Niguel Shores Mid-Year Financial Update

NIGUEL SHORES MID-YEAR FINANCIAL UPDATE

As of June 30, 2014

The Niguel Shores Finance Committee is comprised of six owners and meets on a monthly basis to review, monitor and make fiscal recommendations on topics such as budgets, expenses, investments and reserves. The current members of the Finance Committee are: Chair Sue Kichline, Art Staudenbaur, Martin Dedrick, Jim Eckstaedt, David Goldberg and Terry McLaughlin. The Committee wishes to thank Jeannie Sticher for her past leadership and service as she will be missed! A continuing objective of the Committee is to provide owners a mid-year update on the 2014 budget, actuals to date and comments on expectations for year-end variances and ongoing projects. The mid-year update includes expenses and income incurred thru June 30, 2014.

Various committees within Niguel Shores recommend and monitor all budgeted line item expenses on a monthly and sometimes weekly basis and provide input to the Finance Committee on potential variances and monies needed in the upcoming year. The budget process for 2015 began in July 2014 with a review of the reserves and will continue thru October with committees recommending monies needed for 2015. The Finance Committee reviews these recommendations for clarity and provides a total budget recommendation to the Board in late October. The Committee could not function without co-operation from the various committees, and wishes to thank all involved for their never ending hard work on all our behalf. The Finance Committee welcomes questions and feedback on this mid-year update and invites you to submit comments/ questions to the attention of the Finance Chair at mmiller@niguelshores.org.

 

NIGUEL SHORES INVESTMENTS

 The Niguel Shores investment monies are monitored and reviewed by the Controller, Niguel Shores CFO and an Investment Sub-Committee, led by Sue Kichline and several members from the Finance Committee. An outside agent is used to assist in identifying appropriate CD investments for optimum interest rate and protection of the principal.

The investments of Niguel Shores are required to be placed in financial instruments insured by the Federal Government under the Davis-Stirling Common Interest Development Act. Funds which are not required for immediate expenditures are invested in laddered CD’s backed by the FDIC.

The budgeted yield for investments in fiscal year 2014 is $42,798 and the Committee expects to exceed this target by year end 2014. The current investment portfolio is $3,328,454.

 

INCOME UPDATE

 2014 Budget   2014 Actuals   $ Remaining

$3,356,257     $1,706,467       $1,649,790

Most Income is from the quarterly assessments. Other major Income items include, bank interest income, document response, architecture and gate access fees and newsletter commercial ads. The major items expected to exceed the budget are: document response fees, architecture fees, bank interest income and newsletter commercial ads. We are anticipating a shortfall in the assessment late charges and gate access fees due to lower activity in these two areas. Overall, we anticipate the income to meet or exceed the budget for year-end 2014.

 

MAINTENANCE BUDGET UPDATE

2014 Budget   2014 Actuals   $ Remaining

$524,537         $237,393            $287,144

Maintenance is one of the largest budgets in the Niguel Shores community. This budget is reviewed and monitored monthly to assure the maintenance needs of the community are met and that costs for repairs and expenditures are reasonable and within budget guidelines. As the community ages and the amenities and infrastructures are subject to increased usage, the Maintenance Committee and our maintenance staff are always faced with new and unique challenges.

The maintenance staff consists of the Facility Manager and three full-time and one part-time employees. They perform many daily and special projects which include both operating and reserve items. In addition, they oversee outside contractors hired to complete various jobs within the community.

The year-to-date expenditures are currently under budget; however, we are aware that considering our aging infrastructure, there is always the possibility of an unexpected need. A budget line item that is being watched closely is the water usage at the community center, which has increased substantially and is over the planned budget. It is anticipated that we will end the year at or below the planned budget for the Maintenance Department.

 

LANDSCAPE BUDGET UPDATE

 2014 Budget   2014 Actuals   $ Remaining

$966,739         $424,130           $542,609

The Landscaping Budget includes monies for expenses such as water, pest control, sprinklers, tree work and routine planting/slope maintenance. Our routine contract with Harvest Landscape is managed as part of the yearly operating budget. This budget does not include the Master Landscape Plan which has been focused on large scale slope renewals, turf reductions and irrigation refurbishment. The Landscape Committee is under the direction of the General Manager and feedback and updates are provided by Committee representatives from throughout Niguel Shores. To date, the landscape budget is on track.

 

TRAFFIC AND SAFETY BUDGET UPDATE

2014 Budget   2014 Actuals     $ Remaining

$359,658          $167,611            $192,047

The Traffic and Safety budget includes funds for fobs, decals, and surveillance equipment at the gates, spa and in the office. In addition, this Committee monitors the contract for our patrol services. To date, this budget is showing a positive variance. Our Access Control Software rate has been decreased. Also, due to the anticipated gatehouse renovation, the remote entry service has been delayed. These savings will result in spending less than budget and a positive result is expected at year end.

GENERAL AND ADMINISTRATIVE BUDGET UPDATE

 2014 Budget    2014 Actuals    $ Remaining

$1,505,323       $575,738         $929,585

The General and Administrative budget (G&A) includes payroll for the on-site staff and legal expenses. In addition, this cost center includes operational costs such as printing, postage, computers and other services needed to manage the Association. The overall budget is currently showing a positive variance for the year. However, the ongoing revetment dispute will continue to impose an uncertainty to the budget. At the present time, we anticipate to meet the budget at the year-end.

 

NIGUEL SHORES RESERVE AND STUDY UPDATE

 A review of the Association’s reserves is required every three years by an independent contracted consultant. The independent consultant specializes in performing reserve analysis and provides recommendations. In 2012, the independent consultant completed the reserve review. The Niguel Shores General Manager, Controller and representatives of the Finance and Maintenance Committees also provide input to the consultant during the analysis. During the interim years, a similar review is conducted by the in-house staff and committees.

The purpose of the reserve analysis is to identify certain assets in the common areas of Niguel Shores that will need to be repaired or replaced within a defined timeframe. Since the cost to repair or replace these assets may be expensive, the reserve analysis identifies and determines the cost to repair or replace and determines a financial plan to accumulate the needed funds.

A partial list of assets identified in the reserve analysis is: street resurfacing, fencing, lighting/electrical, pool, tennis courts, irrigation, slope repair and master landscape.

Reserve funds spent from January 1 to June 30, 2014 were $141,331. The funds were used in the following areas: streets, tennis courts, entrances, slopes and landscape. The maintenance staff participated in the rebuilding of the Observation Deck near Flying Jib. In the fall of 2014 the pool deck will be replaced.

As of June 30, 2014, the balance in the reserve funds was $3,256,890.

 

**Due to a clerical error the paper copy was not included in the September Newsletter, but will be part of the October Newsletter.

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