southwest retreat condos reserve management plan type 1

Southwest Retreat Condos

Reserve Management Plan

Type 1

Reserve Study with On-Site Analysis

For 30-Year Projection Period Beginning January 1, 2019

Cover

Southwest Retreat CondosJanuary 1, 2019


Reserve Management Plan

Table of Contents

Cover 1Table of Contents 2Preparer’s Report on Reserve Study 3Statement of Position 6Disclosures 7Component List - Summary 10Percent Funded - Annual 11Cash Flow - Annual 12

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Preparer’s Report on Reserve StudyReserve Management Plan

Type I Reserve Study With On-Site Analysis

For 30-Year Projection Period Beginning January 1, 2019

Board of DirectorsSouthwest Retreat CondosLake Havasu City, AZ

Description of Reserve Management Plan Engagement and Reserve Study Report

A reserve management plan engagement involves the reserve professional providing assistance to management of Southwest Retreat Condos by helping them identify key factors, develop assumptions, gather and assemble information, and develop a financial model so they may consider the results based upon their stated assumptions.

A Type I reserve study engagement is based on an on-site analysis. The on-site analysis of Southwest Retreat Condos upon which this reserve management plan is based was performed by Pierre Del Rosario, RS, RSS of Facilities Advisors International LLC on November 5, 2018.

The attached basic financial exhibits and disclosures comprise a Type I Reserve Study report of Southwest Retreat Condos. The basic financial exhibits comprising this reserve study report are the statement of position and summary component list as of January 1, 2019, statements of projected cash flows and expenditures for the 30-year period beginning January 1, 2019, and related disclosures that provide important information regarding the basic financial exhibits.

Management’s Responsibility for Reserve Study

The Governing Body of Southwest Retreat Condos is responsible for the preparation and fair presentation of this reserve study report in accordance with Generally Accepted Reserve Study Principles.

Reserve Professional’s Responsibility

Our responsibility is to perform our reserve management plan engagement and compile the reserve study report in accordance with Generally Accepted Reserve Study Standards.

Report on Reserve Study

Our reserve management plan engagement was performed in accordance with Generally Accepted Reserve Study Standards. A reserve study involves performing procedures to identify, quantify and evaluate condition of components based upon a visual observation for the purpose of making a financial projection. The procedures selected are based on the reserve professional’s judgment. We believe that the procedures we have performed are sufficient and appropriate to support the reserve study report as presented. We are not responsible for any events subsequent to the date of this report.

of 12We have compiled the accompanying reserve study report of Southwest Retreat Condos, comprised of the financial exhibits referred to above in accordance with Generally Accepted Reserve Study Principles.

This reserve study report was prepared using software meeting the reserve study calculation and software standards of the International Capital Budgeting Institute.

We are not aware of any material modifications that should be made to the financial exhibits referred to above, based upon the stated significant assumptions and exclusions, for them to be presented in conformity with Generally Accepted Reserve Study Principles.

This reserve study report is restricted to the management and members of the Southwest Retreat Condos, and should not be relied upon by others not involved in the establishment of the significant assumptions and exclusions upon which this report is based. Readers of the reserve study report should consider the significant assumptions, excluded components, and general exclusions in forming their own conclusions regarding the reserve study report.

Required Supplementary Information

Generally Accepted Reserve Study Standards require that the component list compiled at the major or minor component level be presented to supplement the basic financial exhibits. This component list is the responsibility of the Southwest Retreat Condos’s management and was used to prepare the basic financial exhibits. The information contained in this list has been subjected to the procedures applied in the compilation of the reserve study report, and we are not aware of any material modifications that should be made thereto.

Regulatory Information

In the case of common interest realty associations located in the U.S.A., Generally Accepted Reserve Study Standards require that regulatory disclosures be presented to supplement the basic financial exhibits. Regulatory Disclosures consist of supplemental information required by the Financial Accounting Standards Board and any disclosures required by state or local jurisdictions. Such information is the responsibility of the Southwest Retreat Condos’s management and was derived from the component list used to prepare the reserve study report. The information has been subjected to the procedures applied in the compilation of the basic reserve study report, and we are not aware of any material modifications that should be made thereto.

Facilities Advisors International LLCPierre Del Rosario, RS, RSSNovember 5, 2018


Statement of Position

Projection period: January 1, 2019 to 2046Type of Project: CondominiumNumber of Units: 58Location: Lake Havasu City, AZProjected Construction date: May 1, 1990

Description of Project: Southwest Retreat Condos is an 58 - unit Condominium development located in Lake Havasu City, AZ. The project consists of eight buildings.The project was developed in May 1, 1990.

On-Site analysis performed by: Pierre Del RosarioComponent analysis performed by: Pierre Del RosarioReport prepared by: Pierre Del Rosario

No special assessments are considered necessary during the 30-year projection period.

Components Excluded From This Report

Major Component Reason ExcludedBuilding Structures Lifetime ComponentUtilities - Underground and in Structure Long-lived Component Street Base Lifetime Component Hardscape – sidewalks and curbs Lifetime ComponentIrrigation Lines and Sprinklers Included in Operating BudgetMajor Tree Trimming Included in Operating BudgetLandscape / Plant Replacement Included in Operating BudgetSee Next Page for Summary Component List

Current Replacement Cost of All Components $ 553,762Future Replacement Cost of All Components $ 748,030Projected Balance of Reserve Funds at January 1, 2019 $ 34,432100% Funded Amount at January 1, 2019 $ 279,768Percent Funded at January 1, 2019 12.30 %Reserve (Surplus)/Deficit – Average per Unit at January 1, 2019 $ 4,229Projected Reserve Contribution $ 18,264Average Annual Reserve Contribution Per Unit $ 314Monthly Reserve Contribution First Year of Projection $ 1,522Average Monthly Reserve Contribution Per Unit $ 26Projected Special Assessment $ 0 Projected Inflation Rate 2.50 %Projected Interest Rate 0.00 %

See Preparer’s ReportSee Summary of Significant Assumptions

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Disclosures

Site Analysis

Southwest Retreat Condos is a Condominium development association located in Lake Havasu City, AZ. The Association consists of 58 units located at 1806 Swanson Ave. The units were constructed as a single phase in May 1, 1990. The project consists of eight two story buildings.

The site analysis was performed on November 5, 2018 by Pierre Del Rosario, RS, RSS of Facilities Advisors International LLC. The Manager Amy Telnes was interviewed during the site analysis regarding component existence, maintenance activities, dates last repaired/replaced, and actual or bid costs, if known. Site analysis procedures included:

Review of Google Earth satellite images Tour of Association common areas Identification and quantification / measurement of common area components Component condition assessment

The site analysis was performed as a limited scope visual observation. No destructive or invasive testing was performed. The condition of components may be assessed differently if destructive / invasive testing was performed, but such testing is beyond the scope of a reserve study.

Component Analysis

Components considered for inclusion in the reserve study report are all those components that are the maintenance responsibility of the Association that are anticipated to require future major repair or replacement under the assumption that such components are subject to normal maintenance activities and normal wear and tear. Components with a useful life of less than two years or a cost of $1,000 have generally been excluded from this analysis, as such items are considered to be part of the Association’s operating budget.

The component list was compiled based upon the tour of association common areas, inquiry of Association management and maintenance staff, and selected vendors providing maintenance services to the Association. The component list is believed to be complete, except for the exclusions noted below, which are considered normal exclusions.

Estimated future major repair and replacement costs are generally based on current replacement costs projected to estimated repair or replacement date, applying an inflation factor of 2.50% for the entire 30-year financial projection period.

Current estimated replacement costs are derived from a variety of sources including; actual prior costs, current bids, vendor or contractor estimates, management’s estimates, Facilities Advisors International LLC cost database, or cost estimator manuals. This data is considered reliable and has been relied upon in the determination of current cost. Current cost includes material or product cost, labor, overhead, delivery, and sales tax.


of 12Southwest Retreat Condos

January 1, 2019

General Exclusions from the analysis are:

Excluded Conditions Reason for ExclusionBuilding code or zoning violations or upgrades Outside scope of studyStructural stability or engineering analysisEnvironmental conditions *

Outside scope of studyOutside scope of study

Geological stability or soil conditions Outside scope of studySoil contamination Outside scope of studyHydrological conditions Outside scope of studyMold or fungus Outside scope of studyTermites or other pest control Outside scope of studyRisks of wildfire, flood or seismic activity Outside scope of studyWater quality or testing Outside scope of studyIllegal or controlled substances Outside scope of studyBuilding values or appraisals Outside scope of studyAdequacy of efficiency of any system or componentInformation not provided by the association necessary to identify all components

Outside scope of study

Outside scope of study

* Asbestos, radon, formaldehyde, lead, water or air quality, electromagnetic radiation or other environmental hazards.

Financial Analysis

The financial projection was prepared using the pooled cash flow method. Under this method, aggregate expenditures are projected to future estimated repair or replacement dates considering inflation at 2.50%. Actual expenditures may vary from estimated expenditures, and the differences may be significant.

Reserve fund revenues consist of member assessments and interest earned (and other income). Interest income has been estimated at 0.00%. The funding plan does not contain an income tax expense related to interest earned, as income taxes are paid from the operating fund. The projected annual assessment has been subjected to an annual increase factor for the projection period. This annual assessment adjustment factor is necessary to counteract the effects of inflation on projected expenditures.

Percent funded at January 1, 2019 of 12.30 was calculated using the inflation adjusted method.

The beginning balance of reserve funds was estimated at $ 34,432, based on information provided by management. The beginning balance of reserve funds was provided by management.

Total Funds available for reserves beginning balance $ 34,432


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January 1, 2019

Significant Assumptions

The following significant assumptions were used in the preparation of this reserve study report. If the actual replacement costs or remaining lives vary from the assumptions used in this analysis, the impact could be significant on future assessments. Accordingly, an annual review of the analysis is necessary to see if the Board, within its authority, should increase the regular assessments, pass special assessments or reschedule future replacement dates.

Generally, only long-term major repair and replacement activities for components with a life of 2 years or longer and a cost of $1,000 or more have been considered in this analysis. A group of items with individual cost of less than $1,000 are included if the aggregate cost exceeds $1,000.

The Board of Directors will implement and/or continue preventive maintenance and repair programs to prevent abnormal deterioration of the common areas.

The analysis assumes that no unusual conditions will occur, such as weather, vandalism, unusual use, or unforeseen obsolescence.

Measurements and quantities were obtained by count, measurement, or estimation from plans provided by the Board of Directors unless otherwise noted, and are assumed to be a close approximation to actual.

Proper construction and installation of all improvements is assumed, unless otherwise noted. This analysis assumes that the Association membership wishes to continue the use and maintenance

of all amenities currently in place. The Association carries comprehensive property insurance to cover most insurable property risks. Current financial information was supplied by the Board of Directors and is assumed to be

reasonably accurate as of the date of this analysis. Funded cash balances were not audited nor confirmed directly with financial institutions as a part of this analysis.

The Association will collect and set aside reserve assessments on an annual basis as set forth in the funding plan projection, in order that sufficient funds will be available when expenditures are scheduled or necessary.

The Board of Directors does not anticipate any special assessments other than those that may be scheduled as part of the attached 30-year funding projection.

Interest rate of 0.00% is used in the funding plan. Inflation rate of 2.50% is used in the funding plan.


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Southwest Retreat CondosAnalysis Date - January 1, 2019

Inflation:2.50% Investment:0.00% Contribution Factor:0.00% Calc:Future

Component List - Summary

Replace Est Rem

Component Date Basis Cost Quantity Current Cost Life Life Future Cost

2nd Floor Walkway Carpeting 9/2020 $ 5 5,600 5600 $ 29,310 7:00 1:08 $ 30,541

2nd Floor Walkway Recoat 5/2027 2 5,600 SF 11,200 10:00 8:04 13,758

Asphalt Overlay 2" 3/2039 2 28,388 SF 65,008 25:00 20:02 106,963

Asphalt Slurry Seal 11/2022 0 28,388 SF 5,677 7:00 3:10 6,241

Backflow 5/2025 1,200 2 Each 2,400 25:00 6:04 2,806

Bathroom Remodeling 5/2030 1,200 2 Each 2,400 15:00 11:04 3,175

BBQ 5/2019 950 2 Each 1,900 5:00 0:04 1,915

Billiard Table 5/2030 5,000 1 Each 5,000 20:00 11:04 6,614

Block Wall maintenance 5/2026 1,000 1 Job 1,000 10:00 7:04 1,198

Ceiling Lights 5/2030 120 60 Each 7,200 20:00 11:04 9,525

Concrete Pool Deck 5/2026 0 3,400 Job 1,700 10:00 7:04 2,037

Doors Garage 7/23 - 7/30 950 58 Each 55,100 30:00 7:11 67,156

Elevator Controller Panel 7/2025 15,000 1 Each 15,000 35:00 6:06 17,611

Elevator Doors 7/2030 10,600 2 Each 21,200 40:00 11:06 28,161

Elevator- Cab refurbish 7/2030 7,500 1 Each 7,500 20:00 11:06 9,962

Elevator- Hydraulic System 7/2030 35,000 1 Each 35,000 40:00 11:06 46,493

Fence-Pool Metal 5/2020 30 320 LF 9,600 20:00 1:04 9,921

Fencing - Chain-link 5/2046 30 290 Lf 8,700 30:00 27:04 17,085

Filter - Pool & Spa 5/2030 1,300 2 Each 2,600 15:00 11:04 3,439

Fire Panels & Central Attenuation 7/2030 9,800 1 Each 9,800 30:00 11:06 13,018

Fire Sprinkler System 7/2040 50,000 1 Each 50,000 50:00 21:06 85,022

Gazebo roof tile 5/2040 9 1,422 SF 12,798 30:00 21:04 21,672

Heater - Pool 5/2022 4,000 2 Each 8,000 10:00 3:04 8,686

HVAC 5/2025 3,200 4 Each 12,800 15:00 6:04 14,966

Irrigation System - Replace 5/2030 2,000 1 Each 2,000 15:00 11:04 2,645

Landscape Crushed Granite 5/2025 5,000 1 Job 5,000 15:00 6:04 5,846

Light - Pole Aluminum 5/2035 950 8 Each 7,600 25:00 16:04 11,375

Light Fixture Building 5/2020 250 5 Each 1,250 20:00 1:04 1,291

Mail Boxes - Interior 7/2021 120 60 Each 7,200 30:00 2:06 7,658

Paint - Exterior Stucco 5/2030 1 38,720 SF 73,568 15:00 11:04 97,325

Pool - Replaster 5/2036 7,500 1.2 Job 9,000 20:00 17:04 13,807

Pool Cool Deck - Resurface 5/2018 2 927 SF 1,854 10:00 -0:08 1,854

Pool Furniture 5/2018 3,920 1 Lot 3,920 5:00 -0:08 3,920

Pump Motor Pool & Spa 5/2022 550 3 Each 1,650 7:00 3:04 1,791

Railing - Metal 2nd Floor Paint 5/2030 5 532 LF 2,660 15:00 11:04 3,519

Railing - Metal 2nd Floor Replace 5/2035 35 532 LF 18,620 30:00 16:04 27,869

Roof - Flat 8/18 - 10/22 1 28,960 43,440 5:00 1:03 44,859

Room Renovation 5/2020 1,500 1 Job 1,500 20:00 1:04 1,550

Shower - Outdoor 5/2030 1,500 1 Job 1,500 15:00 11:04 1,984

Trash Enclose 5/2030 500 2 Job 1,000 15:00 11:04 1,322

Vinyl Floor 5/2020 5 156 SF 780 25:00 1:04 806

Walkways allowance 5/2026 1,500 1 Job 1,500 10:00 7:04 1,797

$ 564,936 $ 759,204

PRN:11/05/2018 Southwest Retreat - License # F701136 of 12Percipient Software, Inc. Copyright 2018 All Rights Reserved



Percent Funded - Annual

100% Funded Beginning Percent Expenditure

Beginning Date Time Value Balance Funded Contribution Interest Future Cost

01/01/2019 $ 279,768 $ 34,432 12.30 % $ 18,264 $ 0 $ 20,026

01/01/2020 301,705 32,669 10.82 31,048 0 50,107

01/01/2021 295,468 13,611 4.60 45,020 0 18,354

01/01/2022 322,894 40,277 12.47 46,821 0 21,376

01/01/2023 349,294 65,722 18.81 48,694 0 8,493

01/01/2024 390,630 105,924 27.11 50,642 0 30,275

01/01/2025 409,401 126,291 30.84 52,667 0 55,822

01/01/2026 406,643 123,136 30.28 54,774 0 25,138

01/01/2027 436,506 152,772 34.99 56,965 0 64,707

01/01/2028 424,144 145,030 34.19 59,244 0 8,408

01/01/2029 475,076 195,866 41.22 61,614 0 43,801

01/01/2030 488,915 213,679 43.70 64,078 0 243,697

01/01/2031 306,586 34,059 11.10 66,641 0 13,692

01/01/2032 355,803 87,009 24.45 69,307 0 17,080

01/01/2033 402,965 139,236 34.55 72,079 0 0

01/01/2034 472,263 211,316 44.74 74,962 0 72,158

01/01/2035 462,174 214,120 46.32 77,961 0 47,929

01/01/2036 486,755 244,152 50.15 81,079 0 47,093

01/01/2037 513,045 278,139 54.21 84,323 0 24,357

01/01/2038 566,150 338,105 59.72 87,696 0 0

01/01/2039 647,887 425,801 65.72 91,203 0 139,778

01/01/2040 587,337 377,226 64.22 94,851 0 167,578

01/01/2041 483,920 304,499 62.92 98,646 0 68,824

01/01/2042 493,392 334,321 67.75 102,591 0 21,864

01/01/2043 557,977 415,048 74.38 106,695 0 13,491

01/01/2044 636,353 508,252 79.86 110,963 0 37,127

01/01/2045 691,203 582,088 84.21 115,401 0 176,865

01/01/2046 593,797 520,624 87.67 120,018 0 45,164

01/01/2047 646,127 595,478 92.16 124,818 0 31,179

01/01/2048 716,854 689,117 96.13 129,811 0 60,976




Cash Flow - Annual

Period Beginning Balance Contribution Interest Earned Expenditures Ending Balance

01/19 - 12/19 $ 34,432.00 $ 18,264.00 $ 0.00 $ 20,026.07 $ 32,669.93

01/20 - 12/20 32,669.93 31,048.80 0.00 50,107.44 13,611.29

01/21 - 12/21 13,611.29 45,020.76 0.00 18,354.84 40,277.21

01/22 - 12/22 40,277.21 46,821.60 0.00 21,376.00 65,722.81

01/23 - 12/23 65,722.81 48,694.44 0.00 8,493.19 105,924.06

01/24 - 12/24 105,924.06 50,642.28 0.00 30,275.00 126,291.34

01/25 - 12/25 126,291.34 52,667.88 0.00 55,822.76 123,136.46

01/26 - 12/26 123,136.46 54,774.60 0.00 25,138.67 152,772.39

01/27 - 12/27 152,772.39 56,965.68 0.00 64,707.22 145,030.85

01/28 - 12/28 145,030.85 59,244.24 0.00 8,408.11 195,866.98

$ 34,432.00 $ 464,144.28 $ 0.00 $ 302,709.30 $ 195,866.98


01/29 - 12/29 $ 195,866.98 $ 61,614.00 $ 0.00 $ 43,801.88 $ 213,679.10

01/30 - 12/30 213,679.10 64,078.56 0.00 243,697.70 34,059.96

01/31 - 12/31 34,059.96 66,641.76 0.00 13,692.26 87,009.46

01/32 - 12/32 87,009.46 69,307.44 0.00 17,080.40 139,236.50

01/33 - 12/33 139,236.50 72,079.68 0.00 0.00 211,316.18

01/34 - 12/34 211,316.18 74,962.92 0.00 72,158.52 214,120.58

01/35 - 12/35 214,120.58 77,961.36 0.00 47,929.62 244,152.32

01/36 - 12/36 244,152.32 81,079.80 0.00 47,093.07 278,139.05

01/37 - 12/37 278,139.05 84,323.04 0.00 24,357.06 338,105.03

01/38 - 12/38 338,105.03 87,696.00 0.00 0.00 425,801.03

$ 195,866.98 $ 739,744.56 $ 0.00 $ 509,810.51 $ 425,801.03


01/39 - 12/39 $ 425,801.03 $ 91,203.84 $ 0.00 $ 139,778.38 $ 377,226.49

01/40 - 12/40 377,226.49 94,851.96 0.00 167,578.56 304,499.89

01/41 - 12/41 304,499.89 98,646.00 0.00 68,824.73 334,321.16

01/42 - 12/42 334,321.16 102,591.84 0.00 21,864.35 415,048.65

01/43 - 12/43 415,048.65 106,695.60 0.00 13,491.78 508,252.47

01/44 - 12/44 508,252.47 110,963.40 0.00 37,127.23 582,088.64

01/45 - 12/45 582,088.64 115,401.96 0.00 176,865.68 520,624.92

01/46 - 12/46 520,624.92 120,018.00 0.00 45,164.76 595,478.16

01/47 - 12/47 595,478.16 124,818.72 0.00 31,179.09 689,117.79

01/48 - 12/48 689,117.79 129,811.44 0.00 60,976.58 757,952.65

$ 425,801.03 $ 1,095,002.76 $ 0.00 $ 762,851.14 $ 757,952.65


southwest retreat condos reserve management plan type 1

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