Taxing Golf Courses

[Mike_Sweeney]

How are golf courses taxed? I assume they are taxed as:

1. Property owners with property taxes by local municipalities,
2. Operating entities that are taxed as a standard business which is taxed at the state and federal level.

What are the differences between resort, public for profit, private and muni?

For privates, what are the differences between, equity and non-equity clubs?

What are the biggest problem areas. I often hear that Nassau County, Long Island is bad. How bad in comparison to local New York areas and other areas.

What about California and Florida? They always seem to have a different take on taxes?

Overseas, what is the deal for FatBaldyDrummer and other?

What are the specific rates in specific areas, if people know.

Thanks

PS. I do think this relates to architecture and maintenance budgets, so I consider this on-topic.

[JESII]

Mike,

Without knowing all of the specifics, HVCC here in the Philadelphia area suburbs is set up and taxed a bit different than typical organizations. I know we have a maximum percentage of acreage that can be covered with any type of macadam or concrete and so long as we remain below that number we get some help. Again, I do not know the specifics, but we work very closely with local and state agencies to "do our part" and I believe we are rewarded for that...

[Patrick_Mucci]

Mike,

I believe it has to do with how they're established as an entity for tax purposes.

Most are in the 501C categories, as NOT for profit entities.

Resorts and for profit entities would be in different categories.

[Ron Farris]

Interesting question!
I know a couple of gc owners who spent some time last year fighting high property taxes for a privately held public golf course.  They ended up hiring a consulting group to address the issue.  I will have to check to see what the issues were and what the outcome was.

I trust that the zoning plays a big part in determining the taxes.

[Mike Benham]

Mike,

I believe it has to do with how they're established as an entity for tax purposes.

Most are in the 501C categories, as NOT for profit entities.

Resorts and for profit entities would be in different categories.

Even though the may be a 501C, the are liable for income tax on non-club activity revenues.

[D_Malley]

many townships have a "amusment tax" which effects golf courses public or private.  and also there was just a bill before congress that would of made this sort of tax nationwide. fortunately it did not pass.  also i know our cart revenue is taxed at a higher rate than our green fee revenue, so we can adjust the breakdown in the fees between the two.  and since we are owned by a municipality we prefer to pay the amusment tax to ourselves as opposed to the cart revenue tax to the state.

[Steve_ Shaffer]

In PA, there is a reduced rate on real estate taxes for those who agree to "open space" the property.

[archie_struthers]

 

At Greate Bay, in Somers Point NJ we are taxed as an ongoing business off of our assessment, as are our neighbor clubs. It matters not if they are a non-profit entity.

Our property taxes are almost $275,000 per annum, OUCH!

[Phil McDade]

Mike:

Here in the Madison WI area, this issue has actually been the source of some (not a ton, but occasional) political controversy. Two private clubs -- the very well-regarded Maple Bluff Country Club, and Blackhawk Country Club (said to have some Tillinghast work?) -- are located in two small municipal villages surrounded by Madison (Maple Bluff and Shorewood Hills). The land of the golf courses is owned by the local municipalities, and thus the golf courses are exempt from property taxes, under state tax law that allows local munis to lease public land to private entities, such as a golf club.

The golf courses are public -- in the sense that a local government owns the land -- but you can't normally play there, because the golf clubs are private, along the lines of a traditional private (members and invited guests) club. I say "normally," because the much-rumored (and confirmed by a friend of mine who is a golfer, Maple Bluff resident, but NOT a Maple Bluff CC member) agreement for keeping the golf course land tax-exempt is that each resident of the local municipality is allowed to play one round of golf a year at the course, at the normal fee.

Being familiar with the two courses, the tax break is enormous -- Maple Bluff and Shorewood Hills have some of the most valuable property in the Madison area. (On a side note, two other private Madison clubs -- Nakoma and Cherokee -- do pay property taxes.) A legislator (with whom I've golfed!) in the Madison area has made this property tax exemption for the two clubs one of his pet subjects, wanting to end it. But to no avail, at least so far. Madison itself runs four traditional muni courses that are exempt from local property taxes.

[Scott Stearns]

fun facts for you...

many midwestern towns set their property taxes based on the "highest and best use" permitted by zoning.  For courses built way out of town, this becomes a problem as the town moves toward the course.

one midwestern club i know was built on farmland and taxed as farmland, until a large housing development moved in around it.  The development was upscale, and the people living there demanded an improved school system for their kids,  so the town attempted to rezone the club as single family.

The club was then forced to deal with the potential for a large tax increase, one that would dramatically change the dues structure the club had enjoyed for 40 years.

More fun facts:

Augusta Nat is a for-profit club, as is the separately incorporated tournament.  therefore, the club was spared a challenge on sec. 501 grounds during the Martha Burk thing.

[SB]

Income taxes, sales taxes, and property taxes are each treated separately.

Sales Taxes are dependent on local and state law and are generally pretty similar across the country.  There is often some variation on certain things such as dues (is it actually providing a service a la prepaid greens fees, or is it dues?) and cart fees (is it a product or a service?).

Income taxes depend on the type of course.  Member owned 501 (c) (3) non-profits generally pay no income taxes, but do have to file a return.  Municipalities pay no income taxes, unless leased out to a private operator, who do.  Everyone else pays based on their corporate structure (LLC, corp, etc.)

Property taxes are much more of a wildcard.  Municipal courses generally do not pay property taxes because it would make no sense for a municipality to tax itself.   Interestingly, that usally also carries over to muni courses leased to an operator.

Depending on the jurisdiction, property taxes can be based on either the market value of the property or the cost of the improvements.  Most areas now use the market value, which is determined first by an appraiser using a variety of techniques.  If you don't like the assessed value, there is usually some sort of appeals process where you hire your own appraiser.  It's a little difficult to value member owned private clubs, but it can be done.

That is, unless you live in Nassau County, NY.  In that case, the taxing authority decided to jack up the property on all of the private clubs there with some rediculous assessed values.  The clubs got together, appealed, and won their case.  Tax rates were dropped by a significant amount, helping the clubs there by.  However, the assessor struck back by immediately reinstating the taxes the next year, forcing the clubs to appeal again.  I think they won again, and reportedly the judge was very angry at the assessor, but haven't heard anything recently.  Another club in Nassau appealed and won, and is expecting a seven figure check to reimburse past wrongs.

[Brad Klein]

Gee, from the name of it, I thought this thread was about playing Medinah or Butler National.

[Mike_Young]

I recently heard of a course that argued that the value of the course to the county was reflected in the increased value of the lots and that that value was reflected in the home owners taxes.  They won.  

[HamiltonBHearst]

Very intersesting some municipalities access at the "highest and best use" for the land.  Too bad were the club to disband those same municipalites would most likely not allow the land to be used for the "highest and best use".

[Jonathan Cummings]

Burning Tree in Bethesda, MD has to have the all time horror story on golf course property taxing.     JC

[SB]

Hamilton, you're exactly right.  There is a golf course in northern New Jersey that is zoned (and taxed) as high rise office land.  However, when the owners decided to develop, they were told that they could not build an office building because of traffic issues.  The owners offered to build houses instead, and were turned down.  The course continues to be taxed as an office site.

What is the Burning Tree story?

[Kai Hulkkonen]

Here in Poland authorities tax golf courses as any commercial enterprise but many local authorities have agreed to only charge the property tax (commercial rate) for tees, fairways and greens... That still amounts to roughly 100.000 euros per annum per 18 holes (40 ha).

However, if the local authorities really like the proposed project, it is possible to come to a "special agreement" with them. We traded our tax for free green fee's to local school children.

Kai

[Scott Szabo]

Mike,

I believe it has to do with how they're established as an entity for tax purposes.

Most are in the 501C categories, as NOT for profit entities.

Resorts and for profit entities would be in different categories.

Even though the may be a 501C, the are liable for income tax on non-club activity revenues.

You are both correct!  Typically clubs are formed as not for profit entities under various 501(C) statutes, typically 501(c)7 and do not pay income taxes on the profits they retain.  However, any unrelated business income may be taxed through an excise tax.  This is done when the clubs file their annual informational return.

Clubs that are not organized in this manner are usually government owned and operated, or owned by some type of corporation, or more predominantly an LLC in today's world.  The corporation will file an income tax return just like any other corporation and is responsible for any taxes on profits generated.

As for real estate taxes, I believe this will be different in each region of the US as the local states and local governments determine this.

Hope this helps.

Scott

[Scott Stearns]

will someone reveal the prupose of this thread?

[Mike McGuire]

Under what circumstances, or type of orginazation, can a person treat donations to a club as a tax deduction?

[Mike_Sweeney]

will someone reveal the prupose of this thread?

Sure.

I am a business guy so I am interested in the business of golf, which I think relates directly to the architecture. The more money that gets paid to the government, the less that gets paid out to maintenace and restorations in the case of existing clubs.

My original interest in GCA.com was as a budding developer with a friend that is a housing developer in SE Pennsylvania. Well my friend the developer is building houses on the land but the open space will stay just as that - open space as the economics in that specific region did not even come close to allowing us to build a golf course. We never even got to the point of looking at taxes, so the purpose of this thread was to further my education.

French Creek which is in the same region but not the specific area is currently for sale:

http://tinyurl.com/288yun

The price seems high, but based on the above it appears there can be much manuvering from the tax side. My guess is $12 million for French Creek only works if you can turn 9 holes into houses.

[Bob_Huntley]

Brad Klein,

I thought as did you. My pick was Stone Eagle.

Bob

[Joe Perches]

My pick was Stone Eagle.

If you played there today, I believe you might enjoy the day.

Stone Eagle Weather - 80 degrees

[Bob_Huntley]

Joe,

You are baiting me.

Bob

[Jamey Bryan]

The Burning Tree story is an interesting one......   It's been a long time, so I may have some of the sequences wrong but the essence is:

Back in the 90's, some PC types decided Burning Tree's all male policy was intolerable.  They first tried to have the club's liquor license revoked, but the club won that one.  The PC types then discovered that, in Maryland, golf courses received very large property tax preference (it may have been exemption) as "green space".  They went to the legislature and succeeded in getting a bill which revoked that preference for clubs with any sort of exclusionary policy.  I can't remember exactly, but my recollection is that Burning Tree's tax bill went up by a factor of 5 or 6.

What government giveth, government can take away......