Welcome everyone to the March Association Board of Directors meeting.
Spring is here and the weather is finally turning warm and sunny. It is a busy time for all three Boards as we are working hard here in the middle of budget season. Even though we are not done, I would like to thank all the Board members, all the DACs and all the staff for their continuing hard work on the budgeting. We have approved our insurance renewal for 2025-2026 and are in the process of firming up all of the numbers for our operating and reserve budgets for next year. Of our big three expenses on which we focus most, insurance is under control with a reasonable increase next year. I again extend my thanks to our insurance committee for all its hard work. Landscaping will be going into the second year of a three-year contract, so that is also under control.
Water is another story. Water is expected to see a substantial increase of about $1.6 million next year, which is mostly for irrigation. This is a combination of an increase in water rates and our significant increase in water usage once the water restrictions were lifted. We listened to our homeowners. They wanted green grass. When the water restrictions were lifted, the water was turned on and they got green grass. Now we are paying the price for all the greenery. Remember, in 2029 that water is going to be turned off, so we still are required to do our turf reduction and eliminate non-functional turf. The greenery is only temporary. Right now, we have tasked BellaVista with reviewing all of our valves and sprinkler heads, which are computerized, to get them online and then to automate them appropriately to ensure they are watering the correct amount at the correct time. We are hoping this will save us substantially on our water bill.
When it comes to reserves, I believe that we need to get each Village up to their burn rate if The Villages is going to survive financially in the future without falling into disrepair. The burn rate is how much our units depreciate each year, considering each and every depreciable item contained in our units. For example, I live in Fairways. Right now, we contribute $68,000 per year to our reserve funding which covers everything from roofs to mailboxes. However, our burn rate, as calculated by Ryan Bell, is $82,000 per year. Thus, our little village of 22 units is falling in the hole at the rate of $14,000 per year. What that means is fairly obvious. At some point we will not be able to replace our roofs or do some other repair and will either have to defer maintenance or come up with a special assessment—a large special assessment. And we saw what happened in Florida as a result of deferred maintenance. However, with an increase now of $53 a month, which equals $636 a year, we hit our burn rate, pay our fair share and save us the pain of that special assessment at some point in the future. Those are my calculations. Certainly they are not official but I think it gives us a good idea of what it costs to get us on the right track. And I don’t think $636 per year is a lot to pay to point the ship in the right direction. Each Village is going to have to assess how to get its contributions up to its burn rate.
After sitting through many budget meetings, and with a few more to do before we are done, those are my thoughts.
Thank you all for being here and as usual, my phone, my email and my door are always open and available for questions, comments or discussions.
—Association Board President Michael Schwerin
