Notes from 3/23/09 Finance Committee (FC) Meeting

Attendees: Rick Barrett, Austin Godfrey, Lori Denson, John Murray, Bob Yingling, Terry Dwyer.

A note on the scope of the FC: Its current focus is on establishing a Mount Kemble Lake Capital Reserve Fund (MKLCRF) for the financing of the maintenance of MKL physical assets over the long term. Of particular concern are cyclical, expensive (greater than $10,000) maintenance activities. (Note that we have only indirectly discussed using the reserve as a parking place for a “rainy-day/emergency fund”. This was done in connection with the discussion of land sales, as some MKL residents think the land is the rainy-day fund). All dollar figures in these minutes are in terms of 2009 dollar values. Costs of items should be inflated in subsequent years to account for natural inflation. A yearly inflation average has not been discussed. Neither has the earnings rate on the investments of the MKLCRF. For now, these rates are at Bob’s discretion.

Reports from Subcommittees:

Water Company

- Rick provided expense projection for all the major components (pumping, storage tanks, and distribution lines).

- Agra would be able to assume more operations of the water company for an additional $2500/yr. This would leave the MKL responsibility as checking the pump houses daily (VSA activity), and reporting anomalies/problems to Agra. We did not discuss having Agra assume the VSA activities.

- Rick, Austin and Terry plan to meet with local water companies to see if there would be any interest on their part in assuming operations/ownership/partnership of the MKL Water System.

- John Murray will provide the FC with information on the rates charged in Harding Twp. By the SW Water Authority.

- In anticipation of proposing the sale of some MKL lots, Lori Denson will provide the FC with information on the regulatory ramifications of increasing the number of hookups to the MKL water system.

Clubhouse

- John Murray indicated that the major assets of concern were the roof ($17,000 every 20 years) and floor, and that the floor could last indefinitely with proper finishing (rather than sanding). Subsequent discussion asked John to add deck replacement (suggested every 25 years) and air-conditioning compressor replacement (unspecified interval) as replaceable entities. John will investigate the costs, and intervals, of these additional items.

Roads

- Austin has provided estimates after consultation with the town engineer.

- Basically the roads should be maintained in major and minor cycles. The minor are chip-and-seal every 7 years at $50K, and total replacement every 4 minor cycles (28 years) at $500K.

Lake & Other Recreational Venues

- Austin will get estimates from Don Kuhn on these. The discussion indicated cyclical maintenance for the lake as primarily dredging of the Lagoon (every 5 years, at $20K), and the main lake (every 30 years at $650K). There was inconclusive discussion on the spillway and the gate valve. Austin will research whether these items candidates for the MKJLCRF.

Land

- John provided a map of the lakeshore lots divided into untaxed, partially taxed (approximately 25% discount), and fully taxed lots.

- John will do further research into the partially taxed lots (discount has a 10 year lifespan) and report at next meeting.

- The land subgroup will formulate several proposals regarding the land, centering on selling some and putting others into permanently tax-abated status.

Dues, Fees, Assessments

- The main discussion here was on proposing a property-transfer fee to raise funds for the committee. Austin will develop materials for presentation of this idea to the community.

Reserve Analysis

- Terry led a discussion of the possibility of hiring a professional firm to put together, explain and present a Capital Reserve Program for MKL. Most FC members felt that we could develop the engineering estimates at least as well as such a firm, and that the associated financial projections could be made by Bob. The idea was shelved. Bob will investigate obtaining some software in helping create and format the data.

Working Schedule:

- Next meeting April 28, 7:30 at Austin’s house. This meeting will look at a first cut financial projection for the MKLCRF. Outstanding cost estimates and cycle intervals are due to Bob by April 21.

- Meeting at end of May to review materials/ideas that will be socialized with subset of MKL residents.

- Mid-June … meeting with subgroup of MKL residents to discuss MKLCRF idea, to go over funding possibilities and get their input.

- Fall … Presentation to community, incorporating June discussions/feedback.

- January 2010 – voting on proposals.