Board of Directors Minutes 7/27/23

HIDDEN VALLEY LAKE PROPERTY OWNERS’ ASSOCIATION

BOARD OF DIRECTOR’S MEETING

Thursday, July 27, 2023 at 7:00 p.m. – 8:30 p.m.– POA Lower Level

UNAPPROVED

Board of Directors Members Present: Jeff Fuell, Ken Horn, Grant Smiley, Robert Starks and Donna Yetzer.

Community Manager Present: Dave Wismann

July 27, 2023 Motions:

Motion to Approve May 2023 and June 2023 Minutes—Board Secretary
Motion to Approve Performance Bonds for Return 07/27/2023—Architectural Committee
Motion to approve June statements for POA and Golf Course—Finance Committee
Motion to Approve Healthy Kids Running—Parks and Recreation
Motion to Approve free tennis clinic by Scott Kluener of East Central coach—Parks and Recreation
Motion to Adjourn

Call to Order: Robert Starks

President, Robert Starks called the Board of Directors Meeting to order at 7:00 p.m.

Pledge of Allegiance:

The meeting began with the Pledge of Allegiance.

President’s Report: Robert Starks

Hello and welcome. Once again, it has been an exciting month with a great 4^th of July celebration and plenty of outdoor fun.

Regarding Assessments, they are not necessarily new. I have done research, and in the past, primarily in the 1990’s and early 2000’s, there were emergency assessments made. The most recent was in 2003 for repairs of the pool and to replace the pool liner. At that time, one of the pool walls needed repair and drainage was added around the sides of the pool. The assessment was necessary then because there were no reserves to cover these major expenses. It was such events that exposed the need for an emergency fund and budgeting to support capital expenses which we now call escrow.

As we explained in previous Board meetings, the Emergency Fund had been spent along with our Escrow funds. There is no rule to say what emergency funds could be spent on. The only rule is that the funds must be replaced. What is an emergency, and why are the funds needed? One example is if a natural disaster occurs, and many members cannot pay their bills. We still need to pay our necessary POA bills and possibly restore our infrastructure. Another example is a major slip at one of our many Dams or a major road slip. Our buildings are insured but our roads and dams are not insurable. Another example is the current pool liner and needed repairs exceeded the previous estimates and the escrowed funds.

We have been asked many times, why do we use the term Escrow? The definition for Escrow is “a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met.” And this word comes as close to describing our set aside process as any word that we could find. In this case we set aside funds to be used for a particular item. We first estimate what the future cost will be and then divide that cost by the estimated useful life of the item. For example, the Pool Liner that was recently replaced was last replaced in 2003. We were advised to estimate a 15-year life. Funds were earmarked for this project over the years but were held in the general fund. The good news was that the pool liner lasted 20 years, the bad news was it was more expensive than previously expected.

At our Board meetings, slides have been shown as to how the funds have been spent. Inflation has made a big impact on our necessary expenditures. For instance, our Maintenance and Security use a lot of gasoline and diesel fuel. The cost of gasoline, as you know, is much higher, and we have cruisers on the road 24 hours a day. Everything we buy continues to go up, and we only have one source of income. At one meeting, I asked what are we willing to give up? I look at everything we buy and ask exactly that. Do we need this, or can we substitute for a less expensive item?

Our financials were audited by an outside auditor as they are every year. Our financial statements are also in the Echoes. It is the goal of this Board to be transparent in all that we do.

For that reason, Rich Gannon sent out emails containing a link called Community Forum. If you clicked on the link, you were free to ask a question. You could then select if you wanted the question to be answered public or privately. We had many questions come in via the Community Forum on our website. We have been happy to answer all the questions to the best of our ability. On your agenda is one example of the thoughtful questions along with our answers. One example of those questions is shown. To save time, I won’t go through those now, but you will find this in the minutes of the meeting and online.

What can you do to stay informed of the financial and all other issues in HVL? Go to our website monthly and review our financials. These financials are audited monthly by the POA Staff, Finance Committee, and the Board Treasurer. Hopefully you will find all the information you need. If not send us a question via the Community Forum.

Breaking news: recently I mentioned that the Fire Engine at station 2 which is near us on Stateline had a serious issue of a rusted-out frame. We just received our new engine. It is very high tech, even though it is 13-years-old, and it is in great condition. We did something new. Since you, the taxpayers paid for it, you own it, and the fire department uses it.

Thank you for being here and we hope to see you at the luau.

FORUM QUESTIONS:

Questions from the Profit and Loss statement for 2022

What is 5125 ID card income? over $2000 seems a lot as I thought the cards were free – at least we did not pay. Replacement cards are $5 / Nanny / Grandchild / Etc $50 … correct we did not charge last year because it was a new program, but we are consistently charging this year…
What is 5165 NPO Fines Income? Guess I just do not understand the acronym. Non-Property Owners …. Not much going into this because of the issue with Security … but Non-Residents come through our streets and can get citations, parking, etc….
I noticed that 5192 Golf course income is over $180K. Just what number would this have to be to have the course be self-sustaining? This number is the $90 special Golf Course assessment that was voted by the property owners to buy the golf course. Out of this we pay the $11,500. monthly mortgage payment and residual funds are sent to the Golf Course as originally agreed. Robert, what is the actual golf course income and is itself sustaining. I think we should keep it but would like to know the actual long-term cost. We do not share Golf Course business in public because our competitors would love to get those details. But you can review the budget through David W. or by attending a finance committee meeting.

What is 5210 Cable commission income? At over $14K is this a fee from Comcast? If so will we lose it when SEI is done? This is commission from Comcast … averages about 3500 a quarter. We will lose some of this income as people move from Comcast to SEI REMC. I wonder how much it will cost us to replace water lines and the shattered roadways where there are repairs to the water lines and where SEI has pulled multiple conduits through one spot. Just what have they committed to reimburse – specially for the roadways. Our water lines were already in need of replacement. In some of the potholing, which is used to identify utilities prior to digging, the process itself has caused a break. Utility companies have an agreement that they will repair their own utilities unless things become egregious. VRUC has been replacing pipe and repairing throughout the project.

Road repairs are part of the restoration by the fiber company’s contractor at their expense. In some cases we will have the repair done and then send them the bill.

I noticed that 5401 Fitness membership is approx. $25K but in your note it is now over $42K. Was the increase due to new equipment or ? In any case, if the $42K number is right that is an excellent result in one year and probably would justify the purchase of new equipment even considering other fitness expenses. What is the reason for the increase in dues? Increased membership.

We currently have 195 active paying memberships.

67 Single ($15 per month) = $1,005. x 12 = $12,060.

128 Family ($20 per month) = $2,560. x 12 = $30,720.

Total $42,780.

Fitness expenses are at almost $18K before the new equipment was purchased. Presume this will be almost the same for 2023 less maybe the $2K for maintenance and repairs? Agreed
5987 Willies Rental is $48K for the year 2022. Does this ever go up or is it a percentage of sales? I think we really do much of the major maintenance although Willies may do some. The rental rate does seem a bit low considering average restaurant rental rates and the location, but I do not know what Willies has done for us otherwise. It is a percentage of sales, and we handle building maintenance, but Willies handles all interior maintenance including HVAC.
7690 Pool and Beach maintenance and repairs at $24K. Does this include the new pool liner or is that 2023? The new pool liner for 2022 would show on the balance sheet in 2080 Fixed Asset for Swimming Pool & Beach … as we capitalize and depreciate the expense. Now part of the major expense for maintenance last year was the leak and drain issue upon putting in the liner.
8021 Valley Lawn Care at $53K. Based on statements at meetings this will go up but by how much? The board and Community manager will get competitive bids before the current contract ends.
What is 8050 Valley Ditching at $22K? This is an account to pay for culvert pipe replacement (most are over 50 years old) and efforts to repair the ditch where necessary to correct drainage issues.
What is 8170 Valley fire hydrants expense at $18K? is this just for testing annually? Seem like a lot or I do not know what is being done. This is the water cost for our fire hydrants $1,485/mo… and they are adding 25 new ones in 2025 …. This expense will increase!
12 8221 Security Employee Insurance is this for Workers Compensation, Law enforcement Legal liability or ? Do we have Law enforcement Legal liability? Basic medical/dental/vision/life, etc Do we have Law Enforcement legal liability? Law enforcement liability is through the police department of the employee. In other words, we employ a Ranger who works for West Harrison as an off-duty position. West Harrison carries law enforcement liability insurance. We carry security liability insurance for anything non-law enforcement that our security team does. This same Ranger, who may be involved in dealing with one of our rule’s violations, would be covered by this insurance.
8480 Office Employees Insurance at $38K. Is this for E&O/D&O? If so seems a bit high but I do not know what our experience is. I noticed a separate line 8670 for General Liability Insurance so this number for office employees is confusing. Same as above on Security … General Liability is our property insurance, Board insurance, errors and omissions … and vehicles.
14 8490 Workers Compensation Insurance at $9K. Is this for all employees like maintenance as I could not find another line for Workers Compensation – may have missed it. Work Comp for all POA staff
There were some significant expenses for Office technology but based on what I am seeing in communication these seem to be paying off. Correct!
Golf course 8860 and 8830. We have an item for $31K for Interest expense but nothing for Mortgage payments. Presume the course is paying the payments directly? Also why is there not a separate line for the subsidy the course gets? For tax purposes the subsidy comes from 2005 Investment HVLGC on the balance sheet. On the mortgage payments, at audit these payments get moved to 4031 Golf Course Mortgage on the balance sheet …. Showing a lower long-term liability
8901 $32K fir Natural Resources wages. What is this for and could it be done by volunteers or is it a requirement of having a lake? Employees in this category are part time and seasonal. Linda, who manages this program does the necessary reporting for Stormwater Management (MS4) and other environmental reporting. The employees help with our efforts to control invasive plants, currently focused on physically removing honeysuckle. They are doing a tremendous job helping to recapture some of our walking trails and wooded areas on a consistent basis. We do have volunteers who assist as well.

Treasurer’s Report: Jeff Fuell

Treasurer’s Report – 7/27/2023

Cash Position May 31, 2023: $360,166

Cash Position June 30, 2023: $237,451

Cash Position as of July 26, 2023: $586,059

End of June:

Operating Funds (Cash day-to-day business and payroll) $213,676

Emergency Reserves $23,674

Escrow Reserves – Future Capital Projects $0.00

Capital Expenses June: A/C Unit POA Office $16,275

Escrow Reserves Future Considerations:

Road Paving
Ongoing replacement of vehicles
Security
Maintenance
Equipment
Aging Buildings / Maintenance
Erosion Control
Technology (All Departments)
Committee Wants/Needs

Note:

All amounts are rounded to the nearest dollar.
HVL POA plans annually for a balanced budget. (i.e., anticipated annual expenses are planned to not exceed anticipated annual income)
Some infrequent expenses are predictable such as replacement of vehicles, maintenance of our roads, the many lake dams, swimming pool liner, lake dredging etc. Funds are reserved each year to cover those future expenses and are included in the totals.
Projected cash at year end is generally equal to zero dollars plus reserved funds for above mentioned expenses as well as necessary reserves. Reserves include two months of operating capital, capital for asset purchases, and Architecture bond payments to be refunded.
All financials will be audited by an outside auditor annually.

POA members, at the May meeting the $300.00 assessment and the annual assessment increase were announced. As Treasurer, l showed where funds had been spent on major items including dredging, new docks, roads, pool liner and other major expenses. We also did our best to answer questions. Pat Hawkins also did her best to explain that the funds were spent to meet the requests of the community. Again in June, our President Bob Starks answered questions and we also answered questions that were sent via Jotform.

We have a very robust system in place to assure integrity. A brief outline of the financial controls currently in place at the Hidden Valley Lake, Property Owners Association include;

Finance Committee. A group of residents that review all financial reports monthly and recommends to the Board if the monthly financial reports should be approved or not. Several of these residents have extensive financial education and experience.
All office processes are overseen by a full time professional manager under the supervision of a five person Board of Directors.
All Payables are handled by our payables agent.
All Receivables are handled by an agent separately from payables.
All checks must be signed by two people. This is generally the Community Manager and the Board Treasurer.

The Board president currently reviews the check register.

Secretary’s Report: Donna Yetzer

Motion to Approve May 2023 and June 2023 Minutes made by Grant Smiley and seconded by Ken Horn. Motion passed 5-0.

Community Manager’s Report: Dave Wismann

Golf Course Report

The weather continues to be our friend and, along with the great work of the maintenance team, has created one of the best-looking golf courses we have enjoyed here. The weather has also encouraged more golfing as rounds continue to beat expectations.

Fiber Optics…

Future Planning will present some information on the fiber project later tonight.

We continue to push contractors to restore properties. We have a handful of properties that still need some work and Rich Gannon has been great at twisting arms to get the work done.

Maintenance Team

We have consolidated the pile of yard waste and are now waiting for the lumber company to shred. We are looking for options for the shredded material.

4^th of July

We had many compliments on the 4^th of July celebration and there seems to be a movement to do even more next year. Please let me know if you are interested in being involved in this project.

Security

Some of the Board members and I met with Dearborn County Sheriff, McHenry and Dearborn County Prosecutor, Lynn Deddens a few weeks ago. The issue presented was our use of red/blue lights, even within Hidden Valley Lake. It has always been assumed that there was no issue on private property, but there is now a change in that interpretation. We are working with Safety and Security and the Board to determine our best next course and we are still working on a contract with West Harrison for our officers’ police powers to be used for our security purposes, but it is a project that takes time.

While all this is in the works, we appreciate your adherence to the rules, especially speeding, which is one of our most-frequent complaints.

COMMITTEE AND CLUB REPORTS:

Architecture Committee Report: Tom Cross

Performance Bonds for Return 07/27/2023

Bond Returns

Lot # 870 Connie George

Property Address 21316 Alpine Dr Bond Amount $500.00