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Board Meeting Minutes: July 14, 2007

Board of Trustees Meeting

Minutes – Saturday, July 14, 2007

Draft – Pending Review

 

 

After due notice, a meeting of the Board of Trustees of the Mad River Glen Cooperative was convened at 8:10 a.m. on Saturday, July 14th, 2007 on the third floor of the Basebox at Mad River Glen Ski Area (“MRG”) in Fayston, Vermont.

 

Trustees Jay Appleton, Paul Finnerty, Jed Kalkstein, Eric Schoenholz (phone), Rick Moulton, Lars Bruns, Bill Reynolds, and Geordie Hall were present.Steve Mackenzie was absent. Also present was President Jamey Wimble. There were three shareholders in attendance including Betsy Pratt and Bob Rodgers.

 

CALL TO ORDER:

Jay Appleton, chair, called the meeting to order at 8:10 a.m.

 

REVIEW OF MINUTES:

Regarding the draft June 2nd minutes, Bill Reynolds moved to accept the minutes, Rick Moulton seconded. All trustees present approved the June 2nd minutes as-is, without changes by a vote of 8-0.

 

OPENING SHAREHOLDER COMMENTARY: None.

 

MANAGEMENT REPORT:

Jamey announced good news on the new “Triple Major” college pass.MRG will team with Bolton Valley and Jay Peak to offer unlimited skiing at Jay, Bolton, and MRG for $269, for full-time college students.Eric Friedman had been working on this deal since January.This pass will entitle students to full access to all three resorts with no blackouts. MRG will receive a portion of the revenue from all Triple Major passes sold. When questioned about having to share our Middlebury College nitch, Jamey explained that the revenue coming to MRG from the sale of these joint passes would be reviewed next year to see if it indeed provided a boost to the college segment over last season’s numbers.

 

Mountain crews have been focusing on lift maintenance this month.Mowing is planned for August.The mountain crew will be involved in the Single work thereafter in September and October.

 

New maintenance – we need to replace a sewage line from near patrol room to pumping station as a pipe has collapsed.Hartigan will be onsite to replace the pipe this coming week or next at a cost of ~$3,000.

 

Share sales:We have sold 124 shares YTD, with 0 in June and 4 (so far) in July.There have been two financial hardship cases that have requested information on share redemption.We are waiting to hear back from these shareholders if they desire to redeem these shares.

 

SINGLE CHAIR PROJECT:

The work is on schedule according to CTEC.All rock anchors have been installed from the top down to Tower 9.The Chute footings are pinned/anchored right into rock.All of this work is done by hand.The existing footings will be broken up, scattered, hayed, and seeded.Towers are returning from Maine where they have been sandblasted and painted.Jamey is very pleased with the job they’re doing on the towers they really look great.

 

The total number of chairs on the line must be changed from 158 to 147 due to weight changes on the line.The lift must maintain a proper bull wheel slippage ratio, and additional work on the upper mountain counterweight is required for this as well as the chair quantity change.This change is required due to the ANSII code and is needed since the new chairs weigh ~50 pounds more than the original chairs.The chairs are heavier due to changes in the gauge of steel and grip adaptation requirements.This chair count change will not result in any change to uphill capacity because the chairs will be further apart which will allow the lift to run slightly faster, decreasing the ride time slightly.

 

There are late penalties that are applied to CTEC if the lift is not load tested in October and the punch list is not complete by November.The lift should be ready to go for Green and Gold weekend.Final scheduled contract construction complete date is 10/15.

 

COOP FINANCIAL:

June was ~$10k under budget.We’re currently in a slightly better cash position due to stronger share sales than what was reported at the Annual MeetingWe’ll need to begin using the bank loan for the Single in approximately 3 weeks for CTEC payments.

 

Geordie mentioned that a note will be included in the APR mailing with a request/reminder to shareholders to please consider sending in payments on their 2007 pledges as soon as possible as opposed to waiting until the end of the year.Pledges received earlier in the year will help reduce the interest expense the cooperative will incur as we begin drawing against the line of credit needed to pay CTEC.

 

June financials were reviewed.Lars requested a follow-up on the Fayston tax line item.Lars will re-examine and discuss with Eric S. and Jamey.

 

SINGLE CHAIR CAMPAIGN:

Jamey reviewed the financials year to date.The cooperative currently has ~$612k cash from PTV & SMF foundations.Salvage monies account for $246k (from old chairs) and raffle funds account for $31k.Construction payments to CTEC are in progress with $588k paid to date.Campaign costs have run about $98k so far.

 

Geordie talked about significant planning that is underway regarding Green and Gold and the Single Chair Campaign.We are planning on a full kick-start for the campaign again this fall, timed with Green and Gold weekend.This will be focused on solicitations as only ~35% of shareholders have given to the Single so far.We are shooting for 100% participation.Geordie mentioned that they are planning for a function for Green and Gold weekend to thank the tower donors and tower donor solicitors.Replica plaques will be given to these donors that weekend.Chair donors will be able to ride their chairs from 9-10am on Green and Gold Saturday.A draft all-donor plaque listing will be made available to confirm/change donor names for corrections and clarifications.The full and complete all-donor plaque won’t be complete for another year or so.There are still 2 towers left, so sponsor your tower now!We are also planning on another campaign mailing in the fall, and may potentially combine this with the mountain’s area guide mailing.

 

The board discussed the initial telemarketing campaign this past spring.Many board members volunteered and made suggestions regarding another round of calling.Another telemarketing campaign may be coming around again this fall.Bill asked to see if we can confirm/check the shareholder information for correctness/completeness.Lars suggested calling when the mountain is open.Jamey mentioned that the office staff tries to keep the shareholder directory information up to date (including addresses and phone numbers) and in synch as best they can.

 

Lars reported on the MRG booth at the Farmers market.Bill commented that new puppies work really well to get people to the booth.Generally we get from 20-40 conversations with people per Saturday.We really need more volunteers, especially for August.Last weekend, shareholder Deb Steines talked with someone from a ski lift preservation trust which may be considering a donation.

 

Geordie announced that there will be a full solicitors meeting on the Sunday of Green and Gold, weekend.This will be a short meeting from ~10:30am to 11am, with a free BBQ chicken ticket for each solicitor in attendance.

 

BYLAW DISCUSSION:

As a reminder, Jay noted that any Board action on bylaw discussions require a shareholder notice.The outcome of today’s discussions could result in a notice that the Board would propose a bylaw change at the next Board meeting on Sept 8th.

 

Section 9.6 – Share Redemption:Regarding terminology, Jay reminded everyone thatthe “Carrying value of a share” is what the shareholder paid.The “net book value per share” is the balance sheet book value of the coop divided by number of shares outstanding.Section 9.6 specifies that the amount redeemed is the lesser of the two.

 

Geordie opened the discussion stating that he finds it hard to understand why we can sell shares at $2000 and redeem them for less.For example, when the net book value per share is less, if a person bought a share and then redeemed it a few months later, the redemption value (according to the bylaws) would be at a price lower than the shareholder purchase price.Geordie supports suspending redemptions at this time…but is concerned about the message and moral perspective in redeeming shares at a price lower than the purchase price. Geordie stated he was concerned about the ethical perspective with redemption as stated in the bylaws.Geordie felt that the current bylaws do not represent the true spirit of Mad River during shareholder redemption when the Coop’s book value per share is less than a shareholders purchase price.

 

Geordie stated that he still feels that the bylaws should be revised so that the redemption value is the carrying value, however understands and will support the Board’s position not to make any changes to the bylaws.The board discussed the interpretation of redemption language in the bylaws at length.

 

The other Board members in attendance felt that the redemption value calculation of section 9.6 is in the best interests of the Co-op in the long term because the business risk is allocated evenly across all shareholders. Board members discussed redemption from a fairness perspective as well and generally supported that all shareholders should be treated equally.Section 9.6 means that if one redeems during low revenue years, then one gets less back than during profitable years, but one can not get back more than they paid. Other Board members pointed out that if the Co-op did poorly for several years in a row, then redeeming at the carrying vale (what you paid) could cause a “run on the bank” when people try to get their money out before the Co-op runs out of money.Paul Finnerty said that redeeming at the carrying value only creates two classes of stockholders because if the Co-op went bankrupt, then the shareholders at the end would get nothing back.Therefore he suggested that redeeming solely at the carrying value is probably illegal.

 

Shareholder Betsy Pratt mentioned that the Coop was created for the advance sale.Her problem was with the tough snow years and an energy crisis.She discussed the importance of the advance sale w/ families and how much the mountain needed the clubs and the families.Betsy mentioned that the purpose behind the shares was to receive steady income.She discussed redemption values and APRs.Betsy felt that the APR is very important for the coop’s financial health.

 

The Board decided to take no action, and redeem shares according to section 9.6 as written.The Board recognizedthat in the past it was not made clear to shareholders how the bylaws define the redemption share value.Although no action or motion was made, it was suggested that there be better communication of the redemption clause in the bylaws to current and future shareholders.Jamey mentioned that we have clarified our shareholder prospectus question and answer document to better clarify the bylaws.Eric Schoenholz took an action item to work on talking points to share with board members.He will work Eric F. and Jamey so that everyone can understand and communicate the bylaws consistently.

 

Section 2.1- Advance Purchase Requirement (APR):Jay discussed the existing bylaws section 2.1, specifically the clause of the APR annual amount “maximum commitment shall be increased” yearly.The cooperative has not changed the APR ($200) since inception in 1995.

 

Eric Schoenholz mentioned that this came up at a Finance Committee meeting and that the Board may want to consider changing the words “shall” to “may”.Eric Schoenholz moved and Jed seconded to consider formal discussion and approval of a bylaw change question for the 2008 ballot at the next Board meeting.Additional discussion of the motion continued regarding the bylaw wording.

 

Rick commented that the Bylaws have stood the test of time and that any changes should be considered with care.

 

Lars suggested that the words, "maximum annual commitment", define a ceiling that the APR can be raised to.Therefore the "shall" refers to the ceiling if the APR is increased.It does not require annual increases.A lengthy discussion ensued regarding CPI clause and APR increases being allowed to be cumulative from (since) 1995 or only allowable going back one prior year.The Board decided to table Eric Schoenholz’s motion, pending additional legal perspective regarding interpretation of bylaws language in Section 2.1 regarding “maximum annual commitment”.

 

SHARE REDEMPTION SUSPENSION:

Eric Schoenholz discussed the recommendation from the Finance Committee to continue the suspension of share redemptions due to the Co-op’s need to use a line of credit to fund the completion of the Single Chair project.Geordie motioned to accept the Finance’s recommendation, Bill Reynolds seconded it.The boarded voted 8-0 in favor of accepting the recommendation to continue suspending share redemptions at this time.This item will be revisited at the next Board meeting on September 8th.

 

LONG RANGE CAPITAL PLANNING:

Eric Schoenholz described a Finance committee initiative regarding long range financial scenario planning related to planned capital expenditures.Eric Schoenholz and the Finance Committee have requested Jamey to update the future facilities upkeep/maintenance capital expenditure plan to understand the cooperative’s future spending needs and potential impacts to cash flow.This update will include priorities for the projects. Jamey is currently in the process of updating the mountain’s capital planned spending requirements through 2020.The Finance committee will then work on scenario planning for these capital projects.Eric Schoenholz and a Finance Committee sub-committee will look at these future spending plans and initiatives and prepare this information for the strategic planning discussion scheduled for the November Board meeting.

 

The Board discussed this initiative.Jamey’s updated plan will be reviewed and discussed with the Facilities committee before the November Board meeting while the Finance committee will work on cash flow scenarios.

 

COMMITTEE REPORTS:

There were no new items from Finance committee.The Executive committee discussed a hardship request for share redemption. Although more information was provided to the shareholder, a formal request for redemption has not yet been received from the shareholder.

 

NEW BUSINESS:

Jamey mentioned that there may be a request coming re: single Campaign where the Coop may be asked to indemnify a donation through SMF.Jamey asked if the Board would approve the Executive Committee making the final approval.Jed made a motion to empower the executive committee to make the final call, Geordie seconded the motion.The board approved the motion by a vote of 8-0.

 

CLOSING SHAREHOLDER COMMENTS:

Shareholder Bill Heinzerling asked about the new/increased cost of the Single due to change orders.Jamey mentioned that to date, the total change order costs are about $28,000.The need to purchase a new cable for the line accounted for $18,000 of that cost.CTEC picked up the remaining $36,000 of the cost of the new cable.We also expect a credit (not specified at this time) because of the decrease in the number of chairs being provided.

 

NEXT MEETING:

Upon review of the calendar, it was determined that the next meeting of the Board will be on Saturday, September 8th at 8am on the third floor of the Basebox at Mad River Glen Ski Area (“MRG”) in Fayston, Vermont.

 

ADJOURNMENT:

Jay made a motion to adjourn the meeting, seconded by Bill Reynolds.The meeting was adjourned after an 8-0 vote at 10:35am.

 

Respectfully submitted, Lars Bruns

 

A true record.

 

 

Attest:

 

 

_________________________________

Lars Bruns, Secretary

 

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