2017 Sierra Canyon Association Budget Draft As of October 11,2016 - - PowerPoint PPT Presentation

2017 Sierra Canyon Association Budget – Draft

As of October 11,2016 For Discussion Purposes Only

Disclaimer

This 2017 budget presentation is being made prior to Sierra Canyon Board approval and is subject to possible revisions. The approved 2017 budget documents will be mailed to homeowners after Board approval. Ratification of the budget and assessment rates occurs at the Annual Sierra Canyon homeowner meeting in mid-November 2016. A majority of all eligible homeowners must vote “No”, otherwise, the 2017 budget will be adapted. Financial projections may vary. The

• pinions expressed by the presenter are his own and may not

represent those of the entire Board nor other individual Board members.

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What’s happened since the beginning of 2016

• 5 new SCA board members in place – Loren Farell; Steve

Guderian; Ray Lee; Maryann McKinley; and Amy Berns

• Landscaping contract awarded to new company, Reno Green.
• Aspen Lodge roof and insulation repairs. Paid by Pulte.
• Attempt to acquire Pulte / Del Webb sales office fails.

Disappointed!

• Revised Maintenance Easement Agreement with Somersett.
• Villages 13 and 15 turned over by Pulte. Welcome to all the new

residents!

• Sierra Canyon operating metrics captured and analyzed.

3

2016 Operating Metrics

Aspen Lodge Visits and Activities

Total Visits by Activity Category Visits Events Fitness Clubs* Other

Jan

4,804 202 838 2,324 1,440

Feb

4,347 369 832 2,519 627

Mar

4,653 210 830 3,052 561

Apr

4,795 665 853 2,728 549

May

4,280 394 830 2,932 124

Jun

4,667 960 726 2,794 187

Jul

3,802 190 692 2,902 18

Aug

4,096 220 919 2,891 66

Sep

• Oct
• Nov
• Dec
• Total

35,444 3,210 6,520 22,142 3,572

* Most Popular Clubs = Billiards; Bridge; Community Social

4,000 4,100 4,200 4,300 4,400 4,500 4,600 4,700 4,800 4,900 JAN FEB MAR APR MAY JUN 4,804 4,347 4,653 4,795 4,280 4,667

Total Visits

• 500

1,000 1,500 2,000 2,500 3,000 3,500 1 2 3 4 5 6

Aspen Lodge Resident Visits

Events Fitness Clubs * Other

4

2016 Operating Metrics Other Management Data

• # of ARC applications: 204 applications submitted thru

August; 300 annualized with a first time 80% approval rate.

• # of Customer Service Calls: 400 to date; 600 annualized.

Most calls are about balance inquires (27%); community inquires (15%); to contact on-site management (11%); and

• misc. (47%).
• # of Non-Compliance Matters: 565 to date; 850
• annualized. Landscaping issues (50%); Fence issues (7%);

put away Garbage / Recycle bins (6%); misc. (37%).

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First, Let’s look at 2016

Budget YE Est. Var. Budget YE Est. Var. # of Units 1,134 1,138 4 $’s per unit per month Assessments $ 1,061,424 $ 1,065,090 $ 3,666 $ 78.00 $ 78.00 $ - Fitness & Events Fees 64,000 77,074 13,074 $ 4.70 $ 5.64 $ 0.94

• Misc. - advertising, etc.

17,866 22,722 4,856 $ 1.31 $ 1.66 $ 0.35 Transfer to Reserves (212,477) (212,477)

• $ (15.61) $ (15.56) $ 0.05

Total Revenues 930,813 952,409 21,596 $ 68.40 $ 69.75 $ 1.35 Staff Salaries & Benefits 276,000 332,000 (56,000) $ 20.28 $ 24.31 $ (4.03) Landscaping & Utilities 260,520 245,000 15,520 $ 19.14 $ 17.94 $ 1.20 Repairs & Maintenance 182,700 180,000 2,700 $ 13.43 $ 13.18 $ 0.24 Outside Fitness & Events 66,000 62,500 3,500 $ 4.85 $ 4.58 $ 0.27 Other Admin - mgt, taxes, ins, etc. 156,078 132,909 23,169 $ 11.47 $ 9.73 $ 1.74 Total Cost 941,298 952,409 (11,111) $ 69.17 $ 69.75 $ (0.58)

• Operating Gain (Loss)

$ (10,485) $ - $ (10,485) $ (0.77) $ - $ 0.77

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2017 Budgeting Objectives and Goals

• Set a reasonable 2017 monthly assessment rate with a look

to the future to minimize future assessment fluctuations.

• Take steps to get a more accurate reserve study and
• updates. Improve the funding % for reserve components.
• Include special project expenditures for prioritized amenities

and service enhancements. Examples may include wildfire fuel reduction; recreational projects; web site improvements; water conservation projects; rock wall maintenance; office space acquisition; etc.

7

Now, Let’s look at the draft 2017 budget

Budget Assumptions

• As we build out to 1,210 homes from a 2016 weighted average of 1,138

homes our Assessment Revenues will increase. +$67k @ $78/month.

• Events and Fitness subsidies to remain constant before administrative

allocation of Lifestyle and Athletic salaries and benefits. +$2k

• Increase reserve contribution rate to improve funding % and follow a

consistent funding approach. +$7k

• and Other Key areas of focus: Staffing / Customer Service; Wildfire fuel

reduction; web site; community leadership training and development. See next slide.

8

Key Areas of Focus for 2017 and beyond

• Staffing – Dept. of Labor regulations involving staff eligibility

for overtime pay; improve customer service support; improve maintenance support; and improve web site support. +$71k

• Develop fuel reduction plan and start its implementation.

Continue each year subsequently. +$30k

• Enhance the Sierra Canyon web site experience. +$14k not

including staffing change to support.

• Provide funding for community leadership education and
• training. +$2k

9

Opportunity to Recapture SOA’s Transfer Fee Credit and Provide funding for additional Special Projects

• In 2017, it is likely that the SOA will release $595k that has

accumulated since 2011 as a credit to the SOA Common cost center thus creating a net $11 per unit per month reduction in their assessment rate from $80 to $69 per unit per month.

• This is being done because there are no current SOA Common projects

that are likely to be developed and the Special Projects funding needs are in the Sierra Canyon sub-association and the non-Sierra Canyon areas of Somersett.

• Sierra Canyon has a needs for possible parking modifications, storage

space addition, Aspen Lodge renovations, etc.

• non-Sierra Canyon Somersett has a need for TCTC modifications and

pool area expansion projects.

10

Opportunity to “recapture” in Sierra Canyon Somersett’s Transfer Fee

• What is it? How is it allowed?
• How has it accumulated?
• How much is generated each year?
• How Sierra Canyon can benefit from it?

11

What is it? How is it Allowed? Somersett CC&R’s Article III; Section 15; Transfer Fees

“The imposition of such transfer fees is intended for the purpose of providing a continual source of capital to the Association for the purpose of enhancing the Association’s financial capacity in meeting its

• bligations in maintaining and improving Common

Areas in a manner in keeping with the first-class nature of the subdivision over time”

12

How has it accumulated?

• Prior to 2011, the transfer fee was a revenue source in the SOA

Common Area cost center “in meeting its obligations in maintaining and improving Common Areas”. Monthly assessment rates were moderated by the transfer fee revenues generated.

• Beginning 2011, after recovery from the depression of 2008-

2009, more stable collection of assessments and recoveries from construction defect claims, the SOA board decided to allow the transfer fees to accumulate for the purpose of “improving Common Areas in a manner in keeping with the first-class nature of the subdivision over time”.

13

How much is generated each year?

Somersett’s Transfer Fee

“Generally speaking, people move based on the economy,”

• Dr. Smith said, “and obviously the economy in 2008 was

mediocre to bad. That would tend to have a negative impact

• n people’s desire, ability or need to move.”

In its report Wednesday, the Census Bureau said that Americans’ mobility rate, which has been declining for decades, fell to 11.9 percent in 2008, down from 13.2 percent the year before and setting a post-World War II record low. Moves between states dropped the most, to half the rate recorded at the beginning of this decade.

New York Times By SAM ROBERTS APRIL

22, 2009

Slump Creates Lack of Mobility for Americans

14

How much is generated each year?

Somersett’s Transfer Fee

The initial transfer fee is $400 per unit and then .1% of the sales value of unit sales price. Example: 3,000 units in Somersett; 10% of the population moves or 300 units * .1% of the sales price = $125k to $150k per year in transfer fees generated or

• approx. $4.00 per unit credited to the SOA Common

cost center per year.

15

How can Sierra Canyon benefit from it? Possible Uses for a “recaptured” Transfer Fee

• Use to offset cost increases such as salaries and benefits;

fuel reduction efforts, etc. in 2017 and beyond.

• Use to make SCA improvements such as lodge parking

expansion; storage and other amenity uses generally classified as special projects.

• Make a supplemental reserve fund contribution to further

increase % funded above 84% anticipated at end of 2017.

16

Now, Let’s look at the draft 2017 budget

Operating Fund Budget

$'s per unit per month 2016 YE 2017 Bdgt. Diff. 2016 YE 2017 Bdgt. Diff. # of Units 1,143 1,210 67 $ 89.00 Assessment - Normal 1,069,614 $ 1,182,280 $ 112,666 $ 78.00 $ 81.42 $ 3.42 Assessment-Recapture SOA Trsf. Fee

• 110,000 $ 110,000

$ - $ 7.58 $ 7.58 Fitness & Events Fees 72,500 73,200 700 $ 5.29 $ 5.04 $ ( .25)

• Misc. - advertising, Pulte escrow, etc.

42,940 24,962 (17,978) $ 3.13 $ 1.72 $ (1.41) Transfer to Reserves (212,477) (218,850) (6,373) $ (15.49) $ (15.07) $ 0.42 Total Revenues 972,577 1,171,592 199,015 $ 70.93 $ 80.69 $ 9.76 Staff Salaries & Benefits 330,000 401,000 (71,000) $ 24.06 $ 27.62 $ (3.56) Landscaping & Utilities 256,800 281,610 (24,810) $ 18.73 $ 19.39 $ ( .66) Repairs & Maintenance 162,600 161,800 800 $ 11.86 $ 11.14 $ 0.72 Outside Fitness & Events 61,000 60,000 1,000 $ 4.45 $ 4.13 $ .32 Other Admin - mgt, taxes, ins, etc. 162,177 157,182 4,995 $ 11.83 $ 10.83 $ 1.00 Recapture SOA Trsf. Fee- Sp. Projects

• 110,000

110,000 $ - $ 7.58 $ (7.58) Total Cost 972,577 1,171,592 20,985 $ 70.93 $ 80.69 $ (9.76) Operating Gain (Loss) $ - $ - $ - $ - $ - $ -

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What do we think will happen in 2017

Overall Assessment Rates

2016 2017 2018 SOA Common Area $ 80.00 $69.00 $ 76.00 Sierra Canyon $78.00 $89.00 $82.00 Total Assessments Paid $158.00 $158.00 $158.00

The concept is to try to keep the overall assessments paid by Sierra Canyon residents the same over the next several years by applying the SOA transfer fee credits. Somersett and Sierra Canyon assessment rates are not official until approved by each association’s respective Board of Directors. The 2018 assessment rates are best guesses at this time.

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Sierra Canyon Assessment Rate History

Year Rate Change 2005 92.00 $ n/a 2006 99.00 $ 7.00 $ 2007 99.00 $

• $

2008 99.00 $

• $

2009 99.00 $

• $

2010 99.00 $

• $

2011 91.00 $ (8.00) $ 2012 82.00 $ (9.00) $ 2013 78.00 $ (4.00) $ 2014 78.00 $

• $

2015 78.00 $

• $

2016 78.00 $

• $

There have been 2 assessment holidays declared in the past and; therefore; there has also been 2 assessment increases without a rate change !!!

2017 Rate Change

Normal Assessment $ 81.42 $ 3.42 Recapture Trsf. Fee $ 7.58 $ 7.58 Total $ 89.00 $11.00

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SCA Reserve Study: Replaceable Asset Values

study study update update update update study update update update update

study 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Streets / Asphalt

36,677 188,324 191,819 254,953 254,953 236,139 191,141 191,141 199,880 590,878 599,092 161,122

Roofing

45,000 28,965 29,072 31,807 31,915 34,166 40,159 40,159 42,599 32,104 32,976 318,240

Painting

• 55,034

76,502 82,770

• 145,984

158,842 129,069

Fencing

30,000 24,099 27,739 27,739 42,164 44,800 44,356 44,356 44,356 44,356 48,343 145,420

Lighting / Electrical

25,600 43,298 53,298 63,798 63,798 78,318 84,476 84,476 86,358 88,450 88,450 156,100

Patio

• 9,400

9,400 11,050 11,050 11,050 11,587 11,587 13,119 15,552 15,552 n/a

Pool Furn / Equip / Spa

34,200 30,968 36,568 45,968 47,568 47,568 51,332 51,332 64,462 70,317 85,379 60,974

Recreation

• 26,288

145,593 145,452 159,699 163,199 162,697 164,905 170,465 221,580 225,476 280,857

Interior / Decorator Items

123,825 338,914 124,830 131,767 143,767 165,335 173,524 173,524 179,571 195,462 181,862 166,380

Interior Floors

• 101,580

111,308 111,308 111,308 128,641 128,641 131,434 131,434 129,703 162,426

Interior Walls

• 16,344

16,344 16,344 16,344 18,626 18,626 18,626 18,626 18,626 2,142

Exterior / Special Surfaces

6,600 17,285 22,545 33,708 33,708 33,708 45,434 53,169 39,169 41,819 57,819 160,484

HVAC, Dehumidifier / Misc. Furn

175,780 186,324 201,324 201,324 201,324 203,924 219,584 219,984 234,799 226,999 234,198 649,413

Grounds

• 1,050

11,050 37,038 47,763 47,763 53,863 53,863 53,863 54,688 61,338 68,425

Landscaping

63,000 45,000 45,000 55,000 74,000 74,000 80,000 80,000 40,000 43,000 43,000 96,250

• Misc. Components

10,000

• 2,000
• Total

550,682 994,949 1,092,664 1,250,026 1,239,361 1,267,622 1,307,420 1,315,763 1,318,701 1,921,249

1,980,656 2,557,302 % Change

81% 10% 14%

• 1%

2% 3% 1% 0% 46% 3%

29%

20

Now, Let’s look at the draft 2017 budget

Reserve Fund Budget

Replaceable Assets - $000 $ 2,557 Beginning Bal. - 1/1/17 $ 1,062 Reserve Contributions 219 Reserve Expenditures (176) Interest Income 27 Ending Bal. 12/31/17 $ 1,132 % Funded 84% 2017 Reserve Expenditures:

Streets / Asphalt $24,383 Painting - Interior & Exterior 78,130

Pool Furnishing, Equip., and Spa

6,808 Recreation facilities 16,664 Landscaping Replacements 49,969 Total Expenditures $175,954

21

Calendar of Board Meetings & Annual Owners Meeting

• Oct. 12th – SCA Board Meeting (will be recessed)
• Oct. 26th – SOA Board Meeting
• Oct. 28th – SCA Board Meeting (reconvene Oct. 12th meeting)
• Nov. 1st – SCA 2017 budget package mailed to owners
• Nov. 9th – SCA Board Meeting
• Nov. 21st – SCA 2017 homeowners budget ratification meeting

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Our Sierra Canyon Staff

Karen Brown – Community Manager Kathleen Hall – Assistant Community Manager Lynn Peterson – Athletic Director Dee Dee Viau– Lifestyle Coordinator Darren Null – Maintenance Manager Aly Landes - Communications Admin

and our monitor staff

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Sierra Canyon Board of Directors

Katey Fox – President Loren Farrell – VP & Secretary Ray Lee – Treasurer Andy Hopper Steve Guderian Maryann McKinley Amy Berns

• John McKinney - retired
• Ron Miyasaki - retired
• Jim McKee - retired

24

Sierra Canyon Budget / Finance Committee Maryann McKinley Debbie Mathers Lance Chontos Ray Lee Amy Berns

and we need your help! Please.

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Other Sierra Canyon Committees

Architectural Review Committee Facilities Committee Drainage Ad Hoc Committee Web site Ad Hoc Committee

We need your help! Please participate in your community by

• volunteering. Contact the Community Manager or the

committee chairperson to find out how. Thank you.

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It’s Great to be Home!

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