We are pleased to provide all owners with the King s Creek Plantation Owners Association Annual Report.

Transcription

1 April 30, 2016 Dear Owner, We are pleased to provide all owners with the King s Creek Plantation Owners Association Annual Report. The Report includes the following information: 1. The full legal name of the time-share project and its addresses; 2. The full legal name of the association; 3. Names and mailing address of the members of the association s Board of Directors and the name of the person who prepared the report; 4. The managing entity s name, address, and contact person for the project; 5. A statements of whether or not the developer control period has terminated for the time-share estate project; 6. Financial statements of the association audited by an independent certified public accounting firm of the association: a. Balance Sheets for the years 2014 and b. Statements of Revenue and Expenses for the years ending 2014 and c. Statements of the net changes in the financial position of the association for the years ended 2014 and Statements on the following: a. Time-share estates occupancy expenses b. The regular assessment c. Any special assessments or other charges due for the current year from each time-share owner

2 8. A copy of the current budget reflecting the anticipated time-share estate occupancy expenses along with: a. A statement as to who prepared the budget. b. A statement of the budgetary assumptions concerning occupancy factors. c. A description of any provision made in the budget for reserves for repairs and replacement. d. A statement of any other reserves. e. The projected financial liability for each time-share estate owner, including a statement of (i) the nature of all charges, assessments, maintenance fees, and other expenses which may be assessed, (ii) the current amounts assessed, and (iii) the method and formula for changing any such assessments. f. A statement of any services not reflected in the budget that the developer provides or expenses that it pays, that it expects may become a time-share expense assessment attributable to each of those services or expenses for the association and for each time-share. 9. A statement of the location of the books and records of the association along with the name and contact address of the custodian of such books and records. We appreciate your ownership at King's Creek Plantation. King's Creek Plantation Owners Association Wanda Penn President

3 KINGS CREEK PLANTATION OWNERS ASSOCIATION COMPANY INFORMATION Description Legal Name Address Time-share Project King's Creek Plantation Time-Share Project 191 Cottage Cove Lane Williamsburg, VA Association King's Creek Plantation Owners 191 Cottage Cove Lane Managing Entity King's Creek Management, LLC 191 Cottage Cove Lane Williamsburg, VA ATTN: Kenneth Farino Registered Agent Location of books and records King's Creek Plantation Owners 191 Cottage Cove Lane Custodian: Joseph Cantrell Treasurer

4 KINGS CREEK PLANTATION OWNERS ASSOCIATION BOARD OF DIRECTORS Name Office or Principal Occupation Address Thomas J. Ruhf King's Creek Plantation Owners 191 Cottage Cove Lane Chairman Wanda Penn King's Creek Plantation Owners 191 Cottage Cove Lane President Joseph D. Cantrell King's Creek Plantation Owners 191 Cottage Cove Lane Treasurer Kenneth V. Farino King's Creek Plantation Owners 191 Cottage Cove Lane Secretary Kevin E. Jones King's Creek Plantation Owners 191 Cottage Cove Lane Director This Annual Report has been prepared by Wanda Penn, President

5 KING'S CREEK PLANTATION OWNERS ASSOCIATION Balance Sheet - Audited As of December 31, 2015 and ASSETS Cash - operating $ 1,439,611 $ 1,319,505 Cash - reserve for replacements 2,758,135 2,732,756 Accounts receivable - maintenance fees, net 457, ,583 Accounts receivable - special assessment, net 20, ,942 Accounts receivable - Club Explore 268, ,330 Due from related parties 1,841 58,729 Prepaid expenses 265, ,936 Property and equipment, net 159, ,943 Other assets 126,769 70,852 LIABILITIES AND MEMBERS' EQUITY Total Assets $ 5,497,334 $ 5,784,576 Liabilities Maintenance fees received in advance $ 3,316,816 $ 3,860,711 Accrued expenses 1,493,410 1,318,346 Accounts payable 336, ,820 Due to related parties 20,114 20,596 Notes payable 544, ,790 Total Liabilities $ 5,711,389 $ 5,993,263 Members' deficit $ (214,055) $ (208,687) Total Liabilities & Members' Equity $ 5,497,334 $ 5,784,576

6 KING'S CREEK PLANTATION OWNERS ASSOCIATION Statement of Revenue and Expenses - Audited For the Years Ended December 31, 2015 and Revenue Maintenance fees $ 9,158,270 $ 9,109,782 Sales of inventory to developer 843, ,010 Accommodation income 507, ,672 Other fees 459, ,684 Special assessment fees 440, ,219 Rental income 135, ,083 Other income 24,954 7,613 Total revenue $ 11,569,484 $ 11,964,063 Expenses Quality assurance / maintenance 3,612,836 3,412,762 General administration 1,227,822 1,267,494 Utilities 1,226,365 1,147,961 Operational reserve / refurbishments 1,115, ,656 Bad debt 931,467 1,281,761 Management fee 915, ,978 Property taxes 579, ,847 Guest services (front desk, activities, security) 546, ,752 Special assessment 446, ,219 Grounds maintenance 336, ,136 Owner services 260, ,351 Insurance 251, ,410 Trading Company 83,545 53,996 Credit card fees 28,509 19,693 Loss on sale of equipment 10,869 - Total expenses $ 11,574,852 $ 11,787,016 Excess / (shortage) of revenues over expenses $ (5,368) $ 177,047

7 KING'S CREEK PLANTATION OWNERS ASSOCIATION Statement of Net Changes in Financial Position - Audited for the Years Ended December 31, 2015 and Cash flows from operating activities Excess / (shortage) of revenues over expenses $ (5,368) $ 177,047 Adjustments to reconcile to net cash from operating activities Bad debt expense 931,467 1,281,761 Depreciation and amortization expense 76,047 86,794 Loss on sale of equipment 10,869 - Change in operating assets and liabilities: Restricted cash - for repairs and replacements (25,379) (731,969) Maintenance fees receivable (368,660) (637,368) Club Explore dues receivable (76,016) (59,607) Due from related parties 56,888 39,250 Other assets (146,344) (141,640) Assessments received in advance (543,895) 696,525 Accrued expenses 175, ,837 Accounts payable 106,778 (143,543) Due to related parties (482) (492,446) Net cash from operating activities 190, ,641 Cash flows from investing activities Proceeds on sale of property and equipment 1,600 - Purchases of property and equipment (32,591) (23,908) Net cash from investing activities (30,991) (23,908) Cash flows from financing activities Net increase / (decrease) of debt - maintenance fees receivable 7,000 (149,000) Net increase of notes payable - other (26,339) (28,254) Payment of deferred financing costs (20,533) (15,000) Net cash from financing activities (39,872) (192,254) Net change in cash and cash equivalents 120,106 (27,521) Cash at beginning of year 1,319,505 1,347,026 Cash at end of year $ 1,439,611 $ 1,319,505

8 King s Creek Plantation Owners Association Notes to the Financial Statements For the Years Ended December 31, 2015 and Organization and Nature of Business King's Creek Plantation Owners Association (Association) was organized as a non-stock corporation under the laws of the Commonwealth of Virginia on February 24, The Association s primary business activity is the maintenance of the timeshare resort development known as King s Creek Plantation located in Williamsburg, Virginia, which consists of 260 units (13,520 unit weeks). Membership in the Association consists of five classes: Class A member, King s Creek Plantation, LLC (Developer); Class B members, owners of Cottage time-shares; Class C members, owners of Townhouse time-shares; Class D members, owners of combination time-shares; and Class E members, owners of Estate time-shares. During the initial board term, which ends January 1, 2025, only the Developer as the sole Class A member has voting rights and the right to elect persons to the Board of Directors. The Association contracts with related parties to perform management services in offices located in Williamsburg, Virginia. During the developer control period, King s Creek Plantation, LLC (Developer) is responsible for the management and operation of the timeshare program and for the maintenance, repair and furnishing of the entire timeshare project. After the developer control period, the Association will be responsible for the management and operation of the timeshare program and for the maintenance, repair and furnishing of the timeshare project. The developer control period began when the Developer sold the first timeshare. The developer control period ends at the time the Developer transfers the common elements to the Association or on January 1, 2050, whichever shall occur first. Title to all the common real property is held by the developer. The developer will transfer title to the common real property to the Association in accordance with the requirements of the Time-Share Act. The Association uses the services of companies which are partially or fully owned by its members. King s Creek Management, LLC (KCM) is under a management agreement established January 1, The agreement renews automatically for the same term. The management company receives management fees equal to ten percent of all maintenance fees assessed to owners.

9 King s Creek Plantation Owners Association Notes to the Financial Statements Page 2 2. Independent Auditor s Report An independent auditing firm, Dixon Hughes Goodman, LLP, has audited the financial statements of King's Creek Plantation Owners Association (a Virginia nonstock corporation), which comprise the balance sheets as of December 31, 2015 and 2014, and the related statements of revenues and expenses, changes in members equity, and cash flows for the years then ended, and the related notes to the financial statements. Per the independent auditor s report, the financial statements present fairly, in all material respects, the financial position of King's Creek Plantation Owners Association as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 3. Reserve for Replacements The Association s governing documents require that funds be accumulated for future major repairs and replacements. Accumulated funds are generally not available for expenditures for normal operations; however, funds may be transferred for operating purposes by the Association s Board of Directors. The Association conducted a detailed study in 2012 to estimate the remaining useful lives and replacement costs of the components of common property to determine the amount of funding required. Actual expenditures for future repairs and replacements of common property components may vary from the funding amounts and the variations may be material. Therefore, amounts accumulated in the replacement reserve may not be adequate to meet all future needs for major repairs and replacements. If additional funds are needed, the Association has the right, subject to membership approval, to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available. 4. Special Assessment The Association established a special assessment to be billed in May 2014 and due June 30, The special assessment per interval are $120 for Cottage intervals and $85 for Townes intervals. The stated purpose for the assessment is to complete renovations, refurbishments, and upgrades to the existing Cottage and Townes units. During the period ending December 31, 2015, special assessment revenue of $440,009 was recognized based on upgrade costs incurred to date. During the period ending December 31, 2014, special assessment revenue of $758,219 was recognized based on upgrade costs incurred to date. As of December 31, 2015, $49,703 of outstanding special assessments was included in accounts receivable, with an offsetting bad debt reserve of $29,034. As of December 31, 2014, $223,286 of outstanding special assessments was included in accounts receivable, with an offsetting bad debt reserve of $40,344.

10 KING'S CREEK PLANTATION OWNERS ASSOCIATION *Budget 2016 Consolidated Percentage of Cottages Townes Estates Dollars Revenue Revenues Maintenance fees $4,200,000 $ 3,300,000 $ 2,160,000 $ 9,660, % Club Fees 88,696 69,689 45, , % Late fees 70,217 55,171 36, , % Rental fees 210, , , , % Cleaning 46,957 36,894 24, , % Other Income 225, , , , % Total Revenue 4,841,304 3,803,882 2,489,814 11,135, % Expenses Activities 31,764 24,958 16,336 73, % Security 49,381 38,800 25, , % Front desk 160, ,971 82, , % Owner services 118,084 92,781 60, , % Support Services 1,093, , ,532 2,515, % Maintenance 483, , ,826 1,112, % Operational Reserves / Refurbishments 580, , ,779 1,336, % Grounds maintenance 152, ,078 78, , % Utilities 547, , ,516 1,259, % Gift Shop 17,632 13,854 9,068 40, % General and administration 827, , ,780 1,904, % Property taxes 250, , , , % Insurance 106,957 84,037 55, , % Management fee 420, , , , % Total Expense 4,841,304 3,803,882 2,489,814 11,135, % Net Profit/(Loss) $ - $ - $ - $ % *This budget was prepared by Wanda Penn, President

11 King's Creek Plantation Owners Association Maintenance Fee Charge Allocation 2016 Cottages (Class B Owners) Townhouses (Class C Owners) Estates (Class E Owners) Resort Total Costs per Time- Total Costs for Costs per Time- Total Cost for Costs per Time- Total Cost for share Estate Class B share Estate Class C share Estate Class E Total Expenses Activities $ 5.97 $ 31,764 $ 6.00 $ 24,958 $ 5.27 $ 16,336 $ 73,058 Security , , ,396 $ 113,577 Front desk , , ,454 $ 368,752 Owner services , , ,729 $ 271,594 Support Services ,093, , ,532 $ 2,515,769 Maintenance , , ,826 $ 1,112,806 Operational Reserves / Refurbishments , , ,779 $ 1,336,208 Grounds maintenance , , ,597 $ 351,502 Utilities , , ,516 $ 1,259,000 Gift Shop , , ,068 $ 40,554 General and administration , , ,780 $ 1,904,181 Property taxes , , ,795 $ 576,000 Insurance , , ,006 $ 246,000 Management fee , , ,000 $ 966,000 Total Expenses $ $ 4,841,304 $ $ 3,803,882 $ $ 2,489,814 $ 11,135,000 Credits: Miscellaneous Income (120.43) (641,304) (121.13) (503,882) (106.39) (329,814) (1,475,000) Maintenance Fees $ 789 $ 4,200,000 $ 793 $ 3,300,000 $ 697 $ 2,160,000 $ 9,660,000 NOTES: 1. The annual Maintenance Fees are $760 for a cottage purchased before 11/18/05, $605 for a 2 bedroom townhouse purchased before 11/18/05, $1,015 for a 4 bedroom townhouse purchases before 11/18/05, $810 for a cottage purchased between 11/18/05 and 2/25/08, $655 for a 2 bedroom townhouse purchased between 11/18/05 and 2/25/08, $1,065 for a 4 bedroom townhouse purchased between 11/18/05 and 2/25/08, $405 for a 1 bedroom estate, $695 for a 2 bedroom estate, $785 for a 3 bedroom estate, $1,140 for a 4 bedroom estate purchased on or before 2/25/08, $825 for a cottage purchased after 2/25/08, $665 for a 2 bedroom townhouse purchased after 2/25/08, $1,120 for a 4 bedroom townhouse purchased between 2/26/08 and 12/14/09, $1,195 for a 4 bedroom townhouse purchased after 12/14/09, $1,170 for a 4 bedroom estate purchased after 2/25/08. The Developer will subsidize all costs in excess of this amount. 2. A provision has been made for reserves and refurbishments based on anticipated repairs during Actual operating results may vary from these projections. 4. Costs per townhouse & estate represent the weighted average of 2 and 4 bedroom units. 5. Owners of combination intervals (class D owners) have a maintenance fee charge allocation of $1, Any fees charged by RCI or II, including Club Dues, are billed separately. 7. There are no other reserves than what is reflected in the balance sheet or the budget. 8. There are no other services or expense payments currently provided by the developer that it expects may become a time-share POA expense assessment in future years.