To date the Somersett Owners Association (SOA) Board of Directors (BOD) has not seen fit to provide Somersett Country Club (SGCC) financial data to Somersett owners. They consider it an irrelevant piece of information for Association members, as does the SGCC. However, given the Associations investment in the SGCC (approximately $5M to date) and potential future liabilities, we do consider that the SGCC’s financial health to be of interest to Association members. Especially given that this information is publicly available from the IRS due to the non-profit status of the SGCC. The following table represents the SGCC total revenue and expense data for the years 2010 thru 2014 as extracted from the required IRS Form 990 submittals. SGCC 2015 data will not be publicly available until June 2016.
|Year||Equity Members||Total Revenue||Total Expenses||Revenue Less Expenses||SOA Contribution||Notes|
- 2010 – Year the Developer (Somersett Development Company) accomplished early turnover to the SGCC Equity Members.
- 2011 – First year SGCC was run entirely by Equity Members.
- 2012 – In late 2011, the Developer controlled BOD voted (without homeowner approval) to divert $15/month of homeowner assessments (i.e., SOA Contribution Column) to the SGCC via a “Lease Agreement” in exchange for some SGCC access amenities. Agreement was to run for three years starting in January 2012 with optional 3 and 4 year renewal periods. Main purpose being to subsidize the SGCC’s operating losses.
- 2013 – In mid 2013, a draft complaint was generated by the Nevada Real Estate Division challenging the legality of the aforementioned Lease Agreement. Complaint alleged the agreement required CC&R amendments and homeowner vote. Complaint filing was placed on hold to give parties time to negotiate a new agreement and CC&R amendments to be voted on by all homeowners.
- 2014 – Last year under original SGCC Lease Agreement, new agreement subject to homeowner vote was negotiated.
- 2015 – CC&R Amendments and SGCC Purchase Agreement approved by owner majority vote. Under the Purchase 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 factor) plus an additional rent of $1200/year (fixed amount). Lease term is for 50 years with two 20 year renewal periods at the sole option of the Country Club. The $2.75M was obtained by the SOA via a 15 year bank loan. Under the new agreement, Association members also retain access to SGCC facilities similar to the old agreement.
From the above table it is evident that in 2014, the SGCC made a positive turnaround in the number of equity members. Although their 2014 revenue decreased from 2013, they also took a slice out of their expenses and appear to be moving in a positive direction. However, it still remains that without the SOA contribution they would have incurred a net operating loss in 2014.
So how is the SGCC doing in 2015? The SGCC 2015 current financial status and/or year-end projections have not been made public, hence the TBD’s in the above table. Previous indications from a SGCC officer was that part the $2.75M purchase dollars would be put into reserves and part would be used to fund construction of the long-awaited clubhouse. Perhaps someone from the SOA and/or SGCC BOD’s can provide a 2015 SGCC operations update, and how the $2.75M SOA purchase dollars are being utilized to support the SGCC’s financial stability.