January 28, 2015
Dear ArrowCreek Homeowners:
Several key events have occurred in the last ten days that require an update concerning the potential acquisition and/or operation of “The Club At ArrowCreek.” It was announced by Arnold Palmer Golf (APG) on Thursday, January 22, 2015, that “The Club At ArrowCreek” will reopen by May 1, 2015 as a private club with a new membership structure
including revised dues and benefits. The Friends Of ArrowCreek (FOA) and APG jointly decided to test their ability to market and increase current memberships while operating two 18 hole Arrowcreek golf courses. Arrowcreek residents will be offered a lower-price trial membership in this new private golf club.
The membership drive will begin on February 1, 2015. By the middle of March, APG and FOA expect to determine if their private club is a viable financial model for a sustained golf course operation. The ArrowCreek Homeowners Association, Inc. (ACHOA) Board and ArrowCreek Community Club Committee (ACCC) intended to review the financial models and budgets of “the Club At ArrowCreek” as part of their due diligence and vetting process. But now the new membership marketing plan will be vetted by FOA/APG before they approach the ACHOA to negotiate a Community Club that includes golfing. The ACHOA Board believes that this direction by FOA/APG enhances the prospect that a future Arrowcreek Community Club will be economically viable at the outset and sustainable over a long term. The ACHOA Board and ACCC will review the current Letter of Intent with FOA soon.
The test of a sustainable golf model by “The Club At Arrowcreek” will delay the ACHOA Board and ACCC due diligence, vetting and negotiation plans to establish the purchase price and purchase agreement for the 545 acre golf course and its improvements. The due diligence and vetting process won’t be completed before early April. This delay will allow the ACHOA Board and the ACCC time to conduct additional studies, complete a survey of members, develop a new website, and explore alternatives for the operation and use of the golf course property if the purchase is approved by ACHOA members. The ACHOA Board believes that the ArrowCreek community’s security will be enhanced by the FOA/APG private club model since “transient day golfers” (other than tournament players) will no longer get a pass through our secure entrance. The ACHOA Board and ACCC hope this latest decision and consequent delay chosen by the private FOA/APG joint venture will have a positive outcome.
The ACHOA Board will continue its fiduciary responsibility to examine the potential purchase of the golf course property, under the Option to Purchase in the Letter of Intent from the FOA. Many ACHOA members believe that a successful purchase of the property will ensure that the residents of ArrowCreek control the golf course land and buildings, no matter what fate golfing has in the future.
The ACHOA Board has investigated golf property taxation and recently received a letter from the Washoe County Assessor that placed a tax assessed value of $4,000,000 on “The Club At Arrowcreek”, including the courses, club house, and other structures. This assessed value is about 1.5 times greater than the Letter of Intent purchase price.
The ACHOA Board still plans to hold many community and Town Hall meetings to explain every aspect of a proposed golf property purchase and Community Club proposition in advance of a future ballot date. The ACHOA will continue to provide timely email announcements and ACHOA website updates as new information becomes available.
As noted earlier, there should be full visibility to the projected financial viability of the club. As stated by the ACHOA; “The ArrowCreek Homeowners Association, Inc. (ACHOA) Board and ArrowCreek Community Club Committee (ACCC) intended to review the financial models and budgets of “the Club At ArrowCreek” as part of their due diligence and vetting process.”
The models should be disclosed to the homeowners and available for independent review. The homeowners are being pressured to invest roughly $1M annually. For this amount of funding, the ACCC and ACHOA Board should not be the sole arbitrators of the viability of the models. I am sure there are others in the community who have similar backgrounds in debt and equity investment modeling/capital investment modeling who might participate with me in a review of the models. The ACHOA and ACCC may not have done this type of review thousands of times professionally and funded a couple billion dollars as a result.