Crunching the Numbers at the Annual Co-op Meeting (part 1): Yikes!!

Co-op Annual Meeting on Monday, March 19, 2012 PG photo

Monday, March 19, 2012:   About 70 people attended the Co-op Annual Meeting this evening at the Clubhouse. Ron Covington, president, presided.  A lot of subjects were covered including sewers, laundry and tree trimming, but the most eye-popping news had to do with finances.

It seems that the advisors who analyzed the deal which resulted in resident ownership  had failed to figure out that taxes had to be paid on unsold shares. Suddenly an unexpected additional expense of about $270,000 per year threw a major monkey wrench into the budget.

The  group barely rebounded from that revelation when the Co-op members learned that no mortgage principal was charged this year, but in 2013, principal payments of $50,000-$60,000 per month would have to be paid on top of interest. This means  that an additional $600,000-$720,000 in principal would be needed in 2013 on top of current expenses.

When someone in the audience asked how these 2013 bills would be paid, the president said, “We’re not real sure where it’s coming from.”  The treasurer said that surplus revenues, greater operating efficiencies, increased rental fees and sales of shares would be utilized, but to some in the audience, those items didn’t seem to add up to enough income.  At that point, it became apparent that the situation was worrisome.

Surprisingly, only a couple of people in the audience expressed concern about these revelations, and no one on the dais betrayed any anxiety either.

The Co-op is OK this year, but it remains to be seen as to how these big bills might be paid starting in 2013.  It looks like the motto of the Co-op should become, “Show me the money!”

—PG

11 thoughts on “Crunching the Numbers at the Annual Co-op Meeting (part 1): Yikes!!

  1. EDITOR’S NOTE: Regarding a confusing subject: Co-op shares. There is now only one kind of share available for purchase, and that is the “regular share” which a home buyer can purchase or for those who already own a home here and want to join the Co-op.

    The original Plan B shares were for those homeowners who wanted to join the Co-op but didn’t have the funds to buy a share. These Plan B individuals are considered to be shareholders. Plan B was really a loan to these homeowners, and they are pledged to eventually pay off their loan which is held by the Co-op.

    The original plan “A” shares were purchased by homeowners who already owned a regular share. These “A” shareholders, who receive an interest check each month, are promised a buyback after 7 years if they wish to give up their investment, which yields an interest check every month.

    At the meeting, the president said that these “A” shares “are not shares…they are investments” At another point, they were referred to as “investment shares.” Evidently we are now evolving a new terminology for this category so that these “shareholders” are not really shareholders—they are “investors.” (Otherwise, the plan “B” person and the plan “A” person are being counted as two shareholders for one actual payment).

    If any of you can explain this better, please post a comment.

    ALSO: I have notes from a public meeting held regarding the future Co-op on November 20, 2010 in the Clubhouse. In attendance were representatives from the Florida Community Services Group (Marty and Charity were there).

    They said, “Cash flow will be sufficient to cover all expenses.” Really??

    They also said that the “A” shares would be used to finance the “B” shares. That suggests that when a “B” shareholder pays off his loan, the money should go to buy out an “A” shareholder. Right??

    They also said that the value of each share would go up 10% after the closing. (Did that promise happen? The share price has not changed)

  2. Paul – I think that this meeting was billed as the “Tropicana Annual Meeting” and not a Board Meeting?

    Editor’s note: You are correct. It has been changed PG

  3. Paul – Are you alble to change your posts at will? One post said about 90 attended the meeting, now I see that about 70 attended??? “About 90 people attended the Co-op board meeting this evening at the Clubhouse. Ron Covington, president, presided.”

    I know picky, picky. At least you know someone is reading the blog and you do a great job.

  4. I have been informed that the Co-op has several shares that have been purchased by investors outside the community. How can we be noted as “A 55 and older RESIDENT OWNED COMMUNITY”?

  5. I looked at the photo and realized there were quite a few empty seats behind me, so I revised my estimate. The Co-op should have an accurate count.

  6. Regarding a confusing subject: Co-op shares

    What are the shares called that were/are offered to non-residents, non-owners. Are these not still being offered until March 31st?

  7. Questionable matters:

    I guess we will see the sign at the entrance being changed? “Co-op needs $$$$, so anyone can invest – not be a resident.”

  8. Maybe all Tropicana Homeowners should continue to be informed if we are to live in HARMONY. Paul this blog might make the difference. KEEP IT GOING.

  9. You are correct according to the “Tropicana Topics” social club newsletter. I’ll fix that. Paul

  10. At the meeting, Mr. Covington said that only regular shares are being offered at this time. That sounds like there are no more “A” shares, which were the investment vehicles available in the past. I also heard, in the past, that outsiders could buy such shares.

    But why not? If you are desperate for funds, the return of 5.8% might be attractive to investors, although who knows what such “shares” might be rated at, given the precarious financial situation of the corporation. When a country like Greece is drowning in debt, their bonds get downgraded.

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