NEW ALLEGHENY HOMEOWNERS ASSOCIATION
2006 MANAGEMENT PLAN
The goal of this Management Plan is a presentation which can be easily read and understood. It has been created on an historical as well as a projected basis. In order to accomplish this, the zero base budgeting technique has been used which breaks the association down into budgeting categories which require an individual decision on each item, the logical analysis of every proposal, and the complete justification of each expenditure. This technique is an efficient and effective means of measuring the impact of policy and management decisions upon the financial stability of the association. This type of presentation keeps the Board aware that a single, reversed, decision after the Plan has been adopted, would, in all likelihood, create deviations throughout the entire financial structure of the association. Therefore, it is the basic tool for evaluating the validity and practicality of all policy decisions.
This plan is presented on a fiscal year basis which begins January 1, 2006 and ends December 31, 2006. A one year time frame is used for the financial projection because it enables a more realistic evaluation of the financial viability of the association to be made. The Management Plan assumes an 83 unit population.
This Management Plan is presented on a accrued Modified Fund Basis of accounting rather than on the Cash Basis because it more accurately reflects the true financial position of the association at any given period of time. The Association's Federal Income Tax Return is also done on the accrued modified fund basis of accounting.
The Management Plan is created in two parts, (A) an Operating Budget and (B) a Capital Reserve Budget, which when taken together, project the financial activity and viability of the association.
A) OPERATING BUDGET - The Operating Budget deals with the day-to-day activities of the association and addresses itself only to the current operating needs. The Operating Budget for fiscal year 2006 is attached. Three major sources of data were used in its preparation. The first was the actual operating experience of the current and prior years. The second was the use of property inspections and forecasts from suppliers. The third was the input from the Board members.
B) CAPITAL RESERVE BUDGET - The Capital Reserve Budget deals with the activity of the capital reserve funds. In 1996 the Board engaged the services of an outside firm to complete a formal reserve study. The 2006 reserve budget is attached. Contributions to the reserve for 2006 will total $44,820. Interest Income is projected to be $100.00.
MAINTENANCE FEES are determined each year after extensive study and evaluation by the Board members and management of the anticipated operating costs for the coming year. These are funds required to cover the daily operations of the association. Disbursements from the operating account include payments for all services, labor, materials, supplies for annual repairs as well as operating expenses for the grounds. Operating assessments total $79,680 for 2006.
INSURANCE REIMBURSEMENT The Association provides insurance on the structure of each building. The Association is reimbursed for the insurance from the unit owners based upon unit square footage. The projected reimbursement for 2006 is $12,000.
LANDSCAPING A Landscaper is contracted to perform the grass cutting, on an as needed or weekly basis, the shrub trimming and spraying, mulching and manuring, the spring clean-up and lawn fertilization, all on a contract basis. The total budgeted amount for 2006 is $38,600.
OTHER LANDSCAPING in the amount of $2,000 has been allocated in the budget to replace
expired trees in various common areas.
PAINTING expense for 2006 is budgeted to be $11,700. Selected painting will be focused on Bookbinder Circle, 206-220 Carpenter Lane and 602-620 Brighton Woods Road.
MASONITE PAINTING is the estimated cost to repaint Masonite siding on an as-needed basis. $3,000 is budgeted for 2006.
SNOW REMOVAL is the estimated cost of snow removal from the common areas. We anticipate the total budget for this season to be $2,500.
ROOF REPAIRS of $2,600 consist of minor repairs to the roofs of the homes.
OTHER MAINTENANCE of $4,000 is budgeted for any common area and exterior maintenance done to the property, including common area exterminating and masonry/concrete repairs.
MANAGEMENT FEE The management agreement with Acri Commercial Realty, Inc. provides for a management fee of $14,000 per year.
LEGAL services are rendered for the collection of delinquent assessments, review of Board policies and advice to the Board on legal matters. This year's budget is $500.
ACCOUNTING expense is expected to be $0 for 2006.
OTHER PROFESSIONAL FEES of $200 are for any engineering or architectural work required during the year.
COPYING/DUPLICATING of $500 is for the association's copying costs.
POSTAGE includes the association's mailing charges throughout the year. $600 is budgeted for 2006.
INSURANCE The annual premium for insurance coverage is $12,000. The association carries a Master Policy which is primarily designed to repair or replace the buildings in the event of a fire or other covered loss. The policy is set at 100% of replacement cost with a $1,000 deductible, per occurrence.
The association carries general liability coverage, which is designed to protect the association and all officers of the association against claims of anyone suffering injury on the property owned by the association. The coverage is in the amount of $1,000,000 per occurrence, $2,000,000 aggregate. The association also carries umbrella insurance coverage of $1,000,000 which provides an added level of protection.
Directors and Officers coverage is to cover the Board of Directors. The Board is ultimately responsible for the operation of the Association and all the decisions made in its operation. In order to protect the Board, the association secures this insurance to defend the Board against claims made for decisions and actions arising as a result thereof. The amount of coverage is $1,000,000.
UTILITIES charges are for the electric usage of the common area lighting. $1,000 is projected for 2006. MISCELLANEOUS expenses are any expenses not detailed above. $200 is budgeted for this category.