Orange Beach Mulling Purchase of San Roc Cay

Mixed-use marina development would substitute for municipal marina plans

Published By Mobile Press Register
Monday, December 18, 2006
By RYAN DEZEMBER
Staff Reporter

ORANGE BEACH -- City officials are contemplating an offer to buy San Roc Cay, the mixed-use marina property that sits on the southern shore of Cotton Bayou near Perdido Pass and fronts Alabama 182.

In the meantime, plans to build a municipal marina on Terry Cove for fare-carrying vessels, such as charter fishing and sight-seeing boats, have been put on hold.

Should Orange Beach work out a deal with San Roc Cay's owner, Robin Wade Jr., the city would not build on the former Walker Marina and instead use the Cotton Bayou development as its municipal marina, Mayor Pete Blalock said Friday.

"There's a possibility that it could be a good bit cheaper than building our own, with land costs," Blalock said.

The mayor and City Administrator Jeff Moon said the City Council, at its all-day retreat earlier last week, decided not to pursue in the coming year other proposed property acquisitions -- such as a strip of land near the Waterfront Park -- and also settled on delaying the development of a civic center next to City Hall. The San Roc Cay proposal, which heated up in the days before the retreat, will move to the forefront of the council's early 2007 agenda, they said.

By simply buying San Roc Cay instead of building a marina on the Terry Cove parcel, it's possible Orange Beach could see seven-figure savings, Moon and Blalock said.

"The cost of purchasing San Roc is less than what it would cost us to build a new marina with a parking deck," Moon said. "We'll be looking at it and weighing all our alternatives in the next 30 to 60 days."

Wade, who lives both in Orange Beach and Birmingham, where he runs Wade Sand & Gravel Co., could not be reached for comment.

Opened in 1999, San Roc Cay combines four restaurants, about 20 high-end retail shops, a 120-space underground parking lot and a 54-slip marina on four acres in a style that blends the architectural styles of Tuscany with those of south Florida.

In early 2004 Orange Beach acquired the hurricane-damaged Walker Marina and five acres on Terry Cove using a combination of $7.6 million cash and property -- a small tract fronting Wolf Bay, valued at $2.1 million -- from an employee of former HealthSouth CEO Richard Scrushy.

Scrushy bought the marina and adjacent property along Canal Road in the summer of 2003 for a total of $3.45 million, according to court records.

In July 2005, the city paid Florida's MRD Associates $37,500 to design for the site a municipal marina that would accommodate charter boats. Such vessels, one of the main cogs in Orange Beach's tourist economy, have been losing dock space regularly as old marinas are redeveloped as waterfront resorts.

The plans that MRD came up with called for a five-story parking deck, a 54-slip marina and a three-story building for a dock store, offices and such. The price tag, Moon said, is expected to be somewhere

between $17 million and $19 million. Add the land costs and the project inches toward $30 million.

Moon said there have been no decisions made on what to do with the Walker Marina property other than to put the marina project -- which has been permitted but not fully designed -- on hold. It's possible that the land could be sold to help finance a San Roc Cay purchase or improvements there, like a parking deck, Moon said.

Moon and Blalock said they didn't want to make public the asking price until the city has inked an option to buy the property. Already the council has agreed to split the cost of an appraisal of San Roc Cay, which is expected to be finished by late February.

Blalock said that it's possible Wade could sell to the city for below the market price, able to "gift" the remaining value to the public. Such an approach, which helped the city obtain Robinson Island in 2004, could mean a big tax break for the seller and a price for the city lower than any private buyer could get.

Among the issues city officials are seeking to sort out before an offer sheet is signed is what to do with the 40,000 square feet of retail space.

"We don't foresee us being the landlord," Blalock said. "If we buy it we'll own it, but we see a lot of alternatives there. One is we don't want to be in the management business."

Options, Blalock said, include:

Hiring a management firm to run the day-to-day operations of the retail and restaurant space.

Selling off the commercial areas while retaining the marina, parking and other common areas.

Creating a condominium in which the owner of each business owns his or her own space.

Regardless of the manner, the mayor said he wants the businesses to remain and thrive.

"You need to make sure leases are competitive to where people can have success," Blalock said. "That way not only would you get income from those leases but the city would also get the income from the sales tax revenue."

Said Moon: "There's a possibility that the revenue alone could finance the bond or warrant to pay for it. That's when we said, We can't dismiss this, we've got to call time out.'"