OGC and OVA: Facts As We Know Them
A huge complaint for many of us, for over a year now, is the failure of the Oakmont Golf Club (OGC) to provide the facts that we need to evaluate OGC’s need for funds and other aspects of their situation. While withholding such information is within their rights, it didn’t make sense if they wanted the support of the OVA membership. Even as the OVA Board contemplates making an offer to buy OGC, none of us outside of the few who have signed non-disclosure agreements have access to the key facts necessary to decide whether or not to support the Board’s making such an offer, and few new facts were revealed at the April 16 Town Hall. But a number of facts and assertions of fact have come out over the past year.
The intent of this article is to collect known facts and credible assertions in one document, along with the source and level of confidence in each.
Financial facts and assertions
Asking price: $4,800,000 Fact 
Gross revenue: over $4M Fact 
OGC has been forced to defer maintenance for Fact 
years, and their reserves have been reduced to
almost zero – this, and the fact that they are
currently not able to meet operational costs, are
the reasons they are forced to sell
Cost to irrigate & maintain 225 acres as an open Likely 
space park: $700k/year = $12/OVA member/month
Principal on current OGC large loan: $2.5M Very Likely 
Service on current OGC large loan: $13k/month Very Likely 
OGC has additional loan(s) from the Small Business Fact 
Administration, obtained after the 2017 fires
Golf Club facts and assertions
36-hole semi-private golf club Fact 
Restaurant, banquet/event facilities Fact 
Acres: +/- 253 Fact 
Course architect: Ted Robinson Fact 
Year built: 1963 Fact 
Main clubhouse: +/- 10,000 sq ft Fact 
East clubhouse: +/- 2,000 sq ft Fact 
Membership (3/20/19): 247 Fact 
Net Operating Income: Near Break-Even Fact 
OGC has engaged Marcus & Millichap to market Fact 
OGC’s selling agent is Steven M. Ekovich Fact 
OVA has engaged Madison Marquette’s Ken Arimitsu Fact 
as a buyer’s broker, to assist in determining whether
or not to make an offer on the property and, if yes, to
prepare the offer for OVA
April 2, 2019: Offering memorandum released to vetted Fact 
potential buyers who have signed a Confidentiality
Agreement provided by M&M
Late May, 2019: Letter of intent to purchase must Very Likely 
be delivered to M&M
June: OGC membership will vote to decide offer Uncertain
Unknown Date: Buyer will have some period, possibly
60 days, to complete due diligence
Unknown Date: Sale will close and buyer will assume
ownership – maybe in the fall
OVA membership and financial facts
OVA dues-paying membership: 4,785 Fact [7,p.18]
2019 budgeted total revenue: $4.4M Fact [7,p.9]
2019 budgeted transfers to fund accounts: $1.5M Fact [7,p.9]
2019 budgeted net operating revenue: $2.9M Fact [7,p.9]
Reserve study current replacement cost Fact [7,p.19]
of all OVA property covered by reserves: $10.3M
Reserve study scheduled expenditures in 2019: Fact [7,p.22]
Asset Replacement Fund balance, 3/31/19: $1.7M Fact [8,p.23]
Dues increase to trigger a membership vote: Fact 
20% increase = $15/member/mo = $861k/year
Special assessment to trigger a membership vote: Fact 
5% of annual gross expenses = $219k = $46/member
1,512 single family homes Fact 
1,694 duplex, triplex, fourplex and apartment homes Fact 
Below is a list of additional critical factors in any decision relative to the OGC, which we cannot know but for which there is evidence, often conflicting. Thorough coverage would take far more space than available here, so these are just summarized as areas of concern that should be investigated by anyone wanting to have a serious opinion on what OVA should do about OGC. Caveat: though I endeavor herein to be balanced and to avoid editorializing, it is impossible to avoid some degree of subjectivity when discussing unknowns, and I think it is better to accept some subjectivity than to avoid any discussion and leave the reader wondering what I am talking about.
The future of golf demand is unknown. Golf is not dying, but neither is it growing by leaps and bounds. Because they are discretionary, expenditures on golf vary with the economy, changing demographics, and even with Tiger Woods’ success or falling from view. The future of golf demand in Sonoma County is affected by such nationwide factors, but also by changing local demographics over time.
Future costs of added regulation and water shortages on the cost of operating the golf courses are unknown.
If the OGC property was owned by a person or organization who was not able to make golf a success, the result for the property is unknown. The specter of condos on the fairways has been raised, but the hurdles for a developer to achieve such a result are huge. Rezoning for such adverse uses would not only face the strong opposition of our community of almost 5,000 who would be affected by it, but by issues of providing for water, sewer and particularly for emergency egress for all the added community residents. The more likely result would be that the owner would sell the distressed property to the only interested buyer, i.e. to OVA.
If the OGC property was owned by OVA and OVA chooses to subsidize golf to keep the courses open, the future costs and the impact on Oakmont property values are unknown. We know that OGC has been losing money and deferring maintenance, and that they hoped to get OVA to subsidize their operations by up to $10/member/month. So, unless OVA is somehow to run the operation more effectively than OGC has, the ongoing cost to the OVA membership for owning the OGC property is likely to be at least that much. At the high end, the cost to OVA of keeping the golf operation alive is unlikely to be more than the recent OGC gross income, which is around $4M. If this amount had to be made up completely from OVA dues, this would add around $70/month/member. For a couple currently paying sub-HOA dues of $330/mo, or a total of $480/mo, they would then be paying $620/month. Especially for the smaller, older residences in Oakmont, this would probably result in lower property values and more rental residents.
If the OGC property was owned by OVA and OVA chooses to replace golf with other uses for one or both courses, the future costs and the impact on Oakmont property values are unknown. In this case, the costs would likely be lower and more controllable than if OVA tried to maintain operational golf courses, but they would still be substantial. OVA property would have increased from around 55 acres  to around 308 acres, the total value of OVA property will have gone up by approximately the purchase price of OGC, and there will be additional costs for insurance, security, reserve contributions, and personnel, among others. OVA operational costs will necessarily go up accordingly, but how much is highly speculative.
Without a vote of the OVA membership, whether or not the majority of OVA members support purchasing OGC or how much they would be willing to pay will remain unknown. Members advocating unconditional purchase of OGC by OVA are obviously vocal and are able to fill Berger to overflowing, but how would the vast majority of OVA members who didn’t turn out for the OGC Town Hall on April 16 vote? No one knows or can know unless a vote is held.
Whether or not litigation will result if the OVA Board decides to transform OVA by purchasing OGC is unknown. Litigation has resulted in other places where HOAs purchased or subsidized adjacent or embedded golf clubs , and some think it highly likely here, unless the Board holds a vote to demonstrate membership approval for such a purchase.
Whether or not litigation will result if the OVA Board decides not to transform OVA by purchasing OGC is unknown. Steve paints this as a future possibility, based on declining property values if the golf courses are deserted or developed, although no examples of such litigation have been provided or seen.
As every informed person agrees, the issues around the golf courses in Oakmont are very complex, and there is no easy answer to what can or should be done. There are serious risks and costs to doing nothing, as there are to OVA purchase of the OGC property, and balancing those risks and costs, including making judgments about the unknowns, is the way that a purchase decision should be made. My hope in writing this article is to provide a primer for those who may not have been paying attention or who may not understand why the decision is so critical to Oakmont’s future.
 Leisure Investment Properties Group, Marcus & Millichap Executive Summary for the Oakmont Golf Club offering
 Notes from attending the 2019-03-26 GCC meeting, for attendee comments not reported in the minutes , Bruce Bon, https://docs.google.com/document/d/1Of6ABEX3FtJHiYdoo0m8nbyBoSOyIfBCSsB1gliYGV0/edit?usp=sharing
 Minutes of the Ad-Hoc Oakmont Golf Club Committee (GCC), 2019-03-26, https://oakmontvillage.com/article/3-26-2019-gcc-minutes/
 Huge Crowd Urges Board to Keep Golf Courses in Oakmont, Jackie Ryan, Jim Brewer and Marty Thompson, 2019-04-17, https://oakmontvillage.com/article/huge-crowd-urges-board-to-keep-golf-courses-in-oakmont/
 Open Space & Recreation Element, LRPC, 2013-11-20, https://oakmontvillage.com/pdf/Long-Range-Plan/os_rec_element_11-20-13.pdf
 HOA, condo & co-op Golf Community Updates (Feb. 2019), 2019-02-25, https://independentamericancommunities.com/2019/02/25/hoa-condo-co-op-golf-community-updates-feb-2019/
 OVA Annual Budget Report for 2018 & Annual Policy Statement for 2019, 2018-11-15, https://oakmontvillage.com/wp-content/uploads/2018/11/2019-Oakmont-Village-Association-Annual-Budget-FINAL.pdf
 OVA Financial Summary for Three Months Ending March 31, 2019, in the Meeting Packet for the April 16 OVA Board meeting, https://oakmontvillage.com/wp-content/uploads/2019/04/4-16-19-Board-Meeting-Packet-FINAL.pdf
 Regular Assessment, 20% Limitation page on the Davis-Stirling.com website, https://www.davis-stirling.com/HOME/Assessment-Limitation
 Special Assessment Limitations page on the Davis-Stirling.com website, https://www.davis-stirling.com/HOME/Special-Assessment
 Residence type counts provided by Cathy Dougherty to Donna Hopley in March 2018.