MVF 2015 Budget Presentation - Pt 1 of 2

Dear MVF Board of Directors and Audit Committee Members:

Enclosed please find MVF’s 2015 Proposed Budget and updated 5-Year Plan for your consideration. The budget continues implementation of the MVF Board’s approved Strategic Goals as well as programs and services that benefit residents of the community. The budget is focused around four primary goals: 1) To minimize assessment increases to both the MVF and Designated Users Funds; 2) To continue planning and implementation of major capital projects (Apple Ridge pool renovation and pathway improvements); 3) To maintain sufficient reserve contributions to ensure the future repair and replacement of existing assets; and 4) To fairly compensate MVF employees.

With rising homes sales and two apartment complex transactions assisting in delivering much better than expected Capital Contribution Fee (CCF) revenues, the fund has continued to grow to nearly $400,000 in less than three years. With these significant inflows of capital, careful planning must be used when planning for new facilities as these projects will all require annual operating maintenance and repairs which, over time, will require increased assessments or identified savings in the budget.

For the 2015 budget, there are two projects proposed to be funded by the CCF: 1) Continued enhancements to the pathway system throughout the Village and 2) fencing at the South Valley Park ball fields.

The recent years of using accumulated savings to fund the budget have come to an end; therefore, assessment increases are needed to support both the MVF and Designated User Funds. MVF’s attention continues to focus on providing top-notch services and programs, renovation of existing pools and bathhouses, including implementing ADA requirements, ensuring replacement reserves are adequate and a minimum undesignated operating reserve is preserved as a contingency for unexpected expenditures. These goals will continue as the 5-year Plan is updated on an annual basis.

2015 PROPOSED BUDGET

Pursuant to the 2014 5-year plan, the 2015 proposed budget proposes increases in both the MVF and Designated User Funds. The MVF Fund is proposed to increase $.75 per unit per month while the Designated User Fund is proposed to increase $1.75 per unit per month.

MVF Fund:

The MVF Fund has not increased since 2011 (will be four years) and will increase from $20.54 to $21.29 to fund the 2015 budget. The good news is that the increase is much less than the $1.91 per unit per month projection in the 2014 5-Year Plan. An MVF assessment increase was not necessary in recent year’s budgets because accumulated undesignated reserves were utilized. The 2015 budget proposes to use approximately $84,000 in operating reserves, which would retain approximately $675,000 in undesignated reserves. The $.75 increase will generate nearly $102,000 in new assessment revenues.

Designated User Fund:

As projected in the 5 Year Plan, an increase in the Designated User Fund is needed to fund increased operations costs at pools and community centers as well as provide for adequate reserve funding. Based on the recently completed reserve study additional reserve contributions are needed to adequately maintain our aging pools and other infrastructure. The 2015 proposed budget will increase the DU assessment from $30.02 per unit per month to $31.77 per unit per month. The increase represents a $1.75 per month increase which is in-line with the 2014 5-year plan, which projected a $1.72 increase.

Future Budgets - MVF 5-Year Plan

To enable the organization to engage in a longer planning horizon for both long-term operating and capital project needs, the 2015 budget includes an update of the 5-Year Plan. The 5-Year Plan includes conservative projections for assessments, operating costs, reserves and capital needs.

The financial plan complements the MVF Board’s Strategic Goals. A listing of the strategic goals and specific objectives for 2015 is included in the Appendix section of the Budget.

Program Initiatives

“Maintenance Specialist” - To support small maintenance projects at MVF facilities, a part-time (20 hours/week) maintenance specialist is proposed to be hired and will become part of the Parks and Recreation Team.

Recreation Registration - In 2015, the Active (Active.com) Registration System will be in full operation, thus costs in the User Fee and Village-wide cost centers have been increased to account for the enhanced registration system which makes it much easier for residents to register and pay online for classes/programs. MVF revenue for the associated classes will be adjusted to cover the additional costs. The cost of the new state of the art system was funded in 2014 through reserves as it replaced the existing Safari registration system.

Lawn Theatre Program -The proposed budget includes some additional funds to enhance programs/events at the Lawn Theatre. The goal is to increase attendance by offering a greater variety of programs such as movies, mini-festivals, etc. Staff will be working to improve marketing and identify partners to sponsor each event.

Better communicate with our diverse population - Additional funding has been included in the Architectural Standards budget to send a bilingual letter (English and Spanish) to all residents (over 8,000 homes) that have an architectural control covenant. We believe such a letter will assist in the education and compliance with the architectural covenants. In 2014, collections related information was provided in Spanish and based on feedback from residents it was determined to be very helpful to the process.

New Website - Funds are included in the 2015 budget to roll out a new MVF website with many automated features that will enhance resident services and the overall customer experience on the MVF website. The site design will be coordinated by the Communications Department with input from its committee, MVF departments and the community.

BUDGET CHANGES
REVENUES

Increases vs. 2013:

MVF Assessments – With no assessment increase since 2011, the MVF assessment is slated to increase by $.75 per unit per month for 2015. The assessment would have increased an additional $.34 per unit per month but approximately $84,000 will be used from undesignated reserves to limit the 2015 increase to $.75. The $.75 increase represents $102,000 of additional annual revenue.

DU Assessments – Continuing with MVF’s 5-year plan, assessments must be increased to continue funding the pool, program and facility operations. The 2015 proposed budget will increase the DU assessment from $30.02 per unit per month to $31.77 per unit per month. The increase represents a $1.75 per month increase which is in-line with the 2014 5-year plan, which projected a $1.72 increase.

Transfer/disclosure fees – For the year ended 2013, disclosure fee revenue ended up over 71% from 2012 results due to the move to the online system Homewisedocs and a more robust housing market. The 2014 budget was increased conservatively but with a full year of results, the 2015 budget has been increased accordingly to 2014 trends.

Decreases vs. 2013:

Community Management revenue – With the loss of a community contract in 2014 only partially offset by the addition of a condominium management contract, the 2015 budgeted revenue is slightly lower.

EXPENSES

Personnel Costs: MVF’s greatest asset is our employees who take pride in providing excellent customer service. Building and maintaining a professional staff with specialized skills and training requires fair compensation.

· Merit Increase: To reward those employees who have performed their responsibilities at a satisfactory or higher level, the 2015 budget proposes a 2% merit pool. In recent years, the merit pool increases have been:

o 2010 0% 2011 3% 2012 2% 2013 2% 2014 2%

· MVF’s Flexible Benefits Program:

o Flex Dollars: With the changes in healthcare reform in 2013, the majority of MVF employees noted decreased or flat premium changes to their health benefits for 2014. With this expected to be the case for 2015, the Flex dollars are proposed to remain the same in the 2015 budget. The Flex dollars represent the fixed amount provided to MVF employees each pay period to select the benefits they need from MVF’s cafeteria of benefits options such as healthcare, dental, vision, FSAs, etc. The contribution per pay period, per full-time employee, will remain at $345.

o Medical deductible: MVF funds up to $1,000 ($500 for employee only coverage) for employees on the medical plan. For 2015, $9,000 is projected to be needed to fund this benefit. In previous years, this benefit was funded at higher amounts, but the medical plan has seen decreased enrollment over the last 3 years.

o 401k Employer Match: MVF’s matching employer contribution is proposed to remain at 6%.

Employee Recognition Program: Established by the MVF Board in 2012, the budget includes $10,000 to allow managers the opportunity to reward employees who meet the stringent standards of the policy.