April 26, Town Hall Meeting

1. April Town Hall
Meeting Agenda
April 26, 2008

2. I. Introductions Bob Crouch
II. Outstanding Service Award John Seferian/Kay Born
III. Three Key Principles John Lipkowitz
IV. POA GM Report Roger Klask
V. Building Committee Report Miller Andress
VI. POA Financial Update Sandy Filkowski
VII. Introduction of Needs and Recommendations for
a Capital Reserve History Bob Crouch
VIII. The Needs for New Facilities Claud Lacey
IX. Long Term Finance Committee Report Chuck Palmer
X. Wild Dunes Capital Reserve Experience Jan Landry
XI. Questions and Answers

3. Financial Background Information
For Future Capital
Planning

4. Long Term Debt 3/31/2008
Balance 12/31/2007 $4,381,352
Less Principal Payments
22,734)
Fitness Loan ($
54,124)
Golf/Sconti Loan ($
Plus Additional Borrowing $ 2,600,832
Balance 3/31/2008 $ 6,905,326
Total New Debt $ 3,350,832

5. Amenity Project – New Debt
Original Projection 2005 $7,500,000
December 2006 Projection $7,100,000
October 2007 Projection $6,000,000
Borrowed as of 3/31/2008 $3,350,832
Projected Total Borrowing $6,000,000

6. Update on the Use of the
Insurance Proceeds
Total Funds Received $3,928,200
Uses:
Replacement of:
Property of Others $ 312,794
Inventories/Computers/Supplies $ 315,800
Net Funds Available $ 3,299,606
Partial Retirement of Fitness
Center Debt (February 2007) $1,000,000
Funds Used to Pay for the Amenity
Upgrade Project s $ 2,299,606
Total Uses $3,299,606

7. Amenity Reserve Fund
Established in 1987
Purpose
To ensure that the Developer is paid
for the Amenities that are turned
over to the Big Canoe Property
Owners Association

8. Amenity Reserve Fund
How is it Funded?
One-Half of the Monthly Assessment on
Unimproved and Improved Properties
Based on the Date the Property was First
Assessed as an Unimproved or Improved
Property

9. Amenity Reserve Fund
Amendments to the Agreement
1990 and 1999
The 1999 Amendment placed a $1,500,000 limit
on the amount of money the Developer could
draw from the fund on “unendorsed” amenities.
Unendorsed amenity are those that the
Developer built without POA approval.

10. Amenity Reserve Fund
The Final Unendorsed Project
Wildcat Pool
Balance Remaining to be Paid on the Pool
$651,500

11. Amenity Reserve Fund
Uses of the Fund
Construction of New Amenities
Debt Service Payments on New and Existing
Amenities
Debt Retirement on New and Existing Amenities
Three years of Operational Deficits Generated
from Newly Constructed Amenities

12. Amenity Reserve Fund
2007 Expenditures
Fund Balance 1/1/2007 $ 142,150
Assessments Added $1,090,852
Debt Service
Fitness Center/Golf Course ($ 512,620)
Payments to Developer ($ 450,963)
Fund Balance 12/31/2007 $ 269,419
Increase in fund Balance $ 127,269

13. Amenity Reserve Fund
Future of the Fund
Final Payment to the Developer in 2010
Funds will continue to be used to make debt
service payment on:
Fitness Center Debt
Amenity Project Debt
Estimated Balance 2016 = $1,300,000

14. Amenity Reserve Fund
Options for Use of Balance
Partially Fund a Capital Reserve Fund that
is Recommended to be $2,300,000 in 2018
Retirement of Fitness Center Debt due in
2016 with a projected balance of
$1,791,000
There are not enough funds to do both

15. APRIL 26, 2008
TOWN HALL MEETING
A VIEW TOWARDS
A BRIGHT FINANCIAL FUTURE
ENABLING THE MAINTENANCE OF
THE CHARACTER OF BIG CAN0E

16. POA Commitment to Maintain the Character of
Big Canoe
• Comprehensive statement developed in 2004
• Describes spirit, the values and responsibilities
• All Property Owners embrace and co-operate
• Collectively seek to make Big Canoe an even better place
• POA is charged with
– Maintaining common property
– Managing change
– Respond to needs of Property Owners
– Enhance property value
• Capital Reserve Funding Program
– POA duty to ensure adequate financial reserves
– Assures future needs are addressed and satisfied
– Result of planning for long-term health

17. FIRST, A LOOK BACK:
Big Canoe is over 35 years old.
There is a need for significant infrastructure upgrades.
A recent example:
Dismantling and removing the old docks was a real eye
opener…they were in FAR WORSE SHAPE than even the
committee imagined. A worker stuck his foot through a rotten
board. The DOCKS FELL APART as they were dragged out of
the water; EVEN THE STEEL BEAMS gave way. We had hoped
that there might be some salvageable material, but most of it
was worthless. We are indeed LUCKY THAT WE DIDN’T HAVE
ANY ACCIDENTS in the past few months..
THESE NEEDS HAVE BEEN RESEARCHED AND QUANTIFIED…….

18. Reserve Funding History
• Reserve Advisors, Inc. Study February 28, 1995
132 Major Common Elements
Recommended $15M Reserve Funding over 20 – year period
No Action Taken to Establish or Fund Capital Reserves
• Late 2005 Finance Advisory Committee
Recommend Establishment & Funding of Capital Reserve
March 2006 Repeated in Open Board Meeting
Prudent Recommendation Requiring Significant Planning
Action was to Establish LRPC & LTFC
Need for Updated Reserve Study
Basis for Current Recommendation

19. Additional Background
• Big Canoe is in the Fourth Year of Self-Governance
• The Need for Long-Term Planning was Immediately
Apparent
• The Finance Advisory Committee Recommended a
Reserve Fund in 2005
• The Long Range Planning Committee and the Long-
Term Finance Committee were Established in 2006
• The Only Reserves Historically were for Amenities and
Operating Purposes

20. PLANNING COMMITTEE RECOMMENDATIONS
Property Owner Volunteer Committees devoted two years effort.
Claud Lacey, Chair of LTFPC
Infrastructure needs
Initial cost estimate
Chuck Palmer, Chair of LTFC
Reserve Study
Funding options
Recommendation for funding

21. POA Commitment to Maintain the Character of
Big Canoe
• Comprehensive statement developed in 2004
• Describes spirit, the values and responsibilities
• All Property Owners embrace and co-operate
• Collectively seek to make Big Canoe an even better place
• POA is charged with
– Maintaining common property
– Managing change
– Respond to needs of Property Owners
– Enhance property value
• Capital Reserve Funding Program
– POA duty to ensure adequate financial reserves
– Assures future needs are addressed and satisfied
– Result of planning for long-term health

22. Capital Reserve Fund
There is a Need for a Capital Reserve Fund.
A CAPITAL Reserve Fund will Ensure the
Long-term Financial Health of Big Canoe.
It will Allow Future Boards to Make
Decisions to Improve Big Canoe.

23. WHAT’S NEXT
30 Day period for Comments
Suggested alternatives
Assessment of Feedback
POA Board Vote on Recommendations
June 18th Open Board Meeting
Property Owner Vote
July

24. Big Canoe Facility
Needs
Big Canoe
Town Hall Meeting
April 26, 2008

25. Long Range Planning Committee
Chartered June 2006
1. Committee Focus
• New and existing amenities
• New and existing community property and
facilities
• New and current service and support operations
2. Keep Big Canoe Vision
• Welcoming and safe environment
• Wide range of amenities and activities
• Community that is involved and informed
3. Maintain Character of Big Canoe
• “Harmonious integration of the natural beauty of
the land with those elements most desired in a
resort and residential community”

26. Long Range Planning Committee
Current Members
Rich Andersen Claud Lacey
John Drew Mike Podsedly
Walt Filkowski Bill Rawson
Bill Holyoak Ann Young
Wayne Huey POA General Manager
Ev Hughes
Roger Klask – POA Board Liaison

27. LRPC Report
Summary
• Recommendations focus on existing, developed
Big Canoe
• Future and existing roads are not included
• Focus on current and future major facility needs
(Operational and Amenity)
• Facility recommendations require professional
evaluation, analysis and costing before project
approval
• Recognizes the “Big Canoe Village” as an essential
element of future plans.

28. Order of Need
A. Immediate needs – Corrected or scheduled
for 2008 completion (North Gate water, Swim
Club docks, Chemical storage and mixing)
B. Current needs – needs resolution within
two to three years
C. Growth needs – timing determined in part
by Big Canoe growth rate

29. Amenity Need
(2006)
Lake
Disharoon
Dock
• Rotten carpet
• Metal edge -
safety hazard
2006

30. Amenity Need
(2008)
Lake
Disharoon
Dock
• Removed
carper
• Replaced
damaged decking
• Renovated dock
extending into
lake
2008

31. Maintenance Operations Need
(Scheduled for 2008)
Chemical
Storage Area
in Golf
Maintenance
Area
• Open to the
elements
• Not secure
• Improper mixing
facilities
2007

32. Tennis Center Needs
Entrance
• No Handicap
Access
• Does not match
accepted standards of
other Big Canoe
amenities
2008

33. Tennis Center Needs
Retaining
Walls &
Decking
• Does not match
accepted standards of
other Big Canoe
amenities
• Beyond repair
2008

34. Village Fire Station Needs
Main Station
• Insufficient space
for equipment and
staff
• Sustaining ISO
rating requirements
an ongoing effort
2007

35. Village Fire Station Needs
Public Safety
Office Space
• Cramped office
space – shared by
Public Safety
Director and staff
• Required ISO
records storage space
limited
2008

36. Village Fire Station Needs
Fire
Equipment
Storage
• Limited Storage
• Restricted Access
• Equipment has to
be moved for weekly
Thursday night
training classes
• All department
meeting are held at
the Broyles Center
2008

37. Village Fire Station Needs
Turnout Gear
• Stored in bags due
to lack of easy access
lockers
2008

38. Village Fire Station Needs
Outside
Storage
• Space Fire hoses
and other equipment
are kept in makeshift
outside lockers that
have minimal
protection from the
elements
2008

39. Maintenance
Operations/AECD Needs
North Gate
Building
• Plumbing in poor
condition due to long
time use of high
mineral content well
water
• Lack of effective
storage space
• This is Big Canoe’s
designated emergency
facility
2008

40. AECD Needs
AECD File
Storage
(Office
Building)
• Limited effective
storage space
• More storage
needed as Big Canoe
grows
2008

41. AECD Needs
AECD File
Storage
(Squash
Court)
• Ineffective storage
space
2008

42. Maintenance Operations Needs
Mechanical
Repair Shop
• Lift cannot be used
for some of the
newer (larger)
equipment
2008

43. Maintenance Operations Needs
Sign Shop
• Outside water tap
serves both this
building and the
carpenter shop
• Toilet facilities are
across the yard in the
office building
2008

44. Maintenance Operations Needs
Carpenter
Shop
• “..beyond useful
life..” – 2006/2007
Reserve Study
2008

45. Maintenance Operations Needs
Carpenter
Shop
• Termite infested
pole supporting
structure
2008

46. Maintenance Operations Needs
Carpenter
Shop
• No insulation
• Inadequate heating
and dust control
2008

47. Postal Service Future Need
Building
Access
• Design for
handicap access
2008

48. Postal Service Future Need
Access and
Traffic
• Improve auto
access for both
USPO and patron
• Better direct traffic
flow
• Expand parking
2008

49. Postal Service Future Need
Undersized
Facility
• Design to meet
postal regulations
2008

50. POA Administration Needs
POA
Retained
File
Storage
• Limited
effective
storage space
2008

51. POA Administration Needs
POA Retained
File Storage
• Limited effective
storage space
2008

52. POA Administration Needs
Board
Meeting
Room – POA
Lodge
• Restricted visibility
and poor acoustics
for both board
members and
audience
• Limited seated
2008

53. POA Administration Needs
2008
Operations
Maintenance/AECD
2008
POA Conference
Rooms Big Canoe Lodge

54. More Meetings, More Events
– Increased Demand for Facilities
Today
POA - 13 committees
Community – 50+ clubs & organizations
= Over 650 meetings/year
Tomorrow
1000 meetings & events/year

55. Fitness Center Future Needs
Expand Fitness
Center
• Projected
membership growth
will exceed the
current capacity
• Enlarge locker
rooms
• Add spa
• Expand physical
therapy
2008

56. Auxiliary Entrance to
Fitness/Indoor Tennis Center
Auxiliary
Entrance
• Add reception area
• Better functioning
restroom facilities
designed for larger
crowds
2008

57. Trails Expansion Program
List of Proposed Projects
• Nature Valley
– Complete cabin refurbishment
– Add kiosks and maps at entrances
– Improve to Jeep trail
– Improve parking area
• Playfield Park
– Trail from timeshare to the Village (two bridges & signage)
– Improve running/walking track
• Meadows Park
– Add small kiosks and maps to entrances
– Add nonskid surface to Wildcat connecting trail
• Wildcat Recreation Park
– Add two Bocce Ball courts
– Add trail from parking area to walking path

58. Summary of LRPC
Recommendations
Current Needs (1-2 years)
• Village Fire Station (new facility)
• Tennis Complex (improvements –( phase A, B & C)
• Roads & Trails & Carpenter Shops (new facility)
Future Needs (2 – 10 years)
• Postal Service (new facility)
• Village Hall (POA administrative offices, storage, and meeting rooms)
• Swim Club (renovate)
• Fitness Center (expand)
• Maintenance Operations & AECD (build offices, storage and conference
rooms)
• Golf Maintenance Equipment Storage (rebuild)
• Trails (improvement and expansion)

59. Estimated Cost
The estimated cost for the facilities
LRPC recommendations in today’s
dollars is $10 to $11 million.

60. CAPITAL
INITIATION FEE
IMPROVING BIG CANOE’S FUTURE

61. Long Term Finance Committee
Members
Sandy Filkowski
Vince Flynn
Ev Hughes
Chuck Palmer
Rich White
John Seferian – Board Liaison

62. Long Term Finance Committee
Charter
Review the Reserve Study and Make Reserve
Recommendations to the Board
Recommend a Way of Funding Reserves and
Additional Capital Projects

63. Reserve Study Outcome
Reserve Study Completed by Miller Dodson
30 Year Projection of Capital Expenditure and
Reserve Needs for CURRENT Infrastructure and
Equipment
Road Study – Increased the Road Budget from
$500,000 to $800,000 per Year
Note: Community Assets will be in excess of
$40,000,000 at the end of 2008 up from $19,200,000
at December 31, 2003.

67. Reserve Study Outcome
Reserve Study Completed By Miller Dodson
Based on the Reserve Study the Committee
Determined that Current Assessments are Sufficient
to fund current operations and maintain the existing
infrastructure and equipment.
There are not sufficient funds over the next TEN
YEARS to retire debt and fund reserves as
recommended by the reserve study.

68. COMMITTEE RESULTS
Recommendations
Establish a Capital Reserve Fund that will Eliminate
the Need for the Amenity Reserve Fund.
Update the Reserve Study Every Five Years
Establish a Capital Initiation Fee to Assist in:
Funding the Reserve
Funding Additional Facility Projects
Retiring Debt/Balloon Payments
Capital Related Expenditures (Not Operating
Expenditures)

69. Sources of Current Revenues
2007 Sources of Revenue
Interest Income Other
2% 5%
Special Assessment
7%
General Assessment
53%
Amenity Revenues
33%

70. Financial Position
POA Revenues: 2008 Budget
•
Monthly Assessment $ 6,674,000
Special Assessment $ 858,000
Amenity Income $ 4,265,000
Other $ 439,000
Total Revenues $ 12,236,000
Add Borrowing/New Debt $ 6,000,000
Total Cash Available $ 18,236,000

71. Financial Position
Uses of Funds 2008 Budget
Operating Expenses (Net of Depreciation) $ 9,025,450
Capital Expenditures $ 2,184,500
(Includes $100,000 of Capitalized Interest )
Loan Payments $ 848,250
Amenity Upgrades $ 6,140,000
Funds Available for Reserves $ 37,800
Fund Available for New Projects $ 0
Total Uses $ 18,236,000

72. Future Needs
CAPITAL RESERVE FUND
SUPPLEMENT PEAK ANNUAL CAPITAL
NEEDS
EMERGENCY (NATURAL DISASTERS)
DEBT RETIREMENT
FACILITY UPGRADES/EXPANSION
LONG RANGE PLANNING
COMMITTEE RESULTS

73. How Do We Address These Needs
Do Nothing
•
Slash Operating Expenses – Compromise
•
Services
Borrow = More Loans, Fees Increase
•
More Special Assessments
•
Increase in Assessments and/or Amenity Fees
•
Capital Initiation Fee
•

74. How Much Do We Need in the
Next Ten Years
Long Range Planning
Committee Recommendations $10,000,000 - $11,000,000
Capital Reserves $ 2,300,000
Balloon Payments not
Funded by Operations $ 2,600,000
Total $14,900,000 -$15,900,000

75. How Much Do We Project
Collecting Over The Next Ten Years
1% Capital Initiation Fee ~$14,000,000
OR
Increase in Assessments ~$14,000,000
Approximately $40/Month for an Improved
Property
Approximately $28/Month for an Unimproved
Property

76. Assessment History
MONTHLY SPECIAL
$ AMOUNT % INCREASE ASSESSMENT
2004 $ 169.00 3.68%
2005 $ 172.00 1.78%
2006 $ 175.00 1.74% $25.00
2007 $ 180.00 2.86% $25.00
2008 $ 186.25 3.47% $25.00

77. Why Not Use Amenity Reserve
Funds
Amenity Reserve Funds are Currently Being
Used to Pay the Developer and Service Debt on
the Amenities.
Agreement Does Not Allow Use of Funds for
Non-Amenity Projects Such as:
Fire Station
Maintenance Buildings
Postal Facility
Village Hall

78. What are Other Communities
Doing?
Over 20 other communities are using some
form of Transfer Fee on the sale of property.
They may call it a CIF, CCF, Real Estate
Transfer Fee, Capital Reserve Fee etc. Some of
these fees are flat fees and some are percentage
fees.

79. OUR RECOMMENDATION
Implement A Capital Initiation Fee (CIF)
Collect CIF on All Monetary Sales and Re-sales of
Property Within Big Canoe
Non-Monetary Transfers/Gifts of Property are
not Subject to the Capital Initiation Fee

80. OUR RECOMMENDATION
Recommended CIF is 1% on the Purchase
Amount up to $1,000,000 plus 0.5% on the
Purchase Amount over $1,000,000

81. How Would the CIF Work
Collect the Fee Upon Sale or Resale of Property
Place Funds in a Separate Capital Reserve Bank
Account
Manage Capital Expenditures from this Account
per Limitations/Guidelines

82. Limitations/Guidelines
Funds CAN ONLY be Used for:
New or Replacement Facilities
Capital Reserves Per Reserve Study
Debt Service/Retirement/Balloon Payments
Supplement Annual Capital Expenditures
Funds SHALL NOT be Used for Operating
Expenses

83. Reserve Plan
CIF Projected Revenues and Reserve Fund Accumulation
$16,000,000
$14,000,000
$12,000,000
$10,000,000
CIF Collections
Available For:
$8,000,000 Reserve Fund
New Projects, Emergencies,
$6,000,000 Supplement Peak Capital
Needs, Retire Debt
$4,000,000
$2,000,000
$-
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

84. Decisions for POA Boards
Reserves
Facility Projects
Debt Service/Debt Retirement
Supplement Annual Capital Expenses

85. Benefits to Property Owners
Improved Financial Condition of the POA
Reserve Fund Established and Working
Fund Needed Facility Replacements/Upgrades
Contributes to Sustaining an ISO 5 Fire
Insurance Rating

86. Benefits to Property Owners
Funds Available to Reduce Debt
Funds Available for Emergencies
Reduce Upward Pressure on Assessment Fees
and Amenity Fees
Increase Property Values

87. COMMITTEE RESULTS
Recommendations
Establish a Capital Reserve Fund that will Eliminate
the Need for the Amenity Reserve Fund.
Update the Reserve Study Every Five Years
Establish a Capital Initiation Fee to Assist in:
Funding the Reserve
Funding Additional Facility Projects
Retiring Debt/Balloon Payments
Capital Related Expenditures (Not Operating
Expenditures)

88. APRIL 26, 2008
TOWN HALL MEETING
A VIEW TOWARDS
A BRIGHT FINANCIAL FUTURE
ENABLING THE MAINTENANCE OF
THE CHARACTER OF BIG CAN0E

89. A Comparison of Two Communities
Kiawah Island Big Canoe
Number of Properties 4,300 2,500
Environment Beach Mountain
Annual Budget $9.9 M $11.5 M*
Salary Budget $4.37 M $5.6 M
Number of Employees 89 138 FTEs
Provides Security Plus Fire Protection,
Maintenance Amenities, Trash
Collection
* Excludes Special
Assessment

90. A Comparison of Two Communities
(continued)
Kiawah Island Big Canoe
No. Emp. Comparable 89 41
Comparable Salaries $4.37 M $2.03M
Assets $52 M $40 M
Annual Assessment $1,330 $2,235*
YTY Increase 9% 3.5%
Natural Disasters Hurricane Hugo- High Winds – 2002
1989
*Excludes Special
Assessment

91. A Comparison of Two Communities
(continued)
Kiawah Island Big Canoe
Response Establish Capital Use Assessment
Reserves, 1990 Dollars
Capital Reserves $7.40 M 0
Annual Reserve Funding $1.78 M 0
Capital Reserve Percent ½% 1 % Proposed

92. Other Communities Reserve
Experiences
• Initial Concerns Over Sales & Property
Values
– Over the years, history has shown that this was not
the case
– I would argue that this has enhanced Property Values
– Sales Volumes Reflected in Reserve Contributions:
• 2001 $1,241,711
• 2002 $1,271,464
• 2003 $1,701,188
• 2004 $2,251,446
• 2005 $2,997,029
• 2006 $2,205,318
• 2007 $2,061,542

93. Other Communities Reserve
Experiences
• Our having the ability to make the associations
amenities & infrastructure look fresh and
relevant has given the association an advantage
in sales.
• I can tell you that realtors highlight the improved
recreation center
Joe Bunting, Chief Operating Officer
Kiawah Island Community Association