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Sunday, May 19, 2019

The Fall of Barrington Hall


Those of you that follow my private blog already know the back story and can skip to the main portion of the article. For everyone else, this may help you understand the tone of this story.
In 2013 I was hired to do a market analysis for a developing golf course neighborhood in Hawkensville, Georgia. I knew nothing about golf, save to avoid windmills and gophers, so I had to learn about the industry before I could even begin to understand how it would impact a residential area. What I learned about the future of golf was not encouraging, but it got me thinking about the future of all golf course neighborhoods and if they were the great investment that people thought they were.
I began investigating recent golf course closures and collecting data for the purposes of creating algorithms to evaluate the risk factors for existing golf courses, particularly golf course neighborhoods. To refine my algorithms, I selected a few specific 'at-risk' golf course neighborhoods. Finally, in 2015, i settled on Macon's Barrington Hall as having the highest risk for course closure.
At first, I stayed back and watched quietly as the neighborhood's golf course closed - there was no stopping it at that point. Following the closure residents began to act much as I expected, but to an extreme. My nature got the best of me and I started to inject myself into the conversation, a little at first but I eventually became quite vocal. I still go back and forth on whether or not that was a real mistake.
Certainly, from a professional standpoint, I should have sat back and watched - but when you see a train wreck happen, and passengers desperately trying to crawl away only to look up and spot a line of new trains screaming down the tracks there is only one thing to do, right? Unfortunately, attempts to help were not well received and the trains kept piling on.

The Fall of Barrington Hall

A Brief History of America's Golf Crisis

In 1988 the National Golf Foundation (NGF) issued a challenge to developers, 'build a course a day for ten years'. This bold initiative was prompted by the 'coming of age' of the nation's baby-boomer generation (clearly golf was still considered largely to be an old man's sport). Developer's never quite met this pace (with the exception of 2000) but did manage to build over 4,000 new courses in 15 years. Unfortunately, golf demand did not keep up with supply. From 1988 to 2003 the percentage of the population that golfed went from 9.3% to 10.5% (22.7 million to 30.6 million), these figures have fallen to 7.3% (23.8 million) in 2017 and are expected to fall for the foreseeable future. As a result of this insufficient demand the number of golf courses have dropped from 16,052 in 2005 to 13,936.5 in 2017*. The number of closures is expected to increase as is the rate of closures.

Golf Course Neighborhoods and Risk Factors

Golf Course Neighborhoods (GCNs) are the highest risk facilities making up over 50% of annual closures; around 100 neighborhoods per year lose their golf course. So what are the factors for success and failure?

  • Private GCNs have the greatest chance for failure. These courses rely exclusively on residents and special events for financial support. In areas where high-end homes are few and the majority exist on such courses, these neighborhoods see an increasing number of non-golfers purchasing homes as golfers leave the community. 
  • Public GCNs have the greatest potential for revenue and are better equipped to secure market share when the economy shifts or a new course opens. Unfortunately, courses that go public make residents nervous causing some to wonder just who they are letting into their neighborhoods. Since most links share a property line with back of residential lots, players can get a more intimate view of properties without drawing much suspicion or being rushed - especially on a slow day and players opt to walk instead of relying on a cart. Club Houses have information about upcoming events and photos of active residents as well as social media pages. All the things a potential criminal could want - or so our imaginations might tell us.
  • Neighborhoods with weak or non-existent home owner associations (HOAs) or property owner associations (POAs) put their courses at risk by not being able to show a unified, centralized governing body capable of swiftly managing internal issues and communicating with course owners. Courses seeking investors or loans may find weak HOAs to be an impediment as investors interpret the lack of an HOA as a lack of interested in the course and related amenities.
  • Public opinion has a significant impact on the sustainability and resell of a neighborhood's golf course. Golf course values are tied to their residential property values. Residential  property values are tied to public perception - after all, market price is the price the market (the potential buyer) is willing to pay for a property. Because of this, the internet has more impact on property values than the property itself. Social media plays a huge role in property values because their content is indexed by internal and external search engines and lasts forever. Every negative post, every news station's exposé, every city hall meeting is immortalized in 1s and 0s and lurks a click away from destroying property values - forever.
  • Environmental factors are also a concern. When it comes to golf course neighborhoods, animals are part of the package. This includes not only the common animals such as squirrels, opossums, and raccoons but also the larger animals such as deer and coyotes that tend to be less common in urban areas as well as aquatic life such as turtles, alligators, frogs, beavers, and fish and man-made animal populations such as feral cats and wild dogs. Golf course ecosystems can be delicate, and destroying natural protection like trees and underbrush or manufactured preserves such as beaver dams, increases the chance, and size, of predators moving in.
  • Undeveloped lots collect trash, harbor pests, breed mosquitoes, and generally fail to impress. These lots remain undeveloped when economic futures are uncertain, quickly become developed when futures look promising, and get sold at a loss (or worse, publicly auctioned) when futures look bleak. After all, while residents of a GCN like to look at the course, patrons of the course like to look at the houses.
  • A significant number of investor properties can also negatively impact GCNs. More than undeveloped lots, investor properties are any property owned by someone other than the resident. Construction companies, trusts, estates, property management companies, and even private citizens are investors. Developed investor properties see more wear-and-tear than non-investor properties; uninhabited investor properties in particular see more damage as damage that goes untreated can cause further damage when owners fail to inspect properties regularly.
  • Properties being sold is a good thing. It means new owners are moving in which usually means the former owner did some repairs and the new owner does some beautification (and, likely, even more repairs). Beautiful properties with up-to-date maintenance, materials, and appliances mean properties at their peak value. (Many non-new homes are worth more than they sold for in the weeks immediately following their purchase because of the new owner's efforts.) Unfortunately, when too many properties are for sale at once it becomes noticeable, its even worse when a large portion of them are For Sale By Owner (FSBO). Markets vary, but a healthy number of homes for sale is around 3-5% of the number properties in the neighborhood per year. Beyond this threshold each additional property effectively reduces all property values by 1% per property while those properties are for sale - supply is greater than demand. Assuming that the market is healthy and homes do not stay on the market for more than 3 months that comes out to about two homes per one hundred on sale at anyone time. When you drive around a neighborhood seeing dozens of for sale signs, it begins to feel like rats abandoning a sinking ship.

Case Study: Barrington Hall (Simplified)

So how do these factors stack up when it comes to Barrington Hall? Sadly, Barrington Hall did almost everything wrong. The only thing they seemed to have gotten right was the golf course was semi-private, but even that was blemished by the fact that the golf course had seen three different owners in the last 20 years.
  • Barrington Hall had, and still has, no HOA or POA. On two occasions this has discouraged two separate potential buyers/investors of the Barrington Hall Golf Course. In addition, Barrington Hall's covenants were no-longer being managed by the covenant committee (one or two of whom were dead) and current residents had little to no idea what those covenants were. New construction was delayed and in some cases completely halted because of the poor management of covenants on the part of Barrington Hall residents. 
  • Public opinion of Barrington Hall was moderate to poor prior to the course's closing. Following the closing of the course, residents began to publicly explore actions to compel Macon-Bibb to bailout their golf course suggesting an increase in taxes and requests for SPLOST funds. This all came on the heels of the city nearly losing its entire library system, public transportation system, and recreation centers because they voted against a tax increase. Additionally, the sentencing of Quatrell Spearman and Jasmine Nicole Byrd reminds us that Barrington Hall had been the scene of an armed robbery (that involved an uzi, of all things) just one year prior. Following this, Barrington Hall residents organized a series of 'town hall' style meetings to publicly complain about golf course grass length, speeding violations, mosquito spawning areas, the prospect of the city buying the course, and at later meetings, the lives of children being in jeopardy as the neighborhood had been overrun by coyotes. The earliest of these meetings were recorded by a local news station and posted online along with articles that further dramatize the decline of Barrington Hall. Most recently, residents initiated a poorly conceived letter campaign to the District Attorney in an effort to compel him to solve their problems for them. Supposedly, this resulted in a warrant being issued for the owner of the golf course, though the grounds for this warrant are unclear.
  • One of the solutions proposed by residents at one such meeting (and continued to be pressed in public online forums) is inviting an inspector from Business Development Services (BDS) to the neighborhood for the specific purpose of declaring the golf course 'blighted'. This will open up undeveloped lots to similar inspection, potentially resulting in residential blight. Blighted taxes, in addition to not being able to be inhabited or operate as a business, must pay the seven times the normal tax rate until they are 'brought up to code', a process that could take years. Neighboring properties, such as virtually all Barrington Hall residential properties in the case of the golf course, would experience a 15-40% decline in property value should a property be declared blighted. Following this first meeting, several undeveloped lots were put up for sale and several were auctioned off.
  • At one point the owner of the golf course attempted raise revenue to maintain the grounds by leasing the club house to an event coordinator. Sadly, the community did not support these efforts, complaining, as one resident put it (and numerous others silently supported) there are plenty of other places for a 'dance and juke club'. This incredibly racist sentiment went (virtually) unchallenged and even receive positive responses from numerous members of the community - all stated on a public forum online.
  • Shortly after destroying a beaver dam Barrington Hall faced the obvious and predictable consequence, a spike in coyote incursions into the neighborhood. Beaver dams create natural watering holes that act as a shield for certain aquatic life. These still waters: give mosquitoes a place to breed where their young will be quickly consumed by fish and birds thus reducing mosquito populations; discourage larger prey (and therefore their predators) such as deer as they avoid drinking stagnant water; and give smaller predators such as raccoons, cats, and opossums a place to congregate for food (such frogs and fish fattened by mosquitoes). So when these dams were destroyed, and the water began to flow again, deer returned to the course, smaller animals were without a safe harbor for food and water and coyotes took advantage of these easy pickings and then stayed to eat residents' pets.
  • Investor properties remain as high as 35% of all Barrington Hall properties, a number that is not uncommon or particularly unhealthy on its own. Unfortunately, with the decline in property values many of these investors will face hard times selling these properties. Some investors may elect to forfeit properties leading to even more auctioned lots. Developed properties will see a decline in rental revenue and have a negative impact on property maintenance.  
  • When a boat begins to sink the rats abandon ship. Similarly, when a neighborhood begins to decline the realtors list those investment properties. In October of 2016, Donna Bass quickly sold 100 Fosters Green. Shortly there after the number of properties available for purchase jumped from around a dozen (in an area with less than 500 residential properties) to two and half dozen. Making matters worse, many if not most of these properties were FSBOs with signs cluttering the main road where brokerage signs tethered to failing balloons all but became permanent fixtures. During the recent holiday season, I was able to count over 30 properties for sale in any given month with a shift of less than 6 properties from month to month with only half of those leaving the market as the result of a purchase. Many of these properties are converting to rental properties, increasing the investor percentage, contributing to the lower standards of maintenance, and eroding property values.
  • Shortly before the posting of this article one of Barrington Hall's resident criminals, Hershel Smith, held an illegal gathering on the golf course that included multiple felonies.

Turning It Around

It is well within the realm of possibility for the residents of Barrington Hall to turn things around. Barrington Hall residents will have to come together on paper by forming an HOA/POA or equivalent organization to manage with 'haste and devotion' the property that is currently a failed golf course as well as promote the development of the undeveloped properties within the neighborhood. The media faux pas will have to come to an end and the existing content will have to be buried by more positive content that paints Barrington Hall in a better light. Barrington Hall residents will need to stop viewing the owner of the golf course as an enemy and accept their own responsibility in their current state of affairs. Pets will need to be regulated to prevent future coyote incursions and the ever growing feral cat colonies. Real estate professionals will need to be presented with evidence of the changes made to Barrington Hall - such as an open house for realtors hosted by the HOA/POA. 

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