2021 Budget Part Deux By Keiron McCammon, Treasurer
increases in contributions to reserve accounts for 2021:
LAST MONTH I PROVIDED an overview of the approved
• 10% increase for Common, or about $34,000. • 25% increase for Channels & Lagoons, or about
2021 budget and a breakdown of the $735 quarterly assessment that most members will see next year. As a non-profit homeowner’s association, the primary goal of the budget is to balance the expected revenues from assessment fees, vacation rental permits, recreation passes, and other fees against our operating expenses and needed contributions to our various reserve accounts. Ultimately, besides covering any increases in operating costs (all things being equal, costs tend to go up each year in line with inflation at a minimum), assessment fees have to make up for any expected shortfall in income from vacation rental permits, recreation passes, and the like. As I had previously mentioned, going into the planning for 2021, we faced a shortfall in revenue from vacation rental permits and recreation passes (pool, tennis courts, and beach) due to Measure T going into full effect. The Board approved a Vacation Home Rental (VHR) permit fee of $525 for 2021 and agreed to prorate it monthly based on the expiration date of a homeowner’s City permit. Given we don’t know how many homeowners will choose to continue to vacation rent next year, the Board took a fairly conservative estimate for revenue from rental permits and recreation passes. Based on this estimate, we are expecting a $160,000 shortfall in income next year. Also, the Board decided to reinstate the 50% reduction in Water Quality fees for 105 homeowners that do not reside on our waterways or Lake Tallac (and therefore do not receive weed harvesting services) and are not members of the Tahoe Keys Beach & Harbor Association. We felt that these homeowners truly do not benefit from our water quality efforts as much as other homeowners. The result of this was a $21,000 shortfall in Water Quality revenue for 2021 compared to 2020. As you can see, before we even got started looking at any expense increases, we were already in a $181,000 hole, which would require over a 4% increase in assessment fees to offset. On top of this, our 30-year reserve plans (approved as part of the 2020 budget) projected the following Keys Breeze
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$87,000.
• 10% increase for Water Company, or about $46,000. • And finally, a 50% increase for Water Quality, or about $101,000.
That’s another $268,000, which would require a 6.5% increase in assessment fees. Without factoring in any increase in operating costs, we were faced with over a 10% jump in assessment fees for 2021 out of the gate unless we could find ways to eliminate or reduce costs. Staff, the Finance Committee, and the Board went to work reviewing operating costs, staffing levels, and services to identify ways to save money. The Board approved the following savings as part of the 2021 budget:
• $2,748 due to a reduction in insurance premiums (a • •
• • • • • • •
pleasant surprise after significant increases for the last couple of years). $23,759 by reducing the days the outdoor pool is staffed (eliminating the outdoor pool attendant Monday to Thursday). $4,000 from expected electricity savings due to the installation of LED streetlights this year (kudos to Dan Larson from our Water Company for finding a way to save money). $8,717 thanks to the reduced usage of pool chemicals given less VHR guests. $6,359 from reduced front desk weekend hours (8 hours versus 16 hours currently). $2,956 by holding Board Meetings on a weekday, not on Saturday. $13,394 from starting security patrols at 10:00 am (versus 8:00 am currently). $47,337 by closing the indoor pool one day a week (Tuesday) for 32 weeks during the offseason. $52,047 from implementing a wage freeze for all TKPOA staff in 2021 except for State mandated minimum wage increases. $49,784 by not hiring an Administrative Clerk.
DECEMBER 2020
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