WEAVER: Residents believes money is being co-mingled
Posted
Wake up Sun City West residents! Our APF is being raided.
In the recent budget proceedings and the governing board meeting May 15, the board has started to take the position that Asset Preservation Funds can be used for new assets in addition to repair and replace expenditures and the 2020-21 budget proposes to spend a few million on capital expenditures beyond the income we expect to receive for APF.
The GB will also soon vote to reduce the percentage of fully funded R&R APF balance from the 2017 goal of 70% to 40%. Thus it will not appear Sun City West will be spending needed funds because they reduce our perceived need. The 70% target was derived from a comprehensive APF study and presented as part of the fiscal year 2017-18 April 25, 2017.
According to current budget forecasts, the board expects to spend approximately $37.5 million on capital spending over five years. This is $7.5 million per year while APF income only averages approximately $5 million per year. Deficit spending cannot be sustained and will affect Sun City West’s ability to do needed R&R in the future.
Last year a local consulting firm advised the governing board regarding effective, fiduciary use of an asset preservation fund. The financial consultant was clear that the use of the APF is to preserve current assets and not to fund new assets. Weeks later Sue Fitzsimons asked the board if reserve funds could be used for new assets. GB told her the APF funds are solely for R&R.
APF for new assets and deficit spending are wrong.
If you spend more APF dollars than your APF income you start to deplete your asset protection and security. You can understand this from your own household budgeting.
The problem is more severe when you are building new assets while depleting the APF money needed to maintain asset function and value. The spent funds plus 70% (or 40%) needs to be replaced for adequate coverage.
