Greetings from the Board – October 2022

Greetings from the Board
This month’s article is written by Gayle Lopez, Vistoso Community Association (VCA) President

Last issue we introduced the Vistoso Community Association (VCA) budgeting process. The paragraphs that follow will provide greater insight on various categories of expenses that must be budgeted and defines some budget terminology.

The VCA 2023 annual budget must be completed and is scheduled to be approved by the Board of Directors (BOD) at the October 27, 2022 General Session. Historical expenditures by category from prior years, current budget, and projected year end financials are all considered. Committees that will need funds to complete work in 2023 also provide input. Committees consulted this year include: Governing Documents (e.g., working to update Covenants, Conditions and Restrictions (CC&Rs)), Communications (e.g., newsletters, website operation, etc.), Architecture & Landscape Committee (e.g., park maintenance, landscaping of common areas, etc.).

Another significant source of information for budgeting is the Reserve Study, which will be explained in more detail.

If expected expenses exceed income, the BOD either has to find ways to reduce expenses or approve a budget that includes an increase in assessment fees. Per our bylaws, the BOD must consider any surplus funds from the previous year in calculating the needed revenue before we consider increasing assessments.

Current residential assessment fees are $80/quarter. Non-residential (or commercial) members pay six times the residential assessment rate multiplied by the number of net acres. Our CC&Rs limit the BOD to increasing assessments to 5% per year. An increase higher than 5% requires a vote of 2/3 of all members to approve (CC&Rs page 51). There is a provision that allows taking an increase greater than 5% if the increase in Consumer Price Index warrants it.

An operating budget is an estimate of income and expenses for a one-year period. Income items for home owner associations (HOAs) include assessments, fees, fines, and interest on investments. By far the largest income source is assessments paid by members. Typical operating expenses incurred by an HOA are administrative fees, utilities, landscaping, and common areas maintenance. Administrative fees are costs associated with running the business of the VCA; like collecting assessments, legal fees, office rent, property management staff salaries, etc.

The top five expense categories for the VCA are landscaping, property management (FSR), water, electric, and legal. The VCA spends over $1,000,000 per year on the landscaping of over 100 acres of common area, 6 acres of grass, 10 family parks, a network of trails connecting the community and maintaining over 5000 trees, tens of thousands of shrubs, cacti, groundcovers, and native plantings.

In HOA budgets, the word “reserve” can best be correlated to the word “capital” used in other types of budgets. Reserve funds are used to pay for reserve projects that are outlined in the Reserve Study. In simple terms, a reserve fund is a savings account used to pay for big-ticket assets that age and need to be replaced over time. The Reserve Study identifies these big-ticket items and provides a timeline as to when they need to be replaced. There are certain guidelines that must be followed to qualify an asset for reserve funding.

The annual VCA capital or reserve budget incorporates just a small portion of the Reserve Study as the Reserve Study projects expenses out for 30 years.

Keeping with the 2022 focus on infrastructure, the VCA has spent or will be under contract to spend nearly $1,000,000 replacing aged reserve assets in 2022. Below are the top 5 expense items in the Reserve Study to be completed this year.

1. $170,000 Park Furniture
2. $111,000 Drainage Mitigation
3. $65,000 Shade Sails in Parks
4. $15,000 Street Light Demo Project
5. $12,000 Painting

Now with your new found knowledge on HOA budgeting, test yourself by answering the questions in the “Did You Know?” section of this newsletter.

Snapshot – October 2022

In case you missed the September 29, 2022 Board of Directors meeting, below is a “snapshot” of the General Manager’s report to the community. The entire report begins on page ten in the Meeting Resident Info Packet on the VCA website calendar under VCA website calendar under September 29, 2022.

Rancho Vistoso Blvd Street Lights
• Chris Monrad from Monrad Engineering has completed the RFP for the Demo Project of installing 10 new light fixtures along RVB (starting at Safeway) as per the board’s direction. He currently is in the process of soliciting bids for this project.
• Mountain Power Electric did complete the inspection of the string of streetlights that are still out and finished cleaning pull boxes 151-197, 132-154 & 168-198. They recommend replacing one of the main breakers since it keeps tripping. Chris Monrad reviewed their report and agreed that the breaker should be replaced. They are in the process of putting a proposal together.
Park Furniture Replacement

Park Furniture Replacement
• Park furniture for Big Wash, Sunset Ridge, Wildlife Ridge Parks and Lost Coyote & Woodshade Trails is currently on order.

Onsite Office
• The landlord for the new office location has applied to the TOV for a permit. Once the permit is obtained, they will begin renovations on the suite.
• Management has received the flooring samples. Board President Gayle Lopez, Vice President Matt Wood and management will meet to make paint color and flooring selections.
• FirstService Residential staff is working on acquiring proposals for wiring the new location for our technology needs.
• The VCA furnishings are currently being stored at the AZ Self Storge facility. Once we are ready to move in Expert Movers Arizona will move the association to the new location.

Community Events
• The community yard sale is scheduled for October 8 from 7:00am until 2:00pm. This event will be advertised.

2023 Budget
• Management and the Finance Committee has been working on the proposed budget for 2023. The committee will be meeting with the board to review & discuss the draft budget in early October and the board is expected to adopt the budget during the October 27 meeting.

Did You Know – October 2022

How well do you know where you live? 

1) Which of the following statements is true about the VCA budgeting process?

A. Input is received from committees.
B. The Town of Oro Valley Town Council must review it.
C. The majority of VCA Board of Directors (BOD) must vote to approve it.
D. Information from the Reserve Study is included.
E. The BOD must consider any surplus funds from the previous year before considering an increase in assessments.

2) Which of the following statements is NOT true about the VCA Reserve Study (You can view the 2022 Reserve Study here)?

A. A Reserve Study is long-term capital budget planning tool which identifies the current status of the reserve fund, a 30-year plan to replenish deteriorated reserve assets, and helps ensure sufficient funds are available when needed.
B. There are specific criteria that must be met for an asset to be deemed a reserve asset.
C. Reserve funds must be spent on reserve assets or components.
D. A Reserve fund is like having a savings account: you set aside funds today to cover future expenses.
E. Reserve funds can be used at the discretion of the BOD to make enhancements in the community.

3) What is the maximum increase in assessments that can be imposed without a 2/3 vote of the majority of members?

A. Depends on what the needs of the community.
B. The BOD has the right to increase assessments to the level necessary to cover expenses.
C. 5% or the rate of inflation, whatever is higher.
D. 5% or $4/quarter in 2023.
E. Surplus funds must be taken into account before an assessment increase is considered.

4) Which of the following are items in the operating budget.
A. Legal fees
B. Assessments
C. Landscaping
D. Painting Common Area Walls
E. Interest on Investments

5) The VCA has spent or will be under contract to spend nearly $1,000,000 replacing aged reserve assets in 2022. Which items are included?

A. $360,000 Irrigation Systems
B. $65,000 Shade Sails in Parks
C. $666,400 Granite Rock Replacement
D. $170,000 Park Furniture
E. $111,000 Drainage Mitigation

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Answers:
1) B is false – The Town of Oro Valley is not engaged in the VCA budgeting process.
2) E is false – the BOD can only spend reserve funds on reserve assets.
3) D – Any increase in assessment above 5% requires a 2/3 vote of all members to approve. It is also true that surplus funds must be taken into account before an assessment increase is considered
4) A, B, C, E – Painting common area walls is a reserve expense.
5) B, D, E – Items A is slated for 2024 and item C for 2025.

What’s Happening in October Around Rancho Vistoso?

Check out what Oro Valley has going on.  Events and Meetings Calendar – Oro Valley | it’s in our nature (orovalleyaz.gov)

To find out what’s up in the greater Tucson area – https://thisistucson.com/

ORO VALLEY CONCERT SERIES

Second Thursdays September – April
6 pm – 7:30 pm

Oro Valley Marketplace
12155 N Oracle Rd, Oro Valley, AZ 85737
(in front of Century Theaters)
Free Admission

Learn More https://www.saaca.org/ovconcertseries.html

October 13 – Bouncing Czechs (Oktoberfest)
November 10 – George Howard Band (Soul)
December 8 – Wholly Cats Swing Club (Holiday Swing)
January 12 – OnesAll (Funk / Rock)
February 9 – Sophia Rankin & The Sound (Rock / Pop)
March 9 – Mr. Boogie Woogie (Classic R&B)
April 13 – Rafael Moreno Trio (Latin)
May 11 – Heather Hardy Band (Blues)

STEAM PUMP CONCERT SERIES

Second Saturdays – Country, Folk & Americana

10:30 AM – 12:00 PM

Location:
Steam Pump Ranch
10901 N Oracle Road, Oro Valley, AZ 85737

Learn More https://www.saaca.org/steampump.html

Saturday October 8, 10:30 AM – Bill Ganz (Western)
Saturday November 12, 10:30 AM – Equipata (Old Country)
Saturday December 10, 10:30 AM –Liz and Pete (Singer-Songwriter)
Saturday January 14, 10:30 AM – Febbo and Fuentes (Southwest Americana)
Saturday February 11, 10:30 AM – Bob Bovee (Blues and Folk)
Saturday March 11, 9:00 AM – Tucson Fiddle Contest