Preservation of MOA's Assets

2008 July 24
Posted: 2008 Sep 05. Click History for a list of changes and updates.

___One of the major obligations of MOA through its board of directors is the preservation of MOA's assets. The quality and appearance of the assets provides an important indication of the well being of the Association. Wear and tear are inevitable. Assets in need of restoration are an obvious indicator of the financial health of the Association and poor management by the board of directors.

___The continuation of this post provides the parts of the 2005 preservation study for the items identified for RRR in the 2006-2010 time frame. It seems clear that the current board has decided not to take any action on preserving the assets, even though the board made a report in 2006 stating that the estimates were on the low side, items were omitted from the study, and the preservation fund had a major shortfall.

Don Nordeen
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Continue reading "Preservation of MOA's Assets".

• Key Words:_ access to records; accounting; annual meeting; arbitrary; arbitrary and capricious; Balanced Budget; Business Reviews, 2007; consolidated financial statement; depreciation; Fiduciary Duty; Financial Information, 2007 General; Financial Information, Capital Projects; Financial Information, General; preservation; preservation fund; reserve; reserve fund; Reserves for Capital Repair; transparency;

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Preservation of MOA's Assets (continued)

___In the early 2000's, major repairs were made to the recreational facilities with clubhouse renovations (including exterior restoration and paint, interior renovation for bar & restaurant, office area, great room, indoor pool, HVAC, plumbing and electrical). A new outdoor pool was constructed. The pro shop was renovated both interior and exterior. In the 2004 time frame, a major renovation and upgrade was made to the golf course and parking lots.
___The reserve (preservation) study was updated in 2005 and published in the 2005 audit report. It showed a set aside requirement of $161,000 per year and expenditures of $385,000 ($77,000 per year) in the 2006-2010 time frame for repair, replacement and renovation (RRR). The audit report stated a shortfall of $600,000 (now closer to $800,000 shortfall) in the preservation fund, which has been funded only $48,000 per year, not $161,000. The reserve (preservation) study in the 2005 audit report is available at Reserve for Repair, Replacement and Renovation.
___At the 2007 Apr 14 Board Meeting, Messrs. Martella, Latuszek, and Yodzevicis discussed Operations and Finance. [This link is to a password-protected weblog. Please contact the writer at Email me! for the name and password. Please include your name and the street address of your Michaywé property so I can verify your membership in MOA.] Mr. Latuszek reported that the reserve study underestimated both the content and the amounts for the line items. He reported that the RRR costs were understated by 40%, and that the fund was underfunded by about 80%.
___The items identified in the preservation study for RRR in the 2006-2010 time frame are shown in the table below. In general, the items in the list show obvious wear and tear to a casual observer. All but the last column in the table are taken directly from the 2005 audit report. The last column shows the expenditures required in the 2006-2010 time frame as stated in the study. (text continued after the table)

_	Estimated Useful Life	Estimated Remaining Useful Life	Estimated Future Replacement Cost	Estimated Cost Per Year	DLN Added: Costs within Five Years (2006-2010)
Clubhouse
Exterior	10	5	000053,757	5,376	00 $ 53,757
Interior Decorating	10	5	53,757	1,344	53,757
Floor Coverings	10	5	53,757	5,376	53,757
Clubhouse Furniture	10	5	26,878	2,688	26,878
Playground Equipment	10	5	6,720	672	6,720
Parking Lot	20	5	000006,720	6,720	6,720
Total Clubhouse	_	_	$1,166,680	0 $ 62,994	$288,943
_	_	_	_	_	_
Pro Shop Building	_	_	_	_	_
Repairs/ Improvements	15	10	46,739	3,116	_
Heating/ Cooling	20	15	18,061	903	_
Redecorating	10	5	000013,439	1,344	13,439
Furniture	10	5	000013,439	1,344	13,439
Roof	20	15	000015,352	768	_
Exterior	10	5	000013,439	672	13,439
Floor Covering	10	5	00 0 13,439	941	00 0 13,439
Total Pro Shop	_	_	$ 123,157	$ 9,087	$ 43,005
_	_	_	_	_	_
Golf Course	_	_	_	_	_
Equipment -Mower	10	5	24,862	2,486	24,862
Equipment -Mower	9	5	13,048	1,450	13,048
Total Golf Course	_	_	$1,677,351	$ 76,121	$ 37,910
_	_	_	_	_	_
Member Services	_	_	_	_	_
Total Member Services	_	_	$ 13,083	$ 15,683	_
_	_	_	_	_	_
Grand Total	_	_	$3,165,958	0 $161,285	0 $385,541
_	_	_	_	_	_
_	_	_	Above subtotals and totals are for all components.	Above subtotals and totals are for all components.	Above subtotals and totals are for the selected components only.

___Again, only the items scheduled for some level of restoration in the 2006-2010 time frame are listed in the table above. The amounts are shown in the table. However, the grand totals are the total numbers from the full schedule published in the 2005 audit report.
___However, the preservation study and schedule have produced nothing. The budgets prepared by the board do not show any expenditures for RRR. A budget is more than just income and expense, and includes all receipts and expenditures. Check the dictionary definition. Further, the boards have not provided members with any information on capital expenditures as part of the quarterly business reviews.

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• History _
  • Initial Post — Posted 2008 Sep 05 but written on 2008 Jul 24
  • 2008 Sep 10 — link the board's 2007 study of Operations and Finance added
• Links:_ Preservation of MOA's Assets; at [http://swagmanmwpoa.blogspot.com/2008/07/preservation-of-moas-assets.html]

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