Reserve Study A Short and Long Term Budgetary Planning Vehicle

1. Reserve StudyA Short and Long Term Budgetary Planning Vehicle

2. A Reserve Study is a budgetary planning vehicle that provides data for a property’s necessary and imminent major repairs, replacements and/or required upgrades. The Study provides planners the opportunity to budget for these expenditures, rather than securing a loan or reducing operating funds to manage these replacements, improvements, or repairs. • Major facilities: Schools, hospitals, large building complexes and non-profit facilities often require a Reserve Study for planning purposes. There is usually a peace of mind in knowing the longevity of assets and planning for their estimated useful lives – instead of managing from crisis and lack of preparation for asset failure.

3. A Reserve Study compiles extensive data on the property (properties) through a thorough site survey and inspection, the review and analysis of blueprints/building plans and a review of historical expenditures. • National costing information is used in calculations and projections along with usual and customary asset longevity to create a thorough, very detailed and complete picture of the property and anticipated asset longevity.

4. A Reserve Study Report enumerates each asset or component by cost, useful life and estimated remaining longevity, as well as, recommended annual funding expenditures to manage replacement, repair or improvement. • Thereby reducing and eliminating economic and legal vulnerability relative to facility management.

5. Elements of a Reserve Study • Property Conditions Survey: • Inspect and evaluate conditions of individual property components • Provide written reports of evaluation with pictures in an easy to read and comprehend, non-technical format • Make clear and concise recommendations for repairs, renovation, replacements as necessary providing alternate solutions where possible • Provide realistic cost estimates for all recommended corrective work • Capital Reserve Analysis: • Determine life cycles of all common area components • Accurately estimate remaining lives and replacement cost of components • Provide information regarding condition of individual components and advice regarding short and long term maintenance to maximize useful life • Provide replacement schedule, yearly funding schedule and long term cash flow estimate

6. Optional Environmental & Energy Audit • An Environment & Energy audit is an important step of any facility review aimed at conserving energy and keeping its impacts on the environment within acceptable limits. The result, is to identify options to reduce the overall cost of energy as well as air quality, pollution control and compliance issues. The whole facility is reviewed as a system and the result will be to identify issues that affect indoor air quality and energy efficiency.  An Assessment involves a full examination of the following: • Thermographic aspects of the facility • Efficiency of the Heating/Cooling System • Efficiency of the lighting system (electrical) • Room Imbalances • Indoor air pollutants (including all volatile organic compounds) • Water Usage

7. What is studied? Essentially the entire building and site!

8. A typical Reserve Study examines, however, is not limited to the following: • Building Components: • Carpet • Caulking • Communications • Concrete & Masonry • Doors • HVAC & Hot Water • Electric Systems • Elevators • Finishes • Flooring • Mechanical Systems • Plumbing Systems • Roof & Gutters • Security Systems • Windows • Equipment: • Audio Visual • Kitchen & Food Processing • Office • Technology Parking Areas: • Curbs • Gates & fencing • Irrigation • Markings • Paving • Sealants Miscellaneous: • Athletic Fields • Gymnasiums • Swimming Pools

9. What is required to prepare a Reserve Study? • The age of the building including the dates and an accounting of any improvements, renovations, retrofits, equipment purchases, component replacements, previous studies, and upgrades to the facility. • A complete set of building plans including the mechanical, plumbing, electrical detail and site

10. What is included in a Reserve Study? • Executive Summary - provides the general information about the school system and summarizes the findings of the study. Includes information on percent funded and recommended reserve contributions. • Component Survey - Lists all components studied and their details in tabular format. • 30 Year Funding Plans – Lists theoretical fully funded balance for the next 30 years. Also list theoretical annual contributions, projected year end balance, and percent funded for the current year and recommended threshold funding plans (inflation increases are taken into account) • Annual Expenses – Lists projected annual expenses for each component over the next 30 years in tabular format (Inflation is taken into account) • 30 Year Projection Graph – Displays the reserve account balance for the current, fully funded, threshold and recommended funding plans over the next 30 years • Projected Annual Expense Graph – Displays projected annual expenses over the next 30 years in a bar graph (Inflation is taken into account) • Category Cost % Chart – Provides the percentage of total annual depreciation for each reserve category in a pie graph • Component Details – Provides detailed information on each component. Also includes pictures of selected components

11. Reserve Study Expense: There is no pre-determined cost for Reserve Study as each building or system has different characteristics. The age of the building, size of the building, the availability of plans, the number of buildings in the system, the availability of historical records regarding improvements, purchases and the scope of services requested are determining factors in pricing.

12. Presented by: For More Information Contact: Rich Maiolo Director of Business Development Capital Review Group 860.485.8589 richmcrg@yahoo.com