Article provided by Craig Kessler, SCGA

June 20, 2023

An op-ed in the Los Angeles Times during US Open week captured the attention of the golf and non-golf worlds. Its title: “The PGA Tour-LIV Golf merger isn’t the problem; Golf is.” Its author: A law professor from the Midwest whose magnum opus on golf is a law review article that posits the notion that mere reform of the game isn’t enough; only “abolition” will do. No doubt the good law professor understands what the term, “abolition,” conjures up in the American imagination.

If you missed it, you can access it by clicking here. If upon reading the rest of this Update you would like to discuss further, please reach out to either Craig Kessler or Kevin Fitzgerald. We would welcome the conversation.

Much of the anti-golf screed repeats conclusions about golf’s use of water and non-organics that are as false as they are incendiary. The same goes for repetition of the arguments that the backers of last year’s AB 1910 issued to single golf and only golf out for the receipt of public subsidies to repurpose courses as housing tracts. So too, the dredging up of some of golf’s exclusionary past, as if golf doesn’t have a lot of company in that respect and hasn’t spent the last 60 years remediating it.

But there was one aspect of the op-ed that may have caught you by surprise – the notion that private golf clubs get “special tax breaks” in the form of a tax valuation basis that insulates them from paying what in the author’s opinion is their “fair share,” with the gap between what they remit under settled California law and what the author believes they ought to remit representing a “subsidy.”

The law professor is certainly entitled to his opinion, and the Los Angeles Times is certainly entitled to run that opinion on its Opinion Page.

But there is more than mere “opinion” that one needs to know in order to gain a full understanding of the matter – things like the law on the subject, the history of that law, the sound public policies and public goods that support that law and history, and the undesirable consequences of jettisoning both to satisfy a populist rant.

What follows is some law, some history, some public policy, and some political/social reality to put last week’s op-ed in perspective. Okay – a little “opinion” too. We too are entitled to an opinion.

BACKGROUND

In 1960 California’s voters approved Proposition 6. Its title: “Assessment of Golf Courses.” The initiative set a basis for determining the taxes to be paid by private non-profit golf clubs [501 (c)(7) corporations] that remains in effect to this day and is enshrined in ARTICLE XIII, Section 10 of the California Constitution as follows:

Real property in a parcel of 10 or more acres which, on the lien date and for 2 or more years immediately preceding, has been used exclusively for nonprofit golf course purposes shall be assessed for taxation on the basis of such use, plus any value attributable to mines, quarries, hydrocarbon substances, or other minerals in the property or the right to extract hydrocarbons or other minerals from the property. [ARTICLE XIII, Section 10]

Over the course of 63 years of interpretation by county assessors and boards of equalization, the standard enunciated in this initiative has resulted in tax bills calculated to incent golf clubs to remain what the initiative’s proponents referred in their formal ballot argument as “privately paid-for parks.” Most of the state’s cities, including the City of Los Angeles, zone their private golf clubs “open space” in deference to the Constitutional provision, or as the ballot argument put forth by Proposition 6’s backers much more boldly stated the matter in their introductory remarks:

How would you like the golf courses nearest your home to be converted into noisy factory layouts, clamorous supermarkets, traffic jammed shopping centers or brick and mortar apartment units? Proposition 6 is designed to save these courses and their benefits to you and your family as wooded, planted open space areas giving green belt breathing space to California’s growing cities.

That ballot argument was co-authored by one of Proposition 6’s biggest political backers, Augustus Hawkins, who the historians and political junkies among you will remember as one of the 20th Century’s most prominent Democratic legislators (28 years in the California Assembly and 28 years in the U.S. House of Representatives). While a subject for another day, golf really does need to come to terms with its complete reversal of fortune in terms of the strong support it once had from the left side of the political aisle. Gus Hawkins, co-founder of the Congressional Black Caucus, represented inner city Los Angeles in the House from 1962-1990 and vigorously pushed this initiative to, as he wrote, prevent California’s “privately paid-for parks,” as he defined country clubs, from “being taxed out of existence and taxed into overbuilt industrial and commercial developments.”

The arguments in favor of 1960’s Proposition 6 are worth reexamining in light of last week’s screed in the Opinion Section of the Los Angeles Times, which was but the latest salvo from those who like this author are really about “abolishing” the game, something even Malcolm Gladwell in his rant “A Good Walk Spoiled” didn’t suggest, although he did subtitle his viral podcast, “why I hate golf and you should too.”

Anything worth reexamining is worth repeating. So, here are a few of Proposition 6’s pro arguments excerpted from that 1960 ballot:

TAX REVENUE LOSS DUE TO DEPRECIATING VALUE OF SURROUNDING LAND WILL BE AVOIDED

Residential areas surrounding courses pay higher taxes because of scenic charm and prestige. Unfair taxes on the courses, forcing them to sell out and convert into commercial use, drops the value of the residential areas surrounding, erodes the tax base and throws a heavier tax burden on remaining taxpayers.

PROPOSITION 6 WILL HELP PROTECT OUR TOURIST AND CONVENTION INDUSTRY

These courses are a leading tourist and convention attraction. Tourists bring more than $1 billion in new outside money yearly into California. This means jobs for thousands. Fair taxation under Proposition 6 will help protect a major facility sustaining this source of employment.

TAX PRESSURE HURTS THE THOUSANDS WHO SEEK RECREATION ON PUBLIC LINKS

Courses cut down by the “tax ax” throw their membership into the public links, adding to the already great pressure there. Thus, thousands who cannot afford to belong to private golf clubs will be victimized.

OUR CITIES NEED OPEN AREAS AND “GREEN BELTS”

Civilian defense authorities say golf courses are indispensable facilities for use as mobilization areas in case of emergency. Parks and planted areas operated at private cost contribute to the beauty, health, and appeal of our growing metropolitan areas. Planted areas help decontaminate the air because plants absorb carbon dioxide and give off oxygen; thus, combatting air pollution.

TAKEAWAYS

Sixty-three (63) years later the arguments remain valid, although in 2023 we would need to predicate the value of golf courses as mobilization areas not for “civilian defense,” but rather firefighting. If anything, the relationship between maintenance of private equity clubs and public links access, and its companion affordability, is a much more visceral relationship today than it was in 1960.

There are only two types of golf courses in the City of Los Angeles today – tony private clubs and municipal golf courses. The in-between – the daily fee course – which did exist in large numbers in 1960, are today gone, their once permeable surfaces that provided open spaces, heat sinks, and active recreation now covered in high rise buildings, shopping centers, hotels, and residential communities. It was not the result of some conspiracy or anti-golf animus, merely the workings of market capitalism.

Taken together, the public policy/public good arguments that sold Proposition 6 to California’s electorate in 1960 could have been summed up then as it can even much more so be summed up now – TAX SOMETHING AT HIGHEST AND BEST USE AND HIGHEST AND BEST USE IS WHAT YOU WILL GET – and that’s not what often makes for what those who live in Los Angeles and other urbanized California communities consider a high quality life. It’s why that city has used public funds to take 155,000 acres of land in its Santa Monica Mountains permanently out of circulation for anything other than open space. Dare we suggest that there are far more opportunity costs and tax losses involved in that act of market capitalism forbearance than the forbearance required to allow for not just private golf recreation, but privately held recreation of all types. Dare we also suggest to those enamored of using public subsidies to repurpose publicly held golf courses for commercial purposes that taken together all of California’s golf courses represent less acreage – 144,000 acres to be exact.

LOOKING FORWARD

There are two (2) sides to the story told in last week’s Los Angeles Times. If the only persons telling the story are those like the author of the hit op-ed piece who openly makes a case that golf just needs to be “abolished,” that will end up being the only side that the general public hears. And that will be the side that frames a debate thereon should 2/3 of each House of the California legislature find that the matter should be put to the voters again in the 2020’s.

What appeared in last week’s Los Angeles Times was not the least bit surprising. Indeed, we predicted such one year ago – not only that the issue would be joined when the US Open graced the fairways of Los Angeles for the 1st time in 75 years, but that the issue would be joined in the form of an op-ed in the LA Times. The stage was simply too well set for those who have long aimed at gaining support for singling golf out among other open/green space activities for conversion to commercial purposes.

Golf has a tough call to make. Was last week just a one-time blip in a longstanding crusade by a decidedly minority view that will escape back into silence now that the 2023 US Open is in the record books? Or does it portend more to come? More AB 1910’s, more municipal conversions, and more populist screeds against the very notion of private clubs in urban areas. Overreaction to a negligible threat can provide it with oxygen otherwise unattainable. On the other hand, underreaction to a real threat can put one too far behind to respond effectively. We did say this was a “tough call.”