Financials

This page explains in a simplified manner how your dues money is applied to expenses. Detailed financial statements are also available on this page.

The HOA is a non-profit association. Your dues pay for expenses to run our subdivision. We have 94 acres of landscaping, 3 artificial lakes, a pool, pavilion, a large amount of fencing, and security systems. This cost is spread over only 289 homes.

The 2023 expense budget was developed based on analyzing historical actual costs and plans for the future. Details are available in the PDF file below. It is summarized as follows:

Category	Total Budget	Percent
Landscaping	$ 186,000	40%
Maintenance	$ 96,994	21%
Utilities	$ 73,100	16%
Misc. Operating Exp.	$ 14,150	3%
Administrative	$ 75,040	16%
Amenities	$ 25,500	5%
Grand Total	$ 470,784	100%

The annual dues from all 289 homes adds up to $460,843. The builders who own the unsold lots are required to pay dues also.

In prior years, after paying all expenses, the budget had money left over for Reserves. This year, expenses have gone up due to inflation and no additional reserve contribution is planned. In order to balance the budget so that revenues match the expected expenses, the board has budgeted for Cap Fees which are collected when houses are purchased. The board cannot guarantee that dues won't increase at some point down the road especially with inflation rates, but the budget has been set for 2023 with no increase in dues this year. Reserves are used as follows:

1. Delinquency coverage.
Certain homeowners are delinquent in paying their dues. If 1% are delinquent, as budgeted for 2023 by year-end, the other homeowners will have to cover the $4,608.43 of dues. Generally, the year starts higher and reduces as collections occur. As of the public financial statement for 2/28/2022, Accounts Receivable was $101,207 which (22% of the budget). In May 2022, there were $34,552 of unpaid assessments (7.5% of the budget). This can create a cash flow crunch when residents do not pay their dues as required to maintain operating expenses.

The board would like to avoid having to raise dues. When residents do not pay their fair share of dues, it falls on other residents to pay the bills. Electricity alone (street lights, etc.) is around $45,000 annually. Other bills such as landscaping, irrigation, pool and lake management, and maintenance such as repairs and painting come from the assessment payments. When so much of the budget is not collected, it slows down or stops these improvements.

The HOA is enforcing collections. Every effort is made with multiple notifications to the resident and working on payment plans to resolve the situation but in some cases legal action has been required. The HOA when necessary will forward delinquencies to the attorneys.

HOA dues are considered debt under Texas law. Failure to pay those debts can affect credit ratings and are public records. Residents may incur additional costs for interest, late fees, fines, and legal fees. The HOA second lien will prevent a house sale from closing until debts owed to the association are settled. In the most severe delinquencies, the HOA will file a lawsuit to foreclose the property as a last resort.

While this is shocking to some, it is not unusual for most subdivisions. Reserves have to cover expenses for non-payers while these sums are collected, which in the most severe cases, can take up to 2 years for the legal process which can escalate to a lawsuit followed by foreclosure of the home, since the HOA has a lien on the property. Sometimes, delinquent accounts are collected when the homeowner sells the house since clearing the account balance is required to obtain clear title at closing.

2. 'Rainy Day' Expenses
Reserves cover large expenses that occur infrequently. These are things like fence replacements, pool re-decking and so forth. The HOA conducted a Reserve Study in 2020 to determine the amounts necessary to set aside for asset service life replacements over time.

3. Amenity Improvements
Reserves can be used to make amenity improvements. The HOA is not the Developer. The HOA can only make small amenity improvements based on available budget. One example would be the $11,000 playground shade covering.

In addition to budget surplus (if any), for example as delinquencies are collected or if expenses are managed within budget, Cap Fees also go directly to the Reserve account. Those revenues are used for minor amenity improvements and rainy day expenses.

More Info
Documents on this page provide additional information, including the official financial reports, the operating budget, and the Treasurer's report.