To the casual observer, the 135 acres of rolling green and 60 acres of granite stretching across the heart of Sunland Springs Village in east Mesa just looks like a scenic golf course in the shadow of the Superstition Mountains.
But in the last year, it has emerged as a sliver of hope to thousands of homeowners across the country who fear their quality of life and their investment are slipping away because of a major shakeup in the golf industry.
Threatened by the sale of their 27-hole public golf course, about 400 of the approximate 2,430 Sunland Springs homeowners banded together and bought it from owner Farnsworth Companies in January for $1.19 million.
“The group that brought me out there probably had the best beginning I’ve ever seen,” said Mike Kahn, a golf course consultant based in Florida for more than 50 years who briefly worked with the homeowners in the early stages of the deal. “I thought they did a wonderful job, probably the best I’ve ever seen.”
Club West homeowners in Ahwatukee have studied the Sunland Springs Village purchase as they ponder a possible deal buy their beleaguered course from owner Wilson Gee.
They have used a book about the purchase written by John DeVore, a Sunland Springs resident and one of the golf course owners now.
Jim Lindstrom, founder of a grassroots Club West homeowners group with nearly 700 members, called the book critical in two big ways.
“First, it gave us the key points to consider as we developed our strategy,” said Lindstrom, founder of Save Club West. “Second, it was a tremendous motivational tool for the homeowners as we tried to get them involved. We could point and say, ‘Guess what folks, it’s already been done in the Valley and it’s up and running since January. The book gave us a template for the strategy. You could read it as a cookbook.”
Ever since 2013, Sunland homeowners had been rattled when Gee closed the Ahwatukee Lakes Golf Course. He sold it for more than $8 million to True Life Companies, which describes itself on its website as “a diversified group of real estate companies whose primary mission is to be a premier provider of lots and land to America's home builders.”
True Life wants to turn the 101-acre Lakes course into an “agrihood” with homes and townhouses, community farm, a private school, farmers market and a café. It needs at least 51 percent of the community’s 5,200 homeowners to agree to a change in the Covenants, Conditions and Restrictions (CC&Rs) that would allow the development.
Meanwhile, several Lakes homeowners are suing Gee to force the restoration of the golf course, now little more than a barren desert wasteland.
Club West’s problems emerged over the summer, after Gee reduced irrigation, claiming he could not afford his $700,000-a-year water bill from Phoenix.
The Club West HOA is suing Gee, charging that the water reduction had reduced whole stretches of the course to hay.
But a group of about 675 homeowners, untied in a group called Save Club West, think a lawsuit doesn’t solve the problem of getting a permanent source of cheaper water.
They also are studying the possible purchase of the course from Gee, whose asking price is about $1.9 million.
Big home investments on the line
What further rattled Sunland homeowners was the Farnsworth Companies’ plan to sell their course, just as it had the courses in its three other Mesa golf communities.
The 60-year-old course at Dreamland Villa, the company’s oldest development, was sold for $4.3 million last year to a home-builder who is now erecting houses on the 30-acre site.
“That created a lot of agitation in this community,” said DeVore. “The news really expedited this process because the CC&Rs for the golf course are separate for the community’s. So, whoever owns that course can do whatever they want.”
DeVore, a retired corporate executive and avid golfer who documented the sale in a book published in July, demurs at it being a blueprint for other golf communities with endangered courses.
He said immersed himself in recording every detail of the acquisition because it fascinated him and appealed to his background as a former executive with the Coors Brewing Company and his life-long interest in golf.
Besides, he has also owned a home in Sunland Springs since 2013 and he and his wife Cindy are avid golfers.
“I don’t want to send anyone down the wrong road,” he said of the Sunland golf course purchase. “This is a unique experiment.”
Yet, the book details every step the Sunland Springs Village homeowners took right up to signing the sales purchase agreement.
Devore said their “unique experiment” has preserved green space that is critical to the retirement community’s quality of life—and the homeowners’ pocketbooks.
As in many golf course communities, Sunland Springs homeowners whose houses are adjacent to the course paid a premium to be there. “I guarantee you there are people who paid $100,000 just for the lot,” DeVore said.
Kahn has documented the slide in home values in those golf communities that have lost their golf courses, saying they have declined anywhere between 19 and 30 percent.
The Sunland Village Springs deal comes amid a period of continuing turmoil for the golf industry in general and among communities anchored by golf courses specifically.
The industry began seeing a decline in golfing in the early part of this century, although experts say that has started to change as golf courses begin changing their operation to appeal to a younger market.
Still, Devore notes that the National Golf Foundation reports that in the last five years, close to four million golfers have been lost in the United States. Between 2009-10 alone, “the industry lost one million more golfers than were gained.”
Courses saturated the market
Kahn says the problem isn’t so much in the number of golfers or games played as it is with an oversaturation of courses, especially those that were used by developers to sell homes.
“Golf is not dying; it’s been around for thousands of years. The problem is an oversaturation of courses,” said Kahn, who has been a consultant for golf courses since the mid-50s and has worked in almost every state and Canada.
“It was a huge incentive for developers to offer a golf course to people they want to sell homes to,” he said. “But it was like the invasion of Iraq: they didn’t plan what happens after the course is built and the community is built.”
“Between about 1990 and 2005, almost 8,000 courses were developed but there was no growth in play,” Kahn added. “It’s like you’re the only shoe store in the mall and business is great, then eight other shoe stores open up and business falls off. It’s not that people aren’t wearing shoes; they’re just going to the other stores.”
Worse, Kahn said, the Baby Boomers who bought into these communities, many of them restricted to 55 years and older, are now getting too old to play golf or dying.
And if the course isn’t generating a good profit for the owner, it starts to look more attractive for other uses.
“I had a call from a course near Atlanta and they wanted to know what to do because the developer wanted to sell the course for $40,000 an acre,” Kahn said. “As a golf course, it wouldn’t sell for a nickel an acre, so what do you think the owner is going to sell it for?”
New owners took on risks
Although Sunland Springs Village is an age-restricted HOA, it also is home to a good-sized number of golfers who appreciate a site that is actually divided into three executive nine-hole courses.
“It truly is the centerpiece of our community,” DeVore said. “Our goal, as owners of the golf course is that its beautiful landscapes not only be the visual centerpiece of our community but also takes on a new role as the social center of Sunland Springs Village.”
At the same time, the new owners are aware of the risks they took on.
As DeVore advises in an introduction to his book, “Sunland Springs Golf Course: A Case Study to Help Others,” a golf course “is like a 3-week old baby: it needs virtually 24-7 care.”
Unlike an infant, however, “a golf course never grows out of dependency. In fact, as a golf course ages its care and needs become even greater.”
Kahn gives courses a check list with more than 250 items that must be considered and says there are another couple hundred that are subgroups of that list.
There are permits, licenses, environmental issues, transferable leases, personnel contracts, grass and weed control, liability issues. And because “golf is a competitive business,” DeVore noted, the courses demand “good greens, good fairways, good tees, groomed bunkers, a reasonable challenge for a variety of skills and talents, a nice practice facility, clean facilities and pleasant surroundings.”
The clubhouse just adds to the list, Kahn said, since its atmosphere, the quality and variety of food and beverages and even the clothing sold by the pro shop are all important considerations.
The Sunland course owners held a fundraiser for a separate account of about $170,000, apart from the course’s operating contingency fund, to expand their clubhouse by adding a covered patio with misters, large screen TVs and a fire pit. But the club house’s menu is limited to basically a snack shop with wine, beer and a few sandwiches.
Jury still out on course’s future
But the clubhouse can be an important asset for social engagement to the community, regardless of a resident’s interest in golf.
In his book, DeVore breaks down the steps he took to determine whether he and his wife Cindy should become part owners in the course.
On the one hand, the acquisition committee decided to cap the number of owners at 400 even though 2,430 homes and another 300 to be built before the community reaches build-out.
Between the purchase price and a contingency fund to cover repairs, the acquisition committee decided that owners had to pay a $5,000 “subscription fee” to raise $2 million to over both costs.
First, DeVore considered the benefits of ownership and tallied 14, ranging from “preservation of property values and the quality of life” to early tee time bookings and reduced fees.
“When my wife, Cindy, and I sat down with a pencil and paper to make the investment decision, the conclusion was that since a golf car was already owned, coupled with the number of rounds of golf played per year, the investment would be recovered in 2 1/2 years because of waived golf car trail fees and discounted annual pass fees for members,” he wrote.
Both DeVore and Kahn say the Sunland Springs Village experiment is a work in progress.
The board consists of five people who have no experience in running a golf course. They hired a professional course management company, OB Sports Golf Management, to run day-to-day operations for $65,000 a year plus bonuses if it made specific revenue targets.
Though DeVore signed a confidentiality agreement forbidding him from discussing revenue and related details, he noted that the course has a 15-year-old irrigation system, lacks facilities that would qualify the course for a U.S. Golf Association rating and still has to develop a marketing plan to successfully lure players from many other public courses within a 10-mile radius.
“Golf is a competitive business and demands good greens, good fairways, good tees, groomed bunkers, a reasonable challenge for a variety of skills and talents, a nice practice facility, clean facilities and pleasant surroundings,” he said, adding that courses in general also have to rethink everything from the size of holes to the length of a game.”
“The golf industry is not evolving to be state of the art,” he said. “You have to cater to what the market is telling you. That’s why I get concerned about opening up to the public. If golf is not on the cutting edge of where it has to be tomorrow, you’ve got a problem.”
Kahn agrees. But, like DeVore, believes Sunland Springs Village may have a better-than-average chance of succeeding.
“Golf courses survive if they’re ruled by a board with an iron fist,” Kahn said. “But this operation is the best I‘ve seen in the country. There are enough homes so that their community is strong enough to support that golf course in perpetuity.”