farr orchard hoa

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Farr Orchard HOA Level 1 Reserve Study Report Period – 01/01/2014 – 12/31/2014 Client Reference Number 14109 Property Type Townhouse Number of Units 89 Fiscal Year End 12/31 Report prepared on – Tuesday, August 06, 2013 TEL: (888) 356-3783 | Fax: (866) 279-9662 WWW.COMPLEXSOLUTIONSLTD.COM Date of Property Inspection 6/20/2013 Prepared By Dale Gifford Analysis Method Cash Flow Funding Goal Full Funding

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Page 1: Farr Orchard HOA

Farr Orchard HOA

Level 1 Reserve Study

Report Period – 01/01/2014 – 12/31/2014

Client Reference Number 14109 Property Type Townhouse Number of Units 89 Fiscal Year End 12/31

Report prepared on – Tuesday, August 06, 2013

TEL: (888) 356-3783 | Fax: (866) 279-9662

WWW.COMPLEXSOLUTIONSLTD.COM

Date of Property Inspection 6/20/2013 Prepared By Dale Gifford Analysis Method Cash Flow Funding Goal Full Funding

Page 2: Farr Orchard HOA

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 - 21

Glossary of Commonly used Words and Phrases

Page 3: Farr Orchard HOA

1

Executive Summary – Farr Orchard HOA - ID # 14109 Information to complete this Reserve Study was gathered 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 01/01/2014 $218,584.96 Ideal Reserve Balance as of 01/01/2014 $656,957

Percent Funded as of 01/01/2014 33% Recommended Reserve Contribution (per month) $7,700 Minimum Reserve Contribution (per month) $7,100 Recommended Special Assessment $0

Farr Orchard HOA is an 89-unit community consisting of Townhouse. The property offers the security of an entry system as well as landscaped areas as amenities. Construction on the community was completed in 2006.

Currently Programmed Projects Projects programmed to occur this fiscal year (FY2014) include front doors repaint (Comp# 204), and asphalt seal coat (Comp# 402). We have programmed an estimated $17,929 in reserve expenditures toward the completion of these projects. (See page 15)

Major Reserve Expenditures The first major reserve expenditure is programmed to occur in fiscal year 2026. Projects programmed to occur in fiscal year 2026 include pitched roof comp shingle replace (Comp# 105), rain gutters/downspouts replace (Comp# 120), front doors repaint (Comp# 204), and concrete driveways and sidewalks repair/replace (Comp# 601). We have programmed approximately $704,745 in reserve funds or approximately 49% of fiscal year 2026’s recommended starting balance towards the completion of these projects (see pages 10 & 15).

Significant Reserve Projects The association’s significant reserve projects include vinyl siding replace (Comp# 302), pitched roof comp shingle replace (Comp# 105), asphalt overlay (Comp# 401), and rain gutters/downspouts replace (Comp# 120). The fiscal significance of these components is approximately 42%, 31%, 7%, and 3% respectively (see page 9). 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 $218,584.96 versus the ideal reserve balance of $656,957 we find the association’s reserve fund to be approximately 33% funded. This indicates a fair reserve fund position. In order to continue to strengthen the account fund, we suggest adopting a monthly reserve contribution of $7,700 ($86.52/unit) per month. We have also included a minimum reserve contribution of $7,100 ($79.78/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.

Page 4: Farr Orchard HOA

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Introduction Reserve Study Purpose The purpose of this Reserve Study is to provide an educated estimate of the necessary reserve balance and 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. Gifford has been working in the community association industry for the last 10 years. Prior to taking a position, as the Regional Project Manager covering the Utah region, at Complex Solutions, he worked in community association management in Utah. While in community association management his positions included, Maintenance Supervisor, Senior Portfolio Manager and Vice President of Community Management. His work in community association management gave him extensive experience with; budget creation, reserves and reserve budgeting, community inspections and analyzing common area components.

Reserve Specialist (RS) designation from Community Associations Institute (CAI)

Personally has prepared over 450 reserve studies in Salt Lake City Utah and surrounding areas

Bachelor of Science in Chemistry from Emporia State University

Certified Manager of Community Associations® (CMCA®) designation from the National Board of Certification for

Community Association Managers (NBC-CAM)

Association Management Specialist® (AMS®) designation from Community Associations Institute (CAI)

Professional Community Association Manager® (PCAM®) designation from Community Associations Institute (CAI)

Active member and former Board member and chapter President of the Utah Chapter of Community Associations

Institute (UCCAI)

Recipient of Community Associations Institute’s (CAI) annual award of Excellence In Chapter Leadership for service an achievement in 2010

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 occur on an annual basis. These would include management fees, maintenance expenses, utilities, etc. The reserves are 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 assessment.

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.

Page 5: Farr Orchard HOA

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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 assessment. 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 and long term 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.

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 assessment 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. 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 (for Reserve purposes less than 30 years), 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 as well as general repairs and maintenance. 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” item 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 Site Visit? The Site Visit was conducted of the common areas as reported by client. From our site visit we identified those common area components that we have determined require reserve funding. Based on information provided by the client, client’s vendors, and our assessment of the components we have developed a component list and life and cost estimates. 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. We have assumed any and all components have been properly built and will reach normal, typical life expectancies. In general a reserve study is not intended to identify or fund for construction defects. We did not and will not look for or identify construction defects during our site visit.

Page 6: Farr Orchard HOA

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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 generally 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 generally 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 generally 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.

Disclosures: We will identify only those major components with a useful life of 30-years or less that generally meet industry standards for reserve funding. The projected life expectancy of the major components and the funding needs of the reserves of the association are based upon the association performing appropriate routine and preventative maintenance for each major component. Failure to perform such maintenance can negatively impact the remaining useful life of the major components and dramatically increase the funding needs of the reserves of the association. This Reserve Study assumes that all construction assemblies and components identified herein are built properly and are free from defects in materials and/or workmanship. Defects can lead to reduced useful life and premature failure. It was not the intent of this Reserve Study to inspect for or to identify defects. If defects exist, repairs should be made so that the construction components and assemblies at the community reach the full and expected useful lives. Information provided to the preparer of a reserve study by an official representative of the association regarding financial, historical, physical, quantitative or reserve project issues will be deemed reliable by the preparer. A reserve study will be a reflection of information provided to the preparer of the reserve study. The total of actual or projected reserves required as presented in the reserve study is based upon information provided that was not audited. A reserve study is not intended to be used to perform an audit, an analysis of quality, a forensic study or a background check of historical records. An on-site inspection conducted in conjunction with a reserve study should not be deemed to be a project audit or quality inspection. The results of this study are based on the independent opinion of the preparer and his experience and research during the course of his career in preparing Reserve Studies. In addition the opinions of experts on certain components have been gathered through research within their industry and with client’s actual vendors. There is no implied warrantee or guarantee regarding our life and cost estimates/predictions. There is no implied warrantee or guarantee in any of our work product. Our results and findings will vary from another preparer’s results and findings. A Reserve Study is necessarily a work in progress and subsequent Reserve Studies will vary from prior studies. Update Reserve Studies: Level II Studies: Quantities of major components as reported in previous reserve studies are deemed to be accurate and reliable. The reserve study relies upon the validity of previous reserve studies. Level III Studies: In addition to the above we have not visited the property when completing a Level III “Financial Update” study. Therefore we have not verified the current condition of the common area components. . Insurance: We carry general and professional liability insurance as well as workers’ compensation insurance. Actual or Perceived Conflicts of Interest: There are no potential actual or perceived conflicts of interest that we are aware of. Inflation and Interest Rates: The after tax interest rate used in the financial analysis may or may not be based on the clients reported after tax interest rate. If it is we have not verified or audited the reported rate. The interest rate may also be based on an amount we believe appropriate given the 30-year horizon of this study and may or may not reflect current or historical inflation rates.

Page 7: Farr Orchard HOA

Beginning Assumptions

# of units 89Fiscal Year End 31-DecBudgeted Monthly Reserve Allocation $1,780Projected Starting Reserve Balance $218,585Ideal Starting Reserve Balance $656,957

Economic Assumptions

Projected Inflation Rate 3.00%Reported After-Tax Interest Rate 0.25%

Current Reserve Status

Current Balance as a % of Ideal Balance 33%

Recommendations

Funding Summary

5

Recommended Monthly Reserve Allocation $7,700Per Unit $86.52

Future Annual Increases 3.00%For number of years: 30Increases thereafter: 0.00%

Minimum Recommended Monthly Reserve Allocation $7,100Per Unit $79.78

Future Annual Increases 3.00%For number of years: 30Increases thereafter: 0.00%

Changes From Prior YearRecommended Increase to Reserve Allocation $5,920

as Percentage 333%

Minimum Recommended Increase to Reserve Allocation $5,320as Percentage 299%

5

Page 8: Farr Orchard HOA

Percent Funded - Graph

60%

80%

100%

120%

of

Fu

nd

ing

6

0%

20%

40%

60%

80%

100%

120%20

14

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

% L

evel

of

Fu

nd

ing

Recommended Current Minimum

6

Page 9: Farr Orchard HOA

Component Inventory

Category ID # Component NameUseful

Life (yrs.)

RemainingUseful Life

(yrs.)

Best Cost Worst Cost

Roofing 105 Pitched Roof - Comp Shingle - Replace 25 12 $403,988 $461,700120 Rain Gutters/Downspouts - Replace 25 12 $40,995 $50,105

Painted Surfaces 201 Stucco Surfaces - Repair/Repaint 12 2 $17,658 $23,800204 Front Doors - Repaint 6 0 $6,675 $11,125

Siding Materials 302 Vinyl Siding - Replace 40 28 $836,220 $1,003,464

Drive Materials 401 Asphalt - Overlay 25 13 $84,645 $112,860402 Asphalt - Seal Coat 5 0 $7,336 $10,722

Decking 601 Concrete Driveways & Sidewalks - Repai 10 2 $6,000 $8,000

Prop. Identification 801 Historical Marker - Refurbish N/A $0 $0801 Monument Sign - Refurbish 18 6 $1,000 $1,500803 Mailboxes - Replace N/A $0 $0890 Community Signs - Other N/A $0 $0

Fencing 1008 Vinyl Fencing & Railing - Replace 25 13 $35,730 $51,6101009 Wood Split Rail Fencing - Replace 15 3 $5,040 $6,4801012 Fence Pillars - Replace N/A $0 $0

Recreation Equip. 1307 Benches - Replace 12 2 $1,000 $1,400

Light Fixtures 1602 Exterior Light Fixtures - Replace 16 4 $11,800 $17,7001609 Street Light Fixtures - Replace 20 8 $4,500 $5,400

Landscaping 1812 Landscaping - Renovate N/A $0 $0

Buildings / Structur 2301 Metal Pergola - Replace N/A $0 $02301 Wood Pergola - Replace 15 3 $2,500 $4,000

7

Page 10: Farr Orchard HOA

A $ A %Component NameID #

Significant Components

Significance: (Curr Cost/UL)

Average Current

Cost

Remaining Useful Life

(yrs )

Useful Life

(yrs )

8

As $ As %

105 Pitched Roof - Comp Shingle - Replace 25 12 $432,844 $17,314 31.2045%120 Rain Gutters/Downspouts - Replace 25 12 $45,550 $1,822 3.2838%201 Stucco Surfaces - Repair/Repaint 12 2 $20,729 $1,727 3.1134%204 Front Doors - Repaint 6 0 $8,900 $1,483 2.6734%302 Vinyl Siding - Replace 40 28 $919,842 $22,996 41.4457%401 Asphalt Overlay 25 13 $98 753 $3 950 7 1193%

Cost(yrs.)(yrs.)

401 Asphalt - Overlay 25 13 $98,753 $3,950 7.1193%402 Asphalt - Seal Coat 5 0 $9,029 $1,806 3.2545%601 Concrete Driveways & Sidewalks - Repa 10 2 $7,000 $700 1.2616%801 Monument Sign - Refurbish 18 6 $1,250 $69 0.1252%

1008 Vinyl Fencing & Railing - Replace 25 13 $43,670 $1,747 3.1483%1009 Wood Split Rail Fencing - Replace 15 3 $5,760 $384 0.6921%1307 Benches - Replace 12 2 $1,200 $100 0.1802%1602 Exterior Light Fixtures - Replace 16 4 $14,750 $922 1.6615%1609 Street Light Fixtures - Replace 20 8 $4,950 $248 0.4461%2301 Wood Pergola - Replace 15 3 $3,250 $217 0.3905%

8

Page 11: Farr Orchard HOA

Significant Components - Graph

302 Vinyl Siding - Replace

9

302 Vinyl Siding - Replace

105 Pitched Roof - Comp Shingle - Replace

401 Asphalt - Overlay

120 Rain Gutters/Downspouts - Replace

All Other

17%

302 Vinyl Siding - Replace

105 Pitched Roof - Comp Shingle - Replace

401 Asphalt - Overlay

120 Rain Gutters/Downspouts - Replace

All Other

42%

7%

3%

17%

302 Vinyl Siding - Replace

105 Pitched Roof - Comp Shingle - Replace

401 Asphalt - Overlay

120 Rain Gutters/Downspouts - Replace

All Other

42%

31%

7%

3%

17%

302 Vinyl Siding - Replace

105 Pitched Roof - Comp Shingle - Replace

401 Asphalt - Overlay

120 Rain Gutters/Downspouts - Replace

All Other

As $ As %ID #

Significance: (Curr Cost/UL)

Average Current

Cost

Remaining Useful Life

(yrs )

Useful Life

(yrs )Component Name

42%

31%

7%

3%

17%

302 Vinyl Siding - Replace

105 Pitched Roof - Comp Shingle - Replace

401 Asphalt - Overlay

120 Rain Gutters/Downspouts - Replace

All Other

As $ As %302 Vinyl Siding - Replace 40 28 $919,842 $22,996 42%105 Pitched Roof - Comp Shingle - Replace 25 12 $432,844 $17,314 31%401 Asphalt - Overlay 25 13 $98,753 $3,950 7%120 Rain Gutters/Downspouts - Replace 25 12 $45,550 $1,822 3%

All Other See Expanded Table For Breakdown $9,403 17%

Cost(yrs.)(yrs.)

9

Page 12: Farr Orchard HOA

YearFully

Funded Balance

Starting Reserve Balance

% Funded

Reserve Contributions

Interest Income

Reserve Expenses

Ending Reserve Balance

Yearly Summary

10

Balance BalanceFunded Contributions Income Expenses

Balance2014 $656,957 $218,585 33% $92,400 $640 $17,929 $293,6962015 $715,348 $293,696 41% $95,172 $854 $0 $389,7232016 $795,673 $389,723 49% $98,027 $1,060 $30,691 $458,1182017 $848,561 $458,118 54% $100,968 $1,261 $9,845 $550,5022018 $926,325 $550,502 59% $103,997 $1,487 $16,601 $639,3852019 $1,001,338 $639,385 64% $107,117 $1,721 $10,467 $737,7562020 $1,086,849 $737,756 68% $110,330 $1,969 $12,120 $837,9362021 $1,175,210 $837,936 71% $113,640 $2,239 $0 $953,8162022 $1,280,753 $953,816 74% $117,050 $2,526 $6,271 $1,067,1212023 $1,385,112 $1,067,121 77% $120,561 $2,822 $0 $1,190,5042024 $1,501,232 $1,190,504 79% $124,178 $3,120 $12,134 $1,305,6672025 $1,610,575 $1,305,667 81% $127,903 $3,428 $0 $1,436,9992026 $1 738 000 $1 436 999 83% $131 740 $2 880 $704 745 $866 8742026 $1,738,000 $1,436,999 83% $131,740 $2,880 $704,745 $866,8742027 $1,145,734 $866,874 76% $135,693 $2,078 $209,152 $795,4922028 $1,048,605 $795,492 76% $139,763 $2,124 $33,170 $904,2092029 $1,132,341 $904,209 80% $143,956 $2,426 $14,067 $1,036,5252030 $1,240,860 $1,036,525 84% $148,275 $2,780 $0 $1,187,5792031 $1,369,793 $1,187,579 87% $152,723 $3,163 $0 $1,343,4662032 $1,505,346 $1,343,466 89% $157,305 $3,521 $30,491 $1,473,8022033 $1 616 394 $1 473 802 91% $162 024 $3 891 $0 $1 639 7172033 $1,616,394 $1,473,802 91% $162,024 $3,891 $0 $1,639,7172034 $1,765,097 $1,639,717 93% $166,885 $4,259 $42,947 $1,767,9142035 $1,877,033 $1,767,914 94% $171,891 $4,640 $0 $1,944,4452036 $2,039,658 $1,944,445 95% $177,048 $5,071 $13,413 $2,113,1512037 $2,196,536 $2,113,151 96% $182,359 $5,517 $0 $2,301,0282038 $2,375,222 $2,301,028 97% $187,830 $5,968 $20,633 $2,474,1942039 $2,541,399 $2,474,194 97% $193,465 $6,411 $18,904 $2,655,166$ , , $ , , $ , $ , $ , $ , ,2040 $2,717,827 $2,655,166 98% $199,269 $6,836 $47,292 $2,813,9782041 $2,873,899 $2,813,978 98% $205,247 $7,300 $0 $3,026,5252042 $3,087,061 $3,026,525 98% $211,405 $5,192 $2,115,857 $1,127,2642043 $1,131,093 $1,127,264 100% $217,747 $3,094 $0 $1,348,104

10

Page 13: Farr Orchard HOA

Reserve Contributions - Graph

Monthly Reserve Contributions

11

$16 000

$18,000

$20,000

Monthly Reserve Contributions

$12,000

$14,000

$16,000

$18,000

$20,000

Monthly Reserve Contributions

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

Monthly Reserve Contributions

$

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

Monthly Reserve Contributions

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

Year

Monthly Reserve Contributions

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

Year

Monthly Reserve Contributions

Recommended Current Minimum

11

Page 14: Farr Orchard HOA

ID Component Name UL

RU

L

QuantityAverage Current

Ideal Balance

Current Fund Balance

Monthly

Component Funding Information

12

p U R

yCost

Balance Balancey

105 Pitched Roof - Comp Shingle - Replace 25 12 Approx 115,425 Sq.ft. $432,844 $225,079 $154,708 $2,402.75120 Rain Gutters/Downspouts - Replace 25 12 Approx 9,110 Linear ft. $45,550 $23,686 $0 $252.85201 Stucco Surfaces - Repair/Repaint 12 2 Approx 15,355 Sq.ft. $20,729 $17,274 $17,274 $239.73204 Front Doors - Repaint 6 0 (89) Front Doors $8,900 $8,900 $8,900 $205.85p ( ) $ , $ , $ , $302 Vinyl Siding - Replace 40 28 Approx 167,244 Sq.ft. $919,842 $275,953 $0 $3,191.32401 Asphalt - Overlay 25 13 Approx 56,430 Sq.ft. $98,753 $47,401 $0 $548.18402 Asphalt - Seal Coat 5 0 Approx 56,430 Sq.ft. $9,029 $9,029 $9,029 $250.60601 Concrete Driveways & Sidewalks - Repair/Re 10 2 Extensive Sq.ft. $7,000 $5,600 $5,600 $97.14801 Monument Sign - Refurbish 18 6 (1) Monument Sign $1,250 $833 $833 $9.64

1008 Vinyl Fencing & Railing - Replace 25 13 Approx 1,985 Sq.ft. $43,670 $20,962 $0 $242.421009 Wood Split Rail Fencing - Replace 15 3 Approx 360 Linear ft. $5,760 $4,608 $4,608 $53.291307 Benches - Replace 12 2 (2) Benches $1,200 $1,000 $1,000 $13.881602 Exterior Light Fixtures - Replace 16 4 (236) Fixtures $14,750 $11,063 $11,063 $127.941609 Street Light Fixtures - Replace 20 8 (9) Street Light Fixtures $4,950 $2,970 $2,970 $34.352301 W d P l R l 1 3 (1) W d P l $3 2 0 $2 600 $2 600 $30 02301 Wood Pergola - Replace 15 3 (1) Wood Pergola $3,250 $2,600 $2,600 $30.07

$1,617,476 $656,957 $218,585 $7,700

Current Fund Balance as a percentage of Ideal Balance: 33%

12

Page 15: Farr Orchard HOA

Year 2014 2015 2016 2017 2018Starting Balance $218,585 $293,696 $389,723 $458,118 $550,502 Reserve Income $92,400 $95,172 $98,027 $100,968 $103,997 Interest Earnings $640 $854 $1,060 $1,261 $1,487

S $ $ $ $ $

Yearly Cash Flow

13

Special Assessments $0 $0 $0 $0 $0Funds Available $311,625 $389,723 $488,809 $560,347 $655,986Reserve Expenditures $17,929 $0 $30,691 $9,845 $16,601Ending Balance $293,696 $389,723 $458,118 $550,502 $639,385

Year 2019 2020 2021 2022 2023Starting Balance $639,385 $737,756 $837,936 $953,816 $1,067,121 Reserve Income $107,117 $110,330 $113,640 $117,050 $120,561 Interest Earnings $1,721 $1,969 $2,239 $2,526 $2,822 Special Assessments $0 $0 $0 $0 $0Funds Available $748,223 $850,056 $953,816 $1,073,391 $1,190,504Reserve Expenditures $10,467 $12,120 $0 $6,271 $0Ending Balance $737,756 $837,936 $953,816 $1,067,121 $1,190,504

Year 2024 2025 2026 2027 2028Starting Balance $1,190,504 $1,305,667 $1,436,999 $866,874 $795,492 Reserve Income $124,178 $127,903 $131,740 $135,693 $139,763 Interest Earnings $3,120 $3,428 $2,880 $2,078 $2,124 Special Assessments $0 $0 $0 $0 $0Funds Available $1,317,801 $1,436,999 $1,571,618 $1,004,644 $937,379Reserve Expenditures $12,134 $0 $704,745 $209,152 $33,170Ending Balance $1,305,667 $1,436,999 $866,874 $795,492 $904,209

Year 2029 2030 2031 2032 2033Starting Balance $904,209 $1,036,525 $1,187,579 $1,343,466 $1,473,802 Reserve Income $143,956 $148,275 $152,723 $157,305 $162,024 Interest Earnings $2,426 $2,780 $3,163 $3,521 $3,891 Special Assessments $0 $0 $0 $0 $0Funds Available $1,050,591 $1,187,579 $1,343,466 $1,504,292 $1,639,717Reserve Expenditures $14,067 $0 $0 $30,491 $0Ending Balance $1,036,525 $1,187,579 $1,343,466 $1,473,802 $1,639,717

Year 2034 2035 2036 2037 2038Starting Balance $1,639,717 $1,767,914 $1,944,445 $2,113,151 $2,301,028 Reserve Income $166,885 $171,891 $177,048 $182,359 $187,830 Interest Earnings $4,259 $4,640 $5,071 $5,517 $5,968 Special Assessments $0 $0 $0 $0 $0Funds Available $1,810,861 $1,944,445 $2,126,564 $2,301,028 $2,494,827Reserve Expenditures $42,947 $0 $13,413 $0 $20,633Ending Balance $1 767 914 $1 944 445 $2 113 151 $2 301 028 $2 474 194Ending Balance $1,767,914 $1,944,445 $2,113,151 $2,301,028 $2,474,194

Year 2039 2040 2041 2042 2043Starting Balance $2,474,194 $2,655,166 $2,813,978 $3,026,525 $1,127,264 Reserve Income $193,465 $199,269 $205,247 $211,405 $217,747 Interest Earnings $6,411 $6,836 $7,300 $5,192 $3,094 Special Assessments $0 $0 $0 $0 $0Funds Available $2,674,070 $2,861,270 $3,026,525 $3,243,121 $1,348,104R E dit $18 904 $47 292 $0 $2 115 857 $0Reserve Expenditures $18,904 $47,292 $0 $2,115,857 $0Ending Balance $2,655,166 $2,813,978 $3,026,525 $1,127,264 $1,348,104

13

Page 16: Farr Orchard HOA

Yearly Reserve Expenditures - Graph

$2,500,000

$2,000,000

$2,500,000

$1,500,000

$2,000,000

$2,500,000

Tota

ls

$1,000,000

$1,500,000

$2,000,000

$2,500,000

An

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al T

ota

ls

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

An

nu

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ota

ls

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

An

nu

al T

ota

ls

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

An

nu

al T

ota

ls

Year

14

Page 17: Farr Orchard HOA

Year ID # Component NameProjected

CostTotal Per Annum

2014 204 Front Doors - Repaint $8,900

Projected Reserve Expenditures by Year

15

402 Asphalt - Seal Coat $9,029 $17,9292015 No Expenditures Projected $02016 201 Stucco Surfaces - Repair/Repaint $21,992

601 Concrete Driveways & Sidewalks - Repair/ $7,4261307 Benches - Replace $1,273 $30,691

2017 1009 Wood Split Rail Fencing - Replace $6,2942301 Wood Pergola - Replace $3 551 $9 8452301 Wood Pergola - Replace $3,551 $9,845

2018 1602 Exterior Light Fixtures - Replace $16,601 $16,6012019 402 Asphalt - Seal Coat $10,467 $10,4672020 204 Front Doors - Repaint $10,627

801 Monument Sign - Refurbish $1,493 $12,1202021 No Expenditures Projected $02022 1609 Street Light Fixtures - Replace $6,271 $6,271g p $ , $ ,2023 No Expenditures Projected $02024 402 Asphalt - Seal Coat $12,134 $12,1342025 No Expenditures Projected $02026 105 Pitched Roof - Comp Shingle - Replace $617,132

120 Rain Gutters/Downspouts - Replace $64,943204 Front Doors - Repaint $12,689601 Concrete Driveways & Sidewalks Repair/ $9 980 $704 745601 Concrete Driveways & Sidewalks - Repair/ $9,980 $704,745

2027 401 Asphalt - Overlay $145,0211008 Vinyl Fencing & Railing - Replace $64,131 $209,152

2028 201 Stucco Surfaces - Repair/Repaint $31,3551307 Benches - Replace $1,815 $33,170

2029 402 Asphalt - Seal Coat $14,067 $14,0672030 No Expenditures Projected $02030 No Expenditures Projected $02031 No Expenditures Projected $02032 204 Front Doors - Repaint $15,152

1009 Wood Split Rail Fencing - Replace $9,8062301 Wood Pergola - Replace $5,533 $30,491

2033 No Expenditures Projected $02034 402 Asphalt - Seal Coat $16,307

1602 E t i Li ht Fi t R l $26 640 $42 9471602 Exterior Light Fixtures - Replace $26,640 $42,9472035 No Expenditures Projected $02036 601 Concrete Driveways & Sidewalks - Repair/ $13,413 $13,4132037 No Expenditures Projected $02038 204 Front Doors - Repaint $18,092

801 Monument Sign - Refurbish $2,541 $20,6332039 402 Asphalt - Seal Coat $18 904 $18 9042039 402 Asphalt - Seal Coat $18,904 $18,9042040 201 Stucco Surfaces - Repair/Repaint $44,705

1307 Benches - Replace $2,588 $47,2922041 No Expenditures Projected $0

15

Page 18: Farr Orchard HOA

2042 302 Vinyl Siding - Replace $2,104,5321609 Street Light Fixtures - Replace $11,325 $2,115,857

2043 No Expenditures Projected $0

Year Comp ID Component Name Projected CostTotal Per Annum

1616

Page 19: Farr Orchard HOA

Component Evaluation

Comp #: 105

Source of Information: CSL Cost Database

Best Cost: $403,988

Worst Cost: $461,700

Location: Building Roofs

Quantity: Approx 115,425 Sq.ft.

Observations:

The roofs are in good condition. No problems were noted at the time of the inspection. Typically this type of roofing material has a useful life of approximately 25 years. Inspect roofs regularly and make local repairs as necessary as an operating expense to ensure full life from this component. Remaining life based on current age.

Life Expectancy: 25 Remaining Life: 12

$3.50/Sq.ft.; Estimate to replace roof

$4.00/Sq.ft.; Higher estimate

Pitched Roof - Comp Shingle - Replace

General Notes:

Page 1 of 21

Page 20: Farr Orchard HOA

Comp #: 120

Source of Information: CSL Cost Database

Best Cost: $40,995

Worst Cost: $50,105

Location: Building Roofs

Quantity: Approx 9,110 Linear ft.

Observations:

The rain gutters and downspouts are in good condition. No problems were noted at the time of the inspection. We recommend replacing the rain gutters and downspouts at the same time as the roof replacement (see Comp# 105 Pitched Roof - Comp Shingle - Replace) to ensure proper function and to take advantage of the cost savings benefits. We recommend funding to replace these gutters and downspouts every 25 years. Remaining life based on current age.

Life Expectancy: 25 Remaining Life: 12

$4.50/Linear ft.; Estimate to replace

$5.50/Linear ft.; Higher estimate

Rain Gutters/Downspouts - Replace

General Notes:

Page 2 of 21

Page 21: Farr Orchard HOA

Comp #: 201

Source of Information: CSL Cost Database

Best Cost: $17,658

Worst Cost: $23,800

Location: Building Exteriors

Quantity: Approx 15,355 Sq.ft.

Observations:

The stucco surfaces are in fair condition. Minor damage and discoloration were noted at the time of the inspection. We recommend funding to repair/repaint this component approximately every 10 - 12 years to protect the stucco surface and maintain appearance. Remaining life based on current age and condition.

Life Expectancy: 12 Remaining Life: 2

$1.15/Sq.ft.; Estimate to repair/repaint stucco

$1.55/Sq.ft.; Higher estimate

Stucco Surfaces - Repair/Repaint

General Notes:

Page 3 of 21

Page 22: Farr Orchard HOA

Comp #: 204

Source of Information: CSL Cost Database

Best Cost: $6,675

Worst Cost: $11,125

Location: Unit Front Doors

Quantity: (89) Front Doors

Observations:

The painted front door surfaces are generally in fair to poor condition. Marking and fading were noted at the time of the inspection. We recommend funding to repaint this component this fiscal year (FY 2014). Repaint doors approximately every 6 years to maintain appearance and protect surfaces. Remaining life based on average condition.

Life Expectancy: 6 Remaining Life: 0

$75/Door; Estimate to repaint front doors

$125/Door; Higher estimate

Front Doors - Repaint

General Notes:

Page 4 of 21

Page 23: Farr Orchard HOA

Comp #: 302

Source of Information: CSL Cost Database

Best Cost: $836,220

Worst Cost: $1,003,464

Location: Building Exteriors

Quantity: Approx 167,244 Sq.ft.

Observations:

The vinyl siding is in good condition. No problems were noted at the time of the inspection. Although this component may reach and extended useful life we recommend funding to replace this component approximately every 30 - 40 years to maintain appearance. Remaining life based on current age.

Life Expectancy: 40 Remaining Life: 28

$5.00/Sq.ft.; Estimate to replace siding

$6.00/Sq.ft.; Higher estimate

Vinyl Siding - Replace

General Notes:

Page 5 of 21

Page 24: Farr Orchard HOA

Comp #: 401

Source of Information: CSL Cost Database

Best Cost: $84,645

Worst Cost: $112,860

Location: Community Streets

Quantity: Approx 56,430 Sq.ft.

Observations:

The asphalt streets are in good condition. Cracking was noted at the time of the inspection. Asphalt overlay generally has a useful life of 20 - 25 years. Maintain seal coat schedule to ensure full useful life (see Comp# 402 Asphalt - Seal Coat). Remaining life based on current age.

Life Expectancy: 25 Remaining Life: 13

$1.50/Sq.ft.; Estimate for overlay

$2.00/Sq.ft.; Higher estimate

Asphalt - Overlay

General Notes:

Page 6 of 21

Page 25: Farr Orchard HOA

Comp #: 402

Source of Information: CSL Cost Database

Best Cost: $7,336

Worst Cost: $10,722

Location: Community Streets

Quantity: Approx 56,430 Sq.ft.

Observations:

The asphalt seal coat is in poor condition. Cracks and raveling were noted at the time of the inspection. We recommend funding to seal this component this fiscal year (FY 2014). Seal asphalt surfaces regularly to prevent premature overlay (see Comp# 401 Asphalt - Overlay). Asphalt surfaces should be sealed every 3 - 5 years. Remaining life based on current age and condition.

Life Expectancy: 5 Remaining Life: 0

$0.13/Sq.ft.; Estimate for seal coat

$0.19/Sq.ft.; Higher estimate

Asphalt - Seal Coat

General Notes:

Page 7 of 21

Page 26: Farr Orchard HOA

Comp #: 601

Source of Information: CSL Cost Database

Best Cost: $6,000

Worst Cost: $8,000

Location: Driveways & Sidewalks

Quantity: Extensive Sq.ft.

Observations:

The concrete is generally in good condition. Areas of cracking and spalling were noted at the time of the inspection. Noexpectation to completely replace the concrete surfaces. We recommend making local repairs as necessary as an operating expense and funding to make more significant repairs approximately every 10 years. Remaining life based oncurrent condition.

Life Expectancy: 10 Remaining Life: 2

Allowance to repair/replace

Higher allowance

Concrete Driveways & Sidewalks - Repair/Replace

General Notes:

Page 8 of 21

Page 27: Farr Orchard HOA

Comp #: 801

Source of Information:

Best Cost: $0

Worst Cost: $0

Location: Common Area

Quantity: (1) Historical Marker

Observations:

The historical marker is in good condition. Due to the extended useful life of this component, reserve funding is not appropriate. Refurbish as necessary as an operating expense. No reserve funding necessary.

Life Expectancy: N/A Remaining Life:

Historical Marker - Refurbish

General Notes:

Page 9 of 21

Page 28: Farr Orchard HOA

Comp #: 801

Source of Information: CSL Cost Database

Best Cost: $1,000

Worst Cost: $1,500

Location: Community Entrance

Quantity: (1) Monument Sign

Observations:

The monument sign is in good condition. No problems were noted at the time of the inspection. We recommend refurbishing this component approximately every 18 years to ensure appearance. Remaining life is based on current age.

Life Expectancy: 18 Remaining Life: 6

Estimate to refurbish sign

Higher estimate

Monument Sign - Refurbish

General Notes:

Page 10 of 21

Page 29: Farr Orchard HOA

Comp #: 803

Source of Information:

Best Cost: $0

Worst Cost: $0

Location: Common Area

Quantity: (6) Clusters

Observations:

The mailboxes are in good condition. Typically these mailboxes are owned and maintained by the postal service. No reserve funding necessary.

Life Expectancy: N/A Remaining Life:

Mailboxes - Replace

General Notes:

Quantity description:

(6) - 16 box - Cluster

Page 11 of 21

Page 30: Farr Orchard HOA

Comp #: 890

Source of Information:

Best Cost: $0

Worst Cost: $0

Location: Community Entrances

Quantity: (2) Signs

Observations:

The community signs are in fair condition. Due to the minimal cost associated with maintaining and replacing this component, reserve funding is not appropriate. Repaint and replace as necessary as an operating expense. No reserve funding necessary.

Life Expectancy: N/A Remaining Life:

Community Signs - Other

General Notes:

Page 12 of 21

Page 31: Farr Orchard HOA

Comp #: 1008

Source of Information: CSL Cost Database

Best Cost: $35,730

Worst Cost: $51,610

Location: Common Area

Quantity: Approx 1,985 Sq.ft.

Observations:

The vinyl fencing and railing is in good condition. No problems were noted at the time of the inspection. This type of fencing material has a relatively long useful life. Reserve to replace the vinyl fencing every 25 years. Remaining life based on current age.

Life Expectancy: 25 Remaining Life: 13

$18/Linear ft.; Estimate to replace

$26/Linear ft.; Higher estimate

Vinyl Fencing & Railing - Replace

General Notes:

Quantity description:

220 Linear ft. - 2 Rail Vinyl 580 Linear ft. - Vinyl Privacy, 6ft.1,185 Linear ft. - Vinyl Railing

Page 13 of 21

Page 32: Farr Orchard HOA

Comp #: 1009

Source of Information: CSL Cost Database

Best Cost: $5,040

Worst Cost: $6,480

Location: Common Area

Quantity: Approx 360 Linear ft.

Observations:

The wood split rail fence is in fair condition. No problems were noted at the time of inspection. Expect a useful life of approximately 15 years from this component. Remaining life based on current age.

Life Expectancy: 15 Remaining Life: 3

$14/Linear ft.; Estimate to replace fence

$18/Linear ft.; Higher estimate

Wood Split Rail Fencing - Replace

General Notes:

Page 14 of 21

Page 33: Farr Orchard HOA

Comp #: 1012

Source of Information:

Best Cost: $0

Worst Cost: $0

Location: Split Rail Fence

Quantity: (12) Stone Fence Pillars

Observations:

The fence pillars are in good condition. This component has an extended useful life under normal conditions. Maintain as necessary as an operating expense. No reserve funding necessary.

Life Expectancy: N/A Remaining Life:

Fence Pillars - Replace

General Notes:

Page 15 of 21

Page 34: Farr Orchard HOA

Comp #: 1307

Source of Information: CSL Cost Database

Best Cost: $1,000

Worst Cost: $1,400

Location: Common Area

Quantity: (2) Benches

Observations:

The benches are in good condition. No problems were noted at the time of the inspection. Expect a useful life of approximately 10 - 12 years from this component. Remaining life based on current condition.

Life Expectancy: 12 Remaining Life: 2

$500/Bench; Estimate to replace

$700/Bench; Higher estimate

Benches - Replace

General Notes:

Page 16 of 21

Page 35: Farr Orchard HOA

Comp #: 1602

Source of Information: CSL Cost Database

Best Cost: $11,800

Worst Cost: $17,700

Location: Building Exteriors

Quantity: (236) Fixtures

Observations:

The exterior light fixtures are in fair condition. No problems were noted at the time of the inspection. Expect to replace these lights approximately every 16 years to maintain appearance. Remaining life based on current age and condition.

Life Expectancy: 16 Remaining Life: 4

$50/Fixture; Estimate to replace

$75/Fixture; Higher estimate

Exterior Light Fixtures - Replace

General Notes:

Page 17 of 21

Page 36: Farr Orchard HOA

Comp #: 1609

Source of Information: CSL Cost Database

Best Cost: $4,500

Worst Cost: $5,400

Location: Adjacent to Community Streets

Quantity: (9) Street Light Fixtures

Observations:

The street light fixtures are in good condition. No problems were noted at the time of the inspection. No expectation to replace the light poles. Paint poles as necessary as an operating expense. Although poles may reach an extended life we recommend funding to replace the street light fixtures approximately every 20 years to ensure proper function. Remaining life based on current age.

Life Expectancy: 20 Remaining Life: 8

$500/Fixture; Estimate to replace fixtures

$600/Fixture; Higher estimate

Street Light Fixtures - Replace

General Notes:

Page 18 of 21

Page 37: Farr Orchard HOA

Comp #: 1812

Source of Information:

Best Cost: $0

Worst Cost: $0

Location: Common Area

Quantity: Extensive Sq.ft.

Observations:

Research with the client reveals this component is maintained as an operating expense.

Life Expectancy: N/A Remaining Life:

Landscaping - Renovate

General Notes:

Page 19 of 21

Page 38: Farr Orchard HOA

Comp #: 2301

Source of Information:

Best Cost: $0

Worst Cost: $0

Location: Common Area

Quantity: (1) Metal Pergola

Observations:

The metal pergola is in good condition. This component has an extended useful life under normal conditions. Make repairs as necessary as an operating expense. No reserve funding necessary.

Life Expectancy: N/A Remaining Life:

Metal Pergola - Replace

General Notes:

Page 20 of 21

Page 39: Farr Orchard HOA

Comp #: 2301

Source of Information: CSL Cost Database

Best Cost: $2,500

Worst Cost: $4,000

Location: Common Area

Quantity: (1) Wood Pergola

Observations:

The wood pergola is in fair condition. Dry and cracking wood was noted at the time of the inspection. Paint as necessary as an operating expense. We recommend funding to replace this component approximately every 15 - 20 years. Remaining life based on current age.

Life Expectancy: 15 Remaining Life: 3

Estimate to replace

Higher estimate

Wood Pergola - Replace

General Notes:

Page 21 of 21

Page 40: Farr Orchard HOA

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.

Page 41: Farr Orchard HOA

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.