Board of Trustees Meeting Minutes November 13, 2004








MINUTES OF MEETING – Draft Pending Final Approval

November 13, 2004



<![if !supportLists]> a.      <![endif]> Management Report

<![if !supportLists]> b.      <![endif]> Financial Report (requires MS Excel)

<![if !supportLists]> c.       <![endif]> Water and Septic Easement Policy




After due notice, a meeting of the board of trustees of the Mad River Glen Cooperative was convened at 1:11 PM on November 13, 2004 on the 3rd floor of the Basebox at Mad River Glen Ski Area in Fayston, Vermont.


Trustees Alan Moats (Board Chair), Jay Appleton, Paul Finnerty, Bill Reynolds, Mary Schramke, Leigh Michl, Rick Moulton, Deb Steines, and Jed Kalkstein were present.No trustees were absent.Also present was President Jamey Wimble and several shareholders.



Board Chair Alan Moats called the meeting to order at 1:05 PM.



Upon motion duly made by Deb Steines and seconded by Paul Finnerty, it was unanimously


VOTED: To accept the minutes of the September 11, 2004 board of trustee meeting, as written.


VOTED: To accept the minutes of the ShareholderTown Meeting of October 2, 2004, as written.




Bill Heinzerling made several suggestions.He felt that MadRiver should de-emphasize woods skiing and be seek inclusion on the National Register of Historic Places.He also suggested the resumption of Facilities Committee meetings.Irma Heeter asked about the status of planning for the 10th Anniversary Celebration.Lu Putnam felt that the board should be more responsive to Shareholder initiatives, such as the interest in anniversary celebration.A discussion ensued as to the proper role of the board. The consensus of the board was that decision regarding Co-op social gatherings did not fall within the scope of the board’s responsibilities.Jamey Wimble indicated that planning was underway for a party to acknowledge the Co-op’s 10th Anniversary.



Mr. Wimble presented a written report on developments during the prior month (copy attached).In response to a question from Deb Steines, Mr. Wimble stated that their may be an additional Town Meeting in January to provided further detail on the status of the Single Chair project.Mr. Wimble noted that there will be a Mad River New Year’s Eve Party this year.Mr. Michl commended management for the early mountain preparedness.


There was a question about the decline in the number of seasons pass sold to date this year.Mr. Wimble felt that the lower pass unit sales related to the elimination of the “second pass discount”.With the elimination of the second pass discount, Mr. Wimble felt that more shareholders had elected to have their spouse buy Mad Cards, rather than a pass.Mad Card revenue was up significantly versus the prior year.Therefore, the overall pre-season revenues were on plan and well ahead of last year, however, the mix of pre-season revenues had changed.Mr. Kalkstein felt there was insufficient evidence to conclude support management’s assertion that MadRiver’s pass pricing had “reached the ‘inelastic’ area”.



Mr. Wimble provided the board with income statements for the month of August (copy attached).



Mr. Kalkstein discussed the Finance Committee’s review of the draft fiscal year 2004 audit and the question of a patronage rebate.The Finance Committee recommended that the Co-op not declare a patronage rebate based on significant future cash requirements and the lack of net profitability.Mr. Wimble concurred with this recommendation.The full report of the Committee is attached.


Upon motion duly made by Jed Kalkstein and seconded by Deb Steines, it was unanimously


VOTED: Not to declare a patronage rebate for fiscal 2004.


Upon motion duly made by Deb Steines and seconded by Jed Kalkstein, it was unanimously


VOTED: To accept the findings of the audit for fiscal 2004.



Mr. Wimble noted that Co-op counsel had prepared a memorandum to the board related to share redemption requirements.The general nature of the memo was discussed.Counsel indicated that Co-op Bylaws provided for shareholder redemptions, but that the required timing of the redemption was not clear.


A discussion ensued regarding management’s recommendation that a maximum of 20 shares be redeemed per year.The board discussed a variety of other mechanisms to honor the requirement to redeem share but preserved Co-op cash for major capital expenditures.An inaccuracy in the redemption policy on the MadRiver web site was noted and corrected.


There was question as to the proper redemption payment amount.Mr. Wimble stated that shares were redeemed at purchase price plus accumulated patronage rebates.There was a lengthy debate regarded the inclusion of cumulative losses as a reduction to a shareholder’s redemption amount.


The board discussed the suggestion of a new redemption policy whereby one share would be redeemed for each two new shares sold.


The board suggested that management report back on a proposal, to be voted upon at the next meeting, whereby (1) shares would be redeemed at a maximum rate of one redemption per two new shares sold and (2) the amount of the redemption would include an allocation of cumulative net losses of the Co-op to an individual shareholder’s account.It was also suggested that management clarify with counsel whether verbal statements that may have been made during the share sales process would be held as binding, even though these statements conflict with the actual terms of the Co-op legal documents as acknowledged by the shareholder at the time of actual share purchase.



Mr. Wimble noted that the process of examining and pricing the renovation of the Single Chair was underway and that he was examining details such as vendor selection, pricing, etc. Although more information still needed to be obtained, it appears that a restoration of the Single (including improvements for safety and reliability) could be the most cost effective option, as compared to installing a new double chair or a new single.The board also noted that, regardless of the option chosen, there would be no increase in uphill capacity.The goal of the restoration option would be to provide reliability what equaled or exceeded a new lift.


Mr. Wimble stated that, although the drive portion of the project was fairly well understood, the line portion of the project was not.He presented some details of his findings since the last meeting.The board asked several clarifying questions regarding the nature and timing of tower tests, shieve design, and other details.The board and shareholders commended Mr. Wimble regarding his knowledge of the project and grasp of details.


A discussion ensued regarding how to communicate the status of Mr. Wimble’s findings.The consensus of the board was to communicate interim findings through the list serve, minutes, and the MadRiver web site.


It was noted that, even in a renovation scenario, the Single would have new chairs.The Co-op would sell the old chairs as a method of generating cash.




Facilities Committee – The proposed Water and Septic Easement Policy was discussed and approved (copy attached). The board agreed to address utility and access easements in the future under a separate policy.It was noted that the wording of easements included indemnification of the Co-op.


Shareholder Relations Committee – Mr. Moulton discussed the need for management to fill the Shareholders Liaison position that had been assigned and filled so effectively by Andrew Snow. As one of his tasks, Andrew attended the SRC meetings and, since his role has not been reassigned, having a management liaison is missed by the committee. Mr. Wimble suggested that the topic be pursued outside of the board meeting.


There were no other committee reports.



There was no Executive Session and, there being no further business to come before the board, the meeting adjourned at 3:10 PM.


Respectfully submitted, Leigh Michl


A true record.




Leigh Michl, Secretary

Management Report

Mad River Glen

November 13, 2004



All lifts are inspected and ready for 04/05 season. Snowmaking will begin around Thanksgiving when temperatures allow.


All department heads will be returning once again this season. We are bringing in 10 international workers again this season.


The focus of pre-season orientation will be customer service. This is one area that we can use some improvement in.


Eric has been utilizing our “cooperativeness” to gain more exposure. A breakdown is attached for review.


The only capital project not complete is the phone system. They should begin work this week. Total capital dollars spent should be very close to our budgeted mark of $120,000.


New EMS uniforms for the staff should be here within the next two weeks. Should be a sharp looking crew.


The most recognized change at the mountain this year will be 16oz drafts in the pub!



Jan Lenard and I have had much conversation discussing specific components of the rebuild so that we can get a qualified bid number on the rebuild. This is taking longer than originally planed. Depending on our findings in the next 2-3 weeks we may want to consider moving the holiday town meeting out to January to have a comprehensive layout for the shareholder. We are in a fortunate situation this time because we do not have to make decisions without looking at all the possibilities. When retrofitting a ski lift one move causes a domino affect to the rest of the lift. Especially when it is 57 years old. Not as simple as putting in a new drive and hitting the start button.


Pre-Season sales:

Dollar volume wise passes are down 1% from last year. Ski school is up 23% and race up 6%. Mad cards are up 25%. Total pre-season dollar figures are $50,000 ahead of last year. We achieved our goals on the income we needed to bring in preseason. However we did see a drop in pass numbers. We are down about 6% from last year. The first drop we have seen since the Coop took over. We feel we have hit the “inelastic” area of pass pricing. Tickets are still a question. We will see how the year unfolds. Giving the economy and aggressive moves our competition has made this year we feel good about where we are.


Share sales:

13 shares were sold in the month of October against a budget of 4. We transferred 6 shares to preservation shares and tendered none. 10 shareholders that have multiple shares transferred them to other family members to get additional shareholder discounts. Management is recommending to the board that we cap share redemption at 20 total redemptions per fiscal year to maintain a budget of 20 net share sales.



October P&L income is down due to pass volume decrease in pass volume. Increased income from Mad Cards is not shown in P&L. This number remains on the balance sheet until they are redeemed. Expenses are down but there are still some to enter. This number will go up. See attached report. We have $829,000 cash in the bank. $300,000 of that is the single reserve. Our cash position is $100,000 ahead of last year at this time.

Guidelines for Grant of Water and Septic Easements

Purpose of these Guidelines and Background

The purpose of these Guidelines is to articulate the considerations that should govern Mad River Cooperative in considering requests that the Coop grant easements for water supplies and septic disposal fields to be located on the property of Mad River Glen Ski Area.

There are numerous homes built near the ski area. Many of these homes may need replacements or improvements for their water supply and septic disposal fields that cannot be installed on the home’s lot. The Coop has already received requests from neighbors for easements to use ski area property for these purposes and the Coop anticipates numerous more requests in the future.


The Coop values good relations with its neighboring homeowners. Many homeowners are also owners of the Coop or ski area patrons, or both. The Coop enjoys tangible benefits if neighboring properties are well maintained and suitable for occupancy, and if friendly relations are encouraged to minimize neighbors’ objections to ski area activities.


The Coop’s trustees have a fiduciary duty to protect the Coop’s real estate from encroachments that could interfere with future operations of the ski area, and a fiduciary duty to receive fair value for all property rights the Coop conveys to others. The grant of easements for water or septic systems on property of the ski area inevitably has some limiting effect on the ski area. State law imposes a 200 ft circle around water wells that limit the Coop’s activities in that area. The grant of an easement for a septic system not only limits the Coop’s activities in the affected area, but also carries potentially serious financial costs if the septic system is ever misused and environmental contamination results.


Thus, to protect the Coop’s important interests, the trustees must always follow a defined, analytical process to decide whether and in what manner it may grant requests for water supply or septic disposal easements


The Process to Decide Whether to Grant Easements and the Issues to Be Considered:


1. By whom will the Coop’s decision be made?

The Coop’s board of trustees must ultimately decide whether and on what terms the Coop will transfer property rights. The Coop’s bylaws allow the trustees’ executive committee to make these decisions if there is not adequate time to decide these questions before the trustees next meeting.


Typically, the general manager will receive requests for water or septic easements, evaluate whether and how to respond, and what price to charge, and make written recommendations for action to the trustees or executive committee. The trustees or executive committee will make the final decision, and the decision will be made no sooner than 29 days from the date of the request, and will use their best efforts to act within 60 days.


2. Must a requested easement be denied because the easement may impair future operations of the ski area?

The Coop must deny requests for easements that may create a new and material limitation on the future operation or modification of the ski area. Easements are perpetual once granted, so the Coop must protect not only present operations and planned changes, but it must also consider whether the area of the easement might ever be useful for ski area operations. Although the limitations resulting from any single easement may seem minor, since it is likely that neighbors will seek numerous easements over time, the Coop must guard against all significant encroachments in order to avoid the aggregate effect of these minor limitations.


For example, the Coop must refuse to grant an easement for a septic system that would obstruct passage by snow cats or other vehicles in areas where present or possible future travel by these vehicles may be necessary for efficient operations. Similarly, the Coop must decline to grant easements for septic systems that would occupy areas the ski area may need for its own replacement leach fields or any other development of ski area improvements in the future.


Similarly, the Coop must decline to grant easements for wells or water lines if those structures (or the well’s 200 ft diameter circle of protection) may obstruct present or future operations of the ski area, or occupy areas where the ski area may need to locate structures to other improvements in the future.


Often the decision may be complicated by extreme hardship of the requesting homeowner. There may arise circumstances where the failure of the Coop to grant an easement would destroy or very severely damage a neighbor’s ability to use his property. In such cases of extreme hardship, and if the possible harm to the Coop’s future plans is minor or more speculative, it may be acceptable to allow a grant that would have been denied absent the hardship.


3. What rights should the Coop reserve to use the area subject to the easement?

The Coop may be able to grant easements in areas the Coop may use itself if the Coop can reserve adequate rights to share use of the affected area. Because the future needs of the ski area cannot be predicted with certainly, the Coop should always reserve rights as broadly as possible whenever it grants easements.

Unless such reservations would render the easement useless for septic or well purposes, the Coop should always reserve the following rights:

  1. The right for the Coop and its agents and contractors to enter upon the affected area
  • to inspect and test the grantee’s improvements and the area soils, and
  • to exercise any and all reserved rights.
  1. To use the granted area for skiing, hiking, snowshoeing, and all other recreational purposes, and to install, maintain, improve, repair and replace improvements and to change the grade of the soils for any of these purposes so long as the improvements and re-grading do not interfere unreasonably with the then-current use of the area for the purpose of water supply (or septic disposal, as applicable).
  1. To plant, care for, cut and remove trees, brush and other vegetation in the affected area.
  1. To build, maintain and use roads and drives and to direct the flow of associated surface water drainage.
  1. To install, maintain, improve, repair and replace utility conduits above and below ground across the area (including lines and conduits, and associated poles and related equipment, for water, sewer, electricity, and all forms of communications).
  1. To terminate immediately the use of any septic disposal system that is found to be discharging any petroleum product or other material classified as hazardous, improper, unsafe, or environmentally contaminating under any present or future law or regulation of any governmental authority with jurisdiction over the area.

4. What other protections must the Coop require from the users of easements?

Easements for septic disposal fields carry inherent legal risks because irresponsible persons may use the field to dispose of hazardous or dangerous materials. As the owner of the land where such materials would be deposited, the Coop is legally responsible for any environmental clean up, and the costs can be staggering. The Coop cannot evaluate these risks based on the personality of the first grantee of the easement because the perpetual lifetime of the easement means that inevitably it will be used in the future by persons whom the Coop cannot now identify or evaluate.

If the Coop is not the owner of contaminated land, it is not liable for the costs of environmental clean up should contamination occur. Therefore, the Coop should always consider whether, rather than granting an easement, it is preferable to transfer full ownership of the area in question.

If the Coop transfers full ownership, the Coop should also insist whenever possible to:

  • Reserve appropriate rights to avoid potential loss of use if the area may be important to the ski area’s future; and
  • Limit the grantee to use of the area for the intended purpose and require that such use be only in accordance with all applicable laws and regulations to minimize the risk that any contamination would flow onto the Coop’s retained properties.

Unlike the grant of an easement, the Coop’s transfer of full ownership imposes permitting requirements that add substantial costs and delays for surveying and permitting. The Coop may balance these additional costs to the neighbor when deciding whether to grant and easement or to insist on a conveyance of ownership.

If the Coop decides to grant an easement, it should always include in the conveyance a covenant that obligates the grantee and all successors in title to indemnify and hold the Coop harmless from and against any and all costs, including attorneys fees, that may arise from use of the easement.


5. How much should the Coop charge?

The Coop should not bear the expenses of a transfer that is initiated for the convenience and benefit of another person. So in all transactions, the Coop must require the grantee at closing to reimburse all out of pocket costs of the transaction, including but not limited to, the Coop’s attorney’s review and advice, and, if applicable, for technical advice and for surveying and permitting expense.


In addition, because the Coop legally cannot make “gifts” the Coop must charge a fair and reasonable price to grant an easement, or to sell land, to any other person. To satisfy this legal requirement, the Coop must set a price that fairly reflects the value of the property rights lost to the Coop by the grant, and the value of the benefits conferred on the grantee.


The Coop will determine the fair and reasonable price for its grant by measuring the area affected by the transfer, and then determining the current fair market value of comparable lots in the area. A full appraisal may be needed in some cases, but typically, this evaluation may be made by reference to town tax assessments, State statistical analysis of listed values, and/or recent sales of comparable lots. The Coop will typically charge less than the full sales price for comparable lots because of the rights the Coop will reserve, or the restrictions the Coop will impose, on the area transferred. Ultimately the final price will be set by a case-by-case judgment process.


Post Transfer Documentation

Staff handling the transfer should prepare a memorandum to preserve a record of the rationale and calculations for each transfer. This record will assist in assuring that later transfers conform to a consistent policy and procedure, and (if the Coop decides to disclose the memo) will demonstrate to others in the transaction that their treatment was consistent with prior transfers.


To maintain its property records, the Coop should keep copies of all transfer documents (deeds, surveys, tax forms, etc.).


The Coop should create and maintain a master property ownership map on which each new easement or conveyance is depicted (by sketch at least).