Members of private club voted to take a federal loan. The club will reject it anyway.
The Fisher Island Club announced the results Thursday of its straw poll of members on whether to accept a federal Paycheck Protection Program loan: 67% voted for the club to take the loan, while 33% voted for the club to assess each member $5,000 to cover any operating deficits.
And yet three days after seeking their input, the club won’t follow the will of its members. Instead, the club’s board of directors said in an email, it will reject the loan, citing recently issued guidance by the federal government about the requirement for businesses to certify that they need the money.
Although it would be “quite appropriate” for the club to take the funds as long as it kept all of its employees on payroll, the email said, “we have carefully reviewed these new guidelines with our legal counsel and accountants and decided that the Club should not accept the PPP funds.”
On Monday, the club suggested to members that it stood to lose “many, many millions in revenue” after closing its hotel, restaurants, marina, golf, tennis and spa facilities due to the COVID-19 pandemic. Without the loan or the $5,000 assessment per member, the club said it would likely lay off workers.
Now, it’s not clear what the club will do next.
“We believe this decision is in the best interest of the Club and its Members,” the board said Thursday. “We will be reviewing options for addressing the operating deficit over the next few weeks.”
Last week, the U.S. Treasury Department issued new guidelines for the Paycheck Protection Program, which is intended for small businesses struggling to retain workers during the pandemic. Borrowers must certify “in good faith,” the guidance says, that they need the loan to keep operating.
That guidance came in response to criticism that the program hasn’t helped the small business owners that need it most. Public companies received $500 million in the $349 billion first round of funding, according to the Wall Street Journal.
The federal government said last week that any borrower that repays its loan in full by May 7 “will be deemed ... to have made the required certification [of need] in good faith.” The Fisher Island Club applied for the loan April 10 and expects to receive the funds “within the next week.”
Memberships in the exclusive club cost $250,000. Fisher Island, nestled between Miami and Miami Beach, is the wealthiest ZIP code in America with an average annual income of around $2.5 million among its residents.
The ultimatum the board presented Monday — either we accept the federal loan or you each pay $5,000 — upset at least some of its members. Thomas Lauria, a corporate lawyer, told the Herald he was “stunned” when he learned the club had even applied for the loan.
“That we would even consider taking a government loan out of a program that is designed to really help small businesses on the verge of going out of business — every dollar we take is a dollar somebody else can’t get,” he said.
Lauria said he would willingly pay out of pocket to ensure that island workers keep their jobs.
“I would not turn them out, and I know my friends and other people I know here would not turn them out,” Lauria said.
The club is a separate entity from the Fisher Island Community Association, which is the master homeowners’ association on the island. The Fisher Island Community Association recently asked its members to vote on whether to accept a $2 million small business loan and ultimately decided to reject the funds.
The island made international headlines earlier this month after the Herald reported it had worked out a deal with the University of Miami Health System to make rapid blood tests for COVID-19 antibodies available to the 800 or so families that live there, and to all the workers who maintain the property and patrol its streets.
That news sparked frustration from some as the availability of testing for the novel coronavirus, including antibody tests, remains limited nationwide.
This story was originally published April 30, 2020 at 5:43 PM.