RMA
facing 10 percent dues increase in 2007
Full
story published
Saturday, October 7, 2006
News brief published Wedesday, October 4, 2006
The
Rancho Murieta Association went into Tuesday night's
2007 budget workshop with a planned dues increase of
4.8 percent and emerged from the three-hour session with
a 10-percent increase.
If
the board approves the budget at its Oct. 17 public meeting,
dues will top $131 per month.
The
increase to 10 percent was caused by the board's decision
to not include projected revenues from improvements to
the cable TV system. The Finance Committee resisted including
uncertain revenues in the budget.
“(The
Finance Committee) felt the numbers were a little aggressive. … We
felt it was more prudent just to look at the first year
as a revenue-neutral program,” said Director Chris
Pedersen, RMA treasurer and the chair of the Finance
Committee.
“Nobody’s
going to know until this thing starts running,” said
Director Mike Martel.
A member
of the Communications Committee said industry numbers
indicate 40 percent of Murietans will buy expanded cable
service.
The
outcome of the workshop represented a departure from
previous years. Typically cable revenues are counted
on to offset dues increases and draft budgets get trimmed,
not fattened, and directors pride themselves on keeping
increases to a minimum.
“… Our
dues are very low compared to other areas, so I’d
rather bite the bullet,” said President Paul Gumbinger,
in agreeing to the 10 percent increase along with the
other directors.
In
May, the board accepted a plan to upgrade the cable system
and authorized spending up to $200,000 in cable reserve
funds this year for digital broadcast capability and
to replace failing cable on the North. The first phase
of the plan was scheduled for completion in September,
but has been delayed until the end of the year.
The
plan now calls for premium TV channels to move to digital
format from analog and for the number of channels to
increase in January.
Premium
channels are an optional buy for cable customers. while
the cost of basic cable service is included in everyone’s
RMA dues. There are currently about 300 premium channel
subscribers.
In
addition to the digital premium channels, there will
be other digital programming options, although the 48
basic analog channels that are covered by monthly dues
will remain in place.
The
current draft budget proposed by the board at the budget
workshop projects the net cost of cable to be $27.74
per member per month, according to Finance Manager Colleen
Hagyard.
In
August, the Finance Committee received a draft budget
that projected a 3.8 percent increase in dues and hefty
increases in subscriber numbers for broadband and premium
channel pay services. Digital programming was expected
to attract 750 subscribers in 2007 and generate new revenues
of $279,000.
That
preliminary budget also provided $70,000 for marketing
cable services to members, an approach that General Manager
David Stiffler supported at the August Finance meeting. "It's
a one-time opportunity to market the services we're going
to be able to provide, additional services, enhanced
services and so forth. … We
need to let the membership know what's available to them,
quantity and quality," he
said.
In
September, with the budget workshop two weeks away, the
Finance Committee questioned the budget projections for
almost two hours and balked at recommending expenditures
for digital equipment.
The
committee had made its recommendation for approval of
the plan in May contingent on having a detailed business
plan. The existing pro-forma plan was “not
enough … to have a major program go forward,” said
Pedersen at the September committee meeting.
Stiffler
agreed with committee members, saying it was “absolutely
right” to
have a business plan in place and he was working on one.
The
day before the budget workshop, with no public notice,
a business plan was presented to the Finance Committee
at a special meeting.
Later
that same day, committee members and board members received
an agenda for the workshop. The agenda listed the business
plan and over $100,000 in expenditures for the digital
operation as action items, in effect reaffirming the
board’s
commitment to move forward with the project.
At
the workshop, the board discussion of the business plan
and the expenditures occupied more than half of the meeting.
The business plan was not made available to the audience
during the discussion. Members of the Communications
and Finance committees who attended the meeting had prior
access to the plan. (See the plan here.)
The
board approved the business plan after eliminating the
pages containing subscriber projections and the channel
line-up for the expanded digital services.
The business plan concentrates on this year’s expenditure
of $200,000 for cable replacement and equipment but doesn’t
detail next year’s costs,
which are expected to be in the same range. The reserve
budget allots $187,000 for cable reserves in 2007, said
Hagyard. She said RMA reserves are funded at 79.4 percent.
The
budget projects the number of broadband subscribers to
increase from about 500 to 700 due to the installation
of a high-speed Internet link that’s expected to
be operating by the end of November. In the interests of
disclosure, it was announced at the September board meeting
that Justin Jordan, a member of the Communications Committee,
was awarded a $3,600 contract to complete the installation.
Expenses
in the proposed 2007 budget include a new hire for the
Maintenance Department, a 50 percent budget increase for
legal fees (from $40,000 to $60,000), and equipment for
the cable operation and maintenance.
None
of the expenditures was challenged by the board.
Income
related to new construction -- for example, fees for
cable service, road mitigation and architectural services
-- has declined due to the slowdown in building.
Staff
and board members pointed out that the number of new
homes drops from 60 to 10 in the proposed budget, which
means there will be fewer new members to cushion the
effect of rising operating costs.
