Flying site grants and assistance for improvements
Keith Sessions, Chief Financial Officer
The AMA had a great response from its offer to sign up before the dues increase took place. I hope this helped ease the increase a little.
One of the most common questions I have recently been asked is about AMA providing loans to clubs for flying sites and improvements to flying sites. At some point, I would like to see the AMA provide these kinds of loans, but right now, we do not have the balance sheet to make an impactful program. This does not mean that clubs are out of luck.
The AMA Flying Site Development Improvement Grant Program is available to clubs. The application is on the AMA website and you can contact your district vice president or associate vice president for help with the process. Grants are given annually for improvements and are limited to 10% or $3,000, whichever is less.
Clubs with larger financial needs have to be slightly more creative. Most banks will not loan money to a typical club.
One solution is to have the club members fund the project. There are two ways to do this. One is ownership or stock. A club issues shares that are privately held and transferred among the members. I have seen this utilized when a club is relocating.
Another way is to have the members loan the club money through private bonds. The bonds would be issued in increments, paying a reasonable market rate for a limited period of time.
Let’s say a club needed $30,000 for a new paved runway and pit area. The club has 100 members. They could issue bonds in increments of $1,000, each paying a reasonable market rate of 5% for seven years. Each year, the club would pay the bond holders $50 per bond ($1,500 total) and would need to add $4,285.71 to a bond retirement fund. The cost of carrying the bonds would be $5,785.71 per year or roughly $58 per member.
This is just an example and clubs could set the terms at what the bond buyers would be willing to accept.
Neither private stock issuance nor private debt issuance should be done without consulting a tax advisor and attorney. On the surface, they are simple to understand. To cover everyone for the unexpected, it is imperative to retain proper council.
This is November when many clubs elect new officers. As a reminder, please visit your bank and make sure the old officers are removed from any bank accounts, and the new officers are added.
