The 2020 budget development was led by the general manager working with Finance Operations to incorporate the budget inputs from all the department directors. The fundamental budget development process has separated the operating budget from the reserve funded projects. Staff continued to use the zero-based planning model for labor expenses to review changes from prior year’s budget that included the impacts of the minimum wage increase for 2020. This planning model has been working well and results in a higher level of precision in this year’s labor planning and budgeting process.
The budget focus has been on maintaining the high standards of community appearance as the facilities mature and require more attention. Aging infrastructure, the Arizona minimum wage increase, increased water cost, street maintenance cost, additional landscaping costs, and the Eagle’s Nest golf course renovation were among the many upward budget pressures for 2020. New and resale home closings finished strong for 2019, and the newly implemented Community Enhancement Fund will have accumulated $360,000 by the end of 2019. These funds have been deposited in a separate account and invested in a high yield fund at Merrill Lynch.
Golf operations was presented with several challenges for 2020. The Eagle’s Nest golf course renovation had a substantial impact on golf operations. Golf revenues have been reduced with only 36 holes in operation throughout most of the year. Golf annual membership fees remain virtually the same with a couple of new membership categories added for 2020. Reduction of revenue along with water cost and minimum wage increases had a negative budget impact on the net golf operations. HOA previous years’ surplus has been used to reduce the budget impacts on the 2020 HOA dues.
The Food & Beverage Department is continually implementing operational improvements to match homeowners’ needs. The 2020 Arizona minimum wage increase had a significant impact on the operating cost of the Food and Beverage venues. This resulted in a higher Food and Beverage amenity dues cost of $16.63 per home, per month. The restaurants have continued to provide a greater and consistent level of service to enhance your dining experience and to retain your continued support.
The Criterium Reserve Study recommendations have been incorporated into the long range plan and will be the basis for reserve funded project expenditures in the 2020 budget year. For 2019, a projected $2.2 million of the reserve funds will have been utilized to fund asset replacements that were identified in the long range plan. This will leave the reserve account balance, net of the projected 2019 withdrawals, of approximately $11.4 million at the end of 2019.
Two homeowner meetings were held in early November to review the community financials and budget requirements for 2020. A detailed budget presentation provided residents with insight into the efforts by the general manager, Finance Operations, department directors, the board and staff to efficiently manage the community cost. These meetings provided homeowners the opportunity to better understand the financial requirements and challenges that face our community. For 2020, the budget presentation provided the detailed financials for the operating fund budget and a summary of the planned project expenditures to be funded from the reserve.
The board approved the 2020 budget at the Nov. 20, homeowners association board meeting. This approved budget resulted in a $156 increase in annual HOA dues bringing the 2020 HOA dues assessment to $2,728 per household/year. Of this total, $1981 will be used to fund the day to day operating expenses while $747 will be the contribution to the Reserve account for asset replacements.
The accompanying pie chart and data table depict the specific 2020 budget requirements for each function in the community and break out that portion of your HOA dues needed to support each function. A copy of the 2020 Pebble Creek HOA Budget has been posted on the PebbleCreek HOA website at www.pebblecreekhoa,org. A copy of the 2020 homeowner budget presentation and accompanying budget information article and pie chart have also been posted on the PebbleCreek HOA website.