The Greenway or the highway

When, in July 2012, Council overruled a staff recommendation and unanimously chose a golf management company called Greenway Golf Associates to operate the City-owned Chuck Corica Golf Complex, the decision was based in large part on the confidence expressed by Alameda golfers that Greenway would be an innovator, and not an exploiter.

As the chair of the Golf Commission wrote in an op‑ed at the time, “Greenway has offered us a vision for the future of sustainable golf in Alameda by proposing a new golf experience that is exciting and environmentally sound.”

That was then.  This is now:

Two of Greenway’s three principals, George Kelley and Ken Campbell, are no longer with the company, having sold their stock in December 2019 and April 2020 to a man named Umesh Patel, who became the majority shareholder and chief executive officer.  In apparent disregard of Greenway’s lease, neither Mr. Patel nor anyone acting on the company’s behalf sought or obtained prior written consent from the City for this transfer of control.

The third principal, Marc Logan, remained involved after the sales.  But things just got very messy last week when Mr. Logan filed a lawsuit against Greenway and Mr. Patel in Alameda County Superior Court, alleging, among other things, that the new CEO has failed to keep his promise to contribute sufficient funds to pay for the multi‑million‑dollar renovation of the North Course that Greenway is obligated to perform under its lease with the City.  The complaint seeks to remove Mr. Patel and his designee as directors of the company.

In the meantime, Mr. Patel has taken a variety of actions that have outraged segments of the local golf community that once supported Greenway.  Not only has he raised greens fees across the board, he has imposed restrictions that have driven the Alameda Women’s Golf Club to move about a third of its weekly tournaments from the golf complex (now known as Corica Park) to the Metropolitan Golf Links course in Oakland; and the Alameda Junior Golf Association to move its own fund‑raising tournament to Metro, increase dues for its youth members by 50 percent, and consider cutting back on its long‑standing scholarship program.

And what has the City done about any of these moves?

As far as we can tell . . . nothing.

The selection of Greenway came after golfers convinced Council to reject a proposal by developer Ron Cowan to “swap” vacant land he owned on North Loop Road for the City‑owned land on which the par‑3 Mif Albright course sits.  Mr. Cowan wanted the Mif site so that he could build up to 116 luxury homes there.

When staff then renewed its quest to find a long‑term operator for the golf complex, the odds‑on favorite was Chicago‑based KemperSports, which had been managing the property on an interim basis since November 2008.  At first, KemperSports claimed it was not financially feasible to operate a 45-hole facility and proposed reducing the size to 27 holes.  But when golfers raised a ruckus, it came up with a plan that kept all three courses but offered only modest improvements.

The other finalist was Greenway, a closely held company that managed public golf courses in Florida, Oklahoma, Oregon, and California, including the award‑winning Stevinson Ranch Golf Club near Merced.  It proposed a complete remodel of the South Course, with a redesign by nationally known golf course architect Rees Jones, as well as turf and drainage improvements to the North Course and an upgrade to the Mif and practice range.

Staff recommended that Council give the contract to KemperSports, but, after a lengthy meeting at which 24 Alamedans spoke (17 favoring Greenway, six supporting KemperSports), Council picked Greenway instead.  In July 2012, the parties executed a 20-year lease with a five-year option to extend.

Greenway then got to work.  Upon arriving on the scene, it rebuilt the Mif and made over the practice facility, replacing artificial grass with a drought‑tolerant strain of turf.  Next, it turned to the remodel of the South Course, which took three years.  The course reopened in June 2018 – to rave reviews.  (Golf Magazine named it the best municipal course renovation of the year and one of the best 30 municipal courses in the country.)

As the South Course project was nearing completion, Greenway decided that the North Course could use more extensive improvements than the original lease called for.  It sought, and obtained Council approval for, a lease amendment that lengthened the term to 40 years, with an option to extend for another 10, and obligated Greenway to perform a “complete renovation” of the North Course.  This included raising the level of the course by about three feet; re‑grading and installing new drainpipes; dredging and repairing the storm water detention ponds; and rebuilding fairways, roughs, and greens.  The work began in early 2019.

In March 2020, a visitor appeared at the Golf Commission meeting:  Mr. Patel, who told the Commission that he “became a partner in Greenway as an investor” in December 2019.  According to the minutes, Mr. Patel described himself as an “an Alameda resident for 21 years” whose two boys “grew up in the junior program” at the golf complex.

The minutes do not recite any further details about Mr. Patel’s business background, and our own Google search came up empty.  An August 2018 filing with the California Secretary of State, however, identifies Mr. Patel as the managing member of a limited liability company called Lakewalk Capital LLC, whose office is located in Oakland and whose business is described as “investment advice.”  In addition, the Companies House database in the U.K. identifies Mr. Patel (occupation:  “fund manager”) as a director and “person with significant control” of a “private limited company” called Carisbrooke Care Ltd., which was incorporated in May 2018 with a registered office in Leicester.  The company’s “nature of business” is stated to be “residential care nursing facilities” and “residential care activities.”

We couldn’t find any source indicating that Mr. Patel had any experience in golf‑course operation or management.

Two complaints filed in Alameda County Superior Court (and their accompanying exhibits) reveal a bit more about the sales of Greenway stock to Mr. Patel.  According to the Superior Court complaint filed by Mr. Logan, Mr. Patel bought 1,400 shares apiece from the other two principals in December 2019.  The Stock Purchase and Sale and Contribution Agreement, which is attached as an exhibit to the complaint, called for Mr. Patel to pay $325,000 apiece to Messrs. Kelley and Campbell (or their family trusts) over time.  It also required him to pay off several of Greenway’s outstanding loans, including two loans totaling $2.18 million to Fremont Bank.

(Apparently, Mr. Patel did the deal, at least in part, with borrowed money.  According to a Superior Court complaint filed last March by Alameda resident and former Golf Commissioner Joe VanWinkle, Mr. Patel borrowed $1,041,000 from Mr. VanWinkle “to fund [his] obligations in connection with [his] purchase of stock in Greenway.”)

At the same time, Mr. Patel entered into a Shareholders’ Agreement with Messrs. Kelley, Campbell, and Logan, which also is attached as an exhibit to the Logan complaint.  The Agreement requires Mr. Patel to “contribute” to Greenway “such amounts as may be reasonable, necessary and appropriate to fund” the company’s obligations under its amended lease, including renovation of the North Course.  The funds could take the form either of a loan or a capital contribution.

The initial purchases did not give Mr. Patel control of Greenway, as Messrs. Kelley and Campbell retained 600 shares apiece of company stock and Mr. Logan owned 2,000 shares.  According to the Logan complaint, that situation changed in April 2020 when Mr. Patel bought the remaining 1,200 shares held by Messrs. Kelley and Campbell.  (The complaint does not specify the purchase price.)  This gave him a controlling interest:  4,000 shares compared to Mr. Logan’s 2,000.

(Mr. Patel did not respond to our email request for comment about the allegations made by Mr. Logan.)

We do not know why Mr. Kelley or Mr. Campbell decided to sell all of their Greenway shares to Mr. Patel.  But we do know that the lease requires Greenway to get prior written consent by the City to any “Transfer Arrangement,” which is defined to include “[a]ny sale or other transfer, including by consolidation, merger, or reorganization, of a majority of the voting stock. . . .”  And we also know, based on our emails with City Attorney Yibin Shen and Recreation and Parks Director Amy Wooldridge, that neither Mr. Patel nor anyone acting on behalf of Greenway sought or obtained such consent to his acquisition of a majority interest.

In fact, Mr. Shen told us, “My understanding is that the City has not given consent to any majority ownership transfer in the last few years because Greenway has consistently informed the City that no majority interest transfer has taken place.”  Ms. Wooldridge added that, “The City is reviewing the [Logan] lawsuit allegations and will follow the lease agreement terms as needed.”

(According to the VanWinkle complaint, Mr. Patel’s acquisition of a majority interest in Greenway triggered one other consequence:  it accelerated the $1,041,000 loan made by Mr. VanWinkle, which became immediately due and payable.  When Mr. Patel failed to pay, Mr. VanWinkle filed suit.  The court file indicates that a request for dismissal was submitted shortly thereafter, which usually means a case has been settled.)

So what has happened to Greenway – and to the golf complex – on Mr. Patel’s watch?

We’d like to be able to tell our readers how Greenway has fared financially during the pandemic, but we can’t:  Although the lease requires Greenway to furnish the City with monthly “summary reports” as well as an annual financial statement “prepared by a certified public accountant in accordance with GAAP detailing all income,” the company has delivered neither to the City since Mr. Patel took over.  Or at least that’s we deduced from Ms. Wooldridge’s response to our request for these reports:  “I do not have any responsive documents regarding the monthly and annual statements.”

But Greenway does appear to have taken advantage of the Paycheck Protection Loan program offered through the federal Small Business Administration.  According to the FederalPay database, Greenway applied for and received a $927,080 PPP loan in April 2020 and a second PPP loan in the same amount in January 2021.  The database shows the status of the first loan as “paid in full” (a designation that includes both loans actually repaid and those fully forgiven), and the second as “ongoing.”

The federal government promulgated rules, which changed over time, governing how a borrower could use PPP loan proceeds.  According to the FederalPay database, both times Greenway applied for loans, it stated that it intended to use the funds to meet payroll expenses, which would enable it to “retain” 164 jobs.  (The Logan complaint, it should be noted, alleges that in fact Mr. Patel distributed $18,541.60 of the PPP loan proceeds to Lakewalk Capital, his investment firm, as “G&A Management Fees.”)

And what about the North Course renovation?

At the March 2020 Golf Commission meeting at which he introduced himself, Mr. Patel stated that his “first priority” was to re‑open nine holes of the North Course by the end of the year.  As it happened, the reopening of the front nine didn’t occur until October 2021.  Dirt and sand for the back nine appear to have been delivered, but golfers report that no construction work currently is taking place there.

We don’t know why the North Course renovation has been delayed, but the Logan complaint makes allegations that, if true, may provide part of the explanation.  According to the complaint, the work to date has cost $2,327,911.83, and an additional $2,802,287.40 will be needed to finish the job.  Despite Mr. Patel’s obligation under the Shareholder Agreement to fund the renovation, the complaint alleges, he “has not made any loans or capital contributions directed at the North Course improvements.”

At the same time, when it comes to revenue, Mr. Patel has hardly been a passive owner.

At the October 2021 Golf Commission meeting, Mr. Patel announced that in two days he would be raising greens fees, including those for Alameda residents, seniors, and juniors.  Resident rates would go up by 24 percent for the South Course on Monday through Thursday and 25 percent on Friday, Saturday, and Sunday.  Senior rates for that course on Monday through Thursday would increase by 16 percent with no increase on Friday.   And juniors, who previously had been able to play the South Course during their nine weekly summer tournaments for $1, now could hold those tournaments only on the North Course – and the rate would be $25.  In addition, younger kids who play their tournaments on the par-three Mif would have to pay five bucks rather than one.  (Greens fees for the public at large also would go up between 18 and 25 percent depending on the day of the week).

Wait a minute, the Commissioners, led by Vice Chair Claire Loud, responded:  Wasn’t the City required to approve any rate increases before they went into effect?  And they were absolutely right:  the lease provides that Greenway shall offer “discounted rates to City residents, seniors, and students in accordance with a rate schedule reasonably approved by [the] City.”  But Ms. Wooldridge told the Commission that Council had delegated approval authority to her (we looked for, but were unable to find, a Council resolution to that effect), and the new rates would not apply until she had reviewed them.  Apparently, she found the increases largely satisfactory, since a comparison of the proposed and posted rates shows only two small differences.

The Golf Commission considered itself powerless to overrule her.  Council never got involved.

The rate increases, however, weren’t the only changes made by Mr. Patel.  He also targeted the so-called “service clubs” – the Alameda [Men’s] Golf Club, founded in 1927; the Alameda Women’s Golf Club, founded in 1929; the Alameda Women’s Nine-Hole Golf Club; the Alameda Junior Golf Club; and the Alameda Seniors Golf Club.  Traditionally, a block of tee times had been reserved for each of these groups every week during their respective golf seasons, and each got a discounted rate.

For AWGC, Greenway had reserved at least 56 slots on Thursday mornings (and more when special tournaments were held) for club members in the two previous years.  Now, Mr. Patel announced, AWGC would get only 32 tee times starting January 1 (which, of course, enabled him to offer the vacated 24 slots to the public at rack rates).  He also told the club that the first group would need to tee off by 7:30 a.m., an hour earlier than the decades-old practice.

In addition, during the previous year Greenway had charged a flat rate of $31 for all AWGC members.  Now, Mr. Patel announced, the rate in 2022 for seniors would be raised to $36, and for non-seniors to $50.  He also stated that Greenway intended to adopt a “Pay as You Are” program in 2023, meaning that an AWGC member under the age of 60 who lives outside Alameda would be charged $80 or more to play golf with the club on Thursdays.

With 15 new members in 2022, AWGC needed more tee times, not fewer.  So the club turned to Metro, which was eager to accommodate the women golfers, offering lower rates and unlimited slots for players on most Thursdays, and allowing shotgun starts for special tournaments.  As a result, the 93‑year‑old Alameda Women’s Golf Club will be holding about a third of its tournaments this year in . . . Oakland.

The other women’s club, known as the Niners, also got hit with a rate increase.  Traditionally, all players had been charged a single reduced rate for the nine holes.  That rate was eliminated for 2022, and the Niners are now being charged the same fees as the 18-hole AWGC players, with the same prospect of “Pay as You Are” in 2023.  As a result, some members have quit the club, and others have cut back their playing time.

The women golfers aren’t the only ones who’ve had to scramble to adjust to Mr. Patel’s new policies.

The Alameda Junior Golf Association, which runs the junior golf program (whose alumni include PGA tour professional James Hahn), decided to subsidize play so that the kids would not have to pay the new higher fees out of their own pockets.  To get the necessary cash, the AJGA board raised yearly membership dues from $50 to $75.  It made plans to revive its annual Jack Clark Memorial fundraiser, which had been paused during the pandemic, and, when Greenway insisted on charging $75 per head for participating golfers, it moved the event to Metro, which was willing to offer a lower rate, thereby increasing the size of the field and the amount of funds raised.  Even these actions may not prove to be enough:  the board also is considering reducing the total amount of its annual college scholarship grants – which have averaged $20,000 per year – if necessary to enable it to shield juniors from the rate increases.

Very recently, in response to a groundswell of criticism, Greenway appeared to want to back away from its hard line toward junior golf, but the AJGA board found its offer unacceptable.

(We were unable to find anyone at the men’s or seniors’ clubs to address the impact, if any, on their organizations.)

As a private businessman, Mr. Patel’s only legal obligation is to comply with the terms of Greenway’s lease with the City and his contracts with partners and lenders (as well as any other generally applicable laws.)  And neither City staff, nor the Golf Commission, nor even Council has any power to force him to do anything more.  Still, there were times, not so long ago, when private entities that provided amenities to Alamedans sought to further the public interest, not just their own.  When Council selected Greenway to operate the municipal golf courses, it looked as if it had found such an entity.

But that was then.  And this is now.

Sources:

Greenway-City lease: Greenway lease; 2018-02-15 Ex. 2 to staff report – Lease Amendment

Golf Commission meetings: 2020-03-10 Golf Commission minutes (appearance by Patel); 2021-10-12 Special Golf Commission Minutes; 2021-10-21 Corica Park 2021 Rate Adjustment and Comparable Golf Course Rates

Logan v. Greenway et al.: Logan v. Greenway (complaint filed 3-2-22)

VanWinkle v. Patel: Van Winkle v. Patel (complaint filed 3-11-21)

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
This entry was posted in City Hall, Golf and tagged , , , , , , , , . Bookmark the permalink.

18 Responses to The Greenway or the highway

  1. Gretchen Lipow says:

    What a mess! Mr. Sullwold describes the mismanagement of a valuable city resource. Aren’t the golf courses city owned? Or because they are on city property isn’t the city obliged to maintain reasonable financial policies? Why is our city council burying their heads in the sand? City Council needs to step up and take responsibility for the operation of our golf courses. Steps need to be taken to establish sound financial policies governing the maintenance of our golf courses.

    • Ralph says:

      Maybe there was a space limit on the blog, but Mr. Sullwold failed to mention the role of the then golf commission chair in leading the effort to ignore staff recommendations and pick Greenway https://www.eastbaytimes.com/2012/05/10/my-word-why-greenway-should-renovate-alamedas-golf-complex/

      • Perhaps it’s just a coincidence, but a very similar comment was submitted (and posted) just a few minutes ago by someone using a different made-up name and email address. So I’ll post the same reply:

        The piece hardly hid Jane’s role in the selection of Greenway. Indeed, the very second paragraph provided a link to the op-ed she wrote for the Journal endorsing the company. And if the commenter is interested in reading other MGR columns about Jane’s involvement in the golf wars, he can start with this one: https://alamedamgr.wordpress.com/2013/07/02/certificate-of-service/.

        I suspect the commenter has other pseudonyms or email addresses s/he can use, but I truly hope posting the same comment twice will suffice.

    • Grumpy and Upset says:

      I wholly agree!! This article is a gem, and totally explains why the course is falling into disrepair (experienced the 9 hole course only)
      Where is the money going?! Where is the PPE loan? How can we install a new golf commission that will enforce the contracts?

  2. Publius says:

    Why is the city involved in a non-essential recreational business? Sell the courses outright. Let a private business run them like a private business.

    • shasky says:

      Because they would close the golf course and sell it a developer who would put up thousands of units of stack ‘n’ pack housing?

      • Publius says:

        Fine. It would bring millions in revenue to the city, from sale and ongoing taxation, as well as ease the housing supply crunch. It would also get the city out of a business where it doesn’t belong.

        Golfers could drive the extra mile to play at Metropolitan.

    • chipadeedoodah says:

      I hope you run for office someday so that I can have the pleasure of voting for your opponent.

    • Walther Weiland says:

      The concept of a municipal golf course, is an excellent invention. A lot of municipal courses are highly successful and among some of the best courses in the country. The philosophy behind the concept is akin to City parks and National parks. I played Chuck Corica for 15 years around three times a week. As soon as the course was turned over to private management the entire management “attitude ” tumbled ,with for profit motivation , and continues to fall.
      I no longer play the over hyped and over priced course and know of many Corica faithfuls who have joined me. Maybe it’s time for the city to reverse its mistake and throw the management company out and go back to the original concept of a municipal golf course.

  3. carol says:

    I wonder if this Patel family is related to avid golfer and COO of Ridgemont Hospitality, Dhruv Patel.
    https://creweastbay.org/biography/dhruv-patel,-president-coo

  4. Ron Carlson says:

    Couple of corrections need to be made, construction on south course started 2012 finished 2018, took 6yrs to finish not 3 as indicated.
    Also agreements between greenways Mr Campbell and Mr Kelly at the time were governing bodies made verbal agreements with to Alameda Golf Commission members for service clubs, to remain the same nothing in future to change, price would be resident rates for all tournament participants wheather residents or not, also resident cards would be made available for those not living in alameda at a fair price so when members came to play during week or weekends not on tournament days would be charged resident rates.
    Lets talk about carts GPS new state of the art, how long did they last where are they now. Out of 80 or so carts leased none ever worked properly for long, now all GPS options have been removed and only about 45 carts remain in service.

  5. Mrs. Greenway says:

    Wait a gosh darn second. Wasn’t your wife, Jane Sullwold, the one who chaired the golf commission and lead the effort to overrule staff recommendations and go with Greenway?

    I doubt you’ll approve this comment for all to see, but respect if you do.

    https://www.mercurynews.com/?returnUrl=https%3A%2F%2Fwww.mercurynews.com%2F2012%2F05%2F10%2Fmy-word-why-greenway-should-renovate-alamedas-golf-complex%2F%3FclearUserState%3Dtrue

    • CS says:

      When Jane championed for Greenway golf to get the contract to manage and revamp the golf courses Greenway golf wasn’t being run by this money hungry man. The problems started when he showed up as majority shareholder.

  6. The piece hardly hid Jane’s role in the selection of Greenway. Indeed, the very second paragraph provided a link to the op-ed she wrote for the Journal endorsing the company. And if the commenter is interested in reading other MGR columns about Jane’s involvement in the golf wars, he can start with this one: https://alamedamgr.wordpress.com/2013/07/02/certificate-of-service/.

  7. Save democracy says:

    I thought Donald Chump was the shadiest mulligator involved in the game of golf?

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