Presque Isle Harbor Association Business Plan

By-Law Sections

Presque Isle Harbor Association Business Plan

I: Executive Summary

The Presque Isle Harbor Association (PIHA) located in Presque, MI, is a single-family,residential community that strives to collectively provide essential services to its home andlandowners; it is a membership-based organization. The development of PIHA was begun in1968 by the American Central Corporation, a subsidiary of International Paper, whopurchased the property from the Fletcher family of Alpena. In 1972, American Centralestablished PIHA as a nonprofit corporation under the Michigan Nonprofit Corporation Act(NCA) [1982 PA 162, MCL 450.2304] with the final transfer of all assets to PIHA in 1976.

The Board of Directors operates the Presque Isle Harbor Association in accordance withMichigan laws, the Corporation’s articles of incorporation, restrictive covenants, its bylawsand organizational rules, employee policies, and generally accepted business practices thatwill accomplish the Presque Isle Harbor Association’s mission and goals. The Board ofDirectors, its committees, and subcommittees are made up of Association members and, incooperation with the executive director, are responsible for enforcing the above-referencedlaws, articles, policies, covenants, PIHA rulebook, and business practices. The executivedirector hires personnel to staff the clubhouse during scheduled hours of operation, tomaintain Association property, and to provide legal and financial consultation to the Boardand its members. The Board of Directors is also responsible for maintaining open andeffective communication between itself and the Association membership.

Membership in the Association is determined by meeting specific requirements forownership of property within its boundaries. The Association is bounded to the East byLake Huron, to the West by Grand Lake, to the North by Thompson Harbor State Park andto the South by the community of Presque Isle. When including Lake Esau that is partiallylocated within the Association’s boundaries, there is approximately a total of 4 miles ofshoreline. The Association’s property consists of approximately 3000 acres, of which 2000acres are divided into 12 plated subdivisions. These subdivisions are further divided into3100 lots that are approved for residential housing. The remaining property is designated as“common property” on which the Association’s physical assets are located. Annualoperation of the Association is financially supported through the payment of an assessmentby the owner of each lot which also entitles the member access to a variety of amenities(see Section V, B below). Currently, 2290 members own 3100 lots; 428 of these lots areoccupied by a residential dwelling. Members who purchase property are not required toconstruct a dwelling on their property.

II. Mission Statement

The mission of the Presque Isle Harbor Association is to resourcefully and responsibly manage its assets in order to promote and maintain an exceptional lifestyle that may be shared and enjoyed by all its members.

III. Marketing Analysis and Strategy

The Presque Isle Harbor Association is a true four–seasons, self–managed, residential community nestled along the rugged and pristine shoreline of northwestern Lake Huron. The Association offers an excellent, unspoiled environment of woods, water, and many other natural resources. With easy, daily access to activities and events in Alpena, Rogers City, Cheboygan, and Petoskey, it is ideally suited for persons whose employment or retirement situation would allow them to settle in a community that takes them away from the "hustle and bustle" of most urban areas. Presque Isle is truly a "diamond–in–the–rough" that can be found on the shores of Northeast Lower Michigan.

A comprehensive marketing plan to let others know about our unique community will target active and inactive Association members, retirees and residents new to the Presque Isle area, and seasonal tourists and vacationers.

Advertising: the Association's website will be upgraded to provide accurate and timely information about the organization, its leadership and governance, activities and events of interest, and links to important resources and community partners that may enhance the lives of the membership. The use of printed and other electronic media will also be used when practical and cost–effective. Additionally, our membership is considered a significant resource for marketing the Association by sharing their personal experiences and stories with those who are not familiar with the PIHA.
Partnerships: Building partnerships (or working relationships) with community organizations and agencies (both private and public; e.g., Marine Sanctuary, Discover Presque Isle Cooperative, etc.) will allow for expansion of the kinds and number of resources and amenities that are available throughout the year to Association members, their families and friends, and visitors. Some of these partnerships are already in the planning stage for the coming year.

IV. Financial Management

Budgeting Process: The fiscal year of the Association begins on April 1st and ends on March 31st of the following year. The Executive Director is required to prepare and summit an annual budget to the Budget and Finance Committee and the Board of Directors for their approval before the end of each fiscal year. The budget reflects the cost of administering the programs and services as well as projected revenues of the Presque Isle Harbor Association for the next fiscal year.

Once the Board of Directors approves the budget, the Executive Director is authorized by the Board to implement this financial plan to manage the Presque Isle Harbor Association for the next fiscal year. The financial plan allocates funds for: (1) operating Association facilities, (2) employing personnel to operate and maintain the facilities, (3) reducing debt, (4) managing newly–approved capital or operating expenses, and (5) maintaining funds for a two–month operating reserve.

The Board of Directors has been given the authority to annually review and increase, if needed, the yearly assessment for members of the Association based on the overall budgetary needs of PIHA and the Consumer Price Index (US All Items, 1982–84=100 – CWUR0000SA0 as a baseline).

Budgeting Pro forma: A pro forma is a financial statement that projects gross income, operating expenses, and net operating income for a future period on the basis of a set of specific assumptions. These assumptions are determined in part by the Association&apos:s business goals and objectives written in the final section of this business plan. The Executive Director takes this into account when drafting his or her budget proposal for each fiscal year.

Financial Plan: The following is a projection of budgetary data for fiscal years 2009–10, 2010–11, and 2011–12. Fiscal years 2007–08 and 2008–09 are presented for a baseline comparison. Beginning F/Y 2009–10 (see table below), it is anticipated that an annual increase will be applied with 3% as the standard. Because membership dues make up 83% of the Association's income, we continually look for "other sources of revenue" to augment our annual budget. These other sources of revenue include; campground, vending, clothing sales, pontoon boat rentals, beach house and activities hall rentals. Operational expenses, other than labor, repairs and maintenance and supplies, remain fairly static from year to year.

Recommendations for the expenditure of discretionary funds are made by the Executive Director and approved by the Board of Directors. New discretionary spending for F/Y 2009–10 includes 1) new exercise equipment, 2) installation of a boat dock at Grand Lake Beach, 3) upgrading of security system, 4) purchase of new playground equipment, and (5) extra payments on the principal of the clubhouse mortgage. Projected discretionary spending for operating expenses will increase 1.3% from F/Y 2008–09 to F/Y 2009–10, 3.4% from FY 2009–10 to FY 2010–11, and 3.7% from FY 2010–11 to FY 2011–12; for capital improvements, projected discretionary spending will increase 98% for F/Y 2008–09 to F/Y 2009–10, decrease 54% for FY 2010–11, increase 33% for FY 2011–12 (refer to table below for details on increases and decreases in spending). Actual increases in discretionary funding will be planned and approved in relation to the annual budgetary process, collection rate of annual membership fees, and annual business goals and objectives (see Section VI).

projected year 08–12 financials for piha

projected year 08–12 financials for piha

V. Operations

Staffing: The Executive Director is responsible for the day–to–day operations of the Association under the authority of the Michigan Non–Profit Corporation Laws, the Corporation's articles of incorporation, restrictive covenants, its bylaws and organizational rules, employee policies, and generally accepted business practices to accomplish the Presque Isle Harbor Association's mission and goals as set forth by the Associations Board of Directors.
The role of the Executive Director is to: 1) present an annual budget for approval by the Board, 2) hire appropriate staff to perform operational tasks according to their position descriptions, 3) maintain and secure the Association's assets and recommend new capital purchases or projects when needed, 4) purchase and maintain equipment to meet operational needs, 5) obtain necessary insurances to protect the Association and its staff against liability and losses, and 6) provide legal and financial consultation to the Board through the use of independent contractors.
Chart #1 and Chart #2 are graphic representations of the data provided in the table above. Chart #1 reflects changes in operational expenses based on inflationary trends and lack of growth in our economy from one fiscal year to the next. Chart #2 the relationship (ratio) of income to expenses on a annual basis. These data are used to determine whether the Association will be operating with a surplus or deficit for a particular fiscal year of interest. This allows the administration and the Board to take the necessary action to balance the budget.

Currently, the Association employs six full–time positions (6.0 FTEs): Executive Director, Maintenance Supervisor, Administrative Assistant/Bookkeeper and Maintenance Assistant. Part–time staff consists of maintenance workers and clubhouse, campgrounds, and beach house attendants. During the summer (20 weeks), the Association employs six (6) seasonal, full–time employees for approximately 6500 hours (6.0 FTEs); during the remainder of the year, it employs three (3) part–time workers for approximately 2600 hours (1.2 FTEs). (see Addendum A, organizational chart).
Facilities and Services: A variety of services are available to the membership at four primary locations:
1. Clubhouse: Association office, indoor pool and spa, TV lounge and card room, exercise and locker rooms; game/meeting room; large activities hall (basketball, volleyball, rentals), small second floor meeting room; outdoor deck with grills and tables; tennis court. Open daily, 8 AM to 10 PM except Christmas, Thanksgiving and Easter Sunday.
2. Grand Lake Beach House: sandy beach and swim area, grass picnic area, boat launch and dock, pavilion with picnic tables, restrooms and changing rooms, volleyball court, (available for family parties; contact the office for availability). Open daily, 10:00 AM to 8:00 PM, Memorial Day through Labor Day with an attendant onsite.
3. Campgrounds: 60 sites with water and electric–– 15 of these sites have sewer hook–ups; large wooded sites, pavilion (with fireplace, games and tables); playground; central building with showers and restrooms; horseshoe pits and volleyball court; hiking trails and trailer storage (placement and removal of recreational vehicles by Association staff can be arranged). Is officially open from mid–April through November 30th; an onsite manager is available 24/7 from May 1st through September 20th
4. North Bay Beach House: sandy swimming beaches on North Bay (pavilion with lounge and restrooms) and Presque Isle Harbor; rental of pavilion may be arranged through the Association office at the Clubhouse. There is no onsite attendant.
5. Common Property/Green Space: hiking and snowmobile trails; cross–country skiing; designated hunting areas.

VI. Concluding Statement

Statement of Intent
The Presque Isle Harbor Association (PIHA) faces an important challenge in the next fiscal year. We currently are in one of the most significant economic recessions in the history of the United States. In addition to this, during the last four years, PIHA has been engaged in a complicated legal dispute with a company that has purchased and has been managing multiple lots within the Association. This company's failure to pay Association membership fees on the lots it owns has placed a significant financial burden on PIHA and its members. Also, the company has recently filed for Chapter Seven bankruptcy making the situation even more difficult. Although the financial impact of these events will be felt by our Association for many years, the Association and its Board of Directors will strive to offer a broad range of competitively priced property and housing and to provide the membership with a variety of amenities seldom experienced by members of similar associations.
The Association, its members, board and executive director must accept this challenge and turn it into an opportunity for continuing the planned development and revitalization of our organization to meet the needs and interests of its multifaceted membership. The Presque Isle Harbor Association is committed to providing its members with an organization and program that 1) strive to deliver services that meet high standards of quality, 2) compete with or exceed the operational standards of similar associations, and 3) offer a product that maintains or increases the value of personal property and common assets of the Association through responsible investment and financial management.
This overarching commitment is reflected in the budget pro forma discussed above and in the following summary of business goals and objectives for FY 2009-10.
Goal 1. – Explore new sources of income and proposals for capital improvement.
Objective 1.1– Invite board and committee members, staff, and association members to submit written proposals for new sources of income and capital improvements for fiscal year 2009–10 budget.
Strategy 1.1 (a)– Executive Director to provide by March 1, 2009 a sample template that identifies format and content requirements for submission of a proposal.
Strategy 1.1 (b)– Proposals will be submitted no–later–than April 1, 2009 to Executive Director and the relevant committee for review and action.
Strategy 1.1 (c)– If recommended by the Executive Director and reviewing committee, proposals will be submitted to Board for its consideration and action.
Performance Measure 1.1– Adoption of proposal will be contingent on the kinds of short–term and longer–term budgetary and operational benefits that may be realized by the Association and its membership.

Goal 2. – Improve internal and external communications between the Associationand its membership and the greater community.

Objective 2.1– Redesign and update the Association website.

Strategy 2.1 (b)– Present recommendations for website modification to PIHABoard during February 2009 board meeting.

Strategy 2.1 (d)– Activate new website for 3 month trial period no–later–thanMarch 1, 2009.

Performance Measure 2.1– Webmaster will submit a quarterly operational report toPIHA Board of Directors.

Goal 3. – Promote the health and fitness of Association members.

Strategy 3.1 (a)– Organize an ad hoc committee to evaluate clubhouse fitnessfacilities and equipment by March 1, 2009.

Performance Measure 3.1– Proposal to be submitted to Board of Directors byExecutive Director for action during April 2009 board meeting.

Strategy 3.2 (a)– Task ad hoc committee to explore operational and financialfeasibility of providing or supporting personal and group fitness programmingat Association clubhouse with report or proposal to be submitted to ExecutiveDirector by April 1, 2009.

Goal 4. – Increase opportunities for the interaction of Association members withthe community–at–large.

Objective 4.1– Plan Association events and activities that are open to persons fromthe community–at–large.

Strategy 4.1 (b)– Request that all program committees submit their activitiesplan for FY 2009–10 to the Executive Director by April 1, 2009 with review bythe Board of Directors during its April meeting.

Performance Measure 4.1– Program activity plans will be implemented by no–laterthanMay 1, 2009; committees will submit quarterly reports to Board for programreview.

Presque Isle Harbor Association Business Plan

By-Law Sections

Presque Isle Harbor Association Business Plan

I: Executive Summary

II. Mission Statement

III. Marketing Analysis and Strategy

IV. Financial Management

V. Operations

VI. Concluding Statement

About Us

Membership

In The Area

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