Gulf Beach Hotel, Inc., v. Gulf State Park Authority, et al., and Charley Grimsley v. Governor Bob Riley, et al., Civil Action Nos. 2005-1409 and 2005-1804 (consolidated) (Circuit Court of Montgomery County, AL).

Timothy M. Mulvaney, J.D.

The Circuit Court of Montgomery County, Alabama, recently halted development plans to construct a luxury hotel, spa, and conference center at Gulf State Park along Pleasure Island’s Gulf shore in Baldwin County, Alabama. In an order dated June 26, 2008, Circuit Judge Eugene W. Reese declared a lease agreement, approved by Governor Bob Riley, between the Alabama Department of Conservation and Natural Resources (DCNR) and Auburn University contrary to Alabama constitutional and statutory law.

Background
Gulf State Park, comprising over 6,150 acres and two miles of mostly undeveloped white sand beaches, is the lone natural public space along a coastal area lined with hotels and condominiums. The park provides public recreational opportunities for fishing, swimming, boating, hiking and picnicking, in addition to cottage lodging and camping facilities. One austere, 144-room concrete lodge existed in the park until Hurricane Ivan destroyed it in 2004. The State ultimately demolished the remnants of the lodge in 2006.

The State developed plans to replace the concrete lodge with a 350-room, $100 million luxury resort and conference center. The State’s proposal called for Auburn University, a public institution, to lease the hotel site from the State for a term no less than seventy (70) years, and then sublease it to a private Georgia-based company, the West Paces Hotel Group, for no longer than ninety-nine (99) years. Under the proposal, the West Paces Hotel Group would engage in construction, operation, and management of the facility, with assistance from students enrolled in Auburn University’s hospitality industry program. The interested parties reduced the terms of this proposal to writing in a “Memorandum of Understanding Regarding Ground Lease Agreement” (Agreement) in October 2007.

Litigation
The operators of the Gulf Beach Hotel in nearby Orange Beach, former State Conservation Com­ missioner Charley Grimsley, the Alabama State Employees Association, and others (Plaintiffs) challenged the proposed development as contrary to state law through the filing of a lawsuit against the parties to the Agreement (Defendants). Both the Plaintiffs and the Defendants filed motions with the court seeking summary judgment. Summary judgment is appropriate in circumstances where there are no genuine issues of material fact in dispute, whereby the court can decide the case as a matter of the applicable law, without the necessity of conducting a trial.1

The Court’s Ruling
Judge Reese granted the Plaintiffs’ motion for summary judgment, concluding that the Agreement violated various provisions of state statutes and the Alabama Constitution. The court found that, under Alabama law, any facility at Gulf State Park must be operated and maintained by DCNR employees, due to the fact that money from a $110 million bond issue, approved by Alabama voters for the construction and maintenance of state parks via a state constitutional amendment, was spent improperly on the proposed hotel and convention center.2 Judge Reese rejected Defendants’ assertions that, since they had repaid these monies, they avoided the requirement to utilize DCNR employees to operate and maintain any proposed facilities at the Park.

The court’s order further explained that, for any development at Gulf State Park, the law requires that a Joint Legislative Committee on State Parks effectively and meaningfully consider the average per capita and average per family income of Alabama residents in approving the design and cost of lodging facilities at all State parks.3 In addition, the court ordered that Defendants could not enter into any concession contracts that fail to provide for the reasonableness of the concessionaire’s charges to the public.4

In rejecting Defendants’ contentions that the property at issue had been removed from the State Park System in accord with statutory exemptions,5 Judge Reese cited specific statutory provisions dictating that State park property remain State park property while under lease.6 Therefore, the court determined that the DCNR could not subvert Alabama’s Land Sales Act because, while leasing state land to a public university might be appropriate, such a lease would require the public university to comply with the strict provisions of the Land Sales Act before it could sublease state lands to a private entity.7

The court also chided the duration of the proposed lease and sublease, as Alabama law provides that DCNR may enter into concession contracts with persons, firms, or corporations limited in duration to six years, or, in exceptional circumstances where a contracting party expends significant sums of money to improve or enlarge existing or new facilities, to twelve years.8 Further, Judge Reese’s order noted the absence of a competitive bidding process in selecting the West Paces Hotel Group to construct, manage and operate the hotel, in violation of state statute.9

As of this publication’s editorial deadline, the Defendants had not filed court papers to appeal Judge Reese’s ruling before the Alabama Court of Civil Appeals. For the time being, public debate continues between those claiming the development proposal will direct special benefits to a private business while pricing the average Alabamian out of use of the park, and those claiming the project will bring needed commercial business to this island community still suffering from the effects of the 2004 hurricane season.10

Endnotes
1.   Ala. R. Civ. P. 56.
2.   Ala. Const. Art. XI A7 213.32; Ala. Code A7 9-14A-1, et seq.
3.   Id. A7 9-14B-7.
4.   Id. A7 9-14-24(b).
5.   Id. A7 9-15-82.
6.   Id. A7A7 9-14-20 through 9-14-29.
7.   Id. A7 9-14-27; Id.A7 9-15-70, et seq.
8.   Id.
9.   Id. A7 9-14-20, et seq.
10.  See, e.g., Editorial, State Park Renovations Worth Cost, Montgomery Advertiser, July 7, 2008; Editorial, Gulf State Park Plan Worth Pursuing, Mobile Press-Register, July 2, 2008; Michael Rockwood, Gulf Shores Building Plans Blocked, http://www.myfoxgulfcoast.com/myfox/pages/News/Detail?contentId=6882616&version=1 &locale=EN-US&layoutCode=TSTY&pageId=3.2.1 (last visited July 9, 2008); Brian Lyman, Judge Rejects Gulf State Park Hotel Plan, Mobile Press-Register, June 28, 2008.