With our 50th anniversary year now behind us, it would be fair to say that 2022 was a year of change with property owners seeing escalating and often extravagant capital expenditures, dwindling property owner rights, OSHA investigations, new Association debt, Lake Petit dam concerns and sewer expansion issues . . . the list seemed to go on and on making it impossible at times to just keep current.
And given the sheer volume of information out there in POA land, it seems ever more important to carry on whether it be a targeted lengthy discussion on a specific topic or quick references to seemingly disconnected facts and emerging information that affect each of us as members of the Association. Giving that consideration, ponder the following.
Another interest rate increase . . .
On December 15th, the Fed raised interest rates another .50% resulting in a current SOFR rate of 4.31%. (1) With $15 million of the Wells Fargo credit facility tied to the SOFR (secured overnight financing rate) plus 1.70%, (2) the rate at adjustment will now be 6.01%.
And due to leadership’s 2022 decision to gamble with our money by rolling the balance of the 2016 Land Loan at a fixed rate of only 3.29% into a new $15 million credit line, the Association could now be paying as much as $110k in additional interest costs in 2023 on that balance alone.
Further, should our board elect to actually draw out the remaining funds available on that $15 million credit line, the annual interest cost (through May 2025) at the current rate of 6.01% would be $901,500. And where will that money come from? Additional assessment increases perhaps?
Obviously, the POA does not have the dollars to throw away on such an absurd level of interest expense, and any decision by leadership to do so should be thwarted by the community.
Meanwhile, leadership continues to spend additional property owner dollars on consultants (3a) and architects (4) in preparation for the presentation of the Master Plan which will be impossible to implement without utilization of some if not all of those remaining funds from the credit line.
Note: Maybe it’s time for property owners to join together and seriously insist that the board put the brakes on spending our money and increasing our debt.
FEMA and Lake Petit Dam . . .
Kudos to management for finally obtaining approval from Georgia Safe Dams of the Lake Petit Dam emergency action plan. Presumably, the finalized plan will be posted to the POA website in the near future.
In addition, the Q&A included in management’s announcement noted that those owners of property within the inundation zones might wish to contact their homeowner’s insurance agent while emphasizing “Remember, this is not for flood insurance” . (5) (6) However, information from FEMA suggests otherwise.
Two excellent links to FEMA on the subject that might be useful to those affected can be found at (7) https://www.fema.gov/sites/default/files/2020-08/fema_living-with-dams_p-956.pdf and (8) https://agents.floodsmart.gov/sites/default/files/fema_nfip-summary-of-coverage-brochure-11-2022.pdf
And yet another contradiction . . .
By now, all property owners should have received their first POA statement of the year with a link to a financial letter from management containing false and conflicting information.
Remarkably and completely contrary to the board’s previous response to this writer, (10) management continues to assert to the community that the budgeted net income before depreciation of $4,207,750 “pays for our debt service” [$1.3 million] and replacement capital [$6.3 million]”. It does not. Do the math.
Note: One must ask, will our elected board continue to stand by and permit this distribution of false information to the community?
And what about those pontoon boats? . . .
Confusion reigns. One might recall the GM’s multiple budget presentations and November 17th board discussions (11) (12) clearly specifying that the pontoon boat fleet would be “replaced” in 2023 via an operating lease. Needless to say, that plan was met with substantial disapproval by this writer and other property owners as well as one outgoing director. (13) One might also note that 2023 property owner rental rates for the boats have been increased $10 per hour to help offset the cost of those replacements.
Additional discussion of the plan also took place in a December 28th closed door meeting of the board, with a vote containing the specifics of the replacement scheduled for the January 2023 open board meeting. (14)
And yet, just days later, that same link to the January 1st financial letter inserted into each member’s statement contains the message with highlighted emphasis that the pontoon boats are being merely “refurbished” . Where can the truth be found anymore?
As it is, it would be reasonable for those members opening their monthly statements (that do not listen to the POA board meetings or read this blog) to assume the truthfulness of management’s assertions when in fact they are not.
Note: Whether unintentional or otherwise, management has again misled the community.
UPDATE to the January 1st Financial Letter . . .
Today’s reverification of the link to the financial letter referenced above indicates that the letter has now been edited and corrected after the fact as follows.
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“This pays for our debt service and replacement capital” has been changed to read “This pays for our debt service and partially funds the replacement capital budget”.
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“refurbished” has been corrected to read “new”
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Unfortunately, without any notification from leadership denoting this correction, (9) https://members.bigcanoepoa.org/files/2022-12-31-Letter-to-Property-Owners.pdf those property owners who have relied on the original financial letter, remain misinformed.
As for those 2022 dollars . . .
And finally, taking a quick look back to that 50th year for a moment, consider that even after the infusion of $510k in additional cash from the proceeds of the fire engine lease/loan, the November balance in the “Capital Replacement Fund” stands at only $507k. (15) Meanwhile, significant 2022 capital projects and expenditures have been initiated in the final month(s) of the year and presumably remain partially or totally unpaid. Just to name a few:
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Disharoon/Sconti Silt Removal at $550k
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Racquet Club at $342k
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Clubhouse Furniture costing $420k (Note: Ask the POA questions to determine any amounts paid in advance have remained unanswered.) *Correction – A response provided on January 10th indicated that a deposit for the furniture has been paid in the amount of $265k.
- Creek Nine covered bridge (excluded or deleted from the Creek nine renovation project) at $149k
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And various other yet to be funded 2022 projects (3b)
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Given that information, it quickly becomes apparent that the POA never had the 2022 funds to pay for these projects without relying on future 2023 dollars for payment or reaching out to other inappropriate sources (additional debt; Master Plan Fund).
Neighbors . . . the money was never there.
. . . . .
If you believe the information in this blog to be important, please 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. Likewise, please feel free to post comments below or contact me 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) https://www.newyorkfed.org/markets/reference-rates/sofr
2) 2021 Audited Financial Statement, dated June 23rd, 2022, by Mauldin and Jenkins, Pg. 21, Note No. 6 – Note Payable. (POAwebsite>login>POA>financials>AuditedFinancials>2021)
3) Third Quarter Capital Plan, a) pg. 9 – Master Plan Survey at $64k; b) pg. 7 – Totals (POAwebsite>login>POA>financials>budgets>2022>2022 3rdQuarterCapital)
4) Board meeting minutes, dated September 29th, 2022 approving up to $100k for clubhouse plans. (POA website>login>POA>meetings>minutes>2022>September29)
5) https://www.insidethegates.org/2022/10/14/lake-petit-dam-2/
6) Smoke Signals, January 2023 Edition, pg. Two at https://smokesignalsnews.com/eedition/news/page-n-002/page_6bcc8ac4-e4ca-5bfe-9f37-bf3fc39bbcec.html
7) https://www.fema.gov/sites/default/files/2020-08/fema_living-with-dams_p-956.pdf (pg. 19)
8)
https://agents.floodsmart.gov/sites/default/files/fema_nfip-summary-of-coverage-brochure-11-2022.pdf
9) Financial Letter dated January 1st, 2023, pg. two https://members.bigcanoepoa.org/files/2022-12-31-Letter-to-Property-Owners.pdf
10) https://bcmatters.org/self-inflicted-chaos-updated/
11) https://bcmatters.org/self-inflicted-chaos/
12) Smoke Signals, December 2022 Edition, pg. Three
https://smokesignalsnews.com/eedition/news/page-n-003/page_f5285acf-6694-5e0b-b7c5-ca0fbec063e7.html
13) Big Canoe POA Board Meeting, November 17th, 2022, video on Youtube at a) 1:33:55; b) Regis Falinski at 1:39:35;
14) Special Board Meeting Minutes, December 28th, 2022
(POAwebsite>login>meetings>minutes>2022>December 28th)
15) November 2022 Financial Package, Comparative Balance Sheet, pg. 2
(POAwebsite>login>POA>financials>2022November)
Keep up the good work – much appreciated!
What is the urgency to spend money that we do not have? The board should treat the HOA money is if it’s their own money.
Dues have gone up over 15% in the last two years.
Why would pontoon boats be replaced that do not need to be replaced? Why would be spending over $400,000 for the clubhouse furniture, where there is absolutely nothing wrong with the present furniture.
The HOA funds are not meant to haphazardly be spent on the whim of a few.
I wonder if there is some sort of grand design behind what the POA has been doing in recent years? On the surface it seems to be just mismanagement and perhaps the mutual feathering of some nests with other peoples money, but I wonder if the ultimate goal is to make the cost of living in BC so expensive that only the richest people are left, and the riff-raff (like you and me) are driven out. Just speculation…
Patricia, great job on your 01-14-2023 article “Keeping with the facts.” Something to add to the list of projects planned for 2023 is raising the height of the Covered Bridge coming to or from the main BC entrance. If I remember correctly, the cost of raising the height of the Covered Bridge is $110,000. I know vehicles too tall for the covered bridge have damaged the bridge multiple times a year over the past 4-5 years. Raising the Covered Bridge height will supposedly eliminate this damage. However, does this mean that taller vehicles now being able to go under the raised Covered Bridge height equate to heavier vehicles traveling over the Covered Bridge? Perhaps BC management should publish a structural engineer report informing property owners what should be the max vehicle weight traveling over the Covered Bridge. There are a number of wooden bridges located throughout BC, & unfortunately, none of these bridges have their posted max weight capacity.