A number of positive factors exist for the Hot Springs Village Property Owners’ Association, chief executive officer Lesley Nalley said in her financial report at April’s board of directors meeting.
Controller Liz Mathis provided a five-year view of POA audit reports, which culminated in the 2017 audit with no deficiencies.
“Congratulations to the accounting team for bringing us from stated deficiencies surrounding GAAP (generally accepted accounting practices) and IT (information technology) practices five years ago to an audit report free from all mentions of those past issues,” Nalley told the board.
The CEO’s report had a quarterly review broken down by each of the 75 department. “Reporting at this and even more finite levels were made possible by the same IT conversion that resolved our audit deficiencies,” Nalley said. “Directors and supervisors have access to transaction level reporting that enables them to monitor their team’s progress.”
Total e Integrated of Vaughan, Ontario, was the vendor for the IT conversion, completed Aug. 1, 2016.
New home permits totaled 13 on March 31, but more have been issued in April. There are 9,156 active water meters and 8,020 sanitation customers.
There are 8,794 improved lots, 11 more on Dec. 31, and 25,362 unimproved lots, as well as 99 timeshare units and 199 assisted living units. The POA owns 3,121 lots. Ninety-nine percent of improved lots, 66 percent of unimproved lots not owned by the POA and all timeshare and assisted living units are in good standing.
Currently, there are 7,564 unimproved lots and 85 improved lots with assessment balances exceeding 60 days outstanding. The number of delinquent properties fell by 62 between Dec. 31 and March 31.
Citing results which include release of the escrow account, Nalley recommended:
• Transfering an additional $283,000 for non-utility reserves, in addition to the budgeted $301,000, for a total of $584,000,
• Paying off the $884,000 Desoto Club loan early,
• Transfering an additional $100,000 for utility reserves, in addition to the budgeted $100,000, for a total of $200,000,
• She also called on staff to make recommendations during the budget preparation for using the remaining funds to complete additional identified projects from the CMP’s three-year operation and maintenance plan.
Due to various stages of projects underway, including gates, wastewater and pickleball, Nalley prefers to have those closer to completion before the POA considers more projects. She had also favored discussing transfering funds for an outdoor pool, but the project failed to move forward at the April board meeting.
This year, $185,000 more in assessments were received by March 31 than in 2017.
Year-to-date total operational revenue is 6.35 percent higher than 2017. Administration, sales, public safety, public utilities, lakes, planning and inspection and food and beverage all show an increase in revenue from the prior year.
Total operating expense was 6.10 percent higher on March 31, as budgeted.
Sixty-three percent of the POA’s year-to- date revenue came from billed assessments.
The POA ended March with $9.8 million in cash and cash equivalents, a $1.9 million rise from 2017. Of that, $1.4 million is restricted, including $1.21 million in wastewater bond funds. Other restricted funds include workers compensation and employee insurance.
And $17.4 million of assessments are outstanding, with $14.5 million accrued for bad debt, pending resolution of National Recreational Properties Inc.-successor- entity collection efforts. A total of 10,770 properties are considered unproductive or not in good standing.
The POA had $3.90 million in long-term debt on March 31. “The current debt ratios, cash balance and projected operating results demonstrate Hot Springs Village’s ability to meet the related debt service obligations for 2018,” Nalley told the board.
The POA’s net worth is $70.9 million.
Total net revenue is 18 percent of budget and $153,000 more than 2017. While total revenue is up from the prior year, several divisions show decreases in revenue over prior. In Public Works revenue is down related to the sales of vehicle decals which have been postponed in 2018 pending completion of the gates projects. Recreation revenue is also down from the prior year related to delay of Pickleball annual memberships and a shift from short-term fitness memberships to annual memberships, for which the revenue is allocated throughout the year.
The largest variance is in golf and is explained below.
Total operational expense is 22 percent of budget and $424,000 more than 2017, as budgeted.
Net excess (deficit) before depreciation and capital was $628,000, as compared to a $357,000 deficit last year.