The document summarizes the 2014 draft budget for the Highlands Ranch Community Association. It proposes a $32 annual or $8 per quarter increase in total assessments from $508 in 2013 to $540 in 2014. This is a 6.3% increase. Specifically, it proposes a $27 increase to the administrative assessment from $21 to $48, and a $5 increase to the recreation assessment from $487 to $492. A vote by delegates is required to approve the larger administrative assessment increase.

1. 2014 Draft
Budget
November 19, 2013

2. Agenda
•
Revenue & Expense Adjustments 2010 – 2014
–
Since 2009 there has been one RFCA increase of $8 or 1.75% in
2011
–
Since 2009, there has been no AFCA increase
•
Proposed Assessment Increase
•
Voting Options

3. Revenue Generation & Cost
Control Summary
•
What has Highlands Ranch Community Association done to combat rising
Assessment increases? (2010 to 2014)
Revenue generation and cost control measures have saved the association over $4 million
and held assessments lower:
• Administrative Function Revenues & Cost Reductions
$1,460,0000
– Avoiding Assessment Increases of approximately
$9.76 / year
• Recreation Function Revenues & Cost Reductions
$2,650,000
– Avoiding Assessment Increases of approximately
$18.19 / year
• Total Assessment Increases avoided
$27.95/ year

4. Administrative Revenue Increases
Increased Revenues by over $1,100,000
• Transfer fee increased from $50 to $100 to $130
• Increased Sub-Association Management Services
• Created new web advertising (Yellow Pages)
• Implemented new Architectural Submittal fees

5. Administrative Expense
Reductions / Controls
– Decreased expenses by over $360,000
• Limited staff pay increases
• Reduced health insurance costs
– Increased health plan deductibles and co-insurance
– Increased employee contributions
– Increased participation in lower cost HSA plan
• Reduced HRCA 401(k) plan contribution from 7% to 5%
• Reduced newsletter and invoicing production and mailing costs by introducing
opt-out option
• Changed Administrative Assessment billing to once a year vs. quarterly
• Renegotiated office supplies and equipment contracts
• Reduced telephone lines and renegotiated managed service contract
• Reduced payroll service costs
• Reduced volunteer, business and community expenses

6. Recreation Revenue Increases
– Increased Revenues by over $550,000
• Growth in recreation programs despite competition and depressed
economy
• Increased program fees
• Introduced business & non-resident memberships
• Increased guest fees

7. Recreation Expense Reductions /
Controls
Decreased expenses by over $2,100,000
•Limited staff payroll increases
•Reduced staffing (programming, operating hours, & maintenance)
•Wage freeze on all seasonal employees
•Reduced health insurance and 401(k) contribution costs (see
administrative comments above)
•Reduced facility operating hours
•Reduced registration and membership hours
•Closed or reduced childcare facility hours

8. Recreation Expense Reductions /
Controls
• Reduced utility gas costs by using Seminole verses Xcel
• Consolidated recreation facility contracts (from 4 to 1) for maintenance,
snow removal, landscaping, janitorial and office supplies
• McKinstry projected utility savings of $163,000 annually
• Eliminated trash service expense by using Preferred Provider,
ProDisposal
• Reduced Activity guide and Newsletter production and mailing costs by
offering homeowners online options

9. 2014 Recreation Fund
Deferred Maintenance/Expense
Capital and Reserve Expenditures eliminated or deferred to future
•Administration Fund (Capital)
– New Accounting Software
– Web Site Upgrade
$40,000
$20,000
$ 60,000
•Recreation Fund (Capital)
–
–
–
–
Web site Upgrade
Kiosks and Virtual Tour Website
Digital Displays
Tennis court divider nets and shade structure
$24,000
$20,000
$11,200
$20,000
$ 75,200
•Recreation Fund (Reserve)
–
–
–
–
•Total
NR Gym & Racquetball Court Flooring & walls
NR Lobby Remodel
Continuous lap pools
Reduction in emergency provision
$160,000
$400,000
$ 75,000
$ 65,000 $700,000
$835,200

10. 2014 Proposed Assessments
Actual
Revised
Proposed
Function
Reverse
Revised
Actual
2013
BC
2013
2014
2013 Adjustment Adjustment Assessment Increase
Assessment
Amount
AFCA
$ 21.00 $ 30.00 $ (7.00) $ 44.00 $ 4.00 $ 48.00
RFCA
$ 487.00 $ (30.00) $ 7.00 $ 464.00 $ 28.00 $ 492.00
Total
$ 508.00 $ - $ - $ 508.00 $ 32.00 $ 540.00
* The CPI (Consumer Price Index) for years ending 6/30/12 (+1.76%) and 6/30/13
(2.77%), US Department of Labor, Bureau of Labor Statistics, Denver / Boulder
Region

11. 2014 Proposed Assessments
• What is the proposed $4.00 Administrative assessment increase for?
–
–
–
–
Staff payroll increases (3%)
Increase in health insurance & benefits
Anticipated decline in re-sales (transfers)
Marketing and Rebranding
$
New Admin Expenditures
$ 120,400
New Admin Expenses per home
$
44,400
$ 24,600
$ 21,400
30,000
$
4.00

12. 2014 Proposed Assessments
• What is the proposed $28.00 Recreation assessment increase for?
– Staff payroll increases (3%)
$ 202,600
– Increase in health insurance & benefits
$ 90,600
– Bank, insurance & credit card fees
$ 20,000
– Reserve Study
$ 40,000
– Increase in utility rates
$ 31,000
– Supplies & Expenses Inflation (Non-Utilities) $ 35,900
– Increase in Capital Expenditures
$ 131,300
– New Capital Improvement Fund Provision
$ 250,000
– Other Operating expenses
$ 14,600
– New Rec Expenditures
$ 816,000
New Rec Expenses per home
$
28.00

13. HRCA Assessments Compared
to CPI
• Review CPI Data as it applies to the
Community Declarations

14. HRCA Administration
Assessments Compared to CPI

15. HRCA Recreation Assessments
Compared to CPI

16. HRCA Assessments Compared to
CPI
2014
HRCA Admin $ 48.00
HRCA Rec
$492.00
2009
Variance
% Increase
$ 51.00
$449.00
$ (3.00)
$ 43.00
(5.88%)
9.58%
8.00%
HRCA Total
$540.00
$500.00
$ 40.00
CPI Admin
CPI Rec
$ 53.00
$564.02
$ 47.87
$509.42
$ 5.13
$ 54.60
10.72%
10.72%
CPI Total
$617.02
$557.29
$ 59.73
10.72%
Variance $ 77.02
$ 57.29
$ 19.73
2.72%

17. Voting Process
•
Review Appropriate Sections of the Community
Declarations
–
Obtained advice of legal counsel on voting process and options
–
Providing remedies to Inadequate Funding
•
Review Voting Options and Decision Trees
•
Vote

18. Proposed Recreation
Assessment Increase
•Proposed 2014 RFCA increase from $487 to $492
– $5 increase meets both criteria below of Declaration
– Can be approved by the BOD without delegate vote
•Limitations (both met):
•May not be > Maximum RFCA = $564.02
• RFCA starting from $298.56 in 1993 compounded by CPI
•May not be > 120% of preceding year RFCA = $584.40
•2013 RFCA = $487.00 * 120%

19. Proposed Administrative
Assessment Increase
• Proposed 2014 AFCA increase from $21 to $48
–
$27 increase does not meet both criteria and requires a 2/3 voting power of
delegate body
• Limitations (not met):
• May not be > Maximum AFCA = $53.00
•
AFCA starting from $24.00 in 1982 compounded by CPI
• May not be >120% of preceding year AFCA = $25.20
•
2013 AFCA = $21.00 * 120%

20. Options for Proposed
Administrative Assessment
1.
2.
Request that 2/3 of the voting power of the delegate body approve the
AFCA increase
Do not levy any assessment for 2014
•
1.
Automatically impose Maximum AFCA ($53.00) & RFCA ($564.02) for a total
of ($617.02)
Impose a Supplemental AFCA in 2013 of $27.00 (total $48.00)
•
Board can impose up to $29.29, for an increase to $50.79 for 2013
•
Supplemental AFCA together with the initial AFCA may not be more than
120% of 2012 AFCA ($56.21)
•
Notice must be sent to every homeowner not less than 30 days prior to the
effective date of change (estimated to cost $12,500)
•
2014 AFCA increase is still limited to the Maximum of $53.00

21. Administrative Assessment
Decision Tree

22. 2014 Proposed Administrative
Budget Motion
The HRCA Delegates recommend adoption of the 2014
Administrative Budget as presented in tonight’s meeting.
This budget sets the Administrative Function Common
Assessment (AFCA) for the calendar year 2014 as
follows:
AFCA Proposed at $48.00, a $27.00 increase over
the prior year

23. 2014 Proposed Recreation Budget
Motion
The HRCA Delegates recommend adoption of the 2014
Recreation Budget as presented in tonight’s meeting.
This budget sets the Recreational Function Common
Assessment (RFCA) for the calendar year 2014 as
follows:
RFCA Proposed at $492.00, a $5.00 increase over
the prior year

24. 2014 Proposed Total
Assessments
Year
$/Year
$/Qtr
2014
$540.00
$135.00
2013
$508.00
$127.00
Proposed Increase
$ 32.00
$ 8.00
Proposed % Increase
6.3%

25. Questions?