Thank You for Taking the Time to Learn and. Understand How the. Crooked River Ranch Budget is. Prepared and Implemented!

Transcription

1 Thank You for Taking the Time to Learn and Understand How the Crooked River Ranch Budget is Prepared and Implemented!

2 FY Budget Presentation

3 Introductions Members of the Crooked River Ranch Board of Directors Members of the Budget/Audit Committee Members of the Crooked River Ranch Staff

4 Members of the BAC Marilynne Keyser, Chair Mary Dell Kaps, Vice-chair Diana Scholz, Secretary Jim Dille, CRR Board Treasurer Paula Bartolomei, CRR Board Liaison Bim Gander, Former BAC Chair and CRR Board Member Herb Parker, Former BAC Chair and Former CRR Board Member John Williams, Former CRR Board Member Sue Ellen Haley Mike Folkestad Dan Tomlinson

5 BAC Staff Support Judy LaPora, CRR Ranch Manager Annie Nyars, CRR Accountant Debbie Wagemaker, CRR Bookkeeper

6 Here s What We re Going to Talk About Tonight The Business of our HOA FY Proposed Operating Budget FY Proposed Capital Expenditure Budget FY Proposed Capital Reserve Plan Where do we go from here? Questions?

7 The Association.. Our Association is a 2.7 million dollar business with four business components, three of which are taxable... Rentals RV Park Golf Course Administration

8 Operating Budget The HOA s annual operating budget is like your family s budget it shows where you get your income and where you plan to spend to it. It doesn t show your bank balance, what loans you ve taken out, or what you own. It s not a photo taken at a moment in time. It is more like a video taken over the whole year.

9 FY Operating Budget Rentals RV Park Golf Course Administration Ranch Total HOA Dues $1,136,920 $1,136,920 Rents $40,945 $40,945 Camping $178,820 $178,820 Ext. Stay $80,000 $80,000 Other Sales $8,000 $63,300 $71,300 Greensfees $565,000 $565,000 Cart Rental $210,000 $210,000 Annual Pass $220,000 $220,000 Cart Storage $32,000 $32,000 Other Revenue $1,250 $9,500 $149,062 $159,812 Total Revenue $42,195 $266,820 $1,099,800 $1,285,982 $2,694,797 Total Expenses $24,859 $206,938 $1,094,289 $1,231,681 $2,557,767 Rev over Exp $17,336 $59,882 $5,511 $54,301 $137,030

10 Percentage Contribution to Ranch Profits Administration $54,301 13% Rentals $17,336 40% 4% 44% RV Park $59,882 Golf Course $5,511

11 FY Admin Budget Revenue Expenses Revenue over (under) Expenses Administration $1,259,320 $377,326 $881,994 Pool $500 $65,114 -$64,614 Snack Shack $19,550 $21,146 -$1,596 General Maintenance $5,612 $226,325 -$220,713 Roads $1,000 $541,770 -$540,770 Administration $1,285,982 $1,231,681 $54,301

12 How are HOA Dues Spent? Roads $540,770 44% 31% Admin. Office $377,326 18% 5% 2% Pool $65,114 Snack Shack $21,146 Gen. Maintenance $220,713

13 Capital Expenditure Budget The HOA s annual capital expenditure budget is a list of capital assets that need to be repaired or replaced during the year. The HOA considers any major repair or replacement that exceeds $3,000 to be a capital expenditure. It is paid for with savings that have been set aside for that purpose.

14 What are Capital Assets and Depreciation? Your family has capital assets, like a house, a wood stove, and a car. They are items that last more than one year. Your capital assets deteriorate (and lose value) every year through use. The HOA calls that depreciation. Your family needs to protect your investment by repairing and replacing your assets. So does our HOA. Your family spends less if you save the money first rather than borrowing it. So does our HOA.

15 What is Depreciation? Suppose you buy a car in 2016 for $25,000, and suppose that car will last 10 years

16 Operating Expenses: Gas Oil Brake Pads, etc. General Maintenance, etc. Depreciation Expense: Automobile cost / 10 years $25,000. / 10 years = $2500. per year

17 When you need to replace that car in 2026 Will you be ready? Sticker price: $35,000!!!

18 What are our HOA Assets? Land Land Improvements Buildings Equipment

19 Antiquated road equipment equals more maintenance expense. What we have What we can afford What we need $137, $75,000

20 FY Capital Golf Rentals RV Park Expenditure Budget Course Administration Total Pool fence $20,000 $20,000 Duplex roof $6,000 $6,000 SC roof $10,000 $10,000 9 septic tanks $30,102 $30,102 C Loop plumbing $7,200 $7,200 Carpet replacement $7,500 $7,500 Well pump $12,500 $12,500 $25,000 Rough mower $35,000 $35,000 Utility vehicle $30,000 $30,000 Clubhouse roof $27,500 $27,500 New F-350 $47,000 $47,000 Front-end loader $65,000 $65,000 Cinder shed $41,500 $41,500 Speed displays $12,000 $12,000 Total $16,000 $37,302 $85,000 $225,500 $363,802

21 What do we need to plan for?

22 Capital Reserve Plan The Board of Directors has a fiduciary responsibility to the HOA property owners to protect our shared investment in the common assets of the HOA. Most HOAs are required to have a Capital Reserve Plan to set aside funds to pay for major repairs and replacement of community assets. Our CRP includes a list of all the assets of the HOA, the current replacement costs, and estimated remaining life over the next 30 years. Existing buildings, which would only be replaced as the result of an insured loss, are not included.

23 How much does our HOA need to save to protect our assets? Our HOA assets originally cost $4.8 million (ignoring land); however, many of these are nearing the end of their useful life. The BAC estimates that our HOA needs to raise $6 million over the next 30 years to repair and replace these assets. Each year, the BAC calculates how much is needed to stay on target. By this year, we should have saved $2.2 million. We currently have $1.1 million in the CRP, or 51% of what we should have saved by today. We are short because we did not start funding the CRP until about 10 years ago because our HOA dues were too low.

24 HOA Dues in Five Year Intervals

25 What are the Risks if we fail to save enough? HOA standards for a Capital Reserve Plan recommend maintaining each year a minimum of 70% of the total needed amount. Without a strong Capital Reserve Plan balance, the HOA may be restricted in obtaining bank financing for major repairs or replacements. The HOA might require an emergency assessment for each of our 2,644 property owners.

26 Capital Reserve Plan History $2,200, % $1,650,000 70% $1,100,000 51% 44% $550,000 23% 29% $ Future

27 FY Year CRP FY 2017 est. FY 2018 Budget FY 2019 Project FY 2020 Project FY 2021 Project FY 2022 Project Beg. Balance $647,205 $1,096,108 $918,275 $769,315 $661,622 $702,424 Depreciation $97,171 $107,133 $105,064 $111,094 $114,240 $119,984 Transfer Commitment $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 Special Transfer $500,000 Insurance Reimbursed $21,847 Interest Earned $2,138 $3,836 $3,256 $2,735 $2,358 $2,500 Capital Expenditure -$247,253 -$363,802 -$332,280 -$296,522 -$150,796 -$261,118 End. Balance $1,096,108 $918,275 $769,315 $661,622 $702,424 $638,790

28 Where do we go from here? Our Board of Directors should continue to fund the CRP to achieve and maintain a 70% funding level. To do that, our HOA dues will need to be raised on a regular basis in amounts similar to the last three years. In addition, our HOA needs to continue to improve the profitability of our revenue-producing businesses through capital investments and better marketing.

29 Questions?