Rancho Santa Fe Association picks bank to refinance clubhouse loan

By Karen Billing

The Rancho Santa Fe Association has selected a Pacific Western Bank to refinance the Rancho Santa Fe Golf Club’s clubhouse renovation loan.

Back in 2006, the Golf Club took out two loans to pay for the balance of the cost to renovate the clubhouse. The renovation costs were not-to-exceed $11,833,000 million; the Association paid for some of the costs in cash. The loans included a larger one in the amount of $6 million and the smaller loan was for $2,148,418.

RSF Association Manager Pete Smith said the original intent was for the loans to be paid off in 10 years based on an enrollment of 45 new memberships a year.  However, Smith said, after the economic downturn that number dropped to an average of 15 new memberships a year so it became clear that the loans would not be paid off at that rate.

The Golf Club and the Association came to a consensus last year to refinance and lock into a fixed rate loan rather than a variable rate loan. The first step, already completed, was that the Association replace the 5.75 percent, $1,650,000 million variable rate loan with a fixed 2 percent loan with a 10-year amortization and an annual payment of $182,184.

Their next step, was to pursue a fixed rate loan to replace the current loan in the amount of about $5,394,665 (the payoff amount as of Aug. 1, 2012). From five proposals, they selected the Pacific Western Bank’s terms.

Pacific Western Bank’s loan terms are an unsecured 4 percent fixed rate loan, with a 10-year balloon, built-in index rate that allows the Association to reset the loan at maturity.

Smith said the good news is that the monthly payment of $34,590 falls within the amount collected through the golf club special debt assessment and in 10 years they will have a total outstanding balance on both loans of $2.9 million, which they could pay off in another five years.

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