There is now a Somersett ballot box at the Del Webb Sierra Canyon Lodge. All owners regardless of where their Lot is located are welcome to use it. It is locked and only Somersett official vote-counters can open it.
No stamp needed. Save 49 cents. Also, save on gas as no need to drive the ballot to Somersett’s The Club at Town Center (TCTC).
Not casting a ballot does not mean you DISAPPROVE. You must vote to have you choice counted, so please do vote and the sooner the better. Remember, only one vote per Lot.
Meeting Recap Posted by Geoffrey Brooks – Somersett Homeowner Attendee
Report on Dan Kanyr’s Presentation on the Issues with the $2.75 Million SGCC Purchase Agreement Contract
September 25, 2014at the Del Webb Aspen Lodge
Summary of Presentation’s Key Points
What are we buying? The proposed ‘legal agreement’ aka Transaction states that we are buying the golf club property. Nowhere does it say that if and when the private club fails that we can convert it to green space, develop it for non-golf uses, or sell off any excess water rights. To make matters clear a paragraph should be added “we can close the 18 hole golf course, convert to green space, sell off water rights, property etc.”
If the Country Club members control the Somersett Board and with the newly approved changes to the CCR’s (mail-in quorum method of voting), they can vote to continue operating the Club, raising our dues whenever necessary. The default on failure should be that the property is converted to open green space.
There has been no independent valuation of the property, reverter rights, and water rights – so owners can understand the value of what we are getting. The Board has been fiducially negligent.
The Board contends that golf courses add value to everyone’s property in Somersett. There is no independent report to confirm this. An analysis done by a Somersett owner shows that D’Andrea resale values with a closed golf course have recovered better than those in Somersett with an open one. Somersett resale values are lagging behind Reno’s. Somersett owners who live opposite Northgate have not lost any more home resale value than those who live on the SGCC or Canyon9. Facts from Washoe Country assessor records.
The proposed purchase ‘legal agreement’ (and lease back) states that the water rights are only for the 18 hole golf course. This means the SOA cannot sell off any excess to reduce Association debt. A Country Club report says they use all their 410 Acre Feet for watering the private golf course. We live in a desert and there is an ongoing drought. There is no certainty about the availability of water. The value of water rights fluctuates greatly. If there is another recession and the private Club fails, the water rights could be worth less than we would have paid for them.
The General, Common, and Canyon 9 will go from a debt/equity ratio of 69% to 420%.
Section 3.9 – added after the proposed agreement was first made known – gives the developer a “get out of jail free card” and we as members of the Association forfeit any potential claims to the $1.0 million already paid to the Country Club.
The current agreement with the Country Club expires of December 31, 2014. The Club claims to be doing well. There is no reason for it to receive continued support from Association members.
The Information included within the Purchase Agreement Ballot mailing briefly describes what the SOA (Buyer) is buying as regards land, water rights and related facilities, which collectively, is defined under “Recitals”, Section A, of the Purchase Agreement as the “Property”.
What was not discussed is what the SOA is not buying. This is defined under “Recitals”, Section B of the Purchase Agreement, as follows::
“The Property excludes the (i) Seller Retained Property (below defined), (ii) Canyon 9, which the Buyer already owns, and (iii) any leases, permits, service contracts, personal property, located on or relating to the Property, or that Seller uses in connection with the repair, maintenance, use, possession or operation of the Somersett Country Club and/or the Championship Golf Course; and (iv) Seller’s business of owning and operating the Championship Golf Course and/or the Somersett County Club.”
With regard to the (i) provision above, the Seller (SGCC) Retained Property is defined under Section 3.7 of the Purchase Agreement, which states: “Seller shall retain ownership to the land comprising the planned site of the Seller’s clubhouse and parking lot for a planned clubhouse”.
The BOD argues that this was excluded such that “its members would have no further obligations or liability related to the SCC building a clubhouse on that site”. It is more likely that it was excluded at the insistence of the SGCC to insure they would continue to have a parcel of land and clubhouse for their exclusive use and disposal, including any revenue from future sale of such, even though it may have been built with association money (i.e., the $2.75M).
With regard to the (iii) and (iv) provisions, it would appear the BOD’s premise that, upon default, the SOA could continue to operate the Country Club should we so desire, is false. Reason being that the requisite business permits, leases, machinery, etc. are excluded from the “Property” being purchased. Not to say that such items could not be purchased in the future at an added cost.
A previous post (September 17) questioned if the SOA Board of Directors was fairly administering the “Equal Space” requirements of Nevada Law. Their actions to date have clearly answered this question. Consider the following:
The BOD was requested to include an opposing viewpoint within the initial Ballot Mailings, They refused.
The BOD was subsequently asked to disseminate an opposing viewpoint to all homeowners as required under Nevada Law. To date they have not yet responded to this request, nor disseminated anything to voters.
The BOD has already started counting Ballots and publishing results on the association website, knowing full well that, without opposing viewpoints, voters only have the BOD’s recommendations to follow, hence the majority of early returns will most likely be for Approval. The special interest groups favoring Approval will also most likely submit ballots early.
All the above is nothing more than an attempt on the part of the BOD to influence voters. This is also substantiated by wording on the Ballot itself, which recommends an Approval vote.
Fortunately, the BOD was forced by Nevada Law to establish a majority vote (i.e., 50% +1) of all homeowners for its approval or disapproval. This in lieu of the majority vote of a 20% quorum of homeowners they so desired.
Is this the type of integrity you expect from your BOD? Hopefully not!
Whether the agreement is approved or disapproved is not the issue here. As long as the voters have access to not only arguments for, but arguments against as well, and the voting process is fairly conducted, we can all live with its results.
The obvious answer to whether or not your BOD has fairly administered the voting process is a resounding NO.
All voters are encouraged to not vote until you have considered all sides, then vote accordingly, but please do not abstain, as the BOD will just continue to extend the voting deadline as they did for the CC&R vote.
Three Somersett Owners Association (SOA) Board of Director (BOD) positions currently held by Tony Fakonas, Ray Lee and Curtis Chan will expire November 19, 2014. New elections will be held to fill these positions for a two year term. If you are interested in serving the community and becoming a BOD candidate you must complete a “Board Candidate Statement” Form and return it by US Mail or hand‐delivery by 5PM on October 16, 2014 to: The Club at Town Center, Attn: Board Election, 7650 Town Square Way, Reno, NV 89523. A copy of this form may be accessed and downloaded from the following link:
Following the deadline for submittals, the SOA will mail out election ballots along with the candidate statements. The SOA Election committee will then conduct “Meet the Candidate” nights at The Club at Town Center and Aspen Lodge, time and agenda to be announced at a future date. Ballots will be counted and results announced at the Annual Meeting of Members of the Somersett Owners Association to be held at 4:00PM on Wednesday, November 19, 2014 at The Club at Town Center. Please put this date on your calendar.
New participation on the BOD is always a good thing. If you feel qualified and have a desire to serve your community, you are encouraged to “throw your hat in the ring” and submit your Board Candidate Statement Form.
As stated by the BOD in their Ballot mailing, a primary objective of the proposed SGCC Purchase Agreement is: “to eliminate the Developer’s existing rights tohave the property and water rights revert back tohim”.
In the event of such reversion, the BOD would like you to believe if the Developer (Somersett Development Company) does nothing with the land and it “goes brown” it will have a significant negative impact on property values. However, this has never been substantiated by the BOD’s due diligence, only implied. In an independent investigation performed by a Somersett resident, he concluded that, based on published property re-sale values, there is no factual evidence for this implication. D’Andrea properties were included in this evaluation wherein the data showed properties with a “brown” view had recovered to 80% of their “Pre-recession” values. Negating any short term effect the closing of D’Andrea might have had. The homeowner performing this study has requested his findings be placed on the association website to counter the BOD’s implications to the contrary. It remains to be seen if this request is honored.
The BOD would also like you to believe the Developer might subsequently build residential units on the property, implying this is another bad thing (some may dispute this) with another negative impact on property values, again without any substantiation. However, this being the case, what would it take to accomplish it?
The golf course land is zoned as “PUD”, which refers to the Somersett Planned Unit Development document. The Somersett PUD defines and regulates land use within its boundaries, including housing, commercial, parks and open space. In the Somersett PUD, the golf course is defined as part of the 1282 acres of Somersett open space. The PUD also restricts the number of housing units that can be constructed within its boundaries to 3062 units. It also regulates the types of permitted housing units, all geared to maintaining a quality development. Therefore, to convert the golf course land to residential use, the PUD would have to be amended and Reno Planning Commission and City Council approvals obtained. In amending the PUD many factors would have to be addressed and resolved. Such as environmental, sewage, water, access, fire protection, homeowner amenities and traffic impact studies, to name a few. A major undertaking by any Developer, which would undoubtedly entail public hearings.
Concerning water rights, do not be swayed by the BOD’s implications that the SOA needs to purchase these to assure supply of water for the Canyon 9 golf course. This is purely a scare tactic. Under Division of Water Resources Permit No. 71032, the SOA owns 25 acre feet of water rights to irrigate Canyon 9. What the BOD wants to do is buy the facilities that deliver this water. It is difficult to believe that any future water facilities owner can refuse to provide the SOA with its permitted water rights. Also, given drought conditions, government agencies have the right to reduce water right allotments accordingly. The first priority being recreational or residential “green” space.
Questions have been raised as to why the Developer is giving up these “Reverter” rights under the proposed Purchase Agreement and what does he benefit from it? The BOD has stated he gains nothing, with one member implying he wants to leave behind a “legacy”. Another reason could be the “Satisfaction of Claims” clause (see previous post of September 11) that was subsequently inserted into the Purchase Agreement. However, the proposed Purchase Agreement is not necessary for any of this. If the Country Club fails, the Developer could still deed over the land & water rights to the SOA and he would be in the same position as under the proposed agreement. Think of all the money the SOA would save!
SU concludes that an agreement with the Country Club is not currently warranted, and that if the Country Club should face bankruptcy in the future, a more beneficial arrangement for the SOA could then be negotiated.
Therefore, SU recommends a vote to DISAPPROVE the proposed SGCC Purchase Agreement
In the SGCC Purchase Agreement Ballot mailing, the BOD included a six page summary document wherein they described the elements of the proposed SGCC Purchase Agreement. In which they included statements favoring its approval.
What they did not include in the Ballot mailing was any opposing viewpoints or opinions. This is disturbing because a homeowner group had specifically requested that the BOD include their opposition statement within the Ballot mailings. The BOD refused to honor this request. Instead they acknowledged this right could be accomplished via a mailing subsequent to the Ballot mailings.
What is wrong with this approach? It is that Homeowners receive ballots along with a biased for approval viewpoint. Most likely with the hope that the ballots will be mailed in before receipt of the opposition documentation.
This is also punctuated with actual wording on the Ballot itself which states: “The Board of Directors of the Somersett Owners Association (the “Association”) has proposed that the owners approve a proposed transaction …..”. Such wording is not normal to and has no place on the Ballot itself. It is just another attempt to influence the voting process.
This is a very important measure for the Somersett Community. Whereas the BOD has the right to express their opinions in the Ballot mailing documentation, they also need to be fair and balanced by also including documentation from those with opposing viewpoints.
Having violated the “equal space” provision of Nevada law during the CC&R vote, the BOD has apparently learned one lesson as evidenced by the “equal space” request statement included at the bottom of the Ballot. However, It is contended that this is still not sufficient to comply with the law (NRS 116.31035 1. &.2), which states:
If an official publication contains any mention of a candidate or ballot question, the official publication must, upon request and under the same terms and conditions, provide equal space to all candidates or to a representative of an organization which supports passage or defeat of the ballot question.
If an official publication contains the views or opinions of the association, executive board, a community manager, or an officer, employee or agent of an association concerning an issue of official interest, the official publication must, upon request and under the same terms and conditions, provide equal space to opposing views and opinions of a units owner of the common–interest community.
Whatever the interpretation of the law, the BOD had a request to include an opposing viewpoint within the Ballot documentation, which was refused. This does not constitute fair play!
Posted by “Somersett Homeowners Against the SGCC Purchase Agreement”
Somersett Owners are now receiving ballots for vote on the proposed SGCC Purchase Agreement. We urge all not to vote until you have all the facts and opposition viewpoints. In the ballot mailings the BOD has taken the liberty to present dialog for its approval without including any opposing viewpoints or opinions. Some will be forthcoming, and by Nevada Law they must distribute to the same audience. In the interim, consider the following and share with fellow homeowners via the following download: Don’t Vote until you have all the facts
Arguments Against Approval:
Access to SGCC Amenities (for a fee): Since most homeowners are not golfers, bocce ball players or would consider eating at the SGCC a priority, these amenities have little value to the community. In a recent homeowner survey, SGCC amenities were far down the list. Whereas expanding the existing TCTC amenities and water facilities (e.g., an indoor swimming pool) were considered high priorities. The BOD has gotten their priorities wrong.
$2.75M Bank Loan ($4M over 15 years at 5% interest): Purchase price for the SGCC land and water rights is $2.75M. To accommodate this, the SOA will secure a bank loan to be repaid by homeowner assessments over a 15 year period. The SOA will then lease back (90 year lease term) to the SGCC for $2200/year. During the 90 year lease term, the SOA will receive approximately $200K in revenue from the SGCC. Not an acceptable return for a $4.0M investment.
Impact on Assessments: The BOD emphasizes that the proposed purchase agreement will have no impact on assessments. This is very misleading because they base this on the current $15/month going to the SGCC (i.e., under the current lease agreement) as being superseded by the bank loan payment, which they state will cost homeowners less than $15/month. However, the fact is the current lease agreement will not be in effect beyond December 2014. Therefore, the $15/month assessment reference becomes moot. Disapproval of the proposed purchase agreement should result in homeowner assessments being decreased by $15/month.
Default by the SGCC: If the SGCC defaults on the lease terms, the SOA has no current plans on what to do with the acquired land and water rights. To continue to operate as a community golf course would (by BOD estimate) require an increase in monthly assessments of $50-$70. To maintain as a green belt, costs associated with landscape and water facility maintenance, irrigation, land damage, improvements, etc. will undoubtedly add to homeowner assessments.
Drought Impact on Water Rights: Whether or not the acquired land could continue to remain as a green belt is speculative. As in Las Vegas, drought conditions may dictate whether the irrigating of 220 acres of open land is affordable, desirable or even permissible.
Common Area Usage Problems: Adding 220 acres of green space to the association’s common area, much of which is directly adjacent to homes, could constitute a significant homeowner nuisance factor by those using it for their own pleasure at the expense of others.
SGCC Clubhouse Construction: Strangely, the proposed purchase agreement does not include the new clubhouse the SGCC intends to build (presumably with the $2.75M of SOA funds) or the land on which it stands. Upon default, this property remains with the SGCC for the exclusive use of their members to do with as they wish. The caveat being that the SOA has the first right of refusal should they wish to sell.
Win-Win or Win-Lose? The Country Club has stated that with 400 dues paying members (~200 of which are equity members) they are solvent and membership is growing. If this is true then why the need for the proposed purchase agreement? It makes no sense at all. Perhaps the reason being that the SGCC needs the money to subsidize building of a permanent clubhouse.
This is a bad proposal, not supported by sound economic principles or community benefit. Therefore, we strongly urge all Somersett Homeowners to vote to DISAPPROVEthe proposed SGCC Purchase Agreement.
In a revised version to the SGCC Purchase Agreement that was originally published on the community website, the following provision was subsequently added at the end of Section 3:
“3.9. Satisfaction of Claims. The consummation of this Agreement by the approval of the members of Buyer and the members of Seller constitutes complete satisfaction of any concerns or claims that the Buyer has or had about or against the Developer and the Buyer board members appointed by the Developer arising out of or relating to the execution or negotiation of the Existing Lease Agreement entered into by and between the Buyer and the Seller.”
The Buyer being the Somersett Owners Association (SOA), and the Seller being the Somersett Golf and Country Club (SGCC).
What does this mean? It means that if the Purchase Agreement is approved, the SOA forever relinquishes any claims against the Developer (Blake Smith), his Associate (Tiffany Roland) and current BOD member Ray Lee pertaining to their involvement in formulating and implementing the existing SGCC Lease Agreement. As many know, the current Lease Agreement is the subject of a Complaint being filed before the Nevada Real Estate Commission on Common Interest Communities by the Nevada Attorney General’s office. The complaint alleges that by entering into this agreement, the then SOA BOD (Blake Smith, Tiffinay Roland, and Ray Lee) violated several provisions of Nevada Law. Most notably, acting outside of their authority, misuse of surplus funds, conflict of interest and failing to act in good faith.
To date over $1,2M of association money has been given to the SGCC under the existing Lease Agreement. The intent of the added provision is obvious, and that is to shield Smith, Roland and Lee from any potential law suits (i.e., on the part of the SOA) arising from the Complaint discussed above.
The “Satisfaction of Claims” provision has no relevance to the SGCC Purchase Agreement and, therefore, no business being included therein. In addition, at the August homeowner information meetings, no mention was made by the BOD of this added provision. SU suspects s this omission was intentional and shows a lack of transparency on the part of the current BOD. Perhaps the BOD will chose to address why this provision was added to the Purchase Agreement the next homeowner information meeting.