The Forest Country Club Facility Master Plan Frequently Asked Questions

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1 The Forest Country Club Facility Master Plan Frequently Asked Questions FINANCIAL SECTION: Question: How can we afford $11 million more in debt on top of the $3.85 million for the Bobcat? Answer: The additional debt will be staggered in 2 separate loans of $6 million for Phase 1 and $5 million for Phase 2, which will only proceed when certain conditions are met. At no time will the outstanding balance exceed $10 million without prior approval from membership. The acid test on whether we can afford the debt is the willingness of a bank to make us these loans. Question: I thought the Initiation Fees were already earmarked for the Bobcat. Are you counting twice? Answer: No, we are not using the Initiation Fees twice. The financial model is designed to use the $50 per month Bobcat fees plus the Initiation Fees needed to make the Bobcat loan payments and apply the excess plus the $85 per month FMP fees to make the FMP loan payments. Note: The Bobcat loan will be fully paid in 10 years and the $50 fee stops at end of 10 yrs. Question: Notwithstanding the bank s willingness to make these loans, why do we want to incur debt? Answer: Our guiding principle to fund the FMP with debt was to make this program affordable for the vast majority of our present members. The use of debt allows us to create this flexible financing designed to be a Pay as you Go plan. When a member decides to leave the Club for whatever reason, he or she stops paying. There is no commitment to pay further. If we don t use this debt approach, it is estimated that each present member would need to pay $35,000 up front. Given our demographics, such a request would be soundly rejected. Question: If the membership is unwilling to accept the risk related to this debt, then what do we do? Answer: There are several risks associated with this question. Incurring debt certainly presents a risk but we must not forget that we would incur a far greater risk relating to our ongoing sustainability if we chose to do nothing. We find ourselves in this position because we neglected to set aside a capital reserve fund in prior years to upgrade our facilities on par with our competition. If we continue to ignore our responsibility to upgrade our facilities, our ability to attract sufficient new members will decline resulting in a membership decline and all of us will need to pay more dues just to keep our doors open. At a minimum, we will need to start collecting a capital fee now to build such a capital reserve to enable us to upgrade our facilities in the future, even if we decide not to incur debt now.

2 Question: If we agree to move forward now as proposed, how can we be sure that we will get more new members and increased food and beverage sales? Answer: There are no guarantees, but we do know from published reports from experts (McMahon Group and McGladrey) that a surge in new members and food and beverage revenues occur immediately after major improvements to facilities are completed. We also know that to be true for several peer clubs in our area, including Lexington, Legends, Fiddlesticks, Shadow Wood, Bonita Bay Club and Vanderbilt. Question: If the monthly assessment plus the initiation fees not used for the Bobcat is sufficient to pay off the debt for Phase 1&2 over the 15 year period, why do we have to pay the full amount several years before the start (if approved) of Phase 2? Answer: This funding plan results in a surplus of $1 million that builds to $1.6 million by the end of year 4 before declining. This surplus is intended to be a safety net should our assumptions fall short or there is an unplanned downturn in the economy. If Phase 2 is delayed, we will pay down the Phase 1 loan off over fewer years. Question: What happens if the economy tanks 4 years out and we lose members? Answer: If that happens in the year 2020 and if we lose 100 members (we lost 68 in 2008 market crash), all remaining members would need to pay $120/month for that year only to get us back on track and the $50 per month Bobcat fee would need to be extended for 1 additional year. Thus overall the dollar effect would equate to $35 X12 plus $50 X 12 for a total of $1,020. We do not believe we would lose that many golf members and also do not see a large recession on the horizon from economic readings. Question: What has our membership trend been over the last 10 years? Answer: In 2004 we had 531 golf members by the end of 2011 we were down to 432 golf members after losing 68 members in 2008 and 44 members in In 2012 we had a growth of 5 golf members, in golf members and in golf members. We are forecasting to end 2015 with a total of 492 golf members for a growth of 13 golf members. In the last 4 years we have grown our membership by 57 golf members. Question: When would the $85 per month fee begin and if a member decides on their own accord to resign from the club are they required to continue to pay any of the fees? Answer: It is projected that the $85 per month fee would begin shortly after the approval of the plan. This would allow us to build up a small reserve as we did for both the Bear and Bobcat renovations. This is a pay as you go program and there is no further commitment if you decide to resign your membership. Question: Who has reviewed the Financial Model developed to fund this plan? Answer: The Financial Model has been reviewed by the FMP Finance Subcommittee and the Long Range Planning Committee and the Finance Committee and the Board of Directors. Based on their review they agree that the Financial Model is not without risk but the assumptions are reasonable, conservative and within reach of 2

3 not only being met but exceeded. SURVEY SUMMARY: Question: What were the conclusions from the recent member s survey and focus group meetings? Answer: The following enumerates the top issues by a priority as expressed in the survey: Reconfiguration and /or expansion of Grill Room and Bar Expansion and relocation of Gumbo Limbo Expanded Fitness and Wellness Center Main Dining Room expansion and enhancement General remodeling of Club aesthetics and acoustics Outdoor covered dining adjacent to indoor dining venues Additional Private Dining and Meeting Rooms Expansion of Kitchen Addition of resort Pool and Social Decks to Wellness Center Addition of Feature Rooms such as Wine Room or Library FACILITIES SECTION: Question: How was this plan developed and who was involved in its development? Answer: The process began back in 2012 with the roll out of Vision In late 2013 we interviewed a number of local and national firms prior to choosing Dave Humphrey of Humphrey Rosal of Naples to lead us. Over the past 18 months more than 50 people including those involved with the Facility Master Planning Committee, Long Range Planning Committee, Finance Committee, House Committee, numerous members at large and our Senior Leadership Team have played an active role in the development of the plan. Question: Why do we need to renovate the Clubhouse? Answer: The long term health and sustainability of The Forest CC depends on our being able to meet the changing needs of our existing members and to attract new members by meeting their needs as well. Our existing members have voiced their needs through a membership survey. Prospective members are increasingly looking for family friendly amenities and view our clubhouse as being old and tired. Question: Why renovate now? Answer: We are losing prospects to other clubs that have updated their clubhouses in line with the needs of these new members. These people want a club that provides activities and a social setting for the non-golfing family members while the main member is out golfing. The Forest Country Club has recognized this need by having appropriate membership categories for these families but our amenity offering lags behind. In addition, many new subdivisions are now under construction nearby providing membership potential in the near term that will pass us by if we do not act now. 3

4 KB Home is developing the 80 acres to include 220 single family residences ranging from $350,000 to $450,000. Stock Development is developing Hidden Harbor with 72 homes ranging from $700,000 to $1,500,000 and Emerson Village featuring 324 High End Luxury Apartments. Within a 3 mile radius of our club there will be over 600 new door fronts built in the next 3 years. Question: Why do the renovation in two phases and/or why not just tear down the existing Clubhouse and rebuild on the same footprint? Answer: Each phase of the proposed clubhouse construction could take over a year to complete. Building the Lifestyle Center first will allow the club to keep its dining and social facilities open throughout the construction period. It also allows the Club to showcase new facilities at an early stage which is expected to have a positive impact on membership retention and recruitment. If we were to tear down the clubhouse and rebuild, not only would it cost more than the proposed plan but it would also require closure of the club facilities for more than a year. Such disruption is expected to cause a loss of members and revenue over this time period which would be detrimental to the Club. An unintended consequence of renovating the clubhouse first or tearing it down would be the loss of employment of many of our valued and long term employees. Question: What other issues would we have to face if the Clubhouse was torn down or renovated first: Answer: The need for a temporary building for golf cart storage and charging with temporary electrical service. The need for a temporary structure for pro shop. There would be up to a two year loss of use of the Clubhouse as we know it. There would be up to a two year loss of clubhouse related revenues which would have to be supported by additional increases in dues and fees for all members. It would be very difficult to attract new members to join a club that has very limited and temporary facilities. We would need to establish temporary offices for administrative, accounting, sales and support services which would have to be supported by additional increases in dues and fees for all members. In addition we would have disconnection and reconnection of all utilities as well as communication and technology used by the operations of the club which would have to be supported by additional increases in dues and fees for all members. Question: Why renovate the main clubhouse after building the Lifestyle Center? Answer: The proposed reconfigured ballroom space and associated bar will allow the Forest to attract additional business that is lost due to inadequate facilities. It will also address total rebuilds of the AC and electrical systems that are currently repaired piecemeal due to age and condition. This work needs to be done regardless a cohesive overall plan. Most importantly it would enhance the member experience for all of our traditional events held in the current clubhouse. 4

5 Question: Why was the Bobcat renovation done prior to the Clubhouse? Answer: The overwhelming number one desire of the current membership was to address the Bobcat golf course before any facility upgrades were to be presented to the membership. Question: Why must we have a pool? Answer: As has been reported by every local and national expert in the private club industry the development of swimming facilities with features attractive to families including visiting children and grandchildren is a must for the attraction of the next generation of members. Local realtors have all confirmed the previous statement. Finally when we ask prospective members that choose not to join the Forest we consistently receive the same comments that we have a tired facility with no pool. It is expected that the pool is much more than a place to swim. This facility is being designed to be the synergetic instigator of the Lifestyle Center where members will join together for lunch, dinner, drinks after golf, a night cap by the fire pit at the best venue at our rejuvenated club. Question: Have we added too much bar and dining space with both the clubhouse and Lifestyle Center changes and what is the operating expense impact of these additions due to duplicated kitchen staff, wait staff and added energy costs? Answer: It is the plan to grow the membership base if you couch this with the many times that our current facilities are often overcrowded and the results of other clubs in our market have experienced greater than a 50% increased usage the first two years that maintained itself at 30% or greater there after we do not believe that we have over built any of the facilities. We have asked our FMP Finance Subcommittee to work with the staff in the development of a 5 year operating budget that clearly demonstrates that we can continue to operate the club with a positive annual cash flow. Question: What is the downside risk of not proceeding with the project at all? Answer: The truth is we must invest in major improvements to our facilities as we will not be able to attract and recruit new members. If the Club continues to deteriorate and lose its competitive position, real estate values in the Forest will decrease. We also run the risk of losing current members that are looking for updated facilities and have the means to join other local clubs the offer these type of facilities. Question: Do other comparable private clubs in the area have a lifestyle facility, indoor / outdoor dining and expanded fitness center? Answer: Yes, many local clubs in our competitive set have similar type facilities including Lexington, Wildcat Run, Vanderbilt, Olde Hickory, Legends, Fiddlesticks and many other of the 165 clubs that are active in SW Florida. Question: Why doesn t this plan include tennis facilities? Answer: The Long Range Planning Committee is hard at work updating the Long Range Plan presented in 2014 and due to be updated in Tennis and all other areas of the club will be addressed at that time. 5

6 Question: How will members be able to provide the committee and Board of Directors with feedback? Answer: The FMP will incorporate input from the Town Hall Meeting and accept direct input from members. Over the next two months a number of Focus Group meetings will be held as follows: Wednesday December 2 nd at 1:00 pm Thursday December 17 th at 11:00 am Tuesday January 5 th at 6:00 pm Friday January 8 th at 9:00 am 6