By Heather Michon
Correspondent
The Lake Monticello Owners Association Board of Directors voted Thursday night (Nov. 20) to fund the repayment of a COVID-era federal loan using a mix of reserve funds and operating dollars.
The 6-0 decision capped a long and often frustrating debate over how the association should absorb the unexpected cost and what constituted an emergency use of funds.
The road to repayment
LMOA received a $646,000 Paycheck Protection Program loan from the Small Business Administration in April 2020 to protect staff who were at risk of furlough at the height of the pandemic. The SBA forgave the loan in May 2021.
But in December 2024, the Department of Justice informed LMOA that the loan had been improperly granted and erroneously forgiven. It demanded repayment, warning of possible penalties and prosecution for fraud if the association did not comply.
After months of negotiations, LMOA reached a final settlement in October 2025 requiring repayment of the original loan amount plus just over $30,000 in fees—far lower than the worst-case scenario, which could have resulted in up to $1.3 million in fines and interest.
The association made the repayment on Nov. 6; Thursday’s vote was only to determine how LMOA will balance its books for year-end.
Competing plans
Two competing repayment plans were on the table:
Treasurer Scott Murdoch’s plan: Pay the full amount from the operating account and delay the December transfer of dues into reserve accounts by two to three weeks to preserve cash flow.
Staff-backed plan: Use half Emergency Reserve Account (ERA) funds and half operating funds to maintain adequate end-of-year liquidity while still booking the full 2025 reserve allocation on schedule.
General Manager Tom Schauder and Finance Director Laura Payne said the association must maintain at least $500,000 in the operating account through December to cover payroll, utilities, contractor invoices, and other obligations before 2026 dues begin arriving in mid-January.
If used for the PPP repayment, operations were projected to fall to roughly $145,000.
Board member Mike Kelly, who sponsored the split plan, noted that a June membership vote explicitly authorized the use of ERA funds. He said the staff’s approach protects liquidity while allowing the 2025 reserve allocations to be deposited on schedule and begin earning interest.
Murdoch, meanwhile, argued that the ERA should not be used when a short delay in transferring dues into reserves would allow the association to cover its bills without touching long-term assets. “Drawing from the members’ reserve account when not necessary is not a decision I can support,” he said.
He also questioned whether the PPP repayment constituted an “emergency” under ERA guidelines and said the dues increase approved by members in 2024 was designed to strengthen reserve accounts already projected to be strained by future costs for roads, lake health, and access control.
‘Scaremongering’
Internal debates over the plans have been ongoing for weeks, and the frustrations spilled over into Thursday’s meeting.
When Murdoch argued that the split plan effectively meant $75 of the $150 dues increase approved last year would be offset by ERA use for PPP repayment, Director Gary Sellick pushed back.
“This is just scaremongering,” he said, “and it’s patently incorrect.”
He added that the ERA and member-funded reserve accounts are entirely separate, and that using ERA money “is not going to remove one penny of the $150 dues increase from the reserve accounts members pay into.”
Sellick said he supported the split plan for risk-management reasons. “Come Jan. 15, we have bills to pay, and that amount of money isn’t going to cover it… That’s a risk I’m not willing to take,” he said.
What counts as an emergency?
Several speakers argued that the PPP repayment did not constitute an emergency under the ERA’s original purpose, established in 1998 with proceeds from the sale of the water system. This account now holds about $1.6 million, according to association figures.
Others disagreed.
“When I got a phone call that I needed to go to the post office and pick up a letter from the Department of Justice, damn right it’s an emergency,” said Board President Larry Henson.
Sellick added that “we’ve been successful in averting an emergency,” pointing to months of spending freezes and cash management by staff that allowed LMOA to pay the federal settlement without immediate harm to operations.
Praise for staff and a careful abstention
Multiple board members praised Smith and Schauder for correcting years of financial reporting issues, earning clean audit findings and maintaining stability during what Henson called “a rough road.”
The final vote was 6-0, with Murdoch abstaining.
“My negative vote would probably be seen as a vote against staff under the position that everyone’s taken,” he said, “so I will abstain.”
