Memo. Hot Springs Village Property Owners Association Board of Directors Report

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Hot Springs Village Property Owners Association Board of Directors Report Memo To: Lesley Nalley, CEO From: Liz Mathis, Controller LM Date: April 19, 2017 Re: March 2017 Financial Reports Attached

1 Hot Springs Village Property Owners Association Board of Directors Report Memo To: Lesley Nalley, CEO From: Liz Mathis, Controller LM Date: April 19, 2017 Re: March 2017 Financial Reports Attached please find the following financial package documents: Executive Summary Financial Dashboard Statement of Financial Position Statement of Revenue and Expenses Statement of Capital Additions Property Dashboard Golf Rounds and Revenue Analysis 1

2 Hot Springs Village POA Executive Summary % Operating Expense Budget Spent YTD 22% % Capital Budget Spent YTD 12% % Net Revenue Earned vs. Budgeted YTD 18% Properties/Units in Good Standing 24,153; 70%; 5<Dec FINANCIAL DASHBOARD For 2017 $535k less in assessments have been received over last year. Approximately 1/3 of that is related to a reduction in property owners pre-paying their annual assessments. YTD total operational revenue is 10.66% lower than Almost half of that difference is related to the receipt of insurance funds in early 2016 related to the Desoto Club. In Public Safety, a correction in the ambulance revenue accrual practice will show as a $61k variance over the prior year in We still expect to meet the revenue budget in P&I & Recreation show an increase in revenue from the prior year. Total operating expense is currently 11.57% higher than This increase was budgeted accordingly, particularly in the Golf Department, related to a change in how fertilizers were being purchased. The $6.5mil in 2017 operating expense is split as follows: Administration 18.07%, Public Safety 15.97%, Public Works 11.11%, Public Utilities 13.42%, P&I 1.43%, Food & Beverage 1.76%, Golf 29.79%, and Recreation 8.45%. Expenses in the Administration, Public Safety, Public Works, Public Utilities, Golf & Recreation departments are below budget year to date. Permitting & Inspections expenses are over budget due to spending related to insurance claim proceeds received in % of the Association s year to date revenue came from billed assessments. The service and amenity usage of those assessment dollars is as follows: Administration %, Public Safety 22.54%, Public Works 8.94 %, Public Utilities 8.74%, Planning & Inspection 1.12%, Food & Beverage 1.18%, Golf 24.64%, and Recreation 5.88%. STATEMENT OF FINANCIAL POSITION CASH: HSVPOA ended the month with $7.9mil of cash/cash equivalents, a $1.2mil increase from This increase should not be misinterpreted, since $4.6mil is currently restricted. $1.55 mil of the restricted balance relates the sewer bond ($1.06mil available for improvements and the rest in required reserves). $2.86mil is held in escrow, pending the Appeals Court decision. Other restricted funds include workers comp and employee insurance. There is an additional $100k now held in Reserve for Future Repairs & Replacement for Public Utilities and $358k in Reserve for General Future Repairs & Replacement. ASSESSMENTS RECEIVABLE: $21.1mil of assessments are currently outstanding, with $18.4mil accrued for bad debt, pending resolution of the NRPI successor entity collection efforts. 10,293 properties are considered unproductive or not in good standing. LONG TERM DEBT: $4.45mil of long term debt is currently outstanding. The current debt ratios, cash balance, and projected operating results demonstrate HSV s ability to meet the related debt service obligations for

3 NET WORTH: HSV s current net worth is $70.5mil. STATEMENT OF REVENUE AND EXPENSE NET REVENUE: Total net revenue (1) is 18% of budget and $351k less than $105k of that reduction is related to an increase in the provision for future bad debt largely attributed to the aging of the pending NRPI successor entity collection efforts. An additional $119k is related to Desoto Club insurance funds received in February The remaining variance over prior year ties directly to a method change for the year end Utility Accrual. EXPENSE: Total operational expense (2) is 22% of budget and $748k more than 2016, as budgeted. The largest increase in expenses over prior year is related to the bulk purchase of Fertilizers in the Golf Department. NET OPERATING RESULTS: Net excess (deficit) before depreciation and capital was ($462k) (3), as compared to a $637k last year. CAPITAL: Capital spending totals $646k of the $5.53mil budgeted for As noted during the last Village Values program, the pool project has been put on hold for The bulk of the capital spending year to date is related to the Waste Water system upgrades which are paid from the Sewer Bond funds. PROPERTY DASHBOARD New home permits total 7 year-to-date. Two POA lots have been sold year to date. There are 8,751 improved lots and 25,397 unimproved lots in the Village. Additionally, there are 99 time share units and 199 assisted living units. The POA owns 2,750 lots. 99% of improved lots, 67% of unimproved lots not owned by the POA, and 100% of the timeshare and assisted living units are currently in good standing. Currently, there are 7,441unimproved lots and 102 improved lots with assessment balances greater than 60 days outstanding. 155 fewer properties are considered delinquent between December 2016 and this month. In the most recent bi-monthly utility billing, there were 9,103 water meters and 7,996 sanitation customers billed. GOLF ROUNDS & REVENUE ANALYSIS In March, there were 24 more playable days (across 8 courses) than The average consolidated revenue per playable day this year is $1,513 vs. $1,595 for the same period last year. Year over year improvements in revenue per round were posted by Balboa, Desoto, Isabella & Ponce. Rounds are up at Cortez, DeSoto, & Magellan. Overall rounds were up 769 from the previous year. Golf Revenue is slightly down from the prior year. The variance in revenue and rounds is directly tied to an increase in rounds of play by annual members. Revenue at all courses, but particularly Coronado, show some change from the previous year due to a change in how annual memberships are being spread amongst the courses. The new method allocates based on the prior year s annual play Annual Golf Memberships are spread as follows: DeSoto 13.66%, Granada 12.82%, Cortez 14.47%, Magellan 12.59%, Coronado 2.52%, Isabella 18.42%, Balboa 12.61%, Ponce 12.91%. In 2016 they all received an equal 12.5% split of the annual memberships. 3

Hot Springs Village POA Financial Dashboard At a Glance Comparison of Select Financial Data 2017 YTD 2016 YTD Inc/(Decr) %Change $ 3,992,406 $ 4,528,173 Assessments Received $ (535,767) -13.

4 Hot Springs Village POA Financial Dashboard At a Glance Comparison of Select Financial Data 2017 YTD 2016 YTD Inc/(Decr) %Change $ 3,992,406 $ 4,528,173 Assessments Received $ (535,767) % $ 4,589,897 $ 4,593,685 Assessments & Penalties Billed $ (3,788) -0.08% $ 2,308,002 $ 2,554,038 Operational Revenue $ (246,036) % $ 6,472,188 $ 5,723,338 Operating Expenses $ 748, % $ 4,164,186 $ 3,169,300 Subsidy Before Capital $ 994, % $ 646,101 $ 1,028,143 Capital Spending $ (382,043) % $ 2,813,529 $ 2,807,107 Cash Available for Operations $ 6, % $ 1,061,075 $ - Remaining Sewer Bond Funds $ 1,061, % $ 358,514 $ 256,496 Capital Reserves $ 102, % $ 100,000 $ - Public Utility Reserves $ 100, % Viability Ratio Debt Service Coverage Ratio 32.00% % Expense to Total 29.79% 28.00% 24.00% 20.00% 16.00% 18.07% 15.97% 13.42% 11.11% 12.00% 8.00% 4.00% 1.43% 1.76% 8.45% 0.00% Budgeted % 2017 YTD Actual 2016 YTD Actual Food & Bev, 1% P&I, 1% Golf, 13% Recreation, 4% Actual YTD Revenue % to Total Public Utilities, 7% Public Works, 5% Public Safety, 2% Administration, 1% Assessment, 66% 4

5 HOT SPRINGS VILLAGE POA Comparative Statement of Financial Position ASSETS OPERATING CASH $ 1,272,529 $ 3,299,016 RESTRICTED CASH 4,652,055 1,303,200 INVESTMENTS 1,541,000 1,789,000 PUBLIC UTILITY CAPITAL RESERVES 100,000 - GENERAL CAPITAL RESERVES 358, ,496 TOTAL CASH AND CASH EQUIVALENTS 7,924,098 6,647,712 MEMBERSHIP ASSESSMENT RECEIVABLE GROSS ASSESSMENTS BILLED 21,169,532 17,717,053 LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS (18,441,284) (17,203,910) NET MEMBERSHIP ASSESSMENT RECEIVABLE 2,728, ,143 OTHER MEMBERSHIP RECEIVABLES 57, ,910 OTHER RECEIVABLES 38,479 39,363 INVENTORIES 191, ,819 PREPAID EXPENSES 200, ,677 REAL ESTATE HELD FOR SALE, NET REALIZABLE VALUE 2,062,500 1,885,500 RECOVERABLE ELECTRIC COSTS 3,899,200 3,994,960 PROPERTY AND EQUIPMENT, Net of Accumulated Depr. 64,926,598 65,199,504 TOTAL ASSETS 82,029,538 79,350,588 LIABILITIES AND MEMBERSHIP EQUITY LIABILITIES ACCOUNTS PAYABLE $ 484,447 $ 826,173 ACCRUED EXPENSES 2,776,024 2,485,277 PREPAID ASSESSMENTS AND FEES 3,176,168 3,373,465 SECURITY DEPOSITS & OTHER DEPOSITS 579, ,547 ARVEST LOAN - DESOTO 1,173,997 1,453,835 LINE OF CREDIT - - BONDS PAYABLE 3,280,000 1,535,000 TOTAL LIABILITIES 11,470,062 10,276,297 MEMBERSHIP EQUITY UNDESIGNATED 70,100,962 68,817,795 DESIGNATED FOR FUTURE REPAIRS & REPLACEMENT 458, ,496 TOTAL MEMBERSHIP EQUITY 70,559,476 69,074,291 TOTAL LIABILITIES AND MEMBERSHIP EQUITY $ 82,029,538 $ 79,350,588 5

6 HOT SPRINGS VILLAGE POA Comparative Statements of Revenue and Expenses Months ended March 31, 2017 and March 31, 2016 Actual YTD 2017 Over/(Under) Budget % Budget Budget Prior Year Remaining Earned/Spent Membership Assessment Revenue 17,500,000 4,351,253 4,412,563 Assessment Penalties & Other 600, , ,122 Provision for future Bad Debt (2,233,646) (888,315) (786,398) Net Assessment Revenue 15,866,354 3,701,582 3,807,287 (105,705) 12,164,772 Administration REVENUE 608,400 47,110 53,256 (6,146) 561,290 8% EXPENSE (5,558,332) (1,169,261) (972,767) 196,494 4,389,071 21% Net Administration (4,949,932) (1,122,151) (919,511) Public Safety REVENUE 760,700 94, ,683 (55,782) 665,799 12% EXPENSE (4,449,735) (1,033,405) (1,040,310) (6,905) 3,416,330 23% Net Public Safety (3,689,035) (938,504) (889,627) Public Works REVENUE 2,488, , ,021 (11,731) 2,142,071 14% EXPENSE (3,487,495) (718,745) (574,667) 144,078 2,768,750 21% Net Public Works (999,134) (372,455) (216,645) Public Utilities REVENUE 5,867, , ,574 (91,796) 5,363,215 9% EXPENSE (4,274,955) (868,833) (957,419) (88,586) 3,406,122 20% Net Public Utilities 1,593,039 (364,054) (360,845) Planning & Inspection REVENUE 175,000 45,695 30,302 15, ,305 26% EXPENSE (294,364) (92,470) (71,236) 21, ,894 31% Net Planning & Inspection (119,364) (46,774) (40,935) Food & Beverage REVENUE 337,411 64, ,201 (97,269) 272,479 19% EXPENSE (437,376) (114,209) (70,462) 43, ,167 26% Net Food & Beverage (99,965) (49,277) 91,739 Golf REVENUE 6,814, , ,349 (10,390) 5,912,527 13% EXPENSE (7,978,044) (1,928,215) (1,506,567) 421,648 6,049,829 24% Net Golf (1,163,559) (1,026,257) (594,218) Recreation REVENUE 1,138, , ,652 11, ,364 27% EXPENSE (2,884,348) (547,050) (529,910) 17,140 2,337,298 19% Net Recreation (1,745,648) (244,714) (239,257) Over/(Under) Prior Year Budget Remaining 17 Budget 17 Actual 16 Actual Gross Revenue $ 36,291,051 $ 6,897,899 $ 7,147,723 Bad Debt Expense (2,233,646) (888,315) (786,398) Net Revenue (1) 34,057,405 6,009,583 6,361,325 (351,742) 28,047,822 18% Operational Expense (2) (29,364,649) (6,472,188) (5,723,338) 748,850 22,892,461 22% Excess (Deficit) Before Depr.(3) $ 4,692,756 $ (462,605) $ 637,987 Depreciation $ (1,030,401) $ (948,807) 6

7 HOT SPRINGS VILLAGE POA Statement of Capital Additions 2017 Annual Budget Spending Budget Remaining Administration $ 77,748 $ 1,167,000 $ 1,089,252 Public Safety - 342, ,000 Public Works Public Utilities 535,076 2,050,026 1,514,950 Permitting & Inspections Club Services and Facilities 8, , ,313 Golf 1, , ,939 Parks and Recreation 23,907 1,404,500 1,380,594 Current Yr Capital Additions $ 646,101 $ 5,538,149 $ 4,892,048 Carryforward from 2016 $ - $ - $ - Total Year to Date Capital Additions $ 646,101 $ 5,538,149 $ 4,892,048 7

8 Hot Springs Village POA Property Dashboard SALES & CONSTRUCTION ACTIVITY YTD YTD YTD YTD YTD Home Sales New Home Permits Homes Listed POA Lot Sales PROPERTIES OUTSTANDING MORE THAN 60 DAYS YR END 2016 YTD ,583 7,441 7,698 7, UNIMPROVED IMPROVED TOTAL Improved Lots % GOOD STANDING 99% Water Meters Billed: Sanitation Billed: Residential 8,791 Res-House 472 Commercial 208 Res-Curb 7,405 Sprinkler 79 Commercial 119 Construction 25 No Sanitation 1,062 Unimproved Lots - Non POA 67% Total 9,103 Total 9,058 0% 20% 40% 60% 80% 100% 120% Population Estimate: 14,066 8

9 Hot Springs Village POA Golf Rounds and Revenue Analysis YTD PLAYABLE DAYS & REVENUE/DAY Variance YTD Playable Days Revenue/Day $ 1,513 $ 1,595 $ (81.66) 2017 GOLF RESULTS 2017 Actual Revenue/Round 2017 Budgeted Revenue/Round 2017 Rounds 2017 Revenue Balboa 3,763 87, Coronado 2,320 37, Cortez 6, , DeSoto 5, , Granada 4, , Isabella 6, , Magellan 5, , Ponce de Leon 5, , , ,990 Admin & Miscellaneous 34,968 Total 901,958 $ GOLF RESULTS 2016 Rounds 2016 Revenue 2016 Revenue/Round Balboa 3,864 88, Coronado 2,887 76, Cortez 5, , DeSoto 5, , Granada 4, , Isabella 7, , Magellan 3,683 95, Ponce de Leon 5, , , ,910 Admin & Miscellaneous 40,439 Total 912,349 $ ,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Budget vs Actual Revenue/Round Balboa Coronado Cortez DeSoto Granada Isabella Magellan Ponce de Leon 2017 Actual Revenue/Round 2017 Budgeted Revenue/Round 2017 vs 2016 YTD Rounds Comparison Balboa Coronado Cortez DeSoto Granada Isabella Magellan Ponce de Leon 2017 Rounds 2016 Rounds VARIANCE 769 $ (10,390.16) $ (0.72) 9

Memo. Hot Springs Village Property Owners Association Board of Directors Report

Memo. Hot Springs Village Property Owners Association Board of Directors Report Hot Springs Village Property Owners Association Board of Directors Report Memo To: Lesley Nalley, CEO From: Liz Mathis, Controller LM Date: December 20, 2017 Re: November 2017 Financial Reports Attached