The state of Alabama is attempting to conceal the financial terms and other provisions of a unique 22-year contract for the management of the most lucrative facilities at Gulf State Park, where Gov. Kay Ivey joined other state and local officials last November to cut the ribbon on nearly $140 million worth of improvements.
The Gulf State Park Enhancement Project, which was primarily funded with Natural Resource Damage Assessment (NRDA) funds and a legal settlement from the 2010 BP Deepwater Horizon oil spill, resulted in the construction of a 350-room lodge featuring a pool, restaurants and bars, plus 40,000 square feet of event space, an environmental “interpretive center,” a learning campus and more than $13.5 million worth of trail enhancements and dune restoration.
But one employee recently told Lagniappe Gulf State Park “is a state park in name only,” as the management company, Valor Hospitality Partners, has extended its reach beyond the scope of the initial request for qualifications to acquire oversight of not only the improvements paid for as part of the enhancement project, but also existing state properties north of Highway 182.
Meanwhile, in response to an open-records request that was initially filed weeks after the ribbon-cutting last year and remains partially unfulfilled today, the state redacted portions of the management agreement with Valor Hospitality pertaining to market competitiveness, furnishings, extension of the term of the agreement, competitive bidding, the allocation of billable group expenses, the maintenance of an operating account, management fees and reporting requirements.
When questioned about the redactions in the contract and additional open-records requests for monthly financial statements required under the agreement, Charlanna Skaggs, an attorney for the Alabama Department of Conservation and Natural Resources (ADCNR), wrote: “The disclosure of those terms would be detrimental to the best interests of the public and/or where the public interest will clearly be adversely affected. Namely, those paragraphs contain proprietary data, the disclosure of which would be detrimental to the ability of the Lodge at Gulf State Park to compete in the marketplace (thereby possibly resulting in increased costs, loss of revenue and the disclosure of proprietary data) which would, in turn, be detrimental to the public interest.”
But nowhere in the project’s enabling legislation, request for qualifications, management agreement or in a statewide constitutional amendment approved by voters in 2016 that allowed the state to “provide for the operation and management, by non-state entities, of hotels, golf courses and restaurants at any applicable state parks in Alabama,” does it mention that any agreements resulting from such proposals are exempt from the Alabama Open Records Act.
Further, the enabling legislation and request for qualifications appear to limit the scope of the management agreement to the 29-acre, beachfront site where the primary enhancements were made. But when the contract was awarded, Valor Hospitality also took over the management and maintenance of the park’s 21 cabins and 11 cottages on the north shore of Lake Shelby, the latter of which was included last month in National Geographic’s Unique Lodges of the World program.
In response to a series of emailed questions, ADCNR Commissioner Chris Blankenship said Gulf State Park’s largest accommodation, the 496-site RV campground and 11 primitive camping sites, remain in state control. The same can be said for the landmark pier, the beach pavilion, beach access sites, nature center, pool and splash pad, camp store and headquarters.
But the future of another amenity remains unclear. The state closed the park’s 18-hole golf course in December, citing financial reasons and the park’s master plan, which suggests repurposing the site for other outdoor recreation opportunities.
Blankenship did not offer whether the golf course property may eventually be managed by Valor too, but he did write opportunities there “include, but are not limited to, primitive and group camping, additional RV campsites, green field event space, additional trails, moving the RV storage from the current campground entrance and reworking the current campground entrance to streamline check-in and to provide more trailhead and parking near the beach.”
And curiously, while the park system reportedly cut staff after the closure of the golf course and to make room for Valor employees to maintain the cottages and cabins, one of the newest hires at Gulf State Park is former State Sen. Rusty Glover, who was among the sponsors of Senate Bill 231 (S.B. 231), the legislation passed in 2013 that paved the way for the enhancement project.
While Glover didn’t return a request for comment left on a phone number he used as a legislator as recently as last year, Blankenship said he was hired in January as an Education Specialist 1.
Glover announced his intention to leave the Legislature last year in an effort to campaign for lieutenant governor, but he fell short in the primary to Twinkle Cavanaugh and Will Ainsworth. Ainsworth went on to win the general election.
In accepting the position, Glover also received a pay increase from his time in the Legislature. In 2018, records indicate Glover received a salary of $45,483.57. At Gulf State Park, his salary is $63,252.80.
Blankenship wrote that the question of whether Glover’s position at Gulf State Park was advertised was “hard to answer as asked,” but said Glover qualified for the job based on his “[bachelor of science] and two masters degrees in education and history. He was [also] a teacher for over 25 years in the Mobile County School System.”
Elaborating on open state positions at Gulf State Park, Blankenship wrote: “We do not advertise positions like in the help-wanted ads. We use the State of Alabama Personnel Department for hiring of merit system positions … Education Specialist I is a continuous announcement, meaning it is always open to accept applications.”
Sands of time
The Gulf State Park Enhancement Project was the culmination of the state’s most recent effort to invest in the park after the previous lodge was destroyed by Hurricane Ivan in 2004. While early plans called for issuing bonds of $50 million or more, fate served up a pot of cash when it became apparent it could be rebuilt using money resulting from the BP oil spill.
In early 2013, then-Gov. Robert Bentley announced the state would use $83 million in NRDA funds to rebuild the lodge, a decision that quickly resulted in a lawsuit from the Gulf Restoration Network (GRN).
At the same time, legislators including Glover drafted S.B. 231, which permitted the creation of a Gulf State Park Committee and allowed the governor to approve the long-term lease of any state park property or development. It also limited the scope of the project to a 29-acre site south of Highway 182. The bill was signed by Bentley, but another component of the plan still needed to pass a statewide referendum.
While the GRN lawsuit was pending, the state drafted a master plan that included the construction of the interpretive center and education facility, along with improvements to existing trails and the dune network.
More than a year later, the lawsuit was settled after the state guaranteed certain amenities of the park would be preserved for the public’s use and the state would expend $65 million over the next 20 years to maintain public access. It also carried a stipulation to not build a new access road through the park for 20 years.
Shortly thereafter, the state also received word it would receive around $1 billion in civil penalties from the oil spill, the majority of which was diverted to the state general fund. But as a part of the oil spill settlement, the Gulf State Park Enhancement Project was allocated another $50 million.
With nearly all the funding in place, Amendment 2 was tacked onto the widely popular Nov. 8, 2016 general election ballot, which also featured the Trump-Clinton presidential race. The two-part amendment prevented funds from being transferred from the state-park system and allowed the state-park system to enter into third-party management contracts. It passed overwhelmingly with 1,414,033 voters in favor of it and 359,354 voters against it.
Construction had already begun on the interpretive center and education facilities, with Volkert being tapped as construction manager. The Lodge was built in two phases by MW Rogers Construction and Rabren General Contractors and an agreement was reached with Hilton Hotels to provide branding for the lodge, as well as software and hardware systems, revenue management software, customer relationship management (CRM) software and technical support.
Request for qualifications
Bidding for all construction and management contracts related to the Gulf State Park Enhancement Project was administered by a team from the University of Alabama’s Center for Economic Development. To drum up interest in the request for qualifications (RFQ) for operational support, Project Director Tye Warren directly emailed the top 100 hotel management companies ranked by Hotel Business magazine including, interestingly, The Trump Organization.
But ultimately, with only 30 days to submit a proposal, the RFQ resulted in just 12 responses. Of those, the team selected a shortlist of four firms to move on to the interview process. In addition to Valor, they included Innisfree Hotels, Hilton Management Services and Sandcastle Resorts and Hotels.
The introduction to the RFQ clearly states “support is sought to operate the lodge, interpretive center and learning campus at Gulf State Park,” aligning with the parameters set forth in S.B. 231. But in a summary of responses to requests for clarification, one team asked whether “the operator chosen will assume booking for all cabins and existing event venues … Will [the state] retain reservation oversight for the campsites and RV park?”
The state’s project team then informed the top four firms that “while not included in the RFQ, operators are encouraged to demonstrate their capabilities beyond the scope of work in areas where they possess a high level of proficiency and interest.”
The RFQ also instructed bidders “to provide an understanding of your fee schedule and estimate of your cost for this project. Prior to the final operator selection, the scope of work will be finalized and the fee structure negotiated. Please include a statement of your willingness and ability to contribute any necessary capital to the project.”
While several of the initial 12 bidders offered a proposed fee structure responsive to the RFQ, only one of the final four offered more than a general statement about a willingness to negotiate.
In its response, Innisfree offered it “has the capacity and willingness to commit up to $50 million as an equity partner … depending on the terms. We will charge fees that fall within the normal parameters for our industry. These include a percentage of revenue for management and a monthly flat fee for providing full-service accounting for the project. We are willing to further discuss the fee structure once a fuller scope of the project and our responsibilities are finalized.”
On the other hand, Sandcastle simply offered a “fee structure will be carefully analyzed and negotiated once proforma and related information is clarified. It is critical to establish a pre-opening budget in support of operator objectives and management.” Hilton Management Services was more vague, writing, “Hilton welcomes the opportunity to work with the state of Alabama to determine a mutually acceptable management fee structure” and “is open to further discussions regarding capital needs for Gulf State Park.”
In the winning bidder’s response, Valor suggested: “We are committed to discussion of our pre-opening expense fees after determining the full scope of the project and completing a due diligence of associated costs. We would provide a ramp up of the management fee (to be negotiated) to lighten the expense loan on the hotel while it is ramping up to stabilization. Our goal is to ensure the profitability and financial sustainability of the project.”
Of the proposals ADCNR provided to Lagniappe, Valor’s was by far the lengthiest. But it is primarily composed of page after page of website screenshots for other properties or projects the firm has managed.
While there is no mention of the cottages, cabins or other state-owned properties outside the park enhancement area, it does propose an effort to seek inclusion in National Geographic’s Unique Lodges of the World program. Other proposals, such as a tram service to limit vehicular traffic and a partnership with outdoor products company Orvis to provide programs, have yet to come to fruition.
Still, the University of Alabama project team seemed charmed by Valor’s pitch. In its recommendation to award the contract — specifically “for operational support of the Lodge, Interpretive Center and Learning Center” — the team claimed Valor “profoundly demonstrated deep experience in transforming existing properties into economically sustainable and international models of hospitality .…”
On Nov. 20, 2018, Lagniappe initially filed an open-records request with ADCNR “related to the Gulf State Park Enhancement Project or Master Plan. These include but are not limited to planning documents and communications, agreements, contracts, financial documents, etc. of park improvements, including the lodge and hotel.”
After a few follow-ups via phone and email over the next few weeks, Blankenship responded on Jan. 24 by providing a simple two-page list of contractors who planned, designed and built the lodge, along with others who contributed furniture, fixtures, interpretive signs and artwork.
About a month later, Blankenship suggested Lagniappe narrow the scope of the request, as its complete fulfillment would likely span hundreds of thousands of pages and result in unnecessary man hours and copy fees.
On March 15, Lagniappe submitted a request for “a copy of the state’s contract with Valor Hospitality, as well as any related bid specifications, RFQ, notice of availability or similar that resulted in Valor’s contract.” On March 28, ADCNR said they would fulfill the request at a cost of $173.70, which Lagniappe paid.
They did not mention portions of the request would be redacted and Lagniappe only learned as much after reviewing 1,800 pages of responsive material in chronological order.
Aside from the financial terms, information withheld from the public includes provisions for “FF&E,” essentially, contract terms for all “furniture, furnishings, wall coverings, fixtures, carpeting, rugs, fine arts, paintings, statuary, decorations, hotel equipment and systems and any other personal property .… ”
At other state properties including state parks, such FF&E is often affixed with an inventory tag from the State Auditor’s office. Kathie Lynch, an administrative officer at the auditor’s office, responded to an inquiry about the FF&E thusly:
“When we conducted the property audit last fall, the Lodge was still under construction. My auditor asked specifically about it, but was told it wasn’t finished yet. I looked in our database, but they have codes for each of their buildings. Without knowing which code belongs to which building, I would have no way of knowing what, if any, assets are in the system for the new Lodge or other buildings at Gulf State Park.”
After checking with ADCNR, Lynch reported she was told “Valor Hospitality currently retains property inventory for [the Lodge]. To my knowledge nothing has been tagged as ADCNR property. I’m not sure how the BP funds may apply.”
Further, Lynch said she looked in the state auditor’s asset management database and “only saw new items purchased in the last year to be lawn maintenance equipment, computers, golf carts, and other miscellaneous equipment … when we do their audit in another 18 months, if there are new assets for [ADCNR] not on inventory, my auditor will note it during the audit.”
Asked for clarification, Blankenship wrote, “Valor purchased, owns and is responsible for the Lodge FF&E,” noting hotel furnishings “must meet Hilton franchise standards.”
But he did not clarify what the stipulations were for replacement of FF&E, which is likely after several years of use or in the event of damaging tropical weather.
Another issue that became apparent since the contract was awarded to Valor is that state park gift cards, which can be redeemed for lodging at every other park around the state, cannot be expended on any of the state-owned properties managed by Valor. Questioned about the inconsistency in May, Blankenship said he “did not realize the park’s gift card[s] were not accepted until your email.”
“The gift card sales and redemption and the lodge accounting and management are two different systems,” he explained at the time. “We are looking at what is needed to make it where we can account for the use of those cards at the facilities that are not managed by our State Parks system.”
More recently Blankenship emphasized gift cards can still be used for RV and tent camping at Gulf State Park as well as areas such as the gift shop and attractions not managed by Valor, but “we are discussing the technical and accounting issues with validating and accepting the gift card at the Lodge, including how this method of payment works within the Hilton reservation system.”
Blankenship said in the meantime, he and Gulf State Park Director Gary Ellis can work with card holders “on a case-by-case basis for the Lodge, cottages and cabins.”
In regards to Valor’s scope reaching beyond what was initially proposed in S.B. 231, the RFQ and the management agreement, Blankenship wrote: “The simple reading of only S.B. 231 is not a complete picture … S.B. 231, Amendment 2, the RFQ and contract wholly align with Valor Hospitality’s scope of management. S.B. 231 authorized broad solutions to aid acquisition, lease, financing, management and operation of the project.”
He added the RFQ process “was competitive and thorough” and “we are extremely pleased with the process and outcome.”
According to Blankenship, primary oversight of Valor is handled through the ADCNR Commissioner’s office and the State Parks Division Director’s office in Montgomery.
“Valor Hospitality employees and DCNR administrative and State Parks Division employees communicate and collaborate on a daily basis to provide quality services to our guests in Gulf State Park,” he wrote. “The relationship is working very well.”
In part of an ongoing attempt to examine the full contract, Lagniappe Publisher Rob Holbert asked the ADCNR to provide “specific scenarios in which providing an unredacted contract between the ADCNR and Valor could possibly have a detrimental effect on Gulf State Park.”
“It’s simply not enough to claim it could result in increased costs or loss of revenue in an effort to use the exceptions to the public records act,” Holbert wrote. “I would imagine any judge is going to ask for a much more detailed explanation as to why you would deem this exempt from the law.”
Lagniappe is awaiting a response and will update this story as it develops.
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