True Life Companies took a calculated risk – spending $3 million to sell its vision of turning the fallow Ahwatukee Lakes Golf Course into a lucrative residential redevelopment plan.
Aiden Barry, True Life senior vice president, testified in Maricopa County Superior Court that he thought he could collect the signatures of 51 percent of property owners to change deed restrictions that require the property to remain a golf course if the company came up with the right concept.
But while Barry’s company collected about 2,000 signatures for its controversial Ahwatukee Farms proposal – a preschool, urban garden and residential development – it failed to collect the 3,564 signatures required. Now, the fate of True Life’s crapshoot rides on a pending ruling by Superior Court John Hannah, who must decide whether the former course’s terrible condition and the decline in the golf market constitute a “material change’’ that would justify a modification in the deed restrictions.
Even if Hannah were to rule in True Life’s favor, the company would still face a stormy Phoenix rezoning hearing on its latest plan, which combines a nine-hole par-3 course with about 275 new homes. Closing arguments are scheduled in Hannah’s north Phoenix courtroom today, Nov. 1.
If nothing works out, Barry said, company executives testified that a spinoff company created for the sole purpose of redeveloping the 101 acres, Ahwatukee Lakes Investors, could simply default on an $8.25 million payment due on June 19, 2018. The arrangement would potentially protect the parent company and others from liability and return the property to former owner Wilson Gee, whose recourse would be foreclosure proceedings.
True Life paid Gee $750,000 on June 19, 2015 and had $500,000 payments due on a promissory note on the same date in 2016 and 2017, according to the testimony. But with costs soaring and no true progress being made toward selling off lots or possibly building houses itself, True Life sought and received amendments to the purchase agreement. Gee allowed True Life to forgo the payments in return for an interest payment, which Gee subsequently waived.
“We went into this with eyes wide open,’’ Barry said. “We evaluated the risk and decided to move forward.’’ “True Life approached this knowing there was an ultimate zoning case with the City of Phoenix,’’ he said. “If we were successful in garnering the 51 percent support from the community, there would likely be good support for the rezoning case.’’
Barry was generally composed while he was questioned by Tim Barnes, an attorney for Ahwatukee residents Linda Swain and Eileen Breslin, who have been staunch opponents of the redevelopment plan. But he grew a bit testy when he thought Barnes implied that True Life failed to gain support for Ahwatukee Farms, a plan Barry said he thought would appeal to the entire community rather than just golfers. “We gained the support of 2,000 residents,’’ Barry testified. “We gained tremendous community support’’ – the most, he added, in his career for such a change.
He acknowledged, however, that the company turned to a Plan B after realizing the signature drive was doomed: pursuing legal action to change the deed restrictions under the “material change’’ provision in the deed restrictions.
The latest plan, featuring the par-3 course, emerged in court documents just days before the trial. But Barry and Tabor Anderson, another True Life executive, said a golf course supported by a homeowners association made up of new residents who purchase the homes always was an option. “You just defined a land option,’’ Anderson said when Barnes outlined details of the sale agreement.
When Barnes questioned the need for a $200,000 political consultant, Anderson explained the realities of redeveloping an appealing infill site surrounded by homes in an upscale community. These were the same qualities that enticed True Life into the purchase.
“Entitlements work is like running a political campaign. Instead of getting elected, you get approvals,’’ Anderson said. The course would feature larger-than-normal greens with two pins. Golfers could shoot for, say, the white pins during the first nine holes, then shoot for the blue pins during their next round to add variety.
The HOA would own the golf course and members would be liable to support the course financially if a shortfall was encountered. Anderson and others testified in no uncertain terms that a new stand-alone course, supported almost entirely by greens fees, would not succeed.
Anderson said the proposal would correct a problem created from the beginning of Ahwatukee’s development, where 5,200 homeowners had no responsibility for supporting the course.
Swain and her expert, Buddie Johnson, who helped develop Las Sendas and Red Mountain Ranch in east Mesa, disagreed. Swain envisions an executive course similar to Augusta Ranch in southeast Mesa. Johnson cited the property’s outstanding location and the area’s demographics as reasons a well-designed, competently operated executive course could prosper.
“I have had at least five substantial and capable buyers come to me and express an interest,’’ Johnson said. “It’s a site in the midst of 5,000 homes, with 200,000 people in a five-mile radius. They have the time, they have the money, they can play it fast.’’
He said he envisioned a family, or someone with experience in the golf business who is relocating from the Midwest, buying and operating the course, making it an integral part of the community with league play and other outings. Executive courses appeal to many of the people who make arguments against golf, citing the expense, time, money and difficulty in playing the sport, Johnson said.
But Anderson and Richard Carter, an expert hired by True Life as a consultant from Troon, made Johnson’s opinion sound like a pipe dream. “No chance,’’ Anderson said bluntly when asked whether a stand-alone course could succeed on the property. Anderson, who has developed 15 courses, said courses generally serve as an amenity to attract homebuyers or the construction of hotels and resorts. “It took about one minute to decide that,’’ Anderson said, reflecting on his opinion that a stand-alone course is not viable. “You know how important it is to have those revenue sources to support the amenity upfront.’’ He said Carter’s conclusion that it would take 29 years for a builder to recoup its investment makes it impossible to find financing to replace the Ahwatukee Lakes course.
Johnson and Carter made vastly divergent estimates on how much such a course would cost. Johnson concluded about $4.8 million, using some cheaper options such as a modular clubhouse rather than a permanent one. Johnson cited a $3.9 million renovation at Mountain Shadows in Paradise Valley and a $3.5 million renovation at Rolling Hills in Tempe. Neither course was as badly neglected as The Lakes.
Carter testified that he estimates a three-star facility would cost about $14 million, building a more permanent clubhouse, replacing the irrigation system and building a storage facility for expensive maintenance equipment. “I’d get laughed out of the room’’ if he were to propose such a course, Anderson said. “That’s why these things are funded on the backs of developments.’’ He described True Life’s latest proposal as having a park-like buffer zone, separating existing homes from the new ones while providing a walking path. He said part of the development would have a park-like appearance while another part would feature the par-3 course. Carter said Johnson’s estimate understated the true cost because it is too general. He said Troon would not be interested in building a course on the property. “I would expect this course to be in the condition it is for a long period of time’’ because of a lack of return on investment and a low probability that it would do better under a different owner than Gee.
And it also warned that if he orders the company to restore the old course, the land will remain barren indefinitely. The bombshell disclosures are contained in a brief filed by attorney Chris Baniszewski with state Superior Court Judge John R. Hannah Jr., who began on Tuesday, Oct. 24, hearing evidence in a three-day trial on two residents’ demand that True Life be ordered to restore the course.
Conspicuous by its absence is any mention of the company’s Ahwatukee Farms plan, which would have turned the site into an “agrihood.”
The brief gives no details on how many homes and what kind of course the company would build if Hannah grants its request to modify the covenants, conditions and restrictions that first governed the site in 1986 and then renewed indefinitely in 1992.
All it states is: “The modification will allow additional homes to be built on the property that will generate the necessary funding to construct and operate a golf course.”
Attorney Thomas Barnes, who represents Lakes residents seeking the restoration of the 18-hole executive golf course, states in his brief that True Life wants to build a nine-hole “fun course.”
Baniszewski also warns that if True Life can’t build homes, “no golf course will be operated on the property and it will remain in fallow condition.”
True Life Executive Vice President Aiden Barry declined comment when asked about the brief by AFN last weekend. Barnes asserts that True Life knew what the CC&Rs required when it paid $9 million to buy the site in 2015.
But he charges that True Life “was looking at the profitability of the sale of residences, not the operation of a golf course” when it bought the site and cannot now seek a modification of the CC&Rs.
Besides, he notes, the same set of CC&Rs govern both the Ahwatukee Lakes Golf Course and the Ahwatukee Country Club. That means True Life can’t have the CC&Rs modified because it doesn’t own Ahwatukee Country Club.
The brief seems to signal an end to the “agrihood” that True Life unveiled in August 2016.
That plan called for 270 single-family and duplex houses, a five-acre farm, a private school, café and other amenities on the site. The company waged an aggressive campaign to persuade 51 percent of the approximate 5,400 Lakes homeowners to agree to a change in the CC&Rs that would pave the way for the agrihood.
That campaign stalled, reportedly at around 2,000 signatures, and True Life eventually asked the judge to rule that a “material change” in the course warranted a modification of the CC&Rs.
Lakes residents Linda Swain and Eileen Breslin want Hannah to order True Life to restore the 18-hole course.
In July of last year, Hannah ruled that the CC&Rs required a course, but left for trial the issue of whether True Life could be ordered to do that.
But True Life earlier this year released a consultant’s study that estimated it would cost $14 million to restore the course – and that figure did not include operating expenses.
In his brief, Baniszewski states, “The relative hardships in this case weigh heavily in favor of TTLC.”
“The cost of reconstructing and operating a stand-alone golf course on the property prevents TTLC from operating a golf course even if the court were to grant an injunction,” he states, adding that True Life “cannot attract investors or obtain a loan” for such a venture.
He also says the residents want an “aesthetically pleasing view, but that does not justify a requirement that TTLC expend millions of dollars to reconstruct and operate a golf course that lost money the last four years it was in operation and will likely not make a profit in the future.”
Baniszewski said it would take True Life 29 years just to recover its initial investment if it was forced to recreate a course. “Consequently, the only realistic funding mechanism for a new golf course on the property is for a new golf course to be built in conjunction with a new home development.,” he adds.
True Life is proposing that the judge allow housing and that those new houses would comprise a new homeowners association that would operate the course.
Barnes counters, “The lack of profitability in operating a golf course on the property is a function of the $9 million price TTLC agreed to pay to purchase the Lakes Golf Course.”
While Barnes told the judge that residents are entitled to an injunction ordering the restoration of the course, Banizewski’s brief paints a grim picture of what could result.
Saying the likelihood of anyone restoring the site to its former glory “is remote at best,” he states: “Instead the property will most likely be mired in bankruptcy proceedings. Moreover, given this court’s ruling that the owner of the property must operate a golf course, the chance that the property will be sold out of bankruptcy is also very unlikely….No golf course will be operated on the property and it will remain in its fallow condition.
Save the Lakes street clean up
>> June 10, 2017 <<
Save The Lakes is committed to making our community better by helping keep trash collected on Warner Road. (We welcome all volunteers from our ranks - our next "pick-up" event will be in early July.)
(Warner to Equestrian Trail section of the Warner-Elliot Loop)
After nearly two years of studying flood risks in Ahwatukee that could cause more than $5 million in damage to 492 homes, apartments, commercial buildings and other structures, county and city officials have one piece of advice for owners and renters in harm’s way.
Get flood insurance.
But even if you got it today – in the middle of monsoon season – you’ll still have to wait 30 days before it takes effect. The advice emerged Monday during an Ahwatukee Foothills Village Planning Committee meeting over a frustrating fact: While city and county officials now know where the problems lie, there’s little money to fix them.
And in cases where flooding issues are linked to other property owners’ lack of maintenance, officials aren’t sure if they can force those owners to correct the problems.
“It’s frustrating,” said Karen Young, who appeared before the committee as it discussed the Maricopa County Flood Control District’s final version of the nearly two-year-long study.
That study pinpoints 21 intersections, 15 streets and segments of major arterials, two hillsides and a channel entrance behind Lomas Elementary school as being at risk for heavy damages in a so-called 100-year flood.
Although the term “100-year flood” is a simple definition of a catastrophe that statistically has a 1 percent chance of occurring in any given year, Young discussed how her 80-year-old mother had already been hit twice by fate in three years.
Her mother’s home, near the clubhouse in Ahwatukee Country Club, incurred $14,000 in damage in 2014 and another $4,000 last year. Since then, she’s also forked out $3,000 on flood prevention improvements.
To her dismay, she also heard Hasan Mushtar, the city’s flood plain manager, concede that owners might not be able to get flood insurance if they’ve incurred flood damage before.
The county doesn’t even know how much it would cost to correct all the problems it identified.
It took only six hazards, further studied them and determined that eliminating them will each cost between $100,000 and $2 million. Only one was advanced into the grant-seeking process.
That project – construction of a flood wall and other preventive measures on South Manden Street, a frequent target of runoff from South Mountain – will cost an estimated $1 million.
The Federal Emergency Management Agency already rejected a request for partial funding last fiscal year, so local officials are hoping FEMA will change its mind.
Mushtar told the planning committee he hopes funding will come through so that “either this year or next it will go into final design.” It will then require four months of design and up to another 12 months’ construction.
As for the other five projects identified for “immediate” work, no funding is in sight.
And the remaining hazards identified by the county are even deeper in limbo; corrective work has not been fully proposed, so there are no estimates on what potential fixes might cost.
“We can’t get rid of the risk immediately of every problem, so we need to warn homeowners in those areas about getting flood insurance,” said committee chairman Chad Blostone. “We’d like to do it quickly.” Mushtar said it would take at least two weeks for the city to put together a warning letter for property owners in the flood-prone areas, though he said the review process could take longer before a letter would be ready to send out – meaning a warning like would not arrive in owners’ mailboxes until the monsoon season is practically winding down.
AFN file photo
Blostone’s sense of urgency is based on the fact that regular homeowner insurance will not cover damages caused by water from a source outside the insured property – such as hillside runoffs or fast-moving downpours that overwhelm drainage systems.
Meanwhile, officials had no immediately clear answers on another problem that is associated with some of the flood-prone sites: inadequate maintenance on some nearby property that might not even be in the danger zone. That situation apparently is exactly what happened to the home of Young’s mother because a channel on the Ahwatukee Golf Club’s course may need to be deeper.
City of Phoenix
City of Phoenix
City of Phoenix
“Is there something you can do so this private property owner can be forced to correct the problem and if so, what?” Young asked. No one at the meeting knew, though city Councilman Sal DiCiccio said he would find out, promising to set up a meeting over the next week between Young and city code enforcement officers to see if golf course owner Wilson Gee’s company can be ordered to fix the problems.
Mushtar said city officials have had discussions with the owner to rectify the problem but that little has been accomplished.
“We can start the discussion again with the property owner,” he said.
DiCiccio said more action than that was necessary after Young said the golf course owner is “not going to do it voluntarily because they’re afraid that would admit liability.”
“Apparently, they don’t mind the government or the Ahwatukee Board of Management from coming onto their property and doing it for them, but why should ABM or the city do it?” Young later said in an interview.
City of Phoenix
Meanwhile, Mushtar reminded the audience that the county study “was not meant to point fingers at anybody. It’s to identify problems.”
Statement from Save the Lakes/Save Open Spaces April 23, 2017
Developers claim Golf Course “material change in…circumstances;” Judge sets Save the Lakes/Save Open Space trial for Oct. 23-25
Attorneys for developers seeking to turn The Ahwatukee Lakes Golf Course into a 300 unit, $100 million housing tract and make millions for themselves are now asking a judge to change CC&Rs that block the project, after Ahwatukee residents refused to give their permission.
In a telephone hearing Thursday (April 20), Judge John Hannah agreed both to hear the developers’ latest argument and to try the full case on which he ruled last year, now set for Oct. 23-25. Until the developers' latest pleading, the case had been set for June 12. Judge Hannah ruled against developer The True Life Companies last summer, declaring that the CC&Rs require that The Ahwatukee Lakes Golf Course be operated as a golf course. The point of the developers' latest pleading seems to be to ask the judge to reverse himself because of what True Life’s attorneys now claim to be a “material change in….circumstances.”
Save the Lakes/Save Open Space responded: “The only change in circumstances we see is that True Life failed to get the permission of 51 percent of Ahwatukee residents to change the CC&Rs. True Life lost their motion to dismiss the case when Judge Hannah ruled against them last year. Since they’ve also failed to earn our community’s support, True Life now looks to be asking the judge to rule against the community and change the CC&Rs, because the developers claim it will cost them too much to re-construct the Golf Course that the judge ordered be operated.”
Save the Lakes co-plaintiffs Linda Swain and Eileen Breslin said: “The delay of the trial is another test of our community’s patience. But it also indicates that our case remains strong. While we regret the further delay, we’re grateful for the signs that True Life appears to be reaching the true end of the road.” “We remain confident in our case and in our legal team. Most of all, we’re grateful that our community saw through True Life and its plan, which would produce more traffic jams, overcrowding, and more potential for flooding –- instead of a renewed golf course and open space.” “We are deeply grateful to our community for refusing to sign True Life’s petition, and for standing behind us in this effort to save the heart of Ahwatukee. We welcome and will very much appreciate our community’s further financial support, to help us win the case.” “Contributions may be sent to: Lakes Golf Course Legal Defense Fund c/o Timothy H. Barnes, P.C. 428 E. Thunderbird Road, #150 Phoenix, Arizona 85022 (602) 492-1528 (Direct) “
Issuing the statement on behalf of STL/SOS: Ben Holt, president; Jerry Bryan, vice president; and Deborah Karkosky, treasurer.