Can neighbors demand that a golf course — once a staple of the community but now dried up and shut down — remain a golf course?
It's a question that's plagued golf-course neighborhoods around metro Phoenix, especially as operating a golf course has become less profitable than the alternative: Redeveloping the course into dozens or sometimes hundreds of new homes.
While some neighborhoods have waged successful lawsuits against the would-be developers of their community golf courses, many have not.
In west Phoenix, some members of the Villa de Paz neighborhood unsuccessfully sued the owner of the golf course that cuts through their neighborhood. Virtua Partners wants to build homes on the 118-acre golf course it purchased in late 2017.
Now neighbors are trying a different tactic to restore the golf course, with the help of Phoenix Councilwoman Betty Guardado.
Neighbors say the move is critical to maintain their property values and quality of life. But an attorney for the golf course owner warns that if the council forces the owner to stop development, it could cost taxpayers millions in legal fees.
Villa de Paz history
The Villa de Paz neighborhood near Maryvale is comprised of about 1,200 homes situated around the golf course.
For about a decade, developers have tried to shut down the golf course and replace it with more homes. Neighbors have protested these plans every step of the way.
The prior owner gave up on redeveloping the golf course because of the neighborhood opposition and sold it to Virtua Partners in December 2017 for $1.3 million.
In April 2018, the owner shut down the golf course, much to the anger of homeowners who once had grassy green golf-course views.
In the following months, the property was cited for multiple code violations because of dead trees, litter and other issues on the golf course.
Those have since been resolved, but the property remains an eyesore according to homeowner Jeff O'Toole. The grass is dead and the ponds have very little water, he said.
"It's not in good shape at all under their ownership," O'Toole said.
Attorney Larry Lazarus, who represents Virtua Partners, said the company had to let the golf course fold because it was no longer profitable to operate. It was losing about $300,000 a year, he said.
O'Toole said his neighborhood group believes running a golf course can still be profitable — it's just not as profitable as building homes on the land.
O'Toole said he believes Virtua Partners "very intentionally tried to make (the golf course) look as bad as possible" to strong arm the neighborhood into going along with their plan to redevelop it.
Can the developer build houses?
Once the golf course was closed for one year, a special city permit requiring the land operate as a golf course expired, according to Lazarus.
Once the permit expired, the land reverted to residential zoning, which means Virtua Partners can build single-family homes on the property.
Unlike Ahwatukee Lakes, where homeowners successfully stopped a developer who similarly wished to develop on the neighborhood's golf course, Villa de Paz does not have a homeowners association with covenants, conditions and restrictions that require the golf course to remain a golf course.
With no such requirements, Virtua Partners was clear to move forward with development. The company has since filed plans with the city to build 148 homes on about half of the golf course.
City steps in
Guardado, who was elected in May 2019, said the neighbors in Villa de Paz immediately asked her for assistance when she took office.
Guardado said she tried to negotiate a compromise with the golf course owner but those conversations "fell on deaf ears."
Now, she's working with city staff to pursue a zoning change on the property that would prevent residential development on the parcel. If the zoning change is successful, the owner will only be allowed to operate a golf course on the property or leave it as open space.
"I think it's time for the city to send a strong message," Guardado said.
Trampling of property rights?
Lazarus said he's been practicing real estate law for almost 40 years and is deeply concerned about the consequences if the City Council ultimately approves the zoning change.
"I represent (Virtua Partners) but this also is bad public policy as well," Lazarus said.
He said the issue boils down to property rights. Virtua Partners purchased the property when the zoning allowed for residential development. The current value of the land, with the expectation that single-family homes could be built upon it, is about $15 million, Lazarus said.
If the land is rezoned to no longer allow for residential development, the value will substantially drop, he said.
Virtua Partners also paid more than $1.5 million in back taxes after it stopped operating the golf course — a requirement of state law.
Lazarus said that if the city changes the zoning on the land, Virtua will likely sue because of the diminished value of the property, and the city could be on the hook for the $15 million plus the money the company paid in back taxes.
Additionally, even if the land is rezoned, the city cannot force Virtua Partners or any other future owner to operate a golf course, so the area could just remain dead open space.
Lazarus said it would cost $3 million to bring the golf course back to working order and likely cost the operator about $170,000 a year to operate. He said Virtua Partners has no interest in taking on that cost and that it's unlikely any other buyer would either, .
He said he fears that the zoning change will cost the city upward of $15 million in court, leave the neighborhood with a dead, inoperable golf course and violate his client's property rights.
"There's a possibility and a probability that this will be a lose, lose, lose situation," Lazarus said.
Is compromise possible?
Guardado acknowledged the risk of a property rights lawsuit but said she believes it is a worthwhile risk to take.
She said she's not ruling out a compromise that could satisfy both the property owner and neighbors. The zoning case forces the developer to sit at the table with neighbors, opening up the door for a potential resolution, she said.
Lazarus said the developer discussed the possibility of a compromise that would allow for development on 70% of the land and open space on 30%, but the neighbors were uninterested.
The first public meeting on the zoning change is the Maryvale Village Planning Committee meeting at 6 p.m. on Wednesday. The meeting will occur virtually to allow for social distancing.
The case will also go before the Planning Commission and ultimately need approval from the City Council.
Reach the reporter at jessica.boehm@gannett.com or 480-694-1823. Follow her on Twitter @jboehm_NEWS.
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