The Pellucid Perspective - January 2013 - (Page 10)

GOLF COURSE TAXATION Private owner launches another attack on municipal course tax exemptions By Jim Dunlap P aul Macke, owner of the Cincinnati, OH area Hillview Golf Club, has filed another tax complaint contesting the right of publicly owned golf courses to be exempt from paying property taxes. Buoyed by his success to date in forcing the city of Cincinnati to pay property taxes on its seven city-owned courses and additionally forcing third party operator Billy Casper Golf to pay sales and use taxes on its pro shop and food and beverage revenues at the courses, Macke filed a tax complaint on December 21 against the city of Blue Ash, OH and its exemption from property taxes at the Blue Ash Municipal Golf Course. After Macke’s initial complaints against Cincinnati’s property and sales/use tax exemptions wended their way through lower commissions and courts and appeal processes, the Ohio Tax Commissioner ruled in December 2010 that the city, and in the case of the sales/use taxes, its agent Billy Casper Golf, were not entitled to the exemptions. The city’s back taxes for 2009 and the first half of 2010 were nearly $2 million, with future property taxes estimated to be between $600,000 and $800,000 annually. Billy Casper Golf, as the for-profit operator, was ruled to be liable for the sales/use taxes which had previously been considered to be exempt due to the municipal ownership, although the city is reportedly reimbursing Casper Golf for those payments as part of their renewed operating agreement. The city has since appealed the Tax Commission ruling, and the results of that appeal are still pending. Other municipalities in Ohio have filed briefs of support in favor of Cincinnati and “managed competition,” claiming that professional management from companies such as Billy Casper Golf enable municipal courses to run more efficiently and provide a recreational amenity for those cities’ citizens. While the fact that Casper Golf, a for-private company, is operating Cincinnati’s municipal courses was a significant element in Macke’s original complaints, he claims the fact that the city of Blue Ash does not employ a third party operator does not make the city exempt from paying property taxes on the course. Blue Ash City Manager David Waltz said he was unable to comment on Macke’s complaint in detail until city attorneys had researched it, but said he feels the fact that Blue Ash operates its own course puts it in a different category than the Cincinnati-owned courses. Blue Ash Parks and Recreation Department Director Chuck Funk said he had not seen Macke’s complaint, but was curious as to why Macke had targeted Blue Ash rather than the numerous other municipally owned courses in the region. One likely reason is contained in Macke’s remarks to this publication, citing the fact that Blue Ash has spent nearly $10 million in recent years on a new clubhouse and other improvements at their municipal course, despite the fact that that the course currently loses between $300,000 and $500,000 per year, which Waltz acknowledged. “I’m not going to put up with it,” Macke said. “I’ll do everything I can do to make city courses taxable like the rest of us are. I just want an even playing field for private operators.” The basis of Macke’s complaints against the two cities seems to be somewhat different. One of his major concerns with the Cincinnati courses was his contention that the Casper-managed courses were able to lower their rates, in part because the city and Casper paid no property or sales/use taxes and in part, Macke claimed, because Casper’s contract gave them the majority of the courses’ food and beverage and pro shop revenues and they were more concerned with getting players to the course at any (lower) cost. Blue Ash, on the other hand, charges rates as high, or higher, than Macke’s course, according to Funk, and does not engage in deep discounting. On the other hand, Macke would respond, they have a new clubhouse and an upgraded golf course which carries no property tax burden. When we originally reported the story of Macke’s tax complaints against Cincinnati, he said the verdict “could be a gamechanger” for municipal courses and their private owner competitors. To date, although Macke said he was received a number of inquiries from other owners about the process, and because the Tax Commissioner’s ruling is still under appeal, the “game” n is unchanged. While the fact that Casper Golf, a for-private company, is operating Cincinnati’s municipal courses was a significant element in Macke’s original complaints, he claims the fact that the city of Blue Ash does not employ a third party operator does not make the city exempt from paying property taxes on the course. 10 The Pellucid Perspective January 2013

Table of Contents for the Digital Edition of The Pellucid Perspective - January 2013

The Pellucid Perspective - January 2013
Contents
A Pellucid Preview of the 2012 State of the Industry
Boom times for golf course brokers
Show time: Happy days are here again?
Sharp Park wins
Private owner launches another attack on municipal course tax exemptions
December golf weather impact: 2012 a year for the record books!
Goofy had company in Orlando course developers
Dallas negotiating for construction of new championship course
“Customer co-production” worth looking into for golf

The Pellucid Perspective - January 2013