August 13, 2006 in Idaho

A debate over gates

By The Spokesman-Review
 
The Spokesman-Review photo

Prospective buyers are treated to a boat ride recentlly to Gozzer Ranch.
(Full-size photo)

Developer Marshall Chesrown once rode his horse and gunned his four-wheeler over the land where one of the most luxurious private golf retreats in the West now sits. His Club at Black Rock – with its $5 million homes and $125,000 membership – overlooks Lake Coeur d’Alene near Rockford Bay and is the first gated golf community of its type in North Idaho.

The resort – which seems ripped from the golf Mecca of Palm Desert and plunked in a former hayfield – caters to an average client that Chesrown describes as a 46-year-old incredibly wealthy workaholic with a big ego and passion for golf. This typical client owns numerous homes and is looking for a distant summer getaway the whole family savors. Some people compare these golf communities to a Disney World for adults but with family-friendly activities.

With Lake Coeur d’Alene and North Idaho’s agreeable weather, long golf season and easy access by both plane and interstate, Chesrown and other golf community developers agree Kootenai County is near perfect.

“There’s no nicer place in the world,” Chesrown said recently while sitting in the Black Rock Clubhouse by a lighted fireplace. Outside, ladies on the deck lunched in 80-degree August weather.

That’s how Chesrown, a Spokane native who doesn’t golf, knew these golf retreats would work on Lake Coeur d’Alene.

He quotes a 1998 feasibility study as evidence: “Coeur d’Alene, Idaho, could be the last undiscovered jewel for recreation property left in America.”

He grinned and massaged the leather on his ostrich-skin cowboy boot.

“Eight years later, we’ve definitely been discovered.”

It’s a feat he attributes to Duane Hagadone, who put Coeur d’Alene on the golf radar with his floating green.

Last month Chesrown got approval to expand Black Rock by 1,100 acres – enough land for another 18-hole course plus a 9-hole practice area in addition to 325 more homes, an equestrian center and a children’s camp.

Grass is just sprouting from greens carved out of a former cattle pasture for Gozzer Ranch. The club is owned by San Francisco-based Discovery Land Co., one of the best-known developers in the destination golf industry with 14 retreats from Whitefish, Mont., to the Bahamas.

At least two other companies have staked out lake view property in Kootenai County, intending to cash in on the ultrawealthy looking to buy a lifestyle with a taste of the West.

Seattle-based Heartland LLC wants to cover the Powderhorn Peninsula with three golf courses and 1,350 luxury homes. The county commission just denied Kirk-Hughes Development’s plan for Chateau de Loire, a French-castle themed golf course down the road from Gozzer Ranch. The spokesman for the Las Vegas-based company didn’t return phone calls but previously vowed to fight for approval.

Yet nobody predicts Kootenai County will become the next Palm Desert, with more than 120 golf retreats, or a playland destination like Lake Tahoe.

The ability to assemble large pieces of land – at least 600 acres – with views and frontage on Lake Coeur d’Alene is perhaps the largest factor that will ultimately limit the number of golf retreats in Kootenai County.

Another aspect is that the market – although boiling today – isn’t infinite. Similar private golf clubs are popping up in Montana and other Idaho towns like McCall.

“I think you may see two or three more projects in that greater area,” said Dennis Hillier, a Florida attorney who crafts membership programs for high-end clubs. “There’s only so much demand in each area. You need to be careful, or you will get saturation.”

Hillier, who wrote Black Rock’s membership contract, said elected officials also will watch these first few developments and decide if they complement Kootenai County’s character.

Debate has ignited over these gated oases. Neighborhood groups have formed to oppose every new project, including the Black Rock expansion. At the heart of the issue is whether such developments are appropriate for Kootenai County’s remaining rural areas.

Only a few people objected when Black Rock was proposed in 1999. Today, residents pack public hearings. Besides diminished rural lands, some locals dislike the social barrier that gated communities create and question the environmental impact of golf courses on the waterfront. The concoction of complaints is usually mixed with a splash of jealousy.

Susan Melka lives on the lake near the proposed Powderhorn Ranch project. She fears megamillion-dollar gated communities will change the area’s character. She isn’t alone. Idaho Smart Growth, Kootenai Environmental Alliance and the Washington, D.C.-based Urban Land Institute agree guard shacks and fences alter the social dynamic – making it a battle of the “haves and the have-nots.”

“When you close off access to people who had it for generations, all it does is generate bitterness and jealousy,” Melka said.

Developers bristle at the accusation and say that gates are about securing property where residents live only a few weeks or months a year.

Last week, Steve Walker of Powderhorn Ranch pointed out gates that cross most driveways as he steered his rental SUV down winding state Highway 97. To him, gates are already the norm and have no potential to breed animosity.

Communities like Powderhorn Ranch try not to emit elitism and work to fit in with the locals, he said. It starts with simple things such as explaining local customs to buyers.

“When you drive by on a road, wave to people,” Walker said. “Don’t be arrogant in the restaurant.”

Andy Holloran, of Gozzer Ranch, said he also tries to combat that elitist image. That’s partly why Gozzer Ranch includes a few public elements – a first for a Discovery Land Co. project. The Arrow Point Marina is public, as is Eddie’s Restaurant. The company also owns the Hutton’s store at Squaw Bay.

Hillier, the Florida attorney, points out that elected officials have the ability to control whether a community is gated. In some areas, gates aren’t allowed and Hillier said these high-end developments still thrive because there are many ways to provide security.

Ed McMahon, a senior resident fellow with the Urban Land Institute, said gates aren’t the only problem with these developments, which he believes are outdated.

The majority of Americans don’t golf and that’s why two-thirds of buyers in these developments don’t partake in the sport.

Instead the institute urges developers to ditch golf and build homes around natural open spaces that include bike and walking paths. Walking is exponentially more popular than golf, with 190 million Americans on foot, he said. And he’s confident buyers will still pay top dollar to live next to a natural area even if it’s not a manicured green.

The most valuable real estate in New York state borders Central Park, he said. This conservation model fosters social integration. The most popular towns are those where everyone, regardless of their bank account, shares access to the natural amenities. In Coeur d’Alene, McMahon said, that means lakefront.

“To me, that’s what America is all about,” McMahon said. “Making the melting pot work.”

As Kootenai County grows he encourages residents and politicians to ask a basic question: “Do you want the character of Coeur d’Alene to shape the new development or do you want new development to shape the character of Coeur d’Alene?”

But the developers of these luxury hideaways disagree, arguing golf is key because it sells.

“Real estate is our core business,” Holloran said.

Even if people don’t aspire to a hole-in-one, buyers appreciate the landscape of a golf course, he said.

In nearly every conversation, Holloran and other developers tick off a list of benefits these high-end developments will bring: property tax revenue, jobs, cohesive planning.

Each club will likely have at least 200 employees, not including builders and contractors. Developing large chunks of land in a master plan prevents rural areas from getting chopped up into 10- or 20-acre lots with individual septic tanks and no visual theme.

Even though residents probably won’t volunteer for the local fire department they likely will contribute to charities and boost business by shopping and dinning.

Most importantly, developers tout, there’s potential for local property taxes to go down.

The actual impact to tax bills is debatable. But there’s no dispute that these developments will bolster the property value of the county and bring additional revenue to taxing districts, such as highway and fire.

Black Rock already has about $197 million of taxable value in Kootenai County, and that’s with only 125 homes built or under construction. That means this year Black Rock will pay an estimated $2 million in taxes. Before the land was developed, Chesrown paid about $14,000 a year in property taxes. Now there are individual homeowners in Black Rock who pay $50,000 in property taxes.

Holloran estimates that at build out, perhaps in 15 years, Gozzer Ranch will have more than $1 billion in taxable property value.

If taxing districts don’t use the additional revenue to lower taxes for everyone, then they will likely increase services by improving roads or hiring full-time firefighters.

Chesrown reiterates that developments like Black Rock pay the most property tax in the county but use the fewest public services. There are few, if any, children in local schools. The roads are private and there’s rarely a police or fire call.

“The police aren’t out investigating meth labs at Black Rock,” he said.

Walker has hired economists to calculate the potential impacts to local taxing districts, such as East Side Fire. The average homeowner in Kootenai County actually doesn’t pay enough property tax to cover all the services used, he said. The owner of the average $232,340 home pays about $2,300 in property taxes yet he uses about $2,692 in services. That creates about a $390 deficient for the county, according to Walker’s figures based on current levy rates in the Powderhorn area.

In contrast, the average Powderhorn Ranch resident with a $2.3 million home would pay $22,782 a year in property taxes or nearly 10 times the amount of services they use.

“That’s why places like Palm Desert do so well,” he said.

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