Candidates discuss assessments and amenities

Five candidates are running for two seats on the Canyon Lake Property Owners Association Board of Directors. In the order they will be listed on the ballot, candidates are George Christopher Williams, Dale Welty, Matt Poland, Paul Queen and Paul Chenette. In this third installment of questions for the candidates, The Friday Flyer invited them to answer the following question. Their answers appear in the reverse order from what they will be on the ballot.

Question

Member dues subsidize several revenue-producing amenities in the community. Is the amount Canyon Lake property owners pay overall reasonable? Are there specific subsidies you would like to see reduced? If so, what would you try to do to help those amenities support themselves?

Paul Chenette

The answer to the first part of this question is the reason I moved to Canyon Lake. I don’t know of another place in this country that has all the amenities we have all in one place. Our HOA fees are among the lowest, if not the lowest, of communities similar to ours. I challenge you to find a place that has everything we have for the price we pay.

The four largest revenue producing amenities in our community are 1. The Lighthouse Restaurant ($1,018,850); 2. The Golf Course ($816,086); 3. The Country Club ($596.007); and 4. The Lake ($518,750).

The subsidies I would like to see reduced the most are those we spend on the Lighthouse Restaurant and the Country Club. From a purely business standpoint, the labor and outside services costs are alarming.

The Lighthouse spends 78.6 percent on salaries and related expenses; the Country Club 88.9 percent. When you add in outside services, those numbers escalate to 89.6 percent for the Lighthouse and 106 percent for the Country Club.

Conversely, the Golf Course spends 15.7 percent on salaries and related expenses; the lake 0 percent. When you add in outside services, those numbers are 41.9 percent for the Golf Course and 45.2 percent for the lake.

If elected, I would be pro active in getting the most out of these two amenities. At the Lighthouse, I would create food and beverage service for the pool, boating and beach users. At the Country Club I would actively market to the surrounding areas to use our Country Club restaurant. I believe these simple ideas, if implemented, would increase sales at both venues, ultimately lowering our subsidy.

Now let me put it into perspective. “IF” we were successful in eliminating “ALL” the subsidies for both the Lighthouse and the Country Club, each member would save $5.11 a month. When you look at the budget, the total amount we spend in subsidies for ALL of our amenities combined is $68.19 per month.

The other $168.81 per month is for Corporate, Reserves, Community Patrol, Operations, Planning and Compliance, Member Services and Human Resources. Every other HOA I looked into had fees attached to most or all the areas I just mentioned and, as I mentioned earlier, I was not able to find another place that has ALL that we have.

While I understand that no member uses all of our amenities, the point is they can. All in all it’s a pretty good bargain.

Paul Queen

I think a “reasonable amount” in dues is subject to a person’s perspective. I know many compare Canyon Lake to other small HOA’s and say they pay the same as us, and yet they only have a few amenities for that $250 per month. By that perspective our dues are very reasonable.

But most of those small HOA’s they compare us to consist of 50 to maybe 250 homes at most. Take a mid-size HOA in that range at say 125 homes, that HOA’s revenues would be only $375,000 per year. They pay the same for far fewer amenities because they have a significantly smaller number of homes paying dues.

In contrast, we have 4,800 lots in Canyon Lake paying dues. Canyon Lake POA is bringing in almost $15 million a year in dues alone; and that doesn’t include the money we collect in boat registrations, fines, dock rentals, etc.

So are we paying a fair rate when examined from that perspective? Is over $15 million a year too much to pay to run our POA?

To answer, I think it’s important to remember that, 16 years ago in Canyon Lake, we had almost the exact same amenities that we have now, and dues were $105 per month. We have not had any significant inflation in the years since, and yet we are now paying 2.5 times that much, an increase of almost 250 percent in dues. Even if you figure a 5 percent inflation rate per year (which is significantly more than what we actually had), that would mean we should be seeing dues at 80 percent higher than 16 years ago, or a rate of $189 per month.

I think that $189 per month is a much more reasonable rate, and that we should be much closer to that amount. We need to run smarter, we need to eliminate needless spending, eliminate wasteful spending, stop overpaying contracts, stop paying million dollar per year legal bills, and yes the costs to run our “revenue-producing amenities” are in many cases too high.

Employee costs at our restaurants are at 80 percent of income. I’m told most restaurants are at 40 percent in employee costs. We need to look at what hours produce good revenue and staff to those hours and reduce our staffing at the less productive times.

We need to have a “marketing committee” working with our members to get the menu items our people want, to promote our restaurants and specials on social media pages, to get people to come and enjoy good food and prices at our restaurants. Above all of this, we need consistently good food and good service to keep people coming back, and we need to be a fun and welcoming place to go!

Then we need to actually study the sales and numbers, and adjust to our customers’ preferences. Keep what works, remove what doesn’t. This will make us successful and able to grow revenue.

(Meet me after the Senior Center candidate forum tomorrow, April 9. I will be at the yard sale at 22918 Canyon Lake Dr. South between the hours of noon and 2 p.m. Come and ask questions and have your voice heard.)

Matt Poland

Yes, I think the amount that Canyon Lake property owners pay is reasonable when compared to other communities. However, part of what makes Canyon Lake so attractive is the value we all receive from our dues. As a Board member, I will work to preserve all of the amenities, the club traditions that go along with them, and the value we receive from our dues.

The budget for the upcoming year was recently published, and below are the planned subsidies for the amenities. These subsidies are equal to the revenue minus expenses. Another way to look at it is, if these were individual businesses, this is how much money each one loses.

• Lake – $1.19M
• Golf Course & Country Club – $1.16M
• Parks and Beaches – $447k
• Lodge & Pool – $405k
• Equestrian Center – $114k
• Baseball Fields – $76k
• Happy Camp – $34k
• Tennis Courts – $22k

But these are not individual businesses; these are amenities that Canyon Lakers enjoy. These amenities are part of what make the Canyon Lake lifestyle. While I think the dues are reasonable, I would like to pay less and get more. Here are a few ideas to accomplish this:

Reduce Legal Fees. The budget number for 2017 is $848k. If elected, I will work to end the Lake Lease lawsuit and spend less money fighting. A side benefit of less litigation will be lower insurance expenses.

Planning and Compliance will cost $343k in 2017. We, as a community, are spending almost as much making sure we follow our own rules as we do on all the parks and beaches. There has to be a better way to invest this money.

Invest in Solar.  Next year’s budget has $396k allocated for electricity. Here is an opportunity to invest some of our money to reduce electricity expenses.

Invest in our restaurants. Every weekend many Canyon Lakers leave the gates and spend a lot of money on dining and entertainment. Our restaurants should provide the experience the majority of our community members are looking for and capture that revenue.

In summary, I don’t think the individual amenities should be required to support themselves. I view all the amenities in aggregate as the Canyon Lake lifestyle. If elected, I will work to maintain the Canyon Lake lifestyle. Please vote for Matt Poland on May 12th.

Dale Welty

Canyon Lakers pay reasonable assessments, but of course it would be best if we could reduce the subsidies for our revenue-producing amenities.

Other than the lake, the Golf Course is our largest amenity and requires the largest subsidy. The demand for golf declined during the great recession and golf courses all over the country are suffering; many have closed. In California, the financial stress on golf courses has been even greater due to the rising cost of water. This will likely result in even more golf courses closing, until area golf courses are able to operate without such large losses.

There is some good news for the future of the Canyon Lake Golf Course, though. The demand for golf has slowly been coming back, and the Golf Course community has started to aggressively market outside memberships in the area. While our outreach expands and the number of area residents increase, we should be able to increase the income we bring in with additional members to the Golf Course.

The Campground comes closest to covering its annual costs; and with the Campground upgrade, we should continue to see only a small subsidy for the Campground.

The Equestrian Center also saw a decline in stall rentals and income during the great recession but we are starting to see more horses being boarded there; which will help keep the Equestrian Center subsidy from expanding.

The Lodge and the Country Club will not significantly reduce their subsidy until the community decides to return and support them. It will take some improvements in the food and service, and some marketing to bring the community into the restaurants.

You can get a great omelet and pancakes at the Country Club for a good price. The Lodge has some good sandwiches and dinners on its affordable $8.88 menu. The view from the Lodge is one of the best in Canyon Lake.

We need to follow the example of the golf community. Members of the golf community took on the project of marketing to golfers outside of Canyon Lake. They stepped up for the overall good of the community, even if it meant a little inconvenience and sharing the Golf Course.

The individuals and the clubs that use the amenities are the best resources to find out how to reduce the subsidies. It would be extremely helpful if some of the other groups shared their ideas on ways to help generate income too.

The POA Board can neither change the demand for golf nor force members into our restaurants. In the end, the size of the subsidies is primarily going to be determined by the participation of community members themselves. Reducing the subsidies gives us an opportunity to both keep our POA assessments down and to dedicate funds to invest in our future, so we can insure Canyon Lake stays a first class community.

George (Chris) Williams

The answer to the first part of the question is a resounding no! We are paying two to three times as much subsidy as we ought to be, on the Lake Lease, by way of litigation costs. The Lake Lease is our No. 1 most popular and valuable amenity and already requires a big subsidy.

We are literally adding millions to that cost when you count our past and future fees and EVMWD’s past and future litigation fees. This blows a huge hole in our already substantial subsidy budget and renders the amount we pay overall unreasonable.

Are there specific subsidies you would like to see reduced?

All of them of course. Practically speaking however, that may not be advisable and each subsidy should be reviewed on its merits as well as its raw cost. It makes sense when looking for savings to turn over the biggest rocks first.

I’m not sure at this time exactly what the subsidy pecking order is after “Lake Lease” but my top three guesses are “Golf Course,” ‘Lighthouse Restaurant and Bar” and then “Country Club Restaurant and Bar.”

I’m not frankly familiar enough with the Golf Course finances or accounting practices to make any definitive declarations regarding its management or the “overall reasonableness” of its subsidy. I do know it is a valuable and expensive amenity that needs and deserves to be expertly maintained. That being said, every financial micro system is susceptible to budget manipulation and creep, and needs periodic external review by fresh eyes.

I was surprised to hear that CLPOA employs a golf pro whose contract is worth in excess of $ 200,000 per year. This seems on the surface as if it may be excessive, especially in light of the fact that the course is operating at a significant loss. If it is operating at ever smaller loss or on an improving trend, there certainly might be justifications that I am not aware of (or not).

I have lived here for 28 years. I cannot remember a time when the Lighthouse and the Country Club did not operate at a loss (which is not a reason to quit trying}. But it is a reason to recognize the challenges any operator faces at these locations in terms of access, visibility, isolation, barriers to entry (security gates) and competition.

I don’t have any silver bullet ideas for these amenities, but I think they are important amenities that need to stay open and try to improve. We could talk about trying a voluntary use-it-or-lose-it member monthly minimum, which would spur more frequent use and foster family and extended family dining in a familiar environment.