Closing an Arizona golf course brings tax penalties, angry homeowners
The glory days
Thirty years ago, Robert “Doc” Graves glanced confidently at the white ball by his feet. Whack! The ball flew more than 300 yards, landing neatly on the green. Graves had four eagles that day and he set the course record at the Ahwatukee Lakes Golf Course in Phoenix. Forty-nine strokes, 11 under par.
Back then, Graves played golf all over the world, and he believed the Ahwatukee Lakes course was one of the top 10 executive golf courses in America.
The course was meticulously maintained – a velvety smooth expanse of green grass trimmed one-twentieth of an inch each day. The sand traps were carefully raked.
Today it’s a trashy, weedy wasteland, the victim of demographic shifts, climate change and prohibitively expensive water bills.
The once pristine, emerald lawns are crisp and brown. Kick the sand traps and you might bruise a toe.
“If you go to a movie, you don’t want to sit on a chair full of gum and trash, that’s the way golf courses are too,” Graves, now 84 and a retired chiropractor, says.
Doc Graves comes from a generation that views golf as a gentleman’s game and a status symbol. He began playing golf as a kid during the Depression when he caddied at a St. Louis country club for golf icons Ben Hogan, Gene Sarazen and Vic Ghezzi. He never wanted to go pro, choosing a reliable career instead. But he was an avid amateur golfer.
A tall man with thinning white hair, blue eyes and an easy smile, he still loves golf, but the game is now too strenuous for him. So, instead, Graves serves as a PGA and U.S. Golf Association rules official at tournaments around Arizona.
And it saddens him that his beloved Ahwatukee Lakes course is no longer available for tournaments. He blames mismanagement for the demise of the course. Remembering the glory days of Ahwatukee Lakes, he calls the golf course’s shabby state “pitiful.”
‘Stay away from golf!’
The saga of the Ahwatukee Lakes golf course is not an isolated story in the Phoenix metro area. Owners of three Wigwam resort golf courses in April proposed to shutter about 40 acres and convert it to housing. But, after the city of Litchfield Park was “not receptive” to the development plan, the owners now propose developing about 7 acres of golf course property, said Tom O’Malley, the chief operating officer of JDM Partners, which owns the resort.
In addition, the city of Phoenix is struggling with what to do with its money-losing municipal golf courses.
Recently, the Urban Land Institute warned developers to “stay away from golf.”
That’s because golf’s popularity as a sport has declined for almost a decade. More courses have closed than opened for eight years, according to the National Golf Foundation. A 2013 study by the foundation notes the industry lost 4.7 million golfers since 2005. “Many people believe that golf has a problem attracting new blood to the game, but the truth is golf has a retention problem – we’re losing more people than we are gaining,” the study says.
Here’s why: Golf’s most ardent devotees, members of the Silent Generation, are dying out. Many baby boomers can’t afford golf and don’t like it much anyway. Millenials care even less about golf than boomers.
Phoenix is no exception to the national industry trend. If anything, Phoenix has it worse than other metropolitan areas the same size. Maricopa County alone has more than 220 golf courses. The reason: Builders used golf courses as sales gimmicks for their housing developments. “Just in the last 30 years the number of golf courses has doubled, maybe tripled and primarily because of residential development,” says Dale Larsen, a former director for the Phoenix Parks and Recreation Department who now teaches at Arizona State University.
“I don’t think there’s any dispute that we have more golf courses than we have golfers to supply them ….The sport itself is in a funk,” he says.
The Valley, with nearly 300 days of annual sunshine, cheap land and a propensity for attracting golf-loving retirees from colder states, turned into a golf mecca.
Add climate change to the mix and golf’s challenges worsen in the southwest. Phoenix-area course owners are faced with decreasing revenues and increasing water bills that can soar to $1 million yearly per golf course, in hot dry months.
But if they close their courses to save water and money, owners can be hit with enormous tax bills in Maricopa County.
Million-dollar water bills
Just ask Wilson Gee, owner of the Ahwatukee Lakes course. Gee let the course go fallow because the water bills were too high. Then he became embroiled in a years-long ongoing dispute with angry homeowners who’d paid premium lot prices to face the golf course. Gee wants to convert the dead golf course into homes, and the homeowners are threatening to sue him.
He says the course lost money for five years. “When the cost of water gets up to $1 million per year, 30 to 40 percent of revenue goes toward water. It’s impossible to keep it open,” he says.
What’s more, Gee recently got slapped with a tax bill from Maricopa County for closing the course. Gee owes $1.6 million in back taxes, according to the Maricopa County Assessor’s Office.
That’s thanks to a 1985 statute that gives a golf course owner a tax break of $500 per acre each year as long as the golf course operates as a golf course. If the owner takes the tax break and closes the course, he or she must pay 10 years of the tax break plus interest and a penalty.
Gee won’t comment on his tax situation.
But he has more headaches than just the Ahwatukee Lakes course. His other golf courses aren’t faring as well as he would like. Three of the golf courses are breaking even, while the fourth, Club West, is losing money like the Ahwatukee Lakes.
“When you look at the business end, it’s very difficult. Sometimes we’re cutting our own throat just to survive, so everyone is dropping prices,” Gee says.
For now, Gee says he just wants to sell his dead golf course property. He’s sympathetic to the residents’ anger, but to him the golf industry isn’t viable anymore.
“There are one too many golf courses in Phoenix,” he says. The Ahwatukee Lakes course, he notes, “can’t be a golf course. It will never be a golf course again.”
Climatologists expect the Southwest to get hotter and drier over the long term. This will impact limited water supplies already stressed by population growth. Arizona’s current population of 6.6 million is expected to top 11.5 million by 2050, according to the Arizona Department of Administration Office of Employment & Population Statistics.
In the Valley, during the summer, when temperatures can reach upwards of 115 degrees Fahrenheit, golf courses use 1 million gallons of water per day. That water could be used for 9,000 residents for an entire year based on current per capita water usage rates in Phoenix. In the winter, desert golf courses use about 250,000 to 350,000 gallons of water per day. Most golf courses in Phoenix use effluent – recycled water that has been treated but is not potable – but scientists say in theory that water could be cleaned up enough for human use.
If worse comes to worst.
Phoenix has learned to cut down on water, and city officials predict renewable water supplies will last 100 years. However, the prediction is just that – a prediction. The 2011 City of Phoenix Water Resource Plan warns that sustainable water supply predictions were made for “non-shortage” conditions. So, an interesting paradigm emerges when you ask researchers and climate scientists about water in the desert.
“We’re in a desert area, and water conservation is very important,” says Soe Myint, a professor in the School of Geographical Sciences and Urban Planning at ASU. “The water use is getting higher and higher because population is ever growing forever. There’s no such thing as population decline. It is always going up and up.”
But some of the problems associated with development and water use in Arizona have to do with perception and the way water laws were written. Any Colorado River water Arizona doesn’t use, California gets to keep, says Dara Wald, a postdoctoral fellow in the Center for Policy Informatics at ASU. So city planners have no qualms about making Phoenix an oasis in the Sonoran Desert. “People who moved here were pioneers who were coming to make things grow in the desert. And that underlying perception is still an important part of policy today: that we can make the desert bloom. That goes to the golf courses, that goes to the pools, that goes to the idea that those are accomplishments,” Wald says.
“I would say it’s past time for us to think a little bit more holistically about this. More golf courses: That is not essential to life,” says Sandy Bahr, director of the Sierra Club’s Grand Canyon chapter. “If we’re really going to think about water for the future and water for something other than development, we need to be conserving more.”
Some argue that golf courses in a desert city are more environmentally sustainable than some options to replace them. The bulk of water demand in Phoenix comes from residential use. Residents use 66 percent of Phoenix’ total water while golf courses use only two percent, according to the 2011 Water Resource Plan.
Many golf course managers say they go to great extents to make sure water is never wasted on the course. The “science” of watering a golf course means that many courses now use drought-resistant grass coupled with wetting agents that hold the water in the root zone longer. Many course managers also calculate exactly how much water is needed to sustain the grass, so the grass is never over watered.
Plus, Phoenix, like many cities, suffers from the urban heat island effect. That’s a phenomenon in which cities become hotter than their surrounding landscape due to dark, manmade surfaces like asphalt that soak up heat, says Matei Georgescu, a professor in the School of Geographical Sciences and Urban Planning at ASU. On average at night, downtown Phoenix can be six degrees hotter than the surrounding desert, Georgescu says.
Golf courses and other green landscapes like public parks help cool surrounding areas.
Whether it’s for cooler temperatures, the view, the peaceful atmosphere, or for the love of the game, some Valley residents have long paid high premiums—sometimes into the millions of dollars—to live next to a golf course. This presents a thorny legal problem: Residents lose their real estate value if the golf courses they paid to live by are shuttered and redeveloped.
The closure of the Ahwatukee Lakes golf course sheds light on the complicated legal issues. In this case, disgruntled homeowners who paid to live next to a golf course say they might seek solutions in court.
Barbed wire and weeds
Ben Holt, 74, steps onto Hole 12 on what’s left of the Ahwatukee Lakes Golf Course wearing a faded red T-shirt that reads “Minnesota” in large font, jean shorts, running shoes and a baseball cap. Holt’s white Westie, Skye, follows him through the gate that leads from his backyard to the golf course. Skye sniffs around the weeds and pees on what used to be a green. Holt kicks the dirt next to Skye. Holt has lived on the Ahwatukee Lakes golf course since 1998. He played there three times a week with 11 golfing buddies. Now the golf course is dead.
Jeff Hall, who lives on Hole 2, walks with Holt. Hall is a 58-year-old realtor and a member of Save the Lakes, a non-profit neighborhood organization dedicated to saving the golf course. The two men gesture first to the brown grass and weeds and then to the dead trees. They shake their heads. A large green dumpster, the kind big enough to fit on the bed of a semi-truck, is filled with 60 dead trees that have been felled from the property. Broken ball retrievers and trash litter the landscape, a stark reminder that not all investments pay off. Barbed wire fences ring the lakes.
What was once the finest golf course in the state is an eyesore, Hall and Holt say, and they’re furious.
The Ahwatukee Lakes Golf Club closed in May 2013, but the fight over its fate has been going on for much longer than that. Gee, a California real estate investor, purchased the property in 2006 along with the four other golf courses. At the time, Gee says he didn’t realize the golf industry was struggling. By 2008, Gee had started talking to residents about redeveloping the Ahwatukee Lakes golf course. It was the height of the recession, and decreased playtime coupled with increased water costs pushed the Ahwatukee Lakes golf course over the edge.
Gee went through a number of redevelopment plans with the residents: build apartments on the land, build luxury condominiums, build single-family homes, give Save the Lakes half the golf course to keep and redevelop the other half into anything else. Save the Lakes turned down each proposal. That’s not the deal they signed when they purchased their homes.
Holt, the president of Save the Lakes, is determined to keep the Ahwatukee Lakes golf course a golf course. He has a 4-inch binder stuffed with land deeds, city zoning restrictions, maps, phone numbers, and purchasing agreements. Every week, the 130 members of Save the Lakes meet to discuss what’s happening to the golf course adjacent to their property. There are 80 additional neighbors on standby ready to donate money whenever the big call comes. The cause: a lawsuit to prevent Wilson Gee from redeveloping the desiccated land that was once a golf course.
In the late 1970s when the Ahwatukee Lakes golf course and surrounding housing developments were first developed, advertisements boasted “Everything you came to Arizona for is all right here at Ahwatukee: single family homes, custom home sites, villas…(and) two 18-hole golf courses.” The members of Save the Lakes bought into the vision that their neighborhood would be a lasting investment. Their organization is determined to preserve that broken vision.
“This is information they put out early on when the golf course was first opened telling people that this was going to be ‘Today And For Years To Come,'” Holt says. “All these people paid a premium for these lots because they were on a golf course.” The neighbors don’t want to lose their open space, he says. They don’t want to lose the migratory birds that stop by each year or the 400 yards that separate houses on the golf course. They like their view, and they like their breathing room.
The Ahwatukee Lakes land is zoned specifically for a golf course or golf-related activities like a driving range, according to the Covenants, Conditions and Restrictions the city placed on the land when it was developed. Gee can only rezone the land if 51 percent of the 5,200 surrounding households agree to it, he says.
“I don’t blame the residents. They live there,” Gee says. “But I have to be more pragmatic. In the last five years, I’ve been losing money on the Ahwatukee Lakes Golf Course.”
A housing development company, PulteGroup Inc., has stepped up to tackle the Ahwatukee Lakes golf course. They will only purchase the property from Gee if the land is successfully rezoned. Pulte is responsible for gathering homeowner signatures required to amend the deed so that homes can be built on the golf course.
Holt is confident the golf course will remain a golf course. “We believe that we have enough petition signatures in our possession right now that there’s no way they can get 51 percent of the remaining eligible voters,” he says.
On a warm morning, Doc Graves steers his golf cart as it barrels over the rocky terrain surrounding the fairway of hole one at the Aguila Golf Course. As a rules official, he’s helping an unlucky golfer at the Arizona Pub Links Championship tournament who’d hit his ball out of bounds, and has five minutes to find it.
Graves is a familiar sight on Valley greens, and no one seems to care about his disregard for signs that say “Keep carts on path.” He drives his golf cart off the sidewalk, into the dirt, up a rocky hill and down the other side. Three golfers, including the one who lost his ball, and another rules official walk toward Graves. They use their golf clubs to prod the bushes. There are hundreds of golf balls scattered on the ground.
Graves stops the golf cart. With a certainty that can only come from experience, he asks if the missing golf ball is a Titleist brand ball. The golfer says yes, and Graves points to it on the ground.
Then it’s back to business.
Graves maneuvers his golf cart over rocks and between trees and onto the green. His coffee sloshes over the rim of its cup. A roadrunner darts out of the way of the careening cart.
Even Doc Graves recognizes that the Valley’s golf industry has its problems. He believes developers “really overbuilt” golf courses in the 80s and 90s, and now some are going broke. But Graves is an optimist, and says the golf industry will bounce back. He sees more players on the greens now than he did a few years ago.
He can’t play golf anymore, but he’s found the next best thing. At least he can still get out on the green and close to the game by refereeing. He plans on being a ref, he says, “until the day they put me in the ground.”