Assessments, budgets and more . . .

The December 31st POA member statement along with a two page memorandum from management (1) has just been received leaving this writer somewhat perplexed.  Although the $25/$16 increase approved by the board in November to be used for Master Plan capital projects was included on this statement, it was anticipated that the increase would have been separated and itemized on the statement as a capital fund assessment as indicated on the 2020 POA Budget.  (2)  Instead we find it included in the regular monthly dwelling and lot assessments.

The assessment increase may not be used for operational expenses . . .

Specifically, leadership and management (1) (3a) have both stated that this additional revenue will be used for capital projects only and can not be used for operational expenses.  Curiosity and research reveals that the Big Canoe declaration of covenants provide for only two types of assessments to the property owners.  They are annual or regular assessments and “special assessments”.  No other type of assessment appears to have been contemplated within the covenants.

Regular assessments may be used for operational expenses . . .

To summarize, regular monthly assessments are used for the “maintenance and operation of the Common Properties and to pay for services which the Association is authorized to provide . . . ” but can also be used for acquisition, improvements, replacement and additions to Common Properties.  Although these assessments have certain restrictions regarding allowed increases, they do not require property owner approval. (4a)

Special assessments may not be used for operational expenses and do require property owner approval . . .

Special assessments, however, shall be used exclusively for the construction, reconstruction, unexpected maintenance or repair and replacement of the Common Properties and capital improvements thereon.  Special assessments also require approval of the property owners. (4b)  These types of assessments are specifically defined at Board Policy and Procedure No. 105.2 posted on the BCPOA website (5) and which further states that these assessment dollars will be tracked in “separate general ledger accounts”.  The purpose and use of the $25/$16 assessment increase as described by leadership and management precisely matches the definition of a “special assessment”.  It should also be noted that the approved 2020 operating budget (2) does not include the capital fund assessments estimated at $952k in the net income computation, but rather indicates the increase below that computation much the same as prior special assessments were displayed on previous budgets.  (6)

The $25/$16 assessment increase can not be both “regular” and “special” . . .

That leaves us with the question.  Is the monthly assessment increase a “regular assessment” which would not prohibit it from being used for operational expenses in the future?  Or is the monthly increase a “special assessment” which may not be used for operational expenses and which requires property owner approval?  Only leadership can answer that question, but regardless, it can not be both, and this question should be answered.

Board approved capital budgets for 2020 total over six million dollars . . .

While discussing assessment increases and budgets, it might also be beneficial to actually take a closer look at the 2020 capital budgets.  As it turns out, two separate capital budgets were approved at the November 2019 board meeting . . . the 2020 Capital Plan totaling $3 million (7) and the 2020 Master Fund Budget totaling an additional $3.1 million. (8)  In other words, should property owners approve the $2.165 million golf course renovation, leadership is poised to spend over six million on capital projects in 2020 alone.  The enormity of this total does not sound reasonable or realistic especially considering the $25/$16 assessment increase would account for only $952k of the required source of funding for the Master Fund Budget.

2020 Capital Plan includes new leased golf cart fleet with GPS system to help safely direct property owners and their guests around our non-public course    . . .

Breaking these two budgets out individually, we are told the Capital Plan is substantially a “needs” based budget.  (1)  Among other things, this budget includes the replacement of the golf cart fleet which actually took place in December 2019.  New carts contain upgrades to include premium seating, bluetooth speakers, car control and GPS systems.  To be fair, golf cart fees were increased $2 to help offset the cost of these upgraded features.   Contrary to prior years, the fleet was financed via a lease agreement rather than being purchased outright.  Payments over the term of the 54 month lease beginning in 2020 will total approximately $508k.  (9)

2020 Master Fund Budget . . .

Lastly, we find ourselves staring at a 2020 Master Fund Budget which we are told is the result of the Bergin and Chambers studies and the input of property owners via the Chambers survey.  That may be a stretch.  Aside from the pending golf course renovation vote yet to be determined, did property owners really want assessments increased in order to spend $66k on a new kitchen at the Chimneys?  Or $350k spent to provide additional parking at the Wellness Center and Postal Facility and which will also be used to accommodate overflow from the Chimneys?  And did property owners really want $250k spent to reconfigure the traffic flow at the golf maintenance entrance on Steve Tate Road?

Upcoming increases in our water services . . .

As a final note, when looking at assessment increases, was any consideration given by leadership regarding the impact coupled with the upcoming price increases for our water service?  Although leadership as noted by the POA president at the annual meeting is aware of the pending increases, they have declined to disclose that information to property owners until a future town hall meeting.  (3b)

If you would like to see additional articles posted in the future, please subscribe for an email notification.  In addition, if you believe the issues examined on this site merit property owner awareness and discussion, please share and/or forward to your friends and neighbors in Big Canoe.

Likewise, if you have questions or would like further discussion I can be contacted at thepcrosses@gmail.com.

Patricia Cross (10438)

References:

1    Memorandum to Property Owners, from Director of Finance, January         2nd, 2020 (included in 12/31/2019 property owner emailed statements)

2    Big Canoe POA Budget, 2020 (POAwebsite>login>POA>Financials>Budgets>OperatingBudget2020)

3    Big Canoe POA Annual Meeting, December 7, 2019 (a) at 15:40 and (b) at 5:45  (POAwebsite>login>POA>Meetings>Videos>2019POA AnnualMeeting>15:40 and 5:45)

4    Covenants, March 1988, (a) Article VI, Section 2 (b) Article VI, Section 4 (POAwebsite>login>POA>governingdocuments>covenants>covenants1988

5     Big Canoe Policies and Procedures, Policy No. 105.2  (POAwebsite>login>POA>governingdocuments>BoardDocuments>BoardOfDirectorsPoliciesandProcedures)

6   Big Canoe POA 2019 Budget  (POAwebsite>login>POA>Financials>Budgets>OperatingBudget2019

7    Big Canoe POA 2020 Capital Plan  (POAwebsite>login>POA>Financials>Budgets>2020CapitalPlan)

8    Big Canoe POA 2020 Master Fund Plan  (POAwebsite>login>POA>Financials>Budgets>2020MasterFundBudget

9    POA Board of Directors Meeting, October 25, 2019  (POAwebsite>login>POA>Meetings>Videos>October2019BoardMeeting>18:00)