Special Budget Board Meeting
HSVPOA Board of Directors, along with CEO, Lesley Nalley and CFO, Liz Mathis met via Zoom conferencing in a special-called, Budget Meeting. The purpose of this meeting, held on Tuesday, November 5, 2019, at 3:00 p.m. in the POA conference room was to finalize the 2020 Budget. At their previous Zoom meeting on Monday, October 28, 2019, the board gained a majority agreement in preparation to pass the budget today.
All Board Directors were present.
Director Campagna makes motion to approve Version 5 of 2020 Budget
Chairman of the Board, Cindi Erickson, called the meeting to order and Vice-Chair, Tormey Campagna, immediately made a motion to pass the HSVPOA 2020 Budget.
Campagna: “I make the motion to approve the 2020 Budget, Version 5 which includes:
- CPI increase to assessments of 1.1 %,
- 75 additional improved properties through building and sales incentives,
- 5 year, 500 thousand dollars of the 3-million dollar water plant payback from the public utilities – that 3 million is done over 6 years,
- 2% budget and staff merit increase for pay grades 5 through 9,
- Budget increase to pay grades 2 to 4 to accommodate the new minimum wage rates,
- 3% utility rate increase,
- 2.7% sanitation rate increase,
- Increase the road maintenance expenses by $500 [sic] from the escrow funds for culvert repairs, and
- 450 K rollover from the 2019 street maintenance fund.”
Nancy Luehring corrected, “$500,000 as opposed to $500.”
Director Buddy Dixon seconded the motion.
Director Podawiltz states objections
Director Diana Podawiltz’s discussion follows.
“In order to be succinct as possible today, I pre-wrote this. So I am going to read it. The Hot Springs Village Property Owners Association faces financial challenges. We have over 11,000 lots not paying any assessments. That number has increased by 3,000 since the passing of the two-tier increase, which equates to over 1.4 million dollars per year.
“We don’t have enough revenue to satisfy our needs.
“Our staff has made a valiant effort in establishing priorities for our 2020 operations.
“I especially appreciated Gary Myers telling us during his budget presentation last month that he has cut $400,000 out of his budget, year-over-year and there is nothing more to cut.
“However, in Version 5 of the 2020 Budget, over $100,000 more has been cut from the golf maintenance budget. We fail his department today by voting yes on this budget.
“We have not met or discussed any potential repairs to the Balboa Golf Course since we defeated the renovation proposal at our September Board Meeting.
“We’ve discussed that we can revise this budget to do something, but today’s budget version has every dollar of projected revenue already offset by projected expense. That means any expenditures for the course will have to come from reserves or taking on more debt.
“This will also be true if we fail to reach our 2020 revenue forecast. That being said, I would like to share my prior reason why this Board should vote no for this budget.
“The Board and our CEO are failing our staff, our Property Owners and other stakeholders by the Enterprise Goals that have been put in place to develop this budget and be the driver of our business decisions in 2020.
“The goal of measuring our operating success by having capital exceed depreciation has always been questionable and in this old accountant’s opinion, given the circumstances under which we’ve been operating since the funds generated by the two-tier assessment increase came out of escrow.
“However, this year, unbeknownst to me, our CEO changed our capital policy. We are now capitalizing items which in prior years were expensed. In my opinion, there is no logical business reason for violating the accounting principle of consistency and a possible violation of the accounting principle of conservancy.
“This change has the potential of causing business decisions to be made which are driven by this goal, that may not be in the ultimate best interests of the Association.
“The change has been a factor in the need to hire a fixed-asset accountant in 2020 and increases the workload of the accounting department, as it will increase the capital record bookkeeping requirements and will require several prior years’ financials to be reclassified.
“Without this reclassification, we will diminish the value of our financial management reports as we will be comparing apples to oranges.
HSVPOA 2020 Budget – Version 5 is approved
The Board approved the 2020 Budget, Version 5, including the items listed in the motion memo that have already been read by a vote of 4 in favor. Director Podawiltz was the lone opposition and it appeared her discussion was ignored by the rest of the Board.
Campagna made motion to revise Fitness Center annual fees
Vice-chair Campagna made the motion to revise the Coronado Fitness Center individual annual fee from $490 to $400 and revise all other related Coronado Fitness Center annual fees in proportion, of which were originally approved in the October 16, 2019 budget.
Director Luehring seconded the motion.
Campagna said, “In background, upon further reflection on assuming the 2020 budget, the case for advising the fees closer to which were originally recommended by staff was re-evaluated by the Board and that is the reason for this motion.”
Recreation Committee suggestion was vetoed
Director Podawiltz, “I still don’t understand why we had to go with a different amount than what was researched by the Recreation Committee on fees and all the researching efforts they put into it. I don’t understand why we are not going with the dollar amount that they suggested.”
Director Mike Medica said, “I talked to a couple of people about $400 and they didn’t have a problem with it so that is why I suggested it. I don’t think it is good for us to go all the way back to what we had…”
Campagna said we have a lot more services. Not everybody uses every service. It is difficult to match competitive pricing because of these extra services. “This puts us in a difficult position and that is why I support dropping it only to $400.”
The short meeting was adjourned by Erickson.
Audio only of Special Budget Meeting – November 5, 2019
By Cheryl Dowden, November 5, 2019