Hawthorne Residents Cooperative Association, 2008 Proposed Cash Budget. January 1,2008 through December 31,2008 (Based on 1185 Unit Owners)

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1 Hawthorne Residents Cooperative Association, Inc. Volume 25, Number Hawthorne Blvd., Leesburg, FL November 16, 2007 GEORGE WOLF, President JOHN HAAG, Treasurer BETTY SMITH, Director JERRY PARONTO, Vice President GENE JONES, Director ROBERT WALLER, Director DAN BIRO, Secretary RUDY SCHMITT, Director ED WALSH, Director 2008 Proposed Cash Budget January 1,2008 through December 31,2008 (Based on 1185 Unit Owners) THE FOLLOWING PROPOSED CASH BUDGET FOR 2008, BASED ON 1185 SHAREHOLDERS, WAS REVIEWED BY THE HRCA BOARD AT THE NOVEMBER 15th, 2007 REGULAR BOARD MEETING. FINAL ACTION AND APPROVAL OF THE BUDGET WILL BE TAKEN AT THE DECEMBER BOARD MEETING TO BE HELD IN THE CLUBHOUSE AT 1:30 P.M., THURSDAY, DECEMBER 13th, ANNUAL MONTHLY EXP'S PER MO. EXPENSES EXPENSES PER UNIT (1185) Operating Expenses: Payroll & Related Expenses $ 2,528,500 $ 210,708 $ Maintenance & Repair 280,700 23,392 $ Advertising 82,400 6,867 $ 5.79 Insurance 136,000 11,333 $ 9.56 Supplies 136,500 11,375 $ 9.60 Sewage & Disposal Fees 463,000 38,583 $ Professional Fees 45,000 3,750 $ 3.16 Telephone & Electricity 265,000 22,083 $ Hawthorne Program Expense 21,500 1,792 $ 1.51 Taxes & Licenses 12,620 1,052 $ 0.89 Fees Payable to the Division 4, $ 0.34 Other Expenses 56,050 4,671 $ 3.94 Total Operating Expenses $ 4,032,050 $ 336,004 $ Operating Revenues: Net Revenues (Excl. Maint. Fees) $ (717,850) $ (59,821) $ (50.48) Increase in Working Capital 13,250 1, Total Operating Revenues $ (704,600) $ (58,717) $ (49.55) NET OPERATING EXPENDITURES $ 3,327,450 $ 277,288 $ (OPERATING BUDGET) Capital Expenditures $ 546,100 $ 45,508 $ Reserve Interest $ (40,000) $ (3,333) $ (2.81 ) Increase(Decrease) to Reserve Fund (136,380) (11,365) (9.59) CAPITAL APPROPRIATION $ 369,720 $ 30,810 $ TOTAL 2008 EXPENDITURES $ 3,697,170 $ 308,098 $ Page 2

2 2007 Cash Budget January 1,2007 through December 31, 2007 (Based on 1182 Unit Owners) THE 2007 CASH BUDGET BELOW IS INCLUDED IN THIS GREEN SHEET FOR COMPARISON PURPOSES WHEN REVIEWING THE 2008 PROPOSED CASH BUDGET ANNUAL MONTHLY EXP'S PER MO. EXPENSES EXPENSES PER UNIT (1182) Operating Expenses: Payroll & Related Expenses $ 2,398,000 $ 199,833 $ Maintenance & Repair 285,200 23,767 $ Advertising 83,400 6,950 $ 5.88 Insurance 141,500 11,792 $ 9.98 Supplies 121,000 10,083 $ 8.53 Sewage & Disposal Fees 457,000 38,083 $ Professional Fees 43,000 3,583 $ 3.03 Telephone & Electricity 245,000 20,417 $ Hawthorne Program Expense 23,400 1,950 $ 1.65 Taxes & Licenses 17,900 1,492 $ 1.26 Other Expenses 53,900 4,492 $ 3.80 Total Operating Expenses $ 3,869,300 $ 322,442 $ Operating Revenues: Net Revenues (Excl. Maint. Fees) $ (615,600) $ (51,300) $ (43.40) Increase in Working Capital 8, Total Operating Revenues $ (606,948) $ (50,579) $ (42.79) NET OPERATING EXPENDITURES $ 3,262,352 $ 271,863 $ (OPERATING BUDGET) Capital Expenditures $ 515,450 $ 42,954 $ Reserve Interest $ (70,000) $ (5,833) $ (4.94) Increase to Reserve Fund (105,034) (8,753) $ (7.41) CAPITAL APPROPRIATION $ 340,416 $ 28,368 $ TOTAL 2007 EXPENDITURES $ 3,602,768 $ 300,231 $ Page 3

3 ANALYSIS OF CAPITAL REPLACEMENT RESERVES (BUDGETED) FOR THE YEAR 2008 FUND A - CAPITAL RESERVE ROOF PAVEMENT BUILDING REPLACEMENT & PARKING PAINTING TOTAL Projected Balance $ 63,454 $ 600,853 $ 38,143 $ 702,450 Funding $7.00 x 1185 x12 months 93,540 6,000 99,540 Capital Improvements Expenditures $ 250, ,000 Projected Balance $ 63,454 $ 444,393 $ 44,143 $ 551,990 FUND B - CAPITAL FUND Projected Balance Funding $19.00 x 1185 x 12 months Reserve Interest Land Improvements Building Maintenance Vehicles & Equipment Furniture & Office Equipment Maintenance Equipment Contingency Projected Balance ,500 13,200 51,500 24, ,400 $ 900, ,180 40,000 30,000 (296,100) Projected Expenditures $ 914,080 FUND C - ACTIVITY FACILITIES FUND Projected Balance $ 8,288 Projected Balance $ 8,288 Page 4

4 NOTE - Reserves are funded per Florida Statute There are two options for funding of reserves. 1) Less than full funding, per this budget, would require contributions of $7.00 per month per unit to Fund A- and $19.00 per month per unit to Fund B. 2) Full funding would require a contribution of $ per month per unit for Full funding of reserves may be waived by association action. MONTHLY ANNUAL MONTHLY EXPENSE PER 1) Less than Full Funding Reserve Funding EXPENSE EXPENSE UNIT (1185) Fund A - Capital Reserve Roofing $ $ $ Pavement and Parking 93,540 7, Building Painting 6, $ 99,540 $ 8,295 $ 7.00 Fund B - Capital Fund $ 270,180 $ 22,515 $ Fund C - Activity Facility Fund $ $ $ ) Reserve Funding to Fully Fund Land Improvements $ 883,725 $ 73,644 $ Buildings 304,852 25,404 $ Vehicles 234,581 19,548 $ Maintenance Equipment 179,195 14,933 $ Office Equip/Furniture & Fixtures 144,643 12,054 $ (Detailed Schedule Below) $ 1,746,996 $ 145,583 $ The above Reserve Funding to Fully Fund shows a summary of the total dollars that would be required to fully fund the capital expenditures and deferred maintenance reserve account for 2008 using the 'suggested' formula of State of FL Legislation for Cooperatives. A detailed schedule to fund the reserve is disclosed below as required by State Statute. ASSET DESCRIPTION Cable TV Bridge Sewer System Water System Drainage System Irrigation Electrical Landscaping Seawall Floating Dock Streets Patio and Walks Fencing Putting Greens Gates Tennis & Gazebo Bocce Courts Clubhouse & MultiPurpose Bldg. Shuffleboard Courts Woodcrafters Building Sales Office Operations Office Maintenance Garage Laundry Building Marina/Guardhouse Vehicles Maintenance Equipment Office Equipment Furniture/Fixtures FULLY FUNDED RESERVE DETAIL SCHEDULE (Adjusted LIFE IN YEARS Dec Page 5 Annually) REPLACEMENT COST 719, ,220 1,862,342 1,544, , , , , , , , , ,874 16, , ,072 20,441 4,526, ,450 44, , , ,923 93, , , , , , RESERVE 79,892 25, ,463 96,543 24,045 24,755 27,841 26,133 9,333 91, ,121 15,043 31,087 1,233 38,371 14,089 2, ,794 22,497 2,601 23,975 12,738 11,829 9,361 25, , ,195 44,997 99,646 $17,620,842 $ 1,746,996

5 / ~r.) / )~ Cash & Investments..) ~»: <, ~ -: -, / ~ ~ ~ $2,800,000 $2,600,000 $2,400,000 $2,200,000 $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 At December 31, APPROVAL OF BUDGET BY THE BOARD WILL BE AT THE REGULAR BOARD MEETING TO BE HELD IN THE CLUBHOUSE AUDITORIUM THURSDAY, DECEMBER 13,2007 AT 1:30 PM This proposed Cash Budget is in the format specified by the State Division of Land Sales, Condominiums and Mobile Homes. Budget worksheets are available in the accounting office. Page 6