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Mad River Glen Cooperative
Board of Trustee’s Meeting
Minutes - Saturday September 9, 2006

After due notice, a meeting of the board of trustees of the Mad River Glen Cooperative was convened at 8:10 a.m. on Sept 9, 2006 on the 3rd floor of the Basebox at Mad River Glen Ski Area (“MRG”) in Fayston, Vermont.
Trustees Jay Appleton, Paul Finnerty, Jed Kalkstein, Bill Reynolds, and Eric Schoenholz were present. Trustees Mary Schramke, Steve Mackenzie, and Rick Moulton were absent. Geordie Hall joined the meeting via conference call from 8:45am-10:20am. Also present were staff members President Jamey Wimble and Administrative Manager Sharon Crawford, and several shareholders. Board Member Emeritus Deb Steines took the minutes.

CALL TO ORDER
Jay Appleton, chair, called the meeting to order at 8:13 a.m.
Jay remarked that our next meeting would be the Town Meeting at Green and Gold and would include the kick-off of the Single Chair Campaign. The November meeting will be on the 11th, and Vice-Chair Paul Finnerty will chair the meeting. The Strategic Plan will be discussed at the November meeting.

 

APPROVAL OF MINUTES
Upon motion duly made by Eric Schoenholz and seconded by Jed Kalkstein it was unanimously
Voted: To approve the minutes of the July 15, 2006 board of trustees’ meetings.

 

SHAREHOLDER COMMENTS - none at this time.

 

MANAGEMENT REPORT
President Jamey Wimble reported that an employee was injured on the mountain doing tree removal and will be out of work for at least three months.
The Rental Repair Managers position is open; there is one internal candidate and one outside candidate for position. James Donaldson, the former manager hopes to continue to work part time during the season.
The management report is attached for reference.

 

FINANCIAL REPORT
Net Ordinary Income is ($261) through August and is expected to be ($280k) at year end September). Prior to this year the biggest loss the Co-op had was ($50k).
The financial report is attached for reference.

 

SINGLE CHAIR UPDATE
Jamey Wimble reported that engineering continues and positioning of towers is being finalized. Towers will be sand blasted and painted on the mountain probably near Birdland with full containment of contaminants. The cost of all towers work has been included in the current estimates.
The electrical lines at the base area have been buried and that project is completed. While the excavator was here there was work done on the mountain to clean up the sides of the trails
Jamey reported on the status of the Co-ops negotiations with the Preservation Trust of Vermont (“PTV”). – The parties are currently having difficulty resolving a disagreement over language in Section V of the Memorandum of Understanding (“MOU”) whereby the Co-op would agree to not amend Article 14 of the by-laws, which currently does not permit distribution of residual assets to owners upon dissolution. ; Co-op counsel Steve Kantor has requested that the language requiring that the Co-op not change its by-laws be removed; but PTV has not reconciled to this and is insisting it remain. PTV has a meeting with their executive board on Tuesday to come up with alternate language. Their concern is the recovery of the $1.5 million if the co-op was dissolved; this clause is to protect their status with the IRS. They are looking for indemnification should the Co-op ever be dissolved and sold to protect their 501c3 status. Their accountant is concerned that shareholders would benefit financially if the co-op was sold. The timing of resolution is critical, as we need to plan for the campaign and its announcement at Green and Gold.
Deb Steines, member of the Single Chair Campaign Committee reported that there are four towers tentatively spoken for and the Capital Campaign committee has divided potential donors into two groups: 1) the Leadership portion for donations 10k and over and 2) Major gifts 10K and under. There will be a Single Chair Campaign booth at the mountain over Green and Gold. We expect to staff the both with people that have been trained to do solicitation for the campaign as well as representation from SMF and PTV. Deb also asked for continued board participation in this campaign and for additional names for potential solicitation training going into the winter season. We need to gear up the campaign so we increase our ability to reach our $1.5 million dollar goal by the end of the season.

Geordie Hall joined the meeting via telephone at 8:45 AM.

 

SHARE REDEMPTION POLICY (ACTION)
Jamey reviewed the current policy which is one share is redeemed for every share sold at the end of the fiscal year if replacement capital is available. A discussion ensued to understand our replacement capital position and cash on hand to determine whether to accept the shares that have been tendered. Distribution of losses was discussed as to whether it should be allocated to tendered shares. To date we have not allocated deferred losses and we need understand the calculation to determine it effect on the share redemption value.
There are currently 48 shares sold (33 full and 15 on installment) and 31 on the list to redeem, and 17 were redeemed earlier this year under the old policy.


MOTION: Paul Finnerty made a motion to table the discussion on share redemption until the next meeting, Geordie Hall seconded.

The subsequent discussion centered on whether we were going to redeem shares this year and not make changes to the policy at this time.
(Geordie Hall left the meeting at this point at 10:18 AM.)

 

The board discussed delaying redemption of shares this year due to the lack of cash and capital. Sharon Crawford informed the board that some of the shareholders requesting redemption were sent letters that did not explicitly state that shares would not be redeemed if there was insufficient cash on hand at the end of the fiscal year. It was noted that the By-laws state that shares “may” be redeemed ‘if replacement capital is available.’ Mr. Finnerty advised that the By-laws also state that shares are to be redeemed when replacement capital comes into the co-op. Bill Reynolds asked the members of the Finance Committee if they would be able to state that no replacement capital was available to redeem the tendered shares. Jed Kalkstein and Eric Schoenholz both answered in the affirmative. Jed Kalkstein stated he doesn’t see how the board could vote to redeem shares considering our current capital position. He went on to say that the board has fiduciary responsibility when it comes to share redemption and there will be insufficient cash on the balance sheet at fiscal year end. Jed also asked why the Coop did not implement the By-laws by offsetting the value of shares with the current losses. The point was made that we have to redeem these shares at some point whether now or later. It was further noted that if the ski season does not begin in December and without a good Christmas week for revenue, we would be out of cash in January.


Middle ground was found and it was recommended that the redemption of 2005/06 tendered shares be suspended and reviewed during the new fiscal year rather than waiting until the end of next year. This action is due to the extraordinary circumstances of the bad ski season last year and the investment outlay for the single chair..


Paul Finnerty withdrew his motion.

 

MOTION: Jed Kalkstein made a motion, to accept the recommendation of the Finance Committee, to not redeem the shares eligible for redemption this fiscal year at this time given our financial position but the board will revisit the redemption of these shares starting at the January board meeting upon receipt of a recommendation from the Finance Committee. At the shareholders discretion they can decide to pay their APR to retain shareholder benefits or not pay their APR and dissolve their shareholder benefits. In addition they may request payment under extreme financial hardship. All this is in accordance as stated under bylaw 2.7, 9.6, 10.7 and 10.8.


Upon motion duly made by Jed Kalkstein and seconded by Eric Schoenholz it was unanimously

VOTED: To accept the motion as stated.
The board requested the Finance Committee review the redemption policy for revision based on the bylaws and this motion.
Any shares tendered subsequent to this meeting will be directed to refer to the bylaws and this motion.

 

SHARE PRICE
The Finance Committee has recommended raising the share price from $1750 to $2500; this price increase would take effect April 1, 2007. The new price reflects closely to inflation being applied to the old price. The intent of this change is to create a sense of urgency and hopefully sell more shares for the Single Chair Campaign.

 

MOTION: Upon a motion made by Bill Reynolds and seconded by Jed Kalkstein it was unanimously voted to table discussion on share price increase until more board members are present.

COMMITTEE REPORTS - none

 

OTHER BUSINESS - none

 

ADJOURNMENT
There being no further business to come before the board, the meeting adjourned at 12:10 pm.

 

Respectfully submitted, Deb Steines

A true record.

Attest:

_________________________________
William B. Reynolds, Secretary

Attachments
a. Management Report

Management Report
Mad River Glen
September 9, 2006

Operations:
Cable inspections are complete for the 06/07 season. Lift inspections will be completed in September and October.
We leased an excavator to do the electrical work and had time left to do some much needed trail work on the mountain. Bunny, Porcupine, and the bottom of Periwinkle saw most of the work.
James Donaldson our Rental Repair Manager will not be returning this season. James got a full time position with an environmental firm this summer and has decided to stay on. This was a hard decision for James because he enjoyed his job. The search for a new RR manager will begin immediately.


The mountain experienced another break in August. The maintenance building was broke into. Cloths, Radio’s, and some small tools were taken. No leads to the intruders other than there have been many break-ins in the valley this summer. We are looking into small video cams and some inexpensive alarms.

 

Capital:
The Electric upgrade is the last Capital project for the summer. It is scheduled to be complete by September 15th. The project has gone fairly smooth and will be a major improvement.

 

Share Sales:
Three shares were sold in the month of August against a budget of one. 46 shares have been sold YTD against a budget of 36. 18 shares have been tendered YTD. Staff will be proposing a new share tendering policy. We will tender shares 3/1. Three shares sold for every one we tender. And we must have a positive cash position on the balance sheet at the end of the fiscal year.

 

Financials:
August expenses are down due to not all expenses booked yet and some of the outside crew’s wages are allocated to the electric capital project. The year end numbers for September 31, 2006 is projected to be about a $280,000 +/- loss. Cash flow for the end of the summer was very tight. Dealing with the lean winter, first payment on the single, and capital campaign expenses has depleted our cash position. We have $80,000 of total cash as of September 5, 2006. We should see about $300,000 come in September for preseason sales.

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