Where did all the money go? Unanswered Questions? Part 2

Where did all the money go? Unanswered Questions? Part 2

Summary from Part 1 The $6.6 million MVF reserve fund investment portfolio is not safe, available when need and diminishing over time. (See MVF Summary of Investments 2011 to 2013 PDF)

The board of directors has authorized $4,215,000 capital projects scheduled to be completed over the next 15 months. However, only $951,000 (23%) will be available through December 2014. Board of Directors should understand and accept the fact that if securities are sold before maturity a loss of principal and interest could result. The last “Fair Market Value” schedule of investments was the “Schedule of Investment” in the MVF 2012 Audit, included in the March 2013 Board Meeting package.

The Foundation’s financial reporting continues to be opaque, misleading and depicts a false positive improved state of the Village’s financial affairs as well as the condition of its buildings, parks, lakes and recreation facilities. The assets of the Foundation have been allowed to deteriorate. Instead of the board setting policy and supervising staff and officers, the board passively and without question takes orders from the staff.

Questions Why are Messrs Dave Humpton and Greg Snellings afraid to report each month in the MVF financial reports a listing of the “fair market value” of MVF’s investment portfolio? Why does the board of directors allow MVF’s property and financial assets to deteriorate? Why doesn’t the board of directors supervise and hold accountable the officers and senior employees for these conditions? How is MVF paying for $4,215,000 of reserve expenditures in the next 15 months without taking a substantial lost of interest and principle of its Investment portfolio? (See MVF 2013-2014 MVF Replacement Reserve Expenses PDF)

MVF Capital Reserve Replacement Program 2008 to 2013

 Introduction to Reserve Budgeting from the Reserve Study conducted in the spring of 2007 by Advanced Reserve Solutions (ARS). The Board of Directors of an association has a legal and fiduciary duty to maintain the community in good state of repair. A prudent plan must be implemented to address the issues of long-range maintenance, repair and replacement of the common area assets. An accurate reserve analysis and a “healthy” reserve fund are essential to protect and maintain the association’s long-range plan and provide the critical link between sound business judgment and good fiscal planning.

Key elements There are four key component of information that a comprehensive reserve analysis should provide. Budget amount recommended to be transferred into the reserve account each month of the fiscal year for which the reserve analysis was prepared. Percentage Funded measures the reserve fund “health” as of the beginning of the fiscal year for which the reserve analysis was prepared. Remember, “100% funded,” means the association’s proportionately correct amount of money, to date, for the reserve components it maintains. Projections define the timetable for repairs and replacements and show the financial plan-when an underfunded association will be “Fully Funded” and reach 100% at the replacement year and how a properly maintained association will remain “health”. Inventory of Property Elements or Replacement Reserve Schedule is a complete list of reserve components including placed-in-service date, useful life, remaining life, replacement year, quantity, current cost of replacement, and future cost of replacement that is used to calculate the annual Contribution to Reserves (CTR).

The 2007 ARS Reserve Study Replacement Reserve Schedule displayed current replacement cost by fund within the major reserve component groupings: streets, bridges, interior buildings, exterior buildings and equipment. The recommended Contributions to Reserves from Assessments and Interest for 2008 were $861,000 and increased each year to $1,141,000 by 2014. Component Property Elements with useful life of zero (replacement cost $1,862,000) were schedule to be completed in 2008. Property components with one to seven years remaining life were to be completed between 2009 and 2014.

The ARS 2007 Reserve Analysis and Plan provided the framework and monitoring tools and “financial blueprint” for the future. However, It is of no value unless followed and accurately reported in the on-going financial reporting system. It is incumbent that 1- The Contribution to Reserves be increased each year as determined by the reserve plan, 2- As part of the annual budget process each and every property component reflects current conditions and cost in the Replacement Reserve Schedule, and 3- Contributions to Reserves are realistic, adequate and keep current. Planned or anticipated capital replacement reserve programs not included on the Replacement Reserve Schedule would have to be added to the schedule and funded by a special assessment or over a period of years before it can be completed.

Comment on ARS 2007 Reserve Analysis and Plan Based on the details of the MVF Annual Financial Audits and approved Annual Operating and Reserve Budgets from 2008 to 2012, MVF ignored the recommendations of the ARS 2007 report, did not use it as a monitoring tool, failed to update the Replacement Reserve Schedule and Contribution to Reserves annually, or used as a basis for the annual budget. (See ARS Funding and Expenditure Plan PDF).

Capital Projects & Unanswered Questions 2008 to 2014

The Solar Panels were to be installed on the MVF administrative building roof at a cost of $222,600. A $66,500 down payment was to be paid in 2013 with the remainder financed over ten years. The August 9th 2013 edition MV News Dave Humpton EVP Report “staff has been working with vendors to bring solar collection to some MVF facilities as approved in 2012. Despite unexpected manufacturing hurdles and changing energy rates, staff is committed to finding a solution that helps further the goal of being more energy efficient”.

Comments on Solar Panels The study conducted by Green Spring Energy indicated it would take 20 years to recoup the cost of the panels. Capital project expenditures are normally required to be paid from the Repair and Replacement Reserve accounts funded in advance instead of long-term debt. The Solar Panel project was not a component of the ARS Replacement Reserve Schedule and would have to be added to the scheduled and funded in advance. A special assessment would cost each of the 12,096 property owners $18.40 or if spread over five years $3.40 per year. Best energy saving practices such as lighting retrofitting, replacement; modernization and updating of energy, heating and air condition systems, doors, windows; and insulating roofs and exterior curtain walls provide the best, immediate, and cost effective long term energy savings.

Questions Why didn’t someone in authority recognize early on that this would not have been a cost effective or viable energy saving project? How much money did MVF spend on engineering with Green Spring Energy and others on the Solar Panel project?

Asphalt Advanced Reserve Solutions (ARS) 2007 Reserve Study identified $851,100 streets, parking lots, trails and pedestrian paths components scheduled for repair and restoration from 2007 to 2019. The 2013 reserve budget included $83,544 “Asphalt Pathway repairs” as a 2013 budget necessary project. The 2014 proposed budget contained $125,000 “Park asphalt & concrete repair” and “Asphalt & concrete repairs” at Community Centers.

 “Trail system”, a feature of the MVF Vision 2030 5-year plan costing $150,000) Featured a “Village Wide map and way finding system to make the paths more useable, noting connections to regional trail systems”.  The “Trail system” is not a component of the Replacement Reserve Schedule and it should have been added to the schedule and funded in advance. The trail system would cost each property owners $12.40 or $2.48 over a five-year period.

Comments on Asphalt & Street MVF has ignored the 2007 ARS report repair and replacement schedule. From 2007 to 2012 only $67,254 has been spent on asphalt or concrete repairs. Any maintenance, safety, or storm damage concerns had been met with minimal patching and temporary measures. The asphalt & concrete streets, parking lots, trails and pedestrian path assets in Montgomery Village have been allowed to deteriorate and are approaching its 50th year of neglect. You are invited to view photo album: Asphalt roads parking trails paths.

Questions What value is a Village Wide “map and way finding system” and how much money has MVF already spent on consulting, engineering and feasibility studies?

Lake Whetstone Island Shoreline Restoration was approved at the September 2012 MVF board meeting in the amount of $162,345. In its October 5 2012 edition Sylvia Carignan, staff writer for the Gazette, reports environmental restoration company Ecotone, provided engineering plans for review and permitting for the stabilizing of Lake Whetstone Island shoreline. The budget description “stabilize the lake bank of Lake Whetstone” is misleading. For over 20 years the deteriorating condition and inadequate maintenance of Lake Whetstone Park, Lake and shoreline has been major concern of residents of the South Village & Whetstone neighborhood bordering the lake. 

MVF park, lake, stream and shoreline maintenance conditions including erosion, shoreline stabilization, damage repair, sediment runoff, water quality and environmental concerns is not just limited to Lake Whetstone but includes all Village lakes, streams, ponds, and drainage systems.

The Foundation considers Lake Whetstone & Parks a wildlife habituate and the island shoreline erosion could be a threat over time to the Heron population. In 2012 the expenses for engineer, design and construction plans and specification for the Island shoreline restoration was $35,600, increasing the total cost upon complete to $198,000. Herons, Ducks, Eagles and Swans are not included on the Foundation’s annual count of Geese and Gosling in the Village. However, There are about 30 Herons domiciled on Lake Whetstone Island during the spring matting season. This shoreline restoration capital project will average approximately $6,600 per Heron.

Comments LWI Shoreline Restoration Given the Foundation’s long history of preferring a natural and economical approach to decision making, the restoration of Lake Whetstone Island Shoreline is somewhat surprising. The South Valley Park Lawn theatre renovation cost $204,000 in 2009 and the Lake Whetstone Park Dock erection cost the Village $204,900 in 2010. The shoreline restoration of the island is not a component of the Replacement Reserve Schedule and it should have been added to the schedule and funded in advance. A special assessment would cost each of the 12,096 property owners $13.24 or if spread over five years $2.84 per year.

The Lake Whetstone Island shoreline restoration may well end up as the most expensive and ill advise use of reserve funds in the Village’s history.

Questions Did the MVF board of directors make a prudent business decision to spend $198,000 while turning a blind eye to Lake Whetstone Park and Lake long standing deteriorating condition and inadequate maintenance recreation facilities, landscaping, lawn and tree care, erosion, shoreline stabilization, sediment runoff, water quality, and drainage systems?

South Valley Park Restroom & Concession Stand The revised plan presented at the July 9th 2013 hearing on the SVP Restroom & Concession Stand now shows two separate facilities, one, a 20 foot by 60 foot concession stand located behind the back stop of the baseball diamond and, two, a 12 foot by 13 foot single unisex restroom near the music pavilion available during summer concert series. The concession stand will be in open when the ball field is in use for games and practices and locked all other times. This revised plan completely changes the scope, nature and cost of this project. As Don O’Neill pointed out in his September 12th 2013 blog South Valley Sports Toilet Cost & Schedule Management MVF must report the estimated cost within a predetermined time frame to comply with the Maryland Department of General Service (DGS) procedures to receive state bond funds. This new plan will require further engineering cost for construction drawing, building specifications, site plans and permitting cost for two separate buildings. This completion cost will have to be disclosed and incorporated into the MVF 2014 proposed budget.

The MVF 2014 Proposed Budget, included in the September 6th 2013 MV News, opening paragraph stated “The budget is focused around four primary goals 1) minimize assessment increases, 2) continue staff management effort on capital project development (Whetstone pool renovation and South Valley Park restroom/concession facility, 3) maintain sufficient reserve contribution to ensure the future repair and replacement of existing assets and 4) fairly compensate MVF employees.

Comments on SVP Restroom & Concession Stand The South Valley Park Lawn Theater free concerts are held from 6 to 7:30 p.m. Sunday evenings from June to August. The 2013 MVF Resident Survey questions “How often have you” Attended a Lawn Theater concert, 94.4% of the 162 respondents had never attended or attended once or twice, Attended a Community Band Concert 97.0% of the 165 respondents had never attended or attended once or twice. The cost of this 12 by 13 foot will bear the entire cost of sewer-water and electrical connections and building permitting originally estimated at $80,000 to $100,000 when the project was first proposed as part of the Five-Year Capital Improvement Plan in 2010. A conservative completion cost estimate of the unsex restroom facility will easily exceed the quarter of a million dollars MVF had originally figured for the entire project. The original single building proposal envisioned “a construction of a structure to include a concession stand, toilet facilities and a storage area for use by visiting sports teams and patrons of the Lawn Theater”. This latest two building proposal the restroom will only be open for public use before and after approximately 13 lawn theater concerts estimated to be less than 40 hours a year. The 20 by 60 concession stand will cost at least an addition $200,000 and will be exclusively used and controlled by a private organization that has no standing as a Montgomery Village property owner. The SVP Restroom and Concession Stand is not a component of the Replacement Reserve Schedule and should be added to the schedule and funded in advance. A special assessment will cost each of the 12,096 property owners $45.47 or $9.09 a year if funded over five years through the capital replacement reserve fund. The minutes of the October 7th 2013 meeting of the Recreation Committee on the status of the SVP Restroom and Concession stand stated requests for proposals (RFP) are being sent out for the main building with restrooms and concessions and concessions and for a one or two stall restroom at the lawn theater”. The vote to approve the completion of the SVPR&CS on the agenda for the October 24th 2013 board of directors meeting should be postponed pending the receipt of RFPs estimated cost.

Questions Did the MVF board of directors exercise good business judgment at any time on any aspect in the last five years on this project? Has MVF provided the common area property maintenance of all Village lakes, streams, ponds, and drainage systems before committing upward to a half a million dollars on the construction of a restroom and concession stand? What is so compelling about the SVP restroom and concession stand that its completion deserves to be honored as one of four primary goals Village goals of the MVF 2014 budget? Did the MVF board of directors exercise a duty of undivided loyalty and honesty to Montgomery Village property owners by entering into a partnership with the Montgomery Village Sports Association (MVSA) to South Valley Park restroom/ concession facility completion for MVSA’s exclusive use and control?                                        

Swimming Pool Renovations The MVF Reserve Plan-2014 of the 2014 Proposed Budget page 67, states “In March 2007 a firm was retained to perform MVF’s first professional reserve study including a new system that offers a component level detail to organize the various assets by fund, asset type and year of replacement. The new software and the analysis derived were first used for the preparation of the 2008 budget. During 2012 the results of a facilities study that focused on MVF pools revealed that the 2007 study did not include the cost to replace the pool itself-it had only included the pool components and actual equipment. The reserve program database was increased by $7,000,000 to account for the replacement of each of the MVF’s aging pools. The facility study also noted that three pools MVF pool would be totally renovated within the next five years. Adjustments to reflect all of the facility study findings were made as part of the 2013 budget process.”

Comments on Pool Renovations To maintain the community in good state of condition now and in the future depends upon long-range strategy and plan of maintenance, repair and replacement of the common area assets. Facilities maintenance, preservation and enhancement programs, divide property assets elements by systems, components and parts. Systems include mechanical, heating and air condition, exterior buildings, interior building, pools and recreation facilities, grounds and landscaping, lakes, streams and parks.  In the case of a pool or community center facility, each part of each component is maintained, repaired, renovated, renewed and replaced on or before the end of its functional and useful life in order to maintain the facility in a like new condition. 

Messrs Humpton and Mr. Snellings’ discovery, five years after the fact that, an unidentified “facilities study” revealed that an unidentified MVF “first professional reserve study firm” did not include the cost to replace the pool itself-it only included the pool components and actual equipment”. To paraphrase a famous quote from Bill Clinton, “just depends what you mean by it? “The pool itself – it only included the pool components and actual equipment”. Gentlemen, in math, physicals, logic and Capital Reserve Replacement scheduling, budgeting, and planning, the sum of the parts equals the total.

Status of Community Center and Swimming Pool Projects All seven swimming pool facilities and two community centers have undergone major renovation and restoration projects over the past three years at costing $1,132,000: North Creek Pool and Building 2009,2010, 2012 $286,500, Whetstone 2009,2010, 2012, $164,400 (2013 not included), Lake Marion $163,400 2011, 2013, Stedwick $319,054, 2010,2011,2012, Hurley Park 2013 $82,265, Watkins Mill $48,388 2013; All pools; pool furniture $22,750, pool skimmer replacements $12,675, automatic deliberators $18,544, duraflex diving boards $13,068  2013. (See MVF 2013-2014 MVF Replacement Reserve Expenses PDF).

Whetstone Pool Upgrade and Enhanced Service Level In February 2013 board approved a contract with Paddock Swimming Pool company to design and provide building services to demolish, replace, and enhance the pool and modernize and renovate the bathhouse facilities. The newly designed competitive swimming pool structure will be a 4483 square foot surface with an enlarged diving deeper plus addition swimming lanes. In addition there will be a 2,388 square foot leisure pool area with a beach entrance with spray and bubble features, a four-lane training area. The bathhouse enhancements and upgrade includes a family restroom and showers and a new control desk. The contract price is $1,780,000, Design-permitting $170,000, pool replacement $520,000, new pool features and enhancements $188,000, bathhouse renovations $302,000, demolition and site work $600,000.

At the March 2012 meeting of Recreation Committee on the proposed Whetstone Pool Renovation, evidently, there was significant resident input favoring, sometime in the future, replacing and upgrading the other two pools used for competitive swimming, Apple Ridge and Stedwick, along the same lines of the Whetstone upgrade an enhancement model.

Comments on Pool Renovations Messrs Humpton and Snellings stated in the MVF Reserve Plan-2014 “The reserve program database was increased by $7,000,000 to account for the replacement of each of the MVF’s aging pools”.  This will cost each of the 8,096 Designated User property owners $864.62, $172.92 a year if funded over five years through the capital replacement reserve fund and add $14.41 (48.0%) to the 2014 proposed Designated Users monthly assessment rate of $30.02.  Increasing “the reserve program database by $7,000,000” itself is meaningless unless MVF can collect $864.62 per Designated User property owners to pay “for the replacement of each of the MVF aging pools. 

Three quarters of the Whetstone Renovation cost is directly attributed to design, demolition of existing pool and building a 4483 square foot competitive swimming pool structure primarily for the benefit of Village swimming teams and a 2388 square foot leisure pool with a beach entrance with spray and bubble features

The Whetstone Pool Renovation and Enhancement contract was approved in February 2013. All seven swimming pool facilities including Stedwick have undergone major renovation and restoration projects over the past three years at a cost of $1,132,000. In the last 18 months Stedwick pool, community center, tot lots facilities have been completely renovated. View a photo album of current conditions of the MVF Swimming pools, tennis courts and tot lots facilities.

The Foundation has indicated its intention to spend $1,982,000 to renovate Apple Ridge facilities by 2015 and $1,716,000 for Sedwick by 2017 to replace and upgrade, along the same lines of the Whetstone upgrade enhancement model including the competitive swimming pool features.

At the October 25th 2013 MVF board of directors meeting will vote on the proposed 2014 MVF Budget that includes spending $7,000,000 for proposed pool renovations, which for most part have already been completed, are not needed, is ill advised, the cost of which exceeds total net worth, equity, net assets value of the Montgomery Village Foundation.

Questions If spending a half a million dollars for the South Valley Park restroom and concession stand that benefits Montgomery Village Sports Association baseball and football teams is not right, how wrong is spending $1,300,000 per pool to accommodate the Village competitive swimming teams? Why would MVF demolish and replace a recently renovated Sedwick pool itself for less money spent over the last three years to replace the pool components and actual equipment for seven pools? Did the MVF board of directors exercise good business judgment in authorizing $1,780,000 for the Whetstone pool and enhancement program, an amount equal to 34.8 percent of the $5,110,000 market value of MVF reserve investment portfolio as of 12/31/2012 as verified by the 2012 MVF financial audit statement?

Summary Commons on Where did all the money go? Unanswered Questions Part 2

 A prudent capital reserve funding plan determines how much money should property owners and assessed and set aside each month in a major repair and replacement investment portfolio that will be safe, available when needed and grows over time, that addresses the current and long-range maintenance, repair and replacement issues of all components of the community’s common area assets.

The primary tool for determining property owner replacement reserve assessments is a Replacement Reserve Schedule, which is a complete list of reserve components used to calculate the annual Contribution to Reserves (CTR). As part of the annual budget process each and every property component should reflect current conditions and replacement cost in the Replacement Reserve Schedule. Each year the capital reserve expenditure for each component should be recorded to reflect the end year-end reserve funds. If a component has been replaced to a like new condition, the remaining useful and replacement cost should be adjusted reflecting the new replacement cycle.  The overriding principle of Replacement Reserve Funding should be sufficient to repair, renovate, replace and restore to a like new condition on or before the end of its functional and useful life.

Replacement Reserve funds are set aside in advance, Contributions to Reserves should realistic, adequate and keep current. Planned or anticipated capital replacement reserve programs not included on the Replacement Reserve Schedule it would have to be added to the schedule and funded by a special assessment or over a period of years before it can be completed.

The four unfunded MVF fund capital projects not included on the Capital Reserve Schedule (Solar panels, trail system, lake whetstone island and south valley park of $1,084,000 will cost each Village resident property owners $89.51 or $17.47 if financed over a five year period. The unfunded $7,000,000 pool renovations will cost each designated user property owner $862.62, if financed over a five year period it adds $172.92 to the annual assessment. The condominium and rental apartment communities pay MVF fund fee for all property units monthly as opposed the Homes Corporations owners who pay individual MVF fund and Designated User fund fees quarterly.

Safety of MVF Investment Portfolio October 15 2013 As of December 31 2012 the market value of Franklin US Government Securities Fund was $175,858, as of October 15 2013 market value dropped to $164,867 a lose in value of $10,991. Wilmington Short Duration Government Bond Fund market value went from $998,551 to $993,259 a lost of value of $5,292, a combined lost of $16,283 in 2013. As reported by CNBC financial reporter Suze” Orman, over the last 60 days as a result of the our government’s self inflected financial crisis US government mortgage corporation bonds and US security bond funds such as the Franklin and Wilmington have experienced the greatest loss in value. MVF’s reserve investment portfolio included almost $2,000,000 of these types of securities.

Funding the Replacement Reserve Fund, MVF Style MVF is paying for the reserve expenditures from Contribution to 2014 Reserve Assessment $828,907 Undesignated Surplus from prior periods $221,809, Capital Contribution Fees $185,000, MVF reserve investment portfolio, State Grants $155,000 and the MVF replacement reserve investment portfolio $5,110,515. (See MVF Summary of Investments 2011 to 2013 PDF)

The Contribution to Reserves collected in 2014 will not be deposit to MVF replacement reserve fund investment portfolio but charged as a direct expense from the reserve fund investment portfolio of $5,110,000. (See MVF Summary of Replacement Reserves 1994 to 2012 PDF)

From 2008 to 2012 the Contribution to Reserves from Assessments and Interest on Reserve Investments (account code 4114) was $4,587,500 with reserve expenditures of $4,035,256. However, only $1,433,000 (account code 6650) was deposited to the MVF replacement reserve fund investment portfolio creating a Replacement Reserve funding deficit of ($2,602,410). The Draper & McGinley audits of MVF financials recorded  $717,000 2011 and $834,300 2012 as   “Accounts Receivable Due from Operating Funds” Asset and “Accounts payable Due to Reserve Funds” Liability Account. The MVF financial report version had the Reserve fund owning the Operating fund. (See Summary of Replacement Reserves 1994 to 2012 PDF)

Undesignated Operating Surplus (UDOS) is the accumulation of prior surplus and contributed capital since a Common Interest Realty Association (CIRA) was first established. There are three types of budgets, 1-balanced where income equals expenses, 2-surplus revenue exceeds expenses increasing equity, net worth or undesignated operating surplus, and 3-deficit budget where expenses exceeds income and reduced undesignated operating surplus. A CIRA’s budget policy should mandate UDOS should be sufficient working capital to pay operating funds timely, fund monthly reserve contributions and absorb unanticipated operating deficits equal to at least 10 percent of annual operating assessment, approximately $700,000 for MVF.  Based upon the MVF fiscal year audits completed by Regardie, Brooks & Lewis, and Draper & McGinley, Certified Public Accountants the Foundation’s last Undesignated Operating Surplus positive balance was $29,682 as of December 31 2001. The 2013 MVF budget is a deficit budget of ($804,153) and the proposed MVF 2014 budget is a deficit budget of ($221,809) that is going to fund these annual deficits from non-existing Undesignated Operating Surpluses.

Capital Contribution Fees (CCF) MVF has collected $93,310 CCF fees in 2012 and through September 2013 $127,424 a total of $220,424 since its inception on January 1 2012. Planned expenditures in 2014 Lake Whetstone Fountain $30,000, Apple Ridge Pavilion 30,000 and SVP CS & RR $125,000 a total of $185,000. Capital Contribution Fees have never recorded as Capital Replacement Reserve Income or deposited in a separate Investment or banking account but treated as Operating Income on MVF’s books and records and used to pay Operating Expenses.

State Grants Apple Ridge Pavilion $30,000, SVP CS & RR $125,000, a total of $155,000. This is 2.2% of MVF’s annual budget and a fraction of the capital requirements.

Summary Comments on Where did all the money go? Unanswered Questions? Part 2

Capital Replacement Reserve Funding is the mandated and most effective mechanism for setting aside and accounting for funds for future major repairs, and replacement of property and site elements and improvements. Properly used, managed and maintained, Capital Replacement Reserve Funding is designed to insure that now and in the future there will be adequate funding available to cost effectively maintain and enhance each and every common property building and site element, component and system at the appropriate time. Unfortunately, since 1992 the Foundation has substantiality under budgeted, underfunded and has diverted reserve funds to cover the continuing Maintenance Activity fund and Community Management fund deficits. (See MVF Summary of Fund Balances-Equity 2000 to 2012 PDF).

Recommendations for the MVF 2014 Proposed Budget and updated 5-Year Plan to considered at the October 24th 2013 board of directors meeting.

1. The approval of the 2014 Budget and 5-year plan should be delayed until the status and condition of assets and liabilities and equity can be determined. Upon the approval of the accounting firm of Malvin Riggins and Company PC as MVF’s auditing firm their engagement should begin prior to January 1st 2014 with initial responsibilities to examine internal controls. In addition the Reserve Study being preformed by Design Management Associates should be used as the basis of the Capital Replacement Reserve Funding 5-Year Plan.

2.The approval of the pool design studies for Apple Ridge and Stedwick Pool & Community Center rebuilding for $102,600 and $108,000 respectively and the rebuilding the replacing Apple Ridge pool and community center with the competitive swimming pool structure enhancements reconsidered.

3. The South Valley Park Concession Stand & Restroom approval should be postponed until final complete cost has been determined.