When the FY 2019 (year ending April 30, 2019) financial statements were presented to the CA Board of Directors during the summer of 2019, I questioned the poor cash position of the organization. CA had less than a day of operating expenses in cash deposits, lacked an operating reserve, and had structural underlying financial concerns. The senior leadership team and some members of the board of directors explained to me that, "this is the way we have always done it." In early 2020, the CA Board of Directors approved an FY 2021 (year ending April 30, 2021) capital budget of approximately seventeen million dollars. I voted against the capital budget, as it encouraged limited liquidity and was accompanied by discussions about raising the assessment from 68 cents to 69 cents per $100 of assessed value to raise money for continued spending. However, I was so concerned about the financial stability of CA that I also abstained from the vote on FY 2021 operating budget. And so, Columbia Association continued to operate with little to no cash reserves and continued spending.
And then there is today. Some would call this a healthcare crisis, others would call it an economic or financial crisis, still others would call this a leadership crisis; for the residents of River Hill and Columbia Association it is all three.
As the COVID-19 crisis spread, so did the the economic crisis nationwide and locally. Credit markets began to seize and the ability of organizations to borrow money disappeared. CA's line of credit lender limited the association's ability to use its credit facility. CA senior leadership was tasked with resolving this issue by either refinancing with the current lender or seeking a credit facility with another lender. As of today, this situation has yet to be resolved.
During the April 24th Board of Director's meeting, CA senior leadership presented revised operating and capital budgets for approval. The capital budget was reduced from $15 million to $8 million, but still contained $500,000 in new vehicles and $820,000 in Sports and Fitness, all of which would be financed by borrowing against our line of credit or excess cash flow. I again expressed my dismay and voted against the revised capital budget. The proposed operating budget reflected a 25% reduction in income and a 22% reduction in expenses leaving the organization with an increase in Net Assets (Net Income) of only $34,000. Over the last three months, CA has withdrawn three million dollars from its self-insurance trust to cover its operations.
Soon the CA Board will be faced with more choices to ensure the financial viability of the organization. This brings me to a crisis of leadership. Leadership during a crisis is about open, honest, and transparent communication. Leaders cannot over communicate to their team members or community. The Board has received little communication from the President or the senior leadership team, including not being forthcoming about CA's ability to refinance our line of credit. As the Columbia Council Representative from River Hill it is my responsibility to build resiliency in the community, envision a post COVID-19 community, and to lead from the future. I pledge to be open, honest, and transparent as this situation unfolds.
Reprinted from an email blast from the Village of River Hill written by me on May 14,2020.