Below are the questions
and answers from the brochure that was sent out to all property owners.
You can view and print
this brochure in pdf format. If you have any specific questions
that you do not see answered here, please e-mail us at aquapurchase@woodhavenassociation.com.
We will try to include them in one of our three upcoming forums. Simply
type "Forum Question" in the subject line of the e-mail.
Will we be hit
with a special assessment to pay for this?
The Board’s goal from the very
start was to accomplish this purchase without the need of a special
assessment. The purchase agreement allows us to acquire the water
and waste water utilities without a special assessment provided the
costs for water and sewer service stay at the levels you currently
pay. This will allow us to operate and maintain the facility, pay
off the loans and build a reserve fund for future capital projects.
How and when will I be billed?
We understand everyone’s financial
situation is different. For this reason, our plan is to provide you
with two payment options. Your current water and sewer rates will
be included in the annual assessment amount. Based on our current
2008/2009 projected assessment of $675, the combined assessment on
lots with sewer service is projected to be $1,050 and on lots without
sewer service $865. Similar to paying insurance premiums, a discount
will be offered to those who choose to pay the balance in full prior
to April 1st, the exact amount of this discount will be determined
during the Association’s budget process.
The second payment option will allow
for the assessment to be split into three installments. The first
installment payment will be due by April 1st, just as it is now. The
two remaining installments will be due by June 1st and August 1st.
The Finance Committee has recommended that 50% of the assessment be
due by April 1st, 25% by June 1st and 25% by August 1st. Based on
the assessment examples provided above the following chart shows you
the anticipated payment schedule for this option. Next fiscal year’s
proposed assessment is within a few dollars of this year’s costs
when combining annual dues with water and sewer charges.
| Payment Due Date |
Lots w/ Sewer |
Lots w/o Sewer |
| April 1, 2008 |
$525.00 |
$432.50 |
| June 1, 2008 |
$262.50 |
$216.25 |
| August 1, 2008 |
$262.50 |
$216.25 |
| Total Payments |
$1,050.00 |
$865.00 |
Will my rates go down or will
I get a discount for my second lot?
Your rates probably will not go down
and you will not get a second lot discount. This purchase plan is
pretty much contingent on keeping water and sewer rates at their current
level on a per lot basis. This will allow us to accomplish the purchase
without a special assessment, pay down our debt, operate and maintain
the utilities and build a reserve fund for future capital projects.
The second lot (or multiple lot) discount
concept is a separate issue for the Association. The financial objectives
of the Association are to collect enough money to meet the needs and
desires of its membership. Essentially, your Association establishes
its assessment funding based on a breakeven budget objective. To meet
this objective the funding needs are determined and then the assessments
are established based on a per lot allocation method. If a second
(or multiple) lot discount program were established, the reduction
in funding from these lots would need to be offset by raising the
single lot owner assessment amount. The Association’s position
is that single lot owners should not be asked to subsidize a multiple
lot owner discount program.
What does Woodhaven know about operating a water/sewer system?
While we may not currently know the
exact, day to day, nuts and bolts specifics of the operation, we do
know that the most important thing is to provide you with quality
and reliable water and waste water service. We are working very closely
with current and former employees of the utilities who know the systems
like the back of their hands to learn more about the facilities. Regardless
of how we decide to accomplish the operation and maintenance of the
facilities, we promise we will have a licensed operator and will insist
on compliance with all relevant EPA and IEPA regulations.
Will my rates go down or will
I get a discount for my second lot?
Your rates probably will not go down
and you will not get a second lot discount. This purchase plan is
pretty much contingent on the keeping water and sewer rates at their
current level on a per lot basis. This will allow us to accomplish
the purchase without a special assessment, pay down our debt, operate
and maintain the utilities and build a reserve fund for future capital
projects.
How will this purchase stabilize
the rates?
Woodhaven Association is not driven
to make a profit for investors—Aqua America is. To make a profit,
the current owner bases many of their budgetary and capital project
decisions to meet investor needs, not ours. To do this, the company
looks to increase expenses so they can appeal to the ICC for rate
increases. Not only are they permitted to petition for increases based
on dollar for dollar expenditures, they are also allowed to make a
10% profit on those costs.
Why don’t we just put in
meters?
The simplest answer to this question is that it would result
in higher costs to the Association and its property owners. Meters
are used in community residential areas where they are effective in
monitoring daily use. In 1971, Woodhaven was designed and registered
as a Planned Unit Development, otherwise known as a recreational development.
During our camping season, our population is too large not to have
a water and sewer system. Systems such as ours, overseen by the IEPA,
cannot be turned off when we are not here and turned on when we are.
Regardless of a meter, enough revenue must be generated to operate
365 days a year. The cost to install 6,140 meters at this point would
be significant and rather than save you money would end up costing
you more. The increases would not be limited to just capital investments.
The cost to read the meters would also result in a substantial increase
in the ongoing costs to manage the system, which would also be included
in raising your rates. If we proceed in purchasing the utility systems,
the total cost of this investment would have to be paid by our property
owners. This fact and the additional operating costs to manage a metered
system would end up costing you more money than you are currently
paying.
How will capital projects be paid for?
A portion of the assessment payment
you make will be designated for reserve funding. It would be irresponsible
of us to think that equipment, pipes, valves, etc. will not need repair
or replacement. Rather than paying Aqua’s profit, you are building
your reserves.
Are We Getting What We Paid For?
We are taking very deliberate steps
to research and document the condition of the current facilities.
Since the conclusion of Aqua’s rate increase we have been working
with Fehr-Grahmm and Associates to evaluate the condition of the existing
system. Now with Aqua actively working with us in the purchase transaction,
the engineers are getting a closer look and have been able to openly
communicate with Aqua’s past and current operators.
Why does the Referendum Ask for
Funding Up to $11.2 Million?
There are three main components of
the agreement that could be included as costs for the capital addition
of the water and waste water systems. The referendum question needs
to account for all of the components and is stated at a not-to-exceed
amount of $11.2 million. The actual cost will be provided when the
transaction is completed.
The three components include the purchase
price, the potential buyout of the Operating & Maintenance (O&M)
agreement and costs associated with our due diligence review of the
agreements and of the utility systems. The due diligence costs will
include engineering reports about the utility operations; an independent
financial review of the agreement assessing its fairness; and legal
reviews of the agreements and advise to ensure the Association’s
interest are protected throughout this process. The following chart
provides a breakdown of each components estimated cost in this transaction.
| Purchase Price |
$10,500,000 |
| O & M Buyout Option |
$400,000 |
| Due Diligence Cost Estimate |
$300,000 |
| Referendum Question Amount |
$11,200,000 |
