The ArrowCreek Homeowners Association, Inc. and the Friends of ArrowCreek Limited Liability Company (“Parties”) have entered into a Letter of Intent that represents an expression of each parties’ interest to negotiate only and each party reserves the right of final approval or disapproval for any reason, of a Final Purchase Agreement and Lease. The Letter of Intent is not binding on either Party and is intended to merely establish general deal point agreements only as presented at the last ACHOA Special Board meeting.
The resulting contracts (Purchase Agreement and Lease) when executed by both parties shall contain the full agreement, The parties understand that execution of the Purchase Agreement and the Lease are both contingent upon amendment of the ACHOA Governing Documents, ACHOA member approval of the purchase, ACHOA member approval to encumber common area to finance such purchase and the Friends of ArrowCreek Limited Liability Company membership approval vote for the sale.
ArrowCreek Homeowners Association, Inc, Board of Directors
CLICK HERE TO VIEW/PRINT THE ACHOA-FOA LOI Signed 9-28-15.
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Mr. Kenny proposes that we pay $3.3 million for acres devoted to a dying hobby. We then collect rent of $4,000 (keep in mind The Club is already paying us $16,000 for road fees.) So, the payback on this investment is 825 years?!? But wait, we’re responsible for fire mitigation, funding capital replacements, environmental issues, and keeping 9 or 18 holes green for a year when the FOA claims financial woes!?!?
And this crack Negotiating Team that includes Messrs. Kenny, Burkett, Fox & Reeder believe this Proposal is in the best interests of us owners because we “control our own destiny”??
That’s some destiny all right. And Mr. Kenny advised that each one of has to decide if this makes sense. Please don’t insult our intelligence.
ArrowCreek owners we have a problem. There is a major disconnect between us owners and this group whose agenda is to subsidize The Club.
The Letter of Intent is not binding on either Party and is intended to merely establish general deal point agreements only as presented at the last ACHOA Special Board meeting.
Not! Not! Not!
How many differences can you find between THE ACHOA-FOA LOI Signed 9-28-15 and the briefing at the end of AC 9-16-15 AC SPEC BOD MIN with Presentation Addendum DFT???
The MAJOR difference arrowcreek411 is the view of ‘dormant golf hoes,’ whatever those are……The presentation by Mr. Kenny stated this cost to be $48-$59 per month per property owner for 18 holes. The LOI states this ‘cost’ to be $160,000 per 9 holes per year billable to the HOA as a lump sum invoice. The numbers just don’t make sense as they differ by a factor of two. Someone is playing games of misrepresentation.
THE PRESENTATION DOES NOT MATCH THE SIGNED LOI.
At best the LOI is poorly written. At worst it is a legal liability. The parties involved are the HOA stated as Buyer (and assumed as Lessor though not stated as Lessor) and the FOA as Seller (and assumed as Lessee though not stated as Lessee). In Section 2 the LOI states that the HOA (Buyer) will purchase the property. In Section 3 it states that the Seller will purchase the property from the Buyer. How does that work?
Further, the LOI goes into Downsizing and BK but does not contemplate what is supposed to happen at End of Term. I have worked in Corporate Finance at the highest levels for over 25 years and I have never seen a term sheet that does not contemplate what the plan is end of term. The fact that the Downsizing and BK are so prominent in this letter should be a major red flag.
Additionally, looking at this from a cash flow perspective I do not understand the motivation of the HOA to purchase the land for $3.3MM and then receive annual lease payments of $20,000. Using a DCF analysis, no sane business person would ever enter into this transaction. Especially if the End of Term has not been defined. Does the HOA sell it back to the FOA for $1? If the FOA have the votes, I see an ugly legal mess after the votes have been counted.
So, FOA basically sells dirt to HOA, FOA keeps buildings and other assets, HOA pays to maintain assets, FOA can go bankrupt and or downsize course and keep their 3.3 mil. They can also sell off their assets to anyone. We pay, they control. We are not even shopping for a better partner? Win Win Win for FOA. Lose Lose Lose for HOA. Sam Fox, the board and gang of 36 are as corrupt as it gets. No is the only vote we have!