Several articles on the topic of assessing golf courses have come to my attention in the past few days. I've posted previously on the topic, but will start fresh here.
The first article had to do with assessments in Greenwich, Connecticut, where eight private golf clubs were seeking assessments of just $60,000 per acre. Now that might seem like a high value to people who live in the heartland of America, but Greenwich is a place where a single-acre building lot (with or without an existing house on it) can sell for well over $1 million, and where roughly 1 in 4 residential transactions results in a teardown, often of a home which would be considered a super-luxury home nearly anywhere else. The assessor had sought to value the land at a still-very-generous-to-the-clubbers $200,000 per acre. (By law -- a peculiar law whose justification I don't follow, CT's assessments are to be 70% of actual value, so the $200,000 valuation would be about $285,000 -- still a very generous valuation in a town with high property values.)
The private golf clubs argued that their land should be treated the same as any other open space. I just don't see how that argument holds any water.
- It is closed to the public.
- Membership is severely limited, and one would likely find that these magnificent real estate holdings are in the hands of the wealthiest folks in town, with, perhaps a smattering of out of towners.
- Golf courses do not represent wild, untouched, unimproved habitats for a wide variety of species, with vernal pools that support certain kinds of wildlife. Rather,
- they have been reshaped,
- most of the trees and brush (which provide habitats characteristic of "open space") removed,
- exotic grasses of various kinds planted,
- abundant quantities of fertilizer and pesticides utilized, and
- awesome quantities of water applied from aquifers on which individual homeowners are also reliant.
- Mowers, blowers, de-thatching machines, etc., use significant fuel and produce significant air pollution, as well as noise to scare off many critters.
"No trespassing" signs abound, and an ordinary resident of the town is not welcome to walk these "open spaces." The country clubs' lawyer said,
"The big issue is how do you value open space that is being used for a golf course?" Fogarty said.
I would bet that the combined net worth of the members of the 8 clubs exceeds that of all the nonmembers by a significant margin. It isn't that they are hurting financially and deserve their non-member neighbors' charity in order to maintain their health via vigorous exercise. They will receive $1 million from the town in property tax credits, apparently to be pared from other programs, or funded via an increase in the property tax on all of Greenwich's property -- members, nonmembers and commercial.
Only in America?
The second piece, entitled Is Poor Management an Excuse for Higher Golf Course Property Taxes? quotes "golftax.com" saying
... over 90% of all privately owned golf courses and country clubs in the U.S. are being overvalued and overtaxed by their county taxing authority. Why? Assessment authorities almost universally rely solely upon the replacement cost approach for valuation purposes. Within this approach little or no consideration is given to such issues as income, value transfer, business value, intangibles, local market conditions, or personal property contribution to overall value.
Really?? In my town, they're valued at less than half the value of neighboring residential property.
"Privately owned" I assume is potentially a euphemism for "interim use of the land until the taxpayers provide the investment in infrastructure which will make the land even more valuable for development than it is as a golf course," also known as a "taxpayer." I think of the Valley Forge Golf Course, which sits across the road from the intersection of the Pennsylvania Turnpike and the Schuylkill Expressway, a manageable commute from Philadelphia, and less than 1/4 mile from the second largest shopping mall in the US, King of Prussia. For decades, it was a public golf course. Now it has been scraped and is being developed. It seems sad to think that this land has been underused for so long, and subsidized by the homeowners and other property holders in Upper Merion Township (Montgomery County), and now will provide generous land profits to its owners, who likely paid rather little in property taxes.
The third piece came from the files of a colleague in California, and it describes one of the country's more famous "country" clubs, the Los Angeles Country Club.
Across Wilshire from Century City is the L.A. Country Club, on land worth >$1000/sf, or >$43,560,000/acre.
How do we get $1,000 psf? Land at 9900 Wilshire, in Beverly Hills, in triangle near corner of Wilshire and Santa Monica, adjoining the LACC, sold for more than that -- $1400 psf -- in April, 2007. Buyer is the Guernsey-based CPC firm, luxury builder active in London, Dubai, and elsewhere. Associate Candy and Candy will design new condos, and may be a subsidiary.
A country club takes about 200 acres for 18 holes. This one has 39 holes. Considering the super-luxe nature of the clientele, let’s figure it takes 500 acres. 500 x $40m = $20b. What kind of green fees would pay the interest on $20b? Is this the place for a golf course?
How do they pay the taxes? That part is easy: in California, private members-only golf courses are exempt (de facto) from property taxes. Clubbing smooth ivory balls into holes from a green cloth is a sign of misspent youth, so they say, but clubbing smaller dimpled balls into holes from green grass has redeeming social merit, our legislature believes, so California extends preferential assessment to golf course land. An 18-holer takes some 200 acres. The Los Angeles Country Club straddling Wilshire Boulevard near Century City and Rodeo Drive at a value of give-or-take $1000 per square foot and 43,560 square feet per acre, I leave to your calculators. But you will find no such calculation on the assessment rolls.
$20 billion of private parkland, for the benefit of the wealthy, supported by the property taxes of California's newest homeowners and entrepreneurs! $20 billion of land value, at California's Prop 13 1% (which is what new owners pay in places with no parcel tax -- if such places exist -- would be $200 million per year of property taxes. We couldn't ask those poor club members to pay that sort of money, could we? Just to keep things simple, we charge them nothing, or next to nothing. Aren't we nice? Talk about a Free Lunch! David Cay Johnston take notice! See also http://www.boe.ca.gov/proptaxes/pdf/86_51.pdf and http://www.jmbm.com/index.cfm?event=newsById&id=59
What activities should we be subsidizing? Wealthy people golfing and schmoozing? Trickle down?
How on earth do we justify this? Why is that economic value treated as our common treasure, to be used for public purposes, rather than as the private property of a few? And doing so would allow us to eliminate some of the perverse taxes which burden the economy and reduce opportunities for PEOPLE WHO WORK.
Land value trickles upwards, to the wealthy who possess our best land. They can be motivated to put it to its highest and best use by good incentives, or they can be permitted to party hearty on it, while denying the rest of us access, and requiring us to drive longer and longer daily commutes, expending time we could use better and energy we can't afford and producing pollution that harms all of us.
Which will it be? Privilege or justice?
I don't think that this land should be treated the same way with other open lands. Golf courses earn millions and billions and it's okay for them to have a tax in level of their income.
Posted by: golf clubs | May 03, 2009 at 01:22 PM