GVR 2009 Annual Budget

General Comments

Green Valley Recreation currently operates twelve facilities and one Member Services Center. Construction on our thirteenth facility at Canoa Ranch should be completed this year. Each facility offers a variety of activities, programs, and classes. It is always Green Valley Recreation’s intention to maintain facilities and recreational programs at an optimal level, provide capital maintenance, repairs and replacements as needed, improve existing facilities and deposit to and preserve the operating, replacement, and addition reserves.

2009 Annual Budget

This year, the budget process began in May and ended in September. GVR management initially prepared a Capital Budget including several large projects and recommended maintenance and repairs, equipment replacement and HVAC (air conditioning) replacements at various centers. The Capital Budget was presented to the Planning and Evaluation (P&E) Committee for review and approval. GVR management then prepared the initial draft of the 2009 Operating Budget and was presented to the Fiscal Affairs Committee for discussions. The budget process included a review of last year’s budget, actual expenditures against that budget, housing market and inflationary issues. Once the Capital Budget was approved by the P&E Committee, these recommended expenditures were included in the Operating Budget for further review. The Fiscal Affairs Committee approved the final draft of the 2009 Budget and it was forwarded to the Board of Directors for review at the Board Study Session on September 16. The budget was presented and approved at the Board of Director’s Meeting on September 23.

The 2009 Annual Budget is $7,130,762 which is $534,205 (8.1%) higher than the 2008 Annual Budget. Our source of Revenue is being impacted by the effects of the reduction of both new home sales and re-sale markets. The home mortgage industry continues to be influenced by the many foreclosures and failures of related companies which are making it harder to obtain new loans. On July 1, 2008, New Member Capital Fees were increased from $1,066 to $2,132 or 100% of GVR’s Initial Fee. This higher rate accounted for a $246,610 (58%) increase from 2008.
In previous years, the Board of Directors had accumulated a restricted cash amount of $200,000 for Canoa Ranch operating expenses. Since Canoa Ranch will be operational in 2009, the Board authorized the release of these funds for operations in 2009. This was a much needed source of revenue for 2009. Interest Income decreased $50,000 (23%) from 2008 due primarily to the decrease in interest rates affecting our Certificates of Deposit and Money Market investments.

Member Dues were increased by 2.3% from $394 per year to $403 per year. This increase is the maximum allowed by the GVR Bylaws which states that any Member Dues increase is limited to the Cost of Living Adjustment (COLA) as released by the Social Security Administration in October for the following year. This increase in Member Dues added $115,920 to Revenue and is the primary reason for the modest increase of $135,687 (2.7%) over last year. The difference between the 2.3% dues increase and 2.7% total increase is the additional pro-rated dues to be collected from new members during the calendar year.

Wages and Benefits are 46% of the Expenditure Budget and increased $211,110 (6.9%) from the 2008 Budget. Wages included a Consumer Price Index (CPI) increase of 3.3%, a Step Pay Program of 1.3% and additional staff cost for Canoa Ranch and Las Campanas Phase III of 3.2%. These increases were offset by a decrease of .5% in the medical, life, AD&D and disability insurance premiums paid for staff.

Utility expenses are 13.5% of the Expenditure Budget and they increased $96,818 (11%) from last year. This increase includes $52,360 (6%) attributed to the opening of the Canoa Ranch Recreation Center.

Major Repair and Maintenance Projects increased by $232,900 (390%) for much needed repairs to many of our aging centers.

In May of 2008, construction commenced on the Woodshop Addition Project at West Center. Initially, this project was budgeted for $303,000 in 2008 with the project to be completed in 2009 for an additional $200,000. Instead, this project will be completed in 2008 for a total cost of $695,200. The main reason for this increase was the necessary replacement of the dust collection system. To fully fund this project in 2008, the Board of Directors approved the release of $392,000 from the Replacement Reserves. In doing so, the agreement was to return this same amount to the Replacement Reserve in 2009. We were able to return a total of $463,068.

Depositing to the three reserves continues to be a top priority for the Board of Directors in 2008. Even with the return of $463,068, the Replacement Reserve is still short by $217,000 of the GVR Reserve Study recommended balance as of December 31, 2009. With the completion of the Canoa Ranch Recreation Center, Las Campanas Phase III and the Woodshop Addition Projects this year, the focus for subsequent years will be the repair, maintenance, improvement and upgrade of our facilities. Energy conservation and safety issues will be the primary considerations when major projects are being proposed through the approval cycle.

Jim Cassidy
Finance Director

*All numbers are based on the 2009 GVR Annual Budget. You can pick up the GVR 2009 Annual Budget at the MSC office.