Before I send an email to the General Manager at MountainSide, I'd like to run my thoughts past the TUGgers who have more financial training than I do. I received a copy of the minutes from the recent MountainSide Board of Directors meeting along with the 2021 budget. The minutes included forecasted operating fund savings of $972,000 for 2020 [all due to lower consumption or occupancy due to COVID]. Here's the draft response I've put together outlining my question re: the need for an increase (even if it is a lower one than usual—.8%). Let me know if there's something I'm not seeing based on these numbers from the minutes and the 2021 budget:
"I had a question for you re: the proposed budget, and I will spell out my understanding of the financial picture before I pose the question so you can correct any misunderstandings I have:
According to the recent minutes and the 2021 budget:
1) Forecasted savings for 2020 are $972,000.
2) The major anticipated expense change for 2021 is Bad Debt Expense (moving from 6.01 to 14.50 per unit ownership week).
3) The number of ownership unit weeks at Mountainside is 9,282.
I'm assuming:
1) A $1 change in ownership unit week costs on the 2021 budget represents $9,282 in annual costs.
2) The resort carries an appropriate balance to cover operations, maintenance items, and unanticipated expenditures.
3) The 2021 reserve expenditures will come entirely from the existing reserve budget and 2021 reserve budget.
If these assumptions are correct, then the following statements will also be true about the proposed budget:
1) Bank/Investment Interest will decrease in 2021 by $56,248.92
2) Miscellaneous income will decrease in 2021 by $19,956.30
These decreases combine for a total decrease in income for 2021 of $76,205.22.
3) The driving force for an increase in expenses for 2021 is bad debt in the amount of $78,804.18.
4) Apart from bad debt, the operating expenses are expected to be down overall for 2021.
The total anticipated increase for 2021 based on lower income and higher operating expense (and for the sake of argument, I’ll assume all the operating costs, except bad debt, remain the same for 2021 as the 2020 budget) will be $155,009.40.
I’m trying to understand why there will be any increase in the 2021 maintenance fees when we already have six times the amount needed in savings from 2020 to cover the circumstantial items driving the increase for 2021. Is there something I’m missing or something that wasn’t included in the minutes/budget that provides the rationale for the increase?"
As always, I appreciate the input available from TUG.
"I had a question for you re: the proposed budget, and I will spell out my understanding of the financial picture before I pose the question so you can correct any misunderstandings I have:
According to the recent minutes and the 2021 budget:
1) Forecasted savings for 2020 are $972,000.
2) The major anticipated expense change for 2021 is Bad Debt Expense (moving from 6.01 to 14.50 per unit ownership week).
3) The number of ownership unit weeks at Mountainside is 9,282.
I'm assuming:
1) A $1 change in ownership unit week costs on the 2021 budget represents $9,282 in annual costs.
2) The resort carries an appropriate balance to cover operations, maintenance items, and unanticipated expenditures.
3) The 2021 reserve expenditures will come entirely from the existing reserve budget and 2021 reserve budget.
If these assumptions are correct, then the following statements will also be true about the proposed budget:
1) Bank/Investment Interest will decrease in 2021 by $56,248.92
2) Miscellaneous income will decrease in 2021 by $19,956.30
These decreases combine for a total decrease in income for 2021 of $76,205.22.
3) The driving force for an increase in expenses for 2021 is bad debt in the amount of $78,804.18.
4) Apart from bad debt, the operating expenses are expected to be down overall for 2021.
The total anticipated increase for 2021 based on lower income and higher operating expense (and for the sake of argument, I’ll assume all the operating costs, except bad debt, remain the same for 2021 as the 2020 budget) will be $155,009.40.
I’m trying to understand why there will be any increase in the 2021 maintenance fees when we already have six times the amount needed in savings from 2020 to cover the circumstantial items driving the increase for 2021. Is there something I’m missing or something that wasn’t included in the minutes/budget that provides the rationale for the increase?"
As always, I appreciate the input available from TUG.