FOR SALE...AGAIN: Links at Summerly Golf Course

The ongoing saga for the Links at Summerly Golf Course continues as the Feds put it up for sale. For background information read…http://patch.com/california/lakeelsinore-wildomar/feds-seize-citys-only-golf-course--preventable. On Tuesday, Feb-10, the Lake Elsinore City Council had a Closed Session item on the Price and Terms of Payment regarding E3 Advisors. The Federal Security & Exchange Commission hired E3 Advisors to serve as the Receiver for managing the Links Golf Course following the alleged Ponzi scheme and seizure of the property by the Feds in March 2014 (http://www.worldcapitalmarketreceivership.com/ ).

The Links Golf Course appears to be in terrible condition, as the comments on “Yelp” indicate (http://www.yelp.com/biz/links-at-summerly-lake-elsinore?sort_by=date_desc ). It will be difficult to ever get these customers back to the Links. To quote the Federal Receiver on the maintenance problem…”The availability and cost of water necessary to irrigate and maintain the golf course are major concerns that affect the viability of operations moving forward”. Does it surprise anyone that the Federal government couldn’t properly maintain a golf course? On the other hand, the Links Golf Course may not be economically viable.

I’m not sure why the City Council was looking at price and terms of payment in a Closed Session meeting given on August 28, 2012 the City Council already declined ownership of the golf course. I would have liked this item to be discussed at an open public meeting, so that citizens, homeowners and potential home buyers are informed. In 2012, the City hired an expert to evaluate making the Links a public golf course. Part of the reasoning cited for denying the public acceptance in 2012 was the…”Potential profit exceeded by operational risk and inability to predict when revenue would exceed cost” and “Creates new liability for the City”.

If the City’s CCRs for the Links (http://www.lake-elsinore.org/index.aspx?recordid=1716&page=492 (Agenda Item-9)) are still valid and honored by the Feds, then City Manager Grant Yates does have the sole authority to consent to the sale to a new buyer. Let’s hope this time around he doesn’t approve another Ponzi scheme.

McMillin Homes is the current master developer of the Summerly Development and was the second owner of the Links Golf Course following the bankruptcy of John Laing Homes. McMillin Homes sold the Links Golf Course to World Capital Market (WCM) Inc. in September 2013 for approximately $1,650,000 in cash. Shortly thereafter the Federal SEC alleged WCM was operating a Ponzi scheme. I wonder why McMillin Homes ever decided to sell this golf course in the first place considering their parent company, Corky McMillin Companies, owned and operated other golf courses under the CSC Golf Management Company (http://www.cscgolfmanagement.com/index.htm ). Funny thing, the Federal Receiver selected CSC Golf Management to manage the Links Golf Course following the seizure.

LoopNet currently lists the Links Golf Course for an asking price of $750,000 (http://www.loopnet.com/Listing/18967148/29381-Village-Parkway-Lake-Elsinore-CA/ ). Given McMillin Homes needs the Links Golf Course to continue to sell homes in the Master Planned Community, I suspect they’re eager to re-purchase the Links Golf Course for half the original selling price or less. Let’s hope they do and immediately correct their shortsightedness by restoring the golf course to its original condition.

This is a critical juncture for current homeowners and potential home buyers who may rely on the Links Golf Course adding future value to their investment. What company would purchase and operate this golfing venture given that McMillin Homes sold the golf course once already and the City passed on public acceptance and the Federal Receiver’s doubts about economic viability? If McMillin Homes re-purchases the Links Golf Course, then homeowners better understand the exit plan.

I think in the future, the City might reconsider accepting the property as a public golf course; subject to McMillin Homes establishing an endowment sufficient to make-up for operating shortfalls for a period of time. I don’t like the idea of the City getting into the golf course business; however a public golf course could be on par with a public park and an endowment toward operations would sweeten the deal.

If I was a potential home buyer, then that’s what I’d look for now. Buyers beware!

P.S.: Lake Elsinore’s 100-Year Flood Elevation of 1,263.3’ aMSL (NGVD29) means that over the life of a 30-year mortgage there’s a 30% chance the Links at Summerly Golf Course will be 15 feet underwater during one of those years, along with the City’s Summerly Park. Both will be costly to recondition following inundation by floodwaters. It’s hard to believe during this period of prolonged drought, but the floodwaters from Lake Elsinore have a long history of converting true believers.

Related weblinks below.

http://patch.com/california/lakeelsinore-wildomar/feds-seize-citys-only-golf-course--preventable

http://www.worldcapitalmarketreceivership.com/

http://www.pe.com/articles/golf-693653-capital-investors.html

http://www.pe.com/articles/course-652786-golf-city.html

http://www.pe.com/articles/city-652696-course-option.html

http://www.mcmillinhomes.com/about/companies2

http://www.cscgolfmanagement.com/index.htm

http://www.lake-elsinore.org/index.aspx?page=441

http://www.pe.com/articles/water-673533-recycled-course.html

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