Mad River Glen Cooperative
Board of Trustees Meeting
Minutes – Saturday, January 12th, 2008
Draft – Pending Review
After due notice, a Board of Trustees meeting of the Mad River Glen Cooperative was convened at 5:05 p.m. on Saturday, January 12th, 2008 on the third floor of the Basebox at Mad River Glen Ski Area (“MRG”) in Fayston, Vermont.
Trustees Jay Appleton, Paul Finnerty, Geordie Hall, Steve Mackenzie, Bill Reynolds, Rick Moulton, Eric Schoenholz (phone), Jed Kalkstein (late arrival) and Lars Bruns were present.Also present was President Jamey Wimble and approximately 20 shareholders.
Jay Appleton, chair, called the meeting to order at 5:05 p.m.
Regarding the draft December 15th, 2007 minutes, Trustee Moulton moved to accept them and Trustee Reynolds seconded the motion.The trustees present approved the December 15th minutes as-is, without changes by a vote of 8-0, with Trustee Kalkstein abstaining due to late arrival.
Chair Appleton commended the bravery of managementconcerning the grooming of Wren.
Via email, Shareholder Bob Firenza requested the Board to present summarized year-end financials as part of one of our Board or Town Hall meetings since “we see projected numbers at the Annual meeting in April, but never the actuals at year end.”The Board agreed to present fiscal year-end summarized financials at the December Town Meeting.
Shareholder Lu Putnam wanted to discuss the Single Chair donors’ plaque.She requested recognition for those that bought the old chairs.“Some of these folks spent a lot of money” said Lu, she recommended a separate plaque for these people if needed.“Big plaque or little plaque, on the same plaque as the other donors, or a separate one, but they ought to be recognized.”
Trustee Kalkstein arrived late at the meeting during the opening shareholder commentary.
Shareholder Nancy Smith questioned how the people that bought raffle tickets for the chairs would be treated re: recognition.She felt these people contributed to the success and felt they should be recognized.Shareholder Vivian Branchovsky disagreed and felt raffle tickets are a different category and were not charitable/tax-deductible contributions.
Shareholder Bob Rodgers felt that the idea of a separate plaque for the old chair purchasers may be another idea to resolve conflict.Bob also noted that monies spent on raffles are not tax deductible.
Shareholder Rocky Bleier agreed with Lu Putnam regarding shareholder recognition and the spirit of giving, and felt that everyone should be on the plaque.
Shareholder Dave Prescott felt everyone who gave money should be on the plaque.“This is part of the campaign, to sell the old and new chairs via raffle – giving towards the campaign.”
Shareholder Liz Goodwin said the difference between the donation and the raffle was important to note.“With a donation, you get nothing back.With raffles you can potentially get something back.”
Shareholder Dot Helling brought forward that the SMF has endowed 1.5 miles of the Long Trail between the Single and the Double.Endowment for the future maintenance of the historically important Theron Dean Shelter has been received thanks to a generous donor, but it first needs significant maintenance and overhaul.The Green Mountain Club is submitting an application for a grant.She requested that the Board authorize President Wimble to issue a letter of support for the renovation.The Green Mountain Club was initially going to abandon the shelter but has since changed its mind.A letter of support from MRG would help.This shelter is located on Coop land, and Green Mountain Club has an easement with MRG.Total repair/replacement costs GMC will need to repair the shelter will be around $20k. GMC has another project in the summer that could help reduce cost of this shelter’s renovations.Chair Appleton noted that this would be considered as part of new business discussions.
MANAGEMENT REPORT (Jamey Wimble):
President Wimble discussed the management report.He felt that we had a good startup.Some wrinkles were experienced.We blew the main contactor on Lift 4 and needed a new bull wheel for Callie’s corner.The grand opening for the Single went well, snowboarders came and went, everyone was happy.So far this year, the press and media coverage for MRG has been excellent thanks to our Marketing Director, Mr. Friedman.
We have started receiving the monthly lease monies from Unicel (~$1600/mo.)Cell phone service should begin next month.After our power costs our gross margin on this lease is estimated at approximately $1300/mo.
The mountain was hit hard by the January thaw.Grooming teams and patrol did incredible work to re-open some terrain.We experienced four days above freezing day and night….thankfully we had the snow we had.We sold 14 shares YTD, with 40 shares and 5 preservation certificates waiting in queue for redemption.
December was a good month.$118k net operating ahead of budget.Trustee Hall asked about net profit YTD.YTD profits are $29k (or 10%) ahead of budget due to unexpected upfront season start-up costs as mentioned earlier.
Trustee Schoenholz asked if there was a separate electric meter needed for the Unicel tower.President Wimble felt the “all inclusive” contract terms with Unicel were more advantageous than billing them actuals but we will monitor and check this to confirm.
Shareholder Bob Rodgers asked how much was owed on Single.President Wimble replied that balance is currently $640k.The single chair account is $134k, which will be paid against the $640k debt shortly.We paid $75k down to principal last month.We can also re-amortize as we make significant payments against the outstanding principal.
Shareholder Liz Goodwin asked about the Unicel contract, if that meant improved coverage?President Wimble indicated yes, better cell coverage on the mountain. Liz asked about a courtesy sign to not use the cell phones on the lift.President Wimble responded that improved cell reception actually helps customer service and improves the customer experience.
The management report is attached for further reference, see Appendix A.
FINANCIAL REPORT (Jamey Wimble):
President Wimble reviewed the December and YTD financials.Trustee Bruns asked about any further unexpected costs, President Wimble replied that no further bogeys are expected.
SHARE REDEMPTION SUSPENSION:
Trustee Schoenholz reported that the Finance committee continued to recommend suspending shareholder redemption.Currently there are 40 share redemptions and 5 preservation certificates outstanding.Total redemption value if redeemed would be ~$61k.He mentioned that net our income isn’t exactly great, and we’ve lost a lot of snow.He cited Finance Committee reservations about how fragile our finances actually are, and how critical our snowfall affects our finances.He mentioned the need in June to pay off the double chair bondholders at a cost of $85,000.Finance committee cited outstanding debt for both lifts.Trustee Kalkstein mentioned that while December was great for skiing, it wasn’t stellar for finances.He also cited our fickle status given the thaw.
Chair Appleton asked,Is there evera good time to redeem shares?Trustee Schoenholz mentioned yes, and mentioned that the Finance Committee described a process and a formula to redeem the shares.He mentioned the discussion with the Finance Committee regarding annual timing and that it might be best to consider share redemptions in the spring after the season ends when capital expenditures are considered.Trustee Kalkstein mentioned this formula was a guideline only, and is not scientific.
Trustee MacKenzie felt opposed to the moratorium on share redemption.Trustee MacKenzie felt that the current suspension is against the goodwill of the coop and that some of our materials may be misleading or incomplete.He felt that we need to change our share purchase Q&A documentation to better and more clearly explain that it can take additional time to redeem a share, it is not automatic.Trustee MacKenzie felt the current policy is wrong and that we need to be clear in our materials and communications.He mentioned he has received a lot of comment on this subject from shareholders.
Trustee Finnerty stated that he had pointed out the erroneous statements in the Q&A documentation to Eric Friedman this past week and had requested that they be changed.
President Wimble noted that the Coop’s website contains the correct information about share redemption.
Trustee Kalkstein noted that the correct information regarding share redemption appears on the back of each share certificate.
Trustee Moulton noted that the book value of shares and therefore the share redemption cost went from $992 to $1359 in the last two years.He pointed out that this moratorium on redemptions has therefore cost us.
Trustee Hall asked that the finance committee calculate the increased cost to the Coop if redemption was postponed and the share value continued to increase.Trustee Schoenholz agreed that this was a good idea and that it would be done.
Chair Appleton mentioned that last year we had no money to spend.
A long discussion ensued where Board members debated the importance of the subject.
Chair Appleton recognized Shareholder Deri Meierwho strongly urged the Board to redeem a portion of the shares.“Shares were never sold on a commercial basis”, and he felt that suspending shares pending commercial outcomes and commercial finances is not in the spirit of the coop.He also mentioned natural attrition, “20 shares a year requested to be redeemed is normal, 1-2% a year.”He commented that at the time two years ago we had lousy snow, and it continued for 2 years.We were also facing significant costs to replace the Single.Deri felt that the financing of the single is in good shape now and that the interest expense cost is immaterial when compared to the goodwill of the coop and shareholders.
Shareholder Vivian Branchovsky felt that the intent/will to do something is important.Especially since the majority of requests are over two years old.
Shareholder Lu Putnam also felt that we should also redeem.One share sells tomorrow, one share gets redeemed.Net zero.
Shareholder Rocky Bleier mentioned the importance of goodwill and the “cost to the coop” by not redeeming.He offered to withhold his double bond repayment and wait so that another shareholder could get his share redemption money redeemed in the meantime.
Trustee Bruns offered a compromise.Citing recent unplanned additional income from Unicel, he proposed redeeming one share per month.
Chair Appleton broached the converse argument re: 45 individuals wanting to be redeemed but what about the other 1700 individuals who are still in the coop – that they are important too.
Trustee Finnerty reminded everyone of the importance of following the Coop’s By-Laws, which provide that shares are to be redeemed only after replacement capital is obtained.Trustee Finnerty noted that finance committee is currently advising the Board that replacement capital has not been obtained and thus, their recommendation is not to redeem at this time.
A long discussion ensued regarding the Board and Finance Committee’s interpretation and definition of “replacement capital”.
Shareholder Fritz Branchovsky mentioned that he didn’t understand how some members of the board can say no to share redemptions and felt that we need to change our literature and be prepared to receive future redemption requests.
Trustee Hall motioned to begin redeeming shares via “first in, first out” method at the rate of one per month retroactive to December 1, 2007, to be reassessed at the end of this fiscal year.Trustee Moulton seconded the motion.
Upon motion duly made by Geordie Hall and seconded by Rick Moulton it was unanimously:
Voted9-0: That the Board will begin redeeming one share per month retroactive to December 1, 2007 through this fiscal year at which time this discussion will be re-assessed.
SINGLE CHAIR CAMPAIGN UPDATE (Geordie Hall):
Trustee Hall mentioned that there as been some controversy about the all donor plaque and the names that will be on it.Trustee Reynolds has done a lot of work on it with Jamey and shareholder Penny Parson.Trustee Reynolds provided the recommendation from that group (see Appendix B at end of minutes).Generally the group recommended sticking to and following the campaign gift announcement and counting policies that we have with the Preservation Trust of Vermont and Stark Mountain Foundation.A factor driving this was the desire to keep charitable contributions separate from other money so as not to put tax-deductible contributions at risk with the IRS.Trustee Hall mentioned that we need to honor agreements with the PTV.Consultant Christine Graham also strongly recommended not jeopardizing tax-deductible charitable donations by including share and chair sales in the charitable campaign.
The recommendation was that the donor plaque names be limited to those that gave charitable donations.Chair Appleton questioned whether the plaque would carry a lot of weight with the IRS.Trustee Moulton mentioned that the plaque is an official document and recognition.Trustee Reynolds mentioned that we want to keep this as clean as possible tax-wise, and not commingle retail sale of chairs and charitable contributions.
Trustee Moulton moved that we accept the campaign committee recommendations as read by Trustee Reynolds.Seconded by Trustee MacKenzie.Discussion:Trustee Schoenholz asked if we need to act because nothing has been changed.Trustee Hall mentioned that we want tore-endorse the current policy.
Upon motion duly made by Trustee Moulton and seconded by Trustee MacKenzie it was unanimously:
Voted9-0: That the Board will accept the campaign committee recommendations to continue with the current campaign policies as read by Trustee Reynolds.
Trustee Hall continued with his report.We are currently only $73k short of the original goal of $1.54M.We have a phenomenal team of staff and volunteers who have made great contributions to this effort.The total Single Chair project costs now show $1.93M.He asked to increase the campaign goal to $1.65M which would cover the total cost of the project after accounting for the old chairs sold and old chair raffle proceeds. Trustee Hall also mentioned the diesel backup and that this is not included in the current goal.He asked if the Board would be okay asking the leadership donation team to investigate if there are donors interested in the diesel backup.
Trustee Moulton mentioned that he agreed that the diesel backup would be part of the initial scope of work, but then it was removed.
A discussion of the diesel backup followed Trustee Moulton’s comment.Shareholder Deri Meier felt that we should be only recommending things to donors that we would be willing to pay for normally.“Say we got $86k for the diesel backup, we’d still have to spend $50k for an electric generator to run the Basebox.”Deri felt it was a “Tier 4” capital expenditure spend at best – and doesn’t feel that it is worthwhile to pursue given it is only used a few hours every few years and we still supply refund vouchers.
Trustee Kalkstein asked what the argument was against changing the goal and whether this was a normal practice in capital campaigns.Trustee Hall indicated that it was a normal practice and that there was no argument against doing it.Trustee Hall further mentioned that we want to sell all the new chairs and raise the participation rate among shareholders and that together these will pay for the overall project cost.
Trustee Hall made a motion for the Board increase the Single Chair campaign goal to $1.65M and allow the leadership gifts committee to investigate the giving potential of donors to support the diesel backup.
Upon motion duly made by Trustee Hall and seconded by Trustee Reynolds was unanimously:
Voted9-0: That the Board will increase the Single Chair campaign goal to $1.65M and allow the leadership gifts committee to investigate the giving potential of donors to support the diesel backup.
In closing, Trustee Hall mentioned that a telemarketing effort will begin in February and the committee is sending out a letter to solicit donations from those who haven’t given.Trustee Hall further indicated that the committee is considering sending letters to donors that made one-time contributions to request that they make another as an annual donation.
Elections/Board Development – Trustee Finnerty reminded the shareholders that the Election schedule has been posted on the bulletin board in the Basebox.We are actively seeking candidates to run please from both in and out of state.February 1, 2008 is the deadline for those announcing candidacy, please contact any board members or Election Chair Finnerty.
Facilities Issue – Facilities Committee Chair Moulton asked about the new chair number stickers, and that they were falling off.President Wimble mentioned that the stickers were just temporary for this year due to timing and other needs to get the chairpassed through needed State inspections – a more permanent solution will be figured out after this season.Trustee Moulton, as the facilities chair, also asked about general Board consensus to investigate the condition of the restrooms.An informal straw poll indicated much interest from the Board in improving the restrooms.
Shareholder Rocky Bleier asked for an update regarding the shimmy that people experience when riding the single chair near Tower 16 just after the Midstation and questions that had been posted on the shareholder list-serve.He questioned why management or the Board had not commented.President Wimble explained that there is a shimmy there, and that the CTEC and lift operations teams continue to watch it this season.There was a good explanation posted by a shareholder engineer to the list serve, which is why further commentary was not made by the Board or Management.It was explained that the Board watches and listens to the list serve but refrains from frequent public commentary as the view of one Board member does not necessarily represent that of others or the entire board.President Wimble mentioned that he also refrains from commenting unless there ismisinformation needing correction.
Strategic Plan Sub-Committee - Trustee Bruns commented that each Monday in January at 8am there is a call to review a particular topic of the Strategic Plan for consideration of potential edits or additions.We have had an active group of 12-15 shareholders on each of the calls so far.The next meeting is on the 14th regarding Climate Change and the Environment.Additional Monday morning meetings will cover our Customer Experience, and our Financial Modeling.Please contact Lars@madriver.com for additional details or questions.
No new business.
CLOSING SHAREHOLDER COMMENTS
No closing comments.
Upon review of the calendar, it was determined that the next meeting of the Board will be on Saturday, February 9th 2008 on the third floor of the Basebox at Mad River Glen Ski Area (“MRG”) in Fayston, Vermont.
Trustee Finnerty made a motion to adjourn the meeting, seconded by Trustee Reynolds.The meeting was adjourned after a 9-0 vote to adjourn at 6:57pm.
Respectfully submitted, Lars Bruns
A true record.
Lars Bruns, Secretary
Appendix A: Management Report
Mad River Glen
January 12, 2008
December was a smooth startup month. Things ran well for the most part. We had to put a new contactor in lift 4. This was a $3,000 fix. Snowmaking went well.
Grand opening went well. We were poached by about 35 snowboarders but they were respectful of our ceremonies.
We started receiving our monthly lease payments from Unicel in December. However, we will not have service until mid February. There is a hold up connecting with Waitsfield Champlain Telecom.
The Press coverage continues to be great for us. We have been in all major ski publications.
The mountain was hit hard by the January thaw. We were able to get some terrain back open but will need a storm to get the expert terrain open.
We sold 12 shares in the month of December against a budget of 4. We have sold 14 shares YTD. There are 45 shares on the list to be redeemed. The finance committee will be making a recommendation at the meeting whether or not to lift the redemption freeze now that they have Holiday numbers to look at.
December was a great month. We finished $118,000 ahead of budget net operating income. One of the better holiday periods start to finish I can remember. YTD we are only $29,000 ahead of budget. We had had a lot of unexpected cost in facilities and we also made some purchases that we had been holding off on with the last couple of lean years. Our cash position is good right now. As of January 1 we had $1,025,900 in cash. However, after this aggressive January thaw our number will be dropping off quickly.
Appendix B :
Single Chair Campaign Plaque Sub-committee recommendation
(as submitted by Trustee Reynolds)
The All Donors Plaque Task Force recommends that the campaign follow the Gift Acknowledgment and Gift Counting policies that are incorporated into the memorandum of understanding ("MOU") between the MRG Cooperative and the Preservation Trust of Vermont ("PTV").
Compliance with these policies is required by our agreements with PTV and will help ensure that our campaign donors' gifts will be treated as tax deductible donations. In accordance with these polices, we make the following specific recommendations:
1. The "Donors Plaque" shall contain the names of all donors of any amount, except anonymous donors, with no indication of the amount of their gift. Names will be listed alphabetically regardless of gift amount, including all charitable donations received on or before January 31, 2010, as per the "Gift Acknowledgment Policies for the Single Capital Campaign."
2. Individuals who bought MRG shares during the campaign but did not otherwise contribute to the campaign shall not be listed on the "Donors Plaque" because purchases of MRG shares are not considered "gifts" to the Single Chair Campaign as per the "Gift Counting Policies for the Single Chair Capital Campaign".
3. Shareholders who purchased vintage single chairs but did not otherwise contribute to the campaign shall not be listed on the "Donors Plaque"
because retail purchases of vintage single chairs are not considered "gifts" to the Single Chair Campaign as per the "Gift Counting Policies for the Single Chair Capital Campaign".
4. All solicitors who received training from our campaign consultant, Christine Graham, were informed that the campaign was to be focused on charitable contributions and that chair and share purchasers were not to be considered donors for purposes of the campaign. If chair or share purchasers were told that they would receive the same recognition as people who made charitable donations they were told this in error.In order to clear up any confusion on this point, all vintage chair purchasers and share purchasers who have not already made a charitable donation to the campaign should be contacted by the campaign, provided with information about these policies and given an opportunity to have their names listed on the donors plaque by making a charitable donation through PTV (104 out of 129 share purchasers and 103 out of 152 vintage chair purchasers have not made donations to the campaign).