Is the Price Right?

Ventana Ridge is a proposed residential development of 70-90 homesites to be located adjacent to the northeast corner of Somersett. For access to the development, the Developer has requested an easment through a small section of SOA unused native land at the upper end of Painted River Trail. This easment will permit a Ventana Ridge road to connect to Peavine Creek Road in the existing resendential area adjacent to Somersett. There will be no access to Somersett properties from this road. The amount of SOA land required for the requested easment is approximately 12,250 square feet (0.28 acres).

The question now being, what is this easment worth to the Ventana Ridge Developer and what is a reasonable selling price on the part of the SOA?

To address this question, at the December 12th, 2019  SOA BOD Meeting , the Board voted, on a 3:1 basis (Board Member Simon was not present) with Board Member Retter the disenting vote, to sell the easement property in question to the Ventana Ridge Developer for $300,000 plus all associated costs. Associated costs would include all the legal costs associated with the land sale, as well as the costs associated with obtaining SOA owner approval. It appears that the SOA’s Governing Documents do not permit the BOD to sell off common area property without majority vote of the unit owners.

The $300,000 approved price was apparently based on an appraisal the SOA obtained from Valbridge Property Advisors, in which Valbridge concluded the following: 1) the market value of the SOA land was $32,300, however, 2) the increase in the market value to the Ventana Ridge property as a result of the easment was $900,000. These were accompanied with the appropriate assumption disclaimers!

Given the preceeding, it is obvious that the land in question is much more valuable to Ventana Ridge than to the SOA and, therefore, should be considered in the price negotiations. Valbridge further advised that it is not reasonable to expect that the Ventana Ridge Developer would pay the full amount, and that typically a range of 25% – 50% of the value enhancement (i.e., the $900,000) would be reasonable. The $300,000 subsequently approved by the Board falls within this range (33%). However, there are those who believe it should be higher.

Whether $300,000 or $500,000, selling off this land, which in itself, provides no real value to the SOA, is a good way to replenish the SOA’s depleted Common Area Reserves.

Want to speak your opinion on this issue? Attend the January 22nd Board Meeting, where via Agenda Item 6.b “Easement Access – Appraisal for Ventana Ridge Update”, you can comment on it prior to discussion by the Board.

For those who care to read the entire (all 119 pages of it, including pictures) Valbridge Appraisal, it may be accessed via the following link:      Ventana Ridge Easment Appraisal Report

10 thoughts on “Is the Price Right?

  1. Any amount the board can get in the $300K + area is good.

    Interesting, they mentioned “majority vote of the unit owners” was needed. Guess that wasn’t true for the rock wall law suit. Or was it, and we don’t have the money/lawyers to sue our board?

  2. The appraisal is really insignificant.. the question is, “What is the value to Ventana Ridge?” I say we should go for more like $600K..still worth it to Ventana, and a better deal for HOA homeowners..

  3. $900,000 should be the bottom line. Keep giving away land next it will be houses, roads and parks. The builders want to build they need to pay.

  4. The SU Post discussing the sale of land to Ventana Ridge alluded to approval by majority vote of Somersett unit owners. Since sale of SOA Common Area elements is not covered (i.e., permitted) by either the SOA C&R’s or the Bylaws, one must look to the applicable NRS 116 Statutes governing Common Interest Communities. In this regard SU believes that NRS 116.3112 “Conveyance or encumbrance of common elements” would apply, wherein it states: “In a condominium or planned community, portions of the common elements may be conveyed or subjected to a security interest by the association if persons entitled to cast at least a majority of the votes in the association, ……., agree to that action”.

    What is a security interest? NRS 116.087 defines it as: “Security interest” means an interest in real estate or personal property, created by contract or conveyance, which secures payment or performance of an obligation. The term includes a lien created by a mortgage, deed of trust, trust deed, security deed, contract for deed, land sales contract, lease intended as security, assignment of lease or rents intended as security, pledge of an ownership interest in an association and any other consensual lien or contract for retention of title intended as security for an obligation.”

    Hence, the requirement for owner approval appears to be valid. However, perhaps a confirmation from the SOA Board or the SOA Attorney is in order.

  5. Ventana Ridge (at the moment, as submitted to Reno Town Planning) consists of two parts – one part to be connected through Somersett of roughly 35 houses – connected via a Fire Road (not open) to the other half – which connects into NW Reno near 7th Street.

    Another possibility would be to have a direct connection to Painted River Trail – and the 35 houses annexed into the Somersett PUD – these houses will join a part of a gated community and each pay $248/month. The Developer would be responsible for “landscaping” the common area

    The Developer would pay for modifying the PUD, the community vote and all other costs (legal, etc.) … The houses built in this section of Ventana Ridge would pay all “costs” associated with being a part of Somersett.

    How about an imaginative approach to negotiation with Developers – in Baseball it is called a curve ball … Maybe the Developer would now be happier to pay something closer to $900K for access rights! Then it would be child’s play for them to build a parallel road to PRT through to Peavine Ridge Rd; deal with the folks living outside Somersett as their construction equipment drives past the houses there, as their Children play!

    1. Are you suggesting that the developer would pay a premium to be forced into the SOA with all its financial uncertainties? There is a premium for NOT being associated with Somersett right now.

      1. Not a premium price – just the costs associated with adding half of Ventana to the Somersett PUD – and all associated costs, road improvements, infra-structure improvements, preparation of the landscaping of the common area to Somersett Standards…
        I doubt that the Developer would care about the long term costs to the folks who buy the homes up there! After all there are amenities to help sell the homes…gated security (important to many)…

        Essentially free (?)

        Somersett would be strong financially, if it wasn’t for the parasitic extra-HOA open space (aka known as the Championship Golf Course).
        Then there is the $300K+ (roughly $10/month of our association dues) which go to support the Canyon 9 – we, the homeowners, could close it down, and keep it as green open space (and public trails) – and all have our dues reduced by $7 a month. We have the water!

  6. The Ventana Ridge folk offered a much smaller amount of approximately $30,000 for the lot. I suspect when they see we want substantially more, they will lawyer up and we will end up in arbitration or court or both. This will delay receipt of any funds for Somersett. Also we will place our desires for money in the hands of a judge or adjudicator of which we have no control of their decision and it could go poorly for us. The Board picked the $300,000 as a reasonable amount to avoid arbitration etc and get some needed funding for Somersett. Asking for $900,000 appraisal amount was not going to work. The appraiser said that as well and I think a judge would rule against us and award something much less and far into the future.
    Again the Board was trying a reasonable approach to avoid costly court proceedings and receive funds in a timely manner. Hard to say what the developer will do. We will have to see. Then there is the vote of the Association once we actually find common ground with the developer.
    I am just trying to clarify the Boards rationale and give my personal two cents of what I think will transpire.

  7. The question that I do not believe has been discussed is does Ventana Ridge have an access alternative to the Somersett easement? If so, we do not want to price ourselves out of the running? $300K is a lot of money for a piece of land no one will ever miss!

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