Law could alter golf courses’ tax bills

A law being considered by state legislators would make it easier for municipalities to win assessment challenges by the owners of golf courses.

The legislation, A.6444/S.4420, would allow passage of local laws to stipulate that golf course property tax assessments be based on the property’s highest and best use, rather than the property’s current use as a golf course. Local laws would have to be passed no later than 60 days before the assessment rolls are completed and filed.

Thus far, the state Assembly’s Real Property Taxation Committee has voted in favor of the legislation by an 8-1 vote.

No action has been taken in the state Senate. Similar legislation was proposed during the last legislative session and was not passed.

According to the legislative memo, there are varying types of golf courses, each with varying types of business models and economic returns. The bill’s author, Assemblywoman Sandy Galef, D-Ossining, wrote in the legislative memo accompanying the legislation that courses typically don’t sell on the open market, which makes basing a property assessment on a sales comparison approach unreliable. An income approach is the generally accepted approach to valuing golf courses, but Galef wrote that it often requires reliance on per-round fees paid at neighboring courses.

Per-round fees are difficult to make an adequate comparison of country clubs and smaller courses since a country club receives has many more ways to make money than does a smaller course through membership fees, food service and other amenities that small courses do not have.

“In other instances, such as a member owned not-for-profit golf course, the cash flow and revenue of the club may be unimpressive,” Galef wrote. “However, the property may be located in a prime-real estate area where developers are willing to pay a premium for developable land. Such value is not considered in these assessments.”

The legislation would give communities an option to assess golf courses based on their highest and best use, which is defined by the Appraisal Institute as the “reasonable probable and legal use of vacant land that is physically possible, appropriately supported, financially feasible and that results in the highest value.

“This appraisal principal allows the consideration of other economically profitable uses of a property when determining its value,” Galef wrote. “For the valuation of golf courses only, it could be used by assessors, at local option, to provide a more accurate assessment of the property. This legislation provides another option for communities to explore should they have a golf course(s) that they feel is being assessed at the wrong value.”

John Whittaker is editor of the Post-Journal, an Enterprise sister paper in Jamestown, southwest New York.

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