The Country Club’s prospective buyer says he’s willing to continue beyond a May 30 deadline for the deal – provided the union pension fund that’s holding a $3 million debt over the club’s head will cooperate on a settlement.
“I’ve done close to 150 golf courses (transactions), and I’ve never encountered this,” James A. (Bob) Husband said in a phone interview Sunday.
Operating Engineers Local 3 has 35,000 members, and 22 of them handle landscape maintenance at the club. It has a pension fund that’s seriously underfunded – $3 billion underfunded, according to Country Club officials. The club says it has paid the union every dime called for in its contract, but the union can still force the club, at the time of sale, to cover a portion of its pension shortfall. The club’s share: $3 million on a $3 billion shortfall.
“...The Operating Engineers are these guys who operate the big, heavy equipment,” Husband said, “and we’re talking about $15-an-hour (club) employees here ... so that’s a lot different than what I think is typical in the union. ... They’re such a minuscule part of the union that we felt like trying to negotiate with them, that they would come back with something reasonable. And we’re hoping that they will, of course.”
James A. (Bob) Husband talks with club members in February 2016. (File photo)
Husband pointed to the union’s unrealistic projection for 7½ percent annual investment earnings in the pension fund – and if that number isn’t reached, then the fund’s shortfall worsens. “If you own a business, and you’re in one of these multi-employer defined-benefit (pension) programs, and it gets underfunded,” Husband said, “I don’t know how you ever catch up.”
He added, “Who would go into a business situation like that, not knowing what the future liability could be?”
Husband, a Southern Californian, is a golf industry veteran who has built four respected golf ownership companies. He has put together a group of investors, Bellagio Road LLC, to make the club purchase.
The Operating Engineers’ pension trust fund is the original owner of Rancho Murieta. It bought 3,500 acres as a training center in the late 1960s and trained its members by having them put in the community’s infrastructure.
Husband said the North developers, who own the club land, are willing to help him pay off the union obligation and make the deal happen. Husband’s company would loan the $4 million purchase price to the club, and the club would then sell itself to Husband for $1,000.
In addition to the pension problem, Husband pointed to a new issue with lot line documents for the South Course that weren’t properly executed in the 1990s. He said this problem, which blocks him from getting title insurance, should take a couple of weeks to resolve, but he has learned that everything in this deal takes longer than expected. Over the course of the deal, there have been problems that have surfaced, but they’ve always looked addressable, he said, which is why he and the club have worked under a succession of two-week and four-week extensions of the purchase option.
With $300,000 to $400,000 already invested in the project, Husband said all he needs is a “reasonable” settlement number from the Operating Engineers for him to solve this sizable worry.
“I’m not going anywhere, because I’ve got so much invested, and I really do love Rancho Murieta,” he said. “I have grown to love it over the course of the last year and a half. And I would hate to see this (deal) crater because of something extraneous, like the union.”
- Country Club sale faces $3 million obstacle (May 20, 2017)
- Country Club, buyer extend sale talks (May 9, 2017)
- Country Club says sale is done – for $4 million (December 6, 2016)
- Sale of Country Club wins 95% approval (March 29, 2016)
- 500 attend series of meetings on club sale (March 1, 2016)
- Q&A with club’s prospective new owner (Feb. 23, 2016)
- With interested buyer in hand, club talks sale (Feb. 12, 2016)