| Foundation
Finances
By Jack Weeks, Foundation Treasurer
There are four important issues that I would like to give
you my perspective about as treasurer of your Foundation.
-- Snow removal costs
-- Erection of lighting at the Dairy Lou Pool
-- Renovation of the swimming pool bathhouses
-- Required clearing and renovation of the earthen dams at our six ponds
In discussing these four issues, it is important that our association
members understand the basics of our financial resources.
1. Operating costs are collected annually from dues and assessments. Our
budget must balance annually. Townhome communities have a separate operating
budget for their needs, accounted for on a neighborhood-by-neighborhood
basis. Residential parking lot maintenance and snow removal are key expenditures
for which those neighborhoods alone have financial responsibility.
2. From time to time, new developments have been annexed into Franklin
Farm. Funds from those developers have been reserved for new capital improvements
to benefit all of Franklin Farm.
3. Funds are set aside in a capital reserve fund. A target is established
based on the age and projected cost of capital repairs and renovations.
The fund grows annually from assessments and from earnings on the underlying
investments.
Snow Removal Costs … These are paid from the operating
budget. Our budgets have a built-in 3% contingency. This contingency may
be adequate to pay for the extra costs this year of snow removal from
association-wide common areas, such as the Still Pond Community Center
and office parking lot. One issue that is unknown at this time is whether
we will have any more major snow events this year — and how much it will
cost us to clean up trees damaged or destroyed in the common area.
However, contingency funds are not adequate to cover the costs of clearing
snow from the residential townhome parking lots. These lots are especially
costly to clear, as residents are generally home during major snow events.
As I write this article a day after the blizzard of 2010 (February 7),
it is estimated that snow removal costs exceed available funds in the
townhomes by at least $100 per townhome. The Financial Advisory Committee
and Board of Trustees will address this issue in the coming weeks. Townhouse
residents will have to make up the estimated $100+ per household shortfall
through either a special assessment or an increase in annual assessments
(see Policy Resolution 7AB on opposite page).
Lighting at Dairy Lou Pool … Costs for this improvement
are coming from monies set aside by the builders of neighborhoods annexed
into Franklin Farm. Lighting will allow us to extend hours at the Dairy
Lou pool, help us better serve Franklin Farm’s swim team, the “Froggers,”
and help guard against vandalism in the area. All of us will benefit,
since good facilities enhance our property values.
Swimming Pool Bathhouses … The cost of maintaining these
30-year-old facilities has continued to increase. They are in desperate
need of a complete renovation and modernization. We had reserves of approximately
$30,000 for maintenance. The renovations will cost approximately $140,000.
Fortunately, in our reserve study, we had substantially over-reserved
for the cost of maintaining our walking path bridge structures. Some of
this money has been reallocated to fund the bathhouse structures.
Clearing and Renovation of the Earthen Dams … The pond
dam structures are overgrown and subject to weakening and possible failure.
We are mandated to clear the structures of trees and shrubs. Communications
and hearings are in progress, with work slated to start in July. The cost
of this work is estimated to be approximately $180,000. Funds are available
in our capital reserves.
A Final Note … From a financial perspective, this is
an excellent time to make these major renovations. We are able to secure
favorable price bids from contractors in the area. Our short-term investments
have minimal opportunity to grow, since interest rates are at record lows.
And, finally, we are able to reset the dates well into the future before
these types of renovations need to be repeated. Although we anticipate
some growth in the coming years in the amount of our annual assessments
that need to be set aside into the capital reserve fund, we believe, by
acting now, we reduce future costs.
Certainly these renovations and improvements will help keep Franklin Farm
one of the most desirable communities in the area, helping us to enhance
the resale value of our homes.
Policy
Resolution 7AB
For the first time in the 30-year history of Franklin Farm, the annual
budget had to be amended to account for unexpected expenses. Due to the
record-breaking snowfall in late 2009 and early 2010, the cost of removing
snow from the private streets in our community (in the Tranquility, Foxlease,
Rosemere, and Stone Heather neighborhoods) resulted in charges that far
exceeded the original FY10 budgeted amounts.
Therefore, at the recommendation of the Financial Advisory Committee,
the Board of Trustees acted at its February 17, 2010, meeting to approve
the revised FY10 Operating and Capital Budgets and General and
Neighborhood Assessments (Policy
Resolution 7AB) to account for excess snow removal costs
and to increase FY10 third and fourth quarter assessments in the affected
neighborhoods to recover those costs.
Residents in single-family neighborhoods, where the residential streets
are public facilities owned by the Commonwealth of Virginia and plowed
and maintained by the Virginia Department of Transportation (VDOT), are
not affected by Franklin Farm Foundation assessment increases this fiscal
year. Residents of the Tranquility neighborhood, excluding Tranquility
Lane (which is a public street), and the townhome neighborhoods (Foxlease,
Rosemere, and Stone Heather) were mailed a letter at the end of February
that explained the additional assessment amounts for their neighborhoods.
The Board of Trustees sincerely appreciates your understanding and regrets
any incovenience caused by the budget revision and increased assessments.
We must all keep in mind that the 70+ inches of snow experienced this
winter is not a normal occurrence in our area. Let’s hope that spring
is not far away!
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