Notes from 4/15/10 Finance Committee (FC) Meeting

 

  

 

 

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.

-         A Community Inform meeting is tentatively set for May 20th (3rd Thursday in May).

-         A special meeting to vote on proposals is tentatively set for June 18th.