By now each Tellico Village property owner should have received the assessment notification for 2016 based on the new assessment rate of $117.60 per month, a 5 percent increase over 2015.
As I described in last month’s article, the budget for 2016 continues the theme of repair, replace and renovate started in 2015. While I have received several inquiries from property owners questioning the need for the 5 percent increase during a time when inflation is low, the explanation is that our needs for spending on maintenance and repairs are outpacing inflation.
Repairs needed
Our physical plant is aging and is requiring increasing repairs and renovations. When the choice is between increasing assessments or deteriorating facilities, most property owners are agreeable to paying a little more to ensure that our aging infrastructure and facilities have the needed maintenance, replacements and renovations to keep them up to date and in good working order.
Last month I described the process that led to a balanced, cash self-sufficient budget, focused primarily on capital replacements, repairs and maintenance, while continuing to invest resources in marketing and growing awareness of the Tellico Village brand. This month, I will highlight some of the projects that you will see executed as part of the 2016 budget.
Beginning with our golf operations, the bunker renovation project at Toqua will be completed in 2016 with an $85,000 expenditure. Once completed, this three-year phased project will have renovated approximately 35 bunkers while eliminating 15 bunkers at a total cost of $275,000. Major golf maintenance equipment replacements will include $130,000 for fairway mowers at Kahite and $230,000 for replacement of the golf cart fleet at Toqua.
Focus on roads
In the public services department, the major maintenance expenditure is for road rejuvenation of the Toqua neighborhood — less Toqua Coves — at a cost of $308,000. After underinvesting in road rejuvenation for a couple of years, we are moving back toward the recommended cycle of rejuvenating all Tellico Village roads every five years. We have budgeted $100,000 for painting and $55,000 for HVAC replacements and repairs. We continue to replace old water meters with new, more accurate radio-read meters at a cost of $88,000. Other equipment replacements in public services total $173,000.
The one addition to our infrastructure is paving the Tanasi docks parking lot at a cost of $90,000, funded from the dock reserve fund, which, in turn, is funded from dock rental fees. Two other dock projects, to convert 14 slips at dock F to three-sided slips and to add five jet ski slips, will be contingent upon those projects being presubscribed at pricing adequate to make them economically attractive and self-funding.
The capital plan for 2016 totals $1,173,000 with about 85 percent of that for equipment replacements and renovations. Several design plans are included in the budget to help us make better decisions in future years about major renovations or replacements of facilities.
A project to develop Toqua clubhouse renovation alternatives and cost estimates is included at $10,000. A Tanasi clubhouse parking lot expansion plan will cost $7,500, and a Kahite clubhouse facilities plan will come in at $7,500.
While none of these projects commit us to any specific plans or investments, they will provide alternative designs and cost estimates to help us choose the best value for our limited capital resources.
Strain on reserves
One of the concerns that carries over from this year’s budget process is the strain being placed on the repairs and maintenance reserve fund in light of increasing needs over the five-year planning horizon. The total maintenance budget for all TVPOA operations is more than $2.5 million for 2016, and these costs will likely increase over time.
The Tellico Village Property Owners Association Finance Advisory Committee and the board have recognized this problem and have begun some detailed studies to ensure that we are adequately preparing for the future. The 2017-2021 five-year plan will receive continuing attention in the coming year so that we can make better, more informed resource allocation decisions each year along the way.
The five-year plan will be a subject of discussion at the Jan. 5 board workshop.
Monthly financials
At the December meeting of the POA board, a capital project was approved for $6,000 to purchase and install a weather camera on hole 10 at Tanasi Golf Course.
This camera will be part of the WATE television network of weather cams, will be featured on the WATE weather broadcast in rotation and will be available on both the WATE website and as a button on the new Tellico Village app on your smartphone. This project is one more way that we are keeping the Tellico Village brand in front of the public to enhance our public relations and marketing efforts.
Through the December board meeting, we have approved approximately 82 percent of the 2015 capital plan and are about $181,000 over budget for all projects approved to date. However, all of that unfavorable variance will be offset by project cancellations, deferrals and expected under runs on projects remaining from the 2015 budget. Year-to-date net income reflects a favorable variance to budget of about $52,000.
Parker Owen is financial director with the Tellico Village Property Owners Association.
