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• Our Capital Fund spends on average $350,000 each year
for major repairs or replacement of those assets.
• The total reserves in the Capital Fund currently cover
less than 2 years of normal expenses. If one of our more
expensive capital assets fails, the Capital Fund would be
hard pressed to replace it.
• This is why the Board instituted higher user fees this
year and tripled the percentage of operating revenue
dedicated to the Capital Fund.
•We’ve also convened an ad hoc committee to closely
examine the Capital Fund and recommend actions that
will strengthen it so it can meet its future obligations.
• The updated Capital Asset Reserve Study was delayed
due to the COVID-related restrictions. But it should be
completed soon and it will provide fresh data on which
the ad hoc committee can base its recommendations.
Lesson #3: We must rely on ourselves for the future
sustainability of the Club.
• Since the mid-1970s, the costs of operating the Ranch
and purchasing major capital assets (the Ranch House
alone cost $1.1 million to build in 1978) have been
subsidized by oil and gas royalties. The desire to
significantly improve facilities and amenities while
keeping cost to members low were priorities of both the
Boards and the Membership at the time.
• But the oil exploration and natural gas royalties have
been exhausted – and our facilities and amenities still
require constant maintenance, repair, and replacement.
• Net income from logging is typically less than $80,000
annually – and in some years has barely broken even.
• The bright spot: in 1996, we won a tax dispute with the
County and received a tax refund of almost $1 million.
That money was wisely invested in the Endowment Fund
and has now grown to $2.4 million. It generates over
$100,000 in earnings each year – and our bylaws allow us
to use half of that amount to help offset operating
expenses.
• It takes over $2 million to operate and maintain CCR
each year. This year’s dues total for each membership is
$803, which brings in just under $1.2 million. User fees,
transactional revenues, and transfers between funds
make up the difference.
Lesson #4: The prospect of funding the Ranch without
external sources of revenue need not present an
overwhelming burden.
• Our current financial challenges are not as dire or as
immediate as when the Club faced insolvency in 1990.
• It is true that without the aid of external revenue
sources, it will be up to the membership to provide
additional revenues.
• It is also incumbent on the Board and Management to
scrutinize expenses and assure Members their monies
are being spent responsibly.
• It may be tempting to deplete the Endowment Fund
and the Resource Fund as alternatives to higher member
costs. But those actions would only amount to the illusion
of solving the revenue gap – the equivalent of “eating
our seed corn”. Such actions would soon prove more
unpleasant than raising the necessary new revenues from
ourselves as we need them.
• If we act responsibly, deliberately, and in a timely
fashion the financial impact on each membership can be
reasonable, containable, and affordable.
• Once our expenses have been reviewed and the Reserve
Study updated, we will be in a position to make specific
recommendations and proposals. Until then we will
continue to keep you informed through our multiple
communication channels.
As always, your questions and comments on these
Messages are welcomed.
Respectfully,
Ray Karbon
2020 Monthly CCR Incident Occurrence / Event Log
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