Somersett Golf & Country Club 2018 Financial Summary

The following table represents a summary of the Somersett Golf & Country Club’s (SGCC) revenue and expense data for the years following turnover from the Somersett Developer to its Equity Members. The table has been updated to include the 2018 financials. All financial data contained in the following table are derived from the SGCC’s IRS Form 990’s, which require submittal by May 15th of the following year and become available for public inspection. The SOA Revenue Column represent monies provided to the SGCC from Somersett Owners Association (SOA) funds as indicated by the corresponding “Notes”. Given the SOA’s investment and liabilities associated with the Real Property Purchase Agreement (see Note 5), the SGC’s financial health may be of interest to many Association members.

 

 

 

 

 

 

 

 

 

 

* Full proprietary membership with voting rights, does not include non-permanent provisional or preview memberships

Table Notes:

  1. In the Fall of 2010, the Somersett Development Company negotiated early turnover of the SGCC to its Equity Members via Member majority vote.
  2. First year in which the SGCC was run entirely by Equity Members.
  3. 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. The obvious purpose being to offset SGCC operating losses.
  4. SOA Revenue column represents the revenue the SGCC derived in years 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.
  5. As a replacement for the aforementioned Lease Agreement, 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 the land and water rights 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 bank loan paid for via homeowner assessments.
  6. The SGCC 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.

For those interested in the details associated with the listed 2018 revenues and expenses, the SGCC’s complete 2018 Form 990 may be accessed via the following link:

SGCC 2018 Form 990

Comments:

  1. Although far short of the 450 equity member goal, the SGCC continues to increase its equity membership, which is now at 293 or up 37 from the previous year.
  2. The SunSett Grille appears to be doing much better as the SGCC’s Food & Beverage revenue is up $330K over 2017. If you haven’t already been there, give it a try.
  3. The SGCC’s $313K in revenue derived from the SOA via the Canyon9 maintenance contract was not in effect for 2018. The contract for 2018 and 2019 was awarded to Reno Green on a cost basis. It is unclear how this may have contributed to the increase in the 2018 negative revenue less expense amount.
  4. Yet to be determined is SGCC’s financial liability for the Rockery Wall failures on property leased from the SOA by the SGCC under the 2014 Real Property Purchase Agreement (i.e., the SGCC Hole 5 hillside failures). For expeditious reasons, required repairs were initiated and paid for by the SOA. However, the SOA contends that the SGCC is liable for these repairs under the Purchase Agreement’s Warranty and Property Maintenance Provisions. Although started, legal action was placed on hold until June 30th, 2019 by a mutually agreed upon “Tolling Agreement”, under which the SGCC is paying the SOA $500/month to help offset loan interest fees. It is assumed that the Tolling Agreement was put in place pending results of the ongoing Chapter 40 lawsuit against the Somersett Development Company et. al. However, given that June 30th is just around the corner, and the Chapter 40 lawsuit is still unresolved, will the Tolling Agreement be extended, or will the SOA now proceed with legal action against the SGCC?
  5. Also, to be determined is the SGCC’s future liabilities associated with required repair/replacement of the Canyon9 and SGCC Water Supply System components, which have been estimated as high as $700K over the next five years. The SGCC’s responsibilities in this area are fully defined under the Waiter Facilities Agreement between the SOA and the SGCC. Given that the vast majority of the total water supply is for SGCC course irrigation, the majority of the repair and replacement costs will become the responsibility of the SGCC. This issue is currently under discussion between the two parties regarding liabilities and repair timing.