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Feb

15

2019

From The Blog

2019 Budget Overview

If you are like most property owners, you recently paid your member assessment (due each January). Annual member assessments are the primary source of KICA’s funding but did you know that these assessments are just one of the ways the association pays for its many functions? This high-level budget overview highlights KICA’s revenue sources and spending throughout the year. For additional information, check out “Understanding How the KICA Budget Process Works” at kica.us/budget101.

Revenue

KICA is funded primarily through property owner and commercial entity assessments (accounting for 82% of operating revenue and 39% of the Major Repairs and Replacements (MRR) revenue), a half percent transfer fee on real estate transactions called Contributions to Reserves or CTRs (38% of MRR revenue), commercial access fees (9% of operating revenue and 13% of MRR revenue) and investment income. In 2019, the association is anticipating revenue consistent with 2018.

Expenses

When allocating this revenue to pay for expenses (which is done in the latter half of the previous year – in 2018 for the 2019 budget year), funding is allocated to two discrete budgets: the operating budget and the reserve budget.

Operating Budget

The Operating Budget funds the predictable association functions including security and livability; land, lakes and general maintenance; administration; recreation and amenity operations.

Of note for 2019, the Operating Budget reflects an 8% increase to personnel wages from the 2018 budget. KICA faces the staffing challenges of national low unemployment (2.7% in Charleston County), a dwindling supply of nearby affordable housing and commuter traffic issues. In order to offer competitive wages and retain quality employees, KICA’s board voted in August 2018 to
increase wages for hourly positions to a minimum of $13/hour, which alone accounts for nearly a 5% increase over
the 2018 budget.

KICA is also investing in island security and gate operations. Community members would like more stringent gate access procedures, but want to maintain rapid entry for members. Security is implementing new gate access management technology and will expand its pass office this year to more tightly manage island access for those who arrive without a property owner guest pass or a resort reservation. Stay tuned for more information on these initiatives as they roll out in future months.

Reserve Budget

The Reserve Budget funds major repairs and replacements to existing Kiawah Island infrastructure. This budget is planned with consideration to the projected life of each association asset for the next 40 years.

The largest expense in the Reserve Budget for 2019, and consistently year-to-year, is drainage. Drainage projects will account for about 43% of the Reserve Budget. KICA maintains 43 miles of existing pipe, connecting 119 lakes and ponds, making up 14 drainage basins. Water levels can be managed, to an extent, within the drainage basins, which is crucial to prevent or reduce flooding that can accompany significant rain events.

Other Reserve Budget expenses include the major repair to, or replacement of, 60 miles of roadway and bridges (30% of the Reserve Budget), 19 miles of leisure trails and 25 boardwalks (7.5%), and large-scale landscape revitalization projects (8.5%).

Looking Ahead

At the Jan. 7 board of directors meeting, KICA treasurer and Finance Committee chair Mike Feldmann outlined two subcommittees set up to consider potential drainage projects outside of KICA’s routine maintenance. As outlined above, drainage funding is used for existing infrastructure. However, KICA has identified several projects that would require new infrastructure, for which there is no dedicated funding source. One subcommittee will consider the likely effectiveness of various projects, and the other will look at funding considerations.

Stay up-to-date with KICA’s finances with monthly statements posted at kica.us/finances. To hear from your member-elected directors on financial matters, attend bi- monthly board of directors meetings or tune in to watch at kica.us/livestream.