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!