Another Resident's Opinion

Theme Newsletter -- 2005 Year-end Financial Review

This newsletter presents a variety of Sun City/TX CA financial and operational conclusions from 2005. WARNING = this stuff is pretty boring, unless you like numbers.

Employees -- The average number of Community Association (CA) employees in 2005 was 118. In 2005, there were 44 average employees in golf, 35 in food, and 39 in all other CA operations. Note: these are FTE (full-time equivalent) employees; in other words, two half time people equal one full time employee. Included in the food employees are ten supervisory staff. The overall staff totals exclude all Pulte sales and customer service staff, as well as contractors such as Brickman (landscaping).

Homes -- The number of new homes closed was 320 in 2002; 370 in 2003; 475 in 2004; and 513 in 2005. The total number of homes closed as of December 31, 2005, was 4,103.
Bonuses -- CA staff bonuses totaled $294 thousand in 2002; $202 thousand in 2003; $313 thousand in 2004; and $247 thousand in 2005.

Salary -- Total salary-related costs in 2005 were $4.4 million (includes golf and restaurants, but not contractors). Total CA utility costs (water, sewer, electricity, gas, phone) in 2005 were $985 thousand.

Golf income -- Golf income dollars (excluding pro shop, lessons, cart rental, and range fees) were divided as follows: 47% = annual pass; 30% = punch cards; 11% = resident pay-as-you-go; 7% = non-resident; and 5% = tournaments.

Golf rounds -- Golf rounds played (excluding free-comps) were: 58% = annual pass; 23% = punch card; 7% resident pay-as-you-go; 9% = non-resident; and 3% = tournaments. Some 100,601 rounds of golf (including free-comps) were played on the two courses in 2005. This is 6.2% more rounds than were played in 2004. (The number of average homes increased by 14.7% from 2004 to 2005.)

Overall gain/loss -- For 2005, the CA had a net gain of $374 thousand; however, there were several extraordinary items included. Without the extraordinary items, the CA had a loss of $279 thousand. For 2004, the CA loss was $505 thousand; for 2003 the loss was $482 thousand.
Allocation of costs -- For 2005, excluding the extraordinary items, the Developer paid 7% of the CA net operational costs; the resident assessments paid 93%.

Restaurants/Golf -- During 2005, our two CA restaurants lost $345 thousand or $.21 per dollar of revenue. The golf course operations lost $192 thousand or $.07 per dollar of revenue.
Assets -- As of 2005 year-end, the CA had financial assets of $19.6 million. Those assets were comprised of (a) $12.2 million in land, buildings, and equipment, (b) $5.3 million in cash and investments, and (c) $2.1 in other assets. The former category includes the golf courses, the buildings, and the common area land.

Investments -- As of 2005 year-end, the cash and investments included (a) $224 thousand in charter club cash, (b) $3.7 million in operating funds, and (c) $1.4 million in reserve funds.
Returns on investments -- The average annual return on the $3.7 million in operating funds was 2.7%. The average annual return on the $1.4 million in reserve funds was 3.4% annually. (Note: Until August 2005, the balance of more than $1 million in operating funds was invested to earn approximately 1.3% in a money market fund at a bank where Gary Newman is on the Board. More than $500 thousand, earning 1.7% at 2005 year-end, is still at that bank; even though all deposits are guaranteed only up to $100 thousand. The CA does receive free checking for multiple accounts and other services at this bank.) For comparison purposes, the 3-month Federal government Treasury Bill (which everyone can invest in) currently pays 4.5%.

Reserves -- Rules require the CA to set aside money in reserve accounts to pay for the future costs of replacing our major assets like parking lots, swimming pools, golf irrigation systems, etc. As of 2005 year-end, the golf reserve was funded at 73% of its fully-funded balance. (Most homeowner associations consider 70% or more to be the proper level of reserve funding. Some homeowner associations fund at 100%.) As of 2005 year-end, the HOA (Homeowner association; which means everything but golf) reserve was funded at 44% of the fully-funded balance. Of course, $416 thousand was just placed in that account on December 28, 2005 -- related to the famous $1.8 million "just-found" miscalculation of ten years of Developer subsidy. Without that $416 thousand dollar infusion, the HOA reserve balance would have been at 26% at year-end. It is good that our HOA reserve balance is growing; however, it is unfortunate that it had to be with our own money -- when the Developer agreed to pay up to the 70% level in 2007. Substantial reserve balances are needed so that we do not have large, unexpected special assessments in the coming years.

Conclusions: Sun City/TX finances are in better shape than a few years ago, primarily due to the growth in our community -- more homes to pay the annual assessments. However, one can easily see that there are many opportunities for improvements in both operational and financial management. Hopefully, the future will bring us those improvements.
Full Information Leads to Better DecisionsByron Raynie
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Full Information Leads to Better Decisions
Byron Raynie

Maintained Home Confusion Runs Amok

The February5th SC information Newsletter focused on the chart contained in the January Sun Ray “How your $1,030 Dues will be spent”. The focus was specifically on the $10.62 from Residents Dues being spent on Maintained Homes. Why is the Community Association obligated to cover these expense overruns? The Newsletter also detailed the difficulty I was having obtaining information as to why the developer was not covering this cost if the expense is related to landscaping problems. A good question is why any residents are paying for this shortfall.

Although the initial inquiry was why dues of All Resident’s were being allocated to support landscaping and lawn maintenance of Maintained Homes, it has become quite apparent that there are other significant issues involving Maintained Homes. Many owners of Maintained Homes are apparently not getting the level of service they believed they purchased. And, of course, residents are upset about paying for the mowing of their neighbor’s yards; A quick review of the budget, suggest that the problem was evident in 2005, expected to grow in 2006 and continues into 2007. Landscape maintenance for Maintained Homes apparently has been less than satisfactory for some time and the budget document suggest that will continue. Where in the many venues of our Board meetings, governance committees and communications is this problem to be addressed and resolved? Apparently, owners of Maintained Homes have had about the same response in getting their issues addressed as there has been to getting the answer to why $10.62 is being allocated from All Resident dues to support this mess. The future contains many dead shrubs, sprinkler failures, sod and grass problems, and labor cost increases if not corrected. Unfortunately for all residents these added costs will continue after the Developer is gone and the subsidy disappears.

The Community Association apparently has assumed a Developer obligation with accompanying liability. Any contract between the Community Association and Developer must be at "arms-length" to prevent any potential interest conflict. Since this “arrangement” between the Community Association and Developer is imposing a burden upon All residents, it should be corrected immediately. It is not sufficient to merely claim that the Developer subsidy is covering the Total Community Association deficit.

The Developer has been seeking permission from the City to build a 1000 plus more of the Maintained Home type with landscaping included. [Zero Based Lot Lines and Garden]. Obviously, that kind of an expansion will only compound the current problems and add to CA losses. It is critically important to get both the service level and the financial considerations of this issue straightened out now because of present as well as future financial exposure to the CA and in turn, all homeowners. The responsibility should be placed with the Developer where it belongs.

Common Area maintenance may well have similar problems, as is being experienced with Maintained Homes, except that the problems are buried deeper in the expense budget. At $669K, the budgeted amount for landscape contracts is scheduled to rise 17% over last year and this does not include CA salaries allocated to the activity.

The CA should not be used as an extension of the Developer’s Product marketing program. The CA has a fiduciary duty to Residents. Maintenance “arrangements” should follow a practice similar to that of the home buyer—an inspection and acceptance before closing; then a warranty of a year or more where any problems are quickly corrected at the expense of the Developer.
We ask that the Board of Directors of the CA address these issues immediately.


Now who is really footing the Bill?
Money is fungible. Even so, the statement the developer is essentially subsidizing (paying for) the maintained home program is quite a stretch, to put it kindly. Resident’s assessments and various fees account for about 90% of CA operating revenue; Developer about 10%. Obviously, the Developer’s contribution (subsidy) could not cover all the losses for Restaurants, Golf and Maintained homes. Thus, Residents are stuck with a large portion of such losses.

CY06 Budget Information (page 6, February Sun Rays)
Food & Beverage $368,000 Loss
Golf $373,000 Loss
Maintained Homes $ 48,000 Loss
Total $789,000 Loss
$284,000 deficit funded by Developer according to Sun Rays amount*
$508,000 remaining losses funded by Residents based on Sun Rays.
*The 2006 Budget dated December 30, 2005 shows a different number: this would not change the analysis;
just the amounts.


Another way of saying the same thing:
If losses were eliminated for each of the above activities, there would be No need for a subsidy and no need for higher assessments.

Resident’s assessments could be rebated in the amount of $508,000 or $112.39 for the 4520 resident homes that apparently is being used as divisor. [$48,000/4520= $10.62].

So you determine whether you are paying to mow someone's grass; buying someone’s dinner at Accents or Legacy Grill, or paying for a green fee at White Wing or Legacy Hill. If the Developer was funding all the losses of Golf, Food & Beverage, and Maintained Homes, the subsidy payment would be $789,000 for 2006.
Resident Assessments would not be up 37% since the beginning of 2002.

Finance Committee Meeting
The Finance Committee meeting will be held Tuesday, February 28th at 1:00pm in the Activity Center Meeting Rooms 3&4 and the Maintained Homes Program is on the agenda. Suggest you attend and voice your opinion.

Developer Control
Life is not always fair in Sun City. Many of you may now know that the Chairman of the Neighborhood Rep’s has issued orders to the Rep’s that they cannot forward the Newsletter to their neighbors. The message this sends is clear; actually, the SC Information Newsletter was initiated because of the lack of Transparency in our Governance processes. There is more going on in Sun City than what is on the menu at Legacy or Accents although that information is of critical importance, at least at dinner time.
Such restrictions are all the more reason to continually add new residents to the email data base for SC Information Newsletter.
Email to jackstro@verizon.net to add new addresses. Or check Newsletter at http://scinform.blogspot.com/

Newsletter Objective
Our goal is to foster transparent discussions and actions regarding the issues confronting our Community Association. We welcome an open dialogue regarding the actions proposed and why they are proposed. And, we would very much appreciate additional input from the many residents that have offered ideas, concepts and details about how to address issues confronting the Community Association. We welcome comment on the problems outlined as well as the solutions—both positive and negative [hopefully constructive].

Our Mission
Our mission is to make Sun City Texas a community with a solid financial base with an active adult environment. If you support our mission please forward this email to your neighbors and friends. If your neighbors or friends do not have access to the internet, make them a hard copy. Only with your support will we be successful with the proposed actions. If you wish to have your name added or deleted from the email data base, email jackstro@verizon.net

Future newsletters will focus on the financial aspects of Operations, Future Plans and how different approaches may be utilized to address poor financial results. For additional information and past [Archived] newsletters see:

http://scinform.blogspot.com/

Sun City Residents Make Sun City Great

Some say Accounting issues are always dull—this one sure isn’t!

The Announcement that the CA has received a $1.8 million reimbursement from the Developer for prior miscalculations of the Subsidy payment was welcome news. It is an interesting issue with many facets;

· Is not the Developer, like the Residents, bound by the covenants?

· Why was the repayment terms negotiated in secret without
resident awareness. What happened to the focus on Transparency?

· Were the interests of Residents best served by this arrangement?

· Why is an operational shortfall being used to restore the Reserve Fund
(a contractual responsibility of the developer)?

· What is the fiduciary duty of the Board of Directors?

· What are the ramifications of this experience?

For thoughts and more questions about when a gift is not a gift read on…….

Just what did happen to the Developer’s Subsidy payment?

The Announcement that the CA received a $1.8 million reimbursement from the Developer for prior miscalculations of the Subsidy payment owed was welcome news.

But as more details about the transaction are revealed, the more questions develop as to how did this “miscalculation” occur and what was the rationale for the deposition of the funds associated with the repayment to the CA.

There is an old saying in Texas: “don’t look a gift horse in the mouth”; [explanation for City folks and non-Texans—the horse may be very old and therefore have substantially less value than first glance.]

Such appears to be the case with the “Subsidy’ transaction, except the Developer’s payment should in no way be considered a gift. Developer payments each year should be in conformance with the CC&R’s, which after all, were written by the Developer. The Audited financial statements would suggest that the practice calculating the subsidy and making payment each year has not been followed. Residents must conform to the CC&R’s; there is even a formal committee—Covenants—that assures compliance. No less should be expected of the Developer.

The “misinterpretation” of the subsidy calculation was the second major accounting snafu that has come to light in the past few years. In 2002/03, Bill Liesey once before discovered an “error” in the accounting for the Reserve Fund[s]. Independently, a group of residents also noted a very large and unusual transfer [$539,000] from the Reserve Fund to the Operating Fund in the 2003 Audit. That prompted many questions about the precipitous decline in the Reserve Fund. Following a meeting with the Developer, a Town Hall meeting was held to discuss the issue and answer questions. A subsequent written agreement was finally inked with significantly improved financial benefits to the residents over what had been originally proposed. That process had some elements of openness and Transparency.

The process to correct the “Subsidy miscalculation” and to reallocate funds to various accounts, in contrast, took place “out of the Sunshine”, behind closed doors, and in secret; it was approved by a vote of 2 to 1 by the Finance Committee. Hardly, an overwhelming endorsement!
The “Agreement” was then approved by the Board by “unanimous consent”; whatever that is? So much for Transparency!

The basic question is: were the Resident’s interest well served by this process of deliberations and final agreement? Or….
Did the Developer sell the CA a very Old Horse?

Had there been a more open discussion of this issue; had normal meeting and comment rules been followed; had a Town Hall meeting been held like was conducted following the Reserve shortage, perhaps some of the following questions might have been asked; And perhaps answered.

Questions on Process

Were the meeting and actions consistent with the Finance Committees rules?
SCT FC Resident Comment Policy
Approved 8/22.05
“Before adopting a policy or procedure, the Committee shall give interested residents a reasonable opportunity to submit data, views, or arguments, orally or in writing.”

Why was “Action without a formal meeting” provision utilized for Board action ?
The initial discovery of the “misinterpretation” was in May and the Auditor submitted his report detailing the funding shortage on August 11, 2005. That would seem to allow for a more routine, deliberative process to take place.

Questions regarding specifics of the transaction

What was the basis for “misinterpretation”?
Whose responsibility is it to see that the Developer follows the rules?

Section 9.5 seems rather clear. During the class B control period, the Developer has two options:

“The Declarant may annually elect either to pay assessments on all of its unsold Lots or to pay the shortage [or operating deficit] for such fiscal year.”……
“If the Declarant elects to pay the shortage, such payment shall be
made within 30 days after receipt of the fiscal year’s audited and certified financial statements.”

The official Auditor report showed a difference in the amount of Developer’s past payments and the shortage in payments to be $2,194,947.

Why was that amount reduced to $1.8 million?


Reduction of $196,333 representing Charter Clubs; the accounting treatment may be technically correct. But, are Charter Club members aware that if the Club has net receipts (“profit”) at year-end, it will used to reduce the Developer subsidy to the CA?
This accounting treatment also raises issues about a new policy
of not funding Charter Club asset replacements from the Reserve Fund. The new policy reduces the Developer’s obligation by $700 per $1000 of the Fully Funded Balance for assets removed from the Reserve Fund.
Won’t Charter Clubs [e.g. woodshop and others] that are
increasing member dues to buy new equipment with club revenues
be reducing the subsidy owed by the Developer? A double hit?

Reduction of $173,352 for reserves provided by developer; The Auditor previously cited in the 2003 audit that the Board DID NOT fund Reserves in accordance with policy and the Reserve Study for the 2004 budget. Amount of shortage was $231,333. Did the Auditor review include an assessment of whether the Reserve Fund was funded in accordance with the Reserve Study recommendations?

The $1.8 million was then allocated among various Funds, including one newly created Fund; $809,262 to Operating Fund; $416,000 to the Reserve Fund and $600,000 to a new “Capital Fund”

Of the $1.8 million, only a little over $800k ended up in the Operating Fund.
Had the Subsidy calculation been done each year as apparently required, would not
all subsidy payments been credited to the Operating Fund?

The Developer agreed in writing in May 2005 to fully fund the Reserve Fund to 70% of Fully Funded Balance [FFB] when 95% of the 5000 homes were closed. Doesn’t the allocation of $416,000 to Reserves merely reduce the Developer funding obligation by a like amount?
Is this a proper use of Operating Funds?

A new account was created and funded in the amount of $600K. This sounds like a reasonable approach to have a Capital Account for new capital acquisitions. But, would the new fund merely replace funds for new amenities that the Developer would normally fund? Should any expenditure from this new fund be deferred until SCTX is completed?

Had a Governance process incorporating a minimal degree of Transparency been followed, perhaps these questions would have been answered before Board Action was taken on this matter. And, just possibly, different judgments could have been reached. This clearly demonstrates the need for full and complete Transparency in the CA’s Governance practices.
______________________________________________________

Covenants Compliance and Enforcement

Near the conclusion of the Board of Directors meeting of January 24th, there were some statements regarding the Developer’s obligations to follow CC&R’s and the role of Directors in enforcing Covenants.

A recent Community Associations Institute publication speaks rather directly to this issue. Below is a verbatim excerpt from Chapter two of that publication.

“Developer-Appointed Directors…. The potential for conflict becomes more pronounced for these directors who find themselves in a difficult situation. Their fiduciary duty requires utmost loyalty to the association,
while possibly owing allegiance to the developer.
There are numerous legitimate reasons for developer control of the association during the development period. This control allows for developmental flexibility and protects the developer’s interest in the project.
However, the primary obligation of association directors, including developer-appointed directors, is to make decisions in the best interests of the association.

For developer-appointed directors, this obligation may conflict with the developer's interests. Such directors may prepare the budget so that the assessments are unrealistically low to attract purchasers and to aid them in qualifying for mortgages. While this practice may facilitate sales for the developer, it may also ignore necessary operating expenses and sacrifice the quantity and quality of services provided by the association. If the directors fail to adequately fund operating or reserve accounts, they may be liable for having breached their fiduciary duty and may be personally liable to the association. In fact, courts have held that developer-appointed directors are subject to even closer scrutiny than owner-elected directors.

The developer-appointed director is also exposed to liability for failing to adequately enforce the association's covenants, including assessment collection and rules enforcement against the developer. The Florida Court of Appeals, in B & J Holding Corp. v.Weiss, 353 So. 2d 141 (Fla. Dist. Ct. App. 1978), established that developer-appointed directors who fail to collect assessments from the developer face significant liability for this breach of fiduciary duty, even when the assessments were to pay for litigation against the developer.
An important point to note is that a developer-appointed director, just like any other director, is exposed to personal financial liability for his or her conduct. The developer's corporate structure does not protect the developer from personal liability for actions as an association director. Furthermore, liability imposed for breach of the developer-appointed director's fiduciary duty may not be dischargeable in bankruptcy.

Developer-appointed directors must remain loyal to the association. The developer can minimize his or her risks by transferring control of the board to the owners, while reserving developmental rights.”

Reference:
Sellers, Tonia C. and Jay S. Lazega, “Conflicts of Interest: How Community Association Leaders Honor their Duties”, Community Association Press, chapter two – Board Conflicts, pp 7&8

What next????

Reserve Funding

The Finance Committee has been charged with making a recommendation to the Board: whether to have the Developer fund the Reserves at 70% of Fully Funded Balance [FFB] at the 95% of 5000 homes—probably in early 2007 OR delay Developer funding until 95% of 7500 homes—probably 2011.

Clearly, the intent of the Agreement to fund the Reserve Fund was for the Developer to deposit those funds in early 2007 following a determination of the precise amount based upon a new Reserve Study. All factors considered it would appear that it would be in the best interest of the Residents for the Developer to comply with the timing of payment (early 2007) specified in the Agreement. Policies are now in place that specifies the amount of Resident assessment that is allocated to the Reserve Fund[s]. The new Reserve Study will recommend annual amounts to be budgeted based upon the CA assets [Amenities] identified and the projected maintenance and replacement costs. Policies are now also in place to prevent spending of Reserve Fund monies on items not qualifying as “replacement or repair”. Finally, the CA could begin earning a return on the funds of a properly enhanced balance in the Reserve Fund. Bottom line—Developer should fund the Reserves sooner than later!

Governance

Many feel Governance could be improved by adopting a Transition trigger point at 75% of homes sold rather than the 95% which is now in the CC&R’s. This would change the threshold of homes sold from 7125 to 5625 which would give our governance structure more time to adjust from Developer to resident control. The 75% trigger is the law in California and we understand that it has been very well received by both the developers and residents. It makes for a very smooth transition.

Developer control would have passed to residents in 2007 had not the 2500 home expansion been announced. There is no good reason from a Resident perspective to delay that transition to resident control until 2011. The Developer does not want to pass control, perhaps because they believe residents may not control costs and thereby increase the developer's subsidy. As noted in the above article, the Developer could minimize interest conflict risks by transferring control of the Board to the owners, while reserving developmental rights.

Residents that want continued Developer control apparently feel that there is a need for a safety net as the residents are not capable of governing themselves. That assessment of SC residents seems to be a real damnation of resident's Governance capabilities. Base upon the record residents have made in addressing financial issues as well as the overall Community performance, we believe the Residents are quite capable of governing themselves. We call upon the Developer to add an additional Resident Board member as previously suggested and to begin a process to transition to Resident control of CA operations based upon the 75% of homes sold.

Newsletter Objective
Our goal is to foster transparent discussions and actions regarding the issues confronting our Community Association. We welcome an open dialogue regarding the actions proposed and why they are proposed. And, we would very much appreciate additional input from the many residents that have offered ideas, concepts and details about how to address issues confronting the Community Association. We welcome comment on the problems outlined as well as the solutions—both positive and negative [hopefully constructive].

Our Mission
Our mission is to make Sun City Texas a community with a solid financial base with an active adult environment. If you support our mission please forward this email to your neighbors and friends. If your neighbors or friends do not have access to the internet, make them a hard copy. Only with your support will we be successful with the proposed actions. If you wish to have your name added or deleted from the email data base, email jackstro@verizon.net

Future newsletters will focus on the financial aspects of Operations, Future Plans and how different approaches may be utilized to address poor financial results. For additional information and past [Archived] newsletters see:

http://scinform.blogspot.com/

Sun City Residents Make Sun City Great

Local News and DW2500 Amenities

Local News
Four residents from the Horticulture Club did a presentation at the Property & Grounds Committee meeting January 24th about their progress to date and their plans for the future. I wish all residents would be able to see this presentation; these members have done an outstanding hands-on job in getting this club established, with very little outside help. If you were to EXIT Sun City using Sun City Blvd to HWY195 [I know no one does that]. But, after you pass the water tower, look for the windmill; this is where they will have their garden plots, vine yard, fruit tees, herb garden, and greenhouse. You can go to the Del Webb web site and view their Newsletter. Just a great effort! http://texas.delwebblive.com/images/uploaded/Jan06RootsShoots_38.pdf

Great Job!—Bill Leisey
On January 23, 2006, an announcement was made that the Developer owed the Community Association more than $1.8 million dollars in Subsidy payments due to miscalculations over the past ten years. The announcement also stated that the Developer paid that amount to the Community Association via check on December 28, 2005. We are grateful that this mistake was found.

We would like to note that the key individual responsible for the basic discovery of the error was Bill Leisey, Vice-Chairman of the Finance Committee. The community owes Mr. Leisey a debt of gratitude for his detailed and thoughtful analytical work as well as his dogged approach in staying on top of Community Association and Developer Accounting. Thanks Bill!

You have to wonder why a resident had to champion this cause (and others).

Wanted: Governance Committee Members
There are eleven openings on the Governance committees to be filled; you can see what committees need applicants in the Sun Rays. They also have the date for submitting your application. This is a great opportunity for you to serve our community and to express your ideas to Community Association Board members. If there is a committee that interests you, check the Governance Committee meeting schedule in the Sun Rays and attend a meeting. You can make a difference. Your experience and judgment can be put to invaluable use.




DW2500 Amenities
The ball is in the Property & Grounds court; they are charged with developing a survey which will ask for your input. The scope and date of availability for amenities planned for the DW2500 continues to be a concern for many residents. Given current space constraints at times, some residents question if there is adequate space within our existing buildings since nearly 900 more homes will be added to complete DW5000. If additional space as well as other amenities is not built and opened in the very early stages of DW2500, current existing facilities will become immediately and greatly overcrowded.
The Developer has stated that the “same level” of amenities will be provided for the added residents in DW2500 as has been provided for DW5000 per roof top. Unfortunately, to date, the Developer has been reluctant to provide much additional information, except that an eighteen hole Championship Golf Course will be built. Previously, the Developer had cited “the formula” for amenities for DW5000 at build-out would approximate 88,000 square feet of air conditioned space plus the Pavilion as well as the various sport facilities, such as swimming, tennis, trails, etc. For DW2500, the “same level” would suggest that air conditioned space would total about 44,000 square feet and other facilities would equal roughly half of all other existing structures and sport facilities.

On the Del Webb web site for Sun City Texas there is a disclaimer; “amenities may not be available by the projected completion dates, and/or may vary from the descriptions provided. We reserve the right to modify or discontinue plans for the amenities in our communities.”
See http://www.delwebb.com/Homefinder/Overview.aspx?Page=Amenities%20Overview&ID=100011

Additionally, the Developer had planned to build 10,000 homes in SCTX but abruptly changed those plans to cap the Community at 5000 homes only to again change plans to add back 2500 homes.

The Disclaimer along with the Developer’s track record of changing plans, suggest that a more firm commitment regarding Amenities to accommodate residents from the proposed additional 2500 homes is needed. We will ask the Developer if they could commit to some type of Amenities “formula” to be phased in as building progresses.




What Can be Done Regarding Governance
We feel our best option is to pursue the Transition trigger point be set at 75% of homes sold rather than the 95% which is now in the CC&R’s This would change the threshold of homes sold from 7125 to 5625 which would give our governance structure more time to adjust from Developer to resident control. We have approximately 4100 homes closed now and need 1525 homes to be at 5625 which would be probably in 2008. The Transition Task Group could visit other Sun City communities that have gone through transition and develop our governance structure.

The 75% trigger is the law in California and we understand that is has been very well received by both the developers and residents. It makes for a very smooth transition.

For reasons unknown to us, the Developer has stated that Pulte does not support this practice, although they must conform in California. We need your feedback as to how you feel about this issue, just a short email saying yes or no. If we have a strong yes response, we will pursue the issue with the appropriate Committee[s].

Newsletter Objective
Our goal is to foster transparent discussions and actions regarding the issues confronting our Community Association. We welcome an open dialogue regarding the actions proposed and why they are proposed. And, we would very much appreciate additional input from the many residents that have offered ideas, concepts and details about how to address issues confronting the Community Association. We welcome comment on the problems outlined as well as the solutions—both positive and negative [hopefully constructive].

Our Mission
Our mission is to make Sun City Texas a community with a solid financial base with an active adult environment. If you support our mission please forward this email to your neighbors and friends. If your neighbors or friends do not have access to the internet, make them a hard copy. Only with your support will we be successful with the proposed actions. If you wish to have your name added or deleted from the email data base, email jackstro@verizon.net

Future newsletters will focus on the financial aspects of Operations, Future Plans and how different approaches may be utilized to address poor financial results. For additional information and past [Archived] newsletters see:

http://scinform.blogspot.com/

Sun City Residents Make Sun City Great

Why do ALL Residents Subsidize Maintained Homes?

This Special Edition Newsletter is to give you an appreciation on how our Governance process works. Some have criticized the Newsletter approach for not going through the Governance system regarding issues we have championed i.e., This Special Edition Newsletter is to give you an appreciation on how our Open Elections, Appointing outside management for golf and restaurants, Resident participation at meetings along with Transparency in the Governance process.

I thought since the $10.62 in the CY Budget Information under “How your $1,030 Dues will be spent” had been approved by the Executive Director, Finance Committee, and CA Board, the answer would be available from anyone one that worked on the budget. (See introduction on Page 6 in the Sun Rays regarding the approval process) Now I find out that I must and will attend the February 28th Finance Committee meeting to ask the question that you have asked me. You can follow the progress so far through the following emails:

Typical Email Received from Concerned Residents
Just got my Sun Rays and was reading about the budget. There appears on page 6 several charts etc. One of these is labeled "How your $1030 HOA dues will be spent" by functional areas. One of these functional areas is Maintained Homes. Why do ALL residents have to pay to maintain the yards that Pulte sold as maintained homes? I was under the impression that there would be a separate fund into which such buyers deposited their money to maintain landscaping of those homes. If they are not charging them enough they need to up the ante -- not make us pay it. What is going on here????

Surely we can eliminate that item from the CA's budget!

Email to our Resident Board Members

From: JACK STROOBANDT [mailto:jackstro@verizon.net]Sent: Friday, February 03, 2006 8:57 AMTo: Miller, Frank; Dolich, IraSubject: Maintained Homes
I have received several emails concerning the $10.62 expense in HOA fees. Residents understood that the residents in Maintained Homes covered the expense. Can you help me with a response?

Email from Rob responding to my email to our Resident Board members

From: Rob McDaniel
To: JACK STROOBANDT ; Miller, Frank ; Dolich, Ira
Cc: Jim Romine ; Ann Dodson ; Gary Newman
Sent: Friday, February 03, 2006 1:07 PM
Subject: RE: Maintained Homes

Jack,
I am responded on behalf of Frank and Ira to your question below. The $10.62 annual expense you noted is the projected or budgeted deficit of the Maintained Home program for 2006, when divided by the number total of roof tops. This situation is currently under review by the CA, primarily by the Property & Grounds Committee but also the Finance Committee. I anticipate a recommendation/report from one or both of these committees will be presented to the Board at the March Board workshop.

As you know, you are welcomed to attend meetings of all committees (the next meeting of the P&G Committee is on 2/14). You might suggest to those emailing you that they instead e-mail the P&G Committee directly and/or attend committee meetings. Thank you.
Rob

My Email Response to Rob McDaniel

From: JACK STROOBANDT
To: Rob McDaniel ; Miller, Frank ; Dolich, Ira
Cc: Jim Romine ; Ann Dodson ; Gary Newman
Sent: Friday, February 03, 2006 2:21 PM
Subject: Re: Maintained Homes

I was looking for information explaining to me why the developer was not covering this cost if the expense is related to landscaping problems. We have had maintained homes in Sun City since the beginning and I do not recall HOA fees being needed to subsidize this developer sales/marketing feature.

I think the residents feel more comfortable emailing their concerned to the Newsletter. I will check the agenda for both FC & P&G to see when they will be speaking to this item

My Email to Chairman of Finance and Property & Grounds

From: JACK STROOBANDT
To: Boynton, Jerry ; Facey, Gene
Sent: Friday, February 03, 2006 4:49 PM
Subject: Fw: Maintained Homes

Would appreciate it if you would advise me if this issue will be discussed at your next meeting.

Thank you

Email response from Jerry Boynton Finance Committee Chairman

From: Jerry Boynton
To: Ann Dodson
Cc: JACK STROOBANDT ; Rob McDaniel
Sent: Friday, February 03, 2006 4:54 PM
Subject: Fw: Maintained Homes

Ann,

Please place this on the next committee agenda. It will only be discussed if Mr. Stroobandt is there to present it. Thanks,

Jerry

Well folks –what do you think?

If you have any comments regarding your HOA fees subsidizing Maintained Homes (landscaping) please send your comments directly Rob McDaniel. Rob.McDaniel@delwebb.com Rob can pass them along to the appropriate Governance Committee and Board Members.

$$$$$$$$$$$$$$$$$$$$$$$$

The old saying in our federal government is a dollar here and a dollar there can add up to a lot of dollars pretty fast.

Golf Subsidy $82.54
Restaurant Subsidy $81.56
Maintained Homes $10.62
$174.72 Per Home

Newsletter Goals

Our goal is to foster transparent discussions and actions regarding the issues confronting our Community Association. We welcome an open dialogue regarding the actions proposed and why they are proposed. And, we would very much appreciate additional input from the many residents that have offered ideas, concepts and details about how to address issues confronting the CA. We welcome comment on the problems outlined as well as the solutions—both positive and negative [hopefully constructive].

Mission:

Our mission is to make Sun City Texas a community with a solid financial base with an active adult environment. If you support our mission please forward this email to your neighbors and friends. If your neighbors or friends do not have access to the internet, make them a hard copy. Only with your support will we be successful with the proposed actions. If you wish to have your name added or deleted from the email data base, email jackstro@verizon.net

Future newsletters will focus on the financial aspects of Operations, future Plans and how different approaches may be utilized to address poor financial results. For additional information and past [Archived] newsletters see:

http://scinform.blogspot.com/

Sun City Residents Make Sun City Great