Grande Bay Calls for Public’s Support in Rezoning Request

After running out of money to complete the project, developers of Grande Bay Resort Community are requesting the public’s support in their rezoning request in order to secure more funding.

Four of the six buildings in the Cruz Bay project which first broke ground May 2003 are complete, but the vice president of operations claims building E, the final residential building, will not be finished without an approved rezoning from its current W-1 (waterfront pleasure) status to R-4 (residential medium density).

“We are asking for the rezoning so that we can finish the building and get traditional institutional financing to finish the building,” said Kelly Frye, VP of operations for Bay Isles Associates LLLP and limited partner. “We can’t get a loan to finish building E unless it is rezoned into a condominium building verses a dwelling building.”

Under its current zoning, building E is W-1 permitted for two dwelling units consisting of three stories — dwelling unit one is on the first and second floor with eight bedrooms and dwelling two occupies the third floor with a loft and a total of six bedrooms, according to Frye. The developers are proposing to change the two dwelling units with 14 bedrooms to six condominiums with nine bedrooms.

“What is currently permitted is a taller building with more bedrooms and a greater occupancy load than what we are proposing under the new rezoning application,” Frye said. “Under the application is a proposed three-story building with no lofts at all and  six condominiums with a total of only nine bedrooms.”

Frye said by taking out the lofts, the height of the building would be reduced but he did not know the exact reduction — estimating an approximate half-story. He said condominiums share a story with each other whereas dwelling units exclusively occupy their own stories.

Frye said the waterfront project that broke ground more than six years ago and was originally slated to be complete within two years has been riddled with poor decisions and mismanagement.  

“The project as a whole is not acceptable,” Frye said. “And there is nothing I can do about that. But there is something I can do about building E — what we can do is decrease the occupancy load and decrease the height of the building by eliminating the lofts.”

The four complete buildings include 48 units, and  between 36 and 38 of the units have been sold, Frye said. Bay Isles owns the remaining 10 to 12 units.

The project’s sixth building, which will contain the resort’s lobby, gym, administrative offices, internet desks for guests and owners and a wine cellar, is currently under construction.

“Under the rezoning, we may have the right to put a kitchen facility and restaurant equipment to provide special events food and beverage services to our owners and guests,” he said, reiterating that there will not be a restaurant in the resort.

Frye said the reason they cannot get funding with the building’s current zoning status is because the value of the building is much lower than the cost of construction due to the fact that there are no comparable sales.

Frye admitted the project has been developed irresponsibly.

“It is irresponsible,” he said. “I couldn’t agree more.”

Blaming some of the irresponsibility on past internal problems within the partnership, Frye said the recent election of a new general lead partner, Elita Kane, will help Grande Bay make more responsible decisions in the future.

“Our partnership just recently is under new management so that we can do the responsible thing,” he said. “And part of that responsible thing is me moving here and being a full-time resident so we can have a presence in the community and participate in local charitable endeavors as well as the administrator’s beautification efforts.”

Frye said the partnership scraped enough money together to finish the exterior of building E, pursuant to its agreement with the Grande Bay unit owners. They now need the rezoning in order to finish the interior.

“We are trying to do the best we can with what we have got, and the thing we can do is change building E so that it is more consistent with what is acceptable in the community,” he said. “I can’t tear down buildings A, B, C and D –– they are already sold. For me, the bottom line is we have to be able to finance the completion of building E and the only way we can do that is if building E is condominiums just like all the buildings around us, and it is exactly what all the Grande Bay unit owners want.”

Frye said that with the extended construction time and several lawsuits by neighboring property owners and initial unit buyers ­— including a lawsuit by members of the Trey and Jadan families which is currently in mediation — the project has not been financially viable.

He estimated a loss of more than $10 million dollars since the beginning of the project.

“We are trying to wrap our arms around how much we’ve lost,” Frye said. “I am searching for a proper way to put it. I would say that this  community is fortunate that our partnership was able to pull its bootstraps up and get it done to the point that we have gotten it done.”

He said the new leadership is doing everything humanly possible to financially finish this project.

He said the rezoning itself cannot make the resort profitable but it will enable them to complete the project and make the resort operations viable.

“We have long term future hopes of being able to operate a viable resort ­­­— both for the unit owners as well as, eventually one day, regaining our lost investment in the resort.”

Doug White, president of Island Green Builders Association, met informally with Frye Wednesday evening, September 2, about the rezoning but said the association would prefer to remain neutral and not take a position on the issue.

“IGBA would not support Grande Bay because of the monster, out-of-scale project that they have built which is against everything the green builders stand for,” he said. “Because of Grande Bay’s past performance, we couldn’t come out in support of Grande Bay; however, we do believe the project does need to be completed because it is a liability for everyone in the community if it is left unfinished.”

White said IGBA, like much of the community, is skeptical of developers making promises when they want the public to support a rezoning.

“Developers can say one thing when they want something approved and when it is finished is a different issue,” he said, citing parking as one particular area of concern.

“They say they have adequate parking, but do they?” White questioned. “If it shows the right amount of parking on the plans, will it really be there when the building is done?”

White feels the rezoning needs to stand on its own merit — he said a rezoning based on financial shortfalls alone is not reason for the government to grant it, but he also questions why the physical development is zoned as W-1 when all of the surrounding property is zoned R4 in the first place.

Frye said that the Department of Planning and Natural Resources recommended this R-4 rezoning of building E under the first rezone application submitted four years ago in September 2005. He said it was passed by senators at a legislative session and then vetoed by then-Governor Charles Turnbull.

DPNR has not yet set a date for the hearing to the rezoning request that was submitted October 28, 2008. Frye said the lapse in time is partly due to the internal problems within the partnership as well as delays within the department.

“Now is the time for me to come forward and say we are going to have a DPNR public hearing,” Frye said. “I would like to be as open and accessible to the public as possible.”

On September 10 and 17, at 7 p.m. on the third floor of The Marketplace, Frye is inviting the public to come while he presents relevant information, plans and materials and opens the floor to questions.

“The public should support this rezoning because it means a completed project and jobs for the community,” Frye said. “For this project to be successfully completed, it will benefit all Cruz Bay businesses and mean more visitors for our tourism industry.”

M&I Bank out of Florida has already committed to granting them a loan contingent on the rezoning, according Frye.