Wednesday, August 22, 2007

Orange Beach Resort Gains Approval

Published by the Mobile Press Register
Wednesday, August 22, 2007
By RYAN DEZEMBERStaff Reporter

ORANGE BEACH -- With an altered spelling, new developers and a fresh look, the Gulf-front Mandolay Beach resort won unanimous approval from the City Council on Tuesday evening.
The project, which is planned for about 14 acres just west of where Alabama 161 meets the beach, will include a 40,000-square-foot convention center, restaurants, 412 hotel rooms and 208 condotel units -- essentially individually owned hotel suites -- in two towers, 28 and 23 stories tall.
As part of their proposal, North Carolina-based developers, working under the name Oceanway Properties LLC., will give Orange Beach a 175-foot-wide stretch of beach and build a parking lot and restrooms there. One of the developers, Chuck Starnes, said that the gifted property is worth about $22 million, and the bathrooms and parking will cost about $1.5 million to build.
In the fall of 2004, amid a white-hot real estate market, the $100 million project, then known as Mandalay Beach, was approved as a pair of 36-story towers encasing 500 luxury condominiums. From the onset, designs called for the creation of Orange Beach's first municipal beach -- a bartering piece intended to ensure approval of what would have been the city's tallest buildings.
Its developers, a group that included Gulf Shores real estate broker Rick Phillips, Coastal Builders owner John Case and Mobile businessman Robert Williams, sold more than 100 condos at prices starting at $900,000, they told the Press-Register in 2005.
Soon after, the market for Gulf-front condos fizzled. Lenders tightened the reigns, insurance costs soared, storm-wary buyers backed off and the project never got underway.
Earlier this summer one of the project's lenders, Compass Bank, sued the developers for more than $9 million it said they owed the bank. Simultaneously, the trio faced numerous lawsuits from contractors and buyers on two of their recently completed Gulf Shores condo towers, San Carlos and The Lighthouse.
"When the bubble burst, the project ... was no longer viable," Mayor Pete Blalock said Tuesday. "And basically it would have meant nothing would be coming to us."
The North Carolina developers, however, were able to recast the project and said Tuesday that they strongly believe construction of the hotel tower and an access road will be underway this time next year.
Oceanway Properties' purchase of the land was contingent on the council's approval, and financing is already lined up, said George Sheild, manager of the company. Sheild said Gov. Bob Riley's office agreed to allow the developers to use $100 million in Gulf Opportunity Zone bonds to complete the project.
The Gulf Opportunity Zone Act, offering low-interest rates and tax breaks, was enacted by Congress in the wake of 2005's hurricanes Katrina, Rita and Wilma to drum up private investment and rebuilding efforts on the storm-damaged coast.
"We're not just spending your time on something that is speculative," Sheild told council members. "We feel that we're in real good shape, that we will get the deal done."


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