Central Pointe HOA Level I Reserve Study Report Period 1/01/08 12/31/08 Client Reference Number.... 10870 Property Type...... Mid-Rise Number of Units............ 83 Fiscal Year End....... December 31 Date of Property Inspection..... June 27th, 2007 Inspector...... Robert Forney Report prepared on Tuesday, September 04, 2007
Table of Contents Introduction Executive Summary page 1 Introduction page 2 General Information and Frequently Asked Questions page 3-4 Reserve Analysis Funding Summary page 5 Percent Funded Graph page 6 Component Inventory page 7 Significant Components page 8 Significant Components Graph page 9 Yearly Summary page 10 Yearly Reserve Contributions Graph page 11 Component Funding Information page 12 Yearly Cash Flow page 13 Yearly Reserve Expenditures Graph page 14 Projected Reserve Expenditures by Year page 15-16 Component Evaluation Component Evaluation page 1-28 Glossary of Commonly used Words and Phrases
Executive Summary Central Pointe HOA - ID # 10870 Information to complete this Reserve Study was gathered on June 27th, 2007 by performing an on-site inspection of the common area elements. In addition, we also obtained information by contacting any vendors and/or contractors that have worked on the property recently, as well as communicating with the property representative (BOD Member and/or Community Manager). To the best of our knowledge, the conclusions and recommendations of this report are considered reliable and accurate insofar as the information obtained from these sources. Projected Starting Balance as of January 1, 2008 $15,000 Ideal Reserve Balance as of January 1, 2008 $90,975 Percent Funded as of January 1, 2008 16% Recommended Reserve Contribution (per month) $4,500 Minimum Reserve Contribution (per month) $4,125 Recommended Special Assessment $0 Minimum Recommended Special Assessment $0 Central Pointe HOA is an 83-unit mid-rise community. The property offers a lobby as well as a parking garage and a large patio area on the second floor. Construction on the community was completed in 2007. Currently Programmed Projects There are no projects programmed to occur this year. (See page 15) Major Reserve Expenditures The first major reserve expenditure is programmed to occur in fiscal year 2011. Projects programmed to occur in fiscal year 2011 include repainting the building trim and railings (Comp# 202), and slurry sealing the asphalt parking areas (Comp# 402). We have programmed approximately $63,569 in reserve funds or approximately 35% of fiscal year 2011 s recommended starting balance towards the completion of these projects (see page 10). Significant Reserve Projects The association s significant reserve projects include repainting the building trim/railings (Comp# 202), repainting the building stucco surfaces (Comp# 201), replacing the roofs (Comp# 103), and modernizing the elevators (Comp# 707). The fiscal significance of these components is approximately 24%, 18%, 14%, and 10% respectively (see page 8). A component s significance is calculated by dividing its replacement cost by its useful life. In this way, not only is a component s replacement cost considered but also the frequency of occurrence. These components most significantly contribute to the total monthly reserve contribution. As these components have a high level of fiscal significance the association should properly maintain them to ensure they reach their full useful lives. Reserve Funding In comparing the projected starting reserve balance of $15,000 versus the ideal reserve balance of $90,975 we find the association s reserve fund to be approximately 16% funded. This indicates a relatively weak reserve fund position. In order to continue to strengthen the account fund, we suggest adopting a monthly reserve contribution of $4,500 ($56.96/unit) per month. We have also included a minimum reserve contribution of $4,125 ($52.22/unit) per month. If the contribution falls below this rate, then the reserve fund may fall into a situation where special assessments, deferred maintenance, and lower property values are likely at some point in the future. 1
Introduction Reserve Study Purpose The purpose of this Reserve Study is to provide an educated estimate of the necessary reserve allocation. The detailed schedules will serve as an advanced warning that major projects will need to be addressed in the future. This will allow the Board of Directors to have ample time to obtain competitive estimates and bids that will result in cost savings to the individual homeowners. It will also ensure the physical well-being of the property and ultimately enhance each owner s investment, while limiting the possibility of unexpected major projects that may lead to special assessments. Preparer s Credentials Mr. Forney has been conducting reserve studies for the past five years. After working for a notable national reserve study provider Mr. Forney started Complex Solutions Ltd. in 2001. Complex Solutions provides reserve study consulting services to clients primarily in Nevada, California and Utah. Mr. Forney holds a Bachelor of Science degree in Business Administration from Pepperdine University. Conducted over 300 reserve studies in the last five years. Created the proprietary software and databases used to prepare Complex Solutions reserve studies. This proprietary software gives Complex Solutions the freedom and ability to create reports tailored to the individual clients needs. Projects have ranged in size from small apartment-style condominium communities to 1000+ Planned Unit Communities (PUD). Clients have ranged from developers interested in setting initial reserve accounts for communities under construction to high-rise communities, even an aero park (small airport). Active member of three local chapters of CAI (Nevada, Utah, and Channel Islands, CA). (2) Articles published in Community Interests. Budget Breakdown Every association conducts their business within a budget. There are typically two main parts to this budget, operating and reserves. The operating budget includes all expenses that are fixed on an annual basis. These would include management fees, maintenance fees, utilities, etc. The reserves is primarily made up of capital replacement items such as roofing, fencing, mechanical equipment, etc., that do not normally occur on an annual basis. Typically, the reserve contribution makes up 15% - 40% of the association s total budget. Therefore, reserves are considered to be a major part of the overall monthly association payment. Report Sections The Reserve Analysis Section contains the evaluation of the association s reserve balance, income, and expenses. It includes a finding of the client s current reserve fund status (measured as percent funded) and a recommendation for an appropriate reserve allocation rate (also known as the funding plan). The Component Evaluation Section contains information regarding the physical status and replacement cost of major common area components the association is responsible to maintain. It is important to understand that while the component inventory will remain relatively stable from year to year, the condition assessment and life estimates will most likely vary from year to year. 2
General Information and Frequently Asked Questions Why is it important to perform a Reserve Study? As previously mentioned, the reserve allocation makes up a significant portion of the total monthly dues. This report provides the essential information that is needed to guide the Board of Directors in establishing the budget in order to run the daily operations of your association. It is suggested that a third party professionally prepare the Reserve Study since there is no vested interest in the property. Also, a professional knows what to look for and how to properly develop an accurate and reliable component list. After we have a Reserve Study completed, what do we do with it? Hopefully, you will not look at this report and think it is too cumbersome to understand. Our intention is to make this Reserve Study easy to read and understand. Please take the time to review it carefully and make sure the main ingredients (component information) are complete and accurate. If there are any inaccuracies, please inform us immediately so we may revise the report. Once you feel the report is an accurate tool to work from, use it to help establish your budget for the upcoming fiscal year. The reserve allocation makes up a large portion of the total monthly dues and this report should help you determine the correct amount of money to go into the reserve fund. Additionally, the Reserve Study should act as a guide to obtain proposals in advance of pending projects. This will give you an opportunity to shop around for the best price available. The Reserve Study should be readily available for real estate agents, brokerage firms, and lending institutions for potential future homeowners. As the importance of reserves becomes more of a household term, people are requesting homeowners associations reveal the strength of the reserve fund prior to purchasing a condominium, town home, or any property that belongs to an association. How often do we update or review the Reserve Study? Unfortunately, there is a misconception that these reports are good for an extended period of time since the report has projections for the next 30 years. Just like any major line item in the budget, the Reserve Study should be reviewed each year before the budget is established. Invariably, some assumptions have to be made during the compilation of this analysis. Anticipated events may not materialize and unpredictable circumstances could occur. Deterioration rates and repair/replacement costs will vary from causes that are unforeseen. Earned interest rates may vary from year to year. These variations could alter the content of the Reserve Study. Therefore, this analysis should be reviewed annually, and a property inspection should be conducted at least once every three years. Is it the law to have a Reserve Study conducted? The Government requires reserve analyses in approximately 20 States. Even if it is not currently governed by your State, the chances are very good that the documents of the association require the association to have a reserve fund established. This doesn t mean a Reserve Study is required, but how are you going to know you have enough funds in the account if you don t have the proper information? Some associations look at the Reserve fund and think that $50,000 is a lot of money and they are in good shape. What they don t know is that the roof is going to need to be replaced within 5 years, and the cost of the roof is going to exceed $75,000. So while $50,000 sounds like a lot of money, in reality it won t even cover the cost of a roof, let alone all the other amenities the association is responsible to maintain. What is a Reserve Component versus an Operating Component? A Reserve component is an item that is the responsibility of the association to maintain, has a limited useful life, predictable remaining useful life, typically occurs on a cyclical basis that exceeds 1 year, and costs above a minimum threshold amount. An Operating expense is typically a fixed expense that occurs on an annual basis. For instance, minor repairs to a roof for damage caused by high winds or other weather elements would be considered an Operating expense. However, if the entire roof needs to be replaced because it has reached the end of its life expectancy, then the replacement would be considered a reserve expense. What are the GREY areas of maintenance items that are often seen in a Reserve Study? One of the most popular questions revolves around major maintenance items, such as painting the buildings or seal coating the asphalt. You may hear from your accountant that since painting or seal coating is not replacing a capital 3
item, then it cannot be considered a Reserve issue. However, it is the opinion of several major Reserve Study providers that these items are considered to be major expenses that occur on a cyclical basis. Therefore, it makes it very difficult to ignore a major expense that meets the criteria to be considered a reserve component. Once explained in this context, many accountants tend to agree and will include any expenses, such as these examples, as a reserve component. What happens during the Property Inspection? The Property Inspection was conducted following a review of the documents that were established by the developer identifying all common area assets. In some cases, the Board of Directors at some point may have revised the documents. In either case, the most current set of documents was reviewed prior to inspecting the property. In addition, common area assets may have been reported to Complex Solutions by the client, or by other parties. Estimated life expectancies and life cycles are based upon conditions that were readily accessible and visible at the time of the inspection. We did not destroy any landscape work, building walls, or perform any methods of intrusive investigation during the inspection. In these cases, information may have been obtained by contacting the contractor or vendor that has worked on the property. What is the Financial Analysis? We projected the starting balance by taking the most recent balance statement, adding expected reserve contributions for the rest of the fiscal year, and subtracting any pending projects that will be paid for before the end of the current fiscal year. We compared this number to the ideal reserve balance and arrived at the percent funded level. Measures of strength are as follows: 0% - 30% Funded is considered to be a weak financial position. Associations that fall into this category are subject to special assessments and deferred maintenance, which could lead to lower property values. If the association is in this position, actions should be taken to improve the financial strength of the reserve fund. 31% - 69% Funded is considered a fair financial position. The majority of associations fall into this category. While this doesn t represent financial strength and stability, the likelihood of special assessments and deferred maintenance is diminished. Effort should be taken to continue strengthening the financial position of the reserve fund. 70% - 99% Funded is considered a strong financial position. This indicates financial strength of a reserve fund and every attempt to maintain this level should be a goal of the association. 100% Funded is considered an ideal financial position. This means that the association has the exact amount of funds in the reserve account. 4
Funding Summary Beginning Assumptions # of units 83 Fiscal Year End 31-Dec Projected Starting Reserve Balance $15,000 Ideal Starting Reserve Balance $90,975 Economic Assumptions Current Inflation Rate 3.00% Reported After-Tax Interest Rate 2.00% Current Reserve Status Current Balance as a % of Ideal Balance 16% Recommendations Recommended Monthly Reserve Allocation $4,500 Per Unit $54.22 Future Annual Increases 3.00% For number of years: 12 Increases thereafter: 2.25% Minimum Recommended Monthly Reserve Allocation $4,125 Per Unit $49.70 Future Annual Increases 3.00% For number of years: 12 Increases thereafter: 2.25% 5
Percent Funded - Graph 120% 100% % Level of Funding 80% 60% 40% 20% 0% 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 Recommended Year Minimum 6
Category ID # Component Name Component Inventory Useful Life (yrs.) Remaining Useful Life (yrs.) Best Cost Worst Cost Roofing 103 Flat Roof - EPDM - Replace 18 16 $112,400 $129,700 123 Carport Roof - Repair 6 4 $1,150 $1,450 Painted Surfaces 201 Stucco Surfaces - Repaint 10 8 $70,700 $92,975 202 Trim/Railings - Repaint 5 3 $50,000 $60,000 207 Wrought Iron Fencing - Repaint 4 2 $4,600 $5,600 209 Wood Fencing - Seal N/A $0 $0 216 Interior Surfaces - Repaint 9 7 $4,200 $6,150 Drive Materials 401 Asphalt - Overlay 20 18 $20,000 $22,700 402 Asphalt - Slurry Seal 5 3 $2,700 $3,650 Property Access 502 Garage Doors - Replace 18 16 $4,000 $5,000 Decking 602 Concrete Pavers/Brick - Repair $0 $0 604 Elastomeric Deck - Resurface 18 16 $64,500 $68,500 Mechanical Equip. 704 Garage Heaters - Replace 16 14 $3,500 $4,500 705 HVAC Condenser/Furnace - Replace 16 14 $3,500 $4,000 707 Elevators - Modernize 20 18 $80,000 $100,000 710 Emergency Generator - Replace 25 23 $30,000 $40,000 Prop. Identification 801 Monument Sign - Replace 18 16 $3,000 $5,000 803 Mailboxes - Replace 18 16 $8,100 $9,300 Security 905 Phone Entry Systems - Replace 12 10 $8,000 $10,000 906 Vehicle Gate Operators - Replace 8 9 $6,000 $7,000 Fencing 1001 Wood Fencing - Replace 15 13 $10,600 $12,300 1002 Wrought Iron Fencing - Replace 20 18 $17,900 $23,000 Recreation Equip. 1304 Drinking Fountains - Replace 7 5 $1,400 $1,800 Interiors 1405 Furniture - Replace 10 8 $4,000 $6,000 1490 Ceiling Tile - Replace 15 13 $900 $1,150 Flooring 1501 Carpeting - Replace 9 7 $2,400 $3,000 Light Fixtures 1608 Can Lights - Replace 18 16 $2,100 $2,625 1608 Ceiling Lights - Replace 20 18 $25,200 $31,500 7
Significant Components ID # Component Name Useful Life (yrs.) Remaining Useful Life (yrs.) Average Current Cost Significance: (Curr Cost/UL) As $ As % 103 Flat Roof - EPDM - Replace 18 16 $121,050 $6,725 14.3985% 123 Carport Roof - Repair 6 4 $1,300 $217 0.4639% 201 Stucco Surfaces - Repaint 10 8 $81,838 $8,184 17.5217% 202 Trim/Railings - Repaint 5 3 $55,000 $11,000 23.5514% 207 Wrought Iron Fencing - Repaint 4 2 $5,100 $1,275 2.7298% 216 Interior Surfaces - Repaint 9 7 $5,175 $575 1.2311% 401 Asphalt - Overlay 20 18 $21,350 $1,068 2.2856% 402 Asphalt - Slurry Seal 5 3 $3,175 $635 1.3596% 502 Garage Doors - Replace 18 16 $4,500 $250 0.5353% 604 Elastomeric Deck - Resurface 18 16 $66,500 $3,694 7.9100% 704 Garage Heaters - Replace 16 14 $4,000 $250 0.5353% 705 HVAC Condenser/Furnace - Replace 16 14 $3,750 $234 0.5018% 707 Elevators - Modernize 20 18 $90,000 $4,500 9.6347% 710 Emergency Generator - Replace 25 23 $35,000 $1,400 2.9975% 801 Monument Sign - Replace 18 16 $4,000 $222 0.4758% 803 Mailboxes - Replace 18 16 $8,700 $483 1.0348% 905 Phone Entry Systems - Replace 12 10 $9,000 $750 1.6058% 906 Vehicle Gate Operators - Replace 8 9 $6,500 $813 1.7396% 1001 Wood Fencing - Replace 15 13 $11,450 $763 1.6343% 1002 Wrought Iron Fencing - Replace 20 18 $20,450 $1,023 2.1892% 1304 Drinking Fountains - Replace 7 5 $1,600 $229 0.4894% 1405 Furniture - Replace 10 8 $5,000 $500 1.0705% 1490 Ceiling Tile - Replace 15 13 $1,025 $68 0.1463% 1501 Carpeting - Replace 9 7 $2,700 $300 0.6423% 1608 Can Lights - Replace 18 16 $2,363 $131 0.2810% 1608 Ceiling Lights - Replace 20 18 $28,350 $1,418 3.0349% 8
Significant Components - Graph 202 Trim/Railings - Repaint 201 Stucco Surfaces - Repaint 103 Flat Roof - EPDM - Replace 707 Elevators - Modernize All Other 34% 24% 10% 14% 18% Useful Life (yrs.) Remaining Useful Life (yrs.) Average Current Cost Significance: ID # Component Name (Curr Cost/UL) As $ As % 202 Trim/Railings - Repaint 5 3 $55,000 $11,000 24% 201 Stucco Surfaces - Repaint 10 8 $81,838 $8,184 18% 103 Flat Roof - EPDM - Replace 18 16 $121,050 $6,725 14% 707 Elevators - Modernize 20 18 $90,000 $4,500 10% All Other See Expanded Table For Breakdown $16,298 35% 9
Yearly Summary Year Fully Funded Balance Starting Reserve Balance Percent Funded Reserve Contributions Interest Income Reserve Expenses 2008 $90,975 $15,000 16% $54,000 $848 $0 2009 $141,812 $69,848 49% $55,620 $1,971 $0 2010 $195,617 $127,439 65% $57,289 $3,096 $5,411 2011 $246,950 $182,413 74% $59,007 $3,636 $63,569 2012 $241,450 $181,486 75% $60,777 $4,262 $1,463 2013 $301,332 $245,063 81% $62,601 $5,559 $1,855 2014 $364,231 $311,368 85% $64,479 $6,874 $6,090 2015 $426,328 $376,631 88% $66,413 $8,175 $9,685 2016 $488,309 $441,534 90% $68,406 $7,749 $183,697 2017 $374,691 $333,990 89% $70,458 $7,367 $8,481 2018 $439,965 $403,334 92% $72,571 $8,665 $20,696 2019 $496,499 $463,874 93% $74,749 $10,117 $0 2020 $577,986 $548,740 95% $76,991 $11,830 $2,281 2021 $661,566 $635,279 96% $78,723 $12,570 $103,752 2022 $645,196 $622,821 97% $80,495 $13,187 $19,437 2023 $717,299 $697,066 97% $82,306 $14,900 $0 2024 $813,768 $794,273 98% $84,158 $13,378 $347,078 2025 $557,889 $544,731 98% $86,051 $11,755 $10,744 2026 $643,074 $631,794 98% $87,987 $8,310 $528,201 2027 $200,219 $199,889 100% $89,967 $4,914 $2,806 2028 $287,692 $291,965 101% $91,991 $6,822 $0 2029 $383,210 $390,778 102% $94,061 $8,837 $0 2030 $484,201 $493,676 102% $96,178 $10,637 $29,508 2031 $560,512 $570,983 102% $98,342 $10,662 $183,889 2032 $482,866 $496,097 103% $100,554 $11,028 $0 2033 $595,145 $607,680 102% $102,817 $13,000 $30,098 2034 $682,725 $693,398 102% $105,130 $14,911 $14,449 2035 $792,072 $798,990 101% $107,495 $17,212 $0 2036 $922,695 $923,697 100% $109,914 $16,087 $363,294 2037 $686,249 $686,404 100% $112,387 $14,989 $0 10
Reserve Contributions - Graph Monthly Reserve Contributions $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 Recommended Year Minimum 11
Component Funding Information ID Component Name Average Current Cost Future Cost Ideal Balance Current Fund Balance Monthly 103 Flat Roof - EPDM - Replace $121,050 $194,250 $13,450 $0 $647.93 123 Carport Roof - Repair $1,300 $1,463 $433 $0 $20.88 201 Stucco Surfaces - Repaint $81,838 $103,669 $16,368 $0 $788.48 202 Trim/Railings - Repaint $55,000 $60,100 $22,000 $12,450 $1,059.81 207 Wrought Iron Fencing - Repaint $5,100 $5,411 $2,550 $2,550 $122.84 216 Interior Surfaces - Repaint $5,175 $6,365 $1,150 $0 $55.40 401 Asphalt - Overlay $21,350 $36,347 $2,135 $0 $102.85 402 Asphalt - Slurry Seal $3,175 $3,469 $1,270 $0 $61.18 502 Garage Doors - Replace $4,500 $7,221 $500 $0 $24.09 604 Elastomeric Deck - Resurface $66,500 $106,713 $7,389 $0 $355.95 704 Garage Heaters - Replace $4,000 $6,050 $500 $0 $24.09 705 HVAC Condenser/Furnace - Replace $3,750 $5,672 $469 $0 $22.58 707 Elevators - Modernize $90,000 $153,219 $9,000 $0 $433.56 710 Emergency Generator - Replace $35,000 $69,076 $2,800 $0 $134.89 801 Monument Sign - Replace $4,000 $6,419 $444 $0 $21.41 803 Mailboxes - Replace $8,700 $13,961 $967 $0 $46.57 905 Phone Entry Systems - Replace $9,000 $12,095 $1,500 $0 $72.26 906 Vehicle Gate Operators - Replace $6,500 $8,481 $0 $0 $78.28 1001 Wood Fencing - Replace $11,450 $16,815 $1,527 $0 $73.54 1002 Wrought Iron Fencing - Replace $20,450 $34,815 $2,045 $0 $98.51 1304 Drinking Fountains - Replace $1,600 $1,855 $457 $0 $22.02 1405 Furniture - Replace $5,000 $6,334 $1,000 $0 $48.17 1490 Ceiling Tile - Replace $1,025 $1,505 $137 $0 $6.58 1501 Carpeting - Replace $2,700 $3,321 $600 $0 $28.90 1608 Can Lights - Replace $2,363 $3,791 $263 $0 $12.65 1608 Ceiling Lights - Replace $28,350 $48,264 $2,835 $0 $136.57 $91,788 $15,000 $4,500 Current Fund Balance as a percentage of Ideal Balance: 16% 12
Yearly Cash Flow Year 2008 2009 2010 2011 2012 Starting Balance $15,000 $69,848 $127,439 $182,413 $181,486 Reserve Income $54,000 $55,620 $57,289 $59,007 $60,777 Interest Earnings $848 $1,971 $3,096 $3,636 $4,262 Special Assessments $0 $0 $0 $0 $0 Funds Available $69,848 $127,439 $187,823 $245,056 $246,526 Reserve Expenditures $0 $0 $5,411 $63,569 $1,463 Ending Balance $69,848 $127,439 $182,413 $181,486 $245,063 Year 2013 2014 2015 2016 2017 Starting Balance $245,063 $311,368 $376,631 $441,534 $333,990 Reserve Income $62,601 $64,479 $66,413 $68,406 $70,458 Interest Earnings $5,559 $6,874 $8,175 $7,749 $7,367 Special Assessments $0 $0 $0 $0 $0 Funds Available $313,223 $382,721 $451,219 $517,688 $411,815 Reserve Expenditures $1,855 $6,090 $9,685 $183,697 $8,481 Ending Balance $311,368 $376,631 $441,534 $333,990 $403,334 Year 2018 2019 2020 2021 2022 Starting Balance $403,334 $463,874 $548,740 $635,279 $622,821 Reserve Income $72,571 $74,749 $76,991 $78,723 $80,495 Interest Earnings $8,665 $10,117 $11,830 $12,570 $13,187 Special Assessments $0 $0 $0 $0 $0 Funds Available $484,570 $548,740 $637,561 $726,573 $716,503 Reserve Expenditures $20,696 $0 $2,281 $103,752 $19,437 Ending Balance $463,874 $548,740 $635,279 $622,821 $697,066 Year 2023 2024 2025 2026 2027 Starting Balance $697,066 $794,273 $544,731 $631,794 $199,889 Reserve Income $82,306 $84,158 $86,051 $87,987 $89,967 Interest Earnings $14,900 $13,378 $11,755 $8,310 $4,914 Special Assessments $0 $0 $0 $0 $0 Funds Available $794,273 $891,809 $642,537 $728,091 $294,771 Reserve Expenditures $0 $347,078 $10,744 $528,201 $2,806 Ending Balance $794,273 $544,731 $631,794 $199,889 $291,965 Year 2028 2029 2030 2031 2032 Starting Balance $291,965 $390,778 $493,676 $570,983 $496,097 Reserve Income $91,991 $94,061 $96,178 $98,342 $100,554 Interest Earnings $6,822 $8,837 $10,637 $10,662 $11,028 Special Assessments $0 $0 $0 $0 $0 Funds Available $390,778 $493,676 $600,491 $679,986 $607,680 Reserve Expenditures $0 $0 $29,508 $183,889 $0 Ending Balance $390,778 $493,676 $570,983 $496,097 $607,680 Year 2033 2034 2035 2036 2037 Starting Balance $607,680 $693,398 $798,990 $923,697 $686,404 Reserve Income $102,817 $105,130 $107,495 $109,914 $112,387 Interest Earnings $13,000 $14,911 $17,212 $16,087 $14,989 Special Assessments $0 $0 $0 $0 $0 Funds Available $723,496 $813,439 $923,697 $1,049,698 $813,780 Reserve Expenditures $30,098 $14,449 $0 $363,294 $0 Ending Balance $693,398 $798,990 $923,697 $686,404 $813,780 13
Yearly Reserve Expenditures - Graph $600,000 $500,000 $400,000 Annual Totals $300,000 $200,000 $100,000 $- 2008 2010 2012 2014 2016 2018 2020 2022 2024 Year 2026 2028 2030 2032 2034 2036 2038 14
Projected Reserve Expenditures by Year Year ID # Component Name Projected Cost Total Per Annum 2008 No Expenditures Projected $0 2009 No Expenditures Projected $0 2010 207 Wrought Iron Fencing - Repaint $5,411 $5,411 2011 202 Trim/Railings - Repaint $60,100 402 Asphalt - Slurry Seal $3,469 $63,569 2012 123 Carport Roof - Repair $1,463 $1,463 2013 1304 Drinking Fountains - Replace $1,855 $1,855 2014 207 Wrought Iron Fencing - Repaint $6,090 $6,090 2015 216 Interior Surfaces - Repaint $6,365 1501 Carpeting - Replace $3,321 $9,685 2016 201 Stucco Surfaces - Repaint $103,669 202 Trim/Railings - Repaint $69,672 402 Asphalt - Slurry Seal $4,022 1405 Furniture - Replace $6,334 $183,697 2017 906 Vehicle Gate Operators - Replace $8,481 $8,481 2018 123 Carport Roof - Repair $1,747 207 Wrought Iron Fencing - Repaint $6,854 905 Phone Entry Systems - Replace $12,095 $20,696 2019 No Expenditures Projected $0 2020 1304 Drinking Fountains - Replace $2,281 $2,281 2021 202 Trim/Railings - Repaint $80,769 402 Asphalt - Slurry Seal $4,663 1001 Wood Fencing - Replace $16,815 1490 Ceiling Tile - Replace $1,505 $103,752 2022 207 Wrought Iron Fencing - Repaint $7,714 704 Garage Heaters - Replace $6,050 705 HVAC Condenser/Furnace - Replace $5,672 $19,437 2023 No Expenditures Projected $0 2024 103 Flat Roof - EPDM - Replace $194,250 123 Carport Roof - Repair $2,086 216 Interior Surfaces - Repaint $8,304 502 Garage Doors - Replace $7,221 604 Elastomeric Deck - Resurface $106,713 801 Monument Sign - Replace $6,419 803 Mailboxes - Replace $13,961 1501 Carpeting - Replace $4,333 1608 Can Lights - Replace $3,791 $347,078 2025 906 Vehicle Gate Operators - Replace $10,744 $10,744 2026 201 Stucco Surfaces - Repaint $139,323 202 Trim/Railings - Repaint $93,634 207 Wrought Iron Fencing - Repaint $8,682 401 Asphalt - Overlay $36,347 402 Asphalt - Slurry Seal $5,405 707 Elevators - Modernize $153,219 1002 Wrought Iron Fencing - Replace $34,815 15
Year Comp ID Component Name Projected Cost Total Per Annum 1405 Furniture - Replace $8,512 1608 Ceiling Lights - Replace $48,264 $528,201 2027 1304 Drinking Fountains - Replace $2,806 $2,806 2028 No Expenditures Projected $0 2029 No Expenditures Projected $0 2030 123 Carport Roof - Repair $2,491 207 Wrought Iron Fencing - Repaint $9,772 905 Phone Entry Systems - Replace $17,245 $29,508 2031 202 Trim/Railings - Repaint $108,547 402 Asphalt - Slurry Seal $6,266 710 Emergency Generator - Replace $69,076 $183,889 2032 No Expenditures Projected $0 2033 216 Interior Surfaces - Repaint $10,835 906 Vehicle Gate Operators - Replace $13,610 1501 Carpeting - Replace $5,653 $30,098 2034 207 Wrought Iron Fencing - Repaint $10,999 1304 Drinking Fountains - Replace $3,451 $14,449 2035 No Expenditures Projected $0 2036 123 Carport Roof - Repair $2,974 201 Stucco Surfaces - Repaint $187,238 202 Trim/Railings - Repaint $125,836 402 Asphalt - Slurry Seal $7,264 1001 Wood Fencing - Replace $26,197 1405 Furniture - Replace $11,440 1490 Ceiling Tile - Replace $2,345 $363,294 2037 No Expenditures Projected $0 2038 207 Wrought Iron Fencing - Repaint $12,379 704 Garage Heaters - Replace $9,709 705 HVAC Condenser/Furnace - Replace $9,102 $31,190 16
Component Evaluation Comp #: 103 Flat Roof - EPDM - Replace Building roofs Approx 34,575 Sq.ft. Quantity breakdown: Life Expectancy: 18 Remaining Life: 16 Best Cost: $112,400 $3.25/Sq.ft.; Estimate to replace roof 27,450 Sq.ft. - Building roofs 7,125 Sq.ft. - Second floor patio/common area 34,575 Sq.ft. - Total Worst Cost: $129,700 $3.75/Sq.ft.; Higher estimate for more labor costs Roof is in good condition. No problems noted at the time of inspection. This type of roof has a typical useful life of approximately 18 years. Remaining life based on current age. Page 1 of 28
Comp #: 123 Carport Roof - Repair Parking area Approx 7,700 Sq.ft. Life Expectancy: 6 Remaining Life: 4 Best Cost: $1,150 $1.00/Sq.ft.; Estimate to repair approx 15% of roofs Worst Cost: $1,450 $1.25/Sq.ft.; Higher estimate for more repairs No damage noted at the time of inspection. No expectation to completely replace carport roofs. We recommend funding to make periodic repairs. Page 2 of 28
Comp #: 201 Stucco Surfaces - Repaint Exterior stucco surfaces Approx 74,380 Sq.ft. Life Expectancy: 10 Remaining Life: 8 Best Cost: $70,700 $0.95/Sq.ft.; Estimate to repaint stucco surfaces Worst Cost: $92,975 $1.25/Sq.ft.; Higher estimate for more prep costs Painted stucco surfaces are generally in good condition, no significant staining or discoloration noted. Stucco surfaces should typically be repainted approximately every 10 to 12 years to protect stucco surface and maintain appearance. Page 3 of 28
Comp #: 202 Trim/Railings - Repaint Building trim surfaces See general notes Quantity breakdown: Life Expectancy: 5 Remaining Life: 3 Best Cost: $50,000 Estimate to repaint 2,500 Linear ft. of metal railings 22,275 Sq.ft. of painted metal surfaces Worst Cost: $60,000 Higher estimate No fading or paint loss noted at the time of inspection. We recommend painting these surfaces approximately every 5 years to maintain appearance and protect metal. Remaining life based on current age. Page 4 of 28
Comp #: 207 Wrought Iron Fencing - Repaint Perimeter fence Approx 510 Linear ft. Quantity breakdown: Life Expectancy: 4 Remaining Life: 2 Best Cost: $4,600 $9.00/Linear ft.; Estimate to repaint iron fence 200 Linear ft. - North perimeter 150 Linear ft. - South perimeter 160 Linear ft. - Patio deck 510 Linear ft. - Total Worst Cost: $5,600 $11.00/Linear ft; Higher estimate for additional prep work No rusting or paint loss noted. Expect to repaint this fencing approximately every 4 years to maintain appearance and protect metal. Page 5 of 28
Comp #: 209 Wood Fencing - Seal Perimeter fence Approx 425 Linear ft. Quantity breakdown: Life Expectancy: N/A Remaining Life: Best Cost: $0 100 Linear ft. - North perimeter 175 Linear ft. - South perimeter 150 Linear ft. - West perimeter 425 Linear ft. - Total Worst Cost: $0 Source of Information: Due to minimal cost we recommend sealing this fencing as necessary as an operating expense. No reserve funding necessary. Page 6 of 28
Comp #: 216 Interior Surfaces - Repaint Interior surfaces Approx 6,475 Sq.ft. Quantity breakdown: Life Expectancy: 9 Remaining Life: 7 Best Cost: $4,200 $.65/Sq.ft.; Estimate to repaint Worst Cost: $6,150 $.95/Sq.ft.; Higher estimate 2,925 Sq.ft. - Lobby 650 Sq.ft. - Mailbox area 1,725 Sq.ft. - North commercial hall 1,175 Sq.ft. - South commercial hall 6,475 Sq.ft. - Total Interior painted surfaces are in good condition. No significant marking noted or appearance concerns observed. Expect to repaint these surfaces approximately every 9 years to maintain appearance. Page 7 of 28
Comp #: 401 Asphalt - Overlay Parking area Approx 18,150 Sq.ft. Life Expectancy: 20 Remaining Life: 18 Best Cost: $20,000 $1.10/Sq.ft.; Estimate for overlay Worst Cost: $22,700 $1.25/Sq.ft.; Higher estimate for local repairs Asphalt surfaces are in good condition. No cracking or structural problems noted at the time of inspection. Seal these surfaces regularly (see Comp# 402 Asphalt - Slurry Seal) to protect surface and ensure full life. Page 8 of 28
Comp #: 402 Asphalt - Slurry Seal Parking area Approx 18,150 Sq.ft. Life Expectancy: 5 Remaining Life: 3 Best Cost: $2,700 $0.15/Sq.ft.; Estimate for seal coat only Worst Cost: $3,650 $0.20/Sq.ft.; Higher estimate for local repairs Asphalt seal coat is in good condition. No drying noted or significant cracking observed. Seal asphalt surfaces regularly to prevent premature overlay (see Comp# 401 Asphalt - Overlay). Remaining life based on current condition. Page 9 of 28
Comp #: 502 Garage Doors - Replace Garage (2) 25 X 10 ft. doors Life Expectancy: 18 Remaining Life: 16 Best Cost: $4,000 $2,000/Door; Estimate to replace doors Worst Cost: $5,000 $2,500/Door; Higher estimate for better quality No damage noted. We recommend funding to replace these doors approximately every 18 years to ensure proper function and appearance. Page 10 of 28
Comp #: 602 Concrete Pavers/Brick - Repair Patio deck Approx 7,125 Sq.ft. Life Expectancy: Best Cost: $0 Remaining Life: Worst Cost: $0 Source of Information: These pavers hold down the membrane roofing on the second floor. We recommend funding to make replacements to cracked pavers at the same time as the roof replacement (see Comp# 103 Flat Roof - EPDM - Replace). No separate reserve funding necessary. Page 11 of 28
Comp #: 604 Elastomeric Deck - Resurface Balcony decks Approx 4,030 Sq.ft. Life Expectancy: 18 Remaining Life: 16 Best Cost: $64,500 $16/Sq.ft.; Estimate to replace flat roof Worst Cost: $68,500 $17/Sq.ft.; Higher estimate for more installation costs Reported that the maintenance of these decks is the responsibility of the association. We recommend funding to resurface these decks approximately every 18 years. Page 12 of 28
Comp #: 704 Garage Heaters - Replace Garage (3) Heaters Life Expectancy: 16 Remaining Life: 14 Best Cost: $3,500 $1,750/Heater; Estimate to replace Worst Cost: $4,500 $2,250/Heater; Higher estimate Expect a useful life of approximately 16 years from this heater. Make repairs as necessary to ensure full life. Page 13 of 28
Comp #: 705 HVAC Condenser/Furnace - Replace Garage location, lobby (1) Condenser, (1) Furnace Life Expectancy: 16 Remaining Life: 14 Best Cost: $3,500 Estimate to replace Worst Cost: $4,000 Higher estimate for more installation costs Expect to replace condenser and furnace approximately every 16 years. Remaining life based on current age. Page 14 of 28
Comp #: 707 Elevators - Modernize Garage area (2) Elevators Life Expectancy: 20 Remaining Life: 18 Best Cost: $80,000 $40,000/Elevator; Estimate to modernize elevators Worst Cost: $100,000 $50/Elevator; Higher estimate for more upgrades No problems noted or reported at the time of inspection. Approximately every 20 to 25 years expect to make significant upgrades and replacements to elevator controllers and door packages. Remaining life based on current age. Page 15 of 28
Comp #: 710 Emergency Generator - Replace Adjacent to building (1) Generator Olympian D100P4 Life Expectancy: 25 Remaining Life: 23 Best Cost: $30,000 Estimate to replace Worst Cost: $40,000 Higher estimate Due to minimal use this component has a relatively long life. However we recommend funding to replace this generator approximately every 25 to 30 years to ensure the availability of parts and to keep up with modern technology. Page 16 of 28
Comp #: 801 Monument Sign - Replace Front of building (1) 13-Letter sign Life Expectancy: 18 Remaining Life: 16 Best Cost: $3,000 Estimate to replace Worst Cost: $5,000 Higher estimate Sign is comprised of (13) aluminum backlit letters. Sign is in good condition. Expect to replace this sign approximately every 18 years to maintain appearance. Page 17 of 28
Comp #: 803 Mailboxes - Replace Mailbox area (6) Clusters Quantity breakdown: Life Expectancy: 18 Remaining Life: 16 Best Cost: $8,100 $1,350/Cluster; Estimate to replace mailbox clusters (4) 21-Box clusters (2) 6-Parcel box clusters (6) Clusters Worst Cost: $9,300 $1,550/Cluster; Higher estimate for more installation costs We recommend funding to replace these clusters approximately every 18 years to maintain appearance and ensure proper function. Page 18 of 28
Comp #: 905 Phone Entry Systems - Replace Entrance to building, entry to parking area (2) Systems Life Expectancy: 12 Remaining Life: 10 Best Cost: $8,000 $4,000/System; Estimate to replace system Worst Cost: $10,000 $5,000/System; Higher estimate for more installation costs System at parking area had not been installed at the time of inspection. No problems noted with building entry system. Expect a useful life of approximately 12 years from this component. Page 19 of 28
Comp #: 906 Vehicle Gate Operators - Replace Entry to parking area (2) Operators Life Expectancy: 8 Remaining Life: 9 Best Cost: $6,000 $3,000/Operator; Estimate to replace operators Worst Cost: $7,000 $3,500/Operator; Higher estimate for more installaton cost Gate operators had not been installed at the time of inspection. Once installed we recommend funding to replace these operators approximately every 8 years. Page 20 of 28
Comp #: 1001 Wood Fencing - Replace Perimeter fence Approx 425 Linear ft. Quantity breakdown: Life Expectancy: 15 Remaining Life: 13 Best Cost: $10,600 $25/Linear ft.; Estimate to replace fence 100 Linear ft. - North perimeter 175 Linear ft. - South perimeter 150 Linear ft. - West perimeter 425 Linear ft. - Total Worst Cost: $12,300 $29/Linear ft.; Higher estimate for more installation costs Expect a useful life of approximately 15 years from this type of fence. Seal fence regularly to protect fence and ensure full life. Page 21 of 28
Comp #: 1002 Wrought Iron Fencing - Replace Perimeter fence Approx 510 Linear ft. Quantity breakdown: Life Expectancy: 20 Remaining Life: 18 Best Cost: $17,900 $35/Linear ft.; Estimate to replace fence 200 Linear ft. - North perimeter 150 Linear ft. - South perimeter 160 Linear ft. - Patio deck 510 Linear ft. - Total Worst Cost: $23,000 $45/Linear ft.; Higher estimate for more labor Fencing is in good condition. No significant rusting or structural problems noted at the time of inspection. With regular painting and maintenance, expect a useful life of 20 to 25 years from this component. Remaining life based on current age. Page 22 of 28
Comp #: 1304 Drinking Fountains - Replace Lobby (2) Fountains Life Expectancy: 7 Remaining Life: 5 Best Cost: $1,400 $700/Fountain; Estimate to replace drinking fountain Worst Cost: $1,800 $900/Fountain; Higher estimate for more installation costs Drinking fountains are in good condition. No corrosion or damage noted. No signs of significant wear. Expect to replace these fountains approximately every 7 years. Page 23 of 28
Comp #: 1405 Furniture - Replace Lobby See general notes Quantity breakdown: Life Expectancy: 10 Remaining Life: 8 Best Cost: $4,000 Estimate to replace (3) Padded chairs (2) Arm chairs (2) Love seats (2) Tables (4) Potted plants Worst Cost: $6,000 Higher estimate We recommend funding to replace this furniture approximately every 8 years to maintain appearance in the lobby area. Remaining life based on current age. Page 24 of 28
Comp #: 1490 Ceiling Tile - Replace Commercial hallways Approx 900 Sq.ft. Life Expectancy: 15 Remaining Life: 13 Best Cost: $900 $1.00/Sq.ft.; Estimate to replace ceiling tile Worst Cost: $1,150 $1.25/Sq.ft.; Estimate to replace ceiling tile We recommend funding to replace the ceiling tiles approximately every 15 years to maintain appearance. Page 25 of 28
Comp #: 1501 Carpeting - Replace Lobby Approx 775 Sq.ft. Quantity breakdown: Life Expectancy: 9 Remaining Life: 7 Best Cost: $2,400 $3.10/Sq.ft.; Estimate to replace 525 Sq.ft. - Lobby 250 Sq.ft. - Mailbox area 775 Sq.ft. - Total Worst Cost: $3,000 $3.90/Sq.ft.; Higher estimate for better quality Carpeting is in good condition. We recommend funding to replace this carpeting approximately every 9 years. Page 26 of 28
Comp #: 1608 Can Lights - Replace Lobby and hallways (35) Can lights Quantity breakdown: Life Expectancy: 18 Remaining Life: 16 Best Cost: $2,100 $60/Light; Estimate to replace Worst Cost: $2,625 $75/Light; Higher estimate (20) Lights - Lobby (3) Lights - Mailbox area (7) Lights - North commercial hall (5) Lights - South commercial hall (35) Lights - Total Lights are in good condition. Expect to replace these lights approximately every 18 years to maintain appearance and function. Page 27 of 28
Comp #: 1608 Ceiling Lights - Replace See general notes Approx 126 Lights Quantity breakdown: Life Expectancy: 20 Remaining Life: 18 Best Cost: $25,200 $200/Light; Estimate to replace (42) Lights - 3rd Floor (42) Lights - 4th Floor (42) Lights - 5th Floor (126) Lights - Total Worst Cost: $31,500 $250/Light; Higher estimate Lights are in good condition. Expect a typical useful life of approximately 20 years from this type of fixture. Page 28 of 28
Glossary of Commonly Used Words And Phrases (Provided by the National Reserve Study Standards of the Community Associations Institute) Cash Flow Method A method of developing a reserve funding plan where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different reserve funding plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved. Component Also referred to as an Asset. Individual line items in the Reserve Study developed or updated in the physical analysis. These elements form the building blocks for the Reserve Study. Components typically are: 1) Association responsibility, 2) with limited useful life expectancies, 3) have predictable remaining life expectancies, 4) above a minimum threshold cost, and 5) required by local codes. Component Full Funding When the actual (or projected) cumulative reserve balance for all components is equal to the fully funded balance. Component Inventory The task of selecting and quantifying reserve components. This task can be accomplished through on-site visual observations, review of association design and organizational documents, a review of established association precedents, and discussion with appropriate association representatives. Deficit An actual (or projected reserve balance), which is less than the fully funded balance. Effective Age The difference between useful life and remaining useful life (UL - RUL). Financial Analysis The portion of the Reserve Study where current status of the reserves (measured as cash or percent funded) and a recommended reserve contribution rate (reserve funding plan) are derived, and the projected reserve income and expenses over time is presented. The financial analysis is one of the two parts of the Reserve Study. Fully Funded Balance An indicator against which the actual (or projected) reserve balance can be compared. The reserve balance that is in direct proportion to the fraction of life used up of the current repair or replacement cost of a reserve component. This number is calculated for each component, and then summed together for an association total. FFB = Current Cost * Effective Age / Useful Life Fund Status The status of the reserve fund as compared to an established benchmark, such as percent funded. Funding Goals Independent of calculation methodology utilized, the following represent the basic categories of funding plan goals: Baseline Funding: Establishing a reserve-funding goal of keeping the reserve balance above zero. Component Full Funding: Setting a reserve funding goal of attaining and maintaining cumulative reserves at or near 100% funded. Threshold Funding: Establishing a reserve funding goal of keeping the reserve balance above a specified dollar or percent funded amount. Funding Plan An association s plan to provide income to a reserve fund to offset anticipated expenditures from that fund.
Funding Principles Sufficient funds when required Stable contributions through the year Evenly distributed contributions over the years Fiscally responsible GSF - Gross Square Feet Life and Valuation Estimates The task of estimating useful life, remaining useful life, and repair or replacement costs for the reserve components. LF - Linear Feet Percent Funded The ratio, at a particular point in time (typically the beginning of the fiscal year), of the actual (or projected) reserve balance to the ideal fund balance, expressed as a percentage. Physical Analysis The portion of the Reserve Study where the component evaluation, condition assessment, and life and valuation estimate tasks are performed. This represents one of the two parts of the Reserve Study. Remaining Useful Life (RUL) Also referred to as remaining life (RL). The estimated time, in years, that a reserve component can be expected to continue to serve its intended function. Projects anticipated to occur in the current fiscal year have a 0 remaining useful life. Replacement Cost The cost of replacing, repairing, or restoring a reserve component to its original functional condition. The current replacement cost would be the cost to replace, repair, or restore the component during that particular year. Reserve Balance Actual or projected funds as of a particular point in time (typically the beginning of the fiscal year) that the association has identified for use to defray the future repair or replacement of those major components that the association is obligated to maintain. Also known as reserves, reserve accounts, or cash reserves. In this report the reserve balance is based upon information provided and is not audited. Reserve Study A budget-planning tool, which identifies the current status of the reserve fund and a stable and equitable funding plan to offset the anticipated future major common area expenditures. The Reserve Study consists of two parts: The Physical Analysis and the Financial Analysis. Special Assessment An assessment levied on the members of an association in addition to regular assessments. Governing documents or local statutes often regulate special assessments. Surplus An actual (or projected) reserve balance that is greater than the fully funded balance. Useful Life (UL) Also known as life expectancy. The estimated time, in years, that a reserve component can be expected to serve its intended function if properly constructed and maintained in its present application of installation.