CAPTIvA SANDSeagleslandingcaptiva.com/docs/reserve_study.pdf · Section A REPLACEMENT RESERVE...

REPLACEMENT REsERvE REPORT FY2O1O

CAPTIvA SANDS

Consultant:

millerdodsonI929 West Street, Suite 310

Annapolis, MD 21401Tel 4102680479Fax 4102688483

www mdareserves corn

Ms. Pam Conti

50 Cascade LaneRehoboth Beach, Delaware

302.227.8448

Section A

REPLACEMENT RESERVE REPORT

CAPTIvA SANDS

Rehoboth Beach, Delaware

Scope. Captiva Sands is a condominium association located inRehoboth Beach, Delaware. Captiva Sands was constructed from 2000to 2001. The community consists of two townhouse buildings and threecondominium buildings with a total of 86 units. The survey examined thecommon elements of the property, including:

Asphalt drive and parking.• Concrete sidewalks, ramps. and curb & gutter.• Decks and railings.a Unit entry doors only other doors and windows by owner).

Building extenors including roofs gutters and sidinga Common building systems including central deck, stairs lighting

fire safety systems.a Storm water management system

The pool and pool house are not part of this study.Section E

Attachments

Suopiemental PhotoaraphsAppendix

Replacement Reserve Analysis

Executive Summary - AlReserve Status & Funding Plan - Al

General Information - A2Cash Flow Method - A4

Component Method - AGCurrent Association Funding - A8Reserve Analysis Comments - A9

Section B

Replacement Reserve Inventory

Replacement Reserve InventoryGeneral information - BI

Replacement Reserve InventoryComments.’ B2

Schedule of Projected Replacementsand Exclusions B3

Section C

Projected Annual Replacements

Projected Annual ReplacementsGeneral Information - Ci

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

Calendar ofProjected Annual Replacements.’ C2

Section 0

Condition Assessment

Level of Service. This study has been performed as a Level II Update, With Site Visit/On-Site Reviewas defined under the National Reserve Study Standards that have been adopted by the CommunityAssociations Institute. As such, the component inventory is based on the study that was performed byMiller - Dodson Associates in January 2004. This information was adjusted to reflect changes to theinventory that were provided by the community manager, and the quantities were adjusted accordinglyfrom field measurement and/or quantity takeoffs from to-scale drawings. The condition of all commonly-owned components was ascertained from a site visit and the visual inspection of each component by theAnalyst. The life expectancy and the value of components are provided based in part on theseobservations. The fund status and funding plan have been derived from analysis of this data.

Purpose. The purpose of this Replacement Reserve Study is to provide Captiva Sands (hereinaftercalled the Association) with an inventory of the common community facilities and infrastructurecomponents that require periodic replacement. The Study includes a general view of the condition ofthese items and an effective financial plan to fund projected periodic replacements.

• Inventory of Items Owned by the Association. Section B Replacement Reserve Inventory lists theProjected Replacements of the commonly owned items that require periodic replacement usingfunding from Replacement Reserves. The Replacement Reserve Inventory also provides informationabout excluded items, which are items whose replacements are not scheduled for funding fromReplacement Reserves.

• Condition of Items Owned by the Association. Section B Replacement Reserve Inventoryincludes our estimates of the normal economic life and the remaining economic life for the projectedreplacements. Section C Calendar of Projected Annual Replacements provides a year-by-year listingof the projected replacements. Section D Condition Assessment provides additional detail for itemsthat are unique or deserving of attention because of their condition or the manner in which they havebeen treated in this Study.

• Financial Plan. The Association has a fiduciary responsibility to protect the appearance, value, andsafety of the property and it is therefore essential the Association have a financial plan that providesfunding for the projected replacements. In conformance with American Institute of Certified PublicAccountant guidelines, Section A Replacement Reserve Analysis evaluates the current funding ofReplacement Reserves as reported by the Association and recommends annual funding ofReplacement Reserves by two generally accepted accounting methods; the Cash Flow Method andthe Component Method. Section A Replacement Reserve Analysis includes graphic and tabularpresentations of these methods and current Association funding. An Executive Summary of thesecalculations is provided on Page Al.

Basis. The data contained in this Replacement Reserve Study is based upon the following:

• The Request for Proposal submitted and executed by the Association.

• Our visual evaluation and measurements on August 20. 2009. Miller - Dodson Associates hasvisually inspected the common elements of the property in order to ascertain the remaining useful lifeand the replacement costs of these cornponents

Engineering Drawings. No architectural drawings or engineering site plans were available for review inconnection with this study. We recommend the Association assemble a library of site and building plansof the entire community. Reproducible drawings should be stored and kept in a secure fireproof location.The Association will find these drawings to be a valuable resource in planning and executing futureprojects.

Acknowledgement. Miller - Dodson Associates would like to acknowledge the assistance and input ofPam Conti who provided very helpful insight into the current operations at the property.

Analyst’s Credentials. Mr. Gregory S. Gilbert holds a Bachelors Degree in Architecture from theGeorgia Institute of Technology and a Master of Architecture from the University of Oklahoma. Mr. Gilbertis a licensed Architect. Mr. Gilberts experience includes the design of residential homes, fire stations,and most recently educational projects. He has also done over twenty feasibility studies for the U. S.Navy, Boards of Education and retail developers. All of these feasibility studies included performingexisting condition surveys to look for maintenance issues, code violations and general conditions of thestructure to determine if and how the buildings can be renovated or modified. He is currently a ReserveAnalyst for Miller - Dodson Associates.

Respectfully submitted,MILLER - DODSON ASSOCIATES, INC.

Gregory GilbertReserve Analyst

Miller + Dodson Associates,_Inc.

____

Replacement Reserve Analysis - Page AlCaptiva Sands at Eagles Landing Revised November 10, 2009

IO321O5CAPTIVAIO

EXECUTIVE SUMMARYThe Captiva Sands at Eagles Landing Replacement Reserve Inventory identifies 60 Projected Replacements forfunding from Replacement Reserves, with an estimated one-time replacement cost of $2,166,353.

The Replacement Reserve Analysis calculates recommended funding of Replacement Reserves by the two generallyaccepted methods, the Cash Flow Method and the Component Method. The Analysis also evaluates current fundingof Replacement Reserves, as reported by the Association. The calculations and evaluation are summarized below:

72 898CASH FLOW METHOD MINIMUM ANNUAL FUNDING OF REPLACEMENT RESERVES IN

$‘ THE STUDY YEAR, 2010.

$70.64 Per unit (average), minimum monthly funding of Replacement Reserves

The Cash Flow Method (CFM) calculates Minimum Annual Funding of Replacement Reserves that will fundProjected Replacements identified in the Replacement Reserve Inventory from a common pool of ReplacementReserves and prevent Replacement Reserves from dropping below a Minimum Recommended Balance.

CFM - Minimum Annual Funding remains the same between peaks in cumulative expenditures called Peak Years.

The first Peak Year occurs in 2043 which is outside of the 30-year Study Period. The Cash FlowMethod - Minimum Annual Funding of Replacement Reserves remains constant at $72,898 throughout theentire 30-year Study Period.

104 583COMPONENT METHOD RECOMMENDED ANNUAL FUNDING OF REPLACEMENT

$‘ RESERVES IN THE STUDY YEAR, 2010.

$101.34 Per unit (average), recommended monthly funding of Replacement Reserves

The Component Method is a time tested and very conservative funding model developed by HUD in the early 1980’s.

The Component Method treats each projected replacement in the Replacement Reserve Inventory as a separateaccount. Deposits are made to each individual account, where funds are held for exclusive use by that item.

Based on this funding model, the Association has a Current Funding Objective of $488,204.

The Association reports having $192,786 on deposit, which is 39.5% funded.

25000CURRENT ANNUAL FUNDING OF REPLACEMENT RESERVES

$‘ (as reported by the Association).

$24.22 Per unit (average), reported current monthly funding of Replacement Reserves

The evaluation of Current Funding, as reported by the Association, has calculated that if the Associationcontinues to fund Replacement Reserves at the current level, there will NOT be adequate funds for ProjectedReplacements in 18 years of the 30-year Study Period, and a maximum shortfall of S-682,959 occurs in 2033.

Pages A2 and A3 explain the Study Year, Study Period. Ad1ustments (interest & inflation). Beginning Balance and Projected Replacements Pages A4 to A9— explain in more detail the calculations associated with the Cash Flow Method. Component Method, and current Funding

REPLACEMENT RESERVE STATUS AND FUNDING PLAN

Current fundtng of Replacement Reserves is inadequate to fund Projected Replacements

We recommend the Association adopt a Replacement Reserve Funding Plan based on the Cash Flow Method or theComponent Method, to ensure that adequate funding is available throughout the 30-Year Study Period for theSi 553,949 of Projected Replacements listed in the Captiva Sands at Eagles Landing Replacement Reserve Inventory.

The Funding Plan should be professionally evaluated every three to five years or after completion of each majorreplacement project. The Board of Directors has a fiduciary responsibility to review the Funding Plan annually andshould consider annual increases in Replacement Reserve funding at least equal to the Consumer Price Index.

PLEASE NOTE: For inventory items with a Remaining Economic Life greater than 40 years. the replacementprojections fall outside this study’s limits and are not included in the annual calculations However, tracking theseitems over time wili bring them within the 40 year window and they will be included in the future.

Miller + Dodson Associates, Inc. Replacement Reserve Analysis- Page A2

Captiva Sands at Eagles Landing Revised November 10, 2009IO32IO5CAPTnJAIO

REPLACEMENT RESERVE ANALYSIS - GENERAL INFORMATION

The Captiva Sands at Eagles Landing Replacement Reserve Analysis calculations of recommended funding ofReplacement Reserves by the Cash Flow Method and the Component Method, and the evaluation of the CurrentFunding, are based upon the same General Information; including the Study Year, Study Period, Adjustments (forinterest, inflation, and/or a constant increase in annual funding), Beginning Balance, and Projected Replacements:

STUDY YEAR

The Association reports that their accounting year begins on January 1, and the Study Year, the first year evaluatedby the Replacement Reserve Analysis, begins on January 1, 2010.

STUDY PERIOD

The Replacement Reserve Analysis evaluates the funding of Replacement Reserves over a 30-year Study Periodthat begins on January 1, 2010.

ADJUSTMENTSThe calculations in this Replacement Reserve Analysis do not account for interest earned on Replacement Reserves,the effects of inflation on the costs of Projected Replacements, or a constant annual increase in Annual Fundingof Replacement Reserves. If requested, we will provide a Replacement Reserve Analysis with adjustments forinflation, interest, and/or a constant annual increase in funding, using values provided by the Association.

BEGINNING BALANCE

The Association reports Replacement Reserves on Deposit totaling $192,786 at the start of the Study Year.

Graph #1 Annual Expenditures for Projected ReplacementsThis bar graph summarizes annual expenditures for the $1553949 of Projected Replacements identified in the Replacement Reserve Inventory over the30-year Study Period. The red line shows the average annual expenditure of $51,798.

$500000 —

_________________________

*

$400 000

$300 000

f

— S -. S — “ 5’

— *. _J .J i I

a N 3 CO CO CD N CO CO CO N CO04 03 01 04 04 04 04 04 ‘4 01 CO 03 03 CO CO CO CO CO CO COo C) 0 0 0 C) 0 CD 03 0 0 0 0 0 C) 0 0 0 0 C) 0 0 0 0 0 0 0 0 CD 0

03 04 04 04 04 04 04 04 04 01 01 04 04 03 04 03 04 04 04 03 04 04 04 04 04 04 04 04 01 04

Replacement Reserve Analysis - PageA3Revised November 10, 2009

IO321O5CAPTIVAIO

PROJECTED REPLACEMENTSThe Captiva Sands at Eagles Landing Replacement Reserve Inventory (Section B) identifies 60 ProjectedReplacements with a one-time Replacement Cost of $2,166,353 and replacements totaling $1,553,949 over the30-year Study Period. Projected Replacements are the replacement of commonly-owned items that:

require periodic replacement andwhose replacement is to be funded from Replacement Reserves.

The Replacement Reserve Inventory also identifies 29 Excluded Items. Expenditures for the replacement of theseitems are NOT scheduled for funding from Replacement Reserves. The accuracy of the calculations made in theReplacement Reserve Analysis is dependent on expenditures NOT being made for Excluded Items. The rationalebehind these exclusions is discussed in detail on Page Bi,

Expenditures from Replacements Reserves should be made only after consultation with an accounting professional.

The Section B - Replacement Reserve Inventory, contains Tables that list each Projected Replacement (and anyExcluded Items) broken down into 10 major categories (Pages B3 to B12). Tables are also included that list eachProjected Replacement by year for each of the 30 years of the Study Period beginning on Page Cl

The accuracy of this Replacement Reserve Analysis is dependent upon expenditures from Replacement Reservesbeing made only for the Projected Replacements specifically listed in the Replacement Reserve Inventory.

Graph #2. Comparison of Cumulative Replacement Reserve Funding and ExpendituresThe line graph shows Replacement Reserves Cumulative Receipts over the 30-year Study Period by the Cash Flow Method (red circles), Component

Method (purple diamonds), and the Current Funding Plan as reported by the Assodation (blue triangles) The bar graph shows the cumulativeExpenditures necessary to fund the Project Replacements listed in the Replacement Reserve Inventory (Section B) and summarized in Graph #1.

$3,500,000

Miller + Dodson Associates, Inc.Captiva Sands at Eagles Landing

$3,000,000

Cash Flow Method Cums ahve Receipts Projected Replacements - Cumu at SeExpenddures

Component Method - Cumu shoe Rece pts

Current Funding - Cumulat Se Rece pts-A-

$2,500,000

$2,000,000

$3 099 539

$1 500000

$1 000 000

$2 379 724

$500000

A A A

$44 0S

C C C ‘ C 07 (. 03 (C) C—(N N, (NC N (N NI C’ C’ ) ( 5)

C (3 (3 3 Cs Cs C’ C) Cs C) Cs C)(N -S (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N (N

Miller + Dodson Associates, Inc. Replacement Reserve Analysis - Page A4Captiva Sands at Eagles Landing Revised November 10, 2009

10321 O5CAPTIVAI 0

CASH FLOW METHOD

CASH FLOW METHOD MINIMUM ANNUAL FUNDING OF REPLACEMENT RESERVES IN$72,898 THE STUDY YEAR, 2010.

$7064 Per unit (average), minimum monthly funding of Replacement Reserves

General. The Cash Flow Method is founded on the concept that the Replacement Reserve Account is solvent ifcumulative receipts always exceed cumulative expenses. The Cash Flow Method calculates a MINIMUM annualdeposit to Replacement Reserves that will:

Fund all Projected Replacements listed in the Replacement Reserve Inventory (see Section B)Prevent Replacement Reserves from dropping below the Minimum Recommended Balance (see Page A-5)

• Allow a constant annual funding level between peaks in cumulative expenditures

Graph #3 Cash Flow Method Cumulative Receipts and Expenditures Graph

$2,500,000

Cash F ow Method . Cumsiatse Race pts Cash Fow MetFod. Year Erd Ba’aoce Cumuat vs Expeod tuws*

$2,000,000

$1,500,000

$1,000,000

TIN . ‘xt’ s so cv

N N N N CSCS C. C C)

N .4 (N CS (N CS (N N N CS CS tN N (N (N N (N CS (N N

Miller +DodsonAssociates, Inc. Replacement Reserve Analysis - Page A5Captiva Sands at Eagles Landing Revised November 10, 2009

1O321O5CAP1OVAIO

CASH FLOW METHOD (cont’d)

Replacement Reserves - Minimum Recommended Balance. The Minimum Recommended Balance is $108,318,which is 5.0 percent of the one-time replacement cost of the Projected Replacements listed in the ReplacementReserve Inventory. Unless otherwise noted in the Comments on Page A-9, the Minimum RecommendedBalance has been established by the Analyst based upon an evaluation of the types of items included in theReplacement Reserve Inventory.

Peak Years. The Cash Flow Method calculates a constant annual funding of Replacement Reserves betweenpeaks in cumulative expenditures called Peak Years. In Peak Years, Replacement Reserves on Deposit declineto the Replacement Reserves - Minimum Recommended Balance discussed in the paragraph above.

First Peak Year. The first Peak Year occurs in 2043, which is outside of the 30-year Study Period. The Cash FlowMethod - Minimum Annual Funding of Replacement Reserves of $72,898 remains the same throughout theentire 30-year Study Period.

This funding level is adequate to fund the $1,553,949 of Projected Expenditures listed in the Replacement ReserveInventory.

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

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

Adjustment to the Cash Flow Method for interest and inflation. The calculations in this Replacement ReserveAnalysis do not account for interest earned on Replacement Reserves, the effects of inflation of the cost ofProjected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves.

Comparison of Cash Flow Funding and Average Annual Expenditure. The Average Annual Expenditure forProjected Replacements listed in the Reserve Inventory over the 30-year Study Period is $51,798 (see Graph #1).The Cash Flow Method - Minimum Annual Funding of Replacement Reserves in the Study Year is $72,898.This is 140.7 percent of the Average Annual Expenditure, indicating that the Association is building ReplacementReserves in advance of the first Peak Year in 2043.

Table #1. Cash Flow Method Data - Years I through 30Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Startng b&ance 8192 786Annua depast $72898 $72898 $2698 $72898 $72898 $72898 8’2898 82898 $728°8 $72898

Exp 49 lures $2 312 $11 40$Yea en baa $$94 361 58 30

Mnnjrrre I ndng $1083 8 $ 8318

u 418 5 ndlnr $1 74 $454

81 4 5 51 $701 534 59

8 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029$ 5 3 $ 2 13 $ 2 8 $ .. 848 $ 2 898 $ 2 89 $ 2 55 $2 8 $‘2 898 5 2 9°

Eupendu re 8211 8l $251 76 $80907Yearendbaance $694617 $‘3’ 4 $40s 886 $4 02’5 $443 173

M mre I ‘d*n $108318 $0031 $00318 $108318 $108118

Cs,ru a e cups dlures $ 2944 $‘04 755 $ 06 41 $8888 8 $8 8 8C r a else re e p 51 06 581 $1144 455 $1 21335 $ 3*9 153 $1432 0’1

2030 2031 2032 2033 2034 2035 2036 2037 2038 20392n $78 528 Se 578 Sed $28 $28

4 a 2 2 S

.1 41 4 5444 81 S $ 4 5 48C m 81 4 15 545 8 88 I 13 $2 161 03

513 4’ ‘1482 54434 54 74 54$1 12164 51 9445 $186 4’ 5144 3e6 $ 05 4

$ 5344’ 5 n244 11514

$2 2*3 8 8 $2 336 826 5 9 4


COMPONENT METHOD

Replacement Reserve Analysis - Page AGRevised November 10, 2009

10321 OSCAPTI VA1 0

104 5 3COMPONENT METHOD RECOMMENDED ANNUAL FUNDING OF REPLACEMENT

$ 8RESERVES IN THE STUDY YEAR, 2010.$101.34 Per unit (average), recommended monthly funding of Replacement Reserves

General. The Component Method is a time tested and very conservative mathematical model developed by HUDin the early 1980s. Each of the 60 Projected Replacements listed in the Replacement Reserve Inventory is treatedas a separate account. The Beginning Balance is allocated to each of these individual accounts, as is allsubsequent funding of Replacement Reserves. These funds are ‘locked in these individual accounts and are notavailable to fund other Projected Replacements. The calculation of the Recommended Annual Funding ofReplacement Reserves is a multi-step process outlined in more detail on Page A7.

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

$3,500,000

Component Method . Cumua5ve Receipts Component Method Year End Bathnce Projected Rep’acements . Come atioe Expenditures

$3,000,000

52.500.000

52,000.000

51.500 000

53 099. 539

//

$1 545590

5500 606

*All

* :*

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Miller+ Dodson Associates, Inc. Replacement Reserve Analysis - Page A7Captiva Sands at Eagles Landing Revised November 10, 2009

1O321O5CAPTIVAIO

COMPONENT METHOD (cont’d)

• Current Funding Objective. A Current Funding Objective is calculated for each of the Projected Replacementslisted in the Replacement Reserve Inventory. Replacement Cost is divided by the Normal Economic Life todetermine the nominal annual contribution. The Remaining Economic Life is then subtracted from theNormal Economic Life to calculate the number of years that the nominal annual contribution should havebeen made. The two values are then multiplied to determine the Current Funding Objective. This is repeated foreach of the 60 Projected Replacements. The total, $488,204, is the Current Funding Objective.

For an example. consider a very simple Replacement Reserve Inventory with one Projected Replacement, a fencewith a $1,000 Replacement Cost, a Normal Economic Life of 10 years, and a Remaining Economic Life of 2 years.A contribution to Replacement Reserves of $100 ($1,000 + 10 years) should have been made in each of theprevious 8 years (10 years -2 years). The result is a Current Funding Objective of $800 (8 years x $100 per year).

• Funding Percentage. The Funding Percentage is calculated by dividing the Beginning Balance ($192,786)by the Current Funding Objective ($488,204). At Captiva Sands at Eagles Landing the Funding Percentage is 39.5%

• Allocation of the Beginning Balance. The Beginning Balance is divided among the 60 Projected Replacementsin the Replacement Reserve Inventory. The Current Funding Objective for each Projected Replacement ismultiplied by the Funding Percentage and these funds are then ‘locked’ into the account of each item.

If we relate this calculation back to our fence example, it means that the Association has not accumulated $800in Reserves (the Funding Objective), but rather at 39.5 percent funded, there is $316 in the account for the fence.

• Annual Funding. The Recommended Annual Funding of Replacement Reserves is then calculated for eachProjected Replacement. The funds allocated to the account of the Projected Replacement are subtracted from theReplacement Cost. The result is then divided by the number of years until replacement, and the result isthe annual funding for each of the Projected Replacements. The sum of these is $104,583, the Component MethodRecommended Annual Funding of Replacement Reserves in the Study Year (2010).

In our fence example, the $316 in the account is subtracted from the $1,000 Total Replacement Cost and dividedby the 2 years that remain before replacement, resulting in an annual deposit of $342. Next year, the depositremains $342, but in the third year, the fence is replaced and the annual funding adjusts to $100.

• Adjustment to the Component Method for interest and inflation. The calculations in the Replacement ReserveAnalysis do not account for interest earned on Replacement Reserves, the effects of inflation of the cost ofProjected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves.

Table #2 Component Method Data - Years I through 302010 2011 2012 2013 2014 2015 2016 2017 2018 2019

514° $48 $ 4 $ 8 $104 $134 $z°8 12 $15

Eoxpe 014 5’ 485 $ 90 $ 2 0 3 $ 40 $2 30Yoa e dbao $2 3€ $4 9° 543 049 $°9 66 $8. 2 $7908 4 5° 5576 .. ‘9 11 $ 0’ 846 $ lo 6

47040006 $ o4 $ 3o $ 6 3’o $ o3 2 $04 ‘4 $04 $6 4 5,, 4

C,o a $ 04ce plo $2 3€ $4 051 $5& 534 $6 0 28 $04’ 112 $°16 I 04 591° 280 $1 4218 5’ 124 3z3 $1 226 151

Yeo 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029A oa depoot $101 68o $109°8 $‘3095 $04 84 $‘4165 $9416 $9 02° $9o025 $202 $926

Experdt 04 $231 811 $2 I 1€ 8’ 5” $ 090 $13455 $4’ 3 2V 0 0 dboo e $92490 $ 2 0’ $312’ $°25’3I $‘019 1’ $1 8557 $1 ‘50211 $‘24 887

04 0 Eop 3’ $654 749 $506 4 1 $ $ $8 5 8 $ 2 36 $04 73’ $ 04 ‘3’000414 R opt $ 52 40 $1 5 0 818148 0 $13 783 0406 2’ 5 334 15 622

2030 2031 2032 2033 2034 2035 2036 2037 2038 20390 4 4 54 4 904 41’4

0 0 2 5 0 400’ OIl So or o $54 6 4 5 2 9 $ 2o 9 $1 I o4 5 2 4 51 3 ., 5’ 41 012 $ 4 2 89

C...n 010$ Expend t,’eo 51 009 46’ 51 34’ 3 2 $1 434 045 5’ 475 06’ $1 406 5’ SI 406 05’ $1 497 05’ 5’ 503 440 $1 552 4401041.009001000 $2 27° 205 920 337 $2 481 3.5 5’ 501 9’O S. 74’ 44° 02732890 5203’ 344 62914 381 830(5 340


CURRENT FUNDING

Replacement Reserve Analysis - Page A8Revised November 10, 2009

IO32IO5CAPTIVA1O

CURRENT ANNUAL FUNDING OF REPLACEMENT RESERVES$25,000

(as reported by the Association).

$24.22 Per unit (average> reported current monthly funding of Replacement Reserves

General Our evaluation of the Current Association Funding assumes that the Association will continue to fundReplacement Reserves at the current level of $25,000 per year in each of the 30 years of the Study Period.

Our evaluation is based upon this Replacement Reserve Funding Level, a $192,786 Beginning Balance, theProjected Annual Replacement Expenditures shown in Graph #1 and listed in the Replacement Reserve Inventory,and any interest, inflation rate, or constant annual increase in annual contribution adjustments discussed below.

Evaluation. Our calculations have determined that Current Annual Funding of Replacement Reserves, as reportedby the Association, is inadequate to fund Projected Replacement beginning in 2022.

The Current Annual Funding of Replacement Reserves results in insufficient funds to make Projected Replacementsin 18 years of the 30-year Study Period, and a maximum shortfall of $-682,959 occurs in 2033.

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

Comparison of Current Association Funding and Average Annual Expenditure. The average annual expenditure forProjected Replacements listed in the Reserve Inventory over the 30-year Study Period is $51,798 (see Graph #1).Current Association annual funding of Replacement Reserves is $25,000, or approximately 48 percent ofthe Average Annual Expenditure.

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

52.000 000

$1 500 000

$1 000 000

Current Funding - Cumulative Receipts Current Funding Year End Balance Projected Replacements - Cumulative—A-- Expenditures

C) C ‘2 0) if) ((3 t C)) 3) C) C C)) (c (ci cci C))00 C’1C 00(32 NC\C’JC.JC ‘2 C)c -

C) C) C) C) C) 0 0 C) 0 C) 0 0 C) C) 0 0 0 C) 0 C) 0 0 C) C) 0 0 0 0 0(N (34 (33 00 00 00 (34 00 (N (N (‘3 (‘3 (‘3 (‘2 (‘3 (N (N C’3 C 00 (‘3 (N (N (N (‘3 (N

$942,786

*—*- *

*- * *

*-* * * * * *


CURRENT FUNDING (contd)

Table #3. Current Funding Data - Years I through 30Year 2010 2011

Starting balance 5192 786Annual deposit $25 000 $25 000

ExpendituresYear end balance

Cumulative ExpendituresCumulative Receipts

Year

Annual deposit


Cumu utica expendituresCumulative receipts

Year

Annual deposit


Cumulat vs ExpendituresCorny atine Receipts

COMMENTS ON THE REPLACEMENT RESERVE ANALYSIS

• This Replacement Reserve Study has been developed in compliance with the Community Associations Institute,National Reserve Study Standards, for a Level Two - Update (with site visit and on-site review).

• Captiva Sands at Eagles Landing has 86 units. The type of property is a condominium association.

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

Replacement Reserve Analysis - Page A9Revised November 10, 2009

1O321O5CAPTIVA1O

2014

$25 000

2012 2013 2015 2016 2017

$25000 $25000 $25000 $25000 $25000

$13485 $2907 $2312 S35373S2t7786 $242786 $254301 $276394 $30t 394 $326394 $349082 $338708

$13485 $16392 $16392 $t6392 $18704 $54077

$217,786 $242 786 $267,786 $292 786 $3t7,786 $342 786 $367,786 $392 786

2020 2021 2022 2023 2024 2025 2026 2027$25000 $25000 $25000 $25000 $25,000 $25000 $25,000 $25000

$304560 $231,811 $201 716 $1,500 880.907 $13485$94842 $119842

$372 944 $372,944 $604755 $806 471 $807,971 $088 875 $888 878 $902 363$467,786 $492786 $517786 $542786 $567,786 $592786 $617786 $642786

2030 2031 2032 2033 2034 2035 2036 2037$25 000 $25000 $25000 $25000 $25,000 $25000 $25000 $25000

$394 730 $2 907 $92 973 $41 400 $2 312 $9 000 $16 392

$1338465 $1 341 372 81434345 $1,475 745 $1478057 $1476 057 $1487057 $1 503 449$717786 $742786 $767766 9792786 9817786 $8d2796 $867786 $892786

2018 2019

$25000 $25,000

$11 400 $2907$352 309 $374 402

$65 477 $68 384$417786 $442,786

2028 2029$25 000 $25,000

$41 372

$943 735 $943 735$667 786 $692 786

2038 2039$25,000 $25 000

$49 000 $1 500

$1 552 449 $1 553 949$917786 $942786

Miller + Dodson Associates, Inc. Replacement Reserve Inventory - Page BICaptiva Sands at Eagles Landing Revised November 10, 2009

IO32IO5CAPTIVA1O

REPLACEMENT RESERVE INVENTORYGENERAL INFORMATION

Captiva Sands at Eagles Landing - Replacement Reserve Inventory identifies 89 items, Two types of items areidentified, Projected Replacements and Excluded Items:

• PROJECTED REPLACEMENTS. 60 of the items are Projected Replacements and the periodicreplacements of these items are scheduled for funding from Replacement Reserves. The Projected Replacementshave an estimated one-time replacement cost of $2,166,353. Replacements totaling $1,553,949 are scheduledin the Replacement Reserve Inventory over the 30-year Study Period.

Projected Replacements are the replacement of commonly owned physical assets that require periodicreplacement and whose replacement is to be funded from Replacement Reserves.

• EXCLUDED ITEMS. 29 of the items are Excluded Items, and expenditures for these items are NOTscheduled for funding from Replacement Reserves. The accuracy of the calculations made in the ReplacementReserve Analysis is dependent on expenditures NOT being made for Excluded Items. The Excluded Itemsare listed in the Replacement Reserve Inventory to identify specific items and categories of items thatare not to be funded from Replacement Reserves. There are multiple categories of items that are typicallyexcluded from funding by Replacement Reserves, including but not limited to:

Tax Code. The United States Tax Code grants very favorable tax status to Replacement Reserves, conditionedon expenditures being made within certain guidelines. These guidelines typically exclude maintenanceactivities, partial replacements, repairs, capital improvements, and one-time only replacements.

Value. Items with a replacement cost of less that $1,000 are typically excluded from funding fromReplacement Reserves. This exclusion is made to accurately reflect how Replacement Reserves areadministered. If the Association has selected an alternative level, it will be noted in the Replacement ReserveInventory - General Comments on Page B2.

Long-lived Items. Items that when properly maintained, can be assumed to have a life equal to the propertyas a whole, are typically excluded from the Replacement Reserve Inventory.

Unit improvements. Items located on property owned by a single unit and where the items serve a singleunit are generally assumed to be the responsibility of that unit, not the Association.

Other non-common improvements. Items owned by the local government, public and private utility companies,the United States Postal Service, Master Associations, state and local highway authorities, etc., may beinstalled on property that is owned by the Association. These types of items are generally not theresponsibility of the Association and are excluded from the Replacement Reserve Inventory.

The rationale for the exclusion of an item from funding by Replacement Reserves is discussed in more detail inthe ‘Comments’ section of it’s page of the Replacement Reserve Inventory.

• CATEGORIES The 89 items included in the Captiva Sands at Eagles Landing Replacement Reserve Inventoryare divided into 10 major categories Each category is printed on a separate page, Pages B3 to B12

• I EVEI OF SERVICE This Replacement Reserve Inventory has been developed in compliance with the standardsestablished for a Level Two - Update (with site visit and on-site review>, as defined by the National Reserve StudyStandards, established in 1998 by Community Associations Institute, which states:

Level II Studies are based entirely on the component inventory from a prior study. This informationis adjusted to reflect changes to the inventory that are provided by the property manager, and thequantities are adjusted accordingly from field measurement and/or quantity takeoffs from to-scaledrawings that are made available to us The condition of all components is ascertained from a sitevisit and the visual inspection of each component by the analyst The life expectancy and the valueof componcnt.s are provided based in part on these observations and the fund status and fundingplan are denved from analysis of this data.

MiNer + Dodson Associates, Inc. Replacement Reserve Inventory - Page B2Captiva Sands at Eagles Landing Revised November 10, 2009

1O32IO5CAPTIVA1Q

REPLACEMENT RESERVE INVENTORY - GENERAL INFORMATION (contd)

• INVENTORY DATA. Each of the 60 Projected Replacements listed in the Replacement Reserve Inventoryincludes the following data:

Item Number. The Item Number is assigned sequentially and is intended for identification purposes only.

Item Description. We have named each item included in the Inventory. Where the name of the itemand the category are not sufficient to specifically identify the item. we have included additionalinformation in the Comments section at the bottom of the page.

Units. We have used standard abbreviations to identify the number of units including SF-square feet, FT-feet,SY-square yard, LS-lump sum, EA-each, and PR-pair. Nonstandard abbreviations are noted in theComments section on the page on which the abbreviation is used.

Number of Units. The methods used to develop the quantities are discussed in “Level of Service” above.

Unit Replacement Cost. We use two sources to develop the unit cost data shown in the Inventory; industrystandard estimating manuals published by R. S. Means Company, Inc., and data that we have developedbased upon our experience with similar replacement projects. We frequently use our best professionaljudgment to modify these values to reflect conditions at the site that we believe will affect the unit costs.Actual Replacement Costs may vary substantially from our estimates because of unforeseen demolitioncosts, engineering and architectural fees, timing of the replacement, etc.

Normal Economic Life (Yrs). The number of years that a new and properly installed item should beexpected to remain in service.

Economic Life Remaining (Yrs). The estimated number of years before an item will need to bereplaced. In “normal” conditions, this could be calculated by subtracting the age of the item from theNormal Economic Life of the item, but only rarely do physical assets age “normally”. Some itemsmay have longer or shorter lives depending on many factors such as environment, initial quality of theitem, maintenance, etc.

Total Replacement Cost. This is calculated by multiplying the Unit Replacement Cost by the Number of Units.

Each of the 29 Excluded Items includes the Item Description, Units, and Number of Units. Many of theExcluded Items are listed as a ‘Lump Sum’ with a quantity of 1. For the Excluded Items, this indicates thatall of the items identified by the Item Description’ are excluded from funding by Replacement Reserves.

• REVIEW OF EXPENDITURES. All expenditures from Replacement Reserves should be made only afterconsultation with an accou nting professional.

• PARTIAL FUNDING. Items may have been included in the Replacement Reserve Inventory at less than

100 percent of their full quantity and/or replacement cost This is done on items that will never be replacedin their entirety. but which may require periodic replacements over an extended period of time. The assumptionsthat provide the basis for any partial funding are noted on in the Comments section.

Miller + Dodson Associates, Inc. Replacement Reserve Inventory - Page B3Captiva Sands at Eagles Landing Revised November 10, 2009

10321 O5CAPTI VAI 0

CONCRETE COMPONENTSPROJECTED REPLACEMENTS

UNIT NORMAL REMAININOITEM ITEM NUMBER REP 3EMENT ECONOMIC ECONOMIC REPLACEMENT

# DESCRIPTION UNIT OF UNITS COST ($) UPS (YRS) UPS (YRS) COST (B)

1 Concrete sidewalk (6%) sf 342 $8.50 60 3 $2,9072 Concrete sidewalk (6%) sf 342 $8.50 60 9 $2,9073 Concrete sidewalk (6%) sf 342 $8.50 60 15 $2,9074 Concrete sidewalk (6%) sf 342 $8 50 60 21 $2,9075 Concrete sidewalk (6%) sf 342 $8.50 60 27 $2,9076 Concrete sidewalk (6%) sf 342 $8.50 60 33 $2,9077 Concrete sidewalk (6%) sf 342 $8.50 60 39 $2,9078 Concrete sidewalk (6%) sf 342 $8.50 60 45 $2,9079 Concrete sidewalk (6%) sf 342 $8.50 60 51 $2,907

10 Concrete sidewalk (6%) sf 342 $8.50 60 57 $2,907

11 Concrete curb & gutter (6%) ft 68 $3400 60 6 $2,31212 Concrete curb & gutter (6%) ft 68 $34.00 60 12 $2,31213 Concrete curb & gutter (6%) ft 68 $34.00 60 18 $2,31214 Concrete curb & gutter (6%) ft 68 $34.00 60 24 $2,31215 Concrete curb & gutter (6%) ft 68 $34.00 60 30 $2,31216 Concrete curb & gutter (6%) ft 68 $34.00 60 36 $2,31217 Concrete curb & gutter (6%) ft 68 $34.00 60 42 $2,31218 Concrete curb & gutter (6%) ft 68 $34.00 60 48 $2,31219 Concrete curb & gutter (6%) ft 68 $34.00 60 54 $2,31220 Concrete curb & gutter (6%) ft 68 $34.00 60 60 $2,312

CONCRETE COMPONENTS - Replacement Costs - Subtotal $52,190

CONCRETE COMPONENTSCOMMENTS


IO32IO5CAPTIVA1O

GENERAL SITE IMPROVEMENTSPROJECTED REPLACEMENTS

UNIT NORMAl. REMAiNNO

ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT

B DESCRIPTION UNIT OF UNITS COST ($1 LIFE (YRS) LIFE (YRS) COST ($1

21 Asphalt pavement, seal coat sf 67,425 $0.20 5 2 $13,48522 Asphalt pavement, overlay sf 67,425 $1.40 25 12 $94,395

23 Mailboxes ea 72 $75.40 20 12 $5,429

24 Entry Sign ea 1 $3,000.00 20 12 $3,000

25 Storm water ponds (2) - dredging cy 558 $70.00 25 18 $39,06026 Areator ea 1 $1,500.00 15 14 $1,500

27 Domesticwater-mains(10%) Is 1 $49,000.00 10 28 $49,00028 Storm water - structure & pipe (10%) Is 1 $9,000.00 10 26 $9,000

GENERAL SITE IMPROVEMENTS - Replacement Costs Subtotal $214,869

GENERAL SITE IMPROVEMENTSCOMMENTS

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

• Comprehensive drawings detailing the components of the systems listed above were not available for our review Wehave included the estimated cost of the systems based upon our experience with other similar communities We haveassumed that 10 percent of the system(s) will require replacement every 10 years. In the future. this assumption and theestimated costs should be adjusted based upon actual experience at the community.

• 11/10/09 - Deleted Streetlight. Picnic Table and Sanitary Sewers Corrected SW Pond Dredging

35 GA - Unit Doors36 GA - Utility Room Doors

41 GA - Unit Deck - Decking42 GA - Unit Deck - Structure43 GA - Railings

ea

ea

Replacement Reserve Inventory -Page B5Revised November 10, 2009

1O321O5CAPTIVA1CJ

44 GA Corridor - Gyp Bd Ceiling sf 3,720 $3.50 30 10 $13,020

GARDEN APARTMENT EXTERIORS (GA) - Replacement Costs - Subtotal

GARDEN APARTMENT EXTERIORS (GA)NTS

• 11/10/09 Corrected title block and adjusted remaining life for Corridor Ceilings.

$1,097,853


GARDEN APARTMENT EXTERIORS (GA)PROJECTED REPLACEMENTS

ITEM TEN# OESCRS’flON

29 GA Asphalt shingle roof30 GA - Gutter & downspout

31 GA - Siding, vinyl (50%)32 GA Shutters - Pair (50%)33 GA - Siding, vinyl (50%)34 GA Shutters - Pair (50%)

UNIT NORMAL REMAEJtNGREPLACEMENT ECONOMIC ECONOMIC

COST(S) LAB (YRS) UFE (YRS)

37 GA - Corridor - Decking38 GA Corridor - Structure39 GA Wood Stairs - Treads40 GA - Rails - Wood - Stairs

NUMBER REPLACEMENTUNIT OF UNITS COST(S)

sf 31,680 $4.00 20 13 $126,720ft 960 $8.50 20 13 $8,160

sf 26,730 $4.75 30 20 $126,968ea 90 $175.00 30 20 $15,750sf 26,730 $4.75 30 30 $126,968ea 90 $175.00 30 30 $15,750

72 $750.00 25 15 $54,0006 $500.00 25 15 $3,000

sf 7,440 $9.50 20 10 $70,680sf 7,440 $25.00 40 30 $186,000ea 312 $50.00 20 10 $15,600ft 3,732 $55.00 10 10 $205,260

sf 2,304 $9.50 15 7 $21,888sf 2,304 $25.00 30 22 $57,600ft 918 $55.00 20 12 $50,490


IO321O5CAPI1VAIO

GARDEN APARTMENT EXTERIORS (GA)PROJECTED REPIACEMENTS

UNT NOMA. RMJMQ4OPACEM5Wr ECONOMIC EQONOSC RSPLACEMENT

# SCRPtON UNT OF UNTS COST $) UFEYS) UFE (YRS COST(S)

45 GA- Exterior Ceiling Lights ea 54 $150.00 20 12 $8,100

46 GA - Fire Alarm Central Panel ea 6 $750.00 20 12 $4,50047 GA - Fire Alarm Devices ea 72 $145.00 20 12 $10,44048 GA - Emergency Lights ea 36 $635.00 20 12 $22,86049 GA- Exit Lights ea 36 $100.00 20 12 $3,600

50 GA - Domestic Water Piping - Re-line unit 86 $6,000.00 50 40 $516,000

GARDEN APARTMENT EXTERIORS (GA) - Replacement Costs - Subtotal $565,500

i3EN APARTMENT EXTERIORS (GA)COMMENTS


1O32IO5CAPTIVA1O

TOWNHOUSE (TM)PROJECTED REPLACEMENTS

rrEM ITEM# DESCRPTlON

57 TH - Unit Doors

NUMBERUNIT OF UNfl’S

ea

WET NORMAL REMAtNB4GREPLAOEMENT ECONOMIC ECONOMIC

COET $) LIFE (YRS) LIFE (YRE)

28 $750.00 25 15 $21,000

TOWNHOUSE (TH)COMMENTS

TOWNHOUSE (TH) - Replacement Costs - Subtotal $235,941

51 TH Asphalt shingle roof52 TH - Gutter & downspout

53 TH - Siding, vinyl (50%)54 TH - Shutters - Pair (50%)55 TH - Siding, vinyl (50%)56 TH - Shutters - Pair (50%)

20 13

20 13

REPLACEMENTCOST (F)

$61,600

$5,236

$4.00

$8.50

$4.75

$175.00

$4.75

$175.00

sf 15,400

ft 616

sf 8,590

ea 34

sf 8,590

ea 34

sf 1,200

sf 1,200

ft 240

58 TH - Unit Deck - Decking59 TH - Unit Deck - Structure

60 TH Railings

30 20 $40,80330 20 $5,95030 30 $40,80330 30 $5,950

$9.50

$25.00

$55.00

15 8 $11,40030 23 $30,00020 12 $13,200


1O32IO5CAPTIVA1O

VALUATION EXCLUSIONSEXCLUDED ITEMS

UNIT NORMAL REMAINING

ITEM ITEM NUMSER REPLACEMENT ECONOMIC ECONOMiC REPLACEMENT# OESCRIPTION UNIT OF UNITS COST (5) LIFE (‘IRS) LIFE (YRSI COST (5)

Miscellaneous signage Is 1 EXCLUDED

Picnic table Is 1 EXCLUDED

VALUATION EXCLUSIONSCOMMENTS

• Valuation Exclusions. For ease of administration of the Replacement Reserves and to reflect accurately howReplacement Reserves are administered, items with a dollar value less than $100000 have not been scheduled forfundmg from Replacement Reserves. Examples of items excluded from funding by Replacement Reserves by thisstandard are listed above.

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

Miller + Dodson Associates, Inc. Replacement Reserve_Inventory - Page B9Captiva Sands at Eagles Landing Revised November 10, 2009

1O321O5CAPTIVA1O

LONG-LIFE EXCLUSIONSEXCLUDED ITEMS


ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOESC REPLACEMENT

# DESCRIPTION UNIT OF UNITS COST (5) LIFE (YRS) LIFE (YRS) COST (SI

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

LONG-LIFE EXCLUSIONSCOMMENTS

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

• Exterior masonry is generally assumed to have an unlimited economic life but periodc repomting s required and we haveincluded this for funding in the Replacement Reserve Inventory.

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

Miller + Dodson Associates, Inc. Replacement Reserve Inventory - Page BlOCaptiva Sands at Eagles Landing Revised November 10, 2009

1O32IO5CAPTIVA1O

UNIT IMPROVEMENTS EXCLUSIONSEXCLUDED ITEMS


ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT

# DESCRIPTION UNIT OF UNITS COST (5) LIFE IYRS) LIFE (YREI COST 151

Domestic water pipes serving one unit Is I EXCLUDED

Sanitary sewers serving one unit Is 1 EXCLUDED

Electrical wiring serving one unit Is 1 EXCLUDED

Cable TV service serving one unit Is 1 EXCLUDED

Telephone service serving one unit Is 1 EXCLUDED

Gas service serving one unit Is 1 EXCLUDED

Unit windows Is 1 EXCLUDED

Unit doors Is 1 EXCLUDED

Unit interior Is 1 EXCLUDED

UNIT IMPROVEMENTS EXCLUSIONSCOMMENTS

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


Miller + Dodson Associates, Inc. Replacement Reserve Inventory - Page BI ICaptiva Sands at Eagles Landing Revised November 10, 2009

IO32IO5CAP11VA1O

UTILITY EXCLUSIONSEXCLUDED ITEMS

Uwif NORMA. REMANNGT5M (TEM NUMSSR REPIACEMENT ECO4OWC SCONOMC PLACEMSNT

# DESCRIPflON UrST OF UMTS COST(S) UFE (YRS) UFE (YRS) COST(S)

Primary electric feeds Is 1 EXCLUDEDElectric transformers 1 EXCLUDEDCable TV systems and structures Is 1 EXCLUDEDTelephone cables and structures Is 1 EXCLUDEDSite lighting Is 1 EXCLUDED

UTILITY EXCLUSIONSCOMMENTS

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



IO32IOSCAPTIVA1O

MAINTENANCE AND REPAIR EXCLUSIONSEXCLUDED ITEMS

UNIT NORMAL REMAININO

ITEM ITEM NUMEER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT

S DESCRIPTION UNIT OF UNITS COST (5) LIFE (YRS) LIFE (YRS) COST (5)

Cleaning of asphalt pavement Is I EXCLUDED

Crack sealing of asphalt pavement Is 1 EXCLUDED

Painting of curbs Is 1 EXCLUDED

Striping of parking spaces Is 1 EXCLUDED

Landscaping and site grading Is 1 EXCLUDED

Exterior painting Is 1 EXCLUDED

Interior painting Is 1 EXCLUDED

Repair services Is 1 EXCLUDED

Partial replacements Is 1 EXCLUDED

Capital improvements Is 1 EXCLUDED

MAINTENANCE AND REPAIR EXCLUSIONSCOMMENTS

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

• Examples of items excluded from funding by Replacement Reserves by ths standard are listed above


Miller + Dodson Associates, Inc. Projected Annual Replacements - Page ClCaptiva Sands at Eagles Landing Revised November 10, 2009

IO32IO5CAPTIVAIQ

PROJECTED ANNUAL REPLACEMENTSGENERAL INFORMATION

CALENDAR OF ANNUAL REPLACEMENTS. The 60 Projected Replacements in the Captiva Sands at Eagles LandingReplacement Reserve Inventory whose replacement is scheduled to be funded from Replacement Reserves arebroken down on a year-by-year basis, beginning on Page C2.

REPLACEMENT RESERVE ANALYSIS AND INVENTORYPOLICES, PROCEDURES, AND ADMINISTRATION

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

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

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

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

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

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

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

• REVIEW OF THE REPLACEMENT RESERVE STUDY. For this study to be effective, it should be reviewed bythe Captiva Sands at Eagles Landing Board of Directors, those responsible for the management of the itemsincluded in the Replacement Reserve Inventory, and the accounting professionals employed by the Association.

Miller + Dodson Associates, Inc. Projected Annual Replacements - Page C2captiva Sands at Eagles Landing Revised November 10, 2009

________

1O32IO5CAPTIVA1O

____________________________________________________________

\________________

Item O1O $ Item 2011 —Item 2012 $21 Asphalt pavement seal coa1 913485

No Scheduled Replacements No Scheduled Replacements Total Scheduled Replacements $13485

Item 2013 $ Item 2014 $ Item 2015 s1 Concrete sidewalk (6%) $2907

L Tota Scbedled Rep ace’ie9ts 52 907 No Sheded Replaceets - No Scbedled Rep acemets

Miller + Dodson Associates, Inc. Projected Annual Replacements - Page C3Captiva Sands at Eagles Landing Revised November 10, 2009

IO32IO5CAPTIVA1O

___________________

Item 2016 $ Item 2017 $ Item 2018 $ 111 Concrete curb & gutter (6%) S2312 21 Asphalt pavement, seal coat $13485 58 TH - Unit Deck Decking S11400

41 GA - Unit Deck - Decking $21888

Total Scheduled Replacements $2,312 Total Scheduled Replacements $35,373 Total Scheduled Replacements $11,400

Item 2019 $ Item 2020 $ Item 2021 $2 Concrete sidewalk (6%) $2,907 37 GA - Corridor - Decking $70,680

39 GA - Wood Stairs - Treads $15,60040 GA - Rails - Wood - Stairs $20526044 GA - Corridor- Gyp Bd Ceili $13,020

lSchededReplaceme9ts $2,9O7j otal Scheduled Repaceets $304 560 L No Schedu!ed Replacements

02Th112 Concrete curb & gutter (6%) $231221 Asphalt pavement seal coal $1348522 Asphalt pavement overlay $9439523 Mailboxes S5,42924 Entry Sign $3 00043 GA - Railings $5049045 GA- Exterior Ceiling Lights $810046 GA - Fire Alarm Central Pan $450047 GA - Fire Alarm Devices $10,440

48 GA - Emergency Lights $22,86049 GA - Exit Lights $3,60060 TH - Railings $13,200

Total Scheduled Replacements $231,811

No Scheduled Rep1acements Total Scheduled Replacements


PO4QTEDRPEMNTS-YEAR 13 TO 18

Projected Annual Replacements - Page C4Revised November 10, 2009

IO32IO5CAPTIVA1O

hem 2023 riO2129 GA-Asphalt shingle roof $126 720 26 Areator $150030 GA - Gutter & downspout $8,160’51 TH - Asphalt shingle roof $61,60052 TH - Gutter & downspout $5,236,

Total Scheduled Replacements $201,7 tal Scheduled Replnts$1,5OOl

i027$I21 Asphalt pavement, seal coal $13,485

Item 20253 Concrete sidewalk (6%)

35 GA - Unit Doors36 GA - Utility Room Doors57 TH - Unit Doors

Item$$2,907

$54,000$3 000

S21 000

2026 $

L Total Scheduled Replacements $13 485

Miller + Dodson Associates, Inc. Projected Annual Replacements -Page C5Captiva Sands at Eagles Landing Revised November 10, 2009

IO32IO5CAPTIVA1O

Item 2028 $ Item 2029 $ Item 2030 $13 Concrete curb & gutter (6%) $2312 31 GA - Sding, vinyl (50%) $126968

25 Storm water ponds (2)- drec $39 060 32 GA - Shutters - Pair (50%) $1575040 GA - Rails - Wood - Stairs $205,26053 TH - Sdng, vinyl (50%) $40,80354 TH - Shutters - Paw (50%) $5,950

Total Scheduled Replacements $41,372 No Scheduled Replacements

________

Total Scheduled Replacements $394,730

2031 $ Item 2032 S Item 2033 $

4 Concrete sidewalk (6%) $2 907 21 Asphalt pavement, seal coal $13,485 58 TH - Unit Deck - Decking $11,400

41 GA - Unit Deck - Decking $21,888 59 TH - Unit Deck - Structure $30,000

42 GA - Unit Deck - Structure $57,600

Total Scheduled Replaceme9ts $2 907 Tote Schedi%d Replacements $92 973 Tot& Scheduled Replacements $41 400

Miller + Dodson Associates, Inc. Projected Annual Replacements - Page C6Captiva Sands at Eagles Landing Revised November 10, 2009

IO32105CAPflVAI0

11am 2034 S Item 2035 $ Item 203614 Concrete curb & gutter (6%) $2312 28 Storm water- structure & Pr $9000

Total Scheduled Replacements $2 312 No Scheduled Replacements Total Scheduled Replacements $9 000

Item 2037 $ Item 2038 $ Item 20395 Concrete sidewalk (6%) $2,907 27 Domestic water - mans (1OC $49,000 26 Areator $1,500

21 Asphalt pavement seal coal $13485

Total Schedded Replaceme”ts $16 302 Tota Sctedued Rep ace—e9ts $49 000 Total Sc-edied Replacrie-its 51 500

Miller - Dodson Associates, Inc. Condition Assessment - Page DlCaptiva Sands Revised November 10, 2009

CONDITION ASSESSMENT

General Comments. Miller - Dodson Associates conducted a Reserve Study at Captiva Sands in August2009. Captiva Sands is in average condition for a condominium community constructed in 2000/2001 Areview of the Replacement Reserve Inventory will show that we are anticipating most of the componentsachieving their normal economic lives.

The following comments pertain to the larger, more significant components in the Replacement ReserveInventory and to those items that are unique or deserving of attention because of their condition or themanner in which they have been treated in the Replacement Reserve Analysis or Inventory.

SITE IMPROVEMENTS

Asphalt Seal Coat. The asphalt pavement isestimated to have been seal coated within the past 2years. The seal coating is in good condition overall.We recommend following a crack filling and recoatingcycle of five years for asphalt surfaces.

Asphalt Pavement. The site includes asphaltpavement for vehicle access and parking. In general,the asphalt pavement is in very good condition withlimited cracking, alligatoring, or deterioration. TheAssociation maintains an inventory of 67,425 squarefeet of asphalt pavement, including the following streetsand parking areas:

As a rule of thumb, asphalt should be overlayed when Asphalt pavingapproximately five percent of the surface area hasbecome cracked or has failed. The normal service life of asphalt pavement is typically 18 to 20 years.

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

1. Crack Sealing. All cracks should be sealed with an appropriate sealing compound to preventwater infiltration through the asphalt compound into the base. This repair should be doneannually. This is an entirely different process from the seal coating discussed below. Cracksealing is normally considered a maintenance activity and is not funded from Reserves. Areas ofextensive cracking or deterioration that cannot be made watertight by crack sealing should be cutout and patched.

2 Clearung. Long-term exposure to ol or gas breaks down asphalt. Because this asphaltpavement is generally not used for long term parking it is unlikely that frequent cleaning will benecessary. When necessary spill areas should be cleaned or f deterioration has penetrated theasphalt patched. This is a maintenance activity, and we have assumed that it will not be fundedfrom Reserves.

3. Seal Coating. The asphalt should be seal coated every three to five years. For thismaintenance activity to be effective in extending the life of the asphalt. the crack sealing andcleaning of the asphalt. discussed above should be done first.

Pricing used in the study is based on a recent contract for a two-inch overlay and reflects the current localmarket

Miller - Dodson Associates, Inc. Condition Assessment - Page D2Captiva Sands Revised November 10, 2009

Concrete Flatwork. The concrete flatwork includesthe community sidewalks, unit lead walks. mailboxpads, and picnic pads. The Association maintains aninventory of approximately 5,130 square feet ofconcrete flatwork. The overall condition of theconcrete flatwork is good.

The standards we used for recommendingreplacement are as follows:

1. Trip hazard, 0.5 inch height difference.2. Severe cracking.3. Severe spalling4. Uneven riser heights on steps.5. Steps with risers in excess of 825 inches. Concrete sidewalks

Because it is highly unlikely that all of the community’s concrete components will fail and requirereplacement in the period of the study, we have programmed funds for the replacement of 60% of theinventory and spread those funds over a 60year timeframe to reflect the incremental nature of this work.This approach assumes a failure rate of 1% per year.

Curb and Gutter. The Association maintains aninventory of 1,000 linear feet of concrete curb andgutter. All components have been well maintainedand are in excellent condition. Any problems notedare in the form of minor cracks, spalling or settlementthat can be repaired by continued periodicreplacement of broken sections.

Because it is highly unlikely that all of the community’sconcrete curb and gutter sections will fail and requirereplacement in the period of the study, we haveprogrammed funds for the replacement of 60% of theinventory and spread those funds over a 60 yeartimeframe to reflect the incremental nature of thiswork. This approach assumes a failure rate of 1% peryear.

Mailboxes. The cluster mailboxes located throughoutthe community are in good condition. We haveassumed that when the mailboxes are replaced.fiberglass units will be installed.

Storm Water System. We have mc uded the catch basins and underground piping portions of the stormwater system in the Reserve Analysis No engineering drawings were available to accurately determine

Curb and gutter

Mailboxes


distances, sizes of lines and materials used for underground components of the system. Accordingly, wehave provided an estimate of the approximate replacement cost based on our experience with othercommunities of similar size and on our inspection of the visible components while on site. Inspection ofthe underground lines and structures is beyond the scope of work of this study.

Storm Water Pond. The community is served by twostorm water ponds that have an approximate area of558 sy. These ponds will accumulate silt and over time,lose their ability to store storm water at their designlevels. This could result in overflows and minor localflooding conditions. Accordingly, the ponds will requireperiodic dredging.

Estimates of cost and the frequency of dredging theponds are a function of many variables, including thevolume of the pond, the siltation rate, the nature of thematerial being removed, the method of removal, andthe haul distance to a site that will accept the spoilmaterial. Most of this information is unknown and mustbe assumed for the purpose of Reserve Study planning.The rate of siltation and the cost of periodically Storm water pond

dredging the ponds to remove this material are very speculative and will vary greatly with local conditions.

As a rule of thumb, dredging should be accomplished when approximately one third of the volume of thepond has been filled with silt. In the absence of accurate information about the original depth of the pondand the local siltation rate, we have assumed that it will be necessary to remove one cubic yard ofmaterial over one third of the pond area every 25 years. We have assumed that the material beingremoved is free of heavy metals and hydrocarbons, and that it will be accepted as fill at a local landfill.The cost to remove, haul and dispose of the material is estimated at $70! cubic yard. A more accurateprediction will require a hydrologic analysis and testing of the silt for contaminants, which is beyond thescope of our study.

Because of the significance of the cost of this work in establishing the correct reserve contribution, it isrecommended that the Association undertake studies to refine the information and replace theassumptions we have had to make with more factual information as a basis for the estimates.

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

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

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

nature is known.

Please note that the periodic removal of overgrown vegetation from the pond is considered to be amaintenance activity and has not been reserved for or included in the Reserve Analysis.

Miller - Dodson Associates, Inc.Captiva Sands

BUILDINGS

Asphalt Shingle Roofing. The asphalt shingle roofs arein good condition. We have estimated the remaininguseful life of the roofs based on the conditions seen atthe site as well as the age of the roofs. We haveassumed that when the roofs eventually will requirereplacement, all roofs will be replaced with 20 year roofs.We have assumed that the gutters and downspouts willbe replaced when the roofs are replaced.

Vinyl Siding. The vinyl siding on the buildings is in goodoverall condition. We have estimated the remaininguseful life of the siding based on the conditions seen atthe site as well as the age of the siding.

Due to the large inventory and the varying rates at whichthe siding materials will age and require replacement, wehave divided the siding inventory into 2 equalcomponents and spread their replacement over a 10 yearperiod.

Wood Decks. The community maintains an inventoryof decks and balconies. The condition of the woodbalconies is good.

When it becomes necessary to replace the surfaceboards in the walkways, the community may wish toconsider using one of the engineered wood productsinstead of pressure treated lumber. While the initialcost of the engineered wood product is higher, it offersone and onehalf to two times the service life ofpressure treated lumber

Condition Assessment - Page D4Revised November 10, 2009

Gypsum Board Ceilings. The ceiling of top level of the central corridors in the Condominiums isconstructed of gypsum board. This ceiling is showing signs of water damage in the form of peeling paintand delaminating surface paper. This damage is most likely caused by water vapor being caught betweenthe ceiling and roof structure above. It is recommended that this gypsum board be replaced mold andmildew resisted drywall which uses glass matting as the front and back surface material. Additionallyvents must be installed to allow the transfer water vapor from the enclosed space above.

Vinyl siding

Condo deck corridor


This Condition Assessment is based upon our visual survey of the property. The sole purpose of thevisual survey was an evaluation of the common elements of the property to ascertain the remaining usefullife and the replacement costs of these common elements. Our evaluation assumed that all componentsmet building code requirements in force at the time of construction. Our visual survey was conductedwith care by experienced persons, but no warranty or guarantee is expressed or implied.

End of Condition Assessment

Miller - Dodson Associates. Inc. Suonlemental Photoaraohs - Pacie ElCaptiva Sands

Photo #6 Condominium Stairs

Photo #4. Townhouse - Rear

Miller - Dodson Associates, Inc. Supplemental Photoqraphs - Paqe E2Captiva Sands

Photo #7. Condominium — Emergency Lightand Sprinkler Head

_

Photo #1 1 Trees close to Townhouses

Photo #8. Condominium - Lighting

Photo #9. Storm Water Pond - Second

Photo #12 Entry Sign

Mer-Dodson Associates, hc. AttachmenfeEiAppendix

1. COMMON INTEREST DEVELOPMENTS - AN OVERVIEW

Over the past 40 years, the responsibility for community facilities and infrastructure around many of our homes has shifted fromthe local government to Community Associations Thirty years ago, a typical new town house abutted a public street on the frontand a public alley on the rear. Open space was provided by a nearby public park and recreational facilities were purchased alacarte from privately owned country clubs, swim clubs, tennis clubs, and gymnasiums. Today, 60% of all new residentialconstruction, i.e. townhouses, single family homes, condominiums, and cooperatives, is in Common Interest Developments(CID). In a CID, a home owner is bound to a Community Association that owns, maintains, and is responsible for periodicreplacements of various components that may include the roads, curbs, sidewalks, playgrounds, streetlights recreationalfacilities, and other community facilities and infrastructure,

The growth of Community Associations has been explosive. In 1965 there were only 500 Community Associations in the UnitedStates. According to the U.S. Census, there were 130,000 Community Associations in 1990. Community Associations Institute(CAl), a national trade association, estimates there were more than 200,000 Community Associations in the year 2000, and thatthe number of Community Associations will continue to multiply.

The shift of responsibility for billions of dollars of community facilities and infrastructure from the local government and privatesector to Community Associations has generated new and unanticipated problems. Although Community Associations havesucceeded in solving many short term problems, many Associations have failed to properly plan for the tremendous expenses ofreplacing community facilities and infrastructure components. When inadequate replacement reserve funding results in less thantimely replacements of failing components, home owners are exposed to the burden of special assessments, major increases inAssociation fees, and a decline in property values.

2. REPLACEMENT RESERVE STUDY

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

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

• Section A Replacement Reserve Analysis. Many components owned by the Association have a limited life andrequire periodic replacement. Therefore it is essential the Association have a financial plan that provides fundingfor the timely replacement of these components in order to protect the safety, appearance, and value of thecommunity. In conformance with American Institute of Certified Public Accountant guidelines, Section AReplacement Reserve Analysis evaluates the current funding of Replacement Reserves as reported by theAssociation and recommends annual funding of Replacement Reserves by two generally accepted accountingmethods; the Cash Flow Method and the Component Method. Section A Replacement Reserve Analysis includesgraphic and tabular presentations of these methods and current Association funding.

• Section B Replacement Reserve Inventory. The Replacement Reserve Inventory lists the commonly-ownedcomponents within the community that require periodic replacement using funding from Replacement Reserves.The Replacement Reserve Inventory also provides information about components excluded from the ReplacementReserve Inventory whose replacement is not scheduled for funding from Replacement Reserves.

Replacement Reserve Inventory includes estimates of the normal economic life and the remaining economic lifefor those components whose replacement is scheduled for funding from Replacement Reserves

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

• Section D Condition Assessment. Several of the items listed in the Replacement Reserve Inventory are discussedin more detail The Condition Assessment includes a narrative and photographs that document conditions at theproperty observed during our visual evaluation

• Section E Attachments The Appendix is provided as an attachment to the Replacement Reserve Study.Additional attachments may include supplemental photographs to document conditions at the property andadditional information specific to the property cited in the Conditions Assessment (i.e. Consumer Product SafetyCommission, Handbook for Public Playground Safety, information on segmental retaining walls manufacturerrecommendations for asphalt shingles or siding etc).

Mifler-Dodson Assoates, Inc. Attachments - Pane E2Appendix

3. METHODS OF ANALYSIS

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

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

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

• Cash Flow Method. The Cash Flow Method is sometimes referred to as the “Pooling Method.” It calculates theminimum constant annual contribution to reserves (Minimum Annual Deposit) required to meet projectedexpenditures without allowing total reserves on hand to fall below the specified minimum level in any year. Thismethod usually results in a calculated requirement for annual contribution somewhat less than that arrived at bythe Component Method of analysis.

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

• Adjusted Cash Flow Analysis. This program has the ability to modify the Cash Flow Method to take into accountforecasted inflation and interest rates, thereby producing an Adjusted Cash Flow Analysis. Attempting to forecastfuture inflation and interest rates and the impact of changing technology is highly tenuous. Therefore, in mostcases it is preferable to make a new schedule periodically rather than attempt to project far into the future. We willprovide more information on this type of analysis upon request.

4. REPLACEMENT RESERVE STUDY DATA

• Identification of Reserve Components The Reserve Analyst has only two methods of identifying ReserveComponents: 1) information provided by the Association and 2) observations made at the site. It is important thatthe Reserve Analyst be provided with all available information detailing the components owned by the Association.It is our policy to request such information prior to bidding on a project and to meet with the individuals responsiblefor maintaining the community after acceptance of our proposal. After completion of the Study, the Study shouldbe reviewed by the Board of Directors, individuals responsible for maintaining the community, and theAssociation’s accounting professionals. We are dependent upon the Association for correct information,documentation, and drawings.

• Unit Costs Unit costs are developed using nationally published standards and estimating gu’des and are adjustedby Delaware or region In some instances recent data received in the course of our work is used to modify thesefigures

Contractor proposals or actual cost experience may be available as part of the Associahori records This is ussfui

information which should be incorporated into your report. Please bring any such available data to our attention.preferably before the report is commenced

• Replacement vs Repair and Maintenance. A Replacement Reserve Study addresses the required funding forCapital Replacement Expenditures This should not be confused with operational costs or cost of repairs ormaintenance

Miller-Dodson Associates, Inc. *

Appendix

5. DEFINITIONS

Adjusted Cash Flow Analysis. Cash flow analysis adjusted to take into account annual cost increases due to inflation andinterest earned on invested reserves. In this method, the annual contribution is assumed to grow annually at the inflation rate,

Annual Deposit if Reserves Were Fully Funded. Shown on the Summary Sheet Al in the Component Method summary, thiswould be the amount of the Annual Deposit needed if the Reserves Currently on Deposit were equal to the Total CurrentObjective

Cash Flow Analysis. See Cash Flow Method, above

Component Analysis. See Component Method, above.

Contingency. An allowance for unexpected requirements. Roughly the same as the Minimum Recommended Reserve Level tobe Held on Account used in the Cash Flow Method of analysis.

Critical Year. In the Cash Flow Method, a year in which the reserves on hand are projected to fall to the established minimumlevel. See Minimum Recommended Reserve Level to be Held on Account.

Current Objective. This is the reserve amount that would have accumulated had the item been funded from initial construction atits current replacement cost. It is equal to the estimated replacement cost divided by the estimated economic life, times thenumber of years expended (the difference between the Estimated Economic Life and the Estimated Life Left). The Total CurrentObjective can be thought of as the amount of reserves the Association should now have on hand based on the sum of all of theCurrent Objectives.

Cyclic Replacement Item. A component item that typically begins to fail after an initial period (Estimated Initial Replacement), butwhich will be replaced in increments over a number of years (the Estimated Replacement Cycle). The Reserve Analysis programdivides the number of years in the Estimated Replacement Cycle into five equal increments. It then allocates the EstimatedReplacement Cost equally over those five increments. (As distinguished from Normal Replacement Items, see below)

Estimated Economic Life. Used in the Normal Replacement Schedules. This represents the industry average number of yearsthat a new item should be expected to last until it has to be replaced. This figure is sometimes modified by climate, region, ororiginal construction conditions.

Estimated Economic Life Left. Used in the Normal Replacement Schedules. Number of years until the item is expected to needreplacement. Normally, this number would be considered to be the difference between the Estimated Economic Life and the ageof the item. However, this number must be modified to reflect maintenance practice, climate, original construction and quality, orother conditions. For the purpose of this report, this number is determined by the Reserve Analyst based on the present conditionof the item relative to the actual age.

Estimated Initial Replacement. For a Cyclic Replacement Item (see above), the number of years until the replacement cycle isexpected to begin.

Estimated Replacement Cycle. For a Cyclic Replacement Item, the number of years over which the remainder of thecomponent’s replacement occurs,

Minimum Annual Deposit. Shown on the Summary Sheet Al. The calculated requirement for annual contribution to reserves ascalculated by the Cash Flow Method (see above).

Minimum Deposit in the Study Year. Shown on the Summary Sheet Al. The calculated requirement for contribution to reservesin the study year as calculated by the Component Method (see above)

Minimum Recommended Reserve Level to be Held on Account Shown on the Summary Sheet Al. this number is used in theCash Flow Method only This is the prescribed level below which the reserves will not be allowed to fall in any year This amountis determined based on the age. condtion and replacement cost of the individual components This number is normally given as

k’. .—. .-a ... k’. r.., .....,-,.._. n.,.-.u...-.....,...... n.... ._C I, .. ,.. —. .a puUencg k.a j..e1 a eeie UomponLs

Normal Replacement Item. A component of the property that, after an expected economic life, is replaced in its entirety (Asdistinguished from Cyclic Replacement Items. see above.)

Normal Replacement Schedules. The list of Normal Replacement Items by category or location. These items appear on pagesdesignated.

Numbe of Years of the Study. The number of years into the future for whch exoendtures are projected and reserve levelscalculated Tnis number should be large enough to include the projected rep,acement of every item on the schedule, at leastonce Ths study covers a 4Oyear period

Miller-Dodson Associates,_Inc.

____________ _____

Appendix

One Time Deposit Required to Fully Fund Reserves Shown on the Summary Sheet Al in the Component Method summary, thisis the difference between the Total Current Objective and the Reserves Currently on Deposit

Reserves Currently on Deposit. Shown on the Summary Sheet Al this is the amount of accumulated reserves as reported bythe Association in the current year.

Reserves on Hand Shown in the Cyclic Replacement and Normal Replacement Schedules. this is the amount of reservesallocated to each component item in the Cyclic or Normal Replacement schedules. This figure is based on the ratio of ReservesCurrently on Deposit divided by the total Current Objective

Replacement Reserve Study. An analysis of all of the components of the common property of the Association for which a needfor replacement should be anticipated within the economic life of the property as a whole. The analysis involves estimation foreach component of its estimated Replacement Cost, Estimated Economic Life, and Estimated Life Left. The objective of thestudy is to calculate a recommended annual contribution to the Associations Replacement Reserve Fund.

Total Replacement Cost. Shown on the Summary Sheet Al. this is total of the Estimated Replacement Costs for all items on the

schedule if they were to be replaced once.

Unit Replacement Cost. Estimated replacement cost for a single unit of a given item on the schedule.

Unit (of Measure>. Non-standard abbreviations are defined on the page of the Replacement Reserve Inventory where the itemappears The following standard abbreviations are used in this report:

EA: each FT. feet LS: lump sum PR: pair SF. square feet SY. square yard

6. LIST OF RECOMMENDED REPAIRS - PROCEDURES

A List of Recommended Repairs is offered as a supplemental report to the Replacement Reserve Study (at an additional fee) toassist the Association in understanding the financial implications of all items owned by the Association, not just the itemsincluded for funding by Replacement Reserves listed in the Replacement Reserve Inventory. The following information relates tothe List of Recommended Repairs:

• Repair costs. Cost range estimates given in the repair list assume that all work by a given trade will be donetogether as a single project. If repairs are done piece-meal, the costs would be significantly higher. The costs ofany repairs to be funded out of the Reserve Fund should be subtracted from the Reserves Currently on Depositfigure. The Board or Property Manager should coordinate this decision with the Reserve Analyst as part of therevision process.

• Completion of repairs. The Replacement Reserve Analysis assumes that all repairs cited in the Repair List will becompleted within a twelve-month period of time. Estimated Life Left in the Replacement Reserve Study has beenfactored under this assumption. Any deletions or delays of the projects included in the List of RecommendedRepairs may result in major inaccuracies in the Replacement Reserve Analysis.

a Safety issues. If safety issues have been cited, they should be given the highest priority and should be doneimmediately upon receipt of this report. The Board must recognize that from a liability standpoint, they have beenmade aware of the existence of these unsafe conditions, if any, once the report is delivered for their review.

a Unit costs. Nationally published standards and standard estimating manuals have been used in the developmentof this report. Contractor proposals or actual cost experience may be available as part of the Association recordsWe will adjust our figures to conform to your experience if the material or information is disclosed to us and/or

made available for our use.

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