Transcript EAGLE CROSSING HOA

EAGLE CROSSING
HOA
2007 BUDGET PRESENTATION
MONDAY, NOVEMBER 27, 2006
BY: BRENT WARNER, TREASURER

WHAT DOES OUR BUDGET CONSIST OF?

MAJOR CHALLENGES FACED IN 2006

IMPACT FOR 2007 AND BEYOND

FUTURE INITIATIVES FOR NEW BOARD
WHAT DOES OUR BUDGET CONSIST OF?
BUDGET IS BROKEN DOWN INTO TWO
AREAS WITH THREE MAJOR
COMPONENTS OF EXPENSES:
1. INCOME
2. EXPENSES
1. ADMINISTRATIVE
2. UTILITIES
3. GROUNDS MAINTENANCE
WHAT DOES OUR BUDGET CONSIST OF?
INCOME
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
I’LL EXPLAIN THIS LATER
WHAT DOES OUR BUDGET CONSIST OF?
INCOME
RESERVE FUNDING
LET ME COME BACK TO THIS, TOO.
WHAT DOES OUR BUDGET CONSIST OF?
EXPENSES
ADMINISTRATIVE EXPENSES
(OVERHEAD OF THE HOA)
1) MANAGEMENT FEES
WHAT WE PAY THE MANAGEMENT COMPANY.
2)
PROFESSIONAL FEES
LEGAL FEES FOR COLLECTION, COVENANT ENFORCEMENT, TAX
PREP, RESERVE STUDY (IN 2006)
3)
ADMINISTRATIVE EXPENSES
MAILING FEES, COPY CHARGES, FAX FEES, OTHER TYPES OF
OFFICE EXPENSES PAID BY HOA
WHAT DOES OUR BUDGET CONSIST OF?
EXPENSES
ADMINISTRATIVE EXPENSES (CONT’D)
4. INSURANCE EXPENSE
DIRECTOR’S LIABILITY INSURANCE POLICY AND HOA INSURANCE
POLICY
5.
PROPERTY TAXES
YES, WE PAY PROPERTY TAXES. IT’S ON THE COMMON AREA.
6.
WEBSITE EXPENSE
CONTRACT FOR WEBSITE MONITORING AND DOMAIN NAME.
SHOULD HAVE A NEW SITE UP IN EARLY 2007.
7.
SOCIAL COMMITTEE EXPENSE
EXPENSES FOR GARAGE SALE SIGNS, NEWSPAPER ADS,
NATIONAL NIGHT OUT, VARIOUS OTHER PLANNED SOCIAL
EVENTS IN NEIGHBORHOOD.
WHAT DOES OUR BUDGET CONSIST OF?
EXPENSES
UTILITY EXPENSES
1. SECURITY LIGHTING
STREET LIGHTING PAID TO IPL TO LIGHT OUR STREETS. THIS IS
NOT PAID BY THE COUNTY BUT BY THE HOA.
GROUNDS MAINTENANCE
(EVERYBODY’S FAVORITE WHIPPING BOY!)
1.
SNOW REMOVAL
TO REMOVE SNOW.
2.
LAKE MAINTENANCE
TO TREAT OUR PONDS ON A SCHEDULED BASIS TO PREVENT ALGAE AND
OTHER CRAP THAT CAN GET INTO OUR PONDS.
WHAT DOES OUR BUDGET CONSIST OF?
EXPENSES
GROUNDS MAINTENANCE (CONT’D)
3. MOWING AND TURF CARE
TO MOW OUR COMMON AREA GRASS. MOST AREAS ARE CUT WEEKLY, SOME
ARE “BUSH HOGGED” MONTHLY OR ONCE A YEAR.
BOARD ENTERTAINED SEVEN BIDS FOR MOWING WITH PRICES RANGING
FROM $61,200 TO $202,300.
4.
FERTILIZATION AND WEED CONTROL
FOUR APPLICATIONS OF PRE-EMERGENT FERTILIZER APPLIED TO COMMON
AREA GRASS AND BEDS.
BOARD ENTERTAINED SIX BIDS WITH PRICES RANGING FROM $15,000 TO
$82,200
WHAT DOES OUR BUDGET CONSIST OF?
EXPENSES
GROUNDS MAINTENANCE (CONT’D)
5. MULCH
TO MULCH OUR PLAYGROUNDS, TREE BEDS, COMMON AREA PATHS,
ENTRANCE WAY, ISLANDS, ETC.
BOARD ACCEPTED BID OF APPROXIMATELY $30,000 TO MULCH IN
2007. $10,000 WAS BUDGETED FOR THIS YEAR FOR A PARTIAL
MULCHING, WITH REST TO BE DONE IN 2007. BOARD OPTED TO
MULCH EVERYTHING IN 2007, HENCE THE ADDITIONAL $20,000 IN
MUCLH.
WHAT DOES OUR BUDGET CONSIST OF?
EXPENSES
GROUNDS MAINTENANCE (CONT’D)
6. COMMON GROUND MAINTENANCE
ON-SITE PERSON TO PULL WEEDS, PICK UP TRASH, TURN OVER BEDS,
WATER FLOWERS, PLUS OTHER MAINTENANCE DUTIES ON OUR COMMON
AREA.
ONE BOARD PERSON TO LIASION WITH THIS PERSON AND LANDSCAPING
COMPANY TO ENSURE ALL DUTIES ARE PERFORMED.
THIS REPLACES BED MAINTENANCE AS A LINE ITEM IN OUR BUDGET.
7.
POOL UTILITIES
PHONE AND ELECTRICITY PROVIDED TO BOTH POOLS
WHAT DOES OUR BUDGET CONSIST OF?
EXPENSES
GROUNDS MAINTENANCE (CONT’D)
8. POOL CONTRACT
OPENING AND CLOSING OF POOLS, WEEKLY TESTING AND CHEMICAL
TREATMENT, CLEANING OF POOLS AND OTHER POOL DUTIES.
9. SECURITY
OFF DUTY HCSD AT $25/HOUR AND PRIVATE SECURITY COMPANY FOR BOTH
POOLS.
10. COMMON AMENITY MAINTENANCE
MAINTENANCE TO COMMON AMENITIES SUCH AS REPAIR TO POOL HOUSES
(BATHROOMS, EQUIPMENT, ETC.)
Budget Progression
INCOME
Association Fees
Less: Loss from Uncollectible Receivables
Allowance for Unpaid Dues
Late Fees
TOTAL INCOME
Less: Reserve Funding
TOTAL OPERATING INCOME
2004
221,780
2005
2006
2007
(2,500)
5,000
224,280
(2,500)
221,780
255,900
(1,000)
(9,000)
5,000
250,900
(10,000)
240,900
341,200
(1,500)
(16,000)
6,500
330,200
(15,000)
315,200
341,200
(10,300)
0
0
330,900
(35,000)
295,900
ADMINISTRATIVE:
Management Fees
Professional Fees
Administrative Expense
Insurance Premiums
Property Taxes
W ebsite Expense
Social Committee Expense
TOTAL ADMINISTRATIVE
14,300
2,500
6,000
4,175
7,500
0
4,000
38,475
20,472
5,000
2,500
5,900
7,500
700
4,500
46,572
21,500
12,000
2,700
6,000
22,000
1,000
1,000
66,200
23,031
5,000
3,800
4,751
19,600
1,200
2,000
59,382
UTILITIES
Security Lighting
TOTAL UTILITIES
34,000
34,000
31,000
31,000
33,000
33,000
33,000
33,000
GROUNDS MAINTENANCE:
Snow Removal
Lake Maintenance
Mowing and Turf Care
Fertilization and Weed Control
Mulch
Common Ground Maintenance
Bed Care
Flowers
Pool Utilities
Pool Contract
Security
Common Amenity Maintenance
6,500
5,000
64,700
25,872
0
5,000
10,000
2,000
1,000
15,750
7,300
6,000
6,800
3,700
62,825
26,200
0
5,100
15,800
0
9,950
21,600
7,000
4,000
6,800
4,000
68,000
35,000
10,000
8,000
28,000
6,500
5,418
72,795
26,200
20,000
18,000
0
0
10,000
21,000
20,000
3,000
TOTAL GROUNDS MAINTENANCE
149,122
162,975
215,300
202,913
TOTAL OPERATING EXPENSES
221,597
240,547
314,500
295,295
EXPENSES
10,000
18,500
17,000
10,000
MAJOR CHALLENGES IN 2006
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
COLLECTION OF DUES CONTINUES TO BE A PROBLEM FOR
EAGLE CROSSING. BUDGETED AMOUNT OF $10,300 IS BASED
ON CURRENT WRITE-OFFS PLUS ADDITIONAL BASED ON
CURRENT COLLECTION REPORTS.
BOARD CONTINUES TO REVIEW POSSIBLE ALTERNATIVES TO
IMPROVE SITUATION.
NEW ATTORNEY HIRED – 120 ACCOUNTS PLACED WITH
ATTORNEY.
PRIOR ATTORNEY STILL WORKING 57 ACCOUNTS.
TOTAL OF 177 ACCOUNTS PLACED WITH ATTORNEY’S
BOARD IS CONSIDERING INTIATING FORECLOSURE ON
HOMES WITH DELINQUENT DUES.
MAJOR CHALLENGES IN 2006
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
DELINQUENCY RATE OF APPROXIMATELY 20% IS WAY TOO HIGH!!
IDEAL RANGE: 3 – 5%
HOPEFULLY, TOUGHER ACTION (FORECLOSURE OR THE THREAT OF
FORECLOSURE WILL HELP BRING DELINQUENCIES IN LINE.
AS NEIGHBORHOOD TURNS OVER, WHICH WE SHOULD SEE OVER
THE NEXT FEW YEARS, NEW HOMEOWNERS SHOULD HAVE THE
ABILITY TO AFFORD HOMES, INCLUDING HOA DUES, REDUCING THE
DELINQUENCY RATE.
WITH GARNISHMENTS, HOMES SOLD, CASH FROM DELINQUENT BORROWERS
WILL COME IN SITUATION WILL IMPROVE.
IMPACT FOR 2007 AND BEYOND
RESERVE FUNDING SET
WILL ALLOW BOARD TO BUDGET FOR LARGE EXPENDITURES
WITHOUT THE NEED FOR A SPECIAL ASSESSMENT.
IF BOARD CHANGES FUNDING STRATEGY, MAY RESULT IN AN
INCREASE IN DUES. CHANGING FROM A PERCENTAGE
INCREASE METHOD TO A FIXED CONTRIBUTION.
WILL HELP FACILITATE THE PREPARATION OF A LONG-TERM
BUDGET FOR PLANNING PURPOSES.
DELINQUENCIES
DEPENDING ON SUCCESS OF COURT ACTION AND COLLECTION,
MAY NEED TO INCREASE ALLOWANCE ACCOUNT, RESULTING
IN AN INCREASE IN DUES.
IMPACT FOR 2007 AND BEYOND
FUTURE OF HOA DUES
$400 LIKELY NOT CEILING OF DUES. MORE LIKELY IN THE $450 $500 RANGE, ALTHOUGH IT IS DIFFICULT TO TELL.
CANNOT “CAP” DUES BECAUSE EXPENSES ARE NOT CAPPED.
BUDGET AND FINANCE COMMITTEE DID A STUDY OF SIMILAR
NEIGHBORHOODS TO DETERMINE THEIR FEE STRUCTURE AND
COMPARED TO OURS.
IMPACT FOR 2007 AND BEYOND
HOA DUES COMPARISON
SAMPLED 11 HOA’S
OF THE ELEVEN SAMPLED:




FOUR HAD ONE POOL
EIGHT HAD PONDS
THREE HAD PLAYGROUNDS (ALL HAD JUST ONE)
TWO HAD WALKING TRAILS
DUES RANGED FROM $190 IN HOA’S THAT HAD NO AMENITIES TO $600 IN HOA’S THAT HAD ONE
POOL AND A SMALL AMOUNT OF COMMON AREA GRASS.
MOST COMMUNITIES WERE IN THE $350 TO $400 RANGE WITH LIMITED COMMON AREA
AMENITIES.
EAGLE CROSSING HAD MORE ACRES OF COMMON AREA GRASS, MORE MILES OF WALKING
TRAILS, MORE POOLS, MORE PLAYGROUNDS AND MORE HOMES THAN MOST, IF NOT ALL
THE OTHER NEIGHBORHOODS. YET, OUR DUES WERE IN THE SAME RANGE AS THE OTHER
NEIGHBORHOODS, REGARDLESS OF THEIR AMENITIES.
IMPACT FOR 2007 AND BEYOND
HOA DUES COMPARISON
HOA Dues Comparison
700
600
500
400
300
200
100
0
0
1
2
3
4
5
6
7
8
9
10
11
12
INCOME
Association Fees
Less: Uncollectible Accounts
TOTAL INCOME
Less: Reserve Funding
TOTAL OPERATING INCOME
% of Budget
$ 400
341,200
(10,300)
330,900
(35,000)
295,900
Cost per
Homeowner
3.48%
12
11.83%
41
53
EXPENSES
Cost per
% of Budget Homeowner
7.80%
27
1.69%
6
1.29%
4
1.61%
6
6.64%
23
0.41%
1
0.68%
2
20.11%
70
ADMINISTRATIVE:
Management Fees
Professional Fees
Administrative Expense
Insurance Premiums
Property Taxes
Website Expense
Social Committee Expense
TOTAL ADMINISTRATIVE
23,031
5,000
3,800
4,751
19,600
1,200
2,000
59,382
UTILITIES
Security Lighting
TOTAL UTILITIES
33,000
33,000
11.18%
11.18%
39
39
6,500
5,418
72,795
26,200
20,000
18,000
10,000
21,000
20,000
3,000
202,913
2.20%
1.83%
24.65%
8.87%
6.77%
6.10%
3.39%
7.11%
6.77%
1.02%
68.72%
8
6
85
31
23
21
12
25
23
4
238
GROUNDS MAINTENANCE:
Snow Removal
Lake Maintenance
Mowing and Turf Care
Fertilization and Weed Control
Mulch
Common Ground Maintenance
Pool Utilities
Pool Contract
Security
Common Amenity Maintenance
TOTAL GROUNDS
IMPACT FOR 2007 AND BEYOND

LOOK AT NATIONAL AND LOCAL HOUSING MARKET



MORE HOMES FOR SALE THAN BUYERS
NOT ISOLATED TO EAGLE CROSSING/CP MORGAN HOMES
EARLY IN THE LIFE OF EAGLE CROSSING

MANY HOMES FOR SALE
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

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FORECLOSURE/BANKRUPTCY
DISSATISFACTION WITH NEIGHBORS/NEIGHBORHOOD
DIVORCE
JOB TRANSFER
…AND BEYOND???

EARLY IN THE LIFE OF EAGLE CROSSING
(CONT’D)

PART OF NORMAL CYCLE FOR NEW
CONSTRUCTION NEIGHBORHOODS

TREND MAY CONTINUE BEFORE STABILITY IS
SEEN

BRANCHES
INITIATIVES FOR 2007 BOARD

MONITOR COLLECTION OF DELINQUENT DUES,
INCLUDING PROGRESS OF THOSE ACCOUNTS WITH
ATTORNEY (FOLLOW COLLECTION POLICY)

COVENANT ENFORCEMENT

WORK COMMITTEES (SAFETY & AWARENESS,
BUDGET & FINANCE, SOCIAL COMMITTEE,
BEAUTIFICATION, ETC.
QUESTIONS