The Open Door Volume 1, Issue 2 March 10, 2015 SPANISH OAKS HOA Given the attendance at our first Board Meeting, the March 17th meeting location will be just up the street at The Scottsdale Conference Center, 7700 E. McCormick Parkway, Arizona Rooms II & III. Please join us early from 6-6:30 6:30 pm to hear the Center s General Manager pre- sent on their renovations and potential specials avail- able to residents. 6:30 PM Tuesday Meeting Dates: 3/17/15 4/21/15 5/19/15 6/16/15 7/21/15 August off 9/15/15 10/20/15 11/17/15 12/15/15 HOA President...The Door is Open! The welcome mat is out and approximately 35 Spanish Oaks homeowners attended our February 17th Board of Directors meeting. These are highlights from the Board Officer/Director reports to keep you informed. Meeting Highlights: My President s Report focused on the importance of positive communication and correcting misinformation on the street. We also outlined how the Open Meetings will run to include homeowner participation yet manage a timed agenda. Board Committees are being formed and we encourage homeowners to share their time and talents by completing an application. The guard house has forms, or you can contact HOAMCO: (abennett@hoamco.com abennett@hoamco.com). The Board will select three homeowners per committee by March 31st. Each Board Director chairs one of the five committees. Our Treasurer, Jeff Starling, has worked countless hours on prior year expenses, current year budgeting, reserve planning and setting realistic expectations for financially managing Spanish Oaks through 2015. As we change from cash accounting in 2014 to accrual accounting in 2015, the net income results are unfavorable ($31,140) in December and unfavorable ($21,752) in January. This is due to unpaid bills and approved special projects by the previous Board. Bottom line, approximately $35,000 of expenses carried over from 2014 work that have to be paid in 2015. As of the end of February, the new Board is going to have to re-budget 2015, based on these expenses and there will be little room for any new special projects in the community. Jeff is available to go over materials with homeowners, as some who missed his presentation at the meeting have already requested. I encourage you to reach out to Jeff with questions. His email is: jtstarling@gmail.com Alan Algan reported on landscaping and the wisdom of using a landscape architect to plan any future projects. Desert Villa welcomes the Board s Inside this Newsletter: Town Hall Meeting 2 Security Services 2 Overall Master Site Plan 3 How is Your Money Being Spent Real Cash Position How an HOA Should Use Reserve Fund commitment to working with a professional designer. Also noted, McCormick Ranch remains committed to green spaces, now and into the future, thus landscape plans in Spanish Oaks will remain in harmony with McCormick Ranch with sensitivity to drought resistance. Steve Newell reported on the new security company (continued page 2) 3 4 Reserve Spending 4 President s Close 5 Building a Sense of Community HOAMCO SPANISH OAK LEAF 5
Continued from Page 1 HOA President...The Door is Open! seeking homeowners to update their gate contact sheet, purchase gate openers from HOAMCO and use windshield stickers for entrance. Bruce Fox emphasized the requirement for homeowners to seek advanced Board approval on any projects altering the exterior of their homes, including landscaping. Contact abennett@hoamco.com to receive the SOHOA Architectural Request Form or the guard house has a supply. A Board decision is made The Board is hosting a Town Hall Meeting on the question of HOA governing documents and returning HOA provided front yard landscape services. A panel of experts (attorney, insurance agent, HOAMCO, landscaper) will be available to share their knowledge about HOA CC&R s and any issues associated with HOA provided lawn seeding, fertilizing, bush trimming and irrigation timing. Please join us on Monday, March 23rd at 5:30 7:00 pm in the Mus- tang Library Auditorium, located at 10101 N 90th St, Scottsdale, AZ 85258. A moderator will take homeowner questions filled out on a card at the door, and there will be timecontrolled comments from the floor Security Services Security Services is our new front gate services company. Diane and Wally Buchholz have built their almost 20 yr. old company to over 60 employees and have developed a focus on customer satisfaction. The current guard hours are: 6:00 am to 9:00 pm Staffing: Monday Richard Tuesday Richard & Charles Wednesday-Richard & Peter Thursday Peter & Richard Page 2 during the last part of the meeting. This is an information gathering meeting for homeowners and there will not be any formal Board business. As background, we are including a separate summary sheet along with this newsletter that summarizes where we are and the current impact to homeowners. Please read prior to the Town Hall Meeting to be current on the issues. Thanks!! Friday Peter & Richard Saturday Peter & Charles Sunday Peter & Gary Please keep in mind that as a Spanish Oaks resident, there are options for entry into the community: 1) Remote control gate opener obtain through HOAMCO for $35 2) Punch in your security code on the pad by the gatehouse 3) Place a Spanish Oaks window decal on your windshield and proceed slowly enough for the guard to verify it obtain decals from the guard upon verification of ownership 4) Stop at the guardhouse and check within 45 days of receipt of a request, and work must be completed in 12 months or the request must be resubmitted. Jeff Starling noted the pool temperature is kept at 80-82 degrees and the spa is set at 101 degrees. We continue to monitor the cost of propane and the number of months the pool is heated. Note: Jeff wanted to update you that the lake dock has structural issues and is not safe to walk on. It has been caution taped and repairs are being quoted. Announcement!! - Town Hall Meeting Monday, March 23rd Ask Questions! Offer informed opinions! Fun AZ Facts! in with the guard on duty The Open Door It takes 50 years for a saguaro (sah wah ro) cactus to grow one arm. In April or May the sa- guaro blooms. The blossoms become edible fruit. The sun shines in southern Arizona 85% of the time, which is considerably more sunshine than Florida or Hawaii. Arizona is known as the "Nation's Valentine", because it joined the union on February 14th. Please let the guard know in advance if you have a non-resident entering the community. Otherwise, they may be turned away. Guard House #; 480-991 991-4114 (Be careful not to dial 911 instead of 991 or you will be getting some unwanted attention!) Questions? Please contact Security Services owner Diane Buckholz at: 602-740 740-1128 or: Email Board Director Steve Newell at: steve7835@gmail.com
Volume 1, Issue 2 Page 3 Overall Master Site Plan Metropolitan GREEN The Board is interested in an overall landscape master plan for this community. As a first phase to developing this plan, we have commissioned Metropolitan GREEN to develop design plans for landscape improvements of the main entry from McCormick Parkway. This was a project previously approved by the former Board. Once completed, we can review with the community and determine the best way to implement. A full comprehensive site plan would provide a base for landscape improvements throughout the property and be a great investment tool for future home owner applications and overall property management. Landscape goals and benefits to this landscape renovation plan would consist of updating common area plants, providing updated residential planting guidelines and options that will help maintain a unified look to the development. This plan s goal will be to maintain grass as the main focal element in the landscape, but remove it in areas where it causes property damage or just could be better served with lush, flowering plantings. During the development phase, the HOA will provide its residents with opportunities to review plans so adjustment can be made as needed for maximum resident support. Reducing some turf can have cost efficiencies in landscape water consumption, maintenance costs, and building maintenance related to irrigation water damage. Beyond overall site improvements, design plans would also include updated designs for the mailbox kiosks, entry sign wall and revisiting the previous changes to the pool area. All of which once designed, can be then sent out for multiple bids providing a full understanding of future project designs and how they might need to be phased for construction. Funding for the overall Master Site Plan will probably be something we look at for 2016. How is Your Money Being Spent? Real Cash Position A Message from your Treasurer This is Jeff Starling bringing you the second installment of How Is Your Money Being Spent. As I noted in the Feb meeting, our real budget position is not as positive as it seemed at the end of the year. Several normal bills were not paid in Dec or Jan and spending for 2014 Board authorized, year-end special projects, exceeded budget. Along with this, several owners prepaid some of their 2015 fees in Dec. Without close attention to the finances, one could believe we were in a very cash rich position, when we were not. Think of it like your checking account. Although you have money in your checking account, you need to know what outstanding bills are due before you write any checks for new items. Given all these unpaid expenses, we have to rework our budget and be very thrifty this year. There will not be much room for additional special projects. We have also found maintenance items that need addressing, so we will prioritize, and may delay less critical items to next year. If you would like additional information on any financial items you may email me at: jtstarling@gmail.com Operating Reserve Total Bank Cash $104,753 $88,331 $193,084 Less Homeowners Fees paid ahead in Dec & Jan Less Accounts Payable Dec. & Jan normal invoices not paid in operating and reserve Loan balances Less Outstanding Special Projects Landscape Invoice ($18,433) ($27,271) ($11,613) ($9,930) Less Outstanding Storm Water Pros ($5,900) Less Minimum Checking Balance (10% of assessment income) HOAMCO recommends to cover late assessment payments, early billing statements & emergency expenditures ($42,055) True Extra Cash Available $1,164 $76,718 $77,882 Above is a table summarizing where our true cash position was at the end of Jan prior to the New Board being seated. We will keep you posted on our re- budget progress. We believe we can rework the budget and cover normal operating expenses. We hope we do not have much unplanned or emergency spending this year. If so, we do have the option to stop our monthly reserve additions. However, as you will see in my next article, we have some work to rebuild our reserve as well.
Volume 1, Issue 2 Page 4 How an HOA Should Use the Reserve Fund vs. Operating Fund Funding community operations by an HOA Board is one of the most important, if not the most important, functions of the group. Properly overseeing day-to-day actions and long-term projects insures the neighborhood will have a continuous supply of funds to keep the community running effectively. As HOA Board members we have a fiduciary duty to make sure all money is properly allocated. A realistic and successful budget can be created by using actual expenses and reserve study guidelines. The reserve study (done last year) takes a fresh look at and takes into account larger scale issues such as pool upgrades, major repair or replacement of roads and sidewalks, granite (rock area) replacements, lake sedimentation removal, lake equipment repair, irrigation systems, buildings (guard house) or other large expenditures. There are basically two types of funds we deal with in our HOA. The day-today operations are taken care of by operating funds. The major or longterm projects are handled by the reserve fund. An HOA Board typically runs its financial operations like every household does. A checking account is used for the everyday and ongoing expenditures and a savings account is used for unforeseen circumstances or planning for future repairs and replacements. Civil/IRS code requires these two funds to be kept separate reserves cannot be used for operating. The reserve fund is used for larger scale projects, such as replacement and repair in the HOA community. These monies usually have strict criteria for how they are used based on CC&R s, bylaws, rules and regulations. These expenditures do not occur on an annual basis. As HOA Board members, we have several issues to keep in mind when dealing with your community reserve fund. Reserve Spending: Sorry if the chart above is hard to read. The top lines shows the reduction in reserve funds over the last 6 years and the other lines show the spending from it. There was also no annual reserve addition made in 2013 in order to cover operating expenses, also resulting in the need for the fee increase in 2014. The red line shows over $43,000 of the decline was due to inappropriate non-pool expenditures for operating expenses. The rest of the reduction came due to the improvements made to the pool in 2009, costing $229,552. Of that amount, $79,552 (green dot) was paid directly out of reserve, with a pool loan of $150,000 used for the balance. While upgrading the pool may have been needed, how it was upgraded and how the decisions were made in 2011-2012 to partially prepay and accelerate payments on the loan, reduced the reserve more than probably was necessary. There are several missing meeting minutes during that time that make it difficult to determine what the reasoning was. This may leave us short to cover items needed as indicated by the reserve study. The loan is scheduled to be paid off by the end of 2016. In addition to the $150,000 principal pay back, we will pay approx. $24,500 in interest by the end of 2016. Our monthly loan payments are $536. If you would like more details, please email me at: jtstarling@gmail.com It is essential to have money put aside for major expenditures, in order to avoid special homeowner assessments to pay for major projects. The Board has the fiduciary responsibility to keep the operating and reserve funds separate, clearly documented and in good standing at all times. This is one of the most important aspects of the Board Director s role. The reserve study completed in July 2014, was not discussed in detail at an open meeting by the previous Board and the new Board has yet to complete their analysis. We do know the bottom line of the study indicates, based on estimated upgrade and repair schedule on the current assets, we should be adding at least $50,000 annually to our reserve fund starting in 2015, then increasing over time. Unfortunately, this study excluded the lifespan of the irrigation system which will increase the need for additional reserve contribution. As a comparison, our current budgeted reserve contribution in 2015 is $32,440 ($17,560) less than recommended by the study. (Some information for this article came courtesy of the HIGNELL Company.)
President s Close Page 5 As Board Directors, we hear from many homeowners with diverging views. We read all your notes as a Board. Our primary goal remains squarely on 2015 fiscal responsibility and straightforward communication about decisions by the Board. The Board volunteers their time to responsibly manage $420,000 in annual HOA funds with decisions for the good of all homeowners, using complete transparency. When considering open meeting HOA business, all our information is your information, and we pledge to make smart decisions to protect our real estate assets. If you want any information about open meeting business, please seek out a Board Director or contact our HOAMCO Property Manager, Anna Bennett (contact info to right). It continues to be a pleasure to work with my fellow Board members, HOAMCO and homeowners for the future of Spanish Oaks! Linda Pobuda, HOA Board President Email: llpobuda@gmail.com Phone: 480-492 492-9585 9585 The Open Door Anna Bennett, our HOAMCO Property Manager is your first point of contact for daily issues related to your home and com- munity. abennett@hoamco.com 602-502 502-3133 (mobile) After normal business hours, please call the 24 hour line: 1-800 800-447 447-3838 SPANISH OAKS HOA HOAMCO Property Management 14861 N. Scottsdale Rd Suite 201 Scottsdale, AZ 85254 Phone: 480-994 994-4479 4479 Fax: 480-951 951-5242 5242 Email: abennett@hoamco.com Serving Planned Communities Since 1991 We are on the web! www.hoamco.com Building a sense of Community! The number of community associations in the United States has increased from just 10,000 in 1970, to more than 320,000 today. Spanish Oaks is not alone. Homeowners choosing to live in a planned community, agree to pay fees and live by a set of rules and regulations. These rules and regulations provide consistent community standards for exteriors of homes, yards, parking, pet ownership, etc. We are, for better and worse, a highly transient society. Americans follow Professional opportunities, retirement and other preferences from state to state. By their inherent nature, community associations bring people together, strengthen neighborhood bonds and promote a sense of community and belonging attributes that are often overlooked. A large percentage of the more than 62 million Americans who make their homes in Associations take advantage of association-sponsored activities like holiday events, fitness activities and community amenities, like a pool or guardhouse. These activities and amenities help residents get to know their neighbors and forge new, supportive friendships. Social opportunities exist even in smaller associations that don t have the resources or critical mass to sponsor formal activities. Many Americans make enduring friendships by serving on association boards and committees and volunteering in other ways. Spanish Oaks current Board is focused on moving forward by protecting property values through curb appeal. In addition, they are carefully spending the Associations funds as fiduciaries of the Association. I am always amazed by the time and energy volunteers will put into serving their neighbors. Truly at times a thankless job. We hope you feel that Spanish Oaks is a great place to live! Jim Hanley, President HOAMCO