EAGLE CROSSING HOA 2007 BUDGET PRESENTATION MONDAY, NOVEMBER 27, 2006 BY: BRENT WARNER, TREASURER

EAGLE CROSSING EAGLE CROSSING HOAHOA

2007 BUDGET PRESENTATION2007 BUDGET PRESENTATION

MONDAY, NOVEMBER 27, 2006MONDAY, NOVEMBER 27, 2006BY: BRENT WARNER, TREASURERBY: BRENT WARNER, TREASURER

WHAT DOES OUR BUDGET CONSIST OF?WHAT DOES OUR BUDGET CONSIST OF?

MAJOR CHALLENGES FACED IN 2006MAJOR CHALLENGES FACED IN 2006

IMPACT FOR 2007 AND BEYONDIMPACT FOR 2007 AND BEYOND

FUTURE INITIATIVES FOR NEW BOARDFUTURE INITIATIVES FOR NEW BOARD


BUDGET IS BROKEN DOWN INTO TWO BUDGET IS BROKEN DOWN INTO TWO AREAS WITH THREE MAJOR AREAS WITH THREE MAJOR COMPONENTS OF EXPENSES:COMPONENTS OF EXPENSES:

1.1. INCOMEINCOME

2.2. EXPENSESEXPENSES1.1. ADMINISTRATIVEADMINISTRATIVE

2.2. UTILITIESUTILITIES

3.3. GROUNDS MAINTENANCEGROUNDS MAINTENANCE


INCOMEINCOME

ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTSALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS

I’LL EXPLAIN THIS LATERI’LL EXPLAIN THIS LATER


INCOMEINCOME

RESERVE FUNDINGRESERVE FUNDING

LET ME COME BACK TO THIS, TOO.LET ME COME BACK TO THIS, TOO.


EXPENSESEXPENSES ADMINISTRATIVE EXPENSES ADMINISTRATIVE EXPENSES

(OVERHEAD OF THE HOA)(OVERHEAD OF THE HOA)

1)1) MANAGEMENT FEES MANAGEMENT FEES WHAT WE PAY THE MANAGEMENT COMPANY.WHAT WE PAY THE MANAGEMENT COMPANY.

2)2) PROFESSIONAL FEESPROFESSIONAL FEESLEGAL FEES FOR COLLECTION, COVENANT ENFORCEMENT, TAX LEGAL FEES FOR COLLECTION, COVENANT ENFORCEMENT, TAX PREP, RESERVE STUDY (IN 2006)PREP, RESERVE STUDY (IN 2006)

3)3) ADMINISTRATIVE EXPENSESADMINISTRATIVE EXPENSES

MAILING FEES, COPY CHARGES, FAX FEES, OTHER TYPES MAILING FEES, COPY CHARGES, FAX FEES, OTHER TYPES OF OF

OFFICE EXPENSES PAID BY HOAOFFICE EXPENSES PAID BY HOA


EXPENSESEXPENSES ADMINISTRATIVE EXPENSES (CONT’D)ADMINISTRATIVE EXPENSES (CONT’D)4.4. INSURANCE EXPENSEINSURANCE EXPENSE

DIRECTOR’S LIABILITY INSURANCE POLICY AND HOA INSURANCE DIRECTOR’S LIABILITY INSURANCE POLICY AND HOA INSURANCE POLICYPOLICY

5.5. PROPERTY TAXESPROPERTY TAXES YES, WE PAY PROPERTY TAXES. IT’S ON THE COMMON AREA.YES, WE PAY PROPERTY TAXES. IT’S ON THE COMMON AREA.

6.6. WEBSITE EXPENSEWEBSITE EXPENSE CONTRACT FOR WEBSITE MONITORING AND DOMAIN NAME. CONTRACT FOR WEBSITE MONITORING AND DOMAIN NAME.

SHOULD HAVE A NEW SITE UP IN EARLY 2007.SHOULD HAVE A NEW SITE UP IN EARLY 2007.

7.7. SOCIAL COMMITTEE EXPENSESOCIAL COMMITTEE EXPENSE EXPENSES FOR GARAGE SALE SIGNS, NEWSPAPER ADS, EXPENSES FOR GARAGE SALE SIGNS, NEWSPAPER ADS, NATIONAL NIGHT OUT, VARIOUS OTHER PLANNED SOCIAL NATIONAL NIGHT OUT, VARIOUS OTHER PLANNED SOCIAL EVENTS IN NEIGHBORHOOD.EVENTS IN NEIGHBORHOOD.


EXPENSESEXPENSESUTILITY EXPENSESUTILITY EXPENSES1.1. SECURITY LIGHTINGSECURITY LIGHTING

STREET LIGHTING PAID TO IPL TO LIGHT OUR STREETS. THIS IS STREET LIGHTING PAID TO IPL TO LIGHT OUR STREETS. THIS IS NOT PAID BY THE COUNTY BUT BY THE HOA.NOT PAID BY THE COUNTY BUT BY THE HOA.

GROUNDS MAINTENANCEGROUNDS MAINTENANCE((EVERYBODY’S FAVORITE WHIPPING BOY!)EVERYBODY’S FAVORITE WHIPPING BOY!)

1.1. SNOW REMOVALSNOW REMOVAL TO REMOVE SNOW.TO REMOVE SNOW.

2.2. LAKE MAINTENANCELAKE MAINTENANCE TO TREAT OUR PONDS ON A SCHEDULED BASIS TO PREVENT ALGAE AND TO TREAT OUR PONDS ON A SCHEDULED BASIS TO PREVENT ALGAE AND

OTHER CRAP THAT CAN GET INTO OUR PONDS.OTHER CRAP THAT CAN GET INTO OUR PONDS.


EXPENSESEXPENSESGROUNDS MAINTENANCE (CONT’D)GROUNDS MAINTENANCE (CONT’D)

3.3. MOWING AND TURF CAREMOWING AND TURF CARE

TO MOW OUR COMMON AREA GRASS. MOST AREAS ARE CUT WEEKLY, TO MOW OUR COMMON AREA GRASS. MOST AREAS ARE CUT WEEKLY, SOME ARE “BUSH HOGGED” MONTHLY OR ONCE A YEAR.SOME ARE “BUSH HOGGED” MONTHLY OR ONCE A YEAR.

BOARD ENTERTAINED SEVEN BIDS FOR MOWING WITH PRICES RANGING BOARD ENTERTAINED SEVEN BIDS FOR MOWING WITH PRICES RANGING FROM $61,200 TO $202,300.FROM $61,200 TO $202,300.

4.4. FERTILIZATION AND WEED CONTROLFERTILIZATION AND WEED CONTROL FOUR APPLICATIONS OF PRE-EMERGENT FERTILIZER APPLIED TO COMMON FOUR APPLICATIONS OF PRE-EMERGENT FERTILIZER APPLIED TO COMMON

AREA GRASS AND BEDS.AREA GRASS AND BEDS.

BOARD ENTERTAINED SIX BIDS WITH PRICES RANGING FROM $15,000 TO BOARD ENTERTAINED SIX BIDS WITH PRICES RANGING FROM $15,000 TO $82,200$82,200



5.5. MULCHMULCH TO MULCH OUR PLAYGROUNDS, TREE BEDS, COMMON AREA TO MULCH OUR PLAYGROUNDS, TREE BEDS, COMMON AREA

PATHS, ENTRANCE WAY, ISLANDS, ETC. PATHS, ENTRANCE WAY, ISLANDS, ETC.

BOARD ACCEPTED BID OF APPROXIMATELY $30,000 TO MULCH IN BOARD ACCEPTED BID OF APPROXIMATELY $30,000 TO MULCH IN 2007. $10,000 WAS BUDGETED FOR THIS YEAR FOR A PARTIAL 2007. $10,000 WAS BUDGETED FOR THIS YEAR FOR A PARTIAL MULCHING, WITH REST TO BE DONE IN 2007. BOARD OPTED TO MULCHING, WITH REST TO BE DONE IN 2007. BOARD OPTED TO MULCH EVERYTHING IN 2007, HENCE THE ADDITIONAL $20,000 IN MULCH EVERYTHING IN 2007, HENCE THE ADDITIONAL $20,000 IN MUCLH.MUCLH.



6.6. COMMON GROUND MAINTENANCECOMMON GROUND MAINTENANCE ON-SITE PERSON TO PULL WEEDS, PICK UP TRASH, TURN OVER BEDS, ON-SITE PERSON TO PULL WEEDS, PICK UP TRASH, TURN OVER BEDS,

WATER FLOWERS, PLUS OTHER MAINTENANCE DUTIES ON OUR COMMON WATER FLOWERS, PLUS OTHER MAINTENANCE DUTIES ON OUR COMMON AREA.AREA.

ONE BOARD PERSON TO LIASION WITH THIS PERSON AND LANDSCAPING ONE BOARD PERSON TO LIASION WITH THIS PERSON AND LANDSCAPING COMPANY TO ENSURE ALL DUTIES ARE PERFORMED.COMPANY TO ENSURE ALL DUTIES ARE PERFORMED.

THIS REPLACES BED MAINTENANCE AS A LINE ITEM IN OUR BUDGET.THIS REPLACES BED MAINTENANCE AS A LINE ITEM IN OUR BUDGET.

7.7. POOL UTILITIESPOOL UTILITIES PHONE AND ELECTRICITY PROVIDED TO BOTH POOLSPHONE AND ELECTRICITY PROVIDED TO BOTH POOLS



8.8. POOL CONTRACTPOOL CONTRACT

OPENING AND CLOSING OF POOLS, WEEKLY TESTING AND CHEMICAL OPENING AND CLOSING OF POOLS, WEEKLY TESTING AND CHEMICAL TREATMENT, CLEANING OF POOLS AND OTHER POOL DUTIES.TREATMENT, CLEANING OF POOLS AND OTHER POOL DUTIES.

9.9. SECURITYSECURITY OFF DUTY HCSD AT $25/HOUR AND PRIVATE SECURITY COMPANY FOR BOTH OFF DUTY HCSD AT $25/HOUR AND PRIVATE SECURITY COMPANY FOR BOTH

POOLS.POOLS.

10.10. COMMON AMENITY MAINTENANCECOMMON AMENITY MAINTENANCE MAINTENANCE TO COMMON AMENITIES SUCH AS REPAIR TO POOL HOUSES MAINTENANCE TO COMMON AMENITIES SUCH AS REPAIR TO POOL HOUSES

(BATHROOMS, EQUIPMENT, ETC.)(BATHROOMS, EQUIPMENT, ETC.)

Budget ProgressionBudget ProgressionINCOME 2004 2005 2006 2007

Association Fees 221,780 255,900 341,200 341,200 Less: Loss from Uncollectible Receivables (1,000) (1,500) (10,300) Allowance for Unpaid Dues (2,500) (9,000) (16,000) 0 Late Fees 5,000 5,000 6,500 0TOTAL INCOME 224,280 250,900 330,200 330,900 Less: Reserve Funding (2,500) (10,000) (15,000) (35,000)TOTAL OPERATING INCOME 221,780 240,900 315,200 295,900

EXPENSES

ADMINISTRATIVE: Management Fees 14,300 20,472 21,500 23,031 Professional Fees 2,500 5,000 12,000 5,000 Administrative Expense 6,000 2,500 2,700 3,800 Insurance Premiums 4,175 5,900 6,000 4,751 Property Taxes 7,500 7,500 22,000 19,600 Website Expense 0 700 1,000 1,200 Social Committee Expense 4,000 4,500 1,000 2,000TOTAL ADMINISTRATIVE 38,475 46,572 66,200 59,382

UTILITIES Security Lighting 34,000 31,000 33,000 33,000TOTAL UTILITIES 34,000 31,000 33,000 33,000

GROUNDS MAINTENANCE: Snow Removal 6,500 6,800 6,800 6,500 Lake Maintenance 5,000 3,700 4,000 5,418 Mowing and Turf Care 64,700 62,825 68,000 72,795 Fertilization and Weed Control 25,872 26,200 35,000 26,200 Mulch 0 0 10,000 20,000 Common Ground Maintenance 5,000 5,100 8,000 18,000 Bed Care 10,000 15,800 28,000 0 Flowers 2,000 0 0 Pool Utilities 1,000 9,950 10,000 10,000 Pool Contract 15,750 21,600 18,500 21,000 Security 7,300 7,000 17,000 20,000 Common Amenity Maintenance 6,000 4,000 10,000 3,000

TOTAL GROUNDS MAINTENANCE 149,122 162,975 215,300 202,913

TOTAL OPERATING EXPENSES 221,597 240,547 314,500 295,295

MAJOR CHALLENGES IN 2006MAJOR CHALLENGES IN 2006


COLLECTION OF DUES CONTINUES TO BE A PROBLEM FOR COLLECTION OF DUES CONTINUES TO BE A PROBLEM FOR EAGLE CROSSING. BUDGETED AMOUNT OF $10,300 IS BASED EAGLE CROSSING. BUDGETED AMOUNT OF $10,300 IS BASED ON CURRENT WRITE-OFFS PLUS ADDITIONAL BASED ON ON CURRENT WRITE-OFFS PLUS ADDITIONAL BASED ON CURRENT COLLECTION REPORTS. CURRENT COLLECTION REPORTS.

BOARD CONTINUES TO REVIEW POSSIBLE ALTERNATIVES BOARD CONTINUES TO REVIEW POSSIBLE ALTERNATIVES TO IMPROVE SITUATION.TO IMPROVE SITUATION.

NEW ATTORNEY HIRED – 120 ACCOUNTS PLACED NEW ATTORNEY HIRED – 120 ACCOUNTS PLACED WITH WITH ATTORNEY. ATTORNEY.

PRIOR ATTORNEY STILL WORKING 57 ACCOUNTS.PRIOR ATTORNEY STILL WORKING 57 ACCOUNTS.

TOTAL OF 177 ACCOUNTS PLACED WITH TOTAL OF 177 ACCOUNTS PLACED WITH ATTORNEY’SATTORNEY’S

BOARD IS CONSIDERING INTIATING FORECLOSURE BOARD IS CONSIDERING INTIATING FORECLOSURE ON ON HOMES WITH DELINQUENT DUES.HOMES WITH DELINQUENT DUES.

MAJOR CHALLENGES IN 2006MAJOR CHALLENGES IN 2006


DELINQUENCY RATE OF APPROXIMATELY DELINQUENCY RATE OF APPROXIMATELY 20%20% IS WAY TOO HIGH!! IS WAY TOO HIGH!!IDEAL RANGE: 3 – 5%IDEAL RANGE: 3 – 5%

HOPEFULLY, TOUGHER ACTION (FORECLOSURE OR THE THREAT OF HOPEFULLY, TOUGHER ACTION (FORECLOSURE OR THE THREAT OF FORECLOSURE WILL HELP BRING DELINQUENCIES IN LINE.FORECLOSURE WILL HELP BRING DELINQUENCIES IN LINE.

AS NEIGHBORHOOD TURNS OVER, WHICH WE SHOULD SEE OVER AS NEIGHBORHOOD TURNS OVER, WHICH WE SHOULD SEE OVER THE NEXT FEW YEARS, NEW HOMEOWNERS SHOULD HAVE THE THE NEXT FEW YEARS, NEW HOMEOWNERS SHOULD HAVE THE ABILITY TO AFFORD HOMES, INCLUDING HOA DUES, REDUCING THE ABILITY TO AFFORD HOMES, INCLUDING HOA DUES, REDUCING THE

DELINQUENCY RATEDELINQUENCY RATE..

WITH GARNISHMENTS, HOMES SOLD, CASH FROM DELINQUENT BORROWERS WITH GARNISHMENTS, HOMES SOLD, CASH FROM DELINQUENT BORROWERS

WILL COME IN SITUATION WILL IMPROVE.WILL COME IN SITUATION WILL IMPROVE.


RESERVE FUNDING SETRESERVE FUNDING SET

WILL ALLOW BOARD TO BUDGET FOR LARGE EXPENDITURES WILL ALLOW BOARD TO BUDGET FOR LARGE EXPENDITURES WITHOUT THE NEED FOR A SPECIAL ASSESSMENT.WITHOUT THE NEED FOR A SPECIAL ASSESSMENT.

IF BOARD CHANGES FUNDING STRATEGY, MAY RESULT IN AN IF BOARD CHANGES FUNDING STRATEGY, MAY RESULT IN AN INCREASE IN DUES. CHANGING FROM A PERCENTAGE INCREASE IN DUES. CHANGING FROM A PERCENTAGE INCREASE METHOD TO A FIXED CONTRIBUTION. INCREASE METHOD TO A FIXED CONTRIBUTION.

WILL HELP FACILITATE THE PREPARATION OF A LONG-TERM WILL HELP FACILITATE THE PREPARATION OF A LONG-TERM BUDGET FOR PLANNING PURPOSES.BUDGET FOR PLANNING PURPOSES.

DELINQUENCIESDELINQUENCIESDEPENDING ON SUCCESS OF COURT ACTION AND COLLECTION, DEPENDING ON SUCCESS OF COURT ACTION AND COLLECTION,

MAY NEED TO INCREASE ALLOWANCE ACCOUNT, RESULTING MAY NEED TO INCREASE ALLOWANCE ACCOUNT, RESULTING IN AN INCREASE IN DUES.IN AN INCREASE IN DUES.


FUTURE OF HOA DUESFUTURE OF HOA DUES

$400 LIKELY NOT CEILING OF DUES. MORE LIKELY IN THE $450 - $400 LIKELY NOT CEILING OF DUES. MORE LIKELY IN THE $450 - $500 RANGE, ALTHOUGH IT IS DIFFICULT TO TELL.$500 RANGE, ALTHOUGH IT IS DIFFICULT TO TELL.

CANNOT “CAP” DUES BECAUSE EXPENSES ARE NOT CAPPED.CANNOT “CAP” DUES BECAUSE EXPENSES ARE NOT CAPPED.

BUDGET AND FINANCE COMMITTEE DID A STUDY OF SIMILAR BUDGET AND FINANCE COMMITTEE DID A STUDY OF SIMILAR NEIGHBORHOODS TO DETERMINE THEIR FEE STRUCTURE AND NEIGHBORHOODS TO DETERMINE THEIR FEE STRUCTURE AND COMPARED TO OURS.COMPARED TO OURS.

IMPACT FOR 2007 AND BEYONDIMPACT FOR 2007 AND BEYONDHOA DUES COMPARISONHOA DUES COMPARISON

SAMPLED 11 HOA’SSAMPLED 11 HOA’S

OF THE ELEVEN SAMPLEDOF THE ELEVEN SAMPLED::

FOUR HAD ONE POOLFOUR HAD ONE POOL EIGHT HAD PONDSEIGHT HAD PONDS THREE HAD PLAYGROUNDS (ALL HAD JUST ONE)THREE HAD PLAYGROUNDS (ALL HAD JUST ONE) TWO HAD WALKING TRAILSTWO HAD WALKING TRAILS

DUES RANGED FROM $190 IN HOA’S THAT HAD NO AMENITIES TO $600 IN HOA’S THAT HAD ONE DUES RANGED FROM $190 IN HOA’S THAT HAD NO AMENITIES TO $600 IN HOA’S THAT HAD ONE POOL AND A SMALL AMOUNT OF COMMON AREA GRASS.POOL AND A SMALL AMOUNT OF COMMON AREA GRASS.

MOST COMMUNITIES WERE IN THE $350 TO $400 RANGE WITH LIMITED COMMON AREA MOST COMMUNITIES WERE IN THE $350 TO $400 RANGE WITH LIMITED COMMON AREA AMENITIES.AMENITIES.

EAGLE CROSSING HAD MORE ACRES OF COMMON AREA GRASS, MORE MILES OF WALKING EAGLE CROSSING HAD MORE ACRES OF COMMON AREA GRASS, MORE MILES OF WALKING TRAILS, MORE POOLS, MORE PLAYGROUNDS AND MORE HOMES THAN MOST, IF NOT ALL TRAILS, MORE POOLS, MORE PLAYGROUNDS AND MORE HOMES THAN MOST, IF NOT ALL THE OTHER NEIGHBORHOODS. YET, OUR DUES WERE IN THE SAME RANGE AS THE OTHER THE OTHER NEIGHBORHOODS. YET, OUR DUES WERE IN THE SAME RANGE AS THE OTHER NEIGHBORHOODS, REGARDLESS OF THEIR AMENITIES.NEIGHBORHOODS, REGARDLESS OF THEIR AMENITIES.


HOA DUES COMPARISONHOA DUES COMPARISON

HOA Dues Comparison

0

100

200

300

400

500

600

700

0 1 2 3 4 5 6 7 8 9 10 11 12

INCOME % of Budget Association Fees 400$ 341,200 Less: Uncollectible Accounts (10,300) 3.48% 12TOTAL INCOME 330,900 Less: Reserve Funding (35,000) 11.83% 41TOTAL OPERATING INCOME 295,900 53

EXPENSES

ADMINISTRATIVE: % of Budget Management Fees 23,031 7.80% 27 Professional Fees 5,000 1.69% 6 Administrative Expense 3,800 1.29% 4 Insurance Premiums 4,751 1.61% 6 Property Taxes 19,600 6.64% 23 Website Expense 1,200 0.41% 1 Social Committee Expense 2,000 0.68% 2TOTAL ADMINISTRATIVE 59,382 20.11% 70

UTILITIES Security Lighting 33,000 11.18% 39TOTAL UTILITIES 33,000 11.18% 39

GROUNDS MAINTENANCE: Snow Removal 6,500 2.20% 8 Lake Maintenance 5,418 1.83% 6 Mowing and Turf Care 72,795 24.65% 85 Fertilization and Weed Control 26,200 8.87% 31 Mulch 20,000 6.77% 23 Common Ground Maintenance 18,000 6.10% 21 Pool Utilities 10,000 3.39% 12 Pool Contract 21,000 7.11% 25 Security 20,000 6.77% 23 Common Amenity Maintenance 3,000 1.02% 4TOTAL GROUNDS 202,913 68.72% 238

Cost per Homeowner

Cost per Homeowner


LOOK AT NATIONAL AND LOCAL HOUSING MARKETLOOK AT NATIONAL AND LOCAL HOUSING MARKET MORE HOMES FOR SALE THAN BUYERSMORE HOMES FOR SALE THAN BUYERS NOT ISOLATED TO EAGLE CROSSING/CP MORGAN HOMESNOT ISOLATED TO EAGLE CROSSING/CP MORGAN HOMES

EARLY IN THE LIFE OF EAGLE CROSSINGEARLY IN THE LIFE OF EAGLE CROSSING MANY HOMES FOR SALEMANY HOMES FOR SALE

FORECLOSURE/BANKRUPTCYFORECLOSURE/BANKRUPTCY DISSATISFACTION WITH NEIGHBORS/NEIGHBORHOODDISSATISFACTION WITH NEIGHBORS/NEIGHBORHOOD DIVORCEDIVORCE JOB TRANSFERJOB TRANSFER

……AND BEYOND???AND BEYOND???

EARLY IN THE LIFE OF EAGLE CROSSING EARLY IN THE LIFE OF EAGLE CROSSING (CONT’D)(CONT’D)

PART OF NORMAL CYCLE FOR NEW PART OF NORMAL CYCLE FOR NEW CONSTRUCTION NEIGHBORHOODSCONSTRUCTION NEIGHBORHOODS

TREND MAY CONTINUE BEFORE STABILITY IS TREND MAY CONTINUE BEFORE STABILITY IS SEENSEEN

BRANCHESBRANCHES

INITIATIVES FOR 2007 BOARDINITIATIVES FOR 2007 BOARD

MONITOR COLLECTION OF DELINQUENT DUES, MONITOR COLLECTION OF DELINQUENT DUES, INCLUDING PROGRESS OF THOSE ACCOUNTS WITH INCLUDING PROGRESS OF THOSE ACCOUNTS WITH ATTORNEY (FOLLOW COLLECTION POLICY)ATTORNEY (FOLLOW COLLECTION POLICY)

COVENANT ENFORCEMENTCOVENANT ENFORCEMENT

WORK COMMITTEES (SAFETY & AWARENESS, WORK COMMITTEES (SAFETY & AWARENESS, BUDGET & FINANCE, SOCIAL COMMITTEE, BUDGET & FINANCE, SOCIAL COMMITTEE, BEAUTIFICATION, ETC.BEAUTIFICATION, ETC.

QUESTIONSQUESTIONS

Documents

EAGLE CROSSING HOA 2007 BUDGET PRESENTATION MONDAY, NOVEMBER 27, 2006 BY: BRENT WARNER, TREASURER