Reserve policy at NORD -- Posted by Don Quixote on Vernon Blog

Sunday, November 15, 2009

Reserve Policy to be Addressed at NORD & GVSC by Politicians.

This came from a posting on Saturday, March 08, 2008 called: JUSTIFY this policy on RESERVES to the Taxpayer.
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• At this point Reserves as a %age of operating expenses were $353,388 or 132.75% for the Community Theater.
• At this point Reserves as a %age of operating expenses were $646,728 or 46.52% for the Multi-Plex.
  

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At a Nov 4, 2009 COW Meeting the CFO David Sewell made a presentation of all the reserves of all of NORD's functions and presented the "operating reserves" as a % of operating expenses for 2009. This was the first open and transparent presentation of reserves at NORD that I had ever seen at NORD.

• At Close of 2009 Reserves as a %age of operating expenses were $463,656 or 168.3%
  for the Community Theater. (an increase of over $90,000)
• At Close of 2009 Reserves as a %age of operating expenses were $1,341,531 or 93.5% for the Multi-Plex. (an increase of just less than $700,000)

Our Politicians at the NORD and GVSC tables will be addressing all reserve balances and the philosophy of Operating Reserves (that should be at no more than 20% except in special circumstances as suggested by Mr. Sewell CFO-NORD), Capital Equipment Reserves, and Capital Facility or Future Building Replacement Reserves. The Capping of these reserves and indeed the necessity of the reserves especially for Future Replacement will be formalized hopefully through the upcoming budget cycle.

As Vernon taxpayers pay 66.42% of both the Multiplex and Community Theatre Functions in 2009 the concern about excessive stockpiling of reserves is of paramount interest. (Coldstream pays about 17.06%, Area B pays 8.24% and Area C pays 8.28%).
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Don Quixote Note:
The outstanding debt issues on these two buildings and a breakdown of operating expenses versus debt and interest expenses can be found in a July 2009 Posting: Multiplex and Performing Arts Theatre - Where we stand !

As both of these buildings Debt issues have a 20 year amortization schedule that will be paid off mostly by 2020 it is apparent that the taxpayer of this period (2000-2020) will be paying off a building that hopefully will last at least 35- 40 years before any replacement building will even be contemplated or needed.

Setting aside the argument of whether the Politicians of today should build up Capital Building Replacement reserves by taxing the 2000-2020 taxpayer who is already paying at almost 2 times the lifetime of the building rate, it is easy to see that any such reserves should only start in 2021 when the Debt is fully paid and probably only after Citizen and Taxpayer input at that time. (Referendum?).

A sound Operating reserve capped at a % age of operating expenses (to provide for emergencies and overlooked expenses) and a capped Capital Equipment reserve to pay for major replacements needed are worthy of consideration. Capital Building Replacement reserves at this time and at least until 2021 are NOT needed. The taxpayer who benefits in the future will be the taxpayer who decides if this is what he wants and agrees to be taxed for.

The Financial Staff at NORD has given an honest exposure and explanation of our reserves. It will be up to the Politicians at these tables to represent the taxpayer and formulate a fair ongoing Reserve Policy.

Posted by Don Quixote at 11/15/2009

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