ArrowCreek Situation Has Similarities to Skyline Country Club – What Lessons Can Be Learned?

What are the lessons learned from this (still on-going) Homeowner Association/Golf Club/Arnold Palmer Golf Management legal battle in Arizona that may help us decide what we should do about our golf courses? Skyline has many similarities with our own ArrowCreek situation. What is working? What is not working? How is Arnold Palmer turning it around? What is Arnold Palmer’s turn-around record? We’d love to see some examples of the successes and the failures – and the good and the bad of both – including financials.

From the Arizona Daily Star
March 02, 2014 12:00 am • By Emily Bregel

Plan to save Skyline Country Club relies on non-member homeowners

From the Arizona Daily Star
June 01, 2014 12:00 am • By Emily Bregel

Homeowner sues over plan to force Skyline resident to save country club

Quotes from the “Plan to save Skyline Country Club relies on non-member homeowners” article:

Facing declining membership and the threat of foreclosure, Skyline Country Club recently turned to homeowners in the surrounding gated community — Skyline Country Club Estates — to save the private club, according to documents provided to the Arizona Daily Star.

The country club defaulted on its $3.5 million loan with Northern Trust bank last year, after losing more than one-quarter of its members since 2006, the documents show. The club has hired a third-party manager, Arnold Palmer Golf Management, to turn things around.

But the management company required the financial support of homeowners in the gated community as a precondition of its contract. Last year, club leaders organized a series of town-hall meetings, and a door-to-door and email information campaign, to persuade homeowners — whether they are country club members or not — to help them pay for the contract. An estimated 45 percent of homeowners are club members.

In December, homeowners approved the proposal to raise homeowners association annual fees for the next 25 years and to use the revenue to hire Arnold Palmer Golf Management.

“We wanted to bring in world-class management,” said country club board member and Estates homeowner Joan Sweeney. “A country club is a very complicated business. You have a golf course, you have fitness, you have dining — there are so many moving parts. It’s very, very difficult for clubs to be self-managed in this modern world.”

Quotes from the “Homeowner sues over plan to force Skyline resident to save country club” article:

Magda Urban, a Skyline resident since 2001, is seeking an injunction to prevent Skyline Country Club Estates Improvement Association from charging her increased homeowners’ association fees to support Skyline Country Club. The association took part in a campaign last year to convince homeowners in the gated community — both those who are members of the country club and those who are not — to agree to higher association fees. Those funds went toward hiring a third-party manager to save the ailing country club.

Through her attorney, Urban declined to comment on the lawsuit, filed in Pima County Superior Court. But attorney Roger Wood says the main question is whether the association had the authority to increase fees to benefit a private club.

“You’re going to ask a group of (home)owners to essentially become private country club owners,” Wood said. “That’s not what the HOA was originally developed to do. I think any kind of change you would make to the fundamental purpose of the association would require everybody’s 100 percent approval.”

In December, a majority of homeowners voted in favor of a proposal to save the club by using association fees to hire a third-party manager. Supporters said the plan would protect property values — which some said would be at risk if the club foreclosed and sat vacant — and give perks to non-club members, like free monthly dinners and one day a month of free tennis.

The complaint says homeowners who are now financially supporting the club do not automatically become club members under the plan, “as might be expected when the association is financially rescuing the club.”

The complaint states that the association’s rules don’t allow for the kind of broad action homeowners voted to approve in December. A mandatory increase in fees to benefit a third party would only be legal if an amendment to the homeowners’ association governing documents — known as CC&Rs — empowered the association to levy fees for that purpose, the complaint argues.

There’s little case law on this topic, Wood said. But a 2010 case, Dreamland Villa Community Club Inc. v. Raimey, established that such an amendment could only be approved by a unanimous vote of homeowners.

“At the very least, something should have been done to bring the CC&Rs into compliance with the purpose they are now raising money for. That purpose was never contemplated by the original drafters of the association’s” governing documents, Wood said.

The club’s new third-party manager, Arnold Palmer Golf Management, insisted upon the participation of all homeowners as a condition of managing the club.

A 25-year contract — which pays the management firm $164,731 in the first year, rising to nearly $600,000 in Year 3 — required that homeowners’ annual fees increase by 20 percent each year for three years and remain at the heightened level for the following 22 years.

Urban’s annual fees would increase from $1,575 to $2,722 by Year 3, Wood says.

What do you think? Please comment below. (Yes, it is that teeny tiny little box ‘Leave a comment’ in gray font if you are on the ArrowCreek411 main page!)

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This entry was posted in Arnold Palmer Golf Management, ArrowCreek Community Club, HOA, Mandatory Membership and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

One Response to ArrowCreek Situation Has Similarities to Skyline Country Club – What Lessons Can Be Learned?

  1. Kerry McKinney says:

    Before homeowners vote to employ Arnold Palmer, how about asking them to provide a list of fees that each of their properties have charged, year-by-year, for the past 20 years? Are promises about the limits of homeowner fee increases that are made today kept over time? Can we make a decision fully informed, or simply hope for the best?

    Like

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