A cautionary tale . . .

Well now. With little more than a month elapsed since the announcement of the Renew Big Canoe results, it seems that the board’s euphoria has already begun to fade into oblivion only to be replaced by cryptic references of gloom and doom.

As predicted . . . (1)

While opening the business section of the September board agenda, the POA President wasted no time in shamelessly announcing the likelihood of assessment increases in 2024. Citing “inflation” (1) along with increasing operating costs and essential maintenance fees, the President failed to attribute any part of the increase to the interest expense that will now accrue on the draws against the $15 million credit line. (2a) It seems now, property owners must only wait for leadership to announce just how much that 2024 increase will actually be.

Note: Keep in mind that interest expense will now equate to over one million per year on a fully drawn line and will consume approximately $25 per month of each  homeowner’s assessment until the line’s conversion in May 2025.

The Association continues to spend more money than it is taking in . . . (1)

The negative cash flow [$124,422] through August as reported in the September board meeting is actually much worse than disclosed. First, kudos are due the POA Treasurer for asking the Director of Finance to remind the community that several very large capital expenditures (road paving and repair) will be paid in the coming months. These expenditures will again increase the negative cash flow.

Note: It is also important to recognize that although the 2023 capital budget included $2.192 million for Lake Petit Dam, only $162k of that amount has been paid this year. And contrary to information found at Renew Big Canoe  (3), https://renewbigcanoe.org/faqs-overall%2Ffinance, it is clear that sufficient resources are not currently available to fund this project. Simply put. The money is not there.

Historically low operating fund balances continue . . . (1)

Secondly, the Director of Finance failed to mention that the Association had received additional sources of cash via insurance settlements totaling $571k periodically throughout the year. (4)   AskThePOA Ticket#11424 and  AskThePOA Response&Followup#11424  

Further, these funds intended for capital replacements (capex) pertaining to the Chimneys and realty office damage have in fact been commingled and deposited to the operating cash account rather than being set aside in a capital fund. Instead, it was learned that some of these funds have actually already been used to pay expenses.

That said, given that this writer’s follow up Ask the POA questions regarding the total amount spent remain unanswered, it is impossible to know how much, if any, of these funds even remain available for capital replacement or how much the already alarmingly low operating account balance of $1.1 million is currently inflated by those deposits.

Note: Needless to say, leadership’s assertion that any restoration of the Chimneys would be partially offset by the insurance proceeds has been disingenuous/misleading at best. (3)

December 2022 year end financial statements now corrected . . . (1)

With 2023 almost over, it is certainly refreshing to finally have (presumably) accurate December 2022 year end financial statements posted to the POA website. And rather than surreptitiously correcting the out of balance year end financial statements as predicted, the Director of Finance instead acknowledged the inaccuracy at the September 28th board meeting while simply characterizing it as a “publishing error”. (1) (2b)

Food and beverage losses continue to escalate . . . (5)

And now with a $316k loss through August in food and beverage, the GM has cautioned the community to expect continued losses and variances to the budget for the remainder of the year. Further losses in 2024 during the $6.35 million renovation to the clubhouse facility also appear imminent. In fact, the GM has suggested the possibility of serving meals out of the deteriorating food truck during construction to help offset lost revenue. (2c)

Regardless, it can not be forgotten that the Finance Committee Chair has emphasized that if our amenities were profitable, (specifically food and beverage/clubhouse) they would be subject to taxation. The Chair has further concluded that “because we generate a loss, we don’t owe tax” which he thinks “is a good thing”. (5)

Note: One can expect this mindset to continue as contrary to the Finance Committee Charter limiting terms of membership to a maximum of three years, the Board has approved the extension of his term for an additional three years.

As a side note . . .

And for those curious about the legal notices in Pickens Progress regarding Big Canoe Amenities, LLC, it should at least be mentioned that the POA President actually opened the September 28th board meeting with an explanation for the dissolution of the subsidiary corporation that was created in 2021.

    • As a bit of historical reference, the subsidiary which was organized in order “to gain the most advantageous health insurance renewal rates” (6) was registered with the Secretary of State in July 2021 prior to any authorization by the board. (7)

    • Subsequently, the current POA vice-president along with two former directors met on August 16th, 2021, without a quorum present (as noted in the actual minutes of the meeting and as required by section 3.8 of the Association’s bylaws), along with the GM and a representative from an insurance carrier. (8) The three directors present along with an unidentified absent director (via an email) voted to proceed with the formation of Big Canoe Amenities, LLC.

After determining that more advantageous renewal rates were no longer available through the subsidiary, the directors voted 6-0 in a September 11th, 2023 closed board meeting to return “Big Canoe to a single entity”. (6)

All in all . . .

As for all the foreboding financial news, these downward trends in the Association’s financials have been ongoing for some length of time with references to those trends routinely posted on this site. (1)

What more can be said as we now prepare our minds and our budgets for what lies ahead in Big Canoe POA land?

. . . . .

If you believe the information contained on this site is important, please continue to share and pass it on.  And should you wish to see additional articles posted in the future, please subscribe for an email notification or check back frequently. As for questions or further discussion, I may be contacted at thepcrosses@gmail.com. Meanwhile, take care, stay safe and thank you for your readership.

Patricia Cross

10438 Big Canoe)

References:

1)    https://bcmatters.org/what-just-happened/

2)   Big Canoe POA Board meeting, September 28th, 2023, video on Youtube at a) 30:30; b) 29:10; c) 21:00 and 54;15 ;

3)   https://renewbigcanoe.org/faqs-overall%2Ffinance,

4)   AskThePOA Ticket#11424  and AskThePOA Response&Followup#11424 

5)   https://bcmatters.org/renew-big-canoe-the-financials/

6)   Special Board Meeting Minutes, September 11th, 2023

(POAwebsite>login>meetings>Minutes>2023>September11th)

7)  Big Canoe Amenities, LLC Corporate Registration

8)   Special Board Meeting Minutes, August 16th, 2021

(POAwebsite>login>meetings>Minutes>2021>August16th)

8 thoughts on “A cautionary tale . . .”

  1. I believe I mentioned most of this in my email earlier this year. The monies are Not there to take on a NOT NEEDED renew the clubhouse, specially in light of its dismal revenues and loss’s. People are sick and tired of being run a round, lied too and insulted with half answers and stupidity.
    We all see what the economy is doing and to every sector. Govt in general is causing a massive loss in tax dollars, real estate values, inflation and a whole host of disasters including American Energy, consumer confidence, world leadership and it seems, the POA is just fallen in line with Govt in General.
    No confidence in BC leadership and as an owner, Realtor and Investor, it is very hard for me to promote my Village of friends and neighbors due to the complete gross under management of our systems.

  2. I have no doubt that inflation is impacting operations of Big Canoe. Special expenses to maintain the dam, roads, as well as unexpected miscellaneous costs are impacting the financial outlook. As with any entity, it is clearly time for a formal program to identify/implement spending reductions and cost savings. Every expenditure should be evaluated for adjustment or elimination. Consideration should be given to closure of amenities which are not self sustaining. Staffing levels should be questioned. Personally, my desire is to live in a a beautiful, gated mountain community with well maintained homes, forest, lakes, and walking trails. All this other stuff is fluff. And if it can stand on it’s own, that’s wonderful. The POA board desperately needs to take a breath and do us all a solid by making sound financial management it’s top priority. It makes no sense to Renew Big Canoe if the canoe is at the bottom of the lake.

  3. Two observations:

    As a 27 year full time resident of BC, I can say that we were budgeting a $500k annual loss for restaurant and bar revenues 25 years ago. These will NEVER be profitable. They are loss leaders, and the fact that we are constantly fed optimistic plans to turn things around by spending millions of dollars more as a solution to remedy the shortfall is just BS from a management group who simply considers property owners as gullible, complacent, and not worthy of the truth.

    Regarding Mr. Mason’s comment above that “People are sick and tired of being run around, lied to and insulted with half answers and stupidity”, I’ll say this. Those who know better are sick and tired. I have to conclude that the majority of residents, based on the overwhelming passage of the most recent funds expenditure vote, do not know better and just don’t care.

    If this behavior was exhibited by elected officials in any incorporated municipality, that municipality’s tax payers would be screaming for accountability.

  4. I cannot believe that the POA makes the statement that because there is no
    tax generated, a $316K loss through august is a good thing. I was in business for
    40 years and losing money was never the game plan. If we showed a $100K profit,
    paid $40k in taxes, we would be $356K better than where we are now. I guess it
    is the new math they teach.

  5. The Renew Big Canoe Initiative should never have passed. I’m surprised with a community of educated former CEO’s & executives that this was voted yes by 70%. Just like kids think their parents have a money tree in the backyard the POA must be hoping for the same. To continue to pour money into amenities that don’t and won’t ever make money and expect the property owners to continue to “pony up” is not a sustainable gameplan.

  6. Although the slate of projects was approved in the recent vote, are there mechanisms available to residents to defer the implementation of the projects perhaps indefinitely — a way to say, “Yes, but not now”? How stuck are we?

  7. If you want to know another part of the “why” we’re in this insane (and predictable) situation . . . take a closer look at the makeup of property owners. The great (?) housing boom of the last few years has brought in more investment buyers than homeowners. Those buyers vote for the glitz of Renew BC in order to protect their investment, rather than protect the quality of life for the whole community. If the quorum is now lowered – then, my hope is that those of us who recognize the mess we’re in, will vote in the future with a more unified and reasonable mind.

  8. Do we have a business manager that plans and solicits Corporate Golfing events? Atlanta and surrounding area is the home of several very large corporate headquarters and regional headquarters.
    We have one of the most incredible mountain courses and it’s proximity to Atlanta can attract
    golfers that become home owners. We probably can arrange adequate golf Marshals to help events go without a hitch and maintain the integrity of the course.
    I don’t think we should change anything about the clubhouse until we can generate $500,000 a year in new fees with the infrastructure that we have in place.
    Most of my friends come to Big Canoe to escape socialization and traffic. They don’t support the clubhouse restaurant.

Comments are closed.