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: December 20, 2017 Re: November 2017 Financial Reports

1 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 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 87% % Capital Budget Spent YTD 28% % Net Revenue Earned vs. Budgeted YTD 85% Properties/Units Paying Assessments 23,808; 69%; 350<Dec FINANCIAL DASHBOARD For 2017 $548k less in assessments have been received over last year. $218k is related to a reduction of members prepaying assessments. The remaining variance is related to a significant influx of past due assessments that were collected in early 2016 when increased collection efforts began. YTD total operational revenue is 7.61% higher than Sales & Development, Public Works, Public Utilities, P&I, Food & Beverage, Golf & Recreation all show an increase in revenue from the prior year. One-time adjustments during 2017 include ambulance revenue accrual cleanup, and $282k received from the golf carts traded as part of the new cart leasing program. Total operating expense is currently 3.92% higher than 2016, as budgeted. The $23mil in 2017 operating expense is split as shown in the graph on page 4. Expenses in the Administration, Sales & Development, Public Safety, Public Works, Public Utilities, Planning & Inspections, Golf & Recreation departments are at or below budget year to date. Lakes Management is over budget related to Hydrilla treatment and Food & Beverage is over related to new operations not budgeted. 52% 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 31.84%, Sales & Development 5.36%, Public Safety 28.31%, Public Works 4.76%, Lakes Management 3.49%, Planning & Inspection.28%, Food & Beverage 2.99%, Golf 11.83%, and Recreation 11.15%. STATEMENT OF FINANCIAL POSITION CASH: HSVPOA ended the month with $7.99mil of cash/cash equivalents, a $1mil increase from $4.8mil is currently restricted. $1.11mil of the restricted balance relates to the sewer bond ($736k available for improvements and the rest in required reserves). $3.5mil is still being held in escrow and will be released as specific capital spending is approved. Other restricted funds include workers comp and employee insurance. ASSESSMENTS RECEIVABLE: $19mil of assessments are currently outstanding, with $16mil accrued for bad debt, pending resolution of the NRPI successor entity collection efforts. 10,638 properties are considered unproductive or not in good standing. OTHER MEMBERSHIP RECIEVABLES: $140k of other membership receivables are currently outstanding. This fluctuates from month to month due to the bi-monthly utility billing. As of the end of November, only 9 months of utilities have been billed. LONG TERM DEBT: $4mil 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 $72mil. STATEMENT OF REVENUE AND EXPENSE NET REVENUE: Total net revenue (1) is 79% of budget and $368k less than The following departments are showing revenue reduced from prior year: Net Assessments, $1.6mil of the variance from prior year is related to an increase in the provision for future bad debt, largely attributed to the aging of the pending collection efforts. Administration variance is related to $107k of Auction proceeds received in Public Safety variance from prior year is related to a 2016 methodology change for the year end Accruals of Ambulance fees. In addition, there were $25k of insurance proceeds for damage to the East Gate received in 2016 In Lakes, $43k is related to Insurance funds received in August In Recreation, 2016 revenue includes food and beverage operations that have been moved to the Food & Beverage division in With that variance removed, Recreation Revenues are actually up $72k from the previous year. EXPENSE: Total operational expense (2) is 87% of budget and $998k more than 2016, as budgeted. The largest increase in expenses over prior year is related to consolidation of building maintenance and fleet under the administration department, planned maintenance expenses in Public Utilities, the bulk purchase of Fertilizers and increased equipment maintenance expenses in the Golf Department, the Hydrilla treatment in Lake Balboa and the restructuring of the Food & Beverage department. NET OPERATING RESULTS: Net excess (deficit) before depreciation and capital was $3.37mil (3), as compared to a $4.79mil last year. CAPITAL: Capital spending totals $1.56mil of the $5.53mil budgeted for A spending plan for the remaining 2017 Capital Budget, previously frozen pending the Appeals Court ruling, was presented at the November board meeting. PROPERTY DASHBOARD New home permits total 45 year-to-date. 15 POA lots have been sold year to date. There are 9,129 water meters and 8,014 sanitation customers currently active. There are 8,777 improved lots, representing 37 more than at December 2016, and 25,371 unimproved lots in the Village. Additionally, there are 99 time share units and 199 assisted living units. The POA owns 2,998 lots. 99% of improved lots, 66% 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 7,562 unimproved lots and 78 improved lots with assessment balances greater than 60 days outstanding. 42 fewer properties are considered delinquent between December 2016 and this month. GOLF ROUNDS & REVENUE ANALYSIS There were 52 more playable days (across 8 courses) than The average consolidated revenue per playable day this year is $2,337 vs. $2,320 for the same period last year. Since beginning to track this metric over a year ago, we are now seeing year over year improvement for the second month in a row. Year over year improvements in revenue per round were posted by Cortez, DeSoto, Granada, & Isabella. Rounds are up at Cortez, Isabella, Magellan, & Ponce. Overall rounds were up 4,736. 3

Hot Springs Village POA Financial Dashboard At a Glance Comparison of Select Financial Data 2017 YTD 2016 YTD Inc/(Decr) %Change $ 12,415,909 $ 12,964,198 Assessments Received $ (548,290) -4.

4 Hot Springs Village POA Financial Dashboard At a Glance Comparison of Select Financial Data 2017 YTD 2016 YTD Inc/(Decr) %Change $ 12,415,909 $ 12,964,198 Assessments Received $ (548,290) -4.42% $ 16,762,403 $ 16,720,607 Assessments & Penalties Billed $ 41, % $ 15,405,080 $ 14,232,840 Operational Revenue $ 1,172, % $ 25,458,238 $ 24,459,963 Operating Expenses $ 998, % $ 10,053,158 $ 10,227,123 Subsidy Before Capital $ (173,965) -1.73% $ 1,567,822 $ 3,478,955 Capital Spending $ (1,911,133) % $ 2,636,381 $ 2,183,218 Cash Available for Operations $ 453, % $ 736,518 $ 1,795,257 Remaining Sewer Bond Funds $ (1,058,739) % $ 358,514 $ 256,496 Capital Reserves $ 102, % $ 100,000 $ - Public Utility Reserves $ 100, % Viability Ratio Debt Service Coverage Ratio % Expense to Total 32.00% 28.00% 28.76% 24.00% 20.00% 16.00% 12.00% 8.00% 4.00% 14.63% 2.56% 14.79% 14.93% 9.09% 1.87% 1.04% 3.63% 8.69% 0.00% Budgeted % 2017 YTD Actual 2016 YTD Actual Golf, 19% Recreation, 3% Actual YTD Revenue % to Total Food & Bev, 2% P&I, 1% Assessment, 52% Lakes Management, 0% Public Utilities, 14% Public Works, 6% Public Safety, 2% Sales & Development, 0% Administration, 1% 4

5 HOT SPRINGS VILLAGE POA Comparative Statement of Financial Position ASSETS OPERATING CASH $ 1,095,381 $ 642,218 RESTRICTED CASH 4,898,137 4,459,671 INVESTMENTS - OPERATING RESERVES 1,541,000 1,541,000 PUBLIC UTILITY CAPITAL RESERVES 100,000 - NON-UTILITY CAPITAL RESERVES 358, ,496 TOTAL CASH AND CASH EQUIVALENTS 7,993,032 6,899,385 MEMBERSHIP ASSESSMENT RECEIVABLE GROSS ASSESSMENTS BILLED 19,431,602 19,920,931 LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS (16,708,336) (17,883,016) NET MEMBERSHIP ASSESSMENT RECEIVABLE 2,723,266 2,037,915 OTHER MEMBERSHIP RECEIVABLES 140, ,767 OTHER RECEIVABLES 37,479 38,740 INVENTORIES 38, ,815 PREPAID EXPENSES 198, ,268 REAL ESTATE HELD FOR SALE, NET REALIZABLE VALUE 2,248,500 1,989,750 RECOVERABLE ELECTRIC COSTS 3,876,520 3,976,690 PROPERTY AND EQUIPMENT, Net of Accumulated Depr. 62,804,284 65,356,692 TOTAL ASSETS 80,059,711 81,072,022 LIABILITIES AND MEMBERSHIP EQUITY LIABILITIES ACCOUNTS PAYABLE $ 354,770 $ 320,637 ACCRUED EXPENSES 2,192,800 2,944,387 PREPAID ASSESSMENTS AND FEES 870,830 1,184,484 SECURITY DEPOSITS & OTHER DEPOSITS 570, ,566 ARVEST LOAN - DESOTO 982,437 1,268,515 LINE OF CREDIT - 775,000 BONDS PAYABLE 3,025,000 3,280,000 TOTAL LIABILITIES 7,995,980 10,374,589 MEMBERSHIP EQUITY UNDESIGNATED 71,605,217 70,440,937 DESIGNATED FOR FUTURE REPAIRS & REPLACEMENT 458, ,496 TOTAL MEMBERSHIP EQUITY 72,063,731 70,697,433 TOTAL LIABILITIES AND MEMBERSHIP EQUITY $ 80,059,711 $ 81,072,022 5

6 HOT SPRINGS VILLAGE POA Comparative Statements of Revenue and Expenses Months ended Novmeber 30, 2017 and November 30, 2016 Actual YTD 2017 Over/(Under) Budget % Budget Budget Prior Year Remaining Earned/Spent Assessments, Penalties & Other Rev 18,100,000 16,762,403 16,720,607 Provision for future Bad Debt (2,233,646) (3,331,232) (1,698,929) Net Assessment Revenue 15,866,354 13,431,171 15,021,678 (1,590,507) 2,435,183 Administration REVENUE 232, , ,922 (94,644) (13,278) 106% EXPENSE (4,414,509) (3,725,674) (3,486,218) 239, ,835 84% Net Administration (4,182,509) (3,480,396) (3,146,296) Sales, Mktg, Disc. Ctr. & Dev. REVENUE 376,400 65,836 5,612 60, ,564 17% EXPENSE (1,143,823) (652,290) (663,350) (11,060) (491,533) 57% Net Sales & Development (767,423) (586,454) (657,738) Public Safety REVENUE 760, , ,591 (64,084) 91,193 88% EXPENSE (4,449,735) (3,764,235) (4,085,130) (320,895) 685,500 85% Net Public Safety (3,689,035) (3,094,728) (3,351,540) Public Works REVENUE 2,402,000 1,795,223 1,762,264 32, ,777 75% EXPENSE (3,141,521) (2,315,206) (2,632,456) (317,250) 826,315 74% Net Public Works (739,521) (519,983) (870,192) Public Utilities REVENUE 5,867,994 4,680,048 4,164, ,908 1,187,946 80% EXPENSE (4,274,955) (3,800,777) (3,423,160) 377, ,178 89% Net Public Utilities 1,593, , ,980 Lakes Management REVENUE 86,361 95, ,200 (40,681) (9,158) 111% EXPENSE (345,974) (476,901) (212,706) 264, , % Net Lakes Management (259,613) (381,382) (76,506) Planning & Inspection REVENUE 175, , , ,837 (60,185) 134% EXPENSE (294,364) (265,879) (250,877) 15,001 28,485 90% Net Planning & Inspection (119,364) (30,693) (121,529) *Food & Beverage REVENUE 383, , , ,641 (214,146) 156% EXPENSE (457,866) (923,838) (426,156) 497,682 (465,972) 202% Net Food & Beverage (74,745) (326,572) (35,530) Golf REVENUE 6,814,485 6,028,030 5,581, , ,455 88% EXPENSE (7,978,044) (7,321,523) (7,029,154) 292, ,521 92% Net Golf (1,163,559) (1,293,493) (1,447,463) Recreation REVENUE 1,092, , ,447 3,740 99,803 91% EXPENSE (2,863,858) (2,211,914) (2,250,756) (38,841) 651,944 77% Net Recreation (1,770,868) (1,218,727) (1,261,309) Over/(Under) Prior Year Budget Remaining 17 Budget 17 Actual 16 Actual Gross Revenue $ 36,291,051 $ 32,167,483 $ 30,953,448 Bad Debt Expense (2,233,646) (3,331,232) (1,698,929) Net Revenue (1) 34,057,405 28,836,251 29,254,519 (418,267) 5,221,154 85% Operational Expense (2) (29,364,649) (25,458,238) (24,459,963) 998,275 3,906,411 87% Excess (Deficit) Before Depr.(3) $ 4,692,756 $ 3,378,013 $ 4,794,556 Depreciation $ - $ - *Note Food & Beverage budget was prepared prior to the department's restructure and does not include operation of Granada Grill includes $117k from DeSoto Club insurance proceeds. 6

7 HOT SPRINGS VILLAGE POA Statement of Capital Additions 2017 Annual Budget Spending Budget Remaining Administration $ 155,222 $ 998,000 $ 842,778 Sales, Mktg, Disc. Ctr. & Dev. 29, , ,635 Public Safety 230, , ,963 Public Works 3,364 - (3,364) Public Utilities 1,007,188 2,050,026 1,042,838 Lakes Management Permitting & Inspections Food & Beverage 23, ,350 92,746 Golf 15, , ,539 Parks and Recreation 103,309 1,404,500 1,301,191 Current Yr Capital Additions $ 1,567,822 $ 5,538,149 $ 3,970,327 Carryforward from 2016 $ - $ - $ - Total Year to Date Capital Additions $ 1,567,822 $ 5,538,149 $ 3,970,327 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 ,483 7,562 7,598 7, UNIMPROVED IMPROVED TOTAL Improved Lots % GOOD STANDING 99% Water Meters Billed: Sanitation Billed: Residential 8,809 Res-House 459 Commercial 212 Res-Curb 7,435 Sprinkler 80 Commercial 120 Construction 28 No Sanitation 1,075 Unimproved Lots - Non POA 66% Total 9,129 Total 9,089 0% 20% 40% 60% 80% 100% 120% Population Estimate: 14,094 8

9 Hot Springs Village POA Golf Rounds and Revenue Analysis YTD PLAYABLE DAYS & REVENUE/DAY Variance YTD Playable Days 2,458 2, Revenue/Day $ 2,337 $ 2,320 $ GOLF RESULTS 2017 Actual Revenue/Round 2017 Budgeted Revenue/Round 2017 Rounds 2017 Revenue Balboa 26, , Coronado 15, , Cortez 32, , DeSoto 30, , Granada 28, , Isabella 40,193 1,032, Magellan 30, , Ponce de Leon 30, , ,383 5,619,168 Admin & Miscellaneous 408,862 Total 6,028,030 $ GOLF RESULTS 2016 Rounds 2016 Revenue 2016 Revenue/Round Balboa 26, , Coronado 16, , Cortez 31, , DeSoto 30, , Granada 29, , Isabella 40, , Magellan 28, , Ponce de Leon 27, , ,647 5,538,963 Admin & Miscellaneous 42,727 Total 5,581,690 $ ,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, 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 4,736 $ 446, $

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: April 19, 2017 Re: March 2017 Financial Reports Attached please