This document is intended for the Homeowners of Marina Promenade only. If you have received this document in error, kindly delete it and do not duplicate the contents in any form or by any method. Doing so may lead to legal proceedings and criminal investigations. You are requested to contact the sender of this email at [email protected]to advise of your receipt of this document and we will arrange for the removal of your address from our distribution list. Thank you. Marina Promenade at Dubai Marina How your Community Service Fee works for you 2013 This document is intended for the Homeowners of Marina Promenade only. If you have received this document in error, kindly delete it and do not duplicate the contents in any form or by any method.
Transcript
This document is intended for the Homeowners of Marina Promenade only. If you have received this document in error, kindly delete it and do not duplicate the contents in any form or by any method. Doing so may lead to legal proceedings and criminal investigations. You are requested to contact the sender of this email at [email protected] to advise of your receipt of this document and we will arrange for the removal of your address from our distribution list. Thank you.
Marina Promenade at Dubai Marina
How your Community Service Fee works for you
2013
This document is intended for the Homeowners of Marina Promenade only. If you have received this document in error, kindly delete it and do not duplicate the contents in any form or by any method.
2
Contents
Executive summary 3
The Community Service Fee rate has been maintained for 2013 3
2012 Budget versus actual expenditure summary 3
Underfunding of the Capital Reserve Fund 4
Energy consumption increase 4
CSF Defaulters remain a challenge in the community 5
2012 CSF Budget versus actual expenditure 6
The 2013 Community Service Fee explained 7
How the Community Service Fee is calculated 9
Detailed budget 10
Components of your 2013 CSF budget 11
Budget variance 11
Community Service Fee challenges 12
The role of RERA 13
How to pay 14
3
Executive summary
The purpose of this document is to provide the Homeowners of Marina Promenade with information on the
budget for the 2013 Community Service Fee (CSF) as well as other general information about ongoing plans
to ensure the financial health, longevity and high quality of the community.
The Community Service Fee rate had been maintained for 2013
The Real Estate Regulatory Agency, (RERA), has approved the 2013 CSF budget at AED 22.93 per square
foot. The figures below represent a comparison of the residential portion of the budgets for 2012 and
2013.
Budget item Budget 2013
rate (AED)
Budget 2012
rate (AED)
Operating budget
18.24 19.26
Administrative budget 1.78 1.82
Capital Reserve Fund 2.06 0.87
Master Community Levy 0.84 0.99
Community Service Fee budget 22.93 22.94
2012 Budget versus actual expenditure summary
In 2012, overall actual expenditure was some 7%, or AED 1.78 million, under the budget figure. The
surplus amounts have been allocated to the Capital Reserve Fund, which is currently underfunded by
approximately AED 31 million. Efforts are therefore being made to ensure adequate funds are available to
replace major assets without causing detriment to the CSF budget in the future. The figures below
represent the residential and retail amounts for 2012.
Budget item 2012 Budget
(AED)
Actual
(AED)
Variance
(AED)
Operating budget 21,417,292 19,829,761 1,587,531
Administrative budget 2,013,079 1,813,414 199,665
Capital Reserve Fund 975,693 975,693 -
Master Community Levy 1,090,912 1,090,912 -
Total costs 25,496,976 23,709,780 1,787,196
4
Executive summary contd
Underfunding of the Capital Reserve Fund
A Capital Reserve Fund (CRF) study was commissioned in early 2009, which was prepared by specialist
consultants. In this study, a comprehensive review of Marina Promenade assets was undertaken, taking into
consideration their life expectancy, total replacement costs and other variables. Over a five year period (to
the end of 2013) it was reported that the CRF should hold AED 47,102,816, taking into consideration
incurred interest. This equates to an annual contribution of approximately AED 8,000,000.
In actual fact, the total CRF for Marina Promenade after maturity of all fixed deposits was AED 5,185,629
(as at the end of December 2012). Whilst funds are invested in high interest term deposits with a selection
of A Class banks for periods of between six months and a year, the fund was underfunded by AED
31,278,664 at the end of 2012. To date, contributions to the CRF were approximately AED 900,000 per
year, which is around AED 7,000,000 short of the recommended annual amount.
This underfunding poses a major concern for the community, as there may not be sufficient funds to
replace major assets when necessary. This would result in a Special Levy being added to the Community
Service Fee budget and could pose a great additional expense to Homeowners. Underfunding could also
affect property values if major plants are not replaced or the Community Service Fee increases to an
undesirable level. As such, efforts are being made to continuously drive down community expenditure,
whilst placing any surplus amounts in the CRF. This is to try and prevent increasing the budget from the
current level of AED 22.93.
Energy consumption increase
In 2012, utility charges were almost 0.22%, or AED 55,560, higher than in 2011. This was mainly due to
higher electricity charges related to the generation of chilled water for air-conditioning units in the
community. The table below shows the increase in consumption.
Executive summary contd
5
Several energy saving initiatives are currently being discussed with the Interim Board to lower the utilities
consumption in our community. In particular, an investigation is now being undertaken into the possible
installation of BTU meters and the introduction of direct billing for actual chilled water usage by
Homeowners / residents and retail occupiers. This initiative and others that focus on upgrading equipment
and operations could potentially lead to a reduction of around AED 3 or 4 million in the annual Community
Service Fee. More information about energy saving initiatives will be released during 2013.
CSF defaulters remain a challenge in the community
Non-payment of the CSF remains a challenge as it places a financial strain on the budget and could lead to
the suspension of essential services used by all residents. The payment of the Community Service Fee is the
obligation of every Homeowner, and is absolutely necessary to ensure that the community has adequate
funds to carry out the required services, including the provision of utilities. Without these, residents face the
risk of service disruptions and ultimately, a possible increase in the overall CSF budget to cover any deficits.
CSF increases will be passed onto all Homeowners.
A number of initiatives were introduced in 2012 to encourage the timely payment of the CSF. For 2013, new
initiatives will be implemented, such as the Move In / Move Out policy and access card deactivation to
amenities to increase collections rates. Several other steps are being reviewed and discussed with RERA to
support collection without further delay.
Homeowners who do not pay their CSF on time may be subject to certain penalty fees, restrictions on
property sales / leases and legal action as applicable under local statutes.
The annual CSF collection rates as at December 2012 are as follows:
Year 2012 2011 2010
2009
2008
Overall collection rate (%) 89% 95% 98%
99%
99%
Total arrears (AED) 2,735,449 1,233,911 452,930 124,812
40,381
6
2012 CSF Budget versus actual expenditure
Number of units: 846
Entitlement bases: Saleable internal area
Entitlement square foot: 1,068,773
Operating budget Budget Actual Variance
Maintenance costs 5,227,440 4,738,812 488,628
Services 4,529,497 3,823,226 706,271
Utilities 11,610,355 11,145,881 464,474
Contingency / community
improvement
50,000 121,842 (71,842)
Subtotal 21,417,292 19,829,761 1,587,531
Administrative budget
Professional services 464,600 280,052 184,548
Statutory fees and permits 25,000 - 25,000
Management fee 1,174,214 1,174,214 -
Insurance 349,265 359,148 (9,883)
Subtotal 2,013,079 1,813,414 199,665
Capital Reserve Fund 975,693 975,693 -
Master Community Levy 1,090,912 1,090,912 -
Total costs 25,496,976 23,709,780 1,787,196
Please note the above figures are unaudited and represent both the
residential and retail costs for Marina Promenade.
In 2012, the actual operating and administrative expenditures for the community
were AED 1.78 million, or 7%, lower than budgeted – so this
amount was allocated to the CRF to cover part of underfunding.
7
The 2013 Community Service Fee
explained
The Community Service Fee (CSF) charged to each Homeowner represents his / her share of the annual
CSF budget that is estimated to be required for the maintenance and operation of the common property
and assets of the community. The CSF rate also includes a share towards the Master Community Fee for
Dubai Marina and a provision to the Marina Promenade Community Reserve Fund that will cover the
replacement of common assets when necessary.
Therefore, the Community Service Fee consists of the following four components:
• Operating budget
• Administrative budget
• Capital Reserve Fund
• Master Community Levy
Operating budget – budgeted at AED 18.24 per square foot
The operating budget consists of day to day operating and administrative expenses used to maintain your
community. Operational expenses include, but are not limited to, the maintenance, utility costs and
management of the following:
• Water and electricity (including chillers for the air-conditioning system)*
• Common areas including infrastructure, landscaping / irrigation and water features; general as well
as specialised cleaning; pest control; and civil works such as painting, tiling, masonry and carpentry
• Common area lighting, which includes streets, walkways, corridors, façade, aircraft warning lights
as well as intelligent and central emergency lighting systems
• Common and shared recreational areas such as gyms, squash courts and swimming pools
• Elevators and associated factors
• Garbage chutes and waste collection
• Fire fighting equipment as well as fire detection and control systems / networks
• High and low voltage systems and networks (including earthing and lighting protection systems)
• Generators and associated facilities
• Mechanical, Electrical and Plumbing assets (MEP)
• Signage – its design, manufacture and placement within the community
• Access control systems
• Building Management Systems (BMS)
• Building Management Units (BMU)
• Community security and control rooms
• Periodic upgrades and / or replacements of non-capital equipment and consumables
• Compliance with statutory requirements and / or related internal policies
* The largest component of the operating budget relates to the water / electricity (utilities) consumption of
the 15 chillers located on the top of our towers, which are common assets. These chillers provide cold
water to all air-conditioning units in residential and retail units in addition to all of the related common
areas. These utility charges equate to 46% of the overall budget as detailed on Page 11 or AED 10.63 per
square foot.
8
The 2013 CSF explained contd
The table below shows the gradual increase in electricity and water (utilities) consumption costs at Marina
Promenade. Efforts are being made to reduce costs through the introduction of energy saving measures,
which includes an initiative to improve the efficiency of our cooling equipment in 2013. The figures below
are actual billed amounts for both the residential and retail portions of the community.
Total (AED) 8,926,760.92 8.35 24,056,212.70 9.78 11,570,258.05 10.82
Administrative budget – budgeted at AED 1.78 per square foot
This fund covers the general administration costs and facility management fees that allow us to deliver
community services to the required standards. Administrative expenses include, but are not limited to, the
management of the following:
• Community events and awareness
• Campaigns
• Statutory fees and permits
• Common area insurance
• Auditor’s fees
• Communication charges such as printing, SMS and postage
• Legal and professional fees
• Management costs
• Bank charges
Capital Reserve Fund – budgeted at AED 2.06 per square foot
The Capital Reserve Fund has been established for the costs incurred in the repair and replacement of
capital items no longer under warranty. Examples of this would be elevator or chiller replacements, or
perhaps flooring and cladding of buildings. It is vitally important to have a robust fund to guarantee not
only the smooth running of the community but also to ensure that the value of the building and individual
units are maintained well into the future. In order to ensure this, the Capital Reserve Fund allocation has
been increased from AED 0.87 per square foot in 2012 to AED 2.06 per square foot in 2013.
Master Community Levy – budgeted at AED 0.84 per square foot
A Master Community Levy is charged to each community and other non-residential entities – for example:
hotels, clubs and retail areas within the Dubai Marina Master Community. This charge is paid through the
CSF and covers items such as plants and the maintenance of the Master Community infrastructure including
roads, bridges, underground services, storm drains, sewage lines and pavements. In other words, the
Master Community Levy goes towards maintenance of areas that are not part of any particular community
but are common to the Master Community and shared by all.
9
How the Community Service Fee is calculated
Our budgeting team considers the following aspects when
calculating the Community Service Fee (CSF):
Historical expenses
We evaluate actual expense trends from the previous year based on
individual cost items. Depending upon the operational plan, we decide
whether or not to include them again in the following year’s budget. In
addition, our hands-on experience from daily site operations gives further
insight into various aspects of accurate budgeting and cost savings.
Resource allocation on site
We periodically review resources on site to find ways of improving
performance by employing new technology and operational methods based
on international best practices. This continuing development in the
management of our resources has a substantial and positive effect on the
budget.
Service provider contracts
By regularly reviewing service provider contracts, we can evaluate key areas
of improvement such as performance and cost savings. This helps us to
determine future budgets and predict expenses.
Capital assets evaluation (maintenance, repair and replacements)
Capital assets that are no longer under manufacturer’s warranty are regularly
reviewed for major maintenance or replacement. Essential equipment, such
as sewage pumping stations and / or similar items, supports the overall
infrastructure of the community. So we make allowance in our budget for the
upkeep of these items, thus ensuring the community has sufficient funds
available during times of emergency and / or when replacements are
required.
Provision for doubtful debts
This amount allows for the setting aside of a small portion of CFS collections
as provision in case certain receivables are required to be written off in the
future. This practice conforms to the basic accounting principle of
Conservatism and we take this step to strengthen the financial position of the
community.
Surplus / deficit adjustment from previous years
Finally, any surpluses or deficits from previous years are brought into
consideration during the determination of the CSF rate for the current year.
This allows us to maintain our funds at an optimum level to cater for every
eventuality and serve the community to the highest standards.
*Where applicable
Costs and pricing
sourced by ECM for
services
Budget
prepared
Surplus / deficit
adjustments made
from previous year*
Budget presented to
Interim Board for
review*
Budget endorsed by
Interim Board*
Budget sent to RERA
for approval
Invoices sent to
Homeowners
10
The 2013 Community Service Fee budget
After a thorough review of the 2012 expenditures and cost projections for 2013, the CSF budget for the residential portion of Marina Promenade has been determined and approved by RERA at AED 24.5 million, or AED 22.93 per square foot of saleable area of the residential units.
Specialised system and services (SSS) 2,005,555.07 1.88 8.19%
Landscaping 113,412.74 0.11 0.46%
Water treatment and testing 14,150.89 0.01 0.06%
Health, safety and environment 1,981.12 0.00 0.01%
Community facilities 461,625.00 0.43 1.88%
Provision for delayed payments 750,000.00 0.70 3.06%
Services Cleaning 1,407,031.33 1.32 5.74%
Security services 1,450,518.02 1.36 5.92%
Pest control 28,301.78 0.03 0.12%
Waste management 66,037.48 0.06 0.27%
Contingency / community improvement 326,414.21 0.31 1.33%
Utilities Chilled water (chiller) 7,165,687.59 6.70 29.25%
Electricity 3,733,013.34 3.49 15.24%
Water 472,344.46 0.44 1.93%
Subtotal 19,495,203.45 18.24 79.57%
ADMINISTRATIVE BUDGET
Insurance deductible 37,735.70 0.04 0.15%
Community events and programmes 18,867.85 0.02 0.08%
Statutory fees and permits (government
requirements) 5,443.38 0.01 0.02%
Management Fee 1,134,856.89 1.06 4.64%
Insurance 248,608.28 0.23 1.02%
Bank charges 240,000.00 0.22 0.93%
Professional services 189,786.37 0.18 0.77%
Communication charges / postal charges 24,885.65 0.02 0.10%
Other expenses 5,000.00 0.01 0.02%
Subtotal 1,905,184.12 1.78 7.73%
CAPITAL RESERVE FUND 2,211,372.29 2.06 9.02%
MASTER COMMUNITY LEVY 903,098.84 0.84 3.68%
COMMUNITY SERVICE FEE for 2013 24,509,273.92 22.93 100%
11
The 2013 Community Service Fee budget contd
Components of your 2013 Community Service Fee
Please note the administrative and operational budgets plus utilities charges for all common assets
(including the chillers that also ‘feed’ all residential units) and common areas, are covered by the General
Fund.
Comparison of 2012 and 2013
The graph below shows a comparison of the 2012 and 2013 Community Service Fee budgets – in AED, per
square foot of your property.
Please note these figures compare the residential portion of the budget for 2012 and 2013.
Utilities for common
area
46%
Operational expenses
33%
Administrative expenses
8%
Master Community Levy
4%
Capital Reserve Fund
9%
12
The 2013 Community Service Fee budget contd
Community Service Fee challenges
Looking at budgeted rates versus actual expenses, there have been savings made in the day to day
community operations and management. However due to many Homeowners defaulting on their
Community Service Fee, the community loses the potential benefits of these cost savings – as appropriate adjustments cannot be made in the CSF Invoices sent out. As a result, community funds
are negatively impacted with limited or no actual cash to rebate against budgeted savings.
Any shortfalls in cash are currently funded (from time to time) by the Developer. With the planned registration of the Owners Association and moving forward, there may be more limited financing
options available to the community as the Developer shall no longer be liable for or party to the
operations of the community. The issue of defaulting / non-paying Homeowners is therefore being taken very seriously by ECM and the Interim Board and the following measures may / will be applied,
in line with local statutes and agreement from RERA: Denial of services to late payers
• Related to property sales and transfer / lease execution
• No assistance from the Developer on any other services related to them
• No assistance from Interim Board on any assistance requested from them
• No assistance from the Community Manager on any services related to them
• No access to amenity services – such as gymnasium, squash courts, swimming pools
Other actions taken against late payers
• Late Payment Fees – as directed by law, these will be applied to all overdue payments
• Legal action – Homeowners may be served with legal notices and / or prosecution as per the
law relating to defaulters • Non-issuance of NOC to tenant – Homeowners who rent out their residence must pay all CSF
arrears before NOC is issued under the proposed Move In / Move Out policy
Owners are encouraged to pay any CSF arrears promptly
and make regular payments in a timely manner to avoid actions being
taken against them or their tenants.
13
The role of RERA
The Real Estate Regulatory Authority,
(RERA), supported by the Dubai Land
Department, plays a key role in the
governance of Dubai’s property sector.
The organisation protects the rights of
developers and investors alike by giving
advice on all areas of strategy, policy
and certification concerned with real
estate.
From the regulation of investment
activities designed to yield the highest
returns, to the issuance of licenses for
real estate entities and the monitoring
of projects from a financial and
technical aspect, RERA serves to
protect the wider interests of the
market and its investors.
Your Community Service Fee is carefully
drafted by our financial management
team, taking into account each of the
components within our budget. Then
after a stringent checking process,
RERA issues us with a certificate of
approval, a copy of which can be seen
to the right.
By working carefully within the official
RERA standards and guidelines, you can
be safe in the knowledge that your
rights are protected at every stage of
your dealings with us.
Your Community Service Fee approval letter from RERA
14
How to pay
Homeowners may settle their 2013 CSF Invoice using any of the following methods:
Online payment
• Emaar e-Service - Quick Pay via https://eservice.ecm.ae
• Mashreq and ENBD account holders may pay online via www.mashreqbank.com or
www.emiratesnbd.com
Credit card payment
Homeowners may pay by credit card using any of the following:
• Online via Emaar e-Service
• Auto Debit Authorisation (form included with the CSF invoice)*
• In person at Emaar Customer Centre, Emaar Square, Building 2, Ground floor, Credit
Control
Cash payment
Cash not exceeding AED 40,000 may be paid at Emaar Customer Centre, Emaar Square, Building 2,
Ground floor, Credit Control.
Cheque payment
Homeowners may pay by cheque via:
• CSF Drop Boxes located at the Emaar Retail Centres and select locations within the community
• Mail / courier to Credit Control, Emaar Community Management, PO Box 9440, Dubai, UAE
• Delivery to Emaar Customer Centre, Emaar Square, Building 2, Ground floor, Credit
Control
When paying by cheque, Homeowners must remember to:
• Enclose the payment slip with the cheque(s)
• Make the cheque(s) payable to the bank account name mentioned on the CSF Invoice
• Write the Property ID and property details on the reverse of the cheque(s)
• Allow sufficient time for the cheque(s) to reach Credit Control when mailed
Bank transfer
Bank transfers may be made using the bank details mentioned on the CSF Invoice – please send a copy of
