Jekyll tries to beat delays
Convention center project under way.
Concerns surface over whether enough hotels will be ready for events.

Atlanta Journal-Constitution

Dan Chapman
March 13, 2011
 
Jekyll Island officials who run the lovely state park along Georgia's southeastern coast coined a new motto in 2009 --- "It's all good."

Is it?

Last month Trammell Crow, one of the nation's biggest developers, announced it would delay building two hotels scheduled to open next year. The company blamed the economy and financing troubles.

While construction of the taxpayer-backed convention center is under way, it's uncertain if the accompanying hotels and "village" retail district will open on time in summer 2012. Island observers worry a convention center without nearby amenities will founder, leaving Georgia taxpayers on the hook for $50 million in debt payments.

David Egan, a Jekyll resident and critic of grandiose redevelopment plans, suggested a new motto --- "It's All Gone" --- for the barrier island near Brunswick.

"It seems to me that the Jekyll Island Authority tried to do everything at once and they got way ahead of themselves, " said Egan, co-director of the nonprofit Initiative to Protect Jekyll Island State Park. "If I were in the JIA's shoes I'd certainly be very concerned about this picture, not just short term, but what happens in 2013, 2014 and 2015 if this pattern persists?"

Jones Hooks, the authority's executive director, professes no worries.

"We have seen some real good indications of some (economic) turnaround, and we're feeling very positive about where we are, " he said. "We're way beyond where we have been in the past, and we're making plans for a big spring and summer."

Revitalization efforts

Little has come easily for Jekyll, once the winter playground for northern industrialists named Vanderbilt and Pulitzer, since the JIA undertook large-scale redevelopment five years ago. Most residents and tourists agreed that the ramshackle assemblage of musty hotels and out-dated retail offerings needed sprucing up.

By law, 65 percent of the state park must remain free of development. State code also stipulates that Jekyll, where many a school kid first tasted salty air, must remain affordable for "the average Georgian." Therein lies the roots of developers' struggles.

Linger Longer Communities, the developers of the upscale Reynolds Plantation in Greensboro, won the much-coveted right to develop the state park in September 2007 with a planned $352 million infusion of hotel rooms, condos, shops and parks. A year later, the Atlanta developer scaled back plans, promising a $170 million mix of hotels, condos and shops along the beach.

In December 2009, the JIA canceled Linger Longer's contract citing construction delays. Meanwhile, Trammell Crow has been sitting on two prime oceanfront properties since June 2006. And Georgia legislators had approved $50 million for a new convention center, beachfront park and other amenities.

Last June, the authority approved the latest village revitalization scenario. Three developers promised $75 million worth of hotels, condos and retail. All properties --- the convention center and the adjoining hotel, retail-condo village as well as Trammell Crow's projects --- were scheduled to open by summer 2012.

Today, only the convention center seems a sure bet. While smaller projects --- a Hampton Inn, a Dairy Queen, a gas station and the taxpayer-financed Great Dunes park --- have opened, it's unclear when, or if, the other projects will ever be built. Also unclear is the future of the 166-unit Jekyll Island Oceanfront Resort, which was auctioned online last week.

"Like everywhere else in the country we fell behind because of the recession, " said Kevin Runner, a managing partner at the historic Jekyll Island Club Hotel. "But activity has increased somewhat. We're still a couple of years from being back to where we want to be. We're looking very forward to 2013 and beyond."

Runner's group is also scheduled to develop a 200-room, full-service hotel alongside the convention center. He said they're in the "final stages" of finding a hotel partner and lining up financing, but a date to begin construction hasn't been set.

Colorado-based Phelps Development was chosen by the JIA to build a 140-room mid-priced hotel in the village. And Arizona's Winding Road Development is scheduled to build the village: restaurants, shops, a post office, bank and 60 condos. Neither company could be reached for comment. Hooks, the JIA director, said recently Winding Road was "still working on their plans."

Trammell Crow met with JIA board members Feb. 12 to update development plans. It wasn't a particularly upbeat gathering.

Causes for delays

In its presentation, obtained by The Atlanta Journal-Constitution, the Texas developers said they needed an "extended time frame" to analyze the market and blamed the delay on the economy and its impact on the leisure and second-home markets. The company said it would "reassess" its projects after the other hotels and village shops were built.

"Delays in the delivery and stabilization of the two new convention center hotels will impact the timing of feasibility of development on this site, " its presentation said.

The JIA, concerned about possible delays, had amended Trammell Crow's lease last December. In particular, the Authority wants the developer to report back by May with financing and construction details, Hooks said.

Meantime, Trammell Crow will continue to pay $330,000 annually to lease the hotel properties. Construction will be pushed back at least a year.

"The board said, 'We have really reached the point where we want to see you moving forward, ' " Hooks said. Trammell Crow "would like to see everything up and running before they move forward. They are committed, I think, to Jekyll Island."

Trammell Crow officials couldn't be reached for comment.

"They need to be moving forward with their plans and not wait to see what we're doing, " said the Island Club's Runner. "Originally, they came up with big plans, but they're more scaled down now. And the Authority has planned income from their properties that they won't get now to support the bonds."

Finances strained

Fewer hotel rooms and restaurants --- in the village too --- would reduce revenues that the authority was banking on to pay off convention center debt as well as to maintain daily operations across the 7.5 mile island. By law, Jekyll must be financially self-sufficient.

The recession and its aftermath, though, have already crimped Jekyll's finances. In 2008, according to the state park's most recent annual report, revenues hit $17.5 million. Last year, revenues fell to $16.7 million.

Hotel occupancy rates reached 52.4 percent in 2008. Last year, they dropped to 50 percent.

"How is Jekyll going to make ends meet and be able to service its debt?" asked Egan, the island activist. "We could have a situation where you end up with the convention center completed on time in the summer of 2012 with no hotels available at that time or, perhaps, at any time in the near future."

The authority says not to worry. It tallies 883 hotels rooms today and expects 1,168 rooms once --- if --- the village hotels are completed.

"We're moving forward and everything seems to be in place, " Hooks said. "We don't have any reason not to think we're where we need to be."