Long Term Financial PlanningTown Hall MeetingJune 16th , 2014

1896-1996: a vision towards 2046

Introduction Initial ProposalSurvey ResultsModified ProposalProjectionsOther OptionsWhat’s Next?Questions & Feedback?

Agenda

Protect our investmentGive the Board Direction

We need to plan over a longer time cycle than typical board cycles

Repair our aging infrastructureLeave the club better they we found it

Ensure the legacy of KYC

Introduction : Why do we need a Strategic Plan? March 2011

Harbour Project Grow membership, establish bigger base for future capital

projects Remediation Assessment indicated more work needed that

anticipated.

Required Remediation work put overall budget in excess of our borrowing capabilities

Requirements from our Preferred Lender: Sufficient “as built” appraisal to support the requested loan Ability to sustain the payments. Sufficient initial capital

Introduction (cont.)

Generation of New Capital

Fee Changes: 2015

All Categories, one time: ~24% 2016 – 2019

All Categories: (CPI+~1.5%)/year

Capital Assessment Rates: All Categories: ~17%/year Begin this year (2014), ongoing

Initial ProposalMarch 26th, 2014

166 Responses (44% response rate)

Survey Results

Junior Non-Resident Associate Single Family Life0

20

40

60

80

100

120

140

160

180

Total

Answered

No Unsure Yes0

5

10

15

20

25

30

35

AssociateFamilySingle

Survey Results (cont.)

Q18 If fees are raised as suggested, would you resign your membership at KYC (by Membership category)

Associates equally divided

90% Support investing in the renewal & maintenance of existing facilities

86% Shared among all member

62% Feel support raising membership fees to raise capital

Survey Result (cont.)

Summary Associates more likely to resigning

membershipAssociates not a strongly tied to the ClubNow enough value to justify new fees

Strong support for taking action

Good support for initial proposal

Survey Result (cont.)

Adjusted to have a reduced impact on Associate (non-voting) members Value proposition not yet strong enough, risk losing too many

Associates Would bring Associate fees back in line in the future

General Assumptions Fees (Harbour, Membership, etc.) increase at (CPI + ~1.5%)/year

Growth Targets Associates: 10%/year for 5 years Other categories: 2%/year for 5 years Modest growth or stable Membership after that

Current Proposal

Fee Changes: 2015

Family & Single: ~24%All others: CPI+~1.5%

2016 & beyondAll Categories: (CPI+~1.5%)/year

Capital Assessment Rates: Family & Single: 17%/year Associate & Nominee: 10%/year Begin this year (2014) Ongoing

Current Proposal (cont.)

Entrance Fees

Only applies to joining or upgrading

Equivalent to a percentage of membership fees Approximately 150% of fees

Payment plan to distribute over a few years Possibly 3- years

Propose implementing in 2016 Why 2016?

we would have one year to externally market: “Join now before the new entrance fee begins”

Incentive to upgrade membership before 2016 to avoid initiation fees It would also provide disincentive for current members to leave as they would

be subject to the new entrance fee if/when the rejoin.

Current Proposal (cont.)

2015 Fees

TypeFees 2015Projected(2014 + ~3.5%)

Fees 2015

Proposed

CapitalAssessme

nt(2014)

Capital Assessme

nt(2015)

Total Fees(% over

projected)

Family $838 $1,000 $137 $171 $1171 (42%)

Single $620 $743 $101 $126 $869 (42%)

Associate $338 $338 $32 $34 $372 (10%)

Assoc Nominee $127 $127 $12 $13 $140 (10%)

Non Resident $204 $204 $0 $0 $204 (0%)

Junior $86 $86 $0 $0 $86 (0%)

What would fees look like in 2015?

* HST not included

Parameters: Parameters as noted above (growth, fees, capital

assessment, etc.)

Where does that get us (financially)? Harbour expansion & remediation: completed in

spring 2017 Next Phase of remediation: 2027?

Projections

Projections (cont.)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Capital Assessment

Membership Fees

Harbour Fees

Dock Deposit

Capital Improvement &Replacement Fund

Capital Expenditures

Re

me

dia

tio

n #

2

Capital Improvement &Replacement Fund

Har

bou

r &

Rem

edia

tion

#1

Risk Considerations

Membership resignations not accounted for

Are membership growth goals achievable?

Projections (cont.)

We have had discussions with our current bank and a number of other lenders A 5-year fixed rate is as long as we would get from any

bank An amortization is unlikely to exceed 15 years

Our preferred lender Requires more Club equity in the project More cash flow in order to support the loan payments Sufficient security against the “as built” value of the

property

Other Options: Banks

Required to be paid back, so would only be an “add on” to current fee initiative

Member debentures could provide a way to finance smaller Club projects may not be suitable to assist with the harbour remediation and expansion. Our preferred lender requires the Club’s investment be in the form of

equity, not borrowings.

Once the Harbour Project financing is in place the Club could consider borrowing from members (debentures) for other projects, Club’s cash flow at that time would need to support the additional

borrowing.

Other Options : Member Debentures

Member Donor/Giving structure is being considered

How much could we raise from members? from outside sources?

Also would be an “add on” to the current proposal, but would serve to accelerate progress on projects

Other Options : Gifts & Donations from Members & Benefactors

Solicit final feedback

Seek Membership Approval Motions

#1 Membership & Capital Fees#2 Entrance Fees

Schedule Special General Meeting in July – Aug timeframe

What’s Next?

Ongoing Feedback Options• Survey to be made available shortly.• E-mail: harbourquestions@kingstonyachtclub.ca• Web: www.kingstonyachtclub.ca/newharbour

Getting your input