2021 Fiscal Impacts to SAMLARC: Overview

As a Master Homeowners Association, SAMLARC is classified as a not for profit corporation, governed by Governing Documents (Articles of Incorporation, CC&Rs, bylaws, and rules adopted by the Board of Directors). These documents create legal duties and obligations for the Association to preserve the value, desirability, and attractiveness of the property that SAMLARC owns and holds a responsibility to maintain. To meet these duties and obligations, the Board adopts an annual budget with expenses that are determined in large measure as non-discretionary costs. The budget also takes into consideration the measures of Civil Code Section 5600 (a), which states that the Board must levy regular and special assessments sufficient to perform its obligations under the governing documents.

Annually, each Committee under the direction of the Board provides input and guidance into the preparation of the upcoming year’s budget. A Budget Workshop is held annually, open to the Membership, for the Board of Directors to consider, discuss and approve the upcoming fiscal year budget effective January 1. The Board held the 2021 Budget Workshop on October 6, 2020 and following much deliberation the Board approved the 2021 fiscal year budget for SAMLARC.

In order to maintain existing service levels, accommodate the rise in non-discretionary costs, avoid the potential burden of large increases, and protect the Corporation’s financial health, the Board approved an increase of $4.76 to monthly assessments beginning January 1, 2021. Key drivers of this increase include service contract increases, anticipated rate increases from Santa Margarita Water District, continued fire prevention Defensible Space work as directed by the Orange County Fire Authority, and necessary landscape maintenance. These drivers are briefly outlined in this article and will be further explored in forthcoming updates.

Service Contract Increases

SAMLARC’s service providers execute the operations of the Corporation, including insurance coverage, professional management, maintenance, repair and replacement of assets and amenities. Each vendor is anticipated to increase its contract rates in 2021 due to the effects of California minimum wage mandates as well as COVID-19 hardships. These businesses must increase their contract rates in order to accommodate wage increases and wage compression, while compensating for COVID-19 related hardship such as supply chain disruptions, payroll challenges, and operations modifications. SAMLARC must accommodate these increases in order to ensure that all assets are appropriately maintained.