Why does SCNA need such a large reserve fund?
SCNA Board Treasurer Jonathan LaTurner answers:
SCNA has been fortunate to be able to accumulate $435,559 in unrestricted reserves in the past decade.
Many of our members and neighbors may not know that SCNA nearly dissolved 15 years ago due to declining membership and participation, and low occupancy and community involvement at Sierra 2 Center. SCNA was spending substantially more than it was generating in revenue, forcing it to become dependent on reserves, which put the organization at risk of failure.
SCNA has managed to accumulate a healthy reserve as a result of a detailed budgeting process as well as the successful operation of the Sierra 2 Center, which accounts for about 80 percent of SCNA’s annual revenue.
Our association is unusual in having the opportunity to operate such a revenue-generating asset as Sierra 2 Center, which not many other neighborhood associations have. Typically, neighborhood associations rely primarily on donations, grants and other sources of public support to fund operations and initiatives. In contrast, SCNA normally receives only about 15 percent of its revenue from such sources.
With large capital expenditures on the horizon, such as the theater renovation, a potential lease amendment with the city, possessory interest expense, and the general overall upkeep of an aging Sierra 2 Center, our reserves could be substantially depleted over the next couple of years without public support.
If the Sierra 2 Center had to shut its doors tomorrow, SCNA would only be able to survive for about six months. That’s why an adequate reserve is imperative to the overall health of the association.