Greenbelt Homes, Inc.

Transcription

1 Greenbelt Homes, Inc Budget October 12, First Presentation to Finance Committee & Board of Directors November 2, First Reading November 15, Second Reading and Approval

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3 TABLE OF CONTENTS Pages 1-3 Board President's 2018 budget letter 4 Important changes to 2018 budget 5 Summary budget overview 6 Summary budget schedule Supporting Schedules: Operations 7-10 Distribution of 2018 members' charges Schedule A Service and other income Schedule B Real estate taxes Schedule C Insurance Schedule D Administration/Board/Membership Schedule E Maintenance and improvements (routine) Schedule F Home Improvement Program 23 Crawlspace improvements Schedule G 24 Optional improvements Schedule H 25 H.I.P. contracts Reserves 26 Replacement and addition maintenance reserves (routine) 27 Replacement and addition maintenance reserves (H.I.P.) 28 Major maintenance, replacement & improvement programs 29 Analysis of contingency, replacement & addition Schedule I maintenance reserves

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7 IMPORTANT CHANGES TO Real estate taxes have been budgeted to reflect the impact of the loss of the Homestead Tax Credit for units which will not be eligible to receive it in 2018 (pages 11-12). Contracts include asbestos remediation for crawlspace of frame units (page 20). Expenditures for the Homes Improvement Program (pages 21-23) have been broken out for crawlspace improvements, optional improvements, and replacement and addition maintenance reserves. Summary Budget (page 4) Maintenance & improvements Crawlspace improvements Optional improvements Addition maintenance reserves Administrative Schedule E (page 18) Legal Board/Audit/Committees Maintenance Expense Schedule F (page 19) Payroll Fringe Contract work Maintenance - Contract Work (page 20) Parking lot repairs Swale/drainage improvements Asbestos removal in crawlspace of frame units Replacement Reserves (page 24) Contracts Underground utility (yard restorations) Purchase van Replace roofs on larger homes Replace air conditioning in larger homes Addition Maintenance Reserves (page 24) Contracts Roof replacements Summary Budget (page 4) Adm/Brd/Memb Administrative Schedule E (page 18) Payroll Hiring & training Temp & professional help Maintenance Expense Schedule F (page 19) Materials Replacement Reserves (page 24) Contracts Replace roofs masonry block homes Replace carpet admin building Replace roof on warehouse Revise replacement reserve plan SIGNIFICANT INCREASES IN EXPENDITURES SIGNIFICANT REDUCTIONS IN EXPENDITURES Addition Maintenance Reserves (page 24) Professional fee to revise addition maintenance reserve plan 4

8 SUMMARY BUDGET OVERVIEW The summary budget is a consolidation of income, expenses and equity for all three budget groups. It provides the basis for the cooperative's operations during All of the other documentation included as part of the budget presentation consists of supporting schedules and backup material. The summary budget identifies total receipts (income), expenses and equity. As a cooperative operating on a not-for-profit basis, GHI must determine which expenses are necessary, then collect sufficient income to meet those expenses. In accordance with the bylaws, increases in membership operating payments cannot exceed 10% of the prior year's operating payments without membership approval. The increase in membership operating payments for 2018 falls well within this limit and provides for enhanced services and improvements. This budget reflects an increase in membership operating payments of 6.8%. Operating payments consists of real estate taxes, trash collection, insurance, administration, maintenance and improvements, crawlspace improvements, asbestos remediation and replacement reserves, less service and other income. 5

9 SUMMARY RECEIPTS: 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change Schedule Members' charges: Operating charges $ 4,538,681 $ 4,538,681 $ 4,774, % Real estate taxes 3,710,061 3,827,377 4,023, % Crawlspace improvements 204, , , % Asbestos remediation 40,000 40, ,000 >100% Replacement reserves 1,694,791 1,694,791 1,801, % Total members' charges 10,187,533 10,304,849 11,005, % A Other income sources: Service income 485, , , % B Other income 438, , , % B Total other income sources 924,330 1,001,950 1,017, % Members' charges and other income $ 11,111,863 $ 11,306,799 $ 12,022, % Miscellaneous receipts: Addition maintenance reserves 170, , , % I Optional improvements 441, ,066 1,138, % H Total receipts $ 11,723,843 $ 12,389,865 $ 13,352, % EXPENSES: Real estate taxes 3,710,061 3,827,377 4,023, % C Trash collection 429, , , % A Insurance 452, , , % D Adm/Brd/Memb 1,391,308 1,477,140 1,425, % E Maintenance & improvements 3,115,000 3,160,310 4,388, % F Crawlspace improvements 506,310 1,184,990 2,163, % G Total expenses prior to optional HIP 9,604,455 10,552,998 12,920, % Optional improvements 441, ,065 1,138, % H EQUITY: Total expenses $ 10,046,435 $ 11,466,063 $ 14,059, % Replacement reserves 1,694,791 1,694,791 1,801, % I Addition maintenance reserves 170, , , % I Total reserves 1,864,791 1,864,791 1,992, % Total expenses & reserves $ 11,911,226 $ 13,330,854 $ 16,052, % Unreserved operating fund (209,702) (940,990) (2,699,830) >100% Total expense & equity $ 11,701,524 $ 12,389,864 $ 13,352, % Depr - member units 504, , , % 6

10 DISTRIBUTION OF 2018 MEMBERS' CHARGES Schedule A illustrates how total members' charges are distributed among the three budget classes created by GHI's Mutual Ownership Contracts. Since real estate taxes are determined based on the actual real estate tax bill, not all members within the particular budget class (frame, masonry, & larger homes) will increase by the same percentage. For 2018 the total members' charges are reduced $1,017,145 by service and other income (see Schedule B). ABBREVIATIONS USED IN TEXT 1) GHI = Greenbelt Homes, Inc. 2) GDC = Greenbelt Development Corporation 3) ADM = Administration expense 4) BRD = Board expense 5) MEMB = Members expense 6) MAINT= Maintenance 7) FFS = Fee For Service 8) RR = Replacement reserves 9) HIP = Homes Improvement Program 10) HTC = Homestead tax credit 11) s/s = Service side 12) g/s = Garden side 13) c/a = Common area 14) EPDM = Ethylene Propylene Diene Monomer rubber roofing 7

11 DISTRIBUTION OF 2018 MEMBERS' CHARGES Schedule A FRAME MASONRY LARGER TOTAL HOMES HOMES HOMES CHARGES % Routine Operating Payments Change Real estate taxes $ 2,043,826 $ 2,185,544 $ 1,662,164 $ 1,706,374 $ 121,387 $ 131,174 $ 3,827,377 $ 4,023, % Trash collection 279, , , ,896 8,109 8, , , % Insurance 280, , , ,271 8,149 8, , , % Adm/Brd/Memb 915, , , ,868 26,589 25,651 1,477,140 1,425, % Maint and improvements 1,964,552 3,074,668 1,134,448 1,247,143 61,310 66,913 3,160,310 4,388, % Crawlspace improvements 134, ,000 70, , , , % Asbestos remediation - 60,000 40,000 40, , ,000 >100.0% Transfers to reserves (RR) 929, , , ,381 28,775 29,984 1,694,791 1,801, % Allocation of equity (crawlspace) (942,100) - (942,100) N/A Total charges 6,547,589 7,028,661 4,504,892 4,723, , ,289 11,306,799 12,022, % Less service & other income 621, , , ,206 18,035 18,309 1,001,950 1,017, % Total operating payments $ 5,926,380 $ 6,398,031 $ 4,142,186 $ 4,355,726 $ 236,284 $ 251,980 $ 10,304,849 $ 11,005, % Addition Maintenance Program Transfers to reserves (AM) 97, ,951 71,577 80, , , % Homes Improvement Program Optional improvements 562, , , , ,066 1,138, % Total members' charges $ 6,586,503 $ 7,222,833 $ 4,564,630 $ 4,859,793 $ 236,783 $ 252,540 $ 11,387,915 $ 12,335, % % avg. change in operating payments 8.0% 5.2% 6.6% 6.8% % avg. change in members' charges 9.7% 6.5% 6.7% 8.3% % average change in real estate taxes 1 6.9% 2.7% 8.1% 5.1% % change in transfer to reserves 7.6% 6.0% 4.3% 6.9% % change in operating expenses 1 The variation in percent change between home groups reflects the impact of actual assessed values of homes and the HTC for members who are eligible. The 2018 budgeted real estate taxes by home group are a summation of individual unit real estate taxes for that particular home group and include the benefit of any HTC. Not all members within a home group are impacted equally. 2 In 2018 the cooperative will continue to receive the benefit of the Homestead Tax Credit (HTC) for members who are eligible. If the entire cooperative did not receive the benefit of the HTC, GHI's real estate taxes would have increased by 20.5% or $588,052 for the 2018 budget (see page 10). As stated on page 3 of this budget booklet, increases in membership operating payments cannot exceed 10% of last year's operating charges without membership approval. The increase in operating payments for 2017 falls within this limit and provides for enhanced services and improvements. 8

12 INCOME Member charges account for 92.4% of 2018 income. Miscellaneous 0.3% Members' charges Service & other income Fee For Service 1.2% Sale of services to GDC 2.3% Interest income 1.0% Contract processing 1.2% Garage rentals 1.3% Storage & boat/trailer yd rental 0.3% 9

13 EXPENSES AND RESERVES Real estate taxes 27.0% Maintenance 29.4% ` Administration 9.6% Reserves 13.4% Trash collection 3.0% Crawlspace improvements 14.5% Insurance 3.1% 10

14 SERVICE AND OTHER INCOME NARRATIVE SERVICE INCOME Service income of Schedule B is derived from 3 sources: sale of services to Greenbelt Development Corporation, rental garages, rental of boiler room storage, and rented space in the boat/trailer yards. Sale of services to GDC - GDC will continue to pay its portion of the annual audit, insurance, and a management fee to GHI. Garage rentals - The month rent for closed garages increased to $52/month from $48/month in 2017; open garages to $32/month from $30/month; and garages used for storage increased to $108/month from $100/month. Boiler room storage units at 8,9, and 10 Southway, four units each, are fully rented. A newly converted boiler rom conversion is at 14 Ridge and is budgeted to be fully rented all 12 months. The monthly rent for 2018 remains unchanged at $110/month. Boat/trailer yard rental - Boat/trailer slots increased to $27/month from $25/month in 2017 while slots for canoes remained unchanged at $5/month. OTHER INCOME Other income of Schedule B consists of contract processing, interest income, Fee For Service revenue and miscellaneous income from various activities. Contract processing - Consists of membership fees paid by new members and the processing fees on resales. The 2018 budget reflects administrative fees of $980 (seller), $625 (membership) $78 (MOC change), and a $470 transfer fee and is based on 95 resales. Interest income - This item consists of interest earned on accounts and investments net of those held for specific reserves. Corporate bond interest $340K less bond premium amortization of $96K, the Vanguard Federal Money Market $43K, interest on loan to GDC $7.5K, and other interest $2.5K less interest for specific reserves $160K result in interest income available for operations of $137K. Fee For Service - This income consists of an hourly component charged when services are provided by in-house staff and an administration component when services are contracted to outside companies. Expense relating to FFS activities have been budgeted in general maintenance and contract work. Miscellaneous - This item includes sublease fees of $3K, proceeds from recycling of scrap metal of $3K, late fees paid by members of $21K, and various other miscellaneous receipts including take-backs of distressed units of $18K. 11

15 SERVICE AND OTHER INCOME Schedule B Service Income 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change Sale of services to GDC $ 296,930 $ 296,930 $ 310, % Garage rentals 161, , , % Storage & boat/trailer yd rental 27,500 29,060 33, % Total service income $ 485,430 $ 493,940 $ 516, % Other Income Calculation Completed Contract processing $ 196,600 $ 139,910 $ 156, % Interest income 122, , , % Fee For Service 84, , , % Miscellaneous 36,300 60,700 45, % Total other income $ 438,900 $ 508,010 $ 500, % 12

16 REAL ESTATE TAXES $5,000,000 $4,000,000 4,023,092 3,710,061 3,490,778 3,283,036 $3,000,000 2,942,447 2,997,509 3,136,868 2,739,947 2,517,646 2,293,428 $2,000,000 $1,000,000 $ Budget 13

17 REAL ESTATE TAXES Schedule C Proposed % 2017 Actual 2017 Budget 2018 Budget Change Real estate assessment $ 214,528,737 $ 215,727,991 $ 230,200, % Tax rate (per $100 assessed) % Total real estate tax $ 3,710,061 $ 3,827,377 $ 4,023, % Taxes excluding HTC $ 4,275,772 $ 4,332,034 $ 4,611, % Savings from HTC $ 565,711 $ 588,052 If the cooperative were not eligible to receive the HTC, GHI's real estate taxes would have been $4,611,144 for the 2018 budget. The HTC assisted in reducing GHI's total real estate taxes by $588,052. Individual member real estate tax responsibility will vary due to various factors including timing of eligibility of the HTC and assessed home value. Not all members within a home group are impacted equally. Revised Revised Tax Rates Historic Data per $100 Assessment % 2008 Act ,748, % Act ,292, % Act ,000, % Act ,014, % Act ,193, % Act ,553, % Act ,462, % Act ,318, % Act ,919, % Act ,528, Budget ,200, %

18 TOTAL INSURANCE $600, , ,300 $500, , , , , ,600 $400, , , ,058 $300,000 $200,000 $100,000 $ Budget 15

19 INSURANCE Schedule D 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change INSURANCE Hazard & extended coverage $ 442,700 $ 442,700 $ 457, % (General liability, umbrella, D&O liability, and property damage) Uninsured losses 10,000 10,000 10, % Total to insurance (page 8) 452, , , % (Does not include vehicle & workers' compensation) * Vehicle (included in vehicle expense) 44,700 44,700 48, % * Workers' compensation (included in fringe benefits) 26,300 26,300 49, % TOTAL $ 523,700 $ 523,700 $ 565, % GHI uses an insurance broker to find the best insurance prices. Many factors have caused the increased insurance costs over the last couple of years including storm damage, fires, and lawsuits. * These items are included in maintenance schedules. 16

20 ADMINISTRATION/BOARD/MEMBER EXPENSE NARRATIVE Schedule E Provides a list of expenses of the administrative staff, Board of Directors, elected and appointed committees, and membership activities and services. Payroll - Administration (Decreased from 2017 budget of $816,700 to $816,950). Assistant general manager moved to maintenance budget. There is a 3% salary increase budgeted for existing staff as well as $20K for potential competitive salary adjustments. Fringe Benefits (Decreased from 2017 budget of $256,000 to $248,300). This item is based on calculations of 2018 insurance premiums as they relate to current administration personnel. Budgeted amount includes a 10% increase in health insurance premiums and a 4% increase in dental premiums. All employees contribute 10% of the cost of their medical/dental insurance premiums. Office Equipment, Supplies & Postage (No change from 2017 of $39,500). Items included in this category are: member communications, computers and computer supplies, technical service supplies, postage, and in-house printing on GHI equipment. Computers purchased for HIP staff, replacement computers for existing staff and communications to the membership relating to the Homes Improvement Program are reflected on this line item. Copier Expense (No change from 2017 budget of $14,400). This item reflects our current copier contracts and usage levels. Telephone & (Increased from 2017 budget of $17,600 to 18,000). This is reflective of the current usage in telephone and activity. Hiring and Training (Decreased from 2017 budget of $70,000 to $17,500). This item includes advertising costs to fill vacant positions of $1,500, classes, seminars and workshops for maintenance and administrative personnel of $9,500. Also included are pre-employment and random drug screening totaling $1,000 as well as staff incentive awards of $5,500. Executive search fees for Assistant General Manager and Director of Technical Services in the amount of $52,500 have been eliminated. Temporary and Professional Help (Decreased from the 2017 budget of $21,500 to $15,000). This amount consists of $6,500 for payroll services, $5,000 for home health services, and $3,500 for drainage & swale engineering services. Reduction is due to removal of completed compensation survey. Legal (Increased from 2017 budget of $26,500 to $61,500). This item includes $35,000 for legal fees associated with zoning rewrites which is new for Legal costs associated with various issues which the cooperative may encounter make up the balance of this item. Audit (Increased from 2017 budget of $17,000 to $18,000). This reflects the anticipated cost of accounting and tax services. Association Dues and Conferences (No change from 2016 budget of $3,200). This item includes membership in National Cooperative Business Association (NCBA) $700, Community Association Managers International Certification Board, $350, the Community Association Institute (CAI) $850 and the National Association of Housing Cooperatives (NAHC) $1,300. Staff Events (No change from 2016 budget of $5,500). This item includes quarterly events promoting staff safety, emergency awareness, and planning. This item also includes the company picnic, holiday party, and other staff events. 17

21 ADMINISTRATION/BOARD/MEMBER EXPENSE NARRATIVE (cont.) Board/Audit/Committees (Increased from 2017 budget of $30,220 to $41,020). Architectural Review Committee $390; Audit Committee $7,500; Communications Committee $950; Companion Animal $250; Finance Committee $600; Nominations and Elections $1,550; Woodlands $1,200; Bicycle Committee $1,240; Member Outreach $2,000; stipends for Board and Audit Committee Stipend $19,340; Board strategic planning and training $6,000. Member Expenses (Increased from 2017 budget of $28,600 to 27,900). This line items consists of the annual meeting $6,000; an additional membership meeting of $6,000; advertising for meetings $2,500; Communicator newsletter printing and delivery $2,400; HIP meetings $6,500; News Review ads $3,000; and staff stipend for meals & travel $1,500. Utilities (No change from 2017 of $29,930). This item includes heat, electricity and water for the office buildings. Personal Property Taxes (No change form 2017 budget of $6,000). Depreciation (Decreased from 2017 budget of $8,000 to $5,100). Other (No change from 2017 budget of $6,750). This item includes fees to professional organizations to maintain staff designations and professional relationships as well as reduced bank fees. Information Technology Services (Decreased from 2017 budget of $55,340 to $50,500). This item includes outsourced support, maintenance and remote backup services for computer software including MicroMain and Jenark, web hosting, hardware, and new integrated time and attendance software. 18

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23 ADMINISTRATION/BOARD/MEMBERSHIP EXPENSE SUMMARY Schedule E 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change EXPENSES Payroll-Administration $ 795,625 $ 841,100 $ 816, % Fringe benefits 242, , , % Office equipment/supplies/postage 33,473 39,500 39, % Copier expense 14,000 14,400 14, % Telephone & 18,900 17,600 18, % Hiring and training 26,000 70,000 17, % Temp & professional help 40,000 21,500 15, % Legal 28,000 26,500 61,500 >100.0% Audit 18,000 17,000 18, % Association dues & conferences 3,200 3,200 3, % Staff events 5,500 5,500 5, % Board/Audit/Committees 34,600 30,220 41, % Member expenses 28,200 28,600 27, % Utilities 29,800 29,930 29, % Personal property taxes 5,700 6,000 6, % Depreciation 4,410 8,000 5, % Other 8,600 6,750 6, % Information technology services 55,000 55,340 50, % Total Administration $ 1,391,308 $ 1,477,140 $ 1,425, % 20

24 ROUTINE MAINTENANCE & IMPROVEMENTS EXPENSE SUMMARY Schedule F 0% 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change Payroll - maintenance $ 1,664,250 $ 1,734,500 $ 1,906, % Fringe benefits 599, , , % Materials 235, , , % Subtotal 2,498,550 2,542,200 2,771, % Contract work 459, ,650 1,458,714 >100.0% Vehicle expense 98,500 98, , % Dumpsters 16,000 13,860 16, % Uniforms 13,000 13,000 13, % Sub-meter court lighting 8,300 8,300 8, % Depreciation 21,000 24,800 20, % Total Maintenance $ 3,115,000 $ 3,160,310 $ 4,388, % Note: Fee-for-Service budget expense is $180,000 and is included in Maintenance - payroll ($72K), fringe benefits ($31K), materials ($15.2K), and contract work ($134.6K). Depreciation includes $3.5K for new truck. Schedule F Yr End Proposed % Projection 2017 Budget 2018 Budget Change FRAME HOMES Total frame expenses $ 1,931,300 $ 1,964,552 $ 3,074, % MASONRY HOMES Total masonry expenses 1,127,630 1,134,448 1,247, % LARGER HOMES Total larger homes expenses 56,070 61,310 66, % Total Maintenance $ 3,115,000 $ 3,160,310 $ 4,388, % 21

25 PROPOSED CONTRACTS (ROUTINE MAINTENANCE) Budget Budget % Change Maintenance - Contract Work (Schedule F, Line 4) Asbestos tile removal (masonry homes) $ 2,000 $ 2, % Bathtub reglazing (40) 20,000 20, % Fire & burglar alarm system monitoring & repairs 1,800 1, % Fire extinguisher servicing (administration building) % Fee for service contracted work 78,600 76, % Gutter cleaning (Spring and Fall) 60,000 60, % Janitorial services (administration building) 27,000 28, % Landscape maintenance 54,000 56, % Parking lot repairs (minor repairs) 15,000 39,000 >100.0% Pest extermination 33,000 32, % Power cleaning of storm mains (1E-H Ga (s/s), 58 Cr (g/s)) 5,000 5, % Repairs HVAC units in administration building 2,500 5, % Repairs HVAC units at larger homes 5,000 5, % Swale/drainage improvements (9L-M La, 9L-M Re, 14U-V Hi, 13A-B Ri, 19M Ri5L-M G 25,000 45, % Asbestos removal in crawlspace of frame units - 942,103 >100.0% Tree maintenance & fertilization (includes cost of arborist monthly preventive maintena 130, , % Total $ 459,650 $ 1,458,714 >100.0% PROPOSED CONTRACTS (CRAWLSPACE IMPROVEMENTS) 22

26 HOMES IMPROVEMENT PROGRAM - CRAWLSPACE IMPROVEMENTS Schedule G Schedule G 0% 2017 Yr End Proposed % Crawlspace Improvements Projection 2017 Budget 2018 Budget Change Payroll - crawlspace improvements $ 28,970 $ 67,550 $ 147,950 >100.0% Fringe benefits 10,140 23,640 51,780 >100.0% Subtotal 39,110 91, ,730 >100.0% Contract work 467,200 1,093,800 1,964, % Total crawlspace improvements $ 506,310 $ 1,184,990 $ 2,163, % Schedule G Yr End Proposed % Crawlspace Improvements by Homes Group Projection 2017 Budget 2018 Budget Change FRAME HOMES Total crawlspace improvements - Frame $ 4,693 $ 866,480 $ 1,861,310 >100.0% MASONRY HOMES Total crawlspace improvements - Masonry 501, , , % Total crawlspace improvements $ 506,310 $ 1,184,990 $ 2,163, % * represents 12% of total labor costs 23

27 HOMES IMPROVEMENT PROGRAM - OPTONAL IMPROVEMENTS Schedule H Schedule H 0% 2017 Yr End Proposed % Optional Improvements Projection 2017 Budget 2018 Budget Change Payroll - optional improvements $ 26,120 $ 102,070 $ 67, % Fringe benefits 14,060 35,720 36, % Subtotal 40, , , % Contract work 401, ,275 1,035, % Total optional improvements $ 441,980 $ 913,065 $ 1,138, % Schedule H Yr End Proposed % Optional Improvements by Home Group Projection 2017 Budget 2018 Budget Change FRAME HOMES Total optional improvements - frame $ 210,117 $ 562,199 $ 714, % MASONRY HOMES Total optional improvements - masonry $ 131,990 $ 350,867 $ 423, % Total optional improvements $ 342,107 $ 913,066 $ 1,138, % 24

28 PROPOSED CONTRACTS (HOMES IMPROVEMENT PROGRAM - ALL) Budget Budget % Crawlspace Improvements - Contract Work (Schedule G, Line 3) Change Frame Homes Contract work (258 $3,100/unit) $ 799,800 $ 1,689,500 >100.0% Masonry Homes Contract work (140 $2,100/unit) ( @$2,265/unit) 294, , % Total crawlspace contract work $ 1,093,800 $ 1,964, % Optional Improvements Frame Homes - Contract Work (Schedule H, Line 3) Attic perimeter sealing $ 6,280 $ 12,990 >100.0% Attic insulate/seal hatch 3,210 5, % 1" polyisocyanurate on walls 66, , % Attic to R-38 25,700 54,800 >100.0% Seal s/s trash closet 1,105 1, % Close through-wall A/C 10,910 18, % Bath exhaust fan (basic w/ time controller) 23,195 28, % Kitchen exhaust fan 7, % Storm doors 67,630 49, % Full view 1, % Peephole 955 1, % Knocker 375 1,080 >100.0% Mail slot 2,295 3, % Kick plate 3,955 1, % Kitchen window upgrade 4, % Split system heat pump 195, , % Thermostat (programmable) 28,435 27, % Permits 12,035 10, % Radiant ceiling heater (bath) 7,375 7, % Radiant ceiling heater (kitchen) 4,200 4, % Total 472, , % Optional Improvements Masonry Homes - Contract Work (Schedule H, Line 3) Attic perimeter sealing $ 3,660 $ 6, % Attic insulate/seal hatch 1,275 2,560 >100.0% Vinyl siding & 2" polyisocyanurate on walls 9,675 40,000 >100.0% Attic to R-38 12,030 24,600 >100.0% Seal s/s trash closet % Close through-wall A/C 5,770 26,000 >100.0% Bath exhaust fan (basic w/ time controller) 12,270 15, % Kitchen exhaust fan 4, % Storm doors 35,765 25, % Full view % Peephole % Knocker >100.0% Mail slot 1,215 1, % Kick plate 2, % Casement window (for all upgrades) 72,685 39, % Kitchen window upgrade 2,265 1, % Casement window (1st floor upgrades) 6,860 3, % Split system heat pump 103, , % Thermostat (programmable) 15,040 14, % Permits 6,365 5, % Radiant ceiling heater (bath) 3,905 3, % Radiant ceiling heater (kitchen) 2,220 2, % Total 302, , % 25

29 RESERVES The 2018 budget will continue to fund the reserves as set forth in the 1987 policy adopted by the Board of Directors. Schedule I illustrates the activity taking place in the reservesduring the Homes Improvement Program. Suggested Replacement Reserve expenditures detailed below are categorized based on the August 2013 Reserve study and adjusted to date. In 1987, the Board adopted the goal of having the total Contingency Reserve equal to 10% of the operating budget. In 1993 the Board voted to maintain the Contingency Reserve balance of the 29 larger homes at 35% of their portion of the operating budget. Frame and Masonry contingency funds will be utilized to cover deficits resulting from asbestos remediation. Large homes are expected to be fully funded. Suggested Replacement Reserve Expenditures: Proposed % 1) In House 2017 Budget 2018 Budget Change a) Baseboard heaters 2016-(20), 2015-(60) $ 6,720 $ 4, % b) Ceiling heaters 2016 & 2015-(126) 12,100 19, % c) Frame porch decks 2016-(10), 2015-(51) 1,425 1, % d) Water heaters replacements 2016 & 2015-(229) 112, , % e) Masonry porch roofs 2016-(6), 2015-(12) 1,910 1, % f) Underground utility yard restorations - 9,210 >100% g) Sump pumps 2016-(12), 2015-(21) 5,900 4, % Subtotal 140, , % 2) Contracts a) Underground sewer replacement 325, , % c) Purchase one van - 28,000 >100% d) Sidewalk replacement 50,000 50, % f) Replace roofs for larger homes (13) 47,615 93, % g) Replace roofs on frame homes (40) 119, , % h) Replace roofs on masonry block homes (23) 96, % i) Replace air conditioning in larger homes (7) 25,980 39, % j) Replace carpet - admin building 31, % k) Replace roof - warehouse 36, % l) Revise replacement reserve plan ($17.9K spent in 2013) 18, % Subtotal 750, , % Total suggested replacement reserve expenditures $ 890,775 $ 799, % Suggested addition maintenance reserve expenditures: Proposed 2017 Budget 2018 Budget 1) In House $ 19,500 $ 14, % 2) Contracts (roof replacements) 8,500 16, % 3) Professional fee (revise addition maintenance reserve plan) 30, % Total suggested addition maintenance expenditures $ 58,000 $ 30, % 26

30 RESERVES - HOMES IMPROVEMENT PROGRAM Replacement reserve expenditures related to the Homes Proposed % Improvement Program 2017 Budget 2018 Budget Change 1) Staff costs $ 258,370 $ 250, % 2) Contracts Window replacement (102 masonry) ( ) 384, , % Window replacement (200 frame) ( ) 739, , % Door replacement (102 masonry) ( ) 222, , % Door replacement (200 frame) ( ) 377, , % Siding replacement (200 frame) ( ) 823, , % Baseboard replacement (302 homes) ( ) 289, , % Total HIP contract expenditures & staff costs $ 3,096,005 $ 2,809, % Total replacement reserve and HIP expenditures $ 3,986,780 $ 3,608,536 Addition maintenance reserve expenditures related to the Homes Improvement Program 1) Staff costs $ 26,600 $ 21, % 2) Contracts Window replacement 96,285 70, % Door replacement (covered by AMP) 89,080 37, % Siding replacement 123,950 74, % Baseboard heaters 17,685 22, % Crawlspace improvements 10, ,990 >100.0% Total HIP contract expenditures-additions w/staff $ 363,600 $ 331, % Total addition maint. reserve and HIP addition maint. expend. $ 421,600 $ 362,540 27

31 MAJOR MAINTENANCE, REPLACEMENT AND IMPROVEMENT PROGRAMS Through 2026 Air Condensing Units for Larger Homes (RR Roofs for Larger Townhomes (RR) Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Removal of asbestos from crawlspaces of masonry homes Baseboard heaters for frame & masonry homes (RR) Doors & windows for frame & masonry homes (RR) Vinyl Siding Replacements for Frame homes (RR) Crawlspace improvements for frame and masonry homes Air Condensing Units for Larger Homes (RR Roofs for Rental Garages (RR) Roofs for Larger Townhomes (RR) Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Roofs for Rental Garages (RR) Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Air Condensing Units for Larger Homes (RR) Roofs for Rental Garages (RR) Roofs for Block Homes (RR Roofs for Frame Homes (RR) Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Forecast Replacements for Homes Improvement Program Baseboard heaters for frame & masonry homes (RR)) Doors & windows for frame & masonry homes (RR) Vinyl Siding Replacements for Frame homes (RR) Crawlspace improvements for frame and masonry homes Replacement of porch decks for frame homes (RR) Water heater replacement (RR) Replacement of ceiling heaters (RR) Replacement of porch roofs for masonry homes (RR) Replacement of crawlspace sump pumps (RR) Underground sewer pipe replacement (RR) Swale/drainage improvements Sidewalk repair (RR) Baseboard heaters for frame & masonry homes (RR) Doors & windows for frame & masonry homes (RR) Vinyl Siding Replacements for Frame homes (RR) Crawlspace improvements for frame and masonry homes Baseboard heaters for frame & masonry homes (RR) Doors & windows for frame & masonry homes (RR) Vinyl Siding Replacements for Frame homes (RR) Crawlspace improvements for frame and masonry homes The following programs occur annually from 2017 through 2021 Parking lot reconstruction (RR); parking lot repairs, sealing and striping Crawlspace inspections of masonry and frame homes Gutter cleaning (Spring and Fall) Bathtub re-glazing Tree maintenance Pest and animal control Air Condensing Units for Larger Homes (RR Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Electric wiring Masonry and Frame Homes (RR) Water/waste piping for Masonry and Frame Homes (RR) (RR) - Program funded through the Replacement Reserve. 28

32 ANALYSIS OF REPLACEMENT, ADDITION MAINTENANCE & CONTINGENCY RESERVES (1) (2) (3) (4) (5) (6) (7) Schedule I Beginning Projected Projected Balance Budgeted Projected Balance Budgeted Budgeted Balance Frame Homes 12/31/2016 Collections Expenditures 12/31/2017 Collections Expenditures 12/31/2018 Contingency $ 498,900 $ 498,900 $ (498,900) $ - Interest $ 187,900 $ 107,150 Replacement HIP (2,286,638) $ (2,014,936) Replacement (routine) 9,086, ,412 $ (480,711) 7,436, ,401 (459,377) 6,064,840 9,585,539 1,117,312 (2,767,349) 7,935,502 1,102,551 (2,973,213) 6,064,840 Masonry Homes Contingency 337,412 (337,412) - - Interest 56,300 $ 35,300 Replacement HIP (809,367) (794,264) Replacement (routine) 2,638, ,604 (308,026) 2,313, ,381 (197,906) 2,133,411 2,975, ,904 (1,454,805) 2,313, ,681 (992,170) 2,133,411 Larger Homes Contingency 73,477 73,477 73,477 Interest 6,300 $ 2,990 Replacement HIP - Replacement (routine) 309,923 28,775 (102,039) 242,959 29,984 (142,054) 133, ,400 35,075 (102,039) 316,436 32,974 (142,054) 207,356 Summary Contingency 909,789 - (337,412) 572,377 - (498,900) 73,477 Interest 25, , , ,940 Replacement HIP - - (3,096,005) - - (2,809,200) Replacement (routine) 12,034,951 1,694,791 (890,776) 9,993,461 1,801,766 (799,337) 8,332,130 $ 12,944,740 $ 1,720,291 $ (4,324,193) $ 10,816,338 $ 1,947,206 $ (4,107,437) $ 8,801,547 Additions Interest $ 25,200 $ 14,560 Replacement HIP $ (363,600) $ (331,880) Replacement (routine) $ 1,222, ,000 $ (58,000) $ 996, ,880 $ (30,660) $ 838,969 $ 1,222,469 $ 195,200 $ (421,600) $ 996,069 $ 205,440 $ (362,540) $ 838,969 29