MAD RIVER GLEN COOPERATIVE
Minutes of Board of Trustees Meeting Held July 3, 1999
After due notice, a meeting of the Board of Trustees of Mad River Glen Cooperative was convened at 9:05 a.m. on July 3, 1999, at the Basebox, at Mad River Glen Ski Area in Fayston, Vermont. Trustees Bleier, Curtis, Kirkpatrick, Meier, Michl, Russell, and Schultz were present and voting throughout. Trustees Eaton and Singer were absent. The president, Mr. Meier, presided. The minutes were kept by Ms. Kirkpatrick, the secretary, with the assistance of Cooperative’s counsel, Peter Monte.
Minutes of Prior Meetings
After discussion and upon motion duly made and seconded, it was unanimously
VOTED: To approve as corrected the minutes of the June 12, 1999, meeting of the Board of Trustees.
Ms. Kirkpatrick requested that staff send a letter to the ski school director detailing benefits to be provided regarding time off for training to obtain appropriate qualifications and payment of qualification expense.
General Manager’s Report
Jamey Wimble, assistant general manager, delivered the general manager’s report. Preparations are under way for the July 3 barbecue and the July 3 party at the Basebox and for the state barbecue contest to be held later this summer.
The Cooperative has obtained from the State of Vermont public buildings regulatory authority a waiver of the access rules for the proposed Cricket Club expansion, under the waiver, no elevator will be required for the second floor. While all other access requirements will remain in force, this waiver will save substantial costs on construction.
Staff has signed a promotional contract with the Coca Cola Company. This year the Cooperative will receive $2,500 in marketing money and a 10' x 20' tent. Next year the Cooperative will receive $5,000 in marketing money. There are no "strings" attached to the Coke marketing payments. The Cooperatives consideration is to offer Coke products exclusively at the Basebox.
Staff has completed arrangements with the Mad River Valley Chamber of Commerce to facilitate inclusion of Mad River Glen Ski tickets in lodging and travel packages arranged through the Chamber.
The assistant general manager updated the trustees on share sales: 3 shares were sold in June (5 shares was the June target) and 143 shares have been sold to date this fiscal year (175 is the year’s goal).
The assistant general manager also presented the proposed budget for facilities. Staff proposes for FYE 2000 a facilities budget of $472,400. Last year’s budget was $495,000 and actual expenses last year are estimated to be $473,900. Proposed increases in next year’s budget are for additional payroll, additional snow making, and permit renewal costs.
The budget was prepared assuming 120 days of operations— the maximum likely in a good snow year. The trustees requested that final budgets be prepared on an assumed 110 days of operation (a "normal" year).
Peter Thompson, Basebox manager, presented the proposed FYE 2000 Basebox budget. The budget is based on average experience over the last two years. The budget call for a 5% average increase in food prices and a 3% average increase in bar prices. The budget projects contribution to profits of $64,247 contrasted with last year’s contribution of $60,200.
The trustees commended the Basebox manager for doubling the Basebox’s profits in spite of the of poor skiing weather.
Race Program Budget
Alan Kirkpatrick, volunteer head of the Mad River Glen youth ski racing program, presented the race program budget for FYE 2000. Mr. Kirkpatrick stated that the basic plan is to continue the race program operations without major changes. The proposed budget anticipates $26,200 of expenses and $27,275 in income which would result in a contribution of $1,000 to profit contrasted with a $13,000 contribution last year (next year’s contribution is reduced because of the higher salary costs and reduced revenues). The major reduction from last year’s budget is a lowering of the cost of equipment purchases.
Mr. Kirkpatrick reminded the trustees of the benefits of the racing program for improvement of sales in the Basebox and stimulating the sale of cooperative shares. He stated that the major problem confronting the race program is hiring a sufficient number of qualified coaches.
Mr. Kirkpatrick objected to the lack of communication between the Cooperative staff and the race program about likely impacts of the free skiing offer to youths age 12 and under. Staff has projected increases in race program participation but the program organizers doubt they can hire sufficient numbers of coaches to handle a substantial increase.
Mr. Kirkpatrick informed the trustees that long range plans for the race program include investigating opening of a new trail above and westerly of the practice slope area to add needed vertical pitch to the race course. The present race course is too short to meet the demands of advanced and older racers. Mr. Kirkpatrick informed the board that this year volunteers will remove brush and talk with the neighbors to scope out the possibilities. If these preliminary efforts are successful the race program will present a more specific plan to the trustees.
David Hatoff, share marketing and shareholder relations director, circulated to the trustees a design for the founders plaque. The estimated cost of this plaque is $2,300. The shareholder relations director requested that the trustees act on the proposed design so that it can be installed before the end of summer. It was the consensus of the trustees that Mr. Hatoff should proceed to order and install the recommended plaque.
The assistant general manager presented the capital budget for FYE 2000. The budget assumes sources of funds in the amount of $471,000 and uses of funds in the amount of $429,000 The budget allocates $350,000 to lifts (for the rebuild of the single chair drive station) and the balance to the purchase of a new snow gun, building improvements, and vehicle acquisitions.
Ms. Kirkpatrick noted that last year’s ticket price increase was justified by a commitment of $40,000 per year to capital improvements to overcome past deferred maintenance. She observed that the proposed capital budget shows only $20,000 budgeted for buildings each year through 2003. Mr. Shultz concurred in these observations and requested why staff had made that change.
Mr. Wimble explained that the total multi-year commitment to building expenditures to overcome past deferred maintenance only $10,000 had been pushed forward into future years, but otherwise adheres to the $40,000 per year plan It was the sense of the board that the final capital budget should include the full $40,000 per year expenditure to address deferred maintenance(in fact $20,000 of the FYE 2000 expenditures have already been made, so the final budget should show new projects totaling an additional $20,000).
Ms. Kirkpatrick also questioned the capital budget projections for operating profits and share sales. She noted that share sales were running 20% behind projections and, optimistically, would fall 10% below projections at year’s end. Staff noted that share projections included in the proposed budget had already been reduced to reflect this experience and the budget assumptions were predicated on the share marketing director’s latest estimates.
The trustees also discussed the merits of exploring borrowing options, especially if low-interest loans or grants are available through government programs. The trustees noted that the present capital plan is funded strictly by cash flows. The trustees noted that long range benefits to the Cooperative may be realized by present borrowing to anticipate future revenues, thereby accelerating implementation of needed capital improvements.
Single Chair Rebuild
The president requested that the trustees consider the $350,000 item included in the FYE 2000 capital budget for rebuilding the single chair drive station. The trustees debated the implications for affording the drive station given the sources of funds and proposed uses. The trustees conclusion was that the capital budget shows the single chair drive station to be affordable but only marginally so because cash flows which the project requires are very close. The trustees recognized that financial risks exist because actual revenues may not attain the budgeted projections.
The assistant general manager reviewed the design and cost options under active consideration by staff:
1. A carriage drive with bottom tensioning (mechanically similar to the new double chair lift drive): estimated cost $300,000
2. Vault drive with top tensioning (mechanically similar to the existing single chair drive): estimated cost $350,000.
Staff recommends the implementation of option one, a carriage drive with bottom tensioning, which would be designed to resemble in appearance the existing drive structure. This recommendation is based upon lower initial costs, more conventional design, and elimination of one lift attendant position which a vault drive would require because of the design of the terrain for unloading from the chair.
Staff also recommends that whichever option is chosen the project should also include an added $50,000 to upgrade electric service to the drive.
Ms. Kirkpatrick noted that there was a third option: Refurbishing the existing drive rather than replacing it. The single chair committee has received an informal evaluation from a State employee who has suggested that the " historic" nature of the chair lift will have Act 250 implications. The Act 250 permit authorities are likely to expect the Cooperative to demonstrate that a refurbishing of this "historic" item is not practical or economic before the commission will approve a reconstruction. The State employee recognized that the $9,000 cost for a full engineering study is probably excessive, but recommended that the Cooperative obtain some outside cost estimates of a rebuilding to support any request for replacement of the drive. Ms. Kirkpatrick reported that the single chair committee will attempt to acquire the recommended information.
The assistant general manager informed the trustees that staff has made a dramatic change in its recommendations regarding the single chair lift: staff now recommends that the new single chair lift be built as a single project in the 2002 -03 fiscal year time frame. The assistant general manager informed the trustees that staff no longer supports the chair lift construction in two phases beginning with replacement of the drive station. As staff planning has progressed, it has become apparent that there are unworkable complexities that arise from a two-phase project because merging a new drive into existing line equipment is more difficult than staff originally anticipated. Staff has always known that a two-phase project would be more expensive, and this consideration also weighs in the changed recommendations.
Staff recognizes that the exiting drive station is over 50 years old and presents a risk of a critical breakdown before 2003. But the unanticipated and yet unresolved problems of marrying the existing line equipment to a new drive station tip the scales in favor of staff’s recommended delay.
Staff recognizes that the mechanical breakdown risks of the existing lift make an immediate rebuild of the entire lift the optimum solution. But staff recognizes that the funds required for a complete reconstruction ($1,350,000.00) are simply not yet available; so the real choice before the Cooperative is between less than optimal alternatives.
The president suggested that the trustees decide at today’s meeting whether to acquire new information regarding (1) the specific breakdown risks (2) possible replacement options in the event of a breakdown, and (3) the costs and availability to stockpile critical components of the existing drive; and then decide whether to schedule a meeting in August to evaluate the newly acquired information. After discussion, it was the consensus of the meeting that staff should seek the requested information and the trustees should meet in August to make a final decision on the timing of the single chair project.
Revised Trustee Meeting Schedule
After discussion and upon motion duly made and seconded it was unanimously :
VOTED: To schedule a meeting of the board of trustees for Friday, August 13, 1999, at 5:00 p.m. in the Basebox.
VOTED: To schedule a meeting of the board of trustees for Saturday, September 11, 1999 at 9:00 a.m. in the Basebox.
The trustees entered executive session at 12:25 p.m. to discuss personnel matters. The Cooperative’s legal counsel was invited to attend the session. The Trustees resumed open session at 1:35 p.m.
After motion duly made by Mr. Michl and seconded by Mr. Curtis it was unanimously
VOTED: To authorize the Cooperative’s president to employ Mountain Hire to conduct a search to fill the vacant general manager position and to cap the consultant’s out-of-pocket costs at $5,000 without prior approval of the search committee.
VOTED: To approve a special mailing to inform shareholders of the process by which the general manager position will be filled.
VOTED: To add Mr. Michl to the general manager search committee.
Adjourned accordingly at 1:40 p.m.
A true record.
Mary Kirkpatrick, Secretary