Web SuperBudgeting 2014 · Oak Creek Community HOA

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C.I.A. Services, Inc.

part of the C.I.A. Services Seminar Series for board members and community volunteers The Super- Budgeting® Process Agenda Welcome & introductions The questions What is super -budgeting Understanding the concept of funds Super -budget calculations Components of the super budget package The answers 2 (c) 2014 C.I.A. Services, Inc.

The Questions Every Board member should be able to easily answer two simple questions from homeowners: What is the right assessment for our community?

How much money should we have in the bank?

When we are done today, you will be able to accurately and confidently answer those questions. You’ll also know how to project those answers five or ten years into the future.

The process is called “Super -Budgeting”.

What is Super-Budgeting® Comprehensive financial evaluation of the association Incorporates a short and long term business plan Provides an extended look forward with reasonable forecasts Produces a well documented package to assist in management throughout the year Prevents erratic changes in assessments over time and avoids the need for special assessments 4 (c) 2014 C.I.A. Services, Inc.

About the Word Reserves “Reserves” is one of the most misused and confusing words in budgeting and financial management It is a proper generic term signifying funds set aside, or reserved, for a particular future purpose The problem is that people have different things in mind when they hear and use the word: Is it everything we have in the bank?

Is it the money we have in case the clubhouse burns down?

Is it the amount we have accumulated for the new playground?

Is it what we’ve put aside for a rainy day?

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it everything we have in the bank?

Is it the money we have in case the clubhouse burns down?

Is it the amount we have accumulated for the new playground?

Is it what we’ve put aside for a rainy day?

Super-Budget Funds Operating Fund – for fluctuations in routine operating revenues or expenses relative to budget Lower collection rate, higher utility bills Replacement Fund – for replacing or maintaining major physical assets Replace clubhouse roof, resurface swimming pool Capital Fund – for new assets that don’t exist now Build a new playground, add an entry monument Special Purpose Funds – typically a subset of one of the above funds but held for a special purpose Funds from a special road assessment, donations for tree planting project 6 (c) 2014 C.I.A. Services, Inc.

Operating Fund The purpose of this fund is to protect against fluctuations in budgeted revenues or expenses In the 1980’s there were major reductions in Association revenues streams as the economy faltered and some owners lost their homes and others could not pay their assessments At the same time, expenses rose greatly as inflation reached double -digits Normal assessment increases capped at 3%, 5% or 10% were not able to keep up We generally recommend 25% to 75% of the annual operating expenses as the ideal operating fund level depending on the type and size of community 7 (c) 2014 C.I.A. Services, Inc.

Operating Fund - Examples Most DRs limit assessment increases so limit ability to increase revenues Interest on investments have plummeted since 2000 Hearthstone & Kirkmont section II – cable franchise fees

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Fund - Examples Most DRs limit assessment increases so limit ability to increase revenues Interest on investments have plummeted since 2000 Hearthstone & Kirkmont section II – cable franchise fees disappeared when 1970’s agreements expired Electricity costs rose over 20% in 2001, stabilized and dropped slightly in 2002/2003 and jumped again by 2004 – all within a flat economy Quail Bridge & Pine Forest Village – board addressed security needs by adding security patrols Treehouse Condominiums – rash of internal leaks from aging piping resulting in excessive plumbing and sheetrock repairs 8 (c) 2014 C.I.A. Services, Inc.

Replacement Fund The purpose of this fund is to pay for the predictable costs of maintaining and replacing major assets of the community If we plan to repaint our common area fences every five years at a cost of $20,000 then we need to put $4,000 into the fund every year We do not typically put funds aside for low dollar items with unpredictable lives (e.g. pool pumps) We do not typically put funds aside for items with very short lives (e.g. power -washing clubhouse) or very long lives (e.g. brick columns) The ideal replacement fund balance is calculated through a “reserve analysis” 9 (c) 2014 C.I.A. Services, Inc.

Replacement Fund - Examples Sugarwood – replastered swimming pool and replaced chain link fence with ornamental iron Bridlewood Estates – cleaned, repaired and repainted perimeter ranch style fences Colony Grant – replaced original 25 year old lake fountain with a new floating model Hearthstone Meadows – replaced malfunctioning gate operating system including underground loops and phone lines Townewest – added crushed granite to jogging trail University Place Townhomes – reroofed every building over a three year period

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ing gate operating system including underground loops and phone lines Townewest – added crushed granite to jogging trail University Place Townhomes – reroofed every building over a three year period 10 (c) 2014 C.I.A. Services, Inc.

Capital Fund The purpose of this fund is to pay for new community assets If we want to build a new $40,000 playground in 4 years then we need to put aside $10,000 each year to meet our goal Getting a loan for a capital project is just a variation – instead of accumulating the funds in advance and then doing the project, we do the project and then pay back the loan plus interest The ideal capital fund balance is based on the capital project plan – how many years do we have to accumulate how many dollars 11 (c) 2014 C.I.A. Services, Inc.

Capital Fund - Examples The Highlands – replaced common area fences around community entries with brick walls – added brick columns Vicksburg – assumed responsibility for the fences along the boulevards and replaced all of them Quail Run – built a large clubhouse and recreation center for the community Colony Grant – added shade covers, fans and lights around the perimeter of the lap pool deck West Airport – constructed monuments on South Gessner to delineate boundaries of the community and beautify area Settlers Park – covered pool deck concrete with a durable, textured concrete surface 12 (c) 2014 C.I.A. Services, Inc.

Special Purpose Funds - Examples Valley Lodge – levied a special assessment for road repairs in 2002 and had a small amount left over after work was done – the extra is set aside and is being held for future road repairs Treehouse Condominiums – many years ago a cash settlement was provided by the developer over construction defects – the

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ork was done – the extra is set aside and is being held for future road repairs Treehouse Condominiums – many years ago a cash settlement was provided by the developer over construction defects – the initial problems were repaired but the majority of funds were set aside to make repairs as problems arise Crestwater – a group of homeowners donated funds to the association for planting trees – the funds were set aside and combined with association funds to do the project Southglen Village – donations and fund raisers were used to build a new playground sooner than planned – the association set the funds aside until the playground was built 13 (c) 2014 C.I.A. Services, Inc.

Operating Expenses Major Asset Maintenance Capital Projects Operating Fund Ideal Balance Total Revenues $220,000 Total Operating Expenses $180,000 Net Revenues After Operations $40,000 Allocation to Replacement Fund $13,000 Allocation to Capital Fund $24,000 Allocation of Operating Fund $3,000 15 (c) 2014 C.I.A. Services, Inc. The ideal Operating Fund balance is a percent of normal operating expenses times 30% equals $54,000 Ideal Operating Fund balance The Super -Budget model calculates this allocation based on how far each fund is from the ideal value.

Reserve Analysis Asset Last Repair Year Useful Life Next Repair Year Current Replacement Cost Accumulated Balance as of 12/31/2014 2015 Contribution Pool plaster 2010 8 2018 $24,000 $12,000 $3,000 Clubhouse roof 2007 15 2022 $6,000 $2,800 $400 Boulevard fence replacement 2012 18 2030 $108,000 $12,000 $6,000 Boulevard fence painting 2012 5 2017 $9,600 $3,840 $1,920

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8 $24,000 $12,000 $3,000 Clubhouse roof 2007 15 2022 $6,000 $2,800 $400 Boulevard fence replacement 2012 18 2030 $108,000 $12,000 $6,000 Boulevard fence painting 2012 5 2017 $9,600 $3,840 $1,920 Totals $147,600 $30,640 $11,320 16 (c) 2014 C.I.A. Services, Inc. Sample from 2015 Budget Capital Project Plan Project Added to Capital Project Plan Project Ground Breaking Estimated Project Cost Accumulated Balance as of 12/31/2014 2015 Contribution Install monument at 2 nd entry 2011 2016 $20,000 $16,000 $4,000 Install 1/3 mile jogging trail 2013 2018 $36,000 $14,400 $7,200 Install exercise stations 2013 2019 $14,000 $4,667 $2,333 Install pavilion with park equipment 2013 2021 $30,000 $7,500 $3,750 Totals $100,000 $42,567 $17,283 17 (c) 2014 C.I.A. Services, Inc. Sample from 2015 Budget Alternative Financing There are alternatives for financing operations, replacement projects or capital projects: Special assessment Bank loan Borrow from other funds Ultimately, all financing will eventually come from the property owners (to pay the special assessment, to repay the loan or to replenish the internal funds) Alternative financing simply changes the timing of cash flows and makes a small difference in the cost It could be argued that replacement expenditures should come from accumulated funds and capital projects from loans 18 (c) 2014 C.I.A. Services, Inc.

Alternative Financing - Example Construction year 2015 Construction cost $100,000 Total principal payments $100,000 Total interest on loan (at 9%) $24,550 Total 5 year cost $124,550 $/year from assessments $24,910 19 (c) 2014 C.I.A. Services, Inc. Scenario: a $100,000 playground – build it now with a bank loan or build it in 5 years after we’ve accumulated the funds

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$124,550 $/year from assessments $24,910 19 (c) 2014 C.I.A. Services, Inc. Scenario: a $100,000 playground – build it now with a bank loan or build it in 5 years after we’ve accumulated the funds The table below shows the project comparison Bank Loan Capital Fund 20% higher 2020 Construction year $113,141 Construction cost (at 2½% inflation) $103,450 Fund contributions $9,691 Interest on funds (at 3%) $113,141 Total 5 year accumulation $20,690 $/year from assessments Fund Trends $0$20,000$40,000$60,000$80,000$100,000$120,000$140,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Operating Replacement Capital 20 (c) 2014 C.I.A. Services, Inc.

Cash in Bank versus Fund Balance $0$50,000$100,000$150,000$200,000$250,000$300,000$350,000 Sep Oct Nov Dec Jan Feb Mar Apr May Jun JulAug Sep Oct Nov Dec Operating Replacement Capital Net Income 21 (c) 2014 C.I.A. Services, Inc.

Notice the total “cash” is similar to but not equal to the total Fund Balance from the previous slide Super-Budget Documentation Cover memo Assumptions Operating budget Replacement budget Capital budget Fund balance projections Asset schedule (reserve analysis) Fund balance projections (graph) Assessment projections (graph) Budget notes 24 (c) 2014 C.I.A. Services, Inc.

25 (c) 2014 C.I.A. Services, Inc. Draft or Approved List of Exhibits Major considerations The Stable Gate Homeowners Association Exhibit A - Assumptions 2011 2012 2013 2014 2015 2016 2017 2018 ACTUAL ACTUAL ACTUAL OUTLOOK BUDGET FORECAST FORECAST FORECAST ASSUMPTIONS Maintenance Assessment $813.00 $894.30 $894.30 $894.30 $894.30 $956.90 $956.90 $956.90

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011 2012 2013 2014 2015 2016 2017 2018 ACTUAL ACTUAL ACTUAL OUTLOOK BUDGET FORECAST FORECAST FORECAST ASSUMPTIONS Maintenance Assessment $813.00 $894.30 $894.30 $894.30 $894.30 $956.90 $956.90 $956.90 Increase over Prior Year 0% 10% 0% 0% 0% 7% 0% 0% Collection Rate 99.1% 99.4% 99.6% 98.0% 98.0% 98.0% 98.0% 98.0% Total Lots 230 230 230 230 230 230 230 230 Expense Inflation 3% 3% 3% 3% 3% 3% 3% 3% 26 (c) 2014 C.I.A. Services, Inc. Historical Expected ending for this year Proposed budget Future forecasts 27 (c) 2014 C.I.A. Services, Inc. Community Association of the Highlands Exhibit B - Operating Budget 2010 2011 2012 2013 2014 2015 2016 2017 2018 Actual Actual Actual Actual Outlook Budget Forecast Forecast Forecast REVENUES 4010 Assessments - Current Year 361,486 360,886 378,832 378,884 393,100 391,929 391,929 391,929 391,929 4020 Assessments - Prior Years 4,972 5,552 4,413 3,163 7,500 2,969 2,969 2,969 2,969 4040 Interest - Assessments 2,683 2,660 1,394 1,834 1,400 1,200 1,200 1,200 1,200 4041 Interest - Investments 2,338 2,438 660 709 1,000 2,425 3,104 3,010 3,505 4050 Clubhouse Rental 2,025 2,530 3,800 1,555 3,000 3,000 3,000 3,000 3,000 4055 Tax Exemption Refunds 0 4,730 0 0 0 0 0 0 0 4070 Cable Lawsuit Settlement 0 0 0 0 0 0 0 0 0 4090 Miscellaneous Revenue 345 110 230 255 0 0 0 0 0 TOTAL REVENUES 373,848 378,906 389,329 386,400 406,000 401,523 402,202 402,109 402,604 EXPENSES Services 6110 Management Services 41,040 41,040 45,240 45,240 45,240 46,597 47,995 49,435 50,918 6125 Office Fees Recovered (5,676) (4,820) (5,032) (6,554) (5,000) (5,150) (5,305) (5,464) (5,628)

S Services 6110 Management Services 41,040 41,040 45,240 45,240 45,240 46,597 47,995 49,435 50,918 6125 Office Fees Recovered (5,676) (4,820) (5,032) (6,554) (5,000) (5,150) (5,305) (5,464) (5,628) 6150 Accounting Services 1,800 2,200 900 1,350 1,400 1,442 1,485 1,530 1,576 6160 Tax Exemption Services 0 0 0 0 0 0 0 0 0 6142 Corporate Legal Fees 379 1,019 4,058 1,195 5,200 5,356 5,517 5,682 5,853 6144 Billable Legal Fees 17,408 14,122 15,909 38,260 35,000 36,050 37,132 38,245 39,393 6146 Legal Fees Recovered (17,076) (13,014) (7,881) (12,892) (17,500) (27,038) (27,849) (28,684) (29,545) Subtotal 37,876 40,547 53,194 66,600 64,340 57,258 58,975 60,745 62,567 Committees 6220 Newsletter Committee 2,079 2,134 3,979 2,805 5,100 5,253 5,411 5,573 5,740 6230 Recreation Committee 1,914 1,905 1,761 835 2,000 2,060 2,122 2,185 2,251 6260 Crime Watch Committee 610 200 269 150 450 464 477 492 506 6290 Citizenship Committee 67 43 139 100 103 106 109 113 6250 Beautification Committee 450 0 231 350 450 464 477 492 506 Subtotal 5,054 4,306 6,283 4,279 8,100 8,343 8,593 8,851 9,117 Pool Operation 6310 Pool Operation & Management 78,461 79,486 81,905 74,589 83,000 85,490 88,055 90,696 93,417 6320 Pool Supplies 2,870 2,658 5,801 1,025 5,000 5,150 5,305 5,464 5,628 6330 Pool Maintenance 5,841 9,991 3,052 4,490 10,000 10,300 10,609 10,927 11,255 Subtotal 87,172 92,136 90,758 80,104 98,000 100,940 103,968 107,087 110,300 Utilities

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052 4,490 10,000 10,300 10,609 10,927 11,255 Subtotal 87,172 92,136 90,758 80,104 98,000 100,940 103,968 107,087 110,300 Utilities 6420 Electricity 19,392 15,182 17,587 15,757 18,100 18,643 19,202 19,778 20,372 6400 ESP Royalties (136) (103) (76) (29) (30) (31) (32) (33) (34) 6430 Water-Sewer 10,663 15,606 21,293 20,352 16,000 16,480 16,974 17,484 18,008 6440 Telephone 1,831 2,378 2,497 2,626 2,700 2,781 2,864 2,950 3,039 Subtotal 31,750 33,063 41,302 38,706 36,770 37,873 39,009 40,179 41,385 28 (c) 2014 C.I.A. Services, Inc. Riverpark on the Brazos Property Owners Association Exhibit C - Replacements Budget 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 BUDGET FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST BUDGET CONTRIBUTIONS Allocation from Assessments 472,391 213,160 238,565 194,469 196,098 168,472 145,345 120,980 92,021 121,272 TOTAL CONTRIBUTIONS 472,391 213,160 238,565 194,469 196,098 168,472 145,345 120,980 92,021 121,272 EXPENDITURES BUILDINGS Reroof - Clubhouse Facility & Remodel 0 0 0 0 0 0 0 0 0 0 Clubhouse - Paint - Exterior 0 0 9,230 0 0 0 0 10,700 0 0

0 0 9,230 0 0 0 0 10,700 0 0 Clubhouse - Paint - Interior 0 0 4,244 0 0 0 0 4,919 0 0 Clubhouse - Tile 0 0 3,183 0 0 0 0 3,690 0 0 Clubhouse - Furninture & Décor Clubhouse - Carpet 0 0 0 6,119 0 0 0 0 7,094 0 Clubhouse - Kitchen 0 0 0 0 0 0 0 0 12,668 0 Clubhouse Appliances 0 0 0 0 0 0 0 0 7,601 0 Clubhouse - Hardware Control System 0 0 4,244 0 0 0 0 4,919 0 0

0 0 4,244 0 0 0 0 4,919 0 0 Breezeway - Stain Concrete 0 0 0 0 6,528 0 0 0 0 7,568 Office Equipment 0 0 5,305 0 0 0 0 6,149 0 0 Office Furniture 0 0 0 0 0 0 0 0 0 0 Access Card System - Readers (3) 0 0 7,957 0 0 0 0 9,224 0 0 Snack Bar - Major Appliances 0 0 0 0 0 0 3,582 0 0 0 Snack Bar - Interior Paint/Cabinets 0 0 0 0 0 0 0 17,526 0 0

0 0 0 0 0 0 17,526 0 0 Restrooms - Paint 0 0 2,122 0 0 0 0 2,460 0 0 Restroom - Tile 0 0 0 0 0 0 0 0 13,934 0 Restroom Sinks 0 0 0 0 0 0 0 2,460 0 0 Restroom - Toilets 0 0 0 0 0 0 0 0 1,773 0 Restroom Towel Dispensers 0 0 0 0 0 0 1,194 0 0 0 SWIMMING POOL Pool - Resurface Main Pool 40,000 0 0 0 0 0 0 0 0 0 Pool - Resurface Wading Pool 8,000 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 Pool Furniture 0 0 0 0 0 0 0 41,816 0 0 Pool - Guard Stands 0 0 2,652 0 0 0 0 3,075 0 0 Pool Equipment - Intelliflo Pumps 0 0 0 2,185 0 0 0 0 2,534 0 Pool Equipment - Pumps/Motors 900 0 955 0 1,013 0 1,075 0 1,140 0 Pool Water Features 25,000 0 0 0 28,138 0 0 0 31,669 0 Pressure Wash - Pool Deck and Fence (710 5,000 0 5,305 0 5,628 0 5,970 0 6,334 0 Pool Fence & Gates - Paint 0 0 9,548 0 0 0 0 0 0 0

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0 9,548 0 0 0 0 0 0 0 Pool Arbor 0 0 0 0 0 0 0 0 0 0 Pool Shower Stand 1,275 0 0 0 0 0 0 0 0 0 Pump Room - Interior Walls/Paint 0 0 6,365 0 0 0 0 7,379 0 0 Parking Lot 0 0 0 0 0 23,185 0 0 0 0 29 (c) 2014 C.I.A. Services, Inc. Dancing Bear Property Owners Association Exhibit D - Capital Budget 2011 2012 2013 2014 2015 2016 2017 2018 2019 Actual Actual Actual Outlook Budget Forecast Forecast Forecast Forecast CONTRIBUTIONS Allocation from Assessments 0 95,000 45,728 95,000 120,000 130,000 90,000 105,000 90,000 Bank Loan 0 0 0 0 0 0 375,000 0 0 TOTAL CONTRIBUTIONS 0 95,000 45,728 95,000 120,000 130,000 465,000 105,000 90,000

0 375,000 0 0 TOTAL CONTRIBUTIONS 0 95,000 45,728 95,000 120,000 130,000 465,000 105,000 90,000 EXPENDITURES Lakeside park trash receptacles (2011) 2,851 0 0 0 0 0 0 0 0 Main entry lighting project (2011) 4,997 0 0 0 0 0 0 0 0 Main wall & landscaping project (2012/2014) 0 29,959 0 12,600 0 0 0 0 0 Lakeside park sign & fence (2012) 0 1,975 1,144 0 0 0 0 0 0 Purchase 13 acre park land (2013) 0 0 30,188 0 0 0 0 0 0 PR1748 road reconstruction (2013/2014) 0 0 58,000 125,000 0 0 0 0 0 Rec center master plan (2014) 0 0 0 5,000 0 0 0 0 0 Rec center driveway & parking (2015) 0 0 0 0 20,000 0 0 0 0

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0 Rec center driveway & parking (2015) 0 0 0 0 20,000 0 0 0 0 Rec center play & park equipment (2016) 0 0 0 0 0 50,000 0 0 0 Rec center swimming pool (2017) 0 0 0 0 0 0 400,000 0 0 Rec center clubhouse pool (2022) 0 0 0 0 0 0 0 0 0 Loan payments 0 0 0 0 0 0 89,105 89,105 89,105 TOTAL EXPENDITURES 7,848 31,934 89,332 142,600 20,000 50,000 489,105 89,105 89,105 NET CHANGE TO CAPITAL FUND (7,848) 63,066 (43,604) (47,600) 100,000 80,000 (24,105) 15,895 895 Inflation factor 0.94 0.97 1.00 1.00 1.03 1.06 1.09 1.13 1.16 The Stable Gate Homeowners Association Exhibit E - Changes in Fund Balance FUND LEVELS 2011 2012 2013 2014 2015 2016 2017 2018 ACTUAL ACTUAL ACTUAL OUTLOOK BUDGET FORECAST FORECAST FORECAST OPERATING FUND Beginning Balance 32,792 11,044 26,333 3,269 (7,542) 12,655 28,417 29,538 Excess Operating Revenues (6,743) 15,284 (23,064) (10,811) 20,197 15,762 1,122 607

269 (7,542) 12,655 28,417 29,538 Excess Operating Revenues (6,743) 15,284 (23,064) (10,811) 20,197 15,762 1,122 607 Prior Period Adjustments (5) 5 0 0 0 0 0 0 Interfund Transfer (15,000) 0 0 0 0 0 0 0 Ending Balance 11,044 26,333 3,269 (7,542) 12,655 28,417 29,538 30,145 REPLACEMENT FUND Beginning Balance 85,166 68,173 75,673 88,738 124,393 116,393 129,609 150,922 Net Change to replacement fund (16,993) 7,500 13,066 35,655 (8,000) 13,216 21,313 24,353 Interfund Transfer 0 0 0 0 0 0 0 0 Ending Balance 68,173 75,673 88,738 124,393 116,393 129,609 150,922 175,274 CAPITAL FUND Beginning Balance (31,548) 0 (2,458) (3,026) (3,026) (3,026) (3,026) (3,026) Net Change to Capital Fund 16,548 (2,458) (568) 0 0 0 0 0 Interfund Transfer 15,000 0 0 0 0 0 0 0

0 0 0 Interfund Transfer 15,000 0 0 0 0 0 0 0 Ending Balance 0 (2,458) (3,026) (3,026) (3,026) (3,026) (3,026) (3,026) TOTAL ENDING FUNDS 79,217 99,548 88,981 113,825 126,022 154,999 177,434 202,393 FUND POSITIONS 2011 2012 2013 2014 2015 2016 2017 2018 ACTUAL ACTUAL ACTUAL OUTLOOK BUDGET FORECAST FORECAST FORECAST OPERATING FUND Ending Balance 11,044 26,333 3,269 (7,542) 12,655 28,417 29,538 30,145 Target Level (15% of Operating Expenses) 28,349 28,532 31,608 27,052 27,860 28,417 29,538 30,145 Percent of Target 39% 92% 10% -28% 45% 100% 100% 100% REPLACEMENT FUND Ending Balance 68,173 75,673 88,738 124,393 116,393 129,609 150,922 175,274 Target Level (from Reserve Analysis) 72,350 95,628 72,955 95,628 110,673 130,974 150,477 174,591 Percent of Target 94% 79% 122% 130% 105% 99% 100% 100% CAPITAL FUND Ending Balance 0 (2,458) (3,026) (3,026) (3,026) (3,026) (3,026) (3,026) Target Level (from Capital Project Plan) 0 0 0 0 0 0 0 0 Percent of Target 0% 0% 0% 0% 0% 0% 0% 0% ALL FUNDS Total Ending Balance 79,217 99,548 88,981 113,825 126,022 154,999 177,434 202,393

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0 0 Percent of Target 0% 0% 0% 0% 0% 0% 0% 0% ALL FUNDS Total Ending Balance 79,217 99,548 88,981 113,825 126,022 154,999 177,434 202,393 Total Target Level 100,699 124,160 104,563 122,680 138,533 159,391 180,015 204,736 PERCENT OF ALL TARGETS 79% 80% 85% 93% 91% 97% 99% 99% 30 (c) 2014 C.I.A. Services, Inc. Fund positions relative to ideal Actual fund balance levels 31 (c) 2014 C.I.A. Services, Inc. Diamond Ridge Property Owners Association Exhibit F - Asset Schedule LAST NEXT CURRENT 2015 REPAIR USEFUL REMAIN REPAIR REPLACE 12/31/2014 RESERVE DESCRIPTION YEAR LIFE LIFE YEAR COST BALANCE REQUIRED NOTES Entry sign 2004 15 4 2019 4,000 2,933 267 Estimate Mailbox shelter 2004 25 14 2029 12,000 5,280 480 Estimate Entry iron fences and gates - repaint 2004 6 0 2015 9,000 9,000 1,500 600' long x 6' high @ $2.5/sqft Entry iron fences and gates - replace 2004 25 14 2029 21,000 9,240 840 600' long x 6' high @ $35/ft Gate operators 2004 12 1 2016 6,000 5,500 500 Estimate Gate telephone entry system 2004 12 1 2016 4,000 3,667 333 Estimate Tennis court resurfacing 2014 10 9 2024 10,800 1,080 1,080 2014 resurfacing by TGB Tennis Courts Tennis court windscreens 2005 10 0 2015 3,000 3,000 300 Estimate Tennis court lamp replacement 2005 10 0 2015 3,600 3,600 360 12 lamps @ $300 each Tennis lightpole painting 2005 10 0 2015 1,350 1,350 135 Estimate - 9 poles

cement 2005 10 0 2015 3,600 3,600 360 12 lamps @ $300 each Tennis lightpole painting 2005 10 0 2015 1,350 1,350 135 Estimate - 9 poles Lake park restrooms - refurbish 2004 12 1 2016 8,000 7,333 667 Estimate - 4 restrooms Picnic tables - replace 2004 15 4 2019 4,000 2,933 267 5 tables @ $800 each Observation deck iron fencing - repaint 2004 6 0 2015 1,250 1,250 208 125' long x 4' high @ $2.50/sqft Observation deck iron fencing - replace 2004 25 14 2029 3,500 1,540 140 125' long x 4' high @ $28/ft Lake park pavilion 2004 40 29 2044 80,000 22,000 2,000 Estimate Metal footbridge - repaint 2004 6 0 2015 7,000 7,000 1,167 700' long x 4' high (including under structure) @ $2.50/sqft Metal footbridge - replace 2004 50 39 2054 67,500 14,850 1,350 135' x 6' metal footbridge - estimate based on $500/ft

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The Answers How much money should we have in the bank?

We need to have $30,640 in our Replacement Fund according to our reserve analysis. We need to have $42,567 in our Capital Fund so we can do our four entry and park projects on schedule. And we want to have $54,000 in our Operating Fund which, by Board policy, is set at 4 months operating expenses. Therefore, we should ideally have $127,207 in our Fund Balance. We currently have $105,000 or 83% of our ideal balance.

What is the right assessment for our community?

Our assessment has been set at $440 to meet all of our operating, replacement and capital goals and to get us to our ideal funding levels within two years.