Farr Orchard HOA
Transcript of Farr Orchard HOA
Farr Orchard HOA
Level 1 Reserve Study
Report Period – 01/01/2014 – 12/31/2014
Client Reference Number 14109 Property Type Townhouse Number of Units 89 Fiscal Year End 12/31
Report prepared on – Tuesday, August 06, 2013
TEL: (888) 356-3783 | Fax: (866) 279-9662
WWW.COMPLEXSOLUTIONSLTD.COM
Date of Property Inspection 6/20/2013 Prepared By Dale Gifford Analysis Method Cash Flow Funding Goal Full Funding
Table of Contents
Introduction
Executive Summary page 1
Introduction page 2
General Information and Frequently Asked Questions page 3 - 4
Reserve Analysis
Funding Summary page 5
Percent Funded – Graph page 6
Component Inventory page 7
Significant Components page 8
Significant Components – Graph page 9
Yearly Summary page 10
Yearly Reserve Contributions – Graph page 11
Component Funding Information page 12
Yearly Cash Flow page 13
Yearly Reserve Expenditures – Graph page 14
Projected Reserve Expenditures by Year page 15 - 16
Component Evaluation
Component Evaluation page 1 - 21
Glossary of Commonly used Words and Phrases
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Executive Summary – Farr Orchard HOA - ID # 14109 Information to complete this Reserve Study was gathered by performing an on-site inspection of the common area elements. In addition, we also obtained information by contacting any vendors and/or contractors that have worked on the property recently, as well as communicating with the property representative (BOD Member and/or Community Manager). To the best of our knowledge, the conclusions and recommendations of this report are considered reliable and accurate insofar as the information obtained from these sources. Projected Starting Balance as of 01/01/2014 $218,584.96 Ideal Reserve Balance as of 01/01/2014 $656,957
Percent Funded as of 01/01/2014 33% Recommended Reserve Contribution (per month) $7,700 Minimum Reserve Contribution (per month) $7,100 Recommended Special Assessment $0
Farr Orchard HOA is an 89-unit community consisting of Townhouse. The property offers the security of an entry system as well as landscaped areas as amenities. Construction on the community was completed in 2006.
Currently Programmed Projects Projects programmed to occur this fiscal year (FY2014) include front doors repaint (Comp# 204), and asphalt seal coat (Comp# 402). We have programmed an estimated $17,929 in reserve expenditures toward the completion of these projects. (See page 15)
Major Reserve Expenditures The first major reserve expenditure is programmed to occur in fiscal year 2026. Projects programmed to occur in fiscal year 2026 include pitched roof comp shingle replace (Comp# 105), rain gutters/downspouts replace (Comp# 120), front doors repaint (Comp# 204), and concrete driveways and sidewalks repair/replace (Comp# 601). We have programmed approximately $704,745 in reserve funds or approximately 49% of fiscal year 2026’s recommended starting balance towards the completion of these projects (see pages 10 & 15).
Significant Reserve Projects The association’s significant reserve projects include vinyl siding replace (Comp# 302), pitched roof comp shingle replace (Comp# 105), asphalt overlay (Comp# 401), and rain gutters/downspouts replace (Comp# 120). The fiscal significance of these components is approximately 42%, 31%, 7%, and 3% respectively (see page 9). A component’s significance is calculated by dividing its replacement cost by its useful life. In this way, not only is a component’s replacement cost considered but also the frequency of occurrence. These components most significantly contribute to the total monthly reserve contribution. As these components have a high level of fiscal significance the association should properly maintain them to ensure they reach their full useful lives. Reserve Funding In comparing the projected starting reserve balance of $218,584.96 versus the ideal reserve balance of $656,957 we find the association’s reserve fund to be approximately 33% funded. This indicates a fair reserve fund position. In order to continue to strengthen the account fund, we suggest adopting a monthly reserve contribution of $7,700 ($86.52/unit) per month. We have also included a minimum reserve contribution of $7,100 ($79.78/unit) per month. If the contribution falls below this rate, then the reserve fund may fall into a situation where special assessments, deferred maintenance, and lower property values are likely at some point in the future.
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Introduction Reserve Study Purpose The purpose of this Reserve Study is to provide an educated estimate of the necessary reserve balance and allocation. The detailed schedules will serve as an advanced warning that major projects will need to be addressed in the future. This will allow the Board of Directors to have ample time to obtain competitive estimates and bids that will result in cost savings to the individual homeowners. It will also ensure the physical well-being of the property and ultimately enhance each owner’s investment, while limiting the possibility of unexpected major projects that may lead to special assessments. Preparer’s Credentials Mr. Gifford has been working in the community association industry for the last 10 years. Prior to taking a position, as the Regional Project Manager covering the Utah region, at Complex Solutions, he worked in community association management in Utah. While in community association management his positions included, Maintenance Supervisor, Senior Portfolio Manager and Vice President of Community Management. His work in community association management gave him extensive experience with; budget creation, reserves and reserve budgeting, community inspections and analyzing common area components.
Reserve Specialist (RS) designation from Community Associations Institute (CAI)
Personally has prepared over 450 reserve studies in Salt Lake City Utah and surrounding areas
Bachelor of Science in Chemistry from Emporia State University
Certified Manager of Community Associations® (CMCA®) designation from the National Board of Certification for
Community Association Managers (NBC-CAM)
Association Management Specialist® (AMS®) designation from Community Associations Institute (CAI)
Professional Community Association Manager® (PCAM®) designation from Community Associations Institute (CAI)
Active member and former Board member and chapter President of the Utah Chapter of Community Associations
Institute (UCCAI)
Recipient of Community Associations Institute’s (CAI) annual award of Excellence In Chapter Leadership for service an achievement in 2010
Budget Breakdown Every association conducts their business within a budget. There are typically two main parts to this budget, operating and reserves. The operating budget includes all expenses that occur on an annual basis. These would include management fees, maintenance expenses, utilities, etc. The reserves are primarily made up of capital replacement items such as roofing, fencing, mechanical equipment, etc., that do not normally occur on an annual basis. Typically, the reserve contribution makes up 15% - 40% of the association’s total budget. Therefore, reserves are considered to be a major part of the overall monthly association assessment.
Report Sections The Reserve Analysis Section contains the evaluation of the association’s reserve balance, income, and expenses. It includes a finding of the client’s current reserve fund status (measured as percent funded) and a recommendation for an appropriate reserve allocation rate (also known as the funding plan). The Component Evaluation Section contains information regarding the physical status and replacement cost of major common area components the association is responsible to maintain. It is important to understand that while the component inventory will remain relatively “stable” from year to year, the condition assessment and life estimates will most likely vary from year to year.
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General Information and Frequently Asked Questions
Why is it important to perform a Reserve Study? As previously mentioned, the reserve allocation makes up a significant portion of the total monthly assessment. This report provides the essential information that is needed to guide the Board of Directors in establishing the budget in order to run the daily and long term operations of your association. It is suggested that a third party professionally prepare the Reserve Study since there is no vested interest in the property.
After we have a Reserve Study completed, what do we do with it? Hopefully, you will not look at this report and think it is too cumbersome to understand. Our intention is to make this Reserve Study easy to read and understand. Please take the time to review it carefully and make sure the “main ingredients” (component information) are complete and accurate. If there are any inaccuracies, please inform us immediately so we may revise the report. Once you feel the report is an accurate tool to work from, use it to help establish your budget for the upcoming fiscal year. The reserve allocation makes up a large portion of the total monthly assessment and this report should help you determine the correct amount of money to go into the reserve fund. Additionally, the Reserve Study should act as a guide to obtain proposals in advance of pending projects. This will give you an opportunity to shop around for the best price available. The Reserve Study should be readily available for real estate agents, brokerage firms, and lending institutions for potential future homeowners. As the importance of reserves becomes more of a household term, people are requesting homeowners associations reveal the strength of the reserve fund prior to purchasing a condominium, town home, or any property that belongs to an association.
How often do we update or review the Reserve Study? Unfortunately, there is a misconception that these reports are good for an extended period of time since the report has projections for the next 30 years. Just like any major line item in the budget, the Reserve Study should be reviewed each year before the budget is established. Invariably, some assumptions have to be made during the compilation of this analysis. Anticipated events may not materialize and unpredictable circumstances could occur. Deterioration rates and repair/replacement costs will vary from causes that are unforeseen. Earned interest rates may vary from year to year. These variations could alter the content of the Reserve Study. Therefore, this analysis should be reviewed annually, and a property inspection should be conducted at least once every three years. What is a “Reserve Component” versus an “Operating Component”? A “Reserve” component is an item that is the responsibility of the association to maintain, has a limited useful life (for Reserve purposes less than 30 years), predictable remaining useful life, typically occurs on a cyclical basis that exceeds 1 year, and costs above a minimum threshold amount. An “Operating” expense is typically a fixed expense that occurs on an annual basis as well as general repairs and maintenance. What are the GREY areas of “maintenance” items that are often seen in a Reserve Study? One of the most popular questions revolves around major “maintenance” items, such as painting the buildings or seal coating the asphalt. You may hear from your accountant that since painting or seal coating is not replacing a “capital” item it cannot be considered a Reserve issue. However, it is the opinion of several major Reserve Study providers that these items are considered to be major expenses that occur on a cyclical basis. Therefore, it makes it very difficult to ignore a major expense that meets the criteria to be considered a reserve component. Once explained in this context, many accountants tend to agree and will include any expenses, such as these examples, as a reserve component.
What happens during the Site Visit? The Site Visit was conducted of the common areas as reported by client. From our site visit we identified those common area components that we have determined require reserve funding. Based on information provided by the client, client’s vendors, and our assessment of the components we have developed a component list and life and cost estimates. Estimated life expectancies and life cycles are based upon conditions that were readily accessible and visible at the time of the inspection. We did not destroy any landscape work, building walls, or perform any methods of intrusive investigation during the inspection. In these cases, information may have been obtained by contacting the contractor or vendor that has worked on the property. We have assumed any and all components have been properly built and will reach normal, typical life expectancies. In general a reserve study is not intended to identify or fund for construction defects. We did not and will not look for or identify construction defects during our site visit.
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What is the Financial Analysis? We projected the starting balance by taking the most recent balance statement, adding expected reserve contributions for the rest of the fiscal year, and subtracting any pending projects that will be paid for before the end of the current fiscal year. We compared this number to the ideal reserve balance and arrived at the percent funded level. Measures of strength are as follows: 0% - 30% Funded is generally considered to be a “weak” financial position. Associations that fall into this category are
subject to special assessments and deferred maintenance, which could lead to lower property values. If the association is in this position, actions should be taken to improve the financial strength of the reserve fund.
31% - 69% Funded is generally considered a “fair” financial position. The majority of associations fall into this category. While this doesn’t represent financial strength and stability, the likelihood of special assessments and deferred maintenance is diminished. Effort should be taken to continue strengthening the financial position of the reserve fund.
70% - 99% Funded is generally considered a “strong” financial position. This indicates financial strength of a reserve fund and every attempt to maintain this level should be a goal of the association.
100% Funded is considered an “ideal” financial position. This means that the association has the exact amount of funds in the reserve account.
Disclosures: We will identify only those major components with a useful life of 30-years or less that generally meet industry standards for reserve funding. The projected life expectancy of the major components and the funding needs of the reserves of the association are based upon the association performing appropriate routine and preventative maintenance for each major component. Failure to perform such maintenance can negatively impact the remaining useful life of the major components and dramatically increase the funding needs of the reserves of the association. This Reserve Study assumes that all construction assemblies and components identified herein are built properly and are free from defects in materials and/or workmanship. Defects can lead to reduced useful life and premature failure. It was not the intent of this Reserve Study to inspect for or to identify defects. If defects exist, repairs should be made so that the construction components and assemblies at the community reach the full and expected useful lives. Information provided to the preparer of a reserve study by an official representative of the association regarding financial, historical, physical, quantitative or reserve project issues will be deemed reliable by the preparer. A reserve study will be a reflection of information provided to the preparer of the reserve study. The total of actual or projected reserves required as presented in the reserve study is based upon information provided that was not audited. A reserve study is not intended to be used to perform an audit, an analysis of quality, a forensic study or a background check of historical records. An on-site inspection conducted in conjunction with a reserve study should not be deemed to be a project audit or quality inspection. The results of this study are based on the independent opinion of the preparer and his experience and research during the course of his career in preparing Reserve Studies. In addition the opinions of experts on certain components have been gathered through research within their industry and with client’s actual vendors. There is no implied warrantee or guarantee regarding our life and cost estimates/predictions. There is no implied warrantee or guarantee in any of our work product. Our results and findings will vary from another preparer’s results and findings. A Reserve Study is necessarily a work in progress and subsequent Reserve Studies will vary from prior studies. Update Reserve Studies: Level II Studies: Quantities of major components as reported in previous reserve studies are deemed to be accurate and reliable. The reserve study relies upon the validity of previous reserve studies. Level III Studies: In addition to the above we have not visited the property when completing a Level III “Financial Update” study. Therefore we have not verified the current condition of the common area components. . Insurance: We carry general and professional liability insurance as well as workers’ compensation insurance. Actual or Perceived Conflicts of Interest: There are no potential actual or perceived conflicts of interest that we are aware of. Inflation and Interest Rates: The after tax interest rate used in the financial analysis may or may not be based on the clients reported after tax interest rate. If it is we have not verified or audited the reported rate. The interest rate may also be based on an amount we believe appropriate given the 30-year horizon of this study and may or may not reflect current or historical inflation rates.
Beginning Assumptions
# of units 89Fiscal Year End 31-DecBudgeted Monthly Reserve Allocation $1,780Projected Starting Reserve Balance $218,585Ideal Starting Reserve Balance $656,957
Economic Assumptions
Projected Inflation Rate 3.00%Reported After-Tax Interest Rate 0.25%
Current Reserve Status
Current Balance as a % of Ideal Balance 33%
Recommendations
Funding Summary
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Recommended Monthly Reserve Allocation $7,700Per Unit $86.52
Future Annual Increases 3.00%For number of years: 30Increases thereafter: 0.00%
Minimum Recommended Monthly Reserve Allocation $7,100Per Unit $79.78
Future Annual Increases 3.00%For number of years: 30Increases thereafter: 0.00%
Changes From Prior YearRecommended Increase to Reserve Allocation $5,920
as Percentage 333%
Minimum Recommended Increase to Reserve Allocation $5,320as Percentage 299%
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Percent Funded - Graph
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120%
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% L
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Component Inventory
Category ID # Component NameUseful
Life (yrs.)
RemainingUseful Life
(yrs.)
Best Cost Worst Cost
Roofing 105 Pitched Roof - Comp Shingle - Replace 25 12 $403,988 $461,700120 Rain Gutters/Downspouts - Replace 25 12 $40,995 $50,105
Painted Surfaces 201 Stucco Surfaces - Repair/Repaint 12 2 $17,658 $23,800204 Front Doors - Repaint 6 0 $6,675 $11,125
Siding Materials 302 Vinyl Siding - Replace 40 28 $836,220 $1,003,464
Drive Materials 401 Asphalt - Overlay 25 13 $84,645 $112,860402 Asphalt - Seal Coat 5 0 $7,336 $10,722
Decking 601 Concrete Driveways & Sidewalks - Repai 10 2 $6,000 $8,000
Prop. Identification 801 Historical Marker - Refurbish N/A $0 $0801 Monument Sign - Refurbish 18 6 $1,000 $1,500803 Mailboxes - Replace N/A $0 $0890 Community Signs - Other N/A $0 $0
Fencing 1008 Vinyl Fencing & Railing - Replace 25 13 $35,730 $51,6101009 Wood Split Rail Fencing - Replace 15 3 $5,040 $6,4801012 Fence Pillars - Replace N/A $0 $0
Recreation Equip. 1307 Benches - Replace 12 2 $1,000 $1,400
Light Fixtures 1602 Exterior Light Fixtures - Replace 16 4 $11,800 $17,7001609 Street Light Fixtures - Replace 20 8 $4,500 $5,400
Landscaping 1812 Landscaping - Renovate N/A $0 $0
Buildings / Structur 2301 Metal Pergola - Replace N/A $0 $02301 Wood Pergola - Replace 15 3 $2,500 $4,000
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A $ A %Component NameID #
Significant Components
Significance: (Curr Cost/UL)
Average Current
Cost
Remaining Useful Life
(yrs )
Useful Life
(yrs )
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As $ As %
105 Pitched Roof - Comp Shingle - Replace 25 12 $432,844 $17,314 31.2045%120 Rain Gutters/Downspouts - Replace 25 12 $45,550 $1,822 3.2838%201 Stucco Surfaces - Repair/Repaint 12 2 $20,729 $1,727 3.1134%204 Front Doors - Repaint 6 0 $8,900 $1,483 2.6734%302 Vinyl Siding - Replace 40 28 $919,842 $22,996 41.4457%401 Asphalt Overlay 25 13 $98 753 $3 950 7 1193%
Cost(yrs.)(yrs.)
401 Asphalt - Overlay 25 13 $98,753 $3,950 7.1193%402 Asphalt - Seal Coat 5 0 $9,029 $1,806 3.2545%601 Concrete Driveways & Sidewalks - Repa 10 2 $7,000 $700 1.2616%801 Monument Sign - Refurbish 18 6 $1,250 $69 0.1252%
1008 Vinyl Fencing & Railing - Replace 25 13 $43,670 $1,747 3.1483%1009 Wood Split Rail Fencing - Replace 15 3 $5,760 $384 0.6921%1307 Benches - Replace 12 2 $1,200 $100 0.1802%1602 Exterior Light Fixtures - Replace 16 4 $14,750 $922 1.6615%1609 Street Light Fixtures - Replace 20 8 $4,950 $248 0.4461%2301 Wood Pergola - Replace 15 3 $3,250 $217 0.3905%
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Significant Components - Graph
302 Vinyl Siding - Replace
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302 Vinyl Siding - Replace
105 Pitched Roof - Comp Shingle - Replace
401 Asphalt - Overlay
120 Rain Gutters/Downspouts - Replace
All Other
17%
302 Vinyl Siding - Replace
105 Pitched Roof - Comp Shingle - Replace
401 Asphalt - Overlay
120 Rain Gutters/Downspouts - Replace
All Other
42%
7%
3%
17%
302 Vinyl Siding - Replace
105 Pitched Roof - Comp Shingle - Replace
401 Asphalt - Overlay
120 Rain Gutters/Downspouts - Replace
All Other
42%
31%
7%
3%
17%
302 Vinyl Siding - Replace
105 Pitched Roof - Comp Shingle - Replace
401 Asphalt - Overlay
120 Rain Gutters/Downspouts - Replace
All Other
As $ As %ID #
Significance: (Curr Cost/UL)
Average Current
Cost
Remaining Useful Life
(yrs )
Useful Life
(yrs )Component Name
42%
31%
7%
3%
17%
302 Vinyl Siding - Replace
105 Pitched Roof - Comp Shingle - Replace
401 Asphalt - Overlay
120 Rain Gutters/Downspouts - Replace
All Other
As $ As %302 Vinyl Siding - Replace 40 28 $919,842 $22,996 42%105 Pitched Roof - Comp Shingle - Replace 25 12 $432,844 $17,314 31%401 Asphalt - Overlay 25 13 $98,753 $3,950 7%120 Rain Gutters/Downspouts - Replace 25 12 $45,550 $1,822 3%
All Other See Expanded Table For Breakdown $9,403 17%
Cost(yrs.)(yrs.)
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YearFully
Funded Balance
Starting Reserve Balance
% Funded
Reserve Contributions
Interest Income
Reserve Expenses
Ending Reserve Balance
Yearly Summary
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Balance BalanceFunded Contributions Income Expenses
Balance2014 $656,957 $218,585 33% $92,400 $640 $17,929 $293,6962015 $715,348 $293,696 41% $95,172 $854 $0 $389,7232016 $795,673 $389,723 49% $98,027 $1,060 $30,691 $458,1182017 $848,561 $458,118 54% $100,968 $1,261 $9,845 $550,5022018 $926,325 $550,502 59% $103,997 $1,487 $16,601 $639,3852019 $1,001,338 $639,385 64% $107,117 $1,721 $10,467 $737,7562020 $1,086,849 $737,756 68% $110,330 $1,969 $12,120 $837,9362021 $1,175,210 $837,936 71% $113,640 $2,239 $0 $953,8162022 $1,280,753 $953,816 74% $117,050 $2,526 $6,271 $1,067,1212023 $1,385,112 $1,067,121 77% $120,561 $2,822 $0 $1,190,5042024 $1,501,232 $1,190,504 79% $124,178 $3,120 $12,134 $1,305,6672025 $1,610,575 $1,305,667 81% $127,903 $3,428 $0 $1,436,9992026 $1 738 000 $1 436 999 83% $131 740 $2 880 $704 745 $866 8742026 $1,738,000 $1,436,999 83% $131,740 $2,880 $704,745 $866,8742027 $1,145,734 $866,874 76% $135,693 $2,078 $209,152 $795,4922028 $1,048,605 $795,492 76% $139,763 $2,124 $33,170 $904,2092029 $1,132,341 $904,209 80% $143,956 $2,426 $14,067 $1,036,5252030 $1,240,860 $1,036,525 84% $148,275 $2,780 $0 $1,187,5792031 $1,369,793 $1,187,579 87% $152,723 $3,163 $0 $1,343,4662032 $1,505,346 $1,343,466 89% $157,305 $3,521 $30,491 $1,473,8022033 $1 616 394 $1 473 802 91% $162 024 $3 891 $0 $1 639 7172033 $1,616,394 $1,473,802 91% $162,024 $3,891 $0 $1,639,7172034 $1,765,097 $1,639,717 93% $166,885 $4,259 $42,947 $1,767,9142035 $1,877,033 $1,767,914 94% $171,891 $4,640 $0 $1,944,4452036 $2,039,658 $1,944,445 95% $177,048 $5,071 $13,413 $2,113,1512037 $2,196,536 $2,113,151 96% $182,359 $5,517 $0 $2,301,0282038 $2,375,222 $2,301,028 97% $187,830 $5,968 $20,633 $2,474,1942039 $2,541,399 $2,474,194 97% $193,465 $6,411 $18,904 $2,655,166$ , , $ , , $ , $ , $ , $ , ,2040 $2,717,827 $2,655,166 98% $199,269 $6,836 $47,292 $2,813,9782041 $2,873,899 $2,813,978 98% $205,247 $7,300 $0 $3,026,5252042 $3,087,061 $3,026,525 98% $211,405 $5,192 $2,115,857 $1,127,2642043 $1,131,093 $1,127,264 100% $217,747 $3,094 $0 $1,348,104
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Reserve Contributions - Graph
Monthly Reserve Contributions
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$-
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Recommended Current Minimum
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ID Component Name UL
RU
L
QuantityAverage Current
Ideal Balance
Current Fund Balance
Monthly
Component Funding Information
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p U R
yCost
Balance Balancey
105 Pitched Roof - Comp Shingle - Replace 25 12 Approx 115,425 Sq.ft. $432,844 $225,079 $154,708 $2,402.75120 Rain Gutters/Downspouts - Replace 25 12 Approx 9,110 Linear ft. $45,550 $23,686 $0 $252.85201 Stucco Surfaces - Repair/Repaint 12 2 Approx 15,355 Sq.ft. $20,729 $17,274 $17,274 $239.73204 Front Doors - Repaint 6 0 (89) Front Doors $8,900 $8,900 $8,900 $205.85p ( ) $ , $ , $ , $302 Vinyl Siding - Replace 40 28 Approx 167,244 Sq.ft. $919,842 $275,953 $0 $3,191.32401 Asphalt - Overlay 25 13 Approx 56,430 Sq.ft. $98,753 $47,401 $0 $548.18402 Asphalt - Seal Coat 5 0 Approx 56,430 Sq.ft. $9,029 $9,029 $9,029 $250.60601 Concrete Driveways & Sidewalks - Repair/Re 10 2 Extensive Sq.ft. $7,000 $5,600 $5,600 $97.14801 Monument Sign - Refurbish 18 6 (1) Monument Sign $1,250 $833 $833 $9.64
1008 Vinyl Fencing & Railing - Replace 25 13 Approx 1,985 Sq.ft. $43,670 $20,962 $0 $242.421009 Wood Split Rail Fencing - Replace 15 3 Approx 360 Linear ft. $5,760 $4,608 $4,608 $53.291307 Benches - Replace 12 2 (2) Benches $1,200 $1,000 $1,000 $13.881602 Exterior Light Fixtures - Replace 16 4 (236) Fixtures $14,750 $11,063 $11,063 $127.941609 Street Light Fixtures - Replace 20 8 (9) Street Light Fixtures $4,950 $2,970 $2,970 $34.352301 W d P l R l 1 3 (1) W d P l $3 2 0 $2 600 $2 600 $30 02301 Wood Pergola - Replace 15 3 (1) Wood Pergola $3,250 $2,600 $2,600 $30.07
$1,617,476 $656,957 $218,585 $7,700
Current Fund Balance as a percentage of Ideal Balance: 33%
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Year 2014 2015 2016 2017 2018Starting Balance $218,585 $293,696 $389,723 $458,118 $550,502 Reserve Income $92,400 $95,172 $98,027 $100,968 $103,997 Interest Earnings $640 $854 $1,060 $1,261 $1,487
S $ $ $ $ $
Yearly Cash Flow
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Special Assessments $0 $0 $0 $0 $0Funds Available $311,625 $389,723 $488,809 $560,347 $655,986Reserve Expenditures $17,929 $0 $30,691 $9,845 $16,601Ending Balance $293,696 $389,723 $458,118 $550,502 $639,385
Year 2019 2020 2021 2022 2023Starting Balance $639,385 $737,756 $837,936 $953,816 $1,067,121 Reserve Income $107,117 $110,330 $113,640 $117,050 $120,561 Interest Earnings $1,721 $1,969 $2,239 $2,526 $2,822 Special Assessments $0 $0 $0 $0 $0Funds Available $748,223 $850,056 $953,816 $1,073,391 $1,190,504Reserve Expenditures $10,467 $12,120 $0 $6,271 $0Ending Balance $737,756 $837,936 $953,816 $1,067,121 $1,190,504
Year 2024 2025 2026 2027 2028Starting Balance $1,190,504 $1,305,667 $1,436,999 $866,874 $795,492 Reserve Income $124,178 $127,903 $131,740 $135,693 $139,763 Interest Earnings $3,120 $3,428 $2,880 $2,078 $2,124 Special Assessments $0 $0 $0 $0 $0Funds Available $1,317,801 $1,436,999 $1,571,618 $1,004,644 $937,379Reserve Expenditures $12,134 $0 $704,745 $209,152 $33,170Ending Balance $1,305,667 $1,436,999 $866,874 $795,492 $904,209
Year 2029 2030 2031 2032 2033Starting Balance $904,209 $1,036,525 $1,187,579 $1,343,466 $1,473,802 Reserve Income $143,956 $148,275 $152,723 $157,305 $162,024 Interest Earnings $2,426 $2,780 $3,163 $3,521 $3,891 Special Assessments $0 $0 $0 $0 $0Funds Available $1,050,591 $1,187,579 $1,343,466 $1,504,292 $1,639,717Reserve Expenditures $14,067 $0 $0 $30,491 $0Ending Balance $1,036,525 $1,187,579 $1,343,466 $1,473,802 $1,639,717
Year 2034 2035 2036 2037 2038Starting Balance $1,639,717 $1,767,914 $1,944,445 $2,113,151 $2,301,028 Reserve Income $166,885 $171,891 $177,048 $182,359 $187,830 Interest Earnings $4,259 $4,640 $5,071 $5,517 $5,968 Special Assessments $0 $0 $0 $0 $0Funds Available $1,810,861 $1,944,445 $2,126,564 $2,301,028 $2,494,827Reserve Expenditures $42,947 $0 $13,413 $0 $20,633Ending Balance $1 767 914 $1 944 445 $2 113 151 $2 301 028 $2 474 194Ending Balance $1,767,914 $1,944,445 $2,113,151 $2,301,028 $2,474,194
Year 2039 2040 2041 2042 2043Starting Balance $2,474,194 $2,655,166 $2,813,978 $3,026,525 $1,127,264 Reserve Income $193,465 $199,269 $205,247 $211,405 $217,747 Interest Earnings $6,411 $6,836 $7,300 $5,192 $3,094 Special Assessments $0 $0 $0 $0 $0Funds Available $2,674,070 $2,861,270 $3,026,525 $3,243,121 $1,348,104R E dit $18 904 $47 292 $0 $2 115 857 $0Reserve Expenditures $18,904 $47,292 $0 $2,115,857 $0Ending Balance $2,655,166 $2,813,978 $3,026,525 $1,127,264 $1,348,104
13
Yearly Reserve Expenditures - Graph
$2,500,000
$2,000,000
$2,500,000
$1,500,000
$2,000,000
$2,500,000
Tota
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$1,000,000
$1,500,000
$2,000,000
$2,500,000
An
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$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
An
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$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
An
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$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
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An
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Year
14
Year ID # Component NameProjected
CostTotal Per Annum
2014 204 Front Doors - Repaint $8,900
Projected Reserve Expenditures by Year
15
402 Asphalt - Seal Coat $9,029 $17,9292015 No Expenditures Projected $02016 201 Stucco Surfaces - Repair/Repaint $21,992
601 Concrete Driveways & Sidewalks - Repair/ $7,4261307 Benches - Replace $1,273 $30,691
2017 1009 Wood Split Rail Fencing - Replace $6,2942301 Wood Pergola - Replace $3 551 $9 8452301 Wood Pergola - Replace $3,551 $9,845
2018 1602 Exterior Light Fixtures - Replace $16,601 $16,6012019 402 Asphalt - Seal Coat $10,467 $10,4672020 204 Front Doors - Repaint $10,627
801 Monument Sign - Refurbish $1,493 $12,1202021 No Expenditures Projected $02022 1609 Street Light Fixtures - Replace $6,271 $6,271g p $ , $ ,2023 No Expenditures Projected $02024 402 Asphalt - Seal Coat $12,134 $12,1342025 No Expenditures Projected $02026 105 Pitched Roof - Comp Shingle - Replace $617,132
120 Rain Gutters/Downspouts - Replace $64,943204 Front Doors - Repaint $12,689601 Concrete Driveways & Sidewalks Repair/ $9 980 $704 745601 Concrete Driveways & Sidewalks - Repair/ $9,980 $704,745
2027 401 Asphalt - Overlay $145,0211008 Vinyl Fencing & Railing - Replace $64,131 $209,152
2028 201 Stucco Surfaces - Repair/Repaint $31,3551307 Benches - Replace $1,815 $33,170
2029 402 Asphalt - Seal Coat $14,067 $14,0672030 No Expenditures Projected $02030 No Expenditures Projected $02031 No Expenditures Projected $02032 204 Front Doors - Repaint $15,152
1009 Wood Split Rail Fencing - Replace $9,8062301 Wood Pergola - Replace $5,533 $30,491
2033 No Expenditures Projected $02034 402 Asphalt - Seal Coat $16,307
1602 E t i Li ht Fi t R l $26 640 $42 9471602 Exterior Light Fixtures - Replace $26,640 $42,9472035 No Expenditures Projected $02036 601 Concrete Driveways & Sidewalks - Repair/ $13,413 $13,4132037 No Expenditures Projected $02038 204 Front Doors - Repaint $18,092
801 Monument Sign - Refurbish $2,541 $20,6332039 402 Asphalt - Seal Coat $18 904 $18 9042039 402 Asphalt - Seal Coat $18,904 $18,9042040 201 Stucco Surfaces - Repair/Repaint $44,705
1307 Benches - Replace $2,588 $47,2922041 No Expenditures Projected $0
15
2042 302 Vinyl Siding - Replace $2,104,5321609 Street Light Fixtures - Replace $11,325 $2,115,857
2043 No Expenditures Projected $0
Year Comp ID Component Name Projected CostTotal Per Annum
1616
Component Evaluation
Comp #: 105
Source of Information: CSL Cost Database
Best Cost: $403,988
Worst Cost: $461,700
Location: Building Roofs
Quantity: Approx 115,425 Sq.ft.
Observations:
The roofs are in good condition. No problems were noted at the time of the inspection. Typically this type of roofing material has a useful life of approximately 25 years. Inspect roofs regularly and make local repairs as necessary as an operating expense to ensure full life from this component. Remaining life based on current age.
Life Expectancy: 25 Remaining Life: 12
$3.50/Sq.ft.; Estimate to replace roof
$4.00/Sq.ft.; Higher estimate
Pitched Roof - Comp Shingle - Replace
General Notes:
Page 1 of 21
Comp #: 120
Source of Information: CSL Cost Database
Best Cost: $40,995
Worst Cost: $50,105
Location: Building Roofs
Quantity: Approx 9,110 Linear ft.
Observations:
The rain gutters and downspouts are in good condition. No problems were noted at the time of the inspection. We recommend replacing the rain gutters and downspouts at the same time as the roof replacement (see Comp# 105 Pitched Roof - Comp Shingle - Replace) to ensure proper function and to take advantage of the cost savings benefits. We recommend funding to replace these gutters and downspouts every 25 years. Remaining life based on current age.
Life Expectancy: 25 Remaining Life: 12
$4.50/Linear ft.; Estimate to replace
$5.50/Linear ft.; Higher estimate
Rain Gutters/Downspouts - Replace
General Notes:
Page 2 of 21
Comp #: 201
Source of Information: CSL Cost Database
Best Cost: $17,658
Worst Cost: $23,800
Location: Building Exteriors
Quantity: Approx 15,355 Sq.ft.
Observations:
The stucco surfaces are in fair condition. Minor damage and discoloration were noted at the time of the inspection. We recommend funding to repair/repaint this component approximately every 10 - 12 years to protect the stucco surface and maintain appearance. Remaining life based on current age and condition.
Life Expectancy: 12 Remaining Life: 2
$1.15/Sq.ft.; Estimate to repair/repaint stucco
$1.55/Sq.ft.; Higher estimate
Stucco Surfaces - Repair/Repaint
General Notes:
Page 3 of 21
Comp #: 204
Source of Information: CSL Cost Database
Best Cost: $6,675
Worst Cost: $11,125
Location: Unit Front Doors
Quantity: (89) Front Doors
Observations:
The painted front door surfaces are generally in fair to poor condition. Marking and fading were noted at the time of the inspection. We recommend funding to repaint this component this fiscal year (FY 2014). Repaint doors approximately every 6 years to maintain appearance and protect surfaces. Remaining life based on average condition.
Life Expectancy: 6 Remaining Life: 0
$75/Door; Estimate to repaint front doors
$125/Door; Higher estimate
Front Doors - Repaint
General Notes:
Page 4 of 21
Comp #: 302
Source of Information: CSL Cost Database
Best Cost: $836,220
Worst Cost: $1,003,464
Location: Building Exteriors
Quantity: Approx 167,244 Sq.ft.
Observations:
The vinyl siding is in good condition. No problems were noted at the time of the inspection. Although this component may reach and extended useful life we recommend funding to replace this component approximately every 30 - 40 years to maintain appearance. Remaining life based on current age.
Life Expectancy: 40 Remaining Life: 28
$5.00/Sq.ft.; Estimate to replace siding
$6.00/Sq.ft.; Higher estimate
Vinyl Siding - Replace
General Notes:
Page 5 of 21
Comp #: 401
Source of Information: CSL Cost Database
Best Cost: $84,645
Worst Cost: $112,860
Location: Community Streets
Quantity: Approx 56,430 Sq.ft.
Observations:
The asphalt streets are in good condition. Cracking was noted at the time of the inspection. Asphalt overlay generally has a useful life of 20 - 25 years. Maintain seal coat schedule to ensure full useful life (see Comp# 402 Asphalt - Seal Coat). Remaining life based on current age.
Life Expectancy: 25 Remaining Life: 13
$1.50/Sq.ft.; Estimate for overlay
$2.00/Sq.ft.; Higher estimate
Asphalt - Overlay
General Notes:
Page 6 of 21
Comp #: 402
Source of Information: CSL Cost Database
Best Cost: $7,336
Worst Cost: $10,722
Location: Community Streets
Quantity: Approx 56,430 Sq.ft.
Observations:
The asphalt seal coat is in poor condition. Cracks and raveling were noted at the time of the inspection. We recommend funding to seal this component this fiscal year (FY 2014). Seal asphalt surfaces regularly to prevent premature overlay (see Comp# 401 Asphalt - Overlay). Asphalt surfaces should be sealed every 3 - 5 years. Remaining life based on current age and condition.
Life Expectancy: 5 Remaining Life: 0
$0.13/Sq.ft.; Estimate for seal coat
$0.19/Sq.ft.; Higher estimate
Asphalt - Seal Coat
General Notes:
Page 7 of 21
Comp #: 601
Source of Information: CSL Cost Database
Best Cost: $6,000
Worst Cost: $8,000
Location: Driveways & Sidewalks
Quantity: Extensive Sq.ft.
Observations:
The concrete is generally in good condition. Areas of cracking and spalling were noted at the time of the inspection. Noexpectation to completely replace the concrete surfaces. We recommend making local repairs as necessary as an operating expense and funding to make more significant repairs approximately every 10 years. Remaining life based oncurrent condition.
Life Expectancy: 10 Remaining Life: 2
Allowance to repair/replace
Higher allowance
Concrete Driveways & Sidewalks - Repair/Replace
General Notes:
Page 8 of 21
Comp #: 801
Source of Information:
Best Cost: $0
Worst Cost: $0
Location: Common Area
Quantity: (1) Historical Marker
Observations:
The historical marker is in good condition. Due to the extended useful life of this component, reserve funding is not appropriate. Refurbish as necessary as an operating expense. No reserve funding necessary.
Life Expectancy: N/A Remaining Life:
Historical Marker - Refurbish
General Notes:
Page 9 of 21
Comp #: 801
Source of Information: CSL Cost Database
Best Cost: $1,000
Worst Cost: $1,500
Location: Community Entrance
Quantity: (1) Monument Sign
Observations:
The monument sign is in good condition. No problems were noted at the time of the inspection. We recommend refurbishing this component approximately every 18 years to ensure appearance. Remaining life is based on current age.
Life Expectancy: 18 Remaining Life: 6
Estimate to refurbish sign
Higher estimate
Monument Sign - Refurbish
General Notes:
Page 10 of 21
Comp #: 803
Source of Information:
Best Cost: $0
Worst Cost: $0
Location: Common Area
Quantity: (6) Clusters
Observations:
The mailboxes are in good condition. Typically these mailboxes are owned and maintained by the postal service. No reserve funding necessary.
Life Expectancy: N/A Remaining Life:
Mailboxes - Replace
General Notes:
Quantity description:
(6) - 16 box - Cluster
Page 11 of 21
Comp #: 890
Source of Information:
Best Cost: $0
Worst Cost: $0
Location: Community Entrances
Quantity: (2) Signs
Observations:
The community signs are in fair condition. Due to the minimal cost associated with maintaining and replacing this component, reserve funding is not appropriate. Repaint and replace as necessary as an operating expense. No reserve funding necessary.
Life Expectancy: N/A Remaining Life:
Community Signs - Other
General Notes:
Page 12 of 21
Comp #: 1008
Source of Information: CSL Cost Database
Best Cost: $35,730
Worst Cost: $51,610
Location: Common Area
Quantity: Approx 1,985 Sq.ft.
Observations:
The vinyl fencing and railing is in good condition. No problems were noted at the time of the inspection. This type of fencing material has a relatively long useful life. Reserve to replace the vinyl fencing every 25 years. Remaining life based on current age.
Life Expectancy: 25 Remaining Life: 13
$18/Linear ft.; Estimate to replace
$26/Linear ft.; Higher estimate
Vinyl Fencing & Railing - Replace
General Notes:
Quantity description:
220 Linear ft. - 2 Rail Vinyl 580 Linear ft. - Vinyl Privacy, 6ft.1,185 Linear ft. - Vinyl Railing
Page 13 of 21
Comp #: 1009
Source of Information: CSL Cost Database
Best Cost: $5,040
Worst Cost: $6,480
Location: Common Area
Quantity: Approx 360 Linear ft.
Observations:
The wood split rail fence is in fair condition. No problems were noted at the time of inspection. Expect a useful life of approximately 15 years from this component. Remaining life based on current age.
Life Expectancy: 15 Remaining Life: 3
$14/Linear ft.; Estimate to replace fence
$18/Linear ft.; Higher estimate
Wood Split Rail Fencing - Replace
General Notes:
Page 14 of 21
Comp #: 1012
Source of Information:
Best Cost: $0
Worst Cost: $0
Location: Split Rail Fence
Quantity: (12) Stone Fence Pillars
Observations:
The fence pillars are in good condition. This component has an extended useful life under normal conditions. Maintain as necessary as an operating expense. No reserve funding necessary.
Life Expectancy: N/A Remaining Life:
Fence Pillars - Replace
General Notes:
Page 15 of 21
Comp #: 1307
Source of Information: CSL Cost Database
Best Cost: $1,000
Worst Cost: $1,400
Location: Common Area
Quantity: (2) Benches
Observations:
The benches are in good condition. No problems were noted at the time of the inspection. Expect a useful life of approximately 10 - 12 years from this component. Remaining life based on current condition.
Life Expectancy: 12 Remaining Life: 2
$500/Bench; Estimate to replace
$700/Bench; Higher estimate
Benches - Replace
General Notes:
Page 16 of 21
Comp #: 1602
Source of Information: CSL Cost Database
Best Cost: $11,800
Worst Cost: $17,700
Location: Building Exteriors
Quantity: (236) Fixtures
Observations:
The exterior light fixtures are in fair condition. No problems were noted at the time of the inspection. Expect to replace these lights approximately every 16 years to maintain appearance. Remaining life based on current age and condition.
Life Expectancy: 16 Remaining Life: 4
$50/Fixture; Estimate to replace
$75/Fixture; Higher estimate
Exterior Light Fixtures - Replace
General Notes:
Page 17 of 21
Comp #: 1609
Source of Information: CSL Cost Database
Best Cost: $4,500
Worst Cost: $5,400
Location: Adjacent to Community Streets
Quantity: (9) Street Light Fixtures
Observations:
The street light fixtures are in good condition. No problems were noted at the time of the inspection. No expectation to replace the light poles. Paint poles as necessary as an operating expense. Although poles may reach an extended life we recommend funding to replace the street light fixtures approximately every 20 years to ensure proper function. Remaining life based on current age.
Life Expectancy: 20 Remaining Life: 8
$500/Fixture; Estimate to replace fixtures
$600/Fixture; Higher estimate
Street Light Fixtures - Replace
General Notes:
Page 18 of 21
Comp #: 1812
Source of Information:
Best Cost: $0
Worst Cost: $0
Location: Common Area
Quantity: Extensive Sq.ft.
Observations:
Research with the client reveals this component is maintained as an operating expense.
Life Expectancy: N/A Remaining Life:
Landscaping - Renovate
General Notes:
Page 19 of 21
Comp #: 2301
Source of Information:
Best Cost: $0
Worst Cost: $0
Location: Common Area
Quantity: (1) Metal Pergola
Observations:
The metal pergola is in good condition. This component has an extended useful life under normal conditions. Make repairs as necessary as an operating expense. No reserve funding necessary.
Life Expectancy: N/A Remaining Life:
Metal Pergola - Replace
General Notes:
Page 20 of 21
Comp #: 2301
Source of Information: CSL Cost Database
Best Cost: $2,500
Worst Cost: $4,000
Location: Common Area
Quantity: (1) Wood Pergola
Observations:
The wood pergola is in fair condition. Dry and cracking wood was noted at the time of the inspection. Paint as necessary as an operating expense. We recommend funding to replace this component approximately every 15 - 20 years. Remaining life based on current age.
Life Expectancy: 15 Remaining Life: 3
Estimate to replace
Higher estimate
Wood Pergola - Replace
General Notes:
Page 21 of 21
Glossary of Commonly Used Words And Phrases (Provided by the National Reserve Study Standards of the Community Associations Institute) Cash Flow Method – A method of developing a reserve funding plan where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different reserve funding plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved. Component – Also referred to as an “Asset.” Individual line items in the Reserve Study developed or updated in the physical analysis. These elements form the building blocks for the Reserve Study. Components typically are: 1) Association responsibility, 2) with limited useful life expectancies, 3) have predictable remaining life expectancies, 4) above a minimum threshold cost, and 5) required by local codes. Component Full Funding – When the actual (or projected) cumulative reserve balance for all components is equal to the fully funded balance. Component Inventory – The task of selecting and quantifying reserve components. This task can be accomplished through on-site visual observations, review of association design and organizational documents, a review of established association precedents, and discussion with appropriate association representatives. Deficit – An actual (or projected reserve balance), which is less than the fully funded balance. Effective Age – The difference between useful life and remaining useful life (UL - RUL). Financial Analysis – The portion of the Reserve Study where current status of the reserves (measured as cash or percent funded) and a recommended reserve contribution rate (reserve funding plan) are derived, and the projected reserve income and expenses over time is presented. The financial analysis is one of the two parts of the Reserve Study. Fully Funded Balance – An indicator against which the actual (or projected) reserve balance can be compared. The reserve balance that is in direct proportion to the fraction of life “used up” of the current repair or replacement cost of a reserve component. This number is calculated for each component, and then summed together for an association total. FFB = Current Cost * Effective Age / Useful Life Fund Status – The status of the reserve fund as compared to an established benchmark, such as percent funded. Funding Goals – Independent of calculation methodology utilized, the following represent the basic categories of funding plan goals:
• Baseline Funding: Establishing a reserve-funding goal of keeping the reserve balance above zero.
• Component Full Funding: Setting a reserve funding goal of attaining and maintaining cumulative reserves at or near 100% funded.
• Threshold Funding: Establishing a reserve funding goal of keeping the reserve balance above a specified dollar or percent funded amount.
Funding Plan – An association’s plan to provide income to a reserve fund to offset anticipated expenditures from that fund.
Funding Principles – • Sufficient funds when required • Stable contributions through the year • Evenly distributed contributions over the years • Fiscally responsible
GSF - Gross Square Feet Life and Valuation Estimates – The task of estimating useful life, remaining useful life, and repair or replacement costs for the reserve components. LF - Linear Feet Percent Funded – The ratio, at a particular point in time (typically the beginning of the fiscal year), of the actual (or projected) reserve balance to the ideal fund balance, expressed as a percentage. Physical Analysis – The portion of the Reserve Study where the component evaluation, condition assessment, and life and valuation estimate tasks are performed. This represents one of the two parts of the Reserve Study. Remaining Useful Life (RUL) – Also referred to as “remaining life” (RL). The estimated time, in years, that a reserve component can be expected to continue to serve its intended function. Projects anticipated to occur in the current fiscal year have a “0” remaining useful life. Replacement Cost – The cost of replacing, repairing, or restoring a reserve component to its original functional condition. The current replacement cost would be the cost to replace, repair, or restore the component during that particular year. Reserve Balance – Actual or projected funds as of a particular point in time (typically the beginning of the fiscal year) that the association has identified for use to defray the future repair or replacement of those major components that the association is obligated to maintain. Also known as “reserves,” “reserve accounts,” or “cash reserves.” In this report the reserve balance is based upon information provided and is not audited. Reserve Study – A budget-planning tool, which identifies the current status of the reserve fund and a stable and equitable funding plan to offset the anticipated future major common area expenditures. The Reserve Study consists of two parts: The Physical Analysis and the Financial Analysis. Special Assessment – An assessment levied on the members of an association in addition to regular assessments. Governing documents or local statutes often regulate special assessments. Surplus – An actual (or projected) reserve balance that is greater than the fully funded balance. Useful Life (UL) – Also known as “life expectancy.” The estimated time, in years, that a reserve component can be expected to serve its intended function if properly constructed and maintained in its present application of installation.