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Annual Reporting Requirements Summary

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Annual Reporting Requirements Summary

April 27, 2010


The property has 237 units and 4 different model types. This Annual Reporting Summary is for the fiscal year starting July 1, 2010, and ending June 30, 2011.

As of July 1, 2010, the estimated reserve fund balance is $1,500,000.00. The estimated current replacement cost of the reserve items is $5,671,484.40, and with an annual compounded inflation rate of 3.00% the future replacement cost is $8,505,663.74.

The cash flow method was utilized in preparing the reserve plan with the objective that reserves funds would be available as needed. The following describes how the cash flow was produced:

  • Reserve Fund Balance – projected from the date of the reserve study to the beginning of the fiscal year above;
  • Reserve Item Data - for each reserve item the following was determined: description, category, basis cost, cost, quantity, estimated useful life and estimated remaining life;
  • Expenditures - the reserve item data above was used to project when the initial and recurring expenditures will be incurred over the next 30 years (includes taxes on interest earned);
  • Interest – calculated on the available reserve funds;
  • Contribution – determined based on the following: annual contribution increases, interest earned with related taxes and inflation on reserve items.

No items have been reserved for which have an estimated useful life of less than two years or a total cost less than $500.00.

Based upon the following financial assumptions:

Annual Contribution Increase -2.00%
Interest Earned -3.00%
Taxes on Interest Earned - 25.00%
Inflation on Reserve Items - 3.00%
Contingency - 5.00%
Contingency Time - 6:00 Yr:Mo

The contingency amount is a percentage of the current cost of replacement, $5,671,484.40. This amount will be funded over the contingency time period. This will increase the total monthly contribution by $646.32.

The required reserve amount at the end of the current fiscal year utilizing the cash flow method is $1,500,000.00. The reserve plan, based on all the assumptions, assures that funds for major repairs and replacement will be available when needed and that this method is equitable for charging current rather than future owners with the cost of current use.

The annual contribution for the initial year of this reserve study is $10,000.00, $35,361.77 on a monthly basis and on an average of $149.21 per unit. The monthly contribution per unit type is:

Model
Operations
Reserves
Total
A
$ 335.26
$ 133.19
$ 468.45
B
$ 356.28
$ 150.08
$ 506.36
C
$ 398.74
$ 166.58
$ 565.32
D
$ 412.34
$ 199.98
$ 612.32

The average interest rate earned before and after taxes for the initial year of this reserve study are 3.00%, and 2.25%, respectively.

Based upon Percent Funding, as of July 1, 2010, with an estimated reserve fund balance of $1,500,000.00, 100% Funding being $2,801,945.55, the percent funded is 53.53%. Based upon the percent funded, the current deficiency in reserve funds per unit is $1,324.94. If the cash flow funding plan is adhered to by the board of directors, sufficient funds should be available as needed.

The board of directors of the association has determined:

  • not to defer repairs or replacement of any major component with a with a remaining life of 30 years or less;
  • and anticipates that the levy of a special assessment required to repair, replace, or restore any major component or to provide adequate reserves will not be necessary;
  • that a monthly reserve assessment, determined from the reserve plan, collected from the owners will be deposited in a reserve fund for future projected repairs, replacements or restoration of the major components;
  • that there are no outstanding loans with a original term more than one year.

The financial representations set forth in this summary are based on the best estimates as this time. The estimates are subject to change.


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