The club's Board of Directors recommended accepting the Bay Club's offer at the annual membership meeting last Saturday.
For two years, the board and member committees have been evaluating options for the clubhouse that was built in the mid-1970s. Many areas available to the public for special events do not meet the Americans with Disabilities Act (ADA) standards that was signed by President George H.W. Bush in 1991.
In addition to the Bay Club option, the board evaluated the costs and benefits of just doing the ADA work, doing the ADA improvements plus enhancing the swimming pool area and others within the clubhouse, or building an entirely new clubhouse. Costs for members ranged from $100 per month for 10 years to $200/mo. for 20 years and finally $600/mo. for 20 years.
The board's recommended offer would give Castlewood's equity members the top tier Sapphire Membership in the Bay Club that includes access to any of the four Bay Area campuses. For Castlewood members, that would include access to ClubSport in Pleasanton that was acquired by Bay Club last November.
The current terms call for the Bay Club to purchase the club's assets on a cash-free, debt-free basis. The Bay Club will spend at least $15 million in the first two years to update the clubhouse, locker rooms and address all ADA compliance issues. The Bay Club, which was purchased last year by KKR, an international investment firm, has been owned by investment firms since 1990.
The agreement calls for Bay Club to keep both the Hill and Valley courses open for at least 10 years. Earlier, Castlewood explored the potential of selling the Valley Course for development in partnership with Pleasanton-based Ponderosa Homes, but that option faced major challenges to win government approval with no guarantee of success.
Castlewood and Bay Club will create a holding company that will hold title to the land for 30 years when it will revert to the Bay Club. Any sale within the first 10 years will return 75% of the proceeds to club members.
There are also provisions to allow members to receive at least $10,000 for their equity memberships if they convert to the Bay Club's Sapphire level. There's potential for more than that -- up to 70% if a membership is "sold" for the $30,000 Bay Club list price. Monthly dues are comparable to what Castlewood members are paying currently (when dues, plus capital replacement fund are considered) and are capped at no more than a 5% increase annually. There's also no minimum food and beverage expense.
The Bay Club also has agreed to cap Sapphire memberships at 800 and golf rounds at 100,000 per year. Currently, the club sees between 60,000 and 70,000 rounds annually. There also will be prime tee times reserved for Castlewood members.
If club members reject the board's recommendation, then they will vote on the other three options. One key goal for the board is to address the long-term sustainability of the club. The discussion of pros and cons for each option note the less expensive options do not address sustainability.
