Plus an Update on Golf Course Purchase Costs

According to the OVA financial report presented by Treasurer Elke Strunka at the June 16, 2020 board meeting (and again somewhat reflected in the most recent July report), OVA has transferred $650,000 into a cash account under OVPC (Oakmont Village Property Corporation – the legal entity created to deal with the lease partner and the golf course property). Both monthly reports reflect a current balance of $272,393 in this cash account. The balance of $377,607 was “transferred to AGP for tenant improvements and some other sort of miscellaneous items,” according to Strunka.

Multiple requests of Elke Strunka and Tom Kendrick to specify these “tenant improvements and miscellaneous items” have thus far yielded no further details. The latest response from Kendrick states: “We are still working to nail down the details for the site improvement costs. Last week’s holiday and other factors have made confirming specifics difficult. We do know what has been done and by which contractors, but the bills for the work are not (by design) flowing through OVA.”

Yet, OVA members were told a different story during the pre-election Town Halls and Workshops in the summer of 2019. Director Jess Marzak addressed this issue: “It will be absolutely laid out in detail, every expense for both the restaurant and golf course laid out in a spreadsheet so we can all review it. And by everything, I mean everything including capital expenditures. Any expense that is paid for out of the reserve fund has to be approved by the OVA. Now, there should be no surprises because these are big capital items, we will be talking about them for months in advance. So that kind of involvement is more of oversight kind of a responsibility by OVA and should be pretty straightforward.”

The $8.50 per month from each member’s dues allocated to “social membership” and directed to AGP has raised $193,146 as of 6/30/20. It is carried not as an asset but as an expense on the financial report so it must have been allocated – that is, not sitting in an OVA/OVPC cash account. If this was allocated to AGP along with the $377,607 that was transferred to them, as above, for “tenant improvements, etc” then a total of $570,753 has been sent to AGP as of the end of June.

Take a look at some of the photos below of the West Course that show the physical appearance of the golf course.  Little or no capital improvement funds have been spent addressing these maintenance defects. There has been some work performed on both the West Pro Shop and bar/restaurant but they are still in disarray.

This view greets players as they start their round on the 1st hole

 

Dilapidated bridge to 13th tee – players must go the long way around

 

Missing steps and caution tape at the 11th tee

 

Pond in front of 2nd tee covered in algae and scum

 

“Wedding Pond” in front of 18th tee is also a messy bog

 

Cart path on the 7th hole has been in this state for months

Golf Course Acquisition Costs

There is a line item in the financial report balance sheet “Investment in OVPC” that currently equals $4,987,379.58. When the Treasurer was asked why this value is more than $1.3 million above the announced purchase price of $3.6 million for the golf course property, discussion turned to the closing statement of the purchase. I requested the statement and it was eventually furnished.

Since OVA/OVPC paid a $250,000 loan prepayment penalty for OGC’s outstanding loan the final purchase price turned out to be $3,850,000. Add to this legal fees of $221,097, a $100,000 payment due to purchase delay, broker commission of $72,000, and escrow/title/recording and other fees of $23,906 and the total acquisition cost thus far is $4,267,003.*

(* The $650,000 transferred to an account for tenant renovations mentioned at the beginning of this article and an unspecified payment of $70,376 account for the difference between this number and the $4,987,379 “Investment in OVPC” line item in the previous paragraph.)

Tom Kendrick said in reply to an email inquiry that “there will be additional ongoing expenses attributable to this (ongoing legal fees, for example), but the tally is accurate for now.” He also said, “We plan to assemble and present the information for both the purchase transaction and other finances related to the GC at the BOD meeting next week (July 21).”

Hopefully, other OVA members will join me in asking questions and seeking answers to these important OVA fiscal issues.

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5 Comments

  1. Arlene Wasserman on July 20, 2020 at 8:05 pm

    Thank you for making the complex financials of this matter easy to understand. I appreciate the clarity you’ve brought to this endeavor.

    • Kerry Oswald on July 21, 2020 at 4:09 pm

      Michael:
      Thank you for the thorough research of the financial status of our Oakmont Golf course investment. We have already by-passed the $485,520 that our $8.50 part of our dues increase covers for a year, and this is just over the halfway mark of 2020! AGP not only backed out of the promised $1,000,000 up front investment in our Golf course, it was our lease managing company for only five months before they bailed out on July 9th; and it took this Board from July 9 to July 14th to inform our community by an eBlast that doesn’t reach most of our community.
      Not only that, our General Manager has resigned as of August 1st. What is going on and how is this “Transparency”?

      We know that the pandemic was unexpected. We also know, according to the Broker who represented the OVA on the purchase of the Golf Course that it takes at least $5,000,000 income to support a golf course. It looks like our Reserves are going to be greatly challenged this year, and/or our Green Environment will be!

      Who’s managing the Golf Course at this time?

  2. Don McPherson on July 21, 2020 at 12:27 pm

    Thank you, Michael for your always thorough research, always thoughtful insight and clear, concise writing. Your efforts demonstrate that, especially for those in possession of this information, it is quite possible to keep the community informed and in a timely manner — one is left to wonder why that doesn’t happen and why, instead, it is all left to individuals willing to do this kind of digging and reporting.

  3. Kerry Oswald on July 21, 2020 at 12:31 pm

    Michael
    Thank you for your thorough research on the up-to-date economic investment status of the Golf Course. Obviously we are far beyond the accumulated $8.50 membership dues coverage of the Golf course. We are actually over $200,000 above what will be covered by our year dues investment and it is only mid summer! Secondly, after only 5 months of working with AGP to manage our investment AGP has opted out as of July 9th- and we were not notified until July 14th in an eBlast message that does not really reach the greater OVA community. Not only has AGP backed out after failing to fulfill their promise of a $1,000,000 investment in the Quail Inn remodel when we voted for the dues increase, but our General Manager has also resigned as of August 1st. One can wonder what is really going on. Again we are faced with the issue of Transparency.
    Respectfully,
    Kerry Oswald

  4. John MacInnis on July 21, 2020 at 12:52 pm

    Mike,

    Thanks for your very concise research on the financial detail surrounding the OVA/OGC/AGP purchase and probably the added future costs and liabilities to the OVA membership. And, “pictures are worth a thousand words”. It is unfortunate that the OVA/OVPC “win win” sales agreement with OGC, and the eventual (flawed) lease to AGP, has resulted in an unknown financial black hole for the Oakmont community. Although Covid-19 had a negative effect, the basic planning process was inept. How we get to some reasonable consensus as a community on a solution is a major task that will require a change to the decision making process. It starts with the full disclosure of the financial information and agreements approved by the OVA. And then, a commitment by the BOD that future major planning issues will be subject to community approval.

    JM

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