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SOLERA DIAMOND VALLEY | APRIL 2022 5 Litigation Defects Update • Please make sure to completely fill out every Section of your Home Improvement Application, incomplete applications will not be reviewed by the Design Review Committee. • The Aerobics room flooring has been installed and the project is now complete. • Got Vendor questions? Come to Management so that we may address your concerns. Vendors are hard at work focusing on the task at hand and should not be disturbed. • Violations: Closed- 22, Opened -15 COMMUNITY UPDATES By Ralph Grider, Board Treasurer The Litigation repairs for The Lodge are complete. Empireworks has done a tremendous job and the facility looks great. The final cost was $485,938. This means we have $232,811 left over from all the work that has been completed and attorney fees. So, let's go back to the beginning of this lengthy process. We were able to negotiate with Pulte and their sub-contractors for a final total of $895,000. After attorney and forensic analysis fees, which came to $176,251, we had $718,749 to pay for the repairs on The Lodge. Our final cost as of this writing, is $485,938. There could be some very small final adjustments. Not all of the defects that were identified by the forensic company have been repaired. We only addressed the most serious conditions. The other conditions will be monitored closely and repaired as needed. Again, thank you for your patience during this lengthy process. Now comes the decision on how we process the left-over funds of $232,811. According to the attorneys who helped in this process, they recommend that the excess funds be placed in long-term reserves. We are consulting with our reserve company, RSI, on which reserve accounts these funds should be placed in. As of now the current funds will remain in the Pacific Western Bank account for approximately two years. Why shouldn't these excess funds be placed in operating instead of reserves? We have been informed by our attorneys that if these excess funds are placed in our operating accounts, it possibly becomes income, thus is taxable by the IRS. Per a quote, "Using excess funds for operating expenses or transferring the money into one or more short term or contingency reserves could result in the excess money becoming fully taxable. An Association may prudently and safely decide to maintain the excess funds to be used for construction defect repairs not completed during the initial repair program. The possibility of future problems developing is common and creating a "latent defect fund" to handle these situations helps the Association stay financially strong". Aside from the repairs, we have had the shed painted and are looking to remodel the Ballroom in the very near future.

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