Hello All, 

First a correction, in the presentation I noticed a math error in the percentage of increase, the slides attached have been updated to reflect this.

Thanks to those who were able to attend our meeting on such short notice. Meeting minutes will be sent out after the meeting and light editing for readability. We wanted to make sure we propagate the documents to be discussed right away and provide a summary of our thinking for those who are unable to attend. 

All reports referenced in our presentation can be found in the documents page.

We want to extend our gratitude to all association members for their patience with us as we get up to speed. Regrettably there was zero documentation left from the previous board so we are starting from scratch with engineering and financial assessments. We have a mess to clean up but with everyone’s help we can get our facility in order. 

Decisions made by the board from election until 22.08.18 are conveyed on slide 3

Major events for the facility are detailed on slide 4

Mr. Welch’s litigation with the association is reaching its conclusion. We are settling for $63.436.49 which is currently processing. 

As of 22.07.31 we have $594.69 in operating funds, and $30,001.43 in reserve funds. We have $56,193.15 in accounts receivable. Our total balance sheet is $86,789.27 including liabilities and equity. 

As the money from Mr. Welch’s situation clears, we plan to prioritize it into repairs of the storage area and the roof. 

We had a roof report completed that indicates we have several broken and incorrectly attached vents. There are instances of vegetation in contact with the building. The roof is nearing the end of its life with an estimated 2-3 years left. The report contract includes a meeting to go over the report with their engineers and discuss next steps. We anticipate contracting with them on a future envelope inspection as well to assess the siding and other aspects of the exterior. 

The primary purpose for a COA is to maintain a reserve to handle the financial needs of the association. When a building is constructed there are items with known finite life spans such as roofing, windows, siding etc. Reserve reports keep track of how long until a replacement is anticipated and save funds ahead of time. A fully funded reserve is able to handle the larger expenses, particularly roofing and siding without requiring a special assessment on the residents when large bills come due. Reserve reports are supposed to be updated every 3 years at most, however ours was last updated in 2016. We have recently completed a new reserve study which is attached to this message. The document is lengthy and is worth reviewing in detail, however the executive summary has the key points. 

The low rates enjoyed by residents these past years have unfortunately not been in the best financial interest of the association. We are 4.2% funded with a roof bill coming up in 2-3 years. This puts us at an extremely high risk of special assessment. At current rates, a fully funded reserve balance for an association of our size is $732,740 and we are at $30,710 at time of report. 

Per year our budget is to save $3600 to our reserve, at this rate it would take 30 years from today to save for the roof we need to replace in 2-3 years. 

The recommendation of the reserve report is to execute a special assessment of $275,000 on January 1st in 2023, and increase the reserve funding to $55,500 per year. 

Slide 6 details the components that are pending repairs, with yellow highlighted items being marked for this year. Budget permitting we will address what we can, however there are several non structural items we may defer if their continued deterioration does not risk larger expenses later such as the mailboxes, the sign, and the trash enclosure. The priority for now is the roof and the storage area. 

Our primary goal is to be able to execute the needed repairs and replacements in a timely manner while avoiding a special assessment. As we have no previous documentation, many of the initial sets of data we provided for the reserve report were guesses at best. As we continue to gather new data, future reserve reports will have more accurate projection data. We will not be acting on the recommendation to execute a special assessment of $275,000.

Our funding of the reserve is dangerously low and needs to be increased. We will be acting on the recommendation to increase our yearly funding of the reserve from $3,600 to $55,500. 

We are entering budget season now, and hope to have a fully prepared 2023 budget ready soon. When we have that information it will be conveyed to all residents. 

The following numbers are projections based on an assumption that the 2023 budget excluding the reserve savings is 10% larger than the 2022 budget. These are not commitments. This is meant to act as an estimate for 2023 rates based on current thinking. 

2022 Budget – Minus Reserves = $68,602.59

2022 Budget – Reserves = $3,600.00

2022 Budget – Total = $72,202.59

2023 Budget +10% Estimate – Minus Reserves = $75,462.85

2023 Budget +10% Estimate – Reserves = $55,500.00

2023 Budget +10% Estimate – Total = $130,962.80

2023 Estimated Total Increase = 81.38%

Units numbered 101 and 201 have a 6% share of budget responsibilities, while 102 and 202 have 7%. In 2022, the 6% group has monthly dues of $348.98 and the 7% group has monthly dues of $403.13. With the above estimates, we anticipate that 6% would be roughly $632.99 and that 7% would be roughly $731.21

As board members, we have a responsibility to act in the financial best interests of the association. As the roof and siding begin to fail, we will be required to replace them. In an ideal situation rates would have been adjusted yearly based on reserve reports to ensure there is no major jump in rates or special assessments. At our funding level, we must initiate this steep jump in reserve savings now in an effort to avoid special assessments in the next ~3 years for the roof and ~17 for the siding and windows.

If we maintain course with our historical budget trends, we are guaranteed to have 2 sizable assessments at the ~3 and ~17 year marks, and we are doing everything we can to avoid this.  

Thank you for your time, please reach out with any questions or concerns