Jack’s Point Residents & Owners Association Inc
PO Box 2016 Wakatipu Queenstown 9349 New Zealand Tel. +64 3 450 2050 (Extn 2) Email: email@example.com www.jackspoint.com
28 June 2013
Dear Member Jack’s Point Resident JPROA – Levies 2013-2014 Every year the JPROA sets the levies for the operating year of July to June and issues a levy statement and forecast out to 2016. This is attached. This year, the levies are between 0-9% below the total levy forecast made last June. JPROA Levies Property Band A Property Band B Property Band C Property Band D Property Band E Homesites Water usage (per cubic metre) Waste Water usage (per cubic metre)
Forecast $ 2,037 $ 2,104 $ 2,168 $ 2,285 $ 2,367 $ 4,201 $ 0.97 $ 0.97
Actual $ 2,033 $ 2,088 $ 2,143 $ 2,228 $ 2,318 $ 3,807 $ 0.92 $ 0.92
$ 997 Incl Rebate
We have put this report together for you to provide details of the upcoming levies and in general terms how they will be spent. The following is information about the levies and details that relate to the levies for the 2013-14 levy year.
How Levies are Set The JPROA is required under its Constitution to set levies based on the budgeted cost of services. Overall the budget is based on only having sufficient funding for operating costs that are deemed necessary in this establishment phase of Jack’s Point where the resident population is in its infancy. Sinking funds, which are a significant component of the levies, are being phased in over a number of years to reflect the slower “consumption” of assets during this phase and are reviewed annually to determine if they can be phased in over a greater period. This relates to the rate and pace of consumption of assets such as roading. Five years ago, as a response to the substantial challenges posed by the Global Financial Crisis, the JPROA reduced the levies by approximately 50%. While portions of the reduction related to sinking funds, a portion covered operational services. Over the last 3 years, the JPROA has been slowly moving back towards reincluding these in order to deliver the services at a level originally planned and which the JPROA judge is an appropriate level for Jack’s Point property owners. Levy Structure The levies structure is set out in the Constitution as Fixed Charges, Variable and Proportional Charges (for a group of properties) which include a general variable and a roading variable charge, Connection Charges and Special Charges. The JPROA now has 6 years of data including 3 years of very detailed cost breakdowns and
can therefore budget more accurately.. During the coming year the JPROA will be reviewing how it allocates costs and may alter the way in which levies are split. While there is unlikely to be any substantial changes in the total levy per owner, the aim is to provide a more accurate cost allocation and breakdown of the levies. The JPROA is obligated to set levies in a manner which is fair and equitable and we judge that the levy breakdown could group costs in an allocation that better reflects the services provided by the JPROA. QLDC Rates JPROA levies need to be reviewed in conjunction with QLDC rates which were recently re-accessed as a result of the JPROA submissions in 2011/12. QLDC has announced that this year the average rates increase will be zero. The JPROA will continue to make submissions to the QLDC on both commercial and residential rates reducing any areas that the JPROA believes are being overrated when taking into consideration the services paid for under JPROA levies.
JPROA Budget 2013/14 All figures in this report are exclusive of GST unless otherwise specified. Notes are included for both JPROA and Coneburn Water Supply Company. We have provided as much detailed information as reasonable while protecting that information which is commercially sensitive. The committee have reviewed the levies and have had access to the background information that was used in establishing the levies. Golf Levy The existence and on-going maintenance of the golf course is an integral part of Jack's Point. The JPROA has registered in its favour two Golf Course Encumbrances over the golf course land. These Golf Course Encumbrances provide JPROA members with, amongst other things, secure and on-going rights of access to the golf course (as either a member of the Golf Club or with discounted Green Fees). These benefits include the right to access the golf course subject to any rules and regulations imposed by the golf course operator and the resulting value-add to property values at Jack’s Point due to a well operated and maintained championship golf course. The encumbrances also obligate the JPROA to pay the Golf Course Maintenance Levy (referred to as the Golf Levy in the encumbrances) to the golf course operator so that JPROA members can enjoy these rights of access. The Golf Course Maintenance Levy is made up of annual fixed fees which are set out in the Encumbrances, a copy of which is attached to the Constitution and is payable by all Members of the JPROA whether or not they choose to access their golf rights. This total golf levy is adjusted each year based on the CPI movement using a calculation defined in the Jack’s Point Constitution. Golf Course Maintenance Levies do not form part of the JPROA income as they are passed directly onto the golf course. During the establishment phase of Jack’s Point the Golf Course Operator has passed on substantial discounts to JPROA members in the rebating the initial golf levies (which were agreed to and included in the Golf Deeds) and since these expired, rebates to the golf levy determined by the calculation set out in the encumbrance. Combined rebates have totalled circa $400,000. The total number of properties has increased over 2012/13 (mainly with the completion of the Cunninghams Road properties in The Terraces North) so the total golf levy will be paid by more properties over the next levy year. This year, the total golf levy is $635,252 which equates to $1,077 per property. The Golf Course Operator has offered a rebate of $80 per property reducing the net Golf Levy to $997 per property.
Income Levies – The bulk of JPROA income is sourced through the standard levies and these are budgeted to be a total of $1.22million. Note this excludes the Golf Levy which is not income to the JRPOA. Leviable Lots - With the development of The Terraces North area on Cunningham Drive, the JPROA has added 49 leviable lots bringing our current total of leviable properties to 590. Special Levy – During 2012/13 the JPROA set a special levy to offset its costs of legal representation, planning evidence and expert witnesses in opposition to the proposals by Skydive Queenstown Limited (NZONE) to increase skydiving activity at the Jardine air strip. The actual costs are in line with originally anticipated cost estimate of $150,000 to go to the Environment Court. The charge was intended to be collected over 5-6 quarters to ease the burden on members and the NZone Special Levy of $40 per member will continue for the first two quarters of the year. Water Usage Charges – The JPROA recovers water costs through both fixed and usage based charges. Consumption costs for water this year are $0.92 per cubic metre. Waste Water Usage Charges – The JPROA recovers waste water costs through both fixed and usage charges. The consumption costs are based on an assumed 70% of water use across the whole year and this year are $0.92 per cubic metre. The JPROA has recently reviewed water and waste water use and is able to confirm that across the whole estate the 70% figure is still valid. Transfer of Membership Administration Fees – This year the JPROA will increase its administration fees from $100 to $150+GST per property. This will better reflect the actual cost of transferring memberships. Other Income – The budget this year includes an allowance for rent from OGO for the period January 2014 to June 2014 and an estimate for penalty charges and web listings. Costs The main areas of costs associated with operating the JPROA are: Infrastructure: Reserves Maintenance - The open space maintenance budget is $150K per year which includes an increase in both base costs and the amount of work planned. Feedback from residents is that they would like to see a lift of maintenance in the openspace areas than the current level of service. Reserves Maintenance contracts are managed on a time and materials basis as the seasonal weather conditions can make maintenance requirements hard to predict. Our contract with Delta Utility Services requires the costs to be based on market rates and while the JPROA will be undertaking a review to confirm that the new rates are in accordance with this, at this stage we are confident enough that they are fair market cost and can be included in our budgets. Wastewater Maintenance - The annual maintenance cost of our secondary wastewater treatment system is $76K and is in line with the service contracts that were entered into when the plants were commissioned. Plant Replacement - The JPROA replaced a large number of trees in 2012/13 and has budgeted $20K for plant replacement in the coming year. In 2012/13 the JPROA commissioned a landscape management report and is implementing its recommendations. Some original planting has been more successful than others and where that is the case the more successful species may be selected. For example, some of the kowhais will be replaced with beech in exposed areas. Electricity - Power costs to JPROA and Coneburn Water Supply, particularly for the water pumps, street
lighting and wastewater treatment plants are nearly $65K. We have been able to negotiate better deals with suppliers over the last 2-years which have resulted in savings. Insurance - We are in the process of confirming our insurance right now and have budgeted $50k for JPROA and Coneburn which is a 5% increase. Following the Christchurch earthquake, many councils and utility providers have been unable to secure insurance for their infrastructure assets as the risk is seen as too large. This may impact on the JPROA’s ability to negotiate comprehensive cover and we cannot yet confirm the premiums at the time of setting the levies. Road Maintenance - Delta Utility Services are contracted to provide road maintenance services to the JPROA and our budget this year is $36.5K for roads and $108K for green space maintenance of road corridors. Capital spends, such as roading reseals, are covered by sinking funds. As with reserves maintenance, the market rates for road green space maintenance will be tested this year. Water Maintenance - Delta Utility Services are contracted to provide maintenance services for water to the Coneburn Water Supply Company and our budget this year is $73K. Delta is reviewing the procedures for fault responses to ensure that any faults on the water system are promptly rectified. Strom Water Maintenance - Delta Utility Services are contracted to provide maintenance services for storm water and our budget this year is $11K. This primarily consists of ensuring that the stormwater network is clear of any potential blockages. Site Management – With an ever increasing number of houses on the build, it is important that the site manager spends more time out on site ensuring that the Jack’s Point Estate is respected and cared for. They also oversee our green space management contracts and manage key programmes such as plant replacement and trail repairs. Our site management budget is $25K. Governance, Management and Administration The JPROA provides the services of a mini-council and with such a small team requires key team members who can deliver a wide range of services. The JPROA has engaged Jack’s Point Management Limited (JPML) to supply most of the services as allowed for under the controlling member status. Costs have increased on the past year due to: JPML has provided a considerable subsidy over the last few years and the scale of this subsidy has become unsustainable. JPML continues to provide a subsidy this year but at a decreased level. The increase in the number of private property owners at Jack’s Point which drives member services and general JPROA enquiries. The number of increasingly complex areas the JPROA needs to manage. For example, the Henley Downs plan change & NZone. The changing skill mix needed as the JRPOA enters a phase of increased demand on its infrastructure due to the increased resident population. Governance & Association Management – the JPROA is governed by an elected committee who volunteer their time and a chairman who is currently an appointee of the Controlling Member. The controlling member pays for much of the chairman’s time with the committee as part of its on-going support of the JPROA through JPML. Most committee members put considerable time and effort into the committee and the JPROA expects this year to propose to JPROA members to elect to discount the levies of committee members as an honorarium in recognition of this. The committee is assisted by an expert Governance Adviser who is contracted to supply the services via JPML. The JPROA management is spread over three part time roles within JPML to deliver a full service. In the coming year we will be focussing on rolling out projects which will reduce our costs while improving services
to our members. We will be continuing to assess the skill sets which will deliver the best services to the JPROA while retaining the expert knowledge and experience we have in the team. Governance & Management is budgeted at $107K for JPROA and $20K for Coneburn in the coming year. Member Services and General JPROA Enquiries– Since November 2011 there has been a 70% increase in the number of private property owners at Jack’s Point and this trend is expected to continue as the main corporate land holders (Fletchers Residential, Crown Asset Management and the Developer) sell their portfolio of property. The replacement of a single corporate property owner who holds a large number of lots with a group of individual property owners brings numerous benefits but does involve considerably more cost in delivering member services and responding to general JPROA enquiries. To address this and to continue to deliver the services to our members, JPML will be creating a dedicated part time role to coordinate member services and general JPROA enquiries as well as looking for opportunities to deliver more services on line. Member Services and General JPROA Enquiries are budgeted to cost $50K this year. Financial & Accounting Services – Our finance and accounting services are supplied under contract by JPML. We have this year tested the market and are confident our budget of $94K for JPROA and $9K for Coneburn is at market levels. As the JPROA accounts are audited each year the accounts need to be at a certain standard. Other Services – the vast majority of DRB costs are recovered, however the JPROA has a small budget for non-recoverable cost for example DRB process improvement activities and being able to review guidelines as Jack’s Point develops. Other Costs Consultants –the JPROA has budgeted this year $33K for consultants. The appointment of consultants allows the JPROA to engage experts as needed including having a roading engineer inspect all roads annually. Legal Services – the JPROA manages substantial assets and must act to protect the rights of its members. As many of the issues we deal with become more complex we need to engage expert legal advice. In the last twelve months the JPROA entered into an agreement with Preston Russell to provide the majority of its legal services. Other - the JPROA also has budgets for snow clearing & gritting, Lake Tewa management, pest control, fish care, rates, newsletters, information & maps, website, office space and office costs, interest and bank fees. Where we can make savings during the year or earn extra income, we can put those funds towards discretionary projects. Sinking Funds Sinking Funds are being progressively introduced at Jack’s Point. This year as we have had better information as the assets were loaded into Bizeasset and the Infrastructure Subcommittee has been able to start the process of assessing the economic life and current “consumption” of the assets. There is still considerable work to do in the coming year on this however the committee has enough confidence of the outcomes of the work at this stage to make the decision not to adjust the sinking funds from the last 12 months. It is important that the remaining economic life of assets is determined by a qualified professional on a regular basis. The JPROA is having its infrastructure assets valued this year to assist with calculation of sinking funds and for insurance purposes. The one exception to this is water, where equipment failures which were not totally covered by insurance means that upon review the committee has increased the sinking above 2012/13 levels although still 19% below the forecast.
Payment of Levies One quarter of the Annual Levies are payable to the JPROA on the first day of each quarter. In the interests of operational ease and because the JPROA charges penalties for late payments, the JPROA in general requires levies to be paid on the 20th day of the following month. The exception to this is where a member sells a property before the 20th of the following month where all levies and charges must be paid before the JPROA is in a position to transfer the membership to a new owner. Levies can be paid by electronic bank transfer or by cheque, referenced by the account number that is on every invoice. During the coming year, the JPROA will begin accepting payment by direct debit and by credit card (payments by credit card may incur a fee to cover costs) Invoices You will shortly receive your invoice as normal for the levies for the quarter beginning 1 July. This year’s quarterly levies per property will be: Excl GST JPROA Standard Levies Property Band A Property Band B Property Band C Property Band D Property Band E Homesites Plus NZone Special Levy (July & October quarters)* Plus Golf – All Properties Plus Waters Usage Charges for previous quarter Waste Waters Usage Charges for previous quarter (Excluding Preserve)
$ $ $ $ $ $
508.25 522.00 535.75 557.00 579.50 951.75
$ 584.49 $ 600.30 $ 616.11 $ 640.55 $ 666.43 $ 1,094.51
Variable – Depending on Use Variable – Depending on Use
*Special Levies may be amended during the year I trust the above provides adequate details of the levies for the year 1 July 2013 to 30 June 2014. If you have any queries, please drop us a line via email (to firstname.lastname@example.org) so we can provide you with the necessary information to address your query.
Steve McIsaac Chairman