Identifiable Benefits of the Proposed Cordova Inn
A University of Florida Opinion Paper August 19, 2015
Executive Summary. This opinion paper addresses a proposal to develop privately-owned residential property (approx. 0.96 acres) and the contiguous structures as a boutique inn, i.e., The Cordova Inn, in central St. Augustine. The property is historically important, comprising buildings that date to the sixteenth century. However, the structures and grounds (sic) are in disrepair (sic) and require extensive historic restoration that will be expensive. Once restored, long-term preservation will require a revenue stream that is sustainable. The current proposal appears to resolve (sic) both issues. The owner will restore the property to appropriate standards, assuming all costs privately. No expenditures are expected of the City or other external agencies. [FALSE: OWNER DEMANDS A TEN YEAR TAX HOLIDAY ON VALUE OF IMPROVEMENTS]
Adaptive use of the restored property as a boutique inn would generate the recurring revenue needed for ongoing preservation. Again, no municipal funds are requested.
Beyond historic preservation, adaptive use of the property would have secondary benefits for the local economy. The proposed inn would attract high-value (sic) guests and their additional spending, employ local staff, purchase goods and services locally, and pay ad valorem property taxes. In addition, the inn would have educational benefits, increasing public awareness of the restored property and its historical significance. In our opinion, the Cordova Inn proposal provides a unique opportunity to resurrect these long-neglected (sic) buildings and reintegrate them into the fabric of St. Augustine life. This project has high value for St. Augustine, St. Johns County, and the State of Florida and is strongly supported.
Rationale. This analytical opinion is provided at the request of Ms. Nancy Sikes-Kline, Commissioner of the City of St. Augustine. [Why?] The opinion addresses potential benefits of restoration, preservation, and adaptive use of contiguous properties within the proposed Cordova Inn. These properties date to the sixteenth century and are considered historically important by the University of Florida. University engagement on this issue is consistent with authorizations to manage and maintain 38 historic properties in St. Augustine owned by the State (statute 267.1735) and work with direct support organizations to promote historic preservation and historic preservation-related educational activities in the City of St. Augustine, St. Johns County, and the State (statute 267.1736). [What?]
Background. Prior to their recent purchase, the buildings and grounds on this property were dilapidated (sic) and deteriorating (sic). Several previous owners attempted to repair or restore the structures for use as a tourist attraction. [Fails to discuss the heroic efforts of Kenneth Worcester Dow buying and upgrading the properties 1939-2002, donating them to the DAYTONA MUSEUM OF ARTS AND SCIENCES, which took $2.1 million in State of Florida funding. Why?]
These efforts were underfunded, poorly executed, and did not meet preservation standards. In its current state, restoration of the property will require substantial investment. Continuing preservation will require sustainable revenue. The University (sic) [who? who authorized this outcome-focused "Opinion"] knows of no alternative proposals from private firms that would achieve these goals. Nor does the City, County, State, or University have the funds to purchase, restore, and preserve these properties. [No discussion of the proposed St. Augustine National Historical Park and National Seashore, www.staugustgreen.com. Why?]
Benefits of the Proposed Project
Restoration of historic structures. The property is being restored by the owner at his own expense. A total investment of $5-7M is projected for restoration of the building and grounds, upgrading of water, sewer, HVAC, and fire protection systems, and landscaping. A significant amount of this budget has already been expended on initial improvements to the structures, infrastructure, and surrounding grounds. Work to date appears (sic) to involve thoughtful design, appropriate materials,
Sustainable preservation. Maintenance and repair of the restored property will be funded via adaptive use as a boutique (sic) inn. Contiguous buildings on the property will contain 30 luxury guest rooms renting for $300 or more per night. To assess feasibility of this business model, the current analysis integrates visitor and hospitality data (sic) from multiple sources (listed below). Four points are clear: First, there is demand for rooms at the proposed rate. Data show that 9.1% of all visitors to St. Augustine paid $300 or more per night for accommodations in 2012-13. Since then, the average daily room rate, annual room revenue, and annual demand for rooms have progressively increased. Second, local availability of high-value rooms is limited. St. Johns County has over 10,000 rooms for nightly rental. Only 231 rooms (2.3% of total supply) have rates of $300 or more and these are concentrated in just four hotels. Third, the proposed inn would increase the supply of high-value rooms, helping to meet growing visitor demand. Fourth, the inn would generate significant income. Based on current occupancy rates, room rentals are expected to yield revenues of $4,500 to $6,750 per night for a total annual income that averages $2.1M per year. A fraction of this money would be sufficient for preservation of the property.
Economic impact. The project is expected to benefit the St. Augustine economy. First, ad valorem taxes on the improved property would come to the City directly. Assuming an assessed value of $3M for the improved property, annual tax returns would be approximately $40,000. Second, salaries for workers, supplies, services, utilities, and other operating costs for the proposed inn would be spent in St. Augustine. Third, guests at luxury accommodations in St. Augustine report spending over $500/day in addition to lodging costs, twice the additional spending of average visitors. This predicts additional spending by guests of the inn at rates of $7,500 to $11,000 per day or $3.4M on average per year. These expenditures are expected to benefit local retail shops, food and beverage sales, and other businesses near the proposed inn. Finally, taxes on room rentals would generate roughly $206,995 per year in state and county taxes. The county portion ($82,782/yr) would revert to the St. Johns County Tourism Development Council for promotion of local tourism, an indirect benefit to City businesses.
Educational impact. This issue is not addressed explicitly in the project proposal but can be teased (sic) out. First, the historic nature of the property is intrinsic (sic) to the business plan. The restored buildings will include information (sic) on their history, the preservation effort, and the role of the property in St. Augustine history. Guests are likely to function as ambassadors (sic) after they depart, promoting the historical importance of this property nationally. Second, information on historic preservation of the property is likely (sic) to be featured in marketing materials, the website, and other promotional activities of the inn. Beyond potential guests, this marketing campaign will raise awareness of historic preservation among St. Augustine visitors, the local community, and online viewers. Third, local residents are likely (sic) to learn about historic preservation of the property during First Friday art walk events and private tours that will be offered weekly. Finally, there is potential (sic) for the inn to partner with academic programs of the University of Florida and Flagler College, providing learning opportunities for students at both institutions.
Related issues. Additional questions have been raised about other aspects of community life. The expected impacts of parking and commercial traffic are addressed in the revised PUD proposal and will be considered during the formal hearing process. Theoretical concerns about property values and livability of the neighborhood are beyond the scope of the current analysis.
Opinion. The Cordova Inn proposal provides a unique opportunity to restore an important group of long-neglected historic buildings and reintegrate them into the fabric of St. Augustine life. Adaptive use as a boutique inn represents the only viable option for sustainable preservation of the restored structures. The proposed inn would have significant economic benefits for the City, generating new tax revenues and attracting high-value visitors that will add millions of dollars to the local economy. The proposed inn also would promote public awareness of St. Augustine history and the City’s rich tradition of historic preservation. Overall, the proposed project has high value for St. Augustine, St. Johns County, and the State of Florida and is strongly (sic) supported (sic).
Daniel Fesenmaier, PhD
Jason Stienmetz, MTA
Janet Matthews, PhD
Roy Hunt, JD
Source Material: The opinion is based on information from multiple sources. These include tours of the property in question; conversations with Ms. Nancy Sikes-Kline (St. Augustine Commissioner), Mr. John Regan (St. Augustine City Manager), Mr. David Corneal (property owner), and Mr. Michael Conroy (representing Mr. Corneal); and The Cordova Inn Planned Unit Development (PUD) proposal (Exhibit C only; July 27, 2015 version). Analytical data were obtained from the St. Johns County Tourism Development Council annual report (FY 2014), Florida Statistical Abstract, Smith Travel Research, Expedia.com, and results of the St. Johns County Tourism Development Council visitor survey from 2012-2013 (courtesy Mr. Glenn Hastings, Executive Director).
Disclosure: All authors contributed to the preparation of this document and are aware of its content. There was no conflict of interest in the preparation of this opinion paper. No compensation of any kind was provided to the authors, their representatives, or the University of Florida.