Sun City West reports small year‑to‑date operating shortfall; reserves, golf revenue and APFs highlighted

CFO Cliff Swan told the Recreation Centers of Sun City West governing board on Jan. 23 that the association finished December largely on budget but showed a small year‑to‑date operating deficit.

Swan said the association posted a $32,000 unfavorable result for the month on about $2.8 million in revenue, and that golf — a major amenity — ran a $53,000 deficit for the month. He said golf rounds through December totaled about 125,000 against a 320,000‑round annual budget and that golf generates significant revenue in the spring and early summer months.

The nut graf: while operating results through six months showed a modest deficit — $1.7 million projected for the year per the presentation — favorable variances in wages and benefits (due in part to fewer employees on the health census) and in fuel and supplies improved the position. Swan said year‑to‑date operating variance was roughly $6,000 unfavorable with $851,000 favorable in some expense categories driving a better result versus budget and prior year.

Swan reviewed capital and reserve fund performance, telling directors that realized and unrealized valuation changes produced a weaker month for reserves (about $684,000 in valuation change with $644,000 unrealized losses) but that investment income year‑to‑date was about $614,000 (roughly a 4% annualized return on the association’s 90/10 bond mix). He said APF (assessment per foot) fees were roughly on budget and that $565,000 has been earmarked to flow into reserves from operations year‑to‑date.

On capital planning, Swan reiterated that a large irrigation project at Echo Mesa inflates the capital budget for the year and that over the next 10 years the association will sequence major irrigation work across courses. He said capital improvements were tracking slightly favorable against issued purchase orders and completed projects.

Director questions focused on reserve fund risk and investment strategy and the tradeoffs between liquidity and higher returns; Swan and board members noted the association uses ETFs and fixed‑income funds that trade daily, so unrealized losses occur when rates change but holding to strategy is expected to return the long‑term target. The board also directed continued review of investment policy and reserves in upcoming committee meetings.

Ending: The board accepted the December financials for filing through the Budget & Finance Committee; committee members and staff said they will return with further detail on the reserve/investment policy in subsequent meetings.