By Jack Queen
Rancho Santa Fe Association presidentEvery year at the first meeting in October the board has the task of setting the annual assessment rate for the members’ annual dues. I am pleased to report that for the seventh year in a row the Association has not changed the annual rate of 14 cents per $100 of assessed valuation. However, with the concurrence of the Finance Committee, the board changed how we allocate the 14 cents to make sure we have set aside sufficient funds to cover operating expenses in this year’s budget.
For the last nine years the Association board has set aside 3 cents of the assessment for the Open Space fund. This year, because of a 2.5 percent drop in the overall assessed value of properties in the Covenant, we have reduced the Open Space allocation to 2.5 cents or a total of $1,000,000 instead of the forecasted allocation of $1,200,000. The difference of $200,000 will be used to offset the reduction in income for operating expenses. A condition of the additional half-cent allocation to General Services is that if there is a surplus at the end of the fiscal year those funds will be placed in the Open Space Fund.
During the discussion at the board meeting concerning the best way to allocate the 14 cents, one of the directors made the statement that we are not unique or immune from the impacts of the current economic downturn. Another director followed with the comment that as a homeowners association we are unique in that we are in an extremely strong financial condition. From my perspective, I can tell you both directors were absolutely correct.
We are not immune to the economic conditions. We had a 3 percent drop in assessed values last year. The Association responded by cutting expenses, including a reduction in staff and limiting salary increases. Both last year and this year, as well, we have worked hard to maintain our high level of service to our members yet cut expenses where we can. Economic conditions and expenses need to be closely watched and will be for years to come.
As for being in great financial shape currently, I couldn’t agree more. In spite of the drop in assessment income, based on the 11.5 cents we have now allocated to General Services, we are projecting a budget surplus of $197,000 for the current year. Additionally, all of our replacement reserves to the tune of $1,340,000 are 100 percent funded and we have an additional $2,400,000 in Free Reserves. For a homeowners association, or for any business for that matter, we are in great financial condition and we are unique.