On November 14, 2011 the Somersett Owners Association (SOA) Executive Board entered into a three year Lease Agreement (with options for subsequent three and four renewal periods) with the Somersett Country Club (SGCC), a private entity, wherein it allocated $15/month of Somersett homeowner assessment dues to the SGCC in exchange for the “lease” of SGCC facilities and services to be accessible by homeowners. The facilities being leased (e.g., dining room upgrade, driving range expansion, Bocce Ball Court, and Putting Course) are currently non-existent and will be built using the $15/month homeowner assessments (the SOA Board can authorize prepayment of $100K in 2012 and 2013 to ensure the SGCC has funding to deliver the preceding). At $15/month/unit the SOA commitment to the SGCC is approximately $435K for each year of the three year agreement (~10% of the SOA’s total budget) . The “no dues increase” championed by the SOA Board only applies to 2012 due to availability of what is assumed to be surplus funds. There are no guarantees for 2013 and 2014, let alone the seven year renewal periods.
It is the contention of many unit owners that the primary purpose of the Lease Agreement was to offset SGCC operational deficits to keep them solvent. It is further contended that the SOA Board did not act in good faith in not fully and timely disclosing agreement purpose and details and should have presented it to all homeowners for majority vote approval There is also a concern that the SOA Board violated several provisions of The Nevada Revised Statutes pertaining to common interest communities (i.e., NRS Chapter 116) in entering into the Lease Agreement.
The preceding is not to say that given an eminent failure of the SGCC, that the SOA would not want to intervene in some manner to protect the well being of the Somersett community. However, this should be accomplished via 1) a cost/benefit/risk analysis, 2) full disclosure of all elements in a timely manner to all unit owners, 3) amendment to the CC&R’s, 4) compliance with the applicable provisions of NRS Chapter 116, and 5) majority vote of all unit owners.
To read a copy of the Lease Agreement click here and select SOA SGCC lease management agreement.
For a homeowners analysis of the Lease Agreement terms click here.