(Updated July 9 with July 8 town hall)
A firm that operates 12 successful golf clubs has pledged to invest $3.5 million to modernize and upgrade the Oakmont Golf Club and Restaurant if the Oakmont Village Association’s bid to purchase the operation is accepted.
The lease partner, Advance Golf Partners, outlined its ambitious plans for the OGC at two successive town halls July 2 which tested the limits of the newly remodeled East Recreation Center, including its parking lot and surrounding streets. Traffic snarls were the order of the day as cars jammed the parking lot and lined Oakmont Drive for several blocks in either direction.
Chris Hamill and Josh Smith, representing Advance Golf Partners (AGP), said the firm would invest $3.5 million in the golf club over 10 years, including $1 million in the first year. The initial $1 million would include about $800,000 to upgrade the restaurant and catering operation. The East clubhouse would become a “pizza joint” with an award-winning pizza chef. AGP would lease the operation for 30 years and be responsible for operating cost, including taxes, insurance and maintenance. The company will absorb any loses as they “reinvent the (golf assets) to what they can and should be,” according to a letter to members from Larry Galloway, who heads AGP.
Among benefits proposed by the lease partner, all Oakmont residents would receive free what AGP calls a “social membership,” which includes scheduled times for walking on the courses and bird watching tours, free corkage and discounts at the newly renovated Quail Inn and use of the clubhouse for gathering places.
The OVA has submitted a letter of intent to purchase the two golf courses pending membership approval for what board president Steve Spanier called “a very fair price.” Ballots will be mailed July 8 and voting will end after the required 30-day voting period. Ballots will be counted Aug. 8. The asking price from the Oakmont Golf Club is $4.8 million.
The ballot will ask OVA members to authorize a dues increase of up to $23 a month, which would bring the dues from the current $75 to $98, or $196 a month for a two-person household. This would include roughly $6 for OVA operations, roughly $7 for a 15-year golf acquisition loan and roughly $10 to build a golf reserve fund that will help ensure ongoing financial stability. This reserve fund will be capped, so if OVA’s partner turns around the club’s financial situation, this $10 per month dues contribution could be reduced or eliminated in future years. Withdrawals from the fund would require OVA approval.
Spanier said the reserve fund is required by AGP as a hedge against unanticipated expenses, such as wild fires and rainy winters, which could have a significant impact on golf course revenues.
Spanier said the vote represents “the most consequential decision in Oakmont’s 50-year history.”
Both July 2 town halls attracted overflow crowds with many residents who were not allowed into the first session waiting two hours in the sun to keep their place in line for the second session. At least 50 people were also turned away from the second session. The third town hall, dvided between open forum comments and responses by the board to audience questions, drew about 130 people at the Berger Center. Spanier said there he expescted an OGC response to the OVA proposal later in the week.
Tom Kendrick, OVA Vice President, outlined OVA’s options concerning the golf courses in a PowerPoint presentation at the East Rec. He said turning the golf courses into green space, which was carefully examined, or using contract management to continue golf operations both represent high risks, especially the potential for high initial costs and ongoing operational losses.
In contrast, Kendrick, said, under the lease partner arrangement, operations would continue with improvements and most operating costs, including taxes, insurance and maintenance, would be paid by the lease partner. In addition, ongoing OVA costs would be limited and predictable and there would be a potential for income. He said the operation “could be quite profitable in a few years.”
Ken Arimitsu, a broker with 23 years experience in the sale of about 130 golf courses and hired to represent OVA, said “inaction” by OVA could lead to a situation that confronted homes bordering a golf course in Escondido, Calif., which was sold to developers. He said opponents spent “millions” fighting the developer to no avail. He said the developer built 200-plus homes on the property and netted a $50 million profit. Should the golf course fail under OVA ownership, OVA would share in what could be a $50 million profit. “Non action,” he said, “is the worst of all possibilities.”
Challenged by a resident to rate a lease partner arrangement as financially responsible or irresponsible, Elke Strunka, OVA treasurer, said she was involved in “many iterations” of the numbers informing the OVA offer and called it a “financially responsible thing to do at this time,” adding that she is “confident and comfortable” with the leasing solution as the very best option.
In their comments, board members were unanimous and enthusiastic in their support for purchasing the golf courses and having Advance Golf Partners run the operation. Carolyn Bettencourt said “Oakmont could be changed forever” if it loses the golf courses. She said the courses are “at the very core” of Oakmont values and losing them would be “a monumental step backwards.”
Noel Lyons said the basic $23 increase in dues represents “the best future of Oakmont. We can create something better than we’ve ever had before.” Marianne Neufeld said purchase of the golf courses “will enhance my investment in my home.”
Kendrick said his primary focus has been to “manage risk.” He told the residents to “be skeptical. Please vote,” he added. “Vote your conscience.”
The board is creating a vault of additional information online, available when the ballots are mailed.
Watch videos of the meetings at www.oakmontvillage.com/videos.