Good Intentions but Misguided

I believe there are good intentions among the Directors in this Board of Directors and believe they are hard working people doing what they think is right. However, I also believe they are not seeing the big picture and are not making prudent financial decisions for our association. The majority of the Directors on this board (and certainly the executive committee) ran and were elected with promises of making positive change by fixing the problems from the past regarding funds not being appropriately used and assets being allowed to deteriorate. Lately, though, this board has made several large monetary decisions where I believe they are not taking into account the best financial interests of our association and are not properly planning for the future. This is a problem for all of us.

If I try and take an unbiased attempt at describing what I think is the root of the years of financial issues here in Sudden Valley, I think much of it boils down to *very poor long term financial planning.* This problem started from the get go and kept going over many years and under many different boards. You look at how the HOA came into being in the 1970s with $9/month dues and shiny new facilities. That $9 a month essentially operated the amenities but did not set aside any money to pay for future deterioration and replacement needs of those amenities when the time came that they were no longer shiny and new. Setting aside money for some future need wasn’t the priority at that time for the folks in charge. Dues rose over the years but did they ever really adequately rise to the level needed to both operate and maintain/replace our assets as they aged? I would say no. So, over the years assets have gone away due to neglect when choices had to be made about how to spend existing limited funds (things that went away: stables, ice rink, rotunda, barn, functioning campground, park features fallen to disrepair, etc.) and remaining things have continued to deteriorate due to prioritization of existing funds AND not enough funds allocated to repair/replace/maintain assets. That’s not to say that there hasn’t been an attempt at maintenance for some things. There has. And I think the current board (and past boards) have tried to do some of that, as well, but it is an impossible position of trying to catch up without enough resources to truly do so.

I believe this very same problematic thinking (buying something we “want” now and not thinking ahead of how to pay for it into the future while also making sure we can afford to take care of all of our other maintenance “needs”) is exemplified with this board’s recent decision to purchase the Sunmark property for $1.5 million of community funds. They made this decision without seeking community input and without a clear and compelling use for the property. Listen back to what our accounting manager Joel said at the open session BOD meeting regarding the Sunmark purchase where he explained how we can afford to purchase this property without an increase in dues: His entire explanation for how to do this can be summarized as “can kicking.” He explained that we can buy without increasing dues by deferring money away from other maintenance priorities planned for the CRRRF fund (this fund’s purpose is to repair/replace/refurbish our capital assets) in order to free up the money to pay for the loan we will require to pay the purchase price of this Sunmark property.

I cannot understand how the board sees deferring other maintenance of currently owned property to pay for a loan to buy a new property as a solid financial decision. Maybe if this purchase had been vetted through the finance committee some of this could have been discussed with people who have strong financial backgrounds and understand long term budgeting. Maybe if the board had taken community input in any meaningful way (or had more than one open session meeting regarding the purchase of this property before voting to buy it) some other perspectives could have been considered. Diverse viewpoints would have provided a fuller picture of this decision and it’s impacts. It is one thing to spend $1.5 million of money from CRRRF replacing/repairing something we already own. We have a responsibility to take care of those assets we own (and we have history of failing to adequately do so with our limited funds). It’s an entirely different thing to spend $1.5 million purchasing a brand new property and the accompanying building (built in 1960 so we can expect it will have needs). It’s not just the purchase price of the property we have to plan for. We have to plan for the ongoing maintenance on that property (the building and all it’s components have to be added to our reserve study which determines how much money we need to budget for repairs and replacements as those components age), the operational and utilities costs of that property, the property taxes on that property (looks to be about $6k/year currently).

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