Proposed Assessment Amount -- $245 Per Owner Per Year
The assessment of $245 in the proposed TRMA equals the total of the 2007 assessment and the special NRC charged last year. The proposed annual assessment of $245 will fund the 2008 budget which currently has a projected operational shortfall of $159,000.
The proposed $100 increase in the assessment is justified if one considers that the Ranch has been underfunded for many years while the costs of operating the ranch have increased. We now have the best roads the Ranch has seen in decades and the resort facilities have begun to provide a positive cash flow. Ranch management can continue to improve both the roads and the resort facilities if we provide the funds that this annual assessment will generate. We will also be able to stop borrowing from banks and will have the ability to continue our newly created Capital Reserve and Contingency Funds.
The proposed 2008 assessment of $245 will be budgeted as follows:
- 65% to operating expenses for road maintenance and owner support
- 15% to debt service for road equipment & to repay contingency fund for 2007 cash flow support
- 02% to lawsuit expenses not covered by insurance
- 15% to supplement resort facility operating expenses & improvements
- 03% to increase the Capital Reserve Fund for equipment & improvements
As resort revenues continue to improve and lawsuit expenses end the additional funds will help deflect inflation increases and to increase Capital Reserve funding.
Impact on Future Budget Increases:
- 28% of the proposed increase is needed due to reductions in delinquent accounts and in the number of paying property owners. The number of paying property owners will vary slightly from year to year with a small impact on the fee. The substantial reduction in past due assessment receivables in 2007 should not reoccur and will no longer affect budgetary needs.
- 33% of the proposed increase is due to inflationary increases in operational expenses. We experienced significant cost increases in the specific categories of fuel costs, equipment parts, building materials, which may continue to increase faster than other costs for a while longer. However, the minimum wage increase and the parity wage increase we budgeted for 2008 should not reoccur. We are unlikely to experience further significant increases in legal costs or insurance.
- 39% of the proposed increase is due to eliminating borrowing and to annual budgeting for capital expenditures. The impact from both of these items is in the first year they are implemented. Capital expenditure budgeting may vary somewhat from year to year, but the major impact is during 2008.
Immediate and Long Term Consequences if this Election Fails
If property owners choose to not approve the proposed TRMA and assessment, the Board will find it necessary to further reduce expenses to stay within a budget limited to the $148.47 assessment already invoiced for 2008.
Eliminating the currently projected 2008 budget shortfall will require POATRI to:
- Sell one of the road graders and eliminate road crew personnel, which will reduce regular road maintenance. The effect of this action will eliminate the progress that has been made over the past four years and would not allow the Ranch to meet the total road maintenance needs of property owners.
- Stop expenditures for long term repairs to badly damaged areas throughout the ranch which require contracting bulldozers, dump trucks, and hauling material to areas that are not passable.
- Significantly reduce the services and availability of the resort to property owners. Further cutbacks will also eliminate the ability to increase revenues from outside visitors to move the resort closer to being self sufficient. Owners have indicated they consider the resort an asset to be kept available, and over the last 10 years the facility has contributed positive cash flow to our total operation because its deficit has been less than the fixed costs of maintaining a closed property.
- Reduce administrative and information support services to property owners and prospective property owners. Reduction in administrative support will slow the collections process and jeopardize the progress we have made in reducing badly delinquent accounts.
- Abandon the idea of eliminating borrowing and budgeting each year for capital expenditures. Budgeting for capital expenditures is particularly important because repairs to our facilities have been under-funded for many years. Further delays will significantly reduce their value and future repair costs will be much higher.
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