Based on bankruptcy documents, the calculation of the total value of the debt assumed and cash paid by the FOA to acquire the golf course assets was $1,972,398.
First is a bidding document filed by the FOA stating that bidders must agree to pay $1,892,398 based on a schedule (Exhibit 1 for the bidding document), which contains a list of the claims against the bankruptcy estate (e.g. debts) – highlighted in yellow. Included in the schedule is $160,000 in administrative expenses and unsecured creditors. Bidders would overbid above the $160K in $20K increments. The FOA outbid the former golf course owner at $240,000, or $80,000 above the opening bid, as reflected in the Transcript, and then in Findings of Fact Confirming Plan by the Court. Thus, the value of the total bid by the FOA was $1,972,398.
The facts can be summarized as follows:
1. FOA bought all the assets out of bankruptcy for $1,972,398
2. FOA wants the HOA to purchase land upon which the 36 holes sit for $3.3 million.
3. The HOA has not and will not get an appraisal of the fair market value of this land because the golf course is losing money.
Why should the FOA profit $1.4 million for the sale of only part of the assets it acquired?
First of all the 300% growth of the golf club was a result of discount temporary memberships at $250 per month and no initiation fees. After one year that membership will increase to $500 to $600 per month. So you are right, the golf club is losing money big time. Will you and your fellow club members renew after discounts run out?
The golf club is a money pit and has been operating in the red since its inception. The club house is probably in need of many repairs because of deferred maintenance over the years. It was built in the mid nineties. Heaven knows what repairs will be needed for the irrigation system, fairways, greens, cart paths, bridges etc. etc.
I DO NOT support the purchase. The FOA bought it. Let them pay for it!
If Arrowcreek was losing money when FOA acquired it last fall, wouldn’t you expect those losses to continue immediately following the change of ownership. In the last year the membership grew over 300%. Of course membership revenue would improve the monthly operating results dramatically but it’s highly likely there would still be periods of monthly declining losses. In addition, there were substantial capital and marketing investments. Can’t you understand that $1.4M funded those activities and is not profit to the FOA. The important fact to consider is the current and projected operating results, the reestablished infrastructure, and the new management.
Answer to the previous post: There is no $1.4M profit to FOA, probably little or none at this point.
I am not a FOA member but I am a golf member and I support the purchase.
The argument put forward would most definitely apply IF the proposal were to purchase the entire property from the FOA, it’s not. The proposal is to purchase/acquire ONLY 475 acres of ‘raw’ land under the golf course. It’s understandable that a portion of the expenditures to regenerate ‘The Club’ could be allocated to the 475 acres under lying the golf course but that still wouldn’t come close to justifying the ACHOA spending $3.3 Million on this vacant property, without an independent appraisal, an assessment of the fire mitigation costs to be born by the ACHOA members and the state of the, effluent carrying, irrigation infrastructure costs, again to be born by the ACHOA lot owners.
The proposal is fundamentally flawed and someone said a year ago they would not bring such a proposal before the property owners if it did not make sense. This proposal does not meet that test.