Considering the ever increasing readership of posts on this site and with several friends and neighbors continuing to explore options to end this leadership’s steadfast determination to drive our community into financial decline, it seems important to continue addressing the current events as they unfold.
Further commingling of funds despite the President’s previous promises . . .
First, as a quick refresher, after substantial push back from this writer and others regarding management’s commingling of the Chimneys insurance proceeds in the operating account, the board voted in November 2023 to transfer the residual funds totaling $474k to the Capital Fund to be held for the repairs of the water damage to the facility. (1) (2)
In fact, during the Q&A session of the January 25th, 2024 board meeting, the POA President responded to a property owner’s question by assuring her that the funds which had been set aside in the Capital Fund for the Chimneys would not be touched and were “sitting in that little kitty – when it’s time to use it for the right purpose”. (3)
Unfortunately, it turns out those funds were not set aside at all as the recently posted June 2024 financial statements reflect a remaining balance of only $349k. (4) Obviously, those proceeds have at best been “borrowed” by management for payment of other capital and Renew Big Canoe expenditures.
Meanwhile, management continues to provide inaccurate and/or false financial information to the community . . .
Noted as a subsequent event in the 2023 audited financial statement, the Association executed a lease agreement in April 2024 in the amount of $1,061,248 for a new golf cart fleet (5). At that time, the old fleet which was carried on a non-cancellable operating lease agreement originally set to expire in July 2024 was swapped out for the new fleet.
However, management failed to make any entries to the April, May or June 2024 financial statements to reflect the new lease liability. Instead, it appears that the Association continued to carry the old lease on the balance sheet.
It is important to recognize that the omission of this important information from the balance sheet also resulted in the inaccurate presentation of more favorable cash and debt to equity ratios. With the already extremely low cash ratio of only .63 at June 2024, (4) the addition of the new lease would have driven that ratio down even further.
Note: As discussed previously on this site (and even acknowledged by the GM), the cash ratio should always be above one as that would indicate that the Association had sufficient cash on hand to fund it’s short term obligations. (6)
A refusal to respond . . .
In order to confirm the lease details, a request was submitted via AskthePOA Ticket#14154 (7) containing the following questions:
-
-
-
Where is the lease reflected on the balance sheet?
-
What is the amount of the monthly lease payments?
-
How or where do these lease payments appear on the financial statements?
-
-
The Director of Finance responded only that the lease would be reflected on the July financial statements (due to be posted after the August 29th board meeting).
A follow-up AskthePOA Ticket#14154 was sent and copied to the POA President addressing the failure to disclose the amount of the monthly lease payments and how they would be broken out on the financial statement. The follow-up request also asked, “why the lease for the new golf cart fleet was not reflected on the Association’s April, May and June financial statements when the $1,061,248 agreement was executed in April?”
Apparently leadership does not believe the property owners are entitled to know the amount and details of the monthly lease payments as the Director of Finance once again refused to answer those questions.
One must seriously wonder why?
However, she did respond to the additional question by stating that “as the debt had not been incurred until July”, they will be in the July financial statements”. Really?
Now, given that the Association has been in possession of the new fleet since April 2024, the Director of Finance either does not understand the significance of the possession date (requiring disclosure) or she intentionally omitted the lease liability and ROU (right of use) asset on the Association’s books for the entire second quarter of 2024. (April – June) (8) https://finquery.com/blog/lease-commencement-date-start-date-under-us-gaap-explained/
So, which is it?
Disclaimer: Keep in mind that in addition to the lack of any information regarding payment amounts, etc., this writer is not privy to a copy of the lease agreement and/or any precise wording, terms or details that might be found throughout that document.
And then there’s that spending spree . . .
With apparent disregard for the Association’s current obligations and other pending capital expenditures (unauthorizd $7.67 Clubhouse renovation and the required $9 million Lake Petit Dam repairs), the Board irresponsibly voted at the July 25th board meeting to approve the $1.725 million purchase of a fire engine ladder truck due to be delivered in late 2027. Any contemplation or decision about how this significant capital purchase might be paid for was deferred to some future board at some later date closer to delivery. (9a).
And perhaps as importantly, one must also ask:
Why wasn’t this $1.7 million expenditure put to a property owner vote?
According to the POA Treasurer, no property owner vote was required as “the new ladder truck will replace a 25 year old existing ladder truck”, and the expenditure “is a routine, replacement capital item”. (10) AskthePOA Response#14266
Unfortunately, this defense is flawed for several reasons and nothing about this transaction is routine.
-
-
For example, according to a response to the developer director’s question (9b), the current ladder truck will not be traded or salvaged, but it will instead remain as a “second line” ladder truck. Given this scenario, the expenditure can hardly be called a replacement.
-
Note: The current ladder truck is actually a 2006 model purchased by the Association in 2018.
-
-
Secondly, the “enhanced” capabilities and features of the new ladder truck far exceed that of the current vehicle. For example, it will have a 107′ ladder versus the 55′ ladder on the current truck (9c) and will be able to truck up Petit Ridge at 35 mph. (9d)
-
And of course, there is nothing in the governing documents (specifically, covenants or bylaws which supersede policy) that gives the Board of Directors the authority to proceed with a purchase of this magnitude without property owner approval despite the Board’s September 2021 power grab known as Policy and Procedure No. 152.
In closing . . .
With commingled funds, inaccurate and/or false financial statements and out of control, unauthorized spending . . . things in Big Canoe are definitely amiss.
This is our money and our homes, and it is important that we do the math. The new golf cart lease plus the expenditures (clubhouse renovations, Petit Dam and the fire engine ladder truck) estimated and/or approved by this 2024 Board of Directors total over $19 million, and this is in addition to the balance already outstanding on the $15 million credit line as well as the current fire engine loan, golf maintenance equipment lease and remaining expenditures for the Choctaw golf course renovation.
This is unmistakable madness.
. . . . .
If you believe the information contained on this site is important, please continue to share and pass it on. Should you wish to see additional articles posted in the future, please subscribe for an email notification or check back frequently. And as always, feel free to 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) “Just more of the same”, November 30th, 2023, bcmatters.org, https://bcmatters.org/just-more-of-the-same/
2) “An update to a cautionary tale”, October 25th, 2023, bcmatters.org, https://bcmatters.org/an-update-to-a-cautionary-tale/
3) Big Canoe POA Board meeting, January 25th, 2024, video on Youtube at
1:17:00 https://www.youtube.com/watch?v=O8EeqiaNK1Q
4) June 2024 Financial Package, Comparative Balance Sheet, pg. 2
(POAwebsite>login>POA>financials>2024>June)
5) 2023 Audited Financial Statement, dated June 27th, 2024, by Mauldin and Jenkins, Pg. 26, Note 15. Subsequent Events (POAwebsite>login>POA>financials>AuditedFinancials>2023)
6) “What just happened”, September 8th, 2023, bcmatters.org, https://bcmatters.org/what-just-happened/
8) https://finquery.com/blog/lease-commencement-date-start-date-under-us-gaap-explained/
9) Big Canoe POA Board meeting, July 25th, 2024, video on Youtube at a)1:01:25; b) 57:25; c) 56:38; d) 51:30 https://www.youtube.com/watch?v=4Nri3i5JNaw
Big Canoe has become a business and it’s time to treat it as such. Over the years hundreds of thousands of dollars have been paid to hire headhunters to find senior staff (primarily GMs) only to have disappointing results for whatever reason; then property owners paid hundreds of thousands of dollars to buy out contracts.
From many problems resulting from reneging, changing, recalling and modifying decisions this present board or previous boards enacted, it’s apparent our board and senior management might be in over their heads.
It’s time to hire a professional management team that is familiar with running a community like Big Canoe. We rely on an elected volunteer board which often appears to be a popularity contest. Few board members have any experience running a small town like ours. They may have been stars in their chosen careers, but that doesn’t transfer to running a community that is responsible to property owners.
A previous board hired Scott Auer as General Manager, a man with no experience or credentials for running a community and the issues it would face. What were they thinking?
Board members and senior staff apparently are not being open with property owners – the group that pays the bills. The word transparency is thrown around, but in reality, we have little or none. Questions are either ignored or given a spin that makes residents dizzy. Talk about a word salad!
For starters, I would like to see all meetings of the board open to property owners. We have no idea what is being discussed behind closed doors or the rationale for decisions made.
Our managing senior staff seems to be top heavy and probably could be streamlined. Most communities use advanced software programs to organize financials and every day management. Salaries here, especially for the GM, are at the very, very top of the scale. I don’t think we’re getting good value for our paid salary dollars.
A professional management team – one not a “friend of a friend” situation as happened here not too long ago – should be interviewed by a committee made up of property owners and board members. After several companies are chosen and vetted, property owners should have the opportunity to hear plans each management company offers to Big Canoe. Obviously this would include a Q&A. There might even be a property owner vote to choose the winning management company.
It’s time to examine Big Canoe’s situation and direction closely. Too much is falling between the cracks or swept under the rug.
It’s time for a change.
I thank the writer for insight and courage in continuing publication. I would suggest that BC would be well served to hire an individual with a credentialed degree and a documented career as a MPA. Master of Public Administration. These are professionals who run cities, large and small all over America. BC is a small city. If BC’s golf professionals are credentialed why not extend the same requirement to manager /leadership? Given the reported salary paid in BC I believe a highly acclaimed individual with proven history- not an online degree, would enjoy being employed in such a position. Just a thought.
I realize fire prevention is very essential in BC, but is there anyone who knows how we compare equipment wise with other communities our size? $1.725 million unapproved by property owners seems over the top. When the big boy truck arrives in late 2027 all the clowns who gave the get go on this will be long gone. Pretty convenient.
Maybe the new ladder truck will enable the fire department to actually put a fire out before the structure burns to the ground. Especially a structure that is right across the street from the fire department.
Well put, but sad.
For those who aren’t subscribed to the website Focus on Big Canoe (www.BigCanoe.org), there is a one-question poll asking for property owner input. The question only requires a click the box answer. All confidential.
The question is: Do you support the exploration of a Property Owner lawsuit to force the POA to release more detailed accounting records.
As of 11:30 pm on August 16, here are the responses received:
YES – 199 votes
NO – 23 votes
MAYBE – 14 votes
There is a brief introduction to the vote which contains interesting facts and figures.
The poll closes at midnight, Sunday, August 18.
Take a look. Focus on Big Canoe also has a presence on Facebook.
Alice, you were kind enough to reply in July to my post concerning rundown of the POA General Managers that my husband and I have experienced since purchasing our BC home in 1980. I thank you.
Your input, considering your working closely with a few of these POA managers was informative and I appreciated hearing your pov.
Which begs the question, how many POA members among us know what it takes to hire or also “dismiss” a manager that doesn’t work out? How many of us know of the vetting system or criteria that is used to hire someone to manage this vast community? It is not just a country club, it is a town that needs security, fire prevention, architectural controls as well as future planning. It is an immense job and perhaps needs not only a manager but an assistant manager to accomplish it properly. I would like to see Big Canoe focus on future management goals more than clubhouse renovations.
Big Canoe has suffered from decades of poor management. That is a given. The results are now evident. I think a low standard got entrenched in the system and we are paying dearly for it now. Yet BC is a community of extremely capable and concerned residents. As this newsletter shows, there is significant interest in preventing the leap over the cliff on spending.
Thanking those that post here, including you, Alice, for your invaluable input.
Nancy Franklin
Hey, Nancy – thank you! I’m working on an Ask the POA submission requesting the requirements, educational level, certifications expected and the standards for hiring a Big Canoe General Manager. In addition, I’m asking for a full job description for the General Manager position.
Many of us have asked for a detailed organizational chart so we know who holds what responsibilities here. Despite requests, such a chart hasn’t been forthcoming. It appears the POA website showing department heads and key staff with their titles and photos is what our board and GM feel comprises an organizational chart.
I am also asking for the collective monetary amounts paid to headhunters to acquire the many GMs hired to “run” our community over the years. Along with that, I’m requesting the financial compensation paid to departing GMs, often called “buy outs” when a GM is fired before his/her contract expires. I will request what constitutes reasons for firing.
I expect the board to cry “Confidentiality” but we don’t need names mentioned since a total figure for both the above can suffice. All property owners want to know is where their money goes. It doesn’t matter who gets what amount, but in general this financial information should be available.
Hopefully this will answer some of your questions, Nancy… if I get a response from my query!
Does anyone need further proof of how important money management is here in BC after last night’s storm? Tree maintenance and road clearance should be at the top of our priorities, not rearranging the deck chairs at the Titanic Clubhouse.