Do Meadows Homeowners Need TMCC?

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

Since Meadows homeowners own the property that The Meadows Country Club (TMCC) lease, doesn’t it make sense that we understand who we are doing business with and why? I think it does so and I would like to share an idea given to me by a concern homeowner. First, consider the following background information.

What is the MCA’s relationship with TMCC?

From the very beginning, TMCC was completely separate from the homeowners financially. TMCC membership was primarily Meadows homeowners who were looking for convenient golf facilities, tennis facilities, and social opportunities. As time pasted, country clubs with similar business models fell on hard times due to dwindling memberships and higher operating costs.

In 2017, after years of declining golf memberships, TMCC was faced with selling its most valuable asset (golf course property) or file for bankruptcy. The MCA,, with strong support from the community, engaged in a negotiation with TMCC to buy the property and in 2018 purchased all the real estate. Since the MCA did not have experience running a country club, they decided to lease the newly acquired property to TMCC for an annual fee of $10 and allowed the same board of Governors to continue operating TMCC. For nearly 5 years that working relationship has not changed.

Just what is TMCC?

The Meadows Country Club (TMCC) is a “Not for Profit” corporation. In Florida, a Not for Profit Corporation can simply operate to serve the goals or special interests of its members. It appears that TMCC is doing just that. In a letter written in 2021 to its members, the board wrote, “The goal of the Club is to bring in enough revenue to meet all its expenses without a profit or a loss.”

What public information is available about TMCC finances?

As part of our lease agreement with TMCC, the MCA has an observer who is allowed to set in on board meetings and membership meetings but that representative is not allowed or has decided not to divulge any real financial information,. According to Florida Statute, Members of TMCC are allowed to look at financial information and make copies of that information. TMCC has a policy that members are not allowed to make copies of such information which is illegal.

MAJOR 2024 INFORMATION UPDATE: THIS INFO HAS ALWAYS BEEN REQUIRED TO BE PUBLICLY AVAILABLE!!

Do Meadows homeowners really need TMCC?

Recently, a concerned homeowner sent me a letter regarding our relationship with TMCC and offered an interesting point of view. The person requested to remain anonymous. The following are excerpts from that comprehensive letter.

Golf courses (like most businesses) have 2 groups of expenses: Operating and capital. Capital costs are large and lumpy. They are often financed over a period of time, incurring interest expense in addition to the cost of an asset. Capital costs are often the most difficult to manage because each decision is a significant and costly commitment that can’t be changed, once made.

For instance, at my private golf club over 20% of membership revenues are used to cover capital costs. It is the most difficult cost to manage properly with a long-term view. Capital costs will tend to be higher at clubs that are over 20 years old as items that were part of the original course and buildings tend to need significant refurbishment or replacement. In the current relationship, TMCC receives all revenues and pays all operating costs, but pays no capital costs.

Capital costs are a significant use of cash flow for most golf courses (including TMCC prior to 2018). For that reason, it is accurate to view MCA’s payment of capital costs of the country club as a significant subsidy of TMCC’s operations. It is like a parent who buys a car for their kid, but the kid has to pay for gas and insurance. The parent has obviously conveyed a benefit on their kid.

On the other hand, it is generally accepted that the existence of the golf courses adds to the value of Meadows homeowners. The amount is difficult to determine. There is not a wide disparity in value between property that back onto golf holes and those that don’t. Some data indicate there is not a large disparity between similar properties with and without golf facilities. Other data indicate there may be a premium of up to 25% and that property values benefit from the maintained green spaces that golf courses offer.

The higher end estimates have led to a feeling within some TMCC members that “our club is so important to the market value of properties in the Meadows that they need us even if we lose money. Home prices would plummet if the courses closed”.

This viewpoint misses an important change that has occurred: Prior to MCA’s purchase of the TMCC assets, the existence of TMCC and the existence of the golf courses was synonymous. Now that MCA owns the golf courses, the courses can exist WITHOUT TMCC.

The current MCA ownership – TMCC lease – ICON management arrangement has a couple important awkward considerations:

First, Renaissance Access has many merits in generating wider Meadows community use of recreational facilities within the Meadows. However, determining a fair market price for this is very difficult. TMCC receives $600,000 to provide this access, but incurs minimal incremental operating cost and no capital cost. This cost will always be a bone of contention for some Meadows property owners.

Second, TMCC has a long history of losing money. Since the COVID pandemic, the golf industry has boomed and demand hasn’t been higher in many years. Despite this, TMCC is only able to total about 300 golf members and has an extremely high turnover rate. I believe this is the difficult truth: The Meadows (Members) course is not an adequate golf course layout to build a private club around. When all 3 courses were private as part of TMCC, the Highlands course was strongly preferred by Members as a more enjoyable course. Whatever the reason, TMCC has had decades to be successful and have failed.

Having said all that, it is impossible to make well-informed decisions without access to TMCC’s financials. This information is critical for homeowners to be able to make a judgement about the best use of the assets.

If the information shows that TMCC is being profitable, should they still be subsidized by the MCA, who is paying for the capital improvements?

If the information shows that TMCC is continuing their long history of losses, is it wise for MCA to continue to cede their most valuable asset to TMCC without any real influence to fix the persistent problem?

Since TMCC can’t borrow money, their only choice is to spend less on service and course maintenance which erodes the value of MCA’s biggest asset. The MCA has shielded homeowners from having input, influence, or even awareness of these important issues.

Consider an alternative plan for managing the recreational facility:

What if:

* MCA does not lease the golf course and related assets to TMCC?

* MCA hires ICON directly to continue managing the facilities?

* MCA is free to set up any “usage structure” that make the best economic sense?

* MCA managed our assets without dealing with a middleman (TMCC)?

* Homeowners would have complete transparency on the annual financial results?

* Homeowners would not have to deal with the Renaissance card restrictions?

To accomplish this change, the MCA board would likely want to establish one or more committees to oversee these facilities (golf committee, tennis committee, and food & beverage committee). The committees would take on many of the responsibilities currently held by TMCC Board. ICON Management would continue to carry the operational management responsibilities as they do for TMCC today.