Monday, December 1, 2014

The Saga Of Dead Golf Courses (Part 2)

We have posted about the demise of golf as a sport a few weeks ago.   Last Monday, we posted part 1 of this two part posting.

We had heard that several Oro Valley Golf courses, in addition to the Hilton's, are experiencing financial difficulties.  Our analysis provided a detailed explanation of what was happening.

A reader sent us an article about the Ahwatukee Lakes Golf Course in Phoenix. It is yet another dead golf course.  The article is titled: "Closing a golf course brings tax penalties, angry homeowners". The article discusses in depth regarding the problem with the sport of golf and with golf courses in general.

The Ahwatukee Lakes Golf Course is closed.  When this course closed, the owner" slapped with a tax bill from Maricopa County for closing the course. ... owes $1.6 million in back taxes, according to the Maricopa County Assessor’s Office. That’s thanks to a 1985 statute that gives a golf course owner a tax break of $500 per acre each year as long as the golf course operates as a golf course. If the owner takes the tax break and closes the course, he or she must pay 10 years of the tax break plus interest and a penalty." Ouch!

The article continues, the owner "...let the course go fallow because the water bills were too high. Then he became embroiled in a years-long ongoing dispute with angry homeowners who’d paid premium lot prices to face the golf course. [The owner] wants to convert the dead golf course into homes, and the homeowners are threatening to sue him."

Homeowners are suing the owner.  A group called "Save The Lakes" has formed. They are property owners who live near the golf course. They are outraged that the course has been closed and left in disarray.    Save The Lakes is suing the former owners for monetary damage.

One claim is that the owner has violated the property's covenants, conditions and restrictions ("CCR").  The CCR, they allege, requires that the land be put back into its original condition.

A second claim is the essence of the law suit.  It alleges that the property owner has violated their responsibility to deal in good faith.
“Every contract, whether a contract for a purchase of a home or to loan somebody money, every contract has implied into it a covenant of good faith and fair dealing,” according to Tim Barnes, plaintiff attorney.   
“Good faith and fair dealing in a legal sense means the parties to the contract must not do anything that deprives the other party to the contract of the benefit of what they bargained for."
In other words, homeowners bargained for a golf course when they purchase property.  Suddenly, the property has been abandoned. Suddenly, the property owner wants to sell the property so that Pulte Homes can build on it.  This is not what the original property owners bargained for when they purchased their home.  (Source)

This disaster for the homeowners is one of the potential unintended consequences of changing the use of a golf course or closing a golf course, when that course was built as the centerpiece of a development.


Richard Furash, MBA said...

I certainly hope the town doesn't buy a golf course without OUR consent. That means WE get to vote on it. It is OUR money, after all and how many would actually use it?

Richard Furash, MBA said...

I think more people would use it than use the archery range. It is also a large consumer of water that is sold by the town of OV.