Note: Most of the information below was extracted from an “equal space” letter to the BOD from “Somersett Homeowners Against the Purchase Agreement” and reprinted with their permission.
Recently the SOA Board of Directors emailed an information bulletin to Somersett homeowners stating that an appraisal of the water rights under the proposed Country Club purchase agreement was in itself worth the proposed purchase price. Everyone agrees that water rights have value and it is nice that they have been appraised for $2.67M. However, they are only of value if they can be sold. Water “rights” do not constitute absolute ownership. Nevada water, whether above or beneath the surface of the ground, belongs to the public and is subject to Nevada Water Law, which is administered and enforced by the Nevada Division of Water Resources, or in the case of the Truckee River, by the Truckee Meadows Water Authority. Also, consider the following:
- Under the proposed $2.75M purchase price, these water rights, along with the land, will be leased back to the Country Club for a 90 year period at a nominal annual fee of $2200. Therefore, of no value to the association during this or any subsequent leaseback periods.
- In event of default, acquisition of these rights comes with a cost. Water is not free nor is the operation and maintenance of the distribution facilities required to deliver it.
- What is the probability that the Country Club will fail such that the association will actually acquire the land and water rights for their own use? By their own admission they are currently financially solvent. If they do fail, should the association really be in the business of land development?
In their email, the BOD also urged you to submit your vote so as not having to extend the December 11 deadline. What they did not tell you is that per Section 5.3 of the proposed agreement, close of escrow must occur no later than December31, 2014 or the agreement will terminate immediately. This Section also states that close of escrow shall occur 15 days following approval of the agreement. This leaves essentially no time for extending the December 11 deadline.
A water rights appraisal is valid information to disseminate to homeowners. However, to do so without accompanying facts, risks and/or consequences is simply an attempt by the BOD to influence your vote. Do not let this happen. There are more major factors at play here other than the water rights appraisal that one should consider.