The Recreation Centers of Sun City, Inc. Board of
Directors has finalized the corporation’s 2008 budget, which will be
voted on at the December 20 Board meeting. Developing the $16,160,080
budget has been a challenge for RCSC management and the Board as they
balanced rising operational expenses and the increasing costs to
complete the Sundial Recreation Center construction project with serving
members’ needs while responsibly managing the corporation’s finances.
The proposed budget includes an approximately 4 percent increase in
annual assessment fees, beginning April 1, 2008.
The proposed
2008 budget also includes $3 million for the completion of the Sundial
project. The $2 million originally set aside for the project was based
on an early estimate from the insurance company and did not take into
consideration the concealed damage that was discovered. The final
estimated cost for the completion of the project is $4.9 million, $2
million of which has already been paid out in 2007. Rather than levy a
special assessment on members or use money from the Capital Preservation
and Improvement Fund (reserved for improvement projects, not repairs),
the Board chose to fund the Sundial project from the RCSC budget. A
special assessment to fund Sundial would have required a very large
assessment to cover the remaining $3 million and would not have been
collected in full until the end of 2008. The PIF is reserved for
improvements to facilities. Sundial is a repair project, not an
improvement. Additionally, use of the PIF money would require a delay in
the Fairway Recreation Center renovation project, which would have
significantly increased costs due to inflationary pressures.
The funds
needed to complete the Sundial project came from a number of sources.
Approximately $2 million was deferred from 2007 and 2008 capital
projects that had been requested by management. The remaining funding
came from the cash reserves maintained by the corporation for
emergencies. RCSC management has also played a significant role by
accomplishing extensive savings for 2008 through personnel reductions
and reorganization, leasing of the food and beverage facilities and
various operational and purchasing changes. Management has also taken
several energy-saving steps that have helped to mitigate the effect of
rising utility costs.
RCSC is
confident that the legal action against the insurance company will
eventually result in a settlement that will allow the corporation to
recover the costs of the Sundial repairs. As the deferred capital
projects are still required, those funds can be used to replenish the
reserve money used for Sundial and complete the deferred projects.
“Although
RCSC, because of the Sundial emergency, is in a very tight financial
position, the 2008 adopted budget is a prudent, conservative plan which
will get RCSC through this difficult time while keeping the facilities’
improvements on schedule,” said Denny Nichols, President of the RCSC
Board of Directors.
