[Goldwingnut]

Originally Posted by Bill14564

So you mean the amenity fee I am paying was set by the developer then increases by the CPI? And the amenity fee you are paying was set by the developer and the increased by the CPI? And the amenity fee that will be paid by a new purchaser has been set by the developer and will then be increased by the CPI?

So it seems the amenity fee is “set by the developer” but not controlled by the developer.

EDIT: And then there is the decision to implement an amenity fee deferral rate by the VCCDD and SLCDD (as the RAD and SLAD upon recommendation by the AAC and PWAC). Some might consider that to be developer control of the amenity fee as well.

Once you purchase your home - new or resale - the amenity fee thereafter is adjusted by the CPI adjustment - this is both good and bad, good in that it helps keep up with inflation and rising costs, unfortunately the CPI is a political football in Washington and what is used to determine it and the methodology to calculate it is tweaked and a regular basis by politicians to meet their agenda and spin. It never keeps up with the true rising costs. The SLAD and RAD budgets must live within these CPI adjustments to their revenue, even as they fall short of the actual rising costs of running the amenities. There is no discretionary adjustments allowed under your deed restrictions, contrary to what many think. This continued shortfall was one of the reasons that the deferral rate was not renewed - yes it had to be renewed each year by the AAC/PWAC/SLAD/RAD, it was never a perpetual cap as many believe. Had it not been removed the two amenity districts would have been cumulatively over $20M in the hole this year (drawing down repair and replacement reserves).

The developer owns all the amenities south of 44, it is a business unit for them, and like any business has to maintain it books and budgets in a profitable (that's not a dirty word) condition. For them, the amenity fees have to cover utilities, maintenance, staffing, supplies, repairs, taxes, an amortized construction cost, and of course a profit. This a real-world cost determination not the fantasy that Washington's CPI adjustment magically determines. So each year the assess their costs and determine a prevailing rate that is necessary to meet the financial goals, this is the adjustment we see come out every January that applies to all homes sold following its effective date.

For the SLAD/RAD budgets, this developer adjustment to the prevailing rate is a huge plus as it acts as a reset that helps to overcome the shortfalls of the CPI adjustments as I discussed above, each time a home is resold.

I explain most of this in my videos https://youtu.be/RDjafwcRtQg and https://youtu.be/EsFulbLR32w


As a side note, when/if the developer decides to sell the amenities to the CDD, what was once profit and taxes in the budget becomes the money that pays off the bond used to purchase the amenities from the developer.

After the PWAC was given the responsibility of the amenity budget for 466-44 I did some pretty complex calculations and financial projections on cost to build and operate the amenities and recovery of costs to finally achieve profitability. Based on the information available at the time, current cost, and adjustment to previous costs for inflations, I calculated that it took between 12 and 15 years from delivery of the first amenity until the business unit actually turned an annual profit and nearly 20 years to achieve a net profit. This is because the costs are incurred before the revenue from the home sales in the new areas start to come in. An example of this is the approximate $4M it cost to build the Fenny Rec Center complex which was opened at about the same time the first homes were sold, the revenue the first few years because of the few homes fell way short of actual expenses and is only just now starting to achieve a net profit for this one property however the entire area south of 44 is still operating at a net loss (based on my previous calculations).

These amenities are of course an investment, one that pays off handsomely in the sales of homes and ultimately in the sale of the amenities to the CDD. When will they sell the amenities to the CDD, had to say but a best estimate would be about 3-5 years after the last home is built north of 470 the amenities between 44 and 470 would be sold to the Eastport commercial CDD. Yes, this is pure conjecture on my part, it's based on the timing of the two previous amenity sales to VCCDD and SLCDD.

Last thought, the desire to implement a deferral rate again by some members of the AAC was pure folly and little more than political pandering by some board members. The implementation would have cost the AAC millions, not just in the first year but in all successive years as each year there would be the recurring shortfall each year with no way to make up the deferred revenues - they didn't get a pay raise, but prices still went up, they don't get a double pay raise the following year, so the shortfall still exists. Fortunately, most of the PWAC saw through the folly of this idea and dismissed it. Had this been approved by AAC and PWAC (it would require both to approve, one cannot approve and the other disapprove due to stipulations in the governing establishing documents), both the VCCDD and the SLAD are staffed by intelligent businessmen (ignore gender inference if you must) and they most assuredly would have disapproved it as they are still ultimately responsible for the amenities and budgets.