The Importance of Entitlement

[BCrosby]

Forrest -

"Banking" real estate for golf courses would make sense only if there were a perceived, public need to preserve the relevant golf courses. Before you limit the alienability of a private property interest, before you - in essense - condemn private property, a political determination has to be reached that the public's right to a golf course is so important that other private purposes for the same land are barred forever.

That determination is made all the time with historical buidings, public parks, rivers, coastlines, even neighborhoods. And a similar result might obtain as to a golf course. But I would think if would be pretty infrequent.

It is unfortunate for us golf nuts that the public's interest in the preservation of (and access to) golf courses is fairly low on the totem pole of public concerns. I don't agree with that low ranking. I think golf is good thing for people. There ought to be a public interest in making more golf abvailable to more people. But my (our) voice is a muffled cry in the wilderness.

Bob    

[Forrest Richardson]

There may be several reasons to entitle land for golf, "banking" the land for future golf.

The best reason I can think of would be to secure great sites for golf.

[TEPaul]

Forrest:

With your posts #23 & #24 I'm beginning to see what you mean by "entitlement". The way you describe what they're doing in the West seems to be a form of "optioning" using the permitting process. I've never heard of anything like that around here though. I believe in some of these local entities around here "permits" have some kind of time limit to execute the plan that the "permit" allows.

Regarding an "option" for golf that was "rendered away" I did run across a situation like that recently that was interesting in an historic context.

It involved the fairly famous Creek Club (Macdonald/Raynor) in Long Island. The club held an option on 250 acres contiguous to the golf course for perhaps 55-60 years. They also held that option all those years at a fixed price! Apparenly the option came due in the 1980s and Joe Dey prevailed upon the club to let the option lapse. The fixed purchae price on the entire 250 acres option was $250,000!! I don't know this for a fact but the option must have carried a proviso that the Creek could only excerise that option and use that land for golf and nothing else.

The reason I say that is otherwise dropping that option would be one of the most boneheaded moves ever as today a SINGLE ACRE of that 250 acre parcel is worth well in excess of $1 million!!

[Forrest Richardson]

Sounds like a realllly bad move.

Don't get the feeling that entitlement is widespread for the purposes of tieing up land. This is reallt not the case.

And here is my main point:

With so much energy and passion for great golf sites, it seems many of those on GCA might be spending decent time to see what they might be instigating (in appropriate locales) to further this ideal of great golf. I do not have any specific advice at this time, but I would believe that all great golf course projects begin with the simple idea — and no one is short of these.

[Tom_Doak]

Forrest:

I've been traveling back from Australia the last 2 1/2 days, and dropped my end of this thread.

Another really good example, with which Tom Paul may be more familiar, is Bill Coore's East Hampton Golf Club.  The zoning of a golf course had been approved there about 20 years before the course was built, they even had approved clearing corridors for the front nine holes which Bill was not allowed to alter, compelling him to build a very short and tight nine ... which turned out remarkably well considering the restrictions.

However, other than getting the zoning changed, I'm not sure what other aspects of a course could be entitled forever more, especially if it's clear that there is no intent to break ground anytime soon.  Pat Ruddy's approach was to get something in the ground, so that it only had to be "modified" later.  Grading permits tend to have some statute of limitations, don't they?

[Forrest Richardson]

I suppose it really depends on the locale and laws governing zoning/entitlement. Usually there is a time limit imposed on newly approved zoning. But also, there is usually no specific plan, only a general "loose" plan which must be substantially adhered to in the end.

Of course, there are also lots of stipulations, as you know: Don't build here, drain there, no clearing over yonder, etc.

However, I know of some planned projects which were eseentially approved and nothing has ever been done...then one day you hear they are moving forward with just the necessities of obtaining a grading permit and a few other permits.


There are a couple of discussion points:

1. An already constructed golf course which is mediocre can be transformed into a great golf course if the site and acreage is excellent. This makes older golf courses, regardless of whether they are liked and "good", a tremendous asset to the world of golf. No entitlements, existing use, etc. All that adds up to being able to bypass most of the environmental and other hoops one must go through.

2. Great sites should be looked at sooner than later. For any effort today may well translate to grandfathered approvals in future times.

[Brian Phillips]

Forrest,

Are there no restrictions in America that state the project or area that has been approved must go ahead within a certain time limit?

In Norway, once an area has been regulated for golf, it is inked in on the councils land use map and stays like that until the project is finished.  However, if the project does not go ahead when the next planning/landuse map is due for revision normally every 5-7 years then that project can risk losing the right to have a golf course and the right will go to another property in the area if there is another project competing.

The weird thing in Norway now is that the councils are starting to decide how many golf courses are needed in a specific area.  That means a council can decide that they only want two golf courses in their area even if the demand is enough for 5.

One of the other restrictions some councils are suggetsing is that a project can get permission to start but no earth movement greater than +/- 1 metre...I just hope it doesn't catch on....

Brian

[Forrest Richardson]

Yes, most projects have a time window. But I've seen these extended if the governing body sees tax revenues or other economic goodwill.

[Lou_Duran]

Forrest,

In 20 years of commercial real estate experience, I've never heard of "Entilement" in the context you presented.  Where in the US have you run across such a thing?  You are not just introducing such a concept into our vocabulary, are you?

I've heard of making zoning changes to preempt expected amendments to city ordinances.  I've even seen a land owner remove every tree on his large tract because a neighboring community passed a very restrictive tree ordinance and the "follow the leader" mentality common in local government.

In southern Spain up at least through the mid 90s, to zone land previously designated as agricultural (or rustic, basically, all non-zoned land), the owner would have to pay a sizable amount in land (20-25%) or cash for the right to do so.  The owner then had a certain period of time to develop it (around 10 years), and if he failed to do so, the municipality had the right de-zone the remaining property (the land conveyed to the city or the cash in the original zoning was not returned), and the whole process began again.

If anybody has been to southern Spain recently, I would like to know what has happened to the tens of thousands condo, apartment, and hotel units mothballed in various stages of construction.  What a mess it was.

Brian Phillips,

As one who has written in less than complimentary ways about the US and how we do things, I would be curious to know your thoughts on the efficacy of bureaucrats deciding what it is you "need" in terms of golf.  Perhaps your public sector workers are better intentioned, higher principled, smarter, and more industrious than our own.  Or maybe they achieve superior results because of serendipity.  We continue to slowly evolve toward the time-proven and more FAIR European way.  I just hope that we get a few good bounces, some goodness, and enlightment along the way.

By the way, I am not being rhetorical, but does Norway have an in-migration problem?  Who are the top Norweigan golfers?        

[Forrest Richardson]

I assure you, Lou...it is a quite common term used to describe any range of approvals allowing a project (not just golf) to be built. "Entitlement" can be quite an asset for a property owner — or buyer.

[Lou_Duran]

Forrest,

Where have you come across such terminology?  My handy "Title Handbook for Texas" does not have entitlement in the index or definitions of real estate terms.  Perhaps if we had more fancy words down here we wouldn't be seen as such a bunch of idiots.

I do have a good understanding of the zoning process.  Perhaps that is what Entitlement is- obtaining some type of advantegeous zoning on a property which may not be available when it is ready to be developed.  Often, obtaining the highest zoning makes the difference between selling by the acre or by the foot so long as that use is possible or desirable.   Where land is hyper expensive, golf is seldom, if ever, the highest use.

Also, just obtaining the desired zoning is no guarantee that the property will be developed as desired.  Cities can do a lot through the permitting process to discourage unfavored development (apartments, mobile home parks, large box stores, lead smelters, junk yards, etc.).  So while certain zoning may "entitle" one to build something, having to overcome all sorts of bureaucratic interference, at times involving litigation, what gets built may be totally different.  Of couse, the EPA, conservancy groups, neighbors, and a host of other interveners can put a wrench into the process.

The concept of entitlement on public lands would be of particular interest to me.  I thought that the valley through Yosemite has great potential for several world-class golf courses.  Build a 36-72 hole complex with an adjoining lodge, restaurants, movie house and retail space, price it reasonably, and 100,000 rounds per season would be in the bag.  With a zero basis in the land, ample water, and all the great scenery, it would have to be a financial home run.  But somehow, I don't think that that is what entitlement entails.

[Mike Hendren]

"Highest and Best Use" as defined by the Appraisal Institute:  "The reasonably probable and legal use of vacant land or an improved property, which is physically possible appropriately supported, financially feasible, and that results in the highest value.  The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability."

Seems to me that the land is best banked as a golf course for future development as high density single family residential or other commercial use - not the other way around.  Not unlike the old drive-in movie theater (Lou Duran - tell me you, too, are a long-standing fan of Joe Bob Briggs) that was marginally profitable and ultimately plowed under for re-development.  

There would be an implied opportunity cost just to sit on a piece of land for future development as a golf course.  Alternatively, the operating of a golf course on banked land would hopefully subsidize that cost at a minimum and provide a reasonable return if maximized.  

BTW, one of my all time favorite sayings:  "You can't pay too much for land, you can just buy it too soon."

Regards,

Mike

[Forrest Richardson]

I cannot say when the term was first used. I've heard it for about 15 years that I estimate. It is shown on the ASGCA website:

golfgourse1.com

Your Yosemite idea sounds interesting...the "entitlement" would here have nothing to do with zoning and everything to do with politics and red tape. Interestingly, Jack Snyder worked on Volcano CC, a private CC on National Park land in Hawaii...so it CAN be done!

[Forrest Richardson]

ENTITLEMENT — from the WordNet Dictionary
 
    Definition:       [n]  right granted by law or contract esp to benefits

[Mike Hendren]

Forrest,

As a commercial real estate lender, "entitlement" is the term I use to describe the alpha-to-omega process a developer/client goes through to obtain a building permit.  This may or may not include zoning, commitment for off-site improvements, letters from utility providers comfirming availability and capacity at the site, a zoning letter, approval of the plans and specifications by the relevant codes department and authorization for curb cuts from the local municipality of state dept. of transportation.  Politics play a significant role around here as councilmanic sponsorship is a requisite for re-zoning or granting variances, etc.

BTW, my Foulpointe cardigan is wearing thin.  Perhaps a return is warranted.

Regards,

Mike

[Lou_Duran]

Forrest,

I learn something every day.  Thanks!

Mike H.-

I am not a subscriber to the Joe Bob Report, but at the expense of coming across a little bragadocious, I do have some experience with drive-ins during the late 60s/early 70s.  They were great for warehousing land (relatively low-cost of improvements), and were among the first "multi-use" properties.  Great memories!

As a lender, I am sure you know that golf courses are not a good way to bank the land for future development.  After speding $3- $10MM+ for single-purpose improvements, the land better appreciate greatly in value or you're screwed.  When I was looking at new golf course development, lenders wanted the land to be free and clear, and would only loan 65 - 75% of the improvements (probably an LTV of 50%, though the alternative value if the course failed might be only that of the land less abnormal site preparation costs).
Driving ranges on the other hand have proliferated down here, largely as a generator of cash flow while the market is maturing.

RE: North Berwick- great place, but limited appeal most everywhere else.  I loved it, but would not want to play it every day.  CPC on the other hand, I would.

[Forrest Richardson]

Mike,

I would gladly divulge some more Foulpointe descriptions — unfortunately the last 4+ weeks have spent with minimal typing. I fractured (shattered) the end of my right radius (arm bone) before the holidays and have had surgery since — now beginning rehabilitation. Of course, I'm right-handed, which is not excellent for a golf architect.

How? Oh, roller skating with my daughter. But just for a few seconds.

[RJ_Daley]

I can't get the image out of my mind Forrest, typing qwert with your good left hand and yuiop with your nose

His entire arm seem inactive and this seemed also to affect his left side which was stiff when he walked or moved. Mutξn had told me about Hans, but neglected to mention that he was so severely disabled.

Are you a method writer, Forrest?

[Forrest Richardson]

I am now!

[TEPaul]

TomD:

On the issue of Easthampton G.C. being a reasonable example of this issue of "entitlement" it's very hard for me to say. I'm still not completely clear on what Forrest is talking about here. But in the East I don't think something like this exists exactly or else it's always been called something else--such as permitting, rezoning, variance etc.

I don't know how much info I have about the history of Easthampton G.C this way. This is what I know about it though;

The Bistrian family owned that land for years. Maybe 20 some years ago they decided they'd like to build a little public course on that land. I know the guy who says he routed it for them and they got that routing plan approved years ago. For a couple decades nothing was done with the plan.

When Bill and the Boys were apparently out there ready to go on Friar's and that project ran into an injunction Bill got a call from one of the Bistrians who said to him something like;

"We have this little piece of land that we always wanted to build a course on. We don't know if its any good and we don't really know how to build a course, would you consider helping us?"

Bill said given that request was so touching and they were already about 30 miles away and suddenly shut down he said; "Sure we'll help you!" and they all went down to Easthampton and just worked within the permitted plan because to even think about asking the town for changes with the new ultra resistant climate then in Easthampton would have made doing Easthampton G.C. unfeasible timing wise anyway.

Just from going up to that area during that time and completely apart from Bill I do remember hearing there was a ton of political sentiment in that town to try to stop the already permitted project from happening. My recollection is the leader of that opposition was actor Alec Baldwin and his actress wife Kim Bassinger.

But they got it built in a restrictive atmosphere and that was that. The clubhouse, however, was held up for a couple of years by that local resistance but that's done now.

I once said to Bill Coore I thought Easthampton G.C. was a wonderful course and he said;

"Do you really think so--we just did the best we could on limited piece of property and in a very restrictive atmosphere?"

[HamiltonBHearst]

Mr. Paul-Thank you for the Easthampton GC story.  The scarey thing to me is that the FH project took so long to get completed.  I am just glad longtime residents of my area like Alec Baldwin and Kim Basinger and Mr. Clinton's friend Steven Spielberg have the best interests of the South Fork in mind now that they have recently chosen to live here. I suppose Barbara Streisand is next, she can try to block public beach access, Oh that has been tried "dunehampton".

[TEPaul]

HamiltonBHearst:

I don't know who you are but if that's your real name you sound like one of those people out of the old WASP world in this country.

Have you noticed how many of these movie star/Hollywood/mega new richy types have been moving into the old aristocratic WASP summer communities all over the country? The whole thing almost seems like a repopulation process to me. The old WASP world is sort of kaput now and the Hollywood/new mega money crowd is sort of taking the position the old aristocratic WASP types once held! So it would probably lead one to ask;

Who is it that really had the style?

To me there's no question of it. It's almost the same phenomenon Ralph Lauren has built his empire on. The new wave is trying to actually step right into what they must feel was that glorious dream world gone by!

I shouldn't say this, I guess, but if Alex, Kim, Steven, Barbara are going to move into those glorious old communities like they have somebody should make them keep their "slam the door behind you" activist mouths shut for at least three generations!

[Lou_Duran]

I suspect that the family who owned the EastHGC land previously put in a restriction in the deed specifying the use.  I am surprised that a private course was built, unless the family agreed to remove the word "public" from the restriction.

For those who don't like the celebrity types from leveraging their skills in the public forum, perhaps the L.A. Country Club approach is not a bad one.  Have the city pass an ordinance prohibiting people of certain occupations from owning land.  This could be done also through a comprehensive zoning plan or with deed restrictions, though these folks are probably now in a protected class.

Sometimes having the beautiful people meddling can have fortuitous results.  I was about to invest in a small island in the Muskoka Lake region in Canada, when Martin Short began a full court press to prevent the developer from doing anything with it.  Several years later, I believe that the permits have been granted, but there appears to be little demand.

[John_Cullum]

I have done some further off-site exploration of this term "entitlement." It appears to be more common in the western states. It is essentially pre-permitted land use. An owner can get permission to develop a tract without having the present intention of actually doing the development. It appears from my limited research that the primary function of entitlement is to increase the value of a tract.

Say you own some acreage and you know there is a need for a hazardous waste disposal site in your community. You are not in the Hazardous waste disposal business and have no intention of trying. But you can get it pre-permitted and then sell it to a hazardous waste disposal company. They will pay you top dollar because they will not have to endure the nightmare of seeking approval. You will not have to endure the nightmare of having your property tied up by a contract contingent on the buyer's getting permits. This process is not bulletproof because building and design methods change quickly. It is most often the case that an entitled property will need some tweaking awhen development time finally comes. Old entitlements are probably of little value. Also, the Federal permits are not affected by the entitlement, and state environmental regulation enacted post entitlement are likely not affected either. And local government moods change over time and will rear their head despite the entitlement, resulting in  costly litigation with the municipality.

I do not believe that the concept is used to forever restrict a property to the entitled use.

In light of the above, entitlement's value is limited in golf course development. Unless there is fear that your potential golf course site will someday become distasteful to your community for golf course use, I don't see justification for the obviously complicated process.

[Forrest Richardson]

Sarge,

Your research is admirable.

Entitlement is simply what needs to be done to enable a use on a property — and once it's there it remains as part of the property (unless there were time limits, leases, etc. imposed originally).

And once a property has a use, any taking away of that use is a "property taking" and would be subject to fair value if taken by a government body. In the case of a golf course site, "entitlement" means esentially that you can build a course there and operate it and collect any benefits. That's all.