Dear fellow Seawatch-on-the-Beach owners,
The Board of Directors held our Board meeting November 2-3, 2023, and established the 2024 budget. Most of the Board members have served on the Board for many years and passing a budget with a double digit increase in your fees was something the current Board has never been faced with. Exclusive of pass-through real estate taxes, the fees increased 10.7% or $117.18 per unit week. This increase was driven by three factors. First, our property insurance increased from $200.27 per unit week to $306.55 per unit week, an increase of $106.28 per unit week. This single line-item increase is responsible for 91% of the fee increase. In future years, it is very possible we may be faced with additional increases in insurance costs as the Seawatch insurance claim as of 9/30/23 has already exceeded $5.3 million dollars and is expected to go higher before the claim is closed. Second, we are being impacted by the current inflationary environment in the United States. The excessive inflation impacts our capital reserve estimates. Capital Reserve estimates are long-term estimates for replacement costs of everything we purchase or repair that does not involve operating expenses. For example, pool and patio furniture, while just replaced, must be budgeted for replacement every eight years. The last time we replaced it the cost was $40,000. Now, these costs have risen to $86,000. This required us to re-evaluate the cost of that project to adequately fund that project eight years from now. We must also reserve to repaint the building every eight years. The painting once cost $160,000, now it is $300,000+ due to increased labor and paint costs. The living and dining room furniture are due for replacement in 2024 and these costs have risen over 50% from the time when we last replaced these items. Be assured that we are being proactive where necessary in adjusting our capital reserves due to the new economy. With that said, we are being cautious in our approach until the economy settles down and inflation returns to normal levels to avoid over funding our reserve accounts. Finally, labor costs have increased across most industries. To retain our valuable staff members and third part vendors (housekeeping, activities, etc.) we must assume higher costs in these areas. Thank you, Tim Pellerin