Where is the Tellico Village Property Owners Association going, and what roads will we take to get there?
I believe that good planning makes all the difference in determining your destination and the roads you need to take to ensure your arrival. The answers to these two questions may not be immediately obvious, but there are several processes in place that are used by the TVPOA board, advisory committees and management to make these determinations. These various processes form a hierarchy from the broad and general to the specific and detailed.
The overarching guidelines at the top of the hierarchy are the vision, mission, values and guiding principles of the TVPOA. The vision, to be a continuously improving community, maintaining an environment that affords a high quality of life for members (property owners), is never-ending, but we are continuously striving to achieve that vision.
The mission, to maximize membership value, is both strategic and practical. It is something that we consider in making our long-term investments and in determining our assessments and user fees.
Finally, one of our core values is financial responsibility, which is to provide fiscal leadership assuring viability for the POA. The complete set of vision, mission, values and guiding principles are listed on the TVPOA website.
The next levels of planning guidelines are contained in the long-range plan and strategic vision. Published in 2010, the LRPSV provides a timeline for possible implementation of capital projects deemed important for achieving the vision of the POA. Some of the projects that are on that list have now been completed, such as the fire hall expansion, pickleball courts, the Toqua Golf Course pavilion and refurbishing the Chota Recreation Center building. Some are being studied over the next year or two to determine design alternatives and cost estimates for construction.
Design and cost studies are contained in the 2016 budget for a Tanasi Golf Course parking lot expansion, Toqua clubhouse alternatives and Kahite clubhouse cost estimates. These studies will help determine our best, affordable alternatives for maximizing value to our membership.
A little closer in the timeline is the five-year plan. This is a very detailed plan containing revenue expectations, specific capital projects, major maintenance and operating initiatives and staffing expectations. All of these estimates are combined into projections of revenues, expenses and net income, along with projections of reserves funding and uses.
The document that receives the most interest and attention is the TVPOA budget. The budget not only provides the initial level of approval for capital projects, staffing plans and expense budgets, but it also becomes the benchmark for comparison of actual financial results versus planned. It is the baseline against which we measure our degree of successes and shortfalls for the coming year, and we use it to monitor our performance and alert us to the need for corrective actions if we get too far off course.
During the year, the capital projects and major operating initiatives are executed against this plan, and the department heads and general manager can approve budgeted expenditures up to $50,000 so long as they are within budget or no more than 10 percent over budget. Anything that exceeds these thresholds requires further approval by the POA board.
To ensure that we know where we are going during the budget process, financial guidelines are provided to the department heads at the beginning of the process describing where we need to arrive for the budget to be acceptable. The year 2016 is not an expansionary year filled with new amenities but a continuation of the 2015 theme of repair, replace and renovate. As such, it seemed appropriate that 2016 be cash self-sufficient — that is, all of the costs of operations and the entire capital plan can be paid for from cash generated during 2016.
Consistent with that concept, we set a goal for the capital plan to not exceed the current depreciation level of about $1.4 million. We also targeted for positive net income sufficient to fund a portion of the capital plan.
We wanted to maintain adequate operating and reserves cash balances and to continue to pay down existing debt and leasing obligations. The 2016 budget meets all of these guidelines and is indeed cash self-sufficient.
I believe that we have a good process in place for development of the budget and five-year plan. As we are seeing even more of our resources directed toward maintaining some of our aging facilities, we are focusing more attention on needs beyond the five-year plan. One of the goals adopted by the board for this year includes creation of a master plan for the repair, replace and renovate initiatives. This master plan will look five to 10 years beyond the five-year plan so that we are not surprised by major unexpected expenses that may be lurking in that longer time period. Our overall goal in planning is to know where TVPOA is going and to have a roadmap for the paths that will take us there.
At the March meeting of the TVPOA board of directors, several major capital and maintenance projects were approved. The program to replace 30 water meters per month with radio read meters was approved for $88,200 with funding from the water and sewer reserve fund. Replacement of the original 10 horsepower pumps at Tanasi Cove lift station with 30 horsepower pumps with variable frequency drives was approved for $22,181 with funding from the water and sewer reserve fund.
The Coyatee lift station control panel will be replaced at a cost of $7,412 from the water and sewer reserve fund. Replacement of the Toqua golf cart fleet, plus eight additional carts, was approved at $181,389, which is significantly below the $230,000 that was budgeted for this project. A maintenance project to replace 360 batteries for the Tanasi golf cart fleet was approved for $40,902. Additionally, a replacement of the golf ball dispenser and washer at the Toqua practice range was approved for $12,192.
A new landscape feature was approved for the mound at the south entrance to the Village, creating a new and improved first impression for visitors and residents. Funding of $27,771 was approved. A Ford F350 4x4 dump truck with a snow plow and salt spreader attachment was approved for $53,959. Finally, a 61-inch Ferris riding mower and a 52-inch Ferris walk-behind mower were approved for $15,268.
At this point in the year, we have approved 40 percent of the 2016 capital plan, and, collectively, these individual projects are estimated at about 12 percent under their budgeted amounts. Through February, operations are about $104,000 better than budget for net income, though much of that is a timing variance.
We are off to a good start on positive net cash flow.
