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At the recent HOA Assembly meeting on November 15 2023, the MCA Treasurer announced a change in how the $600,000 Renaissance Access Plan (“RAP”) payment(subsidy) to TMCC will be shown in MCA’s budget and presumably the MCA’s financial statements. This change was also reflected in the 2024-25 Budget Summary sent to MCA homeowners as well as the Detailed Budget available on the MCA website. (kudos to MCA for providing this level of detail)
In the pre-amble of the Budget Summary, the MCA states “The 2024-25 Budget incorporates the continuation of the Renaissance Access Plan at a proportionally reduced rate as the MCA now directly secures and pays the premium for property insurance as well as the property taxes for its buildings that are leased.”
That word salad makes it sound like the MCA homeowners are now paying less for the RAP, doesn’t it? It is likely designed to sound and look that way, but it is essentially a divide-and-hide change. MCA homeowners are still subsidizing TMCC to the tune of $600,000, but it is now buried in the budget and (probably) financial statements as smaller amounts in 3 different spots.
Since the RAP payment/subsidy began, it showed up as a clear and large $600,000 amount in MCA’s budget, MCA’s financial statements, TMCC’s financial statements and probably TMCC’s budget.
In the 2024-2025 MCA Detailed Budget the RAP budget line is only $184,717 vs prior year of $600,000 (it is at the bottom of page 3 of 5). Where did the other $415,283 go? It is buried in an increase in MCA’s property taxes and insurance premiums. Each have increased about $200,000, totalling $415,283 (The MCA Treasurer did describe this at the HOA Assembly meeting). It is now a LOT less apparent that MCA homeowners are subsidizing TMCC by $600,000. In one more year that amount will no longer be visible in the budget or financial statements. As the property taxes and insurance continue to increase, the net payment will likewise decrease making it more and more “out of sight, out of mind”.
The MCA stated that this was so that there were less checks from TMCC to MCA (more on THAT below). That may be technically true, but it reduces transparency on the RAP payment/subsidy dramatically. As the taxes and insurance increase from year to year, the RAP payment/subsidy will decrease by the same amount. But MCA homeowners will continue to be out of pocket $600,000 to TMCC’s benefit every single year. It also makes it impossible to eliminate the $600,000 fee when we are no longer “paying” it.
It combines the lease terms (which required TMCC to pay these taxes and insurance) and the fee/subsidy payment as one transaction when they are clearly two very separate things.
UPDATE FROM 2024 MCA ANNUAL MEETING: As expected, the MCA Board is presenting this change as a reduction in the monthly fee, conveying the idea that MCA Homeowners are paying less fee/subsidy. That is 100% false and intentionally misleading.
There is some benefit to MCA paying property taxes and insurance directly as it avoids potential problems from TMCC not paying these amounts. But the solution is to change the lease terms to require TMCC reimburse MCA for these amounts rather than have TMCC pay them directly. See how easy and transparent that could be?
TO THE MCA BOARD AND MANAGEMENT:
STOP THIS NONSENSE. BE CLEAR AND TRANSPARENT WITH MCA HOMEOWNERS ON WHAT WE ARE PAYING TMCC FOR RAP
TMCC MUST PAY DIRECTLY FOR THE EXPENSES OF OPERATING THE FACILITIES THAT THEY GET FOR FREE. These are completely separate organizations that need to be kept separate, not merging their administration. And before you go down this path, changing the terms of the next lease to paper this over is NOT the answer. BE TRANSPARENT WITH MCA HOMEOWNERS.
Your comments are welcome below.
EDIT: Received a good suggestion from a reader that captures the best of both worlds: Go ahead and net the payments for administrative efficiency. But record them to reflect the actual nature of the transactions: MCA paying $600,000, MCA receiving ~$200,000 for TMCC’s property taxes and receiving ~$200,000 for TMCC’s insurance. This is a very common accounting practice. An everyday example of this is that you make one mortgage payment, but your lender records part as interest payment and part as principal payment.
UPDATE Mar 4 2024: As predicted, at the MCA Annual Meeting the MCA Chair began touting the reduction of the Renaissance Access fee to $185,000.
UPDATE Mar 14 2024: At the MCA Board meeting the MCA Chair again boasted about reducing the Renaissance Access fee to $185,000 or only $4.50/month/residence.
UPDATE July 30 2024: The new lease removed TMCC’s obligation to pay the $50,000 (est) MCA Assessment which all other business in MCA pay. It did not disclose this and it largely offsets the new $65,000 annual lease fee. More than 3 months after the lease was signed the MCA published a summary of the lease but did not mention the elimination of the MCA assessment for TMCC.
UPDATE Oct 30 2024: The MCA President is now touting that the Renaissance Access fee is now only $156,000 (even though MCA is now paying at least $500,000 of TMCC’s normal business expenses)
Update: Nov 14 2024: MCA Treasurer indicates that there will be no Renaissance Access fee for 2025. This likely reflects that the cost of insuring the assets leased to TMCC has increased significantly and the sum of it + property taxes + MCA assessment is now greater than $600,000.
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