Thank You for Taking the Time to Learn and

Understand How the

Crooked River Ranch Budget is

Prepared and Implemented!

FY 2017-2018 Budget Presentation

Introductions

� Members of the Crooked River Ranch Board

of Directors

� Members of the Budget/Audit Committee

� Members of the Crooked River Ranch Staff

Members of the BACMarilynne Keyser, Chair

Mary Dell Kaps, Vice-chair Diana Scholz, Secretary

Jim Dille, CRR Board Treasurer Paula Bartolomei, CRR Board Liaison

Bim Gander, Former BAC Chair and CRR Board Member Herb Parker, Former BAC Chair and Former CRR Board Member

John Williams, Former CRR Board Member Sue Ellen Haley Mike Folkestad Dan Tomlinson

BAC Staff Support

Judy LaPora, CRR Ranch Manager Annie Nyars, CRR Accountant

Debbie Wagemaker, CRR Bookkeeper

• The Business of our HOA

• FY 2017-18 Proposed Operating Budget

• FY 2017-18 Proposed Capital Expenditure Budget

• FY 2017-18 Proposed Capital Reserve Plan

• Where do we go from here?

• Questions?

Here’s What We’re Going to Talk About Tonight

The Association…..

Our Association is a 2.7 million dollar

business with four business components,

three of which are taxable...

�Rentals

�RV Park

�Golf Course

�Administration

Operating Budget• The HOA’s annual operating budget is like your

family’s budget—it shows where you get your income and where you plan to spend to it.

• It doesn’t show your bank balance, what loans you’ve taken out, or what you own.

• It’s not a photo taken at a moment in time. It is more like a video taken over the whole year.

FY 2017-18 Operating

BudgetRentals RV Park Golf

Course Administration Ranch Total

HOA Dues $1,136,920 $1,136,920Rents $40,945 $40,945

Camping $178,820 $178,820Ext. Stay $80,000 $80,000

Other Sales $8,000 $63,300 $71,300Greensfees $565,000 $565,000Cart Rental $210,000 $210,000

Annual Pass $220,000 $220,000Cart Storage $32,000 $32,000

Other Revenue $1,250 $9,500 $149,062 $159,812Total Revenue $42,195 $266,820 $1,099,800 $1,285,982 $2,694,797Total Expenses $24,859 $206,938 $1,094,289 $1,231,681 $2,557,767Rev over Exp $17,336 $59,882 $5,511 $54,301 $137,030

40%

4%

44%

13%

Rentals $17,336

RV Park $59,882

Golf Course $5,511

Administration $54,301

Percentage Contribution to Ranch Profits

FY 2017-18Admin Budget Revenue Expenses

Revenue over(under)

Expenses

Administration $1,259,320 $377,326 $881,994

Pool $500 $65,114 -$64,614

Snack Shack $19,550 $21,146 -$1,596

General Maintenance $5,612 $226,325 -$220,713

Roads $1,000 $541,770 -$540,770

Administration $1,285,982 $1,231,681 $54,301

44%

18%

2%5%

31%

How are HOA Dues Spent?

Gen. Maintenance $220,713

Admin. Office $377,326

Roads $540,770

Pool $65,114

Snack Shack $21,146

• The HOA’s annual capital expenditure budget is a list of capital assets that need to be repaired or replaced during the year.

• The HOA considers any major repair or replacement that exceeds $3,000 to be a capital expenditure. It is paid for with savings that have been set aside for that purpose.

Capital Expenditure Budget

What are Capital Assets and Depreciation?

• Your family has capital assets, like a house, a wood stove, and a car. They are items that last more than one year.

• Your capital assets deteriorate (and lose value) every year through use. The HOA calls that depreciation.

• Your family needs to protect your investment by repairing and replacing your assets. So does our HOA.

• Your family spends less if you save the money first rather than borrowing it. So does our HOA.

What is Depreciation? Suppose you buy a car in 2016 for $25,000, and suppose that car will last 10 years…

X Operating Expenses:

X Gas

X Oil

X Brake Pads, etc.

X General Maintenance, etc.

X Depreciation Expense:

X Automobile cost / 10 years

X $25,000. / 10 years = $2500. per year

When you need to replace that car in 2026…

Will you be ready?

Sticker price: $35,000!!!

What are our HOA Assets?

Land Land Improvements

Buildings Equipment

Antiquated road equipment equals more maintenance expense.

What we need…

What we have…

What we can afford…

2016 - $137,500

2008 - $75,000

FY 2017-18 Capital Expenditure Budget Rentals RV Park Golf

Course Administration Total

Pool fence $20,000 $20,000 Duplex roof $6,000 $6,000

SC roof $10,000 $10,0009 septic tanks $30,102 $30,102

C Loop plumbing $7,200 $7,200Carpet replacement $7,500 $7,500

Well pump $12,500 $12,500 $25,000Rough mower $35,000 $35,000Utility vehicle $30,000 $30,000

Clubhouse roof $27,500 $27,500New F-350 $47,000 $47,000

Front-end loader $65,000 $65,000Cinder shed $41,500 $41,500

Speed displays $12,000 $12,000Total $16,000 $37,302 $85,000 $225,500 $363,802

What do we need to plan for?

• The Board of Directors has a fiduciary responsibility to the HOA property owners to protect our shared investment in the common assets of the HOA.

• Most HOAs are required to have a Capital Reserve Plan to set aside funds to pay for major repairs and replacement of community assets.

• Our CRP includes a list of all the assets of the HOA, the current replacement costs, and estimated remaining life over the next 30 years.

• Existing buildings, which would only be replaced as the result of an insured loss, are not included.

Capital Reserve Plan

How much does our HOA need to save to protect our assets?

• Our HOA assets originally cost $4.8 million (ignoring land); however, many of these are nearing the end of their useful life.

• The BAC estimates that our HOA needs to raise $6 million over the next 30 years to repair and replace these assets.

• Each year, the BAC calculates how much is needed to stay on target. By this year, we should have saved $2.2 million.

• We currently have $1.1 million in the CRP, or 51% of what we should have saved by today.

• We are short because we did not start funding the CRP until about 10 years ago because our HOA dues were too low.

0

125

250

375

500

1973 1978 1983 1988 1993 1998 2003 2008 2013 2018

HOA Dues in Five Year Intervals

What are the Risks if we fail to save enough?

• HOA standards for a Capital Reserve Plan recommend maintaining each year a minimum of 70% of the total needed amount.

• Without a strong Capital Reserve Plan balance, the HOA may be restricted in obtaining bank financing for major repairs or replacements.

• The HOA might require an emergency assessment for each of our 2,644 property owners.

$0

$550,000

$1,100,000

$1,650,000

$2,200,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Future

Capital Reserve Plan History

70%

100%

23%

51%

29%44%

FY 2017-18 5 Year CRP

FY 2017est.

FY 2018 Budget

FY 2019Project

FY 2020 Project

FY 2021 Project

FY 2022 Project

Beg. Balance $647,205 $1,096,108 $918,275 $769,315 $661,622 $702,424

Depreciation $97,171 $107,133 $105,064 $111,094 $114,240 $119,984 Transfer

Commitments

$75,000 $75,000 $75,000 $75,000 $75,000 $75,000SpecialTransfer $500,000

InsuranceReimbursed $21,847

Interest Earned $2,138 $3,836 $3,256 $2,735 $2,358 $2,500Capital

Expenditures

-$247,253 -$363,802 -$332,280 -$296,522 -$150,796 -$261,118End.

Balance $1,096,108 $918,275 $769,315 $661,622 $702,424 $638,790

Where do we go from here?• Our Board of Directors should continue to fund the CRP

to achieve and maintain a 70% funding level.

• To do that, our HOA dues will need to be raised on a regular basis in amounts similar to the last three years.

• In addition, our HOA needs to continue to improve the profitability of our revenue-producing businesses through capital investments and better marketing.

Questions?