Is Government Support of Golf Projects Fair to Private Operators?

By: Jeff Shelley

There seems to be a considerable outcry over the support of golf projects by public agencies. In various parts of the U.S., the financing of golf facilities using public funds – or political clout – has generated a lot of hue and cry among neighboring, privately-owned courses. Let’s take a look at a some of the most controversial projects.

Duluth, Minnesota

In mid-May of this year, developer George Hovland granted the city of Duluth a three-month extension for the city to fix federal grant violations blocking his Spirit Mountain golf project. Hovland’s brainchild includes an 18-hole course and a 150-room lodge on city-owned land atop Spirit Mountain. The 650-site boasts a great location between Interstate 35 and the St. Louis River.

The complex situation is a polarizing conundrum that involves the city and Hovland. But Minnesota’s Department of Natural Resources has stepped into the fray, as has the federal government, which frowns upon private developments on public lands. Hovland needs several permits to get the project off the ground, and the developer must still swap properties for it to work. In September 2001, the Minnesota Department of Natural Resources ruled that the hotel planned for this project was an "unauthorized conversion and violation" of the Land and Water Conservation Act for the National Park Service in Minnesota. The privately-owned Spirit Mountain Villas are already in violation of that Act.

Since that ruling, the developer offered to donate 150 acres to the city of Duluth. The city would then lease the property back to the developer for part of the golf course and the 150-room resort hotel, thus allowing Hovland to avoid violating the Act. The actual property in question is five acres governed by federal grants that must be used for public recreation, not private development. Local proponents, including some Duluth officials, support the land swap, while others want to preserve the property for public use. The latter group claimed victory after a recent denial of the swap by the Duluth City Council.

Duluth Mayor Gary Doty has sided with Hovland, feeling a golf resort on Spirit Mountain would benefit the city. But Doty has found the going rough over the last six years, what with a reluctant city council, the state and now the feds biting at his heels. This past February the state said it wouldn't help the city fix the federal grant problems blocking the project until the mayor and city council agree on how, or if, they want the project to move forward.

To illustrate just how contentious the issue is, Mayor Doty vetoed the denial of work permits by the Duluth City Council for the golf course. The mayor's veto also repealed the council's rejection of the proposed land swap that would resolve the federal grant violations. With the state's temporary withdrawal (it will still help city officials resolve the grant violations the villas created), the future of the project remains as murky as ever. The developer still must acquire 20 federal, state and local permits; so far, only one of the permits has been granted (when nearby Midway Township granted a condition use permit). The developer will obtain financing once the permits are acquired.

Meanwhile, several Dublin-area golf course operators have publicly wondered whether the city’s mayor should be actively helping a private developer build a golf course. They view the backing of a private enterprise by the city’s major elected official to be unfair competition.

Raleigh, North Carolina

Hotel operators in the Raleigh area are echoing these same concerns about a plan by state-operated North Carolina State University to build an 18-hole golf course, 250-room luxury hotel and a 29,000-square-foot conference facility on the school's Centennial Campus. Before it’s allowed to proceed, the project needs approval from the Council of State, a body of elected state executives. Those executives have been getting their ears burned from hostelry operators around the state ever since this large-scale project was announced.

The complaints are being heard. In May 2002, a member of the UNC system's governing board questioned the project, saying he was uncomfortable with the creation of such a high-priced development at a time when the state's universities are scraping by to maintain classroom instruction. Later that month, local hotel industry representatives – including the NC Hotel & Motel Association and the North Carolina Travel and Tourism Coalition – convinced NCSU officials to delay the plan, with chancellor Marye Anne Fox promising a full review of the project. The analysis won't be completed until later this fall.

The coalition fears the luxury resort will cause its member hotels to lose money and that, ultimately, the project amounts to unfair competition. The two industry groups have hired Raleigh lawyers, Hugh Stephens and Gerry Hancock, to fight the project. NCSU took ownership of the 300-acre site in 2001 when its then-private owners expressed doubts about the project's success. NCSU plans to sell about $80 million in taxable bonds to build the project, which includes an Arnold Palmer-designed 18-hole course.

Vinton, Louisiana

Since spring of 2002, criticism has been leveled at a golf project in southwest Louisiana involving the Jena Band of Choctaw. The proposal includes an 18-hole golf course, casino, a 500-room hotel and a convention center in Vinton. If it comes to fruition, the betting parlor will become the largest land-based casino in the U.S.

The flak has been directed at Governor Mike Foster, who signed a secret pact with the tribe, thus irking the neighboring Coushatta Tribe, which is now building an equivalent facility nearby. The Coushattas say they weren't consulted by the state nor given similar preferential treatment by the governor. Coushatta vice chairman, William Worfel, said he'd fight the project in court if the governor’s compact with the Jena Band of Choctaw is not revoked.

Whitehall, Michigan

In late-September 2001, Muskegon County officials rejected a $1.2-million golf project. The project was to occupy 240 acres the county owns on Hilt's Landing, located just east of U.S. 31 and south of the White River. The funding for the project was to have been included in the county’s 2002 budget. But, after encountering considerable opposition from a couple of county commissioners, local privately owned golf facilities, and the chamber of commerce, the project was tabled.

Some opponents said the site contains old Indian burial grounds, while others felt that $1.2 million wasn't enough to build a worthwhile golf course. The neighboring golf course owners believed that the area had an adequate supply of public facilities, and that the county didn’t need to step into a market in which it didn’t belong.

Coatesville, Pennsylvania

Condemnation proceedings against private landowners have become popular ways for local governments to gain access to attractive properties. The condemnation process is often initiated when a landowner and local officials can’t agree on a purchase price. This is happening in Coatesville, a mid-sized town in Chester County. In this case, the condemnation plan was contested by local golf course owners, including Jeff Broadbelt of Agrostis Golf Management, which owns Bucks County Country Club in nearby Jamison.

In summer 2002, Coatesville officials were still in the process of condemning property to allow them to build a municipal 18-hole golf course. The decision to do so was complicated when a Chester County judge dismissed the city's appeal of a West Caln Township decision to include a local couple's property in the township's agricultural-security district, which would make the eminent domain seizure more difficult for Coatesville.

Coatesville officials initiated condemnation proceedings in August 2000 on Dick and Nancy Saha's 48 acres, which the city wants to attach to a proposed 130-acre, $30-million regional recreation center. All of the 130-acre site is privately owned. The plan includes an 18-hole golf course as well as a hotel and conference center, multiplex cinema, batting cages, hiking trails and other attractions. The land-taking would leave the Sahas six acres for their house, barn and a horse corral. The Sahas have fought the condemnation efforts since they were initiated, and the drama will be played out in the courts.

Newstead, New York

In late May 2002, the Erie County Industrial Development Agency (IDA) approved a $540,906 tax abatement for the owner of the par-3 Bright Meadows Golf Course. Joseph Frey wants to convert the facility into a new 18-hole track on adjoining acreage in neighboring Akron. Once completed, the new club would be called Arrowhead.

The $2.8-million project was approved by the IDA, without debate, by a 12-3 vote and despite opposition by the New York State Golf Course Owners Association. The association opposes granting public incentives for this project, claiming such assistance amounts to an unfair advantage. The project is eligible for the inducement (tax abatement) package from the IDA as the agency says it will improve the quality of life in the Buffalo-Niagara region. The owners association countered there are already three golf courses in the Newstead-Akron area, and the area might already be overserved.

Regardless of the local market’s level of saturation, Frey can now proceed with converting the par-3 layout into a regulation-length 18, utilizing 135 acres of adjoining farmland. The proposal began in April of 2001 when Frey, a local furniture store owner, purchased Bright Meadows from Clayton and Marcia Albrecht. Frey will invest $1 million toward the new par-72, 6,700-yard course, while the IDA will pick up the rest of the tab. Groundbreaking for the first nine holes was slated for last summer, but questions about drainage and wetlands have caused the Newstead Planning Board to conduct a full review of the developer's site plan.

Flossmoor, Illinois

In early summer of 2002, an eminent domain lawsuit was still pending and the massive conversion of Cherry Hills Country Club remained in limbo. A court date scheduled for June 24 was delayed, yet again, and the resolution of the case was still uncertain in late-July 2002.

In 1997, the Homewood-Flossmoor Park District offered $4 million to Cherry Hills’ owner Dick Lundin to buy the golf course. Lundin countered the district’s offer with an $11-million price. Because of the price discrepancy, the district sought to acquire the course through eminent domain in 1999, and won a lawsuit the following year to ensure it has the right to buy the facility for a reasonable price.

A court date was scheduled for November of 2001, then postponed to February 2002, then re-slated for April 29, before being tabled to late-June and now to an undetermined future date. When Lundin finally accepts a reasonable purchase offer, the remainder of a $12 million bond already authorized by district officials will be used to renovate the course. Designer Greg Martin has come up with a plan to convert the 27-hole facility into a championship 18, driving range and golf learning center. Also planned is a 1,000-yard beginners course and a new clubhouse.

Somersworth, New Hampshire

In late-June 2002, the Somersworth planning board approved the site plan for the proposed Lily Pond Golf Course. Earlier in May, the city council signed a letter of intent with Four-Up Inc. to develop and build the 18-hole public course on 288 acres of city-owned land. The proposal involves Four-Up leasing the land for 38 years at $33,000 per year, with the lease adjusted every four years.

Four-Up, the owner of Candia Woods Golf Course in Candia, N.H., is responsible for all construction costs and debt. Four-Up wants to begin work on the Brad Booth-designed course later this summer. Among the project’s most vocal opponents is Robert Fisher, owner of the nearby Sunningdale Golf Club. Fisher believes the project will cost taxpayers “substantial amounts of money,” and that the site can be developed just as easily – and with far less risk to the public – by a private developer.

Local Politicians Listen in Alabama

A project in Alabama is where the public’s voice was heard loud and clear. In late-June '02, site prep began on the 36-hole facility, which will be a newest stop on Alabama’s popular Robert Trent Jones Golf Trail. The project was originally slated to be built on a Tennessee Valley Authority (TVA) tract, a concept that was vociferously opposed by environmentalists and taxpayers.

The Golf Trail’s developer, Retirement Systems of Alabama (RSA), was aghast at the reception the proposal on public lands received. Officials in Florence, near where the property is located, were also forced to backtrack. After hearing the opposition – which joined forces with a petition and other public remonstrations, the RSA’s CEO, David Bronner, said there were too many problems with building the course on the TVA Reservation property. All parties breathed a collective sigh of relief when Harvey Robbins, a Colbert County businessman, stepped forward and donated 600 acres near Ford City, about 2 miles from the original TVA site.

The new Trail stop should now enjoy smooth sailing. The $56-million golf complex will be built by RSA’s development arm, SunBelt Golf Corp., in conjunction with the newly-formed Public Park Authority of the Shoals. The authority will help finance the project by securing $16 million in bonds to pay for infrastructure at the two sites (the other property is 12.8 acres north of Wilson Dam, and it’s destined for a hotel); perform renovations on the Renaissance Tower to be leased to RSA; transform Veterans Park in Florence into a tourist attraction; and help start construction on the 200-room hotel. The plans also include a conference center, school performing arts center, shops and offices.

In this case, everyone will benefit: the local governments will enjoy increased tax revenues once the facility opens in October 2003; the RSA will enhance its cachet with another top-flight link on its golf trail; and the local officials who went out on a limb when the RSA came calling, won’t be shoved into a perilous abyss by a complaining public.

Who knows? Maybe they’ll even get re-elected.