Q3 Updates and 2024 Budget

As we approach the end of Q3, the board has some updates on a handful of things and a discussion of our priorities and the budget as we head into 2024.

The long, hot and dry summer has been especially hard on everyone’s landscaping including the Association. Continue to keep irrigation systems in good working order and water lawns according to the current City of Austin watering restrictions. Sod that has browned and goine dormant due to heat and drought should revive this fall if you’ve kept up with watering thoughout the summer. As a warning, if you are found in violation of current watering restrictions, the City of Austin can impose fines or even cut off your water service as many residents of Steiner Ranch have recently discovered.

Continue to care for your lawns and landscaping according to the standards published in the current Design Guidelines and other documents. Lawns are expected to be kept mowed and treated for weeds. Driveways, sidewalks and curbs are expected to be kept neatly edged and brush and limbs encroaching on the sidewalks are expected to be kept trimmed back. Dead or downed limbs and branches must be removed promptly. Bare dirt is not allowed; when cooler weather arrives, either re-sod or use mulch and other plantings to maintain a neat and tidy appearance. Nothing on your Lot should appear overgrown or unmaintained.

Right now, the board does not see the need to do a special assessment related to winter storm cleanup. We have been paying our vendors out of cash reserves as invoices come due and submitting to insurance for reimbursement. Right now, we have been reimbursed for some but not all of our expenses. It appears that we may need to get the Association attorney involved in order to ensure that our insurer pays all of the cleanup expenses it is obligated to pay under our policy. The currently outstanding amounts due for reimbursement are not significant enough to impact our operations but may cause us to temporarily delay or scale back some of the landscaping improvements we had planned for this year.

Earlier this week the board held the annual meeting to review and approve the budget and assessment amount for 2024. Most of the Association’s annual operating budget is allocated to paying our bills for services that keep the common areas mowed and irrigated, cleaning and upkeep on the pool and courts, insurance, management fees, etc. and keeping things in good working order by fixing things when they break. Our target operating metric is that the operating budget take up no more than 80% of the annual assessments with the remaining 20% allocated to our capital account to be spent on items identified in our triennial reserve study as in need of replacement or renovation or on “soft” projects such as large scale landscape refresh / renovations. Like many of you have experienced firsthand, inflationary pressures have increased our costs across the board as well. Of particular note, our property and casualty insurance costs increase by around 50%, going from around $14,000 to $21,000 in just one year. In years past, we have tried to shop around for alternative coverage but with only a small number of A rated issuers providing coverage for HOAs at the level that we require, our options here are limited. Management fees increased at the contracted 3% as did various other services.

The last two years have been especially hard on our irrigation system. The long, hot summers dry the soil which causes shifting and pressure on the irrigation water lines. This results in costly efforts to locate the source of the leaks and make repairs. In each of the last two years, we’ve spent upwards of $20,000 annually to keep the system in good working order. This amount is signifiantly higher that what was budgeted in each of those years. As a result, we’ve substantially increased the irrigation system repair budget for 2024 to be more reflective of recent historical costs.

The subject of wildfire risk is one that has been on the minds of the board for several years. With the recent fires in Maui resulting in significant loss of life and property, combined with damage from this winter’s ice storm adding to the fuel load in the greenbelt canyonlands, the board is approaching this matter with new urgency. We have recently begun working with a local firm called Environmental Survey Consulting with extensive experience in wildfire risk mitigation. This firm currently works with various departments in both the City of Austin and Travis County on land preservation and restoration projects including wildfire risk management. For 2024, the board has allocated $50,000 to develop a comprehensive, multi-year wildfire risk mitigation plan and pilot project with the goal of having a measurable impact on the community’s wildfire risk. We’ll be able to share more details on this effort as we get further into 2024 and better clarity on the elements of the plan and its approach to the problem. At a high level, we are looking to address three key elements: 1) improved canyonland access for first responders and firefighting equipment; 2) construction of fire breaks at key points; and 3) fuel reduction.

After accounting for this new effort and all of our other increased costs, at the current assessment level of $578 annually, we would be almost 9 percentage points above our target operating expense ratio of 80%. Accordingly, the board has unanimously approved an increase of $57 to $635 annually in 2024, payable in two installments, due Jan. 1 and July 1. This represents a 9.86% increase which is is just below the 10% threshold permitted by the Association’s governing documents. Even with this increase, the operating budget is still just a bit over the 80% target.

Announcements and 2023 Budget

A couple of announcements from the CCHOA as we head into the 4th quarter of the year:

If you missed bulk-item pickup earlier this month or are still hanging on to stuff you’d rather part with, hang on to it just a little longer for the neighborhood garage sale that will be held the weekend of Oct. 22. As usual, we have signs at the entrances to the neighborhood and will publicize the event through our normal channels. We do these twice a year and there is usually good traffic through the neighborhood by bargain hunters so if you plan to participate, you have a good chance of selling a fair bit of your unwanted stuff. You may feel free to put signs out directing visitors to your sale but you must collect them afterwards.

The pool will close for the season on October 31 and will reopen in generally in April of next year. Our master of amenities, Dave Marshall, has expressed a desire to make the pool patio/breezeway available for private reservation during the off season so this is something we would like to try. While we don’t have a firm operating plan to support this desire, we would like to work with Members interested in using this facility for private events during the off-season to help us define a sensible and workable set of processes and policies. Please do reach out if you have an event coming up and are interested in booking this facility.

The Board met on Monday, the 19th of September to approve the budget and set the regular assessment rate for 2023. The Board unanimously approved an increase of $52 to the annual assessment, going from $526 the prior two years to $578 for 2023. In addition to our normal 3-5% increases to our landscaping, management and a handful of other contracts, there were significant increases to a several other operating line items.

We saw substantial increases to our property & casualty and liability insurance rates. We had been expecting an increase in property damage insurance last year due to underwriters attempting to recover higher costs associated with winter storm damage but there were increases across the board for all types of insurance we carry. We use an insurance broker who shops multiple underwriters in order to build a complete package of the best bids for each type of coverage we carry. Given there are only a handful of A-rated underwriters who cover HOAs, it is very unlikely that we can lower this expense by bidding with another broker. We have tried this approach in years prior with little success and have no reason to believe things have changed since then.

After almost five years without an increase, our lifeguard contract will increase by over $13,000 annually due to higher expected wage costs. Since we have been with this vendor for several years, we are due to shop this business with other vendors to make sure this is inline with how the overall market is trending. Additionally, our pool chemical costs have increased substantially. The supply of chlorine for pool sanitization was constrained last year by a fire in a major manufacturing facility. This resulted in significantly higher costs for chlorine sanitizer. Even though chlorine sanitizer is once again readily available, it appears that these price increases are going to be the new normal so we have adjusted the budget to reflect the increase.

We have continued to chase down leaks and make repairs to our irrigation system in order to control our water expense. Aggressive management on this front has put us in a position to lower our water budget by around $18,000. For 2023, we have reduced the water budget from just over $90,000 to $72,000.

After accounting for higher operating and maintenance expenses and somewhat offset by a lower water budget, the Association’s budgeted operating margin for 2023 will drop to just over 21%. The board’s target operating margin is 20% or higher. What this means is that in order to stay above the 20% target operating margin, another increase will be likely in 2024 due to normal year-over-year cost increases .

The Association budget process begins in mid-summer with approval typically occurring in September or October. In prior years, the board often sought cost estimates on capital and large discretionary projects targeted for the coming year to assist with budgeting and planning. This often meant that it could be up to 15 or 16 months before a project got underway. For 2022, we had a long list of landscape refresh and renovation that we had to scale back or defer since by the time we were ready to get started, the executable bids bore little relation to the original, cost estimates provided. For 2023, we are altering our approach in that rather than identifying every project with a dollar amount for next year, we are allocating a pool of funds (with a contingency hold back) toward a list of projects that we’d like to address. A handful of these projects are high-priority “must do” based on our reserve study’s recommendations and include replacement of the shade canopy structures at the pool. The remainder are either high-priority maintenance, repairs and upgrades, or fall into the discretionary category of ongoing landscape refresh and renovation. Each board meeting from now through next year we’ll look at where we are, assess any new needs, discuss prioritization, and review bids. Presently, the major projects we’re looking at include:

• Pool canopy structures - total replacement;

• Addition of shading canopy at baby pool;

• Landscaping and solar lighting at the south entrance median;

• Repairs to south entrance median tree well stonework;

• Side-street median bed refresh throughout neighborhood;

• Pool area - drainage improvements, tree replacements and bed refresh;

• Pool / pool house - repairs to swim lane hooks, rust treatment, paint work;

• Courts area - Landscaping, walk path, and drainage improvements;

• Completion of Boulder Lane center island bed renovations;

• Completion of upper tennis court conversion to LED lighting;

We think this approach offers a little more flexibility to select projects based on evolving priorities given the current environment of unpredictable, escalating costs that make it difficult to plan and estimate.

Finally, our 2021 audit is completed but I need to make a correction to my last update when I stated that the steps we took earlier this year to clean up the books related to amenity key card deposits for “this year’s audit” would clear up the “qualified opinion.” It turns out that my timing is incorrect. The audit that was just completed this month is for fiscal year 2021. The board did not take steps to resolve the “qualified opinion” until earlier this year, 2022. Therefore, the 2021 audit has still resulted in a qualified opinion. The audit that will be done next calendar year, for fiscal year 2022 will have the adjustments necessary to resolve the qualified opinion. Aside from this minor issue resulting in the “qualified opinion” the audit uncovered no problems with the HOA finances.

As always, you can reach the full HOA board at board@canyoncreek.net with questions or concerns. Thanks again for the trust you have placed in us. On behalf of the board,

Brett Funderburg
President, CCHOA

Q3 2022 Update / Reserve Study

Just a quick update on a couple of things of interest to Members. The HOA board meeting scheduled for this Monday, September 19 at 6:30 will be to approve the 2023 budget and set the assessment amount for the year. All are welcome to join us online where we will go through the budget line by line. For 2023, we have finally seen the large increase in our insurance rates that I was expecting last year as insurers look to recover the huge costs associated with the winter storms from recent years. Overall, our renewal is coming in at approximately 50% higher. In addition, as identified in our recent reserve study, we are expecting a doubling of our spending on concrete fence maintenance to approximately $70,000 annually. If you care to review the reserve study report, it is available here.

We have also seen higher maintenance spending on our irrigation system this year. One bright spot is that with the City of Austin’s conversion of our legacy water meters, we have been able to identify a series of leaks in the irrigation system accounting for roughly $10,000 in annual water loss this year. As we have no clean baseline to work from, it is unknown for how long this has been going on or what the cost has been. Repairs to these leaks are ongoing but we expect less than a 2 year return on investment in the cost of leak location and repair.. Once these are fixed, we’ll be able to establish a good baseline and be able to identify the presence of new leaks almost immediately going forward. For a couple of years now, the board had been investigating various resource monitoring solutions for this purpose so it has been advantageous that with Austin Water’s conversion to this new technology, we now get this capability at no cost.

As I signaled in the Q2 update, with the higher costs we are experiencing, I expect to propose the full board approve an annual assessment increase of just under a 10% in order to maintain our target operating expense ratio and to fund necessary capital maintenance and improvement projects.

The annual audit for 2021 is underway. With the solution to the handling of amenity key card deposits in effect, I expect no issues and a clean bill of health. This should wrap up before the end of the year.

Finally, our neighborhood scouts have started their annual popcorn sales fundraiser. For a number of years now, the scouts have supported the Canyon Creek HOA through various volunteer service projects. We like working with these young, future leaders of our communities and try to support them in return when we can. Please consider supporting our neighborhood scouts with a popcorn purchase if you can.

As always, you can reach the full board with questions or comments at board@canyoncreek.net

Best,

Brett Funderburg
President, CCHOA

Q4 2021 / Year End Update

As we close out 2021 and enter 2022, I want to share updates on a few things of interest to Members.

As a reminder, Association dues for the first half of 2022 were due on Jan. 1. The amount is unchanged from last year at $263. Late fees and interest will begin to accrue if not received by the end of the month and continue for each month thereafter until the balance is paid in full. Payment plans are available for Members having financial trouble due to job loss, health issues, etc. Getting on a payment plan will stop fees related to collection attempts so please do communicate with us early if you are having difficulty keeping current on assessments.

The first board meeting of 2022 is Monday, January 17 at 6:30pm. Notices will be going out via e-mail so keep an eye out for the details if you wish to join. For convenience, the Board has decided to continue virtual Board meetings via Zoom for the foreseeable future. There is an open forum for Members to address the Board publicly at the start of each meeting. Of course, we are also available by e-mail at board@canyoncreek.net if you prefer a less formal method for communicating with us.

The Annual Meeting of Members is tentatively planned as an in-person meeting and will be held at 6:30PM on March 7, 2022 at Peace Lutheran Church just north of Boulder Lane on 620. The venue may require attendees to mask up depending on the Austin-Travis County Public Health’s Covid-19 Risk Based Guidance at the time of the meeting. This information will be communicated to all Members prior to the meeting.

The annual audit of the Association’s books and records for 2020 was completed in Q4 under the direction of a new accounting firm and has resulted in a “Qualified Opinion” related to cash and liabilities associated with amenity key card deposits collected under the prior management company. Prior to Spectrum Management, amenity key cards were issued to Members on a cash deposit basis. Key cards could be turned in and the deposit reclaimed, usually upon sale of a home, but often cards were simply left behind for the new owner. Occasionally, key cards would be lost, rendering the deposit unrecoverable. Properly accounting for these events requires detailed recordkeeping. Unfortunately, the records that transitioned to Spectrum from prior management are incomplete so we are unable to accurately tie the amenity key card cash deposit balance to an accurate list of redeemable amenity key cards. To clear this up and move forward with an “Unqualified Opinion” in the future, the Board has decided that any Member in possession of a working amenity key card that was NOT issued by Spectrum Management may turn in their card prior to April 15, 2022 and reclaim their $20 deposit. After this date, any outstanding key card deposits will become the property of the Association, legacy key cards will be ineligible for return and become the property of the holder in accordance with the current amenity key card request policy. If a legacy key card is redeemed and a new card is subsequently requested, Members will need to follow the then current procedures for purchasing a new amenity key card. If you are already in possession of a working key card and wish to keep it, then no action is required on your part. Your card will be reclassified as a “sale” to you and become your property in accordance with the current keycard request process. If you wish to redeem an eligible key card and reclaim your deposit, e-mail Spectrum Management at contact@spectrumam.com with your request and address and our community manager will be in contact.

At the November meeting of the Board, we decided to make the covered patio available for reservation by Members during the winter off-season when the pool is otherwise closed for swimming. Use of this space is offered strictly on an “At Your Own Risk” basis so we are not requiring the presence of a pool monitor or lifeguard. Some operational details will need to be worked out as we gain experience over time with the types of events that Members are interested in holding. For example, a large party gathering may require posting a modest cleanup deposit that is fully or partially refundable depending on the condition the space is left in. Other types of events such as a small book club gathering may require no deposit at all. We’ll be working these types of details out in real time and they may be adjusted as needed so we do ask for patience and cooperation.

In December of last year, the Board made a change to our landscaping contractor for performance reasons. Our new contractor is Urban Dirt, a locally owned firm, with a number of very large contracts including Steiner Ranch, going back many years. With the completion of the pool renovation and repairs this past summer, we’ve now wrapped up the last of the major outstanding capital maintenance items from the last several years which frees up cash for some long planned investments in our landscaping. We have plans to refresh major portions of our landscaping with a more modern look and feel that incorporates clump grasses and other native and drought tolerant plants and annual and perennial color where appropriate while better managing our water usage. We have been working with this vendor for several months on preliminary design plans for this project and are looking forward to getting started in the coming weeks. This is a large effort that will take several years to fully realize.

In regards to landscaping compliance with your own home, the Board is aware that some Members feel they are being held to a higher standard than the Association is holding itself with respect to its Common Area landscaping and, in some respects, that is true. However, the Association is fiscally constrained in its ability to fund upwards of five linear miles of improvements along both sides of Boulder Lane and within the Amenity Areas. For this reason, it is all the more important that Members put in a little extra effort to help us keep the neighborhood as a whole looking its best as we get our Common Areas back to looking their best. To get Members excited and incentivized about landscaping compliance, we are launching this year a “Yard of the Month” competition. Each month in 2022, we’ll choose one property in Canyon Creek that represents the highest standards of landscape care and keeping as determined by a majority of the Board. That homeowner will be awarded a $50 gift card to Lowe’s for their efforts (and may not repeat within a 12 month period). Since we are looking to these homes as models for the rest of us, we ask that winners agree to let us share your address and a few photos with the rest of the Members.

With the Marshall fire in Colorado in the news recently, the subject of wildfire risk is on the minds of the Board and many residents. This fast moving, wind-driven fire in the Denver area consumed 6,000 acres and destroyed aver 1,000 homes in just a few hours. We often encounter similar conditions here in our area so our risk is high for this type of event occurring. The HOA has previously organized greenbelt cleanup and wildfire fuel reduction efforts in focused areas behind homes bordering the canyonlands but was forced to take a break due to COVID safety protocols. We would like to resume these efforts if possible this year but it is clear that we need much greater volunteer organization and participation going forward if this effort is to have a meaningful impact. If we have any residents in the community that feel called to service and are willing to help organize and lead a more structured effort to reduce wildfire risk in the community, the members of the Board would like to talk with you. This role will work closely with the Board, county and city officials and groups of residents to organize resources and coordinate risk mitigation efforts. If this opportunity to make a direct impact on your community sounds interesting, do reach out to us.

Finally, on the subject of community service, it’s time for Girl Scout cookies and we have multiple Scout troops in Canyon Creek who are ready to supply your cookie needs. If one of these adorable Scouts happens to pay you a visit, please do consider a cookie purchase to support her mission of leadership through kindness, service to her community, and development of lasting friendships. Canyon Creek HOA is a volunteer led organization and these are important values to cultivate in this next generation of leaders and community servants.

In closing, have a happy new year; let’s hope 2022 is better than 2021 and thanks for the trust you put in us. On behalf of the Board,

Brett Funderburg
President, CCHOA

Q3 2021 Update

As we close the 3rd quarter of 2021, I want to share status updates on a few things the board is working on. Many of you have no doubt noticed along Boulder Lane that we have begun the process of pruning and removing trees affected by the severe winter storms. The board has been working with an independent arborist in recent months to observe how trees in the common areas were recovering and to make recommendations to us on how to proceed with those that were distressed. It is upsetting that so many of our trees were affected especially since they are a key feature of our neighborhood that is not easily replaced. There were a few instances where trees were on the borderline between leave in and prune or take out. In deciding how to proceed with these, the board considered the overall aesthetics of each area giving consideration to spacing, future landscaping plans for the area and how the aesthetics would progress over the near and long term. In the coming days and weeks as this work is proceeding, you’ll start to see stumps being ground and this part of the recovery finishing up and then we’ll slowly begin the process of restoration.

At this time, we’re asking residents who have not already done so to begin clean up or removal of trees on their own property that have suffered weather damage. Our community inspector is now including tree inspections as part of his regular inspections and notices are being sent out. To help Members make informed decisions about how to proceed with trees on their own property, I’m including a link to information we’ve previously shared here, as well as including the arborist report for the trees in the common area. Most folks should find the arborist report very helpful in assessing their own trees since it includes many photographs and descriptions of common area trees with the recommended course of action. It is likely that you will find similarities to your own trees and can use this information to help guide you in your decision making and to understand the expectations in case you receive a notice from our community inspector.

The board meeting to approve the annual budget took place on Sep 22 at 6:30pm. The 2022 approved budget can be viewed here. The regular annual assessment will remain at $526 for 2022, payable in two installments due Jan 1 and July 1. In the operating budget, we allocated increases for regular concrete fence maintenance and tree trimming in the 5 year outlook. In general though, aside from normal increases in contract renewals, etc. the operating budget tends not to vary much from year to year. Major capital expenses, timings and target reserve balances are primarily driven by the triennial reserve study which is refreshed every 3 years with another due in 2022. With the major renovations and repairs to the pool bathhouse and pool now complete, we are turning our attention to the common area landscaping and expect to make a number of small to mid-sized investments in the capital expense budget to refresh and restore landscaping up and down Boulder Lane next year. In addition, we have a nice upgrade to the landscaping at the south entrance median happening next year as well with regular maintenance planned going forward. If all of our numbers and projections are correct, we should end 2022 with about $50,000 in excess of our most recent reserve study’s target reserve balance. This will put us on a nice footing heading into 2023 where we can begin to consider possibilities for new capital improvements as opposed to catching up on maintenance and repairs that were neglected in years prior.

As always, send questions or concerns to board@canyoncreek.net.

Best,

Brett Funderburg
President, CCHOA

Q3 2020 Member Update

With the 3nd quarter of 2020 behind us, I wanted to give an update on several items that may be of interest to Members.

Vikram Shah, one of our newly elected directors from this year’s Annual Meeting has had to resign from the board due to unforeseen work commitments. We wish him well but this is disappointing news as Vikram was shaping up to be a valuable asset to the community. Hopefully he will be willing and able to serve at some point in the future. In the meantime, the Association’s Governing Documents empower the remaining board members to fill the open seat so there will be a fresh call for candidates going out and we’ll be reaching out to the other candidates from this year’s meeting to gauge interest and try to set up some interviews.

You may have noticed that the pace of repairs and maintenance has slowed considerably in recent months. We made the decision to cut back on our planned capital spending while we waited to see what impact COVID-19 would have on our cash position. Thus far, it appears that Member delinquency is only slightly higher than usual so we plan to gradually resume our planned maintenance and repair spending. If your household’s finances have been negatively impacted by the pandemic and you are unable to stay current with your HOA assessments, please reach out to Spectrum to work out a payment plan. This will allow you to avoid expenses related to collection on a delinquent account.

The last major project for this year is to rebuild the dumpster enclosure located in the community center parking lot. This project is currently out for bid and we are not expecting it to impact the use of any amenities at the community center complex. The basketball court remains closed due to coronavirus restrictions and we have identified a handful of repairs to the gate and fencing that we would like to undertake at some point but this may get pushed to next year. The tennis courts were resurfaced the week of July 20 following the installation of a retaining wall to address erosion and washout issues that were degrading the court surface sooner than expected and we hope our tennis players are enjoying the refreshed surface The pool will be closing for the season on October 31 and we want to thank everyone for cooperating with us on complying with the various and changing restrictions we were forced to implement due to the pandemic. We also want to especially thank our lifeguards this year, many of whom are from within the neighborhood. We do appreciate you all.

The Board did conclude its 2021 budget planning and adopted the new budget at the September meeting. In terms of direct operating expense, it looks very similar to the 2020 budget with a couple of exceptions. We did achieve a significant reduction in our property and casualty insurance premiums by switching carriers and in recent years, have placed a high priority on aggressive management and repair and maintenance of our irrigation system. This has resulted in big reductions in our water expense to the point that we are comfortable reducing the budgeted amount by about $10,000 heading into 2021. The big capital expenses for next year were identified by the independent reserve study and are primarily focused on some much needed repair and renovation around the pool including coping, tile, deck repairs and repairs to the plaster. In addition, we’re continuing to invest in overdue maintenance and upkeep of our landscaping, beds, trees, sod and hardscape including the concrete fence along Boulder Lane. The board welcomes input from Members at any time on other spending priorities which we may not have considered.

Our two primary management targets are: 1) an 80% or better operating expense ratio; and 2) capital expenses and reserve balances driven by the independent, triennial reserve study. With the series of assessment increases these last few years, we finally hit our target OpEx ratio of just under 80%. This has put us in a position to scale back assessment increases to a level in line with our annual 1.5 - 2% operating expense increases. I discussed this at the annual meeting and the feedback from members present was that having to remember to update auto-pay balances annually would be a source of error and likely lead to many unintended delinquencies and late fee expenses. In recognition of this, the board has elected to apply an approximately 8% increase to the annual assessment, bringing it to $526 annually. With this increase, we are aiming to avoid further increases until the 2024 timeframe assuming current trends hold and nothing dramatic affects our ongoing operations.

Finally, allow me to recognize a few individuals for their service to the community. First up is Sohum Sharma, shown here, who, as part of his Eagle Scout project, has done a very nice job constructing a new Gaga Ball pit at the community center. We are certainly grateful for his efforts and look forward to being able to use it when covid restrictions are lifted and this is possible. Congratulations to you, Mr. Sharma on achieving the rank of Eagle Scout!

Next up is current HOA member of the Board and licensed electrician, Mark Weaver, who, this year, has donated countless hours and literally tens of thousands of dollars worth of electrical work personally repairing and installing numerous security cameras, LED fixtures, wiring, conduit, breakers and all manner of gadgets; going so far as to even rent a scissor lift to replace a handful of lights at the pool parking lot with energy efficient LED lighting. Mark, thank you so much for your time and talent donated for our benefit - we appreciate you!

On behalf of the Board,

Brett Funderburg

President, CCHOA