Punch Cards

Punch cards are described in Ordinance 7, not necessarily as a way to access our beaches, but an alternate “benefit” for those owners/tenants who do not wish to obtain 5 non-transferable photo id cards (picture passes). Initially beach access was intended to be for owners and the “guests” who were physically accompanied by owners. But we got lazy and wanted to send our guests without us. There is no official limit on the number of punch cards that can be purchased, and since they are transferable, there is no limit on the number of people who can access the so-called “private” or “public with restrictions” beaches.

We have seen offers to buy/sell punch cards on social media, so they provide no controls over who accesses our beaches.

With the proliferation of short term rentals, those beaches no longer have the “exclusivity” that real estate agents promised when buyers made their purchase here a decade ago. Additionally, IVGID has issued other forms of passes that could be used for beach access by the general public.

For years, IVGID management insisted that STR’s were not the reason for increased beach attendance, claiming that punch cards were rarely given to STR guests. We were deceived! Recent social media posts revealed that a freely transferable paper pass, good all season, could be obtained by “exchanging” punch card value. IVGID never reported issuance of exchange passes in its annual Beach Wrap-up. Most property owners knew nothing about these.

This doesn’t even take into consideration that punch cards have been an accounting nightmare. Punch cards and paper passes need to go.

Finally we have an acknowledgement that beach access has to be better controlled, even after the pandemic. GM Winquest is selecting his own committee instead of a committee chosen by the Board to come up with recommendations.

Please fill out the contact form if you wish to receive alerts on when this topic will be on an agenda. In the meantime, email your trustees (listed on the sidebar) with your concerns.

Incline Village to be inundated?

Incline Village Crystal Bay Matters Posted on by

Author: Mike Abel, Incline Village resident

The IVGID Board is soon to take up an issue that may dramatically affect the value of your Incline property.

Few if any Incline residents have ever heard of “Ordinance 7”. Ordinance 7 is the Incline specific regulations which control recreational access and especially access to our private beaches. You only need to drive by Sand Harbor on a summer weekend to know that the private restricted access beaches in Incline Village are a really special asset. You also may not know that Washoe County of which Incline Village is an unincorporated subdivision enacted a law allowing unrestricted licensing of short-term-vacation-rentals (STRs) in Incline Village and Crystal Bay. At present there are 1000 STR licenses in Incline Village. Our Village is presently the only place in the Tahoe basin that lacks a numeric restriction on STRs. Just ask yourself: Why would anyone rent a STR in Incline Village during the core summer season if that rental did not include beach access?

It was estimated about 10 years ago that the value of the private beaches to Incline Village homeowners was about $50,000. Today it is not unreasonable to set the value at $100K-$250K. A little history first:

  1. In and before 1961 home sites were sold in Incline Village. The developer wanted to unload debt obligations for water, sewer development so IVGID was set up to manage and develop water and sewer assets. Washoe County managed that funding through ad valorum (property) taxes.
  2. In 1968 IVGID, which at that time was essentially managed by the developer, purchased the beaches from the developer for $2.1 million and imposed a “rec” fee of $50 per parcel on the homeowners to pay down the lender on the beach debt.
  3. The deed to the beaches is an unusual in that it also includes a contract with IVGID to manage the asset.
  4. The deed to the beaches contains a restriction that limits access to the beaches to the “District” (Incline Village) as it was constituted at the time of the purchase.
  5. The deed also includes legalese language that says:  “that the real property above described (beaches), and any and all improvements now and hereafter located thereon, shall be held, maintained and used by grantee it successors and assigns, only for purposes of recreation by and for the benefit of property owners and their tenants…..within the district. And…as the (IVGID Board) may determine the guests of such property owners……”
  6. The deed also grants IVGID an easement for the “operation of the water pumping facilities (at Burnt Cedar Beach)”
  7. No other rights were granted to IVGID in the original Beach deed.

Over the years, IVGID Trustees and GM’s have changed and revised what were formerly quite restrictive access rules for the beaches. When Incline was a sleepy mountain community in the 1980-2010 the easing of these restrictions had little impact. However, in recent years the beaches have become over run with visitors especially on holiday weekends. Beach crowding and access is now a big issue and affects the quality of the homeowner’s (read owner/taxpayers) usage.

In early 2021 IVGID sent out a not-so-great survey to elicit IVGID citizen’s feelings about recreational venue access, ID cards and “punch cards”. The IVGID General Manager Winquest organized a committee to evaluate Beach access and bring suggestions to the Board of Trustees. The persons appointed to the committee were dominated by real estate (read STR) interests and persons that felt that IVGID was acting in good faith enforcing our beach rights. The Board also hired a lawyer to issue a legal opinion on beach access and guest usage. On April 13th 2022 the committee took the suggestions and report of the committee majority to the Board of Trustees.

Some of the suggestions made to the Board were quite ok and/or do not materially affect your property value. Other important components of owner’s beach usage were either ignored or addressed poorly. Three Key points:

  1. Presently each homeowner is granted a combination of 5 picture passes and/or punch cards. Presently each homeowner may purchase an additional 5 punch cards at approximately $156/each. In the survey that IVGID sent out, 67% of respondents (1140) wanted additional punch card purchases limited to 3 or less. Despite the overwhelming desire of respondents to limit the number of additional punch card purchases to three (3) or less, the committee report recommended that homeowners be able to purchase up to 5 additional passes.
  2. IVGID has given their employees and retired employees cards (called gold and silver cards) that they can use for unlimited beach access for themselves and their families. The pro-STR real estate majority on the committee dodged this super important issue failing to address it. It is my contention that the committee did not want a confrontation with GM Winquest on this issue. It is also my contention that the failure of the hired attorney to address this issue is because he was asked by the GM to NOT address it as a way to give cover to his employees and their beach access privileges.
  3. Commercial activity: This is primarily with respect to boat access to the boat ramp at Ski Beach. Currently several commercial outfits operate for profit boat business in town. They launch, retrieve and store boats for their owners in Incline Village. The special counsel attorney engaged by the Board seems to have addressed this issue. These companies basically do a good and very safe job launching and retrieving boats at Ski Beach. There is reasonable suspicion that they are selling beach access to non-pass-holders. This should not be permitted. Otherwise, I support their use of the launch facility for owners.

Concerns and issues

Too many punch cards – The big gorilla on the block is STR beach privileges.

If home or condo owners can buy 5 EXTRA punch cards – that converts as follows. Since beach access is about $15 and the punch cards cost $154. That converts to 10 visits per card purchased. If there are 1000 STRs in Incline Village and each one purchases 5 extra cards– that converts to 50,000 potential beach visits.

(10 visits per card x 5 cards = 50 visits per unit x 1000 units = 50,000 potential beach visits)

       Now, we do not believe that there will be 50,000 extra beach visitors to our private beaches in 2022 nor in 2023. But, if the IVGID Board approves the issuance of five (5) extra punch cards per parcel this year, I predict: a) our beaches will eventually suffer severe over-crowding from parcel owners who rent out their units as STRs and, b) that a brisk grey resale market will develop in “punch cards”.

Employee Usage

I feel that this is a key issue. Per the original beach deed, IVGID is to act as a fiduciary, rather than an owner who can dispense beach privileges “at will” to employees and retirees with the sole exception that IVGID has the right to define “guest” rights.

IVGID Management giving out beach access

The committee majority, the IVGID GM and the hired gun attorney have dodged this issue. IVGID management has skirted addressing this issue like it is the bubonic plague. Per beach deed paragraphs 5,6 and 7, IVGID has no right to dispense beach access to their employees or retirees. Most IVGID employees and retirees do not live in town nor does the GM whose primary interaction and apparent loyalty is to his staff. We believe that this is a core issue of contention and is a violation of the deed. Like the camel’s nose in the tent, who is to say that access should not be granted to Washoe County employees and their families or with UNR taking over the college to access for employees and UNR students. This breach must be stopped.

Solutions

If you see the problems here speak out and write your feelings to the IVGID Trustees. Their email addresses as follows:

Callicrate_Trustee@IVGID.org

Tonking_Trustee@IVGID.org

Schmitz_Trustee@IVGID.org

Dent_Trustee@IVGID.org

Wong_Trustee@IVGID.org

Go to the Ordinance 7 hearing on May 26th at 6:00 at the Chateau and speak your mind.

If this fails, our property owners must seek relief through the courts. Let us hope that this is not necessary.

Another Moss Adams Report re: IVGID Accounting & Reporting Matters

Incline Village Crystal Bay Matters Posted on by

This report was requested by the IVGID Audit Committee and is included in the 1/28/2021 IVGID Board packet. Following is a summary of the key findings and observations from a local perspective. You can find the complete report here.

  • District business-type activities are better suited for Enterprise funds.
  • The District’s current presentation of central services costs is not in compliance with Generally Accepted Accounting Principles.
  • The punch card “contra-revenue” accounting should be discontinued.
  • The District’s capitalization practices are not in compliance with established government accounting practices.

The “Greater transparency” claimed as the reason for converting from enterprise funds to special revenue funds was not honest to the property owners who pay the facility fees. By reporting capital expenses and debt service separate from operating expenses, special revenue funds only made it more difficult to see what the venues really cost.

The central services cost allocation is simplistic and based on budgeted, not actual expenses. Even though citizens have pointed to these specific inadequacies, staff continued to use its flawed central services cost allocation.

Punch card accounting needs to end. Even Mr. Navazio has called this practice confusing and “weird”. It was really just another way to make IVGID’s venues look like they were performing better than they actually were. Revenues that had already been assigned to specific funds/venues were “diverted” to the ones where punch cards were used, rather than remaining in the funds where initially allocated. When no actual revenue was received, no revenue should have been reported. Crystal Bay residents are rightfully incensed that fees intended to support Community Services have ended up supporting beaches they cannot use.

There are numerous instances where what should have been reported as operating expenses were reported as capital expenses (like the nearly million dollars that was spent on the Diamond Peak Master Plan) This practice resulted in financials that made it look like our operating revenues covered operating expenses, when they did not. Although citizens have brought this concern to the attention of past boards, it was ignored. Additionally Board Policies and Practices are improper in this regard.

So what have we learned?

Our District needs to tap into the resources provided by the many experienced local professionals who have no agenda, have chosen to live in this extraordinary community and willingly share their vast collective knowledge. Additionally the District needs to hire outside help to develop Policies and Procedures as well as internal controls. Elected Boards generally don’t have (nor are they typically expected to have) the experience to develop financial policies and practices. Staff, as we have seen in the past, may have the expertise, but their interests are not always aligned with those who pay taxes and fees.

It is becoming increasingly evident that the District has not been able to responsibly manage its assets. Our “Community Amenities” have gradually been molded into global tourist attractions. Our small community lacks the resources to maintain or operate them efficiently. We may have to look at alternatives as costs of replacing our aging facilities place too much of a burden on local property owners who now have to compete with tourists just to access the recreational venues they have subsidized for so long.

First meeting Ordinance 7 Committee

Incline Village Crystal Bay Matters Posted on by

The GM’s Ordinance 7 Committee met via Zoom on Tuesday, September 29 and was not livestreamed.  Neither has any audio or video recording been posted on the IVGID website. The agenda was not posted until the day before the meeting.  The GM only gave a brief summary in his GM report at the Board meeting on Wednesday, September 30. He announced that Ann Viel would not be on the committee and that Mary Danahey would be added. He said the committee’s ground rules and goals were presented. The committee will meet bi-monthly.  Susan Herron commented on social media that meeting notes would be forthcoming, but as yet none have been provided.

There is no contact information for any of the committee members. And without hearing the discussion, the public is left in the dark.

GM Winquest promised transparency when he announced his intention to form his own advisory committee rather than a Board appointed one which would have been subject to the Open Meeting Law. So far, the transparency has been noticeably absent. We hope to see changes now that the Board has approved a policy requiring that the public be notified of advisory committee meetings, with the clear intent that the public be allowed to observe them. Why would you need to be notified about a meeting that you would never be able to attend?

Mr. Winquest did say he thought it would be 4 to 6 months before the committee would be ready to present their draft to the Board at a public meeting. It could be a long, dark winter.

IVGID Beach Fund under water?

Incline Village Crystal Bay Matters Posted on by

IVGID Finance Director, Paul Navazio’s, 9/9/20 presentation on punch card utilization contains disturbing revelations that our beaches are essentially under water, and not from global warming or rising lake level. The problem stems from complications relating to punch cards and the fact that some residents of the district don’t have beach access. Their facility fees should not be used to support the beaches. Mr. Navazio’s presentation confirmed that, in fact, just last year nearly a half a million dollars of punch card use that should have been deducted from the stated total beach revenue, was instead deducted from the community services fund, resulting in almost an extra half a million in the beach fund and half a million less to support the community services to which Crystal Bay residents have access. It’s not that easy to understand, but it is laid out in painful detail in the presentation. The $125 of our facility fees that was supposed to cover the beach expenses last year was just not enough. In anticipation of the need to replace the Burnt Cedar pool, the Board has shifted the division of the rec fees so that this year $500 will go to the beach fund. But now it’s evident that unless GM Winquest has either cut expenses or alternatively increased revenues by half a million dollars, at least a portion of the increased beach fee will be needed  just to cover this year’s operating expenses (and possibly more to cover prior years’ “indiscretions”). Now that this more than slightly questionable accounting sleight of hand has come to light, going forward we need to have several questions answered:

How does Mr. Navazio plan to “make it right” this year?

How much of the fund balance in beaches actually should be in Community Services?  If we don’t return it, how much do we owe to Crystal Bay residents?

Since IVGID only recently revealed the details of punch card accounting, how long has this practice been going on? Ever since we’ve had punch cards? That would be at least 22 years. 

Mr. Navazio has suggested using 2 separate punch cards, 1 for beach use and 1 for the other venues to avoid the problem in the future. Is it worth it just to keep our Crystal Bay neighbors from accessing the beaches when we let thousands of strangers on them? Maybe it’s time to consider giving the 400 or so residential parcels in Crystal Bay beach access.

Hopefully our Audit Committee and Ordinance 7 Committee will make recommendation to the Board to straighten out this mess.

Punch card “Utilization and Accounting” on 9/9/20 BOT Agenda

Incline Village Crystal Bay Matters Posted on by

This item will have an impact on the FY21-22 budget. It is clear that IVGID budgets to the rec/beach fees, i.e. it determines the maximum acceptable amount for the rec/beach fee and then budgets to spend that amount. It’s supposed to be the other way around. Determine what is needed to maintain and improve our amenities, and after a public hearing to see if the citizens/Board agree, assess fees to meet those needs.

The GM’s Ordinance 7 Committee hasn’t even met yet,but the Board is being asked for direction on punch cards.There are many aspects to the discussion, but the most pressing problem appears to be the overcrowding at the beaches Although beach access is now limited to punch card and picture pass card holders (and guests of either as long as you are in possession of a punch card with “value”), the attendance level is often above the comfort level of those seeking social distancing. And now that the public is more aware of exchange passes and the fact that there is no limit on the number of punch cards that can be sold by IVGID (approx. 2000 were sold by early July), it’s likely the beach crowds will be bigger than ever once the pandemic is under control. There is no real control or permanent limit on beach access.

Since the County still hasn’t come out with any way to limit short term rentals, the only practical way to limit beach crowds is to either eliminate punch cards altogether, requiring that guests be accompanied by a picture pass holder, or limit the number of punch cards issued to each property.

According to many long time residents, guests were originally required to be in the company of an owner. It would be simple enough to load some predetermined value shared by all picture passes issued to a property.

Golfers have effectively controlled discounted use of golf facilities for years by requiring that punch card holders be in the company of a picture pass holder to get any special rate for golf. Punch cards really are not needed for golf. And only the first 5 picture id’s get any golf “privileges”.

It has been proposed that certain discounted rates be developed for guests. By following the precedent set by the golfers, the easiest solution might be to give a percent discount off the rack rate for a limited number of people (maybe 2) accompanied by a picture pass holder, and if desired, put a cap on the total discounts per parcel/dwelling unit.

There are many more issues that need a thorough vetting. One Board workshop is certainly not going to resolve all of them. But if you believe that our amenities are here primarily for the property owners and tenants who have been assigned privileges (i.e. full time tenants) then the following determinations would at least give staff a start: 1) Beach guests must be accompanied by a picture pass holder. 2)Punch cards, if they continue to be issued, must be limited and can only be used by someone accompanied by a picture pass holder with no contra-revenue accounting. 3) There must be a maximum number of picture passes per parcel. 4) additional picture passes/punch cards (set a limit) should not be budgeted revenue, but divided up among all rec/beach fee payers and refunded.

We have a community filled with talented individuals. Please take the time to get informed on the issues and share your ideas with the IVGID Board to keep our community a great place to live, raise families and retire.

Exchange passes

Incline Village Crystal Bay Matters Posted on by

Exchange passes were a way to distribute beach access to individuals without giving them punch cards. They were a little known method that allowed STR and timeshare owners and agents (and others) to use punch card value in “exchange” for these transferable beach tickets.

According to GM Winquest 3500 exchange passes were issued in 2020 before it was decided to curtail issuance after posts on social media disclosed the potential for abuse.

1060 Additional Punch Cards Sold

Incline Village Crystal Bay Matters Posted on by

GM Winquest announced that 1060 additional punch cards had been sold prior to the July 22 Board meeting. These cards are freely transferable; they allow not only beach access, but enable the holder’s guest to access the beaches, as long as there is sufficient remaining value on the card. So potentially 1060 more people plus their guests have beach access.

Since the various forms of paper tickets are not being sold, this increase in sales of punch cards was likely for the use by STR guests.