Golf Course Committee Meeting - Aug 26, 2020
Golf Course Committee Meeting on Wednesday, August 26th, 2020, at 7:30 pm ET to discuss the future of Stoneybrook and its golf course. Learn about the background, proposals, and community efforts. Attendees will be muted, but questions can be posted in the chat or emailed for later discussion. Find more details on the GCC website and Facebook pages.
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Presentation Transcript
Golf Course Committee Meeting Wednesday, August 26th2020 @ 7:30pm ET
Admin All attendees will be on mute to limit interruptions Post any questions in the chat section of the meeting Or email SBmanagement@stoneybrookeast.org Will be answered at the end of the presentation Presentation will be recorded and slides will be available on the GCC website and Facebook pages Full Q&A will be posted for review GCC Webpage Link: http://stoneybrookeast.org/gcc SBE Residents Facebook: https://www.facebook.com/groups/433621000076150/ SBE HOA Facebook: https://www.facebook.com/stoneybrookeastorlando
Why are we here?! Get the community together and discuss the best viable options for Stoneybrook and Stoneybrook golf course to succeed Give a brief overview of the golf course history and what the future holds Stress the importance of taking action by voting! Answer any questions
Background on the golf course SBGC owner is currently $3.5 million in debt Reported losses of $30,000/month; $360,000/year Proposal with Eden (developer) to change the land use and develop 14 acres of land and 250+ apartments on the 9thgreen, driving range, putting green and maintenance shed Deal worth $5 million dollars SBGC owner would pay off outstanding debt Included HOA agreement; $1 million dollars back into the course The county commissioners ended up denying the proposal due to the Stoneybrook residents objection The commissioners told Stoneybrook and the SBGC owner to work out agreement Eden (developer) has appealed the denial of the land use
About the Golf Course Committee (GCC) Buckingham Run The Reserve Glenwood Run Ridgemoor Huntington Run Formed by the Stoneybrook HOA BOD 15 village captains plus a chair and co-chair Wyndham Green Mayfair Run Brixham Run
What has the GCC been doing? Weekly meetings to discuss a wide variety of scenarios Our purpose has been to research and determine the most practical course of action by the Stoneybrook community regarding the golf course. Keep a pulse on the SBGC owner, maintain necessary dialogue and keep track of the appeals hearing and process Getting Stoneybrook community involved and show importance of participation by voting
GCCs Three Options 1. Proposed Subsidy Option 2. Purchase Option 3. Do-nothing Option
We need votes!! Will require 66.7% (905 of 1357 homes) to vote for a single option
Proposed Subsidy Option The SBGC owner indicated to $25-$30/month/household At $25/month/household; Total: $407,100/year GCC would propose $18.50/month/household to help SBGC At $18.50/month/household; Total: $301,254/year Money would be placed in an escrow account and managed to only be used for Stoneybrook golf course Would propose to the SBGC owner a 5-10 year contract where no development could take place for the length of the contract Would require the SBGC owner to come up with a plan to improve the golf course GCC made an unofficial proposal to the SBGC owner, which he has not responded to For any deal to be executed a binding legal document will need to be approved by Stoneybrook and SBGC owner.
Proposed Subsidy Option Pros and Cons Pros A minimal contribution to help maintain the golf course without ANY responsibility of owning the course. Possibly get a small return on investment with discounts for dining and golf. Contributions to help the course may not be required after the 5-10 year contract expires. Shows the County Commissioners we are willing to negotiate with the SBGC owner and shows action to keep them on our side. Cons Could only be a stop gap to eventual development once the contract expires. Having to manage the SBGC owner, verifying he continues to improve the golf course. Possible litigation if SBGC owner reneges on the deal. Residents contribute and the golf course still does not improve. Without access to financials SBGC owner could manipulate accounting numbers.
Purchase option Determining Value What is the golf course worth? Negative cash flow: Multiplier of 1-1.5 times the Gross Revenue Assume $1 million Gross Revenue x 1.5 = $1.5 million dollars (Let s say $2 million to be overly cautious) What is the value of the land? The Eden deal was for around 14 acres of land for $5 million Possible developable holes just off of Alafaya (3,8,9,10,11,18) Can assume with the land re-zoned and sold could be worth $20+ million Rumored SBGC owner would accept $6 million as a sales price
Purchase option What do we offer? Things to consider before making an offer Submit a good faith offer for fair market value of the golf course but would likely get turned down? Submit a competitive offer that the SBGC owner could possibly accept? Fair market value offer $2 million SBGC owner more than likely would turn down Would show good faith effort to County Commissioners that Stoneybrook was willing to make a deal Competitive offer $3.5 million Obviously above market value SBGC owner would be square and we still look good in the eyes of the County Commissioners Would he accept if the appeals process is unsuccessful?
Purchase option Offer for $3.5 million A bank will not lend $3.5 million on an overvalued underperforming asset losing $30k/month? The bank would use the HOA assessments as collateral and not the course Would be able to provide 100% financing Pre-requisites for financing Bank will not just give HOA $3.5 million HOA would be required to partner with a golf course operator and draw up a contract Complete reserve study deferred maintenance (sprinkler repair, fix greens, fix sand traps, pond remediation, cart paths, etc.) To satisfy the reserve study would require us to loan an additional $1 million
Purchase option Running the numbers Loan Details Purchase: $3,500,000 Reserve Account: $1,000,000 Total Amount Financed: $4,500,000 $4,500,000 @ 6% rate for 5 year ARM, amortized over 25 years is $28,994/month $28,994 / 1357 (number of homes in Stoneybrook) = $22/month/household $22 (mortgage) + $8 (unknowns) = $22-$30*/month/household Assumes operating expenses are equal to income revenue * These numbers are our best guess based on the data provided to us and should not be considered final
Purchase option Final Thoughts Billy Casper estimated it would take 2-3 years before profitable 2 summer seasons for the course to recover 1 year after that for word of mouth in community to grow If the golf course starts turning a profit this could bring down the monthly costs or put towards mortgage (many options here) Consider the monthly cost as insurance against the potential loss of property value $350k avg. home price x potential 5% property value loss = $17,500 (Example) $30 x 12 x 25 years = $9,000; Would take almost 50 years to cost more than a 5% drop in property value Once we own the course we can do ANYTHING we want Run it as a golf course Develop if needed Setup some green space (dog park)
Purchase Option Pros and Cons Pros The residents control the narrative; We control how to best utilize the land and golf course Would eliminate the constant battle of development which threatens our property values and quality of life Improve the golf course and community morale towards the course Have the potential to make a profit and lower the cost of ownership Taking action and showing willingness to make a deal in the eyes of the County Commissioners Cons The residents take on FULL responsibility of managing the golf course and maintenance of the land Opens up the community to more risk of liability Higher price to own the land than to subsidize Will require more time, effort, money and human resources to manage the land, the golf course operator and financial accounting Could potentially never become profitable and could require additional dues to cover the loss; more variable cost
The Do-nothing Option This is kind of what we are currently doing now with the SBGC owner. The do-nothing option is just that. Not providing any financial assistance [subsidy or purchase] to the SBGC owner and accepting what ever happens, happens to the course. Attempts to negotiate with the SBGC owner can still continue. Making a non-financial decision could have a negative impact on our relationship with the County Commissioners.
The Do-nothing Option Scenarios Change in land use is denied (owner loses again) SBGC owner can still request land use changes on other parts of the golf course Will be starting from square one again After not coming to an agreement with the SBGC owner, County Commissioners may allow development more easily SBGC owner could just let the course go and wait us out SBGC owner could declare bankruptcy which could allow us to pick up course at a discount Would be fighting outside investors (basically developers) Still have right of first refusal but price could increase Change in land use is approved (owner wins appeal) Apartment development of the 9th hole green is imminent and future development remains a possibility SBGC owner indicated golf course will remain in operation With precedence set for development, could be easier to approve future development projects
The Do-nothing Option Pros and Cons Pros No need for oversight of accounting responsibilities Letting the golf course owner fall in to bankruptcy could lead to a better negotiation position Cons Possible partial or total loss of the golf course Letting the golf course owner go into bankruptcy could allow other investors opportunity to purchase and develop No determination on land use and development Setting a precedent of inaction which will be perceived poorly from the County Commissioners Risk of declining property values due to possible development Run the risk of maintaining inherited undevelopable land within Stoneybrook
Voting and the future How to e-Vote? The voting ballot still needs to be designed but will include some form of the options presented Look for a ballot in October Goal is to have a decision before the appeals hearing Dedicate 15 minutes, read the ballot and take action by voting
Closing THANK YOU!! You made it through without leaving the meeting What can you do next? Talk to your neighbors Attend the County Commissioners meeting Vote! (Have I said this enough already?!?)
