White Cliffs Condo Four

Financial Planning

September ’07 Owners’ Meeting

What We Will Cover• Historical perspective on financial condition

• Board Objectives

• Board actions to improve physical condition and financial condition

• Improvements planned

• Projected impact– Reserves

– Debt burden

– Owner Fees

SOUND PERSPECTIVE ON THE FUTURE

Historical Financial Perspectives• Condos are at least 20 years old. • Construction quality ????• Coastal impact• Fees have not changed since‘04• Inadequate funding for future replacements

– ’03 study --- $1.5 million in future– Siding or major repair and painting needed soon– Reserve at end of ’03 --- $64k– Provided $56k in ’04 – should have been > $200k/yr – Vinyl siding rejected; repair/paint accepted– $689k ($6.4k/unit) assessment in ‘05

Early This Year• Repair/painting siding cost completed last year --

over $715k• Substantial Repairs and Replacements

identified for ’07 – ’14.– Decks/roof membrane– Painting/repair – next cycle– Roadways– Other

• $32k in the reserve at beginning of year

• Weak financial position

A POSITON NO BOARD WOULD WANT

Board Actions• Objectives

– Improvement program– Financing– Establish reserve funding --- updated reserve study– Substantially improve financial condition while

improving physical condition– Maximize market values and competitiveness

• Owner funding increased– $500 assessment– Monthly fee adjustment -- Sept. 1, 2007

• Sound financial modeling to meet objectives• Financing sources and options

Financial Plans – ’07 thru ‘14

• Planning period• Operating Costs -- $2,599,000 – compound

annual growth rate of 2.6% for 7 yrs.• Improvement Program -- $1,288,000

(equivalent to $11,900/unit)• Reserve

– Beginning – $31,600 ($293/unit)– Ending -- $262,500 ($2,430/unit)

• Paid for with– Borrowing– Reserve funds– Owner funding

Average Operating Costs '07 - '14

Landscape related40%

Property insurance20%

Management Fees11%

Repairs8%

Rubbish removal4%

All other14%

Snow removal3%

$118.6

$61.6

$$$33.1

$24.9

$12.6

$7.8$43.0

Average Annual Total = $301.5

Compound annual growth rate of 2.6% over the 7 years

Improvements - '07 - '14

575,000

280,000

110,000

65,000

60,000

57,500

56,000

46,500

38,000

Painting & Wood Repair

Decks/Membrane Roofs

Pavement

Stairways

Privacy fencing

Patios & RR ties

Chimney replacements

Shingle roofs

Other

Total $1,288,000

Total $1,288,000

Improvements Spending -Projected by Year

156,500

377,000

34,000 41,00021,000

566,000

21,000

71,500

2007 2008 2009 2010 2011 2012 2013 2014

Total $1,288,000

$540k is Wood Repair & Painting

Remaining decks, stairs, paving, privacy fencing, painting (1), etc.

Borrowing• Why?• Proposal to 3 banks/credit union• $475,000 ($4.4k/unit) of borrowing drawn down

substantially during ’07 and ’08 with small amount in ’09.

• Projections assume 8% interest ($170K or $1.6k/unit); actual may be slightly less

• Repaid in ’09 through ’15 – 7 years … $69/mo./unit

• Additional $125,000 ($1.2k/unit) assumed borrowed in ’12 on same terms … $18/mo./unit

Outstanding Debt '07 thru '14

100,000

450,000

422,251

365,128

303,259

354,315

266,721

171,856

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Actual Projected

Repair & Paint Year -- assumes $125K new debt

NO DEBT

Reserves

• Objective

• Funding has increased with new fee level

• Reserve Study

• Key to our financial health

Projected Reserve Activity

31,628

110,000 110,000 113,300 116,699 120,200 123,806 127,520 131,346

262,499

-55,000

-10,000 -20,000-41,000

-21,000

-485,000

-20,000

-70,000

Beg 2007 2008 2009 2010 2011 2012 2013 2014 Ending

Annual Funding

Reserve Used

Repaint year

Ending Reserves

55,739

124,107

31,628

86,628

186,628

279,928

355,627

454,827

93,633

201,153

262,499

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$540k est for Siding Repair & Paint .. $485k of reserve used.

Actual Projected

Annual Reserve Funding & Debt Payments

55,860 55,86032,585

110,000 110,000 113,300 116,699 120,200 123,806 127,520 131,346

22,000

88,844 88,839 88,844100,534

112,218 112,219

0

50,000

100,000

150,000

200,000

250,000

300,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Actual Projected

Reserve Funding

Principal & Interest Payments

Reserve Funding & Debt Payments

43 4325

17101

98969390878585

878778696969

0

50

100

150

200

250

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Reserve Funding

Principal & Interest Payments

Actual Projected

28

Interest only

24 21 21 19 13

Projected Fee % Increases

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

No Increases Until 9/1/07

Full year impact of 9/1/07 increase

Annual increases after '08 are equivalent to 33 cents to 59 cents per day.

Compound Annual Increase of 5.2% for 10 years ending '14

Projected Monthly Fees

256 256 256278

346 356373

384402

414426

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Actual Projected

Also Assessments of $6,400 and $500 in '05 and '07

Projected Results – Now thru ‘14• Improvements completed• Total borrowing of $600,000 reduced to

$172,000 outstanding• Reserves available -- $262,000 – will

review against updated Reserve Study• Fees increase at compound annual rate of

5.2% for 10 years ending ’14• $69 of fees for debt payment ends after ’15• Financial position strengthened• Market competitive

Thanks to the Board for taking actions for the present and projecting the future

WE NOW MUST CONTINUE TO REFINE AND IMPROVE OUR

PLANNING FOR THE FUTURE