Ask the board . . .

After more than nine months of requesting and waiting for publication of the covenant required updated reserve study, it has just been unceremoniously posted to the POA website. Upon opening, it is immediately observed that the beginning balance in the restricted Capital Reserve Fund on January 1^st, 2021 is shown to be approximately one million dollars LESS than the balance disclosed on the year end financial statements. (1) Further, it is clearly noted on page 13 of the study that this information was provided to the reserve specialists by “Association management”. (2)

How did this happen? . . .

• • Is this a typo? And if so, why did “Association management” and the board not require a correction as incorrect information invalidates the results.

• • Or did “Association management” purposefully provide the reserve specialists information that was inaccurate?

• • Or has money actually been removed from the reserve fund without any vote of the board or notification to property owners? If so, why was it removed? When was it removed? And where did it go?

Other than these scenarios, there is no other plausible explanation for the discrepancy. And remember, only days ago, three other instances of discrepancies in the cash balances of the association were outlined on this site. (3) https://bcmatters.org/more-big-red-flags/

Board concurrence . . .

After struggling to get past the initial shock of yet another discrepancy in cash, a quick review of the remainder of the study brings forth other deficiencies, questions, and examples of data manipulation by management with leadership’s presumed concurrence.

As for the board’s presumed concurrence, it must be noted that the POA president advised this writer previously that the finance committee would be reviewing the study on April 26^th and the members of the full board would review and discuss at the May 10^th, 2021 work session. Unfortunately, there are no minutes documenting the finance committee meeting and no mention of reserve fund discussions at the May 10^th work session. (4)

Other concerns warranting mention . . .

And now without taking away from the seriousness of this discovery, several other quick observations can be noted for contemplation and future discussion.

• • After five years of leadership’s failure to contribute to the fund, the percent funded ratio has now declined from 18.08% (in 2017) to 10.56%. Woefully underfunded. (A thorough discussion of the capital reserve fund and funding ratios can be found here: https://bcmatters.org/time-to-talk-about-our-capital-reserve-fund/#more-660)

  • Any erroneous reduction in the reserve fund at January 1^st artificially lowers the Reserve Study recommended levels which are used to determine the amount to be repaid if and when reserve funds are used in the future.

And finally, the updated study and component listing EXCLUDES many common area components included on previous studies such as Petit Dam, the Chimneys (now projected at $590k), golf courses, golf maintenance building and postal facility further skewing the recommended levels.

Instead . . .

The aforementioned common area components plus others are now included on a second Reserve Study NOT mandated or authorized by covenant and addressed to the Board of Directors of “Big Canoe Master Plan”. (5) What? The cover letter even refers to the “governing body of Big Canoe Master Plan” etc.

• • Based on information provided to the reserve specialists by management, presumably with the boards concurrence, proceeds in the Master Plan Fund (“MPF”) are defined as “reserve funds”. This is untrue. In fact, the restricted Capital Reserve Fund (“Reserve Fund”) addressed in Article VI, Section 13 of the association covenants (6) is the only designated reserve fund for the association.

• • Of further interest, regardless of any designation leadership might attempt to assign to the “MPF”, and even after property owner approval of the transfer fee, this study reflects negative balances as much as $4.3 million from 2023 through the end of 2031.

All that said, this additional report truly presents a window into the mind of our POA and a glimpse of what grandiose plans they have in store. (Just flip through pgs. 18-19 of the Master Plan study to see)

Complete financial chaos . . .

These observations regarding other details of the study can be enhanced and discussed at a later time with those interested.

But first, and of paramount importance, all discrepancies regarding the Capital Reserve Fund balance outlined at the beginning of this article should be fully and immediately explained. Once again, Big Canoe – we really do deserve better.

. . . . .

To see additional articles posted in the future, please check back frequently or subscribe for an email notification. Likewise, please feel free to contact me at thepcrosses@gmail.com for questions or further discussion. Meanwhile . . . take care and stay safe.

Patricia Cross (10438 Big Canoe)

References: Ask the board, June 3^rd, 2021, bcmatters.org

1 December 2020 Financial Package, “Comparative Balance Sheet”, pg. 2 (POAwebsite>login>POA>Financials>2020>December)

2 Big Canoe POA – Reserve Management Plan, beginning January 1 2021 pgs. 1-40 (POAWebsite>login>POA>Reports and Studies>Reserve Study 2021)

3 More big red flags, June 1^st, 2021, bcmatters.org https://bcmatters.org/more-big-red-flags/

4 Special Board Meeting Minutes, May 10^th, 2021 (POAwebsite>login>POA>Meetings>Minutes>2021>May 10)

5 Big Canoe Master Plan, beginning January 1 pgs. 41 – 91 (POAWebsite>login>POA>Reports and Studies>Reserve Study 2021)

6 Second Amendment to the Covenants, dated August 21, 2010 – (POAWebsite>login>POA>Governing Documents>Covenants>Capital Reserve2010)