Letter from Lee Fossett

I feel the need to clear the air regarding comments made by my running mate for the upcoming POA Board of Directors election. They were taken from our very successful first campaign rally.

Our campaign’s issue from the beginning has been that failure to publish comprehensive financial statements breeds confusion, confusion breeds suspicion, and life is all a rumor mill after that. Here are the facts as we’ve been able to interpret them.

Fact. The Auditor’s report from Earney and Company, dated September 17, 2024, discusses the FHPOA year ended February 28, 2024. Page 4 discloses that FHPOA had a cash balance of $819,635 total in both reserve funds. That same balance sheet shows $203,873 in cash in the operating fund. The report is on FrontSteps.

Fact. FHPOA has published NO comprehensive financial statements, including balance sheets, income statements, and cash flow statements covering any transactions made since February 28, 2024.

Fact. Since February 28, 2024, FHPOA has borrowed $ 6+ million. Together with interest, it creates, by some estimates, a $10 million liability for our Members. Those liabilities, including the amount due in the next 12 months, are required to be shown on a balance sheet. There are no published financial statements showing the loan and its effect on our finances.

Fact. There has been only one treasurer’s report published since the loan obligation was signed. That report is a three-page discussion of the details of the income statement for the Golf Course and the Restaurant. It does not mention the loan obligation at all. The report is posted on Front Steps.

Fact. There was a Treasurer’s report given at the April 23, 2025 Board meeting. That report discussed ONLY the POA income statement. NO mention was made of the Balance sheet and our liabilities. That should be published on Front Steps “soon”.

Verbal statement by our Treasurer in the February Board meeting when asked, “How much operating cash balance do you forecast for the end of the year”. Answer “zero” cash at the end of the year.

Verbal statement by our Treasurer at the April Board meeting. “Subject to some reclassifications, I now project a profit of approximately $33,000 for the year ended 2/28/2024”. (Note that “profit” is not necessarily CASH, and it takes CASH to pay a loan.)

Verbal statement by our Treasurer when asked, “How much money is available in reserve for recovery from a disaster”? Answer: “Zero, that’s why we’re budgeting to contribute to that fund in the coming year.”

Verbal statements in Board meetings by both our Treasurer and our Property Manager “We have been fortunate to be able to use the “dues increase” that was levied for the clubhouse construction for other purposes due to delay in starting the clubhouse.”

Our interpretation of all the above. 

FHPOA had over $800K in cash in reserve on 2/28/2023. Our Members have no idea how much we have now. It could be zero, but we doubt that. FHPOA had $203,873 in cash in the operating fund on 2/28/2023. Based on our treasurer’s verbal comment, we expect that it will be reported as zero as of 2/28/2024.

FHPOA has assumed a liability of about $10 million on behalf of its members. This means that FHPOA has obligated each member to pay approximately $3571 through dues over the payback of the loan. This has not been discussed in ANY formal report to the membership since its inception. Given the public statements that the clubhouse funds were used for other purposes, we conclude that there is zero underlying reserves to support timely payments of that liability.

FHPOA has stated in a public forum that there are zero dollars in reserve for recovery from a disaster. We assume that zero means zero. However, today, we have a Facebook post that claims $110,000 in that account. Note that we spent $1.2 million to recover from Florence, and we had a line of credit to absorb part of it. A Facebook post claiming $110K now substitutes for comprehensive statements.

PLEASE hold us accountable. Publish a balance sheet to the Members showing the accounts mentioned in detail, signed by a CPA. We’d be HAPPY to apologize for our facts being wrong, but the issue of failure to report in a transparent manner is a very real issue. Please comply with NC statute 47F and publish a full income statement, a full balance sheet, and a cash flow statement for the year ended 2/28/2024. It’s required within 75 days after the close of the year.