Dear AAR Board of Directors, 

Thank you to all of you who attended the May Board of Directors Meeting. We hope you are having a great summer. We are writing to request you please save the date for our next Board of Directors Meeting on Tuesday, September 14, 2021, at 9:30am at the Alabama Association of REALTORS® Building at 522 Washington Avenue, Montgomery, AL. Sign in will begin at 9:00am.

The purpose of the meeting will be to consider a proposal to retire the debt on the building, pass the 2022 Budget, and consider several governance proposals. Here is a brief overview:

• Retire the Building Debt; One-time Special Assessment: The building debt has been a frequent subject of discussion with the Board the last 3-4 years and is part of the Association’s Strategic Plan (Objective V-2) to develop a plan to pay off the building mortgage by 2023. The Finance Committee and leadership have taken a measured approach and sought input and direction from the Board on how best to address the building debt. The Board’s input and direction has been very helpful. 94% of the Directors prefer we act this year to retire the building debt. 75% of Directors support some combination of additional revenue to retire the building debt. Retiring the building debt now will put the Association in the best position possible long term to keep the Association in a healthy, stable position in the face of many unknowns in the real estate industry.
  
  The Finance Committee took all of this and other feedback into consideration prior to presenting a plan to the Board. After much discussion and deliberation, the Finance Committee believed a simple straight forward plan would be the best solution to present to the Board for consideration.  Therefore, the Finance Committee recommends that the Board of Directors levy a one-time special membership assessment in the amount of $50.00 in 2022 for the purpose of retiring the building debt. The proposed one-time special assessment will retire approximately $900,000 of the remaining $1,500,000 debt on the building. The remaining balance will be retired by any projected surplus from the 2021 Budgetary year. (Motion 1 and a one-page overview of relevant building information is included.)
• 2022 Budget: Membership has continued to increase more than expected over the last 12-18 months. The strength of the recovering economy and strong housing market have supported this growth. We are projecting a modest decrease in membership in 2022. Current end-of-July membership is 18,393, and we are budgeting 18,000 members for 2022.  This is a conservative approach for 2022.
• Governance: The Board will be asked to consider several governance proposals as follows-
  • Motion 2: REALTOR® of the Year Task Force: Makes updates to the criteria of eligible candidates for the award.
  • Motion 3: Past Presidents PAG: Makes updates to the structure and operation of the Past President Group.
  • Motion 4: Past Presidents PAG: Provides a general framework for the nomination of Real Estate Commission candidates. 
  • *Workgroups are still working and finalizing proposals to advance to the Executive Committee in the coming weeks. Any additional governance proposals will be sent to the Directors by email as soon as information is finalized and at least two weeks prior to the Directors Meeting on September 14.  

Please let us know if you will not attend the Board of Directors meeting. This meeting is for the 2021 AAR Board of Directors. Space and overflow seating will be limited. The attire is business casual, and we will have a barbeque lunch following the meeting at 12:00PM for everyone in attendance. Please reach out to me, President-Elect Wes Grant, CEO Jeremy Walker, or Sharon Callahan prior to the meeting if you have any questions, comments, or suggestions.

Thank you for your leadership, support, and service on the Board!

Warm regards,  

Slade McElroy
2021 President
Alabama Association of REALTORS®

• Current Debt reduction efforts:
  • The mortgage balance was 4.5 million in 2016. The debt has been reduced by approximately $3 million (67%) in 5 years. 
  • AAR made large principal payments towards reducing the debt in the amount of $734,965 in 2020 and $1,015,191 in 2021.
  • As a result of the principal payments, the annual debt service has decreased from an annual amount of $144,000, to $100,000 to approximately $75,600 annually going forward.  
     
• Current Loan Terms on the Building:
  • 9 Years with 20-year amortization
  • Interest: 3.75% Fixed
  • Payment: $18,920 principal plus interest. August payment was $25,239.
  • Balance:  $1,598,769.
  • Maturity: Balloon payment on March 11, 2026 is $591,888.
     
• Current Updated Debt Schedule:

• Current Membership is at an all-time high of 18,055.
  • AAR’s 10-year membership is 13,700; 20-year average is 13,200.
     
• Retiring the debt early will save between $300,00-400,000 interest.
   
• Avoids a balloon payment of approximately $600,000 and estimated $2,000,000 in maintenance and replacement costs at the 15-year mark.
   
• Provides time to build up the Building Maintenance Reserve Fund for expected repairs, maintenance, and replacement. The building is a first-of-its-kind, green building. The life cycle for replacement is occurring sooner than expected. The green building components and systems are not as durable as expected when the building was constructed. We project approximately $2,000,000 in maintenance and replacement costs on or about 2025.
   
• Comparison to Peers: In comparison to peer organizations, including state REALTOR® organizations, local REALTORS® Associations in Alabama and other Alabama state trade organizations, almost no one is doing what we are doing in managing their building debt, carrying the debt burden we are, or spending the amount of money each year on interest and debt service.