The RSFA Board voted today to shift part of the restaurant operating deficit onto the Association and away from the Golf Club.
Click here to read a draft of the agreement which codifies the arrangement. When we get the final agreement, we will update the file. Click here to read the Association’s press release and FAQ of this new arrangement. Click here to read the presentation the Golf Club made during the Board meeting updating members on finances and the agreement.
Historically, the Golf Club has borne all deficits related to running the club house restaurant. While the restaurant has been run by the Golf Club, all Association members may dine there, and at any one time, approximately half the restaurant clientele are Golf Club members, and half are other Association members. While the Golf Club as a whole makes money (read this article about Golf Club finances), restaurant operations have historically run at a $600K-$700K annual deficit once all restaurant related employee salaries and benefits are taken into account.
Under the new agreement, the Golf Club will only be responsible for half of the operating deficits, and the Association will shoulder the other half of the restaurant operating deficit, capped at a set amount before the budget year begins. For fiscal 2019/2020, the Association will pay up to a maximum of $300K for restaurant operating deficits.
The agreement also states that the Association will pay half of future major capital expenses related to the restaurant. The Association recently paid $171K to consultants to propose new concepts, designs, lighting and landscape changes to the restaurant. At the recent General Meeting, Allen Finkelson stated that any future restaurant renovation project would go to members for a vote.
While the Association’s FAQ on this subject makes clear that work on this cost sharing agreement has been on-going for months, Association members were not apprised of this particular operating deficit agreement. Indeed, while Allen informed us about a potential future restaurant remodeling project during the recent General Meeting, he made no mention of operating deficit cost sharing. The Board Agenda for this meeting wasn’t any help either as it had an anodyne item called “Cost Sharing Agreement”, which could have meant anything.
At the Board meeting, several members stood up and protested about a lack of notice about this agreement, and protested against the agreement itself. After hearing the member input, Board member Mike Gallagher amended the resolution to add that every effort should be made to have two of the six committee members be non-Golf Club members. The Board then went ahead and passed the resolution.
The Golf Club will give up its autonomy when it comes to running the restaurant. A cumbersome committee will be set up to approve many operational items including pricing “parameters” and service levels. The Golf Club has historically guarded its operational independence from the Association, so it will be interesting to see how well it works with a Board that likes to micromanage. Either the Association or the Golf Club may exit this arrangement with 90 days notice to each other.
This article was updated June 12, 2019 to include information about Mike Gallagher amending the cost sharing resolution.
This article was update July 9, 2019 to include the Golf Club presentation from the Board meeting.
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