1.

I’ve reviewed the July, August, September, and October2024 Financials provided by Matt Schuster, Cohere’s Senior Accounting Manager, responsible for temporarily producing RMCA financial reports while they were filling an open position in the department, which they have now done.

2.

Some observations as of 10/31/24:

-Cash in the Operating Account-$24,884

-Cash in the Reserve Account- $224,698.

-Homeowner Assessments Receivable: $1431 (One homeowner represents $825 of that total)

-While there is no insurance expense being reflected in the monthly financials, since it is being absorbed by the developer as part of their master insurance policy, there is a line item in our budget for it. I’ve asked and Cohere has provided an insurance quote for Regency as a stand-alone entity, so that we can have some confidence that the budget is reasonable for when the developer no longer subsidizes our budget. The line item in the budget does appear reasonable at this point.

3.

# Closed homes as of 11/22/24: 240 (36% of 664 total planned)

2024 closings from Toll: 56

4.

Operating Deficit Year to Date: $275,683. This will be part of the developer’s anticipated deficit funding. Since the New Member Fees were incorrectly charged to purchasers from the developer through January 2024, and those amounts were improperly included as income to Regency, once the audit is complete, this Operating Deficit will likely increase. This issue goes back to the first closing in 2021, so some of this adjustment will be reflected in 2023 Operating results and some will be prior period adjustment.

5.

At the time of this writing, funds from the developer were received by Cohere and deposited into the Regency account, and refunds are in process for the reimbursement of closing fees incorrectly charged to affected homeowners. While interest on those fees was approved by the Board and will be paid, those interest payments will be delayed while Cohere assists to comply with IRS tax reporting requirements

6.

I have recommended, and the Board is considering, that we do not retain an auditor to audit and issue 2023 Operating results, given that we’re almost at the end of 2024. Instead, I recommend that we retain an auditor to audit and issue a 2024 financial statement, which will incorporate all Operating results up through December 31, 2024.

7.

A routine and template has now been established for Cohere to submit deficit funding requests on a monthly basis to the developer so that we can have a more predictable cash balance to operate from.

8.

The Board has instructed Cohere to incorporate into all budgets starting with 2025 a Reserve funding schedule based on the Reserve Specialist’s supplemental schedule, which utilizes the Threshold method of funding. The Board intends to memorialize this decision in a new Reserve Funding Policy in 2025.

9.

In addition to the finalization of the 2025 budget, which included a 5% increase in HOA fees to $210, the Build Out Budget assumes an annual 5% increase in HOA fees through 2029, at which point we are no longer projected to run at a deficit. It is also at which point the developer expects to have closed 75% of the lots and the homeowners elect 4 of the 5 Board spots.