By Bill Britt
Alabama Political Reporter
MONTGOMERY— Gov. Bentley is asking the legislature during this 2015 Special Session, to allow him to borrow millions of dollars to build a luxury hotel, and conference center at Alabama’s Gulf State Park; even though there are already two just like it a few miles away.
The Governor wants the legislature to approve a $50 million bond for the project, even though around 16 years ago, over $100 million in bonds were issued to build a similar facility on the same site; this, according to former Attorney General, Bill Baxley. He also said the insurance payouts after hurricane Ivan gave the State an estimated $45 million more for Gulf State Park. But, that money has now mysteriously disappeared into another government hole, and Baxley says he’s looked for it, but most of it simply cannot be found. As for the insurance payments there are other estimates but who ever knows for certain isn’t talking.
In the 90’s, the plans to build a luxury resort at Gulf State Park never materialized. However, taxpayers were left to pay the bill on what turned out to be a very costly, political pipe dream.
Bentley, of course, is not the first Governor to want a luxury playground at the beach. In the 1990s, then Governor Fob James would float a $110 million bond to build a similar facility at Gulf State Park.
“O.K…this goes back a long way,” said Baxley, who has represented Perdido Resort since its inception. “When Fob James was Governor, the last time, this group of people down in Baldwin County had this grandiose plan for a big, luxury hotel, owned by the State.” A $110 million bond was issued under James, but was not used to build the hotel and convention center.
According to Baxley it was Conservation chief Jim Martin who convinced James that building an expensive destination spot was not in the State’s best interest. James then felt the best plan was to use the bond money to upgrade the current parks.
Baxley says around $4 or $6 million was then transferred to the Historical Commission and the remaining millions went to Conservation, and disappeared. “I have never been able to find it.”
Baxley said the idea was rekindled during Gov. Don Siegleman administration. “Siegelman becomes Governor…and he has a plan for a luxury hotel that dwarfs anything they had previously in mind,” said Baxley. According to Baxley another multi-million dollar bond was approved but never executed.
So, it is, that since the late 1990s, a $110 million bond, was issued under James, plus $45 million from the insurance settlement, and there is still nothing to show for all that money.
Once again, the State wants to build a luxury convention destination, even though there are two other facilities that offer practically the same amenities.
According to a Feasibility Study prepared for the State by Pinkowski & Company, the new Gulf State Lodge and Conference Center will contain 350 guest rooms and suites, and a mix of meeting spaces totaling 40,000 square feet. The study was commissioned to determine the “viability and market demand for a lodge and meeting facility and the estimated performance level that reasonably could be attained by the proposed facilities.”
Mere minutes away are two, long-established, privately-owned facilities of comparable size, with even more amenities.
The Perdido Beach Resort has 346 guest rooms and a 45,000 square feet of meeting space, in Orange Beach and the Grand Hotel Marriott Resort, Golf Club & Spa, at Point Clear, boasts 405 guest rooms and suites with 23 meeting rooms total with 37,000 square feet of meeting space.
This begs the questions:
Why is the State interested in competing with the private market?
Is there actually a market for a “me-too” hotel and convention center on the coast?
To build the facility, the State not only wants to borrow $50 million, but also appropriate $85 million from the BP settlement. At a time when the Governor is saying the State needs to raise taxes to fulfill its basic obligations, spending nearly $150 million on a luxury conference center is obscene.
Sen. Paul Sanford (R-Huntsville) said, “The Lodge Convention Center is a want not a need and during times of financial strain wants should be put aside in order to address real needs like funding Mental Health. Alabama should not borrow from our children’s generation in order to fund today’s desire to add fluff at the beach.”
Bentley has characterized the undertaking as an, “innovative strategy for tourism and economic development.” Like Sanford, many politicos and business leaders question not only the timing, but also the the business sense, or lack of it, driving this venture.
Jim Meadlock, owner of the Perdido Beach Resort, and founder of the Huntsville-based, multi-billion dollar company, Intergraph puts it more simply: “What are they thinking?”
The State’s feasibility study makes many assumptions, which it claims are dependent on, “competent and efficient management and presume no significant change in the hotel industry in the immediate area…we do not represent them as results that will actually be achieved.”
According to Baxley, the Spa consultant hired by Siegleman said: “This will appeal to a market of higher income, caucasian females.”
“This is directly contrary to what the law says about being affordable,” said Baxley.
Once a destination for working families, even the State’s study shows the new facility would be out-of-reach to most citizens.
The Pinkowski & Company project, a 64 percent room occupancy in the first year, 2019, and that number growing to 68 percent over the next five.
The Grand Hotel, which has been in operation for 160 years, and has a 20,000 square foot spa, averages only 65 percent annual occupancy. With three competing facilities, there is doubt that the projections provided by Pinkowski & Company are achievable.
Meadlock points out that the market on the Gulf only attracts small conventions with larger ones going to New Orleans and other locations. He also says that the Winter months eat away at profit because “few people want to come to the beach in January and February,” but staff and expenses continue.
Cooper Shattuck, who oversees the project for the Governor told al.com in March, ”Our belief is that in doing so, rather than trying to fit a square peg into a round hole by taking a typical hotel and dropping it on the beach, but thinking about the uniqueness of this location on the beach and embracing it. Doing that well will make the facility itself an attraction which will draw people not just to it, but to the natural resources, which is the whole goal of the project.”
The project has been sold to the politicos as a needed convention space. However, the Feasibility Study found, “Currently a significant portion of the demand for lodging is a ‘drive-in market,’ which might distract from off-season fly-in convention business.”
“The Lodge should be put off until current debt is paid of relating to the parks, then the project may be able to move forward, or the project needs to be scaled back or down in stages that reflect the available funds.” said Sanford.
Many conservatives question why the State wants to compete with private business in the first place.
And even a few still wonder…what happened to all that money.