Palm Colony at Pelican Landing February 2017 Treasurer s Report

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1 1. INCOME STATEMENT a. February Operating Income was $2,227 vs. a budgeted Operating Loss of ($8,130) resulting in a positive variance from plan of $10,357. i. Income was $61,345 vs. a budget of $61,532 essentially right on plan. ii. iii. iv. Admin expenses were $9,225 vs. a budget of $11,883 resulting in a positive variance from plan of $2,658. The biggest contributors were insurance which will run under budget for the year and income taxes budgeted in February but not incurred until March. Maintenance expenses were $25,535 vs. a budget of $31,776 or a positive variance from plan of $6,241. Landscape Maintenance expenses came in at $12,374 vs. a budget of $9,998 or a negative variance from plan of ($2,376). Main contributor to the overage was Landscape Improvement which came in $3,100 over budget for the month. v. Facilities Maintenance expenses were $13,161 vs. a budget of $21,778 or $8,617 under budget. The biggest contributors to this positive variance was Roof Repairs, which were budgeted at $3,500 but came in at $0 (no rain=no leaks) and Termite Control which was budgeted at $3,000 for February, but will actually occur in March. vi. Utility Expenses were $8,478 vs. a budget of $10,123 or $1,645 under budget. b. Year-to-date ( YTD ) thru February our Operating Loss was ($1,985) vs. a budget of ($11,392) resulting in a positive variance from plan of $9,407. i. YTD Income was $123,025 vs. budgeted Income of $123,091 essentially right on plan. ii. iii. iv. YTD Admin expense totaled $22,131 vs. budget of $24,079 or $1,948 under budget. The majority of the favorable variance is due to our Property Insurance Premiums coming in under budget. YTD Maintenance expenses totaled $55,344 vs. a YTD budget of $58,477 or a positive variance from plan of $3,133. YTD our Landscape Maintenance expenses $35,180 vs. a YTD budget of $19,993 or a negative variance from plan of ($15,184). The primary contributor to the overage is Landscape Improvement which is $16,836 over budget. Some of this is due to work which was completed at the end of 2016, but not invoiced until January of this year. Also some of the overage is due to repairs caused by the Hot Wire installation, some of which will be reimbursed to the Association. I expect Landscape Maintenance to continue over budget throughout the year, with additional unbudgeted expenses related to: The replacement of shrubs surrounding our buildings damaged by the roof replacement project Unanticipated removal of diseased palms and related replacement

2 v. YTD our Facilities Maintenance are $20,164 vs. a budget of $38,481 or a positive variance of $18,317. The biggest contributors to this positive variance are: Roof Repairs YTD expenses are $0 for the year vs. a YTD budget of $7,500. vi. Pest Control and Termite Protection are $6,000 under budget, but only because the services are not occurring in the month the expense was budgeted. Pool Repairs and Fire Alarm repairs, both of which ran over budget last year, are currently running under budget. Based on our experiences last year I expect we will see periodic and unpredictable spikes in these expenses. All other Maintenance items are within normal variance ranges. YTD Utility Expenses are $15,775 vs. a YTD budget of $20,166 or $4,392 under budget. 2. BALANCE SHEET a. Cash of $209,551 in our Operating Account plus $830,839 in Pooled Reserves results in a February Cash Balance of $1,040,390 vs. $1,075,854 at the end of January, a decrease of $35,464 for the month. b. Maturing CD s. With the Board s recent decision to replace our roofs in 2017 (See Section 4.a.), any maturing CDs will be reinvested in Money Market funds as we will need to utilize a significant portion of our Reserves for the Roof Replacement Project. c. Quarterly Assessments Past Due. We have had one unit owner significantly in arrears since this time last year. Based on a payment plan we negotiated in 2016, they rented their unit for 2 ½ months in 2017 and the rental income, net of fees to the rental agent in the amount of $9,000+ has been forwarded to the Association. d. Accounts Receivable ( A/R ). Due from Owners A/R was $618 down from $9,974 at the end of January. This reduction if primarily due to item 2.(c). e. Balance Sheet under Other Assets Bonita Springs Utilities $11,200. Has been on the Balance Sheet since before Alliant became our association manager. We contacted them and they said the money will not be refunded until the buildings are sold. f. Retained Earnings (also referred to as Owner s Equity). Retained earnings at the end of February were $134,808 vs. $140,126 at the end of January, or a reduction of $5,318 for the month. Stated another way, we spent $5,318 more than our income, to fund our operations during the month of February. Of this amount $1,985 was due to our operating loss for the month, compared to our budgeted operating loss of $11,392 so we re quite pleased with these results.

3 3. RESERVES The following Table shows the forecasted use of our Reserves during Pooled Reserves 01/31/17 $ 789,287 Unallocated Interest 01/31/17 $ 6,693 Jan-Feb $15,880/Month $ 31,760 Feb Unallocated Interest $ 3,100 February Reserve Balance $ 830,839 Projection February Balance $ 830,839 March-Dec $15,880/Month 1 $ 158,800 Roof Replacement Project $ (863,820) Principal Payments 2 $ (66,102) Interest Payments 2 $ (9,725) Seal Coating $ (5,940) Estimated Unallocated Interest 12/31/17 $ 1,500 Projected December 2017 Year End Projected Ending Balance $ 45,552 1 Projected project expense of $1,438,820 less $200,000 down payment to BP Roofing in December 2016 less $375,000 loan from Capital Bank. 2 Projected debt service for 2017 for the $375,000 loan from Capital Bank.

4 4. ROOF REPLACEMENT PROJECT (Repeated from last month s Report) a. Roof Replacement Project After careful consideration, your Board has decided to replace our roofs in Our original plan was that replacing the roofs for Canary Island and Ivory Cane would occur in 2021 and 2022 respectively. However, based on the fact that we spent over $50K on roof repairs in 2016 and that we had initially budgeted another $50K in roof repairs in 2017, it became clear that borrowing money to supplement our Reserves to pay for replacing our roofs in 2017 made more sense than spending $250K or more to continue to repair them between now and Subsequent to this decision we met with Iberia Bank, BB&T Bank, Florida Community Bank and Capital Bank. Based on those meetings we received Term Sheets from all 4 banks offering us the funding we needed at rates ranging from 3.75% to 4.75%. After evaluating our options we have completed the necessary loan documents and have closed on this financing. We will be supplementing our existing Reserves, by borrowing $375,000 at 3.75% for a 48 month term, from Capital Bank. The debt service for this Loan will be paid through our current Reserve Funding, meaning no increase in quarterly assessments and no special assessment will be required to fund this Project. While your Board has the authority to take out a Loan, we did require homeowner approval to conditionally pledge our assessments as collateral for this Loan. This approval was provided at a Special Homeowner s Meeting which occurred just prior to the December Board Meeting. b. Project Costs and Assumptions Palm Colony at Pelican Landing Roof Replacement Project Project Assumptions (Rev ) Canary Island in 2017 Ivory Cane in 2017 Borrow $375,000 for 48 months Interest $ 29,412 Loan Paid off in March 2021 Loan Amount $ 375,000 Interest Rate 3.75% Term 48 Months Monthly Reserve Funding $ 15,880 Monthly Debt Service $ (8,425) Per Month Balance to Reserves $ 7,455 Per Month

5 PROJECT COSTS Canary Island Court $ 584,546 Ivory Cane $ 713,454 Additional Plywood Expense Cap $ 13,800 FORGE Recommendations $ 2,000 Fascia & Sub-Fascia $ 15,000 Gutters $ 37,695 $ 68,325 $ 1,434,820 $ 1,313 Bank Closing Costs $ 950 Total Closing Costs $ 2,263 Further details on this Project can be found on the Palm Colony Web Site in the Owner s Section under Roof Replacement Project. 5. INSURANCE (Repeated from last month s Report) Our 2017 Insurance Premiums were budgeted to be $101,239 an increase of $4,583 or 4.74% over our 2016 Premiums. The actual Premiums (which were invoiced after our Budget was completed) came in at $82,375 a decrease of $14,281 or 15% less than our 2016 Premiums. As a result our Insurance Premiums will be $18,864 less than we have budgeted for 2017.

6 Palm Colony at Pelican Landing Insurance Policy Terms Premiums Increase Budget Actual Premium Variance Umbrella 1/12/ , , , D & O 1/12/ , , , Crime 1/12/ , , , GL 1/12/ , , , (297.74) Property 1/12/ , , , , (18,566.37) Group Accident 1/12/ WC 5/1/16-5/1/ $0.00 Total $ 96, $ 4, $ 101, $ 82, ($18,864.11) We are maintaining the same coverage that we had in A summary of our coverage is shown in the Table below: Palm Colony at Pelican Landing Summary of Insurance COVERAGE AGENT DATES PAID PREMIUM COMPANY VALUES Property with Wind X $71, Empire Indemnity Ins. ECL $22, TIV $5,000 Deductible 5% Wind CY Deductible General Liability X $5, Nautilus Insurance NN $2,000,000 Aggregate $1,000,000 Occurrence Business Auto Included Crime X $1, Liberty Insurance CAC $1M Limit $2,500 Deductible Directors & Officers X $1, Liberty Insurance CAP $1,000,000 Limit $1,000 Deductible Umbrella X $1, Federal Ins. AARE $15,000,000 Liability Limit Workers Comp 05/01/ /01/2017 X $ Zenith Insurance Z If Any $500,000 per accident $500/500/500 limit Group Accident X $ The Hartford Life 21SR $10,000 Accidential limit

7 We did make one change for 2017 and that was with regard to the payment of the Premiums. Last year we paid the entire Premium of $96,656 in January. The year, we were offered the option of paying 20% up front and paying the remainder over 10 months, at a 3% interest rate. Given the amount of cash we used due to the unexpected expenses during 2016, we opted for this financing option to help our cash flow. The interest expense for utilizing this option is approximately $ Should you be in need of proof of the Association s Insurance Coverage please contact Insurance at