Rancho Santa Fe Association board approves Golf Club loan


By Karen Billing

The Rancho Santa Fe Association will pay off the RSF Golf Club’s $1.6 million debt from one of two loans taken to renovate the clubhouse in 2006. The Association will loan the club that amount with a fixed interest rate of 2 percent. The board approved the loan and new terms of the note in a 5-2 vote on March 15, with directors Eamon Callahan and Dick Doughty voting against it.

In order to complete the golf club’s complete renovation of the clubhouse, an $11,833,000 project, the club took out two loans.

The first, taken out in 2005 was for $6 million and provided the bulk of the renovation funds. The terms of the loan were two years interest free followed by a 25-year amortization. The note carries a variable interest rate with a 4 percent floor and a ceiling of 7.75 percent in years 11 through 25. The required monthly amortizing payment on the loan is $31,757 and a balance of $5,462,858 million as of Feb. 1.

The second, smaller loan covered the balance of the project and was converted to a term loan in 2009 in the amount of $2,148,418. The note carries a variable interest rate with a 5.75 percent floor and a 9.75 percent ceiling. The monthly amortizing payment is $13,516 and $1,646,352 remains on the loan.

RSF Association Manager Pete Smith said that in all loans the golf club takes on, the debt is taken on in the name of the Association.

“The good news is in the last five years the total debt of $8.2 million is down to $7 million,” Smith said. “They’ve paid down over $1 million in the last five years.”

Over the last two years, the Association began working with the golf club to explore options to refinance the existing notes.

“Markets have changed,” Smith said. “We thought they’d have it paid off in seven to eight years but they’re not close to paying it off.”

While new membership has dropped at the club, membership is healthy and financially the club is “very solid”, but Smith said they just weren’t able to pay off the loans as fast as they’d like.

The Association decided to focus on paying off the smaller loan note with free reserves, getting out of that 5.75 percent interest. One-third of the money in the Association’s free reserves is from the golf club.

“It’s an ideal solution for us, to focus our entire attention to pay off the big one,” said Jim Boyce, a golf club board member.

The Association will set terms with the golf club for the new loan with a letter of understanding.

Under these new terms, the club could save $275,000 in interest over five years. The payoff of the debt would be reduced from 15 years to about seven years.

Additionally, interest investment for the Association’s investment pool would increase from $5,000 to $33,000.

Association director Roxana Foxx said she commended the finance committee for its work on this issue and said the Association is lucky to have the number of talented people they do on that committee.