I’m Carey Thompson, a fellow homeowner and since June 2020, your Treasurer of our HOA Board. I assumed that responsibility when Bruce Marley resigned for personal reasons. It was an easy transition for me since I was the previous Treasurer and a member of the Finance Advisory Committee. Since I rejoined the Board, we have not been able to have meetings with homeowners in attendance. I’ve been very brief in my reports at the open Board meetings held via streaming, so I thought it might be a good time to provide you an update.
By now you should have received a packet in the mail that contains a cover letter from me and includes the 2020 annual audit results as well as our current insurance coverage. The law requires us to mail this information to you every year. In addition, our resident’s only website has an abundance of detailed financial reports for those of you interested in drilling down into the details.
So, in the spirit of a “State of the Union” address, I want to bring you all up to date on how our community is doing financially. Although this topic makes some people’s eyes glaze over, I think you’ll want to hear how we’re doing. I’ll keep it simple and brief, and I promise you there won’t be a quiz at the end.
Overall, how are we doing financially? In a word – great.
When the pandemic crisis hit in March 2020, the Board took proactive measures to slash expenses to make up for lost revenue. At the height of the pandemic, both Shadows and our golf courses were closed. With no end-of-season group and club parties, there was no revenue from catering, which is usually quite profitable for us. Our investment income was decreased due to falling investment rates.
The Board took steps early on in the crisis to decrease our operating budget expenses including golf, landscape, property protection, fitness, facilities/maintenance, mostly in personnel costs. Closed facilities do not need as many people to maintain them in good working condition. As a result, our 2020 actual performance was just over $600,000 above our budget plan. Here are the numbers:
When the 2020 operating budget was approved, the Board planned just over $14 million in revenue and $14.4 million in expenses, which was a $331,000 budget deficit of revenue over expenses. Our existing working capital would cover that deficit. It allowed the Board to approve an $8 per month credit on the 2020 monthly assessment.
However, due to the cost saving measures the Board took, the actual financial performance for the year was $12.8 million in revenue and $12.5 million in expenses. Although we had reduced revenue in fitness, golf, food and beverage, as well as investment income, we reduced the expenses even more. That’s how we were able to finish the year more than $600,000 above our planned budget. In addition, the favorable variance in actual results, as well as the accumulated net working capital in the
Operating Fund, allowed the Board to authorize a one-time annual credit of $144 per home or $496,800 in total effective January 1, 2021. This $144 credit per home was reflected in your HOA account and your monthly assessment for January 2021 was reduced by the one-time credit.
Since rejoining the board, in addition to the standard monthly responsibilities, I have been quite busy with several major projects: I coordinated the development of the 2021 budget, renegotiated the Troon contract, updated our investment policy, oversaw the 2021 Reserve Study, and the 2020 annual audit and filing of our income taxes. Of course, I had lots of help from FAC and Bill Wethe, as well as significant support from our DRM General Manager, Tyler Ingle and Troon General Manager, Rolland Vaughn.
Here’s what’s on tap for the coming year. The Board is now working on ways to increase our investment income. Return on standard Certificates of Deposit is extremely low, less than 1% of the value of the CD on maturity. We have received some recommendations from our Comerica investment advisors and the FAC for the Board’s consideration. The more revenue we can generate from investment income means less we need to assess homeowners in monthly dues. I will share more information on this in the near future.
We are also planning to replace our golf cart fleet this year. The fleet we purchased almost 5 years ago has been fully depreciated and it is time to purchase new carts. We have been saving money in our Replacement Fund for this purchase. Fortunately, unlike when we previously leased golf carts, we have a trade-in value of more than $200,000 as opposed to no value on the leased carts. We are receiving bids and expect to have new carts delivered by the start of the season this coming November.
When this term of office expires in April 2022, I plan to apply to rejoin the FAC as a regular member. Currently, our FAC has three vacant positions. Yes, you do need a financial or related background to serve on this committee, but we have not had any applications for membership in many months despite our many efforts at recruiting. It’s easy to apply, just go to our resident’s only section of the HOA website and search for the volunteer application form.
As I mentioned, you recently received a packet from me including the 2020 audit of financial statements highlighting our results along with an abundance of additional detail. Take a moment to review the audit. I think you will be happy with our financial standing.
I welcome your comments and questions. You can email me anytime. The address is on the inside front cover of The View every month. I look forward to seeing you at an open board meeting in the future.