Posted by Jim Haar
In the recent issue of “Melissa Mail”, the SOA Board apparently found it necessary to comment on a “Flyer” that had been circulated to some Somersett residents by Somersett United. In it they stated that the Flyer included “several inaccuracies”, but failed to identify what they were. From my perspective I did not note any inaccuracies in the statements contained within the Flyer. Let’s analyze them.
$6M of HOA dues being gifted to the SGCC:
Over the ten year term of the Lease Agreement, homeowner assessments are $15/month/unit for the first three years (Section IV.1.1) and $12/mo/unit for the last seven years (Section IV.4). At the beginning of 2012 there were 2415 dues paying units. Without any consideration of resident growth over the ten years, this equates to $3.74M. Factor in the “Event Trigger” option (Section IV.5) wherein the SOA can participate in permanent SGCC clubhouse design and usage for an additional fee structure (Section IV.5.1) of up to $15/mo/unit (Section IV.10.2 ). Assuming the $15/mo/unit amount and that the Event Trigger occurs at the three year mark, this equates to an additional $3.04M, again without any consideration of resident growth. One might contend that the Agreement options may not be implemented thereby reducing the homeowner liability below $6M. This is possible, but given the actions of the current board, questionable. Whether or not one considers the SOA contribution to SGCC’s operating income a gift, subsidy or justified purchase of new amenities for residents is simply rhetoric and does not alter the potential $6M+ liability figure.
Bail-out for an insolvent golf course:
Per the SGCC’s own financial summary, they had a net income loss of $685K in 2011, and a break even projection for 2012 predicated on $435K income from SOA homeowner assessments and $61K income from resident use of amenities. Call it what you want, but many believe the “bail-out” description fits.
Contract implemented without your approval:
No argument here. Agreement was entered into between the Developer controlled SOA BOD and the SGCC without appropriate disclosure to or buy-in from the Community at large. The Agreement added 10% to the 2012 SOA budget for the SGCC amenities, which under the current CC&Rs we have no right to use (Article VII Section 6). The logical process for an agreement of this type would have been full and timely disclosure of Agreement details and submittal for homeowner vote and amendment to the CC&Rs.
No payback or equity ownership:
At the conclusion of the Agreement there are no payback or ownership rights for the Driving Range Addition, Putt-Putt Course, Bocce Ball Court or Dining Room Improvements built with SOA funds. The SGCC retains ownership and all rights.
Payments continue after the SGCC sells the golf course.
Being a private entity, the SGCC equity owners have the right to sell the SGCC to a third party. In this event, the Agreement stays in force and SOA payments must continue to the Buyer (Section IV.11).
I have no doubt that this post will elicit a response from Country Club members. This is welcome as long as one addresses the facts and keeps it civil. Unfortunately, this is not always the case as witnessed by the very hostile approach I received from a Country Club member at the Financial Committee Meeting demanding to know if I wrote the Flyer, which I did not, and then demanding I tell him who did, all of which is really immaterial and not the issue to be discussed.