CAPITAL RESERVE STUDY

CAPITAL RESERVE STUDY Prepared for: Hampton Club Condominium Association New Brunswick, N.J. Care of: Hampton Club 115 Edpas Road New Brunswick, NJ 08901 Daniel Rush CAI Certified Reserve Specialist Designation Number 6 July 2011 Project Number: 3177.0001

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 2 of 2 TABLE OF CONTENTS PAGE INTRODUCTION... 3 DESCRIPTION OF DEVELOPMENT... 4 DISCLOSURES... 5 TERMS AND DEFINITIONS... 6 STUDY METHODOLOGY... 11 CAPITAL ITEMS... 12 EXCLUDED ITEMS... 23 TABLES : REPLACEMENT RESERVE SCHEDULE... 24 YEARLY EXPENSE PROJECTION TABLE... 26 30 YEAR CASH FLOW CHART... 28 NOTES... 29 SUMMARY... 29 LIST OF ABBREVIATIONS... 30 BIBLIOGRAPHY... 31

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 3 of 3 INTRODUCTION A Capital Reserve Study is a report prepared to estimate the amount of money which must be put aside for future repairs and replacements to the Association s physical plant. The report is a tool for evaluating and establishing a stable level of reserve funding. The primary reason to set aside reserve funds is to ensure that adequate funds are available for anticipated long-term maintenance of common areas. Reserve funding is a means of fairly distributing the costs of future replacement to the common elements among all owners. The reserve fund is integral to the Association s administration of fiscal planning and budgeting. In addition, the reserve funding is an indicator of the financial strength of the Association which will affect the value of the units. This Reserve Study consists of two (2) parts: the physical analysis and the financial analysis. This Capital Reserve Study was prepared in accordance with the National Reserve Study Standards of the Community Associations Institute (C.A.I.). The level of service provided is a Category II, Capital Reserve Study Update. A Category II, Capital Reserve Study Update is a reserve study in which the following five (5) reserve study tasks are performed: 1. Component Inventory (verification only, not quantification) 2. Condition Assessment (based upon on-site visual observations) 3. Life and Valuation Estimates 4. Fund Status 5. Funding Plan This report will analyze the future replacement costs for common elements which are capital items with a reasonably predictable useful life. The capital items will be limited to those items which have a useful life exceeding two (2) years. If a certain item requires replacement more often than every two (2) years, it should be included in the operating budget. Furthermore, items will be excluded if they have an insignificant cost or if they are permanent in nature. Items with an insignificant cost would be those that could be funded in the operating budget without any adverse financial impact. Items of a permanent nature are those which exceed the thirty (30) year study period and those which are integral to reconstruction of the entire project, such as; concrete footings, foundation walls, crawlspace and roof wood framing, in-wall utility services and stormwater piping. Since the remaining useful life estimates, inflation and interest need on-going review, it is recommended that the study be updated every three (3) to five (5) years. An older Association with a significant amount of repair and replacement activity may need to update its study annually.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 4 of 4 DESCRIPTION OF DEVELOPMENT Hampton Club is a residential community consisting of three hundred twelve (312) units contained within twelve (12) buildings. The project is located at Lot 1.03 and 1.05 - Block 596.03 in the City of New Brunswick, Middlesex County, New Jersey. The buildings are wood construction with gable roofs framed by wooden trusses. The roofs are comprised of strip shingles. The exterior cladding of the buildings is constructed of vinyl siding. Entrance to the sixteen (16) acre community is located on Edpas Road. All interior streets and parking areas are maintained and owned by the Association. Recreational facilities within the community include a clubhouse currently under construction, a tennis court, a basketball court and a picnic area. The Association is responsible for common elements such as open space, roads, curbs, sidewalks, parking areas, fencing, irrigation systems, recreational facilities, utilities not located within easements or owned by the respective utility companies, exterior site lighting, roofing, foundations, common area building entrances, exterior or interior main walls between units and other miscellaneous items.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 5 of 5 DISCLOSURES The Capital Reserve Study has been performed under the agreement that all relevant information has been provided to FWH Associates, P.A (FWH). Any material issues that have not been disclosed would cause a distortion of the Association s situation. Information provided by the official representative of the Association regarding financial, physical, quantity or historical issues will be deemed reliable by FWH. The reserve study will be a reflection of information provided to FWH and assembled for the Association s use, not for the purpose of performing an audit, quality/forensic analysis or background checks of historical records. The Capital Reserve Study update is performed considering the client has deemed previously developed component quantities as accurate and reliable. All current work is reliant on the validity of prior reserve studies. All information provided to FWH regarding reserve projects will be considered reliable. On-site inspections should not be considered project audits or quality inspections. At the time this reserve study was conducted FWH has had no involvements with the Association, which could result in actual or perceived conflicts of interest.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 6 of 6 TERMS AND DEFINITIONS 1) 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. 2) Component The 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: a) Association responsibility b) with limited Useful Life expectancies c) predictable Remaining Useful Life expectancies d) above a minimum threshold cost e) as required by local codes. 3) 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 representative(s). 4) Component Method A method of developing a Reserve Funding Plan where the total contributions are based on the sum of contributions for individual components. See Cash Flow method. 5) Condition Assessment The task of evaluating the current condition of the component based on observed or reported characteristics. 6) Current Replacement Cost See Replacement Cost.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 7 of 7 7) Deficit An actual (or projected) Reserve Balance at the end of any fiscal year or at the end of the study which is less than the Fully Funded Balance. The opposite would be a Surplus. 8) Effective Age The difference between the Useful Life and the Remaining Useful Life. Not always equivalent to chronological age, since some components age irregularly. Used primarily in computations. 9) Financial Analysis The portion of a 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 expense over time is presented. The Financial Analysis is one of the two parts of a Reserve Study. 10) Fully Funded One-hundred (100%) percent Funded. When the actual (or projected) Reserve Balance is equal to the Fully Funded Balance. 11) Fully Funded Balance (FFB) Total Accrued Depreciation. An indicator against which Actual (or projected) Reserve Balance can be compared. The Reserve Balance that is in direct proportion to the fraction of the life used up of the current Repair of Replacement cost. This number is calculated for each component, then summed together for an association total. Two (2) formulae can be utilized, depending on the provider s sensitivity to interest and inflation effects. Note: Both yield identical results when interest and inflation are equivalent. ( FFB ) = CurrentCost or EffectiveAge UsefulLife CurrentCost EffectiveAge ( FFB) = ( CurrentCost ) + UsefulLife (1 + InterestRate) EffectiveAge UsefulLife Re maininglife CurrentCost (1 + InflationRate) EffectiveAge UsefulLife Re maininglife

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 8 of 8 12) Fund Status The status of the Reserve Fund as compared to an established benchmark such as percent funding. 13) Funding Goals Independent of methodology utilized, the following represent the basic categories of Funding Plan goals: a) Baseline Funding: Establishing a Reserve funding goal of keeping the Reserve cash balance above zero. b) Full Funding: Setting a Reserve funding goal of attaining and maintaining Reserves at or near one-hundred (100%) percent funded. c) Statutory Funding: Establishing a Reserve funding goal of setting aside the specific minimum amount of Reserves required by local statutes. d) Threshold Funding: Establishing a Reserve funding goal of keeping the Reserve balance above a specified dollar or Percent Funded amount. Depending on the threshold, this may be more or less conservative than Fully Funding. 14) Funding Plan An Association s plan to provide income to a Reserve Fund to offset anticipated expenditures from that fund. 15) Funding Principles a) Sufficient Funds when Required b) Stable Contribution Rate over the Years c) Evenly Distributed Contributions over the Years d) Fiscally Responsible 16) Life and Valuation Estimates The task of estimating Useful Life, Remaining Useful Life and Repair or Replacement Costs for the Reserve components. 17) Percent Funded The ratio, at a particular point of time (typically the beginning of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 9 of 9 18) Physical Analysis The portion of the Reserve Study where the Component Inventory, Condition Assessment and Life and Valuation Estimate tasks are performed. This represents one of the two parts of the Reserve Study. 19) Remaining Useful Life Also referred to as Remaining Life. 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 initial year have zero Remaining Useful Life. 20) 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. 21) Reserve Balance Actual or projected funds as of a particular point in time that the Association has identified for use to defray the future replacement of those major components which the Association is obligated to maintain. Also known as Reserves, Reserve Accounts, Cash Reserves. 22) Reserve Provider An individual that prepares Reserve Studies. 23) 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 (2) parts: the Physical Analysis and the Financial Analysis.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 10 of 10 24) Responsible Charge A reserve specialist in responsible charge of a reserve study shall render regular and effective supervision to those individuals performing services which directly and materially affect the quality and competence rendered by the reserve specialist. A reserve specialist shall maintain such records as are reasonably necessary to establish that the reserve specialist exercised regular and effective supervision of a reserve study of which he was in responsible charge. A reserve specialist engaged in any of the following acts or practices shall be deemed not to have rendered the regular and effective supervision required herein: a) The regular and continuous absence from principal office premises from which professional services are rendered; except for performance of field work or presence in a field office maintained exclusively for a specific project; b) The failure to personally inspect or review the work of subordinates where necessary and appropriate; c) The rendering of a limited, cursory or perfunctory review of plans or projects in lieu of an appropriate detailed review; d) The failure to personally be available on a reasonable basis or with adequate advance notice for consultation and inspection where circumstances require personal availability. 25) Special Assessment An assessment levied on the members of an Association in addition to regular assessments in anticipation of unexpected common element replacement and funding deficit. Special assessments are often regulated by governing documents or local statutes. 26) Surplus An actual (or projected) Reserve Balance greater than the Fully Funded Balance. See Deficit. 27) Useful Life (UL) Total Useful Life or Depreciable Life. The estimated time, in years, that a reserve component can be expected to serve its intended function if properly constructed in its present application or installation.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 11 of 11 STUDY METHODOLOGY The quantities used in the replacement cost estimations of the common elements were taken from the previous Capital Reserve Study prepared by Gartenberg Associates, LLC, dated 2006. The remaining life expectancies of the common elements were determined by FWH through visual site inspections performed on June 24, 2011. The common elements were identified by the previous Capital Reserve Study, through the experience of FWH and by information provided by the Association. The Hampton Club community was constructed in 1988, which is used as the base year of installation for the common elements. The current replacement costs were estimated utilizing published construction cost data, estimates provided by contractors and cost data from recent similar projects performed by this firm. The useful life and remaining useful life were estimated based on field inspections of the items and on the assumption that an adequate maintenance schedule exists and will be followed. Without proper maintenance the common elements can deteriorate quickly and require funds from the reserves for replacement earlier than planned. It should be noted that this data is an estimate based upon the experience of this firm. The work was performed pursuant to generally accepted standards of practice. Since accurate and detailed control over market conditions, usage, rate of deterioration, maintenance or weather conditions is not feasible, the actual costs and useful life expectancy will vary from the estimates presented. We cannot and do not represent or guarantee that the actual costs or useful life expectancy will not vary from those presented in this report. The future updates of the report will make adjustments so that these variations will have no significant impact. It is recommended that the study be updated every three (3) to five (5) years. The Capital Reserve Funding Plan developed within this report is based on the cash flow or pooling method. The cash flow method is 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. This report uses the threshold funding method, in which the reserve balance is kept above a specified dollar amount or percent funded amount. The existing reserve amount effective as of September 1, 2011, has been projected into the future based on the existing funding plan and information provided by the Association. It is the opinion of FWH Associates, P.A. that the Associations current reserve funding plan is adequate. It will, however, be necessary to increase the annual contribution in anticipation of future expenditures.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 12 of 12 CAPITAL ITEMS 1) Asphalt Roads All of the paved surfaces at the Hampton Club community are constructed of bituminous concrete paving. Bituminous paving has a typical useful life of twenty (20) years after which it is expected to receive a new two (2 ) inch asphalt wearing surface. Half of the main entrance road and all the parking lots adjoining the condominium frontages were paved in 2005/2006; the front parking lot was resurfaced in 2011. Edge Failure at Inlet Severe Pavement Deterioration This asphalt and were observed to be in average condition, displaying separation and cracking along the installation seam. Evidence of crack sealing along these open seams did not remedy the longitudinal cracking. The back portion of the entrance road leading to the dumpster enclosure and the two (2) parking areas to the west are in poor condition, experiencing longitudinal and transverse cracking, alligatoring, failure at storm inlets, potholes, raveling and general surface deterioration. Patching at storm inlets was also evident. It is expected that the back roadway and parking lots will require an overlay in 2012. Regular maintenance of the asphalt surface including crack filling and pothole repair will extend the useful life of the pavement system. 2) Asphalt Sealcoating and Crack Repair It is recommended that all roadways and parking areas receive sealcoating every five (5) years to protect the asphalt surface from exposure to ultra-violet light, water, solvents and fuels such as gasoline, brake fluid, oil and engine coolant, all which have a destructive effect on asphalt. The cost to repaint parking stall delineations is included in the unit cost within the schedule.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 13 of 13 3) Concrete and Granite Curb The roadways at the Hampton Club community are edged with standard 8 x 16 concrete curb and a granite block curb. Concrete and granite curb have a typical useful life of forty-five (45) years. The curb system was observed to be in average condition with the exception of the rear parking lot which displayed numerous areas of cracked and broken curbing. It is recommended that curb replacement is coordinated with the resurfacing of the asphalt to prevent damage to either item during replacement and resurfacing. 4) Concrete Surfaces a) Sidewalks / Servicewalks Scaled Sidewalk at Tennis Court The sidewalks and unit servicewalks at the Hampton Club community is constructed of Portland Cement concrete which has a typical useful life of thirty (30) years. The Association has replaced approximately ten (10%) percent of the sidewalks and servicewalks since 2006. The walks were observed to be in average condition displaying cracking, scaling, exposed aggregate and chipped corners, large gaps between expansion joints and heaved or depressed sections. Any existing sidewalk posing possible trip or safety hazards should be replaced or mudjacked immediately through the operating budget. Two (2%) percent of the walks are expected to require replacement beginning in 2013 which is reflected in the reserve schedule. b) Dumpster Pad The dumpster pad is constructed of six (6 ) inch thick Portland Cement concrete in order to support the weight of a dumpster. The replacement cost includes the removal and disposal of the old concrete pad. The slab was observed to be in average condition displaying minor cracking and is anticipated to require replacement in 2018.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 14 of 14 c) Brick Paver Sunken Pavers at Curbline Brick pavers are interspersed throughout the community. The pavers were observed to be in average condition with settled pavers noted along a curbline, posing a possible trip hazard. The pavers are expected to perform for the remainder of their thirty (30) year useful life, with continued maintenance. Damaged and settled paver walkways should be repaired and reset on an as needed basis through the maintenance budget. Any existing pavers posing possible trip hazards should be repaired immediately through the operating budget. 5) Patios Each first floor unit at the Hampton Club community is supplied with a rear patio that is constructed of Portland Cement concrete. The patios were observed to be in average condition, displaying areas of spalling at the interface of the patio and the concrete foundation. It is expected that the patios will require replacement in 2027. 6) Exterior Lighting Community walkways, parking areas and roadways are illuminated with globe, cobra head and/or floodlight fixtures which are mounted on aluminum, steel or wood posts. The lighting was observed to be in average to below average condition, displaying pole base corrosion as well as leaning posts. Exterior lighting has a useful life of twenty-five (25) years. It is expected that all lighting will be replaced with fixtures of the same type and intensity. The Association should consider replacing wood posts with fiberglass or aluminum posts which require less maintenance. Corroded Light Pole Base

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 15 of 15 7) Chainlink Fence Ten (10 ) foot high, vinyl coated chainlink fence is located at the tennis court and basketball court. Fence of this type has a twenty-five (25) year typical useful life and was observed to be in average condition with minor fastener corrosion and warped fence fabric, especially adjacent to the basketball hoops. It is important that the fencing receives regular maintenance in order to ensure it fully achieves its full expected useful life. Replacement of the fence is expected to occur in 2020 as provided on the schedule. 8) Board on Board Fencing Six (6 ) foot high board on board privacy fencing exists along a portion of the southeasterly property boundary and also at the dumpster pad. The fence was observed to be in average condition with leaning fence sections and broken slats observed. The replacement cost includes removal and disposal of the old fencing. It is recommended that exterior wood products are weatherproofed every three (3) to five (5) years to assure that premature replacement will not be required. Wood Board on Board & Aluminum Fence 9) Aluminum Fence There are two (2) types of aluminum fence within the Hampton Club community. A ten (10 ) foot high aluminum privacy fence follows the westerly and southerly site perimeter. This perimeter fence was noted to be in average condition with rusted and/or displaced fence components visible. A seven (7 ) foot high picket style Jerith fence exist between clubhouse parking lot and the gatehouse. Aluminum fences typically have a useful life of twenty-five (25) years. The Jerith fence was observed to be in average condition with no significant damage noted. With maintenance, this item is anticipated to fully achieve its typical useful life. 10) Aluminum Railing Each servicewalk and unit balcony at the Hampton Club community is provided with an aluminum railing. The railings are constructed of forty-two (42 ) inch high tubular aluminum which appeared in average condition. Fastener rust and general surface wear was observed on the railings. Aluminum rails can be sanded and painted to rejuvenate their appearance. Aluminum railing has a thirty (30) year typical useful life and it is anticipated that the railings will be removed during the balcony deck replacement work and re-installed.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 16 of 16 11) Wrought Iron Fence An eight (8 ) foot tall wrought iron fence runs between the masonry walls along Van Dyke Avenue. The fence was experiencing corrosion and requires sanding and painting. With maintenance, wrought iron fence has a typical useful life of thirty (30) years. It is expected that this fence will require replacement in 2029. Corroded Fence Surface 12) Tennis Court/Basketball Court One (1) tennis court and one (1) basketball court are located within the community and are constructed of bituminous concrete. Funding for the replacement of the courts followed by resurfacing has been included in the schedule. Both courts were observed to be in average to above average condition with minor surface cracks visible in the basketball court. It is anticipated that the both courts will require resurfacing occurring in 2014. It is recommended that the courts are resurfaced every seven (7) years to seal minor cracks and deficiencies in the surface and also to rejuvenate surface. Tennis courts have a typical useful life of twenty (20) years, after which time they will require and overlay of new asphalt or full reconstruction depending on their condition. The unit costs for tennis court resurfacing includes reconstruction of all significant cracks, crack sealing, application of a new color coat, etc. The replacement cost includes a complete removal and replacement of the asphalt courts. 13) Strip Shingle Roofing The roofing that weatherproofs the condominium buildings at the Hampton Club community is a three (3)-tab strip type shingle. Shingles of this type have a twenty-five (25) year typical useful life. Information provided by the Association states that nine (9) out of the twelve (12) buildings were reroofed in 2005/2006. The current roofing was installed as a complete replacement and was observed to be in average condition with some lifted shingles noted. Although the building code allows for two (2) layers of shingles to be installed before a total removal of the roof material is necessary, roofing overlays are generally not advisable. Roofing components such as flashing, underlayment, edge metal and roof deck deterioration cannot be verified adequately during a roof overlay. Based on this, FWH recommends the next roofing effort should be a complete roof replacement. This is anticipated to occur in 2028 as reflected on the reserve schedule. It is expected that the remaining three (3) roofs will be completed in 2012 as provided on the schedule.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 17 of 17 14) Siding Patched Siding The exterior walls of the Hampton Club residential buildings are weatherproofed with a horizontal vinyl siding. The siding system was observed to be in average to below average condition showing signs of damaged, displaced and patched sections, particularly at common building entrances. A distortion of the siding at the box beam at the top of the first floor is visible on many buildings. It is recommended that invasive inspections are performed in these areas to ensure no damage to the underlying substrate is causing this distortion. Aluminum cladding on the support posts of the porches and balconies are dented most probably from lawn mowing efforts. Inadequate or no caulking was observed at most building penetrations. This must be remedied to protect the underlying building components from water infiltration. No Caulk at Building Penetration Severe Wood Deterioration A minimum of six (6 ) inches of clearance must be maintained between the bottom of the vinyl siding and the outside ground elevation to avoid the wicking of soil moisture up into the wood sheathing. Inspection of the condominium buildings revealed that this required clearance has not been maintained throughout the site. Areas of siding below grade were observed in numerous locations resulting in severely deteriorated building components. It is strongly recommended that the Association consider invasive inspections in these areas to determine the extent of damage and the methodology required to remediate these integral building components.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 18 of 18 Vinyl siding, related aluminum window and door cladding, porch soffit and fascia have a typical useful life of forty-five (45) years. The siding replacement interval is often based on appearance and not its functionality. It is recommended that cracked, punctured or unfastened sections are replaced immediately to avoid damage to the substrate material. Vinyl siding is virtually maintenance free and should be power washed periodically to free it of dust and staining fungi. Siding replacement on the residential building is expected to occur in 2027. The replacement cost includes removal of the old siding. Detached and Broken Siding 15) Aluminum Gutter and Downspout Aluminum gutters and downspouts on the individual dwelling units and on the community buildings are in average condition possessing the typical signs of weathering, incidental denting, and missing accessories. Information provided by the Association indicates that nine (9) out of the twelve (12) buildings received new gutters and downspouts in 2005/2006. It is expected that the remaining buildings will undergo rood drainage system replacement in conjunction with the roof replacement scheduled to occur in 2011. The leaders and the above ground portion of the ADS pipe are suffering from damage most probably caused by lawn mowing efforts. Gutters and downspouts have a typical useful life of twenty (20) years. Replacement of this system is anticipated to occur coinciding with the next roofing effort. 16) Wood Decks Individual units at the Hampton Club community contain an elevated pressure treated wood deck and aluminum railing. With maintenance, wood decks have a typical useful life of fifteen (15) years. The deck is constructed of 2 x 10 floor joists and 5/4 x 6 decking boards supported by 4 x 4 aluminum clad posts. The deck components were observed to contain many cracked, cupped deck boards and a general weathering. It is anticipated that the deck boards will require replacement over a five (5) year span beginning in 2011. It is recommended that exterior wood building components are weatherproofed every three (3) to five (5) years to assure that premature replacement of the deck is not required. 17) Interior Lighting Illumination in the residential building s common areas / community buildings is achieved through various types of fixtures. Interior lighting possesses a twenty five (25) year typical useful life. Replacement is anticipated to begin in 2021 as reflected in the schedule.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 19 of 19 18) Wood Steps Deteriorated Rear Entry A pressure treated step and deck system constructed of dimensional lumber, are utilized as a secondary egress point for the first (1 st ) floor units. The step systems were observed to be in average to below average condition displaying cupped, twisted and detached wood components. It is recommended that the deck and stair system are replaced through the first five (5) years of the study on an as needed basis. It is recommended that the wood is weatherproofed every three (3) to five (5) years to assure that premature replacement of these systems is not necessary. During the replacement of the step systems, it is recommended that wood decking screws are utilized. 19) Interior Finishes The Association is responsible the replacement of the interior finishes of the common areas of the residential buildings, recreational and community buildings. The replacement of interior finishes is based largely on the element s appearance and not its functionality. a) Carpet Low nap carpet exists in the common hallways and stairwells. Depending on the quality of the loop and the degree of traffic carpet has a useful life of eight (8) to eleven (11) years. The carpet is expected to begin replacement in 2012. Heavily Stained Carpet

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 20 of 20 20) Entry Doors Steel full light doors provide access to the common building entrances. Exterior, prehung entry doors have a typical useful life of twenty (20) years. The doors were observed to be in below average condition displaying corrosion, denting, water infiltration and general wear. The doors are beyond their typical useful life and are scheduled for replacement over a three (3) year span beginning in 2012. Peeling Paint Deteriorated Door Frame 21) Common Windows All of the aluminum clad windows at the Hampton Club community are from the original construction of the building. Windows have a typical useful life of thirty (30) years and require significant maintenance and weatherproofing. The windows were observed to be in below average condition displaying corrosion and water infiltration. The windows are expected to require replacement over a ten (10) year span beginning in 2012 as reflected on the schedule. Corroded Common Window Frame 22) HVAC Systems Heating of the condominium building s common areas at Hampton Club are provided by wall mounted electric heaters. The heaters were observed to be in various conditions and are scheduled to be replaced in 2021. No mechanical, electrical or pneumatic testing was performed as part of our analysis. The systems appear to have been functioning correctly. During the study preparation, FWH was not made aware of any functional or operational difficulties with the system.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 21 of 21 23) Fire Alarm System There are four (4) fire alarm control panels within each of the twelve (12) buildings within the Hampton Club community. These systems must be periodically maintained and inspected by qualified personnel. 24) Intercom/Security System Each of the common entrances of the buildings within the Hampton Club are provided with a intercom/remote door unlocking intercom entry system. The unit cost presented in the schedule accounts for the replacement of the control panel only. The replacement cost does not include the replacement or repair of any electrical work that may need to be done. Components of the security systems possess a typical useful life of twenty (20) years. 25) Security Gates There are two (2) sets of mechanical gates used to provide security at the entrance of the Hampton Club. These mechanical components possess a fifteen (15) year typical useful life. It is anticipated that the hydraulic controller for the entry gates will require replacement at the end of its useful life. 26) Sump Pumps Each building within the Hampton Club condominium is provided with four (4) basement sump pumps. The sump pumps have achieved their typical useful life. The pumps are scheduled to be replaced over a two (2) year span beginning in 2012. 27) Pump Station Corroded Skid The Hampton Club community is responsible for the replacement of the sanitary sewer pump station and its components located within the community boundary. The pump station is housed in a steel shed situated on a concrete pad. The pumps and their associated valves appeared well maintained although portions of the iron skid are corroded. The Hampton Club replaces the pump station components on an as needed basis thought the reserve fund. No mechanical, electrical or pneumatic testing was performed as part of our analysis. The systems appear to have been functioning correctly. During the study preparation, FWH was not made aware of any functional or operational difficulties with the system.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 22 of 22 MISCELLANEOUS PHOTOS Debris Filled Inlet Mower Damage on Deck Support Posts Unanchored Retaining Wall Fresh Air Intake Covered at Utility Room Door

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 23 of 23 1) Entrance Wall EXCLUDED ITEMS An entrance wall constructed of masonry block with a stucco finish and brick capping is located along Van Dyke Avenue. The wall was noted to be in average condition. Stucco has a long useful life. Repair of the stucco should be funded out of the maintenance budget on an as needed basis. 2) Stormwater Management System The stormwater management system located at the Hampton Club community has been omitted from this study; complete replacement of the piping and structures is not anticipated. Storm inlets and basin structures are expected to perform beyond the scope of the study. Storm drainage structures must receive inspection and maintenance on a regular basis through the operating budget to prevent costly replacement of the structures. 3) Powerwashing Powerwashing will improve the appearance of the building exterior and is considered a maintenance item. 4) Air Conditioning Condensers Replacement of A/C condenser units is the responsibility of the individual unit owner. 5) Interior Doors All interior unit doors are the responsibility of the individual unit owner

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 24 of 24 SITEWORK Item PAVED SURFACES Replacement Reserve Schedule 2" Cap Asphalt Resurface 2005 20 14 8580 SY $14.50 $124,410 2" Cap Asphalt Resurface 1988 20 1 15035 SY $14.50 $218,008 2" Asphalt Resurface - Front Parking Lot 2011 20 20 3315 SY $14.50 $48,068 Crack Repair & Asphalt Sealcoating 2005 5 3 8580 SY $1.85 $15,873 Asphalt Sealcoating 1988 5 6 15035 SY $1.65 $24,808 Asphalt Sealcoating (Front Parking Lot) 2011 5 6 3315 SY $1.65 $5,470 Concrete Curbing 2005 45 39 3869 LF 30.25 000 Belgian Block Curbing 1988 45 5 1500 LF $25.00 $37,500 Concrete Sidewalk (new) 2005 30 24 2586 SF $8.50 $21,981 Concrete Sidewalk (Remaining over 10 years) 2005 30 6 10344 SF $8.50 $87,924 Brick Pavers 1988 30 5 2200 SF $13.05 $28,710 Dumpster Pad 1830 30 6 1830 SF $10.00 $18,300 Fencing Subtotal: $631,051 6' Wood Board on Board 2005 15 13 2470 LF $31.50 $77,805 10' Aluminum Privacy (Boundry) 2005 25 25 2099 LF $70.00 $146,930 6' Wood Board on Board 2005 15 8 2470 LF $31.50 $77,805 6' Wrought Iron Fence (Van Dyke Avenue) 2005 25 19 240 LF $56.00 $13,440 10' Chainlink (Tennis Court) 2005 25 19 480 LF $32.00 $15,360 10' Chainlink (Basketball Court) 2005 25 19 200 LF $32.00 $6,400 7' Aluminum Jerith Fence 2005 30 24 1140 LF $60 $68,400 7' Aluminum Jerith Fence 2011 30 30 728 LF $60 $43,680 Recreation Subtotal: $449,820 Tennis Court (Resurface) 2008 7 4 1 LS $8,800 $8,800 Tennis Court (Reconstruction) 1988 20 14 1 LS $45,000 $45,000 Basketball Court Resurface 2008 7 4 1 LS $8,800 $8,800 Basketball Court Reconstruction 1988 20 14 445 SY $27.00 $12,015 Picnic Furniture 2002 20 11 1 LS $6,000 $6,000 Illumination Subtotal: $80,615 Street / Parking Lights (over 10 yrs) 1988 25 2 32 EA $1,815 $58,080 Mechanicals Hampton Club Replacement Reserve Schedule Effective as of : September 1st, 2011 Existing Reserve Amount $1,244,195 Year Installed Useful Life Est. Remaining Useful Life Estimated Quantity Subtotal: $58,080 Sanitary Pump Station 2003 20 12 1 LS $84,000 $84,000 Hydraulic Gate Controller 2004 15 8 1 LS $2,150 $2,150 Unit Unit Cost Current Rep. Value Subtotal: $86,150

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 25 of 25 Item Year Installed Useful Life Est. Remaining Useful Life Estimated Quantity Unit Unit Cost Current Rep. Value STRUCTURES RESIDENTIAL BUILDINGS Exterior Elements Asphalt Roofing Shingles (replace over 2 yrs) 2005 25 17 1080 SQ $310 $334,800 Asphalt Roofing Shingles (replace) 1988 25 2 360 SQ $310 $111,600 Vinyl Siding (over 4 yrs) 1988 45 16 2280 SQ $500 $1,140,000 Aluminum Gutters 1988 20 1 1740 LF $7.16 $12,458 Aluminum Gutters (@ 4 yrs) 2005 20 14 5220 LF $7.16 $37,375 Aluminum Leaders (@ 4 yrs) 2005 20 14 10260 LF $5.27 $54,070 Aluminum Leaders 1988 20 1 3420 LF $5.27 $18,023 Chimney Caps 1988 25 1 72 EA $545 $39,240 Balconies (wood over 3 yrs) 1988 15 2 8640 SF $30.00 $259,200 Concrete Patios (@ 4 yrs) 1988 30 16 8640 SF $8.50 $73,440 Aluminum Handrails (over 4 yrs) 2005 25 19 2400 LF $46.00 $110,400 Rear Entry Decks (repl w/ composite @ 5 yrs) 1988 30 1 1680 SF $46.00 $77,280 Full Light Entry Doors (over 3 years) 1988 25 1 96 EA $1,250 $120,000 Utility Doors - Steel w/ Louver (over 10 yrs) 1988 25 1 312 EA $446 $139,152 Windows (over 10 yrs) 1988 35 1 348 EA $750 $261,000 Building Lights (over 10 yrs) 1988 25 1 408 EA $65 $26,520 Subtotal: $2,814,559 STRUCTURES RESIDENTIAL BUILDINGS Interior Elements Interior Fire Doors (over 3 yrs) 1988 30 11 96 EA $1,200 $115,200 Hallway Carpet (over 5 yrs) 2001 11 2 1930 SY $46.00 $88,780 Hallway Lights 2001 20 10 168 EA $75 $12,600 Emergency Lights 2001 20 10 72 EA $350 $25,200 Fire Lights 2001 20 10 60 EA $280 $16,800 Intercom/Security System (over 3 yrs) 2001 20 10 48 EA $2,725 $130,800 Fire Alarm System 2001 30 20 48 EA $4,000 $192,000 Wall Corridor Heaters 2001 20 10 96 EA $225 $21,600 Sump Pumps (over 2 yrs) 1997 15 2 48 EA $300 $14,400 Subtotal: $617,380 K:\FWH Documents\3177\0001\Reports\Reserves\[20110607hcca-crsu_schedules_draft1.xlsm]Cash Flow GRAND TOTAL: $4,737,655

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 26 of 26 Hampton Club YEARLY CAPITAL REPLACEMENT SCHEDULE ITEM 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 i Factor @ 4% 1.0000 1.0400 1.0816 1.1249 1.1699 1.2167 1.2653 1.3159 1.3686 1.4233 1.4802 1.5395 1.6010 1.6651 1.7317 1.8009 1.8730 1.9479 2.0258 2.1068 2.1911 2.2788 2.3699 2.4647 2.5633 2.6658 2.7725 2.8834 2.9987 3.1187 SITEWORK PAVED SURFACES 2" Cap Asphalt Resurface $207,152 2" Cap Asphalt Resurface $218,008 $477,681 2" Asphalt Resurface - Front Parking Lot $101,271 Crack Repair & Asphalt Sealcoating $17,168 $20,888 $32,156 $39,122 $47,598 Asphalt Sealcoating $30,182 $36,722 $44,677 $66,133 Asphalt Sealcoating (Front Parking Lot) $6,655 $8,097 $9,851 $14,021 Concrete Curbing Belgian Block Curbing $43,870 Concrete Sidewalk (new) $54,177 Concrete Sidewalk (Remaining over 10 years) $10,697 $11,125 $11,570 $12,033 $12,514 $13,015 $13,535 $14,077 $14,640 $15,226 Brick Pavers $33,587 Dumpster Pad $22,265 Fencing 6' Wood Board on Board $124,568 $224,340 10' Aluminum Privacy (Boundry) $376,626 6' Wood Board on Board $102,386 $184,392 6' Wrought Iron Fence (Van Dyke Avenue) $27,227 10' Chainlink (Tennis Court) $31,117 10' Chainlink (Basketball Court) $12,965 7' Aluminum Jerith Fence $168,587 7' Aluminum Jerith Fence $136,223 Recreation Tennis Court (Resurface) $9,899 $13,026 $19,282 $25,374 Tennis Court (Reconstruction) $74,928 Basketball Court Resurface $9,899 $13,026 $26,326 $34,644 Basketball Court Reconstruction $20,006 Picnic Furniture $8,881 Illumination Street / Parking Lights (over 10 yrs) $6,040 $6,282 $6,533 $6,795 $7,066 $7,349 $7,643 $7,949 $8,267 $8,597 $161,025 Mechanicals Sanitary Pump Station $129,314 Hydraulic Gate Controller $2,829 $5,095 Yearly Expense Projection Table

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 27 of 27 ITEM 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 i Factor @ 4% 1.0000 1.0400 1.0816 1.1249 1.1699 1.2167 1.2653 1.3159 1.3686 1.4233 1.4802 1.5395 1.6010 1.6651 1.7317 1.8009 1.8730 1.9479 2.0258 2.1068 2.1911 2.2788 2.3699 2.4647 2.5633 2.6658 2.7725 2.8834 2.9987 3.1187 STRUCTURES RESIDENTIAL BUILDINGS Exterior Elements Asphalt Roofing Shingles (replace over 2 yrs) $313,537 $326,079 Asphalt Roofing Shingles (replace) $116,064 $309,408 Vinyl Siding (over 4 yrs) $513,269 $533,800 $555,152 $577,358 Aluminum Gutters $12,458 $27,298 Aluminum Gutters (@ 4 yrs) $15,558 $16,180 $16,828 $17,501 Aluminum Leaders (@ 4 yrs) $22,508 $23,408 $24,344 $25,318 Aluminum Leaders $18,023 $39,491 Chimney Caps $39,240 $104,607 Balconies (wood over 3 yrs) $89,856 $93,450 $97,188 $121,369 $126,224 $131,273 $136,524 Concrete Patios (@ 4 yrs) $30,571 $31,794 $33,065 $34,388 Aluminum Handrails (over 4 yrs) $55,913 $58,149 $60,475 $62,894 Rear Entry Decks (repl w/ composite @ 5 yrs) $15,456 $16,074 $16,717 $17,386 $18,081 $48,202 Full Light Entry Doors (over 3 years) $40,000 $41,600 $43,264 $106,633 $110,899 $115,335 Utility Doors - Steel w/ Louver (over 10 yrs) $13,915 $14,472 $15,051 $15,653 $16,279 $16,930 $17,607 $18,311 $19,044 $19,806 $37,096 $38,579 $40,123 $41,728 $43,397 Windows (over 10 yrs) $26,100 $27,144 $28,230 $29,359 $30,533 $31,755 $33,025 $34,346 $35,720 $37,148 Building Lights (over 10 yrs) $5,304 $5,516 $5,737 $5,966 $6,205 $14,140 $14,705 $15,293 $15,905 $16,541 STRUCTURES RESIDENTIAL BUILDINGS Interior Elements Interior Fire Doors (over 3 yrs) $56,841 $59,115 $61,480 Hallway Carpet (over 5 yrs) $18,466 $19,205 $19,973 $20,772 $21,603 $28,428 $29,565 $30,748 $31,978 $33,257 $43,763 $45,514 $47,335 $49,228 $51,197 Hallway Lights $17,934 $39,295 Emergency Lights $35,867 $78,590 Fire Lights $23,912 $52,393 Intercom/Security System (over 3 yrs) $62,056 $64,539 $67,120 $135,973 Fire Alarm System $404,515 Wall Corridor Heaters $30,744 $67,363 Sump Pumps (over 2 yrs) $7,488 $7,788 $25,934 $26,971 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 TOTALS $388,505 $342,721 $252,891 $211,856 $176,121 $147,153 $69,106 $197,974 $74,745 $248,248 $222,744 $269,085 $228,553 $384,357 $85,562 $697,451 $1,103,546 $1,040,519 $902,396 $700,459 $650,554 $62,894 $189,487 $305,649 $436,161 $375,944 $683,844 $506,306 $105,231 $617,977 K:\FWH Documents\3177\0001\Reports\Reserves\[20110607hcca-crsu_schedules_draft1.xlsm]Cash Flow

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 28 of 28 30 Year Cash Flow Chart Fiscal Year Beginning Balance as of Jan. 1 Reserve Contribution (Jan 1 - Dec 31) Hampton Club 30 YEAR CASH FLOW Effective as of : September 1st, 2011 Existing Reserve Amount $1,244,195 Net Interest @ 3% Expenses Ending Balance Unit Contribution 2011 $1,244,195 $229,704 $40,771 $388,505 $1,126,166 $61.35 2012 $1,126,166 $243,360 $37,435 $342,721 $1,064,241 $65.00 2013 $1,064,241 $243,360 $35,578 $252,891 $1,090,287 $65.00 2014 $1,090,287 $243,360 $36,359 $211,856 $1,158,150 $65.00 2015 $1,158,150 $243,360 $38,395 $176,121 $1,263,784 $65.00 2016 $1,263,784 $280,800 $42,126 $147,153 $1,439,556 $75.00 2017 $1,439,556 $280,800 $47,399 $69,106 $1,698,648 $75.00 2018 $1,698,648 $280,800 $55,171 $197,974 $1,836,646 $75.00 2019 $1,836,646 $280,800 $59,311 $74,745 $2,102,013 $75.00 2020 $2,102,013 $280,800 $67,272 $248,248 $2,201,837 $75.00 2021 $2,201,837 $280,800 $70,267 $222,744 $2,330,160 $75.00 2022 $2,330,160 $318,240 $74,678 $269,085 $2,453,994 $85.00 2023 $2,453,994 $318,240 $78,393 $228,553 $2,622,074 $85.00 2024 $2,622,074 $318,240 $83,436 $384,357 $2,639,393 $85.00 2025 $2,639,393 $355,680 $84,517 $85,562 $2,994,029 $95.00 2026 $2,994,029 $355,680 $95,156 $697,451 $2,747,414 $95.00 2027 $2,747,414 $374,400 $88,038 $1,103,546 $2,106,306 $100.00 2028 $2,106,306 $374,400 $68,805 $1,040,519 $1,508,992 $100.00 2029 $1,508,992 $374,400 $50,886 $902,396 $1,031,882 $100.00 2030 $1,031,882 $374,400 $36,572 $700,459 $742,396 $100.00 2031 $742,396 $374,400 $27,888 $650,554 $494,130 $100.00 2032 $494,130 $374,400 $20,440 $62,894 $826,076 $100.00 2033 $826,076 $374,400 $30,398 $189,487 $1,041,387 $100.00 2034 $1,041,387 $374,400 $36,858 $305,649 $1,146,995 $100.00 2035 $1,146,995 $374,400 $40,026 $436,161 $1,125,260 $100.00 2036 $1,125,260 $374,400 $39,374 $375,944 $1,163,090 $100.00 2037 $1,163,090 $374,400 $40,509 $683,844 $894,155 $100.00 2038 $894,155 $374,400 $32,441 $506,306 $794,690 $100.00 2039 $794,690 $374,400 $29,457 $105,231 $1,093,315 $100.00 2040 $1,093,315 $374,400 $38,415 $617,977 $888,154 $100.00 TOTALS: $9,795,624 $1,526,372 $11,678,038 $888,154 K:\FWH Documents\3177\0001\Reports\Reserves\[20110607hcca-crsu_schedules_draft1.xlsm]Cash Flow

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 29 of 29 NOTES 1) The table of scheduled items lists all the capital expense items with useful life, remaining useful life, quantity and current replacement value. 2) The yearly capital replacement schedule provides a yearly synopsis of which items are to be replaced and when. It also shows which items will require replacement more than once through the course of the thirty (30) year study. 3) The expenses generated by the replacement of the capital items are projected into the future based upon an inflation rate of 4.0 %. 4) The interest rate applied to the reserve funds is 3.0 %. SUMMARY 1) The thirty (30) year cash flow table indicates an annual reserve contribution for the fiscal year of September 1, 2011 to August 30 2012, to be $ 229,704 This results in a monthly contribution of $ 61.35. The monthly reserve fund contribution per unit is $ 61.35. 2) The unit contribution is based upon the occupancy of 312 units. 3) The projected reserve balance at the end of this study is $ 888,154. 4) It is necessary to increase the unit reserve contributions in anticipation of large capital expenditures throughout the thirty (30) year study.

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 30 of 30 LIST OF ABBREVIATIONS ADJ. AVG. BLDG. CT. CTD. C.Y. EA. E.O.Y. EXC. EXT. FL. LAV. L.F. LG. MBTU MSF NO. P.T. REP. RES. RM. S.F. SM. SQ. S.Y. UTIL. YR. = Adjacent = Average = Building = Court = Coated = Cubic Yard = Each = End of Year = Excellent = Exterior = Floor = Lavatory = Linear Foot = Large = Thousand British Thermal Units = Thousand Square Feet = Number = Pressure Treated = Replacement = Residential = Room = Square Foot = Small = Square (100 square feet) = Square Yard = Utility = Year

HAMPTON CLUB CONDOMINIUM ASSOCIATION Page 31 of 31 BIBLIOGRAPHY 1) Reserve Study Guidelines for Community Associations, Planned Developments, Condominiums by Richard Wyndhamsmith 1989, Wyndamhouse, Inc. 2) Reserve to Preserve, by Community Associations Institute Research Observation, 1991. 3) Gap #24. A Complete Guide to Reserve Funding and Reserve Investment Strategies, 3 rd Edition by The Community Associations Institute. 4) R.S. Means Building Construction Cost Data - 2010, by Construction Consultants and Publishers. 5) R.S. Means Site Work and Landscape Cost Data - 2010, by Construction Consultants and Publishers. 6) National Reserve Study Standards of The Community Association Institute, 1998. 7) Capital Reserve Study, prepared by Gartenberg Associates, LLC, dated 2006. AS/as k:\fwh documents\3177\0001\reports\reserves\20110715hc_crsu_draft1.docm