draft budget 2022
TRANSCRIPT
October 13, 2021 Town Hall
Draft Budget 2022
The Project Funding
Questions
Agenda
2
Master Assessment (exclusive of the Reserve Assessment & Capital Project Fees) will
increase 2.9%
Reserve funding will increase 24%
The Capital Project Fund fees will be included in quarterly assessments in 2022 and
increase 3%
Curtailed F & B operations April – December 2022
Will utilize food trucks, BBQ’s, mobile bar, the newly constructed lakeside pavilion area,
and the tennis center.
Much remains to be flushed out as we get closer to the shutdown.
2022 DRAFT Budget Summary
Revenue
Fav/
Home sales activity very strong. Expect slowdown due to
lack of inventory.
The Project Funding 786,199 11% 0 0% 786,199 Resale, amenity, & Capital Fund fees not in budget.
Reserve Inc. & Interest 446,826 6% 452,000 7% (5,174) Lower interest revenue.
Food & Beverage 1,018,825 14% 820,000 13% 198,825 Slow start; however, strong activity in Q2 and soft budget.
Boat Slips 104,716 1% 95,000 2% 9,716 As planned.
Other 148,503 2% 125,350 2% 23,153 As planned.
Total Revenue 7,366,150 100% 6,271,917 100% 1,094,233 Resale Fees and Food & Beverage driving increase.
2021 2021
Forecast Budget
Expenses
Fav/
Expenses
Cost of Sales - Food & Bev. 477,089 47% 348,800 43% (128,289) Higher cost of sales % due to closures and cost escalation.
Salaries & Benefits 1,911,659 26% 1,791,510 29% (120,150) Incr. due to new Admin. position and salary adjustments.
Administration 341,047 5% 279,400 4% (61,647) Legal, admin, & computer support unfav. to plan.
Insurance 109,463 1% 110,000 2% 537 As planned.
Utilities 237,883 3% 232,800 4% (5,083) As planned.
Contracts 1,885,783 26% 1,942,422 31% 56,639
Favorable landscaping, no price increase and scaled back
at Beach Club. No pressure washing of sidewalks.
Repairs, Maint. & Projects 1,131,318 15% 1,114,985 18% (16,333) As planned.
Reserve Transfers & Int. 446,826 6% 452,000 7% 5,174 Lower interest revenue.
The Project Transfers 786,199 0 0% (786,199) Expense equals the revenue and funds The Project.
Total Operating Expenses 7,327,267 99% 6,271,917 100% (1,055,350) A result of The Project and higher food & beverage sales.
Prior Year Expenses 12,896 0% - 0% (12,896)
Net Inc./(Loss) before Dep'n 25,987 0% 0 0% 25,987 Will end year slightly above breakeven.
5
Revenue
6
Fav/
Master increase of 2.6%, total master & neighborhood
increase of 2.9% excluding Reserve and The Project.
Resale Fees - $3,000 172,500 2% 234,000 3% (61,500) Budgeting historical level of resales for 2022.
The Project Funding 862,250 12% 786,199 11% 76,051
Includes 3% increase on Capital Project Fund fees plus full
year of activity for resale and amenity fees.
Reserve Inc. & Interest 555,040 8% 446,826 6% 108,214 Following Reserve Study.
Food & Beverage 455,900 7% 1,018,825 14% (562,925) Curtailed operations during construction period.
Boat Slips 105,000 2% 104,716 1% 284 No changes in fee structure.
Other 91,320 1% 148,503 2% (57,183) Reduced surplus rollover by $55,000.
Total Revenue 6,991,481 100% 7,366,150 100% (374,669)
2022 2021
Budget Forecast
Expenses
Fav/
7
Expenses
Cost of Sales - Food & Bev. 212,235 47% 477,089 47% 264,854 Curtailed operations during construction period.
Salaries & Benefits 1,600,046 23% 1,911,659 26% 311,613 Smaller staff during closure period.
Administration 303,000 4% 341,047 5% 38,047 Reduced legal expenses.
Insurance 120,000 2% 109,463 1% (10,537) Planning for approx. 10% increase.
Utilities 218,200 3% 237,883 3% 19,683 Lower costs due to closure period.
Contracts 1,918,910 27% 1,885,783 26% (33,127)
Incr. due to full pressure washing of sidewalks, curbs &
gutters.
Repairs, Maint. & Projects 1,201,800 17% 1,131,318 15% (70,482) Replace china & silverware plus increase tree trimming.
Reserve Transfers & Int. 555,040 8% 446,826 6% (108,214) Following Reserve Study.
The Project Transfers 862,250 786,199 11% (76,051) Per The Project funding plan & full year of activity.
Total Operating Expenses 6,991,481 100% 7,327,267 99% 335,786
Prior Year Expenses - 0% 12,896 0% 12,896
Net Inc./(Loss) before Dep'n 0 0% 25,987 0% (25,987) Always budget breakeven performance.
The Project – Revenue vs. Financing Plan
8
Capital Project Fund Fee
$695,250 $675,000 $250 per homeowner due May 1, July 1 & Oct 1, 2021. $193 included with quarterly assessments in 2022, ($773 annually).
Capital Project Resale Fee
$125,000 $92,500 $2,500 per home Resale Fee. Only 9 months of activity in 2021.
New Homeowner Amenity Fee
$42,000 $17,180 $600 per home sale prorated on portion of year. Only 9 months of activity in 2021.
Total Revenue $862,250 $784,680 Off to a good start although home sales will slow down due to a lack of inventory.
• 2021 includes 9 months of activity for Resale Fees and Amenity Fees. • 2022 Capital Project Resale Fees budgeted conservatively and assumes 50 home sales.
9
2022 Quarterly Master Assessments Rounded 1,382.00$ 1,382.00$ 1,382.00$ 1,382.00$
2022 Quarterly Neighborhood Assess. Rounded 435.00$ 668.00$ -$ -$
2022 Total Quarterly Assessments Rounded 1,817.00$ 2,050.00$ 1,382.00$ 1,382.00$
2021 Actual Assessments - Rounded
2021 Quarterly Neighborhood Assessments 432.00$ 452.00$ -$ -$
2021 Total Quarterly Assessments 1,562.00$ 1,582.00$ 1,130.00$ 1,130.00$
Quarterly Change in Master Assessments 252.00$ 252.00$ 252.00$ 252.00$
Quarterly Change in Total Assessments 255.00$ 468.00$ 252.00$ 252.00$
% Change in Master Assessments 22.3% 22.3% 22.3% 22.3%
% Change in Total Assessments 16.3% 29.6% 22.3% 22.3%
Coupon Book Amount
Coupon Book Amount
Base quarterly Master Assessment $1,035 $1,006 2.9%
Reserve portion of quarterly Master Assessment $154 $124 24.0%
Subtotal $1,189 $1,130 5.2%
All in Master Assessment $1,382 $1,317 4.9%
In 2021, the quarterly master portion of the coupon amount was $1,130 and the annual Capital Project Fund Fee of $750, ($187.50 per quarter to compare on an
apples-to-apples basis), was paid separately. In 2022, this fee will be incorporated into the assessment.
11
Assessment excludes special assessments and reserves.
Increase of approx. 3% for most recent 3 years incl. proposed 2022 budget.
Assessment Annual Increases – All Doors
11.4%
13.6%
8.7%
Assessments Excl. Reserves
2018 & 2019 had the same contributions - $260,000.
Have been following the 2020 Reserve Study recommendations.
Reserve Assessment Annual Increases
Reserve Assessments
13
Excludes special assessments and The Project.
Total increased approx. 4.5% for most recent 3 years incl. proposed 2022 budget
Total Assessment Annual Increases
Total Assessments Incl. Reserves
Reserve Study Results – May 2020 Recommended Reserve Funding Table
Still in catch up mode. In 2023, contributions will level off to approx. a 2% increase per annum per the current study. In 2024 we will follow the
recommendations of an updated study taking into account The Project. 14
Reserve Fund Balances vs Requirements Through 2025
15
annual increases • An updated Reserve
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Reserve Fund Balances & Requirements
Reserve Fund Stagnant
16
Contributions
Expenditures
Balances
Plus: Est. 2021 contributions 447,000
Less: Est. 2021 spending (paving, sidewalks) (151,000)
Est. Reserve balance at end of 2021 1,053,000
Plus: Reserve contributions for 2022 555,000
Less: Spending for 2022 (0)
Est. Reserve fund balance at end of 2022 1,608,000
Target reserve fund balance at end of 2022 1,424,000
Reserve Funding ($’s)
Fund @ $46,083 per month - $553,000 for 2022 (plus interest). No spending in 2022 in lieu
of The Project, other than emergencies.17
Special Assessments (S/A) as of Aug. 2021 ($’s)
18
Revenue
Roof S/A was over-funded and monies were transferred to
Limestone Trail. Potential to recover $213K of roof payments based
on insurance claim.
Legal 333,953 72,919 Best guess due to combined billings, etc.
Engineering - 122,953
Est. Future Expenses 5,000 60,000
Projected Surpus/(Deficit) 2,037 (102,984) Deficit for Limestone Trail will be covered from litigation proceeds.
These two accounts will be closed out this year!
Pulte Litigation Settlement – Funded Projects
19
Projects Comments
Repair stone fascia on exterior of three bridges Assessing best solution, paint or reface
Install permanent boat ramp Soliciting bids
Address common area landscaping
Repair drainage and irrigation system around Beach Club Significant deficiencies uncovered
Replace plants around Beach Club
Fund rear gate access control fencing project Will require transponder for pedestrian traffic
Provide lightning protection for main irrigation pumps Avoids ongoing pump repairs
Fund Limestone Trail costs in excess of assessment Project underway
These projects will consume most of the litigation proceeds while addressing the deficiencies outlined in the lawsuit.
Currently mulch is applied during the January/February period each year
The community has asked if the mulch application could be moved from January to the Fall as is
done by most communities.
The preferred time to apply mulch is in late Fall, (after the rainy season).
Moving mulching to the Fall season would require two applications in the transition year
resulting in an additional $300K charge to the community
The Quarry will not apply mulch in January of 2022 but instead hold off until the Fall of
2022 making 2022 the transition year. Due to construction activity, mulch would not be applied to the Beach Club area this year
Best opportunity to make this change
A program will be developed whereby single-family homeowners can have mulch applied
in the Fall of ‘21.
Details not finalized yet
This will be a separate, OPTIONAL, transaction between homeowners and our landscape
company
Mulch
20
Common areas and single-family homes to be a three-term agreement
with the first term ending on December 31, 2023, and an annual
renewal for next two years with an optional 4th term
The Beach Club will begin on January 1, 2023, for three consecutive
annual terms with an optional 4th year
Requests for Proposals (RFP’s) will be sent out to bid in January to
approx. 8 companies that have expressed interest with a return date of
March 1, 2022, and awarded on April 1, 2022
We have engaged an industry expert to work with the Landscaping
Committee to develop the RFP’s
Landscaping
21
The Quarry policy Assessments are due on the 1st of each quarter
Grace period is provided until the 15th of the month due
Collection letters are mailed 16 days after the due date
Quarterly Assessment Due Dates
Association as has been the case in previous
years.
$1,919,000 $1,886,000 $1,942,000
surface area - $15K
changes.
$303,000 $341,000 $279,000
liquor license, CDD support, The Project) - $32K
• Lifestyle expense, $14K, credit card fees, $9K, strategic
planning, $5K, and bad debts, $4K
• Offset by increases in computer/web support, $15K, staff
training $16K, and minor other changes.
2022 Budget 2021 Forecast 2021 Budget
$1,600,000 $1,912,000 $1,792,000
• Curtailed operations for most of the year
• Reduction in FSR burden rate, $60K, partially offset by an
increase in FSR management fees in Administration - $20K
2022 Budget 2021 Forecast 2021 Budget
$1,202,000 $1,130,000 $1,115,000
• Gate repairs - $11K
• Offset by increases in china, glass, & silverware, $64K,
contingency $12K, maintenance $7K and minor other changes.
QUESTIONS
27
Draft Budget 2022
The Project Funding
Questions
Agenda
2
Master Assessment (exclusive of the Reserve Assessment & Capital Project Fees) will
increase 2.9%
Reserve funding will increase 24%
The Capital Project Fund fees will be included in quarterly assessments in 2022 and
increase 3%
Curtailed F & B operations April – December 2022
Will utilize food trucks, BBQ’s, mobile bar, the newly constructed lakeside pavilion area,
and the tennis center.
Much remains to be flushed out as we get closer to the shutdown.
2022 DRAFT Budget Summary
Revenue
Fav/
Home sales activity very strong. Expect slowdown due to
lack of inventory.
The Project Funding 786,199 11% 0 0% 786,199 Resale, amenity, & Capital Fund fees not in budget.
Reserve Inc. & Interest 446,826 6% 452,000 7% (5,174) Lower interest revenue.
Food & Beverage 1,018,825 14% 820,000 13% 198,825 Slow start; however, strong activity in Q2 and soft budget.
Boat Slips 104,716 1% 95,000 2% 9,716 As planned.
Other 148,503 2% 125,350 2% 23,153 As planned.
Total Revenue 7,366,150 100% 6,271,917 100% 1,094,233 Resale Fees and Food & Beverage driving increase.
2021 2021
Forecast Budget
Expenses
Fav/
Expenses
Cost of Sales - Food & Bev. 477,089 47% 348,800 43% (128,289) Higher cost of sales % due to closures and cost escalation.
Salaries & Benefits 1,911,659 26% 1,791,510 29% (120,150) Incr. due to new Admin. position and salary adjustments.
Administration 341,047 5% 279,400 4% (61,647) Legal, admin, & computer support unfav. to plan.
Insurance 109,463 1% 110,000 2% 537 As planned.
Utilities 237,883 3% 232,800 4% (5,083) As planned.
Contracts 1,885,783 26% 1,942,422 31% 56,639
Favorable landscaping, no price increase and scaled back
at Beach Club. No pressure washing of sidewalks.
Repairs, Maint. & Projects 1,131,318 15% 1,114,985 18% (16,333) As planned.
Reserve Transfers & Int. 446,826 6% 452,000 7% 5,174 Lower interest revenue.
The Project Transfers 786,199 0 0% (786,199) Expense equals the revenue and funds The Project.
Total Operating Expenses 7,327,267 99% 6,271,917 100% (1,055,350) A result of The Project and higher food & beverage sales.
Prior Year Expenses 12,896 0% - 0% (12,896)
Net Inc./(Loss) before Dep'n 25,987 0% 0 0% 25,987 Will end year slightly above breakeven.
5
Revenue
6
Fav/
Master increase of 2.6%, total master & neighborhood
increase of 2.9% excluding Reserve and The Project.
Resale Fees - $3,000 172,500 2% 234,000 3% (61,500) Budgeting historical level of resales for 2022.
The Project Funding 862,250 12% 786,199 11% 76,051
Includes 3% increase on Capital Project Fund fees plus full
year of activity for resale and amenity fees.
Reserve Inc. & Interest 555,040 8% 446,826 6% 108,214 Following Reserve Study.
Food & Beverage 455,900 7% 1,018,825 14% (562,925) Curtailed operations during construction period.
Boat Slips 105,000 2% 104,716 1% 284 No changes in fee structure.
Other 91,320 1% 148,503 2% (57,183) Reduced surplus rollover by $55,000.
Total Revenue 6,991,481 100% 7,366,150 100% (374,669)
2022 2021
Budget Forecast
Expenses
Fav/
7
Expenses
Cost of Sales - Food & Bev. 212,235 47% 477,089 47% 264,854 Curtailed operations during construction period.
Salaries & Benefits 1,600,046 23% 1,911,659 26% 311,613 Smaller staff during closure period.
Administration 303,000 4% 341,047 5% 38,047 Reduced legal expenses.
Insurance 120,000 2% 109,463 1% (10,537) Planning for approx. 10% increase.
Utilities 218,200 3% 237,883 3% 19,683 Lower costs due to closure period.
Contracts 1,918,910 27% 1,885,783 26% (33,127)
Incr. due to full pressure washing of sidewalks, curbs &
gutters.
Repairs, Maint. & Projects 1,201,800 17% 1,131,318 15% (70,482) Replace china & silverware plus increase tree trimming.
Reserve Transfers & Int. 555,040 8% 446,826 6% (108,214) Following Reserve Study.
The Project Transfers 862,250 786,199 11% (76,051) Per The Project funding plan & full year of activity.
Total Operating Expenses 6,991,481 100% 7,327,267 99% 335,786
Prior Year Expenses - 0% 12,896 0% 12,896
Net Inc./(Loss) before Dep'n 0 0% 25,987 0% (25,987) Always budget breakeven performance.
The Project – Revenue vs. Financing Plan
8
Capital Project Fund Fee
$695,250 $675,000 $250 per homeowner due May 1, July 1 & Oct 1, 2021. $193 included with quarterly assessments in 2022, ($773 annually).
Capital Project Resale Fee
$125,000 $92,500 $2,500 per home Resale Fee. Only 9 months of activity in 2021.
New Homeowner Amenity Fee
$42,000 $17,180 $600 per home sale prorated on portion of year. Only 9 months of activity in 2021.
Total Revenue $862,250 $784,680 Off to a good start although home sales will slow down due to a lack of inventory.
• 2021 includes 9 months of activity for Resale Fees and Amenity Fees. • 2022 Capital Project Resale Fees budgeted conservatively and assumes 50 home sales.
9
2022 Quarterly Master Assessments Rounded 1,382.00$ 1,382.00$ 1,382.00$ 1,382.00$
2022 Quarterly Neighborhood Assess. Rounded 435.00$ 668.00$ -$ -$
2022 Total Quarterly Assessments Rounded 1,817.00$ 2,050.00$ 1,382.00$ 1,382.00$
2021 Actual Assessments - Rounded
2021 Quarterly Neighborhood Assessments 432.00$ 452.00$ -$ -$
2021 Total Quarterly Assessments 1,562.00$ 1,582.00$ 1,130.00$ 1,130.00$
Quarterly Change in Master Assessments 252.00$ 252.00$ 252.00$ 252.00$
Quarterly Change in Total Assessments 255.00$ 468.00$ 252.00$ 252.00$
% Change in Master Assessments 22.3% 22.3% 22.3% 22.3%
% Change in Total Assessments 16.3% 29.6% 22.3% 22.3%
Coupon Book Amount
Coupon Book Amount
Base quarterly Master Assessment $1,035 $1,006 2.9%
Reserve portion of quarterly Master Assessment $154 $124 24.0%
Subtotal $1,189 $1,130 5.2%
All in Master Assessment $1,382 $1,317 4.9%
In 2021, the quarterly master portion of the coupon amount was $1,130 and the annual Capital Project Fund Fee of $750, ($187.50 per quarter to compare on an
apples-to-apples basis), was paid separately. In 2022, this fee will be incorporated into the assessment.
11
Assessment excludes special assessments and reserves.
Increase of approx. 3% for most recent 3 years incl. proposed 2022 budget.
Assessment Annual Increases – All Doors
11.4%
13.6%
8.7%
Assessments Excl. Reserves
2018 & 2019 had the same contributions - $260,000.
Have been following the 2020 Reserve Study recommendations.
Reserve Assessment Annual Increases
Reserve Assessments
13
Excludes special assessments and The Project.
Total increased approx. 4.5% for most recent 3 years incl. proposed 2022 budget
Total Assessment Annual Increases
Total Assessments Incl. Reserves
Reserve Study Results – May 2020 Recommended Reserve Funding Table
Still in catch up mode. In 2023, contributions will level off to approx. a 2% increase per annum per the current study. In 2024 we will follow the
recommendations of an updated study taking into account The Project. 14
Reserve Fund Balances vs Requirements Through 2025
15
annual increases • An updated Reserve
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Reserve Fund Balances & Requirements
Reserve Fund Stagnant
16
Contributions
Expenditures
Balances
Plus: Est. 2021 contributions 447,000
Less: Est. 2021 spending (paving, sidewalks) (151,000)
Est. Reserve balance at end of 2021 1,053,000
Plus: Reserve contributions for 2022 555,000
Less: Spending for 2022 (0)
Est. Reserve fund balance at end of 2022 1,608,000
Target reserve fund balance at end of 2022 1,424,000
Reserve Funding ($’s)
Fund @ $46,083 per month - $553,000 for 2022 (plus interest). No spending in 2022 in lieu
of The Project, other than emergencies.17
Special Assessments (S/A) as of Aug. 2021 ($’s)
18
Revenue
Roof S/A was over-funded and monies were transferred to
Limestone Trail. Potential to recover $213K of roof payments based
on insurance claim.
Legal 333,953 72,919 Best guess due to combined billings, etc.
Engineering - 122,953
Est. Future Expenses 5,000 60,000
Projected Surpus/(Deficit) 2,037 (102,984) Deficit for Limestone Trail will be covered from litigation proceeds.
These two accounts will be closed out this year!
Pulte Litigation Settlement – Funded Projects
19
Projects Comments
Repair stone fascia on exterior of three bridges Assessing best solution, paint or reface
Install permanent boat ramp Soliciting bids
Address common area landscaping
Repair drainage and irrigation system around Beach Club Significant deficiencies uncovered
Replace plants around Beach Club
Fund rear gate access control fencing project Will require transponder for pedestrian traffic
Provide lightning protection for main irrigation pumps Avoids ongoing pump repairs
Fund Limestone Trail costs in excess of assessment Project underway
These projects will consume most of the litigation proceeds while addressing the deficiencies outlined in the lawsuit.
Currently mulch is applied during the January/February period each year
The community has asked if the mulch application could be moved from January to the Fall as is
done by most communities.
The preferred time to apply mulch is in late Fall, (after the rainy season).
Moving mulching to the Fall season would require two applications in the transition year
resulting in an additional $300K charge to the community
The Quarry will not apply mulch in January of 2022 but instead hold off until the Fall of
2022 making 2022 the transition year. Due to construction activity, mulch would not be applied to the Beach Club area this year
Best opportunity to make this change
A program will be developed whereby single-family homeowners can have mulch applied
in the Fall of ‘21.
Details not finalized yet
This will be a separate, OPTIONAL, transaction between homeowners and our landscape
company
Mulch
20
Common areas and single-family homes to be a three-term agreement
with the first term ending on December 31, 2023, and an annual
renewal for next two years with an optional 4th term
The Beach Club will begin on January 1, 2023, for three consecutive
annual terms with an optional 4th year
Requests for Proposals (RFP’s) will be sent out to bid in January to
approx. 8 companies that have expressed interest with a return date of
March 1, 2022, and awarded on April 1, 2022
We have engaged an industry expert to work with the Landscaping
Committee to develop the RFP’s
Landscaping
21
The Quarry policy Assessments are due on the 1st of each quarter
Grace period is provided until the 15th of the month due
Collection letters are mailed 16 days after the due date
Quarterly Assessment Due Dates
Association as has been the case in previous
years.
$1,919,000 $1,886,000 $1,942,000
surface area - $15K
changes.
$303,000 $341,000 $279,000
liquor license, CDD support, The Project) - $32K
• Lifestyle expense, $14K, credit card fees, $9K, strategic
planning, $5K, and bad debts, $4K
• Offset by increases in computer/web support, $15K, staff
training $16K, and minor other changes.
2022 Budget 2021 Forecast 2021 Budget
$1,600,000 $1,912,000 $1,792,000
• Curtailed operations for most of the year
• Reduction in FSR burden rate, $60K, partially offset by an
increase in FSR management fees in Administration - $20K
2022 Budget 2021 Forecast 2021 Budget
$1,202,000 $1,130,000 $1,115,000
• Gate repairs - $11K
• Offset by increases in china, glass, & silverware, $64K,
contingency $12K, maintenance $7K and minor other changes.
QUESTIONS
27