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Last Update :6/15/2016

Golf Property Analysts Chip Shots - CNN, PHIT, Legal Corner and more!

 

GPA PRESIDENT LARRY HIRSH ON CNN

As a result of Donald Trump's rise to the republican nomination for President, I've been interviewed by several news organizations about his golf properties (click on adjacent photo for CNN story).  

It occurred to me during these interviews that there are some misunderstandings about real estate tax assessments.  Though this (and my interviews) offer no opinions about the Trump properties, I thought it a good idea to use this space to clarify a few things.

First, golf properties typically trade, and are valued as going concerns (real estate, personal property and business value).  However, real estate tax assessments apply only to real estate.  Often, there is a spread between the going concern and real estate values that would indicate a tax assessment lower than the price a golf property may have sold for.  

Golf courses are buisnesses that use large amounts of real estate.  They are assessed for their real estate value but this has no impact on one's federal income tax.  The value of the going concern is sometimes measured by a gross revenue multiplier.  The value of the real property is then allocated from that value through any of several procedures used by appraisers.  

Whether Mr. Trump's assertions in his assessment appeals are justified or not will be determined throgh the course of those appeals.  He, like any businessman seeks to lower his tax burden, while at the same time building his financial statement.  However, like I said on CNN, "you can't have it both ways" and the value is what it is, albeit with the wrinkle of going concern vs. real property value. 

 
 
 

P.H.I.T. - TAX BREAKS FOR GOLFERS?

How many of us have had a fit on the golf course?  Now, we're all going to seek to have a P H I T. The Personal Health Ivestment Today Act (PHIT), now being considered in Congress may be help on the way for some golfers int he form of tax breaks for chasing the little white ball.  According to the story linked below, PHIT may provide tax breaks for things like equipment purchases, lessons for youngsters and more to participate in golf and other activities considered to be advantageous to our health.  If this passes, we can only hope it helps the golf industry.

 

THE LEGAL CORNER

Recently, we've been retained in two cases where members seeking refunds of their entrance deposits to private club membership had sued the club.  In each instance, the club retained Golf Property Analysts to provide advisory services related to the value of the membership and the typical procedures of competing clubs in repayment of those deposits.  Also, the issue of whether changes in the procedure had occurred, at both the club in question and others in the market were at question.  

As many clubs rebound from the great recession, membership entrance fees and structure have changed to encourage more members to join clubs.  In some cases, refundable deposit clubs have offered lower, but non-refundable fees and others have simply eliminated entrance fees of all types.  With many refunds predicated on those resigned members being replaced, often at a ratio of members in to members out, those who have resigned seek their deposits back.  It doesn't always happen, either because the documents may call for revenues to be replaced or simply because the club can't afford it.  In any event, there will be lawsuits and many of these might be avoided by clubs working to modify their membership programs through a modification program.  If your club is considering this problem, maybe we can help.

 
 
 

HOSTING AN EVENT

Many clubs seek to host major golf events.  With the US Open at Oakmont this week, I thought it interesting to explore.  Last week, my club hosted the Senior Players Championship.  It's quite an involved process.  

First, there are volunteers, over 1,000, including both club members and non-members.  Recruiting and organizing the volunteers is a huge undertaking.  Given the expectation of spectators, there are grandstands, concessions and hospitality facilities to be erected and all this goes on during normal member play.  The maintenance staff is also hard at work preparing the golf course and swells with volunteers from other courses during the event.  In order to provide the best conditions possible, greens are preserved by selecting hole locations near the edges of greens, most often the front portion of the green.

Immediately before, during and after the event, the course is closed to members and parking and clubhouse access is restricted.  Member committees provide volunteers for walking scorers, standard bearers, evacuation services, long drive measurement and more.  It's a major project for any club or course, and a major event in the community, with police, fire and medical services all available, traffic and parking are all part of hosting a big time golf event.

It's a big deal and an inconvenience to the membership.  The question is what value does the club receive?  Financially, it is widely perceived that the only events to make a profit for the club are the US Open, PGA Championship and Ryder Cup.  While I've heard of others making limited profits, most clubs lose money hosting events.  Conversely, many clubs feel that the publicity, noteriety and attention the club receives, along with the typically elevated recognition of the golf course in the rankings game is worth the potential cost.  It can also be fun.  The best players in the world challenge your golf course and the buzz and excitement is alluring.  To some it's an inconvenience and nary a club has hosted an event without the debate of whether it's worth it.  Email me with your thoughts and experiences.

 
 
 

THE GPA PRACTICE TEE

GPA has recently been retained for the following assignments:

  • (NJ) - Appraisal of Daily-Fee Course for use in ad-valorem tax assessment appeal
  • (FL) - Appraisal of excess land for private club
  • (PA) - Appraisal of Daily Fee Course for ad valorem tax assessment appeal
  • (NJ) - Litigation support for private club in membership refund dispute
  • (PA) - Appraisal of Semi-Private course for estate
  • Multi location 8 - course portfolio valuation
 
 
 

www.golfprop.com  • Larry@golfprop.com  •  610-397-1818

 


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