Killearn Country Club has recently provided detailed answers to twenty-one questions that arose during meetings with the Killearn Homeowners Association and the Killearn Country Club members about redevelopment plans. The questions and answers are listed below.
1. Does the owner have the right to close the entire 27-hole golf course in 2021?
Answer: Yes. The golf course covenant expires in 2021 and it does not have an extension mechanism.
2. Why does the owner want to close the North course (“Narrows”) now as opposed to waiting until 2021?
Answer: The owner believes that allowing the club to operate at the status quo until 2021 will irreparably degrade the course and club such that the only option in 2021 will be the closure of the entire course. In short, due to the state of the golf industry coupled with the unpopularity of the Narrows, ridding the course of the Narrows and the expenses related to it, and reinvesting the proceeds from the development into the club, is the only way to save the golf course and club. The owner develops and operates golf courses. The owner wants to own and operate Killearn; it does not want to see it wither a slow death on the vine. Finally, the Championship golf course (South/East) will receive far more maintenance and grounds keeping attention after the closure of the Narrows as both manpower and resources can be focused back on the Championship golf course.
3. What is the owner asking the members to do?
Answer: The owner will set a properly noticed meeting and seek a vote: (1) approving the closure of the Narrows; (2) waving the right of the members to purchase the golf course; and (3) approving the utilization of a portion of the Narrows for development activities.
4. How does the members’ Right to Purchase work?
Answer: The members’ Right to Purchase gives the members the option to buy the golf course from the owner in the event all or a portion of the course is closed prior to 2021. It is critical to note that the Right to Purchase is limited solely to the golf course (i.e., it does not include the inn, club house, tennis facility, pool, or other property). Moreover, the Right to Purchase sets the price at appraised market rate, requires a five percent cash deposit, and utilizes a very quick closing mechanism. If you discuss the market with a lender, it will become apparent that golf course loans are currently disfavored. In addition, the membership is not currently an equity membership.
5. Does the Right to Purchase have an expiration date?
Answer: Yes, it will expire in 2021. In the event the vote fails and the owner elects to keep the Narrows operating as a golf course until 2021, the Right to Purchase will expire. If the Owner elects to close the Narrows following a failed vote, the members would have the right to purchase the course.
6. What is the developer offering the members?
Answer: The owner is offering to: (1) place a conservation easement on roughly two-thirds of the property constituting the Narrows; (2) spend roughly $4 to 5 million renovating and rebuilding the club house and course amenities; and (3) extend the golf course covenant for the remaining 18 holes from 2021 to 2046.
7. What impact will the change have on property values in the area?
Answer: While it is impossible to ascertain what property values will be in the future, a quality 18-hole golf course with a new club house would seem to be a much more favorable component to a community than a failing or closed club. Moreover, the conservation easement will benefit home owners. Finally,the extension of the golf course covenant will clearly help all home owners because the uncertainty of a 2021 deadline will clearly impact values.
8. On a scale of one to ten, with the club presently a two, will the end result be an eight?
Answer: The quality of amenities, like courses, is in the eyes of the beholder so that is an impossible question to answer. That being said, the club house will be designed by Chapman, Coyle, Chapman Architects of Atlanta, GA. This entity has designed 20 of the courses affiliated with the owner. The firm’s website (http://www.cccaarchitects.com/) illustrates the quality of their work product.
9. What happens to the pond on the North?
Answer: It will be incorporated into the development. Its capacity and design will go through review and approval by the City of Tallahassee through the development process.
10. What is a conservation easement?
Answer: It is property upon which no development may occur other than City-approved drainage or other infrastructure. If development occurs in 2021, a conservation easement will not be required.
11. Will cart paths be left on the Narrows so a member can gain access to the club with their private cart?
12. Will the number of carts increase?
Answer: Yes. The plan is to increase from 43 to 60 in 2015 and to increase the number further in the future.
13. There is a concern the Killearn HOA will not support the project due to the comments attributed to Mr. Brad Trotman in the Tallahassee Democrat. What are your thoughts on this issue?
Answer: Based on our meetings with board members, we firmly believe the board members feel a viable club is of the utmost importance to the Killearn community. While traffic, drainage, and fees paid 3 to the HOA are issues we will need to address during the development process, we believe a resolution will occur in that a viable club is the goal of all relevant parties.
14. Where will the new roads be?
Answer: The new streets will only be in the developed parcel. In addition, the owner will revamp the South entrance to the club to improve aesthetics.
15. Will there be a trailer to serve as a club house during construction?
Answer: First and foremost, it will not be a trailer. Rather, it will be a modular unit and it will be in use for roughly 12 – 15 months. The owner has opened private clubs with $50,000.00 memberships utilizing this type of unit without complaints. Photographs of other similar modular units will be sent shortly.
16. What about tennis court renovations?
Answer: Killearn has always had a strong tennis program and we believe that will continue. For any renovations to occur, we must obtain capital via development.
17. Will the Championship golf course be closed during the construction of the new facilities?
18. Will the food minimum continue?
Answer: The minimum will be reduced fifty percent per quarter while the existing club house is closed and the modular unit is open (i.e. the club house demolition and reconstruction phase).
19. Will you agree not to raise dues during this development period?
Answer: Yes. Dues will not be raised for existing club members during the development period.
20. Who will maintain the conservation easement?
Answer: The Owner will have a vigorous maintenance covenant and has plans to hire an environmental company to manage the area.
21. Will traffic increase as a result of the new development?
Answer: Certainly. The increase; however, will be subject to City review and approval. Moreover, the proposed project removes approximately 230 acres from a development project which could occur in 2021; thus, the current project causes a long term reduction in traffic.
Given golfs current state of decline and projected continued decline. Is a ‘private’ golf course a viable business now or in 2021?
The accepted wisdom is that there is a high, positive correlation between personal success and intelligence. If you are smart enough to be a member you are smart enough to protect your interests.
It will be interesting to see how that works out here.
Mr. Tuck says he is “offering” to spend “roughly” $4-5M in renovation if the other stakeholders give him everything he wants up front.
But, on the face of things, this is merely a promise, not an “offer” that can be legally and practically enforced. Any attempt by the
other stakeholders to “secure” Mr. Tuck’s promise would, at the least, require expensive legal assistance and probably still not be practical.
Some observers have pointed out that the proposed renovations already appear underfunded. Unsecured promises can be very generously made. And Mr. Tuck’s existing debt level is an unknown.
Mr. Tuck is a businessman and can’t be faulted for structuring a proposal that gives him all of the benefits, while keeping all of his other options open. But the KHA Board has fiduciary duties. It can’t be caught in a “something for nothing” (or “something for little”) deal without exposing the KHA to legal action.
The KHA’s fiduciary duties also require the “fair and equal” treatment of the interests of each association member. As structured, the development and re-zoning proposal would have very unequal consequences and the lawsuits by KHA members against the KHA can be predicted accordingly.
In sum, the stakeholders have a number of fundamental issues to consider and should not be caught up in Mr. Tuck’s strategic rush. If the stakeholders stay the course and reject the proposal, Mr. Tuck could be persuaded that his best remaining strategy is to sell the entire property as a unit to another party with better resources for renovation.
This would be the optimal result and very plausible because, however Mr. Tuck may threaten, he doesn’t really want to wait until he’s 83 (in 2021) to implement an exit strategy.
The answer to No. 4 is inaccurate, as restrictive covenant requires owner to offer to sell items A thorugh F inclusive as set forth in Article IV, which importantly includes the 27 holes, the driving range, the practice putting greens, the golf pro shop, the golf cart storage shed and area, and the golf maintenance shed and area. Effectively the only thing the owner doesn’t have to sell is the delapadated areas that are the biggest club liability.
This list also fails to mention that the removal of the restrictive covenant removes the requirement for the property to be exclusively used as a private club. After the covenant is removed the course could be turned public or semi-private as was recently done by another club Mr. Tuck purchased and made plans to create a 14,000 sf clubhouse on. The Plans for the clubhouse were also delayed… don’t know if it was ever buit.
Question 6: Owner is offering to extend the golf course covenant 25 additional years to 2046. This extension should be in perpetuity so Killearn members are not faced with this problem again .