From the article in the online ‘Smoke Signals’ written by Chuck Palmer (Chairman of the Long Term Finance Committee).
The purposes for the new Capital Initiation Fee:
“we currently have no capital reserves and no funds for new facility requirements.”
“This study concluded that the POA needed to establish a Capital Reserve Fund.”
“What will the funds from the Capital Initiation Fee be used for?”
“The fund use will be limited to capital expenditure-related items only.”
“Fire Station #3 rebuild
Fire Station # 2 expansion
Maintenance Operations/AECD building
Facilities Maintenance Shops building
Equipment Storage building
Roads and Trails shops
Golf Maintenance Operations facility upgrade
Fitness Center expansion
Swim Club Building and Deck renovation/upgrade
Tennis Complex upgrade and growth expansion
Post Office upgrade
Village Hall”
Also:
“new fee would fund such as new facilities, capital reserve fund, repayment/retirement of debt, payment of interest on debt and annual capital expenditures such as roads.”
“The POA will have upgraded facilities, a better financial condition, a capital reserve fund, and will be less likely to raise monthly assessments significantly or impose special assessments.”
As for the current Amenity Fund, which is funded by the monthly fees:
“amenity reserve covers the debt payments for the Fitness Center, a Golf Course Note, the Wildcat Pool, and the land for the new clubhouse parking.”
“Once these obligations are retired, this portion of the monthly assessments will be used for normal capital expenditures or payment of other POA loans. As part of the recommendation, the Committee recommends we replace the amenity reserve calculation with a more encompassing Capital Reserve Fund.”
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And my analysis:
My analysis of the above tells me that the proposed new Capital Initiation Fee (CIF) will be used for anything and everything except maybe the Operating Budget. But since all POA monies are placed in the General Fund (no lock-boxes), and are listed as line-items in that fund, my guess is that the CIF will be used to also help support the coming Operating Budget shortfalls.
In my opinion, a Capital Initiation Fee is necessary, but this new Capital Initiation Fee should be called for what it is – a “creative” way to generate needed income for all of Big Canoe’s budgetary needs.
Lets be truthful, the current financial health of Big Canoe is not good; yes, more money is needed.
4 users commented in " An analysis of the reasons given for the new Capital Initiation Fee "
Follow-up comment rss or Leave a TrackbackThanks for posting Big Mac! I’ll make the same suggestion to you that I did with Deas Nealy’s post - maybe extract some questions from your key points so they can be forwarded to the LTFC.
Questions for the LTFC:
1. How much money is really needed from the CIF projects?
I count 5 or more multi-million dollar new, or replacement, buildings listed in the post above.
Our new Sconti restaurant was priced, and approved by the membership, at $4,000,000. It is now approaching $12,000,000.
2. Again, how much money is really needed for the buildings listed in the justification for the CIF?
3. Don’t we need to know and to understand the reasons for the new Sconti restaurant over-runs before we approve any more money for additional buildings?
4. Would the LTFC members please read Promise #5 of The Six Promises? (Link to The Six Promises web site is listed on the Home Page.)
5. Would the LTFC provide the property owners with an “independent” “full disclosure” audit report on all of the costs of the new Sconti restaurant and include a full disclosure accounting for the reasons for the over-runs (and also include the POA Board’s “Executive” Summary)?
Until the LTFC steps forward and asks the POA Board for a full disclosure accounting on the Sconti restaurant rebuild costs, and until the information called for in question 5 above is given to the property owners, I will vote no on any new income sources for this POA Board.
To the previous comment regarding Sconti cost overruns, I decided to try and chase that point. Thanks to the POA webmaster, financials are now easier to access than a couple of months ago. In digging around, I came across a Nov 2007 statement that shows original and current estimated cost figures. Trust me, I have no dog is this fight and have been leery of some aspects of the board’s actions.
That being said, it would appear the board took the original $10,665,000 budget and added the $3+M insurance proceeds to it to come to a Nov 2007 figure of $13,430,000 for the 7 amenity projects plus contingency. The overwhelming majority of increases occurred with the clubhouse (no surprise here). The original November 2005 projection was for $6,895,000 as a clubhouse total. In Nov 2007, the clubhouse total was $10,433,000, including 1) $800K for the added cart barn, 2) $900K for additional design/testing/legal/architect fees, and 3) $600K in additional site work/road costs.
On the other projects Golf costs went over by $40K, the North Gate went over by $43K, Tennis over by $85K. The origianl contingency fund of $1.1M has been reduced to $350K.
If I assume it was OK for the board to use the insurance proceeds to increase scope of the projects by $3M without formally addressing a membership that voted for a $10.6M project, it would appear budgeting is on a reasonable track.
Bohica,
My dog is honesty and integrity. That is the point to the use of funds. Could the Board legally spend the insurance proceed - I guess - and they did… Should they have?? With the financial position the POA is in??
Better discretion may have been called for instead of spending it like there was no tomorrow. Which really illustrates what you will have with the new capital fund!! This is the community’s blueprint on how things will play out.
Accepting the fact we don’t live in a perfect world, do we REALLY need everyone of these things. Our personal lives and spending budgets are dictated by our means (unless you are subprime and due to get your gov’t bailout for irresponsibilty).
Do we as a commuity on a whole (not a select portion) need a Village Hall?
I am not saying the community doesn’t need more $$ in the coffers. IMO we should have zero debt. But maybe we should be grown up about paying/reserving as property owners.
If the fund is set up as suggested in a painless way to new proprty owners (and should be a flat fee as the access to the facilities/ upgrades are equal to each individual property not by the value of one’s property), the community has seen how a board with next to zero accountbility will spend it. Not on needs but wants and desires.
Another thought…the upgraded facilities you would hope would’t cost more to operate, but what about the new facilities/expansions. We don’t live responsibly now as a community…
We all came here for different reasons, but wonder how those feelings may have changed.
Norton