Finance Committee Minutes: July 2, 2016

Hidden Valley Lake Finance Committee
Meeting Minutes
July 2, 2016

Members Present: John Reiniger, Bonnie Starks, Kyle Packer, Jenifer Reuter, and Linda Hartmann

Members Absent: Mary Anna Taylor

Board Liaison: Bob Starks

Guests: Bruce Keller

Approval of the August Finance Committee Minutes  

Motion by: Jennifer Reuter (subject to correction of next meeting date)
Second by: Bonnie Starks
Voting record: All in favor

Review and Approval of the August 2016 Financial Reports

Motion by: Bonnie Starks
Second by: Kyle Packer
Voting record: All in favor

QUESTIONS

  • John Reiniger, September 2016

Do we have funds in escrow for the sealing machine of $5,000.  Maybe I am missing this. This was just an idea that Bruce stated earlier in the year but was never added to escrow or discussed further.  I believe this was an item that has been delayed or not needed at this time. 

I noted the road repair is over the budget by $7,086.  Was there something unusual here?  We had budgeted $15,000 in August and $5600 in September you are looking at YTD as of August.  We are currently only $1486 over budget. 

Hospitalization-security was up $1,026 for August and $5,346 Y-T-D because of “unexpected additions”.  What were these conditions? Additional Deputy added on as family. 

Hospitalization-general was up $1,026 for August and $5,346 “due to increase in life insurance costs”.  What does life insurance cost have to do with hospitalization and if for life insurance are the premiums based on term coverage and therefore may not be subject to an increase? The correct amount is $3694 over budget and the life insurance/ long and short term disability are included in the general hospitalization/ since the  POA pays for that entire amount.

Report from Bruce Keller

Bruce indicated that the board has approved the purchase of 3 new patrol vehicles for $20,000 each. They will be picked up tomorrow, September 21.

Report from Bob Starks 

Bob and Bruce discussed a trip they took to an Ohio conference for lake communities like HVL. Discussion centered around initiation fees assessed by nearly all of the association members.  Bob will be writing up a trip report with details.

Old Business: 

Rate increase: Comments from John related to assessment

  • Without an increase in 2017, we will have a deficit of $53,000.  The total deficit through 2020 would be $398,000.
  • Last increases for roads was 2004, security 1983, lot 2000 and member assessment 2002 meaning it will be 15 in 2017 since the last increase for members.
  • We are spending $100,000 a year for paving and $55,000 for dredging through 2020.
  • We will spend $47,328 on the Crystal Lake (Please check this number for the grand total we will pay for the entire project)
  • We paid $38,000 extra over the budget for the pool house and baby pool construction.
  • We paid $142,000 for the dam slippage and irrigation system.
  • We have made extra payment for road repairs including Longview Road repaid of $15,000 and we over the 2016 budget by $7,100.
  • Our capital projects have been on hold for three years due to our tight cash position.  (I believe this is correct but please check).
  • As an example of our tight cash needs, in 2014 we paid $202,000 for sand and salt.
  • In 2015 we had a POA loss of $56,200 which had to be made up in 2016 by adjusting our escrow allocation.
  • At the end of 2016, we have only $77,000 in our escrow funds, the lowest ever.
  • Rumpke has a 2% increase each year which is allowed in their contract.  It is our intent not to pass this increase on to the property owners.
  • The increase allows for inflation as well as makes up for the past 15 years where there has been no increase.
  • Our dues are reasonable as per research done my Mr. Keller of some other area POA’s.

HOW MUCH OF AN INCREASE?

  • Keller mentioned in his May 4, 2016
    E-mail $23.58 but he also stated “I believe we would simply average a $20 increase per each year”.  Then due to some residents who prepay monthly, is was recommended $24 per year.
  • Now consider this: Could we have an $18 increase per year or $1.50 per month, which sound better than $24, and then the difference be made up in an increase to people with lots or pass on the charges by Rumpke?  Bruce, perhaps you could work on this.
  • The future increases would be reviewed by the board of directors annually to determine if our cash position has improved enough or future expenses have been significantly reduced or stabilized to discontinue the increases.

WHEN THE INCREASE?

  • My thoughts on this is mid-year 2017 would be better. This would assist residents in their tight cash flow needs due to the holidays, give us more time to prepare for town hall meeting and give the staff extra time in preparing for the audit.

POSSIBLE REACTIONS

  •  NO, I DON’T WANT AN INCREASE!!!
  • I am on a fixed income and my social security payment has been reduced or not increased.
  • My family is young and I need cash for their future needs.We just had an assessment increase for the HVGC, and even though the increase was approved and necessary, this became an additional cash payment for me. 

Bruce presented a spreadsheet prepared by Moe and Chris that illustrated several financial scenarios based on 2035 members. With an increase of $24 per year, revenues will increase by $48,840. With an increase of $48 per year, revenues will increase by $97,680 annually.

  • Scenario 1 – A $48 increase starting in Jan 2017 using 5-year budget projections

Balance
EOY 2017:   +$44,680
EOY 2018:   +$68,903
EOY 2019:   +$46,383
EOY 2020:       -$7,181

  • Scenario 2 – A $48 increase starting in July

Balance
EOY 2017:         -$4,160
EOY 2018:    +$20,063
EOY 2019:        -$2,457
EOY 2020:     -$56,021

Based on projected deficits, Moe and Chris recommend a 4% increase on houses, extra lots, member lots, half lots, and extra houses starting in January 2017 that would yield incremental income of $56, 040.

After discussion on the amount of time it would take to roll-out information on a dues increase to the residents, the committee proposed a $4/month increase to member dues starting in July, 2017.

The committee also discussed levying an initiation fee on new members and decided to implement a one-time assessment on new members equal to 1-year’s assessment. This would start in January, 2017. Based on annual turnover of 100 homes per Bruce Keller, this would yield sufficient revenue to avoid any budgetary shortfalls beyond the projected dues increase. This will be presented at the Board of Directors meeting on September 22.

New Business:

Nothing to report

Motion to Adjourn 

Motion by:  Bonnie Starks
Second by:  Kyle Packer
Voting record:  All in Favor

Meeting adjourned at 7:40 p.m.

NEXT MEETING TO BE HELD ON TUESDAY October 18, 2016 at  6:00

ACTION REQUIRED

Take a moment and update your personal information