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| LIFE IN SOLERA | JUNE 2023 | 3 FROM THE BOARD By Marcia Casem June 1, 2023 is the beginning of our Fiscal Year. At our April 5, 2023, Open Session Board meeting, the new budget was presented and approved by the Board Directors. The new assessment is $268. Comments stated at this meeting by members attending make it clear that some may not realize how the new budgets are determined. The following information may help clarify this process: • The Finance Committee begins by using the financial report for the month of February. This report indicates the amount of money spent on each line of each category during the past nine months. This includes income from interest and incentives, which reduce the amount of assessments. • The next step is to calculate the amount of expense for each item during the last three months of our fiscal year. • The General Manager has been asked to contact our vendors to determine if there is going to be a change in our next year's contract, and how much. REMINDER: except for able and Internet, all contracts are for one year. Cable and Internet is a five-year contract with a stated percentage of yearly increase. • Using this information, the Finance Committee, along with the General Manager, the Treasurer, and one other Board member, strive to decide if the amount in the current year's budget needs to be increased or decreased. There are two other components to the budget: Reserves and Capital Improvement. Each year Association Reserves, Kevin Leonard, Reserve Specialist, evaluates our Reserve Study and makes updates as needed. Every three years an onsite study is performed. "The purpose of the Reserve Study is to serve as a budget planning tool, which incorporates the association's reserve fund balance, budgeted contributions, a list of significant repair/replacement projects, and a recommended funding plan. The component list contains cost estimates and approximate schedules for the association's predictable reserve expenses." Last year we hired an engineer to evaluate the condition of our streets. This study indicated that the streets are in fair to poor condition. The report also indicated the cost to remove and replace or other major repairs needed during the next 11 years, with a cost of just over $7 million. This cost is based on the current year cost, and not an estimate for when the work is actually made. Based on the review and discussion between the Finance Committee and the Board of Directors, it was determined that the amount of funds recommended by the reserve study needed to be increased in order to have sufficient funds to make the necessary repair/replacement of all our streets during the next 11 years. The decision was also made to move the funds planned for Capital Improvement for this coming year to the reserves. There are no major projects planned for the upcoming year, which would require additional funding above our current balance. It is important to understand that every Operating Expense and Reserve expenditure in the budget is an "estimate." This is not an exact calculation. When an item goes over budget, the reason is determined as close as possible. The inflation rate is not locked in for any given amount of time, which makes the cost of living go up and down. As in most of our lives, things are unpredictable, this is true with determining a budget. The best efforts are made by our amazing and dedicated Finance Committee members. We appreciate their time and commitment to our community.

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