NEWTON PARISH REPLACEMENT RESERVE REPORT 2008 REPLACEMENT RESERVE REPORT FY CAS, Inc MILLER ~ DODSON ASSOCIATES. Community Management by:

REPLACEMENT RESERVE REPORT 2008 NEWTON PARISH NEWTON PARISH REPLACEMENT RESERVE REPORT FY 2008 Community Management by: CAS, Inc Mr. Dan Quartermane 1930 N. Salem Street, Suite 101 Apex, NC 27523 919-367-7711 Consultant: MILLER ~ DODSON ASSOCIATES 929 West Street, Suite 310 Annapolis, MD 21401 Tel: 410.268.0479 Fax: 410.268.8483 www.mdareserves.com

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Section A Replacement Reserve Analysis REPLACEMENT RESERVE REPORT NEWTON PARISH Raleigh, North Carolina Executive Summary - A1 Reserve Status & Funding Plan - A1 General Information - A2 Cash Flow Method - A4 Component Method - A6 Current Association Funding - A8 Reserve Analysis Comments - A9 Section B Replacement Reserve Inventory Replacement Reserve Inventory General information - B1 Replacement Reserve Inventory Comments - B2 Schedule of Projected Replacements and Exclusions - B3 Section C Projected Annual Replacements Projected Annual Replacements General Information - C1 Reserve Analysis and Inventory Policies, Procedures, and Administration - C2 Calendar of Projected Annual Replacements - C2 Scope. Newton Parish is a condominium community located in Raleigh, North Carolina, which was constructed in 1984. The community consists of 150 single family and townhouse units. The survey examined the common elements of the property, including: Asphalt drive and parking. Concrete sidewalks and steps. Retaining walls, fencing, and railings. Swimming pool and pool building. Building exteriors. Level of Service. This study has been performed as a Level I, Full Service Reserve Study as defined under the National Reserve Study Standards that have been adopted by the Community Associations Institute. As such, a complete component inventory was established based on information regarding commonly-owned components provided by the community manager and upon quantities derived from field measurement and/or quantity takeoffs from to-scale engineering drawings. The condition of all commonly-owned components was ascertained from a site visit and the visual inspection of each component by the Analyst. The life expectancy and the value of the components are provided based in part on these observations. The fund status and funding plan have been derived from analysis of this data. Section D Condition Assessment Section E Attachments Appendix

Purpose. The purpose of this Replacement Reserve Study is to provide Newton Parish (hereinafter called the Association) with an inventory of the common community facilities and infrastructure components that require periodic replacement. The Study includes a general view of the condition of these items and an effective financial plan to fund projected periodic replacements. Inventory of Items Owned by the Association. Section B Replacement Reserve Inventory lists the Projected Replacements of the commonly owned items that require periodic replacement using funding from Replacement Reserves. The Replacement Reserve Inventory also provides information about excluded items, which are items whose replacements are not scheduled for funding from Replacement Reserves. Condition of Items Owned by the Association. Section B Replacement Reserve Inventory includes our estimates of the normal economic life and the remaining economic life for the projected replacements. Section C Calendar of Projected Annual Replacements provides a year-by-year listing of the projected replacements. Section D Condition Assessment provides additional detail for items that are unique or deserving of attention because of their condition or the manner in which they have been treated in this Study. Financial Plan. The Association has a fiduciary responsibility to protect the appearance, value, and safety of the property and it is therefore essential the Association have a financial plan that provides funding for the projected replacements. In conformance with American Institute of Certified Public Accountant guidelines, Section A Replacement Reserve Analysis evaluates the current funding of Replacement Reserves as reported by the Association and recommends annual funding of Replacement Reserves by two generally accepted accounting methods; the Cash Flow Method and the Component Method. Section A Replacement Reserve Analysis includes graphic and tabular presentations of these methods and current Association funding. An Executive Summary of these calculations is provided on Page A1. Basis. The data contained in this Replacement Reserve Study is based upon the following: The Request for Proposal submitted and executed by the Association. Our visual evaluation and measurements on February 6 and 7, 2008. Miller - Dodson Associates has visually inspected the common elements of the property in order to ascertain the remaining useful life and the replacement costs of these components. Engineering Drawings. No architectural drawings or engineering site plans were available for review in connection with this study. We recommend the Association assemble a library of site and building plans of the entire community. Reproducible drawings should be stored and kept in a secure fireproof location. The Association will find these drawings to be a valuable resource in planning and executing future projects. Acknowledgement. Miller - Dodson Associates would like to acknowledge the assistance and input of Mr. Dan Quartermane. Mr. Quartermane provided very helpful insight into the current operations at the property. Analyst s Credentials. This study has been performed by James E. Piper, who holds a Bachelors Degree and a Masters Degree in Mechanical Engineering from the University of Akron and a PhD from the University of Maryland. Mr. Piper is a Registered Professional Engineer in the State of Maryland, and the author of articles and books on the subject of the condition assessment of facilities. He has over 20 years experience in the evaluation and the management of the physical plant of the University of Maryland. He is currently a Reserve Specialist (RS) for Miller-Dodson Associates. Respectfully submitted, MILLER - DODSON ASSOCIATES, INC. James Piper, RS Reserve Specialist

Replacement Reserve Analysis - Page A1 EXECUTIVE SUMMARY The Newton Parish Replacement Reserve Inventory identifies 113 Projected Replacements for funding from Replacement Reserves, with an estimated one-time replacement cost of $3,375,021. The Replacement Reserve Analysis calculates recommended funding of Replacement Reserves by the two generally accepted methods, the Cash Flow Method and the Component Method. The Analysis also evaluates current funding of Replacement Reserves, as reported by the Association. The calculations and evaluation are summarized below: $157,496 CASH FLOW METHOD MINIMUM ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2008. $87.50 Per unit (average), minimum monthly funding of Replacement Reserves The Cash Flow Method (CFM) calculates Minimum Annual Funding of Replacement Reserves that will fund Projected Replacements identified in the Replacement Reserve Inventory from a common pool of Replacement Reserves and prevent Replacement Reserves from dropping below a Minimum Recommended Balance. CFM - Minimum Annual Funding remains the same between peaks in cumulative expenditures called Peak Years. The first Peak Year occurs in 2028 and the CFM - Minimum Annual Funding of Replacement Reserves in 2029 declines to $81,447 ($45.25 per unit, per month), after the completion of $3,326,174 of replacements in 2008 to 2028. After 2028 the CFM - Minimum Annual Funding remains constant for the remainder of the Study Period. $387,983 COMPONENT METHOD RECOMMENDED ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2008. $215.55 Per unit (average), recommended monthly funding of Replacement Reserves The Component Method is a time tested and very conservative funding model developed by HUD in the early 1980's. The Component Method treats each projected replacement in the Replacement Reserve Inventory as a separate account. Deposits are made to each individual account, where funds are held for exclusive use by that item. Based on this funding model, the Association has a Current Funding Objective of $1,752,225. The Association reports having $120,000 on deposit, which is 6.8% funded. $46,675 CURRENT ANNUAL FUNDING OF REPLACEMENT RESERVES (as reported by the Association). $25.93 Per unit (average), reported current monthly funding of Replacement Reserves The evaluation of Current Funding, as reported by the Association, has calculated that if the Association continues to fund Replacement Reserves at the current level, there will NOT be adequate funds for Projected Replacements in 27 years of the 30-year Study Period, and a maximum shortfall of $-2,304,822 occurs in 2033. Pages A2 and A3 explain the Study Year, Study Period, Adjustments (interest & inflation), Beginning Balance, and Projected Replacements. Pages A4 to A9 explain in more detail the calculations associated with the Cash Flow Method, Component Method, and Current Funding. REPLACEMENT RESERVE STATUS AND FUNDING PLAN Current funding of Replacement Reserves is inadequate to fund Projected Replacements. We recommend the Association adopt a Replacement Reserve Funding Plan based on the Cash Flow Method or the Component Method, to ensure that adequate funding is available throughout the 30-Year Study Period for the $3,800,484 of Projected Replacements listed in the Newton Parish Replacement Reserve Inventory. The Funding Plan should be professionally evaluated every three to five years or after completion of each major replacement project. The Board of Directors has a fiduciary responsibility to review the Funding Plan annually and should consider annual increases in Replacement Reserve funding at least equal to the Consumer Price Index.

Replacement Reserve Analysis - Page A2 REPLACEMENT RESERVE ANALYSIS - GENERAL INFORMATION The Newton Parish Replacement Reserve Analysis calculations of recommended funding of Replacement Reserves by the Cash Flow Method and the Component Method, and the evaluation of the Current Funding, are based upon the same General Information; including the Study Year, Study Period, Adjustments (for interest, inflation, and/or a constant increase in annual funding), Beginning Balance, and Projected Replacements: STUDY YEAR The Association reports that their accounting year begins on January 1, and the Study Year, the first year evaluated by the Replacement Reserve Analysis, begins on January 1, 2008. STUDY PERIOD The Replacement Reserve Analysis evaluates the funding of Replacement Reserves over a 30-year Study Period that begins on January 1, 2008. ADJUSTMENTS The calculations in this Replacement Reserve Analysis do not account for interest earned on Replacement Reserves, the effects of inflation on the costs of Projected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves. If requested, we will provide a Replacement Reserve Analysis with adjustments for inflation, interest, and/or a constant annual increase in funding, using values provided by the Association. BEGINNING BALANCE The Association reports Replacement Reserves on Deposit totaling $120,000 at the start of the Study Year. Graph #1. Annual Expenditures for Projected Replacements This bar graph summarizes annual expenditures for the $3,800,484 of Projected Replacements identified in the Replacement Reserve Inventory over the 30-year Study Period. The red line shows the average annual expenditure of $126,683. $500,000 $400,000 $386,580 $386,936 $126,683 30 YR AVERAGE $82,617 $15,042 $169,964 $12,614 $198,292 $139,641 $336,793 $211,353 $347,728 $44,337 $351,096 $300,000 $200,000 $100,000 $180,287 $65,580 $21,301 $188,655 $10,391 $151,934 $12,628 $12,406 $76,542 $7,324 $35,120 $51,123 $142,089 $26,802 $51,549 $11,206 $72,556 $0 2008 2009 2010 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

Replacement Reserve Analysis - Page A3 PROJECTED REPLACEMENTS The Newton Parish Replacement Reserve Inventory (Section B) identifies 113 Projected Replacements with a one-time Replacement Cost of $3,375,021 and replacements totaling $3,800,484 over the 30-year Study Period. Projected Replacements are the replacement of commonly-owned items that: require periodic replacement and whose replacement is to be funded from Replacement Reserves. The Replacement Reserve Inventory also identifies 36 Excluded Items. Expenditures for the replacement of these items are NOT scheduled for funding from Replacement Reserves. The accuracy of the calculations made in the Replacement Reserve Analysis is dependent on expenditures NOT being made for Excluded Items. The rationale behind these exclusions is discussed in detail on Page B1. Expenditures from Replacements Reserves should be made only after consultation with an accounting professional. The Section B - Replacement Reserve Inventory, contains Tables that list each Projected Replacement (and any Excluded Items) broken down into 17 major categories (Pages B3 to B18). Tables are also included that list each Projected Replacement by year for each of the 30 years of the Study Period beginning on Page C1. The accuracy of this Replacement Reserve Analysis is dependent upon expenditures from Replacement Reserves being made only for the Projected Replacements specifically listed in the Replacement Reserve Inventory. Graph #2. Comparison of Cumulative Replacement Reserve Funding and Expenditures The line graph shows Replacement Reserves - Cumulative Receipts over the 30-year Study Period by the Cash Flow Method (red circles), Component Method (purple diamonds), and the Current Funding Plan as reported by the Association (blue triangles). The bar graph shows the Cumulative Expenditures necessary to fund the Project Replacements listed in the Replacement Reserve Inventory (Section B) and summarized in Graph #1. $6,000,000 Cash Flow Method - Cumulative Receipts Component Method - Cumulative Receipts Current Funding - Cumulative Receipts Projected Replacements - Cumulative Expenditures $5,480,097 $5,000,000 $4,000,000 $3,800,484 $4,160,446 $3,000,000 $2,000,000 $1,520,250 $1,000,000 $0 2008 2009 2010 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

Replacement Reserve Analysis - Page A4 CASH FLOW METHOD $157,496 CASH FLOW METHOD MINIMUM ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2008. $87.50 Per unit (average), minimum monthly funding of Replacement Reserves General. The Cash Flow Method is founded on the concept that the Replacement Reserve Account is solvent if cumulative receipts always exceed cumulative expenses. The Cash Flow Method calculates a MINIMUM annual deposit to Replacement Reserves that will: Fund all Projected Replacements listed in the Replacement Reserve Inventory (see Section B) Prevent Replacement Reserves from dropping below the Minimum Recommended Balance Allow a constant annual funding level between peaks in cumulative expenditures Graph #3. Cash Flow Method - Cumulative Receipts and Expenditures Graph $5,000,000 Cash Flow Method - Cumulative Receipts Cash Flow Method - Year End Balance Cumulative Expenditures $4,000,000 $3,800,484 $4,160,446 First Peak Year $3,000,000 $2,000,000 $1,000,000 $359,961 $0 2008 2009 2010 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

Replacement Reserve Analysis - Page A5 CASH FLOW METHOD (cont'd) Replacement Reserves - Minimum Recommended Balance. The Minimum Recommended Balance is $101,251, which is 3.0 percent of the one-time replacement cost of the Projected Replacements listed in the Replacement Reserve Inventory. Unless otherwise noted in the Comments on Page A-9, the Minimum Recommended Balance has been established by the Analyst based upon an evaluation of the types of items included in the Replacement Reserve Inventory. Peak Years. The Cash Flow Method calculates a constant annual funding of Replacement Reserves between peaks in cumulative expenditures called Peak Years. In Peak Years, Replacement Reserves on Deposit decline to the Replacement Reserves - Minimum Recommended Balance discussed in the paragraph above. First Peak Year. The First Peak Year occurs in 2028, after the completion of $3,326,174 of replacements in 2008 to 2028. The Cash Flow Method - Minimum Annual Funding of Replacement Reserves declines from $157,496 in 2028 to $81,447 in 2029. Subsequent Peak Years. There are no subsequent Peak Years and after the first Peak Year in 2028, the Cash Flow Method - Minimum Annual Funding remains constant for the remainder of the Study Period. Study Period. The Cash Flow Method calculates the recommended contributions to Replacement Reserves over the 30-year Study Period. These calculations are based upon a 40-year projection of expenditures for Projected Replacements to avoid the Replacement Reserve balance dropping to the Minimum Recommended Balance in the final year of the Study Period. Failure to Fund. The Cash Flow Method calculates a MINIMUM annual funding of Replacement Reserves. Failure to fund Replacement Reserves at the minimum level calculated by the Cash Flow Method will result in Replacement Reserves not being available for the Projected Replacements listed in the Replacement Reserve Inventory and/or Replacement Reserves dropping below the Minimum Recommended Balance. Adjustment to the Cash Flow Method for interest and inflation. The calculations in this Replacement Reserve Analysis do not account for interest earned on Replacement Reserves, the effects of inflation of the cost of Projected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves. Comparison of Cash Flow Funding and Average Annual Expenditure. The Average Annual Expenditure for Projected Replacements listed in the Reserve Inventory over the 30-year Study Period is $126,683 (see Graph #1). The Cash Flow Method - Minimum Annual Funding of Replacement Reserves in the Study Year is $157,496. This is 124.3 percent of the Average Annual Expenditure, indicating that the Association is building Replacement Reserves in advance of the first Peak Year in 2028. Table #1. Cash Flow Method Data - Years 1 through 30 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Starting balance $120,000 Annual deposit $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 Expenditures $82,617 $15,042 $169,964 $12,614 $198,292 $139,641 $211,353 $44,337 $180,287 $65,580 Year end balance $194,879 $337,333 $324,865 $469,747 $428,952 $446,807 $392,951 $506,111 $483,320 $575,237 Minimum rec. funding lvl. $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 Cumulative expenditures $82,617 $97,659 $267,624 $280,238 $478,530 $618,171 $829,524 $873,861 $1,054,147 $1,119,727 Cumulative receipts $277,496 $434,993 $592,489 $749,986 $907,482 $1,064,978 $1,222,475 $1,379,971 $1,537,468 $1,694,964 Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Annual deposit $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 $157,496 Expenditures $386,580 $21,301 $188,655 $10,391 $336,793 $151,934 $347,728 $12,628 $351,096 $12,406 Year end balance $346,153 $482,348 $451,190 $598,296 $419,000 $424,562 $234,330 $379,199 $185,599 $330,690 Minimum rec. funding lvl. $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 Cumulative expenditures $1,506,308 $1,527,608 $1,716,263 $1,726,654 $2,063,446 $2,215,381 $2,563,109 $2,575,737 $2,926,832 $2,939,238 Cumulative receipts $1,852,460 $2,009,957 $2,167,453 $2,324,950 $2,482,446 $2,639,943 $2,797,439 $2,954,935 $3,112,432 $3,269,928 Year 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Annual deposit $157,496 $81,447 $81,447 $81,447 $81,447 $81,447 $81,447 $81,447 $81,447 $81,447 Expenditures $386,936 $76,542 $7,324 $35,120 $51,123 $142,089 $26,802 $51,549 $11,206 $72,556 Year end balance $101,251 $106,155 $180,278 $226,604 $256,928 $196,286 $250,931 $280,830 $351,070 $359,961 Minimum rec. funding lvl. $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 $101,251 Cumulative expenditures $3,326,174 $3,402,716 $3,410,040 $3,445,161 $3,496,283 $3,638,372 $3,665,174 $3,716,722 $3,727,929 $3,800,484 Cumulative receipts $3,427,425 $3,508,871 $3,590,318 $3,671,765 $3,753,212 $3,834,658 $3,916,105 $3,997,552 $4,078,999 $4,160,446 First Peak Year

Replacement Reserve Analysis - Page A6 COMPONENT METHOD $387,983 COMPONENT METHOD RECOMMENDED ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2008. $215.55 Per unit (average), recommended monthly funding of Replacement Reserves General. The Component Method is a time tested and very conservative mathematical model developed by HUD in the early 1980s. Each of the 113 Projected Replacements listed in the Replacement Reserve Inventory is treated as a separate account. The Beginning Balance is allocated to each of these individual accounts, as is all subsequent funding of Replacement Reserves. These funds are "locked" in these individual accounts and are not available to fund other Projected Replacements. The calculation of the Recommended Annual Funding of Replacement Reserves is a multi-step process outlined in more detail on Page A7. Graph #4. Component Method - Cumulative Receipts and Expenditures Graph $6,000,000 Component Method - Cumulative Receipts Component Method - Year End Balance Projected Replacements - Cumulative Expenditures $5,480,097 $5,000,000 $4,000,000 $3,800,484 $3,000,000 $2,000,000 $1,679,613 $1,000,000 $0 2008 2009 2010 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

Replacement Reserve Analysis - Page A7 COMPONENT METHOD (cont'd) Current Funding Objective. A Current Funding Objective is calculated for each of the Projected Replacements listed in the Replacement Reserve Inventory. Replacement Cost is divided by the Normal Economic Life to determine the nominal annual contribution. The Remaining Economic Life is then subtracted from the Normal Economic Life to calculate the number of years that the nominal annual contribution should have been made. The two values are then multiplied to determine the Current Funding Objective. This is repeated for each of the 113 Projected Replacements. The total, $1,752,225, is the Current Funding Objective. For an example, consider a very simple Replacement Reserve Inventory with one Projected Replacement, a fence with a $1,000 Replacement Cost, a Normal Economic Life of 10 years, and a Remaining Economic Life of 2 years. A contribution to Replacement Reserves of $100 ($1,000 + 10 years) should have been made in each of the previous 8 years (10 years - 2 years). The result is a Current Funding Objective of $800 (8 years x $100 per year). Funding Percentage. The Funding Percentage is calculated by dividing the Beginning Balance ($120,000) by the Current Funding Objective ($1,752,225). At Newton Parish the Funding Percentage is 6.8% Allocation of the Beginning Balance. The Beginning Balance is divided among the 113 Projected Replacements in the Replacement Reserve Inventory. The Current Funding Objective for each Projected Replacement is multiplied by the Funding Percentage and these funds are then "locked" into the account of each item. If we relate this calculation back to our fence example, it means that the Association has not accumulated $800 in Reserves (the Funding Objective), but rather at 6.8 percent funded, there is $55 in the account for the fence. Annual Funding. The Recommended Annual Funding of Replacement Reserves is then calculated for each Projected Replacement. The funds allocated to the account of the Projected Replacement are subtracted from the Replacement Cost. The result is then divided by the number of years until replacement, and the result is the annual funding for each of the Projected Replacements. The sum of these is $387,983, the Component Method Recommended Annual Funding of Replacement Reserves in the Study Year (2008). In our fence example, the $55 in the account is subtracted from the $1,000 Total Replacement Cost and divided by the 2 years that remain before replacement, resulting in an annual deposit of $473. Next year, the deposit remains $473, but in the third year, the fence is replaced and the annual funding adjusts to $100. Adjustment to the Component Method for interest and inflation. The calculations in the Replacement Reserve Analysis do not account for interest earned on Replacement Reserves, the effects of inflation of the cost of Projected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves. Table #2. Component Method Data - Years 1 through 30 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Starting balance $120,000 Annual deposit $387,983 $319,735 $314,459 $266,524 $264,430 $233,951 $221,800 $199,787 $197,132 $183,511 Expenditures $82,617 $15,042 $169,964 $12,614 $198,292 $139,641 $211,353 $44,337 $180,287 $65,580 Year end balance $425,366 $730,059 $874,553 $1,128,463 $1,194,601 $1,288,911 $1,299,358 $1,454,808 $1,471,654 $1,589,585 Cumulative Expenditures $82,617 $97,659 $267,624 $280,238 $478,530 $618,171 $829,524 $873,861 $1,054,147 $1,119,727 Cumulative Receipts $507,983 $827,718 $1,142,177 $1,408,701 $1,673,131 $1,907,082 $2,128,882 $2,328,669 $2,525,801 $2,709,312 Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Annual deposit $180,725 $162,520 $162,011 $153,280 $153,123 $144,343 $143,025 $136,493 $136,493 $131,540 Expenditures $386,580 $21,301 $188,655 $10,391 $336,793 $151,934 $347,728 $12,628 $351,096 $12,406 Year end balance $1,383,730 $1,524,948 $1,498,305 $1,641,194 $1,457,525 $1,449,933 $1,245,230 $1,369,095 $1,154,493 $1,273,626 Cumulative Expenditures $1,506,308 $1,527,608 $1,716,263 $1,726,654 $2,063,446 $2,215,381 $2,563,109 $2,575,737 $2,926,832 $2,939,238 Cumulative Receipts $2,890,037 $3,052,557 $3,214,568 $3,367,848 $3,520,972 $3,665,314 $3,808,339 $3,944,832 $4,081,325 $4,212,865 Year 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Annual deposit $131,540 $127,838 $126,398 $126,398 $126,369 $126,090 $125,665 $125,665 $125,634 $125,634 Expenditures $386,936 $76,542 $7,324 $35,120 $51,123 $142,089 $26,802 $51,549 $11,206 $72,556 Year end balance $1,018,231 $1,069,526 $1,188,601 $1,279,878 $1,355,125 $1,339,126 $1,437,989 $1,512,106 $1,626,534 $1,679,613 Cumulative Expenditures $3,326,174 $3,402,716 $3,410,040 $3,445,161 $3,496,283 $3,638,372 $3,665,174 $3,716,722 $3,727,929 $3,800,484 Cumulative Receipts $4,344,405 $4,472,243 $4,598,641 $4,725,039 $4,851,408 $4,977,498 $5,103,163 $5,228,828 $5,354,463 $5,480,097

Replacement Reserve Analysis - Page A8 CURRENT FUNDING $46,675 CURRENT ANNUAL FUNDING OF REPLACEMENT RESERVES (as reported by the Association). $25.93 Per unit (average), reported current monthly funding of Replacement Reserves General. Our evaluation of the Current Association Funding assumes that the Association will continue to fund Replacement Reserves at the current level of $46,675 per year in each of the 30 years of the Study Period. Our evaluation is based upon this Replacement Reserve Funding Level, a $120,000 Beginning Balance, the Projected Annual Replacement Expenditures shown in Graph #1 and listed in the Replacement Reserve Inventory, and any interest, inflation rate, or constant annual increase in annual contribution adjustments discussed below. Evaluation. Our calculations have determined that Current Annual Funding of Replacement Reserves, as reported by the Association, is inadequate to fund Projected Replacement beginning in 2010. The Current Annual Funding of Replacement Reserves results in insufficient funds to make Projected Replacements in 27 years of the 30-year Study Period, and a maximum shortfall of $-2,304,822 occurs in 2033. Adjustment to the Current Association Funding for interest and inflation. The Calculations in the Replacement Reserve Analysis do not account for interest earned on Replacement Reserves, the effects of inflation of the cost of Projected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves. Comparison of Current Association Funding and Average Annual Expenditure. The average annual expenditure for Projected Replacements listed in the Reserve Inventory over the 30-year Study Period is $126,683 (see Graph #1). Current Association annual funding of Replacement Reserves is $46,675, or approximately 37 percent of the Average Annual Expenditure. Graph #5. Current Association Funding - Cumulative Receipts and Expenditures Graph $5,000,000 Current Funding - Cumulative Receipts Current Funding - Year End Balance Projected Replacements - Cumulative Expenditures $4,000,000 $3,800,484 $3,000,000 $2,000,000 $1,520,250 $1,000,000 $0 ($1,000,000) ($2,000,000) ($2,280,234) ($3,000,000) 2008 2009 2010 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

Replacement Reserve Analysis - Page A9 CURRENT FUNDING (cont'd) Table #3. Current Funding Data - Years 1 through 30 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Starting balance $120,000 Annual deposit $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 Expenditures $82,617 $15,042 $169,964 $12,614 $198,292 $139,641 $211,353 $44,337 $180,287 $65,580 Year end balance $84,058 $115,691 ($7,599) $26,462 ($125,155) ($218,121) ($382,799) ($380,461) ($514,072) ($532,977) Cumulative Expenditures $82,617 $97,659 $267,624 $280,238 $478,530 $618,171 $829,524 $873,861 $1,054,147 $1,119,727 Cumulative Receipts $166,675 $213,350 $260,025 $306,700 $353,375 $400,050 $446,725 $493,400 $540,075 $586,750 Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Annual deposit $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 Expenditures $386,580 $21,301 $188,655 $10,391 $336,793 $151,934 $347,728 $12,628 $351,096 $12,406 Year end balance ($872,883) ($847,508) ($989,488) ($953,204) ($1,243,321) ($1,348,581) ($1,649,634) ($1,615,587) ($1,920,007) ($1,885,738) Cumulative expenditures $1,506,308 $1,527,608 $1,716,263 $1,726,654 $2,063,446 $2,215,381 $2,563,109 $2,575,737 $2,926,832 $2,939,238 Cumulative receipts $633,425 $680,100 $726,775 $773,450 $820,125 $866,800 $913,475 $960,150 $1,006,825 $1,053,500 Year 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Annual deposit $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 $46,675 Expenditures $386,936 $76,542 $7,324 $35,120 $51,123 $142,089 $26,802 $51,549 $11,206 $72,556 Year end balance ($2,225,999) ($2,255,866) ($2,216,515) ($2,204,961) ($2,209,408) ($2,304,822) ($2,284,949) ($2,289,822) ($2,254,354) ($2,280,234) Cumulative Expenditures $3,326,174 $3,402,716 $3,410,040 $3,445,161 $3,496,283 $3,638,372 $3,665,174 $3,716,722 $3,727,929 $3,800,484 Cumulative Receipts $1,100,175 $1,146,850 $1,193,525 $1,240,200 $1,286,875 $1,333,550 $1,380,225 $1,426,900 $1,473,575 $1,520,250 COMMENTS ON THE REPLACEMENT RESERVE ANALYSIS This Replacement Reserve Study has been developed in compliance with the Community Associations Institute, National Reserve Study Standards, for a Level One Study - Full Service. Newton Parish has 150 units. The type of property is HOA. Our calculations assume that Replacement Reserves are not subject to tax.

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Replacement Reserve Inventory - Page B1 REPLACEMENT RESERVE INVENTORY GENERAL INFORMATION Newton Parish - Replacement Reserve Inventory identifies 149 items. Two types of items are identified, Projected Replacements and Excluded Items: PROJECTED REPLACEMENTS. 113 of the items are Projected Replacements and the periodic replacements of these items are scheduled for funding from Replacement Reserves. The Projected Replacements have an estimated one-time replacement cost of $3,375,021. Replacements totaling $3,800,484 are scheduled in the Replacement Reserve Inventory over the 30-year Study Period. Projected Replacements are the replacement of commonly owned physical assets that require periodic replacement and whose replacement is to be funded from Replacement Reserves. EXCLUDED ITEMS. 36 of the items are Excluded Items, and expenditures for these items are NOT scheduled for funding from Replacement Reserves. The accuracy of the calculations made in the Replacement Reserve Analysis is dependent on expenditures NOT being made for Excluded Items. The Excluded Items are listed in the Replacement Reserve Inventory to identify specific items and categories of items that are not to be funded from Replacement Reserves. There are multiple categories of items that are typically excluded from funding by Replacement Reserves, including but not limited to: Tax Code. The United States Tax Code grants very favorable tax status to Replacement Reserves, conditioned on expenditures being made within certain guidelines. These guidelines typically exclude maintenance activities, partial replacements, repairs, capital improvements, and one-time only replacements. Value. Items with a replacement cost of less that $1,000 are typically excluded from funding from Replacement Reserves. This exclusion is made to accurately reflect how Replacement Reserves are administered. If the Association has selected an alternative level, it will be noted in the Replacement Reserve Inventory - General Comments on Page B2. Long-lived Items. Items that when properly maintained, can be assumed to have a life equal to the property as a whole, are typically excluded from the Replacement Reserve Inventory. Unit improvements. Items located on property owned by a single unit and where the items serve a single unit are generally assumed to be the responsibility of that unit, not the Association. Other non-common improvements. Items owned by the local government, public and private utility companies, the United States Postal Service, Master Associations, state and local highway authorities, etc., may be installed on property that is owned by the Association. These types of items are generally not the responsibility of the Association and are excluded from the Replacement Reserve Inventory. The rationale for the exclusion of an item from funding by Replacement Reserves is discussed in more detail in the 'Comments' section of it's page of the Replacement Reserve Inventory. CATEGORIES. The 149 items included in the Newton Parish Replacement Reserve Inventory are divided into 17 major categories. Each category is printed on a separate page, Pages B3 to B18. LEVEL OF SERVICE. This Replacement Reserve Inventory has been developed in compliance with the standards established for a Level One Study - Full Service, as defined by the National Reserve Study Standards, established in 1998 by Community Associations Institute, which states: A Level I - Full Service Reserve Study includes the computation of complete component inventory information regarding commonly owned components provided by the property manager, quantities derived from field measurements and/or quantity takeoffs from to-scale engineering drawings that may be made available. The condition of all components is ascertained from a visual inspection of each component by the analyst. The life expectancy and the value of the components are provided based on these observations and the funding status and funding plan are then derived from analysis of this data.

Replacement Reserve Inventory - Page B2 REPLACEMENT RESERVE INVENTORY - GENERAL INFORMATION (cont'd) INVENTORY DATA. Each of the 113 Projected Replacements listed in the Replacement Reserve Inventory includes the following data: Item Number. The Item Number is assigned sequentially and is intended for identification purposes only. Item Description. We have named each item included in the Inventory. Where the name of the item and the category are not sufficient to specifically identify the item, we have included additional information in the Comments section at the bottom of the page. Units. We have used standard abbreviations to identify the number of units including SF-square feet, FT-feet, SY-square yard, LS-lump sum, EA-each, and PR-pair. Nonstandard abbreviations are noted in the Comments section on the page on which the abbreviation is used. Number of Units. The methods used to develop the quantities are discussed in "Level of Service" above. Unit Replacement Cost. We use two sources to develop the unit cost data shown in the Inventory; industry standard estimating manuals published by R. S. Means Company, Inc., and data that we have developed based upon our experience with similar replacement projects. We frequently use our best professional judgment to modify these values to reflect conditions at the site that we believe will affect the unit costs. Actual Replacement Costs may vary substantially from our estimates because of unforeseen demolition costs, engineering and architectural fees, timing of the replacement, etc. Normal Economic Life (Yrs). The number of years that a new and properly installed item should be expected to remain in service. Economic Life Remaining (Yrs). The estimated number of years before an item will need to be replaced. In "normal" conditions, this could be calculated by subtracting the age of the item from the Normal Economic Life of the item, but only rarely do physical assets age "normally". Some items may have longer or shorter lives depending on many factors such as environment, initial quality of the item, maintenance, etc. Total Replacement Cost. This is calculated by multiplying the Unit Replacement Cost by the Number of Units. Each of the 36 Excluded Items includes the Item Description, Units, and Number of Units. Many of the Excluded Items are listed as a 'Lump Sum' with a quantity of 1. For the Excluded Items, this indicates that all of the items identified by the 'Item Description' are excluded from funding by Replacement Reserves. REVIEW OF EXPENDITURES. All expenditures from Replacement Reserves should be made only after consultation with an accounting professional. PARTIAL FUNDING. Items may have been included in the Replacement Reserve Inventory at less than 100 percent of their full quantity and/or replacement cost. This is done on items that will never be replaced in their entirety, but which may require periodic replacements over an extended period of time. The assumptions that provide the basis for any partial funding are noted on in the Comments section.

Replacement Reserve Inventory - Page B3 CONCRETE SIDEWALK AND STEPS PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 1 Concrete flatwork (6%) sf 1,397 $7.50 60 6 2 $10,478 2 Concrete flatwork (6%) sf 1,397 $7.50 60 12 2 $10,478 3 Concrete flatwork (6%) sf 1,397 $7.50 60 18 2 $10,478 4 Concrete flatwork (6%) sf 1,397 $7.50 60 24 2 $10,478 5 Concrete flatwork (6%) sf 1,397 $7.50 60 30 2 $10,478 6 Concrete flatwork (6%) sf 1,397 $7.50 60 36 2 $10,478 7 Concrete flatwork (6%) sf 1,397 $7.50 60 42 2 $10,478 8 Concrete flatwork (6%) sf 1,397 $7.50 60 48 2 $10,478 9 Concrete flatwork (6%) sf 1,397 $7.50 60 54 2 $10,478 10 Concrete flatwork (6%) sf 1,397 $7.50 60 60 2 $10,478 11 Concrete steps (6%) lf 19 $90.00 60 3 2 $1,728 12 Concrete steps (6%) lf 19 $90.00 60 9 2 $1,728 13 Concrete steps (6%) lf 19 $90.00 60 15 2 $1,728 14 Concrete steps (6%) lf 19 $90.00 60 21 2 $1,728 15 Concrete steps (6%) lf 19 $90.00 60 27 2 $1,728 16 Concrete steps (6%) lf 19 $90.00 60 33 2 $1,728 17 Concrete steps (6%) lf 19 $90.00 60 39 2 $1,728 18 Concrete steps (6%) lf 19 $90.00 60 45 2 $1,728 19 Concrete steps (6%) lf 19 $90.00 60 51 2 $1,728 20 Concrete steps (6%) lf 19 $90.00 60 57 2 $1,728 CONCRETE SIDEWALK AND STEPS - Replacement Costs - Subtotal $122,058 CONCRETE SIDEWALK AND STEPS COMMENTS

Replacement Reserve Inventory - Page B4 BRICK STEPS PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 21 Brick steps (6%) lf 565 $60.00 40 5 2 $33,912 22 Brick steps (6%) lf 565 $60.00 40 10 2 $33,912 23 Brick steps (6%) lf 565 $60.00 40 15 2 $33,912 24 Brick steps (6%) lf 565 $60.00 40 20 2 $33,912 25 Brick steps (6%) lf 565 $60.00 40 25 2 $33,912 26 Brick steps (6%) lf 565 $60.00 40 35 2 $33,912 27 Brick steps (6%) lf 565 $60.00 40 35 2 $33,912 28 Brick steps (6%) lf 565 $60.00 40 40 2 $33,912 BRICK STEPS - Replacement Costs - Subtotal $271,296 BRICK STEPS COMMENTS

Replacement Reserve Inventory - Page B5 ASPHALT PAVEMENT PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 29 Penny Hill Lane asphalt sf 33,222 $1.45 20 5 2 $48,172 30 Seal coat Penny Hill Lane sf 33,222 $0.16 5 none 2 $5,316 31 Brynwick Place asphalt sf 6,422 $1.45 20 8 2 $9,312 32 Seal coat Brynwick Place sf 6,422 $0.16 5 3 2 $1,028 33 Ashbury Court asphalt sf 11,290 $1.45 20 11 2 $16,371 34 Seal coat Ashbury Court sf 11,290 $0.16 5 1 2 $1,806 35 Sweet Bay Lane asphalt sf 37,900 $1.45 20 10 2 $54,955 36 Seal coat Sweet Bay Lane sf 37,900 $0.16 5 none 2 $6,064 37 No name off of Sweet Bay asphalt sf 5,418 $1.45 20 13 2 $7,856 38 Seal coat no name sf 5,418 $0.16 5 3 2 $867 39 Galloway Court asphalt sf 15,525 $1.45 20 6 2 $22,511 40 Seal coat Galloway Court sf 15,525 $0.16 5 1 2 $2,484 41 Bracken Court asphalt sf 25,650 $1.45 20 7 2 $37,193 42 Seal coat Bracken Court sf 25,650 $0.16 5 2 2 $4,104 43 Weatherburn Lane asphalt sf 39,262 $1.45 20 9 2 $56,930 44 Seal coat Weatherburn Lane sf 39,262 $0.16 5 4 2 $6,282 ASPHALT PAVEMENT - Replacement Costs - Subtotal $281,249 ASPHALT PAVEMENT COMMENTS We have assumed that the Association will replace the asphalt pavement by the installation of a 2 inch thick overlay. The pavement will need to be milled prior to the installation of the overlay. Milling and the cost of minor repairs (5 to 10 percent of the total area) to the base materials and bearing soils beneath the pavement is included in the cost shown above.

Replacement Reserve Inventory - Page B6 SITE FACILITIES PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 45 Wythe Circle asphalt sf 18,822 $1.45 20 10 2 $27,292 46 Seal coat Wythe Circle sf 18,822 $0.16 5 none 2 $3,012 47 Storage shed roof sf 187 $3.90 20 10 2 $730 48 Storage shed siding sf 416 $3.50 15 5 2 $1,456 49 Community sign ea 2 $1,260.00 15 5 2 $2,520 50 Mailbox clusters ea 13 $1,800.00 20 4 2 $23,400 51 Wood retaining wall sf 261 $32.00 20 3 2 $8,352 SITE FACILITIES - Replacement Costs - Subtotal $66,762 SITE FACILITIES COMMENTS Comprehensive drawings detailing the components of the systems listed above were not available for our review. We have included the estimated cost of the systems based upon our experience with other similar communities. We have assumed that 10 percent of the system(s) will require replacement every 20 years. In the future, this assumption and the estimated costs should be adjusted based upon actual experience at the community.

Replacement Reserve Inventory - Page B7 SITE UTILITIES PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 52 Sanitary sewer - mains (10%) LS 1 $23,250.00 20 10 2 $23,250 53 Domestic water - mains (10%) LS 1 $14,250.00 20 10 2 $14,250 54 Storm water - structure & pipe (10%) LS 1 $27,750.00 20 10 2 $27,750 SITE UTILITIES - Replacement Costs - Subtotal $65,250 SITE UTILITIES COMMENTS

Replacement Reserve Inventory - Page B8 TOWNHOUSE & SINGLE-FAMILY EXTERIORS PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 55 Asphalt shingles, 25% sf 37,951 $3.90 20 14 2 $148,007 56 Asphalt shingles, 25% sf 37,951 $3.90 20 16 2 $148,007 57 Asphalt shingles, 25% sf 37,951 $3.90 20 18 2 $148,007 58 Asphalt shingles, 25% sf 37,951 $3.90 20 20 2 $148,007 59 Gutter and downspouts, 25% ft 3,699 $4.50 20 14 2 $16,643 60 Gutter and downspouts, 25% ft 3,699 $4.50 20 16 2 $16,643 61 Gutter and downspouts, 25% ft 3,699 $4.50 20 18 2 $16,643 62 Gutter and downspouts, 25% ft 3,699 $4.50 20 20 2 $16,643 63 Siding, 10% sf 26,729 $6.00 40 2 2 $160,376 64 Siding, 10% sf 26,729 $6.00 40 4 2 $160,376 65 Siding, 10% sf 26,729 $6.00 40 6 2 $160,376 66 Siding, 10% sf 26,729 $6.00 40 8 2 $160,376 67 Siding, 10% sf 26,729 $6.00 40 10 2 $160,376 68 Siding, 10% sf 26,729 $6.00 40 12 2 $160,376 69 Siding, 10% sf 26,729 $6.00 40 14 2 $160,376 70 Siding, 10% sf 26,729 $6.00 40 16 2 $160,376 71 Siding, 10% sf 26,729 $6.00 40 18 2 $160,376 72 Siding, 10% sf 26,729 $6.00 40 20 2 $160,376 TOWNHOUSE & SINGLE-FAMILY EXTERIORS - Replacement Costs - Subtotal $2,262,365 TOWNHOUSE & SINGLE-FAMILY EXTERIORS COMMENTS We have assumed that the masonite siding will be replaced with a cement board siding.

Replacement Reserve Inventory - Page B9 TOWNHOUSE & SINGLE-FAMILY EXTERIORS PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 73 Window shutters, 10% pr 46 $120.00 15 none 2 $5,484 74 Window shutters, 10% pr 46 $120.00 15 2 2 $5,484 75 Window shutters, 10% pr 46 $120.00 15 4 2 $5,484 76 Window shutters, 10% pr 46 $120.00 15 6 2 $5,484 77 Window shutters, 10% pr 46 $120.00 15 8 2 $5,484 78 Window shutters, 10% pr 46 $120.00 15 10 2 $5,484 79 Window shutters, 10% pr 46 $120.00 15 12 2 $5,484 80 Window shutters, 10% pr 46 $120.00 15 14 2 $5,484 81 Window shutters, 10% pr 46 $120.00 15 16 2 $5,484 82 Window shutters, 10% pr 46 $120.00 15 18 2 $5,484 83 Masonry tuckpointing, 10% sf 4,939 $5.00 10 5 2 $24,696 84 Chimney caps ea 150 $125.00 25 23 2 $18,750 TOWNHOUSE & SINGLE-FAMILY EXTERIORS - Replacement Costs - Subtotal $98,286 TOWNHOUSE & SINGLE-FAMILY EXTERIORS COMMENTS

Replacement Reserve Inventory - Page B10 SWIMMING POOL PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 85 Swimming pool structure sf 920 $70.00 45 21 2 $64,400 86 Swimming pool finish sf 920 $3.50 7 1 2 $3,220 87 Swimming pool waterline tile lf 132 $40.00 15 1 2 $5,280 88 Swimming pool coping, brick lf 132 15 1 2 89 Swimming pool filter/chlorinator ls 1 $5,500.00 20 10 2 $5,500 90 Swimming pool valves & plumbing sf 920 $2.00 20 10 2 $1,840 91 Swimming pool pump ea 1 $2,400.00 10 7 2 $2,400 92 Swimming pool concrete deck, 25% sf 801 $10.25 30 6 2 $8,213 93 Swimming pool concrete deck, 25% sf 801 $10.25 30 12 2 $8,213 94 Swimming pool concrete deck, 25% sf 801 $10.25 30 18 2 $8,213 95 Swimming pool concrete deck, 25% sf 801 $10.25 30 24 2 $8,213 96 Swimming pool furniture (25%) ls 1 $640.00 8 1 2 $640 97 Swimming pool furniture (25%) ls 1 $640.00 8 3 2 $640 98 Swimming pool furniture (25%) ls 1 $640.00 8 5 2 $640 99 Swimming pool furniture (25%) ls 1 $640.00 8 7 2 $640 100 Pool fence lf 230 $14.00 15 10 2 $3,220 SWIMMING POOL - Replacement Costs - Subtotal $121,271 SWIMMING POOL COMMENTS We have assumed that the project to replace the pool deck will include the replacement of the plumbing and electrical systems installed beneath the pavement.

Replacement Reserve Inventory - Page B11 POOL BUILDING PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 101 Pool building roof sf 1,142 $3.90 20 15 2 $4,455 102 Pool building gutter & downspouts lf 148 $4.50 20 15 2 $666 103 Pool building soffit sf 432 $4.50 20 5 2 $1,944 104 Pool building siding sf 380 $6.00 40 5 2 $2,280 105 Pool building brick tuckpointing sf 640 $5.00 40 16 2 $3,200 106 Pool building doors ea 5 $550.00 20 4 2 $2,750 107 Pool building restroom fixtures ls 1 $4,000.00 20 10 2 $4,000 108 Pool building foot bridge surface sf 135 $7.54 15 1 2 $1,018 109 Pool building foot bridge structure sf 135 $21.00 30 16 2 $2,835 110 Pool building foot bridge railing lf 54 $11.00 15 1 2 $594 POOL BUILDING - Replacement Costs - Subtotal $23,742 POOL BUILDING COMMENTS

Replacement Reserve Inventory - Page B12 tennis court PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 111 Tennis court - base asphalt sf 12,840 $3.50 15 none 2 $44,940 112 Tennis court - color coat sf 12,840 $0.75 5 none 2 $9,630 113 Tennis court - fence ft 454 $18.00 15 none 2 $8,172 tennis court - Replacement Costs - Subtotal $62,742 tennis court COMMENTS Tot lots and tot lot equipment should be evaluated annually by a playground safety specialist for compliance with the Consumer Product Safety Commission, Handbook for Public Playground Safety. Defects should be corrected immediately to protect the users of the facilities from potential injury and the Association from potential liability for those injuries.

Replacement Reserve Inventory - Page B13 VALUATION EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Site lighting fixtures ls 1 3 EXCLUDED Miscellaneous signage ls 1 3 EXCLUDED Electric heaters ls 1 3 EXCLUDED Tennis court posts and nets ls 1 3 EXCLUDED VALUATION EXCLUSIONS COMMENTS Valuation Exclusions. For ease of administration of the Replacement Reserves and to reflect accurately how Replacement Reserves are administered, items with a dollar value less than $1,000.00 have not been scheduled for funding from Replacement Reserves. Examples of items excluded from funding by Replacement Reserves by this standard are listed above. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

Replacement Reserve Inventory - Page B14 LONG-LIFE EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Masonry features ls 1 3 EXCLUDED Miscellaneous culverts ls 1 3 EXCLUDED Exterior brick veneer ls 1 3 EXCLUDED Building foundation(s) ls 1 3 EXCLUDED Concrete floor slabs (interior) ls 1 3 EXCLUDED Wall, floor, & roof structure ls 1 3 EXCLUDED Common element electrical services ls 1 3 EXCLUDED LONG-LIFE EXCLUSIONS COMMENTS Long Life Exclusions. Components that when properly maintained, can be assumed to have a life equal to the property as a whole, are normally excluded from the Replacement Reserve Inventory. Examples of items excluded from funding by Replacement Reserves by this standard are listed above. Exterior masonry is generally assumed to have and unlimited economic life but periodic tuckpointing is required and we have included this for funding in the Replacement Reserve Inventory. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

Replacement Reserve Inventory - Page B15 UNIT IMPROVEMENTS EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Domestic water pipes serving one unit ls 1 3 EXCLUDED Sanitary sewers serving one unit ls 1 3 EXCLUDED Electrical wiring serving one unit ls 1 3 EXCLUDED Gas service serving one unit ls 1 3 EXCLUDED Cable TV service serving one unit ls 1 3 EXCLUDED Telephone service serving one unit ls 1 3 EXCLUDED Stairs on an individual lot ls 1 3 EXCLUDED Fence on an individual lot ls 1 3 EXCLUDED Unit windows & doors ls 1 3 EXCLUDED Unit deck, patio, and/or balcony ls 1 3 EXCLUDED Unit interior ls 1 3 EXCLUDED UNIT IMPROVEMENTS EXCLUSIONS COMMENTS Unit improvement Exclusions. We understand that the elements of the project that relate to a single unit are the responsibility of that unit owner. Examples of items excluded from funding by Replacement Reserves by this standard are listed above. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

Replacement Reserve Inventory - Page B16 UTILITY EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Primary electric feeds ls 1 3 EXCLUDED Electric transformers ls 1 3 EXCLUDED Cable TV systems and structures ls 1 3 EXCLUDED Telephone cables and structures ls 1 3 EXCLUDED Gas mains and meters ls 1 3 EXCLUDED UTILITY EXCLUSIONS COMMENTS Utility Exclusions. Many improvements owned by utility companies are on property owned by the Association. We have assumed that repair, maintenance, and replacements of these components will be done at the expense of the appropriate utility company. Examples of items excluded from funding Replacement Reserves by this standard are listed above. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

Replacement Reserve Inventory - Page B17 MAINTENANCE AND REPAIR EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Cleaning of asphalt pavement ls 1 3 EXCLUDED Painting of curbs ls 1 3 EXCLUDED Striping of parking spaces ls 1 3 EXCLUDED Numbering of parking spaces ls 1 3 EXCLUDED Landscaping and site grading ls 1 3 EXCLUDED Exterior painting ls 1 3 EXCLUDED MAINTENANCE AND REPAIR EXCLUSIONS COMMENTS Maintenance activities, one-time-only repairs, and capitol improvements. These activities are NOT appropriately funded from Replacement Reserves. The inclusion of such component in the Replacement Reserve Inventory could jeopardize the special tax status of ALL Replacement Reserves, exposing the Association to significant tax liabilities. We recommend that the Board of Directors discuss these exclusions and Revenue Ruling 75-370 with a Certified Public Accountant. Examples of items excluded from funding by Replacement Reserves by this standard are listed above. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

Replacement Reserve Inventory - Page B18 GOVERNMENT EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) State maintained roads ls 1 3 EXCLUDED Curb & gutter at State roads ls 1 3 EXCLUDED Sidewalks at state roads ls 1 3 EXCLUDED GOVERNMENT EXCLUSIONS COMMENTS Government Exclusions. We have assumed that some of the improvements installed on property owned by the Association will be maintained by the local government. Examples of items excluded from funding by Replacement Reserves by this standard are listed above. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

Projected Annual Replacements - Page C1 PROJECTED ANNUAL REPLACEMENTS GENERAL INFORMATION CALENDAR OF ANNUAL REPLACEMENTS. The 113 Projected Replacements in the Newton Parish Replacement Reserve Inventory whose replacement is scheduled to be funded from Replacement Reserves are broken down on a year-by-year basis, beginning on Page C2. REPLACEMENT RESERVE ANALYSIS AND INVENTORY POLICES, PROCEDURES, AND ADMINISTRATION REVISIONS. Revisions will be made to the Replacement Reserve Analysis and Replacement Reserve Inventory in accordance with the written instructions of the Board of Directors. No additional charge is incurred for the first revision, if requested in writing within three months of the date of the Replacement Reserve Study. It is our policy to provide revisions in electronic (Adobe PDF) format only. CONFLICT OF INTEREST. Neither Miller - Dodson Associates nor the Reserve Analyst has any prior or existing relationship with this Association which would represent a real or perceived conflict of interest. RELIANCE ON DATA PROVIDED BY THE CLIENT. Information provided by an official representative of the Association regarding financial, physical conditions, quality, or historical issues is deemed reliable. INTENT. This Replacement Reserve Study is a reflection of the information provided by the Association and the visual evaluations of the Analyst. It has been prepared for the sole use of the Association and is not for the purpose of performing an audit, quality/forensic analyses, or background checks of historical records. PREVIOUS REPLACEMENTS. Information provided to Miller - Dodson Associates regarding prior replacements is considered to be accurate and reliable. Our visual evaluation is not a project audit or quality inspection. UPDATING. In the first two or possibly three years after the completion of a Level One Replacement Reserve Study, we recommend the Association review and revise the Replacement Reserve Analysis and Inventory annually to take into account replacements which have occurred and known changes in replacement costs. This can frequently be handled as a Level Two or Level Three Study (as defined by the Community Associations Institute), unless the Association has completed major replacement projects. A full analysis (Level One) based on a comprehensive visual evaluation of the site should be accomplished every three to five years or after each major replacement project. EXPERIENCE WITH FUTURE REPLACEMENTS. The Calendar of Annual Projected Replacements, lists replacements we have projected to occur over the next thirty years, begins on Page C2. Actual experience in replacing the items may differ significantly from the cost estimates and time frames shown because of conditions beyond our control. These differences may be caused by maintenance practices, inflation, variations in pricing and market conditions, future technological developments, regulatory actions, acts of God, and luck. Some items may function normally during our visual evaluation and then fail without notice. REVIEW OF THE REPLACEMENT RESERVE STUDY. For this study to be effective, it should be reviewed by the Newton Parish Board of Directors, those responsible for the management of the items included in the Replacement Reserve Inventory, and the accounting professionals employed by the Association.

Projected Annual Replacements - Page C2 PROJECTED REPLACEMENTS - YEARS 1 TO 6 Item 2008 $ Item 2009 $ Item 2010 $ 30 Seal coat Penny Hill Lane $5,316 34 Seal coat Ashbury Court $1,806 42 Seal coat Bracken Court $4,104 36 Seal coat Sweet Bay Lane $6,064 40 Seal coat Galloway Court $2,484 63 Siding, 10% $160,376 46 Seal coat Wythe Circle $3,012 86 Swimming pool finish $3,220 74 Window shutters, 10% $5,484 73 Window shutters, 10% $5,484 87 Swimming pool waterline tile $5,280 111 Tennis court - base asphalt $44,940 96 Swimming pool furniture (25 $640 112 Tennis court - color coat $9,630 108 Pool building foot bridge sur $1,018 113 Tennis court - fence $8,172 110 Pool building foot bridge rail $594 Total Scheduled Replacements $82,617 Total Scheduled Replacements $15,042 Total Scheduled Replacements $169,964 Item 2011 $ Item 2012 $ Item 2013 $ 11 Concrete steps (6%) $1,728 44 Seal coat Weatherburn Lane $6,282 21 Brick steps (6%) $33,912 32 Seal coat Brynwick Place $1,028 50 Mailbox clusters $23,400 29 Penny Hill Lane asphalt $48,172 38 Seal coat no name $867 64 Siding, 10% $160,376 30 Seal coat Penny Hill Lane $5,316 51 Wood retaining wall $8,352 75 Window shutters, 10% $5,484 36 Seal coat Sweet Bay Lane $6,064 97 Swimming pool furniture (25 $640 106 Pool building doors $2,750 46 Seal coat Wythe Circle $3,012 48 Storage shed siding $1,456 49 Community sign $2,520 83 Masonry tuckpointing, 10% $24,696 98 Swimming pool furniture (25 $640 103 Pool building soffit $1,944 104 Pool building siding $2,280 112 Tennis court - color coat $9,630 Total Scheduled Replacements $12,614 Total Scheduled Replacements $198,292 Total Scheduled Replacements $139,641

Projected Annual Replacements - Page C3 PROJECTED REPLACEMENTS - YEARS 7 TO 12 Item 2014 $ Item 2015 $ Item 2016 $ 1 Concrete flatwork (6%) $10,478 41 Bracken Court asphalt $37,193 31 Brynwick Place asphalt $9,312 34 Seal coat Ashbury Court $1,806 42 Seal coat Bracken Court $4,104 32 Seal coat Brynwick Place $1,028 39 Galloway Court asphalt $22,511 91 Swimming pool pump $2,400 38 Seal coat no name $867 40 Seal coat Galloway Court $2,484 99 Swimming pool furniture (25 $640 66 Siding, 10% $160,376 65 Siding, 10% $160,376 77 Window shutters, 10% $5,484 76 Window shutters, 10% $5,484 86 Swimming pool finish $3,220 92 Swimming pool concrete dec $8,213 Total Scheduled Replacements $211,353 Total Scheduled Replacements $44,337 Total Scheduled Replacements $180,287 Item 2017 $ Item 2018 $ Item 2019 $ 12 Concrete steps (6%) $1,728 22 Brick steps (6%) $33,912 33 Ashbury Court asphalt $16,371 43 Weatherburn Lane asphalt $56,930 30 Seal coat Penny Hill Lane $5,316 34 Seal coat Ashbury Court $1,806 44 Seal coat Weatherburn Lane $6,282 35 Sweet Bay Lane asphalt $54,955 40 Seal coat Galloway Court $2,484 96 Swimming pool furniture (25 $640 36 Seal coat Sweet Bay Lane $6,064 97 Swimming pool furniture (25 $640 45 Wythe Circle asphalt $27,292 46 Seal coat Wythe Circle $3,012 47 Storage shed roof $730 52 Sanitary sewer - mains (10% $23,250 53 Domestic water - mains (10% $14,250 54 Storm water - structure & pip $27,750 67 Siding, 10% $160,376 78 Window shutters, 10% $5,484 89 Swimming pool filter/chlorina $5,500 90 Swimming pool valves & plu $1,840 100 Pool fence $3,220 107 Pool building restroom fixtur $4,000 112 Tennis court - color coat $9,630 Total Scheduled Replacements $65,580 Total Scheduled Replacements $386,580 Total Scheduled Replacements $21,301

Projected Annual Replacements - Page C4 PROJECTED REPLACEMENTS - YEARS 13 TO 18 Item 2020 $ Item 2021 $ Item 2022 $ 2 Concrete flatwork (6%) $10,478 32 Seal coat Brynwick Place $1,028 44 Seal coat Weatherburn Lane $6,282 42 Seal coat Bracken Court $4,104 37 No name off of Sweet Bay a $7,856 55 Asphalt shingles, 25% $148,007 68 Siding, 10% $160,376 38 Seal coat no name $867 59 Gutter and downspouts, 25% $16,643 79 Window shutters, 10% $5,484 98 Swimming pool furniture (25 $640 69 Siding, 10% $160,376 93 Swimming pool concrete dec $8,213 80 Window shutters, 10% $5,484 Total Scheduled Replacements $188,655 Total Scheduled Replacements $10,391 Total Scheduled Replacements $336,793 Item 2023 $ Item 2024 $ Item 2025 $ 13 Concrete steps (6%) $1,728 34 Seal coat Ashbury Court $1,806 42 Seal coat Bracken Court $4,104 23 Brick steps (6%) $33,912 40 Seal coat Galloway Court $2,484 74 Window shutters, 10% $5,484 30 Seal coat Penny Hill Lane $5,316 56 Asphalt shingles, 25% $148,007 91 Swimming pool pump $2,400 36 Seal coat Sweet Bay Lane $6,064 60 Gutter and downspouts, 25% $16,643 96 Swimming pool furniture (25 $640 46 Seal coat Wythe Circle $3,012 70 Siding, 10% $160,376 73 Window shutters, 10% $5,484 81 Window shutters, 10% $5,484 83 Masonry tuckpointing, 10% $24,696 87 Swimming pool waterline tile $5,280 86 Swimming pool finish $3,220 105 Pool building brick tuckpoint $3,200 99 Swimming pool furniture (25 $640 108 Pool building foot bridge sur $1,018 101 Pool building roof $4,455 109 Pool building foot bridge stru $2,835 102 Pool building gutter & downs $666 110 Pool building foot bridge rail $594 111 Tennis court - base asphalt $44,940 112 Tennis court - color coat $9,630 113 Tennis court - fence $8,172 Total Scheduled Replacements $151,934 Total Scheduled Replacements $347,728 Total Scheduled Replacements $12,628

Projected Annual Replacements - Page C5 PROJECTED REPLACEMENTS - YEARS 19 TO 24 Item 2026 $ Item 2027 $ Item 2028 $ 3 Concrete flatwork (6%) $10,478 44 Seal coat Weatherburn Lane $6,282 24 Brick steps (6%) $33,912 32 Seal coat Brynwick Place $1,028 75 Window shutters, 10% $5,484 30 Seal coat Penny Hill Lane $5,316 38 Seal coat no name $867 97 Swimming pool furniture (25 $640 36 Seal coat Sweet Bay Lane $6,064 57 Asphalt shingles, 25% $148,007 46 Seal coat Wythe Circle $3,012 61 Gutter and downspouts, 25% $16,643 48 Storage shed siding $1,456 71 Siding, 10% $160,376 49 Community sign $2,520 82 Window shutters, 10% $5,484 58 Asphalt shingles, 25% $148,007 94 Swimming pool concrete dec $8,213 62 Gutter and downspouts, 25% $16,643 72 Siding, 10% $160,376 112 Tennis court - color coat $9,630 Total Scheduled Replacements $351,096 Total Scheduled Replacements $12,406 Total Scheduled Replacements $386,936 Item 2029 $ Item 2030 $ Item 2031 $ 14 Concrete steps (6%) $1,728 42 Seal coat Bracken Court $4,104 32 Seal coat Brynwick Place $1,028 34 Seal coat Ashbury Court $1,806 86 Swimming pool finish $3,220 38 Seal coat no name $867 40 Seal coat Galloway Court $2,484 51 Wood retaining wall $8,352 76 Window shutters, 10% $5,484 77 Window shutters, 10% $5,484 85 Swimming pool structure $64,400 84 Chimney caps $18,750 98 Swimming pool furniture (25 $640 99 Swimming pool furniture (25 $640 Total Scheduled Replacements $76,542 Total Scheduled Replacements $7,324 Total Scheduled Replacements $35,120

Projected Annual Replacements - Page C6 PROJECTED REPLACEMENTS - YEARS 25 TO 30 Item 2032 $ Item 2033 $ Item 2034 $ 4 Concrete flatwork (6%) $10,478 25 Brick steps (6%) $33,912 34 Seal coat Ashbury Court $1,806 44 Seal coat Weatherburn Lane $6,282 29 Penny Hill Lane asphalt $48,172 39 Galloway Court asphalt $22,511 50 Mailbox clusters $23,400 30 Seal coat Penny Hill Lane $5,316 40 Seal coat Galloway Court $2,484 95 Swimming pool concrete dec $8,213 36 Seal coat Sweet Bay Lane $6,064 106 Pool building doors $2,750 46 Seal coat Wythe Circle $3,012 78 Window shutters, 10% $5,484 83 Masonry tuckpointing, 10% $24,696 96 Swimming pool furniture (25 $640 100 Pool fence $3,220 103 Pool building soffit $1,944 112 Tennis court - color coat $9,630 Total Scheduled Replacements $51,123 Total Scheduled Replacements $142,089 Total Scheduled Replacements $26,802 Item 2035 $ Item 2036 $ Item 2037 $ 15 Concrete steps (6%) $1,728 31 Brynwick Place asphalt $9,312 43 Weatherburn Lane asphalt $56,930 41 Bracken Court asphalt $37,193 32 Seal coat Brynwick Place $1,028 44 Seal coat Weatherburn Lane $6,282 42 Seal coat Bracken Court $4,104 38 Seal coat no name $867 80 Window shutters, 10% $5,484 79 Window shutters, 10% $5,484 86 Swimming pool finish $3,220 91 Swimming pool pump $2,400 98 Swimming pool furniture (25 $640 97 Swimming pool furniture (25 $640 Total Scheduled Replacements $51,549 Total Scheduled Replacements $11,206 Total Scheduled Replacements $72,556

Miller - Dodson Associates, Inc. Condition Assessment - Page D1 Newton Parish February 6, 2008 CONDITION ASSESSMENT General Comments. Miller - Dodson Associates conducted a Reserve Study at Newton Parish in February, 2008. Newton Parish is in average condition for a condominium community constructed in 1984. A review of the Replacement Reserve Inventory will show that we are anticipating most of the components achieving their normal economic lives. The following comments pertain to the larger, more significant components in the Replacement Reserve Inventory and to those items that are unique or deserving of attention because of their condition or the manner in which they have been treated in the Replacement Reserve Analysis or Inventory. SITE IMPROVEMENTS Concrete Flatwork. The concrete flatwork includes the community sidewalks and unit lead walks. The Association maintains an inventory of approximately 23,283 square feet of concrete flatwork. The overall condition of the concrete flatwork is fair with multiple areas of defects. The defects noted include the following: Cracking. There are multiple sections of the concrete flatwork that have cracked creating trip hazards. Heaving/Settlement. Sections of the concrete flatwork have heaved or settled relative to their adjacent sections, creating trip hazards. Scaling and Flaking. Several sections of the concrete flatwork are scaling and flaking. Scaling and flaking is the loss of the surface mortar in concrete. It is typically caused by water freezing within the concrete. Once started, scaling and flaking can be expected to continue to grow as a result of exposure of the concrete to freeze-thaw cycles. These scaled sections are creating trip hazards. The standards we used for recommending replacement are as follows: 1. Trip hazard, 0.5 inch height difference. 2. Severe cracking. 3. Severe spalling 4. Uneven riser heights on steps. 5. Steps with risers in excess of 8.25 inches. Because it is highly unlikely that all of the community s concrete components will fail and require replacement in the period of the study, we have programmed funds for the replacement of 60% of the inventory and spread those funds over a 60-year timeframe to reflect the incremental nature of this work. This approach assumes a failure rate of 1% per year. Concrete Steps. The community has a several sets of exterior steps that are constructed from poured concrete. The steps currently are in good condition. The standards we used for recommending replacement are as follows: Trip hazard, 0.5 inch height difference. Severe cracking. Severe spalling Uneven riser heights on steps. Steps with risers in excess of 8.25 inches.

Miller - Dodson Associates, Inc. Condition Assessment - Page D2 Newton Parish February 6, 2008 Because it is highly unlikely that all of the community s concrete components will fail and require replacement in the period of the study, we have programmed funds for the replacement of 60% of the inventory and spread those funds over a 60-year timeframe to reflect the incremental nature of this work. This approach assumes a failure rate of 1% per year. Brick Steps. The community has exterior steps that are of brick construction at the entrance to most of the units. The steps vary in condition from good to poor with a number of defects. The defects noted include the following: Failed Mortar Joints. A number of the mortar joints between the bricks have failed and are in need of tuckpointing. Cracks. Movement of the base material under the bricks has resulted in the development of cracks in a number of the brick steps. Broken Nosing. We noted a number of locations where the nosing of the brick steps was damaged, creating an uneven edge that poses a trip hazard Settlement. We noted several locations where steps have settled, creating uneven surfaces that pose a trip hazard. Because it is highly unlikely that all of the community s brick steps will fail and require replacement in the period of the study, we have programmed funds for the replacement of 60% of the inventory and spread those funds over a 60-year timeframe to reflect the incremental nature of this work. This approach assumes a failure rate of 1% per year. Asphalt Pavement. The site includes asphalt pavement for vehicle access and parking. In general, the asphalt pavement is in fair to poor condition with multiple areas of defects. The Association maintains an inventory of 193,521 square feet of asphalt pavement, including the following streets and parking areas: The defects noted include the following: Location Area (square feet) Penny Hill Lane 33,222 Brynwick Place 6,422 Ashbury Court 11,290 Sweet Bay Lane 37,900 (no name) 5,418 Galloway Court 15,525 Bracken Court 25,650 Weatherburn Lane 39,262 Wythe Circle 18,822 Total: 193,521 Open Cracks. There are multiple locations where open cracks are allowing water to penetrate to the asphalt base and the bearing soils beneath the pavement. This water will erode the base accelerating the deterioration of the asphalt pavement. If the cracks have allowed the deterioration of the base materials and the bearing soil, the damaged areas should be removed and replaced. All other cracks should be cleaned and filled. Alligatoring. There are multiple locations where the asphalt has developed a pattern of cracking known as alligatoring. Alligatoring is the result of an unstable base under the asphalt. Shifting in the base causes the asphalt to crack and shift, forming the cracks that resemble the skin of an alligator. Once these cracks extend through the asphalt, they will allow water to penetrate to the

Miller - Dodson Associates, Inc. Condition Assessment - Page D3 Newton Parish February 6, 2008 base, accelerating the rate of deterioration. The only solution is to remove the defective asphalt and compact the base before new asphalt is installed. Potholes. There are a number of locations where potholes have formed as the result of the failure of the underlying base material or the surface material. Repair will require removal of the asphalt and base material, installation and compaction of new base material, and resurfacing with asphalt. Depressions. There are areas where the asphalt surface is depressed due to deformation in the surface or underlying layers. These depressions may continue to grow with exposure to traffic. Water ponding was noted in several of these areas. Repair will require removal of the asphalt and base material, installation and compaction of new base material, and resurfacing with asphalt. Tree Root Damage. There are locations where roots from trees planted near the asphalt surface have pushed up through the asphalt, causing cracks and heaving. Repair of these areas will require removal of the asphalt and the tree roots. Cracking Along Edges. Sections of the asphalt pavement have developed cracks along their edges as a result of a lack of curbing to hold it in place. The pavement will continue to deteriorate with time. Photo 1 - Typical alligatoring Photo 2 - Typical broken up section As a rule of thumb, asphalt should be overlayed when approximately five percent of the surface area has become cracked or has failed. The normal service life of asphalt pavement is typically 18 to 20 years. In order to maintain the condition of the pavement throughout the community and to insure the longest life of the asphalt, we recommend a systematic and comprehensive maintenance program that includes: 1. Crack Sealing. All cracks should be sealed with an appropriate sealing compound to prevent water infiltration through the asphalt compound into the base. This repair should be done annually. This is an entirely different process from the seal coating discussed below. Crack sealing is normally considered a maintenance activity and is not funded from Reserves. Areas of extensive cracking or deterioration that cannot be made watertight by crack sealing should be cut out and patched. 2. Cleaning. Long-term exposure to oil or gas breaks down asphalt. Because this asphalt pavement is generally not used for long term parking, it is unlikely that frequent cleaning will be necessary. When necessary, spill areas should be cleaned, or if deterioration has penetrated the asphalt, patched. This is a maintenance activity, and we have assumed that it will not be funded from Reserves.

Miller - Dodson Associates, Inc. Condition Assessment - Page D4 Newton Parish February 6, 2008 3. Seal Coating. The asphalt should be seal coated every three to five years. For this maintenance activity to be effective in extending the life of the asphalt, the crack sealing and cleaning of the asphalt, discussed above should be done first. Pricing used in the study is based on a recent contract for a two inch overlay and reflects the current local market. Storage Shed. The association maintains a storage shed by the community pool. We have included the roof and the siding from the shed in the reserve analysis. Mailboxes. The cluster mailboxes located throughout the community are in fair condition, with moderate rust on most units. We have assumed that when the mailboxes are replaced, fiberglass units will be installed. Photo 3 - Typical mailbox cluster Pressure Treated Wood Retaining Wall. The Association maintains a single wood retaining wall. The general condition of the retaining wall is fair to poor. The defects noted include the following: Bowing. We found a number of areas where sections of the retaining walls are bowing outward. Bowing occurs as the result of moderate to severe loading of the wall by the material being supported. If the bowing is allowed to continue, eventually it will lead to the failure of the retaining wall. Correcting bowing requires replacement of the sections of retaining wall and installation of better drainage materials behind the wall. Leaning. We found a number of areas where sections of the retaining walls are leaning. Leaning occurs when the pressure of the material being held in place by the retaining wall is sufficient to cause the wall to shift away from the vertical. Once a retaining wall starts to lean, it is at risk of failing and must be replaced. Rot. We found a number of areas where sections of the retaining walls have moderate rot. Once rotting occurs, those effected sections must be replaced.

Miller - Dodson Associates, Inc. Condition Assessment - Page D5 Newton Parish February 6, 2008 Photo 4 - Wood retaining wall Photo 5 - Rotted section of retaining wall When it becomes necessary to replace these walls, we recommend the Association consider one of the segmental block retaining wall systems instead of the wood construction. These systems are impervious to decay, which occurs even with the pressure treated wood systems. If over time the wall experiences movement, sections of the walls can be re-stacked at a very small portion of the cost of a new wall. These walls have an initial cost 15 to 30 percent greater than wood walls but once installed, they have a service life of 40 years or more. Underground Utilities. The Association is responsible for the maintenance of the underground utility lines, including the water mains and sanitary sewer lines. No engineering drawings were available to accurately determine distances, sizes of lines and materials used for underground components of the system. Accordingly, we have provided an estimate of the approximate replacement cost based on our experience with other communities of similar size and on our inspection of the visible components while on site. Inspection of the underground lines and structures is beyond the scope of work of this study. BUILDING EXTERIORS Asphalt Shingle Roofing. The asphalt shingle roofs are in good condition. We have estimated the remaining useful life of the roofs based on the conditions seen at the site as well as the age of the roofs. We have assumed that when the roofs eventually will require replacement, all roofs will be replaced with 20 year roofs. We have assumed that the gutters and downspouts will be replaced when the roofs are replaced. Due to the large inventory and the varying rates at which the roofing materials will age and require replacement, we have divided the roof inventory into four equal components and spread their replacement over a six year period.

Miller - Dodson Associates, Inc. Condition Assessment - Page D6 Newton Parish February 6, 2008 Masonite Siding. The masonite siding on the buildings is in poor overall condition. We understand that the community has maintained an inventory of replacement sections of siding, but that all sections have now been used. With masonite siding no longer available, cement fiber siding has been customized and used as a replacement on a board by board basis. Defects we noted include the following: Loose Sections. We found numerous areas with loose sections of siding. Loose sections can easily be torn from the building by even moderate winds. It is recommended that all loose sections be reattached as soon as possible. Swelling. There are numerous areas where the masonite siding is swelling along its edges. Swelling in masonite siding is an indication that moisture has penetrated the surface. All boards with swelling will require replacement. Disintegration. There are a number of areas where the masonite siding is disintegrating due to moisture. All damaged boards will require replacement. We recommend that the community consider replacing the masonite siding on a building by building basis with cement fiber siding. This will allow the replacement o take place without having to modify the replacement siding to match the existing siding. Due to the large inventory and the varying rates at which the siding materials will age and require replacement, we have divided the siding inventory into ten equal components and spread their replacement over a twenty year period. Window Shutters. We have phased the replacement of the window shutters to take place at the same time that the siding is replaced. Brickwork. The brickwork on the buildings is in good condition. Brick is usually considered to be a life of structure item and therefore excluded from reserve funding. Because weather and other conditions result in the slow deterioration of the mortar in the brick joints, we have included funding in the Reserve Analysis for tuckpointing. We have assumed that ten percent of the brick will require tuckpointing every ten years. Chimney Caps. All chimney caps were replaced approximately two years ago. We have assumed a 25- year service life for the caps. RECREATIONAL FACILITIES Photo 6 - Damaged sections of siding, typical Swimming Pool. The community operates an outdoor pool of concrete construction with a concrete deck. The concrete deck is not coated. Listed below are the major components of the pool facilities; Pool Shell. The shell for the swimming pool is in good condition. Pool shells normally have a finite life of approximately 45 years. At that time it may not be necessary to replace the entire structure. However, it is prudent to anticipate a major expenditure for replacement of underground lines and sections of the pool. Based on our research, we have found it to be prudent to program $70 per square foot of pool surface to cover these needs. Pool Deck. The pool has a concrete. The overall condition of the deck is good. Because it is highly unlikely that all of the community s concrete pool deck sections will fail and require

Miller - Dodson Associates, Inc. Condition Assessment - Page D7 Newton Parish February 6, 2008 replacement at the same time, we have divided the deck into four equal components in the Reserve Analysis and have spread their replacement over a eighteen year period. Whitecoat. The pool whitecoat is in poor condition. We have assumed a service life of seven years for the pool whitecoat. Coping. The pool is edged with brick coping. The coping is in fair condition. Waterline Tile. The waterline tile is in fair condition. We have assumed that the waterline tile will be replaced or restored when the pool is whitecoated. Pump and Filter System. The filter system is in good operating condition. We have assumed a service life of 20 years for the filter system, and 10 years for the pump. Photo 7 - The community pool Photo 8 - Typical coping section Pool Building. The pool building houses two small restrooms and the pool equipment. Listed below are the major components of the pool building: Roof. The asphalt shingle roof is in good condition. We have estimated the remaining useful life of the roof based on the conditions seen at the site as well as the age of the roof. We have assumed that when the roof eventually will require replacement, it will be replaced with a 20 year roof. We have assumed that the gutters and downspouts will be replaced when the roof is replaced. Photo 9 - The pool building Siding. The pool building also has masonite siding. We recommend that the community consider replacing the masonite siding with cement fiber siding. Fixtures. We have assumed a 20 year service life for the restroom fixtures. Tennis Courts. The community maintains two tennis courts. The overall condition of these courts is poor. Listed below are the major components of the tennis court facilities. Asphalt Pavement. The asphalt pavement for the tennis court is in poor condition with cracks and splits that extend into the playing surface. We have assumed a service life of 20 years for the asphalt.

Miller - Dodson Associates, Inc. Condition Assessment - Page D8 Newton Parish February 6, 2008 Color Coat. The color coat on the tennis courts is in poor condition with some major defects in its finish. Fencing. The fencing installed around the tennis courts is chain link and in good condition. There were no noted defects. We have assumed that the fencing will be replaced when the asphalt pavement is replaced. Photo 10 - Crack between courts Photo 11 - Crack in playing surface This Condition Assessment is based upon our visual survey of the property. The sole purpose of the visual survey was an evaluation of the common elements of the property to ascertain the remaining useful life and the replacement costs of these common elements. Our evaluation assumed that all components met building code requirements in force at the time of construction. Our visual survey was conducted with care by experienced persons, but no warranty or guarantee is expressed or implied. End of Condition Assessment