In only a few weeks, property owners will gather a glimpse of what our futures in Big Canoe will be as the last Renew Big Canoe ballots are returned and counted. One can only hope that each property owner had access to all the facts and pondered the choices carefully. But for now, there isn’t much more that can be said so it seems appropriate to refocus on the further draining of “our money” from the Association’s coffers along with the continued discrepancies found in the Association’s financial reporting. (1)
Comparatively speaking, we are going backwards . . .
As usual, while touting the positive variances to an obviously padded budget, the GM fails to place any emphasis on the fact that the Association’s net income from operations through June 2023 is $408k LESS than the prior year even AFTER an increase in property owner assessments of $309k. (2) (3a)
Still inadequate funds generated for the CURRENT debt service . . .
And once again as detailed in previous posts on this site, (4) with a year to date net income from operations of only $298k, sufficient revenue has not been generated to cover the year to date principal payments on the Association’s debt totaling $675k. (3a,b) Please do the math.
Note: An amount equal to depreciation expense is allocated monthly to the Board Designated Capital Fund and therefore not available to be used for debt service.
“Buckets of Money” yield negative cash flow . . .
Using the terminology “buckets of money” to describe the various accounts and capital funds, the Director of Finance’s July 27th board presentation of the Statement of CashFlows (5) clearly documents a negative cash flow through June of [$859k].
Note: This consequence can be directly attributed to the inadequate revenue generated for debt service as well as to capital expenditures that have exceeded the current inflow of cash.
In other words, the Association is spending more money than it is taking in.
Operating accounts at historically low levels . . .
And as a further result of the Association’s spending habits, our operating cash stands at a historically low level of only $1.2 million. (3c) Now flashback to only 2021 and a Lake Petit Dam Town Hall when a previous financial presentation included a slide titled “Cash Flow Forecast” (6) stating that a minimum operating cash level of $2 million was required in order to cover one month of expenses and the annual bank principal payments. Required by whom? The Association? The bank?
One must certainly ask what happened to that $2 million requirement?
And now, let’s shift the discussion to the 2022 audited financial statements . . .
For months, this writer has continued to reference with dismay both management’s retroactive “money grab” of $1.45 million that was transferred out of the Board Designated Master Plan Fund (Master Plan Fund) and into the Board Designated Capital Fund (Capital Fund) as well as their redirection of future capital assessments away from the Master Plan Fund and into the Capital Fund. (7) (8) (9) https://bcmatters.org/connect-the-dots/ At the time (February 2023) it was noted by the Finance Committee Chair that the Association’s independent accountants had concurred with management’s proposal to “restate” the balances in those accounts. (8)
This writer’s dismay was compounded by the Board of Director’s failure to vote on the approval of any of the above. It was further noted by this writer in a previous post that,
“ it continues to be frankly implausible that the accountants would concur with management’s redirection of those funds without majority approval of the board much less condone the backdating of the transfers on the financial statements.” (4)
And now according to information found in the completed 2022 audited financial statement, (10a) it appears the narrative has changed with the transaction being described as a “reclassification” made with the concurrence of the finance committee and the Board of Directors. Now really?
One must seriously ask exactly where might this “concurrence” of the Board of Directors be found? Is there some private, secret set of minutes containing that approval that the property owners are not privy to? And if not, rather than verify, did the “independent” accountants simply take management’s word for it?
“Very clean” . . .
To be fair, although the independent accountant did not make any specific reference to the “reclassification” of the capital accounts in his June 29th board presentation of the 2022 annual audit, it was repeatedly emphasized that the Association’s books were “very clean”. (11)
That said, while briefly touching on the water damage that was sustained at the Chimneys in December, he noted that an insurance liability or estimate had been created on the balance sheet. There was no other reference to these entries by the GM, Director of Finance or Finance Committee Chair at that June 2023 board meeting. In fact, none of these changes were reflected in management’s presentation of the May comparative balance sheet (that included a column containing December 2022 information) or on the financial statements posted to the POA website days later.
Instead, one month later at the July 27th board meeting, the Director of Finance mentioned that an “adjustment” had been made to the year end financial statements which included a “loss”. Without ever specifying the amount of the loss or even the amount of the liability, it was explained that management had waited to inform the community of the “adjustment” until they were sure that the amounts were correct? (2b) (3c)
However, with the 2022 audited financial statement previously posted to the POA website, (10b) it had already been determined by this writer that the 2022 year end income had actually been reduced $386,406 in recognition of a loss pertaining to that damage.
Needless to say, blame should not be attributed to any individual for the Chimneys disaster. It was an unplanned, unanticipated and apparently unavoidable accident.
But in spite of that, it is disconcerting to only learn of these “adjustments” after the unceremonious posting of the audited financial statements and a passing reference by the Director of Finance. Further, one must wonder how management was even able to generate internally prepared financial statements for the community that did not include these “adjustments” after the independent auditors had issued a clean opinion? Go figure.
Perhaps management might have considered simply producing the “very clean” books for the community that they so willingly provide to the independent accountants.
Note: An Ask the POA inquiry was submitted requesting the details of these transactions. A response was received from the Director of Finance confirming the amount of the loss; date of the “adjustments” as mid June; and the amount of the liability created as $738,883 along with other details.
Need more be said? . . .
It appears that questions such as these can only be answered by full disclosure of the books by leadership or a forensic audit. Keeping in mind that the board of directors has refused to provide copies of the Wells Fargo loan documents and refused to provide copies of the depreciation schedules, a forensic audit seems to be the path to transparency.
. . . . .
If you believe the information contained on this site is important, please continue to share and pass it on. And should you wish to see additional articles posted in the future, please subscribe for an email notification or check back frequently. As for questions or further discussion, I may be contacted at thepcrosses@gmail.com. Meanwhile, take care, stay safe and thank you for your readership.
Patricia Cross
10438 Big Canoe
References:
(1) https://bcmatters.org/unfinished-business/
(2) Big Canoe POA Board Meeting, July 27th, 2023, video on YouTube at a) 30:00; b) 33:05
(3) June 2023 Financial Package, (a) Summary of Operations, pg. 1; (b) Statement of Cash Flows, pg. 3; (c) Comparative Balance Sheet, pg. 2
(POAwebsite>login>POA>financials>2022July)
(4) https://bcmatters.org/the-basics/
(5) Statement of CashFlows slide presentation
(6) CashFlowForecast presented at Lake Petit Dam Town Hall Meeting, February 27th, 2021
(7) Big Canoe POA Board meeting, February 23rd,, 2023, video on Youtube at 42:15.
(9) https://bcmatters.org/connect-the-dots/
(10) 2022 Audited Financial Statement, dated June 27th, 2023, by Mauldin and Jenkins, a) Pg. 19- 20, Note 4. Board Designated Funds; b) Pg. 6, Statements of Revenues and Expenses (POAwebsite>login>POA>financials>AuditedFinancials>2022)
(11) Big Canoe POA Board meeting, June 29th, 2023,video on Youtube at 50:56 and 55:57
Thanks again, Patricia. Upon opening my ballot for the Renew Big Canoe Yay or Nay vote, I was surprised to see a full blown promo piece for voting Yes on the Renew Big Canoe issue.
In every election or vote I’ve ever taken part in, there was a strict protocol enforced that prohibited “campaigning” within a defined area of a polling place. I guess that doesn’t apply to voting on issues in mailed ballots in Big Canoe. Blatantly a push was made for voters to check the Yes box.
We all appreciate the time, effort and energy staff and volunteers gave to finalizing this project. We thank them for their work. It wasn’t easy.
However, the other side of this issue, the “con side,” was never officially discussed or debated. This created a lopsided view of this very expensive proposed project.
Those who had questions about the impact Renew Big Canoe might have could only respond in very short, defined segments at official meetings, submit concerns to Ask the POA which usually received a canned answer which was not visible to the entire community or by expressing concerns on Facebook. Most residents of Big Canoe aren’t on Facebook.
Often Facebook responses to such questioning concerns were met with scoffs from those who were in favor of Renew Big Canoe – some were snarky or rude comments implying those not in favor of the vote were stupid or misinformed. Not helpful.
For those who’ve been around here for a few years, they might have been reminded of the last big controversial vote – the Property Purchase. There were wine and cheese events held by the POA to ensure passing this massive spending effort, including huge wearable buttons saying something similar to “I Love Big Canoe – Vote Yes!” Those who were against the issue were made to feel they didn’t “love” our community with their No vote. It didn’t take long after passage of the Property Purchase to show a few negative signs and disappointments. Things weren’t quite what they seemed. Few talk about that vote now.
It’s time to slow down in these perilously difficult financial times. Look at all sides and implications of taking on even more community debt.
Full disclosure of Big Canoe’s financial situation should be made available to all property owners. We’re getting bits and pieces now which sometimes don’t support actual figures.
After living here for almost 20 years I still love Big Canoe enough to vote No on Renew Big Canoe!
This is exactly why I voted no! When the “powers that be” suppress debate, it’s a sure sign to me that Boards do not value transparency and do not have the best interest of the property owner in mind. I lived through the land deal too and it was blatantly promoted and debate was shamefully suppressed. As this one is too.
Alice we appreciate your reaction to the voting package, our reaction was exactly the same, a very lopsided package of propaganda. No other options offered regarding the money being budgeted for clubhouse: Just vote yes and everything will be fixed. Not a word about the fact that not any of the $6.5 million has been allocated for any kitchen improvements. Looks like it will all be used to make a level floor plan, seems like a lot to eliminate a few sets of stairs.
And you are correct regarding submitting alternative ideas and questions. Canned responses from AskthePOA. Facebook private group absolutely demonstrates the worst possible behavior, after I was personally called ignorant because I had a different opinion, and then the administrator called my thoughts tiresome.
The sad part is this campaign is designed to pass, just like the “land deal” and the proponents and supporters will be long gone when it becomes clear the ideas were fun but the reality that money has been spent but nothing has been improved.
In every election or vote I’ve ever taken part in, there was a strict protocol enforced that prohibited “campaigning” within a defined area of a polling place. I guess that doesn’t apply to voting on issues in mailed ballots in Big Canoe. Blatantly a push was made for voters to check the Yes box.
DITTO
Is this Russia?
This is something that many country club members have seen when club management hires consulting firms to help them sell a project to club members. This is very self serving of these companies in that it ties the management to these consultants rather than the members. I believe that many times you the end result is a benefit to management at the cost of membership. A cry slow approach to any new debt should be taken until membership is sure that all facts are out and in the open.
This is exactly what happened when the decision was made to hire Bobby Jones Links to help manage Big Canoe several years ago.
As this company had little or no experience managing a community, many of us wondered why this company was even considered for the job. The company’s focus had always been resorts.
It was suspected Bobby Jones was hired because “somebody knew somebody.”
We paid Bobby Jones many dollars just to get rid of them.
There have been numerous areas of POA mismanagement which cost our community dearly – both in dollars and in credibility.
This must stop and we must have full accountability and disclosure to property owners in a consistent, open manner.
History and present actions of Big Canoe management brings many of us in the “membership” category toward losing confidence. Benefit and well being of Big Canoe and its members/residents must be the penultimate guideline. Without casting doubt or blame on any faction or group, certified facts must be gathered and readily available to any interested member of Big Canoe who pays POA dues. An independent audit of the last two years is a must. Other documentation of expenditures and decisions are important. Each of us must have a basis in fact in order to forge a responsible Big Canoe community.
Difference of opinion is good, so long as we are one.
Is it even legal to insert a propaganda piece “Vote Yes!” paid for by me and all other property owners inside the same envelope as a ballot?