Reblog: Some Very Important Questions

By ArrowCreek Truth

Last week we had a reader (Jason) present us with a series of important questions. We decided that those questions and their answers deserved their own blog post. Thank you, Jason, for your thoughtful questions. We hope that this post will help to clarify the issues for you and all our neighbors.

Question 1: When the FOA bought the golf course, was there any kind of expectation that the HOA would take it off their hands? Or did they buy it, knowing full well that they were taking complete ownership of the risk?

Question 2: What motivated the FOA to buy the golf course? 

  • The entire motivation of the FOA was to be a bridge between the bankruptcy and the purchase by the HOA, with the expectation that the HOA would buy the Club.

Question 3: If the FOA’s motivation was to make a profit, shouldn’t they list this deal on the open market and invite other bidders to participate and let the high bidder take it?

  • The commitment of the FOA was always to offer it to the HOA first.

Question 4: If this is an “opportunity” for the HOA, why wouldn’t the FOA want to keep this “opportunity” for themselves?

  • The FOA’s motivation has always been to be a bridge, allowing time for the HOA to explore options. The current option ensures the HOA has control over the land.

Question 5: Did the FOA pay less for the golf course than what they’re asking the HOA to pay to “acquire and control the land assets inside the gate?” Please be specific on the numbers.

Question 6: If yes, then why would the HOA consider buying something for more than someone did recently?

  • First, it is important to remember that residents are NOT BEING ASKED TO BUY A GOLF COURSE. Rather, this is an opportunity to purchase the MOST VALUABLE ASSET behind our gate: the LAND beneath the golf course.
  • The current proposal is based on the $2.6 million the FOA paid to take the course out of bankruptcy, plus the $1.3 million the FOA expended on repairs and improvements to both the land to be purchased by the HOA and the clubhouse to be retained by the FOA. Negotiators arrived at $3.3 million, which has the HOA paying back some of what was spent on the assets they will acquire and has the FOA having expended $500K on the assets it will retain.

Question 7: If there’s a risk of the golf course going bankrupt without the HOA coming in to do this deal, why isn’t the HOA allowing that to happen? (The HOA would get a much better deal from a bankruptcy court buying a distressed asset, and the HOA’s fiduciary duty is to ALL the homeowners, not the FOA.)

  • If the course goes into bankruptcy there is no guarantee there won’t be offers by others who may not have the best interest of the community in mind, as does the FOA.

Question 8: What guarantees do residents have that the proposed $31/month is all that they’ll ever need to pay to support this golf club?

  • $31/month is based on: loan payment of $26; reserve payment of $2; and tax increase of $3.
  • There is high confidence in $31/month.

Question 9: What studies have been done and shared with the homeowners on how HOA dues affect property values?

  • Please see the Pringle study on the ASSOCIA website. On page 5 and in appendix B it discusses the only study to examine this issue and discusses the application of that study to our community.

Question 10: Does anyone else think there’s something silly about paying to acquire the use of a high-maintenance, high-overhead, grass-intensive asset in the middle of a drought? 

  • The water that is used on the course is reclaimed non-potable.
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35 Responses to Reblog: Some Very Important Questions

  1. Jane says:

    Gretchen,
    I’m sorry for your loss, but not everyone moved here to play golf. I moved here for the security and beautiful views. Yes, I have made many friends too, I have joined many women’s groups and throughly enjoy my life here in ArrowCreek.
    But you are missing the point I did not buy for the Golf, I do not play Golf and I don’t want to subsidize Your Golf. I want to choose where I spend my money, for my children and grandchildren.
    I do not Care if the fairways go back to native vegetation, it’s beautiful high desert .
    If the HOA buys the fairways Us Residents will not even be able to walk on the cart paths… or
    Dale will report us.
    The real reason the previous owner lost money was because there were not enough equity members. He opened up the lower course to the public hoping to off set the costs. By the way
    he owns a golf course in CA and it’s doing great…it’s Public.
    When the FOA raises their membership fees (which it will have to eventually) you will lose players too.
    If you wish to play golf – great, But YOU PAY FOR IT !!!

    Like

  2. George says:

    Gretchen, you stated that the previous owner of the golf club tried to make it profitable by “opening it up to the public” That statement is not true. The previous owner couldn’t open both courses and the club house to the public because you the FOA / Equity members had voting rights which prevented him from doing it! The golf club was doomed to fail because of your demands! Why do you think he filed for bankruptcy? You the equity members (FOA) had a strangle hold on his business!

    When only the Legend course was open for public play you couldn’t use the bar or restaurant, but had to sit outside in a tent to have a drink or lunch. How demeaning is that! Golfers would play other golf courses where they were welcomed and treated with respect!

    By the way I have lived in ArrowCreek since 2000, so I am fully aware of what occured between the golf club and the FOA / Equity Members.

    Like

  3. Jane says:

    Gretchen,
    I’m sorry for your loss, but not everyone moved here to play golf. I moved here for the security and the beautiful views. Yes, I have made many friends too. I have joined many women’s groups and throughly enjoy my life here in ArrowCreek.
    BUT you are missing the point. I did not buy for the Golf, I do not play Golf and I don’t want to subsidize your Golf! I want to choose where I spend my money…on my children and grandchildren. I do not CARE if the fairways go back to native vegetation; it’s beautiful high desert.
    If the HOA buys the fairways US Residents will not even be able to walk our dogs on the cart paths… or Dale will report us.
    The real reason the previous owner lost money was because there were not enough equity members to support the costs. He opened up the lower course to help offset those costs. By the
    way his golf course in CA is doing great… it’s public.
    When the FOA raises their membership fees (which it will have to do eventually) you will lose those players that joined at the lower rate. Then what will you do?
    If you wish to play golf – great but YOU PAY FOR IT!!!

    Like

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  6. Gretchen says:

    I am a member of FOA because I believe in this community. This is a great place to live and my now deceased husband and I moved here BECAUSE of the golf, as did many, many other people in Arrow Creek. I stayed here because of the wonderful people I met at the club. I invested in FOA because I did not want to see the golf course go brown and lose the money I had invested in my home. I have read the posts above where people say that we should make the club open to the public. Anyone who has been around long enough knows that the previous owners tried that and we lost more than we gained. I have also read that many people think we, the FOA, will reap huge profits from a sale of the land to the HOA. The fact is that we, personally, will not get one red cent from this deal. The money will go to pay off debt and to reinvest in the club. The purpose of the sale of land to the HOA is to give the residents control of their destiny. Eventually, we will want to get a return on our investment. To do that, we either wait many years and get paid back as the club makes money, or we look for a buyer. (this is not the plan of FOA at the present, just my guess) Who knows what that buyer will want to do? Maybe open the club to the public once more and bring in hundreds of non residents on a daily basis, or develop all or part of the course? If the HOA owns the land, that will not be possible. If FOA wants to develop the land, development will not be possible. Its up to the residents of Arrow Creek to make that decision. As far as the $31 increasing to hundreds of dollars, thats just fear rhetoric. Its one bank loan. Its just sad that so many people have become fear mongers and people who continue to spread rumors and falsehoods.

    Like

    • Ellie says:

      Gretchen, thank you for validating the points made by many on this website. You said it yourself: the club lost more money than it gained when it was open to the entire golfing population in our area. You want homeowners to invest in an enterprise expecting to “ wait many years and get paid back as the club makes money”. We all know that the golf club has never been self-sustaining or profitable. “Many, many” more people did NOT move here because of the golf: as a matter of fact over 70% enjoy living in Arrowcreek for reasons other than golf (per UNR demographic study). As far as fear mongering: please stop threatening with development of the land if the HOA does not buy the golf courses: there is less than 1% chance of that. (https://arrowcreek411.com/2015/11/07/debunking-the-myth-of-developing-new-homes/) . Please stop threatening with the golf course going brown: the FOA can help prevent that by increasing the current golfing fees to current market rates. The FOA can downsize and keep the land dormant. Instead, the FOA promises a minimal 10% increase of rates for current members for the next year, while asking the majority of homeowners to subsidize cheap golfing by purchasing 475 acres of land that cannot be enjoyed by non- golfers. You enjoy the wonderful people you met at the club: homeowners will be kept out of the Club House even if they purchase the golf courses. Please stop threatening with declining home values: the value of proximity to a golf course or any open land declines beyond 100 feet. And if the FOA were really considering development of the land or letting it go brown: that would contradict the FOA’s professed premise that anything other than a golf course will diminish home values, including and mostly their own.

      Liked by 1 person

  7. Mark says:

    Dale. I retired with 25 years of law enforcement of the third largest city in California. I don’t agree that opening up the golf club to the public would pose a security risk. I have never arrested a golfer for burglarizing someones house. Most problems we have had in ArrowCreek or any other community are misguided young people that live in the neighborhood. I would be more concerned about neighborhood parents that may be having a martini at the club and they have no idea what their teenagers are up to.

    Like

  8. George says:

    Dale with all due respect, your comment about the golf club being open to the public and a steady stream of non-residents, is frankly ridiculous. If the public had access to both courses and the club house restaurant perhaps the golf club could be profitable and would not have to be subsidized by AC homeowners. I would bet many members now live outside of ArrowCreek because of the low membership rate that the club is currently charging.

    Lets be honest you want a private golf club, but it can’t be profitable without us AC residents subsidizing it. This has always been the intention of the FOA!

    Like

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  10. Your AC Neighbor says:

    Alex you live on the golf course. Why don’t you and your neighbors pay to keep it green and stop trying to extort money from the rest of us AC homeowners.

    You say the members already pay for their membership. That is false! Most members are only paying $250 a month with no initiation fee. They get to play on two private championship courses and use a nice club house that for years all of us AC homeowners had access to until members like Burkett and Toomey pushed the developer into making the golf club private.

    If the golf course goes belly up because us AC homeowners refuse to subsidize the the FOA, than we have more open space. We already have hundreds of acres adjacent to us that the developer granted to the county for open space. So be happy and enjoy living in the high desert environment.
    The little patch of green grass beside your home is not that important!

    Liked by 1 person

    • alexgchris says:

      It’s not neighborly to proclaim that your neighbor’s comment is “false”
      It’s not neighborly to accuse your neighbor of “trying to extort money”
      But it’s easy to do anonymously.
      Alex Christopher

      Liked by 1 person

      • George Nastor says:

        Hi Alex … would you kindly give us the names of members in the group called the ‘Friends of ArrowCreek’ living here? I’m very curious who they are?

        Like

        • alexgchris says:

          I am not one of the FOA. Some of them have identified themselves on this website. I don’t know any others.
          I’m trying to defuse the anger that has developed.
          My guess is that the bankruptcy situation caused the FOA to act more quickly than they would have liked in order to prevent the previous owners from retaining ownership and continuing to abuse the club.
          I think that we Homeowners should concentrate on what having the golf course is worth, not trying to determine the motivation of the FOA.
          Alex Christopher

          Like

          • Lisa Ciorciari says:

            Alex, Yes! Yes! Yes! None of the fighting and animosity helps clarify the issues. The bottom line — is this a worthwhile investment? It doesn’t matter why or by whom the land is being offered. We all need to decide for ourselves if it is worth $31 to help protect our home values.
            Lisa Ciorciari

            Like

            • Rudy says:

              Lisa

              No! No! No! Overspending for this dirt is not going to protect our home values. And I have no animosity towards the FOA or anyone associated with the golf club. Good luck making it work…

              Like

  11. AC Homeowner says:

    Dale I have an idea. Why don’t you and your FOA buddies open up the Golf Club to the public. Including both courses and the club restaurant and see if it is profitable? Since its inception it has never operated in the black. I own a property out of state in a community similar to ArrowCreek and the golf club flourishes. Why, because it is open to the public!

    Stop being an elitist golf snub and asking me to pay for your PRIVATE GOLF CLUB! By the way I am a avid golfer and I would never ask for my friends or neighbors to pay for my hobby. So get your hands off my wallet!

    Like

    • Alex G Christopher says:

      You are off track with these comments to Dale.
      The Club members already pay for their use of the course; the $31 is for the benefit of the golf course to the Homeowners
      How much will it cost the Homeowners if the golf course closes?
      Has anybody figured that out, and I mean from unbiased facts, not the opinions of self proclaimed experts? Maybe $31 is a bargain.
      Look at this article
      http://www.reviewjournal.com/news/las-vegas/vegas-golf-course-purchases-worry-neighbors
      Alex Christopher

      Like

      • Kerry McKinney says:

        With respect, Mr. Christopher, I think you are missing the homeowner’s point, which is that the club will not need the HOA to buy the course/land if the club has sufficient membership to be self-supporting. Opening to the public could be a way to get those additional members. Alternatively, the club could charge higher fees to those who wish to keep the club private. Like the homeowner, I simply do not wish to pay a fee to keep the course open, a course that I cannot use, but I would be willing to pay a fee to turn the course into a nature park that I could use.

        I regret that there has been little or no discussion of alternatives to the golf course, but I am glad that finally we can see (above) that the original plan of the FOA included my and other non-golfers’ participation in the buyout. Apparently there never was a plan for the golf club to be self-supporting.

        Like

      • Ellie says:

        Alex hit the nail on the head in his recent posts: the crux of the matter is that we homeowners do not know what the golf courses are worth as we only have had biased information regarding costs and impacts of the golf course purchase or alternative options presented to us by speakers selected by the board. There have been numerous requests by homeowners for more information, and an independent opinion, a financial analysis, and an appraisal. To no avail. Homeowner have literally pleaded with the board for their opinions and concerns to be heard and considered. To no avail. To be heard, we only have this website, but nobody wants to be sued – that is the reason for so many anonymous entries on this blog. THE ACT site is FOA sponsored and monitored. Only approved blog entries will be published, and they would hopefully not sue one of their own, but even there you’ll find posts without a name. It is sad that homeowners have become afraid of speaking their mind and of their neighbors.

        However, the premise that the purchase of the golf course will only cost us $31/m and is perhaps a good deal is wrong. This is just the beginning to cover the purchase loan, reserve fund, and property tax. With the purchase we homeowners will also have to finance the maintenance and capital investments, and fire mitigation for the 36 holes of the GC that we will never get to use while the golfers are using it. Should the FOA decide to downsize: we homeowners will pick up the cost for keeping the land dormant: initially $160000/yr. per 9 holes. This is a contingency clause in the current version of the LOI between the HOA and the FOA. This makes the HOA (we the homeowners) a part of the FOA’s business plan. Homeowners have asked for information regarding the current financial status of the golf club and the club’s long-term business plan. Again to no avail. Should the FOA decide to declare bankruptcy we homeowners will be asked if we want to buy the rest of the assets: the club house and the surrounding 50 acres. The HOA cannot sell any of the golf course property for profit: so what to do with it? So you see: $31/m is a half-truth propagated by the FOA: it is the minimum we homeowners will have to pay and with absolutely no control over the land. The FOA makes the decisions – we get to pay, and future generations will pay.

        And by the way: FOA investors absolutely are expecting to make money. Their own chairman and spokesperson, Gary Pestello, said so at the HOA Board meeting on November 4, 2014. Gretchen said that FOA investors will eventually want to get a return on their money. And with $3.3M for just 36 holes of golf course we are paying way more than what the FOA paid for the entire course (the 36 holes plus the club house). And we are paying way above market price as was said by Gary Smith, who recently resigned from the very committee advising the board about the golf club purchase. We will even pay the SAD debt of $760K through Sept. 2017 for the FOA. Homeowners wanted to know details about the negotiation process and the purchase price. Again to no avail. Yes, it might be irrelevant to know the motivation of the FOA to buy the golf club, but they did so of their own free will. Each one of us should have the same right, and not be forced into owning a golf club by a simple majority vote.

        Liked by 1 person

  12. Bob Kirtley says:

    The amount paid to take the course out of bankruptcy was $1,972,398 per the court records. Additional amounts are what the FOA ‘intends” to pay to settle various debts. Paying a $1.3m dollar broker fee is a steep price for the HOA flipping the real estate to the ACHOA. In addition, the ACHOA will pay $1.553 million in interest if the transaction is able to close with the bank at 5.5% (remember, the rate is not fixed, it floats). A 1% increase in the interest rate raises the cost to the ACHOA by $315,000. Now we are looking at a minimum of $4.9 million for letting the FOA flip the land to us. Is this really in the best interest of the ACHOA when we have no verification of the value of the land being flipped to us? Is the small amount of watered grass in the golf course worth $4.9 million with no support?? Feel free to ask for the loan analysis. I will be happy to provide a tool that is user friendly.

    Like

    • Dale Nuszloch says:

      A question for those of you advocating making the 2 courses public. Do you really want a steady stream of non residents coming through the gate every day? The security you relish would be compromised.
      Dale Nuszloch

      Like

    • Shawn says:

      I’d like to address something I feel is being missed by those who are now jumping in to criticize entries on this site. There are two aspects of the purchase price in this proposal that are critical and being ignored by the board and the ACCC in its presentations to homeowners and definitely not being addressed by ArrowCreek Truth and the FOA.

      1. When the FOA bought the club out of bankruptcy, the purchase price (something over $1.9M, minus SAD) included all, I repeat, all 544.6 acres and all facilities as well as back taxes, and unpaid water costs. The price we will be reimbursing the FOA with this proposal will be that same amount but we will only be getting 475 acres, no facilities and no control over the water, and no control over the property, except at the behest of the FOA in the case of a failing business model.

      2. The original purchase proposal recommended by the ACCC at the Nov. 4, 2014 board meeting included an amount equal to 12% interest to be paid to the FOA on top of all other costs to “make them whole.”

      Let’s say hypothetically, the $2.6M the FOA is now expecting for bankruptcy cost reimbursement is valid. 12% interest on that amount would be about $312K. The purchase amount in this current proposal is $3.3M. The difference in $3.3M and $2.6M is $700K or 21% interest, or better termed, gain, for the FOA. Despite how bad the first proposal last year was, that aspect of the proposal would have been a “good deal” compared to this one. The FOA will be even better off with this proposal and still profit as neighbors from neighbors.

      Not only this, but the cost we will have to pay per acre is excessively higher than the going market rate. As far as we know the board hasn’t even solicited an appraisal for the property. This is absolutely not a good business deal regardless what your position is about the advantages or disadvantages of owning the golf course or whether you are a golfer or not. Who is watching out for us since the Board is not? Why isn’t the board soliciting an objective third party business consultant to run the numbers on our behalf?

      Like

      • Kerry McKinney says:

        Oh, and the HOA purchase price does not include the clubhouse, which was part of the FOA purchase out of bankruptcy. So comparing the HOA price to what the FOA paid is not apples to apples, but rather apple core to apple. The really good part is not part of the HOA purchase price.

        Like

  13. Answer to Questions 1 & 2 for the first time in public is the smoking gun of the collusion between Robin Rakusin, Paul Burkett and the other ACHOA Board members of the time with the golfers to decide a course of action without first pursuing a vote of confidence with the total ArrowCreek Community – including the 80-90% non-golf club members.

    Like

  14. George Nastor says:

    For my dues to go up another $372 more annually, if that, I would rather spent that money on charity … not golf!

    Like

  15. Dale Nuszloch says:

    I believe $31 a month is reasonable for this valuable asset. I am a golf member and know several FOA investors. I have been a resident since August 2000. To my knowledge the FOA is not in this to make a profit but to keep the golf club and land under residents control in the best interest of our ArrowCreek community.

    Like

    • Rudy says:

      Dale that is great for you. If you think $31 a mo. is fair (I do not feel the same), how about you pick up my $31 a month? The O’bama liberal entitlement mentality has gone too far in this country. If you and your friends want the golf club, good for you. You should not expect the community as a whole to bail you out.

      As for you being a resident since 2000 that is irrelevant.

      Like

    • Ronald Duncan says:

      Dale,
      The ‘value’ of an asset is in the eye of the beholder, as my pappy taught me. High desert land is high desert land and the maintenance clauses proposed within this ‘deal’ place ALL of the risk on ALL property owners, not members of the exclusive FOA LLC. It’s called spreading the risk so that the company doesn’t absorb any shocks.
      The vacant land is not worth $3.4 Million (the new price being advertised by the ACCC) along with the maintenance costs and ever increasing HOA fees. The $31 (actually $28) increase in fees is just the down payment.
      Let’s put some sense into this ‘deal’ instead of rhetoric about a ‘golf course,’ which is not what the ACHOA is buying. It is proposed to buy 475 acres currently operated as a ‘golf course’ ONLY.
      Ron Duncan

      Like

      • Dale Nuszloch says:

        I am adding a statement from a FOA investor I know and trust who choses not to get in the mud with us. “If the HOA owns the land (not the course) they have power over what happens to it. If down the road we sell in order to get our money back (FOA gets no money from the sale of the land to HOA). Such a sale might be to a developer who may turn the courses into housing tracts. However if the HOA owns the land that cannot happen unless the HOA decides to let it.” We, the residents, can maintain control for $32 per month. A bargain in my book.

        Like

        • Kerry McKinney says:

          Dale, the $32/month is only the purchase price of the land, based on a single proposed long term loan, and does not include any maintenance or repair that the owners (we homeowners) would incur as a result of the purchase. Since we have never seen any financials for the FOA’s maintenance operations, we do not know whether their proposed lease on the property that we purchase will cover all costs. My vote is that we wait to act until we can do a financial evaluation.

          Like

        • Kevin Mullet says:

          Dale, are you really suggesting that the risk to all residents if the HOA doesn’t buy the course is that FOA might sell the course to a developer who will fill the fairways with housing tracts? Or let the fairways turn brown? Isn’t that precisely what the FOA say they are trying to prevent? Why should that be seen as a credible threat? As the current owners of the property in question, it would seem that the FOA already control their own destiny in that regard. Why is there a need to partner with the unaffected homeowners to prevent the FOA from doing this to themselves? Perhaps, instead of strong-arming the entire community into becoming partners, the FOA could find a way to partner with just those homeowners who believe their property values or quality life would be negatively impacted. The price to affected owners would be higher, of course, but it would be a fair solution based on market principles.

          Liked by 1 person

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