SGCC Related Documents – Get the Facts

There has been a lot of discourse on the Somersett NextDoor website, some unfortunately nasty, on the relationship between the Somersett Owners Association (SOA) and the Somersett Golf and Country Club (SGCC), particularly with regard to the Rockery Wall and Water Facilities issues, and whether or not the SOA should forgive and/or assume the cost for perceived SGCC liabilities . Some of the discourse accuses those with opposite viewpoints of spreading misinformation, telling lies and factual incorrectness, with some directed at this website.

Does SU publish editorial opinions, yes, and all readers have the opportunity to respond accordingly. However, we take pride in also publishing the facts, with appropriate document references, that form the basis for our opinions. Although these documents have been previously published, following is a listing, with links, of documents that pertain to this issue. (also available under the References Tab). We ask all readers, who have an interest in truthful representation, to read them and make up their own minds as to the facts and their implications.

  1. August 2014 SGCC Purchase Agreement (Executed)– This was the Agreement entered into between the two parties. It identifies all the parameters and responsibilities of the two parties pertaining to the SOA’s purchase of the SGCC’s Land, Water Facilities and Water Rights and the subsequent leaseback of these assets to the SGCC.
  2. August 2014 Water Facilities Agreement – Part of the Purchase and Lease Agreement. It establishes responsibilities for the operation and maintenance of the Water Facilities and Water Rights that provide the irrigation sources for both the SGCC and SOA Canyon 9 golf courses.
  3. October 2016 Attorney Letter to SGCC on Lease Viloations – Letter advising the SGCC of certain Lease Agreement violations, particularly with regard to the Water Facilities.
  4. October 2017 Attorney Letter to SGCC – Letter advising the SGCC on their liability for the Rockery Wall failure on SGCC leased land.
  5. November 2017 SOA Attorney Letter to SGCC– Letter advising the SGCC that violation notices contained in the October 2017 letter would be placed on hold pending release of an engineering report on failure assessment. Also, that the SOA would consider paying for damages provided the SGCC will reimburse the SOA on “mutually agreed terms”.
  6. January 2018 CME Rockery Wall Preliminary Failure Investigation Report – The engineering report referenced in the November 2017 Attorney letter, which investigated the causes of failure for the Trail Ridge Court (Hole 5) Rockery Walls.
  7. July 2018 SGCC Tolling Agreement – Basically an agreement to put Rockery Wall litigation hold pending the outcome of the SOA’s lawsuit against the Somersett Development Company et. al.
  8. January 2019 Canyon9 & SGCC Water Supply Infrastructure Review – Report by SOA Consulting Engineer on inspection of the Water Facilities identifying maintenance issues and cost estimates.
  9. June 2019 First Amendment to Tolling Agreement – Extended the Tolling date thru December 2019
  10. July 2019 Golf Course Water Supply Infastructure – Maintenance Cost Summary – Spreadsheet generated by the SGCC & SOA Water Management Advisory Committee identifying Water Supply System components, near and long term maintenance requirements, cost estimates and responsible parties (i.e., the SOA or SGCC).

As mentioned above, SU has been accused of telling lies and incorrectly stating the facts. Naturally SU takes umbrage to these accusations and invites anyone to identify where this has occurred.

As always, this website is open to all for commenting, pro or con, on SU website postings and comments, hopefully in a civil manner.

SGCC and the Water Facilities Agreement

In the previous post, SU identified the Somersett Owners Association (SOA) and the Somersett Golf and Country Club (SGCC) responsibilities under the Water Facilities Agreement. The question now being – is the SGCC living up to its responsibilities under this Agreement? There is no question that the SOA is, as, aside from some cost sharing, the SGCC is primarily responsible for carrying out the operational and maintenance provisions contained within the Agreement. To address the current status, the following summary is in order:

1. This issue first arose in a strong SOA Attorney Letter to the SGCC on October 14, 2016, in which the SGCC was put on notice for certain violations of the Water Facilities Agreement pertaining to maintenance, training and utility cost allocations. A subsequent workshop apparently resolved the electrical cost sharing concerns. However, there remains open issues associated with training, maintenance, water distribution, improper pump replacement and well conditions. A copy of the October 14, 2016 Attorney Letter is available via the following Link:      2016 Attorney Letter to SGCC on Lease Violations

2. Subsequent to the above letter, in mid-2018, a “Golf Course Irrigation Water Source Workshop” was held and summarized in a report by the SOA’s Consulting Engineer Seth Padovan . The workshop summary contains comments on: 1) the Well 5 components providing irrigation water to the SGCC and its perceived deficiencies, 2) A summary of the underground and Truckee River water rights, and 3) A summary of water usage and sources for both the Canyon 9 and SGCC golf courses. No evaluation was included for the surface pump components. A copy of this summary is available via the following link:     Golf Course Irrigation Water Source Workshop

3. The preceding workshop was followed up by a more comprehensive assessment of the water supply system components by Seth Padovan, which included: 1) The Canyon 9 Pond Pump Station, 2) The Truckee River Pump Station, 3) The SGCC Hole 5 Pond Pump Station and 4) The Sierra Canyon Well 5. The resulting report issued in February 2019 contained recommendations for both short and long-term repairs or maintenance of water supply system components, along with associated cost estimates. The report did not address responsibilities for costs. However, per the Water Facilities Agreement, cost allocations would be as follows: 1) Canyon 9 Pump Station – shared between SOA and SGCC, 2) Truckee River Pump Station – shared between SOA and SGCC, 3) Hole 5 Pump Station – SGCC and, 4) Well 5 – SGCC. It should be noted that the shared costs for items 1) and 2) are based on specific pumps for Canyon 9 and water usage rates. A copy of this report is available via the following link:      Canyon9 & SGCC Water Supply Infrastructure Review

To help understand what is in question here, the following simplified Water Facilities System diagram may be of assistance

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4. In June 2019, the SOA Board announced the formation of a “ SGCC and SOA Water Management Advisory Committee”. This is an ad-hoc committee comprised of SGCC and SOA Board Members , plus others as appropriate, whose mission is “to assure both the short and long term ability to provide water to the Canyon9 and Championship course is managed in the best interest of both parties”. This committee is to meet at least quarterly, publish minutes and open to homeowners. The May and June meeting minutes indicate attendance and input from Seth Padovan – SOA Engineer, and Linda Rhodes – SOA Water Consultant. Pertinent items covered were as follows: 1) preparation of an equipment spreadsheet, 2) over pumping of Truckee River water rights by the SGCC, and 3) discussion on a possible new Well to replace Well 5. The subsequently generated equipment spreadsheet incorporates the following elements: 1) Component Condition, 2) Recommended Maintenance, 3) Estimated Costs (near and long term) and 4) Cost Responsibilities. A copy of this spreadsheet is available via the following link:     Golf Course Water Supply Infastructure – Maintenance Cost Summary

SU Comments/ Conclusions

1. The formation of an advisory committee to insure that the water facilities are being operated and maintained appropriately is all well and good. However, perhaps rather than appointment as an “Advisory Committee” it should be an “Oversight Committee”, whose charter is to assure that not only is the SGCC living up to its responsibilities under the Water Facilities Agreement, but all other provisions of the SGCC Purchase and Lease Agreement as well.

2. The equipment spreadsheet cost allocations are all in accordance with the Water Facilities Agreement. This is good. From the spreadsheet, the estimated short term/long term costs by party are as follows: 1) SOA – $7.5K/$30.0K, 2) SGCC – $$422.5K/$161.5K and, 3) Shared – $40K/62.5K. Given that the shared costs are primarily allocated on water usage rates, for which the SGCC uses approximately 8 times that of the SOA, this would equate to the following estimated short term/long term liabilities: the SOA – $12.5K/$37.8K and the SGCC – $457.5K/$216.2K.

3. The primary component of the SGCC’s short term costs ($400K) are attributable to the Well 5 deficiencies. This has prompted a discussion as to whether or not it would be more beneficial to just drill a new well. When questioned at a Board meeting as to who would pay for this, the SOA GM stated that this decision had not been discussed, but that any cost to the SOA would require Board approval. This was somewhat disconcerting, as the decision appears obvious. The water produced by Well 5 only supplies the SGCC, the maintaining of which, per the Water Facilities Agreement, solely rests with the SGCC. The SOA has no need for the water produced via Well 5.

4. As a result of the Well 5 deficiencies, the SGCC has been over-pumping water from the Truckee River, how this will play out with “The Water Master” and its impact on current water rights remains to be seen.

5. It is apparent that most of the work performed in the review and evaluation of the Water Facilities has been accomplished by SOA consultants. Is this cost being paid for or shared by the SGCC? Per the Water Facilities Agreement, this type of activity falls under the duties of the Water Facilities “Operating Manager”, the SGCC that is, so it appears we are doing their work for them.

6. Given the estimated near term maintenance costs for the SGCC of $457.5K, most likely higher if a new well is required, there is a concern as to whether or not the SGCC can come up with the required funding. This has resulted in the voiced opposition by many owners against the SOA providing any financial relief to the SGCC (loan or otherwise). The SOA Board and GM’s somewhat current cavalier attitude on cost decisions and statements that “we own the Golf Course” (i.e., the SGCC) and that “we are all in this together” does not inspire confidence that they will eventually hold the SGCC’s feet to the fire. This opposition is also fueled by SGCC’s estimated liability of $700K for the Hole 5 Rockery Wall repairs, which has already been paid for by the SOA, and was a contributor to the $1,200 assessment.

In conclusion, it is SU’s belief that the SGCC fully recognizes its responsibilities under the Water Facilities Agreement, it just has problems carrying them out, with perhaps some disagreements over the estimated costs and how costs will be allocated in the event a Well 5 replacement is required. With regard to the SGCC’s ability to fund its required maintenance, repairs, and/or replacements, perhaps the SOA Treasurer Joe Strout, who is also the SGCC Treasurer, can  spread some light here.

Comments, pro or con, are always welcome.

Water Facility Responsibilities and Cost Liabilities

There has been much discussion on SGCC cost liabilities (i.e., at Board Meetings and on this and the Somersett Nextdoor websites) with regard to both Water Facility maintenance and the Rockery Wall failures, which collectively has been reported to be in excess of $1.5M. The question of concern being who is responsible for what, and is the SGCC up to the challenge of meeting their liabilities, or will the SOA have to pick up the tab as many owners fear, or apparently O.K. by others? Since these are separate issues, we will just address Water Facilities responsibilities and cost allocations in this post and the Rockery Wall issues in another post.

In addressing liabilities, there should really be no issue as to who is responsible for what as this is all clearly defined within the Purchase & Lease Agreement entered into between the SOA and the SGCC (referred to as SCC in the Agreement) in August 2016, which included a Water Facilities Agreement (hereinafter the Agreement). This Agreement, signed by both parties, describes the Water Facilities and who (the SOA or SGCC) is responsible for its operation, maintenance and associated cost allocations. To insure we all consider the Agreement provisions in developing our opinions, applicable Sections of the Agreement are quoted below ( “just the facts ma’am”). However, for those wishing to view all the details, a complete copy of the Agreement may be accessed by clicking on the following link:

Water Facilities Agreement

Under the Agreement:

1. Exhibit E of the Agreement lists the Water Facilities components under the following categories 1) Truckee River Facilities, 2) Canyon9 Facilities, 3) Championship Course Facilities, and 4) Well Facilities. References in the Agreement point to who is responsible for what under these categories.  Exhibit E is available via the following link:

Exhibit E to Water Facilities Agreement

2. Section 3.1 “Operation of Water Facilities” of the Agreement establishes an “Operating Manager” for the Facilities and clearly identifies the SGCC as such under 3.1 (a), which is quoted as follows:

3.1 (a) Operating Manager. The Party responsible for operating the Water Facilities under this Agreement from time to time is referred to herein as the “Operating Manager”. Subject to Section 3.1 (b), during the term of this Agreement, SCC shall operate the Water Facilities. SCC shall receive no compensation from SOA for serving as Operating manager. Upon the expiration or earlier termination of the Lease, SCC shall immediately and automatically cease being the Operating Manager, without any further act or thing required by either party.

3. Section 3.1 (d) “Water Rights” addresses the Operating Manager responsibilities related to the purchased water rights, which are quoted as follows:

3.1 (d) Water Rights. During the term of this Agreement, the Operating Manager shall have the exclusive right and license to use the Water Rights and water thereunder for the purpose of performing its duties under this Agreement. The Operating Manager shall ensure that the Water Rights are used so that they are kept in good standing and not subject to forfeiture or abandonment for non-use pursuant to the laws or regulations of the State of Nevada.

4. Section 3.2 defines the “Duties of Operating Manager”, which are quoted as follows:

3.2 Duties of Operating Manager. The Operating manager shall be responsible for (a) managing the Water Rights, and (b) operating the Water Facilities in a continual, diligent, and prudent manner and as reasonably requested by the non-operating party so as to provide irrigation water by and through such facilities for application to: (i) the Championship Course Property or, if not so operated, to the extent the Championship Course Property is maintained as green open-space and (ii) the Canyon Nine Property, during all such times as the Canyon Nine Property is being operated as a golf course, or, if not so operated, to the extent the Canyon Nine Property is maintained as green open-space.

5. Section 3.3 defines the “Information/Training” requirements placed on the Operating Manager, which are quoted as follows:

3.3 Information/Training. The Operating Manager shall use commercially reasonable efforts to keep the other Party timely informed with respect to the operational status of the Water Facilities, any existing or expected issues, and other information as such party may reasonably request. While SCC is serving as the Operating Manager, at reasonable times, and from time to time, and without compensation to SCC, SCC will undertake to train designated SOA staff with respect to the operation of the Water Facilities, so that said capability is imparted to SOA staff.

6. Section 3.4 “Water Service Interruption” defines the responsibilities of the Operating Manager in the event of water supply interruption from a Facility source, which is quoted as follows:

3.4 Water Service Interruption. Subject to SOA’s prior written consent, which shall not be unreasonably withheld, the Operating Manager may relocate and modify the Water Facilities or any portion thereof as may be necessary in furtherance of performing its duties under this Agreement, provided that in all such instances of relocation or modification there shall be no unreasonable interference with or interruption of the Operating Manager’s ability to comply with its obligations to provide water to: (i) the Championship Course Property and (ii) the Canyon Nine Property in accordance with this Section 3. Except in the case of emergency and in order for SCC and SOA to mitigate and plan for any interference with or interruption of water delivery under this Section, the Operating Manager shall notify SCC and SOA of any reasonably anticipated interference with or interruption of the delivery of water not less than thirty (30) days prior to the work or event anticipated to give rise to such interruption or interference.

7. Section 4.3 establishes the “Maintenance of Water Facilities: Cost Allocation” – “After the Warranty Period” (the period we are now in) as follows:

4.3 After Warranty Period. For so long as the Lease in in effect and after the Warranty Termination Date:
(a) Responsibility. (i) the Operating Manager shall perform, or cause to be performed, all Maintenance of all the Truckee River Facilities described on Exhibit E: (ii) SOA shall perform, or cause to be performed, all Maintenance of the components of the Canyon Nine Facilities described in Section B.1 of Exhibit E; (iii) SCC shall perform, or cause to be performed, all Maintenance of the components of the Canyon Nine Facilities described in Section B.2 of Exhibit E: (iv) SCC shall perform, or cause to be performed, all Maintenance of the Championship Course Facilities described on Exhibit E; and (v) SCC shall perform, or cause to be performed, all Maintenance of the Well Facilities described on Exhibit E.

The preceding represents binding contract provisions between the SOA and the SGCC regarding operation and maintenance of the Water Facilities and Water Rights. In reading them, one can make up their own mind as to who is responsible for what, and whether or not the respective parties are living up to their responsibilities under the Agreement.

Of course establishing responsibilities and cost liabilities is one thing, funding them is quite another! We will discuss this in a follow-on post, along with current situations and SU opinions.

August 28th SOA BOD Meeting

Following is the final Agenda for the August 28th SOA Board of Directors (BOD) Meeting. Meeting starts at 5:30 PM at The Club at Town Center. The Board Meeting Packet supporting the meeting is also available on the SOA website at www.somersett.net under the SOA/Committees & Meetings tab.

August 28th BOD Meeting Agenda – Final

Details associated with the noted meeting agenda items, as derived from the Board Meeting Packet follow:

Committee Reports:

4.a. Budget & Finance – A verbal report by the SOA Treasurer, no details provided.

4.b. Facilities and Strategic Planning – Made the following recommendations to the Board: 1) Renewal of the Guest Pass program (4 passes/household) for 2020, 2) Approve installation of holiday lights at TCTC and roundabouts the first week of November 2019 and turned on the week of November 18th.

4.c. Communications – Nothing contained in Board Packet.

4.d. SGCC and SOA Water Management Advisory Committee – Nothing contained in Board Packet.

4.e. General Manager – Of particular interest to some may be Exhibit C “BrightView Landscaping Report”, and Exhibit E “Padovan Consulting SOA Engineering Update”. These reports summarize completed, ongoing and planned projects, and may be accessed via the following links:

BrightView August Landscaping Report     Padovan August SOA Engineering Update

Financials

SOA Financial Statements (Balance Sheets, Revenue & Expenses, Operating & Reserve Funds, Year-end Projections) for each of the four cost centers (i.e., Common Area, TCTC, Private Streets & Gates, Town Center) as of June 30th 2019. For those interested in all the details, these financial spreadsheets are included within the Board Meeting Packet accessible on the SOA website.

Old Business:

6.a. Legal Update  –  No update on the Rockery Wall Lawsuit. Still waiting for the Court’s ruling on the Plaintiff and Defendants Summary Judgement Motions, which will have a significant impact on moving forward.

6.b. Easement Access Proposal for Ventana Ridge  –  Carryover item from the last three Board meetings regarding a request from the Ventana Ridge Developer for access rights through a small portion of unused SOA property. Controversy is not the access, but how much to charge the Developer for it. A price approved at the May meeting was subsequently set aside, the June meeting approved obtaining a proposal for performing an asset evaluation from a qualified estimator, and at the July meeting a proposal from Valbridge Property Advisors at $4,500 to perform an evaluation was approved, albeit controversial. Perhaps the verbal report by the SOA GM will provide some closure here!

New Business:

7.a. Proposed Community Garden Charter – One facet of the Somersett West Park, now under construction, is the inclusion of a Community Garden. Apparently the Board believes that the formation of a Committee is needed to oversee its operation, hence the proposed charter which calls for the appointment of five members. If the Charter is approved, those owners interested in serving should submit their applications to the Board. A copy of the proposed charter is available via the following link:   Community Garden Committee Charter.

7.b. Revised AGC Charter – Revision basically consists of increasing the Aesthetic Guidelines Committee size from five to seven, consisting of one primary Board member, one alternate Board member and five independent design professionals (e.g., civil engineer, landscape architect, building architect). No Somersett owner participation included as this was eliminated in a previous revision. A copy of the AGC Charter is available via the following link: Aesthetic Guidelines Committee Charter

7.c. Appointment of New AGC Committee Members – The Board Packet contained no mention as to who the new members would be.

7.d. Gypsy Hill Fire Hydrant Re-Location Sealed Bids  –  Opening of bids. This work was previously approved at a Board meeting on a sole source basis, but apparently the scope of work has changed.

7.e. Gypsy Hill Low Spot Design Proposal from Tectonics  –  No info on this project was contained within the Board Packet, most likely a low cost proposal.

7.f. Asphalt Trail Repair Due to Root Heaving Proposals  –  Three proposals for walking trail repairs to be evaluated. 1) Sierra Nevada Construction at $11,792 with a $7,360 option for BioBarrier installation. 2) West Coast Paving at $17,664 with a $2,208 BioBarrier option, and 3) APS Group at $27,500 including the BioBarrier installation.

7.g. Drainage Channel Repairs Bid 6 Sealed Bids  –  Opening of bids for drainage channel repair and preventative measures along portions of the Parkway and Dakota Ridge.

7.h. Upgrade Irrigation Valves Along Parkway Proposal  –  A proposal from BrightView in the Amount of $49,735 for retrofitting the sprayheads and rotors along the Somersett Parkway with pressure regulators, check valves and some replacements. Purpose is to reduce waste and provide better irrigation coverage.

7.i. Holiday Lighting for TCTC and Roundabouts Proposal  –  Proposals from Lawn Express for installation and removal of holiday lighting at TCTC ($2,300) and the Parkway ($11,000).

7.j. Replace Flooring in Saunas and Massage Room Proposals  –  Estimates from 1) Designs for Living Tile & Stone at $8,000 to remove the carpet from the Message Room and tile from the Sauna Rooms and replace both with new tile (not included in estimate), and 2) D&L Tile at $7,042 for what appears to be the Sauna Rooms only.

7.k. Exterior Clubhouse Painting Proposals  –  Three proposals for exterior painting of TCTC and the two pool houses. 1) Color Trends at $44,000, 2) Fly Right at $63,000 and 3) WPI at $60,574.

7.l. Wrought Iron Fence Painting for Pool Deck Proposals  –  Two proposals for painting of the wrought iron fencing around TCTC pool. 1) Color Trends at $8.000 and 2) Fly Right at $25,000.

7.m. Play Pool Resurfacing Sealed Bids  –  Opening of bids for resurfacing of TCTC Play Pool and installation of two new water feature pumps.

Homeowner Comments

Homeowner comments are always welcome.  If you have any concerns or suggestions on any of the above agenda topics these may be presented (3 minute limit) at the beginning of the meeting. Comments on any other topic must wait to the conclusion of the meeting.  Attend and speak your mind!

 

 

Sunset Bluffs and the SGCC

The Jenuane Communities Sunset Bluffs development in Mogul (41 homesites) has included a Somersett Golf and Country Club (SGCC) equity membership plus one years dues with the purchase of a home. Equity memberships at the SGCC are currently selling for $2,500 with $400/month dues for the first year ($500/mo. thereafter) and a $150/quarter food & beverage minimum. This equates to a $7,900 value to a Sunset Bluffs buyer. However, is it safe to assume that if the buyer is a non-golfer, some credit on the purchase price will be in order?

They also advertise membership at The Club at Town Center (TCTC) and Canyon9, albeit at buyer expense. However, this is not through the Developer, but via their equity membership at the SGCC. TCTC and Canyon9 access rights via the SGCC are granted under Article VII Section 8 “Somersett Country Club Membership Rights to Use Club at Town Center and Canyon9 Golf Course” of the Somersett CC&R’s, which can only be revoked by the SGCC (i.e., not the SOA). The CC&R’s do not identify the fees attributable to non-Somersett owner use, only that they are “reasonably similar” to the fees being paid by Somersett Owners. In this regard the SOA is currently charging $105/month, which is higher than the $89/month for Somersett owners (Note: Per the SGCC website, their fee for this access is $115/mo., does this mean a surcharge for the SGCC?).

Some have voiced a concern over non-Somersett owner use of TCTC fearing overcrowding. However, this is not really a problem as currently only 26 fall into this category. It is also doubtful that many of the Sunset Bluff’s purchasers will take advantage of this. Given only 41 homesites how many buyers will actually end up being Country Club Members, and how many of these will pay the additional $115/month fee (in addition to their own $40/mo. association fee) for access to the TCTC and Canyon9? Although the Sunset Bluffs development borders Somersett, there is no direct road connecting the two, therefore a five-mile journey to the Town Center.

Perhaps the planned and  neighboring Ventana Ridge development should also follow suit, the more the merrier – Country Club Members that is!

The SGCC – Who Owns What?

At the July 24th Board of Directors meeting, the Somersett Owners Association (SOA) General Manager, Tracy Carter, made the statement “We (the SOA) own the Golf Course”, when referring to the Somersett Golf & Country Club (SGCC). This statement is not entirely true and needs the following clarification in understanding what was included and excluded under the 2014 SGCC Purchase Agreement.

Included was purchase of the following Property: 1) Approximately 220 acres comprising the land on which the SGCC operates, 2) Approximately 500 acre feet annually of water rights originating from both wells (major source) and the Truckee River, 3) Water Facilities (e.g., wells, retention ponds, pumping stations, related piping, etc) providing the irrigation water for both the SGCC and Canyon9 golf courses, and 4) the 7500 sq. ft. Maintenance Building adjacent to the SGCC Driving Range.

Excluded from the purchase was the following: 1) The SGCC Retained Property , that is, the SGCC Clubhouse, Parking Lot and the 6 acres of land it sits on, 2) Any leases, permits, service contracts, personal property, located on or relating to the Property, or that the SGCC uses in connection with the repair, maintenance, use, possession or operation of the Somersett Country Club and/or the Championship Golf Course and 3) The SGCC’s business of owning and operating the Championship Golf Course and/or the Somersett Country Club.

Therefore, what the SOA purchased (for $2.75M plus loan interest), and subsequently leased back to the SGCC at $2200/year (for 50 years with two 20 year renewal options at SGCC’s sole discretion), is basically just the land, water rights and water facilities, and not the business, the Club House, or any of the golf course maintenance equipment. If the SGCC ever defaulted on the leaseback agreement, for the SOA to continue operation of the golf course would require significant additional funding.

Regarding the “Seller Retained Property”, if for some reason the lease is terminated, the SGCC could continue to own and operate the Clubhouse property simply as a social/recreation club for its members. Also, if the SGCC wishes to sell this property to a third-party, the purchase agreement includes a “Right of First Refusal” clause, which provides the SOA with the right to purchase the property at the third-party offering price. However, this right only lasts for 30 days, making this provision moot, as it is likely such a purchase would require Somersett owner approval, which could not be accomplished within 30 days. Per the SOA CC&R’s any purchase over $500K requires owner approval and it is doubtful that this property would sell for less than the $500K limit. There is also a “Purchase Option” within the Lease Agreement that has longer option periods and market value considerations.

Exhibit C (Commercial Lease) and Exhibit D (Water Facilities Agreement) to the Purchase Agreement establishes the terms and conditions associated with the leaseback of the SOA purchased property to the SGCC, including SGCC responsibilities for maintenance and repair activities. It is in these areas that a dispute has arisen between the SOA and the SGCC over rockery wall and water facility component repair liabilities – but more on these issues in a subsequent post.

For those interested in all the gory details, a copy of the 2014 SGCC Purchase Agreement is available via the following link (also available under the References tab):

SGCC Purchase Agreement (Executed)

Question: Was the purchase of the SGCC properties referenced above a “piece of good fortune” for the SOA, or will it be “an albatross around our neck”? Comments welcome.

August 28th SOA Board Meeting

The Somersett Owners Association (SOA) Board of Directors (BOD) open meeting is scheduled for Wednesday, August 28, 2019 at 5:30 PM at The Club at Town Center (TCTC) Canyon View Room. The Draft Meeting Agenda as published by the SOA may be accessed by clicking on the following link:

August 28th BOD Meeting Agenda – Draft

When the final meeting agenda is published along with the corresponding Board Meeting Packet, an update with agenda item details and comments will be provided on this website.

SNPAA Wine Sharing Party

The following posted in support of the Sierra Nevada Performing Arts Association (SNPAA). SNPAA ia non-profit organization established to support the performing arts in Northern Nevada and to provide scholarships to local talented students:

Hello: I am pleased to invite you to our Sierra Nevada Performing Arts Association Wine Sharing Underwriting Party on August 24, 2019 at the Hacienda Herring in Arrowcreek. (Details Below) Tickets are $40 plus a bottle of wine per person for sharing. You can go to snpaa.org to buy tickets, or just print the flyer below and mail in your order with your check by August 16. This is our end of summer party to cover our administrative expenses to manage our 501(c)3 non-profit focused on providing scholarships to students graduating from Northern Nevada high schools pursing higher education in the performing arts. We also support local performing arts schools. I am pleased to report that thanks to your generosity in supporting our events this year, we funded 5 more scholarships in 2019, bringing our total since our founding five years ago to 29. Please join us and invite your friends to attend, as well. If you can’t make it this year, a tax deductible donation is always appreciated. This will be a fun evening of friends, wine and great food.

P.S. Please consider donating a bottle of wine of $25 or greater value for our Wine Wagon Auction item. If interested, just let me know and we will pick up your wine donation by August 16.

Joseph Morabito
President
Sierra Nevada Performing Arts Association
+1.949.500.0753 Cell
jmorabito@paragongri.com

Water Rights – Explained

When the Somersett Owners Association (SOA) Board of Directors appointed the “SGCC and SOA Water Management Advisory Committee”, one of its stated objectives was to “Prepare and recommend a plan for the use and optimization of the Water Rights that make up the Agreement between both parties such that the Water Rights as granted never terminate or revert back to their origins and are managed within the state, federal, and local laws are requirements as outlined in any and all water rights licenses or agreements”.

So what Water Rights are they referring to? The Water Rights purchased from the Somersett Golf and Country Club (SGCC), along with the Water Facilities for accessing and delivering the water, which were then leased back to the SGCC subject to the terms and conditions of a Water Facilities Agreement. These Water Rights provide the irrigation water for both the SGCC and the SOA’s Canyon9 golf courses. The water supply comes from two sources, underground wells and the Truckee River via twenty water permits. These permits are listed on the attached spreadsheet, along with the permitted amounts in Acre Feet Annually (AFA) for each. Also, included are the dates when the permits were put into use, along with the next due dates for submittal of the routine “Proof of Beneficial Use” documentation. Note that some of the permits have not yet been activated. The attached indicates that the total allotment of available water is 511.87 ACA. However, how much of this is actually being used is unknown to the writer. Note that the vast majority of the allocated water comes underground wells, primarily Well 5 in Sierra Canyon, which has been the primary source of irrigation water for the SGCC. Whereas the Canyon9 irrigation water, which is minor compared to the SGCC, originates from the Truckee River.

SOA Water Permits

At the last SOA BOD Meeting, the BOD President, Tom Fitzgerald, remarked on “using it or losing it” when speaking about the Water Rights, and the SOA General Manager, Tracy Carter, remarked that Well 5 was no longer producing at the rate it should be for irrigation of the SGCC, which raises the following questions:

  1. If we are not using all, or the majority, of the water authorized under the permits, where can additional uses be applied, if anywhere, and what would be the cost?
  2. Is it possible that unused water rights could be sold off?
  3. If the Well 5 is no longer producing as required, where is the SGCC getting the additional water for irrigation? The alternate source is from the Truckee River, via the Canyon9 pond, but will this result in exceeding the Truckee River Permits?
  4. If a new well to replace Well 5 is required to provide sufficient irrigation water for the SGCC, a very expensive process, who will pay for it?

In addition, with regard to the Committee objective that “Water Rights as granted never terminate or revert back to their origins and are managed within the state, federal, and local laws are requirements as outlined in any and all water rights licenses or agreements”, who is ultimately responsible for this? The answer being that the SGCC is, this per Article 3.1 (d) of the Water Facilities Agreement which states: “The Operating Manager (defined as the SGCC) shall insure that the Water Rights are used so that they are kept in good standing and not subject to forfeiture or abandonment for non-use pursuant to the laws and regulations of the State of Nevada”

is indeed all well and good for the SOA to oversee that the SGCC lives up to the terms of the Water Facilities Agreement, but under the Water Facilities Agreement, the costs for managing the Water Rights and maintaining the Water Facilities lies with the SGCC.

Additional information about the Somersett Water Rights and Water Facilities may be accessed via the following links: