A foursome of businessmen who had tentatively planned to buy the Club West Golf Course and restore it for play by late fall backed out of the deal on Monday, saying it is worth only half the $850,000 price that owner Wilson Gee wants for it.
In a statement the prospective buyers released on Monday — the deadline for closing the sale — the prospective buyers said they had sought an extension on the closing to negotiate new legal and structural problems they had uncovered during their inspection but that Gee refused to give them more time.
“The issues we found during our inspection period would have increased our anticipated expenses by an additional $200,000 to $250,000,” their statement said. “We feel the true value of the property to be around $450,000. This considers the current dilapidated condition, lack of equipment, lack of alternative water source along with the fact that there is currently no active established business.”
“The current condition of the Club West Golf Course property is very depressed,” they said. “The course itself requires a great deal of resources to bring it up to an acceptable level. There is no equipment such as course maintenance equipment, golf carts or operational sprinkler system. The clubhouse is currently not in a condition to conduct business. There is no pro shop, dining furniture, working kitchen or bar and several inoperative air conditioning systems.”
Nevertheless, they added, “We are still very interested in this property and would be willing to discuss possible solutions to our concerns with the sellers if they choose.”
For his part, however, Gee was turning to another party that he said was interested in buying the site.
Gee said he did not know why the group had cancelled at the last minute. saying he assumed the prospective buyers “didn’t understand the complexities of running a golf course.”
“That happens,” said Gee, who owns all four courses in the community, including the defunct Ahwatukee Lakes. “You get people who think they can do it and once they see all that’s involved, it’s too much.”
Knudson said a “time issue” scuttled the deal because the prospective buyers had “too many moving parts to get the deal done in time.”
“They couldn’t get their arms around all of it,” he said, adding that extending the deadline for closing escrow and taking possession of the course could not be extended because “the owner still wants to see rye overseeding in the fall.”
The buyers said Gee, “would not agree to an extension of our inspection period. Extending the due diligence period after finding these issues was a reasonable request.”
Their statement also suggests a lot of work is needed before green grass returns to Club West.
“We’ve spent over $65,000 during our inspection period,” they said. “As a result of our due diligence we identified additional deficiencies with the clubhouse and course.”
For one thing, they said, there are legal issues, some involving several citations involving weeds and other city code violations. Those cases were coming up in Phoenix Municipal Court this week.
“We have been concerned that the sellers are involved in litigation with the City of Phoenix that has scheduled court hearings on and after our due diligence period ends,” the said. “The results of these hearings may have some effect with the new owners of the property.”
But a city spokeswoman said there’s no problem with code inspectors.
Gee’s company was in court within hours of the deal’s collapse and pleaded guilty to the two violations and was fined $100 for each charge because “defendant was not a recidivist per court policy.”
“The judge allowed a full offset of the fines as the attorney provided that $50,000 was spent to clean the property,” she said. “The property is currently in compliance.”
That stands in sharp contrast to The True Life Companies and its record of maintenance of Ahwatukee Lakes Golf Course.
True Life is on the hook with the city for more than $165,000 for its consistent disregard of blight on the Ahwatukee Lakes Golf Course when it still owned it. After losing its campaign to have homeowners change the course’s land use regulations, True Life essentially left the 101-acre site untouched as debris accumulated.
The code violation citations involving Club West were issued when Richard Breuninger and his Inter Tribal Golf Association owned the course and before Gee foreclosed on his $1.3 million note.
There also is a bigger legal issue involving the Club West clubhouse, the would-be buyers said.
They said city code limits occupancy to 49 people — “which would prevent us from realizing an acceptable profit margin.”
In order to legally accommodate over 100 people, they added, “we would need to present a complete set of new architectural drawings, add a full fire sprinkler system to the entire building while addressing ADA (Americans with Disability Act) requirements.”
Stating “we understand that previous owners may have been in violation of this code with occupancy well over the 49 people,” they also warned, “Now that the City of Phoenix and Fire Department are aware of the limited occupancy, this will be an issue for whoever owns the property moving forward.”
The missing golf carts and other equipment are part of the legacy left by Breuninger’s short-lived ownership.
Neighbors and motorists reported seeing a truck last year filled to the brim with golf carts leaving the course months before Gee foreclosed on Breuninger. Gee also said that after he regained possession of the course, his crew found close to 200 sprinkler heads that had been ripped out of the ground.
Until this week, the Club West HOA and homeowners were optimistic about seeing the return late this year of the lush green landscape that Breuning and ITGA brought to the course for three or four months in late 2017 and early 2018.
Those hopes were further buoyed by the would-be buyer’s presentation to the HOA board, in which they said they would be spending $1 million on maintenance and upgrades to the clubhouse, driving range and the course itself.
That did not include the additional cost of finding cheaper water for the course —which could have cost as much as another $1 million.
Mike Hinz, president of the Club West HOA board, said, “I’m disappointed that they couldn’t see it through.”
He added “we shall wait and see” what happens with the new prospective buyer.
Neither Gee nor Knudson would identify that party. Nor could they say if that party would have an equally long due diligence period to examine the course and determine what needs to be done.
“It’s just in its infancy so we’ll see,” Knudson said.
For now, the collapse of the deal is another blow to Club West homeowners who have watched the course wither to its current barren state since February 2018, when the city shut off water over more than $160,000 in unpaid bills.
Cheaper water is yet another major issue for any buyer.
Gee closed the course in June 2016 when he fell in arrears on his water bill and while he eventually settled with the city, he said he could not afford the approximate $700,000 in water bills the course would run up annually.
When he put the course up for sale last year, Gee included a requirement that any buyer be prepared to spend $1 million on a pipeline that would bring cheaper water to the course from the Gila River Indian Community. While Ahwatukee businessman Rande Leonard said his pipeline project is still alive, efforts have been made to find a water source somewhere on Club West property.