DRE Budget Information · 2020-06-10 · Click to edit Master title style 7 Range of Assessments A...

Click to edit Master title style

1

DRE Budget InformationJ u n e 1 0 t h , 2 0 2 0


2

Audie Murphy RanchT h e a s s o c i a t i o n ’ s m a n a g e m e n t s t r u c t u r e

2

Master Association(Common area streets,

landscape, lighting, walls/fences, and recreation

facilities)

Province Cost Center

(Private streets, gated entries)


3

What is the DRE?A n d w h a t d o e s i t m e a n f o r m y H O A b u d g e t ?

3

• The California Department of Real Estate

• Part of the California Department of Consumer Affairs.• State agency responsible for administering real estate and mortgage licensing,

regulating and disciplining real estate licensees and residential subdivision offerings.

• The department reviews estimated HOA budgets in initial project submittals.

• Approval of the DRE budget submittal is required in order to obtain a white report and have a first close of escrow.

• Every 24 months, a new budget submittal is reviewed.


4

The DRE’s RoleW h y i s D R E H O A b u d g e t a p p r o v a l r e q u i r e d ?

4

• Protection to consumers

• Ensures buyers are disclosed all possible assessments

• Provides level of transparency


5

How are costs calculated?F r o m D R E m a n d a t e d e s t i m a t e s t o a s s o c i a t i o n f i n a n c i a l s

5

• Initial Submittal

• DRE Operating Cost Manual

• Industry standards

• Best practices

• Common area quantities from plans and project consultants (landscape architect, civil engineer, etc.)


6

How are costs calculated?F r o m D R E m a n d a t e d e s t i m a t e s t o a s s o c i a t i o n f i n a n c i a l s

6

24 Month Review Submittal

• Association’s financials

• Association’s contracts

• Association reserve study

• Projected cost increases (Water rates, minimum wage increases, inflation, etc.)

• DRE Operating Cost Manual (future common area)


7

Range of AssessmentsA D R E b u d g e t s t r u c t u r e f o r m a s t e r - p l a n n e d c o m m u n i t i e s

7

• Used in communities with 150+ homes, multiple builders and multiple products, such as Audie Murphy Ranch.

• Allows flexibility for builders to add new homes to the community as they are sold.

• New DRE phase budgets are created with each new phase closing. Assessments are recalculated to include new common area and new units, and therefore are subject to change each month.

• Each buyer is disclosed the high end of the range, and the low end of the range.

• Assessments fall somewhere within this DRE approved range.

• The association’s approved DRE assessment range cannot be changed without an additional review and subsequent new approval by the DRE.


8

Current

AMR’s Range of AssessmentW h e r e t h e a s s o c i a t i o n c u r r e n t l y s t a n d s

8

• Range approved by DRE on April 6 th, 2020

• Our current approval will expire April 6 th, 2022.

• How do I budget for a range of assessments?

• We recommend a conservative budgeting approach, taking into account the high end of the assessment range.

$149.78 High

Low$109.00

$137.00


9

Why do costs go up?A l o o k a t w h a t ’ s d r i v i n g c o s t i n c r e a s e s t o H O A s

9

• Landscape and pool/spa/custodial service costs are especially sensitive to labor cost increases.

• Utility rates have seen continual increases, especially due to the recent drought and current issues with PG&E, SoCal Edison, and other energy providers throughout the state.

• Increases to association scope of work or service levels, based on community needs and/or expectations. For example, increased security or patrol service hours, increased janitorial maintenance services, etc.

• HOA costs are subject to the same economic factors as everything else.


10

Where do my assessments go?A q u i c k b r e a k d o w n o f b u d g e t e d c o s t s a t A u d i e M u r p h y R a n c h

10

Utilities (Electric, Water, Gas) – 9%

Ranch House Purchase Agreement - 13%

Pool/Spa/Custodial Service – 10%

Administrative Costs (Legal, Accounting, Office Expense) – 7%

Other – 7%Management Fees – 6%

Landscape - 29%

Reserves - 19%


11

What to expect moving forwardT h e a s s o c i a t i o n ’ s b u d g e t f u t u r e

11

• Our current approval will run through April 6 th, 2022.

• At minimum every 24 months from DRE review, there will be a review submittal, incorporating new contracts, financials, costs, and projections.

• At minimum every 24 months, DRE approved range of assessment will be disclosed to residents and new buyers.

• 24 months is the maximum amount of time between submittals. If there are new planning areas or tracts coming on, a new submittal may take place before the 24 months is up.


12

Questions?We ’ r e h e r e t o h e l p !

12

• Question and Answer session

• If any questions come up after this session, please let Keystone Pacific know. If these are DRE budget related questions, they will reach out to us for you.

Jeanean [email protected]

DRE Budget Information · 2020-06-10 · Click to edit Master title style 7 Range of Assessments A...

Documents

Transcript of DRE Budget Information · 2020-06-10 · Click to edit Master title style 7 Range of Assessments A...