November 27, 2015
From: A team of neighbors
Thank you Dave Steele, Robert McDonald, and Bob Kirtley for your candidacy and your commitment to this community, offering a new perspective and new direction for Arrowcreek. We certainly appreciate your pledge to maintain low HOA fees, and improve the amenities we already have as a community. Thank you also for explaining your views on why the current proposal for the purchase of the golf course land is not in the best interest of Arrowcreek homeowners, and for offering to at least look at different options.
Two of the Friends of Arrowcreek (FOA) supported candidates, Mr. Paul Burkett and Ms. Robin Rakusin (current board VP), as committee members and board member, already have had years to achieve most of the goals and fullfil the promises listed on their candidacy statements and on arrocreektruth. Both are members of the Arrowcreek Community Club Committee (ACCC), the committee negotiating with the FOA. Both have been advising the HOA board and Ms. Rakusin has been voting with the HOA board on its path towards a vote regarding the purchase of the golf course land that has polarized this community. There was no obligation to bring this proposal to homeowners by the board or its committees.
Mr. Burkett also currently is a co-chairman of the Communications Committee (CC). As such, he has been in a leading role guiding the strategy of informing homeowners regarding the golf course land purchase. The CC’s recommendation to finally allow an open debate format for the upcoming informational meetings was rejected by the board. We will be limited again by the old, regimented format of presentations followed by Q&A’s. This format has not worked in the past during HOA meetings. It has left many questions unasked and unanswered, prohibiting homeowners from knowing all the possible implications of the purchase of the land under the 36 holes the golf course. In addition, multiple public requests during HOA board meetings by homeowners for more detailed information were rejected, denied, or left unanswered by the ACCC’s spokesperson, Rich Kenny, and the current board. This hardly satisfies the need for transparency, open communication and discussion. We feel we truly need to replace the old ways with a fresh approach as envisioned by you three gentlemen.
Because you stand for open communication and transparency, we hope with you as new board members, we homeowners will have a chance of getting answers to the most immediate and pressing issue this community is facing: the golf course land purchase. Some of the main questions we have for you are:
1. What is the market value for the 475 acres of golf course land we are supposed to buy for $ 3.3M plus over $1M in interest? The Letter of Intent (LOI) does not include a purchase contingency based on a current assessment of the property’s value. Homeowners are expected to pay more for 475 acres than the FOA paid for 545 acres that also included the assets of the club house and other buildings/ facilities. Will you, Mr. Steele, Mr. McDonald, and Mr. Kirtley look into the option of negotiating a better purchase price for homeowners?
2. Homeowners will have no control over the FOA’s golf course business, nor will they have any control over when the FOA decides to downsize or declare bankruptcy. However, if the HOA ends up owning the golf course land, the failure of the Golf Club will directly increase homeowners’ financial liabilities in those cases. Is there a possibility of renegotiating the related terms of the purchase proposal?
3. What are the cost estimates for maintenance and replacement of the golf cart paths, bridges, viaducts and, most importantly, the base irrigation system we homeowners will be assessed for on top of the initial $31/m for the loan/reserve fund/property tax?
4. What is the basis of the recurring argument that we homeowners need to buy the golf course land to preserve our fire prevention zones? Is the FOA not responsible for that as the current owner of the land?
5. What is the basis of the recurring argument that homeowners need to buy the golf course land to prevent development? There are many obstacles to rezoning and development: https://arrowcreek411.com/2015/11/07/debunking-the-myth-of-developing-new-homes/. Would another obstacle not be the fact that the FOA LLC would have to decide who of its own shareholders, or who of its AC golf club members would accept having houses built on the golf course which they see directly from their homes, and accept the purported loss in home values? Would the HOA have any control over possible lawsuits that could once again taint the image of the AC community? Incidentally, Paul Burkett and Mark Toomey (the third candidate endorsed on arrowcreektruth by Mr. Gary Pestello, FOA chairman) were among the former litigants in 2006 as was Mr. Pestello.
6. What is the basis of the recurring argument that we homeowners need to buy the golf course land to prevent the courses from going brown? Would that not reduce the resale value of the golf course land for its current owners, the FOA LLC? The FOA’s chairman, Gary Pestello, did say that the FOA is prepared to do it on their own. This statement quoted in the RGJ has not been retracted to my knowledge. Will you Mr. Steele, Mr. McDonald, and Mr. Kirtley look into the option of taking Mr. Pestello up on his word and let the FOA own and manage the golf club like the golf club members in Montreux?
7. What is the basis of the recurring argument that we homeowners need to buy the golf course land to preserve property values? Month after month, the Washoe County Assessor reports have indicated that homes off the golf course trend to market price.
Secondly, proximity to open space, not necessarily golf courses, appears to be of increasing value these days (http://www.wsj.com/articles/luxury-home-developers-latest-pitch-unspoiled-nature-1446734336). However, the positive effect of golf courses or other kinds of green or open space diminishes very quickly, as “rapidly as 100 feet” (see: Do and Grudnitski (1995), referenced in the UNR Literature Review of Home Values). Buying and maintaining the golf course land is costly to homeowners. If we end up owning the land, what other options of nonprofit use do you see that would limit the financial burden of repurposing, and improve quality of life for all homeowners?
8. Why would allowing free enterprise to prevail not be the best option?
Mr. Steele, Mr. McDonald, Mr. Kirtley: We hope you will be elected to the HOA board. We hope the upcoming informational meetings will allow you three gentlemen to provide homeowners with some much needed answers.
Donna, Ellie, and a team of neighbors
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I agree that all of these questions are very good ones. I also believe that many have been addressed over the last few months in a variety of presentations/documents. If these can all be aired again in open discussions it will of course be beneficial to everyone who has not had the chance to review them up until now. The logistics of getting all residents together in appropriately sized groups are of course challenging but maybe the Board can work that out. As I’ve said before, we all have to make up our own minds based on the best available data. I’ve also said before that possibly the best outcome is for the Club to become highly successful, in which case all of these arguments become moot. However, it is sensible to weigh the possibility of this not occurring and to consider all of the downside options, which is what all of these protracted and sometimes unpleasant exchanges have tried to address. Hopefully we will all be sufficiently armed in the time available for us all to make our decision.
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Mr. Heaven, do you have enough influence to see that the above posting of ‘A Letter to the Candidates’ is posted on the ACT website?
Thank you.
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I have proposed this and will let you know the outcome. Regards, Malcolm
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Thank you; you are the best!
Margaret
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Margaret – I raised this with the group. The general feeling was that most if not all of the questions raised have been dealt with ad nauseam in many previously issued documents and blog posts. There are many other things to do right in readiness for presentations at meetings, etc., so this was basically back burnered. The list was, of course, pretty comprehensive and well ordered, but there is a different focus right now. I hope you understand. Malcolm
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Thank you Mr. Heaven for your reply to the Letter to the Candidates. But with all due respect and for what it is worth we beg to differ with your sentiment that our questions have been dealt with “ad nauseam”. Based on your comment here on AC411 and comments made by others on ACT, there seems to be a discrepancy between insider information and what is actually released to the rest of homeowners. When and where was the fair market price of the 475 acres of land we homeowners are asked to buy assessed and made public to homeowners? Per Washoe County/AC development agreement, there is a 1% or less chance of rezoning/development: so why does the FOA keep threatening with it? Letting the courses go brown hurts the FOA and golf club members more than the majority of homeowners, so why does the FOA keep bringing it up? The appraiser for the Washoe County Assessor accords premiums to a property based views, specifically city views. Proximity to a golf course without a scenic view is a lesser determinant. This is supported by other literature and research. So why does the FOA reiterate the point of property values being solely associated with proximity to the golf course? When and where have homeowners been informed about future costs for maintenance and repair for the 36 holes of the golf course and its infrastructure? We could go down the entire list of our questions.
We hope we will get to the bottom of things at the upcoming informational meetings.
We trust that David Steele, Robert McDonald, and Bob Kirtley will make sure of that
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To Ellie and her team. Apologies for the delay
1. What is the market value for the 475 acres of golf course land we are supposed to buy for $ 3.3M plus over $1M in interest? The Letter of Intent (LOI) does not include a purchase contingency based on a current assessment of the property’s value.
Homeowners are expected to pay more for 475 acres than the FOA paid for 545 acres that also included the assets of the club house and other buildings/ facilities. Will you, Mr. Steele, Mr. McDonald, and Mr. Kirtley look into the option of negotiating a better purchase price for homeowners?
We, as candidates for the Board, would reopen the Committee recommendation to purchase the land. Our stated concern is there is a lack of any independent valuation or appraisal of the real property. The appraisal would give us transparency to the value of the land and correspondingly, the value of the assets retained by the FOA. The FOA has only been in business 1 year so any purchase price has to reflect the risk that the golf course would not succeed. The ACHOA is not being asked to buy a portion of a profitable golf course; rather land that in the best case has a value similar to the empty county land surrounding Arrowcreek , and quite likely lower value, due to restrictions placed on this specific 475 acres by governing county and HOA documents.
2. Homeowners will have no control over the FOA’s golf course business, nor will they have any control over when the FOA decides to downsize or declare bankruptcy. However, if the HOA ends up owning the golf course land, the failure of the Golf Club will directly increase homeowners’ financial liabilities in those cases. Is there a possibility of renegotiating the related terms of the purchase proposal?
At this juncture, the terms of the Purchase Agreement have not been circulated by the Board. It is our opinion that if the Board executes a Purchase Agreement with the FOA, the terms will be binding on all parties. The FOA gets the $3.3 million to dispose of as they please and the ACHOA is bound to maintain the purchased acreage, and inherit the total risk if the FOA business in not successful. We have no way to tell at this time the likelihood of future negotiations.
3. What are the cost estimates for maintenance and replacement of the golf cart paths, bridges, viaducts and, most importantly, the base irrigation system we homeowners will be assessed for on top of the initial $31/m for the loan/reserve fund/property tax?
We do not have any additional data outside of the Reserve study. One of our concerns is that the current Reserve study is very uncertain because it was completed without site visit and physical review of assets by HOA’s vendor. Another concern would be changes in environmental regulations that impact either the watering system or fire mitigation requirements.
4. What is the basis of the recurring argument that we homeowners need to buy the golf course land to preserve our fire prevention zones? Is the FOA not responsible for that as the current owner of the land?
The FOA currently is responsible for meeting fuels mitigation requirement for their 545 acres just as the HOA is responsible for its currently owned common area.
5. What is the basis of the recurring argument that homeowners need to buy the golf course land to prevent development? There are many obstacles to rezoning and development: https://arrowcreek411.com/2015/11/07/debunking-the-myth-of-developing-new-homes/. Would another obstacle not be the fact that the FOA LLC would have to decide who of its own shareholders, or who of its AC golf club members would accept having houses built on the golf course which they see directly from their homes, and accept the purported loss in home values? Would the HOA have any control over possible lawsuits that could once again taint the image of the AC community? Incidentally, Paul Burkett and Mark Toomey (the third candidate endorsed on arrowcreektruth by Mr. Gary Pestello, FOA chairman) were among the former litigants in 2006 as was Mr. Pestello.
The article referenced by Mr. Hsu reflects our collective opinion on the possibility of development. The FOA members who own homes facing new development would have to consider the impact on the value of their homes. As you noted, homeowners could litigate potential development and the ACHOA and Arrowcreek would be impacted again by the turmoil of the litigation. FOA has stated in the past that they need no more than 300 members to be successful operating their 36 holes of golf. We have seen no data to either support or disprove this assertion. We also have seen no business plan from FOA, no financial results and therefore have no idea what the likelihood is of their success or failure.
6. What is the basis of the recurring argument that we homeowners need to buy the golf course land to prevent the courses from going brown? Would that not reduce the resale value of the golf course land for its current owners, the FOA LLC? The FOA’s chairman, Gary Pestello, did say that the FOA is prepared to do it on their own. This statement quoted in the RGJ has not been retracted to my knowledge. Will you Mr. Steele, Mr. McDonald, and Mr. Kirtley look into the option of taking Mr. Pestello up on his word and let the FOA own and manage the golf club like the golf club members in Montreux?
As Board members, we would cooperate with the management of the golf club. There is a risk that the FOA will not meet its financial plans. The course has a history of not being self- sustaining and the trends for the amount of golf being played our down. We have also stated that we work for all the ACHOA members, the majority of whom are not members of the golf course.
7. What is the basis of the recurring argument that we homeowners need to buy the golf course land to preserve property values? Month after month, the Washoe County Assessor reports have indicated that homes off the golf course trend to market price.
From the New York Times of November 24th :“There are about four million fewer players in the United States than there were a decade ago, according to the National Golf Foundation. Almost 650 18-hole golf courses have closed since 2006, the group says. In 2013 alone, 158 golf courses closed and just 14 opened, the eighth consecutive year that closures outpaced openings. Between 130 and 160 courses are closing every 12 months, a trend that the foundation predicts will continue “for the next few years.” We don’t see the impact of a golf course materially improving property values.
Secondly, proximity to open space, not necessarily golf courses, appears to be of increasing value these days (http://www.wsj.com/articles/luxury-home-developers-latest-pitch-unspoiled-nature-1446734336). However, the positive effect of golf courses or other kinds of green or open space diminishes very quickly, as “rapidly as 100 feet” (see: Do and Grudnitski (1995), referenced in the UNR Literature Review of Home Values). Buying and maintaining the golf course land is costly to homeowners. If we end up owning the land, what other options of nonprofit use do you see that would limit the financial burden of repurposing, and improve quality of life for all homeowners?
The original Arrowcreek development consisted of roughly 3400 acres. As noted in the minutes of the Washoe County Commission of July 27, 2004, 1400 acres were deeded to the County and exist in their natural state and provide a buffer around Arrowcreek. Additionally, much of the golf course has natural vegetation. If there is a bad ending for the FOA and we have an opportunity to buy the land, our contention would be to practice land management in a similar fashion to the County. This would be the lowest cost alternative. We would repurpose the existing infrastructure for walkways and the like. Any improvements would be done with the support of the homeowners and in a way that allows the largest participation, recognizing that any repurposing entails significant cost that would have to be approved by the majority of owners of lots. The clubhouse and other infrastructure would require much more review.
8. Why would allowing free enterprise to prevail not be the best option?
We strongly support that the Board should take a position allowing free enterprise to take its course. Any transaction proposed by the Board that materially impacts the financials of the ACHOA should be vetted, not unilaterally approved. The Board has entered into 2 LOI’s with vastly different terms. We challenge the review process that approved both agreements with no independent support. The FOA has reported strong membership growth. We see no need for the ACHOA to subsidize their operation.
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All,
The land in question is ONLY 525 acres, not 545 as originally assumed in very early conversations on this topic. As a consequence, the ‘current deal’ has the ACHOA acquiring 475 acres to be allocated to ‘common area’ and The Company (FOA LLC) retaining 50 acres and buildings FREE and CLEAR of any debts. Debt would be transferred to the ACHOA property owners.
A nicely written article.
Ron Duncan
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Wonderfully written and ‘right on’. It would be great if you posted this on the ACT website, as well. Since ACT is committed to spreading the ‘truth’, it would seem reasonable that this piece be presented on their webiste.
Thanks for you insights and questions.
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Ha! Dreamer Margaret! As if we had any input “arrowcreektruth” would publish…
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….thou art a nameless thing; so abject….
Ode to Napoleon Bonaparte, with apologies to Lord Byron
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Malcolm Heaven,
I’d choose my words more carefully. For an erudite person like yourself to deal such a minor wound, is shameful. Perhaps you’d be better off bringing out the identity of those nameless ArrowCreek Threat authors.
The Dragon Slayer
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