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Where Do All the Dollars Go?

A quick reference guide to your assessments.

Introduction

The search for your dream house began months ago and you have covered most of Northern Virginia. Your realtor convinces you to look at one last listing that just came in. You make a turn off West Ox Road see the white fence and find yourself in a neighborhood with lots of green space, pools, tennis courts, bike paths, a community center, all in a community of well-tended homes. Where have you come? Franklin Farm! You have found it, the perfect place; you are sold before you even get to the house.

You submit your offer and you receive a very large and intimidating packet of rules and regulations and other "stuff." "Who has time to read all this?" you say, setting it aside. "I have found the perfect house and I have more important things to do like the drapes, carpet, and the new Jacuzzi."

That big packet still sits somewhere unread; The Title Company, the Insurance Company, the Realtor and your first mortgage payment have all been paid. NOW, you think, I can enjoy my new home. Then it happens. As you sift through your mail one day you find a new bill - from Franklin Farm Foundation. The bill is for assessments, whatever those are.

In this booklet, we hope to explain what assessments are, how they are determined, who determines them, and to show where all your dollars go.

Franklin Farm, in many ways, is a small town consisting of 1,777 homes and it has many of the expenses and responsibilities of a small town. The Franklin Farm Foundation is a non-profit corporation incorporated under Commonwealth laws pertaining to homeowner’s associations and acts as the town government. The Foundation expends over $1 million of your dollars each year so it is vital that you understand how those dollars are collected and expended.

Before we start explaining how your money is collected and expended by the Franklin Farm Foundation, there are a few terms you should know.

What does it mean?

Assessments - Funds paid by each resident to fund operations. There are three types of assessments: General, Neighborhood, and Pipestem. General and Neighborhood assessments are paid quarterly; Pipestem assessments are due in full at the beginning of each fiscal year. The assessments fund the following activities:

General - Funds to cover Foundation operating expenses to maintain the community. (Mow grass, open the pools, and fund committees operations, and to fund the Capital Reserve)

Neighborhood - Funds used to pay expenses unique to a neighborhood. For single-family neighborhoods, the Neighborhood Assessment funds trash collection expenses exclusively. Neighborhood Assessments in townhouse neighborhoods fund trash collection, maintenance of curb and gutters, maintenance of parking lots, parking lot snow removal, and funding of the neighborhood capital reserve.

Pipestem - Pipestem assessments are levied only on lots served by a common driveway. Pipestem Assessments are held and invested by the Foundation for the benefit of common driveway owners for the purpose of major repair and replacement of the common driveway. Funds held by the Foundation for the common driveway owners belong to those owners not the Foundation.

Board of Trustees (BoT) – Nine volunteer residents, elected by the community, to run the Foundation.

Budget – This document outlines the anticipated income and expenses of the Foundation and, once approved by the Board of Trustees, provides the authority to expend funds according to approved policy. Each committee who submits budget requests to the FAC. In addition, the Executive Director submits a budget request for Foundation expenditures not under committee cognizance.

Budget Call – A request, sent to all committee chairs, to submit their funding request for the upcoming year.

Budget Hearing – An opportunity for all residents to review and provide comments on the budget.

Capital Acquisition Budget – The Budget setting forth the estimated income and planned expenditures from the Capital Acquisition Fund which is maintained to fund new facilities and major equipment.

Capital Budget – The Budget setting forth the estimated income and planned expenditures from the Capital Reserve Fund which is maintained to fund repair and replacement of existing facilities and major equipment.

Fiscal Year – The twelve month period beginning October 1 and ending September 30.

Financial Advisory Committee (FAC) – Volunteer residents from each neighborhood. This committee, along with the treasurer, is responsible for preparing and monitoring an annual budget, drafting policies and procedures relating to the fiscal operations of the Foundation, and reviewing all contracts over $3,000.

Franklin Farm Foundation – The homeowner and residents of the 1,777 homes in Franklin Farm.

Operating Budget – The Budget for the estimated income of the Franklin Farm Foundation and estimated on-going expenses of the Franklin Farm Foundation for a Fiscal Year. The funds to support the Operating Budget primarily come from the assessment of lots in Franklin Farm.

Where does the money go?

The Foundation spends over $1 million a year. Below is a breakdown of where most of the Foundation revenue comes from and how the money is spent based on FY 03.

Contracts

The Foundation contracts for most required services and supplies. Any contract over $3,000 must be the result of a competition. All proposed contracts over $3,000 are submitted for FAC review. The FAC makes award recommendations to the BoT. The BoT must approve all contracts over $3,000. Any contract or purchase less than $3,000 must be competed to the maximum extent possible and may be entered into by the Executive Director.

Who can spend the money? 

Once the Board of Trustees (BoT) has approved the budget, and the fiscal year has begun, funds can be spent. The Foundation has a paid staff, headed by the Executive Director. The Executive Director, along with the Finance Manager, manages the daily operations of the community. The executive director approves all invoices before they are paid. Once a check is written, two signatures are required, at least one of them from a volunteer, Treasurer, or Board Member. No funds can be spent without budget authority.

Community Functions - Holiday Party, Country Hoe Down, Easter Egg Hunt, Ice Cream Socials, Pool Parties

Education - Flyers and meetings related to school boundary changes or other issues

Election - Printing and mailing ballots and the annual Volunteer Reception.

Open Space - Mowing the grass, planting trees and flowers, maintenance of the ponds and bike paths

Pool Committee - Pool management contract and maintenance of the pools

Tennis - Tennis tournaments and court maintenance.

Transportation - Maps, flyers, and meetings.

Zoning, Land Use - Maps, flyers and meetings.

How is the budget prepared?

The Financial Advisory Committee prepares the budget. Below is a timeline for the entire process.

January – FAC sends a budget call to all committees.

February – The Foundation staff summarizes all the requests into a spreadsheet.

March – The FAC begins reviewing expenses by line item.

April – If necessary, committee chairs appear before the Financial Advisory Committee to clarify and/or support their funding requests.

May – The FAC completes the initial review of the expenses and determines the assessment rates.

June – The BoT and The FAC meet to review the budget. Once the budget has been reviewed the Initial Proposed Budget is developed and published in the Almanac.

July – All residents are invited to attend an open hearing on the budget. Once this hearing is completed, the FAC prepares the Final Proposed Budget for publication in the Almanac.

August – The Budget is prepared and submitted to the Treasurer. The Treasurer then prepares a recommendation and forwards the budget to The BoT. Lastly, The Board of Trustees approves the Budget.

Who is the Financial Advisory Committee?

The Financial Advisory Committee (FAC) is comprised of volunteers who have been sanctioned by their Neighborhoods and the Foundation Treasurer. Each Neighborhood in Franklin Farm is entitled to have a representative and vote on the FAC. The FAC elects a chairman every October who is then approved by the BoT. The FAC meets every second Thursday of the month at 7:30 p.m. at the Still Pond Community Center. FAC meetings are always open to all residents and the FAC affords any resident the opportunity to speak or bring up issues at its meetings. If you wish to become a member of the FAC contact your Neighborhood Board or the Foundation Office.

Where can I get a copy of the budget?

Summarized Budget information is provided in the Almanac at least twice a year. Any resident may obtain detailed budget documents and monthly financial reports at the Foundation Office upon request.

Is the Foundation subject to annual audit?

The BoT retains a Certified Public Accounting firm to perform an independent review of the financial reports. The yearly audit report is available to any resident upon request. Normally, the audit is completed by December of each year.

How are repairs to the amenities paid for?

The Franklin Farm Foundation has capital assets consisting of two swimming pools and equipment, bike paths, tennis courts, volleyball court, tot lots, parking lots, curb and gutter, community center, fences, and major equipment with value over $1 million. The Franklin Farm Foundation maintains a Capital Reserve to fund repair and replacement of those assets. The combined Capital Reserve currently exceeds $1 million. The Treasurer conservatively invests the Capital Reserve with the assistance of an investment manager retained by the Foundation in accordance with an investment policy established by the BoT and applicable laws. The BoT determines the amount of funds required for the Capital Reserve and the annual contribution to the Capital reserve based on the FAC’s recommendation and a professional engineering survey. The Capital Reserve is funded by yearly contributions from the Operating Budget and investment earnings. Expenditures from the Capital Reserve are budgeted annually; Capital Reserve expenditures do not affect assessments.

You can contact the Chairperson of the FAC, a member of the BoT, the Treasurer or the Executive Director, all of whose phone numbers are published in the Almanac. Or you can attend an FAC meeting; meeting dates and times are also available in the Almanac.

The Franklin Farm Foundation - 12700 Franklin Farm Rd - Oak Hill, VA  20171
Phone:  703-620-6230     Fax:  703-620-9021     E-Mail:  foundation@franklinfarm.org
Map of Franklin Farm      Map of the foundation office at the above address

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