Report From First 2017 Annual Budget Study Session

The SCSH Community Association Corporate Board held its first of three monthly study sessions of the proposed Annual Budget for 2017. In attendance were Carey Thompson, Board Treasurer, who led the Study Session along with Directors Barb Stocky, Joan Dzuro and Agi Kessler . In addition, General Manager Ceasar Larrach, and Assistant General Manager Rich Smetana were on hand to assist in providing detailed information, making suggestions as to where costs could be reduced and where or why costs had risen. Emergency Preparedness Committee Chair Jeff Kirkpatrick, who provided a detailed budget to the Directors, for EPC, as well as 6 residents were also in attendance.

Line item by line item, the budget was carefully reviewed by the Directors for justification. For those of you who are not aware, our Annual Operating Budget is prepared in the same way any corporation’s budget would be. Each line item is reviewed, studied and decided upon based upon detailed information. The final 2017 approved Annual Budget will form the basis for member HOA dues.

Rising Costs: While our dues have remained constant at $217 for the past 3 years, and our management fees have remained constant for 5 years, all costs have been going up – costs including but not limited to:

• Utilities(especially water) costs have increased at least 8%. The increase in water costs also affects things like linen usage costs. [Troon’s will be submitting their budget for board review and approval in September].
• Labor costs have risen a minimum of 10%
• Aging infrastructure for which more maintenance is required. The Board voted 4-0 to add two maintenance staff – a maintenance engineer and a custodian – to ensure that we do not have a back log or have to contract these services out at a higher cost.
• Pulte is leaving and we will have higher costs to maintain the common areas which they were maintaining, including but not limited to the new dog park, street sweeping maintenance in some areas of Phase 3, and added common area landscaping.
• Increased costs in 2017 associated with the mailing of Secret Ballot Votes on the Revised CC&Rs and By-Laws.
• Providing a Professional level Fitness Staff.
• New California laws which require increased maintenance schedules of pools and spas.
• New California laws requiring more certifications for staff performing services, such as fitness training.
• Increased costs to address emergency preparedness. Jeff Kirkpatrick discussed possible FEMA and block grants which may be available to us to offset some of those costs.

A Comparison to other 55+ Communities in our neighborhood: Heritage Palms assessments are now at $360 per month and Sun City Palm Desert is at $242 per month. In addition, both have reserve funding levels much lower than ours at 63% and 56% respectively. Our Reserve Fund is currently funded at 95%. Reserve funding is an allocation of our assessments. Some communities can and do keep their assessments artificially low by not keeping their reserve funding level up. But in the end, those homeowners will end up paying more with special assessments.

Possible Areas for Cost Reduction: The FAC and Management reviewed the 2017 proposed general operations budget looking for possible ways to reduce costs. Discussion included the following suggestions:

Dues Payment Coupon Booklets. If all of our homeowners were on auto debit, the Association would have no fees associated with providing members with monthly statements,and this expense item would be reduced to $0. The costs we currently incur are (1) Paper and mailing costs for assessment notices ($1.10 per household, per month) and (2) credit card fees. Apparently, the vast majority of residents do not use auto debit. One of the suggestions that Ceasar provided to the Board, was that the Association replace the monthly statement with a single coupon booklet. The Directors voted 4-0 to replace the monthly invoices with a coupon booklet. If you would like to sign up for auto pay, please click here to learn how.

Telephone and Internet Charges: At the suggestion of management, telephone service for the Association was recently streamlined to increase efficiency and reduce Association costs.

In future sessions, the Board will also be looking at ways to offset increasing costs with additional revenue.

The next Budget Study Session will be on Thursday September 1, 2016.