SGCC In The Black?

Raining MoneyOn March 13 the Sunday Business section of the RGJ published an article entitled “HOA fees keep Somersett golf in the black”, which became a subject of controversy within the Somersett community. To read the full article, please click on the following hyperlink:

HOA fees keep Somersett golf in the black, by Jason Hidalgo

In response to the RGJ Article, the following was submitted to the RGJ by Greg Raleigh:

In Somersett, it’s a win-win for all parties

In response to your article “In the rough: HOA fees keep Somersett in the black” [Business, March 13]:

You adequately covered the voice of a vocal minority here in the Somersett community. But given the impetus for the article, the closing of D’Andrea Golf Course, you missed one very important piece of this story: how creative problem solving between two entities within Somersett created a positive outcome for the entire Somersett community.

As an overall title for your article, instead of “In the rough,” I would have chosen “A tale of two golf communities” because, for Somersett and D’Andrea, it truly is the best of times and worst of times, respectively.

In D’Andrea’s case, the HOA is out of alignment with the owner of the golf club, and the net result is lose-lose. In contrast, Somersett’s experience is the opposite of D’Andrea’s.  In our case, the HOA and golf club aligned to create a positive strategy that benefits both entities. The golf club now has greater support from the community, while the residents have new access to the golf club with additional amenities on the way.

The net result is that, as a community, the entities within Somersett have created a win-win for all parties involved.

Greg Raleigh, PGA, Membership director, Somersett Golf & Country Club

Homeowner Reply:

The following reply to Mr. Raleigh’s letter was submitted by SD Kanyr:

As an active Somersett homeowner, I take exception to Mr. Raleigh’s letter.  SGCC with the support and/or assistance of Blake Smith came up with “creative problem solving” and a “positive strategy”. SOA homeowners were not consulted and were given little time to review the documents before they were rammed through the Board. At no time have SOA Board or Blake Smith admitted that these agreements subsidize SGCC loses.

One of the more “creative” parts of the “positive strategy” involved the legal loophole requiring SOA lease to the SGCC property. By using a lease the Board could avoid allowing Somersett homeowners to vote on the agreements. The Board has never provided a cost benefit -analysis, probably for fear that the subsidy to SGCC would be too apparent. If SGCC was financially sound, as we were told, why not survey SOA members on what additional amenities they wanted? How much they wanted to pay for them? Whether they preferred a $15/mo reduction in SOA fees to the amenities in the SGCC agreements?

Another aspect of the “creative strategy” was the $1 option to buy SGCC prior to any future bankruptcy. This was presented in writing to SOA as “security” in the event SGCC went broke. Looking at the expanse of land occupied by SGCC, security sounds good. What’s left out? SGCC’s title to the property restricts its use to an “18 hole championship golf course”. If SGCC fails to do that, the property reverts to Blake Smith’s Somersett Development Company (SDC).  When SDC transferred SGCC to the members, SDC retained all the economic value of the land via a quitclaim deed separate from the SGCC title. In my judgment, this option is worthless to SOA.

Finally, the financial structure of the agreements is an integral part of the “creative strategy”. SOA must advance $200,000 to SGCC so SGCC can provide amenities that SOA members did not ask for. In effect SOA members are paying in advance for amenities that they were never asked if they wanted.

In the past 20 years developers like Blake Smith included country clubs in their plans to increase the value of their land sales. SDC no doubt profited handsomely when they sold land to builders in Somersett. The builder likewise premium priced the lots. Now the clubs are in trouble. This is playing out all over the US. The SGCC situation is not unique.  In my opinion the country club business model no longer works in many situations and “creative solutions” are needed. I’m available to work with anyone would wants to honestly tackle the problem.

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