HOOPER STUDY COMMITTEE
Minutes, December 19, 2011
Present: Peggy Pschirrer, Chair; Steve Dalessio, Vice Chair; Joe Dion, Charles Lennon; Holly Gowdy, Peter Kenny, Jeff Miller, Jerry Galloway, Sheldon Sawyer.
Whit Aldrich as Chair, Board of Selectmen; Robert Kimball, Trustee of Trust Funds.
Recording Secretary: Vicki Gohl
The Chair, Peggy Pschirrer called the meeting to order at 7:00 pm. The agenda and the minutes of Dec 5, 2011 were distributed.
Committee requested three changes to minutes. Corrections from Mr. Dion: Page 4 “Mr. Smith” should read “Mr. Kenney.” Pro Shop Roof repairs cost $14,000. Page 3 bottom Total trust income for 2011 through October is $79,401.31 Motion to approve corrections. Motion approved. Minutes approved as corrected.
Announcements:
First page of Golf Club current lease distributed to clear up questions regarding ownership of the Club and who are the parties in the current lease. Chair read opening paragraph “This lease was made this 14th day of April, 2011 between the Town of Walpole, NH, a New Hampshire municipal corporation… (address) in its capacity as Trustee of the George L. Hooper Trust hereinafter called the landlord and the Hooper Golf Club of Walpole a New Hampshire Voluntary corporation… (address) hereinafter called the tenant.”
Walpole Town Attorney Hockensmith will meet with the Study Committee during their January 23rdmeeting. Chair proposes that January 9th meeting be used to review RSA’s and put together questions for Attorney Hockensmith which the Chair will send ahead to him. Chair asked committee to please bring RSA’s to the next meeting.
Further Discussion with the Trustees of Trusts Funds
The Chair received questions via email as a result of the presentation during the last meeting and these questions were sent along to Mr. Dion who met with the other Trustees and discussed them in detail.
Question #1: “When Jerry indicates that the earnings are approximately 2+%, I assume he is talking about the comingled trust funds. Does the bank break out the percentage for each trust?”
Mr. Galloway passed out the back page of November financial report and it does show the yield on the investments. This yield is for nonexpendable income or restricted funds and Hooper is not the only trust with restricted funds. The income on the others is 1.4%. Not a large rate of return.
Question #2: “Do you expect a legal opinion from Attorney Hockensmith about the ownership of the buildings and land etc and how do you think this will effect the trust money?”
Mr. Dion: I can only answer half of that. We had always felt the Trust owned the Golf Course and Assets, but we had heard it might be otherwise and we asked the Selectmen if we could ask the Attorney his opinion on this and they said we could. We asked him and he gave us a verbal that the Golf Course was owned by the town. If we are we going to get a written opinion from Hockensmith regarding who owns club, then that is up to the Selectmen to decide, it is not within our jurisdiction to request the written opinion.
Question #3: “Because the Trustees of Trust Funds are elected is there a training or “hand off” process for the successors?
Mr. Dion: The Trustees for Trust funds are elected every two years and paid $500 a year. There did not used to be a hand off process when I came on in 2007, but now there is and it is much more organized. It is not a complicated job but it is time consuming.
Question #4: “How would selling the development rights work?“
Mr. Kimball: There is a country club in Shaker Hill New Hampshire - Sunset Country Club in WRJ area. They raised money, gave it to the New Hampshire Conservancy who bought development rights for about 50% of value of property. Value was $700,000 they sold development rights for $350,000. That money went to the landowner and he could then sell the country club for $350,000. If we were to follow this example, we would raise about $500,000 from local individuals and donate it to the Monadnock Conservancy who would come to the Town of Walpole and buy the development rights. That money could then be put into a maintenance fund for the mansion and then we could sell the country club buildings hopefully to the Hooper Club Association. The land would be protected from development and kept for public use.
Question#5: If we were going to change the Trustee Funds manager how would we do it, who could we get and what criteria would be used? Mr. Dion: BOA gets 55 basis points. We are obviously not happy with them right now. Nothing has been said since the economy has been so bad, but this year we expected a little bit more. If they do not meet their benchmark this year, we will interview other companies. There are two things involved. The administrator guy at BOA is doing a good job but the investment guy is not. We would look at three or four people that are in this business that can handle the administrative aspect of this portfolio and then look at their performance last year and get permission to call their references. Perhaps there is someone out there really doing a better job.
Mr. Galloway: BOA’s situation does not instill a lot of confidence. We are not happy with them. The end of year is a bad time to change, but in the new year we will speak to the four prospects. $3.5million is a good amount and we are one of the largest in the state but we do not meet the criteria for many funds. We are somewhat limited in where we can go because we need them to do MS9’s and MS10’s on the administration side. We also have to have them approved by the State of New Hampshire. It does cost to change over, and of course they sell everything when you change but you can’t keep riding a dead horse.
Question #6: Would you consider going back to the courts for a clarification on ownership? Mr. Dion: That is up the Selectmen.
Mr. Dalessio had submitted additional questions to Mr. Dion much of which had been answered. Mr. Kimball reviewed the income and expense documents presented at the Town meeting and the last Hooper Study Meeting.
Was the $25k transfer necessary? Mr. Galloway: Eloise Clark pointed out that several bills had been paid out of her side of the fund and no monies should be paid out of Hooper I. It was a mistake before our time and we are trying to fix that.
What is the return on the investment for the cottage? We have made no investment in cottage it was a gift. Is cottage a prudent investment at its current rent? The rent of $900 per month does meet market value, but does it cover costs? Is it prudent? Cottage stands alone because it is on Hooper lands. It is not subdivided and cannot be sold, but we need to evaluate it.
Have Trustees from other town trusts complained about income at this point? No. If we have another dismal year we will change.
Can we be given a list of the specific funds that monies have been invested in?
Mr. Kimball – Handed out a sheet showing the non-expendables as they sit at BOA right now. But that is all of the town trusts combined and the Hooper monies are not broken out.
On page seven of the court decree point A states that the principal as of 12 /1991 was to remain in tact and not be preserved for future income. Can this be interpreted that so long as the principal in the accumulator fund does not fall below the 12/1991 balance, that the town could in certain instances use the principal of the trust?
Mr. Kimball: In 1991 they had accumulated income and they had the Hooper Trusts. At that point they had the accumulator and the principal. They decided that the principal must stay in tact – call it Hooper I and take what is in accumulator fund, call it Hooper II, put half in maintenance and half in scholarship funds. Question is does the decree freeze the principal at any level period or only at the 1991 level? Can you touch the growth of the principal since 1991? That is open to interpretation by Hockensmith. The principal has grown by more than $200,000 since 12/1991, can that increase be used? The current Trustees do not believe that this money can be touched.
Chair handed out spending policy and investment policy from New Haven Public Libraries as an example for consideration. Their holdings were about $2miliion. She described evaluation of investment companies and what the philosophy was behind their policies.
Mr. Sawyer recommended getting spending policy of New Hampshire Charitable Association.
There was a discussion of the matter and consequences of invading principle.
Question 8: “Why is cottage lease set up as month to month?”
Mr. Sawyer: We had an annual lease but we needed to change it to month to month in case we needed to vacate.
Question 9: “Is cottage on separate tax lot?” No.
Other questions:
Mr. Kenney: Question regarding maintenance list – does one exist that is current? Mr. Galloway: Brendon Honey’s list was completed and we have not made a new one?
Secretary: - Regarding overseeing maintenance of buildings, why can’t there be a committee as there is for library, cemetery etc?
Mr. Sawyer: It would be up to the Selectmen to create a committee.
Mr. Dion: The selectmen and Trustees of Trust Funds cannot be expected to deal with maintenance issues and it has to be built into the future lease or relationship with the Golf Club.
Ms. Gowdy: We should have punch list done and have a maintenance plan.
Chairman: We need to have a field trip in the spring and have a look at the buildings and properties to see what needs doing.
Mr. Miller –With the maintenance fund if there is money left at the end of a fiscal year, does money go back? Mr. Kimball: No it stays in the unexpended income fund. The scholarship fund has elected to keep about $10k in reserve.
All of the buildings on the property – Hooper Institute and Golf Course – have to be covered by the maintenance funds.
There is $29+k in the maintenance account at the end of November but there is still a deficit. $30k still owed to Hooper I from original error of about $60k. We have paid back $25k.
There were no further questions for the Trustees of Trust Funds. The Committee appreciates their time.
Lease for Golf Club & Issue of Ownership
Chair requested we look at the lease which appears in the notebooks. It is a typical lease with clauses pertaining to insurance, sub-leasing etc. Lease has been made with “the Town of Walpole” since the 1920’s.
Mr. Dion: Terry Knowles says you cannot sell the development rights because it restricts the price. But if the Town owns it they can sell the development rights, but not if the Trust owns it. Hockensmith told him at the town meeting that if the Trust owns it, they must put it out on the open market, but if the Town owns it they do not have any requirement to sell to the highest bidder. Decree says it is fiduciary responsibility of Trust to get best price possible and it cannot be based on an appraisal. I asked Knowles if the Trust can hold a mortgage, but its illegal. Knowles said the State does not allow anything that restricts usage because it would affect the price. Town has right to sell, but town must get Court approval and Trustees approval as well.
Chair: If you look at the original will, the land was devised to the town, but when all of the original will could not be realized, they did the next best thing and revised the documents.
Discussion of whether Town or the Trustees are the “landlord” in the lease and what that means.
Mr. Kenny: Why does the lease not stipulate that the tenant must maintain the land and the buildings? Mr. Miller: It does stipulate that the interior must be maintained and there are some outside responsibilities. See clause #10.
Discussion of Peterborough Golf Club and a recent Newspaper Article.
Chair: Please be prepared to develop list for Attorney Hockensmith and bring the RSA’s to the next meeting.
The meeting was adjourned 8:33
These Minutes were approved by the Hooper Study Committee at the 1/23/12 meeting.
They are respectfully submitted,
Victoria Gohl
1/25/12