March 17, 2011
Feedback on 2030 General Plan Draft
By Hank & Eileen Lewis
We commend the GPC and the Board for their work on a long-range general plan and for providing systematic funding for large capital projects over the next 30 years.
We agree that Tahoe Donner’s infrastructure is aged and some facilities need renovation, major upgrades, or even replacement. However, a blanket approach that is based on generalized assumptions is not the best approach. Rather projects must be assessed, designed, and funded individually to meet specific needs, based on sound business assumptions, homeowner benefit, and solid analytical data such as utilization, cost, growth, and return on investment.
We support the vision and purpose as expressed in the strategic plan and the general plan. We need to protect and enhance our investment in our community because our mountain experience and our property values depend on doing so. Given our Association’s membership growth and changes in demographics, and the growth and changes in utilization of our amenities, as well as the operating requirements of our support departments, we must proactively maintain and upgrade our facilities.
With regard to the projects outlined for the first 5 years of the plan, we offer our feedback in what we see as project priority.
Based on the substance of information presented at recent meetings related to the Maintenance Facility, the Forestry Facility, and Storage Facilities, we believe that there is a compelling business case for making these improvements and they should be of the highest priority. We support these projects.
One of our major bottlenecks in several of our amenities is parking. Given the cost, scope, and value added by additional parking, we support the proposed projects to improve parking at the Beach Club Marina, the Cross Country Ski Area, and the Downhill Ski Area. Additionally, we believe that satellite parking and shuttle bus transportation should be used to mitigate parking problems during peak periods and to avoid making excessive capital improvements that will be under utilized most of the remaining time.
With regard to The Lodge, it is unfortunate that the original building was downsized due to cost problems during its construction. However, we are very fortunate that The Lodge has turned into a very effective and valuable amenity. We support the proposed projects to establish a Bar in the Grotto and to Expand and Enclose the Lodge Deck.
We support the proposed project for a Snowplay Facility given its increase in utilization, positive net operating results, and year round multi-use benefits.
Given the $700K+ of investments recently made in the Downhill Ski Area Lodge and Operations, we do not support the planned replacement of that facility in the next 5 years. This is a public amenity, used mostly by the public (75% - 80%) with member use running around 20% - 25%. We are in a small niche market competing with smaller family oriented ski areas and have no need to compete with the larger ski areas. In fact we are benefitting by trickle down business from the larger ski areas in this economy given our lower cost, easy access, and family oriented business model. At this stage, our facilities compare very favorably to other, similar ski areas. However, we recognize that there are operational bottlenecks and space problems during peak periods, which only impact us for 15 - 20 days per year. The rest of the time, i.e., midweek and off-peak weekends, our downhill ski area is greatly underutilized. Additionally, the Downhill Ski Area facility serves no revenue producing purposes during the non-winter months. Instead of making a substantial capital investment in a new building at this time, we recommend that we continue to make ongoing operational improvements to support peak periods and to gain greater market share during off peak times. For example, the ski rental operation now has online registration, which would allow guests to reserve and pick up equipment outside normal business hours and to keep equipment on a multi-day rental basis at reduced rental rates. The food service operation has been improved and seems to be working well. If additional indoor space is really needed for seating, retail sales, which are of limited financial benefit, locker rooms, and learning center usage, then we might consider another smaller structure to be placed up hill from the current facility. While net operating results have been positive, and have improved substantially in recent years, the pay back period for a facility replacement would be at least 15 – 20 years, which doesn’t take into account the staffing and expenses required to operate a much larger facility. Instead, operational improvements and smaller incremental capital projects would meet our current and ongoing needs, avoid over building for peak utilization, and yield a greater return to home owners for the use of this public amenity by using positive net operating results to offset other under performing amenities and general association operating costs. This large building project should be considered for a later time frame.
It must be noted that the positive change in net operating results of the Downhill Ski Area, and all other amenities, that occurred between 2007 and 2008, was due to a change in accounting practices with regard to the elimination of overhead cost allocations, and not due to actual operational improvements. In fact, our amenities pay for no administrative overhead and are not charged for the cost of the facilities to support their operations. While operational and financial improvements have occurred in some cases, their true scope cannot be determined from the financial data provided in the general plan.
Tahoe Donner has an excellent Cross Country Ski Area. We do have bottleneck and space problems. Expanding parking will meet our greatest need. But we question the need for facilities that provide a locker room and shower facilities. Furthermore, cross country skiers generally pay for access to trails, not fancy facilities, and they tend to be very self-sufficient. Therefore, we do not support a building replacement with a scope of work costing $3.0 million. Rather we should look at remodeling and expanding existing facilities on an incremental basis to meet our current and ongoing needs. Additionally, as is the case with downhill ski area, we should look at making operational improvements and gaining greater market share during off peak times to support additional capital investments.
Our Equestrian Center serves a very small population of users and carries a relatively high net operating loss for its size and function. However, it does add value to our range of amenities and should be retained. For it’s own purposes, we do not support the capital investment of a $300,000 barn replacement/remodel. However, if improvements could be made to serve the multi-purpose uses on a year round basis to the Cross Country Ski Area, the Equestrian Facility, and the Summer Camps, as a whole, then some investment would be justified. These projects should be planned, costed, and justified as a whole, not as separate projects.
With regard to Open Space Land Acquisition, we support setting aside money for this purpose but expect that any project be carefully evaluated and justified.
General Plan Years 2016 – 2030
While the Board should establish a range of plans for reserve account accumulation purposes, we believe that it is a mistake to commit to individual projects beyond the first 5 years at this stage. We need to develop a track record of success in the implementation of our plans for the next 5 years and react to changes in demand, utilization, and cost to make additional investments. Those investments also need to be better scoped and prioritized.
The one exception we have is the Lodge Banquet Facility. Given the success of The Lodge, the inadequacy of the Banquet Facility, the disadvantages of the tent facility, and the need for more common area/multi-use space in the Association, we believe that this project should be a more immediate priority along with the other Lodge projects.
Important to the plan is the process by which it will be implemented. We must first look at making operational improvements within our existing operations before making new capital investments. All planned projects need to be individually scoped, cost estimated, justified, and prioritized with homeowner review and feedback prior to implementation. We must justify each project based on sound business assumptions, taking utilization, growth, investment, homeowner benefit, and return on investment, net of increased operating costs, into account.
Building for peak demand or getting caught up in a “build it and they will come” mentality would be unfortunate.
Furthermore, given the problems associated with cost and construction of the Lodge and the Trout Creek projects, we must look at our capabilities to manage projects of larger scope. While we may have the skills and capabilities to manage operational improvements and small capital projects, we should seek outside professional help to manage larger building projects and to learn from what others have done in similar projects.
The scope of this plan as stated is 30 years and we appear to have a funding capacity of approximately $35 - $40 million dollars for major projects, i.e., Designated Building Replacement, in addition to other Regular Development Fund Projects. Therefore, we should lay out a 6 segment plan, in 5 year segments, for a total of 30 years, updated annually, to scope and prioritize projects within that framework, spending in the range of $6.0 million per segment, using the excess capacity already in the Fund for reserves and accelerating certain projects as required.