The Port Royal Experiment: Inside the biggest land deal in town council history
01 May 2013
- Written by By Lance Hanlin
On March 5, Hilton Head Town Council approved spending $5 million to purchase 102 acres at Port Royal Plantation. The property consists of a large portion of Planter’s Row Golf Course, located on William Hilton Parkway between Dillon and Union Cemetery roads.
It is the largest single parcel the town has ever acquired.
“It was a pretty easy decision,” town manager Steve Riley said. “The price was very good – about $50,000 an acre. The last time we built a recreation field on the island, the land cost us about $200,000 an acre. If nothing else, this is a pretty good buy for future recreational needs.”
The town purchased the property using its Land Acquisition Program, which was started to help manage and control growth on the island. Since 1991, the town has spent more than $168 million to preserve some 1,300 acres from commercial development.
“I have often said that the Land Acquisition Program is one of the most important efforts the town has ever undertaken,” Mayor Drew Laughlin said. “I believe that this purchase, over time and with careful and thoughtful planning, will prove to be the crown jewel of our properties.”
Unlike many golf courses that wind through neighborhoods, homes and other properties, Planter’s Row Golf Course is self-contained. Its 1,494 feet of frontage on William Hilton Parkway made it especially attractive to the town, which has been trying to protect a buffer between the environment and U.S. 278 for years.
The town’s use of the parcel has not been determined. Riley said the project will take a back seat behind the Coligny redevelopment, Chaplin Linear Park and Shelter Cove Waterfront Park projects. Once the sale becomes official this summer, the town will immediately lease the property back to the original owner, Heritage Golf Group, for $1 per year.
Riley described the lease as a cost-avoidance measure, saving the town maintenance costs until it can fully focus on the project.
In 2008, voters approved a referendum allowing the town to purchase land for parks and open space. The town was approved for $17 million but initially borrowed only $12 million.
“We have voter authorization still for that additional $5 million,” Riley said. “It will be structured in such a way that when other debt expires, this will come on board and there won’t be any tax increases.”
The parcel is part of Port Royal Plantation’s minimum required open space and is zoned for open space golf. The town first expressed interest in the property last summer but its offer of $1 million was rejected.
Gary Dee, executive vice president for Heritage Golf Group, said several groups expressed interest in purchasing the property but his company eventually came to terms with the town.
“One big factor was the fact that they were interested, they were able to move in a timely manner and there were no contingencies with their offer,” Dee said.
Dee said a sizable amount of the $5 million will go back into the Heritage Golf Group’s other two courses at Port Royal Plantation.
“This sale will allow us to undertake some significant capital projects on the golf course and in and around the clubhouse,” Dee said. “It would be hard to fund with just our normal capital improvement dollars that come from a percentage of revenue. We see it as a win-win for everyone.”
Some residents of Port Royal Plantation were disappointed with the decision to sell the property to the town. In September, the Port Royal Plantation Board of Directors approved a deal with The Melrose Co. to develop the land. Dee said Heritage Golf Group was unaware of that agreement and only learned of the deal after it became public knowledge.
Bob Kolb, co-founder and CEO of The Melrose Co., said he was contacted last April by former Port Royal Plantation general manager Dan Davis on behalf of the board.
“They asked us if we would work on a plan to develop it,” Kolb said.
The Melrose Co. came up with a plan featuring three products:
1). Around 50 acres of low-maintenance, lock-and-leave retirement homes, as requested by the Port Royal Property Owners Association. The plan was to build the homes for Port Royal residents interested in downsizing from their larger homes while staying in the plantation. It would have included a sales center, a reception center and four furnished model homes.
2). Around 30 acres for an outpost apartment complex Kolb described as “workforce housing.” Tenants of the multi-family apartments would not have paid Port Royal Plantation POA fees or had access to any of the community’s amenities.
3). A shopping and dining area similar to Main Street Village. The company planned to use Whole Foods Market grocery store as an anchor tenant for the shops and restaurants on 14 acres at the corner of Dillon Road and U.S. 278.
The Melrose Co.’s plan also included giving $2.27 million to the Port Royal Association of Landowners.
“Normally when you develop a community like that, you have to put in amenities … swimming pools and stuff like that,” he said. “In this case we were not going to need to do that because the residents would have access to the clubhouse, the beach house and all that. We called it a contribution to amenities. Instead of them giving us a list of things to do, we thought it would be better if we (gave them the money) and they decided what they wanted to do.”
Kolb said The Melrose Co. was negotiating a price with the Heritage Golf Group while working with Riley and the town to learn more about zoning and other regulations required to move the project forward. He was not aware the town was also interested in purchasing the property.
“As a private developer, we needed to have the property rezoned from its current use,” Kolb said. “We were unable to buy the property or even go to binding contract until we had it rezoned. The town feels like they can rezone property for themselves. They didn’t have the obstacle we had. We had a need to rezone and they didn’t. Their course to the property was much less complicated that ours.”
With no immediate plans, Kolb feels the town purchased the property just to keep his company from doing so. He also feels Hilton Head Island is missing out on the new jobs and tax revenue the project would have created.
From the town’s perspective, it was a willing buyer purchasing desirable property from a willing seller at a reasonable price, without compromising the land’s intended use.
“This is part of required open space for Port Royal,” Riley said. “It has no allowable density associated with it. On an island with a 30-year history of trying to control growth, I don’t know why anybody thought we were suddenly going to no longer care about open space requirements or start creating developments where there were none before.”