As we celebrate the past fifty years of Big Canoe that have been so good to so many, the 2021 board of directors has simultaneously sought to position us for the next fifty years fraught with broken promises, flawed budgets, unfunded capital plans and an evermore spin and twist on what should be some of the most basic understandings of truth.
More broken promises . . .
And as most property owners now realize, the first POA statement of the new year will feature a $30 increase (home and lot) with $15 of that increase allocated to the Master Plan Fund. Yet, just one year ago this community was in the middle of a property owner vote to secure the approval of a capital contribution fee initially set at $2,500. In that ballot package, leadership emphasized that “without a CCF passing, general assessments earmarked for capital projects are more likely to be increased for existing Property Owners. This fee currently is $25 per month.” (1)
One might also recall that same board promising that property owner approval would continue to be required for capital expenditures exceeding $1million. (2) https://bcmatters.org/a-betrayal-of-trust/
However, with that “earmark” now increased from $25 to $40 per month (60%), it is now clear that both statements were untrue. It even seems that this allocation was destined to increase regardless of the approval of the CCF. In fact, quite remarkably, at the recent annual meeting, the GM quoted a previous board as saying “Let’s start at $25 and we’ll slowly work it up.” (3) Did that board really say that? Or did the GM just misspeak?
What now? . . .
Realistically, one must wonder, could that CCF have actually passed absent those false reassurances from the board. And further, given those broken promises, what now? Is this the new status quo for Big Canoe? As property owners, do we accept leadership’s constant betrayals and zig zagging policies or do we insist on the reinstatement of past promises?
More debt and yet another broken promise . . .
And now, yet another broken promise looms dangerously on the horizon, and that is the promise of no new debt. With the GM previously noting, “As things currently stand, the only way to make them (essential projects) a reality without raising capital assessments or taking on new debt” is to establish a capital contribution fee . . . (4), property owners were led to believe that the CCF passage would also eliminate the need for additional debt. Not so.
Instead, along with the recurring pleas from the Finance Committee to consider additional debt presumably in order to accelerate capital projects, various “funding options” are being discussed within the closed door board work sessions. (5) (6) (7) (8) (9) It also appears that the new fire truck with delivery now extended to early 2022, is scheduled to be converted to a lease. (10) With $543k paid last December 2020 in advance of assembly, it appears the POA would now like to recoup that cash. Obviously, the association’s cash flow is significantly less than robust if even existent at all.
And additional debt . . . may be the promise broken that could bring Big Canoe to it’s knees. (Interestingly, other communities so often referenced and used as a benchmark by POA leadership, are debt free. Think Connestee Falls, The Landings at Skidaway Island and Hilton Head Plantation for starters. (11)
In a blink . . .
It can not be forgotten that all of this has taken place in the previous twelve months while under the leadership of the 2021 Board of Directors. (The two newly elected directors should not bear responsibility for these past actions and decisions and will be invited to give these concerns serious consideration.)
Sadly, given all the discussions regarding incurring additional and presently unspecified levels of debt, it appears that the approval of the CCF was all for naught. Not only were leadership’s reassurances to the community dishonored, the additional fees and assessments have failed to provide the financial resources to even accomplish leadership’s inflated objectives as is demonstrated in the 2022 operating budget and Capital Plan.
A fundamentally flawed budget . . .
First, despite all the board and annual meeting budget slide presentations featuring lovely photos and snippets of often disconnected and unrelated information, the actual budget posted to the POA website is incomplete. (12) For example, it makes no “provision for maintaining a Reserve Fund” as mandated by Section 5.2 of the 2006 third amended bylaws. Did our board simply overlook this fiduciary responsibility?
Next, it should be noted that the “CCF” and the $40 capital assessment are directed to the Master Plan Fund (per covenant and/or board mandate) designated for other projects not included in the Capital Budget such as the post office, chimneys, clubhouse renovations, etc. Because of that, those funds are not available or included in the operating budget.
With that said, the 2022 budget fails to provide the net income required to service the long term debt and fully fund the $6.5 million Capital Budget. (10) Utilizing the format used by leadership in those years previous to 2021, (13) here is a quick look at how the budget does not add up.
Net Income: $1,045,794
Add back Depreciation: $3,154,332
Less Principal Payments to Debt: ($1,087,386)
Less Capital Expenditures: ($6,473,517)
Net Cash after Expenditures: ($3,360,777)
So, where will all that money come from? . . .
Some of these very questions were submitted to the GM via Ask the POA with the previous POA treasurer responding (14) that “surplus operating cash” and Master Plan funds could be used to offset the deficiency. Unfortunately, the assignment of any “surplus operating cash” to not only service association debt but also partially fund the capital plan is a duplicative use of those funds. Similarly, it is presumptuous and unwise to count on the transfer of master plan funds that have been directed to other projects to instead fund the Capital Budget as this action will not only require the approval of the newly elected board at some future date, but it will also leave no funds available for master plan projects. A budget with no source of funds is not a budget. It is a wish list.
These concerns were relayed to all members of the board prior to the November 29th approval of the budget with this writer respectfully noting that moving forward with such a plan would be financially irresponsible. Based on their unanimous approval of the budget, the board obviously does not share this writer’s view on the subject. Perhaps leadership knows something the property owners do not because, as it stands, the money simply is not there.
Where is the sanity? . . .
And lastly, why do we even have $6.5 million budgeted for “routine” capital replacements in 2022? Perhaps because we are not just “maintaining” and “replacing” but rather we are both accelerating and/or significantly ENHANCING the replacement of our common properties with dollars our association does not have available to spend.
Take for instance, the timber Marina Sea Wall originally planned to be replaced by the Public Works Department now approved at $617k. (15) Or the playfield, rock slide and beach club timber walls with five remaining years of useful life according to the most recent reserve study approved to be replaced with rock at $190k, or the $211k covered bridge on the newly renovated Creek 9 now determined to be unsafe for anything other than golf carts with four years of remaining useful life. (15) Meanwhile, with a property owner vote no longer required, it’s already being communicated by the POA staff to various golf publications that Choctaw and Cherokee nines are scheduled to be renovated in 2023 and 2025. https://www.golfcourseindustry.com/article/big-canoe-georgia-capillary-bunkers/ And where might that money be found? Again, perhaps the POA staff knows something the property owners do not.
All this, and we still have Lake Petit Dam.
The journey ahead . . .
So where is our board taking us in the next fifty years? With total assessments increased $75 or 32% in just four years, is the community being pushed down an unsustainable spiral of both operational and capital spending to be fueled by escalating increases and inordinate levels of debt? Only the future will tell.
Stop the madness . . . Hold on tightly . . .
Big Canoe is too beautiful, too special and too magical a place to be squandered – whether environmentally or financially. For those property owners who would like to see past promises honored and also share this writer’s concerns, please reach out to the current board often and vigorously and in unity as any desired change will require much more than this writer’s words on the pages of this blog.
. . . . .
As always, please feel free to contact me at thepcrosses@gmail.com for questions or further discussion. Likewise, should you wish to see additional articles posted in the future, please subscribe for an email notification or check back frequently. Meanwhile, best wishes for a special and blessed 2022.
Patricia Cross (10438 Big Canoe)
References:
1) 10ThingsToKnow December 7th, 2020, Ballot Package.
2) “A betrayal of trust” , October 29th, 2021, bcmatters.org https://bcmatters.org/a-betrayal-of-trust/
3) POA Board Annual Meeting, December 4th, 2021 at 58:00
4) GM’s Corner, November 2020, Smoke Signals, Pg. 5A
https://smokesignalsnews.com/eedition/news/page-n-005/page_e75c36c6-77ff-5113-8cb8-f7ed8733cba5.html
5) Finance Committee Meeting Minutes, August 19th, 2021
(POAwebsite>login>POA>Committees>Finance>Minutes>August2021)
6) Finance Committee Meeting Minutes, October 21st, 2021
(POAwebsite>login>POA>Committees>Finance>Minutes>October 2021)
7) October 27th, 2021 Special Board Session Minutes (POAwebsite>login>POA>Meetings>BoardDocuments>MeetingNotes)
8) Big Canoe POA Board of Directors Meeting, October 28th, 2021, Minutes (POAwebsite>login>POA>Meetings>BoardDocuments>MeetingNotes)
9) November 22nd, 2021 Special Board Session Minutes (POAwebsite>login>POA>Meetings>BoardDocuments>MeetingNotes)
10) 2022 Capital Plan (POAwebsite>login>POA>Financials>Budgets>2022CapitalPlan)
11) https://connesteefalls.org/documents/10184/0/2022+Recommended+Budget+Presentation%25281%2529.pdf
https://landings.org/sites/default/files/resources/Annual%20Reports/2020%20Annual%20Report.pdf
https://www.hiltonheadplantation.com/pdfs/documents/2020-Audit-Report.pdf
12) 2022 Operating Budget (POAwebsite>login>POA>Financials>Budgets>2022BudgetIncomeStatement)
13) 2020, 2019 Operating Budgets (POAwebsite>login>POA>Financials>Budgets>2020, 2021OperatingBudgets)
14) AskThePOA#5612 and AskThePOA#5613
15) AskThePOA#5614
Very informative. You have done your homework well. Please add me to your list of listeners.
Thank you for the time and effort you routinely put into your blog. It is very important to me, as a reader, that you provide complete references. This posting is of extreme importance.
The leadership team in BC has serious issues they have created and do not appear willing to address. My concerns are basic- for a property owner to pay $4000. 00 yearly and still be required to pay more to use the swimming pool certainly puts BC in a class alone.
Hopefully your post(s) will prompt responsible and concerned owners to get involved and demand accountability.
Again, Thank You.