Golf Course Communities' Double Bogey

John Shields, a past president of the National Golf Course Owners Association and current president of the Glenn Dale Golf Club in Glenn Dale, says his business is off 10 percent this year. He drives to competing golf courses from time to time, counting the number of cars in their parking lots. His club, he said, is on the losing end. He is trying to sell his property to a developer.

"My family and I have owned it for 50 years," said Shields, who said operating costs -- labor, fertilizer, irrigation, fuel for lawnmowers -- have been rising, along with competition. "It's just too difficult to earn a dollar."

He is not alone. By year's end, the owners of Beechtree Golf Course in Aberdeen plan to close it and redevelop it as a community of 735 new homes. At Hillendale Country Club in Baltimore County, members worried about the slowing economy put off a $2.7 million upgrade last year. There are no current conversations about when that might happen, club officials said.

And last summer, two pension funds bought the Leesburg-area Beacon Hill golf course at auction. They would like to sell it for redevelopment by the end of the year, according to Joseph Mayes, an attorney for the funds. But, he said, "we recognize that it's not a particularly good market at this point."

The appetite for land used by golf courses has decreased, said Global Golf Advisors' DeLozier.

"Most of the golf courses being closed and repurposed were being acquired by developers or large-volume home builders," DeLozier said. "Clearly, those folks are now on the sideline. So the elimination of golf courses we saw in 2005-6-7 has slowed because the capital market does not have an appetite."

Jack Kay, whose family has owned, developed and operated golf courses in the Washington region since 1938, closed the last one, Indian Springs in Silver Spring, two years ago, and is in the process of selling it to a developer.

"I wouldn't want to be opening up a new golf course right now," he said, noting that home builders' troubles are making life even more difficult for developers. Developers generally map out a project, sell lots to a builder, construct the golf course and then either sell it to a company that operates courses or turn it over to homeowners. That generally doesn't happen, however, until a development is well underway or completed, industry officials said.

Last Monday, one of Oak Creek's builders, Carl C. Icahn's WCI Communities, filed for Chapter 11 bankruptcy protection. It had completed several houses and a model home in Oak Creek but had not sold them all. Montgomery said he will find another builder to replace WCI, which did not return phone calls seeking comment.

"We have enough sales to offset our debt and make a little bit of profit," said Montgomery, who said that about 350 of 1,200 homes have been sold. About 50 of 400 or so club memberships have been sold, and the pace has been slower than Montgomery says he would like. "It isn't like it's coming to an end; it's just not a very good market," he said.