Does the POA need a so-called Capital Reserve Fund (CRF), or a bailout?
As others have said on this website, the proposed CRF is not truly a “CAPITAL” reserve fund. In a current Smoke Signals On-line article, the POA Board has finally admitted that the CRF money “is needed to allow the POA to pay down existing debt [Sconti overrun debt], maintain the community’s infrastructure [currently paid out of the operating budget] and fund reserves for emergencies.”
The proposed “Capital” Reserve Fund was never intended to be a true “capital” reserve fund.
I feel that the POA Board needs to step forward and to ask the property owners for a Bailout special assessment.
4 users commented in " Is a POA bailout needed? "
Follow-up comment rss or Leave a TrackbackGet hold of your pocket books. There is information from a reliable insider that the Board is considering a “second” special assessment.
I would be willing to pay another special assessment if the entire Board would resign due the financial malfeasance that has occurred during their watch.
As for another assessment, it may be needed due to the deficiencies in the Sconti restaurant design.
The kitchen is too small and can service no more than half the dining room.
A committee is looking at design changes to the kitchen; this will cost more money.
Let’s not forget that the architecture firm forgot to add a loading dock to the building and that the garbage room design may become a health department issue due to its poor design.
And of course the architecture firm forgot to install any public water fountains in the building.
Maybe the committee can address these issues also.
When you think of the new Sconti, consider this (excerpt from 9/2008 financials:
Sales of $148,404 were over the budget of $110,200 by $38,204 or 35%. Cost of sales were 59% for the month compared to a budgeted cost of sales of 35%. The year to date cost of sales is 40%. The year-to-date variance accounts for $36,163 of additional expense. There was a total of $26,062 of prior month invoices (June-August) charged into the current month that caused the increased Cost of
Sales. Salaries and wages were over budget by $35,063 or 57% for the month and $153,786 or 40% on a year to date basis. When 1099 contract wages are added to our payroll expenses, total staffing expenses exceed budget for the month by $42,296 (66.8%). Year-to-Date total staffing expenses
exceed budget by (42.9%). Overtime continues to be an issue. Based on the club industry standards wage expenses are typically 60%-62% of gross revenues. For the month, salaries, wages and contracted labor as a percentage of revenues was, 72.6%. Year-to-date the percentage is 76%.
Cost of sales = 59% (40% ytd)
Wage expenses = 76% ytd
Our ytd subsidy for food and beverage is $442,551. Additionally, we have subsidized “Clubhouse Management” by $180,105.
So, we lose 35% on every meal served, the kitchen can’t keep up with the volume, and there are other design deficiencies in the building, as BCInsider mentions. The most recent budget for 2009 indicates that we would have a $200,000 subsidy for food and beverage, which the finance/audit committee feels is unrealistic, as would anyone else.
Is another special assessment likely? It’s either that or a dramatic increase in the monthly POA bill.