This fall 2014 newsletter concentrates on financial items. Shortly, we need to prepare our 2015 budget, wish to describe many financial items, strongly desire homeowner input and expect to shortly request a homeowner vote on some critical items. Hence, the following is provided:
Background: Our 2014 budget was approximately $293K. Of this, $129K is essentially fixed. This includes such items as regular landscaping, pool care, electricity, Waccamaw Management fees, cable, water, garbage, etc. The remaining $164K is where we have some, but limited flexibility. It includes general maintenance and contributions to our reserve funds. The last few years, the lion's share of the flexible funds has been spent on rotten wood replacement and interior repair needs associated with the near completed roof/deck project. For this reason, we have delayed other efforts in relation to home painting and landscape improvements. It is noted that we did have a monthly regime fee increase in 2014, but had kept dues stable for the few years prior to that. Our concern here related to the nationwide recession and a desire to limit overall costs to all homeowners. However, we do believe that some of these items now need to addressed.
Philosophy: It is our goal to limit overall expenses to homeowners of Oyster Catcher. However, we also wish to maintain maximum value of our investments. Sometimes, these two goals are in conflict. For fee increases, there is a choice between a monthly fee increase and special assessments. Right now, Oyster Catcher has a high monthly association fee and we desire to keep it stable. It is noted that for people desiring to sell their home, high monthly fees are a serious detriment. No one wants special assessments. However, we feel that temporary increased costs are best covered by special assessments, and anticipated regular costs are best covered by monthly regime fees.
Roof/Deck Project: This item was discussed in greater detail in a summer newsletter that was mailed out to all owners. Basically, we expect to complete the project by the end of the year. The costs for the basic deck and roof upgrade were on budget, but we had various cost overruns exceeding $270K for rotten wood replacement along with interior repairs. That $270K was paid from Reserve/Maintenance funds as described above, in addition to a $150K builders loan which we also need to repay.
Loan Repayment: This topic relates to the $150K loan we agreed to in June 2014 that was converted from the previous builder’s loan we had obtained during the roof/deck project. This amounts to $4,500.00 per month for 36 months or, for our 45 homeowners, $100.00 per month per homeowner. This summer, we instituted a $1K per homeowner special assessment to pay the loan through 2014 and into part of 2015. Now, we need to plan to pay the remaining 26 months. There are three choices: Pay it off immediately with a special assessment due early in 2015, Increase dues $100.00 per month, or pay it off according to schedule by a special assessment over the next 30 months. We strongly recommend the third option consisting of ten special assessment payments of about $300.00 per homeowner per payment. If this is not approved, our choices are poor. We would be forced to increase the monthly dues by the maximum permitted by the executive board ($50.00 per month) plus incorporate additional short term special assessments to cover the remainder of this cost. Again, the approach we recommend is a dedicated special assessment.
Painting: A large number of our homes are now in need of painting. As discussed earlier, we procrastinated on painting the last few years due to roof/deck project costs and a desire to keep association fees down. Now more than ever painting is a must need to preserve the value of our property. There are a number of options and conflicting guidance. In a poll taken in the summer of 2013, only half of the 13 homeowners who responded wanted to have homes painted. At the May 2014 Homeowner Meeting there was a call for immediate painting of all homes. We are now looking for a compromise.
-Painting consists of power washing the home to clean and detect any deteriorated siding, painting the home, painting interior front and bedroom porches that are same color as exterior, replacing deteriorated siding, and power washing the stairs.
-Should a homeowner choose, individual extra cost items at the time of painting include screen replacement, window replacement (if needed), and power washing of upper decks.
-Estimated cost for repainting a home is $5K. Replacement of deteriorated siding is extra. As a test case, we recently repainted a home considered to be the most in need. Total cost was $10K for painting and replacement of rotten siding. This is bad news, but we have been given assurances that this is not expected to be the norm. However, some extra costs are anticipated with any project of this scope.
-Following discussion by the executive board, we don't want to immediately repaint all homes. The immediate cost would be excessive; furthermore would we plan to do the same thing in another 5 to 6 years when painting is required once again?
-For annual painting, we propose moving $40K from Reserve Fund allocation to Painting allocation. At $5K per home, this should allow the painting of 8 homes. We realize that siding repair costs will reduce the number of homes painted, but we hope it won't be reduced excessively. The $40K allotment will remain constant and we will repaint as many homes as we can.
-Should we have a Special Assessment to paint extra homes over the next few years? Here we once again solicit owner input. The extreme approach would be to paint all homes in the next few years. Other possibilities include a dedication of an additional $50K, $100K or $150K to paint extra homes. Assuming ten payments, this would cost about $110 to $330 per homeowner each quarter. This would be combined with the earlier discussed loan special assessment. After the extra homes are painted, we would fall back to $40K per year for painting. Again, we request your input on this matter.
Landscaping: We believe that our landscaping has improved since we hired a new landscape maintenance contractor. However, some major additional work is still required at Oyster Catcher.
-We have received a proposal costing $600.00 per home to trim vines along the lake while leaving sufficient vegetation to maintain the bank, and trim back bushes and trees in the front of homes. Exact work is still in negotiation.
-We need to remove many of the large pine trees throughout the property. The trees shade our properties preventing proper lawn growth. More importantly, the pine trees pose a serious threat during a major storm should they fall on one of our properties. After removal, we also desire replacement of some of these trees. However, our landscape company does not have the equipment for this tree removal and we do not have an estimate of cost as of yet. We hope to have an estimate in the very near future for this particular portion of the project.
-Once we have the pine trees trimmed and/or removed, some additional costs will be incurred for lawn replacement. The landscape contractor has indicated that this would be reasonable in cost. But firmer numbers may be needed.
-We desire to upgrade the Oyster Catcher entrance with improved planting and sod. Our landscape contractor has proposed an upgrade here for a total of $500.
-Expect some additional proposals for a Special Assessment in this area. We currently expect $100.00 per homeowner for ten payments. But more data will be required.
Alternate Proposal: A homeowner has proposed divorcing external home maintenance from our association and allowing each homeowner to manage this portion on their own. This would provide additional homeowner freedom, but would also require additional association needs concerning standards and inspections as all Oyster Catcher homes would need to be in proper conformity. If you have a thought on this, please let us know. Obviously, this would apply to the above discussed painting, exterior maintenance, and similar items. It would not apply to the existing loan and landscaping.
Web Site: We are currently working to establish a website for Oyster Catcher Island homeowners. Items that will be accessible for owners will be the governing documents of the association, minutes of member meetings, newsletters, budgets, and other items pertaining to Oyster Catcher Island. The cost will be borne by an existing effort by Litchfield by the Sea. Hopefully this will improve our communications. Our web site, which is currently under construction, can be found in the Homeowner tab through the LBTS site, http://litchfieldbythesea.com. Please explore it.