The Seagate Hospitality Group in Delray Beach has a problem: The luxury Seagate Hotel & Spa in downtown Delray Beach, plus the nearby Seagate Beach Club on the ocean, lack the ability to offer private golf and tennis to guests and members.
A nearby country club community, the Hamlet Country Club in Delray Beach, located just west of Interstate 95 on Atlantic Avenue, also has a problem: A long-standing battle between the club and homeowners who don’t want to pay mandatory club dues.
Last Monday, Seagate held a meeting at the 309-home community and offered to buy the Hamlet Country Club for $7 million and eliminate the need for long-term mandatory memberships by homeowners, according to sources familiar with the meeting.
But in an odd twist, club members each would need to pony up $20,000 to make the deal happen. It’s not clear whether the money will be used to pay down an $11 million loan owed by the club to Wells Fargo, or if the money will be paid to Seagate.
The offer was presented as a take-it-or-leave it proposition, with no room for negotiation or input from club members and residents, sources say. Club members said the Seagate deal, hammered out by the club board, came as a surprise, at a time when many residents already have returned to their primary residences up North.
Seagate Hospitality Chairman E. Anthony Wilson told a packed meeting that the recently renovated Hamlet club house would be perfect for corporate meetings and large events, the sources said. Seagate guests and members also would be able to use Hamlet’s golf and tennis facilities. Hamlet residents could still be members of the club.
A presentation made to Hamlet club members already showed the Seagate’s branding idea: “Seagate Golf & Tennis at the Hamlet.”
It’s an unusual proposal and one that is expected to garner heated debate in the community, which already has been divided over a requirement made a few years ago that single-family homeowners must be members of the country club.
Some residents expressed support for the Seagate proposal, which would eliminate the mandatory membership problem, now the subject of protracted litigation, and free the club from the financial burdens that have hit many private clubs as members age and use amenities less.
But several members were put off by the $20,000 payment, which is in addition to the thousands of dollars club members already have poured into dues and memberships.
In addition, there is still a mandatory three-year membership, but with reduced dues. However, there was no information about the cost of dues after that period.
Some club members already have concluded the sale benefits Seagate more than it does the country club.
Club members are worried about losing control of the venue, a community amenity, which means Seagate could decide when to offer dining or other services enjoyed by club members. Seagate intends to use the clubhouse for corporate or large events, such as weddings, according to people familiar with the meeting.
Wilson dangled the prospect of access for Hamlet club members to the Seagate’s amenities. But he later acknowledged the beach was off-limits because it is already at capacity.
In addition, Hamlet residents would have to pay for access to Seagate facilities, which would cost an additional $1,500 nonrefundable fee, plus another $3,000 each year.
For several years, the Hamlet Country Club has been a community divided.
Some homeowners have been in litigation with the club over the mandatory membership, which consists of initiation fees ranging from $30,000 to $40,000, plus annual dues. Some residents decry the fact that the community made membership in the club mandatory after they had purchased a single-family home. They say the rule is unfair because some residents who previously filed a lawsuit challenging the mandatory membership are exempt from having to buy into the club. Plaintiffs also complain that a mandatory membership makes it hard to resell their homes because of the added club costs.
Home prices in the Hamlet range from $100,000 for a condominium to nearly $900,000 for a single-family home, according to Claude Champagne of Lang Realty in Boca Raton.
But mandatory country club membership is a trend. Clubs have to offset the effects of the recession and an aging membership while still trying to maintain the club and service any debt.
Last year, Hamlet tried to increase club memberships by marking down golf memberships to new homeowners under the age of 62, as well as offering some nonresident golf memberships.
Other small clubs in Palm Beach County have struggled. This was the case with the President Country Club, in West Palm Beach, which labored to service a large loan at a time of declining membership. The country club was sold last year to a group led by Hardrives founder George Elmore, whose Palm Tree Golf Management LLC paid $11 million for the club and its two golf courses.
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