The Desert Horizons Owners Association, a separate legal entity from the Club, remained under control and administration of the Teamsters until such time as 60% of the residential units were sold. That 60% level occurred in 1992 at which point the homeowners elected their first Board of Directors and took control of the Association responsibilities.
Desert Horizons Country Club, a separate legal entity from the HOA, was chartered to have 400 equity voting members and non-golf social members. Buyers were to be among the “Fortunate 400.” Memberships were sold by the Teamsters under a Master Purchase and Sale Agreement which controlled the timing and conditions under which the Club would eventually be turned over to the equity members. After several agreed to postponements, the Club transferred to the equity members on July 1, 1996, but not without some contentious discussions and actions by the Teamsters.
The Teamsters realized it would be less costly to continue to operate the Club at a loss rather than pay dues on their unsold memberships. They bypassed the Club’s Board of Directors and went directly to the golf members offering to discount the membership price if the members agreed to a 5 year delay. That ploy failed. The Teamsters’ project manager insisted that he and his staff be granted a complete hold-harmless from liability warranty by the members for any acts that may have been committed. The Club Board refused to grant this warranty and took the matter directly to the Pension Fund Chairman in Anchorage under the threat of a breach of contract legal action. The Chairman ordered the transfer to occur immediately and the project manager was replaced.
Relations between the Club’s Board and the Teamsters was business like. However, the Teamsters maintained a “we’re still in charge” attitude that required diligence by responsible Club member Directors. For example, objections were raised whenever housing construction plans appeared to encroach too close to the golf course. As a part of the transfer closing, a detailed engineering survey was required to define exact golf course, HOA and property owners’ property lines. There were 267 encroachments discovered that required the Teamsters to prepare and record formal lot-line adjustments to avoid possible liability to the Club members for an errant golf ball entering an encroachment area. This was an expensive remedy, but was insisted on by the Club’s Board of Directors.
Many have asked if the Teamsters investment in this undertaking was successful. No one currently associated with the community is privy to that information, but the best business guess is that it was not as successful as the Teamsters had expected given the extended build-out period making the development vulnerable to economic swings that propose high risk to many long term real estate ventures.
Under the Purchase and Sale Agreement, the Teamsters continued to own and sell the unsold Club memberships, however they were required to pay to the Club full dues and any assessments on any unsold memberships up to a total of 400 for a period of six years. By 1996, there were 249 equity members with 151 unsold memberships. This represented a major unexpected expenditure to the Teamsters not anticipated at the time the Agreement was negotiated with the members. The membership price at the time of the transfer was $35,000. After the transfer, the golf dues were increased from $460 to $560 per month and memberships were assessed $1,500 each to establish a cash capital base and to make certain upgrades to facilities and equipment. In 1998, the membership approved a $2,000 assessment for needed clubhouse upgrades, and in 2000 approved a $6,000 assessment to replace the golf course irrigation system and upgrade the on-course restrooms.
The Club’s Board of Directors had believed that the Club would be better served if it owned and controlled the remaining unsold memberships held by the Teamsters, but also wanted to protect the dues subsidy being received on the unsold memberships through June 30, 2002. On June 10,1998, the Club membership overwhelmingly approved an agreement reached with the Teamsters to transfer all the remaining 120 unsold memberships along with a cash payment of $2 million to the Club relieving the Teamsters of any further dues and assessment obligations. The Fund was to be used to continue the dues subsidy at the 400 member/$560 dues level through June 30, 2002 as committed to at the time of the conversion to the members in 1996. The subsidized dues were used to help sell memberships. In December 1998, the equity membership level stood at 309 and the authorized membership level was reduced to 325.
Since the member takeover in 1996, the required upgrades noted at the time of takeover had been completed by the summer of 2001, assessments amounted to $9,500 and membership value/price had increased from $35,000 to $52,000.
With all other involvement issues resolved ,the Teamsters continued to own and operate the on-site real estate re-sale office that they still owned. In December 2001, the Club and the HOA bought the on-site operation from the Teamsters for $300,000 plus commissions on the outstanding listings at the time of the transfer which closed within 30 days. The cash investment by each of the two corporate owners was $180,000 that covered the purchase price and provided working capital. The purchase included the two lots at the office site, the temporary sales office (trailer) that had been in place under a “non-conforming” agreement between the City and the Teamsters for most years of the development, and all the fixtures. Desert Horizons Newco LLC was formed as owner of the two lots with the Club and the HOA each owning a 50% interest in the LLC. A Board of Directors was established with 5 directors, 2 from the HOA, 2 from the Club and the fifth picked by the four other directors. Qualified real estate companies were interviewed to lease and run the real estate business. Selected operators paid a fixed monthly rent plus a percentage of all commissions arising from sales of real estate in Desert Horizons by their agents.
In February 2002, the City of Indian Wells advised Newco it had 12 months to replace the temporary sales office. An extension to 18 months was negotiated. In July 2003, Newco commenced construction of the building that was to house the HOA, the real estate sales office and an extra office for the Club’s use. The building was completed in February 2004 and was financed by a note for $700,000 amortized over 30 years and payable in full in 10 years. By December 2006, the note had been paid down to $453,556 from rent and commission income received. By the end of 2013, the balance due on the note was $183,785 and it was re-financed in March of 2014 for an additional 5 years. The resale operation continues through Indian Wells Real Estate. ]
On July 1, 2002, the requirement to subsidize the Club dues from the $2 million in funds received from the Teamsters ended with $750,000 of the original funds remaining as capital funds for the Club. Dues were increased from $560 to $750. The Board at that time approved the remodel of the women’s locker room, the pro-shop, the grill room and developed a fitness center. These upgrades cost $700,000 and were financed from the residual funds. The members took over the management of the pro shop sales of hard and soft goods previously contracted to an outsider.
Membership sales began to stall as many new clubs opened in the desert, the city of Indian Wells provided substantially subsidized golf to residents at its two golf courses, and general interest in golf appeared to wane. Age attrition also began to take effect. Strict operating expense challenges kept the Club operating in the black while continuing to maintain facilities and services to members at a high level. During the fiscal year commencing July 1, 2003, the Club Board approved the replacement of the sand in all bunkers and added two more bunkers to the course at a cost of $308,000. Commencing in the Spring 2004, design work began on a project to remodel the clubhouse and add a south-facing outdoor dining patio. The membership approved an assessment of $15,000 in April 2005, and the project commenced in June. It was completed in October 2005 at a cost of $3,000,000 which was $300,000 less than had been estimated. This assessment brought total assessments since the members took ownership to $24,500 per member.
In the fiscal year beginning July 1, 2005, the idea to require all new homeowners of Desert Horizons to be social members of the Club was revisited. A plan was developed to amend the HOA’s CC&R’s and charge a social membership transfer fee of $6500 on the sale of any home in the project. With each purchase, the buyer would become a social member with the right to have a substantial portion of the social membership transfer fee applied toward the purchase of a golf membership if they chose to do so. The plan was approved by the homeowners of Desert Horizons in April 2006 and the fee was imposed on all home escrows after July 1, 2006. The social membership transfer fees flow to Desert Horizons Country Club to help cover golf course maintenance and improvement costs based on the belief that home values of all Desert Horizons residents benefit by the existence of the golf and tennis facilities. The fee may adjust each year based on changes in the Riverside County cost of living index.
As time has passed, now into 2014, there are 177 golf eligible members and the social membership has increased to 239. The Club continues to offer opportunities for substantial continued enjoyment of this wonderful community. Important for the Club is that it has reached this point in its existence with NO DEBT, beyond that related to the Newco mortgage.
Desert Horizons Country Club has had an interesting and successful maturing since its beginning in 1979. Owners are proud of what the Club and community have become. The HOA has continued its care of common areas with colorful flowers throughout the community, maintenance of the community pools and spas, regular upgrades to streets, and the provision of excellent security all to compliment the exceptional care given to residential exteriors. The Club continues to maintain the golf course and its other facilities to the highest standards, including 2014 upgrades to the fitness facility, addition of a covered porch at the south end of the building and expansion of the grill facility that required an assessment of $1250 per member. Residents and members are confident of the successful existence of Desert Horizons Country Club, and that this Desert Horizons community will continue to attract those special people who are drawn to this perfectly located and perfectly lovely community.