Housing developers tee up for Twin Cities courses

At the Parkview Golf Club in Eagan, the once-bustling emerald fairways have been abandoned. Piece by piece, the course is being liquidated — from its clubhouse and popcorn maker to the more than 10,000 yellow and white golf balls.

Soon, bulldozers and dump trucks will zip across the space, as the city's last 18-hole golf course morphs into Eagan's newest subdivision, Hillcrest.

"Any golf course that's within a growing community could be worth more to the owner as a development prospect than as a golf operation," said Tom Ryan, executive director of the Minnesota Golf Association. "It's not a surprise in this market."

With home building on the rise and golf on the decline, Twin Cities courses could become the next frontier for housing developers as struggling course owners seek new uses for their holdings. In the Twin Cities alone, four courses are undergoing conversion to upscale housing developments, and more are likely.

"The housing market is really hot right now, and the golf course market is extremely soft," said Kurt Manley, the Twin Cities developer who recently sold Parkview Golf Club to D.R. Horton Homes. The company has already shuttered the course and will start installing roads and utilities his summer. By fall, D.R. Horton will start building 166 houses that will sell for $400,000 or more.

With more golfers per capita than any other state, Minnesotans clearly love the game, but there just aren't enough of them to support the 500-plus privately owned courses scattered throughout the state, many of which were built during a development boom in the 1990s when interest in the sport was growing and land was cheap. In many communities, golf courses were built by housing developers as a speculative amenity to help drive sales of houses on the periphery of the course, and the operation of those courses was subsidized by developers who relied on them to sell houses. These days, there is a growing shortage of developable land and a glut of courses, especially in the area's mature suburbs, making the land increasingly attractive to builders.

With the oversupply of courses in the region comes a growing reluctance among neighboring homeowners to forgo the open spaces and recreational opportunities that golf courses offer. Such conversions have been met with strong opposition in some communities, leading to delays for some projects. In Eagan, for instance, the decision to convert the Parkview course into housing took more than a year because of complaints from nearby residents. City Council members even received a death threat when a zoning change was requested.

Bill Burgess, president of Lennar Corp., the state's largest builder, said that community resistance makes conversions unattractive. "The limiting factor will probably be the cities and their reluctance to lose open space that their residents have depended upon," Burgess said. "Unhappy voters versus one property owner; you can guess which way most cities side."

But it's the promise of that open space and golf courses' proximity to amenities in prime locations that make such parcels attractive to developers. Rob St. Sauver, project manager for Tradition Development, said that was his motivation in converting the Hampton Hills golf course in Plymouth, which met little resistance.

"We could see the site and envision what we wanted to do," St. Sauver said. "That gave us some advantage."

St. Sauver started building houses on the 140-acre site in 2010, and is already preparing the last phase of the project, which will have a total of 173 lots ranging from $85,000 to $200,000.

Nearby, Jake Walesch, a partner with Gonyea Co., recently received preliminary plat approval for 156 lots on a 70-acre development that will be part of what was once the Elm Creek Golf Course. Walesch said the development, to be called Creekside Hills, will have houses starting at $500,000 and topping $1 million for those built on creekside lots.

With pressure on developers to procure land for future subdivisions, the hunt for developable land will continue. Jon Aune, Lennar's director of land acquisition, said he's been inundated with calls from course owners who after barely surviving the recession are motivated sellers. For now, most of the calls are coming from other states, but he expects to hear from local course owners, as well.

From 2000 to 2011 the number of rounds played per 18-hole course nationwide fell nearly 15 percent, according to the National Golf Foundation, and the declines haven't stopped.

"The downturn in the economy certainly didn't help that industry, especially the smaller courses," he said. "I'd be hard-pressed to think that when someone is presented with an offer for that land, if it's a fair offer, that it would be hard to pass up."

Jim Buchta • 612-673-7376