FULL RESERVE STUDY · 2018. 9. 4. · FULL RESERVE STUDY Lake Lorelei Property Owners Association,...

FULL RESERVE STUDYLake Lorelei Property

Owners Association, Inc.

Fayetteville, Ohio

September 10, 2015

This Report contains intellectual property developed by Reserve Advisors, Inc.

and cannot be reproduced or distributed to those who conduct reserve studies

without their written consent.

© Reserve Advisors, Inc. 2015

TABLE OF CONTENTS

1. RESERVE STUDY EXECUTIVE SUMMARY .......................................................1.1

2. RESERVE STUDY REPORT ....................................................................................2.1

3. RESERVE EXPENDITURES and FUNDING PLAN .............................................3.1

4. CONDITION ASSESSMENT.....................................................................................4.1

Infrastructure ..................................................................................................................4.1

Exterior Building Elements ............................................................................................4.1

Deck, Composite ......................................................................................................4.1

Doors, Garage ..........................................................................................................4.2

Exterior Renovation, Chalet .....................................................................................4.3

Exterior Renovation, Guard House ..........................................................................4.3

Roofs, Asphalt Shingles ...........................................................................................4.4

Roofs, Metal .............................................................................................................4.5

Walls, Plywood Siding.............................................................................................4.5

Walls, Metal Siding………………………………………………………………..4.5

Walls, Stucco ...........................................................................................................4.7

Walls, Wood Trim, Paint Finishes ...........................................................................4.9

Windows and Doors .................................................................................................4.11

Interior Building Elements .............................................................................................4.13

Furnishings ...............................................................................................................4.13

Interior Renovations.................................................................................................4.14

Kitchen Equipment, Exhaust Hood..........................................................................4.16

Kitchen Equipment, Walk-In Cooler .......................................................................4.16

Kitchen Renovation .................................................................................................4.16

Rest Rooms ..............................................................................................................4.17

Walk-In Coolers, Capital Repairs and Door Replacements .....................................4.17

Building Services Elements ...........................................................................................4.18

HVAC Equipment ....................................................................................................4.18

Electrical System, Main Panels ................................................................................4.18

Generator, Emergency .............................................................................................4.18

Security System .......................................................................................................4.19

Property Site Elements ...................................................................................................4.19

Basketball Court.......................................................................................................4.19

Concrete Boat Launch ..............................................................................................4.19

Docks, Composite ....................................................................................................4.20

Fuel System ..............................................................................................................4.20

Gate Entry System, Key Pad and Bar Code Scanner ...............................................4.21

Gates, Swing Arm Operators ...................................................................................4.21

Lakes ........................................................................................................................4.21

Pavilions ...................................................................................................................4.26

Pipes, Subsurface Utilities .......................................................................................4.26

Playground Equipment.............................................................................................4.27

Railings, Metal .........................................................................................................4.27

Signage, LED Entrance ............................................................................................4.28

Vehicles and Maintenance Equipment ...........................................................................4.28

Pavement ........................................................................................................................4.29

Asphalt Pavement, Crack Repair and Patch ............................................................4.29

Asphalt Pavement, Repaving ...................................................................................4.30

Street System, Gravel Replenishment……..………………………………………4.33

Reserve Study Update ....................................................................................................4.34

5. PHOTOGRAPHS ........................................................................................................5.1

6. METHODOLOGY ......................................................................................................6.1

7. DEFINITIONS .............................................................................................................7.1

8. PROFESSIONAL SERVICE CONDITIONS ...........................................................8.1

9. CREDENTIALS ...........................................................................................................9.1

1. RESERVE STUDY EXECUTIVE SUMMARY

Client: Lake Lorelei Property Owners Association, Inc. (Lake Lorelei) Location: Fayetteville, Ohio Reference: 141818 Property Basics: Lake Lorelei Property Owners Association, Inc. is a homeowners association which is responsible for the common elements shared by 625 single family homes. The development was built beginning in 1968. The development contains a clubhouse, marina, asphalt pavement and three lakes. Infrastructure Reserve Components Identified: 69 Reserve Components. Pavement Reserve Components Identified: Eight Reserve Components. Inspection Date: September 11, 2015. Infrastructure Funding Goal: The Funding Goal of this Reserve Study is to maintain reserves above an adequate, not excessive threshold during one or more years of significant expenditures. Our recommended Infrastructure Funding Plan recognizes a critical year in 2033 due to settlement removal at the lakes. Pavement Funding Goal: Our recommended Pavement Funding Plan recognizes multiple critical years in 2019 and 2037 due to replacement of the asphalt pavement. Cash Flow Method: We use the Cash Flow Method to compute the Reserve Funding Plan. This method offsets future variable Reserve Expenditures with existing and future stable levels of reserve funding. Our application of this method also considers:

current and future local costs of replacement 1.2% annual rate of return on invested reserves 2.8% future Inflation Rate for estimating Future Replacement Costs

Sources for Local Costs of Replacement: Our proprietary database, historical costs and published sources, i.e., R.S. Means, Incorporated. Cash Status of Infrastructure Reserve Fund: A projected year-end balance of $90,000 as of December 31, 2015 as projected by Management. A potential deficit in reserves might occur by 2017 based upon continuation of the most recent annual reserve contribution of $30,000 and the identified Infrastructure Reserve Expenditures. Cash Status of Pavement Reserve Fund: A projected year-end balance of $90,000 as of December 31, 2015 a projected by Management. A potential deficit in reserves might occur by 2017 based upon continuation of the most recent annual reserve contribution of $188,000 and the identified Pavement Reserve Expenditures. Recommended Infrastructure Reserve Funding: The Association budgeted $30,000 for Reserve Contributions in 2015. We recommend the Association budget annual phased increases in Reserve Contributions of $55,800 from 2016 through 2020. Afterwards, the Association should budget gradual annual increases in reserve funding, that in part consider the effects of inflation through 2045, the limit of this study's Cash Flow Analysis. The initial adjustment in Reserve Contributions of $55,800 represents about an eight percent (7.9%) adjustment in the 2015 total Operating Budget of $705,279. This initial

Reserve Advisors, Inc.735 N. Water Street, Suite 175

Milwaukee, WI 53202

2 - Executive Summary

adjustment of $55,800 is equivalent to an increase of $7.44 in the monthly contributions per homeowner. Recommended Pavement Reserve Funding: The Association budgeted $188,000 for Reserve Contributions in 2015. We recommend the Association budget annual phased increases in Reserve Contributions of $26,800 from 2016 through 2019. We recommend the Association budget stable contributions of $295,200 from 2020 through 2021. Afterwards, the Association should budget gradual annual increases in reserve funding, that in part consider the effects of inflation through 2045, the limit of this study's Cash Flow Analysis. The initial adjustment in Reserve Contributions of $26,800 represents about a four percent (3.8%) adjustment in the 2015 total Operating Budget of $705,279. This initial adjustment of $26,800 is equivalent to an increase of $3.57 in the monthly contributions per homeowner. Certification: This Full Reserve Study exceeds the Community Associations Institute (CAI) and the Association of Professional Reserve Analysts (APRA) standards fulfilling the requirements of a “Level I Full Reserve Study.”


Lake Lorelei Infrastructure

Recommended Reserve Funding Table and Graph

YearReserve

Contributions ($)Reserve

Balances ($) YearReserve




Balances ($)2016 85,800 155,379 2026 364,700 1,031,149 2036 480,700 868,2732017 141,600 144,253 2027 374,900 1,053,405 2037 494,200 1,205,9232018 197,400 92,109 2028 385,400 903,310 2038 508,000 1,616,7802019 253,200 114,124 2029 396,200 1,030,778 2039 522,200 2,047,8542020 309,000 267,665 2030 407,300 889,507 2040 536,800 2,180,2782021 317,700 428,074 2031 418,700 657,701 2041 551,800 2,650,1722022 326,600 648,759 2032 430,400 242,105 2042 567,300 2,777,1692023 335,700 994,258 2033 442,500 150,625 2043 583,200 3,207,5352024 345,100 1,320,608 2034 454,900 209,725 2044 599,500 3,677,9452025 354,800 1,123,065 2035 467,600 477,200 2045 616,300 4,167,011

‐2000

‐1000

0

1000

2000

3000

4000

5000

YearsRecommended Reserve ContributionsReserve Expenditures

Year‐End Reserve Balances


Pavement

YearReserve






Balances ($)2016 214,800 72,617 2026 338,900 2,089,234 2036 446,700 267,2952017 241,600 75,419 2027 348,400 2,436,733 2037 459,200 135,3572018 268,400 98,464 2028 358,200 2,797,475 2038 472,100 573,8902019 295,200 66,985 2029 368,200 2,296,847 2039 485,300 899,9162020 295,200 341,630 2030 378,500 1,876,622 2040 498,900 1,372,4262021 295,200 618,923 2031 389,100 1,659,674 2041 512,900 1,863,5652022 303,500 907,227 2032 400,000 1,433,423 2042 527,300 2,373,9272023 312,000 1,206,858 2033 411,200 1,831,172 2043 542,100 2,904,1132024 320,700 1,432,233 2034 422,700 863,762 2044 557,300 3,305,5002025 329,700 1,754,544 2035 434,500 394,025 2045 572,900 3,875,371

‐2000

‐1000

0

1000

2000

3000

4000

5000

YearsRecommended Reserve ContributionsReserve Expenditures

Year‐End Reserve Balances

Respectfully submitted on October 15, 2015 by RESERVE ADVISORS, INC.

Alan M. Ebert, PRA1, RS2, Associate Director of Quality Assurance Visual Inspection and Report by: Sarah Girls, RS 1 PRA (Professional Reserve Analyst) is the professional designation of the Association of Professional Reserve Analysts. Learn more about APRA at http://www.apra-usa.com. 2 RS (Reserve Specialist) is the reserve provider professional designation of the Community Associations Institute (CAI) representing America's more than 300,000 condominium, cooperative and homeowners associations.

1 - Report

2. RESERVE STUDY REPORT

At the direction of the Board that recognizes the need for proper reserve planning, we

have conducted a Full Reserve Study of

Lake Lorelei Property Owners Association, Inc.

Fayetteville, Ohio

and submit our findings in this report. The effective date of this study is the date of our visual,

noninvasive inspection, September 11, 2015.

We present our findings and recommendations in the following report sections and

spreadsheets:

Identification of Property - Segregates all property into several areas of responsibility for repair or replacement

Reserve Expenditures - Identifies reserve components and related quantities, useful lives, remaining useful lives and future reserve expenditures during the next 30 years

Reserve Funding Plan - Presents the recommended Reserve Contributions and year-end Reserve Balances for the next 30 years

Condition Assessment - Describes the reserve components, describes our recommendations for repairs or replacement, and includes detailed solutions and procedures for replacements for the benefit of current and future board members

Photographs - Documentation of Condition of various property elements Methodology - Lists the national standards, methods and procedures used,

financial information relied upon for the Financial Analysis of the Reserve Study Definitions - Contains definitions of terms used in the Reserve Study, consistent

with national standards Professional Service Conditions - Describes Assumptions and Professional

Service Conditions Credentials and Resources

2 - Report

IDENTIFICATION OF PROPERTY

Lake Lorelei Property Owners Association, Inc. is a homeowners association which is

responsible for the common elements shared by 625 single family homes. The development was

built beginning in 1968. The development contains a clubhouse, marina, asphalt pavement and

three lakes. We identify 69 and eight major reserve components at the Infrastructure and

Pavement, respectively, that are likely to require capital repair or replacement during the next 30

years.

Our investigation includes Reserve Components or property elements as set forth in your

Declaration. Our analysis begins by segregating the property elements into several areas of

responsibility for repair and replacement. Our process of identification helps assure that future

boards and the management team understand whether reserves, the operating budget or

Homeowners fund certain replacements and assists in preparation of the annual budget. We

derive these segregated classes of property from our review of the information provided by the

Association and through conversations with Management and the Board. These classes of

property include:

Reserve Components Long-Lived Property Elements Operating Budget Funded Repairs and Replacements Property Maintained by Homeowners Property Maintained by Others

We advise the Board conduct an annual review of these classes of property to confirm its

policy concerning the manner of funding, i.e., from reserves or the operating budget.

The Reserve Study identifies Reserve Components as set forth in your Declaration or which were

identified as part of your request for proposed services. Reserve Components are defined by

CAI as property elements with:

3 - Report

Lake Lorelei responsibility Limited useful life expectancies Predictable remaining useful life expectancies Replacement cost above a minimum threshold

Long-Lived Property Elements do not have predictable Remaining Useful Lives. The

operating budget should fund infrequent repairs. Funding untimely or unexpected replacements

from reserves will necessitate increases to Reserve Contributions. Periodic updates of this

Reserve Study will help determine the merits of adjusting the Reserve Funding Plan. We

identify the following Long-Lived Property Elements as excluded from reserve funding at this

time.

Foundations, Common Pipes, Interior Building, Water and Sewer, Common Structural Frames, Common Walls, Vinyl Siding, Management Office (Proposed wood siding replacement

with vinyl siding in 2015, funded through the operating budget)

The operating budget provides money for the repair and replacement of certain Reserve

Components. Operating Budget Funded Repairs and Replacements relate to:

General Maintenance to the Common Elements Expenditures less than $5,000 (These relatively minor expenditures have a

limited effect on the recommended Reserve Contributions.) Beach, Sand Maintenance Basketball Court, Striping Bollards Car Port, Renovation, Management Building, Near Term Concrete Sidewalk Dams, Inspections (The Association maintains earthen dams at the south

perimeter of Lake Lorelei that spans approximately 1,100 linear feet and at the north perimeter at Lake Fichtelberg that spans approximately 250 linear feet. We note several trees at the downstream embankment of the dams. We recommend the Association remove and replace the trees in these areas as needed and fund this activity through the operating budget. Under normal best management practices, which include periodic independent condition assessments and related repairs, we do not foresee the need for replacement/re-building of the dams during the next 30 years. However, the Association should plan for periodic inspection and capital repairs to the dams. We recommend the Association inspect the upstream and downstream sides of the dams, and conduct any

4 - Report

necessary repairs to the dams every five years, funded through the operating budget. More frequent inspections as normal maintenance may be necessary depending on the findings of invasive condition assessments and state and local regulations. We recommend the Association engage a specialist to periodically inspect the earthen dams and apply best management practices in compliance with state and local regulations.)

Electrical Systems, Circuit Breaker Panels, Near Term (We note the use of Federal Pacific Electric (FPE) electrical components. This manufacturer of electrical component has been subject to class-action lawsuits for defects relating to their products. The Association should investigate if any of these defect products are used within the building. FPE panels have the potential for breaker failure to trip, panel and panel-bus failure and arcing. We recommend the Association replace these panels in the near term, funded through the operating budget.)

Electrical Systems, Common Fence, Aluminum, Clubhouse Fence, Property Perimeter (Future Reserve Study updates may include the

replacement of the perimeter fence. The Association should budget for repairs and partial replacements to the perimeter fence through the operating budget.)

Fences, Wire and Wood Posts, Repairs and Partial Replacements, Lake Lorelei South Perimeter

Flag Poles Folding Tables and Chairs Garage Door, Maintenance Shed Griddle, Clubhouse Gutters and Downspouts, Clubhouse and Office HVAC System, Management Office and Guard House Interior Renovation, Guard House Interior Renovation, Management Office Lakes, Aerators, Lake Grunewald Landscape Light Fixtures, Exterior, Clubhouse, Management Office, Maintenance Building

and Marina Building Light Pole and Fixture, Clubhouse Office Supplies and Furniture, Management Office Paint Finishes, Touch Up Patio Furniture, Tavern Playground Equipment, Cove I Lot 59 (Note: This set of playground equipment

is in poor condition and should be replaced in the near term, funded through the operating budget.)

Playground Equipment, East Beach Playground Equipment, West Beach, Small Rest Rooms, Renovation, Maintenance Office and Marina Building Salt Spreaders Shutters, Management Office

5 - Report

Site Furniture Speaker System, Clubhouse Trailers Walls, Masonry, Inspections and Capital Repairs, Clubhouse Walls, Wood Siding, Near Term Replacement, Management Office Water Feature, Entrance Water Heaters, Clubhouse Windows and Doors, Maintenance Building Other Repairs normally funded through the Operating Budget

Certain items have been designated as the responsibility of the homeowners to repair or

replace at their cost. Property Maintained by Homeowners, including items billed back to

Homeowners, relates to:

Homes and Lots Lakes, Shoreline Maintenance, At Homeowner Lots Mailboxes

Certain items have been designated as the responsibility of others to repair or replace.

Property Maintained by Others relates to:

Interior Furniture, Marina Building (Including Small Fridges and Shelving) (Private Owner)

Tennis Courts (Private Owners)

1 - Reserve Expenditures and Funding Plan

3. RESERVE EXPENDITURES and FUNDING PLAN

The tables following this introduction present:

Reserve Expenditures

Line item numbers Total quantities Quantities replaced per phase (in a single year) Reserve component inventory Estimated first year of event (i.e., replacement, application, etc.) Life analysis showing

useful life remaining useful life

Unit cost of replacement 2015 local cost of replacement Total future costs of replacement anticipated during the next 30 years Schedule of estimated future costs for each reserve component including

inflation

Reserve Funding Plan

Reserves at the beginning of each year Total recommended reserve contributions Estimated interest earned from invested reserves Anticipated expenditures by year Anticipated reserves at year end Predicted reserves based on current funding level

Financial statements prepared by your association, by you or others might rely in part on

information contained in this section. For your convenience, we have provided an electronic

data file containing the tables of Reserve Expenditures and Reserve Funding Plan.


The following chart illustrates the relative importance of the categories noted in Reserve

Expenditures and relative funding during the next 30 years.

Lake Lorelei Future Expenditures Relative Cost Illustration

Infrastructure

Exterior Building Elements$446,952 5.2%

Interior Building Elements$558,951 8.7%

Building Services Elements$287,275 3.4%

Property Site Elements$6,393,081 74.3%

Vehicles and Maintenance Equipment$910,855 10.6%

Reserve Study Update with Site

Visit$4,450 0.1%


Lake Lorelei Future Expenditures Relative Cost Illustration

Pavement

Crack Repair and Patch

$948,336 11.2%

2016‐2019 Pavement$3,024,385 35.6%

2010 Pavement$1,565,014 18.4%

2012 Pavement$1,208,660 14.2%

2014 Pavement$747,288 8.8%

2015 Pavement$350,091 4.1%

Gravel$647,887 7.6%

Reserve Advisors, Inc. Infrastructure Years 2015 to 2030

RESERVE EXPENDITURESExplanatory Notes:

Lake Lorelei Property 1) 2.8% is the estimated future Inflation Rate for estimating Future Replacement Costs.

Owners Association, Inc. 2) FY2015 is Fiscal Year beginning January 1, 2015 and ending December 31, 2015.Fayetteville, Ohio Estimated Life Analysis, Costs, $

Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total RUL = 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2015) (2015) (2015) (Inflated) FY2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

----------------------------- -------------- -------------------- --------------------------------------------------------------------------------------------------------------------- ---------------- ------------ ----------------- ---------------- -------------------------------------- --------------------- ----------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

Exterior Building Elements

1.040 360 360 Square Feet Deck, Composite, Management Building 2033 20 to 25 18 25.00 9,000 9,000 14,795

1.200 2 1 Each Doors, Garage, Maintenance Building, Phased 2022 to 25 7 to 19 6,500.00 6,500 13,000 18,871 7,886

1.251 1 1 Allowance Exterior Renovation, Chalet 2025 15 to 20 10 7,000.00 7,000 7,000 25,254 9,226

1.252 1 1 Allowance Exterior Renovation, Guard House 2025 15 to 20 10 10,000.00 10,000 10,000 36,078 13,180

1.280 67 67 Squares Roof, Asphalt Shingles, Clubhouse 2033 15 to 20 18 330.00 22,110 22,110 36,347

1.281 12 12 Squares Roof, Asphalt Shingles, Management Building 2033 15 to 20 18 445.00 5,340 5,340 8,778

1.282 23 23 Squares Roof, Asphalt Shingles, Marina Building 2021 15 to 20 6 445.00 10,235 10,235 31,936 12,079

1.283 36 36 Squares Roofs, Metal, Maintenance Building and Shed 2025 to 30 10 550.00 19,800 19,800 26,097 26,097

1.755 4,660 4,660 Square Feet Walls, Metal Siding, Maintenance Building and Shed 2025 to 40 10 6.00 27,960 27,960 36,853 36,853

1.845 1,700 1,700 Square Feet Walls, Plywood Siding, Marina Building (Replace with Vinyl) 2021 to 35 6 4.20 7,140 7,140 8,427 8,427

1.860 4,450 4,450 Square Feet Walls, Stucco, Paint Finishes and Capital Repairs, Clubhouse 2016 8 to 10 1 1.75 7,788 7,788 32,466 8,006 10,552

1.870 1 1 Allowance Walls, Wood Trim, Paint Finishes and Partial Replacements, Clubhouse 2016 4 to 6 1 13,500.00 13,500 13,500 120,892 13,878 15,933 18,292

1.980 410 410 Square Feet Windows and Doors, Clubhouse 2021 to 45 6 75.00 30,750 30,750 36,291 36,291

1.981 155 155 Square Feet Windows and Doors, Management Office 2030 to 45 15 40.00 6,200 6,200 9,382 9,382

1.982 95 95 Square Feet Windows and Doors, Marina Building 2021 to 45 6 40.00 3,800 3,800 4,485 4,485

Interior Building Elements

2.450 3 1 Allowance Furnishings, Clubhouse, Phased 2020 to 25 5 to 21 8,000.00 8,000 24,000 52,746 9,185 11,455

2.501 1 1 Allowance Interior Renovation, Complete, Clubhouse 2034 to 25 19 74,000.00 74,000 74,000 125,055

2.502 1 1 Allowance Interior Renovation, Partial, Clubhouse 2022 to 12 7 15,700.00 15,700 15,700 19,048 19,048

2.503 1 1 Allowance Interior Renovation, Marina Building 2020 to 25 5 14,000.00 14,000 14,000 48,130 16,073

2.531 1 1 Allowance Kitchen Equipment, Exhaust Hood, Clubhouse 2033 to 25 18 10,000.00 10,000 10,000 16,439

2.532 1 1 Allowance Kitchen Equipment, Walk-In Cooler, Capital Repairs, Clubhouse 2019 15 to 20 4 10,000.00 10,000 10,000 30,569 11,168

2.520 1 1 Allowance Kitchen Renovation, Clubhouse 2019 to 25 4 33,000.00 33,000 33,000 110,359 36,854

2.900 2 2 Each Rest Room Renovation, Clubhouse 2022 to 25 7 12,500.00 25,000 25,000 30,331 30,331

2.951 1 1 Allowance Walk-In Coolers, Capital Repairs and Door Replacement, Marina Building 2025 15 to 20 10 35,000.00 35,000 35,000 126,274 46,132

Building Services Elements

3.070 4 2 Each Air Handling and Condensing Units, Split Systems, Clubhouse, Phased 2019 15 to 20 4 to 14 7,000.00 14,000 28,000 63,405 15,635 20,608

3.071 2 2 Each Air Handling and Condensing Units, Split Systems, Marina Building 2019 15 to 20 4 7,000.00 14,000 14,000 42,797 15,635

3.300 1 1 Allowance Electrical System, Main Panels, Federal Pacific Electric, Replacement, Clubhouse 2028 to 70+ 13 25,000.00 25,000 25,000 35,797 35,797

3.440 2 2 Each Generators, Emergency 2030 25 to 35 15 30,000.00 60,000 60,000 90,792 90,792

3.820 1 1 Allowance Security System 2026 to 15 11 16,000.00 16,000 16,000 54,484 21,679

Property Site Elements

4.080 3,360 3,360 Square Feet Basketball Court 2019 to 35 4 10.00 33,600 33,600 37,524 37,524

4.139 900 900 Square Feet Concrete Boat Launch 2029 to 35 14 20.00 18,000 18,000 26,496 26,496

4.160 205 205 Square Feet Dock, Composite, Marina (Boat Launch) 2028 to 20 13 26.00 5,330 5,330 7,632 7,632

4.161 440 440 Square Feet Dock, Composite, Marina (Fueling) 2028 to 20 13 26.00 11,440 11,440 16,381 16,381

4.162 320 320 Square Feet Dock, Composite, Marina (Pedestrian) 2028 to 20 13 35.00 11,200 11,200 16,037 16,037

4.163 5,920 592 Square Feet Docks, Composite, Standard, Phased (Rentals) 2020 to 20 5 to 24 26.00 15,392 153,920 326,853 17,671 18,674 19,735 20,855 22,040 23,291

Printed on 10/15/2015 Infrastructure Expenditures - Page 3.4 - 1 of 4

Reserve Advisors, Inc. InfrastructureRESERVE EXPENDITURES

Lake Lorelei PropertyOwners Association, Inc.

Fayetteville, Ohio Estimated Life Analysis, Costs, $

Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year TotalItem Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2015) (2015) (2015) (Inflated)

----------------------------- -------------- -------------------- --------------------------------------------------------------------------------------------------------------------- ---------------- ------------ ----------------- ---------------- -------------------------------------- ---------------------


1.040 360 360 Square Feet Deck, Composite, Management Building 2033 20 to 25 18 25.00 9,000 9,000 14,795

1.200 2 1 Each Doors, Garage, Maintenance Building, Phased 2022 to 25 7 to 19 6,500.00 6,500 13,000 18,871

1.251 1 1 Allowance Exterior Renovation, Chalet 2025 15 to 20 10 7,000.00 7,000 7,000 25,254

1.252 1 1 Allowance Exterior Renovation, Guard House 2025 15 to 20 10 10,000.00 10,000 10,000 36,078

1.280 67 67 Squares Roof, Asphalt Shingles, Clubhouse 2033 15 to 20 18 330.00 22,110 22,110 36,347

1.281 12 12 Squares Roof, Asphalt Shingles, Management Building 2033 15 to 20 18 445.00 5,340 5,340 8,778

1.282 23 23 Squares Roof, Asphalt Shingles, Marina Building 2021 15 to 20 6 445.00 10,235 10,235 31,936

1.283 36 36 Squares Roofs, Metal, Maintenance Building and Shed 2025 to 30 10 550.00 19,800 19,800 26,097

1.755 4,660 4,660 Square Feet Walls, Metal Siding, Maintenance Building and Shed 2025 to 40 10 6.00 27,960 27,960 36,853

1.845 1,700 1,700 Square Feet Walls, Plywood Siding, Marina Building (Replace with Vinyl) 2021 to 35 6 4.20 7,140 7,140 8,427

1.860 4,450 4,450 Square Feet Walls, Stucco, Paint Finishes and Capital Repairs, Clubhouse 2016 8 to 10 1 1.75 7,788 7,788 32,466

1.870 1 1 Allowance Walls, Wood Trim, Paint Finishes and Partial Replacements, Clubhouse 2016 4 to 6 1 13,500.00 13,500 13,500 120,892

1.980 410 410 Square Feet Windows and Doors, Clubhouse 2021 to 45 6 75.00 30,750 30,750 36,291

1.981 155 155 Square Feet Windows and Doors, Management Office 2030 to 45 15 40.00 6,200 6,200 9,382

1.982 95 95 Square Feet Windows and Doors, Marina Building 2021 to 45 6 40.00 3,800 3,800 4,485


2.450 3 1 Allowance Furnishings, Clubhouse, Phased 2020 to 25 5 to 21 8,000.00 8,000 24,000 52,746

2.501 1 1 Allowance Interior Renovation, Complete, Clubhouse 2034 to 25 19 74,000.00 74,000 74,000 125,055

2.502 1 1 Allowance Interior Renovation, Partial, Clubhouse 2022 to 12 7 15,700.00 15,700 15,700 19,048

2.503 1 1 Allowance Interior Renovation, Marina Building 2020 to 25 5 14,000.00 14,000 14,000 48,130

2.531 1 1 Allowance Kitchen Equipment, Exhaust Hood, Clubhouse 2033 to 25 18 10,000.00 10,000 10,000 16,439

2.532 1 1 Allowance Kitchen Equipment, Walk-In Cooler, Capital Repairs, Clubhouse 2019 15 to 20 4 10,000.00 10,000 10,000 30,569

2.520 1 1 Allowance Kitchen Renovation, Clubhouse 2019 to 25 4 33,000.00 33,000 33,000 110,359

2.900 2 2 Each Rest Room Renovation, Clubhouse 2022 to 25 7 12,500.00 25,000 25,000 30,331

2.951 1 1 Allowance Walk-In Coolers, Capital Repairs and Door Replacement, Marina Building 2025 15 to 20 10 35,000.00 35,000 35,000 126,274


3.070 4 2 Each Air Handling and Condensing Units, Split Systems, Clubhouse, Phased 2019 15 to 20 4 to 14 7,000.00 14,000 28,000 63,405

3.071 2 2 Each Air Handling and Condensing Units, Split Systems, Marina Building 2019 15 to 20 4 7,000.00 14,000 14,000 42,797

3.300 1 1 Allowance Electrical System, Main Panels, Federal Pacific Electric, Replacement, Clubhouse 2028 to 70+ 13 25,000.00 25,000 25,000 35,797

3.440 2 2 Each Generators, Emergency 2030 25 to 35 15 30,000.00 60,000 60,000 90,792

3.820 1 1 Allowance Security System 2026 to 15 11 16,000.00 16,000 16,000 54,484


4.080 3,360 3,360 Square Feet Basketball Court 2019 to 35 4 10.00 33,600 33,600 37,524

4.139 900 900 Square Feet Concrete Boat Launch 2029 to 35 14 20.00 18,000 18,000 26,496

4.160 205 205 Square Feet Dock, Composite, Marina (Boat Launch) 2028 to 20 13 26.00 5,330 5,330 7,632

4.161 440 440 Square Feet Dock, Composite, Marina (Fueling) 2028 to 20 13 26.00 11,440 11,440 16,381

4.162 320 320 Square Feet Dock, Composite, Marina (Pedestrian) 2028 to 20 13 35.00 11,200 11,200 16,037

4.163 5,920 592 Square Feet Docks, Composite, Standard, Phased (Rentals) 2020 to 20 5 to 24 26.00 15,392 153,920 326,853

Years 2031 to 2045

16 17 18 19 20 21 22 23 24 25 26 27 28 29 302031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

14,795

10,985

16,028

22,898

36,347

8,778

19,857

13,908

21,000 24,110 27,679

14,287 17,819

125,055

32,057

16,439

19,401

73,505

80,142

27,162

27,162

32,805

24,614 26,011 27,488 29,049 30,699 32,442 34,284


Reserve Advisors, Inc. Infrastructure Years 2015 to 2030





----------------------------- -------------- -------------------- --------------------------------------------------------------------------------------------------------------------- ---------------- ------------ ----------------- ---------------- -------------------------------------- --------------------- ----------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

4.220 1 1 Allowance Fuel System, Mechanical Components (Excluding Subsurface Tanks) 2020 15 to 20 5 60,000.00 60,000 60,000 68,884 68,884

4.221 1 1 Allowance Fuel System, Complete Replacement (Including Site Infrastructure) 2040 60+ 25 160,000.00 160,000 160,000 319,115

4.310 1 1 Allowance Gate Entry System, Keypad and Bar Code Scanner 2026 10 to 15 11 10,000.00 10,000 10,000 34,053 13,550

4.320 3 3 Each Gates, Swing Arm Operators 2021 to 10 6 2,500.00 7,500 7,500 35,896 8,852

4.701 2 2 Each Lakes, Low Level Output Valves 2018 to 40 3 25,000.00 50,000 50,000 54,319 54,319

4.702 37,900 37,900 Square Feet Lakes, Concrete Spillway and Bridge, Inspections and Capital Repairs 2019 to 65 4 to 30+ 1.90 72,010 72,010 575,580 80,420 94,913

4.710 17,100 855 Linear Feet Lakes, Erosion Control, Partial 2021 to 7 6 63.00 53,865 53,865 347,811 63,572 77,129

4.730 45,700 11,425 Square Yards Lakes, Sediment Removal, Partial (Cove A) 2025 to 30 10 22.00 251,350 251,350 331,291 331,291

4.731 25,800 12,900 Square Yards Lakes, Sediment Removal, Partial (Cove B) 2026 to 30 11 22.00 283,800 283,800 384,536 384,536

4.732 21,100 10,550 Square Yards Lakes, Sediment Removal, Partial (Cove C) 2027 to 30 12 22.00 232,100 232,100 323,290 323,290

4.733 22,900 11,450 Square Yards Lakes, Sediment Removal, Partial (Cove D) 2028 to 30 13 22.00 251,900 251,900 360,694 360,694

4.734 7,200 7,200 Square Yards Lakes, Sediment Removal, Partial (Cove E) 2029 to 30 14 22.00 158,400 158,400 233,163 233,163

4.735 23,500 11,750 Square Yards Lakes, Sediment Removal, Partial (Cove F) 2030 to 30 15 22.00 258,500 258,500 391,163 391,163

4.736 30,100 15,050 Square Yards Lakes, Sediment Removal, Partial (Cove G) 2031 to 30 16 22.00 331,100 331,100 515,050

4.737 47,000 23,500 Square Yards Lakes, Sediment Removal, Partial (Cove H) 2032 to 30 17 22.00 517,000 517,000 826,749

4.738 6,900 6,900 Square Yards Lakes, Sediment Removal, Partial (Cove I) 2033 to 30 18 22.00 151,800 151,800 249,544

4.739 42,300 6,345 Square Yards Lakes, Sediment Removal, Partial (Lake Fichtelberg) 2034 to 30 19 22.00 139,590 139,590 235,898

4.740 19,300 2,895 Square Yards Lakes, Sediment Removal, Partial (Lake Grunewald) 2035 to 30 20 22.00 63,690 63,690 110,645

4.771 1 1 Each Pavilion, Renovation, Clubhouse 2022 15 to 20 7 30,000.00 30,000 30,000 99,630 36,398

4.772 9 9 Each Pavilions, Renovation, Beaches 2018 15 to 20 3 5,000.00 45,000 45,000 133,816 48,887

4.780 1 1 Allowance Pipes, Subsurface Utilities, Partial 2018 to 85 3 10,000.00 10,000 10,000 162,222 10,864 11,802 12,821 13,929 15,132

4.783 1 1 Allowance Playground Equipment, West Beach (Includes Swing Sets) 2020 15 to 20 5 40,000.00 40,000 40,000 125,702 45,923

4.801 230 230 Linear Feet Railings, Metal, Bridge 2019 to 40 4 50.00 11,500 11,500 12,843 12,843

4.810 1 1 Each Signage, LED Entrance 2030 15 to 20 15 20,000.00 20,000 20,000 30,264 30,264

Vehicles and Maintenance Equipment

5.101 1 1 Each Boom, Arm Mower 2018 to 15 3 15,000.00 15,000 15,000 40,955 16,296

5.102 1 1 Each Bush hog 2017 7 to 10 2 7,000.00 7,000 7,000 42,482 7,397 9,226

5.103 1 1 Each Boat, Pontoon (1988) 2018 to 25 3 15,000.00 15,000 15,000 48,797 16,296

5.104 1 1 Each Boat, Pontoon (1991) 2019 to 25 4 20,000.00 20,000 20,000 66,884 22,336

5.105 2 2 Each Mower, Zero Turn 2017 to 10 2 10,000.00 20,000 20,000 85,712 21,136 27,858

5.106 1 1 Each Truck, Ford F-350 (1994) 2018 to 15 3 48,000.00 48,000 48,000 131,053 52,146

5.107 1 1 Each Truck, Ford F-350 (2007) 2018 to 15 3 48,000.00 48,000 48,000 131,053 52,146

5.108 1 1 Each Tractor, John Deere 2017 to 25 2 45,000.00 45,000 45,000 142,403 47,555

5.109 1 1 Each Tractor, Kubota 2017 to 25 2 40,000.00 40,000 40,000 126,580 42,271

5.110 1 1 Each Wood Chipper 2017 to 25 2 30,000.00 30,000 30,000 94,936 31,704

1 Allowance Reserve Study Update with Site Visit 2017 2 2 4,450.00 4,450 4,450 4,450 4,450--------------------------------------------------------------------------------------------------------------------- ----------------------------- ----------------- ---------------- -------------------------------------- --------------------- ----------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

Anticipated Expenditures, By Year $8,601,564 0 21,884 154,513 250,954 232,415 157,736 161,441 112,337 0 32,556 566,918 469,464 365,077 547,165 280,267 560,024


Reserve Advisors, Inc. InfrastructureRESERVE EXPENDITURES




----------------------------- -------------- -------------------- --------------------------------------------------------------------------------------------------------------------- ---------------- ------------ ----------------- ---------------- -------------------------------------- ---------------------

4.220 1 1 Allowance Fuel System, Mechanical Components (Excluding Subsurface Tanks) 2020 15 to 20 5 60,000.00 60,000 60,000 68,884

4.221 1 1 Allowance Fuel System, Complete Replacement (Including Site Infrastructure) 2040 60+ 25 160,000.00 160,000 160,000 319,115

4.310 1 1 Allowance Gate Entry System, Keypad and Bar Code Scanner 2026 10 to 15 11 10,000.00 10,000 10,000 34,053

4.320 3 3 Each Gates, Swing Arm Operators 2021 to 10 6 2,500.00 7,500 7,500 35,896

4.701 2 2 Each Lakes, Low Level Output Valves 2018 to 40 3 25,000.00 50,000 50,000 54,319

4.702 37,900 37,900 Square Feet Lakes, Concrete Spillway and Bridge, Inspections and Capital Repairs 2019 to 65 4 to 30+ 1.90 72,010 72,010 575,580

4.710 17,100 855 Linear Feet Lakes, Erosion Control, Partial 2021 to 7 6 63.00 53,865 53,865 347,811

4.730 45,700 11,425 Square Yards Lakes, Sediment Removal, Partial (Cove A) 2025 to 30 10 22.00 251,350 251,350 331,291

4.731 25,800 12,900 Square Yards Lakes, Sediment Removal, Partial (Cove B) 2026 to 30 11 22.00 283,800 283,800 384,536

4.732 21,100 10,550 Square Yards Lakes, Sediment Removal, Partial (Cove C) 2027 to 30 12 22.00 232,100 232,100 323,290

4.733 22,900 11,450 Square Yards Lakes, Sediment Removal, Partial (Cove D) 2028 to 30 13 22.00 251,900 251,900 360,694

4.734 7,200 7,200 Square Yards Lakes, Sediment Removal, Partial (Cove E) 2029 to 30 14 22.00 158,400 158,400 233,163

4.735 23,500 11,750 Square Yards Lakes, Sediment Removal, Partial (Cove F) 2030 to 30 15 22.00 258,500 258,500 391,163

4.736 30,100 15,050 Square Yards Lakes, Sediment Removal, Partial (Cove G) 2031 to 30 16 22.00 331,100 331,100 515,050

4.737 47,000 23,500 Square Yards Lakes, Sediment Removal, Partial (Cove H) 2032 to 30 17 22.00 517,000 517,000 826,749

4.738 6,900 6,900 Square Yards Lakes, Sediment Removal, Partial (Cove I) 2033 to 30 18 22.00 151,800 151,800 249,544

4.739 42,300 6,345 Square Yards Lakes, Sediment Removal, Partial (Lake Fichtelberg) 2034 to 30 19 22.00 139,590 139,590 235,898

4.740 19,300 2,895 Square Yards Lakes, Sediment Removal, Partial (Lake Grunewald) 2035 to 30 20 22.00 63,690 63,690 110,645

4.771 1 1 Each Pavilion, Renovation, Clubhouse 2022 15 to 20 7 30,000.00 30,000 30,000 99,630

4.772 9 9 Each Pavilions, Renovation, Beaches 2018 15 to 20 3 5,000.00 45,000 45,000 133,816

4.780 1 1 Allowance Pipes, Subsurface Utilities, Partial 2018 to 85 3 10,000.00 10,000 10,000 162,222

4.783 1 1 Allowance Playground Equipment, West Beach (Includes Swing Sets) 2020 15 to 20 5 40,000.00 40,000 40,000 125,702

4.801 230 230 Linear Feet Railings, Metal, Bridge 2019 to 40 4 50.00 11,500 11,500 12,843

4.810 1 1 Each Signage, LED Entrance 2030 15 to 20 15 20,000.00 20,000 20,000 30,264


5.101 1 1 Each Boom, Arm Mower 2018 to 15 3 15,000.00 15,000 15,000 40,955

5.102 1 1 Each Bush hog 2017 7 to 10 2 7,000.00 7,000 7,000 42,482

5.103 1 1 Each Boat, Pontoon (1988) 2018 to 25 3 15,000.00 15,000 15,000 48,797

5.104 1 1 Each Boat, Pontoon (1991) 2019 to 25 4 20,000.00 20,000 20,000 66,884

5.105 2 2 Each Mower, Zero Turn 2017 to 10 2 10,000.00 20,000 20,000 85,712

5.106 1 1 Each Truck, Ford F-350 (1994) 2018 to 15 3 48,000.00 48,000 48,000 131,053

5.107 1 1 Each Truck, Ford F-350 (2007) 2018 to 15 3 48,000.00 48,000 48,000 131,053

5.108 1 1 Each Tractor, John Deere 2017 to 25 2 45,000.00 45,000 45,000 142,403

5.109 1 1 Each Tractor, Kubota 2017 to 25 2 40,000.00 40,000 40,000 126,580

5.110 1 1 Each Wood Chipper 2017 to 25 2 30,000.00 30,000 30,000 94,936

1 Allowance Reserve Study Update with Site Visit 2017 2 2 4,450.00 4,450 4,450 4,450--------------------------------------------------------------------------------------------------------------------- ----------------------------- ----------------- ---------------- -------------------------------------- ---------------------

Anticipated Expenditures, By Year $8,601,564

Years 2031 to 2045

16 17 18 19 20 21 22 23 24 25 26 27 28 29 302031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

319,115

20,503

11,667 15,377

112,017 132,203 156,027

93,577 113,533

515,050

826,749

249,544

235,898

110,645

63,232

84,929

16,439 17,859 19,401 21,077 22,898

79,779

24,659

11,507 14,352

32,501

44,548

36,718

78,907

78,907

94,848

84,309

63,232

-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

659,734 851,363 536,322 397,949 204,222 97,652 168,921 113,978 112,983 429,593 110,716 472,673 188,528 170,156 174,023


Reserve Advisors, Inc. Page 1 of 1

RESERVE FUNDING PLANInfrastructure

CASH FLOW ANALYSISLake Lorelei Property

Owners Association, Inc. Individual Reserve Budgets & Cash Flows for the Next 30 YearsFayetteville, Ohio FY2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reserves at Beginning of Year (Note 1) N/A 90,000 155,379 144,253 92,109 114,124 267,665 428,074 648,759 994,258 1,320,608 1,123,065 1,031,149 1,053,405 903,310 1,030,778Total Recommended Reserve Contributions (Note 2) N/A 85,800 141,600 197,400 253,200 309,000 317,700 326,600 335,700 345,100 354,800 364,700 374,900 385,400 396,200 407,300

Plus Estimated Interest Earned, During Year (Note 3) N/A 1,463 1,787 1,410 1,230 2,277 4,150 6,422 9,799 13,806 14,575 12,848 12,433 11,670 11,535 11,453Less Anticipated Expenditures, By Year N/A (21,884) (154,513) (250,954) (232,415) (157,736) (161,441) (112,337) 0 (32,556) (566,918) (469,464) (365,077) (547,165) (280,267) (560,024)

----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------Anticipated Reserves at Year End $90,000 $155,379 $144,253 $92,109 $114,124 $267,665 $428,074 $648,759 $994,258 $1,320,608 $1,123,065 $1,031,149 $1,053,405 $903,310 $1,030,778 $889,507

Predicted Reserves based on 2015 funding level of: $30,000 90,000 99,245 (24,824) (247,402)

(continued) Individual Reserve Budgets & Cash Flows for the Next 30 Years, Continued2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

Reserves at Beginning of Year 889,507 657,701 242,105 150,625 209,725 477,200 868,273 1,205,923 1,616,780 2,047,854 2,180,278 2,650,172 2,777,169 3,207,535 3,677,945Total Recommended Reserve Contributions 418,700 430,400 442,500 454,900 467,600 480,700 494,200 508,000 522,200 536,800 551,800 567,300 583,200 599,500 616,300

Plus Estimated Interest Earned, During Year 9,228 5,367 2,342 2,149 4,097 8,025 12,371 16,835 21,857 25,217 28,810 32,370 35,694 41,066 46,789Less Anticipated Expenditures, By Year (659,734) (851,363) (536,322) (397,949) (204,222) (97,652) (168,921) (113,978) (112,983) (429,593) (110,716) (472,673) (188,528) (170,156) (174,023)

----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------Anticipated Reserves at Year End $657,701 $242,105 $150,625 $209,725 $477,200 $868,273 $1,205,923 $1,616,780 $2,047,854 $2,180,278 $2,650,172 $2,777,169 $3,207,535 $3,677,945 $4,167,011

(NOTE 5) (NOTE 4)

Explanatory Notes:1) Year 2015 ending reserves are projected by Management and the Board as of December 31, 2015; FY2015 starts January 1, 2015 and ends December 31, 2015.2) 2016 is the first year of recommended contributions.3) 1.2% is the estimated annual rate of return on invested reserves4) Accumulated year 2045 ending reserves consider the age, size, overall condition and complexity of the property.5) Threshold Funding Year (reserve balance at critical point).

Printed on 10/15/2015 Infrastructure Funding Plan - Page 3.5

Reserve Advisors, Inc. Pavement Years 2015 to 2030





---------------------------- ------------- ------------------- ------------------------------------------------------------------------------------------------------------------------- ---------------- ------------ ---------------- ---------------- ------------------------------------- -------------------- ----------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

4.020 166,890 33,378 Square Yards Asphalt Pavement, Crack Repair and Patch 2016 3 to 5 1 to 5 0.60 20,027 100,134 948,336 20,588 21,164 21,757 22,366 22,992 23,636 24,298 24,978 25,677 26,396 27,135 27,895 28,676 29,479 30,305

4.040 55,140 13,785 Square Yards Asphalt Pavement, Overlay, Phased (2016-2019) 2016 15 to 20 1 to 4 15.00 206,775 827,100 886,642 212,565 218,517 224,635 230,925

4.045 47,660 23,830 Square Yards Asphalt Pavement, Mill and Overlay with 50% Total Replacement, Phased (2010) 2029 15 to 20 14 to 15 22.00 524,260 1,048,520 1,565,014 771,703 793,311

4.046 34,830 17,415 Square Yards Asphalt Pavement, Mill and Overlay with 50% Total Replacement, Phased (2012) 2031 15 to 20 16 to 17 22.00 383,130 766,260 1,208,660

4.047 20,100 20,100 Square Yards Asphalt Pavement, Mill and Overlay with 50% Total Replacement (2014) 2034 15 to 20 19 22.00 442,200 442,200 747,288


4.049 55,140 13,785 Square Yards Asphalt Pavement, Mill and Overlay with 50% Total Replacement, Phased (2016-2019) 2034 15 to 20 19 to 22 22.00 303,270 1,213,080 2,137,743

4.050 28,830 9,514 Square Yards Street System, Gravel Replenishment, Phased 2019 to 15 4 to 14 7.00 66,597 201,810 647,887 74,375 85,388 98,030------------------------------------------------------------------------------------------------------------------------- ---------------------------- ---------------- ---------------- ------------------------------------- -------------------- ----------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

Anticipated Expenditures, By Year $8,491,661 0 233,153 239,681 246,392 327,666 22,992 23,636 24,298 24,978 111,065 26,396 27,135 27,895 28,676 899,212 823,616

Printed on 10/15/2015 Pavement Expenditures - Page 3.6 - 1 of 2

Reserve Advisors, Inc. PavementRESERVE EXPENDITURES




---------------------------- ------------- ------------------- ------------------------------------------------------------------------------------------------------------------------- ---------------- ------------ ---------------- ---------------- ------------------------------------- --------------------

4.020 166,890 33,378 Square Yards Asphalt Pavement, Crack Repair and Patch 2016 3 to 5 1 to 5 0.60 20,027 100,134 948,336

4.040 55,140 13,785 Square Yards Asphalt Pavement, Overlay, Phased (2016-2019) 2016 15 to 20 1 to 4 15.00 206,775 827,100 886,642

4.045 47,660 23,830 Square Yards Asphalt Pavement, Mill and Overlay with 50% Total Replacement, Phased (2010) 2029 15 to 20 14 to 15 22.00 524,260 1,048,520 1,565,014

4.046 34,830 17,415 Square Yards Asphalt Pavement, Mill and Overlay with 50% Total Replacement, Phased (2012) 2031 15 to 20 16 to 17 22.00 383,130 766,260 1,208,660



4.049 55,140 13,785 Square Yards Asphalt Pavement, Mill and Overlay with 50% Total Replacement, Phased (2016-2019) 2034 15 to 20 19 to 22 22.00 303,270 1,213,080 2,137,743

4.050 28,830 9,514 Square Yards Street System, Gravel Replenishment, Phased 2019 to 15 4 to 14 7.00 66,597 201,810 647,887------------------------------------------------------------------------------------------------------------------------- ---------------------------- ---------------- ---------------- ------------------------------------- --------------------

Anticipated Expenditures, By Year $8,491,661

Years 2031 to 2045

16 17 18 19 20 21 22 23 24 25 26 27 28 29 302031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

31,153 32,025 32,922 33,844 34,792 35,766 36,767 37,797 38,855 39,943 41,061 42,211 43,393 44,608 45,857

595,986 612,674

747,288

350,091

512,506 526,856 541,608 556,773

112,545 129,209 148,340-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------

627,139 644,699 32,922 1,406,183 911,739 577,374 593,540 37,797 168,064 39,943 41,061 42,211 43,393 192,948 45,857

Printed on 10/15/2015 Pavement Expenditures - Page 3.6 - 2 of 2

Reserve Advisors, Inc. Page 1 of 1

RESERVE FUNDING PLANPavement

CASH FLOW ANALYSISLake Lorelei Property

Owners Association, Inc. Individual Reserve Budgets & Cash Flows for the Next 30 YearsFayetteville, Ohio FY2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reserves at Beginning of Year (Note 1) N/A 90,000 72,617 75,419 98,464 66,985 341,630 618,923 907,227 1,206,858 1,432,233 1,754,544 2,089,234 2,436,733 2,797,475 2,296,847Total Recommended Reserve Contributions (Note 2) N/A 214,800 241,600 268,400 295,200 295,200 295,200 303,500 312,000 320,700 329,700 338,900 348,400 358,200 368,200 378,500

Plus Estimated Interest Earned, During Year (Note 3) N/A 970 883 1,037 987 2,437 5,729 9,102 12,609 15,740 19,007 22,925 26,994 31,218 30,384 24,891Less Anticipated Expenditures, By Year N/A (233,153) (239,681) (246,392) (327,666) (22,992) (23,636) (24,298) (24,978) (111,065) (26,396) (27,135) (27,895) (28,676) (899,212) (823,616)

----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------Anticipated Reserves at Year End $90,000 $72,617 $75,419 $98,464 $66,985 $341,630 $618,923 $907,227 $1,206,858 $1,432,233 $1,754,544 $2,089,234 $2,436,733 $2,797,475 $2,296,847 $1,876,622

(NOTE 5)Predicted Reserves based on 2015 funding level of: $188,000 90,000 45,656 (5,787) (64,599)

(continued) Individual Reserve Budgets & Cash Flows for the Next 30 Years, Continued2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

Reserves at Beginning of Year 1,876,622 1,659,674 1,433,423 1,831,172 863,762 394,025 267,295 135,357 573,890 899,916 1,372,426 1,863,565 2,373,927 2,904,113 3,305,500Total Recommended Reserve Contributions 389,100 400,000 411,200 422,700 434,500 446,700 459,200 472,100 485,300 498,900 512,900 527,300 542,100 557,300 572,900

Plus Estimated Interest Earned, During Year 21,091 18,448 19,471 16,073 7,502 3,944 2,402 4,230 8,790 13,553 19,300 25,273 31,479 37,035 42,828Less Anticipated Expenditures, By Year (627,139) (644,699) (32,922) (1,406,183) (911,739) (577,374) (593,540) (37,797) (168,064) (39,943) (41,061) (42,211) (43,393) (192,948) (45,857)

----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------Anticipated Reserves at Year End $1,659,674 $1,433,423 $1,831,172 $863,762 $394,025 $267,295 $135,357 $573,890 $899,916 $1,372,426 $1,863,565 $2,373,927 $2,904,113 $3,305,500 $3,875,371

(NOTE 5) (NOTE 4)

Explanatory Notes:1) Year 2015 ending reserves are projected by Management and the Board as of December 31, 2015; FY2015 starts January 1, 2015 and ends December 31, 2015.2) 2016 is the first year of recommended contributions.3) 1.2% is the estimated annual rate of return on invested reserves4) Accumulated year 2045 ending reserves consider the age, size, overall condition and complexity of the property.5) Threshold Funding Years (reserve balance at critical point).

Printed on 10/15/2015 Pavement Funding Plan - Page 3.7

1 - Condition Assessment

4. CONDITION ASSESSMENT

The Condition Assessment of this Full Reserve Study includes

Enhanced Solutions and Procedures for select significant components. These narratives describe

the Reserve Components, document specific problems and conditions, and may include detailed

solutions and procedures for necessary capital repairs and replacements for the benefit of current

and future board members. We advise the Board use this information to help define the scope

and procedures for repair or replacement when soliciting bids or proposals from contractors.

However, the Report in whole or part is not and should not be used as a design specification or

design engineering service.

Infrastructure


Deck, Composite - The Association maintains one composite deck with a wood frame

which comprise a total of 360 square feet at the Management Building. The deck is in good

overall condition at an unknown age. Deck construction includes the following:

Deck boards fastened with screws Wood railing with vertical pickets Wood column supported frames No toe-nailed connections

These elements have a useful life of 20- to 25-years. We elaborate on composite

materials used in deck construction in the following narrative.

The composition of composite materials used in the construction of decks typically

includes a combination of wood waste material, plastic and recycled materials. These composite

materials are low maintenance and do not split, cup or splinter. Composite materials do not

require periodic stain or sealer applications.


Composite deck materials are not structural components and therefore require traditional

framing members, such as wood or metal. In addition, some manufacturers require closer

spacing of framing components to minimize sagging. In addition to the added cost of framing,

composite deck materials can cost up to twice as much as natural wood.

The wood components in the composite material will absorb moisture. When dispelled,

black mold spots can appear that will require chemical cleaning. However, these spots will

reappear resulting in the need for cleaning every other month as needed during humid months.

The Association should fund these expenses through the operating budget. Scratches and stains

caused by pedestrian traffic can permanently damage the product. The color will also fade as it

ages.

Based on these factors, we recommend the Association anticipate a replacement of the

deck elements noted above by 2033. We note this information on Line Item 1.040 of

Infrastructure Reserve Expenditures.

Doors, Garage - The Association maintains the two metal garage doors at the

maintenance building. Management informs us that one garage door was replaced within the last

five years and the second garage door is at an unknown age. The garage doors are in good to fair

condition. The garage doors have a useful life of up to 25 years. We recommend the

Association anticipate the phased replacement of one garage door by 2022 and again by 2034.

We note this information on Line Item 1.200 of Infrastructure Reserve Expenditures. We

recommend replacement with insulated doors to provide structural rigidity to the panels. The

Association maintains the electric operators.


Exterior Renovation, Chalet - The chalet exterior, located at the entrance of the

community, comprises the following:

640 square feet of wood siding 140 square feet of windows and doors 100 square feet of asphalt shingle roofs Six light fixtures Six shutters

The chalet exterior elements are in fair condition at an unknown age. The useful lives of

the chalet exterior elements vary significantly. However, due to the relatively small quantities

and interrelated nature of these elements, we recommend the Association combine their

replacements into coordinated exterior renovations.

We recommend the Association anticipate complete exterior renovations every 15- to 20-

years. These complete renovations should include the following:

Application of paint finish including partial replacement of up to fifty percent (50%) of the wood siding and twenty percent (20%) of the wood trim

Replacement of up to fifty percent (50%) of the windows and doors Replacement of the asphalt shingle roof Replacement of the light fixtures and shutters

Based on the age and visual condition of these exterior chalet elements, we recommend

the Association budget for the next coordinated complete exterior renovation by 2025 and again

by 2045. Line Item 1.251 of Infrastructure Reserve Expenditures notes this information.

Exterior Renovation, Guard House - The guard house exterior comprises the

following:

1,040 square feet of wood siding 130 square feet of windows and doors Four squares of asphalt shingle roofs 110 linear feet of gutters and downspouts One metal awning


The guard house exterior elements are at an unknown age and in fair condition. The

useful lives of the guard house exterior elements vary significantly. However, due to the

relatively small quantities and interrelated nature of these elements, we recommend the

Association combine their replacements into coordinated exterior renovations.

We recommend the Association anticipate complete exterior renovations every 15- to 20-

years. These complete renovations should include the following:

Application of paint finish including partial replacement of up to fifty percent (50%) of the wood siding and trim

Replacement of the asphalt shingle roof assembly including the gutters and downspouts

Replacement of the metal awning

Based on the age and visual condition of these exterior guard house elements, we

recommend the Association budget for the next coordinated complete exterior renovation by

2025 and again by 2045. Line Item 1.252 of Infrastructure Reserve Expenditures notes this

information.

Roofs, Asphalt Shingles - The Clubhouse, Management Building and Marina Building

roofs comprise 67, 12 and 23 squares1 of asphalt shingles, respectively. The roofs at the

Clubhouse and Management Building will be replaced in 2015, funded through the operating

budget. The Marina Building roof is in good to fair condition at an unknown age. The useful

life of an asphalt shingle roof is from 15- to 20-years. We recommend the Association anticipate

complete replacement of the Clubhouse and Management Building roofs by 2033. We

recommend the Association replace the asphalt shingle roof at the Marina Building by 2021 and

1We quantify the roof area in squares, where one square is equal to 100 square feet of surface area.


again by 2039. We note this information on Line Items 1.280 through 1.282 of Infrastructure

Reserve Expenditures.

Roofs, Metal -Approximately 36 squares of standing seam metal roofing comprise the

roofs at the maintenance building and shed. Each panel has two seams that stand up vertically

and are crimped together to seal the joint and keep weather elements from penetrating. The roofs

are original in fair overall condition. These types of roofs have a useful life of up to 30 years.

Based on the age and condition of the roofs, we recommend Lake Lorelei fund for

replacement of the metal roofs by 2025. We note this information on Line Item 1.283 of

Infrastructure Reserve Expenditures. We recommend replacement with prefinished baked

enamel sheet metal.

Walls, Metal Siding - Lake Lorelei maintains 4,660 square feet of metal siding at the

maintenance building and shed. The metal siding is original and in fair condition. We note

damaged metal siding. Page 5.5 of Photographs depicts this condition. These elements have a

useful life of up to 40 years. We recommend the Association budget for replacement by 2025.

We depict this information on Line Item 1.755 of Infrastructure Reserve Expenditures.

Walls, Plywood Siding - Plywood siding comprises approximately 1,700 square feet of

the exterior walls at the Marina Building. The siding is in fair overall condition at an unknown

age. We note deteriorated sections. Page 5.6 of Photographs depicts this condition.

Applications of this type of material have useful lives of up to 35 years. However, failure to

conduct paint applications and repairs in a timely manner will reduce the remaining useful life of

the siding. We discuss solutions and procedures related to replacement of plywood siding in the

following narrative.


Plywood is a laminated wood material constructed of thin sheets of wood that are bonded

in layers to form a strong stable board. The grain direction of each sheet is at right angles to one

another to create a stable panel. The thickness of plywood varies, but four feet by eight feet is a

standard width and length.

Exterior grade plywood utilizes a weather-resistant adhesive. Typical types of exterior

grade plywood include T-1-11 (Textured 1-11) and Reversed Board and Batten. As with all

exterior wood products, exterior grade plywood siding requires periodic paint applications and

maintenance.

Plywood used in exterior applications has a tendency to face check as a result of swelling

and shrinking of the wood. Face checks are small separations between wood fibers in the face

veneer. To avoid failure of the finish as a result of face checking, the Association should either

apply a penetrating finish that does not form a surface film or apply a coating that is flexible,

such as a latex stain or paint.

One characteristic of plywood siding is its porosity and ability to absorb storm water at

the panel edge surfaces. Deterioration of the plywood advances as water is wicked up from

panel edges into the porous wood veneers which creates further expansion and a latent ability to

absorb more water. Warping, delaminating and rotting of this type of siding are typical as the

siding ages but generally are not uniform. Plywood siding is not meant for direct contact with

ground or roof surfaces and thus requires a separation of at least one inch. Vegetation or

landscape can cause direct contact with the ground, for example, and Lake Lorelei should

monitor these conditions as normal maintenance.


As previously stated, timely paint applications and repairs are critical to maximize the

remaining useful life of the siding. We understand the Association funds paint applications to

the siding through the operating budget.

We recommend that Lake Lorelei consider vinyl siding as a replacement material.

Replacement with vinyl siding eliminates the need for paint applications

Based on the condition, age and history of maintenance, we anticipate a phased plywood

siding replacement by 2021. For purposes of this Reserve Study, we base our cost on

replacement with vinyl siding. We depict this information on Line Item 1.845 of Infrastructure

Reserve Expenditures.

Walls, Stucco - Stucco comprises approximately 4,450 square feet of the Clubhouse

exteriors. The stucco paint finish is in fair overall condition at an unknown age. We elaborate

on solutions and procedures necessary for the optimal maintenance of stucco in the following

discussion.

Stucco is Portland cement plaster that is applied either directly to a solid base such as

masonry or concrete, or is applied to galvanized metal lath attached with galvanized fasteners to

frame construction. In frame construction, two layers of a Grade D water-vapor permeable

building paper are necessary to separate the stucco from the wood product sheathing. The actual

construction may vary and must follow the specifications of the supplier, manufacturer or local

building codes; however, the following graphic details the typical components of a stucco wall

system on frame construction:


Along with proper installation, proper maintenance and periodic finish applications, the

inherent composition of stucco wall systems results in an indefinitely long useful life. The useful

life of these finish applications is from 8- to 10-years. We recognize that the initial finish may

achieve a longer useful life. Color variations at repairs often warrant complete coating

application to maintain aesthetics. Periodic repairs and finish applications help prevent water

infiltration and spalling from weather exposure, maintain a good appearance and maximize the

useful life of the system. We include the following commentary as a summary of the minimum

requirements for a successful paint finish application for present and future board members.

Correct and complete preparation of the surface before application of the paint finish

maximizes the useful life of the paint finish and surface. The contractor should remove all loose,

peeled or blistered paint before application of the new paint finish. The contractor should then


power wash the surface to remove all dirt and biological growth. Water-soluble cleaners that

will not attack Portland cement are acceptable for removing stains.

Summarizing the minimum requirements of the proposed scope of work, all bids should

include the following:

1. Name of paint finish product 2. The contractor will involve manufacturer representatives to ensure specifications

and warranty 3. The contractor will apply the paint to clean and dry surfaces at the manufacturer's

recommended spreading rates 4. The contractor will apply successive coats of the paint finish, with sufficient time

elapse between coats, as necessary to ensure uniform appearance 5. The contractor will conduct crack repairs and replace deteriorated or damaged

stucco prior to the application of the paint finish 6. The contractor will replace deteriorated sealants or caulk prior to the application

of the paint finish

In consideration of the above recommended maintenance, useful life and age of the

stucco paint finishes, we advise that Lake Lorelei budget for paint applications, partial stucco

replacements and crack repairs in 2016 and every 10 years thereafter. Our estimate of cost

anticipates the following in coordination with each paint finish application:

Crack repairs as needed (Each paint product has the limited ability to cover and seal cracks but we recommend repair of all cracks which exceed the ability of the paint product to bridge.)

Replacement of up to five percent (5%), of the stucco walls (The exact amount of area in need of replacement will be discretionary based on the actual future conditions and the desired appearance.)

Replacement of up to fifty percent (50%) of the sealants in coordination with each paint finish application.

We depict this information on Line Item 1.860 of Infrastructure Reserve Expenditures.

Walls, Wood Trim, Paint Finishes - The Clubhouse includes paint finish applications

on the following surfaces:

Trim Soffit and Fascia


Periodic application of a protective finish of paint or stain is an essential maintenance

activity to maintain the physical appearance and integrity of these elements. The paint finishes

are in fair to poor condition at an unknown age. We note deteriorated wood trim and siding at

the Clubhouse. Page 5.8 of Photographs depicts this condition.

The Board is likely familiar with many of the requirements for the periodic application of

paint2 products. We include the following solutions and procedures as a summary of the

minimum requirements for a successful paint finish application for present and future board

members.

Correct and complete preparation of the surface before application of the paint finish

maximizes the useful life of the paint finish and surface. The contractor should remove all loose,

peeled or blistered paint before application of the new paint finish. The contractor should then

power wash the surface to remove all dirt or chalking of the prior paint finish.

Summarizing the minimum requirements of the proposed scope of work, all bids should

include the following:

1. Name of paint finish product 2. The contractor will involve manufacturer representatives to ensure specifications

and warranty 3. The contractor will apply the paint to clean and dry surfaces at the

manufacturer's recommended spreading rates 4. The contractor will apply successive coats of the paint finish, with sufficient

time elapse between coats, as necessary to ensure uniform appearance 5. The contractor will replace deteriorated or damaged materials prior to the

application of the paint finish 6. The contractor will replace deteriorated sealants or caulk prior to the application

of the paint finish

2The term paint is a generic reference to a specialized mixture of solid pigment in a liquid solution that results in a clear, opaque or solid color protective finish. Product types are too numerous to list but include latex, oil, acrylic and elastomeric based products.


The useful life of protective paint finishes in Fayetteville is from four- to six-years.

Based on the condition of the paint finishes, we recommend the Association budget for the

following activities in 2016:

Paint finish applications Replacement of 620 square feet, or up to twenty percent (20), of the wood trim,

soffit and fascia (The exact amount of material in need of replacement will depend on the actual future conditions and desired appearance. We recommend replacement wherever holes, cracks and deterioration impair the ability of the material to prevent water infiltration.)

Replacement of sealants as needed

Lake Lorelei should budget subsequent applications and associated replacements every

five years thereafter. We depict this information on Line Item 1.870 of Infrastructure Reserve

Expenditures.

Windows and Doors - Lake Lorelei maintains approximately 410, 155, and 95 square

feet of windows and doors at the Clubhouse, Management Building, and Marina Building,

respectively. These components are in fair overall condition at an unknown age. Management

and the Board inform us the entrance doors at the Clubhouse were recently replaced.

Construction of the windows and doors at Lake Lorelei includes the following:

Wood frames Single pane glass Fixed windows Hinged doors Decorative glass at Clubhouse

Properly maintained wood frame windows and doors have a useful life of up to 45 years.

The useful life of the windows and doors is dependent on the occurrence of water infiltration,

thermal inefficiencies compared to present technology, type of frame, availability of replacement


parts and aesthetics. We include the following discussion pertaining to replacement of windows

and doors for the benefit of present and future board members.

The thermal efficiencies of the window and door assemblies are affected by their design

and construction components. These components include glazings, thickness of air space

between glazings, low-conductivity gas, tinted coatings, low-e coatings and thermal barriers. We

discuss each component of an effective design below.

Glazing - Glazing is the glass surface, or pane, in the assembly. An increase in the number of glazings results in an increase in thermal efficiency. Dual glazing insulates nearly twice as well as single glazing. Adding a third or fourth layer of glazing results in further improvement but also increases the cost of the system. We recommend the use of dual glazing (dual pane windows) as the most cost effective and thermal efficient replacement system. An additional layer of glass, often as storm windows, provides increased thermal efficiencies and additional protection from storm water. Thickness of Air Space - As the thickness of the air space between dual panes increases, the thermal efficiency of the system also increases. The ideal air space thickness is about one-half inch or more. However, if the air space is too wide a convection loop between the layers of glazing occurs. An air space thickness beyond approximately one inch does not result in an increased energy performance. Low Conductivity Gas - The use of a denser, lower conductivity gas, such as argon, in the space between dual panes results in an increase in thermal efficiency. Argon is the most cost effective type of low conductivity gas. Argon is inexpensive, nontoxic, nonreactive, clear and odorless. Krypton is also a low conductivity gas occasionally used in window and door assemblies. Krypton is more thermally efficient. However, it is also more expensive to produce. Tinted Glass Coatings - Tinted glass coatings reduce solar heat gain without reducing visibility. These coatings are typically used in climates with a need for building cooling. Low-e Coatings - The use of thin, transparent coatings of silver or tin oxide permit visible light to pass through the glazings and reflect infrared heat radiation back into the building. A variety of types of low-e (low emissivity) glass are available to suit different climate zones. Low-e glass with high solar heat gain coefficients are appropriate for northern climates while low-e glass with low solar heat gain coefficients are appropriate for southern climates. Thermal Barriers - Thermal barriers are typically comprised of rigid polyurethane, silicone foam or butyl rubber. Conductivity is a primary concern with aluminum frame windows. Aluminum has extremely high conductivity and therefore provides a thermal


bridge for the exchange of heated or cooled air between the inside and outside temperatures. Thermal barriers interrupt this thermal bridge and improve the thermal efficiency of the aluminum assembly.

A combination of the above design and construction components will greatly increase the

thermal efficiency of the assembly. The Association should thoroughly investigate these

component options at the time of replacement. Some manufacturers may include these

components as part of the standard product and other manufacturers may consider these

components as options for an additional cost. Lake Lorelei should review the specifications

provided by the manufacturers to understand the thermal design and construction components of

the proposed assemblies. For reserve budgetary purposes, we assume replacement with systems

that achieve generally accepted construction practices.

Aesthetics can be the primary reason for replacement of windows and doors. The

windows and doors will eventually appear outdated and worn. The frame finish will eventually

deteriorate, resulting in an unpleasant appearance. This discretionary time of replacement can

have a significant impact on the remaining useful life.

Based on the above factors, we recommend the Association budget for replacement of the

windows and doors at the Clubhouse by 2021, at the Management Building by 2030 and the

Marina Building by 2021. We note this information on Line Items 1.980 through 1.982 of

Infrastructure Reserve Expenditures. We base this estimate of remaining useful life in part on

the continued periodic replacement of joint sealants at the windows and doors.


Furnishings - Furnishings in the Clubhouse include the following elements:

Bar stools Chairs


Ice maker Laminate countertops Light fixtures Microwaves Refrigerators Sink Tables Television

These elements are in good to fair condition at various ages. The useful lives of these

interior building elements vary significantly up to 25 years. We estimate the present replacement

cost of these elements at approximately $24,000. Due to varied uses, ages and useful lives, we

recommend the Association budget $8,000 plus inflation for phased replacements of up to thirty-

three percent (33%) of the furnishings every eight years beginning by 2020. Line Item 2.450 of

Infrastructure Reserve Expenditures notes our estimate of future costs and anticipated times of

replacements.

Interior Renovations - The Clubhouse interior comprises approximately 2,300 square

feet of finished area. This quantity excludes the two rest rooms as we include renovation of

these areas on a separate line item. Interior components of the Clubhouse include:

Carpet, tile and wood floor coverings Wood wall coverings Wood ceiling coverings Acoustical ceiling tiles Paint finishes on the walls and ceilings Light fixtures including exit and emergency lights

The Clubhouse interior elements are in good to fair condition at an unknown age. The

useful lives of these interior building elements vary. However, due to the interrelated nature of

these elements and the desire to achieve a uniform appearance, we recommend the Association

combine their replacements into coordinated interior renovations.


We recommend the Association anticipate a complete interior renovation of the

Clubhouse every 25 years. The complete renovation should include replacement or refinishing

of all the interior components listed above.

Based on the age and visual condition of these interior Clubhouse elements, we

recommend the Association budget for a coordinated complete interior renovation by 2034.

In addition to the complete renovation, Lake Lorelei should also anticipate partial interior

renovations every 12 years. These partial renovations should include the following:

Application of paint finish to all surfaces Replacement of the carpet

Based on the reported age and visual condition of these interior Clubhouse elements, we

recommend the Association budget for coordinated partial interior renovations by 2022. Line

Items 2.501 and 2.502 of Infrastructure Reserve Expenditures note our estimates of future costs

and anticipated times of interior Clubhouse renovations.

The Marina Building interior comprises approximately 960 square feet of finished area.

This quantity excludes the rest room as we include renovation of this area in the operating

budget. Interior components of the Marina Building include:

Tile floor coverings Paint finishes on the walls and ceilings Light fixtures including exit and emergency lights

The Marina Building interior elements are in fair condition at an unknown age. The

useful lives of these interior building elements vary. However, due to the interrelated nature of

these elements and the desire to achieve a uniform appearance, we recommend the Association

combine their replacements into coordinated interior renovations.


We recommend the Association anticipate a complete interior renovation of the Marina

Building every 25 years. The complete renovation should include replacement of all the interior

components listed above.

Based on the age and visual condition of these interior Marina Building elements, we

recommend the Association budget for a coordinated complete interior renovation by 2020 and

again by 2045. Line Item 2.503 of Infrastructure Reserve Expenditures notes our estimates of

future costs and anticipated times of interior Marina Building renovations.

Kitchen Equipment, Exhaust Hood - Lake Lorelei maintains one exhaust hood at the

Clubhouse kitchen. The exhaust hood is in fair condition at an unknown age. These elements

have a useful life of up to 25 years. We recommend the Association budget for replacement by

2033. We depict this information on Line Item 2.531 of Infrastructure Reserve Expenditures.

Kitchen Equipment, Walk-In Cooler - Lake Lorelei maintains one walk-in cooler at the

Clubhouse kitchen. The walk-in cooler is in fair condition at an unknown age. These elements

require capital repairs every 15- to 20-years. These capital repairs include repairs to the

compressor and replacements of the door seals. We recommend the Association budget for

capital repairs to the walk-in cooler by 2019 and again by 2039. We depict this information on

Line Item 2.532 of Infrastructure Reserve Expenditures.

Kitchen Renovation- The Association maintains a kitchen and tavern located in the

Clubhouse. Management and the Board inform us the kitchen is currently abandoned. Future

Reserve Study updates will determine the need for replacements of all kitchen items.

Components of the kitchen include:

Tile and wood floor coverings


Paint finishes on the walls and ceiling Cabinets and countertops Light fixtures Appliances Plumbing fixtures

The components are in fair overall condition at an unknown age. The useful life of

kitchen components varies up to 25 years. Periodic renovations of the kitchen are an astute

practice to maintain a positive overall appearance of the Association. We recommend the

Association budget for renovation of the kitchen by 2019 and again by 2044. We note this

information on Line Item 2.520 of Infrastructure Reserve Expenditures.

Rest Rooms - The Association maintains two common area rest rooms located at the

Clubhouse. Components of the rest rooms include:

Tile and wood floor coverings Paint finishes on the walls and ceiling Light fixtures Plumbing fixtures

The components are in fair overall condition at an unknown age. The useful life of rest

room components varies up to 25 years. Periodic renovations are an astute practice to maintain a

positive overall appearance of the Association. We recommend the Association budget for a

renovation by 2022. We note this information on Line Item 2.900 of Infrastructure Reserve

Expenditures. The Association should verify the rest room renovations comply with the

Americans with Disabilities Act.

Walk-In Coolers, Capital Repairs and Door Replacements - Lake Lorelei maintains

two walk-in coolers and 16 cooler doors at the Marina Building. The walk-in coolers are in fair

condition at an unknown age. These elements require capital repairs every 15- to 20-years.

These capital repairs include repairs to the compressor and structure, and replacement of the


doors and their seals. We recommend the Association budget for capital repairs and partial

replacements to the walk-in coolers by 2025 and again by 2045. We depict this information on

Line Item 2.951 of Infrastructure Reserve Expenditures.


HVAC Equipment - The Clubhouse maintains four split systems and the Marina

Building maintains two split systems. These units are at unknown ages and in satisfactory

operational condition. The useful life of residential size units is from 15- to 20-years. We

recommend the Association anticipate the phased replacement of up to two split systems at the

Clubhouse by 2019 and every 10 years thereafter. We recommend the Association replaced the

split systems at the Marina Building by 2019 and again by 2039. We include this information on

Line Items 3.070 and 3.071 of Infrastructure Reserve Expenditures.

Electrical System, Main Panels - Lake Lorelei maintains Federal Pacific Electric main

panels at the Clubhouse. The panels are original and in fair condition. These elements have a

useful life of over 70 years. We note the use of Federal Pacific Electric (FPE) electrical

components. This manufacturer of electrical component has been subject to class-action lawsuits

for defects relating to their products. We are not aware of any potential hazards associated with

the main panels. However, we recommend the Association investigate if any of these defective

products are used within the building. We recommend the Association budget for replacement

of the main panels at the Clubhouse by 2028. We depict this information on Line Item 3.300 of


Generator, Emergency – Lake Lorelei maintains two generators which provide power to

the critical electrical systems during power supply interruptions or outages. The generators are


at unknown ages and reported in satisfactory condition. The generators have a useful life of 25-

to 35-years. Lake Lorelei should continue to test the emergency generator periodically and

conduct repairs as needed. We suggest the Association fund these periodic tests and repairs from

the operating budget. We recommend the Association anticipate replacement of the generators

by 2030. Our cost on Line Item 3.440 of Infrastructure Reserve Expenditures includes

replacement of the transfer switch.

Security System - Lake Lorelei utilizes 14 security cameras through the community as

added security within the buildings and outside grounds. The security system was recently

replaced and is in satisfactory operational condition. As the system ages, service interruptions

will increase in frequency. We anticipate a useful life of up to 15 years for the system. The

Association should anticipate replacement of the security system by 2026 and again by 2041.

We include this information on Line Item 3.820 of Infrastructure Reserve Expenditures. The

Association should anticipate interim replacements of a limited quantity of components as

normal maintenance to achieve a uniform useful life for the entire system.


Basketball Court - Lake Lorelei maintains one basketball court near the Clubhouse that

comprises approximately 3,360 square feet of concrete. The basketball court is original and in

fair to poor condition. These elements have a useful life of up to 35 years. We recommend the

Association budget for replacement by 2019. We depict this information on Line Item 4.080 of


Concrete Boat Launch - Lake Lorelei maintains one concrete boat launch at the marina

which comprises approximately 900 square feet. The concrete boat launch is in fair condition at


an unknown age. We note minor cracks at the concrete boat launch. Page 5.14 of Photographs

depicts this condition. These elements have a useful life of up to 35 years. We recommend the

Association budget for replacement by 2029. We depict this information on Line Item 4.139 of


Docks, Composite - Lake Lorelei maintains approximately 205, 440, and 320 square feet

of composite docks at the marina boat launch, fueling station, and pedestrian section,

respectively. The Association is also responsible for the 74 standard composite docks which

comprise approximately 5,920 square feet. Management informs us the standard docks are

rented to homeowners on a yearly basis, although replacement of the standard docks is under the

responsibility of the Association.

The composite docks are in good condition at various ages and have a useful life of up to

20 years. Based on condition, we recommend the Association anticipate replacement of the

composite docks at the marina boat launch, fueling station, and pedestrian section by 2028. We

recommend the Association conduct a phased replacement of the standard docks beginning by

2020 and concluding by 2038. With a subsequent phased replacement likely beginning by 2040.

Our costs on Line Items 4.160 through 4.163 of Infrastructure Reserve Expenditures include an

allowance for removal and disposal of the existing docks and installation of new docks.

Fuel System - Lake Lorelei maintains a fuel system at the marina. The fuel system is

original and in operational condition. Component of the fuel system include:

Concrete flatwork Dispensers (2) Electrical system Miscellaneous piping, valves, etc. Pumps (4) Subsurface storage tank (4,000 gallons)


The entire system has a useful life of 60 years and beyond. We recommend the

Association conduct interim repairs and replace the mechanical equipment above, excluding the

subsurface storage tank and electrical system, every 15- to 20-years. The Association should

plan for the replacement of the mechanical component and repairs by 2020. We recommend the

Association conduct a complete replacement of the fuel system, including all components noted

above, by 2040. The complete replacement includes the demolition of all concrete as well as the

replacement of the electrical components and storage tank. We depict this information on Line

Items 4.220 and 4.221 of Infrastructure Reserve Expenditures.

Gate Entry System, Key Pad and Bar Code Scanner - The Association utilizes one

gate entry system intercom panel for communication between the units and guests at Lake

Lorelei, including an additional key pad and a bar code scanner. Management and the Board

inform us the system was replaced in 2011 and is in satisfactory operational condition. Gate

entry systems of this type have useful lives of 10- to 15-years. We recommend the Association

anticipate replacement by 2026 and again by 2041. We depict this information on Line Item

4.310 of Infrastructure Reserve Expenditures.

Gates, Swing Arm Operators- The three swing gate operators limit access into the

community. The swing arm operators were replaced in 2011 and are in good condition. We

anticipate a useful life of up to 10 years for the swing arm operators and recommend the

Association budget for replacement by 2021 and every 10 years thereafter. We depict this

information on Line Item 4.320 Infrastructure Reserve Expenditures.

Lakes - The Association maintains Lake Lorelei, Lake Fichtelberg and Lake Grunewald.

The health or condition of a lake is reflected in the clarity of the water, balance of plant life, the


ability of the water to retain life giving gases and the health of the fish in larger bodies of water.

Three factors which affect the health of lakes are erosion, buildup of silt and algae blooms. We

note minor erosion at the shorelines. We include the following solutions and procedures as a

summary of the minimum requirements for successful lake management for present and future

board members.

Eutrophication is a process in which a lake becomes shallower and more biologically

productive. Human or animal activity often increases the rate of eutrophication. Erosion and

storm water deposit fines or silt into the lake and affect the rate of eutrophication. The amount

and intensity of rainfall, soil saturation levels and ground cover all affect the amount of deposits

into the lake. Run-off from construction excavations is another contributor to changes in the

depth of the lake. Lawn fertilizers are another source of nutrients that contribute to

eutrophication. Fertilizers often contain nitrogen and phosphorous which exacerbate nutrient

loads into the water system. We advise that Lake Lorelei consider the use of fertilizers with low

or no phosphorus content for areas adjacent to the lakes.

Another method to slow eutrophication is the use of algae-killing chemical treatments.

Introduction of metal compounds, such as copper sulfate, to the water renders the nutrients

inactive to the algae. If necessary, we recommend the Association fund the use of chemical

treatments to control algae growth in the lakes through the operating budget. The Association

should first obtain all permits necessary for the use of chemical treatments.

There are several methods with which the Association can manage the lakes and limit

algae blooms and slow the eutrophication process. We discuss each management method below.


Aeration - The use of small pumps, motors and aerators circulates lake water and increases the amount of entrained oxygen in the water, increasing water quality and reducing algae growths. The Associations utilizes two bubblers at Lake Grunewald. The bubblers are at an unknown age and in satisfactory condition. Bubblers have a useful life of 10- to 15-years. We recommend the Association replace the bubblers as normal maintenance through the operating budget.

Low Level Output Valves - The Association maintains two low level output valves at Lake Lorelei and Lake Fichtelberg. The low level output valves are original and in poor condition. Theses valves have a useful life of up to 40 years. We recommend the Association replace the low level output valves by 2018. We note this information on Line Item 4.701 of Infrastructure Reserve Expenditures.

Concrete Spillway and Bridge - The Association maintains a concrete spillway and bridge at Lake Lorelei which comprise approximately 38,000 square feet. The spillway and bridge are located at the south perimeter of Lake Lorelei, are original and in fair overall condition. We note large cracks. Pages 5.15 and 5.16 of Photographs depict these conditions. Typically concrete has a useful life of up to 65 years, but we recommend the association conduct repairs to the spillway and bridge to extend the useful life. We recommend the Association inspect all of the concrete, replace up to five percent (5%) of the concrete and conduct repairs of up to one percent (1%) of the cracks at the spillway and bridge by 2019 and every six years thereafter. We note this information on Line Item 4.702 of Infrastructure Reserve Expenditures.

Erosion Control - The lake shorelines comprises 17,100 linear feet of common natural vegetation and stone rip rap. We note areas of erosion. Pages 5.20 and 5.21 of Photographs depict these conditions. Shorelines are subject to fluctuations in water levels, increased plant growth and migrating storm and ground water resulting in the need for erosion control measures up to every seven years. The steep shoreline embankments are likely to exacerbate soil movement and erosion. The use and maintenance of landscape, natural vegetation and/or stone rip rap along the lake shorelines will help maintain an attractive appearance and prevent soil erosion.

Shoreline plantings are referred to as buffer zones. Buffer zones provide the following advantages:

Control insects naturally Create an aesthetically pleasing shoreline Enhance water infiltration and storage Filter nutrients and pollutants Increase fish and wildlife habitat Reduce lawn maintenance Stabilize shoreline and reduce erosion Trap sediments

We recommend that the Association plan to augment the existing stone rip-rap and conduct partial replacements to up to five percent (5%) of the shorelines by 2021 and


every seven years thereafter. We note this information on Line Item 4.710 of Infrastructure Reserve Expenditures.

Sediment Removal – Due to the large surface areas of the lakes, we have organized our estimated areas of sediment removal by coves and smaller lakes as noted below:

Location Quantity (SY)Cove A 45,700Cove B 25,800Cove C 21,100Cove D 22,900Cove E 7,200Cove F 23,500Cove G 30,100Cove H 47,000Cove I 6,900

Lake Fichtelberg 42,300Lake Grunewald 19,300

The gradual build-up of natural debris, including tree leaves, branches and silt, may eventually change the topography of areas of the lake. Silt typically accumulates at inlets, outlets and areas of shoreline erosion. Sediment removal of lakes becomes necessary if this accumulation alters the quality of lake water or the functionality of the lakes as storm water management structures. Sediment removal is the optimal but also the most capital intensive method of lake management. Excavation equipment used for sediment removal includes clamshells, draglines and suction pipe lines. Sediment removal can also include shoreline regrading. Regrading includes removal of collapsed and eroded soil, and redefining the shoreline.

Determining the amount of silt to remove is difficult to estimate but is dependent on the surface area of the body of water and depth of sediment to remove. The surface area of a body of water can be easily estimated with relatively reasonable accuracy. However, difficulties arise in determining the depth of removal, where to remove and the cost per cubic yard. We discuss each of these three factors in the following three paragraphs.

A visual inspection of a body of water cannot reveal the amount of accumulated silt. This is especially true on larger bodies of water. It is therefore inaccurate to assume an entire body of water will require sediment removal. It is more cost effective to spot remove in areas of intense silt accumulation as noted through bathymetric surveys. The amount or depth of silt is determined through prodding into the silt until a relatively solid base is found or through bathymetric surveys. A bathymetric survey establishes a base of data about the depth of the body of water over many locations against which the data of


future surveys is compared. These invasive procedures are beyond the scope of a Reserve Study and require multiple visits to the site. We recommend Lake Lorelei contract with a local engineer for periodic bathymetric surveys. Future updates of the Reserve Study can incorporate future anticipated expenditures based on the results of the bathymetric surveys.

Unit costs per cubic yard to remove can vary significantly based on the type of equipment used, quantity of removed material and disposal of removed material. Sediment removal costs must also include mobilization, or getting the equipment to and from the site. Mobilization costs to position the equipment on the water surface are much higher compared to removal with a back hoe from the shoreline. Also, the portion of the overall cost to remove associated with mobilization varies based the on the volume removed. Costs for sediment disposal also vary depending on the site. Compact sites will require hauling and in some cases disposal fees.

We note deciduous trees in the vicinity of the lakes that will deposit leaves in the water during the autumn season. We also note natural vegetation at the perimeter of a portion of the lakes. These conditions suggest the Association should plan for eventual removal of sediment from the decay of seasonal vegetation at the lake perimeters.

Based on the visual condition, adjacent deciduous trees and visibly apparent erosion, we recommend the Association anticipate the need to remove lake sediment every 30 years. The following table depicts the location, quantity, our estimated percentage of surface area for sediment removal up to an average depth of one yard, and estimated year of sediment removal per location:

Location Quantity (SY) Percentage for Removal (%) Year of Sediment RemovalCove A 45,700 25 2025Cove B 25,800 50 2026Cove C 21,100 50 2027Cove D 22,900 50 2028Cove E 7,200 100 2029Cove F 23,500 50 2030Cove G 30,100 50 2031Cove H 47,000 50 2032Cove I 6,900 100 2033

Lake Fichtelberg 42,300 15 2034Lake Grunewald 19,300 15 2035

The times and scope of future projects will likely vary. However, we judge the amount shown on Line Items 4.730 through 4.740 of Infrastructure Reserve Expenditures sufficient to budget appropriate reserves.

The above management methods will help to maintain the lakes and potentially reduce

more costly future maintenance expenditures.


Pavilions - Lake Lorelei maintains one large pavilion near the Clubhouse and nine small

pavilions at the beaches. The pavilions are in fair condition at unknown ages. We note wood

deterioration and missing shingles. Page 5.25 of Photographs depicts this condition. The

pavilions are comprised of asphalt shingle roofs and wood structures, the larger pavilion also

contains a concrete pad. These elements have a useful life of 15- to 20-years. We recommend

the Association budget for replacement of the large pavilion at the Clubhouse, including partial

replacements to the concrete pad, by 2022 and again by 2042. We recommend the Association

conduct a total replacement of the nine smaller pavilions at the beaches by 2018 and again by

2038. We depict this information on Line Items 4.771 and 4.772 of Infrastructure Reserve

Expenditures.

Pipes, Subsurface Utilities - The Association maintains the water main, sanitary and

storm sewer subsurface utility pipes throughout the property. The exact amounts and locations

of the subsurface utility pipes were not ascertained due to the nature of the underground

construction and the non-invasive nature of the inspection. We anticipate a useful life of up to

and likely beyond 85 years. At this time, we do not anticipate replacement of continuous lengths

of subsurface utility pipes. Rather, we recommend Lake Lorelei budget for repairs to isolated

occurrences of breached utilities. For budgetary purposes, we include an allowance of $10,000,

plus inflation, for possible repairs by 2018 and every three years thereafter. We note this


Although it is likely that the times of replacement and extent of repair costs may vary

from the budgetary allowance, Lake Lorelei could budget sufficient reserves for these utility

repairs and have the opportunity to adjust its future reserves up or down to meet any changes to

these budgetary estimates. Updates of this Reserve Study would incorporate changes to


budgetary costs through a continued historical analysis of the rate of deterioration and actual

repairs to budget sufficient reserves.

Playground Equipment - The Association maintains playground equipment near the

Clubhouse. The playground equipment includes the following elements:

Swing sets Playsets Benches Trash receptacles

The playground equipment is original and in fair condition. Safety is the major purpose

for maintaining playground equipment. We recommend an annual inspection of the playground

equipment to identify and repair as normal maintenance loose connections and fasteners or

damaged elements. We suggest the Association learn more about the specific requirements of

playground equipment at PlaygroundSafety.org. We recommend the use of a specialist for the

design or replacement of the playground equipment environment. Playground equipment of this

type has a useful life of 15- to 20-years. We recommend replacement of the playground

equipment by 2020 and again by 2040. We include this information on Line Item 4.783 of


Railings, Metal - Approximately 230 linear feet of metal railings are found at the

concrete bridge. The railings are likely original and in fair condition. We note evidence of rust.

Page 5.26 of Photographs depicts this condition. Railings of this type have a long useful life but

are not maintenance free. Periodic maintenance should include periodic applications of

protective paint finish to the metal surfaces and partial replacement of deteriorated sections as

needed. Metal components at grade and key structural connections are especially prone to

failure if not thoroughly maintained. Secure and rust free fasteners and connections will prevent


premature deterioration. We recommend the Association maintain the railing paint finishes

through the operating budget. Railings of this type have a useful life of up to 40 years. We

anticipate replacement of the metal railings by 2019. We depict this information on Line Item

4.801 of Infrastructure Reserve Expenditures.

Signage, LED Entrance - The Association maintains one LED sign at the entrance of

the community. The entrance sign is in good condition at an unknown age. The functional

useful life of the signs is from 15- to 20-years. The community signs contribute to the overall

aesthetic appearance of the property to owners and potential buyers. Replacement of community

signs is often predicated upon the desire to "update" the perceived identity of the community

rather than for utilitarian concerns. Therefore, the specific time for replacement of the sign is

discretionary. We recommend the Association plan to replace the sign by 2030. We note this



Lake Lorelei owns maintenance vehicles and equipment which comprise one arm mower

boom, one bush hog, two pontoon boats, two zero turn mowers, two F-350 trucks, two tractors

and one wood chipper. The vehicles and maintenance equipment vary in condition from good to

poor at various ages. For budgetary purposes, we reviewed the age, condition, remaining useful

lives and replacement cost estimates for each piece of equipment and vehicle with Management

and the Board to determine the estimates times of replacement based on existing use, current age

and condition. We detail our recommendation on Line Items 5.101 through 5.110 of



Pavement

Asphalt Pavement, Crack Repair and Patch- Asphalt pavement comprises 166,890

square yards of streets throughout the community. The pavement is at various ages and in good

to poor overall condition. We note pavement deterioration, sever alligator cracks, rutting, and

raveling. To maximize the life of the pavement, the Association should plan for repairs every

three- to five-years. These activities reduce water infiltration and the effects of inclement

weather. We elaborate on solutions and procedures necessary for the optimal maintenance of

asphalt pavement in the following discussion.

We recommend periodic seal coat applications, crack repairs and patching to maintain the

pavement. These activities minimize the damaging effects of vehicle fluids, maintain a uniform

and positive appearance, and maximize the useful life of the pavement. Asphalt pavement is

susceptible to isolated areas of accelerated deterioration in areas that experience freeze-thaw

cycles, at the centerlines of streets and at high traffic areas such as intersections. Depressions

often appear at areas where vehicles park such as driveways and parking areas. Isolated areas of

depressions, cracks and deterioration indicate the need for crack repairs and patching. The

contractor should patch areas that exhibit potholes, alligator or spider web pattern cracks, and

areas of pavement that are severely deteriorated from oil and gasoline deposits from parking

vehicles. Area patching requires total replacement of isolated areas of pavement. The contractor

should mechanically rout and fill all cracks with hot emulsion. Crack repair minimizes the

chance of the cracks transmitting through the pavement.

Lake Lorelei should budget for phased crack repairs and patching of the asphalt

pavement beginning in 2016 and concluding by 2020 and subsequent repairs every five years


thereafter. Line Item 4.020 of Pavement Reserve Expenditures notes our estimate of future

costs and anticipated times of these activities.

Asphalt Pavement, Repaving – As previously stated, asphalt pavement comprises

166,890 square yards of streets throughout the community. The following map depicts the ages

and locations of pavement:

The pavement is at various ages and in good to poor overall condition. We note

pavement deterioration, sever alligator cracks, rutting, and raveling. Pages 5.29 through 5.32 of

Photographs depict these conditions. The useful life of pavement in Fayetteville is from 15- to

20-years. We include the following repaving solutions and procedures for the benefit of the

present and future board members.

Components of asphalt pavement include native soil, aggregate and asphalt. First the

contractor creates a base course of aggregate or crushed stone and native soil. The base course is


individually compacted to ninety-five percent (95%) dry density prior to the application of the

asphalt. Compaction assures a stable base for the asphalt that reduces the possibility of

settlement. For street systems, the initial installation of asphalt uses at least two lifts, or two

separate applications of asphalt, over the base course. The first lift is the binder course. The

second lift is the wearing course. The wearing course comprises a finer aggregate for a smoother

more watertight finish. The following diagram depicts these components:

The manner of repaving is either a mill and overlay or total replacement. A mill and

overlay is a method of repaving where cracked, worn and failed pavement is mechanically

removed or milled until sound pavement is found. A new layer of asphalt is overlaid atop the

remaining base course of pavement. Total replacement includes the removal of all existing

asphalt down to the base course of aggregate and native soil followed by the application of two

or more new lifts of asphalt. We recommend mill and overlayment on asphalt pavement that


exhibits normal deterioration and wear. We recommend total replacement of asphalt pavement

that exhibits severe deterioration, inadequate drainage, pavement that has been overlaid multiple

times in the past or where the configuration makes overlayment not possible. Based on the age

and varying condition of the asphalt pavement, we recommend the overlayment method of

repaving for initial repaving at the 2016-2019 pavement followed by the mill and overlayment

method of repaving with up to fifty percent (50%) total replacement of the asphalt pavement at

Lake Lorelei. We recommend the mill and overlayment method of repaving with up to fifty

percent (50%) total replacement of the asphalt pavement at the 2010, 2012, 2014 and 2015

pavement at Lake Lorelei.

A variety of repairs are necessary to deteriorated pavement prior to the application of an

overlay. The contractor should use a combination of area patching, crack repair and milling

before the overlayment. Properly milled pavement removes part of the existing pavement and

permits the overlay to match the elevation of adjacent areas not subject to repaving. Milling also

allows the contractor to make adjustments to the slope of the pavement to ensure proper

drainage. The contractor should clean the milled pavement to ensure proper bonding of the new

overlayment. We recommend an overlayment thickness that averages 1½ inches (not less than

one inch or more than two inches). Variable thicknesses are often necessary to create an

adequate slope for proper drainage. The contractor should identify and quantify areas of

pavement that require area patching, crack repair and milling to help the Association compare

proposed services.

Total replacement requires the removal of all existing asphalt. For area patching, we

recommend the contractor use a rectangular saw cut to remove the deteriorated pavement. For

larger areas such as entire parking areas or driveways, we recommend the contractor grind, mill


or pulverize the existing pavement to remove it. The contractor should then augment and

compact the existing aggregate and native soil to create a stable base. Finally the contractor

should install the new asphalt in at least two lifts.

The time of replacement is dependent on the useful life, age and condition of the

pavement. The useful life is dependent in part on the maintenance applied to the pavement, the

amounts and concentration of auto solvents that penetrate the pavement, the exposure to sunlight

and detrimental effects of inclement weather. Lake Lorelei should repair any isolated areas of

deteriorated pavement concurrent with periodic seal coat applications. We recommend a phased

replacement of the 2016-2019 pavement beginning in 2016 and concluding by 2019. The

following table depicts the location, quantity, and the time of mill and overlayment with up to

fifty percent (50%) total replacement of the asphalt pavement:

Pavement Quantity (SY) Mill and Overlay with 50% Total Replacement

2010 47,660 Beginning in 2029 and concluding by 20302012 34,830 Beginning in 2031 and concluding by 20322014 20,100 20342015 9,160 2035

2016-2019 55,140 Beginning in 2034 and concluding by 2037

We depict this information on Line Items 4.040 through 4.049 of Pavement Reserve

Expenditures.

Street System, Gravel Replenishment - Lake Lorelei maintains 28,830 square yards of

gravel streets. The gravel streets are in fair condition at various ages. These elements have a

useful life of up to 15 years. We recommend the Association budget for gravel replenishment at

approximately thirty-three (33%) of the streets by 2019 and every five years thereafter. We

depict this information on Line Item 4.050 of Pavement Reserve Expenditures.


Reserve Study Update

An ongoing review by the Board and an Update of this Reserve Study in two- to three-

years are necessary to ensure an equitable funding plan since a Reserve Study is a snapshot in

time. Many variables change after the study is conducted that may result in significant

overfunding or underfunding the reserve account. Variables that may affect the

Reserve Funding Plan include, but are not limited to:

Deferred or accelerated capital projects based on Board discretion Changes in the interest rates on reserve investments Changes in the local construction inflation rate Additions and deletions to the Reserve Component Inventory The presence or absence of maintenance programs Unusually mild or extreme weather conditions Technological advancements

Periodic updates incorporate these variable changes since the last Reserve Study or

Update.

The Association can expense the fee for an Update with site visit from the reserve

account. This fee is included in the Reserve Funding Plan. We base this budgetary amount on

updating the same property components and quantities of this Reserve Study report. Budgeting

for an Update demonstrates the Board's objective to continue fulfilling its fiduciary responsibility

to maintain the commonly owned property and to fund reserves appropriately.

1 - Photographs

5. PHOTOGRAPHS

Photographs document the conditions of various property components as of the date of

our visual inspection, September 11, 2015. The Condition Assessment contains references to

these photographs.

The following is an overview image of the subject property:

The next pages contain the photographs related to the Condition Assessment.

2 - Photographs

Clubhouse overview

Management building overview

Marina building overview

3 - Photographs

Maintenance building overview

Composite deck at Management building

Composite deck at Management building

4 - Photographs

Typical garage door at Maintenance building

Chalet

Guard house

5 - Photographs

Asphalt shingle roof at clubhouse Note: Management informs us the roof will be replaced in 2015, funded through the operating budget.

Metal roof at Maintenance building

Damaged metal siding at the Maintenance building

6 - Photographs

Metal siding at shed

Plywood siding at Marina building

Plywood siding at Marina building Note: Deteriorated sections.

7 - Photographs

Stucco finish at Clubhouse

Stucco finish at Clubhouse

Cracks at masonry wall at Clubhouse Note: Due to the limited quantity, the Association should maintain masonry exterior walls through the operating budget.

8 - Photographs

Deterioration at wood trim at Clubhouse

Wood deterioration at siding and trim at Clubhouse

Doors at clubhouse

9 - Photographs

Ornate windows at clubhouse

Marina building interior

Marina building interior

10 - Photographs

Clubhouse interior

Clubhouse interior

Clubhouse interior

11 - Photographs

Exhaust hood at Clubhouse kitchen

Clubhouse walk-in cooler

Clubhouse kitchen interior

12 - Photographs

Men’s rest room at Clubhouse

Women’s rest room at Clubhouse

Doors at walk-in cooler at Marina building

13 - Photographs

Walk-in cooler at Marina building

HVAC equipment at Clubhouse

HVAC equipment at Marina building

14 - Photographs

Basketball court

Cracks at basketball court

Concrete boat launch Note: Minor cracks

15 - Photographs

Cracks at common concrete sidewalk

Cracks at common concrete sidewalk

Concrete spillway Note: Large longitudinal cracks.

16 - Photographs

Cracks at concrete spillway

Concrete bridge

Composite dock at the Marina boat launch

17 - Photographs

Composite fueling dock

Composite pedestrian dock near Marina

Common dock

18 - Photographs

Common dock in good condition

Common dock in good condition

Fueling pump and dispensers

19 - Photographs

Key pad entry and bar code scanner

Swing arm gate and operator

Low level output valve

20 - Photographs

Lake Lorelei shoreline

Erosion at shoreline in Cove A

Erosion at shoreline in Cove B

21 - Photographs

Minor erosion at shoreline in Cove H

Shoreline at Lake Grunewald

Shoreline at Lake Fichtelberg

22 - Photographs

Cove A overview

Cove B overview

Cove D overview

23 - Photographs

Cove G overview

Cove I overview

Overview at Lake Fichtelberg

24 - Photographs

Overview of Lake Grunewald

Large pavilion near clubhouse

Small pavilions at West beach

25 - Photographs

Wood deterioration at West beach pavilion

Missing shingles at beach pavilion

East beach playground Note: Association should fund replacement of the East beach playground through the operating budget.

26 - Photographs

West beach large playground

West beach small playground Note: Association should fund replacement of the small west beach playground through the operating budget.

Rust at metal railings at bridge

27 - Photographs

LED entrance sign

Pontoon boat (Maintenance)

Pontoon boat (Safety Patrol)

28 - Photographs

Ford F-350 Truck

John Deere tractor

Kubota tractor

29 - Photographs

Asphalt pavement deterioration at Bavaria Drive (Remaining)

Asphalt pavement deterioration at Strauss Cove (Remaining)

Severe alligator cracking at Wagner Drive (Remaining)

30 - Photographs

Asphalt pavement cracks at deterioration at Halle Drive (Remaining)

Significant deterioration and rutting at asphalt pavement street at Odenwald Drive (Remaining)

Significant cracks at deterioration at Krupp Drive (Remaining)

31 - Photographs

Cracks and rutting at asphalt pavement at Berlin Drive (Remaining)

Cracks and rutting at asphalt pavement at Schlitz Drive (Remaining)

Pavement deterioration at Cologne Drive (Remaining)

32 - Photographs

Asphalt pavement at Lorelei Drive (2010)

Minor cracks at asphalt pavement at Fredrickstrasser Drive (2010)

Minor raveling at asphalt pavement at Oder Drive (2012)

33 - Photographs

Asphalt pavement at Brunswick Drive (2012)

Asphalt pavement in good condition at Lorelei Drive (2014)

Asphalt pavement in good condition at Lorelei Drive (2014)

34 - Photographs

Asphalt pavement in good condition at Bremen Drive (2015)

Asphalt pavement in good condition at Schiller Drive (2015)

Gravel road at Harz Drive

1 - Methodology

6. METHODOLOGY

Reserves for replacement are the amounts of money required for future expenditures to repair or

replace Reserve Components that wear out before the entire facility or project wears out. Reserving funds

for future repair or replacement of the Reserve Components is also one of the most reliable ways of

protecting the value of the property’s infrastructure and marketability.

Lake Lorelei can fund capital repairs and replacements in any combination of the following:

1. Increases in the operating budget during years when the shortages occur 2. Loans using borrowed capital for major replacement projects 3. Level monthly reserve assessments annually adjusted upward for inflation to increase

reserves to fund the expected major future expenditures 4. Special assessments

We do not advocate special assessments or loans unless near term circumstances dictate

otherwise. Although loans provide a gradual method of funding a replacement, the costs are higher than

if the Association were to accumulate reserves ahead of the actual replacement. Interest earnings on

reserves also accumulate in this process of saving or reserving for future replacements, thereby defraying

the amount of gradual reserve collections. We advocate the third method of Level Monthly Reserve

Assessments with relatively minor annual adjustments. The method ensures that Homeowners pay their

"fair share" of the weathering and aging of the commonly owned property each year. Level reserve

assessments preserve the property and enhance the resale value of the homes.

This Reserve Study is in compliance with and exceeds the National standards1 set forth by the

Community Associations Institute (CAI) and the Association of Professional Reserve Analysts (APRA)

fulfilling the requirements of a “Full Reserve Study.” These standards require a Reserve Component to

have a “predictable remaining Useful Life.” Estimating Remaining Useful Lives and Reserve

Expenditures beyond 30 years is often indeterminate. Long-Lived Property Elements are necessarily

excluded from this analysis. We considered the following factors in our analysis:

1 Identified in the APRA “Standards - Terms and Definitions” and the CAI "Terms and Definitions".

2 - Methodology

A projected year end Infrastructure Reserve balance of $90,000 as provided by Management and the Board

A projected year end Pavement Reserve balance of $90,000 as provided by Management and the Board

The Cash Flow Method to compute, project and illustrate the 30-year Reserve Funding Plan

Local2 costs of material, equipment and labor

Current and future costs of replacement for the Reserve Components

Costs of demolition as part of the cost of replacement

Local economic conditions and a historical perspective to arrive at our estimate of long term future inflation for construction costs in Fayetteville, Ohio at an annual inflation rate of 2.8%. Isolated or regional markets of greater construction (development) activity may experience slightly greater rates of inflation for both construction materials and labor.

The past and current maintenance practices of Lake Lorelei and their effects on remaining useful lives

The Funding Plan excludes necessary operating budget expenditures. It is our understanding that future operating budgets will provide for the ongoing normal maintenance of Reserve Components.

The anticipated effects of appreciation of the reserves over time in accord with an anticipated future return or yield on investment of your cash equivalent assets at an annual rate of 1.2% (We did not consider the costs, if any, of Federal and State Taxes on income derived from interest and/or dividend income).

Interest rates on reserves are steady or increasing in concert with the certificates of deposit and

money market rates. Slight increases exist in the savings rates of one, two or three-year CDs. Without

significant differences in these savings rates, shorter term investments are the choice of many investors.

We recommend consultation with a professional investment adviser before investing reserves to

determine an appropriate investment strategy to maximize a safe return on reserve savings. The following

table summarizes rates of inflation and key rates for government securities, generally considered as safe

investment alternatives.

2 See Credentials for addition information on our use of published sources of cost data.

3 - Methodology

Interest Rate and Inflation Data

Average or Last Actual = (A) 2014:1 (A) 2014:2 (A) 2014:3 (A) 2014:4 (A) 2015:1 (A) 2015:2 (A) 2015:3 (E) 2015:4 (E)

1-Year Treasury Bill 0.13% 0.15% 0.13% 0.01% 0.25% 0.27% 0.30% 0.35%

10-Year Treasury Note 2.80% 2.65% 2.40% 2.25% 1.90% 2.50% 2.70% 2.80%

30-Year Treasury Bond 3.90% 3.50% 3.35% 3.00% 2.55% 3.20% 3.40% 3.50%

Consumer Price Index (annualized rate) 1.50% 2.00% 2.40% 2.60% 0.00% 0.00% 1.00% 1.80%

0.0% Savings Rates Results RANGE as found in 0.10 to 1.10%Money Market Savings 0.5 to 1.5% for 2-Year Certificate of Deposit http://www.bankrate.com 0.23 to 1.25%1-Year Certificate of Deposit 0.6 to 1.5% for 3-Year Certificate of Deposit

1.2%

2.8% 06/10/2015

2014 2015

Est. Near Term Local Inflation Rate for Future Capital Expenditures . . . . . . .

Estimated Near Term Yield Rate for Reserve Savings . . . . . . . . . . . . . . . . . . . .

Residential Construction Producer Price Index-Inflation Rate, Bureau of Labor Statistics (Year over Year to YE 2014 Showing no meaningful c

Updates to this Reserve Study will continue to monitor historical facts and trends concerning the

external market conditions.

1 - Definitions

7. DEFINITIONS

Definitions are derived from the standards set forth by the Community Associations Institute (CAI) representing America's 305,000 condominium and homeowners associations and cooperatives, and the Association of Professional Reserve Analysts, setting the standards of care for reserve study practitioners

Cash Flow Method - A method of calculating Reserve Contributions 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 Method - A method of developing a Reserve Funding Plan with the total contribution is based on the sum of the contributions for individual components.

Current Cost of Replacement - That amount required today derived from the quantity of a Reserve Component and its unit cost to replace or repair a Reserve Component using the most current technology and construction materials, duplicating the productive utility of the existing property at current local market prices for materials, labor and manufactured equipment, contractors' overhead, profit and fees, but without provisions for building permits, overtime, bonuses for labor or premiums for material and equipment. We include removal and disposal costs where applicable.

Fully Funded Balance - The Reserve balance that is in direct proportion to the fraction of life "used up" of the current Repair or Replacement cost similar to Total Accrued Depreciation.

Funding Goal (Threshold) - The stated purpose of this Reserve Study is to determine the adequate, not excessive, minimal threshold reserve balances.

Future Cost of Replacement - Reserve Expenditure derived from the inflated current cost of replacement or current cost of replacement as defined above, with consideration given to the effects of inflation on local market rates for materials, labor and equipment.

Long-Lived Property Component - Property component of Lake Lorelei responsibility not likely to require capital repair or replacement during the next 30 years with an unpredictable remaining Useful Life beyond the next 30 years.

Percent Funded - The ratio, at a particular point of time (typically the beginning of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage.

Remaining Useful Life - The estimated remaining functional or useful time in years of a Reserve Component based on its age, condition and maintenance.

Reserve Component - Property elements with: 1) Lake Lorelei responsibility; 2) limited Useful Life expectancies; 3) predictable Remaining Useful Life expectancies; and 4) a replacement cost above a minimum threshold.

Reserve Component Inventory - Line Items in Reserve Expenditures that identify a Reserve Component.

Reserve Contribution - An amount of money set aside or Reserve Assessment contributed to a Reserve Fund for future Reserve Expenditures to repair or replace Reserve Components.

Reserve Expenditure - Future Cost of Replacement of a Reserve Component.

Reserve Fund Status - The accumulated amount of reserves in dollars at a given point in time, i.e., at year end.

Reserve Funding Plan - The portion of the Reserve Study identifying the Cash Flow Analysis and containing the recommended Reserve Contributions and projected annual expenditures, interest earned and reserve balances.

Reserve Study - A budget planning tool that identifies the current status of the reserve fund and a stable and equitable Funding Plan to offset the anticipated future major common area expenditures.

Useful Life - The anticipated total time in years that a Reserve Component is expected to serve its intended function in its present application or installation.

1 - Professional Service Conditions

8. PROFESSIONAL SERVICE CONDITIONS

Our Services - Reserve Advisors, Inc. will perform its services as an independent contractor in accordance with our professional practice standards. Our compensation is not contingent upon our conclusions.

Our inspection and analysis of the subject property is limited to visual observations and is

noninvasive. We will inspect sloped roofs from the ground. We will inspect flat roofs where safe access (stairs or ladder permanently attached to the structure) is available. The report is based upon a “snapshot in time” at the moment of our observation. Conditions can change between the time of inspection and the issuance of the report. Reserve Advisors does not investigate, nor assume any responsibility for any existence or impact of any hazardous materials, structural, latent or hidden defects which may or may not be present on or within the property. Our opinions of estimated costs and remaining useful lives are not a guarantee of the actual costs of replacement, a warranty of the common elements or other property elements, or a guarantee of remaining useful lives.

We assume, without independent verification, the accuracy of all data provided to us. You agree to

indemnify and hold us harmless against and from any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorneys' fees, to which we may become subject in connection with this engagement, because of any false, misleading or incomplete information which we have relied upon as supplied by you or others under your direction, or which may result from any improper use or reliance on the report by you or third parties under your control or direction. Your obligation for indemnification and reimbursement shall extend to any controlling person of Reserve Advisors, Inc., including any director, officer, employee, affiliate, or agent. Liability of Reserve Advisors, Inc. and its employees, affiliates, and agents for errors and omissions, if any, in this work is limited to the amount of its compensation for the work performed in this engagement.

Report - Reserve Advisors, Inc. will complete the services in accordance with the Proposal. The

Report represents a valid opinion of our findings and recommendations and is deemed complete. However, we will consider any additional information made available to us in the interest of promptly issuing a Revised Report if changes are requested within six months of receiving the Report. We retain the right to withhold a Revised Report if payment for services is not rendered in a timely manner. All files, work papers or documents developed by us during the course of the engagement remains our property.

Your Obligations - You agree to provide us access to the subject property during our on-site visual

inspection and tour. You will provide to us to the best of your ability and if reasonably available, historical and budgetary information, the governing documents, and other information that we request and deem necessary to complete our Study. You agree to pay our actual attorneys’ fees and any other costs incurred in the event we have to initiate litigation to collect on any unpaid balance for our services.

Use of Our Report and Your Name - Use of this Report is limited to only the purpose stated

herein. Any use or reliance for any other purpose, by you or third parties, is invalid. Our Reserve Study Report in whole or part is not and cannot be used as a design specification, design engineering services or an appraisal. You may show our report in its entirety to those third parties who need to review the information contained herein. The Client and other third parties viewing this report should not reference our name or our report, in whole or in part, in any document prepared and/or distributed to third parties without our written consent. This report contains intellectual property developed by Reserve Advisors, Inc. specific to this engagement and cannot be reproduced or distributed to those who conduct reserve studies without the written consent of Reserve Advisors, Inc.

We reserve the right to include our client's name in our client lists, but we will maintain the

confidentiality of all conversations, documents provided to us, and the contents of our reports, subject to

2 - Professional Service Conditions

legal or administrative process or proceedings. These conditions can only be modified by written documents executed by both parties.

Payment Terms, Due Dates and Interest Charges - The retainer payment is due upon

authorization and prior to shipment of the report. The final payment of the fee is due immediately upon receipt of the Report. Subsequent changes to the report can be made for up to six months from the initial report date. Any outstanding balance after 30 days of the invoice date is subject to an interest charge of 1.5% per month. Any litigation necessary to collect an unpaid balance shall be venued in Milwaukee County Circuit Court in the State of Wisconsin.

CONDITIONS OF OUR SERVICE ASSUMPTIONS To the best of our knowledge, all data set forth in this report are true and accurate. Although

gathered from reliable sources, we make no guarantee nor assume liability for the accuracy of any data, opinions, or estimates identified as furnished by others that we used in formulating this analysis.

We did not make any soil analysis or geological study with this report; nor were any water, oil, gas,

coal, or other subsurface mineral and use rights or conditions investigated. Substances such as asbestos, urea-formaldehyde foam insulation, other chemicals, toxic wastes,

environmental mold or other potentially hazardous materials could, if present, adversely affect the validity of this study. Unless otherwise stated in this report, the existence of hazardous substance, that may or may not be present on or in the property, was not considered. Our opinions are predicated on the assumption that there are no hazardous materials on or in the property. We assume no responsibility for any such conditions. We are not qualified to detect such substances, quantify the impact, or develop the remedial cost.

We have made a visual inspection of the property and noted visible physical defects, if any, in our

report. Our inspection and analysis was made by employees generally familiar with real estate and building construction; however, we did not do any invasive testing. Accordingly, we do not opine on, nor are we responsible for, the structural integrity of the property including its conformity to specific governmental code requirements, such as fire, building and safety, earthquake, and occupancy, or any physical defects that were not readily apparent during the inspection.

Our opinions of the remaining useful lives of the property elements do not represent a guarantee or

warranty of performance of the products, materials and workmanship.

1 - Credentials

9. CREDENTIALS

HISTORY AND DEPTH OF SERVICE Founded in 1991, Reserve Advisors, Inc. is the leading provider of reserve studies, insurance

appraisals, developer turnover transition studies, expert witness services, and other engineering consulting services. Clients include community associations, resort properties, hotels, clubs, non-profit organizations, apartment building owners, religious and educational institutions, and office/commercial building owners in 48 states, Canada and throughout the world.

The architectural engineering consulting firm was formed to take a leadership role in helping fiduciaries, boards, and property managers manage their property like a business with a long range master plan known as a Reserve Study.

Reserve Advisors employs the largest staff of Reserve Specialists with bachelor’s degrees in engineering dedicated to Reserve Study services. Our principals are founders of Community Associations Institute's (CAI) Reserve Committee, that developed national standards for reserve study providers. One of our principals is a Past President of the Association of Professional Reserve Analysts (APRA). Our vast experience with a variety of building types and ages, on-site examination and a historical analyses are keys to determining accurate remaining useful life estimates of building components.

No Conflict of Interest - As consulting specialists, our independent opinion eliminates any real or perceived conflict of interest because we do not conduct or manage capital projects.

TOTAL STAFF INVOLVEMENT Several staff members participate in each assignment. The responsible advisor involves the staff

through a Team Review, exclusive to Reserve Advisors, Inc., and by utilizing the experience of other staff members, each of whom has served hundreds of clients. We conduct Team Reviews, an internal quality assurance review of each assignment, including: the inspection; building component costing; lifing; and technical report phases of the assignment. Each Team Review requires the attendance of several engineers, a Review Coordinator, Director of Quality Assurance and other participatory peers. Due to our extensive experience with building components, we do not have a need to utilize subcontractors.

OUR GOAL To help our clients fulfill their fiduciary responsibilities to maintain property in good condition. VAST EXPERIENCE WITH A VARIETY OF BUILDINGS Reserve Advisors, Inc. has conducted reserve studies for a multitude of different communities

and building types. We've analyzed thousands of buildings, from as small as a 3,500 square-foot day care center to the 100-story John Hancock Center in Chicago. We also routinely inspect buildings with various types of mechanical systems such as simple electric heat, to complex systems with air handlers, chillers, boilers, elevators, and life safety security systems.

We're familiar with all types of building exteriors as well. Our well versed staff regularly identifies optimal repair and replacement solutions for such building exterior surfaces such as adobe, brick, stone, concrete, stucco, EIFS, wood products, stained glass and aluminum siding, and window wall systems.

OLD TO NEW Reserve Advisors experience includes ornate and vintage buildings as well as modern structures.

Our specialists are no strangers to older buildings. We're accustomed to addressing the unique challenges posed by buildings that date to the 1800's. We recognize and consider the methods of construction employed into our analysis. We recommend appropriate replacement programs that apply cost effective technologies while maintaining a building's character and appeal.

2 - Credentials

QUALIFICATIONS THEODORE J. SALGADO

Principal Owner CURRENT CLIENT SERVICES Theodore J. Salgado is a co-founder of Reserve Advisors, Inc., which is dedicated to serving community associations, city and country clubs, religious organizations, educational facilities, and public and private entities throughout the United States. He is responsible for the production, management, review, and quality assurance of all reserve studies, property inspection services and consulting services for a nationwide portfolio of more than 6,000 clients. Under his direction, the firm conducts reserve study services for community associations, apartment complexes, churches, hotels, resorts, office towers and vintage architecturally ornate buildings. PRIOR RELEVANT EXPERIENCE Before founding Reserve Advisors, Inc. with John P. Poehlmann in 1991, Mr. Salgado, a professional engineer registered in the State of Wisconsin, served clients for over 15 years through American Appraisal Associates, the world's largest full service valuation firm. Mr. Salgado conducted facilities analyses of hospitals, steel mills and various other large manufacturing and petrochemical facilities and casinos. He has served clients throughout the United States and in foreign countries, and frequently acted as project manager on complex valuation, and federal and state tax planning assignments. His valuation studies led to negotiated settlements on property tax disputes between municipalities and property owners. Mr. Salgado has authored articles on the topic of reserve studies and facilities maintenance. He also co-authored Reserves, an educational videotape produced by Reserve Advisors on the subject of Reserve Studies and maintaining appropriate reserves. Mr. Salgado has also written in-house computer applications manuals and taught techniques relating to valuation studies. EXPERT WITNESS Mr. Salgado has testified successfully before the Butler County Board of Tax Revisions in Ohio. His depositions in pretrial discovery proceedings relating to reserve studies of Crestview Estates Condominium Association in Wauconda, Illinois, Rivers Point Row Property Owners Association, Inc. in Charleston, South Carolina and the North Shore Club Associations in South Bend, Indiana have successfully assisted the parties in arriving at out of court settlements. EDUCATION - Milwaukee School of Engineering - B.S. Architectural Engineering PROFESSIONAL AFFILIATIONS/DESIGNATIONS American Association of Cost Engineers - Past President, Wisconsin Section Association of Construction Inspectors - Certified Construction Inspector Association of Professional Reserve Analysts - Past President & Professional Reserve Analyst (PRA) Community Associations Institute - Member and Volunteer Leader of multiple chapters Concordia Seminary, St. Louis - Member, National Steering Committee Milwaukee School of Engineering - Member, Corporation Board Professional Engineer, Wisconsin, Registered in 1982

Ted continually maintains his professional skills through American Society of Civil Engineers, ASHRAE, Association of Construction Inspectors, and continuing education to maintain his professional engineer licenses.

3 - Credentials

JOHN P. POEHLMANN, RS Principal

John P. Poehlmann is a co-founder of Reserve Advisors, Inc. He is

responsible for the finance, accounting, marketing, and overall administration of Reserve Advisors, Inc. He also regularly participates in internal Quality Control Team Reviews of Reserve Study reports.

Mr. Poehlmann directs corporate marketing, including business development, advertising, press releases, conference and trade show exhibiting, and electronic marketing campaigns. He frequently speaks throughout the country at seminars and workshops on the benefits of future planning and budgeting for capital repairs and replacements of building components and other assets.

PRIOR RELEVANT EXPERIENCE Mr. Poehlmann served on the national Board of Trustees of Community Associations Institute.

An international organization, Community Associations Institute (CAI) is a nonprofit 501(c)(3) trade association created in 1973 to provide education and resources to America’s 335,000 residential condominium, cooperative and homeowner associations and related professionals and service providers.

He is a founding member of the Institute's Reserve Committee. The Reserve Committee developed national standards and the Reserve Specialist (RS) Designation Program for Reserve Study providers. Mr. Poehlmann has authored numerous articles on the topic of Reserve Studies, including Reserve Studies for the First Time Buyer, Minimizing Board Liability, Sound Association Planning Parallels Business Concepts, and Why Have a Professional Reserve Study. He is also a contributing author in Condo/HOA Primer, a book published for the purpose of sharing a wide background of industry knowledge to help boards in making informed decisions about their communities.

INDUSTRY SERVICE AWARDS CAI Wisconsin Chapter Award CAI National Rising Star Award CAI Michigan Chapter Award

EDUCATION

University of Wisconsin-Milwaukee - Master of Science Management University of Wisconsin - Bachelor of Business Administration

PROFESSIONAL AFFILIATIONS Community Associations Institute (CAI) - Founding member of Reserve Committee; former

member of National Board of Trustees; Reserve Specialist (RS) designation; Member of multiple chapters

Association of Condominium, Townhouse, & Homeowners Associations (ACTHA) – member

4 - Credentials

ALAN M. EBERT, P.E., PRA, RS Associate Director of Quality Assurance

CURRENT CLIENT SERVICES Alan M. Ebert, a Geological Engineer, is an Advisor for Reserve Advisors, Inc. Mr. Ebert is responsible for the inspection and analysis of the condition of clients' properties, and recommending engineering solutions to prolong the lives of the components. He also forecasts capital expenditures for the repair and/or replacement of the property components and prepares technical reports on assignments. He is responsible for conducting Life Cycle Cost Analyses and Capital Replacement Forecast services and the preparation of Reserve Study Reports for condominiums, townhomes and homeowner associations. The following is a partial list of clients served by Alan Ebert demonstrating his breadth of experiential knowledge of community associations in construction and related buildings systems. Brownsville Winter Haven Located in Brownsville, Texas, this unique homeowners association contains 525

units. The Association maintains three pools and pool houses, a community and management office, landscape and maintenance equipment, and nine irrigation canals with associated infrastructure.

Rosemont Condominiums This unique condominium is located in Alexandria, Virginia and dates to the 1940's. The two mid-rise buildings utilize decorative stone and brick masonry. The development features common interior spaces, multi-level wood balconies and common asphalt parking areas.

Stillwater Homeowners Association Located in Naperville, Illinois, Stillwater Homeowners Association maintains four tennis courts, an Olympic sized pool and an upscale ballroom with commercial-grade kitchen. The community also maintains three storm water retention ponds and a detention basin.

Birchfield Community Services Association This extensive Association comprises seven separate parcels which include 505 townhome and single family homes. This Community Services Association is located in Mt. Laurel, New Jersey. Three lakes, a pool, a clubhouse and management office, wood carports, aluminum siding, and asphalt shingle roofs are a few of the elements maintained by the Association.

Oakridge Manor Condominium Association Located in Londonderry, New Hampshire, this Association includes 104 units at 13 buildings. In addition to extensive roads and parking areas, the Association maintains a large septic system and significant concrete retaining walls.

Memorial Lofts Homeowners Association This upscale high rise is located in Houston, Texas. The 20 luxury units include large balconies and decorative interior hallways. The 10-story building utilizes a painted stucco facade and TPO roof, while an on-grade garage serves residents and guests.

PRIOR RELEVANT EXPERIENCE Mr. Ebert earned his Bachelor of Science degree in Geological Engineering from the University of Wisconsin-Madison. His relevant course work includes foundations, retaining walls, and slope stability. Before joining Reserve Advisors, Inc., Mr. Ebert was an oilfield engineer and tested and evaluated hundreds of oil and gas wells throughout North America.

EDUCATION University of Wisconsin-Madison - B.S. Geological Engineering

PROFESSIONAL AFFILIATIONS/DESIGNATIONS Reserve Specialist (RS) - Community Associations Institute Professional Reserve Analyst (PRA) - Association of Professional Reserve Analysts Professional Engineering License - Wisconsin 2012

5 - Credentials

SARAH M. GIRLS, E.I.T., RS Responsible Advisor

CURRENT CLIENT SERVICES Sarah M. Girls, a Civil Engineer, is an Advisor for Reserve Advisors, Inc. Ms. Girls is responsible for the inspection and analysis of the condition of clients' properties, and recommending engineering solutions to prolong the lives of the components. She also forecasts capital expenditures for the repair and/or replacement of the property components and prepares technical reports on assignments. She is responsible for conducting Life Cycle Cost Analysis and Capital Replacement Forecast services on townhomes, homeowners associations, planned unit developments and recreational associations. The following is a partial list of clients served by Sarah Girls demonstrating her breadth of experiential knowledge of community associations in construction and related buildings systems.

Brightwater Homeowner Association Located in Missouri City, Texas, this lively planned unit development

consists of 795 single family homes surrounding a picturesque lake. The Association contains a clubhouse equipped with indoor entertainment amenities. In addition to the clubhouse the development also features an outdoor pool and tennis courts for recreational activities.

Lismore Village Homeowners' Association Located in Greer, South Carolina, this quaint community comprises 76 townhomes. The buildings feature brick masonry, vinyl siding and asphalt shingle roofs. The development contains asphalt pavement, a gazebo, perimeter fences and concrete flatwork.

Pecan Park Garden Estate Condominium This attractive gated community in Austin, Texas consists of 146 units with a relaxing pool. Located throughout the property are perimeter walls, private drives and an irrigation system.

The Villages of Berry Creek Situated in Georgetown, Texas, this inviting community is comprised of 241 homes. Homeowners can enjoy two pools, a large deck and a playground that provide enough recreational space for entertaining. The development also includes perimeter fences and detention ponds.

Maple Leaf 20 Condominium Association A townhome style condominium development of 160 units in 20 buildings located in Greenfield, Wisconsin. These buildings were constructed in the mid 2000's and comprise asphalt shingle roofs, vinyl siding and masonry walls. The development contains asphalt pavement, wood fences and concrete flatwork.

Emerald Pointe Condominium Association This quaint community is located in Raleigh, North Carolina and consists of 51 townhomes in 14 buildings. The Association maintains asphalt shingle roofs, wood siding and decks, concrete flatwork and retaining walls.

PRIOR RELEVANT EXPERIENCE Before joining Reserve Advisors, Inc., Ms. Girls attended Valparaiso University in Valparaiso, Indiana where she attained her Bachelor of Science degree in Civil Engineering. During her time at Valparaiso University, Ms. Girls lead her senior design group to develop a bypass around the City of Delphi, Indiana. This project also included the design of a bridge and mechanically stabilized earth walls. Ms. Girls also worked for Hagerman Inc. as an intern project engineer. She was responsible for overseeing and inspecting the construction of Valparaiso University's new Welcome Center.

EDUCATION

Valparaiso University –B.S. Civil Engineering

PROFESSIONAL AFFILIATIONS

Engineer In Training (E.I.T.) Registration

Reserve Specialist (RS) -Community Associations Institute

6 - Credentials

STEPHANIE A. MUELLER, P.E., RS Review Coordinator

CURRENT CLIENT SERVICES Stephanie A. Mueller, a Civil Engineer, is an Advisor for Reserve Advisors, Inc. Ms. Mueller is responsible for the inspection and analysis of the condition of clients' properties, and recommending engineering solutions to prolong the lives of the components. She also forecasts capital expenditures for the repair and/or replacement of the property components and prepares technical reports on assignments. She is responsible for conducting Life Cycle Cost Analysis and Capital Replacement Forecast services on townhomes and planned unit developments.

The following is a partial list of clients served by Stephanie Mueller demonstrating her breadth of experiential knowledge of community associations in construction and related buildings systems. Caswell Lofts Situated in lively Austin, Texas, five loft-style buildings comprise 42 condominiums. The

buildings comprise brick masonry, fiber cement siding and flat roof assemblies. Homeowners can enjoy the fresh air on the extended open balconies.

Palazzo Tornabuoni Associazione Located in the heart of Florence, Italy, this 15th century palace includes 38 luxury residences. The ground floor includes upscale retail spaces and a restaurant. The building features many historic details such as the tile roofs and original fresco paintings. Members enjoy the private lounge, sauna and steam room.

Village at Washington’s Landing This picturesque community on Herrs Island overlooks downtown Pittsburgh. The 85 townhomes and 3 single family homes feature asphalt shingle and metal roofs, brick masonry and wood composite siding.

Carriage Manor RV Resort This attractive resort in Mesa, Arizona offers 911 recreational vehicle lots. The clubhouse and crafts building feature a banquet hall, billiards room, commercial kitchen and various club rooms. The buildings’ exteriors comprise stucco walls, modified bitumen roofs and concrete tile roofs. Located throughout the resort are tennis courts, a pool, golf driving cages, putting greens and a dog park.

Beechnut Woods Located in Grafton, Wisconsin, this quaint community comprises 68 townhomes. The buildings feature brick masonry, vinyl siding and asphalt shingle roofs. The development contains a gazebo, pond, retaining walls and concrete flatwork.

Sonoma Homeowners Association This expansive community of 1,000 homeowners is located in Round Rock, Texas. Homeowners enjoy the use of two pools, splash area, water slide, playgrounds and a pavilion. Located throughout the property are perimeter fences, ponds and an irrigation system.

Holly Creek Located in Plymouth, Minnesota, this inviting community comprises 108 townhomes in 21 buildings. The buildings feature vinyl siding and asphalt shingle roofs. The development includes asphalt driveways and concrete sidewalks.

PRIOR RELEVANT EXPERIENCE Before joining Reserve Advisors, Inc., Ms. Mueller attended the University of Wisconsin in Madison, Wisconsin where she attained her Bachelor of Science degree in Civil Engineering. Her studies focused on structural engineering. At the University of Wisconsin, she managed a team responsible for the design of a new drinking water facility for a rural Wisconsin town.

EDUCATION University of Wisconsin-Madison - B.S. Civil Engineering

PROFESSIONAL AFFILIATIONS Engineer In Training (E.I.T.) Registration - Wisconsin 2009 Reserve Specialist (RS) - Community Associations Institute Professional Engineer (P.E.) - Wisconsin 2015

7 - Credentials

RESOURCES

Reserve Advisors, Inc. utilizes numerous resources of national and local data to conduct its Professional Services. A concise list of several of these resources follows: Association of Construction Inspectors, (ACI) the largest professional organization for those involved in construction inspection and construction project management. ACI is also the leading association providing standards, guidelines, regulations, education, training, and professional recognition in a field that has quickly become important procedure for both residential and commercial construction, found on the web at www.iami.org. Several advisors and a Principal of Reserve Advisors, Inc. hold Senior Memberships with ACI. American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc., (ASHRAE) the American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc., devoted to the arts and sciences of heating, ventilation, air conditioning and refrigeration; recognized as the foremost, authoritative, timely and responsive source of technical and educational information, standards and guidelines, found on the web at www.ashrae.org. Reserve Advisors, Inc. actively participates in its local chapter and holds individual memberships. Community Associations Institute, (CAI) America's leading advocate for responsible communities noted as the only national organization dedicated to fostering vibrant, responsive, competent community associations. Their mission is to assist community associations in promoting harmony, community, and responsible leadership. Marshall & Swift / Boeckh, (MS/B) the worldwide provider of building cost data, co-sourcing solutions, and estimating technology for the property and casualty insurance industry found on the web at www.msbinfo.com. R.S. Means CostWorks, North America's leading supplier of construction cost information. As a member of the Construction Market Data Group, Means provides accurate and up-to-date cost information that helps owners, developers, architects, engineers, contractors and others to carefully and precisely project and control the cost of both new building construction and renovation projects found on the web at www.rsmeans.com. Reserve Advisors, Inc., library of numerous periodicals relating to reserve studies, condition analyses, chapter community associations, and historical costs from thousands of capital repair and replacement projects, and product literature from manufacturers of building products and building systems.

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