Columbia Association ends fiscal year on target

July 02, 1993|By Adam Sachs | Adam Sachs,Staff Writer

If there's a recession going on, you'd never know it by looking at the the Columbia Association's books.

Overall, the nonprofit corporation -- which runs Columbia's recreational facilities and community programs, and maintains 2,700 acres of open space -- generated $31.7 million in income, falling just $6,000 short of its 1992-1993 budget estimate, according to CA's year-end budget report. Expenses totaled $29.7 million, exceeding projections by $126,000, or 0.4 percent.

The association's recreational facilities enjoyed a banner year in fiscal 1993, collecting $735,000 more than expected from membership dues and facility fees, breaking the record for usage.

But that revenue surplus was partially offset by a $413,000 shortfall in property assessment revenues. The association charges property owners 73 cents per $100 of assessed property value to run its programs. The budget year runs from May 1 to April 30.

The $2 million difference between income and expenses was used to reduce CA's deficit -- the yearly accumulated losses from operating facilities and services -- from $22.4 million to $20.4 million.

Association President Padraic Kennedy says CA aims to eliminate its operating debt, which peaked in fiscal 1985 at $28.9 million, by 2000.

By reducing its deficit, the association can decrease the amount it must borrow to plug budget gaps and slow the growth of its $83 million long-term debt, money that was borrowed over the years for capital projects, said Robert Krawczak, CA vice president of administrative services.

The association spends about 27 cents of every $1 of income to pay interest on debt, as compared with 36 cents in 1985, he said. A reduced deficit could improve CA's credit standing, translating into more favorable interest rates, Mr. Krawczak said.

"It can give the council in the future the opportunity to do more in terms of facility rates, services and quality than it can do right now," he said.

But in the short term, the council made decisions that will increaseCA's debt and interest costs. In the middle of the budget year, for example, the 10-member Columbia Council, which oversees the association, decided to borrow $5 million for new capital projects to take advantage of low interest rates.

It also approved construction of a $5.2 million golf course, anticipating that the project eventually will be profitable.

Income from the association's Hobbit's Glen Golf Course, for instance, exceeded daily operating expenses by $174,000. However, once interest expenses, depreciation and administrative costs were included, the course added $538,000 to CA's deficit.

Critics have charged that CA has borrowed too heavily over the years, increasing debt, operating costs and the financial burden on residents.

The unanticipated bond issue this year, for instance, cost CA $432,000 in extra interest. The association also took in $413,000 less than expected in property liens, attributing the shortfall to a dearth of new construction and a slower rate of growth in property values.

Performances by CA's three operating divisions -- membership services, community services and open space management -- helped offset the added interest expense and the assessment shortfall, Mr. Kennedy said.

"All our operating divisions ended the year significantly better than budget," he said. "The strengths of our operations were such that we basically achieved the bottom line we originally projected."

Mr. Kennedy said the Supreme Sports Club, for instance, recorded 540,000 visits in fiscal 1993, leading the nation in attendance among similar clubs, according to the International Racquet and Sports Association.

Also noted in the annual financial report:

* Columbia's 21 outdoor pools operated at a $1.4 million loss, including interest costs, depreciation in value and administrative expenses.

* Grants awarded to nine community associations totaled $1 million, and the total cost of running village community centers was about $2 million.

* Property charges totaled $16.3 million, or about 52 percent of CA's income. Most of the revenue is applied toward offsetting

operating losses of CA's divisions.

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