Dear Fellow Andover Residents: Your Homeowner Associations and the Andover Presidents Council/Alliance of Andover Homeowner Associations (AAHA) are listening to you! We are monitoring the comments received by email, Nextdoor and Facebook. We, like you, have serious concerns about the future of the Andover Golf and Country Club Property (the Property ). Unfortunately, many of the emails and social media posts contain incomplete, inaccurate, and misstatements of fact, and in some cases, a complete falsification of the issues. Our goals have always been to protect our property values; to preserve a golf course/green space; and to prevent development of the Property as much as possible! As you know, these goals have led our associations to consider and move forward in an attempt to purchase the Property in order to maintain our property values. As you also know, on February 14 th, Judge Ishmael ruled that there is a common scheme of development that creates an implied servitude. Both before and since that ruling, AAHA has, through our lawyer, made multiple attempts to negotiate with Whitaker Bank to purchase the Property. As discussed below in more detail, Whitaker Bank s last demand was $3.35M. This is more than $850K more than the PVA value and $600K more than AAHA s final and best offer. Needless to say, it can only be one thing that is driving Whitaker Bank at this time simple, pure greed. So, unfortunately, there is no deal on the table right now. Whitaker Bank President Tom Hinkebein has repeatedly assured us that the Bank does not want the Property developed. However, in spite of these assurances and the various rulings by the Court, Whitaker Bank's attorney represented to the Court on March 21 st that they are now attempting to pursue a sale of the property on the Todds Road Corridor to a developer and then sell the remnant property to the HOAs as green space. Whitaker Bank refused to disclose the name of the developer or any details of proposal. As our attorney advised the Court, we strongly object to and will aggressively oppose any such development plan. Here are some important updates to provide you accurate information on this important golf course land issue, and some answers to Frequently Asked Questions (FAQs). As additional FAQs are asked, we will try answer them in subsequent communications. We will also address additional issues that, if unchecked development is allowed to move forward, concern us greatly, but which have largely been ignored by the handful of people opposing the purchase of the Golf Couse Property, such as: sewage systems, storm water drainage due to impervious surfaces, school overcrowding, and traffic problems.
With any additional commercial or residential development on the Property, we foresee significant problems in these areas. Our sewer and road infrastructure were not developed with potentially double the population existing within our neighborhoods footprint. There is a golf committee that has received information from four local operators who are interested in operating the course on a lease arrangement. The group is vetting and looking at their viability. The fact that there are at least four parties interested in operating a golf course, gives us confidence that a properly run golf course is viable. If the property is maintained by a golf course operator, that will save the associations significant maintenance costs in the future and save the green space. There are also several parties interested in purchase of the clubhouse and pool to potentially revitalize and upgrade these facilities. We have a committee researching the cost of maintaining the 18 holes as green space. That information will be available on future posts. Additional Access for Updates on the Golf Course Purchase Issue There s good news! In addition to the website and email updates, we will post links to these updates on NextDoor and Facebook. This will hopefully provide residents with continued access when new updates are available. As always, the updates will continue to provide accurate information, correct misunderstanding or inaccurate messages spread by others, and present the facts to keep you informed. Why is AAHA considering purchasing the Andover Golf and Country Club property? The Andover Golf and Country Club property ( Property ) was developed by Ball Homes and Lochmere Development (Troy Thompson) with the intent that it would NOT be developed as either residential or commercial properties and would remain a golf course. AAHA has argued that the Property is subject to an express restriction that requires the property to be maintained and used as a golf course, under the 1988 Lease Agreement between the Developers and Corman-McQueen, the golf course developer. Unfortunately, the Court has ruled that the Developers did not adequately record documents in the Property s chain of title to create an express restriction. AAHA has also argued that the Property is subject to a common scheme of development that created an implied servitude that the Property must be a golf course or green space and cannot be developed for residential or commercial purposes. In February, the Court (Judge Ishmael) ruled there was sufficient evidence to support this implied restriction, but declined to specifically the implied servitude, leaving that decision to his successor, Judge Reynolds. The overwhelming research and evidence establishes that if a golf course closes down and is redeveloped into residential or commercial purposes, the existing, adjacent residential properties are significantly devalued, from between 6-12%. Development of the Property will add new issues and complications for us, such as: o Traffic increases with development of commercial and higher-density residential development;
o Storm water run-off volume & flooding issues increase. New streets and roads add more impervious surfaces in our area that already includes 2 FEMA flood plains. o Sewer flow increases. Additional development (both commercial and high-density housing) will increase demands on the existing sanitary and storm sewer infrastructure. o School overcrowding. Our local schools (ACE, Garrett Morgan, Edith J. Hayes) are already overcrowded, requiring additional portable class rooms. New residents in our neighborhoods are not even being allowed to register in their school district because of this overcrowding. By purchasing the Property, we can prevent development of the Property, protect our property values and select the developer to re-imagine and re-develop the pool, tennis courts, and clubhouse, and stop paying attorneys fees in the litigation with Whitaker Bank. What s Happening Now? Golf The AAHA Golf Committee has met or talked with eight potential golf operators and has identified four local golf course operators interested in managing the Golf Course under a lease agreement with the AAHA. The Golf Committee is vetting the operators, and the strong interest clearly demonstrates the viability of keeping a golf course in our growing area. Clubhouse and Pool AAHA has several parties interested in the purchase of the clubhouse, pool and tennis courts. The parties intend to make significant investments in upgrading these facilities. Green Space AAHA is evaluating the annual costs to maintain the Property as green space, open space, park, recreational uses and trails, in the event that a golf course is not a viable option in the future. Other Frequently Asked Questions (and Answers To Them) What is the lawsuit with Whitaker Bank actually about? There are actually 3 lawsuits and 3 different appeals have already been taken (collectively, the Lawsuits ). The Lawsuits with Whitaker Bank are about protecting the value of our houses by owning and controlling the future use of the Property. Whitaker Bank seeks to sell the Property to third-party developers for the highest and best price (well beyond its actual loan value at the time of foreclosure in April 2017). To do this, Whitaker Bank seeks a judgment that the Property is free and clear of any express and implied restrictions. AAHA, of course, disagrees with this. The HOAs have argued that there are both an express and implied restrictions on the Property that only allows for a golf course or, if a golf course is no longer financial feasible, green space for recreational purposes. On February 14, 2018, the Court ruled there is no express restriction and ruled in favor of AAHA and homeowners, findings there is a common scheme of development that created an implied servitude, but declined to specifically define the implied servitude, leaving that decision to his successor, Judge Reynolds. The videos of that hearing can be found on the andover.org website. The first five minutes of the second video is particularly instructive and helpful.
Why does any of this matter? If Whitaker Bank prevails on its claim that the Property is not subject to any express or implied restriction, it would be able sell the 169 acres to the highest bidder. In turn, that buyer could develop the Property into commercial and high-density housing. As you may know, the Planning Commission and City Council did not expand the Urban Service Boundary last year during the Comprehensive Plan update. As a result, the Planning Commission is now approving new commercial development and high density residential development in areas never before thought possible (or desired). As a result of this decision, commercial development is more valuable than residential. If the Property were to be developed (i.e., no longer a golf course or green space), it would have a significant negative impact on our property values. That s why this matters. What s being done about this possibility? The group of 8 homeowner associations (Andover Forest Homeowners Association, Inc.; Andover Neighborhood Association, Inc.; The Golf Townhomes at Andover Homeowners Association, Inc.; The Golf Townhomes at Andover Homeowners Association, Inc., Phase II; The Golf Townhomes of Andover, Estate Section, Homeowners Association, Inc.; The Villas at Andover Homeowners Association, Inc.; Andover Club Villas Homeowners Association, Inc.; and The Reserve at Andover Residential Homeowners Association, Inc.) have been trying to negotiate with Whitaker Bank to purchase the Property in an effort to prevent commercial development and highdensity housing of Property. Since November 2017, the Associations have made numerous good faith communications with Whitaker Bank regarding purchasing the Property. However, Whitaker Bank has not responded in kind. The last demand by Whitaker Bank was $3.35 million dollars, nearly $1M more than its loan balance at the time of foreclosure last year. In contrast, the Associations have offered Whitaker Bank $2.75M as their final and best offer. While this offer was higher than anyone really wanted to make, it is much lower than the collective loss in value that all of us will incur if Whitaker sells the Property to a developer for commercial and/or residential development. In our opinion, Whitaker Bank is simply being greedy at this point. If the associations purchase the Property, how will it be paid for? Each of the homeowner associations will levy a capital purchase assessment on each of their individual members/homeowners. The assessment will be based upon the PVA value of each home, compared to the collective PVA values of the 1400+ homes in these 8 associations (which is approximately $270M). We cannot establish the final assessment until/unless we have a purchase agreement with Whitaker Bank. We estimate the purchase assessment to be $600 per $100k of PVA value. As an example: PVA value = $300k, assessment of $1,800. If the Property is sold to a developer, that owner would lose an estimated 6-12% of their home s value, or approximately $18,000 to $36,000. The capital
purchase assessment ($1,800 in this example), especially when amortized over 10 years (approximately $200 per year), is a no brainer. How will the homeowners be required to pay the capital purchase assessment? There are two options. Each owner would elect to either pay this fee up front, or to pay it over 10 years. If paid over time, the assessment would bear interest. We have received multiple loan offers from different banks, with up to 100% financing. The collateral for the loan will be an assignment of the capital purchase assessment to the lender bank. The Property would not be collateral for the loan. Will this capital purchase assessment be voluntary or mandatory? If we are able to purchase the Property, all homeowners in these 8 associations will be required to pay the capital purchase assessment, the same as your current HOA dues. Can the associations do this without a vote of the home owners? Yes, you purchased your house in these neighborhoods, you automatically become subject to the deed restrictions filed of record and the by-laws and other governing documents of your respective association. These governing documents are overseen and administrated by a Board of Directors. Further, AAHA asked the Court for approval to purchase the 169-acre Golf Course Property as common property, and to levy capital purchase and ongoing maintenance assessments. The Court granted that motion. The first 5 minutes of the second video from the hearing on February 14 th contains the Court s ruling in this regard. What could happen if a homeowner refuses to pay the capital purchase assessment or annual maintenance fee? Each association would be required to follow its normal rules and procedures for collecting unpaid dues and assessments. This could include additional interest or late fees, and costs and expenses, including attorney s fees. If an account is turned over to an attorney for collection, it would include notice to the owner and potentially a lien being filed against their property. Eventually, if unpaid, the association could bring legal action to obtain payment, which could include foreclosure of the property to settle the debt. The associations will depend on the capital purchase assessment to meet the debt payment obligation to the new lender. What happens when a home is sold? If the homeowner had paid the assessment in full up front, that owner would either include the prerated balance of that purchase assessment in their price of their home or have the buyer pay the pro-rated amount at closing (through the settlement statement).
If the homeowner choses to finance the assessment, as described above, it depends on if the lender requires the association to accelerate the balance on the capital purchase assessment or allows the new owners to assume the remaining balance and payment terms. Shouldn t homes on the golf course be assessed more? Yes, and they are being assessed more. If two houses are exactly the same, and one is on the course and the other is not, the one on the course should have a higher PVA assessment. Because the capital purchase assessment is based on the PVA assessment, the house on the golf course effectively pays more. While there are multiple ways the assessment could have been determined, the Associations Boards of Directors thought this was the most equitable method of determining the assessment. What is AAHA s long term goal for the Property? First and foremost, AAHA wants to avoid the 169-acre property from being developed in any way that devalues or does not protect our property values and neighborhoods. To this end, the AAHA s intends on selling the existing clubhouse, pool, tennis courts and parking lots to a third party to re-imagine and to re-develop recreational facilities that include a pool, fitness center, and private and/or public dining facility(ies). AAHA is also seeking a golf course company to lease the 18-hole course and driving range portion of the Property. If that is not possible (or if the golf course is not financially feasible in the future for some reason), the entire property (greens, fairways, cart paths, roughs, ponds, driving range, etc.) will become open and green space for the owners in our 8 associations to use for recreational purposes. There is no intent on the part of the AAHA to operate a golf course on its own. If there is not a golf course, how will the Property be maintained? Regardless of whether it s a golf course or not, the Associations will assessment an annual maintenance fee. This assessment will be a flat fee each year to cover the costs of mowing, insurance, etc. The cost of this has yet to be determined, and will depend on whether there is a golf course operator, but the annual maintenance initial fee is estimated to be around $100 per year. How many homes have already agreed to prepay the capital purchase assessment? As of March 8, 2018, more than 285 households have committed to prepaying the capital purchase assessment, and another 25 have expressed a willingness to prepay once a final purchase price is agreed upon. This means that more than 20% of the owners have agreed to prepay the capital purchase assessment!