Crooked River Ranch

Club & Maintenance

Association FY 2019-2020 Proposed Budget

Here’s What We’re Going to Talk About Tonight

FY 2019-2020 Operating Budget

FY 2019-2020 Capital Reserve Plan

Operating Budget

• The HOA’s annual operating budget is like your family’s budget – it shows where you get your income and where you spend it.

• It doesn’t show your bank balance, what loans you’ve taken out, or what you own.

• It’s not a photo taken at a moment in time. It is more like a video taken over the whole year.

FY 2019-2020 Operating

Budget Rentals RV Park Golf Course Administration Ranch Total

HOA Dues $1,242,680 $1,242,680

Rents $45,000 $45,000

Camping $217,425 $217,425

Ext. Stay $130,000 $130,000

Other Sales $12,500 $188,000 $200,500

Greensfees $572,000 $572,000

Cart Rental $216,000 $216,000

Annual Pass $195,000 $195,000

Cart Storage $35,500 $35,500

Other Revenue $1,000 _______ $12,000 $123,175 $136,175

Total Revenue $46,000 $359,925 $1,218,500 $1,365,855 $2,990,280

Total Expenses -$29,351 -$259,771 -$1,212,460 -$1,297,008 -$2,798,590

Rev over Exp $16,649 $100,154 $6,040 $68,847 $191,690

Contribution to Ranch Profits

Administration

RV Park

Rentals

Golf Course

Administration $68,847

Rentals $16,649

RV Park $100,154

Golf Course $6,040 Based on FY 2018-2019

Proposed Operating Budget

FY 2019-2020 Admin Budget

Revenue Expenses Revenue over

(under) Expenses

Administration $1,335,180 $388,696 $946,484

Pool $525 $67,385 -$66,860

Snack Shack $25,050 $33,448 -$8,398

General Maintenance

$5,100 $227,456 -$222,356

Roads $0 $580,023 -$580,023

Administration $1,365,855 $1,297,008 $68,847

How are your $1,242,680 in dues spent?

46.7%

17.9%

5.4%

.7%

5.7%

23.6%

Roads $580,023

Snack Shack $8,398

Pool $66,860

Gen. Maintenance

$222,356

Admin Office $294,696 Based on FY 2019-2020

Proposed Operating Budget

CRP $70,347

What are Capital Assets and Depreciation?

• Your family has capital assets, like a house, a wood stove and a car. They are items that last more than one year.

• Your capital assets deteriorate (and lose value) every year through use. The HOA calls that depreciation.

• Your family needs to protect your investment by repairing and replacing your assets. So does our HOA.

• Your family spends less if you save the money first rather than

borrowing it. So does our HOA.

What is depreciation?

Suppose you buy a car in 2019 for $45,000, and suppose that car will last 10 years…

• Operating Expenses: ▫ Gas

▫ Oil

▫ Minor Repairs

▫ General Maintenance, etc.

• Depreciation Expense: ▫ Automobile cost / 10 years

▫ $45,000. / 10 years = $4500. per year

When you need to replace that car in 10 years….. Will you be ready?

HOA Capital Expenditures

• The HOA’s annual capital expenditure budget is a list of capital assets that need to be repaired or replaced during the year.

• The HOA considers any major repair or replacement that exceeds $3,000 to be a capital expenditure. It is paid for with savings that have been set aside for that purpose within the Capital Reserve Fund.

• The HOA’s 30 Year Capital Reserve Plan ensures that the Association is adequately funded to engage in capital expenditures and can effectively plan for them.

What do we need to plan for?

FY 2019-2020 Capital Expenditure Budget

Rentals RV Park Golf

Course Administration Total

Pool Electric Panel & Sm. Pool Resurfacing

$32,500 $32,500

Reroofing $16,000 $16,000

B Loop Drain Field $30,000 $30,000

Top Dresser $10,000 $10,000

Rough Mower $38,000 $38,000

Greens Sprayer $28,000 $28,000

Pressure Washer $8,000 $8,000

Clubhouse Roof $27,500 $27,500

Fuel Cardlock System $20,000 $20,000

Used Excavator $75,000 $75,000

Used Crack Sealer $7,000 $7,000

Total $16,000 $30,000 $84,000 $162,000 $292,000

• The Board of Directors has a fiduciary responsibility

to the HOA property owners to protect our shared investment in the common assets of the HOA.

•Our CRP includes a list of all the assets of the HOA, the current replacement costs, and estimated remaining lives over the next 30 years.

•Our CRP ensures that the HOA will have adequate funds to meet these obligations.

Capital Reserve Plan (CRP)

How much does our HOA need to save

to protect our assets?

• The BAC estimates that our HOA needs to raise $6.3 million in current dollars over the next 30 years to repair and replace these assets.

• Each year, the BAC calculates how much is needed to stay on target. By this year, we should have saved $2.3 million.

• We currently have about $1,015,685 in the CRP, or 45% of what we should have saved by today.

• We are short because we did not start funding the CRP until about 10 years ago because our HOA dues were too low.

0

125

250

375

500

1973 1978 1983 1988 1993 1998 2003 2008 2013 2018 2019

HOA Dues in Five Year Intervals

What are the Risks if we

fail to save enough?

• HOA standards for a Capital Reserve Plan recommend maintaining each year a minimum of 70% of the total amount needed in the future.

• Without a strong Capital Reserve Plan balance, the HOA may be restricted in obtaining bank financing for major repairs or replacements.

• The HOA might require an emergency assessment for each of our 2,644 property owners.

$0

$550,000

$1,100,000

$1,650,000

$2,200,000

$2,750,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Future

Capital Reserve Plan History

70%

100%

23%

51%

29% 45%

45%

FY 2019-2020 5 Year CRP

FY 2019 Actual & Est

FY 2020 Budgeted

FY 2021 Project

FY 2022 Project

FY 2023 Project

FY 2024 Project

Beg. Balance $988,720 $1,015,685 $1,043,951 $998,255 $1,114,434 $1,191,683

Depreciation $114,755 $116,712 $114,240 $119,984 $123,584 $127,291

Transfer Commitments $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

Discretionary Transfers $125,000 $125,000 $125,000 $125,000 $125,000 $125,000

Interest Earned $2,710 $3,555 $3,654 $3,494 $3,901 $4,171

Capital Expenditures -$290,500 -$292,000 -$363,590 -$207,300 -$250,234 -$362,414

End. Balance $1,015,685 $1,043,951 $998,255 $1,114,434 $1,191,683 $1,160,732

Where do we go from here?

• Our Board of Directors should continue to fund the CRP to achieve and maintain a 70% funding level.

• To do that, our HOA dues will need to be raised on a regular basis in amounts similar to the last three years.

• In addition, our HOA needs to continue to improve the profitability of our revenue-producing businesses through capital investments and better marketing.

Thank You for taking the time to learn and understand how the Crooked River

Ranch Budget is prepared and implemented!

Questions?