Copper Health:
Why We Will Now
VOTE TO SELL

PLEASE  -  BEFORE  YOU  VOTE  ON  THE  Copper Health  Bldg.  READ  THIS:

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My name is John Balaco, we have owned our Sun City home since 2016. I have a BA in Biology and Chemistry, an MBA concentrating in Finance and Marketing. I am a Florida licensed Real Estate Agent and Community Association Manager (CAM). I worked 10 years in Finance at Caterpillar, a top Fortune 100 Company, where I was a member of the acquisition team involved in purchases of multinational companies. Since leaving Caterpillar, I have invested in, renovated, operated, and sold a 110 room resort hotel, a polymer chemical plant, several food & beverage establishments, plus numerous investment properties in Florida. I was CFO then Board Chairman at the Chemical plant, Hotel VP and General Manager, and president of our restaurant operations. I am currently treasurer for a Florida Condominium association. I understand the process of purchasing assets and the information required to properly analyze the financial risks.

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The following are my opinions regarding things that residents should consider prior to casting a vote to purchase the Copper Health facility. I am making no recommendation as to how to vote. Just attempting to provide a discussion of the financial risks I believe everyone should consider.  I hope everyone will carefully consider all the available information and please VOTE.

 

I have been to both Board meetings, the Special Finance & Budget meeting, one chat, two forums and watched the video several times. I believe this is a major decision and each resident should have as much information as possible to intelligently cast a vote. I believe every resident should weigh the benefits vs. financial risks as it relates to their situation. I also think the Board is obligated to provide as much unbiased fact based information as is available. The following are my observations and opinions:

The Copper Health video, chats, and forums do a good job of highlighting the benefits of acquiring the facility. These are many. Having this size building can offer many opportunities. The original internal financing of carrying a negative $3,000,000. balance, for the building purchase, in the Capital fund made sense. And in my opinion, posed an acceptable financial risk to residents. However, the new $2,700,000. renovation cost estimate results in a $5,200,000. negative balance, a 49% increase. This increases the individual financial risks plus extends the payback period by at least 2 years to 7- 8 years. I believe the Board has glossed over the total impact of this purchase. There is a much larger financial picture with large financial risks associated with this vote. Future Boards will be severely limited in projects that can be considered.

 I believe the following factors need to be considered:

1.       Cost to renovate the Copper Health building: We must recognize that if the building is purchased it must be renovated to allow usage that benefits the Association. The best uses will be determined and, without a doubt, benefit the community. But THE BUILDING MUST BE RENOVATED and somehow paid for. Most everyone, including Tim Kelly, recognizes that the $1,000,000. used in the financial forecast was low. Our Board president has upped that to $2,700,000. (another guess) - this results in the Capital fund staying negative for at least 7- 8 years. Additionally, there will certainly be unanticipated costs when a medical facility is converted to SCOV uses. When and how renovations take place will affect our balance sheet. I expect it will be more costly and take much longer than 7- 8 years to return the Capital fund positive. I believe this poses a financial risk to residents. Future Boards COULD fund Copper Health renovations or other capital projects by raising our annual homeowner fee by up to 15% and / or levy a Special Assessment in the amount equal to 5% of gross revenues for the prior fiscal year, both without a resident vote per Master Declaration 3.1 and 3.2. Using 2022 fiscal year, that translates to a 2023 annual dues increase of $2,135. x 15% = $325. and a Special Assessment of $10,280,225. x 5% = $207. Totaling $532. resident cost increase.

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2.       Annual increase to Maintenances fees: The video shows that the cost to operate the Copper Health facility will only add about $9,000. to our costs. I believe this is grossly understated. To indicate a 22,000 sq ft building with at least 8 individual HVAC units can only use $6,200. in electricity and $1,300. in gas annually, as a commercial building owner, seems absurd. When this was disputed, the board member's response was, "That information used was the best we had based on the Activity Center." - which has been closed for over a year and is connected to the solar array. For reference, the annual per sq ft cost of electricity shown in the video for the building is .28 cents.  Using that number for a typical 2,000 sq ft residence results in annual electric costs of $512. or $42. per month. We need the actual Copper Health utility numbers. Lowball, unverifiable estimates should concern everyone.

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3.       Property Values:  Having a renovated 22,000 sq ft multi-use facility, new hard courts and updated Artisan Center could positively impact our long term property values. But, as a long-time realtor, I believe there is also a risk of a near term, negative impact. A balance sheet that carries a $5,200,000. negative Capital Fund balance could raise a red flag to potential buyers.

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4.       Cost Avoidance:  In a December 12th email, the Board President shows, by buying the Copper Health building, a cost avoidance of about $2 million. But this assumes several very expensive future projects would be approved by resident votes, for example approval of $4,500,000. for the Artisan Center renovation. In no way is residents’ approval a given. However, if the Copper Health building is approved, costs identified in our HOA President’s December 12th email, including the $4,515,00. Copper Health building  purchase, $2,700,000. Copper Health renovation costs, the Welcome Center demolition, and $1,800,000. existing Artisan Center renovation, may have to become a reality. So, in my opinion, we are actually voting on over $9,000,000. in future projects.

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 This is a major purchase for our community. Before voting on purchasing the facility, consider the  $4,000,000. - $5,000,000. associated projects. Every resident should analyze all the information and decide what level of financial risk they are willing to accept. I don’t think anyone should vote until we have the opportunity to inspect the facility and review the all Due Diligence information.

Then please Vote!