This is sad to hear, but not too surprising given the climate in Seattle. Zoning apartments to a maximum of 4 stories less than 3 miles from downtown is probably a larger issue though.
This was my home course for the 3 years I lived in Seattle and the golf architecture world won't lose much if it goes away. There are a few good holes (14 is the best), but also a lot of really awkward ones. It's main selling feature is that it's close to the city and convenient. I'm not sure why they wouldn't tear up Interbay too, since that is even closer.