Municipal Sponsorship of Golf Course Development

A Public/Private Economic Development Approach
Craig Hullinger AICP & Charles Eckenstahler AICP

A golf course surrounded by residential or commercial development has become an increasingly popular means to provide open space while serving as an attractive amenity for newer developments. Golf courses also provide a visual amenity which enhances the image of the community and attractiveness of a site to potential occupants. It can also help acceptance of major new development by the surrounding property owners. Because of benefits which can be accrued, many communities seek the opportunity to develop a golf course in their community. Many start this process by including a golf course in their Comprehensive Plan.

While showing a golf course on the Comprehensive Plan - Future Land Use Map, most communities do little to implement the goal. Instead, they leave the job of “making-it-happen” to private developers. This article address the role of local government in implementing the Comprehensive Plan goal of developing a golf course in their community.

The initiative for development of a golf course may come form the public or private sector. First, as a part of its Comprehensive Plan, local government can identify an area for the course and designate the land for a future golf course development. Alternately, a property owner or developer can propose a suitable land area. In either case, inclusion of the site on the Comprehensive Plan - Future Land Use Map, acknowledges the goal of the community to locate a golf course; regardless whether publicly or privately owned.

From the perspective of local government, the case for a public-private partnership to develop a golf course is strong, especially for office and industrial projects that will enhance local tax base. The development of a golf course to stimulate other private sector development, such as a business park, can be viewed as a legitimate public-purpose economic development activity since it will provide benefits including:
● Increasing potential for other economic development in the community;
● Enhancing the image and prestige of the community;
● Increasing the amount of land in open space;
● Providing land for wetland rehabilitation and/or preservation;
● Providing land for stormwater detention purposes;
● Improving the visual appearance of the community;
● Encouraging annexation of key properties, sometimes; and
● Providing a valued recreation resource within the community.

Benefits are not one-side. Development a golf course also provides several financial incentives for the developers of abutting property, including:
● Increasing the pace of sales/lease-up within the development;
● Increasing the development value of surrounding property;
● Enhancing the image and prestige of the development (higher prices/lease rates);
● Improving private sector returns on investment made to the development;
● Increasing likelihood of prompt governmental development approvals;
● Possibly lowering costs for stormwater management costs for the development;
● Possibly lowering utility construction and connection costs; and
● Possibly assisting development financing.

Generally there are three partnership development models: 1) government owned course with private owned abutting land development, 2) private owned course with private abutting land development and 3) public/private owned course with private abutting land development.
For each of the models the financing of the course can be entirely municipal, or private, or a mix of public and private capital. Normal, Illinois recently developed a public owned course on land abutting I-55 surrounded by residential and commercial development. The developer initiated the idea, and gave the land to the City with the condition that the City develop the course.

Park Forest, Illinois, expanded its successful executive nine hole course in partnership Naughton Development Company. Naughton Development has constructed single family and town homes around the expanded municipal course.

Munster, Indiana designed a golf course as an open space amenity in a proposed office and industrial park adjacent to a municipal airport. Munster is seeking a developer to undertake the public and private portion of the development.

Country Club Hills, Illinois proposes a joint public/private project with a golf course on Cook County Forest Preserve with abutting private development for land abutting I-57. The City is currently working with the Forest Preserve and private property owners to bring the project reality.

The Kankakee Community College campus has three hole golf course located adjacent to I-57. Vacant land surrounding the course allows for expansion of the course and potential public or private development. This course demonstrates how a small golf course can serve as a initial low-cost way for a community make an attractive entryway feature while enticing additional future private development surrounding a future full-scale golf course.

It is oblivious from these examples, there is an endless number of ways the public and private sector can cooperate in a public/private development partnership. Undoubtably, each situation will dictate the role and commitment of each party. Planning experience and legal counsel will be required to prepare a written development agreement setting forth duties of each party, at some point in the process.

Ideally, from the perspective of the community planner, the golf course should use floodplain areas, provide stormwater detention and wetlands preservation areas as part of its overall design. A floodplain area along a creek or river is an ideal location and provides the opportunity to include wetlands and water features into the course design.

The ideal location, from the private developers perspective, is a site just beyond municipal utilities where land cost are low and private development can easily be attracted. Since the local government is a partner in the development their cooperation and financial support for extension of utilities could be negotiated as part of their participation. Obliviously, if the site is not within the municipality, annexation of the course will likely bring an large new area into the community for future development.

Soil and site conditions must be suitable for a golf course development. Certain flooding conditions is acceptable if the frequency and volume of water storage is made part of the overall course design. Frequently flooded areas or areas where flood water are detained for inordinate periods of time are inappropriate. These areas, however, can serve as buffers and less used portions of the course , if properly designed. Attractive rolling terrain and mature trees are desirable and provide interest into the course design. Thus, the course will usually take maximum advantage of the low ground around a creek or drainage way, the high ground especially rolling tomography and any mature vegetation on the site.

The ideal site is large enough to allow private development along the perimeter of the property. Ideally, a 170 acre course should be located on a 320 to 640 acre tract to ensure sufficient private development around the course. The course should provide the maximum exposure to adjacent development property.

It should be viewable from surrounding roads should providing an attractive vista within the context of the community. Usually, if development is a joint public/private partnership, the course will open for public use and walking and jogging path should surround perimeter the course for use by walkers, joggers, bikers and skaters.

What's in a name? Quite a lot. One major benefit of the private/public development effort is creating or enhancing community image. The best opportunity to help the image of the community occurs when the name of the golf course (and surrounding development) is tied to the name of the of the community. Some examples include: The Munster Golf Course, Munster Country Club, Munster Office Research Center, and Munster Golf Estates for a golf course development in Munster, Indiana. While prestige and marketability of the community and development are enhanced by the name use of the community name links the community location with the development for persons seek to find the golf course and abutting developments.

The current cost of developing an average 18-hole course is two to three million dollars excluding land costs. A pro-named champion course can cost considerably more. Ideally green fees and sales of goods and services should cover all operating costs and repay loans necessary for purchase of land and construction of the course. Whether public or private, the course should operate and generate revenue over and above operational and debt payment expenses.

If the municipality, park district, or forest preserve district, owns the course it has the advantage of as owner has the advantage of not paying property and sales taxes plus can borrow funds for construction as a lessor interest rate. Therefore, public ownership has an easier time making a profit when compared to public ownership. Ownership, will effect the cost charged for daily green fees and other services. Therefor, the form of ownership will be likely be one of the earliest decisions made in creating the public/private agreement for the overall development project.

Public golf courses are, for the most part, profitable although losses must expected during the initial start-up period. In some communities, the public course is viewed as a recreation amenity and the residents of the community are given reduced green fee rates. These communities view the course, in part as a community recreational amenity. While they seek to have the course profitable they recognize that the course may require a minor subsidy from the community form time-to-time.

Local park districts, communities, and forest preserve districts today routinely operate public courses. Sometime, a private operator is engaged to operate the course. In many instance, an experienced golf course operator is probably the best choice, if the local government has no experience.

A public/private partnership approach to golf course and abutting land development can enhance the economic development objectives of any community. A mixed-use public owned golf course surrounded by private residential or commercial development is the type of developments which should be encouraged. . This type of public/private economic development partnership seems will increase in the future. Both local communities and the private developers will benefit

Public/private partnerships can take many forms, but the most obvious golf course development approach is for the local government to own and finance the course while the developer controls the surrounding development. The actual financing arrangements would vary, with the terms of the project, and can be a combination of public and private sources.

A public/private partnerships is difficult achieve. Local government operates in the "fish bowl" of public scrutiny. The public sector must balance both public and private interests so as the development is not viewed as a "give away" to a developer but a “true” incentive for economic development.

We believe the best partnership is one that keeps public functions separate from private functions. We suggest the model of public ownership of the golf course with the responsibility of abutting private development left to private sector interests. The "right" developer and community are clearly critical for the successful completion of a public/private partnership. The community must want to grow, be progressive, and be willing to take some risk to enhance the community. The developer must function in the public fish bowl and be able to take and handle public criticism.