2017 Budget

Analysis & Planning

BOARD OF DIRECTORS MEETING
SEPTEMBER 22, 2016

Topics
1.

Back to Basics

2.

Recap on 2015 Discussions & Board Decisions on 2016/2017 Biennial Budgets

Board Priorities/CEO Goals

3 Questions Asked

3.

Overview of 2017 Cash Need

4.

Historical Review of Assessment

5.

Board Considerations & Decision Points

6.

Next Steps

Back to Basics
Purposes of the Association
(Deed Section III.2)

Policies of the Association

(Bylaws Article II)

1.

1.

2.
3.
4.
5.
6.

Interpret, administer and enforce the

protective covenants to conserve and protect
the value of all property.
Acquire, own and lease property and improve,
administer and maintain such property.
Assess, collect, and disburse the assessment.
Promote the peace, comfort safety and general
welfare of the Members.
Do any and all lawful things and acts for the
benefit of the property and the owners.
Exercise powers conferred by law.

2.
3.
4.
5.

Foster the fullest usage of lands and

facilities and serve the leisure time needs of
the residents.
Encourage the involvement of other
organizations and agencies.
Represent RAs interests before public and
private organizations.
Encourage maximum volunteer member
participation.
Utilize professional management to assure
attainment of the purposes (Deed) ad
policies (Bylaws) of the Association.

Board Decisions in 2015 and CEO 2016 Goals

2016/2017 Board Budget/Strategic Focus:
Optimizing Member Experiences

Improve the look and feel of community, i.e. median mowing

Trail Marking
Maintenance Tools & Supplies

Leading Sustainable Change

Land Use - Development/Redevelopment

Grant Writing

Leveraging Technology

Invest in technology upgrades

Reston Deed Section IV.8 Standards for Common Area Upkeep

The Board may provide for the Upkeep of medians and rights-ofway along dedicated streets and roadways to the extent not
provided by the appropriate governmental agency.

2016 Board Goals for CEO:

Optimizing Member Experiences

Capital Project Planning

Curb/Gutter Cleaning
GMU Recreation Study Recommendations PRAC

Leading Sustainable Change

DRB Strategic Plan Development/redevelopment

Urban Design Guidelines Pedestrian Lighting Plan

Foster Community Engagement

Attendance at Community Events/Key Stakeholder Groups

Metrics & Measurements Plan for Community Engagement CEAC

Leveraging Technology

Upgrade Member Facing Technology Web & Phone System

Managing Competing Resources

BoardSource- Board Development Training Program/Code of Ethics

Delegate More to Senior Level Staff

3 Questions Asked
1. Do the Associations programs pay for themselves?
RA programs cover 88% of their costs.
(See appendix for details.)

2. Do the Associations facilities pay for themselves?

RA facilities cover 35% of their costs.
(See appendix for details.)

3. How does Reston Association compare to other municipalities

and community associations in its assessment rates? (See next slide.)

Comparison to Other HOAs (2015)

Overview of 2017 Cash Need &

Historical Review of Assessment

Determine Cash Need in 2017

Budget Component

Cash Need

Operating Costs

$ 15.4M

RRRF Fund Contribution

$ 2.8M

New Capital

$ 0.1M

Less: Non-Assessment Revenue

($ 3.6M)

Total Cash Need

$ 14.7M

(10 year average)

The $14.7M Cash Need Translates into a $712 Assessment

Compare 2016 & 2017 Cash Needs

2016 Cash Need
Salaries + Employee Costs
o
o
o
o
o
o

Add Back: Land Use Assistant*

Add Back: Accounts Receivable Position*
Add Back: Seasonal Hiring*
Merit Increases
Increased Cost of Benefits
1 New Hire: Capital Projects Admin Manager

Professional & Technical, Other

Increase in RRRF Funding
Offset by an Increase in Non-Assessment Income
Total Increase
2017 Cash Need

$ 14.2M
$ 0.7M
$ 66K
$ 114K
$ 181K
$ 233K
$ 19K
$ 84K

($ 0.2M)
$ 0.1M
($ 0.1M)
$ 0.5M
$ 14.7M

* These items total $360k and were cut from 2016 operations to cover the Lake House cost overrun.

Review Historical Operating Costs

Growth ($) Operating Costs

Growth (%)

Main Driver of the Growth

2011

$ 11.8M

2012

$ 0.7M

$ 12.5M

6%

Rent $500k, Salaries/Professional Svcs $200k

2013

$ 0.5M

$ 13.0M

4%

Salaries/Professional Svcs $350k, Other $125k

2014

$ 0.2M

$ 13.2M

2%

Salaries/Professional Svcs $300k

2015

$ 0.5M

$ 13.7M

4%

Salaries/Professional Svcs $400k

2016

$ 0.7M

$ 14.4M

5%

Salaries/Professional Svcs $300k, Other $350k

Total

$ 2.6M

Notes:

1) Total growth of $2.6M = Salaries/Professional Services $1.55M, Rent $600k & Other $425k.
2) The salary/professional services increase includes: 12 additional headcount, raises, benefits & taxes.

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Examining Historical Trends in RRRF

$8M

Policy change

$7M

$7.0M

$6M
$5M
$4M

$5.6M
$4.9M
$4.0M

$4.0M

$4.0M

$3M
$2M

$2.4M $2.5M

$2.4M
$1.7M

$1.7M

$1.6M

$1M
$M

$4.3M

2012

RRRF Allocation

2013

$4.6M

$4.6M

$2.8M

$2.5M

2014

Capital Project Budget

2015 Reserve Study

$2.9M
$1.9M

$1.7M
$1.3M
actually
spent

2011

$6.0M

$1.6M
actually
spent

2015

2016

2017

EOY RRRF Balance (Audit)

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How does this translate to the assessment?

2011 Assessment

$ 540

Salaries & Professional Services

$ 75

RRRF

$ 55

Building Lease (Facility Rental)

$ 25

Other*

$ 10

Total Increase

$ 165

2016 Assessment

$ 705

2016 Assessment after Injection of $1M Cash Surplus

$ 657

*Note: The Other category includes Other expenses, offset by non-assessment income. This category showed
a big jump from 2015 to 2016 due to roadway median mowing. This would be <1% if you exclude 2016.

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Assessment vs. Assessment Cap

$800
$750

$750

$718

$687

$700

$705

$657

$650

$634

$600

$642

$730
$712

$657

$550
$500
$450
$400
2007

2008

2009

2010

2011

2012

Annual Assessment

2013

2014

2015

2016

2017

Assessment Cap
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Board Considerations & Decision Points

for Revised 2017 Budgets

14

Revised 2017 Capital Projects List

2017 Repair & Replacement Reserve Fund (RRRF) Allocation

$2.8M

Main Capital Repair & Replacement Projects

Original 8/23
Spend Request
was $2.7M

Central Services Facility Renovation

Pony Barn Recreation Area
Pathway Recapping
Other Projects

Reduced by $0.8M for

projects not yet scoped

Amount Remaining to Transfer to RRRF

$0.58M
$0.35M
$0.18M
$0.79M

TOTAL

Instead of asking for 2017 Assessment Dollars

would rather use existing funds in RRRF

$1.9M
$0.90M

Board Considerations Aug. 23, 2016

Budget Request

2017 Operating Expense

2017 Capital Expense

2017 Revenue

2017 Per Unit Cost

Garden Plot Fence Extension HW 2

17,500

0.85

Browns Chapel Park Planning/Design

35,000

1.70

Hook Road Rec. Area Planning/Design

25,000

1.21

Lake Thoreau Pool Planning/Design

35,000

1.70

Roadway Maintenance Staff/Contractor

174,000

8.43

Pool Operations/Staff Hours Change 1

8,000

With board approval, these

four capital 3,500
items can be
Pool Operations/Staff Hours Change 2
$
addressed
with
the RRRF.
Pool Operations/Staff Hours
Change
3 existing
$ dollars from12,500

0.39

0.17

0.61

Court Ordered Repairs Home Repairs

65,000

3.15

Communications Digital Marketing Campaign

9,000

0.44

Member Services Pool Pilot Program

5,000

0.24

Board Governance Training

20,000

0.97

297,000

112,500

19.86

Budget Draft Total

16

Board Considerations Sep. 22, 2016

Budget Request

2017 Operating Expense

2017 Capital Expense

2017 Revenue

2017 Per Unit Cost

Garden Plot Fence Extension HW 2

17,500

0.85

Browns Chapel Park Planning/Design

35,000

1.70

Hook Road Rec. Area Planning/Design

Lake Thoreau Pool Planning/Design
Roadway Maintenance Staff/Contractor
Pool Operations/Staff Hours Change 1
Pool Operations/Staff Hours Change 2
Pool Operations/Staff Hours Change 3

$
25,000 is $40K for Court
$
1.21
Included in the 2017 Covenants
Budget
$
35,000
$
1.70
Why aAnDirector
of
Capital
Projects?
Ordered Repairs.
additional
$35K
is requested
to complete
$
174,000
$
8.43
repairs on the 24 homes.
2015 Audit Property & Equipment
= $45.0M
$
8,000
$
0.39
2015 $Audit(2,500)
Reserve$ Fund = $5.6M
$
3,500
0.29
2016 Capital Project List Budget
$
12,500
$ (59) = $2.5M
0.61

Court Ordered Repairs Home Repairs

Communications Digital Marketing Campaign

Member Services Pool Pilot Program

Board Governance Training

20,000

0.97

ADDED: Director of Capital Projects

(Salary + Benefits)

138,000

6.68

384,500

19.86 18.31

Budget Draft Total

35,000

~ 7 projects
in 2017 will require
community
9,000
$
9,000 $
input5,000
& design/concept planning
$

6,500

1.70
0.24

17

 Staff will incorporate in to the Revised 2017 Budgets

guidance received from Board

Next Steps
2017 Revised
Operating & Capital Budgets

Early October 2nd Draft of Revised 2017 Budgets will sent to

Board and posted on the RA Website
Staff will obtain input from Fiscal Committee
October 27 Meeting, Board will hold public hearing on
2nd Draft of Revised 2017 Budgets & Proposed 2017
Assessment Rates and decide whether/how much surplus
cash to put toward the 2017 RRRF allocation.
November 17 Meeting, Board will adopt Revised 2017
Budgets & Sets 2017 Assessment Rates
Mid-December 2017 Assessment Invoices mailed to RA
Residential Property Owners

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