News From Board of Directors

Friends and Neighbors,

 

2024 is a new year and your new Board of Directors is hard at work making substantive changes that you will be able to see in your neighborhood and feel in your semi-annual assessment … in a significant and positive way.

The first major initiative is now complete and involves two key financial strategies to improve the cash management effectiveness of Valencia resources.  The first strategy involved moving the capital reserve and excess operating funds from low performing financial vehicles at First Citizens Bank to high performing financial vehicles at Fidelity Investments.

The $185,000 balance of the capital reserve fund is now earning 4.98% invested in the safest investment available in the world, US Treasuries.  These funds are liquid within one business day, require no active management of maturity, and they were previously earning 0.35% at First Citizens Bank.  This represents an earnings rate that is 14 times better and actually even reduces risk.

Excess operating funds are now earning 2.69% invested in a Money Market account.  The funds are always liquid, FDIC insured, and they too were previously earning 0.35% at First Citizens Bank.  First Citizens does not offer a commercial Money Market product and this represents an earnings rate that is 7.7 times better with no change in risk.

The second financial strategy implemented is to make semi-annual contributions to the Capital Reserve as opposed to the monthly contributions made previously.  Since our assessments are semi-annual, this strategy gets significant resources ($38,651 in 2024) into the highest earning vehicle we have faster where they can grow faster, with no impact to our operating cash flow.  Funds will spend significantly less time in lower returning accounts and maximizes the investment earnings they generate.

The net impact of these completed strategic cash management initiatives is a cash earnings improvement of $10,365 each and every year compared to the previous strategy.  To put that into perspective that represents the equivalent of completely eliminating the cost of the management services and receiving those services free each year.  Every dollar of this efficiency will reduce assessment each year going forward (8%) … and we’re just getting started.

Your Board is aggressively working on several additional initiatives, some of which have the potential to offer a similar favorable impact on future assessments, in a sustainable way.  Initiatives such as:

• Landscape bid specifications and contract development to introduce broad competitive bidding and contract language that both protects our interests and improves our ability to hold the contractor accountable for results.
• Insurance coverage reviews and rationalization to ensure that we purchase only the coverage we need, eliminate coverage overlap, and shop widely for the best policy rates.
• Capital reserve analysis and methods that review and rationalize each reserve item and refines the estimates that drive assessments, both regular and special.
• Building a ‘coalition of the willing’ with similar neighborhoods in the area that have similar needs to pool and leverage a greater purchasing power and achieve economies of scale.
• Website development to improve bi-directional communication and transparency.
• Establishment of a Valencia Modification Review Board so that requests for approval of property changes can be reviewed and acted upon by our friends and neighbors that live in Valencia as opposed to others that do not.

 

It’s a privilege to serve on your Board and we will keep you informed as we make progress on your behalf.