042608 Town Hall Meeting

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April 26, Town Hall Meeting

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042608 Town Hall Meeting

  1. 1. April Town Hall Meeting Agenda April 26, 2008
  2. 2. I. Introductions Bob Crouch II. Outstanding Service Award John Seferian/Kay Born III. Three Key Principles John Lipkowitz IV. POA GM Report Roger Klask V. Building Committee Report Miller Andress VI. POA Financial Update Sandy Filkowski VII. Introduction of Needs and Recommendations for a Capital Reserve History Bob Crouch VIII. The Needs for New Facilities Claud Lacey IX. Long Term Finance Committee Report Chuck Palmer X. Wild Dunes Capital Reserve Experience Jan Landry XI. Questions and Answers
  3. 3. Financial Background Information For Future Capital Planning
  4. 4. Long Term Debt 3/31/2008 Balance 12/31/2007 $4,381,352 Less Principal Payments 22,734) Fitness Loan ($ 54,124) Golf/Sconti Loan ($ Plus Additional Borrowing $ 2,600,832 Balance 3/31/2008 $ 6,905,326 Total New Debt $ 3,350,832
  5. 5. Amenity Project – New Debt Original Projection 2005 $7,500,000 December 2006 Projection $7,100,000 October 2007 Projection $6,000,000 Borrowed as of 3/31/2008 $3,350,832 Projected Total Borrowing $6,000,000
  6. 6. Update on the Use of the Insurance Proceeds Total Funds Received $3,928,200 Uses: Replacement of: Property of Others $ 312,794 Inventories/Computers/Supplies $ 315,800 Net Funds Available $ 3,299,606 Partial Retirement of Fitness Center Debt (February 2007) $1,000,000 Funds Used to Pay for the Amenity Upgrade Project s $ 2,299,606 Total Uses $3,299,606
  7. 7. Amenity Reserve Fund Established in 1987 Purpose To ensure that the Developer is paid for the Amenities that are turned over to the Big Canoe Property Owners Association
  8. 8. Amenity Reserve Fund How is it Funded? One-Half of the Monthly Assessment on Unimproved and Improved Properties Based on the Date the Property was First Assessed as an Unimproved or Improved Property
  9. 9. Amenity Reserve Fund Amendments to the Agreement 1990 and 1999 The 1999 Amendment placed a $1,500,000 limit on the amount of money the Developer could draw from the fund on “unendorsed” amenities. Unendorsed amenity are those that the Developer built without POA approval.
  10. 10. Amenity Reserve Fund The Final Unendorsed Project Wildcat Pool Balance Remaining to be Paid on the Pool $651,500
  11. 11. Amenity Reserve Fund Uses of the Fund Construction of New Amenities Debt Service Payments on New and Existing Amenities Debt Retirement on New and Existing Amenities Three years of Operational Deficits Generated from Newly Constructed Amenities
  12. 12. Amenity Reserve Fund 2007 Expenditures Fund Balance 1/1/2007 $ 142,150 Assessments Added $1,090,852 Debt Service Fitness Center/Golf Course ($ 512,620) Payments to Developer ($ 450,963) Fund Balance 12/31/2007 $ 269,419 Increase in fund Balance $ 127,269
  13. 13. Amenity Reserve Fund Future of the Fund Final Payment to the Developer in 2010 Funds will continue to be used to make debt service payment on: Fitness Center Debt Amenity Project Debt Estimated Balance 2016 = $1,300,000
  14. 14. Amenity Reserve Fund Options for Use of Balance Partially Fund a Capital Reserve Fund that is Recommended to be $2,300,000 in 2018 Retirement of Fitness Center Debt due in 2016 with a projected balance of $1,791,000 There are not enough funds to do both
  15. 15. APRIL 26, 2008 TOWN HALL MEETING A VIEW TOWARDS A BRIGHT FINANCIAL FUTURE ENABLING THE MAINTENANCE OF THE CHARACTER OF BIG CAN0E
  16. 16. POA Commitment to Maintain the Character of Big Canoe • Comprehensive statement developed in 2004 • Describes spirit, the values and responsibilities • All Property Owners embrace and co-operate • Collectively seek to make Big Canoe an even better place • POA is charged with – Maintaining common property – Managing change – Respond to needs of Property Owners – Enhance property value • Capital Reserve Funding Program – POA duty to ensure adequate financial reserves – Assures future needs are addressed and satisfied – Result of planning for long-term health
  17. 17. FIRST, A LOOK BACK: Big Canoe is over 35 years old. There is a need for significant infrastructure upgrades. A recent example: Dismantling and removing the old docks was a real eye opener…they were in FAR WORSE SHAPE than even the committee imagined. A worker stuck his foot through a rotten board. The DOCKS FELL APART as they were dragged out of the water; EVEN THE STEEL BEAMS gave way. We had hoped that there might be some salvageable material, but most of it was worthless. We are indeed LUCKY THAT WE DIDN’T HAVE ANY ACCIDENTS in the past few months.. THESE NEEDS HAVE BEEN RESEARCHED AND QUANTIFIED…….
  18. 18. Reserve Funding History • Reserve Advisors, Inc. Study February 28, 1995 132 Major Common Elements Recommended $15M Reserve Funding over 20 – year period No Action Taken to Establish or Fund Capital Reserves • Late 2005 Finance Advisory Committee Recommend Establishment & Funding of Capital Reserve March 2006 Repeated in Open Board Meeting Prudent Recommendation Requiring Significant Planning Action was to Establish LRPC & LTFC Need for Updated Reserve Study Basis for Current Recommendation
  19. 19. Additional Background • Big Canoe is in the Fourth Year of Self-Governance • The Need for Long-Term Planning was Immediately Apparent • The Finance Advisory Committee Recommended a Reserve Fund in 2005 • The Long Range Planning Committee and the Long- Term Finance Committee were Established in 2006 • The Only Reserves Historically were for Amenities and Operating Purposes
  20. 20. PLANNING COMMITTEE RECOMMENDATIONS Property Owner Volunteer Committees devoted two years effort. Claud Lacey, Chair of LTFPC Infrastructure needs Initial cost estimate Chuck Palmer, Chair of LTFC Reserve Study Funding options Recommendation for funding
  21. 21. POA Commitment to Maintain the Character of Big Canoe • Comprehensive statement developed in 2004 • Describes spirit, the values and responsibilities • All Property Owners embrace and co-operate • Collectively seek to make Big Canoe an even better place • POA is charged with – Maintaining common property – Managing change – Respond to needs of Property Owners – Enhance property value • Capital Reserve Funding Program – POA duty to ensure adequate financial reserves – Assures future needs are addressed and satisfied – Result of planning for long-term health
  22. 22. Capital Reserve Fund There is a Need for a Capital Reserve Fund. A CAPITAL Reserve Fund will Ensure the Long-term Financial Health of Big Canoe. It will Allow Future Boards to Make Decisions to Improve Big Canoe.
  23. 23. WHAT’S NEXT 30 Day period for Comments Suggested alternatives Assessment of Feedback POA Board Vote on Recommendations June 18th Open Board Meeting Property Owner Vote July
  24. 24. Big Canoe Facility Needs Big Canoe Town Hall Meeting April 26, 2008
  25. 25. Long Range Planning Committee Chartered June 2006 1. Committee Focus • New and existing amenities • New and existing community property and facilities • New and current service and support operations 2. Keep Big Canoe Vision • Welcoming and safe environment • Wide range of amenities and activities • Community that is involved and informed 3. Maintain Character of Big Canoe • “Harmonious integration of the natural beauty of the land with those elements most desired in a resort and residential community”
  26. 26. Long Range Planning Committee Current Members Rich Andersen Claud Lacey John Drew Mike Podsedly Walt Filkowski Bill Rawson Bill Holyoak Ann Young Wayne Huey POA General Manager Ev Hughes Roger Klask – POA Board Liaison
  27. 27. LRPC Report Summary • Recommendations focus on existing, developed Big Canoe • Future and existing roads are not included • Focus on current and future major facility needs (Operational and Amenity) • Facility recommendations require professional evaluation, analysis and costing before project approval • Recognizes the “Big Canoe Village” as an essential element of future plans.
  28. 28. Order of Need A. Immediate needs – Corrected or scheduled for 2008 completion (North Gate water, Swim Club docks, Chemical storage and mixing) B. Current needs – needs resolution within two to three years C. Growth needs – timing determined in part by Big Canoe growth rate
  29. 29. Amenity Need (2006) Lake Disharoon Dock • Rotten carpet • Metal edge - safety hazard 2006
  30. 30. Amenity Need (2008) Lake Disharoon Dock • Removed carper • Replaced damaged decking • Renovated dock extending into lake 2008
  31. 31. Maintenance Operations Need (Scheduled for 2008) Chemical Storage Area in Golf Maintenance Area • Open to the elements • Not secure • Improper mixing facilities 2007
  32. 32. Tennis Center Needs Entrance • No Handicap Access • Does not match accepted standards of other Big Canoe amenities 2008
  33. 33. Tennis Center Needs Retaining Walls & Decking • Does not match accepted standards of other Big Canoe amenities • Beyond repair 2008
  34. 34. Village Fire Station Needs Main Station • Insufficient space for equipment and staff • Sustaining ISO rating requirements an ongoing effort 2007
  35. 35. Village Fire Station Needs Public Safety Office Space • Cramped office space – shared by Public Safety Director and staff • Required ISO records storage space limited 2008
  36. 36. Village Fire Station Needs Fire Equipment Storage • Limited Storage • Restricted Access • Equipment has to be moved for weekly Thursday night training classes • All department meeting are held at the Broyles Center 2008
  37. 37. Village Fire Station Needs Turnout Gear • Stored in bags due to lack of easy access lockers 2008
  38. 38. Village Fire Station Needs Outside Storage • Space Fire hoses and other equipment are kept in makeshift outside lockers that have minimal protection from the elements 2008
  39. 39. Maintenance Operations/AECD Needs North Gate Building • Plumbing in poor condition due to long time use of high mineral content well water • Lack of effective storage space • This is Big Canoe’s designated emergency facility 2008
  40. 40. AECD Needs AECD File Storage (Office Building) • Limited effective storage space • More storage needed as Big Canoe grows 2008
  41. 41. AECD Needs AECD File Storage (Squash Court) • Ineffective storage space 2008
  42. 42. Maintenance Operations Needs Mechanical Repair Shop • Lift cannot be used for some of the newer (larger) equipment 2008
  43. 43. Maintenance Operations Needs Sign Shop • Outside water tap serves both this building and the carpenter shop • Toilet facilities are across the yard in the office building 2008
  44. 44. Maintenance Operations Needs Carpenter Shop • “..beyond useful life..” – 2006/2007 Reserve Study 2008
  45. 45. Maintenance Operations Needs Carpenter Shop • Termite infested pole supporting structure 2008
  46. 46. Maintenance Operations Needs Carpenter Shop • No insulation • Inadequate heating and dust control 2008
  47. 47. Postal Service Future Need Building Access • Design for handicap access 2008
  48. 48. Postal Service Future Need Access and Traffic • Improve auto access for both USPO and patron • Better direct traffic flow • Expand parking 2008
  49. 49. Postal Service Future Need Undersized Facility • Design to meet postal regulations 2008
  50. 50. POA Administration Needs POA Retained File Storage • Limited effective storage space 2008
  51. 51. POA Administration Needs POA Retained File Storage • Limited effective storage space 2008
  52. 52. POA Administration Needs Board Meeting Room – POA Lodge • Restricted visibility and poor acoustics for both board members and audience • Limited seated 2008
  53. 53. POA Administration Needs 2008 Operations Maintenance/AECD 2008 POA Conference Rooms Big Canoe Lodge
  54. 54. More Meetings, More Events – Increased Demand for Facilities Today POA - 13 committees Community – 50+ clubs & organizations = Over 650 meetings/year Tomorrow 1000 meetings & events/year
  55. 55. Fitness Center Future Needs Expand Fitness Center • Projected membership growth will exceed the current capacity • Enlarge locker rooms • Add spa • Expand physical therapy 2008
  56. 56. Auxiliary Entrance to Fitness/Indoor Tennis Center Auxiliary Entrance • Add reception area • Better functioning restroom facilities designed for larger crowds 2008
  57. 57. Trails Expansion Program List of Proposed Projects • Nature Valley – Complete cabin refurbishment – Add kiosks and maps at entrances – Improve to Jeep trail – Improve parking area • Playfield Park – Trail from timeshare to the Village (two bridges & signage) – Improve running/walking track • Meadows Park – Add small kiosks and maps to entrances – Add nonskid surface to Wildcat connecting trail • Wildcat Recreation Park – Add two Bocce Ball courts – Add trail from parking area to walking path
  58. 58. Summary of LRPC Recommendations Current Needs (1-2 years) • Village Fire Station (new facility) • Tennis Complex (improvements –( phase A, B & C) • Roads & Trails & Carpenter Shops (new facility) Future Needs (2 – 10 years) • Postal Service (new facility) • Village Hall (POA administrative offices, storage, and meeting rooms) • Swim Club (renovate) • Fitness Center (expand) • Maintenance Operations & AECD (build offices, storage and conference rooms) • Golf Maintenance Equipment Storage (rebuild) • Trails (improvement and expansion)
  59. 59. Estimated Cost The estimated cost for the facilities LRPC recommendations in today’s dollars is $10 to $11 million.
  60. 60. CAPITAL INITIATION FEE IMPROVING BIG CANOE’S FUTURE
  61. 61. Long Term Finance Committee Members Sandy Filkowski Vince Flynn Ev Hughes Chuck Palmer Rich White John Seferian – Board Liaison
  62. 62. Long Term Finance Committee Charter Review the Reserve Study and Make Reserve Recommendations to the Board Recommend a Way of Funding Reserves and Additional Capital Projects
  63. 63. Reserve Study Outcome Reserve Study Completed by Miller Dodson 30 Year Projection of Capital Expenditure and Reserve Needs for CURRENT Infrastructure and Equipment Road Study – Increased the Road Budget from $500,000 to $800,000 per Year Note: Community Assets will be in excess of $40,000,000 at the end of 2008 up from $19,200,000 at December 31, 2003.
  64. 64. Reserve Study Outcome Reserve Study Completed By Miller Dodson Based on the Reserve Study the Committee Determined that Current Assessments are Sufficient to fund current operations and maintain the existing infrastructure and equipment. There are not sufficient funds over the next TEN YEARS to retire debt and fund reserves as recommended by the reserve study.
  65. 65. COMMITTEE RESULTS Recommendations Establish a Capital Reserve Fund that will Eliminate the Need for the Amenity Reserve Fund. Update the Reserve Study Every Five Years Establish a Capital Initiation Fee to Assist in: Funding the Reserve Funding Additional Facility Projects Retiring Debt/Balloon Payments Capital Related Expenditures (Not Operating Expenditures)
  66. 66. Sources of Current Revenues 2007 Sources of Revenue Interest Income Other 2% 5% Special Assessment 7% General Assessment 53% Amenity Revenues 33%
  67. 67. Financial Position POA Revenues: 2008 Budget • Monthly Assessment $ 6,674,000 Special Assessment $ 858,000 Amenity Income $ 4,265,000 Other $ 439,000 Total Revenues $ 12,236,000 Add Borrowing/New Debt $ 6,000,000 Total Cash Available $ 18,236,000
  68. 68. Financial Position Uses of Funds 2008 Budget Operating Expenses (Net of Depreciation) $ 9,025,450 Capital Expenditures $ 2,184,500 (Includes $100,000 of Capitalized Interest ) Loan Payments $ 848,250 Amenity Upgrades $ 6,140,000 Funds Available for Reserves $ 37,800 Fund Available for New Projects $ 0 Total Uses $ 18,236,000
  69. 69. Future Needs CAPITAL RESERVE FUND SUPPLEMENT PEAK ANNUAL CAPITAL NEEDS EMERGENCY (NATURAL DISASTERS) DEBT RETIREMENT FACILITY UPGRADES/EXPANSION LONG RANGE PLANNING COMMITTEE RESULTS
  70. 70. How Do We Address These Needs Do Nothing • Slash Operating Expenses – Compromise • Services Borrow = More Loans, Fees Increase • More Special Assessments • Increase in Assessments and/or Amenity Fees • Capital Initiation Fee •
  71. 71. How Much Do We Need in the Next Ten Years Long Range Planning Committee Recommendations $10,000,000 - $11,000,000 Capital Reserves $ 2,300,000 Balloon Payments not Funded by Operations $ 2,600,000 Total $14,900,000 -$15,900,000
  72. 72. How Much Do We Project Collecting Over The Next Ten Years 1% Capital Initiation Fee ~$14,000,000 OR Increase in Assessments ~$14,000,000 Approximately $40/Month for an Improved Property Approximately $28/Month for an Unimproved Property
  73. 73. Assessment History MONTHLY SPECIAL $ AMOUNT % INCREASE ASSESSMENT 2004 $ 169.00 3.68% 2005 $ 172.00 1.78% 2006 $ 175.00 1.74% $25.00 2007 $ 180.00 2.86% $25.00 2008 $ 186.25 3.47% $25.00
  74. 74. Why Not Use Amenity Reserve Funds Amenity Reserve Funds are Currently Being Used to Pay the Developer and Service Debt on the Amenities. Agreement Does Not Allow Use of Funds for Non-Amenity Projects Such as: Fire Station Maintenance Buildings Postal Facility Village Hall
  75. 75. What are Other Communities Doing? Over 20 other communities are using some form of Transfer Fee on the sale of property. They may call it a CIF, CCF, Real Estate Transfer Fee, Capital Reserve Fee etc. Some of these fees are flat fees and some are percentage fees.
  76. 76. OUR RECOMMENDATION Implement A Capital Initiation Fee (CIF) Collect CIF on All Monetary Sales and Re-sales of Property Within Big Canoe Non-Monetary Transfers/Gifts of Property are not Subject to the Capital Initiation Fee
  77. 77. OUR RECOMMENDATION Recommended CIF is 1% on the Purchase Amount up to $1,000,000 plus 0.5% on the Purchase Amount over $1,000,000
  78. 78. How Would the CIF Work Collect the Fee Upon Sale or Resale of Property Place Funds in a Separate Capital Reserve Bank Account Manage Capital Expenditures from this Account per Limitations/Guidelines
  79. 79. Limitations/Guidelines Funds CAN ONLY be Used for: New or Replacement Facilities Capital Reserves Per Reserve Study Debt Service/Retirement/Balloon Payments Supplement Annual Capital Expenditures Funds SHALL NOT be Used for Operating Expenses
  80. 80. Reserve Plan CIF Projected Revenues and Reserve Fund Accumulation $16,000,000 $14,000,000 $12,000,000 $10,000,000 CIF Collections Available For: $8,000,000 Reserve Fund New Projects, Emergencies, $6,000,000 Supplement Peak Capital Needs, Retire Debt $4,000,000 $2,000,000 $- 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
  81. 81. Decisions for POA Boards Reserves Facility Projects Debt Service/Debt Retirement Supplement Annual Capital Expenses
  82. 82. Benefits to Property Owners Improved Financial Condition of the POA Reserve Fund Established and Working Fund Needed Facility Replacements/Upgrades Contributes to Sustaining an ISO 5 Fire Insurance Rating
  83. 83. Benefits to Property Owners Funds Available to Reduce Debt Funds Available for Emergencies Reduce Upward Pressure on Assessment Fees and Amenity Fees Increase Property Values
  84. 84. COMMITTEE RESULTS Recommendations Establish a Capital Reserve Fund that will Eliminate the Need for the Amenity Reserve Fund. Update the Reserve Study Every Five Years Establish a Capital Initiation Fee to Assist in: Funding the Reserve Funding Additional Facility Projects Retiring Debt/Balloon Payments Capital Related Expenditures (Not Operating Expenditures)
  85. 85. APRIL 26, 2008 TOWN HALL MEETING A VIEW TOWARDS A BRIGHT FINANCIAL FUTURE ENABLING THE MAINTENANCE OF THE CHARACTER OF BIG CAN0E
  86. 86. A Comparison of Two Communities Kiawah Island Big Canoe Number of Properties 4,300 2,500 Environment Beach Mountain Annual Budget $9.9 M $11.5 M* Salary Budget $4.37 M $5.6 M Number of Employees 89 138 FTEs Provides Security Plus Fire Protection, Maintenance Amenities, Trash Collection * Excludes Special Assessment
  87. 87. A Comparison of Two Communities (continued) Kiawah Island Big Canoe No. Emp. Comparable 89 41 Comparable Salaries $4.37 M $2.03M Assets $52 M $40 M Annual Assessment $1,330 $2,235* YTY Increase 9% 3.5% Natural Disasters Hurricane Hugo- High Winds – 2002 1989 *Excludes Special Assessment
  88. 88. A Comparison of Two Communities (continued) Kiawah Island Big Canoe Response Establish Capital Use Assessment Reserves, 1990 Dollars Capital Reserves $7.40 M 0 Annual Reserve Funding $1.78 M 0 Capital Reserve Percent ½% 1 % Proposed
  89. 89. Other Communities Reserve Experiences • Initial Concerns Over Sales & Property Values – Over the years, history has shown that this was not the case – I would argue that this has enhanced Property Values – Sales Volumes Reflected in Reserve Contributions: • 2001 $1,241,711 • 2002 $1,271,464 • 2003 $1,701,188 • 2004 $2,251,446 • 2005 $2,997,029 • 2006 $2,205,318 • 2007 $2,061,542
  90. 90. Other Communities Reserve Experiences • Our having the ability to make the associations amenities & infrastructure look fresh and relevant has given the association an advantage in sales. • I can tell you that realtors highlight the improved recreation center Joe Bunting, Chief Operating Officer Kiawah Island Community Association

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