Repairs & Replacements (R&R) Reserve Fund
The steering committee for the Concerned Citizens for Responsible Governance has been engaged in the creation of an alternative plan for the funding of a Repairs and Replacement Fund. The plan is presented here. We ask for your opinions and comments. You may email your comments to info@responsiblepoa.com or posts comments on this website http://responsiblepoa.com/.
Thank you,
Concerned Citizens for Responsible Governance, Steering Committee:
Terry Valz, Doug Piggott, Bobbie Garner, Bill Burchenal, Staci Arnold, Emory Williams, Don Wyeth
Background:
· This R&R Reserve Fund recognizes the need to have a reserve of monies to pay for emergencies and major repairs/replacements to Big Canoe’s current asset base. It is designed to be very conservative in the separation and control of monies raised to assure Big Canoe property owners that their investment in this fund is safe from operational use.
Timing:
· No new R&R Reserve Fund should be put in place for at least 12 months or until some benchmark in lot/home sales has been reached - perhaps double the number sold in 2008.
Funding Sources:
· Multiple income streams should be used to generate the R&R Reserve Funds in a manner that all property owners participate in the fund generation, and that new property owners pay initial fees into the fund based on their participation in Big Canoe’s amenities.
· A Community (Infrastructure) Initiation Fee should be one of the income streams. This fee would be billed to all new property owners by the POA after they close on a property - lot or house. A $1000 fee is appropriate (including the current transfer fees).
· Amenity Membership Initiation Fees (non-refundable) should be established for all new property owners who choose to become amenity members (“New” property owners are defined as owners who do not own Big Canoe property as of the affective date and who buy their first property in Big Canoe after the effective date of this provision). Current property owners should be “grandfathered in” and shielded from these fees. “New” property owners should be charged whenever the election is made to become an annual member of one or more amenities. Suggested Initiation amounts: $500 - Fitness, $1000 - Tennis, and $5000 - Golf. These Initiation Fees should replace the existing Amenity Initiation Fees for amenities.
· Single members should receive an Amenity Membership Fee percent discount equal to the discount that is now given for annual dues. There must be a provision to charge back the discount to the member if/when the amenity membership is changed to a family membership.
· A $5.00 increase in the monthly assessment on homes and a proportional amount ($3.00) on lots should be implemented when the current $25.00 per month special assessment expires. This portion of the monthly assessment should go directly to the R&R Reserve Fund and must be isolated from operating funds. (If the current $25.00 special assessment is extended, then $5.00 of the extended assessment should go to the Repairs and Replacements Reserve Fund.)
Uses:
· The Repairs & Replacements Reserve Fund is only to be used for the repair and replacement of existing amenities and/or infrastructure items in excess of $50,000.
· This Fund can also be used for natural disaster recovery.
Controls:
· These funds will be kept in a separate bank account and the balance and all transactions will be reported monthly in the financial statements and in the Smoke Signals.
· Any money from this fund that is used to defray the expense of repairing or replacing insured property should be reimbursed to the fund to the extent of insurance reimbursements. In other words, payment for repairs and replacements must not be paid from the R&R Reserve Fund and then the insurance reimbursement paid to the General Fund.
· The Repairs & Replacements Reserve Fund must not be used for debt service.
· This Fund must not, under any circumstances, be used for operating expenses and/or road work (unless the road work is necessitated by a natural disaster).
New Amenities and/or Infrastructure Items:
· New amenities and/or infrastructure items costing $500,000 or more must be funded through a special assessment approved by at least 50% of the property owners.
· The expansion of existing amenities and/or infrastructure items costing $500,000 or more must be handled as if they are new amenities or infrastructure items.
· Each new amenity and/or infrastructure item must be funded through a separate special assessment/vote requiring separate accounting to eliminate the co-mingling of funds.
Addendum:
The annual projected income for the Repairs & Replacement Reserve Fund from this proposal is $370,300.
This projection is based upon the following assumptions:
100 Real estate transactions by new property owners
15 new golf memberships per year
10 new tennis memberships per year
25 new fitness center memberships per year
2400 privately owned homes in Big Canoe
800 privately owned lots in Big Canoe
Calculations:
100 transactions x $1000 = $100,000 in fees
15 golf memberships x $5000 = $75,000 in fees
10 tennis memberships x $1000 = $10,000 in fees
25 fitness memberships x $500 = $12,500 in fees
2400 homes x $60 per year ($5.00/mo.) = $144,000 in assessments
800 lots x $36 per year ($3.00/mo.) = $28,800 in assessments
Total: $370,300
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Recent Comments
- Chris Beechler: This proposed R&R Reserve Fund plsn needs some clsrificsation for it to be meaningful to me. Here...
- F Shead: Congratulations, very well done.
- F Shead: Must address no-bid contracts. There must be wording added to stop multi-million dollar “no-bid”...
- Larry Grizzle: I would like to think that everyone involved in this process feels they’re doing the right thing...
- DAVID KELLY: My fear is that the POA Board will turn around and increase the monthly assessment to generate the funds...
- Don Wyeth: My numbers as to homes and lots may be slightly inaccurate but are close enough to establish a point....
- mark sementilli: So this is the new and improved CIF? What a dissapointing outcome. I don’t want to appear as...
- Don Wyeth: By now most of you are aware that the POA Board has , after great consideration , come up with a new plan...
- mark sementilli: Doug, The one area or your letter that strikes me as truly amazing is the purported spiking of the...
- Doug Piggott: “Corporate” Board – Fact or Fiction? You decide. Some would have us believe that this term...
Must address no-bid contracts.
There must be wording added to stop multi-million dollar “no-bid” Sconti type contracts.
Congratulations, very well done.
This proposed R&R Reserve Fund plsn needs some clsrificsation for it to be meaningful to me. Here are some of the questions that need to be asked and answered:
1. How much money should be in the Reserve Fund?
2. When it is fully funded what will be done with the excess funds?
3. Since this is designed to be a fund for DEFINED NEEDS then we should define in detail those needs. Itemize those repairs and replacements. This proposal is attempting to cure what the committee sees as a major problem in governance of the POA. This committee has criticized our current elected leadership for its fiscal management of the budget. Some crticism may be warranted but this proposal lacks full and complete clarification and definition of the specific needs.
3. Which buildings need repair, and what will these repairs cost?
4. What specific parts of our infrastructure needs to be repaired / improved / modernized - and what are the estimated costs.
5. What capital equipment do we need to replace or repair, and at what cost?
6. Have any of the members of Concerened Citizens for Responsible Governance volunteered to run as a candidate to serve on our POA Board of Directors?
This neighbor agrees that we do need to be aware of and prepared for future needs. Defining, funding, and maintaining a Reserve Fund is not only in the best interest of each property owner it is at the core of a good and sound business management plan. Actually funding our depreciation is a way to accumulate the monies for most repairs and replacements but may not be the best method. There is a good reasoning to manage our capital needs using a cashflow accounting strategy rahter than an equity based philosophy.
I look forwad to more detailed information and hopefully having my questions answered. I’m sure each property owner will be well served when we have a comprehensive plan that addresses anticipated capital needs.