(Note: The et al here refers to the many names that this company ended up being known by, including River Oaks Communities and ROC Properties.)
Beginning in May of 1981, I began what would become a 10 year association with a company that became the 2nd largest manager/owner of mobile home parks in the country. As you will see, this was the most difficult accounting job I ever had, and this company was responsible for over half of the business entities I have accounted for in my career.
Though it eventually ended up getting into a whole lot of other businesses, the core business for Sunergy Communities always was buying mobile home parks anywhere in the country and either managing them itself or (more likely) selling them to limited partnerships whose limited partners were wealthy individuals. The purpose of each limited partnership was to provide tax-sheltered cash flow to the limited partners and fees to Sunergy Communities.
When I got there, the company was responsible for approximately 25 mobile home parks and approximately 20 partnerships. Over the years this would grow to about 40 to 50 business entities that I was accounting for, not all of them being mobile home park limited partnerships. They had also completed a penny stock offering approximately a month before I joined them.
The books were a MAJOR disaster when I started. There were literally stacks and stacks of computer printouts of accounting records for the company and the 20 or so entities it was responsible for. Probably a quarter of the accounts in these many computer general ledgers were either not labeled at all or were labeled ‘Suspense,’ meaning that the dollars in these accounts were NOT identified as to what they were. What follows were the many and varied things I did in order to get the books back in shape:
- First of all, in order to get a handle on all of this, I worked an incredible number of hours through most of the summer of 1981. Often I worked 12 to 14 hour days, as well as working virtually every weekend.
- The entire accounting structure for this company and its entities needed to be constructed virtually from scratch (actually from below scratch because the ‘system’ in place was doing more harm than good and needed to be removed first).
- The mobile home parks were in approximately 10 states, which meant we needed a method to account for receipts, disbursements and payroll at each remote location as well as a means to communicate everything going on at these parks to our headquarters in Denver.
- I set up a pegboard cash receipts system at each park which allowed the park managers to give the resident a receipt and me a monthly listing of all cash received.
- I set up a method to transfer cash from each local park bank account to its counterpart account at our Denver bank. This required daily bank runs to put in the deposits.
- We set up an A/P system here in Denver to handle the vast majority of bills generated at the parks, and set up a revolving petty cash at each park for them to pay for expenses locally whenever necessary.
- Because it operated in each state, I enlisted ADP to handle our payroll and tied it into a clearing account at our Denver bank account.
- Cash Management – It became obvious early on that this company was and would always be chronically short of cash. Once I got the accounting systems set up and under control I spent about a third of my time keeping track of the cash and fighting off vendors who wanted their money sooner rather than later.
- Before it was done, I ended up being responsible for over 60 separate bank accounts located in at least 15 states and in about 20 banks.
- I was responsible for finding and maintaining the relationship with the CPA firm that we required for auditing and tax return preparation services. It was incumbent on me to set-up all of the accounting to feed directly into these requirements.
- SEC Reporting – Because we were a public company I got involved with creating the quarterly (10-Q) and annual (10-K) reports in conjunction with our CPA firm.
- Within a couple of years, I conducted an analysis for the purpose of plugging in a new computer system for our company. After much effort I settled on the latest version of the IBM System 360 with a version of the Unix operating system. I also hired and managed a person to be responsible for operating and maintaining this computer system. Throughout my career I have always been ultimately responsible for the computer systems our companies used.
River Oaks Communities
One of the avowed goals of the owners of Sunergy Communities was to place the company on the New York Stock Exchange. One way to do this was to grow the company naturally. Another way was to find another company with sufficient size and earnings/track record that a merger would meet the requirements for entrance onto the NYSE.
In 1983 and 1984 they found such a company in River Oaks Homes based in Boaz, Alabama. River Oaks Homes was a relatively young (5 to 6 years old) privately owned mobile home manufacturer that had had spectacular earnings in its short life span.
- Sunergy Communities wanted River Oaks Homes’ size and earnings.
- River Oaks Homes wanted Sunergy Communities’ public company structure.
- Both of them thought it would work because both companies were in the mobile home industry, so in 1984 they consummated a ‘Pooling of Interests’ merger in which both of the original parties received approximately the same ownership percentage of the merged company as they had before the merger, i.e. neither company ‘bought’ the other.
- This ‘pooling of interests’ merger was very complicated and I got involved in a lot of it in my preparation and communication of the Sunergy books. I became the Vice President of Finance and Treasurer of the resulting merged company called River Oaks Industries and received shares of stock in this new company.
- Sunergy Communities ended up being renamed ‘River Oaks Communities,’ but it continued to operate the same way it had before the merger.
- Because of my new situation, I spent a fair amount of time in 1984 in Alabama working with the owners/ accountants of River Oaks Homes. One side project they were getting involved in at the time was a mobile home rental business located in Greenville, South Carolina. I assisted with its accounting.