A/B Board Minutes

 

SUMMARY OF MEETING OF THE HOLLY LAKE RANCH
ASSOCIATION BOARD OF DIRECTORS
20 NOVEMBER 2007

 

I. Call Meeting to Order.
   A. Class “A” Members     B. Class “B” Members
        Bob Levy     John Sparks, Vice President
        Michael Hall    Bill Beggs
        Rebecca Hitt    Larry Bowman, Treasurer
        Wayne Hitt    Jeanette Sterner, Secretary
         Jane McMillan

 

II. Approval of Meeting Summary of July 31, 2007.  Larry Bowman, second by Jeanette Sterner and unanimous approval to accept the minutes, made motion.

 

III. Audit Recommendation.  The General Manager, Rob James, recommended to approve the 2006 Audit performed by Squyres, Johnson, and Squyres as submitted on November 2, 2007.  John Sparks felt that the wording should be changed to “accepted” not “approved.”  Larry Bowman made a motion to accept the 2006 Audit performed by Squyres, Johnson, and Squyres.  Jeanette Sterner seconded motion and there was unanimous approval of the motion.  Motion was made and seconded to approve the payment of the final invoice from Squyres.  There was unanimous approval of the motion.
 
IV. Dues Increase Recommendation.  Rob recommended that a 5.1% increase in property dues be approved.  This increase will result in a $4.40 increase, raising the dues from $86.35 to $90.75.  Four percent ($3.46) of the increase will be placed in the general fund for operating HLRA, while 1.1% (94 cents) will be placed in a contingency fund.  (Note: the property owners as well as Silverleaf will pay this increase.)  The B Board members had worked with the GM on the budget and it was clear that a portion of any increase had to go toward an emergency fund.  Bill Beggs said that the idea was to build on this fund, which would be used strictly for emergencies situations and nothing else.  All B Board members commented on the need and the usage of this fund.  In summary, it was stated that in the past there was no money set aside into a special fund designated for emergencies.  The emergency situation would be assessed and money from that fund would be used.  The fund would carry over to the next budget cycle.  Such a fund would allow the Association to stay on budget in other areas and, hopefully, not take money from a department in order to pay for the emergency.  It will take time to build up the fund and methods of doing that are being assessed.  The A Board made several comments about the decision to include a contingency fund.  In summary, they also agreed that a budget that contains a fund committed to emergency situations is desirable.  A motion was made and seconded that the 5.1% increase in property dues be approved.  There was unanimous approval of the motion.

 

V. Golf Fee Increase Recommendation.  Rob recommended approving a $75 ($825) increase for singles and $100 ($1450) increases for couples in golf dues.  Twenty-five dollars for the single rate and $50 of the couple rate will go into a contingency fund for the proposed new nine holes.  The discussion of this recommendation centered on the use of the contingency fund.  In summary, it was suggested that in case the contract for the new nine-hole golf course was approved, money would already be set aside for the maintenance of the new nine holes.  If the new nine-hole contract was not approved, then the money could be transferred to the golf maintenance department and be used for a project on the existing course.  For these reasons, Bill made the motion to approve the golf dues increase of $75 for singles and $100 for couples, with $25 of the single rate and $50 of the couple rate will go into a contingency fund.  The motion was seconded and the motion passed unanimously.

 

VI. Garbage Fee Increase Recommendation.  Rob recommended approving a 50-cent increase in the garbage fee.  This increase will raise the fee from $13.50 to $14.00.  Currently, we are paying Triumph Disposal $13.55 per homeowner.  Rob said that during the year, the company raised the “gas fee” and that caused the Association not to have the needed revenue from existing garbage fees to pay the increase.  Rob also said that he expects another hike in  “gas fees” this coming year and he wants to be ready for this hike by raising the garbage fee.  A motion was made and seconded to accept this recommendation.  The motion passed unanimously.

 

VII. 2008 Operating Budget Recommendation.  Rob presented the operation budget for 2008.  Several issues were discussed among them were:
A. Rob said that it is not clear how the restaurant will affect the budget.  Together with four of the managers (security, maintenance, pro shop, and golf maintenance) and the B Board members, a budget was deliberated over several times during meetings with those mentioned above.  He said that the thought is that we are not going to run the restaurant as we have done in the past.  A management company or lease it out to someone is what is currently being pursued.  There is a ballot out right now that will assist us in making decisions about the status of the restaurant.  Jeanette asked if Rob sent Bob a copy of the ballot that was sent out.  Rob did send a copy.
B. Larry said that the format is a little different, for example, the “contingency fund” is separate line item. 
C. Bob asked if all of the notes for the restaurant (building and equipment) in the budget.  Rob said they were.
D. John asked if the amount anticipated from the $2500 Initiation Fee collected from new property owners in 2008, the same as the amount collected in 2007.  Jeanette asked what was the amount collected in 2007.  He said the amount collected was $285,000, but that does not include what might still be collected by the end of the year.  However, Rob stated that not many people buy in November and December.  Jeanette said that it was recently stated that over $300,000 had been collected so she wanted to know what was the figure.  Rob said that it was $285,000 and that is what he had basically projected would be collected in 2007.  The 2008 budget projects receiving $270,000 as the current economy could slow down sales.
E. Bill asked that he recalls when we have collected more in the past.  Rob said that is correct but not for this year.
F. Bob asked if there was anything that needed to be done further with the budget.  Larry said that projects and purchases were discussed with each of the four managers and Rob in order that the budgetary process addressed the needs that the staff felt were important to the Association.  John said we went through the “Priority List” with the staff and he felt it was a good exchange of ideas and concerns for the Association.  Jeanette felt that it was helpful to have the managers talk with the GM and the Board, who approve the budget, about the projects they feel need to be addressed and why they are of importance for 2008.  The managers are the ones who work every day; know first hand what needs to be addressed.  Rob said he too felt it was a very good budgetary process.  Rob mentioned some of the items on the budget for 2008:
1. Security will obtain another deliberator.  Another vehicle will be purchased.  New handheld radios will be obtained as needed.  (Note: Initiate a project to upgrade the perimeter fence, beginning with the most critical areas on the Ranch.)
2. Maintenance department will obtain a double axle, dovetail trailer with electric wench.  This is used to haul the backhoe.  (Note: Obtain a used dump truck since the current one leaks oil and fuel.  It has been serviced several times, but the problem is getting worse.  The vehicle’s transmission is frequently having problems.  It is to the point that repairs are getting more costly than trying to replace it with a [new] used vehicle.)  Place more fish in Lake Greenbrier as we have done the last three years.  Re-surface one of the tennis courts.  Bob Levy asked if we were going to grind up the old surface or re-surfacing.  Rob said we would re-surface them.  The skimmers for section 4 pool will be replaced.  Repair the building around the Section 3 pool.
3. Rob said that the Pro Shop/Golf Course Maintenance are going to purchase new range balls, plant some trees on the golf course (every year money is set aside to plant trees,) repair certain sections of the cart paths (every year money is set aside to repair cart paths) re-do the tee boxes on holes 1, 9, and 16, repairing the retaining wall around the restaurant, work the drainage problem between holes 6 and 7, over-seeding this year to maintain the suggested schedule of over-seeding, and re-do the drainage on the driving range.
4. The driveway up to the restaurant and the delivery path to the restaurant is going to be repaired or redone.  It was also approved to resurface the Administration parking lot.
5. The Administration office is going to purchase some new CCS software so that the various computers in the different departments can communicate with each other.  (Purchase some new tables and chairs for the Holly Hall.)
A motion was made and seconded to accept the 2008 budget.  It was seconded and approved unanimously.  (Note:  Another presentation of the 2008 Budget will be given to the people at the December meeting.)
           
 VIII. Rob recommended to the Board to approve the prepaid dues letter for 2008 to be mailed in the December 2 billing.  The members reviewed the letter.  Property owners will save 5% on the overall dues if they pay in full by January 10, 2008.  A motion was made and seconded that the letter be approved.  The motion passed.

 

IX. Reduce the Hours of Operation for the Restaurant.  Rob recommended to begin limiting the hours of operation beginning December 1.  The reason is to save money (in the 2007 budget so as not to have a deficit) and wait for the results of the recent ballot where people could vote to keep the restaurant open or not and perhaps initiate a Food Fee Service Charge.  Rob said that the ballots will be counted tomorrow and that should give us an idea of the general direction we should take concerning the restaurant.  Discussion and questions were as follows:
A. John said that the use of the word “closure” has been used.  Actually, we are talking about limiting service, menu and limited hours of operation so as to save on labor costs in particular.  The 19th Hole menu will be used for ordering food.  The Fore Seasons building will still be open to non-smokers.  Rob said that the salaried employees would work during the hours of 7:00a.m. until 3:00p.m.
B. Rob said that the employees were told that they could still work the catering events, which at this time there are six planned for December.  If the vote indicates that the people want a restaurant, then we will work on how it will be operated.  It is understood that we may lose some of the individuals presently working because they will seek other employment. 
C. It was asked if there would be enough workers for the catering events. Larry said that if you schedule your staff now for each of the catering events, then that would help the employees with their decisions.  It was asked how many do you bring back on for catering events.  Karen will of course decide that.  Jeanette mentioned the very successful Thanksgiving event and that per Karen’s request, members of the Restaurant Work Group helped with pricing, set-up, seating of patrons etc.  If need be, she felt that volunteers could be obtained again, but that would be Karen’s decision.  Jeanette believes that several of the part-time staff may work a catering event to make extra money, even if they acquire another job.  It is not unusual for people to work in food service just as an extra moneymaker. 
D. Bob Levy said that it is not really unusual for restaurants, such as ours, that go to a limited menu because there are not as many people who frequent a restaurant because of the holidays. 
E. Larry said that another reason is that there is some work that needs to be accomplished in the kitchen and storage area.  The carpeting needs to be removed that is in the storage area and the wall and equipment between the 19th Hole and the FS kitchen needs to come out.  Most people we have talked to emphasize the lack of space to move between the two areas without literally running into each other.
F. John mentioned that we have spoken with a third party contractor about possibly running the restaurant.  We have two or three more scheduled for later this month and early December.  It was discussed how the contract might be set up.  It was also discussed that with a third party running the restaurant, it might be easier for this type of manager to work with the staff, who is often property owners or they are family members of the owner.  It was stressed that the third party idea will not take care of all of the problems of running a restaurant, but it might relieve some of the burden of the losses incurred from food costs and labor costs.  The issues of service and consistency in food quality were discussed since those were big concerns noted in the “restaurant survey.”
A motion was made and seconded to limit the hours that the restaurant is open from 7:00a.m. until 3:00p.m, except for catering events.  The primary menu will be the 19th Hole menu, except for catering events.  The primary staff will be the three salaried employees, except for part-time help needed for catering events.  The motion passed.

 

X. Purchase Order Recommendation.  Rob recommended the use of purchase orders as suggested by the audit.  He said that though it does not take effect until January 1, 2008, he is going to have a “trial run” with his department heads to see what corrections need to be made.  Rob presented the rules that will be used by each department.  Questions and comments concerning these rules are below:

 

A. Rob stated that all purchases over $100 must have a purchase order.  Wayne thought that was too low of an amount.  The paperwork that is involved would warrant a higher amount.  Wayne also suggested that the invoices are coded by the department head and then put it on their department’s budget control log.  This indicates to the department head how much money they have left.  With this log, everyone knows how much each department has spent.  Rob said that you can pull up on the computer the purchase order number and you know quickly what has been spent.  Larry suggested that a change be made to rule number 1 and 2, where it reads that purchases over $250 must have a purchase order number.  Yet, every purchase has to be coded and tracked to insure that the department is maintaining its budget.
B. Bob and Larry both commented on the need for Rob to also set up a budget control log.  So, again at any time Rob can see how much a manager has spent.  This will also help managers to forecast expenditures throughout the year.  If a manager sees he has a problem, then he can come to the GM and the Board and discuss the budgetary problems he is facing and explain the situation so action can be taken.  This log would give the manager better control of the department’s budget.
The motion was made to accept the Purchase Order Rules presented by the GM with the following exceptions and one addition:  Rule 1 and 2 change $100 to $250.  Add Rule 10, which would require the Administration to set up a “budget control log.”  The motion was seconded and passed.

 

XI. Employee Vehicle Discussion.  Jeanette mentioned that at the November Open B Board Meeting, Rob went through the 2007 budget and he mentioned that the association pays for three employees to take HLRA vehicles home and use them for personal use.  Several people expressed concern about this policy.  People expressed that we would save a lot of money not having to pay for fuel and repairs of vehicles if they were not allowed to take them home and use them for personal reasons.  They expressed a need to help the association with other projects by saving money were they can.  They wanted justification for this policy because several said that they thought that the managers make a very good salary and therefore should not also receive a vehicle that the Association has to pay for plus all of the expenses of the vehicle.  Several noted the need for vehicles while working, but they did not see the need to take them home.  Rob told the people that they do keep a log of the mileage and if the vehicle is used for personal errands, they account for this on the person’s W-2 form as income.  For this reason, Jeanette felt that this policy needs to be reviewed.  It is currently not part of a written contract with the three managers; therefore, it can be reviewed and possibly changed.  Discussion on this issue was as follows:
A. One member of the A Board said that as far as he knew all golf course maintenance managers receive a car as part of the benefit package.  Bob Levy said there was a time when Silverleaf was struggling and the cars for managers were taken, salaries were frozen, no bonuses, etc. but once they got back on their feet, then the benefits were put back into place.
B. Bill said this is somewhat in line with what the Audit suggested in that logs needed to be kept on a daily basis not a monthly basis, as was the practice.  It was not clear if adequate record was taken so the mileage could be transferred to the W-2 for and be recorded as taxable income for the employee.  Jeanette added that if the vehicles were used only while at work on the Ranch, you would extend the life of the vehicle and that too would save money.
C. Bob Levy said he thinks the vehicle for the GM was probably part of his negotiated salary.  He does not recall when a general manager is hired that a vehicle has not been included.  Bill said it is not an issue that the managers have a vehicle to use at the Ranch; it is an issue of using them as transportation to and from work.  It might have been the policy in the past, but the main concern for Bill is furnishing a gas card for any and all uses by the individual.  He assumes that the vehicle is used for more personal time than actual time at work.  Bob was concerned about the fact that the three employees have received a car for five years and now you want to take it away from them.  Bob asked if we are planning to compensate them in another manner or just the vehicles away.  Jeanette said that cuts are made in companies to save money, so if there is a need to save money, then why cannot this issue be addressed.  Bob said if you do it fine, but you should compensate the people.  Bill said that we were not involved with packages offered in the past and we may not have agreed with all that was done in the past.  So, our concern what is the total package at fair market value.  These vehicles add $10,000 to $12,000 to the salary, which seems high.  We feel that it needs to come into line with the position warrants.  If there is a better way to do that, we are open for suggestions.
D. John said that apparently there was no formal written document that addressed the benefit packages offered to the managers.  We need some type of documentation of the agreements made with employees.  An A Board member said that since we just approved the 2008 Budget and you can keep within the budget, then what is the issue?  He understood you want to save money, but either way you compensate him or buying gas.  John said that it is not an issue of the 2008 budget.  There are plenty of places within that budget that the money (saved) could go.  Jeanette said that a goal is to save money that might be used in other ways to benefit the community. 
E. It was again mentioned by an A Board member that a vehicle is usually part of the standard package for a golf superintendent. 
F. Jeanette said that Rob had told her that the vehicle is taken home in case the employee had to come back for an emergency.  Jeanette asked Rob how many times has an employee had to come back.  No examples were given at the time.  So, the question is still how many emergencies have occurred that has required someone to come back to work after hours or on a weekend.  Rob said that Billy has come out when there have been power outages or water breaks.  Rob said there is no benefit to the association for him to drive the vehicle home, it is just part of the deal he was offered when he came to HLR.  Jeanette feels that the number of times a month a manager has to come back to the Ranch needs to be documented if that is the main reason we furnish a vehicle to take home.
G. A member from the A Board said that if fuel is a big part of the issue, is it possible to limit the amount of fuel.
H. Bill said that the unlimited usage is like writing your own salary.  Larry said that his experience with having a company car did include some perimeters of when and how far you could use the vehicle.  Bill asked if there were such restrictions.  No one was able to give any restrictions other than saying that they were told to put a tank of gas in once in awhile.  Jeanette said that is part of the problem, what does “once in awhile” mean.  She noted that when another employee complained about how far he had to drive to work, the answer given him by staff was that he could have moved.  So, it might make a difference for a manager to take the job if they do not get a vehicle, but the larger picture of the benefit of the job, like salary, should come into play for a person to accept a job.
I. John said that he has a problem with “punishing” an employee for accepting a job thinking the vehicle would be part of the benefit package.  He believes the issue is that any contract with an employee needs to be initially reviewed by the President and the Treasurer of the HLRA, to include salary and benefits.  He suggested that we place the issue of written contracts, benefits and benefit guidelines on the agenda for the January A & B Board meeting.  When the issue of buying vehicles comes up then we have the right to negotiate.  Rob said this has been the case in the past, of the Board approving the vehicle usage, which vehicle and how much would be spent on the vehicle.  We cannot reverse the past.  Bill and Jeanette both reiterated the lack of controls and that is what needs to be addressed.  No one is faulting any one because the employees were told they could use the vehicles to go anywhere.  You have to decide when you are going to put in the limitations and yes it will affect someone, new or returning employee.  Jeanette said that is what homeowners are concerned about, where are their dollars going. 

 

 John said that we have the opportunity to look at line items by department.  Bob Levy agreed that in January we could look at the issue and say this is what we are going to allow for fuel for each of the three employees.  Rob felt that would be a fair approach.  A limit based on type of vehicle, number of miles and cost per gallon of fuel.  (Rob and Larry will come up with a formula for consideration that will be fair to the current employees with vehicles and save money for the Association.)
There was no further business.  A motion was made and seconded to adjourn the meeting.  The motion passed.
The meeting was recorded, cataloged by number 112007 and available in the office of the administrative assistant by appointment only.
The summary of the meeting is submitted by Jeanette L. Sterner, Secretary of the Board of Directors.
________________________________
        Jeanette L. Sterner, Secretary