One of the most important responsibilities for the Encinitas Ranch Board of Directors is managing our finances and ensuring that we have contractual agreements and processes in place to optimize our budget outlays. The board thought that a brief update on this matter might help to reassure homeowners that proper focus and outcome is in place.

If we breakdown the major expenses of our budget involving third party contracts, they include landscaping and professional services.

Landscaping

Nearly one half of our budget is tied to landscaping as it is the single largest and most important amenity in the community. The association has worked with BrightView, our landscaping contractor, for about twelve years and a very close partnership has been achieved. At our January 2018 board meeting a discussion was held regarding the contractual agreement between BrightView and our association. The following were some of the key points of that discussion:

 

• Costs for landscaping labor have increased 38% over the past four years largely because of increases in minimum wages and required benefits like sick leave
• Costs for gasoline and diesel fuel have increased 25% alone in the past 5 years
• Costs for supplies including fertilizer have increased 4% in the past 4 years
• Because of a strong corporate relationship between Associa and BrightView we have received 6% rebates for the past two years that have been directly applied to landscaping enhancements and they will continue in 2018
• Over the course of the 12 years the costs for landscaping support with BrightView have increased an average of 1.3% per year
• Were the community to rebid this work BrightView would increase the monthly costs at least 10% over the current monthly charges and that would translate into over $30,000/year in additional costs
• BrightView has established deep relationships with the golf course, the two water districts that serve our community and many departments within the City of Encinitas. Those relationships have created the ability to generate greater efficiencies and lower costs
• The community has negotiated a pricing freeze for both 2018 and 2019
• The conclusion is that the board firmly believes that we are paying below market value for the services provided by BrightView

The other large component of landscaping is tree trimming. The association went out to bid for this work about three years ago and selected Urban Tree Care. They were the low priced bidder and offered extremely competitive pricing and have done an excellent job. That relationship like the one with BrightView has grown over time to the point where they are viewed as one of our strategic partners and they are committed to re-adjusting their pricing should the association find other lower priced vendors.

Professional Services

With regard to Professional Services, the major component is management and accounting fees with N.N. Jaeschke. They have been our property manager since the community was formed in the late 1990’s.

• Over the course of the last 10 years they have increased their fees an average of 1.7% per year.
• In 2016 the board renegotiated the terms of the agreement with them whereby they provide additional support to the community at no extra charge. As one example they now conduct and provide formal quarterly inspection reports of the entire infrastructure of the community details specific areas where repair work is needed.
• They have provided the community with new technologies over the past few years that allow us to manage all of our architectural applications online, web based accounting and invoicing systems that expedite approvals and review and management dashboards that summarize key services and support at a glance for board meetings at no extra charge.

We reduced our legal fees in 2017 by nearly 50% which generated savings of over $20,000.

For other miscellaneous expenditures like resealing roads, repainting wrought iron fences, repairing block walls, the community always solicits multiple bids.

About eighteen months ago the board selected a new monitoring patrol firm that submitted the low bid. The board quickly learned that while the community saved about $1000/month the results were very disappointing and in fact created more work for the board and N.N. Jaeschke. Even with rigorous oversight the contract was terminated within six months and a replacement was selected. The new firm, Private Security, has been in place since last year and is doing an outstanding job but their services cost more than their predecessor. So, selecting the lowest bidder is not always the right answer.

The board has members that combined have over 100 years of professional contract management experience and that has allowed the community to build very strong supplier relationships while at the same time optimize our spending. There is always a fine balance between saving a few dollars with another vendor and the final work product or outcome. This is where the board excels by spending quality time assessing those variables.

If any homeowner has any questions, concerns or suggestions please feel free to contact our Community Manager, Alana Roper, [email protected] or 858-795-7041. Alternatively, you can submit a comment through the community website at encinitasranch.org and the Contact Us’ link at the top of the home page.

Sincerely,

The Encinitas Ranch Community Association Board of Directors