Is the Sequim Sunland Golf Course Going Bankrupt?

Is the Sequim Sunland Golf Course going bankrupt?  This is the question on the minds of 844 Sunland residents, 119 resident golfers, other Sequim residents who are watching this story unfold, and potential buyers from outside the area.  After reading this article, be sure to read the updated article linked at the end of this article.

Sunland is one of Sequim’s early real estate developments and the first to have a golf course within the subdivision.  In the 1970s the developer sold land to 100 resident golfers who started the Sunland Golf Course Club (“SLGCC” or “Club”).  The Club is a private entity, owned by its members, and it owns the real estate and the clubhouse in Sunland.  The homeowners in Sunland have a Homeowners’ Association (“SLOA”), which is also its own entity with no affiliation or financial connection with the Club.  The two are now at odds, and the issue has created open animosity among some Sunland residents.

The cause of this dispute?  The Club is sliding toward bankruptcy, and it is asking the non-golfers in Sunland to save it.  Club membership has been declining, as is the case with golf courses around the country, but the cost of operation and maintenance has not declined.  There are three logical resolutions to this dilemma:  1. all homeowners chip in, 2. Club members ante up and save their Club, or 3. The Club files bankruptcy and liquidates.

The months long campaign by the Club would require all homeowners to contribute.  What is the most persuasive argument that all homeowners should chip in to help save the Club?  The primary argument is that property values will be negatively impacted, and some have suggested that property values could decline by as much as 30% in Sunland if the Club goes bankrupt.  The Club has suggested that the fairways could become fields of weeds, or that the land could be sold and a developer could come in and put up tract homes.

Many homeowners are not convinced and are politely saying, “No.”  Unfortunately, no is not working.  The campaign to force all Sunland homeowners to help pay for the golf course has intensified.  The battle for the mind of homeowners has turned into an all out war.  Facts, assumptions, and perceptions are getting entangled.  Rumors are flying about what would or could or might happen.  The elderly on limited pensions are feeling pressured to participate even though some widows have expressed their financial inability.

Homeowners are being told their homes will lose value if the Club goes under.  Will Sunland homes be worth less if the Club goes bankrupt and closes?  Will homeowners suffer a loss if they choose to sell their homes without a golf course in Sunland?

Stated like this, these questions can lead a person to any number of tangential arguments, depending upon biases, assumptions, and one’s personal stake in the outcome.  Let me state up front that this author has no stake in the outcome.  I am a Realtor and retired real estate attorney, but I have no office in Sunland, no current listings in Sunland, do not own a home in Sunland, am not a member of the Club, and I am not a noteholder to whom the Club owes an unsecured debt.

It has been said that the answers you get are only as good as the questions you ask.  I believe a better starting place for a question about the impact a bankruptcy (or no golf course) would have on Sunland homes would be questions like this:

Do homes in Sunland now command a premium that can be attributed to the existence of a golf course in Sunland?  This is a question that can be answered with a careful analysis of similar homes that have sold inside and outside of Sunland.  The homes must truly be comps with similar qualities and features and with similar lots and generally similar neighborhoods.  This kind of analysis will take some experience and careful thought, because it would be easy to distort the data with a few homes that are not true comps.  It would also require some differentiating, because there may be some homes in Sunland that would be effected or effected more than the majority of Sunland homes because of their unique location.  Lastly, the data in this analysis must include homes sold from the Olympic Listing Service (not the Northwest MLS which does not include all local listings), and it should include data over a reasonably long period of time, such as five to seven years.  This would cover our peak years of sales in the area as well as the current recession.

This kind of analysis is important.  This is not a time to shoot from the hip on home values or the impact the Club closure may have on home values.  Even professional Realtors can have substantially different opinions if asked to shoot from the hip. Impressions and assumptions have no place in this analysis.  Too much is at stake for the Club and for the homeowners.  Accurate facts are vital to intelligent discussion and freedom of choice in what may be the most important decision Sunland homeowners will ever make.

If the answer to that question is, “No, the current market has not historically brought a statistically significant premium to the value of homes in Sunland simply because of the golf course,” then Sunland homeowners have nothing to fear from the closure of the golf course or the Club, and they should not be pressured to contribute financially.

If, however, the answer to the question is, “Yes, the current market has historically brought a premium to Sunland homes because the community has a golf course,” then homeowners might be motivated to participate, but not without more.  Homeowners are not going to blindly write checks.   The Club has other options, such as Club members increasing their dues.  Homeowners have posted a review of the facts and arguments on the Internet at Sunland-facts.info.  This Sunland blog includes links to important letters and links to the Club’s position.

As a Realtor I listed one home and sold two homes in Sunland last fall in October of 2009.  My buyers purchased a beautiful three bedroom, two bath home on a lot that is well landscaped.  Like all of the other clients I showed homes to in Sunland in 2009, these clients are not golfers.  As we shopped for homes that suited their parameters, we looked at homes inside and outside of Sunland.  The home my clients did purchase was purchased on its own merits without regard to the golf course, and the comps indicated no premium value in the listing price at all.  My clients would not have paid a premium to be in Sunland because there is a golf course.  They found the perfect home on the perfect lot at a great competitive price, and they bought it.  Their feelings were that Sunland is a great little community, but the golf course was not a factor.

One might argue it was an indirect factor, since there are green fields of grass that contribute to the beauty of the community, and while that may be true, it is the green grass or the fields that are attractive, not golfers with clubs or golfers riding on carts.  This means that it is not the Club itself that ads value, but the open spaces.  Even this is debatable.  But my experience is a microcosm, and surely another Realtor could be found to say that they sold to some clients precisely because there was a golf course in Sunland.  But this still begs the question, “Do homes in Sunland command a premium because of the golf course?”  This is why a more authoritative answer to the question involves a thorough analysis of homes sold inside and outside of Sunland over the past five to seven years.

There is one more step in looking at values.  Even if one could show that there is not a premium attached to home values in Sunland because there is a golf course, or that such a premium is negligible, we then must take the next step and ask how this issue of closing the Club will affect perceptions of values on the part of buyers.  The cliche is, “Perception is reality,” and there may be some truth to that statement even if there is not to the underlying claims.  If buyers are hearing that there is animosity within the community, that there are arguments about the effect the bankruptcy of the Club will have on home values, and that there is uncertainty about whether homeowners are going to be required to pay an additional $300 per year, or more, this could turn buyers away from Sunland, or it could motivate a buyer to try to negotiate a lower price.  Perceptions can become reality, but they don’t have to.

The answer to false perceptions is education, promotion and good marketing, honest dialogue, and diligent efforts by homeowners or the SLOA itself.  Alexander Solzhenitsyn once said, “One word of truth will outweigh the whole world.”  From my perspective, Sunland homeowners are some of the greatest people you could ever hope to know, and I would suggest that if Sunland homeowners are fully informed, they will make the right decisions.

One thing that is clear is that there is a massive breakdown of communications.  Several homeowners have worked diligently to gather facts and openly discuss the issues and potential resolutions for everyone.  The homeowners have asked the Club for a plan that would show them how much they want for how long, what will happen in the years ahead, and what the projections are for more financial contributions from homeowners in the years ahead.  The Club has apparently not provided satisfactory answers to the homeowners, and the Club has apparently been unwilling to provide detailed and accurate financial statements of income and expenses and proformas for the next few years.  This comes from my interview of Sunland homeowners.  I also emailed the Club to seek an interview but never received a response.

Persuading the 725 non-golfers in Sunland to contribute $300 per year and possibly more in the future would be no small task.  But this is where the responsibility to communicate openly lies entirely with the Club.  Because the Club is the one asking the homeowners for money, and especially because it is an open-ended request, the Club owes the homeowners a duty of full disclosure, transparency, and that includes opening the books of the Club to homeowners for review (at least complete financial statements).  It would be entirely unreasonable to ask any homeowner to contribute money to a cause that is unclear and managed by others who will not share specifically what they will do with that money and precisely how the homeowner will be effected.  If homeowners feel this way, guess who is responsible for not articulating their position?  Some homeowners feel that they are being asked to subsidize the social and recreational habits of golfers.  I cannot imagine how the Club could overcome that objection.

It was and is the Club’s responsibility to sell their plan to the homeowners, and thus far they have failed.  The animosity among homeowners and the uncertainty hanging in the air is proof of that.  But this is about much more than just number crunching.  It is about respect and fairness.  Selling the Club’s position to homeowners requires diplomacy and gentle persuading.  It requires both the left and right hemispheres of the brain.  Financial statements, proof of the Club’s financial need, and justification for homeowners’ contributions from a financial perspective is all left brain logic.  The other half of persuasion is a matter of speaking to the homeowners ‘right brain, their concerns about the future, connecting with their emotional distress, and treating them with humility and respect.  If the Club cannot do both, any vote to help the Club will fail.

It is unfortunate that an otherwise peaceful community now has hostility brewing.  It is important to note that the hostility is not between homeowners and golfers.  The hostility is between the Club and the homeowners.  It also seems apparent that the mismanagement of this important issue is not the fault of homeowners.  The Club had the lead on this one.  The Club had the responsibility to explain, educate, and persuade homeowners of the need and justify their request.  They have clearly not done that well, and now the tension in the community is high.

Editor: For an update article on the Sunland Golf Course issues, see Sunland Golf Course No Longer In Trouble and Issues Now History?

For more information about the Sequim Sunland Golf Course, see Sunland-facts.info.

August 18, 2018 Update: See the latest update at Sunland Golf Club Issues.

Last Updated on January 27, 2010 by Chuck Marunde