(c) Robert Lowe

Sugar Valley Lakes

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Sugar Valley Lakes

Peoples Party for Change at SUGAR VALLEY LAKES and HIDDEN VALLEY LAKE

Vote People’s Party for Change-Let’s put lakes and roads FIRST for a while!

To download, print and mail your voting Proxy for the 2009 Election of Directors! Click Here.

Over the past 8 years our Homes Association's financial condition has experienced constant erosion and recently has begun spiraling to new lows. The Association's net worth (assets - liabilities) went from a surplus of $55,000 in December 2000 to a new low of --Negative ($81,945) as of a October 31 2008 Association report, (not counting an item called inventory of $86,615 reported on the balance sheet). During the same time, dues and assessments dropped from $410,419 to approximately $397,000 this year. This is in spite of the fact that annual assessments have increased by $28 for each lot per member. Over the same time period, the roads, lakes, and other common properties have been neglected and are in the worst condition ever. Members should realize that the current conditions are due to the policies, priorities, and practices of the Board of Directors. It is the Board who determines how our Association is run. It is the membership who determines who is elected the Board.

A exciting move is underway to drastically change how our Homes Association is managed. It is a move to begin conducting Association business like a homes association and not a country club or a city as it has been over the past eight years.  To make such a change, the 3 vacant board positions will need to be filled with new leadership that has much different priorities than the present board and the board’s of the past 15 years. A major CHANGE is needed to prevent the Association from the inevitable demise that will surely occur if it continues down its current path. A new initiative for the 2009 election has been established.  This initiative is to change the composition of the Board of Directors in order to change the way the Association is managed. Three members have agreed to a common set of principles, values, and  assumptions and have pledged to a common election platform. The initiative is known as the Peoples Party for Change. The Peoples Party candidates for 3 vacant board positions, two at Sugar Valley and 1 at Hidden Valley are:

Joe Price(SV), Bill Gooderl(SV write-in), and Robert Lowe(HV).

Please Note:  Due to a conflict Mr. Bill  Gooderl was chosen and has agreed to participate as a Peoples Party Candidate.  His name was not on the Official ballot mailed to members.  To vote for Mr. Gooderl, please  use the write-in space provided on the ballot for or send a proxy to Mr. Jow Price and he will vote for Mr. Gooderl.

We ask all members to get involved with this election and vote for the Peoples Party candidates for change.  This may be the only time in several years that 3 board positions will be elected. If you don't vote, you can rest assured that the Association business in the coming year will be business as usual.

Here is our second draft of a Peoples Party Platform. We need your comments, and your votes!  Keep in mind that some of these initiatives will take some time to implement.  Just as it takes time to slow down a heavy freight train, some activities that are happening in this massive organization will be difficult to stop immediately without serious consequences.

Assumptions, Principles and Values from which future policies and actions will be based

Assumptions


Highlights

  1. Annual Assessments kept at current levels for 2009 and reduced if possible for future years.
  2. All member fees eliminated
  3. Administrative expenses greatly reduced from current high % of Assessments
  4. Maintenance expenses will be increased for lake, roads and recreational areas
  5. Personal services to members discontinued
  6. Daily Money flow greatly reduced or eliminated
  7. External Auditors recommendations for double-entry accounting for assessment revenues to be followed
  8. Monthly balance sheet and profit/loss statements available for publication on websites supporting the community
  9. Annual balance sheet and profit-loss statement published with annual newsletter and available to websites supporting the community
  10. Improve bylaws to re-instate member rights


Annual Assessments kept at current levels for 2009 and reduced if possible for future years.

The people’s party pledges to keep the maximum Annual Assessments at current levels for 2009. Almost yearly since 2002,  the Association's leaders have put an assessment increase to a vote of the membership. Each time the membership has voted against the increase, yet during that same period, the Association management has increased our annual assessments from $110 in 2000 to $138 in 2008. In 2004 the Association improperly assessed the membership a $42 increase. Two of the Peoples Party candidates filed a lawsuit claiming the Association had violated the Covenants and the Association settled that claim by agreeing to refund the nearly $80,000 improperly levied. The letter that accompanied the refund stated that the Board had refunded the assessments because their lawyer said the election was improper.  The leadership mentioned nothing about the lawsuit and did not give any explanation why it took 11 months to refund the assessments. The Peoples party candidates were serious about protecting your rights then and we will be equally serious about keeping future assessments to a minimum.

Member Fees Eliminated

The People’s Party will eliminate member’s use fees for using the common areas. The “old timers” (original members) will tell you that everything used to be free at Sugar Valley. There were no golfing fees, no green fees, no trail fees, no boating fees, no ATV fees-no fees whatsoever. That’s the way it is supposed to be. All members have an easement to use the common properties. This easement is a right of membership. An easement is a right to use real property of another person or organization. The only prerequisite is that the member’s dues are paid. The Association only has the right to charge fees is if the common properties have to be mortgaged-this is stated in the covenants. But somewhere in the past, the Association's leaders began misleading the membership and started charging to use the golf course. When that worked, these Board members started charging other fees. If we let this practice continue, there will be a fee for every thing-just like in a country club. The Peoples Party will stop these illegal fees and make the Association run like a Homes Association again. Please note: There are certain charges that will continue on a cost recovery basis. Campground use of electricity and water, and golf cart rentals, annual rental of golf shed will continue.  In the long run, an evaluation will be made to determine the feasibility of continuing certain rental operations.

New Business Model

Most of you are probably wondering how we plan to keep assessments low and stop illegally charging use fees for the property you have an easement to use already. This strategy is totally contrary to the  proven failed business model that has been used over the past 10 years. That faulted strategy has been to increase assessments and use fees and to minimize expenses by neglecting the amenities that don't produce revenue. Some of the prior leaders are already promoting that our(so far unpublished) plan is doomed to failure. The new business model is based on running the Association like a homes association instead of a local country club.

The New Business Model is based on:

Increased percentage of members paying assessments

The percentage of lots with no assessment revenue is at an all time high. The Association owns a large number of lots, some purchased at tax sales, some taken from members in consideration for calling off collection agencies for past-due assessments, and some donated by members because the assessments exceeded their property value. In some cases, the association has been able to sell a few of these lots, but with lots selling at the county tax foreclosure sales for $1, it is hard to sell many lots.  These lots do not bring in any assessment revenue. In fact, each year, since these lots are not for the common enjoyment of the community are taxed by the county.
In addition to the association-owned lots, more and more people have stopped paying assessments. The root cause for this phenomenon is that people are not getting any value from their assessments. Some people stopped paying in protest for not seeing any improvements in the common properties that they value. Most of these people don't use the golf course but like to camp, fish, boat and other activities that require the bath houses and parks and lakes to be maintained.  I have talked to some people who just quit paying because they are harassed into removing their camper from their lake lot for five (5)  months out of the year. According to some accounts, approximately 28-percent of the lots are not generating any assessment revenue.  Our goal is to significantly increase the percentage of members who pay their assessments. As one current board member recently stated, if everyone paid their assessments, we wouldn't be having any financial problems. That same board member seems intent to continue raising the assessment amount and not the percentage of those who pay.

An integral part of this strategy is to increase the percentage of the budget to maintain all the common properties and amenities. Most of the roads have been neglected, even after the 1990 assessments were increased from $75 to $100 with promises the new money would be spent on the roads.  Most of the recreation areas are overgrown with timber and weeks and people don't even know where they are. These areas should be available for camping, family activities and other use by the membership. the number of bath houses and restrooms is too low with a membership as large as ours. With a large number of non-residents who need these amenities to enjoy their weekend trip or weeklong camping vacation, having too few resources just causes a self-thinning effect on the  number who use the community. It also has a self-thinning effect on the assessments being paid.

Increased non-member revenue

I have attended board meetings where, in the member forum, some people ask why we don't open up some of the amenities to non-members to raise more money.  The Boards'  response is generally that we are a private development and the Covenants and Bylaws don't permit it.  But, at the same time these board members are contradicting their own formal statements on a small scale in the back office.  The local high school kids for example, are allowed a school-membership to use the golf course. (By the way, we believe this policy is good for the community and thus the association). In another example, several times during the summer, primarily on weekends, the golf course is closed to the members so that privately organized groups can host golf tournaments and raise money for their own cause. There are a few wedding receptions and other activities.

The Peoples Party believes this already tried model needs to be modified and expanded to really grow some  real revenue. There are several school districts who would be a good source of revenue for area events using our facilities. Many of these events could be scheduled during the week-days so that fewer members would be affected. In many cases the facilities could be shared (not closed to the membership).  The school age memberships could be expanded to more surrounding communities and additional school districts could be invited to rent the facilities. The clubhouse could be scheduled year-around for family and group activities when not being used by members for their own family reunions, parties and gatherings.  There are many possibilities to use our valuable resources to increase non-member revenue. 

Administrative Expenses Reduced

We also need to lower the administrative expenses. If you look at the annual profit and loss statements will note that the administrative expenses are very high. The reason is that the Association has too many employees whose only role is keeping the records, managing the business activities, and performing other functions of an administrative nature. It takes a lot of people to run a country club, but only a few to run a Homes Association. The covenants for Assessments specifically state that our assessments are to be used solely for the maintenance and improvement of the common properties including the management of this purpose. As an example, this year (year to date) the association spent less that 2% of the revenue for gravel for our much neglected roads while reportedly total salaries and benefits for employees took 38% of total income. Now, even a voodoo mathematician can determine that 60% of the other money went to some other expense category.  With such a low expense for gravel, one would not think the maintenance expense would be where this money is going.

Personal services to members discontinued

The People’s party will discontinue providing personal services to a few members at the expense of all members. These personal services include pumping the septic holding tanks on a year around basis for many of the residents. These services are costing the entire membership, who mostly does not get any benefit of these services. The use of employees and equipment, and the cost of managing, recordkeeping, and administering these personal services is costing the membership a good deal of money. This is one of the reasons the administrative costs are so high. Also, when the staff is directly performing these services or keeping records or managing the activities, they are not maintaining the common properties for the benefit of all members. The Peoples party believes that the Septic Tank pumping operation needs to be moved to an entire separate corporation that is managed by its own staff, with all expenses and revenues shifted to that corporation. None of our assessment dollars would be spent either directly or indirectly on providing this outside maintenance. Other personal services such as gravel hauling would be discontinued. There are people in town that will do that for a fee. We need our employees maintaining the common properties-all year. We need our people and equipment using our resources to improve the common properties that can benefit all members. That is the role of a good Homes Association.

Other initiatives being considered

The Peoples Party will eliminate or greatly reduce the DAILY MONEY FLOW that is occurring.
 The members and their guests are constantly handing over money in the form of cash, checks and credit cards to the Association employees. The cost of this money flow is enormous. First, some of this money never makes it to the Association bank account. As early as just two years ago, one employee was caught embezzling nearly $4000. About 10 years ago, according to a reliable source another former worker stole  enough money to buy a home in Linn County. Who knows how much additional money was drained by past employees who were never caught. Now, in order to stop this activity, the Association has to hire additional accountants and go through an enormous number of checks and balances to help reduce the lost cash. Then, there is he cost of hiring the employees to take in the money in the first place. One could ask, with all the non-assessment revenue taken in last year, why was there a deficit. The answer is of course, it cost the Association more money to take in and account for the money than was taken from the members and their guests.
The daily money flow can be eliminated by discontinuing or reducing the activities that cause so much money to exchange hands. The Assessments can be collected by an independent agency and most of this money will be taken between January and March and deposited into the bank. The extra fees collected from members will be eliminated. This would include the boat registration fees, the green and trail fees for the golf course, the beach use fees the current board is talking about will not be approved. The ATV fees will be stopped. In short, all of these fees which should be a part of our membership will be abolished.

External Auditors recommendations for double-entry accounting to be followed


Each year for the several years, the By-law mandated External Audit occurs (with some exceptions when the Board has decided to forgo the costs)
Each year when an audit does occur, the Board is presented the results of the audit, including a letter to management. Most members never hear much about this audit or the management letter. The membership has a right to see the results, especially the recommendations for improvement. On common recurring recommendation is that the Association use a double entry accounting method for the Assessment revenues. The main problem is that there is no lot-by-lot accounting in the general ledger system for our assessments. The covenants dictate that every year, the Board members declare assessments for the coming year. On the date set by the board, the member who then owes the assessments is personally responsible for paying the assessments. The association is responsible for maintaining a list of the lot owners at the date the assessments are set. At that time a receivable account for that person should be setup in the accounting system. When the payment is subsequently received from that person, their general ledger account should be credited with the amount paid. If the lot is subsequently sold, the balance is still due from the member who was assessed, not the new owner. The Association has never followed this Covenant and has never used their double entry accounting system in this manner. Each year, (unless the auditors have given up), this practice is written up by the external audit. Each year, the Board members ignore the audit. Each year, the exception is concealed from the membership. That will change when the Peoples Party is elected to the Board. To begin with, the new board will follow the covenant for assessments is setting the assessment amount and date. Then a way will be devised to utilize the accounting system to correctly record the payments from the members. There should be no reason why the records can’t be properly maintained. Perhaps if the bookkeepers weren’t so busy keeping and auditing records for all the other non-essential activities, daily money flow, and personal services, they could better maintain the assessment accounts.  

Monthly balance sheet published on website

There is no reason the Association’s Accounting balance sheet and profit and loss summary cannot be published on any of the three websites that property owners rely on for information. This will occur if the peoples party candidates are elected.

Annual balance sheet and profit-loss statement published with annual newsletter

There is no reason the Association’s yearly accounting balance sheet and profit and loss summary cannot be published in the annual newsletter fro all members to view. It should also be publishes on any or all of the three websites that property owners rely on for information.



To be updated and continued . . . please stay tuned and e-mail cour comments and recommendations