2016 budget presentation narrated version

Category: Education

Presentation Description

The Pointe at Crosswater Condominium Association Budget Presentation for Fiscal Year 2016.


Presentation Transcript


The Pointe at Crosswater Budget Presentation Year 2016


Budget Definition: A budget simply stated is an estimate of the income and expenses for a set period of time, in this case, for the calendar year 2016, also the fiscal year of our condominium association.


Budget Components: Income Beginning operating f und balance—amount in checking account Income—primarily from monthly assessments


Budget Components: Expenses Utilities—water and power Maintenance Administrative


Budget Components (continued) Summary of Expenses Chart Utilities—19% $59,200 Maintenance—59% $182,330 Admin—22 % $70,093 TOTAL EXPENSES: $311,623


Budgeting Components (continued) Maintenance Expenses TOTAL MAINTENANCE: $182,330 Fire Safety 11% Cost Sharing 10% Contingency 9 % Landscaping 60% Other 10%


Budgeting Components (continued) Administrative Expenses Morris Management 38% Insurance 44% Professional 10% Misc. 8 % TOTAL ADMINISTRATIVE: $70,093


Reserve or Replacement Fund Second part of a COA budget Condominium Associations are required to have a Reserve or Replacement Fund to cover future expenses for upkeep of physical assets Reserve studies are utilized to determine appropriate funding for the Reserve or Replacement Fund


Reserve Study Definition A Reserve Study is the art and science of anticipating, and preparing for an Association’s major common area repair and replacement expenses. Reserve Studies are performed by professional companies. Jeff Samdal & Associates has done our last 2 studies.


Why Do a Reserve Study? Since 2008, unless doing so would cause unreasonable hardship, reserve studies shall be performed and updated annually per state statute. RCW 64.34.380 Without a reserve study, at time of sale there must be a disclosure that there is risk to the purchaser. There may be a need for special assessments…etc.


Benefits of a Reserve Study Fulfills lender requirements Helps to maintain property’s value and appearance Establishes sound financial planning and budget direction Reduces the need for special assessments Fulfills fiduciary responsibility of Board of Directors


Reserve Study Types Level 1 or Full Study A “full” reserve study includes an on site visit to review the physical assets of the community, as well as a financial analysis to determine dollars needed to repair and maintain these physical assets 30 years into the future. A Level 1 “full” study was completed in fall of 2011, and again in 2013.


Reserve Study Types (continued) Level 3 Update Study A Level 3 update study simply updates the Level 1 site visit study with current information, both physical and financial. There is no site visit with a Level 3 update study. Typically performed annually for two years between Level 1 and Level 2 studies. A level 3 update study has just been completed.


Reserve Study Types (continued) Level 2 Update with Site V isit A Level 2 update study reviews current status of items presented in the Level 1 “full” study. An on-site visit is performed in a Level 2 update study. A Level 2 update study will be performed in 2016, typically every 3 years after the Level 1 study has been completed . A Level 2 update study is less costly.


Reserve Study Parts Physical Analysis Component Assessment and Valuation Quantity of each component Units of measure Cost per unit Remaining life Useful life Inflation factor of 3% annually


Component Assessment and Valuation Examples Roofing Asphalt Resurface 3 Foot Fence Replacement Quantity 2,450 92,800 3,600 Unit of Measure Squares (SQ) Square Feet Linear Feet Cost per Unit $350.00 $2.35 $18.00 Remaining Life 23 22 17 Useful Life 30 30 25 Replacement Cost $1,692,350.00 $506,771.00 $107,105.00


Reserve Study Parts Financial Analysis Current financial i nformation and funding plan Recommended reserve f unding plans—designed to immediately or gradually get to the financial position that all future expenditures will be fully funded


Financial Analysis Current Financial Information Reserve Fund (Replacement Fund) balance as of August 2015: $530,511 Reserve Fund Balance required for “full funding” at this time should be: $699,234 Currently 75.9% funded


Funding Percentage Discussion Full Funding (100%) means dollars would be available so no special assessments for maintaining the property will be necessary for the 30 year study period Partial Funding means there may (probably will) be a need for special assessments to pay for expenses of property upkeep


What Is a “Good” Level of Funding? ----- 75.9% The Pointe Funding Level 72% of condos in US are funded below a 70% level


Who Cares, Anyway? You—do you want large future special assessments? Potential buyers—would anyone want to purchase knowing there would be large special assessments? Lenders—FHA and other government lenders require funding at 60%


TOTAL BUDGET: Operating Expenses: $311,623 Reserve Fund: $153,650 TOTAL $465,273 Reserve Fund (Replacement Fund) as Part of Total Budget


2016 Budget Expense Changes Earthquake Insurance Current coverage with CAU Earthquake insurance costs, $3,500 annually as part of CAU package No longer part of package Now, estimate $19,500 annually ($14/month increase) Getting new bids Drop earthquake coverage?


2016 Budget Expense Changes Landscape Charge Changes


Landscape Charges History YEAR COMPANY AMOUNT 2008 Premier $65,000 2009 Premier $55,000 2010 Premier $71,676 2011 Premier $88,418 2012 NLS $45,717 2013 NLS $43,284 2014 NLS $63,000 2015 NLS $63,000 2016 ? ?


2016 Budget Expense Changes Landscape Charges NLS losing money on contract Major increase from $63,000 to $93,000 ($21+/month increase) to maintain the same level of service. To fulfill contract obligations, $102,000. Have solicited new proposals—nothing under $93,000


Assessment Increase History YEAR AMOUNT DOLLAR INCREASE 2008 $179 0 2009 $179 0 2010 $184 $5.00 2011 $189 $5.00 2012 $230 $41.00 2013 $230 0 2014 $265 $35.00 2015 $270 $5.00 TOTAL $91.00


Comparison of 2015 and 2016 Budgeted Operating Expenses


The Bottom Line! 2015 Monthly Assessment: $270 2016 Monthly Assessment: $305 Increase due to marked increase in operating expenses Reserve Fund contribution increase limited to 2% rather than 3% this year to lessen increase in monthly assessments

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