Members of the Cyprus Community of New South Wales are set to vote on the future of the Cyprus Club at Stanmore in Sydney during an Extraordinary General Meeting (EGM) on Sunday, October 22 at 3pm.
At the upcoming EGM, members will be asked to vote by way of a paper ballot on whether to stay or sell the Stanmore property.
Following The Greek Herald’s explainer on what the ‘stay’ or ‘sell’ options involve, we received a number of questions from concerned members. In response, we sat down with the President of the Cyprus Community, Andrew Costa, to have him provide some much-needed answers.
There are two options to be voted on at the EGM – ‘stay’ or ‘sell.’ Why have members not been given an opportunity to vote against these options?
In our explanatory notes and the Frequently Asked Questions, the Board has made it clear that a decision on the realisation of the Community’s assets must be taken in the short term. The reasons are financial. The Community has been operating at a loss for more than ten years and has been surviving on borrowings from the bank and Cyprus Capital. This situation cannot continue as has been made clear by the Community’s independent external auditor in the past three annual reports. In addition, the Community’s banker has notified the Board they are no longer in a position to renew the current loan which expires early next year.
If the ‘stay’ option is chosen, does it give the Board ultimate discretion to select a developer without the vote of members?
No it does not give the Board ultimate discretion. If the stay is successful it gives the Board authority to commence an Expressions of Interest (EOI) Campaign and present the proposals to the members in an open and transparent manner. The members then vote on the preferred proposal.
If the ‘sell’ option is chosen, what price is the Community looking to sell the site for?
As indicated to members over the past few months, the Board has sought market appraisals from two highly respected firms. They have provided written appraisals ranging from $65 million to $84 million. Before members are asked to vote on any EOI submissions the Board expects to have an independent valuation.
The information provided said there was a recent appraisal for $70 million. Does the Board need to present best sale offers to members to make the final decision, or will the Board have discretion to decide who the site is sold to and for what price?
As noted above, the members will vote on the submissions following the EOI process
Who will decide on the most appropriate JV agreement and what is the proposed time frame to have JV submissions (tenders)?
The members will vote and decide on any tenders submitted through an EOI process.
If the ‘sell’ vote goes through, information presented by the Board states a public sale of the site. Does this include the six houses, as well as the club site? Does public sale indicate an auction or an EOI campaign?
To maximise the outcome for the Community, the whole site forms part of both resolutions. An EOI process is being proposed.
Does the Board know of the expected sale price of the site if they are granted an additional 30% increase in allowable floor space (FSR) and height?
As noted in Question 4, the board has an indicative market appraisal and we are advised that the State Government would be amenable to a 30 per cent increase in FSR considering the current housing crisis. It is possible the value of the property will increase if not by 30 per cent, then by a significant amount.
In the ‘sell’ scenario, the Board has stated it will relocate its premises within a 10km radius of Stanmore. Has the board looked at market comparisons or viable options for similar potential sites within this area?
The Board has been given anecdotal information on sites purchased by other Community clubs over the past three years but has not launched a formal research process until the EOI process and the membership vote is completed. The Board has also stated that any JV/Sale will include a clause that the Club stays at Stanmore for a minimum of two years, possibly three, allowing time to consider the purchase of other premises.
Other Frequently Asked Questions answered by members of the Board:
A number of Frequently Asked Questions have also been provided to members by the Board ahead of the EGM. Some of them are:
What will happen to the money the Club makes from either option?
Article 23j of the Community’s Constitution gives the Board power to “invest and deal with any of the moneys of the Community… in such manner as the Committee may think fit and from time to time vary or realise such investments.”
Both resolutions take away that power from the Board but only for the money made from the Stanmore property.
Whichever option is selected by the members, there are four outcomes which are certain. The Club will:
- Pay the loans in full.
- Have funds to refurbish/build/or relocate.
- Have money to operate the Club.
- Have significant amount of money left over to invest.
Why is the management of the funds important?
Depending on the members vote, the Club will be left with significant money to invest – this is after all the loans are repaid, plus the cost to redevelop/refurbish or relocate and the proposed $500,000 is put aside to “operate” the Club. It is proposed no further funds to be allocated as the Club will be required to fund itself from its operations.
For decades, Boards and members have worked hard to get to this stage, it is critical the Club is conservative when it comes to preserving and wisely managing the funds.
The money does not belong to any cause, personalities, agendas, it solely belongs to the Club and its mission.
Preserving the principal cash is a sacred mission of the Club and for every Board that will follow for generations to come. It can’t be spent on new decorations or new speakers or better cutlery, these are operational matters that must be paid by the revenue the Club makes.
Who is responsible for these funds?
The Constitution, like other Club and Association Constitutions, makes it clear that the Board is solely responsible for taking the money, investing it and spending it. As the Club is made up of volunteers, from many different backgrounds, and many demands and agendas, it’s wise to ensure all Boards focus on the Club to ensure it makes the money to pay for its operations and of course, the Community’s interests are best served.
If the Club cannot operate and cover its costs on a regular basis, it may start taking money out of the cash reserves. Unfortunately that may lead to where we are today, but without the assets to exit from the debt.
Why is the Board proposing a Trust?
The money is proposed to be controlled by an independent trust with strict, clearly defined rules on how they are to protect the money, invest in high quality investments, be accountable and transparent and liable for the money and to send all revenue back to the Club.
The revenue these funds will generate from various investments will be significant each year. It’s our duty to preserve and ensure there are funds for many future generations to come to finance our mission, and also reduce the temptation to spend funds which may be “readily” available.
Many institutions throughout the world have set up a Trust, a very well-defined governance charter to take the cash, preserve it, invest it and be responsible for it, and not release it unless certain conditions are met. The people who physically hold and manage the cash are called “trustees.”
Trusts are governed by a “Trust Deed” – a document signed by the Club setting up the arrangement.
How will the Trust be set up?
The Club signs a Trust Deed which is the rule book of the trustees, before it hands over the cash to the trustees. It also outlines how the money can be invested i.e. what type of investments, low risk high quality properties and government securities.
The sole beneficiary of any money made out of the trusts’ investments goes to the Club to carry out its mission.
Why do we need a Trust? Can the Board manage the money?
Going forward, the Club needs trustworthy, dedicated experienced people to guard its cash, invest it and send the revenue back to the Club. A trust will provide a group of trustees that understand the importance of risk and yields, who are beyond personalities, agendas and politics. They just focus on guarding our money.
The trustees will be experienced, calm and focused people away from the pressures of operating a large club and community and will only focus on managing and preserving the cash.
Who will appoint the Trustees?
The Constitution makes it clear that the Board must manage the assets but may delegate this to others. The Board will appoint the trustees according to the trust deed. It is proposed that three leading citizens with suitable qualifications within the general Australian community be approached as independent trustees, and the members will nominate two others for the board to appoint. The selection criteria will be clearly outlined to ensure they have qualifications and/or experience to value add, with a sound branding of the Club’s mission.
Who owns and controls the money?
The trustees will control the money. The money will always belong to the Club.
How does the club get money from the trust?
The trust deed will have a formula to set aside revenue made from the investments to be sent to the Club to be spent towards the Club’s mission.
What are the rules to manage the money?
The trust deed has a mandate which will outline how and where the money may be invested. These are clearly defined rules to ensure the money is not used on high-risk investments such as in start-ups. Funds can only be invested in low-risk investments to best ensure the funds are preserved.
What happens if there is a dispute between club and trustees?
The trust deed will have a formula to manage disputes.
Do you have more questions? Any questions you may have can be submitted by 5pm, October 20, 2023, in writing at the front office during business hours or by email to: cyprusclub@optusnet.com.au.
