Chapter 8 - The 1999 Amendment to the Amenity Agreement
Almost two years after the Company failed in its attempt to obtain a change in the Amenity Agreement in order to pursue a certain package of new amenities, the Company came back to the Board table in mid-1998 with a revised request. The package of amenities was very similar, and rather than request a change in the Amenity Agreement, the Company claimed that the Agreement already provided them the benefits they wanted (i.e. reimbursement of construction interest charges plus a POA loan to repay them in full immediately upon completion of the project).
The Elected Directors adamantly denied the Company’s claim, and received a supporting opinion from the POA’s attorney. The Elected Directors suggested negotiations on the basis that they were willing to give the Company some of what it wanted, but only if the Amenity Agreement would then be abolished, or if the Amenity Reserve Fund would be placed under the control of the full board. One or the other of these conditions was considered by the Elected Directors to be essential because the Amenity Reserve Fund was on the verge of becoming very rich and increasingly richer every year (the inflow into the Fund in 1998 was $478,000, and the yearly inflow was expected to grow approximately $50,000 per year for the foreseeable future). In addition, the Amenity Agreement (which had no “sunset” clause) specified that only the Company could obligate monies from the Fund. The Elected Directors projected that the Fund could be accumulating $1 million a year (and still growing) within ten years, and believed that it was essential that the Company give up its right of total control of the Fund. (In fact, the Fund inflow increased faster than was projected, reaching close to the $1 million level in 2005, three years earlier than projected.)
The negotiations were almost called off by the end of November 1998 with the Company threatening, among other things, to build the amenities anyway on an “unendorsed” basis. However, in a “last ditch” special board meeting on December 1, the two sides came to a verbal agreement in principle. The Elected Directors (Emory Williams, Jim Owens, and John Baugus) then convened a “sounding board” of twenty-one knowledgeable and influential property owners at which time the major elements of the agreement were explained. At the conclusion of the meeting there was virtual unanimous agreement that the Elected Directors should follow through on getting a formal agreement and presenting the matter to a vote of the POA membership.
A final draft of an amendment to the Amenity Agreement was approved in the May 1999 Board meeting, and the matter was immediately put to a vote of the membership. The Elected Directors explained that the following benefits would accrue to property owners upon their ratification of the amendment:
- The Company’s future use of the Amenity Reserve Fund would be capped at $1.5 million and the full board would control all other future uses of the Fund.
- Three years of any operating deficits experienced by new amenities would be covered from the Fund, and would not put pressure on monthly assessments by impacting the POA’s operating budget.
- The Swim Club would be totally rebuilt with expanded parking, and the Swim Club building would be renovated.
- The Fitness Center would be constructed in the central part of Big Canoe rather than off near one boundary.
- The Amenity Reserve Fund balance would never fall below $500,000 in order to meet unexpected needs.
The membership vote was announced in a Town Hall meeting in late June, and the amendment passed with over a ninety per cent majority.
The 1998/99 panel of Elected Directors who negotiated this amendment with the Company believed that a future Board should terminate the Amenity Agreement, replace it with a board policy that firmly establishes a commitment for funding a General Reserve Fund for the benefit of all of Big Canoe’s infrastructure, and change the formula for such funding appropriately. These actions could take considerable pressure off of future Operating Budgets and assessment rates.
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About This Site
This site is presented as a resource for use by Big Canoe property owners. Information found on this site will often differ from that which is presented by the POA Board, the current administration, and some of the committees. Much of what you will see here is opinion, but the opinions will be formed from the best available information.
As property owners and users of this site, you are urged to bring attention to the good things you see as well as the bad. You are particularity urged to bring attention to acts by our employees when those actions exceed your expectations.
Property owners have strongly held views and they are encouraged to express their views on this forum. Please refrain from name-calling or attacking individuals. Keep in mind that the goal is to effect change, not create enemies. -
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Recent Comments
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