REPLACEMENT RESERVE REPORT FY 2018 THE LOFTS AT MILLS MILL NHE PROPERTY MANAGEMENT COMPANY. Community Management by: Rebecca Thompson

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1 REPLACEMENT RESERVE REPORT FY 2018 THE LOFTS AT MILLS MILL REPLACEMENT RESERVE REPORT FY 2018 THE LOFTS AT MILLS MILL Community Management by: NHE PROPERTY MANAGEMENT COMPANY Rebecca Thompson PO Box 39 Greenville, South Carolina Consultant: 2661 Riva Road, Suite 1023 Annapolis, MD MillerDodson.com

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3 Section A Replacement Reserve Analysis REPLACEMENT RESERVE REPORT THE LOFTS AT MILLS MILL GREENVILLE, SOUTH CAROLINA Revised July 7, 2017 Executive Summary - A1 General Information - A2 Current Funding - A3 Cash Flow Method Funding - A4 Inflation Adjusted Funding - A Comments - A6 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 Description. The Lofts at Mills Mill is a condominium located in Greenville, South Carolina. Constructed between , the community consists of one building containing 104 units. The survey examined the common elements of the property, including: Asphalt drive and parking. Concrete sidewalks, steps, and curb and gutter. Retaining walls, fencing, and railings. Swimming pool and community room Building exteriors and common interior areas. Level of Service. This study has been performed as a Level 2 Update with Site Visit and On-Site Review as defined under the National Reserve Study Standards that have been adopted by the Community Associations Institute. As such, the component inventory is based on a site visit in 2011, for a 2012 reserve study by Miller - Dodson Associates. The inventory was adjusted to reflect changes as provided by the Community Manager or adjustments were made based on the site visit and visual inspection performed by the Analyst. The included fund status and funding plan have been developed from analysis of the adjusted inventory. Projected Annual Replacements General Information - C1 Calendar of Projected Annual Replacements - C2 Section D Condition Assessment Appendix Accounting Summary - CF1 Overview, Standard Terms, and Definitions Video Answers to Frequently Asked Questions

4 To aid in the understanding of this report and its concepts and practices, on our web site, we have developed videos addressing frequently asked topics. In addition, there are posted links covering a variety of subjects under the resources page of our web site at mdareserves.com. Purpose. The purpose of this Replacement Reserve Study is to provide Lofts at Mills Mill (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 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 includes our estimates of the normal economic life and the remaining economic life for the projected replacements. Section C provides a year-by-year listing of the projected replacements. Section D 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 the Cash Flow Method. Section A, Replacement Reserve Analysis includes graphic and tabular presentations of the Association s current funding and the recommended funding based on the Cash Flow Method. 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. Miller - Dodson performed a visual evaluation on March 12, 2017 to determine a remaining useful life and replacement cost for the commonly owned elements of this facility. This study contains additional recommendations to address inflation for the Cash Flow Method only. For this recommendation, Miller - Dodson uses the Producers Price Index (PPI), which gauges inflation in manufacturing and construction. Please see page A for further details. To-Scale Drawings. The Association has plans, but site and building plans were not provided or used in the development of this study. We recommend the Association assemble and maintain a library of site and building plans of the entire facility in both hardcopy and electronic files Record drawings should be scanned into an electronic format for safe storage and ease of distribution for future use. Current Funding. This reserve study has been prepared for Fiscal Year 2018 covering the period from January 1, 2018 to December 31, The Replacement Reserves on deposit as of March 31, 2017 are reported to be $38,682. The planned contribution for the fiscal year is $99,000. This results in a Reserve Fund balance at the start of the fiscal year as follows: March 31, 2017 $38,682 9 months contribution 74,20 Planned expenditures 0 FY 2018 opening balance $432,932

5 The balance and contribution figures have been supplied by the managing agent and confirmation or audit of these figures is beyond the scope of the study. For the purposes of this study, it is assumed that the annual contribution will be deposited at the end of each month. Acknowledgement. Miller - Dodson Associates would like to acknowledge the assistance and input of Mrs. Rebecca Thompson, CMCA, AMS, PCAM, who provided very helpful insight into the current operations of the property. Miller - Dodson would also like to thank Mr. John Klinedinst, for his input in providing valuable information concerning the property. Analyst s Credentials. Mr. Glenn Larrimore has over twenty year s professional experience in architecture, engineering, and construction. Glenn holds a Bachelor of Science degree in Architectural Engineering and a Master of Architecture degree from the Georgia Institute of Technology. His work experience includes commercial, multi-family, mixed-use, healthcare, and master planning. In addition, he has designed over 100 private homes and renovations, including several high-end residential projects. Mr. Larrimore is currently a Reserve Analyst for Miller - Dodson Associates. Respectfully submitted, Glenn Larrimore, Architect, NCARB Reserve Analyst

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7 Replacement Reserve Analysis - Page A LOFTS AT18 EXECUTIVE SUMMARY The LOFTS AT MILLS MILL CONDOMINIUM Replacement Reserve Analysis uses the Cash Flow Method (CFM) to calculate Replacement Reserve funding for the periodic replacement of the 94 Projected Replacements identified in the Replacement Reserve Inventory. $120,617 RECOMMENDED REPLACEMENT RESERVE FUNDING FOR THE STUDY YEAR, 2018 $96.6 Per unit (average), minimum monthly funding of Replacement Reserves We recommend the Association adopt a Replacement Reserve Funding Plan based on the annual funding recommendation above. Inflation adjusted funding for subsequent years is shown on Page A. LOFTS AT MILLS MILL CONDOMINIUM reports a Starting Balance of $432,932 and Annual Funding totaling $99,000. Current funding is inadequate to fund the $4,801,632 of Projected Replacements scheduled in the Replacement Reserve Inventory over the 40-year Study Period. See Page A3 for a more detailed evaluation. #1 - Cumulative Replacement Reserve Funding and Expenditures Graph $6,000,000 Cash Flow Method - Cumulative Receipts Projected Replacements - Cumulative 07/07/2017 Changed starting balance 07/10/17 Changed minimum balance to $ Current Funding - Cumulative Receipts Expenditures $,000,000 4,901,632 $4,000,000 $4,801,632 4,392,932 $3,000,000 $2,000,000 $1,000,000 $ /07/2017. Changed starting balance. 07/10/17. Changed minimum balance to $100,000.

8 Replacement Reserve Analysis - Page A LOFTS AT18 REPLACEMENT RESERVE ANALYSIS - GENERAL INFORMATION The LOFTS AT MILLS MILL CONDOMINIUM Replacement Reserve Analysis calculations of recommended funding of Replacement Reserves by the Cash Flow Method and the evaluation of the Current Funding are based upon the same Study Year, Study Period, Beginning Balance, Replacement Reserve Inventory and Level of Service STUDY YEAR The Association reports that their accounting year begins on January 1, and the Study Year, the first year evaluated by the Replacement Reserve Analysis, begins on January 1, Years STUDY PERIOD The Replacement Reserve Analysis evaluates the funding of Replacement Reserves over a 40-year Study Period. $432,932 STARTING BALANCE The Association reports Replacement Reserves on Deposit totaling $432,932 at the start of the Study Year. Level Two LEVEL OF SERVICE The Replacement Reserve Inventory has been developed in compliance with the National Reserve Study Standards for a Level Two Study, as defined by the Community Associations Institute (CAI). $4,801,632 REPLACEMENT RESERVE INVENTORY - PROJECTED REPLACEMENTS The LOFTS AT MILLS MILL CONDOMINIUM Replacement Reserve Inventory identifies 94 items that will require perio replacement, that are to be funded from Replacement Reserves. We estimate the cost of these replacements will be $4,801,632 over the 40-year Study Period. The Projected Replacements are divided into 16 major categories starting on Page B3. Pages B1-B2 provide detailed information on the Replacement Reserve Inventory. #2 - Annual Expenditures for Projected Replacements Graph This graph shows annual expenditures for Projected Replacements over the 40-year Study Period. The red line shows the average annual expenditure of $120,041. Section C provides a year by year Calender of these expenditures. $400,000 $376,613 $380,800 $313,120 $361,437 $37,800 $320,90 $347,937 $300,000 $200,000 $120, year Average $116,00 $164,209 $160,60 $131,333 $206,780 $101,93 $16,149 $124,40 $110,63 $179,89 $163,300 $100,000 $2,880 $36,224 $30,770 $9,261 $19,6 $29,013 $,900 $42,94 $28,730 $4,811 $40,629 $38,126 $12,800 $39,96 $33,427 $29,921 $30,283 $2,880 $4,464 $6,800 $63,936 $9,6 $

9 Replacement Reserve Analysis - Page A LOFTS AT18 UPDATING UPDATING OF THE FUNDING PLAN The Association has a responsibility to review the Funding Plan annually. The review should include a comparison and evaluation of actual reserve funding with recommended levels shown on Page A4 and A. The Projected Replacements listed on Page C2 should be compared with any replacements accomplished and funded from Replacement Reserves. Discrepancies should be evaluated and if necessary, the Reserve Study should be updated or a new study commissioned. We recommend annual increases in replacement reserve funding to account for the impact of inflation. Inflation Adjusted Funding is discussed on Page A. UPDATING OF THE REPLACEMENT RESERVE STUDY At a minimum, the Replacement Reserve Study should be professionally updated every three to five years or after completion of a major replacement project. Updating should also be considered if during the annual review of the Funding Plan, discrepancies are noted between projected and actual reserve funding or replacement costs. Updating may also be necessary if there is a meaningful discrepancy between the actual inflation rate and the inflation rate used for the Inflation Adjusted Funding of Replacement Reserves on Page A. ANNUAL EXPENDITURES AND CURRENT FUNDING The annual expenditures that comprise the $4,801,632 of Projected Expenditures over the 40-year Study Period and the impact of the Association continuing to fund Replacement Reserves at the current level are detailed in Table 3. #3 - Table of Annual Expenditures and Current Funding Data - Years 1 through 40 Year Starting Balance $432,932 Projected Replacements ($376,613) ($2,880) ($116,00) ($36,224) ($380,800) ($30,770) ($164,209) ($160,60) ($9,261) ($19,6) Annual Deposit $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 End of Year Balance $1,319 $228,439 $210,939 $273,714 ($8,086) $60,144 ($,06) ($66,62) $23,114 $102,49 Cumulative Expenditures ($376,613) ($402,493) ($18,993) ($,218) ($936,018) ($966,788) ($1,130,997) ($1,291,7) ($1,300,818) ($1,320,383) Cumulative Receipts $31,932 $630,932 $729,932 $828,932 $927,932 $1,026,932 $1,12,932 $1,224,932 $1,323,932 $1,422,932 Year Projected Replacements ($313,120) ($29,013) ($,900) ($42,94) ($28,730) ($4,811) ($40,629) ($131,333) ($38,126) ($12,800) Annual Deposit $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 End of Year Balance ($111,71) ($41,84) $1,16 $7,922 $128,192 $172,382 $230,73 $198,420 $29,294 $34,494 Cumulative Expenditures ($1,633,03) ($1,662,16) ($1,718,416) ($1,761,010) ($1,789,740) ($1,844,0) ($1,88,179) ($2,016,12) ($2,04,638) ($2,067,438) Cumulative Receipts $1,21,932 $1,620,932 $1,719,932 $1,818,932 $1,917,932 $2,016,932 $2,11,932 $2,214,932 $2,313,932 $2,412,932 Year Projected Replacements ($361,437) ($39,96) ($206,780) ($33,427) ($37,800) ($101,93) ($16,149) ($320,90) ($29,921) ($30,283) Annual Deposit $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 End of Year Balance $83,07 $142,092 $34,312 $99,88 ($176,91) ($179,868) ($237,017) ($48,922) ($389,843) ($321,126) Cumulative Expenditures ($2,428,87) ($2,468,840) ($2,67,620) ($2,709,047) ($3,084,847) ($3,186,800) ($3,342,949) ($3,663,84) ($3,693,77) ($3,724,08) Cumulative Receipts $2,11,932 $2,610,932 $2,709,932 $2,808,932 $2,907,932 $3,006,932 $3,10,932 $3,204,932 $3,303,932 $3,402,932 Year Projected Replacements ($347,937) ($2,880) ($124,40) ($4,464) ($6,800) ($110,63) ($179,89) ($163,300) ($63,936) ($9,6) Annual Deposit $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 End of Year Balance ($70,063) ($496,943) ($22,483) ($468,947) ($376,747) ($388,309) ($468,898) ($33,198) ($498,134) ($408,700) Cumulative Expenditures ($4,071,99) ($4,097,87) ($4,222,41) ($4,267,879) ($4,274,679) ($4,38,241) ($4,64,830) ($4,728,130) ($4,792,066) ($4,801,632) Cumulative Receipts $3,01,932 $3,600,932 $3,699,932 $3,798,932 $3,897,932 $3,996,932 $4,09,932 $4,194,932 $4,293,932 $4,392,932 EVALUATION OF CURRENT FUNDING The evaluation of Current Funding (Starting Balance of $432,932 & annual funding of $99,000), is done in today's dollars with no adjustments for inflation or interest earned on Replacement Reserves. The evaluation assumes Replacement Reserves will only be used for the 94 Projected Replacements identified in the Replacement Reserve Inventory and that the Association will continue Annual Funding of $99,000 throughout the 40-year Study Period. Annual Funding of $99,000 is approximately 82 percent of the $120,617 recommended Annual Funding calculated by the Cash Flow Method for 2018, the Study Year. Evaluation of the 94 Projected Replacements calculates an average annual expenditure over the next 40 years of $120,041. Annual funding of $99,000 is 82 percent of the average annual expenditure. Our calculations identify funding shortfalls in 21 years of the Study Period with the initial shortfall in The largest shortfall, $-70,063, occurs in All shortfalls can be seen and evaluated in Table 3 above. In summary, Current Funding as reported by the Association and shown above, does not provide adequate funding for the $4,801,632 of Projected Replacements scheduled in the Replacement Reserve Inventory over the Study Period.

10 Replacement Reserve Analysis - Page A LOFTS AT18 CASH FLOW METHOD FUNDING $120,617 RECOMMENDED REPLACEMENT RESERVE FUNDING FOR 2018 $96.6 Per unit (average), minimum monthly funding of Replacement Reserves Recommended Replacement Reserve Funding has been calculated using the Cash Flow Method (also called the Straight Line or Threshold Method). This method calculates a constant annual funding between peaks in cumulative expenditures, while maintaining a Minimum Balance (threshold) in the Peak Years. Peak Years. The First Peak Year occurs in 2022 with Replacement Reserves on Deposit dropping to the Minimum Balance after the completion of $936,018 of replacements from 2018 to Recommended funding declines from $120,617 in 2022 to $120,614 in Peak Years are identified in Chart 4 and Table. Minimum Balance. The calculations assume a Minimum Balance of $100,000 in Replacement Reserves. This is approx. 10 months of average expenditures based on the $120,041, 40-year average annual expenditure. Cash Flow Method Study Period. Cash Flow Method calculates funding for $4,801,632 of expenditures over the 40-year Study Period. It does not include funding for any projects beyond 207 and in 207, the end of year balance will always be the Minimum Balance. #4 - Cash Flow Method - Graph of Cumulative Receipts and Expenditures - Years 1 through 40 $6,000,000 Cash Flow Method - Cumulative Receipts Cash Flow Method - Year End Balance Cumulative Expenditures Peak Year $,000,000 $4,901,632 $4,000,000 $4,801,632 $3,000,000 $2,000,000 $1,000,000 $0 $100, # - Cash Flow Method - Table of Receipts & Expenditures - Years 1 through 40 Year st Peak Starting Balance $432,932 Projected Replacements ($376,613) ($2,880) ($116,00) ($36,224) ($380,800) ($30,770) ($164,209) ($160,60) ($9,261) ($19,6) Annual Deposit $120,617 $120,617 $120,617 $120,617 $120,617 $120,614 $120,614 $120,614 $120,614 $120,614 End of Year Balance $176,936 $271,673 $27,790 $360,183 $100,000 $189,844 $146,20 $106,304 $217,68 $318,707 Cumulative Expenditures $376,613 $402,493 $18,993 $,218 $936,018 $966,788 $1,130,997 $1,291,7 $1,300,818 $1,320,383 Cumulative Receipts $3,49 $674,166 $794,783 $91,401 $1,036,018 $1,16,632 $1,277,247 $1,397,861 $1,18,476 $1,639,090 Year Projected Replacements ($313,120) ($29,013) ($,900) ($42,94) ($28,730) ($4,811) ($40,629) ($131,333) ($38,126) ($12,800) Annual Deposit $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 End of Year Balance $126,202 $217,804 $282,18 $360,39 $42,423 $18,227 $98,212 $87,494 $669,983 $777,797 Cumulative Expenditures ($1,633,03) ($1,662,16) ($1,718,416) ($1,761,010) ($1,789,740) ($1,844,0) ($1,88,179) ($2,016,12) ($2,04,638) ($2,067,438) Cumulative Receipts $1,79,70 $1,880,319 $2,000,934 $2,121,48 $2,242,163 $2,362,777 $2,483,392 $2,604,006 $2,724,621 $2,84,23 Year Projected Replacements ($361,437) ($39,96) ($206,780) ($33,427) ($37,800) ($101,93) ($16,149) ($320,90) ($29,921) ($30,283) Annual Deposit $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 $120,614 End of Year Balance $36,97 $617,624 $31,48 $618,646 $363,461 $382,122 $346,88 $146,297 $236,991 $327,323 Cumulative Expenditures ($2,428,87) ($2,468,840) ($2,67,620) ($2,709,047) ($3,084,847) ($3,186,800) ($3,342,949) ($3,663,84) ($3,693,77) ($3,724,08) Cumulative Receipts $2,96,80 $3,086,464 $3,207,079 $3,327,693 $3,448,308 $3,68,922 $3,689,37 $3,810,11 $3,930,766 $4,01,380 Year 2nd Peak rd Peak th Peak th Peak Projected Replacements ($347,937) ($2,880) ($124,40) ($4,464) ($6,800) ($110,63) ($179,89) ($163,300) ($63,936) ($9,6) Annual Deposit $120,614 $93,734 $93,734 $93,734 $93,734 $93,734 $93,734 $93,734 $63,936 $9,6 End of Year Balance $100,000 $167,84 $137,047 $18,317 $272,20 $2,422 $169,66 $100,000 $100,000 $100,000 Cumulative Expenditures ($4,071,99) ($4,097,87) ($4,222,41) ($4,267,879) ($4,274,679) ($4,38,241) ($4,64,830) ($4,728,130) ($4,792,066) ($4,801,632) Cumulative Receipts $4,171,99 $4,26,728 $4,39,462 $4,43,196 $4,46,929 $4,640,663 $4,734,397 $4,828,130 $4,892,066 $4,901,632

11 Replacement Reserve Analysis - Page A LOFTS AT18 INFLATION ADJUSTED FUNDING The Cash Flow Method calculations on Page A4 have been done in today's dollars with no adjustment for inflation. At Miller + Dodson, we belive that long-term inflation forecasting is effective at demonstrating the power of compounding, not at calculating appropriate funding levels for Replacement Reserves. We have developed this proprietary model to estimate the short-term impact of inflation on Replacement Reserve funding. $120, CASH FLOW METHOD RECOMMENDED FUNDING #6 - Inflation Adjusted Funding The 2018 Study Year calculations have been made using current replacement costs $10,000 (see Page B2), modified by the Analyst for any project specific conditions. $124, INFLATION ADJUSTED FUNDING A new analysis calculates 2019 funding based on three assumptions; Replacement Reserves on Deposit totaling $176,936 on January 1, All 2018 Projected Replacements listed on Page C2 accomplished at a cost to Replacement Reserves less than $376,613. Construction Cost Inflation of 2.30 percent in The $124,409 inflation adjusted funding in 2019 is a 3.14 percent increase over the non-inflation adjusted 2019 funding of $120,617. $100,000 $120,617 $120,617 $120,617 $124,409 $120,617 $129,377 $120,617 $13,600 $129, INFLATION ADJUSTED FUNDING A new analysis calculates 2020 funding based on three assumptions; Replacement Reserves on Deposit totaling $274,869 on January 1, All 2019 Projected Replacements listed on Page C2 accomplished at a cost to Replacement Reserves less than $26,47. Construction Cost Inflation of 2.30 percent in The $129,377 inflation adjusted funding in 2020 is a 7.26 percent increase over the non-inflation adjusted 2020 funding of $120,617. $0,000 $13, INFLATION ADJUSTED FUNDING A new analysis calculates 2021 funding based on three assumptions; Replacement Reserves on Deposit totaling $282,326 on January 1, All 2020 Projected Replacements listed on Page C2 accomplished at a cost to Replacement Reserves less than $121,921. Construction Cost Inflation of 2.30 percent in The $13,600 inflation adjusted funding in 2021 is a percent increase over the non-inflation adjusted funding of $120,617. $ Cash Flow Method Funding Inflation Adjusted Funding YEAR FIVE & BEYOND The inflation adjusted funding calculations outlined above are not intended to be a substitute for periodic evaluation of common elements by an experienced Reserve Analyst. Industry Standards, lender requirements, and many state and local statutes require a Replacement Reserve Study be professionally updated every 3 to years. INFLATION ADJUSTMENT Prior to approving a budget based upon the 2019, 2020 and 2021 inflation adjusted funding calculations above, the 2.30 percent base rate of inflation used in our calculations should be compared to rates published by the Bureau of Labor Statistics. If there is a significant discrepancy (over 1 percent), contact Miller Dodson + Associates prior to using the Inflation Adjusted Funding. INTEREST ON RESERVES The recommended funding calculations do not account for interest earned on Replacement Reserves. In 2018, based on a 1.00 percent interest rate, we estimate the Association may earn $3,049 on an average balance of $304,934, $2,29 on an average balance of $22,903 in 2019, and $2,786 on $278,98 in The Association may elect to attribute 100 percent of the earned interest to Reserves, resulting in a reduction in the 2018 funding from $120,617 to $117,68 (a 2.3 percent reduction), $124,409 to $122,10 in 2019 (a 1.82 percent reduction), and $129,377 to $126,91 in 2020 (a 2.1 percent reduction).

12 Replacement Reserve Analysis - Page A LOFTS AT18 REPLACEMENT RESERVE STUDY - SUPPLEMENTAL COMMENTS LOFTS AT MILLS MILL CONDOMINIUM has 104 units. The type of property is a home owners association. The Cash Flow Method calculates the minimum annual funding necessary to prevent Replacement Reserves from dropping below the Minimum Balance. Failure to fund at least the recommended levels may result in funding not being available for the Projected Replacements listed in the Replacement Reserve Inventory. The accuracy of the Replacement Reserve Analysis is dependent upon expenditures from Replacement Reserves being made ONLY for the 94 Projected Replacements specifically listed in the Replacement Reserve Inventory. The inclusion/exclusion of items from the Replacement Reserve Inventory is discussed on Page B1.

13 Replacement Reserve Inventory - Page B LOFTS AT18 REPLACEMENT RESERVE INVENTORY GENERAL INFORMATION LOFTS AT MILLS MILL CONDOMINIUM - Replacement Reserve Inventory identifies 17 items. Two types of items are identified, Projected Replacements and Excluded Items: PROJECTED REPLACEMENTS. 94 of the items are Projected Replacements and the periodic replacements of these items are scheduled for funding from Replacement Reserves. The Projected Replacements have an estimated one-time replacement cost of $2,21,837. Replacements totaling $4,801,632 are scheduled in the Replacement Reserve Inventory over the 40-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. 63 of the items are Excluded Items, and expenditures for these items are NOT scheduled for funding from Replacement Reserves. The accuracy of the calculations made in the Replacement Reserve Analysis is dependent on expenditures NOT being made for Excluded Items. The Excluded Items are listed in the Replacement Reserve Inventory to identify specific items and categories of items that are not to be funded from Replacement Reserves. There are multiple categories of items that are typically excluded 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, conditioned on expenditures being made within certain guidelines. These guidelines typically exclude maintenance activities, minor repairs and capital improvements. Value. Items with a replacement cost of less that $1,000 and/or a normal economic life of less than 3 years are typically excluded from funding from Replacement Reserves. This exclusion should reflect Association policy on the administration of Replacement Reserves. 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 property as a whole, are typically excluded from the Replacement Reserve Inventory. Unit improvements. Items 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 be installed 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 in the 'Comments' sections of the Section B - Replacement Reserve Inventory. CATEGORIES. The 17 items included in the LOFTS AT MILLS MILL CONDOMINIUM Replacement Reserve Inve are 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 standards established for a Level Two - Update (with site visit and on-site review), as defined by the National Reserve Study Standards, established in 1998 by Community Associations Institute, which states: Level II Studies are based entirely on the component inventory from a prior study. This information is adjusted to reflect changes to the inventory that are provided by the Association, and the quantities are adjusted accordingly from field measurement and/or quantity takeoffs from to-scale drawings that are made available to us. The condition of all components is ascertained from a site visit and the visual inspection of each component by the analyst. The Remaining Economic Life and replacement cost of components are provided based in part on these observations. The fund status and Funding Plan are derived from analysis of this data.

14 Replacement Reserve Inventory - Page B LOFTS AT18 REPLACEMENT RESERVE INVENTORY - GENERAL INFORMATION (cont'd) INVENTORY DATA. Each of the 94 Projected Replacements listed in the Replacement Reserve Inventory includes the following data: Item Number. The Item Number is assigned sequentially and is intended for identification purposes only. Item Description. We have identified each item included in the Inventory. Additional information may be included in the Comments section at the bottom of each page of the Inventory. Units. We have used standard abbreviations to identify the number of units including SF-square feet, LF-lineal feet, SY-square yard, LS-lump sum, EA-each, and PR-pair. Non-standard abbreviations are noted in the Comments section at the bottom of the page. Number of Units. The methods used to develop the quantities are discussed in "Level of Service" above. Unit Replacement Cost. We use four sources to develop the unit cost data shown in the Inventory; actual replacement cost data provided by the client, information provided by local contractors and suppliers, industry standard estimating manuals, and a cost database we have developed based upon our detailed interviews with contractors and service providers who are specialists in their respective lines of work. Normal Economic Life (Yrs). The number of years that a new and properly installed item should be expected to remain in service. Remaining Economic Life (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 items may 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 63 Excluded Items includes the Item Description, Units, and Number of Units. Many of the Excluded Items are listed as a 'Lump Sum' with a quantity of 1. For the Excluded Items, this indicates that all of the items identified by the 'Item Description' are excluded from funding by Replacement Reserves. REVIEW OF EXPENDITURES. This Replacement Reserve Study should be reviewed by an accounting professional representing the Association prior to implementation. 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 replaced in 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 in the Comments section. REMAINING ECONOMIC LIFE GREATER THAN 40 YEARS. The calculations do not include funding for initial replacements beyond 40 years. These replacements are included in this Study for tracking and evaluation. They should be included for funding in future Studies, when they enter the 40-year window.

15 Replacement Reserve Inventory - Page B LOFTS AT18 SITE COMPONENTS PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 1 Asphalt pavement, seal coat sf 87,000 $ $20,880 2 Asphalt pavement, seal coat sf 87,000 $ $20,880 3 Asphalt pavement, seal coat sf 87,000 $ $20,880 4 Asphalt pavement, seal coat sf 87,000 $ $20,880 Asphalt pavement, seal coat sf 87,000 $ $20,880 6 Asphalt pavement, seal coat sf 87,000 $ $20,880 7 Asphalt pavement, mill & overlay sf 87,000 $ $147,900 8 Concrete parking (10%) ft 120 $ $1,260 9 Concrete curb & gutter, barrier (3%) ft 9 $ $3, Concrete flatwork (6%) sf 194 $ $1,76 11 Concrete retaining wall, near trash room sf 60 $ $36, Concrete retaining wall, repair (10%) sf 60 $ $1,60 SITE COMPONENTS - Replacement Costs - Subtotal $318,098 SITE COMPONENTS COMMENTS 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 ( to 10 percent of the total area) to the base materials and bearing soils beneath the pavement are included in the cost shown above. 07/11/17. The actual normal life of asphalt seal coat is five years and the use of 100 is to make the action properly appear in the correct years. The seal coat has been eliminated in years where mill and overlay occurs (2024 and 2044). The Association does not own or maintain the overflow parking lot at the north entrance of the property. 07/07/17. Changed cost of seal coat 07/07/17. Changed remaining life of sealcoat, mill and overlay.

16 Replacement Reserve Inventory - Page B LOFTS AT18 SITE COMPONENTS (cont.) PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 13 Entry monument, repointing sf 120 $ none 2 $1, Entry monument, letters (allowance) ls 1 $1, $1,200 1 Entry monument, cap ea 1 $2, none 2 $2, Brick pier, repointing (2%) sf 1,200 $ none 2 $10, Brick pier, pre-cast cap ea 3 $ none 2 $39,70 18 Fence, perimeter, wrought iron ft 66 $ $36,7 19 Fence, chain link ft 740 $ $13, Signage (allowance) ls 1 $1, $1, Metal pipe railing, 1 strand ft 200 $ $6,400 SITE COMPONENTS (cont.) - Replacement Costs - Subtotal $112,06 SITE COMPONENTS (cont.) COMMENTS Water penetration is damaging the exterior brick piers. It is recommended that the Association apply a cast in place concrete cap in order to eliminate the exposure to rain. There are approximately 3 brick piers with exposed brick veneer. An allowance has been provided to reflect the cost of adding a concrete top, and replacing damaged or irrepairable brickwork. 04/20/17. Changed description of perimeter fence and adjusted normal and remaining life. 07/07/17. Added entry monument cap. Changed quantity of brick pier repointing. 07/07/17. Changed remaining life of brick pier. 07/07/17. Changed cost of brick pier precast cap. Changed quantity of retaining wall and repair.

17 Replacement Reserve Inventory - Page B LOFTS AT18 SITE COMPONENTS (cont.) PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 22 Bridge, wood structure ls 1 $8, $8, Bridge, composite decking ls 1 $3, $3, Bridge, metal railing ls 1 $4, $4,400 2 Entrance gate, metal ft 19 $ $7, Actuator, swing, entry gate ea 4 $2, $8, Retaining wall, concrete (bridge) sf 60 $ $42, Retaining wall, CMU (10% repointing) sf 60 $ $70 29 Irrigation, controller ea 1 $2, $2, Irrigation, controller ea 1 $ $ Irrigation, controller ea 1 $ $00 32 Irrigation, head ea 4 $ $4,00 33 Landscaping garden boxes,(allowance) ft 1 $3, $3, Landscaping, trees (allowance) ls 1 $, $,000 3 Landscape, lighting (allowance) ls 1 $3, $3,000 SITE COMPONENTS (cont.) - Replacement Costs - Subtotal $94,694 SITE COMPONENTS (cont.) COMMENTS For concrete components and other roadway shoulder work, we have assumed that the Association will conduct concrete component replacement projects in conjunction with the asphalt pavement and other concrete or right-of-way replacement projects. The Association reports no major concerns with the entrance gates. It is reported that one of the gates was struck by an automobile in the past, but sustained no damage. The batteries for the gates were replaced in Steve Nixon, of London Rain, maintains the community's irrigation system. He provided valuable information for this study. An allowance was added for the replacement of large trees and shrubs that add significant value to the property. 07/07/17. Changed quantity of retaining walls concrete bridge and repointing. Changed cost of landscaping trees. 07/07/17. Changed remaining life of landscaping trees.

18 Replacement Reserve Inventory - Page B LOFTS AT18 BUILDING EXTERIORS PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 36 Roofing, fibertight PVC (see comment) sf 34,000 $ $374, Gutter & downspouts, 6" aluminum ft 1,700 $ $20, Brick, repointing (10% allowance) sf,000 $ none 2 $10, Window, stationary sf 6,270 $ $263, Caulking, all windows and doors ft 30,300 $ none 2 $133, Aluminum sills ft 3,030 $ none 2 $40, Entrance door, metal ea 8 $1, $11, Door, prop alarm ea 3 $ $1,00 44 Door, card reader system ea 1 $, $,000 4 Entry callbox ea 1 $3, $3, add per fob station ea 8 $ $3, Handicapped door opener ea 1 $1, $1, Entrance awning, rear, (allowance) ea 1 $3, $3, Entrance awning, front, (allowance) ea 1 $10, $10,000 BUILDING EXTERIORS - Replacement Costs - Subtotal $1,019,916 BUILDING EXTERIORS COMMENTS The Association presently maintains 34,000 sq. ft. of 4 ply built-up roofing. It is the decision of the Association to replace the roof with a more durable roofing, which will allow pedestrian traffic. The choice of replacement roofing is Fibertight PVC. This roofing type is both puncture, and chemical resistant. It has a warranty of 20 years. Roofing information was obtained from Chris Cannon, owner of Cannon Roofing. According to the community manager, the present roofing warranty expired in The reserve study of 2012 considered all balconies, wood decking, and concrete patios the responsibility of the Association. This reserve study, as requested by the Association, has eliminated all balconies, wood decking, and concrete patios. With the exception of community doors and windows, individual door and window units are the responsibility of each owner. Brick repointing includes brick facade and entrance monument only. Brick pier repointing is listed on sheet B4. During the site visit, it was observed that water penetration has occurred at several window sills throughout the building. 07/07/17. Deleted caulking. 07/07/17. Changed cost of brick repointing. Added handicapped door opener and aluminum sills. 07/07/17. Changed quantity and cost of caulking. 07/07/17. Changed remaining life of brick repointing and caulking.

19 Replacement Reserve Inventory - Page B LOFTS AT18 BUILDING INTERIORS PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 0 Furniture, community room (allowance) ls 1 $10, $10,000 1 Furniture, upholstered (allowance) ls 1 $12, $12,000 2 Flooring, wood refinish sf 1,600 $ $,760 3 Interior lighting, general ls 1 $8, $8,00 4 Trash chute door ea 4 $ $2,80 Kitchen, cabinets (allowance) ls 1 $6, $6,00 6 Kitchen, countertop (allowance) ls 1 $1, $1,200 7 Kitchen, range (allowance) ea 1 $ $900 8 Kitchen, refrigerator (allowance) ea 1 $ $90 9 Kitchen, dishwasher (allowance) ea 1 $ $0 60 Kitchen, microwave (allowance) ea 1 $ $ Satelite system ls 1 $7, $7, Mailbox, interior cluster ea 104 $ $6, Hallway wall art ea 27 $ $7,96 64 Reserve study update ea 1 $3, $3,00 BUILDING INTERIORS - Replacement Costs - Subtotal $74,4 BUILDING INTERIORS COMMENTS The Association leases all security cameras, and security video recorders, therefore; they are excluded from this study. The Satelite system is maintained by Rob Reichard, of Wire it Pros. Mr. Reichard provided valuable information on the present condition, cost, and replacement of the community's system. 04/20/17. Changed quantity of trash chutes. Added interior cluster mailbox. 07/07/17. Added furniture upholstered, hallway wall art, and reserve study update.

20 Replacement Reserve Inventory - Page B LOFTS AT18 BUILDING SYSTEMS PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 6 Elevator cab & door, passenger ea 2 $23, $46, Elevator, hydraulic passenger controls ea 2 $46, $93, Elevator, hydraulic passenger piston ea 2 $18, $37, Trash compactor ea 1 $1, $1, Domestic water riser, (20% allowance) ea 1 $41, $41,00 70 Sanitary sewer, (20% allowance) ea 1 $33, $33, Heat pump exercise room ea 1 $6, $6, Heat pump community room ea 1 $11, $11, Heat pumps, through the wall ea 3 $9, $27, Heat pumps, through the wall ea 10 $9, $90,000 7 Hot water tanks, gallon ea 3 $ $2, Sump pump ls 1 $6, $6,000 BUILDING SYSTEMS - Replacement Costs - Subtotal $410,800 BUILDING SYSTEMS COMMENTS 04/20/17. Deleted emergency generator. 07/07/17. Added heat pumps through the wall. Changed quantity of hot water tanks. 07/07/17. Changed remaining life of heat pumps and trash compactor.

21 Replacement Reserve Inventory - Page B LOFTS AT18 BUILDING SYSTEMS (cont.) PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 77 Dehumidifiers ea 2 $1, $3, Backpack vacuum ea 1 $1, $1, Heaters, storage room ea 6 $ $, Generator, 13kW ea 1 $10, $10,000 BUILDING SYSTEMS (cont.) - Replacement Costs - Subtotal $20,300 BUILDING SYSTEMS (cont.) COMMENTS 04/20/17. Deleted fire sprinkler system. The generator on site has 13KW of power. The generator has been getting annual servicing, but does not have an hour meter and therefore it is difficult to ascertain how much life is left. The age of the generator is approximately years and should have 10 to 1 years of life left. Information concerning the generator was obtained from Mr. Robbie Huggins of Cummins Atlantic. Cummins Atlantic provides generator services for the community. 07/07/17. Deleted fan. Changed quantity of heaters.

22 Replacement Reserve Inventory - Page B LOFTS AT18 RECREATION PROJECTED REPLACEMENTS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) 81 Swimming pool structure sf 1,640 $ $139, Swimming pool, whitecoat sf 1,640 $ $9,94 83 Swimming pool waterline tile ft 140 $ $1, Swimming pool coping, stone ft 140 $ $7,000 8 Pool deck, concrete, replace. (10%) sf 26 $ $2,87 86 Pool pump, 3/4 HP ea 1 $1, $1, Pool filter, ea 1 $1, $1, Pool & patio furniture, (allowance) ls 1 $11, $11, Pool furniture, restrap (20% replace) ls 1 $1, $1, Pool cover ea 1 $2, $2, Gas grills ea 3 $ $1, Exercise equipment, (allowance) ls 1 $10, $10, Rubber flooring, exercise room sf 260 $ $1, Fence, metal, pool perimeter ft 168 $ $9,240 RECREATION - Replacement Costs - Subtotal $201,419 RECREATION COMMENTS 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. The swimming pool was closed and covered for the season during the site visit in March MDA contacted Mr. Phil Turner to get detailed information concerning the swimming pool, including pool deck, and equipment. Mr. Turner is the swimming pool vendor for the Association. Mr. Turner states that the pool pump motor was replaced in He also stated that the pool filter has approximately years before it will need replacing. 04/20/17. Added rubber flooring. 07/07/17. Changed cost of pool and patio furniture and gas grills. 07/07/17. Changed remaining life of furniture allowance and restrap.

23 Replacement Reserve Inventory - Page B LOFTS AT18 VALUATION EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Bollard/access control devices ls 1 3 EXCLUDED Bench ls 1 3 EXCLUDED Fire extinguisher cabinet ls 1 3 EXCLUDED Sprinkler head ls 1 3 EXCLUDED Emergency lighting, exit lighting, etc ls 1 3 EXCLUDED Interior doors ls 1 3 EXCLUDED Property identification signage ls 1 3 EXCLUDED Electric heaters ls 1 3 EXCLUDED VALUATION EXCLUSIONS COMMENTS 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, 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.

24 Replacement Reserve Inventory - Page B LOFTS AT18 LONG-LIFE EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Masonry features ls 1 3 EXCLUDED Miscellaneous culverts ls 1 3 EXCLUDED Segmental retaining walls ls 1 3 EXCLUDED Exterior brick veneer ls 1 3 EXCLUDED Building foundation(s) ls 1 3 EXCLUDED Concrete floor slabs (interior) ls 1 3 EXCLUDED Wall, floor, & roof structure ls 1 3 EXCLUDED Fire protection/security systems ls 1 3 EXCLUDED Common element electrical services ls 1 3 EXCLUDED Electrical wiring ls 1 3 EXCLUDED Water piping at common facilities ls 1 3 EXCLUDED Waste piping at common facilities ls 1 3 EXCLUDED Gas services at common facilities ls 1 3 EXCLUDED Stainless steel pool fixtures ls 1 3 EXCLUDED LONG-LIFE EXCLUSIONS COMMENTS Long Life Exclusions. Components that when properly maintained, can be assumed to have a life equal to the property as a 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 an unlimited economic life but periodic repointing is required and we have included this for funding in the Replacement Reserve Inventory. The individual brick of the outer walls are flaking, and breaking down due to water penetration. Cast in place, or precast concrete sills installed at all windows may stop the water penetration. It is recommended that the Association contract with a professional engineer to determine the source of brick corrosion. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

25 Replacement Reserve Inventory - Page B LOFTS AT18 UNIT IMPROVEMENTS EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Unit Interiors ls 1 3 EXCLUDED Unit storage containers in basement ls 1 3 EXCLUDED Electrical wiring serving one unit ls 1 3 EXCLUDED Cable TV service serving one unit ls 1 3 EXCLUDED Telephone service serving one unit ls 1 3 EXCLUDED Gas service serving one unit ls 1 3 EXCLUDED Unit doors ls 1 3 EXCLUDED Unit windows ls 1 3 EXCLUDED Unit deck, patio, and/or balcony ls 1 3 EXCLUDED Unit HVAC system ls 1 3 EXCLUDED UNIT IMPROVEMENTS EXCLUSIONS COMMENTS 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 are listed above. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

26 Replacement Reserve Inventory - Page B LOFTS AT18 UTILITY EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Primary electric feeds ls 1 3 EXCLUDED Electric transformers ls 1 3 EXCLUDED Cable TV systems and structures ls 1 3 EXCLUDED Telephone cables and structures ls 1 3 EXCLUDED Site lighting ls 1 3 EXCLUDED Gas mains and meters ls 1 3 EXCLUDED Water mains and meters ls 1 3 EXCLUDED Sanitary sewers ls 1 3 EXCLUDED Stormwater management system ls 1 3 EXCLUDED UTILITY EXCLUSIONS COMMENTS 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. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

27 Replacement Reserve Inventory - Page B LOFTS AT18 MAINTENANCE AND REPAIR EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Cleaning of asphalt pavement ls 1 3 EXCLUDED Crack sealing of asphalt pavement ls 1 3 EXCLUDED Painting of curbs ls 1 3 EXCLUDED Striping of parking spaces ls 1 3 EXCLUDED Numbering of parking spaces ls 1 3 EXCLUDED Exterior painting ls 1 3 EXCLUDED Interior painting ls 1 3 EXCLUDED Janitorial service ls 1 3 EXCLUDED Repair services ls 1 3 EXCLUDED Partial replacements ls 1 3 EXCLUDED Capital improvements ls 1 3 EXCLUDED MAINTENANCE AND REPAIR EXCLUSIONS COMMENTS Maintenance activities, one-time-only repairs, and capital 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 with a Certified Public Accountant. 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.

28 Replacement Reserve Inventory - Page B LOFTS AT18 GOVERNMENT EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Government, roadways & parking ls 1 3 EXCLUDED Government, sidewalks & curbs ls 1 3 EXCLUDED Government, lighting ls 1 3 EXCLUDED Government, stormwater mgmt. ls 1 3 EXCLUDED Government, ponds ls 1 3 EXCLUDED Government, mailboxes ls 1 3 EXCLUDED GOVERNMENT EXCLUSIONS COMMENTS Government Exclusions. We have assumed that some of the improvements installed on property owned by the Association will be maintained by the state, county, or local government, or other association or other responsible entity. Examples of items excluded from funding by Replacement Reserves by this standard are listed above. Excluded right-of-ways, including LIST ROADS, and adjacent properties. The list above exemplifies exclusions by the cited standard(s) and is not intended to be comprehensive.

29 Replacement Reserve Inventory - Page B LOFTS AT18 IRRIGATION SYSTEM EXCLUSIONS EXCLUDED ITEMS UNIT NORMAL REMAINING ITEM ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # DESCRIPTION UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) Subsurface irrigation pipe ls 1 3 EXCLUDED Subsurface irrigation valve ls 1 3 EXCLUDED Subsurface irrigation control wiring ls 1 3 EXCLUDED Irrigation system electrical service ls 1 3 EXCLUDED Irrigation system enclosures ls 1 3 EXCLUDED IRRIGATION SYSTEM EXCLUSIONS COMMENTS Irrigation System Exclusions. We have assumed that the maintenance, repair, and periodic replacement of the components of the extensive irrigation systems at the property will not be funded from Replacement Reserves. These systems should be inspected each spring when the systems are brought on line and each fall when they are winterized. Repairs/replacements should be made in conjunction with these inspections.

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31 Projected Annual Replacements - Page C LOFTS AT18 PROJECTED ANNUAL REPLACEMENTS GENERAL INFORMATION CALENDAR OF ANNUAL REPLACEMENTS. The 94 Projected Replacements in the LOFTS AT MILLS MILL CONDOM Replacement 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 INVENTORY POLICIES, PROCEDURES, AND ADMINISTRATION REVISIONS. Revisions will be made to the Replacement Reserve Analysis and Replacement Reserve Inventory in 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 our policy to provide revisions in electronic (Adobe PDF) format only. TAX CODE. The United States Tax Code grants favorable tax status to a common interest development (CID) meeting certain guidelines for their Replacement Reserve. If a CID files their taxes as a 'Corporation' on Form 1120 (IRC Section 277), these guidelines typically require maintenance activities, partial replacements, minor replacements, capital improvements, and one-time only replacements to be excluded from Reserves. A CID cannot co-mingle planning for maintenance activities with capital replacement activities in the Reserves (Revenue Ruling 7-370). Funds for maintenance activities and capital replacements activities must be held in separate accounts. If a CID files taxes as an "Exempt Homeowners Association" using Form 1120H (IRC Section 28), the CID does not have to segregate these activities. However, because the CID may elect to change their method of filing from year to year within the Study Period, we advise using the more restrictive approach. We further recommend that the CID consult with their Accountant and consider creating separate and independent accounts and reserves for large maintenance items, such as painting. CONFLICT OF INTEREST. Neither Miller - Dodson Associates nor the Reserve Analyst has any prior or existing relationship 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 the Association 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 the purpose of performing an audit, quality/forensic analyses, or background checks of historical records. PREVIOUS REPLACEMENTS. Information provided to Miller - Dodson Associates regarding prior replacements is considered to be accurate and reliable. Our visual evaluation is not a project audit or quality inspection. EXPERIENCE WITH FUTURE REPLACEMENTS. The Calendar of Annual Projected Replacements, lists replacements we have projected to occur over the next thirty years, begins on Page C2. Actual experience in replacing the items may differ significantly from the cost estimates and time frames shown because of conditions beyond our control. These differences may be caused by maintenance practices, inflation, variations in pricing and market conditions, future technological developments, regulatory actions, acts of God, and luck. Some items 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 LOFTS AT MILLS MILL CONDOMINIUM Board of Directors, those responsible for the management of the items included in the Replacement Reserve Inventory, and the accounting professionals employed by the Association.

32 Projected Annual Replacements - Page C LOFTS AT18 PROJECTED REPLACEMENTS - YEARS 1 TO 6 Item STUDY YEAR $ Item YEAR 2 $ Item YEAR 3 $ 13 Entry monument, repointing $1,020 1 Asphalt pavement, seal coat $20,880 1 Furniture, upholstered (allow $12,000 1 Entry monument, cap $2, Landscaping, trees (allowan $, Reserve study update $3,00 16 Brick pier, repointing (2%) $10, Heat pumps, through the wa $90, Brick pier, pre-cast cap $39,70 88 Pool & patio furniture, (allow $11, Brick, repointing (10% allowa $10, Caulking, all windows and do $133, Aluminum sills $40,026 Total Scheduled Replacements $376,613 Total Scheduled Replacements $2,880 Total Scheduled Replacements $116,00 Item YEAR 4 $ Item YEAR $ Item YEAR 6 $ 10 Concrete flatwork (6%) $1,76 34 Landscaping, trees (allowan $, Retaining wall, CMU (10% re $70 32 Irrigation, head $4,00 36 Roofing, fibertight PVC (see $374,000 4 Entry callbox $3, Hallway wall art $7,96 91 Gas grills $1, add per fob station $3,600 7 Hot water tanks, gallon $2,400 7 Kitchen, range (allowance) $ Swimming pool, whitecoat $9,94 8 Kitchen, refrigerator (allowa $90 92 Exercise equipment, (allowa $10,000 9 Kitchen, dishwasher (allowa $0 60 Kitchen, microwave (allowa $ Reserve study update $3,00 68 Trash compactor $1, Backpack vacuum $1,600 Total Scheduled Replacements $36,224 Total Scheduled Replacements $380,800 Total Scheduled Replacements $30,770

33 Projected Annual Replacements - Page C LOFTS AT18 PROJECTED REPLACEMENTS - YEARS 7 TO 12 Item YEAR 7 $ Item YEAR 8 $ Item YEAR 9 $ 7 Asphalt pavement, mill & ove $147, Landscaping, trees (allowan $, Irrigation, head $4,00 12 Concrete retaining wall, repa $1,60 2 Flooring, wood refinish $, Reserve study update $3,00 29 Irrigation, controller $2, Satelite system $7, Rubber flooring, exercise roo $1, Irrigation, controller $800 6 Elevator cab & door, passen $46, Irrigation, controller $00 66 Elevator, hydraulic passenge $93,000 0 Furniture, community room ( $10, Pool pump, 3/4 HP $1, Swimming pool waterline tile $1, Pool furniture, restrap (20% $1,800 Total Scheduled Replacements $164,209 Total Scheduled Replacements $160,60 Total Scheduled Replacements $9,261 Item YEAR 10 $ Item YEAR 11 $ Item YEAR 12 $ 10 Concrete flatwork (6%) $1,76 13 Entry monument, repointing $1,020 2 Asphalt pavement, seal coat $20, Sump pump $6, Brick pier, repointing (2%) $10,200 8 Concrete parking (10%) $1, Generator, 13kW $10, Actuator, swing, entry gate $8,800 9 Concrete curb & gutter, barr $3, Gas grills $1, Landscaping, trees (allowan $, Reserve study update $3,00 38 Brick, repointing (10% allowa $10, Caulking, all windows and do $133, Handicapped door opener $1, Backpack vacuum $1, Pool filter, $1,800 Total Scheduled Replacements $19,6 Total Scheduled Replacements $313,120 All Replacements not listed $29,013

34 Projected Annual Replacements - Page C LOFTS AT18 PROJECTED REPLACEMENTS - YEARS 13 TO 18 Item YEAR 13 $ Item YEAR 14 $ Item YEAR 1 $ 3 Interior lighting, general $8,00 32 Irrigation, head $4,00 19 Fence, chain link $13, Heat pump exercise room $6, Landscaping garden boxes,( $3, Door, prop alarm $1,00 72 Heat pump community room $11, Landscaping, trees (allowan $,000 2 Flooring, wood refinish $, Heat pumps, through the wa $27,000 Kitchen, cabinets (allowanc $6,00 64 Reserve study update $3,00 89 Pool furniture, restrap (20% $1,800 6 Kitchen, countertop (allowan $1, Dehumidifiers $3, Swimming pool, whitecoat $9,94 91 Gas grills $1, Pool cover $2, Exercise equipment, (allowa $10,000 Total Scheduled Replacements $,900 Total Scheduled Replacements $42,94 All Replacements not listed $28,730 Item YEAR 16 $ Item YEAR 17 $ Item YEAR 18 $ 10 Concrete flatwork (6%) $1,76 3 Asphalt pavement, seal coat $20,880 8 Concrete parking (10%) $1, Bridge, composite decking $3, Irrigation, controller $2,000 9 Concrete curb & gutter, barr $3, Retaining wall, CMU (10% re $70 30 Irrigation, controller $800 1 Furniture, upholstered (allow $12,000 7 Kitchen, range (allowance) $ Irrigation, controller $00 61 Satelite system $7,000 8 Kitchen, refrigerator (allowa $90 34 Landscaping, trees (allowan $, Reserve study update $3,00 9 Kitchen, dishwasher (allowa $0 3 Landscape, lighting (allowan $3, Heat pumps, through the wa $90, Kitchen, microwave (allowa $ Swimming pool waterline tile $1, Pool pump, 3/4 HP $1, Domestic water riser, (20% a $41,00 84 Swimming pool coping, ston $7, Pool & patio furniture, (allow $11, Backpack vacuum $1, Pool furniture, restrap (20% $1,800 8 Pool deck, concrete, replace $2,87 Total Scheduled Replacements $4,811 Total Scheduled Replacements $40,629 Total Scheduled Replacements $131,333

35 Projected Annual Replacements - Page C LOFTS AT18 PROJECTED REPLACEMENTS - YEARS 19 TO 24 Item YEAR 19 $ Item YEAR 20 $ Item YEAR 21 $ 32 Irrigation, head $4,00 34 Landscaping, trees (allowan $, Entry monument, repointing $1, Entrance door, metal $11, Sump pump $6, Brick pier, repointing (2%) $10, Door, card reader system $, Gas grills $1, Signage (allowance) $1, Hallway wall art $7,96 22 Bridge, wood structure $8,400 7 Hot water tanks, gallon $2, Bridge, metal railing $4, Heaters, storage room $, Brick, repointing (10% allowa $10, Rubber flooring, exercise roo $1, Caulking, all windows and do $133,017 4 Entry callbox $3, add per fob station $3, Reserve study update $3,00 69 Domestic water riser, (20% a $41,00 78 Backpack vacuum $1,600 Total Scheduled Replacements $38,126 Total Scheduled Replacements $12,800 Total Scheduled Replacements $361,437 Item YEAR 22 $ Item YEAR 23 $ Item YEAR 24 $ 4 Asphalt pavement, seal coat $20, Landscaping, trees (allowan $,000 8 Concrete parking (10%) $1, Concrete flatwork (6%) $1,76 37 Gutter & downspouts, 6" alu $20,400 9 Concrete curb & gutter, barr $3, Concrete retaining wall, repa $1,60 4 Trash chute door $2,80 14 Entry monument, letters (allo $1,200 0 Furniture, community room ( $10,000 6 Elevator cab & door, passen $46, Irrigation, head $4,00 2 Flooring, wood refinish $, Elevator, hydraulic passenge $93, Reserve study update $3,00 67 Elevator, hydraulic passenge $37, Swimming pool, whitecoat $9,94 89 Pool furniture, restrap (20% $1, Exercise equipment, (allowa $10,000 Total Scheduled Replacements $39,96 Total Scheduled Replacements $206,780 Total Scheduled Replacements $33,427

36 Projected Annual Replacements - Page C LOFTS AT18 PROJECTED REPLACEMENTS - YEARS 2 TO 30 Item YEAR 2 $ Item YEAR 26 $ Item YEAR 27 $ 36 Roofing, fibertight PVC (see $374, Retaining wall, CMU (10% re $70 7 Asphalt pavement, mill & ove $147, Gas grills $1, Landscaping, trees (allowan $, Irrigation, controller $2, Handicapped door opener $1, Irrigation, controller $800 7 Kitchen, range (allowance) $ Irrigation, controller $00 8 Kitchen, refrigerator (allowa $90 64 Reserve study update $3,00 9 Kitchen, dishwasher (allowa $0 83 Swimming pool waterline tile $1, Kitchen, microwave (allowa $ Trash compactor $1, Domestic water riser, (20% a $41,00 70 Sanitary sewer, (20% allowa $33, Backpack vacuum $1,600 Total Scheduled Replacements $37,800 Total Scheduled Replacements $101,93 Total Scheduled Replacements $16,149 Item YEAR 28 $ Item YEAR 29 $ Item YEAR 30 $ 10 Concrete flatwork (6%) $1,76 2 Entrance gate, metal $7,600 8 Concrete parking (10%) $1, Window, stationary $263, Irrigation, head $4,00 9 Concrete curb & gutter, barr $3, Satelite system $7, Landscaping garden boxes,( $3, Door, prop alarm $1,00 71 Heat pump exercise room $6, Landscaping, trees (allowan $, Reserve study update $3,00 72 Heat pump community room $11,800 2 Flooring, wood refinish $, Sump pump $6, Heat pumps, through the wa $27, Pool cover $2, Dehumidifiers $3, Pool pump, 3/4 HP $1, Rubber flooring, exercise roo $1, Generator, 13kW $10, Pool furniture, restrap (20% $1, Gas grills $1,800 Total Scheduled Replacements $320,90 Total Scheduled Replacements $29,921 Total Scheduled Replacements $30,283

37 Projected Annual Replacements - Page C LOFTS AT18 PROJECTED REPLACEMENTS - YEARS 31 TO 36 Item YEAR 31 $ Item YEAR 32 $ Item YEAR 33 $ 13 Entry monument, repointing $1,020 Asphalt pavement, seal coat $20,880 1 Furniture, upholstered (allow $12, Brick pier, repointing (2%) $10, Landscaping, trees (allowan $, Mailbox, interior cluster $6, Actuator, swing, entry gate $8, Reserve study update $3,00 38 Brick, repointing (10% allowa $10, Heat pumps, through the wa $90, Caulking, all windows and do $133, Pool & patio furniture, (allow $11, Domestic water riser, (20% a $41,00 89 Pool furniture, restrap (20% $1, Backpack vacuum $1, Pool filter, $1,800 Total Scheduled Replacements $347,937 Total Scheduled Replacements $2,880 Total Scheduled Replacements $124,40 Item YEAR 34 $ Item YEAR 3 $ Item YEAR 36 $ 10 Concrete flatwork (6%) $1,76 34 Landscaping, trees (allowan $,000 8 Concrete parking (10%) $1, Irrigation, head $4,00 91 Gas grills $1,800 9 Concrete curb & gutter, barr $3, Hallway wall art $7,96 21 Metal pipe railing, 1 strand $6,400 7 Hot water tanks, gallon $2, Bridge, composite decking $3, Swimming pool, whitecoat $9,94 28 Retaining wall, CMU (10% re $70 92 Exercise equipment, (allowa $10,000 4 Entry callbox $3, Fence, metal, pool perimete $9, add per fob station $3,600 2 Flooring, wood refinish $,760 7 Kitchen, range (allowance) $900 8 Kitchen, refrigerator (allowa $90 9 Kitchen, dishwasher (allowa $0 60 Kitchen, microwave (allowa $ Reserve study update $3,00 69 Domestic water riser, (20% a $41,00 70 Sanitary sewer, (20% allowa $33, Backpack vacuum $1,600 Total Scheduled Replacements $4,464 All Replacements not listed $6,800 Total Scheduled Replacements $110,63

38 Projected Annual Replacements - Page C LOFTS AT18 PROJECTED REPLACEMENTS - YEARS 37 TO 42 Item YEAR 37 $ Item 20 - YEAR 38 $ Item YEAR 39 $ 6 Asphalt pavement, seal coat $20, Landscaping, trees (allowan $, Fence, perimeter, wrought ir $36,7 12 Concrete retaining wall, repa $1,60 3 Interior lighting, general $8,00 32 Irrigation, head $4,00 29 Irrigation, controller $2, Satelite system $7, Door, card reader system $, Irrigation, controller $800 6 Elevator cab & door, passen $46,600 Kitchen, cabinets (allowanc $6,00 31 Irrigation, controller $00 66 Elevator, hydraulic passenge $93,000 6 Kitchen, countertop (allowan $1,200 3 Landscape, lighting (allowan $3, Pool pump, 3/4 HP $1, Reserve study update $3,00 0 Furniture, community room ( $10, Pool furniture, restrap (20% $1, Heaters, storage room $, Swimming pool structure $139, Rubber flooring, exercise roo $1, Swimming pool waterline tile $1,449 Total Scheduled Replacements $179,89 Total Scheduled Replacements $163,300 Total Scheduled Replacements $63,936 Item YEAR 40 $ Item 208 (beyond Study Period) $ Item 209 (beyond Study Period) $ 10 Concrete flatwork (6%) $1,76 13 Entry monument, repointing $1,020 8 Concrete parking (10%) $1, Sump pump $6, Brick pier, repointing (2%) $10,200 9 Concrete curb & gutter, barr $3, Gas grills $1, Landscaping, trees (allowan $, Reserve study update $3,00 38 Brick, repointing (10% allowa $10, Caulking, all windows and do $133, Handicapped door opener $1, Domestic water riser, (20% a $41,00 78 Backpack vacuum $1,600 Total Scheduled Replacements $9,6 Total Scheduled Replacements $344,020 Total Scheduled Replacements $8,133

39 Miller - Dodson Associates, Inc. Condition Assessment - Page D1 Lofts at Mills Mill Condominium Revised April 20, 2017 CONDITION ASSESSMENT General Comments. Miller - Dodson Associates conducted a Reserve Study at The Loft at Mills Mill in March The Loft at Mills Mill is in generally good condition for a community constructed between 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. General Condition Statements. Excellent. 100% to 90% of Normal Economic Life expected, with no appreciable wear or defects. Good. 90% to 60% of Normal Economic Life expected, minor wear or cosmetic defects found. Normal maintenance should be expected. If performed properly, normal maintenance may increase the useful life of a component. Otherwise, the component is wearing normally. Fair. 60% to 30% of Normal Economic Life expected, moderate wear with defects found. Repair actions should be taken to extend the life of the component or to correct repairable defects and distress. Otherwise, the component is wearing normally. Marginal. 30% to 10% of Normal Economic Life expected, with moderate to significant wear or distress found. Repair actions are expected to be cost effective for localized issues, but normal wear and use are evident. The component is reaching the end of the Normal Economic Life. Poor. 10% to 0% of Normal Economic Life expected, with significant distress and wear. Left unattended, additional damage to underlying structures is likely to occur. Further maintenance is unlikely to be cost effective. SITE COMPONENTS Entrance Monument and Signage. The Association maintains an entrance monument. The monument is made of brick and is in fair condition due to water penetration. The masonry joints were found to be open in a few locations and efflorescence is evident in some areas indicating water penetration into the masonry joints. It appears that water penetration is occurring at the top brick rowlock. It is recommended that the Association provide either cement coating, metal capping, or a precast concrete covering which is tapered at the edges to allow water to shed off the top. A precast concrete top may be the best alternative as it enhances the historic character of the building because of its ability to blend in as a resemblance of limestone. If a cement coating is used, it will be necessary in the future to reapply additional coats as a maintenance precaution. It is recommended that the Association inspect the top of the monument, window sills, and all brick piers annually for water penetration. The monument lettering is metal and is considered a long life item, and is therefore excluded from this study. The metal lettering should be painted periodically for protection and to maintain its appearance.

40 Miller - Dodson Associates, Inc. Condition Assessment - Page D2 Lofts at Mills Mill Condominium Revised April 20, 2017 We recommend repointing and replacement of defective areas of the masonry as needed. The Association may want to consider applying a coat of Siloxane or other appropriate breathable sealant to mitigate water penetration and further degradation of the masonry work. For additional information, please see the appropriate links on our web site at In addition to the monuments, the Association is responsible for all of the community s signage. An allowance has been provided for all the signs located within the community. Asphalt Pavement. The Association is responsible for approximately 43,00 square feet of asphalt pavement. Additional roadways are maintained by the City, County, or other municipality. In general, the Association s asphalt pavement is in marginal to poor condition, with significant cracking, distress and patching throughout. As a rule of thumb, asphalt should be overlaid when approximately % of the surface area is cracked or otherwise deteriorated. 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 ensure the longest life of the asphalt, we recommend a systematic and comprehensive maintenance program that includes: 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 patched if deterioration has penetrated the asphalt. This is a maintenance activity, and we have assumed that it will not be funded from Reserves. Crack Repair. All cracks should be repaired with an appropriate compound to prevent water infiltration through the asphalt into the base. This repair should be done annually. Crack repair is

41 Miller - Dodson Associates, Inc. Condition Assessment - Page D3 Lofts at Mills Mill Condominium Revised April 20, 2017 normally considered a maintenance activity and is not funded from Reserves. Areas of extensive cracking or deterioration that cannot be made watertight should be cut out and patched. Seal Coating. The asphalt should be seal coated every five to seven years. For this maintenance, activity to be effective in extending the life of the asphalt, cleaning and crack repair should be performed first. The pricing used is based on recent contracts for a two-inch overlay, which reflects the current local market for this work. For seal coating, several different products are available. The older, more traditional seal coating products are simply paints. They coat the surface of the asphalt and they are minimally effective. However, the newer coating materials, such as those from Total Asphalt Management, Asphalt Restoration Technologies, Inc., and others, are penetrating. They are engineered, so to speak, to remoisturize the pavement. Asphalt pavement is intended to be flexible. Over time, the volatile chemicals in the pavement dry, the pavement becomes brittle, and degradation follows in the forms of cracking and potholes. Remoisturizing the pavement can return its flexibility and extend the life of the pavement. Lastly, the resource links provided on our website may provide insight into the general terms and concerns, including maintenance related advantages and disadvantages, which may help the Association better manage the asphalt pavements throughout the community: Concrete Work. The concrete work includes the community curbs, sidewalks, stairs and concrete parking. We have modeled for curb replacement when the asphalt pavement is overlaid. The overall condition of the concrete work is good with no significant cracking, spalling, or tripping hazards. The standards we use for recommending replacement are as follows: Trip hazard, ½ inch height difference. Severe cracking. Severe spalling and scale. Uneven riser heights on steps. Steps with risers in excess of 8¼ inches. Because it is highly unlikely that all of the concrete components will fail and require replacement in the period of the study, we have programmed funds for the replacement of these inventories and spread the funds over an extended timeframe to reflect the incremental nature of this work. The relevant links on our web site may provide useful information related to concrete terminology, maintenance, and repair. Please see

42 Miller - Dodson Associates, Inc. Condition Assessment - Page D4 Lofts at Mills Mill Condominium Revised April 20, 2017 Metal Hand Railing. The Association maintains approximately 200 lineal feet of metal handrails and railing posts that are embedded in concrete. Light rusting is occurring at a few bases that are embedded in concrete. Eventually the concrete wears out or sinks, and causes water to puddle. The water eventually rusts the metal posts if allowed to sit for long periods of time. The Association is advised to annually check for rusting of metal pipe railing. Railings can have an extended useful life if these simple maintenance activities are performed. If left unattended, the pressure from expansive post rust can crack and damage the supporting material. As part of normal maintenance, we recommend the following: Lift or remove ornamental base covers, if applicable. Remove existing caulk completely. Clean, prime, and paint all posts, rails, and pickets. Apply an appropriate caulk around each post base. Tool and shape caulking to shed water from post. Reinstall base covers, and seal and paint all joints. Mortar Grouted Brick Pavers. Brick pavers are used throughout as pedestrian walkways. Brick pavers provide a solid, decorative, and renewable surface that is part of the community s sidewalks. The overall condition of the brick pavers is fair with areas of defects consistent with the age of the installation. The overall condition of the mortar grouted brick pavers is fair with areas of defects consistent with the age of the installation. The defects noted include the following: Cracking. There are multiple cracked pavers, none of which are creating trip hazards. Settlement. We identified areas where pavers have settled due to a failure of the base under the pavers. Ponding. There is no evidence of areas where water is ponding on the unit paver system due to settlement or poor drainage of the surface and surrounding area. Aggregate missing from the joints between paver units. Fine aggregate is effective in reducing the amount of base soil that is removed due to water penetration.

43 Miller - Dodson Associates, Inc. Condition Assessment - Page D Lofts at Mills Mill Condominium Revised April 20, 2017 To correct defects and provide the longest service life of the brick pavers, periodic re-setting is required. Resetting provides an opportunity to replace broken unit pavers, fill in voids in the foundation material, and level the surface. We have included an allowance for periodic re-set of portions of the system. Brick pavers have a service life of 30 years or more if the system is maintained on a periodic basis. Eventually the system will require a large-scale replacement, identical paver units may not be available and it is recommended that the unit paver system be replaced. Guard Rail. We have included the metal guard rail installed at the rear of the property, adjacent to parking. The guard rail is in fair condition. Footings at the guide rail posts should be inspected periodically to ensure that the surrounding soil is intact and compacted. Any damaged sections of the rail or posts should be replaced to ensure the system performs adequately. Retaining Walls. The Association maintains poured concrete and concrete block retaining walls. The retaining walls at the bridge are in fair condition, but has a small degree of bowing. The old rotting timber has been removed with a new, bridge structure. The second retaining wall is poured concrete. This retaining wall is in good condition, but there is a small degree of deterioration at the top of the wall. Retaining walls in general are designed to provide slope stabilization and soil retention by means of a structural system. Typically, walls that are three feet high or more require some level of design. Movement and displacement of any retaining wall is a sign of general settlement or failure. This typically is in the form of leaning and bowing, and can involve the entire wall or localized sections of the wall. Typically, these types of movements are gradual and may require the replacement of the wall. Movement of retaining walls located near other buildings or structures may negatively affect the stability of the adjacent structure. These conditions can become extremely costly if not properly identified, monitored, and addressed. Concrete block masonry walls can have an extended useful life of 40 years or more, and if stable, may only require periodic repointing and localized repair. Repoint is the process of raking out defective masonry joints and tooling in new mortar into the joints. Properly mortared and tooled joints will repel the weather and keep water from penetrating the wall. Siloxane or other breathable sealants should be considered to provide additional protection to the wall from water penetration. This study assumes that repointing will be performed incrementally as needed. Poured concrete retaining walls can have an extended useful life of 60 years or more, and if stable, may only require periodic localized repair. Siloxane or other breathable sealants should be considered to provide additional protection to the wall from water penetration. This study assumes that concrete repairs will be performed incrementally as needed.

44 Miller - Dodson Associates, Inc. Condition Assessment - Page D6 Lofts at Mills Mill Condominium Revised April 20, 2017 When and if it becomes necessary to replace these walls, we recommend the Association consider one of the segmental block retaining wall systems. These systems are very low maintenance. 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. Segmental block retaining walls can have a service life of 80 years or more. As a general source of information about retaining walls, we offer several links from our website at Retaining wall replacement can be costly, and early planning on the part of the Association can help to reduce the impact of this work on the community s budget in the future. We therefore recommend having a Professional Engineer inspect the walls and develop preliminary replacement alternatives and recommendations based on the site conditions, replacement costs, and recommended replacement wall types. This information can then be incorporated into future updates to the Reserve Study. Fencing. The Association maintains metal fencing that is in generally good condition. Fencing systems have a large number of configurations and finishes that can usually be repaired as a maintenance activity by replacing individual components as they become damaged or weathered. The Association maintains approximately 830 linear feet of aluminum railing, and 740 linear feet of chain link fencing. Protection from string machine damage during lawn maintenance can extend the useful life of some fence types. Protection from this type of damage is typically provided by applying herbicides around post bases or installing protective sheathing. Wrought iron fencing can have a useful life of 40 years or more. Periodic cleaning and touch-up painting may be required to keep the fence attractive. Chain link fencing can have a useful life of 40 years or more. Periodic weed control may be required to protect and maintain the fence. For more information on fencing, visit our website link to the American Fence Association. The Association maintains steel fence posts and fasteners that are embedded in concrete or masonry. Light rusting is occurring at the base of a few of the embedded posts. As part of normal maintenance, we recommend the following: Lift or remove ornamental base covers, if applicable. Remove existing caulk completely. Clean, prime, and paint all posts. Apply an appropriate caulk around each post base. Tool and shape caulking to shed water from post. Reinstall base covers, and seal and paint all joints.

45 Miller - Dodson Associates, Inc. Condition Assessment - Page D7 Lofts at Mills Mill Condominium Revised April 20, 2017 Fence posts can have an extended useful life if these simple maintenance activities are performed. If left unattended, the pressure from expansive post rust can crack and damage the supporting material. Pedestrian Bridge. The Association maintains a pedestrian bridge made of steel, composite decking, and metal railing. We have included the full replacement of the bridge in three parts. The bridge structure is expected to have a longer life than the decking and railing. The structural frame is secured to an existing concrete retaining wall and appears to be in stable condition. Likewise, the railing and decking appear to be in good condition. It is recommended, however; that the Association inspect the bridge annually for any structural deficiencies. Garden Boxes. The Association maintains decorative garden boxes at the south end of the community. The garden boxes are composed of treated wood timber, and are included in the study. The garden boxes are in excellent condition. BUILDING EXTERIORS Building Roofing. The facility s roof is flat, and is composed of a 4 ply, built-up roofing system. The roof system is in marginal condition and approximately 80% of its useful life has passed. Flat roofing systems can have a variety of configurations that will greatly affect the cost of replacement including insulation, ballast, the height of the building, and the density of installed mechanical equipment. Flat roofing systems typically have a useful life of approximately 20 years. The Association has expressed the desire to replace the 4 ply, built-up roofing with a more durable, longer lasting Fibertite roofing membrane. Fibertite roofing is up to five times more puncture resistant than a modified bitumen roof, and up to four times lighter in weight. Fibertite s toughness is due to its more densely packed fiber content.

46 Miller - Dodson Associates, Inc. Condition Assessment - Page D8 Lofts at Mills Mill Condominium Revised April 20, 2017 Annual inspections are recommended, with cleaning, repair, and mitigation of vegetation performed as needed. Access, inspection, and repair work should be performed by contractors and personnel with the appropriate access equipment who are experienced in the types of roofing used for the facility. Access to the roof was provided at the time of inspection. For additional information on roofs and roof maintenance, please see the appropriate links on our web site at Aluminum Wall Cap. Aluminum break metal installed on top of the parapet wall masonry wall provides a watertight surface that deflects rain and run-off water from saturating the exterior materials. To perform adequately the cap must be installed flat and sealed on all sides. Any section that develops pop-ups should be addressed so that water cannot penetrate the cap. It is recommended that the aluminum wall cap be inspected twice each year for defects, and that any required repairs be made as soon as possible. Gutters and Downspouts. The building has aluminum gutters and downspouts. The gutters and downspouts are in good condition. A gutter and downspout system will remove rainwater from the area of the building roof, siding, and foundation. This will protect building s exterior surfaces from water damage. Gutters should run the full length of all drip edges of the building roof. Even with full gutters, it is important to inspection the function of the gutters during heavy rain to identify any deficiencies. It may be necessary to periodically adjust the slope of sections, repair connections, replace hangers, and install shrouds to the gutters. Downspouts should be securely attached to the side of the structure. Any broken straps should be replaced. The area of the outlet should be inspected to promote run-off in the desired direction. Long straight runs should have an elbow at the bottom. Splash blocks should be installed to fray the water out-letting from the downspout.

47 Miller - Dodson Associates, Inc. Condition Assessment - Page D9 Lofts at Mills Mill Condominium Revised April 20, 2017 It is recommended that all gutters be cleaned at least twice each year. If there are a large number of trees located close to a building, consider installing a gutter debris shield that will let water into the gutters but will filter out leaves, twigs, and other debris. Windows and Doors. The Association is responsible for the common windows and exterior doors of the facility and the individual owners are responsible for the windows and doors attributed to their respective unit. The windows and doors are in generally good condition. For Associations where the unit owner is responsible for the replacement of their own windows and exterior doors, we recommend for the Association to consider offering the unit owners an option to have their replacements performed in conjunction with the Association s work. This can be performed either by separate agreement between the unit owner and the Association s selected contractor or by back charging the unit owner. Window and door units play an integral part in a facility s overall comfort, efficiency, and energy use. The quality of the installed units and the care taken in their installation and maintenance are major factors in their effectiveness and useful life. These units can have a useful life of 20 to 3 years or more depending on their use and other factors mentioned above. In general, we recommend coordinating the replacement of these units with other exterior work, such as siding and roof replacements. The weather tightness of the building envelope often requires transitional flashing and caulking that should be performed in coordination with each other. Warranties and advantages in economy of scale can often result in lower overall replacement costs and results that are more reliable. Lastly, coordinated replacements offer the opportunity to correct initial construction defects and improve the effectiveness of details with improved construction techniques and materials. For more information, please see our links at

48 Miller - Dodson Associates, Inc. Condition Assessment - Page D10 Lofts at Mills Mill Condominium Revised April 20, 2017 Siding and Trim. The exterior of the building s exterior is constructed of brick. The siding and trim materials are in generally fair condition. In several locations throughout the community, it appears that water penetration is occurring at window sills, and at areas where mortar joints have been damaged, or deteriorated. Brick masonry is used as the main exterior cladding of the building. As masonry weathers, the mortar joints will become damaged by water penetration. As additional water gains access to the joints, repeated freezethaw cycles gradually increase the damage to the mortar joints. If allowed to progress, even the masonry units such as brick, block, and stone can have their surfaces affected and masonry units can become loose. In general, masonry is considered a long-life item and is therefore excluded from reserve funding. However, because weather and other conditions result in the slow deterioration of the mortar in masonry joints, we have included funding in this study for repointing. Repointing is the process of raking and cutting out damaged sections of mortar and replacing them with new mortar. Periodic repointing and local replacement of damaged masonry units will limit the damage done by moisture penetration. For this study, we assume that 10% of the masonry will require repointing every 10 years after approximately 30 years. For additional information about masonry and repointing, please view the relevant links at Building Access. The building is an access-controlled facility with electrically operated doors activated by keypads. The system is reported to be operating normally. Systems of this type typically have a service life of 1 to 20 years. Beyond that point, it becomes increasingly difficult to find replacement parts. Additionally, changes in technology help render the systems obsolete. For these reasons, we have assumed a service life of 1 years for this type of system.

49 Miller - Dodson Associates, Inc. Condition Assessment - Page D11 Lofts at Mills Mill Condominium Revised April 20, 2017 Entrance Awning. The Association maintains a metal frame awning at the main front entrance, and a smaller metal awning at one of the rear entrance doors of the building. The overall condition of both awnings is good, with the metal framing in good condition. We have assumed a service life of 2 years for the metal framing. Although the metal framing appears to be in good condition, we observed that the framing is in need of painting. We have assumed that the framing will be painted when the covering is replaced. Painting is considered a maintenance item and excluded from this study. BUILDING INTERIORS Community Room. We have included the following items from the building s Community Room in the Reserve Analysis: Hardwood Flooring. To help maintain the condition of the hardwood flooring, we recommend that the Association continue with a program of daily sweeping and refinishing. Furnishings. We have included the community room furnishings in the reserve analysis. We have assumed that the service life for the furniture is 1 years and that it will be replaced with similar items.

50 Miller - Dodson Associates, Inc. Condition Assessment - Page D12 Lofts at Mills Mill Condominium Revised April 20, 2017 Light Fixtures. Lobby illumination is provided by ceiling mounted light fixtures. The fixtures use incandescent lamps. The fixtures are in good working condition and provide adequate lighting. Fixtures of this type have a typical service life of 2 years. Stairwells. The building has two interior stairwells. We consider the stairs and the landings to be life of structure items and therefore are excluded from the Reserve Analysis. We have included the hardwood floors of the stairwells in the analysis. All components are in good condition. Health and Fitness Center. The Health and Fitness Center includes exercise equipment. Listed below are the major components: Flooring. The flooring in the exercise room is rubber. The rubber flooring is in good condition. Exercise Equipment. The equipment is in generally good condition. Since it is unlikely that all of the equipment will require replacement at the same time, we have provided a replacement-funding plan that assumes an incremental approach. Restrooms. The restroom fixtures and finishes are in good condition overall. Restroom components typically have a service life of 20 years.

51 Miller - Dodson Associates, Inc. Condition Assessment - Page D13 Lofts at Mills Mill Condominium Revised April 20, 2017 Mailboxes. The cluster mailboxes for the community are located on the first floor and are in good condition. Mailboxes should be maintained to the extent that the structure does lose its ability to function properly. All mail slot doors should remain intact and hinges and locks remain operable. Our replacement estimate assumes that these units will be replaced with fiberglass or composite units. MECHANICAL & ELECTRICAL Elevators. The Association maintains hydraulic passenger elevators that appear to be operating normally. There are no reported cases of entrapment or operational issues by the Association. The estimated costs for the replacement the major components of the facility s elevators have been developed utilizing R.S. Means Construction Cost Data, and guidelines provided by reputable elevator manufacturers and service providers. These costs are included to reflect the obsolescence that occurs with elevator systems. Even though the systems may be functioning well, parts for most mechanical control systems will become increasingly hard to find as the components age, and the reliability of these components becomes problematic. As such, parts availability, down-time, and service costs become major considerations that may force a replacement decision. When these elevator systems are replaced, they will normally have to be brought into compliance with current code requirements. This work typically entails upgrading door operating mechanisms, replacing elevator call systems, and installation of emergency phones, but can involve enlargement of the cab and other very costly work. Where prudent amounts have been included in this study in anticipation of these concerns, we recommend developing a replacement plan with estimated costs based on the specific equipment installed and current local code requirements. Many reputable elevator companies will provide this service free of charge or at minimal cost. At the time of a Reserve Study Update, this information can then be incorporated into the study. Split and Package HVAC Systems. The heating ventilation and air conditioning (HVAC) of the facility are reported to be in good operating condition. Detailed inspection and testing of these systems is beyond the scope of this study.

52 Miller - Dodson Associates, Inc. Condition Assessment - Page D14 Lofts at Mills Mill Condominium Revised April 20, 2017 The Association maintains a number of HVAC systems that use the refrigerant known as R22. This refrigerant will be phased out of production by the year 2020 and was generally phased out of use in new systems in See the EPA, HCFC Phase-out Schedule on our website at Since most of the community s AC systems rely on the old R22 refrigerant, we assume that the HVAC replacement will include upgrading to the new refrigerant, which is likely to require the replacement of the entire system, including the compressor, coil, and line-set. The Association maintains a number of HVAC systems that use one of the new generation refrigerants. Unlike the old R22 refrigerant, the new refrigerants are expected to be available throughout the period of this study. However, the operating pressure for new refrigerant systems is approximately twice as high as older systems. Many of the standard components have not been redesigned for these higher pressures, including the coils, which generally fail due to metal fatigue. Even though manufacturers continue to predict 1 to 20-year life cycles for HVAC equipment that use these new refrigerants, this is not proven by historical data. We therefore recommend anticipating a normal economic life of 1 years for all HVAC equipment that uses pressurized refrigerants of these types. In addition, the Association maintains air handlers/furnaces throughout the facility, and these components can have a useful life of 20 to 40 years. With fan, motor, and coil replacements performed as needed, the casings of these systems can last significantly longer. As is the case with most equipment, to achieve a maximum useful economic life, proper maintenance is essential. In some cases, proper and proactive maintenance can greatly extend the useful life of these components. Emergency Generator. The building is served by a 13 kw generator that is located near the swimming pool. The generator is approximately 10 years old and is in good condition. The generator supplies power to the building s corridor lighting, stairwell lighting, heating system, HVAC system pumps, elevator elevators, fire pump. The estimated cost of replacing the generator has been developed utilizing R.S. Means Construction Cost Data. RECREATIONAL FACILITIES Swimming Pool. The community operates an outdoor pool of concrete construction. The pool appears to be in good condition. Listed below are the major components of the pool facilities:

53 Miller - Dodson Associates, Inc. Condition Assessment - Page D1 Lofts at Mills Mill Condominium Revised April 20, 2017 Pool Shell. The shell for the swimming pool is in good condition. Pool Deck. The pool has a deck. The overall condition of the deck is good with no tripping hazards. Whitecoat. The pool whitecoat is in good condition. We have assumed a service life of eight to ten years for the pool whitecoat. Waterline Tile. The waterline tile is in good condition. We have assumed that the waterline tile will be replaced or restored when the pool is whitecoated. Coping. The pool is edged with masonry coping. The coping is in good condition. Pump and Filter System. The filter system is in good operating condition. Pool Fence. The swimming pool is enclosed by a metal fence that is in good condition.

54 Miller - Dodson Associates, Inc. Condition Assessment - Page D16 Lofts at Mills Mill Condominium Revised April 20, 2017 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. O ur 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

55 Cash Flow Method Accounting Summary - Page CF LOFTS AT18 CASH FLOW METHOD ACCOUNTING SUMMARY This LOFTS AT MILLS MILL CONDOMINIUM - Cash Flow Method Accounting Summary is an attachment to the LOFTS AT MILLS MILL CONDOMINIUM - Replacement Reserve Study dated Revised July 11, 2017 and is for use by accounting and reserve professionals experienced in Association funding and accounting principles. This Summary consists of four reports, the 2018, 2019, and 2020 Cash Flow Method Category Funding Reports (3) and a Three-Year Replacement Funding Report. CASH FLOW METHOD CATEGORY FUNDING REPORT, 2018, 2019, and Each of the 94 Projected Replacements listed in the LOFTS AT MILLS MILL CONDOMINIUM Replacement Reserve Inventory has been assigned to one of 8 categories. The following information is summarized by category in each report: Normal Economic Life and Remaining Economic Life of the Projected Replacements. Cost of all Scheduled Replacements in each category. Replacement Reserves on Deposit allocated to the category at the beginning and end of the report period. Cost of Projected Replacements in the report period. Recommended Replacement Reserve Funding allocated to the category during the report period as calculated by the Cash Flow Method. THREE-YEAR REPLACEMENT FUNDING REPORT. This report details the allocation of the $432,932 Beginning Balance (at the start of the Study Year) and the $361,81 of additional Replacement Reserve Funding in 2018 through 2020 (as calculated in the Replacement Reserve Analysis) to each of the 94 Projected Replacements listed in the Replacement Reserve Inventory. These allocations have been made using Chronological Allocation, a method developed by Miller Dodson Associates, Inc., and discussed below. The calculated data includes: Identification and estimated cost of each Projected Replacement scheduled in years 2018 through Allocation of the $432,932 Beginning Balance to the Projected Replacements by Chronological Allocation. Allocation of the $361,81 of additional Replacement Reserve Funding recommended in the Replacement Reserve Analysis in years 2018 through 2020, by Chronological Allocation. CHRONOLOGICAL ALLOCATION. Chronological Allocation assigns Replacement Reserves to Projected Replacements on a "first come, first serve" basis in keeping with the basic philosophy of the Cash Flow Method. The Chronological Allocation methodology is outlined below. The first step is the allocation of the $432,932 Beginning Balance to the Projected Replacements in the Study Year. Remaining unallocated funds are next allocated to the Projected Replacements in subsequent years in chronological order until the total of Projected Replacements in the next year is greater than the unallocated funds. Projected Replacements in this year are partially funded with each replacement receiving percentage funding. The percentage of funding is calculated by dividing the unallocated funds by the total of Projected Replacements in the partially funded year. At LOFTS AT MILLS MILL CONDOMINIUM the Beginning Balance funds all Scheduled Replacements in the Study Year through 2019 and provides partial funding (26%) of replacements scheduled in The next step is the allocation of the $120,617 of 2018 Cash Flow Method Reserve Funding calculated in the Replacement Reserve Analysis. These funds are first allocated to fund the partially funded Projected Replacements and then to subsequent years in chronological order as outlined above. At LOFTS AT MILLS MILL CONDOMINIUM the Beginning Balance and the 2018 Replacement Reserve Funding, funds replacements through 2020 and partial funds (9.4%) replacements in Allocations of the 2019 and 2020 Reserve Funding are done using the same methodology. The Three-Year Replacement Funding Report details component by component allocations made by Chronological Allocation.

56 Cash Flow Method Accounting Summary - Page CF LOFTS AT CASH FLOW METHOD CATEGORY FUNDING REPORT Each of the 94 Projected Replacements included in the LOFTS AT MILLS MILL CONDOMINIUM Replacement Reserve Inventory has been assigned to one of the 8 categories listed in TABLE CF1 below. This calculated data is a summary of data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory. The accuracy of this data is dependent upon many factors including the following critical financial data: A Beginning Balance of $432,932 as of the first day of the Study Year, January 1, Total reserve funding (including the Beginning Balance) of $3,49 in the Study Year. No expenditures from Replacement Reserves other than those specifically listed in the Replacement Reserve Inventory. All Projected Replacements scheduled in the Replacement Reserve Inventory in 2018 being accomplished in 2018 at a cost of $376,613. If any of these critical factors are inaccurate, do not use the data and please contact Miller Dodson Associates to arrange for an update of the Replacement Reserve Study CASH FLOW METHOD CATEGORY FUNDING - TABLE CF1 NORMAL REMAINING ESTIMATED ECONOMIC ECONOMIC REPLACEMENT BEGINNING RESERVE PROJECTED END OF YEAR CATEGORY LIFE LIFE COST BALANCE FUNDING REPLACEMENTS BALANCE SITE COMPONENTS 6 to 100 years 1 to years $318,098 $20,880 $1,684 $22,64 SITE COMPONENTS (cont.) 10 to 60 years 0 to 38 years $112,06 $3,70 ($3,70) SITE COMPONENTS (cont.) 3 to 60 years 1 to years $94,694 $,000 $4,293 $9,293 BUILDING EXTERIORS 10 to 0 years 0 to 44 years $1,019,916 $323,043 ($323,043) BUILDING INTERIORS 3 to 3 years 2 to 32 years $74,4 $4,00 $19,048 $23,098 BUILDING SYSTEMS to 30 years 2 to 2 years $410,800 $23,1 $68,77 $92,289 BUILDING SYSTEMS (cont.) to 20 years to 18 years $20,300 RECREATION to 40 years 2 to 36 years $201,419 $2,874 $26,817 $29,691

57 Cash Flow Method Accounting Summary - Page CF LOFTS AT CASH FLOW METHOD CATEGORY FUNDING REPORT Each of the 94 Projected Replacements included in the LOFTS AT MILLS MILL CONDOMINIUM Replacement Reserve Inventory has been assigned to one of the 8 categories listed in TABLE CF2 below. This calculated data is a summary of data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory. The accuracy of this data is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $176,936 on January 1, Total reserve funding (including the Beginning Balance) of $674,166 from 2018 through No expenditures from Replacement Reserves other than those specifically listed in the Replacement Reserve Inventory. All Projected Replacements scheduled in the Replacement Reserve Inventory in 2019 being accomplished in 2019 at a cost of $2,880. If any of these critical factors are inaccurate, do not use the data and please contact Miller Dodson Associates to arrange for an update of the Replacement Reserve Study CASH FLOW METHOD CATEGORY FUNDING - TABLE CF2 NORMAL REMAINING ESTIMATED ECONOMIC ECONOMIC REPLACEMENT BEGINNING RESERVE PROJECTED END OF YEAR CATEGORY LIFE LIFE COST BALANCE FUNDING REPLACEMENTS BALANCE SITE COMPONENTS 6 to 100 years 0 to 4 years $318,098 $22,64 $81 ($20,880) $1,76 SITE COMPONENTS (cont.) 10 to 60 years 9 to 9 years $112,06 SITE COMPONENTS (cont.) 3 to 60 years 0 to 4 years $94,694 $9,293 $1,769 ($,000) $6,062 BUILDING EXTERIORS 10 to 0 years 3 to 49 years $1,019,916 $116,824 $116,824 BUILDING INTERIORS 3 to 3 years 1 to 31 years $74,4 $23,098 $367 $23,46 BUILDING SYSTEMS to 30 years 1 to 24 years $410,800 $92,289 $111 $92,400 BUILDING SYSTEMS (cont.) to 20 years 4 to 17 years $20,300 RECREATION to 40 years 1 to 3 years $201,419 $29,691 $1,46 $31,16

58 Cash Flow Method Accounting Summary - Page CF LOFTS AT CASH FLOW METHOD CATEGORY FUNDING REPORT Each of the 94 Projected Replacements included in the LOFTS AT MILLS MILL CONDOMINIUM Replacement Reserve Inventory has been assigned to one of the 8 categories listed in TABLE CF3 below. This calculated data is a summary of data provided in the Three-Year Replacement Funding Report and Replacement Reserve Inventory. The accuracy of this data is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $271,673 on January 1, Total Replacement Reserve funding (including the Beginning Balance) of $794,783 from 2018 to No expenditures from Replacement Reserves other than those specifically listed in the Replacement Reserve Inventory. All Projected Replacements scheduled in the Replacement Reserve Inventory in 2020 being accomplished in 2020 at a cost of $116,00. If any of these critical factors are inaccurate, do not use the data and please contact Miller Dodson Associates to arrange for an update of the Replacement Reserve Study CASH FLOW METHOD CATEGORY FUNDING - TABLE CF3 NORMAL REMAINING ESTIMATED ECONOMIC ECONOMIC REPLACEMENT BEGINNING RESERVE PROJECTED END OF YEAR CATEGORY LIFE LIFE COST BALANCE FUNDING REPLACEMENTS BALANCE SITE COMPONENTS 6 to 100 years 1 to 99 years $318,098 $1,76 $1,76 SITE COMPONENTS (cont.) 10 to 60 years 8 to 8 years $112,06 SITE COMPONENTS (cont.) 3 to 60 years 1 to 3 years $94,694 $6,062 $1,84 $7,646 BUILDING EXTERIORS 10 to 0 years 2 to 48 years $1,019,916 $116,824 $118,463 $23,288 BUILDING INTERIORS 3 to 3 years 0 to 30 years $74,4 $23,46 ($0) ($1,00) $7,96 BUILDING SYSTEMS to 30 years 0 to 23 years $410,800 $92,400 ($0) ($90,000) $2,400 BUILDING SYSTEMS (cont.) to 20 years 3 to 16 years $20,300 RECREATION to 40 years 0 to 34 years $201,419 $31,16 $70 ($11,000) $20,726

59 Cash Flow Method Accounting Summary - Page CF LOFTS AT18 CASH FLOW METHOD - THREE-YEAR REPLACEMENT FUNDING REPORT TABLE CF4 below details the allocation of the $432,932 Beginning Balance, as reported by the Association and the $361,81 of Replacement Reserve Funding calculated by the Cash Flow Method from 2018 to 2020, to the 94 Projected Replacements listed in the Replacement Reserve Inventory. These allocations have been made by Chronological Allocation, a method developed by Miller Dodson Associates, Inc., and outlined on Page CF1. The accuracy of the allocations is dependent upon many factors including the following critical financial data: Replacement Reserves on Deposit totaling $432,932 on January 1, Replacement Reserves on Deposit totaling $176,936 on January 1, Replacement Reserves on Deposit totaling $271,673 on January 1, Total Replacement Reserve funding (including the Beginning Balance) of $794,783 from 2018 to No expenditures from Replacement Reserves other than those specifically listed in the Replacement Reserve Inventory. All Projected Replacements scheduled in the Replacement Reserve Inventory from 2018 to 2020 being accomplished as scheduled in the Replacement Reserve Inventory at a cost of $18,993. If any of these critical factors are inaccurate, do not use the data and please contact Miller Dodson Associates, Inc., to arrange for an update of the Replacement Reserve Study. CASH FLOW METHOD - THREE-YEAR REPLACEMENT FUNDING - TABLE CF4 Description of Estimated Allocation Item Projected Replacement of Beginning Reserve Projected End of Year Reserve Projected End of Year Reserve Projected End of Year # Replacement Costs Balance Funding Replacements Balance Funding Replacements Balance Funding Replacements Balance SITE COMPONENTS 1 Asphalt pavement, seal coat 20,880 20,880 20,880 (20,880) 2 Asphalt pavement, seal coat 20,880 3 Asphalt pavement, seal coat 20,880 4 Asphalt pavement, seal coat 20,880 Asphalt pavement, seal coat 20,880 6 Asphalt pavement, seal coat 20,880 7 Asphalt pavement, mill & overlay 147,900 8 Concrete parking (10%) 1,260 9 Concrete curb & gutter, barrier (3%) 3, Concrete flatwork (6%) 1,76 1,684 1, ,76 1,76 11 Concrete retaining wall, near trash room 36, Concrete retaining wall, repair (10%) 1,60 SITE COMPONENTS (cont.) 13 Entry monument, repointing 1,020 1,020 (1,020) 14 Entry monument, letters (allowance) 1,200 1 Entry monument, cap 2,600 2,600 (2,600) 16 Brick pier, repointing (2%) 10,200 10,200 (10,200) 17 Brick pier, pre-cast cap 39,70 39,70 (39,70) 18 Fence, perimeter, wrought iron 36,7 19 Fence, chain link 13, Signage (allowance) 1, Metal pipe railing, 1 strand 6,400 SITE COMPONENTS (cont.) 22 Bridge, wood structure 8, Bridge, composite decking 3, Bridge, metal railing 4,400 2 Entrance gate, metal 7, Actuator, swing, entry gate 8, Retaining wall, concrete (bridge) 42, Retaining wall, CMU (10% repointing) Irrigation, controller 2, Irrigation, controller Irrigation, controller Irrigation, head 4,00 4,293 4, ,00 4,00 33 Landscaping garden boxes,(allowance) 3, Landscaping, trees (allowance),000,000,000 1,62 (,000) 1,62 1,84 3,146 3 Landscape, lighting (allowance) 3,000 BUILDING EXTERIORS 36 Roofing, fibertight PVC (see comment 374, , , ,463 23,288

60 Cash Flow Method Accounting Summary - Page CF LOFTS AT18 CASH FLOW METHOD - THREE-YEAR REPLACEMENT FUNDING - TABLE CF4 cont'd Description of Estimated Allocation Item Projected Replacement of Beginning Reserve Projected End of Year Reserve Projected End of Year Reserve Projected End of Year # Replacement Costs Balance Funding Replacements Balance Funding Replacements Balance Funding Replacements Balance 37 Gutter & downspouts, 6" aluminum 20, Brick, repointing (10% allowance) 10,000 10,000 (10,000) 39 Window, stationary 263, Caulking, all windows and doors 133, ,017 (133,017) 41 Aluminum sills 40,026 40,026 (40,026) 42 Entrance door, metal 11, Door, prop alarm 1,00 44 Door, card reader system,000 4 Entry callbox 3, add per fob station 3, Handicapped door opener 1, Entrance awning, rear, (allowance) 3, Entrance awning, front, (allowance) 10,000 BUILDING INTERIORS 0 Furniture, community room (allowance 10,000 1 Furniture, upholstered (allowance) 12,000 3,13 8,86 12,000 12,000 (12,000) 2 Flooring, wood refinish,760 3 Interior lighting, general 8,00 4 Trash chute door 2,80 Kitchen, cabinets (allowance) 6,00 6 Kitchen, countertop (allowance) 1,200 7 Kitchen, range (allowance) Kitchen, refrigerator (allowance) 90 9 Kitchen, dishwasher (allowance) 0 60 Kitchen, microwave (allowance) Satelite system 7, Mailbox, interior cluster 6, Hallway wall art 7,96 7,98 7, ,96 7,96 64 Reserve study update 3, ,86 3,00 3,00 (3,00) BUILDING SYSTEMS 6 Elevator cab & door, passenger 46, Elevator, hydraulic passenger controls 93, Elevator, hydraulic passenger piston 37, Trash compactor 1, Domestic water riser, (20% allowance) 41,00 70 Sanitary sewer, (20% allowance) 33, Heat pump exercise room 6, Heat pump community room 11, Heat pumps, through the wall 27, Heat pumps, through the wall 90,000 23,1 66,48 90,000 90,000 (90,000) 7 Hot water tanks, gallon 2,400 2,289 2, ,400 2, Sump pump 6,000 BUILDING SYSTEMS (cont.) 77 Dehumidifiers 3, Backpack vacuum 1, Heaters, storage room, Generator, 13kW 10,000 RECREATION 81 Swimming pool structure 139, Swimming pool, whitecoat 9,94 9,12 9, ,94 9,94 83 Swimming pool waterline tile 1, Swimming pool coping, stone 7,000 8 Pool deck, concrete, replace. (10%) 2,87 86 Pool pump, 3/4 HP 1, Pool filter, 1, Pool & patio furniture, (allowance) 11,000 2,874 8,126 11,000 11,000 (11,000) 89 Pool furniture, restrap (20% replace) 1, Pool cover 2, Gas grills 1, , Exercise equipment, (allowance) 10,000 9,39 9, ,000 10, Rubber flooring, exercise room 1, Fence, metal, pool perimeter 9,240

61 Miller - Dodson Associates, Inc. Page 1 Overview, Standard Terms, and Definitions 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 homeowner 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, streetlights, recreational facilities, and other community facilities and infrastructure. The growth of Community Associations has been explosive. In 196, there were only 00 Community Associations in the United States. According to the 1990 U.S. Census, there were 130,000 Community Associations. 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, 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. Miller - Dodson provides a replacement reserve recommendation based on the Cash Flow Method in Section A, and the Component Method in the Appendix of the report. 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. 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). The Appendix also includes the Accounting Summary for the Cash Flow Method and the Component Method.

62 Miller - Dodson Associates, Inc. Page 2 Overview, Standard Terms, and Definitions 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: 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. 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 that is less than that arrived at by the Component Method. Component Method. This method is a time tested mathematical model developed by HUD in the early 1980s, but has been generally relegated to a few States that require it by law. For the vast majority of Miller - Dodson s clients, this method is not used. The Component Method 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. 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.

63 Miller - Dodson Associates, Inc. Page 3 Overview, Standard Terms, and Definitions. 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.)

64 Miller - Dodson Associates, Inc. Page 4 Overview, Standard Terms, and Definitions 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 numbers 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

65 Miller - Dodson Associates, Inc. Page Video Answers to Frequently Asked Questions What is a Reserve Study? Who are we? What kind of property uses a Reserve Study? Who are our clients? Who conducts a Reserve Study? Reserve Specialist (RS) what does this mean? When should a Reserve Study be updated? What are the different types of Reserve Studies? What is in a Reserve Study and what is out? Improvement vs Component, is there a difference? What is my role as a Community Manager? Will the report help me explain Reserves to my clients?

66 Miller - Dodson Associates, Inc. Page 6 Video Answers to Frequently Asked Questions What is my role as a Board Member? Will a Reserve Study meet my community s needs? Community dues, how can a Reserve Study help? Will a study help keep my property competitive? How do I read the report? Will I have a say in what the report contains? Where do the numbers come from? Cumulative expenditures and funding, what? How are interest and inflation addressed? What should we look at when considering inflation? A community needs more help, where do we go? What is a Strategic Funding Plan?