The Lake Tansi Village Property Owners Association brought together interested members of the community for an open meeting to discuss the future of the embattled community.
"This board is pro community," said Tommy Bean, board member. "We are starting tonight and want to make a difference in saving our community."
Larry Williams, treasurer, reported the POA has an income of $2.5 million in 2011, with the majority of that, 60.4 percent, coming from dues payments. The golf course and pro shop brought in 22.4 percent of the income and cabin rentals accounted for 10.7 percent.
Expenses are at $2.5 million, with a $24,618 profit before deprecation was figured.
There were questions regarding the POA settlement with the city of Crossville over use of water from Lake Tansi. The city paid the organization $550,000; however, the accounting firm used by the POA recommended that income be accounted for as unrelated business income. That would result in state taxes of $35,000 and federal taxes of $175,000.
The POA has gone ahead and paid the state taxes, but not the federal taxes. The board is seeking opinions from other CPAs and a tax attorney on if the income can be counted as regular business income as the POA is selling water to the city.
David Kerr, chairman of the board, said, "It may seem risky, but we felt we had no choice."
Richard Cahill said the board would begin meeting in March with every department head to review costs and eliminate any unnecessary costs.
"We feel we can make a sizable reduction," Richard Cahill, board member, said.
The POA has filed suit against Tansi Waste Water Management, Inc. and the Tansi Sewer Utility District regarding the transfer of the wastewater treatment facility from TWMI to TSUD.
Earl Patton, board registered agent, reported a meeting was set between the POA lawyer and the TSUD lawyer for Feb. 29.
A member of the audience said, "You can't Pollyanna it away. There's a lot of hooey going on in here. The sewer, encumbrances, debts, etc., we had no notification when we purchased our property and we haven't had a say."
Cahill said, "This mess started eight or nine years ago. The board members now were not involved, but all members are responsible, the same as me. I didn't get involved. There was someone who hoodwinked the board at the time. We had a right to interject ourselves into the proceedings."
The POA currently pays about $5,000 a month in interest on the loan to TWMI, which has not been repaid, and $3,000 a month for sewer service. Members of the audience questioned why the POA paid the sewer charge when it was owed $1.3 million.
Kerr said POA lawyers advised to continue paying the sewer fee while the issue works through the legal process.
He noted that, prior to the transfer of assets, including the wastewater treatment facility and sewer lines, from TWMI to TSUD, POA members had been assured the transfer would include liability for the line of credit extended by the POA. That was not what happened, he said.
"They grabbed the plant we're paying for and we got the debt," Kerr said.
Payment of sewer fees ensured sewer service continued for the amenities currently hooked up.
"The lawyer felt not paying that would muddy the POA's legal position," Kerr said.
Kerr said the POA wanted to either get the assets back or have TSUD assume the note.
Cahill explained the POA established a line of credit for the sewer project in the beginning, with Duke Coyne signing the notes. Coyne was on the POA board at the time as well as on the board for TWMI.
"Our position is we want the plant back," Cahill said.
The POA has been negotiating with the timeshare organizations at Hiawatha Manor and Hiawatha Manor West regarding dues payments. Previously, the POA received $55 per time share week, for about $200,000 a year in POA income. The timeshare organization has offered $15 per paid week, so the POA would receive nothing for those timeshare weeks where the members have not paid their dues. That would bring the POA's timeshare income down to about $51,000, board member Chris Burke reported.
The POA has sent a counter offer, asking for $27.50 per unit, per week, regardless if that week has been paid. That would bring in about $177,320. If a deal is not reached, Kerr said the POA would stop extending benefits to those facilities. In addition, timeshares add about $50,000 in golf fees.
Timeshare dues allow timeshare members to use all Lake Tansi POA amenities during their stay and pay member rates at the golf course. There have been complaints regarding the condition of the indoor pool at Hiawatha Recreation Center, as well as complaints about those staying at the Hiawatha Manor West having to drive to the pool. Overall, complaints deal with deteriorating amenities.
"That's the pot calling the kettle black," Kerr said.
Kerr, who is a member of the Hiawatha Manor Timeshares, noted his dues had increased by $15 prior to the offer of $15 by the timeshare organization.
"If they pull out, it will be a significant loss," Kerr said.
He noted that the timeshares would have experienced catastrophic loss had the POA not helped extend sewer service to the condos.
Kerr said, "If they choose to withdraw, there will be difficult restrictions on them. Other things we do will come to a halt unless they pay for those services."
Cahill said, "If they want to keep the amenities, they'll have to pay more. We've got to get everyone paying or we'll go down the tubes."
Someone asked how the POA planned to make up the lost revenue if the timeshares stop paying. Kerr said there will be fees for timeshare guests to use amenities if the association quits the POA.
"And those will be healthy fees," he said.
Tommy Bean addressed the POA debt situation, saying, "We're up to our eyeballs. But, we can't change the past. All we can do is go forward."
Bean encouraged everyone to bring their ideas to reduce debt to the board. He also noted there were some residents of the community that were disgruntled due to actions of the board in the past.
"I've been on the board 47 days and this is my 14th or 15th meeting," Bean said. "I love Lake Tansi. That's why I got off my dock and ran for the board, to try and make a difference."
Members not paying their yearly dues were making the situation worse. Without income, the POA would be unable to continue offering amenities or make any improvements to amenities in need of upkeep, such as the indoor pool and the miniature golf course.
"The amenities enhance our property values and provide jobs in this community," Bean said. "Without dues, we may have to start shutting amenities down and people will be losing jobs."
Bean noted that the POA by-laws entitled the membership to a say in how it is governed, requiring a majority vote of the membership in order to increase dues, a measure that has failed to succeed in recent years. Current dues are $208 a year.
Upon hearing that, some in the audience voiced disagreement and that efforts to be informed of the POA actions had been unsuccessful.
Bean responded to that with, "If you want to know, just call me. Give us your ideas. Air your grievances. Call me if you have questions. Rumors just hurt us all."
It was noted Lake Tansi has numerous retired professionals with expertise in various aspects of business. It was suggested the board draw upon that expertise in finding a way out of its financial difficulties.
"We can work this out if we just work together," said a member of the audience.
POA dues entitle a property owner to use the amenities and facilities of the community; however, as a planned community with maintenance fees, each section had maintenance fees attached to the deed. While people could resign from the POA, maintenance fees were still due and, if not paid, could eventually lead to a lien being placed on the property.
General Manager David Sutton explained how POA attempted to collect past due dues payments. Once dues become delinquent, members are contacted by a collection agency with a soft approach.
"You'd think you were talking to our office," Sutton said.
If that is unsuccessful, additional contact is made through the collection agency. After a year, a lien can be filed on the property for the maintenance fees. The POA does not repossess property due to the cost, but the lien ensures fees are paid when the property sells. Seriously delinquent payments can become a negative finding on a credit report.
Attempts to increase the dues for increased costs have failed recent votes. Someone asked if the POA could have a special assessment for those residents living at Tansi, as those use the majority of the amenities. That, too, would require a vote.
Others have questioned if the non-resident property owners are the reason dues increases fail to pass. Williams said resident members vote by a three-to-one margin against dues increases.
During the question and answer segment, someone asked what it would cost someone who did not pay their dues last year to return to the POA.
Cahill said, "As far as I'm concerned, if you didn't pay last year, pay that and this year with no penalties and no interest."
That didn't sit well with those who had paid their dues.
Kerr said, "We've got to give somewhere. Come back. Get re-involved and let's move forward.
"For those of you that continued to pay, God bless you. You still believe. If you want to come back, God bless you. If you've not decided, keep thinking about it," he added.
The board continues to work with the county to have a manned substation of the Cumberland County Sheriff's Department in Tansi. In the mean time, Kerr said it was hoped the county would take over utility payments for the security building, which the county owns.
Kerr encouraged the community to talk to County Commissioners Joe Koester and Jan McNeil regarding support for the substation.
The Tansi Security Department is now down to five people, with two opting to leave.
Some of the amenities have suffered due to age and not being properly kept up. Many in the audience said the indoor pool at Hiawatha Community Center was unhealthy and dirty.
A lady in the audience noted the pool had not been closed in August, as was usual, for the pool to be drained, scrubbed and painted. She also said chemical levels were not being closely monitored.
Kerr said the pool was built in 1977 and part of the issues could be just from age. It was noted that if no one was properly trained in how to test and regulate the chemicals, that should be done.
Burke recounted how volunteers came together to purchase stain and complete that work at Mitch's quickly and without causing financial strain on the POA or the maintenance department. He said he'll be happy to volunteer to do something similar to help get the indoor pool cleaned up for the residents.
"Until the funds are available, you ladies let us know when the best time to close the pool would be. I'll be there," he said.
Those wishing to sign up as volunteers to assist the POA on committees or with special projects are asked to contact the POA office and sign up.
While golf accounted for 22.4 percent of POA income, the course is operating at a loss projected to be $132,000 this year.
The audience questioned why that had not been addressed with increases in golf fees, similar to increases seen in marina fees, boat stickers and use of other amenities.
"The golf course is pristine," said a member of the audience. "But nothing else gets attention. The marina rates have skyrocketed, but golf had a $1 increase?
"You're bleeding money. That's where. Go from $22 to $25 a round. It's not going to kill anybody."
Statements were made that Tansi has to price golf competitively in order to remain in the market. Too high of an increase could price the course out of business.
One new resident said she had been told that, years before, board meetings had been open to residents. Kerr said the board holds work sessions and members were welcome to come and sit in on those. They would be asked to leave if the board needed to discuss personnel or legal matters.
The next meeting of the board is scheduled March 15 with a question and answer session at 6:30 p.m. and the meeting at 7. To learn when the board will hold its work session, contact the POA office at 788-1262 or (800) 600-9913.
•What is the financial relationship between the POA and the 19th Hole Restaurant?
The POA leases the facility to an operator for a monthly fee. The lease, awarded by a committee, lasts for one year. The operator reimburses the POA for utility expenses as those meters are still in the name of the POA.
•A resident who said she, as a young person with a family, was in the minority, used her membership only three to four months each year to use the beach and pool. However, when she inquired about renting the indoor pool for a pool party for her daughter, she was told it would be $150 for a two-hour party. She questioned that rate, saying it was above and beyond what should be charged.
There is a charge for renting the pool and the Hiawatha Community Center, with a charge for the attendant's time, and the charges are based on the number of people in the party. Only POA members are to rent the facilities.
•How much water can the city of Crossville take from Lake Tansi?
The city was to stop drawing from Lake Tansi Feb. 15. They will only be able to take water that is going over the spillway until the next draw-down period in the fall. Between Oct. 15 and April 15, the city may take seasonal excess water, up to four inches below the spillway elevation. The city may also harvest water in emergency situations, specifically extreme drought as declared by state or federal agencies; catastrophic failure of an impoundment of the city; any condition, circumstance or event when Holiday Lake treatment system is temporarily taken off line or rendered unusable for a temporary period of time and which adversely affects or seriously threatens the adequacy of the city's then existing raw water supply; events, circumstances and conditions resulting from acts of God and foreign or domestic terrorist attacks that threaten the city's raw water supply; and contamination of existing raw water supplies that could affect the health, safety and welfare of the community. The city may also harvest water to refill Meadow Park Lake following completion of repairs to the dam, with a limit of 2 million gallons per day but no more than 12 inches below the spillway elevation, unless the POA consents in writing. That cannot happen between July 1 through Sept. 15.
•Rumors are circulating that General Manager David Sutton is being terminated.
The board said that was a personnel question and not appropriate for discussion at the meeting.