It appears that leadership’s self-applause regarding the savings found in two capital projects budgeted for 2022 warrants mention. Kudos to all involved for actually “rebidding” the beach club extension and marina seawall projects resulting in an overwhelming savings of $800k. For example, the $617k marina seawall, previously questioned by this writer, AskThePOA#5614 (1) has now been reduced a whopping 67% to only $205k. And although it is unknown how or why a disparity this large could have taken place, it is certainly appreciated that leadership opted to take another look.
Non-existent cash flow . . .
It also should not go without mention that the recent posting of the 2021 year end financial statements confirms that the association never had a robust cash flow as so often proclaimed by management. Instead, the year was finished with a negative cash flow of $1.6 million. (2) To be fair, this deficit can be partially attributed to the Creek 9 renovation as well as the Lake Disharoon fiasco, but property owners must also remember that the legally questionable “capital assessments” (3) along with the capital transfer fees both totaling $1.6 million should have offset much of that deficit.
Board Designated Funds . . .
In fact, negative cash flow continues into the current year 2022 as demonstrated by the recent Inside the Gates article at (https://bigcanoepoa.uvdesk.com/en/blog/board-designated-funds ) (4). Although the article seeks to provide a description and explanation of the association’s board designated funds, the information provided is incomplete and thus misleading. While identifying the “sources” of cash for each designated fund, the commentary failed to assign any dollar amount to the actual “uses” of cash. Had these values also been included in the analysis, it would have been immediately apparent that the association continues to spend more than it takes in.
Sources . . .
For the sake of simplicity, these sources (and uses that will follow) have been combined by this writer largely due to leadership’s constant commingling of funds and reassignment of projects back and forth between these two accounts. That said, leadership estimates that the substantial sum of $5.3 million will be collectively deposited to the two designated funds in 2022.
Uses . . .
Yet after inserting the dollar values (5) of the board approved capital plan/budget ($6.5 mil less $800k savings) plus the $1.25 mil Chimneys Project that were missing from the ITG article, it becomes quickly obvious that the association’s uses of cash greatly exceed the sources by $1.65 million once again resulting in negative cash flow for 2022.
As a side note, when this writer inquired about the source of funds for the recently approved Chimneys project, the POA President responded “we don’t see the need to borrow money for this project. It’s all about pricing and timing” while noting that the Board regularly tracks “cash flow and cash position.”
How the Chimneys project and approved operating and capital budgets could have possibly been tracked and included in leadership’s stated cash flow analysis absent additional financing is perplexing.
With all due respect, perhaps leadership has cash flow and cash position confused . . .
Unlike cash flow described above, “cash position” is simply the amount of cash found in all accounts on any given day in time. That distinction probably helps explain leadership’s constant reference to the word “timing”. And while the ITG article noted that excess operating funds might also be transferred into the accounts, it is important to recognize that although this transfer will shift cash to those accounts to pay for capital projects, the transfer will not increase the cash flow . Instead, 2022 cash flow will remain negative, and the association will continue to spend more than it takes in.
Further, even after accounting for excess operating funds or the residual balances of the two funds, both funds will be virtually depleted leaving little or nothing for any other “potential” Master Plan projects described in the ITG article, much less future (2023) Lake Petit Dam repairs, without an infusion of borrowed funds or some other unidentified and/or hidden “source” of cash. Again, perhaps this reality also explains leadership’s hesitancy to provide property owners with estimated year end balances.
Another shell game . . .
This writer is absolutely not suggesting that the 2022 negative cash flow scenario be resolved via additional debt. Quite the contrary. Instead, fix it. Ditch the Chimneys project and any other bloated or unnecessary capital project for now.
Frankly, spending every available dollar on unwise capital projects, prior to the completion of all necessary repairs to Lake Petit dam, will force the association to look to borrowed funds and the much criticized “credit facility” for funding those repairs.
And honestly, that advance depletion of cash is just as disastrous and financially irresponsible as actually drawing against the credit lines for the unnecessary projects. The result is the same.
Acquiesce not . . .
Neighbors . . . carry on. Options are available. (3)
. . . . .
As always, thank you for your readership. Please feel free to post opinions, comments or solutions below or 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. Meanwhile, take care and stay safe.
Patricia Cross (10438 Big Canoe)
References:
2) December 31st, 2021 Financial Package, Preliminary Statement of Cash Flows, pg. 3
3) “What If”, bcmatters.org, February 21st, 2022 https://bcmatters.org/what-if/
4) “Message from The POA Board: Feb 24 Board Meeting Q&A Addendum”, Inside the Gates, March 10th, 2022, https://bigcanoepoa.uvdesk.com/en/blog/board-designated-funds
5) 2022 Capital Plan (POAwebsite>login>POA>Financials>Budgets>2022CapitalPlan)
There needs to be a concerted effort to reestablish the HOA to balance the POA. This is our only major voice to keep the POA in check
I agree 👍 Let’s get it going ASAP
Bob Hale
well researched as always. We keep hiring more Chiefs when Indians are needed….
The POA board’s explanation of why the renovation of the Chimney’s is happening right now was very noble – we have so many groups and clubs here in BC that we need to do this to help them. BS. They are doing this to replace the clubhouse wedding reception venue that is no longer available to non-residents. If you think for one minute that these people would so quickly drop $1.3M on a project “to give our clubs more meeting space,” you’re dreaming.
Mark my words. Time will tell.
And cut the bloated POA staff in half! Ridiculous how much we pay to mismanage this community. And they were trying to add a “communications” specialist to the staff. Really? At what six figure salary? BTW, kudos to whoever found the salary information, which should have been disclosed a long time ago.
Let’s get the HOA re established where we will have strength in numbers
And again, Thank You, Ms. Cross. BC is clearly on life support.- borrowing money “ just because “. Along with dependence on Capital Transfer Fees, bloated management ranks and payroll, seriously outdated amenities (save) Creek Nine. A community ignoring fiscal jurisprudence, governed by a president and junta- the HOA equivalent of Queen Marie-Antoinette of “ Let them eat cake “ fame. Managed by the equivalent of a midway carnival barker encouraging owners to “ party “ all of this year because BC is 50 years old. Owners intimidated by the POA pedestrian attorney and their neighbors. BC is in desperate need of new ideas and direction- fast!.
Amen to fresh ideas. Let’s got HOA re established.