Hello from Mike Kahn:
I'm all about the golf business and the game. As my distance off the tee shrinks, apparently participation in golf is also shrinking.
I've seen it all and done it all in the golf business, yet I've been a recreational player 99% of the time. The 1% was when I was a Canadian PGA member in the early 60's.
As I blog along, probably mostly talking to myself, my comments might be picked up by a blind squirrel - and maybe even post a reply.
Wednesday, April 24, 2013
HOA BATTLE WITH THE DYING GOLF COURSE
“In the RED corner, representing 90% of the community who are non-golfers - the HOA that wants to kill the golf course. In the BLUE corner, the 10% who are golfers who want to save the golf course.”
THERE IS ONE THING THE BATTLE BETWEEN GOLFERS AND NON-GOLFERS HAVE IN COMMON
I receive calls almost every week from a home owner’s association (HOA) board member about the dilemma facing the community’s failing golf course. In every case the classic confrontation between the golfers and non-golfers develops. Unfortunately the non-golfers outnumber the golfers as high as ten to one. In essence, if the golf course cannot pay its way and the non-golfer group prevails the golf course is doomed! But there will be consequences.
The battle often obscures the economics that goes right to the core of the individual household: Its Market Value! The Golfer feels if the golf course closes part of the beauty of the neighborhood is lost. The non-golfers, especially the home owners on the other side of the street, say they don't give a damn about golf, because they don’t play golf. They (non-golfers) call golf a waste of time, money, and real estate. “Why should I pay so clowns in pink shirts can chase a little white ball around a field and curse like truck drivers?”
ARGUMENT ON BOTH SIDES
The writer agrees, somewhat, with both sides in the debate. I do feel a person who is not a golfer should not be required to subsidize a person to play golf. After all, golf is probably one of the greatest wastes of time, money and real estate ever devised! I mean, golf was illegal in Russia till very recently. On the other hand, however, a golf course is permanent open space or green space. Managed, yes, but 99% of golf courses built since the early 80’ are on designated green space land and likely cannot be used for any other (commercial) purpose. So, the non-golfers just say, “Let it grown in.” Grow in? Have a look:
THE ONE THING GOLFERS AND NON-GOLFERS HAVE IN COMMON – THE VALUE OF THEIR PROPERTIES.
First of all, while the debate goes on the one thing that hurts the neighborhood is uncertainty. Let’s make it simple: If you want to sell your house, what do you say to a potential buyer when you don’t know whether the golf course will survive or not? Wait! You be the buyer. Would you buy a home not knowing whether the golf course behind you will survive or not? Would you buy a home in a neighborhood with an HOA in full battle over the plight of the number-one amenity? Which adds another question:
So, both sides have the value of their property at stake – especially during the uncertainty period. In my experience I believe higher end golf course residences have far more to lose than more numerous lower priced residences. Sorry, but nobody seems to have useful data to back up my assumption.
First of all, I believe the higher the price of homes in a golf course development the more they have to lose both percentage (%) wise, and in real dollars ($) if the golf course closes. A $1 million dollar home could drop 50% or more if its community golf course fails. However, I don’t believe a $200,000 home will lose more than 20% if the course closes. In fact, homes that do not have golf course exposure in a lower priced golf neighborhood may actually become more valuable than those backing up to a weed patch that was once a pretty green golf course fairway. I believe too, since there are many more lower priced golf course residential properties around a community golf course than upscale developments, individual homes would be less vulnerable, collectively, by the loss of the golf course. Based on my assumptions, I believe saving a golf course may be more important for home values in high-end neighborhoods than ‘average’ priced golf course neighborhoods.
Then, I have further for arguments or a question for the high priced home owners who say they don't care about the golf course: If you don’t play golf and don’t care about the golf course, why would you buy a home in a golf course community? Secondly, if you can afford to own a home in an upscale golf course community you’d better be prepared to pay whatever it takes to maintain the full integrity of the neighborhood, whether you play golf or not. Unfortunately, golf course communities that do not have covenants that protect the golf course via HOA financial support have a tough road to haul. Attorneys will line up for that fight all day long! Nobody win but the attorneys - believe me!
I spoke with an HOA board member recently who outlined exactly the above dilemma. The development had only 230 upscale homes trying to support an ultra-high end golf course. Classic: The non-golfers say, “Let it grow in!”
If the upscale neighborhood golf course grows in (fails) I believe home values in that neighborhood could plummet 50% or more (my assumption only). I say that, because with a failed amenity (the golf course) the overall development becomes known as a failed neighborhood. Nobody wants to own a home in a failed neighborhood. Ask yourself, “Would you?”
I know it can be expensive to keep up an upscale golf course with 12-foot green speed maintenance demands. But if homes in the neighborhood are $1 million plus value with a golf course in the back yard they need to come to grips with it and pay what is needed to keep the golf course alive. It’s an insurance policy on the value of your property. If you have to pay $5,000 a year to belong to the golf club to avoid a $500,000 drop in the value of your home, I would call that a pretty good investment.
Hey! I say, "If you can afford a $1 million dollar home, you can afford to contribute to the integrity of your neighborhood – golf player or not."
By the way, I get calls from everywhere, like; Wyoming, Montana, North Carolina, New York, Virginia, Georgia, Wisconsin, Alabama, California, Florida… well, you get the point. Same dilemma every time! Some described meeting with screaming and hollering - even fist fights!
The key, in my opinion, is for all to agree on one thing: The value of each resident's property. Then the arguments can start making sense.
Remember, your First consultation is always free: firstname.lastname@example.org, of call me: 941-739-3990.