A group of Alvamar Country Club investors has filed a lawsuit alleging Alvamar Inc. negotiated a new lease that substantially reduced investors’ returns.

The dispute centers on Quail’s Nest Developers. Alvamar is managing partner and owns 70 percent of the interest in Quail’s Nest. The dozen investors who filed the lawsuit are among the general partners who own the remaining 30 percent.

Quail’s Nest was formed in March 1982 to build and later own the Alvamar Country Club’s clubhouse, parking lot and putting green. About a year after the partnership formed, Quail’s Nest leased the properties to Alvamar for $200,000 a year. The lease was extended several times, all at the same $200,000 annual rate.

That is, until June 7, when Alvamar created a new, three-year lease that calls for a substantial drop in rent – down to $92,400. And the lawsuit alleges that Alvamar – as the managing partner – entered into a lease with Alvamar – the tenant – without a vote of other partners.

“The act of entering into the new lease on behalf of the partnership constitutes self-dealing and abuse of Alvamar’s duties as managing partner of the partnership,” the lawsuit states.

The suit states that the new lease is unfair to the investors and is inconsistent with the true rental value of Alvamar. Further, it alleges Alvamar has sought and received a reduction in its property appraisal to justify paying lower rents to the Quail’s Nest partnership.

“It is unfair and unreasonable for Alvamar to determine the rent it pays to the partnership based on the reduced market value it has obtained in connection with its real estate tax appraisal,” the lawsuit states.

When the investors originally joined the partnership, according to the suit, they were told the property was valued at $2.75 million.

According to documents filed with the suit, Alvamar appealed its 2007 valuation, and after a hearing in April, the value was dropped to $1.32 million. According to Douglas County property values, the property was valued at $1,493,900 in 2006 and $1,465,3000 in 2005.

Dick Stuntz, president of Alvamar Inc., said Saturday that he hasn’t carefully read the lawsuit or discussed it with Alvamar’s attorney.

“I’m certainly aware of their position on the complaint – that Alvamar is a manager in Quail’s Nest and also is the lessee – we’re the lessor and the lessee,” he said. “We believe the lease is fair, given the value of the building. We hope we can work it out with the minority partners.”

The lawsuit seeks damages to be paid to the investors and a return to the $200,000 lease rate.

The investors who filed the lawsuit in Douglas County District Court last week are Colt Investments Inc.; Quick Grocery Inc.; John T. Stewart IV; Gene Fritzel Construction Co. Inc.; Zaroco Inc.; Robert G. Billings Trust; Educational Information Systems; Marks Jewelers Inc.; Alice I. Brown Family Trust; Jill A. Huxtable; John and Helen Kiefer; and The World Company, which owns the Lawrence Journal-World.