The New York golf-tax threat of 2019 appears to have passed. The lawmakers who raised it are preparing to take another swing in 2020.
Their bill — to pave the way for much higher assessments of courses — landed with something of a thud in the state legislature, where its chances before the session ends in June are slim. They’re unbowed.
“It’s a difficult issue, partly because the members of golf courses are very prominent in their communities,” said Assemblywoman Sandy Galef, a Democrat whose district includes Trump National Golf Club Westchester. “But we’re not letting it drop.”
The debate over whether courses carry their fair weight has raged around the country for years. It pits people who see golf clubs as bastions of affluence whose tax rates starve local governments against an industry that, after decades of overdevelopment and shifting recreational habits, can reasonably argue that many courses would crumple under heftier tax burdens.
What made it bubble up in Albany was, basically, President Donald Trump.
The Trump National Club’s challenge to its assessed value helped inspire the idea that New York should allow courses to be appraised according to their “highest and best use rather than current use.”
In other words, according to what the land would be worth if it were developed into, say, a tony condo complex.
This would obviously be a pain in the wallet for course owners. As it is, Trump Organization Inc. contends its Westchester club’s assay is out of whack. The company has been appealing for a while now, saying in 2015 that the property should have been valued at about $1.4 million, or 10% of what the assessor came up with. The club’s preferred sum has increased to $7.5 million in subsequent appeals.
While it’s not unusual for a private course to make this kind of challenge, those by Trump National rankled state Senator David Carlucci — in no small part because the president has listed the asset value of the club at “over $50 million” on his federal financial disclosure forms.
“You just scratch your head,” said Carlucci, a Democrat who sponsored the bill in the upper chamber and whose district is in Westchester and Rockland counties. “I think any taxpayer in that area is saying, ‘Wait, I’m paying more in property taxes so that Donald Trump can pay less?’”
Some locals are indeed irritated. A few dozen joined Carlucci at a rally outside the club last month, chanting, “Pay Your Taxes!” The Trump Organization declined to comment.
What kind of difference might the legislation make? First off, proponents have stressed, local tax authorities wouldn’t have to do a thing if it became law; they’d just be given the option of adopting the best-use methodology. “If municipalities are concerned about assessing them this way — that this would hurt golf clubs and force them out of business — then they don’t have to do it,” Carlucci said.
If they did, though, the results could be dramatic. Take the Westchester Country Club, a former PGA Tour stop with a full market value of $37 million, according to the town of Harrison’s 2018 assessment roll. Current real estate listings put residential land in Harrison at $250,000 to $900,000 an acre. So the club’s value — in a very back-of-the-envelope estimate — could possibly increase to as much as $280 million.
Those kinds of numbers tell the backstory. “Communities feel like they’re getting a raw deal,” said Larry Hirsh, president of Golf Property Analysts.
In New York, courts have backed private-club assessments based on comparable public courses, ignoring whatever private members pay in dues and initiation fees. And the industry has many arguments for maintaining the status quo, including one about fairness.
Under the bill, “only golf courses would be singled out and subjected to the ‘highest and best’ use standard, which is now applied only to undeveloped land,” Thomas Nevin, Westchester Country Club’s chief operating officer, said in an email.
James Gaughran, a Long Island Democrat who chairs the Senate committee where the bill has been languishing, ticked off a litany of other defenses for the current-use method, including that courses drive tourism, help recharge aquifers, provide open space and are important venues for charity fundraising.
The impact probably would be greatest upstate, where fairways are abundant and golfers are not. Trey Walewski said his nine-hole Meadowbrook Golf Club in Weedsport is already struggling. The bill becoming law would be the capper. “The day it passes is the day I walk to the bank and hand them the keys.”
Charles Dorn, president of the New York State Club Association, said that by his calculation, courses might have to pay from four to 10 times more than they do today. He said that could spell the end for one in three of the state’s 250 private clubs and the jobs they provide.
The golf business has been under pressure for a while. There were were 16,693 courses in the U.S. at the end of 2018, down 8% from 2006, according to the National Golf Foundation. Americans played 434 million rounds in 2018, 4.8% fewer than a year earlier.
“Golf courses are just getting bombarded from all sides,” said Stuart Lindsay, principal at Edgehill Golf Advisors, who called it “absolute insanity” to try to come up with fair tax legislation that lumps struggling rural courses and exclusive clubs together. “If they want to make sure that golf stays a rich, old, fat, white guy’s game, they’re doing a good job.”
Galef, the assemblywoman, introduced a similar bill in 2018. This time around, the measure made it out of committee in the lower house. If in the next few weeks it doesn’t show any more progress, Galef and Carlucci will try again next year. Their goal, he said, is simply about “making sure businesses are paying their fair share of taxes.”
This article was provided by Bloomberg News.
