Revised RESERVE STUDY UPDATE Park Tower Condominium Association Chicago, Illinois Inspected June 1, 2016 Revised July 25, 2016

Transcription

1 Revised RESERVE STUDY UPDATE Park Tower Condominium Association Chicago, Illinois Inspected June 1, 2016 Revised July 25, 2016 This Report contains intellectual property developed by Reserve Advisors, Inc. and cannot be reproduced or distributed to those who conduct reserve studies without their written consent. Reserve Advisors, Inc. 2016

2 CORPORATE OFFICE Reserve Advisors, Inc. 735 N. Water Street, Suite 175 Milwaukee, WI Reserve Study Update July 25, 2016 The Reserve Study for Park Tower Condominium Association Was submitted on.june 23, 2016 To maintain the most accurate and cost-effective replacement schedule and funding plan for your property elements, this study should be updated on or about...second Quarter, 2018 but no later than..second Quarter, 2019 As a valued client, we are pleased to offer a future reserve study update with site visit for $11,500 For a Reserve Study Update with Site visit as noted above. This future update fee is based on the same property components that were contained in your last Reserve Advisors reserve study or update. We are pleased to include property additions for an additional fee. To initiate your Reserve Study Update, please sign this authorization and fax or mail to the number below. Upon receipt of this authorization we will contact you to schedule your site visit and invoice for the Reserve Study Update Service. Sign this contract below and fax to Or mail to Reserve Advisors, Inc. 735 N. Water St., Suite 175 Milwaukee, WI Delivery options for your Reserve Study Update Report, Please check one of the following: 1-Full color printed copy PLUS Electronic Report, FREE 2-Full color printed copies PLUS Electronic Report, $100 For: Reserve Advisors, Inc. Signature: Monica Mack Director of Illinois Client Services Monica@reserveadvisors.com Ref. # (800) For Park Tower Condominium Association Name: Title: Date: Phone: Agent or Manager: Timothy Patricio Management Firm: Draper and Kramer

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4 TABLE OF CONTENTS 1. RESERVE STUDY EXECUTIVE SUMMARY RESERVE STUDY REPORT RESERVE EXPENDITURES and FUNDING PLAN CONDITION ASSESSMENT INTERNAL PROPERTY CHANGES Deletions Pipes, Domestic Water, Horizontals with Renovations Pipes, Garage Drain Trash Chute and Doors Additions Roof, 2 nd Floor, Sun Deck, Steel Railings Walls, Concrete, Mechanical Penthouse Windows and Doors, Lobby, North Door Exercise Equipment Exercise Room Doors and Operators, Fire Significant Changes Roofs, Tower, Main and Mechanical Penthouse Roof, 2 nd Floor, Concrete Roof, 2 nd Floor, Sun Deck, Planters Roof, Pool Enclosure Walls, Curtain Wall Walls, Masonry

5 Elevator Cab Finishes, Traction, Passenger Mall, Market Boilers, Domestic Hot Water, Residential Elevator, Hydraulic, Refuse Heat Exchangers, Building Heating, Main Life Safety System Security System Plaza Pool, Outdoor Photographic Documentation of Select Remaining Reserve Components Exterior Building Elements Interior Building Elements Building Services Elements Property Site Elements Pool Elements Garage Elements Reserve Study Update METHODOLOGY DEFINITIONS PROFESSIONAL SERVICE CONDITIONS CREDENTIALS...8.1

6 Reserve Advisors, Inc. 735 N. Water Street, Suite 175 Milwaukee, WI RESERVE STUDY EXECUTIVE SUMMARY Client: Park Tower Condominium Association (Park Tower) Location: Chicago, Illinois Reference: Property Basics: Park Tower Condominium Association is a condominium style development of 728 residential and 16 commercial units in a 54-story building. The exterior of the building comprises a curtain wall system, brick masonry and flat roofs. The building was built in 1974 and converted to condominiums in Reserve Components Identified: 113 Reserve Components. Inspection Date: June 1, We conducted previous inspections in 1992, 1994, 1996, 2007 and Funding Goal: The Funding Goal of this Reserve Study is to maintain reserves above an adequate, not excessive threshold during one or more years of significant expenditures. Our recommended Funding Plan recognizes this threshold funding year in 2037 due to restoration of the curtain wall system. The Reserve Funding Plan recommends 2046 year end accumulated reserves of approximately $6,885,000. We judge this amount of accumulated reserves in 2046 desirable or necessary, to fund the likely replacement of the remaining original electrical system components and piping after These future needs, although beyond the limit of the Cash Flow Analysis of this Reserve Study, are reflected in the amount of accumulated 2046 year end reserves. Cash Flow Method: We use the Cash Flow Method to compute the Reserve Funding Plan. This method offsets future variable Reserve Expenditures with existing and future stable levels of reserve funding. Our application of this method also considers: current and future local costs of replacement 1.00% annual rate of return on invested reserves (Board requested) 3.5% future Inflation Rate for estimating Future Replacement Costs (Board requested) Sources for Local Costs of Replacement: Our proprietary database, historical costs and published sources, i.e., R.S. Means, Incorporated. Cash Status of Reserve Fund: $1,590,336 as of February 29, Recommended Reserve Funding: The Association budgeted $1,472,900 for Reserve Contributions in We recommend the Association adopt a reserve budget of $1,600,000 in 2017 and annual inflationary increases through By 2038, the Association will have fully funded for curtain wall repairs. Therefore, the Association may anticipate a decrease in the annual Reserve Contribution to $2,700,000. Afterwards, the Association should budget gradual annual increases in reserve funding that in part consider the effects of inflation through 2046, the limit of this study's Cash Flow Analysis. The initial adjustment in Reserve Contributions of $127,100 represents about a two percent (2.1%) adjustment in the 2016 total Operating Budget of $5,947,200. This initial adjustment of $127,100 is equivalent to an increase of $14.24 in the monthly contributions per homeowner. 1 The Fiscal Year (FY 2016) for Park Tower began March 1, 2016 and ends February 28, For brevity, we refer to the Fiscal Year by its beginning year, i.e. Fiscal Year is FY 2016 or simply 2016.

7 Our revised findings reflect both external market and internal property changes. The result is an overall increase in the recommended Reserve Funding Plan since our last Reserve Study on October 9, The overall increase relates primarily to an increase in Reserve Expenditures for the piping systems. Certification: This Full Reserve Study exceeds the Community Associations Institute (CAI) and the Association of Professional Reserve Analysts (APRA) standards fulfilling the requirements of a Level I Full Reserve Study. Page Executive Summary

8 Park Tower Recommended Reserve Funding Table and Graph Year Reserve Contributions ($) Reserve Balances ($) Year Reserve Contributions ($) Reserve Balances ($) Year Reserve Contributions ($) Reserve Balances ($) ,600,000 1,430, ,256,900 8,713, ,183, , ,656,000 1,191, ,335,900 8,954, ,700,000 1,488, ,714,000 1,679, ,417,700 9,192, ,794,500 3,233, ,774,000 2,077, ,502,300 9,733, ,892,300 3,953, ,836,100 3,224, ,589,900 7,338, ,993,500 5,294, ,900,400 4,858, ,680,500 8,470, ,098,300 6,326, ,966,900 6,295, ,774,300 9,818, ,206,700 6,922, ,035,700 7,954, ,871,400 9,691, ,318,900 5,768, ,106,900 6,065, ,971,900 7,620, ,435,100 6,223, ,180,600 7,568, ,075,900 6,106, ,555,300 6,885, Recommended Reserve Contributions Reserve Expenditures Year-End Reserve Balances Respectfully submitted on July 25, 2016 by RESERVE ADVISORS, INC. Years Alan M. Ebert, PRA 1, RS 2, Director of Quality Assurance Reviewed by: Nicole L. Lowery, PRA, RS, Associate Director of Quality Assurance Visual Inspection and Report by: Todd M. Walter, PRA, RS 1 PRA (Professional Reserve Analyst) is the professional designation of the Association of Professional Reserve Analysts. Learn more about APRA at 2 RS (Reserve Specialist) is the reserve provider professional designation of the Community Associations Institute (CAI) representing America's more than 300,000 condominium, cooperative and homeowners associations. Page Executive Summary

9 2. RESERVE STUDY REPORT At the direction of the Board that recognizes the need for proper reserve planning, we have conducted a Full Reserve Study of Park Tower Condominium Association Chicago, Illinois and submit our findings in this report. The effective date of this study is the date of our visual, noninvasive inspection, June 1, We conducted previous inspections in 1992, 1994, 1996, 2007 and spreadsheets: We present our findings and recommendations in the following report sections and Identification of Property - Segregates all property into several areas of responsibility for repair or replacement Reserve Expenditures - Identifies reserve components and related quantities, useful lives, remaining useful lives and future reserve expenditures during the next 30 years Reserve Funding Plan - Presents the recommended Reserve Contributions and year-end Reserve Balances for the next 30 years Condition Assessment - Describes the reserve components, includes photographic documentation of the condition of various property elements, describes our recommendations for repairs or replacement, and includes detailed solutions and procedures for replacements for the benefit of current and future board members Methodology - Lists the national standards, methods and procedures used, financial information relied upon for the Financial Analysis of the Reserve Study Definitions - Contains definitions of terms used in the Reserve Study, consistent with national standards Professional Service Conditions - Describes Assumptions and Professional Service Conditions Credentials and Resources Page Report

10 IDENTIFICATION OF PROPERTY Park Tower Condominium Association is a condominium style development of 728 residential and 16 commercial units in a 54-story building. The exterior of the building comprises a curtain wall system, brick masonry and flat roofs. The building was built in 1974 and converted to condominiums in We identify 113 major reserve components that are likely to require capital repair or replacement during the next 30 years. Our investigation includes Reserve Components or property elements as set forth in your Declaration. Our analysis begins by segregating the property elements into several areas of responsibility for repair and replacement. Our process of identification helps assure that future boards and the management team understand whether reserves, the operating budget or Homeowners fund certain replacements and assists in preparation of the annual budget. We Page Report

11 derive these segregated classes of property from our review of the information provided by the Association and through conversations with Management. These classes of property include: Reserve Components Long-Lived Property Elements Operating Budget Funded Repairs and Replacements Property Maintained by Homeowners Property Maintained by Others We advise the Board conduct an annual review of these classes of property to confirm its policy concerning the manner of funding, i.e., from reserves or the operating budget. The Reserve Study identifies Reserve Components as set forth in your Declaration or which were identified as part of your request for proposed services. Reserve Components are defined by CAI as property elements with: Park Tower responsibility Limited useful life expectancies Predictable remaining useful life expectancies Replacement cost above a minimum threshold Long-Lived Property Elements do not have predictable Remaining Useful Lives. The operating budget should fund infrequent repairs. Funding untimely or unexpected replacements from reserves will necessitate increases to Reserve Contributions. Periodic updates of this Reserve Study will help determine the merits of adjusting the Reserve Funding Plan. We identify the following Long-Lived Property Elements as excluded from reserve funding at this time. Electrical Systems, Wires and Bus Bars, Common Foundation Pipes, Interior Building, Fire Standpipes (Indeterminate Remaining Useful Life) Pipes, Subsurface Utilities Pool Structures, Main and Outdoor Structural Frame Trash Chute and Doors (Replaced 2005 to 2014) Page Report

12 Walls, Curtain Wall (Indeterminate Remaining Useful Life) (We opine that replacement of system components other than the sealants if necessary would require the use of means other than reserves to fund.) The operating budget provides money for the repair and replacement of certain Reserve Components. Operating Budget Funded Repairs and Replacements relate to: General Maintenance to the Common Elements Expenditures less than $23,000 (These relatively minor expenditures have a limited effect on the recommended Reserve Contributions.) Air Conditioning and Heating Systems, Miscellaneous (Including Common Fan Coil Units, Baseboard Radiators and Window Units) Air Handling and Condensing Units, Elevator Rooms Air Handling Unit, Laundry Room (Coils Replaced 2014) Asphalt Pavement, Crack Repair, Patch and Seal Coat Applications Boiler Stack Boilers, Main, Condensate System Chemical Treatment Systems Column Cladding (The Association maintains the cladding through an annual service contract.) Doors, Automatic Openers/Closers Doors, Interior and Miscellaneous Exterior Electrical System, Thermoscans Elevator Cab Finishes, Refuse Engineer s Apartment (Classified as Operating Budget funded at the direction of Management) Examinations, Periodic Ground Level Inspections of the Exterior Walls as Required by the Chicago Exterior Facade Ordinance Exhaust Systems (Except Garage, Main Kitchen and Main Rest Room) Façade Access Rails and Equipment (Classified as Operating Budget funded at the direction of Management. Management informs us that the Association will likely remove the outer rail as part of the near term roof replacement project.) Fences, Metal, East Perimeter Fire Hoses and Extinguishers Floors, Terrazzo, Interim Honing Garage, Foyers Garage, Vehicular Doors Hallway, 2 nd Floor Landscape Light Fixtures, Building Exterior Loading Dock Motors Paint Finishes, Touch Up Page Report

13 Pipes, Annual Expenditures (Including Rodding, Replacement of Horizontal Branch Pipes during Renovations and Sprinkler System Components at the Garage.) Pipes, Garage Drains Plaza, Annual Repairs and Seal Applications Pool, Furnishings Pools, Paint Finishes Pumps Less Than Five-HP (horsepower) Racquetball Court (Classified as Operating Budget funded at the direction of Management) Seepage Investigation, Garage Lower Level, East and West Walls (Future updates of this Reserve Study will include expenditures for remediation based on the results of the investigation.) Seepage at garage lower level wall Service Areas Sidewalks, On-Grade (Including Shared Public Sidewalks) (We assume replacement as needed in lieu of in aggregate.) Smoke Damper System (Indeterminate Remaining Useful Life) Soffits Staff Areas Stairwells, Paint Finishes and Light Fixtures (Classified as Operating Budget funded at the direction of Management) Storage Areas Sun Deck, Brick Pavers Sun Deck, Furnishings and Grills Sun Deck, Wood Decking, Pergolas and Siding, Interim Repairs and Stain Applications Trash/Service Elevator Rooms, Finishes and Light Fixtures Valves, Small Diameter (Including Riser Shut Off) (We assume replacement as needed in lieu of an aggregate replacement of all of the small diameter valves as a single event.) Page Report

14 Variable Frequency Drives, Interim Walls, Curtain Wall, Annual Repairs (Including Interior Gaskets and Handles) Other Repairs normally funded through the Operating Budget Certain items have been designated as the responsibility of the homeowners to repair or replace at their cost. Property Maintained by Homeowners, including items billed back to Homeowners, relates to unit: Doors Electrical Systems (Including Circuit Protection Panels and Wires from Meters to Units) Heating, Ventilating and Air Conditioning (HVAC) Units (Fan Coil Units and Fin Tube Baseboard Radiation at Corner Units) Interiors Pipes, Interior Building, Water and Sewer, Horizontals Walls, Curtain Wall, Screens Certain items have been designated as the responsibility of others to repair or replace. Property Maintained by Others relates to: Commercial Interiors (Except Market) and HVAC (Commercial Entities) Laundry Equipment and Room Finishes (Vendor) Parking Area, Southeast (Commercial Entity) Sidewalk and Driveway, South Perimeter (Neighboring Entity) Page Report

15 3. RESERVE EXPENDITURES and FUNDING PLAN The tables following this introduction present: Reserve Expenditures Line item numbers Total quantities Quantities replaced per phase (in a single year) Reserve component inventory Estimated first year of event (i.e., replacement, application, etc.) Life analysis showing useful life remaining useful life Unit cost of replacement 2016 local cost of replacement Total future costs of replacement anticipated during the next 30 years Schedule of estimated future costs for each reserve component including inflation Reserve Funding Plan Reserves at the beginning of each year Total recommended reserve contributions Estimated interest earned from invested reserves Anticipated expenditures by year Anticipated reserves at year end Financial statements prepared by your association, by you or others might rely in part on information contained in this section. For your convenience, we have provided an electronic data file containing the tables of Reserve Expenditures and Reserve Funding Plan. Page Reserve Expenditures and Funding Plan

16 The following chart illustrates the relative importance of the categories noted in Reserve Expenditures and relative funding during the next 30 years. Park Tower Future Expenditures Relative Cost Illustration Property Site Elements $4,865, % Pool Elements $961, % Garage Elements $3,436, % Reserve Study Update with Site Visit $22, % Exterior Building Elements $13,104, % Building Services Elements $46,635, % Interior Building Elements $5,310, % Page Reserve Expenditures and Funding Plan

17 Reserve Advisors, Inc. Years 2016 to 2031 RESERVE EXPENDITURES Explanatory Notes: Park Tower 1) 3.5% is the estimated future Inflation Rate for estimating Future Replacement Costs. Condominium Association 2) FY2016 is Fiscal Year beginning March 1, 2016 and ending February 28, Chicago, Illinois Estimated Life Analysis, Costs, $ Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total RUL = Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2016) (2016) (2016) (Inflated) FY Exterior Building Elements Squares Roofs, Tower, Main and Mechanical Penthouse, Modified Bitumen to , , ,100 1,728, , Squares Roof, Lobby Canopy, Flat Membrane to , ,600 25,600 42,889 42, Squares Roofs, 2nd Floor Walkway, Racquetball Court and Exercise Room to , ,500 77, ,626 83, Squares Roof, 2nd Floor, Center/East, Built-up to , ,800 59, ,671 81, Squares Roof, 2nd Floor, Northwest, Thermoplastic to , , , , , Squares Roof, 2nd Floor, Southwest, Built-up to , ,300 48,300 96, ,000 15,000 Square Feet Roof, 2nd Floor, Concrete, Waterproof Coating and Repairs to , , , , ,300 2,300 Square Feet Roof, 2nd Floor, Sun Deck, Planters 2017 to , , , , Allowance Roof, 2nd Floor, Sun Deck, Wood Decking (Incl. Pergolas, Siding) 2026 to , , , , , Linear Feet Roof, 2nd Floor, Sun Deck, Steel Railings (Incl. East of Pool Enclosure) 2026 to ,400 37,400 52,756 52, Squares Roof, 2nd Floor, Membrane (Beneath Decking and Pavers) to , ,700 89, , , ,700 4,700 Square Feet Roof, Pool Enclosure, Inspections, Sealants and Repairs to ,650 44, ,017 46,213 74, ,700 4,700 Square Feet Roof, Pool Enclosure, Replacement 2045 to , , , ,000 7,000 Square Feet Walls, Concrete, Mechanical Penthouse, Repairs and Coating 2018 to ,000 42, ,706 44,991 67, Allowance Walls, Curtain Wall, Infiltration Remediation 2017 to , ,000 25, ,824 25,875 27,718 29,692 31,807 36,499 39,099 41, , ,000 Square Feet Walls, Curtain Wall, Inspections, Partial Sealants and Capital Repairs 2025 to ,827,000 1,827,000 6,252,594 2,490, Allowance Walls, Masonry, Near Term Remaining Restoration 2017 n/a 1 256, , , , , ,000 23,000 Square Feet Walls, Masonry, Inspections and Repairs, Subsequent 2025 to ,800 82, , , ,500 5,500 Square Feet Walls, Metal Siding, Racquetball Court, Exercise Room and Mall Atrium 2033 to , , , Allowance Windows and Doors, Lobby, North Door, Enclosure 2016 n/a 0 30, ,000 30,000 30,000 30, Each Windows and Doors, Lobby, Revolving Doors 2029 to , ,000 90, , , ,300 4,300 Square Feet Windows and Doors, Lobby, Party Room and Aerobic Exercise Room 2029 to , , , , ,100 2,100 Square Feet Windows and Doors, 2nd Floor Walkway and Weight Exercise Room 2021 to , , , , ,700 1,700 Square Feet Windows and Doors, Pool 2021 to , , , , ,000 1,000 Square Feet Windows and Doors, Mall (Entrances and Standard Windows) 2023 to ,000 58,000 73,792 73, Allowance Windows and Doors, Mall, Skylight 2030 to , ,000 45,000 72,841 72,841 Interior Building Elements Each Elevator Cab Finishes, Traction, Passenger 2020 to , ,000 60, ,851 68, Each Elevator Cab Finishes, Traction, Service 2023 to , ,000 24,000 91,293 30, Each Elevator Cab Finishes, Hydraulic, Garage 2023 to , ,000 24,000 91,293 30, Allowance Exercise Equipment, 2016 Total Replacement 2016 n/a 0 77, ,000 77,000 77,000 77, Allowance Exercise Equipment, Cardiovascular 2021 to , ,000 37, ,037 43,944 52,192 61, Allowance Exercise Equipment, Strength Training 2031 to , ,000 39, ,804 65, Allowance Exercise Rooms, Renovations (2016 is Redesign) 2016 to , ,000 50, , ,200 83, ,200 6,200 Square Yards Floor Coverings, Carpet, Hallways to , , , , ,800 2,800 Square Feet Floor Coverings, Vinyl, 2nd Floor Walkway and Pool Area 2023 to ,000 56, ,613 71,248 Printed on 7/25/2016 Expenditures - Section 3-1 of 8

18 Reserve Advisors, Inc. RESERVE EXPENDITURES Years 2032 to 2046 Park Tower Condominium Association Chicago, Illinois Estimated Life Analysis, Costs, $ Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2016) (2016) (2016) (Inflated) Exterior Building Elements Squares Roofs, Tower, Main and Mechanical Penthouse, Modified Bitumen to , , ,100 1,728,701 1,128, Squares Roof, Lobby Canopy, Flat Membrane to , ,600 25,600 42, Squares Roofs, 2nd Floor Walkway, Racquetball Court and Exercise Room to , ,500 77, , , Squares Roof, 2nd Floor, Center/East, Built-up to , ,800 59, , , Squares Roof, 2nd Floor, Northwest, Thermoplastic to , , , , Squares Roof, 2nd Floor, Southwest, Built-up to , ,300 48,300 96,107 96, ,000 15,000 Square Feet Roof, 2nd Floor, Concrete, Waterproof Coating and Repairs to , , , , ,300 2,300 Square Feet Roof, 2nd Floor, Sun Deck, Planters 2017 to , , , Allowance Roof, 2nd Floor, Sun Deck, Wood Decking (Incl. Pergolas, Siding) 2026 to , , , , , Linear Feet Roof, 2nd Floor, Sun Deck, Steel Railings (Incl. East of Pool Enclosure) 2026 to ,400 37,400 52, Squares Roof, 2nd Floor, Membrane (Beneath Decking and Pavers) to , ,700 89, , , ,700 4,700 Square Feet Roof, Pool Enclosure, Inspections, Sealants and Repairs to ,650 44, , ,700 4,700 Square Feet Roof, Pool Enclosure, Replacement 2045 to , , , , ,000 7,000 Square Feet Walls, Concrete, Mechanical Penthouse, Repairs and Coating 2018 to ,000 42, , Allowance Walls, Curtain Wall, Infiltration Remediation 2017 to , ,000 25, , , ,000 Square Feet Walls, Curtain Wall, Inspections, Partial Sealants and Capital Repairs 2025 to ,827,000 1,827,000 6,252, ,730 44,867 48,063 55,153 59,081 63,289 67,797 3,762, Allowance Walls, Masonry, Near Term Remaining Restoration 2017 n/a 1 256, , , , ,000 23,000 Square Feet Walls, Masonry, Inspections and Repairs, Subsequent 2025 to ,800 82, , , , ,500 5,500 Square Feet Walls, Metal Siding, Racquetball Court, Exercise Room and Mall Atrium 2033 to , , , , Allowance Windows and Doors, Lobby, North Door, Enclosure 2016 n/a 0 30, ,000 30,000 30, Each Windows and Doors, Lobby, Revolving Doors 2029 to , ,000 90, , ,300 4,300 Square Feet Windows and Doors, Lobby, Party Room and Aerobic Exercise Room 2029 to , , , ,100 2,100 Square Feet Windows and Doors, 2nd Floor Walkway and Weight Exercise Room 2021 to , , , ,700 1,700 Square Feet Windows and Doors, Pool 2021 to , , , ,000 1,000 Square Feet Windows and Doors, Mall (Entrances and Standard Windows) 2023 to ,000 58,000 73, Allowance Windows and Doors, Mall, Skylight 2030 to , ,000 45,000 72,841 Interior Building Elements Each Elevator Cab Finishes, Traction, Passenger 2020 to , ,000 60, , , Each Elevator Cab Finishes, Traction, Service 2023 to , ,000 24,000 91, Each Elevator Cab Finishes, Hydraulic, Garage 2023 to , ,000 24,000 91,293 60,758 60, Allowance Exercise Equipment, 2016 Total Replacement 2016 n/a 0 77, ,000 77,000 77, Allowance Exercise Equipment, Cardiovascular 2021 to , ,000 37, , Allowance Exercise Equipment, Strength Training 2031 to , ,000 39, , Allowance Exercise Rooms, Renovations (2016 is Redesign) 2016 to , ,000 50, , ,200 6,200 Square Yards Floor Coverings, Carpet, Hallways to , , , ,800 2,800 Square Feet Floor Coverings, Vinyl, 2nd Floor Walkway and Pool Area 2023 to ,000 56, ,613 73,622 87, , , , , ,365 Printed on 7/25/2016 Expenditures - Section 3-2 of 8

19 Reserve Advisors, Inc. Years 2016 to 2031 RESERVE EXPENDITURES Explanatory Notes: Park Tower 1) 3.5% is the estimated future Inflation Rate for estimating Future Replacement Costs. Condominium Association 2) FY2016 is Fiscal Year beginning March 1, 2016 and ending February 28, Chicago, Illinois Estimated Life Analysis, Costs, $ Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total RUL = Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2016) (2016) (2016) (Inflated) FY Each Light Fixtures, Hallways 2018 to , , , , Allowance Lobby, Renovation 2028 to , ,000 80, , , Units Mailboxes (Residential) 2018 to ,640 94, , , Allowance Mall, Corridors, Renovations 2022 to , ,000 80, ,954 98, Allowance Mall, Market, Renovations (2016 is Flooring) 2016 to , ,000 85, ,777 40, , Allowance Mall, Office, Renovations 2022 to , ,000 30, ,277 36, Each Mall, Rest Rooms, Renovations 2022 to , ,000 38, ,370 46, , ,000 Square Feet Paint Finishes, Hallways (Including Elevator Foyer Wall Coverings) to , , , , Allowance Party Room, Renovations, Phased 2022 to 20 6 to 16 26, ,000 52, ,640 31, Each Rest/Locker Rooms, 2nd Floor, Renovations 2021 to , ,000 46, ,162 54,634 Building Services Elements Each Air Handling Units, Residential Corridors, Capital Repairs 2018 to , , , , , Each Air Handling Unit, Lobby, Capital Repairs 2018 to , ,000 39,000 41,778 41, Each Air Handling Unit, Mall Corridors, Capital Repairs 2018 to , ,000 28,000 29,994 29, Each Air Handling Units, Party Room and Basement, Capital Repairs 2018 to , ,000 38,000 40,707 40, Each Air Handling Unit, Pool, Capital Repairs (Incl. Return Air Fan) 2037 to , ,000 55, , Each Air Handling Unit, Racquetball Court, Rooftop Unit 2025 to , ,000 24, ,073 32, Each Boilers, Building Heat, 29,291-MBH 2031 to ,050,000 2,100,000 2,100,000 3,518,233 3,518, Allowance Boilers, Building Heat, Feedwater System (Tank and Pumps) 2025 to , ,000 62,000 84,500 84, Each Boilers, Domestic Hot Water, Residential, High Zone, 1,337-MBH 2016 to , , ,100 1,126, , , Each Boilers, Domestic Hot Water, Residential, Low Zone, 1,337-MBH 2020 to , , , , , Each Boilers, Domestic Hot Water, Commercial, 660-MBH 2018 to , ,000 44, ,928 47, Allowance Building Automation System 2025 to , , , , , Each Chillers, 600-tons, Capital Repairs 2025 to , ,000 74, , , Each Chillers, 600-tons, Replacement 2035 to , ,160,000 1,160,000 2,230, Each Cooling Tower, Residential, 1,051-tons, Capital Repairs to , ,000 56, ,613 71, Each Cooling Tower, Residential, 1,051-tons, Replacement 2043 to , , ,000 1,316, Each Cooling Tower, Commercial, Replacement 2018 to , , , , , Allowance Electrical System, Main Panels 2040 to , , , , Each Elevators, Hydraulic, Garage, Pumps and Controls 2038 to , , , , Each Elevators, Hydraulic, Garage, Cylinders 2045 to , , , , Each Elevator, Hydraulic, Refuse, Controls 2020 to , ,000 38,000 43,606 43, Each Elevator, Hydraulic, Refuse, Pump and Cylinder 2046 to , ,000 60, , Each Elevators, Traction, Passenger, Controls and Equipment 2036 to , ,040,000 1,040,000 2,069, Each Elevators, Traction, Service, Controls and Equipment 2037 to , , ,000 1,853, Each Exhaust Fans, Main Kitchen and Rest Room 2019 to , , , , , Each Expansion Tanks (Main Building Heating and Cooling System) 2032 to , , , ,344 Printed on 7/25/2016 Expenditures - Section 3-3 of 8

20 Reserve Advisors, Inc. RESERVE EXPENDITURES Years 2032 to 2046 Park Tower Condominium Association Chicago, Illinois Estimated Life Analysis, Costs, $ Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2016) (2016) (2016) (Inflated) Each Light Fixtures, Hallways 2018 to , , , Allowance Lobby, Renovation 2028 to , ,000 80, , Units Mailboxes (Residential) 2018 to ,640 94, , , Allowance Mall, Corridors, Renovations 2022 to , ,000 80, , , Allowance Mall, Market, Renovations (2016 is Flooring) 2016 to , ,000 85, , Allowance Mall, Office, Renovations 2022 to , ,000 30, , ,876 52,020 73, Each Mall, Rest Rooms, Renovations 2022 to , ,000 38, , , , ,000 Square Feet Paint Finishes, Hallways (Including Elevator Foyer Wall Coverings) to , , , Allowance Party Room, Renovations, Phased 2022 to 20 6 to 16 26, ,000 52, , ,382 45,084 63, Each Rest/Locker Rooms, 2nd Floor, Renovations 2021 to , ,000 46, , ,528 Building Services Elements Each Air Handling Units, Residential Corridors, Capital Repairs 2018 to , , , , Each Air Handling Unit, Lobby, Capital Repairs 2018 to , ,000 39,000 41, Each Air Handling Unit, Mall Corridors, Capital Repairs 2018 to , ,000 28,000 29, Each Air Handling Units, Party Room and Basement, Capital Repairs 2018 to , ,000 38,000 40, Each Air Handling Unit, Pool, Capital Repairs (Incl. Return Air Fan) 2037 to , ,000 55, , , Each Air Handling Unit, Racquetball Court, Rooftop Unit 2025 to , ,000 24, ,073 67, Each Boilers, Building Heat, 29,291-MBH 2031 to ,050,000 2,100,000 2,100,000 3,518, Allowance Boilers, Building Heat, Feedwater System (Tank and Pumps) 2025 to , ,000 62,000 84, Each Boilers, Domestic Hot Water, Residential, High Zone, 1,337-MBH 2016 to , , ,100 1,126, , Each Boilers, Domestic Hot Water, Residential, Low Zone, 1,337-MBH 2020 to , , , , Each Boilers, Domestic Hot Water, Commercial, 660-MBH 2018 to , ,000 44, , Allowance Building Automation System 2025 to , , , , Each Chillers, 600-tons, Capital Repairs 2025 to , ,000 74, , Each Chillers, 600-tons, Replacement 2035 to , ,160,000 1,160,000 2,230, Each Cooling Tower, Residential, 1,051-tons, Capital Repairs to , ,000 56, , Each Cooling Tower, Residential, 1,051-tons, Replacement 2043 to , , ,000 1,316, ,546 76, , , , ,679 2,230, ,365 1,316, Each Cooling Tower, Commercial, Replacement 2018 to , , , , Allowance Electrical System, Main Panels 2040 to , , , , , Each Elevators, Hydraulic, Garage, Pumps and Controls 2038 to , , , , , Each Elevators, Hydraulic, Garage, Cylinders 2045 to , , , , , Each Elevator, Hydraulic, Refuse, Controls 2020 to , ,000 38,000 43, Each Elevator, Hydraulic, Refuse, Pump and Cylinder 2046 to , ,000 60, , , Each Elevators, Traction, Passenger, Controls and Equipment 2036 to , ,040,000 1,040,000 2,069,380 2,069, Each Elevators, Traction, Service, Controls and Equipment 2037 to , , ,000 1,853,488 1,853, Each Exhaust Fans, Main Kitchen and Rest Room 2019 to , , , , Each Expansion Tanks (Main Building Heating and Cooling System) 2032 to , , , , ,344 Printed on 7/25/2016 Expenditures - Section 3-4 of 8

21 Reserve Advisors, Inc. Years 2016 to 2031 RESERVE EXPENDITURES Explanatory Notes: Park Tower 1) 3.5% is the estimated future Inflation Rate for estimating Future Replacement Costs. Condominium Association 2) FY2016 is Fiscal Year beginning March 1, 2016 and ending February 28, Chicago, Illinois Estimated Life Analysis, Costs, $ Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total RUL = Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2016) (2016) (2016) (Inflated) FY Each Heat Exchangers, Building Heating, Main 2016 to , , , , , Each Heat Exchangers, Remaining (Pool Air Handler, Fin Tubes, Low Level) 2020 to , , , , , Allowance Life Safety System, Central Panel 2022 to , ,000 35, ,104 43, Allowance Life Safety System, Devices 2030 to , , , , , Each Light Fixtures, Exit and Emergency 2024 to , , , , , Each Pipes, Riser Sections, Building Heating, Cooling and Condensate, Phase 2027 to to 20 2, ,700 7,047,000 12,069,735 1,028,841 1,064,850 1,102,120 1,140,694 1,180, Allowance Pipes, Building Heating and Cooling, 06 Tier Insulation 2016 n/a 0 70, ,000 70,000 70,000 70, Allowance Pipes, Riser Sections, Domestic Hot Water, Remaining Phased 2016 to to 5 555, ,000 3,458,000 3,458, , , , , , , , Each Pipes, Riser Sections, Domestic Cold Water, Waste and Vent, Partial 2036 to to 30+ 2, ,280 6,334,200 11,042, Each Pumps, Building Cooling, Commercial 2018 to , ,000 28, ,927 29, Each Pump, Building Cooling, Residential, Cooling Tower 2039 to , ,000 39,000 86, Each Pumps, Building Heating, Commercial 2018 to , ,000 30, ,341 32, Each Pumps, Building Heating, Residential, Fan Coil Loop 2020 to , , , , , Each Pumps, Building Heating, Residential, Fin Tubes 2020 to , ,000 26,000 29,836 29, Each Pumps, Domestic Cold Water 2019 to , , , , , Each Pumps, Fire Suppression 2034 to , , , , Each Pumps, Gas Booster 2019 to , ,000 42, ,892 46, Each Pumps, Sewage Ejection 2020 to , ,000 23,000 82,650 26, Allowance Security System, Complete Replacement 2017 to , ,000 95,000 95,000 95, Allowance Security System, Phased (Cameras, Monitors, Card Readers) 2023 to 15 7 to 13 34, ,000 68, ,147 43,257 53, Each Storage Tanks, Domestic Hot Water 2023 to , , , , , Each Trash Compactor 2032 to , ,000 15,000 26, Each Valves, Large Diameter, Phased (Fire Pumps, Main Water, Main Mech.) 2024 to 50 8 to 10 6, , , ,419 79,009 81,774 84,636 Property Site Elements ,750 1,750 Square Yards Asphalt Pavement, East and North (Shared), Total Replacement to ,250 61, ,238 89, Allowance Plaza, Waterproof Membrane, Remaining Expense 2016 n/a 0 100, , , , , Allowance Plaza, Waterproof Membrane and Concrete, Interim Repairs/Sealants 2022 to , ,000 40, ,178 49,170 64, ,000 11,000 Square Feet Plaza, Waterproof Membrane and Concrete, Replacement 2044 to , ,000 2,536, ,500 1,500 Square Feet Plaza, Waterproof Membrane, Planters (Except at Lobby Entrance) 2037 to ,500 97, ,795 Pool Elements Allowance Hot Tub, Insert 2027 to , ,000 26,000 37,959 37, Allowance Mechanical Equipment, Phased 2016 to 15 0 to 6 23, ,000 46, ,677 12,500 24,638 30,287 37, ,100 2,100 Square Feet Pool, Main, Fiberglass Liner and Repairs 2017 to , , , , , Allowance Pool, Outdoor, Plaster Finish and Repairs (Kiddie Pool) to , ,000 20, ,144 20,000 28,212 Garage Elements Printed on 7/25/2016 Expenditures - Section 3-5 of 8

22 Reserve Advisors, Inc. RESERVE EXPENDITURES Years 2032 to 2046 Park Tower Condominium Association Chicago, Illinois Estimated Life Analysis, Costs, $ Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2016) (2016) (2016) (Inflated) Each Heat Exchangers, Building Heating, Main 2016 to , , , , Each Heat Exchangers, Remaining (Pool Air Handler, Fin Tubes, Low Level) 2020 to , , , , Allowance Life Safety System, Central Panel 2022 to , ,000 35, ,104 72, Allowance Life Safety System, Devices 2030 to , , , , Each Light Fixtures, Exit and Emergency 2024 to , , , , Each Pipes, Riser Sections, Building Heating, Cooling and Condensate, Phase 2027 to to 20 2, ,700 7,047,000 12,069,735 1,221,940 1,264,708 1,308,973 1,354,787 1,402, Allowance Pipes, Building Heating and Cooling, 06 Tier Insulation 2016 n/a 0 70, ,000 70,000 70, Allowance Pipes, Riser Sections, Domestic Hot Water, Remaining Phased 2016 to to 5 555, ,000 3,458,000 3,458, , Each Pipes, Riser Sections, Domestic Cold Water, Waste and Vent, Partial 2036 to to 30+ 2, ,280 6,334,200 11,042, Each Pumps, Building Cooling, Commercial 2018 to , ,000 28, , Each Pump, Building Cooling, Residential, Cooling Tower 2039 to , ,000 39,000 86, Each Pumps, Building Heating, Commercial 2018 to , ,000 30, , , , , , , ,951 1,032,879 1,069,030 1,106,446 1,145,172 1,185,253 75,933 86,038 84, Each Pumps, Building Heating, Residential, Fan Coil Loop 2020 to , , , , Each Pumps, Building Heating, Residential, Fin Tubes 2020 to , ,000 26,000 29, Each Pumps, Domestic Cold Water 2019 to , , , , , Each Pumps, Fire Suppression 2034 to , , , , , Each Pumps, Gas Booster 2019 to , ,000 42, , , Each Pumps, Sewage Ejection 2020 to , ,000 23,000 82,650 56, Allowance Security System, Complete Replacement 2017 to , ,000 95,000 95, Allowance Security System, Phased (Cameras, Monitors, Card Readers) 2023 to 15 7 to 13 34, ,000 68, ,147 65,365 80, Each Storage Tanks, Domestic Hot Water 2023 to , , , , Each Trash Compactor 2032 to , ,000 15,000 26,010 26, Each Valves, Large Diameter, Phased (Fire Pumps, Main Water, Main Mech.) 2024 to 50 8 to 10 6, , , ,419 Property Site Elements ,750 1,750 Square Yards Asphalt Pavement, East and North (Shared), Total Replacement to ,250 61, , , Allowance Plaza, Waterproof Membrane, Remaining Expense 2016 n/a 0 100, , , , Allowance Plaza, Waterproof Membrane and Concrete, Interim Repairs/Sealants 2022 to , ,000 40, ,178 85, ,000 11,000 Square Feet Plaza, Waterproof Membrane and Concrete, Replacement 2044 to , ,000 2,536,326 2,536, ,500 1,500 Square Feet Plaza, Waterproof Membrane, Planters (Except at Lobby Entrance) 2037 to ,500 97, , ,795 Pool Elements Allowance Hot Tub, Insert 2027 to , ,000 26,000 37, Allowance Mechanical Equipment, Phased 2016 to 15 0 to 6 23, ,000 46, , ,100 2,100 Square Feet Pool, Main, Fiberglass Liner and Repairs 2017 to , , , Allowance Pool, Outdoor, Plaster Finish and Repairs (Kiddie Pool) to , ,000 20, ,144 45,765 56, ,955 39,796 56,136 Garage Elements Printed on 7/25/2016 Expenditures - Section 3-6 of 8

23 Reserve Advisors, Inc. Years 2016 to 2031 RESERVE EXPENDITURES Explanatory Notes: Park Tower 1) 3.5% is the estimated future Inflation Rate for estimating Future Replacement Costs. Condominium Association 2) FY2016 is Fiscal Year beginning March 1, 2016 and ending February 28, Chicago, Illinois Estimated Life Analysis, Costs, $ Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total RUL = Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2016) (2016) (2016) (Inflated) FY ,000 63,000 Square Feet Concrete, Elevated Floor, Inspections and Capital Repairs (1P Level) 2018 to , , , , , ,000 2,100 Square Feet Concrete, On-grade, Partial (2P Level) 2018 to 90 2 to ,800 1,134, ,181 40,492 57, Allowance Doors and Operators, Fire 2024 to , , , , , Allowance Exhaust System (Fans, Louvers and Carbon Monoxide Detectors) 2019 to , ,000 85,000 94,241 94, , ,000 Square Feet Fire Suppression System 2034 to , ,000 1,053, Each Light Fixtures 2036 to ,000 46,000 91, , ,000 Square Feet Paint Finishes 2028 to , , , , ,000 25,000 Square Feet Traffic Coating, Elevated Floor, Overlay at Drive Lanes (1P Level) 2018 to , , , , ,000 63,000 Square Feet Traffic Coating, Elevated Floor, Total Replacement (1P Level) 2028 to , , , , Each Unit Heaters 2019 to , , , , ,046 1 Allowance Reserve Study Update with Site Visit , ,500 11,500 22,400 10,900 11, Anticipated Expenditures, By Year $74,335,198 1,367,600 1,897,362 1,907,515 1,240,989 1,393, , , , ,584 4,065, ,348 1,192,722 2,182,133 2,270,240 2,055,418 5,069,522 Printed on 7/25/2016 Expenditures - Section 3-7 of 8

24 Reserve Advisors, Inc. RESERVE EXPENDITURES Years 2032 to 2046 Park Tower Condominium Association Chicago, Illinois Estimated Life Analysis, Costs, $ Line Total Per Phase 1st Year of Years Unit Per Phase Total 30-Year Total Item Quantity Quantity Units Reserve Component Inventory Event Useful Remaining (2016) (2016) (2016) (Inflated) ,000 63,000 Square Feet Concrete, Elevated Floor, Inspections and Capital Repairs (1P Level) 2018 to , , , , ,000 2,100 Square Feet Concrete, On-grade, Partial (2P Level) 2018 to 90 2 to ,800 1,134, ,181 80, Allowance Doors and Operators, Fire 2024 to , , , , Allowance Exhaust System (Fans, Louvers and Carbon Monoxide Detectors) 2019 to , ,000 85,000 94, , ,000 Square Feet Fire Suppression System 2034 to , ,000 1,053,196 1,053, Each Light Fixtures 2036 to ,000 46,000 91,530 91, , ,000 Square Feet Paint Finishes 2028 to , , , ,000 25,000 Square Feet Traffic Coating, Elevated Floor, Overlay at Drive Lanes (1P Level) 2018 to , , , , ,000 63,000 Square Feet Traffic Coating, Elevated Floor, Total Replacement (1P Level) 2028 to , , , Each Unit Heaters 2019 to , , , ,046 1 Allowance Reserve Study Update with Site Visit , ,500 11,500 22, Anticipated Expenditures, By Year $74,335,198 1,627,693 1,516,860 3,096,063 5,128,466 4,658,652 8,428,799 2,119,107 1,072,789 2,208,619 1,698,653 2,123,899 2,676,576 4,536,513 3,039,690 2,958,305 Printed on 7/25/2016 Expenditures - Section 3-8 of 8

25 Reserve Advisors, Inc. Page 1 of 1 RESERVE FUNDING PLAN CASH FLOW ANALYSIS Park Tower Condominium Association Individual Reserve Budgets & Cash Flows for the Next 30 Years Chicago, Illinois FY Reserves at Beginning of Year (Note 1) 1,590,336 1,712,066 1,430,338 1,191,869 1,679,164 2,077,932 3,224,246 4,858,775 6,295,922 7,954,938 6,065,936 7,568,019 8,713,198 8,954,866 9,192,612 9,733,655 Total Recommended Reserve Contributions (Note 2) 1,472,900 1,600,000 1,656,000 1,714,000 1,774,000 1,836,100 1,900,400 1,966,900 2,035,700 2,106,900 2,180,600 2,256,900 2,335,900 2,417,700 2,502,300 2,589,900 Plus Estimated Interest Earned, During Year (Note 3) 16,430 15,634 13,046 14,284 18,692 26,379 40,214 55,496 70,900 69,756 67,831 81,001 87,901 90,286 94,161 84,938 Less Anticipated Expenditures, By Year (1,367,600) (1,897,362) (1,907,515) (1,240,989) (1,393,924) (716,165) (306,085) (585,249) (447,584) (4,065,658) (746,348) (1,192,722) (2,182,133) (2,270,240) (2,055,418) (5,069,522) Anticipated Reserves at Year End $1,712,066 $1,430,338 $1,191,869 $1,679,164 $2,077,932 $3,224,246 $4,858,775 $6,295,922 $7,954,938 $6,065,936 $7,568,019 $8,713,198 $8,954,866 $9,192,612 $9,733,655 $7,338,971 (continued) Individual Reserve Budgets & Cash Flows for the Next 30 Years, Continued Reserves at Beginning of Year 7,338,971 8,470,432 9,818,864 9,691,266 7,620,830 6,106, ,012 1,488,770 3,233,977 3,953,416 5,294,271 6,326,487 6,922,526 5,768,050 6,223,118 Total Recommended Reserve Contributions 2,680,500 2,774,300 2,871,400 2,971,900 3,075,900 3,183,600 2,700,000 2,794,500 2,892,300 2,993,500 3,098,300 3,206,700 3,318,900 3,435,100 3,555,300 Plus Estimated Interest Earned, During Year 78,654 90,992 97,065 86,130 68,295 34,838 11,865 23,496 35,758 46,008 57,815 65,915 63,137 59,658 65,216 Less Anticipated Expenditures, By Year (1,627,693) (1,516,860) (3,096,063) (5,128,466) (4,658,652) (8,428,799) (2,119,107) (1,072,789) (2,208,619) (1,698,653) (2,123,899) (2,676,576) (4,536,513) (3,039,690) (2,958,305) Anticipated Reserves at Year End $8,470,432 $9,818,864 $9,691,266 $7,620,830 $6,106,373 $896,012 $1,488,770 $3,233,977 $3,953,416 $5,294,271 $6,326,487 $6,922,526 $5,768,050 $6,223,118 $6,885,329 (NOTE 5) (NOTE 4) Explanatory Notes: 1) Year 2016 starting reserves are as of February 29, 2016; FY2016 starts March 1, 2016 and ends February 28, ) Reserve Contributions for 2016 are budgeted; 2017 is the first year of recommended contributions. 3) 1.00% is the estimated annual rate of return on invested reserves. 4) Accumulated year 2046 ending reserves consider the need to fund for replacement of the remaining original piping and electrical system components shortly after 2046, and the age, size, overall condition and complexity of the property. 5) Threshold Funding Year (reserve balance at critical point). Printed on 7/25/2016 Funding Plan - Section 3

26 4. CONDITION ASSESSMENT We documented both external market changes and internal property changes through discussions with Management, a review of financial information about reserves and historical Reserve Expenditures, an analysis of market trends since our previous Reserve Study, and our visual inspection of the property on June 1, External market changes reflect historical and current rates of inflation and yield on reserve savings. Internal property changes reflect additions to and deletions from the list of Reserve Components likely to require future expenditures for major replacements or repairs during the next 30 years. Other internal property changes may involve changes to the Remaining Useful Lives of the Reserve Components based on observed or reported condition. External to the property are market conditions which affect inflation of construction materials, labor and equipment costs, and the yield on reserve savings. The cost of construction materials, labor and equipment in Chicago has increased due to normal inflation, the growth of the local economy and demand for construction related services. Our original forecast for inflation was an annual rate of 2.7%. We include a near term inflation rate of 3.5% at the direction of the Board. The following depict the tower elevations: Page Condition Assessment

27 East and south elevations North and east elevations North and west elevations Page Condition Assessment

28 INTERNAL PROPERTY CHANGES We have organized our discussion of internal property changes into three types: Deletions, Additions and Significant Changes. We discuss these changes below and summarize them as follows: Deletions to this Reserve Study Update: Line Item 3.606: Pipes, Domestic Water, Horizontals with Renovations Line Item 3.607: Pipes, Garage Drain Line Item 3.880: Trash Chute and Doors Additions to this Reserve Study Update: Line Item 1.409: Roof, 2 nd Floor, Sun Deck, Steel Railings Line Item 1.660: Walls, Concrete, Mechanical Penthouse Line Item 1.979: Windows and Doors, Lobby, North Door Line Items 2.154, and 2.165: Exercise Equipment Line Item 2.180: Exercise Room Line Item 7.400: Doors and Operators, Fire Significant Changes since prior Reserve Study: Line Item 1.400: Roofs, Tower, Main and Mechanical Penthouse Line Item 1.406: Roof, 2 nd Floor, Concrete Line Item 1.407: Roof, 2 nd Floor, Sun Deck, Planters Line Items and 1.412: Roof, Pool Enclosure Line Items and 1.730: Walls, Curtain Wall Line Items and 1.820: Walls, Masonry Page Condition Assessment

29 Line Item 2.100: Elevator Cab Finishes, Traction, Passenger Line Item 2.712: Mall, Market Line Items and 3.161: Boilers, Domestic Hot Water, Residential Line Items and 3.323: Elevator, Hydraulic, Refuse Line Item 3.460: Heat Exchangers, Building Heat, Main Line Items and 3.560: Life Safety System Line Items and 3.820: Security System Line Items through 4.960: Plaza Line Item 6.801: Pool, Outdoor Deletions We deleted three Reserve Components from our last Reserve Study. We discuss these deletions in the following narratives. Pipes, Domestic Water, Horizontals with Renovations The Association reclassified replacement of domestic water horizontal pipes concurrent with unit renovations to an Operating Budget expense. Therefore, we eliminate Line Item from our previous Reserve Study in this 2016 Reserve Study Update. Pipes, Garage Drain The Association reclassified maintenance of the garage drain pipes to an Operating Budget expense on an as needed basis. We concur with this reclassification. Therefore, we eliminate Line Item from our previous Reserve Study in this 2016 Reserve Study Update. Trash Chute and Doors The Association completed replacement of the remaining original sections of the trash chute in We do not anticipate the need for subsequent Page Condition Assessment

30 replacement during the next 30 years. Therefore, we eliminate Line Item from our previous Reserve Study in this 2016 Reserve Study Update. Additions We added eight Reserve Components since our last Reserve Study. A Reserve Component is a property element of 1) Association responsibility; 2) with limited Useful Life expectancy; and 3) predictable Remaining Useful Life expectancy. This Update uses a 30-year Reserve Component forecast and Cash Flow Analysis to project and illustrate the Reserve Funding Plan. Property additions, the 30-year analysis and aging of the property elements have resulted in the following additions to the inventory of Reserve Components. We discuss these additions in the following narratives. Roof, 2 nd Floor, Sun Deck, Steel Railings The 2 nd floor roof includes approximately 340 linear feet of steel railings south and east of the sun deck, and east of the pool area. The pool area railings include glass panels. The railings are original and exhibit areas of corrosion, primarily at mounts. The inset mounts accelerate masonry damage and steel corrosion. Railing at 2 nd floor sun deck Page Condition Assessment

31 The railings have a useful life of up to 45 years with the benefit of timely paint applications, funded through the operating budget. We include an expenditure to replace the railings with plate mounted prefinished systems by We note this addition on Line Item of the Reserve Expenditures. Walls, Concrete, Mechanical Penthouse - The Park Tower mechanical penthouse exterior includes approximately 7,000 square feet of concrete façade. The concrete exhibits areas of cracks, spall and exposed reinforcing steel. The concrete lacks a coating application. Concrete spall and exposed reinforcing steel at mechanical penthouse wall Over time, continual exposure from weather and wind creates dispersed concrete spalls and cracks. The location and amount of deterioration is variable due to the non-uniform nature of the concrete pours and different weather exposures. The continued exposure of the concrete to weather creates deterioration of the building exterior in a random but progressive manner. Repairs to the deteriorated concrete include cleaning all areas of debris and dirt, the selective cutout and replacement of all deteriorated concrete and reinforcing steel (rebar), and crack repairs. Replacements should use a non-chloride high strength concrete repair mix to Page Condition Assessment

32 minimize future deterioration. Park Tower should also require the contractor to specify the use of epoxy coated reinforcement bars when replacements are necessary. The use of epoxy coated reinforcement bars minimizes future metal deterioration or rust. Periodic liquid-applied coatings serve to inhibit deterioration of the exterior concrete. Coatings on concrete must allow entrained moisture in the concrete to migrate to the concrete surface and evaporate. A non-permeable coating traps this moisture and increases concrete spalling and eventual degradation of the coating. Two common manufacturers of facade coatings are Modac and Sonneborn. We recommend the Association budget for concrete inspections,coatings and repairs up to every 12 years. We include allowances for these repairs by 2018 and every 12 years thereafter. We recommend the Association budget for the following work: Complete inspection Partial depth replacement of up to one percent (1%) of the concrete Crack repairs to up to five percent (5%) of the concrete Coating application Engineering fees Scaffolding Sidewalk protection We note this addition on Line Item of the Reserve Expenditures. Windows and Doors, Lobby, North Door Management informs us that the Association will construct an enclosure at the north lobby door to improve energy conservation. We include a Management provided cost of $30,000 in 2016 for this project. We note this addition on Line Item of the Reserve Expenditures. Page Condition Assessment

33 Exercise Equipment The Association replaced the exercise equipment in We include a Management provided cost for this replacement in 2016 of $77,000. The aerobic exercise room contains the following types of cardiovascular aerobic training equipment: Ellipticals Stationary cycles Stepper Rowing machine Treadmills The weight exercise room contains the following types of strength training equipment: Benches Dumbbells Weight training Aerobic exercise room Weight exercise room Based on advances in technology and overall usage, the useful life of cardiovascular equipment of this type is up to five years. The useful life of strength training equipment of this type is up to 15 years. We recommend Park Tower anticipate replacement of all cardiovascular equipment by 2021 and every five years thereafter. We recommend the Association budget for replacement of the strength training equipment by 2031 and again by We note these additions on Line Items 2.154, and of Reserve Expenditures sufficient to budget appropriate reserves. Page Condition Assessment

34 Exercise Room The Association will complete extensive renovation of the aerobic and weight exercise rooms in 2016, including expansion of the weight area. We include a Management provided cost for this renovation of $112,200 in The exercise room components include: Rubber floor covering Paint finishes Mirrors Light fixtures We recommend the Association renovate the exercise rooms up to every 15 years. We include an allowance for the renovation of the exercise rooms by 2031 and again by 2046 on Line Item of Reserve Expenditures. Doors and Operators, Fire The garage includes rolling fire doors. The doors are likely original. The Association installed an enclosure around the doors in Enclosure at garage fire door The doors are in reported satisfactory condition and have a useful life of up to 50 years. We include an expenditure to replace the doors by We note this addition on Line Item of the Reserve Expenditures. Page Condition Assessment

35 Significant Changes All remaining Reserve Components experienced changes in estimated future costs of replacement due to inflation. Several remaining Reserve Components experienced changes with respect to the times or anticipated quantities at the time of replacement. We discuss the more significant changes in the following narratives. Roofs, Tower, Main and Mechanical Penthouse The main and mechanical penthouse roofs at Park Tower consist of 103 squares 1 of modified bitumen roofing. The roofs were replaced in 1992 and are in fair to poor overall condition. The Building Engineer informs us of a history of leaks. Our visual inspection notes numerous previous repairs, areas that lack drainage, membrane bulge and sealant deterioration. Numerous previous repairs at main roof level Gap at seam at main roof level The useful life of modified bitumen roofs in Chicago is from 15- to 20-years. We include the following solutions and procedures pertaining to replacement of modified bitumen roofs for the benefit of present and future board members. 1 We quantify the roof area in squares, where one square is equal to 100 square feet of surface area. Page Condition Assessment

36 Reroofing is always more labor intensive than an original installation. Removal and disposal are a problem in multistory buildings because of problems conveying the materials off and onto the roof. To maximize the remaining useful life of the roof, the Association should conduct periodic repairs as necessary and fund these expenses through the operating budget. The Association retains a maintenance company for inspections of the roofs semiannually. We concur with this preventive maintenance practice and recommend the Association continue to fund these inspections through the operating budget. Modified bitumen roofing systems are composed of factory manufactured sheets of polymer-modified bitumen with polyester and/or fiberglass reinforcements. The bitumen adds a waterproof characteristic to the system and the reinforcements add strength and puncture resistance. These factory assembled roofing systems offer the advantages of a built-up roofing system through a less labor intensive installation. Contractors can install a new modified bitumen roof in one of two ways: tear-off or an overlay. An overlay is the application of a new roof membrane over an existing roof. This method, although initially more economical, often covers up problems with the deck, flashing and saturated insulation. The tear-off method of replacement includes removal of the existing roofing, flashings and insulation, and installation of a new roofing system. The contractor should follow the manufacturer's directions and specifications upon installation of the roof. The contractor should remove the original insulation if saturated or compacted and apply a new layer of insulation from ½ inch to one inch thick per the manufacturer's instructions. The insulation should fit loosely with gaps no greater than ¼ inch. Gaps will cause failure of the membrane later. Mechanical fastening of the insulation is the best manner of installation. The contractor applies the base sheet of roofing over the insulation board. This sheet is normally 30-pound Page Condition Assessment

37 material. The contractor should start the installation of a roof membrane from the lowest points of the roof. Mechanical fastening and embedding the base sheet in a flood coat of hot asphalt is the best manner of installation. The membrane and plies are either torch applied (thermoset) or hot asphalt applied. We recommend the contractor use the torch method to install a modified bitumen membrane roof system. Mineral granules or reflective paints are sometimes used to protect the cap sheet from sunlight and physical wear. However, a reflective paint finish is often applied one or more years after the roof installation. 2 The following detail depicts a typical modified bitumen roof: The time or need to replace the roofs becomes apparent with multiple or recurring leaks. The Association should determine whether the origin of the leaks is from the membrane or 2 Learn more about single-ply membrane roofs at SPRI is the association representing sheet membrane and component suppliers to the commercial roofing industry. Page Condition Assessment

38 flashings. Repairs of the flashings may be more cost-effective than replacement of the entire roof. However, because of the difficulty in finding several or many breaks in a roof, replacement eventually becomes the more economical option rather than repair. We recommend Park Tower prepare for a complete tear-off at the time of replacement in 2017 and again by Management provided the unit cost. We note these significant changes in the times of expenditures on Line Item of the Reserve Expenditures. Roof, 2 nd Floor, Concrete - The building includes approximately 15,000 square feet of concrete roofing systems at the 2 nd floor with a surface applied waterproof coating. The surface coating was replaced in The coating exhibits areas of unrepaired cracks. Crack in 2 nd floor roof surface coating Crack repairs beneath 2 nd floor roof surface coating Surface applied waterproof coating applications have a useful life of 10- to 15-years. Replacement of the surface applied coating in a timely manner will defer the need for replacement of underlying waterproofing systems. We include expenditures to conduct the following activities by 2025 and every 12 years thereafter: Partial depth replacement of a limited amount of concrete Crack repairs as needed Waterproof coating application (urethane based) Page Condition Assessment

39 We note these significant changes in the times of expenditures on Line Item of the Reserve Expenditures. Roof, 2 nd Floor, Sun Deck, Planters The planters at the 2 nd floor roof sun deck area comprise approximately 2,300 square feet. This quantity excludes the two integral planters at the wood deck area. The planters include landscaping with underlying waterproof membranes. The waterproof membranes likely date to Membrane at 2 nd floor roof planter The waterproof membranes have a useful life of up to 30 years. We include an expenditure for replacement of the planter waterproof membranes in We note these significant changes in the times and scope of expenditures on Line Item of the Reserve Expenditures. Roof, Pool Enclosure The pool enclosure was installed in 1997 and includes approximately 4,700 square feet of Kalwall translucent panels with a steel structure. The pool structure exhibits evidence of water infiltration. Page Condition Assessment

40 Pool enclosure roof Evidence of leakage at pool enclosure roof The enclosure panels have a useful life of up to 50 years with the benefit of repairs and replacement of sealants every 10- to 15-years. We recommend the Association budget for repairs and replacement of joint sealants in 2017 and again by We also recommend the Association budget to replace the enclosure panels by We note these significant changes in the times and scope of expenditures on Line Items and of the Reserve Expenditures. Walls, Curtain Wall - The envelope of the building comprises approximately 203,000 square feet of curtain wall system. The system includes: Single pane glazing (fixed and operable windows) Aluminum frames, frame covers and mullions Prefinished spandrel panels Approximately 228,000 linear feet of wet sealants at metal/metal and metal/glass interfaces The Association completed an extensive restoration of the curtain wall system, including replacement of the sealants, in Management informs us of a limited recent history of water infiltration from the curtain wall system. Page Condition Assessment

41 The Association budgets a periodic allowance for remediation of water infiltration from the curtain wall system. We adjust the timing of these inspections and remediation events to every other year at the direction of Management, beginning in 2017 with timing adjustments for extensive restorations. Curtain wall sealants at metal/metal and metal/glass interfaces Curtain wall sealants at metal/metal and metal/glass interfaces Operable curtain wall window system Interior seals at curtain wall Properly maintained curtain walls have an indeterminate remaining useful life. We include the following discussion pertaining to curtain walls for the benefit of present and future board members. Page Condition Assessment

42 A curtain wall is a non-load bearing building enclosure supported by or attached to the building floor slabs or structural frame like a curtain. We give a brief overview of curtain wall components in the following sections of this narrative. Frame - The visible frame of a curtain wall is typically constructed of aluminum with an anodized finish. Frames also include trim covers. The visible frame may also enclose other structural support elements. The frame supports the dead weight of the curtain wall and resists wind loads. Frame members include horizontals, and vertical jambs and mullions, and interconnecting fasteners. Aluminum frames are corrosion resistant. However, over time the finish will deteriorate. Glazings - Glazings, or panels, are the infill between the frames. Glazings are typically constructed of vision panels, opaque spandrel panels and metal spandrel panels. As with the frames, the glazing finish will eventually deteriorate. Glazing Sealants and Gaskets - Depending on the design, either glazing sealants (wet glazing) or gaskets (dry glazing) hold the glazings in the frames. Curtain wall design with flush exterior glazings (no exterior frame) require an interior structural sealant and an exterior weatherseal/sealant joint at the glazing butt joints. Weather exposure and building movement will cause these materials to deteriorate. During restoration, it is typically most economically feasible to install sealants at glazing and frame joints as necessary rather than replace gaskets. Page Condition Assessment

43 Anchors - Anchors attach the frames to the building structure. Periodic inspections of the anchors are necessary to verify their condition, performance and structural integrity. The following details depict components of a curtain wall: Page Condition Assessment

44 Properly designed curtain walls anticipate the penetration of some storm water beyond the gaskets. This infiltrated storm water collects in an internal drainage system and drains, or exits, the frames through drains. These drains can become clogged with dirt or if a sealant is applied, resulting in trapped storm water. We recommend Park Tower periodically verify all drains are unobstructed concurrent with periodic curtain wall inspections. However, as frames, gaskets and sealants deteriorate, leaks into the interior can result. The curtain wall will eventually need major capital repairs to prevent water infiltration and damage from wind driven rain. Rather than complete replacement, we recommend that the Association sustain the curtain wall through periodic inspections, capital repairs, partial replacements and refinishing. We recommend that the Association budget for the following work up to every 12 years beginning by 2025: Complete inspection of the curtain wall Replacement of sixty percent (60%) of the wet sealants Replacement of a limited amount of glazings Invasive inspection of a limited amount of anchors and refastening of aluminum components as needed Cleaning of the spandrel panels Touch-up finish applications Sidewalk protection Engineering allowance We note these significant changes in the times of expenditures on Line Items and of the Reserve Expenditures. Walls, Masonry - Masonry comprises approximately 23,000 square feet of the base structure exterior walls. The Association recently completed significant restoration of the masonry walls at the west elevation concurrent with replacement of the plaza. We note the following components and conditions of the masonry: Page Condition Assessment

45 Face brick masonry Caps lack flashing (flashing installed at areas addressed during the plaza project) Masonry exhibits areas of joint deterioration, cracks and damage at elevations not addressed during the plaza project Sealant deterioration at control joints Flashing installed beneath masonry cap Flashing installed base plaza interface Masonry joint crack Lack of flashing and gap in sealant beneath cap We advise a complete inspection of the masonry, and partial repointing with related masonry repairs up to every 10 years to forestall deterioration. We include a Management provided expenditure for restoration of the remaining masonry in 2017 of $256,000. A complete inspection of the exterior walls can only identify the Page Condition Assessment

46 exact scope of masonry repairs and replacements. We recommend the Association budget for the following subsequent activities: Complete inspection of the masonry Repointing of up to fifteen percent (15%) of the masonry Replacement of a limited amount of masonry Flashing and weep installation/replacement at caps and shelf angles as needed We recommend the Association anticipate this work by 2025 and every 10 years thereafter. We note these significant changes in the times and scope of expenditures on Line Items and of the Reserve Expenditures. Elevator Cab Finishes, Traction, Passenger - Four passenger traction elevators serve the building. The passenger traction elevator cab finishes consist of: Carpet floor coverings Laminate wall coverings Metal ceilings The Association refinished the walls in The useful life of the elevator cab finishes is up to 20 years. We recommend the Association budget for renovation of the cab finishes by 2020 and again by We note these significant changes in the times of expenditures on Line Item of the Reserve Expenditures. Park Tower should fund interim elevator cab floor covering replacements through the operating budget. Page Condition Assessment

47 Mall, Market - The Association maintains the finishes at the market within the mall. The market, or store, includes: Vinyl floor coverings Ceiling tile system Paint finishes Light fixtures Market flooring The Association will replace the flooring in We include a Management provided expenditure of $40,000 in 2016 for this project. The components vary in age and condition. We recommend renovations of the market up to every 15 years. We recommend Park Tower anticipate a complete renovation by 2026 and again by We note these significant changes in the times and scope of expenditures on Line Item of the Reserve Expenditures. Boilers, Domestic Hot Water, Residential - The Association maintains six Raypak gasfired boilers with an input capacity of 1,337-MBH (thousand British Thermal Units per hour) each to generate domestic hot water for the residential units. Page Condition Assessment

48 High zone residential domestic water boilers The boilers were replaced from 1988 to The Association will replace the high zone boilers in Boilers of this capacity and use have useful lives of up to 15 years. We include expenditures for replacement of the high zone boilers in 2016, low zone boilers by 2020 at the direction of Management and every 14 years thereafter. Management provided the unit costs. We note this information on Line Items and of Reserve Expenditures. The Association should fund replacement of circulation pumps less than five-hp through the operating budget as needed. Elevator, Hydraulic, Refuse - Park Tower utilizes a hydraulic elevator to transport refuse containers. The pump and cylinder were replaced in The main, floor and cab control panels predate the 2015 project. The refuse elevator is in reported satisfactory condition. Page Condition Assessment

49 Controls for refuse elevator Major components in a hydraulic elevator system include the pump, controls, cylinder, fluid reservoir and a valve between the cylinder and reservoir. Once activated by the elevator controls, the pump forces hydraulic fluid from the reservoir into the cylinder. The piston within the cylinder rises lifting the elevator cab. The elevator cab lowers at a controlled rate when the controls open the valve. Hydraulic elevator pumps and controls of this type provide many years of service and, when cared for by a maintenance contract, can have useful lives of up to 35 years. We recommend the Association budget for the following by 2020: Cab control panel Call buttons Microprocessor based controller We also recommend the Association budget for replacement of the cylinder and pump by We note these significant changes in the times and scope of expenditures on Line Items and of the Reserve Expenditures. Heat Exchangers, Building Heating, Main The building includes two main shell and tube heat exchangers for the building heating system. The main heat exchangers have capacities Page Condition Assessment

50 of 2,500-GPM (Gallons per Minute) each. The shells are likely original. The Association will replace the bundles in We include an expenditure provided by Management to replace the bundles in Heat exchangers for main building heat The heat exchangers have a useful life of up to 35 years. Future updates of this Reserve Study will consider the need for subsequent replacements based on the type of boiler system installed. We note these significant changes in the times and scope of expenditures on Line Item of the Reserve Expenditures. components: Life Safety System - The life safety system at Park Tower includes the following Audio/visual fixtures Control panel Detectors Voice communication system at the stairwells Wiring Page Condition Assessment

51 Central life safety panel The system was installed in 2007 and is in reported satisfactory operational condition. The digital display on the Honeywell central panel read System Normal at the time of our inspection. Life safety system devices have useful lives of up to 25 years with proper maintenance. Central control panels have a useful life of up to 15 years. Changes in technology or building codes may make a replacement desirable prior to the end of the functional life. With consideration of the operational condition and age, we recommend the Association budget for replacement of the devices by 2030, and the central control panel by 2022 and again by Our estimate of future cost considers only that amount necessary to duplicate the same functionality. Local codes or ordinances at the actual time of replacement may require a betterment as compared to the existing system. A betterment could result in a higher, but at this time unknown, cost of replacement than the future amount shown. Our cost assumes reuse of the existing wiring. We note these significant changes in the times and scope of expenditures on Line Items and of the Reserve Expenditures. Security System - Park Tower utilizes the following security system components for added security within the building and outside grounds: Page Condition Assessment

52 Automated card reading system (15 access points) Cameras (32) Multiplexers (4) Recorders (2) Management informs us that the Association will replace the system in We include a Management provided expenditure of $95,000 in 2017 to replace the system. We anticipate a useful life of up to 15 years for the system components. The Association should anticipate subsequent replacement of up to fifty percent (50%) of the security system components by 2023 and every six years thereafter. We include this information on Line Items and of Reserve Expenditures. Plaza - The plaza at Park Tower is pedestrian and vehicular areas atop an underlying concrete structure. The vaulted plaza comprises approximately 11,000 square feet. Due to the non-invasive nature of our inspection, we are unable to determine the exact composition of the plaza. Based on our visual inspection, experience with similar construction and knowledge of replacement/capital repair projects of this type, we surmise the plaza comprises the following elements: Concrete pavement Concrete sidewalks with a standard finish Concrete sidewalks with an exposed aggregate finish Landscape planter at the lobby entrance (additional planters addressed separately) Sealants Perimeter flashing Underlying waterproof membrane atop the structure Elevated structural concrete The Association replaced the plaza system in primarily The Association is currently in negotiations regarding possible construction defects. We include a Management Page Condition Assessment

53 provided estimate of $100,000 in 2016 for the remaining plaza system replacement cost. However, the actual cost, if any, is indeterminate pending the results of the negotiations. Crack in plaza concrete Plaza concrete color variations Sealant at plaza concrete joint Waterproof membranes serving these types of areas generally have useful lives of up to 30 years with the benefit of interim repairs and sealant replacements up to every eight years. The Association also conducts annual repairs, cleaning and seal applications. As the membrane ages and deteriorates, water infiltration through the structure and leaks into the space beneath will become more frequent and widespread. Deterioration of the concrete Page Condition Assessment

54 structure beneath the membrane is also probable due to membrane leaks and normal aging of the concrete. The timing and scope of required interim repairs is indeterminate pending the results of the construction defect negotiations. However, we recommend the Association budget for the following by 2022 and every eight years thereafter except when complete replacement occurs for purposes of budgeting appropriate reserves: Replacement of sealants Crack repairs as needed Replacement of a limited amount of concrete topping Replacement of a limited amount of membrane We also recommend the Association plan to repair the concrete structure as necessary, and replace the membrane and all previously listed elements by We note these significant changes in the times and scope of expenditures on Line Items and of the Reserve Expenditures. Pool, Outdoor The development includes a kiddie, or outdoor, pool adjacent to the main pool. The Association will conduct repairs, replace the plaster finish and tile in We include a Management provided cost for this project in We recommend the Association anticipate the need to replace the finish and conduct related repairs every 8- to 12-years to maintain the integrity of the pool structure. Removal and replacement provides the opportunity to inspect the pool structure and to allow for partial repairs of the underlying concrete surfaces as needed. We recommend the Association budget for the following subsequent activities by 2026 and every 10 years thereafter: Removal and replacement of the finish Partial replacements of the scuppers and coping as needed Replacement of tiles as needed Page Condition Assessment

55 Replacement of joint sealants as needed Concrete structure repairs as needed We note these significant changes in the times and scope of expenditures on Line Item of the Reserve Expenditures. Photographic Documentation of Select Remaining Reserve Components The following includes photographic documentation of select Reserve Components that did not experience a significant change in the times or scope of expenditures: Exterior Building Elements Roof system at lobby canopy Lack of drainage at 2 nd floor northwest thermoplastic roof Page Condition Assessment

56 Built-up roofing at 2 nd floor southwest roof Wood decking and planter siding at 2 nd floor sun deck Metal siding at racquetball court Lobby revolving door Possible seal failure at 2 nd floor walkway door Possible seal failure at pool area window Page Condition Assessment

57 Interior Building Elements Residential hallway Floor covering at 2 nd floor walkway and pool area Lobby Corridor at mall Page Condition Assessment

58 Party room Building Services Elements Corridor air handling unit Lobby air handling unit Page Condition Assessment

59 Pool air handling unit Racquetball court air handling unit Main boiler Boiler feedwater system Building automation system controls Chiller Page Condition Assessment

60 Residential cooling tower Electrical distribution panels Casings for garage hydraulic elevator pumps Traction elevator controls Expansion tanks Exhaust fan Page Condition Assessment

61 Fan coil loop pumps Domestic cold water pumps Fire suppression pumps Gas booster pumps Domestic hot water storage tank Valves at main water connection Page Condition Assessment

62 Property Site Elements Asphalt pavement deterioration at north perimeter Pool Elements Main pool Pool mechanical equipment Page Condition Assessment

63 Garage Elements Garage upper level floor traffic coating deterioration Garage upper level floor traffic coating deterioration Evidence of water infiltration at ceiling beneath elevated garage floor Concrete spall and cracks at lower level garage floor Page Condition Assessment

64 Garage exhaust fan Garage unit heater Reserve Study Update An ongoing review by the Board and an Update of this Reserve Study in two- to threeyears are necessary to ensure an equitable funding plan since a Reserve Study is a snapshot in time. Many variables change after the study is conducted that may result in significant overfunding or underfunding the reserve account. Variables that may affect the Reserve Funding Plan include, but are not limited to: Update. Deferred or accelerated capital projects based on Board discretion Changes in the interest rates on reserve investments Changes in the local construction inflation rate Additions and deletions to the Reserve Component Inventory The presence or absence of maintenance programs Unusually mild or extreme weather conditions Technological advancements Periodic updates incorporate these variable changes since the last Reserve Study or The Association can expense the fee for an Update with site visit from the reserve account. This fee is included in the Reserve Funding Plan. We base this budgetary amount on Page Condition Assessment

65 updating the same property components and quantities of this Reserve Study report. Budgeting for an Update demonstrates the Board's objective to continue fulfilling its fiduciary responsibility to maintain the commonly owned property and to fund reserves appropriately. Page Condition Assessment

66 5. METHODOLOGY Reserves for replacement are the amounts of money required for future expenditures to repair or replace Reserve Components that wear out before the entire facility or project wears out. Reserving funds for future repair or replacement of the Reserve Components is also one of the most reliable ways of protecting the value of the property s infrastructure and marketability. Park Tower can fund capital repairs and replacements in any combination of the following: 1. Increases in the operating budget during years when the shortages occur 2. Loans using borrowed capital for major replacement projects 3. Level monthly reserve assessments annually adjusted upward for inflation to increase reserves to fund the expected major future expenditures 4. Special assessments We do not advocate special assessments or loans unless near term circumstances dictate otherwise. Although loans provide a gradual method of funding a replacement, the costs are higher than if the Association were to accumulate reserves ahead of the actual replacement. Interest earnings on reserves also accumulate in this process of saving or reserving for future replacements, thereby defraying the amount of gradual reserve collections. We advocate the third method of Level Monthly Reserve Assessments with relatively minor annual adjustments. The method ensures that Homeowners pay their "fair share" of the weathering and aging of the commonly owned property each year. Level reserve assessments preserve the property and enhance the resale value of the homes. This Reserve Study is in compliance with and exceeds the National standards 1 set forth by the Community Associations Institute (CAI) and the Association of Professional Reserve Analysts (APRA) fulfilling the requirements of a Full Reserve Study. These standards require a Reserve Component to have a predictable remaining Useful Life. Estimating Remaining Useful Lives and Reserve Expenditures beyond 30 years is often indeterminate. Long-Lived Property Elements are necessarily excluded from this analysis. We considered the following factors in our analysis: 1 Identified in the APRA Standards - Terms and Definitions and the CAI "Terms and Definitions". Page Methodology

67 Information Furnished by the Association 2016 unaudited Cash Status of the Reserve Fund 1,590, Budgeted Reserve Contribution 1,472,900 Anticipated Interest on Reserve Fund 16,430 Less Anticipated Reserve Expenditures (1,367,600) Projected 2016 Year-End Reserve Balance $1,712,066 The Cash Flow Method to compute, project and illustrate the 30-year Reserve Funding Plan Local 2 costs of material, equipment and labor Current and future costs of replacement for the Reserve Components Costs of demolition as part of the cost of replacement Local economic conditions and a historical perspective to arrive at our estimate of long term future inflation for construction costs in Chicago, Illinois at an annual inflation rate of 3.5%. (Board requested) Isolated or regional markets of greater construction (development) activity may experience slightly greater rates of inflation for both construction materials and labor. The past and current maintenance practices of Park Tower and their effects on remaining useful lives The Funding Plan excludes necessary operating budget expenditures. It is our understanding that future operating budgets will provide for the ongoing normal maintenance of Reserve Components. The anticipated effects of appreciation of the reserves over time in accord with an anticipated future return or yield on investment of your cash equivalent assets at an annual rate of 1.00% (Board requested) (We did not consider the costs, if any, of Federal and State Taxes on income derived from interest and/or dividend income). Interest rates on reserves are steady or increasing in concert with the certificates of deposit and money market rates. Slight increases exist in the savings rates of one, two or three-year CDs. Without significant differences in these savings rates, shorter term investments are the choice of many investors. We recommend consultation with a professional investment adviser before investing reserves to determine an appropriate investment strategy to maximize a safe return on reserve savings. The following 2 See Credentials for addition information on our use of published sources of cost data. Page Methodology

68 table summarizes rates of inflation and key rates for government securities, generally considered as safe investment alternatives. Interest Rate and Inflation Data Average or Last Actual = (A) 2015:1 (A) 2015:2 (A) 2015:3 (A) 2015:4 (A) 2016:1 (A) 2016:2 (E) 2016:3 (E) 2016:4 (E) 1-Year Treasury Bill 0.25% 0.27% 0.30% 0.65% 0.60% 0.55% 0.60% 0.65% 10-Year Treasury Note 1.90% 2.50% 2.70% 2.25% 1.80% 1.80% 1.85% 1.90% 30-Year Treasury Bond 2.55% 3.20% 3.40% 3.00% 2.65% 2.60% 2.60% 2.65% Consumer Price Index (annualized rate) 0.00% 0.00% 0.00% 0.00% 0.10% 0.00% 0.00% 0.00% Although past indicators are not predictive of future inflation in "building" construction, minimal inflation exists for past 2 years April, 2014 to April 2016 of 1% to 2.5%. Savings Rates Results RANGE as found in 0.02 to 1.11% Money Market Savings 0.15 to 1.45% for 2-Year Certificate of Deposit to 1.25% 1-Year Certificate of Deposit 0.15 to 1.50% for 3-Year Certificate of Deposit Estimated Near Term Yield Rate for Reserve Savings Est. Near Term Local Inflation Rate for Future Capital Expenditures % 3.5% 05/05/2016 Updates to this Reserve Study will continue to monitor historical facts and trends concerning the external market conditions. Page Methodology

69 6. DEFINITIONS Definitions are derived from the standards set forth by the Community Associations Institute (CAI) representing America's 305,000 condominium and homeowners associations and cooperatives, and the Association of Professional Reserve Analysts, setting the standards of care for reserve study practitioners Cash Flow Method - A method of calculating Reserve Contributions where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different Reserve Funding Plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved. Component Method - A method of developing a Reserve Funding Plan with the total contribution is based on the sum of the contributions for individual components. Current Cost of Replacement - That amount required today derived from the quantity of a Reserve Component and its unit cost to replace or repair a Reserve Component using the most current technology and construction materials, duplicating the productive utility of the existing property at current local market prices for materials, labor and manufactured equipment, contractors' overhead, profit and fees, but without provisions for building permits, overtime, bonuses for labor or premiums for material and equipment. We include removal and disposal costs where applicable. Fully Funded Balance - The Reserve balance that is in direct proportion to the fraction of life "used up" of the current Repair or Replacement cost similar to Total Accrued Depreciation. Funding Goal (Threshold) - The stated purpose of this Reserve Study is to determine the adequate, not excessive, minimal threshold reserve balances. Future Cost of Replacement - Reserve Expenditure derived from the inflated current cost of replacement or current cost of replacement as defined above, with consideration given to the effects of inflation on local market rates for materials, labor and equipment. Long-Lived Property Component - Property component of Park Tower responsibility not likely to require capital repair or replacement during the next 30 years with an unpredictable remaining Useful Life beyond the next 30 years. Percent Funded - The ratio, at a particular point of time (typically the beginning of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage. Remaining Useful Life - The estimated remaining functional or useful time in years of a Reserve Component based on its age, condition and maintenance. Reserve Component - Property elements with: 1) Park Tower responsibility; 2) limited Useful Life expectancies; 3) predictable Remaining Useful Life expectancies; and 4) a replacement cost above a minimum threshold. Reserve Component Inventory - Line Items in Reserve Expenditures that identify a Reserve Component. Reserve Contribution - An amount of money set aside or Reserve Assessment contributed to a Reserve Fund for future Reserve Expenditures to repair or replace Reserve Components. Reserve Expenditure - Future Cost of Replacement of a Reserve Component. Reserve Fund Status - The accumulated amount of reserves in dollars at a given point in time, i.e., at year end. Reserve Funding Plan - The portion of the Reserve Study identifying the Cash Flow Analysis and containing the recommended Reserve Contributions and projected annual expenditures, interest earned and reserve balances. Reserve Study - A budget planning tool that identifies the current status of the reserve fund and a stable and equitable Funding Plan to offset the anticipated future major common area expenditures. Useful Life - The anticipated total time in years that a Reserve Component is expected to serve its intended function in its present application or installation. Page Definitions

70 7. PROFESSIONAL SERVICE CONDITIONS Our Services - Reserve Advisors, Inc. will perform its services as an independent contractor in accordance with our professional practice standards. Our compensation is not contingent upon our conclusions. Our inspection and analysis of the subject property is limited to visual observations and is noninvasive. We will inspect sloped roofs from the ground. We will inspect flat roofs where safe access (stairs or ladder permanently attached to the structure) is available. The report is based upon a snapshot in time at the moment of our observation. Conditions can change between the time of inspection and the issuance of the report. Reserve Advisors does not investigate, nor assume any responsibility for any existence or impact of any hazardous materials, structural, latent or hidden defects which may or may not be present on or within the property. Our opinions of estimated costs and remaining useful lives are not a guarantee of the actual costs of replacement, a warranty of the common elements or other property elements, or a guarantee of remaining useful lives. We assume, without independent verification, the accuracy of all data provided to us. You agree to indemnify and hold us harmless against and from any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorneys' fees, to which we may become subject in connection with this engagement, because of any false, misleading or incomplete information which we have relied upon as supplied by you or others under your direction, or which may result from any improper use or reliance on the report by you or third parties under your control or direction. Your obligation for indemnification and reimbursement shall extend to any controlling person of Reserve Advisors, Inc., including any director, officer, employee, affiliate, or agent. Liability of Reserve Advisors, Inc. and its employees, affiliates, and agents for errors and omissions, if any, in this work is limited to the amount of its compensation for the work performed in this engagement. Report - Reserve Advisors, Inc. will complete the services in accordance with the Proposal. The Report represents a valid opinion of our findings and recommendations and is deemed complete. However, we will consider any additional information made available to us in the interest of promptly issuing a Revised Report if changes are requested within six months of receiving the Report. We retain the right to withhold a Revised Report if payment for services is not rendered in a timely manner. All files, work papers or documents developed by us during the course of the engagement remains our property. Your Obligations - You agree to provide us access to the subject property during our on-site visual inspection and tour. You will provide to us to the best of your ability and if reasonably available, historical and budgetary information, the governing documents, and other information that we request and deem necessary to complete our Study. You agree to pay our actual attorneys fees and any other costs incurred in the event we have to initiate litigation to collect on any unpaid balance for our services. Use of Our Report and Your Name - Use of this Report is limited to only the purpose stated herein. Any use or reliance for any other purpose, by you or third parties, is invalid. Our Reserve Study Report in whole or part is not and cannot be used as a design specification, design engineering services or an appraisal. You may show our report in its entirety to those third parties who need to review the information contained herein. The Client and other third parties viewing this report should not reference our name or our report, in whole or in part, in any document prepared and/or distributed to third parties without our written consent. This report contains intellectual property developed by Reserve Advisors, Inc. specific to this engagement and cannot be reproduced or distributed to those who conduct reserve studies without the written consent of Reserve Advisors, Inc. Page Professional Service Conditions

71 We reserve the right to include our client's name in our client lists, but we will maintain the confidentiality of all conversations, documents provided to us, and the contents of our reports, subject to legal or administrative process or proceedings. These conditions can only be modified by written documents executed by both parties. Payment Terms, Due Dates and Interest Charges - The retainer payment is due upon authorization and prior to shipment of the report. The final payment of the fee is due immediately upon receipt of the Report. Subsequent changes to the report can be made for up to six months from the initial report date. Any outstanding balance after 30 days of the invoice date is subject to an interest charge of 1.5% per month. Any litigation necessary to collect an unpaid balance shall be venued in Milwaukee County Circuit Court in the State of Wisconsin. CONDITIONS OF OUR SERVICE ASSUMPTIONS To the best of our knowledge, all data set forth in this report are true and accurate. Although gathered from reliable sources, we make no guarantee nor assume liability for the accuracy of any data, opinions, or estimates identified as furnished by others that we used in formulating this analysis. We did not make any soil analysis or geological study with this report; nor were any water, oil, gas, coal, or other subsurface mineral and use rights or conditions investigated. Substances such as asbestos, urea-formaldehyde foam insulation, other chemicals, toxic wastes, environmental mold or other potentially hazardous materials could, if present, adversely affect the validity of this study. Unless otherwise stated in this report, the existence of hazardous substance, that may or may not be present on or in the property, was not considered. Our opinions are predicated on the assumption that there are no hazardous materials on or in the property. We assume no responsibility for any such conditions. We are not qualified to detect such substances, quantify the impact, or develop the remedial cost. We have made a visual inspection of the property and noted visible physical defects, if any, in our report. Our inspection and analysis was made by employees generally familiar with real estate and building construction; however, we did not do any invasive testing. Accordingly, we do not opine on, nor are we responsible for, the structural integrity of the property including its conformity to specific governmental code requirements, such as fire, building and safety, earthquake, and occupancy, or any physical defects that were not readily apparent during the inspection. Our opinions of the remaining useful lives of the property elements do not represent a guarantee or warranty of performance of the products, materials and workmanship. Page Professional Service Conditions

72 8. CREDENTIALS HISTORY AND DEPTH OF SERVICE Founded in 1991, Reserve Advisors, Inc. is the leading provider of reserve studies, insurance appraisals, developer turnover transition studies, expert witness services, and other engineering consulting services. Clients include community associations, resort properties, hotels, clubs, non-profit organizations, apartment building owners, religious and educational institutions, and office/commercial building owners in 48 states, Canada and throughout the world. The architectural engineering consulting firm was formed to take a leadership role in helping fiduciaries, boards, and property managers manage their property like a business with a long range master plan known as a Reserve Study. Reserve Advisors employs the largest staff of Reserve Specialists with bachelor s degrees in engineering dedicated to Reserve Study services. Our principals are founders of Community Associations Institute's (CAI) Reserve Committee that developed national standards for reserve study providers. One of our principals is a Past President of the Association of Professional Reserve Analysts (APRA). Our vast experience with a variety of building types and ages, on-site examination and historical analyses are keys to determining accurate remaining useful life estimates of building components. No Conflict of Interest - As consulting specialists, our independent opinion eliminates any real or perceived conflict of interest because we do not conduct or manage capital projects. TOTAL STAFF INVOLVEMENT Several staff members participate in each assignment. The responsible advisor involves the staff through a Team Review, exclusive to Reserve Advisors, and by utilizing the experience of other staff members, each of whom has served hundreds of clients. We conduct Team Reviews, an internal quality assurance review of each assignment, including: the inspection; building component costing; lifing; and technical report phases of the assignment. Each Team Review requires the attendance of several engineers, a Review Coordinator, Director of Quality Assurance and other participatory peers. Due to our extensive experience with building components, we do not have a need to utilize subcontractors. OUR GOAL To help our clients fulfill their fiduciary responsibilities to maintain property in good condition. VAST EXPERIENCE WITH A VARIETY OF BUILDINGS Reserve Advisors has conducted reserve studies for a multitude of different communities and building types. We've analyzed thousands of buildings, from as small as a 3,500-square foot day care center to the 2,600,000-square foot 98-story Trump International Hotel and Tower in Chicago. We also routinely inspect buildings with various types of mechanical systems such as simple electric heat, to complex systems with air handlers, chillers, boilers, elevators, and life safety and security systems. We're familiar with all types of building exteriors as well. Our well versed staff regularly identifies optimal repair and replacement solutions for such building exterior surfaces such as adobe, brick, stone, concrete, stucco, EIFS, wood products, stained glass and aluminum siding, and window wall systems. OLD TO NEW Reserve Advisors experience includes ornate and vintage buildings as well as modern structures. Our specialists are no strangers to older buildings. We're accustomed to addressing the unique challenges posed by buildings that date to the 1800's. We recognize and consider the methods of construction employed into our analysis. We recommend appropriate replacement programs that apply cost effective technologies while maintaining a building's character and appeal. Page Credentials

73 QUALIFICATIONS THEODORE J. SALGADO Principal Owner CURRENT CLIENT SERVICES Theodore J. Salgado is a co-founder of Reserve Advisors, Inc., which is dedicated to serving community associations, city and country clubs, religious organizations, educational facilities, and public and private entities throughout the United States. He is responsible for the production, management, review, and quality assurance of all reserve studies, property inspection services and consulting services for a nationwide portfolio of more than 6,000 clients. Under his direction, the firm conducts reserve study services for community associations, apartment complexes, churches, hotels, resorts, office towers and vintage architecturally ornate buildings. PRIOR RELEVANT EXPERIENCE Before founding Reserve Advisors, Inc. with John P. Poehlmann in 1991, Mr. Salgado, a professional engineer registered in the State of Wisconsin, served clients for over 15 years through American Appraisal Associates, the world's largest full service valuation firm. Mr. Salgado conducted facilities analyses of hospitals, steel mills and various other large manufacturing and petrochemical facilities and casinos. He has served clients throughout the United States and in foreign countries, and frequently acted as project manager on complex valuation, and federal and state tax planning assignments. His valuation studies led to negotiated settlements on property tax disputes between municipalities and property owners. Mr. Salgado has authored articles on the topic of reserve studies and facilities maintenance. He also coauthored Reserves, an educational videotape produced by Reserve Advisors on the subject of Reserve Studies and maintaining appropriate reserves. Mr. Salgado has also written in-house computer applications manuals and taught techniques relating to valuation studies. EXPERT WITNESS Mr. Salgado has testified successfully before the Butler County Board of Tax Revisions in Ohio. His depositions in pretrial discovery proceedings relating to reserve studies of Crestview Estates Condominium Association in Wauconda, Illinois, Rivers Point Row Property Owners Association, Inc. in Charleston, South Carolina and the North Shore Club Associations in South Bend, Indiana have successfully assisted the parties in arriving at out of court settlements. EDUCATION - Milwaukee School of Engineering - B.S. Architectural Engineering PROFESSIONAL AFFILIATIONS/DESIGNATIONS American Association of Cost Engineers - Past President, Wisconsin Section Association of Construction Inspectors - Certified Construction Inspector Association of Professional Reserve Analysts - Past President & Professional Reserve Analyst (PRA) Community Associations Institute - Member and Volunteer Leader of multiple chapters Concordia Seminary, St. Louis - Member, National Steering Committee Milwaukee School of Engineering - Member, Corporation Board Professional Engineer, Wisconsin (1982) and North Carolina (2014) Ted continually maintains his professional skills through American Society of Civil Engineers, ASHRAE, Association of Construction Inspectors, and continuing education to maintain his professional engineer licenses. Page Credentials

74 JOHN P. POEHLMANN, RS Principal John P. Poehlmann is a co-founder of Reserve Advisors, Inc. He is responsible for the finance, accounting, marketing, and overall administration of Reserve Advisors, Inc. He also regularly participates in internal Quality Control Team Reviews of Reserve Study reports. Mr. Poehlmann directs corporate marketing, including business development, advertising, press releases, conference and trade show exhibiting, and electronic marketing campaigns. He frequently speaks throughout the country at seminars and workshops on the benefits of future planning and budgeting for capital repairs and replacements of building components and other assets. PRIOR RELEVANT EXPERIENCE Mr. Poehlmann served on the national Board of Trustees of Community Associations Institute. An international organization, Community Associations Institute (CAI) is a nonprofit 501(c)(3) trade association created in 1973 to provide education and resources to America s 335,000 residential condominium, cooperative and homeowner associations and related professionals and service providers. He is a founding member of the Institute's Reserve Committee. The Reserve Committee developed national standards and the Reserve Specialist (RS) Designation Program for Reserve Study providers. Mr. Poehlmann has authored numerous articles on the topic of Reserve Studies, including Reserve Studies for the First Time Buyer, Minimizing Board Liability, Sound Association Planning Parallels Business Concepts, and Why Have a Professional Reserve Study. He is also a contributing author in Condo/HOA Primer, a book published for the purpose of sharing a wide background of industry knowledge to help boards in making informed decisions about their communities. INDUSTRY SERVICE AWARDS CAI Wisconsin Chapter Award CAI National Rising Star Award CAI Michigan Chapter Award EDUCATION University of Wisconsin-Milwaukee - Master of Science Management University of Wisconsin - Bachelor of Business Administration PROFESSIONAL AFFILIATIONS Community Associations Institute (CAI) - Founding member of Reserve Committee; former member of National Board of Trustees; Reserve Specialist (RS) designation; Member of multiple chapters Association of Condominium, Townhouse, & Homeowners Associations (ACTHA) member Page Credentials