In March 2017 ou,r POA had $13,457,456 in long-term investments. As of March 2018, our POA has $0, nada, nothing, in long-term investments. This was our reserve. Our CEO and board have completely eliminated long-term reserves. I can't imagine the penalties we had to pay to eliminate these investments.
Section 7.04 of the Bella Vista POA Policy document says "the primary investment objective of the association is to achieve reasonable long-term growth on a total return basis that exceeds the rate of inflation by at least 2 percent to provide for the on-going maintenance and capital improvements."
I asked Mr. Judson why long-term reserves were eliminated. His response, in part, was,"some of the funds we had in our long-term investments were, in my opinion, too risky for a POA."
So, instead of restructuring our long-term investments, the POA eliminated them -- not just part of them, all of them.
He went on to say it should be noted our net assets have increased by $6.5 million. That is true because, up to this point, we have already spent about half of our reserves. The other half of reserves is now in an account called "Cash and Short-Term Investments" waiting to be spent. This account, from March 2017 to March 2018, has increased from $3,879,522 to $10,620,503.
This $10.6 million is the money to use for all major capital projects. It is the money we will spend to repurpose the Bella Vista Valley, build a new golf course on the MO/ARK land, repurpose the Kingsdale Center (if we close both golf courses and put Papa Mike out of business), which not too long ago we spent $1 million remodeling, and on the new "Taj-Ma-Riordan Hall."
Recently, the POA has undertaken major capital projects, including the Lake Point Events Center, the Country Club, Highlands, Scottsdale and Dogwood golf courses, task forces to study everything, a swimming beach, and on and on. These improvements are great, but we have to ask ourselves whether we should be spending all of our reserves on these upgrades.
Once this $10.6 million is gone, the only thing left is to borrow money and increase assessments to cover the interest payments. As POA members, we need to say "Stop, don't spend our reserves. Put it back."
I would love to have a new car, but I'm not going to buy one just because I want it. I know I can't afford it, so I'll have to take care of and maintain the one I have.
If we want to ensure the long-term value of our homes and community, we need to slow down, replace our long-term reserves and develop a long-term plan with priorities that we can afford and fits our demographics. We need to vote for new board of directors members who will have this as their first priority.
Bella VistaEditorial on 05/16/2018
Print Headline: Don't spend our reserves