Report of the Jekyll Island State Park Authority (JISPA) Board Meeting of 12 May 2008, at the Convention Center, as recorded for Jekyll Island Citizens’ Association by Steven Y. Newell
(Note: IPJI has placed some text in “bold” type for emphasis)
Chairman Porter brought the meeting to order at 9:35 AM. Board members present were Ed Boshears, Buddy DeLoach, Bob Krueger, and Sybil Lynn. Board member Steve Croy and Counsel Zier were present by telephone connection, and the audience numbered about 60 persons. State Representatives Jerry Keen and Terry Barnard of the Park Authority’s Legislative Oversight Committee also sat at the Board table.
Chairman Porter introduced the new Executive Director of the Park Authority, C. Jones Hooks. Jones Hooks noted that he likes to be routinely called "Jones". Jones expressed excitement about his opportunity to work in the Park, and thanked the Park Authority Board for choosing him to fill the Director’s shoes.
Chairman Porter started off the committee sessions with the Legislative Committee, since Representatives Keen and Barnard were in attendance. Porter noted that Terry Barnard had discussed the 2008 Legislative Session at the April Board meeting, and gave Jerry Keen an opportunity to do the same. Jerry reported that the Legislature had left the State in a good fiscal position, and had provided $25 million in bonds for building of infrastructure in the Park. Jerry and colleagues had had to work until the last minute to get the turtle auto-license tag through. Jerry welcomed Jones Hooks to the Park Authority and looked forward to working with him.
Steve Croy called upon Eric Garvey to update the group on the turtle-tag issue, noting that otherwise, "all’s good on this end". Chairman Porter thanked Jerry Keen and Terry Barnard, and the Governor, for their help in obtaining the $25 million in bonds that will be used for infrastructure connected with the building of the new convention center, which he felt was much needed. Steve Croy reported that a group of four legislators had come to him and offered to submit 2009 legislation regarding renewal of residential leases, or lack thereof, in the Park. He stated that he had asked these legislators to hold off, and let the Park Authority handle this matter. He stated that he would update the four legislators on the action taken by the Park Board’s Finance Committee.
Chairman Porter announced that Eric Garvey had been working recently in Atlanta with the Department of Revenue regarding the flow of fee monies from the sales of the sea-turtle license tags. Eric reported that he had conferred with the Revenue Commissioner regarding approval of a proof of the tag. The Department had revised the tag slightly, and Eric plans a couple of additional minor changes. The tag will be ready for production as soon as the Governor signs the bill containing the addition of the sea-turtle tag to the State’s portfolio of special license tags. Ten dollars from the sale of each turtle tag will move through the non-game wildlife fund to the Georgia Sea Turtle Center. Eric noted that the tags will have Turtle Center branding, as well as Jekyll Island branding. Porter and Croy both thanked Jerry Keen for his invaluable assistance in getting the turtle-tag bill through the Legislature. Porter commented that it helps to have a magician when one is trying to get legislation done.
OCEAN OAKS PROJECTS
Bob Krueger called upon Dave Curtis (Managing Partner, Jekyll Ocean Oaks group, operators of the Club Hotel) to discuss the Oaks’ project in replacing the demolished Holiday Inn. Dave started off by describing the group’s plan for expansion of the existing ballroom at the Club Hotel. The Ocean Oaks group is investing $5 million this year in upgrading of the Club Hotel (hallways, corridors, etc.), and the ballroom expansion will result in another turreted entrance. There has been an ongoing series of complaints that the current ballroom is too small to handle the size groups that the hotel needs to accommodate. The new ballroom will include the original and will be a total of 5,000 square feet in size, with capacity for about 300 guests. Kevin Runner of the Oaks group pointed out that when Crane Cottage is already booked for a wedding, potential wedding guests cannot use the current ballroom because of its small size. It is hoped that the new ballroom will be available in March, 2009.
Ed Boshears inquired about the size of the ballroom addition? Answer: 3,000 square feet. Ed stated his understanding that the Park Authority owns the Club Hotel, and Ocean Oaks leases and operates it. Thus, Ed wondered whether the ballroom expansion would also belong to the Authority. Answer: Yes, it will. Ed suggested, then, that the addition would be a free gift for the Authority, and Dave confirmed this projection. Ed expressed appreciation for this gift (laughter). Chairman Porter expressed gratitude for the coming beautiful, historically correct addition to the Club Hotel.
Kevin Runner briefly described the new boutique hotel at the beach that the Oaks group will be building along with the Hampton Inn and Suites on the old Holiday Inn site. This complex of accommodations will be labeled "Jekyll Island Club Beach Village". Dave Curtis announced that the building plans for the Hampton Inn and Suites (130 rooms, approximately $130 per night) are complete and under review; approval is expected in a week, and the building contractor is mobilizing now, and expecting to start hard construction during the first week of June. The Hampton is expected to open in summer, 2009, with management by Newcastle Hotels (oversight by Kevin).
Dave Curtis then moved to a description of another major part of the Jekyll Club Beach Village, which Ocean Oaks is calling its Boutique Hotel (88 rooms, full-service restaurant, ballroom, underground valet parking; essentially the Jekyll Island Club Hotel at the beach). Alongside the Boutique Hotel there will be a condominium building with 64 units (average of two bedrooms). The Boutique Hotel and the condominium building will have three to four stories. It is expected that the 64 condominium units will be placed into the rental pool for much of the year. The top floor of the Boutique Hotel will have eight units that could serve as 2-bedroom condominiums.
Ed Boshears inquired about rate structures for the Hampton rooms versus the Boutique rooms? Answer: about $130 per night for the Hampton, and $185 for the Boutique Hotel. Ed wondered also whether it would be mandatory for condominium purchasers to put their units into the rental pool, or could they live in the condos year-round? Answer: we cannot force the purchasers to put their units into a rental pool; year-round occupancy is a question for the Park Authority. Bob Krueger noted that lease structuring can be used to induce the purchasers to rent-out their condominiums. Ed followed by asking whether someone from Atlanta could use his condo for a month or so, and leave it empty for the rest of the year? Answer: yes. Ed inquired whether Dave had an estimate of the annual fee that the condo owners would be asked to pay. Answer: normally, the condos would be rented, and the building operators would collect part of the rental amount. Ed pointed out that the Park residents are now paying about $400 per year as a lease fee, and that this amount is a subject of much discussion just now. Ed wondered how much money would flow to the Park Authority annually from the condominium owners, for comparison to the residential lease fees? Answer: for condominiums in the rental group, the gross income as rent would be in the neighborhood of $40,000 per year per condo, so at four percent for JISPA …
At this point, Bob Krueger interrupted Dave to point out that his estimates are purely conjecture, since the contract details regarding fee flow to the Authority have not been finalized. Ed then responded that condominium owners who have the option of keeping their condos out of the rental pool should be charged an annual fee comparable to that which is charged on residential homes in the Park. Bob pointed out that the Authority already has a model for this type of comparison in the Villas By The Sea condominiums, and that the point is an important one that the Board will examine carefully. Steve Croy stated that this is a two-sided coin: the condo owners must not be burdened more than the Park residents living in individual homes. Terry Barnard asked whether there would be two types of condominiums, one in the condo building and one at the top of the Boutique Hotel. Answer: the condominiums atop the Hotel are more apt to be a pure investment. Chairman Porter inquired about the cost of the investment in the buildings to replace the Holiday Inn? Answer: a total of about $78 million, with $55 million of that going for the condominium building and the Boutique Hotel.
Bob Krueger announced that Ken Bleakly has provided a proposal to examine the potential changes to the leases of the residents of the Park (extension, modification, etc.). Ken proposes to examine the inventory of the leases and their characteristics, the economic impact of the residents, comparison to land leases in comparable settings, and the structure of proposed renewal options. He proposes to work with the stakeholders: the current residents, the Authority Board, the business community, and the investors. Ken will charge $44,750 for the expansion of his current contract. It is anticipated that the study of the residential lease question will take at least a year. Bob raised the issue of the prohibition of development on the South End of the Park, and suggested that the Board may not want single-family dwellings in the Park.
Ed Boshears pointed out that legislation has been passed over the last decades that affects the leases in the Park; he called for thorough legal analysis of this situation, and suggested that Legislative Counsel could provide a study of the amendments that have been passed affecting the leases. One potential legal problem could arise from purchase of leases during periods when there was an option to buy the leased land. Also, a potential financial problem for the Authority could arise due to obligations regarding the homes on leased land for which the leases are not renewed – will purchase of the houses be required? Bob Krueger noted that Bleakly could do this job. Ed responded that Bleakly admits that he is not a lawyer. Counsel Zier pointed out that Legislative Counsel cannot do the research that Ed had requested; rather, the Attorney General’s Office has this responsibility. Jerry Keen requested of Counsel Zier that he provide copies of his findings regarding the changes over the years in Park-lease structures to both himself and Terry Barnard. Ed commented that Bleakly does not include in his proposal any examination of comparative treatment of residential houses versus condominiums and "cottages" (the term used by Linger Longer Communities [LLC] for its residences in its planned condominium village). Bob Krueger asserted that the residential leases must be discussed separately, because they are land leases. Ed called for consistency and fairness in treatment of residential-home owners and condo/cottage owners that can choose to be year-round residents. Bob responded that Bleakly will look at this question. Ed requested an opportunity to interview Ken Bleakly on several points of interest in his residential-lease proposal, and Chairman Porter asked Bob Krueger to schedule this interview. Chairman Porter wondered whether Bleakly has planned enough time for stakeholder input, since there is such a broad range of stakeholders? Answer: the proposal is actually a work-in-progress, and sessions will be added as necessary, and other revisions to the work schedule are likely to be made. Steve Croy provided his opinion that the Board should not feel that it needs to rush with this study, since it is not just a local question.
Bob Krueger announced that a lease arrangement has been agreed upon for the Jekyll Island Arts Association (JIAA) to use Goodyear Cottage. Certain costs associated with the Cottage’s use will now be the responsibility of the JIAA. Counsel Zier added that this arrangement is different from a standard landlord/tenant lease, and this is necessitated by the fact that the State does not offer landlord/tenant leases when State property is used for cultural purposes, because the State reserves the right to terminate particular types of uses of State properties. The agreement between the Park Authority and the JIAA is now in the form of a revocable license, with a 10-year term, and 5-year renewal. Should the Park Authority decide to open the Cottage for visitation as a museum, they must give 180–days notice. The JIAA will pay the costs of operating the Cottage, and pay a $100 per year fee to the Park Authority. Bob Krueger acknowledged the great value of the JIAA to the Park, and thanked Counsel Zier and JIAA President Betty Rasmussen for their assistance in reaching the tenancy agreement.
Bob Krueger announced that RedBug Motors has applied for a lease on a portion of the storage building for the Great Dunes Golf Course, for the purpose of starting a pizza-preparation and delivery business. Bob felt that this new service would be well received and he expressed a desire to see this lease application approved. All expenses associated with the business start-up would be borne by the RedBug people.
Bob Krueger announced that the RFP for a new gas/service station would go out within the week, and that demolition/replacement would take place by January, 2009. The new facility will include a convenience store, run by a new private partner.
Bob reported that revenues and expenses are both down, year-to-date, but that income is up slightly, because of the enforcement of caution in spending by the JISPA leadership team. Marjorie Johnson added that the Sea Turtle Center is experiencing a $129,000 loss, year-to-date, but that revenue at the Center has picked up. Marjorie expressed the opinion that low revenue for the last two months is a consequence of the rise in gasoline prices (e.g., two museum tours recently canceled, giving the cause as high gas prices). Chairman Porter asked Marjorie what can be done to reverse the trend of falling revenue. Answer: one of Eric’s ideas is to close Great Dunes Golf Course for part of the year to help offset costs. Eric added that golf revenues are clearly a problem with three missing hotels, but that this problem will be solved soon, as the replacement hotels are built out. For now, the strategy will be to rotate use of Great Dunes and Oleander courses seasonally (Great Dunes open in fall/winter, Oleander open in spring/summer). It is anticipated that this strategy will be revenue-neutral ($200,000-300,000 in expense savings, alongside a small increase in golfing fees). This would also alleviate the crisis of aged irrigation wells approaching the end of their useful lives.
Betty Rasmussen thanked the Board and Counsel Zier for making the effort to arrange a long-term rental agreement for the JIAA in Goodyear Cottage. She expressed the love of the JIAA for its home in the Cottage. She invited the Board to come to the Cottage to visit the JIAA. Bob Krueger returned Betty’s thanks, complimenting JIAA for its good works and its help in making the Park a unique destination for visitors.
Frank Mirasola made the point that Bleakly Advisory Group should make it clear that the renewals that Bleakly is considering are the extensions from 2049 onward. He noted that in 2009, residents will be notified by the Park Authority that it is time for the ten-yearly pro-forma renewals. He reminded the Board that absentee owners may be confused by the talk about examinations of residential leases, including the possibility that the leases may not be extended beyond 2049. Some lessees may think that the leases could be changed in 2009, when the pro-forma renewals must be signed. Bob Krueger clarified that the Bleakly Group is to consider options for extension (or not) from 2049 to 2089. The ten-year pro-forma renewals are not part of Bleakly’s charge, and are a part of the Executive Director’s job. Chairman Porter requested that Frank provide assistance to the Executive Director with the ten-year renewals.
Jimmy Veal of the Beachview Club (40-years of operating) announced that he is down over one-half million dollars in gross room sales for 2008. [IPJI Note: Mr. Veal must have meant to refer to gross sales for all hotels, since the JIA’s monthly records show that 2008 gross sales for his Beachview Club have actually increased compared to the same period for 2007]. He reiterated calls that he has previously made for the Board to keep fighting for revitalization of the Park, and thanked the Board for sticking to the fight. He stated his belief that there is no problem with transparency of the visitation numbers that the Authority Board has put out; he believes that these numbers are correct. He called for complainants regarding the Board’s numbers to talk to the business people of the Shopping Center or the hoteliers. He felt that the hoteliers must have the revitalization that LLC proposes. He sees the LLC folks as strong in integrity and environmental conscientiousness. He felt that Canopy Bluff and the Ocean Oaks projects will help, but will not help enough. The new convention center is truly needed, in Jimmy’s view; he firmly believes that with all his heart. At that point, Jimmy reached the 3-minute limit. Ed Boshears noted here that false or exaggerated comments within the State Senate (including that "conditions on Jekyll are so bad that even the roaches have left") are contributing to whatever visitation problem exists.
Richard Van Iderstyne welcomed Jones Hooks and his wife to Jekyll Island State Park. He commented that his new pizza operation (RedBug Pizza) will be delivering using electric cars (it will be a green operation). Chairman Porter wondered whether it was a good idea to choose the name "Red BUG Pizza"?! (laughter). Buddy DeLoach wondered where the pizza samples were?!
Christa Frangiamore reported that she had submitted two grant proposals to the Georgia Forestry Commission. Chairman Porter was reminded that the Huddle House suit settlement had resulted in a $30,000 check to the Park, which will go to the Sea Turtle Center.
Cornell Harvey reported that the Jekyll Square beautification was completed in April in downtown Brunswick. He recognized the JISPA staff persons who contributed. Chairman Porter noted that he had received many compliments on the landscaping work in Jekyll Square, and thanked the participants.
Eric Garvey reported that his marketing efforts have really ramped up in the last couple of months. Over 200 triathletes competed in the recent turtle crawl race, exceeding expectations. The Turtle Center kiosk at the Atlanta airport has been approved, and will be in a prime location, near a major passenger entrance into a security-check zone. Eric complimented the work that Larissa Harris has done, and announced a promotion for Larissa to Assistant Director of Marketing. He reported that over 2000 persons visited Summer Waves on opening day (1000 of whom had free passes).
Bill Irwin described the path that turtle Bev took after her release at Panama City. She swam around the tip of the Florida peninsula, returning to Jekyll Island. She is currently near Cape Canaveral, and may be attempting to nest there. Turtle Spitfire, released during the recent triathletic competition, is still swimming to the east into the ocean. Bill noted that each release is a good marketing opportunity, spurring sales of turtle adoptions, and helping to pay for tracking devices that enable the public to follow the released turtles’ movements. Ed Boshears noted that it might be a good marketing gimmick for Eric Garvey to tell Atlanta folks that even when provided with free transportation to Panama City, Bev swam all the way back to Jekyll Island State Park (laughter). Bill noted that in June the Center will celebrate its first anniversary. Cindy MacDonald of the Jekyll Island Foundation supplemented Bill’s description of the June event, which is the Foundation’s summer fundraiser, now titled Sea Turtle Weekend. She listed several options of touring packages, costing from $150 to $15,000. A wide variety of activities will be included in the packages. The fundraising goal is $100,000. She invited audience members to attend the event, June 27 -29.
Bill Irwin lamented the fact that revenues were down, but added that expenses have been pared back also, so that the Center is not so far down in the red. He noted that 88,000 people have visited the Center since its opening.
Chairman Porter asked Jones Hooks to introduce his wife Stephanie, who was in the audience, and followed by adjourning the Committee Session for lunch at Summer Waves (celebrating its 20th year) at 11:15.
Chairman Porter opened the Board meeting at 12:45. All action items were approved. Ed Boshears inquired whether the Board would be able to publicly question Ken Bleakly in person regarding his residential-lease study, and Bob Krueger assured Ed that this would be made possible. Buddy DeLoach noted that the valuation of the residential properties would be a moving target, with all of the developments going on in the Park, and he wondered whether the Bleakly people would have the appropriate experience to deal with that situation? Answer: they will employ an appraiser as a part of their study.
Ed Boshears inquired about the new LLC Beach Village plan. Answer: LLC is working on a revision to fit the boundaries of the acreage on which they can build west of the Shore Protection Act jurisdictional line. It is hoped that this proposal will become available within three to four weeks.
The meeting was adjourned at 12:53 PM.
Prepared by Steven Y. Newell, Secretary, Jekyll Island Citizens Association