PO Box 160001           Big Sky,  MT   59716

PH:  406-995-3500       Fax: 406-995-3527

Email: Lake@3rivers.net    Web site: www.lakeatbigsky.com

PRESIDENT’S NOTE, SUMMER 2008

 This note is to inform the Owners of the deliberations and actions of their Board of Directors at the summer board meeting.  I will attempt to explain changes in our accounting practices, intent to grow the Capital Replacement reserves and use of the funds from this year’s Special Assessment.  With this communication, the Owners will receive copies of the 2008-09 budgets. 

The annual Operating Budget will show an anticipated end of year surplus of $76,785.00.  Please note that the Unit Interiors budget includes $95,000.00 for fireplace propane after conversion from wood.  This estimate was arrived at from information provided by the fireplace installers and the propane supplies.  After subtracting the $24,000.00 budgeted expense for wood during the 2007-08 year, the estimated increase in cost is $71,000.00, or 5.4% of 2007-08 maintenance fees.  As with any one of us this year, we can only estimate what will happen with the cost of energy supplies in the future, and the cost may be lower or even higher.

In upgrading our accounting, we separated the cost of Capital Improvements from the Operational Budget and expressed them separately.  Capital Improvements will cost us $146,500.00 during 2008-09.  A simple look at the Operational and Capital budgets would reveal that the two would result in a deficit of $69,425.00.  However, we are hoping for a contribution of $117,717.00 to Capital Reserves in 2008-09 due to carry over from this year (indicated in July by our new monthly predictive accounting system introduced by Board member Barney Barber) and other sources, resulting growth of the long term Capital Reserve fund to $165,691.00, with an estimated current value of the fund of $120,000.00  The President considers this a major turn around, since the fund has not grown on a planned basis for more than 10 years.  The Board will attempt to grow the reserve annually hereafter, hopefully to avoid future Special Assessments.

Special Assessment funds are being spent on those items noted in the last President’s Note.  Conversion to propane fireplaces has been accomplished, the pool relining will be done in September, and the landscaping finished soon thereafter.  Starting in October we will embark on replacing window blinds, kitchen floors, upgrading bathrooms and other items as noted in the enclosed 2008-10 Special Assessment budget.  We anticipate completion early in FY 2009-10.  Perhaps those who routinely trade elsewhere should then visit the Lakes to see how excellent they really are.

After extensive discussion, the Board arrived at the conclusion to raise the Maintenance Fee 10% for FY 2008-09.  This seems like a lot and it is, and some may feel we are reneging on keeping the fees down.  However, as noted above, conversion of the fireplaces to propane levied a 5.7% increase alone, making the base fee increase 4.3%, somewhat below the Board’s sense of local Big Sky inflation.  Therefore, the new maintenance fees will be:

                                   2-bedroom unit  -  $473.00         2-bedroom w/loft  -  $533.0

The President feels that the Board has made great strides over the last 3 years to bring the Owners’ investment back into fiscal soundness with many improvements in the units themselves as well as dealing with significant critical events requiring rapid and effective solutions.

The Owners’ Association is always searching for those Owners who would have an interest in becoming a Board member.  If anyone would be interested, or like information about Board activities, please call the office or myself.

Stuart A. Reynolds

President of the Lake Condominium Owners Association