BULLETIN ARTICLES RELATED TO

THE PROJECT-WIDE AGREEMENT
(BULLETIN AUGUST 2011)

"PROJECT WIDE"

PART 2

This month we will continue our review of the Project Wide Agreement in place for property maintenance south of CR 466. Last month we reviewed what the agreement covers and how the expenses are allocated to the participating districts. This month we will look at how maintenance expenses for the numbered districts north of CR 466, which do not have project wide sharing, compare to those south of CR 466.

The primary responsibilities of all the numbered districts are maintenance of the common property within their district boundaries, their storm water system, entry way annuals and signage, villa walls, roadways and signage, recreation trails and tunnels and district boundary fencing. The numbered districts are all quite similar even though they vary by size from less than 900 acres for District 3 to almost 1500 acres for District 6. Many of the expenses for numbered districts, such as Personnel & Professional Services, Accounting & Auditing, Postage, Rentals & Leases, Insurance, Printing & Binding, Permits & Licenses and Legal Advertising, are roughly the same for each district and are little affected by the size of the district. Expenses such as Operating Supplies, Capital Outlays and Renewal & Replacement Reserves can vary with size of the district, but vary greatly from year to year as specific projects are undertaken in particular years. Other expenses such as Utilities Service (electricity & irrigation water) and Landscape & Repairs are a function of the size of a district (the area to be maintained, illuminated and irrigated).

Chart 1 below shows the eight (8) numbered districts that currently have significant residential populations (of the ten districts planned for The Villages). The disbursement expenses from the 2010-11 Budgets are shown grouped by the categories described in the previous paragraph. All numbered districts are responsible for maintenance of their villa roads, but only CDD4 (in Marion County) is responsible for maintenance of all their residential roadways. For that reason, the non-villa roads portion of the Road Maintenance R&R expense has been removed from the CDD4 expense shown, for comparison purposes. Also, only 33% of the CR42 maintenance expense is included in the CDD4 Landscape and Repairs entry since 67% is reimbursed to the District by other benefitting parties.

CCD1 CCD2 CDD3 CDD4 CDD5 CDD6 CDD7 CDD8
Personnel Services 19,611 19,611 13,946 26148 10,417 11,767 0 0
Professional Services> 236,956 274,649 234,784 293,315 289,168 267,681 222,230 258,016
Accounting & Auditing 10,654 10,654 10,654 10,654 10,654 10,654 10,654 20,450
Other Contract Services 183 183 183 183 183 183 0 0
Travel & Per Diem 5,000 1848 800 1,200 5,000 1,000 1,000 0
Postage & Misc. Charges 1,500 2,225 2,500 1,000 1,800 2,200 2,000 2,000
Rentals & Leases 500 1,000 1,500 1,000 500 1,000 0 0
Insurance 5,000 5,000 4,500 5,000 5,000 5,000 5,000 5,000
Printing & Binding 500 500 500 1,000 100 500 500 0
Permits & Licenses 250 250 250 250 250 250 250 250
Legal Advertising 2,200 2,200 2,200 1,500 1,500 2,000 1,500 4,000
subtotal 282,334 318,120 271,817 341,250 324,572 302,235 243,134 289,716
Operating Supplies 8,000 13,750 13,500 7,000 2,500 1,000 1,500 1,000
Capital Outlay 162,476 0 155,408 0 106,731 0 0 125,000
Villa Roads R&R* 0 0 0 78,794 450,000 0 0 0
General R&R 0 0 0 0 0 0 0 500,000
subtotal 170,476 13,750 168,908 85,794 559,231 1,000 1,500 626,000
Utilities Services 139,100 165,000 177,000 208,600 306,000 289,700 159,400 218,000
Landscape & Repairs** 398,500 411,925 503,550 846,290 328,600 431,775 189,857 215,000
Project Wide Expense n/a n/a n/a n/a 1,647,034 1,829,992 1,164,865 1,309,297
subtotal 537,600 567,925 680,550 1,054,890 2,281,634 2,551,467 1,514,122 1,742,297
TOTAL   (1) 990,410 899,795 1,121,275 1,481,934 3,165,437 2,854,702 1,758,756 2,658,013
District Acreage   (2) 998 989 894 1,187 1,406 1,496 976 1,098
Total Expense
per Acre   (1)/(2)
$992 $910 $1,254 $1,248 $2,251 $1,908 $1,802 $2,421

NOTES:

*    For comparison purposes, the CDD4 amount shown is 24% of total Road Maintenance R&R (villa portion only).

**   Amount shown for CDD4 includes 33% of the total CR42 expense since CDD4 is reimbursed 67% of the expense by other benefitting parties.

As shown in Chart 1, the first group of expenses is relatively similar for all districts, since they are little impacted by the size of the district. The second group of expenses varies dramatically depending on what projects a particular district is undertaking in the budget year and whether there are other special situations. For example, CDD8 is still developing and their budget includes $500,000 to significantly increase their General Reserves. This amount is likely to decline substantially in subsequent annual budgets as the reserves reach desired levels, as they have in the other numbered districts. Similarly, CDD6 has included $450,000 for a Villa Road reserve fund and several districts have provided for specific projects requiring capital outlays this year. It is the third group of expenses that we should focus on as they represent a major portion of each district's budget and are the items most noticeable to residents.

CHART 2

CDD 1 - 8 DISBURSEMENTS (2010-11 Final Budgets)

UTILITIES SERVICES, LANDSCAPE MAINTENANCE & REPAIRS and PROJECT WIDE EXPENSE COMPARISONS

CDD1 CDD2 CDD3 CDD4 CDD5 CDD6 CDD7 CDD8
Utilities Services 139,100 156,000 177,000 208,600 306,000 289,700 159,400 218,000
Landscape & Repairs* 398,500 411,925 503,550 846,290 328,600 431,775 189,857 215,000
Project Wide Expense n/a n/a n/a n/a 1,647,034 1,829,992 1,164,865 1,309,297
Total   (1) 537,600 567,925 680,550 1,054,890 2,281,634 2,551,467 1,514,122 1,742,297
District Acreage   (2) 998 989 894 1,187 1,406 1,496 976 1,098
      Expense per Acre   (1) / (2) $539 $574 $761 $889 $1,623 $1,706 $1,551 $1,587
<----------------------- Average $698 ------------------------>| <------------------ Average $1,626 --------------->
Note:
* Amount shown for CDD4 includes 33% of the total CR42 expense since CDD4 is reimbursed 67% of the expense
by other benefitting parties.

For the numbered districts north of CR466, the Utilities Services and Landscape & Repairs line items cover the cost for all electricity, irrigation water, repairs and maintenance services. For the numbered districts south of CR466, Project Wide Expense must also be included to see the total cost. As you can see on Chart 2, on a per acre basis there is a significant difference in cost across the numbered districts for maintaining the property, from a low in CDD1 of $539/acre to a high of $1,706/acre in CDD6. The $1,626 average cost/acre for the four districts south of CR466 is more than twice the $698 average cost/acre for the four districts north of CD466. That seems to be a very large difference for what some might consider a relatively common set of activities. Clearly within acreage there can be different usage. For example, landscaping along residential streets requires little if any district maintenance while a walled villa community requires district maintenance of the wall, entry plantings and regular grass cutting and shrubbery trimming along the wall. Also, one district may have more conservation areas or storm water ponds to maintain than another. Still, you would expect that this would tend to average out over 8 districts and 9,000 acres.

The items shown in Chart 2 represent more than half of each district's total budget for disbursements and are clearly the key items affecting the appearance of our community. For the districts south of CR466, over 70% of this spending is transferred to a Project Wide account in the hopes that the district will save money due to economies of scale. From the comparisons to the districts that do not participate in the project wide agreement, the magnitude of this savings is not readily apparent. Perhaps now would be a good time for the boards of CDDs 5 - 8 to have staff review the project wide contracts and quantify the savings each of these districts are receiving. The alternative to project wide is for each district to retain control of their residents' maintenance assessments and to separately bid out their maintenance needs.

Next month we will look at the other beneficiaries of the project wide agreement - what they contribute and what they receive.