Kent’s Korner 10-5-18

Kent’s Korner
CEO Kent J. Blumenthal, Ph.D., CAE
October 5, 2018


“I like the dreams of the future better than the history of the past.”

–Thomas Jefferson



Friends often ask where I get ideas to write about. Sometimes a topic stems from what occurred (or did not occur) at a recent GVR meeting. At other times, I write in response to something I read or something that answers a recurring GVR member question.

There are lots of moving parts concerning plans and funding for more than $36 million in GVR facilities and capital infrastructure.  These include the WSM Architect-prepared long-range strategic facilities plan (2016); 3-5 year capital projects plan (2017/2018); annual club requests; non-reserve funded capital projects; Maintenance, Repair and Replacement Reserve-funded projects; Initiatives Reserve-funded projects; and unplanned Emergency Reserves-funded activities.

Therefore, this week I decided to write about a bit of GVR History, and in particularly, how we ended up with more than $36M in facilities that support the recreation and leisure interests of some 24,000 individual members.

I relied on the assistance of some very knowledgeable people to help patch this brief historical overview together. I especially wanted to make sure that I presented GVR’s facilities-rich history properly.  Special thanks goes to GVR Vice President Donna Coon (Donna chairs GVR’s Planning & Evaluation Committee); GVR Past President Stan Riddle (when Stan was GVR President, he negotiated a Developer-Member ‘Side Agreement’); and David Jund, GVR Facilities Director (David has been working with GVR facilities for the past 10 years).

Some GVR History
When I have a chance to talk to long-time GVR members, it always surprises me how few know the history of GVR. I expect that from the newer members (those who have been here 10 years or less). How did GVR build these great recreation facilities along both sides of an 8.6 mile stretch of I-19 through Green Valley? That question has an easy answer: For the most part, GVR didn’t build them (though GVR does maintain, remodel, and expand them when necessary and as funds allow).

Almost all the GVR facilities that we use and enjoy were built by developers to help sell houses. Developers needed a way to attract retirees to move to the desert and purchase their homes. Making sure their developments had sparkling swimming pools, fitness rooms, tennis, shuffleboard and room for classes and social activities was a key to attracting new home buyers. The social aspect of our early facilities was central to their thinking (think small, rural Green Valley).  That is why the older centers were named ‘Social Centers.’

Once a developer ‘built out’ his development he was ready to move on to another big project. So who was left to maintain all these facilities? Agreements were set-up between developers and GVR to transfer ownership of recreation facilities to GVR once a certain number of new homes were sold by a developer. The deed restriction that requires new homebuyers to pay a ‘New Member Capital Fee’ and annual dues to GVR was established to make sure GVR has a reliable income stream to maintain these recreation facilities in perpetuity.

A Merger Agreement in 1978 between the Community Recreation Association of Green Valley (CRAGV) and the Fairfield Community Club (FCC) formed a new organization, ‘Green Valley Recreation, Inc.’ FCC was owner and developer of West Social Center; GRAGV was owner of East Social Center. These two organizations entered into a Merger Agreement to stop competing against each other.  As homes were built and sold, the residents became members of the two Social Centers.

In 1984, the GVR Board addressed the problem of nonmembers within the original boundaries of GVR.  There were 2,500 homes, most of which had never contributed anything toward GVR facilities.  In addition, new properties were being built each year.  The membership approved a proposal by a 3-to-1 margin that would allow nonmember properties within GVR’s original boundaries to pay an Initial Fee, plus sign the membership deed restriction.  These affected neighborhoods (HOA’s) are referred to as “Voluntary Deed-Restricted” HOAs.  Approximately 30 voluntary deed-restricted homes joined GVR membership each year and paid the Initial Fee, plus annual membership dues.

As Green Valley continued to grow in the 1980’s and 1990’s, additional agreements were made to build new recreation centers.  GVR and developers worked together when designing these buildings to make sure the needs and expectations of members would be met.

In 1995, Las Campanas Social Center was proposed for development to complement the construction of homes by Fairfield Green ValleyWLC, Green Valley Limited Partnership who was developing homes in Portillo Ridge and Portillo Place area of Green Valley, asked to participate and have membership in the new Social Center.  This resulted in the Developer-Member Agreement with GVR that applied to Las Campanas, Canoa West (Ranch), San Ignacio and the two Portillo developments.  Within the Agreement, the Initial Fee was born – the amount being $1,500 per new construction home, with annual CPI increases.  These funds were to be applied toward Social Center construction costs.

The Agreement called for completion of the remainder of the Social Center when 850 homes had been sold or ten (10) years from the date of the Agreement, which ever occurred first.  In 2005, the number of homes sold had not met its goal, and so an agreement was reached with Fairfield to pay upfront the Initial Fee on remaining number of homes to be built.

The Las Campanas Social Center was expanded (as Phase II) in 2000 to include tennis, bocce and two racquetball courts as outdoor amenities.  GVR contributed $34,500 toward this expansion of Las Campanas. Phase III expansion of meeting rooms and large auditorium was done in 2007.

In Canoa Ranch, Fairfield entered into a business agreement with Meritage Homes to develop a portion of the property subject to provisions of the Developer-Member Agreement. In the Agreement, there was a provision that a Recreation Center would be built beginning no later than five (5) years after the first home was sold.  When that date was met, negotiations with Meritage resulted in Meritage advancing more than $1M to construction of the first phase of the Canoa Ranch Recreation Center.

Meritage has recovered substantially all of the Initial Fees advanced (approximately $60,000 remaining). The second phase of 12,000+ square feet is to be built when Initial Fees have been credited to Meritage on new homes built and sold.  With rising development and construction costs, GVR will likely have to contribute to the completion of phase two of the Canoa Ranch Recreation Center.

So what does this all mean for GVR today?  Following the Great Recession’s housing slowdown, developers subject to Developer-Member Agreements are back selling lots and building new homes. Each of these new residential properties are subject to GVR deed-restriction.

As of today, October 5, 2018, GVR has 13,574 member properties. By comparison, on December 31, 1999, there were 10,126 member homes, an increase of 3,448 member properties, a +25.4% growth in GVR membership over nearly 19 years.

New active adult residents are arriving every day, and GVR is fortunate, thanks to a lot of foresight, to be able to maintain our recreation facilities so well. Historically, due to proper planning and good fiscal management, GVR has been able to maintain, update and expand some recreation centers. And thanks largely to non-dues revenue mostly from the New Member Capital Fee, many improvements are made to our facilities infrastructure. These capital improvements rely on careful management of our reserve funds and are used to benefit many areas of our membership.

Here are a few of the larger capital project expenditures that GVR accomplished:

  • East Center – GVR purchased in 1997 for $850,000.
  • East Center – GVR remodeled in 2001 for $625,000.
  • Santa Rita Springs Center – GVR improvements in the Anza Building for $575,000; pedestrian bridge and 66 new parking spaces for $277,000.
  • Las Campanas Center – Building expansion included GVR contribution of $34,000.
  • West Center – Addition for woodshop in 2009 for $700,000.
  • West Center Tennis Courts – rebuilt and tennis clubhouse (Ramada) added 2007-2012 for $1,117,000.
  • North Abrego Center – Pool/spa/deck replaced in 2015 for $500,000.
  • Canoa Ranch Center – Four pickleball courts built in 2012 for $115,000.
  • East Center – Four pickleball courts built in 2015 for $140,000.
  • Facilities Maintenance Building – GVR purchased the former commercial nursery (southeast corner of La Canada and Paseo del Prado) for $500,000 and remodeled and expanded in 2017/2018 for $180,000.

It’s your GVR. Enjoy the ride.