Motion Before The Board To Purchase HSV Lot 87

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Motion Before The Board To Purchase HSV Lot 87

Postby Wm Shrewsbury » Jun 6, 2009 9:20 am

Hello Everyone,

An opportunity has arisen in Huntsville to purchase Lot 87 on the corner of Link Ave and Pulaski Pike. This is on the same physical block as the NSS headquarters and adjacent to property currently owned by us. You may view the property here: http://tinyurl.com/mhpyha. It should be noted that the house on the property has been removed, though the driveway and fence around it remain. Click on the street level photo to view the property approximately as it appears now.

After discussion among the BOG members it was decided that we should consider purchasing this property. The BOG has assessed the current fiscal ability of the NSS to purchase this property and made an offer due to the immediate financial needs of the current owner. Our offer was accepted. S/T Frantz made a motion to purchase this property, seconded by OVP Shrewsbury. Per the NSS Acts President Birkhimer has called for a vote. His email call for a vote is shown below.

Please contact the BOG (bog at caves dot org) for discussion of this motion.

Wm Shrewsbury
NSS-OVP

Permission is given and encouraged to post this message to other caving related forums, Grotto list-serves and other contact methods for NSS members.

----- The following is from President Gordon: -----

Good Morning Everyone,

As President I have been requested to conduct an official email ballot according to the guidelines established in Act 06-183 Mail Ballots 4-7-01, 8-24-68, 11-16-68 after four members of the Board requested this action, namely Scott Parvin, Jennifer Foote, Wm Shrewsbury, and John LaMar Cole. To be adopted, this Motion by email requires a two-thirds affirmative vote of the entire Board of Governors. The text of any matter that was the subject of a mail ballot, with the vote of each member, will be read into the minutes of the subsequent meeting. Notice of this proposed action will be posted to the Society web site not later than the day following the transmission of the call for the vote. Everyone is encouraged to post additional notices to national and regional caver mail lists and discussion groups.

I believe there has been adequate discussion and the deadline for the end of discussion has concluded with the voting beginning immediately today June 5, 2009. The deadline for voting will be 12 days and ending on Wednesday, June 17, 2009 @ 9:37AM. Votes are subject to each BG member’s reconsideration until the approved deadline. We are voting on the following motion:

Frantz moves that: The AVP is authorized to negotiate the purchase of Lot 87, at the corner of Pulaski Pike and Link Ave. for a sum not to exceed $12,700. Funds to cover this purchase will be taken from the Endowment Fund. In the event that, prior to 12/31/09, the NSS decides to remain in Huntsville, the Endowment Fund will be reimbursed from the Headquarters Fund. Otherwise the NSS will engage in a fund raising campaign to reimburse the Endowment Fund.

Gordon Birkhimer
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Re: Motion Before The Board To Purchase HSV Lot 87

Postby graveleye » Jun 6, 2009 11:07 am

Wm,

Thanks for posting this information.
Is this the lot that was to be used in the Huntsville expansion proposal?

Kevin
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Re: Motion Before The Board To Purchase HSV Lot 87

Postby Wm Shrewsbury » Jun 6, 2009 5:02 pm

Hi Graveleye,

I'd have to re-read their proposal, but I don't believe they needed any new lots to accomplish their proposal. They were going to use our existing lots on Link to locate the new building, which is down hill (and down-dip) from the cave entrance.

If the office proposal from HSV is the one selected, this lot would allow them to have extra parking space as well as a prominent NSS sign right on Pulaski. No decision has been made in any way.

Wm
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Re: Motion Before The Board To Purchase HSV Lot 87

Postby graveleye » Jun 6, 2009 5:07 pm

OK thanks. I wish I could see it in my head as to how it would all look, but it sounds good to me.
I need to get up there soon to get a first hand look as to how everything will fit in. I might just do
that in the next few weeks.
Thanks again for posting this!
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Re: Motion Before The Board To Purchase HSV Lot 87

Postby Wm Shrewsbury » Jun 6, 2009 9:44 pm

Graveleye,

Go to the NSS Business Pages. At the bottom you will find a link to the motion. Click on it and you'll see the motion as posted above, as well as a Google map link and a small PDF of the Lots showing the underlay of Shelta Cave, the Office (Lot 83), the "White House" (Lots 81 & 82), and Lot 87 (the lot in the motion.) The Google map at street view shows a pretty accurate view of the lot. The house has been removed; the fence and driveway remain.

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Re: Motion Before The Board To Purchase HSV Lot 87

Postby Cheryl Jones » Jun 6, 2009 11:55 pm

Hey Wm, I have some questions about funding.

If the Board rejects the H'ville bid, will the property be considered a part of the Shelta Preserve, or the current HQ property? I'm guessing it will be added to the Shelta Preserve since it adjoins the preserve and not the HQ property. If this is correct, then why isn't the Cave Acquisition Fund being used to purchase the property, or to pay back the Endowment Fund?

It appears from the way the motion is worded that the intention is to borrow from the Endowment Fund. If this is correct, then why doesn't the motion clearly state this? The motion reads: "Funds to cover this purchase will be taken from the Endowment Fund. In the event that, prior to 12/31/09, the NSS decides to remain in Huntsville, the Endowment Fund will be reimbursed from the Headquarters Fund. Otherwise the NSS will engage in a fund raising campaign to reimburse the Endowment Fund."

The Endowment Fund rules say "The Foundation shall invest funds in the Endowment Fund until the balance of the fund exceeds $500,000." The balance Dec 30 was just over $300K. This seems to mean that we are not yet able to pull money from the Fund without formally borrowing from it. The idea of an endowment fund of course is to grow untapped until it reaches a point where it will spin off enough income to provide a healthy supplement to the NSS Budget.

The Fund contract also says ""The Foundation may make loans to the Society from the Endowment Fund on passage of a resolution by the Society's Board of Governors requesting such a loan." Does the Foundation approve paying for the lot from the Endowment fund without a formal resolution to borrow from it?

Did the Board consider putting a time frame in the motion for paying back the Endowment Fund, if indeed this will be done through fundraising, to ensure that the endowment fund is replenished ASAP? Otherwise paying back the Endowment Fund could drag on for years, and even be forgotten, particularly if the push is to raise money for a new building. If the H'ville bid is not accepted, what is the contingency plan if money is not raised within a certain time to cover the amount taken from the fund?

Let's say the Board does not select the H'ville HQ bid. Then it seems to me that instead of raising money to cover the cost of the Link Ave property, we'll need to focus fundraising efforts on paying for the new office. That $12.7K in donations for the Link Ave lot could instead have been directed towards the cost of the new HQ. The donation pot isn't bottomless, and the new HQ will be an expensive project -- we need to make the best use of the money our members are able to contribute.

Or has the Board reached an unofficial consensus that the H'ville bid will be selected, therefore any plans or strategies beyond using the Link Ave property for the new HQ is not being given much consideration? :question:

Thanks
Cheryl
Last edited by Cheryl Jones on Jun 7, 2009 11:57 am, edited 1 time in total.
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Re: Motion Before The Board To Purchase HSV Lot 87

Postby Wm Shrewsbury » Jun 7, 2009 7:00 am

Good Morning Cheryl,

I have a few answers immediately for you and have also sent this link to Peri so that she could answer the balance.

- If the board does not accept the bid then the property will be considered part of the Shelta Cave Preserve.
- The earnest money was used by Ray from the Cave Acquisitions fund. There is currently ~$5K in there.
- All bids are still in consideration for the new office complex. In fact, a spreadsheet was recently sent out to all the proposal groups so that we could have an apples-to-apples comparison of some key points.

I'll have to leave the balance of the questions to Peri. While I could fill them in somewhat, she will have the most correct answers.

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Re: Motion Before The Board To Purchase HSV Lot 87

Postby Cheryl Jones » Jun 7, 2009 11:47 am

- The earnest money was used by Ray from the Cave Acquisitions (CA) fund. There is currently ~$5K in there.

$5K "currently" meaning after the earnest money was paid or before? The "Restricted Fund Values" report (in the Fiscal Information section of the NSS Business page) says that the Cave Acquisition Fund had $14,206.63 on Dec 31, 2008. I didn't read in the minutes of the Spring 2009 Board meeting that any withdrawals had been authorized. Was $9K -- nearly the full price of the property -- paid in earnest money? Or does the Board not know the value of the CA Fund?

Why doesn't the motion propose the use the CA Fund for the total purchase, since the property would be bought as an addition to the Shelta Preserve, until the Board votes otherwise? Fundraising or transfers from the HQ Fund can just as easily be used to replace the money in the CA Fund as the Endowment fund.

The Board motion does not ask the Board to approve earnest money from the CA Fund, but proposes that the Endowment Fund be the source of the full $12.7K purchase price.

Ray (or Peri) is not authorized to use any money in the Cave Acquisition Fund without a specific vote by the Board authorizing a withdrawal (as per Board Act 18-712, Appendix C(N).) Has an e-vote already been conducted on this that we're not aware of? Was a vote conducted to approve payment of earnest money?

So do I understand this situation correctly? it appears earnest money was paid without specific Board authorization and before the Board approved the purchase the property, and the money for this was withdrawn from a restricted fund by an officer without necessary Board authorization.

:panic:

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Re: Motion Before The Board To Purchase HSV Lot 87

Postby Wm Shrewsbury » Jun 8, 2009 5:29 am

Peri is having some problems logging in and has asked me to post the message below. The only changes I have made to her text was to add Cheryl> to the lines below where I saw that Peri quoted her. Please feel free to contact them directly for verification.

Wm
----------------------------------------

Before responding to Cheryl's questions, I'd like to step back, and look at the larger picture.

The NSS in currently engaged in a process to determine where the NSS Headquarters should be located. The Board is considering 3 proposals, one which keeps the HQ in Huntsville, a second which moves it to Horse Cave Kentucky, and third which moves it to Bloomington Indiana. The Board has committed to reviewing all three proposals this summer in Kerrville, and making a decision at the fall meeting in Birmingham. Until then, it is essential that the Board not jump to premature conclusions or take actions which are prejudicial either for or against any of the proposals.

If you look at the lot map (linked from the NSS business page, as per Wm Shrewsbury's post), you will see that we own a substantial portion of the west end of the block defined by Pulaski Pike, Cave Ave. and Link Ave. Given the potential impact on Shelta Cave of development above it and in adjacent areas, I strongly believe that the NSS should seek to acquire as much of this block as is fiscally reasonable. Lot 87 has frontage on Pulaski Pike, making it desirable as commercial property. While the neighborhood is zoned residential, there is a medical office at Pulaski and Clayton (one block north), and a residential care facility on Link, not to mention the NSS Office itself. The potential for commercial development on Lot 87, which a concomitant impact on Shelta is non-trivial. We had an opportunity to by Lot 87 last year for $22,500. We felt the price was too high, so we passed. It is now available for $12,700, conditional on a fast sale. At $12,700 it is a good buy.

I would prefer to defer this purchase until after the decision on the HQ, but the property may no longer be available then. I believe we should buy it now, but in a way which neither favors or opposes the Huntsville proposal. To do that, we cannot tie to any specific funding source at this time. Hence, my use of the Endowment Fund, rather than the Cave Acquisition Fund or the Headquarters Fund. We will shift the funding around later, after we have determined whether Lot 87 will become part of the cave preserve or part of a new Headquarters complex.

Several years ago, we had the opportunity to buy Lot 91 on Cave Ave. We dithered around about it for so long, that we lost it. It is now a prominent hole in the preserve. I don't want to repeat that mistake.

Which leads us to Cheryl's questions:

Cheryl> why isn't the Cave Acquisition Fund being used to purchase the property, or to pay back the Endowment Fund?

If we use either the Cave Acquisition Fund or the Headquarters Fund for this purchase, we are making a premature commitment to a specific use for the property. I am proposing to take (not borrow) the funds from the Endowment Fund, which can be done by a 2/3 majority of the Board in accordance with Appendix C, Attachment N, of the Board Acts,

6. By a two‑thirds vote the Society's Board of Governors may require the return of any or all of the NSS Endowment Fund
Since the e-mail ballot requires a 2/3 vote, if it passes, we also have the 2/3 required for using the Endowment Fund. If the sum were larger, I would insist that we borrow it, but for this relatively small sum I'd prefer to avoid the additional paperwork and accounting. However, having taken this shortcut, I wanted to include provisions for refunding the money, once we know how we're using the property. I selected a fund raiser, rather than the Cave Acquisition Fund because the Fund is relatively depleted, and I don't want to draw it down further.

Cheryl> The Endowment Fund rules say "The Foundation shall invest funds in the Endowment Fund until the balance of the fund exceeds $500,000." The balance Dec 30 was just over $300K. This seems to mean that we are not yet able to pull money from the Fund without formally borrowing from it.

Not so. This statement is a directive to the Foundation as to how to invest the invest the Endowment Fund (focus on growth rather than income). It does not preclude using the Fund before it reaches its goal. The Board unanimously approved both the FY 08/09 and FY 09/10 budgets, which each draw approximately 5.5% from the Fund. (See Appendix C for a clearer explanation of the investment goals.)

Cheryl> Did the Board consider putting a time frame in the motion for paying back the Endowment Fund...

I don't think it's necessary. There are already a number of quiet pledges toward that end, I believe the money will be raised without major effort or impact on HQ fundraising.

Cheryl> Or has the Board reached an unofficial consensus that the H'ville bid will be selected,

Most definitely not. The Board is making every effort to avoid make a premature decision. The HQ decision is the most important decision that the Board will make in a decade, and we intend to evaluate all of the data, carefully consider the merits of all three proposals, and make fair and well reasoned decision.

Regarding the earnest money. The Board approved FY 09/10 budget allocates $5K from the Cave Acquisition Fund for cave acquisitions. Ray does not need additional Board approval to spend it. After some discussion, we decided it was a suitable short-term source of earnest money, which we needed in advance of the 12 day waiting period for the Board to approve the motion. If the Board approves, then Ray's budget will be restored. If not, then it's a sunk cost, and we'll move some other money around, so as not to have to tap the Cave Acquisition Fund.

Cheryl> Why doesn't the motion propose the use the CA Fund for the total purchase...?

If we buy it with the Cave Acquisition Fund, which is restricted for a specific purpose, the property itself becomes restricted for cave preserve purposes. If we end up wanting it for part of the HQ, we'd have to unrestrict it. That is a complex process, with tax and audit implications. I much prefer to acquire it unrestricted, and then restrict it later, if appropriate.

I hope this addresses the immediate questions. If there are more, please let me know.

Peri Frantz,
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Re: Motion Before The Board To Purchase HSV Lot 87

Postby David Grimes » Jun 8, 2009 8:32 am

I have posted a copy of this topic into the NSS Topics forum. Regular forum members cannot post their comments about this proposal on this forum and have contacted me requesting that they be able to post replies to this topic. I suggest any further conversation about this topic be continued in the NSS Topics page where everyone can express their views. Please click here to go to the new thread.

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