Candidates discuss subsidies, amenities and dues

Tom Nathan, Phil Hawgood, Paul Chenette and Michael Harris have announced their candidacy to run for a seat on the Canyon Lake Property Owners Association Board of Directors. The seats currently held by Bruce Yarbrough, Eric Spitzer and Edward “Ed” Horton are up for election on May 11.

The Friday Flyer invited the four candidates to answer a series of questions. Last week, The Friday Flyer asked the candidates what they believe is the greatest challenge(s) facing the Association at this time and how being elected will make a difference.

In this week’s Q&A, The Friday Flyer asked the candidates if they believe the amount Canyon Lake property owners pay overall is reasonable, if there are specific subsidies they would like to see reduced and what would they do to try to help the amenities support themselves.

Candidates were asked to answer the question in 400 or fewer words. The candidates are listed in order drawn by official lottery as they will appear 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?

Tom Nathan

Tom Nathan

Our Canyon Lake community provides many amenities that are enjoyed by members year-round. The parks and beaches, launch ramps, dog park, tennis courts, basketball courts, ball fields, senior center, slalom course, ski jump and swimming pool are amenities that can be used by members and their guests free-of-charge.

Other amenities such as the lake (boat fees and marina dock rentals), 18-hole golf course, equestrian center, campground, Lighthouse Restaurant and Country Club Restaurant are amenities that collect revenues from those who chose to use them.

The current monthly dues for Canyon Lake POA members is less than $250 per month, which I believe is very reasonable considering all that we have to enjoy in our community. By comparison, my father lives at The Colony in Murrieta, a gated 55 plus community about one-third the size of Canyon Lake.

The amenities provided to their members include an auditorium, fitness center, library, meeting room, beauty salon and billiards room. Outdoor recreation includes a swimming pool, two tennis courts, three smash ball courts, a bocce ball court and two shuffle board courts. The monthly dues for The Colony HOA members is exactly the same as it is for Canyon Lake POA members, yet we have so much more to enjoy in our community.

In our current dues structure, about 28 percent or $67 per month goes to supporting all Canyon Lake amenities. I believe it is important to manage the subsidy costs for all amenities – revenue-producing or not. The income generated by revenue-producing amenities helps to offset the overall costs. How much of the overall costs are offset depends entirely on member utilization.

Greater member utilization equals greater revenue, which in turn lowers the overall subsidies for the members. Today, our revenue-producing amenities are generally under-utilized.

As members of the Canyon Lake Property Owners Association, we each enjoy the benefits provided for the community. The goal of the revenue-producing amenities is to defray costs, not eliminate them. Charges to members at these amenities should be at or below what one would expect to pay in the public marketplace.

It would be an incredible achievement to have our amenities support themselves, but it’s not a realistic possibility given today’s level of utilization. In a private community, it’s the members that make up the entire customer base to generate those revenues.

Phil Hawgood

Phil Hawgood

The dues that we require our members to pay are simply too high. However, we need to be careful in cutting the dues without appropriate offsets because it is our great amenities that make us the “Jewel of the Inland Empire!”
Instead, we should better utilize the amenities of our great community to help subsidize some of our currently struggling amenities, namely our two restaurants.

Principally, we should rent our lodge as a wedding venue, with its great view of the community and proximity to the lake. This offers two ways for outsiders to help us lower our monthly dues by generating revenue by renting the lodge and by requiring those renters to utilize our restaurants to cater the needed food, which generates revenue for the restaurant.

Given the high cost that wedding venues and related catering supports in the market broadly, we could generate all the needed revenue with only a couple wedding venues per month. This means that the risk of outsiders coming into the community would be very small and easy to monitor.
This is not a new concept as many of our best amenities are supported by members themselves paying to use them.

For example, the Golf Club costs about $2600 annually to play any time or $21 to $42 per outing to play occasionally. Similarly, it costs $360 to obtain a permit to use a boat on the lake.

Moreover, I am going to use this answer to encourage all of you to try the food offered at the country club and lodge restaurant as substantial efforts have been and are currently being made to have better management and quality of food. If everyone went once a month and spent $20 it would generate $92,000 per month. Needless to say, this would permit members to pay money for food and drinks, which is an enjoyable experience, rather than simply as another due, which is not fun. It would also help support establishments run and staffed by our very own members and help the restaurants continue to improve.
These two simple steps would help us lower our monthly member dues, while maintaining out strong support for all of our amenities and the people that work there.

Paul Chenette

Paul Chenette

In regard to the amount of annual assessment members pay, I believe you would have a difficult time, if you were even able to do it at all, of finding any place in the county that has all the amenities we have here in Canyon Lake for less than double what we pay.

While we have many income revenue generating amenities, I want to focus on the four that are budgeted this fiscal year to each generate in excess of over $500,000 (rounded up to the nearest 1,000). The lake at $546,000, Country Club Restaurant at $633,000, golf course at $906,000 and the Lighthouse Restaurant at $921,000.

The subsidy ratio is as follows: lake 2.33 times total revenue ($1,325,000), country club .57 times net revenue ($238,000.), golf course 1.06 times total revenue ($968,000.) and Lighthouse Restaurant .53 times net revenue ($326,000)

The lake revenue pays 100 percent of all other lake related expenses and reduces the amount we have to pay for the lease related payments. Not much can be done here.

The golf course revenue pays 43 percent toward all golf course related expenses. The course maintenance and water costs ($1,381,369) far exceed the subsidy.

While the Country Club and Lighthouse Restaurants are only .57 and .53 times net revenue respectively, the glaring numbers are in cost of labor. The country club spends 109 percent and the Lighthouse 112 percent of net revenue on labor costs. Restaurant industry standards are 25 to 30 percent.

If we could reduce labor costs in both facilities to even 54 percent we would have NO subsidy in either restaurant. If elected I will support finding a way to make that happen.

Michael Harris

Michael Harris

In our “Little bit of Paradise” I have identified thirteen amenities, two of which do not produce revenue. The tennis courts and senior center are the least expensive amenities subsidized by the members. The lake, golf course, parks and beaches, Lighthouse Restaurant, country club, pool, meeting rooms-lodge, equestrian center, Gault Field, campground, tennis courts, senior center, and Community Patrol all produce revenue and are subsidized to varying degrees by the members.

I searched for other private gated communities to compare and I could not find any with the same amount of amenities.  I found 22 private gated communities in Southern California, eighteen of which are multi-million dollar investments to own the property.

The remaining four are priced similar in cost to our homes, but not in style. They are townhomes and three are 55 plus retirement communities.  A simple comparison shows that we have bushels of apples when they only have a few oranges.  I could not find another “jewel” that compares to our community.

The most expensive amenity is the Community Patrol, this is a must to have and subsidize as long as the City of Canyon Lake cannot provide more police protection. I reviewed the budgets for the coming year for all the amenities. Some have excessive subsidies. I am thankful the current Board of Directors began addressing these.

The restaurants are producing a daily profit and loss statement and a weekly inventory is being administered by the POA administrative staff, not the restaurant staff. The golf course and country club began the process of advertising for outside membership.

We need an in-house forensic study of each and every line item in order to identify where we can reduce waste and over spending.

We are a not for profit corporation. This does not mean we have to always show a major loss for all the amenities. I managed the books for my HVAC company and could easily identify when the business needed to increase sales, decrease spending or both. It is time to stop “kicking the can down the road.”

We are being faced with increasing costs for labor, benefits, building materials and repair and maintenance. With this in mind we cannot just increase income (paid by the membership dues), without reducing the expenditures. The lake and golf course are our prime attractions. We will not just abandon an amenity to accomplish this.