January 17, 2025

 

Diamante Country Club was built by Cooper Communities. Construction of the course and facilities started in 1994. Tom Clark of Ault, Clark, and Associates was the architect of the Diamante golf course that was completed in 1995. Diamante Country Club was then and still is surrounded by 450 lots that make up the Diamante subdivision. Cooper held their grand opening in June 1995 with the co-owner ClubCorp. Initially the owners enjoyed great success in selling lots and attracting new members to the Club. After the golf course first opened it was rated as the #1 course in Arkansas and was also rated as one of the best new courses in the United States. Because of the quality of the course and course layout, Stephens Incorporated chose Diamante to host the Buy.com Arkansas Classic in 2001 and 2002 and the Nationwide Tour Arkansas Classic in 2003 and 2004. However, due to the remote location and the gating of Hot Springs Village, it was difficult to draw large crowds. Subsequently, the golf tournament ended after the 4-year run.

 

Although things were mostly going well for the Club, a lifetime dues tie-in requirement in the covenants governing the 450 Diamante lots caused property sales to decline over time. As a result, in 2001 Cooper and ClubCorp decided to offer new buyers of Diamante lots the option of deferring the start of their membership and the payment of club dues for up to 10 years. Their concept was that individuals who were considering retirement would buy property knowing that they wouldn’t have to pay dues until they built their home in Diamante at some point in the distant future. This concept was successful and enabled the Club owners to sell approximately 100 of their remaining lots. However, this sales tactic of giving new property owners something that was not offered to existing property owners infuriated many of the existing property owners who were already locked into the lifetime dues requirement.

 

As a result, in December 2008 a frustrated property owner filed the first of two separate lawsuits against the Club owners alleging that the tie-in was no longer legal. Both lawsuits were dismissed in the Arkansas lower courts, however, for technical reasons. In 2012, a third lawsuit was filed by members Gary and Linda Dye, again alleging that the dues tie-in was no longer legal. That suit ultimately became a class action lawsuit in 2013. In August 2015, the Dye class action lawsuit was decided by an Arkansas Circuit Court judge in favor of the owners, Cooper and ClubCorp. In November 2015, the case was subsequently appealed to the Arkansas Court of Appeals. The litigants also lost there. They then appealed the decision to the Arkansas Supreme Court in April 2016. On February 16, 2017, the Arkansas Supreme Court voted 5 to 2 ruling that the Covenant dues tie-in with property ownership was, and still is, legally binding. As a result, the dues tie-in stayed in place and is still in place today.

 

During the time of these lawsuits several proposals were presented by a team of Diamante member representatives (Rich VanLeeuwen, Dennis VanLeeuwen, John Paul, and Gerry Vaden) to Cooper and ClubCorp recommending they modify the way the permanent dues tie-in requirement was being dealt with. In each case, the Diamante Country Club owners declined and were unwilling to change the way the dues tie-in was administered. The owners advised that the members would have to buy the Club if they wanted to modify the details of the dues tie-in requirement. Subsequently, in December 2012 the member representatives hired Randy Addison of the Addison Law Firm to represent the Diamante members in negotiations with ClubCorp and Cooper. Mr. Addison had been an attorney with ClubCorp for a number of years prior to going into private practice. He was (and still is) an expert regarding club acquisitions. A meeting was subsequently held at the Woodlands for all Diamante members to advise them of the negotiations and to request funding for the legal expenses involved with buying the Club. The members enthusiastically agreed to fund this effort and explore buying the Club. The D C Member Group, Inc. was then formed for this purpose. The mission statement of DCMG was as follows; “Develop and implement a solution that will enhance the value of real property in the Diamante subdivision owned by Diamante Country Club members.” In other words, the main purpose of purchasing the Club was to protect and improve the property values of current and future property owners. On February 20, 2013, confidentiality agreements were signed, and due diligence documents were provided by Cooper and ClubCorp. The letter of intent to purchase the Club was executed by the DCMG with Cooper and ClubCorp on October 13, 2013. Due to the concern over the impact of a possible detrimental ruling in the Dye lawsuit, DCMG hired Chris Parker of the Eichenbaum firm to intervene in the lawsuit on the side of Diamante Country Club (Cooper and ClubCorp). When that lawsuit was decided against the litigants (Dye et al) at the Circuit Court level, Mr. Parker was asked to draft the Findings of Fact and Rulings of Law to document the decision. As detailed above, the lawsuit then worked its way to the Arkansas Supreme Court where the owners of the Club (and DCMG) ultimately prevailed.

 

Given the lengthy litigation involved with the Dye lawsuit, the letter of intent to purchase the Club, signed on October 13, 2013, expired by the time the Arkansas Supreme Court ruled in favor of Cooper and ClubCorp on February 16, 2017. As a result, DCMG, represented by Randy Addison, negotiated a new purchase agreement. On July 31, 2017, Rich VanLeeuwen announced to the members that the new purchase agreement had been signed by all parties. Then on December 19, 2017, Mr. VanLeeuwen announced that the purchase of the Club was completed. The purchase agreement was an Asset Purchase Agreement that had the members buying the Club from ClubCorp and Cooper for $700,00 cash ($400,000 to ClubCorp and $300,000 to Cooper) plus a 4-year note for $100,000 plus interest to Cooper. The new Diamante Members Club, Inc. (DMC) would be responsible for most of the liabilities of the Club but would also gain ownership of most of the assets. On the asset side of the ledger, DMC got the physical assets, the accounts receivable, 35 Diamante owned lots, etc. On the liabilities side of the ledger, DMC got most of the accounts payable, existing leases, initiation deposit repayments, etc. The deposit repayment liabilities were for those who had bought Diamante lots from Cooper and Club Corp from 1994 through 2004. The deposits were to be paid back 30 years after the purchase of the lot. Initiation Deposits (IDs) were $10,000. ClubCorp had done similar plans like this with other country clubs around the Country and had experienced a 2.1% average redemption rate. Still the liability totaled over $4 million, and the expectation was (and still is) that the redemption rate at Diamante would be higher than the ClubCorp average. To make the purchase possible, all the current members were asked to participate financially. Those members with houses were asked to pay $10,000 each and those members with lots were asked to pay $2,500 each to fund the purchase. The members were also asked to forfeit their IDs. In buying the Club, those members participating were granted a modified dues tie-in requirement. The requirement to pay full golf dues would be reduced from lifetime to 48 months starting January 1, 2018. At the end of that time a member could choose “Inactive” status and still be a member, but without the privileges of using the Club. Inactive members would then instead only pay an Administrative Fee each year rather than full golf dues. Optionally, they could and still can downgrade to a Clubhouse, Clubhouse Plus, Court Sports or other Diamante membership. Further, those members with IDs were allowed to reduce the length of their full dues tie-in requirement even further when they forfeited their ID deposits. Their full golf dues tie-in length was reduced by 12 months for every $10,000 in IDs that they forgave.

 

Almost all the members in good standing of Diamante Country Club participated in this purchase arrangement. Two hundred and forty-nine members who were in good standing invested in the purchase and only nine members in good standing declined to participate. The members who participated in the purchase had a limited full golf dues tie in requirement and were classified as Gold Full Golf Members. The nine members in good standing who declined to participate in the purchase of the Club, however, continued to have the lifetime full golf dues tie-in requirement on their property. All non-participating members, including those not in good standing due to a delinquent account, were classified as Silver Full Golf Members. Another option was also offered at the time of the purchase. Members could pay $45,000 to be a Platinum Lump Sum Full Golf Member or $15,000 to be a Platinum Installment Full Golf Member. With the Platinum lump sum option, the members would not have to pay dues again and enjoy all the privileges of full golf membership for as long as they owned a property in the Diamante subdivision. With the Platinum Installment option, the members were required to pay full golf dues for 7 years and then not have to pay dues again for as long as they owned a property in the Diamante subdivision. Twenty-eight members signed up for Lump Sum Platinum and five members signed up for Installment Platinum. Also, there were an additional 19 members who had bought lifetime memberships from ClubCorp and Cooper when the Club originally opened. These lifetime members were asked to also financially participate in the purchase of the Club ($10,000 for those owning a home and $2,500 for those owning a lot). Eighteen of the nineteen lifetime members did so. In the end, the participation of this vast majority of active members resulted in approximately $2.8 million paid in capital with over 44% of that amount coming from Platinum members. Subsequently, at the end of December 2017, after paying ClubCorp ($400k), Cooper ($300k), and all the legal fees associated with the purchase, the Club started operations with $1,670,150 in cash.

 

Since taking over ownership of the Club at the end of 2017, the new owners (the members) have made many positive changes. An impressive list of capital improvements has been accomplished (see the full list posted on our website). For example, in 2018 the golf course bunkers, that were in very poor condition at the time of the purchase of the Club, were redone and converted to “Billy Better Bunkers”. This bunker design is the one used by some of the top Clubs in the Country including the Masters’ Course in Augusta, Georgia. Also, the members replaced almost all the Course and Grounds’ machinery with new equipment (mowers, tractors, work carts, etc.). The golf course cart paths were in disrepair at the time of the purchase. As a result, the members had to replace hundreds of yards of cart paths. From that first year until now Diamante Members Club, Inc. has done over 50 capital improvement projects with about one third of those projects being paid for partially or totally by Diamante members on a voluntary basis. The total of capital improvements since the purchase of the Club is estimated to be over $2.5 million in 7 plus years of Club ownership.

 

Fortunately, the modified dues tie-in requirement has eliminated a major problem that greatly inhibited the growth of the Club. For example, the few existing homes that were sold before the members owned the Club sold for approximately $80 per square foot on average. Since the members bought the Club, many homes have sold, most of them at prices of over $150 per square foot. Lots that were selling for as little as $1 prior to the purchase, are now selling for $20,000 to $45,000. As a result, Diamante Members Club Inc. has clearly achieved its stated mission of “Develop and implement a solution that will enhance the value of real property in the Diamante subdivision owned by Diamante Country Club members.” As a result, the members look forward to a bright future with Diamante as “the place” for golf, for fine dining, for court sports, for swimming, for special events, for friendship, and for fellowship.