Club Business

President’s Letter

The Haig Point Board of Directors had a special Board meeting Tuesday April 12th to finalize how we would proceed with the Capital Planning voting process. During that discussion the Board members and members of Haig Point’s management team reviewed:

· Member feedback from the open sessions

· The potential of bank financing to allow members to spread the assessments over several years

· How recent developments with the Employee Retention Credit program might impact the Capital Plan funding

Below is brief summary of the outcome of each of those three discussions.

Member Feedback

Overall, the member feedback has been positive towards the plan, especially the potential Dues increase to get Haig Point’s operations to breakeven. Much of the feedback on the capital plan projects revolved around opportunities to possibly reduce the upfront assessment and possibly spread the funding of the projects over multiple years, or delay some of the projects to assist in spreading the costs.

Bank Financing

Jeff Smith, Haig Point’s Chief Financial Officer, has held very preliminary financing discussions with three banks, including our current primary banker, Wells Fargo. Based on his conversations with those banks, he felt that if membership passed the proposed dues increases, we should be able to arrange bank financing to allow members to spread the assessments over several years, as the loan would be tied to the special assessment payments by the Haig Point’s membership to secure them.

Employee Retention Credit (ERC)

The Coronavirus Aid Relief and Economic Security (CARES) Act contained a business relief provision known as the Employee Retention Credit (ERC), a refundable payroll tax credit for “qualified wages” paid to retain full-time employees from March 13, 2020 to December 31, 2020. Up until recently the way an organization collected on this was by reducing their payroll taxes sent to the IRS, which meant that it might take years to be fully reimbursed for this credit. We were aware of this and were beginning the process of applying for the credit. We have engaged an outside firm with a great deal of experience in taking clients through it to assist us in this process.

Recently, the method of credit reimbursement changed and now there is an opportunity to be refunded the full amount of the calculated credit by the IRS in one or two checks. They also will now include the first three quarters of 2021 “qualified wages” in their calculations. We hope to have the calculations and IRS forms completed and filed by June 30. If the tax filing is approved and processed by the IRS, we should expect to see the funds by the end of 2022 or early 2023. Because it is a complicated process we will not speculate on how much the refund might be or the chances of being successful. But because the amount might be significant, we feel that we should take it into consideration when looking at the overall cash position of Haig Point as it relates to the Capital Plan projects.

With this in mind the Haig Point Board of Directors voted unanimously to restrict all of the funds that might come from the ERC application to member approved capital projects.

Board Discussion Outcome

Based on the above items, the Haig Point Board of Directors voted unanimously to have two separate membership votes on the components of the Long Range Capital Plan. The first would be on the proposed Dues increase. This vote would begin on May 16th.

This would allow us to take the steps necessary to get Haig Point’s operations to a breakeven, potentially freeing us to use profits from the Real Estate and Development portion of our business to be used for capital projects. It would also, and this is very important, give Jeff Smith, Haig Point’s CFO, the financial leverage to work with banks and get commitments on the financing of your assessments over a period of years.

We plan on having another open session focused on the updated Dues increase prior to the vote, most likely in early May prior to when the voting begins.

The member votes on the five Capital Projects will be delayed until later this year when we have a complete picture of Haig Point’s future financial position and the projected funding for those projects. The information would include:

· Doing multiple year financial projections, based on the dues increase being approved by membership, of cash that should be available from the Real Estate and Development portion of our organization.

· The outcome of the ERC tax refund process

· The outcome of our discussions with banks on financing the assessments over years

We believe that by doing the above, we can meet many of the capital funding goals our membership has requested. It will also give our members the most accurate picture of how their votes on the capital projects would financially impact them, so they could make the very best informed decision.

Once again, on behalf of the entire Haig Point Board of Directors and the management of Haig Point, I want to thank all of you for your involvement and support during this complex Long Range Capital Planning process.

Respectfully,

Gary Baum

President, Haig Point Board of Directors