VHMR Capital Reserve Study Update T. Colle J. Weaver D. Weidner January 23, 2014

Capital Reserve Study Committee (T. Colle, J. Weaver, D. Weidner) formed to prepare Capital Reserve Study Study methodology: 30 potential assets identified (9 later dropped - below “de minimus” cost) Expected life and 2013 replacement cost estimated based on info from original suppliers or businesses with expertise Assume inflation rate to predict future repair or replacement costs in projected replacement year Project replacement costs and annual expenditures out to 2060 (all assets replaced at least once) Option A – Linear Accrual Calculate annual $ needed to reserve for replacement (linear accrual) Aggregate individual assets to determine annual contribution required for the Capital Budget Large annual capital reserve requirements ($200-800k @3% inflation, $250-2,500k @5% inflation) and initial 2014 contribution of $25,000 Rejected Option A due to large reserve requirements Option B – Cash Flow Calculate projected expenditures in each year to keep reserve balance above $0 Initial 2014 contribution of $18,000 sufficient with initial Capital Reserve of $75,000 Recommend adoption of Cash Flow method as basis for funding Capital Reserve Account

Details of Capital Reserve Study Assumed inflation rate: 3.0% 2014 $ added (cash flow method): $17,981 Raise by inflation every year 2013 Replacement Value All Items $296,109 Capital Reserve Funding Method: Ind. Linear Accrual Cash Flow Year Cash Reserve Needed Cash Reserve Spent Annual $ Need Fund Balance Annual Contr. 2006 $1,240 $0 2007 $5,618 $4,378 2008 $28,274 $22,656 2009 $50,930 2010 $76,057 $25,128 2011 $101,185 2012 $126,313 2013 $151,441 $75,000 2014 $176,568 $92,981 2015 $195,897 $6,365 $25,694 $105,136 $18,520 2016 $210,139 $12,020 $26,262 $112,192 $19,076 2017 $221,561 $15,194 $26,616 $116,646 $19,648 2018 $248,176 $136,884 $20,238 2019 $272,471 $2,388 $26,682 $155,341 $20,845 2020 $292,009 $7,379 $26,917 $169,432 $21,470 2021 $318,926 $191,546 $22,114 2022 $271,113 $78,298 $30,485 $136,026 $22,778 2023 $301,598 $159,487 $23,461 2024 $283,881 $49,832 $32,115 $133,819 $24,165 2025 $308,170 $8,555 $32,844 $150,155 $24,890 2026 $341,014 $175,791 $25,637 2027 $313,966 $62,167 $35,119 $140,030 $26,406 2028 $349,085 $167,227 $27,198 2029 $384,203 $195,241 $28,014 2030 $390,823 $29,751 $36,371 $194,344 $28,854 2031 $423,910 $3,405 $36,492 $220,659 $29,720 2032 $339,267 $125,918 $41,274 $125,353 $30,611 2033 $380,541 $156,883 $31,530 2034 $421,815 $189,359 $32,476 2035 $463,089 $222,809 $33,450 2036 $470,488 $35,525 $42,923 $221,737 $34,453 2037 $342,633 $177,056 $49,201 $80,168 $35,487 2038 $391,834 $116,720 $36,552 2039 $389,126 $53,915 $51,207 $100,453 $37,648 2040 $416,713 $24,434 $52,021 $114,797 $38,778 2041 $468,735 $154,738 $39,941 2042 $400,255 $125,626 $57,147 $70,251 $41,139 2043 $452,720 $4,855 $57,319 $107,770 $42,373 2044 $510,039 $151,414 $43,645 2045 $567,358 $196,368 $44,954 2046 $603,393 $22,545 $58,580 $220,126 $46,303 2047 $538,129 $128,673 $63,409 $139,145 $47,692 2048 $571,618 $30,952 $64,441 $157,315 $49,122 2049 $636,059 $207,911 $50,596 2050 $700,500 $260,025 $52,114 2051 $764,942 $313,702 $53,677 2052 $625,924 $209,052 $70,035 $159,938 $55,288 2053 $695,959 $216,884 $56,946 2054 $685,120 $83,997 $73,159 $191,541 $58,655 2055 $692,037 $69,214 $76,130 $182,741 $60,414 2056 $730,264 $39,210 $77,438 $205,759 $62,227 2057 $551,351 $269,852 $90,939 $64,094 2058 $642,290 $66,017 $66,016 2059 $733,229 $134,014 $67,997 2060 $824,168 $204,050 $70,037

Details of Capital Reserve Study