QUESTIONS AND ANSWERS ON GAMING IN SUN CITY ANTHEM
The issue of the restaurant lessee installing gaming machines in the bar area is a matter of interest to homeowners, with some favoring; others opposed, and still others indifferent. There are a number of reasons for as well as against the presence of gaming on our premises. I will not attempt to enumerate those for this purpose. What I will do is to provide you with some information that relates to the proposed adoption of gaming here in Sun City Anthem.
There are two governing authorities involved in the process of permitting gaming. The first is the board of directors. The board has addressed this issue in the lease with TNF Holdings, the legal entity of Tirzo’s Bistro. Section 7.22(b) states two conditions relating to the gaming issue: 1) gaming is prohibited without the prior written consent of the Landlord; and 2) such consent may not be unreasonably withheld. The phrase “unreasonably withheld” is defined in No. 3 below.
The second authority is the Nevada Gaming Control Board. That authority has a number of rules and regulations that they apply to any applicant seeking a gaming license. Click here to view a copy of their regulations pertaining to qualifications for a license and finding of suitability.
The applicant would be the principals of TNF Holdings, in our case, the president, Audra Tubin, and presumably other operator-investors, including Tirzo Hernandez. The applicant holding the license is responsible for assuring compliance with all gaming regulations.
Fortunately, or unfortunately depending on one’s view, the board set forth a definition to provide some guidance on just what they meant in using the term “unreasonably withheld.”
The short answer on polling is that if more than 1,250 unit owners approve of gaming, the board is free to hold discussions with the tenant to allow gaming. However, there is one huge caveat. That assumes a total of no fewer than 35% of total membership, or 2,500, participate in responding to the poll. If more than 2,500 participate, the number that must approve goes up accordingly. For example, if 3,000 participate in the poll, the required number who must vote their approval is 1,500.
Here is how David Berman worded the terms of that polling agreement when it was first announced:
In the event that a majority of households respond affirmatively on the subject of gaming in Trumpets, which means a total of at least 3,573 households, the Association agrees to enter into discussions with the tenant to revise the lease terms to allow gaming.
If less than a majority of all members return the ballot but at least 35 percent of [the 7,144] members do participate, [which equals 2,500 members], the Association reserves the right, IN ITS SOLE DISCRETION, to initiate these discussions with the tenant IF a majority of those 35 percent or more vote in favor of gaming.
Given our polling experience, the threshold of reaching 2,500 ballot voters may be difficult to reach. According to the polling terms noted above, the board has no authority to enter into gaming discussions with the tenant if less than 35% of the membership participates in the poll.
Yes and no. Once having adopted a definition of what constitutes “unreasonably withheld,” it may not be possible for the board to give that term a contrary meaning without reintroducing the matter of a new or an amended polling agreement to the new board. As with any changes to existing language, that prospect carries with it some uncertainty and certain risks.
In order to meet the expressed interest of the new restaurant owner, the lease was amended “to allow [the] Tenant to initiate the process with the Board of Directors to commission a written poll, consisting of a written ballot/questionnaire [to be] sent to all members of the Sun City Anthem Community Association beginning not earlier than May 13, 2010.” That amendment also incorporated new temporary lower rent provisions until 2012, among other changes. The original and amended TNF Holdings leases may be viewed at http://www.sca-hoa.org/outside_home.asp under Documents, Restauant Lease/Documents.
The prior polling agreement had allowed Tirzo Hernandez to conduct such a poll no earlier than June 10, 2010. As it turned out, the two polling dates effectively coincided.
In the absence of a new or amended polling agreement authorized by the board, one must assume that the terms of the existing polling agreement are still in effect.
While some might view that possibility as desirable, I am not aware of any plans to permit homeowners to participate in the polling process. However, see No. 9 below.
Yes. Under NRS 116.31175(6), the official publication of the association must provide equal space to a representative of an organization which supports the passage or defeat of the ballot question.
According to the recently amended lease for TNF Holdings, Section 8(e) provides for the inclusion of the ballot/questionnaire “as an insert in the monthly mailing of the June 2010 [Spirit magazine] or the following corresponding Spirit magazine.” Here is what Sec. 8(e) of that amended lease states:
"If requested and provided to Scott Fewell by May 15, 2010 or later date, the ballot/questionnaire regarding gaming and return envelope will be included as an insert in the monthly mailing of the June 2010 or the following corresponding Spirit magazine."
If, as proposed by that amendment, the association utilizes the mailing of the Spirit magazine, the official magazine of the association, to transmit the ballot/questionnaire for the purpose of determining the outcome on gaming, equal space should be provided to certain others for the purpose of voicing their opinion.Has a request for equal space already been made on this matter? Yes. It's unclear whether the association will comply or ignore that request and proceed to include the gaming ballot/questionnaire along with the Spirit magazine or will ask the Tenant to incur the cost of doing so as the board had once intended.
While it’s unclear what qualifies as an organization for the purpose of NRS 116.31175(6), the definition of an organization would seem to include any entity or grouping having some specific purpose.
If my understanding is correct, gaming income would accrue to the tenant, TNF Holdings. However, the disposition of the net gaming income is yet to be determined if and when the lease is amended to incorporate gaming. Presumably, although not necessarily, such gaming income could be added to the bar, restaurant and banquet income to reflect total gross income upon which the association will derive a percentage share that is already incorporated in the lease. The amended lease provides that alternate monetary terms will be negotiated in the event gaming is approved.
Yes. As a general rule, there are no specific exclusionary provisions of the Nevada Gaming Control Board (NGCB) regulations that would prohibit an individual from being granted a gaming license.
However, there is the potential issue concerning Keith Tubin, husband of the president and majority stockholder, Audra Tubin. Keith Tubin is a convicted felon who was incarcerated in a Colorado federal prison for robbing a number of Las Vegas banks in the early 1990s of just under $90,000, allegedly in order to satisfy his gambling debts. Mr. Tubin’s prior activities will have to be disclosed and investigated by the NGCB, including his involvement in any proposed gaming property. According to the NGCB, they will make their findings known in a report to the Nevada Gaming Commission, which will make a final decision on whether or not to grant a gaming license.
Ron Johnson, 24 May 2010