What is called the Pompano Beach Flying Club today began as the Pompano Senior Squadron Flying Club in 1970, a club that was to be associated with the Civil Air Patrol (CAP).
Getting Things Started
On June 6, 1970, Chester (“Chet”) Good began running classified advertisements in the Fort Lauderdale News and Sun Sentinel looking for members. The first advertisement made the Club’s Civil Air Patrol roots clear:
By the end of that first month, June 1970, the new club had adopted Articles of Incorporation, elected its first officers, and filed incorporation papers with the Florida Secretary of State. Four “initial subscribers” signed the Articles of Incorporation which stated the “amount of capital with which” the club began was $500. The initial requested capital from subsequent member applicants is unknown, but the Club has reported they soon had ten members who had contributed a total of $1,000 to make a down payment on a Cessna 172.
The Terms of Membership
The Articles of Incorporation adopted by the Club in 1970 have never changed and thus allowed the Board of Directors to establish the terms for incoming member applicants. By February 1971, the Club was advertising again, with three aircraft and an incoming membership fee of $500. In the early years, Club members who wanted to leave were allowed to sell their membership to people outside the Club. The Articles of Incorporation even allowed applicants to meet their incoming member capital investment obligation with cash, services, or property. Although the Articles of Incorporation establishes an absolute maximum of fifty Club members, the Club chose to establish a more restrictive policy at that time limiting it to no more than fifteen members per aircraft, effectively limiting the Club to three aircraft.
Thus, in February 1971, with two Cessna 172s and a Cessna 177 Cardinal, the maximum number of members was set at 45. By September 1971, the Club had swapped out the two Cessna 172 aircraft for a Citabria and a Cherokee Six. The incoming membership fee was increased to $700. By 1977, the Club offered five aircraft, but the incoming membership fee, actual membership size, and any membership-per-aircraft restrictions are not known (the Articles have always legally capped membership at fifty).
The Share Marketplace
From the beginning, it was clear to all involved that what was sometimes referred to as a “buy in” was actually the “consideration,” the “just value to be fixed by the Board” that an incoming member had to contribute in order to become a member. Upon acceptance to membership, all incoming members were deemed to own one share of common stock (no stock certificates were issued) and were therefore entitled to a single and equal vote in Club affairs, like all other members. Additionally, the Club did not refund membership fees, so any member could sell their membership to anyone else who willing to buy it. This is why some equate a “membership fee” with a “share.”
Although incoming members were deemed to own one share in the Club, some members withdrew and began selling their Club membership “on the street” to others. The Club was not involved in the financial transaction, but the share in the Club was effectively transferred to the incoming member. By 1980, the Club had once again changed its application terms and was advertising Club membership for $1,000. By 1982, members who were leaving the club were routinely advertising their membership for sale, sometimes undercutting the Club’s advertised membership fee price. In April 1982, one member advertised “$1,000 or best offer,” then lowered it in June 1982 to “$800 or best offer.” In March 1983, the Club President, in apparent response to an increasing number of departing members selling at discounted prices, seemed to understand that the existing $1,000 membership fee was no longer marketable. The Club began advertising a membership fee of $700. However, this change did not completely stop the market slide. By May 1983, a member was advertising just “best offer,” and by June 1983, another member was asking only $500. For its part, the Club apparently stuck to their $700 membership fee and, by August 1983, advertisements from members began appearing for $700 and even $750.
But soon thereafter, apparently looking to replace departing members, Club officials began running advertisements again for membership, although they did not publish the incoming membership terms. The advertisements from individual members continued into 1984 with one member offering his membership for $600. This continued into 1985 with members offering their membership for sale, variously at $700, ’78 cost, “priced below member equity,” and $600. By January 1986, the Club’s officers were offering a “new membership package,” but “discount offers” by individual members continued to be advertised in 1987 for $600, and even $500.
Origins of the $1,700 Refundable Deposit
It is not known exactly when the change occurred but, by 1985, the Club leadership had decided they didn’t like the idea of members selling discounted Club membership on the open market below what the Club thought was a proper price. So the Club decided they would “buy back” the membership of resigning members by refunding what the member tendered when joining the Club. The Club reasoned that, by guaranteeing each member could always leave and be refunded the amount of capital they put in, there would be no discounted memberships. This change would also help the Club uniformly enforce membership standards.
By June 2004, Larry Mellgren, the Club President (who has served nearly 33 years as a Club officer beginning in 1987) was interviewed by the Miami Herald, and said the incoming membership “entry fee” was $1,500 and monthly dues were $80. This $1,500 was stated to be fully refundable when you left. Two and a half years later, in December 2006, Mr. Mellgren explained in another Herald article that the terms applied to prospective members had been modified: “$1,700 to get in – $1,450 of which is refundable when you leave.” However, at some point in the next seven years, the terms of the $1,700 fee was changed to be fully-refundable.
The Membership Count
The historical records discovered make clear that, from very early on, the Club established a ratio of 15 members per aircraft. Apart from the early years discussed above, in 2004, the club had three aircraft and stated a limit of 15 members per aircraft, effectively capping membership at 45. By 2011, the Club was back down to two aircraft and stated the membership was capped at 30. By 2013, the Club had added a plane and increased the membership cap to 45. Regardless of the number of aircraft the Club operates, even though it has never been never acknowledged, the Articles of Incorporation have always established an absolute limit of fifty members no matter how many aircraft the Club operates.
Simple Ignorance or Willful Contempt?
During a regular meeting of the Board of Directors on May 13, 2020, the Board voted to adopt revised Operational Rules. The new Operational Rules adopted (reflecting a May 12, 2020 revision date) were transmitted by email to the membership only one day before the Board meeting and without any explanation or summary of revisions. Prior to May 13, 2020, the Operational Rules in effect recited the hard maximum of 50 members, a limit in compliance with the Club’s Articles of Incorporation. However, the Operational Rules the Board approved on May 13, 2020 removed the provision limiting membership to 50, replacing it with a new limit based solely on a ratio of 16 members per aircraft.
Unfortunately, not one of the new Board members possessed the institutional memory or exercised any due diligence enabling them to understand and respect the Club’s history, most notably where the limit of 50 members came from in the first place. Instead, they only recklessly barged in and improperly removed a limit that had been in existence in the Club’s supreme governing document since the Club was created fifty years ago! Since the Club operates six (6) aircraft today, this improper change to the Operational Rules establishes a “limit” of 96 members, almost twice as many as the hard limit within the Club’s highest internal authority, the Articles of Incorporation. No rational or neutral observer could look at this change without quickly determining it is “out of order.” It is an improper change without validity because it exceeds the authority of the Board of Directors. Even if “a limit of 96” is claimed to be an irrelevant hypothetical example, there can be no denying that, on August 30, 2020 the Club’s web site advertised that the Club had 63 members with six aircraft, so it is anything but theoretical to conclude the current Club’s leadership believe the current limit is 96 members.
It’s impossible to know why the current Club leaders are behaving in the manner they are, but the best-case scenario is that these Club leaders are simply ignorant, have little-to-no administrative abilities, and have introduced even more contradiction and inaccuracy into the Club’s governing documents. The worst-case scenario is that the current Club leaders don’t care about history, don’t care about the rule of law, and don’t care about the membership because they have willful contempt for these things and are just doing whatever they want.
The Complete History of the Club’s Board of Directors
The information in the table below is compiled mostly from the annual reports the Club have made to the Florida Secretary of State. It has also been cross-referenced and corrected with information in the reports the Club made to the IRS and other agencies since 2005.
|