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Somersett United

Somersett United

 

Now that the Country Club Purchase Agreement has been concluded, a question has arisen as to what effect this may have on homeowner assessments going forward. Let’s consider the following:

  1. During the homeowner presentations the BOD advised that repayment of the $2.7M loan amount would cost homeowners about $9/month worth of assessments (for 15 years), which could further decrease as Somersett build-out continues.
  2. Homeowners are still paying $15/month in assessments on the previous Country Club amenities agreement, which was not renewed after December 31, 2014.
  3. Items 1 and 2 above result in a $6/month net gain for the Association or approximately $180K/yr.

Given the preceding, it is fair to ask where this apparent surplus will be applied.  A decrease of $6/mo in homeowner assessments or application to some other common area budget item?  Perhaps someone from the BOD or Finance Committee, who follow this blog, can provide some clarification in this regard.

A related question posed by a homeowner at the February 25th BOD meeting centered on what alternatives has the BOD addressed in the event of a purchase agreement default by the Country Club and how would they impact future assessments? It became apparent that the BOD has not yet definitively addressed this outcome.  The homeowner listed some possible uses and suggested the BOD hire a consultant to evaluate alternate plans and associated costs.   Some may consider this premature, but given the financial struggles the Somersett Country Club, and other Reno Golf Courses, have incurred in the past, a default may indeed happen sooner than later, if at all.

In a previous presentation by the BOD they estimated for the Association to continue to maintain and operate the golf course would cost homeowners between $65/mo and $85/mo in increased assessments.  At the February 25th BOD meeting in response to the homeowner comments discussed above, the BOD indicated it would only cost homeowners between $1/mo and $2/mo to maintain as green space only.  SU believes the later to be significantly underestimated.

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Comments on: "Country Club Purchase Agreement – Assessment Impact?" (8)

  1. Do you stay up nights thinking up stuff like this? REALLY?
    I think it’s fair to also assume that there are some pretty smart people that belong to and are running the SGCC. The club is on strong financial footing, which is even better now that the purchase has been concluded. How you could suggest that it’s worth considering what would happen if the SGCC were to fail? I think you just like to stir up the pot (so to speak). And $6? GAWD, take up bridge or something and put your energy to better use.

  2. Old Joe Clark said:

    At the meeting, the board explained that there is a Strategic Planning Committee in place whose job is to plan for contingencies such as the failure of the Country Club. The blog author conveniently left that fact out of this post. This blog does not accurately report the questions raised by attendees or responses from the board at the meeting. It is negative, one-sided and biased.

  3. Geoffrey Brooks said:

    I asked the Board to seriously consider a “Plan B”.

    I know that memories are short, but after the Great Recession our dues went up $70 a month for gated communities. During the GR there was a 30% shortfall in collections. In fact I just learnt at the Board meeting that we are still “re-selling” properties which the SOA now owns as the monthly payments were not made. During the GR property values fell to around 45% of the 2006 values. Recovery is underway, however, in 2014 we were only at 75% of these original selling values.

    A plan B will tell us the community limits of $ exposure if the private SGCC cancel the lease agreement for any reason, for a green, open space conversion.

    Yes, Mr Clark, the Board did say that the strategic planning committee are considering such a scenario. However, this was the first I heard about it. The SOA should send out a communique tto all community residents to say at the next Strategic Planning Committee meeting, this plan of action will be addressed – please attend, we welcome all suggestions and comments. Perhaps some of the “smart” people Barry mentions will attend and make suggestions for Plan B. 220 acres is a largish “Central Parks” Project.

    Barry, as always it is good to hear that the club is doing well and the possibility of failure is remote. I presume that your optimism rules out the chance of another Recession, with similar potentially catastrophic financial results for our community as from the GR?

    Hopefully this clarifies my concerns. Business contingency planning has always been high on my list of priorities throughout my career. How much did BP’s failure to have a working Plan B in the Gulf of Mexico cost them and their stakeholders (pension plans especially)?
    The cost of failure, for whatever a reason, always far outweighs the increased cost of operations designed to avoid “failure” and possible impactful contingencies.

    Geoffrey Brooks

    • Mike Slattery said:

      Geoffrey,

      First, the “Great Recession” was in the 1930’s. Lets not exaggerate. Now lets give the people who are actually working to advance our community time to work on issues. The golf course transaction has just been completed and unless you are a real pessimist, there is no immediate danger of the golf course failing. The possibilities for the use of the land if and when the golf course does fail are endless. A contingency plan today could be entirely different 15 years from now.

      It is very easy to criticize but more difficult to develop realistic, positive plans. Even doing so, such plans will not please all the people all the time. That is why when the vast majority of homeowners approve, the minority should accept for the benefit of all.

      • Mike Slattery said:

        Geoffrey,

        I stand corrected. Your use of the term “Great Recession” was correct and my reference to the Great Depression did not apply. I was not living here when the $70 per month was added for gated communities. My understanding is that those communities have private streets and related costs. People purchasing in those areas should have known that there would be an additional charge.

        • Geoffrey Brooks said:

          Mike

          We were told by Ryder homes that the cost of the operating gates would be $40 a month

          The $70 is the total difference between what we were told in 2005/6 and what we are paying now

          Recessions great or small are bad for all!

      • Geoffrey Brooks said:

        Hi Mike

        I fully realize how difficult it would be to develop a “Plan B”… conversion of the CGC to the “Central Parks and Recreation of Somersett” for the exclusive and best use by the residents.

        That is why I advocated the hiring of a “landscape architect/planner and paying them to offer a comprehensive plan, along with projected costs and annual up-keep.

        The best place to plan this project is in the “Strategic Planning” Committee.

        I have read the professional future report posted on both MySomersett and Somersett United – it does not deal with integration of the CGC as a park into Somersett at all. Interestingly, it did confirm that a decent sized indoor swimming pool is a “big” unmet need in Reno. It is indeed a pity that the City of Reno does not have the monies available for infra-structure investment for all of our benefit.

        Geoffrey Brooks

  4. Mike Slattery said:

    As to the three points made by the author regarding the assessments and the request that someone clarify the information regarding use of assessments, I suggest that the author look at the official Somersett homeowners website and look at the budget presentation. Specifically, page 13 should give you the answers. If it is still not clear after reviewing the budget, I would suggest that you ask for clarification at the next finance or board meeting.

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