The concept of Highest and Best Use is fundamental to real estate. Highest and best use is defined by the Dictionary of Real Estate Appraisal as “The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of land or improved property—specific with respect to the user and timing of the use—that is adequately supported and results in the highest present value.”
I have long advocated that golf courses represent a highly inefficient use of real estate and that where possible, golf courses should maximize the use of their properties, as in my blog post from August 17, 2017. A key component of this includes an understanding of the uses that are legally permissible. Unfortunately, the most efficient use isn’t always possible when zoning ordinances restrict or prohibit certain uses. A case in point is the recent ruling by Pennsylvania Commonwealth Court overturning a lower court decision which had granted a zoning variance and would’ve allowed the development of a bowling facility at a daily-fee golf course in Lebanon, PA. Interestingly, the action was brought by neighbors, including some members of an adjacent private club, who objected to the bowling facility.
I see a conflict here. For sure, a bowling alley disrupts the environment of a typical golf facility. While I don’t know the specifics of this case, in most cases surrounding residents support existing golf courses as they preserve open space and provide a recreational amenity to the community. It’s no secret that many golf facilities are struggling economically and more efficient use of the real estate asset would seem to help preserve the golf course’s longevity. If the property becomes more profitable, the value increases and it adds to the local tax base with little impact on services. The open space is still largely preserved. The golf facility is enabled to continue operation. Did the residents act in their own best interests by suing to overturn the zoning variance? Maybe not.
Local politics routinely plays a role in the development process. The “NIMBY” (Not in My Back Yard) syndrome is alive and well and I’ve found that often those who advocate limited regulation and lower taxes are often the ones objecting the most when some developments are proposed. Hypocritical?
With many golf courses, depending on local zoning, a “NIMBY” protest that enables a golf course to diversify use could actually backfire on the objectors. As we all know, many golf courses have closed in recent years only to be replaced by residential development, which is often allowed in most zoning districts in one form or another. Though not advocating that golf courses “threaten” their communities with development, it would seem incumbent on the golf course industry to communicate broadly the benefits of golf courses to communities (The World Golf Foundation does this) and to work with local governments and citizens to achieve economic stability that helps preserve golf courses as an asset to both the owner and the community.
To achieve long term economic stability golf courses need to consider the concept of highest and best use. If that use can include continued operation of the golf course everyone wins. If the golf course becomes another housing development, who knows?