| GVR
2008 Annual Budget
General Comments
Green Valley Recreation currently operates
twelve facilities and one Member Services Center.
We have started construction on the thirteenth facility
at Canoa Ranch. Each facility offers a variety of
activities, programs, and classes. It is always
Green Valley Recreation’s intention to maintain
facilities and recreational programs at an optimal
level, provide capital maintenance, repairs and
replacements as needed, improve existing facilities,
and deposit to and preserve the operating, replacement,
and addition reserves.
2008 Annual Budget
This year, the budget process began in
May and ended in October. GVR management initially
prepared a Capital Budget including several large
projects and recommended maintenance and repairs,
equipment replacement and HVAC (air conditioning)
replacements at various centers. The Capital Budget
was presented to the Planning and Evaluation (P&E)
Committee for review and approval. GVR management
then prepared the initial draft of the 2008 Operating
Budget and was presented to the Fiscal Affairs Committee
for discussions. The budget process included a review
of last year’s budget, actual expenditures against
that budget, housing market and inflationary issues.
Once the Capital Budget was approved by the P&E
Committee, these recommended expenditures were included
in the Operating Budget for further review. The
Fiscal Affairs Committee approved the final draft
of the 2008 Budget and it was forwarded to the Board
of Directors. The budget was presented and approved
at the Board of Director’s Meeting on October 23.
The 2008 Annual Budget is $6,571,357 which
is $13,979 higher than the 2007 Annual Budget. Our
source of Revenue is being impacted by the effects
of the reduction of both new home sales and re-sale
markets. The home mortgage industry is being influenced
by the many foreclosures and failures of related
companies which are making it harder to obtain new
loans. Two of our Revenue sources have been negatively
impacted by the reasons above. Our 2008 Initial
Fees are down from last year by $31,756 (30%) and
our New Member Capital Fees are down by $121,408
(22%). With the projected reduction in these two
fees, the inflationary increases in other operating
expenses and the need to replenish our dwindling
Addition Reserve amount, the Board of Directors
approved increases to Member Dues, Transfer Fees,
Tenant Fees and Card Replacement Fees.
Member Dues were increased by 2.3% from
$385 per year to $394 per year. This increase is
the maximum allowed by the GVR Bylaws which states
that any Member Dues increase is limited to the
Cost of Living Adjustment (COLA) as released by
the Social Security Administration in October for
the following year. This increase in Member Dues
added $114,525 to Revenue and is the primary reason
for the modest increase of $126,679 (3%) over last
year. The difference between the 2.3% and 3% total
increase is due to the additional pro-rated dues
to be collected from new home sales during the calendar
year. The projected increase in Transfer Fees, Tenant
Fees and Card Replacement Fees may increase Revenue
by $60,180.
Operating Expenditures will be impacted
by both inflation and energy costs, which will present
problems for both construction projects and overall
operating costs for next year and years to come.
Because energy costs are affecting construction,
including higher costs for steel, cement and other
building materials, it will become exceedingly difficult
to complete as many capital projects as GVR has
done in the past. Wages and Benefits are 46% of
the Expenditure Budget and they increased $148,
870 (5%) from last year. Medical expenses, payroll
taxes and workers compensation expenses were $56,321
(2%) of the $148,870 increase.
Utility expenses are 13% of the Expenditure
Budget and they increased $102,677 (14%) from last
year. Natural Gas expense increased $96,745 due
to higher anticipated usage to heat our pools and
projected increase in the cost of natural gas.
Included in the Capital Addition expense
of $538,900 are two major capital projects. The
addition to the existing Woodshop at the West Center
is a $503,000 project that should start in June
of 2008 and should be completed by June of 2009.
The estimated cash payments to the construction
company in 2008 are estimated at $303,000. The remaining
$200,000 estimate will be a budget item for 2009
for the completion of this project. The second major
capital project is the relocation of the Camera
Club from the East Center to Santa Rita Springs.
This is a $196,000 project that will be completed
in the first quarter of 2008.
We are anticipating that the Canoa Ranch
Recreation Center and Las Campanas Phase III will
be completed in the fourth quarter of 2008. There
are operating costs in the 2008 Annual Budget in
anticipation of the completion of both of these
projects. The additional annualized operating costs
will increase operating expenses by approximately
$200,000 in 2009.
Depositing to the three reserves continues
to be a top priority for the Board of Directors
in 2008. Our Operating Reserve is unchanged at $533,570.
The Replacement Reserve includes a $175,177 contribution
in 2008 raising the total reserve balance to $1,860,458.
This is the recommended amount as of 12/31/2008
in a GVR Reserve Study that is based upon the age
and condition of GVR properties and equipment. The
Addition Reserve includes a $142,049 contribution
in 2008 raising the total reserve balance to $220,510.
In June of this year, the Board approved a transfer
of $315,200 from the Addition Reserve to a Restricted
Cash account to complete Las Campanas Phase III.
Additional contributions to this reserve balance
are essential in the years to come since this will
be a major funding source for future large GVR projects.
Jim Cassidy
Finance Director
*All numbers are based on the 2008 GVR
Annual Budget. You can pick up the GVR 2008 Annual
Budget at the MSC office.
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