It continues to amaze me that many Somersett residents (mostly golfers) champion the SGCC Lease Agreement as a good deal because: 1) The afforded amenities are not costing the residents anything (i.e., no increase in our monthly dues), and 2) As stated by the SGCC Board of Directors in their welcome letter to Somersett residents “for your additional benefit, the Club will be investing approximately $300,000 in future Club improvements” and “we wholeheartedly support the Somersett Owners’ Association in their mission to provide a sense of community and provide amenities to the community to make us all believe the “Its’ Good to be Home!””.
Let’s cut through the rhetoric and put this in its proper perspective:
- Over the initial three year term of the agreement, $15/mo of every Somersett homeowner’s (2415 at the beginning of 2012) assessment will go to the SGCC. This amounts to approximately $1.4M assuming a modest growth rate.
- The no dues increase only applies to 2012 as there were sufficient surplus funds to support the $445K being paid to the SGCC in 2012. No such guarantee will apply to 2013 and 2014.
- The $300K of improvements touted by the SGCC is in reality being paid for by the SOA via the $1.4M in homeowner assessments (i.e., no monetary investment on the part of the SGCC required).
- The $300K from the SOA will be used by the SGCC to enlarge their dining facility, expand the driving range and add an additional nine hole putting course, for which residents will pay a fee to use.
- If the SGCC decides to build a permanent clubhouse, the Lease Agreement contains a provision wherein the SOA Board can request a design that includes resident amenities, accompanied by an appropriate fee structure (i.e., increase in homeowner assessments).
- The Lease Agreement contains provisions for three and four year renewal periods, representing a potential Lease Agreement liability of $4M-$5M to the SOA depending on resident growth rate.
So let’s see here, the SGCC gets expanded dining facilities, expanded driving range, a new nine hole putting course, a bocce ball court and millions of dollars in cash, all paid for by the SOA. Not to mention the potential subsidy to the SGCC for construction of a permanent clubhouse. In return for our investment, aside from limited usage rights for a fee, the SOA receives no payback. That is, no revenue sharing or rights to any of the improvements paid for by the SOA upon termination of the agreement. Who is the real beneficiary here? It is not hard to conclude that there are additional factors at play other than to “provide a sense of community”.