Finance and Budget Committee established to review expenses and evaluate reserve fund

A Finance and Budget Committee was established at September's HOA Board meeting. The purpose of the committee will be to review association expenses and evaluate the accuracy of future reserve fund expenses (as estimated in the 2009 Reserve Study) -- to ensure we're not under-funding (or over-funding) our reserve fund.

The recommendations of this committee will be relied upon to plan future budgets and assessments.

If you would like to participate in this effort, please contact a member of the board and receive committee meeting details. Or, call Sandy Cobb at CWD Group at 206-706-8000.

Budget Q&A, continued...

Thank you to the homeowners who attended the Budget Q&A last Wednesday. Here is a Q&A summary of the topics discussed:

(Q) Cost savings are great. But should we expect the quality of life to go down? Will we hurt our property values?
(A) No. We are committed to protecting home values, and maintaining our community’s established standard of living. We were careful not to cut spending in a way that diminishes our quality of life or risks our property values. For example, we will save money on landscaping, but will do so without reducing our service levels. (We went through a competitive bid process, with seven vendors, and selected a landscaper with comparable service levels at a reduced cost.) Another example: we will save money on insurance, but will do so without sacrificing any coverage. (We simply pushed to negotiate lower rates on our existing policies.) That said, the Board has decided to eliminate funding for non-essentials until our Reserve Fund is more fully-funded. For example, we will not spend the money for bee removal as we did in 2009.

(Q) Why is there $0 in the landscaping improvements budget?
(A) Simply put, we are eliminating funding for non-essentials (like additional landscaping) until our Reserve Fund is more fully-funded. It's worth noting that all the great landscaping improvements in 2009 were completed without any HOA funds. We hope this will continue in 2010.

(Q) What exactly are the risks of a low reserve fund?
(A) Basically, inadequate reserve funding threatens: [A] high risk of special assessments (i.e. hitting each of us with a bill for more money, to meet the association's costs), [B] damaged ability to sell our homes (because mortgage lenders don't want to lend on homes with poor reserve funding), and [C] lower property values because of these two things.

(Q) How funded is our reserve fund now? Are we at risk now?
(A) We are currently more than 40% funded, and improving monthly. (This represents a major improvement from one year ago, when we were less than 27% funded). We have reached 40% funding by managing 2009 expenses carefully. 40% funding is classified as "fair". While we will continue to improve, we are NOT currently at risk for special assessments.

All homeowners are encouraged to be familiar with the Reserve Study, available on our Association's web site.

Our five-year plan projects that we will reach 70% funding by 2015 (70% is classified as "good", and we believe 70% to be a responsible & realistic target.) Faster funding would be possible, but it would require increases to our monthly assessments. We believe this current funding plan balances our community's need for adequate reserves with our desire for low assessments.

(Q) Should we expect assessments to go up again next year?
(A) Here's what we know for sure: we do need to increase our reserve contribution again next year. (Next year, our plan calls for increasing reserve contribution $6/month/home). But this does not necessarily require an increase to assessments. If we can further reduce expenses enough to offset this increased reserve contribution, an assessments increase will not be required. If we cannot further reduce expenses enough to offset this increased reserve contribution, an assessment increase is likely. To avoid future increases, your participation & input is required. We cannot succeed without informed participation.

(Q) Why do we spend so much on a management company? Do we need them?
(A) Yes, we need a management company. Running any business requires a lot of time, resources and expertise -- including our HOA, which is a $12-million corporation. Having the help of a management company is essential to our success. Unless & until our association has [A] very high homeowner participation, and [B] a Board with strong executive experience & more available time, a management company is important. The CWD Group has agreed to hold their contracted rate for 2010 (i.e. no increase), and the Board plans to carefully monitor any extra management costs.

(Q) Aren't our dues unreasonably high already?
(A) Frankly, no. It's a fair question (and one that each Board member has asked as well), but here is a look at Snoqualmie/North Bend comparables. You will see that Mt. Si Cottages compares very favorably. The Falls, $352/month (69 units); The Cottages, $227/month (50 units); three others in the Snoqualmie area, $256, $227, $267. We remain committed to maintaining Mt. Si Cottages as an affordable community.

2010 Budget Questions & Answers

By now you'll have received the Board-approved 2010 budget in your mailbox.

If you have questions or concerns, please join us for a Budget Question & Answer discussion, Wednesday, February 17, at 6:30 p.m. at the Snoqualmie Library.

If you have questions beforehand -- or if you can't make it to meeting -- please leave a comment to this blog post and we will write a reply to you.

2010 Budget

The Board has approved the 2010 Budget, and now it is everyone's turn to review and ratify this budget.

Please be on the lookout for this in your mail (it was mailed today, and should arrive within a day or two).

Two important budget-related meetings are scheduled for this month:

• The budget ratification meeting is scheduled for February 24, 2010, at 6:30 p.m. at the Snoqualmie Library. As the Declarations require, the budget and assessments shall be ratified unless disapproved by at least 51% of the total ownership at this meeting. All homeowners are encouraged to attend.

• You are also invited to a budget question & answer discussion on February 17, 2010, at 6:30 p.m. at the Snoqualmie Library. If you have questions or concerns, we hope you will make time to join us for this informative discussion.

Questions about 2010 Budget & Assessments

There has recently been discussion among homeowners about the upcoming budget for 2010.

The Board has not yet approved a 2010 budget, nor have 2010 assessments been decided upon. We have been discussing it for months, and studying funding options. The board is taking this responsibility seriously, and is committed to honoring our budget philosophy.

We plan to hold a budget ratification meeting within the next month, for homeowners to vote on the proposed budget. This is our community's budget, and we are glad for the interest this topic has received.

We plan to hold a question & answer meeting at least one week before the ratification meeting, specifically to inform homeowners of the proposal and answer questions or concerns. (The date & time will be published on this web site.)

However, if you have a question that you would like to have answered more quickly, please leave a comment to this post so that a Board member can respond to you.

Board Meeting: Budget & Dues!

November's board meeting will be held Monday, Nov. 16, at 6:30 p.m., at the Snoqualmie Library.

As always, any interested homeowner is invited to attend!

One main topic of discussion will be the 2010 budget and homeowner dues. Your board has been working hard on this over the past few months -- and this November board meeting will likely be the final discussion before the budget ratification to be held in December. If you want to participate in this discussion you're encouraged to attend!

Budget Philosophy

The Board has adopted this budgeting philosophy. It will guide our budget decisions on the 2010 budget.

1. We will use the least amount of funds to obtain maximum benefits.
2. We will protect home values, and maintain our community’s established standard of living.
3. We will enhance home values where possible, while remaining true to our community’s origin as an “affordable community”.
4. We will encourage a sense of community, and look to homeowner volunteerism as a means of maintaining standard of living and keeping assessments as low as possible.
5. We will properly insure the Association.
6. We will adequately fund our Reserves, for planning purposes and to protect against special assessments in the future.
7. We will use a zero-based budget approach (which assumes a $0 starting point for all line items, and requires each to be justified before we fund it).
8. We will remain open to homeowner recommendations & input.

Join the Conversation! 2010 Budget Input

The Board is currently reviewing the 2010 Budget -- and we welcome any input & recommendations about how & where our HOA money should be spent.

The Board is always interested in ways to save HOA money, to keep assessments low.

Often homeowners ask "where is all my money going?" and "what are my assessments spent on?" Here's a pie-chart to help answer this question, visually (based on the current 2009 Budget):



Please tell us:

What do you want the Board to consider when building the 2010 Budget?

Perspective (continued)

Some people have asked for more explanation of the September 12 post titled "Perspective", which detailed that Mt. Si Cottages is a $12 million corporation. Here is some more perspective.

• This corporation's largest financial asset is our property. This has a value of more than $12 million.
  


• We have annual revenues of nearly $120,000 (from assessments).
  


• We have annual expenses of nearly $89,000. (It takes a lot of money to run a $12 million corporation, even when we spend every penny carefully.)
  


• We currently save nearly $31,000 into our reserve fund each year (i.e. "savings account"). This money is set aside for major repairs & scheduled projects that will cost us a lot of money in future years. (A healthy reserve fund is important. It helps ensure that we wont get charged special assessments down the road. And it is critical for resale values -- because Lenders expect healthy reserves before they'll lend someone money to buy your house.) ** The Board is currently studying our reserve fund closely, to ensure that we adequately fund it. **
  
  
• Our corporation has 44 owners. (These are the 44 homeowners).
  
  
• The owners elect a Board of Directors, responsible for overseeing the management of the business.
  
  
• Every owner shares in the success or failure of this business.

Perspective.

Here's some valuable food for thought. There are 44 homes in our community. Let's assume an average home-value of $280,000. Think of that. This means we are each invested in a $12.3 million corporation (44 homes x $280,000). And every act of this corporation impacts our lives directly.