Finance Advisory Committee – July 2023

By Zerryl Becker
Vice Chair, FAC Subcommittee

As published in The View, July 2023:

Question of the Month: What does the FAC Subcommittee do to prepare a recommendation to the Board on a project/purchase over $5,000?

Have you ever wondered how our HOA Board decides on those New Business items listed at the end of each meeting agenda? Do they really just make a quick decision on spending our HOA funds?

The short answer is: Yes, the HOA Board makes the decision, but not without a careful evaluation of the recommendation. The FAC Subcommittee considers every request over $5000 and provides detailed comments to the Board on every recommendation. As mentioned in the November 2022 View article, the FAC Subcommittee members have expertise as engineers, contractors, golf maintenance equipment specialists, and in food service.

When a Board Action Form (BAF) is received by the Chair of the FAC, the team evaluates the BAF to be sure it is an appropriate request, there is solid justification for the expense, it includes the required two or three bids from insured contractors, and indicates a source of funding. They also evaluate whether not using the lowest bidder is a good decision.

The team visits the golf maintenance yard and the kitchens to review serial numbers and the age and status of the existing equipment. They discuss how this equipment is used with the greens superintendent, the chef and the director of maintenance. They view the concrete walkways and patios that need repair, the streets scheduled for surfacing or striping, the pickle ball and tennis courts, and even kick the cushions on the patio furniture to see if they need to be replaced.

Team members look at equipment availability, lead times, inflation and whether delaying a purchase is likely to increase the cost; they look at the ramifications of equipment failure – such as having no air conditioning in the Montecito Clubhouse with an eight-month lead time to get replacement equipment, or no irrigation for the North Course during the summer heat.

The FAC Subcommittee checks the request has been reviewed by other homeowner committees where appropriate: Landscape, Facilities and Services, Food and Beverage, Golf Advisory, Health and Fitness, Safety Advisory, Lifestyle Advisory and Design Review.

The Subcommittee frequently sends questions back to staff asking for more detail, clarification, justification, or evaluation of alternatives. The goal is a three-day turnaround on each BAF received, and if that does not provide enough time for thorough evaluation, the team recommends tabling the request for more analysis.

The Vice Chair for the FAC Subcommittee counts the Subcommittee votes and prepares a recommendation and summary of all the Subcommittee comments which is sent to all members of the Finance Advisory Committee, including the Board Liaison. The FAC evaluates the FAC Subcommittee recommendation and the funding source to be sure our HOA has adequate resources to fund the request without any negative impact on other operational or reserve expenditures. Reaching “End of Useful Life” on the Reserve Study brings replacement items to the attention of staff and committees, but it is not sufficient justification for immediate replacement.

So, every BAF for an expense over $5,000, other than the rare emergency need for funding, is reviewed by many SCSH homeowners before being placed on the Board agenda.

The final BAF, with the FAC and FAC Subcommittee recommendations and comments, is available on the SCSHCA website under Board Meeting Packets.

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