492 Ending Balance $131,023 $130,928 $141,618 $136,779 $151,806 Year 2024 2025 2026 2027 2028 Starting Balance $151,806 $172,198 $182,678 $195,784 $103,288 Reserve Income $17,963 $18,592 $19,243 $19,916 $20,613 Interest Earnings $2,428 $2,660 $2,837 $2,242 $1,716 Special Assessments $0 $0 $0 $0 $0 Funds Available $172,198 198 $193,450 $204,757 $217,942 $125,618 Reserve Expenditures $0 $10,772 $8,973 $114,654 $0 Ending Balance $172,198 $182,678 $195,784 $103,288 $125,618 Year 2029 2030 2031 2032 2033 Starting Balance $125,618 $149,011 $148,174 $148,151 $154,217 Reserve Income $21,335 $22,082 $22,854 $23,654 $24,482 Interest Earnings $2,058 $2,227 $2,221 $2,266 $2,514 Special Assessments $0 $0 $0 $0 $0 Funds Available $149,011 $173,320 $173,250 $174,072 $181,213 Reserve Expenditures $0 $25,146 $25,099 $19,855 $0 Ending Balance $149,011 $148,174 $148,151 $154,217 $181,213 Year 2034 2035 2036 2037 2038 Starting Balance $181,213 $132,095 $127,275 $143,793 $174,271 Reserve Income $25,339 $26,226 $27,144 $28,094 $29,077 Interest Earnings $2,348 $1,944 $2,032 $2,384 $2,852 Special Assessments $0 $0 $0 $0 $0 Funds Available $208,901 $160,265 $156,451 $174,271 $206,200 Reserve Expenditures $76,805 $32,990 $12,658 $0 $0 Ending Balance $132,095 $127,275 $143,793 $174,271 $206,200 13

Yearly Reserve Expenditures - Graph $120,000 $100,000 000 $80,000 An nnual Totals $60,000 $40,000 $20,000 $- 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Year 14

Projected Reserve Expenditures by Year Year ID # Component Name Projected Total Per Cost Annum 2009 No Expenditures Projected $0 2010 1311 Asphalt Paths - Seal $6,430 1312 Asphalt Paths - Repair/Replace $6,207 $12,637 2011 207 Metal Fencing - Repaint $2,973 1303 Tot Lot Groundcover - Refill $5,356 1307 Park Furniture - Replace $4,821 $13,149 2012 No Expenditures Projected $0 2013 No Expenditures Projected $0 2014 No Expenditures Projected $0 2015 207 Metal Fencing - Repaint $3,411 1311 Asphalt Paths - Seal $7,637 $11,048 2016 1303 Tot Lot Groundcover - Refill $6,361 1390 Footbridge - Refurbish $5,089 $11,451 2017 801 Monument Signs - Replace $11,851 $11,851 2018 1301 Play Structures - Replace $44,294 $44,294 2019 207 Metal Fencing - Repaint $3,914 1307 Park Furniture - Replace $6,348 $10,262 2020 1311 Asphalt Paths - Seal $9,070 1312 Asphalt Paths - Repair/Replace $8,756 $17,826 2021 1303 Tot Lot Groundcover - Refill $7,555 $7,555 2022 1002 Metal Fencing - Repair/Replace $23,694 $23,694 2023 207 Metal Fencing - Repaint $4,492 $4,492 2024 No Expenditures Projected $0 2025 1311 Asphalt Paths - Seal $10,772 $10,772 2026 1303 Tot Lot Groundcover - Refill $8,973 $8,973 2027 207 Metal Fencing - Repaint $5,155 1003 Chain Link Fencing - Replace $101,140 1307 Park Furniture - Replace $8,359 $114,654 2028 No Expenditures Projected $0 2029 No Expenditures Projected $0 2030 1311 Asphalt Paths - Seal $12,794 1312 Asphalt Paths - Repair/Replace $12,351 $25,146 2031 207 Metal Fencing - Repaint $5,915 1303 Tot Lot Groundcover - Refill $10,658 1390 Footbridge - Refurbish $8,526 $25,099 2032 801 Monument Signs - Replace $19,855 $19,855 2033 No Expenditures Projected $0 2034 1301 Play Structures - Replace $76,805 $76,805 2035 207 Metal Fencing - Repaint $6,788 1307 Park Furniture - Replace $11,007 1311 Asphalt Paths - Seal $15,196 $32,990 2036 1303 Tot Lot Groundcover - Refill $12,658 $12,658 2037 No Expenditures Projected $0 2038 No Expenditures Projected $0 2039 207 Metal Fencing - Repaint $7,789 $7,789 15

Component Evaluation Comp #: 207 Metal Fencing - Repaint Location: Quantity: Common area Approx 275 Linear ft. General Notes: Quantity breakdown: Life Expectancy: 4 Remaining Life: 2 Best Cost: $2,500 $9.00/Linear ft.; Estimate to repaint iron fence Worst Cost: $3,050 $11.00/Linear ft; Higher estimate for additional prep work 75 Linear ft. - Weaver & Stonebridge entrance 85 Linear ft. - Weaver & Bridgecreek entrance 60 Linear ft. - Weaver bridge 55 Linear ft. - Footbridge near stonecreek 275 Linear ft. - Total Source of Information: CSL Cost Database Observations: Painted surfaces are in good to fair condition. No paint loss or rusting noted. Expect to repaint these surfaces approximately every 4 years to maintain appearance and protect metal. Page 1 of 12

Comp #: 801 Monument Signs - Replace Location: Quantity: Entrances to community (4) Signs General Notes: Life Expectancy: 15 Remaining Life: 8 Best Cost: $8,000 $2,000/Sign; Estimate to refurbish signs Worst Cost: $10,000 $2,500/Sign; Higher estimate for more repairs Source of Information: CSL Cost Database Observations: Signs are in good condition. We recommend funding to replace signs and to generally refurbish monuments approximately every 15 years to ensure appearance. Page 2 of 12

Comp #: 1002 Metal Fencing - Repair/Replace Location: Quantity: Common area Approx 275 Linear ft. General Notes: Life Expectancy: 20 Remaining Life: 13 Best Cost: $13,800 $50/Linear ft.; Estimate to replace fence Worst Cost: $16,500 $60/Linear ft.; Higher estimate for more labor Source of Information: CSL Cost Database Observations: No problems noted or reported. Although this component may reach an extended life we recommend funding to make significant repairs and replacements approximately every 20 years. Page 3 of 12

Comp #: 1003 Chain Link Fencing - Replace Location: Quantity: Common area Approx 6,050 Linear ft. General Notes: Life Expectancy: 25 Remaining Life: 18 Best Cost: $48,400 $8.00/Linear ft.; Estimate to replace Worst Cost: $60,500 $10.00/Linear ft.; Higher estimate Source of Information: CSL Cost Database Observations: Although this type of fencing may reach an extended life we recommend funding to replace the chain link fencing approximately every 25 years to ensure appearance. Page 4 of 12

Comp #: 1008 PVC Vinyl Fencing - Replace Location: Quantity: Backyard fencing Extensive Linear ft. General Notes: Life Expectancy: N/A Remaining Life: Best Cost: $0 Worst Cost: $0 Source of Information: Observations: This fencing is the responsibilitiy of the individual owner. No reserve funding necessary. Page 5 of 12

Comp #: 1301 Play Structures - Replace Location: Quantity: Tot-lots (2) Large structures General Notes: Life Expectancy: 16 Remaining Life: 9 Best Cost: $30,000 Estimate to replace Worst Cost: $35,000 Higher estimate Source of Information: CSL Cost Database Observations: Play structures are in good condition. No significant signs of wear or damage noted at the time of inspection. Expect a useful life of approximately 16 years from this component. Remaining life based on current age and condition. Page 6 of 12

Comp #: 1302 Swing Set - Replace Location: Quantity: Rockbridge Drive park (1) 4-Swing set General Notes: Life Expectancy: N/A Remaining Life: Best Cost: $0 Worst Cost: $0 Source of Information: Observations: No expectation to replace swing structure. Replace individual swings as necessary as an operating expense. No reserve funding necessary. Page 7 of 12

Comp #: 1303 Tot Lot Groundcover - Refill Location: Quantity: Tot-lots Approx 10,225 Sq.ft. General Notes: Quantity breakdown: Life Expectancy: 5 Remaining Life: 2 Best Cost: $4,000 Estimate to refill 9,600 Sq.ft. - Rockbridge Drive park 625 Sq.ft. - Arbor Way park 10,225 Sq.ft. - Total Worst Cost: $6,000 Higher estimate Source of Information: CSL Cost Database Observations: Sand beds are clean and full. Expect to refill these sand lots approximately every 5 years. Remaining life based on current condition. Page 8 of 12

Comp #: 1307 Park Furniture - Replace Location: Park areas General Notes: Quantity: (7) Pieces Life Expectancy: 8 Remaining Life: 2 Best Cost: $4,000 Estimate to replace Worst Cost: $5,000 Higher estimate Source of Information: CSL Cost Database Rockbridge Drive park: (2) Benches (2) Trash recepticles Mica Lane park: (1) Trash recepticles Arbor Way park: (1) Picnic table (1) Trash recepticles (7) Pieces Observations: Furniture is in good condition. Noted minor fading but not loss of plasticol surface or appearance concerns noted. Expect to replace this items approximately every 8 years. Page 9 of 12

Comp #: 1311 Asphalt Paths - Seal Location: Quantity: Common area Approx 35,550 Linear ft. General Notes: Approx 3,950 Linear ft. Life Expectancy: 5 Remaining Life: 1 Best Cost: $5,325 $.15/Sq.ft.; Estimate to seal Worst Cost: $7,100 $.20/Sq.ft.; Higher estimate for more repairs Source of Information: CSL Cost Database Observations: Asphalt paths are in good condition. No significant raveling or surface loss noted. Expect to seal these paths approximately every 5 years to protect asphalt and prevent premature repairs (see Comp# 1312 Asphalt Paths - Repair/Replace). Page 10 of 12

Comp #: 1312 Asphalt Paths - Repair/Replace Location: Quantity: Common area Approx 35,550 Sq.ft. General Notes: Approx 3,950 Linear ft. Life Expectancy: 10 Remaining Life: 1 Best Cost: $5,330 $1.00/Sq.ft.; Estimate to repair/replace approx 15% Worst Cost: $6,665 $1.25/Sq.ft.; Higher estimate Source of Information: CSL Cost Database Observations: No expectation to completely remove and replace asphalt paths. We recommend funding to make repairs to the asphalt paths approximately every 5 to 7 years. Page 11 of 12

Comp #: 1390 Footbridge - Refurbish Location: Quantity: Waking path (1) 35 X 10 ft. bridge General Notes: Life Expectancy: 15 Remaining Life: 7 Best Cost: $3,000 Estimate to refurbish Worst Cost: $5,000 Higher estimate Source of Information: CSL Cost Database Observations: No expectation to completely replace bridge. We recommend funding to replace the wood surfaces and generally refurbish the bridge approximately every 15 years. Page 12 of 12

Glossary of Commonly Used Words And Phrases (Provided by the National Reserve Study Standards of the Community Associations Institute) Cash Flow Method A method of developing a reserve funding plan where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different reserve funding plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved. Component Also referred to as an Asset. Individual line items in the Reserve Study developed or updated in the physical analysis. These elements form the building blocks for the Reserve Study. Components typically are: 1) Association responsibility, 2) with limited useful life expectancies, 3) have predictable remaining life expectancies, 4) above a minimum threshold cost, and 5) required by local codes. Component Full Funding When the actual (or projected) cumulative reserve balance for all components is equal to the fully funded balance. Component Inventory The task of selecting and quantifying reserve components. This task can be accomplished through on-site visual observations, review of association design and organizational documents, a review of established association precedents, and discussion with appropriate association representatives. Deficit An actual (or projected reserve balance), which is less than the fully funded balance. Effective Age The difference between useful life and remaining useful life (UL - RUL). Financial Analysis The portion of the Reserve Study where current status of the reserves (measured as cash or percent funded) and a recommended reserve contribution rate (reserve funding plan) are derived, and the projected reserve income and expenses over time is presented. The financial analysis is one of the two parts of the Reserve Study. Fully Funded Balance An indicator against which the actual (or projected) reserve balance can be compared. The reserve balance that is in direct proportion to the fraction of life used up of the current repair or replacement cost of a reserve component. This number is calculated for each component, and then summed together for an association total. FFB = Current Cost * Effective Age / Useful Life Fund Status The status of the reserve fund as compared to an established benchmark, such as percent funded. Funding Goals Independent of calculation methodology utilized, the following represent the basic categories of funding plan goals: Baseline Funding: Establishing a reserve-funding goal of keeping the reserve balance above zero. Component Full Funding: Setting a reserve funding goal of attaining and maintaining cumulative reserves at or near 100% funded. Threshold Funding: Establishing a reserve funding goal of keeping the reserve balance above a specified dollar or percent funded amount. Funding Plan An association s plan to provide income to a reserve fund to offset anticipated expenditures from that fund.

Funding Principles Sufficient funds when required Stable contributions through the year Evenly distributed contributions over the years Fiscally responsible GSF - Gross Square Feet Life and Valuation Estimates The task of estimating useful life, remaining useful life, and repair or replacement costs for the reserve components. LF - Linear Feet Percent Funded The ratio, at a particular point in time (typically the beginning of the fiscal year), of the actual (or projected) reserve balance to the ideal fund balance, expressed as a percentage. Physical Analysis The portion of the Reserve Study where the component evaluation, condition assessment, and life and valuation estimate tasks are performed. This represents one of the two parts of the Reserve Study. Remaining Useful Life (RUL) Also referred to as remaining life (RL). The estimated time, in years, that a reserve component can be expected to continue to serve its intended function. Projects anticipated to occur in the current fiscal year have a 0 remaining useful life. Replacement Cost The cost of replacing, repairing, or restoring a reserve component to its original functional condition. The current replacement cost would be the cost to replace, repair, or restore the component during that particular year. Reserve Balance Actual or projected funds as of a particular point in time (typically the beginning of the fiscal year) that the association has identified for use to defray the future repair or replacement of those major components that the association is obligated to maintain. Also known as reserves, reserve accounts, or cash reserves. In this report the reserve balance is based upon information provided and is not audited. Reserve Study A budget-planning tool, which identifies the current status of the reserve fund and a stable and equitable funding plan to offset the anticipated future major common area expenditures. The Reserve Study consists of two parts: The Physical Analysis and the Financial Analysis. Special Assessment An assessment levied on the members of an association in addition to regular assessments. Governing documents or local statutes often regulate special assessments. Surplus An actual (or projected) reserve balance that is greater than the fully funded balance. Useful Life (UL) Also known as life expectancy. The estimated time, in years, that a reserve component can be expected to serve its intended function if properly constructed and maintained in its present application of installation.