The hits just keep on coming: a vote on the amenities project joins the seawall and the governance power grab on the front page!

This has been quite an eventful week. Eight days ago, the Board issued a long and convoluted ballot intended to further empower the Board by amending the governance documents. A week ago the Board disclosed that the J-Lot seawall lot owners had filed suit against the Club (i.e., us) for millions of dollars in alleged damages. Four days ago the Board issued a missive trying to convince the Owners that the amendments to the governance documents were no big deal. Nothing to see here, folks--move along! And yesterday, the Board announced that the so-called "guaranteed maximum price" for the amenities would be $21 million--an increase of 42 percent from the original forecast of $14.8 million (please recall that the $16.5 million price tag included a contingency of $1.7 million to cover any cost overruns that may "unexpectedly" occur). Few details have been provided, but don't worry--the cost overruns will simply be paid out of the capital fund, no further assessments will be required, and there will still be plenty of money in the capital fund for other projects. Oh--by the way, after nearly a year with no actual construction of the amenities, the Board's in a hurry and wants to cram this important issue through the Owners in less than a month. Sounds like a job for Lucille Van Pelt:  

A little history is in order. The amenities were approved by the Owners in March 2021. Among the promises made by the Board were:

• The amenities project would cost $14.8 million, but the Board also sought approval of a $1.7 million contingency, for a total approved cost of $16.5 million.
• The amenities were to be built simultaneously and "in service dates" were forecast:
• Dye: 3Q22-4Q22
• Tennis: 4Q21-1Q22
• Athletic Center: 1Q23-2Q23
• As of March 2022, ground has not been broken on any part of the package, nor has the project yet been permitted.

After nearly a year of studies, meetings, and committees, here's where we are:

• Choate--a major commercial contractor--has provided the Board with a so-called "guaranteed maximum price" for the project of $21 million, which includes a $1.1 million contingency.
• So it seems to me that an "apples to apples" price comparison is $14.8 million a year ago to $19.9 million today--an increase of 34 percent. Wow.
• The currently advertised timing is:
• Dye: 4Q23 (a delay of over one year since last year and a six month delay since the Fall Town Hall Meeting)
• Tennis: 4Q22 (a delay of at least nine months since last year and a delay of three months since the Fall Town Hall Meeting)
• Athletic Center: 4Q23 (a delay of over one year since last year and a six month delay since the Fall Town Hall Meeting)

I'll have more analysis when I have a chance to review all of the promises made in the past and the current financial statements. But here are my initial questions:

• The initial vote was a package--the Owners were promised a package of amenities that would cost no more than $16.5 million and be completed no later than the second quarter of 2023 in exchange for the Owners approving a $20,000 assessment and authorizing the Club to use certain contents of the capital account and to borrow some money. Two thirds of the Owners approved this package deal.
• Now we're told that the promised package of amenities will cost significantly more and will be delayed by about a year.
• The assessment was approved as part of a package that included promises that have been broken. Now the Board claims that because no new assessment will be required as a part of the package, only a majority vote is required.
• This is a classic bait and switch. Over promise--under deliver--and reduce the threshold for approval from 67% to 50.1%. Sound good to you?
• But it gets even better. If the Owners are impertinent enough to vote down the $4.5 million increase in the authorized spending, the Board will take its ball and go home and "let next year's Board" deal with the issue. I'm afraid I have to call bullshit on this threat.
• What happens if during construction mold is found or some structural issue is identified? Is that included in the $21 million? 
• I'd ask what the contract says about that, but apparently we don't have a contract yet, so who knows?
• What about change orders?
• Who will be accountable? How will they be held accountable?
• If the answer is "we, the Board will be accountable," what does that mean?
• Will the Board establish a reserve out of their personal funds to guarantee the $21 million cost? I certainly wouldn't if I were on the Board. Without financial or employment consequences, NO ONE IS ACCOUNTABLE.
• For that matter, who is being held accountable for the 34% cost overrun and the one year delay? Anyone?

My back of the envelope analysis is that--unlike the financing plan presented last year--this plan poses a significant risk to the Club. What will the seawall dispute cost? What projects will we have the money to fund? I'll have a lot more analysis of this issue in a future post. As luck would have it, I earned a living for 20 years doing analyses of capital projects, and this is a run-of-the-mill financial analysis. Stand by. But my initial reaction is: VOTE NO--DO THE DYE. I suspect that a vote on doing the Dye and deferring the athletic center would get over 80% approval (if the $21 million proposal is defeated and the Board wants to give up, maybe they should just resign and we can elect someone who will do the Dye first, with real accountability for management. But like Dennis Miller says, that's just my opinion, I could be wrong.

Initial reactions are sometimes wrong--so I emphasize that this email is only a first cut at an analysis of the amenities. I'm puzzled at what the hurry is. We've gone a year with no results--what's the rush to cram this through the Owners in 28 days? This is an extremely complicated issue, and the Board's track record on this project isn't particularly impressive.