Kudos to the Big Canoe POA Board of Directors for finally recognizing the importance of transferring the $474k residual balance of the insurance settlement proceeds (for the Chimneys and realty office freeze damage) to a capital account rather than allowing those dollars to remain commingled with the operating cash account. (1) (2)
Old news . . .
Interestingly, while making the recommendation for the transfer of these funds during the November 16th open board meeting, the POA Treasurer provided the same breakdown of receipts and expenditures (absent $6k in additional IT expenses) that had already been noted in a previous post on this site. (2) (3)
Apparently, the Treasurer didn’t get the memo . . .
However, while seeking to assure the community that damage to the marina dock was also included in the insurance settlement funds thereby characterizing information in this writer’s post as “incorrect”, (4) it does not appear that the Treasurer was privy to the Director of Finance and POA Vice-President’s AskThePOA#10824 responses that failed to include that same damage in the settlement amount when specifically asked by this writer. (5) Similarly, there was no mention of marina dock damage in the 2022 audited financial statement. (6a)
One must wonder, who was bamboozled with inaccurate or incomplete information on this issue? The Treasurer? This writer? Mauldin & Jenkins?
It was a busy night . . .
Further, in this last open board meeting of the 2023 calendar year, the Board provided the community with a packed agenda that included the October financial results and numerous other items of business to include the approval of various components of the 2024 budget.
Comparative Balance Sheet now AWOL . . .
As for those October financial results, for whatever reason, the comparative balance sheet was not included in management’s financial presentation. It was likewise excluded in the previous month’s board discussion as well.
However, once the financial package was actually posted to the POA website, a quick look confirmed that the cash ratio continues to hover well below one at .80. (7)
Note: Keep in mind that any financial presentation that omits the balance sheet from the discussion is not a true representation of an organization’s financial affairs and should be seriously questioned.
As for that 2024 budget . . .
By now, most property owners have probably heard that assessments will be increased $25 per month as outlined in the General Manager’s November 9th budget presentation. That represents a 7% increase for those members who own a lot and a home while representing a disproportionate increase of 10.87% for those members who own a lot only. (8) 2024 Assessment Changes
Note: It is important to note that this disproportionate (%) increase attributed to lot owners could be construed as a violation of Article VI, Section 3, of the 1988 covenants. (9)
Other increases include:
-
The capital contribution fee due upon the sale of a home has been increased from $3,500 to $4,000 representing a 14.29% increase.
-
And the lease administration fee will be increased from $175 to $187 representing a 6.86% increase.
Note: These increases do not appear to have any real correlation to the CPI, but rather represent needed revenue to support the ever expanding and unsustainable spending habits of leadership that can be clearly demonstrated by simply comparing previous years to the 2024 budget totals now posted on the POA website. (10) For example, Communications/Marketing expenditures will explode to 2024 totals of $428k as compared to 2020 totals of only $178k.
And now for the song and dance . . .
However, a master at twisting every narrative and displaying even bad news as a good thing, in yet another media blitz of power point slides and pie charts, the GM repeatedly emphasized that 79.9% of the assessment increases would be going to the Association’s employees. (11) Perhaps . . . Then again, it really all depends on how you slice that pie.
For example, the GM would somehow have us believe that after offsetting interest income, the interest expense presently calculated at 7% on any outstanding balance of the $15 million line of credit will account for only $19k of the total assessment increase. (12) With the annual interest expense on the line equating to approximately $70k per each one million dollars outstanding, this assertion is frankly implausible. Please do the math. (13)
Increasing losses in the clubhouse . . .
After being told in the Renew Big Canoe campaign that “The clubhouse project will be constructed in several phases and our goal is for full-service dining and beverage service to remain open during normal business hours throughout the renovation period”, (14) it is shocking and unacceptable to learn that leadership has budgeted a $596k loss for the upcoming year.
$206k included in the capital budget for china, glassware and silverware for the new clubhouse . . . (15)
Really? And will this dinnerware also be purchased via the same architect required interior design firm that has already been paid $433k thus far for the new clubhouse tables and chairs? (16)
Note: Comprehend this. After adding $639k worth of dinnerware, chairs and tables to the $6.35 million clubhouse renovation, the community will have invested $7 million on a facility projected to lose $596k in 2024. Friends, neighbors . . . this is insanity.
And finally in another repeat performance . . .
Remarkably, despite all these increases, leadership has once again presented the community with a budget that fails to generate sufficient revenue to service the Association’s debt.
And just as in the previous year, (17) leadership has violated Section 5.2 of the 2006 Section 5.2 of the 2006 bylaws which clearly states:
“The Operating Budget must be balanced: expenses must not exceed revenues.”
With principal reductions scheduled by leadership at $1.2 million (18) on the 2016 land loan rolled into the WF credit line plus principal reductions at approximately $99k on the fire truck loan, (6b) net income from operations budgeted at $254k is clearly insufficient to service the debt.
Note: Capital assessments ($1.8 million) and cash associated with depreciation expense ($3.9 million) are not available for debt service as they are allocated to the Board Designated Capital Fund.
One must continue to ask, where will that additional money come from? It is not there.
Enough said.
. . . . .
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 have a blessed holiday season.
Patricia Cross
10438 Big Canoe
References:
1) “A cautionary tale”, bcmatters.org, October 12th, 2023
https://bcmatters.org/a-cautionary-tale/
2) “An update to a cautionary tale”, bcmatters.org, October 25th, 2023
https://bcmatters.org/an-update-to-a-cautionary-tale/
3) followup reply referenced at “An update to a cautionary tale”,
4) Big Canoe POA Board meeting, November 16th, 2023, video on Youtube at a) 32:40
6) 2022 Audited Financial Statement, dated June 27th, 2023, by Mauldin and Jenkins, a) Pg. 12, Note 1. Insurance Settlement Receivable; b) Pg. 22, Note 6, Notes Payable
(POAwebsite>login>POA>financials>AuditedFinancials>2022)
7) October 2023 Financial Package, Comparative Balance Sheet, pg. 2
(POAwebsite>login>POA>financials>2023>October)
9) Covenants, March 1988, Article VI, Section Three, pg. 24
(POAwebsite>login>POA>governingdocuments>covenants>covenants1988
10) 2024 Operating Budget
(POAwebsite>login>POA>Financials>Budgets>2024OperatingBudget)
11) Where does my 2024 assessment increase go
13) “What just happened”, bcmatters.org, September 8th, 2023
https://bcmatters.org/what-just-happened/
14) renewbigcanoe.com
15) 2024 Major Capital Items over $100,000
16) October Capital Plan
(POAwebsite>login>POA>Financials>Budgets>2023OctoberCapital)
17) “Self-inflicted chaos”, bcmatters.org, November 30th, 2023
https://bcmatters.org/self-inflicted-chaos/
18) 2021 Audited Financial Statement, dated June 23th, 2022, by Mauldin and Jenkins, Pg. 21, Note 6. Notes Payable (POAwebsite>login>POA>financials>AuditedFinancials>2021)
It was surprising to learn about the enormous increase in the Marketing/Communications budget in just a few years. Exactly who are we marketing to?
In years past, real estate companies provided marketing to draw home sales. Has this changed?
Is the Marketing/Communications department top heavy? Could property owners see job descriptions and a business plan for that department?
It would appear with so many dollars being spent to market Big Canoe, assuming any marketing is aimed at property owners and possibly long term renters, it follows all amenities should be profitable, including the Clubhouse. We’ve been told countless times that our Clubhouse will never show a profit. Private facilities simply don’t expect to make money, instead they expect and accept a negative cash flow.
Is there documentation showing that every clubhouse, country club or private facility in the USA is in the same boat? Are all facilities happy to lose money year after year? What a concept!
What suggestions have been offered to stop the flow of red ink at the Clubhouse? Do folks really think new seating, flatware, glassware and dishes, along with extensive renovations connected with Renew Big Canoe, will draw the community to the Clubhouse? There’s a disconnect going on somewhere.