RESERVE STUDY - Meadows of Seven Points€¦ · Repair/Replacement Reserves - Non-annual...

© 2017,Onsite Engineering, An MJS Consultants, LLC Company

RESERVE STUDY

MEADOWS OF SEVEN POINTS HOA, SEVEN POINTS TRACE, HERMITAGE, TN 37076

Site-Visit Survey performed

March 10, 2017

FINAL - submitted

March 31, 2017

Prepared For:

C/O Scott Seaman

MEADOWS OF SEVEN POINTS HOA

Prepared By:

Onsite Engineering170-D EAST MAIN ST., STE 129

HENDERSONVILLE, TN 37075

615-264-0505

Project Number:

12785

Reserve Specialist:

Andrew D Hart, EIT, RS

© 2017,Onsite Engineering, An MJS Consultants, LLC Company

TABLE OF CONTENTS

INTRODUCTION ......................................................................................................................................................................................3

EXECUTIVE SUMMARY ......................................................................................................................................................................3

PURPOSE & SCOPE .............................................................................................................................................................................4

REFERENCES ..........................................................................................................................................................................................6

PROPERTY DESCRIPTION ..............................................................................................................................................................7

OBSERVATIONS AND COMMENTS SUMMARY .................................................................................................................14

RESERVE FUND ANALYSIS ..........................................................................................................................................................15

LIMITATIONS ..........................................................................................................................................................................................18

CONCLUSION .........................................................................................................................................................................................20

APPENDIX

RESERVE FUND PROJECTIONS ...............................................................................................................................................21

PROJECT PHOTOGRAPHS ...........................................................................................................................................................22

PROFESSIONAL QUALIFICATIONS ..........................................................................................................................................31

Meadows of Seven Points HOA

Seven Points Trace, Hermitage, TN

INTRODUCTION

Meadows of Seven Points HOA, through Meadows of Seven Points HOA, authorized Onsite Engineering to

conduct a Building Evaluation and Reserve Fund Study for Meadows of Seven Points HOA, located at

Seven Points Trace, Hermitage, TN 37076.

Studies of this nature are important to ensure that a community has sufficient funds for long-term,

periodic capital expenditure requirements. Anticipating large expenditures over an extended period of

time through a structured analysis and scheduling process assists the Association in meeting financial

requirements without:

increasing the service fees above permitted maximums,

borrowing the funds,

or levying special financial assessments to the owners.

Typically, a community association has two broad cash requirements: the general operating requirements

and the capital replacement reserves. In this report, we will focus on those items falling under the capital

replacement reserve criteria. We have projected a capital repair and replacement reserve for thirty (30)

years. The first ten years are the most reliable.

This report is structured to analyze components of the community for which the Association is responsible

and to assess a useful expected life and useful remaining life of those components. The anticipated

scheduled repair or replacement of the component and the anticipated expense for the activity are then

analyzed in conjunction with the current capital reserves funding program for the community. Funding

program recommendations are made with the objective of limiting substantial cash excesses while

minimizing financial burdens that can result from significant cash inadequacies.

This report is intended to be used as a tool to determine reserve fund allocation requirements for the

community, to manage future Association obligations, and to inform the community of future financial

needs in general. The report that follows has been prepared from the perspective of what an owner of

this property would benefit from knowing. Some items, beyond those of immediate concern, may be

discussed. Therefore, the report should be read in its entirety in order to fully understand all of the

information that has been obtained.

EXECUTIVE SUMMARY

The following is a summary of the issues discussed in this Reserve Study. A detailed discussion of each

topic is provided in each of the noted sections of the report.

In summary, we consider this property to be in average condition when compared to others of similar age

and construction type.

Based upon the information provided to us, and our own estimates of costs and useful lives of capital

assets, the existing Reserve Fund with the current annual contribution rate is projected to be insufficient

to fund the reasonably expected capital expenditures over the 30-year life of this study. In addition, there



are significant expenditures projected to occur after the end of the 30-year study period. Therefore,

because these are not covered under the current reserve fund projections, updates to the reserve study

will be required so that reserves can be accrued for future capital expenditures.

Therefore, a study such as this should be updated from time to time, usually on a three to five-year cycle,

in order to reflect the most accurate needs and obligations of the community.

This report has been prepared in strict confidence with you as our client. No reproduction or re-use will

be undertaken with any third party without your express written consent or oral consent.

We have included two alternatives to your current funding program and recommend that the board adopt

an alternative that best reflects the objectives of the community. They are outlined in narrative form in

the RESERVE FUND ANALYSIS Section and on Page 1 of the RESERVE FUND PROJECTIONS (Financial

Projections) in the Appendices.

PURPOSE & SCOPE

PURPOSE

The purpose of this study is to perform a reserve fund analysis and to determine a capital needs

projection. It is intended to be used as a tool for to determine the allocation requirements for the reserve

fund to meet future anticipated capital expenditures for the community.

This report forecasts obligations for the community thirty years into the future. It should be noted that

events might occur that could have an effect on the underlying component or system useful life

assumptions used in this study. Likewise, inevitable market fluctuations can have an impact on component

or system replacement and repair costs.

We recommend that this report be reviewed and updated periodically. The property conditions should

also be evaluated periodically as part of that review. Also, additional concerns which may have developed

during this time period can be identified and, if planned for early enough, may be coordinated into

current funding budgets with the least impact on the individual homeowners. The National professional

association for CPAs (AICPA) recommends that this type of study be updated every three to five years.

SCOPE

This study has been performed according to the scope as generally defined by Meadows of Seven Points

HOA, Onsite Engineering, and the standards of the Community Associations Institute. The findings and

recommendations are based on interviews with the community's management personnel, a review of

available documents, and an investigation of the buildings and site.

The guidelines used to determine which physical components within the community are to be included in

the component inventory are based on the following general criteria:

The component must be a common element, or otherwise noted to be the responsibility of the



Association to replace.

The component has an established estimated useful life (EUL). Organizations such as RSMeans, Fannie

Mae, National Association of Home Builders (NAHB) and Whitestone have established EULs for various

building and property components.

The component is visible such that a remaining useful life (RUL) can be projected. The component

must have an estimated remaining useful life of thirty years or less. As the site ages, additional

components may need to be added.

The cost of replacement should be high enough to make it financially unsound to fund it from the

operating budget or is funded through a maintenance contract. We have established a minimum

reserve component cost of $1,000 for this study.

Components, such as painting, which are considered deferred maintenance, are most appropriately

funded from the Operating Budget instead of Reserves. We have done so unless the painting cost is a

significant portion of the budget or we were requested to do so.

This study estimates the funding levels required for maintaining the long-term viability of the property.

Our approach involves:

1. Examining association-managed equipment, buildings and site facilities.

2. Predicting their remaining service life (RUL) and approximating how frequently they will require repair

or replacement (EUL).

3. Estimating current repair or replacement costs for each capital item.

4. Using data developed in Steps 1, 2 and 3 to project Capital Reserve balances for Years 1 through 30.

The statements in this report are opinions about the present condition of the subject community. They

are based on visual evidence available during a diligent investigation of all reasonably accessible areas

falling under the responsibility of the Association. We did not remove any surface materials, perform any

destructive testing, or move any furnishings. This study is not an exhaustive technical evaluation. Such an

evaluation would entail a significantly larger scope than this effort. For additional limitations, see the

LIMITATIONS SECTION.

As the preparer of this reserve study, Onsite Engineering certifies that we do not have any vested

interests, financial interests, or other interests that would cause a conflict of interest in the preparation of

this study.



REFERENCES

SOURCES OF INFORMATION

The following people were interviewed during our study:

Scott Seaman- Meadows of Seven Points HOA Board President

The following documents were made available to us and reviewed:

Description Source

Pre-Site Visit Questionnare HOA Board President

Past Reserve Project Costs HOA Board President

STANDARDS OF REFERENCE

For your reference, the following definitions may be helpful:

Excellent: Component or system is in "as new" condition, requiring no rehabilitation and should perform

in accordance with expected performance.

Good: Component or system is sound and performing its function, although it may show signs of normal

wear and tear. Some minor rehabilitation work may be required.

Fair: Component or system falls into one or more of the following categories: a) Evidence of previous

repairs not in compliance with commonly accepted practice, b) Workmanship not in compliance with

commonly accepted standards, c) Component or system is obsolete, d) Component or system

approaching end of expected performance. Repair or replacement is required to prevent further

deterioration or to prolong expected life.

Poor: Component or system has either failed or cannot be relied upon to continue performing its original

function as a result of having exceeded its expected performance, excessive deferred maintenance, or

state of disrepair. Present condition could contribute to or cause the deterioration of other adjoining

elements or systems. Repair or replacement is required.

Adequate: A component or system is of a capacity that is defined as enough for what is required,

sufficient, suitable, and/or conforms to standard construction practices.

All ratings are determined by comparison to other buildings of similar age and construction type.

All directions (left, right, rear, etc.), when used, are taken from the viewpoint of an observer standing in



front of a building(s) and facing it. Some comments may refer to left-hand or right-hand when facing a

specific object.

Repair/Replacement Reserves - Non-annual maintenance items that will require significant expenditure

over the life of the buildings. Included are items that will reach the end of their estimated useful life

during the course of this forecast, or, in the opinion of the investigator, will require attention during that

time.

PROPERTY DESCRIPTION

GENERAL

Property Description: The subject property is a residential subdivision with 194 single-family homes

located on public streets.

Year Built: 2000 through 2015

SITE

PROPERTY ACCESS

Description: The main entrance to this property is located near the west perimeter of the property on

Seven Points Trace off of South New Hope Road. There is a second entrance to the property near the east

perimeter of the property on Leona Pass off of Earhart Road.

Observations and Comments: No significant problems were observed.

ENTRANCE MONUMENT AND BRICK WALLS

Description: This property is identified by a block entrance monument with brick veneer located at the

main entrance to the property. Additionally, there are large block walls with brick veneer located on each

side of the entrance to the property.

Observations and Comments: We observed cracks in one of the brick wall pilasters on the north entrance

wall. The horizontal crack on the back side of the pilaster measured an approximate width of 1/16-inch

and the vertical crack in front of the pilaster measured an approximate width of 1/8-inch. Refer to the

following photos.



The pilasters of the south brick entrance wall showed much more significant signs of cracking and freeze-

thaw damage. We observed significant cracking and separation of the brick on the front pilasters. We

observed cracks as wide as 3/4-inch. Refer to the following photos.



We observed similar cracking throughout the pilasters on the back side of the wall. We observed

horizontal cracks as wide as 3/8-inch and vertical cracks as wide as 1/4-inch. Refer to the following

photos.

These cracks indicate significant signs of wall settlement or freeze/thaw damage. We recommend that the

HOA engage an engineer in order to determine the structural significance of the cracking and suggest

methods of correction.

After repairs have been made, we recommend that the HOA have the cracks tuck-pointed and sealed to

prevent water from entering the cracks and causing further freeze/thaw damage to the walls.

We have included an allowance toward future repairs of the entrance monument and walls on a 5-year

cycle beginning in 2022. We have also included an estimate for a repair project for the cracked pilasters

anticipated in 2018.



COMMON AREAS

Description: During our site visit, the Board President identified multiple common areas throughout the

property. The common areas are primarily located at the two entrances to the property, around four

detention ponds, and along Seven Points Trace and Seven Points Circle. Additionally, there is a large open

field area located off of Kaylee Meadow Lane.

Observations and Comments: No significant problems were observed. Based on a conversation with the

HOA Board President, the HOA maintains the grounds and trees around the common areas. We also

understand that the large field area off of Kaylee Meadow Lane may be re-purposed as an amenities area

in the future.

STORM DRAINAGE

Description: Surface drainage around the homes is generally directed toward drainage swales located

behind the homes which connect to one of four detention ponds located on the property. Surface

drainage in the roadways is directed toward grated drains which connect to an underground storm water

system that ultimately discharges drainage into one of the four detention ponds. One retention pond is

located just south of Leona Pass, one retention pond is located to the east of the north cul-de-sac on

Amanda Meadow Drive, and the remaining two detention ponds are located on Seven Points Trace.


EARTHWORK/GRADING/EROSION CONTROL

Description: The ground of the common areas is covered with grass.

Observations and Comments: No significant problems were observed. Grading throughout the common

areas appears adequate to direct water to the detention ponds.

SIDEWALKS

Description: Based on a conversation with the Board President, we understand that the HOA seals

approximately 971 feet of city-owned concrete sidewalks located in front of the common areas of the

property. These common areas are located at the two property entrances, in front of the two detention

ponds on Seven Points Trace, and in front of the metro-service area on Seven Points Circle.


Based on a conversation with the Board President, we understand that the HOA plans to seal the

sidewalks in 2017. We have included a line item for sealing the sidewalks on a 3-year cycle beginning in

2017.



WALKING PATH

Description: There is a concrete walking path located on the east side of the detention pond located near

5863 Seven Points Trace. Based on a conversation with the Board President, we understand that the

Meadows of Seven Points HOA is responsible for maintaining approximately 300 feet of the concrete

walking path as well as a wood bridge on the path.

Observations and Comments: We observed typical signs of cracking in the concrete walking path. Refer

to the following photo.

We observed deteriorated paint and algae growth on the wood bridge. Refer to the following photo.



We observed missing boards and broken balusters on the outer side of the bridge railing. Refer to the

following photos.

Concrete sidewalks have an estimated useful life of over 50 years. Because they are generally not

replaced all at once, but are replaced as sections fail, we have included an allowance for repair of 2% of

the concrete walking path on a 10-year cycle beginning in 2023.

We anticipate that the wood bridge would be pressure washed and re-painted as an operations and

maintenance budget item. We have included a line item for the replacement of the wood bridge

anticipated in 2022.

PROPERTY SIGNAGE

Description: There are combination street/stop signs, speed limit signs, and dead end signs located along

the roadways throughout the property.

Observations and Comments: Based on a conversation with the Board President, we understand that the

street identification signs were replaced in 2016 and the street sign posts were painted in 2016.

We have included the following projections in the financials for this study:

Property Signage Component Year

Street Identification Signs - Replace 2031

Stop, Speed Limit, & Dead End - Replace 2023

Property Signage Posts - Paint 2021 (5-year cycle)



LANDSCAPING

Description: Landscaping around this property consists of trees, bushes, and flowers planted around the

entrance monuments and brick walls at the west entrance to the property. There are landscape lights

installed in the ground around the entrance monument and brick walls.

Observations and Comments: No significant problems or deterioration which would indicate other

problems were observed.

Maintenance of the landscaping is typically considered an operations and maintenance budget iteml

however, based on a conversation with the Board President, we understand that the HOA anticipates

significant tree trimming expenses on a regular basis. Therefore, we have included an allowance toward

tree trimming and removal on an annual cycle beginning in 2018.

Based on a conversation with the Board President, we understand that the landscape lighting was

replaced in 2016. We have included a line item for the future replacement of the landscape lighting in

2031.

IRRIGATION

Description: There is a lawn irrigation system on the property which serves the landscaped areas around

the entrance monument and brick walls at the east entrance to the property. This system was not

operated or tested as a part of this inspection. The irrigation controller is located behind the north brick

wall.


We have included an allowance for landscaping irrigation upgrade/repair on a 3-year cycle beginning in

2019.

OTHER

UPDATES

Description: An estimate for the update of the Reserve Study has been included in the financial

projections.



OBSERVATIONS AND COMMENTS SUMMARY

Following is a summary of the Observation and Comments grouped according to their report Section(s):

We observed cracks in one of the brick wall pilasters on the north entrance wall. The horizontal crack

on the back side of the pilaster measured an approximate width of 1/16-inch and the vertical crack in

front of the pilaster measured an approximate width of 1/8-inch.

The pilasters of the south brick entrance wall showed much more significant signs of cracking and

freeze-thaw damage. We observed significant cracking and separation of the brick on the front pilasters.

We observed cracks as wide as 3/4-inch.

We observed similar cracking throughout the pilasters on the back side of the wall. We observed

horizontal cracks as wide as 3/8-inch and vertical cracks as wide as 1/4-inch.

We observed typical signs of cracking in the concrete walking path.

We observed deteriorated paint and algae growth on the wood bridge.

We observed missing boards and broken balusters on the outer side of the bridge railing.



RESERVE FUND ANALYSIS

We have analyzed the projected capital expenditures and calculated a reserve cash flow need. The

following is a reserve fund financial analysis for non-annual items as discussed in the report. These

financial worksheets take into consideration a reasonable return on invested moneys and inflation.

Please review this thoroughly and let us know of any changes that may be desired. The intent of this

reserve fund financials is to help the Association develop a reserve fund to provide for anticipated repair

or replacements of various system components throughout the term of the study. Many different

variables, such as season, locale, and inflation, affect the final cost of any project. Consultation with a

competent contractor capable of performing this work will provide you with an actual estimate.

Lacking actual estimates from contractors bidding on the work, costs are developed through our own

experience and from published cost indexes such as Means Construction Cost Data. Useful life information

is obtained from published information provided by the Federal National Mortgage Association (FNMA),

other authoritative sources and our own experience. This information lists national averages for

component useful lives.

The capital items listed are those that are typically the responsibility of the association and are derived

from a list provided by the HOA Board. However, association by-laws vary, and therefore, which

components are the responsibility of the owner and which are the responsibility of the Association can

vary. You should confirm that the items listed should be financed by the reserve fund.

The Board President provided the following information for this study.

Reserve Fund Balance as of January 1, 2017 $0

Reserve Contributions to be collected until Study Effective Date $0

Less Projected Reserve Expenditures $0

Projected Year-End Reserve Balance before the Effective Date $0

The Reserve Fund Projections (financials) in the Appendix provides the following:

An input sheet that defines all the criteria used for the financial alternatives, including the assumed

inflation rate and rate of return on deposited reserve funds.

A table that lists anticipated replacement and/or repair items complete with estimated remaining life

expectancies, projected costs of replacement and/or repair, a frequency in years of when these items

require replacement and/or repair, and a projection based on this frequency.

A table and graph that represent end-of-year balances versus capital expenditures based on your

current funding program and reserve balances, and alternatives to your current program. The

provided graphs illustrate what effects the funding methods will have over the presented life of the

study versus the anticipated capital expenditures. Care should be taken in analyzing the graphs due to



varying graphic scales that occur within each graph and between graphs.

This study is based upon a Cash Flow Method using a Threshold Funding goal. The Cash Flow Method

looks at reserve requirements each year and then calculates what the cash requirements will be each

year. Our funding goal is to maintain a positive balance in the reserve fund at or above the threshold

amount with an additional goal of achieving 100 percent funding throughout the study term.

We have defined the threshold or minimum allowed reserve balance as the average annual expenditure.

In addition, as an additional measure of Association reserve funding health, we have included information

about percent of Full Funding. The funding alternatives we have provided are based on maintaining a

minimum reserve balance above a threshold value using Cash Flow Method. They are also based on

keeping the percent funding as close to the goal as possible. By doing so, there is less of a possibility of a

special assessment.

To show these methods, we have included the percent funding values on the Alternative Funding Charts

as well as a target percent funding level line. This can be informative because there may be years when

even though the minimum cash flow requirements are met, future years would have a large projected

cash outlay, which would be shown by the percent funding measurement.

As a result, we do not expect or anticipate to rigidly meet a particular percent funding target. We do

expect and anticipate, however, to meet the Reserve threshold cash flow requirements throughout the

entire 30-year term of the study and to use the percent funding target as a reserve balance positioning

tool.

Note that based upon the information provided to us, and our own estimates of costs and useful lives

of capital assets, and taking inflation and return on investment into account, the current funding rate

will not be adequate to fund the reasonable, expected capital expenditures over the 30-year life of the

study.

The association should bear in mind that unanticipated expenditures can always arise and maintenance of

a significant reserve fund balance can be viewed as an important way to avoid special assessments.



We have included two alternatives to your current funding program and recommend that the board adopt

an alternative that best reflects the objectives of the community.

All funding alternatives are based on a revised funding amount beginning January 1, 2018. They are based

on the entire Association as a single unit.

We have used an inflation rate of 2.8% based on CPI over the last 30 years, and a rate of return on

investment of 1.0%.

We have used the projected average annual expenditure rate of $10,393 as our threshold for the reserve

fund account balance.

In summary, the funding alternatives are as follows:

2017 Funding Rate: Based on a conversation with the Board President, we understand that Reserve

expenses are currently being handled as Operations and Maintenance budget items

Alternative 1: Beginning January 1, 2018, transfer $25,000 into the Reserve Fund Account and set the

annual contribution to the reserves at $6,500 per year. Every following year, beginning in 2019 through

2047, increase the annual contribution to the reserves by $225 per year.

Alternative 2: Beginning January 1, 2018, transfer $25,000 into the Reserve Fund Account and set the

annual contribution to the reserves at $6,500 per year. Every following year, beginning in 2019 through

2047, increase the annual contribution to the reserves by 3.0% per year.

These funding alternatives are projected to maintain a positive balance at or near the threshold while

targeting a 100% funding goal.

The Reserve Fund Projections in the Appendix lists estimated capital reserves from 2018 through 2047.



LIMITATIONS

The observations described in this study are valid on the date of the investigation and have been made

under the conditions noted in the report. We prepared this study for the exclusive use of . Onsite

Engineering does not intend any other individual or party to rely upon this study without our express

written consent. If another individual or party relies on this study, they shall indemnify and hold Onsite

Engineering harmless for any damages, losses, or expenses they may incur as a result of its use.

Information provided by the representatives of the association regarding financial, physical, quantity or

historical issues will be deemed reliable by Onsite Engineering. The reserve study will be a reflection of

the information provided to us and assembled for the association's use. An independent audit or

verification of the information provided to us is beyond the scope of this study. The purpose of this study

is not to perform an audit, quality/forensic analyses or to perform background checks of historical

records. This study relies on data provided to us by the client, the client’s representative, contractors

and/or management company. It also assumes that the property will be properly maintained in order to

obtain industry acceptable property component estimated useful lives.

All measurements or quantities are approximate. Any quantities are based upon field measurements

when plans of the buildings or site are not provided to us. Unless specifically described above, no

construction documents were reviewed, and no comments are made regarding conformance or non-

conformance to plans and specifications. No guarantee or warranty as to future life, performance, or

need for repair of any item inspected is intended or implied.

Please keep in mind that our review of this property focuses on the structural, mechanical and functional

conditions of the common areas. While some mention within this report may be made regarding life

safety issues, this report is not to be considered a life safety/code compliance review of this property.

Further, issues regarding handicap accessibility and other related issues adopted under the Americans

with Disabilities Act (ADA) or the Fair Housing Amendments Act are not included in this report, since this

was beyond the intended scope of services. Some comments about ADA or Fair Housing Act compliance

may be mentioned in the "General" section of this report.

This study is limited to the visual observations made during our inspection. We did not remove surface

materials, conduct any destructive or invasive testing, move furnishings or equipment, or undertake any

digging or excavation. Accordingly, we cannot comment on the condition of systems that we could not

see, such as buried structures and utilities, nor are we responsible for conditions that could not be seen or

were not within the scope of our services at the time of the investigation. We did not undertake to

completely assess the stability of the buildings or the underlying foundation soil since this effort would

require excavation and destructive testing. Likewise, this is not a seismic assessment.



We did not investigate the following areas:

Buried utilities or infrastructure

Concealed structural members or systems

We do not render an opinion on uninvestigated portions of the community.

We did not perform any computations or other engineering analysis as part of this evaluation, nor did we

conduct a comprehensive code compliance investigation. This study is not to be considered a warranty of

condition, and no warranty is implied. The appendices are an integral part of this report and must be

included in any review.

In our Reserve Fund Analysis, we have provided estimated costs. These costs are based on our general

knowledge of building systems and the contracting and construction industry. When appropriate, we have

relied on standard sources, such as Means Building Construction Cost Data, Craftsman Construction Books

etc. to develop estimates. Any costs or other comments contained herein do not necessarily infer that

subcontracts, quotes or opinions of other professionals were solicited or obtained. However, for items

that we have developed costs (e.g.: structural repairs), no standard guide for developing such costs exists.

Actual costs can vary significantly, based on the availability of qualified contractors to do the work, as well

as many other variables. We cannot be responsible for the specific cost estimates provided.



CONCLUSION

In summary, we consider this property to be in generally average condition when compared to others of

similar age and construction type. We recommend that this report be reviewed and updated periodically.

The property conditions should also be evaluated periodically as part of that review. This updating is to

identify additional concerns which may have developed and, if planned for early enough, may be

coordinated into current funding budgets with the least impact on the individual homeowners. An

estimate for the update of the Reserve Study has been included in the financial projections.

This report has been prepared in strict confidence with you as our client. No reproduction or reuse will be

undertaken with any third party without your express written or oral consent.

If you have any questions about this study or the reserve fund analysis, please feel free to contact us.

Thank-you for the opportunity to be of assistance to you.

Respectfully submitted,

Andrew Hart, EIT, RS

Engineering Technician

Reviewed By:

Mark J. Smith, P.E., RS

Certified Building Inspection Engineer



RESERVE FUND PROJECTIONS

FINANCIALS

Components List and CostsAge: 17 Effective Date: 1/1/2018

No. Homes: 194 Fiscal Year Start: 1/1/2018

Report Date: 3/31/2017

1 SITE

2 Entrance Brick Walls - Repair Project 1 LS 12,000.00$ 12,000.00$ 1000000 0

3 Entrance Monument & Brick Walls - Allowance 1 LS 5,000.00$ 5,000.00$ 5 4

4 Concrete Sidewalks - Seal 1 LS 3,085.00$ 3,085.00$ 3 2 Meadows of Seven Points HOA

5 Concrete Walking Path - Repair Allowance 1 LS 1,500.00$ 1,500.00$ 10 5

6 Walking Path Bridge - Replace 1 LS 5,000.00$ 5,000.00$ 20 4

7 Street Identification Signs - Replace 1 LS 2,115.00$ 2,115.00$ 15 13 Meadows of Seven Points HOA

8 Stop, Speed Limit, & Dead End - Replace 1 LS 2,250.00$ 2,250.00$ 15 5

9 Property Signage Posts - Paint 1 LS 2,115.00$ 2,115.00$ 5 3 Meadows of Seven Points HOA

10 Tree Trimming - Allowance 1 LS 2,000.00$ 2,000.00$ 1 0

11 Landscape Lighting - Replace 1 LS 6,340.00$ 6,340.00$ 15 13 Meadows of Seven Points HOA

12 Irrigation System - Allowance 1 LS 1,000.00$ 1,000.00$ 3 1

13 OTHER

14 Reserve Study Update 1 EA 1,000.00$ 1,000.00$ 3 2

Abbreviations: EA - Each, LF- Linear Feet, LS - Lump Sum, SF - Square Feet, SQ - Square, SY - Square Yard, U/M - Unit of Measure

The Meadows of Seven Points HOASeven Points Trace

Hermitage, TN 37076

# Remaining

Useful Life

(RUL)

Comment / ReferenceComponent Qty U/M Unit Cost Reserve

Requirement

Estimated

Useful Life

(EUL)

Components List and Costs Page 1 ©2014 Onsite Engineering

Projected Reserve Expenses by Year

# Reserve Component 1 2 3 4 5 6 7 8 9 10

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

1 SITE

2 Entrance Brick Walls - Repair Project 12,000$

3 Entrance Monument & Brick Walls - Allowance 5,584$ 6,411$

4 Concrete Sidewalks - Seal 3,260$ 3,542$ 3,848$

5 Concrete Walking Path - Repair Allowance 1,722$

6 Walking Path Bridge - Replace 5,584$

7 Street Identification Signs - Replace

8 Stop, Speed Limit, & Dead End - Replace 2,583$

9 Property Signage Posts - Paint 2,298$ 2,638$

10 Tree Trimming - Allowance 2,000$ 2,056$ 2,114$ 2,173$ 2,234$ 2,296$ 2,360$ 2,427$ 2,494$ 2,564$

11 Landscape Lighting - Replace

12 Irrigation System - Allowance 1,028$ 1,117$ 1,213$

13 OTHER

14 Reserve Study Update 1,057$ 1,148$ 1,247$

Inflated Total For Each Year 14,000$ 3,084$ 6,431$ 4,470$ 14,518$ 11,291$ 2,360$ 3,640$ 10,227$ 8,975$


Hermitage, TN 37076

Projected Reserve Expenses by Year, Page 2 ©2014 Onsite Engineering


# Reserve Component

1 SITE

2 Entrance Brick Walls - Repair Project

3 Entrance Monument & Brick Walls - Allowance

4 Concrete Sidewalks - Seal

5 Concrete Walking Path - Repair Allowance

6 Walking Path Bridge - Replace


8 Stop, Speed Limit, & Dead End - Replace

9 Property Signage Posts - Paint

10 Tree Trimming - Allowance


12 Irrigation System - Allowance

13 OTHER

14 Reserve Study Update

Inflated Total For Each Year


Hermitage, TN 37076

11 12 13 14 15 16 17 18 19 20

2028 2029 2030 2031 2032 2033 2034 2035 2036 2037

7,360$ 8,450$

4,180$ 4,541$ 4,933$

2,270$

3,028$

3,028$ 3,477$

2,636$ 2,710$ 2,786$ 2,864$ 2,944$ 3,026$ 3,111$ 3,198$ 3,288$ 3,380$

9,078$

1,318$ 1,432$ 1,556$ 1,690$

1,355$ 1,472$ 1,599$

3,954$ 8,245$ 2,786$ 19,431$ 16,317$ 5,296$ 4,667$ 9,731$ 6,765$ 13,519$



# Reserve Component

1 SITE

2 Entrance Brick Walls - Repair Project

3 Entrance Monument & Brick Walls - Allowance

4 Concrete Sidewalks - Seal

5 Concrete Walking Path - Repair Allowance

6 Walking Path Bridge - Replace


8 Stop, Speed Limit, & Dead End - Replace

9 Property Signage Posts - Paint

10 Tree Trimming - Allowance


12 Irrigation System - Allowance

13 OTHER

14 Reserve Study Update

Inflated Total For Each Year


Hermitage, TN 37076

21 22 23 24 25 26 27 28 29 30

2038 2039 2040 2041 2042 2043 2044 2045 2046 2047

9,701$ 11,137$

5,359$ 5,822$ 6,325$ 6,872$

2,992$

9,701$

4,583$

3,909$

3,992$ 4,583$

3,474$ 3,572$ 3,672$ 3,775$ 3,880$ 3,989$ 4,101$ 4,215$ 4,333$ 4,455$

13,737$

1,836$ 1,994$ 2,167$

1,737$ 1,887$ 2,050$ 2,227$

14,480$ 3,572$ 5,508$ 15,476$ 23,282$ 8,975$ 12,476$ 4,215$ 29,403$ 24,691$


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

(14,000)$ (17,084)$ (23,515)$ (27,985)$ (42,503)$ (53,794)$ (56,155)$ (59,795)$ (70,022)$ (78,997)$ (82,951)$ (91,196)$ (93,982)$ (113,413)$ (129,729)$

-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

14,000$ 3,084$ 6,431$ 4,470$ 14,518$ 11,291$ 2,360$ 3,640$ 10,227$ 8,975$ 3,954$ 8,245$ 2,786$ 19,431$ 16,317$

-80% -80% -107% -112% -235% -372% -283% -246% -310% -355% -306% -325% -271% -450% -691%

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047

(135,026)$ (139,692)$ (149,423)$ (156,188)$ (169,707)$ (184,187)$ (187,759)$ (193,267)$ (208,743)$ (232,024)$ (240,999)$ (253,476)$ (257,691)$ (287,094)$ (311,785)$

-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

5,296$ 4,667$ 9,731$ 6,765$ 13,519$ 14,480$ 3,572$ 5,508$ 15,476$ 23,282$ 8,975$ 12,476$ 4,215$ 29,403$ 24,691$

-450% -691% -576% -480% -495% -453% -523% -620% -493% -428% -489% -710% -651% -661% -533%

Projected January/1/2018 Reserve Fund Balance: -$ Inflation: 2.80% Threshold: 10,393$

Present Total Annual Deposit to Reserves: -$ Return on Investment: 1.00% Funding Percent Target: 60%

RESERVE FUND ANALYSIS - EXISTING FUNDING RATE

Annual Deposits

Special Assessments

Actual Percent Funding

Ending Year Balance

Ending Year Balance

Special Assessments

Annual Deposits


Inflated Annual Expenditures


$-

$50,000

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

20

47

RESERVE FUND ANALYSIS - EXISTING FUNDING RATE

Ending Year Balance $s at 60% Funding Target Threshold:

Financials Page 5 ©2014 Onsite Engineering

$(350,000)

$(300,000)

$(250,000)

$(200,000)

$(150,000)

$(100,000)

$(50,000)

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

20

47

Do

lla

rs

Funding Years


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

17,675$ 21,529$ 22,269$ 25,223$ 18,286$ 14,766$ 20,458$ 25,142$ 23,447$ 23,227$ 28,303$ 29,324$ 36,095$ 26,351$ 19,880$

6,500$ 6,725$ 6,950$ 7,175$ 7,400$ 7,625$ 7,850$ 8,075$ 8,300$ 8,525$ 8,750$ 8,975$ 9,200$ 9,425$ 9,650$

14,000$ 3,084$ 6,431$ 4,470$ 14,518$ 11,291$ 2,360$ 3,640$ 10,227$ 8,975$ 3,954$ 8,245$ 2,786$ 19,431$ 16,317$

101% 101% 101% 101% 101% 102% 103% 103% 104% 105% 104% 104% 104% 105% 106%

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047

24,704$ 30,439$ 31,343$ 35,480$ 33,063$ 29,879$ 37,907$ 44,288$ 40,892$ 29,805$ 33,285$ 33,490$ 42,268$ 25,922$ 14,399$

9,875$ 10,100$ 10,325$ 10,550$ 10,775$ 11,000$ 11,225$ 11,450$ 11,675$ 11,900$ 12,125$ 12,350$ 12,575$ 12,800$ 13,025$

5,296$ 4,667$ 9,731$ 6,765$ 13,519$ 14,480$ 3,572$ 5,508$ 15,476$ 23,282$ 8,975$ 12,476$ 4,215$ 29,403$ 24,691$

105% 105% 104% 103% 102% 101% 99% 98% 96% 91% 90% 87% 87% 77% 60%

Increase Period (Years) : 1

Projected January/1/2018 Reserve Fund Balance: 25,000$ Number of Increases : 29 Threshold: 10,393$

First Year Contribution : 6,500$ Return on Investment: 1.00% Periodic Increase : $225 Funding Percent Target: 60%

RESERVE FUND ANALYSIS - ALTERNATIVE 1 - Escalating Funding at $225 Every Year Through 2047

Ending Year Balance


Ending Year Balance



Annual Deposits

Special Assessments

Annual Deposits

Special Assessments


$45,000

$50,000

RESERVE FUND ANALYSIS - ALTERNATIVE 1 - Escalating Funding at $225 Every Year Through 2047

Ending Year Balance $s at 60% Funding Target Threshold


$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

Do

llars

Funding Years


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

17,675$ 21,499$ 22,184$ 25,064$ 18,040$ 14,427$ 20,027$ 24,625$ 22,858$ 22,587$ 27,642$ 28,679$ 35,512$ 25,883$ 19,592$

6,500$ 6,695$ 6,896$ 7,103$ 7,316$ 7,535$ 7,761$ 7,994$ 8,234$ 8,481$ 8,735$ 8,998$ 9,267$ 9,545$ 9,832$

14,000$ 3,084$ 6,431$ 4,470$ 14,518$ 11,291$ 2,360$ 3,640$ 10,227$ 8,975$ 3,954$ 8,245$ 2,786$ 19,431$ 16,317$

101% 101% 101% 100% 100% 100% 101% 101% 101% 102% 102% 102% 102% 103% 104%

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047

24,667$ 30,735$ 32,065$ 36,730$ 34,955$ 32,537$ 41,467$ 48,898$ 46,713$ 37,011$ 42,062$ 44,040$ 54,805$ 40,677$ 31,617$

10,127$ 10,431$ 10,744$ 11,066$ 11,398$ 11,740$ 12,092$ 12,455$ 12,828$ 13,213$ 13,610$ 14,018$ 14,438$ 14,872$ 15,318$

5,296$ 4,667$ 9,731$ 6,765$ 13,519$ 14,480$ 3,572$ 5,508$ 15,476$ 23,282$ 8,975$ 12,476$ 4,215$ 29,403$ 24,691$

105% 106% 106% 107% 108% 109% 109% 108% 110% 113% 114% 115% 113% 120% 132%

Increase Period (Years) : 1

Projected January/1/2018 Reserve Fund Balance: 25,000$ Number of Increases : 29 Threshold: 10,393$

First Year Contribution : 6,500$ Return on Investment: 1.00% Periodic Increase : 3.0% Funding Percent Target: 60%

RESERVE FUND ANALYSIS - ALTERNATIVE 2 - Escalating Funding at 3% Every Year Through 2047

Ending Year Balance

Annual Deposits

Special Assessments


Percent Funding

Percent Funding

Ending Year Balance

Annual Deposits

Special Assessments


$50,000

$60,000

RESERVE FUND ANALYSIS - ALTERNATIVE 2 - Escalating Funding at 3% Every Year Through 2047

Ending Year Balance $s at 60% Funding Target Threshold


$-

$10,000

$20,000

$30,000

$40,000

$50,000

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

Do

llars

Funding Years




Page 22

PROJECT PHOTOGRAPHS



Page 23

No. Image

1

Entrance monument

2

Typical brick wall at east

entrance to property



Page 24

3

Irrigation controller and

electric meter

4

Typical landscape light



Page 25

5

Typical sealed common

sidewalk

6

Typical property signage



Page 26

7

Common area across

Seven Points Trace from

Seven Points Cove

8

Common area detention

area and drainage swale

along Seven Points

Trace between West

Point Cove and East

Point Cove



Page 27

9

Detention pond near

5863 Seven Points Trace

10

Concrete walking path



Page 28

11

Walking path bridge

12

Common area on Seven

Points Circle near metro-

serviced area



Page 29

13

Common area field off

of Kaylee Meadow Lane

14

Detention pond at the

end of Kaylee Meadow

Lane field



Page 30

15

Detention area south of

Leona Pass



Page 31

PROFESSIONAL QUALIFICATIONS



Page 32

ANDREW HART, EIT

ONSITE ENGINEERING

PROFESSIONAL ENGINEER REGISTRATIONS:

EIT Tennessee

EXPERIENCE

Engineering Technician, Onsite Engineering

Engineering Technician, Criterium-Smith Engineers

Construction Materials Technician, S&ME

Professional Intern, CEMEX

PROFESSIONAL:

Reserve Specialist (RS) Designation, By Community Associations Institute (CAI)

ACI Concrete Field Testing Technician - Grade 1

EDUCATION:

Middle Tennessee State University

BS Concrete Industry Management

Tennessee State University

BS Civil Engineering



Page 33

MARK J. SMITH, P.E.

ONSITE ENGINEERING

PROFESSIONAL ENGINEER REGISTRATIONS:

Tennessee - No. 107733

Illinois - No. 62-043214

Kentucky No. 27136

EXPERIENCE

Owner, Onsite Engineering

Owner, Criterium-Smith Engineers

Director of Engineering, American Permanent Ware Company

Director of Engineering, Southbend A Middleby Company

Project Engineer, Anetsberger Brothers

Project Engineer, Underwriters Laboratories

PROFESSIONAL:

Board Certified Building Inspection Engineer (BCBIE), By the Building Inspection Engineers

Certification Institute.

Member, National Society of Professional Engineers (NSPE)

Professional Member, National Academy of Building Inspection Engineers (NABIE)

Board Member, National Academy of Building Inspection Engineers (NABIE)

Member of Community Associations Institute (CAI)

Reserve Specialist (RS) Designation, By Community Associations Institute (CAI)

LEED Accredited Professional

Passed National Home Inspection Exam (NHIE)

EDUCATION:

University of Illinois, Champaign-Urbana, Illinois

BS Mechanical Engineering

Wheaton College, Wheaton, Illinois

BA Liberal Arts Engineering

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