ISLAND FINANCIALS
Financial Update from KICA’s Treasurer
below budget as of May. The majority of that shortfall
is from collecting less in vehicle access fees ($85,000
below budget) and losses in Castle Grille, events and
shuttle revenue ($83k behind budget). Looking at
total revenue, which includes investments, KICA is
about 2.6% down, with investment revenues coming
in $200,000 under budget. This constitutes a big
rebound for investment income, which was down
$500,000 in March.
At KICA’s July 13 Board of Directors meeting,
treasurer Dave Morley gave a report on the financial
status of the association. KICA always provides
monthly financial reports to members but in this
case, it’s important to highlight how the association
is performing in this unusual year. Dave’s report
looked at KICA’s finances through the end of May
2020 in comparison to the annual budget.
As a reminder, KICA froze hiring and department
heads cut a minimum of 10% from their approved
budgets in anticipation of a possible shortfall related
to COVID-19. The total savings for the plan, put in
place in March, was $1,562,189 for the year.
OPERATING EXPENSES
Almost halfway through the year, KICA is seeing a
$1.4 million total positive variance. Of that, about
$736,000 can be attributed directly to the budget
reduction. Those variances are from these expense
categories:
Payroll: $214,000
Administrative: $95,000
Common area: $186,000
Building repairs and Maintenance: $224,000
The remaining $673,000 of the variance is timing
differences and deferrals on projects that are still
expected to be completed.
OPERATING REVENUE
Dave reported that KICA’s operating revenue is 1.3%
The complete picture looks rosier than previously
expected. Despite early concerns, assessments are
on budget for 2020. Contributions to Reserves (CTRs
- real estate transaction fees) are on-budget through
May. Once June’s financials are finalized, CTRs will
be $150,000 above budget due to a large real estate
transaction. Vehicle Access Fees are currently down
by $85,000 but by the end of June will only be down
$22,000 or 2% below budget. Investment revenue
also improved in June compared to the budget,
though a shortfall of $150,000 is expected.
At this point, the financials are stronger than
anticipated. Dave noted, “we had no way to forecast
what COVID-19 would do to our revenue sources
but right now, it doesn’t look like it has had a
material impact.”
RECOMMENDATIONS FROM THE FINANCE
COMMITTEE
Dave brought two motions before the board from
KICA’s member-led Finance Committee. These
motions were discussed at the committee’s Friday,
July 10 public meeting.
1. KICA received an offer to refinance the mortgage
on Beachwalker Center (23 Beachwalker Drive).
KICA’s current mortgage has a balance of around
$400,000 at an interest rate of 3.6%, while the
proposed rate would be 2.9%. After noting that
they had sought comparative offers from other
companies, Dave characterized the rate as ‘very
competitive.’ The offer is an unsecured loan
rather than a real estate loan and there are no
closing costs. This loan also has no prepayment
penalty. Making this switch would allow a cash
6 | KIAWAH ISLAND DIGEST