Board postpones reserves to lower increase to $13/mo

In preparation for a vote on the 2021-22 budget next month, the Canyon Lake POA Board met last week to hash out the budget’s details and to focus on how to keep monthly assessment increases as low as possible. The open workshop was available on Zoom and gave the board members an opportunity to review together the next budget.

It is looking like the monthly assessment will increase $13 per member when the budget is finalized and voted on at the March 9 regular board meeting. It initially appeared with expenses increasing for the new fiscal year, monthly assessments would need to go up by about $30 per member. Instead, the board voted to delay $1 million to its reserves, thus reducing the assessment increase to $13 a month.

The board said at the workshop that its goal is to base the proposed operating budget on making sure the POA continues to provide the same services that were provided this past year. Also, increases in the upcoming operating budget will need to be made to accommodate for the new minimum wage law and significant increases in insurance, legal and utility costs. Funds are also needed to maintain POA property and to pay for the ongoing improvements to POA amenities, including the new Sierra Park North Pump Track and outdoor event space and the dining facility at the Canyon Lake Lodge.

Member assessments also include the required contribution to the Canyon Lake POA reserve funds. The road reserve fund is the only reserve fund that is requiring significant increase in funds. A study shows Canyon Lake roads are in need of $20 million in improvements over the next seven years.

With only $10 million currently in that reserve fund, member assessments will need to be increased to capture an average of $2 million per year over the next five years to reach the needed $20 million. With the impact on member finances that COVID-19 has been, the board decided to fund just $1.5 million this next year and keep the monthly assessments as low as possible. They took an additional $500,000 out of the other two reserves’ budgets, saving a total of $1 million from the 2021-22 overall budget. The lost $1 million will need to come from future member assessments.

At the beginning of the workshop, the Canyon Lake POA staff, with the Finance Committee’s concurrence, provided the board with a proposed budget for the 2021-22 fiscal year. The proposed budget was developed in keeping with the budget model approved by the Board last fall, and the Finance Committee carefully reviewed it in January and February.

The proposed budget includes the Canyon Lake POA operating budget and recommendations for annual contributions to its three reserve funds.  The three reserve funds are related to Repairs and Replacement, Road Repairs and Capital Improvements. The Davis-Stirling Common Interest Act requires the Canyon Lake POA to have both the Repairs and Replacement and Road Reserves funds. The Canyon Lake POA established the Capital Improvements Fund to allow for continuous improvement of its property, facilities and amenities.

Board recommendations to contribute to the reserve funds is a rather subjective decision made each year based on future needs. This year, for the first time, the board commissioned a subcommittee of the Facilities Planning Committee and Finance Committee to review and prepare a summary of the current and projected needs for the three reserve funds.

The subcommittee’s study provides a five-year projection of the cash needed from each fund. The recommended contributions are similar to last year, except for the Road Reserve Fund. A survey of the current condition of the association’s 37 miles of roads resulted in projected improvements of nearly $20,000,0000 over the next seven years.

All that was discussed and voted on at the workshop last week is tentative. The final decision on the actual budget and the corresponding monthly member assessment will be voted on at the regular board meeting on March 9. Until then, members of the board will continue to evaluate and ruminate on what they discussed at the workshop.