Open Letter to the HSV Board of Directors

Lloyd Sherman

 Declared Candidate for 2019 HSV Board of Directors

Following the vote last Friday, I am sure you have been inundated with commentary, suggestions, and criticisms. Now that the vote issue is behind us and settled, I want to take this opportunity to convey some input I have received from property owners over these last few difficult months. The following is a compilation of my own views as well as what I have heard in meetings with fellow property owners both before and after I announced my intention to run for a position on the 2019 HSV Board of Directors. Several major topics are at the core of what has led to the division in the village.

Comprehensive Master Plan – The introduction and rollout of the CMP was the catalyst that woke up many property owners. These residents had simply retired and didn’t want to get involved in any level of politics or POA administration. They believed nothing would ever be done to change the reasons why they moved to the village. Intended or not, the rollout of the CMP came as a total shock to their psyche. While many aspects of the CMP have merit, the concept of items such as the Town Center with shopping and restaurants did not – and does not – appeal to the majority. Residents with business experience, particularly those who have had real estate related careers, instinctively knew that this concept was flawed and will fail here. Town Centers work in suburban, high density population areas of larger cities. But for Hot Springs Village, there are limited reasons for people to come other than retirement. There is insufficient industry in this part of the state to sustain those who still need or wish to work. There just is not sufficient population to justify another grocery store; particularly one of such nature that residents would frequent enough to make it successful. Furthermore, people do not want a hotel operation within our gates. Given the anxiety this subject matter has generated, it is my considered opinion that this plan needs to be permanently shelved.

Marketing & Sales – Rather than the CMP, in its place needs to be an Intensive, Concentrated, Marketing, Branding and Sales Program to sell our Village and our main asset – Golf. Call it an ICMBSP if you want. Residents overwhelmingly believe we must make a concerted effort to focus on the 10,000 people currently retiring each and every day in the US, and less on millennials. And, in order to support such a program residents believe a laser focus needs to be placed on one of our other main assets. The Lots! We need an aggressive campaign to concentrate on Lot Sales; whether owned by the POA or individuals, it matters not. I have spoken to many who possess excellent ideas and plans on how to make such a program work. Let’s start using some of these retired residents already living right here in the village who have significant expertise in these areas. In-house we have the talent and ideas. Let’s capitalize on them to generate Marketing, Branding and Sales programs with specific metrics that will work.

TRANSPARENCY – Whether real or perceived, there exists a huge TRUST
issue with both the Board of Directors and Senior Management. It matters not if
you feel it is deserved. That is irrelevant. The fact is: Property owner’s perception
is the reality and they believe there is No Transparency and therefore there is no
Trust. This problem will take time to cure. For starters, the board working
sessions should be re-established so as to provide for in-depth input of the
property owners. Quarterly – maybe even monthly at first – Town Halls with ‘open microphone’ are also needed and will provide a sense of inclusion to the
residents. Executive Sessions should only – and rarely – be convened for the
purpose of which they were originally intended. The current perception is that
they are now used in lieu of what used to be the working sessions with only the
Board or selected ‘invitees’ providing input. This has to stop. Ultimate decisions
that impact the entire property owner population require heavy population input,
not self-serving surveys to justify an already made decision. Full disclosure is
needed with all expenditures, contracts, and deals. The residents need to know
the details, the whys and with whom, not just summary numbers in a half-page
‘Motion’ written by staff and presented at a Board Meeting with virtually no
advanced public vetting. Currently, it is impossible for property owner’s to get
access to detailed transactional data for expenditures that are being or have been
made with their assessment revenues. Again, this has to stop.

FINANCIAL – Budgeting and financial accounting that can be easily understood
is a huge concern of those with working knowledge in these aspects of business
operations. By their own admission, I have heard a couple of board members
indicate they do not fully understand the budgeting process. I was totally stunned
when this was told to me directly. Board members should possess budgeting and
financial knowledge, as well as business experience. Our financial reports and
budgeting process need to be laser focused on a profit and loss concept. We also
need to establish a powerful finance committee that can assist and monitor the
activities of the financials and oversight of the budget process. Such committee
should have direct access to all financial data and staff. And they should be
vested with real power to implement change, not just recommendations to an
autonomous CEO.

OTHER – During the recent budgeting process, in addition to nothing significant
being discussed on how to increase revenues, there was no discussion on cost
containment or cost reduction. When the top line is not growing, the only
alternative left is to look for ways to reduce or contain costs. Golf will most likely
continue to be a subsidized activity for the near future, at least till our Marketing
efforts (above) kick in. All other areas of our operations need to be evaluated
from the bottom up and alternatives developed. Two lowest hanging fruit items
here are Restaurants and Village Homes and Land.

• Restaurants – The current restaurant program is not working and has not been working for years if not decades. Much like reinitiating a finance committee, a new committee to evaluate the future of restaurant operations should be formed. This group should be formed of only property owners who are ex-CEO types of multi-site restaurant operations. These resources currently exist within the property owner population. These two committees should operate without any members of the Board or senior POA staff and report directly back to the Board. The initial mandate given the committee must be the decision of which operations to close completely and/or revert back to being merely a hot dogs and beer type operation for golfers.

• Village Homes and Land – This unit must be disbanded and shut down. With the number of real estate brokerages already in existence, there is absolutely no reason for the existence of such an operating unit. Virtually all activities of this group can and must be assimilated into the existing private broker network. Marketing activities for Discovery Packages can be coordinated with the Chamber of Commerce and working with the HSVRealtor Board. Any remaining functions of a sensitive nature – such as remote POA owned lots to be held in suspension – can be handled by a single staff member as an ancillary duty

The current Board must accept, whether you agree or not, that Trust has broken down with a huge contingent of the property owner population. It must be regained. There has been much discussion since the vote about healing. The POA Board and Management must take an active role in that endeavor and convince the majority that things are changing as they have been requested to be done. In addition, there has been increased activity and discussion with a growing contingent of property owners regarding the formal filing of a vote of no confidence in the Board, along with calling for the resignation of the CEO. I suggest that these voices not fall on deaf ears.

Thank you in advance for consideration of my input and opinions. I know we all want what is in the best interest of HSV, but for varied reasons, many are not feeling that their best interests are being considered.

Lloyd Sherman

Declared Candidate for 2019 HSV Board of Directors

December 6, 2018

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