“Melissa Mail” Response to SU Flyer

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.

7 thoughts on ““Melissa Mail” Response to SU Flyer

  1. I agree, that we must keep these discussion civil, and honest. I don’t blame the Golf Club members for being upset about a loss of investment and failing course.. Our home, situated on the golf course, is about 55% of the price paid. Quite accurately, we have a $300,000 loss. But I’m still looking at ways to improve our property values in the future, trying not to dwell on the past. Some ideas might require money that we are spending, to keep the private golf course going. There are other ways to enhance property values. Let’s keep an open and honest discussion going, for EVERYONE’S benefit.

  2. Your points are well taken. As a senior manager of RMI, Melissa has a responsiblility to make sure her communications are accurate. Just because some members disagreed with your analysis does not make it inaccurate,

  3. Instead of putting it in perspective (or keeping it in perspective) you keep blowing it out of proportion. The reality is that it’s $15 per month out of HOA dues already being paid (NO ADDITIONAL DUES OR ASSESSMENTS TO HOMEOWNERS) for a significant addition of amenities and VALUE to Somersett homeowners. If you spread the numbers over ten years and blow them out of proportion it seems like a big number, but then you should compare that BIG number to the overall dues over ten years, which would then make them seem small.

    I read your posts and it reminds me of some of the political ads paid for and “approved” by our illustrious incumbent President against Mitt Romney, which are also ALWAYS blown out of proportion as well. I’ve never seen so much energy devoted to such a meaningless cause in my entire life……

    Bottom Line – Somersett homeowners are getting a significant addition to their community both in terms of amenities and sustained value and community well being. Again, just drive over to Northgate and/or D’Andrea and look around and then tell me that the $15/mouth out of the general fund is not worth it?

    Also, as noted in an earlier post I made, one key example of the value is the significant home values retained by keeping the golf course vibrant and alive is that one homeowner at D’Andrea had his/her home in escrow for $350k but when the announcement that the DU (D’Andrea United) homeowners voted to not pay an additional $25 to keep the course alive the buyer backed out (that day) and the home ended up selling for $50k less. Let’s see, at 2415 dues paying homeowners and $50k/home that adds up to $120 million dollars in lost property value. Wow, that $6M over ten years (that is already being paid) doesn’t seem like that big of a deal does it?

    $6M (no additional cost) over ten years versus negative $120M (Real property value loss – possibly immediate)???? Hmmmm – not so bad now?

    1. Barry,

      Yes, the Lease Agreement provides new amenities to the Community, yes they have some merit, but how significant and useful they are to the Community at large is the subject of another debate.

      You like to focus on how the Agreement is not costing the homeowners anything because of the no dues increase. The no dues increase does not mean it is not costing the homeowners anything, if so where does the money come from? The no dues increase was because of surplus funds (i.e., SOA income exceeding SOA costs) and there is no guarantee this condition will exist over the next ten years as you imply.

      Regarding Surplus funds the Nevada law states “any surplus funds of the association remaining after payment of or provision for common expenses and any repayment of reserves must be paid to the owners in proportion to their liabilities for common expenses or credited to them to reduce their future assessments for common expenses”. The SOA Board may argue that the money really didn’t come from surplus funds, but through some other mechanism to justify the expenditure. To me this is moot, if the Board did not want to credit the $15/mo assessment to the homeowners, but spend it on new amenities for the community, then this should have been discussed with and decided on by homeowner vote.

      You also like to focus on the D’Andrea situation and its affect on home values. The D’Andrea residents were approached well in advance, attended seminars where the Pros and Cons were discussed and, yes unfortunately for some, voted overwhelming not to subsidize the golf course. Far be it from me to criticize the democratic process. Then again, how does this relate to Somersett, are you saying that the SGCC would shut down if not for the income derived from homeowner assessments? It certainly was not presented this way by either the SOA or SGCC Board of Directors. If this is truly the case, then let’s work together with the entire community for an equitable and consensus solution. Rather than feel threatened by the D’Andrea outcome, perhaps you should have more faith in Somersett resident support for the Country Club. I know of no one, me included, and contrary to some SGCC member accusations, that want the Club to “go brown”. However, we all took that risk when we bought here knowing that the SGCC was a private entity, separate from the SOA and responsible for their own destiny. If this destiny requires SOA subsidy, then let the Somersett residents decide if it is their destiny as well.

    2. Barry, You seem to be spending a lot of (what you call) useless energy on these meaningless causes. Perhaps you could better direct your time and resources to Mitt Romneys election.

      1. Oh my, Barry! Now the truth comes out. You own the Sports Relief Corp. located right there at the SGCC. So, you have a vested interest in the survival of SGCC and you personally benefit from receiving money from our HOA (our money), so you personal opinions mean “0”.

  4. I am tired of one sided opinions being expressed in our SOA News letter. Afterall, we are all members of Somersett and the major opinons, SGCC and SU should both have the opportunity to express them, particularly if one is represented as in this news letter and the other not. Afterall, SU is an open forum for anyone to reasonably comment in. Also, stating “several inaccurancies” while not saying what they are is misleading. We can all have our opinions, no one has to completely agree, but a hostile, threating approach to an individual is not the answer and frankly not acceptable.

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