Jekyll Island Lessons Learned FMFADA Board July 16
Jekyll Island Lessons Learned FMFADA Board July 16, 2009 bae
Today’s Agenda bae § § § Quick Comparison Jekyll Island as “City” Challenges Commercial Lessons Learned Residential Lessons Learned Key Insights
Quick Comparison § § bae Fort Monroe: Urban context; more residential and office Jekyll Island: Large natural setting; more acreage and lodging facilities
Jekyll Island as “City” § Almost all municipal services provided by Jekyll Island Authority (“JIA”) • • bae § Water and waste water Roads, beaches, and trails Sanitation Law enforcement services provided by Georgia State Troopers • • § Fire/EMS Office and dispatch at entry No cost to JIA Permitting services provided by Glynn County • Building and construction permits for new construction
Jekyll Island Fire Department § bae § Small permanent staff (4 FTEs) • • • Use part-time firefighters employed by other fire departments • With new resort redevelopment expect fire fee revenue to permit expansion of permanent staff (new budget = $1. 2+/-M) Three pumper trucks and ambulance Current budget $825, 000 to provide fire and EMS service demand Specialized services • Small local department can provide niche services: • • • Example: rescue swimmers at high tide on sand bar Off-road rescue trailer for bike-path and trail access Hurricane disaster preparedness
Taxes and Fees § JIA levies: • • bae § Fire service and other municipal fees ($1. 6 M) • Fire fees based upon assessed value Glynn County • • § Hotel tax 5% on rooms and rentals ($1. 7 M) Property taxes Building and construction permit fees Overall, there is “room” for the JIA to levy extra charges • • Need to look at overall “holding costs” of property • Millage rate, fees, and lease payments Other Georgia island communities charge $300 to $500 annually for association dues for amenities and services that the JIA provides at no cost
Jekyll Island Residential Program § bae Residential • • • 801 single-family homes, duplexes & condos Homeowners lease lots 50% of units are available for vacation rental Local brokers specialize in Jekyll Island $209, 000 generated by residential leases
Jekyll Island Lodging Program § Lodging/Retail/Commercial • bae • • Six hotels/motels with 828 rooms • Plans for up to 2, 100 rooms/new and expanded properties Shopping Center, 3 restaurants, gas station, bike rentals, & gift shops $3. 2 M in business lease revenue Jekyll Island Club Hotel Days Inn
JIA Amenities & Enterprises § bae § JIA owns and operates a variety of visitor amenities and enterprises • • Convention center (62, 000 sq. ft. ) Restaurants Museum & Summer Wave Golf and other concessions Total Visitor Amenity Revenue $8. 9 M (half of operating budget) Summer Waves Water Park Convention Center
Jekyll Island Challenges bae
Lessons Learned Commercial § bae § § Declining Visitation • • Visits declined by 10% Hotel/motel occupancy fell to 52% Competition among leisure destinations in southeastern U. S. Conference center losing business to other locations Obsolete Lodging Facilities/Conference Center • • • Older properties needed reinvestment/replacement • • Several hotel/motels went into bankruptcy (prior to current downturn) Limited services and lack of amenities Lack of architectural guidelines - uneven design quality, including condos and homes Old commercial leases lacked strong provisions re: maintenance, reinvestment, and overall quality standards Lack of Focal Point/Community Center • • • No focal point to Jekyll Island Heavy automobile orientation Lack of connectivity between facilities
Commercial Revitalization bae § § § Master Plan Update in 2004 Design and Conservation Standards formulated Demolition of 700 rooms Selection of development partner (Linger Longer LLC) Formulation of “Beach Village” concept • • • 22 acres - $100 M+ of private investment Redeveloped and expanded convention center to 76, 000 SF Mid-scale hotel (200 rooms) Economy hotel (150 rooms) Vacation ownership (160 units) Retail (30, 000 SF) $25 G. O. million bond • • Road realignment Conference center upgrade New beachfront park Issued by state; repaid by JIA
Lessons Learned Residential § Original JIA leases did not have escalation or reappraisal clauses • bae • • § Started at market but now substantially under-market ($420 annually versus $8, 000) • Major foregone revenue generation Rents for lots should be priced between 5 and 7 percent of value 40 -year lease term and lack of affordable flood insurance has limited reinvestment Major effort to restructure leases and encourage investment • • Homeowner stakeholders resistant to change - balancing economic interests • JIA now formulating “preferred alternative” for renegotiating leases State extended lease to JIA to 2089; JIA can now renegotiate lease terms and offer another 40 -years • • Ideas: add CPI-based escalation, levy leasehold “transfer fee, ” Apply new structure only when leaseholders voluntarily sell, refinance, or obtain reverse mortgages
Key Insights bae § There is precedent for operating as a small city with modest building base § Commercial leases need to be structured to ensure high quality development, maintenance, and customer service § Lease structure needs to provide incentives for reinvestment § Once FMFADA and its master developer establish a residential leasehold program there is no going back…so careful structuring is a must § FMFADA needs to identify non-real estate based revenue streams to support its operations and programming
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