Editor’s Note: As we were preparing to publish this article the OGC announced that their member vote to approve the $750 per member assessment successfully passed. This vote likely removes the immediate need for OVA financial assistance to OGC. However, it does not change the fact that this was seriously considered, may still be on the table, and raises serious questions of setting a troubling precedent. Critics of this approach say OVA should step back and allow the marketing of the property and assets to play out.
On March 1st OVA Board President Steve Spanier announced that he had resigned his membership in the Oakmont Golf Club (OGC) and said that he no longer had a conflict of interest representing OVA in its dealings with OGC. During the board workshop on March 5, comments and questions were directed to the board by members of the community and Spanier’s statement four days earlier that he will be “all in” on this issue was quickly demonstrated.
He took it upon himself to answer all questions on behalf of OVA as well as OGC, as his fellow board members sat silently with only Director Kendrick making an occasional comment. It became clear that Spanier was well-versed in information – both public and private – about the club, its financials and the details of the sale.
“This board is now working very actively with the OGC board and Marcus & Millichap. In fact, there was a conversation between all three of us this morning.”
“With a golf course that is, you know, making about four million a year and spending a little bit like that, in that neighborhood, too, you are pretty close to breakeven.”
“There is an operating loss the last couple of years for the golf club because of bad conditions.”
“The total profit picture is close to breakeven over the last 25 or so years, losing money more or less regularly.”
“What is also true is that closing one golf course reduces expenses not by half, not even close in fact. Because you still have the same equipment, etc. What we have ascertained in the past is the potential hit to revenue exceeds the savings and so makes it a less profitable thing to consider.”
“What the gentleman from Marcus & Millichap has told us in no uncertain terms is that it lowers significantly the type of buyer and the money offered and the potential control of the land going forward if a buyer can’t be convinced that there is some skin in the game from the community. And so they are looking for something like that potentially to make the sale easier.”
In response to a question about whether only certain OGC buildings or portions of the land could be purchased:
“Well, I think the property is being sold as-is. And I believe that there is a provision in the contract with Marcus & Millichap that forbids breaking up the land, breaking up anything, the land or the facilities, prior to the sale.”
A speaker asked if anyone in the room knew what was the amount of OGC’s negative cash flow and said, “raise your hand.” Spanier and one other person in the back of the room raised their hands. Spanier alone answered:
“It’s a very difficult question to answer. The revenue differs widely year to year. I think in 2015 we had a very good year. 2016 was less good. 2017 was a disaster because of the rains and the fires. 2018 was not bad until November because of the Camp Fire. So the revenue year to year depends very strongly on the weather for one thing. I think that it’s reasonable to characterize the revenue picture, the profit/loss picture as basically a little bit of a loss every year on average.”
Notice the use of the word “we” when referring to OGC. Was this a slip of the tongue or is Spanier negotiating not only on behalf of the 4785 OVA members but also the 260 OGC members? While there is certainly overlap in membership between the two organizations, each has a distinct board of directors to represent and protect their separate interests.
Spanier misunderstood a question from a gentleman with a heavy accent regarding how much each individual assessment would cost homeowners to purchase the OGC golf courses and facilities. His reply addressed the “financial aid” or “bridge financing” to OGC that he had raised in his recent President’s Message.
“First of all, it wouldn’t be five million dollars out of our bank account. You know, it would be something far less than that, assuming the debt. It would be agreeing to make the accounts payable in a more reasonable place, paying off the vendors, etc. So we just don’t know at this point. But nobody should feel like Oakmont is going to be writing a check for five million dollars tomorrow. That would not be necessary in the purchase.”
Asked if “we are going to have a vote by the people?” Spanier replied, “We don’t know the answer to that, either.” At that point Director Kendrick jumped in to specify that “it is very likely that if the purchase option was on the table and we were actively looking at it that it would almost certainly trip the threshold and we would have a community vote. That’s under Davis Stirling, California law.” Such thresholds would be a 20% rise in dues year over year ($15 this year / 20% of $75) or a special assessment of greater than 5% of budget (+/- $200,000).
Another person asked, “How much revenue is due to the special events, the weddings and special events, at the club?” Spanier replied, “I’m not at liberty to talk about specifics of the operation of their business.” It appears that specifics of OGC’s business are not subject to the “honest, open approach of the new, current OGC board” cited by Spanier in which “we are all now free to engage in a factual, community-wide discussion of this issue.”
Referring to the frequent statements by board members that any financial assistance by OVA to OGC must involve something of value in return, someone inquired how a recent proposal to pay off OGCs vendor payables would follow this principle. Spanier replied, “I think it is pretty easy to justify the value of keeping the golf courses alive to the community. Just that as far as I’m concerned is enough to provide money.”
At the outset of the meeting the other board members each said a few words. Director Noel Lyons said he had no “hidden agenda” and that he had “no idea which of (the three options) we should be doing.” Director Al Medeiros said, “I have no idea what the conclusion should be. There is nothing that I’ve prejudged.” Director Marianne Neufeld said, “I have no idea what’s going on. I have not made a decision. I have no hidden agenda here.” Director Heidi Klyn said, “I don’t have any agenda. This all came as a surprise to us.” Director Carolyn Bettencourt said, “I really want to hear what you all have to say. I look forward to us being able to work something out and save the golf courses somehow. Because I think we need to do that.” Let’s not forget that this issue has been on the board’s radar for nearly a year, though it would be hard to tell from these statements.
VP Kendrick spoke slightly longer than his fellow directors and said in part: “The board is not planning to do any action in the short run and any action we might take at some point down the road will be completely examined both by the community and by our legal advisors to make sure that we are not stepping out of bounds in some way. There is nothing on the table and, even if there were, we would ensure to the degree possible that whatever might be contemplated was completely legal.”
OVA members should continue to pay close attention to this issue and hold the board accountable to this statement.