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What They Are Not Telling Us...

EHFJR

Updated: Aug 20, 2024

A good friend of mine said "Some people are just outright liars, while others are good at not giving you the whole story.", he would continue and say, "Both are just as dishonest."


Many have asked why our management is so intent on dissolving the LLC and changing the community's covenants, making the courses an amenity. Management offers various reasons none of which, in my opinion, make any sense. But we all know why management wants to do this:


"To bring financial stability to the courses.


Management has already, without any vote, discussion or approval announced they will add $10 to the monthly assessment to financially support the courses.


That is a $120 a year assessment, forever. And that is just the beginning.


Absolute lunacy. Our management wants the community to pay for the upkeep of two golf courses that hardly anyone plays, and even the golfers who do play the courses, are unwilling to pay a fair price. Resident golfers want their golf subsidized.


In terms of maintenance costs, this is why there is so much emphasis on financial help for the courses. The courses have a maintenance company, call them BV, and have a five (5) year contract for services. Below is a table that shows the annual fee due. Currently, we are in YEAR 2 and YEAR 3 starts December 1, 2024.


The table shows that for YEAR 1 and YEAR 2, a part of the fee has been DEFERRED, making the cost of maintenance less. But, starting YEAR 3, December 1, 2024, the DEFERRAL period ends, and the courses now must pay the market price *** plus *** what has been deferred in previous periods. Notice that not only do we pay the deferred amounts, but also interest on the deferred amounts. The interest rate is 8%.

  • Because of deferral in YEAR 1 and 2, YEAR 3 maintenance costs will increase by $289,633 annually to $1,389,633.


  • At a minimum, the monthly expense for course maintenance will increase from $93,000 to $115,803 a month, an increase of 24.5%.


  • How will this affect the courses? At a minimum, it will add $24,136 of expenses, per month, to the cost of running the courses making it impossible to be profitable.


  • In both 2022 and 2023, the courses lost over $700,000 annually. This will push operating losses to over $1 million annually for 2025.


But notice the asterisk starting YR 2. This means that an inflation escalation will be applied. For YEAR 2, inflation increased the price of the contract by 3%. This means if another 3% increase is applied, the contract will increase by 6% for YEAR 3. This means the contract will increase to:


$1,389,633 * 6% = $1,473,011 or $122,751 a month, a 32% increase over YEAR 2.

Whoever negotiated this contract owes the community an apology.


We have just gone through the strongest part of the season (Jan - Apr) and as of April 30, the courses have been Cash Flow Negative. Extrapolating and solving for May 2024 and May's losses far exceed May 2023. The courses are in a downward spiral, not upward trend.


The courses will not be able to stay open with this additional expense. That is why management wants to make the courses an amenity so that they, the HOA Board, can financially support the courses without oversight and criticism.


This is a fleecing of our community. Management is not giving residents the complete story. Management has "kicked the can down the road", and has negotiated a contract that has excessive future costs and can potentially drive the courses out of business. Now Management wants the community to pay for their bad decision.


We must maintain oversight and control.


1. Vote NO to dissolving the LLC

2. Vote NO to changing our covenants.


WE CAN NOT LET THE BOARD MAKE THE GOLF COURSES AN AMENITY.


IT WILL BE A FINANCIAL BURDEN AND CAUSE OUR MONTHLY ASSESSMENTS TO RISE DRAMATICALLY.


Thank you and keep fighting the good fight.


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