Grand Elk HOA tees up to buy golf course
May 9, 2013
GRANBY—A majority of Grand Elk homeowners are in favor of purchasing the Grand Elk Golf Course from High Golf LLC.
During an April 27 Grand Elk Homeowners Association special meeting on the issue at the SilverCreek Convention Center in Granby, as many as 537 members voted to adopt an amendment allowing for purchase of the golf course, with 34 members against the proposed action.
Those homeowners supporting the purchase of the privately owned golf course (including the clubhouse, maintenance barn and related facilities) are hoping that owning the golf course would stabilize it, ensuring it will be open at the start of each golf season while protecting its future prospects.
High Golf LLC is the corporation of Pam Lacy, the widow of Howard Lacy who bought the course in 2003. In 2008, High Golf LLC also bought the buildings associated with the course, spending $4.5 million in hopes of stabilizing and refinancing bank loans, but these actions were ultimately unsuccessful.
At the time of the recession, as many as 400 of the 680 lots within the Grand Elk development suffered foreclosure. The Lacy family took over management of the golf course in 2010 after the death of Howard Lacy. The Lacy family has personally subsidized the golf course for the past two years, losing to the tune of $13 million since the family first invested in it, according to Pam Lacy.
HOA reviews terms of sale
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"We're thrilled that the HOA is going to take over the golf course and make it a huge success," Lacy said.
Terms for sale of the regulation 18-hole Championship Craig Stadler Signature course designed by world-renowned architect Tripp Davis include the payment of back taxes ($420,000) and a purchase price of $1.05 million.
Assets of the golf course in the proposed sale include all golf course real estate, including the clubhouse, pool, hot tub and cart barn, as well as the land associated with them. Water rights for the golf course and all associated equipment, leases, water and sewer taps are also included in the deal. Grand Elk Homeowners Association President Tom Fry said details surrounding the purchase of water rights could end up being a deal-breaker. Due diligence in the coming months would yield definitive answers, he said.
Grand Elk is one of two golf courses in the county not subsidized by property taxes under municipal recreation districts. The other is Headwaters Golf Course built as an amenity to Granby Ranch's residential development and not operated to its full potential as a for-profit course, and recently leased to a tax-exempt district.
The Grand Elk Golf Club fell under investor ownership after recession-induced financial hardships resulted in below optimal real-estate sales and membership numbers.
Rendezvous developer eyes Grand Elk lots
The HOA amendment also allows for a possible contract with Koelbel and Company of Denver, the developer who owns Rendezvous subdivision in Fraser and has shown interest in purchasing and developing remaining unsold lots in the subdivision. "We've been searching for three years to find an excellent developer like Koelbel with a long history in Grand County," Lacy said.
Besides the adoption of a resolution approved by the board and two-thirds of the owners allowing for the purchase of the golf course, modification to the dues structure was included to allow for a contract with Koelbel and Company, which currently owns 32 lots and has shown interest in purchasing the remaining 301 lots under foreclosure, bringing Koelbel's total ownership to 49 percent of the lots in Grand Elk and allowing for two seats on the Grand Elk HOA advisory board.
A discussion period preceding the vote brought up concerns over the proposed deal from Koelbel and Company that included exemptions from the design review board and a change in the monthly dues structure from $60 per month to a three-tiered structure: Single-lot/home owners would pay $220 per month with no cap on future assessments; multiple lot owners would pay $220 per month on the first lot or home and $60 per month on additional properties with no cap; and Koelbel and Company would pay $12.50 per lots capped (not subject to future assessments).
HOA: 'A tough pill to swallow'
Opponents of the Koelbel deal pointed out the proposed dues structure would result in 30 percent of the lots paying 80 percent of the expenses. Potential golf course losses would only increase the monthly dues until the developer is able to sell lots to full-paying members.
An owner in the Riverside Cabins of Grand Elk, Steven Sery, said that he is researching whether the three-tiered dues structure is even legal under the Colorado Common Interest Ownership Act. He thinks it violates the act because the developer receives "preferential assessment," which is specifically prohibited.
There are also fears that homes built without design board review would result in lower-quality construction and selling prices far below the price of Grand Elk homes already on the real-estate market. HOA members also cited a lack of hard facts on which to base their decisions and a need for appraisals of the golf courses value from professionals that do not have a stake in the deal.
"It all boils down to him trusting us and us trusting him," said Tom Fry, the Grand Elk Homeowners Association President who owns six lots himself. "It's a tough pill to swallow, but a necessary part of the contract." He added that the bank quit paying dues on the foreclosed lots in January of this year, and that Koelbel has already paid those dues to date.
In an e-mail to the HOA members dated April 16, Walter Koelbel Jr, President of Koelbel and Company, stated that concerns over his company's investments in Grand Elk are unwarranted. "Our goal is to put Grand Elk in the successful category of developments," he said. "It is in our best interests to raise the bar as high as possible to maximize that opportunity.
"At this time, Grand Elk has been tainted as a failed community and needs a strong injection of stability and corresponding credibility for sales activity to occur," Koelbel continued. "Control of the golf course by the HOA will add significantly to the perception of the stability of Grand Elk. Repositioning and re-energizing are key to sales, and ultimately a far stronger financial footing than what exists today."
Koelbel added there is a significant risk associated with resort development in our current economic environment, and the quickest and easiest way to continually reduce HOA dues is by the addition of new homeowners to the ranks of those already paying dues.
Upon announcement of the vote allowing for the sale of the golf course to the HOA, Grand Elk's golf pro and general manager Mike Rus commented the only alternative was to let the golf course sit and need progressively more maintenance money as time went by.
"In four to five years, without maintenance, it will reach a point of no return," he said. "Without the golf course, this development will have empty lots for the next 40 years."