I just now opened and read through the “Annual Disclosure and Budget Package,” and despite the fact that I have a bit of an accounting background, I am entirely confused by what I read.
For the life of me, I can’t understand what the Annual Budget form tells us. I was assured by the RSFA Board president, whom I spoke to last week, that not one penny of HOA assessments was ever used for the golf course. If, as represented by the Association president, the Golf Club and Tennis Club are truly self-sufficient, then why are both included on the budget report? The history of the Ranch and this annual budget report indicate otherwise.
Common Sense
Now, I don’t know all the details of how the original build-out of the golf course was funded, but common sense would suggest that for many years it was financed by the Association and the assessments paid by the members of the Covenant of Rancho Santa Fe. In fact, the 219 acres used to build the golf course were given by the Association, which paid for — and ran — the golf course from 1934 to 1987. This makes a reasonable case for all Association members to have some kind of access to the golf course without the six-figure initiation fees.
The RSFA’s argument for not allowing Covenant members to play on said golf course without paying the club’s initiation fee is that since 1987, all operational costs, capital improvements etc., have been completely paid for by Golf Club members. But this ignores the fact that for the 60 years prior, it was Association monies that paid for the construction, loans and interest, and maintenance of the golf course.
Equitable Solution
Perhaps one solution would be for the Golf Club to purchase the 219 acres, as well as the clubhouse facilities and snack bar from the Association. Now we know that this won’t likely happen, so in all fairness, the Association should be providing members with some kind of partial-play program without the Golf Club’s mandated $100,000 initiation fee. Maybe the Association should conduct an advisory vote with input from all Covenant residents to decide how to find an equitable solution.
The next table of the Budget Report addresses the cash reserves necessary for the repair, replacement, and maintenance of major Association components. Again, if we are being told the Golf Club and Tennis Club are self-sufficient, why are they included along with Osuna Ranch and the RSF Connect fiber program?
Creative Accounting?
The “General Services – Component List” includes the parking overlay of the Golf Club and Tennis Club and other items that might be associated with these two clubs, but it’s not clear at all who is (or should be) paying for what.
The “Insurance Policy Schedule” lists all of the various carriers and coverages, but the Golf Club and Tennis Club are supposed to reimburse the Association for their costs. Is this happening? When a budget report is this confusing, one might wonder if there’s some “creative accounting” at play.
Too Much or Too Little
I don’t want to micromanage the Association operations, and given the size and generous salaries paid to the Association management, our multi-million-dollar planned community should be running like an efficient, well-oiled machine. Yet, when looking over the budget, the costs of outsourced services, deficits, and questionable financial decisions (the PPP situation notwithstanding), it appears that the Association is either lacking Board oversight, or suffering from too much of it.
I guess it’s time I got more involved in what’s happening in my town, rather than just sitting on the sideline and complaining.
Philip Shapiro is a Covenant member.