Homeowners need to know all the TerMs of planned $5,000,000 Loan

5/1/2022 35 Comments

Homeowners need to know all the TerMs of planned $5,000,000 Loan

At the HOA Board Meeting last week, the board announced that the bank who is financing the $5 million loan has provided them with a "Fixed Term Sheet" that outlines the terms and conditions of this loan.

The board also decided to not release the "Fixed Term Sheet" to the homeowners. As one board member stated, "I have a PHD and it is hard for me to comprehend", implying that homeowners do not have the capability to understand all the details. So the board released a summary of the loan financial terms without any specific obligations (as outlined in the Fixed Term Sheet) that each of us will be committed to if the Board takes out this loan.

It is a right for all homeowners to request and see the "Fixed Term Sheet" before voting to allow the Board to enter into this loan.

Without this document, homeowners will not know all the obligations we have been committed to under the loan contract.

To receive a copy, send your request to: Jerry Storage jstorage@desertprincesscc.com

and CC our board members:

Peter Webb pfwebb@telus.net
Terri Swartz terriswartz.dp@gmail.com
Russ Holowachuk holowachukr@shaw.ca
Bob Mangold lingold7096@sbcglobal.net
Bill Bergstrom billbergstrom.dp@gmail.com
Martin Backstrom backstrom@berkeley.edu
Mark Brown mark@310.net

Please leave any additional comments below

35 Comments

Ken Muraco

5/1/2022 06:19:07 pm

Just what we need right now, higher HOA Fees.
Or maybe they’ll just hike our rental units again to pay for it?

Tim

5/2/2022 09:49:13 am

No need to hike vacation rental fees.

VRBO will no longer due business with the City of Cathedral City rentals because of the restrictive nature of their bullshit and stupidity.

That with the continued ban of resale mortgages sets us up in great shape for the Recession that will come shortly.
Now they want to add an unnecessary $5-10 million dollar debt-- No one is sure exactly how much.

You get the government you deserve.

And you pay for it.

Dolores Graham

5/1/2022 06:48:51 pm

Sent a request to Jerry Storage for the information regarding the potential loan under consideration for the potential landscaping project. As a homeowner, I want to be knowledgeable about the financial commitment we
are committing ourselves to in the future.
Thank you.
Dolores Graham

Concerned Canadian

5/1/2022 06:55:19 pm

Peter Webb, our board president thinks the landscaping project is so wonderful and has no problem approving a $5M dollar bank loan and putting Desert Princess up for collateral. Maybe Peter can loan the HOA the money himself by taking an equity loan out on his $5M dollar residence in Vancouver. We might get better terms from him.

Douglas

5/1/2022 07:37:16 pm

Just say NO to the loan these B of D along with many in the past only like to spend OUR money

Peggy

5/1/2022 10:11:36 pm

I concur and will request the bank's Fixed Term Sheet.

Anonymous

5/2/2022 07:29:40 am

The fact the Board is withholding the Fixed Term sheet tells you all you need to know.....they have something to hide from the community. Just vote NO!

Stacy and Rose Kanda

5/2/2022 09:49:33 am

If someone receives the terms agreement please attach it to this blog.

Beyond Belief

5/2/2022 01:16:39 pm

The latest lies from the CDAC are beyond belief.

They obviously think (according to their latest "DID YOU KNOW" advert) that all homeowners are gullible sheep (sorry sheep).

Let's take then sequentially:-

1 "No homeowner is ever personally liable for an HOA loan"
WE ARE ALL LIABLE TO REPAY ANY AND ALL DEBTS OF THE HOA

2 The "effective" rate of interest is ONLY 3%
THE TERM SHEET STATES THE INTEREST RATE FOR THE FIRST 7.5 YEARS WILL BE 5.46 % AND THEN FOR THE NEXT 7.5 YEARS, WHATEVER THE LENDING BANK SAYS IT WILL BE.

3 Fannie and Freddie "Do Not Lend List" unrelated to commercial loan.
BUT NOTICE, THEY SAY OTHER CONSIDERATIONS, FOR EXAMPLE, COUNTRY CLUB REVENUES and TRIBAL LEASES.

WHAT THEY DID NOT TELL YOU, IF THIS LOAN GOES THROUGH, THE GREATEST IMPEDIMENT OF ALL (TO GET OFF THAT "DO NOT LEND LIST") WOULD BE THE FACT THAT THE DESERT PRINCESS WILL LOSE ALL POTENTIAL TO OBTAIN ANY FURTHER CREDIT FOR 15 YEARS Because THE LOAN AGREEMENT PUTS THE LENDING BANK AHEAD OF ALL OTHER HOA DEBTS.

So, should any emergency arise in the next 15 years, that we do not have the funds available to pay for, the only solution would be another special assessment for whatever the value and immediate total cost would be at that time. We could not obtain loan financing from anyone.

4 Have we just been insulted again?

5 The last ice age was Temporary!

6 through 11 These people turned down FREE PROFESSIONAL HELP FROM MANY QUALIFIED HOMEOWNERS WITH EXPERIENCE AND QUALIFICATIONS TO BACK THEM UP.
Not one person on the Board or the CDAC is qualified in any of the required disciplines. and apparently neither is our current landscaping company. (so many plants dying).
But let them quote on new ones!

Now amazingly today, it will become possible at year 7.5 for each homeowner to pay off the outstanding debt in one fell swoop if interest rates go out of sight,
SO, THIS IS A SPECIAL ASSESSMENT!

BUT wait, didn't they just tell us last week in their last "WORST CASE SCENARIO" forecast that interest costs could ONLY go up by $0.22. per month?
SO, WHICH IS IT?

Why the urgency to put everyone in hock for 15 years? without even knowing how deep that hock is or will be? are these brilliant minds or what?

Again, the tail is wagging the Dog.

Terry

5/2/2022 04:26:07 pm

It is interesting to understand the extent to which the Board has gone to keep certain information away from homeowners regarding the large 15 year loan for 5 million dollars. Per the "loan sheet" from the bank, the funds will be used for "the revitalization of landscaping AND other projects approved by the BOD." So, it is indeed a slush fund that will be wasted on pet projects that produce no revenue but give the board a rush towards their spending addiction.

DP's Reserve funds including all settlement funds must be deposited to the lending bank for the complete term of the loan. Additionally we must pledge as collateral the HOA's cash flow which includes HOA related accounts receivable
(membership assesments and lien rights) operating bank accounts and operating investments, all of which must be deposited with the lending bank.

The lender says that after the reset homeowners can pay the balance off in cash if the interest rate is too high. ( So it is a special assessment). It is referred to as just that throughout the term sheet.

This proposed loan will keep DP on the No loan list for at least the duration of the loan based on increased homeowner jeopardy that Fannie and Freddy have now avoided by curtailing residential mortgages at DP.

No one knows the reset interest rate as of 90 months downstream.

All this drama that is totally unnecessary and uncalled for. There are many more important issues that need to be dealt with now. Placing homeowners in debt for 15 years ( not temporary as some suggest ) over a debt that could turn into a time bomb is just idiotic. Stop this nonsense. Vote No.

Ken

5/2/2022 11:58:15 pm

PEOPLE WE NEED A SOLUTION. Lets turn a negative into a positive we can take the country club/ grill into a money maker instead of a loser. Hire a good cook friendly staff and a simple quality menu, rent out to weddings and quencinaras in the OFF season. Use the profit to fund special projects. We could easily make over 500k a year in income.

Anonymous

5/3/2022 11:53:05 am

Ken, in the entire two decades I've been an owner, F&B has lost hundreds of thousands of dollars every year. The problem is simple....we are either a semi-privare country club, which is and has been a financial black hole OR we look into an entirely new paradigm. We should get this monetary monkey off our backs by leasing out the restaurant to professionals who can operate it profitably. We are either a closed country club subsidized by DP homeowners OR a restaurant operated like a business. Regrettably, we can't be both. Time to investigate viable alternatives to the status quo.

Terry

5/5/2022 02:25:56 pm

Anonymous,

Leasing out the restaurant WILL NOT get us off the FF no loan list. Homeowners would still be required to pick up any operating shortfalls that should arise. Fannie and Freddie are well aware of this.

The legal structure of our owership is what needs to change to get homeowners off the hook and able to get home loan mortgages. The BOD does not want want this as it will likely mean that the board no longer will have absolute control of the clubhouse and possibly will no longer have ownersip.

Remember, all residential mortgages are and will not be available at DP unless the legal structure of Desert Princess is modified. The BOD say it is impossible. IT IS NOT IMPOSSIBLE. It can be done.

Terry

Ken

5/9/2022 11:38:25 pm

Anonymous, your right thats all im trying to say we dont have to keep loosing money on that black hole called a restaurant....Cimarron makes theres work and it turns a profit with NO help from an HOA

Judge

5/3/2022 07:28:02 am

33% is all they need to pass! INSANE That is how they manipulate their votes.
Vote NO NOW ON THIS PAGE. Let's see the truth!
NO

Leslie

5/3/2022 11:15:56 am

That's not quite correct, Judge. The Board needs 33% of all owners to vote in order to constitute quorum. In this case, a total of 400 ballots need to be cast for the votes to be counted. If quorum is achieved, 50% +1 decides the matter. It is imperative we all vote particularly if you do NOT support this proposal. Because theoretically if we just reach quorum, 400, if 201 vote in favor, this project gets approved. To defeat this insanity, it will take all the NO votes we can muster.

Judge

5/3/2022 01:03:38 pm

Just sent Fact Sheet to this page? Where is it please?

Michael Stark link

5/3/2022 01:09:34 pm

Ken and Anonymous, I agree completely with your statements regarding F&B/Mountain View Grill. Someone recently stated the restaurant looks like a dining room in an assisted living facility. So very true. It's dark and depressing. We frequently have large overhangs on our buildings and housing in the desert because of the hot sun. We must compensate for that by adding brighter colors, better lighting and skylights. The mood inside a restaurant has a huge impact on how people feel. At the very least, the interior should be painted white with brighter colors on the upholstery and carpeting. We also need to do something about the "chef" that works on Sundays. Dear lord, how does someone screw up breakfast? I will never go there again on a Sunday until they get a real chef. When the servers have negative comments about the chef, it's time to worry. Rent the place out for weddings, etc. We need a new vision for the Grill, not a conservative, boring and old fashioned band-aid.

Jeff Renick

5/5/2022 09:37:43 am

My wife and I are new owners, and were completely shocked it was recently refurbished. Should've brought in a young interior designer to do the project.

Anonymous

5/4/2022 06:33:30 am

The rumors are the BOD eventually want the HOA fees to reach $1000.00 per month. Get rid of STORAGE & WEBB their funding their lifestyle on our dollars!!!!! This insane 😍

Michael Stark link

5/4/2022 03:20:38 pm

Anonymous, there are NO "rumors" about our hoa fees reaching $1,000. per month, other than the one you just created. Let's be adult about this thing and deal in facts, not conjecture. Rumors serve no purpose other than causing disagreements, slandering people, dissolving relationships and starting wars. Please post your name and let's see how many rumors you've "heard".

Cathie Wachter

5/9/2022 08:23:49 pm

Below were my questions to the Board and the response i received. You should start at the bottom and work your way up for the email stream. It is a bit of a read but worth your time. I agree with one of the statements above that we have many people living in our community that would be a great resource for the various decisions that need to be made. Why not put out a request for committee members with specific experience for the many projects and issues that arise.

Peter, thank you for your explanation about your “long standing practice”. I am getting the impression from this response and your previous response related to your inaccurate explanation of the PPP loan proceeds that you think the Desert Princess owners are not intelligent enough to comprehend normal business transactions. That is a bit uncomfortable to me. Thank you for resending what was already provided. The summary of the Term Sheet was very vague at best. There are pertinent parts of the loan agreement that could negatively affect the owners and that was the purpose of my inquiry.

Respectfully, this is not sufficient information for anyone in Desert Princess to make a decision. I completely understand having a satisfactory relationship with our bank is the easy way to go but you and the board are legally and ethically responsible for providing the BEST and most advantageous solutions to our owners. If the board had put out an RFP you would have seen rates up to 1.00% less than what you have gotten from Alliance Association Bank. If the board had explored a MDL you could have saved several thousands of dollars on interest expense. There is no such thing as “typical” when it comes to bank fees. We are paying for this project and we need to see and know what are the full details of this loan. I am communicating directly with you for now but will raise these issues if this information is not shared with the owners by Monday of next week.

Cathie Wachter
310-991-8281

From: Peter Webb <pfwebb@telus.net>
Date: Tuesday, May 3, 2022 at 11:17 AM
To: Kurt/Cathie Wachter <cawksw@cox.net>
Subject: Re: Landscape Revitalization

Cathie, thank you for your inquiries about the bank loan to finance the proposed Landscape Revitalization project. My apologies for not getting back to you more promptly on your previous email.

The HOA's long standing practice is not to release detailed information on contracts that have not been fully executed. In this case, however, the Board of Directors published a summary of the Term Sheet covering what we believe to be the important terms for your consideration. It sounds like you have seen this but just in case, the summary is attached.

We trust this will provide sufficient information to help you decide on how you wish to vote on this matter and encourage you to do so. In response to the additional questions you raised we did not put the loan out to an RFP. Alliance Association Bank is the Bank with whom we conduct our other business and already have our banking accounts.. They are one of few who specialize in handling HOA's so we believe it makes sense to stay with them. We have been quite satisfied with the relationship. It is not an MDL. Closing fees are waived but other expenses are typical of such transactions and include such things where appropriate as outside counsel, recording fees, inspection fees, and documentation expenses.

Thank you for your interest in our community,

Peter Webb
President, Board of Directors

On Mon, May 2, 2022 at 8:19 PM Kurt Wachter <cawksw@cox.net> wrote:
Hello Board of Directors ,

Thank you for the information provided related to the landscape project. I do have a few questions related to this proposal.

Was this loan put out for an RFP?
If so, how many banks responded?
If there were several proposals received back what made this bank the best option?
You have not addressed fees. What fees will be assessed to the loan (origination, points, legal, etc.)?
Will this be a Multiple Disbursement Loan (MDL) or all out on day one?
If a MDL, what will be the milestones for the next draw?
What are the specific required covenants?

Thank you for taking time to address my questions.

Cathie Wachter
67548 S. Laguna Dr.
310-991-8281

Unfortunately because our Board did not put out a Request for Proposal (RFP) we have lost time in a period of rates increasing quickly.

Lindsay Mcgrail

5/10/2022 07:40:12 am

Thanking Cathie for all your hard work!

Cathie Wachter

5/14/2022 12:16:25 pm

Thank you Beyond Belief for sharing parts of the Term Sheet such as "the revitalization of landscaping AND other projects approved by the BOD." Another item of note is:

Proposal Expiration:
The terms and conditions of this proposal must be acceptable and agreed to by the Borrower in the manner provided below. An executed copy of this letter must be delivered to AAB, along with all required documents listed in the Customer Underwriting Package, on or before May22,2022. Absent the executed copy of this letter and additionally required information, on or before the stated expiration date, the term sheet will be considered void.

HOW CAN THE DPB COMMIT TO SOMETHING THAT WE ARE NOT VOTING ON UNTIL JUNE 3RD?

Am I wrong

5/14/2022 02:42:43 pm

Cathie, how dare you, by thinking logically, point out that the Board and the CDAC do not have a brain between them. Make no mistake folks, the Board and the CDAC are ONE in this lunatic undertaking with only one Board member who does fit this moronic description. (You know which group you belong to)!

Definition of lunatic
a : affected with a severely disordered state of mind :

What this revitalization episode reaffirms for us that we have major problems at the Desert Princess which we cannot afford to put off any longer without addressing them.

Please think seriously about what this really means, we have given morons the opportunity to destroy our community.

Moron;
1. a person who is notably stupid or lacking in judgment.

We need new people who will CARE about our community and the people in it, people who can read and understand a Term Sheet, People who understand that a Fixed Term loan does not change the terms half way through the term, People who do not profess to know what interest rates will be 7.5 years into the future. One of the group of idiots actually thinks that the real interest rate, after some hocus pocus, is actually only 3%

People who know that May 22 2022 precedes June 3 2022.

Do we need a major change?

Am I wrong?

Michael Stark link

5/14/2022 09:23:58 pm

Why are people posting their opinions on this blog without giving their names? Maybe it gives them the autonomy they crave to call others morons, lunatics, etc. I have a suggestion; how about posting your names and giving all the dues paying members of DP some intelligent ideas for updating our aging infrastructure and maintaining our quality of life? I’m waiting to hear what all the name callers have to say. Give us your best ideas on how to make DP the beautiful place it used to be. I’M SERIOUS, HOW WOULD ALL OF YOU FINANCE THE WORK THAT DESPERATELY NEEDS TO BE DONE? Or do we just throw up our hands and let DP look like the rest of Cathedral City?

Ken

5/16/2022 03:58:36 pm

Michael, its funny you call people out for not using there real name when you guys (the board) shut down meetings and zoom calls as soon as we the residence start asking questions you guys dont like. You want real answers real solutions LISTEN TO THE PEOPLE..with over a thousand residents you cant please everyone BUT one thing we can all agree on is Desert princess has gone down hill in the past 7yrs.(bad maintenance, miss managed funds ect.) We ALL love this place and want the best for our community.
Now how do we get there, simple change directions what were doing is not working and just taking out ridiculous loans is NOT the answer. This is a beautiful place and there's no reason we should be loosing money.
Feel free to call me. 714)723-2600
I'm not afraid 😊

Truth tellers

5/15/2022 09:37:15 am

Stating that something DESPARATELY NEEDS TO BE DONE suggests that the sky is falling, an over dramatization by someone who want to scare you and sell you something that you do not really need, sound familiar?

It does not matter who the whistle blower is as long as we have TRUTH TELLERS in our community, it is the truth that matters not who is saying it.

Anyone who would commit themselves to a loan without knowing what all the details of that loan are is a MORON.

Anyone who would commit YOU and your neighbours to loan without knowing what all the details of that loan are is a criminal LUNATIC, unfortunately for the homeowners most of the board and CDAC fall into this group of people.

The blog is here to exchange ideas and allow whistleblowers to point out problems when they are identified. The blog is not here to have individuals use it as a pillory to condemn other individuals by name and divert attention away from the issues being discussed. Trolling is the usual way to describe that kind of activity.

Have your say without fear of personal retribution if that is what you would like, but have your say.

Michael Stark link

5/19/2022 03:47:13 pm

Did everyone have the time to read the message on Condo Communities this morning regarding the proposed loan for the Landscape Revitalization Project? Your thoughts, please?

Anonymous

5/20/2022 06:26:24 am

Michael, as a reasonably intelligent individual who one who has been fortunate to have read the loan term sheet in detail, I'm sorry to say the Condo Communities message of 5/19 does not even resemble what I read in the Term Sheet. The email distributed by a concerned homeowner the day before, after having received a copy of the Term Sheet is the real deal.

Concerned

5/20/2022 04:45:04 pm

In Response to the Board statement May 19 2022, stating:-

Misinformation: The Board must pay an upfront 'origination fee' of $1,500 before homeowners vote.

The Facts: This is MISLEADING. The ‘origination fee’ of $1,500 was paid to lock in the interest rate and term. It is refundable if we don’t proceed with the loan.

SO, NOT MISLEADING AT ALL, THE INFORMATION PUBLISHED BY A CONCERNED HOMEOWNER WAS 100% ACCURATE,

BUT HERE THE BOARD INADVERTENTLY REVEALS THAT THEY HAVE IN FACT PAID $1,500 TO THE BANK BEFORE WE EVEN GET STARTED ON ANY LOAN,

THE BOARD HAS NOW STATED THAT IF THE PROPOSAL PASSES ,THAT IS GOODBY TO ANOTHER $1,500.00

WERE WE NOT TOLD THERE WOULD BE NO CLOSING COSTS?

NOW WE WAIT TO FIND OUT WHAT OTHER BANK AND OTHER CHARGES WILL ALSO BE LEVIED ON US, SO IMMEDIATELY THE COST OF THIS PROPOSED LOAN IS GOING UP.

THE BOARD IS COMPLAINING ABOUT INFORMATION (MISINFORMATION) BEING DISTRIBUTED BY HOMEOWNERS.

IT IS THEIR OWN NEFARIOUS and EVIL CONDUCT WHICH HAS BROUGHT ABOUT THE CURRENT SITUATION

THE BOARD HAS ALL THE INFORMATION BUT REFUSED TO SHARE IT WITH HOMEOWNERS

WHAT ELSE HAS THE BOARD NOT TOLD US?

VOTE NO IF YOU HAVE NOT YET VOTED

Michelle

5/21/2022 05:49:08 am

As a former banker I can tell you an origination fee is a NON-REFUNDABLE payment associated with the establishment of an account or loan. It covers the banks direct costs in opening an account, taking a loan application and obtaining information and documentation related to approving it.

What an origination fee is NOT is a fee to "lock in an interest rate". Such a rate guarantee is generally outlined in the Loan Term Sheet with an expiration date attached.

Judge link

5/22/2022 09:47:38 am

So you did receive the Term Sheet.
Concerned?

Michelle

5/22/2022 12:01:34 pm

I'm not sure what possible difference it makes to the discourse as to whether or not "Concerned"received a copy of the Term Sheet or not. If he/she did, Bravo to that. The fact remains the Board brought this whole fiasco on themselves by NOT providing it to all the owners since it contained critical information upon which to base a truly informed decision on the merits of this project. The Boards own actions fueled an environment that fostered suspicion, mistrust, and feelings that we were all being misled. By dressing this up as "NOT" a special assessment, which affected the quorum required to proceed with the ballot count, denying us access to the Loan Term Sheet that they were legally committing us to for 15 YEARS, is incomprehensible and undeniably disgusting.

So Much More Clear

5/21/2022 07:35:38 pm

Let me be the first to apologize to the CDAC and The Board.

If only the CDAC had put out their last offering "SO MUCH MORE" much sooner, it would have saved so much heart ache, everything is now so clear.

"It's more than just landscaping"

"It's Lighting"

"It's Signage"

"and it's Safety Too"

And all for such a short-term (if you live long enough) 15-year $7.5 million plus mortgage, so it's not just a plant swap, it's a signage swap, it's a lighting swap, (didn't we just have one of those?) and we are getting our very own fire engine (with crew I hope, or it would be useless).

As I noted above, I apologize to all of you, from both CDAC and the Board, who voted in favor of the revitalization proposal for having thought of you as just being high and on a power trip.

It is now "SO MUCH MORE" clear, that in fact, you are all insane and certifiable.

Your comment will be posted after it is approved.

Charter

This blog is designed as a means to provide transparency and informative access to the policies and protocols of the Desert Princess Palm Springs Homeowners Association, the governance of the HOA Board of Directors and the management of the community’s assets by The Management Trust. The expressed intent is to establish a neighborhood hub for trusted connections and the exchange of helpful information, goods, and services; it is hoped that homeowners will use it to build a stronger and safer Desert Princess Palm Springs.

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Homeowners need to know all the TerMs of planned $5,000,000 Loan

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