Financial Matters
What is it going to cost?
How are we going to pay for it?
Where We Started
Cash on Hand
At the time of the fire, the Club was in a strong financial position with significant cash reserves. Not including the funds in restricted accounts, at year end 2023, the Club had approximately $266,000 cash on hand (approximately $72,000 in its regular operating and reserve accounts, and $194,000 in its capital account). At month-end May 2024, cash on hand was $3,867,000, which includes $37,000 in the Club’s regular operating and reserve accounts, and $3,830,000 in its capital account. Because of its strong cash position at the time of the fire, the Club has been able to complete the numerous purchases and upgrades needed for our interim facilities and operations without significant depletion of the insurance proceeds paid under our fire claim.
Liabilities
At the time of the fire, the Club had three outstanding loans: (1) a longstanding SBA loan (2.9% fixed, fully amortized payoff 2033), (2) a loan in connection with the construction of the floating docks (5% fixed, fully amortized payoff 2029), and (3) a small loan that is an amortization of amounts drawn under a letter of credit used in the past for major repairs (5%, fully amortized payoff 2029). At month end November 2023, the approximate outstanding balances were $107,000 on the SBA Loan, $471,000 on the Dock Loan, and $31,000 on the Small Loan (total loans, $609,000). All loans have continued to be paid in their ordinary course, and as of month end May 2024, the approximate outstanding balance of loan debt was $567,000, a $42,000 reduction since the fire. As of May 2024, regular monthly loan payments reduced the principal around $6,000 per month, and that monthly debt reduction will continue to increase as the loan balances fall.
Insurance Proceeds
The clubhouse building was insured for $3,500,000, and the Club has received the full policy limit for that portion of the claim. The cost to demolish the damaged structures was included under the building coverage, but additional coverage of up to $25,000 may be available to offset the cost of Debris Removal. Business Personal Property located in the clubhouse was insured for $250,000, and the Club has received the full policy limit for that portion of the claim for the full policy limit. The policy limit for Business Income Loss was $700,000. Business income losses are being submitted as they occur and are being reimbursed periodically. As of June 2024, the club has received $326,000 insurance proceeds related to its business income losses. Losses are expected to continue through the rebuild, therefore, we expect settlement of the business losses claim to be an ongoing item. Insurance proceeds paid to date are deposited into the Club’s interest-bearing capital account.
Cost Projections
Cost Projections based on conceptual plans and drawings are tentative estimates utilizing an estimated cost per square foot. At this stage, the Building Committee is using $450/psf as a working number for the average cost to construct a building of the planned size and quality. Accordingly, a 10,000sf clubhouse building may be in the range of $4,500,000. The Building Committee also anticipates the rebuild will involve replacing the existing pool with new, a new or revamped parking lot, plus restoration and improvement of all exterior hardscape and landscaping. Preliminary thinking is that these two items could cost in the range of $1,500,000. The Building Committee has not yet developed preliminary estimates for the cost of furnishings and other personal property. While work on detailed construction plans and drawings is continuing, the Building Committee will work with professionals to ascertain extensive cost estimates for all parts of the project. Although preliminary, and fettered by the conceptual nature of the planning to this point, it is reasonable to anticipate that the cost of the rebuild project could be in the range of $6,000,000. This page will be updated as more informed cost projections become available.
How to Bridge the Shortfall
So, if available cash is in the neighborhood of $3,800,000, and the cost to rebuild is in the range of $6,000,000, what is the plan to bridge the gap? The sources for funding the gap is discussed below, in order of priority of source (from top to bottom).
#1: Fundraising
The results of the post-fire member survey spoke loud and clear: Our members overwhelmingly told us that the primary source for additional funds should come from fundraising. To that end, we have launched Love the Club, a fundraising campaign of St. Andrews Bay Yacht Club. We have set a goal of raising $1,000,000. It is our belief and our hope that members of our Club and our community will rise in support of preserving and restoring our beloved Club, which is Anchored in Tradition, and Built for Generations. With 400 members, a gift of $5,000 each would raise $2,000,000. We know that not every member is in position to make a gift of that size, but we also know that many of our members are financially able to do much more. We hope that in considering their gift, each of our members will consider the deep and rich tradition of the Club within their lives and that of their families, including future memories and traditions that will be treasured and a part of generations to come. Click here for more information on gifting levels and options for making a pledge to be paid over time.
#2: In-Kind Gifts
As the project progresses, we anticipate identifying specific items that one or more of our members might be willing to provide by way of an in-kind gift. Moreover, in the past, members (especially with businesses) have sometimes been uniquely situated to pass along excellent discounts and products that have resulted in great savings to the Club. Please keep your sources and opportunities in mind and reach out to the Club if you are willing to explore assisting the rebuild in this way.
#3: Other Assets
The Board of Governors is committed to being good stewards of our Club assets. For that reason, if circumstances show that funds are needed beyond that which is on hand or donated, the Board will carefully review the Club’s assets to weigh whether it makes sense and is feasible to convert an available asset to cash that can be used to bridge a funding gap. Although it is currently premature to predict whether conversion of assets will be considered, it is anticipated that a review of all convertible assets would be undertaken by the Board of Governors as they explore all options to avoid additional debt.
#4: Financing
(Traditional / Non-Traditional)
If fundraising and conversion of available assets are not sufficient to bridge the gap, the Board will explore available financing options, including both traditional bank lending and non-traditional financing, such as a private bond issue, or other non-traditional private financing. The Board is mindful of the attractive interest rates under the Club’s existing loans, and if possible, the Board will seek a solution that would allow the benefit of those rates to be preserved.
#5: Last Resort
It is only if the combination of the four funding avenues above appears unlikely to bridge the gap, that the Board contemplates it would consider an increase in monthly member fees to cover the gap. A new assessment to raise additional capital is a last resort. And of course, under the Club’s bylaws, any special assessment would require approval of the members.
A Word about Membership Growth
Although not a “funding avenue,” a discussion of the Club’s financial realities would not be complete without a word about the impact of anticipated membership growth. Despite the fire, membership retention has been strong. Although some members resigned after the fire, the vast majority have doubled down on their support of the Club, and new members are joining every month. As excitement for the rebuild grows, we anticipate that membership growth will accelerate. When a brand new beautiful clubhouse starts to become a reality, we think that numbers seeking to join the Club will be unprecedented. The Board is alert to this and understands that the price to join the Club, after all is shiny and new, should reflect due consideration for the loyal members who supported the Club following the fire and gave generously to the rebuild. We foresee that initiation fees and additional revenue from membership growth will positively affect the Club’s finances, even before the new clubhouse is complete. (And if you have friends who are considering joining the Club, do them a favor and let them know that they might want to join sooner, rather than later.)