September 17, 2010
Dear Daytona Beach Ocean Towers Unit Owner:
Proposed Budget #1 covers a 7% increase over the current budget and Proposed Budget #2 is a $40.5% increase
to fully cover Mandated Reserves if no Waiver is approved.
Our current Budget was adopted in 2007 and was a 6% Decrease from the previous budget.
This Budget #1 7% IINCREASE is required principally to raise the amount set aside in our DEDICATED
RESERVE FUND TO 10%
In the past Reserves have been funded with an extra fee each July invoiced at $57,192. This is 1/13th
or 7.69% of the annual total budget. This has not provided a sufficient "cushion" to avoid Special Assessments from
time to time for necessary Major Capital expenditures. In addition, lenders have become resistant
to writing mortgages for units in the building due to the meager Reserve set aside. As a result, sales are becoming
limited to CASH BUYERS. Such a limited market has a negative affect on the market value of All
units, whether or not they are for sale. An increase Reserve Fund of 10% or $79,554 invoiced annually would meet lenders
requirements and also enable us to build up a more realistic Reserve Fund.
Our Reserve Fund covers 8 basic Major Capital expense components. Based on their estimated replacement
cost and useful duration, we should be setting aside $125,500 annually to cover these espenses. Obviously, even this
7% increase to $79,554 annually falls short, but we do have the usual option of WAIVING full Reserve
funding. If this is is not Waived, annual invoices for the coming fiscal year would be 40.5% higher than those
To simplify payments, there will be just 12 INVOICES INSTEAD OF 13 EACH YEAR. The
new monthly payments will be:
$283 One Bedroom
$132 Business #12
326 One Bedroom 68
423 Two Bedroom
395 Business #15
140 Business #9
295 Business #16
132 Business #10
68 Business #110
There are no invoices for Association owned Residential unit 102 and Business units 5 & 11, and an additional
charge for utilities is added to Business unit 110.)
These results seem much higher per month, but by eliminating the extra monthly July payment, the 12 regular
invoices mean one bedroom owners will be paying just $198 more annually, one bedroom deluxe units will be $233 more, and two
bedroom units will be increased b y $435 per year. Collected funds will simply be deposited 10% to the Reserves Fund
and 90% to the Operating Account. This will also simplify bookkeeping.
Budget Ballots were distributed on September 24, 2010 and the tally will be reported at our Budget
Board Meeting on October 12, 2010 at 6:30 PM in the Clubhouse.