2022-2023 Accrual Budget/Forecast Information Sheet

On an annual basis, SLMC’s income is $1,076,836 from billed assessments, cell tower leases and SLMC rentals. Of this income, $797,325.00 is allocated to operations and $279,511 is allocated to reserves. This is based on 681 billed properties. The assessments are detailed below:

Itemized Assessments:

$40.00 HOA Assessment – 80%-32.00 Operations, 20%-8.00 Reserve

$18.28 Special Assessment – Reserve

$10.00 Replacement Reserve Assessment – Reserve

$65.00 Water Service – 95%-61.75 Operations, 5%-3.25 Reserve

Operations Budget: Reserve Budget:
Total Gross Income$797,325.00 Total Gross Income$279,511.00 
Expenses  Expenses 
   Total Monthly Bills & Etc.$59,460.00      Community Center Projects$14,400.00 
   Total Payroll Expenses$144,300.00      Parks and Recreation Projects$70,800.00 
   Total Professional Services$28,800.00      Water System Improvements$198,000.00 
   Total Repairs and Maintenance$8,400.00 Total Expenses$283,200.00 
   Total Water System$289,200.00 Total Reserve Income-$3,689.00 
   Total Taxes$33,300.00    
   Total Utilities$47,080.00 
Special Assessment Repayment$14,000.00 
Reserve Study$30,000.00 
Total Expenses$654,540.00 
Total Net Income$142,785.00 

For an itemized spreadsheet that explains each category, please reach out to the office for a print out. We will be explaining each category at the annual meeting.

5 Year Reserve Projection:

 Reserve
Year 1$173,655.00
Year 2$347,310.00
Year 3$520,965.00
Year 4$694,620.00
Year 5$868,275.00

Summary

In the following two pages, you’ll find two budgets. One for operations and one for reserve. The colors of the text determine whether the monies are specific to maintenance, water or both. You’ll also notice the income section of each budget shows the already divided up monies. Based on our billing statements from NWS, we’re calculating our income off 681 accounts.

Highlights

In these budgets, we’ve allocated funds towards our water system. Both in operations and reserve. We’ve also allocated an additional salary for an office person. We’ve raised the amounts we paid last year on common items, such as monthly bills, by 3% or so to account for inflation. We’ve included some money for projects in the park and community center too. In addition, we’re dedicating funds towards water system repairs and water system projects.

After analyzing the special assessment of (18.28), we projected that this December, we might not have collected enough to repay the 300k loan. From our calculations right now, it might be 14,000 remaining. We’ve adjusted for this in the operations budget too. We’ll know more as we get closer to December.

This budget takes into account the raised HOA Assessment of $40.00. Which was voted on and passed in the April 2022 Board of Directors meeting and communicated in the April billing newsletter.

Legend

Blue text = Water System Spending

Purple text = Maintenance Spending

Black text = Combination between Water System and Maintenance Spending

Revenue Breakdown

To explain each budget income section, an explanation of how we bill needs to be broken down. On your monthly bill, it totals 103.28, unless you’ve paid the upfront special assessment. In that case, your bill will be 85.00. Starting in June, this will go up $30.00 to account for the raised HOA Assessment.

Itemized as follows:

$40.00 HOA Assessment – 80%-32.00 Operations, 20%-8.00 Reserve

$18.28 Special Assessment – Reserve – Ending 1/1/2023

$10.00 Replacement Reserve Assessment – Reserve

$65.00 Water Service – 95%-61.75 Operations, 5%-3.25 Reserve

Operations Expense Breakdown:

Budget CategoryDescription/Explanation
InsuranceAuto, Liability, Umbrella, Terrorist
Licenses & PermitsFire, Notary, DFW, Sanitation, Utility Usage
Bank Service ChargesFees Associated with Having Bank Accounts
Office SuppliesPaper, Staples, Toner, Tape, Pens, Pencils, Paper Clips
Phone/InternetTelephone lines, Internet, Cellular Phone, Web/Email Hosting, Registrar
Postage and ShippingStamps, Shipping Costs, Bulk Mailings, etc
Printing CostsPrinter Equipment Lease
Security SystemBrinks Security for Office and Park
Software/SubscriptionsQuickBooks, Office 365, McAcfee Security, Zoom
Safety EquipmentVests, Harnesses, First Aid, Extinguisher, Reflective Material, Cones
Personal Protective Equipment (PPE)Goggles, Gloves, Facemasks, Helmets, Clothing
TrainingSupervisor/Management Training, Bookkeeping/Accounting, Billing
Park SuppliesBuoys, Swim Lines, Signs, Playground Cover
Maintenance EquipmentBlades, Sharpening Services, Weed Line
Mileage ReimbursementReimbursement for Usage of Personal Vehicle
Salaries – PayrollMaintenance Technician, Part Time Seasonal Worker, Office Staff
Payroll TaxesL&I Employer Taxes
AuditAnnual Cost to Audit 2021-2022 Fiscal Year
AccountantPeriodic Accounting Consulting to Verify Bookkeeping Records
LegalAttorney Fees for Contract Review/Advice, Review of Association Documents
Community CenterKitchen Supplies, Light Bulbs, HVAC, Mops, Blinds, Paper Products, Soap
Park MaintenancePlayground, Court Upkeep, Docks Upkeep, BBQ Upkeep, Kitchen Upkeep, Septic
Misc. MaintenanceFlashlights, Batteries, Keys, Chargers, Maintenance Organizer, etc
Equipment MaintenanceGasoline, Oil, Spark Plugs, Filters
Water OperatorNWS Fees, Depositing Chemicals, Labratory
ChemicalsChlorine, Calcium
BillingNWS Billing Management
Meter Read / Chlorine TestWater Testing 3 Times a Month
Water RepairsRepairs to the Water System
Property TaxesProperty Taxes
Federal Income TaxIRS
DOR TaxesB&O, Excise Tax, Public Utility
Electricity A Community CenterCC Electric Charges, Ball Field
Electricity C Well HouseWell House Electric Charges
Electricity D ParkPark Electric Charges
Street LightsElectric Charges for Street Lights
Power for PumpingElectric Charges to Pump Water
PropanePropane Tank to Fuel Generators
Waste ManagementGarbage Cans, Recycling Across the Properties
Sani CansPortable Toilets (3)
Special Assessment RepaymentEstimated Remainder Repayment of 300k
Reserve StudyCost to Generate a Reserve Study

Reserve Expense Breakdown:

Budget CategoryDescription/Explanation
Community Center ProjectsPaint Inside/Outside, Safety, Flooring, Railings, Parking Lot
Park & Recreation ProjectsCourts, Extra BBQs, Lake Wading Area, Swim Area, Floating Dock, Playground
Water System ProjectsValve Cut-Ins, Blowoffs, Meter Upgrades, Meter System & Software

Future SLMC Financials:

The reserve account for SLMC is severely low. It doesn’t reflect the necessary funds to replace our entire association assets. We are required to maintain a balance in our reserve account to support a complete replacement for 30 years out. To do this, inflation averages are taken into account to estimate what those balances would be. It’s speculated that a full replacement of our water system could be 15 million. That’s an estimate for 2022. Subtracting our current balance from this estimate is 13.5 million. 13.5 million equates to 450k per year. For the first year, we would need to set aside 73% or $54.75 that is collected from each community member. As time goes on, this amount would go up based on inflation. The estimated rate would be about .50-.75 cents per year. The remaining amount of $20.25 would be used for water operations. Fortunately, that is enough to maintain our water operations needs. Monthly water operations costs are about 12k, the collected amount is 13.5k.

Q & A

What are Reserves?

A reserve account is money set aside to pay for a complete replacement of assets for an association. In the case of SLMC, the assets would be the water system, common areas, buildings, ball field, park and docks. The collection of these monies is a delicate dance because estimates of annual usage and 30 year replacement savings have to be considered. Often times a reserve account is also called a Capital account, or a Capital Expenditure. These two terms are the same.

How can Reserves be spent?

Traditionally, when a reserve study is available, the components within the study will identify the lifecycle of replacement for each component. When it’s time to procure these components, the funds to use can be taken from the reserve account. There will be times when an association needs to procure something that isn’t in the reserve study, such as a new building or new equipment, if the item cost over $500.00 and has a 12 month benefit to the association, the funds can come out of reserves. If a major repair occurs, whether the component is in the reserve study, the funds can still come from the reserve account.

  1. Reserve Study Component Replacement/Improvement
  2. New Purchase that’s over $500.00 and is beneficial for over 12 months
  3. Major Repair

Is SLMC an HOA or just Maintenance?

SLMC is an HOA that offers Water as a service/utility to it’s homeowners. SLMC also represents the owners for the management of common areas that are shared amongst the owners. SLMC is a business, a non-profit business that manages the assets of the owners(SL Property Owners). In order to manage these assets, the association is a corporation with Articles that define us. In addition to the Articles, we have By-Laws, CC&Rs(Declaration of Covenants, Conditions, Restrictions and Easements), Water Rules. All of these are available for reading on the SLMC website.

What should I look for in the SLMC Budget?

Depends on what matters to you. If you spend a lot of time at the park, you might want to know what is being done to improve and maintain the property. If you spend a lot of time entertaining and want to use the community center, you’ll want to know what’s being done to improve and maintain the CC. If your interested in baseball and want to organize a league, you’ll want to know how we’re improving and maintaining the ball field.

Who owns the money?

You do. The Property Owners of Scott Lake own the money that is collected for HOA and Water Assessments. The management of this money is performed by the SLMC Board of Trustees, it’s agents and employees.

Why do we need a Reserve Study?

In order to know a detailed list of every component asset for an association, it’s lifecycle and projected replacement, a reserve study is this list. It’s evidence for justification of spending out of reserves.

Why do we need an Audit?

Every year and Audit should be performed to ensure the money is being managed properly. But an audit isn’t just related to the money, it’s very much an entire association audit. The auditor reviews the businesses policies, procedures, processes, safety standards, reserve study management, etc. It’s a complete check in every year to protect the owners assets.