Greenbelt Homes, Inc. 2018 Budget October 12, 2017 - First Presentation to Finance Committee & Board of Directors November 2, 2017 - First Reading November 15, 2017 - Second Reading and Approval
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TABLE OF CONTENTS Pages 1-3 Board President's 2018 budget letter 4 Important changes to 2018 budget 5 Summary budget overview 6 Summary budget schedule Supporting Schedules: Operations 7-10 Distribution of 2018 members' charges Schedule A 11-12 Service and other income Schedule B 13-14 Real estate taxes Schedule C 15-16 Insurance Schedule D 17-20 Administration/Board/Membership Schedule E 21-22 Maintenance and improvements (routine) Schedule F Home Improvement Program 23 Crawlspace improvements Schedule G 24 Optional improvements Schedule H 25 H.I.P. contracts Reserves 26 Replacement and addition maintenance reserves (routine) 27 Replacement and addition maintenance reserves (H.I.P.) 28 Major maintenance, replacement & improvement programs 29 Analysis of contingency, replacement & addition Schedule I maintenance reserves
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IMPORTANT CHANGES TO Real estate taxes have been budgeted to reflect the impact of the loss of the Homestead Tax Credit for units which will not be eligible to receive it in 2018 (pages 11-12). Contracts include asbestos remediation for crawlspace of frame units (page 20). Expenditures for the Homes Improvement Program (pages 21-23) have been broken out for crawlspace improvements, optional improvements, and replacement and addition maintenance reserves. Summary Budget (page 4) Maintenance & improvements Crawlspace improvements Optional improvements Addition maintenance reserves Administrative Schedule E (page 18) Legal Board/Audit/Committees Maintenance Expense Schedule F (page 19) Payroll Fringe Contract work Maintenance - Contract Work (page 20) Parking lot repairs Swale/drainage improvements Asbestos removal in crawlspace of frame units Replacement Reserves (page 24) Contracts Underground utility (yard restorations) Purchase van Replace roofs on larger homes Replace air conditioning in larger homes Addition Maintenance Reserves (page 24) Contracts Roof replacements Summary Budget (page 4) Adm/Brd/Memb Administrative Schedule E (page 18) Payroll Hiring & training Temp & professional help Maintenance Expense Schedule F (page 19) Materials Replacement Reserves (page 24) Contracts Replace roofs masonry block homes Replace carpet admin building Replace roof on warehouse Revise replacement reserve plan SIGNIFICANT INCREASES IN EXPENDITURES SIGNIFICANT REDUCTIONS IN EXPENDITURES Addition Maintenance Reserves (page 24) Professional fee to revise addition maintenance reserve plan 4
SUMMARY BUDGET OVERVIEW The summary budget is a consolidation of income, expenses and equity for all three budget groups. It provides the basis for the cooperative's operations during 2018. All of the other documentation included as part of the budget presentation consists of supporting schedules and backup material. The summary budget identifies total receipts (income), expenses and equity. As a cooperative operating on a not-for-profit basis, GHI must determine which expenses are necessary, then collect sufficient income to meet those expenses. In accordance with the bylaws, increases in membership operating payments cannot exceed 10% of the prior year's operating payments without membership approval. The increase in membership operating payments for 2018 falls well within this limit and provides for enhanced services and improvements. This budget reflects an increase in membership operating payments of 6.8%. Operating payments consists of real estate taxes, trash collection, insurance, administration, maintenance and improvements, crawlspace improvements, asbestos remediation and replacement reserves, less service and other income. 5
SUMMARY RECEIPTS: 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change Schedule Members' charges: Operating charges $ 4,538,681 $ 4,538,681 $ 4,774,879 5.2% Real estate taxes 3,710,061 3,827,377 4,023,092 5.1% Crawlspace improvements 204,000 204,000 306,000 50.0% Asbestos remediation 40,000 40,000 100,000 >100% Replacement reserves 1,694,791 1,694,791 1,801,766 6.3% Total members' charges 10,187,533 10,304,849 11,005,737 6.8% A Other income sources: Service income 485,430 493,940 516,485 4.6% B Other income 438,900 508,010 500,660-1.4% B Total other income sources 924,330 1,001,950 1,017,145 1.5% Members' charges and other income $ 11,111,863 $ 11,306,799 $ 12,022,882 6.3% Miscellaneous receipts: Addition maintenance reserves 170,000 170,000 190,880 12.3% I Optional improvements 441,980 913,066 1,138,550 24.7% H Total receipts $ 11,723,843 $ 12,389,865 $ 13,352,312 7.8% EXPENSES: Real estate taxes 3,710,061 3,827,377 4,023,092 5.1% C Trash collection 429,076 450,481 452,750 0.5% A Insurance 452,700 452,700 467,600 3.3% D Adm/Brd/Memb 1,391,308 1,477,140 1,425,050-3.5% E Maintenance & improvements 3,115,000 3,160,310 4,388,724 38.9% F Crawlspace improvements 506,310 1,184,990 2,163,730 82.6% G Total expenses prior to optional HIP 9,604,455 10,552,998 12,920,946 22.4% Optional improvements 441,980 913,065 1,138,550 24.7% H EQUITY: Total expenses $ 10,046,435 $ 11,466,063 $ 14,059,496 22.6% Replacement reserves 1,694,791 1,694,791 1,801,766 6.3% I Addition maintenance reserves 170,000 170,000 190,880 12.3% I Total reserves 1,864,791 1,864,791 1,992,646 6.9% Total expenses & reserves $ 11,911,226 $ 13,330,854 $ 16,052,142 20.4% Unreserved operating fund (209,702) (940,990) (2,699,830) >100% Total expense & equity $ 11,701,524 $ 12,389,864 $ 13,352,312 7.8% Depr - member units 504,000 550,000 610,000 10.9% 6
DISTRIBUTION OF 2018 MEMBERS' CHARGES Schedule A illustrates how total members' charges are distributed among the three budget classes created by GHI's Mutual Ownership Contracts. Since real estate taxes are determined based on the actual real estate tax bill, not all members within the particular budget class (frame, masonry, & larger homes) will increase by the same percentage. For 2018 the total members' charges are reduced $1,017,145 by service and other income (see Schedule B). ABBREVIATIONS USED IN TEXT 1) GHI = Greenbelt Homes, Inc. 2) GDC = Greenbelt Development Corporation 3) ADM = Administration expense 4) BRD = Board expense 5) MEMB = Members expense 6) MAINT= Maintenance 7) FFS = Fee For Service 8) RR = Replacement reserves 9) HIP = Homes Improvement Program 10) HTC = Homestead tax credit 11) s/s = Service side 12) g/s = Garden side 13) c/a = Common area 14) EPDM = Ethylene Propylene Diene Monomer rubber roofing 7
DISTRIBUTION OF 2018 MEMBERS' CHARGES Schedule A FRAME MASONRY LARGER TOTAL HOMES HOMES HOMES CHARGES % Routine Operating Payments 2017 2018 2017 2018 2017 2018 2017 2018 Change Real estate taxes $ 2,043,826 $ 2,185,544 $ 1,662,164 $ 1,706,374 $ 121,387 $ 131,174 $ 3,827,377 $ 4,023,092 2 5.1% Trash collection 279,298 280,705 163,074 163,896 8,109 8,150 450,481 452,750 0.5% Insurance 280,674 289,912 163,877 169,271 8,149 8,417 452,700 467,600 3.3% Adm/Brd/Memb 915,827 883,531 534,725 515,868 26,589 25,651 1,477,140 1,425,050-3.5% Maint and improvements 1,964,552 3,074,668 1,134,448 1,247,143 61,310 66,913 3,160,310 4,388,724 38.9% Crawlspace improvements 134,000 201,000 70,000 105,000 - - 204,000 306,000 50.0% Asbestos remediation - 60,000 40,000 40,000 - - 40,000 100,000 >100.0% Transfers to reserves (RR) 929,412 995,401 736,604 776,381 28,775 29,984 1,694,791 1,801,766 6.3% Allocation of equity (crawlspace) (942,100) - (942,100) N/A Total charges 6,547,589 7,028,661 4,504,892 4,723,933 254,319 270,289 11,306,799 12,022,882 6.3% Less service & other income 621,209 630,630 362,706 368,206 18,035 18,309 1,001,950 1,017,145 1.5% Total operating payments $ 5,926,380 $ 6,398,031 $ 4,142,186 $ 4,355,726 $ 236,284 $ 251,980 $ 10,304,849 $ 11,005,737 6.8% Addition Maintenance Program Transfers to reserves (AM) 97,924 109,951 71,577 80,368 499 560 170,000 190,880 12.3% Homes Improvement Program Optional improvements 562,199 714,851 350,867 423,699 - - 913,066 1,138,550 24.7% Total members' charges $ 6,586,503 $ 7,222,833 $ 4,564,630 $ 4,859,793 $ 236,783 $ 252,540 $ 11,387,915 $ 12,335,167 8.3% % avg. change in operating payments 8.0% 5.2% 6.6% 6.8% % avg. change in members' charges 9.7% 6.5% 6.7% 8.3% % average change in real estate taxes 1 6.9% 2.7% 8.1% 5.1% % change in transfer to reserves 7.6% 6.0% 4.3% 6.9% % change in operating expenses 1 The variation in percent change between home groups reflects the impact of actual assessed values of homes and the HTC for members who are eligible. The 2018 budgeted real estate taxes by home group are a summation of individual unit real estate taxes for that particular home group and include the benefit of any HTC. Not all members within a home group are impacted equally. 2 In 2018 the cooperative will continue to receive the benefit of the Homestead Tax Credit (HTC) for members who are eligible. If the entire cooperative did not receive the benefit of the HTC, GHI's real estate taxes would have increased by 20.5% or $588,052 for the 2018 budget (see page 10). As stated on page 3 of this budget booklet, increases in membership operating payments cannot exceed 10% of last year's operating charges without membership approval. The increase in operating payments for 2017 falls within this limit and provides for enhanced services and improvements. 8
INCOME Member charges account for 92.4% of 2018 income. Miscellaneous 0.3% Members' charges Service & other income Fee For Service 1.2% Sale of services to GDC 2.3% Interest income 1.0% Contract processing 1.2% Garage rentals 1.3% Storage & boat/trailer yd rental 0.3% 9
EXPENSES AND RESERVES Real estate taxes 27.0% Maintenance 29.4% ` Administration 9.6% Reserves 13.4% Trash collection 3.0% Crawlspace improvements 14.5% Insurance 3.1% 10
SERVICE AND OTHER INCOME NARRATIVE SERVICE INCOME Service income of Schedule B is derived from 3 sources: sale of services to Greenbelt Development Corporation, rental garages, rental of boiler room storage, and rented space in the boat/trailer yards. Sale of services to GDC - GDC will continue to pay its portion of the annual audit, insurance, and a management fee to GHI. Garage rentals - The month rent for closed garages increased to $52/month from $48/month in 2017; open garages to $32/month from $30/month; and garages used for storage increased to $108/month from $100/month. Boiler room storage units at 8,9, and 10 Southway, four units each, are fully rented. A newly converted boiler rom conversion is at 14 Ridge and is budgeted to be fully rented all 12 months. The monthly rent for 2018 remains unchanged at $110/month. Boat/trailer yard rental - Boat/trailer slots increased to $27/month from $25/month in 2017 while slots for canoes remained unchanged at $5/month. OTHER INCOME Other income of Schedule B consists of contract processing, interest income, Fee For Service revenue and miscellaneous income from various activities. Contract processing - Consists of membership fees paid by new members and the processing fees on resales. The 2018 budget reflects administrative fees of $980 (seller), $625 (membership) $78 (MOC change), and a $470 transfer fee and is based on 95 resales. Interest income - This item consists of interest earned on accounts and investments net of those held for specific reserves. Corporate bond interest $340K less bond premium amortization of $96K, the Vanguard Federal Money Market $43K, interest on loan to GDC $7.5K, and other interest $2.5K less interest for specific reserves $160K result in interest income available for operations of $137K. Fee For Service - This income consists of an hourly component charged when services are provided by in-house staff and an administration component when services are contracted to outside companies. Expense relating to FFS activities have been budgeted in general maintenance and contract work. Miscellaneous - This item includes sublease fees of $3K, proceeds from recycling of scrap metal of $3K, late fees paid by members of $21K, and various other miscellaneous receipts including take-backs of distressed units of $18K. 11
SERVICE AND OTHER INCOME Schedule B Service Income 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change Sale of services to GDC $ 296,930 $ 296,930 $ 310,145 4.5% Garage rentals 161,000 167,950 172,870 2.9% Storage & boat/trailer yd rental 27,500 29,060 33,470 15.2% Total service income $ 485,430 $ 493,940 $ 516,485 4.6% Other Income Calculation Completed Contract processing $ 196,600 $ 139,910 $ 156,030 11.5% Interest income 122,000 109,800 136,930 24.7% Fee For Service 84,000 197,600 162,700-17.7% Miscellaneous 36,300 60,700 45,000-25.9% Total other income $ 438,900 $ 508,010 $ 500,660-1.4% 12
REAL ESTATE TAXES $5,000,000 $4,000,000 4,023,092 3,710,061 3,490,778 3,283,036 $3,000,000 2,942,447 2,997,509 3,136,868 2,739,947 2,517,646 2,293,428 $2,000,000 $1,000,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budget 13
REAL ESTATE TAXES Schedule C Proposed % 2017 Actual 2017 Budget 2018 Budget Change Real estate assessment $ 214,528,737 $ 215,727,991 $ 230,200,400 6.7% Tax rate (per $100 assessed) 1.9931 2.0081 2.0031-0.2% Total real estate tax $ 3,710,061 $ 3,827,377 $ 4,023,092 5.1% Taxes excluding HTC $ 4,275,772 $ 4,332,034 $ 4,611,144 20.5% Savings from HTC $ 565,711 $ 588,052 If the cooperative were not eligible to receive the HTC, GHI's real estate taxes would have been $4,611,144 for the 2018 budget. The HTC assisted in reducing GHI's total real estate taxes by $588,052. Individual member real estate tax responsibility will vary due to various factors including timing of eligibility of the HTC and assessed home value. Not all members within a home group are impacted equally. Revised Revised Tax Rates Historic Data per $100 Assessment % 2008 Act 1.8771 143,748,447 0.000% 0.0000 2009 Act 1.8771 210,292,440 46.292% 0.0000 2010 Act 1.8771 230,000,000 9.372% 0.0000 2011 Act 1.8771 246,014,521 6.963% 0.0000 2012 Act 1.8996 227,193,562-7.650% 0.0225 2013 Act 1.9306 181,553,126-20.089% 0.0310 2014 Act 1.9481 182,462,318 0.501% 0.0175 2015 Act 2.0001 183,318,500 0.469% 0.0520 2016 Act 1.9981 198,919,264 9.019% 0.0500 2017 Act 1.9931 214,528,737 2018 Budget 2.0031 230,200,400 25.574% 0.0030 14
TOTAL INSURANCE $600,000 549,080 525,300 $500,000 502,525 502,525 463,992 442,700 457,600 $400,000 354,058 371,960 384,058 $300,000 $200,000 $100,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budget 15
INSURANCE Schedule D 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change INSURANCE Hazard & extended coverage $ 442,700 $ 442,700 $ 457,600 3.4% (General liability, umbrella, D&O liability, and property damage) Uninsured losses 10,000 10,000 10,000 0.0% Total to insurance (page 8) 452,700 452,700 467,600 3.3% (Does not include vehicle & workers' compensation) * Vehicle (included in vehicle expense) 44,700 44,700 48,020 7.4% * Workers' compensation (included in fringe benefits) 26,300 26,300 49,980 90.0% TOTAL $ 523,700 $ 523,700 $ 565,600 8.0% GHI uses an insurance broker to find the best insurance prices. Many factors have caused the increased insurance costs over the last couple of years including storm damage, fires, and lawsuits. * These items are included in maintenance schedules. 16
ADMINISTRATION/BOARD/MEMBER EXPENSE NARRATIVE Schedule E Provides a list of expenses of the administrative staff, Board of Directors, elected and appointed committees, and membership activities and services. Payroll - Administration (Decreased from 2017 budget of $816,700 to $816,950). Assistant general manager moved to maintenance budget. There is a 3% salary increase budgeted for existing staff as well as $20K for potential competitive salary adjustments. Fringe Benefits (Decreased from 2017 budget of $256,000 to $248,300). This item is based on calculations of 2018 insurance premiums as they relate to current administration personnel. Budgeted amount includes a 10% increase in health insurance premiums and a 4% increase in dental premiums. All employees contribute 10% of the cost of their medical/dental insurance premiums. Office Equipment, Supplies & Postage (No change from 2017 of $39,500). Items included in this category are: member communications, computers and computer supplies, technical service supplies, postage, and in-house printing on GHI equipment. Computers purchased for HIP staff, replacement computers for existing staff and communications to the membership relating to the Homes Improvement Program are reflected on this line item. Copier Expense (No change from 2017 budget of $14,400). This item reflects our current copier contracts and usage levels. Telephone & Email (Increased from 2017 budget of $17,600 to 18,000). This is reflective of the current usage in telephone and email activity. Hiring and Training (Decreased from 2017 budget of $70,000 to $17,500). This item includes advertising costs to fill vacant positions of $1,500, classes, seminars and workshops for maintenance and administrative personnel of $9,500. Also included are pre-employment and random drug screening totaling $1,000 as well as staff incentive awards of $5,500. Executive search fees for Assistant General Manager and Director of Technical Services in the amount of $52,500 have been eliminated. Temporary and Professional Help (Decreased from the 2017 budget of $21,500 to $15,000). This amount consists of $6,500 for payroll services, $5,000 for home health services, and $3,500 for drainage & swale engineering services. Reduction is due to removal of completed compensation survey. Legal (Increased from 2017 budget of $26,500 to $61,500). This item includes $35,000 for legal fees associated with zoning rewrites which is new for 2018. Legal costs associated with various issues which the cooperative may encounter make up the balance of this item. Audit (Increased from 2017 budget of $17,000 to $18,000). This reflects the anticipated cost of accounting and tax services. Association Dues and Conferences (No change from 2016 budget of $3,200). This item includes membership in National Cooperative Business Association (NCBA) $700, Community Association Managers International Certification Board, $350, the Community Association Institute (CAI) $850 and the National Association of Housing Cooperatives (NAHC) $1,300. Staff Events (No change from 2016 budget of $5,500). This item includes quarterly events promoting staff safety, emergency awareness, and planning. This item also includes the company picnic, holiday party, and other staff events. 17
ADMINISTRATION/BOARD/MEMBER EXPENSE NARRATIVE (cont.) Board/Audit/Committees (Increased from 2017 budget of $30,220 to $41,020). Architectural Review Committee $390; Audit Committee $7,500; Communications Committee $950; Companion Animal $250; Finance Committee $600; Nominations and Elections $1,550; Woodlands $1,200; Bicycle Committee $1,240; Member Outreach $2,000; stipends for Board and Audit Committee Stipend $19,340; Board strategic planning and training $6,000. Member Expenses (Increased from 2017 budget of $28,600 to 27,900). This line items consists of the annual meeting $6,000; an additional membership meeting of $6,000; advertising for meetings $2,500; Communicator newsletter printing and delivery $2,400; HIP meetings $6,500; News Review ads $3,000; and staff stipend for meals & travel $1,500. Utilities (No change from 2017 of $29,930). This item includes heat, electricity and water for the office buildings. Personal Property Taxes (No change form 2017 budget of $6,000). Depreciation (Decreased from 2017 budget of $8,000 to $5,100). Other (No change from 2017 budget of $6,750). This item includes fees to professional organizations to maintain staff designations and professional relationships as well as reduced bank fees. Information Technology Services (Decreased from 2017 budget of $55,340 to $50,500). This item includes outsourced support, maintenance and remote backup services for computer software including MicroMain and Jenark, web hosting, hardware, and new integrated time and attendance software. 18
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ADMINISTRATION/BOARD/MEMBERSHIP EXPENSE SUMMARY Schedule E 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change EXPENSES Payroll-Administration $ 795,625 $ 841,100 $ 816,950-2.9% Fringe benefits 242,300 256,000 248,300-3.0% Office equipment/supplies/postage 33,473 39,500 39,500 0.0% Copier expense 14,000 14,400 14,400 0.0% Telephone & email 18,900 17,600 18,000 2.3% Hiring and training 26,000 70,000 17,500-75.0% Temp & professional help 40,000 21,500 15,000-30.2% Legal 28,000 26,500 61,500 >100.0% Audit 18,000 17,000 18,000 5.9% Association dues & conferences 3,200 3,200 3,200 0.0% Staff events 5,500 5,500 5,500 0.0% Board/Audit/Committees 34,600 30,220 41,020 35.7% Member expenses 28,200 28,600 27,900-2.4% Utilities 29,800 29,930 29,930 0.0% Personal property taxes 5,700 6,000 6,000 0.0% Depreciation 4,410 8,000 5,100-36.3% Other 8,600 6,750 6,750 0.0% Information technology services 55,000 55,340 50,500-8.7% Total Administration $ 1,391,308 $ 1,477,140 $ 1,425,050-3.5% 20
ROUTINE MAINTENANCE & IMPROVEMENTS EXPENSE SUMMARY Schedule F 0% 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change Payroll - maintenance $ 1,664,250 $ 1,734,500 $ 1,906,200 9.9% Fringe benefits 599,300 557,500 629,900 13.0% Materials 235,000 250,200 235,400-5.9% Subtotal 2,498,550 2,542,200 2,771,500 9.0% Contract work 459,650 459,650 1,458,714 >100.0% Vehicle expense 98,500 98,500 100,000 1.5% Dumpsters 16,000 13,860 16,000 15.4% Uniforms 13,000 13,000 13,650 5.0% Sub-meter court lighting 8,300 8,300 8,300 0.0% Depreciation 21,000 24,800 20,560-17.1% Total Maintenance $ 3,115,000 $ 3,160,310 $ 4,388,724 38.9% Note: Fee-for-Service budget expense is $180,000 and is included in Maintenance - payroll ($72K), fringe benefits ($31K), materials ($15.2K), and contract work ($134.6K). Depreciation includes $3.5K for new truck. Schedule F-1 2017 Yr End Proposed % Projection 2017 Budget 2018 Budget Change FRAME HOMES Total frame expenses $ 1,931,300 $ 1,964,552 $ 3,074,668 56.5% MASONRY HOMES Total masonry expenses 1,127,630 1,134,448 1,247,143 9.9% LARGER HOMES Total larger homes expenses 56,070 61,310 66,913 9.1% Total Maintenance $ 3,115,000 $ 3,160,310 $ 4,388,724 38.9% 21
PROPOSED CONTRACTS (ROUTINE MAINTENANCE) Budget Budget % 2017 2018 Change Maintenance - Contract Work (Schedule F, Line 4) Asbestos tile removal (masonry homes) $ 2,000 $ 2,000 0.0% Bathtub reglazing (40) 20,000 20,000 0.0% Fire & burglar alarm system monitoring & repairs 1,800 1,800 0.0% Fire extinguisher servicing (administration building) 750 650-13.3% Fee for service contracted work 78,600 76,600-2.5% Gutter cleaning (Spring and Fall) 60,000 60,000 0.0% Janitorial services (administration building) 27,000 28,350 5.0% Landscape maintenance 54,000 56,211 4.1% Parking lot repairs (minor repairs) 15,000 39,000 >100.0% Pest extermination 33,000 32,000-3.0% Power cleaning of storm mains (1E-H Ga (s/s), 58 Cr (g/s)) 5,000 5,000 0.0% Repairs HVAC units in administration building 2,500 5,000 100.0% Repairs HVAC units at larger homes 5,000 5,000 0.0% Swale/drainage improvements (9L-M La, 9L-M Re, 14U-V Hi, 13A-B Ri, 19M Ri5L-M G 25,000 45,000 80.0% Asbestos removal in crawlspace of frame units - 942,103 >100.0% Tree maintenance & fertilization (includes cost of arborist monthly preventive maintena 130,000 140,000 7.7% Total $ 459,650 $ 1,458,714 >100.0% PROPOSED CONTRACTS (CRAWLSPACE IMPROVEMENTS) 22
HOMES IMPROVEMENT PROGRAM - CRAWLSPACE IMPROVEMENTS Schedule G Schedule G 0% 2017 Yr End Proposed % Crawlspace Improvements Projection 2017 Budget 2018 Budget Change Payroll - crawlspace improvements $ 28,970 $ 67,550 $ 147,950 >100.0% Fringe benefits 10,140 23,640 51,780 >100.0% Subtotal 39,110 91,190 199,730 >100.0% Contract work 467,200 1,093,800 1,964,000 79.6% Total crawlspace improvements $ 506,310 $ 1,184,990 $ 2,163,730 82.6% Schedule G-1 2017 Yr End Proposed % Crawlspace Improvements by Homes Group Projection 2017 Budget 2018 Budget Change FRAME HOMES Total crawlspace improvements - Frame $ 4,693 $ 866,480 $ 1,861,310 >100.0% MASONRY HOMES Total crawlspace improvements - Masonry 501,617 318,510 302,420-5.1% Total crawlspace improvements $ 506,310 $ 1,184,990 $ 2,163,730 82.6% * represents 12% of total labor costs 23
HOMES IMPROVEMENT PROGRAM - OPTONAL IMPROVEMENTS Schedule H Schedule H 0% 2017 Yr End Proposed % Optional Improvements Projection 2017 Budget 2018 Budget Change Payroll - optional improvements $ 26,120 $ 102,070 $ 67,280-34.1% Fringe benefits 14,060 35,720 36,230 1.4% Subtotal 40,180 137,790 103,510-24.9% Contract work 401,800 775,275 1,035,040 33.5% Total optional improvements $ 441,980 $ 913,065 $ 1,138,550 24.7% Schedule H-1 2017 Yr End Proposed % Optional Improvements by Home Group Projection 2017 Budget 2018 Budget Change FRAME HOMES Total optional improvements - frame $ 210,117 $ 562,199 $ 714,851 27.2% MASONRY HOMES Total optional improvements - masonry $ 131,990 $ 350,867 $ 423,699 20.8% Total optional improvements $ 342,107 $ 913,066 $ 1,138,550 24.7% 24
PROPOSED CONTRACTS (HOMES IMPROVEMENT PROGRAM - ALL) Budget Budget % Crawlspace Improvements - Contract Work (Schedule G, Line 3) 2017 2018 Change Frame Homes Contract work (258 units @ $3,100/unit) $ 799,800 $ 1,689,500 >100.0% Masonry Homes Contract work (140 units @ $2,100/unit) (2015-120@$2,265/unit) 294,000 274,500-6.6% Total crawlspace contract work $ 1,093,800 $ 1,964,000 79.6% Optional Improvements Frame Homes - Contract Work (Schedule H, Line 3) Attic perimeter sealing $ 6,280 $ 12,990 >100.0% Attic insulate/seal hatch 3,210 5,100 58.9% 1" polyisocyanurate on walls 66,000 120,730 82.9% Attic to R-38 25,700 54,800 >100.0% Seal s/s trash closet 1,105 1,230 11.3% Close through-wall A/C 10,910 18,000 65.0% Bath exhaust fan (basic w/ time controller) 23,195 28,260 21.8% Kitchen exhaust fan 7,805 - -100.0% Storm doors 67,630 49,450-26.9% Full view 1,115 - -100.0% Peephole 955 1,540 61.3% Knocker 375 1,080 >100.0% Mail slot 2,295 3,880 69.1% Kick plate 3,955 1,820-54.0% Kitchen window upgrade 4,280 - -100.0% Split system heat pump 195,780 298,750 52.6% Thermostat (programmable) 28,435 27,590-3.0% Permits 12,035 10,200-15.2% Radiant ceiling heater (bath) 7,375 7,480 1.4% Radiant ceiling heater (kitchen) 4,200 4,670 11.2% Total 472,635 647,570 37.0% Optional Improvements Masonry Homes - Contract Work (Schedule H, Line 3) Attic perimeter sealing $ 3,660 $ 6,000 63.9% Attic insulate/seal hatch 1,275 2,560 >100.0% Vinyl siding & 2" polyisocyanurate on walls 9,675 40,000 >100.0% Attic to R-38 12,030 24,600 >100.0% Seal s/s trash closet 585 - -100.0% Close through-wall A/C 5,770 26,000 >100.0% Bath exhaust fan (basic w/ time controller) 12,270 15,980 30.2% Kitchen exhaust fan 4,130 - -100.0% Storm doors 35,765 25,220-29.5% Full view 590 - -100.0% Peephole 505 790 56.4% Knocker 200 550 >100.0% Mail slot 1,215 1,980 63.0% Kick plate 2,090 930-55.5% Casement window (for all upgrades) 72,685 39,885-45.1% Kitchen window upgrade 2,265 1,240-45.3% Casement window (1st floor upgrades) 6,860 3,765-45.1% Split system heat pump 103,540 172,220 66.3% Thermostat (programmable) 15,040 14,070-6.4% Permits 6,365 5,200-18.3% Radiant ceiling heater (bath) 3,905 3,950 1.2% Radiant ceiling heater (kitchen) 2,220 2,530 14.0% Total 302,640 387,470 28.0% 25
RESERVES The 2018 budget will continue to fund the reserves as set forth in the 1987 policy adopted by the Board of Directors. Schedule I illustrates the activity taking place in the reservesduring the Homes Improvement Program. Suggested Replacement Reserve expenditures detailed below are categorized based on the August 2013 Reserve study and adjusted to date. In 1987, the Board adopted the goal of having the total Contingency Reserve equal to 10% of the operating budget. In 1993 the Board voted to maintain the Contingency Reserve balance of the 29 larger homes at 35% of their portion of the operating budget. Frame and Masonry contingency funds will be utilized to cover deficits resulting from asbestos remediation. Large homes are expected to be fully funded. Suggested Replacement Reserve Expenditures: Proposed % 1) In House 2017 Budget 2018 Budget Change a) Baseboard heaters 2016-(20), 2015-(60) $ 6,720 $ 4,744-29.4% b) Ceiling heaters 2016 & 2015-(126) 12,100 19,300 59.5% c) Frame porch decks 2016-(10), 2015-(51) 1,425 1,992 39.8% d) Water heaters replacements 2016 & 2015-(229) 112,420 105,470-6.2% e) Masonry porch roofs 2016-(6), 2015-(12) 1,910 1,950 2.1% f) Underground utility yard restorations - 9,210 >100% g) Sump pumps 2016-(12), 2015-(21) 5,900 4,590-22.2% Subtotal 140,475 147,256 4.8% 2) Contracts a) Underground sewer replacement 325,000 320,000-1.5% c) Purchase one van - 28,000 >100% d) Sidewalk replacement 50,000 50,000 0.0% f) Replace roofs for larger homes (13) 47,615 93,250 95.8% g) Replace roofs on frame homes (40) 119,565 121,770 1.8% h) Replace roofs on masonry block homes (23) 96,085 - -100.0% i) Replace air conditioning in larger homes (7) 25,980 39,060 50.3% j) Replace carpet - admin building 31,455 - -100.0% k) Replace roof - warehouse 36,600 - -100.0% l) Revise replacement reserve plan ($17.9K spent in 2013) 18,000 - -100.0% Subtotal 750,300 652,080-13.1% Total suggested replacement reserve expenditures $ 890,775 $ 799,336-10.3% Suggested addition maintenance reserve expenditures: Proposed 2017 Budget 2018 Budget 1) In House $ 19,500 $ 14,660-24.8% 2) Contracts (roof replacements) 8,500 16,000 88.2% 3) Professional fee (revise addition maintenance reserve plan) 30,000-100.0% Total suggested addition maintenance expenditures $ 58,000 $ 30,660-47.1% 26
RESERVES - HOMES IMPROVEMENT PROGRAM Replacement reserve expenditures related to the Homes Proposed % Improvement Program 2017 Budget 2018 Budget Change 1) Staff costs $ 258,370 $ 250,670-3.0% 2) Contracts Window replacement (102 masonry) (110-2017) 384,560 314,710-18.2% Window replacement (200 frame) (208-2017) 739,860 551,000-25.5% Door replacement (102 masonry) (110-2017) 222,630 285,600 28.3% Door replacement (200 frame) (208-2017) 377,315 500,000 32.5% Siding replacement (200 frame) (208-2017) 823,890 632,400-23.2% Baseboard replacement (302 homes) (318-2017) 289,380 274,820-5.0% Total HIP contract expenditures & staff costs $ 3,096,005 $ 2,809,200-9.3% Total replacement reserve and HIP expenditures $ 3,986,780 $ 3,608,536 Addition maintenance reserve expenditures related to the Homes Improvement Program 1) Staff costs $ 26,600 $ 21,650-18.6% 2) Contracts Window replacement 96,285 70,160-27.1% Door replacement (covered by AMP) 89,080 37,430-58.0% Siding replacement 123,950 74,150-40.2% Baseboard heaters 17,685 22,500 27.2% Crawlspace improvements 10,000 105,990 >100.0% Total HIP contract expenditures-additions w/staff $ 363,600 $ 331,880-8.7% Total addition maint. reserve and HIP addition maint. expend. $ 421,600 $ 362,540 27
MAJOR MAINTENANCE, REPLACEMENT AND IMPROVEMENT PROGRAMS 2017 2018 2019 2020 2021 Through 2026 Air Condensing Units for Larger Homes (RR Roofs for Larger Townhomes (RR) Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Removal of asbestos from crawlspaces of masonry homes Baseboard heaters for frame & masonry homes (RR) Doors & windows for frame & masonry homes (RR) Vinyl Siding Replacements for Frame homes (RR) Crawlspace improvements for frame and masonry homes Air Condensing Units for Larger Homes (RR Roofs for Rental Garages (RR) Roofs for Larger Townhomes (RR) Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Roofs for Rental Garages (RR) Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Air Condensing Units for Larger Homes (RR) Roofs for Rental Garages (RR) Roofs for Block Homes (RR Roofs for Frame Homes (RR) Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Forecast Replacements for Homes Improvement Program 2017-2020 Baseboard heaters for frame & masonry homes (RR)) Doors & windows for frame & masonry homes (RR) Vinyl Siding Replacements for Frame homes (RR) Crawlspace improvements for frame and masonry homes Replacement of porch decks for frame homes (RR) Water heater replacement (RR) Replacement of ceiling heaters (RR) Replacement of porch roofs for masonry homes (RR) Replacement of crawlspace sump pumps (RR) Underground sewer pipe replacement (RR) Swale/drainage improvements Sidewalk repair (RR) Baseboard heaters for frame & masonry homes (RR) Doors & windows for frame & masonry homes (RR) Vinyl Siding Replacements for Frame homes (RR) Crawlspace improvements for frame and masonry homes Baseboard heaters for frame & masonry homes (RR) Doors & windows for frame & masonry homes (RR) Vinyl Siding Replacements for Frame homes (RR) Crawlspace improvements for frame and masonry homes The following programs occur annually from 2017 through 2021 Parking lot reconstruction (RR); parking lot repairs, sealing and striping Crawlspace inspections of masonry and frame homes Gutter cleaning (Spring and Fall) Bathtub re-glazing Tree maintenance Pest and animal control Air Condensing Units for Larger Homes (RR Roofs for Block Homes (RR) Roofs for Frame Homes (RR) Electric wiring Masonry and Frame Homes (RR) Water/waste piping for Masonry and Frame Homes (RR) (RR) - Program funded through the Replacement Reserve. 28
ANALYSIS OF REPLACEMENT, ADDITION MAINTENANCE & CONTINGENCY RESERVES (1) (2) (3) (4) (5) (6) (7) Schedule I Beginning 2017 2017 Projected 2018 2018 Projected Balance Budgeted Projected Balance Budgeted Budgeted Balance Frame Homes 12/31/2016 Collections Expenditures 12/31/2017 Collections Expenditures 12/31/2018 Contingency $ 498,900 $ 498,900 $ (498,900) $ - Interest $ 187,900 $ 107,150 Replacement HIP (2,286,638) $ (2,014,936) Replacement (routine) 9,086,639 929,412 $ (480,711) 7,436,602 995,401 (459,377) 6,064,840 9,585,539 1,117,312 (2,767,349) 7,935,502 1,102,551 (2,973,213) 6,064,840 Masonry Homes Contingency 337,412 (337,412) - - Interest 56,300 $ 35,300 Replacement HIP (809,367) (794,264) Replacement (routine) 2,638,389 736,604 (308,026) 2,313,900 776,381 (197,906) 2,133,411 2,975,801 792,904 (1,454,805) 2,313,900 811,681 (992,170) 2,133,411 Larger Homes Contingency 73,477 73,477 73,477 Interest 6,300 $ 2,990 Replacement HIP - Replacement (routine) 309,923 28,775 (102,039) 242,959 29,984 (142,054) 133,879 383,400 35,075 (102,039) 316,436 32,974 (142,054) 207,356 Summary Contingency 909,789 - (337,412) 572,377 - (498,900) 73,477 Interest 25,500 250,500 145,440 395,940 Replacement HIP - - (3,096,005) - - (2,809,200) Replacement (routine) 12,034,951 1,694,791 (890,776) 9,993,461 1,801,766 (799,337) 8,332,130 $ 12,944,740 $ 1,720,291 $ (4,324,193) $ 10,816,338 $ 1,947,206 $ (4,107,437) $ 8,801,547 Additions Interest $ 25,200 $ 14,560 Replacement HIP $ (363,600) $ (331,880) Replacement (routine) $ 1,222,469 170,000 $ (58,000) $ 996,069 190,880 $ (30,660) $ 838,969 $ 1,222,469 $ 195,200 $ (421,600) $ 996,069 $ 205,440 $ (362,540) $ 838,969 29