A Boom Could Follow

Source: Bloomberg Columnists - December 30, 2005

Joe Mysak is a columnist for Bloomberg News. The opinions expressed are his own.

Alabama City Shows Us There's Life After Hurricanes: Joe Mysak
Dec. 30 (Bloomberg) -- The eye of the hurricane made landfall around 3 a.m. The storm surge destroyed houses, condominiums and roads, and made a hash of the little souvenir stands and restaurants near the beach.

``It's Catastrophic,'' said one newspaper headline.

``Killer Storm Wipes Out Coastal Homes,'' said another.

The stories referred again and again to demolished houses, front yards filled with debris when they weren't either entirely washed out to sea or buried beneath five feet of sand, boats left miles inland, high and dry.

Looking at the scenes of devastation, it was hard to see how life ever would return to normal again. Here and there a few hearty souls vowed to rebuild. There were even a few optimists who said that the storm would give everyone a chance to start anew, to build structures that could withstand fiercer storms, to get it right this time.

The storm was Ivan, and it was terrible, and it pummeled Alabama and Florida's Gulf coasts in September 2004.

Life begins again, as Moody's Investors Service reminded everyone earlier this month in its analysis of $25 million in warrants being sold by the hard-hit city of Gulf Shores, Alabama, to purchase land for a 62-acre shopping complex and for other municipal capital projects.

On Rebound

Gulf Shores is a town of 5,044 year-round residents (which swells to 200,000 on some days during the summer) some 214 miles east of New Orleans, in the southwest portion of Alabama on the Gulf of Mexico. It is rated A1 by Moody's Investors Service, the fifth-highest municipal rating there is. This part of the Redneck Riviera, as the coast of Alabama and Florida is called by some, appears to be one special place, even after the storm.

``The city's tourism-based economy will continue to rebound strongly after Hurricane Ivan, with redevelopment projected to increase the tax base by 50 percent in the near term,'' says Moody's. ``Gulf Shores is one of the premiere beach resorts in the state of Alabama.''

The rating company spells out the recent history of Gulf Shores: ``Hurricane Ivan hit the city in September of 2004 and damaged many buildings on or near the coast.'' Because of the storm, property occupancy has been less than 80 percent of what it was before Ivan. The city has asked the state to finish its cleanup of the Gulf State Park's hotel and conference center, destroyed in the storm, and of course there are complaints about how dilatory the Federal Emergency Management Agency is.

This hurricane season was kinder to Gulf Shores, which escaped serious damage.

Big Complexes

But there's more to this story than just the grim work of rebuilding. ``City management believes the storm has provided an opportunity for redevelopment of the beachfront, which had previously been populated with older structures and single and multifamily resort homes,'' says Moody's.

``City officials have worked with developers to direct redevelopment into large condominium complexes, allowing for an increased housing capacity and more ocean vistas,'' says the rating company, adding that building permits increased to 1,518 in 2005, from 779 in 2003. With the completion of the new condominium complexes, occupancy in the city is expected to rise to 150 percent of pre-Ivan levels by 2007.

Perhaps this is why the city's Web site calls it the place ``Where Business Meets the Beach.''

Value Per Capita

More than a year after Ivan, it looks like the city of Gulf Shores is on the mend. It surely is a thing of beauty in the terms dearest to the municipal bond market, which is full value per capita. That's the value of all taxable real property in a municipality divided by population.

Not surprisingly, the leaders when it comes to full value per capita tend to be small, mainly resort towns where the real estate is very pricey and the year-round population very small. Keep in mind that, nationally, the median full value per capita of cities in the U.S. is $68,262, according to Moody's. A full value per capita of $100,000 is, well, just peachy, although the companies that give out credit ratings generally describe localities' full value per capita as ``substantial,'' ``significant,'' or ``strong.''

The estimated 2005 full value of Gulf Shores, Alabama, is $4.4 billion. The estimated full value per capita is a ``very high'' $1.2 million, says Moody's.

The calm after a storm is often a time of despair. And then, as Gulf Shores shows, a boom can follow.

City OKs $48.3 M Budget

Thursday, December 22, 2005
By RYAN DEZEMBER
Staff Reporter

ORANGE BEACH -- City officials predict that municipal revenue will exceed pre-Ivan levels next year, according to a 2006 budget unanimously approved by the City Council on Tuesday.

The financial plan reflects a 12-month period that will begin Jan. 1. Unlike most local municipalities, Orange Beach is using a calendar-year budgeting process rather than an Oct. 1 through Sept. 30 fiscal-year period.

A 16-page version of the budget is available online at orangebeachagenda.muniagenda.com/public/MeetingAgenda.aspx?meetingid=29. To download the document, click on the "attachments" icon beside the 2006 budget item.

In the introduction to the version presented to council members, Jeff Moon, city administrator, calls the $48.3 million budget "the most difficult and challenging" he's ever had to prepare because of the uncertainty in guessing how well the city's revenue sources will rebound after a year of recovery from the September 2004 storm, and providing for staffing and equipment needs without that knowledge.

Moon also wrote that the budgeting process was complicated by delays in receiving hurricane relief money, the difficulty of projecting which developments will be permitted in the coming year and trying to absorb the $18 million in land purchases made by the council in the last year.

Those purchases include a 5-acre tract on Terry Cove where a municipal marina is being planned, $6 million paid in October for the Orange Beach Golf Center on Canal Road and an 80-acre parcel along the Foley Beach Express which cost $4.85 million last month.

The city's 2006 revenue projections exceed $49.2 million, but that includes about $5.4 million in expected hurricane recovery money from federal and state agencies and a proposed $14 million bond issue that will be used to pay for the design and construction of the municipal marina as well as repay the city's coffers about $8 million used to buy the property and plan the facility, according to the budget.

Mayor Steve Russo said the city is likely to seek a 30-year bond and repay the debt with income generated by the marina.

Of the $49.2 million, officials expect the city to bring in $21.6 million from taxes, fees and other sources in 2006. According to the budget, a boost in the building permit and project design fees, a flurry of post-hurricane construction work and increasing property taxes will account for the $4 million and $5 million increases over that collected in the two previous fiscal years, respectively.

"We went back and looked at pre-Ivan numbers and predicted a very modest increase over that as far as lodging," Russo said. "Sales, we counted a little gain there.

"The biggest increase percentage-wise will probably be in permit fees, which is because the changes we made to elevate the rates there some."

Total spending -- which includes everything from the day-to-day operations of the city to debt repayment and capital expenses -- is slated to be about $48.3 million. That amount would absorb all but about $942,000 of the city's estimated revenue, according to the budget.

Among major capital expenditures planned for 2006 are the completion of Firehouse No. 2 on Canal Road, a new fire engine, equipment for the recently acquired golf course and driving range and improvements to the ball fields at the Orange Beach Sportsplex, including expanded seating that will help the city lure baseball and softball tournaments, Russo said.

The money city officials set aside for professional services -- money that pays outside lawyers, engineers and consultants -- is slated for $700,000, which is $425,000 more than was planned last fiscal year, but only about $107,000 more than was actually spent, according to city records.

"The reason for that large number is that we budgeted around an additional $300,000 for some work to go toward the Wolf Bay bridge," Russo said. "If it looks skewed a little bit that's why."

Also Tuesday, the council voted unanimously to let the mayor negotiate a deal with the Alabama Department of Transportation in which the city would give the state $2.7 million to use in acquiring rights of way along Canal Road as long as the agency promises to expedite the widening of the state route.

The road was scheduled to be widened beginning next year, but Transportation Department officials told local authorities recently that there is no money to buy the rights of way until 2007, which would push back construction until 2009.

City officials are concerned that without improvement, the oft-congested road will be unbearable by then because development now under way along Canal Road will be completed.

ON THE NET

Orange Beach 2006 budget:

orangebeachagenda.muniagenda.com/public/MeetingAgenda.aspx?meetingid=29

Condo Trial Ends Without Ruling

Wednesday, December 21, 2005
By RYAN DEZEMBER
Staff Reporter

BAY MINETTE -- A trial that will ultimately decide if developer Larry Wireman can build the second phase of his Turquoise Place condos -- and if so, what he might have to pay those who hold restrictive covenants on the Gulf-front site -- concluded just before noon Tuesday without a ruling.

Presiding Baldwin County Circuit Judge James H. Reid said he would have to rule on a separate civil case that went to trial during the summer before he could begin to sort out the one he'd heard over the last two days in Bay Minette.

Nine beach parcels make up the proposed condo site in Orange Beach. While not owning the site, the AmSouth Bank-managed estate of an Orange Beach family, and a surfside hotel, claim to control 40-year-old covenants that limit development of those nine lots to single-family homes.

They contend that if the restrictions are lifted, Wireman and the lots' owners will profit tremendously. For that reason, the lawsuit's defendants, the Carl T. and Jessie A. Martin estate and owners of the Island House Hotel, asked Reid to order compensation if he annuls the restrictions.

Wireman and the landowners contend that maintaining beach houses on the stretch is unrealistic. Two of Wireman's towers, slated to be 310 and 370 feet tall, are under construction to the west, while the 12-story Island House hotel sits to the east.

The restrictions are borne of "horse and buggy days" and are no longer relevant to that part of Orange Beach, Wireman said during the trial's first day.

The defendants contend that the restrictions, placed on the land by the Martins between 1955 and 1966, are still pertinent in protecting the defendants' other holdings in the area. But if the judge rules against such reasoning, then the restrictions are at least relevant in that their removal is worth millions to Wireman and the landowners who have contracted with the developer to sell their sandy lots for $55,000 per waterfront foot.

Appraiser Les Farmer was hired by the defendants' lawyers to determine the value of the nine lots if they were developed with condo towers versus their value if construction were limited to a single home per parcel. Farmer, who testified Tuesday, said that the land was worth about $22,000 per waterfront foot -- or about $20 million for all 928 feet -- with the development restriction, but would bring between $69,000 and $75,000 per front foot, or about $70 million, with high-rise condos.

Wireman's attorney, Dan Blackburn, tried to discredit Farmer's study by pointing out that in its comparable sales section, it listed a sales price -- $40 million -- for a tract that his client bought as the site of the first two towers of Turquoise Place. Blackburn said that was about $8 million too high.

The defendants' attorneys, who included Walter Cook, representing AmSouth Bank, and Robert Wills, representing Island House Hotel, were unsuccessful in getting Wireman to divulge the profits he expects to make developing Turquoise Place East. They had Farmer draft a hypothetical cash flow chart for Turquoise Place East that showed the developer's profits exceeding $103 million, but Reid did not allow that as evidence and Wireman gave no indication whether that figure was accurate.

The defendants never mentioned in court filings their estimate of the exact worth of the rights to the restrictions, but Wills said during the trial Tuesday that the restrictions had "tremendous value."

Wireman and Blackburn said that the defendants had asked for $22 million in settlement talks that preceded the trial.

"We told them we'd take $10 million and they never responded," Cook said after the trial. "They're trying to make us look unreasonable but they're making so much on this it's extraordinary."

Before closing the proceedings, Reid said that if he decided to lift the restrictions he may have to revisit the evidence to determine what price to put on the covenants.

In 1999, the hotel's owners paid the Martin estate $25,000 for the rights to enforce the restrictions on two lots adjacent to the building.

The hotel's general manager, Barbara Walters, said the restrictions preserved a wide western sunset view that made nine rooms along the side of the building among the establishment's most desirable.

"Those are the rooms that will be affected if Mr. Wireman builds his 300-foot towers," she testified. "I'm afraid we won't see the sun."

Ken Niemeyer, a trust officer with AmSouth, also testified and said that the towers would create traffic and density problems that would "denigrate" nearby property still controlled by the Martin estate and still restricted to single-family home development by the covenants.

Though Reid did not allow Niemeyer to respond to a question Blackburn asked about the bank's valuation of the restrictions, the witness said their worth would be "reduced or eliminated" if Turquoise Place East were allowed.

Niemeyer, under questioning from Blackburn, said the bank didn't record the covenants' value on any financial reports because they're "unique" and "not normally reported as an asset."

Turquoise Must Get Past Deed Restrictions

Tuesday, December 20, 2005
By RYAN DEZEMBER
Staff Reporter

BAY MINETTE -- Developer Larry Wireman and nine property owners will return to court at 9 this morning to ask presiding Baldwin County Circuit Judge James H. Reid Jr. to lift restrictive covenants from their Gulf-front lots in Orange Beach so that Wireman can build the two towers of Turquoise Place East.

If they are successful, the property owners, who have contracts to sell the beach lots to the developer for $55,000 per front foot, will become multimillionaires and Wireman will have hopped the last hurdle in building the half-billion-dollar follow-up to Turquoise Place, which is under construction on adjacent property.

The AmSouth Bank-managed estate of Carl T. Martin and Jessie A. Martin as well as the owners of Island House Hotel hold the covenants. They want compensation if the judge decides to dissolve the restrictions, which limit development there to residential purposes.

Wireman said that the condos of Turquoise Place will not be rent restricted and therefore some may be let to tourists for short-term stays. But he said that scenario is unlikely since average unit price exceeds $1 million.

In July 2004, the Orange Beach City Council voted 4-2 in favor of Wireman's plans to add a second phase to his Turquoise Place project, called Turquoise Place East. Combined, the developments will feature 882 luxury condo units in four surfside condos. The two outer towers will reach 310 feet while those in the middle will reach 370, according to the designs.

The council's December 2003 decision to approve the first Turquoise Place towers followed a contentious public debate because they would become the first to exceed the city's 140-foot building height limit.

In court filings, Wireman's lawyer, Dan Blackburn, has argued that the beach has changed dramatically since the period between 1955 and 1966, when the Martins put the restrictions on their property.

In court Monday, Blackburn called Orange Beach Mayor Steve Russo, Alabama Gulf Coast Convention and Visitors Bureau president Herb Malone and Wireman as witnesses, asking them to describe, building by building, the commercial and condo development along Alabama 182 in Orange Beach.

In the suit filed in August 2004, Blackburn cited a previous judge's 1984 decision that the Martins' restrictive covenants could not be used by the then-owners of the nine lots to prevent construction of the Island House Hotel because the neighborhood had not been "developed pursuant to a common plan or scheme."

The hotel was completed in 1993 and one of its owners, Thomas Mitchell of Bay Minette, testified Monday that the property was chosen because of the restrictions, which would prevent a competing tower from crowding its beach or blocking its western view.
Court asked to lift deed restrictions
Page 2 of 2
To ensure those rights, Mitchell said Sea Shell Inc., the corporation through which he owns half of the hotel, paid the Martin estate $25,000 in 1999 for the right to enforce the restrictions on two adjacent 100-foot-wide lots. The estate retains the restriction rights to the other seven lots.

Prompted by his attorney, Robert Wills, Mitchell explained the purchase.

"There would never be competition to the side," he said. "If you don't ever have another high-rise building there you always have a view and you don't have the density."

Blackburn asked Mitchell whether he wanted compensation or to prevent Turquoise Place East from being built.

"I'll be fine either way," Mitchell said.

The defendants' lawyers tried unsuccessfully at one point to get the judge to allow Wireman to divulge his anticipated profits, arguing that whatever Wireman expected to make building and selling Turquoise Place East would be a good indicator of the value of the restrictions.

The Martin estate's lawyer, Walter Cook, said Wireman and the property owners, "will realize a huge windfall if these restrictions are lifted."

"What do we do with that?" Reid asked. "Is that what you're going to ask for at the end of the trial?"

Though Reid sided with Blackburn and did not force Wireman to discuss his forecast profits, he did allow the defendants' lawyers to ask the developer whether he agreed with an appraiser's recent study that concluded the 928-foot-wide property would rise in value from $22,000 to $75,000 a front foot -- or from about $20.4 million to $69.6 million -- if the restrictions were lifted and commercial development was allowed to replace single-family beach houses.

Wireman said he agreed with the appraiser's findings.

During a break in the trial, Wireman said the defendants have asked him for $22 million.

Orange Beach & Gulf Shores School System GO Ahead

Monday, December 19, 2005
By RYAN DEZEMBER
Staff Reporter

Mike's comment: Good school systems boost property values. Gulf Shores and Orange Beach have qualified to create their own school system and separate from the county system. Due to the high tax revenues from the beach, this would create the HIGHEST funded system in the state.


GULF SHORES -- A special census conducted in recent months has found that Orange Beach has about 5,300 year-round residents, which exceeds the threshold for cities to split from their county school systems.

The finding has renewed talks between Orange Beach and neighboring Gulf Shores about seceding from the Baldwin County Public Schools System because it allows them to skirt political and legal hurdles that have prevented the creation of a new school district that also would include unincorporated Fort Morgan and Ono Island.

Under state law, only county and city school systems are allowed and anything else would require a constitutional amendment approved by voters statewide. Local legislators have been reluctant to support the proposal and city leaders have been hesitant to spend money on an uncertain statewide lobbying effort.

But the law, city officials said, doesn't prohibit two cities from breaking away from a county system and then contracting with each other to share facilities, administration and students. A referendum passed by local voters would be necessary to levy the taxes to support the proposed system, though.

"It's like the door's opened," Orange Beach City Councilman Pete Blalock said at Gulf Shores City Hall during a meeting last week. "We've just got to walk through it now."

City officials said at the meeting that their goal would be to have a new school system in place for the 2007-08 school year.

Once they reach 5,000 residents, cities are supposed to split from county systems or contract with their local boards of education to remain part of the larger districts, according to state law. But that doesn't always happen; many cities have remain affiliated with county school systems long after they've surpassed 5,000 residents, including Mobile, Daphne and Gulf Shores.

There has been a push to increase the population threshold to 15,000, according to Gulf Shores and Orange Beach officials, so they want to formally declare their intention to withdraw from the Baldwin County Public Schools System before lawmakers -- who convene in Montgomery in January -- have a chance to make the change.

"Honestly, if we can get our ducks in a row, I would like to go ahead and declare before that happens," Blalock said. "That will at least grandfather us in no matter what they do."

In November 2002, the cities paid Birmingham education consultant Ira Harvey $15,000 to study the feasibility of a so-called Island-wide school system. Completed in June, 2003, Harvey's work concluded that the Gulf-front cities could have the most well-funded school system in the state with a tax increase of 12 mills, for a total levy of 24 mills.

Property owners in the Birmingham suburb of Vestavia Hills pay 52 mills to fund what are considered among the best schools in the state.

A mill is equal to $1 in taxes for every $1,000 of assessed property value. A house appraised by the county for $100,000 is assessed at 10 percent of that, for an assessed value of $10,000. Each 1-mill increase, therefore, would mean a $10 per year increase in taxes.

In Gulf Shores and Orange Beach, however, a substantial portion of residential property is considered commercial, such as condominiums and beach homes that are rented to vacationers. That property is assessed at 20 percent of its appraised value.

Harvey's study didn't account for these higher assessments, nor did it foresee the dramatic rise in property values that has occurred since. For those reasons, Orange Beach Mayor Steve Russo said, city officials are looking into exempting owners of non-commercial property from any tax increase, which would likely improve the chances of a successful referendum to boost taxes.

Harvey is updating his study to account for the new real-estate values and higher assessments, and another education consultant is concluding a study of that will show what the increased funding could provide that the local schools don't have now, from new equipment to expanded class offerings to employee raises, said City Administrator Jeff Moon.

Both will be used when city officials take the matter to residents in coming weeks.

For his part, Baldwin County Board of Education Superintendent Faron Hollinger said in an interview last week that he opposes a second system, but would cooperate with the cities' information requests and hopes to have a discussion with local leaders soon.

"I continue to believe that maintaining a single system in the county would always be our favored position," he said. "We think we could avoid redundancy in administrative costs."

Hollinger said the Baldwin County school board is researching ways for Baldwin County municipalities to raise property taxes to increase funding at their local schools.

"There's some advantage to that rather than pulling out and raising taxes," he said.

Also, the school board and cities would have to negotiate the takeover of the county system's buildings and debts as well as what to do with students living in the unincorporated areas, Hollinger and city officials said.

City May Put $2.7 Million Toward Road Project

Sunday, December 18, 2005
By RYAN DEZEMBER
Staff Reporter

ORANGE BEACH -- In an attempt to expedite the widening of often-clogged Canal Road, the City Council is scheduled to vote at its Tuesday meeting whether to give the state $2.7 million to buy rights of way along the route.

City officials learned last month that the Alabama Department of Transportation had moved back the project's start date from next year to 2009.

Canal Road -- also known as Alabama 180 -- is two lanes, though a center turn lane runs along some stretches. Plans call for about 5 miles of the road to be to widened. That portion west of Alabama 161 is slated to become four lanes separated by a median while a center turn lane is planned to be added to that segment east of the north-south highway.

Mayor Steve Russo said that shortly after he heard about the "unacceptable" delay, he met with state Sen. Bradley Byrne, R-Montrose, and state Rep. Steve McMillan, R-Gulf Shores, to figure out what was causing the hold up.

Byrne "met with the Department of Transportation, he got back to me and he said the problem is the right-of-way acquisition budget: The money is not there to buy right of ways," Russo said.

State officials estimate that it will cost $2.7 million to buy roadside property along the route to complete the expansion, Russo said.

"From what I've been told, the engineering and all of that has not come to a halt," Russo said last week "It's just the acquisition of the right of ways."

In agreements with the council, three separate developers have agreed to widen portions near their Canal Road projects. Therefore the state only needs to widen an approximately 2.2-mile stretch between Alabama 161 and the eastern edge of The Wharf, a mixed-use development under construction near the Foley Beach Express toll bridge.

The Wharf's Birmingham-based developers, AIG Baker LLC, have agreed to add lanes to the north side of the road across its property, which straddles the toll bridge's southern landing and is about seven-tenths of a mile long.

To the west, developer Tim James has proposed replacing a concrete plant with high-rises featuring 903 condo units. A condition of that unnamed project's approval is that he widen a half-mile of the state park from his property west to the Beaver Creek subdivision's entrance.

To the east, developers of a 462-unit Terry Cove condo called Grand Harbor will expand about 1.4 miles of the highway between Alabama 161 and Wilson Boulevard as part of its plans.

If the council is willing to put forth the funding, Transportation Department officials said they could begin buying rights of way immediately instead of in 2007, when state funding becomes available, the mayor said.

"The benefit of that is it'll only be $2.7 million dollars instead of $4.4 or $4.5 of whatever it may be (in 2007)," Russo said.

The mayor said that money pledged by developers for any infrastructure improvements could be given to the state as long as the council votes to do so. The city has millions accumulated from developers who often provide it to fulfill public benefit requirements of certain zoning categories.

Though there has been talk at the city level that many landowners along the state highway could be persuaded to donate rights of way because a wider road is expected to improve traffic flow and property values, the state must pay for the land, City Administrator Jeff Moon said.

"If I donate the easement and they condemn yours and pay you, then I may have recourse against them to get the same amount of money," Moon told council members last week. "So they want to pay everybody on the front end to make it clean."

Both Moon and City Attorney Larry Sutley encouraged council members to push the Transportation Department to commit to a detailed timeline for the project's completion, if Orange Beach provides the millions.

"We would need something definitive in the agreement that would say our total obligation is X," Sutley said. "If the cost accelerates because of untimeliness or anything, this is not a burden for us and that they agree to stay on the timeline. Staying on the timeline is key."

Unusual IRA Investments

Source: smartmoney.com
By Bill Bischoff Published: December 16, 2005

To determine if your retirement account qualifies for the following article check out www.entrustsoutheast.com

MOST FOLKS DON'T get too funky with their IRA investments. A few mutual funds, some stocks — maybe some bonds — that's the typical fare.

But it turns out that you can get a lot more creative with your investments than that. Just about the only things that are flat-out banned are life insurance policies and certain collectibles, such as works of art, rugs, antiques, metals, gems, stamps, coins and alcoholic beverages. You can however, buy certain gold and silver coins minted by the U.S. or by U.S. states. You can also invest in high quality gold, silver, platinum, and palladium bullion, among other things. (However, any such bullion must be kept in the physical possession of your IRA trustee.)

Now, in this article we won't address whether it's a wise decision to allocate your IRA (and we're talking about any type of IRA here: traditional, SEP, SIMPLE and Roths) to any of these alternative investments. But we will cover what you can hold and how to do so, if you feel so inclined. Keep in mind, though, this is pretty tricky stuff. So be sure to talk to your tax pro before pulling the trigger.

Be Prepared to Find the Right Broker
Not every trustee (often a brokerage firm, although it could be a bank or other IRS-approved outfit) will be thrilled about helping you invest your IRA in something other than the mundane. That's because should you invest in something not permitted by the IRS rules (we cover the specifics below), you lose the tax advantages of IRA investing. Unfortunately, what is and isn't allowed by the IRS can get pretty vague, which is why many trustees simply don't want to deal with the potential hassle.

That said, some outfits specialize in functioning as IRA trustees for folks interested alternative investments. The easiest way to locate suitable trustees is by doing an Internet search using the key words "self-directed IRA." Once you have a list of contenders, do some due diligence to find one that's reputable. Then check their fee schedules carefully. Having an IRA with alternative investments inevitably costs more than the garden-variety version.

What's Allowed:
Once you find a trustee that's willing to work with you, suitable alternative investments can potentially include:


Stock from an initial public offering.
Closely held stock.
Real estate.
Options to buy real estate.
Oil and gas royalty interests.
Stock options.
Mortgages or other loans to be held for investment.
This is not an exhaustive list, but as you can see, some of these options are inherently illiquid, which can cause problems. If you have too much of your account balance tied up in illiquid investments, you won't be able to dip into your IRA for cash anytime you please.

At the very least, you want to be sure to maintain enough liquidity to take your annual required minimum distributions after age 70 1/2. Why? Because if you fail to take these minimum distributions, the IRS can penalize you for 50% of the difference between what you should have withdrawn from your account each year and what you actually withdrew (if anything). Thankfully, Roth IRAs are not subject to the required minimum distribution rules until after the account owner dies. Real Estate for Your IRA

Given that everyone and their brother seems to be an aspiring real-estate mogul these days, here are some specifics on how to hold real estate in your IRA:
First, your IRA must own the real estate strictly as an investment, which means no use by you or certain family members. The IRA trustee must also hold legal title to the property. And finally, your IRA must have sufficient liquid assets (either from other investments in the account or from your annual contributions) to cover any costs associated with owning the real estate.

Keep in mind, you lose some tax advantages by holding real estate in a traditional IRA, SEP IRA or SIMPLE IRA. Specifically, you won't benefit from the 15% maximum federal income tax rate on long-term real-estate gains (25% for long-term gains attributable to depreciation), and you can't claim deductions for mortgage interest, property taxes, depreciation and so forth. However, if you use a Roth IRA to invest in real estate, the property can be sold with the gain eventually distributed federal-income-tax-free (and maybe state-income-tax-free, too) to you or your heirs, assuming the rules for tax-free Roth IRA distributions are met. Now that's a great deal!

Unmortgaged rental properties are a good choice for IRAs as are real-estate mutual funds and REITs.

Mortgaged real estate, on the other hand, is less advisable because leveraged property can potentially create "unrelated business taxable income," or UBTI, and a resulting federal income tax bill for your IRA. (We cover the details of this nasty little tax hit below.) Your IRA must have enough liquidity to service the debt, pay for any other expenses related to the property, and pay any UBTI tax bills. Using an IRA to invest in a real-estate partnership may also trigger UBTI problems.

Bottom line? Consult with your tax adviser before using your IRA to invest in mortgaged real estate or a real-estate partnership. For a large transaction (i.e., one involving equity of hundreds of thousands of dollars), your tax pro may recommend asking for an IRS private letter ruling on this issue.

Keeping the IRS Happy: Look Out for the Prohibited Transaction Rules
When investing in alternative investments, you need to watch out for two problems: You must avoid the "prohibited transaction rules" and avoid triggering the "unrelated business taxable income." Here's what you need to know on each front.

First, let's go over the prohibited transaction rules. As boring as this may sound, you need to pay attention here because if these rules are broken, your IRA's tax-favored status may be lost. Should that happen, your entire IRA balance would become taxable. You would also be hit with a 10% penalty tax if you're under age 59 1/2. Not pretty.

The prohibited transaction rules are intended to prevent so-called "self dealing" where the IRA owner uses the account's money to meet personal financial objectives considered to be inconsistent with the IRA's status as a tax-favored retirement account. In other words, you can't have a conflict of interest in what you buy for your IRA. Unfortunately, trying to interpret this area of the tax law is more of an art than a science. Examples of what the IRS (or the Department of Labor) may consider to be prohibited transactions include the following.


Having your IRA buy stock or other assets from you or sell them to you.
Having your IRA lease assets from you or to you.
Having your IRA buy stock in a corporation in which you have a controlling interest.
Having your IRA lend to you or borrow from you.
Having your IRA engage in transactions with certain related parties and/or family members.

Avoiding "Unrelated Business Taxable Income"
The other tax snag you want to avoid: triggering "unrelated business taxable income" (UBTI). Basically, certain types of income (not including investment income) are prohibited in IRAs. When this happens, your IRA may owe federal income tax, which defeats the whole purpose of the account. The UBTI rules are intended to prevent IRAs from investing in income-producing businesses via direct ownership or via ownership of a partnership or LLC interest. An example might include using an IRA to buy an interest in a cattle-breeding partnership.

Leveraged assets can also generate UBTI for an IRA. So investing in a partnership that owns leveraged assets could cause UBTI problems.

Kiva Dunes Earns Acclaim

Golf Course News Magazine
12/13/2005

Gulf Shores, Ala. – Kiva Dunes Golf & Beach Club – a Gulf Shores Golf Association member course – has garnered best-of distinction from Golfweek Magazine in its “America’s Best Resort Golf Courses - The Definitive Guide to Golf Travel in 2006.”

The resort ratings are derived directly from Golfweek’s annual list of “America’s Best Courses,” published each March since 1997. More than 350 raters throughout the country rank courses on the basis of 10 evaluation criteria.

Kiva Dunes, designed by Alabama native and former U.S. Open Champion Jerry Pate, is part of the Gulf Shores Golf Association (www.golfgulfshores.com), a 10-course cooperative.

“Kiva Dunes Golf & Beach Club offers something for everyone, including golf, proximity to the Gulf of Mexico, resort accommodations, real estate and a pampered lifestyle,” says Mark Stillings, Kiva Dunes director of golf and president of the Gulf Shores Golf Association. “We’re proud that a national publication of Golfweek’s repute judged us to be one of the best resort courses in the U.S.”

Kiva Dunes also was named to “The Sublime 75: The Best Golf Resorts In North America” by Golf Digest magazine last year.

"We’re thrilled for the hard-working folks at Kiva Dunes, who ensure that their residents and resort guests are provided with great course conditions, customer service and the other amenities that go into creating an excellent golf lifestyle and experience,” says Mike McArthur, director of the Gulf Shores Golf Association. “Kiva Dunes’ award supports the feedback that visitors and golfers who experience our Gulf Shores Golf Association courses share with us – that our 10 member courses are the equal to virtually any golf destination in the country.”

Update from the Wharf - December 05

Many thanks to those of you who stopped by during our holiday Open House a few weeks ago. We saw several hundred people over the course of the weekend, which gave us a chance to visit with our homeowners, future homeowners, and guests. The Outfitter’s Center, pictured above, is currently serving as our Visitor’s Center but will eventually become a private, member’s only facility open only to our homeowners and overnight guests.

Weekend Open House

We will continue to host a smaller version of our Open House each Saturday, from 9 am to 6 pm and on Sundays from noon to 5pm and would like to extend an invitation to you to drop by. We, of course, always encourage you to stop by anytime you’re in the area – our Visitor’s Center is open seven days a week.

Self-guided Driving Tour

We have developed a self-guided driving tour that will take you through property and highlight various locations. This has been a great tool for presenting the complete Wharf experience to our homeowners and prospective homeowners and guests.
Construction has begun on the retail area located along Wharf Parkway, directly across from the Levin’s Bend condominium tower. Work has also been started on the western section of Levin’s Bend. One can truly get a feel for this area now as they drive between the two projects – it’s exciting to imagine what it all will be like as we complete the various phases of construction. Much progress has been made on the Rave Movie Theater, and our two parking garages are coming along nicely. Be sure to visit our Progress Page on our website to view more photos.

Marina at The Wharf

Most of the floating dock system has been installed at The Marina at The Wharf and we will be ready to accept boats in the western end of the marina by the end of the year. A temporary marina store and office is being located on the west end, as well, which should be ready soon to receive visitors. Our fuel docks will be open and servicing boats by the end of the year, also, so be sure to stop by if you are cruising down the Waterway anytime soon.
Destined to be an icon of the Gulf Coast for generations, The Wharf’s Ferris wheel will be delivered from Italy shortly after the first of the year and installation will commence thereafter. We are planning to host an event toward the end of February to celebrate the ‘first ride’. We are finalizing details now and should be able to make a formal announcement after the first of the year.

Grand Opening of Phase 1

Mark your calendars now for The Wharf’s Phase 1 Grand Opening celebration, scheduled for Memorial Day Weekend, 2006. A four day event, our grand opening will feature concerts, a parade, shopping, giveaways, a fishing tournament, fireworks and a host of additional festive activities. We’ll keep you posted as we begin to finalize our plans.

Romar Lakes Plan OK'd

Wednesday, December 14, 2005
By RYAN DEZEMBER
Staff Reporter

Marqueza, a 15 story structure, will replace storm-damaged low-rises in Orange Beach

ORANGE BEACH -- A redevelopment plan for the hurricane-damaged Romar Lakes condominiums was approved by the City Council on Monday.

The vote was unanimous, although Councilwoman Joni Blalock abstained.

Replacing the five three-story buildings on the north side of Alabama 182 will be two towers standing 15 stories tall. While the current development has 75 units, the designs proposed by Rick Fine will include 297.

Called Marqueza, the project was originally pitched to be a pair of 151-unit, 23-story towers. But concerns from city officials over the height, which would have exceed that allowed under a recently approved set of zoning rules for that part of the beach highway, led architect Forrest Daniell to recast the designs, coming up with a C-shaped building that rises from 13 stories at the south-facing ends to 15 along the long northern edge.

As part of the approval, Fine will give the city about $1.5 million to spend on infrastructure improvements, pay for a crosswalk or pedestrian overpass to connect the project with its Gulf of Mexico beach access, link its lakes to a nearby state park trail and give $250,000 to a scholarship fund for Orange Beach students.

What limited building height on the 9.5-acre Romar Lakes property were the lakes and wetlands that sit between the current condos and the Gulf State Park to the north. Because the new zoning rules, collectively called the beach overlay district, require structures to be built back from the north side of Alabama 182 two feet for every foot of building height, 268-foot-tall towers would have to be at least 537 feet from the road.

The developer originally proposed setting the buildings back between 235 feet and 350 feet from the highway, according to the plans.

A 537-foot setback would put the buildings amid the small lakes and wetlands, and City Council members said they'd rather let the developer break the setback rules -- though not by as much as 300 feet -- than try to fill wetlands.

"A strict interpretation would be about 14 stories and we're talking 15 stories, so this does meet the intent," said Jim Lawson, community development director. "This is very involved and the people now living in the condos have a lot of problems and need to move out and do want to stay here in Orange Beach."

During previous public hearings before the council and the Planning Commission, many Romar Lakes owners spoke in favor of a redevelopment plan, saying it would be too expensive to repair the condos, which suffered more than $2 million in damage in 2004's Hurricane Ivan.
Wayne Bennett, president of the Romar Lakes Condominium Owners Association, and others have long argued that the structures weren't worth saving because of "construction deficiencies." Though residents are still living in some units, others have been uninhabitable since Ivan.

The buildings, for example, have no moisture barrier between the exterior stucco and wooden frames, and improperly installed flashing around pieces of wood that secure stairs and walkways has caused rot, Bennett has said. Each building's elevator needs expensive repairs and one building is sinking, he's said.

Covered under a $5 million insurance policy, Romar Lakes is in need of an estimated $8 million in repairs, owners said.

"More than 85 percent of the owners at Romar Lakes have signed redevelopment agreements and strongly support this proposal," Bennett said at a public hearing before the council earlier in the month, according to a recording of the meeting. "Our complex has become difficult if not impossible to maintain and extremely expensive to insure."

Some who opposed an earlier redevelopment proposal by Mobile developer K.C. Chiang agreed to Fine's, making it possible to override the opinions of a handful of opponents.

Under Alabama law, the sale of condo complexes built after 1991, such as Romar Lakes, which was completed in 1996, requires the approval of at least 80 percent of the owners.

The exact terms of the redevelopment proposal were not made public, but the owners told the Planning Commission at its October meeting that, like Chiang's earlier offer, they would be getting a unit in the new building.

Councilman Ed Carroll said council members wanted to work with the developers on a compromise rather than simply reject the original designs because of the owners' situation, "But we couldn't go with what they wanted based on the height because everyone else would in come here and want the same thing or more."

Carroll and other council members commended Fine and Daniell for changing their plans to better fit the intent of the zoning district.

Councilman Pete Blalock said that although Romar Lakes was permitted a loose interpretation of applicable zoning rules, its situation was unique and that other developers should not expect similar allowances.

"This one is very unique in the situation that came about because the wetlands behind it, the people involved," he said. "To think that this has anything to do with any other project that comes down the line, you're going to be sorely disappointed."

Project to Finish by Early Spring

Monday, December 12, 2005
By RYAN DEZEMBER
Staff Reporter

Efforts to reclaim storm-blown sand in Gulf Shores and to replace portions of a $25 million manmade beach there and in neighboring Orange Beach will continue through the holidays and likely conclude by March.

That means the beaches are expected to be cleared of equipment and ready for spring break with one exception: a mile-long stretch along the far end of West Beach in Gulf Shores that has yet to be bolstered at all after summer storm delays and now an equipment problem.

During a weekend of choppy surf last month a booster pump, a barge-mounted machine that pushes dredged sand through an underwater pipeline, had its anchor uprooted and was flooded, Gulf Shores Public Works Director Chuck Hamilton said last week. New equipment must replace the damaged pump and completion of that stretch, which has yet to receive any new sand, will be set back until sometime in March.

The good news, Hamilton said, is that by then most of the renourishment sand that was lost in last summer's storms will have been replaced along other stretches.

"They're basically finished with repumping the sand that was taken (by Hurricane) Katrina from the state park to the Pink Pony Pub," Hamilton said.

City officials have said post-storm surveys indicate that about 1.1 million of the 6 million cubic yards of sand that was pumped ashore as part of the 16-mile, $25 million beach renourishment project begun 10 months ago was lost. Cost of the repairs was calculated last month at about $6.7 million, but the Federal Emergency Management Agency and its state counterpart will pay 85 percent of that with both cities and the Alabama Department of Conservation and Natural Resources, which partnered in the project, divvying up the rest.

The main public beach at the base of Alabama 59 in Gulf Shores was finished in October in advance of the National Shrimp Festival by collecting drifts from Alabama 182, sifting the sand and then trucking it surfside.

After the replacement sand is pumped west to the Pink Pony Pub, which sits at the eastern edge of the public beach, efforts will concentrate on the section between West Second Street to West 10th Street, where sand removed from streets and piled up on the beach will be sifted and packed into dunes, Hamilton said. That section should be complete by Christmas, he said.

The city's reclamation of sand from private property, mostly on the north side of the beach highway, will take place concurrently, he said.

Next, the sand will be trucked to the stretch from West 10th Street to beyond Little Lagoon Pass, he said. Hamilton said this portion is expected to be finished before March.

All pipes and equipment are expected to be off Gulf Shores beaches by late March or early April, Hamilton said.

The dredge equipment is expected to be floated to water off Orange Beach's shore around Christmas where it will begin pumping sand from the city's western border to the Romar Beach area, said Phillip West, the city's Coastal Resources Manager, who is overseeing the beach project there.

"Right before the New Year, they'll flip around and start about a mile west of (Perdido) Pass and move west," he said.

Once the crews reach Romar Beach from the east -- likely sometime in February -- the dredge equipment will be moved to a point off Perdido Key to begin bolstering beaches there, West said.

Also, during the winter the U.S. Army Corps of Engineers will clear the navigation channel in Perdido Pass and put about 350,000 cubic yards of sand dredged up in that project on beaches west of the inlet, West said. In effect, he said, the city will be getting between $1.5 million and $2 million worth of sand pumped onto local beaches at no cost to the municipal government.

Besides looking good in time for tourist season by getting large pipelines and bulldozers off the sandy vistas, West said a spring completion date will allow sea oats that will be planted beginning in February to take firmer root and form a stronger anchor along dunes in advance of next year's hurricane season, which begins June 1.

"I don't think you can really overstate the importance of a healthy beach," West said. "It's just amazingly resilient."

When Tropical Storm Isidore struck badly eroded beaches in 2002, for example, the storm caused between $2.5 million and $3 million in property damage in Orange Beach, West said. But when hurricanes Dennis, Katrina and Rita as well as two tropical storms churned up the Gulf last summer, after the beach had been bolstered, there was almost no structural damage beyond that to boardwalks and surfside pools, he said.

Perdido Key - The Holdup Behind the Cleanup

Brett Norman
PensacolaNewsJournal.com

Perdido Key's recovery from Hurricane Ivan has been hampered by an excruciatingly slow cleanup.

Until recently, debris was piled up on the key, while Orange Beach and Gulf Shores, just on the other side of the Alabama line, were cleaned up within months of the storm.

The difference?

Perdido Key took the full brunt of the hurricane's most powerful winds and storm surge, so damage there was more severe than across the state line.

In addition, Escambia County officials were dealing with a ravaged 660 square miles while the two small municipalities focused on reviving their beach-driven economies.

Escambia County waited for the state to pick up most of the debris along Perdido Key Drive, a state road, while Orange Beach and Gulf Shores launched an immediate cleanup of State Road 182, the Perdido Key Drive extension.

Gulf Shores Mayor G.W. "Billy" Duke III recalled the obvious difference "as soon as you crossed the state line."

"When things hit, we just sort of get after it," he said.

Orange Beach financed the operation with a line of credit from a local bank before receiving assurances of reimbursement from the Federal Emergency Management Agency, City Administrator Jeff Moon said.

"It was a bit of a leap of faith," he said. "But we knew what we needed to do. We knew that we had to get back open. Our whole economy is based on tourism."

The day after Ivan's strike on Sept. 16, 2004, Alabama crews also began repairing State Road 182. Within 72 hours, traffic was flowing on the five-lane Gulf-front road. Eleven days later, the road was open to the general public.

Perdido Key Drive was not completely repaired and open to all traffic until Dec. 6, 2004.

"The biggest problem was they had five lanes of asphalt to travel on and we only had two," Escambia County Administrator George Touart said. "The state was out there as soon as possible, but when you've got a road that's only two lanes, was unprotected along the park areas and washed out in so many places, it's just going to take longer."

Mike Foster, vice president for marketing at the Alabama Gulf Coast Convention and Visitors Bureau, believes that Alabama's beaches received quick aid because the state is invested heavily in its 32-mile slice of the Gulf Coast.

Also, Ivan was Alabama's first hurricane that season. It was Florida's third in less than a month.

Alabama devotes 30 percent of its tourism development budget to its Gulf-front resort communities, Foster said. They generate more bed tax revenue than Birmingham, Duke said.

By contrast, the 17 mile-long key is a relatively insignificant fraction of Florida's 1,300 miles of coastline and mammoth $57 billion annual tourism industry.

"It makes a big difference when you're the only two counties on the water," Moon said of Baldwin and Mobile counties. "We got whatever we asked for."

A Paradise Paralyzed May be Poised for Rebirth

Brett Norman
Pensacola News Journal

This articles goes into depth about the issues which restrain Perdido Key as they try to keep pace with Gulf Shores and Orange Beach.


Many Perdido Key residents long have complained their beach community is treated like the red-headed stepchild of Escambia County, thanklessly producing millions in annual tax dollars for precious little in return.

The perennial complaint has grown louder as the key's snail-paced recovery from Hurricane Ivan has continued to stall.

To this point, progress has been so slow that only about 800 of the key's approximately 2,000 year-round residents have returned to the island, and tourism is virtually nonexistent, said Jennifer Wolfe, outgoing director of the Perdido Key Area Chamber of Commerce.

For nearly two years, new construction has been hamstrung because of furor over a tiny mouse. Since Ivan struck Sept. 16, 2004, redevelopment also has suffered because of the mouse and a state limit on beach dwelling units.

While the key has struggled, two Alabama beach communities down the road, Orange Beach and Gulf Shores, have boomed.

It's a source of rancor to key residents.

"We've got this glaring discrepancy," said Ann Griffin, president of the Perdido Key Association, which represents property owners.

"Do they just do it that much better in Alabama? Gulf Shores is months and months ahead of us in getting back to pre-hurricane condition. The thing that's been so frustrating out here is that we could visibly see progress a half-mile away, and there was no reasonable explanation why we weren't seeing it here."

But the tide finally may be turning.

On Thursday, Escambia County commissioners made two key decisions involving:

1. The endangered Perdido Key beach mouse: After months of negotiation, commissioners approved an agreement with state and federal wildlife officials to protect the beach mouse and allow development to proceed.

Under the agreement, builders will make a one-time payment of $100,000 per acre of affected beach mouse habitat and pay a recurring annual fee of $201 per unit.

The money will fund a conservation program administered by the county's Neighborhood and Environmental Services Department.

The long-delayed agreement was hailed as a step forward by most.

Commissioners successfully negotiated terms that are much cheaper than alternative proposals calling for developers to pay $198,000 per acre or to purchase land as a set-aside for beach mouse habitat.

The new permitting system is expected to go into effect in January, when commissioners vote on "housekeeping" measures associated with it, such as changing the land-development code to allow the county to charge the $201 fee.

2. The dwelling-unit cap: Commissioners adopted an amendment to the county's growth-management plan that would lift the state-imposed cap of 7,150 dwelling units on the beach in favor of county zoning, which allows an estimated 9,168 units.

As long as the cap remains in place, the county can't issue permits for any more units on a given piece of property than existed before Ivan.

The result is that many single-family homes and small condo developments remain in ruins, unable to attract buyers who want to build back bigger.

The commission's two actions aren't guaranteed to go into effect.

Some owners of private property oppose the beach mouse agreement, and some residents and potentially the state may oppose the dwelling-unit decision.

Randy Cudd, a businessman on the key, said commissioners are in "a tough spot" as they try to restart development.

"No matter what they did, they would probably be sued," he said. "We're moving slowly somewhat in the right direction. I guess the best I could do is say that I'm cautiously optimistic."

County Attorney Janet Lander said she's ready to defend the dwelling unit decision, and she doesn't believe the county faces serious legal consequences from the beach mouse agreement.

"What you're going to see now is what's called smart growth. So unless you're completely opposed to it, it's something you can get excited about it," she said. "It addresses traffic concerns, density issues, aesthetics and property rights. It's all there. I think it's a sustainable plan."

Alabama comparison

Perdido Key does not compare exactly to the Alabama beach communities because it's smaller both in population and land and sustained the brunt of the Ivan damage.

Nevertheless, the differences between the key and beaches to the west still are striking:

1. Gulf Shores and Orange Beach are "just a hair shy" of having 12,600 available condo and hotel units -- 100 percent of the pre-Ivan inventory, said Mike Foster, vice president for marketing at the Alabama Gulf Coast Convention and Visitors Bureau.

On Perdido Key, only 22 percent of an estimated 2,817 pre-Ivan units are usable, Wolfe said.

2. New condominium and hotel projects are springing up on the Alabama coast, which is projected to have 27,000 hotel and condo units in the next five years, Foster said. An additional 20,000 jobs to support the tourist industry will be required during the same period, he said.

On Perdido Key, about 2,200 units are expected to open in the next 12 to 18 months, Wolfe said.

3. The beach-front road in Alabama -- State Road 182 -- has had four lanes plus turn lanes since the early 1980s. The state undertook the project shortly after Hurricane Frederic hit in 1979.

For years, Escambia County has asked the state to widen the same road on Perdido Key -- Perdido Key Drive -- to improve the hurricane evacuation route and provide infrastructure for greater development.

Only recently did the County Commission secure $3 million from the state to begin a planning and design study for widening the Perdido Key Corridor, which includes Perdido Key Drive, the Theo Baars Bridge and Sorrento Road to Blue Angel Parkway.

The total cost of the project, which would take several years, is estimated at $135 million.

Revenue possibilities

Even in its current state, and even after Ivan took $496 million in buildings off the tax roll, Perdido Key is generating substantial money for Escambia County.

It could generate much more.

"From a strictly financial perspective, there is no other resource in Escambia County that I'm aware of that has this kind of potential for growth," county budget manager Amy Lovoy said.

Seven percent of Escambia's property taxes for 2005 are projected to come from key, although less than 1 percent of the county's residents live on the island.

That translates into $14.5 million -- $7.2 million for Escambia County, $6.6 million for the School District and $615,000 for the Sheriff's Office.

The key's largest developer, WCI, plans to build 1,900 units over 10 years on its 430 acres of property, said WCI division president Wanda Cross.

But that depends on the dwelling-unit cap being lifted, the beach mouse issue being resolved and Perdido Key Drive being widened, she said.

The beach mouse agreement will cost WCI about $5 million, Cross said. But the company's new units will sell for a conservative $1.24 billion, almost 150 percent more than the 2005 taxable value of the entire key.

"I don't think Escambia County was prepared for the kind of development that they've seen on their beaches," Cross said.

She said the county "really needs to have a vision and a plan."

"They need to come up with a time-line and what you've got to do to meet it, then you've got to do it," she said. "You've got a lot of the old-timers who don't want things to change. Well, too bad. Not everybody's going to be happy."

She added the county is taking important steps in the right direction.

Building up

Lois Benson, whose Perdido Key beach house was damaged beyond repair by Ivan, calls the building situation "impossible."

"The key is going condo. It's just a matter of time," she said. "I don't want to rebuild my house and be the last little house in this wall of condos. But I can't sell it because of the dwelling unit cap and, of course, the beach mouse."

Benson and five neighboring property owners considered selling their land to an interested condo developer, but the Perdido Key's density restrictions, dwelling-unit cap and beach mouse problems sank the deal, she said.

"The developers I've talked to are developing in Destin, developing in Alabama, developing all over, but they're not coming here. Why would they?" she asked.

Benson, an Emerald Coast Utilities Authority board member and former state legislator who is active in government circles, said the situation "really is a dilemma for people."

"The county depends on the key as its cash cow," she said. "To treat the cash cow this way doesn't make good economic sense or good government."

Joe Gilchrist, owner of the legendary Flora-Bama Lounge on the state line, called the hurricane recovery "a very difficult and frustrating business."

Ivan devastated his lounge, which has reopened with improvised facilities.

"Economically, it's been a monster," Gilchrist said. "The county was knocked from the south to the north, to the east to the west. But I can't understand why governments wouldn't make every effort to get one of the main economic engines back up and running. The people out here are being held hostage by a system, and they are very slow to do anything about it."

Real estate agent Ron Herrington, who owns a home and condo on the island, is bitter.

"I think it's just a travesty the way it's just been forgotten," he said. "It doesn't make any sense.

"Millions (of dollars) are pouring into the county. I pay well above $10,000 in taxes, and I can't get a darn trash can out here. You can't say the same about Orange Beach, Gulf Shores. I just can't understand the apparent lack of interest."

Behind the beach mouse

The beach mouse controversy began when the U.S. Fish and Wildlife Service trapped one of the endangered rodents on private property in January 2004.

The federal agency subsequently declared 240 acres -- nearly all of the key's remaining developable land -- to be potential habitat for the mouse.

The result was effectively a moratorium on any construction not approved before the mouse was trapped.

The only approved construction since Ivan has been to replace -- on the exact footprint or a smaller one -- what already was there.

Escambia County commissioners have had to extend building permits for at least 19 projects so they wouldn't expire before a beach mouse agreement was reached.

The effect has been felt by big and small property owners alike.

Dan Savage, a consultant for condo developments on the Key and in Alabama, said one of his clients has paid $1.3 million in interest on money borrowed for a project that's been on hold for more than a year because of the mouse.

"It's cost a lot of money," Savage said. "It's also caused more uncertainty than anything else. We've waited almost two years to find out what the state, the county and the federal government are going to do. It's like dragging a rock up a hill with all the issues, but I think we're making headway."

Paul Fisher, 55, owner of Wave Lengths hair salon in Jackson, Miss., didn't know about the beach mouse when he bought a Gulf-front lot in 2004.

Plans were drawn for the duplex Fisher wanted, but he hasn't been able to get a permit to build it.

Meanwhile, Fisher is paying $25,000 annually in property taxes.

"Since I bought the lot, I've lost one member of my family," he said. "We had hoped to be having reunions and get-togethers down there by now, but I've been stuck for two years."

Along the Alabama coast, the beach mouse problem is not so critical.

The Alabama beach mouse, a cousin of the Perdido Key species, is holding up construction on two or three projects in Gulf Shores, but the beach mouse lives mostly in the unincoporated and less developed Fort Morgan area west of the city.

Larry Goldman, field supervisor for the U.S. Fish and Wildlife office in Daphne, Ala., said the Escambia County agreement marks a breakthrough.

"We're not nearly as far along," he said.

Removing the cap

The Florida Department of Community Affairs resisted efforts to remove the key's dwelling-unit cap when commissioners submitted an amendment to the county's growth-management plan earlier this year.

The department is expected to announce within 45 days whether it will approve the amendment, Lander said. After that, the public has 30 days to lodge any objections. If no agreement is reached, the matter will go before an administrative law judge.

"We hope the DCA will like what we've done," Lander said.

Many developers, residents and business interests on the key favor lifting the cap, but the Perdido Key Association and its president, Griffin, are against it.

The main concern raised by Griffin is that the county will allow more development than the infrastructure -- mainly Perdido Key Drive -- can safely support.

It's a concern echoed by the DCA.

County Engineer Richard Duane says the key's roads will be able to support construction up to the current cap of 7,150 units, since WCI has pledged to pay for some improvements.

The plan to replace the dwelling-unit cap with zoning also calls for establishing a Tax Increment Financing District on the key.

A percentage of the growth in tax revenue from that area would be used, in part, for road widening that would support growth over the 7,150-unit cap to the 9,168 allowed by zoning.

Even if the dwelling unit cap is lifted, 13 units per acre will be the maximum density allowed on remaining Gulf-front property.

Alabama has fewer problems with zoning because county zoning decisions, even for the waterfront, are not subject to review by state planning officials as they are in Florida.

Anticipating an onslaught of interest from developers, as happened after Hurricane Frederic slammed the area in 1979, Orange Beach and Gulf Shores formed committees after Ivan to determine what kind of development they wanted and implemented the appropriate zoning.

"That's a big difference," said Jeff Moon, city administrator for Orange Beach. "We settle it locally."

'Maximizing resources'

Collier Merrill of Merrill Land Co. in Pensacola is building The Verandas, a condo project, on Orange Beach.

Merrill purchased 20 badly damaged Gulf-front homes in Orange Beach after Ivan. He is replacing them with two towers, 35 stories each.

They're projected to sell for a total of $480 million, and construction is scheduled to be complete in 2008. A similar project in Escambia county would generate $8.4 million in annual property taxes.

"And (condo owners) are not going to need fire service, police protection. They're not going to use the schools," Merrill said of the owners. "Where you can, you need to maximize your resources."

Building departments along the Alabama coast have a reputation for accommodating developers.

"I've gotten cooperation from start to finish," said Merrill, who's also developing two Gulf Shores condos, Crystal Shores and Crystal Shores West. "It's been a joy working with them."

Commissioner Mike Whitehead said he speaks with developers frequently who wouldn't work in Escambia County because of a cumbersome permitting process.

Still, no one is calling for the same kind of development that's booming in Alabama.

"I think we should maximize the resource we've got, but I wouldn't want to see the same thing as what's going on in Gulf Shores and Orange Beach," said Whitehead, who generally favors development. "What we're missing is a vision."

Commissioner Bill Dickson, whose district includes the key, said the county's decisions last week will help get the key on the right track.

"For too long, improvements have not been made to the key," he said. "It's time for us to move forward in terms of getting rid of the cap and going with what's allowed under zoning."

Building Moratorium Approved

Friday, December 09, 2005
By GUY BUSBY
Staff Reporter


Council votes 3-2 on a 120-day freeze on residential construction plans along most of Alabama 59


GULF SHORES -- Apartment and condominium construction requests along Alabama 59 will be put on hold for the next four months while Gulf Shores officials study the effects of multi-story construction in the city's business districts.

The Gulf Shores City Council voted 3-2 Thursday morning to approve a 120-day moratorium on extended-stay and multi-family construction in areas with zoning designations BG, or general business, and CD, commercial.

Council members Carolyn Doughty, Phillip Harris and Robert Craft voted for the moratorium resolution. Mayor G.W. "Billy" Duke III and Councilman Steve Jones voted against the proposal. Councilman Joe Garris was absent.

Advertisement



Name:
Phone:
Email:
Campus:
Choose One Birmingham Huntsville VC Online








Council members who voted for and against the moratorium said they opposed multi-story buildings towering over the Dr. W.C. Holmes Bridge on Alabama 59, but disagreed whether using a moratorium was appropriate.

"Am I in favor of a building that towers over the bridge? Personally, I'm not, but I disagree with the process," said Duke.

Duke said he could recall only two times when Gulf Shores had only ordered building moratoriums -- once after Hurricane Ivan hit in 2004 and once in Fort Morgan when residents sued over annexation along Alabama 180. He said both of those situations came about while city officials were trying to determine what to do after unexpected events took place, which was not the case with the current moratorium.

The mayor said the moratorium hurts property owners who have not yet applied for construction permits or site plan approval, while rewarding developers who have already filed for permission to build. He said city officials should have given residents more notice before ordering a four-month freeze on requests.

Craft said council members and other city officials met with developers and property owners in the last week to discuss zoning in the commercial areas. He said the moratorium would give officials time to work out the issue.

Moratorium supporters said more notice would only have caused developers to rush plans that might be inappropriate in order to beat the deadline.

"That would just force people to try to scramble to get something in to get it grandfathered in and that wouldn't be in anyone's best interests," said Doughty.

Doughty said the city's zoning ordinance does not prohibit tall buildings in areas zoned for business. In the past, the regulations have not been an issue since no developers had expressed an interest in construction towers in the commercial areas. With more condominium towers going up along the beach, however, officials and developers have been looking at other areas.

She said that throughout the city, property owners have been seeking ways to get the most density on their parcels. Taller buildings are one way to allow more use of the property, but neither officials or residents want a corridor of towers lining Alabama 59 down to the beach, she said.

"You can achieve density by allowing more lot coverage and not height," she said. "At the beach, we wanted a smaller footprint because that's what the citizens wanted, more views of the Gulf, so we allowed height, but in others areas that's not been what they wanted."


Advertisement




Doughty said officials are looking at changes to the zoning laws that would prevent towers in areas such as near the bridge. She said the new ordinance should be ready for a vote by February or March.

Garris said that until the ordinance is ready, the moratorium would prevent any attempts to get around changes at the last minute.

"It would be in the best interest to go ahead and put this moratorium in place to give us time to finish this," he said.

Jones said that since officials and developers are near agreement, he did not see the need for a moratorium.

During the 120 days, city officials will seek public comments on the issue and a report from Jordan, Jones & Goulding Inc., the Atlanta-based land-use consultants the city hired to review commercial zoning. Officials will study building uses, population density, building sizes, traffic and other issues in order to create a new ordinance, according to the resolution passed Thursday.

The areas zoned for general business and commercial include most of the property in Gulf Shores along Alabama 59 from Fourth Street, just north of the beach, to Baldwin County 8, near the northern city limits, according to Steve Foote, city planner.

Commissioners OK More Funds for New Route

Wednesday, December 07, 2005
By VIRGINIA BRIDGES
Staff Reporter

BAY MINETTE -- The Baldwin County Commission voted Tuesday to use local money to fill the final $2 million funding gap in a plan to build a second evacuation route from the Gulf beaches to Interstate 10.

"It is a wonderful day to have $50 million secured for this project," said Commission Vice Chairman Wayne Gruenloh. "It is an important project that has been worked on for many, many years."

The 4-0 vote closes the most recent shortfall in financing for the $50 million project to extend the Foley Beach Express to I-10 via Baldwin County 83.

The commission will put up $1.5 million in addition to other county money committed to the project, and accept $500,000 from the Baldwin County Bridge Co. -- which built the toll bridge from Pleasure Island over the Intracoastal Waterway, along with most of the Foley Beach Express.

The move settles confusion that followed recent funding announcements for the evacuation route meant to ease traffic congestion from Alabama 59 when powerful storms threaten the area.

In July, Congress designated $26 million for the road as part of a transportation bill. That money, along with a $5.2 million county match, was thought to be enough to create the four-lane corridor, county officials have said.

After recent construction estimates indicated that the road would cost at least $50 million, Gov. Bob Riley announced at a Nov. 14 news conference that the Alabama Department of Transportation would give $10 million. About 80 percent of the funding is federal money, with a required 20 percent match, according to Tony Harris, a spokesman for the state Transportation Department.

With a previous state obligation to pay $5 million for the I-10 interchange, the additional money narrowed the $19 million funding gap to about $4 million.

Riley also announced that the Baldwin County Commission would give an additional $3 million, and the city of Orange Beach and the Baldwin County Bridge Co. would put up $500,000 each.

Apparently the state Highway Department meant to propose the funding plan to local sources, while Riley thought the deal had been set, state officials said. Following the announcement, city and county officials said they had not agreed to that deal or even heard of it.

After continued discussions between state and county officials, the state pledged an additional $2 million to the project and asked that the remaining $2 million come from local sources.

The $1.5 million in county money committed Tuesday includes $500,000 initially set aside in July 2004 to assist the city of Orange Beach in purchasing Robinson Island as a nature preservation site. The money was never used as the city received other funding for that purchase, commissioners said.

The commission will pay the remaining $1 million from county Highway Department funds set aside for Baldwin County 83 before federal funding was allocated, county officials said.

"(The plan ) shows when we all work together and try to achieve the same goal, it certainly makes things move smoothly," Commissioner Frank Burt said.

Letters from John McInnis, manager of the Baldwin County Bridge Co., and Orange Beach Mayor Steve Russo indicated they agree to the plan.

Cal Markert, director of the county's Highway Department, said Baldwin is taking the lead on the project and moving forward with the highway's design and rights of way acquisition, but all plans will have to be approved at the state and federal levels. Markert expects to break ground on the project toward the end of 2006, he said.

Business Zoning Changes Debated

Wednesday, December 07, 2005
By RYAN DEZEMBER
Staff Reporter

GULF SHORES -- A public discussion that will ultimately determine the extent of high-rise development throughout the city was held Monday and talks on the topic will continue today with municipal planners, residents and developers meeting with the city's Atlanta-based zoning consultants.

At issue is whether to change rules for parcels zoned for general business or commercial development to remove the ability to build high-rise and high-density multi-family projects on such property. That land is primarily located along Alabama 59, the north side of East Second Avenue, the south side of Cotton Creek Drive and along the Intracoastal Waterway.

The discussions were largely prompted by a proposal to replace the Sawgrass Landing shopping center on Alabama 59 with a 17-story, extended-stay hotel and are part of the current administration's efforts to revamp what they say are outdated and unfeasible zoning rules.

Zoning rules along the beach, Fort Morgan Road, the Intracoastal Waterway and in the Plash Island area have already been re-examined and changed by the City Council. Those changes, in many cases, decreased the intensity of the allowable development.

Though city leaders have indicated that they will make changes to decrease the maximum building height and density that can be built on general business and commercial property, no specific proposal has been put forward. An early recommendation from the city's zoning consultants to limit developers to 12 units per acre, as opposed to the 42 allowed now, had some landowners worried Monday, but was deemed unlikely by city officials.

Mayor G.W. "Billy" Duke III said Monday's meeting was intended to gauge the opinions of residents and property owners and also to hear their thoughts regarding a possible moratorium on development proposals for general business and commercial-zoned property.

On Tuesday city officials met with consultants from the Atlanta firm Jordan, Jones and Goulding as well as owners of large commercially zoned tracts to see what sort of development plans may soon be proposed. Then, today, the consultants, which worked on the other area rezonings, will meet with residents and city officials to outline a zoning plan that will reconcile those projects already in the works with the desires to limit high-rise, high-density development, City Councilman Robert Craft said Monday.

Craft told the 50 or so residents and landowners who attended Monday's meetings that decreasing density and building height limits will be necessary to preserve the quality of life in Gulf Shores and prevent overdevelopment.

"It's not easy to do because you have to change things," Craft said. "We're trying to use our best judgment to do it the best way. It's not something we take lightly, it's not something that's easy, but it's something that had to be done."

Some landowners expressed concern that their land values would drop if land use was further limited. Lou Peed said his family has long held property on both sides of the Intracoastal Waterway in hopes of developing it into "something big" and the proposed reduction of density has some of his relatives aggravated.

"It's like buying a bond for 99 years and they're going to pay you 10 percent interest and then when it comes time to collect your money, they tell you it's only going to be 3 percent," Peed said. "It's a big change."

Resident Reg Thatcher said he wondered whether the city had any plans to compensate landowners for the loss of value to their property if changes were made. He said his future decisions on whether to invest in such land would be based on the outcome of the discussions.

"We can't in good conscience take someone else's property, which they have fairly bargained for considering the future value and the present value, and not compensate that person for that," Thatcher said. "It's very unjust of government to use that heavy hand."

Others, however, spoke in favor of limiting high-density projects and towers to certain areas where they already exist. Marci Forrester, a resident, said she favored a moratorium to slow any proposals so that the city can "be sure what it is we want to do and be sure of what the face of Gulf Shores will look like 20, 30 years from now."

Councilman Philip Harris, who has been a proponent of temporarily banning multi-family and hotel proposals for commercial property while changes are made, said, "If we end up with one major project that is a detriment to the community, then we haven't done our job."

Because a moratorium would likely be lifted once the zoning rules are changed to allow less-dense, and therefore less-profitable, projects, landowners may rush to submit development plans that are less desirable than those they could come up with if more time was allowed, several opponents of a moratorium said Monday.

"There may be people out there that are trying to accumulate properties so they can do one development and if we say we're going to put a moratorium on, they're probably going to rush out and do individual site plans," Duke said. "Instead of having one developer we might have four or five."

Kaiser Realty President Leonard Kaiser, like Duke, said he opposed a moratorium because there isn't the same urgency to justify one like there was a year ago in the post-Hurricane Ivan boom, when Gulf-front property was selling rapidly and development plans poured into City Hall.

"Clearly the market has changed," Kaiser said. "I think one thing that's going to stop high-rise buildings up and down 59 is the banks. Banks are not going to loan the money because you're not going to be able to market and sell them."

Developers Withdraw Canal Road Proposal

Sunday, December 04, 2005
By RYAN DEZEMBER
Staff Reporter

ORANGE BEACH -- Developers hoping to build a 376-condo, 126-home Canal Road marina development have withdrawn their plans, canceling a Tuesday public hearing on the proposal so that they can recast their designs.

The project -- called Bay La Launch Village in its most recent version and earlier named Harbortown at Orange Beach -- had been set for review in a 3:30 p.m. public hearing. The City Council could have voted to rezone about 70 bayside acres from single-family residential uses to a planned unit development, which is necessary to accommodate the designs, as soon as its 5 p.m. meeting that same day.

According to city rules, if a request to rezone land as a planned unit development is turned down by the council, landowners cannot submit another rezoning proposal for six months. If the plans are pulled before a vote, though, revised designs could be filed to start over the approval process almost immediately.

Though the public hearing and vote still appear on the council's Tuesday agenda, the owner of property where Bay La Launch Village is proposed, Bay Minette attorney Dan Blackburn, sent a letter to city planners late this week asking them to delay the discussions.

"We ask that the matter be deferred until a later date after a less-dense site plan has been submitted for your consideration," Blackburn wrote.

If the developers Blackburn has hired, Olson Associates of Northwest Florida, do bring back less-dense plans, it will be the second time such revisions were made.

Originally, when the designs were called Harbortown at Orange Beach, the $500 million plans included 830 residential units, condo towers up to 18-stories tall, about 500 boat slips, a hotel, retail space and a proposal to cut a channel that would link a 4.76-acre lake on the property -- Lake Baldwin -- to Bay La Launch so that an inland boat basin could be created.

Following a May public hearing in which nearly 40 residents spoke out against the proposal, the Planning Commission voted 5-0 against the plans.

The developers returned in October with less-ambitious plans in attempt to sway neighbors who had opposed such dense construction on the long-undeveloped land. Under the name Bay Launch Village, designs included 502 residential units, a greater proportion of which were single-family homes than the earlier plans; fewer than 300 boat slips; towers toppings out at 12 stories; no plans for a hotel or retail space and the abandonment of plans to link the lake to the saltwater bay.

Nearly 30 residents spoke against these plans at the Planning Commission's Oct. 11 meeting before the body decided once again to oppose the plans, this time in a 5-1 vote. Though the 3:30 p.m. hearing is canceled, a public hearing on whether the city should trade a quarter of an acre of land at the southern end of Wilson Boulevard and trade it for a slightly larger parcel two lots to the east is still slated for 4:30 p.m. Tuesday.

Both properties sit on Terry Cove, but the city's right of way lies between two tracts owned by the same couple, one of which is Hudson Marina.

The council could vote on the swap at its regular meeting, which begins at 5 p.m.

Councilman Ed Carroll said he's opposed to the trade because the property currently owned by the city, at the end of a paved road, is a better place for firefighters to launch their rescue boat and it preserves a view of the water for all the property owners along that block of Wilson Boulevard.

"A lot of those people that bought property on that street bought it for a reason, and that reason was they didn't want to look at a condo, that they would love to look out and see the bridge and Terry Cove and what have you," Carroll said at the recent work session.

Eliminate Confusion on Baldwin Highway Work

Friday, December 02, 2005

BALDWIN COUNTY leaders and officials of the Alabama Department of Transportation don't seem to be communicating about some crucial highway projects.

Recently, on two road projects of importance to the public safety and the economy, Baldwin officials have said one thing and state officials have said something else.

On Nov. 14, Gov. Bob Riley announced that the state had committed an extra $10 million to a planned evacuation route from the Foley Beach Express to Interstate 10. He also said that the county had agreed to put up an additional $3 million, and Orange Beach and the Baldwin County Bridge Co. would put up $500,000 each.


Problem was, that was news to the locals. And since the cost estimate has gone up from a one-time $26 million to $50 million today, without the local money there's a multimillion-dollar gap.

Highway department officials said they meant to tell the county and Orange Beach about the proposal for more local funding, but Gov. Riley thought the deal was done. (At the time of the governor's news conference on the subject, his communications director said the County Commission had given the information to the Transportation Department.)

Such confusion makes Gov. Riley seem uninformed, puts unfair pressure on local leaders who haven't debated about whether they want to commit more money, and leaves the public wondering what's going on. The evacuation route, meanwhile, becomes more important as both Baldwin County's population and the number of hurricanes increase.

Similar misinformation attends the widening of Canal Road to five lanes, from just west of the Foley Beach Express bridge to east of the intersection with Highway 161. The two-lane road is already congested and three developers are lining up large-scale projects involving condominium towers and retail space.

The Orange Beach City Council has wisely negotiated with the developers to get them to cover the cost of widening the sections of Canal Road that their projects will affect. That's excellent public policy: The developers who will benefit the most from the projects -- and who will also contribute to traffic congestion -- will relieve the taxpayers of the burden of upgrading the road. Also, Canal Road will be easier to navigate and hurricane evacuations will be improved.

But Orange Beach leaders thought the work would begin next year. Now the highway department says the work won't begin until late 2009, even though Orange Beach has gotten private parties to pay for a large part of it. The highway department is still trying to obtain rights of way for the 2.2 miles it has to widen itself.

By 2009, at least some parts of the private projects will be operating and the traffic will already be even worse than it is now. The Transportation Department needs to push harder and faster to get the rights of way and take Orange Beach Mayor Steve Russo up on his offer to help with condemnation proceedings, if necessary.

Overall, though, the state needs to make sure that everyone directly affected by a construction project knows where the money is coming from and what the timetable is.

That means announcements of funding that hasn't been secured should not be made. And no one should lose sight of the urgency of getting the work done.

Gulf Shores Pushing State to Raze Ivan-Battered Resort

Friday, December 02, 2005
By RYAN DEZEMBER
Staff Reporter

GULF SHORES -- In their quest to get rid of buildings damaged beyond repair by Hurricane Ivan, city officials have sent letters to the Alabama Department of Conservation and Natural Resources -- which runs the Gulf State Park Hotel and Resort -- urging it to demolish the park's hollowed surfside structures.

Conservation Commissioner Barnett Lawley said that he has tried since shortly after Ivan to tear down the buildings, but the state's insurance carriers contend that the resort isn't a total loss. The city's letters urging demolition give his argument more weight, he said.

"That's been a big help... I'm getting something going out of there which I haven't been able to do in a year and a half," Lawley said this week. "It's sending a strong message of what the community wants."

In October, after the City Council voted to condemn and remove two badly damaged waterfront homes, Councilman Robert Craft suggested that Gulf Shores look into taking similar steps with the beat-up resort. City building officials said there are no shortage of problems with the structures and the entire site would qualify for condemnation if it weren't the state's.

Some of the resort's structures, which were decaying even before the September 2004 storm, were loosened from their foundations in the hurricane, and the first floors of each of the hotel buildings are blown out. In the larger main building there is other structural damage, including crumbling concrete. But in researching the situation, city officials found that municipal laws that allow the city to tear down damaged structures deemed safety hazards don't apply to state property.

"The state's immune," said City Administrator Ernie Smith. "But they want to tear it down."

Lawley, who has been supportive of a redevelopment plan proposed by Gov. Bob Riley, insists, like Gulf Shores, that the old park buildings must be razed.

"We can all look at it and tell it needs to be torn down," he said. "It is an eyesore, it is a danger, and it needs to come down."

The City Council has condemned about 12 storm-damaged properties this year, demolishing most of them and billing the owners.

In some cases, the owners were glad for the city's action because it had secured a good price for the work through competitive bidding, Mayor G.W. "Billy" Duke III said. Others, such as the owners of the Landmark East condominiums, which was condemned along with three houses by the city this week, were torn down just prior to the council's vote.

In condemning and razing hurricane-damaged structures, city officials are hoping to erase memories of Ivan and project an image that matches their message that Baldwin County's beaches are open for business and tourism. Having the crumbling state park resort on display doesn't help convey a sense of recovery, city officials said.

"You can't ignore it when you drive down the street and it pops right out at you," Craft said. "I understand legally that we can't tear it down, but we can compel them to tear it down."

Damage from Hurricane Ivan can still be seen in the resort building at the Alabama Gulf State Park in this Aug. 17 photo. The resort and hotel have been closed since the storm. Gulf Shores officials have sought to have the building demolished, but municipal laws don't apply to state properties. City officials have now sent letters to the state urging the razing of the resort.