I enjoy living in an area where you can experience the change of seasons, but with another week of snow in the forecast, I am ready for the next season.
In January we closed on the #6 land sale and retired our bank debt. With the sale of both parcels of land we were able to eliminate nearly $2 million in debt. If you have ever paid off a mortgage you know the feeling of pride and relief with the financial burden removed.
In addition to eliminating the club’s mortgage, we have set aside money for a new tee box and fairway on #11 and to build a cart storage barn. When those projects are complete we will review options for use of the remaining property proceeds. We also funded a short-term capital account for emergency repairs and set aside funds for further restoration of the golf course if necessary.
The money previously spent monthly to service the debt is now funding a long-term capital account ($7,100/month) and short-term capital emergency repair account ($800/month) with the remainder going toward operating expenses. These capital accounts are not a Christmas fund where you save monthly and spend annually. The intent is to provide a long-term safety net and a source for some planned spending. The idea of establishing a capital account to provide a safety net for operating the club has been suggested and discussed for many years. Finally funding the concept is a major accomplishment. Congratulations to the membership for approving the property sale financial plan.
The board is considering formation of a strategic planning committee to assist the board in reaching decisions on long-term issues that impact the club finances. One role will be developing a financial stability plan that takes into account an appropriate safety net and reserve fund for known capital expenditures. We will communicate more on this soon.
The current fiscal year ends March 31 and we are close to approving an operating budget for next year. Thanks again to the finance committee for working with management to craft a plan for the coming year. Keeping pace with regional wage inflation and deferred maintenance continue to be challenges to the operating budget. What does that mean?
Prior to July 2016, the Oregon minimum wage was indexed to the Western Region CPI. The period 2010 to 2015 saw annual increases averaging 2%. In 2016 Oregon adopted a pre-determined schedule of increases in effect until 2023 when it will revert back to a CPI index. The period 2016 to 2019 will increase on average 5% annually and 2020 to 2023 will increase at more than 6% annually.
We have some positions where regional demand has driven wages well above the minimum level. So this is a challenge we have been dealing with for several years and it will continue. While the budget is not yet finalized, I suspect we will have a modest increase in dues this year. We did not increase dues this past year. More details to follow when budgets are finalized.
Join me in rooting for the next season and a return to the golf course. Until then, stay warm.
BGC Board of Directors