WWS 2010 Preliminary Budget Distribution

The WWS 2010 Preliminary Budget is being prepared for distribution to the owners. Next week the cluster advisers will be delivering the preliminary budgets to each cluster. Out of town owners will receive their packets in the mail.

The 2010 Preliminary Budget shows a reduction over last year's figures. Annual maintenance fees will be approximately $360 ($90 per quarter ) lower than last year if the BOD approves the budget as proposed. The major portion of this reduction comes as a result of a proposed revision in reserve accounting. The Budget Committee has recommended the adoption of a method known as 'pooling' that will combine our multiple reserve line item accounts into one fund.

Once the 2010 Preliminary Budget is accepted with the pooling of reserves, the owners must approve the transfer of existing reserve funds to the new pooled reserve fund. This must happen at a Special Meeting of the Owners. We have scheduled the Special Meeting to convene immediately after the November 23, 2009 BOD meeting.

Look for a voting proxy and return envelope in your budget packet. Each owner must vote to approve the transfer of reserve funds from our current line item accounts into the new pooled fund. Please complete and return your proxy to the office ASAP. This will insure that your vote is counted in the event you cannot attend the Special Meeting on November 23.

The BOD recommends you vote 'YES' on this item.


Director Terms. Déjà vu
I've had some discussion with a few owners about the following statement in my last post:

We have ten remaining Directors who were elected prior to the effective date of this law. Since the law is not retroactive, those ten Directors are allowed to complete their terms.

Some people have read that statement to mean that those 10 Directors are not up for election in March 2010. I included the statement to explain why only 5 Directors were elected in March of 2009 and not all 15. Those 10 Directors were allowed to complete their terms.

As another year passes, 5 of those 10 seats will be up for election in March 2010. Remember that our BOD had staggered 3 year terms until the law changed. So as each year passes, 5 more Director terms come to an end until all 3 year terms are gone.

Consider the following information:

We have 15 Directors on our BOD with the following status:

5 Directors on 3 year terms expiring March 2010
Elected 2007 - prior to the new law

5 Directors on 3 year terms expiring March 2011
Elected 2008 - prior to the new law

5 Directors on 1 year terms expiring March 2010
Elected 2009 - after the new law

A total of 10 Director seats are up for election in March 2010.

So the original statement as it was presented is correct. We have ten remaining Directors who were elected prior to the effective date of this law. Since the law is not retroactive, those ten Directors are allowed to complete their terms. 5 of those director seats will come to their natural term end in March of 2010 and will be open for election.

If nothing else, this highlights how confusing the whole issue can be.

WWS2010 Budget - Operating Accounts

The budget committee meetings on Saturday 9/26 and Tuesday 10/6 were a review of operating accounts since 2000 and the preliminary budget for 2010.

The chart below is a visual representation of how each maintenance dollar is allocated in the proposed budget. As you can see, over 50% of each maintenance dollar is spent on the uncontrollable items of insurance, utilities, and cable tv. Those are the big ticket items where rates are determined by municipalities or single service providers.

The preliminary budget as presented shows an average decrease in maintenance fees of over 7% for 2010. A large portion of that decrease is a result of the change in reserve accounting that is being proposed by the Budget Committee.

The proposed budget must now be reviewed by the BOD. There may be further adjustments before the numbers become final.

The complete presentation including the chart shown above is available at the link below and on the President's Blog.

2010 Budget Presentation

The BOD will consider the preliminary budget at the October BOD meeting on 10/26. All owners are invited to attend.

WWS 2010 Budget - Controlling Costs

The major portion of the budget is devoted to operating expenses. These are the day to day costs of running Wildewood Springs and include items such as insurance, cable tv, utilities, administration, grounds and landscaping maintenance, pool maintenance and water/sewer.

Many owners have expressed concern about the rise in maintenance fees since 2000. David White, the budget committee chairman has provided an informative analysis to explain the reason for the rise in fees over the past 8 1/2 years using historical expense information supplied by Dennis Bucher, our Property Manager. In a nutshell, uncontrolled costs have risen from being 40% of our operating budget to 55% of our operating budget. Remember, uncontrolled costs are the big ticket items of insurance, utilities and services (water, gas, sewer, trash, electric), and cable tv. These are items where the rates and terms are dictated by a municipality or a single service provider (i.e. insurance) and we have little control over the charges.

Insurance cost alone has risen 818% (yes, you read that correctly!) since 2000, from a low of $65,384 to the current cost of $535,037 and comprises 24% of our operating budget. In other words, roughly one quarter of each dollar paid in maintenance fees goes toward paying our insurance bill. Remember, the bulk of our insurance is provided by Citizen's Insurance, the Florida State Insurance Provider. Citizen's Insurance is our only insurance option because no other insurance carrier will insure a community as large as WWS.

On the other hand, our controlled expenses tell a better story. Controlled expenses are the items Dennis Bucher, our Property Manager, and the BOD manage directly. Examples of controlled expenses are: administration and office expense, grounds and landscaping, building maintenance, pool maintenance. These items have been well managed with an increase of approximately 2.8% annually since 2000. That's less than the rate of inflation for the period.

The presentation is available at the link below and also on the President's blog on the right column.

2010 Budget Presentation 9/15/2009

The next budget committee meeting is scheduled for Saturday, September 26th at 10AM. Location to be announced.

WWS 2010 Budget - Reserves

The first phase of the budget process involves planning for reserves. Reserve funds are monies set aside for high dollar expenditure items and long range projects that are done infrequently. Reserve projects most often involve the following types of expenditures: Roof, Road/Pavements, Painting, Swimming Pools, Tennis Courts, Machinery and Public Utility.

Some reserve items: Roof, Swimming Pools, Road/Pavements


A portion of each maintenance fee paid is put into reserve funds. For 2009, that amounted to approximately 15% of each maintenance fee payment or 15 cents of every dollar.

The balance in reserve funds is reported monthly in the financial report.
We have been building reserves steadily since the end of the roof project in 2007. The balance in reserve funds on July 31, 2009 was $708,792

The Budget Committee has recommended we consider using a pooled technique for handling our reserves starting in 2010. This technique considers cash flow requirements on a pooled reserve fund instead of treating each reserve item as a separate account. The owners must accept this type of reserve accounting by a majority vote in order for WWS to transition to this method.

The Budget Committee presentation is available here:

2010 Budget Reserve Presentation
It is also posted on the right column of the President's Blog page on the website.

The next Budget Committee meeting is scheduled for Tuesday September, 15 at 9AM in the Wildewood Springs office.

Crunching the Numbers

The budget process will begin in earnest in a few days. It might be helpful to review some frequently asked questions to refresh your memory about how this happens. This entry is devoted to basic budget questions. As we move through the cycle, I will provide additional updates.

WHY do we budget?
It costs money every day, to cut the grass, heat the pools, answer the phone, spray the bugs, clean the gutters, pickup trash, pay for cable and all the other things that keep Wildewood Springs going. The budget process is the formal evaluation and decision process that we use to plan what we believe it will cost to run this community for the coming year.

WHAT is the WWS budget?
The annual budget is the anticipated cost for the coming year. The total dollar amount is allocated by unit size to 558 units as maintenance fees.

The budget is comprised of two main sections.
The first section, Reserves, are monies we accumulate for capital projects such as roof coating, painting and paving.
The second section, Operating Expenses, are the everyday expenses incurred in running Wildewood Springs such as trash, water, sewer, electricity, insurance, administration and cable tv.

WHO creates the WWS budget?
The Budget Committee develops the budget with input from the Property Manager and from service providers. The Board of Directors approves the WWS Budget and the Owners approve the funding level for Reserves.

HOW is this done?
All those costs mentioned above are reported and tracked during the year. When the budget cycle begins, the current year's costs are reviewed and considered to develop the new budget. Anticipated rate increases for items such as insurance, electricity, gas, water and trash are factored into the equation. The schedule for large capital projects such as painting must be reviewed to verify we are accumulating reserve monies at an adequate rate to have funds when the projects are planned to occur.

WHEN does the process occur?
The budget process dates are tentative. Here are the milestones:

April/May
The preliminary Budget Committee meeting. This is generally an overview of the cycle.

August/September/October
There are a series of meetings where the budget components are reviewed and revised.

October
The budget is presented to the BOD tentatively in the October meeting.
The Board gives approval for distribution and budget copies are distributed to all owners.

November
Final Board approval is tentatively planned for the November meeting.


WHERE do the meetings happen?
The first committee meeting is scheduled for Tuesday September 8, 2009 at 9AM in the Wildewood Springs office. Watch for official meeting notices on the office bulletin board and additional notices posted on the cluster bulletin boards, Channel 95 and the reminder email notices. Budget Committee meetings are open to all owners. Additional meetings will follow and be announced in the same fashion.

Last Week at Wildewood

Last week was certainly busy here at Wildewood Springs. We started off with a Poolside Chat at Pool 5 on Monday evening. It was a fun time and there were about 20 owners in attendance. We socialized and enjoyed snacks and drinks. Plus it was a good place to find excess Easter candy.

From Poolside 2009-04-13

I've included a few photos from the event. You can view the online album if you click on the link below the photo.


On Tuesday morning we had our official 2010 Budget Kickoff Meeting, the 'Snowbird Special'. After introducing the committee members, David White, committe chairperson, explained the budgeting process he plans to use and presented a tentative schedule of events. He also answered a number of questions from the owners in attendance. The next budget meeting will not occur until after Labor Day in September. Then we will begin the process with vigor.

I'm listing the tentative meeting dates in this note, but please watch for the official confirmation of the dates as the fall approaches. The locations will be announced when the dates are confirmed.

• Tuesday 9/9/2009 9AM
• Tuesday 9/15/2009 7PM
• Saturday 9/26/2009 10AM
• Tuesday 10/6/2009 9AM with Cluster Advisors
• Board of Directors October Meeting 10/26/2009 2PM Budget Review
  
• Board of Directors November Meeting 11/23/2009 2PM Final Budget Vote

The presentation documents are available at the following links:

Meeting Minutes Part 1
Meeting Minutes Part 2
Meeting Minutes Part 3
Meeting Minutes Part 4

These links are also available on the Notes from the President page on the WWS Website.