2014 proposed budget options 2013-11-08 web version
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2014 Draft 2014 Draft BudgetBudget
November 19, 2013November 19, 2013
AgendaAgenda
• Revenue & Expense Adjustments 2010 – 2014
– Since 2009 there has been one RFCA increase of $8 or 1.75% in 2011
– Since 2009, there has been no AFCA increase
• Proposed Assessment Increase
• Voting Options
Revenue Generation & Cost Revenue Generation & Cost Control SummaryControl Summary
• What has Highlands Ranch Community Association done to combat rising Assessment increases? (2010 to 2014)
Revenue generation and cost control measures have saved the association over $4 million and held assessments lower:
• Administrative Function Revenues & Cost Reductions $1,460,0000
– Avoiding Assessment Increases of approximately $9.76 / year • Recreation Function Revenues & Cost Reductions $2,650,000
– Avoiding Assessment Increases of approximately $18.19 / year
• Total Assessment Increases avoided $27.95/ year
Administrative Revenue IncreasesAdministrative Revenue Increases
Increased Revenues by over $1,100,000
• Transfer fee increased from $50 to $100 to $130
• Increased Sub-Association Management Services
• Created new web advertising (Yellow Pages)
• Implemented new Architectural Submittal fees
Administrative Expense Administrative Expense Reductions / ControlsReductions / Controls
– Decreased expenses by over $360,000• Limited staff pay increases• Reduced health insurance costs
– Increased health plan deductibles and co-insurance– Increased employee contributions– Increased participation in lower cost HSA plan
• Reduced HRCA 401(k) plan contribution from 7% to 5%• Reduced newsletter and invoicing production and mailing costs by introducing
opt-out option• Changed Administrative Assessment billing to once a year vs. quarterly • Renegotiated office supplies and equipment contracts• Reduced telephone lines and renegotiated managed service contract• Reduced payroll service costs• Reduced volunteer, business and community expenses
Recreation Revenue IncreasesRecreation Revenue Increases
– Increased Revenues by over $550,000
• Growth in recreation programs despite competition and depressed
economy
• Increased program fees
• Introduced business & non-resident memberships
• Increased guest fees
Recreation Expense Reductions / Recreation Expense Reductions / ControlsControls
Decreased expenses by over $2,100,000
•Limited staff payroll increases
•Reduced staffing (programming, operating hours, & maintenance)
•Wage freeze on all seasonal employees
•Reduced health insurance and 401(k) contribution costs (see
administrative comments above)
•Reduced facility operating hours
•Reduced registration and membership hours
•Closed or reduced childcare facility hours
Recreation Expense Reductions / Recreation Expense Reductions / ControlsControls
• Reduced utility gas costs by using Seminole verses Xcel
• Consolidated recreation facility contracts (from 4 to 1) for maintenance,
snow removal, landscaping, janitorial and office supplies
• McKinstry projected utility savings of $163,000 annually
• Eliminated trash service expense by using Preferred Provider,
ProDisposal
• Reduced Activity guide and Newsletter production and mailing costs by
offering homeowners online options
2014 Recreation Fund2014 Recreation FundDeferred Maintenance/ExpenseDeferred Maintenance/Expense
Capital and Reserve Expenditures eliminated or deferred to future•Administration Fund (Capital)
– New Accounting Software $40,000– Web Site Upgrade $20,000 $ 60,000
•Recreation Fund (Capital)– Web site Upgrade $20,000– Kiosks and Virtual Tour Website $11,200– Digital Displays $20,000– Tennis court divider nets and shade structure $24,000 $ 75,200
•Recreation Fund (Reserve)– NR Gym & Racquetball Court Flooring & walls $160,000– NR Lobby Remodel $400,000– Continuous lap pools $ 75,000– Reduction in emergency provision $ 65,000 $700,000
•Total $835,200
2014 Proposed Assessments2014 Proposed Assessments
Actual Revised Proposed
FunctionActual 2013
Reverse 2013
AdjustmentBC
Adjustment
Revised 2013
Assessment 2014
Increase Assessment
Amount
AFCA $ 21.00 $ 30.00 $ (7.00) $ 44.00 $ 4.00 $ 48.00
RFCA $ 487.00 $ (30.00) $ 7.00 $ 464.00 $ 28.00 $ 492.00
Total $ 508.00 $ - $ - $ 508.00 $ 32.00 $ 540.00
* The CPI (Consumer Price Index) for years ending 6/30/12 (+1.76%) and 6/30/13 (2.77%), US Department of Labor, Bureau of Labor Statistics, Denver / Boulder
Region
2014 Proposed Assessments2014 Proposed Assessments
• What is the proposed $4.00 Administrative assessment increase for?
– Staff payroll increases (3%) $ 44,400– Increase in health insurance & benefits $ 24,600– Anticipated decline in re-sales (transfers) $ 21,400– Marketing and Rebranding $ 30,000
New Admin Expenditures $ 120,400
New Admin Expenses per home $ 4.00
2014 Proposed Assessments2014 Proposed Assessments
• What is the proposed $28.00 Recreation assessment increase for?– Staff payroll increases (3%) $ 202,600– Increase in health insurance & benefits $ 90,600– Bank, insurance & credit card fees $ 20,000– Reserve Study $ 40,000– Increase in utility rates $ 31,000– Supplies & Expenses Inflation (Non-Utilities) $ 35,900 – Increase in Capital Expenditures $ 131,300– New Capital Improvement Fund Provision $ 250,000– Other Operating expenses $ 14,600– New Rec Expenditures $ 816,000
New Rec Expenses per home $ 28.00
HRCA Assessments Compared HRCA Assessments Compared to CPIto CPI
• Review CPI Data as it applies to the Community Declarations
HRCA Administration HRCA Administration Assessments Compared to CPIAssessments Compared to CPI
HRCA Recreation Assessments HRCA Recreation Assessments Compared to CPICompared to CPI
2014 2009 Variance % IncreaseHRCA Admin $ 48.00 $ 51.00 $ (3.00) (5.88%)HRCA Rec $492.00 $449.00 $ 43.00 9.58%
HRCA Total $540.00 $500.00 $ 40.00 8.00%
CPI Admin $ 53.00 $ 47.87 $ 5.13 10.72%CPI Rec $564.02 $509.42 $ 54.60 10.72%
CPI Total $617.02 $557.29 $ 59.73 10.72%
Variance $ 77.02 $ 57.29 $ 19.73 2.72%
HRCA Assessments Compared to HRCA Assessments Compared to CPICPI
Voting ProcessVoting Process
• Review Appropriate Sections of the Community Declarations
– Obtained advice of legal counsel on voting process and options
– Providing remedies to Inadequate Funding
• Review Voting Options and Decision Trees
• Vote
Proposed Recreation Proposed Recreation Assessment IncreaseAssessment Increase
•Proposed 2014 RFCA increase from $487 to $492– $5 increase meets both criteria below of Declaration– Can be approved by the BOD without delegate vote
•Limitations (both met):•May not be > Maximum RFCA = $564.02• RFCA starting from $298.56 in 1993 compounded by CPI
•May not be > 120% of preceding year RFCA = $584.40•2013 RFCA = $487.00 * 120%
Proposed Administrative Proposed Administrative Assessment IncreaseAssessment Increase
• Proposed 2014 AFCA increase from $21 to $48– $27 increase does not meet both criteria and requires a 2/3 voting power of
delegate body
• Limitations (not met):• May not be > Maximum AFCA = $53.00• AFCA starting from $24.00 in 1982 compounded by CPI
• May not be >120% of preceding year AFCA = $25.20• 2013 AFCA = $21.00 * 120%
Options for Proposed Administrative Assessment
1. Request that 2/3 of the voting power of the delegate body approve the AFCA increase
2. Do not levy any assessment for 2014• Automatically impose Maximum AFCA ($53.00) & RFCA ($564.02) for a total
of ($617.02)
1. Impose a Supplemental AFCA in 2013 of $27.00 (total $48.00)
• Board can impose up to $29.29, for an increase to $50.79 for 2013
• Supplemental AFCA together with the initial AFCA may not be more than
120% of 2012 AFCA ($56.21)
• Notice must be sent to every homeowner not less than 30 days prior to the
effective date of change (estimated to cost $12,500)
• 2014 AFCA increase is still limited to the Maximum of $53.00
Administrative Assessment Administrative Assessment Decision TreeDecision Tree
2014 Proposed Administrative 2014 Proposed Administrative Budget MotionBudget Motion
The HRCA Delegates recommend adoption of the 2014 Administrative Budget as presented in tonight’s meeting. This budget sets the Administrative Function Common Assessment (AFCA) for the calendar year 2014 as follows:
AFCA Proposed at $48.00, a $27.00 increase over the prior year
2014 Proposed Recreation Budget 2014 Proposed Recreation Budget MotionMotion
The HRCA Delegates recommend adoption of the 2014 Recreation Budget as presented in tonight’s meeting. This budget sets the Recreational Function Common Assessment (RFCA) for the calendar year 2014 as follows:
RFCA Proposed at $492.00, a $5.00 increase over the prior year
2014 Proposed Total 2014 Proposed Total AssessmentsAssessments
Year $/Year $/Qtr
2014 $540.00 $135.00
2013 $508.00 $127.00
Proposed Increase $ 32.00 $ 8.00
Proposed % Increase 6.3%
Questions? Questions?
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