A state Superior Court judge on Tuesday rejected The True Life Companies’ plan for houses and other amenities on the defunct Ahwatukee Lakes Golf Course.
Judge John R. Hannah Jr. also ordered True Life to pay the attorney fees of the two residents who sued to have the course restored and further directed their attorney to propose an order by Jan. 23 that would help him determine the next step in the long legal battle.
The verdict was a complete win for residents Linda Swain and Eileen Breslin as Hannah also rejected True Life’s request that he set aside the land-use regulation that required the 101-acre site to be maintained as a golf course.
True Life will have until Feb. 9 to react to his ruling and until Feb. 22 to file objections to whatever order is proposed by attorney Tim Barnes, who represents Swain and Breslin.
The course was closed in 2013 after then-owner Wilson Gee said it no longer was profitable.
True Life maintained the same position when it asked Hannah last year to set aside the course’s covenants, conditions and restrictions on grounds that the course’s terrible condition and the decline in the golf market constitute a “material change’’ that would justify a modification in the deed restrictions.
The ruling sets the stage for an intriguing future for the course, which could end up back in Gee’s hands. True Life agreed to buy the course for $8.25 million, but only put down $750,000.
Aiden Barry, True Life executive vice president, testified during the October trial before Hannah that a spinoff company created for the sole purpose of redeveloping the course, Ahwatukee Lakes Investors, could simply default on the $8.25 million payment due Gee on June 19, 2018.
The arrangement would potentially protect the parent company and others from liability and return the property to Gee, whose recourse would be foreclosure proceedings.
If the course ended up for auction, any potential buyer likely would have to consider Hannah’s findings in the suit brought by Swain and Breslin, since they basically uphold the deed restrictions on the site.
True Life originally wanted to reimagine the course as Ahwatukee Farms. It proposed to build about 270 homes, a five-acre farm, a private school and other amenities.
But the company could not a sufficient number of the Lakes’ approximate 5,400 homeowners to agree to a change in the CC&Rs that would pave the way for the development.
So shortly before the trial, it modified its plans and said it would install some kind of golf course as long as it got approval to build the houses. The company also proposed that the entire site become a separate homeowners association.
True Life had asserted that restoring the 18-hole executive golf course would cost at least $14 million with no certainty it could ever turn a profit.
Company executives maintained that their the proposal would correct a problem created from the beginning of Ahwatukee’s development, where 5,200 homeowners had no responsibility for supporting the course.
Swain and her expert, Buddie Johnson, who helped develop Las Sendas and Red Mountain Ranch in east Mesa, disagreed.
Swain envisions an executive course similar to Augusta Ranch in southeast Mesa. Johnson cited the property’s outstanding location and the area’s demographics as reasons a well-designed, competently operated executive course could prosper.
“I have had at least five substantial and capable buyers come to me and express an interest,’’ Johnson said. “It’s a site in the midst of 5,000 homes, with 200,000 people in a five-mile radius. They have the time, they have the money, they can play it fast.’’
He said he envisioned a family, or someone with experience in the golf business who is relocating from the Midwest, buying and operating the course, making it an integral part of the community with league play and other outings.
Executive courses appeal to many of the people who make arguments against golf, citing the expense, time, money and difficulty in playing the sport, Johnson said.
But True Life executive Tabor Anderson and Richard Carter, an expert hired by True Life as a consultant from Troon, contended that a stand-alone course could succeed on the property.
Anderson, who has developed 15 courses, said courses generally serve as an amenity to attract homebuyers or the construction of hotels and resorts.
“It took about one minute to decide that,’’ Anderson said, reflecting on his opinion that a stand-alone course is not viable. “You know how important it is to have those revenue sources to support the amenity upfront.’’
He said Carter’s conclusion that it would take 29 years for a builder to recoup its investment makes it impossible to find financing to replace the Ahwatukee Lakes course.
Johnson and Carter made vastly divergent estimates on how much such a course would cost. Johnson concluded about $4.8 million, using some cheaper options such as a modular clubhouse rather than a permanent one.
Johnson cited a $3.9 million renovation at Mountain Shadows in Paradise Valley and a $3.5 million renovation at Rolling Hills in Tempe. Neither course was as badly neglected as The Lakes.
Carter testified that he estimates a three-star facility would cost about $14 million, building a more permanent clubhouse, replacing the irrigation system and building a storage facility for expensive maintenance equipment.
“I’d get laughed out of the room’’ if he were to propose such a course, Anderson said. “That’s why these things are funded on the backs of developments.’’
He described True Life’s latest proposal as having a park-like buffer zone, separating existing homes from the new ones while providing a walking path. He said part of the development would have a park-like appearance while another part would feature the par-3 course.
Carter said Johnson’s estimate understated the true cost because it is too general. He said Troon would not be interested in building a course on the property.
“I would expect this course to be in the condition it is for a long period of time’’ because of a lack of return on investment and a low probability that it would do better under a different owner than Gee.