Source: The Times (Munster, Ind.)
Talks to transfer ownership of Sand Creek Country Club to its members have broken down, and some residents of the posh golf-course community fear a sale to outside investors is imminent.
They have hired the Chicago law firm of Jenner & Block to represent their interests if a sale goes forward.
"We want to know how to keep what was guaranteed at the time we were sold our homes, and see that it continues to happen," said Gino Burelli, a Sand Creek resident and country club member. "That's all people want."
If the 50,000-square-foot clubhouse and private 27-hole, championship-level course are sold, it would represent one of the largest real estate deals in recent years in Northwest Indiana. If other Lake Erie Land holdings are included, it would become a land deal of historic proportions.
But a number of residents and club members fear a new owner could mean higher dues, less service and perhaps radical changes in how the club is run.
Sand Creek is owned by Lake Erie Land Co., a subsidiary of NiSource Inc.
NiSource also is the parent company of Northern Indiana Public Service Co., the largest utility in Indiana.
Lake Erie Land's lawyer, Thomas Godfrey, did not return calls seeking comment for this story.
But last September, Kevin Warren, then-director of land development for the company, described the country club as "the amenity that defines Sand Creek."
"People that live in Sand Creek can build the same house in any location," he went on to say. "But having the club there is what makes the decision for them."
Lake Erie Land informed members last summer it wanted to give them first dibs on buying the private country club, but also made it clear the complex could be put on the open market.
A committee made up of former "club captains" and residents submitted such a proposal about five months ago and then the committee dissolved, according to Jerry Pickford, a former Sand Creek club captain and committee member.
The committee made its "best offer" to Lake Erie Land and hoped for the best, Pickford said. He admitted it probably was low for what Lake Erie Land expected.
"We wanted to keep it within our means for running a club in today's golf market," he said. "But honestly, we weren't real optimistic they would take it."
The club also would need to pick up new members to make a go of it at the current dues of around $ 5,000 per year, he said.
Other sources say offers discussed by the committee would have included loans from Lake Erie Land and perhaps a special assessment on members.
Sand Creek Country Club originally was built in 1976 as a haven for Bethlehem Steel executives and their families. NIPSCO Industries subsidiary Lake Erie Land became sole owner of the golf club and a nascent housing development in 1994.
From there, it was up-and-away for what once had been mainly rolling farmland just east of the quaint town of Chesterton.
Lake Erie Land built a 50,000-square-foot, state-of-the-art clubhouse in 1996. It has never revealed how much it cost to build but described it as a "multimillion dollar project." Lake Erie Land also added nine more holes to the golf course and upgraded it to championship standards.
Today, the clubhouse is on Northwest Indiana's A-list for everything from charity balls to manufacturing seminars.
Close to 500 acres surrounding the golf course have been built up into one of the region's most up-scale communities. Many homes sell for more than $ 1 million. Street directories read like a "who's who" of business leaders in Northwest Indiana and Chicago.
Immediately south of Sand Creek is Coffee Creek, another Lake Erie Land development. It consists of 640 acres and once was touted by the Urban Land Institute as one of the world's 26 most innovative communities.
But it has had a star-crossed history since it was proudly launched by NIPSCO and Lake Erie Land president Jerry Mobley in 1998. Slow to develop, it also has been the scene of a major real estate scandal.
In September 2003, federal authorities nabbed real estate brokers Kevin Pastrick and Carl Paul Ihle Jr. in connection with a bribery scheme that sealed a $ 10 million land deal at Coffee Creek. Their company, Sand Creek Sales & Development Inc., was the exclusive broker for land at Sand Creek throughout the 1990s.
Bribes and kickbacks totaling more than $ 200,000 came out of a $ 600,000 commission Lake Erie Land paid the two. Both have been stripped of their real estate licenses. Pastrick on Thursday was given a three-year, one-month sentence and a $ 177,500 fine for bribing a carpenters' union official in the Coffee Creek scandal. On Friday, Ihle received a 21-month sentence and $ 33,000 fine.
The buyer of the land, a carpenters union pension board, now is suing Pastrick, Ihle, and others for the return of $ 5 million plus damages, alleging the land they bought was grossly overpriced. The pension board also is suing Lake Erie Land, saying officials there knew the land was overpriced.
Lake Erie denies that and has asked a federal judge to dismiss it as a defendant.
Though federal authorities have concentrated on Pastrick's and Ihle's activities at Coffee Creek, residents of Sand Creek now are talking about claims the two made when selling homes at their exclusive development.
They said Pastrick and Ihle assured them NIPSCO's "deep pockets" would always be there for them. They said the issue has been raised at meetings of the Sand Creek homeowners association. But Lake Erie Land officials respond that any representations made by Pastrick and Ihle are null and void.
Instead, Lake Erie said the sale will be governed by the 51-page declaration of covenants for Sand Creek, which appears to give rights to Lake Erie as far as any sale of "private amenities" such as the country club.
Lake Erie Land's holdings in Porter County total in the hundreds of acres. They not only include hundreds of home sites at Sand Creek and Coffee Creek, but also prime commercial and industrial spaces along major transportation routes.
Parcels such as 50 acres along Ind. 49 could fetch close to $ 10 million or more. That is just one of half a dozen prime pieces Lake Erie Land owns in the immediate area.
The noncountry-club properties in fact may be one key to any deal at Sand Creek. It is believed the country club currently operates at a loss, while the surrounding real estate continues to sell for premium prices.
In 1996, the average home site at Sand Creek was selling for $ 100,000 with some going for more than $ 250,000, according to Lake Erie Land's sales promotions.
The trend these days is home builders buying whole golf-course communities, rather than someone just buying the course, according to Eric Hamilton, a reporter with Golf Business, a Crittenden publication.
Many private country clubs also have fallen on hard times as lifestyle preferences change.
"There are still courses that make money, but some don't," Hamilton said.
Golf courses with clubhouse sell for anywhere from $ 5 million to $ 20 million, Hamilton said.
In the Chicago area, Billy Casper Golf and the KemperSports are two big names in golf course management. But most people now believe it is more likely a housing developer or real estate firm will buy Sand Creek.
Despite that, Pickford said there is no doubt the clubhouse is the crown jewel of the Sand Creek development.
"There are not 10 percent of the clubs in the country that have a 50,000-square-foot clubhouse," Pickford said. "It is just huge. It is a nice facility and NiSource did a great job with it."
