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Home My WebLink About20163532.tiffRESOLUTION RE: APPROVE PETITION FOR ABATEMENT OR REFUND OF TAXES - COLORADO NATIONAL GOLF CLUB, LLC WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to Colorado statute and the Weld County Home Rule Charter, is vested with the authority of administering the affairs of Weld County, Colorado, and WHEREAS, the Board of County Commissioners of Weld County, State of Colorado, at a duly and lawfully called regular meeting held on the 16th day of November, 2016, at which meeting there were present the following members: Chair Mike Freeman, and Commissioners Sean P. Conway, Julie A. Cozad, Barbara Kirkmeyer, and Steve Moreno, and WHEREAS, notice of such meeting and an opportunity to be present has been given to the taxpayer and the Assessor of said County, with said Assessor, Christopher Woodruff, being present, and taxpayer, Colorado National Golf Club, LLC, being present, it was decided to continue this matter to November 16, 2016 to allow the applicant time to review the petition, and WHEREAS, on November 16, 2016, the Board of County Commissioners has carefully considered the attached petition, and is fully advised in relation thereto. NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld County, Colorado, that the Board concurs with the recommendation of the Assessor and the petition be and hereby is, approved, and an abatement or refund be allowed as follows: CORRECTION TO ASSESSED TAX YEAR ABATEMENT VALUATION OR REFUND $870,000.00 $23,298.33 2014 c.G=Ca.CcreoH) G5RC OK/C.ct./ceW Gr C -'PL/ G -P Pta, Rue It /30! lro 2016-3532 AS0093 TAX ABATEMENT PETITION — COLORADO NATIONAL GOLF CLUB, LLC PAGE 2 The above and foregoing Resolution was, on motion duly made and seconded, adopted by the following vote on the 16th day of November, A.D., 2016. BOARD OF COUNTY COMMISSIONERS WELD COUNTY, COLORADO ATTEST: ditAtiV ' vi Mike Freeman, Freeman, Chair Weld County Clerk to the Board ou y Attorney Steve Moreno Date of signature: I l/ I �ZS'f ( 2016-3532 AS0093 bd, t b - 00 (p PETITION FOR ABATEMENT OR REFUND OF TAXER E C E County: WELD Section I: Petitioner, please complete Section I only. Date: May 23, 2016 ED Date Received (Use Assessor's or Commissioners' Da 1" p)2 6 2016 WELD COUNTY ASSESSOR GREELEY, COLORADO Month Day Year Petitioners Name. Catalyst Property Tax Consultants, LLC �j lro M40J 6�1 0110 Petitioner's Mailing Address: 291 Arapahoe Avenue Boulder CO 80302 City or Town SCHEDULE OR PARCEL NUMBER(S) RE194 6fra 2700 Vista Parkway Erie, CO State Zip Code PROPERTY ADDRESS OR LEGAL DESCRIPTION OF PROPERTY Petitioner requests an abatement or refund of the appropriate taxes and states that the taxes assessed against the above property for the property tax year ?014 are incorrect for the following reasons: (Briefly describe why the taxes have been levied erroneously or illegally, whether due to erroneous valuation, irregularity in levying, clerical error, or overvaluation. Attach additional sheets if necessary.) Income approach most applicable method of valuation for a going concern business. Additionally, the personal property and BEV/Intangible needs to be removed from the going -concern value to arrive and the value for the land a Petitioner's estimate of value: $ 2,155,955 ( 2014 ) Value Year I declare, under penalty of perjury in the second degree, that this petition, together with a . . = ying exhibits or statements, has been prepared or examined by me, and to the best of my knowledge, information, and belief, is true, correct, and complete. Petitioner's Signature Daytime Phone Number ( Email By / Daytime Phone Number (720 ) '? dig _ 3z5 Email ent's Signatti "Letter of agency must be aVached when petition is submitted by an agent. If the Board of County Commissioners, pursuant to § 39-10-114(1), C.R.S., or the Property Tax Administrator, pursuant to § 39-2-116, C.R S denies the petition for refund or abatement of taxes in whole or in part, the Petitioner may appeal to the Board of Assessment Appeals pursuant to the provisions of § 39-2-125. C.R.S., within thirty days of the entry of any such decision, § 39-10-114.5(1), C.R.S Section II: I Assessor's Recommendation (For Assessor's Use Only) Tax Year 2 0I Actual Assessed Tax Original 43-1)°i7e° 1./C1 1(°441° / k3, i rt !, 3 boo ©00 p pop i scp ?le?, ' corrected , 1 t'4 , , 4:,,,,t o c �'w'' a t?, . Abate/Refund _.. Assessor recommends approval as outlined above. If the request for abatement is based upon the grounds of overvaluation, no abatement or refund of taxes shall be made if an objection or protest to such valuation has been filed and a Notice of Determination has been mailed to the taxpayer, § 39-10-114(1)(a)(!)(D), C R.S. i` Tax year: /103 Protest? %No ❑ Yes (If a protest was filed, please attach a copy of the NOD.) Assessor recommends denial for the following reason(s): 15•DP r -AR No. 920-66/15 G Assessor's or Deputy Assessor's Sigure :'A.: i»Y.0.*ON4V /:..:' '::!WS:):'SLf»:il4Y/rfL6A9M 6%'f9% -at :#n tv/x.r. %Yaw.Aa..y:*n:_:.ole:`A:N,[%:T.%MKt.Y:4HN.C%fl • 2016-3532 FOR ASSESSORS AND COUNTY COMMISSIONERS USE ONLY (Section III or Section IV must be completed) Every petition for abatement or refund filed pursuant to § 39-10-114, C.R.S. shall be acted upon pursuant to the provisions of this section by the Board of County Commissioners or the Assessor, as appropriate, within six months of the date of filing such petition, § 39-1-113(1.7), C.R.S. Section III: Written Mutual Agreement of Assessor and Petitioner (Only for abatements up to $10,000) The Commissioners of County authorize the Assessor by Resolution No. to review petitions for abatement or refund and to settle by written mutual agreement any such petition for abatement or refund in an amount of $10,000 or less per tract, parcel, or lot of land or per schedule of personal property. in accordance with § 39-1-113(1.5), C.R.S. The Assessor and Petitioner mutually agree to the values and tax abatementlrefund of: Tax Year Actual Original Corrected Abate/Refund Assessed Tax Note: The total tax amount does not include accrued interest, penalties, and fees associated with late and/or delinquent tax payments, if applicable. Please contact the County Treasurer for full payment information. Petitioner's Signature Date Assessor's or Deputy Assessor's Signature Date Section Iv: Decision of the County Commissioners (Must be completed if Section III does not apply) WHEREAS, the County Commissioners of GO Q I CJ County, State of Colorado, at a duly and lawfully called regular meeting held on I I I i (O / (Co , at which meeting there were present the following members: Month Day Year COMMA .CANct; Kt, Ff. e . Covwvi.'s Sean rontt) , e Cozad , Q,n.r horo►i K i r ts , o%.n d S -fev's- with notice of such meeting and an opportunity to be present h ving been given to the Petitioner and the Assessor of said County and Assessor ale\ ri s to pint_' UJ o o ci ro ('Fybeing present --not present) and Name Petitioner CO f GZ4' ( C Q IF' Club (being present --not present), and WHEREAS, the said Name County Commissioners have carefully considered the within petition, and are fully advised in relation thereto, NOW BE IT RESOLVED that the Board (agrees --does not agree) with the recommendation of the Assessor, and that the petition be (appard--approved in part --denied) with an abatement/refund as follows: aoiH gio.000.00 a3,ags:33 Year Assessed Value Taxes Abate/Refund Chairperson of the Board of County Commissioners' Signature I, toe a, . ReAvvr-1 County Clerk and Ex -Officio Clerk of the Board of County Commissioners in and for the aforementioned county, do hereby certify that the above and foregoing order is truly copied from the record of the proceedings of the Board of County Commissioners. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said County this (C day of fl oVe brter 1 90 tD Month Year Clerk's or Deputy County Cl(Zusarle. Signature Note: Abatements greater than $10,000 per schedule, per year, must be submitted in duplicate to the Property Tax Administrator for review. Section V: Action of the Property Tax Administrator (For all abatements greater than $10,000) The(action of the Board of County Commissioners, relative to this petition, is hereb Approved ■ Approved in part $ ■ De for the fo jiw g reason(s): to 's Signatbre 15-D PT -AR No 920-66/15 Pro �' y� -x Administrators Signature ate BOARD OF ASSESSMENT APPEALS STATE OF COLORADO Docket Number 69023 Single County Schedule Number R8942769 STIPULATION (As To Appeal for Tax Year 2016) Colorado National Golf CLub HQ LLC, Petitioner(s), vs. Weld COUNTY BOARD OF EQUALIZATION, Respondent. Petitioner (s) and Respondent hereby enter into this Stipulation regarding the tax year 2016 valuation of the subject property, and jointly move the Board of Assessment Appeals to enter its order based on this Stipulation. Petitioner (s) and Respondent agree and stipulate as follows: 1. The property subject to this Stipulation is described as: TRACT7A&7B&8&9& 10A& 10B& 10C& 13 & 14A& 14B& 15& 20 VISTA RIDGE ALSO PT VAC WCR 5 ADJ & TRACT 11A & 12A VISTA RIDGE MASTER AMD 1 2. The subject property is classified as commercial property (what type). 3. The County Assessor originally assigned the following actual value to the subject property for the tax year 2016: Land $995,635.00 Improvements $2,498,800.00 Total $3,494,435.00 4. After a timely appeal to the Board of Equalization, the Board of Equalization valued the subject property as follows: Land $995,635.00 Improvements $2,498,800.00 Total $3,494,435.00 R8942769 1 5. After further review and negotiation, Petitioner (s) and County Board of Equalization agree to the following tax year 2016 actual value for the subject property: Peti Land Improvements Total $995,635.00 $2,004,365.00 $3,000,000.00 6. The valuation, as established above, shall be binding only with respect to tax year 2016. 7. Brief narrative as to why the reduction was made: After a review of all approaches to value an adjustment was indicated. 8. Both parties agree that the hearing scheduled before the Board of Assessment Appeals on (date) at (time) be vacated; or, a hearing has not yet been scheduled before the Board of Assessment Appeals X (check if appropriate). DATED this 14th day of November, 2016. ent or Attorney Address: /! f �r.f(nc-E G42 Telephone:'? 247 q -37-37 Docket Number Stip-1.Frm R8942769 (Assistant) County Attorney for Respondent, Weld County Board of Equalization Address: 1150 "0" Street P.O. Box 758 Greeley, CO 80632 Telephone:(970) 336-7235 County Assess > Address: 1400 N.17th Avenue Greeley, CO 80631 Telephone: (970) 353-3845 ext. 3697 2 PETITION FOR ABATEMENT OR REFUND OF TAXER ECEI ED County: WELD Section I: Petitioner, please complete Section I only. Date: May 23, 2016 Month Day Year Petitioner's Name: Catalyst Property Tax Consultants, LLC Cb Date Received (Use Assessor's or Commissioners' DaMnp)2 6 2016 WELD COUNTY ASSESSOR GREELEY, COLORADO lcrraxjo McjionaJ -GO 11nick) LLB Petitioner's Mailing Address: 291 Arapahoe Avenue Boulder CO 80302 City or Town State Zip Code SCHEDULE OR PARCEL NUMBER(S) PROPERTY ADDRESS OR LEGAL DESCRIPTION OF PROPERTY R8946�`° 2700 Vista Parkway Erie, CO B L3 Wsoa Petitioner requests an abatement or refund of the appropriate taxes and states that the taxes assessed against the above property for the property tax year 2014 are incorrect for the following reasons: (Briefly describe why the taxes have been levied erroneously or illegally, whether due to erroneous valuation, irregularity in levying, clerical error, or overvaluation. Attach additional sheets if necessary.) Income approach most applicable method of valuation for a going concern business. Additionally, the personal property and BEV/Intangible needs to be removed from the going -concern value to arrive and the value for the land and improvements. Petitioner's estimate of value: $ 2,155,955 ( 2014 ) Value Year R SEP 2 8 2016 WELD COUNTY COMMISSIONER, �., , z I declare, under penalty of perjury in the second degree, that this petition, together with any accompanying exhibits or statements, has been prepared or examined by me, and to the best of my knowledge, information, and belief, is true, correct, and complete. By Petitioner's Signature ent's Signat Daytime Phone Number ( ) Email Daytime Phone Number (720 )'? gib- es 32►3 7 Email *Letter of agency must be a'ached when petition is submitted by an agent. If the Board of County Commissioners, pursuant to § 39-10-114(1), C.R.S., or the Property Tax Administrator, pursuant to § 39-2-116, C.R.S., denies the petition for refund or abatement of taxes in whole or in part, the Petitioner may appeal to the Board of Assessment Appeals pursuant to the provisions of § 39-2-125, C.R.S., within thirty days of the entry of any such decision, § 39-10-114.5(1), C.R.S. ection II: ctual 00 O Original ' 5 / Corrected ) C tic." G Abate/Refund ■ Assessor's Recommendation (For Assessor's Use Only) Tax Year Assessed Tax /oi. Out Assessor recommends approval as outlin If the request for abatement is based upon the gro protest to such valuation has been filed and Tax year: ■ Protest? O Assessor rec e 06- C 15-DPT-AR No. 920-66/15 file ,� /9* arj /9 ce:5 s of overvaluation, no ice of Determination has been tement or refund of taxes shall be made if an objection or fled to the taxpayer, § 39-10-114(1)(a)(l)(D), C.R.S. n Yes (If a protest was filed, please a a copy of the NOD.) _.0116 ` �r}d'. Assessgr`s b De • Asse or's • T, ture V NIA 09/26/2016 Attn: Chris Woodruff RE: 2014 Abatement received 5/26/2016 R1388502/ 1467-32-4-02-052 Colorado National Golf Club LLC 1745 Hwy. 7 Erie, CO 2014 Assessors Value $3,500,000 ($195,000 / per hole) SUBJECT: The subject property is located at 1745 Highway 7 in the town of Erie. The subject property contains 200.24 acres of land which is used for an 18 hole golf course. The subject property has three improvements. The first is the eighteen hole golf course, a clubhouse with basement golf cart storage and repair, and an indoor golf practices facility. The clubhouse has a restaurant, pro shop, lockers, and management offices on the main level. The practices facility has indoor green and overhead door that open to the driving range. The improvement are considered good quality and typical condition. The Abatement is for the year 2014.s The 2014 value was establish by an appeal and adjustment to the 2013 value. The 2013 and 2014 values by Colorado statute are tied together. They can only be different if there has been a change to the property. No change has occurred to the subject property between 2013 and 2014. Based on the Colorado Court of Appeals, case number 93CA1984, Lowe Denver Hotel Association vs. Arapahoe County Board of Equalization the Welds County Assessor's office request this abatement be denied. INCatalyst Property Tax Consultants Friday, May 27, 2016 FAX To: Weld County Assessor Fax: 970-304-6433 Re: 1.) 2014 Petition for Abatement on R8942769 & R1388502 2.) 2016 Protest of Valuation on R8942769 & R1388502 Please call if there are any issues with this transmission. Sincerely, Jason Flynn (720) 744-3237 Catalyst Property Tax Consultants, LLC 2291 Arapahoe Avenue Boulder. CO 80302 Jason Flynn 720.744.3237 Flynn'a Catalystpropertytax.com WELD COUNTY ASSESSOR CHRISTOPHER M . WOODRUFF 1400 N 17TH AVE GREELEY, CO 80631 IAX YLAII 2015 2O15 REAL PROPERTY NOTICE OF VALUATION Phone: (970)353-3845, Fax (970) 3048433 TAXPAYER COPY Office Hours: 8:00 a.m. • 5:00 p.m. M -F appelb@weldgov.aom www.co.weld.co. us TAY, AlikA COME [L(.HO'l IV's t' AY t401 COr i'LCIL� v RO ow 9N -�E HR 0 4464 02 AVp 78 •'A� Q T3 004 �Q 16 7 Illlliillllllllllllhlllldlrlilll�nfill�u�l�ill�l'Ili null COLORADO NATIONAL GOLF CLUB LLC 2700 VISTA PKWY ERIE CO 805167954 146732402052 ERI VR TRACT 7A & 78 & 8 & 9 & 10A & 10 B&IOC&11&12&13&14A&146&15 & 20 VISTA RIDGE ALSO PT VAC WCR 5 ADJ T 0 COMMERCIAL 3,500,000 NT AC'::!'.. YAI E 3,500,000 3,500,000 t 3,500,000 Using the above values, the estimated tax based on the prior year value was $163,088. The estimate of tax based on the current value is $163,088. This results in no change In tax. This estimate is based on 2014 tax rates. You will receive a tax bill in 2016. The current year tax amount is merely an estimate based upon the best infatuation available. You have the right to protest the adjustment in valuaticn , but not the esti mate of taxes, § 39-5-121(1.5). C.R.S. PROPERTY CHARACTERISTICS For specific property characteristic details, please see the Building Information and Valuation Information Tabs on your Property Report. ZEIG PLEASE REFER TO THE BACK OF THIS FORM FOR GENERAL INFORMATION CONCERNING YOUR PROPERTY VALUATION AND YOUR APPEAL RIGHTS. HOM101CMIS 022184 OWN 0701 OF 0000 04SOt4099498 i WELD COUNTY ASSESSOR CHRISTOPHER14N 17th AM WOODRUFF GREELEY, CO 80631 DATE: May 1, 2014 El 0 ow FN fr Fl it sr,rEJC E 1 ACCCUHT HUMBER TA1l YEAH R1388502 2014 REAL PROPERTY NOTICE OF VALUATION PhQ,ne S.970)35,31845 3� 845 Fax (970)304-p:453 APPEAL FORM OfriCe Hours: 8:00 a.m. - 5:00 p.m. M RETURN TO ASSESSOR appealsoweidgov.com w iw.weldgov.com TM ANEA GOGE YRUPEHS Y" OtSCfI��fION (NM NOT 6E CCMPLElL) 2014 j 3520 COLORADO PKWY NATIONAL GOLF CLUB LLC 2700 VISTA ERIE CO 80516-7954 COMMERCIAL 'YPE of 3,500.000 TOTALS 1745 7 HWY ERIE ERIVR TRACT 7A & 7B & 8 & 9 & 10A & 10 B& 10C& 11 & 12 & 13 & 14A& 148 & 15 & 20 VISTA RIDGE ALSO PT VAC WCR 5 MAT 0 3,500,000 , 3,500.000 Using the above values, the estimated tax based on the prior year value was $163,301. The stimate of tax based on the current value is $163,301. This results in no change in tax. This estimate is based on 2013 tax rates. You will recieve a tax bill in 2015. The tax amount is merely an estimate based upon the best information available. You have the right to protest the adjustment in valuation, but not the estimate of taxes, 39-5-121(1.5), C.R.S. T - IS IS NOT A BILL `LAND SIZE 200.24 Acres # OF BUILDINGS ON FILE 3 BUILDING #1 CHARACTERISTICS DISPLAYED V L UI w V 4 <r I v >- cr w a O cc 0 - LAND NET SOFT: 8722454 OCCUPANCYI: Country Club OCCUPANCY2: Clubhouse OCCUPANCY3: Golf Course "CODE YEAR BUILT: 2002 CLASS: Wood Frame TOTAL BLDG SQ FT: 16434 TOTAL COMMERCIAL SO FOOTAGE; 16434 UNIT SQ FT: TOTAL BUILDING COUNT: 3 PLEASE REFER TO THE BACK OF THIS FORM FOR INFORMATION ON HOW TO APPEAL YOUR PROPERTY VALUATION ORCLASSIFICATION. WELD COUNTY ASSESSOR CHRISTOPHER M WOODRUFF 1400 N 17th AVE GREELEY, CO 80631 DATE: May 1, 2013 SCHL LOLL , AC;OUN' NUtdBL11 HO ow PN EE RR COMMERCIAL R1388502 2013 REAL PROPERTY NOTICE OF VALUATION Moe (970)353.3845 Fax 070)304-6433 APPEAL BONN Orrice Nours: 8:00 a.m. - 5:uu p.m. M -t RETURN To ASSEsuon appealsOweldgov.com wiw.weldgov.com 1AX YOAH ' 1AA AREA CULL 2013 3520 COLORADO NATIONAL GOLF CLUB LLC ERIE CO805754 PARKWAY 1VIL cF PROPERI TOTALS 1'NOPtHit L`L'aCR•°11811 (Ma? 1101 PL GJh1T,:Tt; 1745 COLORADO 7 HWY ERIE ERIVR TRACT 7A&7B&8&9&1DA& 10 B&10C&11 &12&13&14A&14B&15 & 20 VISTA RIDGE ALSO PT VAC WCR 5 ADJ T 0 !_i'1P vl.,. 3,500,000 4,500,001 3,500,000 4,500,001 +1,000,001 +1,000,001 Usin the above values, the estimated tax based an the prior year value was $163,653. The �st,mate of tax based on the current value is $21010. This results in an increase of +$46,757. This estimate is based on 2012. tax rates. You will recieve a tax bill in 2014. The tax amount is merely an estimate based upon the best information available. You have the right to protest the adjustment in valuation, but not the estimate of taxes. 39-5121(1.5), C.R,S. LAND SIZE 200 24 Acres if OF BUILDINGS ON FILE 3 BUILDING #1 CHARACTERISTICS DISPLAYED V 1Y w 1 - CC U ›- CC w a O 4 LAND NET SOFT: 8722454 OCCUPANCY!: Country Club OCCUPANCY2: Clubhouse OCCUPANCY3: Golf Course *CODE YEAR BUILT: 2002 CLASS Wood frame TOTAL BLDG SQ FT: 16434 TOTAL COMMERCIAL SQ FOOTAGE. 16434 UNIT SQ FT: TOTAL BUILDING COUNT: 3 PLEASE REFER TO THE BACK OF THIS FORM FOP INFORMATION ON HOW TO APPEAL YOUR PROPERTY VALUATION OR ITS CLASSI8004 FICATION. r,�a•st.cc�a 0218151 elCatalyst Property Tax Consultants STATEMENT OF AGENCY This agreement made on May 12, 2016, by and between Colorado National Golf Club, LLC 2700 Vista Parkway Erie, CO 80516 (Hereinafter "Taxpayer") Catalyst Property Tax Consultants, LLC 2291 Arapahoe Avenue Boulder, CO 80302 Telephone: 720.344.3237 (Hereinafter "Catalyst") Hereby appoint Catalyst Property Tax Consultants, LLC as its representative and agent for assessment years 2014.2016 in connection with the valuations for assessment of Taxpayer's real property in Boulder County known as: Colorado National Golf Club Erie, CO (Hereinafter "the Property") Catalyst shall have full authority to: 1. Review all applicable records relating to the valuation for assessment for the Property; 2. Discuss the valuation for assessment of the Property with the County Auditor/Assessor, or any of his representatives, as to the amount of valuation which Catalyst deems appropriate in the circumstances; 3. Accept on behalf of the Taxpayer any valuation for assessment; and 4. Pursue any statutory remedies which Taxpayer may possess, before the County Auditor/Assessor, County Board of Equalization, State Assessment Appeals Board, or in binding arbitration, in the Taxpayer's name and on Taxpayer's behalf with regard to the Property. This appointment of envy shall remain in effect until revoked in writing by both parties. COLORADO By: UB, LLC (Signature) ,fe' fde (Printed Name) Date: .j`/!G-0 // g (Title) STATE OF COUNTY OF In , on the day of , 20_, before me, a Notary Public in and for the above state and county, personally appeared , known to me or proved to be the person named in and who executed the foregoing instrument, and being first duly sworn, such person acknowledged that he or she executed said instrument for the purposes therein contained as his or her free and voluntary act and deed. NOTARY PUBLIC (SEAL) My Commission Expires: OraNNINNAINOWNENEWRIEMMEMOMMIMIr Catalyst Property Tax Consultants, LLC 2291 Arapahoe Avenue Boulder, CO 80302 Jason Flynn 720.744.3237 Flynn@Catalystpropertytas.com PETITION FOR ABATEMENT OR REFUND OF TAXES County: W Date Received (Use Assessors or Commissioners' Date Stamp) §gsiggi I: Petitioner, please complete Section I only. May23, 2016 Date: Month Day Year Catalyst Property Tax Constttahts, tic Petitioners Name' Petitioner's Mailing Address: 291 Arapahoe Avenue Boulder CO 80302 City or Town SCHEDULE OR PARCEL NUMBER(S) PROPERTY ADDRESS OR LEGAL DESCRIPTION OF PROPERTY R8942769 2700 Vista Parkway Ede. CO (Parcel number In 2015) R1388502 2700 Vista Parkway Erie. CO (Parcel number In 2013/2014) State Zip Code Petitioner requests an abatement or refund of the appropriate taxes and states that the taxes assessed against the above property for the property tax year 2014 are incorrect for the following reasons: (Briefly describe why the taxes have been levied erroneously or illegally, whether due to erroneous valuation, irregularity in levying, clerical error, or overvaluation. Attach additional sheets if necessary.) "Income approach most applicable method of valuation for a going concern business. Additsxisliy, the personal property and BEV/Intangible needs to be removed from the going -concern value to arrive and the value for the land and improvements. Petitioner's estimate of value: 2.155,955 20( 14 ) Valve Year I declare, under penalty of perjury in the second degree, that this petition, together with any accompanying exhibits or statements, has been prepared or examined by me, and to the best of my knowledge, information, and belief, is true, correct, and complete. Daytime Phone Number ( Email Daytime Phone Number (720 Emits Mmr>QcaWystp 0p1M1ytax.cwn 144-3237 *Lauer et agency must tie attached when petition Is submitted by at agent If the Board of County Commissioners. pursuant to § 39.10.114(1), C.R.S., or the Property Tax Administrator. pursuant to § 39.2-116, C.R.S., denies the petition for refund or abatement of taxes in whole or in pert the Petitioner may appeal to the Board of Assessment Appeals pursuant to the provisions of § 39-2-125, C.R.S., within thirty days of the entry of any such decision, § 39-10-114.5(1). C.R.S. Section II: Assessor's Recommendation (For Assessors Use Only) Tax Year ( Ads lea Original Corrected AberelRefund O Assessor recommends approval as outlined above. If the request for abatement is based upon the grounds of overvaluation. no abatement or refund of taxes shad be made if an objection or protest to such vsuation hes been sled and a Notice of Determination has been mated to the taxpayer, § 3310.114(txa)(I)(D), C.R.S. Tax year: protest? O No ❑ Yes (Ira protest wee flied, pleas* attach a copy of the NOD.) ❑ Assessor recommends denial for the following reason(s): Assessor's or Deputy Asseum'a Signature 15 -DPI -AR No. 92046/15 FOR ASSESSORS AND COUNTY COMMISSIONERS USE ONLY (Section IS of Section IV must be completed) Every petition for abatement or refund filed pursuant to § 39-10.114, C.R.S. shall be acted upon pursuant to the provisions of this section by the Board of County Commissioners or the Assessor, as appropriate, wittvn six months of the date of filing such petition, § 39-1-113(1.7), C.R.S. Section III: Written Mutual Agreement of Assessor and Petitioner (Only for abatements up to $10,000) The Commissioners of County authorize the Assessor by Resolution No. to review petitions for abatement or refund and to settle by written mutual agreement any such petition o abatement or refund in an amount of $10,000 or less per tract, parcel, or lot of land or per schedule of personal property, in accordance with § 39-1-113(1.5), C.R.S. The Assessor and Petitioner mutually agree to the values and tax abatementlfotund of•. amid Tax Year Misread Lait Original Corrected Abate(Refund Note: The total tax amount does not include accrued merest, penalties. and fess associated with late endfor delinquent tax payments, if appecable. Please contact the County Treasurer for full payment mtomution. Petitioner's Signature Assessor's or Deputy Assessor's Signature Date Data Section IV: Decision of the County Commissioners (Must be completed If Section III does not apply) WHEREAS, the County Commissioners of County, State of Colorado, at a duly and lawfully called regular meeting held on 1___./ , at which meeting there were present the following members: Month Day Year with notice of such meeting and an opportunity to be present having been given to the Petitioner and the Assessor (being present —not present) and of said County and Assessor Petitioner Name County Commissioners have carefully considered the within petition, and are fully advised in relation thereto, NOW BE IT RESOLVED that the Board (agrees —does not agree) with the recommendation of the Assessor, and that the petition be (approved —approved in part —denied) with h an abatement/refund as follows: Name (being present —not present), and WHEREAS, the said Year Assessed Value Taxes Abate/Refund Chairperson of the Board of County Commissioners' Signature County Clerk and Ex -Officio Clerk of the Board of County Commissioners in and for the aforementioned county, do hereby certify that the above and foregoing order is truly copied from the record of the proceedings of the Board of County Commissioners. IN WITNESS WHEREOF. I have hereunto set my hand and affixed the seal of said County this day of Month Year County Clerk's or Deputy County Chilies Signature Note: Abatements greater than 510,000 per schedule. per year. must be submitted in duplicate to the Property Tax Administrator for revlaw. Section V: Action of the Property Tax Administrator (for all abatements greater than $10,000) The action of the Board of County Commissioners, relative to this petition, is hereby O Approved ❑ Approved in part $ O Denied for the following reason(s): Secretsys Signature Property Tax Administrator's Signature Date 1 5 -DPI -AR No. 920-00115 Account Number R8942769 "F k 13885- Parcel Number Owner Name Colorado National Golf Club LLC Phone Number 720-744-3237 e-mail flynn@catalystpropertytax.com REAL PROPERTY QUESTIONNAIRE Attach additional documents as necessary. 9 7o - -64/33 MARKET APPROACH 1 This approach to value uses comparable sales from the appropriate time period to determine the actual value of your property. The following items, if known, will help you estimate the market value of your property. If available, attach a copy of any appraisal or written estimate of value. Have similar properties in your immediate neighborhood sold within the 18 -month data gathering period? DATE SOLD PROPERTY ADDRESS SELLING PRICE Based on these sales and accounting for differences between sold properties and your property, state the value of your property. $ N/A COST APPROACH (For Non -Residential Properties Only) This approach to value uses replacement construction costs from the appropriate time period to determine the value of your property. The following items, if known, will help you estimate the replacement cost of your property. ORIGINAL CONSTRUCTION COST YEAR BUILT BUILDER List all changes made to your property prior to January 1 of the current year. i.e., remodeling of storefront; expansion of storage area; addition to parking, service or manufacturing area. DATE DESCRIPTION OF CHANGE COST Is your structure in typical condition for its age? If not, why? Based on the replacement cost of construction and of any changes, induding depreciation, state the total value of your property. $ NIA INCOME APPROACH (For Non -Residential Properties Only) This approach to value converts economic net income from the appropriate time period into present worth. If the property was rented or leased, attach operating statements showing rental and expense amounts for this property. Indicate square foot rental rate for all tenants. (Attach rent and lease schedule) If known, list rents of comparable properties. If available, attach operating statements showing rental and expense amounts for comparable properties. If an appraisal using the income approach was conducted, please attach. FINAL ESTIMATE OF VALUE State your final estimate of the property's value. $ 2.142,556 EQ So/-: /C r / .nS G ` � , ,4 6-100CE /N '_ 15-AR-DPT / l�V ARt_ VOL 2 41—) 5frh 1-84 Rev 10-09 ipCatalyst Property Tax Consultants STATEMENT OF AGENCY This agreement made on May 12, 2016, by and between Colorado National Golf Club, LLC 2700 Vista Parkway Erie, CO 80516 (Hereinafter "Taxpayer") Catalyst Property Tax Consultants, LLC 2291 Arapahoe Avenue Boulder, CO 80302 Telephone: 720.344.3237 (Hereinafter "Catalyst") Hereby appoint Catalyst Property Tax Consultants, LLC as its representative and agent for assessment years 2014-2016 in connection with the valuations for assessment of Taxpayer's real property in Boulder County known as: Colorado National Golf Club Erie, CO (Hereinafter "the Property") Catalyst shall have full authority to: I. Review all applicable records relating to the valuation for assessment for the Property; 2. Discuss the valuation for assessment of the Property with the County Auditor/Assessor, or any of his representatives, as to the amount of valuation which Catalyst deems appropriate in the circumstances; 3. Accept on behalf of the Taxpayer any valuation for assessment; and 4. Pursue any statutory remedies which Taxpayer may possess, before the County Auditor/Assessor, County Board of Equalization, State Assessment Appeals Board, or in binding arbitration, in the Taxpayer's name and on Taxpayer's behalf with regard to the Property. This appointment of agency shall remain in effect until revoked in writing by both parties. COLORADO By: UB, LLC (Signature) (Printed Name) (Title) Date: STATE OF G COUNTY OF In , on the day of , 20_, before me, a Notary Public in and for the above state and county, personally appeared , known to me or proved to be the person named in and who executed the foregoing instrument, and being first duly sworn, such person acknowledged that he or she executed said instrument for the purposes therein contained as his or her free and voluntary act and deed. (SEAL) NOTARY PUBLIC My Commission Expires: Catalyst Property Tax Consultants, LLC 2291 Arapahoe Avenue Boulder, CO 80302 Jason Flynn 720.744.3237 Flynn®C atalystp ro p e rtytax.com COLORADO NATIONAL GOLF CLUB 2700 VISTA PARKWAY ERIE, CO WELD COUNTY 2014 Petition for Abatement May 23, 2016 Prepared by: Catalyst Property Tax Consultants, LLC 2291 Arapahoe Avenue Boulder, CO 80304 (720)744-3237 Phone (877)635-0070 Fax flynn(a catalystpropertytax.com COLORADO NATIONAL GOLF CLUB TABLE OF CONTENTS Section A 1. Petition for Abatement (2014) 2. Statement of Agency 3. Petitioner's Issues and Concerns Statement 4. Parcel Value Summary 5. Summary of Salient Facts 6. Revenue and Expense Summary 7. IRS Form 8594 Declaring Intangible Value at purchase 8. Income Approach (Typical) 9. Income Approach (Actual) 10. Colorado Board of Assessment Appeals Golf Course Cases 11. Realty Rates Q1 2012 Survey 12. NGF 2010 Operating and Financial Performance Profiles of 18 -hole golf facilities 13. Club Benchmarking 2014 Gross Profit and KPI Report Section B — Defining the Market Value of Golf Courses 14. The Appraisal Journal — Appraising Golf Courses for Ad Valorem Tax Purposes, Stephen R. Hughes, MAI 15. Article: Future of Golf Sits in Deep Rough, The Washington Post, 3/8/2015, Drew Harwell 16. Article: How Much Is a Golf Course Worth Today? Bruce Buckley — Golf Business Magazine 17. Article: Measuring Up - The True Value of a Course is Seldom Worth the Sum of Its Investments, Steve Eubanks - Golf Business Magazine 18. Article: The Valuation of Golf Courses, Stephen R. Hughes, MAI, SGA 19. Study of Economic Obsolescence on 3 Colorado Golf Courses (Cost vs. Market Value) Section C — Going Concern Valuation 20. Article: Going Concern Property Transactions: The Necessity of Value Allocations, Valuation Strategies (WG&L), Thompson Reuters 21. Golf Courses and Tax Assessments — Just One Right Way -Laurence Hirsch CRE, MAI 22. IRS and FASB Guidelines on Intangible Property Section D — Additional Information 23. 2010-2012 Financial Statements WELD COUNTY STATE OF COLORADO COLORADO NATIONAL GOLF CLUB Petitioner's Issues and Concerns Issues and Concerns for Colorado National Golf Club's Current Valuation for 2014: 1. The subject property is a public course that operates as an amenity to the surrounding development and community. 2. The Income Approach yields the most supportable value for any revenue producing property, and is the ONLY approach which would be considered by a potential purchaser or investor. Actual revenue and expense data has been provided and the valuations have been calculated utilizing actual financial data as well as "typical" industry data. 3. The Colorado Board of Assessment Appeals has documented the validity of utilizing the income approach for golf courses in Colorado. We have determined the "going concern" value of the entire business entity by removing disallowed expenses to arrive at an NOI. The NOI is then capitalized with a loaded cap rate to account for property taxes to arrive at the entire going concern business value. Once the total assets have been calculated the declared value of the personal property has been removed. Additionally, the declared value of the intangible component as documented on IRS form 8594 has been removed to identify the Land and improvement value. • Value of the Land & Improvements using actual financials - $2,590,143 • Value of the Land & Improvements using "typical" financials - $1,721,767 • Average of Industry typical and actuals - $2,155,955 I have included a handful of articles regarding the valuation of golf courses as well as intangible personal property. All of these articles point out the income approach being the most appropriate method of valuation. The cost approach is not relevant because it is far more expensive to build a course that it would ever be worth. I have included a study of economic obsolescence for golf courses demonstrating the cost to build and the sale price a few years later. The sales comparison approach is not applicable because not two courses are the same and major adjustments are required, rendering it an ineffective method. These articles support the method (Income approach to arrive at a business value then removing the PP and IPP to arrive at a Real Estate value) in which I have arrived at the recommended value for the golf course. The national brokers that I keep in touch with are always quick to state that the revenues are the only thing that a prospective buyer looks at. They see golf courses with giant clubhouses change hands for less than a course that has a much smaller clubhouse but has a stabilized positive NOI. The clubhouse comes in to play when an official is using the cost approach (with a large discount for economic obsolescence) but the golf market no longer places any weight on it. In reality, the larger the clubhouse, the larger the potential capital expenditures and expenses involved that will deteriorate the Net Operating Income. Finding efficiencies on the expense side is the primary way that management companies and owners are evolving in order to keep more of the gross revenue in a declining market. I have spent a considerable amount of time compiling as much golf data as possible in an effort to know as much as possible and to be able to share this with the Counties where I have clients. The data is applicable to all states and counties for Golf is a national marketplace rather than a local one. BACKGROUND DATA ON GOLF The golf industry has been in a negative trend for some time and it has been well publicized that it has been due to the cost, time required, and the overabundance of courses that were built over the last 20 years. Colorado National Golf Club has suffered like the majority of clubs nationwide with play stagnating or decreasing, revenues flat, with expenses increasing. These factors all play in to the strategy of a golf course buyer thereby affecting the market value of a golf property. Purchasers of golf courses are valuing a property based on two scenarios. 1.) The first is as land only and redeveloping it for a different use. Often times this is not a possibility due to prohibitive zoning or platting that is long term or permanent that establishes a course as the open space amenity for the surrounding community. Colorado National Golf Club is part of the surrounding PUD thereby limiting its potential uses. Additionally, Colorado National Golf Club operates in a state that looks at the "Value in Use" for Ad Valorem Tax purposes. 2.) The second option for a golf course is to continue operating as a golf course and buying the "going concern" entity. The courses that are bought and will continue to be operated as the going concern business are being valued according to the income statement. In the past, "going concern" was the term used to describe the three elements requisite in defining market value, which today are said to comprise the total assets of the business, i.e. — Real Property, Tangible Personal Property, and Intangible Personal Property. For the purposes of our opinion of value, we recognize that Colorado National Golf Course is a business property containing the following elements and components: The first element, Real Property, includes: 1.) Land 2.) Buildings 3.) Fixtures The second element, Tangible Personal Property, includes: 1.) Furniture and equipment (F&E) 2.) Business Fixtures The third element, Intangible Personal Property, includes: 1.) Contracts 2.) Lease Agreements 3.) Licenses (liquor, etc.) 4.) Tournaments Booked in Advance 5.) A specially trained workforce 6.) Real property rights (mineral and water) 7.) Course architect's name recognition 8.) Connection / Tap Fees USPAP points out that "An appraiser must analyze the effect on value of any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal. (Standard Rule 1-4 (g))". Without intangible personal property a golf course cannot operate. If the market value of a golf course is what the buyers are currently paying for it to continue to operate, a concession for the Intangibles must be made. The Rushmore and Business Enterprise Methods are well known calculations nationally that were originally developed for the Hotel industry due to the "Going -Concern" nature of that business. These methods can and have been used as guides for other going -concern businesses including golf courses. I have included some articles relating to the valuation of Intangible Personal Property for your review. Thank you for your time! Jason Flynn Catalyst Property Tax 720-744-3237 Ph. Flynn@catalystpropertytax.com O w Eff. Tax Rate Annual R.E. Tax Assessment aI a 10 W z To 0 H rovements E Land Valuation C 0 O Y u g o Nco 4 � a o m u^1 lD cti v Lei v N 0 00 lD CO a1 r4 co 4 u1 u1 N N N 0 N o O 0 0 O O O O O u1 O O m rn in N a en m 0 O N N N ./r 0 0 0 0 O O 0 o o Lei o O u1 en 01 u1 N V en ri v rn m 0 N N 0 •-1 174,627.00 $ 3,496,625.00 $ 3,496,625.00 $ to 1/1 U? V? VT O O O O 00 00 01 N o 0 0 0 O O O O o u1 O O L(1 m 01 V1 - ui rn rn VT N 01 m N 00 O N 0 0 in NI N N en CO lD a u1 00 0 00C1101a101 • K K z 10 2,498,800.00 $ 997,825.00 $ COLORADO NATIONAL GOLF CLUB SUMMARY OF SALIENT FACTS Property Description: Property Address: Owner of Record: Property ID: Acres: Interest Valued: Land Use/ Zoning: Highest and Best Use: The subject property is a golf course known as Colorado National Golf Club. The club is woven into the Vista Ridge. The club offers 18 holes of golf with a restaurant pro shop, and practice facility. 2700 Vista Parkway Erie, WA Colorado National Golf Club LLC R4841207, R8942769, R2550303, R1388702, P0906438 199.57 Fee Simple Estate Planned Development Amenity For ad valorem purposes, the current use is assumed to be the highest and best use COLORADO NATIONAL GOLF CLUB Reconstructed Revenue and Expense Summary Colorado National Golf Club, LLC and Vista Ridge Catering, LLC 2013 2012 2011 2010 OPERATING INCOME Membership Golf Shop G&A (Does not include VRC Concessions Rental Income to CNGC, LLC from VR Catering) Landscaping Food Sales Beverage Misc. F&B Rev. Total LESS COST OF GOODS Golf Food Beverage Total Effective Gross Income General Expenses & Payroll Food and Beverage (Does not include VRC Concessions Rental Expense to CNGC, LLC) Membership Golf Shop Course Maintenance Clubhouse Maintenance General and Administrative* Landscaping Practice Facility Operating Expenses Total Percent Expenses & Payroll to Revenue Percent COGS to Revenue Total Expenses to Revenue * Net Operating Income Percent NOI to Revenue 422,716 1,611,057 12,633 34,826 $ 649,567 $ $ 450,624 $ $ 48,817 $ $ 3,230,240 $ $ 105,261 $ $ 225,592 $ $ 112,963 $ $ 443,816 $ 464,206 1,914,013 156,876 23,610 637,888 $ 448,424 $ 41,424 $ 486,071 1,677,503 562,456 $ 396,811 $ 34,965 $ 3,686,441 $ 3,157,806 $ 141,485 $ 267,543 $ 125,612 $ 534,640 $ 97,358 $ 239,219 $ 109,699 $ 504,974 1,599,040 560,062 367,780 37,590 3,069,446 108,096 249,820 104,485 446,276 $ 462,401 $ 2,786,424 $ 3,151,801 $ 2,711,530 $ $ 403,149 $ 61,112 $ 345,223 $ 669,380 $ 106,264 $ 401,096 $ 13,983 $ 5,539 $ 469,584 $ 34,580 $ 343,703 $ 816,404 $ 111,453 $ 481,074 $ 23,135 $ 78,400 $ 405,103 $ $ 675,670 $ $ 883,860 $ 2,607,045 399,189 636399 892,716 $ 2,005,746 $ 2,358,333 $ 1,964,633 $ 1,928,904 62.09% 13.74% 75.83% $ 780,678 $ 24.17% 63.97% 14.50% 78.48% 793,468 $ 21.52% 62.22% 14.13% 76.35% 62.84% 15.06% 77.91% 746,897 $ 678,141 23.65% 22.09% Property Taxes Amortization Depreciation $ 173,382 $ $ 95,441 $ $ 332,462 $ 172,754 $ 112,843 358,476 $ 206,016 $ 187,617 412,922 $ 412,306 * Expenses do not include amortization, depreciation, reserves, debt service, property taxes, trust life insurance premiums, or interest expense I F. r,8 59 (Rev. F. 'ary 2006) Department of the Treasury Internal Revenue Service Asset Acquisition Statement Under Section 1060 ► Attach to your income tax return. OMB No. 1545.1021 Attachment Sequence No. 61 Name as shown on return COLORADO NATIONAL GOLF CLUB I LLC Check the box that identifies you: �] Purchaser (- Seller Identifying number as shown on return 26-3297148 I Part i I General Information I Name of other party to the transaction IN PLAY MEMBERSHIP GOLF, INC Address (number, street, and room or suite no.) 2405 S. YOSEMITE STREET Other party's identi, ing number r City or town, state, and ZIP code DENVER. CO 80231 2 Dale of sale 11113108 IPalt III 3 Total sales price (consideration) 7,850,000. Original Statement of Assets Transferred 4 Assets Aggregate fair market value (actual amount for Class I) Allocation of sales price Class I $ 0 . $ 0 . Class II $ 0 . $ 0 . Class III $ 0 . $ 0 . Class IV $ 49,525. $ 49,525. Classy , $ 6,758,164. $ 6,758,164. Class Vl and e VII $ 1, 042, 311. ,$ 1,042,311. Total _$ 7, 850, 000. _1 7, 850, 000. 5 Did the purchaser and seller provide for an allocation of the sales price in the sales contract or in another written document signed by both parties? Yes No If 'Yes,' are the aggregate fair market values (FMV) Listed for each of asset Classes I, II, III, IV, V, VI, and VII the amounts agreed upon in your sales contract or in a separate written document? Yes No 6 In the purchase of the group of assets (or stock), did the purchaser also purchase a license or a covenant not to compete, or enter into a lease agreement, employment contract, management contract, or similar arrangement with the seller (or managers, directors, owners, or employees of the seller)? If 'Yes,` attach a schedule that specifies (a) the type of agreement and (b) the maximum amount of consideration (not including interest) paid or to be paid under the agreement. See instructions. Yes M No LHA For Paperwork Reduction Act Notice, see separate instructions. Fotm 8594 (Rev. 2-2000) 820281/ 04-25-08 09330706 138895 COLO7148 2008.03041 COLORADO NATIONAL GOLF CLUB COLO7141 Instructions for Form 8594 (Rev. December 2012) Asset Acquisition Statement Under Section 1060 Department of the Treasury Internal Revenue Service Section references are to the Internal Revenue Code unless otherwise noted. Future Developments For the latest information about developments related to Form 8594 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form8594. General Instructions Purpose of Form Both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 to report such a sale if goodwill or going concern value attaches, or could attach, to such assets and if the purchaser's basis in the assets is determined only by the amount paid for the assets. Form 8594 must also be filed if the purchaser or seller is amending an original or a previously filed supplemental Form 8594 because of an increase or decrease in the purchaser's cost of the assets or the amount realized by the seller. Who Must File Generally, both the purchaser and seller must file Form 8594 and attach it to their income tax returns (Forms 1040, 1041, 1065, 1120, 1120S, etc.) when there is a transfer of a group of assets that make up a trade or business (defined below) and the purchaser's basis in such assets is determined wholly by the amount paid for the assets. This applies whether the group of assets constitutes a trade or business in the hands of the seller, the purchaser, or both. If the purchaser or seller is a controlled foreign corporation (CFC), each U.S. shareholder should attach Form 8594 to its Form 5471. Exceptions. You are not required to file Form 8594 if any of the following apply. • A group of assets that makes up a trade or business is exchanged for like -kind property in a transaction to which section 1031 applies. If section 1031 does not apply to all the assets transferred, however, Form 8594 is required for the part of the group of assets to which section 1031 does not apply. For information about such a transaction, see Regulations sections 1.1031(j) -1(b) and 1.1060-1(b)(8). • A partnership interest is transferred. See Regulations section 1.755-1(d) for special reporting requirements. However, the purchase of a partnership interest that is treated for federal income tax purposes as a purchase of partnership assets, which constitute a trade or business, is subject to section 1060. In this case, the purchaser must file Form 8594. See Rev. Rul. 99-6, 1999-6, I.R.B. 6, available at http://www.irs.gov/pub/irs-irbs/ i rb99-06. pdf. When To File Generally, attach Form 8594 to your income tax return for the year in which the sale date occurred. If the amount allocated to any asset is increased or decreased after the year in which the sale occurs, the seller and/or purchaser (whoever is affected) must complete Parts I and III of Form 8594 and attach the form to the income tax return for the year in which the increase or decrease is taken into account. Penalties If you do not file a correct Form 8594 by the due date of your return and you cannot show reasonable cause, you may be subject to penalties. See sections 6721 through 6724. Definitions Trade or business. A group of assets makes up a trade or business if goodwill or going concern value could under any circumstances attach to such assets. A group of assets can also qualify as a trade or business if it qualifies as an active trade or business under section 355 (relating to distributions of stock in controlled corporations). Factors to consider in determining whether goodwill or going concern value could attach include: • The presence of any section 197 or other intangible assets (provided that the transfer of such an asset in the absence of other assets will not be a trade or business); • Any excess of the total paid for the assets over the aggregate book value of the assets (other than goodwill or going concern value) as shown in the purchaser's financial accounting books and records; or • A license, a lease agreement, a covenant not to compete, a management contract, an employment contract, or other similar agreements between purchaser and seller (or managers, directors, owners, or employees of the seller). Consideration. The purchaser's consideration is the cost of the assets. The seller's consideration is the amount realized. Fair market value. Fair market value is the gross fair market value unreduced by mortgages, liens, pledges, or other liabilities. However, for determining the seller's gain or loss, generally, the fair market value of any property is treated as being not less than any nonrecourse debt to which the property is subject. Also, a liability that was incurred as a result of the acquisition of the property is disregarded to the extent that such liability was not taken into account in determining the basis in such property. Classes of assets. The following definitions are the classifications for deemed or actual asset acquisitions. Class I assets are cash and general deposit accounts (including savings and checking accounts) other than certificates of deposit held in banks, savings and loan associations, and other depository institutions. Class II assets are actively traded personal property within the meaning of section 1092(d)(1) and Regulations section 1.1092(d)-1 (determined without regard to section 1092(d)(3)). In addition, Class II assets include certificates of deposit and foreign currency even if they are not actively traded personal property. Class II assets do not include stock of seller's affiliates, whether or not actively traded, other than actively traded stock described in section 1504(a)(4). Examples of Class II assets include U.S. government securities and publicly traded stock. Class III assets are assets that the taxpayer marks -to -market at least annually for federal income tax purposes and debt instruments (including accounts receivable). However, Class III assets do not include: • Debt instruments issued by persons related at the beginning of the day following the acquisition date to the target under section 267(b) or 707; • Contingent debt instruments subject to Regulations sections 1.1275-4 and 1.483-4, or section 988, unless the instrument is subject to the noncontingent bond method of Regulations section Aug 28, 2012 Cat. No. 29292S 1.1275-4(b) or is described in Regulations section 1.988-2(b)(2)(i)(B)(2); and • Debt instruments convertible into the stock of the issuer or other property. Class IV assets are stock in trade of the taxpayer or other property of a kind that would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business. Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets. Note. Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business (defined earlier) are generally Class V assets. Class VI assets are all section 197 intangibles (as defined in section 197) except goodwill and going concern value. Section 197 intangibles include: • Workforce in place; • Business books and records, operating systems, or any other information base, process, design, pattern, know-how, formula, or similar item; • Any customer -based intangible; • Any supplier -based intangible; • Any license, permit, or other right granted by a government unit; • Any covenant not to compete entered into in connection with the acquisition of an interest in a trade or a business; and • Any franchise, trademark, or trade name (however, see exception below for certain professional sports franchises). See section 197 (d) for more information. The term "section 197 intangible" does not include any of the following: • An interest in a corporation, partnership, trust, or estate; • Interests under certain financial contracts; • Interests in land; • Certain computer software; • Certain separately acquired interests in films, sound recordings, video tapes, books, or other similar property; • Interests under leases of tangible property; • Certain separately acquired rights to receive tangible property or services; • Certain separately acquired interests in patents or copyrights; • Interests under indebtedness; • Professional sports franchises acquired before October 23, 2004; and • Certain transactions costs. See section 197(e) for more information. Class VII assets are goodwill and going concern value (whether or not the goodwill or going concern value qualifies as a section 197 intangible). Allocation of consideration. An allocation of the purchase price must be made to determine the purchaser's basis in each acquired asset and the seller's gain or loss on the transfer of each asset. Use the residual method under sections 1.338-6 and 1.338-7, substituting consideration for ADSP and AGUB, for the allocation of the consideration to assets sold and asset purchased respectively. See Regulations section 1.1060-1(c). The amount allocated to an asset, other than a Class VII asset, cannot exceed its fair market value on the purchase date. The amount you can allocate to an asset also is subject to any applicable limits under the Internal Revenue Code or general principles of tax law. Consideration should be allocated as follows. 1. Reduce the consideration by the amount of Class I assets transferred. 2. Allocate the remaining consideration to Class II assets, then to Class III, IV, V, and VI assets in that order. Within each class, allocate the remaining consideration to the class assets in proportion to their fair market values on the purchase date. 3. Allocate consideration to Class VII assets. If an asset in one of the classifications described above can be included in more than one class, choose the lower numbered class (e.g., if an asset could be included in Class III or IV, choose Class III) Reallocation after an increase or de- crease in consideration. If an increase or decrease in consideration that must be taken into account to redetermine the seller's amount realized on the sale, or the purchaser's cost basis in the assets, occurs after the purchase date, the seller and/or purchaser must allocate the increase or decrease among the assets. If the increase or decrease occurs in the same tax year as the purchase date, consider the increase or decrease to have occurred on the purchase date. If the increase or decrease occurs after the tax year of the purchase date, consider it in the tax year in which it occurs. For an increase or decrease related to a patent, copyright, etc., see Specific Allocation, later. Allocation of increase. Allocate an increase in consideration as follows. 1. Allocate the increase in consideration to Class I assets. 2. Allocate any remaining amount consideration to each of the following classes (Class II, III, etc.). The number of classes may vary depending on the year of the acquisition. Increase the amounts previously allocated to the assets in each class in proportion to their fair market values on the purchase date (do not allocate to any asset in excess of fair market value). If an asset has been disposed of, depreciated, amortized, or depleted by the purchaser before the increase occurs, any amount allocated to that asset by the purchaser must be properly taken into account under principles of tax law applicable when part of the cost of an asset (not previously reflected in its basis) is paid after the asset has been disposed of, depreciated, amortized, or depleted. Allocation of decrease. Allocate a decrease in consideration as follows. 1. Reduce the amount previously allocated to Class VII assets. 2. Reduce the amount previously allocated to Class VI assets, then to Class V, IV, Ill, and II assets in that order. Within each class, allocate the decrease among the class assets in proportion to their fair market values on the purchase date. You cannot decrease the amount allocated to an asset below zero. If an asset has a basis of zero at the time the decrease is taken into account because it has been disposed of, depreciated, amortized, or depleted by the purchaser under section 1060, the decrease in consideration allocable to such asset must be properly taken into account under the principles of tax law applicable when the cost of an asset (previously reflected in basis) is reduced after the asset has been disposed of, depreciated, amortized, or depleted. An asset is considered to have been disposed of to the extent the decrease allocated to it would reduce its basis below zero. Patents, copyrights, and similar prop- erty. You must make a specific allocation (defined below) if an increase or decrease in consideration is the result of a contingency that directly relates to income produced by a particular intangible asset, such as a patent, a secret process, or a copyright, and the increase or decrease is related only to such asset and not to other assets. If the specific allocation rule does not apply, make an allocation of any increase or decrease as you would for any other assets as described under Allocation of increase and Allocation of decrease. Specific allocation. Limited to the fair market value of the asset, any increase or decrease in consideration is allocated first specifically to the patent, copyright, or -2- similar property to which the increase or decrease relates, and then to the other assets in the order described under Allocation of increase and Allocation of decrease. For purposes of applying the fair market value limit to the patent, copyright, or similar property, the fair market value of such asset is redetermined when the increase or decrease is taken into account by considering only the reasons for the increase or decrease. The fair market values of the other assets are not redetermined. Specific Instructions For an original statement, complete Parts I and II. For a Supplemental Statement, complete Parts I and III. Enter your name and taxpayer identification number (TIN) at the top of the form. Then check the box for purchaser or seller. Part I —General Information Line 1. Enter the name, address, and TIN of the other party to the transaction Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. The time needed to complete and file this tax form will vary depending on individual circumstances. The estimated burden for individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is shown below. (purchaser or seller). You are required to enter the TIN of the other party. If the other party is an individual or sole proprietor, enter the social security number. If the other party is a corporation, partnership, or other entity, enter the employer identification number. Line 2. Enter the date on which the sale of the assets occurred. Line 3. Enter the total consideration transferred for the assets. Part II Original Statement of Assets Transferred Line 4. For a particular class of assets, enter the total fair market value of all the assets in the class and the total allocation of the sales price. For Classes VI and VII, enter the total fair market value of Class VI and Class VII combined, and the total portion of the sales price allocated to Class VI and Class VII combined. consideration paid is the highest amount possible. If you cannot determine the maximum consideration, state how the consideration will be computed and the payment period. Part III Supplemental Statement Complete Part III and file a new Form 8594 for each year that an increase or decrease in consideration occurs. See Reallocation after an increase or decrease in consideration, and When To File, earlier. Give the reason(s) for the increase or decrease in allocation. Also, enter the tax year(s) and form number with which the original and any supplemental statements were filed. For example, enter "2012 Form 1040." Line 6. This line must be completed by the purchaser and the seller. To determine the maximum consideration to be paid, assume that any contingencies specified in the agreement are met and that the Record keeping 11 hr. Learning about the law or the form 2 hr., 34 min. Preparing and sending the form to the IRS 2 hr., 52 min. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the IRS at the address listed in the instructions for the tax return with which this form is filed. ncome Approach ACTUAL EXPENSES a) N a) a. W C co a) C a) ce 4-3 Q E 0 4- i O 'Co • cu V a) E 0 V i 0 4Yr. Avg. 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LI I $6 E q utry OAR Surve,ed Rates Zip. 0 0917..10 2 0 iJty:20 OCR Technique 01E1E7 Band of Investment Technique Mortgage Lci u!ty OAR Su riffled Rates 05.0 50:. 01E15(7 OCt:U7y3 501. 0 224238 0112110 OCR Technique 160 0.[143285 Band of Investment Technique MO Itgage Equity OAF; Surveged Rates 0.66 6€'-: 0.05328E 00E1EO1 34'. 0166577 0.056220 OAR 4 76 5.89 559 18 18 19.29 18.33 9.85 11.80 12.95 RealgRates.com INVESTOR SURVEY - 1st Quartet 2814' GOLF COURSES & COUNTRY CLUBS - PUBLIC DAILY FEE COURSES Item Minimum Spread Over 10 Teal Treasury Clebt Coverage RauO Interest Rate Amon': anon Mot tga3e Con5tar.r Loan-tO-Value Ratio Equity Dividend Rata Maslmum Spread Over 10 -Year 1 neasary Debt Coverage Ratio Interest Rate Amottiz anon Mortgage Constant Loan -to -Value Ratio Equity Dividend Rate Average Spread Over 10 -Year Treasury Debt Coverage Ratio Interest Fare Arrrortiz anon Mortgage Corslar.t Loan -to -Value Ratio Equrtg Dividend Rate '418 Gtu.x t o 201:_, D of e Input 1.30,: 1.36 4.02% 20 0.072844 65% 9.61: 10.86% 180 1258% 15 0156437 50% 21.82% 6.08% 1.48 8.80% 011218f: 58% 15.11% Mortgage Eaton) GAR Surveged Rates DCR Technique 1.330 0.072:'44 Band of Investment Technique 65^. 0.072E44 35'.. 0 096102 0.65 0 047245 0 (1336.3€ OCR Technique 160 0156437 0.50 Band of Investment Technique Mortgage 50% 0 1564 37 0078215 Equrtg 531. 0.2U238 0.109119 OAF Surveyed Rates OCR Technique 1.48 0.11218E 0.58 Band of Investment Technique Mortgage 5E% 011218E 0064507 Equity 43'. 0.151063 0064202 OAR Surveged Rates OAR 6.45 8.10 7.69 14.08 18.73 17.80 9.56 12.87 12.38 Copvrwt,! 2014 R<al!yFac: cum "' fi fl fi ,fl ; I "I Item Minimum Rea:t9Rates.com 0VVESTOR SURVEY -1st Quartet 2014" GOLF COURSES & COUNTRY CLUBS - SEMI -PRIVATE GOLF CLUBS Input c•ptead Over II...,-TrV i Debi L n .' -r age Ft':' Intere:t Rate Art,ofrl: Mortgage Conran, Loan-ro 5'aLie Flan Equity Dividend Rare Maximum Spt Pad Cicer 1t0.'iear reas:Jry Debt Co'.'era.' 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" RealtgRates.com INVESTOR SURVEY - 1st Quarter 2014' GOLF COURSES 8 COUNTRY CLUBS - PRIVATE CLUBS Item Minimum Spread Over 10 -Year Treasury Debt Coverage Ratio Interest Rate 0+M:4 i:atior, Mortgage Constant Loan -to -Value Ratio Equity Dividend Rate Maximum Spread Net 40 -Year Treacvr4 Debt Coverage Ratio kNeresr Rate Amortization Mortga ge Cc rrsr am Loan -to -Value Ratio Equity Dividend Rate Average Spread Over 10 -Year Treasury Debt Coverage Ratio Interest Rare Amotti: atior, Mortgage Constant Loan -to -Value Ratio Equity Dividend Rate Qem ttf 2013 Dot. Input 120% 120 3,921, 40 0 049557 8Cr•.-. 9.01% 10._2.. 190 12.94% 15 0151356 00^: 21.22': Equity OAR Surveyed Rates Frio to) ase Eq utt OAF; Surveyed Rates OCR Technique 120 0.049557 0.80 Band of Investment Technique 80'. 0.049557 0.039640 2I.' : 0 09O02 0.019 220 DCR Technique 1.58 0.151356 Band of Investment Technique Mettaaoe 60% 0151356 0.090813 40% 0.212238 0.004895 521%i OCR Technique 159 0.089480 15+9 7.93% 20 OO89O5O 70% 14.04% 0.60 0.70 Band of Investment Technique Mortgage 70'x. 0.089480 0,062630 Equity 30% 0148%3 0.044509 OAF; Surveyed Rates OAR 4.76 5.89 5.59 17.98 17.57 16.63 9.96 10.71 12.26 Copy, yAt 2O14 Rcattyt tc:,top, "• fi II fi ,fl ; I [II. BOARD OF ASSESSMENT APPEALS, STATE OF COLORADO 1313 Sherman Street, Room 315 Denver, Colorado 80203 Docket No.: 60588 Petitioner: LAKEWOOD COUNTRY CLUB, v. Respondent: JEFFERSON COUNTY BOARD OF COMMISSIONERS. ORDER THIS MATTER was heard by the Board of Assessment Appeals on January 11, 2013, James R. Meurer and MaryKay Kelley presiding. Petitioner was represented by Richard G. Olona, Esq. Respondent was represented by David Wunderlich, Esq. Petitioner is requesting an abatement/refund of taxes on the subject property for tax year 2010. Subject property is described as follows: 6800 West 10th Avenue, Lakewood, Colorado Jefferson County Schedule No. 110117 and 051401 The subject property is a private 18 -hole native -soil golf course on 120.98 acres. It was originally constructed in 1908, and five greens were rebuilt in 1961. Membership is capped at 450. The course is heavily treed with narrow fairways and small tee boxes and has insufficient room for expansion. Improvements include a clubhouse built in 2006 (dining and meeting rooms, pro shop, offices, locker rooms), cart barn and maintenance building, pool and fitness complex built in 2008, and a parking lot. The club owns water rights in the form of 88 shares in the Rocky Mountain Ditch Company. Respondent assigned a value of $8,226,520 for tax year 2010 but is recommending a reduction to the appraised value of $7,600,000. Petitioner is requesting a value of $4,684,500. 60588 1 Mr. William Lazzeri, Club's Treasurer and former President and Mr. Troy Sprister, Club's General Manager, presented the history of the Club, physical characteristics, membership, and financial data. Petitioner presented the following indicators of value: Market: Cost: Income: Reconciled: $3,630,100 - $4,531,100 $4,120,340 $4,684,500 $4,684,500 Petitioner's witness, Tom McElhinney, Certified General Appraiser, testified that the Lakewood Country Club was a "going concern" and that based on industry standards, the income approach to value should be the primary indicator of value for the real property associated with the subject. Relative to the income approach, Mr. McElhinney used the actual income from the facility and industry typical expenses to arrive at a net operating income (NOI) of $1,204,959. The NOI was capitalized at a 13% overall rate to arrive at the total assets of the business (V tab) of $9,268,912. Declared personal property in the amount of $1,444,925, intangible assets in the amount of $1,639,400, and atypical income attributed to equity memberships and to special assessments for a new sprinkler system in the amount of $1,500 were subtracted from Vtab to arrive at a real property value of $4,684,500 rounded. Mr. McElhinney also presented cost and market approaches but placed little weight on either. Respondent presented the following indicators of value: Market: Cost: Income: Reconciled: N/A $11,000,000 $7,655,000 $7,600,000 Respondent' witness, Randall Brenimer, Certified General Appraiser, presented an income approach with Petitioner -provided income and expenses for 2006, 2007 and 2008, arriving at a three year average net operating income of $1,225,145, which he capitalized at 13%. He declined to deduct intangible personal property or atypical membership equity figures and special assessments. Mr. Brenimer presented a cost approach but considered it less reliable due to external obsolescence reflecting the industry at whole. Petitioner presented sufficient probative evidence and testimony to prove that the tax year 2010 valuation of the subject property was incorrect. After careful consideration of the testimony and exhibits presented at the hearing, the Board concludes that the income approach best represents value for a property of this type and that the income approach developed by Petitioner should be given the most weight in the final conclusion of 60588 2 value. The Board concludes that estimating the total assets of the business and subtracting the appropriate asset classes resulting in the value of the real property is a preferable valuation methodology. Considering this conclusion, Petitioner's appraisal is more persuasive; actual income and expenses were used, intangible assets were deducted, and atypical income was deducted. The Board concludes that the 2010 actual value of the subject property should be reduced to $4,684,500. ORDER: Respondent is ordered to cause an abatement/refund to Petitioner, based on a 2010 actual value for the subject property of $4,684,500. The Jefferson County Assessor is directed to change his records accordingly. APPEAL: If the decision of the Board is against Petitioner, Petitioner may petition the Court of Appeals for judicial review according to the Colorado appellate rules and the provisions of Section 24-4-106(11), C.R.S. (commenced by the filing of a notice of appeal with the Court of Appeals within forty-five days after the date of the service of the final order entered). If the decision of the Board is against Respondent, Respondent, upon the recommendation of the Board that it either is a matter of statewide concern or has resulted in a significant decrease in the total valuation for assessment of the county wherein the property is located, may petition the Court of Appeals for judicial review according to the Colorado appellate rules and the provision of Section 24-4-106(11), C.R.S. (commenced by the filing of a notice of appeal with the Court of Appeals within forty-five days after the date of the service of the final order entered). In addition, if the decision of the Board is against Respondent, Respondent may petition the Court of Appeals for judicial review of alleged procedural errors or errors of law when Respondent alleges procedural errors or errors of law by the Board. If the Board does not recommend its decision to be a matter of statewide concern or to have resulted in a significant decrease in the total valuation for assessment of the county in which the property is located, Respondent may petition the Court of Appeals for judicial review of such questions. Section 39-10-114.5(2), C.R.S. DATED and MAILED this 17th day of January, 2013. 60588 3 I hereby certify that this is a true and correct copy of the decision of the Board of Assessment Appeals. BOARD SSESSMENT APPEALS James R. Meurer Milla 'richton MaryKay Kelley 60588 4 BOARD OF ASSESSMENT APPEALS, STATE OF COLORADO 1313 Sherman Street, Room 315 Denver, Colorado 80203 Petitioner: LAKEWOOD COUNTRY CLUB, v. Respondent: JEFFERSON COUNTY BOARD OF EQUALIZATION. Docket No.: 59196 ORDER THIS MATTER was heard by the Board of Assessment Appeals on March 30, 2012, Debra A. Baumbach and James R. Meurer presiding. Petitioner was represented by Richard G. Olana, Esq. Respondent was represented by James Burgess, Esq. Petitioner is protesting the 2011 actual value of the subject property. The property is described as follows: Lakewood Country Club 6800 W. 10`h Avenue, Lakewood, Colorado 80214 Jefferson County Schedule Nos. 110117 & 051401 The property consists of the Lakewood Country Club including a private 18 -hole regulation parkland golf course, clubhouse, an aquatics and fitness center, swimming pool complex, and miscellaneous support buildings. The golf course is supported by a driving range and practice green. The Club was originally constructed in 1908 with five greens rebuilt in 1961. The main clubhouse building was constructed in 2006 and the aquatics and fitness center was constructed in 2008. Site size is 120.98 acres consisting of a 120.012 acre primary parcel and a 0.97 acre parcel used as an employee and overflow parking lot. The club owns water rights in the form of 88 shares in the Rocky Mountain Ditch Company. Petitioner is requesting an actual value of $4,332,000.00 for the subject property for tax year 2011. Respondent assigned a value of $9,975,000.00 for the subject property for tax year 2011; however, is recommending a reduction to the appraised value of $9,000,000.00. There was no dispute among the parties relative to the land value of the subject. 59196 1 Mr. William La77eri, Treasurer and past President of the Lakewood Country Club, Mr. Troy Sprister, General Manager of the Club, and Mr. Thomas F. McElhinney testified on behalf of Petitioner. Mr. McElhinney presented the following indicators of value for the real property associated with the subject: Market: $6,459,215.00 Cost: $4,500,000.00-$6,300,000.000 Income: $4,332,000.00 Reconciled $4,332,000.00 Mr. McElhinney testified that the Lakewood Country Club was a "going concern" and that based on industry standards, the income approach to value should be the primary indicator of value for the real property associated with the subject. Relative to the income approach, Mr. McElhinney used the actual income from the facility and industry typical expenses to arrive at a net operating income (NOI) of $927,180.00. The NOI was capitalized at a 13% overall rate to arrive at the total assets of the business (V tab) of $7,132,154.00. Declared personal property in the amount of $1,884,905.00 and intangible assets in the amount of $1,261,470.00 were subtracted from Vrab to arrive at a real property value of $3,985,779.00. The amounts of personal property and intangible assets were not disputed by Respondent. The difference between the $3,985,779.00 and the $4,332,000.00 results from a math error in Petitioner's model. In order to further support the value derived from the income approach, Mr. McElhinney developed a cost and market approach, but placed little weight on these approaches in the final opinion of value. Mr. McElhinney testified that the facility suffered from functional obsolescence due to its size and age and that this obsolescence directly impacted membership. Relative to the comparables in Petitioner's market approach, Mr. McElhinney pointed out that the subject was valued significantly above similar clubs in the metropolitan area. Mr. McElhinney further testified that the costs and sales used in Respondent's approaches to value were flawed and should not be relied upon to conclude value. Respondent's witness, Mr. Randall K. Brenimer, a Certified General Appraiser with the Jefferson County Assessor's Office, presented the following indicators of value for the real property associated with the subject: Market: Cost: Income: Reconciled: $9,200,000.00 $9,980,000.00 $7,800,000.00 $9,000,000.00 Mr. Brenimer testified that for a special purpose property such as the subject, the cost approach based on Marshall and Swift Cost Service is considered to be the most reliable indicator of value. This approach was given the most weight in the conclusion of value, and according to the witness, depreciation and obsolescence were properly deducted. 59196 Mr. Brenimer further testified that the income approach was considered but given minimal weight and that the market approach was used primarily for a test of reasonableness for the cost approach. Within Respondent's income approach, the necessary deduction for personal and intangible property was purportedly netted out of the total gross income resulting in no line - item deduction for these asset classes. Only three comparables were employed in the market approach with minimal discussion and support for the adjustments. The primary difference between Petitioner's and Respondent's concluded values involved which approach (e.g. income v. cost) was most appropriate and should be given the most weight, how the asset classes of personal property and intangible assets should be addressed in the analysis, and whether age and size of the facility resulted in significant obsolescence. After careful consideration of the testimony and exhibits presented at the hearing, the Board concludes that the income approach best represents value for a property of this type and that the income approach developed by Petitioner should be given the most weight in the final conclusion of value. The Board concludes that estimating the total assets of the business and subtracting the appropriate asset classes resulting in the value of the real property is a preferable valuation methodology. The Board concludes to the value of $4,332,00.00, equating to $240,667.00 per golf hole, which is bracketed and further supported by Petitioner's sale comparables. ORDER: Respondent is ordered to reduce the 2011 actual value of the subject property to $4,332,000.00. The Jefferson County Assessor is directed to change their records accordingly. APPEAL: If the decision of the Board is against Petitioner, Petitioner may petition the Court of Appeals for judicial review according to the Colorado appellate rules and the provisions of Section 24-4-106(11), C.R.S. (commenced by the filing of a notice of appeal with the Court of Appeals within forty-five days after the date of the service of the final order entered). If the decision of the Board is against Respondent, Respondent, upon the recommendation of the Board that it either is a matter of statewide concern or has resulted in a significant decrease in the total valuation of the respondent county, may petition the Court of Appeals for judicial review according to the Colorado appellate rules and the provisions of Section 24-4-106(11), C.R.S. (commenced by the filing of a notice of appeal with the Court of Appeals within forty-five days after the date of the service of the final order entered). .59196 3 In addition, if the decision of the Board is against Respondent, Respondent may petition the Court of Appeals for judicial review of alleged procedural errors or errors of law within thirty days of such decision when Respondent alleges procedural errors or errors of law by the Board. If the Board does not recommend its decision to be a matter of statewide concern or to have resulted in a significant decrease in the total valuation of the respondent county, Respondent may petition the Court of Appeals for judicial review of such questions within thirty days of such decision. Section 39-8-108(2), C.R.S. DATED and MAILED this 10th day of April, 2012. BOARD OF ASSESSMENT APPEALS a Sb�eb,' Debra A. Baumbach Jam R. Meurer I hereby certify that this is a true and correct copy of the decision of (rfce Bo of Assessment App Milla chton 59196 4 Public, Frostbelt, Total Revenues $1.3 million or more NGF/Golf Datatech Operations Profile 2010 21 Public, Frostbelt, Total Revenues $1.3 million or more REVENUES (Average) Green fee & golf car revenue Other golf revenue Food & beverage revenue Merchandise revenue All other revenue TOTAL OPERATING REVENUE 2009 $1,087,200 $110,900 $415,000 $123,200 $144,300 $1,880,700 2008 Percent Change $1,140.000 $111,800 $432.400 $134,500 $123,000 $1,941,700 -4.6% 0.8% -4.0% -8.4% 17.3% -3.1% Percentage of 2009 Total Revenues Green fee & golf car revenue 57% All other revenue 8% Merchandise revenue 7% Food & beverage revenue 22% Other golf revenue 6% Range of Values - 2009 Total Revenue $1.3 - under $1.4 mm $1.4 - under $1.7 mm $1.7 - under $2.0 mm $2.0 mm or more 25.6% 28.2% 19.2% 26.9% 100.0% Food & Beverage Revenue Under $250,000 $250.000 - under $500.000 $500,000 or more 30.2% 36.0% 33.7% 100.0% Golf Revenue (fees, carts & other) Under $1.0 mm $1.0 - under $1.2 mm $1.2 -- under $1.5 mm $1.5 mm or more 20.6% 26.8% 33.0% 19.6% 100.0% Merchandise Revenue Under $75.000 $75,000 - under $125,000 $125,000 - under $200,000 $200,000 or more 19.3% 31.8% 27.3% 21.6% 100.0% NGF/Golf Datatech Operations Profile 2010 22 Public, Frostbelt, Total Revenues $1.3 million or more \\_ _ EXPENSES (Average) Total maintenance expenses All other operating expenses TOTAL EXPENSES Percent 2009 2008 Change $746,300 $873,000 $773,300 $923,700 -3.5% -5.5% $1,61.9,300 $1,697,000 4.6% Muse Range of Values - 2009 Total Expenses Under $1.1 mm $1.1 - under $L5 mm $1.5 - under $2.0 mm $2.0 mm or more 21.8% 30.8% 26.9% 20.5% 100.0% Maintenance Expenses Under $400,000 $400,000 - under $600,000 $600,000 - under $1.0 mm $1.0 mm or more 20.9% 27.9% 30.2% 20.9% 100.0% CAPITAL EXPENDITURES Percent of courses with expense Ave rage 2009 Percent 2008 Change 81% 78% $228,670 $169,790 35% CAPEX Range of Values -- 2009 Under $30,000 $30,000 - under $100,000 $100,000 or more 30.3% 39.4% 30.3% 100.0% NGF/Golf Datatech Operations Profile 2010 23 Public, Frostbelt, Total Revenues $1.3 million or more REVENUES PER ROUND (Average) rota, RPR Golf RPR Food & beverage R P R Merchandise RPR 2009 $66.67 $43.73 $15.52 $5.14 2008 $68.26 $46.83 $16.62 $5.58 Percent Change -2.3°k -6.6% -6.6% -8.0/4 Green fees, golf cars and other golf revenue Range of Values Total RPR Under $50 $50 -- $74 $75 or more 32.2% 38.9% 28.9% 100.0% F&B RPR Under $8 $8 - $19 $20 or more 33.3% 39.5% 27.2% 100.0% Golf RPR* Under $35 $35 - $49 $50 or more 35.6% 38.9% 25.6% 100.0% Merchandise RPR Under $3.00 $3.00 - $5.99 $6.00 or more 31.0% 38.1% 31.0% 100.0% Play Days (Average) Play days 2009 269 2008 269 Percent Change 0.1% NGF/Golf Datatech Operations Profile 2010 24 C Performance >s% N D C Ct 0 0 C,) CO 0 2 C9 U Z r:Cr( U Uw WOO Total Operating Revenue and Total Capital income S 0 0 0 C 0 0 0 0 0 a 0 N 0 0 0 U, fcrt $10, 000, 000 0 0 0 0 0 0 In 4^ a.+ 171$ V a 0 les c� c en on to c c O U Z (cic< Z UW m C m • - N N a _-r-. oaM . Q 0) 9.07 _ N o Nts" N a n N U, $25,000,000 o 0 o 0 0 0 o 0 0 0 o 0 0 0 0 In 0 in N es r in Vii 418), V) UMW - 0 4n 0 75th Percentile C a 25th Percentile Gross Margin a 44 Nit as N a, C C, a, ce on C T.; A a a. O 0 on eo c a, Q e� in In c a, V � 75th Percentile 25th Percentile di in u) di r w ts) ilk linked co p a 2 u *2°-• esits di In CU C di 3 O Q so 2 0 aj P. i7 1 Golf Operations Labor aaueualutew 13 s5utpltng a, iaftik cz- 4!! on Nose CU 0 5 au s u c co X •� c Sports a Recreation Course Maintenance Of! C •s+ d og ga a O a z U Z Fa - I _ 0 0 0 .. 0 O r 4^ l 0 0 0 0 0 ir 0 0 Q CO CN N a rg;71 }� 1 A gszr c+ ($500,000) -1 75th Percentile I a I I a, C 0 en riert 0 a. O eben L. 0 m on r0 C C C, CL le Zan in 4.1 to a, In C, Vs C a, 0 O C, z 1 y 0 us; - i lc; I _ ci r gfri L. uA N 25th Percentile ( Lc The Appraisal oumal 471 Limited -Scope Appraisals: A Time for Reform 478 Privatization: The Sale of the Century 483 The Quality Appraisal Report 489 Marketing/Exposure Time and Market Value Estimates 494 Trap for the Unwary: The Scope of an Appraisal ‘1 500 Identifying a Well -Founded Market Analysis 609 Assumptions Underlying the Retail Gravity Model 519 House Sizing: A Cooperative Venture 524 Computer -Assisted Real Estate Appraisal: A California Savings and Loan Case Study 533 Adjusting House Prices for Intro -Neighborhood Traffic Differences 539 Stein Rule Estimation in Real Estate Appraisal 545 Supply -Saturation -Induced External Obsolescence: Two Techniques for Quantifying Value Loss 553 Three Approaches? 565 Market Value: Does One Size Really Fit All? 570 Adjusting Overall Rates and Gross Income Multipliers: A Fresh Perspective 576 Linear Regression Analysis of Economic Variables in the Sales Comparison and Income Approaches OCTOBER 1993 APPRAISAL INSTITUTE 557 Effects of Asbestos on Commercial Real Estate: A Survey of MAI Appraisers Published quarterly by Appraisal Institute 600 A Survey of Appraisers Regarding Factors in Discounting Partial Interests DEPARTMENTS APPRAISAL INSTITUTE Notes and Issues Myths about Hotel Business and Personalty Values Sean F. Hennes Professionalism and the Role of the Appraisal Institute Thomas A. Dorsey, MAI, SRA Financial Views Fall ---1993 James E. Gibbons, MAI 600 4 616 Sealmiellanws 619 Construction and the Appraiser Wall Systems Thomas C. Richard, AIA 622 Cases in Brief 626 Book Review 629 Letters to the Editor 631 Appraisal Institute Publications Manuscript Guide 637 639 About the Appraisal Institute 641 Index 643 MISSION STATB&NT The Appraisal Jaand Is published to provide a torum for information and Ideas on the practice and theory of real estate copra sal. A combination of two poor POIXoisd Ir ditits a rxticcflons. The Rear afore ApRxaber and The Appr>abor Journal, the new f urnai address the neeCls of raden'Kd and generai appraisers The opinions and statements set forth herein do not necessatty reflect the viewpoint of the Appraisal Institute at the time at pUblicatIon. While a great deal of core has been torten to prow'ide a xsscte cnd current information nets the Appraisal insfflule nor tis etas and staff assume responsitiNti for the accuracy of the data contained herein. Further, the general WirdPles and c0nclrAiorrs presented in this text are subject to bcol, staate. and federn bas and regulations, amt cases► and any revisions Of the Borne. This publication is sold for educational purpcess with the understanding that the publisher is not engaged In rendering legal, accounting, c any other procol senACO. The Apprdsai brute advocates edsai oppatunity and nondsorimlevation In the appealed profession and conducts tit activities without regard to race, cola, sew reil0lonz no%or,iol origin, or harms status. The Appraisal Joti►nd (ISSN 0003-7067) is published quarterly (Ja'uy/Apd/ / O 1993 by the Appraisal Institute, on Minis Ndtt or-PrSt Corparal on at 875 North Mchipan Avenue, Site 2400. Chicago, Nrois 60611-1980. All rights reserved. Second class postage paid at Otago. Minis. and at additional mailing offices Wbscrip on rota $30 Per year, broi l $35; Appraisal !nab le mike e members and candidates, S20 per Yea (aiiocalad ttor'n dui and service tees): k'rhockbory one - yea student role. $25 (foreign. $30), Single copy price: S10. Telephone ones (312) 335-4427. Postmcasiter. Send address changes to Orcuiat$o n Deportment, The Appraisal .band 875 N. Mchipon Ave, suite 2400, Chicago, N. 60611.1460. Allow sin weeio for change. a separate expense to be funded by the owner. A separate replacement allowance for short-lived assets is rarely included or even mentioned among the expenses in hotel pro formas. Therefore, while current ho- tel valuation technique double counts FF&E, it doesn't count at all the necessary cost of replacing short-lived building components. CONCLUSION The technique described by Lesser and Rubin does not isolate the land and build- ing. An additional deduction must be made to remove the value of personal property. Further, if anyone could agree about what business value is, it would need to be subtracted out as well. The preceding observations fall far short of a comprehensive treatment of the subject. Cautious baby steps are sometimes more prudent, however, than a comprehen- sive, yet insupportable, theory. Appraising Golf Courses for Ad Valorem Tax Purposes Stephen R. Hughes, MAI, and Kevin K. Nunnink, MAI A significant expense for any golf course — and an expense that seems to be on the rise --is the real estate taxSt 1 As with many special -use properties, such as racquet dubs, hotels and motels, restaurants, and convenience stores,agsga Willeagisiths. Further, county ap- praisers may lack the staff, budget, or data necessary to properly value a golf course. THE HIGHEST AND BEST USE APPROACH The first step in appraising a golf course for ad valorem tax purposes is to estimate the highest and best use of the subject propery • s issue is also important to recognize when analyzing comparable golf course sales_ if a golf course is sold for redevelopment to single-family resi- dential, it is a land sale with a change in use and therefore not useful in estimating lSphen Q. Hughes, MM, is president of Hughes & Company, Ina, of Leawood, Kansas. He is a member of the Society of Golf Appraisers and has appraised Several county clubs and golf courses for a variety of including ad valorem tax appeals. Mr. Hughes received an MBA from the University of Kansas and has been active in commercial real estate valuation since 1984. Kevin K. Nunntnk, MM, is president of Kevin K. Nunnink & Associates, Inc., in Westwood, Kansas. He has been an act$se appraiser since 1976, appraisng all types of residency and commercial property, inducing golf and mixed - use properties. Mr. Nunnink is also involved in commercial ial real estate development and management. He re - coved a Masters of public administration degree nom the University of Kansas, and is a mermen of the Valuation Network. Inc. :I Herne Notes and Sues 611 Residential lots adjacent to a quality golf course typically sell for 20% to 60% more than similar lots not on the golf course. the value of a golf course. Golf courses are often acquired by government entities in order to maintain the area as open space or green space, avoiding redevelopment. In some instances these entities will pay a premium over the golf course value to maintain the open space. Some states have noted that tax rates are getting so high that it is difficult for golf courses to pay real estate taxes, forc- ing them into redevelopment. In re- sponse, certain states have passed "green space" legislation to lower the tax bur- dens for golf courses. THE COST APPROACH A common oversight by some county ap- praisers is to estimate a land value based on land sales that are used for develop- ment to a higher density use, such as sin- gle-family residential tracts. When add- ing the improvement value to the land value, it is necessary to use a low -density land value based on comparison to lower density use tracts such as parks and golf courses.' Even tracts that have been pur- chased for development adjacent to a golf course would be inappropriate as a land comparable without significant adjustments. Cost services such as Marshall Valua- tion Service, published by Marshall and Swift, tend to understate the replacement cost for a modem golf course with irri- gation and proper drainage under the greens. Current construction costs can range from $75,000 per hole to over $300,000 per hole, depending on the suit- ability of the ground before development and the extent of grading, shaping, and landscaping required. Entrepreneurial profit should be added and then backed out based on the business value adjust- ment, which is discussed later. While sod, shrubs, and trees can mature with age (i.e., maintain value or appreciate), a por- tion of the golf course improvements, such as the greens, sand traps, and irrigation equipment, depreciates. In addition to the physical deterioration, one must consider the sometimes significant external obso- lescence that affects a golf course. For ex- ample, a championship golf course de- signed by Pete Dye, a nationall recognized architect, Of this, approximately 12% can be attributed to physical deterioration. The remaining ac- crued depredation is attributable to ex- ternal obsolescence, based somewhat on soft market conditions, but mostly based on the value transfer to adjacent residen- tial lots. Residential lots adjacent to a quality golf course typically sell for 20% to 60% more than similar lots not on the golf course. This can result in millions of dollars of value being transferred to the surrounding residential property as a re- sult of the construction costs of the course. This unique value transfer in real estate is also referred to as the "imparted value."2 Using this term, Heuer and McKay imply that the imparted value to the residential ground surrounding the course would be an adjustment to the land value. Since it is created by the construction of the golf course, however, it seems more appro- priate to allocate this to the external ob- solescence of the improvements. Generally, the first step in the con- struction of a golf course subdivision de- velopment is the planning and zoning process. Typically, a developer will pur- chase a site and design an upscale sub- division around the proposed golf course. The burden of a substantial portion of the land cost is generally borne by the sub- division. In fact, residential developers often donate the golf course land to get the course built. To illustrate this value transfer, one only has to examine zoning controversies surrounding golf courses that have been contracted for sale subject to a redevelopment plan. In almost all cases the adjoining property owners have objected, primarily because of the im- mediate loss in value to their property. Thus, the zoning of the development coupled with demand usually triggers the value transfer. Value transfer can be quantified by counting the lots on the course and esti- mating the golf front value increase. Figs 1. Arthur E. Gimmy and Martin E. Beeson, Golf Courses and Country Clubs: A Guide to Appraisal, Market Analysis, Devel- opment, and Financing (Chicago; The Appraisal Institute, 1992), 69. 2. Karla L. Heuer with Cecil McKay, Jr., Golf Courses, A Guide to Analysis and Valuation (Chicago: American Institute of Real Estate Appraisers, 1980), 30. 612 the Appraisal Journal, October 1993 ure 1 is an example from a prestigious country club in an upscale neighborhood in the Midwest. This analysis presumes that value transfer is attributed to adjacent lots and not improvements on those lots. Further, it should be noted that other, less ob- vious value transfers may occur to sec- ond -her lots or to the entire golf course community. External obsolescence from over- building, which has happened in some markets, can be measured by capitalizing the revenue loss based on a comparison of current levels of initiation fees and monthly dues to former levels. The same method can be applied to daily fee courses if green fees and rounds of play have dropped. SALES COMPARISON APPROACH The sales comparison, or market, ap- proach is similar to any other commercial real estate analysis. In addition to inter- viewing golf course owners and man- agers, it is sometimes helpful to check with local officials of the Professional Golfers Association to see what golf courses in the area or region may have been sold re-- cently. It is important to ascertain as much data as possible about a golf course that has sold. Because of a limited number of sales, significant adjustments are usually necessary and, with more information, these adjustments are more easily quan- tified. One component that is very im- portant to identify is how much FF&E, or personal property, was included in the sale FIGUM 1 Golf Count* Value Transfer price. If an operating corporation is sold, cash reserves, deposits, liquor, inven- tory, and licenses may be included in the sale price. All non -realty items should be deducted from the sale price. A green -fee multiplier can be used for daily fee courses. A per -hole analysis for adjust- ments is appropriate, but the following items should be noted for comparative purposes and adjusted if necessary: • Property rights, including water rights where applicable • Terms of sale (e.g., favorable fi- nancing, motivated seller) • Market conditions (e.g., over time, deflation as a overbuilding) • Location • Age, quality, and condition • FF&E (i.e., personal property) and other non -realty items (i.e., intan- gible assets or business value) • Contributory value of other im- provements (e.g., different club- house sizes, recreation amenities such as pools or tennis courts) • Length of the course (if signifi- cantly different) • Course signature (e.g., Tom Fazio, Robert Trent Jones, Jack Nicklaus, Pete Dye) Because of the limited number of golf course sales, it is usually appropriate to analyze sales throughout an entire region that may span several states. Care should be taken, however, to make sure the mar- ket is similar. For example, golf courses inflation result of Average Lot Stze (square feet) Number of Estimated Lots Value/Lot Estimated Gott Front Total Value Premium Lots fronting golf course: Some lots without golf frontage: Lot value increase from goof course: 10,000 10,000 20,000 22.000 10,000 10.000 20,000 22000 12 8 25 15 12 8 25 15 S 50,000 $ 60,000 $135,000 $165,040 Subtotal S 40.000 S 40.000 S 40,000 $110,000 Subtotal S 600,000 5 480.000 S3,375,000 S2,475,000 $6,930,000 S 480,000 $ 320,040 $2.250,000 1,650,000 S4,700,000 �2,2___34,_D00 25% 50% 50% 50% None None None None HughesfNunnink: Notes and issues 613 with year-round play in Florida or Cali- fornia cannot be used for comparison to Midwest courses where there is seasonal play. If golf courses in other metropolitan areas are utilized, an analysis should be undertaken to determine local market conditions for each sale. It is sometimes helpful to use supply and demand statis- tics, which can be obtained from the Na- tional Golf Foundation. . • • If the course is pri- vate, initiation ees, monthly dues, and rounds played should be noted. If it is public, green fees, rounds played, and cart fees should be noted. In some markets, published data is available through business newspapers or golf -related associations. iimissamet These should be correlated from historical statements. In some country dub operations the ini- tiation fees from new members are allo- cated to capital replacements. A reserve for the real estate items would include funding for short-lived items such as a roof, a parking lot, a pool, tennis courts, certain heating, ventilation and air-con- ditioning systems, irrigation equipment, and interior finish such as carpeting and wall treatment. Greens, ponds, and sand traps need periodic renovation as well. Replacements of personal property should be left in the reserve because the personal property is valued separately and de- ducted from the total property value. The personal property reserve includes re- placement of all FF&E. Replacement of case goods and inventory items are in- cluded with the other expense items. A . 1 gimilmlask The ideal source for cap- italization rates is the overall rate, de- rived from the market by noting the pur- chaser's expectation of the NOI in the following year, divided by the sales price. Alternatively, mortgage -equity tech- niques for building an overall capitaliza- tion rate can also be used. The tax capi- talization rate is then added to the overall capitalization rate. It is calculated by not- ing the tax levy per dollar multiplied by the assessment ratio. Care should be taken to review the subject profit -and -loss statement for non - stabilized items, such as leases for golf carts, and adjustments should be made to stabilize those figures. This is necessary because capitalizing an NOI with a sig- nificant deduction for a lease that may pay out in less than- five years would under- state the NO1 and understate the capital- ized value of the property. In some in- stances where leases are simply financing arrangements, the lease should be treated as debt service and disregarded. PERSONAL PROPERTY VALUATION ADJUSTMENT • MOM tally, the term fixtures ap- plies to real estate, but it has become long entrenched by usage that will continue for our purposes. Two figures that should be noted are e, owunt valuation of the pers hen:a ~sa.'�M aY.'6J.. jA7Y'dPyr' 4suA.� U4!!dx s weld as the book value of the NOME 2 Indicated overall rote, including reserve Red elate lac adjustment assessment ratio X Tot rate/S1 = 29.00% 0.100434 Incllcated overall rate for ad vdorem tax anti* 12.50% 2.9'1% 15.41% 614 The Appraisal Journal, October 1993 personal property on the balance sheet. Replacement costs for the FF&E should be noted from interviews with owners and from cost manuals such as Marshall Val- uation Service. FF&E costs for mainte- nance equipment for an 18 -hole golf course can range from $200,000 to $500,000. FF&E for a large, high -quality country club can exceed $750,000. Care should be taken to make sure that the county does not as- sess as personal property any equipment that is assessed with the real estate, in- cluding certain kitchen, pool, and irriga- tion equipment. The next step in the analysis is to re- view the age of different components of the FF&E against the estimated useful life. The personal property should be based on a value in use (i.e., depreciated cost) and not based on a salvage value. If a sig- nificant external obsolescence is applied to the improvements, a proportionate external obsolescence factor should also be applied to the personal property so the value of the personal property relative to the real property improvements and land is not overstated. Some appraisers of properties with significant FF&E, such as hotels and motels, discuss the impor- tance of estimating the return on and the return of the personal property. This is appropriate, but the value of the personal property relative to the entire value esti- mate must not be overstated. al 1111111111111MONNISIMM eaSIMINNISIMIRMS Business value is an important compo- nent of any real estate that is an end -user property where operation of the real es- tate is intertwined with the real estate it- - inMS • ismimmirrg capitahna�r� be amour Another method to estimate the busi- ness value is to estimate pre -opening or organizational expenses based on a sur- vey of operators and developers. The ideal way to estimate business value is to es- timate a market -rate lease payment based on a triple net lease of the real estate (land and improvements). We have noted golf course net leases from municipalities where the lease rates range from 10% to 15% of green fees and cart fees, plus 5% to 7% of gross sales (e.g., food, beverage, merchandise), and the lessee manages the entire operation and owns all the per- sonal property. Whatever method is used, it is important to identify this component of value and make sure that it is consid- 3. Laurence Binh, "Golf Courses —valuation and Evaluation,,. The Approrsal Journal (January 1991): 38-47. 4. Gummy and Benson, 81. The management fee technique is particularly popular, but it assumes that all business value is related to the management of the operation, which is not necessarily true with a golf course. Hughes/Nunnink Notes at agates 615 ered in each approach to value. In the cost approach, start-up costs, permits and li- censes, and entrepreneurial profit should be included to be offset by the business value deduction. filmSlialimbe aNdmiSktfir a SININOMMINSID alin• CONCLUSION In sum, important issues that must be considered in an ad valorem tax analysis of a golf course include the following: • Land value should be based upon low -density uses such as golf courses and parks or flood -prone areas. • External obsolescence can be quan- tified by noting value transferred to adjacent residential lots and also by total accrued depreciation analysis of golf course sales. • All comparable sales should be con - finned to identify the amount of FF&E and intangible assets (i.e., business value) included in the transfer. Golf courses rarely sell as real estate alone. • All three approaches should be ad- justed to exclude personal property and business value. Professionalism and the Role of the Appraisal Institute Thomas A. Dorsey, MAI, SRA Objects have always been assigned some value by society, value based on either trade or status. Order required the exis- tence of a level of agreement as to the rel- ative value of an object. This led, invari- ably, to the "What's it worth?" question. But who answered it? Everyone and any- one. Yet, while acting as independent and self -trained appraisers, our ancestors managed to build and maintain --as we continue to do today —a fairly structured and effective market economy. In 1993, who answers the valuation question? We all do. People determine value. Supply and demand consider- ations aside, each individual ultimately decides the value of an object, which is then quantified as value in exchange for a common denominator: money. In the more complex society of the twentieth century, however, a need for profession- alism when measuring value has evolved. It is no longer sufficient for buyer and seller to agree on value, and thereupon consummate their business transaction. Often, one of the parties seeks advice. And, especially in a real estate transac- tion, there is a need to convince another party a lender that society agrees with the value the individual buyer and seller have assigned to a particular object or property. The lender is concerned that its loan be secured, and that concern re- quires an objective and supported esti- mate of market value. This concept of professionalism in the appraisal of real estate is fundamental to modern principles of real estate lending. Most recently, three significant events have worked to better define and secure the role of a professional appraiser: 1. The formation of The Appraisal Foundation and the introduction of the Uniform Standards of Professional Appraisal Practice (USPAP) in 1987. 2. The passage of Financial Institu- tions Reform, Recovery and En- forcement Act of 1989 (FIRREA) legislation, including a demand- ing --and for the most part uni- form --set of agency appraisal standards and a program of state certification for appraisers throughout the United States. 3. The merger of the American Insti- Thomas A. Doan, kW, a d senior vice president at American Savings of Honda, F.S.B. He represents Region X as a member of the Appraisal institute's Board of Director& and has published articles in The Red Estate Ap- praiser and Analyst. 616 The Appraisal Journal, October 1993 Future of golf sits in deep rough By Drew Harwell The Washington Post Posted: 03/08/2015 12:01:00 AM MST DenverPost.com A A round of golf offers participants some magnificent views, but the game — with its drivers. clubs. shoes and tee times — is expensive to decade ago, when the golf course was a de facto playground for the professional set and a young Californian named Tiger Woods was the world's best player, golf looked like an unassailable national undertaking, and corporate players were champing at the bit to get in. But the business behind one of America's most slow -going, expensive and old-fashioned pastimes has begun to fall apart rapidly. TaylorMade, the world's biggest maker of golf clubs and clothes, saw sales nosedive 28 percent last year, its parent company, Adidas, said last week. "A decline in the number of active players ... caused immense problems in the entire industry. And, as a market leader, this hit us particularly hard," Adidas CEO Herbert Hainer said on a call with analysts. The sporting -goods giant has taken "some painful measures to restructure and stabilize" its golf division, Hainer said, including listing its slow -selling golf gear at deep discounts and postponing new launches. The coming years, Hainer had previously warned, present even more "significant negative headwinds" for the game. It has been years since the increasingly unpopular sport of golf plunked into the rough, and the industry is realizing that it may never be able to get out. All the qualities that once made it so elite and exclusive are, analysts say, now playing against it. The game with its drivers, clubs, shoes and tee times is expensive to prepare for and to play. The sport is difficult, dissuading amateurs from giving it a swing, and time- consuming, limiting how much fans can play. Even what loyalists would say are strengths its simplicity, its traditionalism can seem overly austere in an age of fitness classes, extreme races and iPhone games. Even Jack Nicklaus, perhaps the greatest golfer in history, makes a strong argument for why new players aren't flocking to golf. "I'd like to play a game that can take place in three hours," Nicklaus told CNN in January. "I'd quite like to play a game that I can get some reasonable gratification out of very quickly and something that is not going to cost me an arm and a leg." The number of Americans who said they played golf at least once last year has fallen to one of its lowest points in years, Sports & Fitness Industry Association data show. Even worse for the sport's future: The number of people ages 18-30 playing the game has sagged nearly 35 percent over the past decade. "Every macro -indicator that we've been looking at for the past 20 years rounds played, number of minorities playing, women coming into the game all of these things that we tracked says that there's less people playing," Mark King, a former TaylorMade president and current president of Adidas North America, told HBO's "Real Sports" last year. "I don't like where the game looks like it's going." Even the golf business' biggest heroes have fallen out of grace. Tiger Woods sliced through a set of disappointing tournaments, including the worst round of his career, before declaring last month he would take a much -needed break. That drop-off has hit America's greens and links hard. More golf courses closed than opened in 2013 for the eighth straight year, according to the National Golf Foundation. And the number of course closures has sped up, averaging 137 closings every year since 2011, data from golf -industry researcher Pellucid show. But it's not just TaylorMade or the courses that are struggling. Dick's Sporting Goods, which bet big on golf in 2006 by buying specialty retailer Golf Galaxy for more than $200 million, has repeatedly acknowledged its bogey, shuttering stores and ending one experiment staffing a PGA professional in the golf sections of more than 500 stores by firing all of them. "Golf from a participation standpoint, and how it translates to retail, is in a structural decline," Dick's CEO Edward Stack said in August. "And we don't see that changing." The golf industry has made overtures at "growing the game," some of which have pinned hopes on another superstar like Tiger reinvigorating the game. But some are calling for the great game to prepare for even tougher times ahead. "There's nobody out there who's going to save us," said Pellucid president Jim Koppenhaver at a Professional Golfers Association of America gathering in January. "We have to save ourselves." Sales & Finance How much is a course worth today? With so many troubled courses on the market, it's almost impossible to determine course value. But the one thing that is known is that values are dropping. BY BRUCE BUCKLEY • n the end, the most precarious crossing at The Bridges at Black Canyon in Montrose, Colo., turned out to be the one that bridged the expectation gap between the seller and a buyer. here's no confidence in running (income) numbers out into the future. How many years will it be until we're confident that things are heading in a positive direction? " ----JEFF WOOL SON Following the death of the course's owner in 2008, three years after the par 7] Nicklaus Design course opened, the lender, New Frontier Bank, foreclosed on the property and put it up for sale at $25.5 million. As it turns out, The Bridges wasn't the only troubled asset in New Frontiers portfolio. In April 2009, the FDIC took over the bank and looked to unload The Bridges at $7 million. In December 2010, the course, the clubhouse, the restaurant and all other facilities sold to Lew Thompson Properties LLC of Arkansas for $3 million -- just under 12 cents on the dollar. In an environment where troubled properties are trading at deep discounts, many analysts say the industry has yet to see course values hit bottom. Although some courses are starting to see rounds and revenues level off, observers warn that even stable owners could sec their assets continue to lose value in the market for years to come. "Values are falling like a rock," says Ron Carciere of Golf Market Advisors in Auburn, Calif. "We haven't seen a bottom. Every month it shocks me how low they are getting. live seen things that would have sold for 5) 2 million in the late 1990s that would have gone for $5 million five years ago and now are at $l million. Ws in freefall" Ultimately, the value of courses today are driven less by a property's financial performance and more by the willingness and ability of buyers to close a deal. Operationally, some courses are starting to see signs of stabilization. Through October, rounds nationally were down slightly at 1.8% below the same period in 2009, according to the National Golf Foundation, as many courses saw rounds begin to flatten out. Meanwhile, the inventory of golf courses is beginning to shrink, meaning no new competition is entering the market. But despite any improvements in golf course balance sheets, considerable issues remain on the buyers' side of the equation. Chief among the concerns is the general lack of financing. Golf•specific lenders are gone and tradit ional banks remain skittish, especially as they try to work through troubled assets in their own portfolios. As a result, the field of potential buyers has shrunk considerably. "There arc plenty of potential buyers out there, but they just can't get financing," Carciere said. "The deals you sec now are cash deals. In the past, it) to 15 percent were cash transactions and the rest were financed Today. the reverse is true Once you eliminate those financed transactions, you're down to maybe 20 percent of t hr buyers that used to be in the market. And those cash deals tend to be in the $ 1 million to $2 million range." Even among those buyers with the means to close deals, the long-term outlook for the golf business remains fuzzy "Anyone looking at the golf market today is having trouble quantifying the risk of golf course income," says M.J. Mastalir of Real Estate Capital Corporation. "It has been trending down for ten years. It's very difficult to say how reliable a 'property's) income stream will be when you try to project that out over several years" As a result, buyers are reigning in lJ—I r 'et Sales & Finance r 044 • • • •-w et' -. r t M4. MO - Rq �. Is —r -.rimers 8ridgcs ©t Black Conlon y risk. In the late 199O', when course financials were trending up, courses with positive cash slow t.omrnunly traded at capitalization rain of 8 to 10 percent. In 200)9, capitalization rates averaged 12 percent, according to the Society of Golf Course Appraisers More often that, not, courses on the market are financially in the red, and buyers are applying multipliers to gross income to determine value. Jeff Woolson, managing director and senior vice president of CB Richard Ellis' Golf & Resort Properties Group in Carlsbad, Calif., says that while ,roperties might have seen multipliers xtween 2 to 2.5 in the past, today they ire at roughly half that level. "I've seen people break ii out and ay, 'We'll pay l limes gross on t he golf, nil the food and beverage won't make noney, so we'll value that at OS times,' ie said. "There's no confidence in running income) numbers out into the future. low many years will it be until we're onfident that things are heading in a *salve direction' Three years% No one vows, What many analysts can predict is that to volume of properties on the market likely to balloon in the coming years. (though some lenders have started to ►recluse on properties, observers say bat most banks are staying patient with ?linquent borrowers. Once the supply of •operlies goes up, taints could go down "If you have seven bankrupt properties ," •M..••. in a market and 10 buyers now, what happens next year when there arc twice as many bankrupt courses ,for sales?" says Chris Charnas of Links Capital Advisor: in Evanston, III+ "Those buyers are Just waiting for prices to drop" Even those courses that aren't for sale could feel the impact, Mastalit says. "When we get to the end of the cycle and the properties that fail get brought to market by lenders, that is when you'll see the devaluation occur at golf courses," Mastalir said. "ribose courses) will have an impact in the local market when they are situated. A $ 12 million course that chat led $120 greens fees, but was bought fat 51 S million can now charge $25 That impacts net yone in that market" Although the looming tsunami of foreclosures could be painful for owners, Carciere says it's a necessary next step to recovery for the market. "We need banks to get out of the ownership of golf courses;' he says. "Until then, we won't be at bottom. The good news is, once that inventory is gone we can start to improve again, but that could be a three- to five-year process." Echelon Golf Club & Real Estate - Alpharetta, GA FOR FURTHER DETAILS FOR RIDDING: • • lilt .vr►w om .cam SIMPSON Pang _COMPANY Click on "SEALED BID SALES" se et in • r t • 3434/. Acres Tool • Rees Jones I $ Hole Active Golf Course • Tennis Facility Designed By Sias Smith • Phase One: 11 Planed Residential Lots - 10 Acres • Phase Iwo: 71 Acres For Estimated 56 Lots Appraised wire: 52.3,000,000 Asking Price: SS,%l,01 Conan loisrasatioa: Frank N. Simpson, CCx M The Simpson Company ofGeorgia, line. 770.532.9911 PO Box 292 • Gainesville. GA • 30503 Out' S'cort ,.� ,1, '. Lt. tiff .., EICCAUSC OUR DRIVE- AND 01.A -4' REST INTERESTS APE: WHAT Cc)1INT-. • f., .."1ti.hn '��'er"*'—- .yam„ r _ _ • • "`.+ " _ • •.' r _ m .4- �- f SOLD' i -_ CL SED Closed more than 550 Got4 Courses since 1991 5850 Million S8d0 minor in Sales ,de or THE EOM, Cdtb TODAY 888-324-5020 sivww.HiIda-AIIencorn /3 ^ni,lLrrr* Ile Measuring Up Page 1 of 3 JANUARY 2016 GOLF BUSINESS Current Issue Vital Signs For close to a decade now, pundits of all stripes have prodded and probed the golf industry trying to diagnose its ailments and devise cures. ► Water Works As California's historic drought stretches into a fifth year, it's indeed become challenging times for the state's 900 -plus golf courses. Paving A Different Road It hasn't been easy, but Terry Smith is using the fruits of labor from a separate business to solidify the foundation of Rock Hollow MORE CONTENT Online Exclusives MORE EXCLUSIVES Programming For Profits From wine and nines to junior leagues to fitness, savvy operators understand that creating a golf experience that appeals to the masses requires much more than a pristine course. Related Articles In the Flow In the Zone Commentary: Regaining Popularity for the Game Eye to the Future How to Negotiate a Better Lease ti! %jiI\AL LOUT COJKSE CFV NL SUBSCRIPTIONS February 2010 Measuring Up By Steve Eubanks ADVERTISE EDITORIAL The true value of a course is seldom worth the sum of its investments Legendary investor Warren Buffet once quipped, "Price is what you will pay. Value is what you get." That's a quote worth remembering, especially for golf course owners trying to put a value on all the sweat, fear, love, anxiety and effort they've poured into the ground at their facilities. While it's human nature to wonder what your life's work might be worth, it's also scary, especially during times of economic hardship. The sad reality for most owners is that the fair market value of a golf course isn't what they thought. And in many cases, it doesn't equal the money, time and effort they've invested in it. "Cost has nothing to do with value," explains Larry Hirsh, president of Golf Property Analysts, a Pennsylvania -based golf appraisal firm. "That's a hard fact, but it is a fact." Splitting Hairs In its simplest form, "value" is what a buyer agrees to pay and what a seller agrees to take. Everybody understands that, but the most elementary principles sometimes get lost in the jumbled emotions of a complicated transaction. Consider the number of times you've heard a salesperson state, "I can't sell it for that price. I've got more than that in it." While that's a perfectly acceptable reason for rejecting any offer, what you have in something has nothing to do with what that something is worth. Think about it this way: Picasso had about $20 invested in paints, brushes and canvas for any given work he produced, but his paintings routinely sell for millions of dollars. In fact, a collector so valued his work that one of his masterpieces, "Garcon a la pipe," fetched $104 million at Sotheby's in 2004. Meanwhile, only one of Vincent van Gogh's works ("The Red Vineyard") sold during his lifetime. despite his enormous investment of blood. Some might scoff at these comparisons, but a lot of owners view their golf courses as works of art, a blend of man and nature with intrinsic value that cannot be quantified on an income statement. No one can look at The Yellowstone Club in Montana, for example, without being moved. And what kind of value could be placed on Peachtree Golf Club, a Bobby Jones - designed course in the middle of Atlanta's trendy Buckhead district that has, as its clubhouse, the home General William T. Sherman used as his headquarters during the Atlanta Campaign? These are golfs equivalent of Rembrandts. No valuation formula can quantify their true worth. Problem is, investors, tax assessors and potential purchasers take a more black -and -white approach. "The concept of market value is not tied to what it costs to produce something or the amount of sweat equity someone has invested, but rather what a knowledgeable buyer and knowledgeable seller would pay and accept for a property," Hirsh says. Key word: knowledgeable. Equipped with objective data, buyers can make informed decisions that are sometimes to the chagrin of developers, builders and owners. "They (owners) only see the cost because that's what they spent, and in most cases, they don't want to admit they spent too much," Hirsh notes. "I've rarely seen a golf course where somebody got the value out of it commensurate with what they put into it." To underscore this point, consider that the National Golf Course Builders Association estimates the average cost of golf course construction to be $7.7 million. Meanwhile, the average course sale in the last year has been $2 million, creating more than a $5 million discrepancy between what an owner has in a course and what he or she can potentially get out of it. "The typical appraisal process -although golf courses are more complicated - is based on the land's highest and best use," says Bob Gorman, president of the Gorman Group, a Chicago -based appraisal and consulting firm that specializes in golf course valuations. 'That means the value of a course falls into one of a couple of categories: what the value of the property would be Search GolfBusiness.com ARCHIVES LOGIN a SEARCH CONTACT US No B undaries Illt We'll keep breaxt'ng ti -,e bou 'dsrmec.. Vier -,ere . .. 1.. 1, ,,, . ' to you. Ride III First to C ass. The All New rucxsrerxo� V Featured Resource Bright Ideas Archive Brought to you by ValleyCrest Golf Maintenance Access some of the most creative ideas golf course owners and operators have to offer within the Bright Ideas area of the GB Archive. ► j a N 0 1 E CONTENTS DIGITAL FLIPBOOK Connect With Us 000 http://www.golfbusiness.com/article.aspx?id 1212&bq=6yfv%5 Eg43 3 $ 1/13/2016 Measuring Up Page 2 of 3 as raw land, if it were redeveloped for housing or as a commercial area, or on the low end, letting it return to farmland; or, a value based on the economics of the course as an ongoing business. The quickest way to evaluate the latter is to look at the net income and determine what someone is willing to pay for this business as a going concern." A Variety of Variables Regardless of the method, countless variables factor into the valuation of any golf course. For example, a course might encompass 300 acres of land in a high -end residential area where lots are priced at $100,000 or more. But how much of that land value is attributable to the fact that the golf course exists? And how much would the per -acre value plummet if the golf course went away? Then there are situations where an alternative use is impossible. With today's environmental laws, there's no way Pebble Beach could be developed for anything other than the golf course that currently sits there. And if Sand Hills Golf Club in Nebraska were not one of the best golf courses in America, the highest and best use of the land would probably be as a cornfield. "In Chicago, we have a number of golf courses built on top of dumps," Gorman notes. "So, there might not be any value to the underlying land because of the remediation costs. You might have a golf course that looks like a multi -million -dollar course, but it's only worth a couple hundred thousand dollars because there's nothing you can do with the land and it's not throwing off enough cash to have any value." To complicate matters further, governments typically restrict how property can be used. So, for instance, a golf course might be viewed as acceptable green space, while any residential or commercial development tied to the project may not be so readily accepted. "Zoning laws and impact fees play a huge roll," Gorman admits. "In some cases, if you change zoning from low density or even agricultural to higher density residential, some governments will bill you for 20 years worth of back taxes under the new zoning. The assumption is that the land could have been developed as lots all along." Therein lies the rub. If the land cannot be converted to homes or condos, the value of a golf course is simply a multiple of the cash it generates as a business, minus physical, functional and economic depreciation. That cash multiple is usually pretty easy to calculate. Six- to eight -times net earnings has been a good rule of thumb historically, assuming there are any buyers showing interest. However, the inexact part of the equation -and the one that causes so much angst among golf course operators -is depreciation. What sort of encumbrances are on the property? Is the state about to condemn two holes to expand a highway, as they did with a Bobby Jones -designed course in Canton, Georgia? Is the owner engaged in a dispute over chemicals seeping into a nearby aquifer? Has a dog drowned in one of the lakes, leading to a lawsuit and expensive judgment? Don't laugh -that's just what happened at Isleworth, the exclusive club in Windermere, Florida, where Tiger Woods, Mark O'Meara, John Cook, Stewart Appleby and J.B. Holmes reside. "This is where due diligence can get tedious," Hirsh says. "Physical depreciation is what you think it would be: the property's normal wear and tear and stuff that hasn't been done because the owner is cutting back to take as much cash out as possible. But it's also the things that are under the ground like deteriorating irrigation pipes and poor drainage." At a course in Myrtle Beach, South Carolina, for instance, mounds were created by burying everything from old stumps and brush to car tires and other waste, creating a biological stew and potential nightmare for any potential purchaser, a fact that was discovered through an exhaustive due diligence process. "There's always something," Hirsh says. "Functional depreciation is a little easier to see -it's when time has passed the place by. If a course can only be stretched to 6,200 yards, for example, it will have some functional depreciation. "Then there's economic deprecation, which is the stuff the owner has no control over, like the city building a noisy road next to your property or the fact that you're now in the glide path for a major airport," he adds. "Your property hasn't changed, but outside forces have diminished the value." It's a harsh way to put a price on a Rembrandt, especially when a course owner receives his or her tax bill and realizes the assessor is valuing the property based on replacement costs. But, as most any appraiser familiar with golf course valuations will attest, it's common practice because it's the easiest for appraisers. "For the mom-and-pop operator, it's especially tough," says Gorman, who estimates that more than 90 percent of all privately owned golf courses and country clubs in the United States are being overvalued and overtaxed by their county authority. "They're dealing with two negatives: declining rounds and income, which can put them in a negative cash -flow position, and a declining underlying value of the land because of this deep, deep real estate recession. Throw in increasing tax burdens, and it's a tough pill to swallow." http://www.golfbusiness.com/article.aspx?id=1212&bq=6yfv%5Eg433$ 1/13/2016 Measuring Up Page 3 of 3 January 2016 Contents Digital Flipbook Home The solution, if there is one, is to suck it up and press forward. "I recommend that an owner in today's market hang on for awhile [until surrounding real estate values pick up, even if the golf does not, before thinking of selling]," Gorman says. "It's better to wait it out and hope that this market turns around." Steve Eubanks is an Atlanta -based freelance writer and former golf course owner o Share / Save ri v. L4 Leave A Comment SUBMIT COMMENT Subscriptions Subscribe Renew Address Change Customer Service Advertise Media Kit Contact Us Editorial Editorial Calendar Article Submission Editorial Policy Contact Us Archives Advanced Search Request Back Issues Golf Business - The Official Publication of the NGCOA © 2015 I ngcoa.org Contact Us GB Staff Customer Service http://www.golfbusiness.com/article.aspx?id=1212&bq=6yfv%5Eg433$ 1/13/2016 VOLUME 2, NUMBER 1 • JANUARY/FEBRUARY 2004 The Valuation of Golf Courses By Stephen R. Hughes, MAI, SGA Hughes & Company, Inc. SCOPE Vahsinga golf course can be more challenging than playing golf In addition to the teal estate there is asignificant component of tangible personalpmperty such as furniture and equipment, and often, intangible personal peoperty such as business value Golf courses have several departments that operate very differently from each other. No two golf facilities are ever alike, therefore a deep understanding of the departmental operations. including their potential needs to he in place to reliably estimate the value of the entire property. This issue will examine the data and methodology used to value golf course facilities using all three approaches to value INTRODUCTION Golf course appraisal principles are similar to those for valuing other commercial property. However, with this special use. an additional body of knowledge is needed which includes course design/playability, quality, turf maintenance, irriga- tion, golf carts, and course maintenance equipment. The market analysis is unique to the golf industry- Because private clubs include a variety of membership tights and privileges, ownership and use rights become important. The valuation process is generally looked upon as an or- derly procedure involving various steps in order to arrive at a value conclusion. It specifically deals with first identifying the type of appraisal problem that the appraiser or assessor is faced with, and then gathering available pertinent data. Once the data is obtained and properly analysed, it is utilized as the basic ingredient for estimating value from each of the three approaches to value —the income approach, the sales comparison approach, and the cost approach. Buyers tend to focus on the income potential of a course, therefore, the income approach is the most important to an appraiser. 1 GOLF COURSE MARKET Before the appraiser or assessor gathers physical data, it is important he/she thoroughly understands the features of the property being appraised and how it fits into the com- petitive golf course market environment. A good source of this type of data is the Internet. Following are some areas that need to be researched concerning the subject property being appraised: Types of Golf Courses 1. Rreuunote These courses are 18 holes with multiple tees ranging from 5.200 to 7.100 yards and have a par of 66 to 72. 2. Nwe-rrote: This course covets over 2600 yards with a par over 33. 3. ErCImVE This course is 4.000 to 5.200 yards in length with a par of 58 to 66. IAAO SUBSCRIPTION SERVICE - ISSUES IN APPRAISAL AND ASSESSMENT 4. PAR 3: This type drowse is less than 4,000 yards for 18 holes with a par of 54. Types of Golf Course Operations 1. DAILY FEE: The most popular type of operation. Golf revenue is generated by a charge for each round of golf and in some cases by an annual pass. Many are municipal but most are under private ownership and operate for profit. The term is somewhat out of date in that nearly all courses charge for each round but a few still allow all day golf for a single fee. 2. Pluvam CLUBS: These account for 35 percent of the market, but this ratio has been shrinking in recent years. They are the most difficult to value because of the variety of member rights. They can be for-profit operations, not -for-profit, semi -private, or a combina- tion thereof. A combination of entry fees and monthly or annual dues generate revenue 3. RESORT COURSES A resort course can also be a daily fee or private course, or a combination of both. Destina- tion facilities. such as a second home area or resort, are associated with these courses. 4. IEARN NG & PRACTICE COURSES: These would be short courses ranging from Pitch -N -Putt to Par -3 to Execu- tive length It would also include practice holes at driv- ing ranges and courses with a non-standard number of holes, Charge would be like a daily fee course. Course Design Configurations for Regulation Facilities 1. CottE: The oldest and most basic design. Holes share common roughs, reducing the land requirement, which is typically 125 to 140 acres for a full-length course. 2 Swrze mow This course is built primarily for maximum golf lot sales. Requires between 165 to 195 acres. These can be either continuous fairways or returning nines 3. DOME rmIRwAT: This course offers less frontage for real estate development Requires between 140 to 175 acres. These courses can also be either continuous fairway or returning nines. Table 1 shows the variousperfamance ratings forselected characteristics for each type of configuration: 2 TABLE 1: Portomance ratings for selected characteristics for each rapulaion come design type Design Dodoes Land Frontage Flexibility Consumption t]poorWNdea calamity Maintenance Cost Cora Low Low Medium Low SttgteiCont High High Low High 56tddte& High High High High DeuhleiCml. Medium Medium Low Medium Dots Iulrtet Medium Medium High Median PROPERTY DESCRIPTION Property description includes mole than just describing the buildings and typical site improvements such as parking and perhaps a pool or tennis court. The more significant asset is the golf course. not the buildings. A detailed description of the golf course is oftentimes overlooked by inexperienced appraisers. Golf course improvements, including the course yardage, layout/design, type and condition of grass (for example. bare spots or poor drainage areas). size of greens, number and condition of sand traps. length and condition of cart paths, and quality/age/condition of the irrigationsystero including wells pumps.valves, pipes and sprinkler heads, arc all important in estimating the value of a golf course Follow- ing is a golf property description checklist 1. Comm DESIGN: Things to consider are layout. aesthet- ics, and designer (if applicable). Signature architects such as Jack Nicklaus. Torn Fazio. Pete Dye and Arnold Palmer can command design fees of 3750,000 to 31,000,000 or more Other qualified architects typi- cally charge 3200,000 and up. 2. AGE of me GOLF COURSE ANU IMPROVEMENTS 3. LAND ANALYSIS: Things to look at during this analysis are items such as location, topography, flood plain, water source, size/shape, utilities, zoning/master plan, and excess land. 4. CLIMATE: Amount of precipitation, golfing season length prevailing wind etc. 5. GRASSING: Costs to consider here are tee areas, greens, fairways, and rough 6. HAZARue Bunkers, sand traps, water, etc. l2 -X VOLUME 2, NUMBER 1 • JANUARY/FEBRUARY 2004 7, COURSE DESIGN FLAWS' Important to I ook for here are pos- sible functional problems (greens or tees that are too small, erosion, poor soils, areas that are not playable danger of getting hit by stray golf balls, etc) Some of these items will be curable and others will not. 8. IRRIGATION SYSTEM Many older courses and low cost courses have manual irrigation around the greens only. Inexpensive irrigation systems have manual hoses or couplings that require higher labor costs. Modern irrigation systems are typically computer operated Automatic top -of -the -line systems measure water saturation, wind speed, and temperature around the course. 9. IMPRovpJ4INFANALYSts• Building improvements are of less importance than the golf course but they do contribute to value The dubhouse typically ranges from 3,000 to 6.000 square feet fora daily fee course to 20,000 to 30.000 square feet fora private clubhouse (some may be larger than 60.000 square feet). The maintenance facility is typically a metal building with a size of 4.000 to 8,000 square feet Cartstor- age is usually in the basement under the clubhouse outdoors, or in a nearby building with a typical size of 4,000 to 6,000 square feet. Other types of improve- ments to consider are cart paths. tennis courts, pools, driving ranges, and other recreational areas. 10. PERSONAL FROfIRTY—FURNIMRE, sumacs, ANo eo lestear (FF&E): Personal property items are significant in all golf courses. The greatest cost is the course mainte- nance equipment, which typically will range between $200,000 to 4500 000. Golf carts are another signifi- cant cost. The typical number of carts is 50 to 70 with a cost of around 53.000 each Oftentimes the golf carts may be leased. Areas in the dubhouse where personal property items are typically found are the kitchen, din- ing rooms, office security areas locker rooms, etc U. Quwty AND R PitAr.R- This involves an estimation of the quality and amount of maintenance that has been performed on each of the golf course's assets. This will be useful in determining the amount of physical depreciation in the cost approach and for selecting corn - parable properties in the sales comparison approach 12 ENVIRONMENTAL Potential environmental problems can be fuel tanks. chemical storage. chemical usage, wetlands, source water quality, etc. 3 HIGHEST AND BEST USE ANALYSIS Assessors or appraisers typically estimate the highest and best use of the subject property depending on local statutes. Generally, a golf course is appraised according to its value -in - use as a golf course. Redevelopment to other higher density uses is often limited by zoning, restrictive covenants, con- figuration of the course, and master plans or land use plans that designate the site as a recreational area or open space. Theseissues are also important to recognize when analyzing comparable golf course sales. A highest and best use analysis typically will consist of two parts: a golf market analysis (demand and feasibility study) and a current or alternate use analysis (redevelopment). Market Analysis Supply and demandandfeasibility of constructing new cours- es is usually beyond the scope of what an assessor or appraiser is called upon toprovide. Nevertheless, an overview should be useful This process involves the following studies: 1. Poevi noN AND GOLFER oeMoGRAPret3: There is a dear relationship between household income and golf participation. Approximately 53 percent of golfers show household incomes of more than $50,000 annually. Up- scale courses will draw from households with incomes of $75,000 to 5150,000 plus. According to the National Golf Foundation's (NGF) 2000 Golf Participation, 117 percent oldie US. population over the age of 12 has played golf at least once. Oft is percentage,80percent of golfers are male Approximately 46 percent of the golfers are college graduates. The average US. golfer is 40 years old, has a household income of $59,970, has played 14.8 years, and plays 19.3 rounds of golf each year. Facts such as these reported by region can be obtained from the NGFs Web site at wwwngforg 2. DEFINmoN OF MARKET AREA: The market area for golf is wider than for roost other red estate- Golfers often drive 20 to 40 minutes to play a golf course. When four to six hours are spent at the course, the drive time is not that significant. 3. COMPETMVE Gnu FANrnrs IN MARts'roNc AREA Originally, golf courses were designed as stand-alone recreational facilities usually either private or municipal in a core design. During the 1960s, golf courses began to be incorporated as part of real estate developments. Par - !A -3 IAAO SUBSCRIPT ION SERVICE • ISSUES IN APPRAISAL AND ASSESSMENT titipation in the game of golf and the number of new courses grew significantly in the 1980s, which led to a substantial amount of overbuilding and foreclosures. In the 1990s, golf courses opened in record numbers (mostly upscale daily fee courses) even in the face of less rapid growth in the number of golfers and total rounds. Asa result, the market started another down- turn in 2000 and 2001 resulting in snore foreclosures and a dedine in new construction. In the future, the golf market will continue to be cyclical 4. DEtaoewtptnc AREA ANALIES: This analysis involves three basic steps: define geographic area for examination, es- timate population of trade area and course inventory, and conclude and forecast market variables. Identifying golf courses under construction and in the planning stages is important forall appraisers orassessors in all circumstances. Sources for this information indudedisnu- siors with golf pros, Pellucid (a national golf database), the National Golf Foundation. local orstategolf associations, golf magazines, newspapers, and golf industry analysts. Golf Course or Alternate Use In testing for alternate land use options, the appraiser or as- sessor must check such things as: zoning, deed restrictions, promises to adjacent homeowners regarding limitations of redevelopment of the golf course site. etc. This will include analysis of the subjectproperty's land value. as if vacant based upon an alternate use Redevelopment potential is related to the usability of the site. indudingsuch factors as topography, frontage, access, utilities and general shape Test FOR mai= eem east use The highest and best use needs to be determinedas if vacant and as improved The four highest and best use tests in dude ph ysicallypossible (usually already known), legally permissible, financially feasible and maximally productive VALUATION TECHNIQUES USED ON GOLF COURSES There are three approaches to value that arc employcdwhrn valuing commercial real estate such as a golf course. They are the income approach, the market approach, and the cost ap- proach. Typically, the one relied on most often by investors in this type of property is the income approach The cost approach is more relevant for proposed or new courses. The market approach is used the least because of the general lack 4 of similar golf course sales. Keep in mind that, for ad valorem tax valuation, only the real estate will be valued The Income Approach In the income approach, the whole property value may be estimated by capitalizing the stabilized net opera ring income and then taking lump sum deductions for the contributory value of the FF&E and intangible value. In adjusting the historical income and expense state- ment provided by the operator of the subject property, the appraiser or assessor would back out any interest income, interest expense, debt service, and depreciation or amor- tization. This results in net operating income. In addition, special consideration must be given to capital items and a reserve for replacement amount should be correlated from historical statements. In some country dub operations, the initiation fees from new members are allocated to capital replacements An alter- nate calculation, which is more complicated is to estimate and exclude income and expenses attributable to non -realty property and capitalize only the real property income. The ideal source for capitalization rates is the overall rate, derived from market sales by noting the purchaser's expecta- tion of NOI in the following year, divided by the sale price Alternatively, mortgage -equity techniques for building an overall capitalization rate can be used The effective tax rate (tax capitalization rate) is then added to the overall rate to find the overall capitalization rate. Care should be taken to review the subject property's income and expense statement fornon-stabilized items, such as leases for golf carts. When these types of items are found adjustments should be made to stabilize those figures. This is necessary because capitalizing an NOI with a significant deduction fora lease that may pay out in a year would under- state the capitalized value of the property. In some instances where leases are simply financing arrangements, the lease should be treated as debt service and disregarded Following are some additional considerations to keep In mind when using the income approach to value golf courses: 1. GROSS INCOME ESTIMATE: The gross income figure will typically include green fees, dues, and initiation fees. A market survey should always be undertaken to de- termine if the fees reported by the subject property's owner is reflective of the competitive marketplace. If the course is private then the initiation fees, monthly dues, and number of members should be noted If it is a public course, green fees, rounds played and cart fees should be notedin some markets, published data is available through business newspapers or golf -related associations. Other income sources that may be reported are: cart rental, food and beverage sales (from VOLUME 2, NUMBER 1 • JANUARY/FEBRUARY 2004 snack shops, on -course beverage carts, dining rooms, and banquet facilities), pro shop merchandise, driving range fees, and fees from other recreational areas. 2. Earerues: Typical expense items will include: mains nance, administration (including payroll), cost of goods sold fixed expenses (insurance), management fees, ad- vertising, etc. When appraising property for ad valorem purposes. the real estate taxes are not considered a valid operating expense because they are handled in the effective tax rate component of the capitalization rate 3. CAPITAL IMPS nMExts/tusFltvrs Foe sspu a r :A replacement reserve for the real estate items would include funding for short-lived items (those items that have an economic life less than the life of the main structure). Examples of reserve items would be: a roof, a parking lot. a podtennis courts. certain heating, ventilation and air-conditioning systems, cart paths. irrigation equipment and interior finish items such as carpet and wall treatments. Items such as greens, ponds, and sand traps (bunkers) need periodic renova- tion as well and should be treated as a reserve item_ Replacements of personal property should be left in the reserve amount if the personal property is valued separately and deducted from the total property value The personal property reserves include replacement of all FF&E items. The replacement of case goods and inventory items are included with other expense items, 4. JusrincCenom or INCOME ANIexpense ESTIMATES: Income and expense estimates can be verified through published sources such as the NGF, the Golf Course Superintendents Association (GCSA). and other state and national associations. They can also be verified by the use of comparable property data. 5. TAX ADJUSTMENTS: As noted earlier, the overall capital- ization rate may need to be adjusted for the effective tax rate. Following is an example of how the adjust- ment can be handled: Indicated overall rate, slier reserves 11.00% Real estate tar adjustment (essm. ratio r tax rate): .29 x 9.11659 + Indicated overall rale for ad velorern tax analysis: 14.30% The Sales Comparison Approach In the sales comparison approach the first step is to research and analyze all the available sales of golf courses. There are 5 over 16,000 golf courses in the United States but when the municipal or member -owned facibties are removed (35 to 45 percent), there are a limited number of courses that might sell. When looking for sales, a regional or statewide search will probably be necessary.This approach to value has limited usefulness in the valuation of golf course property unless a recent comparable golf course sale(s) can be confirmed Generally, this approach is used to set a reasonable range in value for the property being appraised. Golf courses rarely sell as real estate alone. Therefore, it is very important when analyzing sales to identify how much personal property was included in the sale price. Intangible assets must also be deducted when estimating only the real estate component of a sale. If an operating corporation is sold, cash reserves, deposits, liquor, inventory, and licenses maybe included in the sale price. All non -realty items should be deducted from the sale price. Property rights, including water rights where applicable, or partial interests (leasehold) as well as terms of sale (favorable financing, motivated seller) should also be investigated. Sources of data include local golf professionals, golf appraisers, and published sources such as industry newsletters and journals. Developing a unit of comparison is oftentimes difficult when using the sales comparison approach to value golf courses. They are difficult to determine because of the wide variation inthesizeand type of improvements. Some typical units of comparison are price per hole, revenue multipliers, price per round, price per acre, and price per yard. PRICE PER HOLE: The price per 18 holes is probably the most useful of the various units of comparison. This adjustment can only be used however, if the golf courses sales and the subject are similar in all characteristics (quality, location, improvements, etc.). REVENUE MULTtaUERS: These multipliers are useful for daily fee courses. A green fee revenue multiplier can be used when the exact revenue is unknown. A green fee multiplier is calculated by dividing the saleprice by a stabilized rounds estimate times the weekend green fee (sale price/stabilized rounds estimate x weekend green fee). This multiplier can be utilized without any income data on the subject property or the comparable properties because green fees and approximate rounds can always be ascertained Consideration should be given for 9 -hole rounds, discounting and member play. Paso PER MIND (PRICE PER modus): This unit of comparison has limited usefulness because of the lack of sufficient data. Pen PER ACRE This unit of comparison is useful to determine if the golf course sale being analyzed was perhaps really a land sale. Many golf course buyers state that their motivation was to keep the golf course but that they felt the land could be redeveloped for about the same value By the same token, many governmental agencies have overpaid for a golf course for the express purpose of maintaining open space. /2•S IAAO SUBSCRIPTION SERVICE • ISSUES IN APPRAISAL AND ASSESSMENT PRICE PER YARD: This unit of comparison has no real value in valuing golf courses. Variations in yardage, unless hugely significant, are inconsequential. Another part of the sales comparison approach is the process of adjusting sales for difference in physical characteristics. Some common adjustments that should be considered when looking at golf course sales include LocAnon: This adjustment involves looking at the distance the course is horn the playing populace, its interrelationship with subdivisions, access (ingress and egress), and available parking. C.LEaos Factors Factoss lookedathere are the lengthof the playing season, the wind direction and velocity and the frequency of storms that stop play on the course PL YAarutr:Thisadjustnsentconsidershowchallengingthe course is, the player appeal of the Louise, the steepness of the fairways, aesthetic design, size of the greens, the condition of the course surface drainage, width of the fairways, shrub and tree maturity, etc IRRIGATION SYSTEM: Consider the reliability of the water source, water costs (pumping costs or vendor costs), water quality, system type (fuIyautonatic. etc.), water rights, etc SOIL TYPE AND TExTURe Items considered are salinity. alkalinity. drainage, percolation capacity, etc TOOLS, EQUIPMENT, AND RENTAL !TENS: This adjustment looks at the type and condition of these items along with the income produced from the rental of golf carts, dubs, etc. Peec lce muse Income produced from and quality of the driving range SIZE: Number of acres and the number holes. IMPROVEMENTS: Looks at the size and condition of improvements suds as the clubhouse, bar, restaurant, clubroom locker rooms, pro shop, pool, tennis courts. etc. FINANCIAL FArloeI This adjustment considers items such as outstanding debt, number of members, monthly dues. minimums required to be spent at the bar or restaurant. green fees, history of special assessments, annual operating costs, rounds played annually. etc. SALE TERMS AND CONDITIONS Items analyzed include sale price type of deed (trust deed mortgage including chattels), interest rates terms of loan, leases, options, mineral rights, liquor license etc. The Cost Approach Typically reproduction cost is used when valuing golf courses using the cost approach The cost estimate can be obtained from talking to architects, contractors, national costing manuals, etc. The reproduction costs for the course must include golf specific items such as grading and grassing, bunkers, irrigation, tees, greens, cart paths, driving range, bridges, etc. The reproduction costs on the buildings will be based on square footage for finished building area and any 6 unfinished storage area. Also in d uded should be the pool and tennis courts if they exist. PERSONAL PRDPER7v: Even though the personal property is not part of the real estate valuation, it should still be valued for use in the adjustment process for the other approaches to value if the subject property's financial statements are available, the actual cost of the FF&E can be noted on the balance sheet lithe equipment is older, however, that number will likely understate current replacement cost It should be depreciated for physical wear and tear and oftentimes for economic obsolescence like the improvements. There is minimal demand for used FF&E. Like an automobile, it suffers a significant value loss even a month after first being put into use. Furthermore, with a short life span of 5 to 15 years, the physical depreciation is much higher than real estate improvements. Sort costs: Soft costs include such things as interest and other financing costs, legal fees, permitting fees, maintenance of the golf course during the grow -in period management of the facility during construction, pre -opening marketing costs, etc. Entrepreneurial profit should be added to the cost figure and then backed out based on the business value adjustment if appropriate DEPRECATION A deduction for depreciation should also be considered. Physical depreciation to the buildings and site improvements would be handled like other commercial appraisals. On the course itself the sod, shrubs and trees mature over time and tend to maintain their value or even appreciate in value However, items like the greens, sand traps, tee areas and irrigation equipment do havealoss in value due to wear and tear which must be accounted for through the physical depreciation. Functional obsolescence isa common factor in golf course appraisal. Relative to the buildings, functional obsolescence might result from a poorly designed dubhouse or one that has had various additions overtheyars. ltcan be evidenced in poorly placed kitchens, inadequate circulation patterns for guests or for kitchen personnel in relation to food service areas, inefficient energy usage, inefficientand/orinadequate parking, an oversized or over -improved clubhouse. lack of inside storage for golf carts, etc. Some typical functional problems found on golf courses include a poorly designed course resulting in dangerous intersections whereplayers can behitbygolfballs, incomplete or improper irrigation design, flooding and erosion problems which cause excessive replacement and cleanup costs. poor soil drainage, inadequate green or sand trap drainage, continuous single fairway design, anything that causes extra maintenance, etc. Functional obsolescence cam be addressed as a deduction to the reproduction cost or as an increase in operating costs in the income approach. If the problem is curable, the cost to /2-G VOLUME 2, NUMBER 1 • JANUARY/FEBRUARY 2004 cure may be the way to estimate the appropriate deduction in the cost approach. External or economic obsolescence may also be a factor when appraisinggolf courses This could be a result of negative neighborhood influences or more often over building For private dubs, it can be measured by capitalizing the revenue loss based on a comparison of current levels of initiation fees and monthly dues to fonner levels. The same method can be applied to daily fee courses if green fees and rounds of play have dropped. Wuxi-ParentWuxi-Parent Mother cost approach deduction is value transfer which is related to the value of the golf course improvement cost being transferred to adjacent residential lots. Residential lots adjoining a golf course are worth 30 to 90 percent more than the same lot without the golf amenity. Therefore, the burden of a substantial portion of the golf course land cost is generally borne by an associated subdivision. In fact, residential developers often donate the land for the golf course to get the course built. The total lot value inaease is directly related to the golf course improvement cost on the adjacent site. When development of the course is not feasible without adjacent residential drvdopment.avalue transfer adjustment may be appropriate to offset the golf course replacement cast. Value transfer can be considered a component of external obsolescence and/or a negative land value. To quantify value transfer one must know the number of lots on the course and estimate the present value of the total golf front premium. Typically, this loss in value is only attributable to the adjacent residential lots. However, value transfers may also occur on second -tier lots or to the entire golf course community. SUMMARY 1. There are several types of golf courses and golf course operations. Knowing what type is being appraised is important to arriving at fair market value. For example, private equity dubs are not motivated to make a profit. They set dues to cover only expenses, replacement of reserves, and debt service. Their fees can come in a variety of forms suds as initiation fees, equity fees, or stock purchase fees. The higher the entry fee, the more developers can receive during the initial sell-out. Private equity dubs' operating state- ments typically do not reflect market -based N0I. 2. The process of listing or descrthingagolicourse property involves more than just describing the buildings and typi- 7 cal sac improvements. It is very important to adequately describe the golf course itself (i e. yardage, size of greens, type and condition of grass. irrigation, etc). This step is oftentimes overlooked by inexperienced appraisers. 3. In conducting the highest and best use analysis, it is important to perform an analysis of the golfing market- place by comparing area population features to golfer demographics and also to look at alternative uses for the course. 4. All three approaches to value should be used to value the golf course if data is available. All three approaches should be adjusted to exdude personal property (FF&E) and business value, if appropriate. 5. All comparable sales should be examined to identify the amount of FF&E and business value included in the transfer. Golf courses rarely sell as real estate alone. 6. Lad value should be based upon low -density uses such as golf courses, parks or flood -prone areas. A large value transfer can result in a low or negative land value. Steve Hughes has valued hundreds ofgolf courses since the mid -1980s His companyspedalizcs in the valuation ofgolf courses andttsidentialsubdivivons Hessamember ofL4AQ National Coll Course Owners Associations National Coll Foundation. Society d Call Appraisers and the Appraisal brstinrte Mit his Web site at wunehughesgolfcom. !z•7 Calculation of Economic Obsolescence By Cost of Construction vs. Actual Market Sales Redlands Mesa Golf Club — Opened in 2001 Cost to Construct: Land Improvement Buildings FF&E Total Sold in 2007 Net Difference % Loss Vista Ridge Golf Club — Opened in 2003 Cost to Construct: Land Improvement Buildings FF&E Total Sold in 2006 Net Difference % Loss Pradera Golf Club — Opened in 2005 Cost to Construct: Land Improvement Buildings FF&E Total Sold in 2007 Net Difference % Loss $5,058,000 $3,194,000 $522,000 $8,774,000 $2,500,000 ($6,274,000) 71.5% $4,283,000 $3,630,000 $1,272,000 $9,185,000 $3,350,000 ($5,835,000) 63.5% $9,900,000 $6,650,000 $2,000,000 $18,550,000 $5,625,000 ($12,925,000) 69.7% Average % Loss vs. Cost to Construct 68.2% Notes: 1.) Land was given NO value for all land was donated by the developer. % loss would be higher with an assigned cost included. 2.) All Figures are rounded to the nearest $1000 3.) All properties we developed as a centerpiece of a housing community 4.) All courses were designed by prominent golf course designers Valuation Strategies (WG&L) Going Concern Property Transactions: The Necessity of Value Allocations, Valuation Strategies (WG&L) The failure to allocate value components of a going concern purchase price generates significant risk for buyers and sellers, and denies buyers the opportunity to lawfully avoid some tax. Author: MICHAEL ALLEN AND CUTCHIN POWELL MICHAEL ALLEN is a principal, and CUTCHIN POWELL is a manager, in the Arlington, Virginia, office of Ryan, LLC, a tax services firm. It has long been accepted that the acquisition price of a "going concern" property includes both the tangible and intangible assets of a combined business operation. While the methodology for deriving the component values of a going concern has continued to evolve, both the fundamental necessity of valuing each portion and the underlying, significant financial benefits of value allocation have remained constant. Buyers and sellers of going concern properties who neglect to complete partitioned valuations not only risk potential negative tax consequences, but also they make themselves vulnerable to the corresponding adverse impacts to the profitability of those assets and investments. The Evolving Market The current commercial real estate market is in transition. The bad assets that were purchased in the "cheap money" -fueled economy between 2005 and early 2008 have not been fully flushed out, yet again there are the ominous signs of aggressive underwriting and rosy future assumptions as to increased performance. Investment capital and credit are slowly becoming more accessible to investors. Real estate investment trusts (REITs) and other publicly funded entities are awash in cash, as investors seek alternatives to other investments, particularly those susceptible to increases in inflation. The pressure (and requirement) to invest that capital is back, even when that investment is based on frothy assumptions that may not be realizable over the investment's intended holding period. Nowhere is this mixed tide of investor confidence and pessimism better observed than with going concern properties, including, but not limited to, hotels. More Than Just Real Estate All going concern properties serve as complex platforms for the business purpose and enterprise of their owners. Going -concern values include a real estate base that is commingled with the value of the enterprise it supports. Examples include nursing homes, movie theaters, bank branches, regional malls, hospitals, hotels, resorts, casinos, and golf courses. These properties all have something in common they require intensive and ongoing investments in working capital, management, marketing, staff, and licensing. And in each case, the value of the going concern is much greater than that of the underlying real estate alone. This fact may be illustrated by considering two identical buildings: one fully outfitted and functional as a flagged (i.e., part of a franchise) and operating hotel, the other an unequipped building without an operating business. Assuming that each of the properties has a uniform "highest and best use" and other comparative factors that are similar, which property would demand a higher purchase price? The latter property, with no furniture fixtures and equipment (FF&E), no staff in place, no "flag," no reservation system, no frequent flyer alliance with the major airlines, and no pre -sold or recurring banquet or convention business, among other potential intangible assets, would obviously not be as valuable to a prudent and knowledgeable investor. Such a buyer would typically pay a substantial premium for the established and functioning property over the property that is not stable or performing. The premium paid for the established property represents the non -real estate components of value for that going concern. This enterprise premium is comprised of tangible personal property (TPP), intangible personal property (IPP), and goodwill. The latter two components are sometimes collectively called "business enterprise value." They are considered an intangible benefit or asset that is transferred together with the real and personal property needed to house and sustain the operation. Intangible Personal Property When valuing IPP, prudent investors will expect not only a return of their original capital but also a profit on their cash outlay. An investor will pay a premium to shortcut the costs associated with the stabilization, or original startup, of the income stream to be acquired. On a subsequent sale, the owner who originally incurred those costs will expect a return on that initial investment; more precisely, the owner will expect to recoup not only his or her original investment but also an added premium on sale. Just as the original owner will recoup that principal and interest entirely from the next owner, the secondary owner will seek to recover those amounts from the third owner, and so on. The same consideration is true not only with each form of IPP but also with each tangible asset. A key concept for going concern properties is that rarely, if ever, are the land and building being purchased alone. Rather, the buyer is usually interested in acquiring the present value of the future income stream attributable to the business operation. In going concern properties, the presence and operation of the furniture, fixtures, and expenses (FF&E) and intangibles as a whole accelerate both the receipt and the quantity of the stabilized overall net operating income (NOI) being purchased. Further, it enhances the quality of that NOI. For instance, if there are two hotel properties of similar size located next to each other, one that is flagged and equipped to be a luxury international flag and the other is an obscure local flag or "mom and pop" operation, the revenue per available room that each property can generate will be different. As the NOI will vary, so too will the price at which each will sell. This does not mean that on a per -key basis the latter flag will be automatically less profitable or that the return on investment (ROI) for that hotel will be less, but it does mean that the size of the investment and the associated risk will be different. In each sale of a going concern property, different components of value (in different proportions to the whole) are commingled and embedded together in the final, combined purchase price. It is therefore vital to both identify and segregate those individual values for multiple purposes, including tax, accounting, and financial reporting. Ultimately, the allocations may impact: • Recordation or transfer taxes. • Initial (and in states that "chase" sales prices, such as California, subsequent) real estate taxes and personal property taxes. • Sales taxes. • Income taxes. • Fixed -asset accounting and ledgers. • The overall profitability of the investment. Each of the taxes listed may be levied at rates as high as 10%, with some, such as real estate and personal property taxes, occurring annually. This article will identify ways in which prudent investors can ensure that they pay no more than their fair share of property and transfer taxes associated with the acquisition of going concern properties, while remaining in full compliance for all other purposes. Uniqueness of Going Concern Properties Going concern properties always generate operating income from more than the underlying real estate that houses the embedded business. Often, such properties are specially designed or equipped for a particular use (e.g., a bank branch, hotel, golf course, regional mall, nursing home or hospital, movie theater, or sports complex). In many cases, the right to operate the business may require qualifying for and receiving a special license, without which the special use will cease and the real estate will return to a more generic use (i.e., nursing home to apartment building, or bank branch to drive -through pharmacy). Hospitals, assisted living facilities, surgery centers, nuclear power plants, and airports are also examples of such properties. For each, if the current license is not transferred to the new owner, the property's NOI would not justify the premium that the new buyer would otherwise pay over the more generic use of that real estate and the lesser income streams that it would generate. It has been suggested that the difference between "value in use" and "value in exchange" is the total business value or, perhaps, the value of all of the combined intangibles. Value in use is the value of property for a specific use, and there will generally be only a limited number of buyers. Consequently, it is considered a subjective measure of value. On the other hand, value in exchange is a more generic market value of real estate, in which the real estate is exploited based on its respective highest and best use. As such, it is a more objective measure of value. Understanding the nature of the premium being paid for any going concern property is crucial to identifying, extracting, and adjusting for non -realty values that need to be considered separately. There are typically four components to value in the acquisition of any going concern property: • Real estate land. • Real estate improvements. • Tangible personal property. • Intangible personal property.' Each value component must be identified and its value separated depending on the purpose of the valuation. For example, raw land is not depreciable, and so for accounting and tax purposes it is important to accurately identify and record the value of raw land. On the other hand, improvements to and on land are depreciable for tax and accounting purposes. Whether the real estate improvements consist of buildings or improvements to the land itself, such as site improvements, they must be correctly identified, their respective useful lives determined, and the corresponding depreciation computed. TPP is movable, breakable, and can disappear. It covers literally any assets not nailed down or permanently attached to the building or improvements. Verifying and valuing all of the TPP acquired in a transaction is critical to ensure that the buyer gets what he or she bargained for, and is not paying for any "ghost assets" on the fixed asset ledger. This is an important consideration, because if a seller's depreciated book values for these assets are corrupted by nonexistent assets or assets showing salvage values that are not attainable on the open market, then the values will be ignored for other purposes. Those purposes include preparation and filing of local business personal property tax returns and calculation of taxes thereon, as well as the accounting and income tax functions of determining accrued depreciation and useful lives. Finally, acquired IPP must be identified, at a minimum, on a global basis. If possible, it is also beneficial for IPP to be divided into assets that are depreciable and assets that are not. For example, under Financial Accounting Standards Board (FASB) 141/142, there are five established categories of depreciable intangible assets. Other items, like the value of "staff in place" and goodwill, however, are not depreciable, and so it is helpful to capitalize the associated income for each of the depreciable qualifying intangible assets and then assume the balance is nondepreciable. This will not bind the buyer's accountants or auditors to automatically treat the value allocations in the same manner for other purposes, but it does give them a road map to follow when they consider how to treat the assets for other purposes. Methodology The valuation of going concern properties requires the individual valuation of each of the four component assets real estate land, real estate improvements, TPP, and IPP. First, the TPP is valued. This value can be derived using several methods. The approach chosen depends on how accurate and up-to-date the current fixed asset ledger i,s and what the seller is getting from the buyer as part of due diligence or at closing. If the review indicates that the ledger's depreciated book value is a reasonable estimate of the TPP's fair market value (FMV), then it can be used to prepare the TPP bill of sale and to represent the TPP value of the going concern allocation. Otherwise, an inventory has to be conducted, particularly if there is any concern about "ghost assets," if deletions were not previously fully made from the fixed asset ledger, or if additions were not completely broken down into their constituent parts. Another method is asset tagging or reconciliation. This permits a new FMV of the TPP to be established as of the closing date for use in post -closing renditions. Once TPP values are estimated, the real estate value is calculated separately by one or all of the three traditional approaches to value (income, cost, or sales comparison). The choice of method is based on the type of property. For example: (1) The cost comparison approach is usually not reliable if the buildings and improvements at issue are old, in poor condition, or subject to many functional or physical obsolescence issues due to difficulty in estimating accrued depreciation. Also, a lack of recent and vacant land sales that are similarly sized and zoned, and topographically laid out with similar permitted development potential (i.e., floor -to -area ratio) to the subject property makes the cost approach extremely hard to use to extract a credible unit of comparison. (2) Similarly, the sales comparison approach does not work if there are insufficient recent arm's -length sales in the same market as the subject property for comparison purposes. This approach can be effective only when each transaction is adjusted to reflect differences between the comparison property and the subject property. If, in the adjustment process, it is necessary to make many adjustments or a large adjustment, the extracted unit of comparison will be unreliable and, in this event, it should not be given any weight. (3) The income approach is usually the best valuation method for commercial income - producing properties. If no actual income is being generated, as in the case of owner - occupied properties, then a pro forma NOI can be estimated. This is done by using a market -extracted rent for each of the uses at the subject property, less stabilized vacancy and collection costs, operating expenses, and building reserves. The resulting NOI is then capitalized into a value estimate using a market -extracted overall capitalization rate (R.). That base cap rate solves for the combined value of the land and its improvements, but it may need to be "loaded" with the local real property tax rate if property taxes were not deducted from the operating expenses to arrive at the stabilized annual NOI. (4) If multiple value indications are produced by these three methods, they must be reconciled into a single value. That does not mean that the values must be averaged. Rather, greater weight is to be placed on the value indication that is the most credible based on the market data available. Once the reconciled total real estate value is determined, it must be allocated between land and improvements. This is generally done by reference to recent and similar arm's -length land sales. More likely in today's transitional U.S. real estate market, in which sales are infrequent, land values can be better determined by reference to extraction methods under the income approach. These techniques are based on the principle that land is indestructible, and as a result, less risk is associated with land than with improvements, which will all wear out over time. The lower the risk, the lower the capitalization rate that should be applied to the stabilized annual NOI. Land capitalization rates are typically 200 to 500 basis points lower than those selected to value only improvements. By applying different rates to the same overall NOI for either land (RL) or buildings (R8), the separate values can be extracted and used to isolate their respective values. Case Studies To understand the benefit and use of pre -closing allocation studies, it is best to review how they are used by parties involved in performing the due diligence and executing the closing of commercial going concern property. The present authors considered the following three case studies: • Purchase of a single, full -service flagged hotel. • Purchase of a portfolio of multi -tenant data centers. • Purchase of a resort that includes golf courses, a conference center, and rental condominiums (but no traditional hotel). As with all transactions, each of the case studies has a unique fact pattern requiring customized consideration of the underlying assumptions, properties, and methods of acquisition. When reviewing each particular fact pattern, it is important to remember that the most common mistake made by the buyer, seller, or tax assessor is to equate the value of the going concern to that of tangible real estate. Assessors are typically tasked with discerning the value to the real estate only (VRE), but with going concern assets, assessors typically mistake the income of the going concern (lo) with the income of the real estate only (IRE). Therefore, assessors often mistakenly (and illegally) assess based on the value of the going concern (Vo) instead of the VRE. In each of the following case studies, the present authors determined the VRE for recordation and real estate tax assessment purposes. In each case, the purchaser and seller recognized the significant potential benefits of arriving at an agreed -on price for each asset to be recorded. Case Study 1. The traded property was a single, full -service hotel in a major urban market, which was established, built, and operated as a hotel for more than 25 years and had a stabilized income stream. The property had approximately 500 guest rooms, onsite parking, an onsite "outside" chain restaurant, more than 75,000 square feet of meeting and conference space, two distinct buildings with public -space usage rights underneath, an onsite third -party rental car tenant with reduced rate agreements, existing airline preferred provider booking contacts, and staff in place. The property also offered various complementary services, such as airport shuttles. The property was transferred with all TPP and IPP, including a major flag and management agreement, in place. Key considerations. The transaction was an indirect acquisition. More specifically, instead of directly purchasing the going concern, the buyer acquired a 100% share of the stock of the entity that owned the operation. Specific intangible personal properties that were transferred included the flag or franchise, management operations, reservation systems, promotional alliances and agreements, customer lists and advanced bookings, assembled workforce, non -realty contracts, non -realty leases, start-up costs, and goodwill. Methodologies used. Never is it more evident that the acquisition of going concern properties includes significant non -real estate components than when a corporation is acquired (i.e., the realty is acquired through transfer of stock). A stock transfer is generally valued by the purchaser differently than a direct transfer of the underlying real estate, but the allocation of the purchase price will begin with valuation of the real estate. In this case study, the three traditional approaches to value were considered, but the cost approach was significantly discounted. Similarly, the sales comparison approach was given little weight due to a lack of recent, similar, and arm's -length sales in the sale market. The income approach including both direct and yield capitalization was given the greatest weight, using actual historic and pro forma future NOI. All incurred expenses of the business (including TPP and short-lived real estate replacement reserves, management and franchise fee, and insurance) were considered, except real estate taxes.2 From the resulting NOI, the present authors capitalized the going concern value. Then, the returns on IPP and TPP, along with the value of required capital improvements, were capitalized and deducted from the going concern value. The intangible assets had to be more valuable than their capitalized costs, because a return on those investments was expected. The authors therefore considered various market sources, management circulars, and actual expenses to arrive at those values. (It is important to note that capitalization rates for intangible properties are typically 100 to 250 basis points higher than tangible properties to reflect the perceived additional risk associated with non -real estate.) Next, the TPP was valued by considering the seller's fixed asset ledger and prior returns, and market surveys, ultimately arriving at a replacement cost new less depreciation (RCNLD) value to be deducted from the going concern value. As a check, each of these three distinct valuations real estate, TPP, and IPP were added and confirmed to reconcile with the entire going concern value. Results. Based on the authors' study and its review by the buyer and seller, the going concern purchase price was determined to include the following allocations: 19% to real estate land, 52% to real estate improvements, 12% to TPP, and 17% to IPP. These results are of critical importance, as a combined 29% of the going concern purchase price acquired was determined to be from non -realty assets. Buyers and sellers not completing such an analysis often erroneously report the entire going concern value as a real estate (land and improvements) only value, resulting in flawed bookkeeping and significant overspend for various taxes. As a result, as much as 29% of the purchase price was not inappropriately taxed, of which 17% was not taxed at all. In this case, given the sale of stock, the local assessor may well have determined that the underlying real estate had sold at the full going concern purchase price, and used that as the sole basis for determining subsequent ad valorem taxation of the real and personal property. Since there was no deed or bill of sale recorded, refuting such an aggressive valuation would have been difficult and costly but for the authors' report and allocation of values. Case Study 2. The property included a portfolio of data centers located in various cities and states. Some of these properties were established (i.e., built and operated in their current use for three to eight years), and had stabilized income streams. Other properties were currently used as commercial office or warehouse space and were in process of being converted to their highest and best use as data center space. The average site was a single structure having between 50,000 and 175,000 square feet of gross rentable area. Some sites included significant added land, however, which was intended for future expansion or was in the process of being expanded at the time of sale. The properties also offered various complementary services, such as engineering and IT support, as well as additional for -hire services. Most sites included electrical substations with contracts in place allowing for power sharing with the local community. The properties were transferred with all TPP and IPP in place. Key considerations. The transaction was a direct acquisition of the going concern and underlying real property. As the portfolio being acquired included both industry and site name brands that were inseparable from the specific properties, the residual value of those intangible assets had to be considered even though this was not a stock acquisition. Methodologies used. The allocation process began with valuation of the underlying real estate. As in Case Study #1, the three traditional approaches to value were considered. The cost approach was significantly discounted for the established property, but it was used as a key indicator for property under construction. The sales approach was not used, because the sales were found to be unhelpful. The income approach including both direct and yield capitalization was given the greatest weight, using actual historic and pro forma future NOI. All incurred expenses of the business (including TPP and short-lived real estate replacement reserves, equipment rental, power generation, and insurance) were considered, excluding real estate taxes. From the resulting NOI, the present authors capitalized the going concern value. Returns on the IPP and TPP and the value of required capital improvements were capitalized and deducted from the going concern value. The intangible assets had to be more valuable than their capitalized costs because a return on those investments was expected. The authors considered various market sources and actual expenses to arrive at those values. Specifically, estimated hours and income from service contracts, and the expense and anticipated return on staff in place, were considered. (As noted earlier, capitalization rates for intangible properties are typically 100 to 250 basis points higher than tangible properties.) Next, the authors valued the TPP by considering the seller's fixed asset ledger and prior returns, and market surveys, and ultimately arrived at a RCNLD value to be deducted from the going concern value. Finally, each of these three distinct valuations —real estate, TPP, and IPP were added and confirmed to reconcile with the entire going concern value. Results. Based on these independent valuations for each location, the combined going concern purchase price was determined to include the following (rounded) allocations: 6% to real estate land, 80% to real estate improvements, 1% to TPP, and 13% to IPP. These results are of critical importance, as a combined 14% of the going concern purchase price acquired was determined to be for non -realty assets. Separate allocations for each location were made, and the bulk sale was broken down into its constituent parts. A buyer or seller not completing this analysis might have erroneously reported the entire going concern value as real estate (land or improvements), resulting in flawed bookkeeping and higher taxes than required. As a result, as much as 14% of the purchase price was not inappropriately taxed, and 13% was not taxed at all. Of course, the allocations varied by location, but as is readily apparent from the base allocations, the risk of potential over -taxation prior to this allocation was significant. Case Study 3. The subject property was a resort with a conference center, golf courses, and rental condominiums in a suburban area with significant tourism draw. While select condominiums have been razed or built over the years, the primary property was established, built, and operated in its current use for 20 years and had a stabilized income stream. The site was encumbered by partial external ownership of some golf facilities and most condominiums by multiple third parties. Further, development rights of the significant excess land were restricted by the homeowners' association. The property also received unrelated income from off -site catering, videography and photography, and landscaping businesses. The property was transferred with all TPP and IPP in place. Key considerations. The transaction was a direct acquisition. The purchase included a significant name -brand acquisition, as well as the off -site businesses in place, along with intangible assets. Development rights were encumbered by easements and contracted association (and other third -party) agreements that were in place. As the resort boasted a myriad of property types, uses, and businesses, varied assumptions had to be considered for each business type and ultimately consolidated and reconciled with the combined going concern purchase price. Methodologies used. The allocation began with valuation of the underlying real estate using the three approaches to value and significantly discounting the cost approach for this established property. The cost approach was considered, however, for a single family residence, for select land, and for other non -income generating real estate. The sale comparison approach was also discounted due to the unique nature of the business operation and the absence of a suitable sample size. The income approach including both direct and yield capitalization was given the greatest weight, using actual historic and pro forma future NOI. All incurred expenses of the business (including TPP and short-lived real estate replacement reserves, management fees, and insurance) were considered, except real estate taxes.' From the resulting NOI to the going concern, the present authors capitalized the going concern value for each underlying business. Then, returns on the IPP and TPP, along with the value of required capital improvements, were capitalized and deducted from the going concern value. Again, the intangible assets had to be more valuable than their capitalized costs because a return on those investments was expected. Therefore, the authors considered various market sources and actual expenses to arrive at the values. Next, the TPP was valued by considering the seller's fixed asset ledger and prior returns, and market surveys, ultimately arriving at a RCNLD value to be deducted from the going concern value. Finally, each of the three distinct valuations real estate, TPP, and IPP were added and confirmed to reconcile with the entire going concern value. Results. Based on these independent valuations for each location, it was determined that the combined going concern purchase price included the following (rounded) allocations: 17% to real estate land, 44% to real estate improvements, 10% to TPP, and 27% to IPP. That is, a combined 37% of the going concern purchase price acquired was determined to be for non -realty assets. As a result, as much as 37% of the purchase price was not inappropriately taxed, and 27% was not taxed at all. Conclusion Many buyers of going concern properties lament the lost opportunity they could have realized had they carefully considered pre -closing allocation of asset values. Months or years later, when they finally find time to address the myriad of governmental, legal, and tax accounting and auditor issues following the purchase, they find that they let their chance to lawfully reduce their tax liability pass. Simply put, buyers often wish that some value or asset classification had been made clearer or had been better supported when they find themselves responding to questions posed by an assessor, other government agent, or even their own accountants long after the acquisition is completed. By this time, attempts to reconstruct past assumptions and underwriting are difficult, if not impossible, as the buyer realizes that informed personnel have left, documents have been lost or misfiled, or the acquisition team handed the matter off to the operations team without a full briefing of the closing. Further, despite intensive due diligence, a buyer rarely gets from the seller all of the books, records, and supporting materials needed to prove every number on subsequent tax returns, the allocated assessment valuation, or accounting books and records. An allocation study is a useful tool to focus buyers and sellers on addressing and documenting the underlying valuation of the various interconnected assets while the deal is still being struck and the parties still have a joint motivation to memorialize the underlying elements of the total purchase price. Without this certainty, taxing authorities are much more likely to apply their subjective valuations for the different purposes and functions that they perform. More often than not, this will result in multiple valuations and allocations, each different from the other, with no rationale to explain the differences. Rarely does this result in a buyer paying less tax. Further, although pre -closing allocations are important for all buyers and sellers of going concern properties, they are particularly important for REITs. REITs are encumbered by a requirement and condition for their special income tax status to ensure that no more than 15% of revenue, or 25% of value, is derived from non -realty assets. Failure to respect these restrictions may result in the REIT losing its privileged tax status, which allows its shareholders to avoid double taxation. Accordingly, REITs must appropriately consider value allocations before closing to ensure compliance. If they are going to replace or enhance any non -realty after acquisition, it is especially important to empty the glass first before trying to refill, so as not to violate the REIT rules. Memorializing these buyer- and seller -agreed asset values and allocations within the closing documents, incorporating them into all filings, and using them as the basis from which taxes are computed, will ensure that the buyer and seller are not taken advantage of. It will also ensure that ad valorem -based tax of real or personal assets will not be distorted or inflated because non - realty assets are included in those assessments. In short, pre -closing allocation saves time and money, by allowing buyers to avoid challenging these ongoing values in post -closing years. 1 Goodwill is included in IPP. 2 Real estate taxes were accounted for by "loading" the capitalization rate. As with the other case studies, this expense was accounted for by "loading" the capitalization rate. © 2011 Thomson Reuters/RIA. All rights reserved. FEATURE Golf Courses and Tax Assessments: Just One Right Way? BY LAURENCE A. HIRSH, RSH, CRE INTRODUCTION THERE IS NO "ONE SIZE FITS ALL" APPROACH TO appraising golf course properties for ad valorem tax assessments. While this is acknowledged, there is concern about methodologies being employed that do not reflect the actions of market participants. The real problem inherent in the valuation of golf course properties for tax assessment cases is that there is a lack of consistency between jurisdictions in golf property valuation methodology. The purpose of this article is to provide guidance to attorneys, judges, assessors, appraisers and other interested parties on current practices in golf property valuation, and how best to achieve fair assessments based on methodology consistent with buyer and seller behavior for the particular property being considered. As clearly illustrated in "Segmentation of Golf Course Markets" by Stephen F. Fanning,' there are several distinct types of golf course properties, with the primary areas being private, public daily fee and resort. Each requires consideration of different data sets to understand and value accurately, though in some states, courts have dictated that all courses (even private clubs) be considered as daily fee, regardless of whether the property in question is a private, membership club with entirely different economics and operations, and may even be part of a gated, private community that is not open to the public. Taking such an approach not only distorts the actual property characteristics, but further ignores the fact that private clubs can be and are operated for profit, despite the sometimes present myth that they cannot. About the Author Laurence A. Hirsh, CRE, MAI, SGA, FRICS, is the president of Golf Property Analysts, a golf and club property consulting, appraisal and brokerage firm based in Philadelphia. Hirsh has performed consulting and appraisal assignments on more than 2,500 golf and club properties in 45 U.S. states, Canada and the Caribbean, and has previously written two articles on golf and club property valuation in The Appraisal Journal, co-authored The Urban Land Institute's Golf Course Development In Residential Communities, and authored articles for a variety of industry publications. Hirsh also has lectured at seminars, meetings and universities, and is on the education faculty for the PGA of America. A founder and first president of the Society of Golf Appraisers, he has developed a golf course and brokered more than $ioo million in golf course and club properties. Hirsh is a graduate of The Pennsylvania State University. Following are some facts about golf properties: • Private clubs, though often operated as not -for- profit are also very frequently acquired by investors and operated for investment income and growth; • Private clubs and daily fee courses have very different operating profiles and require considerably different management techniques; REAL ESTATE ISSUES 48 Volume 38, Number 2, 2013 FEATURE Golf Courses and Tax Assessments: Just One Right Way? • The value of golf course properties is almost exclusively driven by their income -generating potential; • Golf course properties are typically bought and sold as going concerns and for ad valorem tax purposes; an allocation between real and personal property is required. When considering a valuation assignment for a golf course property, like any other appraisal assignment, it is necessary to consider the three traditional approaches to value. INCOME APPROACH Without question, the income approach is the method preferred by market participants. The income approach reflects the fact that golf courses are going concerns and that they are typically purchased for income investment. However, in tax assessment cases in many jurisdictions, valuations of golf courses are often forced into one type of operating scenario rather than acknowledging that there are several different types of operations, some of which are so dramatically different the only thing in common is that they are golf course facilities. As clearly noted in Fanning, there are multiple (as many as 12) types of golf courses and even five types of private clubs, each serving a different market segment and each targeting different clientele, often from different geographies. For instance, many private golf and country clubs are member -owned and operated as not -for -profits. As such, it is not uncommon to hear the comment from clubs that "it can't have much value because it doesn't make any money." Conversely, taxing authorities claim that the only way to value such a "special purpose property" is by use of the cost approach. Neither of these arguments is correct. In addition to the many not -for-profit clubs, there are also many private clubs operated for-profit by companies and individuals in business specifically for the purpose of owning and managing private clubs for investment and income. Many not -for-profit clubs have been sold to these operators in recent years as member/owners have demonstrated limited ability to keep their clubs afloat financially. While some have become semi -private, or even daily fee facilities, many have simply become for-profit, private clubs that are now profitable or are on their way to becoming profitable through professional management. Since most member -owned private clubs have an economic value to for-profit buyers, and there is clear evidence of a market for these properties, it is logical to value these clubs based on their for-profit potential and assume the property is operated accordingly. The likely buyers are for-profit buyers and unless the club's highest and best use is for an alternative development, using the private, for-profit value model is the best way to develop an accurate and reliable value estimate. This assumes, of course, that the club has profit potential. If it does not and there is no economically feasible use, the appraisal problem becomes more complex, which is discussed later. Laymen seem more comfortable with the idea of daily fee courses (as opposed to private clubs) being valued by the income approach. Since most daily fee courses are operated for profit, that seems easier to understand. This can be misleading since some golf facilities are ill-suited for conversion (in the valuation exercise) from one type to the other. "Shoe horning" a private club into a daily fee valuation model ignores the fact that private clubs have economic value and their own unique marketplace. The models for a private club are as different as are the facilities, and the appraiser should take care to and be able to synchronize the valuation exercise to the specific type of property and the characteristics of that club. In those jurisdictions where this practice is preferred, it is recommended to value as BOTH a private club and a daily fee facility in order to illustrate the differences and the difficulty in being accurate while trying to "fit a square peg into a round hole." Depending on market dynamics, course characteristics, and the size and quality of infrastructure and buildings, a golf property may be more suited to either private or daily fee use, making use as the other unlikely, or at the very least challenging and costly to adapt. And, there is the potential issue of memberships, the rights of members and refund obligations with private clubs that can result in a variety of legal issues, and may or may not contribute to the value of the real property depending on the type of membership contract and in which theory one believes?' 3 Many clubs have the element of membership deposit or initiation fee refunds as a liability; in many cases, the potential liabilities are complex enough to discourage buyers from even considering the purchase of clubs with those obligations on their balance sheet. The income approach requires a deft understanding of the subject property, its relevant market characteristics and the ability to develop a value model consistent with the property and market. This can be accomplished through taking the time to fully comprehend the club's business model, its competitive environment, and the strengths and weaknesses of the specific club. REAL ESTATE ISSUES 49 Volume 38, Number 2, 2013 FEATURE Golf Courses and Tax Assessments: Just One Right Way? SALES COMPARISON APPROACH The sales comparison approach is often applied by inexperienced golf course appraisers utilizing a unit of comparison of sale price per hole (dollars/hole). The problem is that the vast majority of golf courses are 18 holes, and the rest are some multiple of nine holes. Using this approach, the other elements of a golf course or club, such as the clubhouse, other sports amenities, infrastructure and economic characteristics, are ignored. There is no common denominator. Since almost all courses are purchased for economic reasons, even in the sales comparison approach, an economic unit of comparison such as a market extracted overall capitalization rate is appropriate. In the current environment, with many courses having limited or no cash flow, many buyers rely on gross revenue multiples (GRM) and typically have either a particular investment requirement, a minimum level of gross revenues, or both. It is critical to understand that GRMs vary with the level of profit (or loss) experienced, and can be misleading on non -stabilized properties. In today's market, many sales are distressed, or at the very least not stabilized,4 and often to varying degrees. This makes analysis difficult and executing a classic sales adjustment grid virtually meaningless. If one has a sampling of stabilized sales considered adequate, the sales comparison approach is quite useful. Typically, it is the approach used to test the reasonableness of the income approach, and the sales comparison approach is done more subjectively than objectively. Many jurisdictions rely exclusively on the sales comparison approach despite its inherent weaknesses, yet often ignore its strong point, which is based on comparing the sales of different income streams. Most experienced and qualified golf course appraisal specialists advocate developing the sales comparison approach, even if the market data is fragmented and doesn't show strong trends. At the very least, it illustrates what is occurring in the marketplace and can often be used as a check on the income approach. COST APPROACH Some say the cost approach is a test of feasibility. Others say the cost approach provides an estimate of land value. Still others claim that the cost approach is the only appropriate method of valuation for "special purpose" properties such as golf courses. The short response to the last of these claims is "Nonsense:' Without question, assessors are at a considerable disadvantage because of the sheer number of properties they have to assess and the limited amount of information they are provided. The simple fact remains that if the golf course or club is the highest and best use, the land value is not of particular importance in most cases. Feasibility is not usually an issue once the course is developed, and golf courses are not so "special purpose" that the other approaches tangy• bttdeveloped: Most important, market participants completely disregard the cost approach. There is often considerable economic and functional obsolescence, which is very difficult to accurately measure; costs are difficult to estimate accurately and are not relevant to the value of an existing course. In assessment cases, the cost approach is often used by taxing authorities because: ■ it can be completed with limited market data; ■ assessors have computer models set up to do the cost approach; and ■ it typically yields the highest resulting value. A big challenge in the cost approach today is that few golf courses are being built, so cost comps are more difficult to find. If accurate costs can be estimated, depreciation can be estimated by the market extraction method, and this approach can be done with some degree of reliability, however reliant on the accuracy of the other approaches it might be. HIGHEST AND BEST USE What if the club has limited or no profit potential and alternative uses are limited or not economically feasible? As a club, the value may be intrinsic to the membership but have limited value in exchange. If there is no development potential, the club ceases to operate and there is no economic use for the property, the appraisal problem becomes more challenging. Because the value of "open space" can be a real challenge, the cost approach is often employed by assessors but really doesn't provide a market -based indication of value. Sometimes, there are sales of conservation parcels that could be analyzed, but the question as to the economic value remains unanswered. This is a challenging appraisal problem that could be the topic of another article. One thing is for sure: the procedures relating to the broader issue of highest and best use vary from state to state, and care must be employed to ensure that the appraiser understands those issues and how they are impacted by the Uniform Standards of Professional Appraisal Practice and by local jurisdictions. REAL ESTATE ISSUES 50 Volume 38, Number 2, 2013 FEATURE Golf Courses and Tax Assessments: Just One Right Way? ALLOCATION The issue of allocation of real and personal property value is one that has been debated by appraisers for a long time. For golf course properties, several methodologies exist, but there are no conclusive methods that adequately answer all the questions. The text Analysis and Valuation of Golf Courses and Country Clubs' offers allocation methodology ranging from the "excess profits" technique to the "management fee" technique, and others. Another technique that has been used recently is the "market rent" method, which converts golf course revenue sources into a rental rate for real estate only, which is then capitalized into a value conclusion. There is also the recent (2011) Appraisal Institute course on allocation that promotes a technique utilizing balance sheet assets and the following equation: TAB = RE + PP + BEV TAB: Market value of Total Assets of the Business (i.e., market value of the going concern); RE: Real Estate assets to include land, buildings and other improvements; PP: Personal Property to include furniture, fixtures and equipment; BEV: Business Enterprise Value to include all intangible assets owned by the business. Each of these methods, however, has flaws. The excess profits and management fee techniques focus on the business value, but fall short on equipment. The market rent method, which is required in New York State by case law, suggests that even private clubs be considered as daily fee courses, and rental estimates are often derived from revenues for items not directly related to real property. The best way to estimate market rent is from comps, and the author's extensive research of golf course rental comps over the years shows that they are not as common as one would like and that those that exist often lack tight enough trends to conclusively support the rental estimates. The method derived from the Appraisal Institute course using the equation (TAB = RE + PP + BEV), though logical, utilizes balance sheet values rather than real -world market values of the personal property assets.- - ° 'n mi ALTERNATIVE USE Conventional thinking by laymen is that golf course properties are worth more if put to another use. Many times that is the case. However, alternative uses often are not available or feasible, creating a more complex issue. Recently, golf courses have closed at a more rapid rate than new `ones have been developed and opened. During the past two years, approximately 300 golf courses have closed and between 30 and 35 have opened for play in the United States, according to the National Golf Foundation. Considering that most states require assessment valuations to be based on the highest and best use, it is critical to consider the potential alternative uses for golf courses and whether or not they represent a "higher and better" use. In many instances, and especially those where golf courses are an amenity to a residential development, alternative uses are limited either by zoning or restrictive covenants. Most of these will result in the golf course being the highest and best use. Where the golf course is not economically feasible, the use is usually restricted to open space or recreation and the economic value is often limited. In some states, such as New York, case law 6 dictates that value must be developed based on the property's current use, which effectively eliminates the highest and best use question, even when the highest and best use is for alternative development. Even in those (most) states where property is to be valued based on highest and best use, during recent years, development slowed because of market and economic factors. The result is that some golf course properties with development potential still have a highest and best use for golf, at least for a period of time. As real estate markets improve, this could change or could be anticipated to change, resulting in the possibility of golf representing an interim" use. Not only do decisions vary from one jurisdiction to another but, in Ohio, for example, several cases were found that contradict each other. In one, all three approaches to value were rejected. Some states disallow the income or sales comparison approaches, or both. Some states require the property be valued based on continued present use, and others based on highest and best use. Still other states require certain, specific methodology be used in order to satisfy the apparent direction of recent decisions. In New Jersey, the recent decision in one case (Bear Brook') rejects the income approach as follows: The income approach is seldom appropriate in appraising a private nonprofit club or a municipal course Id. at 107; this court finds no distinction with semi private courses such as Bear Brook. The Bear Brook Club was, in fact a for-profit, semi -private club, and yet the judge found no difference between it and REAL ESTATE ISSUES 51 Volume 38, Number 2, 2013 FEATURE Golf Courses and Tax Assessments: Just One Right Way? either a private not -for-profit club or a municipal course. Further, the court stated: While it is clear to the court that the Cost Approach is the most appropriate valuation method for Bear Brook, Fredon's Cost Approach must nevertheless be rejected for the deficiencies delineated hereinabove. The appraisal deficiencies noted by the court related to comparable land sales that were judged to be inadequate and post-dated the valuation date. Of particular interest is that several golf course owners recently were awaiting a pending decision in New Jersey Tax Court that might have answered the question of whether the cost approach is judged to be the only acceptable way to value golf courses for assessment in that state, or if appraisers are encouraged to employ more market -based methods within the income and sales comparison approaches. After two years of waiting for a decision, the sides settled, mainly because of the onerous financial burden of continuing to pay the (excessive) taxes on the property. So the question at least in New Jersey —is still unsettled. SOLUTION It is difficult to imagine that every judge, lawyer and assessor would have ample time to educate themselves on the unique issues of golf property valuation. However, when in litigation, a solution is to focus on the applicable theory both in the appraisal report and in the oral arguments before the judge. It is incumbent on the appraiser to be able to explain and justify his/her valuation theory and for counsel to present a concise and understandable case for proper valuation theory. As a state's rights issue on taxation, judges in each state vary on their decisions in tax court, so consistency nationwide on methodology is unlikely. However, working toward stipulations on methodology from both sides, or seeking guidance from the judge after presenting these issues relative to the specific property, can help clarify and lead to improved and consistent methodology. As part of the solution to this problem, it is advisable to consider the definition of market value. As offered by The Online Dictionary of Real Estate Appraisal, 9 the most widely used definition is: "The most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, as of a specified date, in cash, or in terms equivalent to cash, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, for self-interest, and assuming that neither is under duress:' Inherent in this definition is that any appraisal assumes a sale. While many states have different variations on the definition of market value, most are similar and (at least) imply that same assumption. Few, if any sales are based on a cost approach analysis. As such, it is incumbent on appraisers, assessors, attorneys and jurists to also consider value as if a sale were going to occur and analyze the property as market principals would. There is no one "right way" to appraise all golf course properties. As stated earlier, there are at least 11 or 12 different types of golf courses and each operates with different revenue and expense profiles and trades with different motivations and economics. We can conclude that in almost all cases, exclusive use of the cost approach is rarely consistent with market behavior and that most golf course properties trade based on either their operating history or operating potential to generate cash flow. It's the appraiser's job to know and understand not only the applicable valuation methodologies, but also the jurisdictional specifics that sometimes complicate the valuation exercise. ■ ENDNOTES L Fanning, Stephen F., "Segmentation of Golf Course Markets," The Appraisal Journal, January 2003, pp. 62-67. 2. Benson, M.E., "Challenges in Appraisal of Private Clubs," The Appraisal Journal, October 1, 1998. 3. Hirsh, Laurence A., "Private Golf Club Memberships — Real or Personal Property, "Journal of Property Tax Assessment and Administration, Vol. 4, Issue 3, 2009. 4. Income at that point in time when abnormalities in supply and demand or any additional transitory conditions cease to exist and the existing conditions are those expected to continue over the economic life of the property; projected income that is subject to change, but has been adjusted to reflect an equivalent, stable annual income. 5. Gimmy, Arthur and Buddie Johnson, Analysis and Valuation of Golf Courses and Country Clubs, The Appraisal Institute, 2003. 6. New Country Club of Garden City v. Board of Assessors, Supreme Court, Nassau County, Index No. 12696/88, June 4, 1991. 7. Interim use is the temporary use to which a site or improved property is put until it is ready to be put to its future highest and best use. 8. Gale & Kitson Fredon Golf LLC v. Township of Fredon, 007359-2008; 004341, 2009, Tax Court of New Jersey, December 22, 2011. 9. The Online Dictionary of Real Estate Appraisal, 5th Edition, The Appraisal Institute, 2010. REAL ESTATE ISSUES 52 Volume 38, Number 2, 2013 Colorado National Golf Club, LLC Statement of Operations (See Accountant's Compilation Report) For the Twelve -Month Period Ended December 31, 2013 2012 Revenues Membership Golf Shop General & Administrative Landscaping Total Revenues Cost of Goods Sold Cost of Goods Sold - Golf Merchandise Total Cost of Goods Sold General and Administrative Expenses Membership Golf Shop Course Maintenance Clubhouse Maintenance General & Administrative Landscaping Practice Facility Total General and Administrative Expenses Income (Loss) from Operations Other Income (Expenses) Other Income Interest Income Interest Expense Trust Insurance Premiums Expense Depreciation Expense Amortizaion Expense Total Other Income (Expenses) Loss before Income Tax (Expense) Benefit Income Tax (Expense) Benefit Net Income (Loss) $ 422,716 17.0% $ 464,206 16.7% 1,611,057 64.9 1,914,013 68.8 414,633 16.7 378,876 13.6 34,826 1.4 23,610 0.8 2,483,232 100.0 2,780,705 100.0 105,261 4.2 141,485 5.1 105,261 4.2 141,485 5.1 61,112 2.5 34,580 1.2 345,223 13.9 343,703 12.4 669,380 27.0 816,404 29.4 106,264 4.3 111,453 4.0 826,463 33.3 942,978 33.9 13,983 0.6 23,135 0.8 5,539 0.2 78,400 2.8 2,027,964 81.7 2,350,653 84.5 350,007 14.1 288,567 10.4 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 (136,493) (5.5) 0 0.0 (332,462) (13.4) (358,476) (12.9) (95,441) (3.8) (112,843) (4.1) (564,396) (22.7) (471,319) (16.9) (214,389) (8.6) (182,752) (6.6) 0 0.0 0 0.0 $ (214,389) (8.6)% $ (182,752) (6.6)% See notes to financial statements -3- Colorado National Golf Club, LLC Schedule of Membership Expense - Schedule I (See Accountant's Compilation Report) For the Twelve -Month Period Ended Budget Actual Variance December 31, Year -to -Date December 31, 2013 2012 Budget Actual Variance Membership Sales Member Dues Initiation Fees Cancellation Fees Finance Charges Total Membership Sales Membership Expenses P/R Bonus P/R Commissions Employee Meals Telephone Constract Services General Supplies Office Supplies Paper Supplies & Disposables Printing & Stationery Club Event Expense Marketing & Promotion Member Relations Membership Incentives Mileage & Fuel Travel, Meals & Entertainment Bad Debt Expense Human Resource Management Spoilage & Theft Miscellaneous Income/Expense Total Membership Expenses Depreciation Expense Net Income (Loss) from Memberships $ 411,659 97.4% $ 450,381 97.0% $ 476,096 $ 411,659 $ 64,437 8,750 2.1 10,800 2.3 10,000 8,750 1,250 0 0.0 500 0.1 0 0 0 2,307 0.5 2,525 0.5 3,831 2,307 1,524 422,716 100.0% 464,206 100.0 489,927 422,716 67,211 0 0.0 510 0.1 500 0 500 16,258 3.8 14,110 3.0 10,255 16,258 (6,003) 0 0.0 996 0.2 1,152 0 1,152 500 0.1 755 0.2 1,061 500 561 0 0.0 1,543 0.3 0 0 0 405 0.1 68 0.0 27 405 (378) 853 0.2 523 0.1 543 853 (310) 34 0.0 0 0.0 0 34 (34) 189 0.0 668 0.1 133 189 (56) 28,070 6.6 534 0.1 0 28,070 (28,070) 12,402 2.9 13,790 3.0 22,570 12,402 10,168 0 0.0 124 0.0 0 0 0 75 0.0 0 0.0 0 75 (75) 60 0.0 64 0.0 0 60 (60) 213 0.1 0 0.0 0 213 (213) 2,003 0.5 790 0.2 583 2,003 (1,420) 50 0.0 0 0.0 0 50 (50) 0 0.0 105 0.0 0 0 0 0 0.0 0 0.0 0 0 0 61,112 14.5 34,580 7.4 36,824 61,112 (24,288) 105 0.0 113 0.0 105 105 0 361,499 85.5% $ 429,513 92.5% $ 452,998 $ 361,499 $ 91,499 -13- Colorado National Golf Club, LLC Schedule of Golf Shop Expense - Schedule II (See Accountant's Compilation Report) Golf Shop Revenues Green Fees Tournament Green Fees Cart Fees Tournament Cart Fees Range Fees Tournament Range Fees Golf Clinics & Lessons Golf March-Clubs/Bags Golf March -golf Balls/Gloves Golf March -Men's Apparel Golf March -Ladies Apparel Golf March -Golf Shoes Golf March -Outerwear Golf March -Accessories Golf March -Special Order Golf March -Cigar Sales Golf March -Discounts Cigar Sales Club Rental Club Repair Club Storage Handicap Fees Locker Fees Expired Gift Certificates Other Income Other Non -Golf Income Total Golf Shop Revenues Cost of goods Sold Merch COS-Clubs/Bags Merch COS -Golf Balls/Gloves Merch COS -Men's Apparel Merch COS -Ladies Apparel Merch COS -Golf Shoes Merch COS -Outerwear Merch COS -Accessories Merch COS -Special Order Cost of Sales - Cigars Cost of Goods - Discount Total Cost of Goods Sold For the Twelve -Month Period Ended December 31, 2013 2012 Budget Actual Variance Year -to -Date December 31, Budget Actual Variance $ 703,217 43.6% $ 856,529 44.8% $ 767,974 125,736 7.8 145,538 7.6 121,426 366,675 22.8 427,055 22.3 359,215 40,680 2.5 44,840 2.3 45,645 111,258 6.9 119,788 6.3 108,459 14,440 0.9 15,580 0.8 14,678 18,425 1.1 14,256 0.7 11,461 13,346 0.8 23,105 1.2 9,221 45,596 2.8 50,443 2.6 42,510 32,434 2.0 36,955 1.9 31,069 10,969 0.7 9,839 0.5 10,769 12,986 0.8 14,203 0.7 8,380 22,168 1.4 28,709 1.5 26,567 31,806 2.0 38,503 2.0 28,206 17,593 1.1 43,014 2.2 21,805 1,420 0.1 3,587 02 0 (19,149) (1.2) (24,291) (1.3) (16,998) 0 0.0 0 0.0 1,866 13,520 0.8 I4,560 0.8 11,720 1,420 0.1 1,743 0.1 1,769 1,562 0.1 571 0.0 731 11,750 0.7 12,200 0.6 12,900 1,900 0.1 942 0.0 656 10,441 0.6 9,834 0.5 6,911 2,464 0.2 4,810 0.3 1,243 18,400 1.1 21,700 1.1 16,800 $ 703,217 125,736 366,675 40,680 111,258 14,440 18,425 13,346 45,596 32,434 10,969 12,986 22,168 31,806 17,593 1,420 (19,149) 0 13,520 1,420 1,562 11,750 1,900 10,441 2,464 18,400 1,611,057 54.8 1,914,013 53.8 1,644,983 1,611,057 9,265 0.6 15,164 0.01 6,782 24,475 1.5 25,314 0.01 20,737 18,534 1.2 21,388 0.01 19,035 5,452 0.3 5,241 0.00 5,205 8,062 0.5 8,162 0.00 4,484 10,172 0.6 12,953 0.01 12,475 16,123 1.0 17,697 0.01 14,347 12,832 0.8 33,979 0.02 13,908 816 0.1 1,603 0.00 0 (470) (0.0) (16) (0.00) 0 105,261 6.5 141,485 0.07 96,973 $ 64,757 (4,310) (7,460) 4,965 (2,799) 238 (6,964) (4,125) (3,086) (1,365) (200) (4,606) 4,399 (3,600) 4,212 (1,420) 2,151 1,866 (1,800) 349 (831) 1,150 (1,244) (3,530) (1,221) (1,600) 33,926 9,265 (2,483) 24,475 (3,738) 18,534 501 5,452 (247) 8,062 (3,578) 10,172 2,303 16,123 (1,776) 12,832 1,076 816 (816) (470) 470 105,261 (8,288) Total Gross Profit and Other Income $ 1,505,796 93.5% $ 1,772,528 92.6% $ 1,548,010 $ 1,505,796 $ 42,214 -14- Colorado National Golf Club, LLC Schedule of Golf Shop Expense - Schedule H (Continued) (See Accountant's Compilation Report) For the Twelve -Month Period Ended Budget Actual Variance December 31, Year -to -Date December 31, 2013 2012 Budget Actual Variance Direct Operating Expense P/R Salaries $ 66,923 4.2% S 64,054 3.3% $ 63,958 $ 66,923 S (2,965) P/R Hourly 50,123 3.1 52,144 2.7 43,861 50,123 (6,262) P/R Overtime 1,728 0.1 3,213 0.2 1,712 1,728 (16) P/R Bonus 1,500 0.1 1,500 0.1 1,000 1,500 (500) P/R. Commissions 51 0.0 620 0.0 0 51 (51) Golf Pro Lessons 11,647 0.7 10,752 0.6 6,894 11,647 (4,753) P/R ERTaxes 12,655 0.8 12,237 0.6 11,640 12,655 (1,015) Employee Insurance 1,873 0.1 2,641 0.1 3,976 1,873 2,103 Employee Meals 0 0.0 1,000 0.1 1,080 0 1,080 Telephone 550 0.0 600 0.0 150 550 (400) Equipment lease 154,611 9.6 138,604 7.2 118,272 154,611 (36,339) Equipment Rental 0 0.0 797 0.0 4,458 0 4,458 Equipment Repair & Maintenance 1,917 0.1 32 0.0 199 1,917 (1,718) Building Repair & Maintenance 40 0.0 0 0.0 0 40 (40) Cart Repair & Maintenance 3,730 0.2 7,457 0.4 7,831 3,730 4,101 IT Maintenance 230 0.0 31 0.0 1,543 230 1,313 Contract Services 350 0.0 0 0.0 0 350 (350) CleaninglLaundry Supplies 0 0.0 30 0.0 0 0 0 Driving Range Supplies 5,421 0.3 10,027 0.5 7,759 5,421 2,338 Equipment Expense 550 0.0 0 0.0 425 550 (125) Gasoline & Lubricants 10 0.0 0 0.0 0 10 (10) General Supplies 421 0.0 641 0.0 859 421 438 Golf Club Repairs 1,206 0.1 1,172 0.1 698 1,206 (508) Office Supplies 1,359 0.1 2,300 0.1 1,721 1,359 362 Paper Supplies & Disposables 80 0.0 0 0.0 0 80 (80) Printing & Stationery 2,545 0.2 975 0.1 1,997 2,545 (548) Uniforms 719 0.0 1,459 0.1 599 719 (120) Club Event Expense 886 0.1 650 0.0 234 886 (652) Marketing & Promotion 1,975 0.1 3,484 0.2 584 1,975 (1,391) Membership Incentives 0 0.0 129 0.0 0 0 0 Mileage & Fuel 139 0.0 0 0.0 0 139 (139) Travel, Meals & Entertainment 93 0.0 448 0.0 0 93 (93) Dues & Subscriptions 626 0.0 626 0.0 1,047 626 421 Handicap Expense 7,132 0.4 7,955 0.4 7,970 7,132 838 Miscellaneous 41 0.0 50 0.0 0 41 (41) NSFChargebacks 0 0.0 1,139 0.1 531 0 531 Postage 199 0.0 569 0.0 249 199 50 Finance/Service Charge 68 0.0 0 0.0 0 68 (68) Spoilage & Theft 0 0.0 180 0.0 0 0 0 Tournament Expense 1,107 0.1 800 0.0 1,007 1,107 (100) Workers Comp Insurance 2,260 0.1 1,786 0.1 1,958 2,260 (302) I ssed Property Tax 10,458 0.6 14,639 0.8 20,137 10,458 9,679 Miscellaneous (Income)/Expense 0 0.0 (1,038) (0.1) 170 0 170 Total Direct Operating Expenses 345,223 21.4 343,703 18.0 314,519 345,223 (30,704) Depreciaton Expense 548 0.0 245 0.0 117 548 (431) Net Income (Loss) from Golf Shop $ 1,160,025 72.0% S 1,428,580 74.6% $ 1,233,374 $ 1,160,025 $ 73,349 -15- Colorado National Golf Club, LLC Schedule of Course Maintenance Expense - Schedule Ill (See Accountant's Compilation Report) Other Income Other Income Total Other Income Direct Operating Expense P/R Salaries P/R Hourly P/R Overtime P/R Bonus P/R ER Taxes Employee Insurance Employee Meals Utilities -Power Utilities -Water Waste Removal Telephone Equipment Lease Equipment Rental Equipment Repair & Maintenance Building Repair & Maintenance Cart Repair & Maintenance Irrigation Repair & Maintenance Roads & Path R&M Topdressing, Bunkers & Soil Sod, Turf& Seed Fertilizer Landscaping & Plants Pesticides Legal Fees Consulting fees Contract Services Outsourced Laundering Security Equipment Expense Gasoline & Lubricants General Supplies Golf Course Accessories Office Supplies Printing & Stationery Small Tools Uniforms Club Event Expense Marketing & Promotion Mileage & Fuel Travel, Meals & Entertainment Dues & Subscriptions Gratis Beverage Permits & Licenses Postage Professional Development Workers Comp Insurance Leased Property Tax Finance/Service Charge Miscellaneous Income/Expense Depreciaton Expense Total Direct Operating Expenses For the Twelve -Month Period Ended December 31, 2013 2012 Budget Actual Variance Year -to -Date December 31, Budget Actual Variance $ 0 $ 25 $ 0 $ 0 $ 0 0 25 0 0 0 128,899 108,985 90,046 128,899 (38,853) 141,581 213,160 195,247 141,581 53,666 11,894 21,603 10,539 11,894 (1,355) 375 1,375 500 375 125 29,264 35,368 32,395 29,264 3,131 1,391 3,013 3,960 1,391 2,569 0 320 192 0 192 43,010 48,059 33,346 43,010 (9,664) 71,917 39,256 53,399 71,917 (18,518) 1,290 2,197 1,522 1,290 232 850 450 600 850 (250) 64,371 63,183 55,348 64,371 (9,023) 944 3,567 4,099 944 3,155 27,147 48,385 21,889 27,147 (5,258) 1,048 1,531 1,824 1,048 776 O 194 5,676 0 5,676 26,375 36,442 19,852 26,375 (6,523) O 1,534 3,389 0 3,389 5,247 11,696 13,389 5,247 8,142 22,229 945 2,129 22,229 (20,100) 18,396 54,333 34,214 18,396 15,818 2,377 7,227 8,818 2,377 6,441 9,584 18,008 16,712 9,584 7,128 O 1,570 0 0 0 3,336 10,560 5,000 3,336 1,664 4,025 3,950 4,066 4,025 41 236 244 429 236 193 0 245 315 0 315 0 21 8,440 0 8,440 28,456 41,121 42,376 28,456 13,920 1,353 1,033 762 1,353 (591) 4,427 13,884 7,612 4,427 3,185 102 129 218 102 116 69 0 0 69 (69) 2,352 4,357 6,034 2,352 3,682 2,518 2,432 1,969 2,518 (549) 0 114 0 0 0 O 900 0 0 0 220 197 0 220 (220) 40 715 177 40 137 325 660 500 325 175 0 42 0 0 0 49 99 0 49 (49) 19 210 76 19 57 405 270 125 405 (280) 5,042 4,238 5,494 5,042 452 6,142 7,735 10,360 6,142 4,218 75 4 6 75 (69) 2,000 843 0 2,000 (2,000) 669,380 816,404 703,044 669,380 33,664 8,074 6,695 2,951 8,074 (5,123) $ 677,454 $ 823,074 $ 705,995 $ 677,454 $ 28,541 -16- Colorado National Golf Club, LLC Schedule of Clubhouse Maintenance Expense - Schedule IV (See Accountant's Compilation Report) Direct Operating Expenses Utilities -Power Utilities -Water Waste Removal Telephone Equipment Rental Equipment Repair & Maintenance Building Repair & Maintenance Cart Repair & Maintenance Roads & Path R&M Contract Services Security Music Service Cable/Satellite Subscription Cleaning/Laundry Supplies Clubhouse Amenities Gasoline & Lubricants General Supplies Golf Course Amenities Office Supplies Towels & Amenities Club Event Expense Mileage & Fuel Insurance Depreciation Expense Total Direct Operating Expenses For the Twelve -Month Period Ended December 31, 2013 2012 Budget Actual Variance Year -to -Date December 31, Budget Actual Variance $ 49,881 $ 52,453 $ 47,170 $ 49,881 $ (2,711) 18,524 16,746 13,550 18,524 (4,974) 1,719 3,132 3,254 1,719 1,535 6,564 6,391 8,655 6,564 2,091 0 409 0 0 0 43 1,334 278 43 235 8,965 14,399 4,682 8,965 (4,283) 0 87 0 0 0 3,208 0 0 3,208 (3,208) 8,055 8,429 8,110 8,055 55 840 3,123 2,400 840 1,560 661 624 597 661 (64) 3,082 2,405 2,843 3,082 (239) 82 347 506 82 424 194 0 0 194 (194) 146 100 0 146 (146) 1,848 984 1,587 1,848 (261) 46 47 0 46 (46) 0 83 0 0 0 0 97 0 0 0 0 90 378 0 378 0 173 100 0 100 2,406 0 2,775 2,406 369 106,264 111,453 96,885 106,264 (9,379) 3,243 2,642 1,301 3,243 (1,942) $ 109,507 $ 114,095 $ 98,186 $ 109,507 $ (11,321) -17- Colorado National Golf Club, LLC Schedule of General & Administrative Expense - Schedule V (See Accountant's Compilation Report) For the Twelve -Month Period Ended December 31, 2013 2012 Budget Actual Variance Year -to -Date December 31, Budget Actual Variance Revenues Rental Income VRC Concessions $ 402,000 $ 222,000 $ 222,000 $ 402,000 - $ 180,000 Other Income 161 112 521 161 360 Management Fee 11,944 99,088 0 11,944 (11,944) Other Non Golf Income 528 57,676 2,940 528 2,412 Total revenues 414,633 378,876 225,461 414,633 (189,172) General & Administrative Expese P/R Salaries P/R Hourly P/R Bonus P/R Commissions P/R ER Taxes Employee Insurance Employee Meals Telephone Equipment Lease Equipment Repair & Maintenance IT Maintenance Legal Fees Consulting Pees Contract Services Outsourced Payroll Expenses Computer Supplies & Equipment Equipment Expense General Supplies Office Supplies Printing & Stationery Club Event Expense Marketing & Promotion Mileage & Fuel Travel, Meals, & Entertainment Vehicle Allowance Bad Debt Expense Bank Service Charges Cash Over/ Short Credit & Collections Credit Card Fees Donations Dues & Subscription Management Fee Expense Human Resource Management NSF Charges Permits & Licenses Postage Professional Development Sales Tax Variance Finance/Service Charges Tournament Expense Website Insurance Workers Comp Insurance Property Tax Expense Miscellaneous Income/Expenses Prior Year Corrections Interest Income Interest Expense Total General & Adminitrative Expenses 111,083 143,644 150,416 111,083 39,333 O 1,960 693 0 693 750 1,489 1,000 750 250 0 1,405 0 0 0 10,698 13,395 14,275 10,698 3,577 249 1,747 2,174 249 1,925 4,282 2,088 1,896 4,282 (2,386) 1,109 2,184 0 1,109 (1,109) 8,102 8,470 12,823 8,102 4,721 155 190 0 155 (155) 17,538 5,096 4,389 17,538 (13,149) 8,985 15,280 1,848 8,985 (7,137) 11,795 6,446 10,103 11,795 (1,692) 37,162 37,471 51,448 37,162 14,286 4,087 6,107 5,066 4,087 979 1,409 0 307 1,409 (1,102) 2,836 0 0 2,836 (2,836) O 15 247 0 247 1,441 2,578 2,348 1,441 907 O 653 320 0 320 O 27,550 30,063 0 30,063 O 73 0 0 0 1,036 1,261 854 1,036 (182) 4,567 1,023 3,048 4,567 (1,519) 1,254 1,479 1,255 1,254 1 21,118 10,247 57 21,118 (21,061) 1 31 38 1 37 0 (416) 3 0 3 66 1,573 200 66 134 45,084 52,163 52,264 45,084 7,180 750 1,000 100 750 (650) 915 0 833 915 (82) 18,000 0 0 18,000 (18,000) 10,761 8,793 0 10,761 (10,761) (20) 0 0 (20) 20 418 63 673 418 255 1,071 1,025 1,167 1,071 96 0 350 0 0 0 0 483 667 0 667 45 122 321 45 276 O 22 0 0 0 4,875 4,176 3,928 4,875 (947) 71,069 27,676 32,430 71,069 (38,639) 2,211 1,983 2,292 2,211 81 173,382 172,754 175,519 173,382 2,137 (3,806) I 27,805 (3,806) 31,611 O 90,297 0 0 0 O (119) 0 0 0 251,985 289,150 305,917 251,985 53,932 826,463 942,978 898,787 826,463 72,324 Tenet Insurance Premiums Expense 136,493 0 0 136,493 (136,493) Depreciation Expense 320,492 348,781 1,595 320,492 (318,897) Amortization Expense 95,441 112,843 0 95,441 (95,441) 552,426 461,624 1,595 552,426 (550,831) Net Income (loss) from General & Administrative $ (964,256) $ (1,025,726) $ (674,921) $ (964,256) $ 289,335 -18- Colorado National Golf Club, LLC Schedule of Landscaping Expense - Schedule VI (See Accountant's Compilation Report) Landscaping Sales Other Non -Golf Total Landscaping Sales Direct Operating Expense P/R Hourly Waste Removal Equipment Rental Irragtion Repair & Maintenance Sod & Turf Soil, Seed and Fertilizer Landscaping & Plants Pesticides Contract Services Gasoline and Lubricants Small Tools Workers Comp Insurance Miscellaneous Income/Expense Total Direct Operating Expense Total Direct Operating Expenses For the Twelve -Month Period Ended December 31, 2013 2012 Budget Actual Variance Year -to -Date December 31, Budget Actual Variance $ 34,826 $ 23,610 $ (1,196) $ 34,826 $ (36,022) 34,826 23,610 (1,196) 34,826 (36,022) 8,925 16,323 26,301 8,925 17,376 457 0 0 457 (457) 336 483 1,039 336 703 348 572 990 348 642 1,935 0 443 1,935 (1,492) 333 1,759 1,562 333 1,229 0 1,720 0 0 0 986 0 0 986 (986) 425 0 0 425 (425) 22 (1) 0 22 (22) 216 2,173 915 216 699 0 106 0 0 0 0 0 0 0 0 13,983 23,135 $ 20,843 $ 475 -19- 31,250 13,983 17,267 (32,446) $ 34,401 $ (35,597) Colorado National Golf Club, LLC Schedule of Practice Facility - Schedule VII (See Accountant's Compilation Report) For the Twelve -Month Period Ended Budget Actual Variance December 31, Year -to -Date December 31, 2013 2012 Budget Actual Variance Direct Operating Expense P/R Hourly Utilities - Power Utilities - Water Telephone Irrigation Repair & Maintenance Topdressing & Bunkers Sod & Turf Soil, Seed & Fertilizer Landscaping & Plants Legal Fees Consulting Fees Contract Services Security Cleaning/Laundry Supplies Driving Range Supplies Equipment Expese General Supplies Marketing & Promotion Workers Comp Insurance Miscellaneous Income/Expense $ 0 $ 5,094 $ 0 $ 0 $ 0 3,077 2,352 0 3,077 (3,077) 598 769 0 598 (598) 1,355 1,109 0 1,355 (1,355) 0 15,434 0 0 0 0 11,927 0 0 0 0 10,342 0 0 0 0 5,828 0 0 0 0 6,619 0 0 0 0 1,164 8,808 0 8,808 0 3,380 0 0 0 0 40 0 0 0 300 250 0 300 (300) 0 126 0 0 0 0 610 0 0 0 0 6,400 0 0 0 209 107 0 209 (209) 0 110 0 0 0 0 64 0 0 0 0 6,675 0 0 0 Total Direct Operating Expense $ 5,539 $ 78,400 $ 8,808 $ 5,539 $ 3,269 -20- Vista Ridge Catering, LLC Statement of Operations (See Accountant's Compilation Report) For the Year Ended December 31, 2013 2012 Food Sales Sales Revenue Less Cost of Food Sales Gross Profit on Food Sales $ 649,567 100.0% $ 637,888 100.0% 225,592 34.7 267,543 41.9 423,975 65.3 370,345 58.1 Bar sales Liquor- Revenue 140,737 100.0 134,419 100.0 Less Cost of Liquor Sales 29,984 21.3 34,594 25.7 Gross Profit on Liquor Sales 110,753 78.7 99,825 74.3 Wine - Revenue Less Cost of Wine Sales Gross Profit on Beer Sales 67,870 100.0 54,952 100.0 19,216 28.3 20,615 37.5 48,654 71.7 34,337 62.5 Beer - Revenue 242,017 100.0 259,053 100.0 Less Cost of Beer Sales 63,763 26.3 70,403 27.2 Gross Profit on Wine Sales 178,254 73.7 188,650 72.8 Other Income Room Rental Other Income Minimum Patronization Fees Total Other Income 20,866 42.7 18,060 43.6 17,919 36.7 17,435 42.1 I0,032 20.6 5,929 14.3 48,817 100.0 41,424 100.0 Total Gross Profit & Other Income $ 810,453 70.5% $ 734,581 65.1% See notes to financial statements -3- Vista Ridge Catering, LLC Statement of Operations (Continued) (See Accountant's Compilation Report) For the Year Ended December 31, 2013 2012 Direct Operating Expenses P/R Salaries S 54,447 4.7% $ 75,268 6.7% P/R Hourly 88,595 7.7 102,655 9.1 ServerP/R-Hourly 67,254 5.9 92,130 8.2 P/R Overtime 11,809 1.0 5,492 0.5 Server P/R Overtime 7,611 0.7 7,268 0.6 Kitchen P/R Bonus 750 0.1 188 0.0 Kitchen PLR - Commissions 835 0.1 0 0.0 Kitchen P/R ER Taxes 14,348 1.2 22,730 2.0 Server P/R Taxes 24,886 2.2 23,461 2.1 Employee Insurance 155 0.0 1,564 0.1 Employee Relations 0 0.0 37 0.0 Equipment Lease 0 0.0 0 0.0 Equipment Rental 2,756 0.2 8,630 0.8 Equipment Repair & Maintenance 6,211 0.5 13,090 1.2 Building Repay & Maintenance 1,928 0.2 1,417 0.1 Cart Repair & Maintenance 100 0.0 0 0.0 Contract Maintenance 656 0.1 94 0.0 Professional Fees 337 0.0 321 0.0 Legal Fees 3,507 0.3 0 0.0 Consulting Fees 3,946 0.3 1,315 0.1 Contract Services 810 0.1 2,421 0.2 Outsourced Laundering 16,232 ' 1.4 18,763 1.7 Pest Control 1,989 0.2 2,094 0.2 Cleaning/Laundry Supplies 4,325 0.4 6,720 0.6 Computer Supplies & Equipment 133 0.0 0 0.0 Dining Room Supplies 774 0.1 2,303 0.2 Equipment Expense 0 0.0 2,120 0.2 Gasoline & Lubimnts 25 0.0 40 0.0 General Supplies 1,716 0.1 4,604 0.4 Kitchen Supplies 2,481 0.2 3,697 0.3 Office Supplies 1,721 0.1 1,253 0.1 Paper Supplies & Disposables 20,761 1.8 26,768 2.4 Printing & Stationery 0 0.0 449 0.0 Uniforms 1539 0.1 2,067 0.2 Club Event Expense 9,268 0.8 7,835 0.7 Marketing & Promotion 1,543 0,1 525 0.0 Mileage & Fuel 294 0.0 228 0.0 Entertainment 4,663 0.4 6,152 0.5 Bank Service Charges 129 0.0 117 0.0 Credit Card Fees 20,053 1,7 17,695 1.6 Dues & Subscriptions 110 0.0 135 0.0 Gratis Beverage 598 0.1 429 0.0 Gratis Food 956 0.1 338 0.0 Human Resources Management 190 0.0 50 0.0 Miscellaneous 0 0.0 500 0.0 Permits & Licenses 1,579 0.1 1,183 0.1 Professional Development 40 0.0 200 0.0 Sales Tax Variance (1,267) (0.1) 0 0.0 Vendor Rebates (1,782) (0.2) 0 0.0 Workers Comp Insurance 6,856 0.6 5,2.35 0.5 Rent Expense - Concession 402,000 35.0 222,000 19.7 Miscellaneous (Income)/Expense 17,282 1.5 3 0.0 Depreciation Expense 2,153 0.2 1,386 0.1 Total Direct Operating Expenses 807,302 70.3 692,970 61.4 Income (Loss) front Operations 3,151 _0.3 41,611 3.7 Other Income (Expenses) Other Income 0 0.0 0 0.0 Interest Income 0 0.0 0 0.0 Interest Expense 0 0.0 0 0.0 Total Other Income (Expanses) 0 0.0 0 0.0 Loss before Income Tax (Expense) Benefit 3,151 0.3 41,611 3.7 Income Tax (Expense) Benefit 0 0.0 0 0,0 Net Income (Loss) S 3,151 0.3% $ 41,611 3.7% See notes to financial statements -4- Colorado National Golf Club Income Statement Yr vs Yr - December, 2011 Year YTD To Date Last Yr REVENUE Member Dues 476,096 494,224 Initiation Fees 9,975 10,750 Cigar Sales 1,866 0 Green Fees 889,400 875,112 Cart Fees 404,860 368,817 Range Fees 123,137 116,670 Instruction 11,461 12,149 Merchandise Sales 162,228 180,906 Other Non -Golf Income 241,740 235,687 Other Income 81,072 42,172 TOTAL REVENUE COST OF SALES Mdse Cost of Sales TOTAL COST OF SALES TOTAL GROSS PROFIT OPERATING EXPENSE PAYROLL & BENEFITS Payroll & Benefits TOTAL P/R & BENEFITS Utilities Leases & Rentals Repair & Maintenance Soil, Seed & Fertlizer Fees Supplies Marketing & Promotion Travel & Entertainment General & Administrative Insurance Property Tax TOTAL OPERATING EXP 2,401,835 2,336,487 97,358 108,096 97,358 108,096 2,304,477 2,228,391 675,670 636,999 675,670 636,999 162,707 166,968 196,040 236,554 89,956 102,846 62,501 53,348 104,677 71,209 89,748 84,706 53,829 49,478 5,434 322 74,020 84,507 44,948 42,778 206,016 187,617 1,765,545 1,717,332 TOTAL EBITDA OTHER INCOME/EXPENSE Non -Recurring Interest Inc/Exp TOTAL OTHER INC/EXP TOTAL EBTDA DEPR/AMORT EXP Depreciation Expense TOTAL DEPR/AMORT EXP TOTAL EBT TOTAL NET INCOME/(LOSS) 538,931 511,059 27,975 1,179 305,917 312,474 333,892 313,653 205,039 197,406 412,922 412,306 412,922 412,306 - 207,883 -214,900 - 207,883 -214,900 Vista Ridge Catering, LLC Income statement year vs year - December, 2011 Year To Date REVENUE Food & Beverage Sales Cigar Sales Liquor Sales Wine Sales Beer Sales Other Income TOTAL REVENUE COST OF SALES Food & Beverage Cost of Sales Cigar Cost of Sales Liquor Cost of Sales Wine Cost of Sales Beer Cost of Sales TOTAL COST OF SALES TOTAL GROSS PROFIT OPERATING EXPENSE PAYROLL & BENEFITS Payroll & Benefits TOTAL P/R & BENEFITS Utilities Leases & Rentals Repair & Maintenance Fees Supplies Marketing & Promotion Travel & Entertainment General & Administrative Insurance Rent Expense TOTAL OPERATING EXPENSE 562,456 3,479 118,442 51,586 226,783 34,965 YTD Last Yr 560,062 3,214 108,205 53,555 206,020 37,590 997,711 968,647 239,219 249,820 3,112 2,921 28,669 26,763 17,780 17,594 60,138 57,207 348,918 354,306 648,793 614,341 296,110 299,687 296,110 299,687 0 200 5,342 6,845 6,972 10,815 16,694 17,924 43,858 38,306 3,589 1,354 5,485 6,271 20,022 12,003 7,032 5,784 222,000 228,326 627,103 627,515 TOTAL EBITDA OTHER INCOME/EXPENSE Non -Recurring TOTAL OTHER INC/EXP DEPR/AMORT EXPENSE Depreciation Expense TOTAL DEPR/AMORT EXPENSE TOTAL EBT TOTAL NET INCOME/(LOSS) 21,690 -13,174 - 8,579 1,019 - 8,579 1,019 907 496 907 496 29,362 -14,689 29,362 -14,689 CLERK TO THE BOARD PHONE: (970) 400-4225 FAX: (970) 336-7233 1150 O STREET P.O. BOX 758 GREELEY, COLORADO 80632 October 5, 2016 Colorado National Golf Club, LLC C/O Catalyst Property Tax Consultants, LLC 291 Arapahoe Avenue Boulder, CO 80302 RE: SCHEDULE NUMBER 146732402052 (KNA 146732302043) Dear Property Owner: This is to advise you that the Weld County Board of Commissioners will hear your petition for abatement or refund of taxes on the property described as: Colorado National Golf Club, LLC at 2700 Vista Parkway, Erie, CO 80516. The meeting is scheduled for Wednesday, October 26, 2016, at 9:00 a.m., in the Chambers of the Board of County Commissioners of Weld County, Colorado, Weld County Administration Building, 1150 O Street, Assembly Room, Greeley, Colorado 80631. The Assessor is recommending that the Board deny your petition. You are not required to be present at this hearing; however, this is your opportunity to have your position heard, particularly if your position is opposed to the Assessor's recommendation. If you intend to submit any documentation in support of your position for this hearing, all such documentation must be submitted to the Office of the Clerk to the Board and to the Weld County Assessor's Office at least seven calendar days prior to the meeting date in order for it to be considered at the scheduled hearing. If you have any questions concerning this matter, please do not hesitate to contact me at (970) 400-4225. Cam' -p,,,,„tzd Chloe A. Rempel Deputy Clerk to the Board cc: Assessor Catalyst Property Tax Consultants, LLC U.S. Postal ServiceTM CERTIFIED MAIL° RECEIPT Domestic Mail Only For delivery information, visit our website at www.usps.com`% Certified Mail Fee $ (406° ExtraServices & Fees (check box, add fee as appropriate) ❑ Return Receipt (hardcopy) ❑ Return Receipt (electronic) ❑ Certified Mail Restricted Delivery ❑ Adult Signature Required $ ❑ Adult Signature Restricted Delivery $ Postage $ Ir't j a Total Postage and Fees $ 1GL Postmark Here tO/S/kG Sent To co f a-* l Golf" C lob I LS,L.G Street and Apt. No., or PO Box No. Slo o `/ s+-ch.. PKw Ci , State, ZIP+4 ® tar i e Co Tr O51G G Oc4+n • stfv) Ke rr • PS Form 3800, April 2015 PSN 7530-02-000-9047 See Reverse for Instructions co In r r\ - C3 D N a D lu c0 m N a a D D a N a a N U.S. Postal ServiceTM CERTIFIED MAIL° RECEIPT Domestic Mail Only For delivery information, visit our website at www.usps.com®. Certified Mail Fee $ r1c Extra Services & Fees (check box, add fee as appropriate) ❑ Return Receipt (hardcopy) $ o Return Receipt (electronic) $ ❑ Certified Mail Restricted Delivery $ ❑ Adult Signature Required $ ❑ Adult Signature Restricted Delivery $ at r L4? 9 US Y,; MS Postage $ Total Postage and Fees $ fl/c%- Postmark Here nt To _ G+ S Pris pe r eta 'Tax £.onso +a•,n.} s , LLS C. Street and -A07: No., or PO Box No. A tl .5a h - v' 9 Gl .tmo.t. h o e, owe. . City State, ZIP+4 ® G. . t-, Co c'so •- PS Form 3800, April 2015 PSN 7530-02-000-9047 See Reverse for Instructions U.S. Postal ServiceTM CERTIFIED MAIL° RECEIPT Domestic Mail Only For delivery information, visit our website at www.usps.com®. Certified Mail Fee $ n1c• Extra Services & Fees (check box, add fee as appropriate) ❑ Return Receipt (hardcopy) $ N ❑ Return Receipt (electronic) $ El Certified Mail Restricted Deliver/ ❑ Adult Signature Required ❑ Adult Signature Restricted Delivery Postage $ ex - Total Postage and Fees $ r1 I a, Postmark Here Sent To C O ,+Cisic3e+ PCo? • 1 o`x Cons. aetACV 'o1so n Car \ x1.r1. Street and Apt. No., or PO Box No. N _ 93 cj t aco,vouoe.. av e . City, State, ZIP+4® CO c3aa PS Form 3800, April 2015 PSN 7530-02-000-9047 See Reverse for Instructions SENDER: COMPLETE THIS SECTION • Complete items 1, 2, and 3. • Print your name and address on the reverse so that we can return the card to you. • Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: Colorado flo%+orsbc¼t Goth' Clot Ck+4-n= .Yl. Kerr O o 0 \/ ; S +a-G.“-KtAiaLe Ca c ostCo i 1111111111111111 u uu m 11111 9590 9402 1714 6053 4700 68 i X ❑ Agent Addressee D. Is delivery address different from item 1? O Yes If YES, enter delivery address below: O No 2. Article Number (Transfer from service label) -101CO 0160 0000 -ia38 aco lro 3. Service Type ❑ Adult Signature ❑ Adult Signature Restricted Delivery DC Certified Mail® ❑ Certified Mail Restricted Delivery ❑ Collect on Delivery ❑ Collect on Delivery Restricted Delivery ❑ Insured Mail ❑ Insured Mail Restricted Delivery (over $500) ❑ Priority Mail Express® ❑ Registered MailTM ❑ Registered Mail Restricted Delivery ❑ Return Receipt for Merchandise ❑ Signature confirmationTM ❑ Signature Confirmation Restricted Delivery PS Form 3811, July 2015 PSN 7530-02-000-9053 Domestic Return Receipt 7 SENDER: COMPLETE THIS SECTION • Complete items 1, 2, and 3. • Print your name and address on the reverse so that we can return the card to you. • Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: CO1/4+O.156 Pr -O per # aTa.x Cori 5c3 ( -t-o`r + s • LA -ace O1, +tn = Jackson F" n ai 1 aro Uvoe 3oo 1de,r CO 2a3G a i i m u 9590 9402 1714 6053 4700 99 i COMPLETE THIS SECTION ON DELIVERY 4111 ture ❑ Agent ❑ Addressee Received by (Print Leorcren4- Zd Name) C. Date of Delive D. Is delivery address different from item 1? ❑ Yes If YES, enter delivery address below: ❑ No 2. Article Number (Transfer from service label) 7016 0750 DODO 7938 2623 3. Service Type ❑ Adult Signature D Adult Signature Restricted Delivery Certified Mail® ❑ Certified Mail Restricted Delivery ❑ Collect on Delivery ❑ Collect on Delivery Restricted Delivery Mail vlail Restricted Delivery )0) ❑ Priority Mail Express® ❑ Registered MaiITM ❑ Registered Mail Restricted Delivery ❑ Return Receipt for Merchandise ❑ Signature Confirmation"" ❑ Signature Confirmation Restricted Delivery PS Form 3811, July 2015 PSN 7530-02-000-9053 Domestic Return Receipt PETITIONER, TAX AGENT REPRESENTATIVE, LESSEE POSTAL CODE 80302 805161 STATE CO O u CITY BOULDER Fc I hereby certify that I have placed a true and correct copy of the surronding property owners in accordance with the notification requirements of Weld County in the United States Mail, postage prepaid First Class Mail by lett 5th day of October 2016. Dat d the 5th day of October 2016. Chloe A. Rempel Deputy Clerk to the Board ADDRESS 1 291 ARAPAHOE AVENUE 2700 VISTA PARKWAY COMPANY ATTN: JASON FLYNN ATTN: S.M. KERR LAST NAME FIRST NAME _ CATALYST PROPERTY TAX CONSULTANTS, LLC COLORADO NATIONAL GOLF CLUB, LLC co co ru u a W Please print and press hard. -p E x � n W LLzy� a r I 0 a) -0 E LL- Z V) 4-0 L C TCD O C U Cn C ale moos mama ' To most locations. PULL AND RETAIN THIS COPY BEFORE AFFIXING TO THE PACKAGE. NO POUCH NEEDED. 4-0 • —C ai a) L d L -0 a) c0 a) l0 > •t0 v J }- v.) Z m a a) Q CO = X m L.1.4 .C O Y y > -2 c0 LL Cn ed >-a t0 a) 0 Co 0 m >-caa) c to 'D a- cD CD - a)> cc E a) O m a) Q ai a a-�� a E a, > Q `- EaC COa, O to=� cm—O N'— E CD I-- >F- 0"y 0- limc�( Si a N N>Xc c Q C LU mv) L1JCn c°�to O ntc LL Cn to 7 a) C O . C a. t tee. nits **- a a)ca e E E O :.L C3 OD a U r Packages over 150 lbs. 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CC ru co in r N a O 0 0 O L N 0 ram rR O U.S. Postal Service CERTIFIED MAIL° RECEIPT Domestic Mail Only For delivery information, visit our website at www.usps.com'' Certified Mail Fee $ f a Extra Services & Fees (check box, add fee as appropriate) ❑ Return Receipt (hardcopy) $ o Return Receipt (electronic) ❑ Certified Mail Restricted Delivery ❑ Adult Signature Required ❑ Adult Signature Restricted Delivery $ $ Postage $ rtIo- Total Postage and Fees $ l f O Sent To no1/4.+---CotE C\o1/4 Street and Apt No., or PO Box No. 31o6 v i 4-c"- P K `.A..x.ae Cr , State, ZIP+4o t -r e,co sico Postmark Here t )/3o PS Form 3800, April 2015 PSN 7530-02-000-9047 See Reverse for Instructions ■ Complete items 1, 2, and 3. • Print your name and address on the reverse so that we can return the card to you. • Attach this card to the back of the mailpiece, or on the front if space permits. � . Article Addressed to: o t � �! v � Cotoroido flcx+'onc'-t G 9 -loo Vi Sf a paaeic u a -t -A Go c�5 4 s t co 111!!!101!)101111_)111,11!11111111111111 59094017146034 35 2. Article Number (Transfer from service label) ?D1,6 0750 00D0 7938 2760 PS Form 3811, July 2015 PSN 7530-02-000-9053 ❑ Agent ❑ Addressee a Date of Delivery D. Is delivery address different from it -m 1? s If YES, enter delivery address below: ❑ No 3. Service Type O Adult Signature ❑ Adult Signature Restricted Delivery Certified Mail® ❑ Certified Mail Restricted Delivery ❑ Collect on Delivery ❑ Collect on Delivery Restricted Delivery Aail Aail Restricted Delivery 10" ❑ Priority Mail Express® ❑ Registered MailTM ❑ Registered Mail Restricted Delivery ❑ Return Receipt for Merchandise ❑ Signature ConfirmationTM Q Signature Confirmation Restricted Delivery Domestic Return Receipt r Hello