Mountain Shadows Annual HOA Meeting Financial and Road Presentation

In Review

• The Board decided to form a committee to review the Financial Health of the Association, partially driven by knowing that there would be the potential for some substantial expenses in the near future (Road).

• Financial committee did a deep dive of 2017-2020 income and expenses for the Association.

• A determination was made that the current dues are adequate for recurring operations and general maintenance for the Road and Water system.

• The Board developed and adopted a new budget policy as a result that includes the logic on general operating expenses, emergency and non-emergency expenses and how each are handled (see next page for Budget Policy Doc).

Special Assessment Financing Option

• I contacted multiple potential lending sources in regard to financing options for large one-time projects as an Association.

o While there are many that offer this service, the business Bank I have been using for 12+ years has a dedicated division for Association lending.

• Requirements from the Bank o Financially Savvy board with proven track record o 50-100% of Annual expenses in Reserve o Proof of successful vote from members o Proper Board resolutions for loan authorization

• More information on the Bank itself is provided in the following pages.

Review of the Road Bid(s) and options

• Options that were discussed and evaluated. o Repair and Chip Seal o Re-Paving 1 and 2 inches thick o Do nothing/Minimal repairs.

• The recurring recommendation is for required repairs and paving the entire road with 2 inches of new asphalt.

The current bid does not include the Cul-de-sacs.

• Slender Paving Bid included in the following pages.

• Sample Payments options based on this Bid are included as well.

• Questions for me outside of today’s meeting can be emailed to bill@elitenetworks.com

MOUNTIAN SHADOWS HOA BUDGET POLICY (approved 1/6/2021 at the Regular BOD Meeting)

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Policy intent: 1. This policy offers a framework and rationale for Mountain Shadows "Annual Homeowners Operational Dues & Assessments" built into the framework of our Covenants, Conditions & Restrictions (CC&R's) and By-Laws. 2. Further, this policy establishes certain cornerstones for a fundamentally sound fiscal position resulting in a solid financial standing for the purpose of seeking favorable loans and/or credit, if needed or deemed necessary. 3. This policy defines the ongoing financial necessities for maintaining the community by way of breaking out and separating normal, emergency and special project financial and methodology requirements.

MOUNTAIN SHADOWS HOMEOWNERS ASSOCIATION BUDGET POLICY

Annual assessment calculated to satisfy all ongoing operational expenses, including but not limited to maintenance, minor repairs and upgrades associated with repairs. Any unexpended balance would be held in reserve and as cashflow allows transferred to the designated reserve account. Funds held in reserve do not impact the then current budget year allocations for operations, water and road. "Reserve(s)" are defined as any funds over and above the normal operating expenses of the HOA. A separate interest bearing reserve account should be maintained, the target average annual balance for the reserve account to be a 1.5 times the then current annual dues. Non-emergency projects that would reduce the reserve account below the target figure will be evaluated on whether being reshaped, rescheduled, or considered for special assessment funding is the best course of action, unless the execution of the project represents a low risk to our overall yearly financial health. Non-emergency projects including large capital expenses such as roads or drilling of new water wells to be funded by special assessments. Special assessments could be funded from accrual prior to project execution, or use of loan proceeds to provide funding at the time of or at the completion of the project. Project schedule and financial factors should define which method is used. Emergency projects to be funded from reserves, if reserve balance is not adequate, a loan would be executed to cover the project.

We’ve worked with community associations across the Northwest since 2008, so we know a thing or two about the industry. Our team of experienced bankers provide solutions and service customized to your associations’ specific needs. At Northwest Bank, you’ll know your banker, and that’s important. We make decisions, and support your community, locally. Because of that:

No Two Associations Are Alike.

Experienced Bankers. Exceptional Service. Customized Solutions. www.northwest-bank.com

“The community association team at Northwest Bank provides exceptional service and flexible solutions to meet the financial management needs of our community. We appreciate the wide range of available products—from cash management to project financing—and the friendly, knowledgeable staff who so capably support our relationship with Northwest Bank.” — Susan Stone, Board Treasurer RiverPlace Condominium No. 1 Association

• We can move from term sheets to loan documents in as little as two weeks, so you can keep your projects moving.

• We provide support at board meetings, so your association managers and homeowners are informed. • We simplify the account transition process, so you can keep working on the things that matter most.

This is why we’re different.

Deposit & Treasury Management Solutions:

• Customized reserve and deposit solutions to make managing your associations’ finances easier

• Full suite of treasury services to maximize efficiency, cash flow, and payment collection

• FDIC insured products: DDMSM* and CDARS®**, so you can manage all accounts in one place

• Full service, internet based online banking system with customized access controls for peace of mind Loan Solutions:

• 5 and 10 year fixed rate commercial loans up to 20 year terms

• No unit minimum or maximum

• Local decision makers for loans up to $10MM

• Competitive rates

• Preferred partner pricing for community associations

We value relationships with communities of all sizes, and move quickly to customize and deliver solutions to fit your associations’ specific needs.

We know our craft. This is what we do.

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Assets Loans Deposits

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2015 2016 2017 2018 2019

As much as we focus on our client’s business, we focus on ours. You should demand that of your banking partner. We maintain a balanced portfolio across our geographic footprint and lines of business, ensuring our bank remains strong.

A strong bank is a better partner.

Data as of December 31, 2019

All loans and credit products are subject to underwriting and credit approval. If approved, certain fees, restrictions and other terms and conditions may apply.

4900 Meadows Road, Suite 410 Tel: 503.906.3939 www.northwest-bank.com Lake Oswego, OR 97035 Fax: 503.906.3938

Loan Request Application

Loan Estimate & Sample Loan Terms(1-3 days for Bank to prepare)

Board Selects Northwest Bank Kickoff Meeting

(30 min virtual or inperson meeting)

Bank Collects Supporting Documentation

Bank Preapproval Underwriting "Preflight" (PF)

(1-2 weeks for Bank to prepare)

Financial Proposal Signed by Board"Letter of Intent" (LOI)

Additional Supporting Documentation

Requested to Complete Underwriting

Collect Loan Signer Information/ "Customer Information Profile" (CIP)

and Open Bank Accounts

Bank Prepares Final Loan Approval "Credit Memo" (CM)

(1-2 weeks for Bank to prepare)

Loan Documents Prepared (1 week for Bank to prepare)

Board and/or Attorney Review and Final Edits

2-3 days for review / 2-3 days for edits

Loan Signing at Bank(1-3 days after final review)

Financing Frequently Asked Questions

Am I personally liable or a guarantor on a loan?

No. The loan is made to your association. No personal guarantees required.

Is there a lien on my Lot/Home?

There are no liens taken on real estate. The collateral for the loan is a UCC-1 filing on all assets of the association with the state, including an assignment of the rights of the association.

Am I able to buy or sell a Lot/Home while a loan is still outstanding?

Yes. Individual Lot/Homes may be bought and sold.

Am I able to refinance my Lot/Home?

Yes. Your association’s loan is not a lien on your property and does not have an impact on the refinancing of your Lot/Home.

Are we able to prepay the loan?

Yes. There is no prepayment penalty if from cash or sale of property. There is a small prepayment penalty if the loan is refinanced with another lender.

What happens if association members do not pay?

The loan repayment obligation is allocated by the HOA. Your association would be responsible for collecting from individual Lot/Homeowners similar to regular assessments.

Can we re-amortize the loan and is there a cost?

The proposed Loan product offers automatic quarterly re-amortization. Additional re-amortizations can be requested for a small fee.

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Description Amount

Mobilize equipment on job site.

Clean all streets in subdivision using power broom and air blowers

$5,000.00

Pre-patch streets where needed to prepare for pavement.

Raise manholes 2” to meet new grade

Apply CSS-1 tack coat binder to existing asphalt streets

$20,000.00

Re-pave +\- 3.5 miles of streets in Mountain Shadow subdivision. Roads are approximately 20 feet wide with the exception of the lower portion.

Compacted/finished depth is 2”Material will be provided by Sunrock or IMC. Material data sheet is available upon request

$605,000.00

Final inspection on job site and clean up of job site.

Please make payment to:

Bank Account Number: 40630104134910999Routing Number: 121000248

Subtotal $630,000.00Total $630,000.00

Total $630,000.00

Notes

Slender paving will provide all cones and signage required for the duration of the project.

Exact schedule is dependent on weather, trucking, and other conditions. We will do our best to keep to the schedule as given. Any deviations from the agreed-upon schedule will be discussed with Bill Klevinberg.

Payment schedule will be 1/3 at start, 1/3 at the halfway point and 1/3 upon completion of work

Due to the surge of construction activity in the state of Idaho we ask for a prompt response to this proposal to ensure us being able to schedule it for the summer of 2021

For: Bill Klevenberg-Mountain Shadows HOA 208-250-9973bill@elitenetworks.com18 Creek Hollow DrGarden Valley, ID, 83622

EstimateEstimate No: 21100

Date: 04/22/2021

2051 S Beartooth WayMeridian, ID, 83642Leonard 208-919-7283Tom 208 353-0445Lic #042369Slenderpavingid@gmail.com

- Estimate 21100 - 04/22/2021

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Thank you for the opportunity to bid your job!

Leonard Slender

Terms and Conditions

1. All job cancellations require a 96 hour notice to avoid a 10% cancellation fee. 2. Project start dates are subject to change beforehand and are weather dependent. We will make every effort to start and finish work as scheduled. 3. Unless otherwise stated, balance is due in full, on date of job completion.4. A 10% deposit is required to schedule all jobs. 5. A late fee of 3% be added to invoices not paid within 10 days of job completion.6. Outstanding invoices that are not paid within 30 days of job completion will be assessed with a 10% late fee and a mechanics lien will be filed on the property where work was performed.

Slender Paving Inc. Client's signature

Pre-Financing Cost Per lot $7,241.38

Loan Amount 5 YR Fixed Rate 5 YR Fixed Rate 10 YR Fixed Rate

$630,000.00 Scenario 1 Scenario 2 Scenario 3

Loan Period in Years 5 5 10

Payment Frequency Monthly Monthly Monthly

Annual Interest Rate 4% 4% 4.5%

Scheduled Payment $11,602.41 $6,378.44 $6,529.22

Total Payments 60 120 120

Total Interest $66,144.53 $135,413.24 $153,506.37

Total Cost of Loan $701,144.53 $770,413.24 $788,506.37

$760.28 $1,556.47 $1,764.44

$1600.33 $879.78 $900.58

Total interest Per Lot

Annual Payment Per Lot

Fees Associated with Loan (estimated) $5,000.00 $5,000.00 $5,000.00

Bank Loan Payment Comparison