FINANCE & LEGAL COMMITTEE
Monday, October 4, 2010
“Responsible for the annual operating and capital budgets, determination of fees and assessments, definition of member and guest privileges, and all related legal, taxes, insurance, zoning, and organizational matters affecting the Association.”
PRESENT: Jere Kovach-Chairman & Member Board of Directors
Kirk Sessions- GM-Ex Officio
ABSENT: Eugene Root
ALSO IN ATTENDANCE: None
The meeting was called to order @ 3:00 P. M.
Note: The meeting of Sept. 20 was held. No motions were made and no minutes were kept.
The minutes of Sept, 13 were approved.
The outstanding 2009 unpaid assessments have remained at 32. The 2010 unpaid assessments have declined to 94.
Mr. Kovach handed out copies of an E-Mail from Mr. Stucki concerning assessments, a memo from our attorney, Mr. Sanderson, copies of the Articles of Incorporation and a summary estimate from Jerry Myers who is the Architect representing the Main Street Project. In summary, Mr. Stucki is concerned about the size of the assessment and his desire to keep it as low as possible. Mr. Kovach emphasized that the BOD and the members of this committee all are highly interested in keeping the assessment as low as possible but the BOD does have the responsibility to “improve, construct, maintain, operate and care” for our facilities in accordance with Article III of the Articles of Incorporation. He further pointed out that until the formation of the Town and the Town’s assumption of responsibility for water and roads the assessment was insufficient for any expenditure other than operating expenses. This resulted in a large backlog of financing needed to “improve, construct, maintain, operate and care” our facilities. In other words prior boards were unable to fulfill their responsibilities due to a lack of funding. Mr. Myers has estimated the cost to renovate the Barn and Silo at $2,457,229. The Town and BOD are cooperating in an effort to get a grant from the State of Wyoming for $1,000,000. In addition, there is a possibility of obtaining a low interest (2%) loan for another $1,000,000 from the state. It will be about another year before we know the results of those applications. In addition, we have obvious, but no cost estimates, needs for improvements to the office area and swimming pool. Mr. Kovach is of the opinion that we need to begin building up cash reserves for these future expenditures and has proposed to the BOD that $25 of all future assessments be dedicated to the Capital Fund. This would provide about $50,000 to the Capital Fund per year. We have about $1,000,000 in various CDs that have been directed to the Capital Fund. About $250,000 of that is being held for the eventual construction of a new pipe line from Green Canyon. In summary, there is a need for considerable funding to “improve, construct, maintain, operate and care” for our facilities. Many questions and decisions must be asked and made before proceeding. It is obvious however, that future projects will need considerable funding.
Mr. Sessions discussed the Golf “Falling Prices” program he implemented after Labor Day. In summary the program has been a big success with increased revenue and rounds played as compared to last year. Mr. Sessions is developing other plans to increase golf revenue for next year. We still have the goal of making Golf self financed and possibly even a net profit center. Considerable discussion ensued over the portion of the assessment that is now going to Golf. It was agreed that we need to estimate all the costs attributable to all of our Operations and let the membership know the portion of the assessment that is being utilized for all of them including Golf.
Mr. Sessions distributed a draft “CAPEX REQUEST 2011”. CAPEX is an abbreviation for “Capital Expenditure”. Considerable discussion ensued over the issue of whether to lease or purchase new Golf course equipment. The current lease for our equipment costs us about $75,000 per year and will expire at the end of this year. After some discussion Mr. Stucki made the observation that buying is always preferable to leasing from an overall economic perspective. At the present time we have over a million dollars in various CDs earning about 1.4% interest. The new proposed lease would be carrying an equivalent interest rate of about 6.8%. The committee agreed that it would be a good use of Capital Funds to purchase the equipment rather than lease. It was also agreed that there would be included in the Operating Budget funds to replenish the Capital Fund on a multi-year schedule. In essence the Operating Fund would be leasing from the Capital Fund and we would be recognizing the true cost of utilizing the equipment for Golf Operations. It was moved by Mr. Stucki and seconded by Mr. Vandel to have Mr. Kovach recommend to the BOD that we proceed with a plan to purchase golf equipment rather than enter into a new lease. The motion passed unanimously.
- DCC&R Balloting Incentive: Mr. Kovach has discussed the recommended incentive with our lawyer and has been advised that the incentive is not only legal but is not a violation of our Articles of Incorporation or the Bylaws.
- Conversion of SVRA owned lots from Residential to Common: This is still in the hands of the attorneys. Our attorney is of the opinion that the conversion would be legal and not a violation of the DCC&Rs. Mr. Hanck pointed out that there has already been a precedent for this in that we have converted a portion of a lot from residential to common.
- Forensic Audit: This has not been completed but it continues to appear as though the differences in the bank statements and Balance Sheet are due to poor bookkeeping rather than fraud.
- Barn/Silo Grant: Mr. Kovach reviewed the ongoing joint preparations of the Town and SVRA for requesting the grant from the state. The grant will be submitted in Sept. 2011. There is a possibility of obtaining some financing from a private foundation which is interested in preserving the character of the barn and silo area. The issues are complex and it will take some time for them to be resolved.
- Delinquent Assessments: Some discussion took place about the possibility of making public the names of members who are delinquent in paying their assessment. No further action was taken.
- Bar: Mr. Kovach has been doing some analysis of the bar operation and feels that it can be become more profitable but keeping it as an SVRA operation rather than leasing it out is still the way we want to operate.
- Pro Shop: Some discussion took place concerning the operation of the Pro Shop. In general, it was agreed that a review of what we should carry in inventory needs to be made.
Mr. Sessions will have draft Capital and Operating Budgets available by Mon. Oct. 11 for distribution to all Committee members. A review of the two draft budgets will be made at our next meeting. We expect to present the budgets to the BOD at a workshop in Nov. and at the regular board meeting on Nov 20.
Meeting was adjourned at 5:45 PM. The next meeting will be in the library at 3:00 P. M. on Oct. 18.