Notes from 4/15/10 Finance Committee (FC) Meeting
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Attendees:
Rick Barrett, Austin Godfrey, Lori Denson, Davor
Gjivoje, Terry Dwyer, John Murray
The purpose of
this meeting was to continue working on recommendations to the Association and
Lakeshore boards re the work of this committee.
Membership Fee:
No change from
previous recommendation. Austin will work with legal counsel to define the
mechanics of how the actual payment (1% of gross sale price) to the association
would be made.
Disposition of Property (to Effect real Estate Tax
Reduction):
We continued
discussing this topic in light of John�s memo on the meeting with Jim Wyse, a
land use attorney, regarding reverting tax-abated properties to taxed (and
therefore saleable) status. At the previous meeting this had seemed to be a
favorable proposition, but the feeling now was that it was no longer likely to
be �easy� to do such a reversion. After much discussion, the committee
therefore decided on the following recommendations:
1.
Reduce the
real estate tax burden of the Lakeshore Company. The tax savings should be
designated for a Lakeshore reserve fund.
2.
The ballfield is currently in a partially abated status. Keep
it that way, but investigate the possibility of converting it to a �woodland lot� (a
la The New Jersey Forest Stewardship Act � see John�s memo) for a more
substantial tax savings.
3.
Continue paying full taxes on the 4 most heavily
taxed (and therefore most valuable) Lakeshore lots including:
a.
Block 43, lot 16 (between Murray�s and Siegler)
b.
Block 37, lot 2 (between Collier and Merenda)
c.
Block 40, lot 7.02 (behind Coor)
d.
Block 36, lot 18 (between Heiden
and Galdieri)
4.
Put all other lots in permanent tax abated status, thereby
saving approximately $23,000/year (2/3 of the tax bill). Put this savings into
a Lakeshore Reserve fund.
5.
The amount contributed to Lakeshore�s reserve in the
initial year would be the taxes saved (i.e. not paid) that year for the tax-abated
lots. This amount would be changed in future years as the amount of the abated
taxes changed. The funds for this payment to the Reserve Account would come
from Lakeshore�s dues (which aren�t going to taxes), and the dues would
eventually have to be increased to cover the increased reserve fund payments.
Oversight of Reserve Fund:
The committee
discussed Austin�s note on his meeting with legal counsel re how reserve funds
are normally overseen. The committee voted to adopt that document, as modified
below, as the basis of its recommendation for oversight of the MKL Reserve
Funds:
1.
Maintain
separate bank accounts for the reserve funds.
2.
Reserve
accounts should be designated for capital expenditures on specific facilities, e.g.
the water system. A list of such restricted expenditures should be created.
3.
All
Board members must review reserve bank statements quarterly.
4.
Reserve
funds shall be invested in high grade, insured, government issued obligations,
or FDIC insured bank accounts.� In
particular no investments in stocks should be made. It was recognized by the
committee that while a portfolio restricted to such an asset class was likely
to produce �safe� returns, its performance would, in general, be expected to
underperform a more diversified (and riskier) mix of asset classes.
5.
Two
signatures of board officers shall be required for all expenditure of funds
from the reserve funds.
6.
The
Boards should report to the community the status of reserve funds by quarterly postings
of fund statements on the MKL web site.
7.
Community
members will be reminded of their right to review financial data.
8.
The
anticipated expenditures from the reserve funds for a given year will be detailed
in advance at the annual meeting preceding that year. A simple majority will be
required to approve these expenditures. Any other expenditures
of such funds must be approved by a simple majority vote at a special meeting
of the community.
9.
An
oversight committee of three non-Board volunteers will be formed. This
committee will review statements and investments, and advise the Boards of any
non-compliance issues in the operation of the reserve funds. The committee
shall provide a report at the annual meeting.
Next Steps:
-
Terry and John
will work on a presentation to the joint boards on May 3. This presentation
will, in effect, be a preview of the Community Inform meeting presentation.
Drafts of this presentation will be distributed by email to committee members
for comment.
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A Community
Inform meeting is tentatively set for May 20th (3rd
Thursday in May).
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A special
meeting to vote on proposals is tentatively set for June 18th.