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| SUN LAKES LIFESTYLES | SEPTEMBER 2023 | 7 The Association had a loss (Expenses exceeded revenue) in July of $63,495 and a year-to-date surplus of $232,032 (see table below). The Association has done better than budget in all departments except Restaurant and Lounge. For example, the Golf operations loss year to date is 41.1% of the annual budgeted loss, on the other hand the Restaurant & Lounge loss year to date of $517,219 is 102.5% of the annual budgeted loss. Continued losses in the Restaurant are reducing the 2023 surplus and causing Management to make cuts in other departments. At the end of July, the balance in the Operating fund checking account was $545,886, on that same date the Association had outstanding bills of $1,040,006. I use the comparison of cash to bills because it provides a simple example of the shortage of cash in our Operating fund. You should think of this as the same as looking at your own checking account and comparing the cash balance to your outstanding bills. The Board is developing a plan, to be included in the 2024 budget, to increase the Operating Fund cash balance and reduce outstanding bills. This comparison of cash vs outstanding bills is a basic test of the sufficiency of cash in the Operating Fund. A more liberal way at looking at the financial position of the Association would be to include accounts receivable in the amount available to pay bills (see the graphic below). At the end of July, the Association had cash of $11,725,378 in the Repair & Replacement (R&R) Fund. The 2023 budgeted R&R expenditures are expected to approximate the projected revenue. The 2024 expenditures, based on a recently completed independent reserve study, are projected to exceed $5,000,000. While this estimate is subject to Management and Board review, a significant decrease in the percent funded of 65.5% is expected. The Board is planning, before the end of this year, a proposed CC&R change entitled a "Reserve Replenishment Assessment." It will be an assessment paid by home buyers through escrow. The proposed amount is six months HOA dues. There would be no cost to existing homeowners. A similar assessment is being charged by other adult communities in California. I recommend the membership vote in favor of this CC&R change. If approved the assessment would substantially increase the R&R Fund. I have been asked by members how much the Association pays FirstService Residential (FSR) based on our current contract with them. In 2022 SLCC paid FSR $658,840. In addition, FSR was paid $245,000 in fees in 2022 by new Association Members when they purchased a home in SLCC. SLCC also pays all expenses, including salaries and wages, for the operation of SLCC. Gary Burkel, SLCC Treasurer, CPA-Retired TREASURER'S REPORT * THE OPERATING FUND IS USED TO MANAGE DAILY OPERATIONS OF THE HOA. IT DOES NOT INCLUDE CASH IN RESTRICTED FUNDS. THIS IS A BASIC TEST THAT MEASURES THE SUFFICIENCY OF THE CASH POSITION OF THE ORGANIZATION. SUN LAKES COUNTRY CLUB HOA OPERATING FUND CASH* Available cash (blue) compared to outstanding bills (red) SUMMARY OF JULY 2023 INCOME STATEMENT BY DEPARTMENT

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