RESERVE STUDY - Meadows of Seven Points€¦ · Repair/Replacement Reserves - Non-annual maintenance items that will require significant expenditure over the life of the buildings.
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OBSERVATIONS AND COMMENTS SUMMARY .................................................................................................................14
RESERVE FUND ANALYSIS ..........................................................................................................................................................15
RESERVE FUND PROJECTIONS ...............................................................................................................................................21
PROFESSIONAL QUALIFICATIONS ..........................................................................................................................................31
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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INTRODUCTION
Meadows of Seven Points HOA, through Meadows of Seven Points HOA, authorized Onsite Engineering to
conduct a Building Evaluation and Reserve Fund Study for Meadows of Seven Points HOA, located at
Seven Points Trace, Hermitage, TN 37076.
Studies of this nature are important to ensure that a community has sufficient funds for long-term,
periodic capital expenditure requirements. Anticipating large expenditures over an extended period of
time through a structured analysis and scheduling process assists the Association in meeting financial
requirements without:
increasing the service fees above permitted maximums,
borrowing the funds,
or levying special financial assessments to the owners.
Typically, a community association has two broad cash requirements: the general operating requirements
and the capital replacement reserves. In this report, we will focus on those items falling under the capital
replacement reserve criteria. We have projected a capital repair and replacement reserve for thirty (30)
years. The first ten years are the most reliable.
This report is structured to analyze components of the community for which the Association is responsible
and to assess a useful expected life and useful remaining life of those components. The anticipated
scheduled repair or replacement of the component and the anticipated expense for the activity are then
analyzed in conjunction with the current capital reserves funding program for the community. Funding
program recommendations are made with the objective of limiting substantial cash excesses while
minimizing financial burdens that can result from significant cash inadequacies.
This report is intended to be used as a tool to determine reserve fund allocation requirements for the
community, to manage future Association obligations, and to inform the community of future financial
needs in general. The report that follows has been prepared from the perspective of what an owner of
this property would benefit from knowing. Some items, beyond those of immediate concern, may be
discussed. Therefore, the report should be read in its entirety in order to fully understand all of the
information that has been obtained.
EXECUTIVE SUMMARY
The following is a summary of the issues discussed in this Reserve Study. A detailed discussion of each
topic is provided in each of the noted sections of the report.
In summary, we consider this property to be in average condition when compared to others of similar age
and construction type.
Based upon the information provided to us, and our own estimates of costs and useful lives of capital
assets, the existing Reserve Fund with the current annual contribution rate is projected to be insufficient
to fund the reasonably expected capital expenditures over the 30-year life of this study. In addition, there
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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are significant expenditures projected to occur after the end of the 30-year study period. Therefore,
because these are not covered under the current reserve fund projections, updates to the reserve study
will be required so that reserves can be accrued for future capital expenditures.
Therefore, a study such as this should be updated from time to time, usually on a three to five-year cycle,
in order to reflect the most accurate needs and obligations of the community.
This report has been prepared in strict confidence with you as our client. No reproduction or re-use will
be undertaken with any third party without your express written consent or oral consent.
We have included two alternatives to your current funding program and recommend that the board adopt
an alternative that best reflects the objectives of the community. They are outlined in narrative form in
the RESERVE FUND ANALYSIS Section and on Page 1 of the RESERVE FUND PROJECTIONS (Financial
Projections) in the Appendices.
PURPOSE & SCOPE
PURPOSE
The purpose of this study is to perform a reserve fund analysis and to determine a capital needs
projection. It is intended to be used as a tool for to determine the allocation requirements for the reserve
fund to meet future anticipated capital expenditures for the community.
This report forecasts obligations for the community thirty years into the future. It should be noted that
events might occur that could have an effect on the underlying component or system useful life
assumptions used in this study. Likewise, inevitable market fluctuations can have an impact on component
or system replacement and repair costs.
We recommend that this report be reviewed and updated periodically. The property conditions should
also be evaluated periodically as part of that review. Also, additional concerns which may have developed
during this time period can be identified and, if planned for early enough, may be coordinated into
current funding budgets with the least impact on the individual homeowners. The National professional
association for CPAs (AICPA) recommends that this type of study be updated every three to five years.
SCOPE
This study has been performed according to the scope as generally defined by Meadows of Seven Points
HOA, Onsite Engineering, and the standards of the Community Associations Institute. The findings and
recommendations are based on interviews with the community's management personnel, a review of
available documents, and an investigation of the buildings and site.
The guidelines used to determine which physical components within the community are to be included in
the component inventory are based on the following general criteria:
The component must be a common element, or otherwise noted to be the responsibility of the
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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Association to replace.
The component has an established estimated useful life (EUL). Organizations such as RSMeans, Fannie
Mae, National Association of Home Builders (NAHB) and Whitestone have established EULs for various
building and property components.
The component is visible such that a remaining useful life (RUL) can be projected. The component
must have an estimated remaining useful life of thirty years or less. As the site ages, additional
components may need to be added.
The cost of replacement should be high enough to make it financially unsound to fund it from the
operating budget or is funded through a maintenance contract. We have established a minimum
reserve component cost of $1,000 for this study.
Components, such as painting, which are considered deferred maintenance, are most appropriately
funded from the Operating Budget instead of Reserves. We have done so unless the painting cost is a
significant portion of the budget or we were requested to do so.
This study estimates the funding levels required for maintaining the long-term viability of the property.
Our approach involves:
1. Examining association-managed equipment, buildings and site facilities.
2. Predicting their remaining service life (RUL) and approximating how frequently they will require repair
or replacement (EUL).
3. Estimating current repair or replacement costs for each capital item.
4. Using data developed in Steps 1, 2 and 3 to project Capital Reserve balances for Years 1 through 30.
The statements in this report are opinions about the present condition of the subject community. They
are based on visual evidence available during a diligent investigation of all reasonably accessible areas
falling under the responsibility of the Association. We did not remove any surface materials, perform any
destructive testing, or move any furnishings. This study is not an exhaustive technical evaluation. Such an
evaluation would entail a significantly larger scope than this effort. For additional limitations, see the
LIMITATIONS SECTION.
As the preparer of this reserve study, Onsite Engineering certifies that we do not have any vested
interests, financial interests, or other interests that would cause a conflict of interest in the preparation of
this study.
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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REFERENCES
SOURCES OF INFORMATION
The following people were interviewed during our study:
Scott Seaman- Meadows of Seven Points HOA Board President
The following documents were made available to us and reviewed:
Description Source
Pre-Site Visit Questionnare HOA Board President
Past Reserve Project Costs HOA Board President
STANDARDS OF REFERENCE
For your reference, the following definitions may be helpful:
Excellent: Component or system is in "as new" condition, requiring no rehabilitation and should perform
in accordance with expected performance.
Good: Component or system is sound and performing its function, although it may show signs of normal
wear and tear. Some minor rehabilitation work may be required.
Fair: Component or system falls into one or more of the following categories: a) Evidence of previous
repairs not in compliance with commonly accepted practice, b) Workmanship not in compliance with
commonly accepted standards, c) Component or system is obsolete, d) Component or system
approaching end of expected performance. Repair or replacement is required to prevent further
deterioration or to prolong expected life.
Poor: Component or system has either failed or cannot be relied upon to continue performing its original
function as a result of having exceeded its expected performance, excessive deferred maintenance, or
state of disrepair. Present condition could contribute to or cause the deterioration of other adjoining
elements or systems. Repair or replacement is required.
Adequate: A component or system is of a capacity that is defined as enough for what is required,
sufficient, suitable, and/or conforms to standard construction practices.
All ratings are determined by comparison to other buildings of similar age and construction type.
All directions (left, right, rear, etc.), when used, are taken from the viewpoint of an observer standing in
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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front of a building(s) and facing it. Some comments may refer to left-hand or right-hand when facing a
specific object.
Repair/Replacement Reserves - Non-annual maintenance items that will require significant expenditure
over the life of the buildings. Included are items that will reach the end of their estimated useful life
during the course of this forecast, or, in the opinion of the investigator, will require attention during that
time.
PROPERTY DESCRIPTION
GENERAL
Property Description: The subject property is a residential subdivision with 194 single-family homes
located on public streets.
Year Built: 2000 through 2015
SITE
PROPERTY ACCESS
Description: The main entrance to this property is located near the west perimeter of the property on
Seven Points Trace off of South New Hope Road. There is a second entrance to the property near the east
perimeter of the property on Leona Pass off of Earhart Road.
Observations and Comments: No significant problems were observed.
ENTRANCE MONUMENT AND BRICK WALLS
Description: This property is identified by a block entrance monument with brick veneer located at the
main entrance to the property. Additionally, there are large block walls with brick veneer located on each
side of the entrance to the property.
Observations and Comments: We observed cracks in one of the brick wall pilasters on the north entrance
wall. The horizontal crack on the back side of the pilaster measured an approximate width of 1/16-inch
and the vertical crack in front of the pilaster measured an approximate width of 1/8-inch. Refer to the
following photos.
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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The pilasters of the south brick entrance wall showed much more significant signs of cracking and freeze-
thaw damage. We observed significant cracking and separation of the brick on the front pilasters. We
observed cracks as wide as 3/4-inch. Refer to the following photos.
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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We observed similar cracking throughout the pilasters on the back side of the wall. We observed
horizontal cracks as wide as 3/8-inch and vertical cracks as wide as 1/4-inch. Refer to the following
photos.
These cracks indicate significant signs of wall settlement or freeze/thaw damage. We recommend that the
HOA engage an engineer in order to determine the structural significance of the cracking and suggest
methods of correction.
After repairs have been made, we recommend that the HOA have the cracks tuck-pointed and sealed to
prevent water from entering the cracks and causing further freeze/thaw damage to the walls.
We have included an allowance toward future repairs of the entrance monument and walls on a 5-year
cycle beginning in 2022. We have also included an estimate for a repair project for the cracked pilasters
anticipated in 2018.
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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COMMON AREAS
Description: During our site visit, the Board President identified multiple common areas throughout the
property. The common areas are primarily located at the two entrances to the property, around four
detention ponds, and along Seven Points Trace and Seven Points Circle. Additionally, there is a large open
field area located off of Kaylee Meadow Lane.
Observations and Comments: No significant problems were observed. Based on a conversation with the
HOA Board President, the HOA maintains the grounds and trees around the common areas. We also
understand that the large field area off of Kaylee Meadow Lane may be re-purposed as an amenities area
in the future.
STORM DRAINAGE
Description: Surface drainage around the homes is generally directed toward drainage swales located
behind the homes which connect to one of four detention ponds located on the property. Surface
drainage in the roadways is directed toward grated drains which connect to an underground storm water
system that ultimately discharges drainage into one of the four detention ponds. One retention pond is
located just south of Leona Pass, one retention pond is located to the east of the north cul-de-sac on
Amanda Meadow Drive, and the remaining two detention ponds are located on Seven Points Trace.
Observations and Comments: No significant problems were observed.
EARTHWORK/GRADING/EROSION CONTROL
Description: The ground of the common areas is covered with grass.
Observations and Comments: No significant problems were observed. Grading throughout the common
areas appears adequate to direct water to the detention ponds.
SIDEWALKS
Description: Based on a conversation with the Board President, we understand that the HOA seals
approximately 971 feet of city-owned concrete sidewalks located in front of the common areas of the
property. These common areas are located at the two property entrances, in front of the two detention
ponds on Seven Points Trace, and in front of the metro-service area on Seven Points Circle.
Observations and Comments: No significant problems were observed.
Based on a conversation with the Board President, we understand that the HOA plans to seal the
sidewalks in 2017. We have included a line item for sealing the sidewalks on a 3-year cycle beginning in
2017.
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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WALKING PATH
Description: There is a concrete walking path located on the east side of the detention pond located near
5863 Seven Points Trace. Based on a conversation with the Board President, we understand that the
Meadows of Seven Points HOA is responsible for maintaining approximately 300 feet of the concrete
walking path as well as a wood bridge on the path.
Observations and Comments: We observed typical signs of cracking in the concrete walking path. Refer
to the following photo.
We observed deteriorated paint and algae growth on the wood bridge. Refer to the following photo.
Meadows of Seven Points HOA
Seven Points Trace, Hermitage, TN
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We observed missing boards and broken balusters on the outer side of the bridge railing. Refer to the
following photos.
Concrete sidewalks have an estimated useful life of over 50 years. Because they are generally not
replaced all at once, but are replaced as sections fail, we have included an allowance for repair of 2% of
the concrete walking path on a 10-year cycle beginning in 2023.
We anticipate that the wood bridge would be pressure washed and re-painted as an operations and
maintenance budget item. We have included a line item for the replacement of the wood bridge
anticipated in 2022.
PROPERTY SIGNAGE
Description: There are combination street/stop signs, speed limit signs, and dead end signs located along
the roadways throughout the property.
Observations and Comments: Based on a conversation with the Board President, we understand that the
street identification signs were replaced in 2016 and the street sign posts were painted in 2016.
We have included the following projections in the financials for this study: