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.

11 thoughts on “The SGCC – Who Owns What?

  1. No matter how it’s explained, this “country club” is an albatross on Somersett. It reminds me of a government undertaking – tons of money goes in and little of value comes out. The rich, elite golfers are the beneficiaries and we retirees in Sierra Canyon have to help foot their bill and support their life style.

    I have personally seen real country clubs in Florida, Alabama and California, and this is no country club.

  2. If I were a member of the SGC, I would be embarrassed to be asking my non-golfing neighbors to pay my expenses so that I could maintain my “status” as an elite golfer. If each SGC member kicked in $2000 (assuming 300 members..), there would have been no need to ask for money for their portion of the rockery wall repair. This is a paltry sum for a golf club member..BTW, have you ever been thanked, by a SGC member, for community support?

  3. The damage done by the SGC, asking for financial aid from their neighbors (everyone can’t afford to pay..) outweighs any benefit they tout..It causes distress in the community, and threatens property values with the threat of more SGC-related assessments.

    1. Terry,

      What you say about Somersett being a master planned golf community is true, and it is not a question of most owners not wanting the golf course, I suspect the vast majority indeed want the Country Club to continue to be a viable part of the community. However, the County Club is not part of the SOA, but rather a separate entity that one can join if they wish, and owners are advised of such when they purchase here. Herein lies the rub, non Country Club members just do not want to subsidize its operation. I know you do not like that characterization, but the fact remains that, to date, the SOA has funneled approximately $3,623,000 to the Country Club, not including loan interest on the $2,750,000 required for the Purchase Agreement. The point here is many fear that, in light of the over $1M in liabilities the Country Club is facing due to Rockery Wall and Well 5 repairs (or replacement), and a perceived notion the Country Club is short of funds, the SOA might, once again, come to their rescue at homeowner expense. The $1200 special assessment was difficult for many and the thought of letting the Country Club off the hook for their Rockery Wall and Well 5 liabilities would be hard to swallow. I recognize that this is speculative, but based on past events, the fear is real.

      Therefore, your comment that “Why did you folks move here if you didn’t want the golf course?” is somewhat disingenuous, and not in keeping with a Board Member.

      Jim Haar

      1. Thank you, Jim.. that kind of language, by Terry Retter, indicates disrespect for me, as a homeowner, and disrespect for any homeowner who wishes to see enforcement of the legal contracts in place.

  4. As a Board Member representing the SOA, that board member, if he is also a member of the Country Club, has violated his fiduciary duty to the SOA owners if he votes on any issue with regards to the Country Club.

  5. According to the documentation available, it seems that fixing the Golf Course Wall (which fell down) cost Somersett residents about $750,000 to repair – So when one does the math that means around $235 of the $1200 special assessment was used to pay for SGCC wall repairs. All of us, Sierra Canyon residents, plus Vue and the Village, whether we play golf or not have been asked to fork out extra cash, because we are a “Golfing Community”.

    Something is wrong here!

    People moving to Del Webb – a 55 + community are retired and probably living on a fixed income.

    Coming from California, Del Webb does seems to be a relatively inexpensive place. Buying a nice Del Webb 2 BR 2000 sq. ft house for $550,000 – putting $100,000 down, means a monthly mortgage (4.5%) payment of ~$2800 + $500/month property tax + $50/month sewer taxes + $40/month SAD taxes + $200/month HOA dues … + waste pickup power and water. That totals ~ $3,600 a month + Medicare (+) costs of $1100 (for two) – that is more than our SS payments…

    So another $100 a month to pay for Wall failure is a a big burden…. How much will the law suit against the developer cost ? Another $400,000 ($6 a month on our Somersett assessment bill)… Then we read that the suit against the whisper rock residents cost the community another $400,000. It adds up!

    If we had the extra money we could join the SGCC for another $400+/month and have make a commitment to spend money at the Restaurant (nice enough, but we have so many good restaurants in Reno less than 25 minutes away). Perhaps a bigger issue is that golf is a declining pastime and health concerns do make playing a viable option.

    We are told that we have to do this to maintain property values. The Whisper Rock and Dakota Ridge Trail residents live on the defunct Northridge golf club and their values have climbed above their 2005 costs. Interestingly, D’Andrea’s housing on the defunct golf course has increased above the 2004 initial purchase values.

    So does having a green golf course really matter?

    1. NO! Having an exclusive Golf Course here in Somersett that is solely supported by its members has not worked in our community. The Country Club is not self-supporting and never has been. Everyone who lives in Somersett has been paying for the “exclusive rights” of less than 300 members through dues and special assessments that have totaled more than $3 million and more will be needed in the near future. Some options are: Making the Country Club public and turning it over to a professional golf management agency such as has been done at Arrow Creek. Another option is turning the Golf Course into a beautiful park with gardens, winding walking and or bike paths as in Caughlin Ranch. This would be a better asset to our entire community and less expensive to maintain. Turning the Country Club into a beautiful asset that would benefit the entire community would enhance our property values and everyone would benefit, not just a few. We need the opportunity to vote on these issues as a community.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s