Sierra Canyon, Somersett, Villages, The Vue – Your Community Forum

 Submitted by:  Somersett Owners Against the SGCC Purchase Agreement

During the Due Diligence period in which the Somersett Board of Directors are considering whether or not to go forward with the purchase of the golf course, Somersett owners should ask the Board to: Simply deal directly with the Developer in acquiring the reverter land and water rights instead of paying $2.7 million to a small number of golf course equity members, some of whom are not even Somersett homeowners.

Somersett owners have potential claims against the Developer for an amount in excess of $1 million for replacement of unfunded reserves, and approximately $1.2 million for the Developer’s action in committing the SOA to pay the Somersett Golf & Country Club, without a vote of owners, under the SGCC Amenity Lease Agreement.  The execution of the proposed SGCC Purchase Agreement means that in addition to giving up the $1.2 million claim, Somersett owners will be obligated to pay $2.7 million to a small number of equity owners of the SGCC. With interest over 15 years, for repayment of the bank loan, our true cost is roughly $4 million.

The Somersett Board has worked with the golf course owners and the Developer in drafting the proposed golf course purchase agreement. The Board has also aggressively campaigned for the approval of the agreement by a vote of owners.  In the opinion of many, the Board’s actions in this regard are a blatant display of bias in favor of a small number of golf course equity owners to the detriment of the great majority of Somersett owners.

Financial Gain is a powerful motivator:   Equity member owners of the golf course have worked hard not only in getting out the vote to stack the SOA Board with Directors favorable to their interests,  but they have also worked aggressively to get out the vote In favor of the proposed SGCC Purchase Agreement.  Who can blame them for pursuing a significant monetary reward, but should the rest of us Somersett owners be the ones to pay for this? We think not, especially when there is such a better and far less costly alternative?

The Urgent question is:  Will the Board move forward with this costly purchase agreement or will they exercise prudent fiduciary responsibility and decide not to go forward using the release of liability for claims against the Developer, and maybe even a modest cash payment of some type to the Developer, in order to acquire the reverter rights (land & water rights) directly from the Developer? This could save Somersett owners millions of dollars that could be put too much better use.

Voice Your Opinion:  Email (soa@mysomersett.com), call, or write the SOA Board. Tell the Somersett Board of Directors they have a fiduciary responsibility to represent the best interest of the great majority of Somersett owners, and not just the interests of a select few.

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Comments on: "Why Not Acquire the Somersett Developer’s Reverter Rights to the Golf Course Land and Water Rights Directly From the Developer?" (5)

  1. ReTiredinSomersett said:

    Aged has dimmed my mathematical skill, but my calculation is as follows

    Homeowners pay the private golf course club $2.75 million
    Interest over 15 years at 5%
    $1.00 million
    Forgive the developer the missing reserves
    $1.00 million
    Forgive the developer for diverting our monies for a access lease without a homeowner vote
    $1.25 million

    That adds up to $6,000,000 for a golf course leased to a private country club for 50 years for a token lease payment, with no escalation clauses
    After 4 years we have to pay to maintain the water facilities – how much a year will that be??
    Keep counting, I suspect that out Social Security income will expire prior to the lease!

  2. At least if you’re going to post these inaccurate, exaggerated and misleading suggestions, the least you can do is to identify yourself….

    First of all, the SOA is NOT paying “$2.7 million to a small number of equity owners of the SGCC. With interest over 15 years, for repayment of the bank loan, our true cost is roughly $4 million.”. The SOA is purchasing land and water rights owned by the SGCC so that the control of such land and water rights are in the hands of the SOA, SHOULD something bad happen financially to the SGCC. Also, if the equity owners are small number, what do you consider the 5 or 6 of you on this site that continue to reel against the SOA, the BOD, the SGCC and anything else you decide you don’t like that happens in this community. YES EVERYONE, it’s 5 or 6 people making ALL this noise…

    You also state “In the opinion of many, the Board’s actions in this regard are a blatant display of bias in favor of a small number of golf course equity owners to the detriment of the great majority of Somersett owners.” What do you consider “many”? Again, it’s a handful of you (maybe 5 or 6), who have this opinion, NOT “many”.

    Finally, you ask “The Urgent question is: Will the Board move forward with this costly purchase agreement”? The homeowners voted overwhelmingly in favor of the purchase (over 3 to 1). That’s not because the equity members or the BOD worked hard to get them to vote that way. Everyone worked hard to get people to vote (one way or another). So, of course the board will move forward with the purchase, since the Somersett homeowners voted for it.

    Isn’t it time to MOVE on? One way or another…..

    • Geoffrey Brooks said:

      Barry

      3 comments

      1. HOA is Purchasing Land and Water rights – as this leased back to the private country club for 90 years to use as a golf course – the community cannot dispose of these assets unless the SGCC fails. So to me, that seems like we (all the homeowners) are buying a private golf course for the exclusive use by the SGCC!

      2. We have been told that there are 300 + members of the SGCC most of whom live in Somersett. Surely, by voting for our HOA to buy a golf course (yes, I know, Land and water rights) for $2.75 million to be paid by all residents; one can fairly argue that you are voting for your self interest – not necessarily for the rest of us who may not be able or want to play golf!

      3. When I checked MySomersett, 494 folks had voted against the purchase and financial encumbrance!

  3. Mike Slattery said:

    Geoffrey,

    You are absolutely correct that the HOA is buying land and water rights and leasing it to the golf course on a triple net lease. My opinion is the reason we are doing this is because numerous golf courses have failed. If this golf course never fails, you are correct, If it does fail, then we the Somersett Owners have control of the land and water rights, In my opinion, it is a type of insurance policy that will cost me less than $100 per year for 15 years, Payback could be $0 if the golf course never fails, or assets worth in excess of $5.500,000 (today’s appraised value) if the golf course fails.

    We obviously look at numbers differently. Of the 1389 yes votes, subtract some 300 for equity members leaving some 1,000 vote for the purchase vs 494 against, (still 2 to 1 in favor.)

    Compare that to the team of 7 of which you are a member who cannot convince their neighbors so they sue.

    • Geoffrey Brooks said:

      Mike

      I agree that regarding the HOA purchase and lease back agreement as insurance makes sense. I have heard Joe Fadrowsky and Rob Duca say that each current resident is spending less than $1200 (spread over 15 years) for this insurance. As such it sounds like an inexpensive policy that all should endorse.

      Insurance is there as back-up security to protect against an unanticipated event. You mention the upside of potential private club failure.

      There is a failure to consider the downside of failure of the private club. The Board decides to continue operating the CGC – say at $60 a month.

      I cannot speak for anyone other than myself, but in my view the Board should come up with a Plan B. Where the CGC is converted into open space in event of failure. Monies should be spent now, with a landscape architect to design a plan to re-shape the CGC as parkland – a Central Park for Somersett – a plan which can be implemented once the “lease” is cancelled. A cost for the implementation of this plan should be “budgeted by the Somersett HOA finance committee” along with a proposed annual cost to maintain it in its new “guise”, so everyone knows… NOW!

      I believe, that would be a plan that would provide extra insurance, peace of mind to many of our residents. Certainly for me.

      You can never have enough insurance!

      There is one other contingency that the Board has not considered – is that the private club – could continue their payments (a mere $2200) and sell off some of the water rights – subject to the lease payments being maintained for 90 years – and perhaps maintaining a 1 or 2 hole golf course.

      The weather may play a role in the future of recreational water rights (for golf) in Reno, especially our water supply. Lake Tahoe is still 1′ below the “rim” so nothing (yet) is flowing out. Boca and Stampede are essentially empty. TMWR tell us we are good for only 6 years (artesian/well water) – and lots of water will be needed for the upcoming industrial development in our area. The record setting drought continues. How long will we be allowed to water our lawns and the beautiful Somersett Greenways?

      Maybe the SGCC need a contingency plan to use grey water (like Arrowcreek)

      Hopefully, Mike, as a member of the finance committee you will work on plan “B” for me and others looking for additional insurance.

      Just one citizens viewpoint!

      Geoffrey

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