I've transcribed the Finance Report to the best of my ability. Listen to the tape of the report yourself. Thank you Wedgfield Times for providing a complete meeting tape on line. Transcription will be typed in BLUE, UNDERLINED, AND IN QUOTES. COMMENTS WILL BE IN RED.
The report is given by DeMarchi. He starts with a motion, the first of two, that lead us to the Reserve Study. He makes a motion to move $50,000 from operating into reserves at Edward Jones. Prior to the motion he explains that he had calculated what we will need to operate until February of 2014. There is plenty of cash. There is a second to the motion and they move to discussion.
Garrison, "One question, how will you allocate that to the individual reserve categories?" DeMarchi, "Until we complete our analysis of the reserve study I'm going to go ahead and allocate that according to the current appropriations schedule that we have, 30%, 20%, an so on. At the end of the year we're going to have another surplus somewhere in the $50,000 - $70,000 which will the be allocated to the agreed upon Reserve Study numbers. I'll talk more about that in a minute. Right now we are in good shape."
A few questions and comments: Savings should never be a problem, but what is the hurry? The Reserve Study has just come in. Why do we want to apply the current allocation percentages now? Could it be because they are DeMarchi's? There isn't any hurry. As you read further you'll note we are receiving very little interest on the account at Edward Jones. Could it be that this is your board's first orchestrated step to ignoring and diminishing the professional Reserve Study? Remember, throughout the study the board is encouraged to seek professional engineering, professional financial guidance, and professional oversight of projects. If they weren't going to follow the directives of the study, why did we pay for one? This is the board that is expert at all things. Prior to the start of the meeting, I heard DeMarchi tell someone at the board table that he wasn't going to get into percentages. Why, more in the dark administration? Back to transcription.
Garrison: "So, so far as this $50,000 is concerned, how much is going to each? Do you have the numbers on it?" DeMarchi, " No I don't have the specific numbers on it. Kathy...We went over that the other day. I believe 30%....$15,000 will go into canals....(Kathy brings info to the table.) I'm sorry, $15,000 went to roads, $5,000 to drainage, $5,000 to marina, $7,500 emergency, $5,000 to canals, $7,5000 to landscaping and building, and $5,000 into miscellaneous. We currently have in our operating account approximately $206,000. We need $120,000 to carry us through February of next year. So that will leave us $80,000 we're going to transfer $50,000 that will still leave us a cushion of $36,500 and at that rate of collections.... We had a very good week this week. Last week over $7,000. Some of those ere 3 liens that we had placed on the properties that sold. The liens got paid. One was a settlement on a bankruptcy - wasn't it? Two were pass due people who came in and paid their entire past due plus their delinquency fees their late fees."
The motion passes with 5 voting yes. McBride abstains saying he would like to see the numbers in front of him.
John Walton, "Al, do we get interest on this? DeMarchi, "Yes, we do very minimal about .1%, which is something that we might want to look at which is not on our report, but some of the brokerage firms are offering, in fact some of the credit card...like American Express...You can open up, basically, a savings account with them which is what we have with Edward Jones and they're paying .85% interest which is considerably more than we earning now. The next item, I'm a little premature on this, I submitted a 2014 proposal budget month. I asked for input from board members for additions, deletions, corrections, and so on. The only change would be to the revised budget you were given - there were three line items that basically are now covered under one line item - landscape. We had $1,500 for tree removal - blah, blah, blah, etc., and flowers and benches and pine straw. These items total $34,000 in the proposed budget and after the approval of the landscape contract last month, it is off by $100 - $34,100 landscape contract and I think we could deal with that variance without generating a new budget. If you look at the second page of the reserve fund allocations, OK, if you have your report there it tells you what the reserve point allocations will be next year and that was BASED ON THE CURRENT which will not happen...once we go through the Reserve Study and determine the CORRECT ALLOCATIONS for our specific needs.. Those will be appropriated to the specific organizations, whatever you want to call it. The reserves stand at $198,000 and we'll add the $50,00 to it. So I'd like to go ahead and have the budget approved since I won't be here to present it next month, or if the board would like to hold off, I can have someone else present it next month. I'd like to have the 2014 budget approved."
McBride, Al, it seems premature to approve any 2014 budget until we had the opportunity to look at the - ALL OF US, to look at the Reserve Study so that we include those items also into that budget. That's very important, " McBride is interrupted by DeMarchi, "They are in the budget" Remember that DeMarchi says they are in the budget. Didn't he say earlier that he used the current percentages - HIS? McBride, "I didn't see them" Garrison, "Have you not looked at the Reserve Study?" McBride, "Yes I have. We need to meet and talk about that Reserve Study and what those numbers are and then look at your budget and see how those are included. I don't see them included. DeMarchi, "Well, OK I can answer that for you John. I spent about 50 hours and I probably have another 50 to go on this thing. That's why the Finance Committee is going to meet but if you were to look down at the end of the proposed, or towards the end of it, it shows reserve fund allocations for next year, OK." McBride, "I'm trying to find that. Did you include that in this packet? DeMarchi, "No, it was sent to everybody LAST MONTH."
When last month? The Reserve Study came out last month. DeMarchi spends 50 hours working on the figures, wants the 2014 budget approved tonight with his current reserve allocations (HIS), and then after the board approves the budget he'll meet with the Finance Committee?????. I know some of the individuals on this committee. They are smart people, I have respect for them, so don't take this any other way, but they aren't what the Reserve Study calls for in the decision making for moving forward. Besides, this is just half ass backwards and DeMarchi is running the ship while placing blinders on everyone - including you. This is like the federal health care bill. You have to approve it to read it and find out what is in it. Read the Reserve Study. It is suggested that the association select a funding plan. There are four basic strategies that most associations select from. From the study, "It is recommended that the association CONSULT PROFESSIONALS to determine the best strategy or combination of plans that best suit the association's need." They recommend the following: 1) a financial advisor to determine tax implications, 2) American Institute of Certified Public Accountants (AICPA) for their reporting requirements. Read Section 10: Definitions, and the type of information required and ask yourself if a transitioning board and it's related view and structure for finance, can make these decisions? Review the transcribed words above. We don't have a certified accounting professional any where. If your board was going to play this game, why did we even bother to use funds to pay for something they never intended to follow? Back to transcription.
McBride, "I don't have that with me right now." DeMarchi, "OK. The Reserve Study indicated that we needed approximately $215,000 put into reserves next year." McBride, "I read it differently but go ahead." DeMarchi, "So what I did, I just took those numbers and ALLOCATED AGAINST OUR CURRENT PROPORTIONS (HIS) . These are not going to be allocated that way John. As I said, once we finish with the Reserve Study we will go ahead and reallocate those according to the percentages, or the dollar values that are in the Reserve Study. One of the problems we have and I'll be quite honest is the Reserve Study right now, we look good for about the next five years and if we want to be short sighted come 2021, we're going to go over $500,000 in the hole. We'll be behind $500,000. I do not want to go to a bank and borrow $500,000 so we're looking at the individual line items and moving those into appropriate years, some we are ELIMINATING, OK. Some WE WILL NOT DO AT ALL, OK . So that's where we are with that. No one has provided any input on the Reserve Study other than what I'VE DISCUSSED WITH OTHER INDIVIDUALS." What other individuals? Certainly not the entire board. This is a long term plan that we paid for. Go back and review who set the stage for the Reserve Study. Who wouldn't let the entire board participate? Who appears to have been included? Back to transcription.
McBride, "The Reserve Study clearly states that we have to have X number of dollars available and that we need to do that - accumulate at such and such a rate until 2021, 22, 23, at which time the rate of accumulation can go down." DeMarchi, No, actually in year 2021 our assessments based on the Reserve Study will be $2,008 per lot." McBride, "If we used their plan there and start to assess at the rate that they're suggesting...I suggest that you do that at 100% and not at 83%. I have yet to see us do a reserve project that was even close to the national average in terms of cost, but according to that...we need to accumulate money so that year 2021 we don't have $500,000 that we need to all of a sudden ....In my mind we need to accumulate gradually in year 2014, 15, 16 and all the way up to that, so that money is available." This board set the 2014 assessment before the Reserve Study even came in, just like DeMarchi is playing with the budget now. Shouldn't this be an indication of your board's intentions? McBride is correct. If you fail to assess properly there will be a huge problem at some point. Remember, this board won't follow the recommendations of the professionals they hired. What are the chances they'll hire competent professionals to help us at this point. Some on the board embrace the fear factor. Remember how some residents were told they would all have to pay $5,000 for the last canal dredging? Never happened. This report could appear to be a meeting of the drama club. Will you buy it? Back to transcription.
DeMarchi, "I really didn't want to get into this John, but I'll tell you basically I...tons of numbers OK, and the first was based on the RDA study, OK and according to that study on assessments for this year should be $611, next year $761, the following $371, and then $394, $389, $524, $425, an the $2,008 in the year 2021 and then it drops to $878 the following.... Numbers here John. We're in good shape here because we have reserves to cover that. We start to recover some of our money here and then we spend it here according to their study. We can't do that. We're not going to the bank. We're not borrowing money. We're not going to hit somebody with a $2,000 assessment. I won't be on the board, OK. Next years board may decide to throw this thing away. Another scenario, OK, saying we made some adjustments, we're a little better off, OK. We actually go about $150,000 in the whole in 2021, but then we come out of it by the year 2025, but that's based on raising our annual assessment an additional $25 a year forever. So next year it will be $475, $500, $525, $550, $575,. I ran another proposal here and another John. I will gladly give you these numbers. You can look at them, but these numbers on this Reserve Study need to be adjusted." McBride, "I think the BOARD NEEDS TO SIT DOWN WITH YOU AL, I'm sure you've done a very fine job here and have you share all of this with us and how it fits into this Reserve Study, so that we don't catch people off guard and have to assess a million dollars in one year. That would be $2,000 a household. We just can't afford that kind of mistake. " Anyone can see that adjustments could be made in the low years so we never have to reach the drama of 2021. First, share it with the whole board. Second, hire professionals. There is too much slight of hand (mouth) going on here. The board kept some board members out of the contract with the vendor, wouldn't allow all board members to see the draft, and gave erroneous information to the vendor. Back to transcription.
Garrison, "Let me...with something here. The Finance Committee meeting is when?" DeMarchi, "Tuesday night." Garrison, "I suspect that part of what the Finance Committee is going to do is take a look at the Reserve Study and evaluate SOME of that." In one meeting? DeMarchi, "Yes" Garrison, "That be the case, seems to me that it is up to the Finance Committee at this particular point in time to assess the reality of those numbers and what those numbers - what those projections are, and understand that the Reserve Study is not by any stretch of the imagination a mandate. It is a suggestion based on certain assumptions, some of which in my view are patently unnecessary - not all. The major thrust of it and if any of you ....it has been on the web, if any of you have looked at it, is the biggest commitment - basically is with roads, and I believe drainage is pretty much behind that. There's no question there's work that needs to be done on roads, but MY intent, I think this boards intent is that what ever is needed is going to be tempered with the resident's ability to pay. To pay as it goes, not by borrowing money, not by doing it by whacking people with huge assessments, collectively, individually, or any other way. If that means that some things take 3 or 4 years longer than the Reserve Study might indicate would be optimal, unless there is a really pressing need for something, than you know we just start with Duck Pond which probably is the most depressed road around here. It is under consideration now. (Well Garrison, you sat on the board when it was repaired in 2010, ignored engineering, and once again, you'll decide?) It makes more since to me to recognize that the Reserve Study needs to be tempered with a good dose of reality in terms of what's affordable. I think that's what Al is trying to do". How affordable does it become when you have to redo it 3 years later because you AL knew how to schedule it the first time? When you have an unbiased schedule, provided by a third party, it keeps selective self serving moves from individual board members, from happening. How did we get to Francis Parker and Joanna Gillard, for instance for drainage? Garrison continues. "Now that doesn't mean the assessments are never going to go up. Sure they are. Everything - the cost of living is going to go up, alright, by looking at this over a long rang picture and let the FINANCE COMMITTEE evaluate first and they report . I think the process should work. Let the Finance Committee and go over that. Then let the Finance Committee have a meeting that they invite the board to and that would be the appropriate place to have that discussion at and iron out any differences there may be in opinion in regard to that. That seem reasonable to everybody?" McBride, "I think we have to remember Bob, that there's nothing that you can say and there is nothing you can do to change when these roads are going to wear out and when these ditches need to be dug, and canals need to be dredged. It is going to happen and when it happens, it happens. We have to have the money available, now the one thing we can serve ourselves, is get a PROFESSIONAL opinion on some of this stuff. It says right in the report that we ought to be doing that. Find out what they are saying. I already see more than Duck Pond with weeds encroaching two feet unto the road." Garrison, "There's no question and I have no objection now or going forward on a unit by unit basis, when it is appropriate, as it is with Duck Pond, as we've already approved, to conduct an engineering study to determine the best way to clear that and that's going to happen with each of those as the Roads Committee decides which of them are most relevant. I'm not much interested in hiring an engineering firm to assess the entire roads system in Wedgefield at this particular point." President Walton, "You're not going to repair in unison at one time anyway." Garrison, "You couldn't afford it in 10 years right away. So, although I agree - yeah - that they're going to have to be done. There are things that are going to be needed, but is going to have to be done on a step by step basis, in order to be affordable to the community."Please take time to review the study. There is a plan for roads and it. No where does it say to do the roads all at once. In fact there is a schedule for it that the Roads Committee should follow. Could these long, sometimes misleading statements, count on you not being informed, and intended to cause fear? Personally, I'm more afraid of the miserable half baked jobs we've had in the past, conducted by some on boards, with favored projects and favored ill equipped vendors. Garrison continues, "This board, AT LEAST ME, for as long as I'm on this board, is not going to go on some expedition borrowing money to do something that's going to put a hole in every body's wallet. You can do just as well with cash on hand if we look at it properly, correct assessments as to what needs t be done. We're hoping we can do that without breaking any body's pocket." I haven't read in the study, nor have I heard anyone but DeMarchi and Garrison, keep bringing up borrowing money. There are several possible funding options in the study. Why try and set the stage for upset? Do they want people to think they have to ignore the study in order to save them? Well maybe some of this is because it is nearing elections and some of these board members are running again. Is it easier to get votes if you start convincing members that you are going to save them? McBride, "Many of the ...... that you say are absolutely correct. Until you have professional opinions, WRITTEN OPINIONS, from a PROFESSIONAL road builder....We're going to have to have something in place. Then we can plan what kind of money we're going to have to raise....until we know exactly and that's what is in here. He's given us the best guess that he can, but he's suggesting we get......professional to advise us. It could really fall apart. I just want to be....about this. I don't want to have big bills come. Let's get a little bill and keep it going so we have money available ." Garrison, "My suggestion is let the Finance Committee look that over and meet with the board with their recommendations." DeMarchi, "Do you want me to hold this acceptance of the budget?"
DeMarchi closes by saying something about his wanting to get this out of the way because he wasn't going to be here next month. This is important. We haven't ever had a study. This board, some - provided orchestrated information to the vendor, didn't want engineering, and now some of them who did all this behind the scenes, don't want what they got. They continue to want to avoid professional help, state every board before them did the wrong thing, and now they want to self direct, because they know better????? They'll employ scare tactics if they have to.
Some questions for all board members. Were you allowed to have input into the information that went to the study vendor? Did you review all the information before it went to the vendor? Were you allowed to see the draft? Have you read the complete document? How many hours have you spent reviewing it?
To the Finance Committee: Were you allowed to have input into the information that went to the study vendor? Did you review all the information before it went to the vendor? Were you allowed to see the draft? Have you read the complete document? How many hours have you spent reviewing it? HAVING READ THE RECOMMENDATIONS REGARDING PROFESSIONALS, DO YOU BELIEVE YOUR COMMITTEE AND THE CURRENT BOARD ARE CAPABLE OF MAKING THE CRITICAL DECISIONS REQUIRED FOR OUR LONG TERM FUTURE, WHILE IGNORING PROFESSIONAL ADVICE TO BRING IN PROFSIONALS?
Residents, don't let the scare tactics get to you. This is important. Read the study, listen to the words of the board, and ask weather they are speaking in the best interests, for the long term, of our association.
