Gulf Shores, AL

Major development planned around Lulu's restaurant

Sunday, June 21, 2009 By KATHY JUMPER Real Estate Editor

Mac McAleer recalls bringing Lucy Buffett to the 27-acre site near the Dr. W.C. Holmes Bridge and hugging the Intracoastal Waterway and saying it would be the home for her new restaurant.

"She said, 'Are you kidding me?'" McAleer said last week, smiling.

Lulu's at Homeport Marina opened five years ago. Last year, 200,000 people came through, and the restaurant did $13 million in food and retail sales, McAleer said. Folks wait up to three hours for a table, listening to live music while sitting at one of three bars or watching their kids play in the mega sandbox.

Sometimes, a visitor even catches a glimpse of Lucy's famous singer- songwriter brother, Jimmy Buffett. (He pilots his own plane to the nearby Gulf Shores Airport.)

"It's been a great partnership with Lucy," McAleer said of the deal with his ex-wife, whom he calls a close friend.

Ambitious project

Now he plans to parlay Lulu's destination status by surrounding the eatery with a 250-room hotel, five-story parking deck, 1,000-seat conference center and a casual fine dining restaurant, retail and office space on Ala. 59 and East 29th Avenue. A new ferry terminal, with room for two high-speed vessels, might eventually take 250 passengers to Biloxi casinos and bring them back again.

He would also like to put a lighthouse, similar to the Middle Bay Lighthouse in Mobile Bay, near the existing marina, and have a bar and deck extend from the lighthouse to the casual fine dining restaurant, which will be located under the Holmes bridge.

"Will it happen?" he asked. "That's my intention. Three groups of investors are presently doing their due diligence."

Partners in the project include his marina management team - son Joe McAleer III and Ken Carter. They plan to either partner with other developers or sell them land.

McAleer, a former top executive at Krispy Kreme Doughnuts, leases the land to Lulu's restaurant and built the adjacent multimillion-dollar, 76-slip concrete floating marina, which is almost leased up.

He presold and planned to build 96 condominium units before Hurricane Katrina, but returned the buyers' deposits after the storm.

The new project has been dubbed Homeport, which was the name of the Buffett's family home on Mobile Bay, said McAleer.

Preliminary plans for Homeport are in front of the Gulf Shores City Council, which must approve a right-of-way relocation on the land.

Transportation epicenter

McAleer views the Homeport location as being an epicenter of transportation, with the nearby airport, the main highway and the waterway.

Gulf Shores Councilwoman Carolyn Doughty said the city rezoned property along the waterway from industrial to resort use several years ago with the idea of developing a tourist center not as vulnerable to Gulf storms as properties on the coast.

"It would give us an alternative," she said. "It would be like a second coast."

Meeting space is in demand at the Gulf, which lost about 45 percent of such space after 2004's Hurricane Ivan, according to Herb Malone, president of the Alabama Gulf Coast Convention & Visitors Bureau. He was glad to hear about the Homeport plans, adding, "We will be even more excited when it goes vertical. Lulu's is a tremendous asset to the area."

Charlie Williamson of Gulf Coast Commercial Realty in Mobile is working with McAleer to put the hotel group together and bring in financing and investor groups. Once the hospitality group is in place, he will work to bring in other venues to enhance the property, he said.

"The big thing was we already had a venue in place that was successful, and we didn't have to start from a piece of dirt," he said. "Lenders are not going to lend one dime on a land deal. He's already got the land, which is an unbelievably huge hurdle.

'Excited about timing'

"We're excited about timing on this," he continued. "We think in eight or nine months we'll see the hospitality industry get aggressive again."

Developers want to have plans finished and permits ready when the market turns, he said. The site engineering and project management is being done by Engineering Development Services in Daphne.

More venues at the Gulf mean more activity for everybody, according to Shaul Zislin, owner of The Hangout on the beach at Alabama 59 and 182 in Gulf Shores, which opened a year ago.

"If they can bring in 50,000 more people a year for their conference center, those guests won't eat at Lulu's every night," he said. "Whatever extra they can generate, we say bring it on."

/cut/p36.3/cPhotos by BILL STARLING/ Staff PhotographerTop: Lulu's at Homeport Marina on the Intracoastal Waterway is seen from the top of the Dr. W.C. Holmes Bridge in Gulf Shores.

Above: Mac McAleer plans to develop the property surrounding Lulu's. He also owns and leases the land for the popular restaurant. His plans call for a 250-room hotel and conference center as well as other venues. He is shown at one of the outdoor bars at Lulu's, which is owned by Lucy Buffett.

/cut/3/cRendering by Nimrod Long & AssociatesThis rendering shows the planned development of the Homeport Marina on the Intracoastal Waterway to be built around Lucy Buffett's popular Lulu's restaurant.

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Riley signs bill for beach hotel at Gulf State Park

Wednesday, May 13, 2009 By GEORGE R. ALTMAN Capital Bureau

Gov. Bob Riley on Tuesday approved a compromise bill to bring a new, beachfront hotel and convention center to Gulf State Park, after years of court battles over the project.

But legal problems for the planned hotel may not be over.

Senate Bill 254 requires that room rates at the hotel, planned for public land, be reasonable in comparison with similar hotels.

"Because a four-star hotel's rates would not be reasonable to the public, if Governor Riley violates this section of SB 254, I will carry him back to court so fast it will make his head swim," former Conservation Commissioner Charley Grimsley said in an e-mail.

Lee Sentell, director of the Alabama Tourism Department, said the hotel's rates will only need to be comparable to the nearby Perdido Beach Resort, which has rates that meet luxury standards set by a national hotel statistics organization. Sentell said it costs more to build a hotel on the beach, so the rates must be higher.

"You cannot put millions of dollars in the ground and then expect to build a Motel 6 on top of the sand," he said.

The planned hotel has been a subject of controversy for years.

After 2004's Hurricane Ivan destroyed the state's previous hotel in the park, the Gulf State Park Lodge, Riley backed a plan to replace it by subleasing land to the Atlanta-based West Paces Hotel Group.

Grimsley and other opponents sued, four years of litigation followed and the state's highest court ruled against Riley in late March.

Soon after that ruling, both sides worked out a compromise in the Legislature, through a bill sponsored by Sen. Larry Dixon, R-Montgomery.

The bill required legislative approval for the long-term lease or sale of other state beaches but allowed a lease for the former site of Gulf State Park Lodge. The bill also mandated that the lease be between 30 and 70 years, construction be competitively bid, state employees run the convention center, local governments enter into negotiations for paying maintenance costs, and the hotel's rates be reasonable.

Riley signed the bill into law Tuesday in Gulf Shores, but disagreements persist.

A clause in the bill refers to a state law, which mandates that contracts "shall provide for the reasonableness of the concessionaire's rates and charges to the public, and such rates shall be judged primarily by comparison with those rates or charges for facilities and services of comparable character."

Dixon and Sentell pointed to the nearby Perdido Beach Resort as a comparable facility.

For a single guest staying one night, the lowest available rate at Perdido is $191.86, as a seven-day average. Booking information from the hotel's Web site shows that the lowest available nightly rate this week ranges from $269, for a Friday check-in, to $159, for Sunday and Monday check-ins.

The average cost for Perdido is almost 2.5 times the average daily rate for the region and falls within the "luxury" price classification, according to information from Smith Travel Research, a Tennessee-based group that compiles statistics on hotels nationwide.

"Governor Riley wanted a four-star luxury hotel whose rates would be unreasonable to the public. SB 254 stops that by requiring reasonable rates," Grimsley's e-mail said.

Riley's office did not return messages seeking comment. Sentell said room rates would have to be low enough to draw visitors but high enough to pay for construction costs.

Dixon said he believes Grimsley will lose if he takes the matter to court again. He added that the most important part of his bill is that it protects more than 4 miles of beaches beyond the old Gulf State Park Lodge site.

"Basically, nobody has to worry about some developer getting hold of that beachfront from now on," Dixon said.

Condo business stable

Even with tighter lending guidelines, buyers are out there looking for deals Sunday, May 03, 2009 By KATHY JUMPER Real Estate Editor

Two weeks after broker Tammy Godbold listed 10 condominium units in Crystal Shores West in Gulf Shores, four were under contract, and she also sold two units in the nearby Crystal Tower, off the beach.

"This is a sign that people are ready, willing and able to buy," said Godbold, owner of Waterways Realty in Orange Beach. The two-bedroom, two-bath units in the 170-unit Crystal Tower were listed for $225,000 to $250,000; the three-bedroom, three-bath units in the 108-unit Crystal Shores West on the beach were listed for $382,250.

Buyers are coming back to the resort market, looking for deals, plunking down cash or financing condo purchases, according to Realtors.

"Condos are hot right now when the price is right," said Patrick Daily, owner of REMAX of Orange Beach. "If you find a two-bedroom, two-bath between $250,000 and $325,000 in a good building, it goes under contract immediately. The mortgage rates are awesome if you've got a little cash."

The mortgage lending crisis has lenders tightening guidelines on condo loans, but financing is available for qualified buyers, lenders and agents say.

Fannie Mae and Freddie Mac require that about 51 percent of the condo building be owner-occupied. The theory is that investors would more likely let a unit go into foreclosure than a second-home owner, according to lenders.

Many of the newer condo developments have rent restrictions, such as a 30-day rental minimum, and that helps avoid rental issues when financing a unit, according to Amanda Landry of Amicus Mortgage Group in Gulf Shores.

Buyers often prefer Fannie Mae since the institutional lender typically offers the lowest interest rates, according to Landry, but "you have to do your homework" when applying because lending guidelines are constantly changing, she said.

Interest rates on a 30-year fixed mortgage averaged 4.78 percent this past week, according to Freddie Mac. A 15-year fixed loan was 4.48 percent.

Restrictions are a way for lenders to "slow things down and try to recoup" in a tough economy, according to Anthony Kaiser, sales division vice president at Meyer Real Estate in Gulf Shores. One of the toughest things to get around, he said, is the 20 percent down payment that many lenders require.

Meyer's agents have had very few loans turned down, he said. A third of the recent sales have been foreclosure properties, with condos sell ing at an average $300,000.

Joey Parker of HMC, Home Mortgage Co., in Gulf Shores, sends a 25-point questionnaire to condo owners associations to help determine if a borrower is eligible for Fannie Mae or Freddie Mac lending.

"We do not have any problems," lending to condo buyers, Parker said. "You can still get very attractive financing terms. All the condos I do are on a 30-year fixed rate, and all have very attractive rates."

His business is up, with most of the activity in condos, Parker said.

"The market is absorbing short sales and foreclosure properties more than it did last year. And a lot of the units that developers kept back are selling."

The Merrill Co. decided to release most of the remaining developer-owned units in Crystal Shores West and Crystal Tower while there are buyers out there, according to Collier Merrill of the Pensacola-based company.

"People ask me if now is the right time to buy," Merrill said. "If you're investing and looking to flip it, I don't know. But if you're looking for something you want to use, now is the perfect time. You've got a lot of choices, you can use it and in 10 years it will be worth more than you paid for it."

Realtors are starting to see signs of the beach market reaching a bottom, according to Bob Shallow, owner of REMAX Paradise in Orange Beach. He said he's seeing second home buyers who can afford to spend $500,000 to $1 million on a unit that they don't have to rent.

Newer condo units are at 40 to 50 percent of the value they were a year or two ago, Shallow said. For example, a unit with a boat slip in Vista Bella on Ole River in Orange Beach is priced at $550,000 compared to the selling price of $1.1 million two years ago.

"People who want to sell and are realistic with the price, they now have an opportunity to sell it," Shallow said. "Two years ago, price didn't do it."

Gulf State Park hotel supporters take case to Legislature

MONTGOMERY - Backers of a plan, rebuffed by the Alabama Supreme Court, to put a private, luxury hotel on state-owned Gulf Shores beaches are taking their case to the Legislature.

For nearly 90 minutes of a House committee meeting last week, some of the state's most influential figures debated whether an unrelated bill should be changed to block the hotel or to fast-track its approval.

State Revenue Commissioner Tim Russell told the House Government Operations Committee that his department must take in $1 million per hour to keep agencies running, and a beachfront resort would mean big money.

"I'm here to say that, on behalf of the governor and the state, we think we need the state park (hotel) up and running to support the average citizen," Russell said.

Former state Conservation Commissioner Charley Grimsley said that building a high-priced hotel in Gulf State Park would be tantamount to telling average citizens to "ride on the back of the bus."

"I've heard people on this project say, 'Poor folks ought to go across the highway and sit on picnic tables, while rich people sip champagne on the beach,'" he said. "I don't think that's right. The state parks were built for all Alabamians."

The state once had a hotel in the park, but the Gulf State Park Lodge was destroyed by Hurricane Ivan in 2004 and never rebuilt.

Gov. Bob Riley proposed replacing that hotel with a private resort and convention center. His plan called for the state to arrange a long-term lease with Auburn University, which would then sublease the land to Atlanta-based West Paces Hotel Group.

Opponents sued, and the matter was in Alabama courts for four years, until the state's highest court ruled against Riley about a month ago.

Russell sees a bill concerning a separate parcel of Gulf Shores land as a quick way to get around the Supreme Court ruling.

"If we can get this amendment through, than we can move forward this term," Russell said.

But the bill's sponsor, Sen. Larry Dixon, R-Montgomery, said he doesn't want either side to "commandeer" his measure.

"They're talking about what they'll be able to do if they can take this bill, tear it up and give you their substitute," Dixon told the committee, as he ripped a paper copy of his bill in half.

Dixon's proposal would require legislative approval for the sale or long-term lease of state-owned beachfront land located about five miles west of the former Gulf State Park Lodge.

Development of that land could be difficult, as it has been designated a critical habitat for the endangered Perdido Key beach mouse, but Dixon said he wants to make sure the "pristine" beach is protected.

The House committee will again consider whether to alter or pass Dixon's bill on Wednesday.

While Grimsley and Russell argue from opposite ends of the spectrum, the powerful heads of the Alabama Education Association, or AEA, and the Alabama State Employees Association are working for a compromise.

AEA chief Paul Hubbert said he'd favor a new hotel, if state employees ran the convention center and building were limited to the site of the old hotel.

"Alabama obviously needs a convention center on the Gulf Coast," Hubbert said.