Tellico Village Property Owners Association Board of Directors last week approved the 2020 budget.
Board members Pat White and Cap Purvis motioned and seconded, respectively, to accept an operating budget, capital plan, monthly assessment rate increase, water and sewer rate increases and reserves, financial and pricing plans.
The vote passed 6-0. Bruce Johnson, board president, was absent.
A 10-year plan for 2021-2030 was also approved.
Prior to the vote, Bob Coates, Financial Advisory Committee chairman, spoke to the board.
“This year the process worked very well,” Coates said. “From the standpoint of the relationship between the board and FAC, the advisory committee, the interaction and the relationship was very good. It’s not always been that way, but I say this was one of the better years if not the best year we’ve had. I appreciate the fact that most of the board members attended almost every one of these review meetings, and in addition to those we had several meetings the first week and then the last meeting last Friday.”
Coates said a major milestone in the coming year will be the full payment of a loan taken April 2006 for the Wellness Center.
“The loan was originally to be amortized over a 15-year term, but as interest rates dropped over the course of the loan, we paid the loan off faster,” Parker Owen, POA chief operating officer, said in an email correspondence. “At current interest rates, we expect to pay off the loan in August 2020. TVPOA has maintained a banking relationship with United Community Bank throughout this period of time. In addition to the Wellness Center, UCB has financed the TVPOA Welcome Center, the Summit Medical Group Office Building at Tellico Village, and, most recently, about one-half of the new Toqua Golf Clubhouse.
“We budget for debt service as part of our annual budget and 10-year plan, and pay down debt aggressively,” he added. “In 2020, we will make payments to principal of more than $400,000.”
Owen said next year’s budget should see a positive net income of $566,000.
The budget includes a capital plan of nearly $2.6 million.
“Far and away the largest project in that plan is the Coyatee Hills water storage tank at $1 million,” Owen said. “The Yacht Club basin weigh attenuator at $220,000, the Yacht Club first floor renovation at $110,000, and then essentially half of the budget for equipment replaces and additions to infrastructure. ... You could say the entire budget, capital budget, is for replacements and additions to infrastructure.”
The R&M Reserve funding formula increases from $17.25 percent of net collectible assessments to 20.75 percent. The largest expenditure for the reserve is for pavement preservation for roads at $978,000.
“Coming out of R&M primarily HA5 pavement for roads almost $1 million, parking lot overlays, a couple of trucks, Yacht Club renovations, HVACs and a host of other miscellaneous items,” Owen said. “I will point out because of the timing of the Wellness Center roof project, there is likely to be a carryover of — I’m currently estimating $218,000 — carried over from this year’s approved funding into next year, and it will be shown as a draw against the R&M reserve.”
There will be a 5 percent increase to assessment fees to $139.54. Water and sewer rates will also increase 3 and 8 percent, respectively.
Discussion spurred over the price hike after a resident asked for board members to take into account Villagers who may struggle with increased rates.
“I mean we’re trying, and as Pat (White) has alluded to, the thousands of hours people working together to keep this as low as we can but yet still maintain the beautiful amenities, maintaining our roads,” Purvis said. “We put almost $1 million in HA5 on our roads next year. We did almost that much this year. We get no help from Loudon County.”
Carla Johnson, board member, spoke on concern of a blanket approval.
“This was definitely something that we looked at, but I would like to take us back to the town hall meeting that we had when we talked about and this was in 2018 about the Toqua Clubhosue and the Kahite Community Center and it was very, very clearly laid out in that town hall meeting that if we do those two projects this year that for the foreseeable future our assessment increase would be up to 5 percent so that we could rebuild that amenity reserve fund that would basically be spent down to nothing,” Johnson said. “There was overwhelming support in that meeting for those two projects and there was overwhelming support in this board meeting when they approved the budget last year for those two projects. That doesn’t come without a cost and I felt like as a Village people were very supportive of building those two amenities.”
She also pointed to inflation.
“The cost of everything is going up, so there’s definitely an inflation factor that we have to consider,” Johnson said. “We don’t get the luxury of everything continuing to cost the same even if we don’t do anything new. So those are going to be cost increases.”