White Cliffs Condo Four Financial Planning September ’07 Owners’ Meeting.

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Presentation transcript:

White Cliffs Condo Four Financial Planning September ’07 Owners’ Meeting

What We Will Cover Historical perspective on financial condition Board Objectives Board actions to improve physical condition and financial condition Improvements planned Projected impact –Reserves –Debt burden –Owner Fees SOUND PERSPECTIVE ON THE FUTURE

Historical Financial Perspectives Condos are at least 20 years old. Construction quality ???? Coastal impact Fees have not changed since‘04 Inadequate funding for future replacements –’03 study --- $1.5 million in future – Siding or major repair and painting needed soon – Reserve at end of ’ $64k – Provided $56k in ’04 – should have been > $200k/yr – Vinyl siding rejected; repair/paint accepted – $689k ($6.4k/unit) assessment in ‘05

Early This Year Repair/painting siding cost completed last year -- over $715k Substantial Repairs and Replacements identified for ’07 – ’14. – Decks/roof membrane – Painting/repair – next cycle – Roadways – Other $32k in the reserve at beginning of year Weak financial position A POSITON NO BOARD WOULD WANT

Board Actions Objectives – Improvement program – Financing – Establish reserve funding --- updated reserve study – Substantially improve financial condition while improving physical condition –Maximize market values and competitiveness Owner funding increased – $500 assessment – Monthly fee adjustment -- Sept. 1, 2007 Sound financial modeling to meet objectives Financing sources and options

Financial Plans – ’07 thru ‘14 Planning period Operating Costs -- $2,599,000 – compound annual growth rate of 2.6% for 7 yrs. Improvement Program -- $1,288,000 (equivalent to $11,900/unit) Reserve –Beginning – $31,600 ($293/unit) –Ending -- $262,500 ($2,430/unit) Paid for with – Borrowing – Reserve funds – Owner funding

Compound annual growth rate of 2.6% over the 7 years

Total $1,288,000

Borrowing Why? Proposal to 3 banks/credit union $475,000 ($4.4k/unit) of borrowing drawn down substantially during ’07 and ’08 with small amount in ’09. Projections assume 8% interest ($170K or $1.6k/unit); actual may be slightly less Repaid in ’09 through ’15 – 7 years … $69/mo./unit Additional $125,000 ($1.2k/unit) assumed borrowed in ’12 on same terms … $18/mo./unit

Reserves Objective Funding has increased with new fee level Reserve Study Key to our financial health

Projected Results – Now thru ‘14 Improvements completed Total borrowing of $600,000 reduced to $172,000 outstanding Reserves available -- $262,000 – will review against updated Reserve Study Fees increase at compound annual rate of 5.2% for 10 years ending ’14 $69 of fees for debt payment ends after ’15 Financial position strengthened Market competitive

Thanks to the Board for taking actions for the present and projecting the future WE NOW MUST CONTINUE TO REFINE AND IMPROVE OUR PLANNING FOR THE FUTURE