Precision 20/20 Full Reserve Study for. Sevanna Park Condominium Association Ithaca, New York March 27, 2013

Precision 20/20 Full Reserve Study for Sevanna Park Condominium Association Ithaca, New York March 27, 2013

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TABLE OF CONTENTS RESERVE STUDY EXECUTIVE SUMMARY............................... Page 1.1 RESERVE STUDY REPORT............................................. Page 2.1 IDENTIFICATION OF PROPERTY......................................... Page 2.2 RESERVE EXPENDITURES and FUNDING PLAN............................. Page 3.1 CONDITION ASSESSMENT.............................................. Page 4.1 Exterior Building Elements........................................... Page 4.1 Balconies, Railings.............................................. Page 4.1 Balconies, Wood................................................ Page 4.2 Gutters and Downspouts, Aluminum................................. Page 4.3 Light Fixtures.................................................. Page 4.5 Roofs, Asphalt Shingles........................................... Page 4.5 Shutters...................................................... Page 4.12 Soffit and Fascia............................................... Page 4.13 Walls, Masonry................................................ Page 4.13 Walls, Wood Siding, Paint Finishes................................. Page 4.14 Walls, Wood Siding, Replacement................................. Page 4.15 Windows and Doors, Office....................................... Page 4.17 Interior Building Elements........................................... Page 4.18 Office, Interior Renovations....................................... Page 4.18 Building Services Elements.......................................... Page 4.18 Boilers....................................................... Page 4.18 Furnaces...................................................... Page 4.19 Water Heaters................................................. Page 4.19 Property Site Elements.............................................. Page 4.20 Asphalt Pavement, Crack Repair, Patch and Seal Coat.................. Page 4.20 Asphalt Pavement, Repaving...................................... Page 4.22 Catch Basins.................................................. Page 4.26 Concrete, Flatwork.............................................. Page 4.27 Concrete Curbs.......................................... Page 4.27 Concrete Patios, Buildings E through G........................ Page 4.28 Concrete Patios and Stoops, Townhomes....................... Page 4.28 Concrete Sidewalks....................................... Page 4.29 Concrete Steps, Buildings A through D........................ Page 4.29 2013 Reserve Expenditures....................................... Page 4.30

Reserve Study Update.............................................. Page 4.30 PHOTOGRAPHS...................................................... Page 5.1 SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENTS............. Page 6.1 METHODOLOGY...................................................... Page 7.1 DEFINITIONS........................................................ Page 8.1 CONDITIONS OF OUR SERVICE.......................................... Page 9.1 ASSUMPTIONS....................................................... Page 9.1 PROFESSIONAL SERVICE CONDITIONS................................... Page 9.2 CREDENTIALS...................................................... Page 10.1

RESERVE STUDY EXECUTIVE SUMMARY Client: Sevanna Park Condominium Association (Sevanna Park) Location: Ithaca, New York Reference: 130023 Property Basics: Sevanna Park Condominium Association is a condominium style comprised of 48 units in three three-story buildings and 65 units in 13 two-story buildings. The exteriors of the buildings comprise masonry veneer and asphalt shingle roofs. The buildings were built in 1965. The development contains asphalt pavement and concrete flatwork. Reserve Components Identified: 30 Reserve Components. Inspection Date: March 27, 2013. Funding Goal: The Funding Goal of this Reserve Study is to maintain reserves above an adequate, not excessive threshold during one or more years of significant expenditures. Our recommended Funding Plan recognizes these threshold funding years in 2016 and in 2029 due to repaving. Cash Flow Method: We use the Cash Flow Method to compute the Reserve Funding Plan. This method offsets future variable Reserve Expenditures with existing and future stable levels of reserve funding. Our application of this method also considers: current and future local costs of replacement 0.7% annual rate of return on invested reserves 1.8% future Inflation Rate for estimating Future Replacement Costs Sources for Local Costs of Replacement: Our proprietary database, historical costs and published sources, i.e., R.S. Means, Incorporated. Cash Status of Reserve Fund: $225,597 as of March 31, 2013. Recommended Reserve Funding: The Association budgeted $203,343 for Reserve Contributions in 2013. We recommend that the Association adopt a reduced reserve budget of $129,000 from 2014. through 2018. Afterwards, the Association should budget gradual annual increases in reserve funding, that in part consider the effects of inflation. The recommended year 2014 Reserve Contribution of $129,000 is equivalent to an average monthly contribution of $95.13 per unit owner. Certification: This Precision 20/20 Full Reserve Study exceeds the Community Associations Institute (CAI) and Association of Professional Reserve Analysts (APRA) standards fulfilling the requirements of a Level I Full Reserve Study. Page 1.1 - Executive Summary

Sevanna Park Recommended Reserve Funding Table and Graph Year Reserve Contributions ($) Reserve Balances ($) Year Reserve Contributions ($) Reserve Balances ($) Year Reserve Contributions ($) Reserve Balances ($) 2014 129,000 50,914 2024 143,500 322,459 2034 171,500 625,263 2015 129,000 66,363 2025 146,100 304,571 2035 174,600 730,180 2016 129,000 47,853 2026 148,700 333,303 2036 177,700 829,514 2017 129,000 141,536 2027 151,400 460,610 2037 180,900 904,295 2018 129,000 125,155 2028 154,100 425,042 2038 184,200 844,941 2019 131,300 257,791 2029 156,900 303,340 2039 187,500 1,039,012 2020 133,700 387,761 2030 159,700 341,643 2040 190,900 1,237,853 2021 136,100 464,058 2031 162,600 507,204 2041 194,300 1,296,435 2022 138,500 498,714 2032 165,500 610,935 2042 197,800 1,241,720 2023 141,000 424,342 2033 168,500 736,271 2043 201,400 1,103,595 1,500 Thousands $ 1,000 500 0 (500) 2013 2016 2019 2022 2025 Reserve Expenditures Recommended Reserve Contributions Year-End Reserve Balances 2028 Years 2031 2034 2037 2040 2043 Respectfully submitted on October 15, 2013 by RESERVE ADVISORS, INC. Alan M. Ebert, PRA 1, RS 2, Associate Director of Quality Assurance Visual Inspection and Report by: Timothy J. Matthiesen 1 PRA (Professional Reserve Analyst) is the professional designation of the Association of Professional Reserve Analysts. Learn more about APRA at http://www.apra-usa.com. 2 RS (Reserve Specialist) is the reserve provider professional designation of the Community Associations Institute (CAI) representing America's more than 300,000 condominium, cooperative and homeowners associations. Page 1.2 - Executive Summary

RESERVE STUDY REPORT At the direction of the Board that recognizes the need for proper reserve planning, we have conducted a Precision 20/20 Full Reserve Study of Sevanna Park Condominium Association Ithaca, New York and submit our findings in this report. The effective date of this study is the date of our visual, noninvasive inspection, March 27, 2013. spreadsheets: We present our findings and recommendations in the following report sections and Identification of Property - Segregates all property into several areas of responsibility for repair or replacement Reserve Expenditures - Identifies reserve components and related quantities, useful lives, remaining useful lives and future reserve expenditures during the next 30 years Reserve Funding Plan - Presents the recommended Reserve Contributions and year-end Reserve Balances for the next 30 years Condition Assessment - Describes the reserve components, documents conditions with photographs, describes our recommendations for repairs or replacement, and includes detailed solutions and procedures for replacements for the benefit of current and future board members Supplementary Information for Financial Statements - Contains significant unaudited information about existing reserves from the Reserve Components and Expenditures, and estimated current and future replacement costs Methodology - Lists the national standards, methods and procedures used, financial information relied upon for the Financial Analysis of the Reserve Study Definitions - Contains definitions of terms used in the Reserve Study, consistent with national standards Conditions of our Service - Describes Assumptions and Professional Service Conditions Credentials Resources Page 2.1 - Report

IDENTIFICATION OF PROPERTY Sevanna Park Condominium Association is a condominium style development comprised of 48 units in three three-story buildings and 65 units in 13 two-story buildings. The exteriors of the buildings comprise masonry veneer and asphalt shingle roofs. The buildings were built in 1965. The development contains asphalt pavement and concrete flatwork. We identify 30 major reserve components that are likely to require capital repair or replacement during the next 30 years. Our investigation includes Reserve Components or property elements as set forth in your Declaration. Our analysis begins by segregating the property elements into several areas of responsibility for repair and replacement. Our process of identification helps assure that future boards and the management team understand whether reserves, the operating budget or homeowners fund certain replacements and assists in preparation of the annual budget. We derive these segregated classes of property from our review of the information provided by the Association and through conversations with Representatives of the Association. These classes of property include: Reserve Components Long-Lived Property Elements Operating Budget Funded Repairs and Replacements Property Maintained by Homeowners Property Maintained by Others We advise that the Board conduct an annual review of these classes of property to confirm its policy concerning the manner of funding, i.e., from reserves or the operating budget. Page 2.2 - Report

The Reserve Study identifies Reserve Components as set forth in your Declaration or which were identified as part of your request for proposed services. Reserve Components are defined by CAI as property elements with: Sevanna Park responsibility Limited useful life expectancies Predictable remaining useful life expectancies Replacement cost above a minimum threshold Long-Lived Property Elements do not have predictable Remaining Useful Lives. The operating budget should fund infrequent repairs. Funding untimely or unexpected replacements from reserves will necessitate increases to Reserve Contributions. Periodic updates of this Reserve Study will help determine the merits of adjusting the Reserve Funding Plan. We identify the following Long-Lived Property Elements as excluded from reserve funding at this time. Foundations Pipes, Composite, Building Heat, Buildings E-G Pipes, Composite, Domestic Hot Water, Buildings E-G Pipes, Subsurface Utilities (Replaced from 2008-2013) Staircases, Metal, Buildings E-G (Replaced in 2012) Structural Frames The operating budget provides money for the repair and replacement of certain Reserve Components. Operating Budget Funded Repairs and Replacements relate to: General Maintenance to the Common Elements Expenditures less than $5,000 (These relatively minor expenditures have a limited effect on the recommended Reserve Contributions.) Asphalt Pavement, Street, Crack Repair and Patch Chimney Caps and Maintenance Doors, Common Electrical Systems, Common Expansion Tanks Fences, Wood Landscape Laundry Rooms Lower Level Water Infiltration Remediation Mailboxes, Buildings E-G Paint Finishes, Touch Up Page 2.3 - Report

Pumps Less Than Five-HP (horsepower) Signage Other Repairs normally funded through the Operating Budget Property Maintained by Homeowners relates to unit: Decks, Wood, Townhome Units Electrical Systems Heating, Ventilating and Air Conditioning (HVAC) Units Interiors Pipes, Interior Building, Buildings A-D and Townhomes, Water and Sewer Storage Units Windows and Doors Property Maintained by Others relates to: Laundry Equipment (Leased) Light Poles and Fixtures (Electric Company) Page 2.4 - Report

RESERVE EXPENDITURES and FUNDING PLAN The tables following this introduction present: Reserve Expenditures Line item numbers Total quantities replaced during the next 30 years Quantities replaced per phase (in a single year) Reserve component inventory Estimated first year of replacement Life analysis showing - useful life - remaining useful life Unit cost of replacement 2013 local cost of replacement Total future costs of replacement anticipated during the next 30 years Schedule of estimated future costs for each reserve component including inflation Reserve Funding Plan Reserves at the beginning of each year Total recommended reserve contributions Estimated interest earned from invested reserves Anticipated expenditures by year Anticipated reserves at year end Page 3.1 - Expenditures and Funding

1 of 1 Reserve Advisors, Inc. RESERVE EXPENDITURES for Explanatory Notes: Sevanna Park 1) 1.8% is the estimated future Inflation Rate for estimating Future Replacement Costs. Condominum Association 2) FY 2013 is Fiscal Year beginning November 1, 2012 and ending October 31, 2013. Ithaca, New York Quantities: Estimated Life Analysis, 2013 Cost of Total Future (See Notes 1 & 2) Line 30-Year Per 1st Year of Years Unit Percentage Replacement Costs of RUL = 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Item Total Phase Units Reserve Component Inventory Replacement Useful Remaining Cost, $ Ownership per Phase, $ Replacement, $ FY2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 ----------- ------------ -------------- -------------------- ------------------------------------------------------------------------------------------------------- -------------------- ------------ ---------------- ---------------- ------------------ -------------------- ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Exterior Building Elements 1.105 220 44 Each Balconies, Railings, Buildings A-D and Townhomes, Paint Finishes 2014 6 to 8 1 120.00 100% 5,280 34,900 5,375 5,982 7,024 1.106 44 22 Each Balconies, Railings, Buildings A-D and Townhomes, Replacement, Phased 2023 to 40 10 650.00 100% 14,300 34,493 17,093 17,400 1.107 44 22 Each Balconies, Refurbishment, Buildings A-D and Townhomes, Phased 2023 to 25 10 1,100.00 100% 24,200 58,373 28,926 29,447 1.120 72 12 Each Balconies, Wood, Buildings E-G, Phased 2014 20 to 25 1 3,300.00 100% 39,600 305,437 40,313 41,038 41,777 1.240 12,400 3,100 Linear Feet Gutters and Downspouts, Phased 2023 15 to 20 10 10.00 100% 31,000 179,721 37,054 37,721 1.260 150 150 Each Light Fixtures 2025 to 25 12 100.00 100% 15,000 18,581 18,581 1.280 840 210 Squares Roofs, Asphalt Shingles, Phased 2023 15 to 20 10 400.00 100% 84,000 486,989 100,405 102,213 1.560 400 200 Pairs Shutters 2016 to 20 3 100.00 100% 20,000 50,189 21,100 1.700 11,520 5,760 Square Feet Soffit and Fascia, Aluminum, Phased 2023 to 40 10 5.10 100% 29,376 70,858 35,113 35,745 1.820 248,000 62,000 Square Feet Walls, Masonry, Inspections and Partial Repointing 2016 8 to 12 3 1.30 100% 80,600 439,750 85,031 99,841 1.940 6 1 Allowance Walls, Wood Siding, Paint Finishes (Includes Window Frames) 2017 4 to 6 4 33,500.00 100% 33,500 273,656 35,978 38,639 44,567 47,863 1.945 3,300 3,300 Square Feet Walls, Wood Siding, Replacement 2025 to 40 12 9.50 100% 31,350 38,834 38,834 1.980 180 180 Square Feet Windows and Doors, Office 2025 to 40 12 40.00 100% 7,200 8,919 8,919 Interior Building Elements 2.100 2 1 Allowance Office, Interior Renovations 2018 to 20 5 16,000.00 100% 16,000 41,610 17,493 Building Services Elements 3.160 3 3 Each Boilers, 214-MBH 2028 15 to 20 15 18,500.00 100% 55,500 72,529 72,529 3.161 4 4 Each Boilers, 333-MBH 2028 15 to 20 15 23,000.00 100% 92,000 120,228 120,228 3.420 128 16 Each Furnaces, Phased 2014 15 to 20 1 1,300.00 100% 20,800 220,374 21,174 22,741 24,423 26,229 28,169 3.940 128 16 Each Water Heaters, Phased 2014 12 to 18 1 1,250.00 100% 20,000 211,897 20,360 21,866 23,483 25,220 27,086 Property Site Elements 4.020 83,700 9,300 Square Yards Asphalt Pavement, Parking Areas, Crack Repair, Patch and Seal Coat 2015 3 to 5 2 2.25 100% 20,925 248,541 21,685 22,877 24,135 25,462 26,862 29,368 4.040 9,300 9,300 Square Yards Asphalt Pavement, Parking Areas, Mill and Overlay 2029 15 to 20 16 15.00 100% 139,500 185,583 185,583 4.041 6,550 6,550 Square Yards Asphalt Pavement, Parking Areas, Total Replacement, Remaining 2014 15 to 20 1 29.00 100% 189,950 193,369 193,369 4.042 2,920 2,920 Square Yards Asphalt Pavement, Street, Mill and Overlay 2032 15 to 20 19 15.00 50% 21,900 30,736 30,736 4.043 2,920 2,920 Square Yards Asphalt Pavement, Street, Total Replacement 2015 15 to 20 2 29.00 50% 42,340 43,878 43,878 4.100 9 9 Each Catch Basins, Inspections and Capital Repairs 2029 15 to 20 16 1,000.00 100% 9,000 11,973 11,973 4.110 3,700 925 Linear Feet Concrete Curbs, Parking Areas, Phased 2014 to 65 1 26.00 100% 24,050 131,721 24,483 31,995 4.111 915 305 Linear Feet Concrete Curbs, Street, Phased 2015 to 65 2 26.00 50% 3,965 16,208 4,109 5,565 4.130 12 4 Each Concrete Patios, Buildings E-G, Phased 2018 to 65 5 1,400.00 100% 5,600 21,329 6,122 7,062 4.131 49 7 Each Concrete Patios and Stoops, Townhomes, Remaining, Phased 2014 to 65 1 3,900.00 100% 27,300 243,442 27,791 29,847 32,055 34,426 36,972 4.140 20,300 2,900 Square Feet Concrete Sidewalks, Phased 2014 to 65 1 8.00 100% 23,200 206,884 23,618 25,365 27,241 29,256 31,420 4.170 12 4 Each Concrete Steps, Buildings A-D, Partial 2014 to 65 1 2,000.00 100% 8,000 34,302 8,144 1 1 Allowance 2013 Reserve Expenditures 2013 n/a 0 59,887.00 100% 59,887 59,887 59,887 1 Allowance Reserve Study Update with Site Visit 2015 2 2 3,250.00 3,250 3,250 3,250 ------------------------------------------------------------------------------------------------------- -------------------- ------------ ---------------- ---------------- ------------------ -------------------- ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Anticipated Expenditures, By Year $4,098,441 59,887 364,627 113,960 147,908 35,978 146,311 0 5,982 62,774 107,202 218,591 247,988 166,175 122,193 26,862 192,757 281,142 123,647 0 65,669 47,863 Expenditures and Funding - Page 3.2 Printed 10/15/2013

1 of 1 Reserve Advisors, Inc. RESERVE EXPENDITURES for Sevanna Park Condominum Association Ithaca, New York Line 21 22 23 24 25 26 27 28 29 30 Item Reserve Component Inventory 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 ---------- ----------------------------------------------------------------------------------------------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- ---------------- Exterior Building Elements 1.105 Balconies, Railings, Buildings A-D and Townhomes, Paint Finishes 7,818 8,701 1.106 Balconies, Railings, Buildings A-D and Townhomes, Replacement, Phased 1.107 Balconies, Refurbishment, Buildings A-D and Townhomes, Phased 1.120 Balconies, Wood, Buildings E-G, Phased 59,689 60,763 61,857 1.240 Gutters and Downspouts, Phased 52,005 52,941 1.260 Light Fixtures 1.280 Roofs, Asphalt Shingles, Phased 140,917 143,454 1.560 Shutters 29,089 1.700 Soffit and Fascia, Aluminum, Phased 1.820 Walls, Masonry, Inspections and Partial Repointing 117,230 137,648 1.940 Walls, Wood Siding, Paint Finishes (Includes Window Frames) 51,403 55,206 1.945 Walls, Wood Siding, Replacement 1.980 Windows and Doors, Office Interior Building Elements 2.100 Office, Interior Renovations 24,117 Building Services Elements 3.160 Boilers, 214-MBH 3.161 Boilers, 333-MBH 3.420 Furnaces, Phased 30,253 32,491 34,894 3.940 Water Heaters, Phased 29,089 31,241 33,552 Property Site Elements 4.020 Asphalt Pavement, Parking Areas, Crack Repair, Patch and Seal Coat 30,983 32,686 34,483 4.040 Asphalt Pavement, Parking Areas, Mill and Overlay 4.041 Asphalt Pavement, Parking Areas, Total Replacement, Remaining 4.042 Asphalt Pavement, Street, Mill and Overlay 4.043 Asphalt Pavement, Street, Total Replacement 4.100 Catch Basins, Inspections and Capital Repairs 4.110 Concrete Curbs, Parking Areas, Phased 35,610 39,633 4.111 Concrete Curbs, Street, Phased 6,534 4.130 Concrete Patios, Buildings E-G, Phased 8,145 4.131 Concrete Patios and Stoops, Townhomes, Remaining, Phased 39,707 42,644 4.140 Concrete Sidewalks, Phased 33,744 36,240 4.170 Concrete Steps, Buildings A-D, Partial 12,496 13,662 2013 Reserve Expenditures Reserve Study Update with Site Visit ----------------------------------------------------------------------------------------------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- ---------------- Anticipated Expenditures, By Year 287,257 74,411 83,806 112,166 249,655 0 0 144,557 261,368 347,705 Expenditures and Funding - Page 3.3 Printed 10/15/2013

Reserve Advisors, Inc. 1 of 1 RESERVE FUNDING PLAN CASH FLOW ANALYSIS Sevanna Park Condominum Association Individual Reserve Budgets & Cash Flows for the Next 30 Years Ithaca, New York FY2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Reserves at Beginning of Year (Note 1) 225,597 285,368 50,914 66,363 47,853 141,536 125,155 257,791 387,761 464,058 498,714 424,342 322,459 304,571 333,303 460,610 Total Recommended Reserve Contributions (Note 2) 118,617 129,000 129,000 129,000 129,000 129,000 131,300 133,700 136,100 138,500 141,000 143,500 146,100 148,700 151,400 154,100 Plus Estimated Interest Earned, During Year (Note 3) 1,041 1,173 409 398 661 930 1,336 2,252 2,971 3,358 3,219 2,605 2,187 2,225 2,769 3,089 Less Anticipated Expenditures, By Year (59,887) (364,627) (113,960) (147,908) (35,978) (146,311) 0 (5,982) (62,774) (107,202) (218,591) (247,988) (166,175) (122,193) (26,862) (192,757) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Anticipated Reserves at Year End $285,368 50,914 66,363 47,853 141,536 125,155 257,791 387,761 464,058 498,714 424,342 322,459 304,571 333,303 460,610 425,042 (NOTE 5) (continued) Individual Reserve Budgets & Cash Flows for the Next 30 Years, Continued 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Reserves at Beginning of Year 425,042 303,340 341,643 507,204 610,935 736,271 625,263 730,180 829,514 904,295 844,941 1,039,012 1,237,853 1,296,435 1,241,720 Total Recommended Reserve Contributions 156,900 159,700 162,600 165,500 168,500 171,500 174,600 177,700 180,900 184,200 187,500 190,900 194,300 197,800 201,400 Plus Estimated Interest Earned, During Year 2,540 2,250 2,961 3,900 4,699 4,749 4,728 5,440 6,047 6,101 6,571 7,941 8,839 8,853 8,180 Less Anticipated Expenditures, By Year (281,142) (123,647) 0 (65,669) (47,863) (287,257) (74,411) (83,806) (112,166) (249,655) 0 0 (144,557) (261,368) (347,705) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Anticipated Reserves at Year End 303,340 341,643 507,204 610,935 736,271 625,263 730,180 829,514 904,295 844,941 1,039,012 1,237,853 1,296,435 1,241,720 1,103,595 (NOTE 5) (NOTE 4) Explanatory Notes: 1) Year 2013 reserves are as of March 31, 2013; FY 2013 starts November 1, 2012 and ends October 31, 2013. 2) Reserve Contributions for 2013 are the remaining budgeted 7 months; 2014 is the first year of recommended contributions. 3) 0.7% is the estimated annual rate of return on invested reserves; 2013 is a partial year of interest earned. 4) Accumulated year 2043 ending reserves consider the need to fund for replacement of the asphalt pavement shortly after 2043, and the age, size, overall condition and complexity of the property. 5) Threshold Funding Year (reserve balance at critical point). Expenditures and Funding - Page 3.4 Printed 10/15/2013

CONDITION ASSESSMENT The Condition Assessment of this Precision 20/20 Full Reserve Study includes Enhanced Solutions and Procedures (ESP) for select significant components. These narratives describe the Reserve Components, document specific problems and conditions, and may include detailed solutions and procedures for necessary capital repairs and replacements for the benefit of current and future board members. We advise the Board use this information to help define the scope and procedures for repair or replacement when soliciting bids or proposals from contractors. However, the Report in whole or part is not and should not be used as a design specification or design engineering service. Exterior Building Elements Balconies, Railings - The Association maintains approximately 530 linear feet of metal railings at the 44 balconies at Buildings A through D and the townhome units. The railings are in fair overall condition at an unknown age. The railings exhibit instances of rust throughout. Railings of this type have a useful life of up to 40 years with the benefit of periodic maintenance. Periodic maintenance should include applications of a protective paint finish and partial replacement of deteriorated railing sections every six- to eight-years. Periodic applications of paint to the metal will maximize its useful life. Preparation of the metal before application of the paint finish is important. The painting contractor should remove all soil, dirt, oil, grease and other foreign materials before application of the paint finish to maximize its useful life. The contractor should also remove paint blisters and rust prior to the paint finish application. We recommend the use of a power wire brush, scraper and/or sander as effective means of removal. The Association should require the application of a primer on bare Page 4.1 - Condition Assessment

metal. The primer for metal surfaces should include a rust inhibitor for added protection. We recommend the Association budget for paint applications to the railings in 2014 and every six years thereafter with a timing adjustment when replacement occurs. We anticipate replacement of the railings beginning by 2023 and concluding by 2024. We depict this information on Line Items 1.105 and 1.106 of Reserve Expenditures. Balconies, Refurbishment - Sevanna Park maintains the 44 cantilever balconies at Buildings A through D and the townhomes. The balconies are in fair condition at unknown ages. The Board informs us the balconies comprise a metal structure. We were unable to verify the exact components due to the nature of our non-invasive inspection. However, based on our knowledge of similar building components, we recommend the Association conduct a refurbishing of the balconies every 25 years. Refurbishment should include the following: Replacement of the rubber membrane floor coverings Replacement of the aluminum cladding and soffit Repairs and replacement to the underlying structure as needed We recommend the Association budget for a phased refurbishing beginning by 2023 and concluding by 2024, coordinated with aluminum soffit and fascia replacements. We depict this information on Line Item 1.107 of Reserve Expenditures. Balconies, Wood - The Association maintains 36 cantilever wood balconies which comprise a total of approximately 3,020 square feet. The balconies are in fair to poor overall condition at unknown ages. The balconies exhibit partial replacements of structural members and deck boards throughout. Balcony construction includes the following: Page 4.2 - Condition Assessment

Wood deck boards with screw fasteners. Wood railings with plywood panels Cantilevered wood frame construction Wood frames with screw fasteners Wood balcony materials treated with a protective finish have useful lives of 15- to 25-years with proper maintenance. Proper maintenance should include the following activities funded through the operating budget: Annual inspections to identify and correct any unsafe conditions Securing of loose fasteners and replacement of deteriorated fasteners Replacement of deteriorated wood components Power washing with an algaecide and application of a sealer/stain The rates and types of deterioration are not uniform due to the nature of wood. Replacement is normally an ongoing process which eventually leads to a complete replacement for economic or aesthetic reasons. We recommend the Association anticipate a phased replacement of the balcony elements noted above beginning in 2014 and concluding by 2026. A subsequent phased replacement is likely beginning by 2036 and concluding by 2038. We depict this information on Line Item 1.120 of Reserve Expenditures. We include paint applications on a separate line item, please see Wood Siding, Paint Finishes for our recommendation on paint finish applications. Gutters and Downspouts, Aluminum - Approximately 6,200 linear feet of aluminum gutters and downspouts drain storm water from the roofs of Sevanna Park. This quantity includes the office. We note the gutters and downspouts at Buildings E through G have a larger capacity than the gutters and downspouts at Buildings A through D and the townhomes. These gutters and downspouts are in good to fair overall condition at ages of up to eight years. The gutters and downspouts exhibit leakage at seams. We include the following solutions and Page 4.3 - Condition Assessment

procedures for gutter and downspout maintenance and replacements for present and future board members. The most common and economical type of gutter profile is the metal roll-formed seamless K-style. The five-inch wide K-style gutter is standard but six-inch wide K-style gutters should be used on larger roofs. The size of the gutter is determined by the roof's watershed area, a roof pitch factor and the rainfall intensity number of the Association's region. We recommend sloping gutters 1/16 inch per linear foot and providing fasteners a maximum of every three feet. Downspouts can drain 100 square feet of roof area per one square inch of downspout cross sectional area. Downspouts should be of the same material as the gutters. We recommend the use of downspout extensions and splash blocks at the downspout discharge to direct storm water away from the foundations. Downspouts that discharge directly onto roofs cause premature deterioration of the roofs due to the high concentration of storm water. We recommend either routing these downspouts directly to the ground, connecting the downspouts to the gutters of the lower roof or distributing the storm water discharge over a large area. Maintenance of the gutters and downspouts should include semiannual inspections, repairs at seams and fastening points, verification that the downspouts discharge away from foundations and cleaning. More frequent maintenance may be required for gutters and downspouts in areas of concentrated landscape growth. The Association should fund these expenses through the operating budget. A lack of maintenance resulting in misdirected storm water will result in deterioration of soffits, fascia, siding, foundations, and the gutters and downspouts themselves. Page 4.4 - Condition Assessment

The useful life of gutters and downspouts coincides with that of the asphalt shingle roofs. Therefore, we recommend the Association budget for the phased replacement of the gutters and downspouts in conjunction with the phased roof replacements beginning by 2023 and concluding by 2024. This will result in the most economical unit price and minimize the possibility of damage to other roof components as compared to separate replacements. A subsequent phased replacement is likely beginning by 2042 and concluding by 2043. We depict this information on Line Item 1.240 of Reserve Expenditures. Light Fixtures - Sevanna Park maintains approximately 150 exterior wall and soffit mounted light fixtures to accent the front and rear entries. The light fixtures are in good to fair overall condition. The useful life of exterior light fixtures of this type and quality is up to 25 years. Based on the condition of the light fixtures, we recommend that the Association plan for replacement by 2025. The Association should aggregate the replacement of the light fixtures to ensure their availability and to maintain aesthetic continuity throughout the community. We include this information on Line Item 1.260 of Reserve Expenditures. Roofs, Asphalt Shingles - Approximately 420 squares 1 of asphalt shingles comprise the roofs of Sevanna Park. This quantity includes the office. The roofs are in good overall condition at ages of up to eight years. The roofs exhibit minor shingle lift and shingle warp throughout the community and our inspection notes minor roof deflection at Buildings E through G. Pages 5.6 through 5.9 of Photographs depict these conditions. The existing roof assembly comprises the following: 1 We quantify the roof area in squares where one square is equal to 100 square feet of surface area. Page 4.5 - Condition Assessment

Laminate shingle Boston style ridge caps Rubber boot flashing at the waste pipes Soffit vents, gable vents and square hood box vents Lack metal drip edges The useful life of asphalt shingle roofs in Ithaca is from 15- to 20-years. We include the following solutions and procedures pertaining to the components of an asphalt shingle roof system, times of replacement, recommended method of replacement, and coordination of other related work for the benefit of present and future board members. Insulation and ventilation are two major components of a sloped roof system. Together, proper insulation and ventilation help to control attic moisture and maintain an energy efficient building. Both insulation and ventilation prevent moisture buildup which can cause wood rot, mold and mildew growth, warp sheathing, deteriorate shingles, and eventually damage building interiors. Sufficient insulation helps to minimize the quantity of moisture that enters the attic spaces and adequate ventilation helps to remove any moisture that enters the attic spaces. These two roof system components also help to reduce the amount of energy that is required to heat and cool a building. Proper attic insulation minimizes heat gain and heat loss between the residential living spaces and attic spaces. This reduces energy consumption year-round. Proper attic ventilation removes excessive heat from attic spaces that can radiate into residential living spaces and cause air conditioners to work harder. Properly installed attic insulation and ventilation work together to maximize the useful life of sloped roof systems. In addition to moisture control and energy conservation, proper attic insulation and ventilation are essential components to prevent the formation of ice dams. Ice dams occur when Page 4.6 - Condition Assessment

warm air accumulates at the peak of an attic while the roof eaves remain cold. Warm air from the attic melts the snow at the ridge of the roof and the water runs down the slope of the roof. At the cold roof eaves, the water refreezes and forms a buildup of snow and ice. This buildup often traps water that can prematurely deteriorate asphalt shingles and ultimately seep under the shingles and cause water damage to the roof deck and building interiors. Proper insulation minimizes the amount of heat that enters attic spaces in the winter and adequate ventilation helps to remove any heat that enters the attic spaces. Together, these components prevent ice dams with a cold roof deck that melts snow and ice evenly. The Association should periodically ensure that the vents are clear of debris and are not blocked from above by attic insulation. If the soffit vents are blocked from above, the Association should install polystyrene vent spaces or baffles between the roof joists at these locations to ensure proper ventilation. Sevanna Park should fund this ongoing maintenance through the operating budget. Certain characteristics of condition govern the times of replacement. Replacement of an asphalt shingle roof becomes necessary when there are multiple or recurring leaks and when the shingles begin to cup, curl and lift. These conditions are indications that the asphalt shingle roof is near the end of its useful life. Even if the shingles are largely watertight, the infiltration of water in one area can lead to permanent damage to the underlying roof sheathing. This type of deterioration requires replacement of saturated sections of sheathing and greatly increases the cost of roof replacement. Roof leaks may occur from interrelated roof system components, i.e., flashings. Therefore, the warranty period, if any, on the asphalt shingles, may exceed the useful life of the roof system. Page 4.7 - Condition Assessment

Warranties are an indication of product quality and are not a product guarantee. Asphalt shingle product warranties vary from 20-to 50-years and beyond. However, the scope is usually limited to only the material cost of the shingles as caused by manufacturing defects. Warranties may cover defects such as thermal splitting, granule loss, cupping, and curling. Labor cost is rarely included in the remedy so if roof materials fail, the labor to tear off and install new shingles is extra. Other limitations of warranties are exclusions for "incidental and consequential" damages resulting from age, hurricanes, hail storms, ice dams, severe winds, tornadoes, earthquakes, etc. There are some warranties which offer no dollar limit for replacement at an additional cost (effectively an insurance policy) but again these warranties also have limits and may not cover all damages other than a product defect. We recommend a review of the manufacturers warranties as part of the evaluation of competing proposals to replace a roof system. This evaluation should identify the current costs of remedy if the roof were to fail in the near term future. A comparison of the costs of remedy to the total replacement cost will assist in judging the merits of the warranties. Our estimate of remaining useful life considers this possibility and the Association should anticipate the need for capital repairs to the shingles and other roof system components to achieve or maximize the remaining useful life of the roofs. The Association should fund ongoing roof repairs as normal maintenance from the operating budget. Contractors use one of two methods of replacement for sloped roofs, either an overlayment or a tear-off. Overlayment is the application of new shingles over an existing roof. Although this method is initially more economical, the following disadvantages exist for this type of replacement: Page 4.8 - Condition Assessment

1. Overlaid shingles hide condition defects of the roof system and do not allow for replacement of critical flashings, underlayments and ventilation. 2. Additional layers of shingles absorb and store more heat resulting in premature deterioration of the new shingles and continued deterioration of the underlying shingles and other roof system components. 3. New shingles installed over deteriorated shingles may result in an uneven appearance. The above disadvantages result in a shorter useful life of 10- to 15-years for overlaid roofs. This shortened useful life and the inevitable eventual replacement of both shingle layers will actually result in increased long-term replacement costs. The costs of an eventual total replacement are deferred onto future homeowners thereby conflicting with the purpose of a reserve study to ensure that homeowners pay their fair share of the weathering and aging of this commonly owned property. Therefore, we recommend only the tear-off method of replacement. The advantages of the tear-off method include the correction of hidden or latent defects and extend the useful life of the new roof. The tear-off method of replacement includes removal of the existing shingles, flashings if required and underlayments. The contractor should then inspect the roof sheathing for areas of water damage and partially replace the sheathing as needed. Once the roof sheathing is repaired, the contractor can begin installation of the new underlayments, flashings and shingles. The following cross-sectional schematic illustrates an asphalt shingle roof system. Page 4.9 - Condition Assessment

The two types of underlayment most often used in an asphalt shingle roof system are ice and water shield membrane, and organic felt paper of varying weights depending on local building codes. Both types of underlayment protect the roof sheathing from moisture damage and wind-driven ice and snow. They have a low vapor resistance that impedes the accumulation of moisture between the underlayment and the roof sheathing. Ice and water shield membrane is thicker than organic paper and is used in areas that are subject to ice dams and standing water. The contractor should install ice and water shield membranes (often a modified bitumen product) at the outer 36 inches of the gutter and rake edge roof eaves, and in the roof valleys. Standard 15-pound organic felt paper should provide sufficient protection over the remaining portions of the roof. Underlayments work in conjunction with flashings to form a watertight roof system. Page 4.10 - Condition Assessment

The function of flashing is to provide a watertight junction between the roofing material and the other parts of the structure and between roof sections. Flashing material is usually galvanized metal, although some roofs use copper or synthetic rubber. The Association should require the contractor to augment existing flashings or replace deteriorated flashings at the time of roof replacement at the following locations: Changes in the slope Valleys Roof intersections with a wall, vertical structure, roof penetration, i.e., vent stacks Rakes (sloped edges of the roof) and soffits (lower roof edges) Another critical type of flashing is drip edge flashing. This important flashing sheds water off the edges of the roofs. The drip edge flashing allows storm water to run off the roof into the gutters without coming into contact with the underlayment and eave board. The special profile of a metal drip edge also prevents or minimizes the possibility of rain water blowing back under the shingles. The contractor should install this flashing at the gutter edge before the installation of underlayment and at the rake edge after the installation of underlayment. Asphalt shingles include both fiberglass shingles and organic mat shingles. Both shingle types are made with asphalt. Fiberglass shingles use a fiberglass reinforcing mat while organic shingles use a wood based cellulose fiber mat. Fiberglass shingles are thinner, lighter and carry a better fire rating than organic shingles. Organic mat shingles are more durable and stay more flexible in cold weather. The contractor should install the shingles atop the underlayment and in conjunction with flashing. Based on a better fire rating, we suggest Sevanna Park use a standard strip, fiberglass, Class A, minimum weight class of 210 pounds per square self-sealing shingle at the time of replacement. The self-sealing strip affixes to the lower exposed edges of the shingles. Heat from ambient weather and sunlight activates the shingle adhesive material and seals the two Page 4.11 - Condition Assessment

adjacent courses of shingles together. Contractor proposals should specify the types of proposed materials and types of proposed fasteners. The Association should require the use of nail fasteners, not staples, at the time of replacement. Nail guns are acceptable. Staples are of lesser quality and might not withstand wind forces as well as nails. The Association should plan to coordinate the replacement of gutters and downspouts with the adjacent roofs. This will result in the most economical unit price and minimize the possibility of damage to other roof components as compared to separate replacements. Based on their age and condition, we recommend that Sevanna Park plan to replace the roofs beginning by 2023 and concluding by 2024. A subsequent phased replacement is likely beginning by 2042 and concluding by 2043. We note this information on Line Item 1.280 of Reserve Expenditures. The Association should fund any repairs prior to the complete replacement of the roofs through the operating budget. Shutters - The exteriors of the buildings contain approximately 200 pairs of decorative plastic shutters. These shutters are original and in fair overall condition. As plastic shutters age, their color fades and they become brittle, making them increasingly susceptible to damage from wind. Sevanna Park should anticipate a useful life of up to 20 years for these exterior building components. We recommend the Association budget for their replacement by 2016 and again by 2034. We depict this information on Line Item 1.560 of Reserve Expenditures. Page 4.12 - Condition Assessment

Soffit and Fascia - Sevanna Park maintains approximately 11,520 square feet of aluminum soffit and fascia at the buildings. This quantity includes the office. The soffit and fascia is in good to fair condition at an unknown age. The soffit and fascia exhibits isolated instances of deflection, damage and rust. These elements have a useful life of up to 40 years. We recommend the Association budget for a phased replacement of the aluminum soffit and fascia, coordinated with the phased roof replacement beginning by 2023 and concluding by 2024. We depict this information on Line Item 1.700 of Reserve Expenditures. Walls, Masonry - Sevanna Park maintains approximately 62,000 square feet of brick masonry at the buildings. This quantity includes the office. This masonry is in good to fair overall condition. The masonry exhibits isolated mortar and masonry cracks. We note severe instances of efflorescence and spalling near the front entrance steps at Buildings A-D. Our inspection also notes masonry stains and deterioration throughout the community, particularly at areas adjacent to gutter leaks. Pages 5.10 through 5.12 of Photographs depict these conditions. Masonry generally requires less maintenance than other types of exterior elements. However, masonry is not maintenance free. Sevanna Park should plan for the periodic inspection of the masonry to identify and repair areas of deterioration. Common types of masonry deterioration include efflorescence, spalling and cracking. Repointing is a process of raking and cutting out defective mortar to a depth of not less than ½ inch nor more than ¾ inch and replacing it with new mortar. We advise a complete inspection of the masonry walls, and partial repointing with related masonry repairs every 8- to Page 4.13 - Condition Assessment

12- years to forestall deterioration. We suggest that the Association budget for repointing of up to five percent (5%) and replacement of up to (1%) by 2016 and every nine years thereafter. We depict this information on Line Item 1.820 of Reserve Expenditures. Walls, Wood Siding, Paint Finishes - The buildings include paint finish applications on the wood siding, wood window frames and wood balconies and railings. Periodic application of a protective finish of paint or stain is an essential maintenance activity to maintain the physical appearance and integrity of these elements. The finish at the wood components throughout the community is in poor overall condition. Our inspection notes paint finish deterioration throughout and severe instances of window frame deterioration. The Board is likely familiar with many of the requirements for the periodic application of paint 2 products. We include the following solutions and procedures as a summary of the minimum requirements for a successful paint finish application for present and future board members. Correct and complete preparation of the surface before application of the paint finish maximizes the useful life of the paint finish and surface. The contractor should remove all loose, peeled or blistered paint before application of the new paint finish. The contractor should then power wash the surface to remove all dirt or chalking of the prior paint finish. 2 The term paint is a generic reference to a specialized mixture of solid pigment in a liquid solution that results in a clear, opaque or solid color protective finish. Product types are too numerous to list but include latex, oil, acrylic and elastomeric based products. Page 4.14 - Condition Assessment

Summarizing the minimum requirements of the proposed scope of work, all bids should include the following: 1) Name of paint finish product 2) The contractor will involve manufacturer representatives to ensure specifications and warranty 3) The contractor will apply the paint to clean and dry surfaces at the manufacturer's recommended spreading rates 4) The contractor will apply successive coats of the paint finish, with sufficient time elapse between coats, as necessary to ensure uniform appearance 5) The contractor will replace deteriorated or damaged materials prior to the application of the paint finish 6) The contractor will replace deteriorated sealants or caulk prior to the application of the paint finish The useful life of protective paint finishes in Ithaca is from four- to six-years. The Board informs us the Association has budgeted to paint the wood components in 2013. We recommend the Association apply subsequent paint applications every four- to six years thereafter and budget for the following activities by 2017: Paint finish applications Replacement of 165 square feet, or up to five percent (5%), of the wood siding and trim (The exact amount of material in need of replacement will depend on the actual future conditions and desired appearance. We recommend replacement wherever holes, cracks and deterioration impair the ability of the material to prevent water infiltration.) Replacement of sealants as needed Sevanna Park should budget subsequent applications and associated replacements every four years thereafter, except when replacement occurs. We depict this information on Line Item 1.940 of Reserve Expenditures. Walls, Wood Siding, Replacement - Natural wood siding comprises approximately 3,300 square feet of the exterior walls. This quantity includes the office. The siding is in good to Page 4.15 - Condition Assessment

fair overall condition at an unknown age and exhibits cracks, isolated rot and paint finish deterioration. Wood siding is not watertight and is especially prone to water penetration at joints and knots. Therefore, wood siding should be installed over a continuous weather resistant barrier. The weather resistant barrier should include water-vapor permeable building paper and properly integrated flashing around all penetrations. the following: Naturally occurring defects in lumber as a result of growth patterns or lumber cut include Bow - ends of board move towards each other and form a rocking chair Case Harden Crack - lumber is dried too fast creating internal stresses noted by cracks in the surface Crook - board warps from side to side, or sags Cup - parallel edges of the board move towards each other, or forms the letter "C" Heart Pith - soft, spongey tissue at the center of a tree Knot - location of branch growth Twist - ends of board rotate in opposite directions Wane - absence of material at board edge due to lumber cut Isolated occurrences of these defects is normal in lumber. However, an inordinate occurrence of these defects indicates a low lumber grade. Low lumber grades have a shorter useful life than high lumber grades. Deterioration of the siding as a result of weathering and aging includes cracks, warp and rot. We base the remaining useful life of the siding on the amount of existing deterioration. Lumber is either air-dried or kiln-dried. The moisture content of lumber used for siding should be less than eighteen percent (18%) of the total board weight. If primer and paint is Page 4.16 - Condition Assessment

applied to siding that exceeds this percentage, the paint will trap moisture inside the board and it may rot from the inside out or the paint finish may not properly adhere to the wood. For purposes of this Reserve Study, we assume replacement of the wood siding in like kind. However, we recommend that Sevanna Park consider fiber cement siding as a replacement material. Fiber cement siding is made from a combination of cement, sand and cellulose fiber. A wood grain imprint is typically applied to the exposed surface. This type of siding requires less frequent paint applications and has a longer useful life. Vinyl siding products are also acceptable alternatives. Replacement with vinyl siding eliminates the need for paint applications. Based on the condition, type, occurrence of defects and history of maintenance, Sevanna Park should anticipate a useful life of up to 40 years. This useful life is dependent upon paint applications and partial replacements of deteriorated siding every four- to six-years. See Walls, Wood Siding, Paint Finishes for our recommendations on these applications. We recommend the Association conduct a replacement of the wood siding by 2025. We depict this information on Line Item 1.945 of Reserve Expenditures. Windows and Doors, Office - The office windows and doors comprise approximately 180 square feet and are in good to fair overall condition. The useful life of windows and exterior doors of this type is up to 40 years. The useful life of the windows and doors is based on the occurrence of water infiltration, thermal inefficiencies compared to present technology, type of frame, availability of replacement parts and aesthetics. Based on these factors, we recommend Page 4.17 - Condition Assessment

the Association anticipate replacement of these windows and doors by 2025. We depict this information on Line Item 1.980 of Reserve Expenditures. Interior Building Elements Office, Interior Renovations - The office interior comprises approximately 1,500 square feet of finished area. Interior components of the office include: Approximately 160 square yards of carpet floor coverings Approximately 1,000 square feet of wood panel wall coverings Paint finishes on the walls and ceilings Plumbing Fixtures Light fixtures including exit and emergency lights Various furnishings including tables, chairs and desks The office interior elements are in fair overall condition at unknown ages. The useful lives of these interior building elements vary. However, due to interrelated nature of these elements and the desire to achieve a uniform appearance, we recommend the Association combine their replacements into coordinated interior renovations. We recommend the Association anticipate complete interior renovations every 20 years. These complete renovations should include replacement of all the interior components listed above. Based on the visual condition of these interior office elements, we recommend the Association budget for a coordinated office interior renovation by 2018 and 2036. We note this information on Line Item 2.100 of Reserve Expenditures. Building Services Elements Boilers - The Association utilizes seven Buderus gas-fired boilers to provide heat and domestic hot water to Buildings E through G. Four boilers have an input capacity of 333-MBH (thousand British Thermal Units per hour) and have an efficiency of eighty-eight percent (88%). Page 4.18 - Condition Assessment

The remaining three boilers have an input capacity of 214-MBH each and have an efficiency of eighty-nine percent (88.7%). The boilers are in good operational condition at ages of up to four years. The useful life of boilers of this capacity is from 15- to 20-years. The lack of replacement parts, increased efficiencies of new units and corrosion of the exterior shell will eventually justify complete replacement of the boilers. Based on the age and reported operational condition, we recommend the Association budget for replacement by 2028. Our cost on Line Item 3.160 and 3.161 of Reserve Expenditures includes an allowance for replacement of the heat exchanger and controls. The Association should fund replacement of expansion tanks, valves and circulation pumps less than five-hp through the operating budget as needed. Furnaces - Sixty gas-fired forced air furnaces supply heat to the units at Buildings A through D, the townhomes and the office. The furnaces are in good to fair overall operational condition at varied ages of up to 25 years. The useful life of furnaces of this capacity and use is from 15- to 20-years with periodic and normal maintenance. Failure of all the furnaces as a single event is unlikely. Therefore, we recommend the Association anticipate the phased replacement of up to 16 furnace units in 2014 and every four years thereafter. We note this information on Line Item 3.420 of Reserve Expenditures. Water Heaters - Sevanna Park utilizes 60 gas-fired water heaters to produce domestic hot water for Buildings A through D, the townhomes and the office. The water heaters have a capacity of 40-gallons each. The water heaters are in good to fair operational condition at varied ages of up to 25 years. The useful life of the water heaters of this capacity is from 12- to 18-years. The useful life is dependent on use, demand per unit and the quality of water. We Page 4.19 - Condition Assessment

recommend the Association anticipate the phased replacement of up to 16 water heaters in 2014 and every four years thereafter. We depict this information on Line Item 3.940 of Reserve Expenditures. Property Site Elements Asphalt Pavement, Crack Repair, Patch and Seal Coat - Asphalt pavement comprises 9,300 square yards of parking areas throughout the community. Additionally, Sevanna Park is responsible for fifty percent (50%) of the 2,920 square yards of street pavement that is shared with the neighboring community. The Board informs us that approximately 2,750 square yards of asphalt pavement located by Buildings C, D and G was replaced from 2010 to 2011. This pavement is in good overall condition and exhibits isolated instances of vehicle fluid stains. The remaining parking area pavement is in poor overall condition. This pavement exhibits significant pavement deterioration throughout. We note potholes and large expanses of significantly cracked pavement with the most severe deterioration occurring south of Building A and north of Building D. The street pavement is in fair to poor overall condition and exhibits severe deterioration throughout. To maximize the life of the pavement, the Association should plan for seal coat applications and repairs every three- to five-years. We elaborate on solutions and procedures necessary for the optimal maintenance of asphalt pavement in the following discussion. We recommend periodic seal coat applications, crack repairs and patching to maintain the pavement. Seal coat applications, crack repairs and patching minimize the damaging effects Page 4.20 - Condition Assessment

of vehicle fluids, maintain a uniform and positive appearance, and maximize the useful life of the pavement. Asphalt pavement is susceptible to isolated areas of accelerated deterioration in areas that experience freeze-thaw cycles, at the centerlines of streets and at high traffic areas such as intersections. Depressions often appear at areas where vehicles park such as driveways and parking areas. Isolated areas of depressions, cracks and deterioration indicate the need for crack repairs and area patches. The contractor should patch areas that exhibit potholes, alligator or spider web pattern cracks, and areas of pavement that are severely deteriorated from oil and gasoline deposits from parking vehicles. Area patching requires total replacement of isolated areas of pavement. The contractor should mechanically rout and fill all cracks with hot emulsion. Crack repair minimizes the chance of the cracks transmitting through the pavement. There are four main types of seal coats available: fog coat, acrylic sealer, chip seals and asphaltic emulsion. A fog coat is a simple mixture of water and asphalt. Acrylic sealers include an acrylic additive to the water and asphalt mixture for greater resistance to abrasion. Fog coats and acrylic sealers are typically spray applied and are only for aesthetic purposes. Chip seal is the most substantial type of seal coat which involves placement of oil and aggregate on the driving surface. Either a roller or normal vehicular traffic works the gravel into the oil. Asphaltic emulsions combine a sharp sand mixture or mineral fibers, and an emulsifying agent with the water and asphalt mixture. Asphaltic emulsions are typically hand applied with squeegees to ensure that the sealer fills surface abrasions and minor cracks. This prevents the infiltration of water through cracks into the underlying pavement base. Seal coats therefore minimize the damaging effects of water from expansion and contraction. We regard asphaltic emulsions as the most effective and economical type of seal coat. Page 4.21 - Condition Assessment

Sevanna Park should repair any isolated areas of deteriorated pavement prior to seal coat applications. Proposals for seal coat applications should include both crack repair and area patching. These activities reduce water infiltration and the effects of inclement weather. The contractor should only apply seal coat applications after remedial crack and surface repairs are completed. A seal coat does not bridge or close cracks, therefore, unrepaired cracks render the seal coat applications useless. Our future estimates of cost include an allowance for both crack repair and area patching. We recommend the Association defer the initial application of seal coat until 18 months after the near term asphalt repaving. Sevanna Park should plan subsequent applications of seal coat that include crack repair and area patching beginning by 2018 and every three years thereafter with a timing adjustment when subsequent repaving occurs. Line Item 4.020 of Reserve Expenditures notes our estimate of future costs and anticipated times of these subsequent seal coat applications. Asphalt Pavement, Repaving - Asphalt pavement comprises 9,300 square yards of parking areas throughout the community. Additionally, Sevanna Park is responsible for fifty percent (50%) of the 2,920 square yards of street pavement that is shared with the neighboring community. The Board informs us that approximately 2,750 square yards of asphalt pavement located by Buildings C, D and G was replaced from 2010 to 2011. This pavement is in good overall condition and exhibits isolated instances of vehicle fluid stains. The remaining parking area pavement is in poor overall condition. This pavement exhibits significant pavement deterioration throughout. We note potholes and large expanses of significantly cracked Page 4.22 - Condition Assessment

pavement with the most severe deterioration occurring south of Building A and north of Building D. The street pavement is in fair to poor overall condition and exhibits severe deterioration throughout. Pages 5.15 through 5.19 of Photographs depict these conditions. The useful life of pavement in Ithaca is from 15- to 20-years. We include the following repaving solutions and procedures for the benefit of the present and future board members. Components of asphalt pavement include native soil, aggregate and asphalt. First the contractor creates a base course of aggregate or crushed stone and native soil. The base course is individually compacted to ninety-five percent (95%) dry density prior to the application of the asphalt. Compaction assures a stable base for the asphalt that reduces the possibility of settlement. The initial installation of asphalt uses at least two lifts, or two separate applications of asphalt, over the base course. The first lift is the binder course. The second lift is the wearing course. The wearing course comprises a finer aggregate for a smoother more watertight finish. The following diagram depicts these components. Page 4.23 - Condition Assessment

The manner of repaving is either a mill and overlay or total replacement. A mill and overlay is a method of repaving where cracked, worn and failed pavement is mechanically removed or milled until sound pavement is found. A new layer of asphalt is overlaid atop the remaining base course of pavement. Total replacement includes the removal of all existing asphalt down to the base course of aggregate and native soil followed by the application of two or more new lifts of asphalt. We recommend mill and overlayment on asphalt pavement that exhibits normal deterioration and wear. We recommend total replacement of asphalt pavement that exhibits severe deterioration, inadequate drainage, pavement that has been overlaid multiple times in the past or where the configuration makes overlayment not possible. Based on the apparent visual condition of the asphalt pavement, we recommend the total replacement method for the initial repaving event and the mill and overlay method for subsequent repaving at Sevanna Park. Page 4.24 - Condition Assessment

A variety of repairs are necessary to deteriorated pavement prior to the application of an overlay. The contractor should use a combination of area patching, crack repair and milling before the overlayment. Properly milled pavement removes part of the existing pavement and permits the overlay to match the elevation of adjacent areas not subject to repaving. Milling also allows the contractor to make adjustments to the slope of the pavement to ensure proper drainage. The contractor should clean the milled pavement to ensure proper bonding of the new overlayment. We recommend an overlayment thickness that averages 1½ inches (not less than one inch or more than two inches). Variable thicknesses are often necessary to create an adequate slope for proper drainage. The contractor should identify and quantify areas of pavement that require area patching, crack repair and milling to help the Association compare proposed services. Total replacement requires the removal of all existing asphalt. For area patching, we recommend the contractor use a rectangular saw cut to remove the deteriorated pavement. For larger areas such as entire parking areas or driveways, we recommend the contractor grind, mill or pulverize the existing pavement to remove it. The contractor should then augment and compact the existing aggregate and native soil to create a stable base. Finally the contractor should install the new asphalt in at least two lifts. The time of replacement is dependent on the useful life, age and condition of the pavement. The useful life of 15- to 20-years is dependent in part on the maintenance applied to the pavement, the amounts and concentration of auto solvents that penetrate the pavement, the exposure to sunlight and detrimental effects of inclement weather. Sevanna Park should repair any isolated areas of deteriorated pavement concurrent with periodic seal coat applications. Page 4.25 - Condition Assessment

We recommend the Association plan for a total replacement of the remaining parking area pavement in 2014. We depict this information on Line Item 4.041 of Reserve Expenditures. We recommend the Association plan for a total replacement of the street asphalt pavement by 2015. We depict this information on Line Item 4.043 of Reserve Expenditures. We recommend the Association plan for subsequent milling and overlayment of the parking area pavement with area patching of up to fifteen percent (15%) by 2029. We depict this information on Line Item 4.040 of Reserve Expenditures. We recommend the Association plan for subsequent milling and overlayment of the street pavement with area patching of up to fifteen percent (15%) by 2032. We depict this information on Line Item 4.042 of Reserve Expenditures. The Association should coordinate asphalt repaving with related activities such as partial replacement of concrete curbs and gutters, and capital repairs to catch basins. Catch Basins - Nine catch basins collect storm water from the pavement and conduct it into the storm water system. The overall condition of the catch basins is good without settlement visually apparent. The Board informs us the catch basins were replaced concurrent with drainage improvements from 2008 to 2012. The useful life of catch basins is up to 60 years. However, achieving this useful life usually requires interim capital repairs or partial replacements every 15- to 20-years. The Association should anticipate the occasional displacement or failure of a catch basin and the surrounding pavement from erosion. Erosion causes settlement around the collar of catch basins. Left unrepaired, the entire catch basin will shift and need replacement. Sevanna Page 4.26 - Condition Assessment

Park should plan to repair or replace any displaced or failed catch basins concurrently with surrounding pavement and curbs. The exact times and amount of capital repairs or replacements are dependent upon variable natural forces. Based on the age and condition of the catch basins, we recommend the Association anticipate the inspection, capital repair or partial replacement of the nine catch basins in conjunction with subsequent repaving of the parking areas. We include this information on Line Item 4.100 of Reserve Expenditures. Concrete, Flatwork - The Association maintains various applications of concrete flatwork such as curbs, patios, sidewalks, stoops and steps. These applications of concrete have useful lives of up to 65 years although isolated deterioration of limited areas of concrete is common. Inclement weather, inadequate subsurface preparation and improper concrete mixtures or finishing techniques can result in premature deterioration such as settlement, chips, cracks and spalls. Variable conditions like these result in the need to plan for periodic partial replacements of the concrete flatwork throughout the next 30 years. We comment on the respective quantities, conditions and times of partial replacements of concrete flatwork in the following sections of this narrative. Concrete Curbs - Concrete curbs line the parking area and street pavement of Sevanna Park. The curbs that line the parking areas comprise 3,700 linear feet and are in fair to poor condition overall. The curbs that line the street pavement comprise 915 linear feet and are in fair condition overall. We recommend the Association budget for a phased replacement of up to 925 linear feet of concrete curbs at the parking areas by 2014, 2029, 2035 and 2041. We depict this information on Line Item 4.110 of Reserve Expenditures. Page 4.27 - Condition Assessment

We recommend the Association budget for a phased replacement of up to 305 linear feet of concrete curbs at the street by 2015, 2032 and 2041. We depict this information on Line Item 4.111 of Reserve Expenditures. We assume the use of 3,500 psi (pounds per square inch) concrete. Concrete Patios, Buildings E through G - The Association maintains 12 concrete patios at the rear of the ground level units at Buildings E through G. Each patio comprises an average of 84 square feet of concrete and they are in good to fair condition. We recommend the Association plan for a phased replacement of up to four patios by 2018, 2026 and 2034. Line Item 4.130 of Reserve Expenditures notes our estimate of future costs and anticipated times of replacements. We base our estimate of replacement on four-inch thick, 3,000 psi concrete with 6x6 - W1.4xW1.4 steel reinforcing mesh. Concrete Patios and Stoops, Townhomes - Each townhome unit has an elevated concrete stoop at its front entry and an elevated patio. Our inspection notes 15 of the patios and stoops have been replaced. The remaining 49 patios and stoops are in fair to poor overall condition. The patios and stoops exhibit cracks and settlement throughout. Our inspection notes some patios and stoops may have been overlaid with an additional layer of concrete. Based on their age and condition, we recommend the Association anticipate the replacement of seven stoops in 2014 and every four years thereafter through 2038. Line Item 4.131 of Reserve Expenditures notes our estimate of future costs and anticipated times of replacements. Page 4.28 - Condition Assessment

Concrete Sidewalks - Concrete sidewalks comprise 20,300 square feet throughout the community. The sidewalks are in fair to poor overall condition. The sidewalks exhibit cracks, settlement and trip hazards. We recommend the Association budget for a phased replacement of 2,900 square feet of concrete sidewalks every four years beginning in 2014 and concluding by 2038. Line Item 4.140 of Reserve Expenditures notes our estimate of future costs and anticipated times of replacements. We base our estimate of replacement on four-inch thick, 3,000 psi concrete with 6x6 - W1.4xW1.4 steel reinforcing mesh. We recommend an annual inspection of the sidewalks to identify potential trip hazards. We suggest that the Association grind down or mark these hazards with orange safety paint prior to replacement and fund this ongoing activity through the operating budget. Concrete Steps, Buildings A through D - Buildings A through D utilize 28 sets of concrete steps at the front entries. The steps are in poor overall condition and exhibit cracks and spall throughout. The Board informs us two of the steps at Building C have been replaced and 22 of the concrete steps will be replaced in 2013, funded from Reserves. Based on their age and condition, we recommend the Association anticipate the replacement of four remaining steps in 2014. Subsequent replacements of four stoops are likely needed by 2038 and 2043. Line Item 4.170 of Reserve Expenditures notes our estimate of future costs and anticipated times of replacements. The Association should coordinate the concrete flatwork partial replacements on Line Items 4.130 through 4.170 of Reserve Expenditures to maximize the given amount of concrete in Page 4.29 - Condition Assessment

a single event. This will permit the use of a single contractor and likely achieve the most economical unit price for the work. The Association should also coordinate partial replacements of concrete curbs with asphalt pavement, due to the interrelated nature of these items. The times and costs of these replacements may vary. However, the estimated expenditures detailed in Reserve Expenditures are sufficient to budget appropriate reserves. 2013 Reserve Expenditures - Sevanna Park will expend $59,887 in reserve expenditures in 2013. These expenditures relate to the following: $34,887: Replacement of concrete steps at Buildings A-D $15,000: Painting wood siding and window frames $10,000: Drainage improvements We include this information on the second to last line item in Reserve Expenditures. Reserve Study Update - An ongoing review by the Board and an Update of this Reserve Study in two- to three- years are necessary to ensure an equitable funding plan since a Reserve Study is a snapshot in time. Many variables change after the study is conducted that may result in significant overfunding or underfunding the reserve account. Variables that may affect the Reserve Funding Plan include, but are not limited to: Deferred or accelerated capital projects based on Board discretion Changes in the interest rates on reserve investments Changes in the local construction inflation rate Additions and deletions to the Reserve Component Inventory The presence or absence of maintenance programs Unusually mild or extreme weather conditions Technological advancements Page 4.30 - Condition Assessment

Periodic updates incorporate these variable changes since the last Reserve Study or Update. The Association can expense the fee for an Update with site visit from the reserve account. This fee is included in the Reserve Funding Plan. We base this budgetary amount on updating the same property components and quantities of this Reserve Study report. Budgeting for an Update demonstrates the Board's objective to continue fulfilling its fiduciary responsibility to maintain the commonly owned property and to fund reserves appropriately. Page 4.31 - Condition Assessment

PHOTOGRAPHS Photographs document the conditions of various property components as of the date of our visual inspection, March 27, 2013. The Condition Assessment contains references to these photographs. The following is an overview image of the subject property: The next pages contain the photographs related to Section 4 - Condition Assessment Page 5.1 - Photographs

Typical front and rear elevations, Buildings A-B Typical front and rear elevations, Buildings C-D Typical front and side elevations, Buildings E-G Page 5.2 - Photographs

Typical rear elevation, Buildings E-G Typical front and side elevations, Townhome Units Front and side elevations, Office Page 5.3 - Photographs

Metal balcony Balcony floor coverings Paint finish deterioration and rust at balcony railing connection Page 5.4 - Photographs

Paint finish deterioration and rust at railing Wood balconies Paint finish deterioration and partial joist replacements Page 5.5 - Photographs

Partial floor board replacement Paint finish deterioration and partial floor board replacement Dimensional asphalt shingles Page 5.6 - Photographs

Dimensional asphalt shingles and box vent Minor shingle warp Shingle lift Page 5.7 - Photographs

Shingle lift at office roof Metal flashing deterioration Minor shingle lift Page 5.8 - Photographs

Minor shingle lift and roof deflection Gable vent Shutters Page 5.9 - Photographs

Soffit deflection Rust at soffit Masonry stain and deterioration Page 5.10 - Photographs

Masonry stain and deterioration Masonry and mortar deterioration near entrance steps Masonry and mortar deterioration near entrance steps, note efflorescence Page 5.11 - Photographs

Masonry spall near entrance steps Mortar cracks Mortar and masonry cracks Page 5.12 - Photographs

Paint finish deterioration at window trim Window frame deterioration Window frame deterioration Page 5.13 - Photographs

Office interior Boilers Typical forced air furnace unit Page 5.14 - Photographs

Typical water heater Significant pavement deterioration and repairs at parking area north of Building D Significant pavement deterioration at parking area north of Building D Page 5.15 - Photographs

Significant pavement deterioration at parking area south of Building A Cracks and pothole at parking area south of Building A Cracks and potholes at parking area between Buildings D and F Page 5.16 - Photographs

Significant pavement cracks and patches at parking area between Buildings D and F Pavement and catch basin replacement at parking area near Building F Significant pavement deterioration at parking area near Buildings E and F Page 5.17 - Photographs

Replaced pavement at parking area south of Buildings C and D Replaced pavement at parking area south of Building G Vehicle fluid stain at replaced pavement Page 5.18 - Photographs

Significant pavement deterioration at street Significant pavement deterioration at street Significant pavement deterioration at previously replaced street pavement Page 5.19 - Photographs

Cracks and damage at curb Curb deterioration and exposed reinforcement Patio crack at Building E Page 5.20 - Photographs

Townhome stoop deterioration Townhome patio crack and evidence of possible overlayment Townhome stoop deterioration and step settlement Page 5.21 - Photographs

Cracked sidewalk sections at Buildings E-G courtyard Sidewalk settlement and trip hazards Sidewalk settlement and concrete deterioration Page 5.22 - Photographs

Significant sidewalk crack near Building B Concrete steps at unit entrance, note concrete deterioration (2013 Replacement) Concrete steps at unit entrance, note crack (2013 Replacement) Page 5.23 - Photographs

SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENTS The Reserve Funding Plan uses the Cash Flow Method to determine an appropriate funding plan with the following unaudited financial information furnished by the Association. Unaudited Supplemental Information on Future Major Repairs and Replacements Reserve Component Categories Total Current Replacement Costs Total Future or Inflated Replacement Costs % of Total Future Replacements Component of Projected 2013 YE Fund Balance Exterior Building Elements $1,476,702 $2,000,700 48.8% $139,306 Interior Building Elements $32,000 $41,610 1.0% $2,897 Building Services Elements $473,900 $625,028 15.3% $43,520 Property Site Elements $1,093,410 $1,367,966 33.4% $95,249 2013 Reserve Expenditures $59,887 $59,887 1.5% $4,170 Reserve Study Update $3,250 $3,250 0.1% $226 Totals $3,139,149 $4,098,441 100% $285,368 The Audit and Accounting Guide for Common Interest Realty Associations presents recommendations on Supplementary Information on Future Major Repairs and Replacements in end of fiscal year Audits of Financial Statements for community associations 1. Accountants use discretion and judgment on how to present the Supplementary Information on Future Major Repairs and Replacements. However, the Supplementary Information on Future Major Repairs and Replacements often references and includes excerpts from our Reserve Studies. The following table excerpts significant unaudited information from the Reserve Expenditures about Reserve Component categories and estimated current and future replacement costs based on inflation at an annual rate of 1.8%. The information included in the table above may be included as part of the Supplementary Information on Future Major Repairs and Replacements. However, Reserve 1 American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide - Common Interest Realty Associations; American Institute of Certified Public Accountants, Inc.; 2003 Page 6.1 - Supplemental Information

Advisors, Inc. does not certify that the information in the table will fully satisfy the recommendations of the AICPA guideline. The most important category of Reserve Components noted in Reserve Expenditures is the Exterior Building Elements. The following chart illustrates the relative importance of the Reserve Expenditures and relative funding during the next 30 years. Future Expenditures Relative Cost Illustration Sevanna Park Condominum Association 2013 Reserve Expenditures $59,887 1.5% Reserve Study Update $3,250 0.1% Property Site Elements $1,367,966 33.4% 48.8% Exterior Building Elements $2,000,700 15.3% Building Services Elements $625,028 Interior Building Elements $41,610 1.0% Page 6.2 - Supplemental Information

METHODOLOGY Reserves for replacement are the amounts of money required for future expenditures to repair or replace Reserve Components that wear out before the entire facility or project wears out. Reserving funds for future repair or replacement of the Reserve Components is also one of the most reliable ways of protecting the value of the property s infrastructure and marketability. following: Sevanna Park can fund capital repairs and replacements in any combination of the 1) Increases in the operating budget during years when the shortages occur 2) Loans using borrowed capital for major replacement projects 3) Level monthly reserve assessments annually adjusted upward for inflation to increase reserves to fund the expected major future expenditures 4) Special assessments We do not advocate special assessments or loans unless near term circumstances dictate otherwise. Although loans provide a gradual method of funding a replacement, the costs are higher than if the Association were to accumulate reserves ahead of the actual replacement. Interest earnings on reserves also accumulate in this process of saving or reserving for future replacements, thereby defraying the amount of gradual reserve collections. We advocate the third method of Level Monthly Reserve Assessments with relatively minor annual adjustments. The method ensures that homeowners pay their fair share of the weathering and aging of the commonly owned property each year. Level reserve assessments preserve the property and enhance the resale value of the homes. Page 7.1 - Methodology

This Reserve Study is in compliance with and exceeds the National standards 1 set forth by Community Associations Institute (CAI) and the Association of Professional Reserve Analysts (APRA) fulfilling the requirements of a Full Reserve Study. These standards require a Reserve Component to have a predictable remaining Useful Life. Estimating Remaining Useful Lives and Reserve Expenditures beyond 30 years is often indeterminate. Long-Lived Property Elements are necessarily excluded from this analysis. We considered the following factors in our analysis: Information Furnished by the Association March 31, 2013 unaudited Cash Status of the Reserve Fund $225,597 Remaining 2013 Budgeted Reserve Contributions $118,617 Anticipated Interest on Reserve Fund $1,041 Less Anticipated Reserve Expenditures ($59,887) Projected 2013 Year-End Reserve Balance $285,368 The Cash Flow Method to compute, project and illustrate the 30-year Reserve Funding Plan Local 2 costs of material, equipment and labor Current and future costs of replacement for the Reserve Components Costs of demolition as part of the cost of replacement Local economic conditions and a historical perspective to arrive at our estimate of long term future inflation for construction costs in Ithaca, New York at an annual inflation rate of 1.8%. Isolated or regional markets of greater construction (development) activity may experience slightly greater rates of inflation for both construction materials and labor. The past and current maintenance practices of Sevanna Park and their effects on remaining useful lives 1 Identified in the APRA Standards - Terms and Definitions and the CAI Terms and Definitions. 2 See Credentials for addition information on our use of published sources of cost data. Page 7.2 - Methodology

The Funding Plan excludes necessary operating budget expenditures. It is our understanding that future operating budgets will provide for the ongoing normal maintenance of Reserve Components The anticipated effects of appreciation of the reserves over time in accord with your average current return or yield on investment of your cash equivalent assets at an annual rate of 0.7% (We did not consider the costs, if any, of Federal and State Taxes on income derived from interest and/or dividend income) Interest rates on reserves are steady or increasing in concert with the certificates of deposit and money market rates. Slight increases exist in the savings rates of one, two or three-year CDs. Without significant differences in these savings rates, shorter term investments are the choice of many investors. We recommend consultation with a professional investment adviser before investing reserves to determine an appropriate investment strategy to maximize a safe return on reserve savings. The following table summarizes rates of inflation and key rates for government securities, generally considered as safe investment alternatives. Interest Rate and Inflation Data Av erage or Last Actual = (A) 2011:1 (A) 2011:2 (A) 2011:3 (A) 2011:4 (E) 2012:1 (A) 2012:2 (A) 2012:3 (A) 2012:4 (E) 90-Day Treasury Bill 0.050% 0.40% 0.20% 0.20% 0.05% 0.10% 0.1% 0.1% 1-Year Treasury Bill 0.30 0.15 0.10 0.10 0.30 0.19 0.18 0.18 10-Year Treasury Note 2.50 2.25 2.20 1.85 2.50 1.50 1.45 1.70 30-Year Treasury Bond 4.50 4.50 3.60 2.80 4.50 2.55 2.50 2.90 Consumer Price Index (annualized rate) 0.02 3.6% 3.8% 3.2% 2.1% 2% 2% 2% "Residential Construction" Producer Price Index -Inflation Rate, Bureau of Labor Statistics (BLS - 12 months) 2.3% National Market Savings Rates as found in 0.10% for Money Market Savings 0.8% for 2-Year Certificate of Deposit http://www.bankrate.com 0.4% for 1-Year Certificate of Deposit 1.2% for 3-Year Certificate of Deposit Estim ated Near Term Yield Rate for Reserve Savings................... 0.7% Est. Near Term Local Inflation Rate for Future Capital Expenditures........... 1.8% 10/17/2012 Updates to this Reserve Study will continue to monitor historical facts and trends concerning the external market conditions. Page 7.3 - Methodology

DEFINITIONS 1 Cash Flow Method - A method of calculating Reserve Contributions where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different Reserve Funding Plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved. Component Method - A method of developing a Reserve Funding Plan with the total contribution is based on the sum of the contributions for individual components. Current Cost of Replacement - That amount required today derived from the quantity of a Reserve Component and its unit cost to replace or repair a Reserve Component using the most current technology and construction materials, duplicating the productive utility of the existing property at current local market prices for materials, labor and manufactured equipment, contractors' overhead, profit and fees, but without provisions for building permits, overtime, bonuses for labor or premiums for material and equipment. We include removal and disposal costs where applicable. Fully Funded Balance - The Reserve balance that is in direct proportion to the fraction of life "used up" of the current Repair or Replacement cost similar to Total Accrued Depreciation Funding Goal (Threshold) - The stated purpose of this Reserve Study is to determine the adequate, not excessive, minimal threshold reserve balances. Future Cost of Replacement - Reserve Expenditure derived from the inflated current cost of replacement or current cost of replacement as defined above, with consideration given to the effects of inflation on local market rates for materials, labor and equipment. Long-Lived Property Component - Property component of Sevanna Park responsibility not likely to require capital repair or replacement during the next 30 years with an unpredictable remaining Useful Life beyond the next 30 years. Percent Funded - The ratio, at a particular point of time (typically the beginning of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage. Remaining Useful Life - The estimated remaining functional or useful time in years of a Reserve Component based on its age, condition and maintenance. Reserve Component - Property elements with: 1) Sevanna Park responsibility; 2) limited Useful Life expectancies; 3) predictable Remaining Useful Life expectancies; and 4) a replacement cost above a minimum threshold. Reserve Component Inventory - Line Items in Reserve Expenditures that identify a Reserve Component. Reserve Contribution - An amount of money set aside or Reserve Assessment contributed to a Reserve Fund for future Reserve Expenditures to repair or replace Reserve Components. Reserve Expenditure - Future Cost of Replacement of a Reserve Component. Reserve Fund Status - The accumulated amount of reserves in dollars at a given point in time, i.e., at year end. Reserve Funding Plan - The portion of the Reserve Study identifying the Cash Flow Analysis and containing the recommended Reserve Contributions and projected annual expenditures, interest earned and reserve balances. Reserve Study - A budget planning tool that identifies the current status of the reserve fund and a stable and equitable Funding Plan to offset the anticipated future major common area expenditures. Useful Life - The anticipated total time in years that a Reserve Component is expected to serve its intended function in its present application or installation. 1 Definitions are derived from the standards set forth by the Community Associations Institute (CAI) representing America's 305,000 condominium and homeowners associations and cooperatives, and the Association of Professional Reserve Analysts, setting the standards of care for reserve study practitioners. Page 8.1 - Definitions

CONDITIONS OF OUR SERVICE ASSUMPTIONS To the best of our knowledge, all data set forth in this report are true and accurate. Although gathered from reliable sources, we make no guarantee nor assume liability for the accuracy of any data, opinions, or estimates identified as furnished by others that we used in formulating this analysis. We did not make any soil analysis or geological study with this report; nor were any water, oil, gas, coal, or other subsurface mineral and use rights or conditions investigated. Substances such as asbestos, urea-formaldehyde foam insulation, other chemicals, toxic wastes, environmental mold or other potentially hazardous materials could, if present, adversely affect the validity of this study. Unless otherwise stated in this report, the existence of hazardous substance, that may or may not be present on or in the property, was not considered. Our opinions are predicated on the assumption that there are no hazardous materials on or in the property. We assume no responsibility for any such conditions. We are not qualified to detect such substances, quantify the impact, or develop the remedial cost. We have made a visual inspection of the property and noted visible physical defects, if any, in our report. Our inspection and analysis was made by employees generally familiar with real estate and building construction; however, we did not do any invasive testing. Accordingly, we do not opine on, nor are we responsible for, the structural integrity of the property including its conformity to specific governmental code requirements, such as fire, building and safety, earthquake, and occupancy, or any physical defects that were not readily apparent during the inspection. Our opinions of the remaining useful lives of the property elements do not represent a guarantee or warranty of performance of the products, materials and workmanship. Page 9.1 - Conditions of Our Service

PROFESSIONAL SERVICE CONDITIONS Our Services - Reserve Advisors, Inc. will perform its services as an independent contractor in accordance with our professional practice standards. Our compensation is not contingent upon our conclusions. Our inspection and analysis of the subject property is limited to visual observations and is noninvasive. We will inspect sloped roofs from the ground. We will inspect flat roofs where safe access (stairs or ladder permanently attached to the structure) is available. The report is based upon a snapshot in time at the moment of our observation. Conditions can change between the time of inspection and the issuance of the report. Reserve Advisors does not investigate, nor assume any responsibility for any existence or impact of any hazardous materials, structural, latent or hidden defects which may or may not be present on or within the property. Our opinions of estimated costs and remaining useful lives are not a guarantee of the actual costs of replacement, a warranty of the common elements or other property elements, or a guarantee of remaining useful lives. We assume, without independent verification, the accuracy of all data provided to us. You agree to indemnify and hold us harmless against and from any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorneys' fees, to which we may become subject in connection with this engagement, because of any false, misleading or incomplete information which we have relied upon as supplied by you or others under your direction, or which may result from any improper use or reliance on the report by you or third parties under your control or direction. Your obligation for indemnification and reimbursement shall extend to any controlling person of Reserve Advisors, Inc., including any director, officer, employee, affiliate, or agent. Liability of Reserve Advisors, Inc. and its employees, affiliates, and agents for errors and omissions, if any, in this work is limited to the amount of its compensation for the work performed in this engagement. Report - Reserve Advisors, Inc. will complete the services in accordance with the Proposal. We will consider any additional information made available to us in the interest of promptly issuing a Final Report (if requested). However, the Report represents a valid opinion of our findings and recommendations and is deemed complete and final if no Final Report or changes are requested within six months of our inspection. We retain the right to withhold the Report or Final Report if payment for services is not rendered in a timely manner. All files, work papers or documents developed by us during the course of the engagement remains our property. Your Obligations - You agree to provide us access to the subject property during our on-site visual inspection and tour. You will provide to us to the best of your ability and if reasonably available, historical and budgetary information, the governing documents, and other information that we request and deem necessary to complete our Study. You agree to pay our actual attorneys fees and any other costs incurred in the event we have to initiate litigation to collect on any unpaid balance for our services. Use of Our Report and Your Name - Use of our Report(s) is limited to only the purpose stated herein. Any use or reliance for any other purpose, by you or third parties, is invalid. Our Reserve Study Report in whole or part is not and can not be used as a design specification, design engineering services or an appraisal. You may show our report in its entirety to those third parties who need to review the information contained herein. The Client and other third parties viewing this report should not reference our name or our report, in whole or in part, in any document prepared and/or distributed to third parties without our written consent. This report contains intellectual property developed by Reserve Advisors, Inc. specific to this engagement and can not be reproduced or distributed to those who conduct reserve studies without the written consent of Reserve Advisors, Inc. Page 9.2 - Conditions of Our Service

We reserve the right to include our client's name in our client lists, but we will maintain the confidentiality of all conversations, documents provided to us, and the contents of our reports, subject to legal or administrative process or proceedings. These conditions can only be modified by written documents executed by both parties. Payment Terms, Due Dates, and Interest Charges - The retainer payment is due upon authorization and prior to shipment of the report. The final payment of the fee is due immediately upon receipt of the Report. Subsequent changes to the report can be made for up to six months from the initial report date. Any outstanding balance after 30 days of the invoice date is subject to an interest charge of 1.5% per month. Any litigation necessary to collect an unpaid balance shall be venued in Milwaukee County Circuit Court in the State of Wisconsin. Page 9.3 - Conditions of Our Service

CREDENTIALS HISTORY AND DEPTH OF SERVICE Founded in 1991, Reserve Advisors, Inc. is the leading provider of reserve studies, insurance appraisals, developer turnover transition studies, expert witness services, and other engineering consulting services. Clients include community associations, resort properties, hotels, clubs, non-profit organizations, apartment building owners, religious and educational institutions, and office/commercial building owners in 48 states, Canada and throughout the world. The architectural engineering consulting firm was formed to take a leadership role in helping fiduciaries, boards, and property managers manage their property like a business with a long range master plan known as a Reserve Study. Reserve Advisors employs the largest staff of Reserve Specialists with bachelors degrees in engineering dedicated to Reserve Study services. Our principals are founders of Community Associations Institute's (CAI) Reserve Committee, that developed national standards for reserve study providers. One of our principals is a Past President of the Association of Professional Reserve Analysts (APRA). Our vast experience with a variety of building types and ages, on-site examination and a historical analyses are keys to determining accurate remaining useful life estimates of building components. No Conflict of Interest - As consulting specialists, our independent opinion eliminates any real or perceived conflict of interest because we do not conduct or manage capital projects. TOTAL STAFF INVOLVEMENT Several staff members participate in each assignment. The responsible advisor involves the staff through a Team Review, exclusive to Reserve Advisors, Inc., and by utilizing the experience of other staff members, each of whom has served hundreds of clients. We conduct Team Reviews, an internal quality assurance review of each assignment, including: the inspection; building component costing; lifing; and technical report phases of the assignment. Each Team Review requires the attendance of several engineers, a Review Coordinator, Director of Quality Assurance and other participatory peers. Due to our extensive experience with building components, we do not have a need to utilize subcontractors. OUR GOAL To help our clients fulfill their fiduciary responsibilities to maintain property in good condition. VAST EXPERIENCE WITH A VARIETY OF BUILDINGS Reserve Advisors, Inc. has conducted reserve studies for a multitude of different communities and building types. We've analyzed thousands of buildings, from as small as a 3,500 square-foot day care center to the 100-story John Hancock Center in Chicago. We also routinely inspect buildings with various types of mechanical systems such as simple electric heat, to complex systems with air handlers, chillers, boilers, elevators, and life safety security systems. We're familiar with all types of building exteriors as well. Our well versed staff regularly identifies optimal repair and replacement solutions for such building exterior surfaces such as adobe, brick, stone, concrete, stucco, EIFS, wood products, stained glass and aluminum siding, and window wall systems. OLD TO NEW Reserve Advisors experience includes ornate and vintage buildings as well as modern structures. Our specialists are no strangers to older buildings. We're accustomed to addressing the unique challenges posed by buildings that date to the 1800's. We recognize and consider the methods of construction employed into our analysis. We recommend appropriate replacement programs that apply cost effective technologies while maintaining a building's character and appeal. Page 10.1 - Credentials

THEODORE J. SALGADO, P.E., PRA Principal Theodore J. Salgado is a co-founder of Reserve Advisors, Inc., which is dedicated to serving community associations, city and country clubs, religious organizations, educational facilities, and public and private entities throughout the United States. He is responsible for the production, management, review, and quality assurance of all reserve studies, defect identification transition studies, and consulting services for a nationwide portfolio of more than 5,000 clients. Under his direction, the firm conducts reserve study services for apartment complexes, churches, hotels, resorts, office towers and vintage architecturally ornate buildings. PRIOR RELEVANT EXPERIENCE Before founding Reserve Advisors, Inc. in 1991, Mr. Salgado, a professional engineer registered in the State of Wisconsin, served clients for over 15 years through American Appraisal Associates, the world's largest full service valuation firm. Mr. Salgado conducted facilities analyses of hospitals, steel mills and various other large manufacturing and petrochemical facilities and casinos. He has served clients throughout the United States and in foreign countries, and frequently acted as project manager on complex valuation, and federal and state tax planning assignments. His valuation studies led to negotiated settlements on property tax disputes between municipalities and property owners. Mr. Salgado has authored articles on the topic of reserve studies and facilities maintenance. He also co-authored "Reserves", an educational videotape produced by Reserve Advisors on the subject of Reserve Studies and maintaining appropriate reserves. Mr. Salgado has also written in-house computer applications manuals and taught techniques relating to valuation studies. EXPERT WITNESS Mr. Salgado has testified successfully before the Butler County Board of Tax Revisions in Ohio. His depositions in pretrial discovery proceedings relating to reserve studies of Crestview Estates Condominium Association in Wauconda, Illinois and the North Shore Club Associations in South Bend, Indiana have successfully assisted the parties in arriving at out of court settlements. EDUCATION Milwaukee School of Engineering - B.S. Architectural Engineering PROFESSIONAL AFFILIATIONS/DESIGNATIONS American Association of Cost Engineers - Past President, Wisconsin Section Association of Construction Inspectors - Senior Designated Member and Certified Construction Inspector Association of Professional Reserve Analysts - Past President, and Professional Reserve Analyst (PRA) Community Associations Institute - Member and Volunteer Leader of multiple chapters throughout the United States Concordia Seminary, St. Louis - Member, National Steering Committee Milwaukee School of Engineering - Member, Corporation Board Professional Engineer, Wisconsin - Registered in 1982 Page 10.2 - Credentials

JOHN P. POEHLMANN, RS Principal John P. Poehlmann is a co-founder of Reserve Advisors, Inc. He is responsible for the finance, accounting, marketing, and overall administration of Reserve Advisors, Inc. He also regularly participates in internal Quality Control Team Reviews of Reserve Study reports. Mr. Poehlmann directs corporate marketing, including business development, advertising, press releases, conference exhibiting, and direct mail promotions. He frequently speaks throughout the country at seminars and workshops on the benefits of future planning and budgeting for capital repairs and replacements of building components and other assets. Mr. Poehlmann served on the national Board of Trustees of Community Associations Institute. Community Associations Institute (CAI) is a national, nonprofit 501(c)(6) trade association created in 1973 to provide education and resources to America's 305,000 residential condominium, cooperative and homeowner associations and related professionals and service providers. The Institute is dedicated to fostering vibrant, responsive, competent community associations that promote harmony, community, and responsible leadership. He is a founding member of the Institute's Reserve Committee. The Reserve Committee developed national standards and the Reserve Specialist (RS) Designation Program for Reserve Study providers. Mr. Poehlmann has authored numerous articles on the topic of Reserve Studies, including Planning for Replacement of Property Doesn't Have to Be Like a Trip to the Dentist, Reserve Studies for the First Time Buyer, Sound Association Planning Parallels Business Concepts, and Reserve Studies Minimize Liability. He has worked with a variety of publications, including the Chicago Tribune, The Milwaukee Journal/Sentinel, Common Ground, Common Interest, and Condo Management. He also co-authored "Reserves", an educational videotape produced by Reserve Advisors on the subject of Reserve Studies and the benefits of maintaining appropriate reserves. The videotape is available through Reserve Advisors or CAI's website, www.caionline.org and libraries in the State of Virginia. INDUSTRY SERVICE AWARDS CAI National Rising Star Award - To an individual whose leadership abilities and professional contributions have earmarked them for even greater accomplishments in the future. CAI Michigan Chapter Award - "Given to the individual who contributed their time, expertise, and resources toward improving the quality of services offered by the chapter. Mr. Poehlmann was unanimously selected as the winner of the CAI Michigan Chapter Award." EDUCATION University of Wisconsin-Milwaukee - Master of Science Management University of Wisconsin - Bachelor of Business Administration PROFESSIONAL AFFILIATIONS Community Associations Institute (CAI) - Founding member of Reserve Committee; former member of National Board of Trustees; Reserve Specialist (RS) designation; Member of multiple chapters Association of Condominium, Townhouse, & Homeowners Associations (ACTHA) - member Page 10.3 - Credentials