Presented below is a chronologic chain of one-way communications from Jim Verhey to the HOA Board via Jeanne Tarantino at Associa begun back on August 4 relative to establishing a framework of decision making for the golf course options that might be available to the Board and to the ArrowCreek Owners. Considering that there was never a response to this question set for the noted options, and considering that they might be addressed in the Wednesday, Sept 16th special meeting, it seems that it may be helpful to have the background questions available for potential attendees as preparation for this special session on September 16. Hopefully the questions will be answered with valid background substantiation. So far we haven’t seen or heard any factual data to back up any repeated and repeated and repeated, please-drink-the-Kool-Aid, feel-good statements.
By Jim Verhey
Sent 08/04/2015 to
ArrowCreek Homeowners Association Board
C/O Ms. Jeanne Tarantino
Thank you for the two most recent Communications Committee sessions on the costs of various alternatives for use of the ArrowCreek Development open space currently used and owned by the Golf Course along with the Realtor perspectives on the merits of ArrowCreek and their observations of the impact of the uncertainty associated with the future of the Golf Course and the potential market impact of increased HOA fees.
The more I have heard and read about the various aspects of the purchase option, the more questions I have been confronted with on the unsettled details of the proposed purchase option and various other alternatives that may have been briefly discussed but not clearly defined or quantified for a clear picture of how various options stack up according to costs and benefits.
Presented as follows are a number of questions regarding the cost /benefit analysis of various options that seem plausible and could be within the realm of investigation, analysis, discussion and decision. They hopefully will be considered to be a help in establishing an informed and objective decision making framework for the Board and for the Membership.
If your answers are unable to be specific or to the point due to particular data needs or other factors, it would be helpful to nevertheless have answers based on some identified and reasonable set of assumptions for a rational Ball Park response.
OPTION 1: HOA Denies ACC Purchase and Gets On with Promoting and Managing a Mutually Beneficial Lifestyle Community
What are the short and long term costs or disadvantages of deciding to do nothing about the ACC purchase while supporting the current owners with encouragement and appreciation for starting the Club turnaround, gaining additional members, and establishing an asset they and the HOA membership can be proud of?
What is the HOA plan for further development of the HOA owned 500+ acre Open Space to enhance utilization for the benefit of the other 79% non golf oriented HOA Membership? i.e., walking- hiking jogging paths,mountain bike paths, etc.
What is being done/or will be done soon by the HOA Board to foster/facilitate community affinity interest clubs to embellish the advantages of our community and brighten our prospects for having a happy/friendly/financially sound/crisis free lifestyle community? i.e., definition and communication of designated group affinity options per the demographic survey including conveniently communicated meeting dates,meeting place, and sign up sheets, startup facilitation leadership, etc.
OPTION 2: HOA Provides a Subsidy to ACC Owner for an Ongoing Golf Course Deficit
What is the estimated amount of an initial & potential HOA subsidy that would be required to support the status quo operation of the Golf Course with recognition of the continued negative trend for golf revenues in the future…assuming a well run operation with tight management for service quality and revenue/expense control?
What is the acceptable and competitive monthly HOA fee increase for ArrowCreek HOA members to support a subsidy of the Golf Course deficit to support the retention of the green space views and fire break?
What Club and Course amenities would be offered by the Golf owner entity to the non-golf member HOA members for provision of the subsidy?
If both Courses would be open for public play, would a subsidy be required?
OPTION 3: HOA Purchase of Golf Club Assets with Ongoing Operation by Contract Management
What do independent/objective golf turnaround advisors and licensed Golf Course Business Brokers currently use for purchase price metrics for golf courses without deficits and with property that can be developed for other uses? How about the purchase price metrics for consistent deficit projects and with real estate that cannot be developed due to onerous regulatory and zoning barriers and constraints such as ArrowCreek?
What would the maximum purchase price be for attaining HOA breakeven feasibility success for the project purchase including all Water Arrears, Back Taxes, Palmer contract escalations and any other total cost outliers? What is the assumed financing method and loan feature/conditions that could be anticipated?
Due to deficit operations for the Club currently understood to be at an estimated $1 Million, what would the acceptable HOA contractor increase be for membership? a round of golf? What increases are considered tolerable by consumers for the restaurant -bar operations, etc. in order to cover the deficit? How many members would drop if the rates would increase? How many more rounds of golf are needed to cover the deficit at the increased round rate? How many rounds would be lost due to the increase?
How would costs and revenues be affected if one of the two courses were shut down?
OPTION 4: HOA Purchase of Golf Club Assets for Closure & Conversion to Other Non Golf Uses
Again,what would the maximum purchase price including total outlier costs be for a feasible HOA acquisition and closure/conversion investment?
What are the initial setup and annual costs of maintaining the former golf green space to other minimal uses such as for purposes of limited recreation and fire breaks ? What agrarian range management methods would be used to reduce the costs to the basic minimum? i.e., sheep and goat grazing, HOA owned tractor with Brush Hog use. What would the cost be for the minimum?
What revenue might be generated from the current facility and possible improvements following golf course closure?ie Club facility sale &conversion to Assisted Living/Child Day Care,or Club facility rental for events such as weddings with retention of the Bar-grill and Restaurant for HOA members and public, and/or development of a RV/Boat storage facility in an unoffending location,establishment of fee based Equestrian grazing, trails and facilities etc.
Following a Master Re Planning process and the prospect of Washoe County approval, what is the feasibility of a sale of select Golf course Open Space to abutting homeowners? What would the sale price be, what portion of the initial purchase price might be recovered by the HOA, how would maintenance costs for the open space be reduced?
Thanks for your consideration in applying serious thought and energy to doing a rational analysis and reporting on the noted plausible Golf Course options so that we can resolve our community conundrum and get on with a positive future.
Regards, Jim Verhey
1223 Kachina Court
Sent: Thursday, September 03, 2015 4:56 PM
To: AMI acservice
Subject: Fwd: ArrowCreek Golf Course Options and Decision Framework/Reply
Just a quick note to see whether there is anything that may be expected in Board acknowledgment or reply to the communique that I sent sent a month ago.
Regards, Jim Verhey
From: Jeanne Tarantino
Sent: Friday, September 04, 2015 1:19 PM
Subject: RE: ArrowCreek Golf Course Options and Decision Framework/Reply
I do not have an update. I know that the Committees and Board have had their hands full lately. I have sent an email to inquire about your request. Hopefully I can get you a response soon. Thank you for your patience.
Jeanne Tarantino, PCAM, AMS, CMCA
From: Jeanne Tarantino
Sent: 9/9/2015 11:22:41 A.M. Pacific Daylight Time
Subj: RE: ArrowCreek Golf Course Options and Decision Framework/Reply
I contacted the Communications Committee about your below inquiry. They had not responded to you directly because the issues of concern are being discussed at the Special Meeting On September 16, 2015 (the attached agenda was mailed on 9/4/15) and some of the issues are addressed in President’s report in the Newsletter, being sent today (also attached). Hopefully the meeting and newsletter will provide you the information you are looking for. If you have further questions, please let me know.
Jeanne Tarantino, PCAM, AMS, CMCA
Funny, not ha ha….At the Communications Committee meeting this last Tuesday, it was said that no new questions had come in. The “Committee” never saw Jim’s questions. So, who did? Who responded?
Here is Sam Fox’s President’s Report from the ArrowCreek Newsletter. Since it doesn’t have any substantiating facts in it, the board and ACCC should prepare themselves with facts to hand out at the Wednesday, Sept 16, Special ACHOA BOD Meeting to address the golf club issue.
By Sam Fox, Board President
ArrowCreek was developed with two championship golf courses. When the developers succeeded in selling all of their available lot’s they decided to discontinue the operation of the golf course. In 2006 when I first moved to this community there was great concern about what would happen to the golf courses. The property was eventually sold to some investors from Northern California. There was a sigh of relief as the new owners took over and proceeded to run the club. The owners were not successful as membership declined, operating losses mounted, the owners neglected to pay Washoe County for the water they were using, and they also did not pay the County property taxes. In 2013 the county filed to foreclose on the property for the overdue water payments and property taxes.
As a result of this action the owners filed for bankruptcy protection in January 2014. At this point a group of homeowners called the Friends of ArrowCreek (FOA) placed a competing bid
with the bankruptcy court. In October of 2014 the Court awarded the property to the FOA. The FOA has worked diligently to restore the Club to operation. They have made necessary repairs to the property and have hired a reputable management company Arnold Palmer Golf to run the day to day operation of the Club.
During this period of time the Board formed a committee, the ACCC
(ArrowCreek Community Club Committee), to look into all facets of the golf course. The due diligence conducted by the committee included a comprehensive review of all golf courses in the Reno area. The committee also conducted a study to see what the financial implications of a successful or failed golf course would have on the surrounding community in which it was located. The primary concern was to avoid the consequences of failed golf community such as D’andrea in Sparks and Northgate in Reno. Evidence suggests that these communities suffered a decrease in property values as a result of the golf courses being allowed to die. A dead golf course also creates a fire danger as dead grass, weeds and bushes provide fuel to any wild fire which may strike. The ArrowCreek property suffered a severe wild fire in 1992. Luckily this was prior to the building of any homes in the community.
ArrowCreek is a very diverse community. Some community members are golfers and they are very concerned about the ongoing success of the club. Some community members are not golfers and they do not believe the existing golf courses benefit the community. Many other community members are not golfers but they still like the idea of a golf course to continue to operate within the community but they do not feel the HOA should be involved at all with the operating of the golf Club. Most members of the community are united on one central issue – an ongoing successful functioning golf course is desirable for the ArrowCreek community.
The Board and the ACCC has investigated all aspects of the golf club business. We have looked at several ways in which we may partner with the golf club. We looked at doing absolutely nothing and hope that the current owners are successful. We looked at subsidizing the owner of the golf course to offset operating deficits. We looked at purchasing the golf club assets and converting the golf courses to other purposes within the community. We looked at purchasing the golf club assets and leasing the golf course operation to another operator. We also looked at purchasing the golf club assets and entering into a joint venture opportunity whereby the community would jointly own the club along with Arnold Palmer Golf Management.
The Board and the ACCC during its due diligence process and cost
benefit analysis have ruled out several proposals or elements of the above plans to determine if alternative solutions could be considered. The following assumptions have been eliminated from consideration by the Board and the ACCC:
1. The Board and the ACCC will not recommend any “forced” or mandatory membership in the Golf Club and have that cost paid through ACHOA monthly assessments. This option was not viable. Homeowners may join the club or not and that will be their sole decision on how to spend their discretionary funds.
2. The Board and ACCC will not recommend that the ACHOA enter into any agreement which will subject the homeowners to losses sustained by the operations of the Club. This ongoing liability has no cap and this is unacceptable to the Board and the ACCC. This also includes that the ACHOA will not provide any subsidy to support the status quo of the golf operation since it may not have a cap on the
3. The ACHOA and ACCC will not recommend significant monthly assessment increases to the membership where the increase will become a detriment to the community.
The Board and the ACCC however, believe that a stable well-functioning golf course operation is a definite plus for the community. This belief comes from several proven studies the Board has reviewed, analysis provided by Doctor Pingle of UNR, and by
discussions with local realtors who are active in the sale of homes in the ArrowCreek community.
As a result of the due diligence and vetting that the Board and ACCC has conducted, the Board and the ACCC believe that it is prudent to continue to work with the owners of the golf course to see if there is a way we can work together to insure the long term
success of the Club. I am certain that none of us want to revisit this situation again in the future.
A Special Golf Board Meeting has been scheduled for 9/16/15 to discuss ACHOA golf options. A meeting agenda was sent to all members on 9/4/15.