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Shadow Oaks Recreation Association
April 20, 2009 |
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Dear SORA Members:
I am writing to you as the new Treasurer of the Pool Board. I was elected after Monica Howard resigned to take on the Treasurer position of our newly created Swim Team 501(c)(3) Board. My family has belonged to the pool as stockholder members for the past 4 years. Professionally, I am a financial advisor with A.G. Edwards, now Wachovia Securities, and for the past 7 years, my job has been to look at businesses with an investment eye. Given this background, below are my observations about the pool.
The decline in membership over the past several years and the increased costs of maintaining the pool and grounds have put it in jeopardy of closing. The savings we've had from previous years has been depleted. The average costs for running the pool are approximately $30,000 - $40,000 annually and our membership revenue has been steady at $20,000 annually. The remaining shortfall has been made up by swim team revenue, party rentals and events, concessions, and generous anonymous donations from members. In addition to the lack of funds, members that volunteer time to help with the pool is putting a strain on them as it had with former volunteers in past years.
Below is a snapshot of our financial condition:
Last year, in mid-April 2008 we started the season with:
+ $9,900 in savings and checking combined
(8 of 54 member families paid as of that date)
Throughout the 2008 swim season, our revenue included:
+ $40,800 in income from:
$23,000 in membership revenue
(54 members paid an average of $420/per family)
$11,800 in total Swim Team Revenue
$6,000 in rental revenue, events, concessions, and donations then expenses of:
- $32,300 for months May 2008 - August 2008
- $10,800 for months September 2008 - February 2009
= $7,600 to end the fiscal year with a $2,300 reduction to the savings
Today, April 20, 2009 we have:
+ $13,200 in savings and checking
(includes 13 paid memberships for this season, avg. of $375/per family)
then expenses of:
-$3,300 to earmarked donated projects (playground enhancements)
-$2,500 in operating expenses and reimbursements owed
-$7,200 in insurance premiums payable in May
=$ 200 is our remaining balance
We expect the Swim Team to make a net profit as well as concessions, events and parties, etc. to add to the bottom line. But, as a 501c7 organization, SORA cannot receive more than 35% of revenue that is not from membership dues, fees, and assessments or we lose our tax exempt status. Because of this, we rely heavily on membership revenue.
Clearly, we cannot continue to operate fiscally as we have in the past. The question is not, do we want to sell the pool. The question is how can we generate more income to keep the pool running. One solution to consider is an investor group and/or real estate fund that might have an interest in purchasing the pool and its grounds as is, with the obligation to lease it back to our club. If we find an investor that can agree on a price and terms for leasing it back to us that would sustain the pool, and this could be an option. There are many different negotiating factors for doing a deal like this, but if the pool is closed because it cannot support itself, then what choice do we have.
Finally, the last option would be to sell the pool outright. This would of course require a vote by all stockholders and it would involve attorney fees and/or selling agent fees that would be necessary to pay off before the stockholders get their payment. This is not the course of action I would recommend, but it may be the one we have to take because of financial reasons.
With the current balance of the SORA bank accounts, and anticipating EVERY current stockholder renews their membership, it is possible the pool can make it through the summer season. However, history has proven that 10-15% of our members do not return, and therefore it is imperative that each of us seeks to recruit one or two new families to keep this pool afloat. MEMBERSHIP INCREASE is VITALLY necessary.
I am available to answer any questions you may have as is our Board President, Kirby Schimmels. The SORA 2009 Board looks forward to seeing you at our April 27 Membership Meeting.
Jason J. Hugele
Jason.hugele@gmail.com
832-265-6697
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Shadow Oaks Recreation Association
10502 Westview
Houston, Texas 77043
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