Silver Beach Improvement Association Purchase of 196 Crystal Spring Ave. April 5, 2014 Silver Beach Improvement Association
Agenda � Review Opportunity & Timeline of Events � History of the Tea Room -- Pros & Cons of Purchase � Specifics of the Purchase -- Financing Options -- Questions/Details Still To Be Addressed -- Voting Process � Next Steps � Q&A Silver Beach Improvement Association 2
Ground Rules � 35-45 Minute Presentation � Please hold questions until presentation is over � The conference call has been muted to avoid disruption � Questions will be done orderly, lining up to use the mic so people on the phone can hear � Questions from people on the phone will be done via email, submitted to newsilverbeach@gmail.com � Let’s be respectful, don’t talk over each other or have side conversations � Everyone will be given a chance to speak and to be heard � Let’s respect each others opinions and understand we all have different vantage points � We will stay as long as needed until all voices have been heard Silver Beach Improvement Association 3
Silver Beach Improvement Association 4
The Role of the Board and The President • Do the due diligence on the potential property acquisition • Present the facts as I see them • Give an unbiased opinion • Allow all members of the association to voice their opinions • Lead the Board to produce a motion for the association members to vote on • Get out of the way and let the members of the association decide if they want this property • If approved, assure that the purchase is successful and nothing hurts the long term viability of the association Silver Beach Improvement Association 5
Timeline of Events � February 2014 – Ryan Hutchins received communication from Jeff about potential for a Sale � Late February 2014 – Ryan and Jeff discussed the parameters of the sale � March 1, 2014 – Winter Board Meeting – Board voted in favor of negotiating the purchase of the property � March 5, 2014 – Ryan and Michael McCarthy met with Jeff Gummow to tour the property and negotiate a deal � March 6, 2014 – Letter of Intent Sent to the Gummows � March 8, 2014 – Executed Letter of Intent received from the Gummows � March 12, 2014 – P&S Emailed to the Gummow’s attorney Silver Beach Improvement Association 6
Timeline of Events � Anticipated Dates � April 5, 2014 – Executed P&S � April 5 , 2014 – Meeting with SBIA Members � April 7, 2014 – Board Meeting to Approve Vote � April 11, 2014 – Mailing of Voting Materials � April 30, 2014 – Voting Closed � May 1, 2014 – June 15, 2014 – Due Diligence � June 15, 2014 – Bank Commitment � July 2, 2014 - Closing Silver Beach Improvement Association 7
History of the Tea Room How it all began… Do you remember… 1921 the Florence General Store was opened � The square dances (and, gasp, the rock ‘n roll � by Fritz and Florence Lindskog bands of the 60s) 1923 an outdoor beer garden was added � Tea and Dinners being served upstairs � (after prohibition ended!) � The sheet of paper at the general store you 1926 Post Office opens could sign if you didn't have money with you � 1934 began holding dances upstairs � The famous doughnuts and fresh baked � muffins 1948 the Lindskogs sell the Tea Room to the � Cunninghams � Your post office box number 1980s Tea Room sold to Gail Roycroft and � The soda bar � Joanne Leasure � Pinball, pinball and more pinball 1987 Tea Room sold to the Gummows � � Carving your name into the table (we wont tell) � The jukebox (with disco tunes blaring) � TRICS ice cream (yum) � Bands playing on the roof � Friends, friends and more friends! � NO PARENTS! 8
Pros of the Purchase � Prevents anyone from developing the property � Preserves the history of the Tea Room for future generations � Property can be used to its fullest extent including tea room, beach storage, store, association events � Expense reduction - Inclement weather rentals � Possibility for public restrooms / outside shower � Potential revenue stream for the association (yoga classes, babysitting services for events, etc. ) � Potential outside eating area � Expanded use of Tea Room including � General Store � Prepared Foods � Coffee and Light Breakfast � Family Beach Storage Silver Beach Improvement Association 9
Cons of the Purchase � Increase to dues and/or special assessment � Liability with operation of store � Risk with flooding and hurricane damage/High Cost of Insurance � Having to use Tennis Court Property as collateral � Loss of Members � Association Burden of Running Store and or being a Landlord Silver Beach Improvement Association 10
The Deal � Purchase Price - $855,000 � $5,000 Refundable Deposit � Additional $35,000 Deposit payable 5 days after positive vote � .381 Acres � 5,195 SF � Closing Date – 7/2/14 (60 Days After Vote) � Gummow’s to Rent Unit until 9/1/14 @ $2,500/mo � All Tea Room Equipment Included � Select Tea Room Memorabilia Included Silver Beach Improvement Association 11
Dues Comps from Similar Associations � Popponesset Beach Club - $400 Summer (Raked Beaches, Security) � Wild Harbor Estates - $750/Summer (No guards, security only) � Wild Harbor Yacht Club $150/Summer (Use of Boat Ramp) � Megansett – $1,400/Summer (Plus $1,500 Bond per family) � Seascape – � Nye’s Neck - $500/Summer (guards and roads) – swimming lessons extra! Silver Beach Improvement Association 14
Financing Options for Consideration � All Options Will Have Increased Dues � 3 Specific Options We Studied 1. Assessment and Increased Dues – 80% Loan 2. Selling of Bonds and Less Increased Dues 3. No Assessment and Increased Dues – 100% Loan At this point, we think Option #3 is the best � No short term assessment burden � Silver Beach Improvement Association 15
Option 3 – 100% Finance – No Assessment � Increase in Dues Current Membership 375 Members 216 Regular 64,800.00Increase Dues by $300 - T o $500 135 Senior 13,500.00Increase Dues by $100 - T o $200 Get Rid of Junior Level, $425 31 Junior 10,075.00 Increase Assume we lose 15 full paying Attrition -7,500.00 members Dues Increase Net Income 80,875.00 Silver Beach Improvement Association 16
Option 3 – 100% Finance – No Assessment � Income Ordinary Income Income 4010 · Additional Dues Income 80,875.00 See Previous Slide 4030 · T ea Room Income 55,000.00 $5,500/week at 10 weeks 4090 · Convienence Store Rent 3,000.00 2 Months at $1,500 4170 · NSBIA Store 3,500.00 Additional Store Sales 4180 · Association 10 events at $250 - rental of Functions 2,500.00 upstairs T otal Income 144,875.00 Silver Beach Improvement Association 17
Option 3 – 100% Finance – No Assessment � Expense & Net Income Expense 5000 · T axes 4,751.45 2013 T ax (8.15) * Value of $583,000 6140 · NSBIA Store purchases 1,500.00 In addition to other budget 6140 · NSBIA Food purchases 33,000.00 60% of Income 6180 · Insurance - Flood 21,000.00 Quote 6180 · Insurance - Liability 3,500.00 Quote 6230 · Licenses and Permits 1,500.00 Health Permits 6270 · Professional Fees 1,500.00 Misc. 6290 · Mortgage 55,200.00 855k, 5%, 30 year fixed - $4,600 6300 · Repairs and Maintenance 5,000.00 Assume 5k a year, every year 6350 · Equipment purchases 3,000.00 Assume 15,000 ammortized over 5 years 6390 · Utilities 3,000.00 Assume 250/mo 11am -10pm, 7 days a week, 10 weeks - 6555 · Salary 8,600.00 $10/hr + 2 people @ night 3 hours, T ,F ,S 6560 · Payroll Expenses 3,010.00 35% of Salary T otal Expense 144,561.45 Net Income 313.55 Silver Beach Improvement Association 18
Questions To Be Addressed….At Some Point � Do we rent out the Tea Room or run it ourselves? � Do we rent out space for a general store or setup a general store as part of the tea room operation? � Do we use upstairs as a clubhouse or rent it as an apartment….or rent it out in the Winter? � Can we get volunteer labor to run the Tea Room? � Permit – On Selectman’s Agenda in April � Separate Legal Entity Created For the Purchase? � Betterment for Sewer? Silver Beach Improvement Association 19
The Vote – 2011 Bylaw Revision � Membership � Full membership shall be limited to those people residing in the area bounded by the property, formerly owned by the Silver Beach Improvement Association, Inc., presently owned by the Wild Harbor Yacht Club, from the inner harbor to Wild Harbor Road; then along Wild Harbor Road to Quaker Road; then along Quaker Road to the land known as Wild Harbor Estates; then along Wild Harbor Estates boundary line, but not including Wild Harbor Estates to Wild Harbor. These requirements for full membership shall apply immediately, but shall not pertain to those existing members in good standing who are now full members and continue to be full members in good standing. Full members shall consist of both the regular full membership and senior full membership levels. Silver Beach Improvement Association 20
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