Melbourne Bailiwyck Home Owners Association

Melbourne at Bailiwyck Home Owners Association

Annual Meeting – 1/28/2013

Treasurer’s Report

Introduction:

The Melbourne at Bailiwyck HOA was chartered in 2005, and consists of 89 homes and lots in the Fort Mill, South Carolina area. Currently, 88 homes are completed and occupied, while 1 lot is still vacant.

2012 Cash Flow:

As of 12/31/2012, the association books are in sound financial condition. During the 2012 fiscal year, cash receipts totaled $25,204 (includes trash service of $10,324), and total expenses, including trash, were $29,004.

As in previous years, electric ($7,265) and landscaping ($6,947) were the two primary contributors to the total expense. An unanticipated expense of $1,075 for repair of the sewer line on Melbourne was included in the landscaping total. The annual insurance premium was $1,631, water was $849, and the web site expense totaled $479. New for 2012 was the trash service expense of $10,720. The association had no other major expenses during the year. Net loss for the fiscal year was $3,797, and the association ended the year with a cash balance of $26,911.40.

2013 Budget:

The 2013 budget is based on actual expenses for 2012, with adjustments as appropriate in certain expense categories. Total expenses are projected to be higher than 2012 ($33,950 vs. $29,004), but that difference is primarily due to the fact that trash service for 2012 was for 9 months, and will encompass the full year for 2013. Excluding trash service, projected expenses are actually lower by $334.

Ending cash reserves for 2013 are estimated to be $26,576. Cash reserves are available for two primary purposes – as an emergency fund for unplanned circumstances, and to supplement or fully fund future capital improvements in the community. Based on previous discussions and feedback from the association, the Board believes that this reserve amount is appropriate for current circumstances and anticipated market conditions.

2013 Annual Fee:

Association dues are paid each year by all homeowners to cover electric bills for street and front entrance lighting, landscaping maintenance, capital improvements to the community, insurance and legal expenses, general administration of the association’s business affairs, and other expenses as required. For 2012, the annual fee was $170 per lot.

Based on the projected budget for 2013 and the association’s cash surplus, the Board determined that the annual fee should remain at $170. This assessment will cover anticipated expenses with a modest deficit (approx $3,995) for budget year 2013.

Annual Deficit and Cash Reserves:

In 2008, annual dues were $240 per home, and the association cash reserves were approximately $33,000. At the January 2009 annual meeting, the HOA board recommended, and the association agreed, that an ideal level of reserves should be approximately $20,000. Annual dues were lowered to $170, and the association began running a planned deficit of around 10% per year.

The association will arrive at the recommended reserve level sometime in 2014, and annual dues will need to be increased (and/or expenses cut) by approximately $45 per home in order to balance the budget and maintain the recommended cash reserve levels.

Summation:

The association is in good financial condition. Accounts in arrears are at a reasonable level, (only one account is past due as of 12/31/2013). Reserves are adequate for emergency purposes and anticipated capital repairs/expenditures. The annual fee is lower than most communities in the area, and I foresee no major issues or concerns that might adversely affect the financial health and stability of the association.

Respectfully submitted:

Brad Witzel

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Brad Witzel, Treasurer

January 28, 2013