Friday, July 27, 2007

07/24 - Jekyll development deal raises questions

Jekyll development deal raises questions
July 24, 2007
Local News


The Brunswick News

A Jekyll Island Authority member who voted with other board members to give a developer a nearly $10 million abatement on rent is now questioning why the board did it.

The board approved the reduction July 9, but now Ed Boshears is at a loss to understand why that happened, especially when nearly $20 million is needed in repairs to the Jekyll Island Historic District.

"And there's probably another $20 (million) to $30 million in other repairs," Boshears said.

The abatement is an incentive the board opted to give Trammel Crow, the lead managing member of Jekyll Crow Hotel Partners. Trammel Crow is investing about $90 million to demolish the Buccaneer Beach Resort on Jekyll Island and rebuild a 426-room hotel and conference facility on the site.

Private developers pay lease and other fees to the authority, which manages the state-owned land.

Boshears said Jekyll Ocean Oaks, the group rebuilding on the site of the former Jekyll Island Holiday Inn, was put through the wringer when getting its lease agreement from the authority.

"We spent a long time negotiating the deal with (Jekyll Ocean Oaks)," Boshears said. "These people had agreed to go out on a limb, and we only gave them a small rent abatement."

Boshears said he remains in favor of the deal Jekyll Ocean Oaks was given. It's the size of the recent deal which bothers him.

"I don't see the sense in giving them $10 million," Boshears said. "Our revenue stream will decline while the hotels are being torn down and rebuilt."

The rent abatement includes the usual 3 percent rent on all food and beverages sold at the new hotel during the first 10 years of the lease.

It's almost as if the authority is handing Trammel Crow a competitive edge, he said.

"How do we justify that to the other hotels on the island that will be competing against them?" Boshears asked, noting that other hotels don't have a large food and beverage rent abatement package. "Why are we giving this new hotel such a competitive edge?"

This is not the first time Boshears has been at odds with board action.

Long an outspoken advocate for Jekyll Island's citizens, Boshears has been most vocal recently in the need to keep Jekyll Island affordable for all Georgians - something lost on the politicians and developers, he said.

"The authority says this project will spur development on Jekyll Island," Boshears said. "I don't see why we need all this development."

Eric Garvey, spokesperson for the Jekyll Island Authority, said the Buccaneer deal with Trammel Crow is an important catalyst project for the state park.

"The deal brings in a $90 million investment to the island, gives us 426 first-class, new hotel rooms and will generate incredible economic impact," Garvey said, noting it will lead to increases in parking fees, conference business and golf business.

"It requires no cash investment by the Jekyll Island Authority, yet provides tremendous benefit. It is a great deal."

Garvey said it will take two years to construct the new hotel, and, once it is completed, direct revenue to the Jekyll Island Authority will exceed the current rent amount paid by the Buccaneer. He said that by the time the hotel is 10 years old, the authority will receive more than six times the amount of rent now being paid by the Buccaneer.

"While the first two years (of the construction phase) the JIA will see a reduction in rent revenue from this property, by the third year the JIA will be $500,000 cumulatively ahead from rent revenue," Garvey said.

Trammel Crow also plans to make an initial $1.4 million in renovations for the Oceanside Inn and Suites prior to the Buccaneer being torn down.

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