The following table represents a summary of the Somersett Golf & Country Club’s (SGCC) revenue and expense data for the years 2010 through 2017 (i.e., years since turnover from the Somersett Developer to SGCC Equity Members). Given the Somersett Owners Association’s (SOA) ongoing investment and liabilities pursuant the to Real Property Purchase Agreement (as entered into between the SGCC and the SOA in late 2014), SGCC’s financial status should be of interest to Association members. Note that the SGCC’s operating loss for 2017 was $73,008.
• Full proprietary membership with voting rights, does not include non-permanent provisional or preview memberships
- 2010 – Year in which the Somersett Development Company accomplished early turnover of the SGCC to its Equity Members via Member vote.
- 2011 – First year in which the SGCC was run entirely by Equity Members.
- In late 2011, the Developer controlled SOA Board voted to divert $15/month of homeowner assessments to the SGCC via a “Lease Agreement” in exchange for some SGCC access amenities. Agreement was to run for three years starting in January 2012 with optional 3 and 4-year renewal periods. Purpose being to offset SGCC operating losses.
- SOA Revenue column represents the approximate revenue the SGCC derived in 2012, 2013 and 2014 from the SOA under the Lease Agreement described in Note 3 above. 2014 was the last year under this agreement after being declared improper by the Nevada Real Estate Board.
- In late 2014, a SGCC Real Property Purchase Agreement was approved by SOA owner majority vote. Under this agreement, the SOA purchased the SGCC land and water rights for $2,750,000 with a subsequent leaseback of 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 SGCC optional 20-year renewal periods. SOA purchase funds were obtained via a bank loan being paid for by SOA homeowner assessments.
- The SGCC’s 2015 negative revenue less expense amount was primarily due to the $2,750.000 sale price income (see Note 5) minus a reported sales expense (asset loss) of $4,294,781.
- 2016, 2017 – Years without any SOA revenue contribution
All Table data was derived from the SGCC’s IRS Form 990 submittals, which are open for public inspection. For those interested, the SGCC 2017 financial details associated with revenues, expenses, assets and liabilities (i.e., Form 990 Parts I, II, VIII, !X and X) may be accessed via the following link:
2018 Revenue and Liability Concerns:
- The SGCC’s approximately $300K in revenue derived from the SOA via the Canyon9 maintenance contract will not be in effect for 2018. The contract for 2018 and 2019 was awarded to Reno Green based on an annual quoted price differential of $47K. How this will affect the SGCC’s 2018 financials remains to be seen.
- Also unknown is SGCC’s financial liability for the Rockery Wall failures on SGCC leased property. For expeditious reasons these repair costs are currently being paid for by the SOA. However, per the 2014 Real Property Purchase Agreement, the SGCC is liable for these repairs under the Agreement’s Warranty and Property Maintenance Provisions (see related post in the April 2018 Archives entitled “SGCC Rockery Wall Repair Obligation”). In this regard, it is anticipated that the SOA will seek financial reimbursement from the SGCC (approximately $14K in SOA legal fees has already been expended on this dispute). Although not publicly revealed, the SGCC’s share of repair costs has been estimated in the $500K range. How the SOA’s Chapter 40 law suit against the Developer will affect this issue has yet to be determined or revealed. If the SGCC is indeed liable for repair costs, the question is how will the SGCC secure the funds. Perhaps another dip in the SOA money well via some other agreement? Hopefully not, SGCC Equity Member assessments would be more palatable.