Developer “Reverter” Rights Argument

Somersett United
Somersett United

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 to have the property and water rights revert back to him”.

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