2014 Draft 2014 Draft BudgetBudget

November 19, 2013November 19, 2013

AgendaAgenda

• Revenue & Expense Adjustments 2010 – 2014

– Since 2009 there has been one RFCA increase of $8 or 1.75% in 2011

– Since 2009, there has been no AFCA increase

• Proposed Assessment Increase

• Voting Options

Revenue Generation & Cost Revenue Generation & Cost Control SummaryControl Summary

• What has Highlands Ranch Community Association done to combat rising Assessment increases? (2010 to 2014)

Revenue generation and cost control measures have saved the association over $4 million and held assessments lower:

 • Administrative Function Revenues & Cost Reductions $1,460,0000

– Avoiding Assessment Increases of approximately $9.76 / year  • Recreation Function Revenues & Cost Reductions $2,650,000

– Avoiding Assessment Increases of approximately $18.19 / year

 • Total Assessment Increases avoided $27.95/ year

Administrative Revenue IncreasesAdministrative Revenue Increases

Increased Revenues by over $1,100,000

• Transfer fee increased from $50 to $100 to $130

• Increased Sub-Association Management Services

• Created new web advertising (Yellow Pages)

• Implemented new Architectural Submittal fees

Administrative Expense Administrative Expense Reductions / ControlsReductions / Controls

– Decreased expenses by over $360,000• Limited staff pay increases• Reduced health insurance costs

– Increased health plan deductibles and co-insurance– Increased employee contributions– Increased participation in lower cost HSA plan

• Reduced HRCA 401(k) plan contribution from 7% to 5%• Reduced newsletter and invoicing production and mailing costs by introducing

opt-out option• Changed Administrative Assessment billing to once a year vs. quarterly • Renegotiated office supplies and equipment contracts• Reduced telephone lines and renegotiated managed service contract• Reduced payroll service costs• Reduced volunteer, business and community expenses

Recreation Revenue IncreasesRecreation Revenue Increases

– Increased Revenues by over $550,000

• Growth in recreation programs despite competition and depressed

economy

• Increased program fees

• Introduced business & non-resident memberships

• Increased guest fees

Recreation Expense Reductions / Recreation Expense Reductions / ControlsControls

Decreased expenses by over $2,100,000

•Limited staff payroll increases

•Reduced staffing (programming, operating hours, & maintenance)

•Wage freeze on all seasonal employees

•Reduced health insurance and 401(k) contribution costs (see

administrative comments above)

•Reduced facility operating hours

•Reduced registration and membership hours

•Closed or reduced childcare facility hours

Recreation Expense Reductions / Recreation Expense Reductions / ControlsControls

• Reduced utility gas costs by using Seminole verses Xcel

• Consolidated recreation facility contracts (from 4 to 1) for maintenance,

snow removal, landscaping, janitorial and office supplies

• McKinstry projected utility savings of $163,000 annually

• Eliminated trash service expense by using Preferred Provider,

ProDisposal

• Reduced Activity guide and Newsletter production and mailing costs by

offering homeowners online options

2014 Recreation Fund2014 Recreation FundDeferred Maintenance/ExpenseDeferred Maintenance/Expense

Capital and Reserve Expenditures eliminated or deferred to future•Administration Fund (Capital)

– New Accounting Software $40,000– Web Site Upgrade $20,000 $ 60,000

•Recreation Fund (Capital)– Web site Upgrade $20,000– Kiosks and Virtual Tour Website $11,200– Digital Displays $20,000– Tennis court divider nets and shade structure $24,000 $ 75,200

•Recreation Fund (Reserve)– NR Gym & Racquetball Court Flooring & walls $160,000– NR Lobby Remodel $400,000– Continuous lap pools $ 75,000– Reduction in emergency provision $ 65,000 $700,000

•Total $835,200

2014 Proposed Assessments2014 Proposed Assessments

  Actual Revised Proposed

FunctionActual 2013

Reverse 2013 

AdjustmentBC 

Adjustment

Revised 2013 

Assessment 2014 

Increase Assessment 

Amount

       

AFCA  $   21.00   $    30.00   $     (7.00)  $       44.00   $         4.00   $       48.00 

RFCA  $  487.00   $   (30.00)  $      7.00   $     464.00   $       28.00   $     492.00 

Total   $  508.00   $         -     $          -     $     508.00   $       32.00   $     540.00 

* The CPI (Consumer Price Index) for years ending 6/30/12 (+1.76%) and 6/30/13 (2.77%), US Department of Labor, Bureau of Labor Statistics, Denver / Boulder

Region

2014 Proposed Assessments2014 Proposed Assessments

• What is the proposed $4.00 Administrative assessment increase for?

– Staff payroll increases (3%) $ 44,400– Increase in health insurance & benefits $ 24,600– Anticipated decline in re-sales (transfers) $ 21,400– Marketing and Rebranding $ 30,000

New Admin Expenditures $ 120,400

New Admin Expenses per home $ 4.00

2014 Proposed Assessments2014 Proposed Assessments

• What is the proposed $28.00 Recreation assessment increase for?– Staff payroll increases (3%) $ 202,600– Increase in health insurance & benefits $ 90,600– Bank, insurance & credit card fees $ 20,000– Reserve Study $ 40,000– Increase in utility rates $ 31,000– Supplies & Expenses Inflation (Non-Utilities) $ 35,900 – Increase in Capital Expenditures $ 131,300– New Capital Improvement Fund Provision $ 250,000– Other Operating expenses $ 14,600– New Rec Expenditures $ 816,000

New Rec Expenses per home $ 28.00

HRCA Assessments Compared HRCA Assessments Compared to CPIto CPI

• Review CPI Data as it applies to the Community Declarations

HRCA Administration HRCA Administration Assessments Compared to CPIAssessments Compared to CPI

HRCA Recreation Assessments HRCA Recreation Assessments Compared to CPICompared to CPI

2014 2009 Variance % IncreaseHRCA Admin $ 48.00 $ 51.00 $ (3.00) (5.88%)HRCA Rec $492.00 $449.00 $ 43.00 9.58%

HRCA Total $540.00 $500.00 $ 40.00 8.00% 

CPI Admin $ 53.00 $ 47.87 $ 5.13 10.72%CPI Rec $564.02 $509.42 $ 54.60 10.72%

CPI Total $617.02 $557.29 $ 59.73 10.72%

Variance $ 77.02 $ 57.29 $ 19.73 2.72%

HRCA Assessments Compared to HRCA Assessments Compared to CPICPI

Voting ProcessVoting Process

• Review Appropriate Sections of the Community Declarations

– Obtained advice of legal counsel on voting process and options

– Providing remedies to Inadequate Funding

• Review Voting Options and Decision Trees

• Vote

Proposed Recreation Proposed Recreation Assessment IncreaseAssessment Increase

•Proposed 2014 RFCA increase from $487 to $492– $5 increase meets both criteria below of Declaration– Can be approved by the BOD without delegate vote

•Limitations (both met):•May not be > Maximum RFCA = $564.02• RFCA starting from $298.56 in 1993 compounded by CPI

•May not be > 120% of preceding year RFCA = $584.40•2013 RFCA = $487.00 * 120%

Proposed Administrative Proposed Administrative Assessment IncreaseAssessment Increase

• Proposed 2014 AFCA increase from $21 to $48– $27 increase does not meet both criteria and requires a 2/3 voting power of

delegate body

• Limitations (not met):• May not be > Maximum AFCA = $53.00• AFCA starting from $24.00 in 1982 compounded by CPI

• May not be >120% of preceding year AFCA = $25.20• 2013 AFCA = $21.00 * 120%

Options for Proposed Administrative Assessment

1. Request that 2/3 of the voting power of the delegate body approve the AFCA increase

2. Do not levy any assessment for 2014• Automatically impose Maximum AFCA ($53.00) & RFCA ($564.02) for a total

of ($617.02)

1. Impose a Supplemental AFCA in 2013 of $27.00 (total $48.00)

• Board can impose up to $29.29, for an increase to $50.79 for 2013

• Supplemental AFCA together with the initial AFCA may not be more than

120% of 2012 AFCA ($56.21)

• Notice must be sent to every homeowner not less than 30 days prior to the

effective date of change (estimated to cost $12,500)

• 2014 AFCA increase is still limited to the Maximum of $53.00

Administrative Assessment Administrative Assessment Decision TreeDecision Tree

2014 Proposed Administrative 2014 Proposed Administrative Budget MotionBudget Motion

The HRCA Delegates recommend adoption of the 2014 Administrative Budget as presented in tonight’s meeting. This budget sets the Administrative Function Common Assessment (AFCA) for the calendar year 2014 as follows:

AFCA Proposed at $48.00, a $27.00 increase over the prior year

2014 Proposed Recreation Budget 2014 Proposed Recreation Budget MotionMotion

The HRCA Delegates recommend adoption of the 2014 Recreation Budget as presented in tonight’s meeting. This budget sets the Recreational Function Common Assessment (RFCA) for the calendar year 2014 as follows:

RFCA Proposed at $492.00, a $5.00 increase over the prior year

2014 Proposed Total 2014 Proposed Total AssessmentsAssessments

Year $/Year $/Qtr

2014 $540.00 $135.00

2013 $508.00 $127.00

Proposed Increase $ 32.00 $ 8.00

Proposed % Increase 6.3%

Questions? Questions?