For any course owner or operator whose golf facility co-exists with surrounding residential communities, the real estate setting can be a blessing and a curse. Or both at some point during the lifespan of the course or club.
For the estimated 3,200 residential golf developments master-planned in this precise manner, the blessing can be a boon for business – what with the built-in captive consumer audience for daily-fee rounds and other clubhouse-related traffic, not to mention pricey memberships typically “bundled” with the purchase of homes or vacant lots at the estimated 3,700 private club facilities throughout America.
The curse, ironically, can be these very same residents and members who share the valuable 100-200 acres of golf-related greenspace and various club amenities that in turn sell more homes and grow the associated lifestyle.
The business logic behind creating these latter types of golf projects and ensuring the concepts are sustainable for all sides of the economic equation notwithstanding, Concert Golf Partners chairman Peter Nanula raises the question that it seems odd many golf residential communities are “rife with lawsuits and internecine warfare” between the homeowner associations and the clubs at their very center.
Nanula, whose Lake Mary, Fla.-based firm owns or operates 29 private clubs, goes on to point out real estate developers typically choose to invest in the construction of a golf club to “reap the lot premiums” and justify their requisite internal rate of return. Meanwhile, residents want a well-managed and maintained club to preserve – if not grow – their home values over the long term, and club owners/operators need surrounding residents to participate in the club life so the economics behind the going concern work.
Yet for as long as errant balls have been pinging off neighboring homes or for a variety of other economic reasons, course owners have been at the crossroads of controversial headlines in mainstream media for decades. In most cases, these contentious situations involve financial matters and/or the state of the golf course asset itself.
For instance, a little more than a year ago, thousands of residents at Solivita, an age-restricted golf community just outside Orlando, were awarded nearly $34.8 million in a civil case after a state judge ruled that the developer was charging them improper homeowners’ association fees. In another similar case involving Wall Street icon Carl Icahn and resident members of his private club community Grand Harbor, the membership sued Icahn for reportedly failing to follow through with capital reserve commitments after he turned over the club to its residents.
To be sure, there are myriad reasons that lead to these headlines and misunderstandings between course owners and their constituents. In some cases, the developer or course owner may or may not care about the long-term condition or the future of the club. In other cases, inexperienced or poorly capitalized owners or third-party operators find the economics and complexities of running a course and/or country club are not as easy as planned and simply run out of capital and leave the asset in a state of bankruptcy protection.
So what can be done to ensure your course or club avoids some of the above situations and remains fiscally harmonious? Especially when it can certainly be difficult finding a consensus among a thousand or more households – many of whom might not be golfers as statistics historically show – to work toward a common goal of long-term sustainability?
From his company’s experience of partnering with 18 master-planned, gated residential golf communities, Nanula will tell you one of the paramount ingredients behind Concert Golf’s ongoing success lies in communication.
One of the critical best practices successfully used by Marsh Landing Country Club, in Ponte Vedra, Fla., while it was transitioning from being owned by the original developer to what is now Concert Golf-led ownership, was being “frequent and transparent with residents” throughout the process, according to Greg Neal, president of Marsh Landing’s HOA. According to Nanula, Neal and his HOA colleagues reached out to club members and non-members, focusing on enhancing the community club asset for the benefit of everyone’s home values. Consequently, this thoughtful and transparent messaging for the greater good resulted in 92 percent of the 1,000-plus households voting in favor of relinquishing some legal rights and increasing homeowner dues to a degree to ensure a properly funded transition to a top-quality operator, Nanula wrote in a recently published newsletter.
Another way Nanula described this positive golf club case study was calling this win-win outcome a “home value insurance policy” for all residents. And it all began with a common-sense approach to proactive and transparent communication.