Budget & Meeting

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Harbor Ridge Condominium Association Special Meeting Agenda

Saturday, December 7, 2024—10:00 a.m.

Annual Meeting Documentation and Zoom Information to be provided on December 5, 2024

1. Call to Order

2. Roll Call of Officers

3.  Election of Officers

4. Consideration of ratification of proposed annual budget

5. Transaction of such business as may properly come before the meeting

6. Adjournment 

¹Seven percent of the assessment total is set aside in a reserve account for maintenance, repair and replacement on a periodic basis of common elements, limited common elements and limited common property for which the Association is responsible and to cover deductible amounts for any insurance policies maintained by the Association.

NOTE: The budget has been prepared based upon what Harbor Ridge believes to be the best current estimates of future costs currently available, such as current and past operation and maintenance costs of the property or of similar properties. In preparing the budget, Harbor Ridge has assumed that all the units will be occupied during the one-year period which the budget covers and that there will be a nominal inflation rate. These estimates are not intended, nor should they be considered, as guarantees or warranties of any kind whatsoever.

Condominium Association Special Meeting Minutes

 Saturday, December 7, 2024 at Harbor Ridge and via Zoom

President Linda Connelly called the meeting to order at 10:05 AM.

Those present at Harbor Ridge: Linda Connelly, President; Jan Franz, Treasurer; Jay Hewett, Secretary; David Ezzio, Member; Margaret Austin, Manager and Annette Bartlett, Manager.  Present Via Zoom: Amy Lytle, Member.

Four owners were present in person and 11 owners were present via Zoom.  All in attendance introduced themselves and their timeshare experiences for the benefit of the group.

Election of two expired Board positions was next on the agenda.  The outgoing Board members included Jan Franz, Treasurer and Jay Hewett, Secretary. Four candidates vied for the two vacancies. Votes received by proxy and from Owners present were as follows: Jay Hewett – 245, Chris Lyford – 181, Dan Mosley – 95 and Kurt Zemba – 92.

To elect a member to the Board the by-laws require a minimum a quorum of 408 votes. A total of 328.50 proxies were received plus an additional 200 votes were available from the HOA; thus, a quorum was present. Jay Hewett was re-elected, and Chris Lyford was elected to be our newest board member. Each term is for five years.

Margaret and Linda thanked Jan Franz for her 20 years of service to the Board of Directors.  Her accounting knowledge was very helpful to the resort.

Resort Manager Margaret Austin reviewed the proposed income budget for 2025. The financials were presented as of October 31, due to a number of accounting transactions in November that needed our new accountant’s advisement.

She then provided a thorough overview of the income portion of the Profit & Loss comparison for January through October 2024 with the 2025 proposed budget adopted by the Board at its September meeting. A question from Owner Mike Zelinski focused on the reduction in rental income over the recent post-COVID period. The management response indicated that there have been fewer rentals since the pandemic and that, of these rentals, fewer were for full-week rentals. Thus, a forward-looking projection is to reduce expectation of income from this source.

Manager Annette Bartlett reviewed the proposed expense budget for 2025 in the context of recent 2024 experience. As with the discussion of income, the various line items were explained as to what they represented.

A major unplanned expense in October was the need to purchase a new truck. The existing truck would not pass inspection, and repairs would have far exceeded its remaining life-time value.  So, a good used pick-up with a snowplow was purchased through a dealership with a three-year warranty.

Bad-debt expense was explained as being the write-off of unpaid maintenance fees.  Budgeted maintenance fees are booked at the time they are due to be paid by Owners, whether they have actually been paid or not. Efforts to collect unpaid fees persist over a period of three, sometimes four, years.  In December a decision is made to write off bad debt to minimize income taxes.

Another recent expense we chose to incur was to connect the internal fiber-optic wi-fi system to the Consolidated Communications fiber optic line on Freeman Ridge Road.  This provides a significant increase in internet speed and streaming capacity.

Contributions were made to two fire departments that responded to a brush fire on the wooded border of our property.

Insurance costs continue to climb; thus, we must budget accordingly.

Owner expenses have dropped slightly due to less interest as indicated by fewer sign-ups and no-shows at wine and cheese and breakfast events.

Payroll expenses are up because of wage rates needed to compete for workers in the expensive MDI labor market.  During COVID, these expenses were down because salaried management staff covered front desk duty when suitable staffing was not available.

Property Tax expense will be lower in 2025 because the recent revaluation increased property valuations for shore frontage while maintaining inland values approximately the same. Thus, the mil rate will go down and with it, our tax bill.

Repairs and Supplies includes all the exterior and interior repairs and replacements like roofing, plumbing and heating, housekeeping supplies, furniture and appliances, etc.  We experienced four heat pump failures within a three-week period this summer. They are all original installations and were 9 years old.  We can expect to need more replacements going forward.

The utilities category includes fuel, electricity, sewer, water, internet, and cable  costs. We are able to project lower costs overall for 2025 because we have an electricity supply contract with C.N. Brown, which is very helpful in relation to the PUC’s “standard offer.” We also have a fixed-price contract for fuel oil at a much better price than we paid in 2024.

Several questions from the audience were fielded by management. Answers included a discussion of lighting to say that bulbs are replaced with LEDs with the exception of 3-way bulbs which continue to be replaced with incandescent bulbs because the LED equivalent bulbs are very expensive and seem not to last as well as single wattage LEDs. Questions about heat pumps revealed that their original installation saved us about 5000 gallons of fuel oil per annum. Further, heat pumps are dual-mode and provide both heat and air conditioning as the season requires.  Occupants have control of both the mode in use and the temperature set points. Further, while air conditioning in the upstairs bedrooms may be desirable, the new skylights provide cross ventilation and make a second unit less necessary.  The possibility of obtaining wind and solar power was raised. This has been extensively reviewed in the past and found not feasible for on-site installation.  However, a new study was suggested and Board member David Ezzio volunteered to, again, review the feasibility of on and off-site installations for solar and wind energy.

A motion “To approve the budget as presented” was requested.  Owner David Leissner moved and Dan Mosely seconded: “To approve the budget as presented”.  All present in person and via Zoom approved; there were no “nay” votes.

In a final discussion, Karlene Additon-Strout asked if we had ever considered using refillable soap and shampoo dispensers rather than the individual cakes and tubes now offered.  Management indicated that we had thought about it. It is not considered to be a significant cost-saver and may increase the housekeeping labor to keep them filled and in repair.  That said, we will research the available products and if a stable and cost-effective product line is found, we will give the idea additional consideration.

It was noted that the audio quality of the speech going out to the Zoom participants was poor while that of the Zoom participants coming into those present in person was pretty good. This is an ongoing problem that affects our Board meetings as well and is under review for improvement going forward.

There being no further business or discussion, the meeting was adjourned at 11:12 AM.

Respectfully submitted by Jay Hewett, Secretary

Condominium Association Special Meeting Minutes

 Saturday, December 2, 2023 at Harbor Ridge and via Zoom

President Linda Connelly called the meeting to order at 10:01 AM.

Officers Present at Harbor Ridge: Linda Connelly, President; Jan Franz, Treasurer; David Ezzio, Member; Margaret Austin, Manager and Annette Bartlett, Manager.  Present Via Zoom: Dianne Lytle, Member; Absent: Jay Hewett, Secretary due to out-of-country travel.

There were two owners in attendance in person, and another five owners were in attendance via Zoom. All in attendance introduced themselves and their timeshare experiences.   A quorum requires 408 votes. Votes by proxy from owners and in person:  343.5; votes available from HOA were 178; thus, a quorum was present. Proxy votes for Curtis Brooks: 123.5; Linda Connelly: 241; William Hayes: 85; Amy Lytle: 191.5; and Secretary for unspecified votes: 21.  Thus, Linda Connelly and Amy Lytle were elected to five-year terms.

Resort Manager, Margaret, gave condolences to the family of Lee Brown, our accountant at Harbor Ridge, who unexpectedly passed away in August. Management recently met with the new accountant, and there may be some slight differences in how to account for certain expenses and income going forward.  Margaret reviewed the proposed income budget for 2024 and the actual income figures through November 30, 2023.  While some line items were above budget, others were below.  Gift shop and owner getaway rentals were down; however, some winter long-term (more than 30 days) rentals have been secured.  Legal fees, owner charges, and interest exceeded projections.  The resort will be modifying rental rates in 2024 to be more comparable with Air BnB rentals on the island.  Various transaction fees will increase, such as bonus weeks, legal fees, and internal exchanges.

Resort Manager, Annette, explained the expense line items. Harbor Ridge uses accrual base accounting, and bad debt expenses will be incurred in December.  The credit card fee structure was negotiated.  The contract line is down considerably as the current pest services provider just terminated its agreement.  The insurance line item is down due to worker’s comp and health insurance.  Harbor Ridge has the lowest number of employees ever; thus, payroll is down. Our core staff has really stepped up, and we are so grateful!  Repairs and supplies are down, as Building 1 skylights have just been ordered.  This spring will be our last unit roofing project. Property taxes increased $11,181.23 over last year.  Supplies increased due to linens, large appliances, and housewares.  Bill Sweeney asked about the Reserve line.  Annette directed him to our money market and certificate of deposit numbers on the balance sheet. Joe Guaraldo and Karlene Additon-Strout inquired about solar at Harbor Ridge. The board has looked at solar and wind, and the payback period is too long.  The directional location of our buildings is also not conducive to solar on the roofs or on the ground.  Our location high on the ridge is also troublesome with extreme high winds and rain.  Our electrical supply contract is very competitively priced.  The board has felt that there are other investments with better paybacks financially with greater owner and guest satisfaction.

Lori Wiswell asked about the homeowner association owned weeks.  There are 178 deeded weeks, and they have been utilized for rental income, roofing loss of use weeks, and weeks lost during COVID.

David Ezzio moved to accept the budget; Jan Franz seconded the motion, and the budget was accepted.

Linda gave accolades to Dianne Lytle for her service on the board and wished her the very best!

There being no further business or discussion, the meeting was adjourned at approximately 11:00 AM.

Respectfully submitted,

Annette Bartlett, Secretary pro tem

Condominium Association Special Meeting Minutes

 Saturday, December 3, 2022 at Harbor Ridge and via Zoom

President Linda Connelly called the meeting to order at 10:01 AM.

Officers Present at Harbor Ridge: Linda Connelly, President; Jan Franz, Treasurer; Jay Hewett, Secretary; Margaret Austin, Manager and Annette Bartlett, Manager.  Present Via Zoom: Dianne Lytle, Member; Absent: Jim Nicholson, Member.

Seven owners were in attendance in person, and another eight owners were in attendance via Zoom. A quorum requires 408 votes. Votes by Proxy from owners: 325.5; Votes available from HOA: 166 thus, a quorum is present. Proxy Votes: for David Ezzio: 166; for William Hayes: 136.  David Ezzio was elected to a 5-year term of office.

Manager Margaret Austin reviewed the proposed income budget for 2022.

The various line items were explained as to what they represented. Line item amounts were not discussed in specifics, but were relatively consistent with previous years.  Adjustments were made for the current economic conditions and the impact on the Resort, as well as people traveling again.

Both Payroll Protection Loans received in 2020 and 2021 have been forgiven.  No additional income from this source can be expected, going forward.

A question regarding legal fees resulted in a discussion of the cost of deed preparation. Currently, deed transfers to family members are prepared at a cost of $100.  Deed transfers to third parties cost $200.

A question regarding the number of HOA owned weeks was answered as 160 weeks, and management explained that they have been used for rentals, owner getaways, and loss of use due to major repair projects and the COVID epidemic.  Long term, we need to reduce the number of HOA owned weeks by selling them to new owners.

A suggestion was made to the effect that because Harbor Ridge has shown itself to be open to all, that we market to groups seeking acceptance of diversity. The Board will discuss this proposal and take any action that is decided.

An owner suggested to put the list of units-for-sale in the unit guest book.  The idea is to generate interest in unit sales.  The list changes constantly and would be difficult to keep up to date in 50 books.  The list is available on request at the front desk.  The lobby white board listing sales is intended as a conversation starter.

Several owners present had questions about the off-season weeks that are not producing income. A summary of management responses included:

Most of the non-productive weeks are in the winter with a few scattered throughout the year.

Management works with owners encouraging payment plans, education on usage, and lastly the costs involved in deeding the week back to the HOA. Use of a collection agency has been tried and will be again, as well as a future foreclosure auction. Collections and foreclosures actions are very time consuming for the staff and expensive in terms of fees and legal costs.

Marketing to locals that want to use the clubhouse facilities and / or need overflow housing for regular events is an on-going effort.

Money received for HOA weeks  sold is applied to Accounts Receivable on the balance sheet.

The HOA retains some weeks throughout the year to offset mistakes and lost weeks due to projects and emergency repairs.

An owner suggestion was to publish a list of weeks that are in demand.  This may induce owners to sell weeks that they are paying for, but no longer want.

Manager Annette Bartlett reviewed the proposed expense budget for 2023. As with the discussion of income, the various line items were explained as to what they represented and were mostly consistent with previous years.

Specific comments pertaining to budget categories included:

Insurance cost always increases, but this year our “experience rating” will be impacted by two freeze-ups last winter that required costly repairs. Steps taken to avoid future problems of this type should improve our rating going forward.

Payroll Expense is up due to wage increases needed to attract and retain housekeeping and maintenance staff in a competitive wage environment ongoing in Maine and MDI.

The significant increase in utilities is primarily due to fuel and electricity. Projected costs based on locked-in fuel and projected electricity rates result in the 20% increase shown in the budget.

An owner asked who determines wages and salaries and do we have a plan to hire more staff. Management responded to say that they determine salaries and staffing levels with the advice and consent of the Board within budgetary constraints.  Additional quality, long term staff is desired.

Another owner asked whether it was possible to make suggestions for specific improvements to amenities and utensils provided in the units. The Management response was a definite yes; we take the requests into account in two ways: lower demand items may be stocked at the front desk for loan-out and higher demand items are typically distributed to all the units.

President Connelly requested a motion to approve the budget as presented. Owner John Hanson moved to accept the proposed 2023 budget as presented. Joseph Guaraldo seconded. The motion was approved by all present and by proxy.

Under other business, owners present at the meeting in person and via Zoom said it was difficult to hear what people “on the other end of the line” were saying. It was suggested that we need better microphones and speakers to better allow those present to hear and communicate with those present via Zoom.  The Board will take this issue up for discussion and make improvements.

Another owner expressed concern for the stagnant salaries of Annette and Margaret. They responded to the effect that their present compensation was a choice they made to help control increasing costs. Linda Connelly, Board president, also made it clear that this is also a concern of the Board’s and is routinely discussed at Board meetings.

Mike Zielinski expressed appreciation to Margaret and Annette for their long service, a combined 50 years, and credited them for the on-going success of Harbor Ridge Resort.

Annette indicated that major projects planned for Spring of 2023 include re-roofing and new skylights on Building 5 and renovating carpets and master bathrooms in building 3.  She also expressed relief that they were able to lock-in our oil delivery price at $3.95 per gallon when current prices are $5 and up.

There being no further business or discussion, the meeting was adjourned at approximately 11:30AM on a motion by John Hanson.

Respectfully submitted,

Jay Hewett, Secretary

Harbor Ridge Condominium Association  Special Meeting Minutes

December 4, 2021 via Zoom

President Linda Connelly called the meeting to order at 10:05 AM.  Officers present via Zoom included: Linda Connelly, President; Jan Franz, Treasurer; Jay Hewett, Secretary; Dianne Lytle, Member; Jim Nicholson, Member.  Harbor Ridge Managers Margaret Austin and Annette Bartlett were also present via Zoom.  Two owners were present in person.  Thirteen additional owners attended via Zoom.  There was a quorum with proxy votes submitted.

Manager Margaret Austin reviewed the proposed income budget for 2022.  The proposed 2022 Maintenance Fee is $550 per unit-week, an increase of $30 over the two previous years.

Both Payroll Protection Loans have been forgiven.  No additional income from this source can be expected going forward.

Both owner and HOA rentals have significantly increased during COVID.

There were several questions regarding unit weeks owned by the Homeowner Association (HOA):

How many unit weeks does the HOA own? The answer was given as 141 weeks, an increase of 30 over 2020.  Policies have been added due to costly foreclosure costs and to counteract the suspect and fraudulent timeshare practices.

What is the seasonality of HOA-owned weeks? Management stated that most are off season with only a handful of peak season weeks. These have been used to offset lost weeks due to major maintenance projects and COVID.

Manager Annette Bartlett reviewed the proposed expense budget for 2022.

Specific comments pertaining to budget categories included:

Bad Debt expense reflects loss of maintenance fees associated with the weeks owned by the HOA. Timeshares use the accrual method of accounting, which requires all weeks be recognized as revenue.

Gift Shop purchases are higher than normal due to lack of purchases in the first year of COVID-19.  The gift shop did well this year.

Loss of Use reflects the cost of renting weeks needed for major maintenance projects, such as roofing.

Owner Expenses were minimal, as the resort did not host breakfast and wine and cheese.  S’more campfires were held August thru October.  These events were missed by guests, and they will return when it is safe to do so.

Payroll Expense is up due to wage increases needed to retain housekeeping staff in a competitive wage environment ongoing in Maine and MDI.

Repairs and Supplies include things like new roofing and skylight projects, bathroom renovations, carpeting, and other routine maintenance projects.

Supplies include cleaning, office, and townhouse supplies, along with large appliance and furniture purchases.  Sixteen sofas are also on order and more than 20 major appliances were purchased this year.

Utilities include oil, electricity, water, sewer, cable TV, and internet service. All have increased due to higher occupancy.  Internet service is now free to guests.

Management indicated that bank charges are a cost of doing business, and it reflects the processing fees charged to the HOA to accept maintenance fees, rentals, and gift shop sales by credit card.

President Connelly requested a motion to approve the budget as presented. Owner John Hanson moved to accept the proposed 2022 budget as presented. A second to the motion was offered by Dianne Lytle. The motion to approve the budget was approved by all present and by proxy.

Under other business, management reported that functions are still not allowed in the Great Room and that it recently dropped Clubhouse use by reservation.  A few owners have objected and want previous COVID protocols reinstated.

John Hanson questioned how flexible our COVID policies and practices have been.  He indicated that it is important to err on the side of caution.  Management indicated that we have been flexible via Board policy and action.  It was suggested that the schedule be split into reserved and open blocks.  The Board will discuss this further in their meeting to follow.

Mike Zelinski expressed appreciation to the Board and Management for good performance during the pandemic, as Harbor Ridge remains in a financially sound position.

Manager Margaret Austin indicated that we may still need to do six-day rentals in 2022, because of limited staff and continuation of increased cleaning and laundry requirements.

Charles Sidman feels the hybrid annual meetings are needed, and it is not too difficult to do. The Board will consider continuing them beyond the pandemic period.

There being no further business or discussion, a motion to adjourn was offered by John Hanson and seconded by Charles Sidman.  This was approved by all present at 11:05 AM.

Respectfully submitted by Jay Hewett, Secretary

Condominium Association Special Meeting Minutes

 Saturday, December 5, 2020 via Zoom

The meeting was called to order at 10:02 am by President Linda Connelly.   Board members, Dianne Lytle, Jan Franz, Jim Nicholson, Jay Hewett and managers, Margaret Austin and Annette Bartlett, were present.  It was held via ZOOM, with several owners as far away as Washington State and Texas participating.

There were 413.5 owner proxies submitted prior to the meeting and in attendance virtually.

Margaret reviewed how the resort has fared through the COVID-19 situation.  The resort was closed entirely from mid March through June 1.  We reopened first to Maine resident owners, then gradually added other state residents with 14-day quarantines and negative test results.  Occupancy rates have been around 75-90% of normal occupancy depending on the week.  The clubhouse is now open by reservation, one family at a time for 45 minutes each.  We received a Payroll Protection Plan loan, which has been forgiven in full, but we do not yet know whether it will be classified as taxable or nontaxable income.

Management has been working very hard to make sure that owners do not miss out on their 2020 vacation because of the closures.  If anyone who could not use their week in 2020 because of the pandemic  and has not spoken with Annette or Margaret, they should call to see what can be done.

Management presented the 2021 budget, along with the balance sheet and actual expenses and income for 2020 as of November 30, along with year end numbers for  2019 and 2018.   These documents were sent out prior to the meeting for those who had signed up for the Zoom meeting.  The uncertainty of next year’s COVID-19 situation made the budget preparation very difficult.  Margaret reviewed the income side of the financials line by line and answered several questions.  Revenues directly impacted by COVID-19 included bonus week purchases, gift shop sales, rental commissions, owner charges, internet, and vending machine revenues.  Rentals were down for the year, but they were much better than expected.

Annette then went over the expenses and reviewed the balance sheet.  On the expense side, some differences may be associated with the timing of bills being paid.  Automobile expenses included some major repairs (e.g. control arm and steering pump) this year, as the truck is now 10 years old.

Additional bad debt will be written off before year end.  Most bad debt reflects the maintenance fees of the HOA owned weeks.

Credit card processing fees are stable; and management is seeking to add online maintenance fee payments.

Computer charges increased due to the redesign of the website.  Contracts were significantly higher, as the pest control company increased their rates and then they offered a discount on next year’s services if we prepaid, so we did.

Dues, fees, licenses, and permits were up due to the permit for the linen storage shed (required for COVID-19) and the Chamber of Commerce dues increased.

Insurances were down due to changes in employee health plans.

Gift shop purchases normally occur in early spring.  With COVID-19 exploding at that time, it was decided to defer purchases, as the gift shop was sufficiently stocked.

Loss of use was incurred, as the association had to rent a few units during Building 3’s roofing project.

Owner expenses were minimal, as the resort did not host breakfast, wine and cheese, or s’more campfires after March 15.  These events were missed by guests, and they will return when it is safe to do so.

Payroll was down with the loss of two full-time maintenance employees due to retirement, as well as the employees being furlowed in April and May.  Management was on-site during the closure.  Harbor Ridge was very fortunate to retain its staff through the entire summer and fall season, which has only just slowed down in mid-December.

Property taxes for the entire association increased by $3,179.95.

Repairs and supplies are up significantly; but the improvements are many.  There are new rugs throughout Buildings 1 and 5.  The master bathrooms in Building 1 are completely renovated.  The ocean side of Building 4’s roof was done in the spring, along with the driveway side of Building 3 this fall.  The decision was made to remove the bathroom skylights and only replace the “hall” skylights.  The new skylights have blinds and automatically close during a rain shower.  A linen shed was purchased to house the additional linens needed to meet the cleaning requirements during the COVID-19 pandemic.

The supplies category encompasses a lot of expenditures, and overall it was down; however, the cleaning supplies were up $6,000, and townhouse furnishings were down $20,000, as we did not purchase any new furniture this year.  Linen purchases were up 200%.

Utilities were down due to the resort being closed in April and May, with limited occupancy in June.  Our cost per gallon of No. 2 fuel was down by $0.29, and the resort locked in at $1.689 for this year.

David Ezzio moved to accept the budget and financials as presented, seconded by Dianne Lytle, and the motion passed.

One owner who is trying to dispose of her week brought a suggestion to the group about a way to offer it to other owners, as all of her fees are up to date.  It was agreed that the Board would consider the suggestion, and management will work with this owner to find a satisfactory solution.

Another owner asked about the use of the bike shed for storage of maintenance items.  Annette assured him that she would speak to maintenance about clearing out the space for next summer and fall.  The shed has been a huge asset for winter equipment storage.

Annette mentioned that Dave Leissner called prior to the meeting and extended his appreciation for the maintenance fees remaining the same and for excellent usage of funds during COVID-19 to keep the resort on good financial footing while keeping employees and improving the property.

There being no further business brought forward, the meeting adjourned at 11:26 am.

Respectfully submitted,

Dianne Lytle, Secretary

Condominium Association Special Meeting Minutes

 Saturday, December 7, 2019

Dianne Lytle called the meeting to order at 10:00 AM, as outgoing President Tim Letourneau had a family emergency out of state.   Board members, Dianne Lytle, Jan Franz, Jim Nicholson, Linda Connelly, and managers, Margaret Austin and Annette Bartlett, were present.  Owners in attendance introduced themselves and write-in candidates, Jay Hewett and David Ezzio, gave brief biographies on themselves.

There were 332 owner proxies submitted prior to the meeting.  Owners in attendance submitted ballots at the meeting to cast their votes.  The meeting continued as the financial discussion continued during the calculation of the results.

The Profit and Loss Previous Year Comparison was presented by Margaret. While some revenue sources increased, other revenue sources were down slightly.  Bonus weeks can be purchased from the HOA. Owners continue to convert to the Club Interval Gold points membership making their exchange opportunities more transparent.  Gift shop sales are $2,000 over last year.  The rental commissions were down.  The HOA receives a 30% commission of each rental.  The sales price of any HOA-owned resale is applied first to past due maintenance fees. 

HR was forced to find another internet provider when the existing provider gave short notice that they would no longer supply internet access on MDI as of July 1.  All of the internal internet infrastructure was upgraded, and the speed was significantly improved. 

Deed fees were up, due to more resales and more owners adding family members to their deeds.  Questions about legal fees and deed title searches came from David.  Management explained that the legal fee revenue line includes the fees that the resort charges to prepare and record the deed.  Management has done 95% of the deed work and does not use attorneys, therefore saving costs. Annette reported that unofficial title searches are done through online access to the Registry of Deeds and assured no title insurance was sold. She confirms that mortgages have been discharged and that there are no liens on the property.  If any problem exists with the deeds that cannot be handled inhouse, she advises the owners to hire an attorney to do their deed work.

Owner charges include internal exchanges, upgrades, guest fees, and Great Room functions. Long term rentals are the rental proceeds from the apartment located above the laundry room.

On the expense side, some differences may be associated with the timing of bills being paid.  Advertising includes employment ads and marketing costs for social media sites, Trip Advisor and Trivago.

Automobile expenses include mileage reimbursement and truck repairs.  There were some major repairs (e.g. U Joints) this year, as the truck is now nine years old.

Additional bad debt will be written off before year end.  Most bad debt reflects the maintenance fees of the HOA owned weeks. 

Management renegotiated better credit card processing rates this year. HR rates are higher as transactions are mostly hand-keyed, not swiped.

Two new computers and software had to be purchased this year.  HR has preventive maintenance and service contracts on the following:  copier, furnaces, collection, fire sprinkler protection, pest control, security, and the dehumidification system in the swimming pool area.

Employee expenses include employee appreciation meals, birthday gift cards, the Christmas party, and staff shirts.

Gift shop inventory purchases are up; however, it directly relates to better sales.

HR management works closely with Cross Insurance for its insurance needs.  Each building’s replacement cost is approximately $825,000. The Clubhouse is slightly higher. Our umbrella policy is five million dollars. David Ezzio asked if the resort’s total market value was evaluated. Margaret explained each year insurance increases to compensate for value changes. Annette stated that replacement value was calculated by insurance company. Jay Hewett stated that tax assessments would be used as one of many factors in calculating replacement costs. Annette provided some history of Southwest Harbor’s tax assessments when BLDG 5 was completed in 1999 and the 2014 property tax reevaluation. After BLDG 5 was completed, the taxes quadrupled. After the 2014 reassessment, taxes decreased.  David Leissner stated that with the current insurance, each unit would equate to $120,000. 

Bob O’Brien asked questions on property taxes. Annette stated that HR pays the entire bill for the homeowner’s association. The stated expense amount on the profit and loss is the increase in taxes from one year to the next.  The taxes are a liability “pass through” account, and owners are billed in arrears due to the invoicing schedule. Prime week owners are charged at a higher tax rate; however, the base maintenance fee for operations is equal for all owners.

Health insurance is provided only for full time employees.  Our workers compensation insurance will unfortunately increase due to a couple of incidents this year.

Owner expenses include costs associated with the breakfast, the social hour, spring water for Clubhouse guests, and the seasonal campfire s’more supplies.

Professional fees include accountant and legal fees, when needed.  Registry expense is the cost to record the deeds, discharges, liens, and release of liens.

The supplies expense line includes laundry chemicals, cleaning supplies, office and general supplies, miscellaneous items, large furniture purchases, and townhouse appliances.

Utility costs are up overall.  The water costs were less this year due to last year’s pool water supply pipe breakage issue.  The average price per gallon of fuel is up.  Our cable costs are higher; however, our digital picture is much improved. Internet will remain stable.

Dave Leissner complimented management for reduction in expenses and increase in income. He stated that this was outstanding. Annette explained that upcoming carpet costs were not included on this report, and there were budgeted dollars remaining to be used that would allow Harbor Ridge to recognize a near zero profit for 2019.

David Ezzio asked about depreciation. Annette explained how depreciation is reported for income tax purposes. Annette reported that there was $42,706 for 2018.  Bob O’Brien had a follow up question regarding depreciation. Annette explained the time share reporting of depreciation. Many purchases are expensed immediately, while other purchases are not. At the end of the year, the HR accountant determines that year’s depreciation schedule. 

Dave Leissner moved to approve the Profit and Loss as presented. David Ezzio seconded the motion, and the report was approved. 

Margaret presented the 2020 budget and reminded owners that a budget is a guideline.  Questions:  David Ezzio asked about the anticipated additional expenses. He stated that the income did not appear to increase.  Management assured that if the cash is not there, major upgrades are postponed. The HOA has no loan payments. The growing bad debt is a concern, HR will need a public foreclosure auction again, which is expensive.  Payroll has seen significant increases to retain employees. There have been mandated minimum wage increases for the past three years. She stated that Hannaford pays $13.00 per hour for baggers, and there is a small, competitive labor pool on the island, especially for housekeepers. HR was not fully staffed this year.

David Ezzio asked why HOA resale income was not anticipated. Revenues are applied to annual assessment accounts receivable. The 2016 annual assessments will be written off this year. David asked if all bad debt is from unpaid owner maintenance fees, and Annette said it includes owner and homeowner association owned units.

Charles Sidman had three separate areas of concern. He stated that the overall costs are going up 7 to 8 percent per year. He said these numbers are not unreasonable but wants to discuss areas that are higher than 7 to 8 percent. He also had a Reserves question. He stated that the percentages are higher than the cost of living and wanted to know if HBR is sustainable. AB reported that like our individual homes, as the resort property ages, expenses increase. Resort repairs, supplies, and payroll costs increase. There are unknown and uncontrollable occurrences that happen, such as the swimming pool and hot tub areas which must be addressed immediately and would cause increase costs. Health insurance costs have increased more than 8 percent, and the age-banded insurance changes impacted HR.  HR also needed to increase housekeeping wages for retention and needed to add another maintenance person.  Many HR employees are multifaceted, which helps HR function as efficiently as possible. Annette stated that Management and the Board must work at selling resale weeks to raise the revenue line items. Margaret said that several locals have purchased resales to use the facilities, which increases ownership. 

Linda discussed the Board and management’s dedication at keeping maintenance fees as low as possible without jeopardizing HR’s premier rating with exchange affiliate, Interval International. HR is viable and sustainable. Ongoing upkeep is a must. We want to retain our independent status and not become managed by larger resort holding companies, such as Diamond Resorts, Wyndham, VRI, or others, as overall costs will dramatically increase.   HR must continue to be proactive as possible in maintaining the property. Linda thanked the attendees for bringing up the valuable questions and concerns for discussion. 

David Leissner moved to approve the budget as stated. David Ezzio seconded the motion, and the budget was approved.

Election of Board Members:  Three write-in candidates submitted their names after the newsletter had been mailed to the owner base. The candidates were Kurt Zemba, Jay Hewett, and David Ezzio. Incumbent Jan Franz’s term was up for re-election, and she was listed on the original proxy. There were now four names for two open board positions. The biographies were presented to the attending members. Once the attending members’ proxies were returned to Annette, she tabulated the proxy ballot results for the incoming board members. The total votes were tallied as follows: Jan Franz – 320.5 votes; Kurt Zemba – 2.5 votes; Jay Hewett – 8 votes; David Ezzio – 5 votes. Fifteen blank votes were given to the Secretary to vote.  One person attending the meeting abstained their vote. Jan Franz and Jay Hewett were voted in as board members.

There was no additional business presented.  The meeting adjourned at 11:30 am. 

Respectfully submitted by,

Linda Connelly, Secretary

Harbor Ridge Board Condominium Association

 Special Meeting ~ December 1, 2018

Tim Letourneau called the meeting to order at 10:00 AM.

Board Members, Tim Letourneau, Dianne Lytle, Jan Franz, Jim Nicholson and Linda Connelly, were all present, along with Managers Annette Bartlett and Margaret Austin.  Owners in attendance introduced themselves.

There were 400.5 owner proxies submitted prior to the meeting. With those in attendance, there were 412, and the 20% quorum was met.  HOA votes from the Secretary were not needed due to sufficient owner proxies submitted. Linda Connelly and Dianne Lytle were reelected as Board Members. 

The Profit and Loss Previous Year Comparison was presented.  The Club Interval Gold line item was discussed. This Interval International option is a point-based system that allows owners additional vacation time opportunities. Gift Shop income was down this year. 2018 rentals have been successful, while resale income is lower. When a resale occurs, proceeds are applied to annual assessment accounts receivables before recognizing profits.  Owner charges include cleaning fees, great room usage, guest fees, and internal exchanges. Long term rental income is the rental of the on-site apartment for seasonal housekeeping staff.

The advertising cost increase is due to Trip Advisor and other advertising means. Although the expense is higher, there is an overall positive effect on the income side.

Generally, maintenance fees are written off as bad debt after four years, and it will be evaluated again in December.  Bank charges are up, as more people use reward-based credit cards. Management recently called the credit card processing company to negotiate better rates.  Computer costs have remained steady; however, upgrades may be needed soon. Contracts include furnace maintenance, alarm systems, pest control, and sprinkler system maintenance. These ongoing contract costs have remained steady.

Employee expenses include meals, work related clothing, holiday celebrations, flowers for employees experiencing family loss, and birthday recognitions. Gift shop purchases have been steady.

Insurances were lower due to switching the building liability insurance to Patron’s Oxford.  Loss of use occurs when we must rent someone’s unit due to a maintenance issue when full occupancy is expected. Owner expenses include breakfast, s’mores, and wine and cheese costs.

Payroll expenses are up due to essential raises and seasonal bonuses to attract and retain staff. Professional fees include accounting and collection fees.

Property taxes increased due to the first mil rate increase in five years.  Property taxes are recorded as liabilities and are reflected on the balance sheet.

Registry expenses are down due to fewer deed transfers between parents and children.

Repairs and supplies are higher due to broken water pipes that supply the pool in February. A pipe broke underground, and the SW Harbor Water District supervisor reported to management the large increase in water usage mid-cycle. The pipe had been broken for a while before it was discovered, and another broken pipe was detected as soon as the first repair was done. It was also determined that one more pipe needs to be done, and this pipe will be replaced when finances and timing allows. The gable ends of Units 18, 28, and 38 were repaired. Unit 11 has been started and will be finished in the spring. Other gable ends will be completed in 2019.  All living rooms, other than Unit 51, now have a hard surface floor. This change has been a major enhancement and well received by owners and guests. Staff has also commented how much easier these floors are for cleaning. Pavement crack sealing was done this summer. New sofas for Building 4 were installed this past spring, and Building 2 is scheduled later this winter. Annette recently visited a timeshare with a higher end hospitality sofa, and she ordered this brand for longevity and better sleeping comfort. The cedar walls in the pool area and the pool liner are scheduled for repair in January. Units 45 – 48’s carpets will be replaced this winter.

Seminar and training expenses were up due to required pool chemical recertification classes. Annette attended an Interval International conference in October. Interval has provided numerous accommodation certificates and increased point exchange values for our owners this year, and the board has renewed its exclusive agreement with Interval. 

Utility costs remained steady overall. Management has been upgrading to LED lights, which has saved the resort close to $8,000. When the pipes for the pool broke, the SW Harbor Water District worked with us. This eliminated the need to go through two $5,000 insurance deductible claims. Heat pumps have reduced the overall oil usage by approximately 4,000 gallons. 

Tim asked for approval of the budget as presented. Dave Leisner made a motion to accept the budget as presented.  Dennis Connelly seconded the motion, and the budget was approved.

Other business included an owner requesting the board to evaluate solar power again.

Mrs. Kostron requested new sofas for Building 2, and Annette reported that Building 2 sofas are being ordered this week.

Annette clarified that the maintenance fee increase for 2019 is $15.00. 

Dave Leisner asked if the path that leads to downtown could be better maintained and cut back. Annette stated that it is done each summer, but it should probably be done earlier in the season.

Mrs. Kostron asked if internet charges could be dropped as many resorts offer free wi-fi access.  Dianne commented that it would result in an increase in the maintenance fee.  Annette stated that the Board evaluates this topic each year.  As mobile companies increasingly offer unlimited data plans, Harbor Ridge internet income may decrease.

Since there was no further business to be discussed, the meeting adjourned at 10:45 am.

Respectfully submitted by,

Linda Connelly, Secretary