Rich Oster Open Letter Commentary

Sending a Response Courtesy og

Posted by Geoffrey Brooks

Hi Rich, 

WOW! I read through your letter, concerning the value for monies that ALL the residents are getting for our $1.3 million 3 year lease deal (is it really cancelable then?) with the SGCC.

I am now reiterating the written commentary I made to the SOA Board in January, 2012; about what I believed to be an extraordinarily bad deal for the homeowners and how we all should have had the been informed and allowed to vote (per NRS regulations) on these very “large expenditures” of homeowner funds.

Wow, again! We are paying $300k “lease fees“ (of the $1.3 million) to build our new amenities!

In the world I have operated in, most lease agreements will give you the opportunity to own it, if you lease it – that is something for your money. A car lease allows you to buy it (yes, actually own it) at the end of the lease. Somersett homeowners never can, as the SGCC cannot sell the land on which the new amenities built for the SOA are constructed.

The Championship Golf Course (unlike the Canyon 9, which the homeowners own), is still effectively owned by Blake Smith/Somersett Development.  In his role as SOA Board President (a conflict?), and, with the current board members approval, they “engineered” the “lease” agreement. Ray Lee has posted a justification for the “amenities lease” on the SOA member web site. The actual lease agreement has been challenged through the NV Ombudsman’s Office, it was referred to the Real Estate Division’s legal department for review under Case # IN-1580 dated 6/4/12.

Lets assume for a moment that the homeowners owned these newly constructed amenities after 3 years (we would pay about $30K in interest at 10% if it were like buying a Ferrari), so what is the other $1,000,000 we are paying buying for ALL of us?


-3000 “free” driving range experiences for residents!

-3000 “free” fish (if we can catch them) that we have to release! (We could alternatively have resident fishing adventures on one of our nearby lakes say at $300 a day/person (boat rental, gear). Assume 3000 residents, each could potentially have one “free” trip for a total cost $900K (and one gets to keep/eat the fish). Maybe the SGCC should offer a series of fishing tournaments. What a great thing for all member/residents.

-6 “free” resident/member meals over 3 years (but we have to pay to eat/drink at the Sunsette Grill). So, assuming a $50 meal and drink is worth $100 at another restaurant/casino. Again, assuming 3000 residents participate that would be

-18,000 meals = $900K subsidy by the SGCC to create harmony and value for ALL residents. Also, this would represent a $900K gain for the SSG. This could be easily accomplished by a $50 resident give-back on a $100 + dining experience.

-Using my anarchic logic, I can find many ways to provide residents value for their $1,000,000 3 year investment over the agreement period, but not unfortunately, for the $300K for the new “leased amenities”.

Eat up, enjoy your money, ask for that real fishing experience. The SGCC should be happy to do this for you so you can really be happy with how your HOA money is spent.

I would welcome other opinions, after-all we do have pay for our golf ambience. I do believe that most people bought houses here because they DID NOT have to belong to a private golf course!

Rich, What do you think about my assessment of the “lease” and ideas for the SGCC to provide some “extra” value for the residents investment?

In my mind, lower assessments result in higher prices for our property!

7 thoughts on “Rich Oster Open Letter Commentary

  1. WOW!!! First, before I get into clarifying the inaccuracies in your posting, I’d like to share some personal thoughts with you regarding this whole issue regarding the agreement between the SOA and the SGCC, that a HANDFUL of Somersett residents have decided to mount an offensive against….

    I understand that you might not like the agreement and that is your prerogative and right…

    I understand that you might not like the process through which the agreement was entered into and that is your prerogative and right…

    I understand that you might not agree with and/or like the amenities that the SGCC is providing as part of the agreement and that is your prerogative and right…

    What I DON’T understand, is why a few of you have decided to distort the truth, exaggerate the details beyond belief and try to mislead others who you want to persuade to join your crusade against the SGCC, Blake Smith and the SOA….

    Now, let’s clarify the non-truths that have been distorted in your posting…

    In the world you operate in, which is the world we all operate in, lease agreements can be structured in MANY ways. When I lease a property in the Desert, i am not entitled to buy it at the end of the lease. When I lease a U-haul to move something, I am not entitled to purchase it at the end of the lease. When I entered into a lease agreement with a storage facility, nowhere did it say I was entitled to purchase that space at the end of the lease…

    Here is Websters definition of “lease”

    ” A lease is created when a property owner (the offeror) makes an offer to another party (the offeree), and the offeree accepts the offer. The offer must authorize the offeree to possess and use property owned by the offeror for a certain period of time without gaining ownership. A lease must also contain consideration, which means that the offeree must give something of value to the offeror. Consideration usually consists of money, but other things of value may be given to the offeror. Finally, the offeror must deliver the property to the offeree or make the property available to the offeree. When a lease is formed, the property owner is called the lessor, and the user of the property is called the lessee.”

    Nowhere in there does it state that any lease between two parties must involve a provision for ownership at the end of the lease…..

    That said, if you would like to purchase the amenities and/or the golf club at the end of the lease, I’m sure I can convince the SGCC board to come up with a quote for you…

    Regarding your statement that “the SGCC cannot sell the land on which the new amenities built for the SOA are constructed”, the SGCC owns the golf course outright, it’s land and the water rights to it. The SGCC can absolutely sell the golf course, land and other amenities to a third party, as long as it continues to operate as a golf course. Blake Smith nor the Somersett Development does NOT own or have any interest in the SGCC any longer.

    WHAT? The amenities, which many people are enjoying are not “like a Ferrari”, they involve a newly renovated and improved restaurant, a newly constructed, maintained and utilized driving range, newly constructed and maintained Bocce Ball court(s), a newly stocked and maintained fishing pond and a soon to be designed, developed and maintained putting course. Last time I checked a Ferrari was a car…

    As for your diatribe about “maybe” ideas, WHATEVER!!!

    As for why people buy in Somersett as opposed to other developments, I’d like to see your data that backs up your statement that “most people bought houses here because they DID NOT have to belong to a private golf course”. On the contrary, I suspect that most people bought houses here because of the sense of community, the amenities (yes, even the one’s you don’t like), the surrounding beauty the centerpiece of the community provides (a championship 18 hole golf course – otherwise known on this site as the SGCC) and the positive and friendly attitudes of MOST of the residents of Somersett! Why would someone buy a house (and pay more for it) in a golf course community, if it wasn’t at least partially for the beauty and ambiance that a golf course provides, even if they aren’t golfers? There are plenty of communities without golf courses that provide more home for the money, but are much less attractive from aesthetic perspective…

    Last but not least, lower assessments ($15 as you so vehemently fight for) will NOT result in higher prices for your property. ARE YOU SERIOUS? What WOULD result in lower prices for your property is if the center piece of this community, the SGCC were to be taken over by a new owner that didn’t care about the community like the current equity members do, or if what happened to Northgate and D’Andrea happened here.

    Again, if you didn’t read a previous posting I made, a friend of mine is a Real Estate agent. He had a home in escrow in D’Andrea for $350k. The day the homeowners voted to not spend an “EXTRA” $25/month to keep the course alive and vibrant, the buyer pulled out of the deal. The home sold a few months later for $300k ($50k loss in a few months – that’s 2000 months of $25 assessments or 167 years). WELL, they managed to keep their assessments down didn’t they??? WOW!

    1. Hi Barry

      The debate is very interesting, but I am not “implacably” opposed to ALL of the Somersett residents providing some “subsidy” to keep the SGCC going as you seem to suggest. This is a constructive dialog in an attempt to lay the groundwork for “fairness” for ALL.

      The current board has entered into an agreement (as I mentioned before, under review by the legal dept of the REDNV), which seems to me, makes little business sense, offers little in added value to ALL the residents and was not subject to a vote.

      I don’t wish to engage in a war of semantics, but I rent an apt (or house), I rent a car, I rent a UHaul, I do rent a storage space, with no expectations to own. The expectation is that once I have used the ‘UHaul’, I return it and my financial obligation runs out. I believe that if the SOA board is going to spend $300,000 of our money to build amenities that I should have a say, and a vote, along with every other resident. I firmly believe that we should be able to own “free and clear” amenities we have purchased. The current “lease” does not envision this option, and it is not just for three years – but 10.

      You have not addressed the issue of the “other” $1,000,000 expenditure over the three years – what are we getting here? If these monies are for use of the SGCC facilities, I would suggest that you might consider offering ALL the residents something for their money – I attempted this, with some humor, I hope!

      Every time I look at the $ being sent to the SGCC, I cringe, as they make no financial sense in their current format.

      I had sent a long letter to Rich Oster concerning some options to move the SGCC in the right direction, it seems that the new “initiation” fee is a step towards making Somersett Golf Course public. Canyon 9, which we all own, is already open to the public. The lease for the championship golf course, with its reverter rights to Somersett Development/Blake Smith, is only worth $10 if the golf course fails; hence a bank would probably not want to loan money to construct a golfing club house using the course as collateral. In the event of failure, there is no tangible asset available.

      As far as Reno property values are concerned, have a look at the Wolf Run GC area, where the course is public, and the monthly maintenance fees for the houses built around the course (gated and ungated) are less than $50 a month, often with great golf course views.

      I had noted your prior D’Andrea comments, but you might check whether the new construction house prices were lowered after the golf course closing – I think not.

      As an owner with a golf course view, I can only refer you to my Talon Point survey (published on Somersett United) on house values, which indicates that the premium we paid is not evident in 2012. We have to move into the future world of today and tomorrow, not keep reminiscing about the long lost world of yesterday.

      I fervently believe that Somersett can become an even more desirable place to live in the future, building on Blake Smith’s award winning 20th century vision. I also believe that the golf courses help to add desirable ambience to our community. However, I do believe that we are a community where only if ALL are involved, that we will be able to properly balance the competing desires of the residents as our assessment monies are spent wisely. I believe that we need to put the right infrastructure and amenities in place that make it easy for the active developers to build and sell out the homes they are planning. The more desirable the community, the faster this will happen, the more future residents will pay; and all our property values will recover.

      Lastly, resident country club members constitute only 150/2411 assessment paying property owners. Roughly 400 lots/2411 are built on the championship golf course. The new board in 2013 has to carry out the SOA’s business catering to ALL the residents, and deliver value for the owner’s assessment monies. Balance, not everyone plays golf!

      1. Hi Geoffrey,
        Just a couple quick clarifications/corrections….
        1) There is no intention or desire to move SGCC into a public golf course. The new fee structure is being offered to compete with market conditions and add new/additional dues paying members all as part of a plan to get to a desired membership total and a position in which people are now waiting to get into SGCC instead of SGCC needed to offer lower dues prices.
        2) The lease term is for THREE years, not TEN. This has been pointed out on numerous occasions. The agreement was written such that the SOA has an option to renew for another three years and then again for another four years (or visa versa). These renewals are options that the new (not Blake run) board will get to vote on and were put in place to protect the community against SGCC just taking the initial $1.4M adding the amenities and then moving on without any possible further consideration for the Somersett residents that want the new amenities.
        3) Again, the course only reverts back to Blake Smith/Somersett Development if it ceases to exist as a golf course for over one year. The course has a significant value (land, water rights, dues paying membership, NO DEBT, etc..) and could easily be sold to new owners if the owners of the club decide that is the best solution for the members and the community. As we speak, there are buyers looking at D’andrea. I believe it was or is in escrow for $3.5M (it might have fallen through – I don’t know the details). The point is that golf courses like SGCC have a significant value and it would never just fail and go back to Blake/SDC as you suggest. There are numerous golf course management companies throughout the country that buy/run golf courses like SGCC. some with hundreds of courses that would be very interested in what we have here at Somersett. There is basically no chance this course will ever go back to SDC in the future.
        4) The country club has over 265 dues paying members at this time (not 150 as you state) and the property owners number is closer to ~1850, not 2411. I believe the difference between your number of 2411 and the real number of ~1850 is that the developers (Toll Brothers, Ryder etc..) still have to pay dues on empty lots to the SOA.

        Lastly, your use of ALL throughout your posting is unrealistic in my opinion. It’s not possible in a community this large to provide amenities that ALL residents will aprove of or desire. Some will like/use the pool, others will not. Some will like/use the fitness center, others will not. Some will like and use the tennis courts, others will not. Some will like/use the Bocce Ball Courts, others will not. Some will like/use the Sunsett Grill, others will not and so forth and so on…. BUT, together they all provide for a better community with more to offer than other communities that will over time help to rebuild all of our home values again…

        BTW, It was exciting to see a couple dozen (or more – I didn’t count them) residents out having a Bocce Ball tournament/gathering the other night. While I’m not really a Bocce Ball person and probably could care less about it, those people were in fact taking advantage of one of the new amenities provided to the community by the lease agreement entered into between the SGCC and SOA… I urge ALL residents to check out their new amenities (The Sunsett Grill, The Bocce Ball Courts, The new Driving range, The Golf course twice a year, etc…), so everyone can benefit from the small investment the SOA has made for the community…



  2. Barry:

    The point you fail to make is that, if the newly elected board is controlled by SGCC members, they will be in conflict with Nevada State Law NRS 116 which requires a board to act in the best interest of the entire community and not a small special interest group. This will be of concern when the question of lease renewal comes up for a vote in 2014. None of the mentioned amenities were ever voted on by the non-golf course owners and a conflict of interest existed when the lease agreement was made known only to the golf course members and not the rest of the community. All of Somersett should have been made aware of the agreement and been allow to voice their opinion by a vote. The cost of the amenities you mention might have been put to better use such as put into a building fund to sometime in the future build a real club house rather than the double-wide trailer that substitutes for that currently.

    Inorder for the course to succeed, the members will need to pay higher dues to support it or, as Geoffrey points out, plan to go Public as so many other courses have had to do all over the country. The only courses that are surviving are those that have acknowledged the current economy and developed a business plan that others have found successful such as Wolf Creek. Even Arrow Creek has recognized this need. Why do the 150 equity members feel they need to be supported by the rest of Somersett without those remaining owners having a vote? Do we not believe in democracy?

    Charnelle Wright

    1. Charnelle: Your assumption that Somersett Country club members would act ONLY in the best interest of what you refer to as a “special interest group” is just not accurate. What makes you think that Somersett homeowners that also happen to be Country Club members are only concerned with the Country Club. SGCC members have a much greater investment (both financially and personally) in their homes than they do in the Country Club.

      I find it interesting that you have so much knowledge of what it will take for the SGCC to succeed. You have NO IDEA what the state of the SGCC is or what it will take to succeed. And furthermore, if you REALLY believe that it is in the best interest of the Somersett community for the course to be sold to a corporation that has NO interest in our community you are sadly mistaken. If you really knew what was going on at Arrowcreek and D’Andrea you would be fighting tooth and nail for this club to succeed. BUT, don’t worry, we don’t need your help or your other so called “in the best interest of the community” partners to make the SGCC succeed, thrive, and be an integral part of the Somersett Community.

      BTW, Arrowcreek didn’t recognize anything. They went BK and were sold to an uninterested company (in their community) and people are moving out of there because of it. And stop suggesting that the equity members of this country club “feel they need to be supported by the rest of Somersett”. It was and is a MUTUALLY BENEFICIAL agreement between the SOA and the SGCC for the benefit of both the Somersett residents and the community as a whole….

    2. Would it not also be a conflict with Nevada State Law if the new board is controlled by SU. The case could be made that they are a special interest group.

  3. Hi Barry

    A few points

    1) we already live a golfing community – the SOA own C9 – we ALL pay $15 a month for this.

    2) I have no interest in seeing the CGC close down and cease to exist – I am anxious to work with the entire community to formulate an equitable plan for survival. As stated before, I have discussed future operating ideas/ formats/plans with Rich Oster. I look forward to sitting down and doing the same with his successor, Pat Gaskill – a fellow Talon Point resident.

    3) I firmly believe that the “lease” agreement offers exceptionally poor value to all residents. I note that the current SOA board has just changed the agreement by capping the maximum all residents can be charged to $15. I believe that this is the result of Jim Haar’s complaint to the ombudsman, which is currently under legal review. When NV RED rules on the “leases” legality, that will be he time to discuss changes and perhaps submit the successor document to a community vote.

    4) From a business viewpoint, the document that Ray Lee signed on behalf of the SOA board for ALL residents is absosolutely terrible and self serving. In the business environment, anyone who presents this kind of document as a negotiated settlement would be “fired” .

    All community residents should read ray lee’s post about the “lease” on mysomersett for themselves; and ask themselves could they in good conscience, exercising good fiduciary judgment , actually think it was a fair “lease”?

    5) Blake Smith, last March in the RJG, expressed an opinion that the Country Club’s survival was in doubt. Hence the effort by Somersett United to suggest options which can help the secure the future of our golfing community

    6) All those who know me, know that I am passionately committed to working altruistically on behalf of our community for ALL of the residents, the builders and real estate industry to make Somersett the pride of N. NV!

    Geoffrey Brooks

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s