Two approaches are typically used to establish costs new:
- Actual construction costs - useful for relatively new courses (0 to 10 years).
- Replacement cost technique - applied in the analysis of typical building improvements and course improvements (preferred method).
Aside from the cost of the golf course improvements which include the tees, greens, fairways and irrigation system, the clubhouse is generally the highest valued improvement. For simple, basic facilities the Marshall & Swift occupancy code 311 Clubhouse, is likely the appropriate code for costing. For better quality facilities, occupancy code 314 Country Club, is the appropriate code for the clubhouse. The occupancy codes are described as follows:
311 - Clubhouse
Clubhouses are general-purpose buildings such as community halls/centers, veterans or senior’s citizen buildings. These buildings generally have light kitchen facilities, large multi-purpose general use room with stage and multiple restrooms. Better quality clubhouses have moveable partition walls and some small meeting rooms or offices.
Clubhouse class
314 - Country Club
Country clubs are designed for entertainment and have few, if any sleeping rooms. Group entertainment normally requires good kitchen facilities, minimum restrooms with or without showers and lockers, and large general use rooms. They typically have small offices and meeting rooms. Higher quality structures have a ballroom, bar; banquet and pro shop facilities, as well as extensive locker and shower rooms.
Country Club class - Paradise Canyon Golf Course - Lethbridge.
To complete a Cost Approach analysis, the assessor requires more detailed descriptions of the course and building improvements. If actual costs are available, the costs new can be established on that basis. If actual costs are not available, or if they are dated, then the costs new can be established from cost manuals.
The Cost Approach has the following attributes worth consideration:
- it is the only approach that can be applied to all types of golf courses, regardless of income or ownership motivations, and
- it avoids the issue of valuing non-real estate interests - an issue that must be considered when using the Income Approach.
|
