LAKE PANORAMA ASSOCIATION BOARD OF DIRECTORS MEETING

ANNUAL MEETING 2007
LPN Conference Center
LAKE PANORAMA ASSOCIATION Thirty-eighth Annual Meeting
       Saturday, May 5, 2007 Lake Panorama National Resort and Conference Center
       The Thirty-eighth Annual Meeting of the Lake Panorama Association was called to order at 10:00 a.m. at the Lake Panorama National Resort and Conference Center by Board President, Ron Morden. The other Directors in attendance included Courtney Allen, Bill Douglass, Dave Goss, Tom Jeschke, John McDermott and John McRoberts. Also in attendance was Roger Dunlop, LPA General Manager; John Dinnebier, LPN, LLC General Manager; Susan Lyons, Accountant; Jon Paulsen, CPA from Meriwether, Wilson and Company, P.L.C.; and Thomas Polking, Legal Counsel.
       Morden introduced the current Board of Directors and recognized the past Directors in attendance at the meeting. Dave Goss, Board Secretary, read the Proof of Service for the Annual Meeting.
       The four ballot counters were recognized by Morden: Janet Hardy, Angie VanHouten, Kathy Symonitis and Sheila Deardorff. He then introduced the seven candidates running to fill the three open positions on the Board of Directors: Eric Chrystal, Dave Goss, John McDermott, Larry Rains, Duane Spicer, Susan Thompson and Randall Walz.
       Morden then indicated it was time to read the minutes from the 2006 Annual Meeting. A motion was made that the reading of the minutes from the 2006 Annual Meeting be waived. That motion was seconded and carried.
       Goss announced that the Lake Panorama Association has 1,737 active members and 14 inactive members for 1,751 total members. Morden indicated there were 159 voting members present at the meeting. He then closed the balloting and asked that any ballots not already turned in be picked up so the counting of the ballots could begin.
       Jon Paulsen, CPA from Meriwether, Wilson and Company, P.L.C., discussed the audit report. He noted they have been the Association's external auditors for the past three years and began by explaining the external audit process. Paulsen thanked Larry Bauer, Susan Lyons and Judy Contner for their work this year. He then reviewed the financial statements which were handouts for the meeting, and began by going over the balance sheet, pointing out the assets and liabilities. He noted that as of December 31, 2006, the Association and their subsidiary have approximately $1.1 million of debt. There are total assets of $1.4 million and a net investment in property and equipment of $4.1 million, with total assets being $5.7 million. There are current liabilities of $394,794.00, and noncurrent liabilities of $481,751.00. The Members' equity is $4.8 million.
       
       The next item in the package reviewed was the Consolidated Statement of Operations. Paulsen pointed out that the Association and it subsidiary made $283,203.00 this year. Individually, the Association had revenues of $396,185.00, and the LPN, LLC had a loss of $112,982.00. The LPA's income increased due to the sale of lots. There was approximately $170,000.00 more in lot sales in the current year. Paulsen cautioned that from an operating standpoint, the LPA is depleting assets to meet operating expenses, and while money was made this year, it was through the sale of assets and not from dues and assessments.
       Paulsen was asked if he had rendered an opinion on the financial statements, and if so why it wasn't presented today. He was then asked if he issued a management letter regarding internal controls, and if so why it wasn't presented. Paulsen indicated the Board has both documents and would provide copies to members upon request. Morden indicated the opinion on the audit report was a standard clean opinion.
       John Johnson (Sunset Pines #6) asked if the financial statements provided were the ones that were audited. Morden indicated they were and that the audit report is available for any member to examine at the office. Johnson then asked how the 5% increase in dues increased revenue. Morden indicated the 5% increase in dues generates approximately $50,000.00.
       John McRoberts continued with the financial report. He began by recognizing the passing of LPA member, Phil Boesel, and expressed condolences to his widow, Frances Boesel. McRoberts then asked the members to turn to pages five and six of the handout and he outlined the revenue information. He noted the cost of goods, expenses, operating income and net income figures for both the LPA and LPN. McRoberts discussed land sales, indicating the revenues from land sales can only be used on capital improvements and can't be used towards any other expenses, making them a capital expenditure and not an income source.
       McRoberts commented on some of the letters that had been written regarding the purchase of the LPN property. He explained that when the Association acquired the LPN, it was ready to be closed and boarded up. The Association felt a boarded up complex would not improve the value of the Association. When they purchased the property they also acquired a great deal of land, and this year they are going to begin to sell off that land around the golf course. The sale of that land should generate more than was spent on the entire project so far. McRoberts feels the LPN is a great asset for the Association. McRoberts continued by pointing out that prior to acquiring the LPN, the LPA was receiving rental income from the LPN and also receiving interest on the money that was used to acquire the property. Those two factors explain why the first two years of operation showed a considerable loss.
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       Bob Hollwager (Lot 759A) shared some questions regarding the format of the financial statement, which were addressed by both McRoberts and Susan Lyons.
       Roger Dunlop gave the General Manager's report. He began by introducing the incoming General Manager, John Rutledge. Dunlop continued by thanking the Board for their support and asked that they give the new General Manager the same kind of support.
       Dunlop talked about the great base of employees at the Association, taking special notice of how well the Association has run during the turnover of various general managers in the last three years. He feels the employees are the best asset of the Association and made special mention of the employees indicated below:
       Kelley Kirtley, Maintenance Department Supervisor
       Mike Monthei, Dredging Supervisor and back-up Dam Operator
       Dennis Merritt, Security Department Manager
       Andy Johnson, Water Superintendent
       Mike Gliem, Dam Operator
       Judy Contner, Office Manager
       Randy Holl, Senior Administrative Assistant
       Connie Butler, Office Assistant
       Larry Bauer, Accounting
       Susan Lyons, Accounting
       Dunlop then identified the part-time employees for the Association. He added that they are always working to improve services to the membership. During the introduction of the employees Dunlop noted that over the last eight years 5.2 million cubic yards of silt has been removed, which equals 650,000 truck loads of mud.
       In December of 2006, the Board put together a Steering Committee to work towards consolidation of the LPA and LPN. The Steering Committee consists of Dunlop, Larry Bauer and John Dinnebier. Dunlop indicated it has been a great pleasure to work with John and Larry on the project.
       Dunlop thanked the membership, indicating he felt they had a good year and noted they came in under budget on expenses by $170,000.00. Dunlop thinks things are moving in the right direction and feels the staff is in place and the Board is focusing on the right issues. He wrapped up by stating there is a lot to look forward to and the Association has a bright future.
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       John Dinnebier, the General Manager and Head Golf Professional for LPN, LLC, then gave an update. He began by giving a brief summary of his work history at the LPN, indicating he has been at the LPN for eight years, starting as the Golf Professional and working up to General Manager four years ago.
       Dinnebier introduced his employees to the members:
       Mike Harris, Chef
       Gina Harris, Bar Manager
       Ryan Gilliland, Restaurant Staff
       Mike Sund, Jr., Restaurant Staff
       Dick and Ilene Ellis, Par Three Managers
       Mike Kleinwolterink, Golf Professional
       Gary Babcock, Golf Professional
       Brandon Waddle, Golf Course Superintendent
       Dan Wollner, Head Golf Course Superintendent
       Joyce Moore, Reservations
       Marlene Chaloupka, Housekeeping
       Dinnebier continued by indicating the LPN is now managing the Par 3 Golf Course, and they have hired a consultant to look at the irrigation system on the National course. The way the irrigation system currently operates, course employees have to manually turn on the irrigation during the night to be sure watering is done before golfers arrive in the morning. Dinnebier complimented the course, stating it is always in good shape and thanked the course employees for their hard work. Dinnebier then detailed the various types of rental and lodging units available at the LPN.
       Dinnebier expressed his pleasure with the LPA's purchase of the LPN. He feels they are making a turn for the better and business has been good. He conveyed his appreciation for the work done by Larry Bauer and Susan Lyons, noting that having financial information in a timely manner makes his job much easier.
       Dinnebier listed the restaurant hours: Tuesday through Saturday 11 am to 9 pm; and Sunday 11 am to 7 pm. There were record rounds of golf played in 2006, just under 27,000 rounds. There was a golf membership drive this year that acquired 98 new members. The lodging now has a new name, Lake Panorama Inn and Suites, and they continue to update motel rooms and town homes.
       Dinnebier concluded by thanking the Board for their support, and Roger Dunlop and Larry Bauer as part of the steering committee. For the first four months of 2007, January
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       through April, the LPN has shown a profit. Dinnebier hopes things continue on budget and they have a year in the black. Dinnebier thanked the members and said he is looking forward to a great year.
       Ron Morden gave the President's report. He began by praising the Steering Committee, which is fundamentally a staff management committee consisting of Roger Dunlop, John Dinnebier and Larry Bauer. He noted the improved operations, cost efficiency, new ideas, and under budget expenses. Morden indicated the Association was very fortunate to have Roger Dunlop as General Manager. Roger is able to get people to work together as a team, creating better efficiency.
       Morden noted the increase in availability of financial information assists both the managers and Board. Larry Bauer and Susan Lyons have been working to upgrade the financial software system and procedures. Their work internally has saved almost two-thirds of the cost estimated for installing the system.
       Morden recognized John McRoberts for his six years of service to the Board. He then gave the operations report and began by listing the new projects and accomplishments, which include the establishment of the Steering Committee and the Appeals Committee, along with a Capital Improvement Plan (CIP). As part of the CIP they are looking at the establishment of an asset replacement reserve which will tie together the depreciation schedules and future capital maintenance.
       Morden spoke about the increased management of financial information and the changes and improvements made in the internal controls, cash handling and check writing. Morden mentioned the expanded and improved quarterly newsletter and noted Randy Holl's work on the newsletter. He reminded members of the information available on both the LPA and LPN websites.
       Morden continued with the operations report by mentioning other successful activities. They have implemented a tracking system on member complaints and work requests. The year-end audit expense was reduced by 90%. A building and contractor packet has been developed that contains rules and requirements for construction. The life cycle on vehicles has been extended, with no purchases made in 2006, and none scheduled for 2007. Expenditures and expenses stayed below budget in 2006. They operated with one fewer administrative employee in 2006, and reduced the summer maintenance help by two employees. In addition, silt is being pumped into the county basin at the upper end of the lake.
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       The Association is looking at operations on a long range basis, rather than just current issues. The Board is looking at the sale of lots on the golf course, which would be a significant source of additional capital for the LPA. Plans are in place for more emphasis on marketing the entire LPA area.
       Morden continued by discussing the asset replacement reserve. In the past, with the limitations placed on dues revenue, the Association has had to use profits from various departments to cover the capital projects. They have sold lots to fund part of the operation, and they cannot continue to sell off assets to do that.
       The LPA has never had a separate dues assessment to cover operational expenses and capital needs. They have never funded a replacement reserve. The financial statements indicate $4 million in property, plant and equipment. These items depreciate and wear out and need to be repaired or replaced. A typical homeowner association will fund an asset replacement reserve so when it is time to replace or repair, the funds are available and there is no need for an emergency assessment. Morden referred members to the information and figures on the handout given at the meeting and reviewed the information in detail, noting that based on those figures, the LPA should have $1.5 million in reserve.
       Morden stressed that the Board is not bringing any specific proposal to the members, but rather presenting the concept. They intend to have a retreat with the board members, steering committee and long range planning committee to look at this issue. The intent is to have a specific proposal for the membership to vote on by the end of the year.
       In order to balance the budget for 2007, they had to cut $70,000.00 from the road maintenance budget. They will seal coat 8 miles of roadways this year. In the past they have done 15 miles a year. According to the Guthrie County Auditor, the total value of the properties around the LPA area is approaching $300,000,000.00. To assure property values continue to appreciate, repairs and improvements to infrastructure need to be made. There is a real need to put money into the infrastructure to keep the property values appreciating within the Association as they have in the past.
       They plan on having more informational meetings, probably on a quarterly basis, in order to share this type of information with the members. Morden asked that if members have expertise in a certain area, and they are willing to share that expertise, to please make it known to the Board and LPA management so it can be tapped into.
       Morden directed the members' attention to the Fin and Feather booth and the retirement center presentation.
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       Morden gave the report from the tellers concerning the balloting for new board members. There were 698 ballots with one spoiled ballot. The balloting results are as follows:
       Eric Chrystal 115
       DaveGoss 310
       John McDermott 442
       Larry Rains 207
       Duane Spicer 384
       Susan Thompson 416
       Randall Walz 99
       John McDermott, Duane Spicer and Susan Thompson were elected to the Board. They will serve three-year terms.
       The results from the balloting for changes to the bylaws was reported. The first proposal, which allows board members to participate in meetings without being physically present, passed with 367 "yes" votes and 285 "no" votes. The second proposal, requiring the payment of Association attorney fees by members who do not prevail in litigation brought against the Association, passed with 414 "yes" votes and 233 "no" votes. The third proposal, which would have allowed for ballots to be unsigned, did not pass. There were 324 "no" votes and 323 "yes" votes.
       Rick Hayes, President of Fin and Feather, gave a summary of their activities for the year. They stocked between 5,000 and 6,000 fish in the lake last year. Rick reminded members of the annual banquet on May 26th, which is their fund raiser to stock the lake. The fish they stock cost about $1.50 each.
       The floor was then opened up for questions and comments.
       John Johnson, Sunset Pines #6, had a question regarding the change in cash balance. Jon Paulsen addressed the question, indicating for 2005 - 2006 there was a decrease in cash and cash equivalents of $73,136.00. Morden indicated this went towards operating expenses and capital purchases.
       Barry Stetzel, Guthrie County Auditor, gave a detailed summary of his office's activities for the year. He began by praising the Board on their decision to hire John Rutledge as the new General Manager, noting that John will be missed as the Guthrie County Auditor. Stetzel introduced Kris Katzmann, the Guthrie County Engineer, who was also in attendance at the meeting.
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       There has been a 14.86% increase overall on lots and dwellings. There are $42,351,688.00 in total assets on Lake Panorama. Lot sales are driving the values up 23.51% while the dwellings increased 9.9%.
       LPA's overall assessed value is $337,671,049.00, which represents 37.65% of all of Guthrie County, which is assessed at $896,761,601.00. That figure includes agricultural land, residential realty and commercial realty. When looking at residential realty only, LPA has 51.59% of the value for the county.
       The average sale price for A lots was $430,132.00, which increased 15% per square foot. The average sale price forB lots was $15,053.00, which increased 20% per square foot on improved lots. The average sale price for C lots was $10,059.00, which increased 10% per square foot. The average sale price for a vacant lot was $142,569.00.
       For assessed values, there was a 10% increase per square foot in B and C lots. Improved B lots had a 20% increase per square foot, while A lots increased about 15%.
       Stetzel noted the state of Iowa is in a housing slump, with the exception of two places that had increases in value - Lake Panorama and the Spirit Lake / Okoboji area. He mentioned the need to assess every year to keep up with values, indicating that if there isn't inflation at Lake Panorama, then the owners have a bigger problem.
       Stetzel mentioned the flood plain maps and the need to solve the problem of out-dated information using a new GIS system. He concluded his talk by noting the need to have funds set aside in reserve for replacements and improvements.
       Mindy Poldberg (Lot 292) had two questions, the first regarding the State's sex offender registry and the second involving green algae in the cove where they live. Attorney Tom Polking addressed the first question, indicating law enforcement has determined that limiting where individuals can live is not an exact solution because the sexual predator can wander to a playground or park blocks away. Polking believes the Board does possess the legal right to remove someone from being a member of the Association, if they so desire. Roger Dunlop indicated he would take a look into the algae problem in the cove, but said there is not much that can be done when you have low water flow in coves, combined with hot weather. The green algae is a big problem, and there are chemicals that can be used, but they are incredibly expensive and may not work.
       Bob White (Lot 92) asked why the assessments are so high if they are in a flood plain. Barry Stetzel indicated the Assessor's office does not think they are in a flood plain, it is a FEMA classification.
       
       Monty Shaw (Lot 691) commended the Board for implementing the asset replacement plan, indicating it is a better way to run a business. At the same time he hopes there might be an annual mechanism whereby owners can review what goes on a long range capital budget. He has been in other associations and has concerns that the funds set aside are ultimately used for real capital improvements. Shaw commented that the Association has been replacing items out of the current operating budget and it would be nice to know what some of the expenses might be on annualized basis, and just how much of that is already coming out of the operating budget.
       Morden addressed Mr. Shaw's question regarding funds in the operating budget to provide for capital. He explained they have basically used the depreciation expense, which runs approximately $300,000.00 a year, to provide for a lot of the capital purchases over the years. Morden again referred members to the handout regarding the asset replacement plan, and more specifically the items that are future potential projects, indicating this is not a complete list, but shows the major items coming down the pike. The $300,000.00 a year in depreciation does provide cash, but it will not be sufficient with these upcoming projects. Morden again mentioned the idea of having quarterly informational meetings in order to get more information to the members.
       Dave Furbush (Lot 331) commented on the issue of water quality and suggested that the membership should do more in the way of lobbying legislators on the importance of increasing the level of water quality throughout the state. Morden echoed the comments made by Mr. Furbush and urged members to talk to their legislators about the importance of water quality in the state.
       Bob Hollwager (Lot 759A) moved to adjourn the meeting. However, there was another question from a member.
       Gary Lewis (Lot 764) inquired about plans for dredging the cove where he lives, indicating the cove has been filling up and is barely usable. Roger Dunlop addressed the question. That particular cove (Lewis Cove) is by the maintenance shop and there is only one silt basin in the area which is pretty full and needs to be re-worked, so that cove will not be worked on this year.
       Dunlop went on to explain that a dredging plan has been presented to the Rural Improvement Zone (RIZ) in order to obtain the funds needed to resolve the dredging issues in these coves. One of the problems they are facing is the lack of silt basins in areas like Hughes Cove and Lewis Cove. Morden explained that another problem is the Association's dredge is too large to work in the small cove areas, and those may need to be handled by
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       amphibius excavators, which are much less cost efficient. They are looking to the RIZ for funding for these projects.
       Hollwager's motion to adjourn was again presented to the members and a second was obtained. The meeting adjourned at 11:50 a.m.
       Board Secretary
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