MVF Finances - March 2014

Overall results through the end of March continue ahead of budgeted projections led by greater than expected revenues from assessment collection fees, disclosure fees and advertising as well as lower than budgeted personnel and operating expenses.

 MVF overall net income for the month is $157,179 which exceeds the budget by 97% and March 2013.  Year to date net income is $607,581 which exceeds the budget by 82% and March 2013 by 58%. 

 The following summarizes MVF’s overall results for March 2014:

 -        Total revenues through March were $2.1M which exceeds the budget by 7.0% and exceeds the same period in 2013 by 13.5%.

 -        Total operating expenses through March were $1.4M, which is 8.6% under budget and 1.6% higher than the same period last year.

 -        Reserve Fund contributions through March were $237,500 as prescribed in the 2014 budget.

 -        Year to date expenditures for reserve related assets total $508,890 vs. $44,693 in 2013.

 -        Capital contribution fees received through March were $130,721 vs 59,681 in 2013.  A lump sum payment of $110,000 was paid to MVF during February related to the sale of the Cider Mill apartment complex.

 Operations Fund

The results from the Foundation’s Operating Fund at the end of March, 2014:

Month vs Budget:  For the month of March 2014, the revenue budget variance is primarily due to lower than expected revenues from camps/classes.  Personnel costs are favorable to the budget due to lower than expected full-time wages and benefit costs due to several vacant supervisory level positions.  Operating costs budget variance is primarily due to lower than budgeted business expenses, office supplies and expenses and the timing of the audit fees being paid in February vs budgeted in March.

 Month v Prior Year:  For the month of March 2014 vs. March 2013, the revenue variance is due to higher assessments from the Designated User assessment increase effective January 1, 2014 as well as higher advertising revenues but offset partially by lower than expected camp/class and rental revenues.  Personnel costs are lower than the year ago period primarily due to 3 payrolls in March 2013 vs 2 in March 2014.  Operating cost variance is due to higher costs from office expenses and legal collection fees.  Reserve/capital costs reflect the lower operating capital costs spent vs the prior year.

The results from the Foundation’s Operating Fund through the end of March, 2014:

Year to Date

For the year-to-date period ending March 2014, the budgeted revenue variance is primarily due to the increased Designated User Assessment, advertising revenues tracking ahead of budget, and the capital contribution fee received from the sale of the Cider Mill apartments.  Personnel costs budget variance is due to several vacant supervisory level positions but is partially offset by higher than budgeted payroll taxes (MVF budget annualizes these taxes whereas the actual payment is capped and ends half way through the year).  Operating cost budget variance is due to lower than expected business expenses, office supplies/expenses, occupancy costs, equipment maintenance and maintenance costs.  Reserve/capital costs reflect the higher revenue received from the Cider Mill capital contribution fee being moved from the Operating Fund to the Reserve Fund.  Reserve contributions have been made pursuant to the budget.

Balance Sheet:

Through the end of March 2014, MVF continues to maintain very a solid financial position with nearly $8.2M of its $14.1M assets (58.5%) currently invested or held in bank accounts.  While using undesignated reserves the last 2 years (2012 & 2013) to keep assessments low, MVF still has nearly $1.5M undesignated operating surplus which is partially allocated to ongoing capital projects and slated to be used in 2014 to maintain the MVF assessment the same for the 3rd year in a row.

Reserve Study:

During 2013, MVF started the process of updating its 2007 reserve study by conducting a request for proposal.  Through this process, Design Management Associates Inc. was hired by the MVF Board to evaluate MVF’s assets and provide an update to the 2007 study.  DMA worked with MVF staff over the course of 2013 and completed their field work in last fall.  Over the last few months, staff and DMA advisors have been working closely to evaluate all aspect of the new study to ensure the accuracy of all data in the report.  As of March 2014, DMA is in the process of finalizing the report to present to MVF management and the Board at an upcoming meeting (likely to be May 2014).  Parks and Recreation department staff have spent many hours working with DMA advisors to arrive at the final report.

 Investment Activity:

There have been no new investment actions in March; however, the next meeting of the investment committee is scheduled for Monday April 14, 2014 to follow the Executive meeting which begins at 7pm.

 Technology:

Jenark Conversion:  As of March 20th, MVF made the leap of faith to Jenark’s new version of the property management system.  With the exception of some minor glitches in the conversion process, the majority of the functionality and all of MVF’s critical data made the move successfully.  Much thanks to the many employees who have worked very hard for the last 9-12 months to make this move possible.  MVF had used the same version of the Jenark software for the last 10 years and missed out on many of the latest and greatest enhanced features of offered in periodic releases.  Special thanks to MVF’s recently departed IT Manager, Gail Chaippone who was able to complete the conversion prior to her retirement March 31!

 Capital Spending:

As of the end of March, 2014, year to date capital expenditures totaled $466,043 of which 395,536 is related to Designated Users related and $70,507 is MVF.

 Legal Collections:

Over the last two months, the MVF Collections department has been working on two very important objectives:  1) To analysis the details of the existing delinquent unit accounts to better understand the current state of MVF’s delinquency issue and 2) to understand and develop a process to continue legal efforts beyond the judgment phase (e.g. oral exams).  With these short-term goals in focus, the following statistics were derived based on MVF December 31 delinquency report:

Legal Status:                         Units      $$           Pct

New delinquencies (Q4 ’13)     346   58,593        6.0%

Delinquent-no legal as yet      195   152,046     15.7%

Lawsuit Pending                    166      96,812      10.0%

Judgments                            232        661,235   68.3%

Oral exam – process just initiated in Q1 2014.  Thus far 21 cases have been filed.

Currently MVF has 8.2% ($56,932) of the delinquent owners on active payment plans, 5.2% ($86,069) are in foreclosure and 3.3% ($64,113) are in bankrupcty.

 With the aforementioned statistics now understood, MVF’s legal process has begun to move forward.  In March, staff prepared and filed the first 20+ requests for oral exams with the District Court for debtors to identify assets (such as wages, bank accounts, and rents) that MVF can seek to satisfy judgments it is owed.  Staff also filed more than 280 new lawsuits related to the 4th quarter of 2013.  As suits are processed through the Court’s docket, many delinquent owners seek to avoid this process and court appearances by paying their accounts in full or working out payment plans.  In cases where owners do not respond to the suits, MVF will continue the legal process and receive judgments.

 Delinquency Rate:  As of the end of the 1st quarter of 2012, the unit delinquency rate is 11.6%.  The rate increased .5% from the end of 2013 and is .5% higher than the same period a year ago.  

Significant increases in the delinquency rate were noted in East Village, (9.5% to 10.2%), Northgate (11.3% to 12.3%) and Patton Ridge (9.9% to 11.6%).

 The incidence of foreclosures continues to increase in 2014.  As of the end of March, 59 units in the Village were in foreclosure.  There were 5 fewer units than at the beginning of the year, but 14 units more than March 2013.

 Bankruptcies in MVF are static.  As of the end of March, 34 owners were in bankruptcy.    This was 2 fewer units than at the beginning of the year, and 1 more than last year at this time.