Source: The Myrtle Beach (S.C.) Sun-News
Island Green Golf Club homeowner and member Baird Couch has wasted little time since learning the course he lives on has been listed on a real estate sales Web site.
Fearing all or part of the course could be redeveloped, resulting in the loss of the quality of life he worked for years to give himself in retirement, Couch has attempted to organize a possible purchase of the course by his fellow members and landowners.
Couch has reason to be concerned.
Diminished golf profits in the Myrtle Beach market coupled with rising property values have led several course owners to consider selling their courses to developers.
"It's just the highest possible return on the property," said Strand course owner and former PGA of America president Gary Schaal. "It's a natural cycle that hits every economy. Unfortunately for Myrtle Beach, that cycle has hit us where the [golf] supply and demand has created a need to look at other uses. Right now, homes and condos are hot, and golf courses are cold. It's simple economics."
Gator Hole Golf Club in North Myrtle Beach began the redevelopment trend in 1999 when it closed and became a shopping plaza and residential homes.
At the time it was an aberration, but it is becoming the trend.
Winyah Bay Golf Club in Georgetown closed in January and is being converted into 160 neotraditional Charleston-style homes by Prudential Source One Properties. Raccoon Run in Myrtle Beach is for sale and its owner expects it to be redeveloped. Robbers Roost in North Myrtle Beach is closed and is expected to be redeveloped - depending on zoning changes. And both Marsh Harbour and Ocean Harbour in Calabash, N.C., have been closed for more than two years.
Nine holes of the Burning Ridge West Course on U.S. 501 in Conway are scheduled to become housing after the summer, and if zoning issues are resolved, Bay Tree Plantation's 54 holes in North Myrtle Beach could become a Centex Homes planned community.
There likely are more to come.
Brent Schulz, a partner and director of land development for the land planning company DDC Engineers Inc., said his firm is working on studies for several course owners to determine the best and most profitable uses for their property. That is in addition to working with Centex on the Bay Tree project and members of the Tilghman family, who own Robbers Roost, on possibilities for their course.
Mike Wyatt, president of the Myrtle Beach division of Centex, said the home builder has been approached by several course owners.
"I can tell you there are four or five others who have come to us and asked us the same thing: 'Is there a potential for Centex to buy our property and redevelop it?' " Wyatt said.
The factors
Golf course profits aren't what they used to be.
A building boom that saw 77 courses open on the Strand in the 15 years between 1987 and 2001, spurred by overpredicted growth in the golf industry by organizations including the National Golf Foundation, gave the Strand 120 courses, including 117 open to the public.
Though paid rounds per course have been up slightly for the past two years, they dipped from more than 45,000 in 1992 and nearly 43,000 in 1999 to less than 36,000 in 2002. Schaal believes some courses are losing money.
"It's a supply and demand issue, and we have overbuilt in Myrtle Beach over the last number of years," said George Hilliard, executive director of the Myrtle Beach Area Golf Course Owners Association.
"The business is becoming more and more difficult to run, with advertising and trying to attract the golfers to turn a profit. Why continue to go through that if the value of the property has increased? It may be time to get out of the market for some of them and redevelop [the land]."
Many facilities are owned by a group of investors who can sell their property for millions now and enjoy the return on their investment, or continue to persevere in a struggling market in the hopes of making marginal profits over several years.
According to an ownership shareholder of both courses, Quail Creek Golf Club recently sold for $3.75 million and the nine holes of the Burning Ridge West Course, encompassing 63 acres, is contracted to sell for $2.2 million. The Pennsylvania owners of Island Green have their 27 holes listed for more than $6 million.
"It's kind of an economic necessity in some places," said Schaal, who is a partner in Wicked Stick, Deer Track, Indigo Creek and Diamondback. He said his partners are watching the market but currently have no intentions of selling.
The emergence of national home builders on the Strand such as Centex, D.R. Horton, Portrait Homes and Beazer Homes has made courses more vulnerable to redevelopment. Courses generally are sprawling tracts of 150 or more acres per 18 holes. Bay Tree is about 500 acres. Smaller local developers are more likely to buy smaller parcels of land and attempt to turn them over quickly.
"The amount of land on a golf course is attractive to a national builder. They like to go in and spend three, four and five years on a piece of property," said real estate appraiser and consultant Buddy Hucks of E.F. Hucks & Associates. "The other force that is really equally important is environmentally. If you go and buy an existing golf course, you pretty much know what you've got. ... The implementation time of developing a golf course could be significantly quicker than going out and buying a forest in Carolina Forest."
Likely candidates for redevelopment are older courses with struggling balance sheets in need of renovations, especially those on property valued by residential or commercial developers. Some courses are temporarily protected through land-lease deals.
Partially because a course on the Strand often physically settles over time, Schulz said they're often in need of a major overhaul after a couple decades that could cost several million dollars. Of the 10 courses either closed or knowingly for sale to potential developers, only Ocean Harbour opened after 1980.
"The life of a golf course is between 20 and 30 years," Schulz said, "then you're going to have to completely renovate it, including irrigation, restructuring the greens and tees, redoing all the traps, all the drainage. The choice is [whether] you reinvest in a golf course that's not making any money, or do you look for a higher and better use for the property?"
Concentrated building has made golf course acreage east of the Intracoastal Waterway a commodity, and urban sprawl has brought development to courses once out of the way, making their property more valuable.
"Some courses were kind of farther out and now the city and county have grown out to them and the property is probably better suited for something else," said Wyatt, who added his company seeks property in an area that will benefit from a change. "... You want to make sure it's a positive impact and a good use of the land."
The impact
It's widely accepted on the Strand that the redevelopment of some courses is healthy for the industry as a whole. The loss of some courses will financially strengthen the layouts remaining in the market.
"If there are some net losses, I hope nobody gets hurt," Schaal said, "but if somebody does convert to housing or something else, there are some winners."
There certainly are some losers as well, beginning with property owners - many of them retirees - who thought they were buying a house on a golf course rather than near a construction site or development.
"There is an ethical issue here," said Jim Oppedisano, chairman of the Committee to Save Bay Tree who lives off the 10th tee of the Silver Course. "We buy a house on courses for a reason, we retire down here for a reason. Then to have it taken from underneath us. What it's going to do to our lifestyle? ... They're taking away a lifestyle we worked for 30 years to get."
Golf course residents also fear a decrease in property value when the fairway in the back yard is bulldozed.
Though many proposed redevelopments, such as those at Raccoon Run and Winyah Bay, won't affect many home and condo owners, many, such as the ones at Robbers Roost and Bay Tree, will.
There aren't a great deal of residences on holes at Bay Tree, but there are 18 developments around the property consisting of more than 1,700 homes and condos within 500 feet of a golf course, according to Oppedisano. Many of the residents are course members who play regularly. "It's amazing how they'd treat the people who have supported them for many years," Oppedisano said.
Unlike Bay Tree's residents, who have no contractual ties to the courses other than annual memberships, there are homeowners on the Strand, including many at Island Green, who have deed guarantees that could help thwart an attempted redevelopment.
Couch bought his home in 1989 complete with a golf membership and deed declaration that obligates the owners and their successors to honor all memberships in the golf course. Couch fears a new owner could eliminate some of the holes, however.
There are other considerations to redeveloping courses, including the effect on traffic and municipal and county services that include schools, stormwater runoff, recreational facilities, and police and emergency services. The larger the development, the larger the effect. The proposed Bay Tree development calls for a 1,975-unit residential community over 15 years.
"There is an impact on the services government provides from all new development," said Horry County Public Safety Director Paul Whitten. "New growth does create an impact on the delivery of public safety. That's a definite reality we deal with, especially new construction."
Whitten said 911 calls in Horry County have increased by 7,000 in each of the past two years to reach approximately 215,000 in 2004. "I attribute that to growth," Whitten said. "We save lives based on seconds, and the congestion affects that."
The fate of the land, owners and residents of Bay Tree, which is zoned for housing but not the comprehensive community Centex wants to build, likely is in the hands of Horry County Council, which must pass a zoning change for construction to begin.
The fate of other courses also may come before a city or county council if the current zoning doesn't fit into a developer's plans.
"It's a tough call," said Horry County Councilwoman Liz Gilland. "I think it's a dreadful position for us to be in."