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The morning of October 11 was a momentous occasion in the history of Kingswood Golf Estate, as it marked the culmination of a negotiation process spanning more than a year. During that Monday’s AGM, overwhelming support was received by the Kingswood HOA (Homeowners’ Association) members to proceed with the acquisition of the Gatehouse building.
In September, Kingswood CEO Willem Jacobs and trustees Roy Edge, Pieter Viljoen and Gerrit Botha compiled a proposal for Kingswood HOA members to purchase the Gatehouse. This abridged version of their presentation touches on the pros and cons.
Background
The Gatehouse was built by developer KGE Pty Ltd (Kingswood Golf Estate) to serve as a temporary clubhouse where golf operations, the pro shop and restaurant could be run. It houses KGO (Kingswood Golf Operations) owned by Liesel Niehaus and Mike Quinn, and the HOA, as well as KDC Architects, and Pam Golding Properties offices.
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During the course of 2020, KGE indicated to the HOA that they wished to sell this property, leaving the HOA with three options to consider.
Option 1: Not buying the Gatehouse and retaining the status quo
This option would necessitate the immediate start of designing and constructing an appropriate and affordable new clubhouse. But time was bound to run out, as planning would not have been completed before the current leases expired.
Option 2: Not buying the Gatehouse and entering into a head lease with KGE
If Props (Kingswood HOA Properties Pty Ltd), which is 100% HOA owned and owns the golf course and related assets, did not buy the Gatehouse, KGE proposed a head lease to allow sufficient time to proceed with the construction of a new clubhouse on its originally proposed site.
Option 3: Buying the Gatehouse
Purchasing the Gatehouse took termination of current leases out of the equation, leaving the HOA with enough time to decide on the way forward. This could include the Gatehouse remaining the clubhouse, i.e. never building a new clubhouse.
This meant considering the costs associated with renovating the existing Gatehouse; or building a new clubhouse and redeveloping the Gatehouse into an income-producing commercial building.
Leases are key
Another consideration was that the lease agreement for the HOA and all other tenants in the Gatehouse building terminate at the end of September 2022. If sold to a third party, there would be no obligation to renew existing leases, which means that the current tenants could be evicted and would need to find alternative premises.
A further possible consequence of the Gatehouse being sold to a third party was that the HOA would have scant or no control over the future utilisation of the building, particularly as it is already zoned for commercial use. A future owner might not have the best interests of homeowners at heart, potentially resulting in significant conflict between parties. As major tenants, the HOA and KGO would be most at risk if these leases were not renewed.
The HOA would need to find alternative premises to conduct its estate management and administration activities, while KGO would need to conduct day-to-day golf operations from elsewhere.
Willem explains the ripple effect that such a scenario may have had: “If KGO had no adequate premises from which to conduct daily activities, their ability to continue a viable business could be called into question, with the possibility of them defaulting on paying their monthly lease, valid until 2025.
“This would have resulted in us not being able to meet the monthly commitments necessary to maintain our golf course in its present condition, which is necessary to safeguard the Kingswood brand and, most importantly, to enhance existing property values.”
Naturally, any shortfall could also have the consequence of increased levies.
Benefits of the acquisition
Since the sale of the Gatehouse was approved by 89% of members who voted in favour of the acquisition of the property, the HOA now has control over how and what the building is used for in future.
“In the hands of a third party, the Gatehouse could be developed or utilised by them in a way not aligned to our overall vision for our estate, which includes being in control of all assets on the estate,” explains Willem.
Now this asset can be converted for future use, even if a new clubhouse is built. A legion of attractive amenities could include community facilities (gym, health spa, hairdresser); offices and medical rooms; storage for caravans, boats, trailers; a creche and more.
Furthermore, the HOA controls the overall condition and maintenance of the building, ensuring that a positive impression is maintained when entering at Gate 1.
Rental contributions made by tenants occupying the building pay for monthly financing charges and other expenditure, and should prevent a near-future increase in homeowner levies.
Roads agreement an added bonus
As part of negotiations between the HOA and KGE, inclusion into the transaction of a proposed settlement to the long-standing dispute relating to the storm water and roads in Phases 1-3 was discussed.
This made the AGM even more joyous for Kingswood’s board of trustees and everyone who had laboured to steer the protracted Gatehouse negotiations to their current happy conclusion. The majority (92%) of HOA members voted in favour of accepting the settlement agreement for the transfer of roads and private open spaces.
This state of affairs is a best-case scenario indeed and, according to trustee Gerrit Botha, the dream of planning a brand-new clubhouse can now be turned into reality, to the benefit of all Kingswood residents.
