HOA Letter to WGC Residents
Dear Fellow Residents,
On the 30th of January, at our Annual Meeting for 2024, our board used the Question-and-Answer session of our meeting to discuss our financial situation.
Our property manager, Dawn Smith, with East Texas Community Management, reported the detailed numbers in her financial report to the members present, and explained the numbers on the slide I had prepared for my Power Point Presentation.
Here are those numbers:
Expenses
| ● Administrative | $ | 8,429.77 |
| ● Landscaping | $ | 93,516.25 |
| ● Professional Fees | $ | 19,675.00 |
| ● Pool | $ | 18,600.72 |
| ● Other | $ | 9,517.69 |
| ● Utilities | $ | 21,122.35 |
| ● Total Expenses | $ | 170,861.78 |
| ● 2023 Budget | $ | 154,372.00 |
Dawn explained that because of a $12,000 drainage repair cost, plus being $15,000 over the amount set for trees, we exceeded our budget. Also, Dawn explained, we had to add more money to the landscaping budget to handle the unusually large number of tree limb problems from the ice storm.
At the end of December, 2023, this is the total financial accounting for the balances we have:
Assets
| ● Operating | $ | 6,507.52 |
| ● Savings | $ | 64,331.37 |
| ● Total 2023 | $ | 70,838.89 |
● At the end of 2022, our total assets were $115,870.10
I reported this budgetary reality to our membership, who, as owners of property, all have a say in how to address this trend before it becomes a problem.
I presented the following information to the members present. In fact, these are the words they heard. I think it’s only fair for you all to read what was stated at the meeting, and have the same information:
We need to discuss an unpleasant topic, but it is a reality every one of us needs to understand, as members of this association.
We ended 2023 with the lowest amount in our savings, or Reserve Fund, that we’ve had in years.
We did not get to that point by wild-eyed, profligate spending.
We got there because we had to use our savings to pay for our expenses, which have continued to rise over the years.
We had to pay out more than we took in. It is as simple as that.
We have been proud of the fact that we’ve never raised our dues in the entire 30-plus years The Woods has been an HOA community. The dues have never changed in all that time.
I’m told that $300 is the least amount charged in the entire City of Tyler, and that we have the lowest rate in all of Smith County.
And don’t forget that the majority of our HOA pays $270 per year, not $300, by taking advantage of the 10% discount we offer.
I’m not saying that because we are the lowest rate of anyone else, we should increase our dues to match what others do. I am saying that we don’t want to be the HOA that falls into disrepair because we are stubborn and stick to the old ways, even though they don’t mesh with the current economy.
Our budget issues were caused by having to pay for things like an unexpected $12,000 drainage repair bill at the end of 2022/ early 2023.
We are also $15,000 over our budgeted amount for trees that had to be removed.
Because of our shortfall, we have not been able to put any money aside for savings, or what is called our Reserve Fund. Instead of the $100,000 the Reserve Study we had prepared advises, we have just about $70,000 at the end of December.
We have had to use savings to pay the bills these last couple of years—which is fine. That’s what it’s for.
But we need to think of how to repay that money to ourselves, so we have the advised $100,000 base.
So, what is a Reserve Study I mentioned? It is an assessment for capital planning for HOA’s and condo associations, to provide direction on where money should be spent.
Essentially, it’s a financial analysis of everything we are responsible for or have to spend money on.
The firm that did our study, Criterium-Dotson Engineers, detailed all our assets and costs. They estimated major repairs or replacement of common elements that will be upcoming.
Examples of these elements are our special street signs, irrigation systems, wrought iron fencing, playground equipment, the pool house roof or structure, our monument signs, and any electrical or mechanical things we have to maintain. They also consider depreciation, and figure that in as well.
We were found to be in “good general condition, and well-maintained.”
But, given our annual dues costs, the study finds that our current level of funding is “not adequate to meet future needs.” That level was based on us contributing $5,000 to the Reserve Fund (or savings) annually, which we weren’t able to do this year.
When we had a Zoom meeting with the engineer who prepared our Reserve Study in late 2021, he recommended an increase in dues of $10 per month, starting in 2022. That would have made the dues $420 per year since 2022.
But, as you know, we resisted that recommendation, in our hope that we could continue to meet our needs with the current rate for dues.
Our tree guy tells us he expects 2024 will see the same amount of trees in need of removal, because they are so stressed from the very cold winters, and the very hot, dry summers.
(Unfortunately, his prediction is already coming true. We had a tree down on the Ridge Hill on the 10th of January, as well as a couple of trees down on Woods Blvd!)
Since we have never raised dues to coincide with the level of any inflation that has occurred, we will be in the red by 2030 if we continue the way we’re going. Perhaps 2028 if things are like they were in 2023.
So, in order to satisfy the findings of the Reserve Study and to boost our savings account, one option is a special assessment of $100 per household for next year.
The Reserve Study bases our number of units at 534. If everyone paid an extra $100, we would boost our savings by $53,400, or at the current rate of spending, we’d have $115,00 instead of $70,000 in reserve.
We are aware that no one wants a dues increase—the board doesn’t want that either.
But, we also understand we cannot keep up with today’s costs on a 1990’s budget in the 2020’s.
We pay more for everything just like you do in your own households. Everything we purchase, from envelopes and ink, to lightbulbs, sprinkler heads and paint, has increased in cost. So have the water rates in the 30-plus years this subdivision has been in existence.
Thankfully, our landscaper’s rate is the same as it has been since 2018, and so is our property manager’s rate.
The Board cannot assess any special assessment or dues increase without the approval of 51% of residents attending an annual meeting like this one, or at a special called meeting for the purpose of voting.
We will not be voting on this today. We must give proper notice for any such vote.
Today, we just want discussion about this unpleasant topic. What are your thoughts about a $100 per household special assessment, or a $10 per month increase in dues?
At that point, the floor was opened for comments, and our residents gave their opinions, which were excellent, reasoned contributions. Every person who spoke their mind did so thoughtfully and with clear understanding of the situation.
Everyone realized we must keep this a premier neighborhood, and that now is the time to act, not after we’re already in the red.
The board will take the input from the meeting into consideration and make the best possible determination for going forward.
As reported at the meeting, the Board cannot make the decision without the approval of 51% of the members present at a special called meeting, after being given ample notice to the entire membership. We will let you know when that will be, if that’s the route the Board chooses to travel. (That was the preferred consensus of those present at the meeting, and “the sooner the better,” as several residents mentioned.)
This letter is to keep those informed who were not able to attend the meeting. If you should have any questions, please don’t hesitate to ask.
Thanks to all,
Donna Dozier, President
The Woods Garden Club HOA