Green Valley Recreation, Inc.
1070 Calle de las Casitas – PO Box 586 – Green Valley, Arizona – 85622-0586
(520) 625-3440 Fax (520) 625-2352 www.gvrec.org
APPROVED BY GVR FISCAL AFFAIRS COMMITTEE
Thursday, August 14, 2014
EXHIBIT
Board of Directors Meeting
August 26, 2014
GVR FINANCIAL RESERVE SYSTEM
Proposed Amendment
To Corporate Policy Manual (CPM)
SECTION V – Fiscal/Accounting, Subsection 2 –
Reserve Policy, A. -D
Overview

The Board-approved 2014/2015 Work Plan directs the CEO to prepare Financial Planning Principles that
include establishment of a GVR Financial Reserve System (a format for reserve funds and reserve
requirements), and provide recommendations to the Fiscal Affairs Committee and the Board of Directors.

The proposed policy for the GVR Financial Reserve System would establish three (3) reserve funds:
o Operating Reserve Fund
o Building Reserve Fund
o Initiatives & Innovations Fund

The GVR Financial Reserve System (see Addendum) articulates the Scope (specific uses); Funding Source;
Target Fund Range; Authorization; and Investment Parameters. The status of each fund will be reported
through the budget development process.

As recommended by GVR’s independent CPA auditor, only existing unrestricted net assets will be used to
initially fund the reserve accounts, with no additional monies required.
Recommendation
Remove in its entirety from the GVR Corporate Policy Manual (CPM) SECTION V – Fiscal/Accounting,
Subsection 2 –Reserve Funds, A – D. Type and replace with the GVR Financial Reserve System as presented in
the ADDENDUM to this Exhibit.
Current CPM Language (to be removed)
CPM SECTION V – Fiscal/Accounting, Subsection 2 – Reserve Policy, A. -D
SUBSECTION 2 - RESERVE POLICY
A. RESERVE FUNDS - TYPE
GVR maintains a Replacement Reserve which is restricted for future funding of major repairs and
replacement of equipment and facilities.
B. INVESTMENT GUIDELINES
1. Reserve funds shall be invested to achieve:
a) Preservation of the principal investment maintaining FDIC insurance limits.
b) Available cash flow for operating or capital projects’ activities maintaining maturity dates of not
more than 18 months, unless approved by a majority of Directors then in office.
2. Approved Investments
a) Money market investments not to exceed the prevailing FDIC insurance limits.
b) Certificates of Deposits not to exceed the prevailing FDIC insurance limits.
c) U.S. Government and Agency securities – backed by the Full Faith and Credit of the U.S. Government.
3. Review and Control of Investments
a) All investment accounts and general ledger activity, statements and trade confirmations shall be
subject to a periodic review by the Board.
b) They shall be reviewed and reconciled by the Finance Director monthly, reviewed at least quarterly
by the Chief Executive Officer, and reviewed annually by the outside accountant and audit firm.
c) Policy considerations and recommendations concerning changes of investment strategy or
government security selection criteria will also be considered at least quarterly.
C. AUTHORIZATION TO MOVE OR WITHDRAW RESERVE FUNDS
An approved resolution by the Board will be required to move or withdraw monies of the Funds. Such
action in these matters shall require the approval of two-thirds of the total Board members then in office.
D. SOURCES OF FUNDING THE RESERVES
Funding sources may include, but will not be limited to:
1.
2.
3.
4.
Fees
Excess cash
Annual contributions designated in the budget process
Other sources of income, such as interest income earned on the Reserve Funds.
APPROVED BY GVR FISCAL AFFAIRS COMMITTEE
Thursday, August 14, 2014
ADDENDUM
GVR FINANCIAL RESERVE SYSTEM
Overview
Green Valley Recreation, Inc. [GVR] maintains three (3) financial reserve funds to ensure its long-term solvency
and sustainability as part of the Corporation’s Financial Planning Principles.
For each reserve fund, the following information describes the purpose, desired scope and target fund range,
funding source, authorization, and investment parameters. In executing their oversight role, the GVR Board of
Directors may elect to revise these factors over time, as needs of the Corporation evolves and as opportunities
and investment markets may suggest.
Maintenance of GVR Financial Reserve System
GVR reserve funds are part of the statement of financial position presentation and designated as “Board
Restricted” funds for operating, building, and initiatives/innovation opportunities. The Controller will make an
annual adjustment to reserve funds to bring balances into line as described and defined in the GVR Financial
Reserve System, which may include moving money between the funds. Once created, each reserve fund may
be drawn upon immediately.
1.
Operating Reserve Fund
Purpose: This fund is primarily intended to serve as an “emergency safety-net” for the Corporation by
ensuring solvency for the annual operation of the Corporation should a severe economic downturn or
unanticipated or catastrophic event threaten its welfare. This fund may also be used to ensure reliable cash
flow.
Scope and Target Fund Range: The size of the fund should be of sufficient size to guarantee one year’s
payment of the legal obligations of the Corporation (e.g.; debt service on outstanding loans) so as to protect
its capital assets, and a goal of not less than an amount equal to 50% of the annual operating budget revenue
(approx. $3.0 Million in 2014).
Funding Source: An initial funding amount of $1.5 Million (2014) will come from adding $960,634 of FY 2014
unreserved funds to $539,366 already reserved for this purpose. Additional contributions necessary to reach
and exceed the minimum fund balance will come from GVR corporate contributions from excess revenue over
expenses at the close of each fiscal year, at the rate of 50% of total revenue less expenses.
Authorization: The CEO is authorized to access Operating Reserve Funds to address critical needs as they may
arise, with notification to the Board of Directors.
Investment Parameters: The fund is to be limited by low risk investments, which allow for prompt liquidity,
without significant penalty for cash withdrawal.
2.
Building Reserve Fund
Purpose: This fund is primarily intended to hold and invest annual asset depreciation funding received from
the annual budget. The fund is designed for capital replacement and to accommodate renewal and
modification of GVR facilities, capital construction, procurement of land and real property, and replacement of
furniture, fixtures, and equipment, including computer-related hardware and software.
Scope and Target Fund Range: This fund should be of sufficient scope to guarantee that all safety-related
maintenance projects can be accomplished, along with replacement of fixed assets that have reached the end
of their useful lives. The size of this fund should be a minimum of $2 Million with a goal of the net book value
of fixed assets (e.g., $17,341,568 in 2014).
Funding Source: Initial funding amount of $2 Million (2014) will come from adding $47,999 from current
undesignated funds to the $1,952,001 already reserved for this purpose. Additional contributions necessary to
exceed the minimum fund balance will come from two (2) sources:
 a contribution amount up to 50% of annual depreciation calculated for the forthcoming fiscal year
(50% annual depreciation approximately $600,000 in 2014);
 GVR corporate contributions from excess revenue over expenses at the close of each fiscal year.
Authorization: The CEO is authorized to access Building Reserve Funds to address emergency situations
pertaining to capital assets with notification to the Board of Directors. The Board of Directors may also
authorize expenditures from the Building Reserve Fund for capital projects not included in the current fiscal
year capital budget.
Investment Parameters: The fund is to be guided by low-to-medium risk investments, which allow for
reasonably prompt liquidity, without significant penalty for cash withdrawal.
3.
Initiatives & Innovation Reserve Fund
Purpose: The fund is to support new initiatives and innovation opportunities that may arise which are not
funded within the annual budget and that offer value-added member services, and/or significantly improve
the Corporation’s position in the marketplace. As such, the Initiatives & Innovation Reserve Fund serves as an
investment fund for the Corporation’s growth and development and, therefore, as a means of increasing its
value to members and overall financial worth.
Scope and Target Fund Range: This fund should maintain a $500,000 balance and may grow as large as
Corporation resources allow.
Funding Source: Initial funding of $500,000 will come from 2014 undesignated funds. Future contributions to
the fund will be sufficient to maintain a balance of $500,000 at the beginning of each fiscal year. If this fund is
reduced below the $350,000 threshold, the fund should be replenished from other GVR corporate financial
resources, including GVR reserve funds, year-end annual budget net revenue, and other sources.
Authorization: The Board of Directors may authorize expenditures from the Initiatives and Innovation Fund for
activities not included in the current year’s operating or capital budget. The CEO may access the Initiatives and
Innovation Fund as authorized by the Board of Directors or to implement a Board of Directors’ authorized
project or activity.
Investment Parameters: The fund is intended to include investments of moderate risk, which allow a higher
rate of return than either the Operating Reserve Fund or the Building Reserve Fund. Similarly, the fund is also
intended to focus on longer-term investment return, without the need for quick liquidity which may guide the
other reserve accounts.