The long-awaited board meeting where members presented their ideas for income-generating or cost cutting ideas for the farm took place on Sunday, June 14, and the best idea of the day goes to (drum roll, please) Bill who crunched the numbers and found the farm could contract out the haying on the farm for less than it currently costs the farm to do it. “We should not be making our own hay,” Bill explained. “It’s costing us. We break tractors. We burn a lot of fuel. It’s too expensive.” According to Bill, we can have someone cut our hay for $25 per bale. “We can’t do it for that,” Bill added. “What I would like to try this year, not next year, now, on the second cutting, is to bring someone in here and have them do it, someone who only cuts hay. I think it will work great.”
Wait. There’s more. “I want to sell all of the hay-making equipment and sell one of the tractors,” Bill added. “We’ll keep the new one and get rid of the big one, and that’s about a $20,000 tractor, used, and I want to put all of that money into the reserves,” he said to a hearty round of applause.
In short, we save money by contracting the haying out at $25 per bale. No more hot, dusty work in the fields. We don’t have to mow it. We don’t have to ted it. We don’t have to rake it. And someone else would be responsible for maintaining their own tractors and equipment using their own fuel and supplies thereby saving the farm money. AND, we can then sell our big tractor which would no longer be needed for haying in the range of $20,000, even used. Hello, reserve fund! How about a cool, refreshing drink at the gazebo instead while we watch someone else do the hot, dirty work? Boom! Win!
Steps by the Board of Directors to raise revenue
At the June 14 meeting, the Farmcolony treasurer reported a deficit in the Farmcolony operating budget of -$13,536.17. In response, steps were taken by the Board of Directors to initiate a special assessment of $130 for this fiscal year on Farmcolony Homeowners Association members to raise needed revenue for the farm. “As far as I know, in our 45-year history, we have never had a special assessment. However, the Deed of Dedication is clear that a special assessment is for a purpose of such need and I will put a motion forward to raise a special assessment of $130,” said President Nitzsche in his request for a motion for the assessment. “I know it is more than what remains on the tractor (repairs) that still needs to be paid down, but I also know we have additional expenses.” With the equipment budget depleted, “the closest we can get to where we need to be is to look at the full $130 assessment,” he added. The Deed of Dedication and Declaration of Covenants Conditions Restrictions and Easements governing the community dictate that owners are obligated to pay special assessments for capital improvements or repairs when funds are not available to cover the costs. The vote in favor of a special assessment was unanimous.
In addition to the special assessment, the Board of Directors unanimously voted to increase homeowners’ dues by 25 percent, or $130 ($32.50 per quarter or 9.75 per month), to begin in the fourth quarter of FY:2020 to help cover the current shortfall in the budget. Again, the Board of Directors is following The Deed of Declaration and the Bylaws which state, “…the Board of Directors shall adopt a budget containing an estimate of the total amount which it considers necessary to pay the cost of maintenance, management, operation, repair and replacement of the farm and its facilities…and other expenses declared to be common expenses…” and goes on to say, “Any net shortage (of actual expenditures), if the board deems advisable, shall be added to the next installment due from the owners after the rendering of the accounting.” Commenting on the increase, President Nitzsche explained, “We do see that there is a budget shortfall. We do see in the P & L (Profit & Loss statement) there is a shortfall on the amount of income that has been generated. If the next board looks at this and determines that this amount is in excess of what we need in the next budgeting cycle, they always have the flexibility to reduce that amount.” The next Board of Directors will convene after the Farmcolony Homeowners Association (FCHA) elections are held at the association’s annual meeting in August.
Farmcolony has been operating at a deficit for the past several years. In addition to the current deficit, a net shortage in the 2019 budget totaled -$4,979.00. The budget shortfall in 2018 came to -$1,209.21; in 2017, -$10,632.02; and, in 2016, -$15,288.74. Over the last ten years, Farmcolony reserves also have trended downward dropping from $140,104 in 2009 to $11,931 in 2019. As of June 14, Farmcolony reserves are reported at $5551.08, the full amount of which is allocated to the road fund. The drop in our reserve funds has exposed the need for a reserve fund study which is required by the Property Owners’ Association Act, a Virginia law that regulates subdivisions in the state. The board has asked the Finance Committee to begin the task of conducting a full reserve fund study to meet this requirement.
The Deed of Declaration and the Bylaws also allow for any amount collected above and beyond the amounts needed to cover farm expenses to be returned to FCHA members, so reducing the budget where possible and generating additional income on the farm can not only offset spending deficits and reduce the need for general and special assessments to cover common expenses, it can benefit us all. In the spirit of reducing our budget shortfalls, a number of FCHA members put forward income-generating or cost cutting ideas for the farm at the June 14 meeting.
Income-generating and cost cutting ideas
Beginning the discussion, Lisa made the following cost-cutting recommendation for the orchard. Referencing the Deed of Dedication and Declaration of Covenants, Conditions, Restrictions and Easements, Article V, Section 6b, Lisa recommends charging members $10 per year for picking rights to offset the $200 budgeted for the orchard. The Deed of Dedication and Declaration of Covenants, Conditions, Restrictions and Easements, Article V, Section 6b that Lisa references states “It is the intention of the Declarant that the farm be and continue as an operating farm for the raising of livestock and produce for the use of the owners. The results of operations shall be made equally available to all owners at cost…”.
Lisa and DJ took on the chair position on the orchard committee this year. The orchard committee has been without a chair for a number of years and is suffering from years of neglect. Lisa reports the current status of the orchard as follows:
- 8 apple trees, (3 producing, 3 riddled with worms, 2 with no fruit);
- 5 pears (4 look good, 1 looks dead);
- 2 cherries trees (1 with worms, 1 with very little fruit);
- 1 peach tree (looks decent so far);
- 3 memorial trees
- 3 small paw paw trees
- 2 possible mulberry trees
- 1 chestnut tree
- 1 unknown tree
- In the garden there is 1 pear and 1 apple tree (both look like they are doing pretty well).
With the existing $200 in the budget for the orchard, Lisa and DJ purchased a dedicated organic sprayer as well as organic insecticide, fungicide and herbicide and disease control products suitable for organic gardening. They are using free alpaca and rabbit manure to fertilize the trees and will use the free mulch left by the electric company to put around the base of the trees to reduce weeds. The goal of the orchard committee, she said, is to help the orchard become more self-sustaining.
Ponds
The farm ponds were intended for swimming and fishing, according to the Deed of Dedication, but it is difficult to reach the ponds because of overgrowth and weeds. The Ganos have a particular interest in using the ponds for the reasons intended and are willing to clean up the ponds, specifically the pond at their end of Farmview Road, which we are now referring to as Area 51 Pond, and the Farmhouse pond to make the ponds more appealing and accessible, and to gift the farm the money needed to stock the best pond based on water testing, etc., the cost of which is estimated to be in the range of $800. The Ganos would happily accept any offers to help clean up the ponds as well as any donations from anyone interested in contributing to this effort. One caveat is the removal from the Farmcolony rules of operation the language stating that fishing in the ponds is catch and release only, which is in conflict with the Deed of Dedication that says fishing is permitted. The Ganos suggest using the best pond for catch and keep fishing to be available to members only and using the other pond for members and their guests as a catch and release pond. The Ganos would also like to put into place a fee for catch and keep to help cover future costs of managing and stocking the ponds, which is in accordance with the Deed of Dedication guidelines stated above. Hopefully, fees from catch and keep could also provide some additional income to the farm.
Chickens
The farm’s chicken and egg operation, as reported by Laura, currently has a flock of 44 hens and one rooster producing approximately 44 dozen eggs per month with a current budget of $1,000 and a current sale price of eggs at $2.50 per dozen. The chicken committee has done an exhaustive analysis of the costs of the chicken and egg operation and has calculated the direct costs of the chickens based on their current laying to an egg price of $4.00 per dozen. There is currently a budget deficit of just over $1,000 in the chicken operation, the amount of which has been subsidized by volunteers on the chicken committee. To cover the direct cost of what is produced, the chicken committee recommends raising the price of the eggs to $4.00 per dozen beginning in July to reflect the actual costs of feeding, medicating and looking after the chickens. The committee understands that eggs can be purchased elsewhere for less than $4.00 per dozen, but the committee is basing the price on the current cost of raising chickens in the manner that the committee is doing it. As Roberta points out there is a quality to our eggs that you are not getting elsewhere and to the life of our hens that are checked twice a day, in a clean environment, being tested for disease, living in the proper numbers for their flock size. “It is what it is,” Laura concluded. “What I am telling you is the current situation we are now in and the cost of what we are doing right now.” The committee is looking for ways to improve the operation that hopefully could lead to a reduction in the price of eggs in the future.
Animal Boarding
The Animal Boarding Committee members currently contribute $2,990 per year in boarding fees to Farmcolony HOA, with no expenses budgeted and few indirect costs incurred. Expenses cannot be reduced in the budget because there are no expenses budgeted for animal boarding, according to Deborah who spoke on behalf of the committee.
The possibility of raising revenue by boarding horses of non-members of the association has been broached in the past, but the Animal Boarding Committee members strongly oppose that suggestion citing reasons of liability and difficulty. There are physical risks and concerns that come with introducing new horses to a herd, for instance. They also feel boarding from outside of the community is inappropriate based on our Deed of Dedication, which states that the farm is for the benefit of property owners. It makes an allowance for property owners to board private animals but not for the general public. The committee points out that Farmcolony is not a horse farm and its facilities (barn, fences, and pastures) are far below the usual standards for horse boarding facilities. A great deal of expense and work would be needed to bring the accommodations up to par.
The boarding fees and dues were increased by $10 per quarter in 2015 to $115 quarterly each, significant contributions to the Farm’s revenue, the committee believes, that subsidizes other farm operations. Owners also contribute time, labor, and money to maintain the buildings and the pastures that for the most part are not useful for other purposes. They graze the grass and fertilize the fields with their manure, and the manure is available for garden compost. For these reasons, the Animal Boarding Committee asks that policies and fees remain the same at this time.
Farmhouse
Bill had a second proposal that he does not expect to be popular among the membership. “Looking at our budget, we spend a lot of money on the farmhouse: $4,000 for insurance, $3,000 for utilities, $2,000 for other routine stuff. When I add all of that up, the farmhouse takes up a lot of our budget,” Bill pointed out. “In total we pay $11,000 for this farmhouse per year and that is 24 percent of our budget based on our current income. If we throw in $500 per year for reserves to do major things on the farmhouse over time, it comes out to 32.6% of our budget on this farmhouse. That’s a heck of a chunk taken out of our budget. This is really a money hole when you start to think about it. My thought is to sell this thing.”
Selling the farmhouse would require a three-quarters majority vote from the membership, and Bill does not expect his proposal to pass. “There are 28 people,” Bill noted, “so if nine people say they don’t want to get rid of the farmhouse, it ain’t gonna pass, but I want to plant the seed at the meeting and ask for a vote on it for two reasons: One, to alert them (members) to the fact that we have this big problem, and, two, we could get rid of a heck of a lot of problems by doing this.”
The Farmhouse Committee did come up with some money saving ideas, as Phyllis pointed out. First, the committee believes closing up the farmhouse during the coldest months of the year could save a significant amount of money, as much as $4,000 per year in propane costs, the committee believes, which is what we are currently spending to heat the farmhouse through the winter months, a time of year when the farmhouse is rarely used. The committee is also interested in organizing a couple of fundraising events to improve the farmhouse facilities. One idea put forward is a yard sale and bake sale asking members of our farm family for donations of gently used items for the event. Another idea is to host a benefit concert with a disc jockey (DJ) or a local band for which we could sell tickets to raise money or ask attendees for donations. The committee also recommends raising rental fees for the farmhouse and will be looking for ways to increase rentals.
Garden
Reporting for the garden committee, Lori noted that the committee would like to increase interest in the garden by asking for ideas from members as to what they would like to see growing in the garden. The committee is also considering cost cutting initiatives such as asking for donations so that the garden would break even rather than costing the farm, which, as pointed out earlier, is required in the Deed of Dedication that states that produce should be made available to members at cost. One option under consideration is operating as a CSA (community supported agriculture) where members pay a certain price per year and receive a box of whatever produce is ready for harvest each week during the growing season. Another option is issuing a right-to-pick permit where members would pay a certain price to pick produce throughout the season to cover the cost. The right-to-pick option could also be made available to people outside of the community, which could help raise additional money. Lori would like for the farm to continue subsidizing certain projects in the garden like installing a watering system or rebuilding raised beds to help offset those costs.
Laura summed up the outcome of the meeting nicely. “We are getting a more accurate assessment of costs and what it takes to run this farm. I think going forward it’s going to be really good because we’ll all know what the true cost is and then we can work from that number.”
After four and a half hours, the meeting adjourned.
