WHY YOUR SCA BOARD HAS LET YOU DOWN!
The Main Reserves are an integral part of the financial well-being of a community. Sophisticated home buyers and their real estate agents look at Reserves before making a buying decision.
SCA used to have a standard of 90% funding and the Main Reserve has slipped over the years because of increases in spending and low priority. I believe that was and is a mistake both for resale and homeowner protection against special assessments.
The 2023/4 Reserve Study is board approved and effective January 1, 2024. The 2024 Budget has its reserve component drawn from this study. If you read the cover of the Study, it states that the Main Reserves are funded at 74.91 % on January 1, 2024. That is very misleading because at the end of 2024 the funding level drops to 68%. When you go into the supplemental schedules of the 30-year study you discover that on January 1 years 2025 through 2028 the funding level is in the mid 60% range. That is underfunded. And your assessments for the reserve portion only goes up 15% for each year in 2025-2028. That’s their plan. The board has the authority and responsibility to act in the best interests of homeowners. In my view they have not. Not only have they not made efforts to restore the Main Reserve to the previous 90% level they voted to go in the opposite direction. Red Flag!
They should NOT look for ways to spend more money on new capital expenditure pet projects but that seems to be a priority for them. Are the Reserve expenditures as listed for 2024 theoretical or real?
The Reserve spending for 2024 is listed at $4,495, 039. Why would the board approve a theoretical expenditure list for Year 1? I reviewed the detailed list, and you would think if a board was being transparent and honest and competent that the first year of spending in a reserve study would be what was really going to be spent so as not to mislead homeowners. Something is off.
Here are just a few examples of monies listed to be spent from Reserve Study in 2024. Maybe they make sense. Maybe not. A complete review of year one ought to be done and disclosed prior to 2024 budget approval. Freedom Hall is listed for a new Stage Floor, New Chairs and a new Motorized screen for over $260,000. More down time for Freedom Hall? Retaining & Privacy walls recorded in system July 2023(so maybe they had been excluded from inventory in previous reports) are scheduled for an expenditure of $348,773. Court Replacement A/C @$509,901; Fence & Gate repairs entered 7/1/23 with one year life at $71,386. Phone Handsets @$59,148 and Phone Backend @$43,851. I don’t know about you but with the lack of transparency and competency in monthly financial matters all of this is suspect. Does the board stand behind these numbers or is this some type of a hidden reserve. And by the way what is the COO, Sandy Seddon doing? How is she able to convince these boards to do her staff work? It’s called upward delegation. The board under our self-managed governance is to set policy and exercise oversight. The COO is charged to execute those policies. But in many instances, board members are merely worker bees doing her staff work. That is another topic for a later time.
In 2023 the 7144 homes had a $2.1 million dollar component or $295 per homeowner as the Reserve Assessment. The supplemental schedules from the Reserve Study show that number growing to $4.05 million ($568 per homeowner) and Reserves underfunded at 66% in 2028. Not good. We apparently need a new board majority to exercise better oversight.
On the operating budget assessment side in 2024 with a bloated payroll, deficit financing of the restaurant, inflation increasing utilities, insurance and maintenance costs, Anthem Council raising its assessment and increasing legal counsel expenditures our financial health could be a lot better. Until this community elects board members who are respectful with your money, limit new capital projects, and abide by our budget ratification rules (Article VIII of our CCnRS), plan on being at risk. Don’t let the slide continue. Vote in 2024 for those board candidates committed to strengthening SCA’s financial health and reporting transparency. The Main Reserves are being terribly mismanaged. The best protection for homeowners is a policy to fund Main Reserves at 100% as there will be less money available for boards to waste.
The pocketbook you save could be your own.
Until next time…. Robert