Given the Somersett Owners Association’s (SOA) investment and liabilities associated with the Somersett Golf and Country Club (SGCC) Purchase and Lease Agreements, the SOA has a vested interest in the financial health of the SGCC and hence of interest to many Association members. Since the SGCC’s financial data is not made available to Association members through any other media, it has been SU’s practice to annually publish what is publicly available, hence the following update.
The following table represents a summary of the Somersett Golf & Country Club’s (SGCC) revenue and expense data for the years following turnover from the Somersett Developer to its Equity Members in 2010. The table has been updated to include the 2020 financials. All financial data contained in the following table are derived from the SGCC’s IRS Form 990’s, which require submittal by May 15th of the following year and become available for public inspection. The SOA Revenue Column represent previous monies provided to the SGCC from SOA funds as indicated by the corresponding “Notes”.
|Year||SGC* Equity Members||SGC Total Revenue||SGC Total Expenses||Revenue Less Expenses||SOA Revenue Contribution **||Notes|
* Represents full proprietary membership with voting rights, does not include non-permanent or provisional memberships
** SOA Revenue Contribution does not include Canyon9 Maintenance Agreements with the SGCC which ran through 2017 at then $309K annually. The SGCC no longer provides this maintenance service to the SOA.
- In the Fall of 2010, the Somersett Development Company negotiated early turnover of the SGCC to its Equity Members via Member majority vote.
- 2011 was the first year in which the SGCC was run entirely by Equity Members.
- In late 2011, the Developer controlled SOA Board voted to divert $15/month of homeowner assessments to the SGCC via a “Lease Agreement” in exchange for some SGCC access amenities. This agreement was to run for three years starting in January 2012 with optional 3 and 4-year renewal periods. The obvious purpose being to subsidize the SGCC’s operating losses.
- The SOA Revenue column represents revenue the SGCC received in years 2012, 2013 and 2014 from the SOA under the Lease Agreement described in Note 3 above. 2014 was the last year under this agreement after being declared unlawful by the Nevada Real Estate Board.
- As a replacement for the aforementioned Lease Agreement, in late 2014, a SGCC Real Property Purchase and Lease Agreements were approved by SOA owner majority vote. Under this agreement, the SOA purchased the SGCC land and water rights for $2,750,000 with a subsequent leaseback of the land and water rights to the SGCC at a base rate of $1000/year (subject to escalation) plus a fixed rent amount of $1200/year. Lease term is for 50 years with two SGCC optional 20-year renewal periods. The SOA purchase funds were obtained via an ongoing bank loan currently being paid for from homeowner assessments.
- The SGCC 2015 negative revenue less expense amount was primarily due to the $2,750.000 sale price income (see Note 5) minus a reported sales expense (asset loss) of $4,294,781.
A copy of the SGCC’s 2020 Form 990 may be accessed via the following link:
Comments on the Preceding:
After years of moderate equity member growth, the 330 total at the end of 2020 represents an increase of 56 members over 2019, the largest gain since 2004. Note: Unless subsequently modified, equity membership is capped at 450.
The SGCC’s operating loss, which had been steadily increasing since the loss of the SOA revenue contributions in 2016, showed a good turnaround for 2020, with an excess of revenue over expenses of $110,749. This primarily due to a decrease in expenses of $253,084. Better management possibly?
In 2020, The SGCC was facing a lawsuit from the SOA for their share of Rockery Wall failure repairs (approximately $680K) on he hillside adjacent to Hole #5. This lawsuit was settled out of court with the SGCC agreeing to pay the SOA $263,097 via an annual payment of $5,979.48 per year for 44 years (i.e., the remaining 44 years on the current lease agreement). A good settlement for the SGCC, not so much for the SOA.
A breakdown of the SGCC’s revenue and expenses by category is found in Part VIII “Statement of Revenue” (page 9) and Part IX “Statement of Functional Expenses” (page 10) of the SGCC 2020 Form 990.
Based on the 2020 financials, the SGCC appears to be reaching financial stability. Perhaps this will alleviate the fears of many that the SOA will again be called on to provide some sort of financial support to the SGCC, which has not been the case since 2015.