concerned members of moss creek single fee presentation
DESCRIPTION
The presentation delivered at Bostwick Paviliion January 22, 2007.TRANSCRIPT
Company
LOGO
Impact of the Single FeeImpact of the Single Fee
An AnalysisAn Analysis
The IssuesThe Issues
• Competitiveness and Home Value
• Fairness
• Golf Pricing and Choices
The Economic EnvironmentThe Economic Environment
• Real Estate Market—End of the Bubble– Rising Inventory– Falling Prices– Record Vacancies/Foreclosures– Bottom—2010?
Real Estate Sales BubbleReal Estate Sales Bubble
0
500
1000
1500
2000
2500
3000
3500
4000
2001 2002 2003 2004 2005 2006 2007
Real Estate Sales
Recovery is not Projected to begin until 2010
HH
I U
nits
Sol
d
Golf-Revenue and Cost ChallengeGolf-Revenue and Cost Challenge• 2000-2007—Long Term Decline
– Rounds Played*– Revenues*– Construction* – Popularity*
“People retiring in the next 10-15 years are going to have golf as one of many things they do….not the only thing they do.”
Vice President, Toll Brothers Golf Division
*All Falling
Moss Creek’s MarketMoss Creek’s Market
• Where Do People Choose to Live?
• 134 Housing Communities in HHI/Bluffton
• 24 Comparable to Moss Creek• 5 Comparables are Single Fee• 19 Comparables are “Choice”
Four out of five buyers—80 percent—purchase homes in “choice” communities.
The Bottom Line
• Buyers in the “Single Fee” community market do not purchase homes in the price range where Moss Creek houses sell.
• 8 out of 10 potential purchasers buy homes in communities that offer a “Choice.”
Moss Creek’s MarketMoss Creek’s Market
Costs of the Single FeeCosts of the Single Fee
• Cost
• Fairness
Note: The average annual increase in fees in single fee communities is 7%, not including annual special assessments.
Transfer Fee: Compounding Our Problem
Transfer Fee: Compounding Our Problem
• At $23,000 Among Highest in HHI/Bluffton– 53% Increase From 2003-2008
• Serious Disadvantage in Market– 5% of Sale Price for Average Home in 2008
• Annual Cost for a 15-Year Homeowner:– $1500/year on Top of Annual Assessment
Transfer Fee: Compounding Our ProblemTransfer Fee: Compounding Our Problem
Community Transfer Fee % of Av. Sale Price (2007)
Moss Creek $23,000 4.6%
Colleton River $15,000 1.4%
Belfair $16,400 1.9%
Berkeley Hall $ 7,000 0.6%
Wexford $20,000 1.2%
Long Cove $15,000 1.0%
Moss Creek has the most expensive real estate transfer fee in our market
Costs of the Single FeeCosts of the Single Fee
What is Fair?
The Burden• 1800 Residents and 448 Annual Plan Golfers*….
– 74% Pay For the Recreation of 26%– $725K ( $1K each in 2007) to Subsidize Annual Golf Play
An Aging Population• 385 Residents—21% of Moss Creek—75 Years or Older
– Less Likely or Able to Play– 10%—126 Residents—Over 80 By 2010
*An additional 54 people purchased 10-40 round packages or renter package plans. Data from 2007.
Year Under 40
40-49 50-59 60-69 70-79 >80
2000 N/A 4.7% 25.3% 38.1% 27.7% 2.5%
2003 N/A 3.3% 20.2% 41.2% 28.4% 5.5%
2006 3.4% 3.8% 18.1% 38.9% 28.6% 6.9%
Distribution of Age at Moss Creek
Tri-Annual Moss Creek Membership Survey
Top Reasons residents left Moss Creek 2003 2006
Move to Assisted Living 3.0% 8.0%
Move Closer to grandchildren 13.9% 20.0%
Higher Fees 7.6% 8.9%
Economic Reasons 15.2% 22.0%
Other 48.2% 34.0%
No Answer 11.4% 8.0%
Tri-Annual Moss Creek Membership Survey
The Single Fee and Our HomesThe Single Fee and Our Homes
• Will We Be Competitive?• Negative Impact <$500,000
– 60% of all Moss Creek Homes• Major Problem <$400,000
– 35% of all Moss Creek Homes• Positions Moss Creek in Wrong Market
– 80% of Home Buyers Select “Choice” • Unfair Shift of Financial Burden
– Golf Subsidy and Age Issue
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
• Goals– Maintain Quality Courses– Support Other Pursuits and Interests– Manage Prudently and Fairly
• Challenges– Declining Golf Participation– Weak Housing Market– Falling Revenues
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
Golf Pricing—The Central Issue
• What’s a Fair Price?
• What a Fair Way to Share the Burden?
Benchmarking….
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
Benchmarking
• Golf – Major Cost Driver
• 35% of Operating Budget ($2.8M in ‘07)• 21% of 5-Year Capital Spending Plan ($835K)
– Declining Popularity and Under-Used Courses• Only 1 out of 5 New Buyers Choose Annual Golf• Courses Idle 60% of Each Day
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
• Benchmarking
• How Does Moss Creek Compare?– Private Clubs– Semi-Private Clubs
• A Sample– Sea Pines Country Club– Country Club of Hilton Head
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
• Benchmarking
Common Measure For Annual Golf Plans
• Per Round – Price– Costs– Financial Performance
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
Price Per Round
With Cart
Cost Per Round Gain/(Loss)
Moss Creek* $31.66 $52.22 ($20.56)
Sea Pines CC $53.37 $53.28 $0.09
CC Hilton Head $52.30 $47.50 $4.80
•Benchmarking Annual Plans•Average Price, Cost, Performance per Round
*Includes annual subsidy of $820 from the Moss Creek 2006 assessment of $3366.
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
Moss Creek Today
Moss Creek Single Fee
Sea Pines CC CC of Hilton Head
Greens Fees $2622.00 $556.00 $3092.00 $3660.00
Annual Plan Subsidy $1022.00 $1091.00
Cart Fees $2754.00 $3277.00 $3464.00 $2592.00
Total $6398.00 $4924.00 $6556.00 $6252.00
Per Person Annual Price $3199.00 $2462.00 $3278.00 $3126.00
Price Per Round With Cart* $33.67 $25.91 $53.37 $52.30
A Single Fee: How Will Current Annual Family Plan Golfers Benefit?
*Based on average number of rounds played by annual family plan unlimited golf members at Moss Creek, Sea Pines, and CC of Hilton Head in 2006
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
• Benchmarking Annual Plans– Average Price, Cost, Performance per Round
• The Issue– How to Price Golf Annual Plans Fairly
• Annual Golf Plans Discounted 40% Below Cost
• “Pay A Fair Share to Play”
Do We Have Choices?Do We Have Choices?
• Fair Golf Fees
• Annual Golf Pricing
– $1000 Increase to a Benchmarked Price?
– The Result:
• $300,000
• Outside Revenue
• Target Key Markets
– 4 More Foursomes Per Course?
– The Result:
• $600,000
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
Revenue Goals
What’s the Impact on Moss Creek?
• 5 Foursomes Per Course• 20 Players @ $50 Round
• Gross Annual Revenue: $600,000*
• Impact: Negligible
– Added Play: 1 Hour Per Day For Each Course
*Based on 300 Playable Days
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
Outside Golf: The Facts About Privacy
Who’s in Moss Creek Monday Through Saturday….
On Average Each Day:– 80 Daily Vehicle Pass Holders– 30 out of the 150 Annual Vehicle Pass Holders
275-300 People On Average Every Day…
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
Name Vehicle License Number
Driver’s License Number
Credit Card Number
Phone Number
Security Deposit
Daily Vendor Pass Yes No No No No No
Annual Vendor Pass
Yes Yes No No No No
Outside Golfer Yes Yes Yes Yes Yes Yes
Outside Golf: The Facts About Security
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
A Community Strategy for Moss CreekA Community Strategy for Moss Creek
• The Way Forward– Fair Pricing: Benchmarking Fees and Costs
– New Income: Growing and Diversifying Revenue
– Realistic Budgeting: Managing For Challenges Ahead