Notes on Oct 30 Special Board Meeting

This post is going to “summarize” Board comments then provide analysis and comments to our 600+ (and growing) subscribers. As always if there are any inaccuracies, please let us know and we will correct them.

Full video meeting can be viewed HERE (this was recorded by an MCA Homeowner).

First of all, a few positives:

1. The Board sent notice of the Oct 30 meeting to MCA Homeowners via Constant Contact.
2. The Board offered the meeting via Zoom. As a result, 120 MCA Homeowners were able to “attend” virtually (the room was at capacity with an estimated 160 persons).
3. A Board member spoke passionately about the need for increased transparency to both Board members and MCA Homeowners (LINK to that portion of the meeting video).

We truly hope the MCA continues with email notifications, Zoom options and increases transparency overall. More clear information will allow us all to understand and focus on the problems rather than trying to fight through obtaining information and dealing with half-truths and inaccurate information.

Unfortunately, we still need to keep dealing with half-truths and inaccurate information but at least we now have a forum to do so through this blog. So, let’s get into it.

The Chair stated the Board has confirmed with their bankers and legal counsel to confirm MCA can legally lend to TMCC. Good that they’ve confirmed but with the low trust level please provide specific sections in MCA by-laws or Florida statutes. Referencing the dog’s breakfast of the 48 original documents and amendments that make up the MCA Master Documents (not searchable fo rkeywords) and saying “you can look it up” is not helpful at all when you claim to have the precise answers from legal counsel.

Treasurer indicated TMCC was behind budget after the prime part of their season (Jan – April) but has been hit hard in lost golf and hospitality by the three hurricanes experienced recently (Debbie, Helene and Milton).  

The Treasurer states that TMCC cannot obtain a loan like other business because MCA’s lease with TMCC prohibits it. We don’t yet have a copy of the new lease, so we can’t say for sure what it says, but that is likely not an accurate characterization as the 2021-24 lease stated:

15. C.   The Club shall not acquire any debt beyond those expenses and accounts payable that are ordinarily and customarily incurred in doing business without first obtaining written permission from the MCA. This includes loans from financial institutions, vendors or other parties. The Club may make intra club cash management arrangement with members to facilitate operational requirements provided such arrangements in no way impair the rights of the MCA nor its claim on an property or revenues of the Club.

At TMCC’s 2024 Annual Meeting the TMCC stated: “The club has no ability to raise capital and no borrowing ability other than from capital leases and finance agreements, so any reduction in deficits has to be derived from its membership”.

TMCC’s statement more accurately reflects the situation. No lender would loan TMCC money as they have no assets to back the loan and a history of poor financial results. Why not just say that? Probably because it acknowledges that no rational lender would be confident of repayment.

The Treasurer then summarized the proposed terms of the loan:

• $250,000 loan @ 5% interest. Total interest would be about $5,000.
• $100,000 repaid in February
• $100,000 repaid in March
• $50,000 repaid in April
• 5% penalty for late payment (= $12,500)

The Treasurer then states that the Board has 2 choices:

1. Loan TMCC $250,000
2. Let TMCC “cease to exist” and have “MCA take over all operations in a week or two”.

#2 may be the best option (as we’ve documented in many posts) but it has to be done in an organized, thoughtful, well-planned approach. Taking all operations over in “a week or two” is clearly not a viable option even though the Treasurer exaggerates it as a doomsday scenario where there would be no golfing revenue going forward.

The Treasurer recommends #1 and we “stay with them (TMCC), monitor the situation, and craft a business plan”.

Later in the meeting when an MCA Homeowner asked about the urgency of the situation, the Chair replied that it was necessary to meet payroll now and for the rest of the year.

The Treasurer accurately states that TMCC has substantial cashflow inflow from operations in the Jan-Apr period and will have cash to repay the loan. That is true, but this completely ignores that the repayment of the loan will immediately put TMCC back into the same cash crunch. In TMCC’s 2024 Annual Meeting handout, the Treasurer’s report on pages 6 & 7 they clearly state that TMCC accumulates cash in the first 4 months to cover shortfalls over the remainder of the year. Does anyone really believe that TMCC will generate an extra $250,000 of additional profit over the previous year to have extra cash to pay off the loan without affecting their viability? We don’t believe it and the Board shouldn’t either. So, if TMCC repays the loan they will be right back in the same situation of being short of cash with nowhere to go other than MCA Homeowners.

What if another unexpected event happens that results in large unexpected expenses (the number of hurricanes going forward is going to increase), or, as the Treasurer pointed out about last year, the weather in January and February of this season is as bad as it was last year and golf revenues are way down again?

Will TMCC even repay the loan? What happens if TMCC don’t make the repayments? They’ll continue to accrue interest at a ludicrously low rate of 5% for the high credit risk. They’ll accrue a non-payment penalty. But what other consequences are there of non-payment? There is virtually no downside to not repaying it. The Treasurer and Chair can keep saying it is a loan not a gift, but it is clear that it is unlikely to be repaid (at best) without another loan being required a short period of time later. It will be the first step in a perpetual cycle.

Ultimately the Board chose to “table” the motion (not vote on it at this meeting) so that they would have some time to further consider the loan and its terms.

So, what do we propose? We’ve had only 48 hours to think about it, but the situation has some urgency, so here are our thoughts:

1. Any loan has to be accompanied by a serious effort to figure out a different approach for MCA to utilize its golf/tennis/fitness/dining facilities. MCA has to finally take ownership and responsibility for managing the assets it purchased in 2018. TMCC has had every chance over 6+ years (and a decade before that) to figure out how to operate as a private club and has not been able to do it. Stop hoping TMCC will figure it out. More on this below.
2. Any default on monthly interest or loan repayments causes the lease to immediately revert to a month-to-month basis. This will allow the operation to continue AND give MCA the appropriate flexibility to move to a different approach when they are ready to do so. If the current lease does end in Dec 2025 (we haven’t seen a copy of the lease yet), that frankly isn’t a lot of time to figure out a new plan and implement it.
3. Manage the risk of TMCC spending the loan on something other than payroll by structuring the loan to fund payroll each month to a maximum of $250,000. This may reduce MCA’s risks and will reduce TMCC’s interest cost. This recommendation assumes that the reason given for the loan to MCA Homeowners is factual.

Some of the MCA Homeowners who indicated they have banking expertise may have some additional ideas. Please add them in the comments below.

Developing a VIABLE plan for MCA’s assets

This must be about MCA making a plan to utilize its golf/tennis/fitness/dining facilities for the optimal benefit of MCA Homeowners. We need to move past trying to help or fix TMCC. TMCC has been unsuccessful for more than a decade. Fixing it is not a viable solution or it would have worked already (demand for golf is at a VERY high level since 2020). The Treasurer referred to the loan giving MCA 5/6/7 months to figure out a plan. We agree with that aspect and he asked for input. Here is what has to happen.  

1. Hire a professional golf industry advisor such as National Golf Foundation. The Treasurer referred to “tweaking” TMCC’s business plan and asked for ideas from MCA Homeowners. That isn’t going to get us to the significantly different approach that we need to keep MCA’s golf courses in business. We need EXPERTS in the golf industry with knowledge and credibility.
2. Get professional advice from experts on golf club dining/clubhouse facilities BEFORE we spend $3.6 million to update the clubhouse (mentioned at the Oct 22 Board meeting). It is our understanding that the industry has moved away from large banquet facilities, but get expert advice. If a country club isn’t viable, don’t rebuild country club style facilities.
3. Start this process NOW. After giving TMCC 3 years of grace from 2018 to 2021, we’re now in our fourth year of MCA Board ignoring the problem to avoid taking responsibility for managing MCA’s assets. Deferring responsibility to TMCC hasn’t been working and is not going to cut it anymore.
4. Golf course memberships are generally good for golf courses. We want to have MCA Homeowners as members. But we will not be able to continue the private club lifestyle of current TMCC members. TMCC cannot dictate or excessively influence the direction that MCA chooses for the ongoing business plan for MCA’s assets.

Almost all of these comments refer to the golf courses. Based on the information available to us the tennis club is likely profitable, in which case it would not require significant change.

We’re sure it must be heart-breaking for TMCC members who have enjoyed their club for decades to see it go downhill. We know they love their club, but that isn’t enough to make it successful. If they aren’t willing or able to pay the FULL cost of having a private club, they cannot expect the 90% of MCA Homeowners who aren’t club members to make up the difference. It’s just that simple. It has been a long spiral downwards. It has to come to an end before the facilities are allowed to further degrade.

One more transparency comment: We’ve noted this many times and wish we didn’t have to. One of the MCA Homeowners noted this in the meeting as well. From 2020 to 2023 MCA paid TMCC $600,000 per year for the Renaissance Access Fee(subsidy). Within the last 12 months, the payment was restructured so that MCA paid about $440,000 of property taxes and insurance related to the facilities leased to TMCC (and required to be paid by TMCC under the terms of the past leases), and TMCC only paid the net amount of approximately $160,000. The Chair continues to mislead MCA Homeowners by claiming that the Renaissance Access Fee(subsidy) has been reduced to $160,000. We are still paying $600,000 in total. STOP WITH THIS BLATANTLY MISLEADING STATEMENT. BE TRANSPARENT AND HONEST.

We strongly support the sentiment of Board member Mark Pienkos who passionately spoke for more transparency. It may feel like a difficult change but it is necessary if the community is going to work together to find a solution to keep our golf courses viable.

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