Dear Mesquite Owners,
We arrive at another Season and another election with a couple of prominent issues facing us this year at Mesquite Country Club.
The 2 issues that I believe deserve the main focus of our attention are the escalating HOA dues and expenses, and the situation of the Golf Course.
HOA DUES:
When we endorsed President David Krubinski on his initial run for the Board, we did so with the hope and expectation that someone would go in and review the expenses and spending of past Boards. Like all of us, Boards often accumulate spending patterns that continue after better alternatives are available, or services are no longer needed.
The majority of you also agreed with our endorsement, and you elected not only Mr. Krubinski but also the other Board members we recommended. Unfortunately, those 2 Board members did not serve out their terms, and Mr. Krubinski has since appointed 2 replacement members of his choosing. Make no mistake about it, this is his Board.
Today we would like to outline a few items in this year's Budget that we believe deserve to be discussed at this year's Annual Meeting.
In the " 2007 Budget Packet" dated November 29, 2006 outlines the proposed spending for 2006 and 2007:
1. Management Services. In 2006 we had an annual budget of $142,000 for management service. In 2007 we propose to increase this by @ 30%... or $44,000.00... to $186,000.00.
What is this increased money to be used for? Does it really need to be increased? How is the original $142,000.00 now being spent?
A few years ago when we gave our HOA manager a raise it was done so with the provision that she did not need any additional help. Are we now back to adding an assistant? Once these expenses are approved they seldom go away. Is this an expense we really want to increase?
2. Landscaping Expenses. We are now spending over $600,000.00 a year on landscaping expenses. Keep in mind, this is not for the golf course, but for the most part just in our individual phases, many of which have gone increasingly toward a "desert landscape". This means more rocks and hearty desert plants and less flowers and grass to mow.
In 2007 the budget projects that we will spend $577,500.00 for "Total Landscape". This includes more than $37,000.00 in tree trimming and another $10,000.00 in "extras".
On the next page of the budget we have added another $76,000.00 next year (at the top of the page) for "Grounds Labor". Adding all of this together it totals more than $653,000.00 for landscaping of the individual Phases at Mesquite.
Are we sure we can't get a better deal or more for our money than this?
3. Legal Fees. Our Proposed Budget for "Legal Fees and Legal Litigation" for 2007 is proposed at $18,000.00.
Is this really what we expect to pay if litigation continues on the golf course issue, not to mention the other issues that will invariably require legal advice?
Does this include all of the law firms we are working with, and all payments?
One of the questions raised recently has been if any money set aside from our legal entanglement with the new Golf Course owner/s has been spent, for example, on legal fees. Or has that money remain escrowed in a separate account, as I believe it should be, with no money spent until the issues have been resolved?
It is my understanding that we stopped making payments to the golf course, for the most part, several months ago. What is the current balance in the account that those funds were placed? Have we spent any of that money other than to pay the golf course our rent? If so, for what?
4. Our Management Contract. We have had a management contract with Monarch Management for as long as I have been at Mesquite, which is to say for at least 7 years. It may be much longer. As time has evolved, so has our involvement with Monarch. It is my understanding that the Landscaping Company is a closely related company to Monarch, as has been some of the Security Services in the past.
If we take our proposed 2007 "Management Service" fee of $186,000.00, combined "Landscaping Fees" (see #2) of $653,000.00, and the proposed "Total Security" allocation of $141,000.00... that comes to a total dispersement of $980,000.00. Or nearly $1 million dollars a year.
Now all of this may not be paid to Monarch or Monarch Management's related companies in 2007. But a significant portion of it is. And it is difficult to ask one Monarch employee to make cuts on other Monarch related expenses. That is why we believe it is so important that the Board do their duty in this area to get owners the best services we can obtain at the best price. And to reduce whatever duplication or non-essential services are inherently included in a budget of nearly $1 million dollars.
5. Office Rent. Our proposed "Office Rent" for 2007 is $9,425.00. We continue to pay rent of nearly $10,000 a year to house 1-2 employees off property when we currently have any one of 4-5 Security Gate Offices available at no charge that would be more accessible to owners, and in theory more convenient to management to keep an eye and ear to the ground at Mesquite. Why does the Board continue to pay this amount to house Mesquite Management away from Mesquite Owners?
The Golf Course.
The answer to many of our prayers seemed to happen when the golf course was purchased by people who said they wanted to improve the aging and deteriorating course. They also talked about adding upscale housing on some portion or adjacent portions of the Mesquite Course. Names such as Ritz Carlton and The Four Seasons have been mentioned. If true, you don't have to be a regular viewer of CNBC to understand the future impact on our property values.
So what in the world happened???
1. Poor Communication. Before the honeymoon got started it seems like we were already in court. To unravel this situation you need the wisdom of Solomon. Because someone-- either on the HOA side or the Golf Course side, has been playing hard and loose with the facts-- when facts are presented at all.
Scott Schmutzer is the new face of the Golf Course at Mesquite. He states that he has had experience in running other golf courses in the past, and he has additional well know investors who wish to remain "silent" at this time that may join him if there is future development. What seems to be the proposal most discussed is a "Fractional Ownership" by a big name company, or kind of a "Timeshare for Rich People". This would be a limited number of luxury units which a limited number of mostly very wealthy people would own, and may include ownership in other desirable locations as well, such as Aspen, Santa Barbara, etc.
What is known is that the golf course is in the best shape it has been in-- at least in recent memory. Who's money has been spent to rehabilitate the Course is not clear, nor the reasons why the Sale of the Course has not been finalized. But is does appear that Scott has some type of management agreement to run the course.
A lot of misinformation, confusion, and bad blood we believe could have been avoided if Scott and his group would have prepared a press release to Mesquite Owners and the community regarding who he was, where he was from, and what his plans were for the golf course at Mesquite.
It is still not too late to do this, but a lot of time and good karma has been lost in this process.
2. The HOA. Shortly after the golf course transition the HOA Board hired a Los Angeles area Law Firm to represent our interests. What this costs per hour or to date to our knowledge has not been spelled out.
One of the firms’ lawyers gave a presentation to Mesquite Owners last year where she revealed the details of what the Board would ask the Golf Course owners in return for amending our agreement with the Golf Course.
The Golf Course wants the agreement cancelled. We believe the prudent thing to do is amend the contract, cancel out our payment to the Golf Course of @ $200,000.00 a year, and receive other reasonable benefits such as grand fathered access to the golf course for all Mesquite Owners and guests, as well as guaranteed access to the golf course and future amenities.
In return, we believe the Golf Course should be given very specific options to build and redesign the course, but not to cancel our lease.
We believe we should also give the Golf Course a specific list of what they need to do to get their money from us. And to make this list know to owners as well. We want to encourage a successful partnership. Not spend the rest of our lives and money in court-- and on legal fees.
3. Scott-- Come to the Annual Meeting. Scott Schutzer says he or his group own a condo at Mesquite CC. That makes him an owner like the rest of us. We believe he should attend the Annual Meeting this Saturday February 23rd at 9AM. We have also suggested on our Discussion Page at www.mesquiteowners.com that he hold a Question and Answer Session before or after the Meeting for owners. We believe that is an excellent opportunity to reach out to the Mesquite community, present his ideas and vision of the future, and answer questions and confront misinformation.
I hope Scott will not let this opportunity go to waste.
The Election.
The election this year features 3 incumbents: David Krubinski, current President, Eric Chiel, current Secretary, and Merle Debus, current director.
The only challenger who has volunteered to run is fulltime resident Walter Rau. Mr. Rau is running against many policies of the Board as he has stated, has been a longtime property manager in the Orange County, CA area, and, as he says, "is only 68."
One troubling aspect of the current Board and this year's budget is outlined by them on the front page of the November 29,2006 Budget Packet. It states:
"The Board will be reviewing this budget within 60-90 days after the start of the fiscal year to determine if it is adequate to meet all of the needs of the Association."
Since 3 members of the Board are up for reelection, forgive our cynicism about this review taking place after the elections are over-- to determine if the HOA fees for next year need to be raised.
Finally, the Board needs to be commended for tackling the long dormant issue of funding our reserves. In 2007 they state they will put over $600,000.00 back into that fund.
And no doubt President Krubinski will answer this email with his own point for point as he is accustomed to do.
But the pressing issues for Mesquite this year as we see them is to review all spending and vendor contracts, and to resolve the mess we have gotten into with the Golf Course so that it is fair, beneficial to both parties, and longstanding.
Our Recommendation for the Election:
If you are happy with the Board vote your 3 votes for the incumbents.
If you wish to show dissatisfaction, cast all 3 votes for Mr. Rau, who by himself will not alter the Board make up, but will send them a message.
When we had the last election
Tim Gaffney
MesquiteOwners.com
Email.... TGofKW@aol.com
Phone... 305-294-1525
