In the late summer of 2016, the (then) owner of the golf course in Cape Royal abruptly closed the course and its facilities. This is the story of how the Cape Royal Community, facing an uncertain future, banded together to succeed in the face of adversity.
THE CAPE ROYAL SUCCESS STORY
This story was compiled from the recollections of the Cape Royal HOA board members and residents involved, two years after the closing of the golf course in the Cape Royal community.
Submitted by Neil Price
June 30, 2018
It is part of the Florida lifestyle dream. Communities throughout the state have been developed with promise of resort like amenities, organized activities, and serene, beautiful surroundings in an endless summer climate. Our lifestyle is compelling for retirees, snowbirds and families alike. New residents are streaming into Southwest Florida at ever-increasing rates. But Florida’s lifestyle promise seen in developer’s sales offices with slick development plans have all too often not stood the test of time. All is well while properties continue to sell and cash flows in, but when development is complete and amenities, particularly golf, need to support themselves, many have failed. The volatile market conditions stemming from 2008 have also taken their toll. As result, homeowners are often left without the lifestyle they thought they had secured.
Cape Royal, a gated, family-friendly, golf community in Cape Coral faced just such a dilemma. Cape Royal truly managed to turn lemons into lemonade through resident involvement and action to shape the future for their community. Twelve months after the abrupt closing of Royal Tee Golf Club, Cape Royal’s centerpiece golf operation, Cape Royal’s residents have acquired the property, renovated facilities, secured a nationally known commercial golf operator, renamed the club and opened for business. The community and Cape Royal Golf Club are thriving. This is the story of how this unique community stood apart and succeeded in protecting their dream.
Cape Royal is a Florida gated community in unincorporated Lee County, located along the western edge of Cape Coral and bounded by mangrove preserves along Matlacha Pass. Cape Coral/ Ft Myers was ranked by Forbes in 2017 as America’s fastest growing city.
Cape Royal was conceived in 1983 as a community of estate-size lots and homes surrounding water features, preserve lands, and a new championship golf course. In 1984 Construction began with the digging of ponds and grading for Royal Tee Golf Course. By 1985, a small number of custom homes had been built and lots were being aggressively marketed.
However, Florida development at the time could be hit or miss, and Cape Royal was no exception. Several changes in ownership occurred and a variety of new partners became involved in the ensuing years. As a nucleus of homeowners became established, a Homeowners Association (HOA) was formed. Under Florida law, the HOA Board of Directors is controlled by the developer until such time as individual homeowners comprise the majority of lot ownership. Like most developer-controlled HOAs, a HOA management company was contracted by the developer. However, as developer ownership changed and Cape Royal’s growing number of home and lot owners sought, and were often denied, information regarding development plans, a legal effort was mounted to gain control of the HOA. The results of this would prove important in Cape Royal’s future. Through legal action and arbitration, homeowners secured control of their HOA, removing the management company, establishing self-management and a self-controlled budget. The developer became an HOA member with votes for every lot held as well as an agreed upon number for the golf course.
Although a family-friendly community, Cape Royal like many communities in Florida, appeals to active retirees from the North. As these new seasonal and full-time residents took occupancy of their Florida dream, many had time to help in their new community. Keen to keep association fees and costs to a minimum, Cape Royal residents participate in 12 committees with responsibilities ranging from gate maintenance to beautification and landscaping. With an eye to uncertainty presented by an aging golf club owner-operator, Cape Royal’s HOA established a Strategic Planning committee with a modest budget to be held against any future need. This turned out to be prescient.
Golf Club Closure
Royal Tee Golf Club, Cape Royal’s golf club, owned by one of the early developers, was quite popular and successful in the early-mid 2000’s and even hosted tour qualifying events. But over the next several years challenges of running a golf operation mounted at a time when Royal Tee’s owner’s investment in successful golf operations and course improvement dwindled. Necessary repairs and improvements were postponed indefinitely. Cape Royal’s individual residents contributed financially or in-kind for improvements that never materialized. On Aug. 1st 2016, without notice, Royal Tee Golf Club’s doors were locked and all staff dismissed. The owner informed Cape Royal’s HOA board that he would no longer maintain the course. Furthermore, he would not meet HOA dues obligations and golf club property and assets were for sale.
Developing a Recovery Strategy
The HOA Strategic Planning committee had discussed potential scenarios for a course closure almost a year earlier. Their rough plans began to take shape and members began to take action upon the golf course closure. Communication with residents and far-flung lot owners was going to be essential. First, every resident or lot owner needed to know what had happened and what the potential impacts could be. Secondly, everyone needed to understand what options might be available. The communication challenge was significant as any HOA board action that results in additional assessments to residents/owners requires a 75% approval of all owners, not of just those voting or attending a meeting.
Interestingly, though every Cape Royal lot bounds one of 27 golf holes, fewer than 40% of residents are golfers. The HOA is responsible to all homeowners to uphold community standards and lifestyle, maintain common grounds and assets, and represent the community’s interests in decisions or activities that may affect property values. However, the Cape Royal HOA board has made clear that HOA funds cannot be used to subsidize or operate any golf operation.
Closure of golf operations and, more significantly, abandonment of all groundskeeping and maintenance activities meant that the HOA needed to act quickly. There were three options: 1) do nothing, 2) utilize HOA funds allocated in the strategic planning and contingency budgets to perform minimal maintenance of the golf course until sold, or 3) seek resident/owner approval to attempt acquisition of the property for the sole purpose of controlling future development. Doing nothing would result in quick overgrowth and deterioration of the golf course and subsequently have a dramatic negative impact on property values, as seen at many other golf course closings across the country.
The board approved immediate action to perform minimal maintenance and mowing within the bounds of available funds. But it was clear that to secure Cape Royal’s lifestyle for the future, the HOA must control any proposed development. One potential buyer had already presented a development plan adding a high density of small homes on land currently used as a driving range and two of the fairways. The board recommended that an option to acquire the golf course property and assets be prepared and presented to resident/owners for a vote. This would not be easy and involved development of a purchase offer, identification of a lending source, establishing a negotiations team and a herculean communications effort to secure resident/owner participation in the vote. The purpose of this effort was to acquire the property primarily to maintain open space and minimize impact of course closure on property value. Any continued operation as a golf course would be dependent on interest of professional golf operations companies with Cape Royal HOA simply leasing course and facilities. This was not considered a goal of the HOA’s efforts and was tabled for consideration until after acquisition, if successful.
Getting the Community on Board
Through year-to-year HOA activities, the communications committee remained diligent in collecting contact information, particularly email addresses for new residents and owners. To maintain vigilance in collecting this owner information Cape Royal’s board relies on a network of resident “block captains” who facilitate communication to all residents and owners. Block captains, generally responsible for regular communication with 40-50 lot owners, were essential in conveying information regarding the course closure and HOA strategy going forward. They were able to seek out and find missing email and contact information, make individual contact and maintain a straw vote tally as the presentation of options and call to vote neared.
While communication efforts moved into full swing, board members and resident advisors familiar with banking and lending practices began investigating avenues to fund a potential purchase. It was clear that gaining approval of a large assessment for an outright cash purchase would not be attainable. But local and regional banks would find the HOA, with its predictable revenues and cash flows from dues, an attractive customer. By securing a medium-term, 15-year note, the golf course purchase assessment to residents would be minimized. Having specific terms and each resident/owner’s cost impact was another essential element in selling a purchase plan to the community ahead of presentation and the vote. In fact the debt service assessment required at the upper limit of estimated course purchase price amounted to less than $300 per year for each lot. Financially this was a no-brainer. With these figures in hand, the case for purchasing the golf course and protecting against unwanted development was compelling. It would all hinge on communication efforts and participation of all owners. A full 75% of all lot owners would have to cast an affirmative vote and any owner not voting would be the same as a no vote.
Several presentations were held to keep residents informed. These were well-attended meetings in large public or rented locations, one even attracting local television news crews that had reported earlier on the sudden closure of “yet another Florida golf course.” Many lot owners permanently reside out of state or even out of the country. These non-resident owners would be needed if the vote was to be successful. To facilitate non-resident owners, all presentations and meetings were conducted with live WEB conferencing tools and also utilized chat style virtual rooms so questions could be taken and responded to live. As the vote date neared, block captains were working hard to speak with every resident in their group. Neighbors were encouraged to discuss their views neighbor to neighbor, dog walker to dog walker. They had to instill the importance of every vote being cast and to set in motion individual discussions over any concerns or confusion.
When voting day arrived, response was overwhelming. 91% of all lot owners cast votes in favor of their HOA Board recommendation to pursue purchase of the golf course and assets up to a specified maximum amount. Of the other 9%, most were non-voters.
With homeowner approval in hand, an acquisition negotiation team began working on getting a deal done. Potential competing buyers quickly dropped out, seeing their development plans too risky once homeowners and their HOA were seeking to buy the course. With counsel advice, the acquisition team began negotiations with multiple parties including the lender, banks holding notes on the golf course and the previous owner. On January 20th 2017 the deal was done and Cape Royal’s HOA had secured the golf course and control of any potential development. At a minimum, the course and ponds would be mowed and maintained leaving the community surrounded by open grass spaces and pathways.
Finding a Golf Course Operator
When the board had secured approval to make an offer for the course, they had also included approval to investigate whether a third party golf operator might be interested in leasing the course. This was contingent upon no HOA funds or encumbrances being used to subsidize golf operation. Another team of board members and residents approached several golf operating companies. A number of them expressed interest and some visited. The team selected Indianapolis-based Green Golf Partners (GGP). GGP operates 19 courses throughout the Midwest and Florida and presented an opportunity to work with a successful golf operator that had a clear understanding of what would be required to bring Cape Royal’s course back, and the resources and willingness to do it. Don Weigand, HOA President, noted, “GGP was very enthusiastic about the potential of Cape Royal Golf Club, very willing to work with us, and had the financial means to recover the course while sustaining minimum revenue.” On February 16, 2017 GGP executed a 10-year lease with Cape Royal’s HOA for operation of the golf course. Part of the negotiation included certain infrastructural improvements to the building and irrigation system for which the HOA was responsible. These were not for golf operations and would have been required to maintain assets regardless of use. GGP is responsible for renovation of course greens, fairways, bunkers and tee boxes. This began immediately with replanting of 18 of the greens, leaving 9 available for opening play. In August 9 holes were available for residents only with a nominal greens fee.
Renamed as Cape Royal Golf Club, on October 13th 2017 the course opened for 13 holes of play. The restaurant named, The Caloosa Club completed renovations and received its liquor license and approvals to open a few days later. Soon another 4 holes were ready, followed a few weeks later by 5 more, opening 18 playable holes across the three nines. Course recovery had experienced a setback when hurricane Irma roared through Florida. Although structural damage was light, many hardwood trees went down. A minor storm surge also created salt water intrusion in several ponds leading to burn out on several of the new greens. GGP aggressively addressed the course issues and resident volunteers and GGP team members worked hard on clean-up.
Now, six months after Irma, all 27 holes are open. The course is still rough in places but improving daily. According to GGP Superintendent Greg Coyne: “It will take a couple more growing seasons to get the course where we want it to be, but it is playable now and provides a scenic and enjoyable round for all that visit.”
Exceeding All Expectations
Operation of any golf course is risky and Cape Royal Golf Club had many challenges to success. But results have far exceeded expectations. As of March 2018 the course is seeing 250-300 rounds per day, outstanding by any measure. Less than a year after opening, the manager of the Caloosa Club restaurant is planning to expand to service higher than expected demand for food and beverage. Residents, golfers and non-golfers alike, view the club as “theirs”. It has become the gathering place for community activities such as pickleball, bocce ball, card and activity clubs, as well as host of many special resident events. The community and GGP are working together make it a success and each recognizes the other’s vested interest in this success.
Perhaps it is best summed up by what one Caloosa Club patron said over his martini near closing one evening: “ Ya know, the closing of the old golf club was the best thing to ever happen to Cape Royal.”
Cape Royal by the Numbers
Community Size : 483 Acres with 483 residences/homesites Golf: Cape Royal Golf Club – Public 27 holes (3282 yds, 3233 yds, 3329 yds), No mandatory fees or membership
2017 HOA Fees: $850 / Year
Golf Course Acquisition Assessment: $295/ Year (15-year note expires 2031)
Located in unincorporated Lee County, bounded by City of Cape Coral, FL