Simply not possible . . .

After over three inches of rain within two days in late March combined with a fully opened lower level outlet, Lake Disharoon dumped muddy water, (1) silt and dead fish (2) into the creek below as it flowed into Sconti and beyond. Although estimated to take two to three weeks, the complete draining of Disharoon was accomplished in only a matter of days despite the extreme rainfall.

Somewhere during that process or soon thereafter, a leak was discovered in the drainage system. In the April 6^th POA Public Service Announcement, Wes McDonald of Geosyntec described the problem as unique and rare while also stating that he had “not seen anything like this before”. (3) Meanwhile, fast forward nine days to the April board work session as the GM seems to be explaining that the deluge of silt did “damage to the discharge pipe”. (4a) And although the GM’s discussion included many much appreciated photographs of the work in progress, a brief Zoom appearance from a Geosyntec representative responsible for ascertaining the problem and ultimate solution would have provided additional reassurance.

Duplicative uses of reserve funds . . .

And now, it is also learned that the restricted Capital Reserve Fund has been targeted as a funding resource for the recently discovered maladies of the Lake Disharoon dam. Honestly, it is a bit old and certainly unrealistic and misleading for management (presumably with the board’s support) to insist that one solitary account with an already inadequate $2.8 million balance could possibly finance the Disharoon repairs while ALSO being available to fund the Lake Petit repairs while ALSO providing cash resources in peak years for other capital components not to mention roads and bridges AS WELL AS any other capital emergencies that might arise.  Not possible.

If that sounded long winded it is because management’s list of uses for these dollars is very, very long.

Further, the GM’s assertion that the Capital Reserve Fund is “not earmarked for other projects” (4b) is untrue. Rather, the cash flow forecast for Lake Petit Dam clearly specifies that the “POA may need to draw from the Capital Reserve Fund to cover capital expenditures”.

And quite honestly, the GM’s statement in the April Administrative Report “just like your own household, it’s good to have an “emergency fund” on hand when your AC goes out on an August afternoon” was frankly insulting. (5) To compare the magnitude of unforeseen repairs at Lake Disharoon and this community’s Capital Reserve Fund to the failure of a residential AC system is dismissive and inappropriate.

Cash Flow Models . . .

Even though the precise problem and required fix and price tag is still unknown, when asked how the repairs will be paid for, the GM attempts to reassure property owners by stating “we have plenty of cash flow”. (4c)

However, using the POA’s own “robust” cash flow model as presented at the February town hall, this writer noted previously that the analyses included absolutely no margin for error or contingencies. (6) One valid and current example would be the recent census study indicating that 320 property owners plan on selling within the next five years. That revelation, if accurate, is a far cry from the 190 sales per year (to total 950 sales in five years) required to even achieve the revenue predicted on the cash flow model needed to fund the Lake Petit Dam repairs. (7) (Note: That shortfall alone would render a deficiency far in excess of $1.5 million) And now we have Disharoon.

Near term plans . . .

Also without having any idea exactly what the problem is much less what the total cost of this repair will be, management continues to boast it’s proactiveness by stating the POA has planned ahead and is well funded to handle a “large unexpected expense without changing any of our near term plans.” (5) In other words, leadership will forge ahead with the estimated $10.4 million in capital expenditures during 2021 – 2022 which includes projects such as renovation of the Chimneys ($440k) and reconfiguration of the maintenance building ($328k). (8)

As another example, the 2021 Capital Plan includes an arguably expensive renovation of the swim dock at $312k. As it turns out, the swim dock/pier and pilings (9) were removed to make way for more inflatables. (10) Instead, it was clarified (via AskthePOA) that this project actually refers to the replacement of the walkway to the rock slide, pouring footings into the lake bed and construction of a concrete wall (or seawall). This project is scheduled for sometime in the Fall and after approval by the board. (11)

All that said, it appears this project might require yet another draw down of Disharoon. One can’t help to question why management would have scheduled two draw downs of the lake in a single year rather than combining the timing of the two projects. That reasoning has continued to shift.

Now let us consider . . .

(Anyone who has read a few of the posts on this site, probably recognizes that leadership’s mischaracterization of the capital reserve fund and failure to fund and maintain adequate balances in the account is a major and prominent concern of this writer. ) (6) (12)

Whether one shares this writer’s concerns about the significance of the Capital Reserve Fund, it must at least be agreed that the POA has no other form of reserves. Instead, management and leadership continue to spend every other available dollar almost upon it’s receipt without ever giving any consideration to saving for a rainy day. This is not proactive. This is not planning ahead. This is not fiscally responsible. Not remotely.

And because of that, funding of all these near term capital projects combined with the unexpected Disharoon repairs and unknown Lake Petit Dam expenses is simply not possible without some significant adjustments being made.

Again, clearly as the Petit Dam cash flow forecast indicates, at the present pace, total cash will dip dangerously low (excluding CFR) to only $2.3 million by the end of 2023 followed by a dip to $1.6 million in 2024. And remember . . . this forecast did not anticipate the Lake Disharoon problem.

Likewise keep in mind, as noted by the Finance Committee Chair, the POA requires roughly one million dollars per month just to cover operating expenses. Beyond that, it takes another million to service the land purchase debt for one year. The total of these two represent the minimum balances as required by the “bank”.

In conclusion . . .

The math does not support the lack of financial concern (2c) or the references to “plenty of cash flow”. The money is not there. And bottom line,  for historical reference, we never really had the money for the Creek 9 renovation.

Given the large, unknown expenses pending for both Lake Petit and Disharoon, let’s hope that members of our board will step up to curb the excessive capital expenditures and not make that same mistake again.

* * * * *

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 contact me at thepcrosses@gmail.com for questions or further discussion. Meanwhile . . . take care and stay safe.

Patricia Cross (10438 Big Canoe)

References:

1   Muddy Water 

2   Dead Fish 

3   Eblast from POA Board of Directors, Public Service Announcement, “Work on Disharoon uncovers drainage issue”, April 6^th, 2021. (POAwebsite>login>POA>CommunityOverview>Communications>ReadThe20MostRecentEblasts)

4    Meeting of the Board of Directors Work Session Video, April 15^th, 2021, at a) 4:20; b) 16:20; c) 16:44  (POAwebsite>login>POA>Meetings>SubscribeToOurYouTube . . .)

5   Administrative Report, April 2021 (POAwebsite>login>POA>Financials>AdminReport>2021>April)

6   A bit more dam talk, March 29^th 2021, bcmatters.org. https://bcmatters.org/a-bit-more-dam-talk/#more-829

7CashFlowForecast

8   AnnualCapitalExpenditures

9   pilings

10  POA Announcement, Disharoon Lake Maintenance and Improvements, March 24^th, 2021, https://bcmatters.org/wp-content/uploads/2021/04/Disharoon-Lake-Maintenance-and-Improvements.pdf

11   AskthePOATicket#2985

12   Time to talk about our Capital Reserve Fund, November 18^th, 2020, bcmatters.org https://bcmatters.org/time-to-talk-about-our-capital-reserve-fund/#more-660