A little OT: Is Change Coming for Open Space (read golf clubs) Tax Breaks?

[Rob Marshall]

Wasn’t the purpose of prop 13 to prevent families from being forced to sell their homes when they couldn’t afford RE tax increases due to escalating values?


Texas is a high property tax state?……How about living in a high property tax state, high sales tax state and a high income tax state like NY. I still laugh at the stupidity of the politicians who said the what non income tax state residents were at a disadvantage since they couldn’t deduct state taxes so they should be able to deduct sales tax. What’s the Fing disadvantage? They don’t pay any income income tax? Idiots.

[Tim_Weiman]

Matt,


You have presented quite a bit in this thread, but I am still not clear exactly what you think private urban courses should do.


Take the LACC example. What exactly should it do?

[Matt Schoolfield]

Take the LACC example. What exactly should it do?

I'm not entirely sure. I wish I had a better answer for you. This is a collective problem and there is no way to fix it that won't be messy. The 501(c)(7) legal structure limits what clubs are even allowed to do as far as making themselves indispensable to the community. Changing over to the British private club tax system would help there immensely.

If I were on a board, at a minimum, I would want to be mindful of public relations. I would want the club on record supporting attainable home-ownership in the area.

I think large memberships are also helpful to public perception, the Olympic Club does well to retain 10,000+ members (you might actually meet one occasionally).

As it stands, the occasional philanthropy for a local 9 hole during a major public event is nice enough, I just don't think it's going to cut it going forward even if it is non-trivial money. There are tax changes that might annoy these clubs, but there are also changes that could really hurt them. I hope when the changes come, we don't lose any courses.

[Charlie Goerges]

You have presented quite a bit in this thread, but I am still not clear exactly what you think private urban courses should do.


Take the LACC example. What exactly should it do?

I think anyone posting to this thread should try to provide an answer to this question. Matt was asking for our input on what to do.


I certainly don't want any courses to disappear, so fully taxing all the private clubs at the actual value of their property may be off the table. As a first step, the thing that makes the most sense to me is to negotiate a middle-ground property tax for "outdoor recreation" that is more commensurate with the value of the property while acknowledging there is some benefit to the neighborhood of having that greenspace there.


I like Matt's idea of the courses/clubs supporting the up-zoning of surrounding property, though their support should include legal support for that zoning (not just lip-service). If they're going to be taking that much usable land off the table they should help in the creation of more housing in the areas surrounding them.


Public-access courses should allow some sort of usage like nature trails and such to run through the property (in a safe and well thought-out way). If private clubs don't want to do that, then make a strong move to make their grounds legitimate habitat for plant and wildlife that the surrounding neighborhoods will benefit from (it seems clear that this will require serious changes to current practices).


Those are a few ideas, but I'd really like to hear what many more here think should be done. Maybe you think nothing, maybe you think the courses should be turned into apartments, I'd be really curious to read what everyone thinks.

[John Kavanaugh]

Tax everyone who earns more than $100,000/year 10cents for every hour they are outdoors. It is easily monitored through our phones. Use the money to stabilize climate change. I’d pay $1 per day.


If you don’t like it stay inside.

[Charlie Goerges]

Tax everyone who earns more than $100,000/year 10cents for every hour they are outdoors. It is easily monitored through our phones. Use the money to stabilize climate change. I’d pay $1 per day.


If you don’t like it stay inside.

Thanks for the idea. You're not afraid that this would create some perverse incentives? I don't think a bunch of rich-guy-only indoor golf courses the size of 32 football stadiums will be all that good for climate change.

[John Kavanaugh]

To be outside will soon be a privilege, or a death sentence. Our choice.

[Charlie Goerges]

To be outside will soon be a privilege, or a death sentence. Our choice.

I don't want it to be either, I want it to be everyone's right...to be able to go outside for recreation.

[John Kavanaugh]

After taxing the private clubs force the great public’s to accept carbon credits. A Tesla and a lb of compost will get you on Pebble.

[Kalen Braley]

Along the lines of disgruntled folks..

https://www.msn.com/en-us/sports/golf/chemical-vandalism-at-pga-tour-site-leaves-multiple-greens-unplayable/ar-AA1aN6dX?ocid=hpmsn&cvid=bdb3b25f326a4240a796986605ea2ebd&ei=8

[Mike Wagner]

I'm new here, and I normally wouldn't want to rock the boat like this, but this is a bit of a hobby horse of mine and I think it's extremely important, even if much of golf culture doesn't want to hear it.

In many parts of the country right now, urban golf courses, especially urban private golf courses, need to offer the greater community something, anything, if we want our culture to survive this accelerating housing crisis. This is an ongoing series in my writing: 1 2, and I'm the guy on reddit prattling on whenever it comes up.

I'll try to keep this short. I was born on the first year of the millennials' generation, so I feel like I stand between the two worlds of the older generations and the younger generations, and the difference in access to wealth-building is stark. When the young people, who are now the largest voting bloc, see no path whatsoever to own a home in many regions (Newton, MA being chief among them) then they are going to change the system. It's happening right now in California, where we are fighting bills trying to pay cities to close municipal courses, and if you live in an area with a housing crisis, similar political fights are going to happen where you live.

Open space can be good for society if it's open space for native flora or fauna, but if you're trying argue that open space dedicated to Annual Bluegrass is somehow good for society, it's probably not going to fly anymore. A dubious "Audubon International" certificate, which is very much not issued by the National Audubon Society, probably isn't going to fly anymore. I really think the folks running urban golf courses need to start thinking about how to give the general public something to lose if the course goes away. Whether it's a popular dining facility, a venue where many couples in the city got married, an apiary operated by the local university, or a walking trail open to the public, there needs to be something, anything, for the general, non-golfing public to see as something they lose when the course they never use (an in many cases aren't allowed to use even if they wanted to) goes away.

I'm planning on writing specificity about this topic, about LACC, in the run-up to the US Open. There is no more egregious tax-break gifts to the most wealthy among us than there are in northern Los Angeles, yet our golf culture showers accolades on many of these exclusive tax-dodgers, even while we sheepishly admit that things should probably change when directly challenged on it. I don't think the public will stand for it forever.

I care deeply about the game of golf, which is why I'm so concern about this. Our housing crisis is accelerating across the country, not abating.

Go put the same passion into the expense side of things. If that isn't MORE alarming than trying to figure out private clubs' taxes, then you're just part of the problem.

[Matt Schoolfield]

Go put the same passion into the expense side of things. If that isn't MORE alarming than trying to figure out private clubs' taxes, then you're just part of the problem.

(Olive branch out-stretched): while I'm currently spending most of my time building this golf wiki (similar to GCA, but with a different scope), and this is about to get very off topic, yes, I am quite passionate about the expense side. I'm pretty active locally pushing for approaches to maintain sustainable, wealth-creating, long-term budgets. I'm a nerd, golf nerd first, but also municipal bond nerd. I hope I can earn a reputation here as a straight-shooter, and I'm sorry if I didn't give that impression.

[Tom_Doak]

Tax formula should be (Total Yards - 6400) x Stimp/10.

Longer and faster pays the piper. Anything under 6400yds gets a tax credit. Greens stimping under 10 earns a credit. A tech rollback will soon follow. Taxes work.

I love this formula.


For Sedge Valley the state would have to pay me 

[Mike Wagner]

Go put the same passion into the expense side of things. If that isn't MORE alarming than trying to figure out private clubs' taxes, then you're just part of the problem.

(Olive branch out-stretched): while I'm currently spending most of my time building this golf wiki (similar to GCA, but with a different scope), and this is about to get very off topic, yes, I am quite passionate about the expense side. I'm pretty active locally pushing for approaches to maintain sustainable, wealth-creating, long-term budgets. I'm a nerd, golf nerd first, but also municipal bond nerd. I hope I can earn a reputation here as a straight-shooter, and I'm sorry if I didn't give that impression.

Love it .. and that sounds very interesting. We all come at this kind of thing from different angles and attitudes. End of the day we're all connected by being golf nerds .. so welcome aboard!

[Tim_Weiman]

Matt,


My understanding is the Los Angeles and New York have the largest homeless populations with about 70,000 and 65,000 respectively.


Do you think one can credibly argue that the existence of golf courses in these cities contributes significantly to the homeless problem?

[Matt Schoolfield]

Do you think one can credibly argue that the existence of golf courses in these cities contributes significantly to the homeless problem?

I don't love the framing here, so I'm going to be upfront and dodge the question.

First, there a lot of room between chronic homelessness, homelessness, housing affordability, and housing attainability (at any reasonable price). For the purposes here (golf course tax-policy) I think it's most important to stay focused on housing attainability, because that's where I think the problematic thrust we may be facing soon comes from. None of this is to say that the other aspects aren't important (they are), but you need to have large numbers of active voters extremely angry with the existing land use system, and that's going to be a result of lack of housing attainability.

My second point of contention would be with "contributes significantly." In a way, the answer is obviously no. Unfortunately, the way forward isn't always going back in time and addressing the systemic problem. Do I think golf courses being converted into housing could effectively change the state of housing attainability and reduce homelessness? Unfortunately, when I look at the amount of high-density housing that can be placed on a golf course, the answer seems to very much be yes. However, here is where I come down hard against those policies: urban open-space is a public good and a finite resource. If there is any solution that we can find before consuming finite, public goods, we should use that other solution.

I think this is why these issue are so pernicious. The blame for how and why we got into this mess are going to be more an more irrelevant to the younger generation. If we can find an effective way forward that preserves golf courses (at reasonable prices!), I fear we're going to need to look to upzoning large area of the urban landscape, and that can be uncomfortable for many folks in this community. I know some folks in the Santa Rosa gov't (where my girlfriend is from) and I know I've changed a mind or two on Bennett Valley golf course, which was potentially up for redevelopment. This is a bipartisan issue for the younger generation. If you can stand CA politics, I would recommend again Ezra Klein's interview with Scott Wiener which is very much in depth about this issue. If you can't stand CA politics, I would very much recommend The Strong Towns Podcast, which addresses the same subject from a more conservative (municipal finance) perspective. When increasing density is the issue, the laziest, but easiest solution for many politicians will be to look for the biggest piece of land to build on, with the least amount of outrage. That's unfortunately going to be municipal golf courses, and loss of tax breaks.

[Tim_Weiman]

Matt,


Thanks for your detailed response to my previous question. Let me ask a different question:


What tax rate do you think a club like LACC should pay?

[Tim_Weiman]

Matt,


Honestly, I am trying to determine what one could reasonably determine is the value of LACC and what their annual tax bill should be.


I came across one estimate from Max Gladwell, a left leaning long time writer for the New Yorker magazine. His estimate is $6-9 billion which he also estimates would mean a $60-90 million annual tax bill.


Assuming LACC has about 300 members, it would mean a value of $20-30 million per member for a sale or an annual tax assessment of $200-300,000.


At such a value, a sale of the property might not be a bad option.


But, I also found a Berkshire Hathaway estimate for land cost per acre in Los Angeles. Their median value estimate is $60,000 per acre.


So, let’s assume three times the median value or $180,000 per acre. My understanding is LACC is 295 acres making the value of the property more like about $53 million, quite a big difference from Gladwell’s multi billion dollar estimate.


If the lower figure is correct, a sale would only yield about $177,000 per member - not really such an attractive number. Moreover, applying applying the California mansion tax rate of 5.5% would only yield about $3 million in annual taxes ($10,000 annually for each member).


At this lower value -3 times the estimated median value for land in Los Angeles, the benefit for the City of Los Angeles isn’t that great and the incentive for the club members to sell isn’t either.


Now, one more reality check. Apparently. Los Angeles spends about $600 million per year in support for homelessness. This suggests that the Berkshire Hathaway land value estimates mean a sale of LACC (and every other private course) isn’t going to contribute that much to LA’s ongoing homelessness problem.

[Pat Burke]

I don’t know anything in this world


But many golf course properties have a difficult time trying to re-zone to sell for development don’t they?


Prop 13 has allowed a lot of long time homeowners to stay in the home instead of being forced to sell due to property taxes. It is the golden target of California politics, who see a huge revenue source if they could somehow destroy it.  Not sure it was meant to protect “commercial” property, but it’s been a Godsend to many, and California isnt exactly hurting for revenues is it?


Watching property tax bills explode where I used to work in RainDance Colorado this year is staggering.  Should NOT be unexpected, it’s why I didn’t buy a house offered to me.  I knew the tax increases would push me uncomfortably budget wise.


San Diego wants to put in rent controls and I understand, but I see property tax controls in the same light fwiw


But again, please, I have been fortunate to live a simple life managing my family, not all of this. Just some thoughts

[Charlie Goerges]

LA folks, is $180,000/acre a reasonable amount in Beverly Hills?


There’s a 1.5 acre lot here in Mankato Minnesota’s best neighborhood for an asking price of $300,000

[Tim_Weiman]

LA folks, is $180,000/acre a reasonable amount in Beverly Hills?


There’s a 1.5 acre lot here in Mankato Minnesota’s best neighborhood for an asking price of $300,000

Charlie,


Just to be clear,  have no idea what the right number. That’s why I offered two different estimates that are far apart in value.


Here is a third estimate:


Berkshire Hathaway median price for land in Los Angeles times ten
 
$60,000 x 10 x 295 = $177 million


Annual tax at 5.5% = $9.7 million


Per 300 members


Sale at $177 million = $590,000
Annual assessment on $9.7 = $32,450


Note: if this estimate is correct, LACC would play about $9,7 million vs $600 million annual spending on the homeless.

[Sean_A]

LA folks, is $180,000/acre a reasonable amount in Beverly Hills?


There’s a 1.5 acre lot here in Mankato Minnesota’s best neighborhood for an asking price of $300,000

I was going to say, assuming LACC could be zoned for commercial or residential development, $53 million land value is a joke. But rezoning is a big if, no?

While I do believe it is wise for private clubs to get seriously involved with local communities, I don't believe lack of homes is due to golf courses. The US generally has terrible zoning laws which encourage wasting land. The priority of vehicle access roads over public transport is a big issue for not using urban land well. US cities are for the most part a mess. How that is redressed is way beyond me. I guess it starts with a total overhaul of zoning laws and massive investment in non road using public transport.

Ciao

[archie_struthers]

 


What a world , what a world...just can't wrap my arms around the idea that a swath of open space , even with some people with clubs and even buggies roaming around on it, should be taxed at rates commensurate with buildings and homes.


It has been a long standing belief that America should protect open space . For years even the quasi communist state of NJ has protected our Pinelands and the farmland that brings some of the best tomatoes , blueberries and corn to our tables for generation after generation. Certainly southern NJ has done this. 


Just in our  little example building a golf course we could have built 225 homes , contributing to the pressures on our roads , school systems et al.  That that 240 plus acres is now a golf course wasn't a great economic decision for me personally, but it sure as hell does have wildlife, fish and a myriad of species that otherwise wouldn't be alive today.


Perhaps i's inevitable that the government will come for us all. I'm probably too old to worry too much. If indeed  the younger generation embraces the abandonment of individual property rights, they are  are in for a rude awakening. Be careful what you wish for!

[Tim_Weiman]

What a world , what a world...just can't wrap my arms around the idea that a swath of open space , even with some people with clubs and even buggies roaming around on it, should be taxed at rates commensurate with buildings and homes.


It has been a long standing belief that America should protect open space . For years even the quasi communist state of NJ has protected our Pinelands and the farmland that brings some of the best tomatoes , blueberries and corn to our tables for generation after generation. Certainly southern NJ has done this. 


Just in our  little example building a golf course we could have built 225 homes , contributing to the pressures on our roads , school systems et al.  That that 240 plus acres is now a golf course wasn't a great economic decision for me personally, but it sure as hell does have wildlife, fish and a myriad of species that otherwise wouldn't be alive today.


Perhaps i's inevitable that the government will come for us all. I'm probably too old to worry too much. If indeed  the younger generation embraces the abandonment of individual property rights, they are  are in for a rude awakening. Be careful what you wish for!

Archie,


I agree that individual property rights are part of this discussion. That is a pretty serious road to go down.

[John Kirk]

LA folks, is $180,000/acre a reasonable amount in Beverly Hills?


There’s a 1.5 acre lot here in Mankato Minnesota’s best neighborhood for an asking price of $300,000

Charlie,


Just to be clear,  have no idea what the right number. That’s why I offered two different estimates that are far apart in value.


Here is a third estimate:


Berkshire Hathaway median price for land in Los Angeles times ten
 
$60,000 x 10 x 295 = $177 million


Annual tax at 5.5% = $9.7 million


Per 300 members


Sale at $177 million = $590,000
Annual assessment on $9.7 = $32,450


Note: if this estimate is correct, LACC would play about $9,7 million vs $600 million annual spending on the homeless.

Hi Tim,

Here is a listing on Redfin for a 2.27 acre parcel about 3/4 mile north of the golf club:

https://www.redfin.com/CA/Los-Angeles/344-Delfern-Dr-90077/home/6824267

You need to reconsider your most recent estimate.  Conservatively, you are off by a factor of 5.  The retail value of residential land is now $600k per acre in typical upper-middle class towns in many areas of the western United States.  I'd argue the primary reason for the high cost of residential land is a notable scarcity in housing supply which makes residential real estate an attractive industry for major investment companies.