November 22, Boca Rio Condominium Homeowners Association Board of Directors Blossom Valley Road El Cajon, CA Attn: Robin Clegg

Sonnenberg & Company, CPAs 5190 Governor Drive, Suite 201, San Diego, California 92122 Phone: (858) 457-5252 -- (800) 464-4HOA -- Fax: (858) 457-2211 -- (800) 303-4FAX November 22, 2017 Boca Rio Condominium Homeowners Association Board of Directors 10035 Blossom Valley Road El Cajon, CA 92021 Attn: Robin Clegg Inv. #:RS1217 Invoice For Professional Services: Compilation of Level III: Update Reserve Study Report, including: * Assessment and Reserve Funding Disclosure Summary * Reserve Study Summary Page * Reserve Funding Analysis * 30-Year Projection as of December 31, 2017 * Consultant s Report Total $400

Sonnenberg & Company, CPAs 5190 Governor Drive, Suite 201, San Diego, California 92122 Phone: (858) 457-5252 -- (800) 464-4HOA -- Fax (858) 457-2211 -- (800) 303-4FAX Boca Rio Condominium Homeowners Association November 22, 2017 c/o Board of Directors 10035 Blossom Valley Road El Cajon, CA 92021 RE: Reserve Study - Boca Rio Condominium Homeowners Association Fiscal Year End - December 31, 2017 Due to Homeowners No Later Than - December 1, 2017 60 Day Review Period Ends - January 21, 2018 APPROVAL LETTER Dear Board of Directors: Please review the attached reserve study draft for the subject association, with our funding analysis, and the required disclosure statement. As you know, the reserve study summary and disclosure statement must be distributed to the owners no sooner than 90 days, and no later than 30 days prior to the end of the current fiscal year. Our analysis, and the disclosure, are based on our best estimate of anticipated funding and distributions from the reserve funds through the end of the current fiscal year. The disclosure statement must report, in addition to the current assessment rate, the Board s plan for the next 30 year funding. Should the Board of Directors decide on a different funding plan than we have presented, or should unanticipated expenditures be made, or anticipated expenditures not be made in this fiscal year, please advise us so that we may revise our funding schedule and the disclosure statement in sufficient time for distribution to the owners. Please note, current Federal Housing Administration (FHA) loan requirement states that FHA loans require that Reserve contributions represent at least 10% of the total budget. (It is understood by Sonnenberg & Co., CPAs that not all loans will be made through FHA.) Please be aware that the AICPA states that the Board is responsible for management decisions and functions; for designating an individual with suitable skill, knowledge, or experience to oversee the reserve study services we provide; and for evaluating the adequacy and results of those services and accepting responsibility for them. A signature, by the designated individual to oversee this reserve study, confirming the approval of this reserve study and its contents, is required before the final package can be mailed out. This could be a board member, homeowner or the property manager. If no revisions are in process and signed approval is not received within 60 days of the date of this study, we will assume this study to be final and it will be sent out as such. Any revisions made after the study is finalized may be subject to the revision fee stated in the original contract. Please review this study thoroughly and reply to our office with any needed revisions or questions you may have, within the 60 day review period. Extensive or numerous revision may be assessed a revision fee. Final studies will be sent via email PDF file, unless requested otherwise.* We thank you for the opportunity to work with you in the preparation of this reserve study, and look forward to our continued relationship in the future. Sonnenberg & Company, CPAs *Please send final study as a hard copy via regular mail (check box) To the best of my knowledge the contents of this reserve study are correct, and we approve the completion of the final report: Signature Title Phone # Date Member: The American Institute of Certified Public Accountants and California Society of Certified Public Accountants

Reserve Study Executive Summary Boca Rio Condominium Homeowners Association Association Name: Location: 1590-1690 Seacoast Drive, Imperial Beach, CA Fiscal Year Ending: December 31, 2017 No. of Units: 44 Built: 1964 Level of Study: Level III: Update with no On-Site Inspection Last Reserve Study with On-Site inspection: December 31, 2016 CURRENT FISCAL YEAR END SUMMARY OF RESERVE COMPONENTS (See Reserve Analysis Worksheet, pg. 5, for breakdown of all components individual lives, current costs, and projected future replacement costs) Reserve Estimated Estimated Estimated Annual Accumulated Allocation Percent Component Useful Remaining Replacement Funding Funding of Fund of Fund Groups Life Life Cost Requirement Requirement Balance Balance ROOFING & DECKS 3-30 1-24 $ 362,800 $ 16,128 $ 78,797 $ 128,336 21.9% PAINTING/REPAIRS 1-12 1-6 146,682 34,854 96,136 156,576 26.7% FENCE/RAILINGS/WALLS 5-35 1-20 98,085 5,334 65,994 107,484 18.4% PAVED SURFACES-Repairs 7-7 3-3 6,500 929 3,714 6,049 1.0% MECHANICAL/PLUMBING 3-20 1-14 70,350 10,559 27,523 44,827 7.7% OCEAN TIDE CONTROL 1-10 1-3 71,500 11,650 51,550 83,959 14.3% FIRE/SAFETY 6-6 2-2 1,000 167 667 1,086 0.2% LANDSCAPING & IRRIGATION 6-6 5-5 7,500 1,250 1,250 2,036 0.3% LIGHTING 8-8 5-5 7,500 938 2,813 4,581 0.8% MISCELLANEOUS 3-20 1-6 22,250 4,588 13,892 22,625 3.9% CONTINGENCY (5%) 39,708 4,320 17,117 27,878 4.8% TOTALS $ 833,875 $ 90,716 $ 359,451 $ 585,437 CURRENT FISCAL YEAR RESERVE FUNDS Current Budgeted Annual Reserve Allocation $ 63,360 Reserve Fund Balance as of: September 30, 2017 $ 594,597 Anticipated Funding to Year End 15,840 Anticipated Expenditures to Year End (25,000) Cash Projected at Year End December 31, 2017 $ 585,437 Accumulated Funding Requirement (Fully Funded) $ 359,451 Percentage Funded at the end of this Fiscal Year 162.9% Accumulated Surplus for Current Fiscal Year $ 225,986 Per Unit $ 5,136 Deferred repair/replacement of any major component with a remaining life of 30 years or less? YES RESERVE FUNDING OPTIONS FOR THE FISCAL YEAR ENDING: 2018 per unit per month per year funding options assume a 3% increase, unless otherwise noted Annual Requirement Funding: $ 177 $ 93,437 Current Budgeted Funding: 124 65,261 Recommended Funding: 81 43,000 Special Assessment/s Recommended? NO For funding option details please see Reserve Study Summary page 2 We present this summary of the repair and replacement funding program of the Association as of December 31, 2017, and the related reserve funding projection for the 30-year period from 2018 to 2047, based on information provided by management and based upon the consultant's estimates of the most probable reserve component replacement costs, conditions, and lives. The annual requirement is based on the cost of each component divided by its total useful life. The accumulated requirement is the annual requirement multiplied by the number of years each component has been in service. The difference between accumulated requirement total and the actual cash balance may indicate a deficit which would be expressed in the percentage funded. The above information is a condensed summary of the reserve study, in compliance with CA Civil Codes 5300, 5550, and 5600, and is intended to be included in the annual budget package to be provided to owners not less than 30 nor more than 90 days prior to the Association fiscal year end. CACC 5550 requires an on-site inspection every 3 years, and the study to be reviewed annually. Assumptions have been made about costs, conditions, and future events that may occur. Some of these assumptions may not materialize; and unanticipated events and circumstances may occur subsequent to the date of this report. Therefore, the actual replacement costs and lives may vary from this report and the variations may be material. The compilation of this reserve funding analysis and projection is based on representations of management and the consultant's estimates. We have not audited or reviewed the accompanying analysis and projections and, accordingly, do not express an opinion or any other form of assurance on them. We assume no responsibility to update this report for events occurring after the date of issuance of this report. November 22, 2017 Sonnenberg & Company, CPAs Sonnenberg & Company, CPAs Reserve Study Summary, Page 1

Boca Rio Condominium Homeowners Association Level III: Update with no On-Site Inspection December 31, 2017 Inflation and Interest Earned on Reserves: As an industry standard, provision has been made in the funding projections for inflation, computed at three percent (3%), and an assumed 1% net interest on the reserve balance has been added to the reserve funds. As costs increase in the future, the annual reserve reports should be revised accordingly. Reserve Calculations: Based on estimated current replacement costs of $833,875 and estimated normal and remaining useful lives as determined by the independent consultant, the annual funding requirement is calculated to be $90,716. The accumulated funding requirement is calculated to be $359,451. As of December 31, 2017, the Association may have $585,437 in accounts designated as reserve funds. Therefore, a surplus of $225,986 has been calculated, with a funding percentage of 162.9%. A portion of the annual reserve requirement may be provided for in the operating budget. Industry Standard Measure of Funding Strength: 0% - 30% = WEAK At this level of funding, Special Assessments and deferred maintenance are likely. 31% - 70% = FAIR At this level of funding Special Assessment and deferred maintenance are less likely, but could still pose a concern. Efforts should be taken to increase to a healthier level of funding. >70% = STRONG At this level of funding the Association should be well covered, with hopefully no need for deferred maintenance or Special Assessments. Funding Calculations: There are a variety of methods by which the Association can approach the desired level of funding. The Board is responsible for determining the optimum funding program. We have calculated three options: Option 1: Annual Requirement Funding: This option assumes that the Association will maintain the annual funding requirement as calculated on page 5, without regard to any funding deficiency. Currently the annual requirement allocation is $93,437 or $177 per unit per month (based on annual funding requirement, plus 3% inflation increase) beginning next fiscal year. Overfunded in FY 2018. High levels of overfunding are likely throughout the 30 year projection. Option 2: Current Funding: The current budgeted funding level is projected over the 30-year period, including three percent (3%) annual increase, as compared to option 1 and 3. Currently, with the 3% increase, $65,261 or $124 per unit per month will be allocated to reserves next fiscal year. Reserves are currently funded over 100 percent but could fall to the Fair level of funding by FY 2031. Deficits could occur beginning FY 2041. Option 3: Recommended Funding: This option is intended to calculate the amount of funding that would be the most sufficient for the Association over the next 30 years. The Current Budgeted Funding, and the Annual Requirement Funding are both taken into consideration while creating a Recommended Funding that is hopefully achievable by the Association. Recommended funding is, $43,000 or $81 per unit per month. To reduce overfunding, the Regular Reserve allocation could be decreased to equal $43,000 annually in FY 2018. To avoid deficits which could occur beginning FY 2041 and to keep reserves funded at the Strong level of funding, the Regular Reserve allocation could be increased 20% annually in FY s 2023 through 2027 and could be made without 3% annual increases in FY s 2032 through 2037. Reserves could maintain Fully Funded to Strong levels of funding throughout the 30 year projection. Sonnenberg & Company, CPAs Reserve Study Summary, page 2

(1) Regular Assessments - Assessments to members are averaged at $390 per unit per month for the year ending December 31, 2017. Amount/ unit/month (3) Reserve Account Balances - Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the Association s obligation for repair/and or replacement of major components during the next 30 years? (4) Additional Assessments - Boca Rio Condominium Homeowners Association Assessment and Reserve Funding Disclosure Summary December 31, 2017 * If assessments vary by the size or type of unit, the applicable assessment rates may be found in the Association s accompanying Annual Budget and /or can be provided by the Association/management agent. (2) Special Assessments - Additional assessments that have already been scheduled to be imposed or charged, regardless of the purpose, which have been approved by the Board and/or members: Date assessment is due: N/A Purpose of this assessment is to fund or supplement the replacement costs of: Yes No X If the answer to #3 is No, what additional assessments or other contributions to reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the board of directors or the members? Recommended Funding: To reduce overfunding, the Regular Reserve allocation could be decreased to equal $43,000 annually in FY 2018. To avoid deficits which could occur beginning FY 2041 and to keep reserves funded at the Strong level of funding, the Regular Reserve allocation could be increased 20% annually in FY s 2023 through 2027 and could be made without 3% annual increases in FY s 2032 through 2037. Reserves could maintain Fully Funded to Strong levels of funding throughout the 30 year projection. (5) Major Components - All major components are included in the reserve study and are included in its calculations. (6) Current Funding Comparison - As of the current reserve study or update, the balance in the reserve fund is projected to be $585,437. Based on the method of calculation in paragraph 4 of subdivision (b) of Section 5570, the estimated accumulated funding requirement is $359,451. The percentage funded is: 162.9% (7) Funding over next 5 Budget Years - Based on the method of calculation in paragraph 4 of subdivision (b) of Section 5570, the estimated amount required in the reserve fund at the end of each of the next five budget years is projected to be: $300,148 $316,664 $297,627 $347,866 $336,822 The projected reserve fund cash balance at the end of each of those years is projected to be, taking into account only assessments already approved and other known revenues, as follows: $506,533 $501,896 $460,954 $488,235 $453,923 % Funded 168.8% 158.5% 154.9% 140.4% 134.8% If the recommended reserve funding plan is approved by the Association and implemented, the projected reserve fund cash balance at the end of each of those years would be: $484,273 $456,484 $391,472 $393,732 $333,421 % Funded 161.3% 144.2% 131.5% 113.2% 99.0% The law does not require the Association to fund reserves in accordance with these calculations. The financial representations set forth in this summary are based on best estimates of the consultant at the time. These estimates regarding costs, lives and conditions are subject to change. An assumed long-term inflation rate to be applied to major component repair and replacement costs was 3% per year. An assumed long-term net interest rate earned on reserve funds is 1% per year. Per CACC 5550, the Association is required to adopt a 5 year funding plan. November 22, 2017 Sonnenberg & Company, CPAs Assessment & Reserve Funding Disclosure Summary, Page 3

Boca Rio Condominium Homeowners Association December 31, 2017 Major Repairs and Replacements Funding Requirements 44 Units; Built 1964 First Five Year Projection Consultant's Report: Accountant's Program: (source key: C = Consultant; M = Management/Board of Directors; V = Vendor; A = Actual Cost) Current Estimated Annual Accumltd Cash Units Unit Replcmt Life: Funding Funding In Surplus 2018 2019 2020 2021 2022 COMPONENT Measured Cost Srce Cost Usfl Rmg Reqrmnt Reqrmnt Reserves Disb Disb Disb Disb Disb 1 2 3 4 5 ROOFING & DECKS Useful Life raised on TPO Roof Systems (FY '17) Roofs-Replace w/tpo single-ply 60 Mil 11 bldg 19,250.00 C/M/A $ 211,750 30 24 7,058 42,350 68,975 26,625! Roof Maintenance Total C/M 5,000 3 1 1,667 3,333 5,429 2,096 5,000 5,450 Common Decks, Resurface 275 sf 22.00 C 6,050 15 11 403 1,613 2,628 1,014 Unit Balconies/Decks, Repair/Resurface/Reflash 16 Total C/M/A 105,000 20 14 5,250 31,500 51,304 19,804 *** Unit Balconies/Decks, Repair/Resurface/Reflash (FY '17) 6 ea Total C/M/A 35,000 20 20 1,750 - - - Subtotal $ 362,800 PAINTING/REPAIRS Building Stucco Tuck-Under Carports 18,216 sf 1.25 M/C $ 22,770 10 6 2,277 9,108 14,834 5,726 Exterior Wood - A/B Units 30,000 sf 1.25 M/C 37,500 6 2 6,250 25,000 40,717 15,717 38,625! Exterior Wood - C/D Units 30,000 sf 1.25 M/C 37,500 4 1 9,375 28,125 45,807 17,682 37,500 42,000! Annual Exterior Maintenance Painting Total M/C 12,000 1 1 12,000 12,000 19,544 7,544 12,000 12,360 12,720 13,080 13,440 Railing & Trellis Brackets - Treat/Paint Total M/A/C 4,500 7 5 643 1,286 2,094 808 5,040 Wood Balcony Railings (3') - West Facing 264 lf 8.00 M/C 2,112 7 5 302 603 983 379 2,365 Wood Stair Rails - 2nd Floor Access 550 lf 10.00 M/C 5,500 7 5 786 1,571 2,559 988 6,160 Wood Stair Rails - Balcony Access 100 lf 10.00 M/C 1,000 7 5 143 286 465 180 1,120 Wood Replacements/Repairs Allowance C/M/A 15,000 12 1 1,250 13,750 22,395 8,645 15,000! Wrought Iron Gates 5 ea 275.00 M/C 1,375 4 1 344 1,031 1,680 648 1,375 1,540 Common Decks, Topcoating 275 sf 3.00 M/C 825 5 2 165 495 806 311 850 Unit Balconies/Decks, Topcoating 16 ea 300.00 C/M 4,800 5 2 960 2,880 4,691 1,811 4,944 * Unit Balconies/Decks, Topcoating 6 ea 300.00 C/M 1,800 5 5 360 - - - 2,016 Subtotal $ 146,682 FENCE/RAILINGS/WALLS $1K in Gate/Lock Maintenance conducted annually to combat ocean air corrosion Wrought Iron Gates 5 ea Allowance C/M $ 4,000 5 1 800 3,200 5,212 2,012 4,000 Wood Walls @ Patios (Siding) 7 ea 1,525.00 C/M 10,675 20 8 534 6,405 10,432 4,027 + CMU Walls @ Patios (w/slate Cap) 4 ea 2,550.00 Beyond 30 Yr Projection 40 36 - - - - Wood Walls-3ft Separating Buildings 60 lf 40.00 C/M 2,400 25 11 96 1,344 2,189 845 Wood Balcony Railings (3') - West Facing 264 lf 45.00 C/M 11,880 25 11 475 6,653 10,835 4,183 Wood Stair Rails - 2nd Floor Access 550 lf 45.00 C/M 24,750 25 11 990 13,860 22,574 8,714 Wood Stair Rails - Balcony Access 100 lf 45.00 C/M 4,500 25 11 180 2,520 4,104 1,584 Masonry Walls @ Driveways Allowance C 7,500 6 1 1,250 6,250 10,179 3,929 7,500 $5.4K in Repairs Conducted FY '17 ** Metal Hand Rails @ Concrete Steps 12 ea 615.00 C/M/A 7,380 25 20 295 1,476 2,404 928 Tubular Metal Fence (South Perimeter) To be replaced with CMU Wall and Vinyl Fence Cap Railing by FYE '18 CMU Wall w/vinyl Cap Railing (South Perimeter) 110 lf Total M 25,000 35 1 714 24,286 39,554 15,268 25,000 Subtotal $ 98,085 PAVED SURFACES-Repairs Concrete Paving Replacements Allowance C/M $ 6,500 7 3 929 3,714 6,049 2,335 6,890 Subtotal $ 6,500 MECHANICAL/PLUMBING Water Heater, Domestic (40 gal) 9 ea 1,500.00 C/M $ 13,500 10 3 1,350 9,450 15,391 5,941 14,310 Water Heater, Domestic (75 gal) 2 ea 2,000.00 M/A/C 4,000 10 6 400 1,600 2,606 1,006 Domestic Water Shut-off Valves 19 ea 150.00 C/M 2,850 20 12 143 1,140 1,857 717 Gas Line Replacements-as needed Allowance C/M 15,000 3 1 5,000 10,000 16,287 6,287 15,000 16,350 Slab Leak Repairs Allowance C/M 5,000 3 1 1,667 3,333 5,429 2,096 5,000 5,450 Waste Lines in Carports Allowance M/C 30,000 15 14 2,000 2,000 3,257 1,257 Subtotal $ 70,350

Boca Rio Condominium Homeowners Association Major Repairs and Replacements Funding Requirements 44 Units; Built 1964 Following Six to Thirty Year Projection Estimated Usfl/Remg 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2042 2047 COMPONENT Life Disb Disb Disb Disb Disb Disb Disb Disb Disb Disb Disb Disb Disb Disb Disb Disb Disb 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 ROOFING & DECKS Roofs-Replace w/tpo single-ply 60 Mil 30 24 Roof Maintenance 3 1 5,900 6,350 6,800 7,250 7,700 8,600 Common Decks, Resurface 15 11 7,865 Unit Balconies/Decks, Repair/Resurface/Re 20 14 145,950 Unit Balconies/Decks, Repair/Resurface/Re 20 20 54,950 PAINTING/REPAIRS Building Stucco Tuck-Under Carports 10 6 26,186 33,017 Exterior Wood - A/B Units 6 2 45,375 52,125 58,875 Exterior Wood - C/D Units 4 1 46,500 51,000 55,500 64,500 Annual Exterior Maintenance Painting 1 1 13,800 14,160 14,520 14,880 15,240 15,600 15,960 16,320 16,680 17,040 17,400 17,760 18,120 18,480 18,840 20,640 22,440 Railing & Trellis Brackets - Treat/Paint 7 5 5,985 6,930 Wood Balcony Railings (3') - West Facing 7 5 2,809 3,252 Wood Stair Rails - 2nd Floor Access 7 5 7,315 8,470 Wood Stair Rails - Balcony Access 7 5 1,330 1,540 Wood Replacements/Repairs 12 1 20,400 25,800 Wrought Iron Gates 4 1 1,705 1,870 2,035 2,365 Common Decks, Topcoating 5 2 974 1,097 1,221 Unit Balconies/Decks, Topcoating 5 2 5,664 6,384 7,104 Unit Balconies/Decks, Topcoating 5 5 2,286 2,556 2,826 3,096 3,366 FENCE/RAILINGS/WALLS Wrought Iron Gates 5 1 4,600 5,200 5,800 Wood Walls @ Patios (Siding) 20 8 12,917 CMU Walls @ Patios (w/slate Cap) 40 36 Wood Walls-3ft Separating Buildings 25 11 3,120 Wood Balcony Railings (3') - West Facing 25 11 15,444 Wood Stair Rails - 2nd Floor Access 25 11 32,175 Wood Stair Rails - Balcony Access 25 11 5,850 Masonry Walls @ Driveways 6 1 8,850 10,200 11,550 12,900 Metal Hand Rails @ Concrete Steps 25 20 11,587 Tubular Metal Fence (South Perimeter) CMU Wall w/vinyl Cap Railing (South Perim 35 1 PAVED SURFACES-Repairs Concrete Paving Replacements 7 3 8,255 9,620 MECHANICAL/PLUMBING Water Heater, Domestic (40 gal) 10 3 18,360 Water Heater, Domestic (75 gal) 10 6 4,600 5,800 Domestic Water Shut-off Valves 20 12 3,791 Gas Line Replacements-as needed 3 1 17,700 19,050 20,400 21,750 23,100 25,800 Slab Leak Repairs 3 1 5,900 6,350 6,800 7,250 7,700 8,600 Waste Lines in Carports 15 14 41,700

Boca Rio Condominium Homeowners Association December 31, 2017 30-Year Cash Projections 44 Units; Built 1964 30-Year Cash Projections: Fiscal Year Ended ---------> 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2037 2042 2047 Number of Years-----------> 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 20 25 30 Option 1 - Annual Requirement Funding: Overfunded in FY 2018. High levels of overfunding are likely throughout the 30 year projection. Regular Dues - Unit/Month 177 182 188 193 199 205 211 218 224 231 238 245 252 260 268 310 360 417 Beginning Cash 585437 Annual Funding w/3% incrs 93437 96240 99128 102102 105165 108319 111569 114916 118364 121915 125572 129339 133219 137216 141332 163843 189939 220191 (includes 3% annual increase) Net Interest On Balance (1%) 5854 5347 5594 5489 6079 6064 6610 7103 7355 7885 8506 8508 9347 8040 6566 10463 9614 12588 Annual Disbursements 150019 76922 115196 48641 112646 59795 68919 96780 72749 67742 133879 53887 273284 292630 28031 180807 190849 36914 Ending Cash Reserve - Option 1 534710 559376 548902 607851 606449 661037 710297 735536 788506 850564 850762 934722 804005 656631 776499 1039769 970141 1454661 Option 2 - Current Budgeted Funding: Reserves are currently funded over 100 percent but could fall to the Fair level of funding by FY 2031. Deficits could occur beginning FY 2041. Regular Dues - Unit/Month 124 127 131 135 139 143 148 152 157 161 166 171 176 182 187 217 251 291 Beginning Cash 585437 Current Funding w/3% incrs 65261 67219 69235 71312 73452 75655 77925 80263 82670 85151 87705 90336 93046 95838 98713 114435 132662 153791 (includes 3% annual increase) Net Interest On Balance (1%) 5854 5065 5019 4610 4882 4539 4743 4881 4764 4911 5134 4724 5136 3385 1451 2779 0 0 Annual Disbursements 150019 76922 115196 48641 112646 59795 68919 96780 72749 67742 133879 53887 273284 292630 28031 180807 190849 36914 Ending Cash Reserve - Option 2 506533 501896 460954 488235 453923 474322 488071 476434 491119 513439 472400 513573 338472 145064 217197 214308 (171770) (56112) Option 3 - Recommended Funding: To reduce overfunding, the Regular Reserve allocation could be decreased to equal $43,000 annually in FY 2018. To avoid deficits which could occur beginning FY 2041 and to keep reserves funded at the Strong level of funding, the Regular Reserve allocation could be increased 20% annually in FY's 2023 through 2027 and could be made without 3% annual increases in FY's 2032 through 2037. Reserves could maintain Fully Funded to Strong levels of funding throughout the 30 year projection. Regular Dues - Unit/Mth 81 84 86 89 92 110 132 158 190 228 235 242 249 257 257 257 298 345 Beginning Cash 585437 DECREASE Recommended Funding 43000 44290 45619 46987 48397 58076 69692 83630 100356 120427 124040 127761 131594 135542 135542 135542 157130 182157 (inclds 3% annl incrs unless noted) (20% ann incrs in FY's 2023-2027) (no incrs) Net Interest On Balance (1%) 5854 4843 4565 3915 3937 3334 3350 3392 3294 3603 4166 4109 4889 3521 1985 4911 2248 3070 Annual Disbursements 150019 76922 115196 48641 112646 59795 68919 96780 72749 67742 133879 53887 273284 292630 28031 180807 190849 36914 Ending Cash Reserve - Option 3 484273 456484 391472 393732 333421 335036 339159 329400 360300 416588 410915 488898 352097 198530 308026 450785 193316 455280 Projected Total Replacement Cost - Projected Funding to Cost Ratio - 1967946 23% Percent of Accumulated Reserve Requirement Funded: 162.9% Cash at End of Fiscal Year: Cash at September 30, 2017 594,597 Monthly Allocations through year-end 15,840 Anticipated Expenditures through year-end (25,000) Cash Projected at Year End December 31, 2017 585,437 Prepared by Sonnenberg & Company CPAs See Accountant s Letter and the Accompanying Notes and Assumptions Funding Projection Options, Page 7

Boca Rio Condominium Homeowners Association December 31, 2017 Major Repairs and Replacements Funding Requirements 1600 1400 Year-End Reserve Balances Projected Over 30 Years 1200 Reserve Balance Thousands 1000 800 600 400 200 0 (200) (400) Annual Requirement Funding Current Funding Level Recommended Funding Prepared by Sonnenberg & Company CPAs See Accountant s Letter and the Accompanying Notes and Assumptions Chart Relating to Projections, Page 8