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 taht 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

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

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.

Audits

Below are the Assocaitiosn audits.

Audits		Date	Type
2009 Audit (Pending)		00-00-00
2008 Audit (Pending)		00-00-00
2007 Audit (Pending)		00-00-00
2006 Audit (Pending)		00-00-00

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 canhave 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 maintyain 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.


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