Welcome And Meet The Board

SPEAKER_03 0:00

Hello, Bonita Bay Club members. Today is our first podcast in our Clubhouse series of keeping our members informed. Today we are joined by three leaders from Bonita Bay Club. David Treadwell, our board president and a member for over 15 years, Deborah Ruskin, board member for over five years, and David Weatherby, board member for over six years. Thank you all for being here. My first question to you, Mr. Treadwell, is you know, we think about the three-year process. The book just came out. We emailed it to the members on Monday, and they should be receiving a hard copy next week. It's been a three-year process. Tell me how it all started.

SPEAKER_01 0:43

Well, about a little over three years ago, Fred came to the board with a bit of a dilemma. He said that the condition of the building, and it's everything from the HVAC, the air conditioning system, the chillers, the fact that it's a 40-year-old building down in Florida was going to require somewhere$35 to$40 million worth of money put into it just to get it back into normal operating condition. And there's an extensive list of the various issues that were with that. And his question to the board at that time was, do we want to put that kind of money into that, or do we want to deal with the issues that we've got with the building itself? For example, with 55, there's no kitchen, as everybody knows, or a very small kitchen, which very much limits our food service there. The main kitchen, which services the club room and the banquet rooms together out of the same kitchen is grossly inadequate. There's a lot of kitchen equipment that we're getting to the point where needing to replace, you know, et cetera, et cetera, on through and say the grand total of doing those things, or do we want to spend the$35 to$40 million and do that? We decided as a board that we need to take a look at that. We looked at various renovations. Is there ways to put in a kitchen for$55 just to fix the main kitchen? And very quickly came to the conclusion that it just didn't make a lot of sense. By the time you started fixing the$35 to$40 million that you needed to do and started to deal with the major issues that were impacting the membership, you got to the point of spending$80 to$85 million on the building. And at that point, it just made more sense to look at a new construction.

What Members Asked For

SPEAKER_03 2:14

Okay. What's the whole story from this book? And what do you think the members need?

SPEAKER_01 2:18

Well, we asked the members, was the easiest way to do that. We took a couple of different surveys. We've held countless town hall meetings and received input from the surveys. I think we said in there we've had over 2,000 comments come back to us in terms of what the membership's looking for. And I think it's just a different experience in a clubhouse that fits with the rest of the renovations we've done. We've spent about$135 million renovating the rest of the club assets over the last seven or eight years. I think everybody's familiar with the golf course master plan. They're familiar with adding pickleball and what we've done with that, with the Breezeway, the new resort pool, the Lifestyle Center. The one thing that doesn't get a lot of commentary was the Center for Housing for the Staff. We're one of the few clubs in the area that's done that. A lot of the other clubs now are having to build from scratch to accomplish the same thing we did there. But we've done all that. We've done it all out of initiation fees. We've accumulated no debt in undergoing all of that. And the last piece left is the clubhouse. And it's the piece that just doesn't offer the members the same experience that the others do. It's just not up to par.

Dining And Event Upgrades Planned

SPEAKER_03 3:22

What are you hearing, Mrs. Ruskin, talking to all the members?

SPEAKER_02 3:26

Well, I'm happy to say I'm hearing a lot of very positive support for this clubhouse and a lot of excitement about the vision and the ability to bring this to light. I think one of the important things for me is that we have to think about the Bonita Bay Club as a total product. And that total product consists of world-class sports facilities. Nowhere down here can you have five amazing golf courses that we have, the amazing tennis, epicable lifestyle center. But the reality is our clubhouse is not up to those standards. And frankly, it isn't on par with the peer clubs and the clubs that we're competing with in an increasingly competitive environment. And I do hear people say, you know, well, I don't really lose the clubhouse. I just want to be here for these great golf courses. But I think, as David said, our ability to continue to invest to keep all those sports facilities in the next sort of generation world class relies on the fact that we can continue to attract new members at a high initiation fee. And the reality is that a world-class clubhouse is necessary to do that.

SPEAKER_03 4:33

How would this improve a members' experience? And what do you think they envision? Or what do you envision?

SPEAKER_02 4:40

Well, I had the privilege of being part of the facilities planning team, which was very well led by Frank Kinsey, Fred Bell, and a number of others. And I think the vision for the amenities are really exciting. I mean, with the new kitchen and the expansion of 55, people will be able to go and have a wonderful casual nighttime dining experience. That's one of the biggest things that we hear in terms of the shortfall with our food and beverage offering right now. I think the sunset cocktail lounge that's planned will be wonderful to be able to go meet people just for a cocktail before dinner or before going somewhere else. I think the plan to make the club room, which is now feeling a little large, cavernous, and dated, and to create a more specialty dining experience is well asked for, along with the sushi bar, which I think is greating a lot of positive feedback when people see it in the plan. The enhanced ballroom, it's really important for us to be able to meet the demand for our events. Right now, we have a wait list. Every single event that we put on at this club goes into a wait list on day one. And when you think about holidays like Thanksgiving and others, we're just falling way short in meeting the demands of our members. I think when you join a club like this and you pay the fees that we do, you should expect to be able to come to the club and be served when you want to come to the club. And right now, our capacity really limits us from meeting those bases of the case.

SPEAKER_03 6:11

I think especially like Thanksgiving or Easter. On the first day, it gets full. It's packed. But that's true for every event.

SPEAKER_01 6:19

I think that's the important point. You know, a lot of folks will say, well, you're building the church for Easter, so to speak. And it's not just those days. It's 35, 40 days a year that it's filled up and you know, trivia night. I mean, all the various activities they've had on Saturday nights, I didn't go to the disco dance, but you know, I understand that it was a great success. And it was it was sold out. Right. And to Deb's point, you're paying all this money. You ought to be able to attend the events you want to attend.

Better Staff Facilities For Retention

SPEAKER_00 6:42

Trevor Burrus, Jr.: I think another key issue that came out of the work that the Facilities Planning Committee did was that our employee facilities were not up to par with other clubs in this area. And that's been another focal point of this project is actually bringing our employee facilities up to the standard that not only we should have here at Benita Bay, but also that makes us competitive from an attracting employee and retention employee standpoint. This new building, the employee break room areas, locker rooms, et cetera, are more than six times the size that we currently have. We're going to be allowed to feed all of our employees, which we're not able to do right now. I mean, those are all important things for attracting and retaining our employees.

SPEAKER_03 7:24

I agree. There's a video that's on the All Things Clubhouse now that showcases that.

SPEAKER_01 7:33

And there's two aspects to that. One is treating people the way they should be treated, but also from a selfish standpoint, if you want to retain the talent and retain employees, you've got to treat them right and you've got to give them these kind of facilities. They can go to the Mediterra, Grey Oaks, Shadowwood, and they get those there. So if we want to retain them, we've got to be up to par.

Financing Plan And Debt Advisors

SPEAKER_03 7:51

I agree. Take me through the finance experience. I know that's a big question amongst some of the members.

SPEAKER_00 7:58

So the Clubhouse Finance Committee was formed a couple of years ago, actually, when we first started talking about this project in terms of how we would want to go about uh financing it. It certainly has evolved over a two-year period. And I think one of the big decisions that that group has made is that we decided that we needed outside representation for a project of this size. And there are a lot of excellent organizations out there that play a role of a debt consultant and will do a lot of that heavy lifting for you. We spent some time with four different organizations. Those were Raymond James, Colliards International, Baird Capital Partners, and Birkadia. We had a little bit of a beauty contest. They all came in here and presented to us in terms of how they could best represent us, what they felt, you know, the sort of the terms and the structure might look like. We had some additional QA with each of them, but the group unanimously decided to move forward with uh Berkadia. It's a very interesting organization. It's actually a joint venture between Berkshire Hathaway and uh Jeffries Financial Group, both very highly regarded Wall Street firms. But the other part is, you know, in looking at where we are, Berkadia is the number one debt advisor in Florida. They placed over$4.7 billion in loans last year. They've got offices in every major city in Florida. So this is the boots on the ground and the national reach and the fact that they're number one in terms of debt placement in this state, that we feel very good about them being able to secure us the best terms in terms of a loan.

SPEAKER_01 9:35

So, David, maybe you give some color as to what the reaction you got from the debt consultants is as to their ability to place the debt.

SPEAKER_00 9:42

Yeah. So every single one of those organizations that came in, the four of them that I mentioned, we're very confident in the ability to be able to place this debt. We are fortunate that we have another club in the area that is going through a similar project to ours that has also secured a very similar amount of debt that we are looking for as well. So we're not breaking new ground here. This has been done within our area by an organization that is roughly half the size of ours in terms of membership, does not have the balance sheet that stacks up with ours. And so the consensus was that they felt very good about not only being able to secure, in this case, roughly$55,$56 million in debt, but that we would get very attractive terms on that in terms of both rate, length of the loan, and the ability for us to prepay on that loan if our new membership inflow was running better than projected.

SPEAKER_01 10:37

So, David, I know we've talked about this, and Deb, who chairs the finance committee, if you can respond to this also, with$55,$56 million of debt, how many new members have we been getting and how many new members do we need to have to cover that kind of a debt?

SPEAKER_00 10:53

Yeah. I mean, historically, we've been running roughly 55 new golf members per year and another 20 to 25 in sports. The way that we have modeled this out on a conservative basis, we're only projecting 30 new golf and 20 new sports from now through construction. After that, we're moving to 42 golf and 25 sports. So significantly less than what we've done historically. But the beauty of this with the debt amount is that we're looking at roughly$5.8 million in terms of annual debt service. And that would require just 18 new golf and 13 new sports per year in order to service that debt. I would also point out that in the terms of the loan, we expect that they will be a liquidity reserve, probably one year's worth of payments that we would need to set aside in an account for anything that could potentially happen. We've actually modeled this with a$9 million liquidity reserve, which gives us 18 months of runway. You know, if there were a recession or something were to happen and we didn't quite have the intake of new members that we would expect for over a short period of time. So we feel really good about being able to, you know, not just hit the new member numbers, but also know that we have that backstop if there's a hiccup along the way.

SPEAKER_01 12:07

Deb, I know you've talked with the new members and have a pretty good feel for that. What kind of sense are you getting from them as to the$225,000 initiation plus the$15,000 projected assessment? And what's their attitude on the new clubhouse here?

SPEAKER_02 12:21

Yeah, look, I think that's really topical. In fact, we just had the finance committee meeting this morning. And, you know, be pleased to know that we are we're pretty much there in terms of our budget of new members for this year already. And, you know, we are now with all of the new members, potential new members that are actually touring the club, this conversation is an active conversation because very often the question is, hmm, clubhouse looks a bit dated. And so, of course, you know, we're very openly discussing the fact that uh on top of the current 225, the initiation will go up to 250. There's uh zero pushback on that. In fact, it's seen as a positive in terms of the conversation with the new members. New members that are younger, they are wanting a more modern clubhouse, and frankly, they're willing to pay it at that level.

SPEAKER_03 13:06

I agree. That's what I'm hearing more than anything. And talking about the existing members now, they're not really discussing so much the assessment as the disruption of the clubhouse and how it's really going to impact them, especially a lot of our older members. How would you address that?

SPEAKER_01 13:25

That's certainly one of the biggest issues that's been raised. I think when you go through all the various things that have come up over the last three years in the surveys and the project, I think we've been able to address vast majority of them. The disruption issue is there'll be two seasons when the club will be under construction. The primary reason we're phasing the project is to deal with that. The first season, you'll basically have everything except for the ballroom and fireside room. So you'll still have 55, you'll still have the locker rooms, the grill rooms, you'll have most of the club room will still be available. So the disruption, I would think, would be pretty minimal unless you were somebody that wanted to use the ballroom all the time. And I think that on the second season, we'll have the brand new ballroom area, the new fireside room, and we'll be able to use the ballroom basically as a 55. We can put a bar in the middle of it like we have at 55 and utilize it in the same way. There's a page in the book, it's page uh 15 when you get to look at the book that tells you how you can access each of these areas and what's going to be open during the different phases of the plan. So I think we've done a pretty good job at dealing with that. One of the questions you get asked, well, by you know, doing it this way, are you adding cost? And it's actually not an add to the cost. The cost of general conditions of having contractors to do the two halves of the building is significantly less than what we envision the cost of the temporary facilities, primarily temporary kitchens that you'd have to have in order to service membership during the time period. And it adds four months, which will primarily be a summer season issue anyway. So it's really nothing extra in the length of it. The cost is probably slightly less, or at least called even. And we think we've got the disruption managed as well as we can. There will be some, but I think it will be a lot less painful experience than what people are envisioning.

SPEAKER_02 15:07

Trevor Burrus, Jr.: If you want to just put that into numbers perspective, right now between the club room and 55, we have 358 covers that we can serve on a nightly basis. In phase one, we'll continue to have 358 covers. Exactly. In phase two, when we flip to using the ballroom as everyday dining, we'll have 370 covers. So in fact, for that entire period, whilst we'll be under construction, we'll have no less capacity to serve members that we have now. And I would also put in a plug for the Breezeway. Hopefully, many people have been noticing that we have a much more expanded nighttime dining menu over at the Breezeway. And as we work on the acoustics over there, by the time we go into construction, I think the Breezeway will also become a really popular dining facility for casual dining at night as well.

Vote Details And Assessment Options

SPEAKER_03 15:56

Some of the members are asking, what exactly are they voting on and when is the vote?

SPEAKER_00 16:01

So the vote is going to be on two particular items. The first one is additional club indebtedness up to$60 million specific to the clubhouse project. Now that debt is in addition to the existing debt limits as specified in the club's bylaws. The second part of the vote is the refundable assessment amounts that are reflected on page 17 in the book. It's$15,000, one-time payment, or you can make three payments over roughly a 20-month period that totals$16,500. And those amounts are on a pro rata basis down depending on your membership category. The vote period will be from April 16th through April 30th, and that will be on vote now.

SPEAKER_03 16:46

Correct. So you'll be getting an email from them, and some of them might go to a spam, but just know that if you didn't get it on the 16th, to call me, Becky.

SPEAKER_01 16:57

And I think we should add that there will be a podcast dealing with the supersenior and the graduated, whether you call it opt into those to the supersenior category or opt out of the liability to pay the assessment. And there's a lot of details around that, but you do need to have those forms signed by April 10th.

SPEAKER_03 17:13

Correct.

SPEAKER_01 17:14

And then all the information on that is again is in the book that was emailed to you, and there'll be a hard copy mailed to your house in the next week or so.

SPEAKER_03 17:21

And that podcast will also discuss refundability, correct?

SPEAKER_01 17:25

Yes.

SPEAKER_03 17:26

Yes. And we will have another one with Fred and Max Lumis discussing the real estate market. So those are coming soon.

SPEAKER_01 17:35

I hope the short podcast gave you a little better feel for some of the issues that we've discussed. There'll be others. What I would ask all the members is to avail yourself of the information. We've spent a lot of time putting together the book. We're having, you know, this and other podcasts. Um talk to other members, but get up to speed. Over the last couple of years, one of the things we've learned is that people were asking questions or saying, you know, did you address this? And it's like, well, that was in the information we sent. And they said, well, we never we never read that. So I just ask you to read what the information that's out there. If you have questions, send us an email. We'll try to respond to as much as we can to get this to everybody. And I just think, you know, have some faith. It's it's a great club. We need to continue to be a great club. And to do that, we need to get the assets up where they belong. And this is going to be much like the Breezeway in that when it's done, everybody's going to wonder why it took us so long to do it. It's going to be a fabulous. I can't wait to sit in the Sunset Lounge and have uh David Weatherby buy me a drink. I'd be glad to do that.

unknown 18:33

Okay.

SPEAKER_03 18:34

And just as I had mentioned at the beginning, the books they're being mailed out to everybody. So they should be receiving them next week. And we also have the spring meeting on April 2nd. That if members have more questions and this presentation, I encourage everybody to come to that and to make reservations. And thank you, uh Mr. Treadwell, Mrs. Ruskin, and Mr. Weatherby. And we'll see you again. Thank you. Okay, thank you.