CHATEAUX CHATEAUX. Replacement Reserve Study. Falls Church, Virginia. Property Management: SEQUOIA MANAGEMENT COMPANY. Jan Fenton Property Manger

Transcription

1 Replacement Reserve Study CHATEAUX RSTUDY+ REPLACEMENT RESERVE STUDY CHATEAUX Falls Church, Virginia Property Management: SEQUOIA MANAGEMENT COMPANY Jan Fenton Property Manger Parkeast Circle Chantilly, Virginia Tel: Consultant: RICHARD J. SCHUETZ, AIA ARCHITECT Wm. Bruce Bennett Senior Reserve Analyst th Street South, Suite #4 Arlington, Virginia Tel: Fax: June 20, 2009

2 June 20, 2009 RICHARD J. SCHUETZ, AIA ARCHITECT th Street South, Suite #4 Arlington, Virginia Tel: (703) Fax: (703) Jan Fenton SEQUOIA MANAGEMENT COMPANY Parkeast Circle Chantilly, Virginia Jan Fenton: Tel: Pursuant to your acceptance of our Proposal dated October 24, 2008, we have completed our evaluation of CHATEAUX in Falls Church, Virginia, and have developed the enclosed RSTUDY+ Replacement Reserve Study. The Study includes the following components: C C C C C C C Replacement Reserve Report. The Report contains a summary of the financial data calculated by the Replacement Reserve Analysis, a general description of the community, a summary of the conditions observed during our site evaluation, and information about the Replacement Reserve Inventory. Replacement Reserve Analysis. The Analysis is a tabular and graphical presentation of current Association funding of Reserves, and recommended Reserve Funding, calculated by both standard funding methodologies, the Cash Flow and Component Method. Replacement Reserve Inventory. The Inventory lists the common components of the community evaluated by the Replacement Reserve Analysis, and includes estimated replacement costs, normal economic life, and the remaining economic life for each component evaluated. List of Recommended Repairs. The Repair List itemizes defects we observed during our site evaluation. The repairs are categorized by building trade and include estimated costs. Supplemental Photographs. The photographs document observations made during the site evaluation. Replacement Reserve Allocations. The Replacement Reserve Allocations suggests allocation of the annual deposits to Replacement Reserves by the Cash Flow and Component Method. Cash Flow contributions are allocated based upon a chronological method recently developed by RSTUDY. Appendix. The Appendix contains definitions and standard procedures. This Study should be reviewed by the CHATEAUX, Board of Directors, those responsible for the management of the components included in the Inventory, and the accounting professionals employed by the Association. We are prepared to provide revisions to the Replacement Reserve Analysis and the Replacement Reserve Inventory upon the request of the Board of Directors. Revisions should be requested by the Board of Directors within three (3) months of the date of this Study. If you have any questions regarding this report, please contact Mr. Richard J. Schuetz at (703) Sincerely, RICHARD J. SCHUETZ, AIA Architect Wm Bruce Bennett Wm. Bruce Bennett Senior Reserve Analyst Replacement Reserve Report A. General Information - Page 1 B. Financial Summary - Page 2 C. Site Evaluation - Page 6 D. Inventory - Page 14 E. Methodology - Page 18 Replacement Reserve Analysis Summary - A1 Cumulative Funding and Expenditures Graph - A2 Cash Flow Method Cumulative Receipts and Expenditures - A3 Component Method Cumulative Receipts and Expenditures - A4 Current Association Funding Cumulative Receipts and Expenditures - A5 Annual Replacement Expenditures - A6 Replacement Reserve Inventory Inventory of Projected Replacements - Page 1 Schedule of Projected Annual Replacements Years One to Thirty - Page 7 List of Recommended Repairs Attachments Supplemental Photographs Replacement Reserve Allocations Appendix Balcony Report by Thomas Downey, LTD. dated October 25, 2004 (electronic copy only)

3 REPLACEMENT RESERVE REPORT A. GENERAL INFORMATION CHATEAUX Falls Church, Virginia June 20, 2009 Intent. The intent of this RSTUDY+ Replacement Reserve Study is to provide CHATEAUX (hereinafter called the Association), with an inventory of the common community facilities and infrastructure components that require periodic replacement, a general view of the condition of these components, and an effective financial plan to funded projected periodic replacements. Inventory of common components. The attached Replacement Reserve Inventory lists the common components of the community that require periodic replacement, whose replacement is scheduled for funding from Replacement Reserves. Section D of this Replacement Reserve Report provides information about components excluded from the Inventory, whose replacement is not scheduled for funding from Replacement Reserves, and the basis of those exclusions. Condition of common components. The Replacement Reserve Inventory includes our estimates of the normal economic life and the remaining economic life for those components whose replacement is scheduled for funding from Replacement Reserves. Section C of this Replacement Reserve Report provides additional information about several of these components including recommendations for repairs, maintenance, and replacements. Financial plan. Because many components owned by the Association have limited life and require periodic replacement, it is essential the Association have an effective financial plan to provide funding for the timely replacement of these components, to protect the appearance and value of the community. In conformance with American Institute of Certified Public Accountant guidelines, the Replacement Reserve Analysis evaluates the current funding of Replacement Reserves as reported by the Association, and recommends annual funding of Replacement Reserves by two generally accepted accounting methods, the Cash Flow Method and the Component Method. The Replacement Reserve Analysis includes graphic and tabular presentations of these methods and current Association funding. Scope. CHATEAUX is a residential community of residential condominium units in Falls Church, Virginia. The Request for Proposal submitted by the Association states that the community was constructed in 1964 and consists of 108 residential units and associated improvements. The community was originally constructed as a rental property and converted to a condominium in the late 1980's. We have assumed that all of these units are individually owned and are not the responsibility of the Association. These individually owned units and other components of the community not identified in the Request for Proposal as being the responsibility of the Association were not evaluated and were not included in the Replacement Reserve Inventory or Replacement Reserve Analysis. CHATEAUX PAGE 1 OF 18

4 REPLACEMENT RESERVE REPORT We have identified community facilities and infrastructure components with limited life that require periodic replacement and whose replacement is the responsibility of the Association, based upon our review of the following: The Request for Proposal, submitted and executed by the Association. Our field evaluations and measurements. The previous Replacement Reserve Study, prepared by Richard J. Schuetz, AIA, and dated September 2004 (revised in October and December 2004), October 30, 1999 and July 30, Aerial photographs acquired by Richard J. Schuetz, AIA. We have divided the components whose replacement is the responsibility of the Association into two categories, based upon the source of funding for the needed replacement. The categories are: Funding from Replacement Reserves. Those components whose replacement is scheduled for funding from Replacement Reserves are listed in the Replacement Reserve Inventory. This is a comprehensive list and the funding of replacements other than those specifically listed in the Replacement Reserve Inventory will result in inaccuracies in the results calculated by the Replacement Reserve Analysis. Funding from other sources. Examples of components whose replacement is NOT to be funded from Replacement Reserves, are listed and discussed in Section D - Inventory, below. This is not a comprehensive list and we have assumed that the replacement of all components not specifically listed in the Replacement Reserve Inventory will NOT be funded from Replacement Reserves. The major components included in the Replacement Reserve Inventory are the asphalt pavement, concrete sidewalks, concrete curb & gutter, concrete patios, retaining walls, roof systems, brick veneer, exterior wood trim, balconies, a Community Center, twelve stair halls, garages, HVAC equipment, and a swimming pool. etc. The components included in the Replacement Reserve Inventory have an estimated one-time replacement cost of $3,130,642. Site evaluation. We conducted our site evaluation on April 13, 21, and 22, Our evaluation was visual and nondestructive. Replacement Reserve Study - Level of Service. The Replacement Reserve Study has been performed as a Full Service Replacement Reserve Study as defined under the National Reserve Study Standards adopted by the Community Associations Institute. A complete component inventory was established based on information regarding commonly owned components provided by the Association and upon quantities derived from field measurement and/or quantity takeoffs from to-scale engineering drawings made available by the Association. The condition of all components was ascertained from a site visit and the visual inspection of each component by the analyst. The life expectancy and the value of components are provided based on these observations. The funding status (Replacement Reserves on Deposit) and funding plan (Current Annual Contribution to Replacement Reserves) have been provided by the Association. CHATEAUX PAGE 2 OF 18

5 REPLACEMENT RESERVE REPORT B. FINANCIAL SUMMARY Purpose. The purpose of the attached Replacement Reserve Analysis is to evaluate the current funding of Replacement Reserves as reported by the Association, and to recommend annual contributions to Replacement Reserves by two generally accepted accounting methodologies, the Cash Flow Method and the Component Method. All three evaluations are based upon the same 30-year Study Period, Replacement Reserves reported to be on deposit at the start of the Study Year, and projected expenditures for replacements of common elements shown in the Replacement Reserve Inventory. Study Year and Study Period. The Association reports that they operate on a calender year. The first year evaluated by the Replacement Reserve Analysis, the Study Year, is The Replacement Reserve Analysis evaluates funding in a 30-year period extending forward from January 1, This 30-year period is called the Study Period. Current Funding. In a memo dated March 11, 2009, the Association reports Replacement Reserves on Deposit of $625,000 as of January 1, 2010, and annual deposits to Replacement Reserves totaling $157,077. Projected Expenditures. We project that in the first five years of the study, from the Study Year, 2010, through the end of 2014, the Association has a cash requirement of between $575,370 and $715,370. This is based upon $420,370 of expenditures for replacements listed in the Replacement Reserve Inventory and $155,000 to $295,000 of repairs, maintenance, and miscellaneous small replacements outlined in the List of Recommended Repairs. Several of the projects associated with these expenditures are discussed in Section C below. We have projected annual Association expenditures (not including the $155,000 to $295,000 of repairs, maintenance, and minor replacements outlined in List of Recommended Repairs) over the next 30 years, based upon the Replacement Reserve Inventory. This data is presented as a graph on page A-6 of the Replacement Reserve Analysis. It shows that the average annual expenditure from Replacement Reserves over the next 30 years is $165,169. List of Recommended Repairs - timing of repairs. The enclosed List of Recommended Repairs itemizes $155,000 to $295,000 of defects we noted during our site evaluation. The accuracy of the values used for the remaining economic life in the Replacement Reserve Inventory and thereby the entire Replacement Reserve Analysis is dependent upon the timely completion of these repairs, maintenance, and miscellaneous small replacements. List of Recommended Repairs - funding of repairs. We have assumed that NO Replacement Reserves will be used to fund the correction of the defects outlined in the List of Recommended Repairs. The United States Tax Code grants very favorable tax status to Replacement Reserves, conditional on the expenditure of Replacement Reserves within specific guidelines. Funding maintenance, repair, and/or capital improvements from Replacement Reserves may have adverse tax consequences and should be done only after consultation with an accounting professional. CHATEAUX PAGE 3 OF 18

6 REPLACEMENT RESERVE REPORT EVALUATION OF CURRENT ASSOCIATION FUNDING. Our evaluation of the current Association funding plan is based in part, on financial data provided to us by the Association. $159,077 Current Association Funding. The Association reports that they are currently contributing $157,077 per year to Replacement Reserves ($ per unit per month). Based upon Replacement Reserves reported to be on deposit, and the Replacement Reserve Inventory, our evaluation of Current Association Funding shows that it results in the Association being unable to make scheduled replacements in 18 years of the thirty-year Study Period. We have calculated that a maximum shortfall of $729,690 will occur in Projections of Current Association Funding are presented in graph and tabular format on page A-5 of the Replacement Reserve Analysis. These calculations assume that NO Replacement Reserves will be allocated to fund the $155,000 to $295,000 of repairs, maintenance, and/or minor replacements outlined in the List of Recommended Repairs. A more detailed explanation of the Current Association Funding calculations is contained in the Appendix. STANDARD ACCOUNTING METHODOLOGIES. The enclosed Replacement Reserve Analysis calculates recommended funding of Replacement Reserves in each year of the of the 30-year Study Period, by two generally accepted methods, the Cash Flow Method, and the Component Method. Both calculations are based upon the same financial data, including the costs of the replacements scheduled in the Replacement Reserve Inventory and Replacement Reserves reported to be on deposit at the start of the Study. The Cash Flow Method and Component Method calculations and Replacement Reserve funding recommendations in 2010, the Study Year, are discussed below: $267,855 Cash Flow Method - Minimum Recommended Funding of Replacement Reserves in the Study Year ($206,68 per unit per month). The Cash Flow Method calculates the minimum annual funding of Replacement Reserves that will fund Projected Annual Replacements from a common pool of Replacement Reserves and prevents Replacement Reserves from dropping below the Minimum Recommended Balance. Annual deposits to Replacements Reserves remain the same between peaks in cumulative expenditures called Peak Years. Minimum Recommended Balance. We have established the Minimum Recommended Balance at $156,532 or 5 percent of the one-time replacement cost of all of the components listed in the Replacement Reserve Inventory. The Cash Flow Method calculations are presented in graph and tabular format on page A-3 of the Replacement Reserve Analysis. These calculations assume that NO Replacement Reserves will be allocated to fund the $155,000 to $295,000 of repairs, maintenance, and/or minor replacements outlined in the List of Recommended Repairs. A more detailed explanation of the Cash Flow Method is contained in the Appendix. CHATEAUX PAGE 4 OF 18

7 REPLACEMENT RESERVE REPORT $467,435 Component Method - Recommended Funding of Replacement Reserves in the Study Year ($360,68 per unit per month). The Component Method is a time tested and very conservative mathematical model developed by HUD in the early 1980's. The Component Method treats each component in the Replacement Reserve Inventory as a separate account and deposits are made annually to each of these individual accounts. A fence with a life of ten years and a value of $1,000, will require a deposit of $100 per year to Replacement Reserves. Based upon this funding formula, the Association should have $1,929,695 on deposit (Current Funding Objective), but the Association reports to having Replacement Reserves totaling $625,000 on deposit, approximately 32.4 percent funded. The Component Method calculations are presented in graph and tabular format on page A-4 of the Replacement Reserve Analysis These calculations assume that NO Replacement Reserves will be allocated to fund the $155,000 to $295,000 of repairs, maintenance, and/or minor replacements outlined in the List of Recommended Repairs. A more detailed explanation of the Cash Flow Method is contained in the Appendix. FUNDING RECOMMENDATIONS: We recommend the Association adopt an annual contribution to Replacement Reserves calculated by one of the standard accounting methods, either the Cash Flow Method or the Component Method, to insure that proper funding is available to make scheduled replacements throughout the entire 30-year Study Period. We further recommend the Association fully fund the List of Recommend Repairs in the Study Year, and establish the necessary annual funding for the normal maintenance and repairs needed throughout the community. CHATEAUX PAGE 5 OF 18

8 REPLACEMENT RESERVE REPORT C. SITE EVALUATION General comments. CHATEAUX is facing several large and expensive replacement, repair, and maintenance projects. The major replacement projects facing the Association in the first five years of the Study Period, from the Study Year, 2010, through the end of 2014, include: Asphalt pavement replacement. Partial replacements of the concrete components including the curb & gutter, patios, stairs, and sidewalks. Tuckpointing of the building brick facade and the brick retaining walls. Partial replacement of the garage door systems. Partial replacement of the stair hall carpeting. Replacement of the pool finish. Exterior trim and shutter replacements. These projects and several more minor projects are scheduled in the Replacement Reserve Inventory and have an estimated cost of $420,370 in the first five years of the Study Period. The List of Recommended Repairs outlines $155,000 to $295,000 of repairs, maintenance, and miscellaneous small replacements we observed throughout the community, which need correction now. Most of this amount is associated with the following: Correction of defective site grading. Correction of damaged base materials and bearing soils beneath the asphalt pavement. Maintenance of the roof systems. Evaluation of the balconies and correction of defects at the balconies. Safety defects. Several of the defects in the List of Recommend Repairs are safety hazards and should be repaired immediately to protect the residents from potential injury and to protect the Association from potential liability. We have identified safety hazards in the List of Recommended Repairs by printing them in bold. We do NOT warranty that all defects throughout the community that could be considered safety defects are identified in the List of Recommended Repairs. Site plans and drawings. No site plans or drawings were made available to Richard J. Schuetz, AIA., for our review in conjunction with the preparation of this Replacement Reserve Study. The Association is responsible for the maintenance, repair, and replacement of hundreds of thousands of dollars of components. Attempting to accomplish these tasks without comprehensive site plans, drawings and documents places an unnecessary and expensive additional burden on the Association. When we conducted our first evaluation in 1996, the Association had an extensive inventory of drawings and site plans. We recommend the Association locate these drawings and site plans or otherwise acquire comprehensive site plans and drawings, detailing the construction of all common elements of the community. These documents should be scanned into an electronic format and posted to an Association web site, where they will be an excellent resource for the residents, Board of Directors, and contractors working for the Association, in the coming years. CHATEAUX PAGE 6 OF 18

9 REPLACEMENT RESERVE REPORT Comments on Site Evaluation. The List of Recommended Repairs provides a component by component discussion of defects we observe during our site evaluation. The following comments are not intended to restate these observations but address one of the following specific issues regarding the larger, more significant components at the community: Components that require specific comments because of the manner in which they have been treated in the Replacement Reserve Analysis. Comments on components that could not be properly addressed in the List of Recommended Repairs. The comments on the following pages reflect the conditions found at the time of our site evaluation. Asphalt pavement - general. We identified approximately 47,035 square feet of asphalt roadways and parking areas throughout the community that is the responsibility of the Association. No information about the dates of installation or the specifications that were used to install the pavement was provided for our review. The asphalt pavement has been kept in service long after the end of its normal economic life. The Association has made extensive spot repairs and maintenance and these operations have been ineffective at preventing water penetration through the pavement, causing damage to the base materials and bearing soils beneath the pavement and adjacent concrete components. We observed extensive areas where the defective asphalt pavement is allowing large amounts of water to penetrate through the asphalt pavement, causing damage and deterioration of the load carrying capabilities of the base materials and bearing soils beneath the pavement. The defects we observed included areas with open cracks, large holes in the pavement, severe alligatoring, and depressed areas of pavement indicating damage to the base materials and bearing soils beneath the pavement. We also observed that previous pavement operations and repairs have been done without necessary milling of the asphalt pavement. CHATEAUX PAGE 7 OF 18

10 REPLACEMENT RESERVE REPORT Asphalt pavement - replacement and repair. We have assumed that the Association will replace the asphalt pavement by overlaying with 2 inches of new asphalt and the cost of this project is included in the Replacement Reserve Inventory. Before the installation of the new pavement, the existing asphalt roads and parking areas should be milled. The asphalt pavement is milled to insure that the new pavement can be properly graded to move all water to the storm water system. The project to replace the asphalt pavement should include the evaluation of all damaged and deteriorated pavement. Areas of asphalt pavement with minor defects that are limited to the asphalt pavement, where the base materials and bearing soils have not been damaged, may be repairable with one of the fabric reinforcing sheets in use today, to prevent defects from printing though to the new asphalt pavement. Areas of asphalt pavement with more serious defects, where the asphalt pavement has significant damage and/or deterioration, or where base materials and/or bearing soils beneath the pavement have been damaged, should have defective asphalt pavement, base materials, and bearing soils removed and replaced with materials capable of properly supporting the new pavement. The correction of these defects should be a onetime-only repair, assuming that in the future, the Association will make timely replacements of the asphalt pavement, before the failure of the pavement and the consequential damage to the base materials and bearing soils. One-time-only repairs are not appropriately funded from Replacement Reserves and we have included the estimated repair costs of between $30,000 and $50,000 in the List of Recommended Repairs. Failure to accomplish proper repairs prior the installation of a new asphalt top coat will result in the new pavement having a substantially reduced economic life as the old failures rapidly print through to the new asphalt. An asphalt pavement overlay, installed over defective pavement, frequently begins failing almost immediately and will generally be at complete failure in 2 to 5 years. The result of a proper installation of a 2 inch asphalt overlay, after appropriate repairs, should be a new traffic surface with an economic life of 14 to 18 years for the roads and parking areas. For the Replacement Reserve Inventory, we have assumed that appropriate repairs will be made, that the new pavement will be properly installed, and that the roads and parking areas will have an economic life of 16 years. The economic life should be adjusted in the coming years as the CHATEAUX PAGE 8 OF 18

11 REPLACEMENT RESERVE REPORT Replacement Reserve Inventory is updated, to reflect the actual condition of the asphalt pavement as it ages. This evaluation should be conducted every three to five years. In several locations the concrete curb & gutter segments are damaged and/or displaced. These defective segments of curb & gutter will prevent proper grading of the new asphalt pavement and/or allow water to penetrate into the bearing soils beneath the curb & gutter segments and adjacent asphalt pavement. These curb & gutter segments should be replaced before, or in conjunction with, the project to replace the asphalt pavement, to establish a proper grade and insure that all water is properly directed to the storm water system. Asphalt pavement replacement - scheduling. We have included the replacement of the asphalt pavement in the Replacement Reserve Inventory in first year of the Study, the Study Year, We recommend the Association replace the pavement as soon as possible to prevent further damage and deterioration of the asphalt pavement, base materials, and bearing soils. Delay in the replacement of the pavement will likely result in repair costs significantly higher than those shown in the List of Recommended Repairs. Concrete components. We identified approximately 11,550 square feet of concrete pavement (sidewalks and stairs), 5,400 square feet of concrete patios, and 2,540 feet of concrete curb & gutter throughout the community that is the responsibility of the Association. There are extensive defects in these components including components that are severely deteriorated, damaged, and displaced. Some of these defects are trip hazards and we recommend that the defective components be replaced as soon as possible to protect the residents from potential injury and the Association from potential liability for those injuries. Multiple segments of curb & gutter will need to be replaced prior to, or in conjunction with, the asphalt replacement project to insure that the new asphalt pavement can be properly graded to direct water to the storm water system. We have assumed that varying percentages of the concrete components will be replaced in conjunction with the asphalt pavement replacement project scheduled in 2010, based upon our visual evaluation of the components. Subsequent cycles of concrete component replacements are scheduled at 16 year intervals in the Replacement Reserve Inventory, to coincide with future asphalt replacement projects. We have accelerated the percentages of concrete components CHATEAUX PAGE 9 OF 18

12 REPLACEMENT RESERVE REPORT scheduled for replacement in future projects to reflect a normal aging pattern. Interim replacements may be necessary and in the Replacement Reserve Inventory, we have assumed that these replacements will not be funded from Replacement Reserves. Grading, drainage, and landscape. The List of Recommended Repairs outlines multiple site grading and drainage defects. Defective site grading is impounding large quantities of surface water and water discharged from the downspouts against the buildings. This has already resulted in some movement of the building foundations. These defects were noted in the 1996, 1999, and 2004 Replacement Reserve Studies. During our recent evaluation, we observed that the structural movement has printed through to the facade and we have included a recommendation for evaluation in the List of Recommended Repairs. In 2001, the Board of Directors commissioned a comprehensive evaluation of the site grading defects by Cervantes & Associates, P.C. The report they submitted titled Site Rehabilitation Plan, The Chateaux Condominium, discussed the need for a comprehensive repair before additional damage was done to the building foundations and other site improvements. We continue to support the recommendations in this Plan and recommend that it be updated and implemented along with the other grading and drainage recommendations in the List of Recommended Repairs. Metal railings. All stairs with more than two rises should have a handrail that provides firm support, at a proper height, along the entire length of the stair. Many stairs do not have handrails and many of the existing railing are defective. CHATEAUX PAGE 10 OF 18

13 REPLACEMENT RESERVE REPORT Roof systems. When we last evaluated the community in 2004, the Association had recently installed a granule surfaced modified bitumen roof system on Buildings 1 and 2. We noted that the Association suspended installation of this system and resumed making replacements with an EPDM membrane (white). In the Replacement Reserve Inventory, we have assumed that future replacements will be done with this system. The roof systems evidence little maintenance or repair since installation. If the roof systems are to achieve the economic lives shown in the Replacement Reserve Inventory, they should be enroled in a system of professional roof maintenance. The initial phase of the roof maintenance should include the correction of defects residual from initial installation. Roof tile replacements. Previous Replacement Reserve Studies have assumed that the tiles installed on the mansard roofs would have an unlimited economic life. During our site evaluation, we noted a tremendous increase in the number of defects in the roof tiles and as a consequence, have included a project for roof tile replacement in the Replacement Reserve Inventory. We observed that some of the failing tiles are a potential hazard to pedestrians in the vicinity. We have assumed that the Association will identify one section of roof tile for replacement every 10 years and that the undamaged tiles in this area will be carefully removed and used to make replacements throughout the remainder of the community.. It is unlikely that a like-kind tile can be found for the new installation and the association may need to consider an alternative, such as slate or metal. The use of an alternative material will require that the section of tile scheduled for replacement be carefully chosen so as not to have an adverse impact on the visual character of the community. CHATEAUX PAGE 11 OF 18

14 REPLACEMENT RESERVE REPORT Brick tuckpointing. We observed no evidence of tuckpointing operations having been conducted on the brick facades and brick retaining walls. The masonry has extensive defects and may of these defects are allowing water penetration into the structure. We have included a tuckpointing project in the Replacement Reserve Inventory in the Study Year that would address 15 percent of the masonry. Balcony restoration. Robert Downey, LTD, conducted an evaluation of the balconies in 1997 and in 2004 and a copy of the October 25, 2004 report is attached to this Study. Page 2 of the 2004 report recommends specific corrective actions including the replacement of the caulking between the metal fascias and the concrete decks in accordance with an included detail. We observed no evidence of this work having been accomplished, or the work has failed and been removed. We also observed extensive evidence of water penetration through this detail. In the List of Recommended Repairs, we recommend a follow-up evaluation of the balconies by Robert Downey, LTD, to confirm the economic life and replacement costs we have assigned to the balconies. We further recommend the correction of a variety of defects we noted in the balcony construction. We will modify the Replacement Reserve Analysis and Inventory to reflect the findings of Robert Downey, LTD, at no cost to the Association. CHATEAUX PAGE 12 OF 18

15 REPLACEMENT RESERVE REPORT Exterior wood trim and shutters. Partial replacements of the exterior wood trim and the wood shutters are scheduled to be done in conjunction with a the painting and caulking project. The Replacement Reserve Inventory includes a nominal 10 percent replacement. We observed that the Association has delayed the painting and caulking of the building exteriors and as a consequence, there is an unusually large number of trim and shutter failures. We have included funding for these excess replacements in the List of Recommended Repairs. Asphalt pavement - interior. The garage spaces on the lower level of each building are paved with asphalt. In this configuration, with no exposure to direct sunlight, asphalt pavement has an extended economic life. We did observe multiple defects in the pavement and the associated utility access points and drains that need to be corrected. These defects are outlined in the List of Recommended Repairs. Electrical switch gear, panels, and equipment. We observed rust and deterioration of the electrical services throughout the community have included a project to correct the defects in the List of Recommended Repairs. CHATEAUX PAGE 13 OF 18

16 REPLACEMENT RESERVE REPORT D. INVENTORY Basis. The data contained in the Replacement Reserve Inventory is based upon information provided by the Association and our field observations and measurements on April 13, 21, and 22, No drawings or documents were provided for our review in conjunction with the preparation of this Replacement Reserve Study. We utilized aerial photographs of the community. We confirmed the scale of the aerial photographs using field measurements. Partial and Normal Funding. Several components have been included in the Replacement Reserve Inventory at less that 100 percent of their full replacement value. This is done on components that will never be replaced in their entirety, but which will require periodic replacements over time. Examples of this type of component include: Brick tuckpointing. We have assumed that 15 percent of the brick in the building facade and in the brick retaining walls will be tuckpointed every 10 years with the initial projects scheduled in the Study Year. Exterior trim and shutters. We have assumed that 10 percent of the exterior wood trim and shutters will be replaced every 3 years in conjunction with a comprehensive painting project. Note that the painting project is a maintenance issue and is not scheduled for funded from Replacement Reserves. The percentage of the components scheduled for replacement should be adjusted in future years based on historical data and experience. All other components are included in the Replacement Reserve Inventory at their full estimated replacement cost. Estimated Life Left. The values in the Estimated Life Left in Years column in the Replacement Reserve Inventory have been established by the Analyst based upon a visual evaluation of the components. The values are not based upon a mathematical formula directly related to Estimated Economic Life in Years." Some components may experience longer lives while others may experience shorter lives depending on many factors such as environment, quality of the component, maintenance, timeliness of repairs, etc. CHATEAUX PAGE 14 OF 18

17 REPLACEMENT RESERVE REPORT Administrative exclusions from the Replacement Reserve Inventory. We have reviewed the Replacement Reserve Inventories prepared in conjunction with the Replacement Reserve Studies date dated September 2004, October 30, 1999 and July 30, The CHATEAUX CONDOMINIUM - Board of Directors has chosen to restrict the number of components included in the Replacement Reserve Inventory and to fund the components excluded from the Replacement Reserve Inventory from the operations budget of the community. The components that have been excluded from the Replacement Reserve Inventory by the Board of Directors are listed below. It is important to note that funding replacements of these excluded components from Replacement Reserves will result in critical under funding of future needed replacements. Stockade fence along east property boundary. General signage throughout the community and notice boards. Metal railings on exterior stairs. Metal fences at the swimming pool. Area way covers. Roof top mounted exhaust fans (36). Exterior light fixtures. Metal louvers. Stair hall entry doors Stair hall entry door locks. Stair hall entry door call systems. Gutters and down spouts. Garage door control systems. Garage door motors. Garage door bearing systems. Common windows. Unit entry doors (108). Miscellaneous common doors (73). Interior light fixtures. Smoke detectors. Lighted exit signs. Emergency lighting. Utility floor coverings in storage/mechanical rooms. Community Center interior and exterior light fixtures. Community Center furniture, fixtures and equipment. Community Center exhaust fans. Community Center canopy. Community Center and pool plumbing fixtures. Community Center cabinets and counters. Community Center ceramic tile. Community Center interior and exterior doors. Community Center hot water heater. Swimming pool cover. Swimming pool furniture. CHATEAUX PAGE 15 OF 18

18 REPLACEMENT RESERVE REPORT Standard exclusions from the Replacement Reserve Inventory. The following items have been excluded from the Replacement Reserve Inventory. If any of these exclusions have been made in error, we will reinsert the component at the request of the Board of Directors:. Long-lived components. Components that when properly maintained, can be assumed to have a life equal to the property as a whole, are excluded from the Replacement Reserve Inventory. Examples of components excluded from the Replacement Reserve Inventory by this standard include: Brick and metal entrance signage. Building foundations and structures Stair hall stairs and railings. Fire protection system. Stainless steel pool equipment. Brick privacy walls with balanced fill. Domestic water, sewer, and HVAC piping. Electrical wiring and switch gear. (Restoration of these services is needed now and the correction of defects in the electrical services is in the List of Recommended Repairs) Copper flashed, metal clad dormers. Bike racks located in garage. Interior wood trim, metal railings, metal stairs, etc. Community Center interior doors. Unit improvements. We understand that the elements of the project that relate to a single unit are the responsibility of that unit owner. Examples of components excluded from the Replacement Reserve Inventory by this standard include: Interiors of all of the units. Windows associated with a single unit. Patio doors. Utility connections, including domestic water piping, sewer piping, HVAC piping, and electrical wiring, that serve a single unit, even connections located on community property. Maintenance activities. Maintenance activities are normally NOT funded from Replacement Reserves and funding maintenance projects from Reserves can have tax consequences that should be discussed with an accounting professional. We have excluded the following from the Replacement Reserve Inventory: Interior and exterior painting. Landscaping, landscape maintenance, and site grading. HVAC loop. A system of pipes runs throughout each of the buildings delivering hot and cold water to the HVAC equipment in each of the units. We have assumed that any needed replacements of the components of this system will not be funded from Replacement Reserves. CHATEAUX PAGE 16 OF 18

19 REPLACEMENT RESERVE REPORT Domestic water pipes. A system of pipes runs throughout each of the buildings delivering hot and cold drinking water to each of the units. We have assumed that any needed replacements of the components of this system will not be funded from Replacement Reserves. Storm water management system. There is an extensive storm water system installed throughout the community on property owned by the Association. No drawings detailing the components of the system were available for our review, but the system likely includes inlets, outlets, subsurface piping, and other structures. We have assumed that any needed replacements of the components of this system will not be funded from Replacement Reserves. Sanitary sewer mains. There is a network of sanitary sewer mains installed throughout the community on property owned by the Association. No drawings detailing the components of the system were available for our review. We have assumed that any needed replacements of the components of this system will not be funded from Replacement Reserves. Domestic water supply mains. There is a network of domestic water mains installed throughout the community on property owned by the Association. No drawings detailing the components of the system were available for our review. We have assumed that any needed replacements of the components of this system will not be funded from Replacement Reserves. Other utilities. Many improvements owned by utility companies are on property owned by the Association. We have assumed that repair, maintenance, and/or replacements of these components will be done at the expense of the appropriate utility company. Examples of components excluded from the Replacement Reserve Inventory by this standard include: Primary electric feeds and transformers. Telephone and cable TV systems. Government. Site improvements that serve the community are located on property owned by the local or state government. These improvements are located along Route 7 and Patrick Henry Drive. We have assumed that any needed repairs or replacements of components located in these areas are not the responsibility of the Association and costs associated with any work on these components will not be funded from Replacement Reserves.. They component located in these areas include but are not limited to those listed. Asphalt pavement. Concrete sidewalks. Concrete curb & gutter. Storm water management system components. Mail boxes, bus shelters, signage, etc. Utilities, including electrical, sanitary sewers, domestic water mains, and natural gas. CHATEAUX PAGE 17 OF 18

20 REPLACEMENT RESERVE REPORT E. METHODOLOGY The site data used in this Replacement Reserve Study is based upon information provided by the Association and our visual survey of the property on the dates stated in the Report. We have estimated the normal economic life, remaining economic life, and replacement cost for each component listed in the Replacement Reserve Inventory. We have used Government standards, published estimating manuals, our experience with similar properties, and engineering judgment to develop these estimates. Our visual survey of the property did not ascertain compliance with current building codes, but assumed that all components met building code requirements in force at the time of construction. This Replacement Reserve Study has been developed with care by experienced persons, but Richard J. Schuetz, AIA, Architect (and/or its representatives) makes no representations that the Study includes, evaluates, and estimates all appropriate components, or discloses all defects, concealed or visible. No warranty or guarantee is expressed or implied. Actual experience in replacing components may differ significantly from the estimates in the Study because of conditions beyond our control. These differences may be caused by maintenance practices, inflation, variations in pricing and market conditions, future technological developments, regulatory actions, acts of God, and luck. Some components may function normally during our survey and then fail without notice. The intent of this RSTUDY+ Replacement Reserve Study is to provide the Association with an inventory of the common elements of the community, a general view of the condition of these components, and an effective financial planning tool for the replacement of the community facilities and infrastructure components with limited life, for which, the Association is responsible. To be effective, this Study should be reviewed by the CHATEAUX Board of Directors, those responsible for the management of the components included in the Inventory, and the accounting professionals employed by the Association. We are prepared to provide a revision to Replacement Reserve Inventory and the Replacement Reserve Analysis upon the request of the Board of Directors. Respectfully Submitted, RICHARD J. SCHUETZ, AIA ARCHITECT Wm Bruce Bennett Wm. Bruce Bennett Senior Reserve Analyst CHATEAUX PAGE 18 OF 18

21 REPLACEMENT RESERVE ANALYSIS CHATEAUX CONDOMINIUM June 2009 GENERAL INFORMATION: 2010 Study Year $625,000 Replacement Reserves reported to be on deposit at start of Study Year $3,130,642 Estimated value of all Components included in the Replacement Reserve Inventory The information shown in this Summary does not account for interest earned on Replacement Reserves on deposit, nor does it include adjustments for inflation. For more information see the attached Appendix. REPORTED CURRENT FUNDING DATA: $157,077 REPORTED CURRENT ANNUAL CONTRIBUTION TO REPLACEMENT RESERVES $ Per unit current monthly contribution to Replacement Reserves CASH FLOW METHOD CALCULATIONS: $267,855 MINIMUM RECOMMENDED ANNUAL CONTRIBUTION TO REPLACEMENT RESERVES $ Per unit miniumum recommended monthly contribution to Replacement Reserves $156,532 Recommended minimum Replacement Reserve Funding Threshold (5.0 percent) 2017 First year Reserves fall to minimum recommended level (Design Year) COMPONENT METHOD CALCULATIONS: $467,435 MINIMUM RECOMMENDED ANNUAL CONTRIBUTION TO RESERVES (IN STUDY YEAR) $ Per unit miniumum recommended monthly contribution to Replacement Reserves $1,929,695 Current Funding Objective 32.39% Funding Percentage $1,304,695 One time deposit required to fully fund Replacement Reserves $168,416 Annual Contribution to Replacement Reserves if Reserves were fully funded. PROJECT INFORMATION: PROPERTY MANAGED BY: MAJOR COMPONENTS IN ANALYSIS: TYPE OF PROPERTY: SEQUOIA MANAGEMENT COMPANY Asphalt pavement, sidewalks, curb & gutter Condominium Jan Fenton community center, swimming pool, building # OF UNITS: Parkeast Circle exteriors, garages, and stair halls 108 Chantilly, VA PROPERTY LOCATION: YEAR BUILT: (703) Falls Church, VA 1964 NOTES: This Replacement Reserve Analysis complies with the National Reserve Study Standards, adopted by the Community Associations Institute (CAI) in 1998, and applies to the 2010 accounting year (Jan 1 to Dec 31, 2010). This Analysis does NOT include funding for the repairs, maintenance, and replacements outlined in the the List of Recommended Repairs. The List of Recommended Repairs contains defects that are potential safety hazards that should be corrected as soon as possible to prevent personal injury and to protect the Association from potential liability. page: Richard J. Schuetz, AIA, Architect A th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rjs@great-architecture.com

22 REPLACEMENT RESERVE ANALYSIS CHATEAUX CONDOMINIUM June 2009 Funding Methods Comparison Graph - Cumulative Receipts and Expenditures $8,000,000 $7,000,000 $6,944,567 $6,000,000 $6,131,253 $5,337,310 $5,000,000 $4,955,067 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ Cash Flow Method - Cumulative Receipts Component Method - Cumulative Receipts Current Association Funding - Cumulative Receipts Cumulative Expenditures page: Richard J. Schuetz, AIA, Architect A th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

23 REPLACEMENT RESERVE ANALYSIS CHATEAUX CONDOMINIUM June 2009 Cash Flow Method - Cumulative Receipts and Expenditures Graph $7,000,000 $6,000,000 $6,131,253 $5,000,000 $4,955,067 $4,000,000 $3,000,000 1st Design Yr $2,000,000 $1,000,000 $1,176,186 $ Cash Flow Method - Cumulative Receipts Cash Flow Method - Year End Balance Cumulative Expenditures Cash Flow Method Data - Years 1 through 30 Year TEN YEAR Starting balance $625,000 SUMMARIES Annual deposit $267,855 $267,855 $267,855 $267,855 $267,855 $267,855 $267,855 $267,855 $152,882 $152,882 Expenditures: Expenditures $229,516 $24,000 $2,800 $65,870 $98,184 $1,159,742 $250,252 $780,942 $14,998 $44,000 $2,670,304 Year end balance $663,339 $907,194 $1,172,248 $1,374,233 $1,543,904 $652,017 $669,619 $156,532 $294,417 $403,299 Receipts: Minimum rec. funding lvl. $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $3,073,603 Cumulative expenditures $229,516 $253,516 $256,316 $322,186 $420,370 $1,580,112 $1,830,364 $2,611,306 $2,626,304 $2,670,304 Cumulative receipts $892,855 $1,160,709 $1,428,564 $1,696,419 $1,964,274 $2,232,128 $2,499,983 $2,767,838 $2,920,720 $3,073,603 1st Design Yr Year Expenditures: Annual deposit $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $1,422,122 Receipts: Expenditures $154,263 $31,290 $80,548 $39,490 $94,098 $72,800 $159,838 $275,332 $250,252 $264,212 $1,530,845 Year end balance $401,919 $523,512 $595,846 $709,239 $768,024 $848,106 $841,151 $718,701 $621,332 $510,002 Minimum rec. funding lvl. $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 Cumulative expenditures $2,824,566 $2,855,856 $2,936,404 $2,975,894 $3,069,992 $3,142,792 $3,302,630 $3,577,962 $3,828,214 $4,092,426 Cumulative receipts $3,226,485 $3,379,368 $3,532,250 $3,685,133 $3,838,015 $3,990,898 $4,143,780 $4,296,663 $4,449,545 $4,602,428 Year Expenditures: Annual deposit $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $152,882 $862,641 Receipts: Expenditures $121,146 $55,490 $11,000 $24,000 $103,525 $186,390 $0 $75,890 $30,038 $255,162 $1,530,855 Year end balance $541,738 $639,131 $781,013 $909,896 $959,253 $925,745 $1,078,628 $1,155,620 $1,278,465 $1,176,186 Minimum rec. funding lvl. $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 $156,532 Cumulative expenditures $4,213,572 $4,269,062 $4,280,062 $4,304,062 $4,407,587 $4,593,977 $4,593,977 $4,669,867 $4,699,905 $4,955,067 Cumulative receipts $4,755,310 $4,908,193 $5,061,075 $5,213,958 $5,366,840 $5,519,723 $5,672,605 $5,825,488 $5,978,370 $6,131,253 page: Richard J. Schuetz, AIA, Architect A th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

24 REPLACEMENT RESERVE ANALYSIS CHATEAUX CONDOMINIUM June 2009 Component Method - Cumulative Receipts and Expenditures Graph $8,000,000 $7,000,000 $6,944,567 $6,000,000 $5,000,000 $4,955,067 $4,000,000 $3,000,000 $2,000,000 $1,989,499 $1,000,000 $ Component Method - Cumulative Receipts Component Method - Year End Balance Cumulative Expenditures Component Method Data - Years 1 through 30 Year TEN YEAR Starting balance $625,000 SUMMARIES Annual deposit $467,435 $335,612 $330,203 $329,761 $326,825 $316,051 $222,903 $213,930 $176,034 $175,607 Expenditures: Expenditures $229,516 $24,000 $2,800 $65,870 $98,184 $1,159,742 $250,252 $780,942 $14,998 $44,000 $2,670,304 Year end balance $862,920 $1,174,531 $1,501,934 $1,765,825 $1,994,465 $1,150,774 $1,123,425 $556,413 $717,450 $849,057 Receipts: Cumulative Expenditures $229,516 $253,516 $256,316 $322,186 $420,370 $1,580,112 $1,830,364 $2,611,306 $2,626,304 $2,670,304 $3,519,361 Cumulative Receipts $1,092,435 $1,428,047 $1,758,250 $2,088,011 $2,414,835 $2,730,886 $2,953,789 $3,167,719 $3,343,754 $3,519,361 Year Annual deposit $175,607 $174,382 $174,382 $173,365 $173,339 $172,079 $171,861 $170,379 $170,260 $170,260 Expenditures: $1,422,122 Expenditures $154,263 $31,290 $80,548 $39,490 $94,098 $72,800 $159,838 $275,332 $250,252 $264,212 Receipts: Year end balance $870,402 $1,013,494 $1,107,328 $1,241,203 $1,320,445 $1,419,724 $1,431,747 $1,326,794 $1,246,802 $1,152,850 $1,727,935 Cumulative Expenditures $2,824,566 $2,855,856 $2,936,404 $2,975,894 $3,069,992 $3,142,792 $3,302,630 $3,577,962 $3,828,214 $4,092,426 Cumulative Receipts $3,694,968 $3,869,350 $4,043,732 $4,217,097 $4,390,436 $4,562,515 $4,734,377 $4,904,756 $5,075,016 $5,245,276 Year Annual deposit $170,260 $170,260 $170,260 $170,260 $170,260 $169,598 $169,598 $169,598 $169,598 $169,598 Expenditures: $862,641 Expenditures $121,146 $55,490 $11,000 $24,000 $103,525 $186,390 $0 $75,890 $30,038 $255,162 Receipts: Year end balance $1,201,964 $1,316,734 $1,475,994 $1,622,255 $1,688,990 $1,672,197 $1,841,795 $1,935,503 $2,075,063 $1,989,499 $1,701,321 Cumulative Expenditures $4,213,572 $4,269,062 $4,280,062 $4,304,062 $4,407,587 $4,593,977 $4,593,977 $4,669,867 $4,699,905 $4,955,067 Cumulative Receipts $5,415,536 $5,585,796 $5,756,057 $5,926,317 $6,096,577 $6,266,175 $6,435,773 $6,605,371 $6,774,969 $6,944,567 page: Richard J. Schuetz, AIA, Architect A th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

25 REPLACEMENT RESERVE ANALYSIS CHATEAUX CONDOMINIUM June 2009 Current Association Funding - Cumulative Receipts and Expenditures Graph $6,000,000 $5,000,000 $5,337,310 $4,955,067 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $382,243 $0 ($1,000,000) ($2,000,000) Current Association Funding - Cumulative Receipts Current Funding - Year End Balance Cumulative Expenditures Current Funding Data - Years 1 through 30 Year TEN YEAR Starting balance $625,000 SUMMARIES Annual deposit $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 Expenditures: Expenditures $229,516 $24,000 $2,800 $65,870 $98,184 $1,159,742 $250,252 $780,942 $14,998 $44,000 $2,670,304 Year end balance $552,561 $685,638 $839,915 $931,122 $990,015 ($12,650) ($105,825) ($729,690) ($587,611) ($474,534) Receipts: Cumulative Expenditures $229,516 $253,516 $256,316 $322,186 $420,370 $1,580,112 $1,830,364 $2,611,306 $2,626,304 $2,670,304 $2,195,770 Cumulative Receipts $782,077 $939,154 $1,096,231 $1,253,308 $1,410,385 $1,567,462 $1,724,539 $1,881,616 $2,038,693 $2,195,770 Year Annual deposit $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 Expenditures: $1,422,122 Expenditures $154,263 $31,290 $80,548 $39,490 $94,098 $72,800 $159,838 $275,332 $250,252 $264,212 Receipts: Year end balance ($471,719) ($345,932) ($269,403) ($151,816) ($88,837) ($4,560) ($7,321) ($125,576) ($218,751) ($325,886) $1,570,770 Cumulative expenditures $2,824,566 $2,855,856 $2,936,404 $2,975,894 $3,069,992 $3,142,792 $3,302,630 $3,577,962 $3,828,214 $4,092,426 Cumulative receipts $2,352,847 $2,509,924 $2,667,001 $2,824,078 $2,981,155 $3,138,232 $3,295,309 $3,452,386 $3,609,463 $3,766,540 Year Annual deposit $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 $157,077 Expenditures: $862,641 Expenditures $121,146 $55,490 $11,000 $24,000 $103,525 $186,390 $0 $75,890 $30,038 $255,162 Receipts: Year end balance ($289,955) ($188,368) ($42,291) $90,786 $144,338 $115,025 $272,102 $353,289 $480,328 $382,243 $1,570,770 Cumulative Expenditures $4,213,572 $4,269,062 $4,280,062 $4,304,062 $4,407,587 $4,593,977 $4,593,977 $4,669,867 $4,699,905 $4,955,067 Cumulative Receipts $3,923,617 $4,080,694 $4,237,771 $4,394,848 $4,551,925 $4,709,002 $4,866,079 $5,023,156 $5,180,233 $5,337,310 page: Richard J. Schuetz, AIA, Architect A th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

26 REPLACEMENT RESERVE ANALYSIS CHATEAUX CONDOMINIUM June 2009 Graph of Annual Replacement Expenditures $1,400,000 $1,200,000 $1,159,742 $1,000,000 $800,000 $780,942 $600,000 $400,000 $200,000 $0 $229,516 $165, YR AVERAGE $24,000 $2,800 $65,870 $98,184 $250,252 $14,998 $44,000 $154,263 $31,290 $80,548 $39,490 $94,098 $72,800 $159,838 $275,332 $250,252 $264,212 $121,146 $55,490 $11,000 $24,000 $103,525 $186,390 $0 $75,890 $30,038 $255, page: Richard J. Schuetz, AIA, Architect A th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703)

27 REPLACEMENT RESERVE INVENTORY CHATEAUX CONDOMINIUM June 2009 INVENTORY OF COMPONENTS - NORMAL REPLACEMENT UNIT NORMAL REMAINING TOTAL ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) CONCRETE COMPONENTS 1 Concrete sidewalks - 15% sf 1,733 $ none $14,293 2 Concrete sidewalks - 18% sf 2,079 $ $17,152 3 Concrete sidewalks - 20% sf 2,310 $ $19,058 4 Concrete sidewalks - 22% sf 2,541 $ $20,963 5 Concrete sidewalks - 25% sf 2,888 $ $23,822 6 Concrete patios - 5% sf 270 $ none $4,185 7 Concrete patios - 10% sf 540 $ $8,370 8 Concrete patios - 20% sf 1,080 $ $16,740 9 Concrete patios - 30% sf 1,620 $ $25, Concrete patios - 35% sf 1,890 $ $29, Concrete curb & gutter - 10% ft 254 $ none $8, Concrete curb & gutter - 15% ft 381 $ $12, Concrete curb & gutter - 20% ft 508 $ $16, Concrete curb & gutter - 25% ft 635 $ $20, Concrete curb & gutter - 30% ft 762 $ $24,765 COMMENTS: Concrete components. We have assumed that the concrete sidewalk, patios, and curb & gutter replacements will be done in conjunction with the asphalt pavement replacement project in 2010 and every 16 years thereafter. We have include increasing percentages of components for replacement to reflect the normal aging of the materials. Interim replacements may be needed and we have assumed that they will not be funded from Replacement Reserves. Concrete patios. The large open cracks in some of the patios have been repaired but the cement coating on many of the patios is at failure. page: Richard J. Schuetz, AIA, Architect th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

28 REPLACEMENT RESERVE INVENTORY CHATEAUX CONDOMINIUM June 2009 INVENTORY OF COMPONENTS - NORMAL REPLACEMENT UNIT NORMAL REMAINING TOTAL ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) SITE IMPROVEMENTS 16 Asphalt pavement - exterior sf 47,035 $ none $72, Seal coat asphalt - exterior - cycle 1 sf 47,035 $ $10, Seal coat asphalt - exterior - cycle 2 sf 47,035 $ $10, Seal coat asphalt - exterior - cycle 3 sf 47,035 $ $10, Brick retaining wall, misc. sf 1,695 $ $81, Brick retaining wall, pool sf 315 $ $15, Concrete retaining walls sf 260 $ $15, Metal fence ft 560 $ $23,520 COMMENTS: Asphalt pavement. The asphalt pavement is at failure is allowing water penetration, causing damage to the base materials and bearing soils beneath the pavement and adjacent concrete components. The cost of the $30,000 to $50,000 of repairs to the base materials and bearing soils in not included in the square footage costs shown above. Brick retaining walls. The brick retaining walls should be tuckpointed in conjunction with the tuckpointing of the building exteriors. We observed movement in several of the walls. page: Richard J. Schuetz, AIA, Architect th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

29 REPLACEMENT RESERVE INVENTORY CHATEAUX CONDOMINIUM June 2009 INVENTORY OF COMPONENTS - NORMAL REPLACEMENT UNIT NORMAL REMAINING TOTAL ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) BUILDING EXTERIORS 24 Roof system - Building 1 sf 9,694 $ $111, Roof system - Building 2 sf 9,694 $ $111, Roof system - Building 3 sf 9,694 $ $111, Roof system - Building 4 sf 9,694 $ $111, Roof system - Building 5 sf 9,694 $ $111, Roof system - Building 6 sf 9,694 $ $111, Roof system - Community Center sf 1,500 $ $17, Roof tile replacement/renovation ls 1 $20, none $20, Brick tuck pointing (15%) sf 6,069 $ none $75, Ext. trim & shutter replacement (10%) ls 1 $20, none $20, Balcony replacement project ea 72 $9, $655,200 COMMENTS: Roof system. The most recent roof replacements have used a white EPDM membrane. Roof tiles. A heavy ceramic roof tile is installed on the mansard roofs. We observed multiple tiles to be broken and damages. We have assumed that one section will be replaced every 10 years and that the tiles from that section carefully removed and the undamaged tiles used to make repairs throughout the remainder of the community. Brick tuck pointing. We have assumed that 15 percent of the exterior brick will be tuck pointed every 10 years. Extensive tuck pointing is needed now. The project should include the exterior brick retaining walls. Exterior wood trim and shutter replacement (10%). This line item is intended to parallel the exterior painting. We have assumed 10% of the wood components will be replaced at each repainting which is scheduled to occur every three years. Balcony replacement. The balcony replacement project reflects the information in the October 25, 2004, Thomas Downey, LTD report. We recommend this report be updated to insure the safety of the residents. page: Richard J. Schuetz, AIA, Architect th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

30 REPLACEMENT RESERVE INVENTORY CHATEAUX CONDOMINIUM June 2009 INVENTORY OF COMPONENTS - NORMAL REPLACEMENT UNIT NORMAL REMAINING TOTAL ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) COMMUNITY CNTR & RESIDENTIAL BLDG INTERIORS 35 Community Cntr hardwood flooring sf 500 $ $6, Community Cntr hardwood floor finish sf 500 $ none $3, Stair hall carpet - Building 1 sf 1,944 $ $7, Stair hall carpet - Building 2 sf 1,944 $ $7, Stair hall carpet - Building 3 sf 1,944 $ none $7, Stair hall carpet - Building 4 sf 1,944 $ $7, Stair hall carpet - Building 5 sf 1,944 $ $7, Stair hall carpet - Building 6 ls 1,944 $ $7, Stair hall wall paper sf 34,800 $ $147, Asphalt pavement - garages sf 35,798 $ $80, Garage pavement seal coat - Phase 1 sf 35,798 $ $9, Garage pavement seal coat - Phase 2 sf 35,798 $ $9, Garage pavement seal coat - Phase 3 sf 35,798 $ $9,308 COMMENTS: Stair hall carpet. Future stair hall carpet projects should include the correction of defective subfloor and stairs which are causing the carpet to fail prematurely. Asphalt pavement - garages. Repairs are needed now to the asphalt and utility access points to eliminate trip hazards in the garages. page: Richard J. Schuetz, AIA, Architect th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

31 REPLACEMENT RESERVE INVENTORY CHATEAUX CONDOMINIUM June 2009 INVENTORY OF COMPONENTS - NORMAL REPLACEMENT UNIT NORMAL REMAINING TOTAL ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) EQUIPMENT 48 Chiller ea 6 $60, $365, Cooling tower - Bldgs 1, 5, & 6 ea 3 $16, $49, Cooling tower - Bldgs 2, 3, & 4 ea 3 $16, $49, HVAC circulation loop pump (1.5hp) ea 6 $1, $11, Cooling tower pump (2hp) ea 6 $2, $14, Boiler ea 6 $22, $132, Domestic hot water heater - Bldg 1 ea 1 $8, $8, Domestic hot water heater - Bldg 2 ea 1 $8, $8, Domestic hot water heater - Bldg 3 ea 1 $8, $8, Domestic hot water heater - Bldg 4 ea 1 $8, $8, Domestic hot water heater - Bldg 5 ea 1 $8, $8, Domestic hot water heater - Bldg 6 ea 1 $8, $8, Hot water storage tank ea 1 $6, $6, Expansion tanks ea 12 $1, $22, Garage exhaust fans ea 6 $4, $26, HVAC unit - Community Center ea 1 $4, $4, Garage doors (Phase 1) ea 2 $12, $24, Garage doors (Phase 2) ea 2 $12, $24, Garage doors (Phase 3) ea 2 $12, $24,000 COMMENTS: Chiller. We have consolidated the chillers and three way valves based upon the assumption that at this point in their economic lives, they will be replaced as a single component. Boilers. We have consolidated the boilers and the gas burners based upon the assumption that at this point in their economic lives, they will be replaced as a single component. Domestic hot water heater. We observed that the domestic hot water heaters and the circulation pumps are being replaced as a single project and we have consolidated these components into a single line item. Garage doors. The garage door line items are for the replacement of the garage doors. We have assumed that the maintenance and repairs of the doors will not be funded from Reserves. page: Richard J. Schuetz, AIA, Architect th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

32 REPLACEMENT RESERVE INVENTORY CHATEAUX CONDOMINIUM June 2009 INVENTORY OF COMPONENTS - NORMAL REPLACEMENT UNIT NORMAL REMAINING TOTAL ITEM NUMBER REPLACEMENT ECONOMIC ECONOMIC REPLACEMENT # UNIT OF UNITS COST ($) LIFE (YRS) LIFE (YRS) COST ($) SWIMMING POOL 67 Pool structure ea 1 $42, $42, Pool finish ls 1 $4, none $4, Pool coping & waterline tile ft 123 $ $7, Pool pump ea 1 $2, $2, Pool filter system ea 1 $4, $4,200 COMMENTS: page: Richard J. Schuetz, AIA, Architect th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

33 REPLACEMENT RESERVE INVENTORY CHATEAUX CONDOMINIUM June 2009 SCHEDULE OF REPLACEMENTS - YEARS ONE TO FIFTEEN Brick tuck pointing (15%) $75,859 Garage doors (Phase 1) $24,000 Pool pump $2,800 Asphalt pavement - exterior $72,434 Ext. trim & shutter replacement ( $20,000 Roof tile replacement/renovation $20,000 Concrete sidewalks - 15% $14,293 Concrete curb & gutter - 10% $8,255 Stair hall carpet - Building 3 $7,290 Pool finish $4,200 Other Replacements $7,185 Total Scheduled Replacements $229,516 Total Scheduled Replacements $24,000 Total Scheduled Replacements $2, Garage doors (Phase 2) $24,000 Asphalt pavement - garages $80,546 Balcony replacement project $655,200 Ext. trim & shutter replacement ( $20,000 Seal coat asphalt - exterior - cycl $10,348 Stair hall wall paper $147,900 Stair hall carpet - Building 4 $7,290 Stair hall carpet - Building 2 $7,290 Roof system - Building 1 $111,481 Stair hall carpet - Building 5 $7,290 Roof system - Building 2 $111,481 Stair hall carpet - Building 6 $7,290 Brick retaining wall, misc. $81,360 Garage doors (Phase 3) $24,000 Brick retaining wall, pool $15,120 Community Cntr hardwood floorin $6,000 Other Replacements $7,200 Total Scheduled Replacements $65,870 Total Scheduled Replacements $98,184 Total Scheduled Replacements $1,159, Roof system - Building 3 $111,481 Chiller $365,040 Seal coat asphalt - exterior - cycl $10,348 Roof system - Building 4 $111,481 Boiler $132,000 HVAC unit - Community Center $4,650 Ext. trim & shutter replacement ( $20,000 Roof system - Building 6 $111,481 Stair hall carpet - Building 1 $7,290 Roof system - Building 5 $111,481 Garage doors (Phase 1) $24,000 Roof system - Community Cente $17,250 Domestic hot water heater - Bldg $8,200 Stair hall carpet - Building 3 $7,290 Other Replacements $4,200 Total Scheduled Replacements $250,252 Total Scheduled Replacements $780,942 Total Scheduled Replacements $14, Garage doors (Phase 2) $24,000 Brick tuck pointing (15%) $75,859 Garage doors (Phase 3) $24,000 Ext. trim & shutter replacement ( $20,000 Garage exhaust fans $26,400 Stair hall carpet - Building 2 $7,290 Roof tile replacement/renovation $20,000 Stair hall carpet - Building 5 $7,290 Stair hall carpet - Building 6 $7,290 Stair hall carpet - Building 4 $7,290 Pool coping & waterline tile $7,134 Community Cntr hardwood floor f $3,000 Total Scheduled Replacements $44,000 Total Scheduled Replacements $154,263 Total Scheduled Replacements $31, Expansion tanks $22,800 Garage doors (Phase 1) $24,000 Cooling tower - Bldgs 1, 5, & 6 $49,500 Ext. trim & shutter replacement ( $20,000 Domestic hot water heater - Bldg $8,200 Concrete retaining walls $15,600 Seal coat asphalt - exterior - cycl $10,348 Stair hall carpet - Building 1 $7,290 Garage pavement seal coat - Ph $9,308 Domestic hot water heater - Bldg $8,200 Domestic hot water heater - Bldg $8,200 Domestic hot water heater - Bldg $8,200 Stair hall carpet - Building 3 $7,290 Domestic hot water heater - Bldg $8,200 Pool finish $4,200 Pool pump $2,800 Total Scheduled Replacements $80,548 Total Scheduled Replacements $39,490 Total Scheduled Replacements $94,098 page: Richard J. Schuetz, AIA, Architect th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

34 REPLACEMENT RESERVE INVENTORY CHATEAUX CONDOMINIUM June 2009 SCHEDULE OF REPLACEMENTS - YEARS SIXTEEN TO THIRTY Garage doors (Phase 2) $24,000 Asphalt pavement - exterior $72,434 Roof system - Building 1 $111,481 Ext. trim & shutter replacement ( $20,000 Cooling tower - Bldgs 2, 3, & 4 $49,500 Roof system - Building 2 $111,481 Cooling tower pump (2hp) $14,400 Concrete sidewalks - 18% $17,152 Garage doors (Phase 3) $24,000 HVAC circulation loop pump (1.5 $11,400 Concrete curb & gutter - 15% $12,383 Stair hall carpet - Building 6 $7,290 Community Cntr hardwood floor f $3,000 Concrete patios - 10% $8,370 Stair hall carpet - Building 4 $7,290 Stair hall carpet - Building 5 $7,290 Hot water storage tank $6,500 Total Scheduled Replacements $72,800 Total Scheduled Replacements $159,838 Total Scheduled Replacements $275, Roof system - Building 3 $111,481 Roof system - Building 5 $111,481 Brick tuck pointing (15%) $75,859 Roof system - Building 4 $111,481 Roof system - Building 6 $111,481 Roof tile replacement/renovation $20,000 Ext. trim & shutter replacement ( $20,000 Garage doors (Phase 1) $24,000 Seal coat asphalt - exterior - cycl $10,348 Stair hall carpet - Building 2 $7,290 Roof system - Community Cente $17,250 Stair hall carpet - Building 1 $7,290 HVAC unit - Community Center $4,650 Community Cntr hardwood floor f $3,000 Total Scheduled Replacements $250,252 Total Scheduled Replacements $264,212 Total Scheduled Replacements $121, Garage doors (Phase 2) $24,000 Domestic hot water heater - Bldg $8,200 Garage doors (Phase 3) $24,000 Ext. trim & shutter replacement ( $20,000 Pool pump $2,800 Stair hall carpet - Building 3 $7,290 Pool finish $4,200 Total Scheduled Replacements $55,490 Total Scheduled Replacements $11,000 Total Scheduled Replacements $24, Pool structure $42,000 Stair hall wall paper $147,900 Ext. trim & shutter replacement ( $20,000 Garage doors (Phase 1) $24,000 Seal coat asphalt - exterior - cycl $10,348 Stair hall carpet - Building 2 $7,290 Garage pavement seal coat - Ph $9,308 Pool filter system $4,200 Stair hall carpet - Building 5 $7,290 Community Cntr hardwood floor f $3,000 Stair hall carpet - Building 4 $7,290 Stair hall carpet - Building 6 $7,290 Total Scheduled Replacements $103,525 Total Scheduled Replacements $186,390 No Scheduled Replacements Garage doors (Phase 2) $24,000 Seal coat asphalt - exterior - cycl $10,348 Roof system - Building 1 $111,481 Ext. trim & shutter replacement ( $20,000 Domestic hot water heater - Bldg $8,200 Roof system - Building 2 $111,481 Domestic hot water heater - Bldg $8,200 Stair hall carpet - Building 3 $7,290 Garage doors (Phase 3) $24,000 Domestic hot water heater - Bldg $8,200 Pool finish $4,200 Domestic hot water heater - Bldg $8,200 Domestic hot water heater - Bldg $8,200 Stair hall carpet - Building 1 $7,290 Total Scheduled Replacements $75,890 Total Scheduled Replacements $30,038 Total Scheduled Replacements $255,162 page: Richard J. Schuetz, AIA, Architect th Street Souh, Suite 4, Arlington, VA Tel: (703) Fax: (703) rick@great-architecture.com

35 LIST OF RECOMMENDED REPAIRS CHATEAUX Falls Church, Virginia June 20, 2009 REPAIR CATEGORY AND REPAIR DESCRIPTION PHOTOGRAPHS ESTIMATED REPAIR COST SITE IMPROVEMENTS: 1. Asphalt pavement - replacement From Reserves Replace the asphalt pavement throughout the community including the roadways and parking areas. The project should include the operations discussed below. See Supplemental Photographs #5, 6, 29, 49, 60, 79, 80, 81, 84, 105, 106, 107, 110, 129, 135. " Replace the existing asphalt pavement by overlaying with 2 inches of new asphalt. Prior to the installation of the new pavement, mill the existing asphalt pavement to insure that the final grade of the new pavement will not impound water and to eliminate the need to run the asphalt pavement into the curbs. " Evaluate damaged and deteriorated asphalt pavement and make necessary repairs to insure that the new asphalt pavement will have a normal economic life. See "2. Asphalt pavement - repairs" below for an outline of these repairs and funding for these repairs. " Prior to, or in conjunction with the asphalt replacement discussed above, replace defective segments of curb & gutter that would prevent the new asphalt pavement from being properly graded. See "3. Concrete components" below for a discussion of these repairs. CHATEAUX PAGE 1 OF 14

36 LIST OF RECOMMENDED REPAIRS 2. Asphalt pavement - repairs $30,000-50,000 The project to replace the asphalt pavement should include the corrections of defects in the asphalt pavement, base materials, and bearing soils. The cost shown in the Replacement Reserve Inventory assumes that base repairs will be needed at 5 to 10 percent of the total area. The asphalt pavement has been kept in service long past the normal end of its economic life and repairs are needed a 25 to 35 percent of the total area and the cost shown above is for these additional repairs. We have assumed that in the future, the Association will make timely replacements and that these repairs are one-time-only costs. One-time-only repair activities are not appropriately funded from Replacement Reserves. The repair activities should include the operations discussed below. See Supplemental Photographs #5, 6, 29, 6179, 80, 81, 84, 93, 105, 106, 107, 109, 110, 129, 135 " Conduct a comprehensive evaluation of asphalt pavement to identify defective asphalt pavement, base materials, and bearing soils. " Correct minor defects in the asphalt pavement that are limited to the asphalt pavement (no damage to the base materials or bearing soils), to insure that the new asphalt pavement will have a normal economic life. This may be accomplished by the use of a fabric reinforcement to prevent existing minor defects from printing through to the new pavement. " Correct more serious defects where the asphalt pavement has significant damage and/or deterioration, or where base materials and/or the bearing soils beneath the pavement have been damaged. Corrective actions should include the removal of the defective asphalt pavement, base materials, and bearing soils and their replacement with materials capable of properly supporting the new asphalt pavement. " Remove asphalt pavement improperly installed into the concrete curbs and restore or replace the concrete curbs. CHATEAUX PAGE 2 OF 14

37 LIST OF RECOMMENDED REPAIRS 3. Concrete components From Reserves Concrete pavement. Replace defective segments of concrete sidewalk. The segments that require replacement have one or more of the defects outlined below. See Supplemental Photographs #7, 12, 13, 16, 17, 18, 24, 57, 73, 85, 96, 128, 135. " Displaced segments of concrete pavement (with a difference in elevation over 1 inch) which are trip hazards. " Spalling segments of concrete pavement. Segments with loose or very rough pavement are trip hazards. " Segments of concrete pavement that have been repaired by coating or patching, where the material is failing, resulting in a hazard. " Segments of concrete sidewalk and patio that have moved, creating risers greater than 8.25 inches. " Modify sidewalk installations where they prevent proper grading at the building foundations. " Segments of concrete sidewalk that have moved, causing water to be impounded against the buildings. " Damaged/deteriorated segments of concrete pavement. Concrete stairs. Replace defective concrete stairs. The stair that require replacement have one or more of the defects outlined below. See Supplemental Photographs #9, 14, 30, 96, 113. " Defects that are typical of concrete pavement and listed under concrete pavement above. " Steps that have failed at the railing socket as a result of the long term impounding of water the sockets. Note that these replacements should be made prior to or in conjunction with the correction of the defective metal railings discussed below. " Steps with uneven risers or risers greater than 8.25 inches. CHATEAUX PAGE 3 OF 14

38 LIST OF RECOMMENDED REPAIRS Concrete curb & gutter. Replace defective concrete curb & gutter segments. The curb & gutter segments that require replacement have one or more of the defects outlined below. See Supplemental Photographs #46, 77, 78. " Defects that are typical of concrete pavement and listed under concrete pavement above. " Segments that are displaced and impound water. " Segments with defects that allow water to penetrate into the base materials and bearing soils beneath the curb & gutter and adjacent asphalt pavement. " Segments that prevent the proper grading of the asphalt pavement. 4. Grading, drainage, and landscape. $60,000-80,000 Correct site grading defects at the buildings. Establish proper grade at structure. Ground level patios should be 4 to 6 inches above the adjacent grade. The tops of the areaways should be at least 4 inches above grade. Openings in the facades, including weep holes, should be at least 8 inches above the adjacent grade. Non-pressure treated materials should be at least 8 inches above grade. After the establishment of proper grade at the buildings, modify grade to provide a constant fall of at least 1 inch per foot away from the foundations for at least the first 12 feet. Grading operations should include the remove all organic materials in the areas to be addressed, including all top soil, ground cover, grass, mulch, plants, shrubs, trees, leaves, etc. Where necessary, the grade should be raised by the installation and compaction of a high clay content soil to prevent water penetration. Final grade should be achieved by the installation of a maximum of 2 inches of top soil, mulch, or decorative gravel. See Supplemental Photographs #26, 28, 43, 52, 58, 59, 88, 89. CHATEAUX PAGE 4 OF 14

39 LIST OF RECOMMENDED REPAIRS Install a comprehensive system of subsurface downspout extensions and drains to move all roof discharge to an appropriate component of the storm water system or to a paved area that will direct the water to a storm water system component. The existing system of downspout extensions should be water tested to insure they function properly. Any defective components should be replaced. Replacements should be made schedule 40 PVC which can be properly maintained. See Supplemental Photographs #46, 67, 88, 90, 94, 101, 102. Grade adjacent to concrete pavement to prevent water, silt, and debris from being impounded on the components and/or to eliminate low areas and sink holes adjacent to the sidewalk and stairs that could be trip hazards. See Supplemental Photographs #23, 111, 118. Properly install a concrete drainage swale at the curb in the southeast corner of the property so that an open joint is not the low point of the swale, or remove swale and properly grade the area to eliminate the need for the swale. See Supplemental Photographs #62. Establish proper ground cover on property owned by the Association. See Supplemental Photographs #47, 103. CHATEAUX PAGE 5 OF 14

40 LIST OF RECOMMENDED REPAIRS 5. Metal railings $4,000-6,000 Install proper metal handrails on all exterior stairs with over two risers, that provides firm support, at an appropriate height, along the entire length of the stair. See Supplemental Photographs #30, 157, 167. Restore and paint all damaged and/or deteriorated exterior metal railings. See Supplemental Photographs #9, 11, 14, 35. Fill all rail attachment sockets and railing attachment fasteners with an epoxy grout, mounded to prevent water being impounded against the metal railing and the consequential failure of the concrete or masonry. See Supplemental Photographs #9, 13, 14, Site Improvements - Miscellaneous $2,000-4,000 Evaluate all areaway grates. Install proper supports and correct deterioration as necessary. See Supplemental Photographs #38. Repair/replace damages sections of metal fence. See Supplemental Photographs #3, 4. CHATEAUX PAGE 6 OF 14

41 LIST OF RECOMMENDED REPAIRS BUILDING EXTERIORS 7. Roof system - EPDM & MB. $25,000-40,000 Conduct a comprehensive evaluation of the EPDM roof systems, the granule surfaced modified bitumen (MP) roof systems, and all associated metal flashing systems for compliance with NRCA roofing standards. The defects that will require correction include but are not limited to those listed below. Correct all defects. See Supplemental Photographs #146, 149, 152, 153, 154, 155, 156. " Areas with ponding water in excess of NRCA standards. " Improperly installed install metal flashing details. " Failed caulking. " Roof system improperly stripped-in at the termination with the metal flashings. " Improperly executed roof penetrations. If the roof systems are to achieve the economic life shown in the Replacement Reserve Inventory, the systems should be enrolled in a system of PROFESSIONAL roof maintenance. 8. Ceramic roof tile system. From Reserves Correct defects in the ceramic tile roof system. A cost effective approach to these replacements will likely include the tasks outlined below. Note that some of the defects that we observed are potential hazards to pedestrians. See Supplemental Photographs #42, 68, 92, 92, 140, 143, 159. " Identify one section of ceramic tile roof for replacement. Replacement should be made with a like kind product or an alternate roofing system deemed appropriate by the Association. All tiles should be removed with great care and tiles in good condition should be carefully stored for use in the correction of defects throughout the community. CHATEAUX PAGE 7 OF 14

42 LIST OF RECOMMENDED REPAIRS " Using tiles obtained from the replacement project discussed above, replace damaged and deteriorated roof tiles throughout the community. " Correctly install metal caps on the corners to prevent water penetration into the building structure. " Replace missing or improperly installed metal flashings systems that protect the upper face of the shingles and the fasteners from deterioration. 9. Masonry From Reserves Tuckpoint defects in the exterior masonry. The defects that will require correction include but are not limited to those listed below. See Supplemental Photographs #2, 10, 15, 18, 20, 33, 35, 54, 55, 63, 83, 173. " Replace damaged, deteriorated, and/or eroded mortar. " Replace cracked, damaged, or dead brick. " Correct defects in the masonry that are allowing water to penetrate into the building structure. " Cleaning organic growth from the masonry. " Seal around penetrations to prevent water, air, and insect penetration. " Install weep holes in masonry retaining walls to prevent excessive hydrostatic pressure. " Replace masonry piers and walls with excessive lean. " Where appropriate, install through wall flashings to reduce deterioration of the exterior retaining and privacy walls. CHATEAUX PAGE 8 OF 14

43 LIST OF RECOMMENDED REPAIRS Remove paint system from the masonry entrance signage and install a proper breathable membrane. See Supplemental Photographs # Balcony - restoration $15,000-40,000 Commission a comprehensive update of the balcony evaluation last done by Thomas Downey, LTD., on October 25, 2004, to confirm that the assumptions in the Replacement Reserve Inventory are correct. Perform the corrective actions outlined on page 2 of the Thomas Downey, LTD, October 25, 2004, report. We noted additional defects at the balconies including but not limited to those outlined below. These defects should be corrected in conjunction with the corrective actions outlined in the Thomas Downey, LTD, October 25, 2004, report. See Supplemental Photographs #21, 22, 25, 27, 32, 40, 50, 144, 145, 147, 148, 150. " Carpet is installed on may of the balconies, impounding water and accelerating the deterioration of the adjacent components. " Balcony railings and the balcony railing finishes have extensive defects. " The vinyl soffit material installed on the bottom of the balconies is loose and wavy at multiple locations. " Adjacent baseboards are deteriorated, making it impossible to install a proper seal to prevent water penetration into the structure. CHATEAUX PAGE 9 OF 14

44 LIST OF RECOMMENDED REPAIRS " Failed sealants. " Ponding water and poorly installed drains, installed to eliminate the ponding water. " The recommendations in the Thomas Downey, LTD, October 25, 2004, report, were apparently not accomplished and long term water penetration through the open joints at the intersection of the concrete balcony and the metal edge detail has caused obvious deterioration of the metal and wood components and possible deterioration of hidden structural components. 11. Exterior caulking a painting Maintenance Conduct a comprehensive painting and caulking project throughout the community. The project should include the replacement of defective and deteriorated wood siding, shutters, and trim as outlined below. See Supplemental Photographs #36, 37, 41, 44, 50, 51, 56, 74, 86, 87, 95, Exterior wood shutters and trim - normal replacements From Reserves Replace approximately 10 percent of the exterior wood siding and trim in conjunction with each of the exterior painting projects, which should be done every three years. See Supplemental Photographs #31, 44, 87, 97, Exterior wood shutters and trim - excessive replacements $10,000-20,000 Replace wood siding, shutters, and trim in excess of the 10 percent included in the normal replacement project outlined above. These excess replacements appear to be a consequence of the paint and caulking throughout the community being allowed to go to failure in a large number of locations. Areas of severely deteriorated wood siding and trim should be evaluated to determine if the adjacent structural components have been damaged. Make repairs as necessary. See Supplemental Photographs #31, 44, 87, 97, 98. CHATEAUX PAGE 10 OF 14

45 LIST OF RECOMMENDED REPAIRS 14. Building Exteriors - Miscellaneous $3,000-5,000 Replace deteriorated lenses on exterior light fixtures. See Supplemental Photographs #82 Install/adjust jamb and sill weatherstripping on all exterior doors. Restore paint finish on garage doors. Install counter on the Building 6 garage door. BUILDING INTERIORS 15. Security re-key $2,000-3,000 After the completion of the restoration/replacement of the common interior and exterior doors, re-key all doors to the common spaces so as to provide proper security and to allow rapid access to all spaces in the event of an emergency. 16. Community Center wood floor From Reserves Refinish Community Center wood floor. See Supplemental Photographs # Building interiors - miscellaneous $10,000 to 15,000 Properly install asphalt pavement and utility access points in the garage floors to eliminate trip hazards. The work should include modifications at the drains to insure that the drains function properly. See Supplemental Photographs #142, 169, 179. CHATEAUX PAGE 11 OF 14

46 LIST OF RECOMMENDED REPAIRS Clean garage floors of gasoline and oil. Repair damaged or deteriorated asphalt pavement. See Supplemental Photographs #161. Properly install handrails in the stair halls that are mounted so close to the walls as to prevent the use of the handrail. See Supplemental Photographs #112. Restore drywall walls and ceiling to achieve the designed level of fire protection in garages, boiler rooms, etc. See Supplemental Photographs #127, 160. Restore proper function of all interior and exterior doors and confirm that all fire doors with automatic closure systems function properly. Restore/replace deteriorated doors, door jambs, and hardware as necessary. See Supplemental Photographs #163. Install panic hardware on all garage/stair hall doors, to allow keyless egress from the garage in the event of a fire. CHATEAUX PAGE 12 OF 14

47 LIST OF RECOMMENDED REPAIRS BUILDING SYSTEMS AND EQUIPMENT 18. Structures $1,000-2,000 Install motion monitors on the large open stair step cracks in the facade and on the retaining walls that exhibit movement. See Supplemental Photographs #54, 55, 69, 99, 100. If, after the correction of the grading defects discussed in Grading, drainage, and landscape above, the motion monitors indicate that there is no further movement of the building structure and retaining walls, the defects should be repaired. It movement of the building structure continues after the correction of the grading defects discussed in Grading, drainage, and landscape above, we recommend the Association engage a Registered Architect or Professional Engineer to design the repairs that will be necessary to stabilize the structures. The cost of this follow-on evaluation and any corrective action identified by this evaluation in NOT included in the estimated repair cost shown above. 19. Electrical switch gear and electrical systems $10,000-15,000 Conduct comprehensive restoration and preventative maintenance cycle on electrical switch gear. Defects to be corrected should include those listed below. See Supplemental Photographs #76, 121, 122, 123, 130, 165, 173, 177. " Restore or replace electrical switch gear that has been damaged by the water penetration or corrosive chemicals. " Remove stored items and other obstructions from the vicinity of the electrical panels and establish safe work zones. See Supplemental Photographs #. " Properly abandon unused electrical wiring. " Properly install light fixtures. CHATEAUX PAGE 13 OF 14

48 LIST OF RECOMMENDED REPAIRS SWIMMING POOL 20. Swimming Pool - finish From Reserves Replace the pool finish. See Supplemental Photographs #65, Swimming Pool - repairs $3,000-5,000 Install proper access from the pool equipment room to the pool deck. See Supplemental Photographs #162. Correct minor leak in pool equipment room and install cleanable finishes in the pool equipment room. See Supplemental Photographs 163, 164. Replace loose coping tiles. See Supplemental Photographs #66. TOTAL COST OF RECOMMENDED REPAIRS $155,000 to $295,000 NOTE: Defects that are potential safety hazards should be repaired immediately to prevent personal injury and to protect the Association from potential liability. We have identified safety hazards in the above List of Recommend Repairs by printing them in bold. CHATEAUX PAGE 14 OF 14

49 CHATEAUX Supplemental Photographs June 2009 Page 1 Photo #1. Start of photographs taken on April 13, Property identification monument. Photo #2. Cracks in brick above garage entrance, Building 1. Photo #3. A metal fence has been installed along the north and a portion of the west property boundary. Photo #4. Metal fence has minor damage. Photo #5. Typical defective asphalt pavement. Photo #6. Typical defective asphalt pavement.

50 CHATEAUX Supplemental Photographs June 2009 Page 2 Photo #7. Typical displaced concrete sidewalk impounds water and silt on the pavement. Photo #8. Wood fence installed along the east property boundary. Photo #9. Improper installation of the metal handrail has resulted in the deterioration of the metal railing and the concrete steps. Photo #10. Missing brick. Photo #11. Typical deteriorated paint on the metal railings. Photo #12. Typical displaced concrete sidewalk is a potential trip hazard.

51 CHATEAUX Supplemental Photographs June 2009 Page 3 Photo #13. Typical failed concrete sidewalk, Community Center. Photo #14. Typical failed concrete step at the railing attachment point, Community Center. Photo #15. Defective retaining wall with evidence of excessive moisture, Community Center. Photo #16. Sealant installed between the Community Center and the sidewalk has failed and is ineffective at preventing water penetration. Photo #17. Displaced concrete sidewalk, Community Center. Photo #18. Leaning masonry pier, Community Center.

52 CHATEAUX Supplemental Photographs June 2009 Page 4 Photo #19. Displaced sidewalk has resulted in risers over 8.25 inches, a safety hazard. Photo #20. Typical defective masonry. Note the lack of a proper through wall flashing to prevent water penetration. Photo #21. Unit balcony where the water integrity of the structure is dependent upon the caulking under the door. Photo #22. Unit balcony with stained coating and defective railing attachment. Photo #23. Defective grading and displaced concrete sidewalk results in water and silt being impounded on the pavement, a trip hazard, Building 6. Photo #24. Typical defective concrete pavement.

53 CHATEAUX Supplemental Photographs June 2009 Page 5 Photo #25. Typical edge detail on balcony with evidence of water penetration. Photo #26. Typical location where defective grading impounds water against the building foundations, Building 6. Photo #27. Drain retrofitted into balcony is poorly detailed and executed, Building 6. Photo #28. Defective grading at areaway impounds water against the building foundations. Photo #29. Typical defective asphalt pavement, Building 6. Photo #30. Typical location with three risers and no handrail. This is a safety defect.

54 CHATEAUX Supplemental Photographs June 2009 Page 6 Photo #31. Typical damaged shutter, Building 5. Photo #32. Typical location where water penetration through the balcony surface is causing deterioration of the metal edge detail. Photo #33. Typical dead brick. Note severe deterioration of the adjacent mortar which is allowing water penetration into the façade. Photo #34. Community Center entrance canopy. Photo #35. Defective metal railings and masonry. Note the sharp edges at the failed railing. Photo #36. Typical failed caulking between the windows and the adjacent trim.

55 CHATEAUX Supplemental Photographs June 2009 Page 7 Photo #37. Typical failed caulking between the exterior openings and the masonry. Photo #38. Typical areaway cover. Note deflection and lack of support where the cover intersects the façade. Photo #39. General view of sidewalk between Buildings 4 and 5. Photo #40. Soffit installed under balcony is bowed and does not appear to be properly attached, Unit Photo #41. Typical failing exterior paint. Photo #42. Roof tiles are evidencing deterioration.

56 CHATEAUX Supplemental Photographs June 2009 Page 8 Photo #43. Grading at areaway impounds water against the building foundation, Building 5. Photo #44. Typical failed caulking and trim at the intersection of the exterior opening and the masonry, Photo #45. Typical defective asphalt pavement, Building 5. Photo #46. Typical displaced concrete curb & gutter, Building 5. Photo #47. Poorly executed drainage project and consequential erosion. Photo #48. Crack in concrete patio has been repaired and there is no evidence of further movement, Building 4.

57 CHATEAUX Supplemental Photographs June 2009 Page 9 Photo #49. Severely alligatored asphalt pavement immediately adjacent to an asphalt patch, Building 4. Photo #50. Water penetration is causing deterioration of the metal edge detail and blistering of the paint, Photo #51. Typical failed paint, Photo #52. Defective grading along the west façade of Building 4. Proper corrective action may require the replacement of the adjacent sidewalk. Photo #53. General view of the swimming pool. Photo #54. Retaining wall at swimming pool. Note eroded mortar.

58 CHATEAUX Supplemental Photographs June 2009 Page 10 Photo #55. Failed mortar evidences movement of the retaining wall, Swimming Pool. Photo #56. Typical failing paint, Photo #57. Typical damaged and displaced sidewalk is a potential trip hazard, Photo #58. Defective grading impounds water against the building foundations, Building 4. Photo #59. Defective grading impounds water against the building foundations, Building 4. Photo #60. Typical failed asphalt pavement, Building 4.

59 CHATEAUX Supplemental Photographs June 2009 Page 11 Photo #61. Small sitting area at the southeast corner of the property. Note that pavement repairs have filled the concrete gutter to the height of the curb. Photo #62. Poorly executed concrete drainage swale, southeast corner of the community. Photo #63. Typical failed mortar. Photo #64. Sitting area above swimming pool. Photo #65. Swimming pool finish coat. Photo #66. Swimming pool coping and waterline tile.

60 CHATEAUX Supplemental Photographs June 2009 Page 12 Photo #67. Defective downspout extension discharges a large quantity of water at the building foundation, Building 3. Photo #68. Typical defective roof tile, Building 3. Photo #69. The gap between the patio and the swimming pool retaining wall evidences movement of the wall. Photo #70. Incomplete dual drain installation, at the swimming pool. Photo #71. Crack in the concrete patio has been repaired, Building 3. Photo #72. Surface of the concrete patio is in poor condition and there are additional cracks to the repaired crack in the upper part of the photo and in #71.

61 CHATEAUX Supplemental Photographs June 2009 Page 13 Photo #73. Failed coating and crack in concrete patio, Building 3. Photo #74. Failed paint on the soffit may evidence water penetration, Building 3. Photo #75. General view of the roadway along the west property boundary. Photo #76. Defective streetlight. Photo #77. Cracked concrete curb. Photo #78. Cracked and displaced concrete curb.

62 CHATEAUX Supplemental Photographs June 2009 Page 14 Photo #79. Typical severely deteriorated asphalt pavement, Building 3. Photo #80. Concrete curb and asphalt pavement is in poor condition, Building 3. Photo #81. Failed asphalt patches indicating that proper base repairs were not made. Photo #82. Typical discolored lens installed on exterior light fixture. Photo #83. Typical dead brick, Building 3. Photo #84. Typical severely deteriorated asphalt pavement. Note that the worst failures are at the patches, indicating that proper base repairs were not made.

63 CHATEAUX Supplemental Photographs June 2009 Page 15 Photo #85. Typical displaced concrete sidewalk is a trip hazard. Photo #86. Typical failed paint and caulking, Photo #87. Fascia appears to have suffered from long-term water penetration and is deteriorated, Photo #88. Downspouts from Building 2 discharge into an area that does not drain properly. Photo #89. Defective grading impounds water against the building foundation, Building 2. Photo #90. Poorly executed drainage project, Building 2/Community Center.

64 CHATEAUX Supplemental Photographs June 2009 Page 16 Photo #91. Typical metal caps on the tile corner caps are poorly executed and are likely allowing water penetration. Photo #92. Typical failing roof tiles are a hazard to the residents, Building 2. Photo #93. Improperly graded asphalt pavement impounds water against the building foundations, Building 2. Photo #94. Typical defective drainage system. Photo #95. Failed paint and deteriorated wood trim, Photo #96. Typical failed coating on concrete patio, 3127.

65 CHATEAUX Supplemental Photographs June 2009 Page 17 Photo #97. Typical deteriorated wood shutters. Note lack of caulking to prevent water penetration. Photo #98. Typical evidence of water penetration at the balconies. Photo #99. Open stair step crack in the façade may indicate damage to the building foundations. Photo #100. Open stair step crack in the façade may indicate damage to the building foundations. Photo #101. Defective drain, Community Center. Photo #102. Defective grading and drainage system, Community Center.

66 CHATEAUX Supplemental Photographs June 2009 Page 18 Photo #103. Lawn area without proper ground cover, Building 1. Photo #104. Evidence of water penetration at the balcony edge, Photo #105. Deteriorated asphalt pavement, Building 1. Photo #106. Improper and ineffective crack sealing of deteriorated asphalt pavement, Building 1. Photo #107. Severely deteriorated asphalt pavement and displaced concrete curb & gutter, Building 1. Photo #108. Cracking of the property identification monument.

67 CHATEAUX Supplemental Photographs June 2009 Page 19 Photo #109. Improperly graded asphalt pavement impounds water, Building 1. Photo #110. Typical severely alligatored asphalt pavement, Building 2. Photo #111. Start of photographs taken on April 21, Defective site grading impounds water, Photo #112. Typical location where the stair handrail is installed too close to the wall and does not provide proper support, a serious safety defect. Photo #113. Concrete steps evidence movement and deterioration, Photo #114. Start of photographs taken on April 22, General view of the kitchen facilities in the Community Center.

68 CHATEAUX Supplemental Photographs June 2009 Page 20 Photo #115. Restroom facilities in the Community Center. Photo #116. Damaged wood floor, Community Center. Photo #117. Admin office, Community Center. Photo #118. Defective grading and displaced sidewalk are a hazard, Photo #119. Domestic water heater and circulation pump, Building 1. Photo #120. Chiller, Building 1.

69 CHATEAUX Supplemental Photographs June 2009 Page 21 Photo #121. Electrical service, Building 1. Photo #122. Main breakers, rust, and possible evidence of moisture, Building 1. Photo #123. Open electrical outlets, Building 1. Photo #124. Open and damaged electrical outlets, Building 1. Photo #125. New circulation pump, Building 1. Photo #126. Boiler, Building 1.

70 CHATEAUX Supplemental Photographs June 2009 Page 22 Photo #127. Defects in drywall ceiling, Building 1. Photo #128. Standing water at the entrance to the boiler room of Building 1 is a hazard in icing. Photo #129. Asphalt pavement impounds water against the building foundation, Building 1. Photo #130. Electrical service, Building 2. Photo #131. Chiller, Building 2. Photo #132. Boiler, Building 2.

71 CHATEAUX Supplemental Photographs June 2009 Page 23 Photo #133. Domestic hot water heater, Building 2. Photo #134. Pipe is deteriorated, Building 2. Photo #135. Standing water at the entrance to the boiler room in Building 2. Photo #136. Chiller, Building 3. Photo #137. Circulation pump, Building 3. Photo #138. Domestic water heater, Building 3.

72 CHATEAUX Supplemental Photographs June 2009 Page 24 Photo #139. Boiler, Building 3. Photo #140. Missing roof tile, Building 3. Photo #141. Door machinery, Building 3. Photo #142. General view of garage, Building 3. Photo #143. Damaged roof tile, Building 3. Photo #144. Balcony edge is not sealed to the metal edging, allowing water to penetrate into the balcony wood structure.

73 CHATEAUX Supplemental Photographs June 2009 Page 25 Photo #145. Wood trim in direct contact with the concrete balcony is deteriorated, typical. Photo #146. Building 2 roof system with minor ponding water. Photo #147. Carpet impounds water on the balcony and causes accelerated deterioration. Note the growth on the surface of the concrete. Photo #148. Carpet impounds water on the balcony and causes accelerated deterioration. Photo #149. Metal details on the roof are not properly assembled and exposed joints may allow water penetration into the structure. Photo #150. Intersection of the metal edge and the concrete balcony is open and impounds water.

74 CHATEAUX Supplemental Photographs June 2009 Page 26 Photo #151. HVAC unit, Community Center. Photo #152. MB roof system installed on Building 1. Photo #153. EPDM roof system installed on Building 6. Photo #154. Gap between the bitumen sheet and the metal gravel stop is not sealed and impounds water. Photo #155. Roof penetrations are not detailed in compliance with NRCA standards. Photo #156. Failed sealant at the storm collar.

75 CHATEAUX Supplemental Photographs June 2009 Page 27 Photo #157. Concrete stair with 4 risers and no handrail, Building 3. Photo #158. EPDM roof system with extensive ponding water, Building 5. Photo #159. Flashings do not properly protect the fasteners used to install the roof tiles. Photo #160. Typical opening in the garage ceiling that would allow the rapid spread of smoke and flame. Photo #161. Typical oil/gasoline damage in the garages. Photo #162. Door to pool deck.

76 CHATEAUX Supplemental Photographs June 2009 Page 28 Photo #163. Pool equipment room door. Photo #164. Pool pump and filter. Photo #165. Damaged/deteriorated electric panel in pool equipment room. Photo #166. Crack in the pool coping. Photo #167. Stair without a proper handrail. Photo #168. Typical garage ventilation fan.

77 CHATEAUX Supplemental Photographs June 2009 Page 29 Photo #169. Utility access points and drains are not properly installed in the garage floors. Photo #170. Boiler, Building 5 Photo #171. Cooling tower, Building 4. Photo #172. Deteriorated piping in the boiler room, Building 4. Photo #173. Defective and improperly installed light fixture, Building 4. Photo #174. Domestic hot water heater, Building 4.

78 CHATEAUX Supplemental Photographs June 2009 Page 30 Photo #175. Garage door machinery, Building 4. Photo #176. Damaged garage door cowl, Building 4. Photo #177. Electrical service, Building 5. Photo #178. Chiller, Building 5. Photo #179. Improperly installed utility access point in garage is a trip hazard, Building 5. Photo #180. Domestic hot water heater, Building 5.