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Message from the SMYC Board of Directors
Dear S.M.Y.C. Shareholder,
As most of you are aware, The Board of Directors, ever since we acquired the property, has been focusing on the deteriorating condition of the infrastructure of our Marina. Like anything else subject to salt water, wind, waves, the sun in the summer and freezing conditions in the winter, things tend to wear out and need replacement.
Our Marina was built in 1985 and had, at the time, a 20 - 25 year life expectancy. It is now 23 years and we are seeing signs all around us of parts of the marina in need of major repair or replacement. Our docks are showing signs of rot. Look for vegetation growing up between the planks. The electrical system is in a constant state of needing attention, putting unwanted currents of stray electricity into our waters and causing power outages in various sections of the marina. The outer dock, referred to by some as our "breakwater" or "wave attenuator" has had ongoing repairs done to it over the last several years to simply hold it together. The plumbing on our docks is requiring more and more attention as the years go by as well.
While, as part of our annual maintenance fee, we have been budgeting about $15,000 per year to go into a "replacement fund," that fund took a substantial "hit" when we decided to fund part of the property acquisition expenses from it, rather than go to the shareholders at the time. The Board feels that the marina is better prepared for any eventuality if we can build up a substantial cash reserve earmarked exclusively for major repair or replacement purposes. These monies are not intended to be used for day-to-day expenses or maintenance purposes and a separate accounting will be given periodically to the shareholders as to what amount we have in the fund and what has been expended.
The Board has been wrestling with how to prepare ourselves with enough capital to properly address the needs of the marina, without imposing an onerous financial burden on the shareholders. We conducted an "informational" meeting on May 10, 2008, which many of you attended, where we discussed the needs of the marina and the various methods available to us to fund these needs. The consensus among those in attendance and the board was that a multi-year assessment seemed to make the most sense and we needed to get together at least $400,000.
At our Board meeting on July 1, 2008, the Board decided, as you see in the copy of the resolution that was passed unanimously, to have a 4 year assessment, with each shareholder being assessed $100.00 per share and the payment being spread over the 4 years. A 40 share slip, for example, would be paying $1,000.00 per year for 4 years with each year's payments being split into 2 equal payments of $500.00 each.
We all agree that this $400,000 is no where near enough to "replace" the entire marina but it would give us a sufficient cushion, when coupled with what we have in the replacement fund right now, plus any insurance monies we might get, should a "disaster" strike. The paragraph which our accountants insert into each of our annual statements reads as follows:
"The purpose of the replacement fund is to accumulate funds over the lives of capital assets which are part of the common elements and/or the Corporation’s responsibility to replace so that sufficient amounts are available to pay for their eventual replacement."
The Board is continuing to look for and explore ways of preserving, for as long as possible, the infrastructure we now have. Prudence however dictates that we be prepared should the need arise.
Thank you for your understanding and co-operation.
Ernie Odierna, President, S.M.Y.C. Board of Directors