To the ArrowCreek board:
As a homeowner in ArrowCreek, I am very concerned about the Board seeking the purchase and lease back of the ArrowCreek golf courses.
I am not sure why the AC home owners are being held hostage by the ArrowCreek board and (Friends of ArrowCreek) FOA. In my opinion, they are not our friends.
Anyone who spends my money for their investment is neither my friend nor neighbor. As for FACTS, these are the facts below. Hard numbers! Not the esoteric jargon and babble others seem to produce. It is not the responsibility of the home owners of ArrowCreek to bail out the FOA. Let the FOA file bankruptcy as have all the previous owners of the golf courses. After the bankruptcy, the ACHOA can then decide what needs to be done with the property. If nothing else, it can be purchased for a fraction of the price the ACHOA board has negotiated with the FOA.
The threat seems to be if the ACHOA does not buy the club property from the FOA, the golf course will go brown and the FOA will sell the property to developers?
The solution should be the FOA operate the golf course and club as a profitable business. It is the responsibility of the FOA to make a viable business of the golf course and not have the Home Owners subsidize a business that cannot support itself.
Perhaps the FOA needs to look to its member with an initiation fee for the golf and social members, raising the yearly dues and eliminating the free rounds of golf offered to friends of members. If this is not feasible to retain members, then the course should fold.
Priorities change and golf is an activity enjoyed by fewer individuals. Currently, the majority of golfers are older. Gen X, Y and Millennials have found other activities and golf is not their priority.
A statement by Sam Fox is: “The ACHOA and ACCC will not recommend significant monthly assessment increases to the membership where the increase will become a detriment to the community.”
How is a 30% to 40% ( a 13.8% increase with an additional increase if the FOA shuts down 18 holes, that increase would then be an additional 19% to 24%) increase in ACHOA dues become an ‘insignificant amount?’
Another statement by Sam Fox also goes on to say the board will not make decisions that will be to the detriment of the community. How can he commit to this with the future ramifications discussed below:
If the golf course is purchased according to the proposal, the following seems a ridiculous trade for the ACHOA but a great deal for the FOA!
- How was the purchase price negotiated?
- If someone buys a property from a bankruptcy, the sellers (FOA) should take a significant loss.
- The ACHOA would ‘own’ the land under the golf courses and lease it back to the FOA for use as a golf course
- However, by purchasing the land the ACHOA would inherit the responsibility for fire mitigation and any environmental issues which the FOA has not done anything with so far.
- The FOA gets $3.3 Million cash infusion.
- What they do with that cash infusion is not available to the ACHOA since the FOA is an LLC and a private entity
- The ACHOA buys the property and leases it back to the FOA for $20,000 per year
- The board would not charge the current $15,696.00 per year assessments to the FOA.
- The lease payment of $20,000 per year from the FOA is only an increase of $4,304.00 per year on what the FOA is currently paying the ACHOA for using our roads and security.
So in summary, the ACHOA:
- Purchases the golf courses from the FOA for $3.3 million
- Leases the courses back to the FOA for $4,304.00 more a year than they currently are paying in Association fees
- According to the ArrowCreek board there would be an increased assessment to all ACHOA property owners of approximately $300,000.00 to $880,000.00 or more a year under the board’s proposal (This is based on approximately 1,000 homeowners in ArrowCreek, paying an additional assessment of $30.00 to $88.00 per month)
This is a great deal for the FOA!
For only $4,304.00 per year, the FOA:
1. Pays off their loan
2. Pays a very strong return to its investors
3. Runs the course for a few years and then files bankruptcy
– Because no matter what professional management company operates the club, it will not bring back non-existent golfers.
4. The FOA, as an LLC, has no personal guarantees and can walk away leaving the ACHOA with a bankrupt property
For the ArrowCreek home owners:
1. We are stuck with a large loan
2. A bankrupt facility
3. Large taxes, environmental issues, fire mitigation and water charges
4. Home values would decline and home owners will have a difficult time selling their homes due to the exceptionally large debt and expenses of owning a bankrupt property.
5. If we try and sell the property, the ACHOA will take a large loss since the ACHOA is a non-profit corporation.
6. When the burden falls on the ACHOA , ALL property owners will have to reach deep into their pockets and pay off the loan(s) under Nevada law.
I am not sure why we are concerned about additional development. Current ArrowCreek bylaws would prohibit apartments and substandard housing.
This is a great deal for the FOA and a very poor business proposition for the ACHOA!
The board should have the FOA take the financial loss and leave the ACHOA out of the process.
All the board is doing is kicking the can down the road to an inevitable problem we are facing today but at an exceptionally large cost to the home owners.
In my opinion, the board is in dereliction of its fiduciary responsibility to protect the ACHOA from undue expense and future financial burdens.
In my opinion, the ACHOA board should be held personally libel for the poor decisions in continuing this doomed process and for the future problems and expenses incurred.
Also, in my opinion, the law firm advising the board has errored in its opinion that nonpublic meetings could and did occur under the guise of non-disclosure. The ACHOA has paid for their services, thus is the client of this law firm, and all information should be made public to all ACHOA members.
In my opinion, due to the exceptional benefits for the FOA and the very expensive costs for the ArrowCreek Home Owners, one or more of the ACHOA board members are not dealing at “Arms-Length” and have a conflict of interest in their dealing with this issue. One only look at recent and past events where very powerful individuals and organizations thought they could elude detection (Hillary Clinton, Volkswagen, Enron, Arthur Anderson and a host of legal firms) but were detected. It was either a weak link in the organization, fear of prosecution or a guilty conscious that unraveled the situation.
Peter Linstroth, A True Friend of ArrowCreek Homeowners