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| SUN LAKES LIFESTYLES | SEPTEMBER 2017 | 7 Treasurer's Report By John Clark BOTTOM LINE: Summer months are with us and expenses increase. The financial plan projected, for the month of July, expense to exceed revenue by $95,130. The month ended with expense exceeding revenue by only $26,200. The difference of $68,930, when added to the surplus accumulated through June, increases the surplus for the seven months to $184,137. NON-OPERATIONS: Home resales continue to lag, averaging 13 per month against an expected 19 per month and it is reasonable to assume this trend will continue through the balance of the year. Previous articles have discussed the Association's plan to convert approximately $1.2 million of existing cash and cash equivalents into certificates of deposit and thereby increase the Association's interest. Approximately $825,000 has now been converted with another $446,000 to be converted in September. There is the potential for more as the Association's future cash requirements become more defined. REVENUE: The month was up slightly, with both golf and the Food & Beverage operations coming in on the plus side. HOA was slightly below with lagging home resales being the major culprit. EXPENSE: The HOA, under budget by $72,520, was principally responsible for July's excellent showing. There were numerous accounts, within the HOA cost center, that were below budget. The large items were utilities, under budget by approximately $30,000 and maintenance expense, approximately $11,400 under budget. Golf, over budget by $7,204, actually includes a charge of approximately $40,000 due to under accrual of irrigation expense in June. FUNDS: The total of all funds decreased by $529,649 primarily due to the purchase of a number of pieces of major golf course maintenance equipment (mowers, mechanized sand trap rakes, etc.). BUDGET for 2018: The Board, working with the Finance Advisory Committee, our staff and the District Delegates, are into the second draft of the 2018 budget. It is very early in the process, but initial results are projecting an increase in the monthly assessment of $7 to a total of $252. State mandated increases in hourly wages, increasing medical costs, increasing food costs and a 15 percent increase in water rates are some of the elements driving the increase. Additionally, there are a number of significant unknowns including vendor responses to several large contracts that have been put up for bid. Those vendors are subject to some of the same pressures (mandated wage increases, medical costs) as the Association. Homeowners are urged to attend and participate in the budget planning sessions open to homeowners. BOARD OF EQUALIZATION (BoE): The California State BoE has conducted a tax audit of the Association for the years 2014 through 2016. The auditors concluded the Association has been 'under reporting' revenue and thus shorting the state on taxes. In general terms, the state contends the restaurant is not charging enough for the portions served. In the lounge, the state does not accept what we demonstrated as our standard alcohol pour. The auditors have assessed the Association approximately $200,000 in taxes, penalties and interest. The Association absolutely disagrees with the BoE findings and intends to aggressively defend its position. The initial step, retaining an attorney specializing in tax matters of this nature with the state, has already been accomplished. DELINQUENCIES: Increased from 2.2 percent of all homeowners to 2.5 percent. The balance owed increased from $134,512 to $139,049. FINALLY: Did you know "Your attitude, not your aptitude will determine your altitude." ~ Zig Ziglar Comments: John Clark at jdclark@dc.rr.com.

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