Perhaps Mr. Guderian’s inquiry from his “Golf Course Knowledge” post could have been better phrased as:
“What does the Community do for the SGCC”.
There is no question that the Somersett Golf and Country Club (SGCC) with its lovely green fairways and open space enhances the beauty of the Somersett Community, and possibly, although some may disagree as to what extent, property values as well. Also, as captured under Mr. Retter’s (“yogiwan”) comment, SOA owners do have certain access privileges to SGCC facilities. However, these did not come without a price. A brief history follows:
- As originally conceived, the SGCC was owned and operated as a separate and independent entity from the Somersett Owners Association (SOA), with no SOA say over its existence, ownership or operation. Hence, Somersett owners originally had no access privileges to SGCC facilities.
- In 2010, facing financial difficulties, the SGCC owner, Somersett Development Company (SDC), accomplished early turnover of SGCC ownership to its Equity Members, espousing some positive projections in doing so. However, revenue versus expenses for that year resulted in a $560K loss.
- In 2011, the first year under Equity Member ownership, the SGCC’s financial woes continued, with a revenue/expense loss of $628K. To offset these losses, in December 2011, the SDC controlled SOA Board of Directors (BOD) voted to divert $15/month of owner assessments to the SGCC in exchange for some limited SGCC access privileges (i.e., the misnamed “Management & Lease Agreement”). The agreement was to begin in January 2012 and extend through December 2014 with subsequent three and four-year renewal periods. During this period, revenues provided to the SGCC via SOA owner assessments totaled approximately $1,235,000, which helped to keep it in the black.
- Needless to say, this agreement sparked considerable controversy within the Community. A complaint was subsequently filed with the Nevada Real Estate Division against the SOA BOD, which challenged its authority to enter into such an agreement without owner vote. Also, citing violations to both the Somersett CC&Rs and Nevada Statues (NRS-116). After a considerable amount of wasted legal and bureaucratic time, the complaint was upheld by the Nevada Attorney Generals office with the remedy being for the SOA (under a now all owner BOD) to modify the original agreement, revise the CC&R’s accordingly and to submit it for owner ratification.
- In subsequent negotiations with the SGCC, the original agreement was replaced by a “Real Property Purchase Agreement”, the CC&R’s modified to permit such purchase, and subsequently ratified in late 2014 by SOA owner majority vote. Under the approved agreement, the SOA purchased the SGCC land and water rights for $2,750,000 with a subsequent leaseback to the SGCC at a base rate of $1000/year (subject to escalation) plus a fixed rent amount of $1200/year. Lease term is for 50 years with two optional 20 year renewal periods at the sole discretion of the SGCC.
- Since ratification of the Real Property Purchase Agreement, no subsequent financial dealings between the SOA and the SGCC have taken place. However, there is a potential issue regarding who pays for the Rockery Wall failures occurring on SGCC leased land. Some (including a former BOD member) belueve this liability (possibly as much as $500K) lies with the SGCC under terms of the Purchase Agreement. Currently all repair work is being paid for by the SOA via Common Area funding. Is there litigation in the offing?
SGCC Membership Status
- After SDC turnover to the Equity Members in late 2010, Equity membership stood at 188 out of a 450-member target. Since then, equity membership growth has been rather slow increasing to 241 at the start of 2017. This does not include an unknown quantity of “Preview Memberships” for those wanting to “test the waters”.
- Per the SGCC website (www.somersettgolfandcountryclub.com), Equity member dues for 2017 were set at $425/month plus a $150/quarter food and beverage minimum. Preview Memberships were $250/month plus a $150/quarter food and beverage minimum. Monthly dues do not include golf cart fees. The SGCC is currently offering their equity memberships with “No contribution at this time”. How this may relate to any deferred payment was not published. Note that the price for an SGCC equity membership ranged from $25K at inception to a high of $40K, only to drop drastically during the recession.