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Jekyll authority backs out of Linger Longer development deal
The Jekyll Island Authority is dropping out of a controversial beachfront development deal because its private partner could no longer guarantee a timeline for completion, officials said today.
Since October, the authority and Atlanta-based Linger Longer LLC had been renegotiating timing and financial terms of the package. The parties inked a deal in December 2008 calling for construction of two hotels, lofts and time-share units, and up to 30,000 square feet of retail space on the state-owned barrier island.
Both parties mutually agreed to walk away from the deal, authority spokesman Eric Garvey said today. The chief sticking point: The authority still wanted a firm timeline for completion of each component, and Linger Longer couldn’t agree to that.
In particular, Linger Longer was unwilling to commit to 2012 completion of two hotels and retail space in the $170 million Beach Village. Working with a different developer, the authority broke ground yesterday on the Great Dunes park component of the village, which will also include a renovated and expanded convention center.
Critics had accused the authority of giving Linger Longer rights to build on prime beachfront property for next to nothing. They also questioned whether Linger Longer’s political connections had influenced the authority’s handling of the deal. Mercer and Jamie Reynolds, owners of Linger Longer’s parent company, were major fundraisers for President George W. Bush, U.S. Sen. John McCain and a number of Republican candidates in Georgia.
State Sen. Jeff Chapman and former Adjutant General David Poythress — both candidates for governor in 2010 — had called on the authority to back out of the Linger Long deal as a financial disaster for Georgia taxpayers. Critics, meanwhile, pointed out that Jamie Reynolds is campaign finance chairman for another gubernatorial candidate, former state Sen. Eric Johnson of Savannah.
Gov. Sonny Perdue, who once named Jamie Reynolds to the state Board of Natural Resources, was informed of the situation yesterday after he flew down for the Beach Village groundbreaking. Garvey said there was “no political influence” on the decision to drop the partnership.
The authority now will seek individual development partners for different pieces of the island revitalization plan. “Progress is unaffected by this announcement,” Garvey said. “This does not in any way mean that the project is dead.”
But the time-share units may be on life support for a while, due to the recession and a soft market for vacation properties. Garvey said it was always understood that the timing of the “vacation-ownership” development was subject to change.
The authority’s board in October signed off on terms of a sweeter financial deal for Linger Longer. Under the amended agreement, the company could have collected more than twice as much in program management fees and deferred most of the $3.5 million in partnership payments it owed the authority.
With today’s announcement, at least for now, Linger Longer collects nothing.
“No money has exchanged hands between Linger Longer and the Jekyll Island Authority,” he said. “They have participated in some planning work … but because there was no final contract, there was no money exchanged.”
Here is today’s news release from the Jekyll Island Authority:
Jekyll Island Authority and Linger Longer Communities
agree to suspend partnering agreement
The Jekyll Island Authority announced today that by mutual consent they have suspended contract deliberations with Linger Longer Communities LLC on a series of private partnering agreements. The partnering agreements were intended to contractually reflect the Revitalization Partnering Agreement (RPA) approved approximately one year ago. The RPA followed the selection of Linger Longer Communities as the successful proposer in a public Request for Proposals (RFP) back in 2007.
While contract negotiations with Linger Longer on specific terms have been ongoing for the past year, the Jekyll Island Authority has independently progressed with plans on a new beach village. A cohesive project design team is in place and work will continue on the new beach park, convention center as well as road and utility work. Focus will now shift to identifying appropriate developers that can accomplish the individual hotel and retail village components.
Robert W. Krueger, Jekyll Island Authority Board Chairman, recognized the efforts of Linger Longer Communities and Jekyll Island Authority representatives to achieve a goal which was unachievable in today’s marketplace. “I want especially to thank Linger Longer representatives for their interest in Jekyll Island and their support throughout this difficult process. We acknowledge the hard work and hours of due diligence spent by both parties, and I am confident Linger Longer and the Reynolds Group will continue to be an outstanding leader in the hospitality industry. While a difficult decision, in the end it was important to make a decision in the best interest of Jekyll Island and the citizens of the State of Georgia.”
“The economy has created much uncertainty,” stated Jones Hooks, Executive Director with the Jekyll Island Authority. “In my 30 plus years in community and economic development I have not seen things so bad.”
To complete the beach village and accomplish the goals established for the project, the Jekyll Island Authority will move forward with current plans and each private-sector opportunity will be matched with a firm best suited to successfully complete it. By breaking the project up among several developers, financing should be more obtainable. This approach also puts the Jekyll Island Authority in control over timing.
“We will have retail operations in temporary facilities starting in the third quarter, and we must show a definite timeline,” continued Hooks. “We also must bring new hotel lodging units on line as soon as the new convention center is ready. These and other circumstances have dictated this decision.”
The amount of private-sector investment is expected to be at least if not more than the $120 million. Each private-sector component — two hotels, 30,000 sq. ft. of retail with condominium lofts and vacation ownership units — will represent a unique hospitality investment opportunity.
The Jekyll Island Authority officially broke ground on the beach village project on Monday, December 7th with a ceremony attended by Governor Perdue. Construction is now underway for the new 20-acre Great Dunes Park which along with a new 78,000 sq. ft. convention center will be key integrated public components of the beach village project. Fifty million dollars in public bonds have already been secured and set aside to fund the state-owned portion of the project.
“It is not unusual at all for public investment to be used to stimulate private investment,” stated Hooks. “We are completely confident that we can secure the private development investment needed, and that this project will come together as highly successful and highly profitable for the businesses involved.”
The design team that will continue working on the project includes the well- regarded architecture and engineering firm HHCP from Maitland, Florida. Thomas and Hutton are providing on-going engineering work, and landscape architect Glatting Jackson Kerchler Anglin. Southern Wilderness of Edison, Georgia has been selected as the contractor for the initial phase of Great Dunes Park. The groundbreaking celebration for the public Great Dunes Park and the beach village project which occurred yesterday is unrelated and not affected by this announcement.
The Jekyll Island Authority Board is expected to take formal action on the RPA at its regular monthly meeting on December 14th.