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Nepenthe Update on Finances

Nepenthe Update on Finances. Board of Directors Meeting Nov. 30, 2009. Items. Operating budget Reserves budgets Financial planning Painting and Siding. Just Like at Home. Day to Day Living Costs Utilities Landscape Paper Allowance. Checking Account. Paycheck. Saving Account.

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Nepenthe Update on Finances

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  1. Nepenthe Updateon Finances Board of Directors Meeting Nov. 30, 2009

  2. Items • Operating budget • Reserves budgets • Financial planning • Painting and Siding

  3. Just Like at Home Day to Day Living Costs Utilities Landscape Paper Allowance Checking Account Paycheck Saving Account Savings for the Rainy Day: Siding Painting Roofing Machines break

  4. Just Like at Home – At Nepenthe… Day to Day Living Costs Utilities Landscape Office supplies Salaries Operating Account DUES Reserves Accounts Savings for the Rainy Day: Siding Painting Roofing Machines break

  5. Operating Budget • Easy to plan • Routine costs • Projections of increases fairly reliable Checking Account SMUD Water Etc… BILLS CHECKS

  6. Monthly Routine Costs • SMUD • Pool maintenance • Landscape service • Phone lines • Etc

  7. Operating Budget Savings • Board worked hard last year to find efficiencies created last year: • E-mailing newsletter • End copier lease • Not sending copying to southern California but doing it in house • Taking hard look at landscape maintenance contract • Significant savings • Fall planting • Irrigation work

  8. Dues for Operating Expenses • Finance committee recommended an Operating Expense budget to the Board that called for a $4.00 a month increase. • The Board sent the budget back to the FC to redo with no more than a $2.00 a month increase. • The Board voted to increase the Operating dues by $2.00 effective January 1, 2010.

  9. Reserve Account Buildings Landscape Common Areas Paving

  10. Reserve Account We have improved but still Need to address watering the Streets. Landscape

  11. Reserve Account BEFORE Common Areas

  12. Reserve Account AFTER Common Areas

  13. Reserve Account BEFORE Paving

  14. Reserve Account Buildings BEFORE

  15. Reserve Account Buildings AFTER

  16. Funding the Reserves • Good financial planning • Avoids special assessment • Other HOAs have had assessments of $32,000 in ONE year! • Looked at by lenders before they will approve an HOA loan for purchase

  17. Reserves AreThe Planning Process

  18. RESERVES = ESTIMATES • Projects • What • When • Cost

  19. Schedule Finish Painting & Siding Finish Painting & Siding Painting & Siding Painting & Siding 2009 – 2010 – 2011 – 2012 …. 2020 …… 2030 ……… 2040 Roof Remodel Clubhouse Roof Remodel Clubhouse Water! Painting & Siding

  20. Schedule Water! Finish Painting & Siding Painting & Siding Finish Painting & Siding Painting & Siding Painting & Siding 2009 – 2010 – 2011 – 2012 …. 2020 …… 2030 ……… 2040 Roof Remodel Clubhouse Roof Remodel Clubhouse

  21. Reserves AreThe Planning Process VERY HIGH Short Tem ROOFING

  22. Funding Targets • Reserve study projects our funding levels in the thirty year bar chart. • Fully funded means we have enough money to pay for everything if everything failed in any year. • Target Is 70% funded.

  23. Dues for Reserves • The Board is increasing the monthly dues contribution to the reserves by $2.00.

  24. TOTAL INCREASE $2.00 to Operating Expenses $2.00 to Reserves Account $4.00 Overall Increase to Monthly Dues This equates to a one percent increase.

  25. How Do You Figure The Costs of Items in the Reserve Study? Start talking to contractors Finish Painting & Siding Finish Painting & Siding Painting & Siding Estimate! Painting & Siding 2006 – 2007 – 2008 - 2009 – 2010 – 2011 – 2012 …. 2020 …… 2030 ……… 2040 Roof Remodel Clubhouse Roof Remodel Clubhouse Water! Painting & Siding Estimate! Estimate!

  26. How Do You Figure The Costs of Items in the Reserve Study? Follow actual costs Finish Painting & Siding Finish Painting & Siding Painting & Siding Estimate! Painting & Siding 2006 – 2007 – 2008 - 2009 – 2010 – 2011 – 2012 …. 2020 …… 2030 ……… 2040 ….. Roof Remodel Clubhouse Roof Remodel Clubhouse Water! Painting & Siding Estimate! Conversations with architects

  27. How Do You Figure The Costs of Items in the Reserve Study? Follow actual costs Finish Painting & Siding Finish Painting & Siding Painting & Siding Estimate! Painting & Siding 2006 – 2007 – 2008 - 2009 – 2010 – 2011 – 2012 …. 2020 …… 2030 ……… 2040 ….. • Preliminary discussions. • Homeowner meetings in January/February over use of space. • Estimates include Pool Patio concrete replacement which was left out of earlier studies. Roof Remodel Clubhouse Roof Remodel Clubhouse Water! Painting & Siding Guessimate! Conversations with architects

  28. The closer you get to spending the money,the more accurate your estimate will be.

  29. But then… life happens!

  30. But then… life happens! For example, WATER

  31. How Do You Figure The Costs of Items in the Reserve Study? Follow actual costs Water! Finish Painting & Siding Painting & Siding Finish Painting & Siding Painting & Siding Estimate! Painting & Siding 2006 – 2007 – 2008 - 2009 – 2010 – 2011 – 2012 …. 2020 …… 2030 ……… 2040 ….. Roof Remodel Clubhouse Roof Remodel Clubhouse May not be able to afford everything identified in reserve. Water! Painting & Siding Estimate! Conversations with architects

  32. A Reserve Study is simply an estimate of future potential costs.And every year the estimates change.And every three years the estimates are reviewed in detail and may change even more.

  33. PAINTING & SIDINGIs it over budget?

  34. What was the budget… • Finance Committee estimates • Board president estimates (O. Turner) • Bids • Reserve amounts from 06 to 09 • Project manager estimates

  35. Lesson:Have One Number Separate From Reserves For Any and Every ProjectConfusion ensued from too many numbers discussed for Paint/Siding.

  36. Current Painting and Siding Project • In 2006 Finance Committee recommended to the board that they start to consider an assessment. • In 2007 the FC recommended an assessment of $5,000 for each owner. • This was voted on by the membership and passed.

  37. Cost of Painting and Siding • In 2006 the FC told owners cost of P&S etimated to be $3.4 million. $3,400,000

  38. Finance Committee Presentation to Homeowners Oct 2006 $3,400,000 FROM POWERPOINT PRESENTED TO HOA OCT 06

  39. Cost Estimates • In 2007 the Finance Committee increased that estimate to be $5.5 million. $5,500,000

  40. Key Reserve ExpensesFinance Committee Sept 07 • Painting/Siding • $5.5 million over three years • These are reasonable estimates • Can this be put off? • Siding is deteriorating faster than anticipated • $298,000 needed last fall for emergency repairs • Additional funds will be needed this year for problems recently identified. FROM POWERPOINT PRESENTED TO HOA SEPT 07 $5,500,000

  41. Finance Committee Presentation to Homeowners Sept 2007 $5,500,000 FROM POWERPOINT PRESENTED TO HOA SEPT 07

  42. Crib Notes From Board President • Source: Sept 4, 2007 Word Document • $4,673,500 paint and siding 2008-2010 • $ 290,206 for additional siding for failures – this has been included in the project • TOTAL = $4,963,716 $4,673,500

  43. Bid From Draeger 2007 • $2,145,301 estimate • A Chart of unit charges were included • Everyone expected the costs to be higher than the bids due to problems that would be uncovered as siding was removed. • Draeger was selected for low bid, low unit cost, and ability to use the new ceramic paint. $2,145,301+

  44. Ceramic Paint • Painting Cycles • Nepenthe has not maintained a paint cycle consistently. • This is what caused many of our problems. • Paint lasts 5 years. • Ceramic paint has potential to last 7 to 10 years. If this holds true, we will have saved a lot of money!

  45. DanMark Estimates • February 2007 - $4,129,129 • September 2007 - $4,098,290

  46. Looking at Reserves for P&S

  47. Including Fence Gutters, over by 16% Over estimate by 9% These estimates did not include inflation factors!

  48. Projected Final Costs Paint, Siding, and Project Management Fees are 9% or $348,889 more than estimated in 2007. Total Project including above and gutters, fences, and project yard were 16% or $644,817 more than estimated in 2007. However, funds were reserved separately for gutters and fences during this time. WITHOUT INFLATION FACTORS!

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