- Jackie Ryan
With sales and lease agreements signed and ready, delays in financing have pushed escrow on the Oakmont Golf Club into the new year and triggered a reduction in services and staff that will mean closing the courses at least until the sale is final.
“At this point, we anticipated we’d be days away from close of escrow. Unavoidable loan delays have prevented this. We are hoping to close in January or February to complete transition activities, and at long last close escrow,” said Steve Spanier, OVA board president.
Spanier gave a rundown on the status of the golf purchase at a town hall Dec. 10. He told a large Berger Center crowd the OVA Board had met its goals in pursuing the purchase of the Oakmont Golf Club, which went on the market last spring after years of troubled operations. He listed control of the land and subsequent protection of property values as high priorities for buying the courses.
“We’ve achieved that and more,” he said. “Our board was motivated by what is happening in golf communities around the country. Golf course failure has the potential to devastate golf course communities. Fortunately, Oakmont residents voted in overwhelming numbers for a purchase that adds significantly to our dues burden. We believe it was, and is, a good investment,” he said.
The purchase price of the property is $3.6 million, and roughly $17 of the $23 increase in dues in 2020 is earmarked for the purchase and maintenance of the golf asset. Under a signed lease agreement with Advance Golf Partners (AGP), OVA will now spend $1 million to renovate the club and is responsible for insurance costs over $80,000 a year, if any. The change in contract terms does not affect dues.
“AGP backed away from this when the loan terms they could get were unsatisfactory. During the power outages and the fire threats, they also backed away from paying all the insurance costs and wanted a cap,” said Spanier. When negotiations with AGP changed, the board solicited new bidders, and three golf companies submitted proposals. “Ultimately due to the strengths AGP brings to the table, the board chose to remain with AGP as our operating partner,” he said.
Several weeks ago, Ellen Leznik, an OVA member and former board president, filed a lawsuit in small claims court claiming election violations and seeking an injunction to stop the golf course sale from going forward. No ruling has been issued on the case, which was heard Nov. 27 and could take up to 90 days. “The Board and our legal counsel believe the claims have no merit and that an injunction would be extremely unlikely,” Spanier said in response to a member’s questions, noting if successful an injunction could have impact on the process.
The cost of a social golf club membership, originally set at $10, will be $8.50 per person per month paid for in members’ dues. The social membership provides agreed upon benefits from grounds access to enhanced dining and events. Initial negotiations granted AGP the first $200,000 of profit. That amount has been reduced to $100,000 a year. The 20-year lease also has a list of AGP financial commitments, including putting 3% of annual gross revenues into capital improvements and equipment and 50% of annual net income over $100,000 into a reserve fund.
“This agreement incentivizes AGP to excel. This is not business as usual. As a lessee, they get no management fee. For AGP to profit they need to turn the club around,” Spanier said.
The OGC notified its members Dec. 5 that the club would “severely reduce club operations effective Dec. 16.” Staffing will be reduced to “skeleton” levels. Both courses will close and the Quail Inn restaurant will be limited to bar and bar food only service on Thursdays through Mondays from 11 a.m. to 7 p.m.
Calling employees “heroic as they deal with difficult times,” the OCG announcement expressed regret for a decision “that could not be much worse.”
“The current delay in completing the deal is beyond our control and that of OVA — but do know that both parties are trying to get over the final hurdles,” the notice to Golf Club members said.
“This is certainly a tragic end to 2019 for OCG. Our hearts go out to Kemper and OGC employees and their families,” Spanier said. Kemper has been the OGC’s operating company.
After escrow closes, AGP will keep the club closed for about 4 weeks and then host a grand opening. At that time, OVA will also appoint an advisory committee to review financial statements provided by the lease partner. Meanwhile, Spanier said the board will explore allowing members to walk on paths while the course is closed.
To see the town hall presentation, visit https://oakmontvillage.com/article/12-10-2019-special-meeting-agenda/