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Country Club meeting

The Country Club's Murieta Room was full – more than full – for Thursday night's meeting. (Click photos for larger images.)

At a raucous, standing-room-only meeting Thursday night, the Country Club board argued why filing for Chapter 11 bankruptcy is the best course available to the club. Members asked questions and offered challenges to the board, and the landlord called for investors to join her in saving the club.

The session, which lasted more than two hours, was rowdy at times. Sixty seconds after it began, as Vince Lepera, the board president, was doing an introduction, a man yelled out that it was supposed to be a town hall, prompting boos that drowned out his complaint. Maybe his anger was motivated by the story going around beforehand that only written questions would be answered, and no questions would be taken from the floor.

That wasn’t the case. The audience, which numbered 200 to 300, had the floor for 90 minutes. People filled the seats and lined the back wall of the Murieta Room and spilled over into the Terrace Lounge.

Among the speakers was Carol Anderson Ward, the club’s landlord, who said she is “trying to build a strong, healthy community” with her investments – the Equestrian Center, the new hotel, the shopping center and the Retreats development.

She said a Chapter 11 filing would be “the worst thing for our community and its property values,” which drew strong applause.

Carol Anderson Ward

Carol Anderson Ward asked for people with great ideas and $500,000 to invest. (Click photos for larger images.)

Lepera had just said the club’s landlord is still interested in selling the land and that prospective buyer James A. (Bob) Husband, who backed out of the deal in July, is still interested in buying.

“Some of the things that are being said and represented right now are hurting me very badly,” Ward said. “To say that Bob Husband is going to step back in here and buy the club is a complete lie. I don’t think he ever had the money, first of all. I think the Pension Trust Fund (problem) was the last straw (on) the camel’s back.”

When Lepera challenged her for the answer to the club's problems, she said the club needs people running it who have great ideas. “I’m sorry, Vince,” she said. “I don’t believe that you have our best interests in mind. I’m sorry. You’ve failed.”

Ward said as landlord, she had offered to do remodeling of the club, but the club told her no, fearing the rent would go up. She said it was never the property owners’ goal to sell the club.

She said she thought there were five people in the audience who would be willing to invest $500,000 and become owners of the club and help fix it up.

For club members who “love what we have here,” she said, “Call me. ... We will find some way to make this work without filing bankruptcy and causing damage to all of our properties.”

Vince Lepera

Vince Lepera, club president, handled much of the club's presentation. (Click photos for larger images.)

In a 45-minute presentation at the start of the meeting, the club offered details, numbers and pie charts. On the way in, members got a packet with seven pages of frequently asked questions and answers. On the way out, the board promised to provide answers on the club’s website to all written questions submitted at the meeting.

Director Jeff Frost, who, like Lepera, is up for re-election, spoke about how the board has come to see Chapter 11 as the best available option – the only way the club can get out from under a multimillion-dollar pension shortfall, which is the only way the club can be sold, which is the only way there will be an infusion of capital. 

“The board is nearly unanimous in approaching Chapter 11 as our primary option,” Frost said. He added, “The reality is that going into Chapter 11 bears some risk. The question is: Is it more or less risky than doing what we’re doing now? That’s the question for you guys when you vote.”

This fall’s club election is a referendum on the possibility of Chapter 11. Three candidates, Bill Armstrong, Lepera and Frost, argue that Chapter 11 is the best possible choice at this hour, while eight other candidates oppose Chapter 11. There are six seats open on the nine-person board – three in an election that closes Oct. 12 and three in an election that closes Oct. 31.

Longtime member Ted Hart, who’s working with the slate of eight candidates, challenged the board with the first audience question, asking if the board hasn’t already voted to file Chapter 11.

Yes, it has, Frost replied, but he said there was no timing set for a possible filing. He added, “Let’s be honest: There’s an election; things could change.”

Hart continued, saying the board voted in executive session in July to take the step, while Lepera told members at the August board meeting that the club was only considering the action.

Hart drew applause when he challenged Lepera, “Were you telling the truth at this point? I mean, you can’t have it both ways. If you’d already voted to file for a Chapter 11, then it comes back to the question – you’re telling the membership, ‘We’re just contemplating this.’ It doesn’t work both ways.”

Lepera at first denied the closed-session vote was in July, but the date was confirmed by Director Chris Pasek, the board secretary.

Hart made available a copy of the minutes from the board’s July executive session, which say: “MOTION – Jeff Frost moved that RMCC file for Chapter 11 Bankruptcy after we meet with the developers and the bankruptcy attorney which would happen within the next week. It was seconded by Clint Souza. The vote was 6 yes to 1 no (Ray Bray). Buzz [Breedlove] asked if the petition to file bankruptcy could be withdrawn before the plan is submitted. The answer was probably and was added to the motion. All agreed. ... Vince was authorized to make the filing determination.”

Virgil Flores Sr. argued that a bankruptcy would drop Murieta property values by 10 or 20 percent. He suggested that the club simply give the club’s keys back to the landlord and let the landlord handle the problem of the unfunded pension liability. “We can say to those who own the land, it’s not our problem, sir, ma’am; it’s your problem,” he said.

Speakers suggested legal strategies, a new dues structure, negotiating strategies with the union and financial approaches for the club. They challenged the way the club has handled things like the previous assessment, which was allowed to expire. They said the club needs a new board to try new approaches.

Two club attorneys were on hand, and they answered questions about Chapter 11 and the club’s negotiations with the union.

Echoing one of the lawyers' comments, Al Dolata backed the board's approach, saying, “The plan here is to seek the court’s protection from the union. It’s that simple. And the court can give it. ... There is precedent that permits the court to help this club escape the crippling liability of that mismanaged union pension plan. That’s the course we must take.”

Some gloomy facts shared by the board:

  • Club membership is declining 8 percent a year.
  • Fifty-seven percent of the community has no role in the club.
  • The average age of club members is 63. (Lepera: “We’re not attracting very many younger members because we don’t have the amenities.”)
  • The club can’t weather a major financial problem. (Frost: “The coup de grâce for us as a club is when we have to replace this roof. Because we don’t have a reserve to do it.”)

Every year is a budget struggle for the club, the financials shared at the meeting showed; there is no money for major improvements. Lepera said based on Husband’s calculations, the club will require $7 million in investments in the next five years to fund maintenance and product improvements, like a swimming pool and fitness center. 

“If you want to do the things we’ve talked about, if you want to get $7 million into this club in the next five years, you sell the club,” Lepera said. “If you don’t want to do that, then this board, we need to reach out to the RMA and somehow get them involved....”

At another point in the meeting, he said, “I remember when RMA did the community center vote. How bad was that defeated?”

As for the members' monthly bill, the directors made two points: A three-year assessment of $40 a month is on the club ballot, even though it won’t be quite enough to address the projected financial shortfall. And members are asked to pre-pay dues this fall. They’ll get a discount and the club will get cash that will carry it through the slow winter months.

In the closing moments of the meeting, in response to a member suggestion, Lepera endorsed the idea of a member vote on whether to file for bankruptcy. He confirmed his support in a brief interview after the meeting.

In an email Friday morning, Lepera clarified that his support would happen if he was elected to another term in this fall’s club election. Such a vote would require board approval, he wrote, and his term will be up before the board could vote. He pointed out that Frost, who’s also seeking re-election, told the audience there would be no action taken on bankruptcy before January, after members have had a say in the club election.


Mike Simas's picture
Joined: 03/21/2008
Posts: 46
Post rating: 46

I and many of my friends who

I and many of my friends who are Social Members of RMCC, received a voter packet. Some of them have marked the ballot and mailed it in. It was my understanding that to vote for the CC board you had to be a full golfing member. Is this correct? If so, what now happens to the votes cast by social members

Mike Simas

Jerry Pasek's picture
Joined: 12/13/2007
Posts: 121
Post rating: 173

RMCC vote packet

The  RMCC by laws provide for a full vote for golf members and a quarter vote for Social/Sport Social Members. Hence ALL members should vote  and return the ballot with a signed envelope. The color indicates to the club which box the ballot in the envelope belongs once membership is validated. 

Jerry Pasek

Greg Cannon's picture
Joined: 09/07/2016
Posts: 15
Post rating: 17

Omitted "gloomy fact"

The article left out the worst "gloomy fact": The club must notify the union, by October 31st, whether we will be terminating our relationship. That's not much time to come to a consensus, particularly given the divisions and anger I saw at the meeting. My guess is that we will not do anything prior to the deadline, and that will leave us in the position of negotiating with the union from a position of weakness. The club will be unmarketable, and we will continue our financial death spiral unless we can figure out a way to bump up revenue and cut costs.

If we're not going to file bankruptcy, we have to start by putting the past behind and start moving forward with unity and purpose. Talking about forcing people who live here to contribute is silly and counterproductive. There is no way to force anyone to contribute, and talking about it just alienates the locals who may otherwise have been motivated to do something. We can't force people to be members. We have to make them want to be members. Right now, it's hard for me to imagine anyone wanting to be a member of such a fractured and angry group.

As I've written before, we need to start using our assets immediately, including food service and the golf courses. Ventana Canyon, just outside Tucson, has two lovely courses just like us. They reserve one of the courses for the members every day and the other is open to resort play. We could do something similar. We can't afford a pool or fitness center at the moment, but we can come up with a way to let non-member locals play once or twice a month and we can let them use the dining facilities. The idea would be to increase traffic and make our neighbors feel welcome and wanted.

No matter what we end up doing, we have to stop the circular firing squad. It's just a recipe for failure.

RM.com's picture
Joined: 06/19/2007
Posts: 26805
Post rating: 1317

Thanks for adding that

Thanks for posting, Greg. The Oct. 31 deadline, a point made by Vince Lepera, should have been mentioned in the story. 

Norm Spaulding's picture
Joined: 11/03/2013
Posts: 16
Post rating: 0

Saving RMCC

It seems that an obvious solution to our income shortfall is to have more income.  This could be accomplished by allowing non-resident's limited use of the golf, dining, tennis, etc facilities after paying an access/useage fee. 

Norm

John Hein's picture
Joined: 08/07/2007
Posts: 280
Post rating: 341

Non Member use

Short sighted folks always come up with the why not let non members use the facilities? Answer, if non members can use the faciility how many members would quit? A couple hundred? Likely.

One answer should be a small fee limited social membership to allow for a lower form of membership at said fee. No initiation and perhaps $20.00 a month. This would only include dining and beverage priviliges. Many folks don't want what comes with the $85 per month membership but would like to use 19th and Parasol Room. I would support that type of plan with zero initiation fee.

To respond to Sid Williams post I would like to say that only one of the candidates has ever been on the board and the rest have never even served on a commitee to the best of my knowledge. I am skeptical that those with no CC experience can solve all of our woes.

John Hein

Bunky Svendsen's picture
Joined: 08/07/2007
Posts: 101
Post rating: 119

No thanks

John....so you want to charge non-members $20 per month for the "privilege" of dining at the country club? Talk about short sighted, and so generous of you to waive the initiation fee. Thanks...but perhaps not.

John Friedrich's picture
Joined: 07/31/2007
Posts: 10
Post rating: 22

Short sighted vs. big picture

Bunky,  

      I don't think you and other non members see the bigger picture.  If the country club files bankruptcy because it cannot entice enough community members to join at the minimal level, home values are sure to drop significantly.  Do the math.   If values drop 8% (and that's an optimists view) a $400,000 home just lost $32,000!  Do you still think it short sighted to invest that $20 to protect that?  Granted the Club has to offer more than just the privilege of being able to eat dinner.  I'm hopeful the new board can generate some ideas that make people 'want' to be members, not 'have' to be members.  But the bottom line is:  if you think you are saving a few bucks staying on the sidelines, in reality you may be costing yourself a whole lot more.  There are no simple fixes to the Clubs problems, but the solutions are going to involve the entire community, not just a new board or owner.

John Friedrich

John Hein's picture
Joined: 08/07/2007
Posts: 280
Post rating: 341

Home value

John, you have it absolutely correct. However your 8 percent number is far too low. A more realistic number is perhaps as much as 20 percent of home value. Anyone out there who believes the CC has no effect on their home values is not thinking clearly for lack of a better term.

I for one do not want to lose over a $100,000 of my home value much less perhaps not even being able to sell it. For gosh sakes, the developer is having trouble selling homes now and has put more construction on hold. That's a tip, in my mind.

And BTW Bunky, I said some in the community my be interested in that type of membership, not all. Certainly not every non-member would be willing to spend $10 or $20 and you seem to be one of them. That's fine!

John Hein

Jerry Nobis's picture
Joined: 10/03/2017
Posts: 1
Post rating: 3

Home Values

John

You hit the nail on the head.  Suppose the South or even the North course(s) do end up shutting down.  One only need to drive by the old Sunol Golf Course near Fremont to see what a closed golf course looks like.  Overgrown and brown is not pretty and that could be what you see when you drive into Rancho Murieta and in some home owner's backyards.  Home values for ALL will definitely decline if the Country Club ceases to exist.  The entire commnity should have a vested interest in keeping the Country Club alive.

Greg Cannon's picture
Joined: 09/07/2016
Posts: 15
Post rating: 17

Stop worrying about a bankruptcy filing in January

Seems to me that some still are missing the big picture with regard to whether we file for Chapter 11 protection. The CC president just sent out an email blast indicating that they weren't going to file until January. The die actually will be cast at the end of this month. If we don't commit to another five years with the union, we will be $3.4 million in the hole and there will be no choice but to file for Chapter 11 protection or Chapter 7 dissolution.

The question thus is what will the board do with regard to the OE3 deadline, and that is where the arguments should focus. The board does not have to wait until January. They can force the hand simply by notifying OE3 that we're not going to renew and that will completely moot the argument over whether we file for Chapter 11 protection this coming January.

There really are only a couple of ways forward. We can be proactive and file for Chapter 11 protection and hope that it all works out for the best. Worst case scenario would be a conversion to Chapter 7 and the end of the club as we know it. The best case scenario would involve a white knight stepping in and doing a deal similar to what was contemplated with Bob Husband. This clearly would require not renewing with OE3, and that means we really don't have time to get it done. The middle of these two paths is to renew with OE3 and hang on, hoping for a miracle.

For those of you who worry about the courses going feral, I would counsel you not to worry. Someone is going to come in to pick up the pieces once the CC folds, and it's probably going to be the landlord. If I was a potential buyer, I would see the financial failure of the club as inevitable and wait patiently on the sidelines for the CC to discharge OE3 in Chapter 7 before trying to scoop up the lease from the landlords.

If I was the landlord, on the other hand, I would argue against seeking bankruptcy protection and wait for the club to suffer a slow financial death and, eventually, default on the lease before we file for Chapter 11 protection.

Someone is going to profit from the demise of the club. We need to stop arguing about filing for Chapter 11 protection and start thinking about who we would want to take over when the club goes under. As near as I can tell, the only significant "assets" owned by the club are the lease and the members. Whoever acquires the lease will need to cut some sort of deal with the existing members in order to have a sustaining cash flow for the transition, so we should be thinking about who will give us the best deal and start working to get that person or entity in line to acquire the lease.

 

 

Jackie Flannigan's picture
Joined: 06/27/2014
Posts: 4
Post rating: 6

The Country Club

So, after being a full golf member for over 30 years, I will be resigning from the country club on November 1.  I am now 70 years old, and I only wish to play golf once a week.  I am out of the country for 6 months a year, so I pjay 24 times per year and that works out to about $250 per round.  I have been doing this since I retired 18 years ago. Years ago I asked the BODs if there was a way to put my membership in sleep mode and was told "no".  Have known several people who have had serious medical conditons that kept them from playing, and they were told the same thing, so they quit the club.  I suggest that you reach out to all members that have quit in the last 5 years or so, and ask them why they quit and what it would take to get them back to some level of membership.  Would I stay a social member if I could play (and pay) say once a week for the 6 months per year I am here?  Yes.  Even in that senario my cost per round would be roughly $140 per round. Still on the high side, but doable. How many people are out there that would either rejoin or join for the first time with that option?  Also, I am a one-golfer-family, and I pay the same amount as the family with 6 golfers. I know this is a dead horse, but maybe it's time to address it.  I think both courses should open to the public.ASAP. Have blocks of time on both courses.  Advertise a deal where for a reasonable cost, people could bring a foursome out including dinner, and have an offer to join the country club at an enticing price on every table, including the bar.  Allow members to bring X number of friends out per year as a free quest, not just the occasional offer .Get the professional staff to come out to the driving range and offer tips if anyone wants one.I can count on 1 hand how may times I have seen that in 30 years, and every time it has been Don. By they way, the staff in our shop are the best.  Not just my opionion. Another  thing.  What makes everyone so sure that doing a chapter 11 or 7 gets us off the hook for OE3?  That's pension money and I don't think we can just blow that off with a BK.  I could keep on writing, but I'm cramping up.  I will say that I honor those who serve on all our boards and committees.  

 

John Hein's picture
Joined: 08/07/2007
Posts: 280
Post rating: 341

How many members would resign

How many members would resign if public play was allowed? I'm guessing around 500. There would be NO reason to be a member if you could play without a membership. On the other hand seasonal and individual memberships need to at least be discussed.

John Hein

Jackie Flannigan's picture
Joined: 06/27/2014
Posts: 4
Post rating: 6

non member play

John,  In the past we have allowed play to the public on a LIMITED basis in order to raise money.  We went back to private after hitting our target.  Back then we didn' lose 500 members, closer to zero.

Frank Pumilia's picture
Joined: 08/08/2007
Posts: 126
Post rating: 178

Non Member Play/Dining

Jackie

I don't recall you ever attending a Finance Committee meeting to see as Paul Harvey would say "The Real Story"

I have been on the Finance Committee for a long time through out numerous Boards...Increaseing income has always been a top priority of all past Boards and the Finance Committee for as long as I can remember. Many "non member outside play/dining" programs have been planned,  introduced and instituted over these years....

The net result has never shown these to be the income producers expected.  One example vivid in my mind, was years ago we had an open "Pasta Buffet".. all you could eat for about $7.00...it was very busy and also.. lost a lot of money as many people filled "take home boxes" as they left....along with the mess on the tables, carpet and the room in general. They had no vested interest in the club and were not responsible for the costs  of the program and it was discontinued..

As far as outside play programs, RMCC advertised in the BEE and many golf websites, we were never able to generate enough play to make a signifant contribution to the income line.   We still allow outside play to other CC  members in the area.

If the club became open to the public...most members would quit as most (such as 84 year old me)  have a similar  cost factor per event used as you do ...it would be much less expensive to only pay for what you consume.

In my opinion the fact that we went to "Private" back when we were full at over 1100 golf members did not see the demografic changes coming....before then as you well remember all lot owners were at least social members. 

Carole Kramer's picture
Joined: 06/16/2015
Posts: 4
Post rating: 2

Letter to the Editor

Section 6.03 of the by laws of Rancho Murieta Country Club clearly states that a Director "will be ineligible to seek re-election to the Board for a period of one year" once they have served two terms.

Vince Lepera has served those two terms, plus 9 months, because the Board did not hold an election last year because of the potential sale of the club.  He is not eligible to run in this election, despite the Executive Committee's declaration to the contrary.  He ceased to be a Director on October 12, 2017. No break in office. He has been almost continuously influential in the running of the Club since 2005.  And, the Club is now considering bankruptcy.

I, for one, will not be silent on this issue.  Should he, somehow, get enough votes in the second election - separated from the first to get him on the ballot - I will seek legal action to honor our by laws.

Herman Kramer

Jackie Flannigan's picture
Joined: 06/27/2014
Posts: 4
Post rating: 6

Jusr suggestions

Frank,  I'm just throwing out my ideas to raise money.  What are your suggestions?

Frank Pumilia's picture
Joined: 08/08/2007
Posts: 126
Post rating: 178

Suggestions

Jackie..

The only suggestion I can come up with, that in my opinion will address the RMCC revenue problem, are more members, and that means getting the non members involved in some form of membership,   

I am hoping the new board will be able to come up with ideas to interest the RMA communitee to realize that it would be in their long term interest that the club does not fail.....some support to protect home values is low cost insurance. Without new member support the finiancial outlook is dim...

 

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