Statesman's Public-Private Partnership

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The Statesman Group, Canadian developers who want to build a 'urban scale' resort on Hood Canal, see this deal as a 'public-private' partnership. Statesman's vision:  Jefferson County "grants" the developer $2 million and the state grants $9.25 million and then issues $26.5 million in tax exempt bonds so Statesman can get their resort rolling. 

Attorneys and planners doubt this is even a legal arrangement. It is a window into Statesman's strategy.

Here is the Statesman Proposal. See Memo to Statesman for further background on how Statesman is trying to pull the same scheme in Canada now, and the ways it has misrepresented the proposed $300 million Hood Canal MPR (Master Plan Resort) resort in Brinnon. This developer has never built a resort.

What could we do differently with the development agreement that the county is about to sign? Below, is MRSC best practices in this situation. 

The lead MPR planner for Jefferson County Department of Community Development (DCD) expressed these same concerns and assured us that there would a "performance bond" attached to this agreement.  What happened to that?

 01/18/2013 Peninsula Daily News

01/18/2013 Peninsula Daily News

 

Our questions to District 3 commissioner candidates:

  1. Do you support a public-private partnership for Statesman to build its resort?
  2. Should we do a financial feasibility study, as MRSC recommends, to see if this resort can yield the benefits promised?
  3. Should we have financial guarantees (or performance bond) in the development agreement, as MRSC recommends and Jefferson County promised?

Want to know what the citizens want, who we are, and our struggles in community development? See the BrinnonInfo Planning page.

MRSC (The Municipal Research and Services Center (MRSC) is a nonprofit organization that helps local governments across Washington State better serve their citizens by providing legal and policy guidance on any topic. At MRSC, we believe the most effective government is a well-informed local government, and as cities, counties, and special purpose districts face rapid changes and significant challenges, we are here to help.). From MRSC:

"Resort development is a risky business, although the long term prospects for the industry may be favorable. Master planned resorts are typically large undertakings that will take years (and sometimes decades) to complete all phases.  To be successful, resort developers must make a substantial investment in recreational facilities and other amenities.  Much of this investment must occur before substantial revenues come in. Like the agriculture business, resort businesses that provide outdoor recreation facilities, such as golf or ski areas, may suffer from the whims of the weather.  After reviewing North American resort and recreational projects over a 30-year span, some resort industry leaders estimated that as few as 10 percent were profitable for the original developer (Middleton, 1994). As a result, local jurisdictions should carefully evaluate a proposed MPR’s prospects for success. 

"Recognizing the level of risk in the resort industry, a number of Oregon communities have adopted minimum investment criteria for destination resorts, based on Oregon’s Statewide Planning Goals and Guidelines.  An investment of at least $7 million is required for onsite developed recreation facilities and visitor-oriented accommodations for “destination resorts” (similar in concept to Washington’s MPR and on a site of 160 acres or more).  At least one-third of this amount must be spent on recreational facilities.  This amount does not include expenditures for sewer, water and road improvements. The same Oregon goal calls for a $2 million investment (one-third of it for recreation facilities) for “small destination resorts” (OAR 660-015-0000(8)).  Although this may seem like a lot, an 18-hole golf course is in itself a multi-million dollar project.  As one Oregon community development director observes, a serious resort prospect “doesn’t bat an eye” at these minimums (Read, 2001).

"Local officials may or may not be interested in adopting specific investment targets.  However, they should look for convincing assurance that the project is economically viable.  A developer should present market plans and analysis that demonstrate that a proposed resort can succeed and that benefits to the community will materialize.  In addition, a developer should provide evidence of sufficient company experience and financial backing to manage a large-scale, long-term venture.

"Deschutes County, OR (which does have minimum investment requirements) also has adopted the following submittal requirements and approval criteria for economic analysis:

Economic Analysis Submittal Requirements from Deschutes County, OR

19. An economic impact and feasibility analysis of the proposed development prepared by a qualified professional economist(s) or financial analyst(s) shall be provided which includes: a) An analysis which addresses the economic viability of the proposed development; b) Fiscal impacts of the project including changes in employment, increased tax revenue, demands for new or increased levels of public services, housing for employees and the effects of loss of resource lands during the life of the project.

Source: Deschutes County Code §18.113.050(B)(19)

Economic Analysis Criteria from Deschutes County, OR

C. The economic analysis demonstrates that:

1. The necessary financial resources are available for the applicant to undertake the development consistent with the minimum investment requirements established by DCC 18.113.

2. Appropriate assurance has been submitted by lending institutions or other financial entities that the developer has or can reasonably obtain adequate financial support for the proposal once approved.

3. The destination resort will provide a substantial financial contribution which positively benefits the local economy throughout the life of the entire project, considering changes in employment, demands for new or increased levels of public service, housing for employees and the effects of loss of resource land.

4. The natural amenities of the site considered together with the identified developed recreation facilities to be provided with the resort, will constitute a primary attraction to visitors, based on the economic feasibility analysis.