Good afternoon residents:
I am sending you information about our finances from our Treasurer Bruce Marley:
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 being taken by our Management Company, Desert Resource Management (DRM), and our on-sight manager Troon (for Golf and Food/Beverage operation) in response to the Covid-19 Pandemic. In both cases, DRM and Troon, each has already taken significant measures 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 preserving 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 31st, 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 in on 12/31/17, and 2.05 on 12/31/18. 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 12/31/2020 working capital of $1,827,005, equal to 2.34 months, the decline due to the Board’s decision to reduce your 2020 dues to the current $273/month, from the balanced budget of $281. This decision was made because we had the ability to do so, and it was decided 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 be increased 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 of funds in our Reserves/Replacement Fund. While the monthly dues may vary slightly if some homeowners are unable to make their payment, our current delinquency rate is less than 1%. As for the 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):
At this very early point in time, Troon is forecasting combined losses directly attributable to the Pandemic, to add over $300,000 to budgeted 2020 losses associated with these two budget components. If you might recall, the monthly budgeted subsidy for golf and food and beverage 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.
Our management company immediately made cuts to some maintenance areas, and housekeeping, especially the club houses which are both shut down, along with other areas that will not require ongoing attention and maintenance. Additionally, there were cuts in the AV (audio visual) area, along with cuts in the Fitness department.
I hope you have found this useful. Please remember three things:
- 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.
- These decisions by Troon and DRM have impacted 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.
- 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.
Bruce Marley, Treasurer, SCSHCA
Thank you and see you all soon.