IVGID GM’s Corner: No increase in Rec Fee planned for sixth straight year
Special to the Bonanza
“Smoothing” isn’t something that IVGID just does to the sand at our beautiful beaches. It is also a basic principle for the way we budget our resources each year.
Smoothing was developed in 2011 as a response to a projected pattern of Recreational Facility Fee increases to support a number of future capital projects.
The primary objective of smoothing was to schedule our capital projects in a way to avoid huge fluctuations in resource needs from year to year.
Avoiding major fluctuations from year to year also meant avoiding fluctuations in the Recreational Facility Fee from year to year as well.
As most of you know, the Recreational Facility Fee increased all but one year from 1999 through 2010. Since 2011, smoothing has allowed us to keep the Fee flat for five straight years.
For the 2015-16 budget, we are proposing a sixth straight year with no increase.
Now, smoothing probably wasn’t possible for many of those years due to the significant number of major capital projects that needed to be completed in the last decade.
Since many of our facilities were built in the 1960s, those facilities had reached the end of their useful life by the late 1990s and were in need of replacement or major renovation.
Unfortunately, there had been little or no money set aside over the years for facility replacement. This is one reason why the Recreational Facility Fee was able to stay so low for most of the 1980s and 1990s.
This put the entire burden for facility upgrade on the future owners, which necessitated significant increases in the Recreational Facility Fee beginning with the 1999-2000 budget year.
The good news is that we’ve now completed most of the needed backlog in facility updates and replacements.
While we have several major “catch-up” projects left, we are getting close to a point where we should be able to include funding for future replacement costs in each venue’s budget.
Our water and sewer functions have been doing that now for a number of years.
Some of the remaining “catch-up” projects include the Clubhouse and Maintenance Facility at the Mountain Golf Course, our Administration Building, and the aging 72-inch culvert that diverts Incline Creek under Diamond Peak’s parking lot.
In each case, we have worked hard to keep these facilities intact well beyond their anticipated useful life.
However, there are building code and safety issues with both the Mountain Clubhouse, its Maintenance Facility and the Administration Building that necessitate a major renovation or replacement within five years.
The culvert is in a condition where repair and replacement now will likely be much cheaper than waiting for a failure.
In the future, it will also be our goal to keep facilities in top condition for as long as possible in order to ensure the most cost-effective operation possible.
By having more funds set aside for replacement and repair on an annual basis, this should help us extend the life of our facilities and keep them in a condition that provides the most value to the residents of Incline Village and Crystal Bay.
In the world of asset management, paying now is inevitably more cost effective than paying later.
I know that there are some who believe we should only assess the Recreational Facility Fee at a level to meet our immediate needs.
While this would lead to a lower Fee in some years, it would lead to huge increases in years with major capital needs.
My experience shows that it is a more prudent approach to keep fees and expenditure as level as possible from year to year.
This allows those who pay the Fee to be able to plan ahead and not have payment shock in a year with a lot of capital projects under way.
It also allows more certainty in our Capital Planning. It is much easier to come up with a five-year schedule of improvements when you have a good idea of what your resources will be on annual basis.
The Board is discussing “smoothing” in more detail at its 2 p.m. budget workshop today (April 2) at the Chateau.
Trustees will be holding another budget workshop at the Chateau on April 9 from 1-4 p.m. Additional budget workshops are also being scheduled for the last week in April.
The final budget will be considered by the Board at the state-mandated time and date of 9 a.m. on May 21.
“GM’s Corner” is a twice-monthly column from Incline Village General Improvement Distinct General Manager Steve Pinkerton, who will discuss issues and offer updates regarding various district matters.
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