Ann Arbor Country Club's 'dire' finances prompt board to propose ownership transfer to investor
Ann Arbor Country Club started the golfing season amid concerns over its lender selling its defaulted $1.7 million mortgage to an investor, followed by litigation involving control of the club.
Now it's ending the summer in what a neighborhood note calls "dire financial straits" and its volunteer board is recommending that all club assets be transferred to that investor.
AnnArbor.com files show a March view of the clubhouse.
According to an email sent today by the Loch Alpine Board of Directors - a group that represents the 455-home neighborhood that borders the country club in Webster Township - the AACC membership met Wednesday and learned that the board "will decide by this weekend whether to accept this transfer of assets."
The transfer to West Virginia investor A2C2 could take up to 6 months, and AACC would disband.
Other terms of the deal, according to the email, include A2C2:
• providing a cash infusion to continue club operations into 2011. • assuming management responsibility and some club liabilities that weren't specified in the note. • retaining the name Ann Arbor Country Club. • operating the club as a semi-private operation and seeking to increase membership.
"The exact details of this potential transfer have not been finalized," according to the email.
A2C2 is represented in Michigan by Mike Weikle, who also lives in Loch Alpine. He could not be reached for comment.
In addition, neither Karen Stevens, AACC board president, nor Loch Alpine Improvement Association president Peter Logan were available for comment.
One person close to the situation described the potential action as a "friendly foreclosure."
The recommendation to turn over the assets follows the loan default; according to previous reports, the club struggled to make payments to Citizen's Bank starting in late 2008. It went into default after club membership fell below the 120 total mandated in the mortgage.
The bank initiated a sale of the mortgage early this year.
A2C2 bought the note for $625,000 in March after an effort by neighbors and AACC board members to buy the property failed.
Weikle, on behalf of A2C2, then sued the club to remove the board members who had sought to buy the club. That lawsuit was dismissed in April.
Weikle said he'd been concerned that an early-season board vote to reduce rates - in an effort to boost membership - could jeopardize revenue, which needed to cover operating cost and the original $1.7 million mortgage payments.
Following dismissal of the suit, Weikle said, “I’m hopeful that we’ll all get together … and do what’s in the best interest of members and shareholders.”
Comments
bob goetz
Fri, Apr 22, 2011 : 2:34 p.m.
I have provided services for years with AACC with only a handshake. I had always been very patient for payments from them. In return for that I have been stiffed out of moneys owed to me for the entire 2010 season. There has never been a word from their staff or board members indicating that there was an issue about finances. Shame on all of you. Small businesses struggle because of inconsiderate people that hide from their obligations. Sometimes you just need to man up.
larry kramer
Tue, Sep 21, 2010 : 8:52 p.m.
I used to belong to aacl. but they nickled and dimed me at every turn--even charged my guests for a cart fee to ride my cart--even though I'd paid a cart path fee to use the cart. The members were great, but when I resigned, they always found an excuse to not refund me my equity membership fee of $3000. Just a few members on the board who pushed for a new unneeded clubhouse bankrupted this great course. Its sad, but deserved! dishonesty never pays!
krc
Mon, Aug 30, 2010 : 10:28 a.m.
$625,000 is 76 times my yearly income. Guess I won't be joining.
15crown00
Sun, Aug 29, 2010 : 12:03 a.m.
well hackers what do you do next?play it as it lies or tkes several penalty strokes in the form of several thousand dollars?
spaceman
Sat, Aug 28, 2010 : 9 a.m.
There was more information in Brian Kuehn's post than in most A2.com "articles".....thanks Brian. What happened here seems to be a microcosm of many real estate deals of the past couple of decades. Everybody involved used circular logic to make their decisions. The Loch Alpine homeowners (the vast majority of club members) thought the expensive club enhancements would boost their home values. The bank (who has been managing Citizens Bank??) saw a way to pick up fees and interest income and make more home mortgages in the area. The house of cards collapsed and there is no bailout coming.
Brian Kuehn
Sat, Aug 28, 2010 : 8:08 a.m.
I believe the Ann Arbor Country Club (made up of 100+ familes) owns the facility and land. A2C2 purchased the $1,700,000 loan from Citizens Bank for $625,000. So now Ann Arbor Country Club owes A2C2 $1,700,000 plus interest. The fact that A2C2 purchased the note for less than its face value does not relieve the club from its debt of $1,700,000. Certainly the new lender might settle for something less than $1,700,000 but that would need to be negotiated. The Board of Ann Arbor Country Club has the option to ask each member to pony up about $15,000 to $20,000 to pay off the note. In private country clubs parlance this would be an assessment. Once upon a time that is how clubs raised money for improvements. A healthy club with 300 members might levy a $10,000 assessment (payable over 10 years with interest). Active members could sign a note to pay or resign from the club. At the same time, the initiation fee for new members would be increased by $10,000, so as not to allow new members the ability to dodge the assessment. It appears that the Ann Arbor Country Club did not make the membership responsible for the $1,700,000 loan. Instead, they pledged the land and buildings for the loan. Presumably the hope was that they would grow the membership through improvements funded by the $1,700,000. Unfortunately for the membership, the growth never materialized. As the numbers of members shrank, it became harder to fund the payments of principal and interest to Citizens Bank and continue to operate the club at a high level. Ultimately, if a club does not have sufficient membership support in both numbers and money, it is time to disband. It appears Ann Arbor Country Club may have reached that point.
win
Sat, Aug 28, 2010 : 7:37 a.m.
@whodat, you are 100% correct my friend. why would anyone pay outrageous golf memberships, facility and banquet minimums, and assessment fees when they can play great courses all over Washtenaw county for under $40 a round? If exclusivity is that important, I guess it comes with a hefty price. I'd rather play different courses with different people than be with the same people (most of whom you can't stand anyway) all the time!
scooter dog
Sat, Aug 28, 2010 : 7:27 a.m.
So who owns the aacc?,the investor,or the board? If the investor owns the club,why does he need permission to fire the board. If I plunked down $625.000 I'd damm well have my people in there running the place. I guess I am at a loss as to who really owns the place.
whodat
Sat, Aug 28, 2010 : 7:22 a.m.
Golf has become so popular and with so many courses to now choose from, country clubs are starting to struggle. Once viewed as a prestigious sport, only played by rich people belonging to country clubs, people can now play public courses that are much cheaper and are also in great shape for a fraction of the price. Paying several/tens of thousands of dollars for a country club membership is ridiculous and it's only a matter of time before we either see: a. private courses become public, or b. private courses significantly reduce their membership costs.
AlphaAlpha
Fri, Aug 27, 2010 : 10:29 p.m.
Golf is popular during bull markets, not so much in bear markets. Many golf enterprises will close during the next few years, much like in the 1930s, when many courses were converted to orchards...
Tom Joad
Fri, Aug 27, 2010 : 7:16 p.m.
Country clubs...biggest waster of prime real estate ~Al Czervik
Craig Lounsbury
Fri, Aug 27, 2010 : 5:21 p.m.
Ironically $1.7 million is couch change for Tiger Woods.... At least it was a week ago.