City Club of Baton Rouge Proposed Renovations
At the Stockholders January 19th meeting, the Board of Governors unveiled a vision for the future involving renovations or additions to virtually every area of the Club. We also assured the membership that we considered these plans to be a starting point for discussions with the broader membership.
The plan was to have three additional meetings, but we soon realized that we needed a fourth. We were very gratified both by the significant membership participation, as well as the ideas and concerns that were discussed.
As a result of the meetings, we are in discussions with both our architect and CPA in order to respond to what we have heard from our members. The membership has articulated three basic concerns: 1) a large assessment could cause membership loss; 2) the debt associated with the project is too high; and, 3) the current bar should not be moved and replaced with a new basement bar. In response, among other things, we are testing a financial model that includes a dues increase that could be used with a smaller assessment, or in lieu of an assessment, to fund the renovations. The challenge is to find the right project mix—an acceptable level of debt and adequate financing through dues/assessments—to make our membership comfortable that we are doing the right thing to advance the Club.
While tax credits might provide some relief from the debt level, the difficulty in estimating how much we might receive using tax credits has caused us to remove estimated net amounts of tax credits from our financial models. This results in a significant increase in debt and a higher debt to equity ratio. Tax credits may yet materialize, but we are not counting on them.
While we remain convinced that this entire project, as originally set forth, is the best course for the Club; we also must be prudent stewards of the trust placed on us by the membership. We believe that we can restructure this project in such a fashion that will allow us to achieve our mission statement, “To strive to be the premier social club in Louisiana,” while allowing a more modest financial exposure to the Club and its membership.
We originally thought we would hold a vote in late March or early April, but it appears likely that we have to come to the membership later, in April or in May. Please bear with us as we find the best set of options to present to you.
