REPORT FY 2010 WOODWIND ASSOCIATION - NHE

REPLAC

EMEN

T RESER

VE REPO

RT FY

2010

WO

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WIN

D A

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IATION

REPLACEMENT RESERVE REPORT FY 2010WOODWIND ASSOCIATION

Community Management by:

N & H Enterprises

PO Box 5539 Greenville, SC 29607

864-467-1600

Consultant:

MILLER ~ DODSON ASSOCIATES

929 West Street, Suite 310 Annapolis, MD 21401

Tel: 410.268.0479 Fax: 410.268.8483

www.mdareserves.com

Intentionally Left Blank

Section A

Replacement Reserve Analysis

Executive Summary - A1 Reserve Status & Funding Plan - A1

General Information - A2 Cash Flow Method - A4

Component Method - A6 Current Association Funding - A8 Reserve Analysis Comments - A9

Section B

Replacement Reserve Inventory

Replacement Reserve Inventory General information - B1

Replacement Reserve Inventory Comments - B2

Schedule of Projected Replacements and Exclusions - B3

Section C

Projected Annual Replacements

Projected Annual Replacements General Information - C1

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

Calendar of Projected Annual Replacements - C2

Section D

Condition Assessment

REPLACEMENT RESERVE REPORT

WOODWIND ASSOCIATION Mauldin, South Carolina

Revised February 13, 2009

Scope. Woodwind Association is a condominium community located in Mauldin, South Carolina. Woodwind Association was constructed in 1985. The community consists of 31 townhouse buildings with a total of 114 units. The survey examined the common elements of the property, including:

• Asphalt drive and parking. • Concrete sidewalks and curb. • Retaining walls, fencing, and railings. • Swimming pool and pool building. • Building exteriors.

Level of Service. This study has been performed as a Level I, Full Service Reserve Study as defined under the National Reserve Study Standards that have been adopted by the Community Associations Institute. As such, a complete component inventory was established based on information regarding commonly-owned components provided by the community manager and upon quantities derived from field measurement and/or quantity takeoffs from to-scale engineering drawings. The condition of all commonly-owned components was ascertained from a site visit and the visual inspection of each component by the Analyst. The life expectancy and the value of the components are provided based in part on these observations. The fund status and funding plan have been derived from analysis of this data.

Section E

Attachments

Appendix

Purpose. The purpose of this Replacement Reserve Study is to provide Woodwind Association (hereinafter called the Association) with an inventory of the common community facilities and infrastructure components that require periodic replacement. The Study includes a general view of the condition of these items and an effective financial plan to fund projected periodic replacements. • Inventory of Items Owned by the Association. Section B Replacement Reserve Inventory lists the

Projected Replacements of the commonly owned items that require periodic replacement using funding from Replacement Reserves. The Replacement Reserve Inventory also provides information about excluded items, which are items whose replacements are not scheduled for funding from Replacement Reserves.

• Condition of Items Owned by the Association. Section B Replacement Reserve Inventory

includes our estimates of the normal economic life and the remaining economic life for the projected replacements. Section C Calendar of Projected Annual Replacements provides a year-by-year listing of the projected replacements. Section D Condition Assessment provides additional detail for items that are unique or deserving of attention because of their condition or the manner in which they have been treated in this Study.

• Financial Plan. The Association has a fiduciary responsibility to protect the appearance, value, and

safety of the property and it is therefore essential the Association have a financial plan that provides funding for the projected replacements. In conformance with American Institute of Certified Public Accountant guidelines, Section A Replacement Reserve Analysis evaluates the current funding of Replacement Reserves as reported by the Association and recommends annual funding of Replacement Reserves by two generally accepted accounting methods; the Cash Flow Method and the Component Method. Section A Replacement Reserve Analysis includes graphic and tabular presentations of these methods and current Association funding. An Executive Summary of these calculations is provided on Page A1.

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 January 22 and 23, 2009. Miller - Dodson Associates

has visually inspected the common elements of the property in order to ascertain the remaining useful life and the replacement costs of these components.

Current Funding. This reserve study has been prepared for Fiscal Year 2010 covering the period from January 1, 2010 to December 31, 2010. The Replacement Reserves on deposit as of January 1, 2009 are reported to be $57,821. The planned contribution for the fiscal year is $43,000. This results in a Reserve Fund balance at the start of the fiscal year as follows:

January 1 balance $57,821 12 months contribution 43,000 FY 2010 opening balance $100,821

Engineering Drawings. No architectural drawings or engineering site plans were available for review in connection with this study. We recommend the Association assemble a library of site and building plans of 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 future projects. Acknowledgement. Miller - Dodson Associates would like to acknowledge the assistance and input of Ms. Rebecca Thompson and Mr. Dale Illsley. Ms. Thompson and Mr. Illsley provided very helpful insight into the current operations at the property.

Analyst’s Credentials. This study has been performed by James E. Piper, who holds a Bachelors Degree and a Masters Degree in Mechanical Engineering from the University of Akron and a PhD from the University of Maryland. Dr. Piper is a Registered Professional Engineer in the State of Maryland, and the author of articles and books on the subject of the condition assessment of facilities. He has over 20 years experience in the evaluation and the management of the physical plant of the University of Maryland. He is currently a Reserve Specialist (RS) for Miller - Dodson Associates. Respectfully submitted, MILLER - DODSON ASSOCIATES, INC. James Piper, RS Reserve Specialist


Miller + Dodson Associates, Inc. Replacement Reserve Analysis - Page A1Woodwind Association Revised February 13, 2009

1001403WOODWIND10

EXECUTIVE SUMMARYThe Woodwind Association Replacement Reserve Inventory identifies 130 Projected Replacements forfunding from Replacement Reserves, with an estimated one-time replacement cost of $2,712,114.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:

$281,440 CASH FLOW METHOD MINIMUM ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2010.$205.73 Per unit (average), minimum monthly funding of Replacement Reserves

The Cash Flow Method (CFM) calculates Minimum Annual Funding of Replacement Reserves that will fund Projected 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 2010 and the CFM - Minimum Annual Funding of Replacement Reserves in2011 declines to $192,460 ($140.69 per unit, per month), after the completion of $300,897 of replacements in the Study Year, 2010.A subsequent Peak Year and decline in the Cash Flow Method, Minimum Annual Funding, occurs in 2016.

$610,546 COMPONENT METHOD RECOMMENDED ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2010.$446.31 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 separate account. 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 $1,592,749.The Association reports having $100,821 on deposit, which is 6.3% funded.

$43,000 CURRENT ANNUAL FUNDING OF REPLACEMENT RESERVES (as reported by the Association).$31.43 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 30 years of the 30-year Study Period, and a maximum shortfall of $-2,138,256 occurs in 2035.

Pages A2 and A3 explain the Study Year, Study Period, Adjustments (interest & inflation), Beginning Balance, and Projected Replacements. Pages A4 to A9explain in more detail the calculations associated with the Cash Flow Method, Component Method, and Current Funding.

REPLACEMENT RESERVE STATUS AND FUNDING PLANCurrent funding 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 the$3,428,670 of Projected Replacements listed in the Woodwind Association Replacement Reserve Inventory.The Funding Plan should be professionally evaluated every three to five years or after completion of each major replacement 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.


1001403WOODWIND10

REPLACEMENT RESERVE ANALYSIS - GENERAL INFORMATIONThe Woodwind Association Replacement Reserve Analysis calculations of recommended funding ofReplacement Reserves by the Cash Flow Method and the Component Method, and the evaluation of the Current Funding, are based upon the same General Information; including the Study Year, Study Period, Adjustments (for interest, inflation, and/or a constant increase in annual funding), Beginning Balance, and Projected Replacements:

STUDY YEARThe 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 PERIODThe Replacement Reserve Analysis evaluates the funding of Replacement Reserves over a 30-year Study Period that 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 for inflation, interest, and/or a constant annual increase in funding, using values provided by the Association.

BEGINNING BALANCEThe Association reports Replacement Reserves on Deposit totaling $100,821 at the start of the Study Year.

Graph #1. Annual Expenditures for Projected Replacements This bar graph summarizes annual expenditures for the $3,428,670 of Projected Replacements identified in the Replacement Reserve Inventory over the30-year Study Period. The red line shows the average annual expenditure of $114,289.

30 YR AVERAGE$114,289

$300

,897

$43,

337

$319

,895

$57,

414

$239

,567 $2

61,3

15

$233

,230

$70,

881

$114

,682

$57,

414

$39,

933

$10,

140

$22,

182

$1,1

40 $10,

058

$256

,632

$0

$221

,755

$155

,538

$219

,187

$311

,313

$100

,998

$109

,896

$1,1

40 $10,

614

$187

,920

$1,0

50

$42,

918

$16,

020

$11,

605

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$0

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$100,000

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$350,000


1001403WOODWIND10

PROJECTED REPLACEMENTSThe Woodwind Association Replacement Reserve Inventory (Section B) identifies 130 ProjectedReplacements with a one-time Replacement Cost of $2,712,114 and replacements totaling $3,428,670 over the30-year Study Period. Projected Replacements are the replacement of commonly-owned items that: require periodic replacement and whose replacement is to be funded from Replacement Reserves.

The Replacement Reserve Inventory also identifies 33 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 B1.

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 any Excluded Items) broken down into 16 major categories (Pages B3 to B17). Tables are also included that list eachProjected Replacement by year for each of the 30 years of the Study Period beginning on Page C1.

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), ComponentMethod (purple diamonds), and the Current Funding Plan as reported by the Association (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.

$1,390,821

$3,428,670

$5,012,608

$4,018,877

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$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Cash Flow Method - Cumulative Receipts

Component Method - Cumulative Receipts

Current Funding - Cumulative Receipts

Projected Replacements - CumulativeExpenditures


1001403WOODWIND10

CASH FLOW METHOD

$281,440 CASH FLOW METHOD MINIMUM ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2010.$205.73 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 if cumulative 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

First Peak Year

Second Peak Year

$3,428,670

$590,207

$4,018,877

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$1,000,000

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$3,000,000

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$5,000,000

Cash Flow Method - Cumulative Receipts Cash Flow Method - Year End Balance Cumulative Expenditures


1001403WOODWIND10

CASH FLOW METHOD (cont'd)

Replacement Reserves - Minimum Recommended Balance. The Minimum Recommended Balance is $81,363,which is 3.0 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 2010, after the completion of $300,897 of replacements in the Study Year, 2010. The Cash Flow Method - Minimum Annual Funding of Replacement Reserves declines from $281,440 in 2010 to $192,460 in 2011.Subsequent Peak Year. A subsequent Peak Year and decline in the Cash Flow Method - Minimum Annual Funding, occurs in: 2016.

Study Period. The Cash Flow Method calculates the recommended contributions to Replacement Reserves over the 30-year Study Period. These calculations are based upon a 40-year projection of expenditures for Projected Replacements 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 in Replacement Reserves not being available for the Projected Replacements listed in the Replacement Reserve Inventory 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 Reserve Analysis do not account for interest earned on Replacement Reserves, the effects of inflation of the cost of Projected 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 for Projected Replacements listed in the Reserve Inventory over the 30-year Study Period is $114,289 (see Graph #1).The Cash Flow Method - Minimum Annual Funding of Replacement Reserves in the Study Year is $281,440.This is 246.3 percent of the Average Annual Expenditure, indicating that the Association is building ReplacementReserves in advance of the first Peak Year in 2010.

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

Starting balance $100,821 Annual deposit $281,440 $192,460 $192,460 $192,460 $192,460 $192,460 $192,460 $107,907 $107,907 $107,907

Expenditures $300,897 $43,337 $319,895 $57,414 $239,567 $261,315 $233,230 $70,881 $114,682 $57,414Year end balance $81,363 $230,486 $103,051 $238,097 $190,990 $122,134 $81,363 $118,390 $111,615 $162,107

Minimum rec. funding lvl. $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363Cumulative expenditures $300,897 $344,234 $664,129 $721,543 $961,110 $1,222,425 $1,455,656 $1,526,536 $1,641,218 $1,698,632

Cumulative receipts $382,261 $574,720 $767,180 $959,640 $1,152,100 $1,344,559 $1,537,019 $1,644,926 $1,752,833 $1,860,740 First Peak Year Second Peak Year

Year 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029Annual deposit $107,907 $107,907 $107,907 $107,907 $107,907 $107,907 $107,907 $107,907 $107,907 $107,907

Expenditures $39,933 $10,140 $22,182 $1,140 $10,058 $256,632 $221,755 $155,538 $219,187Year end balance $230,082 $327,848 $413,574 $520,341 $618,190 $469,465 $577,372 $463,524 $415,893 $304,613

Minimum rec. funding lvl. $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363Cumulative expenditures $1,738,565 $1,748,705 $1,770,886 $1,772,026 $1,782,084 $2,038,716 $2,038,716 $2,260,471 $2,416,009 $2,635,196

Cumulative receipts $1,968,647 $2,076,553 $2,184,460 $2,292,367 $2,400,274 $2,508,181 $2,616,088 $2,723,995 $2,831,902 $2,939,808



Minimum rec. funding lvl. $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363 $81,363Cumulative expenditures $2,946,509 $3,047,507 $3,157,403 $3,158,543 $3,169,157 $3,357,077 $3,358,127 $3,401,045 $3,417,065 $3,428,670

Cumulative receipts $3,047,715 $3,155,622 $3,263,529 $3,371,436 $3,479,343 $3,587,250 $3,695,157 $3,803,063 $3,910,970 $4,018,877


1001403WOODWIND10

COMPONENT METHOD

$610,546 COMPONENT METHOD RECOMMENDED ANNUAL FUNDING OF REPLACEMENT RESERVES IN THE STUDY YEAR, 2010.$446.31 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 130 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 not available to fund other Projected Replacements. The calculation of the Recommended Annual Funding of Replacement Reserves is a multi-step process outlined in more detail on Page A7.

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

$3,428,670

$1,583,938

$5,012,608

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Component Method - Cumulative Receipts Component Method - Year End Balance Projected Replacements - Cumulative Expenditures


1001403WOODWIND10

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 for each of the 130 Projected Replacements. The total, $1,592,749, 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 ($100,821)by the Current Funding Objective ($1,592,749). At Woodwind Association the Funding Percentage is 6.3%

Allocation of the Beginning Balance. The Beginning Balance is divided among the 130 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 6.3 percent funded, there is $51 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 the Replacement Cost. The result is then divided by the number of years until replacement, and the result is the annual funding for each of the Projected Replacements. The sum of these is $610,546, the Component MethodRecommended Annual Funding of Replacement Reserves in the Study Year (2010).

In our fence example, the $51 in the account is subtracted from the $1,000 Total Replacement Cost and divided by the 2 years that remain before replacement, resulting in an annual deposit of $475. Next year, the depositremains $475, 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 of Projected Replacements, or a constant annual increase in Annual Funding of Replacement Reserves.

Table #2. Component Method Data - Years 1 through 30Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019



Cumulative Expenditures $300,897 $344,234 $664,129 $721,543 $961,110 $1,222,425 $1,455,656 $1,526,536 $1,641,218 $1,698,632Cumulative Receipts $711,367 $1,054,492 $1,378,610 $1,616,535 $1,842,482 $2,034,400 $2,199,793 $2,343,318 $2,482,619 $2,613,994


Expenditures $39,933 $10,140 $22,182 $1,140 $10,058 $256,632 $221,755 $155,538 $219,187Year end balance $1,002,867 $1,119,061 $1,223,213 $1,347,851 $1,463,572 $1,332,404 $1,452,309 $1,350,458 $1,314,117 $1,213,478

Cumulative Expenditures $1,738,565 $1,748,705 $1,770,886 $1,772,026 $1,782,084 $2,038,716 $2,038,716 $2,260,471 $2,416,009 $2,635,196Cumulative Receipts $2,741,432 $2,867,766 $2,994,100 $3,119,878 $3,245,656 $3,371,120 $3,491,025 $3,610,929 $3,730,126 $3,848,674


Expenditures $311,313 $100,998 $109,896 $1,140 $10,614 $187,920 $1,050 $42,918 $16,020 $11,605Year end balance $1,020,713 $1,036,504 $1,042,869 $1,157,990 $1,263,638 $1,191,790 $1,306,812 $1,379,967 $1,479,745 $1,583,938



1001403WOODWIND10

CURRENT FUNDING

$43,000 CURRENT ANNUAL FUNDING OF REPLACEMENT RESERVES (as reported by the Association).$31.43 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 $43,000 per year in each of the 30 years of the Study Period.Our evaluation is based upon this Replacement Reserve Funding Level, a $100,821 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 2010.The Current Annual Funding of Replacement Reserves results in insufficient funds to make Projected Replacementsin 30 years of the 30-year Study Period, and a maximum shortfall of $-2,138,256 occurs in 2035.

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 the cost 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 $114,289 (see Graph #1). Current Association annual funding of Replacement Reserves is $43,000, or approximately 38 percent ofthe Average Annual Expenditure.

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

$3,428,670

($2,037,849)

$1,390,821

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Current Funding - Cumulative Receipts Current Funding - Year End Balance Projected Replacements - CumulativeExpenditures


1001403WOODWIND10

CURRENT FUNDING (cont'd)

Table #3. Current Funding Data - Years 1 through 30Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


Expenditures $300,897 $43,337 $319,895 $57,414 $239,567 $261,315 $233,230 $70,881 $114,682 $57,414Year end balance ($157,076) ($157,413) ($434,308) ($448,722) ($645,289) ($863,604) ($1,053,835) ($1,081,715) ($1,153,397) ($1,167,811)

Cumulative Expenditures $300,897 $344,234 $664,129 $721,543 $961,110 $1,222,425 $1,455,656 $1,526,536 $1,641,218 $1,698,632Cumulative Receipts $143,821 $186,821 $229,821 $272,821 $315,821 $358,821 $401,821 $444,821 $487,821 $530,821


Expenditures $39,933 $10,140 $22,182 $1,140 $10,058 $256,632 $221,755 $155,538 $219,187Year end balance ($1,164,744) ($1,131,884) ($1,111,065) ($1,069,205) ($1,036,263) ($1,249,895) ($1,206,895) ($1,385,650) ($1,498,188) ($1,674,375)

Cumulative expenditures $1,738,565 $1,748,705 $1,770,886 $1,772,026 $1,782,084 $2,038,716 $2,038,716 $2,260,471 $2,416,009 $2,635,196Cumulative receipts $573,821 $616,821 $659,821 $702,821 $745,821 $788,821 $831,821 $874,821 $917,821 $960,821


Expenditures $311,313 $100,998 $109,896 $1,140 $10,614 $187,920 $1,050 $42,918 $16,020 $11,605Year end balance ($1,942,688) ($2,000,686) ($2,067,582) ($2,025,722) ($1,993,336) ($2,138,256) ($2,096,306) ($2,096,224) ($2,069,244) ($2,037,849)


COMMENTS ON THE REPLACEMENT RESERVE ANALYSISThis Replacement Reserve Study has been developed in compliance with the Community Associations Institute,National Reserve Study Standards, for a Level One Study - Full Service.

Woodwind Association has 114 units. The type of property is a condominium.

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


Miller + Dodson Associates, Inc. Replacement Reserve Inventory - Page B1Woodwind Association Revised February 13, 2009

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REPLACEMENT RESERVE INVENTORYGENERAL INFORMATION

Woodwind Association - Replacement Reserve Inventory identifies 163 items. Two types of items areidentified, Projected Replacements and Excluded Items:

PROJECTED REPLACEMENTS. 130 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 $2,712,114. Replacements totaling $3,428,670 are scheduledin the Replacement Reserve Inventory over the 30-year Study Period.Projected Replacements are the replacement of commonly owned physical assets that require periodic replacement and whose replacement is to be funded from Replacement Reserves.

EXCLUDED ITEMS. 33 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 from Replacement Reserves. This exclusion is made to accurately reflect how Replacement Reserves are administered. If the Association has selected an alternative level, it will be noted in the Replacement Reserve Inventory - 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 single unit 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 the responsibility 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 163 items included in the Woodwind Association Replacement Reserve Inventoryare divided into 16 major categories. Each category is printed on a separate page, Pages B3 to B17.

LEVEL OF SERVICE. This Replacement Reserve Inventory has been developed in compliance with the standardsestablished for a Level One Study - Full Service, as defined by the National Reserve StudyStandards, established in 1998 by Community Associations Institute, which states:

A Level I - Full Service Reserve Study includes the computation of complete component inventoryinformation regarding commonly owned components provided by the property manager, quantities derived from field measurements and/or quantity takeoffs from to-scale engineering drawings thatmay be made available. The condition of all components is ascertained from a visual inspectionof each component by the analyst. The life expectancy and the value of the components areprovided based on these observations and the funding status and funding plan are then derived from analysis of this data.


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REPLACEMENT RESERVE INVENTORY - GENERAL INFORMATION (cont'd)

INVENTORY DATA. Each of the 130 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 additional information 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; industry standard 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 be replaced. In "normal" conditions, this could be calculated by subtracting the age of the item from the Normal 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 the item, maintenance, etc.Total Replacement Cost. This is calculated by multiplying the Unit Replacement Cost by the Number of Units.

Each of the 33 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 after consultation with an accounting 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 assumptions that provide the basis for any partial funding are noted on in the Comments section.


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CONCRETE SIDEWALK AND CURB & GUTTERPROJECTED REPLACEMENTS

UNIT NORMAL REMAININGITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT

# DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($)

1 Concrete flatwork (6%) sf 675 $7.50 60 none 2 $5,0632 Concrete flatwork (6%) sf 675 $7.50 60 6 2 $5,0633 Concrete flatwork (6%) sf 675 $7.50 60 12 2 $5,0634 Concrete flatwork (6%) sf 675 $7.50 60 18 2 $5,0635 Concrete flatwork (6%) sf 675 $7.50 60 24 2 $5,0636 Concrete flatwork (6%) sf 675 $7.50 60 30 2 $5,0637 Concrete flatwork (6%) sf 675 $7.50 60 36 2 $5,0638 Concrete flatwork (6%) sf 675 $7.50 60 42 2 $5,0639 Concrete flatwork (6%) sf 675 $7.50 60 48 2 $5,063

10 Concrete flatwork (6%) sf 675 $7.50 60 54 2 $5,063

11 Concrete curb (6%) lf 481 $32.00 60 3 2 $15,37712 Concrete curb (6%) lf 481 $32.00 60 9 2 $15,37713 Concrete curb (6%) lf 481 $32.00 60 15 2 $15,37714 Concrete curb (6%) lf 481 $32.00 60 21 2 $15,37715 Concrete curb (6%) lf 481 $32.00 60 27 2 $15,37716 Concrete curb (6%) lf 481 $32.00 60 33 2 $15,37717 Concrete curb (6%) lf 481 $32.00 60 39 2 $15,37718 Concrete curb (6%) lf 481 $32.00 60 45 2 $15,37719 Concrete curb (6%) lf 481 $32.00 60 51 2 $15,37720 Concrete curb (6%) lf 481 $32.00 60 57 2 $15,377

CONCRETE SIDEWALK AND CURB & GUTTER - Replacement Costs - Subtotal $204,398

CONCRETE SIDEWALK AND CURB & GUTTERCOMMENTS

The concrete flatwork includes the sidewalks, dumpster pads, mailbox pads, the front door stoops, and the rear patios.


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BRICK STEPSPROJECTED REPLACEMENTS



21 Brick steps (10%) lf 85 $65.00 40 none 2 $5,55122 Brick steps (10%) lf 85 $65.00 40 6 2 $5,55123 Brick steps (10%) lf 85 $65.00 40 12 2 $5,55124 Brick steps (10%) lf 85 $65.00 40 18 2 $5,55125 Brick steps (10%) lf 85 $65.00 40 24 2 $5,55126 Brick steps (10%) lf 85 $65.00 40 30 2 $5,55127 Brick steps (10%) lf 85 $65.00 40 36 2 $5,55128 Brick steps (10%) lf 85 $65.00 40 42 2 $5,55129 Brick steps (10%) lf 85 $65.00 40 48 2 $5,55130 Brick steps (10%) lf 85 $65.00 40 54 2 $5,551

BRICK STEPS - Replacement Costs - Subtotal $55,510

BRICK STEPSCOMMENTS


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ASPHALT PAVEMENTPROJECTED REPLACEMENTS



31 East Bay Court asphalt sf 5,286 $1.70 20 5 2 $8,98632 Seal coat East Bay Court sf 5,286 $0.20 5 none 2 $1,057

33 Sims Alley asphalt sf 8,260 $1.70 20 5 2 $14,04234 Seal coat Sims Alley sf 8,260 $0.20 5 none 2 $1,652

35 Legar Street asphalt sf 20,836 $1.70 20 none 2 $35,42136 Seal coat Legar Street sf 20,836 $0.20 5 5 2 $4,167

37 Pool parking lot asphalt sf 7,444 $1.70 20 2 2 $12,65538 Seal coat pool parking lot sf 7,444 $0.20 5 7 2 $1,489

39 Tradd Street asphalt sf 14,858 $1.70 20 5 2 $25,25940 Seal coat Tradd Street sf 10,012 $0.20 5 none 2 $2,002

41 Queens Street asphalt sf 10,012 $1.70 20 5 2 $17,02042 Seal coat Queens Street sf 10,012 $0.20 5 none 2 $2,002

43 Strolls Alley asphalt sf 22,944 $1.70 20 5 2 $39,00544 Seal coat Strolls Alley sf 22,944 $0.20 5 none 2 $4,589

45 Wentworth Street asphalt sf 18,490 $1.70 20 2 2 $31,43346 Seal coat Wentworth Street sf 18,490 $0.20 5 7 2 $3,698

ASPHALT PAVEMENT - Replacement Costs - Subtotal $204,478

ASPHALT PAVEMENTCOMMENTS

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


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ASPHALT PAVEMENTPROJECTED REPLACEMENTS



47 Lambell Street asphalt sf 20,870 $1.70 20 2 2 $35,47948 Seal coat Lambell Street sf 20,870 $0.20 5 7 2 $4,174

49 Market Place asphalt sf 11,036 $1.70 20 2 2 $18,76150 Seal coat Market Place sf 11,036 $0.20 5 7 2 $2,207

ASPHALT PAVEMENT - Replacement Costs - Subtotal $60,621

ASPHALT PAVEMENTCOMMENTS


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SITE IMPROVEMENTSPROJECTED REPLACEMENTS



51 Brick monument, tuckpointing sf 84 $12.50 20 6 2 $1,05052 Community sign ls 1 $1,300.00 20 1 2 $1,300

53 Site lighting fixtures ea 22 $2,150.00 25 8 2 $47,300

54 Trash enclosure brick, tuckpointing sf 855 $12.50 30 10 2 $10,688

55 Mail building roofs sf 454 $3.75 20 5 2 $1,70156 Mail building brick tuckpointing sf 912 $12.50 30 15 2 $11,40057 Mailboxes ls 1 $5,775.00 20 10 2 $5,775

58 Gazebo roof sf 83 $3.75 20 15 2 $31259 Gazebo ls 1 $3,200.00 40 15 2 $3,200

60 Pressure treated wood retaining wall sf 964 $32.00 15 5 2 $30,84861 Railroad tie retaining wall sf 560 $40.00 40 none 2 $22,40062 Brick retaining wall sf 680 $50.00 40 15 2 $34,00063 Brick privacy fence sf 144 $45.00 40 15 2 $6,48064 Wood privacy fence lf 534 $30.00 20 8 2 $16,020

65 Storm water catch basins ea 13 $6,500.00 40 15 2 $84,50066 Water mains, 10% unit 116 $250.00 20 5 2 $29,00067 Sanitary sewer lines, 10% unit 116 $125.00 20 5 2 $14,500

SITE IMPROVEMENTS - Replacement Costs - Subtotal $320,474

SITE IMPROVEMENTSCOMMENTS

We have assumed that the railroad tie retaining walls will be replaced with ones constructed using modular block.


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TOWNHOUSE EXTERIORSPROJECTED REPLACEMENTS



68 Asphalt shingles, 25% sf 30,594 $3.90 20 20 2 $119,31769 Asphalt shingles, 25% sf 30,594 $3.90 20 19 2 $119,31770 Asphalt shingles, 25% sf 30,594 $3.90 20 18 2 $119,31771 Asphalt shingles, 25% sf 30,594 $3.90 20 17 2 $119,317

72 Gutter and downspouts, 25% ft 2,555 $6.50 20 20 2 $16,60873 Gutter and downspouts, 25% ft 2,555 $6.50 20 19 2 $16,60874 Gutter and downspouts, 25% ft 2,555 $6.50 20 18 2 $16,60875 Gutter and downspouts, 25% ft 2,555 $6.50 20 17 2 $16,608

76 Vinyl siding, 10% sf 9,088 $4.50 35 none 2 $40,89777 Vinyl siding, 10% sf 9,088 $4.50 35 1 2 $40,89778 Vinyl siding, 10% sf 9,088 $4.50 35 2 2 $40,89779 Vinyl siding, 10% sf 9,088 $4.50 35 3 2 $40,89780 Vinyl siding, 10% sf 9,088 $4.50 35 4 2 $40,89781 Vinyl siding, 10% sf 9,088 $4.50 35 5 2 $40,89782 Vinyl siding, 10% sf 9,088 $4.50 35 6 2 $40,89783 Vinyl siding, 10% sf 9,088 $4.50 35 7 2 $40,89784 Vinyl siding, 10% sf 9,088 $4.50 35 8 2 $40,89785 Vinyl siding, 10% sf 9,088 $4.50 35 9 2 $40,897

86 Masonry tuckpointing, 5% sf 1,109 $5.50 10 5 2 $6,097

TOWNHOUSE EXTERIORS - Replacement Costs - Subtotal $958,763

TOWNHOUSE EXTERIORSCOMMENTS

We have assumed that the existing wood siding will be replaced with vinyl siding. We have also assumed that the siding will be replaced at the rate of 10% per year for the next ten years.


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TOWNHOUSE EXTERIORSPROJECTED REPLACEMENTS



87 Wood railing, front stoop & steps, 25% lf 299 $35.00 25 2 2 $10,46588 Wood railing, front stoop & steps, 25% lf 299 $35.00 25 4 2 $10,46589 Wood railing, front stoop & steps, 25% lf 299 $35.00 25 6 2 $10,46590 Wood railing, front stoop & steps, 25% lf 299 $35.00 25 8 2 $10,465

91 Window shutters, 25% pr 68 $100.00 15 none 2 $6,77592 Window shutters, 25% pr 68 $100.00 15 2 2 $6,77593 Window shutters, 25% pr 68 $100.00 15 4 2 $6,77594 Window shutters, 25% pr 68 $100.00 15 6 2 $6,775

95 Wood deck, decking - 25% sf 3,686 $18.00 15 none 2 $66,34896 Wood deck, decking - 25% sf 3,686 $18.00 15 2 2 $66,34897 Wood deck, decking - 25% sf 3,686 $18.00 15 4 2 $66,34898 Wood deck, decking - 25% sf 3,686 $18.00 15 6 2 $66,348

99 Wood deck, structure - 25% sf 3,686 $22.00 30 none 2 $81,092100 Wood deck, structure - 25% sf 3,686 $22.00 30 2 2 $81,092101 Wood deck, structure - 25% sf 3,686 $22.00 30 4 2 $81,092102 Wood deck, structure - 25% sf 3,686 $22.00 30 6 2 $81,092

103 Wood deck, wood railing - 25% ft 533 $30.00 30 none 2 $15,990104 Wood deck, wood railing - 25% ft 533 $30.00 30 2 2 $15,990105 Wood deck, wood railing - 25% ft 533 $30.00 30 4 2 $15,990106 Wood deck, wood railing - 25% ft 533 $30.00 30 6 2 $15,990

TOWNHOUSE EXTERIORS - Replacement Costs - Subtotal $722,680

TOWNHOUSE EXTERIORSCOMMENTS


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SWIMMING POOLPROJECTED REPLACEMENTS



107 Swimming pool structure sf 1,250 $70.00 45 20 2 $87,500108 Swimming pool finish sf 1,250 $5.25 7 4 2 $6,563109 Swimming pool waterline tile ft 150 $20.00 15 4 2 $3,000110 Swimming pool coping ft 150 $40.00 15 4 2 $6,000111 Swimming pool cover sf 1,250 $1.95 7 4 2 $2,438112 Swimming pool filter/chlorinator ls 1 $5,500.00 20 10 2 $5,500113 Swimming pool valves & plumbing sf 1,250 $2.00 20 10 2 $2,500114 Swimming pool pump ea 1 $3,200.00 10 5 2 $3,200

115 Swimming pool concrete deck, 25% sf 981 $10.25 30 none 2 $10,058116 Swimming pool concrete deck, 25% sf 981 $10.25 30 7 2 $10,058117 Swimming pool concrete deck, 25% sf 981 $10.25 30 14 2 $10,058118 Swimming pool concrete deck, 25% sf 981 $10.25 30 21 2 $10,058

119 Swimming pool furniture (25%) ls 1 $1,140.00 8 1 2 $1,140120 Swimming pool furniture (25%) ls 1 $1,140.00 8 3 2 $1,140121 Swimming pool furniture (25%) ls 1 $1,140.00 8 5 2 $1,140122 Swimming pool furniture (25%) ls 1 $1,140.00 8 7 2 $1,140

123 Perimeter fence - 6' ft 225 $14.00 15 5 2 $3,150

SWIMMING POOL - Replacement Costs - Subtotal $164,641

SWIMMING POOLCOMMENTS

We have assumed that the project to replace the pool deck will include the replacement of the plumbing and electrical systems installed beneath the pavement.


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POOL BUILDINGPROJECTED REPLACEMENTS



124 Pool building roof sf 870 $3.90 20 7 2 $3,393125 Pool building gutters & downspouts lf 150 $6.50 20 7 2 $975

126 Pool building brick tuckpoint sf 424 $5.50 40 15 2 $2,332127 Pool building exterior doors ea 3 $950.00 25 7 2 $2,850

128 Pool building HVAC unit ea 1 $4,500.00 30 5 2 $4,500129 Pool building HVAC condensing unit ea 1 $3,000.00 15 5 2 $3,000

130 Pool building fixtures ls 1 $3,500.00 20 5 2 $3,500

POOL BUILDING - Replacement Costs - Subtotal $20,550

POOL BUILDINGCOMMENTS


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VALUATION EXCLUSIONSEXCLUDED ITEMS



Miscellaneous signage ls 1 3 EXCLUDED

VALUATION EXCLUSIONSCOMMENTS

Valuation Exclusions. For ease of administration of the Replacement Reserves and to reflect accurately how Replacement Reserves are administered, items with a dollar value less than $1,000.00 have not been scheduled for funding from Replacement Reserves. Examples of items excluded from funding by Replacement Reserves by this standard are listed above.

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


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LONG-LIFE EXCLUSIONSEXCLUDED ITEMS



Miscellaneous culverts ls 1 3 EXCLUDEDExterior brick veneer ls 1 3 EXCLUDEDBuilding foundation(s) ls 1 3 EXCLUDEDConcrete floor slabs (interior) ls 1 3 EXCLUDEDWall, floor, & roof structure ls 1 3 EXCLUDEDCommon element electrical services ls 1 3 EXCLUDEDWater piping at common facilities ls 1 3 EXCLUDEDWaste piping at common facilities ls 1 3 EXCLUDEDElectrical wiring ls 1 3 EXCLUDEDStainless steel pool fixtures ls 1 3 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 by Replacement Reserves by this standard are listed above.

Exterior masonry is generally assumed to have and unlimited economic life but periodic tuckpointing is required and we have included this for funding in the Replacement Reserve Inventory.



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UNIT IMPROVEMENTS EXCLUSIONSEXCLUDED ITEMS



Domestic water pipes serving one unit ls 1 3 EXCLUDEDSanitary sewers serving one unit ls 1 3 EXCLUDEDElectrical wiring serving one unit ls 1 3 EXCLUDEDGas service serving one unit ls 1 3 EXCLUDEDCable TV service serving one unit ls 1 3 EXCLUDEDTelephone service serving one unit ls 1 3 EXCLUDED

Unit doors & windows ls 1 3 EXCLUDEDUnit interior ls 1 3 EXCLUDED

UNIT IMPROVEMENTS EXCLUSIONSCOMMENTS

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



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UTILITY EXCLUSIONSEXCLUDED ITEMS



Primary electric feeds ls 1 3 EXCLUDEDElectric transformers ls 1 3 EXCLUDED

Cable TV systems and structures ls 1 3 EXCLUDEDTelephone cables and structures ls 1 3 EXCLUDEDGas mains and meters ls 1 3 EXCLUDED

Storm water management pond ls 1 3 EXCLUDED

UTILITY EXCLUSIONSCOMMENTS

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



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MAINTENANCE AND REPAIR EXCLUSIONSEXCLUDED ITEMS



Cleaning of asphalt pavement ls 1 3 EXCLUDEDPainting of curbs ls 1 3 EXCLUDEDStriping of parking spaces ls 1 3 EXCLUDEDLandscaping and site grading ls 1 3 EXCLUDEDExterior painting ls 1 3 EXCLUDEDInterior painting ls 1 3 EXCLUDED

MAINTENANCE AND REPAIR EXCLUSIONSCOMMENTS

Maintenance activities, one-time-only repairs, and capitol improvements. These activities are NOT appropriately funded from Replacement Reserves. The inclusion of such component in the Replacement Reserve Inventory could jeopardize the special tax status of ALL Replacement Reserves, exposing the Association to significant tax liabilities. We recommend that the Board of Directors discuss these exclusions and Revenue Ruling 75-370 with a Certified Public Accountant.

Examples of items excluded from funding by Replacement Reserves by this standard are listed above.



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GOVERNMENT EXCLUSIONSEXCLUDED ITEMS



State maintained roads ls 1 3 EXCLUDEDCurb & gutter at State roads ls 1 3 EXCLUDED

GOVERNMENT EXCLUSIONSCOMMENTS

Government Exclusions. We have assumed that some of the improvements installed on property owned by the Association will be maintained by the local government. Examples of items excluded from funding by Replacement Reserves by this standard are listed above.



Miller + Dodson Associates, Inc. Projected Annual Replacements - Page C1Woodwind Association Revised February 13, 2009

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PROJECTED ANNUAL REPLACEMENTSGENERAL INFORMATION

CALENDAR OF ANNUAL REPLACEMENTS. The 130 Projected Replacements in the Woodwind AssociationReplacement Reserve Inventory whose replacement is scheduled to be funded from Replacement Reserves are broken 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 the first 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 the visual 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 or after 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 by the Woodwind Association Board of Directors, those responsible for the management of the itemsincluded in the Replacement Reserve Inventory, and the accounting professionals employed by the Association.


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PROJECTED REPLACEMENTS - YEARS 1 TO 6Item 2010 $ Item 2011 $ Item 2012 $ 1 Concrete flatwork (6%) $5,063 52 Community sign $1,300 37 Pool parking lot asphalt $12,655

21 Brick steps (10%) $5,551 77 Vinyl siding, 10% $40,897 45 Wentworth Street asphalt $31,43332 Seal coat East Bay Court $1,057 119 Swimming pool furniture (25 $1,140 47 Lambell Street asphalt $35,47934 Seal coat Sims Alley $1,652 49 Market Place asphalt $18,76135 Legar Street asphalt $35,421 78 Vinyl siding, 10% $40,89740 Seal coat Tradd Street $2,002 87 Wood railing, front stoop & s $10,46542 Seal coat Queens Street $2,002 92 Window shutters, 25% $6,77544 Seal coat Strolls Alley $4,589 96 Wood deck, decking - 25% $66,34861 Railroad tie retaining wall $22,400 100 Wood deck, structure - 25% $81,09276 Vinyl siding, 10% $40,897 104 Wood deck, wood railing - 25 $15,99091 Window shutters, 25% $6,77595 Wood deck, decking - 25% $66,34899 Wood deck, structure - 25% $81,092103 Wood deck, wood railing - 25 $15,990115 Swimming pool concrete dec $10,058

Total Scheduled Replacements $300,897 Total Scheduled Replacements $43,337 Total Scheduled Replacements $319,895

Item 2013 $ Item 2014 $ Item 2015 $ 11 Concrete curb (6%) $15,377 80 Vinyl siding, 10% $40,897 31 East Bay Court asphalt $8,98679 Vinyl siding, 10% $40,897 88 Wood railing, front stoop & s $10,465 32 Seal coat East Bay Court $1,057120 Swimming pool furniture (25 $1,140 93 Window shutters, 25% $6,775 33 Sims Alley asphalt $14,042

97 Wood deck, decking - 25% $66,348 34 Seal coat Sims Alley $1,652101 Wood deck, structure - 25% $81,092 36 Seal coat Legar Street $4,167105 Wood deck, wood railing - 25 $15,990 39 Tradd Street asphalt $25,259108 Swimming pool finish $6,563 40 Seal coat Tradd Street $2,002109 Swimming pool waterline tile $3,000 41 Queens Street asphalt $17,020110 Swimming pool coping $6,000 42 Seal coat Queens Street $2,002111 Swimming pool cover $2,438 43 Strolls Alley asphalt $39,005

44 Seal coat Strolls Alley $4,58955 Mail building roofs $1,70160 Pressure treated wood retain $30,84866 Water mains, 10% $29,00067 Sanitary sewer lines, 10% $14,50081 Vinyl siding, 10% $40,89786 Masonry tuckpointing, 5% $6,097

114 Swimming pool pump $3,200121 Swimming pool furniture (25 $1,140123 Perimeter fence - 6' $3,150128 Pool building HVAC unit $4,500129 Pool building HVAC condens $3,000130 Pool building fixtures $3,500



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PROJECTED REPLACEMENTS - YEARS 7 TO 12Item 2016 $ Item 2017 $ Item 2018 $ 2 Concrete flatwork (6%) $5,063 38 Seal coat pool parking lot $1,489 53 Site lighting fixtures $47,300

22 Brick steps (10%) $5,551 46 Seal coat Wentworth Street $3,698 64 Wood privacy fence $16,02051 Brick monument, tuckpointin $1,050 48 Seal coat Lambell Street $4,174 84 Vinyl siding, 10% $40,89782 Vinyl siding, 10% $40,897 50 Seal coat Market Place $2,207 90 Wood railing, front stoop & s $10,46589 Wood railing, front stoop & s $10,465 83 Vinyl siding, 10% $40,89794 Window shutters, 25% $6,775 116 Swimming pool concrete dec $10,05898 Wood deck, decking - 25% $66,348 122 Swimming pool furniture (25 $1,140102 Wood deck, structure - 25% $81,092 124 Pool building roof $3,393106 Wood deck, wood railing - 25 $15,990 125 Pool building gutters & down $975

127 Pool building exterior doors $2,850


Item 2019 $ Item 2020 $ Item 2021 $ 12 Concrete curb (6%) $15,377 32 Seal coat East Bay Court $1,057 108 Swimming pool finish $6,56385 Vinyl siding, 10% $40,897 34 Seal coat Sims Alley $1,652 111 Swimming pool cover $2,438119 Swimming pool furniture (25 $1,140 36 Seal coat Legar Street $4,167 120 Swimming pool furniture (25 $1,140

40 Seal coat Tradd Street $2,00242 Seal coat Queens Street $2,00244 Seal coat Strolls Alley $4,58954 Trash enclosure brick, tuckp $10,68857 Mailboxes $5,775112 Swimming pool filter/chlorina $5,500113 Swimming pool valves & plu $2,500



1001403WOODWIND10

PROJECTED REPLACEMENTS - YEARS 13 TO 18Item 2022 $ Item 2023 $ Item 2024 $ 3 Concrete flatwork (6%) $5,063 121 Swimming pool furniture (25 $1,140 117 Swimming pool concrete dec $10,058

23 Brick steps (10%) $5,55138 Seal coat pool parking lot $1,48946 Seal coat Wentworth Street $3,69848 Seal coat Lambell Street $4,17450 Seal coat Market Place $2,207


Item 2025 $ Item 2026 $ Item 2027 $ 13 Concrete curb (6%) $15,377 38 Seal coat pool parking lot $1,48932 Seal coat East Bay Court $1,057 46 Seal coat Wentworth Street $3,69834 Seal coat Sims Alley $1,652 48 Seal coat Lambell Street $4,17436 Seal coat Legar Street $4,167 50 Seal coat Market Place $2,20740 Seal coat Tradd Street $2,002 71 Asphalt shingles, 25% $119,31742 Seal coat Queens Street $2,002 75 Gutter and downspouts, 25% $16,60844 Seal coat Strolls Alley $4,589 92 Window shutters, 25% $6,77556 Mail building brick tuckpointi $11,400 96 Wood deck, decking - 25% $66,34858 Gazebo roof $312 119 Swimming pool furniture (25 $1,14059 Gazebo $3,20062 Brick retaining wall $34,00063 Brick privacy fence $6,48065 Storm water catch basins $84,50086 Masonry tuckpointing, 5% $6,09791 Window shutters, 25% $6,77595 Wood deck, decking - 25% $66,348114 Swimming pool pump $3,200122 Swimming pool furniture (25 $1,140126 Pool building brick tuckpoint $2,332

Total Scheduled Replacements $256,632 No Scheduled Replacements Total Scheduled Replacements $221,755


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PROJECTED REPLACEMENTS - YEARS 19 TO 24Item 2028 $ Item 2029 $ Item 2030 $ 4 Concrete flatwork (6%) $5,063 69 Asphalt shingles, 25% $119,317 32 Seal coat East Bay Court $1,057

24 Brick steps (10%) $5,551 73 Gutter and downspouts, 25% $16,608 34 Seal coat Sims Alley $1,65270 Asphalt shingles, 25% $119,317 93 Window shutters, 25% $6,775 35 Legar Street asphalt $35,42174 Gutter and downspouts, 25% $16,608 97 Wood deck, decking - 25% $66,348 36 Seal coat Legar Street $4,167108 Swimming pool finish $6,563 109 Swimming pool waterline tile $3,000 40 Seal coat Tradd Street $2,002111 Swimming pool cover $2,438 110 Swimming pool coping $6,000 42 Seal coat Queens Street $2,002

120 Swimming pool furniture (25 $1,140 44 Seal coat Strolls Alley $4,58960 Pressure treated wood retain $30,84868 Asphalt shingles, 25% $119,31772 Gutter and downspouts, 25% $16,608

107 Swimming pool structure $87,500123 Perimeter fence - 6' $3,150129 Pool building HVAC condens $3,000


Item 2031 $ Item 2032 $ Item 2033 $ 14 Concrete curb (6%) $15,377 37 Pool parking lot asphalt $12,655 122 Swimming pool furniture (25 $1,14052 Community sign $1,300 38 Seal coat pool parking lot $1,48994 Window shutters, 25% $6,775 45 Wentworth Street asphalt $31,43398 Wood deck, decking - 25% $66,348 46 Seal coat Wentworth Street $3,698118 Swimming pool concrete dec $10,058 47 Lambell Street asphalt $35,479121 Swimming pool furniture (25 $1,140 48 Seal coat Lambell Street $4,174

49 Market Place asphalt $18,76150 Seal coat Market Place $2,207



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PROJECTED REPLACEMENTS - YEARS 25 TO 30Item 2034 $ Item 2035 $ Item 2036 $ 5 Concrete flatwork (6%) $5,063 31 East Bay Court asphalt $8,986 51 Brick monument, tuckpointin $1,050

25 Brick steps (10%) $5,551 32 Seal coat East Bay Court $1,05733 Sims Alley asphalt $14,04234 Seal coat Sims Alley $1,65236 Seal coat Legar Street $4,16739 Tradd Street asphalt $25,25940 Seal coat Tradd Street $2,00241 Queens Street asphalt $17,02042 Seal coat Queens Street $2,00243 Strolls Alley asphalt $39,00544 Seal coat Strolls Alley $4,58955 Mail building roofs $1,70166 Water mains, 10% $29,00067 Sanitary sewer lines, 10% $14,50086 Masonry tuckpointing, 5% $6,097108 Swimming pool finish $6,563111 Swimming pool cover $2,438114 Swimming pool pump $3,200119 Swimming pool furniture (25 $1,140130 Pool building fixtures $3,500


Item 2037 $ Item 2038 $ Item 2039 $ 15 Concrete curb (6%) $15,377 64 Wood privacy fence $16,020 88 Wood railing, front stoop & s $10,46538 Seal coat pool parking lot $1,489 121 Swimming pool furniture (25 $1,14046 Seal coat Wentworth Street $3,69848 Seal coat Lambell Street $4,17450 Seal coat Market Place $2,20787 Wood railing, front stoop & s $10,465120 Swimming pool furniture (25 $1,140124 Pool building roof $3,393125 Pool building gutters & down $975


Miller - Dodson Associates, Inc. Condition Assessment - Page D1 Woodwind Association January 23, 2009

CONDITION ASSESSMENT General Comments. Miller - Dodson Associates conducted a Reserve Study at Woodwind Association in January 2009. Woodwind Association is in average condition for a condominium community constructed in 1985. A review of the Replacement Reserve Inventory will show that we are anticipating most of the components achieving their normal economic lives. The following comments pertain to the larger, more significant components in the Replacement Reserve Inventory and to those items that are unique or deserving of attention because of their condition or the manner in which they have been treated in the Replacement Reserve Analysis or Inventory. SITE IMPROVEMENTS Concrete Flatwork. The concrete flatwork includes the community sidewalks, mailbox pads, and dumpster pads. The Association maintains an inventory of approximately 11,250 square feet of concrete flatwork. The overall condition of the concrete flatwork is fair with multiple areas of defects. The defects noted include the following:

• Cracking. There are multiple sections of the concrete flatwork that have cracked creating trip hazards.

• Heaving/Settlement. Sections of the concrete flatwork have heaved or settled relative to their

adjacent sections, creating trip hazards. • Scaling and Flaking. Several sections of the concrete flatwork are scaling and flaking. Scaling

and flaking is the loss of the surface mortar in concrete. It is typically caused by water freezing within the concrete. Once started, scaling and flaking can be expected to continue to grow as a result of exposure of the concrete to freeze-thaw cycles. These scaled sections are creating trip hazards.

• Popouts. Sections of the concrete flatwork have developed a number of popouts. Popouts are

small sections of concrete surface that fail as the result of moisture freezing in a void just below the surface, causing pieces of concrete to pop away, leaving a shallow divot. Water can collect in the popouts and can extend the damage if it freezes.

The standards we used for recommending replacement are as follows:

1. Trip hazard, 0.5 inch height difference. 2. Severe cracking. 3. Severe spalling 4. Uneven riser heights on steps. 5. Steps with risers in excess of 8.25 inches.


Because it is highly unlikely that all of the community’s concrete components will fail and require replacement in the period of the study, we have programmed funds for the replacement of 60% of the inventory and spread those funds over a 60-year timeframe to reflect the incremental nature of this work. This approach assumes a failure rate of 1% per year. Concrete Curb. The Association maintains an inventory of 8,017 linear feet of concrete curb. In general, the community’s concrete curbing is in poor condition with multiple areas of defects. The defects noted include the following:

• Cracking. There are multiple sections of the curb and gutter that are cracked. Some of the cracks are creating trip hazards.

• Heaving/Settlement. Sections of the curb have heaved or settled relative to their adjacent

sections, creating trip hazards. • Broken Sections. There are multiple locations where impacts from vehicles have broken off

sections of the curb. These broken sections are creating trip hazards.

Photo 1 - Failed dumpster slab Photo 2 - Sidewalk trip hazard, typical

Photo 3 - Cracked sidewalk, typical Photo 4 - Sidewalk trip hazard, typical


Because it is highly unlikely that all of the community’s concrete curb sections will fail and require replacement in the period of the study, we have programmed funds for the replacement of 60% of the inventory and spread those funds over a 60-year timeframe to reflect the incremental nature of this work. This approach assumes a failure rate of 1% per year. Brick Steps. The community has numerous sets of exterior steps that are of brick construction. The steps vary in condition from good to poor with a number of defects. The defects noted include the following:

• Failed Mortar Joints. A number of the mortar joints between the bricks have failed and are in need of tuckpointing.

• Cracks. Movement of the base material under the bricks has resulted in the development of

cracks in a number of the brick steps. These cracks extend through both the mortar joints and the bricks themselves.

• Broken Nosing. We noted a number of locations where the nosing of the brick steps was

damaged, creating an uneven edge that poses a trip hazard

• Settlement. We noted several locations where steps have settled, creating uneven surfaces that pose a trip hazard.

Photo 5 - Failed curb, typical Photo 6 - Failed curb, typical

Photo 7 - Failed step mortar joints, typical Photo 8 - Failed step mortar joints, typical


Because it is highly unlikely that all of the community’s brick steps will fail and require replacement in the period of the study, we have programmed funds for the replacement of 60% of the inventory and spread those funds over a 60 year timeframe to reflect the incremental nature of this work. This approach assumes a failure rate of 1% per year. Asphalt Pavement. The site includes asphalt pavement for vehicle access and parking. In general, the asphalt pavement is in fair to poor condition with multiple areas of defects. The Association maintains an inventory of 140,036 square feet of asphalt pavement, including the following streets and parking areas:

Location Area, Square Feet East Bay Court 5,286 Sims Alley 8,260 Legar Street 20,836 Pool parking lot 7,444 Tradd Street 14,858 Queens Street 10,012 Strolls Alley 22,944 Wentworth Street 18,490 Lambell Street 20,870 Market Place 11,036 Total 140,036

The defects noted include the following:

• Open Cracks. There are multiple locations where open cracks are allowing water to penetrate to the asphalt base and the bearing soils beneath the pavement. This water will erode the base accelerating the deterioration of the asphalt pavement. If the cracks have allowed the deterioration of the base materials and the bearing soil, the damaged areas should be removed and replaced. All other cracks should be cleaned and filled.

• Improper Grading. The asphalt pavement is not properly graded in a number of areas, resulting

in the ponding of water on the pavement. Water ponding on asphalt pavement accelerates the deterioration of the pavement and will result in the formation of potholes. Proper grading of the asphalt pavement will require replacement of portions of the asphalt. It may also require replacement of some of the adjacent segments of curb and gutter that are not properly sloped to move water to the storm water management system.

• Alligatoring. There are multiple locations where the asphalt has developed a pattern of cracking

known as alligatoring. Alligatoring is the result of an unstable base under the asphalt. Shifting in the base causes the asphalt to crack and shift, forming the cracks that resemble the skin of an alligator. Once these cracks extend through the asphalt, they will allow water to penetrate to the base, accelerating the rate of deterioration. The only solution is to remove the defective asphalt and compact the base before new asphalt is installed.

• Potholes. There are a number of locations where potholes have formed as the result of the

failure of the underlying base material or the surface material. Repair will require removal of the asphalt and base material, installation and compaction of new base material, and resurfacing with asphalt.

• Depressions. There are areas where the asphalt surface is depressed due to deformation in the

surface or underlying layers. These depressions may continue to grow with exposure to traffic. Water ponding was noted in several of these areas. Repair will require removal of the asphalt and base material, installation and compaction of new base material, and resurfacing with asphalt.


• Tree Root Damage. There are locations where roots from trees planted near the asphalt surface have pushed up through the asphalt, causing cracks and heaving. Repair of these areas will require removal of the asphalt and the tree roots.

As a rule of thumb, asphalt should be overlayed when approximately five percent of the surface area has become 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 life of 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 prevent water infiltration through the asphalt compound into the base. This repair should be done annually. This is an entirely different process from the seal coating discussed below. Crack sealing is normally considered a maintenance activity and is not funded from Reserves. Areas of extensive cracking or deterioration that cannot be made watertight by crack sealing should be cut out and patched.

2. Cleaning. Long-term exposure to oil or gas breaks down asphalt. Because this asphalt

pavement is generally not used for long term parking, it is unlikely that frequent cleaning will be necessary. When necessary, spill areas should be cleaned, or if deterioration has penetrated the asphalt, patched. This is a maintenance activity, and we have assumed that it will not be funded from Reserves.

Photo 9 - Failed asphalt pavement, typical Photo 10 - Alligatoring, typical

Photo 11 - Alligatoring, typical Photo 12 - Failing asphalt


3. Seal Coating. The asphalt should be seal coated every three to five years. For this maintenance activity to be effective in extending the life of the asphalt, the crack sealing and cleaning 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 local market. Site Lighting. The Association is responsible for the operation of the community’s street lights. The lighting system was not on at the time of our site visit. We understand that the lighting system is in good operating condition. Trash Enclosures. We have included the concrete pads from the trash enclosures in the concrete flatwork item in the Reserve Analysis. The brickwork on the enclosure walls is in good condition. Brick is usually considered to be a life of structure item and therefore excluded from reserve funding. Because weather and other conditions result in the slow deterioration of the mortar in the brick joints, we have included funding in the Reserve Analysis for tuckpointing. Mail Buildings. We have included the concrete pads from the Mail Buildings in the concrete flatwork item in the Reserve Analysis. The brickwork on the Mail Building walls is in good condition. Brick is usually considered to be a life of structure item and therefore excluded from reserve funding. Because weather and other conditions result in the slow deterioration of the mortar in the brick joints, we have included funding in the Reserve Analysis for tuckpointing.

Pressure Treated Wood Retaining Walls. The Association maintains an inventory of approximately 964 square feet of pressure treated wood retaining walls. The general condition of the retaining wall is fair. The defects noted include the following:

• Bowing. We found a number of areas where sections of the retaining walls are bowing outward. Bowing occurs as the result of moderate to severe loading of the wall by the material being supported. If the bowing is allowed to continue, eventually it will lead to the failure of the retaining wall. Correcting bowing requires replacement of the sections of retaining wall and installation of

Photo 13 - Typical trash enclosure

Photo 14 - Mailbox building Photo 15 - Mailbox building


better drainage materials behind the wall.

• Leaning. We found a number of areas where sections of the retaining walls are leaning. Leaning occurs when the pressure of the material being held in place by the retaining wall is sufficient to cause the wall to shift away from the vertical. Once a retaining wall starts to lean, it is at risk of failing and must be replaced.

• Rot. We found a number of areas where sections of the retaining walls have moderate rot. Once

rotting occurs, those effected sections must be replaced. When it becomes necessary to replace these walls, we recommend the Association consider one of the segmental block retaining wall systems instead of the wood construction. These systems are impervious to decay, which occurs even with the pressure treated wood systems. If over time the wall experiences movement, sections of the walls can be re-stacked at a very small portion of the cost of a new wall. These walls have an initial cost 15 to 30 percent greater than wood walls but once installed, they have a service life of 40 years or more. Railroad Tie Retaining Walls. The Association maintains an inventory of approximately 560 square feet of retaining walls constructed from treated railroad ties. The general condition of the retaining wall is poor. The defects noted include the following:

• Bowing. We found numerous areas where sections of the retaining walls are bowing outward. Bowing occurs as the result of moderate to severe loading of the wall by the material being supported. If the bowing is allowed to continue, eventually it will lead to the failure of the retaining wall. Correcting bowing requires replacement of the sections of retaining wall and installation of better drainage materials behind the wall.

• Leaning. We found a number of areas where sections of the retaining walls are leaning. Leaning

occurs when the pressure of the material being held in place by the retaining wall is sufficient to cause the wall to shift away from the vertical. Once a retaining wall starts to lean, it is at risk of failing and must be replaced.

• Rot. We found numerous areas where sections of the retaining walls have moderate rot. Once

rotting occurs, those effected sections must be replaced.

• Failed Sections. We found a number of areas where individual members of the retaining walls have failed. These sections can cause material behind the wall to pass through the wall, and can lead to additional damage to the wall. Repair of failed members requires replacement of that section of the retaining wall.

When it becomes necessary to replace these walls, we recommend the Association consider one of the segmental block retaining wall systems instead of the wood construction. These systems are impervious to decay, which occurs even with the pressure treated wood systems. If over time the wall experiences movement, sections of the walls can be re-stacked at a very small portion of the cost of a new wall. These walls have an initial cost 15 to 30 percent greater than wood walls but once installed, they have a service life of 40 years or more. Brick Retaining Walls. The community has several brick retaining walls that it maintains. The total brick retaining wall inventory is approximately 680 square feet. All brick sections are in good condition.

Photo 16 - Railroad tie retaining, rotted section - typical


When it becomes necessary to replace these walls, we recommend the Association consider one of the segmental block retaining wall systems instead of the concrete construction. If over time the wall experiences movement, sections of the walls can be re-stacked at a very small portion of the cost of a new wall. These walls have an initial cost 10 to 20 percent greater than concrete block walls but once installed, they have a service life of 40 years or more. Wood Board Fencing. Wood board fencing is installed as privacy fencing in several locations in the community. The Association maintains an inventory of 534 linear feet of wood board fencing. The general condition of the fencing is fair. The defects noted include the following:

• Loose boards. Several boards are currently loose and need to be renailed.

• Warped boards. Several sections of the fencing

have boards that are badly warped. Warped boards should be replaced to maintain the integrity of the fencing.

• Loose/Leaning Fence Posts. A number of the

wood fence posts are not properly supported by the ground. As a result, they are loose and can be easily moved. Additional posts are leaning.

• Undermining. We noted several locations where erosion or settlement has resulted in the

formation of a larger than normal gap between the bottom of the fence and the ground. This gap will allow small animals and objects to pass under the fencing. These areas will have to be regraded to close the gap.

Storm Water Catch Basins. We have included the storm water catch basins located along the community’s roads and parking areas. While these tend to be very long life items, they eventually do fail and will require rebuilding. Underground Utilities. The Association is responsible for the maintenance of the underground utility lines, including the water mains and sanitary sewer lines. No engineering drawings were available to accurately determine distances, sizes of lines and materials used for underground components of the system. Accordingly, we have provided an estimate of the approximate replacement cost based on our experience with other communities of similar size and on our inspection of the visible components while on site. Inspection of the underground lines and structures is beyond the scope of work of this study. BUILDING EXTERIORS Asphalt Shingle Roofing. The asphalt shingle roofs are in good condition. We understand that all roofs have been replaced over the past four years. We have estimated the remaining useful life of the roofs based on the conditions seen at the site as well as the age of the roofs. We have assumed that when the roofs eventually will require replacement, all roofs will be replaced with 20 year roofs. We have assumed that the gutters and downspouts will be replaced when the roofs are replaced. Due to the large inventory and the varying rates at which the roofing materials will age and require replacement, we have divided the roof inventory into four equal components and spread their replacement over a four year period.

Photo 17 - Fence & retaining wall section


Composite Siding. The composite siding on the buildings is in poor overall condition. We have estimated the remaining useful life of the siding based on the conditions seen at the site as well as the age of the siding. The defects we noted include the following:

• Loose Sections. We found numerous areas with loose sections of siding. Loose sections can easily be torn from the building by even moderate winds. It is recommended that all loose sections be reattached as soon as possible.

• Swelling. There are numerous areas where the composite siding is swelling along its edges.

Swelling in composite siding is an indication that moisture has penetrated the surface. All boards with swelling will require replacement.

• Disintegration. There are numerous areas where the composite siding is disintegrating due to

moisture. All damaged boards will require replacement.

• Failing Paint. The paint on the siding is cracked and pealing. While painting is not a reservable item, maintaining the paint in good condition is important for the long life of the composite siding.

We recommend that the community initiate a program to replace all siding with vinyl or cement fiber siding. For the Reserve analysis, we have assumed that vinyl siding will be installed. If cement fiber siding is installed, the community can expect that the installed price would be approximately 30 percent higher.

Due to the large inventory and the varying rates at which the siding materials will age and require replacement, we have divided the siding inventory into ten equal components and spread their replacement over a ten year period. Brickwork. The brickwork on the buildings is in good condition. Brick is usually considered to be a life of structure item and therefore excluded from reserve funding. Because weather and other conditions result in the slow deterioration of the mortar in the brick joints, we have included funding in the Reserve Analysis for tuckpointing. We have assumed that five percent of the brick will require tuckpointing every ten years.

Photo 18 - Typical siding damage Photo 19 - Typical siding damage


Wood Porch and Stair Railing. We have included the wood porch and stair railings in the Reserve Analysis. The condition of these components varies from good to poor. Due to the large inventory and its varying condition, we have divided the railing inventory into four equal components and spread its replacement over a six-year period. Window Shutters. We have included the window shutters in the Reserve Analysis. In general, the shutters are in good condition. Due to the large number of window shutters, we have divided the inventory into four equal components and spread their replacement over a six-year period. Wood Decks. The Association is responsible for the pressure treated wood decks found on the back of a number of the units. A number of these decks have been converted to screened porches. We have assumed that the screen components are the responsibility of the unit owners. The condition of the wood decks varies from fair to poor. We noted a number of decks that have structural defects significant enough to result in sagging. Some decks are overloaded with stored fireplace wood. We have separated the wood decks into three components to reflect their different service lives; the deck surface, the deck structure, and the deck railing. Due to the large number of decks, we have divided the inventory into four equal components and spread their replacement over a six-year period.

RECREATIONAL FACILITIES Swimming Pool. The community operates an outdoor pool of concrete construction with a concrete deck. The concrete deck is not coated. The pool was covered at the time of our site visit. Listed below are the major components of the pool facilities:

• Pool Shell. The shell for the swimming pool is reported to be in good condition. Pool shells normally have a finite life of approximately 45 years. At that time it may not be necessary to replace the entire structure. However, it is prudent to anticipate a major expenditure for

Photo 20 - Leaning stair railing

Photo 21 - Sagging deck, typical Photo 22 - Screened porch addition to deck


replacement of underground lines and sections of the pool. Based on our research, we have found it to be prudent to program $70 per square foot of pool surface to cover these needs.

• Pool Deck. The pool has a concrete deck. The overall condition of the deck is good with some

cracking. Because it is highly unlikely that all of the community’s concrete pool deck sections will fail and require replacement at the same time, we have divided the deck into four equal components in the Reserve Analysis and have spread their replacement over a 21-year period.

• Whitecoat. The pool whitecoat is in good condition. We have assumed a service life of 10 years

for the pool whitecoat. • Coping. The pool is edged with masonry coping. The coping is reported to be in good condition. • Waterline Tile. The waterline tile is reported to be in good condition. We have assumed that the

waterline tile will be replaced or restored when the pool is whitecoated.

• Pump and Filter System. The filter system is in good operating condition. We have assumed a service life of 20 years for the filter system, and 10 years for the pump.

Pool Building. The Pool Building is of brick construction with an asphalt shingle roof. The roof and gutters are in fair condition, with only a limited amount of shrinkage of the roof shingles. The building has an HVAC system. We have separated the system into two components to reflect their different service lives; the interior portion of the system, and the outdoor condensing unit.

Photo 23 - Community pool Photo 24 - Pool deck cracks

Photo 25 - The Pool Building


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

End of Condition Assessment

Miller - Dodson Associates, Inc. Attachments - Page E1 Appendix

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 from the local government to Community Associations. Thirty years ago, a typical new town house abutted a public street on the front and a public alley on the rear. Open space was provided by a nearby public park and recreational facilities were purchased ala carte from privately owned country clubs, swim clubs, tennis clubs, and gymnasiums. Today, 60% of all new residential construction, 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 periodic replacements of various components that may include the roads, curbs, sidewalks, playgrounds, street lights, recreational facilities, and other community facilities and infrastructure. The growth of Community Associations has been explosive. In 1965 there were only 500 Community Associations in the United States. According to the U.S. Census, there were 130,000 Community Associations in 1990. Community Associations Institute (CAI), a national trade association, estimates there were more than 200,000 Community Associations in the year 2000, and that the 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 private sector to Community Associations has generated new and unanticipated problems. Although Community Associations have succeeded in solving many short term problems, many Associations have failed to properly plan for the tremendous expenses of replacing community facilities and infrastructure components. When inadequate replacement reserve funding results in less than timely replacements of failing components, home owners are exposed to the burden of special assessments, major increases in Association 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 facilities and infrastructure components that require periodic replacement, a general view of the condition of these components, and an effective 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 the intent of the Replacement Reserve Study, and lists documents and site evaluations upon which the Replacement Reserve Study is based.

• Section A Replacement Reserve Analysis. Many components owned by the Association have a limited life

and require periodic replacement. Therefore it is essential the Association have a financial plan that provides funding for the timely replacement of these components in order to protect the safety, appearance, and value of the community. In conformance with American Institute of Certified Public Accountant guidelines, Section A Replacement Reserve Analysis evaluates the current funding of Replacement Reserves as reported by the Association and recommends annual funding of Replacement Reserves by two generally accepted accounting methods; the Cash Flow Method and the Component Method. Section A Replacement Reserve Analysis includes graphic and tabular presentations of these methods and current Association funding.

• Section B Replacement Reserve Inventory. The Replacement Reserve Inventory lists the commonly-owned

components within the community that require periodic replacement using funding from Replacement Reserves. The Replacement Reserve Inventory also provides information about components excluded from the Replacement Reserve 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

life for 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

discussed in more detail. The Condition Assessment includes a narrative and photographs that document conditions at the property 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 and additional information specific to the property cited in the Conditions Assessment (i.e. Consumer Product Safety Commission, Handbook for Public Playground Safety, information on segmental retaining walls, manufacturer recommendations for asphalt shingles or siding, etc).


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 Annual Contribution to the Reserves. The results of both methods are presented in this report. The Association should obtain the advice of 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. It treats each item in the replacement schedule as an individual line item budget. Generally, the Minimum Annual Contribution to Reserves is higher when calculated by the Component Method. The mathematical model for this method works as follows:

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

the minimum constant annual contribution to reserves (Minimum Annual Deposit) required to meet projected expenditures without allowing total reserves on hand to fall below the specified minimum level in any year. This method usually results in a calculated requirement for annual contribution somewhat less than that arrived at by the 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 the estimated replacement costs to the future years in which they are projected to occur. Based on these expenditures, it then calculates the minimum constant yearly contribution (Minimum Annual Deposit) to the reserves necessary to keep the reserve balance at the end of each year above the Minimum Recommended Reserve Level to be Held on Account. The Cash Flow Analysis assumes that the Association will have authority to use all of the reserves on hand for replacements as the need occurs. This method usually results in a Minimum Annual 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

account forecasted inflation and interest rates, thereby producing an Adjusted Cash Flow Analysis. Attempting to forecast future inflation and interest rates and the impact of changing technology is highly tenuous. Therefore, in most cases it is preferable to make a new schedule periodically rather than attempt to project far into the future. We will provide 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 Reserve

Components; 1) information provided by the Association and 2) observations made at the site. It is important that the 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 responsible for maintaining the community after acceptance of our proposal. After completion of the Study, the Study should be reviewed by the Board of Directors, individuals responsible for maintaining the community, and the Association’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 guides and are

adjusted by state or region. In some instances, recent data received in the course of our work is used to modify these figures.

Contractor proposals or actual cost experience may be available as part of the Association records. This is useful 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 for

Capital Replacement Expenditures. This should not be confused with operational costs or cost of repairs or maintenance.


5. DEFINITIONS Adjusted Cash Flow Analysis. Cash flow analysis adjusted to take into account annual cost increases due to inflation and interest 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 A1 in the Component Method summary, this would be the amount of the Annual Deposit needed if the Reserves Currently on Deposit were equal to the Total Current Objective. 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 to be 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 minimum level. 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 at its current replacement cost. It is equal to the estimated replacement cost divided by the estimated economic life, times the number of years expended (the difference between the Estimated Economic Life and the Estimated Life Left). The Total Current Objective can be thought of as the amount of reserves the Association should now have on hand based on the sum of all of the Current Objectives. Cyclic Replacement Item. A component item that typically begins to fail after an initial period (Estimated Initial Replacement), but which will be replaced in increments over a number of years (the Estimated Replacement Cycle). The Reserve Analysis program divides the number of years in the Estimated Replacement Cycle into five equal increments. It then allocates the Estimated Replacement 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 years that a new item should be expected to last until it has to be replaced. This figure is sometimes modified by climate, region, or original construction conditions. Estimated Economic Life Left. Used in the Normal Replacement Schedules. Number of years until the item is expected to need replacement. Normally, this number would be considered to be the difference between the Estimated Economic Life and the age of the item. However, this number must be modified to reflect maintenance practice, climate, original construction and quality, or other conditions. For the purpose of this report, this number is determined by the Reserve Analyst based on the present condition of 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 is expected to begin. Estimated Replacement Cycle. For a Cyclic Replacement Item, the number of years over which the remainder of the component's replacement occurs. Minimum Annual Deposit. Shown on the Summary Sheet A1. The calculated requirement for annual contribution to reserves as calculated by the Cash Flow Method (see above). Minimum Deposit in the Study Year. Shown on the Summary Sheet A1. The calculated requirement for contribution to reserves in 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 A1, this number is used in the Cash Flow Method only. This is the prescribed level below which the reserves will not be allowed to fall in any year. This amount is determined based on the age, condition, and replacement cost of the individual components. This number is normally given as a percentage of the total Estimated Replacement Cost of all reserve components. Normal Replacement Item. A component of the property that, after an expected economic life, is replaced in its entirety. (As distinguished from Cyclic Replacement Items, see above.) Normal Replacement Schedules. The list of Normal Replacement Items by category or location. These items appear on pages designated.


Number of Years of the Study. The number of years into the future for which expenditures are projected and reserve levels calculated. This number should be large enough to include the projected replacement of every item on the schedule, at least once. This study covers a 40-year period. One Time Deposit Required to Fully Fund Reserves. Shown on the Summary Sheet A1 in the Component Method summary, this is the difference between the Total Current Objective and the Reserves Currently on Deposit. Reserves Currently on Deposit. Shown on the Summary Sheet A1, this is the amount of accumulated reserves as reported by the Association in the current year. Reserves on Hand. Shown in the Cyclic Replacement and Normal Replacement Schedules, this is the amount of reserves allocated to each component item in the Cyclic or Normal Replacement schedules. This figure is based on the ratio of Reserves Currently 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 need for replacement should be anticipated within the economic life of the property as a whole. The analysis involves estimation for each component of its estimated Replacement Cost, Estimated Economic Life, and Estimated Life Left. The objective of the study is to calculate a recommended annual contribution to the Association's Replacement Reserve Fund. Total Replacement Cost. Shown on the Summary Sheet A1, 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 item appears. 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) to assist the Association in understanding the financial implications of all items owned by the Association, not just the items included for funding by Replacement Reserves listed in the Replacement Reserve Inventory. The following information relates to the List of Recommended Repairs:

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

• Completion of repairs. The Replacement Reserve Analysis assumes that all repairs cited in the Repair List

will be completed within a twelve-month period of time. Estimated Life Left in the Replacement Reserve Study has been factored under this assumption. Any deletions or delays of the projects included in the List of Recommended Repairs may result in major inaccuracies in the Replacement Reserve Analysis.

• Safety issues. If safety issues have been cited, they should be given the highest priority and should be done

immediately upon receipt of this report. The Board must recognize that from a liability standpoint, they have been made aware of the existence of these unsafe conditions, if any, once the report is delivered for their review.

• Unit costs. Nationally published standards and standard estimating manuals have been used in the

development of this report. Contractor proposals or actual cost experience may be available as part of the Association records. We 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.

Documents

REPORT FY 2010 WOODWIND ASSOCIATION - NHE