RANCHO SANTA FE — The discussion of loan restructuring for the Rancho Santa Fe Golf Club continued from the March 15 Association meeting to the meeting on April 5, which resulted in an agreement after much debate.
The terms finally settled upon are that the $1,650,000 loan will be for 10 years at a 2 percent fixed rate, with a monthly payment of $15,182, financed by the Association’s own investment group. Also, any surplus debt service funds will be applied at the discretion of the golf club.
After last month’s meeting, golf club officials were concerned with the terms of the approval and restrictions placed on the club in that it included a balloon payment after five years and that the allocation of any surplus debt service funds would be applied at the discretion of the Association board.
“The golf club strongly supports refinancing the $1,650,000, to fund the debt internally, but is concerned with the board’s action (on March 15) that takes away some of their authority in regards to their administration of the loan,” said Pete Smith, Association manager.
“As the golf club is fully responsible for the repayment of the loan and for collecting the payments from their members, the club feels they should continue to have the discretion to apply any additional debt service reduction.”
Not everyone was in favor of the terms.
“This is not so simple as we are led to believe,” Director Ann Boon said.
She said she and other board members had not been provided with numbers in regard to the proposal.
Director Dick Doughty said he was not sure he understands the terms.
“I think we should proceed very cautiously,” Doughty said.
Director Larry Spitcausfsky said the terms should be put before others.
“Let’s put it before a committee and let it get straightened out,” he said.
This loan in question was the smaller of two taken out to finance the remodeling of the golf club. The project that began in 2005 had an original loan of $6 million, which financed the bulk of the project. The second loan, the one currently under consideration, was taken out in May 2009 to cover the rest of project.
Until the recession, golf club officials believed the entire debt could be retired six or seven years after the project was completed. Since the economic downturn, fewer members have joined the golf club, people have dropped their memberships and fewer homes have been purchased within the Covenant, which provides new members.
Golf club official Mike Irvine told the Association that new enrollments 10 years prior averaged about 45 per year. During the last three years the club has averaged 15 new members. The club’s membership base has also dipped, which means fewer golfers to pay the $1,100 yearly assessment toward the loans.