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110 MEETING OF THE BOARD OF DIRECTORS Ma, : PM F eedo Hall, I depe de e Ce te He de so Ne ada MINUTES. CALL TO ORDER : PM.. PLEDGE OF ALLEGIANCE QUORUM Boa d of Di e to s Re Weddle Aletta Wate house Bella Meese To Nisse Bo Bu h Ca l Wei stei Ma age e t a d eddo Ji O li k Lo i Ma ti A eliese Ga oa A se t Ja es Ma field P eside t Vi e P eside t e eta T easu e Di e to Di e to Ge e al Ma age Chief Fi a ial Offi e Co u it Asso iatio Ma age E e uti e Coo di ato Di e to.. APPROVAL OF AGENDA [R ] Upo otio dul ade Bella Meese a d se o ded Aletta Wate house, the Boa d u a i ousl app o ed the age da fo Ma, ith the a e d e t to i lude the Co e a ts Co ittee epo t i the o se t ale da. APPROVAL OF MINUTES A. Ap il, [R ] Upo otio dul ade Bella Meese a d se o ded Ca l Wei stei, the Boa d app o ed the i utes f o Ap il, eeti g a ote of, Aletta Wate house a d Bo Bu h a stai i g. Board Meeting Sun City Anthem Community Association Page 1 of 21

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144 MEETING OF THE BOARD OF DIRECTORS Jul, : PM Dela a e Roo, A the Ce te He de so Ne ada. CALL TO ORDER. PLEDGE OF ALLEGIANCE. QUORUM Boa d of Di e to s: Re Weddle Aletta Wate house Bella Meese Bo Bu h Ja es Ma field Ca l Wei stei Ma age e t: Sa d Seddo Ji O li k Lo i Ma ti A eliese Ga oa A se t: To Nisse MINUTES P eside t Vi e P eside t Se eta Di e to Di e to Di e to Ge e al Ma age Chief Fi a ial Offi e Co u it Asso iatio Ma age E e uti e Coo di ato T easu e. APPROVAL OF AGENDA A. Jul, oa d eeti g [R ] Upo otio dul ade Bella Meese a d se o ded Aletta Wate house, the Boa d u a i ousl app o ed the age da fo the Jul, eeti g ith a ha ge to e o e ite.a... APPROVAL OF MINUTES A. Ju e, oa d eeti g [R ] Upo otio dul ade Bella Meese a d se o ded Aletta Wate house, the Boa d u a i ousl app o ed the i utes f o the Ju e, oa d eeti g.. MEMBER COMMENT PERIOD The e e e o e e o e ts.. PRESIDENT S REPORT Board Meeti g Su City A the Co u ity Asso iatio Page of 32

145 Re Weddle ead aloud the P eside t s Repo t hi h is atta hed to a d ade pa t of these i utes. see atta h e t #. GENERAL MANAGER S REPORT Update o Li e t Ce te CMC P oje ts A ti ities Fa ilities Fit ess Sa d Seddo ead aloud the Ge e al Ma age s epo t hi h is atta hed to a d ade pa t of these i utes. see atta h e t #. FINANCIAL REPORTS A tio Ma Be Take A. Ma Fi a ials B. I est e t Repo t C. Colle tio s Repo t D. Re ie of W ite Offs of Bad De t E. Pa oll Be efits & T a sitio Budget s. P oje ted Ji O li k p ese ted the Ma Fi a ials hi h is atta hed to a d ade pa t of these i utes. see atta h e t #. BOARD OF DIRECTORS COMMENT PERIOD The e e e o Boa d of Di e to s o e ts.. OPENING OF BIDS The e e e o ids e ei ed.. CONSENT CALENDAR A tio Ma Be Take The Board of Dire tors ay take a tio o all o se t ale dar ite s ith o e otio, a epti g the re o e datio s as stated o the age da ite. The o se t ale dar ay i lude Co ittee reports, Ser i e Group reports a d/or Ad Ho Work/Ad isory Group reports that ay ot o tai Board a tio ite s. A. A ept the o thl o ittee epo ts:. A hite tu al Re ie. Audit o report. Co u i atio s o report. Co u it Lifest le. Co e a ts. Ele tio. Fi a e. Golf Course Liaiso o report. Health a d Fit ess o report. Properties a d Grou ds o report. Co u it Pat ol Board Meeti g Su City A the Co u ity Asso iatio Page of 32

146 . Co u it Se i e G oup. E erge y Prepared ess Ser i e Group o report. Guest Poli y Task For e o report. Restaura t Liaiso o report. Su Cit A the Tele isio. Villa/Pi a le Ad isory Group o report. Volu tee Coo di ato. We site De elop e t a d Lau h Work Group o report [R ] Upo otio dul ade Bella Meese a d se o ded Aletta Wate house, the Boa d u a i ousl a epted the o thl epo ts as listed i the o se t ale da.. BOARD ACTION ITEMS A tio Ma Be Take BAI # App o e the e plaste i g of oth the i doo a d outdoo spas at A the Ce te f o BND Pool Plaste i g Spe ialists i the a ou t of $,. to e paid f o Rese es. [R ] Upo otio dul ade Ca l Wei stei a d se o ded Bo Bu h, the Boa d u a i ousl o ed to app o e a d a ele ate the e plaste i g of oth the i doo a d outdoo spas at A the Ce te f o BND Pool Plaste i g Spe ialists i the a ou t of $,. to e paid f o Rese es. BAI # A ele ate the e fi ishi g a d e st appi g of all pool fu itu e i the outdoo pool a ea at A the f o Re u Casual Fu itu e Re o ato s, I. i the a ou t of $,. to e paid f o Rese es. [R ] Upo otio dul ade Ca l Wei stei a d se o ded Bo Bu h, the Boa d u a i ousl o ed to app o e a d a ele ate the e fi ishi g a d e st appi g of all pool fu itu e i the outdoo pool a ea at A the f o Re u Casual Fu itu e Re o ato s, I. i the a ou t of $,. to e paid f o Rese es. BAI # App o e a o th opie lease ith Ra Mo ga Co pa to epla e the e isti g Ko i a Mi olta opie e uip e t ith e Ca o e uip e t i a o thl a ou t esti ated et ee $, a d $, ased o fi al e uip e t o figu atio a d i ludi g lease a d esti ated o thl usage. [R ] Upo otio dul ade Aletta Wate house a d se o ded Bella Meese, the Boa d u a i ousl app o ed a o th opie lease ith Ra Mo ga Co pa to epla e the e isti g Ko i a Mi olta opie e uip e t ith e Ca o e uip e t i a o thl a ou t esti ated et ee $, a d $, ased o fi al Board Meeti g Su City A the Co u ity Asso iatio Page of 32

147 e uip e t o figu atio a d i ludi g lease a d esti ated o thl usage. BAI # App o e the ha te a d la s of a e Ca asta Clu. [R ] Upo otio dul ade Bella Meese a d se o ded Ca l Wei stei, the Boa d u a i ousl app o ed the ha te a d la s of a e Ca asta Clu. BAI # App o e the eassig e t of e isti g etai e f o Alessi & Koe ig to HOA La e s G oup. [R ] Upo otio dul ade Ja es Ma field a d se o ded Aletta Wate house, the Boa d u a i ousl app o ed the eassig e t of the e isti g etai e u de the e a e ha ge, HOA La e s G oup. BAI # A ele ate the pu hase of e Ra pak C R A EN C ASME Co e ial Spa Heate s f o A o E gi ee ed S ste s fo the outdoo spa a d i doo a ate pool at Li e t Ce te i the a ou t of $,. to e paid f o Rese es. [R ] Upo otio dul ade Ca l Wei stei a d se o ded Bo Bu h, the Boa d u a i ousl o ed to app o e a d a ele ate the pu hase of e Ra pak C R A EN C ASME Co e ial Spa Heate s f o A o E gi ee ed S ste s fo the outdoo spa a d i doo a ate pool at Li e t Ce te i the a ou t of $,. to e paid f o Rese es.. OLD BUSINESS A tio Ma Be Take Note: Ite s listed u der Old Busi ess are arried o er fro pre ious Board Meeti gs. A. P ese tatio a d Dis ussio Rega di g Defi itio of Su plus Fu ds Di e to, Ja es Ma field. Autho ize a t a sfe of $, f o the ope ati g fu d to the ese e fu d. ite has ee e o ed Ja es Ma field p ese ted a d dis ussed su plus fu ds. see atta h e t #. NEW BUSINESS A tio Ma Be Take A. No e. MEMBER COMMENT PERIOD The e e e si eside ts that spoke du i g e e o e t pe iod. A o g the topi s e e: su plus fu ds; CB G aphi s; a d fi a ial epo ts.. REVIEW AND RECOMMENDATION OF SEALED BIDS A tio Ma Be Take BAI # Board Meeti g App o e Cha ge Co st u tio, LLC to pai t the ought i o fe i g i A o o Vista, Big Sk, Dese t Sk a d Shado Ca o i the a ou t of $, to e paid f o ese es. Su City A the Co u ity Asso iatio Page of 32

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149 Atta h e t # July 28, 2016 President s Report At today s Executive Session the Board heard one appeal on sanctions levied by the Covenants Committee. Additionally, the Board reconsidered the terms of a decision it made on June 23 concerning an appeal from the Covenants Committee. The Board authorized Management, through our counsel, to settle a pending legal matter. When that is concluded, we will announce the terms and conditions of the settlement at the next available monthly Board meeting. We reviewed with Alessi and Koenig the status of properties previously directed to foreclosure. We received notice of foreclosed property sale. It also briefed us about a pending legal matter before the courts that would affect HOA s. A&K explained the change in the firm s name due to merger activity it will not affect our operational relationship. That matter appears later on the agenda. No write-off of bad debt was recommended. We approved minutes from the June 23 Executive Session. The minutes were approved from an Emergency Executive Session on July 6, where the Board discussed the performance evaluation of the General Manager. Minutes were also approved for the Executive Session on July 21, which was incorrectly and briefly--posted as an Emergency Session. The Board discussed the performance evaluation of the General Manager, the timing of a 2016 bonus payment, if any, and, if so, its subsequent notice to members. No action was taken. In an effort to keep the community updated on the surplus funds situation, I posted an EBlast early this month. It mentioned we had met with the Division about this topic and received some instruction on what is legally allowed. I said our intention was to share those opinions with the Finance Committee, because financial advice to the Board is one of the committee s roles. We hoped the committee could provide a recommendation by next month for the possible adoption of a Board policy on surplus. Board Meeti g Su City A the Co u ity Asso iatio Page of 32

150 Before putting the Finance Committee to its task, the Board made additional efforts with the Division to confirm what we were told. Sadly, those efforts have met with a silent refusal to confirm our understanding in writing. As many of you heard on Tuesday, some members of the community have developed opinions about what the law and our own Board documents require of us. That s a good thing. Later on the agenda, Director Jim Mayfield will present his take on all of this. That s a good thing. I m sure Jim will point out that he speaks for only for himself. For myself, I plan to reserve my opinion until I have the Finance Committee s thoughts. Besides of the imprecise statutes we have to rely on - statutes we are unable to get written guidance on from our appointed bureaucrats - most of the Board believes our fiduciary obligation is to consider all sources of expert advice available to us. We contract with legal and financial experts to assist us in meeting our obligations. If we did not obtain their judgments and share them with the committee, we d be not only foolish but negligent in our responsibility. Accordingly, that additional advice and opinion will be part of what we ll ask the committee to consider in making a policy recommendation to the Board. The Finance Committee is rescheduling its August 10th meeting to August 17th. Instead, on the 10 th, it will hold a workshop on the surplus issue to prepare itself for an eventual recommendation to the Board. We intend to have all needed information to the Committee by the 10 th. This will include both our attorney and CPA being present at the workshop to field questions about their opinions. An EBlast will notify everyone about these schedule revisions. That concludes my report. Board Meeti g Su City A the Co u ity Asso iatio Page of 32

151 Atta h e t # July 28, 2016 Board Meeting General Manager's Monthly Report UPDATE ON LIBERTY CENTER As previously reported, repairs at Liberty Center began on June 15, The scope of repairs includes, among other items: solar removal, roof repairs, exterior weather proofing, interior and exterior pool decks, re-plastering of pools, drywall framing and repairs, tile replacement, HVAC work, remodeling of locker rooms, duct cleaning and interior painting. The construction hours are Monday through Friday, 6:00 AM to 5:00 PM, with periodic work on Saturday and Sunday. Many residents have asked when this work will be completed. The construction management company has a target month to reopen Liberty Center in September. To date, the Association has recovered the following insurance proceeds: $51, in repair costs $5, in repair costs $72, in repair costs $50,000 from insurance (limit amount of coverage for mold remediation) $4,983 (coverage for the security company to secure premises) There are still unresolved claims that are pending. On June 8, 2016, all residents were mailed a letter from our construction defect attorney Francis Lynch. This letter was sent to comply with Chapter 40 Notice Pursuant to NRS As required, the letter contained a copy of the builder response which basically disputes our claims. Pulte did agree to engage in mediation, which is scheduled for September COMMUNITY MEETING TO DISCUSS THE RESTARUANT A workshop has been scheduled for Tuesday, September 27, 2016 at 9 am in the Delaware room. This workshop is an opportunity for residents to share feedback to Management and the Board regarding the restaurant space. The Board has instructed me that securing a restaurant is a management task. I think we can all agree that a restaurant is needed; it s just a matter of what kind and how we go about it. To that end, we hope that this scheduled workshop is productive and meaningful. There is no specific Board Meeti g Su City A the Co u ity Asso iatio Page of 32

152 timeline or process that has been outlined yet related to the restaurant. This is just the beginning. PIRFS Some SCA residents may know that the Board Policy Manual (BPM) allows for residents to submit a request for a proposed Capital Improvement project on a Project/Item Request Form (PIRF). Some of the PIRFs received have been for items to be considered in future years as far out as 2018 or However, when PIRFs are received, the process has been for staff to conduct pricing research and other related particulars for the proposed request. This process can be time-consuming and sometimes futile considering that prices for items or labor can change by the year 2018/2019. At this time, staff s priority is deferred maintenance and a backlog of reserve projects. Therefore, in an effort to allow staff to focus on deferred maintenance and the day-to-day operations, the decision has been made to suspend the PIRF process until July We kindly ask all residents, groups and clubs to hang on to any PIRFS as we will not be accepting them during this time period. This does not preclude anyone that has an idea to come see me, send me an , attend a committee meeting or the board meeting. Your management team appreciates this time to focus on the immediate needs of Sun City Anthem and making your common areas and recreational centers as pristine as possible. BUDGET PROCESS Staff is putting the finishing touches on the draft operating budget. This draft will then be turned over to the Finance Committee no later than Monday, August 1, Management is scheduled to have its first meeting with the Finance Committee on August 22, The draft of the Reserve Study is still in the hands of Criterium and is expected to be sent back to management for review within the next 7 9 business days. COMMUNITY PATROL The Reverse Directory program of the SCA Community Patrol is to create a confidential and secure database of residents that is only used by the patrol to contact residents when an emergency need arises. These needs include, but are not limited to, the following: 1. Open garage doors 2. Water leaks from the garage or irrigation system lights are blinking 4. Other emergency situations that may arise Board Meeti g Su City A the Co u ity Asso iatio Page of 32

153 In addition, the form that is used for obtaining the relevant resident data asks if the resident would like for us to share their name, address and telephone number with the Community Neighborhood Watch Program. Despite the best efforts of the Community Patrol, we currently have data for only about 2400 homes in Sun City Anthem. In addition, we have problems keeping it current with changes in persons renting homes as well as in the buying and selling of homes. The Community Patrol would like to work to significantly increase the number of homes that are in the reverse directory and in increasing its accuracy in reflecting resident changes. The goal is to both better serve the residents of the community by notifying them in the timeliest manner of an emergency condition existing with their home and in providing the volunteers of the Community Patrol with the greatest level of safety. Knocking on doors late in the evening is risky even with all of the precautions that our patrol volunteers take as on several occasions our volunteers have been met at the door looking at the barrel of a gun. For privacy reasons, Management cannot supply the reverse directory information directly with the Community Patrol. Community Patrol and Management will be working together to bring both knowledge about the program and the signup form to all the homeowners and residents. These efforts could include having forms available at all resident check in desks; publishing the form as an insert in the Spirit Magazine; having forms available at the Anthem Center desk outside the office; and, also within the Anthem Center office. Having staff ask if members are part of the reverse directory and having forms readily available would go a long way in helping increase the number of forms completed by residents. FITNESS Pandora radio can now be heard throughout the Fitness Center. Pandora avails us to millions of songs and the ability to shuffle through various genres and decades bringing a much welcomed variety of music. Locker room mid-day cleanings have begun at the Anthem Center. A scheduled 30-45minute closure of the locker rooms for cleaning will occur three times a week. These closures assist Facilities in more effectively maintaining the locker rooms cleanliness and keeping the toiletries fully stocked. A new digital thermostat has been installed for the indoor pool at Anthem. This will greatly diminish the fluctuating temperature issues we have been having. The process has begun to refurbish the worn out pool furniture both indoor and out at the Anthem Center. New cushions have arrived for the indoor furniture as of last week. Board Meeti g Su City A the Co u ity Asso iatio Page of 32

154 Training for the teachers and trainers will be held Friday, July 29 th. We will be reviewing the latest and greatest from the IDEA World Fitness Convention. Aqua certification is Sunday, July 31 st. We are hoping to bring additional water fitness instructors to Anthem. ACTIVITIES Bus Trip to Ikea July 28 th Johnny Cash Tribute - Sunday, July 31 st Motown Legacy - Friday August 12 th Let s Duet Sunday - August 28 th Our next parking lot sale will be Saturday, September 10 th and the shredder truck will be returning Saturday, September 17 th Join us on September 17 th for Movie on the Lawn featuring the movie The Intern at 7 pm. FACILITIES MAINTENANCE The new indoor spa and outdoor pool heaters have been ordered and should arrive in the next two weeks. A new digital controller was installed on the Anthem indoor pool heater to obtain better temperature control. A digital controller will be installed on the new outdoor pool heater when it arrives. The re-finishing of the two monument signs on Anthem Parkway are underway. Employee uniforms have been ordered and they should arrive in about 3 weeks. Prices are being obtained to replace the rubber flooring in the free weight area at Anthem Fitness. A new commercial coffee maker has been installed at the coffee station. A new faucet was also installed. A 5-ton compressor was replaced on an A/C unit for the walking track at Anthem Center. The door issue we were having at the R-1 doors (Anthem fitness entrance) has been repaired. New cushions have been ordered for the chairs in the patio area at Independence. Our Fire suppression system for Anthem and Independence were inspected this past month. Over 20 New Wi-Fi thermostats have been installed and seem to be helping with the afterhours requests for temperature changes. Board Meeti g Su City A the Co u ity Asso iatio Page of 32

155 Additional panic buttons are being installed on the walking track and in both handicap restrooms at Anthem Center. The concrete area outside the entrance doors at Independence center is scheduled to be coated with a two color urethane. This will be done in two phases and will begin in approximately 2 weeks All the A/C filters have been changed this past month. The re-landscaping project at the waterfall area has begun. Completion is expected in the next 7 days. A new safety loop was installed at the exit gate of Pinnacle. A new electronic lock was installed at the man gate at Pinnacle. Miscellaneous painting has begun around the property. CMC PROJECTS (AMOR) The replacement of the lifting and damaged concrete around Anthem and Independence is complete. The awning repair at Independence center court area is finishing up. The Delaware Room remodel is still being scheduled. The painting & VCT floor replacement in the sewing and arts & crafts room is underway. Drywall repair and painting of the soffits and above at Anthem is being scheduled. Drywall repair and painting at Independence is being scheduled. Board Meeti g Su City A the Co u ity Asso iatio Page of 32

156 Atta h e t # Board Meeti g Su City A the Co u ity Asso iatio Page of 32

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162 Board Meeti g Su City A the Co u ity Asso iatio Page of 32

163 Attachment #4 ANALYSIS OF SURPLUS FUNDS FROM ASSUMPTION OF HOMEOWNER CONTROL THROUGH 2015 Operating Fund Accumulated Surplus Funds, Beg of Year 0 562, ,156 1,198,025 2,218,595 1,110,137 (63,445) (231,959) 182, , ,302 Excess of Revenues Over Expenses, Excluding Depreciation and Deferred Tax 543, ,954 1,271,037 1,020,570 (1,108,458) (1,174,681) 154,915 1,643,487 1,696,189 2,187, ,633 Less: Transfers to Reserve Fund 19,152 (183,650) (1,021,168) 0 0 1,099 (323,429) (1,229,208) (1,638,118) (1,510,479) 0 Accumulated Surplus Funds, End of Year 562, ,156 1,198,025 2,218,595 1,110,137 (63,445) (231,959) 182, , ,302 1,099,935 Note 1: Basis of Estimate for Surplus Funds at Year End Upon Assumption of Homeowner control from Developer Control in May The period prior to May 2005 was under the developer control; therefore, the assumption is made that any Surplus Funds accumulated during this period were properly credited to homeowners by the Developer. An additional assumption is used to allocate 8 months, beginning in may, of the Excess Revenues over Expenses to SCACAI. Note 2: Negative Excess of Revenues Over Expenses in 2009 and 2010 were a result of the 4th Q Assessment Holidays in these years. The lower amount of Excess of Revenues over Expenses in 2008 was a result of the partial Assessment Holiday in Note 3: One theory for computing the amount of accumulated Surplus Fund is to subtract the amount of Property & Equipment from the Fund Balance reported in the audited financial statements for the Operating fund: Operating Fund Fund Balance as of December 31, ,998,290 Less: Property & Equipment, Net 807,588 1,190,702 Comparing the two methods for estimating Surplus Fund shows that a reasonable estimate of cumulative Surplus Funds is between $1.1 and $1.2 million. Given the various changes in reporting practices during this period, this range of estimates represents a fact-based, good faith basis of estimate for the amount of accumulated Surplus Fund. JNM 27 July 2016 Page 20 of 32

164 ANALYSIS OF THE DEFINITION OF SURPLUS FUNDS Presentation By James N. Mayfield, Director 28 July 2016 Page 21 of 32

165 WHY A DEFINITION IS NEEDED? NRS doesn t provide a definition of the term surplus funds or a methodology for calculating surplus funds. SCA CC&R Section 8.1(e) attempts to define the term surplus funds, but requires interpretation. NRED, including the Ombudsman, has consistently refused to issue an Advisory Opinion that would define the term surplus funds. Neither SCA s CPAs nor legal counsel can provide an authoritative definition since neither the statute, SCA CC&Rs, nor NRED provide a clear definition upon which they can base an opinion. 1 Page 22 of 32

166 NRS Surplus Funds Unless otherwise provided in the declaration (CC&Rs), any surplus funds of the association remaining after payment of or provision for common expenses and any prepayment of reserves must be paid to the unit owners in proportion to their liabilities for common expenses or credited to reduce assessments for common expenses. 2 Page 23 of 32

167 SCA CC&R SECTION 8.1(e) CC&R Se tio 8.1 e The a ou t to e raised y Base Assess e ts duri g a fis al year shall e e ual to: i The Operati g Budget for su h period, plus ii The Reser e Budget to e set aside for said period, less the a ou t attri uta le to the Operati g Budget olle ted ut ot dis ursed i the i ediately pre edi g fis al year i lieu of su h su tra tio, the oard ay ele t to refu d said surplus to the o ers or deposit the fu ds i to the reser e a ou t. 3 Page 24 of 32

168 NRED ORAL GUIDANCE Unless reserve funds are more than 100% funded on a full funded basis, the concept of surplus funds is only applicable to the operating fund. Accumulation of working capital for contingencies for potential undefined obligations doesn t comply with the intent of NRS and is not authorized. Surplus Funds must be returned to the unit owners, credited to their accounts or transferred to the reserve fund up to the amount at which reserves are fully funded. 4 Page 25 of 32

169 PROPOSED DEFINTION OF SURPLUS FUNDS The amount of Surplus funds accumulated during a fiscal year is the Excess of Revenues Over Expenses from Operations in the Operating Fund reported in the audited supplemental schedule entitled Statement of Revenues, Expenses, and Changes in Fund Balances By Fund. As of December 31, 2015, the amount of surplus funds accumulated in 2015 would be defined as $182,633 using this definition. 5 Page 26 of 32

170 TOTAL ACCUMULATED SUPLUS FUNDS ON DECEMBER 31, 2015 The amount of accumulated surplus funds through the end of 2015 is a minimum of approximately $1.2 million (including the $182,633 accumulated during 2015). Operating Fund 2015 Total Assets, excluding property $ 2,994,264 Less: Total Liabilities (1,803,562) Accumulated Surplus funds $ 1,190,702 6 Page 27 of 32

171 ADDITIONAL TASK FOR FINANCE COMMITTEE The total amount of Surplus Funds accumulated through December 31, 2015 could be more than presented on the previous slide, depending upon whether the accrual or cash flow method of accounting is used for the calculation. Therefore, the Finance Committee should address the issue of developing a recommendation as to the amount of Surplus Funds accumulated through last year and a recommendation on how to address all existing accumulated Surplus Funds. 7 Page 28 of 32

172 FREQUENTLY ASKED QUESSTIONS FAQ 1. How should SCA account for the funds needed to complete capital projects approved in the budget for the preceding fiscal year? Answer. Budget authorizations for a fiscal year expire as of the end of the fiscal year. The approval of expenditures for partially completed capital projects and/or capital projects approved but not started in the previous fiscal year must be included in the budget for the next fiscal year. 8 Page 29 of 32

173 FAQ s (continued) FAQ 2. Shouldn t SCA accumulate excess working capital to provide for fluctuations in the annual cash flow cycle? Answer. No. SCA begins the year with substantial cash received from prepaid annual assessments from Members who prepaid their annual assessments for the entire next fiscal year. SCA quarterly installments are due and must be paid at the beginning of the first month of each quarter. These two sources of cash, collected in advance of related expenditures, provide a cash flow cushion from which to plan to fund variances in the cash flow cycle. The accumulation of Surplus Funds to underwrite poor cash management or inexact budgeting isn t authorized in NRS nor can it be justified under the business judgment rule. 9 Page 30 of 32

174 FAQ s (continued) FAQ 3. What action should SCA take to fund the cash requirements for an expenditure that was not anticipated in the approved annual budget? Answer. Small expenditures can and should be funded by reducing non-essential expenditures and the use of cash management strategies. Large, unanticipated expenditures can be funded by deferral of capital expenditures, loans, increasing the annual assessment, imposition of a special assessments, and use of aggressive cash management strategies. In any event, the accumulation of Surplus Funds isn t authorized in NRS for undefined, unbudgeted contingencies. 10 Page 31 of 32

175 FAQ s (continued) FAQ 4. What are the dangers in using surplus funds for excess working capital? Answer. Besides the risks associated with non-compliance with State law and the SCA CC&Rs, excess working capital fosters imprecise budgeting, cash slush funds, impairment of transparency related to budget variances, and excess holding of the money of SCA homeowners. Because of SCA s history of investigations regarding surplus funds, SCA s surplus funds policy should reflect an abundance of caution regarding compliance with NRS and CC&R Section 8.1(e). 11 Page 32 of 32

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BANDERA SQUARE FOR LEASE. 451 Bandera Rd, San Antonio, TX Bethany Babcock. Zach Parra. Principal

BANDERA SQUARE FOR LEASE. 451 Bandera Rd, San Antonio, TX Bethany Babcock. Zach Parra. Principal 451 Bandera Rd, San Antonio, TX 78228 Bethany Babcock Principal Zach Parra Senior Leasing Agent 1380 PANTHEON WAY STE 290 SAN ANTONIO, TX 78232 FORESITECRE.COM LEASE BROCHURE OFFERING SUMMARY PROPERTY