Given the Somersett Owners Association’s (SOA) investment and liabilities associated with the Somersett Golf and Country Club (SGCC) Purchase and Lease Agreements, the SOA has a vested interest in the financial health of the SGCC and hence of interest to Association members. Since the SGCC’s financial data is not made available to Association members through any other media, it has been SU’s practice to publish what what is publicly available, hence the following update.
The following table represents a summary of the Somersett Golf & Country Club’s (SGCC) revenue and expense data for the years following turnover from the Somersett Developer to its Equity Members in 2010. The table has been updated to include the 2019 financials. All financial data contained in the following table are derived from the SGCC’s IRS Form 990’s, which require submittal by May 15th of the following year (July 15th 2020 for 2019 financials) and become available for public inspection. The SOA Revenue Column represent monies provided to the SGCC from SOA funds as indicated by the corresponding “Notes”.
|Year||SGCC Equity Members *||SGC Total Revenue||SGC Total Expenses||Revenue Less Expenses||SOA Revenue Contribution **||Notes|
* Represents full proprietary membership with voting rights, does not include non-permanent, provisional or preview memberships
** SOA Revenue Contribution does not include Canyon9 Maintenance Agreements with the SGCC which ran through 2017 at then $309K annually. The SGCC no longer provides this maintenance service as it was awarded to others on a cost saving basis for 2018 & 2019.
- In the Fall of 2010, the Somersett Development Company negotiated early turnover of the SGCC to its Equity Members via Member majority vote.
- 2011 was the first year in which the SGCC was run entirely by Equity Members.
- In late 2011, the Developer controlled SOA Board voted to divert $15/month of homeowner assessments to the SGCC via a “Lease Agreement” in exchange for some SGCC access amenities. This agreement was to run for three years starting in January 2012 with optional 3 and 4-year renewal periods. The obvious purpose being to subsidize the SGCC’s operating losses.
- The SOA Revenue column represents revenue the SGCC received in years 2012, 2013 and 2014 from the SOA under the Lease Agreement described in Note 3 above. 2014 was the last year under this agreement after being declared improper by the Nevada Real Estate Board. It is interesting to note that these were the only years the SGCC did not have an operating loss.
- As a replacement for the aforementioned Lease Agreement, in late 2014, a SGCC Real Property Purchase and Lease Agreements were approved by SOA owner majority vote. Under this agreement, the SOA purchased the SGCC land and water rights for $2,750,000 with a subsequent leaseback of the land and water rights to the SGCC at a base rate of $1000/year (subject to escalation) plus a fixed rent amount of $1200/year. Lease term is for 50 years with two SGCC optional 20-year renewal periods. The SOA purchase funds were obtained via an ongoing bank loan currently being paid for from homeowner assessments.
- The SGCC 2015 negative revenue less expense amount was primarily due to the $2,750.000 sale price income (see Note 5) minus a reported sales expense (asset loss) of $4,294,781.
For those interested in the revenues and expense details by category, the SGCC’s complete 2019 Form 990 may be accessed via the following link:
Comments on the Preceding:
- After five years of moderate equity member growth, 2019 showed a decrease of 19 equity members over 2018. It is unknown what the membership level is to date, but given the COVID-19 scenario, it is problematic that this decrease will by made up for in 2020..
- Also evident is that the SGCC’s operating loss has been steadily increasing since the loss of the SOA revenue contributions. That is, from 2016 and beyond. For those interested in comparisons, Prior year SGCC Form 990’s may be accessed via the following links: SGCC 2018 Form 990, SGCC 2017 Form 990, SGC 2016 Form 990, SGCC-2015-Form-990
- Yet to be determined is SGCC’s financial liability under the SOA lawsuit filed against the SGCC for their share of the Rockery Wall failure repairs
- Also, to be determined is the SGCC’s future liabilities associated with required repair/replacement of the Canyon9 and SGCC Water Supply System components, which have been estimated as high as $700K over the next five years, of which the major responsibilities lie with the SGCC.
What does the Future Hold?
Given the SGCC’s apparent current financial doldrum, and given a negative financial outcome (i.e., for the SGCC) with regard to items 3 and 4 above, it is fair to ask what does the future of the SGCC hold? If indeed the Court rules that the SGCC has violated the provisions of the Purchase and Lease Agreements with a significant dollar liability to the SGCC, and they do not have the resources to pay their financial obligations thereunder, what recourse will the SOA pursue? Does the Board have a plan in place? Not that anyone is aware of.