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.

12 thoughts on “SGCC and the Water Facilities Agreement

  1. Time for common sense and I mean common business sense, plus no conflicts of interest. No wolves in the hen house.

    I have seen well-run golf clubs. As a high school and college student, my father’s club, Inverness in Toledo, OH; and as a member of the New York Athletic Club while working in New York, Winged Foot in Mamaroneck, NY- both sites of US Opens. SGCC has a loooong way to go.

  2. The reading of Somersett United summaries on water rights and allocated costs is ,with due respect ,hilarious. You are really trying hard at presenting the situation in a very legal way, when what it requires is a naked use of words.The SCCG does not have any money to pay for former and future expenses.The SOA has been carrying them all this time and if the past indicates future actions, they plan to pay for the new pump for the sole use of the golf course as well as their share of the rocky walls . They are doing this because they feel that the closing of the golf course will affect homes values. And that money has to come from somewhere. Are we looking at future special assesments?
    As a homeowner in Sierra Canyon I am not willing to carry the golf course burden anymore. Let’s close the private golf course and either live with a native landscape like we do in Sierra Canyon or find other sources to become self sufficient.

  3. Wow, it is shocking that after reading the 2016 SOA’s attorney’s letter to the SGCC on Lease Violations that the SGCC continues to ignore that letter during the past 3 years while our SOA continues to do nothing to enforce the rules of the lease agreement and specifically the demands put forth in that letter all the while continuing to hand over hundreds of thousands of dollars of SOA homeowner money to the SGCC which now are north of $1.3M . What’s even more despicable is that the SGCC and it’s supporters continue to wail that all SOA homeowners must continue to fund their private playground while questioning non golfers decision to purchase homes here in Somersett and suggesting that THEY move out!

    Even today, there is evidence to suggest that the SOA and the BOD are still trying to figure out ways to continue funding the SGCC while putting up smoke screens to distract the homeowners. It’s high time to put a stop to this highly questionable relationship between the SOA Board and SGCC. Perhaps there are attorneys living within our association that have the capacity to look into the legal remedies to correct serious and multiple breaches of fiduciary responsibility by our past and current BODs.

    Homeowners need to actively attend SOA board meetings to educate themselves and to keep the pressure on the SOA BOD. The BOD also must also begin active legal proceedings against SGCC to make them live up to their responsibilities or face real consequences. Letters with no teeth do not scare the SGCC as history demonstrates. Stop with the fake “advisory committees” and take real action now. There is a big stink in Somersett and it smells like SGCC continues to stick it to the residents of the SOA laughing all the way to their playground while our SOA BOD looks the other way.

    Election of new SOA Board of Directors is around the corner. Time for responsible and honest homeowners to step up and clean up our community.

  4. Time for the deployment of a road map with appropriate time gates. At a minimum:
    1. Detailed clarity on what the issue/issues are
    2. Who is accountable
    3. Timeline for start/finish of each
    4. Cost estimates and who is responsible for paying
    5. Any agreements that impact success or must be adhered to
    6. Detailed notes on any cost overruns, inability to meet time gate and successes in early time gate completions.

    The frustrations of seeing assessments (maybe more), inability to hold anyone or group accountable and our community seeming to become an “us vs them” is not what we want.

    Where will Somerset be in 5, 10, 20 years?? Without an approved vision or visible plan the majority can agree on, we will be where I think we are now….. dysfunctional, money pit, no accountability.

  5. Mr. Strout has a conflict of interest. How can he look out for the SOA if he is also the treasurer of the SGCC? Unbelievable that he took this position! We need clear representation for the SOA.

    These two entities are separate and our payment and agreement should have taken care of any further “help” from the SOA to the SGCC.

    The SOA BOD should not let the homeowners be the piggybank for the SGCC. I would imagine most, like myself, swallowed when we paid the SGCC, thinking at least, it would be settled.

    It appears no SGCC member should be able to be on the SOA board. It is not our responsibility to prop up the private golf course. Perhaps Duncan Golf or another company would buy them out and it could be run like a business rather than a financial drain on the rest of the community, where many don’t play golf and get nothing out of it.

    It is time for the SGCC to pay their fair share of expenses or put the business up for sale. There are companies that have bought private golf courses and have made them profitable. We just played on one for a golf outing a couple weeks ago.

  6. The SGCC is out of money. It would be so much easier to merge it into the SOA and give full access to the golf club to SOA members.

    We all recognize that having a golf course make Somersett a desirable place to live. Without the golf course, Somersett would become a new Damonte Ranch.

    Merge the two associations, let people use the golf course and move on.

    1. Bronco – Let’s see now, in 2018 the Country Clubs expenses were about $3.3M. If we use $3.5M as a baseline and 3500 SOA households, that would equate to $1,000/year/household or $83/month. Do you want to pay an additional $83/month in assessments? I suspect not. Golfers might!

      1. Yes, good point. I personally don’t golf but I enjoy having a golf course in the community. It’s just pretty to look at, creates open spaces etc… + if we want to live in a premium community, we need a golf course.

        I think at the end of the day, the SOA will end up paying for the golf course regardless of the arrangement (loan, refinancing, etc…) unless the SGCC sees a sudden spike in membership enrollment -which I doubt will happen.

        Why not ask the homeowners what they think? Continue the current arrangement or pay $83/month and have unlimited access to the golf course.

      2. Comment on Reply to Bronco

        Tony Fakonas (BOD chairman who negotiated the lease/purchase agreement with the SGCC) told us that it would only be about $60/month more if the homeowners took over running the golf club…
        Only $2 month if it was converted to green space.

        Plus we could sell at least 300AF of water rights (value ~ $2,000,000) to help retire our debt – and we would still be golfing community as we own the Canyon 9

        Let’s have a vote – what do the residents want? Let’s stop all the nonsense

  7. Personally, I would like to see more investments into more premium facilities in Somersett.

    If we want to have a premium luxurious community, we should for example have premium restaurants and shops at the Town center.

    The food at the pool should also be greatly improved, a fully stocked bar should be built and a table/lounge chair service should also be available.

    A horse barn/stales with horse riding lessons should also be contemplated and offered to residents. Eventually we could think about building polo fields and organizing a polo competition. Polo is fun and entertaining and a great way to attract investors to a community.

    I grew up spending my summers with my family in Sotogrande. Here is the website of their latest residential area – that will give the readers of this page some ideas. https://www.lareservaclubsotogrande.com

    Also we need to invest in the technology, an app should be available to check out the club schedules, book a tee time, a tennis court or a swim lesson.

    We should dream BIG.

    1. Sounds like what I want..not sure about Polo, but I like thinking big.. the Canyon 9 could provide a place for Polo..

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