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Bae Jekyll Island Lessons Learned FMFADA Board July 16, 2009.

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Presentation on theme: "Bae Jekyll Island Lessons Learned FMFADA Board July 16, 2009."— Presentation transcript:

1 bae Jekyll Island Lessons Learned FMFADA Board July 16, 2009

2 bae Today’s Agenda  Quick Comparison  Jekyll Island as “City”  Challenges  Commercial Lessons Learned  Residential Lessons Learned  Key Insights

3 bae Quick Comparison  Fort Monroe: Urban context; more residential and office  Jekyll Island: Large natural setting; more acreage and lodging facilities

4 bae  Almost all municipal services provided by Jekyll Island Authority (“JIA”) Fire/EMS Water and waste water Roads, beaches, and trails Sanitation  Law enforcement services provided by Georgia State Troopers Office and dispatch at entry No cost to JIA  Permitting services provided by Glynn County Building and construction permits for new construction Jekyll Island as “City”

5 bae Jekyll Island Fire Department  Small permanent staff (4 FTEs) Use part-time firefighters employed by other fire departments Three pumper trucks and ambulance Current budget $825,000 to provide fire and EMS service demand With new resort redevelopment expect fire fee revenue to permit expansion of permanent staff (new budget = $1.2+/-M)  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

6 bae Taxes and Fees  JIA levies: Hotel tax 5% on rooms and rentals ($1.7M) Fire service and other municipal fees ($1.6M) Fire fees based upon assessed value  Glynn County 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

7 bae Jekyll Island Residential Program  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

8 bae Jekyll Island Lodging Program  Lodging/Retail/Commercial 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 $3.2M in business lease revenue Jekyll Island Club Hotel Days Inn

9 bae JIA Amenities & Enterprises  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 $8.9M (half of operating budget) Summer Waves Water ParkConvention Center

10 bae Jekyll Island Challenges

11 bae Lessons Learned Commercial  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 Limited services and lack of amenities Lack of architectural guidelines - uneven design quality, including condos and homes Several hotel/motels went into bankruptcy (prior to current downturn) 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

12 bae Commercial Revitalization  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 - $100M+ 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

13 bae Lessons Learned Residential  Original JIA leases did not have escalation or reappraisal clauses 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 State extended lease to JIA to 2089; JIA can now renegotiate lease terms and offer another 40-years JIA now formulating “preferred alternative” for renegotiating leases Ideas: add CPI-based escalation, levy leasehold “transfer fee,” Apply new structure only when leaseholders voluntarily sell, refinance, or obtain reverse mortgages

14 bae Key Insights  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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