Notes from 1/18/10 Finance Committee (FC) Meeting
Attendees:
Rick Barrett, Austin Godfrey, Lori Denson, �Bob Yingling, Davor Gjivoje, Terry
Dwyer.
The purpose of
this meeting was to prepare recommendations to the Association and Lakeshore
boards re the work of this committee.
Each attendee
outlined his or her position regarding the following areas: membership fee, the
2008 $400 dues increase, disposition of common property, and oversight of a
reserve fund.
The target
amount for annual input to a reserve fund was accepted to be in the range of
$60K to $100K. The former figure would cover the amount projected for the first
10 years, but would provide no start on the second 10 years.
Membership Fee:
All agreed
this was a good idea, and the discussion centered on the type and amount of
such a fee. The proposals ranged from �% to 2% of the sale price of a property.
The idea of a fixed amount fee (instead of a fixed percentage) was not
seriously considered, largely because of the regressive nature of such a
structure on lesser-valued properties. After much discussion the group settled
on a recommendation of �1% or higher�. �This fee would contribute about $30K per year
to a reserve fund.
2008 $400 Dues Increase:
This increase
was instituted to help pay the cost of part 1 of the road paving project.
During the outposts it was stated it was not an area of concern for this
committee. However, in retrospect this increase in fact is used to fund a large
scale, cyclic maintenance project, and as such is the province of this
committee. The recommendation was to continue this increase, contributing about
$36K per year to a reserve fund.
Disposition of Property:
Property Sale:� One attendee proposed that lots be offered
for sale to adjoining homeowners, with deed restrictions against subdividing
and construction of buildings. The property could be used for such purposes as
septic field extension, parking, and recreation facilities. The reasoning here
was that, in addition to taxes being assumed by the new owner, some revenue
could accrue to a reserve while precluding substantial development. There was
little support for this position, with counter arguments being that the
benefits of such limited development rights would be a disincentive to
purchasers, and the political problem of other residents protesting �give-aways�. No proposals were made for property sale with full
development rights. No recommendation regarding land sale was adopted.
Property Tax Abatement:
�All attendees agreed that some tax
abatement was desirable. Such a rebate could be passed on to property owners, thus
lessening the impact of dues increases (such as the 2008 $400 increase, and a
forthcoming Lakeshore increase) used to fund the long-term projects. Proposals
ranged among 20%, 50% and 100% (excepting the ball field, which would be reserved
for dredge spoils) of common property to be tax-abated. One attendee proposed
0% or 100% be abated, depending on whether property that had been abated could
be �un-abated� at a reasonable cost.
The 100% position
was held by half of the attendees, with the following reasoning:
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the community
has generally expressed an interest in no new development
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it is very unlikely that property will be sold in the future.
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Since all
property would be tax abated, there is no problem in how to select the abated
vs. un-abated lots.
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The larger the
reduction in taxes of common property, the less the total dues burden is to
homeowners, and the more willing they will be to fund a reserve.
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If funds are
to be saved for a future emergency, sell developable property now and put the
proceeds into an emergency fund (which is not the same as a reserve fund).
Tax-abate all remaining unsold property, which, given the establishment of an
emergency fund, would have no reason to be sold.
Those
supporting a �less than 100% position� reasoned as follows:
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the annual tax costs (say 1% of market value) are insignificant
relative to the worth of the assets, which may be useful someday.
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There is no
reason to establish emergency funds now � forestall sale of any developable
lots until the need is manifest, at which time the un-abated property could be
sold.
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There was some
discussion in this proposal on how to select abatable lots, with one proposal
to empower a �commission of residents� to make the choice (the election of the
commission would be subject to a 2/3 vote, and its decisions would be final).
Note that
these proposals would not directly provide funds to a reserve. Depending on the
selection of the percentage, the reductions to tax expenses could be from $0 to
$35K, some or all of which could be used to offset property owner contributions
to a reserve. Thus it is an indirect way of funding a reserve.
No conclusion
was reached on a recommendation. The committee asked that John Murray
investigate the ability to get tax abatements in the first place, and will
reconsider the topic when he reports on his findings.
Oversight of Reserve Fund:
This topic was
only marginally discussed. One attendee proposed a separate Reserve Finance
Committee and a Steering Committee. Another attendee suggested an outside audit
of the reserve fund. This topic will need to be discussed in more detail at an
upcoming meeting.
Next Steps:
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Austin will
report on the status of the committee at the upcoming annual meeting (1/29/10).
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Austin will
brief the boards on the work of the committee. No explicit meeting of the
committee with the boards will be necessary.
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A tentative
date of June was established to have a special community meeting. In advance of
that a Community Inform meeting will be scheduled by
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John Murray
will research the tax abatement question. When he has a resolution, an FC
meeting will be scheduled. The main topic of that meeting will be a
re-discussion of the tax-abatement issue.