Golf Course Acquisition



If we get to have the golf course, can we have free memberships or discounts or free items at the golf course and the restaurant?


The members of the association already get a 25% discount on golf and a 15% discount on snacks and beverage in the pro-shop only. No, homeowners would not receive free golf. We would need to have revenue to keep up the expense on running the course. 

What about the Green Jackets?
Is the HOA accepting the financial commitment to the "Green Jackets?


We have not finished going through all the contracts from the golf course. Once a decision has been made the “Green Jackets” will be contacted either by the HOA or the current owners. 

TOWN HALL MEETING QUESTIONS  

1.    N​ow that the deal is done, why schedule a public meeting? Only 1 public meeting was held regarding the golf course acquisition when required signatures from homeowners were needed. Why the obvious lack of transparency for months throughout negotiations, ie., price etc.? We are scheduling a meeting as some information is finally public knowledge and we know residents have questions. During the negotiation we were not able to be transparent as most of the information was confidential. Also, during negotiations it was back and forth, deal was on and off all the way up to day of closing. Now that the acquisition is final you can see all the recorded documents on https://recorder.maricopa.gov/recdocdata/ search Augusta Ranch Community Master Association. 


2.    Who did we buy the golf course from? What was the price? The HOA bought the golf course from YSPF Holdings B, LLC. Augusta Ranch Golf Course was one of the 10 companies they had in their investment portfolio. The HOA bought the golf course for 2.2 Million Dollars with $300,000 back from seller concession for capital improvements. 


3.    The Sunset Pass- will the monthly fee stay the same?Pricing of all of the passes are evaluated each year. The pricing will be priced accordingly to success and economy. We are excited to announce that residents will receive a discount on all unlimited passes.


4.    The property walls facing the airport- when will they be fixed/painted and who will incur the cost? They really need attention. The walls and wrought iron are expected to be painted in 2018. We have already started the process of getting bids. The walls are “party walls” so they are owned 50% from HOA and 50% from homeowner. The HOA will be billing back a certain percentage but that is unknown at this time. This was also done with the homeowners that back up to the parks in Augusta Ranch. 


5.    Is the VUE restaurant a part of the golf course acquisition or a separate entity? If separate does the HOA intend to purchase it too? If part of the current purchase how is the state of its financials?The VUE building was party of the golf course acquisition. We meet with the VUE monthly, but don’t go over specific financials. We are owners to this building only. We are not pertinent to this information. 


6.    What did the appraisal come in at? The bank did not require an appraisal. 


7.    Did your preliminary research find other communities advertised as a “golf course community” that lost their golf course to housing development? If so, what legal precedent was cited against the homeowners to allow that to happen? If you would like to find information on lawsuits in regards to golf courses and housing developments please search internet for Awahtukee Lake Golf Course, Silverstone Golf Course, Dreamland Villa, Glen Lakes 9, Escondido Country Club etc…


8.    I understand there will be a golf committee to oversee the homeowners interest in how the course is run. Will this committee include residents and more importantly golfers who play the course regularly and know the issues. Since the current course management will continue to run the course this could be important.The golf course committee is comprised of 4 board members who are residents of Augusta Ranch. One of the board members is a regular golfer at Augusta Ranch and other golf courses in the valley. The committee has also contracted with a 3rd party consultant to oversee the operation and maintenance standards. We are going to keep the logistics the same for at least the 1st year. 


9.    If additional expenses to running golf course, are homeowners billed an assessment? We have minimized the risk in the operational expenses by leasing the golf course and we don’t foresee any operational expenses at this time. 


10.    Frequency of assessment?At this time there is no plan or need for a special assessment.    As some of us live on a fixed income so need to know how this affects us.


11.    If a large assessment ($1000) example & cannot pay all at once, what happens? Payments? Interest charged?Same as question #10. 


12.    What’s the acquisition going to do to our monthly fees?We are doing everything possible to minimize the risks. We do not foresee any monthly fees increasing for acquisition and operational expenses. 


13.    What is the final purchase price of the golf course including paying for all the vendors/lawyers/other professionals who gave guidance on the purchase of the property?We paid approximately $60K for Alta Survey, CPA, Legal Expense, 3rd party golf consultant over that last 2 years. That is approximately 2.7% of the purchase price. 


14.    Where is the proof that the golf course is profitable?We had a CPA review the financials from the previous owner and they were favorable for the purchase. This information is confidential according to A.R.S. § 33-1805(B)(4).


15.    No increase in dues? It has already happened?You are correct that it has happened the last two years. That is because we have not raised them in over 8 years previously. We could not find any more ways to absorb the increases in contracts and water. We have sent out a letter the last 2 years showing the percentage increase in each contract and water. We are still in line with all the surrounding neighborhoods, especially with all that Augusta Ranch offers (security, discount on golf, restaurant, community events, parks, golf course community etc…).


Yearly Assessment Analysis
Augusta Ranch $680
Sierra Ranch 1 $514
Sierra Ranch 2 $960
Villages of Eastridge $840
Crismon Creek $468
Mesquite Canyon $567
Mulberry $1,428
Santa Rita Ranch $624
Sunland Springs $665
Sunland Village East $500
Average $675 


16.    Explain how Board is addressing concerns expressed by board in January meeting: Additional cost of $10-$15 a month per homeowners, which does not include future projections of the federal minimum wage increase and other items.We did get seller concession for some capital improvements. If we have to raise the assessments, it will be because the HOA contracts are increasing due to minimum wage increase. The lessee of the golf course will be dealing with the minimum wage increase for his staff.  The irrigation system is older technology and would cost approximately $1 million to upgrade. The HOA irrigation is also older technology and it works just fine. We do not plan to upgrade either system at this time. 


17.    Originally the request for the residents to allow the committee to proceed with searching for financing was simply that, and I thought that prior to going forward with the acquisition, there was to be additional discussion. I do not recall any more news other than the on an off nature of the deal. The original request was to secure financing and gave the board authority to move forward according to your CC&Rs. The bank only needed certificate from the association attorney that we complied with the CC&RS.  


18.    What did balance sheets of last 5 years look like? Did expenses outweigh the revenues? We had a CPA review the financials from the previous owner and they were favorable for the purchase. No


19.    What has been the # of golf rounds per year for the last 3 yrs?  It averages around 41,000 per year. 


20.    What has been the league activity including outside (trailer park usage) per year for the last 3 yrs.?They continue to host many leagues from outside communities and league rounds have been increasing each year. 


21.    I understand that a business "partner" with Don Rea has invested $100,000 into the course. What is this all about? Not public information according to A.R.S. § 33-1805(B)(4).


22.    What is the agreement with Don Rea in running the course? The leasing agreement is with CCRS (Don Rea) for a 3 year term with additional 2) 2 year terms. 


23.    Will the golf course acquisition affect the sixteen “Green Jacket” lifetime members? No, we do not believe anything will change at this time. 


24.    Will anything be done to solve the "back-up" problem prevalent from November through March each year? Usually on holes on holes 5 and 13, there are 3 to 4 groups waiting. Many other. Purses do shotgun starts about 3 times a day during the Winter season.This is an operational question please take up with the lessee.


25.    Does that mean our HOA fees would go up they are high enough? Our HOA fees will probably increase as the HOA contracts increase.We feel we are in line with all the surrounding neighborhoods. We gave the annual assessments of the surrounding neighborhoods to all attendees at the Annual Meeting. They are also posted on this site. 


26.    During the winter months, it is almost impossible to play enjoyable golf due to course overcrowding. Most days, there is constant backup of three to four groups at holes such as #5 and #13, sometimes causing as much as 20 to 30 minute delays while waiting to tee off on those holes. I have heard many people complain and claim they are never coming back. Many similar-size courses, including Sunland Village, Sunland Village East and Fountain of the Sun, do shotgun starts about 3 times a day during the winter months, alleviating backup problems. The cost is also cheaper at these courses, with green fees/cart charges ranging from about $20 to $25 per person for those "shotgun start" tee times. Will any thought be given to doing similar at Augusta Ranch? This is an operational question please see lessee for the answer. 


27.    What was the cost and what are the loan terms for the golf course purchase? $2.2 Million, 5.39% 15 year term, $300,000 seller concession for capital improvements.


28.    Who actually owns the course? Augusta Ranch Community Master Association
29.     If someone falls and sues, who is potentially liable for any judgment?The 1st line of defense is the lessee of the golf course.


30.    What are the revenue sources used to pay debt service as well as any other costs?drainage easement, lease revenue, monthly transfer from HOA, CIF from lessee.


31.     Is there a maintenance reserve established to meet expected, as well as unexpected, maintenance needs? How is that funded?We are working on a 5 year capital reserve study for the golf course. We do have a reserve fund and the financial balance sheet will be on the website each month. We have not received the first one yet so I don’t have that information. 


32.     I’m not sure exactly how to ask or phrase this question. What expenses or amounts may be passed on to each HOA homeowners? Refer to questions above. 

 



Is a task force being put together to help with the plans to mange the golf course? Thanks


Yes, the golf course committee is working on a contract to lease the golf course. We are using other leases for other community golf courses as a guideline. This will all be reviewed by association attorney after it is completed. 

Has a deal already been made with the current owner that allows the current management and all of it's employees to be retained by the HOA once the sale is final? 

In the purchase agreement there is no obligation or stipulation that the current management or team members will be retained by the new ownership. However, your HOA Board is looking at options that will be the best for the community to ensure continuity in the golf course operations.


Hi, I'd like to know if the current golf course owners will be going through and repairing all the walls that are in need of texture, paint,and or structural decay repair from sprinkler damage due to golf course watering over spray? Will the the lake on number 10 be cleared up, I can only speculate that the circulation pump is sucking in silt and then spraying it back out through the fountains and water fall causing it to be cloudy or the water needs to be treated for something growing in it? It looks terrible with debris floating on top often making it look unsanitary. Why are HOA fees already being discussed being increased when the golf course in supposedly profitable, when we were told at the initial meeting that home owners would not be affected unless absolutely necessary. I play the course often and can see a lot of things that need to be addressed, and hope we as home owners are not going to be held responsible for things that be put off. 


No, the owners will not be completing the repairs to the wall before the sale. In negotiations we have settled on an undisclosed amount for repairs on the walls. The walls are party walls, which mean they are owned 50% by homeowners and 50% golf course owner. After a 3rd party company came out to inspect the golf course it was determined that the deterioration of the walls has been caused by both parties throughout the community. We are looking into the fountain. If you are speaking about the community email that went out a couple weeks ago. That was misunderstood. He was saying that we were able to negotiate the price so that we did not have to raise them 20%. The 3rd party that inspected the course is creating standards for the course and will do the field assessment for one year. 



I would recommend that every employee, from top to bottom, including new people on the open market, to have to interview for every job position. This would help in getting the best person for each job with the golf course and homeowners interest in mind.


Thank you for your suggestion and we will keep this in mind. 



Does ownership of the course include the clubhouse, restaurant, maintenance equipment, etc.? Also, as owners, will that affect our fees should we decide to golf? Will we be sharing any profits or losses from a business view? May we assume the values of our homes will be affected? Will our HOA fees change? Thank you.


The HOA already owns the Pro-Shop. The sale of the golf course will include the restaurant, maintenance yard, equipment, pro-shop inventory, cart barn, carts etc… We cannot guarantee that it will not affect your assessments, but it is the last step that we would want to take. We are using the drainage easement and monthly lease payment to pay off debt. No, there will be no profit sharing amongst homeowners as individuals. We would assume that the values stay the same or increase as we would not have to worry about development of homes on golf course.


 

Who is going to make payments on this transaction when things get bad. you will dump it on the home owners. It seems that the current owners can[t sell it to any one else. please be cautious this is out future you are messing with. I was against the purchase fro the beginning. I would rather see homes built on the property. This will maintain the value of Augusta Ranch for all.


We have put money into reserves and have thought of cost saving ideas if the golf course does have a bad year. We are also researching the possibility of  leasing the golf course where they take the hits and receive the profits. This is what many community golf course do when owned by an HOA.  Based on prior input from the residents, the majority do not want homes built on the golf course.  Keep in mind having a golf course in our community currently raises our home values as we are seen as a golf community.

The first thing we want to know  is how much will this cost us if this purchase does go through? How will this affect us all as homeowners? Will there be mandatory membership fees? Could you please forward, or direct us to information that was previously shared with the Augusta Ranch Homeowners.


We can’t guarantee it will not affect homeowners, but the last step we would want to take would be to increase assessments. No, there will not be mandatory golf membership fees. We had all the information on this site from previous questions throughout the year, but the site went down and we lost the information. If you would like to know more please let me know.

Underneath all what you've said about the acquisition of the golf course is a business decision, and I don't recall ever seeing any profit and loss statements or discussion about how viable (able to sustain itself) the business operation of the golf course is. In other words, does the golf course generate enough capital to make it's acquisition a good business decision? You've told us our HOA fees will not go up as a result of the association owning and operating the golf course, but if the course doesn't generate the revenue to take care of the purchase as well as upkeep, maintenence and capital improvements then where will that money come from? If there's a reasonable chance that would happen then this is a bad business decision. What safeguards will there be for us, the average homeowner in Augusta ranch, should the course prove not to be viable? Thanks.


Yes, the golf course is profitable. We did have financials on the website at one time. I will see if I can find them again. If the golf course had a bad year due to rain or other unforeseen circumstances, the board of directors started a reserve fund for the golf course a year ago. They will keep putting a monthly amount into that reserve fund that is just for the golf course. There are many other cost saving ideas that could be done if the golf course had a bad year (layoffs, cut landscaping costs, merge HOA and golf course landscaping etc..)

Hi John, In discussions with Kamin, I left with an answer that I wasn't comfortable with. It sounds like we are guaranteeing the $ for the purchase of the golf course but that it will be run separately and the profits if any won't be to the benefit of the Home owners...if we are on the hook for any short comings we should also benefit from any gains, it should be "open book" did I misunderstand the answer, do the home owners understand the answer? Thanks!


We will be leasing the golf course back to a management company. They will pay us a monthly fee (that we will use to pay off debt) and they will cover the months that are in the red (summer) and collect in the months they are in the black (winter). They will also take care of all the capital improvements up to a certain amount then we will split 50/50.