2019-2020 Board of Directors

It’s More Than Living... It’s A Lifestyle!

1565 E. Rancho Vistoso Blvd., Oro Valley, AZ 85755520-825-3711www.scovaz.com

Lou GardVice President

Howard SchulzDirector

Jim MitchellDirector

Christine LudwigDirector

Joy HuxtableSecretary

Tim KelleyTreasurer

John WilsonPresident

Asset Reserve Capital Contingency Fund Fund FundProjected Balance June 30, 2019 $5,214,399 $1,000,427 $197,710 Membership Dues $1,120,000 Capital Contrib. Fees* $50,300 $430,313 AT&T Lease Revenue $40,200 Excess Revenues from Operations $231,718 Interest Revenue $79,181 $20,273 $3,034 Other Revenue $9,000 Capital Expenditures ($1,113,957) Projected Balance June 30, 2020 $5,349,923 $1,722,931 $209,744 *170 resales @ $2,812.50; 10% to Asset Reserve Fund

Revenues: Annual Homeowner Fees (58%) 4,665,000 Golf Revenues (21%) 1,713,981 Restaurant Revenues (15%) 1,254,000 Activities Programs (2%) 177,600 Other Income (4%) 297,700 Total Revenues 8,108,281 Expenses: Payroll & Benefits (47%) 3,822,426 Utilities (11%) 923,220 Repair & Maintenance (1%) 118,910 Supplies & Expenses (25%) 2,056,393 Total Expenses 6,920,949 Excess Revenues 1,187,332 Capital Funding: Contribution to Asset Reserve (14%) 1,120,000 Contribution to Wash Fund (.31%) 25,000 New Capital Acquisitions (.49%) 39,600 Total Capital Funding 1,184,600 Results of Operations 2,732

of homeowners, both present and fu-ture. It is the Board’s task to not only maintain what we have, but to plan for the future. Perhaps you will agree, that surely is challenging. No reliable crystal ball is available. In planning for the future, we are aided by rec-ommendations from relevant com-mittees (e.g., Long Range Planning Committee, Marketing Committee) as well as input from residents. In the immediate future, surely one of the most significant changes will be the renovation of our Activity Center. Es-sentially unchanged since it was built about thirty years ago, it is sorely in need of updating and refitting to meet current and anticipated future needs. The Activity Center Renovation Committee has already presented two forums (in March, 2019, and video available on the SCOV website) to update the community on their prog-ress. As their specific proposals and estimated costs become available, that information will be made avail-able to the community. All residents have a stake in this project, and I urge you to stay tuned for further de-velopments and, as always, feel free to provide your input as we proceed with this task.

2019-2020 Budget Summary & General Information

A Message from Your Board President

Projected Balances for Restricted Use Funds

For Fiscal Year 2019-2020

Revenue & Expense BudgetFor Fiscal Year 2019-2020

John Wilson

Sun City Oro Valley is “an active adult community.” Probably

the most common reading of that phrase is that the “active” de-scribes the “adult.” That is, SCOV is “a community of active adults,” implying that we are not just sitting around on our duffs but are out there participating in, and enjoy-ing, the many activities that SCOV and its surroundings have to offer. But it occurs to me that there is another way to read that, with the “active” referring to the “commu-nity.” In other words, SCOV is an “active community of adults.” “Ac-tive” implies change, and if there is anything that SCOV has done over the years, it is fairly described as change. Fellow Board member Joy Huxtable had a great article in the May issue of the Tipster re-counting some of the many changes that have occurred in SCOV since its inception. (If you haven’t read that interesting article by Joy, it is available through the SCOV website: www.suncityorovalley.com.) As Joy pointed out, “Change is inevitable and constant. SCOV will continue to evolve...” as it adapts to new tech-nologies and changing preferences

The 2018/19 fiscal year has been very successful and productive.

We have seen a variety of new activ-ities and a major renovation proj-ect as well as governing document amendments.

The Views Restaurant kitchen ren-ovation project was a tremendous success. The remodel included a new fryer that filters the cooking oil al-lowing for more use and cutting the expense for cooking oil. Increased fire suppression over the cook line was added to support the fryer. The configuration of the kitchen was modified for efficiency. This resulted in the replacement and relocation of the walk-in freezer and refrigerator. The new grease interceptor was con-nected and the flow of the kitchen was analyzed with several changes being made. The dish wash station was relocated to facilitate service and received a new high speed/high efficiency dish washer. The beverage station was completely redesigned and received a new door to the din-ing room allowing for less steps to service our customers. Improved lighting was installed along with improved beverage accessibility. A pass-through door was also added to a wall decreasing the number of steps required for cook staff to access

ASSETS

Current Assets: Cash & Cash Equivalents $2,505,311 Investments in Cert. of Deposits 5,795,831 Receivables 100,162 Inventories 97,783 Prepaids & Deposits 85,475 Total Current Assets 8,584,562 Fixed Assets: Land, Buildings & Equipment 30,807,289 Accumulated Depreciation (17,207,325) Total Fixed Assets 13,599,964

Total Assets $22,184,526

LIABILITIES & FUNDS

Current Liabilities: Accounts Payable & Accruals $332,579 Deferred Revenues 1,068,618 Total Liabilities 1,401,197 Fund Balances: Operations 479,856 Restricted Use Funds 20,303,473 Total Funds 20,783,329

Total Liabilities & Funds $22,184,526

The forecast for the current ’18-’19 fiscal year is for a budget surplus of approximately $230,000. Over 80% of this surplus is related to the Golf oper-ations. Savings in Administration also contributed.

Following the close of the year and the completion of the annual audit by an outside firm, the Board will determine where this surplus should be credit-ed. Historically, the budget surplus is much smaller than this year’s estimate and has been applied to either the Asset Reserve, Capital, and/or Contingency Funds. The current thinking is that this surplus will be credited towards the Capital Fund in anticipation of the Activity Center Renovation funding require-ments.

The table below shows how the annual dues of SCOV compare with other HOAs. Some of these are the HOAs we “compete” with to attract new buyers for our home sales. In addition to the attraction of our community in general, the amenities, lower annual dues, and the absence of special assessments are important as new home buyers evaluate their options.

Association 2019 2018 2017 2016 2015SaddleBrooke Ranch * $2,700 $1,980 $1,680 $1,886 $1,884Pebble Creek * $2,572 $2,448 $2,310 $2,100 $1,980Quail Creek * $2,556 $2,316 $2,136 $1,896 $1,776Highlands @ Dove Mtn $2,448 $2,376 $2,316 $2,208 $2,160SaddleBrooke HOA #1 $2,433 $2,383 $2,383 $2,383 $2,383SaddleBrooke HOA #2 $2,160 $2,225 $1,980 $1,980 $1,780Sun City Oro Valley $1,875 $1,865 $1,790 $1,685 $1,620Sun City Anthem * # $1,788 $1,210 $1,210 $1,100 $1,560Sun City Festival * $1,656 $1,596 $1,748 $1,656 $1,608

Note: * Developer Controlled HOA # Plus Assessment

In those cases where the developer is still building and managing the

association (indicated by *) annual dues may be kept artificially low to attract new buyers. SCOV has the lowest dues when compared to the HOAs that are geographically the closest to us.

Our annual budget process is complete, and annual dues will be increasing by $10, or 0.5%, to $1,875.

Voter approved increases in the AZ minimum wage have impacted all the operational departments. Increases are also attributable to efforts to remain wage and benefit competitive in a strengthening economy.

In ’19 the Board approved an operational business plan targeted to improve our restaurant operation. The results from this plan have been positive and this year’s budget reflects the continuation of increased staffing and service.

The Board accepted the recommendation of the Finance-Budget Committee to fund the Asset Reserve Fund between 60 and 70%. This year’s dues contribution to the Asset Reserve Fund has increased by $14. The risk of a special assessment related to existing assets is low.

The performance of the golf operation continues to improve. For the second year in a row dues support for golf has decreased. The annual dues support for golf this year is 27% lower than last year or a decrease of $51. The decrease is the result of increasing golf revenues.

The annual dues breakdown is as follows: Category ’19-’20 ’18-’19 Increase Administration $435 $424 $11 Activities Programs $203 $190 $13 Building Maintenance $331 $317 $14 Common Area Maintenance $218 $211 $ 7 Restaurant $ 77 $ 74 $ 3 Golf $135 $186 ($51) Asset Reserve Fund $450 $436 $14 New Capital Acquisitions $ 16 $ 6 $10 Capital Fund $ 0 $ 0 $ 0 Contingency Fund $ 0 $ 11 ($11) Wash Fund $ 10 $ 10 $ 0 Total $1,875 $1,865 $ 10

Treasurer Looks AheadGeneral Manager’s Update

Mark WadeCMCA , AMS, PCAM, LSM, CAAM

Statement of Financial PositionMarch 31, 2019 (unaudited)

the refrigeration units and food prep area. Improved lighting was added along the expeditors line.

Financially, the Association con-tinues to be in excellent condition. Thanks primarily to The Views Golf Course successes this past year, we were able to keep the annual fees in-crease to a minimum. We are seeing homes selling quickly once placed on the market. The capital contribution fees collected from these home sales provide funds for future construc-tion projects. The reserve fund is adequately funded, and the staff are dedicated to serving and providing customer service for the residents, while maintaining the facilities in a manner that shows pride in the com-munity.

I just passed my second-year an-niversary of service here at Sun City Oro Valley. I’m excited to be a part of a community that shows great sup-port for the Board of Directors and the staff, a community that displays pride in ownership by taking diligent care of their own properties and allowing staff to keep the existing facilities in top notch condition. The volunteerism that is selflessly given is an example to other HOAs around the country. Please keep up the great community spirit and support.

Tim KelleyTreasurer

Homeowner Dues 2018-2019

Administration 23%

Building Maintenance 18%Golf 7%

Common Area Maintenance 12%

New Capital Acquisition 1%Wash Fund .5%

Activities 11%

Restaurant 4%

Asset Reserve Fund 24%