The elephant in the room is dead...thank God.

Discussion in 'Sun City General Discussions' started by BPearson, Oct 12, 2019.

  1. BPearson

    BPearson Well-Known Member

    It's hard to believe: we've lived in Sun City since 2003. During the entirety of that time, Sun City has lived under the veiled threat of legal action. 16 years of internal angst and turmoil. A constant drumbeat of how bad Sun City was; all over a golf course drainage ditch.

    It ended yesterday when the court ruled and released the RCSC of almost all liabilities from the court case. There are some small issues pending, but anything of substance is gone. There will be a rap up on October 29, but the judge is giving each party 30 minutes to plead their case. Most attorneys take that much time to open their briefcase.

    Before i begin, it helps to set the stage; i spent my work life fighting for and with people. I learned one thing very quickly; bringing in the attorneys usually resulted in higher costs and less attractive outcomes. Don't get me wrong, they have their place, but avoiding them and finding solutions between the parties is way better.

    The problem comes when there is no effort to find solutions. When the end game is getting even, it is pretty well ordained the winners will be the attorneys. Not so much the case in this case, because given the settlement, there will be no big payday for the plaintiff's attorneys. In fact, their out of pocket costs will be substantial.

    The judge dismissed all counts brought against the RCSC. That's a good thing, a really good thing. As much as i dislike some of the things the RCSC has done, this case had the potential to change Sun City in ways that would have crippled us. Let me restate that and shout it: CRIPPLED US.

    This thread is getting long enough and i suspect will get some varied responses. I do want to end it with a cut form the judges ruling that says it all: "Class certification is simply not appropriate in this case. Because the defendant is a nonprofit, the class members are suing themselves. Plaintiffs are asking for over $5 million in damages. The nonprofit gets most of its revenue from its members in the form of assessments and fees. Thus, any damage award here would be paid by the class members themselves through higher assessments, depleted reserves and/or reduced services and amenities. The only class members who would benefit are those who no longer live in Sun City, and their attorneys. The Court finds that this is not an appropriate use of class action procedure."

    For anyone who is interested and hasn't read the 30 page document, you can read it here.
    Emily Litella likes this.
  2. IndependentCynic

    IndependentCynic Active Member

    A win of sorts, I guess, for the community -- the threat of monetary consequences is gone. Nonetheless, a sad day in the history of SC that the misdeeds if the RCSC were completely vindicated. Without T33 we residents are going to pay the price (literally) given the fact that the facilities agreement and the modified BLs gives the RCSC a blank check to do whatever they want.
  3. BPearson

    BPearson Well-Known Member

    More often than not IC, we agree. Not in this case though. There’s a reason i never agreed to be part of any of these machinations. There was never an upside. The attorneys took the case purely on the come. The buy-in was cheap, somewhere around 30K for the formula registry, but the long game played by the plaintiff’s attorney's was always about getting millions via the court case.

    The reality is, they had scored pretty good on an Anthem settlement and they saw this as more of the same. The problem is it dragged on for years and their costs just kept rising. They had to win. They threw everything but the kitchen sink at it and hoped against hope.

    I said this years ago, all we were doing was suing ourselves. Some will argue, ya but we have insurance. Sorry, if you lose, we pay directly out of the RCSC’s pocket or we pay higher premiums. There is no free lunch. And the idea the RCSC doesn’t have the right to pass rules governing how they work is ludicrous.

    The breakdown comes on our end, those of living here and those getting elected to represent us. We all have allowed the management to take over the process of self-governance. If we want or need to find someone to blame, we should all take a good look in the mirror.
    Emily Litella likes this.
  4. Emily Litella

    Emily Litella Well-Known Member

    Funny, this is exactly the title that I would have chosen for this thread. After I checked the Independent website and read and reread the article, I downloaded and read the decision yesterday, and I was waiting to see who would post about it first.

    I wasn't around when this whole business started many years ago, but even hearing/reading about what went on, I was never in favor of a law suit. I think in hindsight it was all about greed, ego, selfishness, pettiness and money.

    I think the stress and uncertainty wore on our boards, management, and those of us in the community who even paid marginal attention to what was going on.

    I'm extremely thankful that it's over. I think anyone who may have been on the fence about purchasing here will jump in now and buy, and prices will go even higher. Funny thing is most folks here that purchased after the lawsuit didn't know or knew and didn't care. I knew there was a possibility of a lawsuit in 2012 and I still purchased in early 2013.
  5. IndependentCynic

    IndependentCynic Active Member

    As I see it, there are 40,000 elephants in the room. Sadly, most are perpetually sleeping or following the herd mindlessly.
    Perhaps I'm more of a Jefferson type than you?
    I don't believe everything can be solved by negotiation and reason because sometimes the players are so selfish they just ignore the desires and rights of others. Sometimes the leaders lose sight of their true reason to exist and become engulfed in self preservation. Thus I supported the portion of the lawsuit related to T33. Without T33 we'll never have a say in what happens unless Management capitulates. And that's not likely anytime soon.

    I've always said the PIF was not the proper way to fund major maintenance and reconstruction expenditures -- DW should have set up the RCSC with a portion of the Assessment designated as PIF. But they didn't. There were so few alternatives so late in the game. I thought I could live with it. But then the PIF increases started... one, then another, and another. The RCSC had given themselves a blank check to skim from our property's value under the absurd guise someone else is paying for it. But I never really supported the PIF part of the lawsuit, either... although a part of me probably hoped the judge would impose just enough of a penalty to the RCSC to wake up the sleeping elephants.
  6. SCR

    SCR Member

    In my view, the recent court ruling was more about SB 1094. Those of us who had visions of the Judge over-ruling the political decision to change the status of SUN City after the fact were correctly awakened to the fact that their beliefs were wrong. I never felt the judge would ever rule in favor of T33 after the GM brought political influence to the game. Monday morning lawyers are just like Monday morning quarterbacks. They usually on speak up when their team loses.

    As far as the PIF - it apparently is not a deterrent to most people buying into the community. Going forward however, if the PIF is constantly increased, it may become a deterrent and
    those living here now will have to make up that shortfall with constant and heavy increases to the annual dues.
  7. IndependentCynic

    IndependentCynic Active Member

    I think the real question is who's really paying for the PIF. On the face of it, it's the buyer. But I wonder -- are the buyers simply making offers less than the asking price to compensate? Certainly in a typical real estate market they would. But SC's market is affected by so many things other than the usual supply/demand market influences it's hard to tell what the real market value is. Families buy within families, out of state estate settlers simply want to dispose of the property quickly, elderly sellers often have no concept of the current market, etc, etc. Certainly many buyers have been surprised by the PIF when they get closer to closing, but most buy anyway because they're already emotionally committed to the buy. One thing certain, the more property the RCSC acquires, whether through purchases or expansion, the higher the cost of maintaining it will be. Since the number of properties is fixed, that only leaves increases in everyone's assessments and the PIF to fund additions like Grand, etc. Thus expect annual assessments to increase at rates greater than inflation. There's no other option I can see. Now, if we could only get our SS to increase anywhere close to the inflation rate...
  8. BPearson

    BPearson Well-Known Member

    I hate the argument IC, because without the PIF and the updates, what would your property be worth? Old facilities become more an anchor dragging prices down than new facilities which enhances property values.

    There is a legitimate argument about the RCSC owning more property and driving costs up on the yearly assessment. It is exactly why i have lobbied for a targeted approach to how and where we spend PIF. Think about it in these terms: The Grand Ave project will cost 10 million dollars by the time they are done. They’ll get a fraction of the space they could have gotten had they bought the Lakes Club. With renovations it would be around the same number, maybe less. There was a problem with the land lease, but with the property (land) owned by the Sun Health Foundation it could have been resolved.

    The real question is, how aggressive are we at insuring that golf is paying for itself? It was supposed to be revenue neutral, is it? Who knows? The plan was not to subsidize golf, because that could drive costs off the charts. Maybe someday we’ll do a forensic audit and see where we are.
  9. aggie

    aggie Active Member

    This is from the posted 10/14/19 Finance & Budget Committee Summary:

    The $671,877 net operating deficit in the proposed 2020 golf division budget was of concern to the committee. However, it was recognized that the $346,307 additional loss from the last 12 months operations is completely due to wage increases dictated by the increase in minimum wage due to Proposition 206.
  10. BPearson

    BPearson Well-Known Member

    Cool, then it must not count.
  11. aggie

    aggie Active Member

    Not sure if Sun City West mandates that golf be self supporting because they are in worse shape than RCSC. Here's an excerpt from an Independent article:

    In the 2018-19 fiscal year, RCSCW golf income was $8,468,969. However, the expenses for the year exceeded that amount by $1,410,727. The difference is made up in resident member dues, Mr. O’Hara said, adding green fees stayed the same for residents for the past three years.

    “Yes, there is a deficit in golf, but there are also deficits in many of our programs, such as dog parks,” Mr. O’Hara said.

    Must be cool with them, too.
  12. BPearson

    BPearson Well-Known Member

    Sun City West has always subsidized golf. It was one of the reasons they have been looking at the future as it relates to golf. Hard decisions will have to be made some day. As golf play dwindles, subsidization increases along with rec fees. If you follow 55Places, you will see most new age restricted communities don't build or own golf courses. If there is one, it is owned and operated by an outside vendor. It doesn't take a genius to realize Gen X won't be playing much golf. Trends are what the future will be.

    The bigger concern here is we abandon our tenets. Who the hell knows how accurate the golf budgets are? Once you realize we shoved golf course maintenance buildings under the facilities ledger rather than on the golf side (for PIF distribution) you should be able to get your head around the GM can put the numbers wherever she wants. Most troubling though is the idea because Prop 206 is at fault, the RCSC is okay with not keeping golf revenue neutral. So when seed prices or fertilizer takes a sudden spike, it's beyond their control and it's okay to subsidize it.

    Somewhere around 15% of the residents play the game of golf (about where it has always been). The golf courses are a wonderful amenity. No question, the green spaces are a plus when selling the community. That said, we have dumped a large fortune in the remodeling and rebuilding. It comes from the PIF (mostly, though not all). The PIF allowed them to get around the tenet of golf and 10 pin bowling not being revenue neutral. I'm actually okay with that, it just shouldn't have been so one-sided for so long. What i am not okay with is using the general ledger to support golf (and we have done that at least a couple of times and not billed it back to golf). When we do that, we inevitably fail to stand by the principles Sun City was founded under.

    Sadly, what we are coming to see is: The history and traditions that made Sun City unique are being dispatched on a regular basis by the board members as they defer all leadership to the management.
  13. aggie

    aggie Active Member

    This conversation is a bit buried but there is another thing bugging me. It's a bit ironic that the RCSC's Communication & Outreach Committee hasn't posted any summaries of their meetings since June 2019. How's that for communicating?
  14. IndependentCynic

    IndependentCynic Active Member

    Bill, you hate what? That I contend that the PIF might devalue property values by a few grand? Do you actually believe the PIF is entirely paid by the buyer and no seller cuts their price to compensate? The Rec Centers only add value for those that use them... the more you use them, the greater their apparent value. So, my wife and I still work part time and will have to as long as we can -- thus we each belong to Duffyland, one club each, and I occasionally use the gym. Can you tell me in $ what value that adds to the value of my home. Not much in my opinion.

    So what is my property worth? My house, like most, is worth whatever someone is willing to pay for a near-50 year old home on a tiny lot in an extremely low tax, low crime, senior neighborhood. I, like many others, did not buy in SC because of the Rec Centers. And like many others, I cannot afford to renovate my home to make it competitive with newer housing. Several homes on my street were bought by flippers this past year... they did surface renovations... new cabinets, counters, bath fixtures, new paint and floor treatments. Neither replaced the original windows, and no major renovations -- things that would modernize the house's structure and really boost the value and elevate the neighborhood. The net effect of little to no upgrades in a community is historically a slow decay. The RCSC is at best a buffer to that decay.

    We've disagreed on these thoughts in the past but it hasn't changed my mind. Nor yours, apparently. Others have told me (on previous boards) to move since I don't use the Rec Centers as much as I apparently should. They just don't seem to be able to understand that with or without the RCSC, SC is a cheap place to live and will increasingly attract those that can only afford lower cost housing. In an incorporated area the town/city would eventually take some actions to stem the decline to avoid a slum. We're a long way from that, but it's pretty unlikely Maricopa County will ever take such an action when that time arrives.
  15. BPearson

    BPearson Well-Known Member

    I hate the argument because it is circular IC. There is no right or wrong answer, there's only our opinions. I would guess half the people living here don't use the rec centers (purely a guess, it may be higher, it may be lower). People do buy here for a lot of reasons. That said, the amenities are a major attraction for potential buyers. I start every morning with a quick read at 55Places and at least once a month there's an article that includes Sun City. The rec centers and golf courses are always a part of the read. It just adds value to the community, whether you use it or not is up to you. That's fairly straight forward.

    The discussion on the PIF gets more difficult. You know when it first started and several times when it was raised, realtors told us they would never sell another home in Sun City. That hasn't been the case, nowhere near it in fact as we average 2000 home sales a year; about six homes sold each and every day of the year. The circular argument about who pays it is where we apparently disagree; in a down market when the buyer has more leverage it is more likely shoved on to the buyer. When the market is hot, sellers have no sense or need to discount the property. Right now, homes are bumping up against that 2005 crazy point where you could sell for almost whatever you want. No buyers are arguing for the seller to pay their PIF. The inventory is low and we are back into multiple bid situations.

    My point regarding the PIF was, what would your home (or Sun City for that matter) be worth if we still had the old Bell Center, Fairways dumpy design, no pickleball courts and everything aging in place?

    Finally, the most distressing of your comments is being told to leave if you don't like it here. I do hate that. People owning here have the right to dislike and disagree. That was how Sun City was built, there were massive disagreements over direction. Residents fought over schools, incorporation, how much rec fees should be and a host of other things. Unfortunately, we have turned over those decisions to management with the board there to "support them." It couldn't be a more wrong headed approach.

    Please don't mistake my comments as suggesting you don't have a right to them, you do. We just disagree. That's not a bad thing. I've had this discussion too many times and you can't prove a negative and you can't prove what something would be if say the PIf had never been passed. There's only speculation.

    Finally, the good news, at least for now is, homes that have not been updated, are worth as much or more than they ever have been. Flippers are waiting in line to overpay so they can fix them up and new buyers can overpay even more. I am simply stunned by what some of these properties are selling for. Maybe a downturn is coming, but for now Sun City is as hot as it has ever been real estate wise.
    Last edited: Oct 28, 2019
  16. BPearson

    BPearson Well-Known Member

    What’s really interesting is the management reports just sent paint a perfectly rosy picture of our financials. If that’s the case, why not fund the softball building from the general ledger? The GM has always enjoyed million dollar carry overs from year to year and that more than handles the cost of the building.

    I really wish they hadn’t lost the video from the last meeting. I’ve heard and read various comments and it would be far better to see it first hand.
  17. Cynthia

    Cynthia Well-Known Member

    I would not have bought a flipped house. I wanted original MCM. Not to say I won’t do anything but original can be very desirable because people can do what they want or not do. Of course a new roof and air conditioner will help a sale.
  18. BPearson

    BPearson Well-Known Member

    The flips are an interesting discussion. Some are really well done, some are like lipstick on a pig. I know most hate the idea of living through remodeling, and for many, they have no ability to see what a house can become. The mid century modern found in many of the early homes in Sun City is loved by many. Maintaining the outside look is one thing, updating kitchens and baths is another. In the end, all that really matters is keeping the community looking good.
  19. BPearson

    BPearson Well-Known Member

    What is really curious about the financial reports is what was being told to committee members and the dire straights they were in compared to what the latest management reports are stating. Someone is confused, wonder who?

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