2019 Budget Overview

Lesley Nal ley, CEO

Liz Mathis, Control ler

OUR

LONG

TERM

VISION:

+2,500

BY 2040

WHY INCREMENTAL

GROWTH?

*Source: CMP Section 6, Pages 316-346

The CMP notes a funding gap of $5M to $7M

per year*

2,500 additional improved assessments, a

suspension strategy, new revenue streams

and predictable annual inflationary increases

close that gap

The 2019 budget addresses $6M of the

$45M in O&M*

What’s the

Status Quo & 2%=

$5mil/yr

@ 10 years

Incremental Growth

& 5% = $10mil/yr @

10 years

The choice is ours.

The

CMP

IS:

A LONG

TERM

ROADMAP

“The Comprehensive Master Plan is intended

to serve as a guidebook for both growth and

preservation of the Village over the next few

decades” – Dave Roberts, VP Planning, Crafton

Tull, CMP Section 1, Page 9

Strategies within this plan are initially

presented on a long-term scale, with

prioritization following in later sections. Be

aware that a small percentage of the total

vision is achievable within a 20-year horizon. –

CMP Section 2 Village Structure

Growth of 2,500 units over 20 years is

ambitious, yet it represents just 10% of unbuilt

capacity.– CMP Section 2 Village Structure

A build it and they will come plan – we’ve

already been through that phase and have

9 golf courses, 12 lakes, 500 miles of

paved roads and $45mil +/- in deferred

maintenance to prove it.

A mass marketing referendum – we’ve

already been through that phase with

NRPI, who operated in several CCI

communities, leaving HSV with millions of

dollars in bad debt.

The POA attempting to be a developer

THE 2019 CMP IMPLEMENTATION

PLAN IS NOT:

CMP SECTION 5, PAGE 291

WE INVITED CCI TO PARTICIPATE AND SOUGHT

ADVICE FROM BELLA VISTA & CHEROKEE VILLAGE

JUNE 2017 IN HOT SPRINGS VILLAGE

CCI DECLINED TO OFFER A PLAN

PROPERTY OWNERS INFORMED

THE CMP’S CONTENT October 23, 2017 kickoff meeting and interactive

exercises at Coronado Center

November 30 th, 2017 charrette opening meeting,

hands on activities

Open studio hours between November 28 th and

December 6 th

December 6 th, 2017 charrette closing meeting –

compilation of outcomes

March 2018 CMP Presentation

April 2018 CMP Adopted

6 months of interaction between property

owners and planners

Over 4,000 responses between three surveys

Two mailed white papers

Webpage on explorethevillage.com with Q&A’s,

presentations, etc.

CMP Steering Committee, 9 subcommittees,

with minutes posted to the web page

THROUGH AN INTERACTIVE AND

TRANSPARENT PROCESS

THE PLAN HAS ALREADY PAID

FOR ITSELF, SAVING $600K!

Empty

Nesters &

Retirees

61%

Traditional

& Non-

traditional

families

28%

Younger

Singles &

Couples

11%

OUR TARGET MARKET

WAS DEFINED

Source: CMP Section 4, page 166

570

482

213 185 184

# of Mentions in the CMP

THE

RESULTING

PLAN WAS

MULTI

FACETED

WITH

MAINTENANCE

MENTIONED

3 X MORE

THAN OTHER

TOPICS

A THREE PRONG APPROACH

TO BUDGETING EMERGED

Service Gaps

Growth

Maintenance

MAINTENANCE PRIORITIES

JUNE 20TH BOARD MEETING

Visit http://explorethevillage.com/wp-content/uploads/2017/11/CMP-Phase-I-

Implementation.pdf for full presentation

SERVICE GAP PRIORITIES

JUNE 20TH BOARD MEETING

Visit http://explorethevillage.com/wp-content/uploads/2017/11/CMP-Phase-I-

Implementation.pdf for full presentation

INNOVATION PRIORITIES

JUNE 20TH BOARD MEETING

Visit http://explorethevillage.com/wp-content/uploads/2017/11/CMP-Phase-I-

Implementation.pdf for full presentation

“MAINTAINING CURRENT VALUE”

2019 STRATEGIES:

1. Capital spending on infrastructure exceeds

depreciation expense

2. Members’ equity remains stable, at a minimum

3. Operating results yield cash sufficient to bring

capital reserve balances to 3/5th of the 5 -year

reserve plan (i.e. the plan began in 2017 and

forecasted by 2021, total util ity reserves of $1.7mil

and total non-util ity reserves of $2.3mil)

4. Repair 25% of culverts identified in the three-year

culvert replacement plan (TBD by Dec) in each of

the next three years.

5. By June, present Balboa Golf Course & Clubhouse

project proposal to the Board.

6. By February, complete Lake Balboa dredging plan.

“ADDRESSING SERVICE GAPS”

2019 STRATEGIES:

1. By December, place wifi in Coronado Center and

Ponce/Woodlands complex.

2. Implement a mobile recycling program for at least

4 events in 2019.

3. By June, align staffing structure to support CMP

pillars, while keeping total compensation expense

below 2018 levels, plus budgeted merit increase.

4. By August and in collaboration with the HSV

Chamber of Commerce, present a path-forward

report to the Board for lodging and east -end

grocery solutions.

5. By July, present a lot suspension strategy and

timeline to the Board.

“CREATING NEW VALUE”

2019 STRATEGIES:

1. By December, sell 30 POA owned lots.

2. By December, increase number of improved

properties by 60.

3. By June, present first pocket neighborhood

proforma and sales launch plan to the Board.

4. By August, hold a deliberative engagement

session on the CMPs Coronado Center ideas.

5. By September, hold a deliberative engagement

session on the CMPs town center ideas.

97% OF SPENDING IS ON

MAINTENANCE & SERVICE GAPS

BUDGET ASSUMPTIONS

IRC SECTION 528 EDUCATION

JEFF CRONE, EGP PLLC

CONSOLIDATED BUDGET

OVERVIEW

New revenue streams for discovery

packages and housing starts

$435K for Lake Balboa Dredging

Additional $685k for road

maintenance expense

FTEs are flat

Total compensation expense is less

than 3% merit budget

No Golf fee increases

No Water/Waste Water Increases

Investor and developer recruitment

2

0

1

9

H

I

G

H

L

I

G

H

T

S

RESERVE OVERVIEW