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Saturday, January 15, 2011

Richmond’s Dominion Club members dazed and abused by declaration of bankruptcy

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     The members of the Dominion Club outside Richmond are feeling betrayed and abused this week, and what has happened to them is a clear signal to all of us that equity “deposits” for golf club initiation fees are, at best, a risky investment.

        During a tough few years for most clubs, Dominion owners HHHunt

If Hunt's company clears the bankruptcy hurdle, it will reportedly try to lease back the club to its members, many of whom will lose their deposits through the bankruptcy.

gave no signal to its members of any financial difficulties.  Indeed, with nearly 800 members who were actively engaged in club activities, including plenty of golf cart fees on the Curtis Strange designed course, cash flow was not a problem.  So it was with amazement that club members learned that Hunt had placed Dominion in bankruptcy proceedings.

        Since the Hunt group intends to retain and, it hopes, lease the club back to its members, club members and local journalists believe the developer is trying to get out of its obligation to repay member initiation deposits of as much as $29,000.  Hunt lists $13 million in debts, the bulk of which are reported to be those deposits.

        Hunt built Wyndham, the community that surrounds the golf course.  The company has retained ownership of the adjacent lake, clubhouse and tennis courts through another group it owns, Loch Loven.  The club has “incredible cash flow and [is] very profitable,” according to a local realtor who has listed and sold many properties in Wyndham.

        In an arrangement that rivals credit-default swaps for its evil genius, Hunt charges the Dominion Club –- in other words, himself -– as much as $1 million in rent for the land, taking it from one pocket and applying it to other properties in the Hunt portfolio, according to the local realtor.  Even after the leasing payments, the club generates a reported mid-six figures of income annually which, of course, goes to Hunt.  Yet, over decades, Hunt has made no significant capital investments in the putting surfaces and deteriorating irrigation system on the golf course, according to club members.

        Reportedly, Hunt is not interested in selling the golf club.  Instead, according to reports, the company hopes to lease the club back to its members after the bankruptcy is resolved.  In other words, Hunt will be looking for a continuing stream of income from the very same folks whose deposits the firm is seeking to vaporize.

        What’s the old saying?  “Fool me once, shame on you; fool me twice, shame on me.”  A Richmond bankruptcy judge is going to have his hands full with this one.

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Larry Gavrich

This blog was conceived and is published by me, Larry Gavrich, a former corporate communications executive who founded HomeOnTheCourse, LLC, in 2005.  Our firm advises baby boomers and others seeking a lifestyle in which golf is a major component.  My wife Connie and I own a home in Connecticut (not on a golf course) and a condo at Pawleys Plantation in Pawleys Island, SC, on a Jack Nicklaus layout.  We began our search for our home on the course more than 15 years ago, and the challenges of the search inspired me to research golf communities and write objective reviews of them.


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