I Need University of SU Info

Posted by Steve Guderian – Association Member & Candidate for the SOA Board:

“To the SU readers, for me personally a number of things have come out of the election process, one of which is that I do not know as much as I should about the Golf Course. I checked the SU docs section and found some things but I would like to go beyond that.

  • Here is my understanding; SOA owns the land the Golf Course is on and Somersett Country Club owns the Country Club building.
  • SOA also owns the water rights that go with the Golf Course… Where does the water come from, wells or purchased?
  • SOA owns the land but the CC runs the golf course, what happens if the CC goes bankrupt?
  • If the CC goes bankrupt what happens with the brand new building?
  • Who runs the CC??
  • I understand there is a BOD, who is on this board and how did they get there?
  • Was is the communications protocol between the CC and SOA, who handles all of this?
  • Any other info that anybody else can think of that would be helpful, please tell me.

Steve Guderian”

The following is offered in response to Mr. Guderian’s inquiry:

  • The SOA purchased the Somersett Country Club (SCC) land (approximately 220 acres) and water rights (approximately 1000 acre feet) in late 2014 for $2.75M.  Purchase excludes approximately 6 acres of land on which the SCC Club House was subsequently built.
  • Water rights are derived primarily from the Truckee River and wells.
  • In conjunction with the Purchase Agreement, the SOA executed a lease-back agreement with the SCC. Lease-back rent is $1000/year escalation adjusted plus $1200/year unescalated.  Term is for 50 years with two 20 year renewals at the discretion of the SCC. If the SCC declares bankruptcy or defaults on the lease agreement in any other way, the SOA may terminate the lease and assume full control and use of the premises.
  • The SOA has no property rights to the SCC Clubhouse or the ground on which it stands.  This remains exclusively the property of the SCC regardless of any default on the part of the SCC.
  • It is believed that the SCC is run and operated by a its own equity members through a Board of Directors..  That is, not via a contracted for Management Company.
  • Current SCC President is Glen Armstrong, Do not know the entire make-up of the SCC’s Board and how they are elected and/or appointed.  Assume it is via vote of the equity members. Perhaps a SCC reader can provide this information.
  • Communication protocol between the SOA and the SCC is handled by their respective Boards, or their respective lawyers over default or other legal issues. 

Any comments, corrections or clarifications on the preceding response to Mr. Guderians inquiry are welcome.

Note that complete terms of the SCC purchase and lease agreement may be accessed via the References Tab and clicking on the “Country Club Purchase Agreement” link.

 

6 thoughts on “I Need University of SU Info

  1. Anyone, please correct and clarify as applicable.

    As I remember, “back in time” the private golf club was in great financial difficulty. Unbeknownst to homeowners (association members) the Somersett Board was taking $15 of their monthly dues and giving it to the private golf club in order to keep it afloat. When that became known, an election was held over four different things. One had to do with board quorum. Another was seeking owner approval for the Somersett Board to borrow the $2.75M referenced above. The election was contentious and the Board extended the ballot deadline three or four times.

    During the extension periods the Board was opening received ballots on a weekly basis; and while homeowners did not know, the Board knew exactly where the ballot count stood.

    Finally the “pro golf club” factions won and the money was borrowed.

    Today, $8 of each owner’s monthly dues paid to Somerset goes to pay back the $2.75M with interest.

    Somersett Board Treasurer at the time, Ray Lee, knows all the ins and outs of this “monkey business.” Perhaps he will post the actual scenario and facts here on Somersett United.

    It is my opinion, that the Somersett Board has a right to the financial statements of the private golf club and should publish them (say quarterly) for all owners to read.

    Also, I don’t know and haven’t looked, but the monthly financial statements for the Somersett Owners Association should contain the monthly bank statement detailing the status of the loan’s interest, payments, and current balance.

    1. Joe – A bit of clarification and history

      The original “Lease Agreement” (beginning in January 2012) wherein the Country Club received $15/month of owner assessments was developed and approved by the then Developer controlled 3-person Board of Directors (BOD). This action was eventually ruled in violation of NRS Statutes and the SOA CC&R’s by the Nevada Attorney General’s office as a result of a complaint filed with the Nevada Real Estate Division. The Attorney General’s office concluded that such an agreement required an owner vote and an amendment to the SOA CC&R’s. This ruling was stayed to enable the SOA BOD to take corrective actions.

      In November 2012 the Developer relinquished control (facilitated by other legal actions) of the BOD and a 5-person owner BOD was elected.

      To comply with the above referenced Attorney General’s ruling, the new BOD scraped the original agreement and replaced it with the $2.75M Purchase Agreement along with required amendments to the CC&R’s. These were subsequently approved by owner vote in late 2014 effective January 2015. By this time the Country Club had already received approximately $1.24M from the SOA under the original agreement. Therefore, the SOA’s total investment in the Country Club to date is approximately $4.75M when factoring in the interest for the $2.75M loan to finance the Purchase Agreement.

      During the 2014 CC&R amendment voting process, legal action was taken against the BOD for unfair practices and violation of Nevada Statutes with regard to the publishing of opposing viewpoints. This action was eventually settled out of Court with the SOA reaching a settlement with the Plaintiffs.

      You ae correct in that the SOA BOD, despite the Association’s significant investment in the Country Club, has never chosen to disclose the Country Clubs financial status. However, being a non-profit organization, their financial records are accessible to the public on an annual basis, and are routinely published on this website. See the July 2017 archives for a Post entitled “Somersett Golf Club 2016 Financials”

  2. As a simple matter it seems that the SCC is making its weight felt with regard to the new golf club restaurant. It seems that Sierra Canyon members are not welcome any longer even thought members continue to pay dues as required. The golf club is not self-sustaining and relies on support from SOA which comes from member dues. What on earth do Sierra Canyon members get from their dues to SOA? One thing was a nice restaurant. Now that is taken away. If I am in error then please correct me.
    John F Moran

  3. Joe Bower, thanks for the info. Info about these matters seem to be placed in a void. If you are right then from the $8/month multiplied by 3082 units (on the budget sent to everyone) would give $24,656/month multiplied by 12 would give $295,872 per year. This multiplied by 10 years would give $2,958,720. Of course this is just simple calculations and does not account for compounding, but it would appear that the $$2.75M would be paid up in 10 years. What part of these financial affairs does the SCC handle? Lots of other questions arise but not any transparency.
    John F Moran

  4. First off, Jim, thank you so much for your information. I kinda have a few more questions now. If I understand the information;

    If SCC goes bankrupt or defaults on the loan SOA could own a golf course but no country club buildings?

    What happens if SCC goes bankrupt on the loan for the new country club building?

    Technically speaking, SCC could still make its payment to SOA but not on the building loan, (I am assuming that there is a loan on the building given the financial troubles in the past for SCC).

    As I recall the history, and I am looking for education here, the whole SOA development was around the golf course because this is what Blake Smith wanted, is Blake Smith still associated with SCC?

    Correct me if I am making a mistake, but the way I understand this right now is that a major portion of SOA is being overseen by an unknown board with unknown people on it, right?

    Isn’t this information that the SOA community should know?

    Thanks to all for any info on this.

  5. Steve – In response to your Comment

    Not sure what loan you are referring to. The SOA took out a loan ($2,75M) to finance the purchase of the Country Club land and water rights. Do not know how the Country Club used these funds and how much of it was used to build their Clubhouse. If they took out a loan on their own to help finance its construction, this is unknown to SU. The Clubhouse and the land on which it stands was excluded from any SOA property rights in the event of default under the terms of the Purchase Agreement. Also, do not believe there are any Purchase Agreement terms that relate to what happens if the Country Club defaults on any of their internal loans, Clubhouse or otherwise. However, the SOA does have some first refusal purchase rights should the Country Club decide to sell off the Clubhouse and land.

    It is clear that the Country Club is an integral part of Somersett, hence its marketing description as a “Master Planned Golf Community”.

    Since the Country Club does not publically publish who its equity members are, cannot comment on whether Blake Smith, his family or employees are members. However, given that Blake Smith was its developer and first owner, would be very surprised if he does not have a free lifetime membership.

    If you are referring to the Country Club BOD and not the SOA’s, I am sure the SOA BOD knows who sits on the County Club BOD. Not sure what the benefit would be for the SOA to publish their names.

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