During two meetings with area property owners, different and unimpressive versions of finance and development activities were given by Jhett Browne, the scheduled purchaser.
First, a dramatic notation of monthly operating expenses at $90,000 was subsequently reduced a week later to $35,000; then the appearance of debt financing for the purchase of the north nine golf course in the amount of $1.5 million (unavailable one week) subsequently appeared a week later. Was the entire transaction really a solid sale, given the financial drama? What accounting revelations occurred so quickly? Initially, in the absence of the aforesaid $1.5 million, there was the necessity to sell a portion of the land on the north nine course to a “big time” developer to sell 40 home sites to create adequate cash flow; then that wasn’t needed when new money suddenly appeared.
However, the cost to redesign and rebuild the north nine into attractive playing conditions has a potential price tag of approximately $2 million. No definite idea has been presented to area homeowners to design and build that scenario in terms of time and cash/financing. To capitalize those additional costs, extensive membership growth would have to exist in the absence of mortgage funding. If one does the math per the proposed membership fees, it could be quite a while before the north nine is ready for play.
Interestingly, it should be added that “any resistance to the idea of adjacent development” of the 40 home sites resulted in a not-too-veiled threat of litigation by “deep pocket, serious players” who would all but be assured of a victory, according to Browne. For the record, Mr. Browne, the residents are not the supposed litigation foes, your opponent in a proposed rezoning of fairway property from existing special use to residential use would be the City of Rio Rancho — quite a different scenario, regardless of the depths of pockets by “serious players.”
It might be added that threats and intimidation in a sales presentation are poor form, to say the least, in winning over a prospect.
The latest proposal presented by Browne has golf course area residents being asked to provide club memberships to cash-flow this deal, in lieu of property sales to developers for homes. If enough memberships are sold, then the housing idea presumably disappears. It must be asked: What assurances and conditions are provided by Browne to those homeowners that the same sale scenario wouldn’t be pursued in the future? Where is the written covenant of good faith? None is apparent at this writing.
It gets better… a “development agreement” by Browne with the City of Rio Rancho for “real property” (perhaps water rights?) to irrigate the property is scheduled behind closed doors.
Is the city being asked to incentivize this deal in some undisclosed manner? Could a collateralization of land secured by new membership fees provide financial leverage to negotiate groundwater pumping rights? What of the reclaimed water negotiation process in all this? Nothing has been publicly finalized in that rate structure.
Somehow, after much head-scratching, I’m skeptical of the entire scenario. Are you?
(Bill Nelson of Albuquerque is a former Rio Rancho resident. He is a commercial real-estate broker and has worked in the Rio Rancho area since 1985 on development and building occupancy issues. He is a former city planning and zoning commissioner.)