News

A Message from Your Treasurer

With all the financial questions about the HOA and how the “Stay at Home” directive has affected us, I thought it appropriate we take a moment to listen to our Treasurer, Bruce Marley, as he oversees the financial health of our HOA. Keep in mind this article was submitted on May 5, 2020. Please stay healthy and safe. And now, Bruce Marley’s letter:

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Greetings, fellow neighbors of Sun City Shadow Hills Community Association (SCSHCA). The intent of this communication is to describe where your HOA is financially and to highlight the measures our management company, Desert Resource Management (DRM), and our onsite manager for Golf and Food/Beverage operations, Troon, are taking in response to the COVID-19 pandemic.

Both DRM and Troon have already taken significant steps to reduce costs, while at the same time ensuring that our community is well maintained and ready for when this pandemic comes to an end. Please note that we continue to ensure resident safety by maintaining our security at full strength and to preserve the quality and ambience of our common areas, both deemed essential by the Board.

Entering this unprecedented challenge, our community’s financial resources were among the strongest in the valley! As of December 31, 2019, our financials show SCSHCA as having $2,158,205 of working capital on hand, equal to 2.80 months of Operating Fund monthly assessments. This is a good thing. Industry measures suggest from 1 to 3 months should be on hand. The 2.80 compares to 1.20 on December 31, 2017, and 2.05 on December 31, 2018. As you can see, the Board has worked to increase this key measure and, while no one could have anticipated COVID-19, we find SCSHCA in a good position to get through this challenge.

The 2020 budget preliminarily forecast year-end (December 31, 2020) working capital of $1,827,005, equal to 2.34 months. The decline is because the Board decided to reduce your 2020 dues to the current $273/month, from the balanced budget of $281. We made this decision because we had the ability to do so, and we wanted to keep dues reasonable while retaining our solid working capital position. This working capital will be used to offset increased expenses, so monthly dues are not expected to increase in 2020 as a result of the pandemic.

Adding to the ongoing financial strength of SCSHCA are two significant aspects of our structure. One, we continue to collect monthly dues of $273 from our 3,450 homeowners, which totals $941,850 per month. Two, we have over $13,000,000 in our Reserves/Replacement Fund. While the monthly dues may vary slightly if some homeowners are unable to make their payments, our current delinquency rate is less than 1%. As for Reserves, while these funds are set aside for specific Common Area replacement needs for many years to come, it is reassuring to know we have “money in the bank.”

So, with that in mind, here is what we are doing right now to account for the significant anticipated shortfalls for Golf and Food/Beverage (Troon) and to control costs in general (DRM):

Troon

At this very early point in time, Troon is forecasting that combined losses directly attributable to the pandemic will add over $300,000 to budgeted 2020 losses associated with these golf and food and beverage. If you might recall, the monthly budgeted subsidy for these two components was approximately $40/month per residence. This $300,000 equates to $7.25/month per residence, which will be paid for out of working capital as previously mentioned.

DRM

Our management company immediately made cuts to some maintenance areas like housekeeping, especially because both clubhouses are shut down, along with other areas that will not require ongoing attention. Additionally, there were cuts in the AV (audio visual) area, along with cuts in the Fitness Department.

Summary

I hope you have found this useful. Please remember three things:

1. All figures used in this article are subject to further review and audit. I intend to provide updates on an ongoing basis as we learn more.
2. These decisions by Troon and DRM have affected over 50 employees spread between those two companies. We are all in this together, and I ask that you think about all the employees of Troon and DRM who are struggling with the decisions that were made and consider supporting the local food banks and other such services.
3. Chances are we will be dealing with COVID-19 through May, given current “government” words and actions. We will be looking closely at all areas of expense as needed, while at the same time working to preserve and protect the quality of our amenities.

Please feel free to reach out to me or other Board members with your thoughts and comments

Regards,
Bruce Marley
Treasurer, SCSHCA