Agate Bay Resort
Shareholder Report from the Board of Directors
22 March 2022
Zoom Meeting Registration Link
https://us06web.zoom.us/meeting/register/tZElcO-hpzsqH9wwxfyOuBtJhsaNTXUaF65R
Dear Shareholders
It is 7 months since most of us joined the Board of Directors and it has been a busy time. We have been working to clarify the issues the resort is facing, how those might best be resolved, and the costs of doing so.
We are calling a shareholders’ meeting on 24 April 2022 at 11am to discuss the way forward and our aim is for you to have notice and information in advance so that we can be as efficient as possible at that meeting.
It has been raised that the AGM should take place on May long weekend. For the past two years, this has been pushed to August due to Covid. We would like to push it to August for one more year to enable us to deal with these pressing issues below now and then hold the AGM (and update you as to progress) in August. There is too much to get through it all in one meeting in May.
We now need to agree the shareholder financial contributions for the coming year.
Apologies for the length of what follows. We suggest you grab a drink, settle down and please try and make it to the end!
Issues to be resolved:
- Foreshore Lease renewal
You have all received our update emails and posts on the website so I won’t repeat the issues here. In terms of where we have got to:
- Land Survey Report. That has been carried out and is with the Ministry for approval. The issue was whether the lake front properties had encroached on Crown land. The findings are that Burke’s (now Gord and Jill’s) property encroaches by between 1.1 and 1.8m.
The rest of the properties will hopefully be approved by the ministry and if so, it is thanks to Darrin’s powers of persuasion. We are waiting for confirmation however before we relax too much.
- Hydrodynamic report: Following shareholder approval, this has been instructed and we hope will progress in the next month or so. It is to reassure the ministry that our dock is not disturbing fish habitat and water flows from the creek.
- Burke and Brad’s dock: Burke tells us that the houseboat will be gone this week. A mechanic is out to it on Weds, 23 March.
Before the dock can be removed, we need ministry approval for the works to be done outside the approved window. That has been requested and is awaited.
In passing, when Burke sold the house to Gord and Jill Hotchkiss, he remained responsible for the houseboat and the dock (along with Brad re the dock). Welcome to Gord and Jill and thanks for all their help in moving this forward.
Once the houseboat and dock are removed and boundaries are in compliance, we hope that the hydrodynamic report will clear the way for the ministry to permit our new boom to be installed and a foreshore lease to be renewed for the next 10 years.
- The Dock:
We anticipate that some members may wonder why all shareholders are bearing the cost of this foreshore renewal regardless of whether they have a boat slip. The view of the board is that access to the water and the presence of the dock is a central part of the resort and the value of all properties.
It is the board’s intention that over time, each lot should have the opportunity of a boat slip on the dock if they want one. Limit of one slip per lot. If you do not have one and want one, please let us know for our forward planning. It may take some time to accomplish given the system we have inherited but that is our aim in the longer term.
We will also be looking at the cost of the slips. At the moment, they are all charged an equal annual fee, regardless of size. That would seem unfair particularly when limited space means there are some who do not have a slip.
Also, we appear to have a problem with the positioning of some larger boats as they are concerns around the strain on the dock of larger boats being nearest the boom in stormy weather. We may in due course, need to seek approval to make some adjustments to placements to ensure the safety and maintenance of the dock for all.
In the meantime, the dock has suffered considerable storm damage this winter. We need to replace around 36 bolts holding fingers to the main dock, a bracket holding the piling to the dock has sheared off and the old boom has almost entirely come apart. The concern is why and whether the chains holding it in place have been sunk. A diving company is out this next week to assess the situation. Costings for this issue are currently very uncertain.
Repairs are being done urgently (Darrin will update at the meeting) but PLEASE DO NOT launch your boat to the dock until those are complete. The existing finger bolts will probably not take the additional weight of boats in a storm until the bolts are secured.
- Water intake:
You all know that water for the resort is pumped from the lake. A concern is that once Brad and Burke’s dock is taken out, the barrier it provides between us and the sand bar/creek will also be removed. The water intake pipe currently runs from in front of the pump house out to the corner of the dock boom near the marina entrance.
Once more sand is being moved by the creek, it is anticipated that the issues we currently have with the pump house being silted up by sand, may become considerably worse.
I have sought costings therefore, to install a new water intake away from its current location to the other corner of the boom nearest the public launch. There it will be bedded on stone rather than sand and will hopefully be further removed from the creek’s effect.
McCaskills are coming out this week to assess this and firm up costs below.
- Property Taxes:
The BC Assessment of value came in for 2022. Jeff has worked his usual magic and has done the calculations for 2022 property taxes with an adjustment for 2021 over or under payments. The overall tax bill has gone down from $35,000 in 2021 to $30,000 in 2022.
Copy of Jeff’s calculation for 2022 is attached and will give you an idea for budgeting purposes. The 2021 calculation is also attached for comparison. As is the case every year, the actual taxes will not arrive until May.
- Corporate Taxes:
It was with dismay that we learned that the resort has never filed a company tax return. I understand that there was a belief that if the resort did not make a profit, then it did not need to file CRA tax returns. This is incorrect. The law is clear that every corporation (even non-profits) must file an annual T2 return.
I have been in discussion with a contact at KPMG about being appointed the resort’s accountants for this annual requirement. We have discussed making a voluntary disclosure to the CRA and seeking to agree that we will file retrospective returns for the last 10 years as opposed to the last 30 years! The estimated cost for each return is $750 plus tax. The indications are that as no profit is made, there is no tax and if we make a voluntary disclosure before we are found, the CRA will not levy penalties for late filing.
However, there is one other issue. Companies with assets of over $200,000 also have to file a T1044 return. The question arises as to whether us holding shares in the company means that the company technically owns the resort as a whole (worth a lot more than $200K) in which case the T1044 would also be due.
The late filing penalty for T1044 is $2,500 per year!! We are some 30 years overdue!
I have discussed with KPMG that my preferred approach would be to not file T1044’s and if questioned by the CRA, argue that although we hold shares in the company, our shareholder’s agreement giving us rights to our individual lots effectively means that we each own the beneficial interest in our lots rather than the company owning it. Beneficial interest should be sufficient to remove the asset value from the company.
I cannot guarantee that this will be accepted by the CRA but I think it has sufficient legal precedent to make it a viable position. KPMG agrees so far!
- Sewer Project:
I have carried out a review of the paperwork on this and can identify the following areas which need completing in order to finish this long running project.
As previously stated, the aim of the project is twofold:
- General system not coping as resort develops;
- Ministry of Environment compliance requirements.
- System efficiency:
- Cleartech Consulting advised reducing the load on the general system by installing separate septic tanks for cabins. This works by leaving sludge in separate tanks and only passing water into general system. 8 out of 11 of these tanks have been installed.
- The three left to install are Harriet, Gord/Jill and Brad. Burke had said he doesn’t want one because of siting issues. Gord has said he would.
- Longer term, we need to review whether the current general system can cope if three extra tanks are installed. If not, then an extra tank will need to be installed in the trailer section. Issue is tank sites cannot be driven over and trailer lots are smaller. Volunteers would be sought for location of extra tank if needed.
- Ministry of Environment compliance required:
- Cleartech Consulting recommended:
- Installation of 3 monitoring wells – 2 quotes were obtained and Ryan Pallard’s firm, Metro testing was most competitive. Wells installed in 2020 at a cost of $12.5k.
- Metrotesting carries out quarterly testing of system and annual reporting. Cost of $3k per year. However, we have just been notified that that cost will increase fourfold as Ryan is leaving Metro. Alternative quotes are being sought.
- Outstanding compliance issues:
- 4 observation ports required for each drainage field. 8 in total. McCaskell have estimated.
- Drainage fields cannot have animals grazing or heavy machinery cutting. We need to speak to the Andersons to agree fencing. Quote needed for post and wire fence around drainage field. 150-200 metres of fence. Wooden posts/steel stakes with wire should suffice.
- Flow rate meter needed to comply with monthly summer reporting requirements.
- Pressure manifold needed to even up flow into each drainage field. Est cost $12k incl design.
There are some other issues which have been discussed. Sand filter, improvements to the pump house beyond the water intake, fire fighting equipment and TNRD zoning issues. The board is currently at capacity dealing with the above urgent issues and so these other matters are currently taking a back seat. They will be addressed as soon as we can get to them.
Thank you for making it this far!
Unfortunately, the world has become highly regulated and the government more proactive. The days of the resort bobbing along on an informal basis are sadly, over. The various ministries have us in their sights and if we are not careful, the CRA will too.
Inevitably, there are costs associated with all this. We have done our level best to identify those and obtain costings. Below is a table of our best estimate of what it means for each shareholder. Please be clear that we have only been able to get estimates. The picture evolves constantly so revisions are inevitable. This is our best shot with the information we currently have.
We appreciate that finding additional funds will not be easy for many members. We accept that we may need to make priorities or consider payment plans.
Please be aware, however, that this has been (and will be) an enormous amount of work for each of your directors on top of their day jobs and family commitments. The longer we pan it out for, the longer that effort continues. The regulatory clock is also ticking.
The directors’ aim is to bring the resort into modern management and to improve communication with the members. There is no sense dwelling on how we got here. We hope that you will recognize our efforts and intentions and get behind the board in getting the resort to where it needs to go.
To the extent we can, therefore, we would like to raise the funds needed to bring the resort into compliance as soon as we can and to set up its forward management in an organized and efficient way, so that we can all go back to enjoying our little piece of paradise!
Thank you. Please scroll down for costings.
Estimated costings for 2022:
- Property Tax for 2022 – please see Jeff’s assessment attached.
- Regular Maintenance contribution – $725 per share. This is calculated as to
- $35,000 expenditure (excl property tax) in the 10 months to March 2022 – see income account attached.
- Applied as to 12 months = $42,000
- $725 per share
- Special Projects Estimate – $1,500 per share – see below
| Special Project | Next Steps | Estimated costings |
| Foreshore Lease | Land Survey | $4,600 |
| Hydrodynamic Survey | $10,000 | |
| Water intake | Initial survey Very rough ball park if all as Anticipated | $900 $10,000 |
| Corporate Taxes | $750 plus tax per T2 x 10 years | $7,500 |
| Sewer Project | 8 Observation ports | $3,500 – $4,000 |
| Fencing to drainage fields Estimate 150-200 m of wooden posts/steel stakes with wire | ?? Any offers to obtain quotes or do work with materials? | |
| Flow rate meter | $1,000 | |
| Pressure Manifold and design | $12,500 | |
| Two 1200 litre septic tanks | $15,000 x 2 | |
| One 900 litre septic tank | $10,000 | |
| Dock Repair | Piling bracket – replace and a spare Replace bolts Boom | $600 $150 Not known – provisional $2,000 |
| Sub total: Plus taxes | $93,250 $11,190 | |
| Total | $104,440 |
Cash at bank: $26,849
Less contingency: -$6,849
Total available: $20,000
Projects forecasting: $104,440
Less sums on account -$20,000
Sums to be raised $84,440
Per share – 58 shares: $1,450 per share.