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

Size: px

Start display at page:

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

Jocelin Jennings
5 years ago
Views:

1 Hot Springs Village Property Owners Association Board of Directors Report Memo To: David Twiggs, COO From: Lesley Nalley, CFO LAN Date: April 15, 2015 Re: March 2015 Financial Report The March 2015 financial report is attached and includes the following items: Executive Summary & Financial Dashboard Statement of Financial Position Statement of Revenue and Expenses Statement of Capital Additions 2015 Budget Update This document summarizes the various discussions related to audit adjustments, 2014 capital carryforward, and the elimination of certain allocations.

2 Hot Springs Village POA Executive Summary CASH: HSVPOA ended the month of March with $6.8mil (1) of cash/cash equivalents and planned future spending according to the reconciliation of projected cash usage. The $1.5mil year over year decrease correlates to the increased assets from capital projects (mainly water plant) and the outstanding assessments receivable. ASSESSMENTS RECEIVABLE: Year to date, $217k more assessments have been received than were received in This appears to be a combination of annual payment timing and an improvement of collection practices. As of March, $14.3mil of assessments have been outstanding for more than a year. With the advice of Mitchell Williams Law Firm beginning in November, all delinquencies are being prioritized and evaluated for collectability. The current focus is on $8.6mil related to NRPI operations and its successors. POA LOTS: As previously mentioned, the Real Estate Held for Resale (19) line on the Statement of Financial Position and related monthly transactions were reviewed with Frost. In years past assessments were calculated on POA owned lots and then partially written off. This impacted the value of the lots, gross revenue, and the allowance for doubtful accounts. GAAP requires these lots to be valued at the lower of cost or market. As such, a $381k lot value adjustment (decrease) is reflected on the March financials. LIABILITIES: Total liabilities equal $8.8mil (2), with $3mil (3) relating to 2015 prepaid fees per Frost s advice to begin spreading annual sales across 12 months, $3.2mil (4) in outstanding operating liabilities, and $1.8mil (5) in bond debt. REVENUE: YTD Gross Revenues total $6.1mil (6). $800k(7) has been accrued through March for assessment bad debt. The 2015 revenue reflects both operational and accounting methodology differences. With regard to year over year operational changes, golf rounds, new home permits, and amenity fees are posting year to date decreases. Approximately $150k of the golf variance relates to an operational decline, while $800k is merely an accounting methodology change. We anticipate recapturing some of the revenue decline as the weather improves in the 2 nd and 3 rd quarters. Four accounting methodology changes impact year over year variances and should not be considered as operational variances: 1. Assessment revenue and bad debt provision each reflect elimination of interest and an increase in late fee, as well as the late fee now being assessed on the 31 st day. 2. Elimination of assessment calculations on POA-owned lots 3. Reversal of the 2014 unbilled revenue occurred in January and the 2015 entry will be made in December. 4. Golf & Recreation will recognize annual sales revenue over 12 months

3 EXPENSE: YTD Operational Expenses total $5.3mil (13), which was $85k less than in The $234k(22) decrease in Golf relates to the change in fertilizer purchase and usage, as well as decreases in payroll expense due to course closures. The increase in Administration(21) is a reflection of the previously mentioned cessation of allocating overhead to other departments. The $122k(25) increase in Public Works reflects changes to building and vehicle expense calculations. In 2014, these two areas were allocated to other departments. NET OPERATING RESULTS: Net deficit before depreciation and capital was $4.2k (14), as compared to $1.3mil in The main contributor to this difference in revenue recognition. Assuming other activities track to budget, this gap will close once the 2015 Unbilled Revenue entry is made in December and the 12 th month of annual golf and recreation sales is recorded. CAPITAL: Capital Spending totals $532k(15) of the $4.6mil budgeted for 2015 and $57k(16) carried forward from HSVPOA's Net Worth is $71.1mil(18). Notice the decrease in equity. This is a section that represents retained earnings from prior years and current year net increase or decrease. The 2014 audit adjustments and 2015 accounting methodology changes contribute to this decrease. Once the prepaid fees are recognized as revenue, we will see the net worth return to previous levels.

4 Cash & Cash Equivalent Balance $ 6,856,333 Petty Cash & Act 833 Funds (46,761) Outstanding Accounts Payable (702,010) A forecasted deficit of less than $2.1mil Accrued 2015 Cash Spendingv (1,520,441) indicates that budgeted operations are Remaining Projected Cash Yield from Operations 1,776,486 covered, but reserves have not yet Remaining 2015 Budgeted Capital (4,197,621) been fully funded. Deferred Vehicle & Equipment Purchase Reserves (750,000) Deferred Road & Culvert Maintenance Reserve (350,000) Building Failure Reserve Remaining (322,281) Balboa Projects Reserve (750,000) Pickleball Reserve (174,000) Remaining Emergency Reserve (600,000) Bond Reserve (280,000) Forecasted Available Excess (Deficit) Funds $ (1,060,294) v - Mainly relates to accrued payroll, insurance, and property taxes Hot Springs Village POA Financial Dashboard Reconciliation of Projected Cash Usage At a Glance Comparison of Select Financial Data YTD 2015 vs. YTD YTD 2015 YTD Inc/(Decr) %Change $ 3,076,977 $ 3,294,513 Assessments Received $ 217, % $ 3,776,282 $ 2,346,604 Operational Revenue* $ (1,429,678) % $ 5,439,193 $ 5,353,569 Operating Expenses $ (85,625) -1.57% $ 1,227,316 $ 532,340 Capital Spending $ (694,975) % $ 8,408,543 $ 6,856,333 Cash and Cash Equivalents $ (1,552,210) % 34,249 27,721 Golf Rounds (6,528) % New Home Permits (5) % Residential Additions (62) % Home Sales % *Note Executive Summary discussion of changes in accounting methodology

5 Hot Springs Village POA Financial Dashboard Property & Population Statistics Total Commercial & Residential Properties Subject To Assessments 34,439 Total Standing Current Deeded Lots Not Owned by the POA 31,589 24,738 6,851 Lots Owned by the POA 2,442 2,442 - Mortgage held by CCI (Class B) Lots Owned by CCI Time share units Good Samaritan Units* Mt Carmel Units *Beginning in March Good Sam will be billed for 111 units 34,439 27,576 6,863 Good Not Improved vs. Unimproved Lots Improved Lots 8,978 8, Unimproved Lots Not Owned by the POA 23,019 16,300 6,719 Unimproved Lots Owned by the POA 2,442 2,442-34,439 27,576 6,863 Cooper's Commercial Reserved Property (no voting rights, pays a square footage fee) 8 Water Meters Sanitation Service Residential Meters 8,682 At House 618 Under Construction 18 Curbside 8,064 Commercial 151 Commercial 151 Sprinkler Svc only 76 Sprinkler Svc Only 76 POA & Other 114 POA & Other 114 Good Sam 1 Good Sam 1 Mt Carmel 1 Mt Carmel 1 Total Water Meters 9,043 Under construction 18 Total Sanitation 9,043 Population Estimate Residential Meters 8,682 GAC Population Formula 1.60 Estimated Population 13,891

Hot Springs Village POA Financial Dashboard Assessments Received & Cash Trending 3 Year Comparison $2,100,000

November December 2013 $1,626,021 $719,069 $834,990 $876,381 $656,413 $936,276 $1,132,871 $623,734 $733,083

$766,794 $803,869 $519,045 $1,981,421 2015 $1,790,439 $671,554 $832,520 Assessment Aging Note: The total under

47,491 69,512 Delinquent Amounts Delinquent Units (Non POA Owned) 41,679 59,169 100,121 79,107 14,391,267 Under

6 Hot Springs Village POA Financial Dashboard Assessments Received & Cash Trending 3 Year Comparison $2,100,000 $1,600,000 $1,100,000 $600,000 $100,000 January February March April May June July August September October November December 2013 $1,626,021 $719,069 $834,990 $876,381 $656,413 $936,276 $1,132,871 $623,734 $733,083 $812,278 $584,739 $2,176, $1,525,960 $728,173 $822,844 $866,220 $627,975 $900,293 $1,120,375 $599,342 $766,794 $803,869 $519,045 $1,981, $1,790,439 $671,554 $832,520 Assessment Aging Note: The total under 365 days (with penalties) equals $296k of the $14.6mil outstanding. 47,491 69,512 Delinquent Amounts Delinquent Units (Non POA Owned) 41,679 59, ,121 79,107 14,391,267 Under 61, 1, , 521 Under ,354 73,811 12,062,300 Over 365, 5, , , Assessment Only Assessment w/ Penalties & Interest Over 365

7 HOT SPRINGS VILLAGE POA Comparative Statement of Financial Position March March ASSETS CASH AND CASH EQUIVALENTS (1) $ 6,856,333 $ 8,408,543 MEMBERSHIP ASSESSMENT RECEIVABLE GROSS 14,715,040 11,663,808 LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS (14,317,332) (11,318,543) OTHER MEMBERSHIP RECEIVABLES 128, ,750 OTHER RECEIVABLES 2,230 8,704 INVENTORIES 690, ,366 PREPAID EXPENSES 205, ,747 REAL ESTATE HELD FOR SALE, NET REALIZABLE VALUE (19) 1,763,341 1,802,781 RECOVERABLE ELECTRIC COSTS GROSS 8,000,000 8,000,000 LESS ALLOWANCE FOR UNCOLLECTIBILITY (4,000,000) (4,000,000) PROPERTY AND EQUIPMENT, Net of Accumulated Depr. 65,920,569 65,686,817 TOTAL ASSETS $ 79,964,607 $ 81,458,972 LIABILITIES AND MEMBERSHIP EQUITY LIABILITIES ACCOUNTS PAYABLE (4) $ 702,010 $ 719,062 ACCRUED EXPENSES (4) 2,563,540 1,706,308 PREPAID MEMBERSHIP ASSESSMENTS AND OTHER FEES (3) 3,057,148 2,205,302 SECURITY DEPOSITS & OTHER DEPOSITS 702, ,749 BONDS PAYABLE (5) 1,815,000 2,085,000 TOTAL LIABILITIES (2) 8,839,977 7,504,421 MEMBERSHIP EQUITY UNDESIGNATED 68,774,051 71,914,279 DESIGNATED FOR FUTURE REPAIRS & REPLACEMENT 2,350,580 2,040,271 TOTAL MEMBERSHIP EQUITY (18) 71,124,630 73,954,551 TOTAL LIABILITIES AND MEMBERSHIP EQUITY $ 79,964,607 $ 81,458,972

8 HOT SPRINGS VILLAGE POA Comparative Statements of Revenue and Expenses Months ended March 31, 2015 and March 31, 2014 Actual YTD 2015 (As Originally Stated)* Increase Budget Budget Mar Mar (Decrease) Remaining Membership Assessment Revenue 15,377,638 3,608,711 3,781,855 (173,144) 11,768,927 Assessment Penalties & Other 1,024, , ,332 (49,330) 829,998 Provision for future Bad Debt (7) (3,453,080) (800,044) (998,235) (198,191) 2,653,036 Net Assessment Revenue 12,948,558 3,002,669 3,026,952 Administration REVENUE 511, ,309 96,337 20, ,291 EXPENSE(21) (3,282,440) (869,483) (804,223) 65,260 2,412,957 Net Administration (2,770,840) (752,174) (707,885) Public Safety REVENUE 755, , ,277 (10) 611,353 EXPENSE (4,249,271) (1,022,534) (1,055,259) (32,725) 3,226,737 Net Public Safety (3,493,651) (878,267) (910,981) Public Works REVENUE* 6,828, ,578 1,312,871 (330,293) 5,845,892 EXPENSE(25) (7,248,771) (1,445,995) (1,323,398) 122,597 5,802,776 Net Public Works (420,301) (463,417) (10,527) Planning & Inspection REVENUE 140,000 31,841 53,215 (21,375) 108,159 EXPENSE (400,270) (74,014) (72,596) 1, ,256 Net Planning & Inspection (260,270) (42,173) (19,381) Food & Beverage REVENUE 244,400 35,917 37,384 (1,467) 208,483 EXPENSE(26) (402,560) (67,399) (94,802) (27,403) 335,161 Net Food & Beverage (158,160) (31,482) (57,417) Golf REVENUE*(12) 6,501, ,384 1,728,688 (947,304) 5,720,156 EXPENSE (22) (7,669,548) (1,312,098) (1,546,587) (234,488) 6,357,450 Net Golf (1,168,008) (530,714) 182,101 Recreation REVENUE* 1,058, , ,509 (150,201) 805,576 EXPENSE (2,564,022) (562,046) (542,330) 19,716 2,001,976 Net Recreation (1,505,137) (308,738) (138,821) 15 Budget 15 Actual 14 Actual Inc/(Decr) Budg. Rem. Gross Revenue* (6) $ 32,442,153 $ 6,149,317 $ 7,801,469 $ (1,652,151) 26,292,836 Bad Debt Expense (3,453,080) (800,044) (998,235) (198,191) 2,653,036 Operational Expense (13) (25,816,882) (5,353,569) (5,439,193) (85,625) 20,463,314 Excess (Deficit) Before Depr. (14) $ 3,172,191 $ (4,295) $ 1,364,041 3,176,486 Depreciation $ (900,076) $ (850,372) $ 49,704 $ 900,076 *The 2015 accounting methodology change for annual fees and unbilled revenue is creating a year over year difference. Please see the Executive Summary for details.

9 HOT SPRINGS VILLAGE POA Statement of Capital Additions 2015 Annual Budget Spending Budget Remaining 2014 Projects $ 57,000 $ 57,000 $ - Administration 92, , ,391 Public Safety 22,281 58,000 35,719 Public Works 49, , ,174 Club Services and Facilities 7,000 2,211,000 2,204,000 Golf 230, , ,831 Parks and Recreation 68, , ,237 Construction 5, , ,269 Total Capital Additions (15) $ 532,340 $ 4,729,961 $ 4,197,621 Projects carried over from 2014: PW Striping Machine $ 5,000 IT - Total e Budgeted but not yet billed 35,000 Recreation Bridge Project 17,000 Total 2014 Capital to be Carried forward to 2015 (16) 57,000

10 HOT SPRINGS VILLAGE POA 2015 Budget Update Reflects Audit Adjustments, 2014 Capital Carry Forward, and Elimination of Admin Allocations Original Budget Approved by the Board Revenue Operating Expense Capital Administration $ 13,450,158 $ 2,528,110 $ 490,500 Marketing 10, ,850 15,500 Permitting & Inspections 140, ,270 - Fire 735,900 2,117,560 - Police 19,720 2,131,711 58,000 Recreation 1,714,553 2,938,543 2,516,500 Golf 6,501,540 7,669, ,681 Public Works 6,828,470 7,345, ,780 Total $ 29,400,341 $ 25,593,438 $ 4,672,961 Amended 2015 Budget Revenue Operating Expense Capital Administration $ 13,450,158 $ 2,820,590 $ 525,500 Marketing 10, ,850 15,500 Permitting & Inspections 140, ,270 - Fire 735,900 2,117,560 - Police 19,720 2,131,711 58,000 Recreation 1,303,285 2,966,582 2,533,500 Golf 6,501,540 7,669, ,681 Public Works 6,828,470 7,248, ,780 Total $ 28,989,073 $ 25,816,882 $ 4,729,961 Difference Between Original & Amended Budget Budgeted Revenue Operating Expense Capital Administration(1) $ - $ 292,480 $ 35,000 Marketing Permitting & Inspections Fire Police Recreation(2) (411,268) 28,039 17,000 Golf Public Works(3) - (97,075) 5,000 Total $ (411,268) $ 223,444 $ 57,000 (1)Expense difference relates to previous overhead allocation method, most of which ended up on the balance sheet. (2)Revenue & expense differences relate to audit reclass of insurance proceeds (3)Difference relates to previous previous overhead allocation method. 1

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: David Twiggs, COO From: Lesley Nalley, CFO LAN Date: March 18, 2015 Re: February 2015 Financial Report The February 2015