Case Study: HOA's $2.2-Million Golf Course Purchase Protects Home Values
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Amenities like golf courses drive up property values because of their impact on a community’s reputation. A thriving golf course can truly elevate a community – even one that is already doing well. Conversely, the ramifications of a depreciating golf course are significant. Because of its size and impact on the community at large, a deteriorating golf course can cause a community’s reputation to drop dramatically, with property values following close behind. Before this happens, associations need to plan ahead and partner with their management company on initiatives that help protect home values and improve the resident experience. The Augusta Ranch Homeowners Association saw an opportunity to partner with FirstService Residential and FirstService Financial to purchase a golf course, preventing it from becoming obsolete and protecting their property values for years to come.
Augusta Ranch is a 2,200-home master-planned community located in Mesa, Arizona, surrounded by natural landscape, including lush trees and rose gardens. FirstService Residential began managing the master association in 2003 and also manages four of the five sub-associations. The Augusta Ranch community is located near local schools, shopping and recreation. The association holds multiple events throughout the year, including an annual picnic with more than 2,000 attendees, charity events, movies and a holiday event that surrounds the golf course. Additionally, the now HOA-owned 18-hole, par 61 golf course has an exceptional reputation in the area and has been named “Best Executive Golf Course” by the Arizona Republic.
"By not intervening, the golf courses were becoming obsolete, and in turn, bringing home values down significantly."
—Kamin Havens, Community Manager, Augusta Ranch
By all accounts, Augusta Ranch Homeowners Association was not facing any immediate problems. But there was an underlying issue that had the potential to stunt the community’s future growth. With the neighboring Augusta Ranch Golf Course expected to be sold from a private equity firm (who had a 10-year contract), they knew that if a careless investor bought the golf course, they would likely face consequences. In many cases, when a golf course changes ownership, it often languishes and landscaping deteriorates, causing it to become an eyesore in the community. According to Kamin Havens, community manager for Augusta Ranch, “Based on conversations with FirstService Residential managers in other desert communities, similar master-planned communities were seeing many courses closing, which was devastating the surrounding communities.” She said, “By not intervening, the golf courses were becoming obsolete, and in turn, bringing home values down significantly.”
On the flipside, the benefits of owning an asset like a golf course are enormous. Owning such a prominent amenity can only add to an HOA’s existing reputation in the community at large. Because of the long-term benefits that come from this kind of partnership, Augusta Ranch had already established a solid relationship with the golf course, utilizing its facilities for events and board meetings on a regular basis, and in turn, paying $200,000 for a drainage easement each year. With an existing relationship in place, they needed support from their community and significant funding to make the purchase happen.
“You can’t make these kind of decisions in a bubble. You need to see what has and hasn’t worked in other markets. Having such a great network of support throughout FirstService Residential is what made those conversations possible.” —Kamin Havens, Community Manager, Augusta Ranch
With the knowledge that the golf course would be going up for sale around 2018, the board sprang into action and began to explore options in 2016. Augusta Ranch community manager Kamin and the board ultimately partnered with FirstService Residential and FirstService Financial to begin moving forward with the golf course purchase. Kamin worked closely with FirstService Residential Vice President Kirk Kowieski and spoke with several FirstService Residential-managed communities obtaining critical additional insights on what a successful purchase involves. The board then worked with CPAs and association attorneys to make sure they covered all legal details. Kamin said, “The truth is, you can’t make these kind of decisions in a bubble. You need to see what has and hasn’t worked in other markets. Having such a great network of support throughout FirstService Residential is what made those conversations possible.” The board worked in conjunction with FirstService Residential to take the following preemptive steps:
- Went door to door in the Augusta Ranch community to get a 2/3 (approximately 1,500 votes) approval vote needed to borrow the funds for the golf course purchase
- Worked with FirstService Financial Vice President Karla Chung to shop around for competitive loan rates to purchase the golf course
- Partnered with community managers, associations, vice president in Arizona, CPAs and association attorneys to get guidance with the purchasing process
By working with a team of experts, getting financial support from FirstService Financial and obtaining guidance from FirstService Residential’s network of managed properties and industry leaders, the Augusta Ranch board of directors was able to purchase the golf course on May 16, 2017. Now owned by the Augusta Ranch community, the association can protect and maintain the most visible amenity for both residents and golfers. With the guidance of FirstService Residential, the board achieved the following results:
- FirstService Financial leveraged their existing relationships with banks to help the board get approved for a 15-year loan for $2.2 million to purchase the golf course, securing a competitive rate and ensuring that they would only have to raise assessments marginally (an average of 3% to 5%)
- Community staff and board have maintained a strong partnership with the golf course manager; they continue to host many different events to benefit both Augusta Ranch residents and golfers, subsequently boosting the community’s public reputation and resident experience
- With guidance from FirstService Residential and their support network, the board continually communicated the short and long-term benefits with homeowners throughout the golf course purchase process to ensure their support, maintaining solid relationships with the community
- The Augusta Ranch board is now able to leverage the popular and award-winning golf course as a means to build their reputation in the community at large and with potential homeowners and residents. As a result, their prominence in the area continues to grow.
“While the process of purchasing our golf course took over two years to complete, FirstService Residential was by our side, making sure this process went as smoothly as possible. Kamin Havens was instrumental in keeping this project on track and updating all parties involved on the status of this project. We also utilized the services of FirstService Financial to obtain the funding for the loan. Obtaining this asset in our community would not have happened without the backing and persistence of FirstService Residential, FirstService Financial and our community manager.”
– Lisa Quedens, Board President, Augusta Ranch Homeowners Association
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