Homeowners Protecting Backyard Golf Courses
Imagine your neighborhood golf course closes. The value of every residence goes down because the desirability of beautiful green manicured fairways become weed and varmint infested eyesores. Neighborhood crime goes up. Coyotes are attacking small dogs. What can your community do. Can the golf course be saved?
Don’t just sit there. Take immediate action. Whether a golfer or not, you have a stake in the golf course.
First: Form A Committee
Immediately! Your homeowners association (HOA) needs to form a special committee made up of non-golfers and golfers. Their job is to gather evidence and data so the community board has proper information before adopting any strategy.
What we see too often is worry. Fist clenching (either by homeowners or golf course owners) as they prepare for the battle.
Instead of enduring this, your HOA should take a more matter-of-fact stance. Then try to determine whether the golf course can be sustained forever. Sustainability is important because if it’s not, your community will wind up with a permanent “problem child” forever.
Your special committee needs to find out what the golf course needs today, next year, and five years from now. They need to understand the golf course marketplace whether or not there is sufficient population to support the golf course. For instance, the number of residences in the golf course community is crucial.
Once the special committee has assembled the proper information the board can begin to adopt a plan. Keep in mind, there could be any number of strategies to consider.
As Indicated on the home page, your HOA has basically three choices:
Buy the golf course
Participate by way of social membership commitment by all homeowners
Stand firm and let the golf course fail
1 - Buy the golf course and hire a management company to run it
Buying the golf course can work if the price is right and the marketplace indicates sustainability. For instance, a separate homeowner group was formed and acquired the Sunland Springs 27-hole Executive Golf Course in Mesa, Arizona in 2013..
They hired OB Sports Golf Management to run the golf course.
The Sunland Group hired me, Mike Kahn, to acquaint them with the golf course and its marketplace, as well as help establish a fair purchase price. With 2.500 residences in the Sunland community, sustainability appeared achievable.
ONE WAY TO BUY THE GOLF COURSE MAY BE TO ESTABLISH A SPECIAL TAX DISTRICT TO RAISE THE MONEY TO BUY IT
A homeowners association in Gretna, Louisiana (New Orleans area, hired me and colleague, Bill McIntosh, to help acquaint the special committee with the Stonebridge Golf Club and its neighborhood. Headed up by a matter-of-fact individual they applied for and created a SPECIAL TAX DISTRICT (follow the link to learn about the 37,000 special tax districts in the USA) to raise the money to buy the golf course, which also had extensive deferred issues. However, there were over 700 fairly high priced residences in the Stonebridge community with much to lose if the golf course was to completely fail.
If your golf course residential community is made up of at least 500 residential units, your special committee should explore that strategy.
2 - Agree to make a social membership compulsory for all residents
There have been a few experiments with the social membership strategy. One in particular was in Green Cove Springs, Florida where the homeowners in the Magnolia Point Golf Course neighborhood agreed to take out a social membership. The annual social dues put the golf course into a healthy financial condition thereby staying alive. However, Magnolia Point is a full amenity country club complete with clubhouse dining, a swimming pool, a fitness room and tennis courts. The social membership gave homeowners access to all but the golf course for which they could play for a additional green fees, or a full golf membership.
The Magnolia Point plan had a better chance to survive because there were thousands of homeowners involved, and they did get something for their social dues - including an insurance policy, more or less, on the value of their residences.
3 - Stand firm and let the golf course fail
If your golf course community is fewer than 500 residences, and they’re not $1 million dollar homes, there is simply not enough immediate market strength to sustain a golf course. However, if it’s a million dollar per residence community, then the course could (might) survive permanently as a private club.
If your community fits the higher priced residential level, you should consider bringing Kahn, McIntosh, and White aboard to analyze and provide a clear picture of the golf course, its upkeep costs, etc., so your board has a clear and understanding picture before making any plans.
NO FIGHTING! I BELIEVE YOUR HOA SHOULD (AT LEAST) TRY TO SIT ON THE SAME SIDE OF THE TABLE WITH THE GOLF COURSE OWNER BECAUSE THERE IS A MUTUAL INTEREST.
There are hundreds of golf course communities where the golf course owner and the residents are clenching fists to prepare for a fight. It begins with the golf course owner threatening to close the golf course and add more development if the residents don’t do more to support the business. In essence, the golf course owner is pretty well asking for a handout (we saw exactly that when the owner of a Northern Indiana golf course pointed a finger at the 500 residents because he said he’s been losing over $300,000 a year). He more or less threatened residents to make up his losses or he’d take drastic action.
It was my advice that the residents and the golf course owner sit down and figure out how the two sides can give and take until both are happy. The problem there was that the golf course owner refused to allow an analysis of his family-run golf course and would not open his books.
In this case, the HOA might turn their backs on the golf course owner and let the chips fall. However, there’s too much at stake not to negotiate,
Figure 500 residential properties at current average market value of $500,000 likely to lose at least 20% in value if the golf course closes. That’s a whopping $50 million in total property loss for that neighborhood.