Proposed SOA SGCC New Agreement

somersett UnitedThe Somersett Owners Association (SOA) Board of Directors (BOD) has issued a “Letter of Intent”, signed by all parties, for a new agreement with the Somersett Golf and Country Club (SGCC). Due diligence by all parties will take place over the next few months before a final agreement is in place. Several homeowner meetings have been scheduled to present the case for the new agreement. The first being held at The Club at Town Center on November 23 with about 40 attendees. Subsequent meetings are scheduled as follows:

 December 4, 2013  –   5:30 PM at The Club at Town Center

January 14, 2014  –  5:30 PM at the Aspen Lodge.

Subsequent 2014 dates to be announced.

 Both the Letter of Intent and the presentation slides used at the November 23 meeting are available on the mysomersett.com website. They may also be accessed via the following links:

Proposed SOA SGCC New Agreement

Letter of Intent

 The basic premise of the new agreement is that the SOA will purchase the SGCC property (approximately 220 acres) including all water rights and distribution system for $2.75 million. The SOA leases it back to the SGCC (50 years with two 20 year renewal options) for a nominal fee ($2200/yr). The SGCC continues to operate it as a private country club (cannot go public) paying all operating and maintenance costs related thereto. If it ceases to operate as a golf course, the SOA takes over the property to do with as they see fit. During the lease term, SOA homeowners will continue to have access to SGCC amenities, which will be pretty much as now except residents can play 4 times a year (at guest rates) instead of the current 2 times a year, also free use of  the “association”  driving range or the member driving range for $10/day. It is estimated that homeowner assessments to pay off a $2.75 million loan will be less than the $15/month going to the SGCC under the current agreement. The new agreement will be subject to “homeowner ratification”.

 Unlike the current agreement, the proposed replacement obviously has its merits in that the SOA will receive some payback for its investment in the SGCC. However, it does raise the following questions:

 1.  What constitutes homeowner ratification?

2.  What will the SGCC do with the $2.75M?

3.  In the event of SGCC failure, what will it cost the SOA to maintain the SGCC property as common space and how would this affect future assessments?

4.  Is a CC&R amendment required for vote on the new agreement?

 All are encouraged to access the above documents, read them carefully, attend the homeowner meetings and submit any questions you may have to the BOD via email at soa@mysomersett.com. Questions and Answers will be posted regularly on the mysomersett website.

 Readers who wish to post their own article (i.e., as opposed to commenting on an existing article) on this subject (pro or con) may do so by emailing it to somersettunited@gmail.com. Please try to limit to a maximum of 400 words.

SOA BOD Election Results

Somersett United
Somersett United

Congratulations to Daniel Kirby who was reelected to her position on the SOA Board of Directors and to Chris Huff who was elected to fill the position vacated by Dave Hughes.  Thanks to the other candidates (Joe Fadrowski, Dan Kanyr and Steve Myerson) for their time, effort and interest in serving the community.

Somewhat disappointing was the voter turnout as only 40% (999) of eligible Somersett homeowners cast ballots.  Also, attendance at the November 20 annual homeowner meeting following the Ballot counting was rather low.  We all need to do what we can to increase homeowner interest in Association affairs.

Please Vote for Candidates if You Haven’t

Today at 8:14 AM
PLEASE VOTE THIS MORNING
The ballots for two new Somersett board members will be counted this afternoon.  If you haven’t voted, please complete your ballot for the candidates of your choice, hopefully Joe Fadrowsky and Dan Kanyr, and hand it in at the reception desk at the Somersett Club at Town Center by 1PM today.
The ballot to change the Somersett CC&R’s is not due until December 15. Of course it can be voted now, but it won’t be counted until then.  So, the first important step is filling the two open board seats.
As you can tell from the many emails, flyers, and telephone calls that you probably have received already on candidates, amendments, and the private golf club matters, there is a lot going on that will have great effects on all owners and their pocketbooks.
Thanks for voting if you already have.
Joe Bower
Concerned Del Webb Owner
Member Somersett Owners Association
Member Somersett United

TCTC Meeting Recap – CC&R Changes

Somersett United
Somersett United

Another SOA Board of Director (BOD) homeowner meeting was held at TCTC on November 12 to present the case for the proposed amendments to the Somersett CC&R’s.  This one was not as “lively” as the previous one held at the Aspen Lodge on November 6, nor did it appear to be as well attended. However, the questions/comments raised by attendees were basically the same and centered around authorized spending limits, quorums, impact on Country Club Lease Agreement negotiations and timing behind the CC& Change vote.

A summary of these discussions follow:

Spending Limits

The BOD advised that the $500K limit for purchase or annexation of real property (i.e., before homeowner approval), was felt to be a reasonable value based on the association’s annual budget of $4.5M.  That no formal financial or scientific analysis was performed to come up with this value.

When questioned about the authority to make multiple purchases up to $500K without homeowner approval, the BOD, without refuting such authority, stated that this was highly improbable in that funding would not be available without raising assessment levels over their authority to do so.

When questioned about there being no limit placed on the BOD’s authority to lease property, the BOD’s defense was that was the way the amendments language came back from the SOA Attorney and they just “missed it” and there was no intent to be devious in this regard.

Quorums

Background  – A quorum is the  minimum number of association members to submit ballots or be present at a meeting (proxies accepted) to vote on a measure for it to be valid. The proposed CC&R changes define homeowner approval of purchases above the 500K limit as being a simple majority of a homeowner quorum.  However, the proposed changes did not define what quorum applied to these changes.  At the Aspen Lodge meeting the BOD president said a 50% quorum would apply.  This was challenged by several  homeowners who quoted other provisions in the CC&R’s that established a quorum at 20%.

At TCTC meeting the BOD President acknowledged that the 20% quorum requirement was indeed the correct value, which means that given the approximate 2480 unit owners, the minimum number of voting members for the measure to be valid would be 496 and to pass would require a minimum of 249 affirmative votes.  However, the BOD President expressed the opinion that for significantly high dollar measures, the probability that a high number of homeowners would abstain from voting was very low.

An attendee commented as to why the BOD did not explain and quantify the quorum issue in their letter to sent out with the ballots, or within the amendment language itself.  Rather than creating confusion and leaving it up to homeowners to figure out what a majority vote of a quorum meant.

Impact on Country Club Lease Agreement

When questioned about the impact of the proposed CC&R changes on the future Country Club Lease Agreement vote, The BOD advised that these were unrelated issues. Implying that a lease agreement vote was not subject to the proposed changes.

An attendee expressed an opinion that under the lease provision of the proposed amendments, the BOD could enter into leases, without a dollar limit and without homeowner approval, as long as homeowner assessments were not raised above their authority to do so.  The BOD’s first response was that the amendment in question only applied to the purchase, annexation or lease of real property and that the Country Club Lease Agreement would not fall under this category.  This premise was challenged by another attendee and some unresolved discussion ensued.  However, in closing the BOD clearly stated that the re-negotiated Lease Agreement would definitely be put out for homeowner vote regardless of what this provision stated.

Another attendee asked for a clear definition as to what would constitute homeowner approval of the re-negotiated agreement.  After some discussion the BOD advised that the 20% quorum would most likely apply.

When questioned about what would be in the new agreement, the BOD respectively replied that it would not be appropriate to speculate until a letter of intent is generated.  The BOD did state that homeowner meetings on the agreement would be held before voting.

Timing on CC&R Amendment Vote

At least three attendees commented on the content and timing of the CC&R vote.  Concerns centered around why the rush to vote on amendments related only to the purchase, lease or annexation of real property.  Why not expand the amendments to incorporate all necessary changes now that the association is no longer under developer control and/or other changes that make sense for the community.  The bottom line suggestions being that the BOD withdraw the vote, consider other changes and resubmit?

The BOD made their case for a piecemeal approach based on an opinion it would be to complex and difficult for homeowners to address multiple changes at one time. This approach was supported by another attendee.

Editorial Comment

Most  of the homeowner comments at both the Aspen Lodge and TCTC meetings questioned the authority being given to the BOD under the proposed amendments.  It is clear to some that an over aggressive BOD could financially commit the association to pay large dollar amounts for the purchase, annexation or lease of property without homeowner vote or a vote subject to a 20% quorum for approval.  I guess it all boils down to one commenters question as to how much do you trust the current and future BOD’s to do the right thing?

Proposed CC&R Change Circumvents Need for Country Club Lease Agreement

Posted by Concerned Association Member

……overshadows most important issue of concern to all Somersett owners the reversion and water rights in perpetuity to the land on which the Golf Course resides.

The Somersett Board of Directors at a meeting with homeowners at the town center advised homeowners that the proposed CC&R changes did not have anything to do with a new agreement to lease amenities from the Somersett Golf and Country Club.

This comment is rather disingenuous when the proposed CC&Rs does give the right to the Board of Directors to lease property(s) in a given year in an amount up to $500,000 without homeowner approval, or to enter into a lease of unlimited value also without homeowner approval.  Therefore, the Board under the new CC&Rs could easily enter into an agreement to lease land or the Sunsett Grill from the Country Club putting Somersett in the restaurant business.

If the new CC&Rs are voted in the Board will have circumvented the need to have a vote on an agreement to lease amenities as required by the Attorney General’s office.

The Board stated further that the negotiations on the lease agreement have been difficult  and convoluted with many “twists and Turns”, that is why it is taking so long having started discussion with the Country Club as early of March of this year.  What is difficult to accept at face value is why the current Board has not adopted the negotiation tactic of setting a deadline and refusing any further monthly payments to the Country Club until such time as a lease agreement is agreed on.   This in light of a Nevada Statute permitting such action taken together with the AG’s office requiring a vote of homeowners on a new lease agreement

Rather than seek a change in the CC&Rs which is most difficult to obtain, Somersett Owners should ask of its Board that they come up with a plan which may include financial assistance to the Country Club, but must include acquisition of the reversion and water rights to the land on which the golf course resides so that the future of the property as open space to the benefit of all owners in perpetuity is preserved.

….treating Somersett Homeowners as if they recently fell off a Turnip Truck is an insult to their intelligence, while this approach has been used in the past it should not be used by our current homeowner board.  Come up with a plan that we as a community can all support, nobody wants to see the golf course go brown, we all want to see the open space preserved to the benefit of all owner for time immemorial.

Danger – Quorum Ahead

Posted by Joe Bower Member Somersett Owners Association

DANGER – QUORUM AHEAD

Mr. Sullivan’s informative comments hit the nail on the head.

I would like to add that while HOA’s may have membership quorums at their meetings, the intent of the legislature to define a quorum as 20% of the total HOA membership (with the voting majority, 50%+1 of that number, being able to approve or disapprove of something) was to save HOA’s with small memberships from the large expenses of developing and mailing voting materials to the membership-at-large; and to provide a means for getting association decisions made when experience showed greater membership apathy and lack of attendance at meetings when something that just had to get done done.

20% was not designed to enable a small group of partisans to push their agendas upon their fellow owners. However, “smart” people can figure out multiple uses for any tool.

20% is not practical in large membership HOA’s. Can you imagine 496 owners at a Somersett meeting? Not even if something was being given out for free, in my opinion. It is not meant for the few to hide something from the many and regardless of the size of an HOA it should not be abused.  The tool is there, but for use under the right circumstances and not as a means to avoid community-wide votes.

Of course some of the 496 could carry multiple proxies from sympathetic owners to their cause so the number of bodies is less, but the votes are there. Danger – Quorum Ahead.

Comments from a Concerned Citizen

Posted by a Concerned Citizen

A flyer was placed at our door yesterday.  Two couples contributed to the flyer, one couple from Somersett and the other from Sierra Canyon.  I appreciated that they took the time to compose and deliver these flyers, even though my opinions are in opposition to theirs.  It is good to see people taking an interest on such important issues.  I am pulling out “quotes” from their flyer for clarification/discussion purposes.

For the Somersett couple, they are:

1)  “. . . . two unnamed candidates” were referenced.  (Since you are supporting Kirby and Huff, the two candidates can only be two out of the following three:  Fradrowsky, Kanyr or Meyerson.)  You wrote:  “We have a concern with postcard flyers that we have received regarding some candidates that are running for the Board and we are worried that these individuals may not reflect the values that make our community such a wonderful place to live”.

  • This comment makes me think that you do not believe Somersett is worthy of people who have attained difficult and impressive accomplishments, such as CPA’s, Attorneys, Ph.D’s, and/or successful business careers.    Is this what you meant?

2)  “At our own expense, we decided that we wanted to distribute this flyer and encourage you to vote for candidates that reflect your values.”

  • Do you mind explaining your values as they pertain to the filling of two Board positions?  I don’t understand how such accomplished people would have values that would be undesirable.  Will you take the time to clarify?

3) You wrote “While having financial or legal experience are good qualifications for some positions in life, and casting negative judgments about other candidates may be an approach to get oneself elected, we believe that it’s equally important that the SOA Board members reflect the perspectives and values that our community holds as well, and that brings us all together.”

  • This one really confused me.  I tried, but could not come up with a situation where a financial and/or legal background would not be beneficial for BOD positions in an Owners’ Association.  These qualifications should enhance, not detract from their qualifications for a governing Board of Directors position in a Homeowners’ Association.  When I read your comment that financial experience may be good qualifications for some positions, a funny saying came to mind “Money is the answer, what was the question?”
  • “. . . and, casting negative judgments about other candidates may be an approach to get oneself elected. . . . .” Would you, please, provide negative comments that any of the candidates have made?  I haven’t heard one disparaging comment from any of the candidates.  The only negative comments I’ve heard have come from the President of the golf club in his email supporting your two candidate choices:  Huff and Kirby.

4)    The expression “bring us all together”.

  • Would you please clarify what this term means?  Could it mean providing amenities that the survey indicated the property owners wanted, for example, and indoor pool, expanded exercise equipment and facility, safety and security measures to protect the children of Somersett (and really for all residents of both Somersett and Sierra Canyon)?  Would those improvements bring us together as a community versus the large fissure caused by the illegal* payment of approximately $440,000 per year (Approximately $7 million over 10 years–with all the other caveats–) from all property owners without their knowledge and consent to a privately held golf club.  (*The NV Attorney General’s Office determined the lease agreement is illegal.)

Now, to the claims made by the Sierra Canyon Homeowners:

1)  “We moved here from D’Andrea, in Sparks, after the golf course closed.”  “For example, the home we sold at D’Andrea lost $50,000 in value, when the golf course closed.”

  • Did you sell at the bottom of the housing bubble in Reno (NV was deeper and longer than most of the rest of the United States)?
  •  Was it purchased as a short sale for about $.30-$.40 on the dollar for the purpose of “flipping”?
  • Was the asking price a reasonable asking price based on a bona-fide appraisal at that point in time, whether the golf course was there or not?
  • How often do homes in down markets, when bankers aren’t lending money, sell for the asking price?

2)  “Have you noticed all the new homes being built in Somersett?  The builders can barely keep up with the demand. . . . .”

  • I am concerned that we are not making comparisons at the same points in time.  If you sold your home “after the golf course closed”, that means more than 2 years ago.  All of Reno’s housing market was still totally depressed at that time;   virtually no one was building then.  Now, however, building is going on all over Reno.  Note:  two (2) separate, distinct points in time.

Based on the lack of information, a cause and effect relationship cannot be established that your $50K was lost due to the closing of the golf club.

Important Homeowner Meeting on CC&R Amendments

If you did not have the opportunity to attend the Homeowner meeting at the Aspen Lodge on Wednesday November 6, wherein the proposed changes to the Somersett CC&R’ s were discussed, we urge you to attend the one to be held at:

The Club at Town Center at 5:30 PM on Tuesday November 12.

The Aspen Lodge meeting was a lively one with many residents questioning the wisdom of the proposed amendment changes.  Points of contention raised by homeowners included the following:

  1. Dollar limits for Board authority to purchase or annex real property into the Common Area.  Proposed amount is $500K (could apply to multiple purchases).
  2. Homeowner approval level for purchases over $500K.  Proposed amendment calls for majority vote of a “quorum”.  The current CC&R’s establish a quorum as 20%.  That is, vote is valid if 20% (500) of total homeowners (2500) cast ballots and if at least 50%+1 (251) vote yes, the measure is passed.
  3. Confusion over both the BOD election and CC&R approval ballots being contained in single mailing with only one return envelope, but different deadline submittal dates.
  4. Why information meetings are being held after the CC&R ballots had been mailed, why the rush?
  5. Voter approval level for passage of the Country Club Lease Agreement.  The BOD refused to answer what constituted a quorum for this measure or what percentage of homeowner votes would be required for its passage. It is interesting to note that no authority limit requiring homeowner approval was applied to real property leases as was done within the purchase and annexation amendments.

The preceding represents the more contentious issues raised at the Aspen Lodge meeting. It is anticipated these issues and others will again be raised at the November 12 meeting.   Please attend the November 12 meeting, listen to what the Board and your fellow homeowners have to say, and ask any questions you may have.  But most importantly, study the proposed changes, and make sure you understand their ramifications before submitting your ballot.

CC&R Amendment Impact on Country Club Lease Agreement

Somersett United
Somersett United

At the recent Aspen Lodge Meeting, the BOD president refused to answer a question as to what would be the homeowner approval number required for passage of the re-negotiated Country Club Lease Agreement.  We suspect that this was a deliberate evasion so as not to have to address the following provision that is part of the proposed amendments the CC&R’s:

“The Association, by majority vote of the Board, may lease real property if the Association can fund the lease payments out of the operating budget without increasing annual assessments more than the Board of Directors has the authority to increase regular assessments on an annual basis without the vote of the Owners. If the Board has to levy annual assessments in excess of the amount which the Board can increase assessments without the vote of the Owners to pay the rent under any lease, then the Owners must approve such lease and assessment increase by a Majority percentage vote.”

Read the above carefully and then consider the following facts:

  1.  There is no limit established as to the dollar value of any lease
  2. The BOD’s current authority to increase assessments is 15% annually and $25% for a special assessment.
  3. Majority Percentage Vote is defined simply as the majority vote of a homeowner quorum, which is currently established in the CC&R’s  as 20% of Homeowners or approximately 500 owners

How could this Amendment relate to the Country Club Lease Agreement?

  1. The BOD could enter into a long term  multi-million dollar Lease Agreement  with the SGCC , increase owner assessments to cover costs by the percentages indicated above, without a vote of homeowners
  2. If the costs are such that they cannot be accounted for by the increased assessments, then the Lease Agreement can be approved by as little as 250 owners based on the 20% quorum figure.
  3. If one considers the Lease Agreement concept presented by the BOD at the May “Information” meeting (I.e., 8.5 years, ~4.6 million dollars), then under the proposed CC&R Amendment, the BOD could enter into this agreement (or even longer and larger ones), without consideration or approval of Somersett homeowners.

Why did not the BOD discuss the preceding as an example of what could be accomplished by passage of the CC&R Amendment?  Rather they used examples like buying the lot adjacent to the TCTC for increased parking space, (~$200K) and leasing the LOFT space for activities.  By using simple examples they downplayed the significance of this provision.

In their ballot mailing, they also misrepresented that the proposed amendments would “limit their authority”. Nothing could be farther than the truth.  It actually increases their authority with regard to the purchase, lease or annexation of real property.

Do you really trust the BOD with this increased authority? If not, you need to vote no on the proposed CC&R Amendment.

BOD CC&R Modification Intent

Posted by Jim Haar

The intent of the Board of Directors with regard to the proposed CC&R Amendments is clear to me.  That is, they want to amend the CC&R’s to make the approval of the Country Club  Lease Agreement  (and other $500K+ purchases) easier to pass.  Approving the proposed amendments (as discussed in the previous “No Choice – Vote No on Proposed CC&R Amendments” post) would allow the BOD to enter into a costly Country Club Lease Agreement with as little as 10% yes vote from homeowners (assuming the minimum quorum vote requirement of 20%).  That is, if the proposed amendments are approved, then this would set the standard for voting approval on the Lease Agreement.   The “Agreement to Stay Investigation” stipulation with the Attorney General’s office simply states that the owners must approve the Lease Agreement without defining what “approval” means.  Therefore, amending the CC&R’s as proposed provides the legal basis for homeowner approval. This is why at the Aspen Lodge meeting, the BOD refused to answer what voting standard would be applied to the Lease Agreement vote.

Do we really want passage of a multi-million dollar SGCC Lease Agreement subject to an approval vote as little as 10% of Somersett homeowners?  Given that SGCC membership (equity, associate and preview), probably equals this amount, passage is certainly guaranteed.

I have always been a proponent on letting the Somersett homeowners vote on whether or not a portion of our assessments should go to funding the SGCC for whatever reason, and we could all live with the results of this decision.  However, I never imagined a BOD proposing CC&R amendments such that this decision could be made by 10% of homeowners.  For a vote of this type 50% homeowner approval should be in effect.

Quite simply – This is an attempt to give the Board more control and the homeowners owners less control.  It comes down to whether or not we believe this to be in the best interests of the association at large and how much trust we would have in both the current and future Boards.  Based on actions to date by both the past and current Boards, I certainly do not!  What about you?