Kelowna Yacht club sinking in red ink

Kelowna Yacht Club members face $561,638 deficit

The Kelowna Yacht Club is faced with a projected deficit of $561,638 for the current fiscal year.

While there have been hard feelings and finger-pointing expressed at two information meetings this month about how the yacht club has evolved into its current financial crisis, there is also widespread desire to do what is necessary to avoid the organization falling into receivership.

Ken Good, a long-time yacht club member, said now is not the time to be arguing back and forth and placing blame for the club’s current financial predicament.

“It’s an ugly situation financially but the message for the yacht club board from my perspective is to get it fixed,” Good said.

“There is 70 years of history with the yacht club in Kelowna and we’re not going to just let it go.”

A membership meeting is planned for Sept. 21 to vote on financial changes proposed by the yacht club board of directors, but not all the proposals have the unanimous support of the board and some have raised concerns among individual members.

Each of the 1,627 members will be asked to support a $500 increase in annual membership dues and defer benefits from the minimum house account charge of $500 for the next fiscal year.

Another proposal called for a one-time $350 payment to help cover the 2017 losses but it’s unclear if that idea will be brought forward at the meeting.

The yacht club facility manager was fired Sept. 1, the third consecutive person hired for that position who was ultimately found not “ideally suited” to do the job. The search process for a new GM is now underway.

Other actions focus on the members’ lounge, a sinkhole of red ink due to bad management and a dysfunctional designed kitchen.

The lounge would be reduced in size and part of the existing area demarcated for self-service by club members; the menu would be simplified from its current high-end restaurant format; and yacht club events would be revenue neutral or profitable wherever possible.

There is also an estimated $400,000 in dock repairs required due to a lack of maintenance over recent years which would be addressed.

How the yacht club fell into its current precarious financial position dates back to when the new clubhouse was opened.

In a report to club members, Don McEachern, vice-commodore of the Kelowna Yacht Club, explained that general revenue ramped up in 2014 “due to a moorage basin and membership expansion especially with lucrative initiation fees as we moved into our new building.”

But while those initiation fees provided a nice cash cushion for future budgets, revenue has been on a steady decline in the years since while operating expenses continued to rise.

“As a result, our cash reserves have been regularly depleted, until this fiscal year when they have been drawn down more quickly.”

While the new clubhouse was initially widely celebrated for its unique design and serving as a new landmark for Kelowna’s waterfront, the reality is operating deficiencies and poor management decisions have since led the organization into its current crisis.

McEachern’s report says it has been “more costly to operate and maintain than was originally assumed. Significant capital has been expended in correcting design flaws, defective materials and a very dysfunctional kitchen.”

One member told the Kelowna Capital News leasing out space to the Cactus Club, a popular restaurant with a lease that is financially detrimental to the yacht club, has worked against the concept of the club’s upstairs lounge operating as a high-end restaurant.

While what to do with the lounge moving forward remains a contentious point of debate, of equal concern is the proposal for increased membership dues, in particular how that will impact social and corporate club members.

The membership fears are two-fold: Will increased fees give pause for boat owners to re-evaluate the investment in their boats, and will non-boat owners opt to spend their money elsewhere.

“You are basically asking people to spend $1,000 more a year while reducing the level of service…with the possibility that the club may ask for more money next year,” a yacht club member told the Capital News.

“People who are boaters might go along with that because there are limited moorage options, but for social or corporate members without a boat, they could just as easily spend that money elsewhere.”

The social and corporate membership dues are important because a high percentage of boat owners in the club are part-time Kelowna residents or use their boats infrequently.

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