MRC President`s Report - 2015 AG

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THE MUSKOKAN RESORT CLUB INC.
REPORT FROM THE BOARD
ANNUAL GENERAL MEETING OF JUNE 22, 2015
IT IS MY PLEASURE TO HIGHLIGHT A NUMBER OF ACTIVITIES THAT HAVE CONSUMED THE BOARD’S TIME SINCE
OUR LAST ANNUAL MEETING.
ON THE FINANCIAL SIDE:
AS REPORTED BY STEPHEN CHESNEY THIS EVENING, WE ENDED 2014 WITH A SURPLUS OF $17,234
AND THIS INCREASED OUR ACCUMULATED SURPLUS TO $115,017. THIS AMOUNT IS SLIGHTLY MORE
THAN THE ONE MONTH’S FEES THAT WE LIKE TO KEEP AS A FLOAT AND THE BOARD HAS SPENT
SOME OF THIS EXCESS SURPLUS ON IMPROVEMENTS AROUND THE PROPERTY RELATED TO LIGHTING,
LANDSCAPING, TWO PADDLEBOARDS AND SOME ADDITIONAL LOUNGERS FOR THE BEACH. IF YOU
COMPARE THE ACTUAL AUDITED OPERATING COSTS IN 2013 TO THOSE IN 2014, YOU WILL NOTICE
THEY HAVE INCREASED BY $59,206 OR 7.25%. TWO SIGNIFICANT REASONS FOR THIS INCREASE WERE
INCREASES OF $20,000 IN UTILITY COSTS AND $22,000 IN HOUSEKEEPING WAGES. WE DID CUT BACK
ON OUR CAPITAL IMPROVEMENT EXPENSES TO LESSEN THE IMPACT OF HIGHER UTILITIES AND
INCREASES TO STAFF COSTS.
OUR CONTRIBUTION TO THE RESERVE FUND INCREASED BY ALMOST 11% OR $17,000 from 2014 to
2015. LAST YEAR, WE SPENT $101,000 ON RESERVE ITEMS. THE 2 LARGEST EXPENSES RELATED TO
LANDSCAPING AND DECK STAINING OF THE CARLING VILLAS AND REPAIRS AND PAINTING INSIDE
VILLAS. WE ENDED THE YEAR WITH A BALANCE IN THE RESERVE OF $695,000. AN UPDATED RESERVE
FUND STUDY WAS RECEIVED LAST FALL AND WAS APPROVED BY THE BOARD. THE BOARD IS
FOLLOWING THE RECOMMENDATIONS OF THAT STUDY.
TO DATE IN 2015, WE ARE RUNNING A LITTLE OVER BUDGET AS A RESULT OF BUDGET OVERRUNS IN
REPAIRS AND MAINTENANCE CAUSED BY A DECISION TO HAVE ALL AIR DUCTS IN THE VILLAS CLEANED
AND UTILITIES.
ON THE PROPERTY SIDE,
AS INDICATED, WE STAINED THE DECKS AND RAILINGS OF THE CARLING UNITS. WE HAVE RECENTLY
STAINED THE RAILINGS OF THE SANDFIELD AND WATER’S EDGE UNITS BUT, BECAUSE OF THE ABILITY
OF STAIN TO PROPERLY ADHERE TO HORIZONTAL SURFACES AND THE COST OF ONGOING INCREASED
MAINTENANCE, WE DID NOT STAIN THE DECKS.
WE HAVE EXPERIENCED PROBLEMS WITH A NUMBER OF SUMP PUMP UNITS, PARTICULARLY IN
CARLING 1&2 AND WE WERE FORCED TO MAKE SOME MODIFICATIONS ON DRAINAGE FROM THAT
VILLA. WE HAVE PURCHASED A PORTABLE GENERATOR, PRIMARILY TO BE ABLE TO DEAL WITH SUMP
PUMPS IF WE HAVE A PROBLEM DURING AN EXTENDED POWER FAILURE.
WE HAVE MADE MODIFICATIONS TO OUR INTERNET SERVICE AND HAVE TERMINATED, AT NO COST,
OUR ARRANGEMENT WITH DATAVALET.
SEVERAL BOARD MEMEBERS DID A DETAILED INSPECTION OF THE CARLING UNITS WITH DIANNE AND
WALTER DURING A MAINTENANCE WEEK TO GET A BETTER UNDERSTANDING OF HOW VARIOUS
ITEMS ARE WEARING AND TO ASSIST IN THE FORMULATION OF A PROGRAM RELATED TO THE
REPLACEMENT OF THE FF&E IN THOSE VILLAS AND WE HAVE REPLACED A NUMBER OF ITEMS IN THE
CARLINGS AND IN THE SANDFIELDS AS NECESSARY – POTS & PANS, KNIVES, SOME UTENSILS, DUVET
COVERS ETC.
WE ARE ALSO CONTINUING TO WORK WITH WATER’S EDGE LANDSCAPING ON A NUMBER OF MINOR
PROPERTY IMPROVEMENTS – IN FRONT OF THE BOATHOUSE AND THE CLUBHOUSE AND OTHER AREAS
THAT NEED IMPROVEMENT. WE HAVE ALSO POWER WASHED AND CLEANED UP THE SPORTS COURT,
INSTALLED STEPS FROM THE PARKING LOT TO THE MAINTENANCE BUILDING, PURCHASED A NEW
GATOR, A NEW FLOATING DOCK AND SOME ADDITIONAL PADDLE BOARDS.
GOING FORWARD, WE WILL BE RESURFACING THE TENNIS COURTS IN JULY BECAUSE OF CRACKING
THAT CANNOT SIMPLY BE REPAIRED, WE ARE MAKING MINOR CHANGES TO THE BOATHOUSE TO
EXPAND THE EXERCISE FACILITY AND WE WILL BE INSTALLING ADDITIONAL LIGHTING AND SOME
PERMANENT FLAGS AT OUR FRONT ENTRANCE.
ON THE ADMINISTRATION SIDE,
WE CONDUCTED ANOTHER OWNERS’ SURVEY LAST FALL AND THE INFORMATION OBTAINED WAS
VERY USEFUL AND WAS CAREFULLY REVIEWED BY THE BOARD. NOT EVERY SUGGESTION IS POSSIBLE
BUT WE DID MAKE A NUMBER OF DECISIONS BASED ON THE SURVEY. AS YOU MIGHT EXPECT,
OWNERS WANT US TO MAINTAIN A HIGH STANDARD OF MAINTENANCE AND REPAIR AND, AT THE
SAME TIME, KEEP THE MAINTENANCE FEES AT THE LOWEST POSSIBLE LEVEL. LIKE ANY GOVERNING
BODY, THIS IS THE ULTIMATE CHALLENGE OF ANY BOARD. GENERALLY SPEAKING, WE SEEMED TO GET
A LOT MORE COMPLAINTS IN LAST YEAR’S SURVEY THAN IN OTHER YEARS AND THERE HAS BEEN A
CONCERTED EFFORT TO IMPROVE STANDARDS OF HOUSEKEEPING AND TRAINING OF STAFF TO
ELIMINATE WHAT I CALL THE “FLIES AND MOSQUITOES” THAT ANNOY RESIDENTS. WE HAVE ADDED A
HOUSEKEEPER FOR CHANGEOVER DAYS AND DECIDED TO MAINTAIN THE MID WEEK CLEAN.
WE RECEIVED A VERY MIXED RESPONSE TO THE ANNOUNCEMENT THAT WE WERE IMPLEMENTING A
$100 RENTAL FEE AND A 2% OF SALE PRICE TRANSFER FEE. I CAN ASSURE YOU THAT THIS DECISION
WAS ONLY MADE AFTER HOURS OF DISCUSSION AT THE BOARD LEVEL. I WOULD LIKE TO MAKE A
COUPLE OF COMMENTS BEFORE WE GET TO OTHER BUSINESS BECAUSE I DO BELIEVE THERE WILL BE
SOME QUESTIONS.
I AM GOING TO BEGIN WITH WHAT EVENTUALLY BECAME AN AGREED STATEMENT OF FACTS, AT
LEAST AT THE BOARD LEVEL.
1) THE MUSKOKAN STARTED AS A PRIVATE RESIDENCE CLUB SOLD FOR LIFESTYLE, NOT FOR AN
INVESTMENT. INTERVALS WERE BEING USED OR EXCHANGED INTO THE REGISTRY COLLECTION.
2) OVER TIME, RENTALS OR GIFTS OF WEEKS TO FRIENDS AND RELATIVES INCREASED BUT, FOR THE
MOST PART, WERE HANDLED BY OWNERS. GENERAL ENQUIRES FROM THE PUBLIC WENT TO OUR
INNKEEPER AND, IF AND WHEN POSSIBLE, HE ATTEMPTED TO PUT PARTIES TOGETHER. EVENTUALLY,
THIS ACTIVITY BECAME OVERWHELMING AND BECAUSE OF HER ON-SITE PRESENCE, HIS WIFE TOOK
THAT ACTIVITY OVER.
3) OVER THE YEARS, RENTAL ACTIVITY INCREASED AND, FOR A VARIETY OF PERSONAL REASONS, MANY
OWNERS WANTED TO SELL THEIR INTERVAL OR ONE OF THEIR INTERVALS. INCREASED PRESSURE WAS
PUT ON STAFF AND THE BOARD TO BETTER CONTROL AND TO BETTER FACILITATE THESE ACTIVITIES
AND MORE TIME WAS REQUIRED BY OUR INNKEEPER ON ADMINISTRATIVE FUNCTIONS RELATED TO
RENTALS. OPERATIONAL ISSUES – MAINTENANCE AND HOUSEKEEPING - BEGAN TO SUFFER. AT THE
SAME TIME, BECAUSE OF GENERAL MARKET CONDITIONS AND THE VOLUME OF INTERVALS ON THE
MARKET, SALE PRICES BEGAN TO SUFFER.
4) OF THE 252 ORIGINAL SALES AND RESALES FROM THE BEGINNING, ONLY 1 OCCURRED THROUGH A
REAL ESTATE AGENT. AGENTS ARE NOT INTERESTED AND HAVE NOT BEEN EFFECTIVE IN SELLING
FRACTIONAL OWNERSHIP. BECAUSE OF THE DIFFICULTY IN GAINING ACCESS AND THE NEED TO
ENSURE SECURITY, EVERY SALE INVOLVED SITE STAFF AND SITE STAFF WAS AS INVOLVED AS ANY
AGENT IN ARRANGING FOR OR SHOWING VILLAS ON BEHALF OF OWNERS. THE ON-SITE PRESENCE OF
AN INDIVIDUAL WAS ABSOLUTELY ESSENTIAL IF ANY SALES ACTIVITY WAS GOING TO OCCUR.
5) NOTWITHSTANDING THE EXISTENCE OF ADMINISTRATIVE ASSISTANCE FOR ALL CLUB ACTIVITIES TO
THE EXTENT OF 1 DAY PER WEEK, IT BECAME VERY CLEAR THAT THIS WAS VERY INADEQUATE.
OWNERS WHO WERE NOT RENTING OR SELLING WERE NOT GETTING THE SERVICE THEY EXPECTED.
6) TO THOSE WHO UNDERSTOOD INTERVAL OWNERSHIP AND TIME SHARE IN MUSKOKA, THE
MUSKOKAN CLUB IS CONSIDERED TO BE THE PROPERTY. THE PROBLEM IS THAT INTERVAL OWNERSHIP
IS NOT A WELL KNOWN CONCEPT AND THE MUSKOKAN IS NOT WELL KNOWN TO THE GENERAL
PUBLIC.
7) THE CLUB DOES NOT HAVE ITS OWN WEBSITE. WE HAVE BEEN PIGGYBACKING ON THE DEVELOPER’S
WEBSITE AND OUR PORTION WAS NOT BEING PROPERLY UPDATED, MANAGED OR MAINTAINED AND
WAS ACTUALLY BECOMING A SOURCE OF COMPLAINTS FROM OWNERS.
8) THE BOARD HAD DONE AND WAS DOING VIRTUALLY NOTHING TO DEAL WITH TIME PRESSURES ON
STAFF, AND OTHER RELATED SIDE EFFECTS, THE CONFLICTS, THE DEMANDS OF MANY OWNERS AND
THE SAGGING MARKET VALUE OF THE INTERVALS.
9) AND FINALLY, IT WAS AGREED THAT BECAUSE WE ARE ALL SHAREHOLDERS IN A COMPANY, THE
BOARD HAD AN OBLIGATION TO DO SOMETHING ABOUT SHARE VALUE AND, WHATEVER THAT
SOMETHING WAS, THE BOARD DID NOT WANT TO INCREASE FEES, ESPECIALLY FOR THOSE OWNERS
WHO DID NOT WANT TO RENT OR SELL.
THE SOLUTION, AT LEAST IN THE MINDS OF THE DIRECTORS, WAS THREEFOLD. FIRST, WE NEEDED THE
ON-SITE PRESENCE OF SOMEONE WHO WAS DEDICATED TO ADDRESSING THE ISSUES JUST DESCRIBED.
SECONDLY, WE NEEDED SOME EXPERTISE IN WEBSITE DESIGN AND MARKETING TO PROVIDE THE
TOOLS AND THE SUPPORT NECESSARY TO MAKE THAT INDIVIDUAL EFFECTIVE AND, FINALLY, WE
NEEDED TO CREATE A FEE STRUCTURE THAT WOULD OFF-SET THE COST.
I HAVE ALREADY INTRODUCED GENEVIEVE. SHE IS CUSTOMER SERVICE DRIVEN, HIGHLY MOTIVATED
BY THIS OPPORTUNITY AND A DELIGHFUL PERSON TO WORK WITH. I WOULD NOW TO INTODUCE
JULIE MAVIS FROM CATS MEDIA WHO IS THE LEAD ON REFRESHING THE BRANDING OF THE
MUSKOKAN CLUB, REDESIGNING OUR WEBSITE AND CREATING NEW IDEAS TO IMPROVE CONSUMER
KNOWLEDGE ABOUT INTERVAL OWNERSHIP AND THE MUSKOKAN RESORT CLUB ITSELF.
AFTER JULIE HAS GIVEN HER PRESENTATION, THERE WILL BE AN OPPORTUNITY TO ASK HER
QUESTIONS ABOUT HER ROLE. YOU WILL HAVE AN OPPORTUNITY TO ASK ANY QUESTIONS ON ANY
MATTER UNDER THE ‘OTHER BUSINESS’ PORTION OF THE AGENDA.
I WOULD LIKE TO THANK ALL DIRECTORS FOR THEIR TIME, SUPPORT AND EFFORTS IN DEALING WITH
THESE AND OTHER ISSUES THAT CONSTANTLY ARISE. I WOULD ALSO LIKE TO THANK WALTER AND
DIANNE FROM RESORTS MUSKOKA FOR THEIR WORK AND DILIGENCE AND MARK MURPHY, OUR
INNKEEPER, PERRY MASON AND BRANDY FOR THEIR LOYAL SERVICE. THE BOARD HOPES THAT ALL
OWNERS ENJOY THEIR TIME THIS SUMMER AT THE MUSKOKAN.
RESPECTFULLY SUBMITTED ON BEHALF OF THE BOARD
JOHN OAKES, PRESIDENT
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