Tuesday, October 23 , 2018, 6:50 pm | Partly Cloudy 66º

 
 
 
 

Glen Annie Golf Club: Which Par Is for the Course?

Troubled course's current situation tees up several possibilities for future outcomes. Second in a Noozhawk series

[Noozhawk’s note: This is the second in a series of articles exploring the past, present and future of Glen Annie Golf Club, and similar, emblematic projects on the South Coast. Click here for the first article.]

This summer’s showdown over the fate of Glen Annie Golf Club was a roller-coaster ride. And it probably isn’t over.

To recap, in the span of about a month ending in early July, the plans were in constant flux. First, the public was told that to survive, the golf course, located at 405 Glen Annie Road just outside Goleta city limits, needed to shrink considerably and develop 185 houses on the property. Then, when the Goleta City Council voted 3-2 against exploring this option, headlines proclaimed the course would close. Less than two weeks later, however, came a complete about-face: to the delight of local golfers, the public was told the course would remain open under a new ownership, with no changes.

So for now, it’s business as usual. But how long will it last? The long-term outlook seems far from certain.

This is especially the case in Goleta, which seemingly hasn’t made up its mind about whether it should grow. The Goleta City Council is known for its split votes and shifting majorities; in the young city’s seven-year lifetime, the council makeup already has swung from an anti-growth majority to a pro-growth majority, and back.

This means that it wouldn’t take much — perhaps a change of just one City Council member after the 2010 election — for the golf club’s new owners to have ample reason to give the housing idea another go.

In any event, the future of the course could spin off in several directions. This story examines a few of those possibilities.

Scenario 1: Status quo

Despite the course’s recent near-death experience, August was a pretty good month for revenue. So maybe the status-quo option is viable after all.

Glen Annie general manager Rich Nahas attributes the influx of business in part to general excitement among locals over the course’s unlikely survival. But he said recent improvements have also played a major role.

In response to customer feedback, for instance, maintenance crews have shortened the rough and eased prior restrictions for cart access. And the club recently launched a program that parallels a gym membership: for as low as about $100 a month, people can golf as much as they want, with a few exceptions on weekends. The response, he said, has been “overwhelming.”

Soon, the scenic patio area will be furnished with couches and portable fire pits, to create an outdoor lounge effect.

“We’re pushing the envelope a little bit, and responding to the customer feedback,” Nahas said. “We’re basically trying to make the golf course more user-friendly.”

So far, it’s working: Nahas said August outperformed August 2008 by a modest measure, and generated a profit — at least when factoring out the debt factor. (He declined to provide numbers, saying he is not authorized to give out such information.)

But even given this early success, the course’s future is remains murky.

The view from Glen Annie Golf Course includes Dos Pueblos High School in the foreground and UCSB in the distance.
The view from Glen Annie Golf Course includes Dos Pueblos High School in the foreground and UCSB in the distance. (Lara Cooper / Noozhawk photo)

The invisible hand guiding these changes is Touchstone Golf LLC, the golf management company hired by the club’s new owners. The new owners are the initial investors who reclaimed the course through foreclosure when the previous owner, Burt Sperber, couldn’t repay his development debts.

Thus far, they’ve been a tight-lipped and mysterious group. Nahas said he isn’t certain what they call themselves, and one representative, Mark Luthman of the Bay Area, has not returned several calls from Noozhawk.

But Nahas told Noozhawk that as far as he knows, the course will remain as is for the foreseeable future.

At first blush, the wisdom of this plan might seem questionable. After all, the course has operated in the red since it opened in late 1997. Consider: the initial business model assumed the course would sell 80,000 rounds a year. To date, the course has yet to crack 50,000.

What’s more, in the lead-up to this summer, Glen Annie’s managers spent years talking about the course’s financial shortcomings to anyone who would listen.

Thanks to the debt service, Nahas said, the course lost $1 million a year for 11 years.

And yet, there is still reason to believe the business-as-usual plan could work. This is because the annual losses were largely the result of how deep in debt Sperber was.

Sperber’s debt came from development. Largely because Glen Annie sits on extremely environmentally sensitive land, developing it cost a whopping $20 million — up to 10 times the typical cost of building a golf course of the same caliber, according to Nahas. Interestingly, the land by itself — with no golf course on it — is worth only about $6 million.

“They created a beautiful course,” Goleta Mayor Roger Aceves said. “But they out-priced themselves for the neighborhood.”

Absent the outstanding financial obligations — which by late June was estimated at $15 million — the course actually would have produced a modest profit during most years. On the high end, such profits would have reached $500,000, Nahas confirmed.

Because the course is now owned by the creditors, it’s conceivable that they are planning to slowly recoup their money by maintaining it as is for years.

Scenario 2: The new owners sell the course

Rumor has it that the club’s owners might soon put the course up for sale.

Nahas declined to comment on this, but developer John Dewey — Sperber’s partner in the ill-fated bid to build houses on the property — said he’s heard the rumor and believes it.

“Lenders are usually not in the business of owning and operating the properties they’ve taken back,” Dewey said. But he added: “This is not the best time to sell a property. It could be the worst possible time in the last 15 years.”

One strong possibility is the city of Goleta will purchase the land so it can run a municipal golf course.

Aceves has voiced strong support for this idea.

“I would love to have that dialogue,” he told Noozhawk.

Another possibility, however, is that the land could be sold and converted back into agricultural land.

“That would be a tremendous loss to the city of Goleta and community,” Dewey noted.

The reason for the danger? According to the latest appraisal, the land is worth more sans golf course. Conducted three years ago, the appraisal that put the land’s value at $6 million assumes the course has been replaced by lemon and avocado orchards and three or four houses, Dewey said. (Current zoning allows for just a handful of ranch homes on the land.) The appraisal also concluded that the land was worth less with a golf course on it, Dewey said, although he wasn’t certain by how much.

Interestingly, Dewey said that if the course were to go on the market, he’d consider purchasing it.

“My partners own other golf courses in Southern California,” he said. “We’d probably take a look. But I’d say our interest is pretty lukewarm. Like any investment, it all depends on the price.”

Would he still want to put houses on it?

“After three and a half years of time, energy and effort, I don’t think I’m interested in putting forth a similar proposal in the future,” he said. “But anything is possible.”

Scenario 3: The new owners give the housing idea another go

Just because the Goleta City Council shot down the idea of studying the concept of annexing the course and re-zoning the land to allow the construction of 185 houses doesn’t mean the housing idea is dead.

For one thing, the new owners could also try the “mom said no, so let’s ask dad” option.

In other words, because the Glen Annie course is located in Santa Barbara County, the next logical step might be to make an appeal to the Board of Supervisors for a zoning change that would allow for the housing development.

But county planners are resistant.

Planner Alex Tuttle said the course’s former owner inquired about this option before going to the Goleta council. County officials told the owner they wouldn’t be able to support the housing plan because the property is located outside the county’s urban boundary lines that define where neighborhoods can exist. The boundaries haven’t been significantly changed since they were established a couple of decades ago, Tuttle said.

“If (the owners) come back, they will probably face the same stumbling blocks,” he said.

Still, the new owners could return to the city with a similar proposal — perhaps after the 2010 election.

As is, the Glen Annie course is zoned for agriculture. This means that if the golf course fails, the only other option is to start a farm or ranch — which some movers and shakers insist is not a viable option.

Over the summer, Sperber’s proposal sought to broaden his options by getting the city council to study the possibility of annexing the land and changing the zoning to residential. (Sperber and Dewey would have picked up the study’s estimated $750,000 tab.)

The hope was to build 185 homes on the property, pay off the debt for developing the course, and run a scaled-down version of the golf course. It wasn’t to be.

However, the inclinations of the Goleta City Council have changed before, and could change again.

Depending on the outcome of the 2010 election, the club’s new owners might stand a chance of getting a similar proposal approved.

For all the debate’s complexity, the argument in Goleta boils down to a single question: Does the city stand to benefit from swallowing the Glen Annie property?

Aceves, who voted with the majority in rejecting the offer, says the answer is no.

“We don’t need the housing inventory — that’s the bottom line,” he said. “It makes no sense to annex property when you don’t need the housing.”

In addition, said Aceves, who was joined in his opposition by Council members Margaret Connell and Ed Easton, the city would actually lose money by adding houses — despite the revenue those homes would generate in property taxes.

This is because Goleta, in its quest to become an incorporated city seven years ago, struck a so-called “revenue-neutrality agreement” with the county, in which roughly half of the property taxes collected in Goleta are handed over to the county — in perpetuity. Consequently, the cost of providing police, fire and utility services to a new neighborhood near Glen Annie Golf Club would outstrip the revenue the city would reap from the property taxes.

Plus, Aceves said, recent wildfires have shown that extending a city’s limits (read: Santa Barbara’s) so far into the foothills can be perilous.

On the other side of the debate, Councilmen Michael Bennett and Eric Onnen believe the city does need more housing, although both are careful to add that they were only in favor of studying the feasibility of annexing Glen Annie.

Bennett said his main concern at the time was ensuring that the course stayed put.

“When I campaigned, I said I would do what I could to save the golf course,” he said. “For me, (the current outcome) works out fine.”

Still, Bennett added that it is important for city leaders to plan for some amount of growth, and those who think a city can have “no growth” are kidding themselves.

“We can either plan for it and do something, or we can bury our heads in the sand like ostriches,” he said.

Onnen, meanwhile, said the city could have benefited from other amenities offered in the Glen Annie plan, such as a component calling for soccer fields, street improvements and the donation to the city of the clubhouse.

“There was no way I was not going to look at it — there was so much potential benefit to the community,” he said. “I would hate to see the thing change character to something that didn’t bring community benefit.”

The terms of Aceves, Bennett and Onnen all expire in 2010, and all three are expected to seek re-election.

Scenario 4: Divvy up the land and sell it to ranchers

Before the 160-acre swath became Glen Annie Golf Club, the land was a patchwork of properties belonging to four separate owners. The course’s new owners could decide to make it so again.

In the early 1990s, the Board of Supervisors approved the plans of the initial developer on the condition that, should the course fail, the land would revert to the four 40-acre parcels of ag land.

Making this happen sooner than later would placate environmentalists, who say the land probably should never have become a golf course in the first place.

“I think it’s a poor location for the golf course, and I don’t see that it’s a good location for annexation,” said Eddie Harris, president of the Santa Barbara Urban Creeks Council, which in the early 1990s sued the county for approving the Glen Annie project. “The county made a mistake when they allowed the use for the golf course.”

But Onnen — the only golfer on the council — said he believes the ranching option would bring minimal benefits to the city.

“My druthers are it stays as is,” he said of the course.

Some doubt that the land is even viable for farming.

The course’s initial developer, John O’Shaughnessy, said he was told when he started the project that the land hadn’t been farmed profitably in 50 years.

Kristen Amyx, president and CEO of the Goleta Valley Chamber of Commerce, said that in general, it’s pretty difficult to start a farm from scratch these days. In 2006, the chamber commissioned an exhaustive study on the viability of the Goleta Valley’s ag land.

“The costs of starting up are too high,” she said, although she added that Glen Annie wasn’t part of the 2006 study. “I kind of think if (Glen Annie) was real viable for running orchards, the owners would have done that all along.”

But Steve Chase, Goleta’s director of planning and environmental services, said the county’s latest study — conducted more than a decade ago — concluded that the Glen Annie land is agriculturally viable for avocado and lemon orchards.

Moreover, he said, trends over the past decade have actually rendered agriculture more viable in Goleta.

“It went through a lull, for the better part of this decade and the ‘90s,” he said, citing reasons such as high water costs and low ag prices. But, he said, the advent of farmers markets, as well as the emergence of an enormous refrigeration unit at the Port of Hueneme have “changed ag economics tremendously for our region.”

“It’s almost like the advent 10 years ago of boutique hotels in San Francisco,” he added.

In the end, one thing is certain — the future of Glen Annie Golf Club remains uncertain.

“In the short-term, it’s probably going to stay there,” Onnen said. “But how long is that? A year? Six months? Multiple years? I don’t know.”

Noozhawk staff writer Rob Kuznia can be reached at .(JavaScript must be enabled to view this email address).

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