Many people think IVGID’s acquisition of the community’s two (2) golf courses goes all the way back to the District’s creation on May 20, 1961¹. But that’s not accurate. IVGID purchased the golf courses, The Chateau and Bowl Incline from Japan Golf Promotion (U.S.A.), Inc. (“JGP”) more than fifteen (15) years thereafter; on/about June 29, 1976.

Recall that “Art Wood (an entrepreneur from Oklahoma) and his (CPA) associate Harold Tiller² (were the visionaries)…of Incline Village — a master-planned vacation resort community on the northeastern shore of Lake Tahoe. (The golf courses were two) of Art Wood’s cornerstone recreation amenities in his master-planned ‘Pebble Beach of the Sierra'” vision³. But neither golf course was built for nor intended to be owned/operated by IVGID⁴. In fact, both were constructed and initially operated by Crystal Bay Development Co. (“CBDC”) beginning in 1964⁵. And then taken over by Boise Cascade Home & Land Corporation (“Boise Cascade”) when CBDC sold all of its remaining Incline Village properties but for the beaches on June 4, 1967⁶. And both were sold to JGP on/about August 14, 1973. So how did IVGID end up owning Incline Village’s two (2) golf courses?

IVGID‘s Acquisition: At the Board’s March 11, 1976 meeting former General Manager (“GM”) Kermit McMillin revealed for the first time he had been having “discussions with Mr. Bob Yoxall of (JGP on the District’s possible)…purchase of the two Incline golf courses…the bowling alley”⁷ and The Chateau⁸. Apparently these “discussions” were far more than simply “discussions” inasmuch as the Board was informed that “the attorney for Japan Golf…(wa)s sending his draft of (a proposed) purchase agreement…and…would like to have further discussion(s) adjourned until” after receipt and consideration of the same. Apparently JPG’s decision to sell these facilities was motivated by at least three (3) announced factors.

1. The first was that there had been extensive damage to the bowling alley⁹.

2. The second was that JGP was losing money on its operation of the golf courses (see discussion below). And,

3. The third was that both Incline Village golf courses were falling into a state of disrepair given JGP’s principals had no idea of the massive capital costs associated with golf course ownership/operation when they first acquired the same (see discussion below).

Two weeks later at the Board’s March 25, 1976 meeting, its chairperson read a press release which recited the following:

“A tentative agreement ha(s) been reached between JGP and the District on the (latter’s) purchase of the two golf courses and the bowling alley. The appraised value of the two golf courses and bowling alley is $2,400.000 and (the District’s) offer for (all three) was $1,200,000…The owners of the golf courses and ski area¹⁰ w(ill) only be required to have these facilities open to the public for five (5) more years.”¹¹

And the very next day the IVGID Board adopted Resolution No. 1244 which directed its chairperson to enter into a written agreement with JGP for the District’s purchase of the two golf courses and bowling alley contingent upon bond funding (see discussion below) and judicial confirmation in a NRS 43.140(1) petition proceeding¹².

Reasons For IVGID‘s Acquisition: So why would the IVGID Board want to purchase two golf courses [especially when: both were falling into a state of disrepair; and, “last fiscal year (their) revenues were $518,000 and expenses were $635,000”¹³]? And more importantly, where would the money come from to pay for this purchase? Let’s examine the former question first. A review of the written record insofar as the District’s purchase of the golf courses is concerned reveals there were a number of reasons:

1. First, a group of core golfers, headed by their real estate allies¹⁴, were spearheading the move by asserting the narrative the golf courses “help(ed) to maintain property values;”¹⁵

2. Closely related to the first justification was the disingenuous and untrue⁴ argument “Incline Village was built around the golf courses and (the community) could not run the risk of allowing them to fall into a state of disrepair;”¹⁵

3. To bolster these arguments in support, the Board’s chairperson “stated that the present owners show(ed) many expenses which the District would (allegedly) not have¹⁶ (such as)…as taxes, interest on debt¹⁷ and excessively high administrative costs¹⁸. He stated that “the District now has administrative personnel wh(o) could help in the operation of the golf courses;”¹³

4. And to further bolster the arguments in favor, staff introduced the idea of “competition” for the golf courses. You know, that there was allegedly interest in the community from unidentified others¹⁹. GM “McMillin stated that he had a phone call from a(n unidentified) prospective purchaser of the Championship Golf Course and (he) ha(d) a meeting with him scheduled for Friday, March 12;”¹⁵

5. Moreover, at the Board’s April 8, 1976 meeting a choreographed presentation was made by Harris, Kerr, Forster & Co., hospitality consultants, on a “preliminary pro forma in the operation of the (two) golf courses” where it represented total gross profit operations of $108,729 would likely be realized¹⁵ operating the courses for the period April 1, 1976 to March 31, 1977²⁰;

6. And to further bolster the arguments in favor even more, staff advanced the “value” argument. You know, “the opportunity to purchase the (golf courses)…at a price (only half as much as)…the(ir) appraised value…A high priority of those who responded to (a) recent recreation survey”²¹ authorized at the Board’s April 29, 1976 meeting²²;

7. Then of course the choreographed presentation included “the District’s Bond Counsel…advise(ment)…that the District could sell bonds to sufficiently cover the acquisition…providing the Board was willing to increase the annual Recreation (Facility) Charge.”¹⁴ In response to questions as to “how the (proposed) revenue bonds would be purchased, District Bond Counsel Andrew Hall…stat(ed) the District ha(d) an excellent credit rating and that selling these bonds would be easier than it was to sell the bonds for the original purchase of the beaches. He also stated that if for some reason the bonds could not be sold…the purchase of these facilities would not take place;”

8. Finally, to assure local property owners²³ that their concerns would not be unilaterally trampled upon, even though they were²⁴, “legal Counsel Berkson…stated that the purchase would have to be confirmed by a court¹² and…there would have to be a public notice listed for five weeks, during which time any group or individual could file a protest.”²⁵

IVGID‘s Funding For This Acquisition: Now onto the latter question; where would the money come from? Since CBDC’s and IVGID’s common playbook had worked so well insofar as paying for the infrastructure improvements necessary for the development of Incline Village and acquisition of the beaches, as recited above, on March 26, 1976 the Board adopted Resolution No. 1245 which authorized the issuance and sale of $1.2 million of interim debenture no. 1 financing bonds²⁶, to be junior to the outstanding Revenue Bonds of 1968²⁷. This issuance was intended to be in anticipation of issuing new 1976 recreation refunding bonds.

Then on July 19, 1976 the IVGID Board adopted Resolution 1262 which authorized the issuance of a whopping $5.71 million of revenue bonds (labeled “the Special Obligation Bonds of 1976”). The proceeds of these bonds: paid off the then outstanding principal due under the Revenue Bonds of 1968²⁸ issued to pay for acquisition of the beaches; paid JGP its agreed upon $1.2 million purchase price for Incline Village’s two (2) golf courses, The Chateau, and Bowl Incline; paid JGP $1.5 million for Ski Incline and the chipping area adjacent to the Championship Golf Course driving range¹⁰; and, provided $600,000 to pay for contemplated improvements/repairs to the Championship Golf Course and Ski Incline. And of course on July 12, 1976, in anticipation of servicing the Special Obligation Bonds of 1976, the IVGID Board adopted Resolution No. 1261 which doubled the Recreation Facility Fee (“RFF”) to pay the servicing costs on those bonds²⁹; just how staff had suggested.

So now you know when, how and why the District purchased Incline Village’s two (2) golf courses, The Chateau, and Bowl Incline!

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1. See Washoe County Ordinance 97, Bill 57.
2. Also known as “the father of Incline Village.”
3. See https://www.diamondpeak.com/about/diamond-peak-history.
4. As we have demonstrated, when IVGID sought public recreation powers from the Washoe County Board of Commissioners (“the County Board”) its Board representative Harold Tiller expressly represented that if granted, this new power would not be exercised to acquire nor operate any contemplated recreational facility, specifically including the golf courses. Rather, all such facilities would be privately owned, operated and presumably financed [see pages 159-160 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2020 meeting (“the 5/27/2020 Board packet”)].
5. See that 2001 Golf Master Plan.
6. IVGID wasn’t notified of the sale until May 13, 1968.
7. Interestingly, in 1971 NRS 318.143(3) was added [see AB631, Chapter 507, page 1054, 1971 Statutes of Nevada] to expressly allow GIDs to include the following “recreational facilities…exposition buildings, museums, skating rinks, other type rinks, fieldhouses, sports arenas, bowling alleys, swimming pools, stadiums, golf courses, tennis courts, squash courts, other courts, ball fields, other athletic fields, tracks, playgrounds, bowling greens, ball parks, public parks, promenades, beaches, marinas, levees, piers, docks, wharves, boat basins, boathouses, harborages, anchorages, gymnasiums, appurtenant shower, locker and other bathhouse facilities, amusement halls, dance halls, concert halls, theaters, auditoriums, aviaries, aquariums, zoological gardens, biological gardens and vivariums (or any combination thereof).”
8. Although little mention was made of the District’s purchase of The Chateau at the time, it definitely was included in the subject purchase/sales discussions. And for those not familiar with The Chateau, this is the large meeting space facility located adjacent to the Grille Restaurant above the Championship Golf Pro Shop.
9. At the Board’s March 11, 1976 meeting GM McMillin made reference to the fact staff “need(ed) to find out when the damage we want taken care of will be repaired, and that we might require a(nother) bond to insure that all items will be taken care of.”
10. This subject is addressed in more detail at our How IVGID Acquired Diamond Peak discussion.
11. Suggesting that thereafter, these facilities would become privatized even though recall that the power the District secured on November 15, 1975 was to furnish facilities for public recreation.
12. NRS 43.100(1) instructs that a “governing body may file….a petition…in…district court…praying a judicial examination and determination of the validity of any…act…of the municipality, whether or not such…act…has been taken.” NRS 43.140(1) instructs that “upon hearing the court shall examine into and determine all matters and things affecting the question submitted…and render such judgment and decree thereon as the case warrants.”
13. See the minutes of the Board’s March 25, 1976 meeting.
14. Sound familiar?
15. See the minutes of the Board’s April 8, 1976 meeting.
16. Conspicuously, there was no mention made of the massive capital costs associated with golf course ownership/operation which had doomed JGP. Nor the massive irrigation costs (in the many tens of millions of gallons).
17. Given funding of the purchase was dependent upon interest bearing bonds, we are at a loss to understand the alleged savings argument because of the lack of interest on debt.
18. Given the District’s current excessive administrative costs, we are again at a loss to understand the alleged savings argument as a result of IVGID’s administration.
19. Right. We’d better strike while the iron is hot because if we don’t, our purchase might be pulled away right under us!
20. An interesting assessment given it was likely there would be no such operations for the six (6) month period from early October of 1976 through March 31,1977.
21. See the minutes of the Board’s June 29, 1976 special meeting.
22. See the minutes of the Board’s April 29, 1976 meeting where GM McMillin stated “a postcard was being sent out, on which…all property owners (c)ould vote on the types of recreation that they want(ed) or d(id) not want.”
23. Since they would be the ones ultimately paying for this acquisition.
24. Although public notice would take place, in order for members of the public to voice their concerns, they would have to become formal parties to a court lawsuit. How many such members of the public do you think were knowledgeable enough and willing to “appear and move to dismiss or answer the petition” [see NRS 43.130(1)] and thus participate in such a lawsuit? We assume none. And if none, who made the court aware of Harold Tiller’s October 25, 1965 representations to the County Board and the public [see page 159 of the packet of materials prepared by staff in anticipation of the IVGID Board’s May 27, 2020 meeting (“the 5/27/2020 Board packet“)] that but for public parks and the beaches “all (other)…recreational facilities…w(ould) be privately owned…operated” and presumably privately financed? Without this material knowledge, how possibly could the court “determine all matters and things affecting the question submitted…make such findings with reference thereto, and render…judgment and decree thereon (approving the proposed purchase) as the case (truly) warrant(ed)” [see NRS 43.140(1)]?
25. See the minutes of the Board’s March 26, 1976 meeting.
26. We are not certain whether these bonds ever actually issued because they were intended to only provide interim financing. However, regardless, if issued, they would have been retired when the Special Obligation Bonds of 1976 issued.
27. The bonds issued to finance purchase of the beaches.
28. Which via deduction must have been about $2,410,000 including issuance costs for the new bonds.
29. Why did the RFF have to be doubled given Harris, Kerr, Forster & Co. had represented (see discussion above) total gross profit operations of $108,729 would likely be realized¹⁵ operating the courses for the period April 1, 1976 to March 31, 1977²⁰?