Reserve Study – Budget Meeting

You are Cordially Invited:

Don’t miss the Board of Director’s
Reserve Study/Budget Meeting,
open to ALL Residents.
June 16 at 9:00 AM – 12:00 PM
at the Montecito Clubhouse – Ballroom

Have you been wondering why our “Reserve Account” is now being called the Repair and Replacement Fund?  Have you been wondering what items/projects are being funded in 2017 out of this fund, as opposed to the general operating budget?

Where are we in respect to being fully funded in our reserve fund balance?  Hear from the experts in this excerpt from the summary report:

As of December 31, 2016, the estimated ending reserve fund balance is $12,292,000 and the estimated current replacement cost is $35,585,127 for the portfolio of reserve components. The projected future replacement cost of the portfolio is $49,165,976, calculated at an annually compounded inflation rate of 2.00%. The Association’s level of funding which is based upon the estimated ending reserve fund balance divided by the reserve components’ fully funded amount is 83.14%. This is referred to as Percent Funded. The Association would be 100.00% funded if there were $14,784,561.00 in the reserve fund.

The current deficiency (or surplus if the number is in parenthesis) in reserve funding expressed on a per unit basis is $722.48. This is calculated by subtracting the ending balance ($12,292,000) from the 100% funded figure ($14,784,561.00), then divided by the number of ownership interests (3450). There is currently no requirement to be fully funded.

Our original analysis of the cash flow for this association indicated future inadequate funding if there were no annual increases to the Reserves. It is our understanding the Board of Directors will allocate a total of $155,250 per month starting in 2017 ($45.00 per unit per month for each of the 3450 ownership interests) towards the reserve fund. To offset the future cash shortfall, we recommend and have included an increase of 3.32% starting in 2018 for 29 years. The increase is scheduled to take effect in the year 2018. The Board of Directors may change the amount; however, it will impact the level of funding on reserves. These numbers, by themselves, are not a clear indicator of financial strength and could indicate underfunding, overfunding, or adequate funding.

This is YOUR money being spent and you have a right to hear how it’s being spent.

So, please join us June 16 at 9:00 AM – 12:00 PM
at the Montecito Clubhouse – Ballroom