Reasons & Consequences of Voting Against Dues Increase Related to OGC Purchase

Observer Note: The following news release was submitted by the Oakmont Alliance.

On Wednesday, July 31, the Oakmont Alliance sponsored an open meeting in East Rec to present and discuss reasons for voting against the proposed Oakmont Village Association 30.7% dues increase, and the consequences should the dues increase be defeated.

Although OVA refused to publicize this meeting on its media (OVA Eblast and OVA website), several dozen OVA members attended and participated in an informative and thoughtful discussion of the issues surrounding the vote and purchase of the Oakmont Golf Club (OGC). Presentations were made by Bruce Bon, a frequent contributor to the Oakmont Observer on a variety of issues, and Ellen Leznik, retired corporate lawyer, former OVA Board member and president, and current Board Chair of the Meadowgreen #1 HOA.

Bruce opened the program with an introduction of the Oakmont Alliance (OA), a collection of individual members of OVA who seek to make Oakmont a better and more compassionate community. OA means to improve OVA governance and to protect OVA members of lesser means from the actions of those who would double or triple our dues in order to transform Oakmont into a deluxe resort community. In keeping with these goals, OA is advocating against the proposed dues increase because it is not in the best interests of all of Oakmont.

Ellen Leznik presented the following arguments against the proposed dues increase:

1. Purchasing the OGC property and operating it as a golf club is a financial black hole. OVA would be assuming responsibility and liability for this large property. According to Ken Aramitsu, OVA’s consultant in this transaction, the golf club is operating at an annual loss and this will continue for the next 5-10 years. OVA will be covering annual losses with funds raised from our dues. We can expect future increases in dues to cover golf club operations and the possibility of emergency assessments.
   
2. The Board has not provided sufficient financial details or clarity for the membership to be able to make an informed decision. There is no contract (either sales contract with OGC or lease contract with Advance Golf Partners [AGP]), no negotiated contract terms or even a binding term sheet. We are being asked to make a financial decision on a major investment without the information needed to do so in an informed and intelligent manner.
   
3. The expansionist agenda of the current Board will lead to major dues increases in future years. In addition to their ambition to provide (and subsidize) a premium golf club, the Board wants additional land for new construction of a “downtown Oakmont”. Reasonable estimates of the costs, for a Berger upgrade, CAC expansion, new “Berger II” building, new parking, relocation of the bowling green, etc, exceed $20 million, which will require major borrowing and dues increases to service the loans. One way to block this fiscally imprudent agenda is to block acquisition of the land from OGC.
   
4. Higher dues required for an expansionist agenda will have a negative effect on home values, especially for smaller homes in Oakmont. As an example, a couple in an HOA with $330/month HOA dues is already paying $480/month in combined HOA and OVA dues, which will rise to $526 in 2020 if the dues increase passes. As OVA increases dues even more in following years to cover “downtown Oakmont” construction, it won’t be long before these homes will become difficult to sell, resulting in lower property values.
   
5. Major dues increases will penalize Oakmonters with low or modest incomes and reward the affluent ones. There is a significant wealth gap in Oakmont, and increases in dues will make it more difficult for people to afford to live here. The most unfair aspect of this is that people of modest means will be subsidizing the recreation of affluent residents and of non-resident golfers, all of whom will pay lower greens fees than would be required to fully cover the operating costs of the golf club.
   
6. Unequal treatment of Oakmont homeowners. Scenic views of a minority of Oakmonters whose houses face golf courses will be protected at the expense of other homeowners. No such protection is afforded under OVA CC&Rs. Homeowners in the CAC area have not been treated the same way and their views are not being protected. That area has been kept as fenced open space without any improvements since it was bulldozed by the Andy Altman Board one day before the 2016 election, for more than 3 years. Why is such situation acceptable for CAC area residents and users and not golf course neighboring residents? If the parking lot behind CAC area is constructed as planned, it will destroy views of homeowners in that area and CAC users. Why is that not a concern of the Board?
7. Buying and operating a for-profit business may jeopardize OVA’s non-profit status. OVA is a 501(c)(7) tax-exempt corporation. OVA has not contacted IRS or a tax lawyer to clarify this issue. It is possible that OVA’s non-profit status may be revoked in the future by IRS which will result in serious tax implications. Much more research is required.
   
8. The process of selling the proposed dues increase to OVA members has been deeply flawed. The OVA Board has failed to provide alternative solutions with supporting financial data or financial projections for future years. No opposing viewpoints have been allowed through OVA channels (Oakmont News, OVA website, OVA Eblasts). The YES campaign has been given preferential treatment by the Board, including providing them with information before OVA has made the information public through OVA channels.
   
9. The Board violated its own long-standing Board policy of Board members not advocating on social media. Scare tactics and hard sell techniques similar to those use to sell timeshares have been used to sell the Board’s proposal.

Bruce explored the consequences if the dues increase vote fails

Following Ellen’s presentation of reasons for rejecting the dues increase, Bruce explored the consequences if the dues increase vote fails. “While we can’t know exactly what others will do, logic and common sense can tell us a lot about what is likely to occur. Following are ordered from most likely to least likely to occur:”

1. The OVA Board will buy the OGC property, but without the dues increase, will be unable to operate it as a golf club. A dues increase within the 20% limit will be adequate for the purchase and minimal maintenance. Using portions of the property to generate income, e.g. by leasing out the Quail Inn, would allow more extensive conversion of the rest of the property to uses that would benefit more Oakmont residents than golf ever has.
   
2. OGC may sell to one of the three other bidders. Some of these may be attractive alternatives, but the details are being withheld in order to influence OVA members to vote for the dues increase to allow the OGC-preferred AGP proposal. If OGC does sell to someone other than OVA, it will be because that buyer has convinced OGC that they will continue to operate the property as a golf club.
   
3. Interested golf players and other affluent Oakmont homeowners and non-OVA investors may pool their resources and buy the OGC property. They could then continue operating it as a golf club, using AGP or another company as a managing partner.
4. OGC will not sell to a pure developer as long as either OVA, or an alternative buyer who offers to keep golf, is willing to pay off their debts and take over the property.
   
5. OGC will not go bankrupt, because the OVA offer to buy the property will remain even if the dues increase fails. Neither OVA nor OGC has any interest is allowing the property to be auctioned off to the highest bidder.

In the July 23 Press Democrat, Steve Ekovich, the selling broker for OGC, is quoted as saying “it would be nice, and a fairy tale ending, for it to be owned by the community (Oakmont Village), but the community has to step up to the plate and pay market price.”

Bruce quipped that it would be a fairy-tale ending for OGC and for Ekovich. “OGC members get to enjoy their sport on improved golf courses, all debt and management worries disappear, and someone else foots the bill! Unfortunately, that someone else is the OVA membership, most of whom do not play golf. The proposed OVA/OGC agreement is grossly unfair to most OVA members and should be blocked by voting down the dues increase.”

Following the prepared presentations, a lively Q&A session followed, with many in-depth questions from the audience and a free exchange of ideas. At the end of the meeting, a common comment was “I wish you had held this meeting three weeks earlier.” We agree!

If you have not yet voted, please learn as much as you can, make your own judgements, and then vote your conscience.