Today at 10 am, OVA held a Town Hall Meeting to report on the status of the Oakmont Golf Course acquisition. There was a slide show, narrated by Steve Spanier (OVA president), which is available on the OVA web site.
Of particular note in the slide show are the goals of the OGC acquisition, on pp. 6-9, and the Advance Golf Partners (AGP) lease agreement details, several of which have changed within the past few months, on pp. 19-20. Changes noted:
- AGP backed away from their commitment to spend $1M within the next two years for property renovation, and the OVA Board has agreed to fund this renovation with $1M, to be funded from loan proceeds and to cost OVA members about $1.50/member/month for 15 years.
- The funding commitment from OVA to AGP from OVA dues was reduced from $10/member/month to $8.50/member/month, and recharacterized as a golf club social membership for every OVA member. Thus the monthly commitment remains the same dollar amount (when you include $1.50 for repayment of the additional $1M OVA loan), but the likelihood of it being reduced within five years or so has gone down substantially.
- AGP also balked at the possibility of having to pay very high insurance costs due to recent fire threats, so OVA has accepted the responsibility for paying insurance premiums over $80k/year. Steve asserted that the anticipated insurance premiums for the golf courses is $60k to $8ok per year, and if it stays within that range, AGP would pay it all.
- The length of the AGP lease contract has been reduced from 30 years to 20 years.
- Profit sharing: The off-the-top profit to be retained by AGP has been reduced from $200k/year to $100k/year (in exchange for OVA funding the early $1M renovation investment). After the first $100k, 50% of net income would be retained as AGP profit and 50% would be put into a Capital Reserve Fund for possible golf operation improvements.
Steve also announced that there would be a “Service Reduction” during the transition. Escrow should close within a few weeks after loan funding comes through. Loan funding has been delayed by the sale of the company funding the loan, but they hope to get it within the next few weeks.
The service reduction amounts to complete closure of both golf courses from December 16 until they are reopened, hoped for by March, and includes substantial layoffs of OGC and Kemper personnel. While it was not stated in the meeting, there may be limited food service provided by the Quail Inn during this transition. In preparation for the grand re-opening, the Quail Inn will likely receive cosmetic renovation (e.g. painting). The $1M OVA renovation funding is to be spent within about two years, and first priority for that funding will be the Quail Inn.
The west course will be renamed to the Wine Country Golf Club, and the east course will be renamed to the Valley of the Moon Golf Club.
Much more information than was in the slide show was provided in response to member questions. A sampling:
- AGP personnel are here and have begun planning the transition.
- A skeleton crew will ensure maintenance of the golf courses during the transition.
- OVA has hired a transition expert, to manage the many details, such as transferring the liquor license, etc.
- OVA/AGP will strongly consider allowing use of golf course paths for biking, hiking, etc during the transition closure, but such use will likely be “structured” in some fashion.
- Renovations will continue beyond the initial plans, with an expectation of an additional investment of $2.5M within ten years. The amount will be funded from the Capital Improvement Fund, as it receives the $8.50/member/month (total $484k/year) dues contribution from OVA.
- One member pointed out that, with AGP no longer putting up $1M of their own money, they no longer have a big stake in making the operation a success — they could exercise their option to withdraw while losing relatively little. Effectively, the change to OVA providing $1M up front shifts investment risk for that $1M from AGP to OVA; if AGP decides to walk, OVA will have spent the $1M plus $484k/year of our dues, and AGP will have invested $1M less than promised in June. Steve replied that they could do that, but that OVA would still own the land (OVA’s top priority goal).
- The Board considers it very unlikely, but if the judge in the Leznik small claims lawsuit were to make an injunction to prevent the sale or the AGP lease from going forward, then the entire complex plan would fall through, with unknown results. Alternatively, if the judge were to void the August dues increase election, then the Board would struggle to be able to complete the purchase without increasing dues beyond the $90/member/month allowed by law without the vote. The lawsuit was heard on Nov 27, and the judge promised a decision within about ten days, but may take up to 90 days to render his decision, and the decision had not been released by this morning.
The next regular OVA Board meeting is Tuesday, December 17 at 1 pm in Berger.
Addendum: Announced by Eblast at around 3 this afternoon, the OVA website now has an article covering this morning’s meeting. It has some additional information, including the Quail Inn’s days and hours of operation during the reduced services period that begins on December 16.