Don’t Vote Until You Have All the Facts!

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:

  1. 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. $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.
  3. 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because they base this on the current $15/month going to the SGCC (i.e., under the current lease agreement) as being superseded by the bank loan payment, which they state will cost homeowners less than $15/month.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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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 DISAPPROVE the proposed SGCC Purchase Agreement.

12 thoughts on “Don’t Vote Until You Have All the Facts!

  1. One thing you forgot to bring up is if the measure to purchase the golf course does pass the cost will not be $2.75 million but and additional $1.2 million that Blake Smith and his associates will not have to pay back because of the clause in the aggreement that will hold harmless the whole group that make the illegal assement for the golf course. So when it is all said and done the total cost will be $5.2 million. Way to much of our money to be spent on for a few people who will benifit. Let the majority rule, vote no on this ballot issue.

  2. The SOA BOD estimate of $50-70/month/member to operate the championship golf course is based on the assumption that there will be no fee for members to play, and no play by nonmembers. As a golfer, I know no private course that charges both golf-playing and nonplaying members equally. SOA BOD claims based on this business model are absurd.

    Bad decisions by SGCC have kept many golfers, like me, from joining. Now they want to use SOA funds to provide $2.75M to SGCC so they can secure a loan and build the clubhouse they have never been able to afford because of those bad decisions.

    The SOA BOD claimed the water rights alone were worth the $2.75M, but they said they did not even examine the original water right grants, and could not provide an appraisal to support their claim.

    The SOA BOD is acting like SGCC affiliates, instead of SOA fiduciaries. They are unbelievable, unfair, and inequitable.

  3. Always enjoy the misinformation from this blog. Just some observations

    1. If anyone has looked at indoor pool costs vs utilization it would be obvious this is not a good investment for a community
    2 The financial benefit for acquiring over 200 acres of land for about half it value is really the water rights that will be needed when Somersett is fully built. There are essentially no other sources for water are these prices which are assured for 90 years.
    3. The assessments at this time are only $12 since they were reduced a year ago and they should decrease another $3 if this agreement is approved.
    4. The threat of an increase in assessments is part of this “fear, uncertainty and doubt” approach is unfounded as there are essentially not circumstances that would cause this. The issue on an existing plan by the SOA should not be a surprise as there is not a plan for the community as a whole. That is what the Strategic Planning Committee is working at this time. The considerations that impact the strategic plan should be brought to that committee.
    5. More of the FUD rhetoric. While a sever drought would limit water use, having the water rights that would come with the acquisition would provide Somersett with priority rights to the available water. Something many other communities would love to have.
    6 This is a personal opinion as a vast majority of people who live adjacent to the golf course paid a significant lit premium to do so and not all of these people are golf members.
    7 This issue with a club house, which is not intended to be built with the funds from this transaction, is not understood. If the SOA would take over they would have access to the any club house or other facilities the SSGC would have. It is clear now that the SOA could use more facilities for ‘meetings, classes and such so it would seen this could be a hidden benefit.
    8 This issues is unclear as well. The reason the transaction was propagated was as a consequence to litigation that Somersett Unite was an active participant. And has been negotiated in good faith by the SGCC and SOA to extract benefits for both parties. Somersett was originally designed as a golf community so none of this should be considered unusual.

    I do not mind an active disagreement and discussion but the facts should be properly reported.

    1. Terry,

      I agree that facts should be properly reported. The problem being who determines what the FACTS are. Certainly not what you or I say, or our respective BOD’s for that matter, but what the Purchase Agreement says.

      For example, In your item 7, you state that if the SOA would take over (I assume you are referring to takeover as a result of lease agreement default on the part of the SGCC) “they would have access to the any club house or other facilities the SGCC would have“. However, Section 3.7 “Seller Retained Property” of the Purchase Agreement states: “Seller shall retain ownership to the land comprising the planned site of the Seller’s clubhouse and parking lot for a planned clubhouse“. Please advise where in the Purchase Agreement the SOA would have any access privileges to such clubhouse following default for “meetings, classes and such” , as you would imply

      You also state a future clubhouse “is not intended to be built with the funds from this transaction“. However, this is contrary to previous statements from both the SOA and SGCC BOD presidents. What the SOA may do with the $2.75M is not addressed anywhere in the Purchase Agreement. Therefore, the facts are, the SGCC can do whatever they wish with the $2.75M including building a clubhouse, placing in reserves or a cash out by equity members. Not to say this is wrong, only that it is factual.

    2. Terry – your comment below raises interesting unanswered questions:

      “4. The threat of an increase in assessments is part of this “fear, uncertainty and doubt” approach is unfounded as there are essentially not circumstances that would cause this. The issue on an existing plan by the SOA should not be a surprise as there is not a plan for the community as a whole. That is what the Strategic Planning Committee is working at this time. The considerations that impact the strategic plan should be brought to that committee.”

      The Board says in their presentation materials that if the private country club fails – assessments may go UP – $50 to 70/month.

      That in my mind is a considerable DOWNSIDE for the residents!

      Presumably, we will want to keep the golf course in good shape after the promised 45 days prior to bankruptcy filing – hence an emergency additional assessment seems likely.

      Unfortunately, the Board have not asked either the strategic planning committee or the finance committee to come up with “secanrios” on what might happen and what the actual potential costs might be. I think that before we seek to own the CGC we need to fully understand the implications of this “downside”.

      Some scenarios: (as I see it)

      Fall-Back PLAN A

      Operate as a CGC – Dues go up $70 a month

      Fall-Back PLAN B

      Operate as a Public Golf Course – just like Canyon 9 is today

      1)  Have HOA employees run it  – how much would that cost and what fees could we anticipate when the public pays to play. 
      (Note the C9 costs us a total of $400K a year to operate – and generates $65K in revenue)
      Does not seem to be a winning solution…

      2)  Contract out running of the CGC as a public GC – what is that going to cost? I am sure that the SCC have had a proposal from an independent GC operator that they could share with all Somersett residents (and the HOA Board).

      Perhaps an indication of costs, revenues and perils of golf course operation.

      Fall-Back PLAN C

      Convert to open space, build new non-golfing amenities, pickleball, racketball courts, walkways, mountain bike trails, gardens, etc. on our newly acquired open land – Initially, the HOA Board claim minimalistic maintenance costs estimated by the board at $65,000 a year  – is this a real number?  We are paying $800K per year to the Groundskeeper to maintain all the common landscaping (other than the C9 and CGC).

      What are the costs of “conversion”, how much will the new amenities cost us?

      Yes,I noted that Mike Slattery has already commented that an indoor swimming pool is not a financially viable option – from his comments, I presume that the C9 is also not financially viable!!

      Why havent we been informed what these potential plans might be and how much they could cost us all?

      Geoffrey Brooks

  4. I challenge this site to look at the cost of water rights. I’ve dealt with water rights for over the last 10 years in my previous profession. What we’re paying for is like purchasing the land for nothing and the cost of the water rights is price we’re paying.

    If you feel that $15 a month is too much, then perhaps you need to find a cheaper place to live. I find it obscured that people complain about a small amount after paying what most have paid for their homes. In my previous profession I got a letter from a homeowner in Sierra Canyon complaining they were on a “fixed income” and couldn’t afford increase in taxes, but yet they spent $500,000 for their home. Seems to me there are too many cheap people living here.

    1. Mr. McNeil,

      Your comment that “there are too many cheap people living here” is an elitist and insulting comment, As I see it, the issue for many is that the previous BOD used association surplus funds, both illegally and without homeowner vote, to give to the Country Club $15/month of homeowner assessments, which appalled many. It is not that $15/month was too much, only that due process be followed. I suggest that if you took a poll on what “amenities” owners preferred for their $15/month it would not be Country Club related. To suggest that if someone would rather have an additional $15/month in their pockets rather than give it to the Country Club, and I quote: ” you need to find a cheaper place to live” is again an elitist comment showing lack of respect for those who may have a different viewpoint than you.

      We are not all “Water Rights” experts as you claim to be, but can appreciate that they do us no good as long as the Country Club continues to operate. Do you want them to fail so we can then reap the benefits of acquiring them?

      BTW – We do live on the golf course, and certainly do not want to see them to fail, but will vote according to the merits, or lake thereof, of the Purchase Agreement contents, not because we are cheap! You do your cause no good by implying this.

  5. Golf courses are prime redevelopment sites just by their design. SGCC is 220 acres. Say 100 acres are prime, flat developable land (120 acres too steep or inefficient). SF6 (6000 SF lots) would be the most likely zoning that Reno would allow. When you deduct for street ROWs, you are still looking at 6 units per acre, or 600 new development lots possible. At multifamily (townhouse) MF14, 1500 new units.

    A SFR requires about ¼ AF of water and MF about half of that. SGCC has enough “good” water rights to cover full redevelopment of the golf course.

    Would Reno go for the deal? Hell, they’d SPONSER it! Major road, utility, and public safety improvements are already in place – it is perfect infill development opportunity. At $3200 per year in property taxes, full SFR redevelopment would generate close to $2M annually with minimal costs to the City.

    SGCC WILL fail at some point, and the Developer WILL exercise his reverter rights. Is this the future the SOA membership envision for Somersett? Approving the SGCC purchase works out to about $1000 per owner. That is a pretty cheap insurance policy to be able to control the future of the development, whether you are a golfer or not.

    1. RRreno

      Two things

      1. The SGCC Land is currently zoned PUD (Planned Unit Development) and is governed by the descriptions and regulations contained within the Somersett PUD, wherein it is described as part of the planned 1282 acres of open space. It is true that minor amendments to the PUD are not difficult to obtain. However, to convert the SGCC land to residential use is quite another manner. This would undoubtedly require approvals from the Reno Planning Commission and City Council,with public hearings, wherein residents could be as vocal as they want.

      2. I am not sure that some future residential build-out would be a bad thing, either for the Somersett Community or Reno.

  6. i do NOT live in somersett, but i get emails for cheap golf ($175/month) and today see it for $45/round on living social for a one day membership groupon/living social etc are often used by desperate businesses that are trying to break even by keeping their facilities for sitting empty (and then losing money). what is the difference in a one day day membership and a public golf course? im glad i didn’t move there, but its fun to keep up with the drama that compelled me to cancel a short sale a few years ago.

  7. The grass is always greener on the other side!

    Having read everything concerning the vote posted on the SU site (easy to access and follow)
    Conversley I have found that the MySomersett site is one sided, difficult to manouevre through as a non-computer person – and reading and understanding a 100 + page legal agreement in legalese on my computer – creates eye-strain and quite frankly tiring –

    I appreciate the thoughtful posts and counter posts by Terry Retter and Jim Haar – what they both say makes a lot of sense. The “devil” is always in the actual details . Reading my recently received “voting information” – seeing no arguments why we should consider a No vote, indicates that the Board has a one-way, myway or the highway approach. Presumably they have to satisfy the developer and golf club demons (or maybe there are too many conflicted board members who belong to the SCC and have families who play golf).

    Simplistically –

    if one believes that this is probably a good deal for the future of Somersett – and – you believe that the private golf course will fail in the next 5 years – you should definitely vote YES.

    If you believe that the private country club will survive and thrive – there is no need to spend our monies in this manner, they will keep our community green – you should Vote NO.

    Factors missing from the ‘facts from the board” include the following”

    1. No professional outside valuation of the “deal” or “bet”.
    No kudos to the Board for their business savvy….

    2. No future plans on how to cope with private country club failure (if we vote YES) – other than it costs over $2,000,000 a year to maintain a Golf Course – our dues could be hiked exponentially… while we decide…

    3. No cost/revenue feasibility study as to what would happen if we ran the amenity as a public golf course. (if we Vote YES)

    4. No plan to properly secure the water for the Canyon 9 (if we vote NO)

    Perhaps before we vote, some further details can be provided by the Board and the SCC on the missing “value pieces” so I can make the best informed decision.

    Green Grass of Home

  8. Facts are what you want them to be. Lets cut out all the B.S., vote NO on the Purchase Agreement and let the Country Club go their way and the SOA theirs. What the future will be will be, we can deal with it then. Sierra Canyon residents have nothing to gain here.

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