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restructured and our financial accounting and transparency have been raised to industry-leading standards – and at the same time each member ’ s experience has been materially improved through the acquisition of important capital assets like our beautiful Ranch House and our modern maintenance equipment , and enhancements in member services like our present day campground facilities , the beach pavilion , and the modernization of the services our Office staff provide .
But our financial position is not so strong that we can assume the Club will be able to offer everything we ’ ve come to expect without our close attention and our willingness to do more for the Association going forward . Our Capital Fund has never been fully funded , and now that our oil and gas revenues have dried up we must draw on the lessons from our own history to maintain and improve this wonderful place for ourselves and the generations of members who will follow .
Lesson # 1 : We must work together , not separately or independently , for the good of the whole Club . While each of us experiences the Club in our own way , it is only by working cooperatively together that we can achieve the most benefit for each of us .
This is especially true of our Board of Directors . Our Bylaws charge the Board with setting the direction of the Club and ensuring it is run responsibly and with an eye toward its future sustainability . Each year we elect new Directors and changing one or more persons can change the dynamics and the effectiveness with which the Board discharges its responsibilities .
With this in mind , this year ’ s Board has made an important decision to identify “ best practices ” that successful private clubs use to make sure their boards always act with their club ’ s sustainability foremost in their minds . These best practices will be used by future CCR Boards to assess their business practices against those of the best run clubs . Employing industry best practices will help each new CCR Board to quickly reach optimal performance while shortening the inevitable period of annually adjusting to new board members .
Lesson # 2 : We must rely on ourselves for the future sustainability of the Club .
Since the mid-1970s , keeping out-of-pocket costs to members low while also making significant improvements to our facilities and amenities were priorities for both the Membership and Boards . Our dues structure remains the lowest of any club of our kind in the country . And while it has maintained this low dues structure , the Club has purchased millions of dollars of capital assets . Our Ranch House alone cost $ 1.1 million to build in 1978 ! The only way it has been possible to keep our dues so low and simultaneously purchase millions of dollars of capital assets is by heavily subsidizing dues and fees with oil and gas royalties .
But the oil exploration and natural gas royalties have been exhausted , and net income from logging is typically less than $ 80,000 annually – and still our facilities and amenities require constant maintenance , repair , and replacement .
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It takes over $ 2 million to operate and maintain CCR each year . This year ’ s dues total for each membership was $ 803 , which brought in just under $ 1.2 million . User fees , transactional revenues , and transfers between funds have been making up the difference . But balancing that equation is becoming increasingly difficult , particularly as more of our capital assets age and require replacement .
Lesson # 3 : We cannot expect large returns by making small investments .
The total of all the Club ’ s capital assets comes to millions of dollars . Just the purchase price of our buildings , equipment , and vehicles totals $ 5.8 million according to our last audited financial report . Replacement costs for those same assets are estimated to be many more millions of dollars than their original purchase prices .
Each year our Capital Fund spends about $ 350,000 for major repairs or replacement of those assets , yet our Capital Dues raise only $ 140,000 each year . This underfunding has been going on for many years , and the cumulative effect cannot be ignored any longer . Currently , total reserves in the Capital Fund can cover about two years of normal expenses . If one of our more expensive capital assets were to fail unexpectedly , the Capital Fund would be hard pressed indeed .
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 will be completed soon and provide fresh data with which the ad hoc committee can form recommendations .
Lesson # 4 : Funding the Ranch without external sources of revenue does not need to present an overwhelming burden .
Our current financial challenges are not as dire or as immediate as when the Club faced insolvency in 1990 .
First , the Board and Management must scrutinize expenses and assure Members their monies are being spent responsibly .
But it is also true that without the aid of oil and gas royalties , it will be up to the membership to provide additional revenues .
It may be tempting to deplete the Endowment Fund and the Resource Fund as alternatives to higher member costs . But depleting those savings cannot solve the Capital Fund ’ s long-term revenue gap – we ’ d only be “ eating our seed corn ”. Such actions would soon prove inadequate and it would still be necessary to raise new revenues from ourselves .
If we act responsibly , deliberately , and in a timely fashion the financial impact on each membership can be reasonable , containable , and affordable .
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