I Heard a Rumor...

I thought it might be constructive in this edition of my Manager's Corner to address some of the most frequently asked questions and various rumors I have heard of late...

I heard that the HOA has spent $200,000 in startup expenses on the new Owner Services Business. Is this true? Also, there is no way a handyman business will be profitable: will my assessments be used to subsidize this business if not profitable?

First and foremost, we have taken great care to start small with the Owner Services Business (OSB) and keep startup costs to a minimum. To date, less than $7,500 in total startup costs were incurred in September. Additionally, we are off to an excellent start with the OSB in October and November: both months have shown a positive cash flow. We are getting very positive feedback from our customers about the quality and timeliness of service, and are on pace to pay back all startup costs and operate at a profit as of December 31, 2011.

When budgeting for the OSB, are fair costs and allocations for staff support time and overhead being taken into account when evaluating break even and profit?

Yes, absolutely; we have budgeted fair allocations of all soft costs necessary to support the OSB and they will be paid or reimbursed as necessary. This is not only reasonable and prudent operationally, but it is also required from a tax perspective. Many communities around the United States already provide handyman and home caretaking services (for a separate fee) to their owners and are profitable doing so. It is our intent to provide these services and be similarly profitable, as well. So far we have proven to be very price competitive, convenient (if we say we'll be there at 8:00 AM, then we'll be there at 8:00 AM!), and have offered high quality workmanship in all cases. Try us! Let us earn your business, and your trust.

Why are Master Association assessments increasing by 8%? This is much higher than inflation!

There are two primary causes for the increase (literally ¾ of this 8% figure):

The balance of the increase is about 2%, which is under the national inflation rate for 2011.

Road maintenance is the single biggest budgetary expense for all HOA entities in Desert Mountain. This only makes sense given that we own and maintain more than 65 miles of private roads, many of which are aging and require more care. Last year's polymer reinforced rubberized chip seal project was an excellent step toward maintaining and preserving, and therefore extending, the life of the Association's main arterial roadway, but it was not inexpensive. We have increased reserve funding again this year to stay appropriately on track for future maintenance needs and to do everything possible to prevent future special assessments. This is not only good facilities and physical plant maintenance, but it is also sound financial management.

The Association also maintains more than 700 drainage culverts around Desert Mountain, and keeping this massive and interconnected drainage system open and flowing smoothly positively benefits the entire community. In recent years we have received much input from professional engineers on this matter and have improved our cleaning and maintenance specification based on their recommendations. The good news is that Desert Mountain will be safer as a result during summer monsoon rains. The challenge has been that this has all come at an increased cost. We have worked diligently with DLC Resources to analyze this issue and feel this year's increase should provide the needed funding level going forward and that our costs in this area will level off.

I don't hike and think the trails being built are a waste of money! Why is the Associations spending so much of my money on this project that will be of no use to anyone?

First, the Association spent approximately $65,000 on the first "Demonstration Trail." This money was in a Capital Improvement Reserve Account that was specifically earmarked for projects such as this. Additional ancillary items such as the rest benches placed in various locations along the trail have been funded by sponsorships. Given the Board's sensitivity to worldwide economic issues these days, it is currently the intent of the Association to fund future trails development through fundraising. Approaching trails development in this manner means that the Board should not require funding from association dues for this purpose at all.

I realize that this may sound like heresy, but it is no longer just about golf here in Desert Mountain... or in the communities around the country that we compete with for home buyers and club members. As golf rounds have continued to decline nationwide (both public and private), new buyers and club members are looking for more diversified recreational opportunities from their communities. Interestingly, hiking is at the top of every list of amenities desired by prospective buyers in upscale golf communities. We want to help attract and excite more buyers to Desert Mountain. More buyers means more home sales, and more sales mean better property values. This really is an investment in diversification and in protecting and enhancing Desert Mountain's value and future.

What's in store for 2012?

Your Board and Committees have worked very hard to come up with a strong and sustainable strategic plan for Desert Mountain. The philosophical cornerstones of this plan are Safe, Secure, and Beautiful. As such, we plan to continue working on the following:

Safe

Secure

Beautiful

Our job with all of these items (and everything we do) is to enhance and maintain Desert Mountain in the best way possible. We do all of this not only because it keeps Desert Mountain looking great, but also because it is an investment in maintaining and enhancing the value of your home and Desert Mountain experience. We truly are working for the Association to be a value-added enterprise. Please call us anytime we can be of service.