LAND LEASE INFORMATION
In 1877, as an incentive to complete a railroad to the Pacific, the U.S. government gave Southern Pacific Railroad title to the odd-numbered parcels of land for 10 miles on either side of the tracks running through the Southern California desert around Palm Springs. The even-numbered parcels of land were given to the Agua Caliente Band of Cahuilla Indians. In the 1950s, the Federal government allotted the bulk of reservation land to individual members of the tribe, but Federal law prohibited them from selling the land or leasing it long-term to derive income from it. It was not until President Eisenhower signed the Equalization Law in 1959 that tribes could realize profits from their lands.(Source: DesertUSA.com)
Today, the Agua Calientes are the largest landowners in the city, with nearly 6,700 acres within the city limits. Some of that land is occupied by Indian families or used for tribal purposes, some is vacant, and the unsold remainder is leased to non-Indians for residential or commercial purposes. Over the years, the land interests of the original Indian owners have become subdivided among numerous heirs and estates, making large-scale business developments cumbersome to negotiate. The Agua Caliente Development Authority (ACDA) was established in the early 1990s, in part to represent these fractured interests so they could maximize the return from their real estate.
How It Works
The community now known as Canyon Country Club Estados was originally developed in the 1960s as a tennis club on land leased from Indian families; then in the mid-1970s, it was developed in two stages as a condominium community. The Indian lessors are represented by the ACDA, and the current lessee, the Canyon Country Club Estados Trust, is descended from the original condo developer. The Trust, in turn, subleases interests in the land to individual unit owners when they purchase their units. Because the Trust is the middleman between the Indian land owners and the unit owners, it is sometimes known as the "sandwich lessee."
Fey's Canyon Financial Services bills and collects the annual land rent from the unit owners, then passes along to the Trust and the ACDA their respective shares of the income. Current land rent varies between about $3,000 and $3,500 per year per unit, the exact amount depending on the size of the unit and in which stage of the development it is located.
The New Lease
A new lease became available in April 2013, and expires in 2063. For those who adopted the new lease at its inception, the annual land rent ranges from about $3,000 to $3,500, depending on unit size and other factors, with a cost-of-living increase every five years beginning in 2014. For those who adopt the new lease in the future, the annual rent will be substantially higher. A few unit owners chose to remain on the old lease, whose land rent ranges from $729 to $1,072.50 per year. When that lease expires in 2031, those units will be subject to foreclosure.
Most Indian land leases (and subleases) have a duration of 65 to 75 years. Mortgage lenders, to protect their interests when financing or refinancing property on Indian lease land, generally require that the lease have at last five years longer to run than the length of the mortgage. To obtain, for example, a 30-year mortgage loan, the land lease would have to run at least 35 more years. For this reason, most Indian-land lessees (or, in our case, sublessees) begin to negotiate a lease extension when the lease has 30 to 35 years left on it.
Our lease and subleases were set to expire in 2031, so about 10 years ago, the homeowners association Board of Directors, on behalf of the unit owners, began the process of working on a lease extension with the ACDA and the sandwich lessee. An agreement was finally reached on a new lease in 2013. The new lease runs until May, 2063. Most unit owners signed a new sublease in the spring or summer of 2013. The new sublease required a one-time entry fee, and contained a provision for a cost-of-living increase every five years.
More than 90 percent of the unit owners signed the new sublease. The few who did not sign remain subject to the former sublease, which expires in February 2031. Although the land rent under that sublease is only a fraction of the rent under the new one, units that remain under the old sublease will be subject to foreclosure when that sublease expires.
Canyon Country Club Estados Homeowners, Renters and Guests!