SOA 2022 Budget Presentation

Budget 4

On October 6th, the Annual Homeowner Budget Presentation Meeting was held at The Club at Town Center (TCTC). Attendance was available either in person or via Zoom Videoconference. The presentation was conducted by the SOA Board President Mark Capalongan. For those who were unable to attend, a copy of the presentation material and access to the video file is available on the SOA website (www.soa.org) on the “SOA Documents/Financial Documents/Annual Budgets” page. For reader convenience these may also be accessed via the following links:

2022 SOA Budget Presentation
2022 SOA Budget Presentation Zoom Recording

The Budget Presentation PowerPoint document summarizes all the projected 2022 revenues and expenses for the  Common Area, The Club at Town Center and Private Gates & Streets Cost Centers. New items and significant changes from the 2021 Budget are highlighted on the presentation document. Comments follow:

  • For the Common Area Cost Center, monthly assessments will be increased from $105/month to $108/month. This to account for increased landscaping costs, reserve transfers, and general inflationary expenses. The budgeted increase in landscaping costs represent a 40% increase over 2021, which raises the question, why so much? Certainly not due to inflation, therefore did our Request for Proposal require additional services over that for previous years? Perhaps this will be revealed in more detail when the Board selects the approved vendor (three vendors have submitted proposals, which are currently undergoing analysis). Increasing the reserve transfer makes perfect sense as the Common Area reserves are below recommended reserve funding levels (i.e. approximately 50% as opposed to 64% for the TCTC and 116% for the Gates). This a result of the past drawdown to pay for the rockery wall repairs.
  • The TCTC and Private Gates monthly assessments remain unchanged at $89/month and $50/month respectively.
  • The SOA debt currently consists of approximately $3.3M for the Common Area (primarily due to rockery wall repair loans) and $1.6M for TCTC (primarily due to reimbursement costs originally owed to the Developer). Any surpluses of 2022 revenues over expenses will be targeted to paying down these debts, also a good idea. What was not discussed is how any 2021 surpluses will be handled. At the September BOD meeting the Board Treasurer reported that for 2021, excesses of revenue over expenses were currently running at $716K for the Common Area and $193K for TCTC. However, this did not address any significant expenses not yet accounted for. The recommendation being to use any year end surpluses to pay down the debt.

The finalized 2022 Budget will be formally approved at the October 13th Board Meeting. The approved Budget will be mailed to all owners no later than November 1st and ratified at the November 15th Annual Owners Meeting. Note that ratification is essentially assured, as rejection of the budget by owners would require a monumental task! Check out the following from Article II of the Association CC&R’s:

Section 6. Budget. The Board shall adopt a proposed budget for each calendar year based on the projected common expenses of the Association, which shall include a reasonable reserve, Within thirty (30) days after adoption of any proposed budget for the Association, the Board shall provide a summary of the budget to the Owners, and shall set a date for a meeting of the Owners to consider ratification of the budget not less than fourteen (14) nor more than thirty days after mailing of the summary. Unless at that meeting seventy-five percent (75%) of all voting power of Owners rejects the budget, the budget is ratified, whether or not a quorum is present If the proposed budget is rejected, the periodic budget last ratified by the Owners must be continued until such time as the Owners ratify a subsequent budget proposed by the Board.

If one has any objections to or comments on the proposed 2022 Budget, it is probably too late to have any impact. These should have been addressed at the previously held and announced July and August Budget Workshops which were open to owners.  However, one may still state or submit their comments, prior to final approval, during the Homeowner Comment session at the beginning of the October 13th Board Meeting.

One thought on “SOA 2022 Budget Presentation

  1. Thank you for including this analysis of the budget. We are always eager to hear the input of our homeowners and all are invited to add their comments at the next Board meeting where this is on the agenda for discussion and approval.

    PAYING DOWN OUR DEBT
    Although a separate matter, when the Board elected to pay down our debt (across both GC and TCTC cost centers) of $1 million in 2021, it was originally announced that there might be enough cash to pay even more of this debt but that it was prudent to conserve cash until the end of the year and make a decision at that time on whether to pay off more of the debt from available cash. That still remains a goal, after all our cash earns 0% interest but our debt costs us 5.5% Our present concern is that when switching deposit accounts for assessment payments from FSR to our own, there may be a lag due to some homeowners continuing to pay to the old FSR account. We will get those funds eventually, but delays may result. We’ll need to have a cushion of cash to cover expenses if there are funds that get delayed. That said, we should have a good picture of our cash flows at the end of the year and should the cash be safely available to continue to pay down debt, I believe the new board would be in favor.

    INCREASES IN LANDSCAPE CONTRACT BIDS
    We too are dismayed by the increase in bid prices submitted for the landscaping. Given the substandard nature of the existing contract and the opportunity of our contractor to call all the shots while being immune to substandard performance, these were properly addressed in the contract RFP which was bid upon. (Please note that the RFP is on our website for your perusal). So yes, we have a more stringent contract, by necessity. There are a series of hard and direct questions to be answered by landscape candidates at their interviews beginning next week. You are correct that the increased bid amounts can’t be accounted for exclusively by increased labor rates. No do I believe that new contract requirements can be to blame- a good and fair contract benefits ALL parties.

    There will be some difficult choices before we choose our next landscape company. There may also be some other options that deserve to be investigated. What about splitting the contract by areas and dividing it amongst a larger pool of possible contractors? What about creating our own “strike team” for irrigation and plumbing issue which is something our outside landscapers seem to be universally poor at maintaining. What about including the SGCC team and soliciting a contract from them for at least the C9? What about developing our own landscaping operations like Caughlin Ranch did?

    Those are all big “What if’s” and I’m not saying that any of these are ready to install as an immediate alternative. Nor am I saying that we must change our landscape to something else. But as we receive these huge and seemingly unjustified increases without viable alternatives we will be forever boldened to their every demand and price increase. I know that change can be scary, but is this worth looking at? Just like everything else, as we develop some ideas, nothing goes forth and no decision are made without the needed study, due diligence, and homeowner input including conducting surveys.

    Where we see a need, great minds go to work and we’d be wise to at least listen.

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