With a lengthy May 29th board meeting that was informative at times and misleading at others along with the recently posted April financial package, there is much to talk about. Perhaps it’s time to put the trademark discussions on the back burner for a moment and refocus attention to other financial matters.
Seeing red . . .
Beginning with the General Manager’s slide presentation dominated in red, it is quickly observed that the Association realized an astounding operating loss for the month of April totaling ($412,473) along with a year to date loss of ($210,709). (1a)
In fact, the only thing keeping the P&L in the black overall are the capital contribution fees and capital assessments which can not be used for the day to day operations of the community.
Just an accounting adjustment . . .
The General Manager partially attributed the loss to $46.5k in legal fees for the trademark negotiations that were billed during the month of April. However, keep in mind that those fees would not include legal expenses associated with additional trademark applications that took place later in May as described in a previous post on this site. (2) https://bcmatters.org/an-albatross-updated/
The GM then flippantly dismissed the bulk of the poor performance to an “accounting adjustment” and/or “accelerated depreciation” related to the Choctaw renovation along with the replacement of the Desert Aire system at the Wellness Center while proclaiming “that is not a cash expense”.
Despite the GM’s usual song and dance around an unpleasant situation, it is important to note that these accounting entries were the recognition of significant losses on the disposal of assets. Specifically, $265.6k in Choctaw golf course assets were written off during the month of April along with $74k for the Desert Aire system. And while the Desert Aire system disposal was unavoidable, (early breakdown of equipment) the Choctaw write-off should have been foreseen and expected from the beginning of the project and considered in the total cost.
Kudos are due, however, to the Director of Finance for her succinct discussion that followed regarding depreciation and useful life. It was noted that although the Choctaw course had been assigned a useful life of thirty years, it was replaced after eighteen thus creating the loss.
Given that, both the GM and Director of Finance appeared to cast blame on prior management for its assignment of the “useful life” of those assets.
“A non-cash expense” . . .
And just as management and leadership have trivialized the importance of depreciation expense in the past (3), the GM and Director of Finance attempted to trivialize these losses by emphatically stating five times over a five minute discussion that these write offs were merely “a non-cash expense”. (4a) https://www.youtube.com/watch?v=WHyVUZCbbZ8 beginning at 25:56
While it is true that the transactions did not drain cash out of the Association’s accounts, they did reduce the value of the Association’s fixed assets on the balance sheet. With leadership appearing to believe that cash is the only asset that matters, our elected board is failing to uphold, acknowledge and understand their fiduciary duty outlined in Article III, Section 3.3 of the 2006 bylaws which state that they must “preserve and protect the assets of the POA”.
With assets other than cash representing 81% of the total, perhaps it’s time for leadership to begin recognizing their significance.
Seriously. Think about it. The Chimneys facility is currently being allowed to waste, (5) and management has already written off assets totaling $426k since year end.
Note: (Choctaw @ $265.6; Desert Aire @ $74k; Wellness Center Equipment @ $46,725 and Chimneys insurance receivable @ $40,156)
Management is either depreciating capital assets over an extended time frame thereby inflating the value of those assets on the Association’s balance sheet, or assets are being replaced prematurely.
So which is it? Perhaps this is something that Mauldin & Jenkins will explain when they make their annual visit at the June 2025 board meeting.
Regardless, this is a subject that should command serious study.
And unfortunately there’s more to come . . .
As if the April losses attributed to disposal of capital assets were not disconcerting enough, it was particularly disappointing to learn that the clubhouse renovation project will suffer similar write-offs. In this scenario, the Association’s accountants, Mauldin & Jenkins, have mandated that the loss must be posted as of the 2024 year end. (4b)
Once again, this should come as no surprise to anyone, as this writer has asked these very questions in prior posts on this site. (6) https://bcmatters.org/its-a-mess/
-
-
“One must wonder, for example, whether the walls, the flooring, the wine room and any other demolished components have been fully depreciated prior to this renovation?
-
If not, will the disposal of those components be additional “soft costs” of the renovation?”
-
And as usual, those questions were ignored.
Note: The Director of Finance was contacted requesting the amount of this additional loss. She has assured this writer that a response is forthcoming. Any new information will be included in a future update.
As for the Association’s cash . . .
A quick glance at the April comparative balance sheet reflects substantial cash totaling just over $13 million. (1b) However, this is a mirage as the Wells Fargo line of credit has now been fully drawn partially against capital projects from previous years thereby creating flush cash balances and more favorable financial ratios. Further, it is most important to recognize that neither the complete clubhouse renovation nor all repair bills for the lower level outlet have been expensed.
After subtracting those pending expenses, (7) approximately $4.7 million remains in the Capital and Master Plan Funds to pay for the spillway repairs conservatively and questionably estimated by management at $6 million.
Note: Of that cash total of $13 million, $1.9 million is operating cash and $3.1 is restricted capital reserve funds and have thus been omitted from this calculation.
Where will those additional dollars for the spillway repairs be found? Additional assessments? And what if the cost of those spillway repairs exceed $6 million?
And then there’s those pesky food and beverage losses . . .
For the record, as wonderful as the Bistro may be to many, F&B losses already total a quarter million dollars just through April surpassing even the 2024 losses. (1a) Of course, when payroll expenses exceed revenues, significant losses can be expected.
Apparently management along with leadership present and past (via social media) continue to believe the clubhouse renovation will be the panacea for all of the facility’s financial woes as it was designed to accommodate large “profitable” events such as weddings. Unfortunately, there has never been any documentation to support leadership’s assertion that weddings have been profitable at Big Canoe. Never.
In fact, the 2020 interim GM from Bobby Jones Links (an outside management company) stated that food and beverage losses had occurred “across all venues”. (8)
And contrary to those who would like to credit the near break even F&B performance in 2021 to a perceived “surge” of weddings after covid restrictions had been relaxed, it is most important to instead recognize that the food and beverage function was under the purview of Bobby Jones Links during that time frame. This fact alone speaks volumes regarding present management. (9)
Clearly, one must simply look at both 2019 and 2023 to determine if weddings had a positive impact on the F&B bottom line. Specifically, the 2019 F&B function that included outside weddings posted a $775k loss under a previous GM. Similarly, the 2023 F&B function that included only property owner weddings posted a $721k loss under the current GM. (10) https://bcmatters.org/spread-the-news
Now finally, about those weddings and your clubhouse . . .
It seems that sufficient concern had been expressed on social media and communicated to the board regarding any plans to open up the newly renovated clubhouse to outside weddings as the subject secured a spot on the May board meeting agenda under “Trending Topics”.
In response, the POA Secretary made the following statement to the community: “It is the board’s understanding that the General Manager and his food and beverage team are reviewing the existing wedding policy and will make recommendations to the Finance & Audit Committee and the POA Board during the 2026 budget process that begins next week. . . . “ (4c) https://www.youtube.com/watch?v=WHyVUZCbbZ8 at 1:19:30
And although it was noted that the board had no plans to alter the current policy restricting weddings to property owners and relatives only, it was further stated that the board “would and should” be open to any proposals from the GM and his team that could generate additional “revenue” to help improve the overall clubhouse financial performance. (4c)
Seriously neighbors. This is your community and your $8 million plus clubhouse!
Policy decisions such as these should not be made based solely on the recommendations of a GM and other employees.
Perhaps those property owners who are opposed to this change in direction should once again unite as was done regarding the trademark fiasco to present your own demand and recommendation to the board.
Go for it.
Simply expressing polite concern to deaf ears or reading the words on these pages will do nothing to effect real change.
. . . . .
If you believe the information contained on this site is important, please continue to share and pass it on. Should you wish to see additional articles posted in the future, please subscribe for an email notification or check back frequently. And as always, feel free to contact me directly at thepcrosses@gmail.com for questions or further discussion. Meanwhile, take care, stay safe and thank you for your readership.
Patricia Cross
10438 Big Canoe
References:
1) April 2025 Financial Package, a) Income from Operations, pg. 5; b) Comparative Balance Sheet, pg. 2;
(POAwebsite>login>POA>financials>2025>April)
2) “An albatross updated”, May 31st, 2025, bcmatters.org site. https://bcmatters.org/an-albatross-updated/
3) “Spent into oblivion”, December 3rd, 2024, bcmatters.org , https://bcmatters.org/spent-into-oblivion/
4) Big Canoe POA Board Meeting, May 29th, 2025, video on Youtube at a) 25:56 to 30:55; b) 31:55; c) 1:19:30
https://www.youtube.com/watch?v=WHyVUZCbbZ8
5) “The untouchables”, April 15th, 2025, bcmatters.org, https://bcmatters.org/the-untouchables/
6) “It’s a mess”, November 8th, 2024, bcmatters.org, https://bcmatters.org/its-a-mess/
7) Clubhouse renovation @ $7.7 million less $5.2 million paid through April = approximately $2.5 remaining. Lower level outlet cost projected at $1.7 million less $700k paid through April = $1 million remaining.
8) “Back to the numbers”, June 26, 2020, bcmatters.org, https://bcmatters.org/back-to-the-numbers/
9) Administrative reports, January through November 2021
10) “Spread the news”, July9th, 2024, bcmatters.org, https://bcmatters.org/spread-the-news/