From Jim Mayfield...Sun City Anthem Board Member...to...Anthem Opinions
I have read the analysis by Forrest Quinn and find it a thoroughly professional analysis of the issue.
I know how long it takes to research the issues and to write an article such as the one written by Mr. Quinn.
Part of the value added to the public discussion by Mr. Quinn's article is that he goes into the accounting subjects at a more detail level than I did in my position paper. While the discussion may seem a little too detailed and confusing to the average person who isn't a CPA, documenting the detail accounting treatment and reporting analysis will be most useful for future SCA CFOs and members of an SCA Member financial advising group.
Now here is the really interesting point. Without any collaboration or coordination, Mr. Quinn and I reached virtually the same conclusion and the same computation of the amount of surplus funds as of December 31, 2015, based upon the audited financial statements for 2015.
The amount of surplus funds at the end of 2015 was approximately $1.2 million. The only difference between our final recommendations is on how the surplus funds should be credited to the Members (SCA homeowners), and I suspect that we are not really apart on this issue.
One of the uses authorized under NRS 116.3114 is to use surplus funds to reduce future assessments from the Members. The 2016 budget, ratified by the SCA homeowners, contains a deficit of approximately $585,00. Using a portion of the 2015 surplus funds to fund the deficit avoided having to increase the annual assessment to homeowners in 2016.
If the amount of the 2016 deficit is subtracted from the $1.2 million of accumulated surplus funds, a residual amount of just over $600,00 of surplus funds must still be distributed to SCA homeowners, in accordance with the options provided in NRS 116.3114.
My view is that the best distribution of the surplus funds will be to immediately make a special transfer of $600,000 to the SCA reserve fund.
As frequently reported, including at the June Board meeting by the new CFO, the repairs at Liberty Center will be largely charged to the reserve fund, in accordance with Nevada law. (Note, this is a position upon which both Mr. Quinn and I also agree.)
The transfer of $600,000 of surplus funds to the reserve funds will help defray the cost of the repairs and the impairment of the percent of funding of SCA's reserves.
I shall have placed on the July agenda two action items to address surplus funds. The first action item will be to authorize a special transfer to the reserve fund of $600,000. This will allow the amount of funds transferred to the reserve fund to be part of the calculation used by the reserve specialist in the 2016 Reserve Study Update.
I shall also place on the agenda a policy that will define surplus funds so that the issue is not just handled this time but will provide a protocol for defining surplus funds in the future so that the distribution requirements in NRS 116.3114 can be enforced in the future.
I have been asked: "When will the SCA Board finally do something about surplus funds?" My answer is never, unless the SCA homeowners massively protest and demand action. Mr. Quinn and I have done our jobs. Now you must do your jobs. Let the Board know that you demand action by approving the two action items I will place on the July Board Agenda.
I also hope that all of the blogs will support the work done by Mr. Quinn and me by actively encouraging SCA homeowners to support resolution of the current surplus funds problem and a long-term resolution of this divisive subject.
From Jim Mayfield...Sun City Anthem Board Member...to...Anthem Opinions
ReplyDeleteI have read the analysis by Forrest Quinn and find it a thoroughly professional analysis of the issue.
I know how long it takes to research the issues and to write an article such as the one written by Mr. Quinn.
Part of the value added to the public discussion by Mr. Quinn's article is that he goes into the accounting subjects at a more detail level than I did in my position paper. While the discussion may seem a little too detailed and confusing to the average person who isn't a CPA, documenting the detail accounting treatment and reporting analysis will be most useful for future SCA CFOs and members of an SCA Member financial advising group.
Now here is the really interesting point. Without any collaboration or coordination, Mr. Quinn and I reached virtually the same conclusion and the same computation of the amount of surplus funds as of December 31, 2015, based upon the audited financial statements for 2015.
The amount of surplus funds at the end of 2015 was approximately $1.2 million. The only difference between our final recommendations is on how the surplus funds should be credited to the Members (SCA homeowners), and I suspect that we are not really apart on this issue.
One of the uses authorized under NRS 116.3114 is to use surplus funds to reduce future assessments from the Members. The 2016 budget, ratified by the SCA homeowners, contains a deficit of approximately $585,00. Using a portion of the 2015 surplus funds to fund the deficit avoided having to increase the annual assessment to homeowners in 2016.
If the amount of the 2016 deficit is subtracted from the $1.2 million of accumulated surplus funds, a residual amount of just over $600,00 of surplus funds must still be distributed to SCA homeowners, in accordance with the options provided in NRS 116.3114.
My view is that the best distribution of the surplus funds will be to immediately make a special transfer of $600,000 to the SCA reserve fund.
As frequently reported, including at the June Board meeting by the new CFO, the repairs at Liberty Center will be largely charged to the reserve fund, in accordance with Nevada law. (Note, this is a position upon which both Mr. Quinn and I also agree.)
The transfer of $600,000 of surplus funds to the reserve funds will help defray the cost of the repairs and the impairment of the percent of funding of SCA's reserves.
I shall have placed on the July agenda two action items to address surplus funds. The first action item will be to authorize a special transfer to the reserve fund of $600,000. This will allow the amount of funds transferred to the reserve fund to be part of the calculation used by the reserve specialist in the 2016 Reserve Study Update.
I shall also place on the agenda a policy that will define surplus funds so that the issue is not just handled this time but will provide a protocol for defining surplus funds in the future so that the distribution requirements in NRS 116.3114 can be enforced in the future.
I have been asked: "When will the SCA Board finally do something about surplus funds?" My answer is never, unless the SCA homeowners massively protest and demand action. Mr. Quinn and I have done our jobs. Now you must do your jobs. Let the Board know that you demand action by approving the two action items I will place on the July Board Agenda.
I also hope that all of the blogs will support the work done by Mr. Quinn and me by actively encouraging SCA homeowners to support resolution of the current surplus funds problem and a long-term resolution of this divisive subject.