Whether a taxpayer or taxing authority managing assessments for golf and club properties is always a challenge. Like many other properties, golf property values are likely to be impacted by the Coronavirus pandemic. As a result of mandated course closures and stay at home orders in many areas, even those areas where golf is allowed (currently about 33 states, play is likely to be reduced and ancillary revenues (food and beverage, pro-shop, etc.) almost non-existent.
The golf course sales market is typically one that relies on a snap shot of recent performance for determining value. While in many investment properties, values are calculated by projecting future performance, often with the benefit of long term leases, golf courses typically don’t have the benefit of long term commitments for revenue that creates an increased perceived risk. Accordingly, many golf and club properties’ values are dependent on either the trailing cash flow from the immediate past 12 months, or in some cases a projected future cash flow for the immediate next 12 months. There are several determinants of value that could impact golf properties
- We’ve been in a buyer’s market environment for some time. Even though (hopefully) a short term event, buyers will leverage the immediate impact of the pandemic to underwrite potential acquisitions more conservatively.
- The prospect that there will be longer term economic fallout from the pandemic suggests that golf courses and clubs could take a hit much like that in the wake of the 2008 Great Recession. Time will tell. It took golf a long time to recover from that, and the closure of many courses occurred.
- Those clubs and courses which have been in distress may have been dealt a death blow by the immediate impact of Coronavirus. Accordingly, if they are sold, it could be at a discounted price reflective of the COVID-19 impact.
- Many golfers, public and private alike are suffering from personal financial pressure from loss of employment, closure or reduced activities of their business and a sharp decline in the value of their investments. While the most avid golfers are likely to find a way to continue playing, some more casual golfers could stop playing, either permanently or temporarily.
Each of these could be a factor in the short and long term performance of any golf course or club, indicating that real estate tax assessments should be reviewed.
At Golf Property Analysts, we are continuing to monitor the events that impact the value of golf and club properties. While it is too soon to tell what the impacts on value might be, we urge all clubs to reach out to us to discuss your specific situations and determine if it may be worthwhile to have us review your tax assessment. If there is an opportunity to reduce the assessment it’s possible that the impact on operations can potentially be reduced by a significant tax reduction.
At GPA, we’ve helped many clubs manage their real estate tax assessments as well as assisting many taxing authorities in their response to golf and club property assessment appeals. We know both sides of the coin and can help achieve fair results in a cost-effective manner.
I will be presenting webinars for the National Golf Course Owners Association, the National Club Association and the International Association of Assessing Officers during the next several weeks. Look for more information to attend on the dates listed below:
- April 21, 2020, 11:30 AM, sponsored by the National Club Association (NCA)
- May 6, 2020, 2:00 PM, sponsored by the National Golf Course Owners Association (NGCOA)
- May 13, 2020, 1:00 PM, sponsored by the International Association of Assessing Officers (IAAO)