Fore! How To Convert Golf Courses

What do you get when you combine a former real estate bubble and a severe economic downturn? For some communities, the result has been a shrinking inventory of undeveloped land and a declining market of viable golf courses. Now that the economy is showing glimpses of recovery, many developers are looking at former, now fallow golf courses as potential sites for new development.

However, golf courses carry with them a unique and complex history, making their conversion and development a trap for those unaware of or unprepared for the myriad of land use, environmental, liability and public relations issues that certainly lie ahead. Here's what your company should know when developing one of these projects.

Land Use Issues

In most communities, golf courses are zoned as commercial, recreational or green, open or park space. The development of these spaces into a residential use requires a rezoning of the land. This carries with it the typical land use change obstacles of neighborhood opposition, reassessment of impacts and compatibility analysis. A conversion of a golf course, however, carries with it an extra layer of angst. Many developments were created with a golf course centerpiece, and many lots were sold with boasts of golf-course views. Neighbors will feel a sense of possessiveness toward the golf course as if its continued existence is a matter of right. Some local governments have even carried that concept into law, creating substantial burdens and restrictions upon those seeking to convert a golf course.

So what is a developer to do? A growing number of golf courses have succumbed to the bad economy of the last few years. Many of those courses have been abandoned, left to sit fallow. Neighbors accustomed to pristine views of well-manicured fairways now stare at weeds, pests and rodents. If choosing between a pristine golf course and a new residential development, who would not want the course? But when those choices are an eyesore and a new residential development, in many cases the balance shifts. While still not an easy road, today’s economic climate may at least result in a developers’ plan being objectively considered.

Environmental Issues

Perhaps the single most intimidating issue for those contemplating the conversion of a golf course is the environmental issue. With histories of arsenic and pesticide applications, and the health hazards associated with both, golf course conversions should be approached with environmental caution.

Caution should first be exercised in the due diligence phase. Keep in mind that most environmental laws impose liability for contamination on anyone in the chain of title. Therefore, it is important to know what the environmental condition of the property is before you buy it. Second, many jurisdictions impose a duty to report contamination on the owner or operator of a property. As a prospective purchaser, it is unlikely that you would be considered either. As such, you have a limited look-see opportunity before you find yourself not only in the chain of title but with a corresponding duty to report.

If contamination is found, potential liability must be analyzed not just for the assessment and any required remediation of the contamination, but also for potential liability to residential home buyers, users of the amenities, and potentially to adjacent land owners whose property may be affected by any contamination originating from the golf course.

But there is some good news. Advanced soil management techniques including soil blending and capping, risk-based tools to address soil and groundwater contamination and a myriad of institutional controls which may include deed restrictions to reduce or prevent human exposure to the contaminants can all be used not only to address but even resolve the contamination. In many instances, the use of these tools can result in the property receiving the environmental equivalent of a clean bill of health. It is imperative, however, to find environmental, engineering and construction professionals knowledgeable about and experienced in golf course projects to maximize your chances of success and minimize the costs associated with achieving that success.

Construction Costs

When pricing golf course conversion projects, it is important to consider and budget for non-traditional items such as additional public zoning hearings, disposal costs for any contaminated soils required to be removed, additional clean fill if needed to cover or cap remaining contaminated soils, specialized dewatering in the event of contaminated groundwater, and the professional fees associated with managing the increased land use and environmental compliance issues.

The good news is these projects are typically on prized pieces of land and in high-demand areas. Even with the increased costs associated with golf course concerns, many developers find the success of these projects to be worth the cost.

Public Relations

Don’t be caught flat-footed on the public relations front.  There are very bad words to be associated with new residential development, including “arsenic,” “pesticides” and “cancer.” You must, therefore, manage the process. This starts by knowing the condition of the property before you begin. Hire strong and experienced compliance professionals, make sure  regulators and public officials are kept in the loop  and keep neighbors informed. Remember, the continued use of the property as a golf course means the continued legal application of pesticides and herbicides. To convert the golf course into a new use stops that practice.

Gaining the Advantage

Overcoming common golf course obstacles takes preparation along with the right tools and the guidance of experienced professionals.  A successful conversion is dependent upon identifying the traps so they can be avoided. As more developers consider golf courses as targets for new development, the issues that can be the downfall for the unwary can give the knowledgeable developer a significant advantage.

Dawn M. Meyers is a partner with Berger Singerman LLP and manager of the firm’s government and regulatory team, concentrating her practice in the areas of government contracting, airport and port regulations, environmental and land use law, administrative law, and general governmental regulation. She can be reached at dmyers@bergersingerman.com.

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