Formerly the proposed Repair & Replacement Fund
From the http://www.bigcanoepoa.org/index.php/home web page:
“The Long Term Finance Committee has put together a survey, or, as some would call it, an opinion poll. We will be sending it to you online shortly. The purpose of the poll is to determine what the most acceptable method is for funding a capital reserve and retiring our $8M debt.
Here are some facts. The POA has never funded a capital reserve. Our reserve consultant, Miller-Dodson Associates, has recommended we build up a capital reserve, and our analysis shows we need $2M for this community and the $40M in assets on our books.
Another long term financing issue for the POA is our debt of over $8M. We recently paid off a short term note of $675,000, and we are making the final payment to the developer in December of $451,000. That will leave the debt of the POA at $8.1M. The debt is made up of two Wachovia loans. One loan that we call the Fitness Center loan will come due in 2016 when we must pay a balloon payment of $1.5M or refinance the balance. The other loan we call the Clubhouse loan represents the monies needed to partially fund the amenity projects completed over the last three years. The clubhouse loan balloon payment is $4.2M in 2018. The committee and the POA Board seek to pay off these loans in 2016 and 2018 and not refinance.
How do we provide for a $2M capital reserve and save for the balloon payments?
The committee is proposing the establishment of a Capital Reserve and Debt Retirement Fund. The committee has suggested two optional methods of funding starting in 2011. The current special assessment of $25 per month for homes and $16.25 per lot ends in December of 2010. Under option one, a new capital assessment of $25 (and $16.25) per month would be started in 2011 and continue thru 2016, with $6M being generated. This is enough to fund the capital reserve of $2M and pay off the balloon payments in 2016 and 2018.
The second option would be a $20 per month assessment and a capital fee (or transfer fee) assessed when a property is purchased. This fee would be $1000 or an improved lot (home) and $650 for an unimproved lot. This combination of $20 per month and the capital fee also yields $6M over six years.
So, the committee wants to find out which method is more acceptable. Following you feedback, we will present our recommendation to the Board. The Board will then ask for the Property Owners to vote on the chosen method of funding sometime in 2010.
Some would ask if $6M is enough. Yes and no. It is enough for the limited uses discussed above. It is not enough for large facility projects. The committee believes the Property Owners want to vote on facility projects over $1M. So the Board and Management must provide the Property Owners justification and plans for the project before proceeding. The funding method must also be identified. The Property Owners would then vote to approve or disapprove the project.
What would happen to the amenity reserve fund? After the final payment is made to the developer in December, this fund can be replaced by the Capital Reserve and Debt Retirement Fund (CRDRF). And any monies left in the fund could be used to start the CRDRF.
So please participate in this poll. We need your input.
Long Term Finance Committee:
Steve Brazen
Sandy Filkowski
Vince Flynn
Jim Head
Ev Hughes
Chuck Palmer
Paul Ray
Don Travis
Richard White ”
5 users commented in " Proposed “Capital Reserve and Debt Retirement” Fund "
Follow-up comment rss or Leave a TrackbackI thought for a minute that the committee had actually posted their announcement on this web site! Silly me, I’m sure they really don’t want it subjected to any rational thought.
If you haven’t already taken the survey on the POA site, it’s not very thought provoking. The questions are very shallow and there is only one place for any comments. I’m pretty certain they aren’t interested in what the property owners have to say.
While I think we should be giving some thought to paying off these debts and funding repairs and maintenance, I remain very concerned about giving our board a free hand to spend money at a million dollars a pop for whatever they want. Unfortunately, it seems that even the best meaning individuals who get elected to the board quickly fall under the spell of the old hands who no longer feel compelled to represent the desires of the property owners.
I think what was done at the fire station in the village is exactly the kind of improvement that could be done at the main gate and at the maintenance yard. It’s too easy to just tear things down and spend other people’s money (ours) on unneeded “improvements.” The north gate is an example. While it is nicely done, there is no question that it has the look of a commercial entrance. I certainly hope this isn’t what they have in mind for the main gate.
The obscene overruns at the Sconti are reason enough why the board should never be trusted with discretionary spending authority. The recent explanation of how there may have been some lapses in communication show that they still don’t get it.
It is amazing how the composition of the board changes over time but the same attitude prevails. I can only hope that the two new directors will be able to withstand the pressure and actually live up to what they said in their campaigning.
I would urge everyone to very carefully read what they want us to approve and be prepared to stand up for what’s right.
When I realized that the Long Term Finance Committee members were letting the POA Board piggy back the long-term debt onto the Capital Reserve Fund, I lost my faith in the committee.
“I really struggled with answering this survey because I do not see why we are combining a capital reserve fund with a long-term debt retirement fund. I think the two should be separate.
At the very least there should be no debt retirement out of this fund unless and until we have an adequate reserve established. Removing funds for use as debt retirement should be voted upon option with all parameters presented for the property owners to assess.
For example all capital needs for current and future assets and maintenance thereof properly identified including cost estimates before any funds are recommended for debt payment. In other words the case should be made each time funds are extracted for non-capital expenditures.
It is a proper function for the board to manage and inform the property owners therein. Also with the board is about to change covenants to permit million dollar disbursements and additional incurrence of debt a million dollars at a time for capital projects without property owner approval.
This reserve fund then becomes a crapshoot for the property owners. Showing the property owner quarterly reports is an after the fact offering.
In other words there is no accountability before the fact. I am not implying that we have a need for micromanagement but with the size of the funds involved, I think there should be some checks and balances for some defined size of expenditure be it 100k, 250k, 500k or a million.
There has to be rules and accountability and some assurance that the property owners have some say at some level before the fact and not be forced to deal with a problem after the fact. This too often is the case with the POA Board.
It is a corporate America type approach but even though the POA might technically be a corporation it is still first and foremost a Property Owner Association.
I have heard only one person, soon to be on the board express and interest in actually managing our money in tight economic times. We are too free spending and have built in too many layers of expensive management.
We may as well be living in a condominium for the size of fees and assessment and the rate at which they are growing. I am concerned about the number of properties for sale, the number of people I know that are considering leaving and what this continuing propensity for spending gobs of money will do for Big Canoe’s future.
I am concerned about the shrinking size of the work force needed to maintain our resource and assets.
I fear I too may be forced to leave Big Canoe because we cannot control our spending.
Certain People who have been on the board for too long have broken just about every rule in the project management book They have cost this community dearly with their lack of integrity and distain for the property owners in general.
Too much ego implying a particular individual knows what is needed has driven many a corporation into oblivion. I fear that instead of preserving the property values, ultimately the financial excess of recent years will ultimately make it difficult to sell our homes at any price.
I do not know what happens to people who get elected to the board and become turncoats. What kind of gun exists that would encourage people to vote for things that will ultimately be a detriment to their own well-being?
I am not encouraged by this (what appears to be a) shell game called the Capital Reserve and Debt Retirement Fund. The explanation of why this was designed or proposed this way is non-existent.
I am not comfortable with this proposal as it stands. Ironically, I am open to a reasonable explanation as to why this is now a capital and debt fund and what the justification for it is.
Along with this I want to see how it will work in conjunction with the other financial covenants and proposals the board now has on the table.
I love Big Canoe and love living here, but my peace has been shaken by one blunder after another financially.
It is good to see some attempt these days at planning but I do not see that we have arrived and a truly solid mode of operating and management at this time.”
Until the members of this board publicly apologize for their roles in the sconti rebuild obscene cost overruns, I will vote against any debt retirement.
This POA Board has made it perfectly clear that they will never provide the property owners full transparency of the Association’s financial records.
Therefore, I will vote against every proposal that asks for more money, and I will continue to do so until they accept their fiduciary duty for providing full transparency of the Association’s financial records to the property owners.