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Since the Annual General Meeting held in Halifax last
October, the MAC has been working with the Developer, the Operating Manager,
and the Bermuda Department of Tourism about a possible one-time assessment
from the Operating Manager that would produce an immediately and urgently
need cash inflow to the St Georges Club. There are two parts to this need.
The books of the Club have, since 2006, carried a
half million dollar loan payable to the Developer. This represented an
obligation that was generated when the termination of the former managing
agent (RCIM) in that year left the Club essentially without cash to operate.
RCIM had historically operated the Club at a substantial annual loss. Sally,
as Developer, therefore obtained a personal loan from a bank, and passed the
proceeds to the Club to provide it with the operating cash in exchange for a
promissory note that evidenced the Club's assumption the debt and payment of
the interest payments on the loan. The current interest rate on that loan is
8.25%. Club Ops bears this interest charge every year, and it contributes to
the operating losses that have continued. In today's financial environment,
the bank has now recently called the loan.
After careful consideration, MAC has come to the
conclusion that the proposed assessment is in the best interests of the
membership, and of the Club itself, and has indicated its willingness to
support it when asked by the Department of Tourism. Using a formula proposed
by the Operating Manager, the portion of the assessment paying the loan off
would require an assessment of about $150 from each week’s owner to
accumulate enough to pay it off. Under the Operating manager’s proposal,
payment would be made by all owners of weeks, including Sally's paying her
share on her own Developer inventory.
At the same time, our review, with the Developer and
Operating manager, of the Club's operating results through the third quarter
of 2010, and plans for the full year and 2011 suggested that by seeking just
a bit more cash now, the Manager would be able to accomplish substantial and
immediate operating cost reductions that are significant enough to make such
a cash infusion long-term beneficial to the Club and the members. The cash would
be used to install immediately more energy-efficient appliances -
specifically new stainless steel and energy-efficient refrigerators and air
conditioning - in ALL cottages. Utility costs on Bermuda are exorbitant, so
finding a way to better manage and minimize them will have the dual effect of
reducing current operating costs and make the property more attractive to
potential buyers, which enhances all of our values and reduces future
maintenance fees.
The additional cash needed to accomplish this purchase
and installation would add about another $150 to the assessment, bringing the
proposed total to about $350 for a 2 bedroom cottage week and $250 for a 1
bedroom week. The Department of Tourism has assured the MAC this week that it
will carefully and continually monitor the expenditure of the receipts from
this portion of the assessment to assure that the money is spent only for the
indicated refurbishment items.
MAC believes it is both a wise and necessary one-time
necessity, and it has indicated to the Department of Tourism that it would
support the Operating Manager’s proposal under conditions that have been
mutually agreed as to its use and the monitoring of that use.
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