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2018 budget presentation

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Information about 2018 budget presentation
Education

Published on October 18, 2017

Author: bjbservices

Source: authorstream.com

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Slide1: The Pointe at Crosswater Budget Presentation Year 2018 Slide2: 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 2018, also the fiscal year of our condominium association. Slide3: Budget Components: Income Beginning operating f und balance—amount in checking account Income—from monthly assessments Slide4: Budget Components: Expenses Utilities—water, power, phone Maintenance Administrative Slide5: Budget Components (continued) Summary of Expenses Chart Utilities--18% $63,915 Maintenance--61.9% $217,213 Admin--20.1 % $71,551 TOTAL EXPENSES: $352,679 Slide6: Budgeting Components (continued) Maintenance Expenses TOTAL MAINTENANCE: $217,213 Fire Safety 10% Cost Sharing 8.5% Contingency 10% Landscaping 55% Other 16.5% Increase 10.6% Slide7: Budgeting Components (continued) Administrative Expenses Morris Management 40.5% Insurance 47% Professional 8.5% Misc. 3.9% TOTAL ADMINISTRATIVE: $71,551 Slide8: 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 Slide9: 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 5 studies. Slide10: 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. Slide11: 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 Slide12: 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. Slide13: 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 was completed in 2016. Costs less than a Level 1 study. Slide14: Reserve Study Types (continued) Level 3 Update Study A Level 3 update study simply updates the Level 1 or 2 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 2 studies. A level 3 update study was completed in 2017. Slide15: 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 Slide16: 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 $375.00 $3.15 $19.00 Remaining Life 21 23 15 Useful Life 30 30 25 Replacement Cost $1,709,146.00 $576,919.00 $106,565.00 Slide17: Reserve Study Parts Financial Analysis Current financial i nformation and funding plan is reviewed Recommended reserve f unding plans—designed to immediately or gradually get to the financial position that all future expenditures will be fully funded are presented Slide18: Financial Analysis Current Financial Information Reserve Fund (Replacement Fund) balance as of August 2017: $522,069 Reserve Fund Balance required for “full funding” at this time should be: $753,191 Currently 69.3% funded Slide19: 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 be a need for special assessments to pay for expenses of property upkeep Slide20: What Is a “Good” Level of Funding? ----- 69.3% The Pointe Funding Level 72% of condos in US are funded below a 70% level Last Year: 77% Slide21: 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 now require funding at 60%. Slide23: TOTAL BUDGET: Operating Expenses: $352,679 Reserve Fund: $156,832 TOTAL $509,541 Reserve Fund (Replacement Fund) as Part of Total Budget Slide24: 2018 Budget Expense Changes Landscaping increase from $99,000 to $104,000—due to minimum wage increase Insurance increase of 8% due to water damage General maintenance expenses increasing due to aging property Slide25: Landscape Charges History YEAR COMPANY AMOUNT 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 Garner’s $93,000 2017 NLS $99,000 2018 NLS $104,255 Slide26: Assessment Increase History YEAR AMOUNT DOLLAR INCREASE 2008/2009 $179 $0 2010 $184 $5.00 2011 $189 $5.00 2012/2013 $230 $41.00 2014 $265 $35.00 2015 $270 $5.00 2016 $305 $35.00 2017 $327 $22.00 Slide27: Comparison of 2017 and 2018 Budgeted Operating Expenses Slide28: The Bottom Line! 2017 Monthly Assessment: $327 2018 Monthly Assessment: $354 $27 increase or 8.2% increase from 2017 to 2018 No increase in Reserve Fund contributions to compensate for operational expense increase

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