An Investigative Report into the Financial Relationship between TMCC and MCA

NOTE: This post was created by Joe Moore during his 2023 MCA Board member campaign.

In 2018 the Meadows Community Association (MCA) decided to buy most of the land and building assets and the liabilities of The Meadows Country Club. Since then there has been a close working relationship between the two organizations which is frequently a source of frustration by members of both organizations

The following article was written by Leon Miller in April, 2021. Leon is a seasonal resident of the Meadows and was concerned about the rapid and continuing increase in his property assessments. He did a considerable amount of research to write this analysis and he was very specific and detailed in describing his findings. Since the article was distributed 4 months ago, some facts may have changed due the the revelation of new information. It is interesting to note that no-one has been able to challenge or disprove the facts based upon the date of this article. The article is being re-published in this blog with his permission.

My name is Leon Miller. My wife Sandy and I are seasonal residents at 3756 Lyndhurst Ct. After seeing my annual MCA assessment increase by 81% since 2018, I felt it important to understand the reason for that increase. In that time period, my Sarasota County assessed value has increased by 14.7%. The millage rate changed by the MCA has increased by 57.8%. I believe as a homeowner in The Meadows it is my right and duty to understand where these increased funds are being spent. The annual budget provided to all residents early in the year hides any information that would be of value in understanding how funds are spent.

I contacted Marilyn Maleckas, a current MCA Board member, and she set up a meeting with myself, Pat Hess, (Lyndhurst Ct president), Jan Lazar, (president of the MCA) and herself, which was held on March 31 at the MCA Community Building. Jan informed us that she could not understand why anyone still had questions after all the meetings that were held over the past 3 years and all the information spelled out in the Meadoword. Marilyn Maleckas has been most interested and accommodating in seeing that our questions were answered. Since that meeting I have reviewed all of The Meadoword issues starting in 2017. What follows is information that I have gathered trying to understand the implications of the MCA purchase of TMCC and the transactional relationship between the MCA and TMCC.

In The Meadows there are 3547 residents, including several hundred individual homes and 52 HOA/Condo associations. The Meadows community is governed by a 9 member board of directors.

HISTORY

From 1975 to 1990 The Meadows Country Club was a public club owned by Taylor-Woodrow. During that period, approximately 80% of The Meadows residents were members of TMCC. There were also members from outside The Meadows. The club was the center of social life and recreation for the community. In 1990 the club was sold to those members willing to invest equity to purchase the club.

The January, 2015 Meadoword stated that the MCA board knew that TMCC was following the national trend of decreasing memberships. Where 80% of residents had been members, that was down to 20% by the end of 2014. That trend of declining membership has continued to the present. In the January, 2019 Meadoword, board president Claire Coyle reported “seeing real progress in our goal of building a strong club”. She further stated that as of November, 2018 the club had added 100 new members, but had 116 resignations. According to my math, that is a net loss of 16 members for 2018. I would not call that real progress.

By 2018 TMCC was on the verge of bankruptcy. Had the club gone into bankruptcy, all the MCA restrictions against building of homes on the golf courses would have disappeared, opening the possibility of a developer constructing housing where the golf courses now exist. As a preventative measure the MCA decided to purchase all the land, 330 acres, and buildings from TMCC. TMCC was carrying a debt load of $4 million. $3 million was owed to Synovus Bank including a $500,000 line of credit which the bank withdrew. An additional $1 million had been loaned to the club by a group of club members. The MCA purchased all of the land and buildings from TMCC for $6 million. The $6 million was paid by buying the $3 million debt from Synovus Bank. Over the next 3 year period the MCA paid the $1 million loan from the group of club members and the balance of $2 million to TMCC in 3 installments from 2018 to 2020.

It would appear that the purchase of all the land and buildings had broad support from the Meadows community. Personally, I believe the purchase was in the best interests of all the residents.

CURRENT REALITY

Per the agreement, TMCC pays all property taxes and insurance related to all the land and buildings included in the purchase. The tax paid 1/13/2021 was $114,352.55. They are responsible for all maintenance of the golf courses and buildings. They lease the land and buildings from MCA. To my knowledge there is no lease payment for the land and buildings. TMCC pays an annual assessment to the MCA, which is currently approximately $45,000 per year.

Notwithstanding, the agreement states that TMCC maintain all buildings and golf courses, the MCA in 2020 spent $1.6 million repairing the Regency Room ($100,000) at TMCC and renovating the Meadows private golf course ($1,500,000). The MCA position is that these were not maintenance items. I would suggest that these are routine maintenance issues naturally developing over time which had been deferred because of the depleted financial resources of the club.

The assessment for every homeowner includes a fee for the Renaissance Access Plan. The RAP is exclusively a fee to grant Meadows residents access to limited TMCC programs. The most notable being the fitness center. The amount allocated as a MCA budget expense is $600,000. That entire $600,000 is paid to TMCC. Besides the fitness center, this fee compensates TMCC for access to the swimming pool, dining in Fountainview Lounge for lunch on certain week days and Sunday brunch. It also provides access to Meadows residents to attend the Women’s Club and other TMCC activities in which Meadows residents may occasionally participate. The major portion of the $600,000 goes toward meadows residents access to the fitness center, a facility owned by the homeowners via the MCA and managed by TMCC.

Historically, as presently, most of the MCA board members are also members of TMCC. In the January 2018 issue of the Meadoword, the MCA president reported that “a small group of residents have raised concerns about the MCA board’s ability to make impartial decisions on matters dealing with TMCC while they own equity in the club.” It also reported “The seven MCA directors who owned equity in TMCC signed waivers relinquishing that equity.” I believe it is a direct conflict of interest for a TMCC member to also be a MCA board member while making financial decisions related to TMCC. It was reported in the September 2018 issue of The Meadoword that Claire Coyle, MCA Board President will have a seat on TMCC board of governors. It is absolutely essential that when financial decisions are negotiated between two parties, such as in this case, that it is an arms length transaction. That is impossible when the MCA board members have a personal interest in both sides of the decision.

In 2020 the MCA received a $9.2 million loan from Centennial Bank to “build our community center/fitness facility, as well as, make needed improvements on the facilities which the MCA purchased from TMCC”. This is a 10 year loan with a 4.25% rate of interest. This loan will be repaid with the increases in each of our annual assessments from that past couple of years and increases in the future. The stated purpose of the loan is to build the new fitness center, major renovations to the TMCC dining and banquet facility and changes to outside decking and tennis club building. I believe it also includes money’s spent in 2020 for The Meadows Golf Course renovations and Regency Room.

RESALE VALUE OF MEADOWS RESIDENCES

The recurring claim, by the MCA board, in every conversation and published statement related to the purchase and investment in TMCC, is that we have to ensure the continuity of TMCC, a private club, in order to protect the resale value of our homes. In the January 2018 issue of The Meadoword, President Claire Coyle stated that if TMCC goes bankrupt and we loose the green space, our homes will loose value between 25% to 40%. At that time the assessed value of the Meadows community was $577 million. A 25% loss in value would equal $144 million. The implication being that spending millions to support a private country club is a bargain compared to a 25% assumed loss of property values.

There are numerous communities in The Meadows each containing homes with golf course views and homes without golf course views. I have done comparisons of homes in Kingsmere, Longcommon, Oakley Greene and Chanteclaire. 13 with golf course views and 13 with no golf course view. Homes with no golf course view averaged 3.7% lower in value than homes in the same community with golf course views. I also looked at home values in Vilage Walk, a Palmer Ranch community. There are no golf courses in Village Walk. It is a beautifully maintained, attractive community. It also borders on the west side of I-75. Semi-detached homes, 2 & 3 bedroom, 1500 to 1700 square feet average in value between $350,000 and $400,000. These values range considerably higher than comparable homes in the Meadows. My point being that the repeated claim of 25% to 40% loss in home values without the golf courses is a smoke screen to divert our concern away from the MCA subsidizing a private country club. There are creative ways that will protect our green space without a direct subsidy to a private country club.

University park was faced with a similar circumstance as The Meadows in their purchase of the golf course and buildings related to the country club. Their private country club golf course is open to the public with 3 day advance reservation. There is also a requirement for each resident to purchase a social membership giving them access to dining and certain limited athletic facilities. As a result of last year’s success the University Park Country Club has paid $2 million to the community association from it’s profits from 2020.

I live on the 11th Tee of the Meadows golf course. There is significant capacity for increasing revenue by opening up to the public with 3 days advance tee time reservations. Adding 40 rounds of golf per day at $75 per round could generate in excess of $500,000 between November and April, not including any additional play May through October. The incremental cost for that additional income is minimal.

TO SUMMARIZE

1. With the MCA purchase of TMCC land and buildings, the club has no debt.
2. TMCC generates revenue from member dues and public play on the Groves and the Highlands golf courses.
3. In 2020 the MCA borrowed $9.2 million from Centennial Bank to replace, renovate capital assets managed by TMCC, of which Meadows residents have limited access. $1.6 million was spent in 2020 to renovate the Meadows Golf Course ($1.5 million) and the Regency Room ($100,000). $3.5 million will be used to build a new fitness center. The balance, $4.1 million, will be used for planned TMCC building and golf course renovations.
4. Currently, the MCA pays TMCC $600,000 annually for Renaissance Access Plan, the total collected from Meadows residents, which equals an average $169/resident.
5. The total annual rent/lease money paid by TMCC for use of 3 golf courses and all buildings = $45,000. It would take 35.5 years for that rental payment to recoup the $1.6 million already paid to renovate a private golf course and private restaurant/clubhouse.

CONCLUSION

The national trend in private clubs has been an annual loss of members. The president of the MCA acknowledged the same for TMCC in 2015. That trend in TMCC has continued to this day. The MCA and TMCC will not be able to change that trend with their present model. There are ways to connect the financial disaster of TCMM. It will require a little flexibility on the part of TMCC members.

The fundamental issue that needs to be addressed by the residents of the Meadows community is the conflict of interest of having a board composed mostly of active members of The Meadows Country Club. It is essential that all negotiations and contractual arrangements be done at arm’s length. I cannot state urgently enough, it is impossible to negotiate a fair and honest arrangement between the MCA and TMCC when the negotiating persons on the MCA board have personal interests on both sides of the negotiation.

The MCA board will not listen to individual voices on this important matter. It can only be addressed with enough concerned residents uniting to push for change.

I would urge anyone who reads this paper to pass it on to anyone in our Meadows community. Urge your HOA board to address this issue at your HOA board meetings and neighborhood.

The Meadows is a great community. Let’s work together to initiate changes that are urgently needed.