The House Committee Report *****
Some
Members say “We’ve been had”.
Others call it “Hoodwinked”.
And, like many of you who have made your opinions known to the Member Committee, we feel inhabited by the ghost of Howard
Beale, the fictional character in the 1976 movie “Network,” who shouted out “I’m mad as hell and I’m
not going to take this anymore!”
The problem is, who will listen? And if they do, is there any meat or merit to
the memberships’ contention that it is the victim of a bait-and-switch scheme perpetrated by Ownership and Management
in gaining support for its 2005 Development Plan?
In a yearlong effort to assess
members’ rights and obligations under different versions of Addendum B, replaced at the last minute with the IMA, the
committee—with personal funds donated by members—employed two independent legal firms and a CPA firm that specialized
in private club law to provide some clarity as to the potential effect of the documents. The Member Committee has also attempted
to work with Management to rectify many of the problems we are facing, but Management is frequently unresponsive.
Before highlighting some of the more glaring issues that came to light in these analyses, something our attorney wrote to
us recently bears repeating here: “You need to be very careful about giving these folks (Four Seasons/Ty Warner) any
sense that anything about what they have proposed has contractual legitimacy…you don’t negotiate from their artifice
(def: a subtle but base deception) as a starting point. To do so is necessarily to the detriment of members because it attaches
legitimacy to that artifice.”
That being understood, following are some significant points:
1.
Dues cap: The renovation plan was approved based, in part, on the owner’s
agreement to cap dues at the rate of inflation for at least 10 years. The replaced Addendum called for a dues cap based on
any increase in operating expenses instead of a cost of living index. According to our CPA’s determination it is impossible
to make a calculation based on their formula’s wording “because its literal interpretation requires subtracting
amounts stated in dollars from amounts stated as percentages, a calculation that cannot be made.” Furthermore, operating
costs incurred by a management company that is inexperienced in running a private club could be very expensive to members,
particularly when we have no say in decisions that create those expenses, some of which are driven to serve hotel guests and
would be consistent with the Four Seasons’ high-end brand pricing. Management actually has a disincentive to control
costs, since great costs leads to greater dues increases, which should permit great operating profits. Since accounting is
done by the Manager, it is likely that most of the many gray areas will be decided in a way that favors the Manager.
2. Guest fees,
legacy memberships, membership recruitment and retention: The imposition of a significantly increased guest fee severely
limits members’ ability to bring guests and family to the club as does an increased fee which makes it difficult or
impossible for children of many members to join. The Coral Casino has traditionally been a family-oriented club.
Current marketing of the club membership is not done directly, but is bundled with two other clubs owned by the same
owner at a cost of $250,000, a fee that has caused Coral membership to remain stagnant while using the club’s traditional
appeal to attract membership to other properties which will, under the IMA, cause current Coral members to endure higher than
necessary dues increases.
3. The Raft and other losses: Elimination of the Raft removed what many members regarded as a central
gathering point. The upper sundeck gave way to a new restaurant and the grassy area patio outside the Ball Room is now considered
part of the hotel’s conference facilities. Heretofore, the Rules provided that the location of “member’s
only areas” of the club could be modified only by agreement of the member committee. The IMA now states that the Club
Owner can modify location and utilization of an exclusive members’ area “if reasonably necessary to comply with
applicable law.” The vague language is a red flag that member usage could be more frequently usurped, transforming the
Club into a hotel facility.
4. Food and beverage analyses and surveys: Earlier this year, we took on the task of doing an analysis
of food and beverage pricing at comparable facilities in the area and found the Club’s pricing to be unreasonable and
non-competitive. For example, after our 15% discount, prices for popular cocktails at the Coral Café were found to
be 44% higher than at comparable facilities, and Tydes’ prices were 70% higher. Indeed, Tydes’ drink prices were
27% higher than at the co-owned San Ysidro Ranch. A similar situation was found to exist with food pricing at Tydes. We have
fought to bring these prices down, and we have sought unsuccessfully to stop Management from charging us tax and gratuities
on the discounted portion of food and beverage prices that we do not pay. We adopted an unanimous motion on May 26 asking
Management to report back to us with a response to our findings. They chose not to do so. In order to ascertain if the membership
shared our concerns, we conducted a survey to which approximately 140 members responded. We were frustrated in these efforts
because Management refused to provide us with a list of members and their contact information. (Indeed, we still continue
our fight to get a members’ directory prepared.) The survey results confirmed our view that members generally gave more
favorable reviews for the Café, other than beverage pricing and menu variety, both of which remain significant problems,
members also shared our concerns with Tydes. The more pertinent results are summarized here, and copies of our analyses and
specific survey results are available on request:
•Fewer than 20% consider
Tydes a first choice when dining out.
•58% are unhappy with selection and variety.
•More than 83% are unhappy
with food and beverage pricing.
•89% feel prices are not competitive.
There is no efficient way to summarize the complex permutations or legal land mines in the framework of this letter, rather
consider it a cautionary communication, one from members who are more-than-mildly disappointed and feeling very much betrayed
by an owner and business entity that is clearly bent on turning the Coral Casino into an adjunct facility for the benefit
of the Four Seasons’ Biltmore Hotel.
We would urge that the General Membership
ask the Member Committee to retain such help as needed to explore all available options to guide us in an organized effort
to restore the Coral casino to a private club run principally for the benefit of, and responsive to, the
members. We are faced with a choice: do we want to continue to be able to access the beautiful facilities that are increasingly
being run as an adjunct to the hotel serving unlimited hotel guests, or do we want to restore a private beach club atmosphere
that is responsive to the needs and preferences of its members? It is important to remember that the Coral Casino is located
on residential property and is conditionally permitted to operate by the County only as a private club.
If we continue to do nothing, that is exactly what we will get, or worse.
Sincerely,
The House Committee
October 15, 2009
