The golf course is breaking the POA

[glen]

Operation of the golf course is the major financial drain for the POA and is the principal reason dues are required. The following discussion examines key POA financial data for the most recent period 2000 thru 2010 (see the attached table). This information was prepared from POA financial reports and data.

Most of the POA’s annual operating expenses are now directed at funding operation of the golf course and continues a long term trend of operational losses that began over 30 years ago. The aftermath of Hurricane Frederic in 1979 created major financial problems for the POA. To compensate for the loss in revenue, the golf course was made available for public use after Hurricane Frederic. However, the amount of golf played each year has consistently not been sufficient to offset the operating expenses despite green fees being maintained at levels among the lowest in the region for comparable courses. Although the golf course maintenance and office staffs were severely reduced in the early 2000s to save costs, the course still continues to operate at a deficit. Only 36 golf memberships presently exist, with "snowbirds" now being critical to the course’s annual income.

Gas royalty payments to the POA once helped offset the golf course losses. However, royalty payments have gradually declined each year. In addition, funds have periodically been extracted from the POA Trust Fund to compensate for the golf course losses. This practice has resulted in the Trust Fund being diminished to an unsustainable level. These conditions collectively contribute to the POA’s annual budget shortfalls.

It was largely due to effect of the golf course losses that the existing $100 dues requirement was begun in 2005. Beginning in 2006, approximately 1,000 property owners have elected to pay dues each year. Dues payments have added a total of $500,603 to the POA's Total Income received over the 5-year period between 2006 and 2010.

Over the 11-year period between 2000 and 2010, the POA lost money in 8 of the 11 years (see attached table). As a result, the POA experienced a cumulative net loss of $738,772 over that 11-year period. If the POA had not received dues payment in the total amount of $500,603 between 2006 and 2010, the POA's net total cumulative loss for the entire 11-year period could have been as great as $1,239,375.

The POA's financial losses are directly attributable to the operation of the golf course (see attached table). The POA golf course experienced a loss in each of the 11 years between 2000 and 2010. Over that 11-year period, average annual golf income declined almost 40% from the beginning to the end of that period. The cumulative loss from the golf course operations alone over this 11-year period was $868,385.

Golf course losses totaled $457,089 for the 5-year period between 2006 thru 2010. If dues in the total amount of $500,603 paid over that 5-year period had not been required to offset the golf course losses, the POA could have operated at a theoretical net profit of $408,837. That theoretical profit could have been made available to fund other POA projects, facilities, and activities that may have appealed to a wider audience of Dauphin Island property owners that do not play golf.

Thus far, the Board has not developed a workable solution to eliminate the continuing financial drain that the golf course creates for the POA. The Board's only recommendation is to raise the annual dues from $100 to as much as $250. Most of the dues paid will be directed to continue subsidizing the golf course, without providing alternative recreational facilities for those property owners that do not play golf.

The time has arrived for the POA membership to realize that our organization can no longer afford to operate the golf course. Continuation of the historic management approach for the golf course may lead to the financial ruin of the POA within a decade if dues are not raised and if the present 1,000 property owners that pay dues do not continue to do so.

The question that should be answered is: Are increased dues in the best interest of the overall POA membership? I do not think so. Instead, it is time for POA to consider pursuit of alternative creative management strategies that will make better use of this extremely valuable POA property asset for the benefit of all POA members and the betterment of the overall quality of life on the Island.

Attachments:

[glen]

The PDF file of summary golf course and total POA financial data for the years 2000 thru 2010 is attached to this post. See original post that began this thread for the text discussion that accompanies and elaborates upon the data contained in this table.

Attachments:

[whistlingdixie]

I pay my dues and I get absolutely nothing for that money except the right and privilege to attend meetings and the obvious benefits. I do not golf. I pay for my swimming. I don't mind the fee to have a right to speak and listen at meetings. I believe it is worth paying for. There are appx. 2800 property owners on this island....and 1000 or so are dues paying members to the tune of $100.00....Give me an alternative to the golf course.....tell me what you propose as a way of giving the POA dues payers a return on their money....I KNOW that most folks want something in return.....

[JBJ]

One of the reasons that many of us believe the AFRC project--we've referred to it as the "military hotel"--would be a good thing for the island in general and the POA in particular is that it would very likely bring more golfers to the course. And that's what we need for the long term viability of the course whether we continue to run it or whether some other arrangement is better.

[Dennis Knizley]

The concept of the golf course remaining an operating entity either by POA support through dues and other funding is understandable, albeit at some point the costs may outweigh the benefit.

The benefit would seem to be to afford property owners the opportunity to play golf, but as or more importantly it offers island visitors and renters an attraction to come here.

Puzzling is the benefit to property owners of having an AFRC controlled golf course excluding the owners use and eliminating the attraction for visitors and renters to have a golf course available for their use.

Understanding we do not know what proposal may be forthcoming, it appears that most such proposals for AFRC facilities significantly restrict or do not allow non- military use. That attraction eliminated for non-military renters, we then would count on the military folks to replace those non-military who now come because golf is a factor. Of course, property owners who rent lose those visitors to the military complex "renters" or hotel users. Can those additional Island visitors, if they are additional, compensate to the town economy in retail sales, restaurant visits, gasoline sales and the like to financially off set rental losses and loss of use of the golf course, pool, beach, tennis , clubhouse to property owners and their renters?

If there is PX for groceries, a hotel restaurant and gift shop, a risk of hurting local property owner businesses exists. Island life may change, as there could a big exclusive military retirement community with facilities, some that used to be the property owners, and then there is what is left for the residents, visitors and renters.

We do not know what proposal may be forthcoming. However, too much improvement on this scenario does not seem to be reasonably conceivable. If a more promising vision exists for the benefit of property owners, an enlightenment would be welcomed.

[JBJ]

We indeed don't know what proposal--if any--we will receive from the AFRC, but I can't imagine a scenario that would include the golf course's being taken over for exclusive use by the AFRC. I don't think that would be proposed, and if it were, I don't think it would be accepted.
( but to paraphrase Yogi Berra....I can predict anything except the future )

Much more likely--and in my view much more attractive--would be a housing unit of some kind ( 100-150 room hotel e.g.) maybe with a private beach/pool--but with the "big" amenities ( golf course, marina, etc.) shared. So we would get a significant increase in play, thereby helping our bottom line. The AFRC (or developer as the case my be) might want to see the course improved and number of carts, say, doubled--and be willing to contribute to that in exchange for a special fee structure, etc. Those are the kinds of details I expect to face--not an offer to acquire the POA property.

But again, we don't know---and until we do, this is all speculation.


( I'll post this on the AFRC thread also--probably fits best there)

[glen]

The POA's financial data show that the golf course consistently operated in the red in each of the 11 years between 2000 and 2010, losing a total of $868,385 over that period (see table attached to previous post). The golf course cannot continue to operate unless subsidized by membership dues, which the Board is now proposing be increased from the present $100 to as much as $250 per year. The Board is also counting on at least 1,000 members to pay these dues, many of which do not play golf.

A question that should be asked and answered is: Why is the golf course a sacrosanct facility that the POA must continue to operate, even while it is leading to the financial ruin of the POA? A related question that should be asked is: Is the continued operation of the golf course in the best interest of the POA membership as a whole?

I am completely in favor of paying dues to the POA. However, I want more in return for my dues than only receiving the right to vote and to attend the monthly Board members. Since I and most POA members do not play golf, I believe the POA should provide those of us with alternative recreational options. I no longer want my dues to be used to subsidize the golf course.

During the 5-year period 2006-2010, the POA received a total of $500,603 in dues. Of those dues, $457,089 were required to compensate for losses incurred from operation of the golf course. If the golf course losses had not consumed most of those dues, the POA would have operated at a theoretical net profit of $408,837 over that 5-year period. Thus, $408,837 would have been available to pursue alternative recreational facilities that could have been used by all members of the POA. Such facilities could have included the following:

• Construction of a "real" pool that would be available for the exclusive use of members, their guests, and/or renters. The pool could be located on POA beach property near the Isle Dauphine Club, other POA property, or on one or more of the interior island lots that are for sale.

• Development of the POA owned Jefferies Park located on Little Dauphin Island Bay. The improvements could include a boat ramp, picnicking facilities, and other park amenities that would be available for the exclusive use of members, their guests, and/or renters.
  

• Establishment of a kayaking ramp and related recreational facilities on POA property along Salt Creek. Similar facilities could be constructed on other POA waterfront properties.
  

• Construction of piers at POA owned waterfront lots. The piers could provided temporary mooring for POA boat owners and improved fishing platforms.
  

• Develop scattered POA properties into small neighborhood parks.
  

It is time the POA seriously consider alternative management options for the golf course. While establishment of the proposed AFRC facility may bring additional golfers to Dauphin Island, what happens if the AFRC facility does not materialize?

The Board of Directors should establish a Select Committee comprised of both golf and non-golf POA members having personal integrity, business sense, and being independent of Board control to objectively evaluate management solutions for the golf course. Those solutions could range from the lease of the property to a professional golf course entity to the outright sale of the property.

If the golf course property were sold, millions of dollars could be generated. Those funds could be used to establish a Dauphin Island Restoration Authority which could partner with the Town and other entities to periodically address the serious erosion issues affecting our Island. The Authority could be modeled after the existing Dauphin Island Water and Sewer Authority which could operate independent of the Town and the POA.

To date "all of the POA's eggs" seem to be placed in the AFRC basket. If the Board is considering other options they should make those options known. If the golf course continues to receive the POA leadership's principal attention and the proposal to increase the dues and to modify the POA constitution passes, the name of the POA should then be changed to the "Dauphin Island Golf Course Association". Is that what the entire POA membership wants and deserves?

[ambergreen]

Glen's argument is very well stated. I think his suggestions for other recreational facilities would be very well received by the membership. This is one of those things that members should be able to vote on - how their dues are spent. The entire membership should be able to vote to say "I want 90% of all POA dues to continue to be spent on the golf course", or "I want POA dues to be spread out among other recreational options - new tennis courts, full sized swimming pool, boat ramp, etc."

[Dennis Knizley]

Glen's position is well stated and offers attractive alternatives to continuing to subsidize the golf course. Though not a golfer, I understand golf is a major attraction to many people, and that would include prospective renters of Island owners properties. Without it, conceivably rentals, and consequently local commerce, may decline.

If decisions are being made about mandatory dues to support it, other uses such as AFRC for it, or even possibly closing it, the benefit of it to property owners needs to be reasonably assessed. The Board may have already done some inexpensive study or is just aware of the general concepts of golf course benefits, and lack thereof, to beach destination vacation locations. Also to be considered is non-renting property owners who just want to use POA assets they expected to benefit from by virtue of the deed provisions existing when they bought the property.

From any approach, it is a major asset of the property owners, by deed, and POA leadership has a duty to property owners to direct the use of it to whatever may benefit owners the most. If some use ends up being a gold mine for someone with only marginal benefit to the owners, that is terribly wrong. I think some people here are concerned a developer would come in, make a lot of money, and leave property owners with less overall than they had if the intruders would have stayed away.

To ease that concern, prompt and total disclosure, to the extent it can be reasonably done, of all discussions, negotiations, and other exchanges the POA leadership has regarding any asset should be made. If that is done, reasonable people may still question the judgment, but will not question the integrity of the decision maker.

[ambergreen]

This post references posts #38 & #39 in the Deed Restriction Removal thread:
dipoa.proboards.com/index.cgi?board=constitution&action=display&thread=7&page=2

Even though the information below is related to those posts, it seemed better suited to this thread.

The Grand Hotel at Point Clear is merely a hotel owned by the Marriott Corporation. It's not exclusive – anyone can rent rooms there or eat meals there.

The Lakewood Golf Club near the Grand Hotel is a totally separate entity. It is connected to the hotel only in that they have an agreement with each other – hotel guests get to use the course on a one-time or daily basis for a fee ($135 for 18 holes), but the course is otherwise open only to members, not to the general public, Unlike the other Jones trails in Alabama (which are public courses), Lakewood IS exclusive. You have to be a member ($10,000 initiation fee + $300 monthly dues) – or a guest at the hotel – to play there.

This information was easy to obtain – from visiting their website and calling their membership office.

Neither the Grand Hotel nor the Lakewood Golf Club has a constitution since they are not connected with any property owners association. The golf course has membership fees and rules which govern its maintenance, but the hotel is like any other commercial, non-military hotel – open to the public.

The Lakewood Course succeeds or fails based on its membership, marketing and maintenance. There is no property owners association supporting it.

While the Isle Dauphine golf course is a great amenity, if it requires dues from ALL property owners (many or most of whom do not use the course) to help keep it open, then many would argue that it is, at best, on welfare, and at worst, on life support and maybe time to pull the plug. It is simply not fair to use 90% of member dues to support one amenity when there are so many other amenities we could offer property owners and visitors such as those mentioned by Glen – better tennis courts, a bigger pool, kayaking, boat docks, whatever. If the golf course was mostly supporting itself, and only needed a little help from the members (maybe 20% of its funds coming from member dues), it might be a different story.

I think the best business model for the Isle Dauphine Golf Club is to manage it separately from the POA. I think it should be leased to a developer where the POA would still own the property but get a cut of the greens and membership fees. Or sell it to someone who will really upgrade it (and maybe even make it part of the Robert Trent Jones Golf trail), but allow current property owners to be “grandfathered in” and get discounted golf, sort of like how guests at the Grand Hotel get to play at Lakewood. I know, I’ve heard we have tried to find a developer in the past with no success, but I say try and try again. And yes, I agree that if the developer is the DOD and they insist on exclusive use by the military, then that’s a raw deal.

The DIPOA Constitution does not allow the Board to give away or restrict access to any POA property without a vote by the membership. So it is prudent to fully explore all ramifications of deed restriction removals, as well as how a voting pool reduced by a mandatory dues amendment would affect the sale or lease (or donation without remuneration) of POA property.

[glen]

Ambergreen:

I think your suggestions are "right on". The POA Board should pay close attention to your ideas.

Several years ago, I participated in preliminary discussions with Honors Golf (http://www.honoursgolf.com/home/) about their interest in entering into an agreement with the POA to assume management of the POA golf course and to build a small hotel. There was definite interest on their part, but it was never pursued to conclusion by the Board. Several years before that, I understand there was also interest by Alabama's Retirement Systems (http://www.rsa-al.gov/Real%20Estate/News/RTJ/2011%20RTJTrailGuide.pdf) in taking on management of the POA golf course as part of the Robert Trent Jones Trail, but I do not know what happened in that case. The problem in the POA Board's not following through may be to the transcendent nature of the Board composition that changes each year due to the elections. Whatever the case, to date, our varied POA Boards have not effectively dealt with the problem of the golf course losing money each and every year that it is allowed to operate.

We are fortunate in having among our property owners a diverse community of business professionals with considerable experience in the private sector. The Board should take advantage of this talent pool by nominating a committee of individuals having demonstrated collective business sense to prepare a Request for Proposals (RFP) prospectus that would be submitted to national golf course management firms to take on management of the Isle Dauphine Golf Course. The prospectus should identify the significant evaluation criteria that we are interested in seeing addressed in the proposals. From the proposals received, the committee could select the three proposals that best address the evaluation criteria and invite the responsible firms to make verbal presentations to the committee and the POA membership. From that presentation, the "best" firm could be selected to develop a more thorough proposal upon which a decision could be based to enter into a management/development agreement. Or, the committee could decide to move on to the second and/or third firms on the list if it was not satisfied with the expanded proposals. This entire process should take less than a year to complete.

Apparently, the current Board is not interested in pursuing a truly objective approach to consider alternative management options. Instead, the Board appears to be only waiting to see what happens with the Armed Forces Retirement Center (AFRC) hotel/recreational complex option that is being advocated by the Town and the Town's Washington-based lobbyist Rod Grimm. Under the AFRC approach, it appears that various levels of our local leadership believe the POA would continue to retain direct management control over the operation of the golf course. This means that existing "key" employees could remain in their current management positions under that eventuality.

I think the POA's internal "golf lobby" has a overwhelming influence on the present Board since they appear to be attempting to keep things the way they are as much as possible in order to maintain green fees low and to keep "key" employees on the payroll. Otherwise, why doesn't the Board attempt to seek a management solution to the POA's failing golf course that makes more business sense than the present situation. The POA golf course property has too much real and potential intrinsic value to Dauphin Island to allow it to continue to be mismanaged as a resource. Time has clearly shown that the POA is incapable of managing the golf course to even a "break even" outcome. If you examine the attached table, you can see that the income generated by the golf course has dropped by 40% from the beginning to the end of the last decade and the course has only 36 memberships. A major change is needed in the way the golf course is managed before its present operation shoves the POA into bankruptcy which is where our organization is headed before the end of the next decade. That is why the Board is attempting to extort higher and higher "mandatory dues" from the larger non-golf POA membership so the golf course can continue to be subsidized for the benefit of the Island's relative small golf community.

Attachments:

[JBJ]

As I look over the various posts on this topic it occurs to me that there's more agreement than disagreement re. the future of the POA facilities in general and the golf course in particular. We all agree that we can not continue to spend more than we take in and that we must find a long range solution to our situation or we will eventually find ourselves facing bankruptcy. So the question we face is how do we create long term viability--what are our options and how do we find the optimum path forward.

Some perspective--there's much made of how the golf course is subsidized, doesn't pay for itself, etc. That's true--but so are all of our facilities/amenities--the parks, the beach, the clubhouse, etc. It's true that the golf course is the "biggest loser" and it's too early to tell if the GulfView Grill will be profitable on its own (so far so good) but the pool, the beach, the parks, etc. all cost to keep in operation. The thing about the golf course is that it creates revenues and has the potential to pay for itself and more. The clubhouse has some potential too as does the pool/grill--the question is how to realize this potential?

The idea that the POA would be better off if the golf course for sure--and maybe the other amenities as well--were owned/leased /managed by an outside entity who would improve, market, manage, etc., has been pursued to varying degrees over the years. I don't have first hand experience with the efforts made in the 90's and 00"s but I hear reports of how we have been close to a good deal on several occasions. I don't know why nothing came of these efforts. I do know that in June of last year I met with representatives of Touchstone Golf about their involvement with our course. We also approached the RSA about making us a part of the Robert Trent Jones trail. So far nothing from these efforts but we haven't given up--it's just not a good time for investing in the golf industry.

So in consideration of our options, we decided last year to pursue two somewhat parallel paths. We developed a "vision plan" to use in an effort to seek economic development funding in the oil crisis aftermath, and we adopted a business plan to consolidate the management of our facilities after having had less than favorable results from leasing pieces of our operation out to others. So our strategy is to stay alive in the short run while seeking to live better in the long run.

It's true that a significant piece of our plan is member support thru dues payments. And while some have attempted to suggest that members should be "outraged" because non-golfers are paying dues to support the golf operation, I think most members have a more enlightened view of the situation. We own valuable property including a golf course, beach, clubhouse, pool, etc., and these holdings add to our property value. To keep it up, we are asked to pay a nominal dues payment and if the amendment passes--and even if we are required to pay the max that would be allowed-- it would still be nominal. I think most see the merits of supporting and seeking to improve the common properties that we own.

So, I'll stop here and post this --but I will mention that we've just completed a major re-do of the pol and we're about to declare it open for the season. Come check it out.

[ambergreen]

Apr 3, 2011 20:16:55 GMT -6 JBJ said:

Some perspective--there's much made of how the golf course is subsidized, doesn't pay for itself, etc. That's true--but so are all of our facilities/amenities--the parks, the beach, the clubhouse, etc. It's true that the golf course is the "biggest loser" and it's too early to tell if the GulfView Grill will be profitable on its own (so far so good)...

What? Does this mean that member dues are subsidizing the grill?

[JBJ]

Our game plan for the Grill (and the Cabana when it opens) is that it will have a positive P/L and will also help the golf operation to improve its P/L. One of the reasons that we didn't continue the practice of leasing the grill to a third party is that we can more effectively manage a tournament when all of the resources are commonly run. But while it looks promising now, we won't really know how profitable the Grill/Cabana will be until we operate for a full cycle.

[carolinegraves]

Is your best solution to the GOLF COURSE property losing money, is to put the Town/developers Military hotel or now condos on the property with a Jack Nicklaus golf course THAT THE PROPERTY OWNERS WILL NOT BE ABLE TO USE. Who will make the money from this scheme?

[cliff]

I admit that I have not read all of the posts on this board as I am a relatively new member. Has it been suggested that members of the DIPOA will be forbidden from using the golf course at some point in the future?

[Dennis Knizley]

Apr 5, 2011 21:30:49 GMT -6 cliff said:

I admit that I have not read all of the posts on this board as I am a relatively new member. Has it been suggested that members of the DIPOA will be forbidden from using the golf course at some point in the future?

Good question. The answer is yes that has been suggested. You may want to know if the DIPOA Board of Directors is considering, or will consider, any proposal that "forbids" or prohibits use of the golf course by members. That is a simple and straightforward question and this forum seems to be an appropriate place to ask it. If you want to know, ask a Board member here.

[JBJ]

Apr 8, 2011 20:05:28 GMT -6 Dennis Knizley said:

Apr 5, 2011 21:30:49 GMT -6 cliff said:

I admit that I have not read all of the posts on this board as I am a relatively new member. Has it been suggested that members of the DIPOA will be forbidden from using the golf course at some point in the future?

Good question. The answer is yes that has been suggested. You may want to know if the DIPOA Board of Directors is considering, or will consider, any proposal that "forbids" or prohibits use of the golf course by members. That is a simple and straightforward question and this forum seems to be an appropriate place to ask it. If you want to know, ask a Board member here.

Well you never say never --I suppose it's possible that someone could come along and offer to buy or lease the property for such a sum that we would have to consider it. (E.g.--here's $100 million dollars POA that you can use to restore the shoreline and maintain it forever...) The membership may be willing to give up the golf course under such an arrangement. But that's not likely.

Much more likely is that the AFRC will build or buy a hotel/housing unit somewhere on the island and simply use the golf course, beach, pool, etc. as others do. That would be a good thing for the POA, as we need more golfers. Now, they may seek to buy/lease a piece of our property to build on, and they may approach us about improvements to the golf course, or special usage arrangements, etc. We'll just have to see.

But keep in mind, any encumbrance of POA property --including a long term lease-- would require the approval of a super majority of the membership. The board can only recommend--the members would have to decide.

[Dennis Knizley]

An offer of $100 million or half of that to purchase the golf course that the POA is having a difficult time keeping the losses at a manageable level would certainly deserve consideration. The comment about restoring the shoreline was curious, however, as we gave that away to the Town in 2007, excepting the small area near the clubhouse. Granted, if we still owned the 3 1/2 mile West End Beach, or get it back because the Town fails to procure funds to construct the engineered beach, consideration of such a project would be prudent. Hopefully, however, there is no POA Board philosophy existing that would support use of POA assets to improve Town owned beaches, and the remark was not one based on some casual discussion Board members had when speculating on "what if" such a purchaser came along.

The post does touch on another issue that may be important to POA members when deciding of how to vote on the upcoming matters, as well as future decisions. What is the realistic value of the golf course property? There probably is a limited market in today's economy for golf courses as well as just beachfront property, but what is a good estimate of value of the real estate, in a good and bad market, and for use as a golf course or an alternative one?

Lastly, as this property is without a mortgage and thus no debt service, the operating expense would be far less than if a developer had to borrow money to buy land and build a golf course, or the investment here would be far less than one a developer would have if he had the money and did not have to finance such a project. If courses are built elsewhere and profit when property purchases and debt services are involved, why is ours difficult to operate at a profit? Is the location not attractive enough, the course not of a quality to attract more golfers, a marketing issue, or we just do not really know?

[logicfan]

This idea may not be popular with the golfers, but I think the membership ought to have the opportunity to vote on the future of the golf course.

The golf course on DI is not likely to ever be a draw for serious golfers. We can't compete with places like Hilton Head, Palm Springs and other serious golf destinations. The golf course is a "nice to have" for the snowbirds and residents that like to golf, but clearly not enough of them use it to keep it afloat. In addition, the efforts of the town and the POA appear to be at odds in terms of development and attracting tourists.

Fixing up the golf course to attract tourists would be aimed at a much higher caliber of tourists than the tatooed day trippers that the town seems to want. If you want the higher class tourists who will pay to play golf, you have to have at least one or two nice restaurants (nothing against the Common Loon - I love it - but there's no ambiance there, the menu is quite limited and they close very early) and you have to enforce parking, leash and behavior laws.

The classier element doesn't want to sit on the beach next to a chain smoking 400 pound 17 year old mother in a bikini who uses the "F" word three times in every sentence and leaves her baby's dirty diapers on the beach and lets her dog run loose and poop all over the place. If giving out and collecting the fines on parking tickets and other enforcement (NO GLASS ON THE BEACH!, no littering, no public drunkenness) keeps those folks away, we might have an easier time attracting folks with money that want to spend it on golf. Until then though, I think attempts to make the golf course profitable are a lost cause.

[Dennis Knizley]

Disturbing is the lack of participation of the POA leadership in this forum. The forum was created by the POA leadership as a communication medium, but there has been no responses by Board representatives since their election to several inquiries of constituents. Former Board President Bruce Jones was diligent in keeping owners abreast of Board position and philosophy, and encouraged member usage of the forum as a means to communicate with leadership in his remarks at the annual meeting.

Is the Board going to keep losing nearly $100,000 a year keeping the golf course open? Soon a bankruptcy will come about if there is not a remedy to this problem.

Let the owners know in this or some forum what the plan is, if any, to stop the hemorrhaging.

[glen]

Attached is the updated table showing a summary of the financial results of POA operations over the last 12 years since 2000.

The data from the POA's recently completed Fiscal Year (i.e. 2011) show that the trend for losses continued through another year. What is also clearly shown is that the golf course experienced a 12th straight year of losses. For the last 12 years, the golf course losses have totaled over $970,000 -- and those losses have occurred even while $600,000 in dues were received since 2006 and used to offset the golf losses. That means the golf course losses would have exceeded $1.5 million if it had not been for the dues that were paid, most by the non-golf playing members of the POA.

The Board just issued its August/September newsletter. In that newsletter, the Board attributed the financial woes of the POA to "...hurricanes, oil spills, the economy, the general waning of the golf industry, etc." Those factors fail to address the complete cause of the POA's problems. Dauphin Island has not been significantly impacted by a hurricane since Katrina in August 2005. In 2010, BP rented the Isle Dauphine Clubhouse from the POA, as well as paying the POA a claim of $84,200 to compensate for golf revenue losses attributable to the oil spill. Examination of the attached table shows the money received from BP actually prevented the oil spill from having a serious impact on the POA which allowed the general financial trend that has characterized the POA's operations and losses over the last 12 years to remain essentially unchanged. In only one year after the oil spill, most tourism activities along the Alabama Gulf Coast are back to normal according to numerous recent articles in the Press-Register, with Gulf Shores and Orange Beach experiencing a record season to date. It should be pointed out that the 12-year period since 2000 includes both good national economic times and other years with economic problems. The one consistent factor that stands out in the attached table is that the POA golf course always loses money, and this is despite being subsidized by membership dues since 2006. What is not addressed in the above list of factors that have contributed to the financial problems of the POA are the consequences of actions taken and/or not taken by the Board.

To date, the Board has failed to openly inform the POA membership that only $100,000 remains in the Operating Account. To this point in the current Fiscal year, the POA is expending operating funds at the rate of $17,000/month. That means the POA will only be able to keep its doors open for an around another 6 months, and that doesn't account for annual property taxes totaling over $20,000 that must be paid before the end of the current calendar year. Receipt of voluntary dues will only buy a few additional months for the POA to continue to operate in its current fashion. The temporary infusion of voluntary dues now being solicited by the Board will not solve the POA's fundamental fiscal problems.

The Board's newsletter also stated that the Board is considering options to cut back on operations, but that it currently favors keeping the golf course open. Should the golf course continue to be operated in the face of the impending financial calamity, the only real winner will be POA General Manager Jeff Collier. It is time the Board acknowledged that the golf course must be closed, and closed now. The weak revenue stream that the course generates does not justify any other decision. I have heard a few individuals extol the financial importance of the golf course to Dauphin Island. However, no one has ever come forward with the hard data that supports that position. If the golf course is that important to Dauphin Island, why is not capable of supporting itself and must instead be increasingly subsidized by the non-golf playing POA membership.

In July, Island Watch provided the Board with a suggested approach that could be followed to professionally seek proposals from prospective managers/developers to whom the golf course could be leased. Since receiving the suggested approach, the Board has continued to dither in seriously considering that proposal or any other action to lease the Isle Dauphine property. And all the while, the POA moves closer toward insolvency.

The Board has been less than honest with the POA membership about the pure and simple fact that the golf course is breaking the POA. And many POA members continue to blindly follow the lead of the Board instead of demanding answers and actions that they deserve.

Attachments:

[glen]

There was a problem with the file containing the table attached to my above post. The correct file containing the referenced table is attached to this post.

Sorry for any inconvenience. Thanks

Attachments:

[exonip]

Hello Every One !!!!
One of the aspects that many of us believe the AFRC project--we've known as it as the "military hotel". The concept of the golf course remaining an handling business either by POA support through costs and other funding is clear and understandable, simultaneously at some aspect the costs may over-shadow the benefits.I am definitely in support of investing costs to the POA.

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