Contents
  1.  Mt. Carmel Gate Landscaping Project
  2.  Reserve Fund
  3.  Borrowing Money – Realtor Comments
  4.  Future Sidewalks
  5.  Financials
  6.  Future Road Projects
  7.  Joint POA -Country Club Branding Project
  8.  Executive Session – Contract Renewals
  9.  Water Line Work – Sod Replacement

1.  Mt Carmel Gate Landscape Project

The Board approved an expenditure of up to $65,000 for redoing the landscaping at the Mt. Carmel entrance. POA President Becky Berrey presented the proposal and expressed the opinion that this work needed to be done to improve the image of the community. She felt that the current entrance did not look that nice, looked dated and needed to be opened up. She also said that there were continuing problems with the original, existing landscaping; which she said was not done correctly.

There was some debate about whether the top priority for such expenditures was roadworks or landscaping. Don Lummus expressed three concerns; timing, that funds might be better used for future road projects and possible negative reactions from residents. Kelley Hunter expressed the view that the work was needed and that, once residents saw the results, they would be happy with the decision.

Since this project does not appear as a separate line item in the operating budget, I inquired as to the source of funds.  I was told that it would come from two sources.  First, assuming nothing more is charged to the Tree Removal and Landscape Projects accounts in 2014, there will be $45,000 available in the current operating budget.  The balance would be covered by going against the $24,000 that was not spent in the Community Appearance budget in 2013.

That $24,000 savings was part of the 2013 operating surplus of $135,000 that was transferred to the Reserve Fund at year end.  The $24,000 savings was primarily due to lower spending for pine straw and mulch ($15,000), tree removal ($3,500) and Spring/Fall Clean Up ($3,000).  At that time, this was an intentional effort to limit spending due to the uncertainty surrounding the cost of the road project.

After some discussion, the Board voted seven to one in favor of proceeding with the project. Don Lummus was the only negative vote.

(Editorial Comment: Since it was not specifically listed in the budget, this relatively large project may come as a surprise to some people.  It is true that the project was not previously discussed in any Board meeting and has never appeared in any Board minutes.  However, the funds are coming from the existing Community Appearance budget and and that committee’s savings from the 2013 budget.

The project was referenced in general terms in this year’s Community Appearance meeting minutes, but they never mentioned timing, scope of work or cost estimates.

I don’t know if competitive bids were solicited for this project.  All I can note is that competitive bids were not mentioned during the Board discussion nor mentioned in any committee minutes.)

2.  Reserve Fund

To re-cap previous discussions, our only Reserve Fund is for all capital expenditures, not just road re-building projects. Funds accumulated for road reconstruction projects will be held in this account, but the entire account is not just for that purpose; because it was recognized that the community has and will have the ongoing need to fund other necessary, one-time capital improvement projects of varying sizes.

Each year, a portion of our annual assessment is allocated to the Reserve Fund for future capital projects. For the past several years, that amount has been around $480,000. In addition to that amount, approximately $45,000 is paid annually from our operating account to the Reserve Fund representing the yearly payment on the POA building note.

So, the total contribution each year has been around $525,000. The idea is that, over time, this will accumulate (like a sinking fund) to the point that we have sufficient cash to pay for the next major road reconstruction project; which is how most of the cost of the recent road project was funded. But, over that same period of time, the Reserve Fund may be tapped for other capital projects approved by the Board. All expenditures can be tracked and all funds accounted for.

Now, with that in mind, Bill Colton gave a summary of our position in the Reserve Fund. Unfortunately, I did not have access to the numbers that were being discussed and could not write fast enough to record all of them. Therefore, the numbers that follow may not be totally precise, but they will be close enough to convey the general message.

We started 2014 with a Reserve Fund of around $500,000; reflecting the fact that the vast majority of road project costs were paid prior to the 2013 year end. Since January, some capital projects have been funded, and there are pending requests for several more. The pending requests have not all been approved, but this meeting’s discussion concerned projecting the level of the Reserve Fund if all of them actually were approved.

To give an idea of the kinds of capital projects that arise on an ongoing basis, here are a few of those currently being considered:

• The installation of curtain drains ($50,000); to prolong the life of certain roads and delay major rebuilding projects.

• A back-up generator for the Lystra Gate ($10,000); being considered because the entry gates default to the “up” position in a power outage, which is an issue when the gate is unmanned.

• License plate reader/cameras for both gates ($12,000); to have a better and more complete record of who enters the community.

According to Bill Colton, if all the projects currently being considered are funded, the Reserve Fund will contain around $250,000 in cash at the end of this year. Note that this projected cash balance does not include the POA building note balance of around $230,000 which is being paid off in yearly installments.

We need to accumulate around $2.0 million or more for the next major road reconstruction project. Bill pointed out that, assuming no change in the level of annual assessments and no other needed capital expenditures (which is highly unlikely), achieving this level in the Reserve Fund would not occur until 2018.

Therefore, Bill Colton’s message was that, for the next major road project to occur any earlier, it would require either an increase in the annual assessment, additional special assessments or borrowing the funds.

The concept of borrowing money to accelerate the road reconstruction process leads to the next section.

3.  Borrowing Money – Realtor Comments

There was a meeting recently between the Infrastructure Committee and the Marketing and Realtor Relations Committee at which a number of realtors were in attendance. Based on comments I heard at this Board meeting, it appears that one of the main goals was to solicit opinions from realtors on how homes could sell more easily.

Judi Anderson said that one or more of the realtors claimed that our best strategy would be to borrow whatever was necessary to redo all roads that needed reconstruction and do that work as quickly as possible. The idea is that, once the work is done, buyers would know the level of annual assessments and that there would be no future assessments for road projects. Realtors have claimed that the “unknown” of future assessments has turned away some potential buyers. Based on these comments, Judi felt that it would be a good idea to borrow money to accelerate the road reconstruction process.

In addition, Doug Frey mentioned that the Marketing and Realtor Relations Committee also favored taking on debt for this purpose. Bill Colton echoed his previously expressed views that borrowing money would allow us to take advantage of low interest rates and avoid what he feels will inevitably be higher constructions costs in the future.

This led to a general discussion about borrowing money to accelerate the road reconstruction work. Based on the comments I heard, it appeared to me that most of directors looked favorably on the idea of taking on debt to rebuild the roads faster.

(Editorial Comment: The POA can borrow money and encumber the association with debt without a community vote. Therefore, the pros and cons of borrowing should be carefully considered by all property owners. Since this is somewhat involved, I plan to do a separate information paper which outlines some of these issues and provides more details on the views of individual directors. I will post that as soon as I can.)

More realtor comments from this meeting were discussed. Becka Huckabee said that, among realtors, the two biggest negatives in our community were the restriction against parking cars in driveways and the restriction on fences. Apparently, realtors do not like these restrictions because they turn away some prospective buyers. Somebody made the comment that “they were working on it”. I understood “it” to mean these two restrictions. But I did not clearly catch who “they” were or what “they” were actually doing in terms of working on these two restrictions.

4.  Future Sidewalks

Becky Berrey brought up the issue of future sidewalks and the next sidewalk project. Several directors said that the community should have some input in terms of where to build the next sidewalk. After some discussion, the Board decided to form a Sidewalk Sub-Committee under the Infrastructure Committee. It will be this committee’s task to come up with alternatives, estimated costs and ideas for soliciting community input in terms of prioritizing sidewalk projects.

5.  Financials

The operating budget was reported to generally be on track; except for storm maintenance costs. A more detailed variance report can be found here:  8-14 Variance Report

6.  Future Road Projects

Doug Frey reported that the Infrastructure Committee is working on plans for the next phase of road works. Committee meeting minutes dated July 24, 2014 contain an excellent summary of this issue; including timing and cost. If you have any interest in this subject, I highly recommend reading the first page and a half of these minutes. They can be found here:  IFC Minutes 7-14

7.  Joint POA – Country Club Branding Project

This was referenced several times during the meeting, but no details were discussed. Last month, the Board spent a good deal of time discussing this study in Executive Session. It appears that a final report should be given to the Board within several weeks. It will then be up to the Board to decide how and when to disseminate information to the community at large.

8.  Executive Session – Contract Renewals

The POA attorney was in attendance for the entire meeting. During the meeting, the Board went into Executive Session for 25 minutes to take legal advice. I believe that foreclosure issues were also discussed in this session.

When the Board reconvened in open session, several resolutions were passed unanimously.

The Board approved a three year extension of the Bland landscaping maintenance contract from 2016 to the end of 2018 with maximum increases of 2% annually. The current contract was set to expire at the end of 2015. The contract allows either party to cancel for any reason on 30 days notice.

The Board approved a three year management contract with CAS.

Since there was no discussion on these two contract extensions, I assume that was done during the Executive Session.

Also, the Board approved funding for a road salt storage facility with a cost not to exceed $18,000.

9.  Water Line Work – Sod Replacement

I have heard some residents commenting on the sorry condition of the sod installed by the county after the water line installation. For anyone who is interested, this note was in the Manager’s report:

“We have an agreement with Chatham County to replace any dead sod and plants they installed. Ideally, this replacement will occur in the fall when the sod and plants have a better chance of survival.”