Development of remaining land could buoy Patriots Point’s maintenance funds

Patriots Point Development Authority plans to talk with developers and investors in the coming months about leasing its remaining 50 acres for mixed-use projects. The revenue generated could fund much-needed and expensive restoration and maintenance of the decades-old ships. (Photo/Liz Segrist)

Patriots Point Development Authority plans to talk with developers and investors in the coming months about leasing its remaining 50 acres for mixed-use projects. The revenue generated could fund much-needed and expensive restoration and maintenance of the decades-old ships. (Photo/Liz Segrist)

By Liz Segrist
lsegrist@scbiznews.com
Published in the Oct. 7 print edition

Development of land surrounding Patriots Point could help restore and keep the site’s historic ships in Charleston Harbor.

Patriots Point Development Authority plans to talk with developers and investors in the coming months about leasing its remaining 50 acres for mixed-use projects. The revenue generated could fund much-needed and expensive restoration and maintenance of the decades-old ships.

“You could argue that this is some of the most valuable real estate in the Southeast, sitting on Charleston Harbor,” Executive Director Mac Burdette said. “Our board is very focused on developing a strategy for leasing those 50 acres.”

Patriots Point Development Authority has created a three-year plan to increase profits and diversify its revenue streams. (Photo/Liz Segrist)Patriots Point Development Authority’s three-year business plan:
  • Increase attendance revenue by 17%.
  • Increase revenue to $11.7 million annually by fiscal year 2016, up from $9.7 million in fiscal year 2012.
  • Increase ticket sales to 260,000 per year.
  • Increase campaign registrations to 24,000 per year.
  • Increase student enrollment in education to 20,000 per year.
  • Increase number of event rentals to 350 per year.
  • Increase monetary gifts to $500,000 per year by working with Patriots Point Foundation and USS Yorktown Foundation.
  • Increase property lease revenue to $1.84 million.

Source: Patriots Point Development Authority

Patriots Point Land Map (Click to view larger)

Patriots Point Land

  • Parcel 1: Patriots Point Naval & Maritime Museum
  • Sports Complex Parcel: Roughly 36 acres leased to the College of Charleston.
  • Golf course and Parcel E: Roughly 180 acres leased to Lubert-Adler real estate investors.
  • Parcels 4-6: Leased to the Medal of Honor Museum Foundation for its future museum.
  • Parcels A-1 and A-2: The Cottages on Charleston Harbor are leased to Mike Bennett.
  • Parcels A, B, C and D: Leased to the Great American Insurance/Brothers Corp.; includes Charleston Harbor Resort and Marina, a pavilion and a restaurant.
  • Parcels 2, 3, 7-10 and the easement: Roughly 55 acres available for development.

Source: Patriots Point Development Authority

The authority has struggled to fund the enormous costs of maintaining the naval and maritime museum’s ships, which sit in water near the base of the Arthur Ravenel Jr. Bridge. Salt water has been slowly eating away at their steel exteriors for years.

The USS Laffey destroyer recently underwent a $13 million restoration. The aircraft carrier USS Yorktown needs an estimated $40 million to $80 million in repairs.

The Coast Guard cutter Ingham was given to a Key West, Fla., museum in 2009. The USS Clamagore submarine will eventually be sent to the ocean floor off the coast of Florida to be an artificial reef.

Financial issues resulted in a lack of grant support at the federal level a few years back, according to state leaders. The authority is a state agency, but it receives no state funding.

Burdette, former Mount Pleasant town administrator, assumed the helm in 2010. He plans to increase Patriots Point’s profits through more long-term lease executions, technology enhancements for the museum’s exhibits and increased fundraising efforts. A $100 million National Medal of Honor Museum is being constructed on-site as well.

“The remaining ships are absolutely here to stay,” Burdette said. “It comes back to business. We need to redevelop our products and diversify our revenue streams even more so.”

Mike Sudzina, a Patriots Point volunteer and Marine, said the museum helps connect people to the sacrifices made by the military. It also serves as a tourist attraction and revenue generator for the community.

“The fact that it’s here says that people value all of the values represented here: freedom, sacrifice and service for the country. I think kids need to learn that,” Sudzina said. “When I grew up, everybody had an uncle or a dad that fought in World War II. As time went on, people had no connection to the military. Patriots Point provides that.”

Expensive ships

The Yorktown and Laffey serve as tourist attractions and a place of reflection for veterans. Patriots Point Naval and Maritime Museum makes an estimated $50 million economic impact in Charleston each year, according to a 2012 College of Charleston study. Many veterans feel a deep attachment to the ships, officials say.

State lawmakers set up the tourist attraction and maritime museum in the 1970s. The board planned for ticket sales and long-term leases on roughly 300 of its 360 acres to fund the maintenance of ships, but that hasn’t been enough. A maintenance fund was never incorporated into the budget.

Now, the authority is trying to earn additional revenue through leases on its remaining 50 acres to fund repairs.

Mixed-use developments including hotels, restaurants, multifamily housing and retail establishments are all possibilities for the remaining land. Previous development proposals fizzled for being too heavily residential for the area, Burdette said.

Currently, a resort hotel and marina, a golf course and the College of Charleston’s athletic fields occupy the majority of the board’s land with 99-year leases. Those leases generate about $1.6 million, or roughly 16%, of Patriots Point’s $10.3 million budget annually. The lease revenue pays for daily operations and maintenance of the ships.

Patriots Point Development Authority wants new developments’ leases to generate an additional $5 million to $6 million annually, Burdette said. The board plans to use the revenue from the leases solely to fund ship repairs.

“Our goal within three years is that we will have grown our average daily revenue, from ticket sales and the like, that we no longer need to rely on our leases for operations and we can set that aside for restoration of ships and maintenance of ships. ... But it’s not as easy as it sounds,” Burdette said. “Not every developer wants to deal in leases.”

The board plans either to use the roughly $5 million from leases each year for restoration, or to request state permission for a $10 million loan, for example, which it would pay back in two years.

“It puts us in a position to be a lot more flexible and creative with our biggest challenge, which is maintaining these ships,” Burdette said.

In 2009, the authority received a $9.2 million loan from the state  to repair the Laffey, which was at risk of sinking. It was denied a request for a $20 million federal grant that it would have used to repay the state loan. The authority is still paying back the loan.

Congressman Jim Clyburn, D-S.C., said in 2010 regarding the denial of the federal grant: “If there’s ever been gross — I do mean gross — mismanagement of anything that I’ve ever seen in the state of South Carolina, it’s what’s been happening at Patriots Point.”

Changing demographics

When Patriots Point opened in 1976, it was the first aircraft museum in the nation and 20 million World War II and Korean veterans were still living. Those veterans constituted more than half of the attraction’s visitors for more than 20 years, Burdette said.

Today, 7 million World War II and Korean veterans are living, he said. People are not as directly connected to the wars of the past; many will visit once, but it won’t be a repeat destination. Burdette wants to change that.

“Our audience has changed,” Burdette said. “Technology must be a part of the exhibits for any successful museum, because the stories don’t change. ... Kids today — particularly kids — and families in general, don’t want to walk in and see that picture on the wall. It’s just not good enough. They want to push a button and have something happen.”

The museum’s new exhibits will include videos, firsthand accounts and hands-on interactions, as well as rotating exhibits. Leadership plans to roll them out over the next four years or so. Funded by a $10,000 grant from the Tin Can Sailors, the first of these exhibits is expected to launch soon on the USS Laffey.

Visitors will enter the Laffey’s gun mount and a video will show a Japanese plane approaching and then firing on them. A voice will announce that some comrades survived, while others did not, and the soldiers’ stories will be shared.

“It will create an emotional attachment between the visitor and the ship, and that’s how a returning visitor is created,” Burdette said.

The authority also wants to increase the amount its fundraising foundations generate. It will increase marketing efforts and target new groups for its children’s overnight educational visits.

The authority is also launching a series of programs to recognize the 50th anniversary of the Vietnam War. It has received $55,000 in grants for the Vietnam Experience.

Patriots Point could have programs connected to specific events during the war and could bring back a mobile version of the Vietnam Veterans Memorial Wall.

“The ships give the public a unique window into the military that most don’t get to see,” Sudzina said. “They help veterans connect with one another and they help kids understand what being a veteran means.”

Reach Liz Segrist at 843-849-3119.

Editor’s Note: This story appeared in the Oct. 7 print edition of the Charleston Regional Business Journal. Two parcels’ ownership was incorrectly identified in the print edition. Parcels A-1 and A-2 are leased to Mike Bennett, and Parcels A-D are leased to the Great American Insurance/Brothers Corps, according to Patriots Point.

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