Kings Park West

Community Association

 

2005 Reserve Study

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

  1. INTRODUCTION
  2. EVALUATION METHODOLOGY

  3. FINANCIAL OVERVIEW
    1. Accounting Methods

    2. Interest In on Reserve Funds
    3. Future Replacement Costs (Inflation)
  4. REPLACEMENT METHODS
  5. UPDATING THE RESERVE FUND
  6. MAINTENANCE
  7. ATTACHMENTS and NOTES
    1. Attachments
    2. Notes

 

  1. INTRODUCTION
    2.

This report is prepared in accordance with The Commonwealth of Virginia Statute §55-514.2, Reserves for Capital Components, . The Statute requires the Kings Park West Community Association ("KPWCA") to prepare a budget for reserves to that includes:

    1. The cCurrent estimated replacement cost, estimated remaining life and estimated useful life of the capital assetscomponents;

    2. As of the beginning of the fiscal year for which the budget is prepared, the cCurrent amount of accumulated cash reserves set aside, to repair, replace, or restore capita capital assetscomponents and the amount of expected contribution to the reserve fund for theat fiscal year; and

    3. A gGeneral statement describing the estimation and accumulation of cash reserves procedures and how the association is funding its reserve obligations.used for the estimation and accumulation of cash reserves pursuant to this section and the extant to which the association is funding its reserve obligations consistent with the study currently in effect.

KPWCA is comprised consists of 580 single-family dwellings located in Fairfax, Virginia, . The community is located in Sections 16 through 22 of the larger Kings Park West subdivision (Sections 1 through 22). KPWCA was cConstructed in the mid to late 1970s, KPWCA and has public streets and sidewalks that are maintained by the Virginia Department of Transportation. Common land owned by KPWCA is mostly natural habitat consisting of mature trees and flood plains. Amenities (common assets) include asphalt footpaths and concrete walkways providing access to the common land.

Within the common land, there are easements to the Colonial Pipeline Company, and and to Fairfax County Department of Public Works and Environmental Services for sanitary and storm sewer maintenance. Fairfax County maintains detention ponds located on the common land as well as maintenance and of an asphalt path and concrete box culvert in Section 22.

The report writer conducted aA field investigation conducted for this report in January 2005. Allfound all asphalt and concrete walkways were generally clean of snow and debris. The common assets appeared to be in overall fair to good condition, except although certainfor one concrete walkways needing require immediate attention.

The approach to tThe reserve study developed a schedule, indicating the year of replacement and appropriate costs for each common asset . was to evaluate the replacement costs of the common assets. A schedule was developed indicating the year of replacement and the appropriate replacement costs for each common asset. The study did not address aAdditional maintenance costs to prolong the life of the structures was not factored into the report , which and will be addressed in the Association’s will address in its annual operations budget.

  1. EVALUATION METHODOLOGY
    2.

    A visual assessment of the common assets Observation of the common assets revealed thewas performed for this report. The reported condition and estimated remaining useful service life.ves are set forth in this Report, as well asThe condition and assessment of the common assets, with photographic evidence, is included in this Report . See Tab A. of the visual assessment and condition of the assets. However, tThe assessment was non-invasive and nowith no destructive testing was performed to uncover or expose any hidden conditions.

    Replacement costs are based upon cCommonly accepted references and experience with similar components installed in similar conditions is the basis for replacement costs, with opinions based on . The opinions are based on published construction cost data (2005 RSMeans Building Construction Cost Data), and the professional experience. of the report writer. Actual construction costs can vary significantly, due to seasonal considerations, material availability, labor, and economy of scalescale; therefore, this is merely a guide for. This report is intended to be a guide for future financial planning.

     

  2. FINANCIAL OVERVIEW
    3.

    The Association is on a calendar fiscal year. After being dormant for a number of years and reorganized in 2004, KPWCA currently was dormant for a number of years and was reorganized in 2004. There are currentlyhas no reserve funds for the replacement of common assets. The Report includes the estimated cost to replace common assets,Limited interest earnings were considered on the reserve account due to the projected low account balance combined with current low interest rates and expected maintenance costs on the account. An average ofas well as inflation rates for calculating the future cost of construction. OMB and CBO inflation rates was used to calculate the future cost of construction. The Board decided that replacement of common assets should be with like structures. Accordingly, the Report finds the following:

    Replace Asphalt and Concrete With Like Structures

    The 30-year study period projects total expenditures of for the thirty-year study period are projected to be $62,711. Based on the this projectionprojected expenditures over the next thirty years period and the current reserve fund balance, the suggested annual contribution to the reserves iswe are suggesting an annual contribution to reserves of $2,100 beginning in 2005 and continuing through 2015, which can then be . The annual contribution can then be reduced to $1,800 for the remaining yearsder of the period. At these levels, the annual contributions for the This would provide a projected total reserve of thirty-year period would total $59,100 plus interest income of $4,284. See Tab B.

    The condition assessment and reserve fund plan is intended to be a working tool for the Board for long-term planning over the long term and to inform the mMembers of the condition and cost to maintain the Association’s assets.

    1. Accounting Methods
      2.

      The reserve fund year endyear-end balances and corresponding annual contributions was determined by setting a zero level balance in the fund computed after the replacement expenditures. This method is typically referred to as the cash-flow method. Although in many instances it is preferred to have a minimum balance equal to a set percentage of the assets value, this report sets the minimum value at zero. The report writer believes that the low value of the common assets value does not require excess reserves and slight deviations in expenditures can be handled in the operating account.

    2. Interest In on Reserve Funds
      3.

      The reserve study uses money market rates for interest earned. Although some funds may be placed in longer term Certificate of Deposits or other investment accounts, the report writer recommendsit would be in the best interest of the Association to have the account remain liquid until developing a the Association’s financial history has been developed. Current interest rates for money market accounts are 0.25% for accounts less than $10,000; thereafter the interest rate is 1.2%. With balances below $2,500, there is a $10 monthly assessment fee.To avoid monthly maintenance costs a minimum balance of $2,500 is required, if the balance is below that amount a $10 per month fee is assessed. The interest rate and earnings used in the study have been adjusted to reflect the cash balance of the account.

       

       

    3. Future Replacement Costs (Inflation)
      4.

    The present value of the replacement construction costs includes an have been adjusted foradjustment for the future value of the replacement costs due to inflation. An average of the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO)Office of Management and Budget ("OMB") and the Congressional Budget Office ("CBO") inflation rates waswas used to calculate the future cost of construction. The projected inflation rate for 2006 is 1.9%;, 2007 is 2.15%; . 2008 and 2009 is 2.3%; , and an estimated rate of 2.2% was used thereafter.

  3. REPLACEMENT METHODS
    4.

    All of the common assets are scheduled for complete replacement at the end of their useful service life. Replacement of Although items such as sidewalks may can be replaced on a cyclical basis, with sections replaced where sections are replaced in lieu of the entire sidewalk, but in KPWCA’s case, the length of sidewalks and paths do not lend itself to partial replacements.

    Construction industry standards provided a guideline for the The useful service lifeves of of the components are established using construction industry standards as a guideline., which can Useful service lives can vary greatly due too initial quality and installation, materials, maintenance practices, and local environment. By visual observation, the projected useful service life may be shortened or extended due to the present condition. The useful service life is a guideline for anticipating replacements and for accumulating reserve funds.

  4. UPDATING THE RESERVE FUND
    5.

The Commonwealth of Virginia Statute §55-514.2, Reserves for Capital Components requires the KPWCA Board to:

    1. Conduct a study at least once everyonce every five years a study to determine the necessity and amount of reserves required to repair, replace and restore the capital components;

    2. Review the results of that the study at least annually to determine if reserves are sufficient; and

    3. Make any adjustments the bBoard of dDirectors deems necessary to maintain reserves, as appropriate.

 

  1. MAINTENANCE
    2.

    The following preventative maintenance practices are suggested to develop a routine maintenance program. Routine maintenance will help extend the useful service lifeves of the common assetsassets; therefore, a suggested routine maintenance program is as follows:.

    1. Asphalt Footpaths
      2.

      Clean Ccracks should be cleaned of debris and plant growth and filled with a rubberized asphaltic compound every three to six years to prevent water infiltration.. Crack filling should be performed every three to six years. Applying Aasphalt seal coating can also be applied to further extend its useful service life.

       

       

    2. Concrete Sidewalks
      3.

      When sidewalks are cracked, scaled, or sections have settled, repair or replacement may be necessary. Where dDifferential settlement has occurred, causes a tripping hazard may manifest that can present a liability to the Association, therefore should be repaired. Tripping hazards should be repaired as soon as practicable to promote safety and limit liability concerns.

    3. Concrete Steps
      4.

      Replace Cconcrete steps should be replaced when cracking, deterioration, or settlement occurs, filling . Cracks that occur at cracks at the intersection of the treads and risers should be filled with an appropriate sealant to prevent water infiltration.

    4. Metal Handrailings
      5.

    Periodically straighten Mmetal handrailings; should be periodically straightened, repair loose connections repaired,; and cleaned of rust, primed, and painted to maintain appearance and extend the useful service life. Clean and seal Bbases should be cleaned and sealed to prevent moisture infiltration that can damage concrete due to freeze/thaw cycles. In lieu of complete handrail replacement, replacement of deteriotated handrail bases byW welding new bases to replace deteriorated bases is an option to complete replacement of the handrails. may be an viable option.

     

  2. ATTACHMENTS and NOTES:
    3.
    1. Attachments

      2. TAB A, Description and condition of common assets:

      Common Land Description

       

      Table of Common Land Useful Life

       

       

       TAB B, Cash flow analysis of expenditures, reserve funding and interest

      Table of Cash Balances

       

       

       Cumulative Cash Flow

       

      Graph of Cash Flow

       

    1. Notes
      2.

    1. Fairfax County DPWES acknowledged responsibility for repair and replacement of the asphalt path located in Section 21, Parcel A, Tax ID No, 0682-05-A.

    2. Fairfax County Public Schools acknowledged they would share in the cost to repair and replace the asphalt paths in Section 17, Parcel Outlot Z, Tax ID No. 0684-09-Z. The Report has reduced the Association’s cost of replacement to 50% of the total anticipated replacement cost.

    3. The King Park West Civic Association has routinely maintained the three entrance signs on behalf of the Association. The Report does not include any costs to repair or replace the entrance signs.