Rossmoor Finances: Part I

 

By Sam Richards

Staff writer

 

Friday, August 23 (11:00 a.m.): It’s called the “coupon” for a reason.

The monthly assessment paid by Rossmoor residents to cover expenses and replenish cash reserves of the Mutuals, and to cover costs incurred by the GRF Trust that owns, operates and maintains the amenities within Rossmoor, is still colloquially referred to as the “coupon.”

Jerry Priebat, a three-term former GRF Board president, said that when Rossmoor was founded in the mid-1960s — an era long before automatic electronic transfers from checking accounts – Rossmoor residents were given books with coupons. The coupons were to be detached from the book every month, and submitted – with a paper check attached – to GRF to pay for amenities, maintenance and other various expenses.

“I still do it that way,” Priebat said.

And he isn’t alone; GRF Controller Amanda Davis said approximately 25% of Rossmoor households use such coupon books today, submitting checks to their Mutuals. The other 75% of Rossmoor households, she said, have Automated Clearing House (ACH) electronic money transfers set up enabling monthly amounts to be automatically drawn from residents’ bank accounts.

In any event, the term “coupon” has stuck, even though paper isn’t usually part of the equation.

Two separate “coupons”

While Rossmoorians make one monthly coupon payment, that payment has two distinct portions – the GRF portion and the Mutuals’ portion.

The GRF coupon, GRF Director of Mutual Operations Jeroen Wright explained, covers the GRF Trust that owns, operates and maintains the amenities within Rossmoor, including the Gateway, Dollar, Creekside and Hillside clubhouses; the Event Center; Tice Creek Fitness Center and the three swimming pools, as well as property insurance protecting those assets. The GRF portion also includes programs and services such as Recreation, Counseling Services, Public Safety/Securitas, Golf, Lawn Bowling, Landscape, Fitness, Aquatics, Transit, Custodial, Communications and Adminstration. (Capital projects are paid through Membership Transfer Fees, not the coupon).

The GRF portion of the monthly coupon is established in September every year by the GRF Board, as a key part of the annual budgeting process. When the Board in September 2023 approved GRF’s $26.8 million 2024 operating budget, it also established the GRF portion of the residential coupon for 2024, at $334.69, an approximately 1.45% increase from 2023.

In broad strokes, Wright said, the GRF coupon numbers are set by taking the projected costs of maintenance of GRF Trust properties, operating expenses for amenities, programs and services; Comcast high-speed broadband internet and cable available to all households; and insurance for those shared amenities, and dividing that figure by the number of Rossmoor manors. 

Mutuals’ side of the coupon

Unlike the GRF portion of the coupon, which is the same for all Rossmoor manors, the Mutuals’ side of the coupon is slightly different from one Mutual to another.

“How much water (a Mutual) uses, the amount of electricity they use, the level of landscaping service they get through a third party – Bright-View or Terra – those are different for every Mutual and affect the coupon,” Wright said.

Davis said each Mutual board conducts its own budgeting process, holding open budget meetings typically around the same time the GRF Board establishes its budget and coupon amount. But Susan Hildreth, president of Mutual 28, said the budgeting process is really a year-round effort, working closely with the MOD accounting group. The goal is for Mutual 28 to pass its budget every October.

“It’s a collaborative process with MOD,” Hildreth said. “They are familiar with our long-term plans and help us budget for them. Other than constant monitoring, we really rely on projections by MOD of what we will be spending.”

Mutuals typically establish their own coupon amounts by mid-November each year, Davis said; their amounts must be set, and residents told of those amounts, by Dec. 1, 30 days before the next year’s budgets go into effect.

And residents of Mutuals 1, 2 and 8 pay a tax-related assessment because the manors in those Mutuals are coops. Those residents pay taxes through their cooperatives, and those taxes are incorporated into those Mutuals’ coupons.

Todd Arterburn, Rossmoor’s chief financial officer, said the coupon for residents in those three Mutuals can vary manor to manor, based on each manor’s specific tax situation; Arterburn said, MOD employs two property tax specialists who work with those co-op Mutuals, their costs being covered under those Mutuals’ management agreements with MOD.

Keeping residents informed of every step of the process is crucial, Hildreth added. “We want to be as transparent about the coupon as possible,” she said.

Insurance blues

Perhaps the single largest coupon expense over the past few years has been property insurance, including to protect GRF and Mutual assets from wildfire.

The property insurance industry worldwide has been stretched to nearly the breaking point over the past decade by destructive fires, floods, earthquakes and other disasters that have created a shortage of funds for payouts. In California, destructive wildfires have contributed significantly to the problem; it all means inflated premiums.

Wright said GRF’s property insurance premium went up 50% from 2023 to 2024. Hildreth said Mutual 28’s premiums increased 75% during that same period, forcing the Mutual to use reserve funds to pay that year’s premium, and to call for an election to charge a special assessment to replenish the reserves (the assessment was approved by resident election).