Fourteen days into the new year, and we now learn that we have a $3 – $4 million dam problem. As discussed at the January board work session, Geosyntec has completed their study regarding the condition of the Lake Petit Dam and provided management with a report of their findings. (1) The GM indicated that the required repairs to the dam in the next four years would be in the $3-$4 million range, and that the contents of the report had been reviewed earlier in the week with the board, Geosyntec and certain members of the staff and Audit and Risk Committee.
While the GM states that the “community has been planning for this eventuality for many years” (2), he fails to demonstrate how or where. He further stresses that our community is in excellent financial shape to run several projects in parallel (which will apparently be explained in “robust” cash flow models to be presented at a later date).
As what has now become customary, the discussion included the glowing accolades of the POA’s own performance to even include recitation of Geosyntec’s praises directed at management. And now, with a community coffee tentatively scheduled for late February, property owners will be allowed to ask our intelligent questions about what will take place based on a report paid for with our assessment dollars that we will never be allowed to see. AskThePOATicket&Response#2409 (3) Quite honestly, it appears that 2021 has taken up precisely where 2020 left off with yet another example of secrecy and non-transparency. https://bcmatters.org/reality-check-2020/(4)
It might be time to consider reaching out to the Georgia Safe Dams Program for freely available information regarding the status of our dam (State ID No. 112-009-00462). They can be reached at:
Safe Dams Program, 2 Martin Luther King Jr. Drive, SE, Suite 1362, Atlanta, GA 30334 (Phone: 404-463-2461)
It can also be noted that based on questions directed to the GM from several directors regarding details, one might even question just how much all of our elected board members actually entrusted with the fiduciary responsibility of our community even remain in the loop.
A failure to prioritize . . .
Obviously, we all knew that our 48 year old earthen dam would be needing repairs at some point, but unfortunately, throughout the promotion for the $2.3 million Creek 9 renovation as well as the Capital Contribution Fee amendment (directing those proceeds to the Master Plan Fund rather than the Capital Reserve Fund intended to account for capital components such as dam repairs), property owners were repeatedly assured that no major problems were anticipated with the Lake Petit Dam.
Granted things happen, and things change, but leadership was encouraged to delay the aforementioned votes until results of the Geosyntec study were complete AND results of the August 2020 Reserve Study were available.
Surely any reasonable person would have elected to have all available data from both the Geosyntec and Capital Reserve studies before committing our community and our financial resources to other projects and directions.
Misleading claims of preparation . . .
What follows is not a discussion on any safety aspects, etc. of the dam, but rather the financial consequences of this information.
The repair of the Lake Petit dam is NOT a master plan project, but rather one of the many capital replacement components (needs) included in the reserve studies mandated by covenant that determine the appropriate reserve balances to be maintained in the Capital Reserve Fund. Since the very origin of this blog site, it has been suggested that any excess funds be allocated to the underfunded Capital Reserve Fund rather than being diverted to any master plan fund or project. (wants)
Both the GM and the past POA president point to the Capital Reserve Fund established in 2010 as a demonstration of proper planning with leadership preparing for this eventuality. Unfortunately, considering the following reasons, this is an empty and misleading claim:
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According to the 2012 Reserve Study, replacement of the spillway was actually scheduled for 2017 at an estimated cost of $2.5 million. (5) When the Reserve Study was updated in 2016 (immediately following property owner approval of the land deal), the scheduled replacement was deferred to 2053. This action not only extended and delayed those repairs but also skewed the calculations of the already woefully underfunded Capital Reserve Fund found in that 2016 reserve study. (6)
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The past president and the GM fail to acknowledge that absolutely zero dollars (other than interest income) have been contributed to the Capital Reserve Fund by this or any previous board since year end 2016.
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Finally, the independent updated reserve study conducted in early August 2020 has not been posted to the POA website as it is still under review by management. (Given this new information regarding the status of the dam, it is imperative that the covenant mandated reserve study be completed and posted to the POA website as soon as possible.)
As for the funding . . .
While accurately suggesting that a portion or all of the proceeds from the Capital Reserve Fund ($2.8 million) might be used to help fund the repairs to the dam, the GM also stated that covenants would require that any withdrawals from that fund be “repaid” within three years. (1c) In actuality, the covenant specifies that if any funds are withdrawn from the fund for dam expenditures, or any other capital expenditure for that matter, the POA must build reserves back up to Reserve Study recommended levels. (7) In other words, this would include replacing the amount withdrawn in addition to any other amount necessary to bring the balance up to the recommended level. As a very important note, if the Capital Reserve Fund were adequately funded, which it presently is not, this would not be an issue. This is a clear example of why it is so important to maintain the Capital Reserve Fund at reserve study recommended levels. Had appropriate balances been maintained and had the spillway replacement not been moved out to 2053, replenishment requirements would have been minimal. (8) https://bcmatters.org/time-to-talk-about-our-capital-reserve-fund/
Reassuring newer residents to Big Canoe . . .
And finally, the previous board president also stepped into the discussion by trying to reassure newer residents to Big Canoe that the POA was adequately prepared to meet these obligations by pointing to the $25 additional assessment plus any revenue from the recently approved Capital Contribution Fee as possible funding sources for these repairs to the dam. (1b) This assumption is somewhat problematic as both forms of revenue have instead been specifically directed to the Master Plan Fund. Although this writer would be joyful to see those revenue sources permanently redirected to the restricted Capital Reserve Fund for these repairs and other capital components included on the reserve studies, the feasibility of that suggestion is somewhat questionable considering the language found in the recently approved CCF covenant amendment.
Now imagine . . .
We all love our Big Canoe and each have significant vested interests in it’s success. In the coming days and weeks more specific details will certainly be presented regarding the planned repairs, but meanwhile, leadership is implored to cast aside the ongoing practices of closed meetings and withheld reports and information as a step toward transparency and unification. With these tools, we might be able to meet our problems head on with honesty and an open sharing of ideas and opinions. Consider that.
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If you would like to see additional articles posted in the future, please check back frequently or subscribe for an email notification. Likewise, please feel free to forward and share this information with your friends and neighbors. I may be contacted at thepcrosses@gmail.com for questions or further discussion. Meanwhile . . . take care and stay safe.
Patricia Cross (10438 Big Canoe)
References:
1) Meeting of the Board of Directors Work Session Video, January 14th, 2021 (a) : (b) 54:00; (c) 45:40 (POAwebsite>login>POA>Meetings>SubscribeToOurYouTube . . .)
2) Big Canoe Administrative Report, January 14th, 2021 (POAwebsite>login>POA>Financials>AdministrativeReports>January2021)
3) Ask the POATicket&Response#2409 AskThePOATicket&Response#2409
4) Reality Check 2020, December 30th, 2020, bcmatters.org https://bcmatters.org/reality-check-2020/
5) 2012 Miller Dodson Replacement Reserve Analysis
POAWebsite>login>POA>Reports and Studies>Reserve Study Big Canoe POA 2012)
6) Big Canoe POA – Reserve Management Plan, August 7, 2016 –
(POAWebsite>login>POA>Reports and Studies>Reserve Study 2016)
7) Second Amendment to the Covenants, dated August 21, 2010 –
(POAWebsite>login>POA>Governing Documents>Covenants>Capital Reserve2010)
8) Time to talk about our Capital Reserve Fund, November 18th, 2020, https://bcmatters.org/time-to-talk-about-our-capital-reserve-fund/