The budget approval process is well underway for the 2018 budget, which once approved will commence from January 1, 2018.
With the support and direction from Beth Brittingham, Kentlands Community Manager and the CMC finance team supporting her, The Budget Finance Advisory Committee (BFAC), under the chairmanship of Ken Dretchen, has done a great job building the 2018 budget. The preliminary budget was presented to the Board during the August KCA Board of Trustees meeting.
At the outset of the process, The BFAC reviewed every expenditure line item and stabilized each at appropriate levels such that future increases should remain contained. The BFAC set out to minimize expenses wherever possible and with that in mind has tried to minimize increases except where necessary.
It is important to understand that there are two major functional components of our budget: the operating budget and the reserves. The operating budget covers the expenses associated with the day-to-day operation of the association and its ongoing support of the citizens and programs/events provided to citizens during the year. The reserve budget supports the long-term needs of the community to repair and replace existing infrastructure and association-owned property over an extended lifetime, looking out from now to 25-30 years from now. Annual contributions to the reserves are informed by a study conducted on the KCA’s behalf on an intermittent basis and are revised accordingly based on its findings. We expect to commission a revised Reserve Study during 2018.
As noted in the Chairman’s column this month, the BFAC recommended that the Board use some of the operating funds to pay off the two loans which were taken on to complete the Quince Orchard retaining wall remediation, thus negating future principal and interest (5%) payments in the 2019 budget and beyond. The KCA BOT agrees with the BFAC’s recommendation and plans to pay off the outstanding loans in 2018. This will eliminate the remaining principal which as of July 2017 totaled more than $282,000. Aside from this amount and mandated contributions to the reserves, the overall budget remains [flat], as do assessments in 2018.
While the budget is currently a work in process, we anticipate assessments for single family, townhomes & condominiums will not be increased in 2018.
Major additions to the 2018 budget contributing to the operating expense increase include:
- Increases in Grounds and Landscaping expense from adding in upkeep and maintenance of the retaining wall and Route 28 berm as well as wood chipping of pocket parks on a 2-3 year rotation, which were not previously included; as recommended by the Environmental Management Committee ($42,500);
- Funding for Kent Oaks Mews project as proposed by Kent Oaks Mews working group and approved by the BOT ($30,000);
- Funding of 3rd Party Inspection program in 2018 as requested by Board of Code Compliance ($19,500);
- Repair of the irrigation system to minimize costs of watering & maintaining certain KCA owned grounds ($24,000);
- Expanded funding of the snow reserve fund ($5,000); The goal remains to build the reserve to 50-75K so that in the future, the annual snow removal costs will be virtually constant each year with excesses charged to the Snow Removal Reserve Fund.
The Community Manager is in the process of finalizing the proposed budget as presented by the BFAC and discussed during the August BOT meeting. The BOT will review the budget at its September meeting and thereafter provide the community time to review and comment on it, with final approval scheduled for the October BOT meeting. The draft budget will be available after prelimniary Board approval following the September 27th BOT meeting, both on line and in the clubhouse.