TAMARISK WEST OWNERS ASSOCIATION Budget Notes

[Pages:10]TAMARISK WEST OWNERS ASSOCIATION Budget Notes

November 2017

Re: 2018 Budget & Reserve Analysis; Assessment & Reserve Disclosure; Insurance Summary Disclosure; Annual Policy Statement; Alternative Dispute Resolution and Internal Dispute Resolution; Architectural Disclosure; Fine Schedule; Collection Policy; Annual Address/Information Update Form; Member List Opt-Out Form; Electronic Communication Form (Email Opt-In) and an Auto Debit Authorization Agreement.

To: Homeowners

Please find enclosed the 2018 Pro-Forma Budget and Reserve analysis, together with the Collection Policy. The Board has approved an annual reserve funding amount of $45,000.00 for the 2018 fiscal year. Since the adopted budget currently reflects a deficit, the Board may be required to increase the regular assessment or impose a special assessment during the 2018 budget year to meet the operating needs of the Association. The monthly assessment will remain at $645 per lot/per month. New coupon books will be mailed under separate cover.

As required by California Civil Code Section 5310(a)(7), we have enclosed the Association's insurance summary disclosure form. Please be advised that even though a claim may be covered, you may be responsible for all or a portion of the deductible that applies. The Association strongly encourages you to contact your insurance agent or broker to acquire individual unit owner coverage. Also included is a summary of Civil Code Section 5975, regarding Alternative Dispute Resolution ("ADR") and Internal Dispute Resolution ("IDR").

Enclosed you will find an authorization agreement to request direct debit from your checking account for the monthly assessment amount. Debits are made on or after the 5 th of every month. Should you elect this option, be advised that it may take up to 60 days before Desert Resort Management can process your payment automatically. You must continue to pay by check until you receive confirming notification from Desert Resort Management with a starting date.

Upon written request and during reasonable business hours, Minutes of Board Meetings and other records are available at Desert Resort Management, 42-635 Melanie Place, Suite 103, Palm Desert, CA 92211.

Any of these and other HOA documents can also be found on the association's website located by visiting . We are in the process of establishing a custom domain that will link directly to the Tamarisk Villas HOA website. If you have not yet registered with the site, please have your HOA account number ready as you will need this in order to create a username and password.

The Board of Directors would like to take this opportunity to thank owners who faithfully pay their assessments, which enables the Association to make timely payments to our service providers. Please note the late fee for assessments is $64.50 in accordance with the governing documents of the Association. If you pay your monthly HOA Assessments via check, please mail the payment to:

Tamarisk West Owners Association P.O. Box 601205 Los Angeles, CA 90060-1205

The Board of Directors has been pro-active in addressing day-to-day maintenance as well as long-term replacement projects. This approach benefits individual owners through increased property value, longer asset life, and increased curb appeal, keeping Tamarisk West the great place it is to live.

Should you have any questions regarding the enclosures, please do not hesitate to contact your community association manager, Sam Rodriguez, CMCA?, AMS? via e-mail at srodriguez@. You may also phone the Desert Resort Management Customer Service at (760) 346-1161 or send an email to serviceorders@ for account questions, submit common area work order requests, or for any other community association needs. In the event of an emergency involving common area elements, we offer a 24-hour answering service at the same number.

Sincerely,

Board of Directors Tamarisk West Owners Association

Budget Summary Report Tamarisk West Owners Association

Dept: 221 - Operating 2018 Approved Budget - 22 units

Operating Income 4000 - Member Assessments Total Operating Income

Total Operating Income

Administrative 5000 - Administrative Contingency 5210 - Postage & Printing 5400 - Insurance Expense 6300 - Permits & Licenses Total Administrative

Professional Services 5105 - Reserve Studies 7000 - Audit & Tax Services 7020 - Legal Services 7040 - Mangement Contract Total Professional Services

Utilities 6000 - Electric Service 6005 - Gas Service 6025 - Water Service Total Utilities

Landscaping 6100 - Landscape Contract 6120 - Fertilizer 6199 - Landscape - Extras 6200 - Irrigation Repair & Maintenance Total Landscaping

Contracted Services 6434 - Pest Control 6438 - Pool Management Total Contracted Services

Grounds Maintenance 6530 - Common Areas Repair & Maintenance 6545 - Lighting Repairs & Maint 6700 - Pool Extras Total Grounds Maintenance

Reserve Contributions 9105 - Reserve Contribution Expense Total Reserve Contributions

Total Operating Expense

Total Operating Net Income / (Loss)

2017 Budget

170,280.00 170,280.00

170,280.00

1,000.00 1,000.00 11,000.00 1,040.00 14,040.00

750.00 1,500.00 2,000.00 9,000.00 13,250.00

8,500.00 13,000.00

6,000.00 27,500.00

38,400.00 950.00

10,000.00 2,000.00

51,350.00

1,825.00 4,200.00 6,025.00

2,615.00 7,100.00 3,400.00 13,115.00

45,000.00 45,000.00

170,280.00

0.00

2018 Budget

2018 Monthly

Monthly

Budget Budget Per Unit

170,280.00 170,280.00

170,280.00

14,190.00 14,190.00

14,190.00

645.00 645.00

645.00

1,000.00 1,000.00 11,000.00 1,040.00

14,040.00

83.33 83.33 916.67 86.67

1,170.00

3.79 3.79 41.67 3.94

53.19

750.00 1,450.00 2,000.00 10,815.00

15,015.00

62.50 120.83 166.67 901.25

1,251.25

2.84 5.49 7.58 40.97

56.88

8,500.00 13,000.00

6,000.00

27,500.00

708.33 1,083.33

500.00

2,291.66

32.20 49.24 22.73

104.17

38,400.00 950.00

10,000.00 2,000.00

51,350.00

3,200.00 79.17

833.33 166.67

4,279.17

145.45 3.60

37.88 7.58

194.51

1,825.00 4,200.00

6,025.00

152.08 350.00

502.08

6.91 15.91

22.82

2,615.00 7,100.00 3,400.00

13,115.00

217.92 591.67 283.33

1,092.92

9.91 26.89 12.88

49.68

45,000.00 45,000.00 172,045.00 (1,765.00)

3,750.00 3,750.00 14,337.08 (147.08)

170.45 170.45 651.70

(6.70)

Annual Budget Statements and Information

Civil Code Section 5300(b)(1): The 2018 Budget is enclosed with this statement.

Civil Code Section 5300(b)(2): A summary of the Association's reserves is enclosed with this statement.

Civil Code Section 5300(b)(3): A summary of the reserve funding plan is enclosed with this statement. The full reserve study plan is available to Members upon request and the Association shall provide the full reserve plan to any Member upon request.

Civil Code Section 5300(b)(4): The Board of Directors has determined not to defer or not undertake repairs or replacement of any major component with a remaining life of 30 years or less.

Civil Code Section 5300(b)(5): The Board of Directors, consistent with the reserve funding plan adopted pursuant to Civil Code Sections 5550(b)(5) and 5560, has determined or anticipates that the levy of one or more special assessments will not be required at this time to repair, replace, or restore any major component or to provide adequate reserves thereof.

Civil Code Section 5300(b)(6): The Board of Directors will fund reserves to repair or replace major components through the mechanisms set forth in the reserve funding plan summary enclosed with this statement.

Civil Code Section 5300(b)(7): The procedures used for calculation and establishment of reserves is set forth in the Assessment and Reserve Funding Disclosure Summary enclosed with this statement.

Civil Code Section 5300(b)(8): The Association does not have any outstanding loans.

Civil Code Section 5300(b)(9): A summary of the Association's insurance policies is enclosed with this statement.

Civil Code Section 5300(b)(10): Certification by the Federal Housing Administration may provide benefits to members of an association, including an improvement in an owner's ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.

This common interest development [ is / is not ] a condominium project. The association of this common interest development [ is / is not ] certified by the Federal Housing Administration.

Civil Code Section 5300(b)(11): Certification by the federal Department of Veterans Affairs may provide benefits to members of an association, including an improvement in an owner's ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.

This common interest development [ is / is not ] a condominium project. The association of this common interest development [ is / is not ] certified by the federal Department of Veterans Affairs.

Civil Code Section 5305: A review of the Association's financial statement shall be prepared in accordance with generally accepted accounting principles by a licensee of the California Board of Accountancy for the fiscal year, and distributed to the Members within 120 days after the close of the fiscal year.

Reserve Summary

(As required by California Civil Code Section 5565)

FIRST TAMARISK WEST HOMEOWNERS ASSOCIATION

SCT Reserve Consultants, Inc. is pleased to provide this Level II Reserve Study (Site Visit Update Report). In order to comply with the California Civil Code, specifically the Davis-Stirling Common Interest Development Act, Section 5565, we are providing the following information to the Homeowners within FIRST TAMARISK WEST HOMEOWNERS ASSOCIATION.

The following study has been prepared with several assumed factors taken into account: a 3.00% inflation rate; a 1.00% return on investment (interest earned); taxes on interest earned is paid for through the operating fund; an estimated remaining life of each reserve component; and an estimated current replacement cost of each reserve component.

As of December 31, 2017, the estimated ending reserve fund balance is $53,500 and the estimated current replacement cost is $402,661 for the portfolio of reserve components. The projected future replacement cost of the portfolio is $656,446, calculated at an annually compounded inflation rate of 3.00%. The Association's level of funding which is based upon the estimated ending reserve fund balance divided by the reserve components' fully funded amount is 40.63%. This is referred to as Percent Funded. The Association would be 100.00% funded if there were $131,689.00 in the reserve fund.

The current deficiency (or surplus if the number is in parenthesis) in reserve funding expressed on a per unit basis is $3,554.05. This is calculated by subtracting the ending balance ($53,500) from the 100% funded figure ($131,689.00), then divided by the number of ownership interests (22). There is currently no requirement to be fully funded.

Our original analysis of the cash flow for this association indicated future inadequate funding if there were no annual increases to the Reserves. It is our understanding the Board of Directors will allocate a total of $3,750 per month starting in 2018 ($170.45 per unit per month for each of the 22 ownership interests) towards the reserve fund. To offset the future cash shortfall we recommend and have included an increase of 0.40% starting in 2019 for 29 years. The increase is scheduled to take effect in the year 2019. The Board of Directors may change the amount; however, it will impact the level of funding on reserves. These numbers, by themselves, are not a clear indicator of financial strength and could indicate underfunding, overfunding, or adequate funding.

The following table represents additionally required information pursuant to the Davis-Stirling Common Interest Development Act, Section 5565.

Fiscal Year: January 1, 2018 through December 31, 2018

Category

Estimated Remaining

Useful Lives

Estimated Current Replacement

Cost

Fund Balance on Dec 31, 2017

Estimated Reserve Allocation

Estimated Special

Assessment Allocation

Asphalt & Concrete 9804 Electrical/Lights 9892 Fence/Gates/Rails 9852 Irrigation 9884 Mailboxes 9902 Paint 9914 Pools & Spa 9924

1 to 22 2 to 29 12 to 16 9 to 17 14 to 14 1 to 10 1 to 28

$139,252 $12,080 $46,775 $26,000 $3,000 $44,562 $130,992

$16,423 $1,557 $7,495 $2,364

$357 $7,565 $17,739

$13,813.86 $1,309.84 $6,303.89 $1,988.02 $299.92 $6,363.43

$14,921.04

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Totals:

$402,661

$53,500

$45,000

$0

The complete reserve study is available by request from the Association.

Estimated Interest

$234.26 $22.21

$106.91 $33.71

$5.09 $107.92 $253.04

$763

Report Date 11/1/17 Version 1

44

Assessment and Reserve Funding Disclosure Summary For the Fiscal Year Ending December 31, 2018

(As illustrated by California Civil Code Section 5570(a))

(1) The regular assessment per ownership interest is $645.00 per month, of which approximately $170.45 is allocated to reserves.

Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be

found on the following page of the attached summary. NOT APPLICABLE

(2) Additional regular or special assessments that have already been scheduled to be imposed or charged,

regardless of the purpose, if they have been approved by the board and/or members: SEE ANSWER BELOW

TO QUESTION #4 WHICH SUGGESTS THERE WILL BE INCREASES IN REGULAR

ASSESSMENTS FOR RESERVE FUNDING.

Date assessment will be due:

Amount per ownership interest per month or year:

Purpose of the assessment:

(Intentionally left blank)

(Intentionally left blank)

(Intentionally left blank)

Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be

found on the following page of the attached summary. NOT APPLICABLE

(3) Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association's obligation for repair and/or replacement of major components during the next 30 years?

Yes __X__ No __X__

Yes, if the Association follows the recommended future reserve contribution increases as outlined in the reserve study and disclosed in the table of question (4) with consideration to the note below*.

No, if the Association does not follow the recommended future reserve contribution increases as outlined in the reserve study and disclosed in the table of question (4) with consideration to the note below*.

*Note: The information contained within the reserve study includes estimates of replacement value and life expectancies of the components and includes assumptions regarding future events based on information provided by and supplied to the Association's Board of Directors and/or management. Some assumptions inevitably will not materialize and unanticipated events and circumstances may occur subsequent to the data of this disclosure summary. Therefore, the actual replacement cost and remaining life may vary from the reserve study and the variation may be significant. Additionally, inflation and other economic events may impact the reserve study, particularly over a thirty (30) year period of time which could impact the accuracy of the reserve study and the funds available to meet the association's obligation for repair and/or replacement of major components during the next thirty (30) years. Furthermore, the occurrence of vandalism, severe weather conditions, earthquakes, floods or other acts of God cannot be accounted for and are excluded when assessing life expectancy of the components. The reserve study only includes items that the Association has a clear and express responsibility to maintain, pursuant to the Association's CC&Rs.

(4) If the answer to (3) is No, what additional assessments or other contributions to reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the Board or the members?

Approximate date assessment(s) will be due:

0.40% starting in 2019 for 29 years

Amount per ownership interest per month:

(Current amount) X (the increases)

(5) All major components are included in the reserve study and are included in its calculations.

(6) Based on the method of calculation in paragraph (4) of subdivision (b) of Section 5550, the estimated amount required in the reserve fund at the end of the current fiscal year is $157,543.98, as of December 31, 2018, based in whole or in part on the last reserve study or update prepared by SCT RESERVE CONSULTANTS, INC. The projected reserve fund cash balance at the end of the current fiscal year is $99,263.14, resulting in reserves being 63.01% percent funded at this date. If an alternate, but generally accepted, method of calculation is also used, the required amount is $0. (See explanation below).

Explanation: Cash Flow Methodology - a method of developing a reserve funding plan 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.

SCT Reserve Consultants, Inc.

5

Assessment and Reserve Funding Disclosure Summary For the Fiscal Year Ending December 31, 2018

(As illustrated by California Civil Code Section 5570(a))

(continued)

7) See below: 30-Year Reserve Funding Plan Table...Based on the method of calculation in paragraph (4) of subdivision (b) of Section 5550 of the Civil Code, the estimated amount required in the reserve fund at the end of each of the next five budget years is $(see "100% Funded" column below), and the projected reserve fund cash balance in each of those years, taking into account only assessments already approved and other known revenues, is $(see "Cash Flow Balance with Funding Plan" column below), leaving the reserve at (see "Percent Funded" column below) percent funding. If the reserve funding plan approved by the association is implemented, the projected reserve fund cash balance in each of those years will be $(see "Cash Flow Balance with Funding Plan" column below), leaving the reserve at (see "Percent Funded" column below) percent funding. Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was 1.00% per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costs was 3.00% per year.

30-Year Reserve Funding Plan Table

Yea r

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047

Fiscal Year: January 01, 2018 - December 31, 2018

End of Year

Revenue

100% Funded

Cash Flow (Balance with Funding Plan)

Percent Funded (EOY)

$131,689

$53,500 40.63%

$157,544

$99,263 63.01%

$168,605

$130,170 77.20%

$185,773

$167,533 90.18%

$190,012

$190,715 100.37%

$200,348

$220,310 109.96%

$224,490

$265,735 118.37%

$216,199

$271,884 125.76%

$215,431

$286,778 133.12%

$241,655

$333,715 138.10%

$251,892

$359,956 142.90%

$240,637

$356,974 148.35%

$264,544

$400,688 151.46%

$264,465

$411,845 155.73%

$286,765

$453,903 158.28%

$281,886

$451,005 160.00%

$281,943

$457,454 162.25%

$259,873

$435,585 167.61%

$257,265

$432,105 167.96%

$293,486

$485,041 165.27%

$296,727

$493,126 166.19%

$320,895

$528,775 164.78%

$347,753

$569,181 163.67%

$235,892

$345,408 146.43%

$267,813

$383,893 143.34%

$307,723

$433,418 140.85%

$291,081

$397,263 136.48%

$277,072

$369,558 133.38%

$276,161

$355,466 128.72%

$253,141

$265,962 105.07%

$283,163

$284,169 100.36%

Contr i buti on, Interest,

Spec Assess

Contr i buti on Unit/M onth

Contr i buti on % Change

$45,763 $46,256 $46,805 $47,222 $47,695 $48,323 $48,583 $48,911 $49,549 $50,004 $50,172 $50,774 $51,086 $51,679 $51,858 $52,108 $52,092 $52,241 $52,936 $53,228 $53,764 $54,358 $52,437 $52,906 $53,590 $53,464 $53,382 $53,435 $52,776 $53,112

$170.45 $171.14 $171.82 $172.51 $173.20 $173.89 $174.59 $175.28 $175.99 $176.69 $177.40 $178.11 $178.82 $179.53 $180.25 $180.97 $181.70 $182.42 $183.15 $183.89 $184.62 $185.36 $186.10 $186.85 $187.59 $188.34 $189.10 $189.85 $190.61 $191.38

0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40%

30-Year Sum: $1,530,510

Expenditures

Components, Ta xes,

Deferred Exp

$0 $15,349

$9,442 $24,040 $18,100

$2,898 $42,434 $34,017

$2,612 $23,763 $53,155

$7,060 $39,928

$9,622 $54,756 $45,659 $73,961 $55,721

$0 $45,142 $18,115 $13,952 $276,210 $14,421

$4,066 $89,618 $81,088 $67,527 $142,279 $34,905

$1,299,841

SCT Reserve Consultants, Inc.

6

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