Mason & Mason - Falls Run Community Association...

Mason & Mason Capital Reserve Analysts, Inc.

Condition Assessment and

Reserve Fund Plan 2007

for

Villas at Falls Run

Fredericksburg, Virginia

Prepared for: The Board of Directors

&

Koger Management Group, Inc.

September 29, 2006 Mr. Paul Niemi, President Villas at Falls Run Condominium 14 Turtle Creek Way Fredericksburg, Virginia 22406 RE: CONDITION ASSESSMENT AND RESERVE FUND PLAN 2007 Villas at Falls Run Condominium Fredericksburg, Virginia Project No. 6070

Dear Mr. Niemi: Mason & Mason Capital Reserve Analysts, Inc. has completed the report for the above community. As outlined in our proposal, the report is being submitted to you and the Board of Directors for review and comment. A review of Section 1.0 and 2.0 will provide you with our findings and financial analyses. We will be happy to meet with the Board to help them fully understand the issues. If no changes are necessary, please consider this version the final report. If changes are requested, Mason & Mason will make the revisions and re-issue the report. We encourage the Board to complete this process expeditiously and will support the effort. We genuinely appreciate the opportunity to work with you and the community. Sincerely, Mason & Mason Capital Reserve Analysts, Inc. James G. Mason, R. S. N. K. Mason, R. S. Principal Principal

Mason & Mason Capital Reserve Analysts, Inc.

P. O. Box 2666 Reston, Virginia 20195 800-776-6980 [email protected] Fax 800-776-6408

FOREWORD .................................................................................................................................. 1 1.0 INTRODUCTION ............................................................................................................. 2 2.0 FINANCIAL OVERVIEW ................................................................................................ 3 3.0 VISUAL EVALUATION METHODOLOGY ................................................................... 4 4.0 ACCOUNTING METHODS ............................................................................................ 4 5.0 REPLACEMENT METHODS ......................................................................................... 6 6.0 UPDATING THE RESERVE FUND PLAN .................................................................. 6 7.0 MAINTENANCE PROTOCOLS ..................................................................................... 7

RESERVE FUND PLAN COMPONENT DATA AND ASSET REPLACEMENT SCHEDULE TABLE 1

CALENDAR OF EXPENDITURES TABLE 2

CURRENT FUNDING ANALYSIS, CASH FLOW METHOD TABLE 3

GRAPH

ALTERNATIVE FUNDING ANALYSIS, CASH FLOW METHOD TABLE 3.1

GRAPH

FUNDING ANALYSIS, COMPONENT METHOD TABLE 4

GRAPH

PHOTOGRAPHS #1 - #21

TABLE OF CONTENTS

Villas at Falls Run Condominium 2007 Page 1

FOREWORD One of the most important assets held by a common-property

owner’s association is its replacement reserve fund. The goal of the

fund is to protect property values, not only for common areas, but

also the individual properties within the community whose values

depend upon the condition of the common assets. Reserve fund plans

protect property by providing a methodology for replacement of

deteriorating capital assets. The end result of a successfully

implemented reserve fund plan is an increased quality of life for

community residents.


1.0 INTRODUCTION

1.1 Background: Villas at Falls Run Condominium (VFRC) is comprised of 199 villa-style homes located within 55 buildings constructed as 34 four-residence buildings (136 total residences) and 21 three-residence buildings (63 residences) in the age-restricted Falls Run Development of Fredericksburg, Virginia. There are single-level designs totaling 16 four-residence buildings and 13 three-residence buildings. There are also walkout basement designs totaling 18 four-residence buildings and 8 three-residence buildings. The buildings are residential frame with vinyl siding and limited masonry veneer (faux stone and brick). Gable roofs have asphalt shingle coverings. The buildings are fully equipped with fire sprinklers. The community was completed this year.

The community’s main entrance is through access control gates and monuments at Legend Drive and Plantation Drive with an additional entrance/exit on Harborton Lane leading to the greater Falls Run Development and Community Center. The site is situated on seven paved streets with curbs, driveway aprons, sidewalks, modular block retaining walls and railings, wood fencing, traffic control gates and entrance monuments, and storm water drainage system which are the responsibility of the Falls Run Community Association (FRCA). VFRC has responsibility for certain common components, which include site features associated with the buildings and residences, the building exteriors, and limited utilities.

James G. Mason, R. S., and N. K. Mason, R. S. (M & M) conducted the field evaluation for this report on September 25, 2006. The weather was clear and the temperature was approximately 80 degrees F. Precipitation had occurred the day prior to the site visit. Pavements, walkways, and grounds were generally dry and clean of debris.

Prior to the field evaluation, M & M, met with Mr. Paul Miemi, President, and Ms. Nancy Garner, Treasurer to discuss issues associated with the Condominium and to review the VFRC Asset Base Maintenance Determination document dated 9/6/06, which has been developed by the Board, and was useful for establishing the common reserve components to be included. We were not provided with any construction drawings, and we did not review any other documents in the preparation of this report. While this report is not a transition or warranty inspection, and should not be used for that purpose, we conducted a visual evaluation to establish general service lives of components based on their current observed or as-built condition.

1.2 Principal Findings: The common assets appear to be in overall good condition. We observed an average deficiency rate (between 3% and 4%) in the concrete flatwork (leadwalks and driveways), which were shrinkage or settlement cracks with no differential settlement. These deficiencies are a warranty issue, but in any case should not be a concern of reserves for several years. Concrete retaining walls were found to be in generally good condition with one major wall deficiency, which is discussed in the Table 1 component narrative. The asphalt shingle roofing is a concern as we observed a number of slightly deflected sheathing areas, some damaged shingles, and some irregularities in fit and trim. For these reasons, we have used a more conservative service life of 18 years, rather than the standard of 20 years. The Board should consider a limited scope invasive sampling engineering evaluation of the roofing system to determine if hidden construction defects exist, and how, if any, the defects would affect the service life and warranty claims. Vinyl siding, vinyl trim, vinyl perforated soffits, and vinyl trim cladding generally appear to be in good condition. Any deficiencies occurring during the warranty period should be reported and repaired to prevent further


damage. After the warranty period, general repairs to roofing and vinyl components should be covered under operations.

In order to maintain the physical attributes that preserve property values and provide a safe environment for occupants and guests, a series of capital expenditures should be anticipated. Consequently, we have scheduled near-, mid-, and late-term restoration and replacement projects based on anticipated need from our experience with similar properties.

The net effect of the projections to the reserve fund plan is that there is a required increase to $73.69 per unit per month in reserve contributions to properly fund at levels consistent with the Component Method. Anything less than a Component Method level is deficit funding and will eventually result in a shortage of funds possibly requiring large increases, bank loans, or special assessments, all of which should be avoided. Please see the Financial Overview, Section 2 below, for specific information and a Cash Flow alternative funding plan.

Generally, our approach is to group appropriately related component replacement items into projects. This creates a more realistic model and allows a grouping time line that is more convenient to schedule and logical to accomplish. Please see the Table 1 Discussion, Column 18, for specific information.

2.0 FINANCIAL OVERVIEW 2.1 Calculation Basics: The Association is on a calendar fiscal year. Management reported that the reserve fund balance, including cash and securities, as of December 31, 2006, is projected to be $127,480. We have used the OMB projected, five-year average 4.00% annual interest income factor and the 3.50% inflation factor in our model. The total expenditures for the twenty-year study period for both the Cash Flow Method and Component Method are projected to be $3,300,848.

2.2 Current Funding Analysis, Cash Flow Method (Table 3 & Graph): The current annual contribution to reserves is $85,780. At this level, the total for all annual contributions for the twenty-year study period would be $1,715,600, and the total interest income is projected to be $585,270. Continued funding at this level results in the depletion of the reserve fund by 2024, the year of the projected re-roofing project.

2.3 Alternative Funding Analysis, Cash Flow Method (Table 3.1 and Graph): This alternative provides the annual contributions necessary to maintain balances more consistent with the Component Method funding by increasing the annual contribution to $175,960 in 2008 and providing an annual escalation factor of 3.50% (matching inflation) thereafter. This alternative allows for a gradual increase over time after the initial increase and addresses generational equity issues. The total for all annual contributions for the twenty-year study period would be $4,723,592, and the total interest income is projected to be $1,750,624. The reserve fund balance in the last year of the study (2026) is $3,300,848, or a 33% balance to asset base ratio.

2.4 Funding Analysis, Component Method (Table 4 & Graph): This method of funding would require annual contributions ranging from a low of $212,848 to a high of $333,944 for an average annual contribution throughout the twenty-year study period of $237,770. The total for all annual contributions for the twenty-year study period would be $4,755,396, and the total interest income is projected to be $1,984,194. The Fully Funded ending balance in 2026 is $3,300,848. The Component Method model considers the current reserve fund balance in computing individual component


contributions for current cycles. The Component Method model distributes the current reserve fund balance proportionally to all components prior to calculating the individual component contributions for each component cycle.

2.5 Reserve Funding Philosophy: The condition assessment and reserve fund plan is intended to be a working tool for Management and the Board for planning over the long term in order to help them understand the complex issues before them and make informed decisions. The Board of Directors, in consultation with Management and accounting professionals, should decide which of the two reserve funding methods is appropriate for the community. We believe that funding using the Cash Flow Method based on levels determined by the Component Method is the most appropriate and manageable approach.

3.0 VISUAL EVALUATION METHODOLOGY

The condition assessment forming the basis for this report was visual and non-invasive. We did not perform any destructive testing to uncover or expose hidden conditions. No operational testing of mechanical, electrical, plumbing, fire protection, or other internal systems was performed. No spaces were entered that were inaccessible or potentially hazardous. Code compliance, capacities and equipment adequacy for current loads were not addressed. Mason & Mason makes no warranty that every defect is disclosed. Our scope of work does not include an evaluation of moisture penetration, mold, indoor air quality or other environmental issues. While we may identify safety hazards observed during the course of the field evaluation, this report should not be considered to be a full safety evaluation of components.

Repair and replacement costs are based upon commonly accepted references and our experience with similar components installed in similar circumstances. Our opinions of costs are based on published construction cost data, experience with similar projects, information provided by local contractors and management personnel. Actual construction costs can vary significantly due to seasonal considerations, material availability, labor, economy of scale, and other factors beyond our control. Projected useful service lives presume a normal level of past, present and future maintenance. No warranties or guarantees of component service life expectancies are expressed or implied and none should be inferred by this report. Actual experience in replacing components may differ significantly from the projections in the Reserve Fund Plan, because of conditions beyond our control or that were not visually apparent at the time of the evaluation. This report is not a mandate, but is intended to be a guide for future planning.

4.0 ACCOUNTING METHODS

4.1 Cash Flow Method of Funding (Tables 3, 3.1 etc.): The balance of the reserve fund and corresponding annual contribution is determined by setting a level above a pre-determined minimum balance computed after the yearly expenditures. The minimum balance is typically expressed as a percentage, or ratio, of the total reserve fund balance to the asset base. The appropriate level is determined by a variety of factors including condition, age, and complexity of the community. This method is becoming widely accepted in part because of advanced computer modeling but also because it can be a more efficient use of capital. The goal should be to set the first year contribution at a level requiring only small annual inflationary increases, to fully fund the reserves long-term. This addresses generational equity issues as the first year contribution


will be equal to the last year in terms of the cost of money. We have determined through many years of experience that funding under the Cash Flow Method at levels determined by the Component Method will produce the best results. The combination of the two systems is the most manageable. This method is depicted on Table 3, Current Funding Analysis Cash Flow Method and Alternatives, if appropriate.

4.2 Component Method of Funding (Table 4): Each component is fully funded at 100% of its replacement value on a ratio directly proportionate to its remaining life cycle years. Each component is also allotted a percentage of the fund’s total reserves (balance on hand) as part of this complex calculation prior to determining the actual annual contribution. Fully funded means the fund is on target, including time considerations. Funds set aside for replacement of individual components are not normally used for the replacement of other components. In rare cases where a reserve fund is actually overfunded, $0 will be displayed on the component tables, indicating that the component is fully funded for that cycle. The Component Method usually results in annual contribution fluctuations and fund balances, but is considered to be the most conservative method for accruing reserve funds. This method is depicted on Table 4, Funding Analysis Component Method.

4.3 Interest Income on Reserve Funds: In order to replicate approximate financial conditions, interest income on reserve funds should be recognized. The financial tables have been programmed to calculate interest income based on a pre-determined rate. This rate can be set at any level, including zero, for those desiring to not recognize interest. Typically, the rate used reflects OMB’s (Office of Management and Budget) projection for T-Note rates during the 2005 through 2015 time period. The rate should reflect, as accurately as possible, the actual combined rate of return on all securities and other instruments of investment.

Interest calculations are segregated into three individual asset components, and the results are summed to generate the yearly interest accumulations. Interest accrued by the reserve fund assets are compartmentalized and calculated according to the following three categories; beginning reserve fund balance, interest accumulated upon the reserve fund contributions, and interest lost by the capital expenditures.

Interest earned on the yearly beginning reserve fund balance is calculated by compounding the beginning reserve fund balance on a monthly period by the interest rate. Interest earned for the reserve fund contributions are calculated by assuming that twelve equal installments are deposited, and interest is accrued and compounded monthly upon the accumulating balance. Likewise, the interest lost on the capital expenditures is calculated on the assumption that expenditures are deducted from the reserve balance on a monthly basis, and the interest that is lost is calculated upon the aggregate monthly balance. The interest income displayed on Table 3 and Table 4 is the summation of the beginning reserve fund interest accrual and the interest earned on the contributions minus the interest lost by withdrawing the capital expenditures. This method of calculation, while not exact, approximates the averages of the three principal components of a reserve fund for each twelve-month period.

4.4 Future Replacement Costs (Inflation): In order to replicate actual financial conditions, inflation on replacement costs should be recognized. The financial tables have been programmed to calculate inflation based upon a pre-determined rate. This rate can be set at any level, including zero. Typically, the rate used reflects OMB’s average annual Consumer Price Index (urban) for the period of 2005 through 2015.


4.5 Simultaneous Funding: This is a method of calculating funding for multiple replacement cycles of a single component over a period of time from the same starting date. Example: Funding for a re-roofing project, while, at the same time, funding for a second re-roofing project. This method often results in higher annual contribution requirements and leads to generational equity issues. Mason & Mason employs this method only in special circumstances.

4.6 Sequential Funding: This is a method of calculating funding for multiple replacement cycles of a single component over a period of time where each funding cycle begins when the previous cycle ends. Example: Funding for the second re-roofing project begins after the completion of the initial re-roofing project. This method of funding appears to be fundamentally equitable. This method is the standard by which Mason & Mason calculates funding.

5.0 REPLACEMENT METHODS

5.1 Normal Replacement: Components are scheduled for complete replacement at the end of their useful service lives. Example: An entrance sign is generally replaced all at once.

5.2 Cyclic Replacement: Components are replaced in stages over a period of time. Example: Sidewalks are typically replaced in sections rather than as complete units.

5.3 Minor Components: A minimum component value should be established for inclusion in the reserve fund. Components of insignificant value in relation to the scale of the community should not be included and should be deferred to the maintenance budget. A small community might exclude components with aggregate values less than $1,000, while a large community might exclude components with aggregate values of less than $5,000.

5.4 Long Life Components: Almost all communities have some components with useful service lives typically ranging between thirty and sixty years. Traditionally, this type of component has been ignored completely or included at full replacement value far beyond the twenty-year study period. Example: Storm water drainage systems have a useful service life of approximately forty to sixty years. However, they typically require expensive repairs sometime during their service life. Mason & Mason programming addresses these issues by calculating partial funding over a period of time to provide for anticipated localized repairs.

5.5 Projected Useful Service Life: Useful service lives of components are established using construction industry standards as a guideline. Useful service lives can vary greatly due to initial quality and installation, inappropriate materials, maintenance practices, environment and obsolescence. By visual observation, the projected useful service life may be shortened or extended due to the present condition. The projected useful service life is not a mandate, but a guideline, for anticipating replacements and for accumulating reserve funds.

6.0 UPDATING THE RESERVE FUND PLAN

In order for a reserve fund plan to remain a viable planning tool, it should be periodically updated. Changing financial conditions and widely varying aging patterns of components dictate that revisions should be undertaken every three to five years, depending upon the complexity of the common assets and the age of the community. Weather, which is


unpredictable, plays a large part in the aging process. Full Updates typically involve a site visit to observe current conditions, adjusting fund balances and contributions, and recalculating the financial tables. This updating process insures the integrity of the reserve fund plan and contributes to the financial health of the community. Mason & Mason encourages certain types of communities to perform Administrative Updates on complex properties that are undergoing several costly projects simultaneously. These updates include adjustments to the replacement schedules, annual contributions, balances, replacement costs, and interest income. The Administrative Update does not require a site visit and can be a cost-effective way of keeping the Reserve Fund Plan current between Full Update cycles. Updates are particularly important for those communities employing the Cash Flow Method because it maintains the twenty-year window. The Cash Flow Method does not consider expenditures beyond the study period. Those expenditures are brought into the study as it is periodically updated.

7.0 MAINTENANCE PROTOCOLS

The following preventative maintenance practices are suggested to assist the community in the development of a routine maintenance program. The recommendations are not to be considered the only maintenance required, but should be included in an overall program. The development of a maintenance checklist and an annual condition survey will help extend the useful service lives of the community’s assets.

This section includes protocols for many, but not necessarily all, components in the study. Items for which no maintenance is necessary, appropriate, or beyond the purview of this report are not included in this section.

7.1 Concrete Sidewalks & Leadwalks: When concrete walks are cracked or scaled or sections have settled, the resulting differential or “tripping hazard” can present a liability problem for the Association if personal injury should occur as a result. Tripping hazards should be repaired expeditiously to promote safety and prevent liability problems for the community. Generally, where practical and appropriate, concrete element repairs and replacements are scheduled in the same years to promote cost efficiencies. Replacements are usually scheduled in cycles because the necessity of full replacement at one time is unlikely. Typically, damaged or differentially settled sections can be removed by saw cutting or jack hammer and re-cast. Concrete milling of the differential surfaces is sometimes an appropriate, cost-effective alternative to re-casting. Skim coating is not an effective repair for scaled or settled concrete surfaces and, over time, will usually worsen the problem.

7.2 Metal Railings: Metal railings should be periodically straightened, loose connections repaired, cleaned of rust, primed, and painted to maintain appearance and extend the useful service life. Bases should be periodically cleaned and sealed to prevent moisture infiltration, which will cause damage to the concrete in freeze/thaw cycles. Welding new bases to replace deteriorated bases is a viable alternative to replacing handrailings.

7.3 Tree Trimming, Removal, and Replacement: As communities age, trees, both native and planted, may become problematic if periodic care is not accomplished. Trees may become damaged by weather or disease, or they may outsize their location. Proper, diligent tree trimming may alleviate future problems with regard to damage to adjacent structures. Proper tree trimming also helps maintain a healthy tree and may reduce windage in inclement weather. Proper tree trimming should not be confused with the


common practice of topping, which produces, not only an unattractive tree, but also an unhealthy one due to weakening of the root structure. Tree root damage of asphalt footpaths and sidewalks is also a common problem. The best solution is re-routing the adjacent structure, if possible, to prevent future damage. If re-routing is not possible, tree roots causing the damage may be pruned back when replacement of the damaged component is accomplished. The practice of moderate mulching is beneficial for trees. However, repeated mulching against the tree trunk, year after year, without removal of the old mulch can eventually kill trees by trapping moisture against the bark, allowing fungi and insects to easily infiltrate the tree. Mulch should be placed around trees to the drip line, but should not be touching the bark.

7.4 Composite Shingle Roofs: Roofs and attic spaces should be inspected annually for damage and leaks. During the attic inspection, check to make sure that mechanical ventilation systems, such as bathroom exhaust fans and dryer ducts, are routed through the roof and not discharging into the attic space. Loose or missing shingles should be replaced on a regular basis. Signs of deflected roof sheathing or discoloration of the sheathing are indicative of moisture problems and should be investigated. It is important to ensure that proper ventilation is occurring at the soffit vents and that insulation is not obstructing the airflow. If attic ventilation appears to be inadequate, the installation of ridge vents and/or through-the-roof mechanical vents is usually a cost-effective way of extending the useful service life of the sheathing. Roof penetrations, such as plumbing vents, are a major source of leaks. During the inspection, these areas should be checked carefully for signs of leakage or rotten sheathing. Gutters and downspouts should be inspected annually. Loose, damaged, or leaking sections should be secured, repaired, or replaced. All gutters should be kept clean of leaf material and debris. Clogged downspouts should be cleared. In areas where gutters collect fallen leaves, gutters should have screens installed. Downspouts should be directed away from buildings. Erosion can be minimized by the use of properly located splash blocks or plastic flexible tubing. In all cases, water should be directed away from building foundations. Splash blocks must be properly placed, and flexible plastic extensions require diligent maintenance.

7.5 Brick & Masonry Component Tuckpointing & Repair: Brick and masonry components should be inspected periodically for step cracks in the mortar and shear cracks through the brick and mortar, indicating settlement problems. Signs of efflorescence on the brick face and mortar or spalling brick faces indicate water infiltration and should be investigated. Water infiltration problems are usually initiated at the top of an improperly sealed coping. Eliminating the infiltration of water into the structure from the coping can be accomplished by various methods, depending on the brick detail. Installation of a metal coping is sometimes a cost-effective method of solving these problems and extending the life of the component. Sealing of brick surfaces with breathable coatings will also extend the useful service life of the brick. All vegetation, such as vines or tree limbs should be kept clear of the brick to prevent damage. As brick components age, depending upon the initial quality of the mortar and the long-term environment of the wall, mortar joints may deteriorate. This condition can be corrected by tuckpointing. Applying soft sealants to the deteriorated joints or to cover up mortar joint cracks is not recommended. Deteriorated or cracked mortar joints should be repaired by cutting damaged material ¾-inch deep with a diamond blade masonry saw. The void should then be filled with new mortar and the joints struck to match the original work.

COMPONENT DATA AND ASSET REPLACEMENT SCHEDULE

TABLE 1 EXPLANATION This table lists the common assets included in the reserve fund plan and provides details of the replacement schedules. A narrative discussion is provided adjacent to each component. Photo references and maintenance protocol reference numbers are also provided. An explanation of each column in the table follows: Column 1

Component No. is consistent throughout all tables.

Column 2

Component is a brief description of the component.

Column 3

Quantity of the component studied, which may be an exact number, a rough estimate, or simply a (1) if the expenditure forecast is a lump sum allowance for replacement of an unquantified component.

Column 4 Unit of Measurement used to quantify the component: SY = Square Yards

SF = Square Feet LF = Linear Feet EA = Each LS = Lump Sum PR = Pair

Column 5

CY = Cubic Yards Unit Cost used to calculate the required expenditure. This unit cost includes removal of existing components and installation of new components, including materials, labor, and overhead and profit for the contractor.

Column 6 Column 7

Total Asset Base is the total value of common assets included in the study in current dollars. In addition to capital assets, this figure includes one cycle of maintenance liability. Typical Service Life (Yrs) or Cycle is the typical life expectancy of similar components in average conditions or the length of years between replacement cycles, and does not necessarily reflect the conditions observed during the field evaluation. This number is furnished for reference and is not necessarily computed in the system.

Column 8

1st Cycle Year is the scheduled year of the first projected replacement or repair.

Column 9 Column 10 Column 11 Column 12 Columns 13 Through 16

Percentage of Replacement is the percentage of component value to be replaced in the first replacement cycle. Cost for 1st Cycle is the future cost (with inflation) of the replacement. It is the product of Column 6 times Column 9 in future dollars. 2nd Cycle Year is the scheduled year of the second projected replacement or repair. If a second cycle is not listed, it is because the first cycle is beyond the end of the study. Percentage of Replacement is the percentage of component value to be replaced in the second replacement cycle. This can vary from the percentage of the first cycle for various reasons, such as the increased age of a component may require a larger amount of repair. Cycles, Percentage, and Cost repeat as itemized above. Although not shown on the tables, the cycles continue throughout the study period and beyond.

Column 18 Discussion is the description and observed condition of the component and the methodology employed in the decision-making process. Includes the photo reference, (Photo #1, #2, etc.) and Maintenance Protocol reference numbers (7.1, 7.2 etc.) if applicable.

COMPONENT DATA ANDASSET REPLACEMENT SCHEDULE

TABLE 12007 Through 2026

Reserve Fund Plan forTHE VILLAS AT FALLS RUN


Compon

ent N

o.

Compon

ent

Quantity

Unit of

Mea

sure

men

t

Unit Cos

t

Total A

sset

Base

Typica

l Ser

vice

Life

(Yrs

)

1st C

ycle

Year

Perce

ntage

of R

epla

cem

ent

Cost F

or 1

st C

ycle

2nd Cyc

le Yea

r

Perce

ntage

of R

epla

cem

ent

Cost F

or 2

nd Cyc

le

3rd C

ycle

Year

Perce

ntage

of R

epla

cem

Cost F

or

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

1. SITE FEATURES

1.1 Concrete Leadwalks 26,490 SF $8.00 $211,920 5 2012 4% $10,095 2017 4% $12,023 2022 4% $14,319

1.2 Concrete Driveways & Garage Thresholds

42,848 SF $9.50 $407,056 5 2012 4% $19,391 2017 4% $23,094 2022 4% $27,503

1.3 Concrete Rear Stoops 777 SF $9.50 $7,382 5 2017 10% $1,047 2022 10% $1,247 2027 10% $1,485

1.4 Concrete Retaining Walls 12,840 SF $50.00 $642,000 80 2086 100% $10,153,399

1.5 Metal Railings 4,280 LF $35.00 $149,800 40 2046 100% $585,411

1.6 Surface Erosion & Drainage Allowance 1 LS $12,000.00 $12,000 5 2010 100% $13,326 2015 100% $15,871 2020 100% $18,902

1.7 Villa Unit Landscaping Allowance

199 EA $2,000.00 $398,000 5 2011 10% $45,772 2016 10% $54,511 2021 10% $64,920





Compon

ent N

o.

Compon

ent

Quantity

Unit of

Mea

sure

men

t

Unit Cos

t

Total A

sset

Base

Typica

l Ser

vice

Life

(Yrs

)

1st C

ycle

Year

Perce

ntage

of R

epla

cem

ent

Cost F

or 1

st C

ycle

2nd Cyc

le Yea

r

Perce

ntage

of R

epla

cem

ent

Cost F

or 2

nd Cyc

le

3rd C

ycle

Year

Perce

ntage

of R

epla

cem

Cost F

or

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

1.8 Common Area Tree Replacement Allowance

1 LS $25,000.00 $25,000 5 2011 20% $5,750 2016 50% $17,120 2021 75% $30,584

1.9 Landscape Sprinkler System Allowance 1 LS $5,000.00 $5,000 1 2009 100% $5,362 2010 100% $5,553 2011 100% $5,750





Compon

ent N

o.

Compon

ent

Quantity

Unit of

Mea

sure

men

t

Unit Cos

t

Total A

sset

Base

Typica

l Ser

vice

Life

(Yrs

)

1st C

ycle

Year

Perce

ntage

of R

epla

cem

ent

Cost F

or 1

st C

ycle

2nd Cyc

le Yea

r

Perce

ntage

of R

epla

cem

ent

Cost F

or 2

nd Cyc

le

3rd C

ycle

Year

Perce

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of R

epla

cem

Cost F

or

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

2. BUILDING EXTERIORS

2.1 Re-Roofing Project 433,000 SF $3.25 $1,407,250 18 2024 100% $2,549,179 2042 100% $4,781,979

2.2 Vinyl Siding & Trim Restoration 290,000 SF $4.50 $1,305,000 35 2041 100% $4,282,218

2.3 Masonry Repair Allowance 1 LS $7,500.00 $7,500 10 2016 100% $10,272 2026 100% $14,570 2036 100% $20,665

2.4 Shutters 1 LS $44,000.00 $44,000 30 2036 100% $121,233

3. UTILITIES

3.1 Downspout & Underground Drain Allowance

1 LS $3,000.00 $3,000 3 2010 100% $3,332 2013 100% $3,700 2016 100% $4,109

3.2 Domestic Water Supply Laterals 199 EA $1,800.00 $358,200 50 2055 100% $1,917,248

3.3 Sanitary Laterals 199 EA $1,400.00 $278,600 60 2065 100% $2,115,026





Compon

ent N

o.

Compon

ent

Quantity

Unit of

Mea

sure

men

t

Unit Cos

t

Total A

sset

Base

Typica

l Ser

vice

Life

(Yrs

)

1st C

ycle

Year

Perce

ntage

of R

epla

cem

ent

Cost F

or 1

st C

ycle

2nd Cyc

le Yea

r

Perce

ntage

of R

epla

cem

ent

Cost F

or 2

nd Cyc

le

3rd C

ycle

Year

Perce

ntage

of R

epla

cem

Cost F

or

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

3.4 Fire Sprinkler System Allowance 1 LS $10,000.00 $10,000 5 2013 100% $12,333 2018 100% $14,688 2023 100% $17,492

men

t

or

3rd

Cyc

le

DISCUSSION

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Concrete leadwalks to the individual units throughout the community are generally 3' wide and are in like-new condition with the exception of an approximate3.6% of the total having hairline shrinkage cracks. The Board may want to have these sections replaced under warranty. We have not scheduled near-termreplacements under reserves. The thickness of the concrete could not be visually determined. As sidewalks age, scaling, settlement, and cracking should beanticipated. Cyclic repairs are scheduled as full replacement at one time is not appropriate or anticipated. Concrete repairs are scheduled to coincide with otherconcrete components to promote cost efficiencies. Refer to Maintenance Protocol 7.1.

Access to each garage is provided by cast-in-place, slab-on-grade, 9'- wide driveways. They vary from 14' to 35' in length. We understand that the garage slabsare attached to the driveways with reinforcing steel to prevent settlement at the transition. Replacement of the driveway will necessitate replacement of a portionof the garage slab. Consequently, we have added approximately two feet to each driveway to cover this additional repair requirement. We observedapproximately 3" of the total quantity with hairline (or greater) shrinkage or settlement cracks. The Board may want to have these sections replaced underwarranty. We have not scheduled near-term replacements under reserves. Cyclic repairs are scheduled as full replacement at one time is not appropriate oranticipated. Concrete repairs are scheduled to coincide with other concrete components to promote cost efficiencies. Refer to Photo #2

We counted 37 cast-in-place, slab-on-grade rear stoops installed at units with finished "porch" spaces. Unfinished or open porches do not have this stoop. Theyare 7' by 3' and are all in good condition with no damage observed. Cyclic repairs are scheduled as full replacement at one time is not appropriate or anticipated.Concrete repairs are scheduled to coincide with other concrete components to promote cost efficiencies.

Brick textured, cast-in-place concrete retaining walls are installed at all grade differentials around the buildings, including between center units at the front andrear of the four-unit buildings. We measured 115 walls varying in length from 4' to 75' and from 2' to 6' in height. Generally, the walls appear to be well-built and ingood condition. One wall at 70 Legend drive has settlement cracking and is in poor condition. This wall should be replaced under warranty. We observed damageat a railing post pocket at a retaining wall corner at Building 20. We did not observed any other damage other than some minor shrinkage cracking, which isnormal with this type of construction and should not be problematic. We have scheduled replacement after a statistical useful service life, but the accumulatingfund may be used for periodic repairs or replacements as necessary throughout the service life. Refer to Photos #3, #4, and #5.

Painted, steel railings are constructed at the top of the numerous concrete retaining walls throughout the community adjacent to buildings and at a few entrancesteps. This category does not include the railings at the top of the modular block walls as those walls and railings are the responsibility of the Falls RunCommunity Association. The railings are generally in good condition with no damaged, detached, or loose components observed. Peeling paint, rust, anddeteriorated bases should be anticipated as components age. With proper, diligent maintenance, including cleaning of peeling paint, priming, and painting,sealing bases, and repairing deteriorated areas by welding replacement parts under the operations budget, railings may provide long service lives. Bases shouldbe sealed with a non-shrinking solid grout to prevent water infiltrating the concrete components and causing freeze/thaw damage to the concrete. Refer to Photo#5, and Maintenance Protocol 7.2.

Surface drainage for the site is facilitated by concrete yard drains, plastic yard drains, surface contouring, roadway curb drop inlets, and underground structuresleading to a storm water management pond. The Condominium does not have responsibility for the site system components. However, a fund to addressdrainage problems and erosion in common areas should be maintained. Refer to Photos #6, #7, and #8.

We have established a budget throughout the study period to address landscaping projects within the immediate proximity of the villas. This would includeremoval and replacement of major landscaping items, but not planting of annuals. Weather is an unpredictable factor for this budget. The budget should beadjusted by update when an actual expenditure history has been established.

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We have established a budget throughout the study period to address tree removal and replacement over time. As the condominium ages and trees mature, theymay require trimming to prevent damage to adjacent structures and components. Also, occasionally trees must be removed due to damage, disease, or if theyoutsize their location. The budget increases in later years to address maturing trees. Refer to Photo #9 and Maintenance Protocol 7.3.

We understand that the community has an extensive landscape sprinkler system with 77 zones and approximately 1,200 sprinkler heads. Since these systemsare usually not replaced in their entirety, we have budgeted an annual allowance throughout the study period to address replacements of sprinkler heads,controls, and piping.

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The 6/12 and 9/12 pitched roofs have asphalt shingles coverings. Ventilation is achieved through soffit vents, ridge vents, and gable vents. Valleys are close-cutstyle. We observed some damaged shingles and limited deflection of the roof sheathing. Pre-finished 4 ' aluminum gutters and downspouts are installed at allproper roof terminations. There are a number of roof penetrations for plumbing and mechanical stacks. Downspouts generally appear to be properly directedaway from building foundations with flex tubing and splash blocks. Re-roofing projects include replacement of shingles, deteriorated sheathing, flashings, roofpenetration flashings, and gutters and downspouts. We are not able to visually determine the hidden construction details or general workmanship of the roofing system. In order to make a more accurate projectionof service lives, and for peace of mind, the Board should consider having a roofing invasive sampling evaluation performed by a professional engineer. Drainagecalculations for gutters and downspouts should also be included. The cost would be approximately $5,000 and could be accomplished prior to finaling thereserve fund plan in case an adjustment in cost or replacement timing would be necessary. Any warranty issues could also be resolved. The cost of theengineering is not included in the reserve fund plan. Refer to Photos #10, #11, and #12 and Maintenance Protocol 7.4.The buildings are clad with vinyl siding, vinyl trim at windows, doors, corners, and rake boards, and vinyl perforated soffits at roof overhangs and on coveredporch ceilings. All vinyl appears to be in generally good condition. Manufacturers represent that this material should provide a 35-year service life, but ourobservations indicate that this may be optimistic. Little maintenance, other than occasional cleaning, should be necessary throughout the useful service life.Refer to Photos #13, #14, #15 and #16.

Mortared brick and dry-look faux stone veneers (approximately 14,400 sf) are installed at portions of the front elevations of the buildings. The veneer appears tobe well executed and in good condition. Veneer is a long-life component and should not require total replacement, but will require tuckpointing and repairsthroughout its service life. We have budgeted an allowance to accumulate throughout the study period to address these projects based on repair ofapproximately 2% of the total each cycle at $25 per square foot. Refer to Photos #17 and #18 and Maintenance Protocol 7.5.

Large and small molded plastic, pre-finished shutters are installed at many windows on the front elevations. There are 199 pairs of large and 199 pairs of smallshutters. They should provide a long useful service life and may be re-painted periodically to maintain appearance. Replacement timing coincides with the vinylsiding replacement. Refer to Photo #17

We observed that discharge from many downspouts is directed underground and under leadwalks leading to pop-up valves, which release the water into theyards. We observed at least one location where this system is causing an erosion washout. These systems will require repair and replacement over time. Wehave budgeted an allowance throughout the study period to address repairs and remediation to the systems as necessary. Refer to Photo #8, #19, #20, and #21.

The plumbing within the units is the responsibility of the unit owner, and the plumbing from the main supply lines to the meter is the responsibility of themunicipal utility. This allowance is for the plumbing lines between the meter and the units. Premature failures and problems may be handled from thisaccumulating fund. The replacement project is scheduled for a single year, but in actuality replacement would probably be scheduled over a number of years.The cost is based on recent replacement projects by our clients from whom we have information.The sanitary piping within the units is the responsibility of the unit owner, but the piping from the unit to the sewer main is the responsibility of the condominium.Premature failures and problems may be handled from this accumulating fund. The replacement project is scheduled for a single year, but in actualityreplacement would probably be scheduled over a number of years. The cost is based on recent replacement projects by our clients from whom we haveinformation.

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The residential units are protected by a full, wet-pipe sprinkler system. Piping for the system is located in the attic of each unit. These are long-life systems andgenerally require only minor repairs and replacements. As the systems age, some heads and piping can be expected to fail. These systems are not usuallyreplaced in their entirety. We have scheduled an allowance to address repairs and replacements of sprinkler heads, controls, valves, and piping as necessary.Calculating a budget for this is made more difficult by the interplay of both private residence insurance and condominium insurance, which may both be a part ofany repair depending on the cause and extent of water damage. We understand that back flow valves are inspected annually, which should help cut down onfailures.

CALENDAR OF EXPENDITURES TABLE 2 EXPLANATION

This table is a yearly plan of action of replacements and costs. A description of the columns in the table follows: Column 1 Column 2

Year is the year of the projected replacement and expenditure. Component No. itemizes the components and is consistent throughout the tables.

Column 3

Component is a brief description of the component.

Column 4 Column 5

Present Cost is the cost for the cycle in today’s dollars. Future Cost (Inflated) is the cost for the cycle in future dollars.

Column 6

Total Annual Expenditures gives the total expenditures by year.

Column 7

Action is an area provided for the Board to make notations as to action taken on each component.

.

YEAR COMPONENT NO. COMPONENTPRESENT COST

2007FUTURE COST

(INFLATED)1 2 3 4 5

2007

2008

20091.9 Landscape Sprinkler System Allowance $5,000 $5,362

20101.6 Surface Erosion & Drainage Allowance $12,000 $13,3261.9 Landscape Sprinkler System Allowance $5,000 $5,5533.1 Downspout & Underground Drain Allowance $3,000 $3,332

20111.7 Villa Unit Landscaping Allowance $39,800 $45,7721.8 Common Area Tree Replacement Allowance $5,000 $5,7501.9 Landscape Sprinkler System Allowance $5,000 $5,750

20121.1 Concrete Leadwalks $8,477 $10,0951.2 Concrete Driveways & Garage Thresholds $16,282 $19,3911.9 Landscape Sprinkler System Allowance $5,000 $5,955

20131.9 Landscape Sprinkler System Allowance $5,000 $6,1673.1 Downspout & Underground Drain Allowance $3,000 $3,7003.4 Fire Sprinkler System Allowance $10,000 $12,333

20141.9 Landscape Sprinkler System Allowance $5,000 $6,386

20151.6 Surface Erosion & Drainage Allowance $12,000 $15,8711.9 Landscape Sprinkler System Allowance $5,000 $6,613

20161.7 Villa Unit Landscaping Allowance $39,800 $54,5111.8 Common Area Tree Replacement Allowance $12,500 $17,1201.9 Landscape Sprinkler System Allowance $5,000 $6,8482.3 Masonry Repair Allowance $7,500 $10,2723.1 Downspout & Underground Drain Allowance $3,000 $4,109



CALENDAR OF EXPTABLE 2

2007 Through 2


2007FUTURE COST

(INFLATED)1 2 3 4 5




2007 Through 2

20171.1 Concrete Leadwalks $8,477 $12,0231.2 Concrete Driveways & Garage Thresholds $16,282 $23,0941.3 Concrete Rear Stoops $738 $1,0471.9 Landscape Sprinkler System Allowance $5,000 $7,092

20181.9 Landscape Sprinkler System Allowance $5,000 $7,3443.4 Fire Sprinkler System Allowance $10,000 $14,688


2007FUTURE COST

(INFLATED)1 2 3 4 5




2007 Through 2

20191.9 Landscape Sprinkler System Allowance $5,000 $7,6053.1 Downspout & Underground Drain Allowance $3,000 $4,563

20201.6 Surface Erosion & Drainage Allowance $12,000 $18,9021.9 Landscape Sprinkler System Allowance $5,000 $7,876

20211.7 Villa Unit Landscaping Allowance $39,800 $64,9201.8 Common Area Tree Replacement Allowance $18,750 $30,5841.9 Landscape Sprinkler System Allowance $5,000 $8,156

20221.1 Concrete Leadwalks $8,477 $14,3191.2 Concrete Driveways & Garage Thresholds $16,282 $27,5031.3 Concrete Rear Stoops $738 $1,2471.9 Landscape Sprinkler System Allowance $5,000 $8,4463.1 Downspout & Underground Drain Allowance $3,000 $5,068

20231.9 Landscape Sprinkler System Allowance $5,000 $8,7463.4 Fire Sprinkler System Allowance $10,000 $17,492

20241.9 Landscape Sprinkler System Allowance $5,000 $9,0572.1 Re-Roofing Project $1,407,250 $2,549,179

20251.6 Surface Erosion & Drainage Allowance $12,000 $22,5111.9 Landscape Sprinkler System Allowance $5,000 $9,3793.1 Downspout & Underground Drain Allowance $3,000 $5,628

20261.7 Villa Unit Landscaping Allowance $39,800 $77,3161.8 Common Area Tree Replacement Allowance $25,000 $48,5651.9 Landscape Sprinkler System Allowance $5,000 $9,7132.3 Masonry Repair Allowance $7,500 $14,570

TOTAL ANNUAL EXPENDITURES ACTION

6 7

2007NO EXPENDITURES

2008NO EXPENDITURES

2009TOTAL EXPENDITURES

$5,3622010

TOTAL EXPENDITURES

$22,2112011

TOTAL EXPENDITURES

$57,2722012

TOTAL EXPENDITURES

$35,4412013

TOTAL EXPENDITURES

$22,1992014

TOTAL EXPENDITURES$6,386


$22,4842016

TOTAL EXPENDITURES

$92,861

PENDITURES 2

2026


6 7

PENDITURES 2

2026


$43,2562018

TOTAL EXPENDITURES

$22,032


6 7

PENDITURES 2

2026


$12,1682020

TOTAL EXPENDITURES

$26,7772021

TOTAL EXPENDITURES

$103,6602022

TOTAL EXPENDITURES

$56,5822023

TOTAL EXPENDITURES

$26,2392024

TOTAL EXPENDITURES

$2,558,2362025

TOTAL EXPENDITURES

$37,5182026

TOTAL EXPENDITURES

$150,164

CURRENT FUNDING ANALYSIS CASH FLOW METHOD TABLE 3.0 EXPLANATION

and, if applicable,

ALTERNATIVE FUNDING ANALYSIS CASH FLOW METHOD TABLE 3.1, 3.2, 3,3 (etc.) EXPLANATION

Table 3.0 shows the financial picture over the twenty-year study period, using the current annual contribution and the reserve fund balance reported at the beginning of the study year. If the results of the study indicate a need to increase the annual contribution to maintain adequate balances throughout the study period, Table 3.1, and possibly, 3.2 will be provided for consideration. Alternatives might also be provided if a community is over-funded and desires to adjust the annual contribution downward. Alternative funding may be achieved by increasing the annual contribution to a fixed yearly amount or by applying an annual escalation factor to increase contributions over time, or a combination of both methods. An inflation factor and interest income factor may be included in the calculations on this page. A description of the columns in the table follows: Column 1 Year Column 2

Total Asset Base of all common capital assets included in the reserve fund with costs adjusted for inflation.

Column 3

Beginning Reserve Fund Balance is the reserve fund balance after all activity in the prior year is completed.

Column 4

Annual Contribution, on Table 3, is the amount contributed annually to the reserve fund as reported by the Board of Directors. On the Alternative Funding Analysis tables (3.1, 3.2, etc.), the annual contribution is projected to maintain positive balances throughout the study period.

Column 5

Interest Income, which is indicated in the heading of the table, is applied to the reserve fund balance and is accrued monthly throughout each year after the yearly expenditures are deducted. The interest income percentage may be varied to reflect actual experience of the community investments.

Column 6

Capital Expenditures are annual totals of expenditures for each year of the study period adjusted by the inflation percentage listed in the heading of the table.

Column 7

Ending Reserve Fund Balance is the result of the beginning reserve fund balance plus the annual contribution, plus interest income, less capital expenditures for the year.

Column 8

Balance to Asset Base Ratio, expressed as a percentage, is the ratio between the ending reserve fund balance and the total asset base for that year. The ratio is useful to the analysts in understanding general financial condition, but there is no standard ratio as each community’s condition and complexity varies.

Beginning Reserve Fund Balance: Annual Contribution To Reserves: Contribution Percentage Increase: Annual Inflation Factor: Annual Interest Income Factor:

$127,480 $85,780 0.00% 3.50% 4.00%

YEARTOTAL ASSET

BASEBEGINNING RESERVE

FUND BALANCEANNUAL

CONTRIBUTION INTEREST INCOMECAPITAL

EXPENDITURESENDING RESERVE FUND BALANCE

BALANCE TO ASSET BASE RATIO

1 2 3 4 5 6 7 8

2007 $5,271,708 $127,480 $85,780 $8,957 $0 $222,217 4%2008 $5,456,217 $222,217 $85,780 $10,935 $0 $318,932 6%2009 $5,647,185 $318,932 $85,780 $14,758 $5,362 $414,108 7%2010 $5,844,836 $414,108 $85,780 $18,269 $22,211 $495,946 8%2011 $6,049,406 $495,946 $85,780 $20,839 $57,272 $545,292 9%2012 $6,261,135 $545,292 $85,780 $23,325 $35,441 $618,956 10%2013 $6,480,275 $618,956 $85,780 $26,615 $22,199 $709,151 11%2014 $6,707,084 $709,151 $85,780 $30,634 $6,386 $819,180 12%2015 $6,941,832 $819,180 $85,780 $34,766 $22,484 $917,242 13%2016 $7,184,796 $917,242 $85,780 $37,227 $92,861 $947,388 13%2017 $7,436,264 $947,388 $85,780 $39,537 $43,256 $1,029,449 14%2018 $7,696,533 $1,029,449 $85,780 $43,343 $22,032 $1,136,540 15%2019 $7,965,912 $1,136,540 $85,780 $47,921 $12,168 $1,258,072 16%2020 $8,244,719 $1,258,072 $85,780 $52,554 $26,777 $1,369,628 17%2021 $8,533,284 $1,369,628 $85,780 $55,423 $103,660 $1,407,171 16%2022 $8,831,949 $1,407,171 $85,780 $57,978 $56,582 $1,494,347 17%2023 $9,141,067 $1,494,347 $85,780 $62,192 $26,239 $1,616,080 18%2024 $9,461,005 $1,616,080 $85,780 $0 $2,558,236 -$856,377 -9%2025 $9,792,140 -$856,377 $85,780 $0 $37,518 -$808,114 -8%2026 $10,134,865 -$808,114 $85,780 $0 $150,164 -$872,498 -9%

$1,715,600 $585,270 $3,300,848STUDY PERIOD TOTALS



CURRENT FUNDING ANALYSISCASH FLOW METHOD

TABLE 3

Beginning Reserve Fund Balance: Annual Contribution To Reserves: Contribution Percentage Increase: Annual Inflation Factor: Annual Interest Income Factor:

$127,480 $85,780 3.50% 3.50% 4.00%

YEARTOTAL ASSET

BASEBEGINNING RESERVE

FUND BALANCEANNUAL

CONTRIBUTION INTEREST INCOMECAPITAL

EXPENDITURESENDING RESERVE FUND BALANCE

BALANCE TO ASSET BASE RATIO

1 2 3 4 5 6 7 8

2007 $5,271,708 $127,480 $85,780 $8,957 $0 $222,217 4%2008 $5,456,217 $222,217 $175,960 $12,913 $0 $411,090 8%2009 $5,647,185 $411,090 $182,119 $20,626 $5,362 $608,472 11%2010 $5,844,836 $608,472 $188,493 $28,440 $22,211 $803,195 14%2011 $6,049,406 $803,195 $195,090 $35,754 $57,272 $976,767 16%2012 $6,261,135 $976,767 $201,918 $43,451 $35,441 $1,186,695 19%2013 $6,480,275 $1,186,695 $208,985 $52,448 $22,199 $1,425,929 22%2014 $6,707,084 $1,425,929 $216,300 $62,700 $6,386 $1,698,542 25%2015 $6,941,832 $1,698,542 $223,870 $73,621 $22,484 $1,973,550 28%2016 $7,184,796 $1,973,550 $231,706 $83,463 $92,861 $2,195,858 31%2017 $7,436,264 $2,195,858 $239,816 $93,780 $43,256 $2,486,198 33%2018 $7,696,533 $2,486,198 $248,209 $106,255 $22,032 $2,818,631 37%2019 $7,965,912 $2,818,631 $256,896 $120,205 $12,168 $3,183,564 40%2020 $8,244,719 $3,183,564 $265,888 $134,951 $26,777 $3,557,626 43%2021 $8,533,284 $3,557,626 $275,194 $148,720 $103,660 $3,877,879 45%2022 $8,831,949 $3,877,879 $284,826 $163,005 $56,582 $4,269,127 48%2023 $9,141,067 $4,269,127 $294,795 $179,825 $26,239 $4,717,508 52%2024 $9,461,005 $4,717,508 $305,112 $143,124 $2,558,236 $2,607,508 28%2025 $9,792,140 $2,607,508 $315,791 $112,343 $37,518 $2,998,124 31%2026 $10,134,865 $2,998,124 $326,844 $126,044 $150,164 $3,300,848 33%

$4,723,592 $1,750,624 $3,300,848STUDY PERIOD TOTALS



ALTERNATIVE FUNDING ANALYSISCASH FLOW METHOD

TABLE 3.1

FUNDING ANALYSIS COMPONENT METHOD TABLE 4 EXPLANATION

Table 4 is a yearly list of annual contributions toward each component, which must be made to achieve 100% funding. The reserve fund balance is the balance at the beginning of the study year. The beginning reserve fund balance is applied, proportionately, to each component prior to calculating the yearly contribution for each component. Future costs (inflation) are factored into the replacement cycles. The annual contribution for each year is calculated in the bottom row of the study labeled Annual Component Contribution Totals. Interest and inflation are calculated at the same annual rates as the Cash Flow Method (Table 3). Column 1 Component Number is consistent throughout the tables.

Column 2 Component is a brief description of the component.

Columns 3 - 22 Years lists the annual contribution amount toward each component

throughout the twenty-year study period, which is totaled at the bottom of the component table.

COMPONENT METHOD SUMMARY

The component method summary computes the beginning reserve fund balance, the annual component contribution, the annual expenditures, and interest income. It then provides the ending reserve fund balance for each year of the study.

Component

Number COMPONENT 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1.1 Concrete Leadwalks $1,487 $1,487 $1,487 $1,487 $1,487 $1,487 $2,169 $2,169 $2,169 $2,169 $2,169

1.2 Concrete Driveways & Garage Thresholds $2,855 $2,855 $2,855 $2,855 $2,855 $2,855 $4,166 $4,166 $4,166 $4,166 $4,166

1.3 Concrete Rear Stoops $76 $76 $76 $76 $76 $76 $76 $76 $76 $76 $76

1.4 Concrete Retaining Walls $16,905 $16,905 $16,905 $16,905 $16,905 $16,905 $16,905 $16,905 $16,905 $16,905 $16,905

1.5 Metal Railings $5,762 $5,762 $5,762 $5,762 $5,762 $5,762 $5,762 $5,762 $5,762 $5,762 $5,762

1.6 Surface Erosion & Drainage Allowance $2,359 $2,359 $2,359 $2,359 $2,863 $2,863 $2,863 $2,863 $2,863 $3,410 $3,410

1.7 Villa Unit Landscaping Allowance $8,257 $8,257 $8,257 $8,257 $8,257 $9,834 $9,834 $9,834 $9,834 $9,834 $11,711

1.8 Common Area Tree Replacement Allowance $1,037 $1,037 $1,037 $1,037 $1,037 $3,088 $3,088 $3,088 $3,088 $3,088 $5,517

1.9 Landscape Sprinkler System Allowance $1,680 $1,680 $1,680 $5,434 $5,627 $5,827 $6,034 $6,249 $6,471 $6,701 $6,940

2.1 Re-Roofing Project $92,509 $92,509 $92,509 $92,509 $92,509 $92,509 $92,509 $92,509 $92,509 $92,509 $92,509

2.2 Vinyl Siding & Trim Restoration $54,432 $54,432 $54,432 $54,432 $54,432 $54,432 $54,432 $54,432 $54,432 $54,432 $54,432

2.3 Masonry Repair Allowance $779 $779 $779 $779 $779 $779 $779 $779 $779 $779 $1,183

2.4 Shutters $2,024 $2,024 $2,024 $2,024 $2,024 $2,024 $2,024 $2,024 $2,024 $2,024 $2,024

3.1 Downspout & Underground Drain Allowance $767 $767 $767 $767 $1,159 $1,159 $1,159 $1,287 $1,287 $1,287 $1,429

3.2 Domestic Water Supply Laterals $11,971 $11,971 $11,971 $11,971 $11,971 $11,971 $11,971 $11,971 $11,971 $11,971 $11,971

3.3 Sanitary Laterals $8,424 $8,424 $8,424 $8,424 $8,424 $8,424 $8,424 $8,424 $8,424 $8,424 $8,424

3.4 Fire Sprinkler System Allowance $1,525 $1,525 $1,525 $1,525 $1,525 $1,525 $1,525 $2,650 $2,650 $2,650 $2,650$212,848 $212,848 $212,848 $216,602 $217,691 $221,519 $223,719 $225,187 $225,409 $226,186 $231,277

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$127,480 $350,190 $581,974 $817,722 $1,049,695 $1,256,407 $1,497,758 $1,764,722 $2,060,221 $2,351,537 $2,583,604$212,848 $212,848 $212,848 $216,602 $217,691 $221,519 $223,719 $225,187 $225,409 $226,186 $231,277

$0 $0 $5,362 $22,211 $57,272 $35,441 $22,199 $6,386 $22,484 $92,861 $43,256$340,328 $563,038 $789,460 $1,012,113 $1,210,114 $1,442,484 $1,699,278 $1,983,524 $2,263,146 $2,484,862 $2,771,626

$9,862 $18,936 $28,262 $37,582 $46,293 $55,274 $65,444 $76,697 $88,391 $98,742 $109,390$350,190 $581,974 $817,722 $1,049,695 $1,256,407 $1,497,758 $1,764,722 $2,060,221 $2,351,537 $2,583,604 $2,881,016

$4,755,396

ENDING RESERVE FUND BALANCE

SUBTOTAL

ANNUAL COMPONENT CONTRIBUTION TOTALS

PLUS INTEREST INCOME @ 4.00%

COMPONENT METHOD SUMMARY

CAPITAL EXPENDITURES

BEGINNING RESERVE FUND BALANCE

PLUS ANNUAL COMPONENT CONTRIBUTION



Beginning Reserve Fund Balance:

$127,480

FUNDING ANALYSISCOMPONENT METHOD

TABLE 4

STUDY PERIOD INTEREST TOTAL

STUDY PERIOD TOTAL CONTRIBUTIONS

2018 2019 2020 2021 2022 2023 2024 2025 2026

$2,583 $2,583 $2,583 $2,583 $2,583 $3,076 $3,076 $3,076 $3,076

$4,962 $4,962 $4,962 $4,962 $4,962 $5,909 $5,909 $5,909 $5,909

$225 $225 $225 $225 $225 $268 $268 $268 $268

$16,905 $16,905 $16,905 $16,905 $16,905 $16,905 $16,905 $16,905 $16,905

$5,762 $5,762 $5,762 $5,762 $5,762 $5,762 $5,762 $5,762 $5,762

$3,410 $3,410 $3,410 $4,061 $4,061 $4,061 $4,061 $4,061 $4,836

$11,711 $11,711 $11,711 $11,711 $13,948 $13,948 $13,948 $13,948 $13,948

$5,517 $5,517 $5,517 $5,517 $8,761 $8,761 $8,761 $8,761 $8,761

$7,186 $7,442 $7,707 $7,981 $8,265 $8,559 $8,863 $9,178 $9,505

$92,509 $92,509 $92,509 $92,509 $92,509 $92,509 $92,509 $181,225 $181,225

$54,432 $54,432 $54,432 $54,432 $54,432 $54,432 $54,432 $54,432 $54,432

$1,183 $1,183 $1,183 $1,183 $1,183 $1,183 $1,183 $1,183 $1,183

$2,024 $2,024 $2,024 $2,024 $2,024 $2,024 $2,024 $2,024 $2,024

$1,429 $1,429 $1,587 $1,587 $1,587 $1,763 $1,763 $1,763 $1,958

$11,971 $11,971 $11,971 $11,971 $11,971 $11,971 $11,971 $11,971 $11,971

$8,424 $8,424 $8,424 $8,424 $8,424 $8,424 $8,424 $8,424 $8,424

$2,650 $3,156 $3,156 $3,156 $3,156 $3,156 $3,758 $3,758 $3,758$232,883 $233,645 $234,067 $234,993 $240,756 $242,709 $243,616 $332,647 $333,944

2018 2019 2020 2021 2022 2023 2024 2025 2026

$2,881,016 $3,213,872 $3,571,146 $3,928,481 $4,222,760 $4,583,023 $4,990,965 $2,829,261 $3,246,137$232,883 $233,645 $234,067 $234,993 $240,756 $242,709 $243,616 $332,647 $333,944

$22,032 $12,168 $26,777 $103,660 $56,582 $26,239 $2,558,236 $37,518 $150,164$3,091,867 $3,435,349 $3,778,436 $4,059,813 $4,406,934 $4,799,494 $2,676,345 $3,124,391 $3,429,918

$122,005 $135,798 $150,044 $162,947 $176,089 $191,471 $152,916 $121,747 $136,304$3,213,872 $3,571,146 $3,928,481 $4,222,760 $4,583,023 $4,990,965 $2,829,261 $3,246,137 $3,566,222

$1,984,194 $237,770 $3,300,848TOTAL EXPENDITURES

AVERAGE ANNUAL CONTRIBUTION

PHOTOGRAPHSWITH

DESCRIPTIVE NARRATIVES

Mason & MasonCapital Reserve Analysts, Inc.

PHOTO #1 Hairline cracking in concrete leadwalks such as this should be covered under warranty. Under the reserves, it normally would not be replaced until it became differentially settled or open

PHOTO #2 Settlement cracking in concrete driveways such as this should be covered under warranty. Under the reserves, it normally would be replaced, as it will continue to deteriorate rapidly with traffic loading

PHOTO #3 One of several major cracks in a single retaining wall at 70 Legend Drive. The settlement and resulting cracking should be investigated and the wall should be replaced under warranty

PHOTO #4 A different crack in the same wall at 70 Legend Drive. This wall is in poor condition

PHOTO #5 Detail of a railing base deficiency. This condition usually resulting from freeze/thaw activity will always be present if concrete is not properly sealed at the base of the railing post. This condition is not pervasive

PHOTO #6 Drainage swale holding water. The swale may require improvements if it continues to stay wet. This condition is not pervasive, but this type of work would be covered under Surface Erosion and Drainage Allowance

PHOTO #7 Undermining of supporting soils at a leadwalk requiring repair to support the slab. This condition is not pervasive, but this type of work would be covered by Surface Erosion and Drainage Allowance

PHOTO #8 Drainage at this downspout outlet is poor and may require additional work to ensure proper flow. This condition is not pervasive, but this type of work would be covered under Surface Erosion and Drainage Allowance

PHOTO #9 Overview of typical common tree plantings along property lines. Replacement of trees and plantings would be covered under Common Area Tree Allowance and Villa Unit Landscaping Allowance

PHOTO #12 These valleys are close-cut style and typical throughout the building roofs

PHOTO #11 Pre installation damaged shingles (red arrow) and deflected shingle (blue arrow) should be replaced under warranty

PHOTO #10 Attic ventilation is achieved through gable vents, perforated soffits, and roof ridge vents, which are usually adequate for our climate

PHOTO #13 Large gables covered with vinyl siding are attractive and maintenance free, but vulnerable to high winds

PHOTO #14 Vinyl entablature trim over a door opening, typical of all trim throughout the buildings. This product is considered maintenance free, although soft sealants and painting may be necessary to maintain appearance as it ages. It should provide the same life as the vinyl siding

PHOTO #15 Detail of vinyl soffits, vinyl corner boards, and roof gutters, all appearing to be in good condition. The gutters may not carry the volume of water that is presented in a heavy rain due to the relative small size in comparison to the large roof fields. Calculations can be made to check for adequacy as part of a roof evaluation

PHOTO #16 Transition between two building materials; vinyl siding, and masonry. The flashing here appears to be properly executed to provide a watertight seal

PHOTO #17 Brick veneer on front building elevations appears to be in good condition with no deficiencies observed. Wall flashings in the cavity above the window cannot be observed and may result in leaks if it has been omitted

PHOTO #18 Faux stone veneer on front building elevations also appears to be in good condition with no deficiencies observed.

PHOTO #21 Downspout discharge into a splash block, which works when the surface contouring is correct for drainage. Future improvements would be covered under Surface Erosion and Drainage Allowance

PHOTO #20 Flex drainpipe providing an underground conduit for condensate discharge, which alleviates a drainage problem in some locations. Future repairs would be covered under Downspout and Underground Drain Allowance

PHOTO #19 Flex drainpipe providing an underground conduit for downspout discharge, which alleviates a drainage problem in some locations. Future repairs would be covered under Downspout and Underground Drain Allowance

Mason & Mason - Falls Run Community Association...

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