Tee Party: Top Private Clubs Tax and
Spend Their Way to Stable Futures

Take a poll of southern golf community residents and you will find many more fiscal conservatives than you will progressives. But when it comes to the health and welfare of their own country clubs, and the effect of the perceived quality of their golf courses on their personal real estate values, club members seem willing to spend millions of dollars for course renovations, and to tax themselves to pay for the upgrades. Irony aside, couples concerned about the stability of a private club they might join should consider how invested –- literally and figuratively –- that club’s members are in its future.

Three communities vote with their pocketbooks
It seems that in the Low Country of South Carolina especially, renovation fever has taken hold since just before the 2008 recession. Located within about an hour’s stretch of each other, club members at Haig Point on Daufuskie Island, Callawassie Island Club in Okatie and the Dataw Island Club near Beaufort voted for millions of dollars in renovations to their golf courses and adjacent facilities over the last five years. The work has now almost been completed. (Dataw Island will renovate its Arthur Hills designed Morgan River course next year after completing the Tom Fazio Cotton Dike course in the next few weeks.) At Haig Point, the $11 million in changes included a beach club and new dining facility overlooking the Calibogue Sound and Hilton Head across the water, plus an entire new irrigation system for the 29 holes on the 20-year old Rees Jones layout. (No misprint; Jones designed two extra holes.) Callawassie spent $4 million restoring its 27 holes of Tom Fazio golf to their original contours after greens had shrunk and bunkers had receded from the greens. As at Haig Point, the bulk of work at Callawassie and Dataw was to modernize the irrigation systems.
Few members at either of the clubs argued against the necessity of the upgrades, and the votes were overwhelmingly in favor of authorizing and paying for the renovations (81% at Dataw, for example, according to General Manager Ted Bartlett, in a vote taken well after the 2008 recession began). The relatively few outliers tended to be those part-time residents who did not use the golf courses more than a few times a year, plus a few lot owners -– some of them misbegotten speculators -- with no reason to pay additionally for a club membership they don’t use.

The grass is greener...now
Haig, Callawassie and Dataw were all opened in the span of a year in the mid 1980s. Like the roof on a house that needs replacing every 20 years or so, the irrigation systems at all three clubs were not up to their tasks anymore.

“We couldn’t grow grass off the fairways,” says Haig Point ‘s Treasurer Jack Hill, “because of shading on our heavily wooded island and because the irrigation line in the middle of the fairway didn’t reach the rough.” A large chunk of the $5 million renovation took care of that with removal of thousands of trees and the installation of new irrigation lines down the edges of the fairways; the spray now reaches both the short and long grass. From my recent round at Haig Point, I can testify that the Bermuda rough is lush and, if the superintendent is feeling feisty, penal.

At Dataw Island, GM Bartlett says the club faced similar watering issues but that members who no longer used the golf course and those expecting to give up golf in the next few years questioned the wisdom of investing during a rough economy.

"Our answers," says Bartlett, "were that we had to continue to invest in our infrastructure to remain an attractive and desirable destination, and that we really had no choice. The fittings on the irrigation system had begun popping. Since the irrigation main lines ran down the middle of the fairways, that meant we had to interrupt play to fix them. After 25 years, it was only going to get worse." Dataw's new system is a little different than Haig Point's in that it runs outside both edges of the fairway, with horizontal lines into the fairways. The larger problems in the future will likely pop up just outside the field of play.

And while you're at it, how about an even better golf course?

The irrigation work made it feasible for the clubs to call in architects to renovate the layouts as well. Haig officials asked Rees Jones to update the layout there. When Jones had first designed the course in 1986, he added a number of fairway moguls that were in vogue at the time, the kinds of excess touches popularized by Pete Dye. But with an abundance of live oaks with their overhanging branches, strategically placed fairway bunkers, and that gnarly Bermuda rough, the Haig Point course offers plenty of challenges. (And what golfer appreciates being penalized with a sidehill lie after hitting the ball in the fairway off the tee?) Away went the moguls. The course I played in early August is much sleeker and cleaner looking than the one I played in 2006, no doubt a consequence not only of the mogul elimination, but also of an estimated 4,000 trees having been removed to promote better air circulation and grass growth.
Although most of the $5.4 million that members authorized at Dataw Island went toward the new irrigation system, it also paid for hardier grasses for all 36 greens, new grass on all tee boxes and many other tweaks to bunkers and greens on both courses. Billy Fuller, the former Augusta National superintendent, supervised the work.

"Over time," says Ted Bartlett, "our greens had shrunk a bit and the bunkers had pulled back from the greens. You would hit a shot over a greenside bunker that you thought was on the green, and it wound up in rough between the two." The work on both Dataw courses will restore all greens to their original sizes, although a few will also be re-contoured slightly to eliminate some hard spots that made holding shots near impossible.
I revisited Callawassie as well in recent weeks and played the Magnolia and Dogwood courses; the Dogwood was the last nine holes of the 27 to undergo renovation (they were closed in March 2009 during my first visit). Arguably the most popular and challenging of the three nines at Callawassie, the Dogwood plays out along the expansive marshes that surround the island. It is the equal of most any nine-hole stretch anywhere in the golf-rich Low Country of South Carolina; the heat and salt-air-resistant miniVerde grasses that had been planted on its greens showed no compromises in terms of putting speed or receptiveness to approach shots. The greens were as fast and smooth as those at Haig Point, the only two courses I have played this summer that putted as if it were fall.

Members pony up to remain competitive

The projects at the three golf clubs were financed in different ways. Haig Point’s 450 members were assessed a one-time fee of $9,000 each; the balance of the costs to renovate the course and build the beachside dining facility was financed by a 15-year loan collateralized by the newest ferry in Haig Point’s four-boat fleet. The current remaining balance is around $2 million. At Dataw, members authorized a dues increase of $115 per month in order to service the bank loan over an estimated 16 years; the members understand that, essentially, the dues increase is permanent. At Callawassie, members opted to pay $100 per month in extra dues until 2018 to cover their loan.
The decisions by members at all these clubs have short and long-term consequences. In the short term, an upgrade to the golf courses makes these communities more attractive to baby boomers who are looking either to duplicate the private club experience of their prior years or to finally put themselves in a position of membership they might not have had time for during decades of hard work and family raising. (Note: Dataw has added 48 members to its roster this year, although it has lost a like amount; still, 48 members in this economy seems to validate the decision to upgrade the courses.) The renovations also maintain each club’s competitiveness with the others in terms of attracting new residents and members; indeed, Ted Bartlett at Dataw indicates that the decision at Callawassie to renovate its golf courses was a key driver in Dataw members deciding to renovate theirs. In the long term, the upgraded facilities also help retain members whose dues, after all, are the sustaining commerce of club survival.

A strong signal to those looking for a private golf community
Couples looking for a private golf community in the southeast should consider the level of investments club members are willing to make in their facilities. All things being equal, a club owned by its members is less likely to walk away from its commitments to the health of the club than is an owner or, certainly in these times, a cash-strapped developer. Members of clubs like Haig Point, Callawassie and Dataw and a number of others we could feature understand the perils of deferred maintenance and the indirect effects of a languishing golf course on the value of the surrounding real estate. Sure, there is always the risk that a generally well-heeled membership could go wild with unnecessarily lavish additions to clubhouse and other facilities, forcing more conservative members to pay the freight too; but the last few years have sobered up all but the most self-aggrandizing club memberships, and unnecessary expenses have little chance of proposal in member-owned clubs, let alone a majority vote.

The willingness of private golf community residents to work together to make tough financial decisions that secure the future of their clubs is an attractive feature of private golf community living, and a model that members of other institutions might consider emulating. Perhaps Speaker Boehner and President Obama should hold their next golf outing with a few members at Haig Point, Callwassie or Dataw. The politicians might learn something about when to hold 'em, when to fold 'em, and when to invest.