(This report contains information on the general community operation and reserve budgets only. APN neighborhoods have separate and different budgets).
Each year in July, the Sun City staff, Finance Advisory Committee, and Board of Directors begin the six-months-long process of creating and approving the budget for the following calendar year. The annual process concludes in December with final approval of all budgets for the next year.
The community’s 5,481 households each pay $125 per month into an assessment fund that finances the staff and activities costs each year. For about 18 years, the $134 assessment per household has fluctuated very little; it has gone up a couple of times by $1 or $2, and it went down once by $2.
However, as we head into 2018, several financial decisions and actions, together with favorable results from previous actions, have combined to create the largest annual assessment reduction in Sun City’s history.
Effective on January 1, if the board of directors approves in its final meeting of the year on December 6, the community’s basic assessment will decrease by $9, from $134 monthly to $125.
Deanna Loughran, executive director, put it this way in an October letter to residents: “Savings in operational expenses and an increase in non-assessment revenue, achieved by the efforts of the First Service Residential (FSR) team, have made this reduction possible.”
Community assessments are broken out into operational and reserve allocations, Loughran said. “The current monthly assessment obligation of $134 represents $106 for operational, day-to-day expenses, and $28 for reserve funding, which is used to repair and replace physical facilities in two lodges and many other recreational activity spaces. The proposed 2018 budget decreases the operating portion by $5 and the reserve portion by $4.
After this announcement was made in October and included in the budget report to residents in the November Lifestyles magazine, two meetings were held on November 9 to allow residents to ask questions of the community’s financial leaders. A total of about 85-90 residents out of a total of more than 9,500 showed up in Drendel Hall. There were 34 residents in the meeting room when the second session started on November 9.
George Sebastian, chairperson of the Finance Committee, presided over the evening session on November 9, accompanied by Loughran, staff Accounting Manager Dolores Drees, Controller Catherine Youngquist, Board treasurer Bob McGouey, and Bill Berendt, vice chairperson of the Finance Committee.
Primarily responsible for the reductions were three actions taken by the staff and board of directors, Loughran said.
Non-assessment revenue is expected to increase by about $81,000 due to the efforts of a new company (Homewise Docs) that provides documentation services for real estate transactions.
Staffing costs have decreased this year by about $112,500 due to minimization of customer service desk hours of operation in the lodges.
The engagement of Landscape Concepts Management to replace Brightview for community and Attached Product Neighborhood (APN) landscape services has reduced grounds and maintenance costs by about $167,500.
“These actions were taken because of the benefits they provided to us, and also because they signaled that they would lead to a reduction in assessments,” Loughran told the Sun Day at the November 9 meeting. Each $65,700 reduction in operational expenses or increase to income equates to $1 in monthly assessments for each of our homes. Therefore, the above actions totaled about $361,000, giving us the opportunity to decrease the operating portion of the budget by $5.”
Regarding the capital reserve fund, Loughran said, “Over the last several years, operating surpluses have been transferred to the reserve account, which in addition to increased investment income, has led to achieving the desired reserve funding goals sooner than expected. Based on cash flow projections and anticipated capital projects, a decrease of $4 for the reserve assessment next year was possible.”
She warned, however, that reductions in assessments are not common, and this year’s actions are not necessarily the beginning of a trend.
“Management will continue to strive to increase efficiencies while providing quality programming and services,” she said.
In our next edition, the Sun Day will publish information about a planned $2.2 million program of reserve fund capital improvements in 2018.
