Rumbling Bald ResortFairfield Mountains Property Owners Association

Annual POA MeetingJune 23, 2014

Video Taping In ProcessVideo Taping In Process

Management will video tape today’s meeting. If you are interested in getting a DVD copy of the meeting, please contact Christy Roper at (828) 694-3010.

Approval of 2013 MinutesApproval of 2013 Minutes

Interested in Interested in Volunteering?Volunteering?If you are interested in serving on a committee, please see Christy Roper. You can also e-mail her at croper@rumblingbald.com.

Committee VolunteersCommittee VolunteersCommittees play a vital role in the

betterment of our community. Most committees meet just once per month. Here is a list of committees seeking volunteers:Finance Committee: Review and interpret financial

records, statements, budgets, capital expenditure proposals, monitor internal controls, determine investment strategies, and review/recommend borrowing commitments.

Infrastructure Committee: Work to develop and maintain buildings and grounds that are clean and attractive, while sustaining the safety and enjoyment of our property owners and guests.

Committee VolunteersCommittee VolunteersGolf Committee: To assist the Resort in ensuring its

property owners and guests a challenging, pleasurable, and safe golfing experience.

Wellness & Marina Committee: Monitor and seek to enhance programs and services which promote an active lifestyle and a quality, healthy environment for members and visitors.

Restaurant & Social Committee: Encourage a focus on quality food, consistent service, and clean appearances for all the food outlets. Create social events for the benefit of property owners.

Business & Customer Development Committee: To provide invaluable input and direction that assures guests and members with a quality experience, perceived as a good value and one that will be memorable and worth experiencing repeatedly.

Architecture Control Committee: Committed to working with our property owners to protect their investment and property values.

Town DredgingTown DredgingThank you to everyone who gave their

support to the Town dredging issue. By working together our voice was heard.

In 2015 the Town plans to spend $60,000 on dredging at the Resort’s end of the lake.

This funding comes without having to raise taxes.

30.9% of the Town of Lake Lure Ad Valorem taxes are paid by the Resort.

Treasurer’s ReportTreasurer’s Report

Presented by Jeff KristjansenPresented by Jeff Kristjansen

2014 2013

Operating Cash (164) (84) Decrease caused in part by the reserving of initiation fees and impact fees.

Reserve – Infrastructure, Improvement, and Repair

177 141 A number of capital projects are still in process.

Reserve Funds 293 207 Steady increase with the deposit of initiation fees and impact fees. These will be our capital funds for the future.

Inventory 167 216 Decrease as a result of numerous merchandise sales.

Total Net Fixed Assets 8,011 8,120 Depreciation is outpacing the addition of new fixed assets.

Total Assets 10,132 10,213

May Balance SheetsMay Balance SheetsAssets Assets (000(000’’s) – Selected Highlighted Accountss) – Selected Highlighted Accounts

A complete copy of the Balance Sheet and Financials is available on the website.

2014 2013

Accounts Payable 424 451 Relatively small change caused by timing of payments in trade and lodging A/P.

Current Portion LTD 114 308 Loan refinanced for better terms last year. Long term liab. are up, short term are down.

Line of Credit 33 64 Small decrease since prior year.

Advance Deposits 539 527 First time this year it has been over prior year.

Deferred Revenue 1,721 1,768 Lower dues billing as a result of lots returned in lieu of dues.

Long Term Liabilities 2,544 2,395 Loan refinanced last year.

Total Capital 4,414 4,395

Total Liabilities & Capital

10,132 10,213

May Balance SheetsMay Balance SheetsLiabilities Liabilities (000(000’’s) – Selected Highlighted s) – Selected Highlighted AccountsAccounts

Profit & Loss: Jan - May Profit & Loss: Jan - May (000(000’’s)s)UnauditedFinancials

2014Actual

2014Budget

Variance

Revenue 3,119 3,243 (124)April was very challenging for the Resort.Lodging ($64k)F&B ($59k)Golf ($68k)

Cost of Sales

463 496 33Savings related to Lodging and F&B revenue under budget.

Payroll 1,582 1,625 43Savings in Medical Insurance of $22k. Multiple departments combined saved $21k.

Expenses 1,344 1,335 (9)Bad Debt Recover over budget by $27k.

Net before Depr

(270) (213) (57)

Depr & Loss 246 236 (10)Higher than expected depreciation.

Net Income (516) (449) (67)Action Plans have been executed to get back on track.

Profit & Loss Profit & Loss Net Income (000Net Income (000’’s)s)Comparison to Budget Comparison to Budget

($650)

($550)

($450)

($350)

($250)

($150)

($50)

$50

$150

$250

$350

$450

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual

Budget

Worse than budget by $67k. The shortfall is primarily the result of a challenging April.

Profit & Loss: Jan - May Profit & Loss: Jan - May (000(000’’s)s)UnauditedFinancials

2014Actual

2013Actual

Variance

Revenue 3,119 3,230 (111)A challenging April.Lodging ($54k)F&B ($46k)Golf ($55k)

Cost of Sales

463 487 24Savings related to Lodging and F&B revenue under prior yr.

Payroll 1,582 1,583 1Payroll even with prior year even with an additional $19k in Med.

Expenses 1,344 1,251 (93)Bad Debt Recovery $61kNon-Cap Projects $15kSubterranean line break $8k.

Net before Depr

(270) (91) (179)

Depr & Loss 246 287 41Several assets are fully depreciated.

Net Income (516) (378) (138)Action Plans have been executed to get back on track.

Profit & Loss Profit & Loss Net Income (000Net Income (000’’s)s)Comparison to Prior YearComparison to Prior Year

($650)

($550)

($450)

($350)

($250)

($150)

($50)

$50

$150

$250

$350

$450

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual

Prior

Worse than prior year by $139k.

Chief Executive OfficerChief Executive Officer’’s s ReportReport

Presented by Tom JudsonPresented by Tom Judson

Review of Business UnitsReview of Business Units

Net Income Total Golf Operations Net Income Total Golf Operations (000(000’’s)s)

($250)

($225)

($200)

($175)

($150)

($125)

($100)

($75)

($50)

($25)

$0

$25

$50

$75

$100

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Budget

Actual

Prior

Worse than budget by $47k.

Net Income from Lodging Net Income from Lodging (000(000’’s)s)

($75)

($50)

($25)

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

$300

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Budget

Actual

Prior

Worse than budget by $22k.

Net Income from Food & Net Income from Food & Beverage Beverage (000’s) (000’s)

($90)

($70)

($50)

($30)

($10)

$10

$30

$50

$70

$90

$110

$130

$150

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Budget

Actual

Prior

Worse than budget by $25k. Notice how in May we had a sharp gain of $14k.

Net Income from Net Income from Wellness/Marina/Salon & Spa Wellness/Marina/Salon & Spa (000(000’’s)s)

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Budget

Actual

Prior

Great start to the year, $22k better than budget.

Net Income Managed Properties Net Income Managed Properties (000(000’’s)s)

($10)

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Budget

Actual

Prior

Better than budget by $8k.

Net Expense from Marketing & Sales Net Expense from Marketing & Sales (000(000’’s)s)

($600)

($550)

($500)

($450)

($400)

($350)

($300)

($250)

($200)

($150)

($100)

($50)

$0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Budget

Actual

Prior

Better than budget by $28k.

Net Income from Business Units Net Income from Business Units (000’s)(000’s)

($500)

($400)

($300)

($200)

($100)

$0

$100

$200

$300

$400

$500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Budget

Actual

Prior

Worse than budget by $38k. Thestruggles in April have caused us a setback.

2014 Accounts Receivable2014 Accounts ReceivableOver 60 Days

May 31, 2014 May 31, 2013

Receivables over 60 days

$540,000 $507,000

Allowance for Bad Debt

$399,000 $352,000

Net Receivables Over 60 Days

$141,000 $155,000

Accounts ReceivableAccounts Receivable

250

300

350

400

450

500

550

600

650

700

750

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Over 60 Days(000's)

2014

2013

2012

Property in Lieu of DuesProperty in Lieu of DuesWhen the POA has no other viable

recourse on the collection of dues, we will often accept POA property in lieu of dues. In 2012 $92,000 was written off in dues and in 2013 $107,000. Fortunately through the first five months of 2014 we have only written off $16k (6 lots), compared to $71k written off in the first five months in 2013 (18 lots).

Strategic Plan & Resort Strategic Plan & Resort InfrastructureInfrastructure

Presented by Mike ModzelewskiPresented by Mike Modzelewski

Strategic PlanStrategic Plan

Strategic Status Update The Strengths remain intact. Change in the status of some of the

weaknesses.New hiking/biking options provides activity options.Significant upgrades in many lodging units, recently

recognized by Trip Advisor.Opening of Mulligan’s at Bald Mt. Pro Shop to address

some convenience store needs.

Some threat mitigation Improving home sales/building is increasing revenue

from initiation fees and impact fees that will be used to fund future capital spending.

Spa service capacity increased.More aggressive golf management in place. Improvements in departmental accounting.

Important issues still remain.Long term dues strategy.Desire to increase reserves.Financial pressures that negatively impact receivables.Growing lot inventory.On going need to subsidize the golf business.

Some opportunities are being capitalized upon, but more can still be done. Identifying other alternative draws as the local area

becomes better known as an “outdoor adventure” destination.

Further expansion of “family friendly” activities.Added growth in what has become a stagnant wedding

business. Increased golf course utilizationOff season facility utilizationCreating a “locals” appeal.

New issues have emerged.Staffing and the challenges to maintaining quality

product and superior service. Adjusting to the requirements of the Affordable Health Care Act.

Legends capacity constraints.Need for a reliable third restaurant option.Appropriate use of cash to fund growth initiatives,

increase reserves, retire debt.

Updated Strategic Initiatives Complete the existing infrastructure

updatesApple Valley Clubhouse and Pool Complex in 2015.Road improvement as an on-going project.

Enhance the Resort experience for members and guests.Seek feedback to ensure amenity package is

competitive.Create detailed plans to leverage “outdoor

adventure”. Improve the integrated reservation system cross-sell

effort.Deliver consistently superior products and services.

Establish reasonable returns for all operating departments and a G&A structure appropriate to our business.Benchmark competitive businesses to ascertain

reasonable expense and profit targets.Clearly define reasons for, and expected benefits from,

any individual business subsidy (presently golf). Define and nurture growth opportunities.

Restaurant, or other, expansion opportunities.“Cluster” lodging to attract more business.Continually seek to identify additional niche markets.

Make fiscal responsibility a hallmark of all business decision makingProper cash planning.

Line of Credit usage for short term cash management needs.

Allocation of cash to operations/reserves/debt retirement.

Prohibit use of long term debt to fund operations.Require cost/benefit analysis on all major new

projects.Keep property owners financial burden reasonable,

regularly evaluating cost effectiveness of outsourcing functions.

Resort InfrastructureResort Infrastructure

Resort Improvements Resort Improvements Planned for 2014Planned for 2014General Resort ImprovementsRoad Paving (carryover) –

CompletedRoad Paving (2014) – FallTrailhead (carryover) – CompletedPavilion Landscaping – CompletedPavilion Restroom – CompletedVehicle Replacement – CompletedDrainage Repair – Placeholder

Resort Improvements Planned for Resort Improvements Planned for 20142014Golf Course ImprovementsApple Valley Restroom #5/#2 –

Completed(The old restroom still needs to be

removed.)

Bald Mountain Restroom #14 – Completed

Golf Course Bunkers – Completed - All greenside bunkers: AV#2, AV#4, AV#13, BM#14, and two bunkers at BM#15.

Resort Improvements Planned for Resort Improvements Planned for 20142014Buildings & Grounds ImprovementsReplace 3 HVAC Units –

PlaceholderGame Court surfacing and tennis

court repair – In processLegends Flooring & Painting –

CompletedSecurity Gate Exterior – CompletedTrout Stream Exterior – Completed

Resort Improvements Planned for Resort Improvements Planned for 20142014Buildings & Grounds ImprovementsWellness Center Exterior –

CompletedPavilion Repainting – CompletedFire Pit for Legends – CompletedExterior Renovation Contingency –

Needed to be used

Resort Improvements Planned for Resort Improvements Planned for 20142014Business Growth ImprovementsWellness Interior Counter

Relocation & Addition of Massage Room – Completed

Purchase of 16 Mountain Bikes & Equipment – Completed

Mountain Bike Adventure Trail - Completed

Chip and SealChip and SealThe Infrastructure Committee is experimenting

with using Chip and Seal to maintain certain (primarily secondary) Resort roads.

Last month a number of roads which were deteriorating were paved using Chip and Seal.

Here are the benefits of using Chip and Seal compared to a “regular” asphalt overlay:

Chip and Seal costs one third to one half the cost of asphalt. This savings is important with 44 miles of roads. It is estimated that to use “regular” asphalt overlay will cost an additional $170 per year per property owner.

By extending the time between asphalt overlays, Chip and Seal results in lower costs over the long term.

Chip and Seal eliminates the need to crack seal.

Chip Seal enhances safety by providing good skid resistance.

Chip and Seal provides an effective moisture barrier for the underlying pavement against water intrusion by sealing cracks in the pavement.

Chip and Seal prevents deterioration of the asphalt surface from the effects of aging and oxidation due to water and sun.

The Department of Transportation has successfully used Chip and Seal for many years to maintain state routes.

In hot weather, Chip and Seal re-seals cracks by flowing back together.

If the Chip and Seal proves to be an acceptable method of maintaining our roads, further paving of this type will take place in the Fall.

Buffalo Creek Trail Buffalo Creek Trail SystemSystem The initial 3.5 miles is open and getting heavy usage. The Resort’s parking lot has been completed. Picnic

tables are located close to the parking lot and stream. Planning on the remaining 1.5 miles is underway. This

additional portion of the trail will be more moderate in difficulty. The construction timeline has not yet been determined, yet should be within a few months.

The Town has already received funding on an additional 7 miles of trails. The construction timeline has not yet been determined.

The Town and the Resort are working together to have additional parking at the Buffalo Creek entrance.

Business & Customer Business & Customer Development CommitteeDevelopment Committee

Presented by Jim RhodesPresented by Jim Rhodes

Here is what we are doing Here is what we are doing for you.for you.POA Perks ProgramMember’s Birthday DessertPrivate Members LockersProperty Rental SurveyAnnual Member Survey (in

development)Community Concierge (in

development)

Closing CommentsClosing Comments

Presented by Peggy DahlePresented by Peggy Dahle

Thank YouThank You

Thank you to all the members who volunteer their time & service in support of our community.

Election ResultsElection ResultsElections results on the two seats for the Board of

Directors:Mike Modzelewski 206 VotesDonnie Samarotto 201 Votes

Special thanks to the Election Committee:Linda Gledura– Chairperson Sue LewisBonnie Worcester Jeannette MoranDick Nealon Bill Coulthart

Member Reception Member Reception Following the MeetingFollowing the MeetingThere will be a reception at the

conclusion of the Annual Meeting. The reception will be held at the Pavilion. Come see the new landscaping and restroom facility. Hors’devours, wine, and beer will be served. Make sure to go to the Pavilion, there is a wedding on the Terrace and a business meeting in the Lakeview bar.

Member CommentsMember Comments

Interested in Interested in Volunteering?Volunteering?If you are interested in serving on a committee, please see Christy Roper. You can also e-mail her at croper@rumblingbald.com.

AdjournmentAdjournment