Post date: Jan 18, 2016 5:13:10 PM
Dear HOA Members,
Several homeowners have asked about the need to increase the annual dues by $10/month. To help everyone better understand our situation, I’ve prepared the following information ahead of the meeting and the Board Officers plan on reviewing this and more at the upcoming Annual General Membership (AGM) meeting on January 23, 2016.
The Board is responsible for developing the next year's budget to cover our association expenditures. The Board voted and passed unanimously the 2016 budget that is attached with you AGM announcement packet. We should have included an explanation for the need to increase the dues by $10 to $65/month and what increases in expenditures are anticipated without decreasing our current maintenance levels or our current rate of Reserve Savings Account deposits. This Board is recommending a budget increase knowing full well many homeowners will question the need, but as volunteers, we understand our responsibility to make decisions which are not always easy but that are best for the Association and in accordance with our CC&Rs and Bylaws.
In reviewing the attached 2016 Budget, there are a number of categories with minor increases due to inflation such as our telephone bill by $100, our water bill usage by $300, and our Best Real Estate professional management contract by $450. However, there are two primary categories with significant increases – namely General Landscaping and Legal Fees.
General Landscaping: $7,800 budget increase
Our general landscaping contract costs this past year have increased significantly when the Board returned to having a landscaping contract with regularly scheduled mowing and trimming of all the common area boulevard grass. This used to be the standard practice but prior to last year, maintenance was only being performed on a minimum level and only when requested. Homeowners had been encouraged to maintain their own boulevard areas as a cost savings effort which resulted in non-uniform appearing boulevards. Also, an adverse effect of this practice meant the landscaping contractor had no responsibility for the general appearance or condition of our boulevards or islands and it was beginning to show. Regular fertilization was not being performed nor broadleaf weed control spraying. Our island sprinkler systems had not been turned on for years and were in need of maintenance just to make them function again. A landscaping committee was formed to investigate member complaints of un-mowed boulevard areas, lots, and of distressed trees and shrubs in the islands. To correct the situation, based on recommendation from the Committee, the Board instructed the landscaping company to return to regular care and scheduled maintenance of all the common boulevard areas. The budgeted 2015 amount was only $13,200 and the total estimated expenses were $24,870 ($11,600 over budget).
A lot of work had to be done in 2015 such as tree trimming, caterpillar nest removal, removing storm damaged trees, regular fertilizing, spraying for broad leaf weed control, repairing all three non-functional island sprinkler systems, and adding beauty bark to the islands. The Landscaping committee developed a scope of work and received landscaping proposals from 5 companies. The committee recommended a new contract beginning in 2016 with Corion Landscaping. The awarded contract value is reflected in the new 2016 Budget at a cost of $21,000. This is a budget increase of $7,800 (from $13,200 to $21,000) but is for the maintenance of all the Association’s common boulevards and islands. Doug Moore will be addressing the advantages of the new Corion contract and expected value savings included within their $21,000 contract.
Legal Fees: $2,500 budget increase
Our budgeted legal fees in 2015 was only $2,500 while our end of year expenses are projected to be $5,000. The new 2016 budget reflects this $5,000 amount. We have had two major legal issues which carried over from 2014. These are the Lot 60 potential litigation over perceived water damage from the adjacent storm water treatment common area (Tract C); and the ongoing legal discussions with the new owners of Tract F who believe they are not bound to belong to the HOA and choose to not follow the HOA’s CC&Rs as they prepare to build their home and out-buildings on their 9.25 acre lot. Because of these two complex issues which have progressed to the point of receiving letters from their respective attorney's, we've had to route all communications through our Attorney to protect the Association and its interests.
2016 Dues Increase ($10/month) $11,520 Budget Increase
This $10/month increase will bring in $11,520 of increased revenue and balance the Association’s expenditures.
Last year, the Board discussed increasing the dues or decreasing the $11,700 reserve account deposit amount but did not make a recommendation. This is in spite of the fact our current 2015 budget is operating <$2,850> in the red from the start ($64,110 budgeted income - $66,960 budgeted expenses).
Our "actual" expenses in 2015 are significantly higher than budgeted. We HAD to pump out the three wet ponds and vacuum out the sediment "muck" in the bottom following the recommendations from the third-party professional inspection report by David Evans and Associations. The professional inspection and completion of maintenance work recommendations is required to be performed every three (3) years in accordance with the CC&R, paragraph 5.7.b.1. The cost to perform all maintenance work outlined in the report was over $26,000 and we had a Storm Water Facility Maintenance Budget of only $8,000. We had no idea the pond sediment had to be removed until the inspection report was completed in April of 2015. And we had no idea of the cost involved or the technical difficulties encountered as this was the first time the wet ponds have ever been drained and cleaned out. This will also be covered in more detail at the AGM meeting.
I hope this helps explain the need for increasing our dues. We will be spending a lot of time covering this and other issues at the AGM meeting.
Regards,
Ryan Barnes, President