Letter to the Editor: Financial Woes of Big Canoe Food and Beverage

With four months of POA financial reporting behind us, it is important to note that property owners continue to do our part, as our contributions exceed 2018 by 259k. Despite this increase in monthly assessments, the POA is already 38k under plan. (1) Meanwhile, we are treated with disregard and even sometimes disrespect which would be glaringly obvious if the videos of board meeting and work session Q&As were allowed to be posted.

And of course, the most obvious source of financial woes presently, continues to be Food and Beverage. F&B losses through April already exceed budget 80k. With losses that exceed 2018 by 49k, (2) it quickly becomes apparent that there has been no improvement whatsoever in this area. Even more disconcerting, even though answers and data have been promised, leadership still can not tell us why or where these losses are occurring. It really is time for some answers. Payroll expenses continue to exceed revenues and budget as well as outpacing 2018 payroll expenses with similar revenues. Are there too many employees on the F&B payroll? Are we giving away food? Are we subsidizing golf functions as noted by the general manager. (3)

In fairness, the finance committee has issued a directive to management to provide an action plan to address deficiencies in F&B as well as loss of revenue from the rental program. (As a side note, one can only ponder why the $250 rental charge would have even been included in the 2019 budget, prepared last Fall, before being voted on and approved in April 2019. This charge was subsequently rescinded in May 2019.)

As for F&B, still no data. Still no answers. With F&B on target to lose 650-750k in 2019, our POA board has determined it reasonable and responsible to prioritize the F&B/Clubhouse kitchen as one of the top three capital projects (along with golf and the postal facility) resulting from the Chambers and Bergin engagements. Really? (4)

In addition to the ridiculous, unexplained F&B losses, one need only look back less than a year to become even further confused by leadership’s decision making.

In June 2018, the Long Range Master Plan for the Big Canoe POA updated by members of the Long Range Planning Committee (LRPC) concluded (pgs. 39-40) that although the clubhouse nor the kitchen were capable of handling large banquets over 250, both were “adequate to serve Big Canoe residents through buildout” . In fact, it was also noted that “the kitchen, in its current configuration, is capable of handling a 35% increase in volume”. (5) If property owners do not want to become a resort, why would we want to pay for capital improvements that benefit outsiders? As an additional note, the entire internally prepared and updated Master Plan should have been presented to the board for approval, but there is no indication in the minutes that this was ever done.

And although the Master Plan had been internally prepared and updated by the LRPC, the board of directors voted secretly and unanimously on August 29, 2018 to engage the services of Chambers for a new Master Plan. (6) Cost of this plan would be $125,000.

In April 2019, the very same Long Range Planning Committee that had updated the internally prepared Master Plan only ten months before, concluded that as a result of the Chambers report, renovation of the F&B/Clubhouse kitchen should be considered a top priority. The general manager was charged with contacting Chambers for preparation of a plan “to produce a new kitchen layout, with adequate square footage to meet the number of dinners we need to produce”. (4)

There are several questions apparent here. Why would the same committee members that determined the clubhouse kitchen to be adequate for BC residents through buildout, determine that renovation is in order such a short time later? Renovation for what? Renovation for who? And obviously, why would property owner assessment dollars be plowed into capital expenditures for the benefit of an amenity with such massive and unexplained and unaddressed losses such as F&B? And as a reminder, capital expenditures are not included in the net profit or loss of POA amenities, therefore, the depreciation expense of this renovation like all other F&B capital expenditures would be in addition to the anticipated loss for the year.

It is also important to note here, that the kitchen renovation will more than likely fall under the one million dollar threshold for property owner approval, therefore, residents are at the mercy of the poor judgement of the current board.

And yet with all this money spent, decisions being made and committee meetings that are closed to property owners, our board has not held the first informational meeting for property owners. There is no transparency here. And although the master plan developments were on the agenda for the May board work session, our POA president spoke only in generalities without ever identifying any potential capital projects. Perhaps he will be more forthcoming in the June board and work sessions.

In the meantime, most information put forth in this article is generally taken from committee minutes and internally prepared reports when and if they become available. For example, excluding several months in 2018, LRPC minutes, which contain more information about the direction of Big Canoe than that learned during an actual board meeting, had not even been posted until after the initiation of the new POA website. Similarly, minutes from scheduled LRPC meetings in May 2019 have not yet been posted. For that matter, property owners have not even seen the actual recommendations from the Chambers and Bergin reports. If leadership and management can not recognize the absurdity of considering a kitchen renovation at this time, it would surely make sense to at least consider the sentiment of the property owners prior to wasting time and resources enlisting an architect to draw up a design. (7)

This lack of transparency and frankly, withholding of information, has to stop. Everything is being done behind the scenes. This is our community. These are our assessment dollars. Property owners should not have to constantly question where and why our dollars are being spent. For more information, read committee minutes posted on the POA website, ask your questions and voice your concerns.

Please feel free to distribute, share and pass this on. Likewise if you have questions or would like further discussion, I can be contacted at thepcrosses@gmail.com.

Patricia Cross
10438 Big Canoe
* You can read all of Patricia Cross’ Financial Letters Series Here.

References:

1. Summary of Operations – April 2019 (Page 1)
   (See POA Website>POA Login>POA Tab>Financials>Summary Of Operations)
2. YTD Amenity Results – April 2019 (Page 10)
   (See POA Website>POA Login>POA Tab>Financials>Summary Of Operations)
3. May 2019 Board Meeting Video at 18:24 timestamp
   (See POA Website>POA Login>POA Tab>Meetings>Videos)
   
4. Long Range Planning Committee Meeting Notes – April 17, 2019
   (See POA Website>POA Login>POA Tab>Comittees>Long Range Planning>Minutes)
5. Long Range Master Plan – Updated June 2018 – Pg. 40
6. Board of Directors Minutes – September 20, 2018 <scroll to page 3>
7. Long Range Planning Committee Meeting Notes – April 23, 2019
   (See POA Website>POA Login>POA Tab>Comittees>Long Range Planning>Minutes)