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HomeMy WebLinkAbout2010 01 25 Regular 611 Tuscawilla Country Club (RDC Golf Group) Third Amendment to Settlement Agreement for New Tennis Court COMMISSION AGENDA Consent ITEM 611 Informational Public Hearing Regul x aJ I i January 25. 2010 MGR. i EPT. Regular Meeting Authorization REQUEST: The City Attorney seeks direction from the City Commission regarding a request made by the Tuscawilla Country Club (RDC Golf Group) to modify the completion date of the last remaining new tennis court which is required to be constructed under the Third Amendment to Settlement Agreement between the City and the Club. EXECUTIVE SUMMARY: On November 28, 2007, the City and the owner of the Tuscawilla Country Club entered into a Third Amendment to Settlement Agreement which authorized the construction of the Greens at Tuscawilla condominium project, among other things. Pursuant to the terms and conditions of the Third Amendment, the Owner agreed to construct two new batteries (4 total) of tennis courts at the Club. The Owner has already completed construction of three courts. However, the 4 tennis court must be completed prior to the completion of the 8` building (32 unit) at the Greens at Tuscawilla project in accordance with a condition imposed by the City Commission. Due to future lending requirements that may pertain to future unit sales at the Greens at Tuscawilla related to club membership, the Owner is now requesting that the City Commission grant it "latitude to [construct the 4 tennis court] at a time when the demand will support the investment." CONSIDERATIONS: 1. On November 28, 2007, the owners of the land encompassing the Tuscawilla Country Club, React Land, LLC and Winter Springs Golf LLC. "Owner and the City entered into the Third Amendment To Settlement Agreement (Third Amendment). 2. Pursuant to the Third Amendment, the City Commission approved the construction of sixty (60) residential condominium units on a portion of Parcel 7 located along Winter Springs Boulevard. 3. In addition, given that one battery of tennis courts had to be removed to accommodate the condominium project, the Owner agreed under paragraph 3.0(a)(2) of the Third Amendment to construct two new batteries of tennis courts (each battery has 2 courts for a total of 4 courts) at REGULAR MEETING JANUARY 25, 2010 REGULAR AGENDA [TEM "611" PAGE2OF4 the Club. To date, one battery of tennis courts was demolished, and three (3) new tennis courts have been constructed. 4. On September 8, 2008, the City Commission approved the Final Engineering Plans for the Greens at Tuscawilla condominium project. 5. On November 24, 2008, the City Commission approved the Final Engineering plans for the construction of three of the four tennis courts required to be constructed under the Third Amendment. As a conditional approval, the City Commission required that the 4 tennis court be located and constructed before the first certificate of occupancy is issued for a unit at the Greens at Tuscawilla. 6. On December 8, 2008, the City Commission amended, at the request of the developer (the late Tom Corkery), the construction deadline for the 4 tennis court by amending the aforementioned condition of approval to require that the "4 tennis court had to be installed prior to the completion of 8 building (32 unit) at the Greens." Because the condominium units have not been constructed yet, the 4 and final tennis court has not been constructed. 7. Further, Paragraph 3.0(3) of the Third Amendment provides that all purchasers of condominium units shall receive membership (minimum tennis level membership) at the Club for purposes of satisfying the City's recreation level of service requirements under the Comprehensive Plan. The tennis membership shall permit the condominium unit owners to use the recreation amenities at the Tuscawilla Country Club (e.g. pool, tennis courts, golf course, and gym facility) under membership terms, fees, and conditions established by the Tuscawilla Golf and Country Club. 8. On January 15, 2009, the City Attorney received by email a formal request by the Owner to amend the construction deadline for the 4 tennis court. In that email, the Owner states that they have now learned that Fannie Mae and Freddie Mac prohibit mandatory club membership requirements for properties financed by Freddie and Fannie. The Owner contends that since Fannie and Freddie control the entire conforming mortgage market, these units could not be financed by purchasers if club membership is required for each condominium unit. The Owner further contends that this will result in less tennis memberships (35 being utilized at the Greens at Tuscawilla than originally anticipated (100 Therefore, the Owner believes that there will be a "significantly reduced demand for the final tennis court," and requests that the City Commission repeal the certificate of occupancy construction deadline for the 4 tennis court and grant them the "latitude to [construct the 4 tennis court] at a time when the demand will support the investment." While the Owner intends to complete the 4 tennis court, the Owner was not in a position to give the City Attorney a firm commitment on when the court would be constructed. 9. A very general summary of the applicable legal authority is as follows: A. Section B4 -2.2 of the 2009 Fannie Mae Single Family Guide Book, which sets forth Fannie Mae's requirements for condo project eligibility, requires that unit REGULAR MEETING JANUARY 25, 2010 REGULAR AGENDA ITEM "611" PAGE 3 OF 4 owners be the sole owners of the project facilities for projects with more than four units. It appears therefore that amenities and recreational facilities may not be subject to a lease between unit owners or the HOA and another party, and that charging unit owners for the use of facilities they do not own is not permissible under Fannie Mae guidelines. B. Section 42.2(g) of the 2009 Freddie Mac Single Family Seller /Servicer Guide, which sets forth Freddie Mac's requirements for condo project eligibility, requires that unit owners are the sole owners of and have the right to the use of project amenities and recreational facilities, and explicitly prohibits that such facilities be subject to a lease between the unit owners, the HOA, and any other party. C. Federal regulations provide that a loan on a single unit in an unapproved condominium project "spot loan") may qualify for FHA condominium mortgage insurance only if the unit owners have sole ownership interest in, and the right to the use of, the project's recreational facilities and common elements. [24 C.F.R. 234.26(i)1(iv)]. For the foregoing reasons, it appears that imposing a mandatory charge (in this case, Club tennis membership fees) upon condominium unit owners for the use of recreational facilities they do not own is not permissible under current Fannie Mae, Freddie Mac, and FHA guidelines. 10. Notwithstanding, the Owner is still able to honor the membership commitment required under Paragraph 3.0(a)(3) of the Third Amendment by offering each future condominium buyer complimentary tennis membership (initiation fees) at the Club, as well as two free months of dues to attract new members from the condominium units. FISCAL IMPACT: None. NOTE: Unrelated to the 4th tennis court, the Owner still owes the City for the second and final $12,500 installment of the TLBD Beautification Supplemental Contribution which was due on September 9, 2009. See Paragraph 7.0 of the Third Amendment. The Owner indicated to the City Attorney that they were hoping to make payment in conjunction with the sale of the Greens at Tuscawilla project, which has not materialized. RECOMMENDATIONS: The City Attorney recommends that the City Commission consider the request and provide direction on whether or not the City Commission desires to amend the construction deadline imposed on the 4 new tennis court required under the Third Amendment REGULAR MEETING JANUARY 25, 2010 REGULAR AGENDA ITEM "611" PAGE 4 OF 4 ATTACHMENTS: Email to City Attorney from Matthew Galvin, dated January 15, 2009. Excerpt of City Commission Meeting on December 8, 2008 (Item 607) Page 1 of 1 Anthony Garganese From: Matthew Galvin [mattg @rdcgolfgroup.com] Sent: Friday, January 15, 2010 5:28 PM To: Anthony Garganese Subject: Tuscawilla CC Anthony, As we discussed, Tuscawilla Country Club is requesting that the City de- couple the requirement that the final tennis court be built by the club in connection with a specific occupancy of the Tuscawilla Greens development. As you will recall, we demolished two tennis courts to make room for the development. We have already replaced those two, plus an additional court leaving just one more court to build per the approval conditions. These four new courts, an increase of two courts, was to serve the 60 unit buyers who would be required to have at least a tennis -level membership in the country club. Unfortunately, we have since learned that both Fannie Mae and Freddie Mac prohibit mandatory membership requirements for properties whose mortgages they finance (if the amenities are owned by a separate party, versus ownership by the community or HOA). Since these two government backed agencies essentially control the entire conforming mortgage market, these units could not be financed by purchasers. In response to this the country club and the developer will offer each buyer a complimentary membership (initiation fees) and two month's free dues in the hope that we can attract members. However, rather than 100% participation we may only achieve a fraction of this. The national average for country club home buyers joining the club in their community is 35 in any membership category. Therefore, we anticipate a significantly reduced demand for the final tennis court. This drop in demand is compounded by a general decrease of existing tennis memberships at the country club due to the economy. The country club still intends on building the final court. However, we would like to have the latitude to do so at a time when the demand will support the investment. Since we acquired Tuscawilla CC in 2000 we have reinvested every dollar of profit back into the operation from equipment to new greens to the restaurant building. We will continue to invest in the club, however, the current agreement regarding the tennis court would create an undue burden and result in an greatly underutilized court. Thank you for your attention to this. Matthew Galvin Exec. VP Member Winter Springs Golf, LLC 1/20/2010 CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION REGULAR MEETING DECEMBER 8, 2008 PAGE 24 OF 28 AGENDA NOTE: THE FOLLOWING REGULAR AGENDA ITEMS WERE DISCUSSED NEXT, IN THE ORDER AS DOCUMENTED. REGULAR AGENDA REGULAR 607. Office Of The City Manager And Office Of The City Attorney ADD -ON Present A Request Made By The Developer Of The Greens At Tuscawilla (Tom Corkery) And The Owners Of The Tuscawilla Country Club Property To Reconsider A Condition Imposed By The City Commission On The Approval Of The Preliminary And Final Engineering/Site Plan For The Tennis Court Relocation /Addition. Attorney Garganese presented this Agenda Item for discussion. Mr. Tom Corkery 759 Bear Creek Circle, Winter Springs, Florida: addressed the City Commission on this project. Much discussion. "I WOULD LIKE TO MAKE A MOTION TO STAND ON THE CURRENT AGREEMENT THAT WE HAVE AND JUST MODIFY THAT THE FOURTH TENNIS COURT WOULD BE BUILT BY THE FIRST C.O. (CERTIFICATE OF OCCUPANCY) OF THE EIGHTH BUILDING THAT IS MID POINT." MOTION BY COMMISSIONER KREBS. ATTORNEY GARGANESE STATED, "IF YOU BUILT ALL FIFTEEN (15) BUILDINGS, IT WOULD BASICALLY BE THE THIRTY -FIRST C.O. (CERTIFICATE OF OCCUPANCY)." COMMISSIONER KREBS ADDED, "OKAY, THEN WE WILL DO IT THAT WAY, THEN, THE THIRTY -FIRST C.O. (CERTIFICATE OF OCCUPANCY)." COMMISSIONER KREBS NOTED, "THAT IS MY MOTION." SECONDED BY COMMISSIONER McGINNIS. DISCUSSION. MR. STEVENSON SAID, "I BELIEVE IF WE GO WITH THE THIRTY -FIRST UNIT, WE'RE ABOUT SEVEN AND A HALF (7 'A) BUILDINGS INTO THIS. CAN WE MAKE IT A MULTIPLE OF FOUR (4), AND SAY PRIOR TO THE C.O. (CERTIFICATE OF OCCUPANCY) OF THE THIRTY -THIRD BUILDING CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION REGULAR MEETING DECEMBER 8, 2008 PAGE 25 OF 28 WITH FURTHER COMMENTS, MR. STEVENSON STATED, "CAN WE JUST SAY, `PRIOR TO THE ISSUANCE OF THE C.O. (CERTIFICATE OF OCCUPANCY) FOR THE THIRTY SECOND UNIT', WHICH WOULD BE THE COMPLETION OF THE EIGHTH BUILDING." COMMISSIONER KREBS ADDED, "I AGREE WITH THAT." VOTE: COMMISSIONER KREBS: AYE COMMISSIONER McGINNIS: AYE COMMISSIONER BROWN: AYE COMMISSIONER BONNER: AYE COMMISSIONER HOVEY: AYE MOTION CARRIED. REGULAR 608. Office Of The City Manager ADD -ON Requesting The Commission To Authorize Funding For Preparation r liossible Funding For City Projects Through The Upcoming Federal Stimulujckage. Manager McLemore presented this Agenda Item for discussio istated, "I gave you a list of projects and what it would cost to get them designed, ompleted, when they would be ready to go to Bid. As I said, I would give first p )idrity to the City Hall expansion, Magnolia Park, and Central Winds Park because all.ofthe others already have funding in place. These do not. So, what I would nee rom you is authority to go ahead and appropriate these dollars so I would hay the authority to go ahead and get these drawings and the construction docu es complete." Manager McLemore added, "City Hall is already done so you don' ave to worry about that one that is ready to go to Bid with just a little polish on the documents; but those Plans have been completed." With further comments, M ger McLemore remarked, "There is one project I would like to add to this list." Much discussion. Manager M emore, "Can I talk to you about that other project? But I need to do more work on i and then bring it back to you. But I don't want to do any work on it if you're not co ortable with it the project would be the Parking Garage in the Town Center. It's economic development project and it may get favorable funding, and we know it h already been designed. So, my question is, do you want me to go further with some vmore analysis on whether we want to put that in or not 4