MAD RIVER GLEN COOPERATIVE
Minutes of Board of Trustees’ Meeting Held July 1, 2000
After due notice, a meeting of the Board of Trustees of Mad River Glen Cooperative was convened at 9:00 a.m. on, July 1, 2000, at the Basebox, at Mad River Glen Ski Area in Fayston, Vermont. Trustees Bleier, Coleman, Eaton, Kirkpatrick, Meier, Michl, Russell, Schultz, and Steines (comprising the entire Board) were present. The Cooperative’s president, Mr. Eaton, presided. Minutes were kept by the secretary, Mr. Bleier, with assistance from corporate counsel, Peter Monte.
Minutes of Past Meetings
After discussion and upon motion duly made and seconded, it was unanimously
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VOTED: |
To approve as corrected the minutes of the April 8, 2000, meeting of the board of trustees. |
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VOTED: |
To approve as corrected the minutes of the April 1, 2000, meeting of the owners. |
Shareholder Comments
The president informed the owners present that he proposed to introduce a new process for shareholder comments at board meetings on a trial basis. Owners present would be provided an opportunity at the commencement of the meeting to comment on any matters which were pending on the agenda for this board meeting. Following the completion of the agenda for trustees minutes, owners would have a second opportunity under A new business@ to raise any other items of interest or concern. The president hopes that this trial process will expedite the trustees disposition of scheduled issues while preserving owners an opportunity to make general comments on all affairs.
None of the owners present offered any comments on the pending agenda items.
Committees
The president invited nominations for trustees to chair standing committees. After further discussion and upon motion duly made by Mr. Michl and seconded by Ms. Kirkpatrick it was unanimously
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VOTED: |
To elect the following slate to chair each of the Cooperative’s standing committees: |
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Personnel |
Shultz |
(Nominated by Eaton, seconded by Kirkpatrick.) |
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Finance |
Michl |
(Nominated by Eaton, seconded by Kirkpatrick.) |
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Facilities |
Coleman |
(Nominated by Eaton, seconded by Schultz.) |
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Board Development |
Russell |
(Nominated by Eaton, seconded by Schultz.) |
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Shareholder Relations |
Bleier |
(Nominated by Eaton, seconded by Russell.) |
The president then requested that trustees volunteer to serve on standing committees. After discussion the following trustees were appointed to standing committees as follows:
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Personnel: |
Bleier, Eaton and Steines. |
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Finance: |
Russell and Steines. |
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Board Development: |
Bleier and Eaton. |
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Shareholder Relations: |
Meier |
General Manager’s Report
The president observed that the general manager’s written report, circulated before the meeting was sufficiently detailed that it was unnecessary for the general manager to repeat each point. The president invited the trustees to interrupt the general manager’s presentation of highlights with any questions or comments they wished to offer. A copy of the general manager’s report will be appended to these minutes.
Ms. Steines commented the naturalist program for its children’s programs as described in the general managers written report.
Robert Ackland, general manager, delivered his oral report. He began by summarizing new programs and initiatives:
Share Sales and Delinquent Shares
The general manager informed the trustees that in the future, the Cooperative will sell shares by subscription only if installments are paid by electronic funds transfer. The administrative costs of handling a multitude of $50 cash transactions are unacceptably high.
The Cooperative satisfied its goal of selling three shares during the month of June. Total sales for the fiscal year to date are 81 shares (the goal was 94 shares to date).
The general manager circulated among the trustees a listing of shareholders who were delinquent in their purchase obligations, having made no installment payments since December 31, l999. The list includes 81 shares which would represent $133,650 in net proceeds if recovered and re-sold by the Cooperative.
Mr. Meier questioned whether the Cooperative should charge the $100 transfer fees for defaulted shares noting that the shareholder would not have initiated the transaction.
Mr. Schultz inquired how many defaulted shareholders had ceased payments because they had lost interest in the Cooperative and how many had fallen on hard financial times. Mr. Hatoff responded that the division was approximately fifty-fifty based on staff inquiries. The largest number of the group, however, had not replied so their reasons were not known.
Mr. Coleman suggested that the trustees should establish a policy to guide future boards and to inform shareholders what level of default would result in forfeiture of the share.
The general manager informed the board that he was getting a mixed message. He urged the trustees to act on delinquent shares to enforce obligations owed to the Cooperative and to raise needed funds. Mr. Hatoff informed the trustees that recent staff communications to delinquent shareholders was more firm than in the past. Each of the delinquent shareholders knows that their default will force the Cooperative to borrow money or tap capital reserves to meet the Cooperative’s December mortgage obligation. Mr. Hatoff stated that it should not come as a surprise to any delinquent shareholder if the Cooperative enforces the default.
Mr. Meier suggested that any ultimate policy must recognize the dollar amount of each delinquency —- a small amount in default may not raise enough money to justify the inevitable imposition on the shareholder.
Ms. Steines suggested that the Cooperative should act now against at least the most delinquent shareholders. She suggested that the trustees could develop a more refined policy in the next few months to establish a going-forward process. After further discussion and upon motion made by Mr. Michl and seconded by Ms. Kirkpatrick it was unanimously
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VOTED: |
To declare in default those shareholders who have not paid toward their installment obligations since January 1, 2000, but to the extent possible for owners who have defaulted on multiple shares, to apply installments already made to effect the purchase of one or more full shares leaving only the remainder in default. |
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VOTED: |
To authorize the general manager to implement formal default notices in such sequence as the general manager may determine in his discretion taking into account the amount owed and the time of delinquency for each defaulted share. |
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VOTED: |
To direct the general manager to prepare for board consideration at the October meeting a draft policy to govern future action against defaulting shareholders. |
Revenues and Expenses
The general manager informed the trustees that he had prepared a revised budget, income and expense statement for the remainder of the fiscal year. The revised projections now forecast a $47,000 loss for the fiscal year ending September 30, 2000. Revisions to the budget and projections were required by unanticipated events including a $12,000 expense arising from an audit of the Cooperative’s worker’s compensation insurance payments for the last year, final calculation of March losses which were greater than the earlier estimates, and increasing expenses for the balance of the year to more realistic levels particularly in the area of facilities (for repairs) and general expenses (for worker’s compensation and medical insurance).
Mr. Michl observed that future budgets should include a larger reserve for Aunexpected@ repairs. Mr. Russell observed that staff should treat as an expense (rather than as a capital expenditure) as much as possible to minimize the Cooperative’s tax liability even if the outcome is to enlarge the appearance of operating losses.
Mr. Meier suggested that the general manager should consider deferring some planned capital projects to recover the $20,000 cash shortfall which would arise from the revised expense projections. Trustees Eaton, Schultz, Steines and Russell countered, urging that the trustees should defer to management’s discretion to cut costs to the extent necessary to avoid a cash shortfall but otherwise should proceed with planned capital expenditures. Mr. Meier then recommended that the finance committee should establish and recommend to the trustees guidelines to fix minimum cash levels required to meet operational needs of the Cooperative. Mr. Meier opined that setting this minimun-cash standard is primarily a risk analysis and policy issue for which the trustees are responsible. Mr. Meier’s policy would establish guidelines to govern staff in balancing the choice between further deferring maintenance expenditures and depleting cash.
The general manager observed that only about 20 % cent of the Cooperative’s ticket and pass revenues are derived from shareholders. Accordingly, the Cooperative depends on non-shareholder revenues for its financial survival. He concludes that the Cooperative must restore and maintain its facilities in a condition sufficient to attract outside skiers to Mad River Glen.
After further discussion it was the consensus of the board not to alter the capital budget formally but to authorize the general manager to forego planned projects if the general manager expects cash on hand to fall below $100,000 at the fiscal year’s end on September 30, 2000.
Chair Lifts
Testing of the ring gear is complete and the gear is in good order. The drive engine is in the shop for overhaul. The overhaul will cost $4,000 more than originally estimated because of concealed conditions in the motor head.
Jamey Wimble and Nate Martin have devised a new design for the single chair’s tower heads. Their innovation will provide sealed bearings on the tower heads at a significantly lower cost than the manufacture’s proposal. The Cooperative plans to test this innovation on two or three towers this coming season to confirm that the design can be used during the single’s rebuild.
A used AMighty Mite@ lift has been purchased. Staff awaits a zoning variance to install the lift.
Other Physical Plant Matters
Staff has purchased a used groomer which should provide improved trail grooming capabilities. The purchase price was below the budget for this replacement.
A new pick up truck has been purchased.
Other improvements underway or planned:
Pricing and 12 and Under Pricing Clarifications
The general manager informed the trustees that shareholder ticket prices would be $31 (weekends and holidays) and $20 (mid week).
The ‘sMad Card’s program has been revised. The card will cost $99 (rather than $79) .
There will be no cap on the number of children in the 12 and under program. (The former 1,000 limit on participants is removed.)
Budget
The president circulated a budget for fiscal year 2001 prepared by the general manager. The president informed the meeting that the finance committee had reviewed the general manager’s draft budget in May and the budget now under consideration reflects the changes in the original budget requested by the finance committee. The finance committee recommends that the trustees adopt the budget, as presented.
The general manager stated that the budget process requires the preparer to make basic assumptions to establish a starting point. The assumptions on which the present budget is based include the following:
In summary, the proposed budget forecasts the following:
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Revenues: |
$1,856,700 |
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Expenses: |
1,620,765 |
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Net Operating Income: |
$ 195,940 |
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Net Income: |
$ 10,989 (after interest, shareholder credits, depreciation and amortization) |
After discussion and upon motion duly made by Mr. Michl and seconded by Ms. Kirkpatrick it was unanimously:
VOTED: To approve fiscal year 2001 budget as presented.
Marketing Plan
Mr. Friedman presented the marketing plan. In summary, Mr. Friedman proposes to continue the plan which has been in implementation during the last two years with only minor Atweaks@.
Mr. Friedman informed the trustees that a new program initiated by the valley chamber of commerce has had an unexpected and promising level of participation. This undertaking, ASki the Valley@, is a cooperative effort of Sugarbush, Mad River Glen and sixteen participating lodges. $200,000 has been budgeted for marketing in this ASki the Valley@ plan. Visitors to the Valley may purchase an eligible ski ticket if they stay at a participating lodge B the plan allows the purchase of a minimum of three day tickets interchangeable at Sugarbush and Mad River Glen.
The general manager expressed high hopes for the ASki the Valley@ program and commended Mr. Friedman for his efforts in spearheading the chamber of commerce effort to create the program.
Policy for Opening and Closing the Ski Area
The general manager presented a written policy which staff had prepared at the trustees= request to define the decision making process for opening and closing the ski area. The general manager informed the trustees that this policy remains a work-in-progress; he was circulating it now to obtain trustee reactions and directions. The general manager’s recommended policy is predicated on the following criteria:
The general manager informed the trustees that a Abreak even@ on the marginal costs for a day’s operation was satisfied if approximately 48 tickets were sold at a $25 price. To make late skiing feasible, the general manager will open the ski area but offer no services (restaurant, bar, rental, or instruction) to reduce costs and enable the ski area to stay open longer in the spring.
Apart from the considerations of revenue and expense for opening, the decision to remain open on a particular day would depend upon:
The proposed policy would establish Thanksgiving as the opening day if sustainable snow cover exists. The ski area would remain open while demand covers at least one half of the variable costs. The Anormal@ year for budget and planning purposes would be 110 days (December 23 through April 8).
The trustees commented on the proposed policy and requested that a final opening and closing policy be presented at a later trustees meeting.
Nonprofit Foundation
The general manager recommends that the trustees support the establishment of a separate corporate entity which is qualified under Internal Revenue Codes Section 501(c)(3). (Tax qualification would allow contributors to this organization to deduct their contributions for income tax purposes.)
This new entity would have a parallel mission with Mad River Glen Cooperative B to preserve and protect the Mad River ski experience. This new entity would provide a vehicle for fund raising to sustain the naturalist program, accomplish land acquisition adjacent to the ski area, and assist in preserving historic structures at the ski area (for example, the single chair lift).
The general manager informed the trustees that to satisfy tax requirements, this new entity must be separate from the Cooperative and at arm’s length. Accordingly, the new entity must have its governance separate from the Cooperative, although there may be some overlapping between the Cooperative’s trustees and the governing board of the new entity. Because of this separation, there would be a risk that the Cooperative and the new entity could come into conflict in the future.
Mr. Michl informed the trustees that the finance committee supports the creation of such a new entity with limited purposes, initially, to minimize the risk that an independent foundation would come in to conflict with the Cooperative’s objectives. Specifically, the finance committee recommends limiting the new enterprise to:
Mr. Michl informed the trustees that he will spearhead an independent effort to form a foundation consistent with the financial committee’s recommendations and limitations.
Ms. Kirkpatrick and Mr. Russell expressed their hope that the new foundation would include among its objectives improvements for rebuilding of the single chair.
Shareholder Comments
Charlie Kettles complimented the board of trustees for their efforts on behalf of the Cooperative. He encouraged the trustees to be flexible and compassionate in dealing with defaulted shareholders.
Ken Quackenbush stated that all of the discussions at today’s trustees meetings were familiar to him from his days as manager of the ski area with the single exception of the discussion about a non-profit foundation.
Schedule For Future Trustee Meetings
After discussion, upon motion duly made and seconded, it was unanimously
VOTED: To schedule trustee meetings on the following dates (each meeting to commence at 9:00 a.m. unless the ski area is open, in which case the meeting will commence at 4:30 p.m.— all meetings to be held in the Basebox at Mad River Glen Ski Area):
October 7, 2000
November 11, 2000
December 9, 2000
January 6, 2001
Executive Session
The trustees entered executive session at 12:05 p.m. to discuss contract matters. The general manager and legal counsel were invited to attend the executive session. The trustees resumed open session at 12:30 p.m.
Adjournment
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 12:30 p.m.
A true record.
ATTEST: ___________________________________________
Robin ‘Rocky’ Bleier, Secretary
Attachments to These Minutes: General Manager’s Report.
