After due notice, a meeting of the Board of Trustees of mad River Glen Cooperative was convened at 4:45 p.m. on February 12, 2000, at the Basebox, at Mad River Glen Ski Area in Fayston, Vermont. Trustees Bleier, Eaton, Meier, Michl, Russell, Singer. Absent were Trustees Schultz and Kirkpatrick. The president, Mr. Meier, presided. Mr. Russell was appointed acting secretary to keep the minutes of the meeting with the assistance of corporate counsel, Peter Monte.
After discussion and upon motion duly made and seconded, it was unanimously
VOTED: To approve as corrected the minutes of the January 12, 2000, meeting of the board of trustees.
Mr. Bleier objected to the trustees entering executive session to discuss filling the vacancy created by Mr. Curtis’ resignation from the board of trustees. Mr. Bleier believes it is contrary to the bylaws to have entered executive session for this purpose and the excessive use of executive sessions by the board is an illustration of the non-democratic processes in which the board of trustees too often engages to the exclusion of owner involvement. Mr. Singer stated that he agreed philosophically with Mr. Bleier’s objection. Mr. Bleier’s full statement is attached.
The president circulated a letter from David Conna inquiring whether the single chair committee had met without notice to him. Staff will inform Mr. Conna that there has been no meeting of the single chair committee to which he was not invited.
David Healey thanks the Cooperative for their accommodation of the Cochran’s youth skiing program by making Mad River available when Cochran’s had no snow.
The president circulated three letters from owners regarding the Fayston education fund. The owners objected to the Cooperative’s communication regarding the Fayston education fund solicitation for monies. The general manager will respond clarifying that the Cooperative neither endorses nor opposes the efforts of the Fayston education fund.
The president circulated three letters in support of the twelve and under free skiing program. These and other shareholder letters in favor or opposed to the twelve and under program will be considered in the program’s evaluation at year’s end.
Owner Bill Medrano wrote a letter commending the general manager on his recent article in the Chute, and reprinted in the latest issue of the Echo.
Bob Ackland, the general manager, delivered his report. The general manager reported that before the last week in January, financial results at the ski area placed the Cooperative $259,000 behind this year’s budget and $250,000 behind last year’s performance. Beginning with the last week in January, the financial situation has improved with better skiing conditions and the ski area has exceeded budget projections during each of the last three weeks. The general manager told the trustees that he would close his report today with a series of financial projections for the remainder of the year and a request that the trustees evaluate before the next meeting its budget for capital expenditures for the remainder of this fiscal year.
The general manager next summarized operations at the ski area. Staffing continues to be a problem but it has not required management to alter lift schedules. The addition of more part time employees and required overtime have allowed operations to continue unaffected by staffing shortages.
The general manager has received a number of inquiries from patrons of the ski area regarding the increase in lift stoppages this season because of wind hold. The general manager acknowledged that there has been an increase this season in wind hold. This increase has been due in part because this season has experienced more periods of high winds than in the past and the ice storm and hurricane damage to the forest has altered the canopy and made the lifts more susceptible to wind hold. In addition, management will no longer risk derailment of lift cables when lift operating conditions are marginal.
Snow making operations have ceased because the brook supplying water for snow making no longer has an adequate flow.
Ski school and rental programs have been sold out for the last three weeks. The environmental program is also doing well. 694 passes have been picked up for the twelve and under program. Management has not discerned any overcrowding because of the presence of twelve and under skiers.
The general manager reported on share sales: 7 shares sold in January (the goal was 10). 51 shares have been sold to date against a season goal of 110 shares. Total shares sold to date are 1,921. The general manager provided the trustees with a list of shareholders who are delinquent on installment payments.
The general manager plans to continue with marketing as budgeted. The budget includes a reserve for a special push if weather conditions warrant during the remainder of the season. A new issue of the Echo is in the mail. Mad River Glen Ski Area was featured in a recent article in the Wall Street Journal. In addition, the Hartford Courant ran an article on the ski area which has been reprinted in many other papers nationwide.
The general manager circulated a report on usage for the new valley transit system. Management’s assessment is that rider ship is improving and this public transportation has a potential to increase mid week group patronage at the ski area through tie in with lodgings in the valley.
The general manager has analyzed increase in expenses as shown on the Cooperative’s audited financial reports for 1996 through 1999. He circulated a copy of his analysis to the board. In summary, there has been a $220,000 annual increase in expenses from l996 to l999. A major component of this increase is explained by the fact that the 1996 expenditure levels represented a continuation of operations under prior ownership. The general manager believes that the prior owners levels of operations were too low to be sustainable and, therefore, subsequent budgets of the Cooperative necessarily show an increase in expenditure levels. The general manager attributed the balance of the increase in expenditures from 1996 to 1999 to the provision of additional services demanded by the shareholders. The general manager noted that there has also been an increase in revenues which partially offsets these additional expenditures.
The general manager has appointed an informal working committee to assist staff in evaluating prospects for a ski shop operated by the Cooperative. Owners Aiken, Geurtin, and Viet are members of that retail shop committee. The committee concurs in the general manager’s recommendation that the Cooperative should renew the Alpine Options lease for at least one year and at the time of renewal the Cooperative should request certain improvements in the operations and offerings of Alpine Options.
The general manager summarized financial results of operations for the month of January and year to date as follows:
|
Income |
Expense |
Profit (Loss) |
|
|
January |
$210,000 |
$230,600 |
($20,315) |
|
YTD |
$690,629 |
$624,232 |
$66,398 |
|
Capital Expenditures: |
$46, 481 |
||
|
Cash on Hand: |
$455,000 (Before payment of accounts payable now due). |
||
The general manager stated that poor ski conditions before the third week in January will result in the Cooperative’s failure to attain its budgeted profit this year. Management has a very limited capacity to reduce operating expenses. So the trustees should begin evaluating the changes in variable expenditures which the Cooperative must make because of its revenue shortfall.
The general manager believes that capital expenditures are the primary variable within management’s control, so he recommends that the trustees focus their attention on capital planning. The general manager has also performed his comprehensive assessment of the Cooperative’s capital improvements for the next five years including lifts and other infrastructure of the ski area.
The general manager circulated to the trustees and owners in attendance a comprehensive written analysis of his projections of revenue and expenses for the balance of this fiscal year and a comprehensive analysis of his recommendations for capital expenditures for the next five years including a listing of recommended projects and the amount and timing of expenditures for each.
The general manager’s current-year analysis show a $40,000 operating loss if revenues for the balance of the fiscal year meet projections and an operating profit of $50,000 if revenues conform to a typical “good” spring ski year. If the Cooperative experiences a $40,000 loss, it will end the year with $91,000 cash in hand, a minimum level.
The revised capital budget includes more complete and updated figures for the projected cost of rebuilding the single chair lift. These new figures show the cost to replace the drive this summer would amount to $271,000. The general manager explained the revisions from the former estimate of $150,000 which justify the new, higher estimate.
The general manager recommended that the trustees defer the single chair drive station rebuild and confine work this summer to rebuilding the drive motor ($6,000), testing the ring gear ($1,000) and sighting the line ($500).
The general manager hopes that these minimal expenditures will buy one or two years of time while the Cooperative defines and implements fund raising which will be required for a complete rebuild of the single chair drive equipment. The general manager cautioned, however, a failure of the ring gear in this summer’s testing would require that his new plan be scrapped in favor of far more expensive alternatives.
The general manager’s report detailed capital expenditures he recommends for the 2000-2001 capital budget to address:
The general manager provided detail of the additional capital expenditures he would recommend for each of the fiscal years ending 2001 through 2005. These expenditures would total $2.2 million. The general manager believes that each proposed project is necessary to correct past deferred maintenance and to place the ski area infrastructure in a sustainable condition. The general manager noted that these expenditures would total between $750,000 and $1,000,000 more than will be available from operations of the ski area during the relevant period.
The general manager requested that the finance committee and the entire board of trustees should make it their highest priority to determine how this million dollars in funds required for capital expenditures can be raised and to implement a specific plan to provide those funds.
Commenting upon the general manager’s presentation, Mr. Singer stated that his reading of the audited financial statements indicates a much worse cash flow scenario. He said that the statements as printed mislead the reader into believing the negative cash flow was approximately $78,000 for the year ended September 30, 1999 when, in fact, the true negative cash flow was a number in excess of $200,000.
The board and shareholders present requested him to detail the basis for this statement, including it in writing. He agreed to present an oral and written explanation at the next board meeting.
The trustees and shareholders present thanked the general manager for his comprehensive and detailed analysis. The trustees recognize that it is a core function of the board of trustees to evaluate the Cooperative’s capital requirements and to devise and implement the plans required to provide the Cooperative with the capital funds it requires. The trustees referred to the finance committee the general manager’s report.
The finance committee will evaluate the general manager’s capital plans and will explore and recommend to the full board sources of funds to pay the required capital costs. Before the March meeting, the finance committee will develop specific recommendations about whether the Cooperative should proceed in the summer of 2000 with its existing plan to upgrade the drive station for the single chair lift.
The trustees scheduled the next meeting of the board of trustees for March 18, 2000. At 4:30 P.M. in the Basebox. The meeting is delayed from March 11 to avoid a conflict with the telemark festival and to allow one more week’s financial results to accrue before the trustees decide what changes are required for the remainder of the year’s capital plan.
Trustees entered executive session at 6:45 p.m. to discuss personnel matters. The general manager, assistant general manager and legal counsel were invited to attend. The trustees resumed open session at 7:25 p. m.
There being no further business to come before the meeting, after discussion and upon motion duly made and seconded it was unanimously
VOTED: To adjourn.
Adjourned accordingly at 7:26 p.m.
A true record.
ATTEST: __________________________
Allan Russell, Acting Secretary
