2020-2021 Budget Report & Annual Policy Statement

2020-2021 Budget Report & Annual Policy Statement

2020-2021 ANNUAL BUDGET REPORT

1. Budget Summary See enclosed Budget Summary for your review. The complete Budget may be obtained by a request to [email protected]. 2. Reserve Summary See enclosed Reserve Summary for your review.

3.

Reserve Funding Plan See enclosed Reserve Funding Plan for your review.

4.

Major Component Repairs The Board of Directors has not deferred or eliminated any repairs or replacements of any major reserve components .

5. Anticipated Special Assessments The Board of Directors does not, at this time, anticipate the need to apply a special assessment during the course of the 2020-2021 fiscal year to repair, replace, or restore any major component or to provide adequate reserves, therefore. However, the Board reserves the right to approve a special assessment for unplanned major expenses in the upcoming year. At the present time, the Board of Directors uses that portion of the monthly assessments allocated to reserves as its mechanisms to fund reserves. 6. Reserve Funding Mechanism As stated in the General Managers disclosure, Reserves are funded through a contribution of regular assessments.

7.

Procedures for calculating Reserves The procedures for calculating Reserves can be found by referencing the Reserve Summary.

8.

Outstanding Loans The Association does not have any outstanding loans. Insurance Summary See enclosed Insurance Summary for your review.

9.

10.

Assessment & Reserve Funding Disclosure See enclosed Assessment & Reserve Funding Disclosure for your review. Charges for Documents provided See enclosed for Charges for Documents provided for your review.

11.

Approved by the Board on April 6, 2020 OUTDOOR RESORT - PALM SPRINGS 2020-21 BUDGET SUMMARY July 1, 2020 - June 30, 2021

ITEM

Annual

Monthly/Unit

REVENUE

Assessments

5,909,778 6,156,583

406.00 422.96

Total Administration Revenue (Including Assessments)

Total Rental/Reimbursement Revenue

452,871 119,270 98,835 11,734

31.11

Total Activities Revenue

8.19 6.79 0.81

Total Bar Revenue Total Golf Revenue

TOTAL REVENUE

6,839,293

469.86

EXPENSE

Total Administration Expense

852,062

58.54

Total Resort Services Expense

211,550 282,864 87,125 102,743

14.53 19.43

Total Activities Expense

Total Bar Expense Total Golf Expense

5.99 7.06

Total Grounds & Greens Expense

1,449,160

99.56 32.49

Total Security Expense Total Mailroom Expense Total Facilities Expense

472,968 54,888 262,562 698,894 76,508 880,709 142,136

3.77

18.04 48.01

Total Maintenance & Repair Expense

Total Vehicle Expense Total Utilities Expense Budget Contingency

5.26

60.50

9.76

Total Operating Expense

5,574,169 1,089,524

382.95

Total Reserve Contribution

74.85

Total Capital Improvements Contribution

80,000 95,600

5.50 6.57

Total Working Capital/Development Fund Contribution

TOTAL GROSS EXPENSE NON-ASSESSMENT INCOME

(6,839,293)

(469.86)

929,515

63.86

NET INCOME/LOSS

(5,909,778)

(406.00)

Reserve Summary (As required by California Civil Code Section 5565) OUTDOOR RESORT-PALM SPRINGS OWNERS ASSOCIATION SCT Reserve Consultants, Inc. is pleased to provide this Level III Reserve Study (Financial Update Report). In order to comply with the California Civil Code, specifically the Davis-Stirling Common Interest Development Act, Section 5565, we are providing the following information to the Homeowners within OUTDOOR RESORT-PALM SPRINGS OWNERS ASSOCIATION. The following study has been prepared with several assumed factors taken into account: a 3.00% inflation rate; a 1.00% return on investment (interest earned); a 3.00% tax rate on interest earned from the reserve account(s); an estimated remaining life of each reserve component; and an estimated current replacement cost of each reserve component. As of June 30, 2020, the estimated ending reserve fund balance is $4,001,500 and the estimated current replacement cost is $10,418,618 for the portfolio of reserve components. The projected future replacement cost of the portfolio is $14,156,670, calculated at an annually compounded inflation rate of 3.00%. The Association’s level of funding which is based upon the estimated ending reserve fund balance divided by the reserve components’ fully funded amount is 71.03%. This is referred to as Percent Funded. The Association would be 100.00% funded if there were $5,633,668.00 in the reserve fund. The current deficiency ( or surplus if the number is in parenthesis) in reserve funding expressed on a per unit basis is $1,345.56. This is calculated by subtracting the ending balance ($4,001,500) from the 100% funded figure ($5,633,668.00), then divided by the number of ownership interests (1213). There is currently no requirement to be fully funded. Our original analysis of the cash flow for this association indicated future inadequate funding if there were no annual increases to the Reserves. It is our understanding the Board of Directors will allocate a total of $88,084 per month starting in 2021 ($72.62 per unit per month for each of the 1213 ownership interests) towards the reserve fund. To offset the future cash shortfall we recommend and have included an increase of 2.97% starting in 2022 for 29 years. The increase is scheduled to take effect in the year 2022. The Board of Directors may change the amount; however, it will impact the level of funding on reserves. These numbers, by themselves, are not a clear indicator of financial strength and could indicate underfunding, overfunding, or adequate funding. The following table represents additionally required information pursuant to the Davis-Stirling Common Interest Development Act, Section 5565. Fiscal Year: July 1, 2020 through June 30, 2021

Estimated Remaining Useful Life

Estimated Current Replacement Cost

Estimated Useful Life 0 to 50 1 to 40 5 to 40 5 to 40 1 to 40 8 to 20 10 to 25 5 to 40 10 to 10 5 to 40 5 to 40 5 to 40 5 to 40 5 to 40 10 to 40 5 to 40 1 to 30

Estimated Reserve Allocation

Uniquely Sourced Revenue

Fund Balance on Jul 01, 2020

Estimated Interest

Location

A Other

0 to 3 0 to 15 0 to 29 0 to 26 0 to 22 0 to 14 0 to 14 0 to 19 7 to 7 0 to 18 0 to 14 0 to 18 0 to 19 0 to 20 2 to 5 1 to 21 0 to 26 1 to 4

$304,073 $136,693 $1,640,757 $1,669,354 $2,225,214 $77,360 $447,662 $210,859 $45,060 $203,517 $201,494 $204,128 $206,623 $212,987 $9,013 $67,217 $2,345,067 $211,540

$403,036 $69,212 $398,321 $693,553 $661,494 $40,055 $160,358 $85,627 $10,421 $98,172 $94,481 $96,462 $86,164 $89,670 $4,794 $29,791 $916,595 $62,424

$106,463.04 $18,282.50 $105,217.55 $183,203.96 $174,735.63 $10,580.59 $42,358.95 $22,618.56 $2,752.66 $25,932.33 $24,957.43 $25,480.82 $22,760.61 $23,686.57 $1,266.30 $7,869.46 $242,121.14 $16,489.40

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$3,730.57 $640.64 $3,686.93 $6,419.65 $6,122.91 $370.75 $1,484.30 $792.58

Administration CH‐El Saguaro CH‐La Palma

Golf Course

Laundry

Maintenance

Sat (A)

Sat (all 6)

$96.46 $908.70 $874.53 $892.87 $797.55 $830.00 $44.37 $275.75

Sat (B) Sat (C) Sat (D) Sat (E) Sat (F)

Shack, Golf Shack, Guard

Streets Vehicle

$8,484.17 $577.81

5 to 7

Taxes

$873

$230.50

$8.08

Totals:

$10,418,618 $4,001,500 $1,057,008.00

$0.00 $37,038.64

The complete reserve study is available by request from the Association.

Report Date 5/8/20 Version 2

Assessment and Reserve Funding Disclosure Summary For the Fiscal Year Ending June 30, 2021 (As illustrated by California Civil Code Section 5570(a)) (1) The regular assessment per ownership interest is $406.00 per month , of which approximately $72.62 is allocated to reserves, monthly . Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on the following page of the attached summary. NOT APPLICABLE (2) Additional regular or special assessments that have already been scheduled to be imposed or charged, regardless of the purpose, if they have been approved by the board and/or members: SEE ANSWER BELOW TO QUESTION #4 WHICH SUGGESTS THERE WILL BE INCREASES IN REGULAR ASSESSMENTS FOR RESERVE FUNDING. Date assessment will be due: Amount per ownership interest per month or year: Purpose of the assessment: (Intentionally left blank) (Intentionally left blank) (Intentionally left blank) Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on the following page of the attached summary. NOT APPLICABLE (3) Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association's obligation for repair and/or replacement of major components during the next 30 years? Yes __X__ No __X__ Yes , if the Association follows the recommended future reserve contribution increases as outlined in the reserve study and disclosed in the table of question (4) with consideration to the note below*. No , if the Association does not follow the recommended future reserve contribution increases as outlined in the reserve study and disclosed in the table of question (4) with consideration to the note below*. *Note: The information contained within the reserve study includes estimates of replacement value and life expectancies of the components and includes assumptions regarding future events based on information provided by and supplied to the Association’s Board of Directors and/or management. Some assumptions inevitably will not materialize and unanticipated events and circumstances may occur subsequent to the >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8-9 Page 10-11 Page 12-13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38-39 Page 40

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