What the records show—and what owners deserve to have explained

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Content published here represents independent owner research, commentary, and analysis and does not constitute an official Association communication or representation.

Dear Neighbors,

After reviewing the 2025 audit, monthly financial statements, general ledgers, bank records, approved budget, project documents, and prior audits, one conclusion is difficult to avoid:

Golden Surf Towers is operating, but it is not presently in a financially healthy position.

This does not mean that $736,347 was stolen or that every unusual transaction was improper. A deficit is not automatically missing money, and high expenses are not automatically fraud. However, the records show persistent deficits, weak liquidity, no accumulated reserves, substantial debt, repeated special assessments, interfund transfers, and accounting issues that require clear, document-supported answers.

Where GST ended 2025

According to the final audited balance sheet, GST ended 2025 with:

Financial condition	Amount
Operating-fund deficit	$221,102
Special-assessment-fund deficit	$515,245
Combined accumulated fund deficit	$736,347
Total recorded assets	$501,917
Total recorded liabilities	$1,238,264
Existing City National loan	$995,135
Operating amount owed to the special-assessment fund	$208,035
Replacement-reserve balance	$0

The accurate statement is that GST ended the year with a $736,347 accumulated fund deficit. That means recorded liabilities exceeded recorded assets by that amount.

It does not mean that $736,347 is necessarily missing, nor should the $995,135 bank loan be added again to create a larger, misleading deficit figure. The loan is already included in the liabilities that produced the $736,347 deficit.

The Association improved in 2025—but remained deeply negative

The audit reports that GST generated a combined 2025 surplus of $166,608:

• Operating surplus: $108,416
• Special-assessment surplus: $58,192
• Beginning combined deficit: $902,955
• Ending combined deficit: $736,347

However, the reported accounting surplus did not produce stronger liquidity. Total cash declined by $208,280 during 2025, from $517,678 to $309,398. Of the year-end total, only $82,493 was reported as ordinary cash and cash equivalents; the remainder included special-assessment cash, security-deposit cash, and deposits in transit. 

For an Association with approximately $1.7 million in annual operating expenses, $82,493 represents only a limited operating cushion.

The reported $166,608 reduction in its accumulated deficit during 2025, from $902,955 to $736,347. That numerical reduction did not restore financial health. It occurred during a year of historically high maintenance assessments, an additional $350,000 roof special assessment, continued bank debt approaching $1 million, zero accumulated replacement reserves, substantial interfund obligations, and declining cash.

Owners are paying substantial dues and assessments

The approved 2025 budget charged approximately:

• One-bedroom: $1,993.68 quarterly, or about $7,975 annually
• Two-bedroom: $2,731.77 quarterly, or about $10,927 annually
• Studio: $1,637.37 quarterly, or about $6,549 annually

These amounts exclude special assessments.

GST collected $1,696,752 in regular maintenance assessments during 2025 and reported $1,700,003 in operating expenses. Almost all regular maintenance revenue was therefore consumed by current operating costs. 

For a 170-unit, non-luxury building with limited amenities, the concern is not simply that coastal high-rise operations are expensive. Insurance, utilities, elevators, fire systems, staffing, corrosion, and structural maintenance are legitimately costly.

The concern is the result:

High dues, repeated special assessments, approximately $1 million of continuing debt, zero accumulated replacement reserves, and a $736,347 combined deficit.

Owners are paying heavily, but the Association still lacks a meaningful financial cushion.

This is a long-term pattern—not one bad year

The audited operating fund changed as follows:

• 2020: positive $28,655
• 2021: negative $155,180
• 2022: negative $401,000
• 2023: negative $254,884
• 2024 operating deficit: $329,518
• 2025 operating deficit: $221,102

Beginning in 2024, the audit separately displayed the special-assessment fund deficit. The combined deficits were:

2025: $736,347

2024: $902,955

The accounting presentation changed in 2024, so earlier years are not perfectly comparable to the later combined figures. Nevertheless, the operating fund has remained negative since 2021.

Major red flags requiring explanation

1. Security-deposit funds were transferred into operating

In September 2025, the security-deposit account decreased from $52,127.76 to $2,877.87 after three transfers totaling $49,249.89 went into operating:

• $40,000 on September 17
• $2,249.89 on September 24
• $7,000 on September 26

The September 24 bank description specifically states “TO CLEAR OD,” meaning the transfer was used to clear an operating overdraft. 

In November, $38,582 was transferred from the 2025 special-assessment account into operating. Later that month, operating transferred $40,000 back into the security-deposit account. 

The timing does not prove that special-assessment money directly replaced security-deposit money. It does create a legitimate reconciliation question.

The final audit was also qualified because the auditor could not obtain sufficient appropriate evidence supporting the recorded $36,204 security-deposit liability. 

Owners deserve to know:

• Who authorized the transfers?
• What expenses were paid?
• Where was the resulting obligation recorded?
• What was the repayment plan?
• Why were deposit funds needed to clear an operating overdraft?
• What documentation supported the later transfers?

2. Operating repeatedly owed substantial amounts to special assessments

At different points during 2025, the books reported large amounts due from operating to the special-assessment fund.

By May 31, that balance had reached $839,921. 

By November 30, it stood at $565,766.52.

The final audit reduced the year-end figure to $208,035.

There may be valid reimbursements and year-end audit adjustments behind that reduction. But owners should receive the transaction-level schedule showing:

• Which expenses created the balance
• Which fund originally paid each invoice
• What was repaid
• What was reclassified
• What board authorization supported each interfund transaction
• Why the balance changed so dramatically in December

3. Replacement reserves ended at zero

The audited reserve schedule reports:

• Beginning reserve balance: $0
• Assessments: $0
• Transfers: $0
• Expenditures: $0
• Ending reserve balance: $0

The reserve study identifies approximately $7.18 million in estimated future component replacement costs and a combined 2026 baseline funding recommendation of $325,748. This is not current debt, but it demonstrates the scale of future needs. 

A zero reserve account does not mean no major repairs are needed. It means those repairs will likely require future dues increases, borrowing, or additional special assessments.

4. Insurance was budgeted $442,759 above actual expense

Insurance was budgeted at $827,760, while actual audited insurance expense was $385,001—a favorable variance of $442,759. 

A budget variance is not missing money. But most of that cushion was absorbed by spending above other budget lines.

Significant overruns included:

• Repairs and maintenance: $234,087 actual versus $120,600 budget
• General repairs: $80,494 versus $35,000
• Elevator repairs: $50,092 versus $4,800
• HVAC repairs: $38,399 versus $10,000
• Fire alarm: $19,248 versus $4,000

Administrative expenses were also $91,352 versus a $53,480 budget, including legal fees of $31,515 versus $15,000 and licenses, taxes, and permits of $26,721 versus $5,000. 

Owners deserve to know what premium information supported the original insurance budget and which expenditures were later approved against the insurance savings.

5. Roof accounting is fragmented

The roof funding plan included:

• $721,312 billed to owners in Phase I
• $300,000 promised from operating
• Another $350,000 assessed in Phase II

The audit reports:

$150,607 in additional parapet-wall expenses recorded in operating

$45,000 in roof expenses paid from operating

$1,116,672 in roof expenses originally recorded under Special Assessment III and later reclassified to the roof assessment

A reclassification is not automatically improper. But a reclassification exceeding $1.1 million requires a complete project reconciliation.

Owners should receive one schedule showing every:

• Contract and amendment
• Change order
• Invoice
• Payment application
• Bank payment
• Operating contribution
• Special-assessment collection
• Insurance contribution
• Engineering approval
• Lien waiver
• Warranty
• Final inspection and certification

6. The loan disclosure contains inconsistencies

The final audit reports:

• $995,135 on the balance sheet
• $995,135 in the principal-payment schedule
• $989,085 in the narrative loan note

It also states that the loan matured on January 22, 2025, while simultaneously presenting payment obligations extending through 2026 and later. The loan note reports $52,668 of interest, while the cash-flow statement reports zero interest paid. 

This does not prove misuse. It means owners need the direct lender statement, current loan agreement, amendments, correct maturity date, amortization schedule, and payment history.

What a financially healthy association should show

A healthy association should be able to demonstrate:

• Positive or credibly improving operating equity
• Adequate unrestricted cash
• Properly funded replacement reserves
• Reliable monthly financial reporting
• Reconciled bank, loan, insurance, owner, and deposit records
• Restricted funds used only for their designated purposes
• Major projects tracked through one complete ledger
• Clear procurement and change-order controls
• A long-term plan that reduces dependence on emergency special assessments

GST’s records do not yet demonstrate that condition.

The questions owners should ask

Owners do not need accusations. We need records and reconciliations.

1. Why were security-deposit funds transferred into operating, including to clear an overdraft?
2. What transactions created the large amount operating owed to special assessments?
3. How was the promised $300,000 operating contribution to the roof actually funded?
4. What comprises the $1,116,672 roof reclassification?
5. Where did the $442,759 insurance budget variance go?
6. Why are reserves still zero after years of high dues and repeated special assessments?
7. What documents reconcile the City National loan balance, maturity date, principal, and interest?
8. What is the written plan to eliminate the $736,347 combined deficit and prevent another cycle of emergency assessments?

Conclusion

The records do not establish that every questioned transaction was improper. They do establish that Golden Surf Towers remains:

Financially fragile, substantially under-reserved, burdened by prior deficits and debt, and dependent on owners to fund the next major problem.

The solution is not rumor, accusation, or blind trust.

The solution is complete financial transparency:

Show the contracts. Show the invoices. Show the bank transactions. Show the authorizations. Show the reconciliations.

Sources: GOLDEN SURF TOWERS-2025-FINAL AUDIT-OWNERS; SEPTEMBER 2025 FINANCIALS, NOVEMBER 2025 FINANCIALS, APPROVED 2025 BUDGET, MAY 2025 FINANCIALS, 2020-AUDIT.

GoldenSurfTowersCondominium is an independent owner-operated website and is not affiliated with, authorized by, or operated on behalf of Golden Surf Towers Condominium Association, Inc., its Board, management, or agents. For informational purposes only.