PECAN PLANTATION OWNERS ASSOCIATION, INC. PECAN PLANTATION COUNTRY CLUB LONG RANGE PLANNING COMMITTEE REPORT

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1 PECAN PLANTATION OWNERS ASSOCIATION, INC. PECAN PLANTATION COUNTRY CLUB LONG RANGE PLANNING COMMITTEE REPORT Chairman: Don Fairweather Members: Bruce Lockwood Gary Bailey Bob Kent Vice Chairman: Ray Lewis Bev Franzen Sam Watts Bob Ziemski Management Representatives: Janice Schefsky and Michael Bartholomew January, 2013

2 TABLE OF CONTENTS EXECUTIVE SUMMARY... 1 INTRODUCTION... 3 MISSION STATEMENT...4 HISTORY OF PECAN PLANTATION... 5 ORGANIZATION AND GOVERNING DOCUMENTS... 7 PREVIOUS LONG RANGE PLANNING EFFORTS MEMBER SURVEY NEW MEMBER QUESTIONNAIRES (LESS THAN 5 YEARS AS A MEMBER) COMMITTEE SURVEY PECAN DEMOGRAPHICS PECAN PROJECTED GROWTH OPERATIONS FUNDING AND ANNUAL BUDGET OPERATIONS FINANCIAL PROJECTIONS ASSET RESERVE FINANCIAL PROJECTIONS ROAD AND DRAINAGE FINANCIAL PROJECTIONS LONG RANGE AMENITY PLAN EXISTING ASSETS AND AMENITIES FUTURE AMENITIES AND FUNDING SOURCES DEVELOPER AND OUTSIDE INFLUENCES ON THE LONG RANGE PLAN BENCHMARKING PECAN AGAINST LOCAL AND NATIONAL ORGANIZATIONS DISCUSSION OF FUNDING NEEDS AND POTENTIAL SOURCES OF INCOME CONCLUSIONS RECOMMENDATIONS REFERENCES ii

3 FIGURE 1. PECAN PLANTATION MAP LIST OF FIGURES FIGURE 2. ALLOCATION OF MEMBER ASSESSMENTS AND DEPARTMENT OPERATING EXPENSES FIGURE 3. ANNUAL NET INCOME OPERATIONS WITH NO ASSESSMENT INCREASE FIGURE 4. TEN YEAR OPERATING FORECAST WITH 2013 ASSESSMENT INCREASES FIGURE 5. CAPITAL ASSET RESERVE AND REPLACEMENT FUND PROJECTIONS FIGURE 6. ROAD AND DRAINAGE FUND IF $10 FEE IS NOT PASSED FIGURE 7. ROAD AND DRAINAGE YEAR END FUND BALANCE IF $10 SPECIAL ASSESSMENT IS PASSED. FIGURE 8. BENCHMARKING PPOA LOCAL CLUBS COMPARISON FIGURE 9. BENCHMARKING PPOA LOCAL AND NATIONAL FULL MEMBERSHIP CLUBS COMPARISON FIGURE 10. MEMBER /COMMITTEE INITIATED NEW AMENITY PROJECTS LIST OF APPENDIX APPENDIX A MEMBER SURVEY AND RESULTS APPENDIX B. STANDING COMMITTEE RECOMMENDATIONS APPENDIX C. LONG RANGE PLAN ITEMS COMPLETED OR REMOVED APPENDIX D. NEW AMENITY EVALUATION MATRIX APPENDIX E CONSOLIDATED OPERATING BUDGET APPENDIX F. CAPITAL RESERVE FUND PROJECTIONS APPENDIX G. ROAD AND DRAINAGE FUND ANALYSIS All changes to this document must have prior approval by the Long Range Planning Committee. iii

4 PECAN PLANTATION OWNERS ASSOCIATION INC. PECAN PLANTATION COUNTRY CLUB LONG RANGE PLANNING COMMITTEE REPORT January, 2013 EXECUTIVE SUMMARY This long range plan contains a discussion of member surveys and other factors which may impact construction of new amenities and improvements to our existing community in order to meet the expectations of our members. The Long Range Planning Committee took into consideration outside factors that may impact Pecan members or Pecan Plantation Owner s Association s (PPOA) ability to fund operations. These factors include the increase of PPOA membership beyond 3000 members (and the associated change to capital asset funding in accordance with the amended LENMO agreement), demographics not only within the limits of Pecan Plantation but also the contiguous communities around Pecan Plantation, and state/local government projects and initiatives affecting our community. The PPOA Board of Directors and management will need to monitor these factors or issues to provide adequate time for planning and action to effectively meet potential changes going forward. The Long Range Planning Committee (LRPC) obtained in-put from the members by using an individual member survey, input from management, and input from standing committees. Additional information was gathered from past surveys, and focus group results. Many recommendations by standing committees were related to improvement to existing amenities and these are scheduled for completion as outlined in the most recent Capital Asset Reserve Study. Several potential new amenities identified by the LRPC will require New Capital as defined in our by-laws or policies and will require 50% plus 1 approval vote by the membership in order to implement and 66 2/3% majority member vote if additional dues are required to fund operations. Several amenities suggested by members will require cooperation/assistance from the Developer and will require more capital funds than may be available in the next 10 years. In addition, operating funds and reserve funds for new amenities must be considered in the decision to construct any new amenity. Based upon an evaluation of the 2012 survey data by the LRPC, increased golf capacity, a fitness center, and more walking trails rank highest on the respondents list of new amenities. There are both financial and logistical issues to solve before these new amenities can be initiated. While other amenities identified by the member survey have little interest to the majority of the respondents they have low capital and operating cost and could be accommodated with existing revenue projections. The three highest potential new amenities identified by the members are discussed below. Fitness Center A fitness center is a high priority to the respondents of the survey. A fitness center has also been identified in past surveys and focus groups as a desired amenity. Construction of a fitness 1

5 facility and equipment would be expensive. Currently, a fitness center is available at the Nutcracker Clubhouse. For an initiation fee and monthly dues, any member of PPOA can join the Nutcracker fitness facility. The 2012 member survey did not include an option for paying for the operational budget for a new fitness center, and it is possible that the members may have voted differently if there was to be a monthly fee for the amenity or if a general membership dues increase was required to operate the facility. Additional Golf Capacity Additional golf capacity also ranked high as a new amenity. Pecan had an option to purchase the Nutcracker Golf Course. That option has expired; however, the Developer has indicated he is still willing to sell to PPOA. At this time there are insufficient funds in the Capital Reserve Account to make this acquisition. However, capital funding could probably be obtained through a loan, backed by future deposits from initiation fees in our Capital Asset Reserve and Replacement Fund. Operational funding can be obtained by increasing the golf cart fees or a dues increase or some combination. Based on the LENMO II Agreement, Pecan has an option for acquiring 200 acres from the Developer for a third golf course (option expires in 2016). A sub- committee to the LRPC is currently evaluating golf capacity and funding options. Hiking/Walking Trails Developing additional hiking/walking trails is another high priority ranked new amenity. In some previous long range plans or proposals, a paved hike and bike trail from the front circle to the Pecan Activity Center (PAC) was considered. The LRPC is of the opinion that a paved trail to accommodate bicycles is not justified. Linier parks or nature trails are considered more desirable. The LRPC recommends that a linier natural or improved path be considered from the PAC or front circle area to and through the Campground area. Trails within some of the existing subdivisions, or trails within the Orchard will require coordination and cooperation with the Developer. Existing Amenity Upgrades Results of the 2012 survey suggest that the golf course, clubhouse and PAC facilities are the most frequently used PPOA amenities and many recommendations for improvement of the facilities were made by members and committees. Funds for improvements/replacement of these assets and a schedule for implementation of these improvements are identified in our Capital Asset Reserve Study. Many of the general comments revolve around appearance of these facilities and general appearance of Association property which requires operational not capital funding. Without an operational dues increase, many of these improvements cannot be made. The committee recommends that new amenities requiring significant operational funds not be approved until members indicate their willingness to pay for the operational funds necessary either with a dues increase or user fees. Current operational funds should be directed at maintaining and enhancing existing amenities and community property. 2

6 INTRODUCTION Long Range Planning is an on-going and dynamic process. It begins with an evaluation of the current status of the organization and identifies additional or upgraded amenities or needed actions to meet the expectations of current and future Pecan members. The process also includes the identification of funding sources for operations and maintenance of common amenities and the identification of potential outside influences on the Pecan community Over the past two years, PPOA has completed two of the steps necessary to develop a Long Range Plan for Pecan Plantation. The Capital Asset Reserve Study and the Long Range Road and Drainage Study established a replacement or improvement schedule and identified the financial resources necessary to maintain our roads and existing capital assets over the next 20 years. In May 2012 the Board of Directors appointed a Long Range Planning Committee with the task of determining the capital and operating cost and funding sources for our future amenities. Incorporation of the first two reports with the cost and funding sources for recommended new amenities forms the basis of the Pecan Plantation Long Range Plan. The community has been involved with the development of this plan through several avenues: 1. A survey was sent to PPOA members requesting information on their use of existing amenities and a prioritized list of possible new amenities (See Appendix A for a copy of the 2012 survey and tabulated survey results). In addition, individuals well versed in the history of Pecan were interviewed. The committee assembled the background and financial data, member surveys and committee reports and capital and operating costs from a number of sources. 2. Standing committees for existing amenities were requested to provide information related to existing and suggested future amenities including capital requirements and operating cost. (Appendix B) Pecan Plantation is a diverse community and cannot be all things to all people. The majority of Pecan members did not return the 2012 member survey. Many members do not attend Board or committee meetings; do not serve the community as a volunteer nor do they vote in Pecan elections. However, the majority of Pecan members, as measured by the 2012 survey, believe they are reasonably well informed of what is occurring in Pecan and are satisfied with living here. 3

7 MISSION STATEMENT The mission of the Long Range Planning Committee (LRPC) is to develop, maintain and present to the Board and the members a financially sound Long Range Plan that represents the changing dynamics of Pecan Plantation. VISION The vision of the Long Range Planning Committee (LRPC) is insuring that a Living Document exists that is a roadmap of how Pecan Plantation will evolve over the next ten years. OBJECTIVES Identify community amenities to meet expectations and preferences of Pecan Plantation members. Identify potential funding sources to construct, replace, maintain and operate existing and future amenities. Identify potential outside influences that might impact Pecan Plantation s Long Range Plan. Develop and present to the Board of Directors, management and members a 10 year Long Range Plan for PPOA/PPCC to be updated on an annual basis with status, revised expected deliverable dates, and new amenity additions. 4

8 HISTORY OF PECAN PLANTATION In the late 1960s, after the construction of Lake Granbury, Paul Leonard, Bob Leonard, Jim Anthony and Leland Hodges formed the Republic Land Company and began development of Pecan Plantation on land owned by the Leonard family. By 1971, the clubhouse, golf course, airport and several recreational areas were completed. In 1972, the Developer established two separate organizations: the Pecan Plantation Owners Association, Inc. and Pecan Plantation Country Club (PPOA/PPCC). Initial monthly dues were $15 per month and it was agreed that the Republic Land Company would complete, operate and maintain the amenities and infrastructure, at its expense, until such time as the amount of dues collected from PPOA members was sufficient to provide the cash flow necessary to assume those obligations. In 1978, there were enough members in the Owners Association to justify the transfer of common property to PPOA and the Turnover Agreement was signed on August 1, At this point, Pecan Plantation Owners Association, Inc. became the owner of all the land and facilities that were Pecan Plantation. The ownership of Leonard Bend Farms, which was all the land not within Pecan Plantation, remained in the ownership of LENMO, Inc. This Agreement has been amended several times with the most significant being April 2, This agreement is known as LENMO II. By membership vote in December 2000, several changes were made to the original agreement. Major changes were as follows: Changed maximum membership from 3000 to 4500 Developer agreed to provide additional amenities to include the PAC, PAC pool, playground, 20 acre horse pasture, 2 mile equestrian trail and sports fields Conveyance of office and lots at the front gate Relocate the front gate and guard house Option for PPOA to purchase Nutcracker An additional 200 acres set aside for a 3 rd golf course The option for PPOA to purchase the Nutcracker expired in 2008; however, the Developer has indicated he is still open to negotiations to purchase the Nutcracker. The Option for the Developer to set aside 200 acres for a third golf course expires on November 8, Today, the members of Pecan Plantation enjoy a residential community located inside a 17 mile loop of the Brazos River (Figure 1). The community is accessible by two gated entrances and two landing strips. The Leonard Bend Pecan Orchard in the center of Pecan and the undeveloped land on the opposite side of the Brazos River provide a relaxing and peaceful environment for all members to enjoy. A central commercial area (owned by the Developer), including: a bank, food store and gas station, liquor store, golf cart retailer, bistro, medical office, pharmacy and dry cleaners, barber shop, veterinarian, pet groomer, church, and car wash provide many convenient services to Pecan members. 5

9 Figure 1. Pecan Plantation Map 6

10 ORGANIZATION AND GOVERNING DOCUMENTS PPOA and PPCC are not-for-profit corporations and have the same Board of Directors and all lot owners are members of both corporations. For all practical purposes, the two corporations function as a single unit. However for tax and accounting purposes, two different sets of accounts are required and two separate tax returns are filed. For many years, membership dues were split with one half being paid to PPOA and one half to PPCC. Since 2010, based on a recommendation from our accounting firm, membership dues are paid only to PPOA and PPCC is paid a management fee. PPOA and PPCC are subject to various federal and state laws which govern not-for-profit organizations and country clubs. In addition, a number of By-Laws, Board Policies, Rules and Regulations, are pertinent to the operation of PPOA/PPCC. Those which are most important to the Long Range Plan are discussed below: The By-laws for PPOA/PPCC are the primary documents which control activities and governance in Pecan. Of particular importance for the long range plan is the requirement for a 2/3 majority vote for dues increases (Article 13, Section 4) and a 50% plus 1 majority vote for new capital projects that exceeds $50,000 (Article 7, Section 10). In addition, the By-laws prohibit PPOA from charging green fees for the existing golf course and other user fees for certain amenities. PPOA/PPCC is a common interest or shared amenity community which means that all members are charged the same dues and have equal access to all amenities. Board Policies: The day to day management and operation of PPOA/PPCC is governed by the many policies developed by the Board of Directors. The primary policy impacting this long range plan is the Board Policy Section 12.9 which dedicates new member initiation fees to the Capital Asset Reserve and Replacement Fund and Board Policies Sections 10 and 11 which control capital expenditures. These policies can be changed at any time by a vote of a majority of the Board of Directors. Developer Agreements: The LENMO Agreements impact the long range plan in a number of ways, including restrictions on the use of any land conveyed to the Association from being used for commercial or business purposes other than activities directly associated with the operation and recreational facilities. In addition, LENMO II limits the Association from increasing initiation fees, building fees and transfer fees above the CPI. As of 12/31/12 the PPOA membership was 2905 members. The provisions of the amended LENMO II agreement requires that new initiation membership fees for members exceeding 3000 be reserved for new amenities and not for replacement of existing amenities. The LENMO II Agreement also contains conditions and time limits on the purchase of the Nutcracker Golf Club and/or the donation of land for a third golf course. 7

11 PREVIOUS LONG RANGE PLANNING EFFORTS Over the years, Pecan Plantation has had a variety of long range plans developed either by external consultants or internally by members. These plans have historically accomplished more than many members may think they have but all have performed poorly in communicating their outcomes over the time span they covered. The following breakdown of previous plans gives a brief history of the plans. Many of the expressed desires of members have been executed. Some are still waiting to be implemented based on financing or agreements from other parties. An important component of each of these plans is the cost and ongoing maintenance of the amenities once developed. It is worth noting that what we face today is no different than what Pecan Plantation Owners Association faced years ago how to pay for all that our members want and how we are operationally going to maintain the amenity once developed Long Range Business Plan A 10 year total management Long Range Plan (LRP) for PPOA including managing current assets, financial planning, operations, employee retention, future asset development. Because our organization is 25 years older now and have in place a strong management team and financial management commitment, many of the issues raised in 1987 are no longer issues but some still exist such as funding for ongoing operational needs. Some of the amenities recommended in : indicates those implemented. o Golf cart storage barn - o Boat storage shed over water at Marina - o Convenience store at Marina - o Health/fitness club o Expansion of Stables - o Snack bar near Pro Shop - o Handball/racquet ball courts o Athletic field for soccer/softball Long Range Plan An extensive 10 year vision for PPOA was developed by the Long Range Planning Committee that focused on external issues and their potential effect on Pecan and internal issues such as current amenities, organization and financial structure of PPOA. Some of the key recommendations made in the Plan include: indicates those implemented. o Determine how much money is required to replace bridge and major road repairs - o Special assessment and 10 year financing to replace bridge and rebuild our roads - o Establish a capital reserve fund for ongoing road maintenance - o Update Clubhouse Inn facilities - o A second golf course completed or underway within the next 10 years 8

12 o Capital expenditures made for improvement of Marina expansion of Convenience Store, additional deep water slip storage, deck expansion - o Institute bar code system to automatically active gate entry - o Develop a five year financial plan for operational and capital needs requirements including funding requirements o Capital Reserve/Asset Study is a 10 year plan in place now for current amenities, their upkeep and ongoing maintenance requirements - o No plan is in place currently for operational requirements 1999 Needs Survey Report Purpose: to identity the magnitude of new capital spending required over the next ten years The following are some of the recommendations from this study. indicates those implemented. o Acquire land for sports complex, 2 nd swimming pool and athletic facility o Acquire land for future Central Administration Facility o Acquire land for central maintenance facility o Replace or repair clubhouse roof o Replace air conditioning system o Build a large golf cart storage barn o Expand and remodel golf Pro Shop o Acquire land for boat and trailer storage at Marina o Add more wet slips o Relocate front gate-house o Add additional security patrol cars o Obtain additional pasture for Stables o Acquire or build second golf course 2000 New Facilities Strategy for Pecan Plantation Focused on acquiring land and financing/assessment increases to pay for new amenities and/or upkeep of current amenities 2006 Long Range Planning Document Developed by Club Mark using focus groups, the document summarizes their input on Food & Beverage, facilities maintenance, activities and events, governance and communication improvements. The report also provided a framework for developing future long range plan documents Amenity Survey New/Expanded Amenities, Existing Amenities Improvements, other members and Committee Chairs responded to an generated survey asking for input on our amenities and suggestions for new amenities. Of note, the top two new amenities recommended in 2009 were a 2 nd golf course and a fitness/exercise facility Although there was no formal report prepared, the 2011 LRP Committee discussed the 9

13 following: Hiking Trail from front gate to Nutcracker but the cost was prohibitive. In addition a special committee was appointed to look at other trail options including trails through the orchard and near the campgrounds. Skeet range needed 20 acres: eliminated due to no available land Access to the River - $10K allocated in the next capital budget, however the project was not implemented Appendix C contains two spreadsheets which identify previous and current long range plan recommendations for new amenities. In most cases, the same amenities have been identified several times, suggesting they continue to rank high on members wish list. The LRPC identified those recommendations which have been completed and those which have been removed for various reasons. The remaining amenity recommendations from previous and current LRPC are contained in Appendix D MEMBER SURVEY In August 2012, members were sent a survey either by attached to their monthly statement or a paper copy included in their monthly statement. The survey was designed to obtain decision-oriented information for inclusion into the long range plan and to obtain specific and current information from a representative sample of members. Members were requested to return the surveys by September 15, Approximately 24% percent of our members returned the survey (703 out of 2905) by the due date. One goal of the survey was to collect data from a representative sample of Pecan members, sufficient to determine the frequency of existing amenity use and membership interest in additional amenities. The findings of a good survey should have a high level of reliability. According to statistical guidelines, for a membership of 3000, we should have at least 341 completed survey forms to have a 95% confidence level and a survey results that are (+or -) 5% margin of error. Our survey exceeds the number required to be statistically valid. However, 98% of the responses were from members living in Pecan and may not reflect the opinions of those who only own lots but reside elsewhere and do use the amenities. These members represent approximately 18% of the membership which is an important consideration when trying to obtain a dues increase which requires a 2/3 majority vote of the members. A copy of the survey form and the tabulation of the survey results are contained in Appendix A. In addition to the survey questions responses, other comments and suggestions for additional amenities not listed in the survey were tabulated and are also contained in Appendix A. The following general conclusions can be drawn from the survey results: 1. In general the majority of Pecan members are satisfied with living in Pecan. 88 % responded that they were satisfied, 10.5 % neutral and 1.5 % unsatisfied. This compares favorably to a 2012 national survey of HOAs which suggested 70% of HOA members were satisfied, 22 neutral and 8% unsatisfied. (IBOPE Zogby International, 2012) 2. A majority of the members in Pecan do not make frequent use of many of the facilities or amenities, yet are satisfied with living in Pecan. Previous surveys and general 10

14 impressions seem to suggest that security, peaceful area, wildlife, and nice surroundings are important. (none of which were included in the 2012 survey) 3. Members who do not reside inside Pecan Plantation were less likely to return the survey forms. 4. While there are a significant number of members under the age of 65 and still working, over 50% of respondents are older than 65 and approximately 64% are retired. 5. Generally respondents noted they are well informed about activities in Pecan. NEW MEMBER QUESTIONNAIRES (LESS THAN 5 YEARS AS A MEMBER) Based on the 2012 member survey, approximately 27% responding have lived in Pecan for less than 5 years. To further determine these new members interest and to identify what attracted them to Pecan, the responses to a questionnaire completed by new members who moved or purchased a lot in Pecan from January 2007 to June 2012 (834 responses) were reviewed. It is clear that the new residents who moved to Pecan liked the idea of living in a gated community with good amenities and they enjoy an active lifestyle. In addition to golf; fishing, tennis, boating, and hiking were frequently listed as hobbies or activities that attracted them to Pecan. Others listed hobbies such as crafts, card games and other activities which are available in Pecan both at the PAC and the Clubhouse. Approximately 60% of the people moving to Pecan moved here based on recommendations from friends and family STANDING COMMITTEES SURVEY Many of the standing committees representing users of our amenities were requested to develop a 0 to 5 year and a 5 to 10 year amenities plan and to provide estimated capital and annual operating costs. Many of the new amenities suggested by the committees were actually improvements to existing amenities. Improvements to existing amenities are budgeted and scheduled in the Capital Asset Reserve Study. Several other recommended amenities or improvements cost less than $2500 and should be classified as an operating expense, and not an asset. The 2012 standing committee survey results are contained in Appendix B. 11

15 PECAN DEMOGRAPHICS Most HOA surveys suggest that members in HOAs are older, better educated and have higher incomes than the general US population. Comparison of U.S. census data for Pecan and surrounding areas suggest that is certainly true for Pecan The demographics of members in Pecan appear gradually to be increasing in age when comparing the 2000 vs U.S. Census data. The median age has increased by 5.5 years to 59.9 in 2010 compared to 53.4 in During the same 10 year period the population of the Pecan Plantation CDP (Census-Designated Place) has increased from 3544 to 5294 or 49%. Although the average Pecan population has continued to age, it is important to point out that with our population growth, we remain a very diverse community with each of the groups from children, young adults, mature adults and retired groups showing growth in absolute population. It is therefore important to retain, and if possible, improve the broad mix of amenities which make Pecan Plantation an attractive place to live. U.S. Census Data for Pecan Plantation CDP Year of Census Age group, yrs Population % Population % In addition to the U.S. census data, selected demographic information was solicited in the 2012 member survey. The age brackets in the 2012 member survey versus the census brackets were different but confirm the fact that most Pecan members are of retirement age and are in fact retired. However, there are a significant number of members who work full or part time. Additional demographic data for Pecan residents is included in the 2012 Member Survey (Appendix A). 12

16 PECAN PROJECTED GROWTH As of December 31, 2012, Pecan Plantation had 2905 members and 2377 of them own or rent homes inside the gates. Some lot owners have a primary residence outside the gates and plan to construct a future home in Pecan. Other members have purchased lots only to have access to the golf course and other amenities. If existing vacant lot owners (approximately 500) decide to build homes, it would increase the demand on existing amenities, but would not increase the number of members or operating funds from monthly dues. The Developer has approximately 100 lots for sale and PPOA owns approximately 19 lots. The Developer has the right under the 2001 LENMO II Agreement to develop and sell sufficient lots to reach a total of 4500 members. Build out of Pecan could ultimately approach a population of 9,000 to 10,000 people. There are many factors which will impact growth, including the economy, and the Developer s plans or ability to increase the number of lots available for sale. Figure 1 is a 2005 map showing the Developer s conceptual plan for Pecan. Most of the proposed lots are not platted allowing the Developer to maintain an agricultural exemption on the property. The appearance and types of amenities in Pecan are key to the Developer s ability to sell lots and the continued sales of existing homes. Discussions with Granbury area real estate agents suggest that Pecan is the best deal in Hood County and Pecan seems to sell itself. Realtors mentioned the pleasant appearance of Pecan and the central commercial area (Pecan Foods, the pharmacy, barber and hair salon, bank, dry cleaners, etc) as being very positive for new buyers. All of the realtors contacted felt the members dues were low for the number and quality of amenities and if you are a golfer then Pecan is the place for you. The only negatives were the commute distant for those who work in DFW area and the slow travel time in Pecan to get to the entrance/exit gates. While the ultimate build out may result in 4500 members, by the end of this ten year plan, Pecan is projected to have 3000 to 3100 members. Given the recent increase in the new home construction, this may under estimate growth. Growth rates should be reviewed annually For planning purposes, the LRPC has adopted the same expected rate of growth used in the financial projections in the Capital Asset Reserve Study and the Road and Drainage Study (10- net new lots or new home sales per year). This growth rate is significantly below the 2.15% compound growth rate projections for Hood County (HDR Engineering). For the last several years, Pecan s growth rate has been impacted by a depressed real estate market. Many potential retirees are not moving to retirement communities because they may be under water on their existing home mortgages (Associated Press, 2012). If or when the real estate market rebounds, we can expect the growth rate to increase. Exceeding the projected growth rate (new lot sales) and existing home resale rate will result in more money deposited in the Capital Asset Reserve and Replacement Fund and in the operations fund from building fees, transfer fees and monthly dues. 13

17 OPERATIONS FUNDING AND ANNUAL BUDGET Funding for Pecan s operations comes from a number of sources. The operations portion of the monthly member assessment is currently $80.00 per membership lot. Additional revenues are derived from new member transfer fees, tenant fees, construction permits, income from operations (food & beverage, inn, golf shop, golf cart fees and marina, stables), and fees collected from members guests. PPOA is restricted by By-Laws Article 4, Section 3 from charging members fees for the use of a number of amenities, including the golf course, tennis facilities, airport and marina launching. We do charge fees for golf cart trail use, marina slip & storage rentals, stable rental and other fees to recover some costs. PPOA has, for a number of years, operated at a funding level below ideal. Based on benchmarking studies our costs to properly maintain and operate Pecan are well below normal for country clubs and Owners Associations of comparable size and amenities (see Benchmarking: Figures 8 and 9). With the exception of the stables and marina, the expenses associated with our amenities exceed the income generated by the amenities and the deficit is made up from the operations portion of the monthly member assessment. Over the last several years, management has evaluated service providers and contracts for potential savings which resulted in a contribution to the bottom line however there are limited opportunities to obtain additional savings from our service providers. The costs of most services continue to increase. The downturn in the real estate market has also increased the number of foreclosures and the amount of bad debt that Pecan must write off. Annually, PPOA management prepares a draft budget for presentation to the Finance Committee and Board of Directors. Typically there is insufficient projected revenue to meet all management s recommendations. The Board normally directs management to write a breakeven budget and accordingly, service is reduced in some areas and/or maintenance and needed projects are delayed. Typically the only way to balance the budget is to reduce labor and benefit costs, increase revenues at our amenities, reduce services, and/or close amenities. An operating budget for fiscal year 2013 is contained in Appendix E. Pecan Plantation is a shared amenity community and the operations portion of member dues is not reserved for specific projects or amenities. The pie charts in Figure 2 illustrate the sources of funding and the relative cost of operating each department and/or amenity. 14

18 Current Allocation of $80.00 Assessment Golf, $11.52 Marina, $(0.31) Roads & Grounds, $7.84 Facility Maintenance, $3.32 Sports & Recreation, $7.74 Stables, $(0.06) Member Services, $1.08 Inn, $1.96 Food & Beverage, $3.13 PPOA/PPCC Corp, $30.33 Communications, $0.50 Security & ACC, $12.94 Departmental Operating Expense Golf, ($411,255) Marina, $11,020 Roads & Grounds, ($279,904) Facility Maintenance, ($118,649) Sports & Recreation, ($276,250) Stables, $2,141 Member Services, ($38,650) Inn, ($70,023) Food & Beverage, ($111,559) Communications, ($18,017) Security & ACC, ($461,870) PPOA/PPCC Corp, ($1,082,605) Figure 2. Allocation of Member Assessments and Department Operating Expenses (2012) 15

19 OPERATIONS FINANCIAL PROJECTIONS In 2012, PPOA management prepared a 10-year financial forecast of operational activities, including revenues, labor expenses and operating expenses. Assumptions utilized in the financial analysis include: 1) Fiscal Year 2013 Operating Budget used as a baseline 2) Estimate of 10 new members per year 3) Annual inflation factor of 1.5% applied to other revenues (excluding assessments), labor and benefits, operating expenses (Note: The Roads and Drainage Fund and Capital Asset Reserve and Replacement Fund projections used a 2.5% inflation factor) 4) Assumed no increase in Operations portion of member assessment 5) Assumed no increase in current staffing levels The results of the financial analysis are included here, and show that current funding is inadequate to maintain current operations and services. (Figure 3) 100, ,000 0 (36,698) (69,624) (103,189) (137,401) (172,270) (207,806) (244,019) (280,919) (318,517) -200, , , Budget Figure 3. Annual Net Income from Operations with No Assessment Increase or Staff Additions. A second financial forecast (Figure 4) which includes the dues increase to be voted on at the 2013 Annual Meeting suggest that even with the proposed increase, additional operational funds will be required by

20 Figure 4: Ten year Operations Forecast with 2013 Assessment increase ASSET RESERVE FINANCIAL PROJECTIONS Capital Assets are defined in Policy Statement Section 10 as: Any tangible, long-lived asset including property and equipment that have an estimated useful life of three years or greater and a cost of $2500 or greater In 2011, PPOA management performed a detailed physical inventory of PPOA capital assets, including condition, estimated remaining useful life and estimated replacement cost. This data was then used to prepare a 20-year financial analysis to determine future funding requirements. The plan was updated in 2012 when additional assets requiring replacement were identified. Capital Asset funding is derived from 2 sources: $8.00 monthly assessment per membership lot; and new and existing home sales initiation fees (by Board Policy) currently $3,080 per member. Additional non-reoccurring funds from a Charter contract were also deposited in the fund. Funding assumptions utilized in the financial analysis include: 1) Estimated number of new and existing homes and lots sold per year 2) Estimate of 10 new members per year 3) CPI increases applied to initiation fees for new members 4) Expected date the membership will exceed ) Annual inflation factor of 2.5% applied to asset replacement costs 6) Assumed no increase in the capital reserve portion of member assessments 17

21 The results of the financial analysis (Figure 5) suggest that current funding is adequate for the repair and replacement of existing assets. The analysis does not consider any new assets or amenities. 1,600,000 1,511,249 1,400,000 1,200,000 1,221,266 1,134,052 1,248,127 1,049,032 1,000, , , , , , , , , , Figure 5: Capital Reserve and Replacement Fund Projections A detailed Reserve and Replacement Schedule, which contains yearly asset replacement costs, is found in Appendix F. ROAD AND DRAINAGE FINANCIAL PROJECTIONS In 2011, PPOA s Infrastructure Committee completed a detailed 20-year plan for maintaining the Association s roadways and drainage systems. Included in the plan are estimated costs for micro-surfacing, asphalt overlays, repairs of damaged areas of roadway, shoulder restoration, ditch cleaning, drainage system repairs, and the maintenance of the airstrip. The expected costs were then turned over to the Finance Committee, who performed a financial analysis. Road and Drainage capital funding is derived from 2 sources: 1) $9.00 monthly Road Assessment per membership lot; 2) $10.00 monthly Special Road Assessment per membership lot, which is set to expire on November 20, Funding assumptions utilized in the financial analysis include: 1) Estimate number of 10 new members per year 2) Annual inflation factor of 2.5% applied to costs 3) Expiration of the $10.00 Special Assessment on November 20, 2014 The results of the financial analysis (Figure 6) show that current funding is inadequate to maintain PPOA roadways and drainage systems. A detailed cost analysis of the Road and 18

22 Drainage Fund is contained in Appendix G. Additionally, the analysis does not consider any new roadways or drainage systems to be acquired in the future. $1,000,000 $0 ($1,000,000) ($2,000,000) $208,975 $263,558 $43,704 ($470,207) ($1,166,635) ($1,581,337) ($1,564,556) ($1,998,814) ($1,995,234) ($2,394,067) ($2,879,052) ($3,737,836) ($3,581,898) ($3,000,000) ($4,000,000) Figure 6: Road and Drainage Funds if $10 fee is not passed. Assuming that the $10 road fee set to expire in 2014 is extended by member vote (requires 2/3 majority) the funding level is considered acceptable. (Figure 7) Figure 7: Road and Drainage Year End Fund balance with Extension of $10.00 Special Assessment 19

23 A long range expenditure plan for roads and drainage, without the proposed dedicated assessment increase is contained in Appendix F. If the 2013 proposed road assessment is not passed, PPOA roads will begin to deteriorate by 2016 because adequate funding will not exist to maintain them. 20

24 LONG RANGE AMENITY PLAN This long range plan is divided into two components: Existing Amenities and Member desired future amenities. EXISTING ASSETS AND AMENITIES A Capital Asset Reserve Study, conducted in 2011 and updated in 2012, identified current assets and determined the capital funding necessary to replace and renovate these assets. Under the current funding and replacement assumptions, the Capital Asset Reserve and Replacement Fund is adequately funded for our current amenities. Based on current income projections, significant new amenities in the near term would require additional sources of funding other than the Capital Reserve Fund. After 2021, the Capital Asset Reserve and Replacement Fund will continue to grow exceeding yearly needs for existing amenities and will support the addition of new amenities either with cash or using the fund and projected income as collateral for a loan. The following covers the general history and condition of our major amenities and suggestions for expansion or improvements made by various committees, members or management. The LRP Committee has screened the recommendations and eliminated those which can be considered an expense item and those currently scheduled for improvements in the Capital Asset Reserve study. In addition, the results of the 2012 member survey were used to determine the usage patterns of existing amenities by Pecan members that responded to the survey. Airpark The initial airpark runway was constructed by the Developer. A 1979 study of the Airport runway reported the airstrip served 45 member planes, visitors, and friends. At that time, the airstrip was an asphalt surface of 3,600 feet in length and 50 feet wide with turn-around taxiway areas located at the North and South ends of the runway. Each of these Safety run up areas is 450 feet by 30 feet. In 2005, the runway was resurfaced to prolong the life of the asset. Current usage for the airstrip is over 140 member planes and frequent guests. Over the years, lighting was updated and parking tie-downs and upgraded signage were added. A GPS landing system will be installed and funded by airpark residents. A fueling storage tank for aircraft fuel is owned and maintained by an independent airport committee at no cost to the Association. The Infrastructure Committee and the Airport Committee has developed a maintenance plan for the runways and ditches. The cost has been included in the Road and Drainage plan which is part of this Long Range Plan. A second airstrip was constructed in the new Landings development and opened in the spring of This airstrip services members who live at the Landings. The runway is constructed of asphalt, is 3,100 feet by 50 feet, and has grass taxiways. The airstrip and associated facilities are maintained by the Landings Development at no cost to PPOA Member survey results: Approximately 10% of the survey respondents use the airport at least once per month, while 83% have never used the airport. 21

25 Clubhouse Complex The Clubhouse Complex, constructed in 1972, consists of the main building, swimming pool, tennis courts and 217 parking spaces. Golf course operation was initially from the eastern onethird of the basement area. Major and minor repairs and interior redesigns have periodically been completed to keep the facility up to date. In 2002, a new golf cart storage area was constructed and the vacant space in the clubhouse basement redesigned into the 19 th hole, a portion of the hotel rooms were converted to administrative offices and conference rooms. Dining facilities and recreational rooms were increased to better accommodate the growth in population. In 2005, the firm Theil and Theil completed a Clubhouse Master plan. The plan was used as a guide for the House Committee to begin renovation of the Clubhouse. Most of the interior of the Clubhouse has been renovated, with the hotel rooms and administrative offices completed in The cost of operating the clubhouse dining facilities, front reception area and the Inn exceeds the revenue produced by members and guests who use the facility. The Brazos Room patio dining area was covered and upgraded in November Areas still in need of updating include the Brazos Room and kitchen Member Survey results: There are a number of different Clubhouse amenities included in the survey results: Amenity Use at least once/month never use Brazos Room 66% 14% 19 th Hole 54% 25% Terrace Room 48% 28% Club Pool 35% 36% Meeting Rooms 31% 46% Inn 14% 45% Teen Room 7% 84% Golf Course Opened for play in 1972, the course was constructed and operated by the Developer until the Turn Over Agreement in Subsequent year s improvements to the course included paved cart paths, stonework around posts and planting beds, fountains and some new tee boxes. Labor and money donations by the LGA and MGA along with the golfing community continued the improvements of the course. Irrigation systems and resurfacing of the greens, funded entirely through voluntary contributions were completed in Since 1988, play at Pecan has increased at 3.5% per year and now averages approximately 44,000 rounds per year. The 1980 s upgrades of the greens irrigation system, tees, and fairways included electric valves wired to a controller making them automatic. A group of members installed a 5 wide concrete cart path around most of the course, replacing the original asphalt. In 1996, several holes were upgraded with triple row irrigation; in 1997, the greens were resurfaced using tiff dwarf grass and some sand added to the profile. In 1998, holes were changed from single row irrigation to double row. In 2011, the old pump station, which operated on a series of switches and a pressure tank, was replaced with a new flowtronix pump station, with upgraded pressure maintenance pump and VFD technology. In 2012 it was noted that 22

26 replacement of several rock retaining walls at the golf course would be required. In 2008, Colligan, a golf course consultant, completed a Master Plan for the Golf Course. The completed greens renovations were a part of the Master Plan and included complete remodel and replacement of the greens. The renovation of the greens and bunkers was approved by the membership in March 2012; and the renovations completed in October Future renovations and improvements to the existing golf course are covered in the Capital Asset Reserve Study. The Association is prohibited from charging green fees, although cart fees and profits from the pro shop partly offset the operations costs. Member dues make up the remaining operating cost Member Survey results: Approximately 56% of the respondents reported using the golf course at least once per month while 32% reported they never used the course. In addition, 43% reported using the driving range at least monthly while 39% reported never using the driving range. Marina The Pecan marina was built around 1968 and was initially owned by the Leonards. At some point the Leonards sold the marina to Bob Hedges. The marina was expanded in 1980 with the addition of a second building. With boating facility needs growing, in 1984, wet-slip storage was built and in 1985 because of continuing population growth in Pecan, the second wet-slip storage was constructed. In 1988, the storage capacity for gasoline was increased and picnic facilities adjacent to the marina were added. Pecan Plantation acquired the marina in 1993 and in 1996 the third wet-slip storage was added. Over the years, decking, additional concrete slab expansions to the patio area, and general upgrades to equipment and storage were made. In 2009, thirty (30) new deep-water wet-slips were added. The cost of the new slips was approved by the membership and money was borrowed from the Capital Asset Reserve and Replacement Fund to pay for the expansion. The loan is being paid back from moneys collected from the new slip rentals. The marina is generally self supporting and requires no money from member dues. When the marina loan is repaid in 2018, profits from the marina will contribute to the operational bottom line Member Survey Results: Approximately 35% of the respondents reported using the marina once per month and 40% never use the marina. Security Past member surveys and focus groups suggest that security (gates and security patrols) remains the foremost amenity for Pecan Plantation members. The gates were open entry points until 2004, when gate arms were added. In 2007, the gate system was updated with access to members by an automated card reader system. The automated system opens the gate for members whose vehicles are equipped with a tag containing an electronic chip that is read by the sensor on the gate arm. Security costs, which primarily consists of labor and benefits, receives the highest amount of funding for amenities from member dues. The Security department receives approximately 3,500 calls per month in the main security office, not counting the calls made direct to the front and back gates. Most of the calls are related to guest entrance authorizations. Monitoring and reduction of vandalism, curtailing speeding and quick response time to calls are the main goals of the security department. Crime Watch volunteers and the many security cameras located through the community also act to 23

27 reduce vandalism in Pecan. Some members and committee members have suggested that there be an increase in security staff and sheriff patrols to reduce vandalism. In addition to normal Hood County Sheriff patrols, Pecan has paid for additional patrols in the summer. Security and Fire departments work with the Hood County Emergency Coordinator for area wide emergencies. The emergency evacuation plan is posted on Pecan Web site. Pecan members can participate in the Code Red 911 reverse calling program, and can be added to the BRA emergency notification in case of flood gate releases Member Survey Results: Security was not included in 2012 survey. Stables The stables can house up to 20 horses and includes pasture and exercise areas. Riding trails and storage facilities for hay and feed were initially provided by the Developer. Over the years, repairs and upgrades to both the stables and storage have been made. Electrical improvements and overall general repairs were completed in 2010 and a new air system was installed in Security cameras have also been installed. In August of 2010, the Anthony Group exchanged approximately 10 acres of land adjacent to the stables to Pecan for 20 acres of non adjacent land, expanding the amount of land contiguous to the stables available for horses. Generally the stables are self supporting. As part of the LENMO agreement, the Developer is required to provide access to the orchard for horse back riding. However the dates the orchard is open to riders is controlled by the Developer and the area often is not available. Several subdivisions in Pecan have areas dedicated for use by horse owners in their subdivision Member Survey Results: Less than 0.6% of respondents reported they use the stables at least once per month with over 98% reporting they do not use the stables. Tennis The tennis program began in the mid-1980 s, with four courts. The tennis shop building was built in A fifth court was built in 1996 and the tennis gazebo was added in Although the tennis shop was remodeled in the spring of 2001, budget shortfalls mandated cutting back the program offerings. In 2005, a Tennis Professional was hired and the tennis program began rebuilding. In 2010, the sixth tennis court was added (50 % of the construction cost was raised by the tennis club), and improvements to the drainage, fencing and irrigation system were made Member Survey results: 9% of the survey respondents reported using the tennis courts at least once per month and 83% reported never using the facility. Pecan Activities Center (PAC) In 2006, as part of an agreement with the Developer, a new recreation center was constructed. The PAC building consists of a regulation size gym, exercise room/meeting room, game room and kitchen. Playground equipment was purchased by the PPYA (currently disbanded). The PAC pool opened in 2008 and was upgraded to comply with new pool requirements. In 2011, the Disc Golf course was constructed and opened for play. The concrete walking trail, at the PAC, is enjoyed by numerous residents on a daily basis. The 24

28 trails underwent repairs to concrete walkways in 2012 and additional repairs are projected for future years. Today the PAC is one of Pecan s most utilized amenity. Revenues from PAC activities are limited and the PAC is primarily supported with member dues. It should be noted that when the PAC was constructed, operational funds were not considered and have received funding by reducing the amount of funds available for other amenities Member Survey Results: 48% of respondents report using the PAC facilities at least once per month while 41% reported never using the facility Archery Range The archery range was constructed in Most routine maintenance is performed by archery club members and /or dues from each club member. The range operates with minimum cost to PPOA members Member Survey Results: 13% of respondents reported using the range at least once per month and 87% reported never using the facility. Beach/Playground Areas The beach and park areas were originally donated by the Developer. In 2005, the playground equipment at each park was purchased and installed by the PPYA (currently disbanded). The areas are maintained by the Roads and Grounds Department, with the limited costs paid for from member dues as part of the Sports and Recreation or Roads and Grounds budget. Many of the facilities at the parks are in need of maintenance. Portions of our parks flood periodically and upgrading or repairing playground equipment may not be cost effective Member Survey Results: 30% of respondents reported using the parks and playgrounds at least once per month and 30% never use them. Sports Fields The sports fields were turned over to the Association as a part of the 1992 LENMO II Agreement. In March 2008, the fields underwent a major irrigation project to upgrade the area. The sports fields were not identified as a separate amenity in this survey. RV Park The RV Park and campground area was originally completed in the early development phase of Pecan Plantation. In 2006, improvement to the electrical lighting and sewer system in the Campground area was completed and in 2010, the renovation of the RV Park including bathrooms, and RV parking, drainage, septic system, and lighting were renovated. A new usage fee was implemented, resulting in an increase in campground revenues. The RV campground is approximately revenue/expense neutral and is included in the Sports and Recreation budget. Currently campground users are raising money to contribute to the construction of a permanent pavilion Member Survey results: Less than 2% of the respondents use the campground at least once per month and approximately 80% never use the facility. 25

29 Roads and Grounds The major Pecan Plantation roads were originally constructed by the Developer. As new subdivisions are developed and accepted by PPOA, new streets are deeded to Pecan Plantation and Pecan then takes over maintenance. Limited maintenance was performed on the roads from their original construction in the early 70 s to late 90 s and deterioration became pronounced. Two new separate assessment increases, were approved by the members, one in December 2001, the other in November 2004 to dedicate funds for road maintenance and repairs. In 1999, the Association constructed a new entrance bridge over the Brazos River to replace the older bridge. In , the first road repaving project was completed, with a second phase started in 2005 and completed in Several cul-de-sac paving projects were also completed. The roads were micro surfaced in In 2010 and 2011 several drainage repairs were made to protect the roads. In 2011, the Infrastructure Committee developed a Long Range plan for the roads and drainage systems. The report contains estimates of costs for preventative maintenance on all of the roadways. The study concluded that additional funding will be necessary to maintain our road and drainage system. This study covered plans for surface rejuvenation (micro surfacing), asphalt overlays, damage repairs, shoulder restoration, ditch cleaning, correcting drainage problems, edge treatment, and airstrip micro surfacing. The last revision of the report was completed on March 9, 2012 and concluded that a minimum of $10 in additional fees will be required starting in 2014 to maintain our roads to acceptable standards. The report concluded that additional operations funding was also needed for routine maintenance and general upkeep Member Survey results: Roads and Grounds were not included in the 2012 member survey. 26

30 FUTURE AMENITIES AND FUNDING SOURCES New amenities, in a shared amenity community, should be those that attract home buyers, help maintain property values and are used by a large segment of the community. Many potential amenities are not a high priority for the majority of the members in Pecan. The 2012 member survey was designed to determine use patterns of existing amenities and can assist management and the Board of Directors in construction of new amenities and allocating cost between existing amenities. Facilities which are under used by the community can be moved to the bottom of the list when funds are scarce and/or if allowed by the governing documents, user fees increased or implemented to off-set some of the operating costs. Roads and security were not included in the 2012 survey, but have been rated very high by members in past surveys. With the exception of roads and security, the 2012 survey and past surveys, suggest that a large segment of the members do not use most of the current amenities. However, even those who do not frequently use the amenities, express satisfaction with living in Pecan. The 2012 member survey included a number of possible new amenities and a usage survey of existing amenities. The LRPC developed a matrix to assist in evaluating the list of possible new amenities. The following methodology was developed and used to rank the amenities in Appendix C and Appendix D. LRPs from 2000 to 2011 were awarded one point for each new asset multiplied times the number of years it was mentioned in the various plans. The 2012 committee responses to the survey were reviewed and awarded two points for each new asset multiplied times the number of times mentioned for 0 to 5 years and one point for five to 10 years. In the 2012 member survey, each amenity was awarded one point times the reverse of priority order, (1 being 10). Finally for write in comments, each amenity mentioned was awarded one point for each time it was suggested. Three of the top rated potential new amenities are discussed in terms of feasibility, cost, operations, and location. If it is determined to move forward with any of these, a complete study should be conducted to clearly outline the feasibility and both capital and operating cost and funding sources established. The remaining new amenities were deemed to have insufficient support to develop capital and operating costs, can be considered if budgets are available. Health/Fitness Center Members have frequently voiced a desire for a fitness center. However, details of exactly what is wanted and how to pay for it have not been discussed. At this stage of the planning process, the LRPC has developed a conceptual fitness center and estimated capital and operating costs. For planning purposes, we have used a 5000 square foot facility as a base. The building would be constructed near or adjacent to the PAC. The building would have showers and lockers, but would not contain spas or steam rooms. The capital cost of the building is estimated to be $350,000. The facility would be equipped with treadmills, ellipticals, upright and recumbent bikes, steppers and other standard equipment. The cost of the equipment is estimated at $130,000. There would be other misc capital cost of furniture, phones, computers, files, etc estimated to cost less than $20,000. Total capital cost is estimated to be $500,000. Obviously if a smaller facility was constructed the cost would decrease. The operational costs are estimated to be $100,000 to $150,000 per year. 27

31 There is a fitness center at the Nutcracker which all Pecan members can join for a relatively small initiation fee and monthly membership fee. Additional Golf Capacity Based on the 2012 Survey and past surveys, golf remains a high priority for many Pecan members. Several options exist regarding golf. These include: (1) do nothing and spend existing capital and operating funds on the existing golf course. Any member who wishes to play additional golf can join the Nutcracker. (2) Purchase the Nutcracker and raise general membership dues or golf cart trail fees to operate the facility. (3) Build a third golf course on land donated by the Developer and raise general membership dues or golf cart trail fees to operate the facility. Funds for purchasing the Nutcracker or construction of a new course does not exist and funds for operating expenses are not available. Currently a subcommittee is looking into the various options for increased golf capacity, including capital and operating costs. A separate report will be prepared. Walking/Hiking Trails Walking/hiking trails rate high on member use and additional trails have been proposed in the past. In 2011, management reviewed several options for hiking/biking trails including a plan for a paved hike and bike trail from the front circle to the PAC. No action was taken on this plan due to cost. It is the LRPC opinion that a walking/hiking trail versus a multiple use paved hike and bike trail would be a better option for Pecan and would be more affordable. The exact location of the trail has not been identified but the most logical areas would include some of the areas currently designated as horse trails in some subdivisions, areas in the drainage easements in the Landings and areas along the river near the campground. Most recent research for hiking trails suggest that linier natural or slightly improved trails in natural areas are the most popular for the age groups in Pecan. Several recent plans for nature trails with grass or grass and mulch were reviewed and cost is estimated to be between $10,000 to $15,000 per mile of trail. This assumes that the trail would only need to be marked with sign post and perhaps a small amount of fencing or gates installed to prevent the entrance of four wheelers or dirt bikes from using the trail. 28

32 DEVELOPER AND OUTSIDE INFLUENCES ON THE LONG RANGE PLAN While the long range plan is primarily concerned with activities that can be decided by the membership, the Board of Directors and Management, there are other issues which can have an impact on member quality of life or Pecan Plantation s future planning. Developer New lot sales and thus an increase in membership are controlled almost exclusively by the Developer. The Orchard Development Company has an office and real estate sales office just outside the front security gate to Pecan. The availability of land for new developments or amenities is also controlled by the Developer. In 1996, the Developer constructed the Nutcracker golf course, clubhouse and fitness center. Many Pecan members are also members of the Nutcracker. They have paid an initiation fee and they pay monthly dues. As part of the 2001 LENMO agreement, Pecan had an option to purchase the facility for $1.7 million, if exercised before Although the option has expired, the Developer has indicated he will still sell the golf course to Pecan. Pecan also has an option to construct a third golf course on land which would be donated by the Developer. This option expires in Two potential future amenities, walking trail in the orchard and/or horse trails require cooperation from the Developer related primarily to land acquisition and coordination with farming activities and possible changes to the CCRs in some units Comanche Power Plant Expansion Currently there are plans for two additional generating units at Comanche Peak Power Plant. If approved, this may impact the growth in Pecan and increase home resale numbers, and have a positive impact on property values. These would be positive impacts to Pecan. From 1972 through 1978, during the construction of Comanche Peak Power Plant, many employees of TU Electric, Brown and Root, Westinghouse and other contractors purchased or rented homes in Pecan and they also used the hotel and restaurant for seminars and other activities which provided a significant increase in revenues for Pecan operations. However, at that time there was limited dining/entertainment/lodging facilities in Granbury and Glen Rose. The new construction, if implemented would not have the same impact that occurred in the mid 1970s due to the additional regional dining and lodging facilities. If two new units are brought on line, in times of droughts, the units would require emergency water from Lake Granbury and could result in lower lake levels, which could impact the revenues from the Marina and may impact the economy of Granbury, especially the tourist or recreational related economy. Construction of the new units is probably outside of this 10 year plan. Previous surveys or committee reports have suggested the desire for a third entrance/exit for Pecan in case of an emergency at the plant. The plant was approached in 2010 to fund such an exit, but the request was rejected. In 2009, two potential areas for a third exit were evaluated. The Johnson County option consisted of a bridge over the Brazos River near Plantation Beach and paving of 3.5 miles of private road to connect the bridge to RT At that time, the landowners in the area where the road was to be constructed were opposed to the project. The second option, the Somervell County option was to construct a bridge in the area of Sandy Beach and pave one mile of road from the Brazos River to County Road 2174 in Hood County. A third entrance is not considered in this 10 year plan as there are no identified funding sources. 29

33 EMS/PPVFD Pecan Plantation Volunteer Fire Department and EMS, Inc is a non-profit (501C)(4) corporation governed by an elected Board of Directors and is a separate organization from Pecan Plantation Owners Association. The Pecan EMS is the 911 EMS provider in Pecan Plantation. PPVFD/EMS services are financed by a combination of fees from Pecan Members ($10 per month - per lot is collected by PPOA and disbursed to PPVFD/EMS), grants, donations, fund raisers and reimbursement from Health Insurance Companies for ambulance and emergency services. In the event of a major emergency in Pecan, an Incident Command System would be enacted to establish coordination of responding agency resources. The PPVFD would begin working with all agencies by either establishing Command for Fire incidents or coordinating with Command for non fire related incidents. If an evacuation is required, Hood County Code RED would be utilized to notify members which areas of Pecan need to be evacuated and to which gate. In order for Pecan members to participate in Code RED, each member should add contact information to Hood County. If your address and phone number is not in the data base, members will NOT be notified. Water Supply Pecan Plantation is located within the service area of the Acton Municipal Utility District (AMUD). The District was created in 1982 to serve Pecan Plantation, DeCordova Bend, Acton and other areas. Pecan members pay no property taxes associated with AMUD. Water is supplied from 20 plus wells, located throughout the district and is supplemented with treated surface water from Lake Granbury. During the winter months the AMUD wells inside Pecan are sufficient to supply the demand. However, during the summer months, AMUD delivers treated water from Lake Granbury to supplement the groundwater supply. Due to the configuration of the pipelines and pumps, not all of Pecan receives water from the lake. The continued salinity increases in Lake Granbury water should not impact the quality of domestic water in Pecan as the lake water is treated by a Reverse Osmosis system before delivery. Private water wells in Pecan are prohibited by our Codes and Restrictions. Some members obtain landscape irrigation water from the Developer, however, due to an agreement with the AMUD, the Developer is not signing up additional clients. Many residents who live along the Brazos River have installed a river pump for landscape irrigation. PPOA has water rights for 750 acre feet of water per year from Lake Granbury. Currently approximately 250 acre feet per year are used; therefore there are sufficient water rights to irrigate a second golf course or other common areas. Pumping arrangements are coordinated with the Developer and a separate pumping system for Pecan has been considered. Sewer A portion of Pecan is served by the AMUD sewer system. These lots are generally in the upper elevations of the development. Newer areas, including the Landings and the Orchards developments are also served by the sewer system. Residents, commercial development and PPOA buildings on the sewer are charged directly by AMUD. Other residences are on septic tank systems which are permitted by the Hood or Johnson County Health Departments. According to Richard English, General Manager of AMUD, there are no plans to expand the sewer system in Pecan although AMUD does have a permit that would allow an increase in the 30

34 discharge to the Brazos River. The current discharge point is downstream of the PPOA parks and beaches and should have no impact on our recreational facilities. There are regional wastewater plans which could ultimately impact Pecan, however; this would be outside the 10 year plan time line. (See HDR Report) Electricity Pecan Plantation is currently within the Oncor service area. Oncor provides the metering and transmission of electricity in Pecan. They are responsible for operating and maintaining the structure, wires, transformers and associated facilities for power distribution. Restoring service after a power outage is also their responsibility. Oncor does not generate electricity but provides the transmission services to unregulated utilities. Pecan residents can contract directly with their preferred provider. Regulated utilities such as the City of Granbury and United Services Coop cannot use the Oncor power lines. Pecan, or at least part of Pecan, is also located inside the service area of United Services Cooperative. AT&T AT&T offers telephone, cable TV and internet services in Pecan. A significant amount of new cable has been installed in enlarging the AT&T service area in Pecan. AT&T provides no revenues to Pecan even through AT&T utilizes PPOA right of way along our private roads for their cables. Telephone companies do collect a fee which is available to cities, but not HOAs. Charter Charter offers telephone, cable television and internet services in Pecan. Charter and PPOA have a contract that requires Charter to pay a percentage of their revenue generated in Pecan to PPOA. In 2011, as part of a new contract, Charter contributed a significant amount of money as a signing bonus to Pecan which was placed in the Capital Asset Reserve and Replacement Fund. The contract extends to As part of the contract, Charter also provides a local access cable (Channel 28) to PPOA. Household Waste Pick Up PPOA has contracted with Progressive Waste Management Solutions to be the residential waste hauler for the community. The contract extends thru December Currently, PPOA collects the monthly trash fee from each resident on their monthly bill and remits the payments to Progressive Waste Management Solutions, less billing and handling fees. Cell Phone Service A number of cell phone providers are in the area and cell phone towers are located near both the front and back gates. However, there are a number of areas where wireless reception is poor to non-existent. Incorporation In 2011, a committee recommended incorporation of Pecan Plantation to prevent a perceived annexation threat from Granbury. The necessary paperwork to start the election process was filed by a group of members. Although an election was held, the results were not counted because of a court order. There are no known current plans for incorporation of Pecan Plantation or any known current threat from Granbury annexation. However, PPOA should continue to monitor the 31

35 cities of Granbury, Cresson and DeCordova activities regarding expansion. Potential Impacts From Granbury Expansion There are plans for a new Bridge across Lake Granbury near the power plant; however, the time of completion is unknown. If right of way is obtained and the new bridge is completed, it is likely that Granbury will expand its city limits and Extraterritorial Jurisdiction (ETJ). If Pecan becomes included in any expansion, this could impact the members including any future need or desire to incorporate. Granbury has been very aggressive in annexing commercial property along major transportation routes. This issue of possible annexation by Granbury or others should be assigned to a Committee and an annual report made to the Board of Directors. Brazos River Authority (BRA) Water quality and quantity can impact Pecan in negative ways, and some residents along the Brazos River may be subject to flooding. New FEMA regulations may impact members insurance requirements and could impact home sales. Low lake levels related to downstream users and potential Comanche Peak needs can impact the marina revenues from slip rentals and gasoline sales. Water quality related to golden algae blooms can impact fishing in the lake. Both can reduce the tourist or retirement desirability of the Granbury area. The BRA provides notification by and phone for any high water releases. Part of the marina is on leased land from the BRA. There are no anticipated problems with the lease. It has been suggested in the past that Pecan try to purchase the leased area, however, this has been rejected by the BRA. Chisholm Trail or Southwest Parkway Project When the Southwest Parkway is completed from Fort Worth to Cleburne it may result in commercial and residential growth east of Pecan. This could potentially impact growth and demographics near or in Pecan and increase the desirability of a third entrance to Pecan. Wildlife Depending on your point of view, Pecan is either blessed with or adversely affected by our wildlife population. Many new members are attracted by the deer and turkey population. However, some become discouraged when they find that the deer love to feed on gardens and landscaping. The most significant wildlife issues are the increases in the deer population and wild hogs. For the last several years, Pecan has followed a deer management plan developed by the Wildlife Committee and Texas Parks and Wild Life. The cost of trapping and removing the deer has been $30,000 per year (reduced to $15,000 in Budget Year due to shortage of funds). A few residents who live along the river have reported wild hog damage to landscaping and hog damage has been observed on PPOA property at the campgrounds, and PAC. Currently a plan to minimize the impact to PPOA property from hogs has not been developed. Members along the Brazos River are authorized to kill hogs on their property. Controlling deer and hog access to Pecan through fencing is not considered an option. Regulatory Programs Pecan Plantation Owner s Association (PPOA) must follow a number of state and federal regulatory programs which can impact Pecan. Included in these programs are American Disability Act (ADA) and Occupational Safety and Health Administration (OSHA) requirements which may impact facilities, playground and pool requirements. Texas Alcoholic and Beverage Commission (TABC) regulations can impact alcohol sales. Some programs such as health insurance, liability insurance, flood insurance and Texas Commission on Environmental Quality (TCEQ) regulations regarding golf course ponds have increased operating costs which impacts 32

36 PPOA s ability to fund operations and amenities. Additional impacts may be from requirements for fuel storage tanks, asbestos and other environmental issues. Oil and Gas Development PPOA and individual lot owners do not own the mineral rights under Pecan. There are a number of horizontal gas wells which have completion intervals under Pecan Plantation. The gas drilling and production activities impact Pecan in both positive and negative ways. Some home owners are employed in the oil and gas business sector and have contributed to existing homes resale and/or new homes. However, service company trucks increase the traffic outside the gates and salt water disposal wells have the potential to create both increased tank truck traffic and the possibility of micro tremors such as are occurring in the Cleburne area. 33

37 BENCHMARKING PECAN AGAINST LOCAL AND NATIONAL ORGANIZATIONS A comparison of PPOA fees, dues and amenities to other comparable HOA s/country clubs suggest that Pecan Plantation offers the best value of local communities. (Figure 8) Additionally, the initiation fees are among the best values available. Pecan also has the lowest annual dues for full family membership with full access to amenities as compared to the nationwide database of 283 HOA/country clubs. (Figure 9). AMENITY COMPARISON Updated 10/2012 FACILITY OPTIONS MEMBER FEE DUES GOLF DRIVING PRO- POOL FITNESS TENNIS CLUBHOUSE MARINA BEACH CITY RANGE SHOP CENTER PARKS Pecan Plantation Comanche Trace Yes Yes Yes Yes No Yes Yes Yes Yes No Full Golf Resident /month Yes Yes Yes Yes Yes Yes Yes Yes Yes No Full Golf Non-Resident Junior Full Junior Limited Corporate Limited Social Non-Resident 290/ month Lake Kiowa No initiation fee /month Yes Yes Yes No Yes Yes Yes Yes Yes No DeCordova tax/mo Yes Yes Yes Yes Yes Yes Yes No Yes Harbor Lakes Bentwater April Sound Harbor Lakes Resident Golf /month Yes Yes 150/yr Yes No Yes Yes No No Non-Resident Golf /month Senior Golf /month Regional Golf /Month Corporate /month Social Membership /month Master Golf /month Yes Yes Yes Yes Yes Yes Yes Yes No Golf Membership /month Yes Yes Yes Yes Yes Yes No Yes No Figure 8. Comparison of PPOA to Local Clubs 34

38 Figure 9. HOA/Country Clubs full membership comparison. 35

39 DISCUSSION OF FUNDING NEEDS AND POTENTIAL SOURCES OF INCOME Funding needs can be divided into operating funding, capital asset funding and road and drainage funding. These are discussed below in terms of both existing and proposed amenities. Capital Asset Funds In addition to replacing existing assets, money from the Capital Asset Reserve and Replacement Fund can be used for New Capital asset or purchases which exceed $2500 and have a useful life of 3 years or longer. These funds are obtained from two sources: (1) $8.00 per month from member dues dedicated to the Capital Asset Fund by member vote and (2) new member initiation fees as per Board Policy. Additional funds such as the recent Charter contract fees can also be placed in the fund at the discretion of the Board. Based on the growth and home resale projections, there will be sufficient capital funds for all planned improvements to existing amenities for the next 20 years. The Current Board policy of depositing all initiation fees in the capital asset fund will result in excess funds beginning in the year After that time, some funding could be diverted each year to operations or new amenities could be constructed without impacting the fund s ability to make planned replacement/improvements to our existing assets. When Pecan s membership exceeds 3000, those new member initiation fees are to be placed in a separate fund for new amenities. Given the projections for existing home re-sales, this should not impact our ability to maintain existing amenities. Road and Drainage Funds Capital expenditures on road and drainage has been funded by (1) membership dedicated fees ($9.00 per month), (2) loans and (3) money from the Capital Asset Reserve and Replacement Fund. Provided that $10 of the expiring road loan is extended for 10 years (needs 2/3 membership vote) sufficient moneys will be available for capital expenditures for road and drainage for the next 10 years, although some money may need to be temporally allocated from the Capital Asset Reserve and Replacement Fund. Operating Funds Operating funds are obtained from member monthly dues ($80.00) and income from Pecan s amenities, such as food and beverage, golf trail fees, PAC fees, etc. Currently operating funds are not sufficient to meet all of the demands. If $5.75 of the expiring road and bridge loans are made permanent and placed in the operating fund and a $5.00 dues increase is passed (needs 2/3 membership vote), there will be sufficient operating funds for the next 5 years to maintain existing amenities and at that time, an additional dues increase will be necessary. Funds for New Amenities The Capital Asset Reserve Study suggest that there will be available funds for the capital costs of new amenities at sometime in the future, depending on if Pecan wants to pay cash, or borrow against the fund. The major draw back to new amenities is operation funds. This can be obtained by (1) dues increase (2/3 majority), (2) increase fees that can be increased (golf cart fees, boat slip rentals, stable rentals, etc.) and/or (3) an increase in memberships and revenues. 36

40 The following costs are estimated for the three highest ranking new amenities: Amenity Capital Costs* Annual Operating Costs* Golf (Nutcracker) $2,000,000 $600,000 to $700,000 Golf (New Course) $5,000,000 $600,000 to $700,000 Fitness Center $500,000 $100,000 to $150,000 Hiking Trails $100,000 to $150,000 $50,000 to $75,000 ($10,000 to $15,000 per mile natural and mulch no fencing) If these amenities are supported entirely by member dues, the operating cost of a second golf course would be approximately $18 per month per member; a fitness center approximately $3 per month per member and a hiking trail approximately $2 per month per member. Funds for Golf course operations could also be obtained by raising golf cart fees to approximately $70 per month. * These estimated costs are subject to modification by the sub-committees which have been tasked with providing detailed costs. 37

41 CONCLUSIONS 1. The results of the 2012 member survey suggest that the majority of Pecan members are retired and fall into two major age groups: 40 to 65 (approximately 32%) and 65 to 80 (approximately 46%). Pecan members are generally active and enjoy both indoor and outdoor activities, they are reasonably informed about events in Pecan and are satisfied with living in Pecan. Differences in income and life experiences results in different amenity preferences and expectations. As the age, income, or interest of PPOA members change and new members purchase property or homes, new amenities and/or expansion of existing facilities may be required to meet expectations. As the existing population ages, outside activities levels may decrease. Meeting expectations and providing good value for member dues is key to the continued resale of existing homes and construction of new homes, which impacts the funding sources necessary to maintain our amenities, roads, security and other common properties. Conclusion: New amenities need to reflect the demographics and use patterns of the PPOA membership. 2. Pecan Plantation has an excellent reputation with realtors as a good place to live and a majority of new Pecan residents over the last 5 years have moved to Pecan based on recommendations from family and friends. Some realtors have stated that Pecan seems to sell itself. Growth (via new home or lot sales) in Pecan is expected to continue at the current rate for the next several years, although in 2012, lot sales and the number of new members exceeded expectations. Re-sales of existing homes ( per year) are expected to remain in the current range until the economy returns to pre recession levels or outside influences impact residential growth patterns. New lot marketing and sales are almost entirely performed by the Developer, although Pecan does own a few lots for sale. According to the Developer, they have not developed an estimate of new lots sales for the future. Conclusion: Growth and resale of homes in Pecan are expected to continue at the historic rate. 3. Based on national and local benchmarking studies, Pecan Plantation offers outstanding value to members in terms of initiation fees and monthly dues versus available amenities. Conclusion: Pecan Plantation is an outstanding value. 4. Current operational revenue from member monthly dues and other revenue sources have not kept up with the CPI. The cost of operating the PAC was never factored into the agreement to accept the PAC and associated facilities from the Developer, resulting in reduced maintenance of other amenities and limited funds to operate any new amenities. Conclusion: Operations funding has not kept up with the CPI. 5. Additional operational revenues including golf cart fees, marina slip rentals, food and beverage prices, RV fees, stable rentals, etc have been increased and in some cases may be further increased to provide additional revenue. However, these increases will be insufficient to offset increasing costs. Conclusion: Increasing current fees would not be sufficient to cover increasing operating costs. 6. Based on past and current member surveys, interviews with management, staff and committee reports, golf continues to be the number one existing recreational amenity in Pecan. Additional golfing capacity has been recommended by several past long range planning committees and 38

42 member surveys. However, funding (both capital and operations) of an additional golf course has been the drawback to achieving this goal. Conclusion: Golf is a highly valued amenity. Funding for future golf capacity continues to be a concern. 7. Current operations revenues are insufficient to maintain our current amenities and the appearance of Pecan s common property. The aging infrastructure requires more maintenance, and the cost of labor and benefits will continue to increase for the staff necessary to maintain our facilities. Conclusion: Cost to maintain existing amenities will continue to increase. 8. The current Road and Bridge loans will be paid off in 2013 and the $15.75 in membership fees used to repay these loans will expire in Funds accumulated after the loans are paid off but before the fees expire will be deposited in the road and drainage fund. To continue to maintain our road and associated drainage systems, $10.00 of these expiring fees should be extended 10 years and dedicated to the Road and Drainage fund. $5.75 of these expiring fees should be made permanent beginning November 2014, to increase operating funds which includes routine maintenance on the roads along with other operational staffing needs. Conclusion: $10.00 must be dedicated to the roads fund, and $5.75 to operating fund which includes ongoing road maintenance. 9. There are no identified needs or actions required in connection with water and sewer services. AMUD coordinates with the Developer for any new service area required and neither the Developer nor AMUD see any additional needs in the next 10 years. Conclusion: No action is forecast at this time. 10. PPOA owns limited land within the Association boundaries. Acreage for land for major new amenities (golf course, hiking trails in orchard, riding trails in orchard, etc) must be donated or purchased from the Developer. Conclusion: Land availability for new amenities being considered should not be a constraint. 11. With the exception of a fitness center, increased golf capacity and more walking trails, the members expectations for new amenities is not broad based. Special interest groups have shown expertise in promoting their own new amenity and small groups of members have expressed interest, via surveys, in additional new amenities. Conclusion: Process for member/committee initiated amenities not included in LRP is in Figure

43 Figure 10. Member /Committee initiated new amenity projects 40

44 RECOMMENDATIONS The following specific recommendations are made for 2014: 1. Bruce Lockwood has been and it is suggested that he continue to be the PPOA s liaison to Granbury and Hood County governances. In his capacity, Bruce will update the BOD and LRPC as needed on activities that may impact Pecan Plantation in the future. 2. Golf Capacity A new golf capacity committee has been formed that will focus on developing a viable strategy for increasing golf capacity. This task force will interact with the Developer, the LENMO Committee and the BOD as necessary. 3. Walking/Hiking Trails The Walking/Hiking subcommittee has provided the following recommendations for 2014: Campground trail will be completed and open by April, 2014; preliminary costs for a walking/hiking trail from Nutcracker to Front Circle should be completed; and a Walk/Hike Master Plan finalized. 4. Fitness Center The Fitness Subcommittee has reported that they will submit their final report to the Long Range Planning Committee in Their report will include building and equipment costs, ongoing maintenance and operational expense. 5. It is suggested that the forecasting tool for future amenities be updated and maintained by the Controller and General Manager and that the Chairperson of the Long Range Planning Committee will keep the BOD informed of forecasting changes as needed. 6. The Capital Asset Reserve and Replacement Fund Study, the Road and Drainage Plan and the Long Range Plan should be reviewed and updated annually as part of the budgeting process.

45 REFERENCES Airport Report 2. Current Infrastructure Committee Airport Report 3. Current Infrastructure Committee Road and Drainage Report 4. Current Capital Asset Reserve and Replacement Fund Report Golf Master Plan 6. Club House Master Plan Club Mark Corporation Focus Group Report 8. A New Facilities Strategy for Pecan Plantation, February 1999, Needs Survey report Nutcracker Study Member Electronic Survey Budget Budget 14. HDR Engineering, 2000, Hood County Regional Sewage System Feasibility Study 15. Alan Plummer and Associates, 1999, Investigation of the expansion of the surface water advanced treatment system to provide treated Surface Water, Prepared for BRA 16. Hope Yen, Associated Press, October 25, City of Granbury, 2010 Parks, Recreation and Open space Master Plan 18. Recommended equipment list and cost for a fitness center: Hiking Trail Costs; %20trai9l/cost.pdf 20 IBOPE, Zogby International, CLUB Benchmarking data base and 2010 U.S. Census data for Pecan Plantation 42

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