December 10, 2022 at 12:07 pm #7426Rana GoodmanKeymaster
By Robert Stern
2023 Reserve Study and WGH Business Plan
Welcome to the weeds. The last Reserve Study in 2020 used an inflation factor of 2% which was a reasonable number based on the available information at the time. What should it be in the 2023 Reserve Study?
The board is going to want to keep it as low as possible so that it minimizes pressure on assessments. My view is that the inflation factor ought to be 5% based on today’s information. So, who makes that decision? According to Gary Porter from Facilities Advisors whose contract is on the December 15 BOD agenda to approve, he lets the board decide as long as it is between 3 1/2 % and 6%.
To better protect homeowners with the Main Reserves now at 71% with also on the December 15 BOD agenda approval for RESERVE EXPENDITURES for the Restaurant Renovation, Furniture and Accessories and Kitchen Repair/Replacement with a total exceeding $800,000.
Couple that with the already acknowledged $235,000 spent on the restaurant in 2021 and 2022 and you are looking at an excess of $1,000,000 and without an approved WGH Business Plan.
The cart is before the horse folks on the buildout. Approval of WGH Business Plan should be first.
Urge the board…rather demand the board approve 5% inflation factor for the 2023 Reserve Study. It will protect homeowners better than 3 1/2 % from a fiscally irresponsible board’s spending or at least it should. 71% Main Reserve is low and needs to be increased significantly.
And then the restaurant loses a projected $300,000 a year for 3 years minimum not counting utilities and more. $2 million for Yorktown. Try the Titanic! Make sure not to miss dessert!December 11, 2022 at 6:13 pm #7428DickParticipant
3.5% inflation factor in the 2023 Reserve Study ????
With just about every prominent economist predicting a major recession by mid-2023, there is absolutely no way that we will be below 7% inflation for the next 18 months AT A MINIMUM, due to the Biden absurd deficit spending policies, many not even yet taking affect for the months ahead.
The Fed’s frequent increases in interest rates (and the amount of each increase) are sure signs that inflation, at best, will remain around the 7% level for the foreseeable future.
Ordering a Reserve study at an interest rate half the actual rate of inflation is another way of “kicking the can down the road” to the next generation.
Where I look at Steve Anderson and a number of others on the Board at recognizing a dilemma caused by past Board ignorance of basic economics and in many cases those Boards (and the same blogger who sounds like a broken record….without any record of personal success other then electing so many of them) being more concerned about reelection then the reality of those economics, the time has come to face the music of the past.
I believe they are making attempts to do that with a couple of exceptions; the artificially low assumed Reserve Study interest rate, and an unnecessary restaurant at a time when those financial woes will strike many.
I believe in many respects that they are trying to accomplish that mission; but sadly, these issues have not been addressed to properly and PERMANENTLY solve our financial woes.
A starting point is the inflation rate of the Reserve Study and Mr. Stern, in my opinion, is actually being conservative in his 5% suggestion; but nonetheless, Mr. Stern’s point of raising the figure is more realistic, yet conservative enough to be a compromise in solving this area of concern.
This Yorktown Restaurant will be a trying experience for the entire community as it has been for many others in past years.
As a realist, I have always believed that a restaurant was, is, and always will be, a losing proposition for many reasons, but I stress those reasons referring to dollars and cents and history. They have all been expressed again and again.
One might recall a pre-pandemic Board meeting where in excess of 1,200 residents signed a petition stating they did not want one, yet that seems to have been ignored.
However, that was then, and this is now.
The decision has been made to go forth with one, and given a reasonable period of time, if the losses exceed a DEFINED amount, then it must be shuttered and finally repurposed. I don’t care how the CCRs are interpreted.
I don’t believe any legal body would force the association to PURPOSELY LOSE LARGE SUMS OF MONEY causing massive dues increases to those in our community year after year.
The question I would like answered by this Board is WHAT IS THAT TIME FRAME? That would be a proper compromise in my opinion.
Calling for a boycott would only serve to exacerbate the situation.
Until them, we have spent a rather significant amount of money already, allow it continue for a limited period of time, but as said previously, DEFINE THAT TIME PERIOD.
Most of all, allow each and every person who resides in our community to express their opinion without undue influence of any person, but that opinion can be expressed not in words by a blogger, but in counting the number of meals served to those who financially support the measure, not those who “talk the talk, but won’t walk the walk”. In other words, MONEY PAYS THE BILLS, NOT WORDS OF PRAISE OR MORAL SUPPORT.
Financial results should determine its success or demise, but once again, A TIME FRAME MUST BE DETERMINED to allow that decision to be made by itself.
Simply stated, if we define that upfront as part of proper financial planning, the goal and objective has been set in stone and the results will take care of themselves.
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