EDITORIAL: Withholding Information is Bad Business

   Normally a homeowners association and its business wouldn’t be newspaper worthy, especially in a county along the US border in the middle of an immigration crisis, but Fort Clark Springs Association is not your run of the mill HOA. As of 2024 the Kinney County Appraisal District depends on FCSA (the property within Fort Clark Municipal Utility District)  as the second largest tax contributing area, approximately $33.5 million more than the City of Brackettville. Fort Clark MUD’s independent audit lists the financial health of FCSA as a notable risk factor. Where else can you find a HOA that is responsible for a significant portion of the buildings that contribute to one of the rarest historic districts in the country, a private landfill, a golf course and pro shop, an airport, a motel, a hunt program, a 1,000,000 gallon spring fed pool and swimpark, a bar, and at minimum, 1,600 acres of common property? This is a full on, multimillion dollar business.  A business that has a significant impact on the county at large, and 1,600+ shareholders that deserve to be informed and educated on its financial health and operations. 

  Now don’t get me wrong, FCSA has taken steps forward. The engagement of a financial consultant, the movement of funds to interest bearing accounts, and the addition of a management software are all positives, but we also need a calculated, methodical approach along with transparency on all fronts. Current directors have called for such transparency on social media prior to election to the FCSA board. Shareholders (members) have not received the required audit for fiscal year 2022-2023 that was due in March of 2024, and it seems nonsensical to expect the 2023-2024 audit will be delivered at the annual meeting in March 2025. Let me be clear, in no way am I professing that any director or employee has their hand in the proverbial cookie jar. In fact it appears there is very little money left after operating on a daily basis, despite two assessment increases in the last twelve months. In other words, there aren’t many cookies in the jar.  I am saying that we need to know where and how we are spending our limited funds, and what our plan is to revive the assets and operations many of us fondly remember. 

  In July of 2024, I met with our financial consultant, general manager, and the board of director’s treasurer and president to address a few questions I had after reviewing the profit and loss statement presented to shareholders. We went line by line to address my concerns, and some adjustments were made to future statements to give a more accurate picture of the operational income and expenses. These are all great things, but I was caught off guard when we got to the end of the conversation. While the profit and loss statement accounts for all of the operational funds from month to month, it was clear that there are other revenues and expenses that do not appear on this statement. I asked our consultant where these numbers would appear, and she stated that to see a full picture of the finances, members would need a cash flow statement and a balance sheet. Seems simple enough. We pay for Quickbooks and a financial consultant so I am going to assume that there is a canned report, or one that can be developed, to quickly produce this information month in and month out. It can probably even be automatically distributed to management without a single human touch. However, President Lisa Vale was quick to inform me that the publication of these reports was at the prerogative of the board of directors. I agree - it's their choice, but why not? More information makes for more constructive conversations. 

   The board recently held a workshop to discuss project planning. How do we even begin the conversation if we can’t see the full financial picture? At one point there was discussion of commissioning a reserve study by a third party to determine the funds needed to operate and improve our common property. Let’s hope we move forward with this study because it is a critical element in the discussion of our future. I’d argue it’s not even worth having the planning discussion without some version of a reserve study. In the future, I’ll further discuss the pros and cons of a reserve study. 

   In November it was reported FCSA had a net operating income of about $28,000. This is better than expected. When diving into the numbers you will see a better than expected income from the hunt program, but further down the profit and loss statement you will see that we overestimated our payroll expenses by about $58,000. So did we over achieve in one of our commercial areas? Yes. However, the deeper analysis shows the significant difference is in the payroll expense line item. We simply did not pay as much as we thought we would. That’s either some serious operational efficiency, or we overestimated by a country mile. I’d bet on the latter. We’ve changed accounting methods, brought on a new general manager, and hired a consultant. Growing pains are to be expected. This is a clear example as to why all the numbers are needed to see the full picture.  

  More recently I've had success communicating with our general manager about suggestions and concerns, but that’s not who is controlling the flow of monthly financial statements. That was made clear to me in July when our board President declared the directors would decide what reports to publish despite our paid professional financial consultant’s statement. As shareholders we are told by our elected directors to ask questions and to reach out if you have concerns. That’s great, and I hope you ask questions to improve your understanding. At this point it seems I have reached the question limit because to quote Director Wiley in response to my questions in an email, “It’s hard to interpret your request as genuine in nature”. As if I’m asking these questions for my health, or to somehow undermine the community where I live, run a business, and strive to volunteer in a meaningful way. Perhaps you’ll have better luck and not be scolded and patronized at the next FCSA business meeting.