Fountains Club In 17 Million Deal To Sell Land To GL Homes

Fountains Club In 17 Million Deal To Sell Land To GL Homes


Highlights

The Fountains Country Club seeks sale of land to offset falling membership at suburban Lake Worth club.

GL Homes is expanding into apartment construction if it goes through with plans at Fountains club.

Golf course greens once lured residents to country club communities throughout Palm Beach County.

But with club members aging and golf interest declining, who can afford to maintain these lush views?

Not the members of the Fountains Country Club in suburban Lake Worth, it seems.

The club’s board of directors just struck a $17 million deal to sell land golf course land to home builder GL Homes, which would build up to 470 housing units on the property.

Right now, the community has three golf courses, but the board wants to close one of them, which it says will save $250,000 a year in costs.

+Fountains club in $17 million deal to sell land to GL Homes photo

A golfer takes a swing on a golf course at The Fountains in suburban Lake Worth. (Palm Beach Post file photo)

The Fountains Country Club is the latest country club to wrestle with weakened demand for membership. Part of this trend is due to players who gravitate to less physically taxing activities as they age.

The trend is a national one. But it is particularly acute in Florida because it has so many golf courses, said Jack McCabe, chief executive of Deerfield Beach-based McCabe Research and Consulting, a real estate consulting firm.

The land sale to GL Homes is a way for the Fountains to cope with declining membership during the past five years, according to a letter sent late last month to club members by Fountains Country Club President Paul Napieralski.

+Fountains club in $17 million deal to sell land to GL Homes photo
STEVE LOPEZ

(Palm Beach Post staff graphic)

It’s also a way to diversify the club and bring in amenities that homeowners now want, Napieralski said in an interview Wednesday.

As part of the terms, the club must build a $2.5 million resort-style pool for its sports complex. The rest of the money likely will be used to pay off a Wells Fargo Bankloan and make other club improvements, Napieralski said.

The money will help “spruce up every aspect of our club, reinventing the Fountains as a premier country club in South Florida,” Napieralski said.

Indeed, club general manager Ricardo Catarino said membership clubs that are successful offer “an all-inclusive experience” that’s greater than just golf and tennis, he said.

The proposed sale follows a January 2016 decision by a Palm Beach County Circuit Court judge that further hurt the club’s finances. Judge Edward Artauruled in favor of seven Fountains communities that wanted out of mandatory membership in the Fountains Country Club.

Although the club has appealed the ruling, the move “has resulted in lower revenues,” Napieralski wrote in the May 24 letter to members.

The board is proposing to sell to GL Homes between 40 and 44 acres on the north golf course and next to the west course. The company would build about 150 to 200 single-family homes ranging in price from $400,000 to $600,000.

On another part of the north course, GL Homes would build between 250 to 300 apartments on about 18 acres.

For GL Homes, the deal is an opportunity to build in the heart of Palm Beach County.

The Fountains is an enormous development dating back to the 1970s. It sits on 865 acres featuring 19 individual residential communities and 1,763 homes. Residences include single-family homes, villas, townhouses and condominiums. The property is bordered by Lake Worth Road on the north and Lantana Road on the south.

The average price for all properties for sale now in the Fountains is $145,855,said Ben Schachter, broker and principal of the Signature Real Estate Companies. During the past year, the average price of sold properties was $80,509, said Schachter, who obtained the information from the Multiple Listing Service used by real estate agents.

Larry Portnoy, GL Homes vice president, said the company became interested in the Fountains because the location is ideal, right along Jog Road.

The deal also will be the first time GL Homes will build apartments, Portnoy said.

Up until now, Sunrise-based GL Homes has built single-family homes throughout central and southern Palm Beach County, as well as some commercial development. “If this works out, I would assume (apartment construction) would be something we would seek to do more of in the future,” Portnoy said.

New development in an older community could make the Fountains fresh and appealing to home buyers, Schachter said.

Napieralski said the land sale also would benefit the community because the new homes would pay into common area costs such as security, “so everybody will be paying a little less.”

But not everyone is in favor of the sale of club land. A community website called Fountainsresidentnetwork.com is filled with vigorous comments from residents who say the new GL Homes would take away views from existing homeowners.

Others just think it’s a short-term “money grab” that won’t fix the country club’s biggest issue — mandatory club membership.

Mandatory membership is the rule for 12 of the 19 community associations. This arrangement ensures a stready stream of cash flow to the club, proponents say.

For a time, membership in the Fountains Country Club was required for all 19 communities. But then seven associations wanted out, and litigation followed.

In a 2013 lawsuit, the communities said they were given the right to repeal mandatory membership when they agreed to it a decade earlier, in 2003. The Country Club filed a countersuit, arguing the associations had no right to repeal.

When Artau ruled in favor of the seven associations, the Fountains became a community divided.

For now, some 750 equity members in 12 associations bear the burden of the club’s upkeep. But according to the community website, more residents want out of mandatory membership.

Some country clubs can charge $80,000 or more for equity membership. At the Fountains Country Club, the equity club membership is much lower, costing $3,000 to a maximum of $10,000, plus annual dues of about $10,000 for a couple, and other charges, Napieralski said.

Still, it’s an added expense that figures into the price of a home. And that, in turn, can depress home prices and limit the pool of interested buyers. At the Fountains, “The homes have not appreciated nearly as well as other homes in the county that are non-club communities,” Schachter said.

As part of the deal with GL Homes, buyers of the new single-family homes only are required to become “sports members” of the Fountains club and pay about $200 a month in dues. But they do not have to join the golf club as equity members.

Apartment dwellers would not have access to any of the clubs, nor would they be required to join. But they could join if they wanted to, Napieralski said.

Napieralski wouldn’t comment on the issue of mandatory membership because of the ongoing litigation.

Club members still have to approve the deal with GL Homes by June 20 for it to go forward. If members give the OK, Portnoy said it would take about a year to get county approvals on the land, and then another year to build. New homes could be ready by 2018.

McCabe said what’s happening at the Fountains is a trend that will continue to affect other private golf course communities. “As we continue our build out of South Florida, with vacant land becoming unavailable, golf courses will be more desirable to developers,” he said.


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Phone: 561-644-0052
Dated: June 2nd 2016
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