An issue with the pension fund for 22 club employees kept the Country Club sale from happening.
After a hopeful beginning 17 months ago, both sides announced Friday that a deal to sell Rancho Murieta Country Club to a Southern California golf exec is now off the table. Still, they made it sound like the deal is not necessarily dead.
Vince Lepera, the club's president, praised the potential buyer, James A. (Bob) Husband, in a conference call announcing that the deal escrow was being terminated. Husband, in an email, had nothing but praise for Lepera and the club's board. Each made it sound like the deal would have happened but for one issue.
“It’s very frustrating that this whole problem stems from us being a union facility, bottom line,” said Lepera. Several times in the half-hour conversation, he returned to the need to address the club’s union situation.
The Pension Trust Fund of Operating Engineers Local 3 wanted to charge the Country Club about $3.4 million on the $4 million sale as the club’s share of the union’s pension shortfall, which runs into the billions of dollars, Lepera said.
“It was a hurdle that we could not jump over,” he said.
Lepera said Husband offered the union $800,000 to settle the shortfall, and the union responded by asking for $1.8 million – with the requirement that the club continue as a union shop, subject to potential pension shortfalls in the future.
Lepera said this would put the club in the position of being responsible for the union’s financial mistakes forever. “No one in their right mind is going to step in and acquire this club under that scenario,” he said.
Lepera said the club is not able to handle the union’s liabilities, or even the annual pension fees for union members.
“This union situation must be dealt with,” he said. “Now it’s in the open. We understand where they’re coming from; they understand where we’re coming from. We need to meet it head-on and deal with it.”
Asked if he was talking about an exit from the union, Lepera said, “I think all options at this point have to be on the table, but I’m not saying that. We have a contract through the end of December. We plan on honoring that contract. At that time, I believe that we need to sit down with them and iron out something that’s beneficial, not only for the employees of the club.”
The union represents 22 grounds-maintenance employees at the club and 35,000 heavy equipment operators around the West and Hawaii.
“We didn’t have a problem with the employees,” Lepera emphasized. “People are always saying ‘the damn union.’ That’s not the problem. ... The problem is that liability....”
Lepera said in the past the club negotiated with local union officials to cover the pension shortfall and began paying about $50,000 a year to cover it. The union contract calls the $50,000 the “rehabilitation payment,” said Bill Armstrong, club general manager, adding that it “catches you up to where you’re supposed to be on funding the pension plan. We have done that. We have not missed a payment.”
Asked if the club and Husband were parting on good terms, Lepera said, “I’m not even 100 percent sure we’ve parted ways, so to speak. I think we have to look at this from a different perspective, and that’s one of the things we’re going to be doing. We are definitely on good terms. Bob put every effort into this that he could have. Just last night, he was still trying to come up with different ways of making this happen.”
Husband had agreed to buy the club for $4 million from Murieta Club Properties, one of the companies of the current North developers. The developers own the club’s land, but not the club itself.
“Bob was more than patient,” Lepera said. “Bob put up in the neighborhood of $300,000 to $400,000 (in purchase costs). ... I’m beyond frustrated. I feel bad for him. I feel extremely bad for the club and community. But I’m just so frustrated that the union, after all these years, really would not come back and negotiate or really put a deal on the table that was beneficial for everyone.”
Lepera said the club was approached by another potential buyer while it was under the sale agreement with Husband, so the club couldn’t interact with the potential buyer.
“If we’re able to tackle the union issue," Lepera said, "I believe that we would owe (a deal) to Bob first, to say, ‘Do you want this now? Because we’ve taken care of what needed to be taken care of.’”
In his email, Husband cited the pension issue as a problem and said he had just learned of a delay in plans to develop 60 homes on the North Course – presumably more of the Retreats development.
He said he has come to love Rancho Murieta in the last 18 months. "I remain very interested in the purchase of the club and have spent a substantial amount of money throughout this process working in good faith to complete the purchase," he wrote. "I have nothing but respect and praise from my dealings with the board of directors and Vince Lepera, the club president."
Husband met club members in a series of meetings in early 2016. He and his ideas for club improvements made a positive impression, so much so that members approved the sale by a vote of 422-17.
The Pension Trust Fund and the union have been part of Rancho Murieta from the beginning. The PTF purchased 3,500 acres of ranch land in the 1960s and Local 3 used the land as a training ground for its equipment operators, who built the community's infrastructure and golf courses and created Rancho Murieta. The union's office and trainee dormitories are still in use on Cantova Way even though the union has moved its training site to land in Sloughhouse.
The club operates under a 55-year lease that expires in 2028. The present North developers purchased the club land, but not the club, in 2013, when they bought out the PTF's Rancho Murieta holdings. That makes the developers the club’s landlord but not its owner.
Lepera said he will meet with the club’s board next week and schedule a member “town hall” meeting along with a board election, which has been on hold for a year.
In his closing thoughts, Lepera offered a positive view: "People might laugh at this, but I really think now that the club's future path is a lot more clear. ... I think now we know all the hurdles that are in front of us. We know the amount of money we need. We know what it's going to take to put in the swimming pool, do the facilities. We know the temperament of the community. We know what's going on with the development. So, to me, everything's in front of us now. And we know exactly how to get there. And even dealing with the union thing, we know how to deal with that now."
Asked whether he thought the path to a sale is closed, Lepera said, "I don't believe it is. ... In my head, I know that it's not over. I'm telling you, this is going to happen."
- Country Club sale is threatened by union fee (July 1, 2017)
- 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)