Tax-Property Article 8-213(c) requires qualified country clubs or
golf courses to be assessed according to their legislative “preferred
use” value. Only when a golf course enters into a country club/golf course agreement, should the following method be utilized in determining the “preferred use” valuation.
For the purpose of valuation, the Department has established six
grades or classes for the golf course valuation. The following values
are as of January 1, 2002:
| AAA Value per hole |
$173,680 |
| AA Value per hole |
$148,090 |
| A Value per hole |
$122,510 |
| B Value per hole |
$96,930 |
| C Value per hole |
$71,340 |
| D Value per hole |
$45,760 |
While these rates are updated annually, based upon the Marshall Valuation Guide, for courses not in an agreement, they shall remain at the above listed levels for courses in an agreement.
The buildings should be valued based on the cost approach and care
taken when depreciating the buildings in order to properly estimate
their contributing value to the property.
All the land of a golf course or country club actively used for
golf shall be assessed in the same manner as open space properties
defined in Title 8-219, Tax-Property Article.
| Use Value Examples |
| Grade (A) Course (18 x $122,510) |
= |
$2,205,180 |
| Less Applicable Depreciation* (20% was determined
to be correct) |
= |
$441,000 |
| Plus 150 Acres Raw Land @ $1,000** Acre (Including
Club Site) |
= |
$150,000 |
| Plus clubhouse and other improvements based
on cost approach |
= |
$250,000 |
*See Course Condition/Depreciation
Chart
**Note: $1,000 per acre under 8-219 Tax Property Article.
|
|
|
| “Preferred Use” Value |
|
$2,164,180 |
The above cost approach should only be used to value golf courses or country clubs in an agreement.
Depreciation on Course Improvements:
| Course Condition |
Code |
Physical/Functional
Depreciation |
Economic Obsolescence |
| Superior |
6 |
5% |
5% - 10% |
| Excellent |
5 |
10% |
10% - 15% |
| Good |
4 |
15% |
15% - 20% |
| Average+ |
3 |
20% |
20% - 25% |
| Average |
2 |
25% |
25% - 30% |
| Fair |
1 |
30% |
30% -35% |
| Poor |
0 |
40% |
35% - 45% |
Depreciation for course improvements shall be applied based upon the schedule shown above. Normally, only physical/functional depreciation will apply.
For courses that are built on community land or open space, additional economic obsolescence should be granted to recognize the lack of development potential for such courses. Economic obsolescence should be applied in the ranges indicated above based upon the perceived market conditions, and the profitability of golf play for the course under consideration.
The market value for these golf courses also needs to be estimated. A letter must be sent in cycle and prior to January 30 notifying the owner of the market value. This value is important because it is used to calculate the penalty if the golf course or country club agreement is broken.
Market Value Examples
A. Market Value: Course where
highest and best use is for development potential
150 acres @$100,000/acre (estimated market rate)
*Add any value for buildings if any contributory value is present. |
Market
Value |
$15,000,000* |
| |
|
|
| B. Market Value: Course where
highest and best use is as golf course.
150 acres @ $10,000/acre (estimated market rate) |
Land Value |
$1,500,000 |
| Golf Course Local office estimate of cost from Marshall Cost Guide |
|
$2,205,180 |
| Depreciation
20% (Local office estimate) |
|
-
$441,000 |
| Buildings (Marshall Cost Guide minus applicable depreciation)
|
|
+ $
250,000 |
| Market
Value as Golf Course |
|
$ 3,514,180 |
| |
|
|
C. Market Value:
The income approach when data is available should
be used to estimate the market
value of a golf course if the highest and best use of the property
is for a golf facility.
|
The market value and “preferred use” value should be
recalculated each triennial review.
|
