Now for the rest of the story . . .

What an unexpected surprise. Without a doubt, the first open board meeting of the year was one of the more informative and enlightening meetings in perhaps many years. Complete with a well presented update on the status of Renew Big Canoe (after all information going virtually dark since the August approval of the project) coupled with the POA President’s repeated promises to adhere to the Association’s policies and procedures, (1a) kudos to the newly elected president are certainly in order.

At the conclusion of the meeting, the President’s update was also appropriately eblasted to the community (2) with a link and reference to renewbigcanoe.org containing a list of frequently asked questions.

At the risk of being redundant, construction of the postal facility, repurposing of the Chimneys building into administrative office space and renovation of the Canoe Lodge have all been “paused” due to “unexpected challenges” and unanticipated costs. Renovations of the Clubhouse and the Choctaw course are still on go.

More musical chairs . . .

In other board news, it seems someone finally did the math and recognized that the 2024 budget as structured did not generate sufficient revenue to service the Association’s debt as has been noted repeatedly on this site. (3) https://bcmatters.org/another-year-in-poa-land/

In a reversal of the June 2020 board decision (4) mandating a monthly transfer of cash equal to depreciation expense from the operating account into the Board Designated Capital Fund, the newly elected board voted unanimously on January 25^th to suspend that requirement. This action now frees up those dollars to be utilized for debt service with any residual available for capital expenditures or perhaps even additional funding to the Capital Reserve Fund. (to be further discussed in a future post)

Note: And although debt service is a priority, it is important to also remember that 2024 income will only partially fund the $5.8 million capital budget.

The shell game alive and well . . .

However, management’s board presentation of the 2023 Statement of Cash Flows  (5) reveals that the scheduled transfer of cash equal to December depreciation expense (approximately $295k) from the operating account into the Board Designated Capital Fund did not take place as mandated by board procedure in place at that time.

Note: This is determined by comparing the year end transfers of depreciation expense to the same November year to date transfers. (6a)

Failure to perform this required transfer (4) effectively neutralized the intent and diluted the effect of the board’s previous month’s decision to transfer the unused insurance proceeds ($474k) from the operating account into the Board Designated Capital Fund while making that transfer now appear as nothing more than a ruse.

And further, this December 2023 deviation in procedure would have required a majority vote of the board, and there is no indication anywhere in the minutes that such a vote took place prior to January 25^th, 2024. Instead, for whatever reason, this vote was taken noting an effective date of December 2023 resulting in a backdated change to board procedure.

One must certainly ask . . .

• • Why was the final transfer of depreciation expense for the 2023 calendar year (totaling approximately $295k) deferred?

  • Could it be that the additional funds were needed in order to bolster the balance in the operating account to $1.067 million (5) and set the stage for the year end audit of the books by Mauldin & Jenkins?

  • For example, would a more favorable year end balance in the operating account as reflected on the audited financial statements enable the Association to attain any possible minimum balance requirements that may have been outlined in the Wells Fargo loan agreements? (7)

There are no good answers to these questions.

Note: It should not be forgotten that this writer’s previous requests for copies of the Wells Fargo loan documents have been denied by a previous board.

As for that cash flow statement . . .

The subject of significant boasting at the January meeting, it is noteworthy that management somehow succeeded in completing the 2023 calendar year with virtually even cash flow. However, caught up in the euphoria, leadership failed to recognize that this was possible as a result of the cash received from the insurance claim for the previous year’s freeze damage.

That said, at only $18k positive, it now appears that management actually spent virtually every single dollar coming in during the 2023 year including the proceeds from the insurance settlement.

Soaring and historical food and beverage losses . . .

And most unfortunately, the GM’s financial presentation also shockingly revealed that the clubhouse (food and beverage) losses for the 2023 calendar year totaled $673,872. Absolutely astounding and unacceptable.

Further, it is particularly distressing to note that the financial performance for the actual month of December was omitted from the GM’s presentation.

However, using the year end clubhouse loss disclosed at $673,872 on the GM’s Preliminary Amenity Net Income slide (9) as compared to the previous month’s year to date loss of $477k, (6b) a simple math exercise reveals that the association recorded a clubhouse loss for the month of December alone totaling $197k! This can not be.

Obviously, nothing pertaining to the clubhouse is under control.

And from what can be determined, this is the highest monthly loss ever sustained at the Clubhouse surpassing even monthly losses sustained by previous management.

Friends, neighbors, something is clearly amiss.

At this point, anything less than a forensic audit of the entire food and beverage function would be considered negligent.

Which brings us back full circle to the Clubhouse renovation now “full speed ahead” (1b) . . .

In all seriousness, after considering the outrageous $673k year end loss, is it really fiscally responsible or even sane to continue the pursuit of the $6.3 million renovation to the clubhouse?

Just like the post office, the community voted in favor of the clubhouse renovation. This writer accepts that decision. However, those votes were cast based on a set of renderings and estimated costs and without any knowledge that the amenity was destined to lose such an astounding amount of money by year end.

Further, it is now stated on the board’s renewbigcanoe.org website that “we do anticipate that the preliminary cost numbers presented last summer will increase”. (10)

And to quote the POA Secretary when discussing the pausing of the postal facility, “A yes vote only gives us the authority to proceed not a mandate that we must proceed no matter the cost”. (1c) Perhaps that logic should be applied to the clubhouse renovation as well.

Just a thought.

. . . . .

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Patricia Cross

10438 Big Canoe

References:

1)    Big Canoe POA Board meeting, January 25^th, 2024, video on Youtube at a) 50:15 ; b) 1:16; and c) 59:04 https://www.youtube.com/watch?v=O8EeqiaNK1Q

2)    A Renew Big Canoe Update from POA Board President, Terry Stewart, eblasted to the community, January 25^th, 2024.

3)    https://bcmatters.org/another-year-in-poa-land/

4)    2022 Audited Financial Statement, dated June 27^th, 2023, by Mauldin and Jenkins, Pg. 19, Note 4, Capital Fund (POAwebsite>login>POA>financials>AuditedFinancials>2022)

5)    2023 Statement of Cash Flows     

6)    November 2023 Financial Package, a) Consolidated Statement of Operations & Restricted Funds, pg. 6; b) Income from Operations, pg. 5 (POAwebsite>login>POA>financials>2023>November)

7)    Cash Flow Forecast  presented at Lake Petit Dam Town Hall Meeting, February 27^th, 2021

8)    https://bcmatters.org/just-more-of-the-same/

9)   Preliminary Amenity Net Income  slide

10)   renewbigcanoe.org, FAQ,  Clubhouse – Question #7