report fy 2015 spring mill plantation

REPLAC

EMEN

T RESER

VE REPO

RT FY

2015

SPR

ING

MILL P

LANTATIO

N

REPLACEMENT RESERVE REPORT FY 2015 SPRING MILL PLANTATION

Community Management by:

KA DIEHL

Stephanie Passon

11822 Highway 17 Bypass South Murrells Inlet, SC 29576 843-357-9888 Ext. 178

Consultant:

929 West Street, Suite 310 Annapolis, MD 21401

Tel: 410.268.0479 Fax: 410.268.8483

www.mdareserves.com

INTENTIONALLY LEFT BLANK

REPLACEMENT RESERVE REPORT

SPRING MILL PLANTATION

CALABASH, NORTH CAROLINA Description. Spring Mill Plantation is located in Calabash, North Carolina. Constructed in 2010 to present, the community consists of single family detached homes. The survey examined the common elements of the property, including:

• Asphalt drive and parking. • Concrete sidewalks and curb and gutter. • Entrance monuments. • Swimming pool and community building. • Ponds and storm water system.

Level of Service. This study has been performed as a Level 1 Full Service Reserve Study as defined under the National Reserve Study Standards that have been adopted by the Community Associations Institute. As such, a complete inventory of components was established for the commonly owned elements of this facility based on information provided by the Community Manager or by quantities that were developed from field measurement or takeoffs from to-scale drawings as performed by the Analyst. The condition of each inventory component was established by the Analyst, based on a visual inspection or review of provided historical data with a major repair or replacement cost for each also set. The included fund status and funding plan have been derived from analysis of this inventory.

Section A

Replacement Reserve Analysis

Executive Summary Reserve Status & Funding Plan - A1

General Information - A2 Cash Flow Method - A4

Cash Flow Inflation Funding - A6 Component Method - A8

Current Funding and Reserve Analysis Comments - A10

Section B

Replacement Reserve Inventory

Replacement Reserve Inventory General information - B1

Replacement Reserve Inventory Comments - B2

Schedule of Projected Replacements and Exclusions - B3

Section C

Projected Annual Replacements

Projected Annual Replacements General Information - C1

Reserve Analysis and Inventory Policies, Procedures, and Administration - C2

Calendar of Projected Annual Replacements - C2

Section D

Condition Assessment

Section E

Attachments

Accounting Summary Appendix

Video Answers to Frequently Asked Questions

To aid in the understanding of this report and its concepts and practices, on our web site, we have developed videos addressing frequently asked topics. In addition, there are posted links covering a variety of subjects under the resources page of our web site at mdareserves.com. Purpose. The purpose of this Replacement Reserve Study is to provide Spring Mill Plantation (hereinafter called the Association) with an inventory of the common community facilities and infrastructure components that require periodic replacement. The Study includes a general view of the condition of these items and an effective financial plan to fund projected periodic replacements. • Inventory of Items Owned by the Association. Section B lists the Projected Replacements of the

commonly owned items that require periodic replacement using funding from Replacement Reserves. The Replacement Reserve Inventory also provides information about excluded items, which are items whose replacements are not scheduled for funding from Replacement Reserves.

• Condition of Items Owned by the Association. Section B includes our estimates of the normal

economic life and the remaining economic life for the projected replacements. Section C provides a year-by-year listing of the projected replacements. Section D provides additional detail for items that are unique or deserving of attention because of their condition or the manner in which they have been treated in this study.

• Financial Plan. The Association has a fiduciary responsibility to protect the appearance, value, and

safety of the property and it is therefore essential the Association have a financial plan that provides funding for the projected replacements. In conformance with American Institute of Certified Public Accountant guidelines; Section A evaluates the current funding of Replacement Reserves as reported by the Association and recommends annual funding of Replacement Reserves by two generally accepted accounting methods; the Cash Flow Method and the Component Method. Section A includes graphic and tabular presentations of these methods and current Association funding. An Executive Summary of these calculations is provided on Page A1.

Basis. The data contained in this Replacement Reserve Study is based upon the following: • The Request for Proposal submitted and executed by the Association.

• Miller - Dodson performed a visual evaluation on May 20, 2014 to determine a remaining useful life

and replacement cost for the commonly owned elements of this facility. • This study contains additional recommendations to address inflation for the Cash Flow Method only.

For this recommendation, Miller - Dodson uses the Producers Price Index (PPI), which gauges inflation in manufacturing and construction. Please see page A6 and A7 for further details.

To-Scale Drawings. Site and building plans were not used in the development of this study. We recommend the Association assemble and maintain a library of site and building plans of the entire facility. Record drawings should be scanned into an electronic format for safe storage and ease of distribution. Upon request for a nominal fee, Miller - Dodson can provide scanning services. Current Funding. This reserve study has been prepared for Fiscal Year 2015 covering the period from January 1, 2015 to December 31, 2015. The Replacement Reserves on deposit as of January 1, 2015 are projected to be $92,559.74. The planned contribution for the fiscal year is $0.0. The balance and contribution figures have been supplied by the property management agent and confirmation or audit of these figures is beyond the scope of the study. For the purposes of this study, it is assumed that the annual contribution will be deposited at the end of each month. Acknowledgement. Miller - Dodson Associates would like to acknowledge the assistance and input of the Community Manager, Ms. Stephanie Passon who provided very helpful insight into the current operations of the property.

http://mdareserves.com/video-library�

http://mdareserves.com/resources/links�

http://mdareserves.com/resources/links�

Analyst’s Credentials. Larry D. Ellis holds a Bachelor’s Degree in Industrial Management from the University of Tennessee and a Master’s Degree in Industrial Management from Central Michigan University. He has over 20 years’ experience in management engineering with the United States Air Force and over 17 years working with community associations and capital reserve analysis. Larry holds a Reserve Specialist (RS) Certification from the Community Associations Institute (CAI). He also holds a Professional Community Association Manager (PCAM) Certification from the Community Associations Institute (CAI). Larry has extensive experience at portfolio management and has managed large-scale properties, including both condominium and HOA. He has worked as a Regional Director for a large Management Company responsible for over a 100 properties and their employees and as Director of Business Development at the corporate level. Currently, Larry is a reserve specialist for Miller - Dodson Associates. Respectfully submitted,

Larry D. Ellis, AMS, PCAM, RS Reserve Specialist

INTENTIONALLY LEFT BLANK

Miller + Dodson Associates, Inc. Replacement Reserve Analysis - Page A1Spring Mill Plantation Revised December 2, 2014

1139712SPRING M15

EXECUTIVE SUMMARYThe Spring Mill Plantation Replacement Reserve Inventory identifies 90 Projected Replacements forfunding from Replacement Reserves, with an estimated one-time replacement cost of $1,612,292.The Replacement Reserve Analysis calculates recommended funding of Replacement Reserves by the two generallyaccepted methods, the Cash Flow Method and the Component Method. The Analysis also evaluates current fundingof Replacement Reserves, as reported by the Association. The calculations and evaluation are summarized below:

$76,932CASH FLOW METHOD MINIMUM ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2015.

The Cash Flow Method (CFM) calculates Minimum Annual Funding of Replacement Reserves that will fund Projected Replacements identified in the Replacement Reserve Inventory from a common pool of ReplacementReserves and prevent Replacement Reserves from dropping below a Minimum Recommended Balance.CFM - Minimum Annual Funding remains the same between peaks in cumulative expenditures called Peak Years.The first Peak Year occurs in 2054 which is outside of the 30-year Study Period. The Cash FlowMethod - Minimum Annual Funding of Replacement Reserves remains constant at $76,932 throughout theentire 30-year Study Period.

$99,812COMPONENT METHOD RECOMMENDED ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2015.

The Component Method is a very conservative funding model developed by HUD in the early 1980's.The Component Method treats each projected replacement in the Replacement Reserve Inventory as a separate account. Deposits are made to each individual account, where funds are held for exclusive use by that item.Based on this funding model, the Association has a Current Funding Objective of $310,078.The Association reports having $92,560 on deposit, which is 29.9% funded.

$46,644CURRENT ANNUAL FUNDING OF REPLACEMENT RESERVES (as reported by the Association).

The evaluation of Current Funding, as reported by the Association, has calculated that if the Associationcontinues to fund Replacement Reserves at the current level, there will NOT be adequate funds for ProjectedReplacements in 14 years of the 30-year Study Period, and a maximum shortfall of $-384,704 occurs in 2034.

Pages A2 and A3 explain the Study Year, Study Period, Adjustments (interest & inflation), Beginning Balance, and Projected Replacements. Pages A4 to A9explain in more detail the calculations associated with the Cash Flow Method, Component Method, and Current Funding.

REPLACEMENT RESERVE STATUS AND FUNDING PLAN

Current funding of Replacement Reserves is inadequate to fund Projected Replacements.We recommend the Association adopt a Replacement Reserve Funding Plan based on the Cash Flow Method or theComponent Method, to ensure that adequate funding is available throughout the 30-Year Study Period for the$1,732,311 of Projected Replacements listed in the Spring Mill Plantation Replacement Reserve Inventory.The Funding Plan should be professionally updated every three to five years or after completion of each major replacement project. The Board of Directors has a fiduciary responsibility to review the Funding Plan annually andshould consider annual increases in Replacement Reserve funding at least equal to the Producer Price Index.


1139712SPRING M15

REPLACEMENT RESERVE ANALYSIS - GENERAL INFORMATION

The Spring Mill Plantation Replacement Reserve Analysis calculations of recommended funding ofReplacement Reserves by the Cash Flow Method and the Component Method, and the evaluation of the Current Funding, are based upon the same General Information; including the Study Year, Study Period, Beginning Balance, and Projected Replacements.

STUDY YEARThe Association reports that their accounting year begins on January 1, and the Study Year, the first year evaluatedby the Replacement Reserve Analysis, begins on January 1, 2015.

STUDY PERIODThe Replacement Reserve Analysis evaluates the funding of Replacement Reserves over a 30-year Study Period that begins on January 1, 2015.

BEGINNING BALANCEThe Association reports Replacement Reserves on Deposit totaling $92,560 at the start of the Study Year.

ADJUSTMENTS AND INFLATIONThe short term consequences of 4.50% inflation and no constant annual increase in Reserve funding on the Cash Flow Method, as calculated by a proprietary model developed by Miller + Dodson Associates. are shown onPages A6 and A7. Other calculations in this Analysis do not account for inflation or a constant annual increase.The calculations in this Analysis do not account for interest earned on Replacement Reserves.

Graph #1. Annual Expenditures for Projected Replacements This bar graph summarizes annual expenditures for the $1,732,311 of Projected Replacements identified in the Replacement Reserve Inventory over the30-year Study Period. The red line shows the average annual expenditure of $57,744.

30 YR AVERAGE$57,744

$5,1

32

$25,

915

$19,

070

$0

$27,

098

$14,

856

$45,

483

$53,

704

$2,5

00

$26,

570 $4

2,16

5

$32,

443 $4

8,35

8

$0

$20,

570

$297

,460

$248

,694

$284

,871

$43,

584

$171

,669

$40,

565

$38,

615

$34,

064

$0

$37,

638

$47,

864

$30,

305

$72,

546

$2,5

00

$18,

070

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000


1139712SPRING M15

PROJECTED REPLACEMENTSThe Spring Mill Plantation Replacement Reserve Inventory (Section B) identifies 90 ProjectedReplacements with a one-time Replacement Cost of $1,612,292 and replacements totaling $1,732,311 in the30-year Study Period. Projected Replacements are the replacement of commonly-owned items that:

require periodic replacement and whose replacement is to be funded from Replacement Reserves.

The accuracy of the Spring Mill Plantation Replacement Reserve Analysis is dependent upon expenditures from Replacement Reserves being made ONLY for the 90 Projected Replacementsspecifically listed in the Replacement Reserve Inventory.

To further assist in the identification of items not appropriately funded from Replacement Reserves,the Replacement Reserve Inventory identifies 57 Excluded Items. The rationale behind the exclusion of itemsfrom funding by Replacement Reserves is discussed in detail on Page B1.

The Section B - Replacement Reserve Inventory, contains Tables that list each Projected Replacement (and any Excluded Items) broken down into 15 major categories (Pages B3 to B16). Tables are also included that list eachProjected Replacement by year for each of the 30 years of the Study Period beginning on Page C1.

Graph #2. Comparison of Cumulative Replacement Reserve Funding and ExpendituresThe line graph shows Replacement Reserves - Cumulative Receipts over the 30-year Study Period by the Cash Flow Method (red circles), ComponentMethod (purple diamonds), and the Current Funding Plan as reported by the Association (blue triangles). The bar graph shows the CumulativeExpenditures necessary to fund the Project Replacements listed in the Replacement Reserve Inventory (Section B) and summarized in Graph #1.

$1,491,880

$1,732,311

$2,688,173

$2,400,515

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Cash Flow Method - Cumulative Receipts

Component Method - Cumulative Receipts

Current Funding - Cumulative Receipts

Projected Replacements - CumulativeExpenditures


1139712SPRING M15

CASH FLOW METHOD

$76,932CASH FLOW METHOD MINIMUM ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2015.

General. The Cash Flow Method (also referred to as the Straight Line Method) is founded on the concept that theReplacement Reserve Account is solvent if cumulative receipts always exceed cumulative expenses. The Cash FlowMethod calculates a MINIMUM annual deposit to Replacement Reserves that will: Fund all Projected Replacements listed in the Replacement Reserve Inventory (see Section B) Prevent Replacement Reserves from dropping below the Minimum Recommended Balance (see Page A-5) Allow a constant annual funding level between peaks in cumulative expenditures

Graph #3. Cash Flow Method - Cumulative Receipts and Expenditures Graph

$1,732,311

$668,205

$2,400,515

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Cash Flow Method - Cumulative Receipts Cash Flow Method - Year End Balance Cumulative Expenditures


1139712SPRING M15

CASH FLOW METHOD (cont'd)

Replacement Reserves - Minimum Recommended Balance. The Minimum Recommended Balance is $80,615,which is 5.0 percent of the one-time replacement cost of the Projected Replacements listed in the ReplacementReserve Inventory. Unless otherwise noted in the Comments on Page A-9, the Minimum RecommendedBalance has been established by the Analyst based upon an evaluation of the types of items included in theReplacement Reserve Inventory.

Peak Years. The Cash Flow Method calculates a constant annual funding of Replacement Reserves betweenpeaks in cumulative expenditures called Peak Years. In Peak Years, Replacement Reserves on Deposit declineto the Replacement Reserves - Minimum Recommended Balance discussed in the paragraph above.First Peak Year. The first Peak Year occurs in 2054, which is outside of the 30-year Study Period. The Cash FlowMethod - Minimum Annual Funding of Replacement Reserves of $76,932 remains the same throughout theentire 30-year Study Period.This funding level is adequate to fund the $1,732,311 of Projected Expenditures listed in the Replacement ReserveInventory.

Study Period. The Cash Flow Method calculates the recommended contributions to Replacement Reserves over the 30-year Study Period. These calculations are based upon a 40-year projection of expenditures for Projected Replacements to avoid the Replacement Reserve balance dropping to the Minimum Recommended Balance in thefinal year of the Study Period.

Failure to Fund. The Cash Flow Method calculates a MINIMUM annual funding of Replacement Reserves. Failure to fund Replacement Reserves at the minimum level calculated by the Cash Flow Method will result in Replacement Reserves not being available for the Projected Replacements listed in the Replacement Reserve Inventory and/or Replacement Reserves dropping below the Minimum Recommended Balance.

Adjustment to the Cash Flow Method for interest and inflation. The funding recommendations on Pages A4 and A5 do not account for interest earned on Replacement Reserves, the effects of inflation of the cost of Projected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves.

Comparison of Cash Flow Funding and Average Annual Expenditure. The Average Annual Expenditure for Projected Replacements listed in the Reserve Inventory over the 30-year Study Period is $57,744 (see Graph #1).The Cash Flow Method - Minimum Annual Funding of Replacement Reserves in the Study Year is $76,932.This is 133.2 percent of the Average Annual Expenditure, indicating that the Association is building ReplacementReserves in advance of the first Peak Year in 2054.

Table #1. Cash Flow Method Data - Years 1 through 30Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Beginning balance $92,560 Minimum annual funding $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932

Expenditures $5,132 $25,915 $19,070 $27,098 $14,856 $45,483 $53,704 $2,500 $26,570Year end balance $164,360 $215,376 $273,239 $350,170 $400,004 $462,080 $493,528 $516,757 $591,188 $641,550

Minimum recommended balance $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615Cumulative expenditures $5,132 $31,047 $50,117 $50,117 $77,215 $92,071 $137,554 $191,258 $193,758 $220,328

Cumulative receipts $169,492 $246,423 $323,355 $400,287 $477,219 $554,151 $631,083 $708,015 $784,946 $861,878

Year 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034Minimum annual funding $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932


Minimum recommended balance $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615Cumulative expenditures $262,493 $294,937 $343,294 $343,294 $363,865 $661,325 $910,019 $1,194,891 $1,238,475 $1,410,143

Cumulative receipts $938,810 $1,015,742 $1,092,674 $1,169,606 $1,246,538 $1,323,469 $1,400,401 $1,477,333 $1,554,265 $1,631,197

Year 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044Minimum annual funding $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932 $76,932


Minimum recommended balance $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615 $80,615Cumulative expenditures $1,450,708 $1,489,323 $1,523,387 $1,523,387 $1,561,025 $1,608,889 $1,639,195 $1,711,740 $1,714,240 $1,732,311

Cumulative receipts $1,708,129 $1,785,061 $1,861,992 $1,938,924 $2,015,856 $2,092,788 $2,169,720 $2,246,652 $2,323,584 $2,400,515


1139712SPRING M15

CASH FLOW METHOD - INFLATION ADJUSTED FUNDING

The Miller + Dodson ModelGeneral. The Cash Flow Method funding recommendations shown on pages A4 and A5 have been calculated in today's dollars with no adjustment for inflation. Recent swings in construction costs demonstrate the risk facing anAssociation that does not consider the effects of inflation when funding Replacement Reserves.Cash Flow Method - Inflation Adjusted Funding. Below is an outline of the proprietary model developed by Miller + Dodson Associates to forecast the short-term consequences of inflation on Replacement Reserves.

Study Year. The Unit Replacement Costs in the Study Year (listed in Section B Inventory) reflect currentconstruction costs. Appropriate adjustments to account for any time lag between when the Study is conductedand the Study Year have been made by the Reserve Analyst.

Year Two Inflation Adjusted Funding calculation. The Year Two Starting Balance is calculated assumingAssociation compliance with the Study Year funding and replacement data listed on Page A7.Next, the Projected Replacement Costs are adjusted using the Construction Cost Inflation Rate (see detailed information below). The adjusted data is then evaluated using the Cash Flow Method, calculating the Year Two Inflation AdjustedMinimum Annual Funding of Replacement Reserves.

Year Three Inflation Adjusted Funding Calculation. The same methodology has been used to develop the Inflation Adjusted Cash Flow Method Minimum Annual Funding of Replacement Reserves in Year Three. Simplecompounding has been used to calculate the Year Three Projected Replacement Costs.

Year Four and Beyond. We have not calculated adjusted funding recommendations beyond the third year of the Study nor do we believe it is appropriate to do so. Inflation adjusted funding recommendations are not intended to be a substitute for the periodic evaluation of the common elements by an experienced Reserve Analyst. We recommend the common elements of the community be evaluated by a Reserve Analyst every 3 to 5 years and at the completion of each major replacement project.

Base Construction Cost Inflation Rate. We have utilized a 4.50 percent base rate of inflation in our calculation of second and third year inflation adjusted funding. The rate of inflation is based upon our review of the Producer Price Indexes for Construction Materials, Structure Types & Subcontractors as published by the Bureau of Labor Statistics and our experience with recent pricing trends in your area."Assumptions. Cash Flow Method, Inflation Adjusted Funding in Year Two and Year Three is calculated based upon three assumptions discussed below and quantified on Page A7. Prior to approving a budget based upon the calculations, the Association should review the accuracy of the assumptions. If discrepancies are noted, contactMiller + Dodson Associates to arrange for a Replacement Reserve Study Update.

Replacement Reserve Funding. We have assumed the Association will fund Replacement Reserves asrecommended in the Study.

Scheduled Replacements. We have assumed the Association will make Scheduled Replacements as discussed in the Study (listed on Page C2) and that the cost of these replacements is in substantial compliance with theestimated replacement costs. We have further assumed that no Replacement Reserves will be used to fundreplacements other than those specifically listed in the Replacement Reserve Inventory.

Construction Cost Inflation Rate evaluation. Prior to approving a budget based upon the Year Two and Year Three Adjusted Replacement Reserve Funding calculations, the 4.50 percent base rate of inflation used in our should be compared to rates published by the Bureau of Labor Statistics. If a significant discrepancy (over1 percent) is noted, contact Miller Dodson Associates prior to using the funding calculations.

Interest. The recommended funding calculations above do not account for interest earned on Replacement Reserves.In 2015, based on a 1.50 percent interest rate, we estimate the Association will earn $1,927 on an average balanceof $128,460, $2,867 on an average balance of $191,111 in 2016, and $3,745 on $249,683 in 2017. Should the Association earn and choose to attribute 100 percent of the interest to Reserves, the 2015 the minimum funding could be reduced from $76,932 to $75,005 (a 2.50 percent reduction), $80,583 to $77,717 in 2016 (a 3.56 percent reduction), and $84,468 to $80,722 in 2017 (a 4.43 percent reduction).


1139712SPRING M15

CASH FLOW METHOD ANNUAL FUNDING GRAPH

THREE-YEAR FUNDING RECOMMENDATIONS WITH INFLATIONADJUSTMENT

The bar graph below shows the Cash Flow Method Annual Funding calculated in today's dollars (lighter bars) and the Inflation Adjusted Cash Flow Method Annual Funding (dark bars)

2015 - STUDY YEAR

$76,932 MINIMUM ANNUAL FUNDING

The $76,932 funding of Replacement Reserves in the Study Year has been calculated using current construction costs (listed in Section B Inventory). The Analyst has adjusted the costs to account for any time lag between the preparation of the Study and the Study Year.

2016 - YEAR TWO

$80,583 INFLATION ADJUSTED MINIMUM ANNUAL FUNDING

The $80,583 inflation adjusted funding of Replacement Reserves in 2016 represents a 4.75 percent increase over the non-inflation adjusted fundingrecommendation of $76,932 in the Study Year.The specific assumptions used to calculate the Year Two Inflation Adjusted Funding are listed below. If the assumptions are inaccurate, do not use the data and contact Miller Dodson Associates to arrange for a Replacement Reserve Study Update. The assumptions are: Replacement Reserves on Deposit totaling $164,360 on January 1, 2016. All 2015 Projected Replacements scheduled in the Replacement Reserve

Inventory and listed on Page C2, having been accomplished in 2015 ata cost of $5,132.

An average annual Construction Cost Inflation Rate of 4.50 percentover the previous 12 month period.

2017 - YEAR THREE

$84,468 INFLATION ADJUSTED MINIMUM ANNUAL FUNDING

The $84,468 inflation adjusted funding of Replacement Reserves in 2017 represents a 9.80 percent increase over the non-inflation adjusted fundingrecommendation of $76,932 in the Study Year.The specific assumptions used to calculate the Year Two Inflation Adjusted Funding are listed below. If the assumptions are inaccurate, do not use the data and contact Miller Dodson Associates to arrange for a Replacement Reserve Study Update. The assumptions are:

Replacement Reserves on Deposit totaling $217,862 on January 1, 2016. All 2016 Projected Replacements scheduled in the Replacement Reserve

Inventory and listed on Page C2, having been accomplished in 2016 ata cost of $27,081.

An average annual Construction Cost Inflation Rate of 4.50 percentover the previous 24 month period.

$76,

932

$76,

932

$76,

932 $80,

583

$76,

932

$84,

468

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

Cash Flow Method Annual FundingInflation Adjusted Cash Flow Method Annual Funding


1139712SPRING M15

COMPONENT METHOD

$99,812COMPONENT METHOD RECOMMENDED ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2015.

General. The Component Method (also referred to as the Full Funded Method) is a very conservativemathematical model developed by HUD in the early 1980s. Each of the 90 Projected Replacements listed in theReplacement Reserve Inventory is treated as a separate account. The Beginning Balance is allocated to each of theindividual accounts, as is all subsequent funding of Replacement Reserves. These funds are "locked" in these individual accounts and are not available to fund other Projected Replacements. The calculation of Recommended Annual Funding of Replacement Reserves is a multi-step process outlined in more detail on Page A9.

Graph #4. Component Method - Cumulative Receipts and Expenditures Graph

$1,732,311

$955,862

$2,688,173

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Component Method - Cumulative Receipts Component Method - Year End Balance Projected Replacements - Cumulative Expenditures


1139712SPRING M15

COMPONENT METHOD (cont'd)

Current Funding Objective. A Current Funding Objective is calculated for each of the Projected Replacementslisted in the Replacement Reserve Inventory. Replacement Cost is divided by the Normal Economic Life todetermine the nominal annual contribution. The Remaining Economic Life is then subtracted from theNormal Economic Life to calculate the number of years that the nominal annual contribution should havebeen made. The two values are then multiplied to determine the Current Funding Objective. This is repeated for each of the 90 Projected Replacements. The total, $310,078, is the Current Funding Objective.For an example, consider a very simple Replacement Reserve Inventory with one Projected Replacement, a fencewith a $1,000 Replacement Cost, a Normal Economic Life of 10 years, and a Remaining Economic Life of 2 years.A contribution to Replacement Reserves of $100 ($1,000 + 10 years) should have been made in each of theprevious 8 years (10 years - 2 years). The result is a Current Funding Objective of $800 (8 years x $100 per year).

Funding Percentage. The Funding Percentage is calculated by dividing the Beginning Balance ($92,560)by the Current Funding Objective ($310,078). At Spring Mill Plantation the Funding Percentage is 29.9%

Allocation of the Beginning Balance. The Beginning Balance is divided among the 90 Projected Replacementsin the Replacement Reserve Inventory. The Current Funding Objective for each Projected Replacement ismultiplied by the Funding Percentage and these funds are then "locked" into the account of each item.

If we relate this calculation back to our fence example, it means that the Association has not accumulated $800in Reserves (the Funding Objective), but rather at 29.9 percent funded, there is $239 in the account for the fence.

Annual Funding. The Recommended Annual Funding of Replacement Reserves is then calculated for eachProjected Replacement. The funds allocated to the account of the Projected Replacement are subtracted from the Replacement Cost. The result is then divided by the number of years until replacement, and the result is the annual funding for each of the Projected Replacements. The sum of these is $99,812, the Component MethodRecommended Annual Funding of Replacement Reserves in the Study Year (2015).

In our fence example, the $239 in the account is subtracted from the $1,000 Total Replacement Cost and divided by the 2 years that remain before replacement, resulting in an annual deposit of $381. Next year, the depositremains $381, but in the third year, the fence is replaced and the annual funding adjusts to $100.

Adjustment to the Component Method for interest and inflation. The calculations in the Replacement ReserveAnalysis do not account for interest earned on Replacement Reserves, inflation, or a constant annual increase in Annual Funding of Replacement Reserves. The Component Method is a very conservative method and if the Analysis is updated regularly, adequate funding will be maintained without the need for adjustments.

Table #2. Component Method Data - Years 1 through 30Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Beginning balance $92,560 Recommended annual funding $99,812 $97,238 $91,785 $90,652 $90,652 $90,390 $90,714 $89,203 $88,254 $88,254


Cumulative Expenditures $5,132 $31,047 $50,117 $50,117 $77,215 $92,071 $137,554 $191,258 $193,758 $220,328Cumulative Receipts $192,372 $289,610 $381,395 $472,046 $562,698 $653,088 $743,802 $833,005 $921,259 $1,009,512

Year 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034Recommended annual funding $88,154 $88,338 $88,338 $87,535 $87,535 $87,535 $85,984 $84,620 $81,807 $81,315

Expenditures $42,165 $32,443 $48,358 $20,570 $297,460 $248,694 $284,871 $43,584 $171,669Year end balance $835,173 $891,068 $931,049 $1,018,584 $1,085,548 $875,623 $712,912 $512,661 $550,884 $460,530

Cumulative Expenditures $262,493 $294,937 $343,294 $343,294 $363,865 $661,325 $910,019 $1,194,891 $1,238,475 $1,410,143Cumulative Receipts $1,097,667 $1,186,005 $1,274,343 $1,361,878 $1,449,413 $1,536,948 $1,622,932 $1,707,552 $1,789,359 $1,870,673

Year 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044Recommended annual funding $81,315 $81,315 $81,303 $81,267 $81,267 $80,988 $82,519 $82,519 $82,504 $82,504


Cumulative Expenditures $1,450,708 $1,489,323 $1,523,387 $1,523,387 $1,561,025 $1,608,889 $1,639,195 $1,711,740 $1,714,240 $1,732,311Cumulative Receipts $1,951,988 $2,033,302 $2,114,606 $2,195,873 $2,277,140 $2,358,127 $2,440,646 $2,523,164 $2,605,669 $2,688,173


1139712SPRING M15

CURRENT FUNDING

$46,644CURRENT ANNUAL FUNDING OF REPLACEMENT RESERVES (as reported by the Association).

General. Our evaluation of the Current Association Funding assumes that the Association will continue to fundReplacement Reserves at the current level of $46,644 per year in each of the 30 years of the Study Period.Our evaluation is based upon this Replacement Reserve Funding Level, a $92,560 Beginning Balance, theProjected Annual Replacement Expenditures shown in Graph #1 and listed in the Replacement Reserve Inventory,and any interest, inflation rate, or constant annual increase in annual contribution adjustments discussed below.

Evaluation. Our calculations have determined that Current Annual Funding of Replacement Reserves, as reportedby the Association, is inadequate to fund Projected Replacement beginning in 2031.The Current Annual Funding of Replacement Reserves results in insufficient funds to make Projected Replacementsin 14 years of the 30-year Study Period, and a maximum shortfall of $-384,704 occurs in 2034.

Adjustment to the Current Association Funding for interest and inflation. The Calculations in the ReplacementReserve Analysis do not account for interest earned on Replacement Reserves, the effects of inflation of the cost of Projected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves.

Comparison of Current Association Funding and Average Annual Expenditure. The average annual expenditure forProjected Replacements listed in the Reserve Inventory over the 30-year Study Period is $57,744 (see Graph #1). Current Association annual funding of Replacement Reserves is $46,644, or approximately 81 percent ofthe Average Annual Expenditure.

Graph #5. Current Association Funding - Cumulative Receipts and Expenditures Graph

$1,732,311

($240,431)

$1,491,880

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

($500,000)

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

Current Funding - Cumulative Receipts Current Funding - Year End Balance Projected Replacements - CumulativeExpenditures


1139712SPRING M15

CURRENT FUNDING (cont'd)

Table #3. Current Funding Data - Years 1 through 30Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Beginning balance $92,560 Annual deposit $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644


Cumulative Expenditures $5,132 $31,047 $50,117 $50,117 $77,215 $92,071 $137,554 $191,258 $193,758 $220,328Cumulative Receipts $139,204 $185,848 $232,492 $279,136 $325,780 $372,424 $419,068 $465,712 $512,356 $559,000

Year 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034Annual deposit $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644

Expenditures $42,165 $32,443 $48,358 $20,570 $297,460 $248,694 $284,871 $43,584 $171,669Year end balance $343,150 $357,351 $355,638 $402,282 $428,355 $177,539 ($24,512) ($262,739) ($259,679) ($384,704)

Cumulative expenditures $262,493 $294,937 $343,294 $343,294 $363,865 $661,325 $910,019 $1,194,891 $1,238,475 $1,410,143Cumulative receipts $605,644 $652,288 $698,932 $745,576 $792,220 $838,864 $885,508 $932,152 $978,796 $1,025,440

Year 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044Annual deposit $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644 $46,644

Expenditures $40,565 $38,615 $34,064 $37,638 $47,864 $30,305 $72,546 $2,500 $18,070Year end balance ($378,624) ($370,596) ($358,015) ($311,371) ($302,366) ($303,586) ($287,247) ($313,148) ($269,004) ($240,431)

Cumulative Expenditures $1,450,708 $1,489,323 $1,523,387 $1,523,387 $1,561,025 $1,608,889 $1,639,195 $1,711,740 $1,714,240 $1,732,311Cumulative Receipts $1,072,084 $1,118,728 $1,165,372 $1,212,016 $1,258,660 $1,305,304 $1,351,948 $1,398,592 $1,445,236 $1,491,880

COMMENTS ON THE REPLACEMENT RESERVE ANALYSIS

This Replacement Reserve Study has been developed in compliance with the Community Associations Institute,National Reserve Study Standards, for a Level One Study - Full Service.

Spring Mill Plantation - the type of property is a home owner association.

Our calculations assume that Replacement Reserves are not subject to tax.

07/18/14. Changed opening balance.

Intentionally Left Blank

Miller + Dodson Associates, Inc. Replacement Reserve Inventory - Page B1Spring Mill Plantation Revised December 2, 2014

1139712SPRING M15

REPLACEMENT RESERVE INVENTORYGENERAL INFORMATION

Spring Mill Plantation - Replacement Reserve Inventory identifies 147 items. Two types of items areidentified, Projected Replacements and Excluded Items:

PROJECTED REPLACEMENTS. 90 of the items are Projected Replacements and the periodicreplacements of these items are scheduled for funding from Replacement Reserves. The Projected Replacementshave an estimated one-time replacement cost of $1,612,292. Replacements totaling $1,732,311 are scheduledin the Replacement Reserve Inventory over the 30-year Study Period.Projected Replacements are the replacement of commonly owned physical assets that require periodic replacement and whose replacement is to be funded from Replacement Reserves.

EXCLUDED ITEMS. 57 of the items are Excluded Items, and expenditures for these items are NOTscheduled for funding from Replacement Reserves. The accuracy of the calculations made in the ReplacementReserve Analysis is dependent on expenditures NOT being made for Excluded Items. The Excluded Itemsare listed in the Replacement Reserve Inventory to identify specific items and categories of items thatare not to be funded from Replacement Reserves. There are multiple categories of items that are typicallyexcluded from funding by Replacement Reserves, including but not limited to:

Tax Code. The United States Tax Code grants very favorable tax status to Replacement Reserves, conditionedon expenditures being made within certain guidelines. These guidelines typically exclude maintenanceactivities, minor repairs and capital improvements.Value. Items with a replacement cost of less that $1,000 and/or a normal economic life of less than 3 years are typically excluded from funding from Replacement Reserves. This exclusion is made to accurately reflecthow Replacement Reserves are administered. If the Association has selected an alternative levels, it will benoted in the Replacement Reserve Inventory - General Comments on Page B2.Long-lived Items. Items that when properly maintained, can be assumed to have a life equal to the propertyas a whole, are typically excluded from the Replacement Reserve Inventory.

Unit improvements. Items located on property owned by a single unit and where the items serve a single unit are generally assumed to be the responsibility of that unit, not the Association.Other non-common improvements. Items owned by the local government, public and private utility companies, the United States Postal Service, Master Associations, state and local highway authorities, etc., may beinstalled on property that is owned by the Association. These types of items are generally not the responsibility of the Association and are excluded from the Replacement Reserve Inventory.

The rationale for the exclusion of an item from funding by Replacement Reserves is discussed in more detail inthe 'Comments' sections of the Section B - Replacement Reserve Inventory.

CATEGORIES. The 147 items included in the Spring Mill Plantation Replacement Reserve Inventoryare divided into 15 major categories. Each category is printed on a separate page, Pages B3 to B16.

LEVEL OF SERVICE. This Replacement Reserve Inventory has been developed in compliance with the standardsestablished for a Level One Study - Full Service, as defined by the National Reserve StudyStandards, established in 1998 by Community Associations Institute, which states:

A Level I - Full Service Reserve Study includes the computation of complete component inventoryinformation regarding commonly owned components provided by the Association, quantities derived from field measurements and/or quantity takeoffs from to-scale engineering drawings thatmay be made available. The condition of all components is ascertained from a visual inspectionof each component by the analyst. The remaining economic life and the value of the componentsare provided based on these observations and the funding status and funding plan are then derived from analysis of this data.


1139712SPRING M15

REPLACEMENT RESERVE INVENTORY - GENERAL INFORMATION (cont'd)

INVENTORY DATA. Each of the 90 Projected Replacements listed in the Replacement Reserve Inventoryincludes the following data:

Item Number. The Item Number is assigned sequentially and is intended for identification purposes only.Item Description. We have named each item included in the Inventory. Where the name of the itemand the category are not sufficient to specifically identify the item, we have included additional information in the Comments section at the bottom of the page.Units. We have used standard abbreviations to identify the number of units including SF-square feet, LF-lineal feet, SY-square yard, LS-lump sum, EA-each, and PR-pair. Nonstandard abbreviations are noted in the Comments section on the page on which the abbreviation is used.Number of Units. The methods used to develop the quantities are discussed in "Level of Service" above.Unit Replacement Cost. We use three sources to develop the unit cost data shown in the Inventory; actualreplacement cost data provided by the client, industry standard estimating manuals, and a cost databasethat we have developed based upon our detailed interviews with contractors and service providers who arespecialists in their respective lines of work. In addition, trends in the Producers Price Index (PPI), laborrates, and transportation costs are monitored and considered. This cost database is reviewed and updated regularly by Miller Dodson and biannually by an independent professional cost estimating firm.Normal Economic Life (Yrs). The number of years that a new and properly installed item should beexpected to remain in service. Remaining Economic Life (Yrs). The estimated number of years before an item will need to be replaced. In "normal" conditions, this could be calculated by subtracting the age of the item from the Normal Economic Life of the item, but only rarely do physical assets age "normally". Some itemsmay have longer or shorter lives depending on many factors such as environment, initial quality of the item, maintenance, etc.Total Replacement Cost. This is calculated by multiplying the Unit Replacement Cost by the Number of Units.

Each of the 57 Excluded Items includes the Item Description, Units, and Number of Units. Many of theExcluded Items are listed as a 'Lump Sum' with a quantity of 1. For the Excluded Items, this indicates thatall of the items identified by the 'Item Description' are excluded from funding by Replacement Reserves.

REVIEW OF EXPENDITURES. This Replacement Reserve Study should be reviewed by an accounting professional representing the Association prior to implementation.

PARTIAL FUNDING. Items may have been included in the Replacement Reserve Inventory at less than 100 percent of their full quantity and/or replacement cost. This is done on items that will never be replacedin their entirety, but which may require periodic replacements over an extended period of time. The assumptions that provide the basis for any partial funding are noted on in the Comments section.

REMAINING ECONOMIC LIFE GREATER THAN 40 YEARS. The calculations do not include funding for initialreplacements beyond 40 years. These replacements are included in this Study for tracking and evaluation. Theyshould be included for funding in future Studies, when they enter the 40-year window.


1139712SPRING M15

SITE COMPONENTPROJECTED REPLACEMENTS

UNIT NORMAL REMAININGITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT

# DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($)

1 Pavement, Springmill Plantation Blvd. sf 139,872 $1.70 18 15 2 $237,7822 Seal coat, Clubhouse parking sf 16,540 $0.20 5 none 2 $3,3083 Pavement, Clubhouse parking sf 16,540 $1.70 20 15 2 $28,1184 Seal coat, Iredel Ct. sf 9,120 $0.20 5 none 2 $1,8245 Pavement, Iredel Ct. sf 9,120 $1.70 20 15 2 $15,5046 Seal coat, Blarney Dost sf 4,824 $0.20 5 1 2 $9657 Pavement, Blarney Dost sf 4,824 $1.70 20 16 2 $8,2018 Seal coat, Brogdon Dost sf 3,024 $0.20 5 1 2 $6059 Pavement, Brogdon Dost sf 3,024 $1.70 20 16 2 $5,141

10 Seal coat, Jarvis Lane sf 61,200 $0.20 5 1 2 $12,24011 Pavement, Jarvis Lane sf 61,200 $1.70 20 16 2 $104,04012 Seal coat, Clare Court sf 7,560 $0.20 5 1 2 $1,51213 Pavement, Clare Court sf 7,560 $1.70 20 16 2 $12,85214 Seal coat, Tartans Glen Lane sf 19,440 $0.20 5 1 2 $3,88815 Pavement, Tartans Glen Lane sf 19,440 $1.70 20 16 2 $33,04816 Seal coat, Heathers Glen Lane sf 33,528 $0.20 5 1 2 $6,70617 Pavement, Heathers Glen Lane sf 33,528 $1.70 20 16 2 $56,998

SITE COMPONENT - Replacement Costs - Subtotal $532,731

SITE COMPONENTCOMMENTS

We have assumed that the Association will replace the asphalt pavement by the installation of a 2 inch thick overlay. The pavement will need to be milled prior to the installation of the overlay. Milling and the cost of minor repairs (5 to 10 percent of the total area) to the base materials and bearing soils beneath the pavement are included in the cost shown above.

12/02/14. Clare Court, Tartans Glen Lane, and Heathers Glen Lane separated out from Jarvis Lane area per Association.


1139712SPRING M15

SITE COMPONENTPROJECTED REPLACEMENTS



18 Seal coat, W. Chatman Dr. sf 13,128 $0.20 5 2 2 $2,62619 Pavement, W. Chatman Dr. sf 13,128 $1.70 20 17 2 $22,31820 Seal coat, E. Chatman Dr. sf 14,640 $0.20 5 2 2 $2,92821 Pavement, E. Chatman Dr. sf 14,640 $1.70 20 17 2 $24,88822 Seal coat, Kilkee Dr. sf 55,080 $0.20 5 2 2 $11,01623 Pavement, Kilkee Dr. sf 55,080 $1.70 20 17 2 $93,63624 Seal coat, Castlebridge Ct. sf 19,920 $0.20 5 4 2 $3,98425 Pavement, Castlebridge Ct. sf 19,920 $1.70 20 19 2 $33,86426 Seal coat, Pickering Dr. sf 38,520 $0.20 5 4 2 $7,70427 Pavement, Pickering Dr. sf 38,520 $1.70 20 19 2 $65,48428 Seal coat, Birkdale Dr. sf 10,992 $0.20 5 4 2 $2,19829 Pavement, Birkdale Dr. sf 10,992 $1.70 20 19 2 $18,686

SITE COMPONENT - Replacement Costs - Subtotal $289,332

SITE COMPONENTCOMMENTS

We have assumed that the Association will replace the asphalt pavement by the installation of a 2 inch thick overlay. The pavement will need to be milled prior to the installation of the overlay. Milling and the cost of minor repairs (5 to 10 percent of the total area) to the base materials and bearing soils beneath the pavement are included in the cost shown above.


1139712SPRING M15

SITE COMPONENT (cont.)PROJECTED REPLACEMENTS AND EXCLUDED ITEMS



30 Seal coat, Stonecrest Dr. sf 8,464 $0.20 5 4 2 $1,69331 Pavement, Stonecrest Dr. sf 8,464 $1.70 20 19 2 $14,38932 Seal coat, Mardella Ct. sf 12,456 $0.20 5 4 2 $2,49133 Pavement, Mardella Ct. sf 12,456 $1.70 20 19 2 $21,175

34 Concrete curb & gutter (5%) ft 2,364 $34.00 60 17 2 $80,37635 Concrete curb & gutter (5%) ft 2,364 $34.00 60 37 2 $80,37636 Concrete curb & gutter (5%) ft 2,364 $34.00 60 57 2 $80,376

37 Concrete sidewalk (6%) sf 2,008 $8.50 60 6 2 $17,06838 Concrete sidewalk (6%) sf 2,008 $8.50 60 12 2 $17,06839 Concrete sidewalk (6%) sf 2,008 $8.50 60 18 2 $17,06840 Concrete sidewalk (6%) sf 2,008 $8.50 60 24 2 $17,06841 Concrete sidewalk (6%) sf 2,008 $8.50 60 30 2 $17,06842 Concrete sidewalk (6%) sf 2,008 $8.50 60 36 2 $17,06843 Concrete sidewalk (6%) sf 2,008 $8.50 60 42 2 $17,06844 Concrete sidewalk (6%) sf 2,008 $8.50 60 48 2 $17,06845 Concrete sidewalk (6%) sf 2,008 $8.50 60 54 2 $17,06846 Concrete sidewalk (6%) sf 2,008 $8.50 60 60 2 $17,068

47 Entry monument sign, painted ea 4 $300.00 20 15 2 $1,200Repoint masonry ent. feature 10% sf 173 3 EXCLUDED

48 Entrance light head (decorative) ea 8 $200.00 15 10 2 $1,600

SITE COMPONENT (cont.) - Replacement Costs - Subtotal $454,356

SITE COMPONENT (cont.)COMMENTS

'For concrete components and other roadway shoulder work, we have assumed that the Association will conduct concrete component replacement projects in conjunction with the asphalt pavement and other concrete or right-of-way replacement projects.

8/12/14 Repoint masonry ent. feature deleted per Association


1139712SPRING M15

SITE COMPONENT (cont.)PROJECTED REPLACEMENTS



49 Sign & post, street allowance ls 1 $2,000.00 5 5 2 $2,000

50 Irrigation system allowance ls 1 $4,000.00 5 5 2 $4,000

51 Stormwater mgmt (10% allowance) ls 1 $24,880.00 10 25 2 $24,880

SITE COMPONENT (cont.) - Replacement Costs - Subtotal $30,880

SITE COMPONENT (cont.)COMMENTS

'8/12/14 Pond dredging deleted per Association


1139712SPRING M15

BUILDING EXTERIORPROJECTED REPLACEMENTS AND EXCLUDED ITEMS



52 Shingle asphalt/fiberglass sf 3,528 $4.25 25 22 2 $14,994

53 Siding & trim, Hardi Bd. 20% w/paint cy sf 392 $9.50 5 5 2 $3,724

Masonry, repointing 10% sf 19 3 EXCLUDED

54 Window sf 207 $42.00 35 32 2 $8,694

55 Entry door, solid metal ea 8 $600.00 20 17 2 $4,80056 Entry door, wood, glazed ea 1 $1,100.00 20 17 2 $1,10057 add for sidelights, pair ea 1 $1,200.00 20 17 2 $1,20058 French door ea 1 $2,400.00 20 17 2 $2,400

BUILDING EXTERIOR - Replacement Costs - Subtotal $36,912

BUILDING EXTERIORCOMMENTS

'8/12/14 Repoint masonry deleted per Association


1139712SPRING M15

BUILDING INTERIORPROJECTED REPLACEMENTS AND EXCLUDED ITEMS



59 Flooring, interior carpet sf 1,536 $4.25 7 4 2 $6,52860 Flooring, ceramic sf 280 $32.60 21 18 2 $9,128

61 Interior lighting, general allowance ls 1 $2,000.00 21 18 2 $2,000

62 Furniture & furnishings allowance ls 1 $10,000.00 10 7 2 $10,00063 Folding/stack chair ea 32 $45.00 14 12 2 $1,44064 Folding table ea 3 $150.00 14 12 2 $45065 54" flat screen TV ea 1 $1,000.00 10 7 2 $1,00066 32" flat screen TV ea 1 $500.00 10 7 2 $500

67 Kitchen, res., cabinets lf 30 $167.00 21 18 2 $5,01068 Kitchen, res., laminate countertop lf 27 $50.00 21 18 2 $1,35069 Kitchen, res., microwave ea 1 $630.00 10 7 2 $63070 Kitchen, res., refrigerator ea 1 $940.00 10 7 2 $940

Restroom Renovate sf 252 3 EXCLUDED

BUILDING INTERIOR - Replacement Costs - Subtotal $38,976

BUILDING INTERIORCOMMENTS

8/12/14 Unit cost of kitchen cabinets lowered and restroom renovate deleted per Association


1139712SPRING M15

BUILDING SYSTEMPROJECTED REPLACEMENTS



71 Furnace/air handler ea 1 $3,200.00 24 21 2 $3,20072 Heat pump/AC unit (less than 3 tons) ea 1 $6,500.00 12 9 2 $6,500

73 Furnace/air handler Mitsubishi split ea 1 $1,000.00 24 21 2 $1,00074 Heat pump/AC unit Mitsubishi split ea 1 $2,000.00 12 9 2 $2,000

BUILDING SYSTEM - Replacement Costs - Subtotal $12,700

BUILDING SYSTEMCOMMENTS

8/12/14 HVAC cost increased per Association


1139712SPRING M15

SWIMMING POOLPROJECTED REPLACEMENTS



75 Swimming pool, structure sf 2,136 $65.00 45 39 2 $138,84076 Swimming pool, whitecoat sf 2,136 $5.25 10 7 2 $11,21477 Swimming pool, waterline tile ft 170 $15.00 10 7 2 $2,55078 Swimming pool, coping ft 170 $50.00 20 7 2 $8,50079 Swimming pool, deck coating sf 4,869 $1.10 10 10 2 $5,35680 Swimming pool, concrete deck 1/3rd sf 1,623 $11.00 10 10 2 $17,853

81 Swimming pool pump (2 - 5 hp) ea 1 $1,800.00 10 7 2 $1,80082 Swimming pool filter ea 2 $1,800.00 20 17 2 $3,600

83 Pool furniture, lounge ea 17 $300.00 15 12 2 $5,10084 Pool furniture, table ea 4 $180.00 15 12 2 $72085 Pool furniture, umbrella ea 4 $325.00 15 12 2 $1,30086 Pool furniture, chair/end table ea 21 $110.00 15 12 2 $2,31087 Pool furniture, rocking chairs ea 6 $150.00 15 12 2 $900

88 Pool area pole lights ea 10 $535.00 20 17 2 $5,35089 Perimeter fence - 6' (alu) ft 266 $32.00 30 27 2 $8,512

SWIMMING POOL - Replacement Costs - Subtotal $213,905

SWIMMING POOLCOMMENTS

We have assumed that the project to replace the pool deck will include the replacement of the plumbing and electrical systems installed beneath the pavement.


1139712SPRING M15

EXERCISE EQUIPMENTPROJECTED REPLACEMENTS



90 Exercise Equipment 20% ea 1 $2,500.00 2 2 2 $2,500

EXERCISE EQUIPMENT - Replacement Costs - Subtotal $2,500

EXERCISE EQUIPMENTCOMMENTS


1139712SPRING M15

VALUATION EXCLUSIONSEXCLUDED ITEMS



Site lighting fixtures ls 1 3 EXCLUDED

Fire extinguisher cabinet ls 1 3 EXCLUDEDEmergency lighting, exit light, etc. ls 1 3 EXCLUDEDInterior doors ls 1 3 EXCLUDEDElectric heaters ls 1 3 EXCLUDED

VALUATION EXCLUSIONSCOMMENTS

Valuation Exclusions. For ease of administration of the Replacement Reserves and to reflect accurately how Replacement Reserves are administered, items with a dollar value less than $1,000.00 have not been scheduled for funding from Replacement Reserves. Examples of items excluded from funding by Replacement Reserves by this standard are listed above.

The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.


1139712SPRING M15

LONG-LIFE EXCLUSIONSEXCLUDED ITEMS



Masonry features ls 1 3 EXCLUDEDMiscellaneous culverts ls 1 3 EXCLUDED

Exterior stone veneer ls 1 3 EXCLUDED

Building foundation(s) ls 1 3 EXCLUDEDConcrete floor slabs (interior) ls 1 3 EXCLUDEDWall, floor, & roof structure ls 1 3 EXCLUDED

Fire protection/security systems ls 1 3 EXCLUDEDCommon element electrical services ls 1 3 EXCLUDEDElectrical wiring ls 1 3 EXCLUDEDWater piping at common facilities ls 1 3 EXCLUDEDWaste piping at common facilities ls 1 3 EXCLUDED

Stainless steel pool fixtures ls 1 3 EXCLUDED

LONG-LIFE EXCLUSIONSCOMMENTS

Long Life Exclusions. Components that when properly maintained, can be assumed to have a life equal to the property asa whole, are normally excluded from the Replacement Reserve Inventory. Examples of items excluded from funding by Replacement Reserves by this standard are listed above.

Exterior masonry is generally assumed to have an unlimited economic life but periodic repointing is required and we have included this for funding in the Replacement Reserve Inventory.



1139712SPRING M15

UNIT IMPROVEMENTS EXCLUSIONSEXCLUDED ITEMS



Domestic water pipes serving one unit ls 1 3 EXCLUDEDSanitary sewers serving one unit ls 1 3 EXCLUDEDElectrical wiring serving one unit ls 1 3 EXCLUDEDCable TV service serving one unit ls 1 3 EXCLUDEDTelephone service serving one unit ls 1 3 EXCLUDED

Driveway on an individual lot ls 1 3 EXCLUDEDApron on an individual lot ls 1 3 EXCLUDEDSidewalk on an individual lot ls 1 3 EXCLUDEDStairs on an individual lot ls 1 3 EXCLUDEDRetaining wall on an individual lot ls 1 3 EXCLUDEDFence on an individual lot ls 1 3 EXCLUDED

Unit exterior ls 1 3 EXCLUDEDUnit windows ls 1 3 EXCLUDEDUnit doors ls 1 3 EXCLUDEDUnit skylights ls 1 3 EXCLUDEDUnit deck, patio, and/or balcony ls 1 3 EXCLUDEDUnit mailbox ls 1 3 EXCLUDEDUnit interior ls 1 3 EXCLUDEDUnit HVAC system ls 1 3 EXCLUDED

UNIT IMPROVEMENTS EXCLUSIONSCOMMENTS

Unit improvement Exclusions. We understand that the elements of the project that relate to a single unit are the responsibility of that unit owner. Examples of items excluded from funding by Replacement Reserves by this standard arelisted above.



1139712SPRING M15

UTILITY EXCLUSIONSEXCLUDED ITEMS



Primary electric feeds ls 1 3 EXCLUDEDElectric transformers ls 1 3 EXCLUDEDCable TV systems and structures ls 1 3 EXCLUDEDTelephone cables and structures ls 1 3 EXCLUDEDSite lighting ls 1 3 EXCLUDEDWater mains and meters ls 1 3 EXCLUDEDSanitary sewers ls 1 3 EXCLUDED

UTILITY EXCLUSIONSCOMMENTS

Utility Exclusions. Many improvements owned by utility companies are on property owned by the Association. We have assumed that repair, maintenance, and replacements of these components will be done at the expense of the appropriate utility company. Examples of items excluded from funding Replacement Reserves by this standard are listed above.



1139712SPRING M15

MAINTENANCE AND REPAIR EXCLUSIONSEXCLUDED ITEMS



Cleaning of asphalt pavement ls 1 3 EXCLUDEDCrack sealing of asphalt pavement ls 1 3 EXCLUDEDPainting of curbs ls 1 3 EXCLUDEDStriping of parking spaces ls 1 3 EXCLUDED

Landscaping and site grading ls 1 3 EXCLUDED

Exterior painting ls 1 3 EXCLUDEDInterior painting ls 1 3 EXCLUDED

Janitorial service ls 1 3 EXCLUDEDRepair services ls 1 3 EXCLUDEDPartial replacements ls 1 3 EXCLUDEDCapital improvements ls 1 3 EXCLUDED

MAINTENANCE AND REPAIR EXCLUSIONSCOMMENTS

Maintenance activities, one-time-only repairs, and capital improvements. These activities are NOT appropriately funded from Replacement Reserves. The inclusion of such component in the Replacement Reserve Inventory could jeopardize the special tax status of ALL Replacement Reserves, exposing the Association to significant tax liabilities. We recommend that the Board of Directors discuss these exclusions and Revenue Ruling 75-370 with a Certified Public Accountant.

Examples of items excluded from funding by Replacement Reserves by this standard are listed above.


Miller + Dodson Associates, Inc. Projected Annual Replacements - Page C1Spring Mill Plantation Revised December 2, 2014

1139712SPRING M15

PROJECTED ANNUAL REPLACEMENTSGENERAL INFORMATION

CALENDAR OF ANNUAL REPLACEMENTS. The 90 Projected Replacements in the Spring Mill PlantationReplacement Reserve Inventory whose replacement is scheduled to be funded from Replacement Reserves are broken down on a year-by-year basis, beginning on Page C2.

REPLACEMENT RESERVE ANALYSIS AND INVENTORYPOLICIES, PROCEDURES, AND ADMINISTRATION

REVISIONS. Revisions will be made to the Replacement Reserve Analysis and Replacement Reserve Inventoryin accordance with the written instructions of the Board of Directors. No additional charge is incurred for the first revision, if requested in writing within three months of the date of the Replacement Reserve Study. It is ourpolicy to provide revisions in electronic (Adobe PDF) format only.

TAX CODE. The United States Tax Code grants favorable tax status to a common interest development (CID)meeting certain guidelines for their Replacement Reserve. If a CID files their taxes as a 'Corporation' onForm 1120 (IRC Section 277), these guidelines typically require maintenance activities, partial replacements, minor replacements, capital improvements, and one-time only replacements to be excluded from Reserves.A CID cannot commingle planning for maintenance activities with capital replacement activities in the Reserves(Revenue Ruling 75-370). Funds for maintenance activities and capital replacements activities must be held inseparate accounts. If a CID files taxes as an "Exempt Homeowners Association" using Form 1120H (IRCSection 528), the CID does not have to segregate these activities. However, because the CID may elect tochange their method of filing from year to year within the Study Period, we advise using the more restrictiveapproach. We further recommend that the CID consult with their Accountant and consider creating separateand independent accounts and reserves for large maintenance items, such as painting.

CONFLICT OF INTEREST. Neither Miller - Dodson Associates nor the Reserve Analyst has any prior or existingrelationship with this Association which would represent a real or perceived conflict of interest.

RELIANCE ON DATA PROVIDED BY THE CLIENT. Information provided by an official representative of theAssociation regarding financial, physical conditions, quality, or historical issues is deemed reliable.

INTENT. This Replacement Reserve Study is a reflection of the information provided by the Association and the visual evaluations of the Analyst. It has been prepared for the sole use of the Association and is not for thepurpose of performing an audit, quality/forensic analyses, or background checks of historical records.

PREVIOUS REPLACEMENTS. Information provided to Miller - Dodson Associates regarding prior replacementsis considered to be accurate and reliable. Our visual evaluation is not a project audit or quality inspection.

UPDATING. In the first two or possibly three years after the completion of a Level One Replacement ReserveStudy, we recommend the Association review and revise the Replacement Reserve Analysis and Inventoryannually to take into account replacements which have occurred and known changes in replacement costs. This can frequently be handled as a Level Two or Level Three Study (as defined by the Community AssociationsInstitute), unless the Association has completed major replacement projects. A full analysis (Level One) based on a comprehensive visual evaluation of the site should be accomplished every three to five years or after each major replacement project.

EXPERIENCE WITH FUTURE REPLACEMENTS. The Calendar of Annual Projected Replacements, listsreplacements we have projected to occur over the next thirty years, begins on Page C2. Actual experience inreplacing the items may differ significantly from the cost estimates and time frames shown because of conditionsbeyond our control. These differences may be caused by maintenance practices, inflation, variations in pricingand market conditions, future technological developments, regulatory actions, acts of God, and luck. Someitems may function normally during our visual evaluation and then fail without notice.

REVIEW OF THE REPLACEMENT RESERVE STUDY. For this study to be effective, it should be reviewed by the Spring Mill Plantation Board of Directors, those responsible for the management of the itemsincluded in the Replacement Reserve Inventory, and the accounting professionals employed by the Association.


1139712SPRING M15

PROJECTED REPLACEMENTS - YEARS 1 TO 6

Item 2015 $ Item 2016 $ Item 2017 $ 2 Seal coat, Clubhouse parkin $3,308 6 Seal coat, Blarney Dost $965 18 Seal coat, W. Chatman Dr. $2,6264 Seal coat, Iredel Ct. $1,824 8 Seal coat, Brogdon Dost $605 20 Seal coat, E. Chatman Dr. $2,928

10 Seal coat, Jarvis Lane $12,240 22 Seal coat, Kilkee Dr. $11,01612 Seal coat, Clare Court $1,512 90 Exercise Equipment 20% $2,50014 Seal coat, Tartans Glen Lan $3,88816 Seal coat, Heathers Glen La $6,706

Total Scheduled Replacements $5,132 Total Scheduled Replacements $25,915 Total Scheduled Replacements $19,070

Item 2018 $ Item 2019 $ Item 2020 $ 24 Seal coat, Castlebridge Ct. $3,984 2 Seal coat, Clubhouse parkin $3,30826 Seal coat, Pickering Dr. $7,704 4 Seal coat, Iredel Ct. $1,82428 Seal coat, Birkdale Dr. $2,198 49 Sign & post, street allowance $2,00030 Seal coat, Stonecrest Dr. $1,693 50 Irrigation system allowance $4,00032 Seal coat, Mardella Ct. $2,491 53 Siding & trim, Hardi Bd. 20% $3,72459 Flooring, interior carpet $6,52890 Exercise Equipment 20% $2,500

No Scheduled Replacements Total Scheduled Replacements $27,098 Total Scheduled Replacements $14,856


1139712SPRING M15


Item 2021 $ Item 2022 $ Item 2023 $ 6 Seal coat, Blarney Dost $965 18 Seal coat, W. Chatman Dr. $2,626 90 Exercise Equipment 20% $2,5008 Seal coat, Brogdon Dost $605 20 Seal coat, E. Chatman Dr. $2,928

10 Seal coat, Jarvis Lane $12,240 22 Seal coat, Kilkee Dr. $11,01612 Seal coat, Clare Court $1,512 62 Furniture & furnishings allow $10,00014 Seal coat, Tartans Glen Lan $3,888 65 54" flat screen TV $1,00016 Seal coat, Heathers Glen La $6,706 66 32" flat screen TV $50037 Concrete sidewalk (6%) $17,068 69 Kitchen, res., microwave $63090 Exercise Equipment 20% $2,500 70 Kitchen, res., refrigerator $940

76 Swimming pool, whitecoat $11,21477 Swimming pool, waterline tile $2,55078 Swimming pool, coping $8,50081 Swimming pool pump (2 - 5 $1,800


Item 2024 $ Item 2025 $ Item 2026 $ 24 Seal coat, Castlebridge Ct. $3,984 2 Seal coat, Clubhouse parkin $3,308 6 Seal coat, Blarney Dost $96526 Seal coat, Pickering Dr. $7,704 4 Seal coat, Iredel Ct. $1,824 8 Seal coat, Brogdon Dost $60528 Seal coat, Birkdale Dr. $2,198 48 Entrance light head (decorat $1,600 10 Seal coat, Jarvis Lane $12,24030 Seal coat, Stonecrest Dr. $1,693 49 Sign & post, street allowance $2,000 12 Seal coat, Clare Court $1,51232 Seal coat, Mardella Ct. $2,491 50 Irrigation system allowance $4,000 14 Seal coat, Tartans Glen Lan $3,88872 Heat pump/AC unit (less tha $6,500 53 Siding & trim, Hardi Bd. 20% $3,724 16 Seal coat, Heathers Glen La $6,70674 Heat pump/AC unit Mitsubis $2,000 79 Swimming pool, deck coatin $5,356 59 Flooring, interior carpet $6,528

80 Swimming pool, concrete de $17,85390 Exercise Equipment 20% $2,500



1139712SPRING M15


Item 2027 $ Item 2028 $ Item 2029 $ 18 Seal coat, W. Chatman Dr. $2,626 24 Seal coat, Castlebridge Ct. $3,98420 Seal coat, E. Chatman Dr. $2,928 26 Seal coat, Pickering Dr. $7,70422 Seal coat, Kilkee Dr. $11,016 28 Seal coat, Birkdale Dr. $2,19838 Concrete sidewalk (6%) $17,068 30 Seal coat, Stonecrest Dr. $1,69363 Folding/stack chair $1,440 32 Seal coat, Mardella Ct. $2,49164 Folding table $450 90 Exercise Equipment 20% $2,50083 Pool furniture, lounge $5,10084 Pool furniture, table $72085 Pool furniture, umbrella $1,30086 Pool furniture, chair/end tabl $2,31087 Pool furniture, rocking chairs $90090 Exercise Equipment 20% $2,500

Total Scheduled Replacements $48,358 No Scheduled Replacements Total Scheduled Replacements $20,570

Item 2030 $ Item 2031 $ Item 2032 $ 1 Pavement, Springmill Planta $237,782 6 Seal coat, Blarney Dost $965 18 Seal coat, W. Chatman Dr. $2,6262 Seal coat, Clubhouse parkin $3,308 7 Pavement, Blarney Dost $8,201 19 Pavement, W. Chatman Dr. $22,3183 Pavement, Clubhouse parkin $28,118 8 Seal coat, Brogdon Dost $605 20 Seal coat, E. Chatman Dr. $2,9284 Seal coat, Iredel Ct. $1,824 9 Pavement, Brogdon Dost $5,141 21 Pavement, E. Chatman Dr. $24,8885 Pavement, Iredel Ct. $15,504 10 Seal coat, Jarvis Lane $12,240 22 Seal coat, Kilkee Dr. $11,016

47 Entry monument sign, painte $1,200 11 Pavement, Jarvis Lane $104,040 23 Pavement, Kilkee Dr. $93,63649 Sign & post, street allowance $2,000 12 Seal coat, Clare Court $1,512 34 Concrete curb & gutter (5%) $80,37650 Irrigation system allowance $4,000 13 Pavement, Clare Court $12,852 55 Entry door, solid metal $4,80053 Siding & trim, Hardi Bd. 20% $3,724 14 Seal coat, Tartans Glen Lan $3,888 56 Entry door, wood, glazed $1,100

15 Pavement, Tartans Glen Lan $33,048 57 add for sidelights, pair $1,20016 Seal coat, Heathers Glen La $6,706 58 French door $2,40017 Pavement, Heathers Glen La $56,998 62 Furniture & furnishings allow $10,00090 Exercise Equipment 20% $2,500 65 54" flat screen TV $1,000

66 32" flat screen TV $50069 Kitchen, res., microwave $63070 Kitchen, res., refrigerator $94076 Swimming pool, whitecoat $11,21477 Swimming pool, waterline tile $2,55081 Swimming pool pump (2 - 5 $1,80082 Swimming pool filter $3,60088 Pool area pole lights $5,350



1139712SPRING M15


Item 2033 $ Item 2034 $ Item 2035 $ 39 Concrete sidewalk (6%) $17,068 24 Seal coat, Castlebridge Ct. $3,984 2 Seal coat, Clubhouse parkin $3,30859 Flooring, interior carpet $6,528 25 Pavement, Castlebridge Ct. $33,864 4 Seal coat, Iredel Ct. $1,82460 Flooring, ceramic $9,128 26 Seal coat, Pickering Dr. $7,704 49 Sign & post, street allowance $2,00061 Interior lighting, general allow $2,000 27 Pavement, Pickering Dr. $65,484 50 Irrigation system allowance $4,00067 Kitchen, res., cabinets $5,010 28 Seal coat, Birkdale Dr. $2,198 53 Siding & trim, Hardi Bd. 20% $3,72468 Kitchen, res., laminate count $1,350 29 Pavement, Birkdale Dr. $18,686 79 Swimming pool, deck coatin $5,35690 Exercise Equipment 20% $2,500 30 Seal coat, Stonecrest Dr. $1,693 80 Swimming pool, concrete de $17,853

31 Pavement, Stonecrest Dr. $14,389 90 Exercise Equipment 20% $2,50032 Seal coat, Mardella Ct. $2,49133 Pavement, Mardella Ct. $21,175


Item 2036 $ Item 2037 $ Item 2038 $ 6 Seal coat, Blarney Dost $965 18 Seal coat, W. Chatman Dr. $2,6268 Seal coat, Brogdon Dost $605 20 Seal coat, E. Chatman Dr. $2,928

10 Seal coat, Jarvis Lane $12,240 22 Seal coat, Kilkee Dr. $11,01612 Seal coat, Clare Court $1,512 52 Shingle asphalt/fiberglass $14,99414 Seal coat, Tartans Glen Lan $3,888 90 Exercise Equipment 20% $2,50016 Seal coat, Heathers Glen La $6,70671 Furnace/air handler $3,20072 Heat pump/AC unit (less tha $6,50073 Furnace/air handler Mitsubis $1,00074 Heat pump/AC unit Mitsubis $2,000

Total Scheduled Replacements $38,615 Total Scheduled Replacements $34,064 No Scheduled Replacements


1139712SPRING M15


Item 2039 $ Item 2040 $ Item 2041 $ 24 Seal coat, Castlebridge Ct. $3,984 2 Seal coat, Clubhouse parkin $3,308 6 Seal coat, Blarney Dost $96526 Seal coat, Pickering Dr. $7,704 4 Seal coat, Iredel Ct. $1,824 8 Seal coat, Brogdon Dost $60528 Seal coat, Birkdale Dr. $2,198 48 Entrance light head (decorat $1,600 10 Seal coat, Jarvis Lane $12,24030 Seal coat, Stonecrest Dr. $1,693 49 Sign & post, street allowance $2,000 12 Seal coat, Clare Court $1,51232 Seal coat, Mardella Ct. $2,491 50 Irrigation system allowance $4,000 14 Seal coat, Tartans Glen Lan $3,88840 Concrete sidewalk (6%) $17,068 51 Stormwater mgmt (10% allow $24,880 16 Seal coat, Heathers Glen La $6,70690 Exercise Equipment 20% $2,500 53 Siding & trim, Hardi Bd. 20% $3,724 63 Folding/stack chair $1,440

59 Flooring, interior carpet $6,528 64 Folding table $45090 Exercise Equipment 20% $2,500


Item 2042 $ Item 2043 $ Item 2044 $ 18 Seal coat, W. Chatman Dr. $2,626 90 Exercise Equipment 20% $2,500 24 Seal coat, Castlebridge Ct. $3,98420 Seal coat, E. Chatman Dr. $2,928 26 Seal coat, Pickering Dr. $7,70422 Seal coat, Kilkee Dr. $11,016 28 Seal coat, Birkdale Dr. $2,19862 Furniture & furnishings allow $10,000 30 Seal coat, Stonecrest Dr. $1,69365 54" flat screen TV $1,000 32 Seal coat, Mardella Ct. $2,49166 32" flat screen TV $50069 Kitchen, res., microwave $63070 Kitchen, res., refrigerator $94076 Swimming pool, whitecoat $11,21477 Swimming pool, waterline tile $2,55078 Swimming pool, coping $8,50081 Swimming pool pump (2 - 5 $1,80083 Pool furniture, lounge $5,10084 Pool furniture, table $72085 Pool furniture, umbrella $1,30086 Pool furniture, chair/end tabl $2,31087 Pool furniture, rocking chairs $90089 Perimeter fence - 6' (alu) $8,512


Miller - Dodson Associates, Inc. Condition Assessment - Page D1 Spring Mill Plantation May 20, 2014

CONDITION ASSESSMENT General Comments. Miller - Dodson Associates conducted a Reserve Study at Spring Mill Plantation in May 2014. Spring Mill Plantation is in generally good condition for a community constructed from 2010 to the present. A review of the Replacement Reserve Inventory will show that we are anticipating most of the components achieving their normal economic lives. The following comments pertain to the larger, more significant components in the Replacement Reserve Inventory and to those items that are unique or deserving of attention because of their condition or the manner in which they have been treated in the Replacement Reserve Analysis or Inventory. General Condition Statements. Excellent. 100% to 90% of Normal Economic Life expected, with no appreciable wear or defects. Good. 90% to 60% of Normal Economic Life expected, minor wear or cosmetic defects found. Normal maintenance should be expected. If performed properly, normal maintenance may increase the useful life of a component. Otherwise, the component is wearing normally. Fair. 60% to 30% of Normal Economic Life expected, moderate wear with defects found. Repair actions should be taken to extend the life of the component or to correct repairable defects and distress. Otherwise, the component is wearing normally. Marginal. 30% to 10% of Normal Economic Life expected, with moderate to significant wear or distress found. Repair actions are expected to be cost effective for localized issues, but normal wear and use are evident. The component is reaching the end of the Normal Economic Life. Poor. 10% to 0% of Normal Economic Life expected, with significant distress and wear. Left unattended, additional damage to underlying structures is likely to occur. Further maintenance is unlikely to be cost effective. SITE COMPONENTS Asphalt Pavement. The Association is responsible for the roadways and parking areas within the community; other roadways are maintained by the City, County, or other municipality. In general, the Association’s asphalt pavements are in good condition, with minor cracking.

As a rule of thumb, asphalt should be overlaid when approximately 5% of the surface area is cracked or otherwise deteriorated. The normal service life of asphalt pavement is typically 18 to 20 years.


In order to maintain the condition of the pavement throughout the community and to ensure the longest life of the asphalt, we recommend a systematic and comprehensive maintenance program that includes:

• Cleaning. Long-term exposure to oil or gas breaks down asphalt. Because this asphalt pavement is generally not used for long-term parking, it is unlikely that frequent cleaning will be necessary. When necessary, spill areas should be cleaned or patched if deterioration has penetrated the asphalt. This is a maintenance activity, and we have assumed that it will not be funded from Reserves.

• Crack Repair. All cracks should be repaired with an appropriate compound to prevent water

infiltration through the asphalt into the base. This repair should be done annually. Crack repair is normally considered a maintenance activity and is not funded from Reserves. Areas of extensive cracking or deterioration that cannot be made watertight should be cut out and patched.

• Seal Coating. The asphalt should be seal coated every five to seven years. For this maintenance,

activity to be effective in extending the life of the asphalt, cleaning and crack repair should be performed first.

The pricing used is based on recent contracts for a two-inch overlay, which reflects the current local market for this work. For seal coating, several different products are available. The older, more traditional seal coating products are simply paints. They coat the surface of the asphalt and they are minimally effective. However, the newer coating materials, such as those from Total Asphalt Management, Asphalt Restoration Technologies, Inc., and others, are penetrating. They are engineered, so to speak, to ‘remoisturize’ the pavement. Asphalt pavement is intended to be flexible. Over time, the volatile chemicals in the pavement dry, the pavement becomes brittle, and degradation follows in the forms of cracking and potholes. Remoisturizing the pavement can return its flexibility and extend the life of the pavement. Lastly, the resource links provided on our website may provide insight into the general terms and concerns, including maintenance related advantages and disadvantages, which may help the Association better manage the asphalt pavements throughout the community: http://mdareserves.com/resources/links/site-components. Concrete Work. The concrete work includes the community common area curbs, sidewalks and leadwalks. We have modeled for curb replacement when the asphalt pavement is overlaid. The overall condition of the concrete work is good.

The standards we use for recommending replacement are as follows:

• Trip hazard, ½ inch height difference. • Severe cracking. • Severe spalling and scale.

http://mdareserves.com/resources/links/site-components�


Because it is highly unlikely that all of the concrete components will fail and require replacement in the period of the study, we have programmed funds for the replacement of these inventories and spread the funds over an extended timeframe to reflect the incremental nature of this work. The relevant links on our web site may provide useful information related to concrete terminology, maintenance, and repair. Please see http://mdareserves.com/resources/links/site-components. Entry Monument and Signage. The Association maintains four entry monuments. The monuments are made of stone with masonry caps and are in good condition, with some open masonry joints and loose and broken masonry units.

We recommend repointing and replacement of defective areas of the masonry as needed. The Association may want to consider applying a coat of Siloxane or other appropriate breathable sealant to mitigate water penetration and further degradation of the masonry work. For additional information, please see the appropriate links on our web site at http://mdareserves.com/resources/links/building-exterior. Storm Water Ponds. The community is served by seven storm water ponds.

Ponds will accumulate silt and over time and lose the ability to store storm water at design levels, which could result in overflows and minor local flooding. In addition, water quality can be negatively affected by increased siltation and debris accumulation. Accordingly, ponds require periodic dredging. Estimates of cost and the frequency of dredging ponds are a function of many variables, including the volume of the pond, the siltation rate, the nature of the material being removed, the method of removal, and the haul distance to a site that will accept the spoil material. Most of this information is unknown and must be assumed for the purpose of reserve study planning. The siltation rate and cost of periodic dredging are speculative, varying greatly depending on local conditions.

http://mdareserves.com/resources/links/site-components�

http://mdareserves.com/resources/links/building-exterior�


As a rule of thumb, dredging should be performed when approximately one-third of the volume of the pond has been filled with silt. In the absence of accurate information about the original depth of the pond and the local siltation rate, we have assumed that it will be necessary to remove one cubic yard of material over a third of the pond area every 30 years. We have assumed that the material being removed is free of heavy metals and hydrocarbons, and that it will be accepted as fill at a local landfill. A more accurate prediction of cost and cycles will require a hydrologic analysis and testing, which is beyond the scope of our study. Because of the significant cost of this work, it is recommended that the Association undertake studies to refine the assumptions of this study. Based on our understanding, we recommend the following:

• Periodically remove accumulated debris and vegetation growing in the ponds. • Survey the ponds to establish the current profile of the bottom. After five years of operation, have the

pond re-surveyed to establish new depths to determine the local siltation rate. This will establish the frequency required for periodic dredging.

• Periodically sample and test for contaminants. • Consult with local contractors to determine the cost of removing and disposing of the spoil, once its

nature is known. Firms that specialize in this work can be typically found by internet searching “Lake and Pond, Construction and Maintenance” for your state or area of the country. Some states provide short lists of companies that specialize in this type of work. Please note that the periodic removal of overgrown vegetation from the pond is considered a maintenance activity and has not been reserved for or included in this study. BUILDING EXTERIOR Building Roofing. The clubhouse is roofed in asphalt shingles that are in generally excellent condition. Asphalt shingle roofs can have a useful life of 20 to 50 years depending on the weight and quality of the shingle. Weathered, curled, and missing shingles are all indications that the shingles may be nearing the end of their useful life. Access to the roof was not provided at the time of inspection. Annual inspections are recommended, with cleaning, repair, and mitigation of vegetation performed as needed. Access, inspection, and repair work should be performed by contractors and personnel with the appropriate access equipment who are experienced in the types of roofing used for the facility. For additional information on roofs and roof maintenance, please see the appropriate links on our web site at http://mdareserves.com/resources/links/building-exterior. Siding and Trim. The exterior of the clubhouse building is clad in cementitious siding and trim. The siding and trim materials are in generally good condition.



Clubhouse front and rear

Cementitious materials typically have an extended useful life and require repainting and recaulking every 10 to 15 years. Following the manufacturer’s recommendations for cleaning, painting, and caulking, we expect cementitious products to have a useful life of 40 years or more. We have programmed a 20 percent replacement of siding and trim with each paint cycle. Stone masonry is used as a base structure of support columns of the clubhouse. As masonry weathers, the mortar joints will become damaged by water penetration. As additional water gains access to the joints, repeated freeze-thaw cycles gradually increase the damage to the mortar joints. If allowed to progress, even the masonry units such as brick, block, and stone can have their surfaces affected and masonry units can become loose. In general, masonry is considered a long-life item and is therefore excluded from reserve funding. However, because weather and other conditions result in the slow deterioration of the mortar in masonry joints, we have included funding in this study for repointing. Repointing is the process of raking and cutting out damaged sections of mortar and replacing them with new mortar. Periodic repointing and local replacement of damaged masonry units will limit the damage done by moisture penetration. For this study, we assume that 10% of the masonry will require repointing every 10 years after approximately 30 years. For additional information about masonry and repointing, please view the relevant links at http://mdareserves.com/resources/links/building-exterior. Windows and Doors. The Association is responsible for the common windows and exterior doors of the clubhouse. The windows and doors are in generally in excellent condition.

Window and door units play an integral part in a facility’s overall comfort, efficiency, and energy use. The quality of the installed units and the care taken in their installation and maintenance are major factors in their effectiveness and useful life. These units can have a useful life of 20 to 35 years or more depending on their use and other factors mentioned above.



In general, we recommend coordinating the replacement of these units with other exterior work, such as siding and roof replacements. The weather tightness of the building envelope often requires transitional flashing and caulking that should be performed in coordination with each other. Warranties and advantages in ‘economy of scale’ can often result in lower overall replacement costs and results that are more reliable. Lastly, coordinated replacements offer the opportunity to correct initial construction defects and improve the effectiveness of details with improved construction techniques and materials. For more information, please see our links at http://mdareserves.com/resources/links/building-exterior. BUILDING INTERIOR Common Interiors. The Association maintains the lobby, great room, kitchen, and exercise room spaces that are in generally good condition.

We have assumed that the Association will want to maintain these areas in a commercially acceptable condition. Typically, replacement cycles for common interior spaces vary between 5 to 10 years depending on the aesthetic tastes of the community, usage, and construction. Material selection and the community’s preferences are the major factors in setting the reserve components for items such as refurnishing and interior refurbishment. The Association will need to establish these cycles as these facilities age. Maintaining historical records and incorporating these trends and preferences into a future Reserve Study update is the best way to adjust for these cycles. Carpet. The carpet in the clubhouse is in good condition. Commercial carpet of this construction in this type of application has a typical service life of 7 to 10 years. To extend the life of the carpet, it is important that the Association continue with a comprehensive maintenance program that includes regular vacuuming, spot and spill removal, interim cleaning of high traffic areas, and regular scheduled cleanings. It is also recommended that all entrances be fitted with walk-off mats to trap soil.



Ceramic Tile. The Association maintains some ceramic tile in the clubhouse as well. The overall condition of the ceramic tile is good. To help maintain the condition of the ceramic tile, regular cleaning is recommended. The tile can further be protected by the installation of dirt catching, walk-off mats placed at all building entrances. Kitchen. The kitchen contains a refrigerator, microwave, cabinets and counter tops. All components are in good condition.

Restrooms. The restroom fixtures and finishes are in good condition overall. Restroom components typically have a service life of 20 years.

Exercise Equipment. The exercise equipment is in good condition. All equipment does not normally fail all at once so we have programmed one piece every two years. MECHANICAL & ELECTRICAL Split and Package HVAC Systems. The heating ventilation and air conditioning (HVAC) of the clubhouse are reported to be in good operating condition. Detailed inspection and testing of these systems is beyond the scope of this study.


The Association maintains two HVAC systems that use one of the new generation refrigerants. Unlike the old R22 refrigerant, the new refrigerants are expected to be available throughout the period of this study. However, the operating pressure for new refrigerant systems is approximately twice as high as older systems. Many of the standard components have not been redesigned for these higher pressures, including the coils, which generally fail due to metal fatigue. Even though manufacturers continue to predict 15 to 20-year life cycles for HVAC equipment that use these new refrigerants, this is not proven by historical data. We therefore recommend anticipating a normal economic life of 12 years for all HVAC equipment that uses pressurized refrigerants of these types. In addition, the Association maintains two air handlers/furnaces in the clubhouse, and these components can have a useful life of 20 to 40 years. With fan, motor, and coil replacements performed as needed, the casings of these systems can last significantly longer. As is the case with most equipment, to achieve a maximum useful economic life, proper maintenance is essential. In some cases, proper and proactive maintenance can greatly extend the useful life of these components. RECREATIONAL FACILITIES Swimming Pool. The community operates an outdoor pool of concrete construction. Listed below are the major components of the pool facility:

• Pool Shell. The shell for the swimming pool is in good condition.

• Pool Deck. The pool has a concrete deck. The overall condition of the deck is good.


• Pool Deck Coating. The concrete pool deck is coated with an elastomeric coating. The coating is in good condition. We have assumed a service life for the coating of ten years.

• Whitecoat. The pool whitecoat is in good condition. We have assumed a service life of eight to ten

years for the pool whitecoat.

• Waterline Tile. The waterline tile is in good condition. We have assumed that the waterline tile will be replaced or restored when the pool is whitecoated.

• Coping. The pool is edged with masonry coping. The coping is in good condition.

• Pump and Filter System. The pump and filter system are in good condition.

• Pool Fence. The swimming pool is enclosed by a metal fence that is in good condition. This Condition Assessment is based upon our visual survey of the property. The sole purpose of the visual survey was an evaluation of the common elements of the property to ascertain the remaining useful life and the replacement costs of these common elements. Our evaluation assumed that all components met building code requirements in force at the time of construction. Our visual survey was conducted with care by experienced persons, but no warranty or guarantee is expressed or implied.

End of Condition Assessment

Intentionally Left Blank

Miller + Dodson Associates, Inc. Cash Flow Method Accounting Summary - Page CF-1Spring Mill Plantation Revised December 2, 2014

1139712SPRING M15

CASH FLOW METHOD ACCOUNTING SUMMARYThis Spring Mill Plantation - Cash Flow Method Accounting Summary is an attachment to theSpring Mill Plantation - Replacement Reserve Study dated Revised December 2, 2014 and is for use byaccounting and reserve professionals experienced in Association funding and accounting principles.This Summary consists of four reports, the 2015, 2016, and 2017 Cash Flow Method Category FundingReports (3) and a Three-Year Replacement Funding Report.

CASH FLOW METHOD CATEGORY FUNDING REPORT, 2015, 2016, and 2017. Each of the 90 ProjectedReplacements listed in the Spring Mill Plantation Replacement Reserve Inventory has beenassigned to one of 9 categories. The following information is summarized by category in each report: Normal Economic Life and Remaining Economic Life of the Projected Replacements. Cost of all Scheduled Replacements in each category. Replacement Reserves on Deposit allocated to the category at the beginning and end

of the report period. Cost of Projected Replacements in the report period. Recommended Replacement Reserve Funding allocated to the category during the

report period as calculated by the Cash Flow Method.

THREE-YEAR REPLACEMENT FUNDING REPORT. This report details the allocation of the $92,560Beginning Balance (at the start of the Study Year) and the $230,796 of additional Replacement ReserveFunding in 2015 through 2017 (as calculated in the Replacement Reserve Analysis) to each of the 90Projected Replacements listed in the Replacement Reserve Inventory. These allocations have been made using Chronological Allocation, a method developed by Miller Dodson Associates, Inc., and discussed below.The calculated data includes: Identification and estimated cost of each Projected Replacement schedule in years 2015 through 2017. Allocation of the $92,560 Beginning Balance to the Projected Replacements by Chronological Allocation. Allocation of the $230,796 of additional Replacement Reserve Funding recommended in the

Replacement Reserve Analysis in years 2015 through 2017, by Chronological Allocation.

CHRONOLOGICAL ALLOCATION. Chronological Allocation assigns Replacement Reserves to ProjectedReplacements on a "first come, first serve" basis in keeping with the basic philosophy of the Cash Flow Method.The Chronological Allocation methodology is outlined below. The first step is the allocation of the $92,560 Beginning Balance to the Projected Replacements in the

Study Year. Remaining unallocated funds are next allocated to the Projected Replacements in subsequentyears in chronological order until the total of Projected Replacements in the next year is greater than the unallocated funds. Projected Replacements in this year are partially funded with each replacementreceiving percentage funding. The percentage of funding is calculated by dividing the unallocated funds by the total of Projected Replacements in the partially funded year.At Spring Mill Plantation the Beginning Balance funds all Scheduled Replacements inthe Study Year through 2020 and provides partial funding (1%) of replacements scheduled in 2021.

The next step is the allocation of the $76,932 of 2015 Cash Flow Method Reserve Funding calculatedin the Replacement Reserve Analysis. These funds are first allocated to fund the partially fundedProjected Replacements and then to subsequent years in chronological order as outlined above.At Spring Mill Plantation the Beginning Balance and the 2015 Replacement ReserveFunding, funds replacements through 2021 and partial funds (59.5%) replacements in 2022.

Allocations of the 2016 and 2017 Reserve Funding are done using the same methodology. The Three-Year Replacement Funding Report details component by component allocations made by

Chronological Allocation.


1139712SPRING M15

2015 - CASH FLOW METHOD CATEGORY FUNDING REPORT

Each of the 90 Projected Replacements included in the Spring Mill Plantation Replacement ReserveInventory has been assigned to one of the 9 categories listed in TABLE CF-1 below. This calculated data is asummary of data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory.The accuracy of this data is dependent upon many factors including the following critical financial data: A Beginning Balance of $92,560 as of the first day of the Study Year, January 1, 2015. Total reserve funding (including the Beginning Balance) of $169,492 in the Study Year. No expenditures from Replacement Reserves other than those specifically listed in the

Replacement Reserve Inventory. All Projected Replacements scheduled in the Replacement Reserve Inventory in 2015 being

accomplished in 2015 at a cost of $5,132.If any of these critical factors are inaccurate, do not use the data and please contact Miller Dodson Associatesto arrange for an update of the Replacement Reserve Study.

2015 - CASH FLOW METHOD CATEGORY FUNDING - TABLE CF-1NORMAL REMAINING ESTIMATED 2015 2015 2015 2015

ECONOMIC ECONOMIC REPLACEMENT BEGINNING RESERVE PROJECTED END OF YEARCATEGORY LIFE LIFE COST BALANCE FUNDING REPLACEMENTS BALANCE

SITE COMPONENT 5 to 20 years 0 to 16 years $532,731 $36,458 $25,637 ($5,132) $56,962SITE COMPONENT 5 to 20 years 2 to 19 years $289,332 $30,456 $9,854 $40,310SITE COMPONENT (cont.) 5 to 60 years 4 to 60 years $454,356 $4,367 $16,885 $21,252SITE COMPONENT (cont.) 5 to 10 years 5 to 25 years $30,880 $6,000 $6,000BUILDING EXTERIOR 5 to 35 years 0 to 32 years $36,912 $3,724 $3,724BUILDING INTERIOR 7 to 21 years 0 to 18 years $38,976 $6,528 $7,773 $14,301BUILDING SYSTEM 12 to 24 years 9 to 21 years $12,700SWIMMING POOL 10 to 45 years 7 to 39 years $213,905 $14,311 $14,311EXERCISE EQUIPMENT 2 years 2 years $2,500 $5,027 $2,473 $7,500


1139712SPRING M15


Each of the 90 Projected Replacements included in the Spring Mill Plantation Replacement ReserveInventory has been assigned to one of the 9 categories listed in TABLE CF-2 below. This calculated data is asummary of data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory.The accuracy of this data is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $164,360 on January 1, 2016. Total reserve funding (including the Beginning Balance) of $246,423 in 2015 through 2016. No expenditures from Replacement Reserves other than those specifically listed in the


*****If any of these critical factors are inaccurate, do not use the data and please contact Miller Dodson Associatesto arrange for an update of the Replacement Reserve Study.



SITE COMPONENT 5 to 20 years 0 to 15 years $532,731 $56,962 $3,176 ($25,915) $34,223SITE COMPONENT 5 to 20 years 1 to 18 years $289,332 $40,310 $20,602 $60,912SITE COMPONENT (cont.) 5 to 60 years 3 to 59 years $454,356 $21,252 $5,174 $26,426SITE COMPONENT (cont.) 5 to 10 years 4 to 24 years $30,880 $6,000 $3,713 $9,713BUILDING EXTERIOR 5 to 35 years 4 to 31 years $36,912 $3,724 $2,305 $6,029BUILDING INTERIOR 7 to 21 years 3 to 17 years $38,976 $14,301 $5,297 $19,598BUILDING SYSTEM 12 to 24 years 8 to 20 years $12,700 $8,500 $8,500SWIMMING POOL 10 to 45 years 6 to 38 years $213,905 $14,311 $24,117 $38,428EXERCISE EQUIPMENT 2 years 1 years $2,500 $7,500 $4,047 $11,547


1139712SPRING M15


Each of the 90 Projected Replacements included in the Spring Mill Plantation Replacement ReserveInventory has been assigned to one of the 9 categories listed in TABLE CF-3 below. This calculated data is asummary of data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory.The accuracy of this data is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $215,376 on January 1, 2017. Total Replacement Reserve funding (including the Beginning Balance) of $323,355 in 2015 to 2017. No expenditures from Replacement Reserves other than those specifically listed in the





SITE COMPONENT 5 to 20 years 3 to 14 years $532,731 $34,223 $27,871 $62,094SITE COMPONENT 5 to 20 years 0 to 17 years $289,332 $60,912 $9,738 ($16,570) $54,080SITE COMPONENT (cont.) 5 to 60 years 2 to 58 years $454,356 $26,426 $10,640 $37,067SITE COMPONENT (cont.) 5 to 10 years 3 to 23 years $30,880 $9,713 $2,287 $12,000BUILDING EXTERIOR 5 to 35 years 3 to 30 years $36,912 $6,029 $1,419 $7,448BUILDING INTERIOR 7 to 21 years 2 to 16 years $38,976 $19,598 $7,639 $27,237BUILDING SYSTEM 12 to 24 years 7 to 19 years $12,700 $8,500 $8,500SWIMMING POOL 10 to 45 years 5 to 37 years $213,905 $38,428 $14,916 $53,344EXERCISE EQUIPMENT 2 years 0 years $2,500 $11,547 $2,422 ($2,500) $11,469


1139712SPRING M15

CASH FLOW METHOD - THREE-YEAR REPLACEMENT FUNDING REPORT

TABLE 4 below details the allocation of the $92,560 Beginning Balance, as reported by the Association and the$230,796 of Replacement Reserve Funding calculated by the Cash Flow Method in 2015 to 2017, to the 90Projected Replacements listed in the Replacement Reserve Inventory. These allocations have been made byChronological Allocation, a method developed by Miller Dodson Associates, Inc., and outlined on Page CF-1.The accuracy of the allocations is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $92,560 on January 1, 2015. Replacement Reserves on Deposit totaling $164,360 on January 1, 2016. Replacement Reserves on Deposit totaling $215,376 on January 1, 2017. Total Replacement Reserve funding (including the Beginning Balance) of $323,355 in 2015 to 2017. No expenditures from Replacement Reserves other than those specifically listed in the

Replacement Reserve Inventory. All Projected Replacements scheduled in the Replacement Reserve Inventory in 2015 to 2017 being

accomplished as scheduled in the Replacement Reserve Inventory at a cost of $50,117.

If any of these critical factors are inaccurate, do not use the data and please contact Miller DodsonAssociates, Inc., to arrange for an update of the Replacement Reserve Study.

CASH FLOW METHOD - THREE-YEAR REPLACEMENT FUNDING - TABLE CF-4Description of Estimated Allocation 2015 2015 2015 2016 2016 2016 2017 2017 2017

Item Projected Replacement of Beginning Reserve Projected End of Year Reserve Projected End of Year Reserve Projected End of Year# Replacement Costs Balance Funding Replacements Balance Funding Replacements Balance Funding Replacements Balance

SITE COMPONENT

1 Pavement, Springmill Plantation Blvd. 237,7822 Seal coat, Clubhouse parking 3,308 6,616 (3,308) 3,308 2,047 5,355 1,261 6,6163 Pavement, Clubhouse parking 28,1184 Seal coat, Iredel Ct. 1,824 3,648 (1,824) 1,824 1,129 2,953 695 3,6485 Pavement, Iredel Ct. 15,5046 Seal coat, Blarney Dost 965 975 954 1,930 (965) 965 965 1,9307 Pavement, Blarney Dost 8,2018 Seal coat, Brogdon Dost 605 611 598 1,210 (605) 605 605 1,2109 Pavement, Brogdon Dost 5,141

10 Seal coat, Jarvis Lane 12,240 12,371 12,109 24,480 (12,240) 12,240 12,240 24,48011 Pavement, Jarvis Lane 104,04012 Seal coat, Clare Court 1,512 1,528 1,496 3,024 (1,512) 1,512 1,512 3,02413 Pavement, Clare Court 12,85214 Seal coat, Tartans Glen Lane 3,888 3,930 3,846 7,776 (3,888) 3,888 3,888 7,77615 Pavement, Tartans Glen Lane 33,04816 Seal coat, Heathers Glen Lane 6,706 6,778 6,634 13,411 (6,706) 6,706 6,706 13,41117 Pavement, Heathers Glen Lane 56,998

SITE COMPONENT

18 Seal coat, W. Chatman Dr. 2,626 2,626 1,561 4,187 1,064 5,251 1,543 (2,626) 4,16919 Pavement, W. Chatman Dr. 22,31820 Seal coat, E. Chatman Dr. 2,928 2,928 1,741 4,669 1,187 5,856 1,721 (2,928) 4,64921 Pavement, E. Chatman Dr. 24,88822 Seal coat, Kilkee Dr. 11,016 11,016 6,551 17,567 4,465 22,032 6,474 (11,016) 17,49023 Pavement, Kilkee Dr. 93,63624 Seal coat, Castlebridge Ct. 3,984 3,984 3,984 3,984 7,968 7,96825 Pavement, Castlebridge Ct. 33,86426 Seal coat, Pickering Dr. 7,704 7,704 7,704 7,704 15,408 15,40827 Pavement, Pickering Dr. 65,48428 Seal coat, Birkdale Dr. 2,198 2,198 2,198 2,198 4,397 4,39729 Pavement, Birkdale Dr. 18,686

SITE COMPONENT (cont.)

30 Seal coat, Stonecrest Dr. 1,693 1,693 1,693 1,693 3,386 3,38631 Pavement, Stonecrest Dr. 14,38932 Seal coat, Mardella Ct. 2,491 2,491 2,491 2,491 4,982 4,98233 Pavement, Mardella Ct. 21,17534 Concrete curb & gutter (5%) 80,37635 Concrete curb & gutter (5%) 80,37636 Concrete curb & gutter (5%) 80,37637 Concrete sidewalk (6%) 17,068 183 16,885 17,068 17,068 17,06838 Concrete sidewalk (6%) 17,068 10,031 10,03139 Concrete sidewalk (6%) 17,068


1139712SPRING M15

CASH FLOW METHOD - THREE-YEAR REPLACEMENT FUNDING - TABLE 4 cont'dDescription of Estimated Allocation 2015 2015 2015 2016 2016 2016 2017 2017 2017


40 Concrete sidewalk (6%) 17,06841 Concrete sidewalk (6%) 17,06842 Concrete sidewalk (6%) 17,06843 Concrete sidewalk (6%) 17,06844 Concrete sidewalk (6%) 17,06845 Concrete sidewalk (6%) 17,06846 Concrete sidewalk (6%) 17,06847 Entry monument sign, painted 1,20048 Entrance light head (decorative) 1,600 990 990 610 1,600


49 Sign & post, street allowance 2,000 2,000 2,000 1,238 3,238 762 4,00050 Irrigation system allowance 4,000 4,000 4,000 2,476 6,476 1,524 8,00051 Stormwater mgmt (10% allowance) 24,880

BUILDING EXTERIOR

52 Shingle asphalt/fiberglass 14,99453 Siding & trim, Hardi Bd. 20% w/paint 3,724 3,724 3,724 2,305 6,029 1,419 7,44854 Window 8,69455 Entry door, solid metal 4,80056 Entry door, wood, glazed 1,10057 add for sidelights, pair 1,20058 French door 2,400

BUILDING INTERIOR

59 Flooring, interior carpet 6,528 6,528 6,528 6,528 6,528 13,05660 Flooring, ceramic 9,12861 Interior lighting, general allowance 2,00062 Furniture & furnishings allowance 10,000 5,947 5,947 4,053 10,000 10,00063 Folding/stack chair 1,440 846 84664 Folding table 450 264 26465 54" flat screen TV 1,000 595 595 405 1,000 1,00066 32" flat screen TV 500 297 297 203 500 50067 Kitchen, res., cabinets 5,01068 Kitchen, res., laminate countertop 1,35069 Kitchen, res., microwave 630 375 375 255 630 63070 Kitchen, res., refrigerator 940 559 559 381 940 940

BUILDING SYSTEM

71 Furnace/air handler 3,20072 Heat pump/AC unit (less than 3 tons) 6,500 6,500 6,500 6,50073 Furnace/air handler Mitsubishi split 1,00074 Heat pump/AC unit Mitsubishi split 2,000 2,000 2,000 2,000

SWIMMING POOL

75 Swimming pool, structure 138,84076 Swimming pool, whitecoat 11,214 6,669 6,669 4,545 11,214 11,21477 Swimming pool, waterline tile 2,550 1,516 1,516 1,034 2,550 2,55078 Swimming pool, coping 8,500 5,055 5,055 3,445 8,500 8,50079 Swimming pool, deck coating 5,356 3,315 3,315 2,041 5,35680 Swimming pool, concrete deck 1/3rd 17,853 11,049 11,049 6,804 17,85381 Swimming pool pump (2 - 5 hp) 1,800 1,070 1,070 730 1,800 1,80082 Swimming pool filter 3,60083 Pool furniture, lounge 5,100 2,997 2,99784 Pool furniture, table 720 423 42385 Pool furniture, umbrella 1,300 764 76486 Pool furniture, chair/end table 2,310 1,358 1,35887 Pool furniture, rocking chairs 900 529 52988 Pool area pole lights 5,35089 Perimeter fence - 6' (alu) 8,512

EXERCISE EQUIPMENT

90 Exercise Equipment 20% 2,500 5,027 2,473 7,500 4,047 11,547 2,422 (2,500) 11,469

Miller + Dodson Associates, Inc. Component Method Accounting Summary - Page CM-1Spring Mill Plantation Revised December 2, 2014

1139712SPRING M15

COMPONENT METHOD ACCOUNTING SUMMARYThis Spring Mill Plantation - Component Method Accounting Summary is an attachment to theSpring Mill Plantation - Replacement Reserve Study dated Revised December 2, 2014 and is for use byaccounting and reserve professionals experienced in Association funding and accounting principals.This Summary consists of four reports, the 2015, 2016, and 2017 Cash Flow Method Category FundingReports (3) and a Three-Year Replacement Funding Report.

COMPONENT METHOD CATEGORY FUNDING REPORT, 2015, 2016, and 2017. Each of the 90 ProjectedReplacements listed in the Spring Mill Plantation Replacement Reserve Inventory has beenassigned to one of 9 categories. The following information is summarized by category in each report: Normal Economic Life and Remaining Economic Life of the Projected Replacements. Cost of all Scheduled Replacements in each category. Replacement Reserves on Deposit allocated to the category at the beginning and end

of the report period. Cost of Projected Replacements in the report period. Recommended Replacement Reserve Funding allocated to the category during the

report period as calculated by the Component Method.

THREE-YEAR REPLACEMENT FUNDING REPORT. This report details the allocation of the $92,560Beginning Balance (at the start of the Study Year) and the $288,835 of additional Replacement Reservefunding in 2015 through 2017 (as calculated in the Replacement Reserve Analysis) to each of the 90Projected Replacements listed in the Replacement Reserve Inventory. These allocations have been madeusing the Component Method as outlined in the Replacement Reserve Analysis.The calculated data includes: Identification and estimated cost of each Projected Replacement schedule in years 2015 through 2017. Allocation of the $92,560 Beginning Balance to the Projected Replacements by the Component Method. Allocation of the $288,835 of additional Replacement Reserve Funding recommended in the

Replacement Reserve Analysis in years 2015 through 2017, by the Component Method.


1139712SPRING M15

2015 - COMPONENT METHOD CATEGORY FUNDING REPORT

Each of the 90 Projected Replacements included in the Spring Mill Plantation Replacement ReserveInventory has been assigned to one of the 9 categories listed in TABLE CM-1 below. This calculated data is a summaryof data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory. Theaccuracy of this data is dependent upon many factors including the following critical financial data: A Beginning Balance of $92,560 as of the first day of the Study Year, January 1, 2015. Total reserve funding (including the Beginning Balance) of $192,372 in the Study Year. No expenditures from Replacement Reserves other than those specifically listed in the



2015 - COMPONENT METHOD CATEGORY FUNDING - TABLE CM-1NORMAL REMAINING ESTIMATED 2015 2015 2015 2015


0 to 16 yearsSITE COMPONENT 5 to 20 years 0 to 16 years $532,731 $26,527 $43,546 $5,132 $64,942SITE COMPONENT 5 to 20 years 2 to 19 years $289,332 $6,183 $21,134 $27,316SITE COMPONENT (cont.) 5 to 60 years 4 to 60 years $454,356 $48,754 $15,842 $64,596SITE COMPONENT (cont.) 5 to 10 years 5 to 25 years $30,880 $1,957 $1,957BUILDING EXTERIOR 5 to 35 years 0 to 32 years $36,912 $790 $2,028 $2,818BUILDING INTERIOR 7 to 21 years 0 to 18 years $38,976 $1,875 $3,767 $5,642BUILDING SYSTEM 12 to 24 years 9 to 21 years $12,700 $527 $994 $1,521SWIMMING POOL 10 to 45 years 7 to 39 years $213,905 $7,904 $9,711 $17,615EXERCISE EQUIPMENT 2 years 2 years $2,500 $833 $833


1139712SPRING M15


Each of the 90 Projected Replacements included in the Spring Mill Plantation Replacement ReserveInventory has been assigned to one of the 9 categories listed in TABLE CM-2 below. This calculated data is asummary of data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory.The accuracy of this data is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $187,240 on January 1, 2016. Total reserve funding (including the Beginning Balance) of $289,610 in 2015 through 2016. No expenditures from Replacement Reserves other than those specifically listed in the


*****If any of these critical factors are inaccurate, do not use the data and please contact Miller Dodson Associatesto arrange for an update of the Replacement Reserve Study.



SITE COMPONENT 5 to 20 years 0 to 15 years $532,731 $64,942 $40,973 $25,915 $79,999SITE COMPONENT 5 to 20 years 1 to 18 years $289,332 $27,316 $21,134 $48,450SITE COMPONENT (cont.) 5 to 60 years 3 to 59 years $454,356 $64,596 $15,842 $80,438SITE COMPONENT (cont.) 5 to 10 years 4 to 24 years $30,880 $1,957 $1,957 $3,914BUILDING EXTERIOR 5 to 35 years 4 to 31 years $36,912 $2,818 $2,028 $4,846BUILDING INTERIOR 7 to 21 years 3 to 17 years $38,976 $5,642 $3,767 $9,409BUILDING SYSTEM 12 to 24 years 8 to 20 years $12,700 $1,521 $994 $2,515SWIMMING POOL 10 to 45 years 6 to 38 years $213,905 $17,615 $9,711 $27,325EXERCISE EQUIPMENT 2 years 1 years $2,500 $833 $833 $1,667


1139712SPRING M15


Each of the 90 Projected Replacements included in the Spring Mill Plantation Replacement ReserveInventory has been assigned to one of the 9 categories listed in TABLE CM-3 below. This calculated data is asummary of data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory.The accuracy of this data is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $258,563 on January 1, 2017. Total Replacement Reserve funding (including the Beginning Balance) of $381,395 in 2015 to 2017. No expenditures from Replacement Reserves other than those specifically listed in the





SITE COMPONENT 5 to 20 years 3 to 14 years $532,731 $79,999 $35,519 $115,518SITE COMPONENT 5 to 20 years 0 to 17 years $289,332 $48,450 $21,134 $16,570 $53,014SITE COMPONENT (cont.) 5 to 60 years 2 to 58 years $454,356 $80,438 $15,842 $96,280SITE COMPONENT (cont.) 5 to 10 years 3 to 23 years $30,880 $3,914 $1,957 $5,871BUILDING EXTERIOR 5 to 35 years 3 to 30 years $36,912 $4,846 $2,028 $6,874BUILDING INTERIOR 7 to 21 years 2 to 16 years $38,976 $9,409 $3,767 $13,176BUILDING SYSTEM 12 to 24 years 7 to 19 years $12,700 $2,515 $994 $3,509SWIMMING POOL 10 to 45 years 5 to 37 years $213,905 $27,325 $9,711 $37,036EXERCISE EQUIPMENT 2 years 0 years $2,500 $1,667 $833 $2,500


1139712SPRING M15

COMPONENT METHOD - THREE-YEAR REPLACEMENT FUNDING REPORT

TABLE CM-4 below details the allocation of the $92,560 Beginning Balance, as reported by the Association and the$288,835 of Replacement Reserve Funding calculated by the Cash Flow Method in 2015 to 2017, to the 90Projected Replacements listed in the Replacement Reserve Inventory. These allocations have been made byChronological Allocation, a method developed by Miller Dodson Associates, Inc., and outlined on Page CF-1.The accuracy of the allocations is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $92,560 on January 1, 2015. Replacement Reserves on Deposit totaling $187,240 on January 1, 2016. Replacement Reserves on Deposit totaling $258,563 on January 1, 2017. Total Replacement Reserve funding (including the Beginning Balance) of $381,395 in 2015 to 2017. No expenditures from Replacement Reserves other than those specifically listed in the

Replacement Reserve Inventory. All Projected Replacements scheduled in the Replacement Reserve Inventory in 2015 to 2017 being

accomplished as scheduled in the Replacement Reserve Inventory at a cost of $50,117.

If any of these critical factors are inaccurate, do not use the data and please contact Miller DodsonAssociates, Inc., to arrange for an update of the Replacement Reserve Study.

COMPONENT METHOD - THREE-YEAR REPLACEMENT FUNDING - TABLE CM-4Description of Estimated Allocation 2015 2015 2015 2016 2016 2016 2017 2017 2017


SITE COMPONENT

1 Pavement, Springmill Plantation Blvd. 237,782 7,887 14,368 22,255 14,368 36,624 14,368 50,9922 Seal coat, Clubhouse parking 3,308 987 2,321 (3,308) 662 662 662 1,3233 Pavement, Clubhouse parking 28,118 1,679 1,652 3,331 1,652 4,984 1,652 6,6364 Seal coat, Iredel Ct. 1,824 544 1,280 (1,824) 365 365 365 7305 Pavement, Iredel Ct. 15,504 926 911 1,837 911 2,748 911 3,6596 Seal coat, Blarney Dost 965 173 396 569 396 (965) 193 1937 Pavement, Blarney Dost 8,201 367 461 828 461 1,289 461 1,7508 Seal coat, Brogdon Dost 605 108 248 357 248 (605) 121 1219 Pavement, Brogdon Dost 5,141 230 289 519 289 808 289 1,097

10 Seal coat, Jarvis Lane 12,240 2,192 5,024 7,216 5,024 (12,240) 2,448 2,44811 Pavement, Jarvis Lane 104,040 4,658 5,846 10,504 5,846 16,350 5,846 22,19612 Seal coat, Clare Court 1,512 271 621 891 621 (1,512) 302 30213 Pavement, Clare Court 12,852 575 722 1,298 722 2,020 722 2,74214 Seal coat, Tartans Glen Lane 3,888 696 1,596 2,292 1,596 (3,888) 778 77815 Pavement, Tartans Glen Lane 33,048 1,480 1,857 3,337 1,857 5,194 1,857 7,05116 Seal coat, Heathers Glen Lane 6,706 1,201 2,752 3,953 2,752 (6,706) 1,341 1,34117 Pavement, Heathers Glen Lane 56,998 2,552 3,203 5,755 3,203 8,957 3,203 12,160

SITE COMPONENT

18 Seal coat, W. Chatman Dr. 2,626 314 771 1,084 771 1,855 771 (2,626)19 Pavement, W. Chatman Dr. 22,318 666 1,203 1,869 1,203 3,072 1,203 4,27520 Seal coat, E. Chatman Dr. 2,928 350 859 1,209 859 2,069 859 (2,928)21 Pavement, E. Chatman Dr. 24,888 743 1,341 2,084 1,341 3,426 1,341 4,76722 Seal coat, Kilkee Dr. 11,016 1,315 3,234 4,549 3,234 7,782 3,234 (11,016)23 Pavement, Kilkee Dr. 93,636 2,795 5,047 7,842 5,047 12,889 5,047 17,93524 Seal coat, Castlebridge Ct. 3,984 797 797 797 1,594 797 2,39025 Pavement, Castlebridge Ct. 33,864 1,693 1,693 1,693 3,386 1,693 5,08026 Seal coat, Pickering Dr. 7,704 1,541 1,541 1,541 3,082 1,541 4,62227 Pavement, Pickering Dr. 65,484 3,274 3,274 3,274 6,548 3,274 9,82328 Seal coat, Birkdale Dr. 2,198 440 440 440 879 440 1,31929 Pavement, Birkdale Dr. 18,686 934 934 934 1,869 934 2,803


30 Seal coat, Stonecrest Dr. 1,693 339 339 339 677 339 1,01631 Pavement, Stonecrest Dr. 14,389 719 719 719 1,439 719 2,15832 Seal coat, Mardella Ct. 2,491 498 498 498 996 498 1,49533 Pavement, Mardella Ct. 21,175 1,059 1,059 1,059 2,118 1,059 3,17634 Concrete curb & gutter (5%) 80,376 16,795 3,532 20,327 3,532 23,859 3,532 27,39235 Concrete curb & gutter (5%) 80,376 8,797 1,884 10,681 1,884 12,565 1,884 14,44836 Concrete curb & gutter (5%) 80,376 800 1,372 2,172 1,372 3,544 1,372 4,91637 Concrete sidewalk (6%) 17,068 4,500 1,795 6,296 1,795 8,091 1,795 9,88738 Concrete sidewalk (6%) 17,068 3,991 1,006 4,997 1,006 6,003 1,006 7,00939 Concrete sidewalk (6%) 17,068 3,482 715 4,197 715 4,912 715 5,627


1139712SPRING M15

COMPONENT METHOD - THREE-YEAR REPLACEMENT FUNDING - TABLE CM-4 cont'dDescription of Estimated Allocation 2015 2015 2015 2016 2016 2016 2017 2017 2017


40 Concrete sidewalk (6%) 17,068 2,972 564 3,536 564 4,100 564 4,66441 Concrete sidewalk (6%) 17,068 2,463 471 2,934 471 3,405 471 3,87642 Concrete sidewalk (6%) 17,068 1,953 409 2,362 409 2,770 409 3,17943 Concrete sidewalk (6%) 17,068 1,444 363 1,807 363 2,170 363 2,53444 Concrete sidewalk (6%) 17,068 934 329 1,263 329 1,593 329 1,92245 Concrete sidewalk (6%) 17,068 425 303 727 303 1,030 303 1,33246 Concrete sidewalk (6%) 17,068 280 280 280 560 280 83947 Entry monument sign, painted 1,200 72 71 142 71 213 71 28348 Entrance light head (decorative) 1,600 127 134 261 134 395 134 529


49 Sign & post, street allowance 2,000 333 333 333 667 333 1,00050 Irrigation system allowance 4,000 667 667 667 1,333 667 2,00051 Stormwater mgmt (10% allowance) 24,880 957 957 957 1,914 957 2,871

BUILDING EXTERIOR

52 Shingle asphalt/fiberglass 14,994 358 636 994 636 1,631 636 2,26753 Siding & trim, Hardi Bd. 20% w/paint 3,724 621 621 621 1,241 621 1,86254 Window 8,694 148 259 407 259 666 259 92555 Entry door, solid metal 4,800 143 259 402 259 661 259 91956 Entry door, wood, glazed 1,100 33 59 92 59 151 59 21157 add for sidelights, pair 1,200 36 65 100 65 165 65 23058 French door 2,400 72 129 201 129 330 129 460

BUILDING INTERIOR

59 Flooring, interior carpet 6,528 557 1,194 1,751 1,194 2,945 1,194 4,14060 Flooring, ceramic 9,128 260 467 726 467 1,193 467 1,66061 Interior lighting, general allowance 2,000 57 102 159 102 261 102 36462 Furniture & furnishings allowance 10,000 597 1,175 1,772 1,175 2,948 1,175 4,12363 Folding/stack chair 1,440 31 108 139 108 248 108 35664 Folding table 450 10 34 43 34 77 34 11165 54" flat screen TV 1,000 60 118 177 118 295 118 41266 32" flat screen TV 500 30 59 89 59 147 59 20667 Kitchen, res., cabinets 5,010 142 256 399 256 655 256 91168 Kitchen, res., laminate countertop 1,350 38 69 107 69 176 69 24569 Kitchen, res., microwave 630 38 74 112 74 186 74 26070 Kitchen, res., refrigerator 940 56 110 167 110 277 110 388

BUILDING SYSTEM

71 Furnace/air handler 3,200 80 142 221 142 363 142 50572 Heat pump/AC unit (less than 3 tons) 6,500 323 618 941 618 1,559 618 2,17673 Furnace/air handler Mitsubishi split 1,000 25 44 69 44 114 44 15874 Heat pump/AC unit Mitsubishi split 2,000 100 190 290 190 480 190 670

SWIMMING POOL

75 Swimming pool, structure 138,840 4,605 3,356 7,961 3,356 11,317 3,356 14,67376 Swimming pool, whitecoat 11,214 669 1,318 1,988 1,318 3,306 1,318 4,62477 Swimming pool, waterline tile 2,550 152 300 452 300 752 300 1,05178 Swimming pool, coping 8,500 1,522 872 2,395 872 3,267 872 4,13979 Swimming pool, deck coating 5,356 487 487 487 974 487 1,46180 Swimming pool, concrete deck 1/3rd 17,853 1,623 1,623 1,623 3,246 1,623 4,86981 Swimming pool pump (2 - 5 hp) 1,800 107 212 319 212 531 212 74282 Swimming pool filter 3,600 107 194 301 194 496 194 69083 Pool furniture, lounge 5,100 203 377 580 377 956 377 1,33384 Pool furniture, table 720 29 53 82 53 135 53 18885 Pool furniture, umbrella 1,300 52 96 148 96 244 96 34086 Pool furniture, chair/end table 2,310 92 171 263 171 433 171 60487 Pool furniture, rocking chairs 900 36 66 102 66 169 66 23588 Pool area pole lights 5,350 160 288 448 288 736 288 1,02589 Perimeter fence - 6' (alu) 8,512 169 298 467 298 765 298 1,063

EXERCISE EQUIPMENT

90 Exercise Equipment 20% 2,500 833 833 833 1,667 833 (2,500)

Miller - Dodson Associates, Inc. Attachments - Page E1 Appendix

1. COMMON INTEREST DEVELOPMENTS - AN OVERVIEW Over the past 40 years, the responsibility for community facilities and infrastructure around many of our homes has shifted from the local government to Community Associations. Thirty years ago, a typical new town house abutted a public street on the front and a public alley on the rear. Open space was provided by a nearby public park and recreational facilities were purchased ala carte from privately owned country clubs, swim clubs, tennis clubs, and gymnasiums. Today, 60% of all new residential construction, i.e. townhouses, single-family homes, condominiums, and cooperatives, is in Common Interest Developments (CID). In a CID, a homeowner is bound to a Community Association that owns, maintains, and is responsible for periodic replacements of various components that may include the roads, curbs, sidewalks, playgrounds, streetlights, recreational facilities, and other community facilities and infrastructure. The growth of Community Associations has been explosive. In 1965, there were only 500 Community Associations in the United States. According to the U.S. Census, there were 130,000 Community Associations in 1990. Community Associations Institute (CAI), a national trade association, estimates there were more than 200,000 Community Associations in the year 2000, and that the number of Community Associations will continue to multiply. The shift of responsibility for billions of dollars of community facilities and infrastructure from the local government and private sector to Community Associations has generated new and unanticipated problems. Although Community Associations have succeeded in solving many short-term problems, many Associations have failed to properly plan for the tremendous expenses of replacing community facilities and infrastructure components. When inadequate replacement reserve funding results in less than timely replacements of failing components, home owners are exposed to the burden of special assessments, major increases in Association fees, and a decline in property values.

2. REPLACEMENT RESERVE STUDY The purpose of a Replacement Reserve Study is to provide the Association with an inventory of the common community facilities and infrastructure components that require periodic replacement, a general view of the condition of these components, and an effective financial plan to fund projected periodic replacements. The Replacement Reserve Study consists of the following:

• Replacement Reserve Study Introduction. The introduction provides a description of the property, reviews the intent of the Replacement Reserve Study, and lists documents and site evaluations upon which the Replacement Reserve Study is based.

• Section A Replacement Reserve Analysis. Many components owned by the Association have a limited life and

require periodic replacement. Therefore, it is essential the Association have a financial plan that provides funding for the timely replacement of these components in order to protect the safety, appearance, and value of the community. In conformance with American Institute of Certified Public Accountant guidelines; Section A Replacement Reserve Analysis evaluates the current funding of Replacement Reserves as reported by the Association and recommends annual funding of Replacement Reserves by two generally accepted accounting methods; the Cash Flow Method and the Component Method. Section A Replacement Reserve Analysis includes graphic and tabular presentations of these methods and current Association funding.

• Section B Replacement Reserve Inventory. The Replacement Reserve Inventory lists the commonly owned

components within the community that require periodic replacement using funding from Replacement Reserves. The Replacement Reserve Inventory also provides information about components excluded from the Replacement Reserve Inventory whose replacement is not scheduled for funding from Replacement Reserves.

Replacement Reserve Inventory includes estimates of the normal economic life and the remaining economic life

for those components whose replacement is scheduled for funding from Replacement Reserves.

• Section C Projected Annual Replacements. The Calendar of Projected Annual Replacements provides a year-by-year listing of the Projected Replacements based on the data in the Replacement Reserve Inventory.

• Section D Condition Assessment. Several of the items listed in the Replacement Reserve Inventory are discussed

in more detail. The Condition Assessment includes a narrative and photographs that document conditions at the property observed during our visual evaluation.

• Section E Attachments. The Appendix is provided as an attachment to the Replacement Reserve Study.

Additional attachments may include supplemental photographs to document conditions at the property and additional information specific to the property cited in the Conditions Assessment (i.e. Consumer Product Safety Commission, Handbook for Public Playground Safety, information on segmental retaining walls, manufacturer recommendations for asphalt shingles or siding, etc).


3. METHODS OF ANALYSIS The Replacement Reserve industry generally recognizes two different methods of accounting for Replacement Reserve Analysis. Due to the difference in accounting methodologies, these methods lead to different calculated values for the Minimum Annual Contribution to the Reserves. The results of both methods are presented in this report. The Association should obtain the advice of its accounting professional as to which method is more appropriate for the Association. The two methods are:

• Component Method. This method is a time tested mathematical model developed by HUD in the early 1980s. It treats each item in the replacement schedule as an individual line item budget. Generally, the Minimum Annual Contribution to Reserves is higher when calculated by the Component Method. The mathematical model for this method works as follows:

First, the total Current Objective is calculated, which is the reserve amount that would have accumulated had all of the items on the schedule been funded from initial construction at their current replacement costs. Next, the Reserves Currently on Deposit (as reported by the Association) are distributed to the components in the schedule in proportion to the Current Objective. The Minimum Annual Deposit for each component is equal to the Estimated Replacement Cost, minus the Reserves on Hand, divided by the years of life remaining.

• Cash Flow Method. The Cash Flow Method is sometimes referred to as the "Pooling Method." It calculates the

minimum constant annual contribution to reserves (Minimum Annual Deposit) required to meet projected expenditures without allowing total reserves on hand to fall below the specified minimum level in any year. This method usually results in a calculated requirement for annual contribution somewhat less than that arrived at by the Component Method of analysis.

First, the Minimum Recommended Reserve Level to be Held on Account is determined based on the age, condition, and replacement cost of the individual components. The mathematical model then allocates the estimated replacement costs to the future years in which they are projected to occur. Based on these expenditures, it then calculates the minimum constant yearly contribution (Minimum Annual Deposit) to the reserves necessary to keep the reserve balance at the end of each year above the Minimum Recommended Reserve Level to be Held on Account. The Cash Flow Analysis assumes that the Association will have authority to use all of the reserves on hand for replacements as the need occurs. This method usually results in a Minimum Annual Deposit, which is less than that, arrived at by the Component Method.

• Adjusted Cash Flow Analysis. This program has the ability to modify the Cash Flow Method to take into account

forecasted inflation and interest rates, thereby producing an Adjusted Cash Flow Analysis. Attempting to forecast future inflation and interest rates and the impact of changing technology is highly tenuous. Therefore, in most cases it is preferable to make a new schedule periodically rather than attempt to project far into the future. We will provide more information on this type of analysis upon request.

4. REPLACEMENT RESERVE STUDY DATA

• Identification of Reserve Components. The Reserve Analyst has only two methods of identifying Reserve

Components; (1) information provided by the Association and (2) observations made at the site. It is important that the Reserve Analyst be provided with all available information detailing the components owned by the Association. It is our policy to request such information prior to bidding on a project and to meet with the individuals responsible for maintaining the community after acceptance of our proposal. After completion of the Study, the Study should be reviewed by the Board of Directors, individuals responsible for maintaining the community, and the Association’s accounting professionals. We are dependent upon the Association for correct information, documentation, and drawings.

• Unit Costs. Unit costs are developed using nationally published standards and estimating guides and are adjusted

by state or region. In some instances, recent data received in the course of our work is used to modify these figures.

Contractor proposals or actual cost experience may be available as part of the Association records. This is useful information, which should be incorporated into your report. Please bring any such available data to our attention, preferably before the report is commenced.

• Replacement vs. Repair and Maintenance. A Replacement Reserve Study addresses the required funding for

Capital Replacement Expenditures. This should not be confused with operational costs or cost of repairs or maintenance.


5. DEFINITIONS Adjusted Cash Flow Analysis. Cash flow analysis adjusted to take into account annual cost increases due to inflation and interest earned on invested reserves. In this method, the annual contribution is assumed to grow annually at the inflation rate. Annual Deposit if Reserves Were Fully Funded. Shown on the Summary Sheet A1 in the Component Method summary, this would be the amount of the Annual Deposit needed if the Reserves Currently on Deposit were equal to the Total Current Objective. Cash Flow Analysis. See Cash Flow Method, above. Component Analysis. See Component Method, above. Contingency. An allowance for unexpected requirements. Roughly the same as the Minimum Recommended Reserve Level to be Held on Account used in the Cash Flow Method of analysis. Critical Year. In the Cash Flow Method, a year in which the reserves on hand are projected to fall to the established minimum level. See Minimum Recommended Reserve Level to be Held on Account. Current Objective. This is the reserve amount that would have accumulated had the item been funded from initial construction at its current replacement cost. It is equal to the estimated replacement cost divided by the estimated economic life, times the number of years expended (the difference between the Estimated Economic Life and the Estimated Life Left). The Total Current Objective can be thought of as the amount of reserves the Association should now have on hand based on the sum of all of the Current Objectives. Estimated Economic Life. Used in the Normal Replacement Schedules. This represents the industry average number of years that a new item should be expected to last until it has to be replaced. This figure is sometimes modified by climate, region, or original construction conditions. Estimated Remaining Economic Life. Used in the Normal Replacement Schedules, this term is the number of years until the current item is expected to need replacement. Normally, this number would be considered the difference between the Estimated Economic Life and the age of the item. However, this number must be modified to reflect maintenance practice, climate, original construction and quality, or other conditions. For the purpose of this report, this number is determined by the Reserve Analyst based on the present condition of the item relative to the actual age. Estimated Initial Replacement. For a Cyclic Replacement Item (see above), the number of years until the replacement cycle is expected to begin. Estimated Replacement Cycle. For a Cyclic Replacement Item, the number of years over which the remainder of the component's replacement occurs. Incremental Replacement Item. Incremental replacement refers to an inventory component that will be replaced in portions over the life of the study rather than in its entirety, as distinguished below, see Normal Replacement Item. Minimum Annual Deposit. Shown on the Summary Sheet A1. The calculated requirement for annual contribution to reserves as calculated by the Cash Flow Method (see above). Minimum Deposit in the Study Year. Shown on the Summary Sheet A1. The calculated requirement for contribution to reserves in the study year as calculated by the Component Method (see above). Minimum Recommended Reserve Level to be Held on Account. Shown on the Summary Sheet A1, this number is used in the Cash Flow Method only. This is the prescribed level below which the reserves will not be allowed to fall in any year. This amount is determined based on the age, condition, and replacement cost of the individual components. This number is normally given as a percentage of the total Estimated Replacement Cost of all reserve components. Normal Replacement Item. A component of the property that is replaced in its entirety. (As distinguished from an Incremental Replacement Item, see above.) Normal Replacement Schedules. The list of Normal Replacement Items by category or location. These items appear on pages designated. Number of Years of the Study. The numbers of years into the future for which expenditures are projected and reserve levels calculated. This number should be large enough to include the projected replacement of every item on the schedule, at least once. This study covers a 40-year period. One Time Deposit Required to Fully Fund Reserves. Shown on the Summary Sheet A1 in the Component Method summary, this is the difference between the Total Current Objective and the Reserves Currently on Deposit.


Reserves Currently on Deposit. Shown on the Summary Sheet A1, this is the amount of accumulated reserves as reported by the Association in the current year. Reserves on Hand. Shown in the Cyclic Replacement and Normal Replacement Schedules, this is the amount of reserves allocated to each component item in the Cyclic or Normal Replacement schedules. This figure is based on the ratio of Reserves Currently on Deposit divided by the total Current Objective. Replacement Reserve Study. An analysis of all of the components of the common property of the Association for which a need for replacement should be anticipated within the economic life of the property as a whole. The analysis involves estimation for each component of its estimated Replacement Cost, Estimated Economic Life, and Estimated Life Left. The objective of the study is to calculate a recommended annual contribution to the Association's Replacement Reserve Fund. Total Replacement Cost. Shown on the Summary Sheet A1, this is total of the Estimated Replacement Costs for all items on the schedule if they were to be replaced once. Unit Replacement Cost. Estimated replacement cost for a single unit of a given item on the schedule. Unit (of Measure). Non-standard abbreviations are defined on the page of the Replacement Reserve Inventory where the item appears. The following standard abbreviations are used in this report: EA: each FT: feet LS: lump sum PR: pair SF: square feet SY: square yard


What is a Reserve Study? Who are we?

What kind of property uses a Reserve Study? Who are our clients?

Who conducts a Reserve Study? Reserve Specialist (RS) what does this mean?

When should a Reserve Study be updated? What are the different types of Reserve Studies?

What is in a Reserve Study and what is out? Improvement vs Component, is there a difference?

What is my role as a Community Manager? Will the report help me explain Reserves to my

clients?

1 of 2

http://bcove.me/nc0o69t7 http://bcove.me/stt373hj

http://bcove.me/81ch7kjt http://bcove.me/ixis1yxm

http://bcove.me/81ch7kjt http://bcove.me/fazwdk3h

http://bcove.me/nc0o69t�

http://bcove.me/stt373h�

http://bcove.me/81ch7kj�

http://bcove.me/ixis1yx�

http://bcove.me/81ch7kj�

http://bcove.me/fazwdk3�

http://bcove.me/nc0o69t7�

http://bcove.me/stt373hj�

http://bcove.me/81ch7kjt�

http://bcove.me/ixis1yxm�

http://bcove.me/81ch7kjt�

http://bcove.me/fazwdk3h�


What is my role as a Board Member? Will a Reserve Study meet my community’s needs?

Community dues, how can a Reserve Study help? Will a study help keep my property competitive?

How do I read the report? Will I have a say in what the report contains?

Where do the numbers come from? Cumulative expenditures and funding, what?

How are interest and inflation addressed? What should we look at when considering inflation?

A community needs more help, where do we go? What is a Strategic Funding Plan?

2 of 2

http://bcove.me/s2tmtj9b http://bcove.me/iqul31vq

http://bcove.me/n6nwnktv http://bcove.me/2vfih1tz

http://bcove.me/wb2fugb1 http://bcove.me/7buer3n8

http://bcove.me/s2tmtj9�

http://bcove.me/iqul31v�

http://bcove.me/n6nwnkt�

http://bcove.me/2vfih1t�

http://bcove.me/wb2fugb�

http://bcove.me/7buer3n�

http://bcove.me/s2tmtj9b�

http://bcove.me/nc0o69t7�

http://bcove.me/n6nwnktv�

http://bcove.me/2vfih1tz�

http://bcove.me/wb2fugb1�

http://bcove.me/7buer3n8�

report fy 2015 spring mill plantation

Documents