What do the Owners want our Club to be?

There are many important issues facing our club. But perhaps the most important issue is what kind of club our members want. While there are many variations on each theme, we need to choose between:

  • An exclusive upscale golf-centric community with easy access to superior golf courses and other amenities on offer. This model would have about 550-600 members.
  • A vibrant country club that offers many amenities, among which would be golf. We would have 700-750 members and would closely resemble Belfair. 

Three years ago, the Board revisited our strategy. In March 2019, there were 29 lots for sale (including 13 so-called "dollar lots") and 30 houses for sale (half of which had asking prices of less than $1 million). About 400 houses had been built in the Club. The media published article upon article about the death of the gated golf community and, indeed, the decline of golf.

Based upon those facts, the Board adopted a strategy of:

  • Controlling our destiny (i.e., buying out the developer)
  • Establishing financial stability (i.e., don't spend money you don't have)
  • Provide a superior membership experience 
To implement the strategy, the Board executed a number of actions:

  • Enter into a business deal with a developer (EDC) to build rooftops.
  • Offer an incentive program for Owners to build rooftops.
  • Move to aggressively add and upgrade amenities.
  • Offer alternative membership and usage opportunities in a manner that protected both the club's finances and reasonable access to the golf courses.
In 2020, COVID arrived. As of this morning, we had five homes for sale (including two unbuilt spec houses) and six lots. The asking price for least expensive house is $1.1 million and for the least expensive lot is $179,000. Clearly, COVID has changed the marketplace.

In 2019, there simply wasn't a demand for an exclusive upscale golf-centric community. So we defaulted to the "vibrant country club" model. Now, both options are viable. But two issues must be addressed:
  • What would be the cost of changing our strategic direction?
  • In light of that cost, what do the Owners want to do?
As much as the Board hates it (and is doing everything it can to change), under our governing documents, we're a strong member-weak Board-powerless president corporation. The Owners have the right to hire and fire Board members, the Owners have access to many corporate documents, and both changes to the covenants and large capital investments require a 2/3 supermajority vote by the Owners. Owners have the right to present issues to their fellow Owners for a vote and Owners can run for the Board without the need to be "vetted" by the insiders who comprise the Nominating Committee.

There would be two major costs associated with a change from a "vibrant country club" model to an "exclusive golf-centric club" model:
  • There are currently about 685 lots platted (of which about 565 are owned by individual Owners--the rest are delinquent or owned by the Club and largely committed to EDC). 
    • Without repeating my analysis of the membership model here, there are about 710 potential individual Owners (including about 25 IP licensees).
    • One way or another, you would need to take 135 lots out of play to get to 575 golfers. How would do you do that?
      • Acquire and retire foreclosed and delinquent lots (about 30 lots?)
      • Retire other Club-owned lots that are not committed to EDC
      • Explore alternatives with EDC to restructure that deal.
      • Increase the price discount (currently about $7,700 per year) for taking a "lifestyle" membership. There are currently about 25 lifestyle members, but that number could easily grow if you were to discount lifestyle memberships by, say $15,000, instead of $7,700.
      • Is it possible to retire 80 lots? I don't know.
      • But this would clearly be expensive.
        • But many Owners would gladly pay another $5,000 per year to have a relatively open tee sheet and readily available golf. Few Owners have indicated that they favor going down a Belfair path.
  • Sharing the fixed costs of running the club over a smaller number of Owners would result in higher dues.
    • On a scoping basis, 585 golf members, 25 IPs, and 100 lifestyle members would provide dues revenue of about $15.8 million per year
      • If 575 golf members were required to pay the same amount, their assessments would increase from $23,565 to $27,445.
        • Many Owners would take this deal in a minute. Many wouldn't. But you won't know unless you ask.
      • There would also be offsets to a smaller membership. Would you need a larger fitness center? How many dining venues would you need?
I don't pretend to have the answers, but I certainly think that the Owners should be asked what they think. Perhaps a non-binding referendum would let us know what our fellow Owners really think? None of us knows what people think until you let them vote in a secret ballot. Why not try that to see what people have to say?

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