(A Colorado Non-Profit Corporation Financial Statements
Table of Contents INDEPENDENT AUDITOR'S REPORT 1-2 Basic Financial Statements: Balance Sheets 3 Statements of Revenues, Expenses and Changes in Fund Balances 4 Statements of Cash Flows 5 Page Notes to the Financial Statements 6-12 Supplementary Schedules: Schedule of Operating Revenues and Expenses - Budget and Actual 13-14 Supplementary Schedule of Community Capital Reserve Fund Future Repairs and Replacements 15-16 i
M & A McMahan and Associates, l.l.c. Certified Public Accountants and Consultants Web Site: www.mcmahancpa.com Chapel Square, Bldg C Main Office: (970) 845-8800 245 Chapel Place, Suite 300 Facsimile: (970) 845-8108 P.O. Box 5850, Avon, CO 81620 E-mail: mcmahan@mcmahancpa.com INDEPENDENT AUDITOR S REPORT To the Board of Directors The Keystone Neighbourhood Company, Inc. Keystone, Colorado Report on the Financial Statements We have audited the accompanying financial statements of The Keystone Neighbourhood Company, Inc., (the Company ), a Colorado non-profit corporation, which comprise the balance sheets as of December 31, 2013, and the related statements of revenues, expenses and changes in fund balances, and cash flows for the year then ended, and the related notes to the financial statements. The prior year summarized information has been derived from the Company s fiscal year 2012 financial statements and, in our report dated May 24, 2013; we expressed an unqualified opinion on those financial statements. Management s Responsibilities Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our audit opinion. Member: American Institute of Certified Public Accountants Paul J. Backes, CPA, CGMA Avon: (970) 845-8800 Michael N. Jenkins, CA, CPA, CGMA Aspen: (970) 544-3996 Daniel R. Cudahy, CPA, CGMA Frisco: (970) 668-3481 1
INDEPENDENT AUDITOR S REPORT To the Board of Directors The Keystone Neighbourhood Company, Inc. Keystone, Colorado Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Keystone Neighbourhood Company, Inc., as of, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The supplemental Operating Fund budgetary comparison schedule on pages 13 14 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of the Company s management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards. In our opinion, the information, except for that portion marked unaudited, on which we express no opinion, is fairly stated in all material respects in relation to the financial statements as a whole. Disclaimer of Opinion on Required Supplementary Information U.S. generally accepted accounting principles require that the Schedule of Future Major Repairs and Replacements on pages 15 16 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Financial Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with U.S. generally accepted auditing standards, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. McMahan and Associates, L.L.C. June 2, 2014 2
BASIC FINANCIAL STATEMENTS
Balance Sheets With Comparative Totals For the Year Ended 2012 2013 2012 Replacement Funds Community Community Capital Community Operating Facilities Reserve Improvements Fund Fund Fund Fund Total Total Assets: Current assets: Cash and cash equivalents 1,028,711 221 38,342 2,245 1,069,519 1,965,298 Investments 1,420,000 351,695 2,054,678 1,223,505 5,049,878 3,340,141 Accounts receivable, net of allowance for doubtful accounts 35,667 - - - 35,667 43,482 Prepaid expenses 38,295 - - - 38,295 32,249 Inventory 36,612 - - - 36,612 19,424 Due (to) from other fund (2,338,692) 439,929 1,125,578 773,185 - - Total Current Assets 220,593 791,845 3,218,598 1,998,935 6,229,971 5,400,594 Fixed assets: Equipment 314,981 - - - 314,981 263,138 Tenant improvements 187,607 - - - 187,607 187,607 Less: Accumulated depreciation (304,589) - - - (304,589) (269,173) Net Fixed Assets 197,999 - - - 197,999 181,572 Total Assets 418,592 791,845 3,218,598 1,998,935 6,427,970 5,582,166 Liabilities and Fund Equity: Current liabilities: Accounts payable 126,061 - - - 126,061 109,223 Prepaid assessments - - - - - 4,285 Other payable 52,748 - - - 52,748 49,253 Deposits 187,783 - - - 187,783 114,075 Note Payable: Current - - - - - 1,815 Total Current Liabilities 366,592 - - - 366,592 278,651 Total Liabilities 366,592 - - - 366,592 284,329 Fund equity: Fund balances 52,000 791,845 3,218,598 1,998,935 6,061,378 5,297,837 Total Fund Equity 52,000 791,845 3,218,598 1,998,935 6,061,378 5,297,837 Total Liabilities and Fund Equity 418,592 791,845 3,218,598 1,998,935 6,427,970 5,582,166 The accompanying notes are an integral part of these financial statements. 3
Statements of Revenues, Expenses and Changes in Fund Balances For the Year Ended (With Comparative Totals For the Year Ended 2012) 2013 2012 Replacement Funds Community Community Capital Community Operating Facilities Reserve Improvements Fund Fund Fund Fund Total Total Revenues: Real estate assessments 768,924 175,107 650,000 157,034 1,751,065 1,351,835 Real estate transfer assessments 652,410 - - - 652,410 663,392 Sales assessments 151,687 - - - 151,687 115,803 Recreation assessments 17,133 - - - 17,133 13,565 Event revenue and sponsorships 300,150 - - - 300,150 257,340 Warren Station 164,823 - - - 164,823 147,194 Interest income 343 105 240 177 865 5,060 Commercial trash 152,812 - - - 152,812 148,353 Other 74,134 - - - 74,134 52,214 Total Revenues 2,282,416 175,212 650,240 157,211 3,265,079 2,754,756 Expenses: General and administrative 449,310 46 356 247 449,959 432,714 Depreciation 35,416 - - - 35,416 41,478 Security 94,369 - - - 94,369 92,554 Road snow removal and maintenance 151,205-68,230-219,435 182,322 Plaza snow and litter removal 481,378 - - - 481,378 463,151 Common area maintenance 253,208-93,722 48,950 395,880 357,302 Pool maintenance 74,520-15,820-90,340 118,260 Community events 662,380 - - - 662,380 591,098 Other capital projects - - 43,751-43,751 69,084 Other 28,630 - - - 28,630 13,894 Total Expenses 2,230,416 46 221,879 49,197 2,501,538 2,361,857 Excess (Deficiency) of Revenues Over Expenses 52,000 175,166 428,361 108,014 763,541 392,899 Fund Balances - Beginning of Year - 616,679 2,790,237 1,890,921 5,297,837 4,904,938 Fund Balances - End of Year 52,000 791,845 3,218,598 1,998,935 6,061,378 5,297,837 The accompanying notes are an integral part of these financial statements. 4
Statements of Cash Flows For the Year Ended (With Comparative Totals For the Year Ended 2012) 2013 2012 Replacement Funds Community Community Capital Community Operating Facilities Reserve Improvements Fund Fund Fund Fund Total Total Cash Flows From Operating Activities: Cash received from members and others 1,667,392 175,107 650,000 157,034 2,649,533 2,110,349 Other cash received 691,919 - - - 691,919 605,101 Interest received 343 105 240 177 865 5,060 Cash paid for goods and services (1,265,346) (46) (221,879) (49,197) (1,536,468) (1,417,455) Interest paid (333) - - - (333) (65) Cash paid for salaries and benefits (932,222) - - - (932,222) (843,685) Transfers 324,891 (39,960) (157,087) (127,844) - - Net Cash Provided (Used) by Operating Activities 486,644 135,206 271,274 (19,830) 873,294 459,305 Cash Flows From Financing Activities: Loan proceeds - - - - - 7,787 Principal payments (7,493) - - - (7,493) (294) Net Cash Provided (Used) by Financing Activities (7,493) - - - (7,493) 7,493 Cash Flows From Investing Activities: Cash payments for purchase of fixed assets (51,843) - - - (51,843) (37,787) Sale of investments 2,723,496 216,645 3,455,168 2,010,715 8,406,024 4,289,709 Purchase of investments (3,170,000) (351,695) (4,109,846) (2,484,220) (10,115,761) (6,638,644) Net Cash Provided (Used) by Investing Activities (498,347) (135,050) (654,678) (473,505) (1,761,580) (2,386,722) Net Increase (Decrease) in Cash (19,196) 156 (383,404) (493,335) (895,779) (1,919,924) Cash - Beginning of Year 1,047,907 65 421,746 495,580 1,965,298 3,885,222 Cash - End of Year 1,028,711 221 38,342 2,245 1,069,519 1,965,298 Reconciliation of Excess (Deficiency) of Revenues Over Expenses to Net Cash Provided (Used) by Operating Activities: Excess (deficiency) of revenues over expenses 52,000 175,166 428,361 108,014 763,541 392,899 Adjustments: Depreciation 35,416 - - - 35,416 41,478 (Increase) decrease in accounts receivable 7,815 - - - 7,815 (30,175) (Increase) decrease in prepaid expenses (6,046) - - - (6,046) 10,307 (Increase) decrease in inventory (17,188) - - - (17,188) (399) Increase (decrease) in accounts payable 16,838 - - - 16,838 36,671 Increase (decrease) in other payable 3,495 - - - 3,495 12,597 Increase (decrease) in prepaid assessments (4,285) - - - (4,285) 4,285 Increase (decrease) in deposits 73,708 - - - 73,708 (8,358) Increase (decrease) in due to/from other funds 324,891 (39,960) (157,087) (127,844) - - Total Adjustments 434,644 (39,960) (157,087) (127,844) 109,753 66,406 Net Cash Provided (Used) by Operating Activities 486,644 135,206 271,274 (19,830) 873,294 459,305 The accompanying notes are an integral part of these financial statements. 5
NOTES TO THE FINANCIAL STATEMENTS
Notes to the Financial Statements 1. Organization The Keystone Neighbourhood Company, Inc. (the Company ), a Colorado non-profit corporation, is the owners association for a large planned community located in Summit County, Colorado. The Neighbourhoods at Keystone was created by Keystone/Intrawest, L.L.C., (the Declarant ) pursuant to the Colorado Common Interest Ownership Act on November 30, 1995. During the year ended December 31, 2003, the Declarant changed to Vail Summit Resorts, Inc. The Company s purposes are (1) to acquire, own, lease and manage the common elements; (2) to provide facilities and services to owners, guests and general public; (3) to administer and enforce the covenants, conditions, restrictions, reservations and easements created by the Declaration of Covenants, Conditions and Restrictions for The Neighbourhoods at Keystone (the Declaration ); (4) to levy, collect and enforce the assessments imposed by the Declaration; (5) to promote the Neighbourhoods at Keystone as a four season destination resort community; (6) to maintain and enhance property values; (7) to take any action it deems necessary to protect the general welfare of owners, guests and general public; (8) to enter into agreements with respect to the foregoing; and (9) to regulate and manage the Neighbourhoods at Keystone. The membership in the Company is comprised of every owner of property within the boundaries of The Neighbourhoods at Keystone. There are five classes of members; residential, commercial, lodges, resort parcel and undeveloped land. The operations of the Company are managed by an executive board of nine directors; this executive board is comprised of three residential directors, two commercial directors, one lodging director, one resort director and two at large directors. The Declarant has control and has exclusive rights to appoint and remove all Declarant appointed officers and directors during the Declarant control period. The Declarant control period ends when (1) 75 percent of the maximum number of equivalent units are allocated to the Neighbourhood at Keystone under the zoning therefore; (2) six years after the last conveyance of a site by the Declarant to a purchaser; or (3) twenty years after the date the Declaration was recorded in the Summit County records, whichever occurs first. The Declarant may voluntarily surrender its rights as Declarant. As of, the Company is still under Declarant control as defined by the Company s Declarations. Management anticipates control to transition from the Declarant to the Company in 2015. 2. Summary of Significant Accounting Policies A. Fund Accounting The Company uses the fund method of accounting, which requires that funds, such as operating funds, funds for future major repairs, replacements and capital expenditures, and funds collected for specially designated purposes, be classified separately for accounting and reporting purposes. B. Basis of Accounting The financial statements have been prepared using the accrual method of accounting, which recognizes revenues when earned or assessed and expenses when incurred. C. Cash Equivalents Checking, money market savings, and money market fund accounts are considered cash equivalents by the Company for the purpose of the Statements of Cash Flows since these accounts have no stated maturities. 6
Notes to the Financial Statements (Continued) 2. Summary of Significant Accounting Policies (continued) D. Investments The Company invests certain excess funds in certificates of deposit and United States treasuries. Because these securities are intended to fund future Replacement Fund expenditures and may provide a ready source of cash when so required, these investments are classified as trading. Accordingly, these securities are reported on the financial statements at fair value and all realized and unrealized gains and losses are included in current period earnings. E. Recognition of Assets Real and personal common property acquired by the original homeowners is not recognized on the financial statements of the Company because it is commonly owned by individual owners and its disposition by the Board is restricted. The Company recognizes as assets on its financial statements only common real and personal property to which it has title and that it can dispose of for cash, while retaining the proceeds thereto. Such assets are recorded at cost. Equipment owned by the Company is depreciated on the straight-line method over estimated useful lives ranging from five to seven years, while tenant improvements are depreciated over a twenty year useful life. For the year ended, fixed assets were comprised of the following: Beginning Ending Balance Additions Deletions Balance Fixed assets: Equipment $ 263,138 51,843-314,981 Tenant improvements 187,607 - - 187,607 Total fixed assets 450,745 51,843-502,588 Less: Accumulated depreciation (269,173) (35,416) - (304,589) Total fixed assets, net $ 181,572 16,427-197,999 F. Allowance for Uncollectible Accounts The Company uses the allowance method for recognizing the future potential uncollectibility of accounts receivable. This reserve is generally calculated based on the estimated uncollectible accounts 90 or more days overdue. At, the Company considered all amounts collectible; therefore, no allowance was established to estimate uncollectible balances. The Company s policy is to charge late fees to owner accounts that are 61 or more days overdue. G. Due To/From Other Funds The Company has chosen to record all accounts receivable and accounts payable in the Operating Fund. In accordance with generally accepted accounting principles, the differences in the individual funds caused by this accounting policy results in interfund asset and liability accounts on the financial statements. 7
Notes to the Financial Statements (Continued) 2. Summary of Significant Accounting Policies (continued) H. Inventory Inventory is stated at cost, which approximates market value, utilizing the first-in, first-out method. I. Investment Income Investment income is allocated among funds based on average fund balances. J. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. K. Comparative Information The financial statements include certain prior year comparative information in total but not by fund. Such information does not include sufficient detail to constitute a presentation in conformity to generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Company s financial statements for the year ended December 31, 2012, from which the comparative totals were derived. Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year s presentation. L. Subsequent Events Management has evaluated subsequent events through June 2, 2014, the date these financial statements were available to be issued. M. Income Taxes 3. Investments While the Company has been organized under Colorado non-profit statutes as a corporation without capital stock or shareholders, the Company is not a tax-exempt organization. Consequently, the Company is subject to Federal and state income taxes on net income derived from investments and other non-membership sources. The income tax returns of the Company are subject to examination by the Internal Revenue Service and the Colorado Department of Revenue. The Company s returns are no longer subject to examination for tax years prior to 2010 by the Internal Revenue Service and for tax years prior to 2009 by the Colorado Department of Revenue. Certificates of deposit: Bearing interest at 0.01% - 0.04% per annum, maturing in 2014 $ 5,049,878 Total investments $ 5,049,878 8
Notes to the Financial Statements (Continued) 4. Assessments and Common Expenses The Board prepares an annual budget to estimate the annual expenses of maintaining the Company s common elements. Since the Company is designed only to operate as a conduit to collect assessments and pay operating expenses on behalf of members, any excess or deficiency of revenues over expenses is repaid to or recovered from the members in a subsequent year by reducing or increasing assessments, or, with the approval of the Company s membership, transferred to the Replacement Funds. The Declaration empowers the Company to levy the following assessments to defray the costs of operations and to provide for future major repairs, replacements and improvements. A. Annual Real Estate Assessment Owners property is subject to an annual real estate assessment, of which 10 percent shall be deemed to be contributions of capital to be placed in a Community Facilities Fund for use to construct and/or finance community development projects. The Annual Real Estate Assessment is calculated by taking the assessed value of real property (determined by Summit County Colorado Assessor s Office) and multiplying this by the 2013 rate of 40.4 mills. B. Sales and Recreation Assessments The Company also collects sales and recreational assessments on all local sales and operations of recreational activities at the rate of 1/2 of 1 percent. C. Real Estate Transfer Assessment The occurrence of any transfer of property within the boundaries of the Company is subject to a real estate transfer assessment at 2 percent of the sales price or transfer at fair market value. D. Special Assessments The Company has the right to assess special assessments in the event there is a budget deficit. No special assessments were levied in 2013. 5. Related Party Transactions Effective January 1, 2011, the Company signed an agreement with Vail Summit Resorts, Inc. ( Declarant ) to provide the Company with security. The initial term was for one year with renewal for subsequent one-year terms upon mutual written agreement. Additionally, effective August 19 th, 2011 the Company has entered into an agreement with Vail Summit Resorts, Inc. in which the Company will not request conveyance of the Dercum Square Property for twenty years except under certain conditions after fifteen years. Such conveyance to the Company is allowed by the Keystone Resort Planned Unit Development ( PUD ) for conditions as noted in the PUD. This agreement has been entered into in order to facilitate the Declarant s construction and operation of an ice rink at the site which is agreed will be a benefit to both parties. Six of the nine members of the Board of Directors are appointed by the Declarant. 9
Notes to the Financial Statements (Continued) 5. Related Party Transactions (continued) The Company paid the following expenses in 2013 for services provided from the Declarant and/or its related companies: Security $ 94,369 Common area maintenance 50,840 Plaza maintenance and utilities 15,833 Pool labor and maintenance 11,317 Office expense 5,213 Rent 40,734 Warren Station events 9,039 Total $ 227,345 At, the Company owed the Declarant $11,419. The Company received assessments and other various revenues from the Declarant and/or its related companies in 2013 totaling $648,548, which comprised approximately 20% of the Company s fiscal year 2013 revenues. At, the Declarant and/or its related companies owed the Company $19,132. 6. Replacement Funds The Company has established replacement funds to comply with the Declaration and to provide funds for future capital projects and major repairs and replacements. The following replacement funds have been established: The Community Facilities Fund was established in accordance with the provisions of the Declaration which requires that 10 percent of the real estate assessments be put into this fund for the purpose of facilitating the construction and financing of community facilities. The Capital Reserve Fund was established by the Company to repair and replace existing capital improvements and to support any other project that the Company decides is a capital project priority. The Community Improvements Fund was established to fund improvements for the community that are not major facilities (i.e. buildings). These could include playgrounds, public furniture, fire pits, outdoor amphitheaters, information kiosks, lights/stage/sound systems, trails, signage, parks and other community improvements. 10
Notes to the Financial Statements (Continued) 7. Future Major Repairs and Replacement Reserve The Company s governing documents allow for the accumulation of funds for future major repairs and replacements. Accumulated funds are held in separate accounts and generally are not available for expenditures for normal operations. For 2013, the Company did not levy any specific assessment to fund Replacement Fund expenses; rather, such expenses were funded from accumulated fund balances and from allocations of annual real estate assessments from the Operating Fund. In accordance with industry guidelines, it is the Company's primary duty to maintain and preserve the common property of the owners. Therefore, it is the Company's responsibility to determine a method for funding the costs of future major repairs and maintenance by assessing owners when funds are needed or by anticipating costs over extended time periods, assessing owners for the anticipated costs, and accumulating funds in reserves to meet the future funding requirements. During the fiscal year ended December 31, 2009, the Company commissioned a study to estimate the remaining useful lives and the replacement costs of the components of common property. The study assumes a 5.00% rate of inflation, a 3.10% increase in reserve fund allocations, and a 3.00% return on investments. The table included in the unaudited supplementary information on future major repairs and replacements is based on the study. The Company is funding for major repairs and replacements over the remaining useful lives of the components based on the study s estimates of current replacement costs and consideration of amounts previously accumulated in the reserve funds. Funds are being accumulated in the reserve funds based on estimates of future needs for repairs, replacements and new additions to common property components. Actual expenditures may vary from the estimated future expenditures, and the variations may be material. Therefore, amounts accumulated in the reserve funds may not be adequate to meet all future needs for major repairs and replacements. If additional funds are needed, the Company has the right, subject to the Board s approval, to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available. 8. Concentrations The Company s revenues for real estate transfer assessments, sales assessments and recreation assessments are materially produced as a result of the sales of real estate and the leasing of commercial real estate units by the Declarant, or its related parties. 9. Retirement Plan On January 1, 1998, the Company established a SIMPLE Retirement Plan for employees who have worked for the Company during any one prior year and received at least $5,000 in compensation during such prior year. The Company is required to make a matching contribution not in excess of 3% of an employee s compensation and not to exceed $6,000. Each employee s account is 100% vested immediately and non-forfeitable at all times. For the year ended, the Company contributed $5,920 to employees who were eligible and participated in the plan. 11
Notes to the Financial Statements (Continued) 10. Operating Lease Office Space The Company leases office space under an operating lease agreement with Vail Summit Resorts, Inc. The lease calls for monthly rentals, with annual escalations through expiry in February 2015. In addition to base rent, the Company is responsible for its allocated share of taxes, common area charges, and other operating costs related to this space. Rent for the year ended December 31, 2013 was $42,528. Future minimum rental payments (base rent) due under terms of the Company s operating lease at are as follows: 11. Note Payable Minimum Rental Year Payments 2014 25,500 2015 4,250 Total $ 29,750 The Company entered into a loan agreement with Ford Credit for the purchase of a vehicle on October 31, 2013. The loan had an initial balance of $7,787 and an interest rate of 4.99%. The note requires monthly payments until maturity on October 15, 2016. During 2013, the Company paid the balance of the loan in full. 12. Operating Fund Balance The Association had an operating fund balance of $52,000 at. In 2013 the Association had Real Estate Transfer Assessments collected in excess of budget. On March 13, 2014 the board approved reducing the 2014 Annual Real Estate Assessments by $52,000. It is anticipated the operating fund balance will be utilized in 2014 to reflect this reduction in Annual Real Estate Assessments. 12
SUPPLEMENTARY SCHEDULES
Schedule of Operating Revenues and Expenses Budget (Non-GAAP Basis) and Actual With Reconciliation to GAAP Basis For the Year Ended (With Comparative Actual Amounts For the Year Ended 2012) 2013 2012 Variance Budget Positive (Unaudited) Actual (Negative) Actual Revenues: Real estate assessments 1,745,093 1,751,065 5,972 1,351,835 Less: Allocation to reserve funds (824,509) (982,141) (157,632) (667,363) Real estate transfer assessments 470,000 652,410 182,410 663,392 Sales assessments 121,500 151,687 30,187 115,803 Recreation assessments 12,000 17,133 5,133 13,565 Event revenue and sponsorships 263,700 300,150 36,450 257,340 Warren Station 133,200 164,823 31,623 147,194 Interest income 1,060 343 (717) 1,119 Commercial trash 154,488 152,812 (1,676) 148,353 Other 23,800 74,134 50,334 52,214 Total Revenues 2,100,332 2,282,416 182,084 2,083,452 Expenses: General and administrative: Payroll and benefits 247,136 243,209 3,927 235,036 Audit and tax preparation 15,250 15,570 (320) 15,250 Legal 16,500 24,153 (7,653) 17,891 Insurance 51,350 54,853 (3,503) 54,431 Income taxes 2,849-2,849 895 Bad debt expense 5,000 465 4,535 - Office expense 121,685 111,060 10,625 108,634 Total general and administrative 459,770 449,310 10,460 432,137 Security: Commercial & residential 95,550 94,369 1,181 92,554 Total security 95,550 94,369 1,181 92,554 Road snow removal and maintenance: Snow removal and hauling 82,000 50,386 31,614 61,072 Trail Head Drive utilities 119,000 100,434 18,566 87,735 Road repairs 1,700 385 1,315 1,067 Total road snow removal and maintenance 202,700 151,205 51,495 149,874 Plaza snow and litter removal: Commercial trash 43,260 35,137 8,123 36,650 Labor 436,005 407,939 28,066 396,319 Machine time/service 16,000 20,179 (4,179) 17,830 Snowmelt utilities 21,000 18,124 2,876 12,351 Total plaza snow and litter removal 516,265 481,379 34,886 463,150 (continued) The accompanying notes are an integral part of these financial statements. 13
Schedule of Operating Revenues and Expenses Budget (Non-GAAP Basis) and Actual With Reconciliation to GAAP Basis For the Year Ended (With Comparative Actual Amounts For the Year Ended 2012) (Continued) 2013 2012 Variance Budget Positive (Unaudited) Actual (Negative) Actual Expenses (continued): Common area maintenance: Plaza maintenance 65,440 52,674 12,766 56,865 Plaza utilities 50,000 57,784 (7,784) 41,686 Restroom cleaning 42,000 56,120 (14,120) 42,948 Signage 500 1,247 (747) 523 Summer landscaping 80,953 85,383 (4,430) 73,937 Total common area maintenance 238,893 253,208 (14,315) 215,959 Pool maintenance: Restroom cleaning 4,700 3,937 763 3,978 Chemicals 17,500 20,914 (3,414) 16,309 Utilities 33,000 33,990 (990) 29,274 Maintenance and repair 16,600 15,678 922 29,267 Total pool maintenance 71,800 74,519 (2,719) 78,828 Community events: Community events 385,275 398,174 (12,899) 356,928 Weddings 24,500 18,984 5,516 15,600 Warren Station 219,441 245,222 (25,781) 218,571 Total community events 629,216 662,380 (33,164) 591,099 Design review, transit and other: Design review 6,040 28,630 (22,590) 13,894 Depreciation 42,000 35,416 6,584 41,478 Total Expenses 2,262,234 2,230,416 31,818 2,078,973 The accompanying notes are an integral part of these financial statements. 14
Supplementary Schedule of Community Capital Reserve Fund Future Repairs and Replacements (Unaudited) During fiscal year 2009, the Association's Board of Directors commissioned a study by independent reserve study engineers to estimate the remaining useful lives and the replacement costs of components of common property. The study projected fund balance, but did not allocate fund balance between the individual reserve study items, nor has the Board elected to allocate fund balance between the components of common property. The following table is based on the study and presents significant information about the components of the Association's common property. Estimated Estimated Remaining Current Useful Lives Replacement Components (Years) Cost Exterior furnishings 0-12 187,958 Common area lighting 0-22 521,765 Cloth banners 0-1 20,001 Holiday decorations 0 20,000 Flag poles 12-17 18,000 Mail kiosk 0-17 9,860 Asphalt paving 0-5 458,623 Concrete paving 12-17 1,027,120 Brick pavers 0-22 518,130 Drive bridges 0-22 386,060 Parking lot 0-1 19,832 Concrete curbs & gutters 0 356,260 Concrete flatwork & steps 0-7 478,206 Common area walkways 0-17 1,875,127 Foot bridges 0-7 82,199 Fencing 4-17 148,350 Hand rails 0-17 67,860 Retaining walls 5-17 337,500 Common area signage 0-12 137,600 Steel bollards 0 4,700 Bus shelters 0-7 21,600 Subtotal 6,696,751 (continued) The accompanying notes are an integral part of these financial statements. 15
Supplementary Schedule of Community Capital Reserve Fund Future Repairs and Replacements (Unaudited) (Continued) Estimated Estimated Remaining Current Useful Lives Replacement Components (Years) Cost Planter walls 2-12 177,990 Stone veneer 17 126,000 Fountains 0 11,800 Landscape plantings 0 1,500 Irrigation 0-3 76,300 Statues 1-22 88,000 Information center 0-22 240,810 Recreation areas 0-22 146,770 Amphitheatre 0-12 79,631 Maintenance building 0-7 113,200 Pool and spas 0-17 126,500 Recycling enclosure 0-9 2,700 Public restrooms 0-3 40,000 Performance center 0-12 249,522 Event tables and chairs 1-5 22,282 Sprinkler systems 0-4 13,000 Snow melt systems 2-7 637,900 Storage yard (water) 1-15 18,710 Trash enclosures 1-17 18,215 KNC office 2 10,000 Maintenance equipment 0-10 197,747 Subtotal 2,398,577 Total Current Replacement Cost 9,095,328 Projected Fund Balance at year end. 4,584,144 Actual Fund Balance at year end 3,218,598 The accompanying notes are an integral part of these financial statements. 16