Proposed Merger of the HOA and Country Club

1/12/2022 48 Comments

Proposed Merger of the HOA and Country Club

The election ballots are in the mail. This ballot includes a yes or no vote for a merger agreement of our HOA with the Country Club. The Board has proposed this merger in order to streamline operations and manage only one entity.

There are still many unanswered questions:

What financial benefits and risks are there in this merger agreement?
How will this merger move the HOA off the “no lend list” that currently restricts the ability to refinance and purchase homes at Desert Princess?
Will taking on the liabilities of the Country Club increase the risk of future assessments?
Will this merger increase interest rates for mortgages and refinancing?
Do we as homeowners have all the facts and answers to commit to this merger?
What is the urgency? Does the merger need to happen now?

The Blog would like to know your thoughts.

48 Comments

Marianne Thomas link

1/12/2022 09:26:06 pm

I for one cannot decide on an issue unless I know the facts....the pros and cons. This includes the messy details.

Maggie Hood

1/12/2022 10:03:48 pm

this approval should ABSOLUTELY NOT be part of the vote!!!

how can we vote yes or no on the merger without ANY information?!!! There is info floating around that this merger will be to our serious detriment. We need to demand that this be removed from the election and dealt with separately - with full disclosure to all of us AND discussion of the "do not loan" situation we currently find ourselves in. MY loan to re-fi got DENIED in December due to "improprieties and comingling'' of funds...I've heard a merger does us no good. INFO PLEASE

Tim

1/14/2022 03:50:46 pm

HI... I would ask the Loan Department Manager to have them please clarify what they meant by:

" DENIED in December due to "improprieties"

Maggie Hood

1/18/2022 10:51:27 pm

Let me tell you all EXACTLY what Wells Fargo said is the reason they DENIED MY RE-FI in December....I called them after I got the denial letter and asked for the exact reason and they wrote:
"Overall the reason we unfortunately were not able to move forward is due to the condo project (ie, Desert Princess) reporting non-incidental business income over 10%. (After review, we were able to determine the condo project's non-incidental business income is 42.5% - from ownership and operation of Desert Princess Country Club")
So - they are asking us to vote on a merger - but it looks like they have already "merged" the money. Sounds like "comingling funds" to me - WE NEED TO DEMAND ANSWERS!!!! AND VOTE NO ON THE MERGER BECAUSE WE DON'T HAVE ALL THE INFO. This denial has NOTHING to do with land leases - it's the board and management making bad decisions

vincent rella

1/13/2022 06:54:18 am

I would "assume" there will be ALL the information we need to accompany the ballet, but you know what they say about assume. If no information is provided, we need to find WHY none was provided. NO infp, NO vote, obviously.

Kathy Rogers

1/13/2022 07:41:07 am

Most of these questions were addressed in the FAQ about this issue that was sent out & i believe there is a Town Hall on the 22nd on the issue.

Joan

1/18/2022 09:22:12 pm

And you believe them? And who is the "them"? Not even sure the whole board even truly understands what is going on regarding this issue.

Tom Rosa

1/13/2022 08:36:22 am

I read the drivel sent out by the HOA to pat us on the head, Again, just a vague " it for your own good" message. The baseline is that the HOA manager and Board think we are all too dumb or disinterested to really ask meaningful questions. Some of the baseline suggestions is that it would be more cost effective. How I ask?
Tell Us. I agree that this should be a stand alone issue once ALL of the facts have been presented to the homeowners. That bullet point document the HOA sent out, I found to be insulting.
Someone ( recall guys ) should start a petition for the homeowners to sign to delay the vote until a complete and comprehensive evaluation of the merger can be presented and evaluated. There appears to be NO urgency for this to proceed.

Anon

1/18/2022 09:28:58 pm

Drivel indeed. That was exactly what it was.
Regarding a petition, great idea but unfortunately the "recall guys" are tired. The "recall guys" tried their darndest to succeed in a recall. And if more had listened and acted; maybe we would have had an itsy bitsy tiny fighting chance to be in a different position and to not be dealing with some of this BS.

Cecilia

1/13/2022 10:37:43 am

EXACTLY....lots of SHOULDS in that message

Alice Kirchner

1/13/2022 10:41:11 am

I think this decision needs to be postponed and full disclosure of ramifications needs to be mailed to each homeowner before casting votes

Felicity

1/13/2022 01:13:30 pm

The only time how should get involved in a no lend list is when maybe hoa fees have not been paid. To my knowledge hoa cannot prevent you from getting a refinance … does not make sense, can someone explain why we would be on a no lend list ???

Maggie Hood

1/18/2022 10:54:14 pm

read my lengthy explanation I just wrote (which has to be reviewed by "someone" first) I quoted Wells Fargo why they denied my re-fi just last December

Mary Maloney

1/19/2022 06:08:19 pm

Felicity please read my explanation on the other thread regarding the "do not lend" list, this has NOTHING to do with hoa fees not being paid. This has to do with much bigger issues.

Judith Stephan

1/13/2022 02:24:09 pm

Since we do not have enough information about the country club corporation, it is premature to vote on a merger. If you read the merger agreement carefully, the finances, assets and liabilities of this shadow corp. are not even going to be revealed until after the vote. That in itself is a disqualifier. There are virtually no facts in the "faq" sheet.

It's probably a good idea to get rid of this ridiculous shadow corp., but I'm not going to take for granted that stupidity is not accompanied by anything worse, like a cover-up. Let's have some transparency, board!

Judith Stephan

1/13/2022 02:35:37 pm

In the "faq's" about the merger, the statement is made that the HOA will lose its non-profit status. That is not true. Or maybe I should say it's not true unless they screw that up too.

And where is the list of assets and liabilities in exhibit B??? Oh, don't worry your little pea brains about that, You'll get it too late - after you vote for the merger. Could this possibly be managed any worse?

Anonymous

1/14/2022 09:17:09 am

The lack of information and vagaries in the FAQs sheet accompanying the ballot is in and of itself a huge red flag that this merger is at best premature and at worst a potential disaster in the making. To issue ballots in advance of a virtual town hall intended to illuminate the facts of this proposal is another indicator this merger is being rammed through post haste. Who in their right minds would vote prior to seeing a current Schedule of Assets and Liabilities of both entities. I prefer the Board taking this ballot off the table until owners are satisfied we have the information we need to make an informed decision. If the Board is determined to ram this through, I'm voting against the merger.

Mary Maloney

1/19/2022 06:09:55 pm

Agree 1000%!!!!!
Everyone needs to vote No at this time. It can be brought back to the homeowners for another vote, but for now the only vote is NO until a deeper dive and more information can be disseminated.

Janet

1/14/2022 09:37:15 am

I have a question. If the merger means that we go to being a private course, does that means that homeowners would be forced to pay the yearly golf membership fee to use the course? Also, does that mean that family or guests could not use it? If so that seems like a push for more money from owners by forcing them to pay membership. Am I missing something?

Anon

1/18/2022 09:30:48 pm

YES, THAT IS WHAT IT MEANS!
DO YOU THINK THEY WANT US TO KNOW THIS?
NOOOOOOOOOOO

Mary Maloney

1/14/2022 09:47:31 am

I encourage EVERYONE to email the HOA and get your points in the record to delay this vote!!!!!!

Chris

1/14/2022 09:54:03 am

When I went to recently secure a loan for my condo I was told by multiple lenders, including loan depot, that I could not get a conventional loan because the HOA had open law suits involving an overturned gold cart incident. Apparently the HOA has many open lawsuits against them.

Mary Maloney

1/19/2022 06:11:35 pm

This is true when lenders are trying to obtain loans that are not backed by Fannie Mae and Freddie Mac. The investors for those lenders do not like the litigation that is currently filed.

1/14/2022 09:57:36 am

How does one email the HOA and how does one assure they receive, record and read it? I am very very worried about this merger. And my biggest question is WHY NOW and WHY NO UNBIASED INFO from a third party legal advisor who can explain the in's and out's without any leaning - just the fact ma'am.

Lois Wilkinson link

1/14/2022 12:15:33 pm

you can email the HOA at: [email protected]

Anon

1/18/2022 09:32:45 pm

And it goes straight to the black hole of Peter Webb's censored inbox. I would encourage you to add ALL of the board members individually onto your emails.

Mary Maloney

1/19/2022 06:12:47 pm

I would encourage a NO vote on the merger at this time. We can always bring it back for another vote at a later time, but for now, a NO vote is a vote to delay the vote until more information can be gathered by the homeowners.

Vincent Rella

1/14/2022 12:16:55 pm

I agree a postponement is necessary and at least until we get assurance from Fannie Mae that the Boards plans will remove us from the no lend list. We should be able to read an opinion from the Board's counsel. I "assume" they have one. If our home values drop because of Fannie Mae or very high maintenance fees due to this merger, we will have no recourse. At least we will be able to go after the Board's counsel if their opinion was negligent.

Mary Maloney

1/19/2022 06:13:58 pm

I would encourage a NO vote on the merger at this time. Once more information can be sent out to the homeowners and more open discussions about the pros and cons can be discussed should we be voting, so a NO vote is a vote to delay.

Lynn & Doug MacDonald

1/15/2022 01:25:55 pm

If it walks like a duck, quacks like a duck, it's a duck. Why would any owner in their right mind (including owners on the Board) EVER want to be on any 'no loan' list. It will ruin the real estate market within Desert Princess, severely decrease our home values, and cost all of us dearly in the end especially if we end up with 'private' golf course. I agree completely with Jon of Loan Depot that this merger will not work to our advantage and once the word is out that Desert Princess is on Fannie Mae's 'no fly' list, all lenders will be very hesitant to work with any of us. SAY NO TO ANY MERGER or at the very least, INSIST ON POSTPONING THE VOTE ON ANY MERGER BY ASKING FOR MORE TRANSPARENCY REGARDING SUCH AN IMPORTANT ISSUE.

Mary Maloney

1/19/2022 06:14:46 pm

YES!!!!

Summer

1/15/2022 07:56:17 pm

This post is on behalf of Phyllis Verdugo who submitted the following to the HOA in advance of the Townhall meeting:

The following statement was made in the Merger FAQ:

“The merger of the Country Club into the HOA should not preclude a homeowner’s ability to secure a mortgage for their home in Desert Princess. When escrow companies request information from the HOA they are always provided the consolidated financials (HOA and Country Club).”

As you know, Desert Princes is currently on the "Do Not Lend List." It is my understanding from local condo lending specialists that the merger may address one lending issue but create others:

To be “warrantable” for conventional lending purposes, the HOA cannot receive any public funds. As a result, after the merger of the HOA and the Country Club, to be warrantable only Desert Princess homeowners could pay for and use the golf course, restaurant, spa, tennis and other facilities.

The Hotel fee paid directly to the HOA for use of the facilities by its guests could cause Desert Princess to be characterized as a “Condotel.”

QUESTIONS:

Has the HOA, through its attorneys or otherwise, been in direct contact with Fannie Mae to determine: 1) why Desert Princess is on the “Do Not Lend List;” 2) what can be done to be removed from that list and 3) the effect the merger will have on homeowners obtaining refinancing and mortgages in the future (i.e. will Desert Princess be a “warrantable” complex after the merger)?

What is the rationale of holding a vote on a merger of the HOA and Country Club at this time before we understand why Desert Princess was placed on the “Do Not Lend List,” before we have an understanding of what can be done to be removed from that list and before we understand the ramifications of a merger on the ability of homeowners to obtain financing going forward?

Anne

1/16/2022 04:48:42 pm

In the event this merger vote proceeds without the owners being provided with all the facts, it succeeds and it ultimately has serious adverse effects to our property values and financial viability, my question would be would this action form the basis of a class action suit against the individual directors as well as the new Corporation?

Anon

1/18/2022 09:36:53 pm

Those that voted for it to be put on the ballot would be deserving of lawsuits against them personally!

Judge

1/25/2022 01:52:46 pm

How many other times have they already had those opportunities?

Judith Stephan

1/16/2022 12:28:45 pm

I reviewed the audited financials carefully, and I found that the accounting for both corporations seems to be in order.

I can see no good reason why this corporation was ever formed and plenty of good reasons why it should be gone: First, its existence is undoubtedly is a disqualifier for loans in this development. Any time you have complications like this second corporation that no one can explain, lenders are wary.

Second, there should be a lot more transparency in accounting and budgets without the complicated transfers back and forth between the two corporations.

Third, and this is a big one, you won't have to pay to use the amenities you already pay for. (You probably never had to anyway, but apparently no one has successfully challenged these fees.)

Finally, voting on the merger on the election ballot will save us the cost of having an additional vote to approve it.

All things considered, I think we should vote yes on the merger. The HOA will go back to being a normal association with business as usual. There will be no additional fees or membership requirements for homeowners to use the amenities they already pay for. Our guests can use the amenities. Our tax-exempt status will remain the same.

Anonymous

1/16/2022 06:19:56 pm

Quite the about face from your earlier post, Judith. Frankly, your observations in your first blog could not all have been addressed by a review of the Financials of both corporations. Without knowing why this was initially established as two corporations, we have no way of knowing what the benefits or potential downside exists to merging. The existence of two corporations has NEVER been a disqualifier for loans in DP. We must find out why, in the past few months, we have been placed on the Do Not Loan list. The Board itself acknowledges they have no insight into this situation. Wouldn't it be prudent to get ALL the facts before the merger goes to a vote? Just askin'.

Mary Maloney

1/19/2022 06:17:26 pm

Interesting post Judith. I would draw your attention to the line item "maintenance expense". Can you also please tell me whether the country club operations are profitable or operate at a loss from the financials you reviewed?

Judge

1/25/2022 01:58:00 pm

Why would we want to inherit CC that has been in the red for the past 5 years?

Anonymous

1/17/2022 11:43:26 am

Without the facts I say vote NO.
This no lend list affects all condo owners in the Coachella valley. There are lenders trying to figure a way around the effects that FM and FM have put on the condo home owners.
I say vote no.

Terry

1/18/2022 03:24:43 pm

There are homeowners at DP who want to have total control of the restaurant and their "country club" and of course their golf course, all 27 holes. It is said that these entities are public but in reality they are supported by homeowners, many of whom do not utilize these facilities. The BOD is now pushing the idea of merging these facilities in the face of a do not lend notice on the part of Fannie and Freddie which means buyers cannot borrow money to purchase DP properties with a conventional loan which is no longer available.
It is time to face the facts. The secondary lender, ie Fannie and Freddie become the underlying mortgage holder when they purchase home loans from the banks. FM & FM don't want the liability associated with the commercial type risks of properties like DP because for one thing home loan mortgage rates are way too low to insulate the lender against commercial risks. The answer is not to get closer to these properties by merging, but to alienate these properties before this charade takes down the whole house. Taking away a homeowner's ability to alienate (sell) their property takes away some of a homeowner's financial security. A lack of vision and poor advise has gotten us here. We need to put the brakes on this before it goes any further. The path we are on is not sustainable.

Mary Maloney

1/19/2022 06:19:49 pm

Agree with you 1000% we are on a slippery slope to becoming the Desperate Princess at the hands of this HOA board. Period. The co-mingling of funds, loss from the country club operations each year being offset by owners is a total mess.

Robert

1/19/2022 07:41:58 pm

I have been in the mortgage business for 42 years, the HOA should not be merged with the Country Club, the financials from each should not be combined for numerous reasons, litigation depending on size and status would effect the eligibility of financing from with FNMA or FHLMC. Numerous issues appear to be in play with the merger and the eligibility for financing through either agency. I STRONGLY urge my fellow homeowners to VOTE NO! Unless the only buyers you want are all cash buyers! Let the consultant complete his/her review and determine the various reasons for the DPCC to placed in the Do Not Lend list. Once that is known then and only IF a merger would not negatively impact eligibility should the merger be considered. The HOA Management and Board have a duty to protect the homeowners if they won’t/can’t they should not be re-elected. VOTE NO UNTIL ALL THE FACTS are known!

Kim

1/20/2022 02:07:52 pm

Thank you for your insights Robert. Your posting is not only informative, but highlights good reasons why we should do this. When you read the Board's reasons as to why this merger is proposed, it's really quite preposterous on its face. They claim it will achieve operating efficiencies as well as reflect the true nature of the two organizations. So in other words, they are suggesting they are overseeing inefficient entities as has been the case since 1992 and we were not being apprised of the true nature of the two organizations. What a stunning admission. Until we have all the facts from specialists in this field, with no self-serving skin in the game, we must vote NO to the merger. A two hour town hall hosted by the Board just doesn't cut it in terms of providing the information we need to vote with confidence, especially BEFORE we get the facts as to why we are on the Do Not Loan list.

Anonymous

1/25/2022 02:22:25 pm

They are in the process.

Doug Schmidt

1/23/2022 12:00:02 pm

Self-Correction by Douglas Schmidt

At the Desert Princess townhall meeting on January 22, 2022, discussing merger of the Country club into the Homeowners Association, I said that I will vote in favor of authorizing the Board to proceed with the merger.

I said that Board members and all homeowners have the same personal interest to preserve Desert Princess property values. I added that if the upcoming election authorizes the Board to proceed with the merger, the Board should hold all its ensuing discussions of the matter in open session, not in executive session, in order to keep members informed and to preserve their confidence in the Board.

To set up my remarks as coming from an objective Board observer rather from a Board apologist, I said that I had been active in two “recall” elections. That was a slip. I should have said two “recent” elections.

One was the 2016 recall election in which I campaigned for the recall, and the other was the 2019 election to annex the Hotel-9 Holes. Although I personally favored the annexation, I campaigned against it in the election. The reason was that I thought the Board was being duplicitous in using the 33% standard for passage in the Country Club governing documents rather than the simple-majority (“more-than-half”) standard in the HOA governing documents. Fortunately, the annexation passed with 55% approval, so my issue was mooted. Nevertheless, ever since I have favored merger of the Country Club into the HOA.

As for the 2022 election to recall the Board president, I studiously took no position.

Judge

1/25/2022 02:18:27 pm

Prediction if the merge goes through.

HOA increases.

John link

9/19/2024 12:05:18 am

Thank you for sharing the informative article.

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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Proposed Merger of the HOA and Country Club

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