Item	2007 (act)	2008 (act)	2009 (act)	2010 (budget)
Capital Reserves Emergency Reserves Cash Total	$0 $0 $68,479 ------------ $68,479	$0 $0 $36,662 ------------ $36,662	$995 $17,000 $7,426 ------------ $25,421	$4,995 $17,000 $9,000 ------------ $30,995

Painting Program

The Association paints and completes siding repairs on roughly 13% of the homes in the community each year (siding repairs to the front of the homes only). In 2009, the owners voted to lengthen the repainting cycle to eight years in an effort to clear up a backlog of 58 homes that were past due. After 2010, siding repairs will be expanded to include the back of homes as well as the front. "Hms past due" means homes that were due to be painted, but were not.

Item	2007 (act)	2008 (act)	2009 (act)	2010 (budget)
Homes painted Hms past due (5 yr cycle) Hms past due (8 yr cycle)	0 45 --	23 58 --	10 -- 0	12 -- 0

Collections and Legal Action

We thank the great majority of homeowners that pay their Association dues on time and those that have donated their time to community projects. We also thank those that have worked with the Association in 2009 to clear up back dues in this difficult economy. It was a very cooperative and constructive process for all.

There has been increasing concerns expressed by the paying homeowners about the few seriously delinquent members that are not making any effort to resolve matters or even communicate. In several cases, the delinquent owner has not made a payment since 2008. The issue of "non-payers" was raised by the paying homeowners and discussed in detail at the November 12, 2009 Association meeting. Everyone agreed that it is unfair for the paying homeowners to be paying for services provided to the deliquent homeowners.

The Association has retained the Blend Law Firm to collect seriously delinquent accounts. We are disclosing the seriously delinquent accounts here so that the paying homeowners know the extent of the problem and can see the progress. As required, names, addresses and cause numbers will be disclosed for any member in litigation with the Association. We will make every effort to avoid this because we do not want to create ill will with any member. Because of the potential for legal action, all information posted here should be considered as unofficial, approximate, and subject to final report from the Association accountant.

All Delinquent Members April 1 , 2010

Name	Action	Oldest Delinq Month*	Balance April 22, 2010*
		--
Confidential/Brentwood	April 5 - notice of pending lawsuit April 13 - in communication April 15 - Agreed to pay April 22 - Check is in the mail April 26 - PAID		$1,181.98 PAID
Confidential/Brentwood	April 7 - Agreed to payment plan April 17 - Made first payment April May 17 - Made second payment	8-08	$1,030.85 Partial Pay
Confidential/Brentwood	April 12 - PAID	8-08	$1,123.33 PAID
Confidential/Brentwood	April 5 - notice of pending lawsuit April 13 - in communication April 17 - Made partial payment April 26 - PAID	6-08	$879.18 PAID
Confidential/Wilshire	April 5 - notice of pending lawsuit April 15 - In communication May 28 - Law suite to be filed	3-09	$778.74 PAID
Confidential/Brentwood	April 5 - notice of pending lawsuit April 13 - sending payment April 15 - PAID	8-09	$586.59 PAID
Confidential/Brentwood Ct	April 7 - PAID	8-09	$569.73 PAID
Confidential/Brentwood Ct	April 5 - notice of pending lawsuit April 15 - Agreed to pay April 17 - PAID	9-09	$548.60 PAID
Confidential/Brentwood	April 30 - notice of that account to be turned over to legal June - PAID		$406.33 PAID
Confidential/Brentwood	April 30 - notice of that account to be turned over to legal June - PAID		$404.24 PAID
Confidential/Wilshire	April 30 - notice of that account to be turned over to legal		$404.24
Confidential/Wilshire	April 30 - notice of that account to be turned over to leagl May 6- resident paid part - will pay balance at end of month		$200.00 PAID
Confidential/Wilshire	April 30 - notice of that account to be turned over to legal. June - PAID		$183.297 PAID

Income and Expenditures

The Associations 2010 budget and three years prior actuals are displayed below. The assessment rate for 2010 is $366 for the first half of the year and $384 for the second half of the year. If the full year is paid in January, a $90 discount can be applied.

Item	2007 (act)	2008 (act)	2009 (act)	2010 (budget)
INCOME Assessments Early Payment Discount Grants Interest Late Charges/Fines Bad Debt Total MAINTENANCE Electrical Entry gate Fence/walls/ironwork Fire lane striping Garage-roof/walls/doors Inspections/license/permit Landscape-additional Landscape-contract Landscape-fert/insect Landscape-shrub Lamp post/exterior lighting Lawn & tree treatments Light bulbs Mailboxes Misc Maintenance Exp Annual paint/exp repair Roadway/sidewalk/curb Plumbing Signs/locks/keys Sprinkler install/maint Storm drainage Traffic spikes Tree trimming/removal Water mains/sewers GENERAL & ADMIN Annual audit/auditor Bank charges Collection/legal Homeowner functions Insurance-property Insurance-liability/D&O Legal (non collection) Management fees Meeting expenses Office supplies Other admin exp Postage Record digitizing/storage Reproduction and copies Website-domain/hosting Website-programming UTILITIES Electricity Water and sewage DEPRECIATION Assigned appreciation TAXES Federal income tax Property taxes Taxes-other ALLOCATIONS Capital & road reserves Emerg reserves EXPENSES NET	$51,255 ($1,530) $2,586 $625 ($405) $51,824 $153 $6,528 $14,904 $267 $0 $2,908 $401 $4,138 $128 $5 ($147) $150 $2,434 $876 $7,410 $275 $65 $2,364 $516 $3,374 $231 $0 $0 $0 $46,454 $5,370.32	$51,300 ($1,395) $1,299 $1,174 ($917) $51,871 $645 $3,748 $16,357 $26,225 $1,492 $4,095 $325 $275 $5 $544 $551 $2,434 $9,410 $229 $548 $4,723 $619 $6,426 $0 $0 $608 $0 $0 $79,669 ($27,798.06)	$51,300 ($1,710) $2,131 $2,310 ($689) $53,342 $1,769 $40 $3,143 $8,853 $379 $298 $65 $46 $10,330 $807 $12,207 $548 $1,467 $1,275 $59 $296 $721 $4,421 $1,191 $41 $8,400 $317 $209 $164 $237 $76 $512 $1,314 $4,696 $706 $1,326 $65,912 ($14,994.08)	$72,000 ($1,700) $800 ($1,000) $70,100 $800 $100 $2,500 $14,250 $1,200 $275 $1,250 $100 $12,000 $1,500 $1,000 $4,400 $50 $750 $750 $2,000 $2,500 $8,400 $250 $300 $200 $300 $100 $600 $150 $0 $1,450 $6,000 $500 $750 $4,000 $0 $68,425 $1,675
Notes:	No Painting this year	23 homes Painted	10 homes Painted	12 homes Painted

Breakout By Major Project

State of the Association Report

A State of the Association was prepared in 2009 to explain to owners of financial condition of the Association. The key points of this report were at the Association had been deficit spending for number of years, the Association's reserves had reached critically low levels, the Association's painting and siding repair program was significantly backlogged, and the Association had claimed tax exemptions it was not entitled to. As a result of this analysis, the owners have taken action to remedy the situation, which included increasing the assessment rate, setting up dedicated reserves, insuring the physical property, restructuring the paint and repair program, and changing its tax policy.

Federal and State Taxes

The Beverly Oaks Homeowners Association files federal taxes as an IRS 528 corporation. The IRS describes "528" as a "quasi not-for-profit" class - a for profit corporation with some special considerations. The primary consideration is that the Association can have dues income without paying tax on it. Beverly Oaks has elected this status since 1983. The Association does not have a 501(c) (4) not-for-profit, Federal tax exempt designation letter. The Association has not been issued a sales tax exemption from the state. The Association is not exempt from paying property taxes.

The Association does qualify franchise tax exemption and filed for this exemption in 1987. The Association is required to report to the State every four years to maintain this status.

The Association pays property tax on the roadway, storage garages, cul-de-sac gardens and mailbox peninsulas. The property has been given a nominal valuation of $22,000 in 2009 even though the improvements have a replacement cost of $1,500,000 (road/water lines/sewer).

FEDERAL TAX FORMS 1099 should be prepared and mailed to all contractors by January 30;

FEDERAL TAX FORMS 1096 should be prepared and mailed to IRS listing all 1099’s mailed by January 30;

FEDERAL TAX FORM 1120H should be prepared and mailed to IRS March 15.


Audits

The association shall, as a common expense, annually obtain an independent audit of the records. Copies of the audit must be made available to the unit owners.

An audit required by this subsection shall be performed by a certified public accountant if required by the bylaws or a vote of the board of directors or a majority vote of the members of the association voting at a meeting of the association.

PROPERTY CODE, TITLE 7. CONDOMINIUMS, CHAPTER 82. UNIFORM CONDOMINIUM ACT, SUBCHAPTER A. GENERAL PROVISIONS, Sec. 82.001. SHORT TITLE. This chapter may be cited as the Uniform Condominium Act. Added by Acts 1993, 73rd Leg., ch. 244, Sec. 1, eff. Jan. 1, 1994. Link to Property Code