Forget the political debate! Whether it is global warming, climate change, tidal flooding or just nature taking its course, from an industry standpoint, clubs are concerned about providing members with an environment that is healthy and attractive. The club also wants to manage its expenses and maximize the return to members through its services and amenities.

Your members are becoming more aware of their influence and impact on society and the environment.

Who heard of sustainable investing just a few years ago? The club may be sending electronic versus paper statements and newsletters to its members. It communicates through email and social media. The club most likely has started a recycling program, either voluntarily or as a result of state or local laws. The food and beverage department has at least considered sustainable food sources and environmentally friendly supplies.

Have you included environmental impacts and energy efficiencies in your capital improvement and maintenance plans?

According to the 2015 issue of Clubs in Town and Country which is published by PBMares, LLP, clubs require constant maintenance and improvements. Also clubs require renovation to stay relevant and compete in the current market. As stated in the publication, “Members seem more willing to invest in improvements if they can justify the costs”. With the nearly constant need to renovate and innovate, incorporating currently available, cost effective, green technologies and practices into your capital plans is imperative.

There are cost savings to be had in planning capital improvements appropriately. Ongoing maintenance costs can be reduced in addition to having positive environmental effects. According to Mark Tercek and Jonathan Adams, authors of Nature’s Fortune: How Business and Society Thrive by Investing in Nature (The Nature Conservancy, 2013), New York City’s planners found that by planting trees and making other improvements to the Catskills watershed rather than building a giant water treatment plant, they could realize a savings of about $6.5 billion. Their solution provided a “win-win-win”, for the City, residents of the Catskills and land conservationists.

Several clubs and resorts have participated in the Audubon Cooperative Sanctuary Program for Golf Courses, working with Audubon International to develop environmentally responsible maintenance practices. Evaluation and planning helps golf course superintendents balance the demands of the users with the responsibility to the natural environment. If planned appropriately, courses can utilize the natural terrain and native florae to provide unique and sustainable greens. Often these designs can provide natural buffers to pesticide and fertilizer runoff, as well as reducing the use of those chemicals and thus the cost of maintenance. Furthermore, water usage can often be reduced and storm water management enhanced, increasing the cost savings.

Stone Mountain Golf Club in Stone Mountain, Georgia began a project in 2012 to convert all of their plant beds to native perennials from annual flowers. They also created new native plant beds along wildlife habitat corridors, native grass areas, early stage succession fields, mixed forest with understory, and shoreline and wetland areas. They estimated they saved about 100 million gallons of water by eliminating high maintenance turf and gardens and using native plants instead. They also realized reduced labor costs in mowing and other maintenance of turf areas.

Other capital improvements with an eye to energy efficiency can also be of benefit to your club. While the federal government has been unable to pass legislation in any timely manner to provide incentives for the for-profit club, club contractors, or non-profit clubs, state legislatures have been working more rapidly to encourage sustainable development and energy efficiencies. Localities, too, are more conscious of working within their jurisdictions to support efforts in preserving green zones, providing urban buffers, and encouraging energy savings.

The Database of State Incentives for Renewables and Efficiency (DSIRE) listed 2,783 different incentives from states and localities on their website as of March 13, 2015. DSIRE is operated by the North Carolina Clean Energy Technology Center at North Carolina State University and is funded by the United States Department of Energy. Not all incentives are available for all entities. Programs vary and some are pilot programs with expiration dates.

Some examples of what might be available to a property considering capital investment plans and which might want to incorporate energy efficiencies in those plans include:

  • Minnesota and Maine provide rebates for energy efficient property purchases.
  • In Virginia, Dominion Virginia Power provides incentives for Solar Photovoltaic systems.
  • The State of Virginia and the City of New Orleans have net metering agreements, whereby the power companies will net out the excess energy generated from renewable energy generating technologies, invested in by their customer with the customer’s usage (any available energy credits revert to the utility company).
  • North Carolina has a renewable energy credit for 35% of the cost of up to $2.5 million of renewable energy property constructed, purchased or leased by a taxpayer (available to offset up to 50% of corporate tax or gross premiums tax).
  • Wisconsin provides a property tax reduction for biogas, synthetic gas or solar energy systems regardless of whether the equipment is deemed real property or personal property.

Conservation easements on club property may be another opportunity to manage costs, as well as provide funds for capital improvements. While situations differ, easements may be negotiated with localities for several reasons, including watershed protection or pollution control. An easement usually restricts the club’s use of the respective property in some ways, but may not entirely bar its use from the membership. However, it could reduce or lock in assessed value for property tax purposes. In addition, the proceeds that may be obtained for the easement could offset the cost of other needed capital improvements. In at least one private letter ruling, the IRS ruled that a 501(c)(7) (tax-exempt) club would not jeopardize its tax status by the sale of a conservation easement and that if the proceeds were invested in other property used directly in the club’s exempt function, the gain would not be taxable.

Outreach to and education of your staff and members will go a long way toward providing support for these plans. Let them know what you are planning, when, where, and why. Often these enterprises lead to other member involvement, such as family programs or kids camps which can piggy-back off of these improvements. The Stone Mountain Club participated in the North American Butterfly Association Butterfly Count as part of their habitat enhancement case study. For Earth Day week (April 19 – 25, 2015), Audubon International introduced the first global Golf Course Bio Blitz, a free species counting competition designed to create awareness among golfers and the community about the environmental value of the habitats supported by golf courses.

Plan with Care

While, according to The Case for Green Infrastructure (a Joint-Industry White Paper, June 2013), “Green Infrastructure solutions often demonstrate financial advantages compared to gray infrastructure”, you must plan carefully. Connect with contractors who have experience in the areas you are considering to maximize the effectiveness. Inquire of other clubs and resorts that have made such improvements to determine what obstacles you may encounter. In addition to enhancing the club and reducing costs, you can have a positive effect on the surrounding community.

What will the neighbors think?

As published in The BoardRoom Magazine