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.
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.