CAPITAL RESERVE STUDY FOR THE Ellicott Meadows Condominium Association I Ellicott City, Maryland Contact Name: Victor Brzozowski Date: October 3, 2017
Table of Contents Section Name Section # Executive Summary... 1 Reserve Study Disclosures... 2 Introduction... 3 Capital Reserve Methodology... 4 Capital Reserve Calculation...5 Capital Reserve Recommendations... 6 Component Narrative... 7 Reserve Summary... 8 Component Schedule... 9 Component Detail... 10 Disbursement Schedule... 11 Reserve Fund Scenarios... 12 Disbursements by Year...13 Reserve Fund Closing Balance... 14 Reserve Fund Contributions... 15 Definitions... 16
Executive Summary The Ellicott Meadows Condominium I Association is an 156 unit community located of Frederick Road in Ellicott City, Maryland. This is a sub association of a larger community, including 84 villa style buildings and 72 single family homes. Several site visits were conducted in July of 2017, with information and assistance provided by the Facilities Manager Victor Brzozowski. Level of Service Level I: New Study Fiscal Year of Study 2018 Current Status of Reserve Fund (Component Method) Current Balance $850,000 Fully Funded Balance $2,414,423 Percent Funded 35.21% Reserve Budget Recommendations Prior Budget Component Year Contribution Method * Contribution/Year $101,088 $326,623 Contribution/Unit $648 $2,094 Contribution/Unit/Month $54 $174 5% Threshold * $179,489 $1,151 $96 10% Threshold * $184,379 $1,182 $98 * Please note that this is the contribution for the period of January 2018 through December 2018. 1
Reserve Study Disclosures General - Becht Engineering BT is not aware of any involvement with this Association, which would lead to an actual or perceived conflict of interest. Physical Analysis - The inspections performed to determine the current physical condition of the common elements were visual in nature; no destructive testing or invasive inspections were performed. Quantities were taken from a combination of field counts/measurements and plan take-offs. Personnel Credentials - Preparation of this Reserve Study was performed by a CAI designated Reserve Specialist and licensed Building Inspector. Completeness - This Reserve Study assumes that proper preventative and corrective maintenance has been and will continue to be performed on the common elements. Failure to properly maintain the common elements may lead to premature failure. It should be noted that higher rates of inflation, lower earned interest rates or prematurely failing components can result in a negative closing cash balance. In addition, it is important to note that the capital fund contributions each year are assumed to rise at the assumed rate of inflation. Failure to raise the annual contributions with inflation will reduce the closing balance and may lead to a future shortfall. Reliance on Client Data - This Reserve Study was prepared based on certain information provided by an official representative of the Association. This information includes the current asset balance of the Reserve Fund and the ages of the common elements and dates of most recent replacements. Scope - This Reserve Study is a reflection of the information provided to us and assembled for the Association's use for budgeting purposes, not for the purpose of performing an audit, quality/forensic analysis or background checks of historical records. Interpretation of contradictions that may exist within the governing document's definition of common elements is not within the scope of this Study. Reserve Balance - The actual and projected Reserve Fund Balance is based upon information provided by the Association and was not audited. Component Quantities - Where this Reserve Study is an update of a previously prepared Study, the Association is considered to have deemed previously developed component listings and quantities as accurate and reliable. Estimated Replacement Costs - Replacement costs are to be considered estimated projections of the cost to replace common elements in kind. These cost estimates are to be considered preliminary until such time as a project specific design or scope of work is developed. These costs can be affected by many variables including inflation, project scope and hidden damage conditions. Reserve Projects - While the information provided in this Study is to be considered reliable, on-site inspections are not to be considered a project audit or quality inspection. 2
Introduction The purpose of a Capital Reserve Study is to estimate the amount of money that must be funded annually to replace those common element components that will require replacement before the end of the effective life of the project. Mortgage lenders recognize the conditions of inadequate reserves. Reserves are important in preserving the qualities of a particular complex or building and therefore can affect property values. Consequently, capital reserves are directly related to the security and risk of a lender's investment and the marketability of the property. The Capital Reserve Study develops a recommended basic annual contribution based upon current replacement costs. Inflation may increase future costs unpredictably, and the accumulation of interest on the reserve fund deposits increases available funds. Accurate projection of these factors is not possible. However, the effects of inflation and interest are shown via cash flow projections using assumed inflation and interest rates. Accurate reserve funding requires regular updates. The Community Associations Institute recommends yearly reviews and a formal study every three years. 3
Capital Reserve Methodology In preparing this study, when provided, we reviewed the master deed and offering statement to identify the common element components. The Association owns these building and site components. Only components with estimated remaining lives of 30 years or less have been included in the capital reserve fund. Components with estimated remaining lives that are greater than 30 years, such as building structures, piping and electrical wiring are usually replaced during a major renovation and financed at that time. Including these components in the reserve fund would result in an unrealistically high-recommended annual contribution to the capital reserve. Quantities of the components to be included in the reserve fund were then determined by field measurements, as well as a review of building and site plans, if available. Estimates of the costs to replace each component were derived from published industry standards, such as the R.S. Means Company cost-estimating guides and from our own experience in designing and supervising construction of similar projects. These cost estimates are to be considered preliminary until such time as a project specific design or scope of work is developed. Finally, estimated remaining lives were determined for each of the included components based on the reported or evident present age, available industry data related to typical useful lives and the condition of the component, as determined by our physical inspection. The capital reserve fund is not intended to cover annual maintenance. If maintenance items are included in the Capital Reserve Study, the tax status of the reserve fund can be jeopardized. However, expected lives are based on the assumption that proper annual maintenance is being performed. Therefore, this annual maintenance should be included in the Association's budget and maintenance fee. Without proper maintenance, accelerated deterioration can be expected, with shortened lives. Please note, it is only possible to reserve for future expenditures and that a current need must be financed separately by borrowing or assessments. This Capital Reserve Study is developed as an aid in the proper financial planning of the Association. As such, the common element components included are evaluated for their physical condition and only for the purpose of estimating their remaining lives. Identification of possible deficient conditions is beyond the intent and scope of the Capital Reserve Study. 4
Capital Reserve Calculation We have provided two Capital Reserve calculation methods as described below. Component Method The first method provided in this reserve study is what is known as the Component Method. This is the most conservative approach to calculating the reserve requirement. The Component Method analyzes each component individually and assumes that the money collected for each item will only be used to replace that item. Our program uses assumed rates of interest and inflation in the calculation of the annual contribution and fully funded balance. We compare the actual balance in the Association's Reserve Fund with the calculated fully funded balance and determine if a surplus or deficit condition exists. If a deficit condition exists, an additional contribution is calculated for each component to offset the deficit. Threshold Funding Method The second calculation method is known as the Threshold Funding Method. This method pools all the components and assumes that the money contributed to the fund is available for replacement of any item. Looking out over the next 30 years, the annual contribution is determined by lowering the contribution until the closing balance for any given year reaches a predetermined threshold. We typically provide two Threshold Method scenarios. These thresholds are based on a percentage of the current replacement cost of all the components in the Reserve Study. Basing the threshold on a percentage of the replacement cost of all components keeps the minimum proportional to the needs of a specific community. This minimizes the annual contribution while maintaining a minimum closing balance. Determining the optimum minimum closing balance is a subjective task. Certainly, the lower the minimum acceptable balance is the greater the risk that the fund will experience a deficit. It should be noted that this method only considers Reserve Account balances over the next 30 years. Large capital expenditures just beyond the 30- year window will not be considered using this method until in the future they fall within the 30-year window. 5
Capital Reserve Recommendations Ellicott Meadows Condominium Association I has a total of 10 components in the reserve fund with a current Replacement Cost of $5,023,754. Ellicott Meadows Condominium Association I presently has a total of $850,000 in the reserve fund. Using the Component Method, we have determined that the Basic Annual Contribution to the reserve fund should be $212,864. The fully funded balance required is $2,414,423. This leaves deficit of $1,564,423 in the reserve fund. The deficit will be offset on an annual basis, for each reserve component, based on the estimated remaining lives. The total of the next budget year contribution to the Contribution Adjustment is $113,759. This results in a Total Contribution to the reserve fund for the next budget year of $326,623. Please see the Executive Summary page for our Threshold Method recommendations. Based on your evaluation of the preferred calculation method, we suggest that you plan your annual contributions over the next few years according to the appropriate cash flow schedule. Each year for the next three years, you may choose to review these assumptions. At no later than three years, we suggest that you contact us for an update based on a proper engineering review of the facility and replacement costs. It should be noted that higher rates of inflation, lower earned interest rates or prematurely failing components can result in a negative closing cash balance. In addition, it is important to note that the capital fund contributions each year are assumed to rise at the assumed rate of inflation. Failure to raise the annual contributions with inflation will reduce the closing balance. We recommend that the Association review this Capital Reserve Study with their Certified Public Accountant to be utilized in the preparation of their annual budget. James H. Stegemerten RS Senior Project Manager CAI Reserve Specialist #145 6
Component Narrative Month Contributions Commence: January 2018 Architectural Description: Gutters and Downspouts Quantity: 27,600 LF Cost Per Unit: $7.50 Replacement Cost: $207,000 Typical Life: 25 Comment: The estimated cost is for the removal and replacement of the aluminum gutters and downspouts. Est Rem Life: 13 Description: Roof, Shingles Quantity: 442,300 SF Cost Per Unit: $3.75 Replacement Cost: $1,658,625 Typical Life: 25 Comment: The estimated replacement cost is for the removal and replacement of the asphalt shingles, including the flashings and underlayments. Est Rem Life: 13 7-1
Component Narrative Month Contributions Commence: January 2018 Architectural Description: Roof, Standing Seam Metal Quantity: 1,987 SF Cost Per Unit: $18.00 Replacement Cost: $35,766 Typical Life: 35 Comment: The estimated cost is for the replacement of the metal standing seam roofing located area of the buildings. Est Rem Life: 23 Description: Siding, Vinyl Quantity: 357,354 SF Cost Per Unit: $7.00 Replacement Cost: $2,501,478 Typical Life: 40 Comment: The estimated cost is for the removal and replacement of the vinyl siding and trim element, and includes the underlayments and flashings. Est Rem Life: 28 7-2
Component Narrative Month Contributions Commence: January 2018 Site Description: Asphalt Paving, Driveways Quantity: 4,441 SY Cost Per Unit: $40.00 Replacement Cost: $177,640 Typical Life: 25 Comment: The estimated cost is for the milling and overlay of the 76 asphalt driveways. Est Rem Life: 13 Description: Concrete Driveways, 25% Quantity: 11,960 SF Cost Per Unit: $8.00 Replacement Cost: $95,680 Typical Life: 35 Comment: The estimated cost is for the removal and replacement of the concrete driveways, and includes the apron area. There are 84 total concrete driveways of varying sizes, for a total square feet of 47,840 SF. Est Rem Life: 20 7-3
Component Narrative Month Contributions Commence: January 2018 Site Description: Concrete Driveways, 25% Quantity: 11,960 SF Cost Per Unit: $8.00 Replacement Cost: $95,680 Typical Life: 35 Est Rem Life: 15 Description: Concrete Driveways, 25% Quantity: 11,960 SF Cost Per Unit: $8.00 Replacement Cost: $95,680 Typical Life: 35 Est Rem Life: 25 Description: Concrete Driveways, 25% Quantity: 11,960 SF Cost Per Unit: $8.00 Replacement Cost: $95,680 Typical Life: 35 Est Rem Life: 10 Description: Entry Lead Walk Allowance, 25% Quantity: 4,035 SF Cost Per Unit: $15.00 Replacement Cost: $60,525 Typical Life: 15 Comment: The estimated cost is for the replacement of the masonry pavers located on the entry lead walks. These walks have an extended useful life, but it is anticipated that replacements, or resetting of paver will be required. We have provided an allowance for an approximate 25% of the estimated total of 16,140 sf every 15 years at $15 sf. Est Rem Life: 15 7-4
Capital Reserve Calculations
Reserve Summary Month Contributions Commence: January 2018 Architectural Replacement Cost Present Fund RESERVES Required Fund CONTRIBUTION Surplus (Deficit) Basic Annual Adjustment* Total Architectural $4,402,869 $731,829 $2,078,758 ($1,346,929) $183,923 $94,849 $278,772 Site $620,885 $118,171 $335,665 ($217,494) $28,941 $18,910 $47,851 TOTALS $5,023,754 $850,000 $2,414,423 ($1,564,423) $212,864 $113,759 $326,623 8
Component Schedule Month Contributions Commence: January 2018 Description Replacement Cost Est. Rem. Life Typical Life Basic Annual Contrib. Percent Total Present Fund Required Fund Surplus (Deficit) Contrib. Adjustment Architectural Gutters and Downspouts $207,000 13 25 $10,782 4.93% $41,896 $119,005 ($77,109) $7,104 Roof, Shingles $1,658,625 13 25 $86,392 39.49% $335,697 $953,546 ($617,849) $56,923 Roof, Standing Seam Metal $35,766 23 35 $1,380 0.65% $5,564 $15,803 ($10,240) $574 Siding, Vinyl $2,501,478 28 40 $85,369 41.02% $348,673 $990,404 ($641,731) $30,248 Site Asphalt Paving, Driveways Concrete Driveways, 25% Concrete Driveways, 25% Concrete Driveways, 25% Concrete Driveways, 25% Entry Lead Walk Allowance, 25% $177,640 13 25 $9,253 4.23% $35,953 $102,125 ($66,172) $6,097 $95,680 20 35 $3,692 2.15% $18,274 $51,908 ($33,634) $2,129 $95,680 15 35 $3,692 2.76% $23,473 $66,675 ($43,202) $3,512 $95,680 25 35 $3,692 1.47% $12,532 $35,597 ($23,065) $1,201 $95,680 10 35 $3,692 3.29% $27,939 $79,359 ($51,421) $5,971 $60,525 15 15 $4,921 0.00% $0 $0 $0 $0 Totals $5,023,754 $212,864 100.00% $850,000 $2,414,423 ($1,564,423) $113,759 9-1
Component Detail Month Contributions Commence: January 2018 Architectural Quantity Replacement Cost Present Fund RESERVES Required Fund CONTRIBUTION Surplus (Deficit) Basic Annual Adjustment* Total Gutters and Downspouts 27,600 LF $207,000 $41,896 $119,005 ($77,109) $10,782 $7,104 $17,886 Roof, Shingles 442,300 SF $1,658,625 $335,697 $953,546 ($617,849) $86,392 $56,923 $143,315 Roof, Standing Seam Metal 1,987 SF $35,766 $5,564 $15,803 ($10,240) $1,380 $574 $1,954 Siding, Vinyl 357,354 SF $2,501,478 $348,673 $990,404 ($641,731) $85,369 $30,248 $115,616 TOTALS $4,402,869 $731,829 $2,078,758 ($1,346,929) $183,923 $94,849 $278,772 10-1
Component Detail Month Contributions Commence: January 2018 Site Quantity Replacement Cost Present Fund RESERVES Required Fund CONTRIBUTION Surplus (Deficit) Basic Annual Adjustment* Total Asphalt Paving, Driveways Concrete Driveways, 25% Concrete Driveways, 25% Concrete Driveways, 25% Concrete Driveways, 25% Entry Lead Walk Allowance, 25% 4,441 SY $177,640 $35,953 $102,125 ($66,172) $9,253 $6,097 $15,349 11,960 SF $95,680 $18,274 $51,908 ($33,634) $3,692 $2,129 $5,821 11,960 SF $95,680 $23,473 $66,675 ($43,202) $3,692 $3,512 $7,204 11,960 SF $95,680 $12,532 $35,597 ($23,065) $3,692 $1,201 $4,893 11,960 SF $95,680 $27,939 $79,359 ($51,421) $3,692 $5,971 $9,663 4,035 SF $60,525 $0 $0 $0 $4,921 $0 $4,921 TOTALS $620,885 $118,171 $335,665 ($217,494) $28,941 $18,910 $47,851 10-2
Disbursement Schedule Month Contributions Commence: January 2018 Year Description Base Cost Future Replacement Cost 2028 Concrete Driveways, 25% $95,680 $128,586 $95,680 $128,586 2031 Asphalt Paving, Driveways $177,640 $260,870 Gutters and Downspouts $207,000 $303,986 Roof, Shingles $1,658,625 $2,435,747 $2,043,265 $3,000,604 2033 Concrete Driveways, 25% $95,680 $149,066 Entry Lead Walk Allowance, 25% $60,525 $94,296 $156,205 $243,362 2038 Concrete Driveways, 25% $95,680 $172,809 $95,680 $172,809 2041 Roof, Standing Seam Metal $35,766 $70,587 $35,766 $70,587 2043 Concrete Driveways, 25% $95,680 $200,333 $95,680 $200,333 2046 Siding, Vinyl $2,501,478 $5,723,201 $2,501,478 $5,723,201 2048 Entry Lead Walk Allowance, 25% $60,525 $146,910 $60,525 $146,910 11-1
Reserve Fund Scenario Month Contributions Commence: January 2018 Opening Annual Contribution Year Balance Contribution Adjustment 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Disbursements Calculation Method: Component Earned Interest Closing Balance $850,000 $212,864 $113,759 $0 $10,269 $1,186,892 $1,186,892 $219,250 $117,172 $0 $13,691 $1,537,005 $1,537,005 $225,828 $120,687 $0 $17,247 $1,900,766 $1,900,766 $232,602 $124,307 $0 $20,941 $2,278,617 $2,278,617 $239,580 $128,037 $0 $24,777 $2,671,011 $2,671,011 $246,768 $131,878 $0 $28,761 $3,078,418 $3,078,418 $254,171 $135,834 $0 $32,897 $3,501,319 $3,501,319 $261,796 $139,909 $0 $37,189 $3,940,214 $3,940,214 $269,650 $144,106 $0 $41,643 $4,395,613 $4,395,613 $277,739 $148,429 $0 $46,265 $4,868,046 $4,868,046 $286,072 $144,858 $128,586 $51,015 $5,221,405 $5,221,405 $294,654 $149,204 $0 $54,618 $5,719,880 $5,719,880 $303,493 $153,680 $0 $59,675 $6,236,728 $6,236,728 $312,598 $55,310 $3,000,604 $64,360 $3,668,394 $3,668,394 $321,976 $56,970 $0 $38,737 $4,086,076 $4,086,076 $331,635 $53,207 $243,362 $42,945 $4,270,501 $4,270,501 $341,584 $54,803 $0 $44,852 $4,711,741 $4,711,741 $351,832 $56,447 $0 $49,329 $5,169,349 $5,169,349 $362,387 $58,141 $0 $53,971 $5,643,848 $5,643,848 $373,258 $59,885 $0 $58,785 $6,135,775 $6,135,775 $384,456 $57,837 $172,809 $63,754 $6,469,013 $6,469,013 $395,990 $59,572 $0 $67,158 $6,991,732 $6,991,732 $407,870 $61,359 $0 $72,459 $7,533,420 $7,533,420 $420,106 $62,067 $70,587 $77,946 $8,022,951 $8,022,951 $432,709 $63,929 $0 $82,920 $8,602,509 $8,602,509 $445,690 $63,332 $200,333 $88,782 $8,999,980 $8,999,980 $459,061 $65,232 $0 $92,840 $9,617,112 $9,617,112 $472,833 $67,189 $0 $99,096 $10,256,230 $10,256,230 $487,018 $0 $5,723,201 $105,200 $5,125,247 $5,125,247 $501,628 $0 $0 $53,970 $5,680,845 $5,680,845 $516,677 $0 $146,910 $59,607 $6,110,219 12-1
Reserve Fund Scenario Month Contributions Commence: January 2018 Opening Annual Contribution Year Balance Contribution Adjustment Disbursements Calculation Method: 5% of Rep. Cost Minimum Balance: $251,188 Earned Interest Closing Balance 2018 $850,000 $179,489 $0 $0 $9,472 $1,038,961 2019 $1,038,961 $184,874 $0 $0 $11,391 $1,235,226 2020 $1,235,226 $190,420 $0 $0 $13,384 $1,439,030 2021 $1,439,030 $196,133 $0 $0 $15,453 $1,650,616 2022 $1,650,616 $202,017 $0 $0 $17,600 $1,870,233 2023 $1,870,233 $208,078 $0 $0 $19,829 $2,098,140 2024 $2,098,140 $214,320 $0 $0 $22,142 $2,334,602 2025 $2,334,602 $220,750 $0 $0 $24,542 $2,579,894 2026 $2,579,894 $227,373 $0 $0 $27,031 $2,834,298 2027 $2,834,298 $234,194 $0 $0 $29,612 $3,098,104 2028 $3,098,104 $241,220 $0 $128,586 $32,288 $3,243,026 2029 $3,243,026 $248,457 $0 $0 $33,776 $3,525,259 2030 $3,525,259 $255,911 $0 $0 $36,639 $3,817,809 2031 $3,817,809 $263,588 $0 $3,000,604 $39,606 $1,120,399 2032 $1,120,399 $271,496 $0 $0 $12,675 $1,404,570 2033 $1,404,570 $279,641 $0 $243,362 $15,560 $1,456,409 2034 $1,456,409 $288,030 $0 $0 $16,124 $1,760,563 2035 $1,760,563 $296,671 $0 $0 $19,213 $2,076,447 2036 $2,076,447 $305,571 $0 $0 $22,420 $2,404,438 2037 $2,404,438 $314,738 $0 $0 $25,749 $2,744,925 2038 $2,744,925 $324,180 $0 $172,809 $29,205 $2,925,501 2039 $2,925,501 $333,905 $0 $0 $31,064 $3,290,470 2040 $3,290,470 $343,922 $0 $0 $34,768 $3,669,160 2041 $3,669,160 $354,240 $0 $70,587 $38,610 $3,991,423 2042 $3,991,423 $364,867 $0 $0 $41,891 $4,398,181 2043 $4,398,181 $375,813 $0 $200,333 $46,017 $4,619,678 2044 $4,619,678 $387,087 $0 $0 $48,294 $5,055,059 2045 $5,055,059 $398,700 $0 $0 $52,710 $5,506,469 2046 $5,506,469 $410,661 $0 $5,723,201 $57,289 $251,218 2047 $251,218 $422,981 $0 $0 $4,803 $679,002 2048 $679,002 $435,670 $0 $146,910 $9,150 $976,912 12-2
Reserve Fund Scenario Month Contributions Commence: January 2018 Opening Annual Contribution Year Balance Contribution Adjustment Disbursements Calculation Method: 10% of Rep. Cost Minimum Balance: $502,375 Earned Interest Closing Balance 2018 $850,000 $184,379 $0 $0 $9,499 $1,043,878 2019 $1,043,878 $189,910 $0 $0 $11,467 $1,245,255 2020 $1,245,255 $195,607 $0 $0 $13,512 $1,454,374 2021 $1,454,374 $201,475 $0 $0 $15,635 $1,671,484 2022 $1,671,484 $207,519 $0 $0 $17,839 $1,896,842 2023 $1,896,842 $213,745 $0 $0 $20,126 $2,130,713 2024 $2,130,713 $220,157 $0 $0 $22,500 $2,373,370 2025 $2,373,370 $226,762 $0 $0 $24,962 $2,625,094 2026 $2,625,094 $233,565 $0 $0 $27,516 $2,886,175 2027 $2,886,175 $240,572 $0 $0 $30,165 $3,156,912 2028 $3,156,912 $247,789 $0 $128,586 $32,911 $3,309,026 2029 $3,309,026 $255,223 $0 $0 $34,473 $3,598,722 2030 $3,598,722 $262,880 $0 $0 $37,411 $3,899,013 2031 $3,899,013 $270,766 $0 $3,000,604 $40,457 $1,209,632 2032 $1,209,632 $278,889 $0 $0 $13,607 $1,502,128 2033 $1,502,128 $287,256 $0 $243,362 $16,577 $1,562,599 2034 $1,562,599 $295,874 $0 $0 $17,229 $1,875,702 2035 $1,875,702 $304,750 $0 $0 $20,408 $2,200,860 2036 $2,200,860 $313,893 $0 $0 $23,709 $2,538,462 2037 $2,538,462 $323,310 $0 $0 $27,136 $2,888,908 2038 $2,888,908 $333,009 $0 $172,809 $30,693 $3,079,801 2039 $3,079,801 $342,999 $0 $0 $32,656 $3,455,456 2040 $3,455,456 $353,289 $0 $0 $36,468 $3,845,213 2041 $3,845,213 $363,888 $0 $70,587 $40,423 $4,178,937 2042 $4,178,937 $374,805 $0 $0 $43,820 $4,597,562 2043 $4,597,562 $386,049 $0 $200,333 $48,067 $4,831,345 2044 $4,831,345 $397,630 $0 $0 $50,467 $5,279,442 2045 $5,279,442 $409,559 $0 $0 $55,013 $5,744,014 2046 $5,744,014 $421,846 $0 $5,723,201 $59,725 $502,384 2047 $502,384 $434,501 $0 $0 $7,377 $944,262 2048 $944,262 $447,536 $0 $146,910 $11,867 $1,256,755 12-3
Disbursements by Year 13
Reserve Fund Closing Balance 14
Reserve Fund Contributions 15
Cumulative Contributions and Disbursements 16
Definitions 16-1
Definitions Base Cost - See definition "Current Replacement Cost Allowance." This calculation, based on current costs, is increased according to the assumed rates of inflation in the "Disbursement Schedule." Basic Annual Contribution - This is the amount that should have been contributed each year, while considering assumed rates of interest and inflation, to accumulate a reserve equal to the Current Replacement Cost at the anticipated replacement time (end-of-life). This is roughly calculated. Contribution Adjustment - If the capital reserve fund for a component is not fully funded, this is the increase in annual contributions that would be required to fully fund the reserve before the estimated end-oflife. If the capital reserve fund for a component is over-funded, this is the decrease in annual contributions that would offset the over-funded condition. Contribution, Total - This is the recommended Basic Annual Contribution plus the "Contribution Adjustment" (see definition) required to make up for past underfunding before replacement of the component is estimated to be required. The amount can decrease in future years because the required Contribution Adjustment decreases each year in which a reserve fund for a capital component is fully funded. Current Replacement Cost - The estimated cost to replace a component in kind at the time of the Study. Estimated Remaining Life - The anticipated number of years before replacement of this component can be expected to be necessary. This is based on the normal life, the current age, and an engineering assessment that considers site-specific condition. Deficit - This shows the amount that the Present Fund is undercapitalized. It is the present fund minus the Required Fund, A positive number (surplus) means excess cash reserves have been set aside to date. A negative number indicates a deficit in the Present Fund; this underfunding can be made up in one of two ways: 1) an increase in the annual fees to catch up or, 2) a special assessment between now and when the component requires replacement. This Study assumes the second method is used and recommends annual makeup on that basis. Interest - Interest accumulated on the capital reserve fund deposit based on the assumed interest rate listed at the top of the "Projected Cash Flow" pages. Inflation - The increased cost of future replacement expenditures are based on an assumed rate of inflation. Opening Balance - On the "Projected Cash Flow" pages, this is the reported total reserve fund on deposit 16-2
for the condominium Association. Percent Funded - Represents the ratio of the Reserve Fund balance to the Required Fund or Fully Funded Balance. This is a measure of the financial health of the Reserve Fund and an indicator of the risk of the future necessity of special assessments. Percentage Of Total - Percent of total recommended Basic Annual Contribution. This shows the significance of specific components relative to required contributions to the capital reserve fund. Present Age - Age of the component at the time of this Study. Present Fund - Present funds set aside for capital component replacement at this time. If present funds are not reserved for specific components but are an unallocated pool, the total present funds allocated between the components according to the Percentage Of Total column. Required Fund - This amount should have been set aside for each component in the fund to be considered fully funded. Surplus - This shows the amount that the Present Fund is overcapitalized. It is the present fund minus the Required Fund. A positive number (surplus) means excess cash reserves have been set aside to date. Typical Life - The anticipated number of years that a component may be expected to provide adequate service. Please note that this is based on industry standards. A component may outlive, or require replacement prior to, its typical life. 16-3