Reserve Summary (As required by California Civil Code Section 5565) OUTDOOR RESORT-PALM SPRINGS OWNERS ASSOCIATION SCT Reserve Consultants, Inc. is pleased to provide this Level III Reserve Study (Financial 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 OUTDOOR RESORT-PALM SPRINGS OWNERS 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); a 3.00% tax rate on interest earned from the reserve account(s); an estimated remaining life of each reserve component; and an estimated current replacement cost of each reserve component. As of June 30, 2020, the estimated ending reserve fund balance is $4,001,500 and the estimated current replacement cost is $10,418,618 for the portfolio of reserve components. The projected future replacement cost of the portfolio is $14,156,670, 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 71.03%. This is referred to as Percent Funded. The Association would be 100.00% funded if there were $5,633,668.00 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 $1,345.56. This is calculated by subtracting the ending balance ($4,001,500) from the 100% funded figure ($5,633,668.00), then divided by the number of ownership interests (1213). 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 $88,084 per month starting in 2021 ($72.62 per unit per month for each of the 1213 ownership interests) towards the reserve fund. To offset the future cash shortfall we recommend and have included an increase of 2.97% starting in 2022 for 29 years. The increase is scheduled to take effect in the year 2022. 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: July 1, 2020 through June 30, 2021
Estimated Remaining Useful Life
Estimated Current Replacement Cost
Estimated Useful Life 0 to 50 1 to 40 5 to 40 5 to 40 1 to 40 8 to 20 10 to 25 5 to 40 10 to 10 5 to 40 5 to 40 5 to 40 5 to 40 5 to 40 10 to 40 5 to 40 1 to 30
Estimated Reserve Allocation
Uniquely Sourced Revenue
Fund Balance on Jul 01, 2020
Estimated Interest
Location
A Other
0 to 3 0 to 15 0 to 29 0 to 26 0 to 22 0 to 14 0 to 14 0 to 19 7 to 7 0 to 18 0 to 14 0 to 18 0 to 19 0 to 20 2 to 5 1 to 21 0 to 26 1 to 4
$304,073 $136,693 $1,640,757 $1,669,354 $2,225,214 $77,360 $447,662 $210,859 $45,060 $203,517 $201,494 $204,128 $206,623 $212,987 $9,013 $67,217 $2,345,067 $211,540
$403,036 $69,212 $398,321 $693,553 $661,494 $40,055 $160,358 $85,627 $10,421 $98,172 $94,481 $96,462 $86,164 $89,670 $4,794 $29,791 $916,595 $62,424
$106,463.04 $18,282.50 $105,217.55 $183,203.96 $174,735.63 $10,580.59 $42,358.95 $22,618.56 $2,752.66 $25,932.33 $24,957.43 $25,480.82 $22,760.61 $23,686.57 $1,266.30 $7,869.46 $242,121.14 $16,489.40
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
$3,730.57 $640.64 $3,686.93 $6,419.65 $6,122.91 $370.75 $1,484.30 $792.58
Administration CH‐El Saguaro CH‐La Palma
Golf Course
Laundry
Maintenance
Sat (A)
Sat (all 6)
$96.46 $908.70 $874.53 $892.87 $797.55 $830.00 $44.37 $275.75
Sat (B) Sat (C) Sat (D) Sat (E) Sat (F)
Shack, Golf Shack, Guard
Streets Vehicle
$8,484.17 $577.81
5 to 7
Taxes
$873
$230.50
$8.08
Totals:
$10,418,618 $4,001,500 $1,057,008.00
$0.00 $37,038.64
The complete reserve study is available by request from the Association.
Report Date 5/8/20 Version 2
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